Black Hills Corp. (NYSE: BKH) today announced financial results for
the second quarter of 2023. Net income available for common stock
and earnings per share for the three and six months ended
June 30, 2023, compared to the three and six months ended
June 30, 2022, were:
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
2023 |
|
2022 |
|
|
2023 |
|
2022 |
|
(in millions, except per share amounts) |
Net income available for common stock |
$ |
23.1 |
|
$ |
33.4 |
|
|
$ |
137.1 |
|
$ |
150.9 |
Earnings per share,
Diluted |
$ |
0.35 |
|
$ |
0.52 |
|
|
$ |
2.06 |
|
$ |
2.33 |
|
Earnings of $0.35 per share for the second quarter were driven
by new rates, rider recovery and a state income tax true-up of
$0.12 per share. Financial results reflected the impact of
inflation on higher year-over-year operating expenses and higher
interest expense.
“We strengthened our balance sheet, enhanced our liquidity and
advanced our strategic initiatives in the first half of 2023,” said
Linn Evans, president and CEO of Black Hills Corp. “I’m pleased
with our excellent operational performance in delivering safe,
reliable service to our customers.
“Our team continued to execute our regulatory plan with the
approval of a settlement for new rates in Colorado for our
intrastate natural gas pipeline, new rate review filings for our
Colorado and Wyoming gas utilities and preparations for a rate
review filing in Arkansas by year end. To achieve the goals of our
Colorado Clean Energy Plan, we recently issued a request for
proposals to add 400 megawatts of renewable and battery storage
resources. For our South Dakota electric resource plan, we are
currently evaluating bids to add 100 megawatts of rate based
renewable resources.
“We are on pace to achieve our earnings guidance for the year.
We expect strong cash flows combined with disciplined capital
management will result in lower than forecasted interest expense
for 2023. For the remainder of the year, we have sharpened our
focus on managing expenses given the challenging macroeconomic
environment. As we look to the future, we remain confident in our
strategy and long-term growth trajectory as clarity around key
opportunities continues to emerge,” concluded Evans.
SECOND-QUARTER 2023 HIGHLIGHTS AND UPDATES
Electric Utilities
- On July 31, Colorado Electric issued a request for proposals
for 400 megawatts of new resources to be in service between 2026
and 2029 to achieve objectives in its Clean Energy Plan. The plan,
which was approved by the Colorado Public Utilities Commission in
March 2023, supports the utility’s voluntary election to reduce its
greenhouse gas emissions by 80% from 2005 levels by 2030. Under the
plan, Black Hills may own up to 200 megawatts of the 400 megawatts
of clean energy resources necessary to meet the plan’s emission
goals.
- On July 24, Wyoming Electric set a new all-time and summer peak
load of 312 megawatts, surpassing the previous peak of 294
megawatts set in July 2022.
- During the second quarter, South Dakota Electric advanced the
competitive bidding process in its request for proposals for 100
megawatts of build-transfer renewable energy resources to be in
service by mid-year 2026.
Gas Utilities
- On July 12, Rocky Mountain Natural Gas, an intrastate natural
gas pipeline in Colorado, received approval from the Colorado
Public Utilities Commission of a settlement agreement for its rate
review submitted on Oct. 7, 2022. The agreement provides $8.2
million of new annual revenue based on a weighted average cost of
capital of 6.93% with a capital structure range of 50% to 52%
equity and a return on equity range of 9.5% to 9.7%. The rate
review requested $12.3 million of new annual revenue based upon a
proposed future test year or $10.3 million of new annual revenue
based on an historical test year. New rates based on the historical
test year approach were effective July 15, 2023.
- On May 18, Wyoming Gas filed a rate review application with the
Wyoming Public Service Commission seeking recovery of approximately
$140 million of investments since its last rate review in 2019. The
rate review requests $19.3 million in new annual revenue with a
capital structure of 52% equity and 48% debt and a return on equity
of 10.49%. The company seeks to renew its integrity rider and
implement new rates in the first quarter of 2024.
- On May 8, Colorado Gas filed a rate review application with the
Colorado Public Utilities Commission seeking recovery of
approximately $130 million of investments since its last rate
review in 2021. The rate review requests $26.7 million in new
annual revenue with a capital structure of 51% equity and 49% debt
and a return on equity of 10.49%. The company is seeking new rates
in the first quarter of 2024.
Corporate and Other
- On July 24, Black Hills’ board of directors approved a
quarterly dividend of $0.625 per share payable on Sept. 1, 2023, to
shareholders of record at the close of business on Aug. 18,
2023.
- On June 16, Black Hills filed a shelf registration statement
with the Securities and Exchange Commission. In conjunction with
this filing, the company also renewed its at-the-market equity
offering program under which it may sell from time to time shares
of its common stock with an aggregate value of up to $400
million. The company’s previous equity offering program was
subsequently terminated.
