Black Hills Corp. (NYSE: BKH) today announced financial results for
the first quarter of 2023. Net income available for common stock
and earnings per share for the three months ended March 31,
2023, compared to the three months ended March 31, 2022, was:
|
Three Months Ended March 31, |
|
2023 |
|
2022 |
|
(in millions, except per share amounts) |
Net income available for common stock |
$ |
114.1 |
|
$ |
117.5 |
Earnings per share,
Diluted |
$ |
1.73 |
|
$ |
1.82 |
|
|
|
|
|
|
Earnings of $1.73 per share for the first quarter benefited from
new rates and rider recovery, a planned gain on the sale of the
Northern Iowa Windpower assets, customer growth, wholesale energy
sales and favorable weather. Results reflected higher
year-over-year operating expenses and interest expense,
mark-to-market losses driven by lower natural gas prices and the
impact from new shares issued.
“Our team delivered solid operational and financial results for
the quarter and advanced our regulatory and growth initiatives,”
said Linn Evans, president and CEO of Black Hills Corp. “Execution
of our financing plan and robust cash flows from operations allowed
us to fully repay our commercial paper borrowings under our
revolving credit facility and improve our credit metrics.
“In March, we initiated a competitive bidding process in South
Dakota to add 100 megawatts of utility-owned renewable resources by
mid-2026. We are also preparing to begin a similar process in
Colorado during the second quarter to add 400 megawatts of clean
energy resources to achieve our 80% by 2030 Clean Energy Plan, with
50% ownership of new resources expected. We remain optimistic about
our long-term growth opportunities and upside potential for our
base capital plan of $615 million for 2023 and $3.5 billion through
2027,” concluded Evans.
FIRST-QUARTER 2023 HIGHLIGHTS AND UPDATES
Electric Utilities
- On April 11, Colorado Electric received approval from the
Colorado Public Utilities Commission of a unanimous settlement
agreement for its Clean Energy Plan. The plan supports the
utility’s voluntary election to reduce its greenhouse gas emissions
by at least 80% from 2005 levels by 2030. Under the plan, Black
Hills can own up to 200 megawatts of the 400 megawatts of clean
energy resources necessary to meet the plan’s emission goals. The
company expects to issue a request for proposal during the second
quarter of 2023 for the new resources to be in service between 2026
and 2029.
- On March 28, South Dakota Electric issued a request for
proposals for 100 megawatts of build-transfer renewable energy
resources to be in service by mid-year 2026.
- On March 10, the Electric Utilities closed the planned sale of
the non-regulated Northern Iowa Windpower assets for net proceeds
of $18.4 million and a gain on sale of $7.7 million, or $0.09 per
share.
- On Jan. 26, Wyoming Electric received approval from the Wyoming
Public Service Commission of a settlement agreement for its rate
review application to recover approximately $250 million of
investments since its last rate review in 2014. The settlement
agreement provides for $8.7 million in new annual revenue based on
a capital structure of 52% equity and 48% debt and a return on
equity of 9.75%. New rates were effective March 1, 2023. The
agreement also includes approval of a new rider that will be filed
annually to recover transmission investment and expenses.
Gas Utilities
- On April 7, Rocky Mountain Natural Gas, an intrastate natural
gas pipeline in Colorado, filed a settlement agreement with the
Colorado Public Utilities Commission for its rate review submitted
on Oct. 7, 2022. The agreement provides $8.2 million of new annual
revenue with recovery on rate base of $209 million, a weighted
average cost of capital of 6.93%, a return on equity range of 9.5%
to 9.7% and a capital structure range of 50% to 52% equity. The
agreement is awaiting a decision by an administrative law judge,
with new rates expected by the third quarter of 2023.
Corporate and Other
- On April 24, Black Hills' board of directors approved a
quarterly dividend of $0.625 per share payable on June 1, 2023, to
shareholders of record at the close of business on May 18,
2023.
