8-K: Black Hills Corp. Announces Second Quarter 2024 Results and Reaffirms Full-Year Guidance

Black Hills Corp. reported second-quarter earnings of $0.33 per share and reaffirmed its 2024 earnings guidance, driven by new rates and lower operating expenses.

Summary

• Black Hills Corporation announced its financial results for the second quarter of 2024, with earnings per share at $0.33, slightly down from $0.35 in the same quarter of 2023.
• The company's net income available for common stock was $22.8 million for the quarter, compared to $23.1 million in the prior year.
• Year-to-date earnings have increased by 6% compared to the previous year, reaching $2.19 per share compared to $2.06 per share.
• The company reaffirmed its full-year 2024 earnings guidance of $3.80 to $4.00 per share.
• Key drivers for the quarter included new rates and rider recovery, as well as lower operating expenses, which offset the negative impacts of mild weather and a prior year tax benefit.
• Black Hills is progressing with regulatory activities to recover investments and costs, with rate reviews advancing in Arkansas, Iowa, and Colorado.
• The company is also focused on clean energy initiatives, including a plan to reduce emissions by 80% by 2030 in Colorado and adding 100 megawatts of utility-owned generation in South Dakota by 2026.
• Black Hills is partnering with Meta to power its new AI data center in Cheyenne, Wyoming, expected to begin service in 2026.
• The company completed a $450 million debt offering and issued 1.4 million shares of new common stock year-to-date for net proceeds of $73 million.

Sentiment

Score: 7

Explanation: The sentiment is positive due to the reaffirmed earnings guidance, progress on strategic initiatives, and the partnership with Meta. However, the slight decrease in quarterly earnings and the impact of mild weather temper the overall optimism.

Positives

• Year-to-date earnings are up 6% compared to the previous year.
• The company reaffirmed its full-year earnings guidance, indicating confidence in future performance.
• New rates and rider recovery contributed positively to financial results.
• Operating expenses were lower, boosting profitability.
• The partnership with Meta for the new AI data center is a significant growth opportunity.
• The company is making progress on its clean energy initiatives and emission reduction goals.
• The company has a long track record of 54 consecutive years of dividend increases.
• The company successfully completed a $450 million debt offering and a $73 million equity raise.

Negatives

• Second-quarter earnings per share were slightly lower than the same period last year.
• Mild weather had an unfavorable impact on earnings.
• Unplanned outages at Wygen I and Pueblo Airport Generation #4-5 decreased revenues.
• The company experienced a prior year income tax benefit that negatively impacted the current quarter's results.

Risks

• The company's earnings are subject to weather conditions, which can impact demand for electricity and natural gas.
• Regulatory approvals for rate reviews and clean energy plans are not guaranteed and could impact financial performance.
• Unplanned outages at generating facilities can negatively affect revenues.
• The company is exposed to risks related to changing interest rates and volatile energy prices.
• The company's ability to achieve its greenhouse gas emissions intensity reduction goals is subject to various factors.
• The company is exposed to supply chain disruptions that could impact the availability and cost of materials.

Future Outlook

Black Hills reaffirms its 2024 earnings guidance of $3.80 to $4.00 per share and is focused on executing its customer-focused strategy, including powering Meta's new AI data center and advancing clean energy initiatives. The company expects to continue regulatory activities to recover investments and costs.

Management Comments

• Year-to-date earnings were up 6% compared to last year and we are reaffirming our earnings guidance for the year, said Linn Evans, president and CEO of Black Hills Corp.
• We continue to deliver progress on our customer-focused strategy and are excited about powering Metas newest AI data center in Cheyenne, which we expect to begin serving in 2026.
• Our team continues to attract new data centers with our leading mission-critical reliability and innovative energy solutions, including our unique tariffs and capital-light energy procurement model.
• Regulatory activities continue to move forward to recover investments and costs critical to serving our customers safely and reliably.
• As we execute on our commitment to a reliable, cost-effective and cleaner energy future, we are delivering new resources to serve the growing needs of our customers and communities.
• Construction is on schedule for our 260-mile Ready Wyoming electric transmission line to enhance reliability, resiliency and energy market access, concluded Evans.

Industry Context

This announcement reflects the ongoing trend in the utility industry towards renewable energy and data center infrastructure development. Black Hills' partnership with Meta highlights the increasing demand for reliable power solutions for large-scale data centers. The company's focus on clean energy initiatives aligns with broader industry efforts to reduce carbon emissions and transition to a more sustainable energy future.

Comparison to Industry Standards

• Black Hills' 6% year-to-date earnings growth is solid compared to some peers in the utility sector, but it is important to compare this to specific companies with similar geographic footprints and business models.
• The company's focus on renewable energy and emission reduction targets is in line with industry trends, but the specific targets and timelines should be compared to companies like Xcel Energy and NextEra Energy, which have also set ambitious goals.
• The partnership with Meta is a significant win for Black Hills, as data center power demand is a growing market. This can be compared to other utilities that have secured similar contracts, such as NV Energy's partnership with Switch.
• The company's 54 consecutive years of dividend increases is a strong performance, placing it among the top dividend-paying utilities. This can be compared to companies like Consolidated Edison and Southern Company, which also have long dividend track records.
• The requested rate increases in Arkansas, Iowa, and Colorado are typical for utilities seeking to recover infrastructure investments. The success of these rate reviews will be crucial for Black Hills' future financial performance and should be compared to the outcomes of similar rate cases for other utilities in those states.

Stakeholder Impact

• Shareholders will be impacted by the quarterly dividend of $0.65 per share and the reaffirmed earnings guidance.
• Customers will benefit from the company's investments in infrastructure and clean energy.
• Employees will be impacted by the company's ongoing projects and strategic initiatives.
• The partnership with Meta will create new opportunities for the company and its stakeholders.
• The company's commitment to reducing greenhouse gas emissions will benefit the environment and the communities it serves.

Next Steps

• Black Hills will host a conference call and webcast on August 1, 2024, to discuss the results.
• The company will continue to pursue regulatory approvals for rate reviews in Arkansas, Iowa, and Colorado.
• Construction of the Ready Wyoming electric transmission line will continue.
• The company will continue its resource planning process in South Dakota to add 100 megawatts of utility-owned generation.
• The company will continue to execute its at-the-market equity offering program.

Key Dates

Keywords

Earnings, Utilities, Renewable Energy, Rate Review, Dividends, Greenhouse Gas Emissions, Data Center, Transmission, Financial Results, Clean Energy