- During the second quarter, Black Hills issued 0.4 million
shares of new common stock for net proceeds of $27.4 million under
its at-the-market equity offering program. Year to date, the
company has issued a total of 0.9 million shares of new common
stock for net proceeds of $57.7 million.
2023 EARNINGS GUIDANCE REAFFIRMED
Black Hills reaffirms 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.
2024 EARNINGS GUIDANCE TO BE ANNOUNCED DURING YEAR-END
2023 EARNINGS
Black Hills will provide its annual financial update during its
fourth quarter and full-year earnings call. This update in early
2024 will include earnings and dividend guidance for 2024 and the
capital investment forecast for 2024 through 2028.
BLACK HILLS
CORPORATIONCONSOLIDATED FINANCIAL
RESULTS
(Minor differences may result due to
rounding)
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
(in millions) |
|
Operating income: |
|
|
|
|
|
|
|
|
Electric Utilities |
$ |
46.6 |
|
$ |
45.2 |
|
$ |
107.7 |
|
$ |
96.0 |
|
Gas Utilities |
|
17.7 |
|
|
28.2 |
|
|
132.4 |
|
|
151.7 |
|
Corporate and Other |
|
(0.8 |
) |
|
(1.0 |
) |
|
(1.6 |
) |
|
(2.0 |
) |
Operating income |
|
63.5 |
|
|
72.4 |
|
|
238.4 |
|
|
245.7 |
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
(41.5 |
) |
|
(38.8 |
) |
|
(85.0 |
) |
|
(77.3 |
) |
Other income (expense),
net |
|
(1.5 |
) |
|
1.6 |
|
|
(0.9 |
) |
|
2.3 |
|
Income tax benefit
(expense) |
|
6.1 |
|
|
0.7 |
|
|
(8.6 |
) |
|
(13.8 |
) |
Net income |
|
26.5 |
|
|
35.8 |
|
|
143.9 |
|
|
156.9 |
|
Net income attributable to
non-controlling interest |
|
(3.5 |
) |
|
(2.4 |
) |
|
(6.8 |
) |
|
(5.9 |
) |
Net income available for
common stock |
$ |
23.1 |
|
$ |
33.4 |
|
$ |
137.1 |
|
$ |
150.9 |
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Weighted
average common shares outstanding (in thousands): |
|
|
|
|
Basic |
|
66,591 |
|
|
64,721 |
|
|
66,315 |
|
|
64,643 |
Diluted |
|
66,684 |
|
|
64,883 |
|
|
66,419 |
|
|
64,822 |
|
|
|
|
|
|
|
|
Earnings per
share: |
|
|
|
|
|
|
|
Earnings Per Share, Basic |
$ |
0.35 |
|
$ |
0.52 |
|
$ |
2.07 |
|
$ |
2.33 |
Earnings Per Share,
Diluted |
$ |
0.35 |
|
$ |
0.52 |
|
$ |
2.06 |
|
$ |
2.33 |
|
|
|
|
|
|
|
|
|
|
|
|
CONFERENCE CALL AND WEBCAST
Black Hills will host a live conference call and webcast at 11
a.m. EDT on Thursday, August 3, 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/BI8142d9b423ae478a8dac026d4571f1e0.
A listen-only webcast player and presentation slides can be
accessed live at https://edge.media-server.com/mmc/p/oi3c9i79 with
a replay of the event available for up to one year.
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 and
six months ended June 30, 2023, compared to the three and six
months ended June 30, 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 and six months ended June 30, 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 June 30, |
|
Variance |
|
Six Months Ended June 30, |
|
Variance |
|
|
2023 |
|
2022 |
|
2023 vs. 2022 |
|
2023 |
|
2022 |
|
2023 vs. 2022 |
|
|
(in millions) |
|
Revenue |
$ |
193.1 |
|
$ |
204.4 |
|
$ |
(11.3 |
) |
$ |
411.8 |
|
$ |
410.9 |
|
$ |
0.9 |
|
Cost of fuel and purchased
power |
|
36.4 |
|
|
56.6 |
|
|
(20.2 |
) |
|
91.8 |
|
|
109.0 |
|
|
(17.2 |
) |
Electric Utility margin
(non-GAAP) |
|
156.7 |
|
|
147.7 |
|
|
8.9 |
|
|
320.0 |
|
|
301.9 |
|
|
18.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operations and
maintenance |
|
74.2 |
|
|
69.0 |
|
|
5.2 |
|
|
141.4 |
|
|
138.7 |
|
|
2.7 |
|
Depreciation and
amortization |
|
35.8 |
|
|
33.5 |
|
|
2.3 |
|
|
70.9 |
|
|
67.2 |
|
|
3.7 |
|
Operating income |
$ |
46.6 |
|
$ |
45.2 |
|
$ |
1.4 |
|
$ |
107.7 |
|
$ |
96.0 |
|
$ |
11.7 |
|
|
Three Months Ended June 30, 2023, Compared with Three
Months Ended June 30, 2022
Electric Utility margin increased as a result of:
|
(in millions) |
|
Transmission services and off-system excess energy sales |
$ |
4.2 |
|
New rates and rider
recovery |
|
4.2 |
|
Integrated Generation(a) |
|
2.9 |
|
Weather |
|
(2.4 |
) |
|
$ |
8.9 |
|
|
___________________(a) Primarily driven by favorable mining
volumes due to a prior year planned outage and increased Black
Hills Colorado IPP fired-engine hours.