- On March 7, Black Hills completed a public debt offering of
$350 million, 5.95% senior unsecured notes due March 15, 2028. The
proceeds from the offering were used to repay notes outstanding
under its commercial paper program and for other general corporate
purposes.
- On Feb. 17, S&P Global Ratings affirmed Black Hills' issuer
credit rating of BBB+ with a stable outlook.
- During the first quarter, the company issued a total of 0.4
million shares of new common stock for net proceeds of $27.4
million under its at-the-market equity offering program.
2023 EARNINGS GUIDANCE REAFFIRMED
Black Hills affirms its guidance for 2023 earnings per share
available for common stock to be in the range of $3.65 to $3.85
based on the follow assumptions:
- Normal weather conditions within our utility service
territories including temperatures, precipitation levels and wind
conditions;
- Normal operations and weather conditions for planned
construction, maintenance and/or capital investment projects;
- Constructive and timely outcomes of utility regulatory
dockets;
- No significant unplanned outages at any of our generating
facilities;
- Production tax credits of approximately $20 million associated
with wind generation assets;
- Capital investment of approximately $615 million;
- Equity issuance of $140 million to $160 million through the
at-the-market equity offering program;
- Interest expense of $180 million to $185 million, including
debt refinancing activity;* and
- Total operating expense of $600 million to $610 million,
excluding fuel, purchased power, cost of natural gas sold,
depreciation, depletion and amortization.*
* Guidance assumptions for interest expense and operating
expense are being provided for only 2023 due to ongoing volatility
in inflation and rising interest rate environments.
|
BLACK HILLS CORPORATION |
CONSOLIDATED FINANCIAL RESULTS |
(Minor differences may result due to rounding) |
|
|
Three Months Ended March 31, |
|
|
2023 |
|
|
2022 |
|
|
(in millions) |
|
Operating income: |
|
|
|
|
|
Electric Utilities |
$ |
61.1 |
|
|
$ |
50.7 |
|
Gas Utilities |
|
114.6 |
|
|
|
123.5 |
|
Corporate and Other |
|
(0.8 |
) |
|
|
(0.9 |
) |
Operating income |
|
174.9 |
|
|
|
173.4 |
|
|
|
|
|
|
|
Interest expense, net |
|
(43.5 |
) |
|
|
(38.5 |
) |
Other income (expense),
net |
|
0.7 |
|
|
|
0.7 |
|
Income tax expense |
|
(14.7 |
) |
|
|
(14.5 |
) |
Net income |
|
117.4 |
|
|
|
121.0 |
|
Net income attributable to
non-controlling interest |
|
(3.3 |
) |
|
|
(3.5 |
) |
Net income available for
common stock |
$ |
114.1 |
|
|
$ |
117.5 |
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
2023 |
|
2022 |
Weighted average
common shares outstanding (in thousands): |
|
|
|
Basic |
|
66,036 |
|
|
64,565 |
Diluted |
|
66,132 |
|
|
64,721 |
|
|
|
|
Earnings per
share: |
|
|
|
Earnings Per Share, Basic |
$ |
1.73 |
|
$ |
1.82 |
Earnings Per Share, Diluted |
$ |
1.73 |
|
$ |
1.82 |
|
|
|
|
|
|
CONFERENCE CALL AND WEBCAST
Black Hills will host a live conference call and webcast at 11
a.m. EDT on Thursday, May 4, 2023, to discuss financial and
operating performance.
To access the live webcast and download a copy of the investor
presentation, go to the “Investor Relations” section of the Black
Hills website at www.blackhillscorp.com and click on “News and
Events” and then “Events & Presentation.” The presentation will
be posted on the website before the webcast. Listeners should allow
at least five minutes for registering and accessing the
presentation. For those unable to listen to the live broadcast, a
replay will be available on the company’s website.
To ask a question during the live broadcast, users can access
dial-in information and a personal identification number by
registering for the event at
https://register.vevent.com/register/BI4aee1716045242efb4b8c7e5089257ab.
