8-K: Black Hills Corp. Announces Strong 2024 Results and Boosts Capital Forecast

Black Hills Corp. reports a solid 2024, highlighted by EPS growth and an increased capital forecast, while also initiating positive 2025 earnings guidance.

Summary

• Black Hills Corp. announced its financial results for the fourth quarter and full year 2024.
• The company reported earnings per share (EPS) of $3.91 for 2024, a 4.3% increase from the midpoint of its 2023 earnings guidance.
• Black Hills Corp. is increasing its five-year capital forecast by 10% to $4.7 billion for the period of 2025 through 2029.
• This includes $1.0 billion allocated for 2025.
• The company projects a total data center load exceeding one gigawatt from existing customers.
• Black Hills Corp. increased its quarterly dividend by 4%, marking 55 consecutive years of annual dividend increases.
• The company initiated its 2025 earnings guidance range at $4.00 to $4.20 per share.
• Operating income for 2024 was $503.1 million, compared to $472.7 million in 2023.
• Net income available for common stock was $273.1 million in 2024, up from $262.2 million in 2023.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong earnings, increased capital forecast, and dividend growth. While there are some challenges and risks, the overall tone is optimistic and forward-looking.

Positives

• The company delivered strong earnings, with EPS of $3.91 for 2024.
• The five-year capital forecast has been increased by 10% to $4.7 billion, indicating growth opportunities.
• The company has a pipeline of data center demand exceeding one gigawatt, expected to significantly boost EPS.
• The quarterly dividend was increased by 4%, marking 55 consecutive years of dividend increases.
• Constructive settlements were reached for natural gas rate reviews in Arkansas and Iowa.
• The company maintained a solid financial position and credit ratings.
• The first phase of the Ready Wyoming transmission expansion was energized.
• Colorado Electric received final approval of its Clean Energy Plan.

Negatives

• Electric Utilities operating income decreased $15.8 million primarily due to unfavorable impacts from unplanned generation outages in 2024, lower off-system excess energy sales, higher insurance expense, and one-time benefits in 2023.
• Mild weather impacted earnings.
• Higher insurance expense affected operating income.
• Net interest expense increased $7.8 million primarily due to lower interest income on lower cash balances and higher interest expense due to higher rates.

Risks

• The accuracy of assumptions underlying earnings guidance and long-term growth targets is a risk.
• The company's ability to obtain adequate cost recovery through regulatory proceedings is uncertain.
• Completing the capital program in a cost-effective and timely manner is a risk.
• Changing interest rates could impact financial performance.
• Supply chain disruptions could affect material availability and costs.
• Inflation and volatile energy prices pose risks.
• The company's ability to obtain sufficient insurance coverage at reasonable costs is a risk.

Future Outlook

Black Hills Corp. initiates its 2025 earnings guidance range at $4.00 to $4.20 per share and anticipates a 4% to 6% long-term EPS growth target.

Management Comments

• Linn Evans, president and CEO of Black Hills Corp., stated that the company advanced its regulatory and growth initiatives and delivered strong earnings.
• Evans expressed confidence in the company's 4% to 6% long-term EPS growth target.
• Evans noted the potential for data centers and other organic growth to drive future transmission and generation investment opportunities.

Industry Context

Black Hills Corp.'s focus on renewable energy projects and data center demand aligns with broader industry trends towards sustainability and increased electricity consumption by technology companies.

Comparison to Industry Standards

• The company's 55-year track record of annual dividend increases is the second-longest in the electric and natural gas industry, demonstrating a commitment to shareholder returns.
• The company's investment-grade credit ratings are comparable to those of other established utility companies.
• The company's focus on renewable energy projects is in line with industry trends and regulatory requirements.

Stakeholder Impact

• Shareholders will benefit from increased dividends and potential for long-term growth.
• Customers will benefit from infrastructure investments and reliable service.
• Employees will benefit from the company's growth and stability.

Next Steps

• The company expects to request a certificate of public convenience and necessity (CPCN) in Wyoming during the first quarter of 2025.
• The company expects a final decision on the rate review request from the Colorado Public Utilities Commission in the first quarter or early second quarter of 2025.
• New rates are requested in the second half of 2025 for Kansas Gas.

Key Dates