Operations and maintenance expense increased primarily due to
$3.8 million of higher generation expenses driven by planned
outages and higher materials costs and $1.9 million of higher
employee-related expenses.
Depreciation and amortization increased primarily due to a
higher asset base driven by current year and prior year capital
expenditures.
Six Months Ended June 30, 2023, Compared with Six Months
Ended June 30, 2022
Electric Utility margin increased as a result of:
|
(in millions) |
|
New rates and rider recovery |
$ |
9.2 |
|
Transmission services and
off-system excess energy sales |
|
6.5 |
|
Integrated Generation (a) |
|
5.2 |
|
Weather |
|
(2.2 |
) |
Other |
|
(0.6 |
) |
|
$ |
18.1 |
|
|
____________________(a) Primarily driven by favorable mining
volumes due to a prior year planned outage, mining contract pricing
and increased Black Hills Colorado IPP fired-engine hours.
Operations and maintenance expense increased primarily due to
$6.2 million of higher mining and generation expenses driven by
planned outages and higher fuel and materials costs and $5.4
million of higher employee-related expenses partially offset by a
one-time $7.7 million gain on the planned sale of Northern Iowa
Windpower assets. Other favorable variances, none of which were
individually significant, comprised the remainder of the difference
when compared to the same period in the prior year.
Depreciation and amortization increased primarily due to a
higher asset base driven by current year and prior year capital
expenditures.
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
Operating Statistics |
2023 |
|
2022 |
|
2023 |
|
2022 |
|
Quantities Sold (MWh): |
|
|
|
|
|
|
|
|
Retail Sales |
1,340,835 |
|
1,338,773 |
|
2,737,203 |
|
2,719,846 |
|
Contract/Off-system/Power
Marketing Wholesale |
241,602 |
|
295,070 |
|
643,249 |
|
637,718 |
|
Total Regulated |
1,582,437 |
|
1,633,843 |
|
3,380,452 |
|
3,357,564 |
|
Non-regulated |
22,848 |
|
72,770 |
|
77,194 |
|
161,864 |
|
Total quantities sold |
1,605,285 |
|
1,706,613 |
|
3,457,646 |
|
3,519,428 |
|
|
|
|
|
|
|
|
|
|
Contracted generated
facilities availability by fuel type: |
|
|
|
|
|
|
|
|
Coal |
92.0 |
% |
82.1 |
% |
92.4 |
% |
86.3 |
% |
Natural gas and diesel
oil |
93.5 |
% |
95.1 |
% |
93.9 |
% |
95.2 |
% |
Wind |
93.0 |
% |
93.8 |
% |
93.4 |
% |
94.7 |
% |
Total availability |
93.0 |
% |
91.4 |
% |
93.4 |
% |
92.7 |
% |
|
|
|
|
|
|
|
|
|
Wind capacity factor |
34.4 |
% |
39.8 |
% |
41.2 |
% |
40.9 |
% |
|
Three Months Ended
June 30, |
Six Months Ended
June 30, |
Degree Days |
2023 |
2022 |
2023 |
2022 |
|
Actual |
Variance from Normal |
Actual |
|
Variance from Normal |
Actual |
Variance from Normal |
Actual |
|
Variance from Normal |
Heating Degree
Days |
840 |
(6 |
)% |
904 |
|
3 |
% |
3,940 |
4 |
% |
3,885 |
|
4 |
% |
Cooling Degree Days |
75 |
(60 |
)% |
213 |
|
28 |
% |
75 |
(60 |
)% |
213 |
|
28 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gas Utilities
|
Three Months Ended June 30, |
|
Variance |
|
Six Months Ended June 30, |
|
Variance |
|
|
2023 |
|
2022 |
|
2023 vs. 2022 |
|
2023 |
|
2022 |
|
2023 vs. 2022 |
|
|
(in millions) |
|
Revenue |
$ |
222.7 |
|
$ |
274.2 |
|
$ |
(51.4 |
) |
$ |
929.6 |
|
$ |
895.6 |
|
$ |
34.1 |
|
Cost of natural gas sold |
|
85.0 |
|
|
131.7 |
|
|
(46.8 |
) |
|
555.9 |
|
|
516.5 |
|
|
39.5 |
|
Gas Utility margin
(non-GAAP) |
|
137.8 |
|
|
142.4 |
|
|
(4.7 |
) |
|
373.7 |
|
|
379.1 |
|
|
(5.4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operations and
maintenance |
|
91.2 |
|
|