A listen-only webcast player and presentation slides can be
accessed live at https://edge.media-server.com/mmc/p/r8n7qzi8 with
a replay of the event available for up to one year.
AGA FINANCIAL FORUM ATTENDANCE
Members of Black Hills' senior leadership team are scheduled to
meet with investors during the 2023 AGA Financial Forum on May
21-22. Leadership will be available to discuss Black Hills'
guidance, long-term growth target, regulatory updates and other
factors relating to its business.
Materials for the conference will be available prior to the
meetings on the “Investor Relations” section of Black Hills Corp.
website at www.blackhillscorp.com. Select “News and Events” and
then “Events & Presentations,” and click on “2023 AGA Financial
Forum.”
USE OF NON-GAAP FINANCIAL MEASURES
Gas and Electric Utility Margin
Gas and Electric Utility margin (revenue less cost of sales) is
considered a non-GAAP financial measure due to the exclusion of
operation and maintenance expenses, depreciation and amortization
expenses, and property and production taxes from the measure. The
presentation of Gas and Electric Utility margin is intended to
supplement investors’ understanding of operating performance.
Electric Utility margin is calculated as operating revenue less
cost of fuel and purchased power. Gas Utility margin is calculated
as operating revenue less cost of gas sold. Our Gas and Electric
Utility margin is impacted by the fluctuations in power purchases
and natural gas and other fuel supply costs. However, while these
fluctuating costs impact Gas and Electric Utility margin as a
percentage of revenue, they only impact total Gas and Electric
Utility margin if the costs cannot be passed through to
customers.
Our Gas and Electric Utility margin measure may not be
comparable to other companies’ Gas and Electric Utility margin
measures. Furthermore, this measure is not intended to replace
operating income as determined in accordance with GAAP as an
indicator of operating performance.
SEGMENT PERFORMANCE SUMMARY
Operating results from our business segments for the three
months ended March 31, 2023, compared to the three months
ended March 31, 2022, are discussed below.
Certain lines of business in which we operate are highly
seasonal, and revenue from, and certain expenses for, such
operations may fluctuate significantly between quarterly periods.
Demand for electricity and natural gas is sensitive to seasonal
cooling, heating and industrial load requirements. In particular,
the normal peak usage season for our electric utilities is June
through August while the normal peak usage season for our gas
utilities is November through March. Significant earnings variances
can be expected between the Gas Utilities segment’s peak and
off-peak seasons. Due to this seasonal nature, our results of
operations for the three months ended March 31, 2023 and 2022
are not necessarily indicative of the results of operations to be
expected for any other period or for the entire year.
Segment information does not include inter-company eliminations
and all amounts are presented on a pre-tax basis unless otherwise
indicated. Minor differences in amounts may result due to
rounding.
Electric Utilities
|
Three Months Ended March 31, |
|
Variance |
|
|
2023 |
|
2022 |
|
2023 vs. 2022 |
|
|
(in millions) |
|
Revenue |
$ |
218.7 |
|
$ |
206.5 |
|
$ |
12.2 |
|
Cost of fuel and purchased
power |
|
55.4 |
|
|
52.4 |
|
|
3.0 |
|
Electric Utility margin
(non-GAAP) |
|
163.3 |
|
|
154.1 |
|
|
9.2 |
|
|
|
|
|
|
|
|
Operations and
maintenance |
|
67.2 |
|
|
69.7 |
|
|
(2.5 |
) |
Depreciation and
amortization |
|
35.1 |
|
|
33.7 |
|
|
1.4 |
|
Operating income |
$ |
61.1 |
|
$ |
50.7 |
|
$ |
10.3 |
|
|
|
|
|
|
|
|
|
|
|
First Quarter 2023 Compared to First Quarter
2022
Electric Utility margin increased as a result of:
|
(in millions) |
|
New rates and rider recovery |
$ |
4.6 |
|
Transmission services and
off-system excess energy sales |
|
2.9 |
|
Integrated Generation (a) |
|
2.1 |
|
Other |
|
(0.4 |
) |
|
$ |
9.2 |
|
____________________(a) Primarily driven
by favorable mining contract pricing.Operations and maintenance
expense decreased primarily due to a one-time $7.7 million gain on
the planned sale of Northern Iowa Windpower assets partially offset
by $2.9 million of higher employee-related expenses and $2.9
million of higher Integrated Generation expenses driven by a
planned outage and higher fuel and materials costs.
