• EPS Growth: 4.3% in 2024, with an expectation of approximately 5% growth in 2025.
• Capital Investment: Over $800 million invested in 2024; five-year plan (2025-2029) includes $4.7 billion, a 10% increase from the previous plan.
• Dividend Increase: 4% increase, marking 55 consecutive years of dividend growth.
• Net Debt to Capitalization Ratio: Achieved target of 55% in 2024.
• O&M Expense Management: Less than 1% increase year-over-year, significantly below the projected 3.5% increase.
• Revenue from New Margins: $0.74 per share driven by regulatory strategy execution.
• Interest Expense: Increased by $0.16 due to higher interest rates.
• Depreciation Expense: Increased by $0.15 due to new assets placed in service.
• Effective Tax Rate: Estimated at 13% for 2025.
• Equity Issuance: Plan to issue $215 million to $235 million in 2025 to finance capital investments.

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Release Date: February 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Black Hills Corp (NYSE:BKH) delivered on its earnings guidance for 2024 and is well-positioned to achieve its long-term EPS growth target.
• The company successfully completed its financing plan and maintained solid investment-grade credit ratings.
• Black Hills Corp (NYSE:BKH) increased its dividend by 4%, marking 55 consecutive years of dividend increases.
• The company has a strong capital investment plan, expecting to invest $4.7 billion over the next five years, an increase of over $400 million compared to the previous plan.
• Black Hills Corp (NYSE:BKH) has a pipeline of over 1 gigawatt of data center demand within the next 10 years, with expectations to serve approximately 500 megawatts by the end of 2029, contributing significantly to EPS growth.

Negative Points

• The company faced challenges from mild weather and unplanned generation outages, which impacted earnings.
• Higher insurance costs and unplanned generation outages were significant financial challenges in 2024.
• There was a slight delay in the timing of new resources entering service under the Colorado Clean Energy Plan.
• Black Hills Corp (NYSE:BKH) experienced a shortfall in its 2024 CapEx, spending under $800 million compared to the targeted $840 million, due to timing issues.
• The company anticipates issuing between $215 million and $235 million of additional equity to finance its 2025 capital investment plan, which could dilute existing shareholders.

Q & A Highlights

Q: Can you provide clarity on the changes in the CapEx forecast, particularly the reduction in 2026? A: Kimberly Nooney, CFO, explained that the changes are due to updated outcomes redistributing costs within the plan. The overall plan increased by $400 million due to organic growth, safety, and reliability investments, and inflation and financing costs related to large projects like Ready Wyoming and Lange 2.

Q: Is there a delay in the data center load contribution to capital opportunities, now expected by 2029 instead of 2028? A: Kimberly Nooney clarified that the growth rate remains unchanged. The 10%-plus contribution from data centers is expected as part of a compounded annual growth rate of 4% to 6%, with organic growth and data center growth contributing to this target.

Q: Has there been any change in your commitment to maintaining BBB+ equivalent credit ratings? A: Kimberly Nooney confirmed there is no change in commitment. Black Hills remains focused on maintaining solid investment-grade credit ratings, having achieved their debt to total capitalization target of 55%.

Q: What caused the shortfall in 2024 CapEx, which was below the $840 million target? A: Marne Jones, SVP of Utilities, stated that the shortfall was due to timing in major projects, with the unspent dollars expected to be utilized in early 2025.

Q: How involved is Black Hills in Colorado wildfire risk mitigation legislation? A: Marne Jones mentioned active involvement in legislative processes across their electric utilities. In Colorado, they are working with peers to mitigate risks, although no bill has been introduced yet. Progress is more advanced in South Dakota and Wyoming.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.