BLACK HILLS CORP /SD/ Q1 FY2025 earnings call

• Key objectives for 2025 include delivering 5% year-over-year earnings growth, executing regulatory initiatives and $1 billion capital plan, and providing top quartile reliability with exceeding safety performance.
• Regulatory execution: Successfully implemented 7 rate reviews since 2024, recovering over $1.3 billion in new system investments; rider mechanisms provided $40 million first phase of $350 million Ready Wyoming transmission expansion project.
• Customer growth: Strong growth across regions, with two new all-time customer peak loads at Wyoming Electric due to data center and blockchain growth, marking 19 consecutive years of increasing demand.
• Infrastructure expansion: Advancing Ready Wyoming transmission project (350 million, 260-mile, to be completed by year end); Colorado Clean Energy Plan with 350 MW renewable resources; South Dakota Lange II project (99 MW gas-fired generation) progressing.
• Wildfire mitigation: Positive wildfire legislation in Wyoming providing liability protection; ongoing efforts in Colorado and South Dakota to address wildfire risks.

No detailed breakdown of product segments by revenue contribution provided in the transcript.

• Reaffirmed 2025 earnings guidance range of $4 to $4.20, 5% growth at midpoint over 2024 EPS.
• Confident in long-term EPS growth target of 4% to 6% starting 2026, supported by robust balance sheet, capital forecasts, and data center growth.
• 2025 capital plan: $1 billion investment, plan to issue $215 million to $235 million of new equity; data center demand forecasted to double EPS contribution to over 10% by 2028.

• Trade tariffs: Historical spend from foreign sources less than 3%, minimal impact on 5-year outlook.
• Inflation Reduction Act: Strategic exposure minimal, less than $20 million in annual production tax credits.
• Wildfire litigation and legislation: Current litigation in Colorado affecting timing, but similar outcomes expected in long run.

Q: Couple questions on Colorado. First, on the electric rate case, can you please talk a little more about the request for rehearing, re-argument, and reconsideration?

A: Marne Jones discussed the Triple-R decision, increase in new annual revenue, continuing to review and determine next steps.

Q: In Pueblo, I know you have had some challenges historically. It looks like they just voted to keep the franchise agreement. Can you just talk about potential outcomes and next steps, how you are thinking about relationships, and also the outlook for rates and affordability for that service territory?

A: Marne Jones talked about the franchise vote, continuing to run the business, affordability, and economic development efforts.

Q: One more, if I may, just on equity, I think you raised only about less than $50 million in the quarter versus the guidance of $225 million at the midpoint. Can you talk about that?

A: Kimberly Nooney discussed timing of equity issuance, capital projects, and lower annual equity needs going forward.

Q: On wildfire mitigation efforts in Colorado and South Dakota, do you see those getting to a similar endpoint as the Wyoming legislation?

A: Linn Evans talked about similar outcomes expected in Colorado and South Dakota, ongoing efforts.

Q: Back to sort of the data center conversation, you noted on Slide 6, and you talked about this a little bit, about incremental demand-driving investment in Colorado, South Dakota, and Wyoming. Is that – do you see that as more transmission to get sort of the generation capacity you have to where it needs to go as these large, low customers come in, or is there a generation opportunity out there tied to this incremental demand coming in?

A: Marne Jones talked about opportunities on generation and transmission sides.

Q: On O&M, you talked about that was maybe more of a response to the mild weather you had last year. If you could just talk about maybe the timing or shaping of that as we go through the rest of the year.

A: Kimberly Nooney talked about timing differences and non-recurring items in Q1.

Q: On the Colorado electric decision, the equity ratio, I think you are asking for 52.4% and you got 48% or the commission awarded 48%, I mean it’s a sizable amount of differential. Just is – do you need to have some offsets to maintain the guidance range?

A: Kimberly Nooney talked about holistic view of regulatory decision and incorporation into plan.

Q: On the long-term EPS growth rate, the difference between "targeting" and "affirm" in language.

A: Kimberly Nooney explained reaffirming the 4% to 6% growth target, with confidence in upper end starting 2026.