Depreciation and amortization increased primarily due to a
higher asset base driven by prior year capital expenditures.
|
Three Months Ended March 31, |
|
Operating Statistics |
2023 |
|
|
2022 |
|
Quantities Sold (MWh): |
|
|
|
|
|
Retail Sales |
1,396,368 |
|
|
1,381,073 |
|
Contract/Off-system/Power Marketing Wholesale |
401,647 |
|
|
342,648 |
|
Total Regulated |
1,798,015 |
|
|
1,723,721 |
|
Non-regulated |
54,346 |
|
|
89,094 |
|
Total quantities sold |
1,852,361 |
|
|
1,812,815 |
|
|
|
|
|
|
|
Contracted generated
facilities Availability by fuel type: |
|
|
|
|
|
Coal |
92.7 |
% |
|
90.6 |
% |
Natural gas and diesel oil |
94.3 |
% |
|
95.3 |
% |
Wind |
92.5 |
% |
|
95.6 |
% |
Total Availability |
93.6 |
% |
|
94.1 |
% |
|
|
|
|
|
|
Wind Capacity Factor |
48.1 |
% |
|
42.0 |
% |
|
|
|
|
|
|
|
Three Months Ended March 31, |
Degree
Days |
2023 |
2022 |
|
Actual |
Variance from Normal |
Actual |
Variance from Normal |
Heating Degree Days |
3,099 |
7% |
2,981 |
4% |
|
|
|
|
|
Gas Utilities
|
Three Months Ended March 31, |
|
Variance |
|
|
2023 |
|
2022 |
|
2023 vs. 2022 |
|
|
(in millions) |
|
Revenue |
$ |
706.9 |
|
$ |
621.4 |
|
$ |
85.5 |
|
Cost of natural gas sold |
|
471.0 |
|
|
384.7 |
|
|
86.2 |
|
Gas Utility margin
(non-GAAP) |
|
236.0 |
|
|
236.7 |
|
|
(0.7 |
) |
|
|
|
|
|
|
|
Operations and
maintenance |
|
94.8 |
|
|
86.4 |
|
|
8.4 |
|
Depreciation and
amortization |
|
26.5 |
|
|
26.7 |
|
|
(0.2 |
) |
Operating income |
$ |
114.6 |
|
$ |
123.5 |
|
$ |
(8.9 |
) |
|
|
|
|
|
|
|
|
|
|
First Quarter 2023 Compared to First Quarter
2022
Gas Utility margin decreased as a result of:
|
(in millions) |
|
New rates and rider recovery |
$ |
5.2 |
|
Non-residential retail growth
and demand |
|
3.4 |
|
Residential growth and
usage |
|
0.9 |
|
Mark-to-market on non-utility
natural gas commodity contracts |
|
(7.0 |
) |
Weather |
|
(2.3 |
) |
Other |
|
(0.9 |
) |
|
$ |
(0.7 |
) |
|
|
|
|
Operations and maintenance expense increased primarily due to
$6.3 million of higher employee-related expenses and $1.7 million
of higher materials and outside services expenses.
Depreciation and amortization was comparable to the same period
in the prior year.
|
Three Months Ended March 31, |
Operating Statistics |
2023 |
|
2022 |
Quantities Sold and Transported (Dth): |
|
|
|
Distribution |
44,978,089 |
|
47,610,536 |
Transport and Transmission |
47,179,540 |
|
45,045,203 |
Total Quantities Sold |
92,157,629 |
|
92,655,739 |
|
|
|
|
|
Three Months Ended March 31, |
|
2023 |
2022 |
|
Actual |
Variance from Normal |
Actual |
Variance from Normal |
Heating Degree Days |
3,196 |
4% |
3,165 |
2% |
|
|
|
|
|
Corporate and Other
Corporate and Other represents certain unallocated expenses for
administrative activities that support our reportable operating
segments. Corporate and Other also includes business development
activities that are not part of our operating segments.
|
Three Months Ended March 31, |
|
Variance |
|
2023 |
|
2022 |
|
2023 vs. 2022 |
|
(in millions) |
Operating income (loss) |
$ |
(0.8 |
) |
$ |
(0.9 |
) |
$ |
0.1 |
|
|
|
|
|
|
|
|
|
First Quarter 2023 Compared to First Quarter
2022
Operating (loss) was comparable to the same period in the prior
year.
Consolidated Interest Expense, Other Income and Income
Tax Expense
|
Three Months Ended March 31, |
|
Variance |
|
|
2023 |
|
2022 |
|
2023 vs. 2022 |
|
|
(in thousands) |
|
Interest expense, net |
$ |
(43.5 |
) |
$ |
(38.5 |
) |
$ |
(5.0 |
) |
Other income, net |
$ |
0.7 |
|
$ |
0.7 |
|
$ |
(0.0 |
) |
Income tax (expense) |
$ |
(14.7 |
) |
$ |
(14.5 |
) |
$ |
(0.2 |
) |
|
|
|
|
|
|
|
|
|
|
First Quarter 2023 Compared to First Quarter
2022
Interest Expense, net
The increase in Interest expense, net was due to higher interest
rates.
Other Income (Expense), net
Other income, net was comparable to the same period in the prior
year.
Income Tax Expense
Income tax expense and the effective tax rate were comparable to
the same period in the prior year.
ABOUT BLACK HILLS CORP.
Black Hills Corp. (NYSE: BKH) is a customer-focused,
growth-oriented utility company with a tradition of improving life
with energy and a vision to be the energy partner of choice. Based
in Rapid City, South Dakota, the company serves 1.33 million
natural gas and electric utility customers in eight states:
Arkansas, Colorado, Iowa, Kansas, Montana, Nebraska, South Dakota
and Wyoming. More information is available at
www.blackhillscorp.com,
www.blackhillscorp.com/corporateresponsibility and
www.blackhillsenergy.com.
CAUTION REGARDING FORWARD-LOOKING
STATEMENTS
This presentation includes “forward-looking statements” as
defined by the Securities and Exchange Commission. We make these
forward-looking statements in reliance on the safe harbor
protections provided under the Private Securities Litigation Reform
Act of 1995. All statements, other than statements of historical
facts, included in this presentation that address activities,
events or developments that we expect, believe or anticipate will
or may occur in the future are forward-looking statements. This
includes, without limitations, our 2023 earnings guidance. These
forward-looking statements are based on assumptions which we
believe are reasonable based on current expectations and
projections about future events and industry conditions and trends
affecting our business. However, whether actual results and
developments will conform to our expectations and predictions is
subject to a number of risks and uncertainties that, among other
things, could cause actual results to differ materially from those
contained in the forward-looking statements, including without
limitation, the risk factors described in Item 1A of Part I of our
2022 Annual Report on Form 10-K and other reports that we file with
the SEC from time to time, and the following:
- The accuracy of our assumptions on which our earnings guidance
is based;
- Our ability to obtain adequate cost recovery for our utility
operations through regulatory proceedings and favorable rulings on
periodic applications to recover costs for capital additions, plant
retirements and decommissioning, fuel, transmission, purchased
power, and other operating costs and the timing in which new rates
would go into effect;
- Our ability to complete our capital program in a cost-effective
and timely manner;
- Our ability to execute on our strategy;
- Our ability to successfully execute our financing plans;
- The effects of changing interest rates;
- Our ability to achieve our greenhouse gas emissions intensity
reduction goals;
- Board of Directors’ approval of any future quarterly
dividends;
- The impact of future governmental regulation;
- Our ability to overcome the impacts of supply chain disruptions
on availability and cost of materials;
- The effects of inflation and volatile energy prices; and
- Other factors discussed from time to time in our filings with
the SEC.
New factors that could cause actual results to differ materially
from those described in forward-looking statements emerge from
time-to-time, and it is not possible for us to predict all such
factors, or the extent to which any such factor or combination of
factors may cause actual results to differ from those contained in
any forward-looking statement. We assume no obligation to update
publicly any such forward-looking statements, whether as a result
of new information, future events or otherwise.
CONSOLIDATING INCOME STATEMENTS
(Minor differences may result due to rounding.) |
|
|
|
|
Consolidating Income Statement |
|
Three Months Ended
March 31, 2023 |
Electric Utilities |
|
Gas Utilities |
|
Corporate and Other |
|
Total |
|
|
(in millions) |
|
Revenue |
$ |
218.7 |
|
$ |
706.9 |
|
$ |
(4.5 |
) |
$ |
921.2 |
|
|
|
|
|
|
|
|
|
|
Fuel, purchased power and cost
of natural gas sold |
|
55.4 |
|
|
471.0 |
|
|
(0.1 |
) |
|
526.3 |
|
Operations and
maintenance |
|
67.2 |
|
|
94.8 |
|
|
(3.6 |
) |
|
158.4 |
|
Depreciation, depletion and
amortization |
|
35.1 |
|
|
26.5 |
|
|
0.1 |
|
|
61.6 |
|
Operating income (loss) |
|
61.1 |
|
|
114.6 |
|
|
(0.8 |
) |
|
174.9 |
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
|
|
|
|
|
(43.5 |
) |
Other income (expense),
net |
|
|
|
|
|
|
|
0.7 |
|
Income tax benefit
(expense) |
|
|
|
|
|
|
|
(14.7 |
) |
Net income |
|
|
|
|
|
|
|
117.4 |
|
Net income attributable to
non-controlling interest |
|
|
|
|
|
|
|
(3.3 |
) |
Net income available for
common stock |
|
|
|
|
|
|
$ |
114.1 |
|
|
|
|
|
|
|
|
|
|
|
|
Consolidating Income Statement |
|
Three Months Ended
March 31, 2022 |
Electric Utilities |
|
Gas Utilities |
|
Corporate and Other |
|
Total |
|
|
(in millions) |
|
Revenue |
$ |
206.5 |
|
$ |
621.4 |
|
$ |
(4.4 |
) |
$ |
823.6 |
|
|
|
|
|
|
|
|
|
|
Fuel, purchased power and cost
of natural gas sold |
|
52.4 |
|
|
384.7 |
|
|
(0.2 |
) |
|
436.9 |
|
Operations and
maintenance |
|
69.7 |
|
|
86.4 |
|
|
(3.3 |
) |
|
152.8 |
|
Depreciation, depletion and
amortization |
|
33.7 |
|
|
26.7 |
|
|
0.1 |
|
|
60.5 |
|
Operating income (loss) |
|
50.7 |
|
|
123.5 |
|
|
(0.9 |
) |
|
173.4 |
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
|
|
|
|
|
(38.5 |
) |
Other income (expense),
net |
|
|
|
|
|
|
|
0.7 |
|
Income tax benefit
(expense) |
|
|
|
|
|
|
|
(14.5 |
) |
Net income |
|
|
|
|
|
|
|
121.0 |
|
Net income attributable to
non-controlling interest |
|
|
|
|
|
|
|
(3.5 |
) |
Net income available for
common stock |
|
|
|
|
|
|
$ |
117.5 |
|
|
|
|
|
|
|
|
|
|
|
Investor Relations: |
|
Jerome E. Nichols |
|
Phone |
605-721-1171 |
Email |
investorrelations@blackhillscorp.com |
|
|
Media
Contact: |
|
24-hour Media Assistance |
888-242-3969 |
Black Hills (NYSE:BKH)
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