83.7 |
|
|
7.5 |
|
|
186.1 |
|
|
170.1 |
|
|
15.9 |
|
Depreciation and
amortization |
|
28.8 |
|
|
30.5 |
|
|
(1.7 |
) |
|
55.3 |
|
|
57.2 |
|
|
(1.9 |
) |
Operating income |
$ |
17.7 |
|
$ |
28.2 |
|
$ |
(10.5 |
) |
$ |
132.4 |
|
$ |
151.7 |
|
$ |
(19.4 |
) |
|
Three Months Ended June 30, 2023, Compared with Three
Months Ended June 30, 2022
Gas Utility margin decreased as a result of:
|
(in millions) |
|
Prior year true-up of Winter Storm Uri carrying costs (a) |
$ |
(10.3 |
) |
Weather |
|
(0.7 |
) |
Mark-to-market on non-utility
natural gas commodity contracts |
|
3.0 |
|
New rates and rider
recovery |
|
2.6 |
|
Residential growth and
usage |
|
0.8 |
|
Other |
|
(0.1 |
) |
|
$ |
(4.7 |
) |
|
____________________(a) In certain jurisdictions, we have
commission approval to recover carrying costs on Winter Storm Uri
regulatory assets which offset increased interest expense. During
the second quarter of 2022, we accrued a one-time, $10.3 million
true-up of these carrying costs to reflect commission authorized
rates.
Operations and maintenance expense increased primarily due to
$6.0 million of higher employee-related expenses and $0.5 million
of higher materials and outside services expenses.
Depreciation and amortization was comparable to the same period
in the prior year.
Six Months Ended June 30, 2023, Compared with Six Months
Ended June 30, 2022
Gas Utility margin decreased as a result of:
|
(in millions) |
|
Prior year true-up of Winter Storm Uri carrying costs (a) |
$ |
(10.3 |
) |
Mark-to-market on non-utility
natural gas commodity contracts |
|
(4.0 |
) |
Weather |
|
(2.9 |
) |
New rates and rider
recovery |
|
7.8 |
|
Non-residential retail growth
and demand |
|
2.9 |
|
Residential growth and
usage |
|
1.6 |
|
Other |
|
(0.5 |
) |
|
$ |
(5.4 |
) |
|
____________________(a) In certain jurisdictions, we have
commission approval to recover carrying costs on Winter Storm Uri
regulatory assets which offset increased interest expense. During
the second quarter of 2022, we accrued a one-time, $10.3 million
true-up of these carrying costs to reflect commission authorized
rates.
Operations and maintenance expense increased primarily due to
$11.9 million of higher employee-related expenses and $3.1 million
of higher materials and outside services expenses.
Depreciation and amortization was comparable to the same period
in the prior year.
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
Operating Statistics |
2023 |
|
2022 |
|
2023 |
|
2022 |
Quantities Sold and
Transported (Dth): |
|
|
|
|
|
|
|
Distribution |
13,063,595 |
|
15,173,532 |
|
58,041,684 |
|
62,784,068 |
Transport and
Transmission |
34,226,643 |
|
37,623,610 |
|
81,406,183 |
|
82,668,813 |
Total Quantities Sold |
47,290,238 |
|
52,797,142 |
|
139,447,867 |
|
145,452,881 |
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|
2023 |
2022 |
2023 |
2022 |
|
Actual |
Variance from Normal |
Actual |
Variance from Normal |
Actual |
Variance from Normal |
Actual |
Variance from Normal |
Heating Degree Days |
674 |
(10 |
)% |
768 |
2 |
% |
3,870 |
1 |
% |
3,933 |
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 June 30, |
|
Variance |
|
Six Months Ended June 30, |
|
Variance |
|
2023 |
|
2022 |
|
2023 vs. 2022 |
|
2023 |
|
2022 |
|
2023 vs. 2022 |
|
(in millions) |
Operating (loss) |
$ |
(0.8 |
) |
$ |
(1.0 |
) |
$ |
0.2 |
|
$ |
(1.6 |
) |
$ |
(2.0 |
) |
$ |
0.3 |
|
Three Months Ended June 30, 2023, Compared with Three
Months Ended June 30, 2022
Operating (loss) was comparable to the same period in the prior
year.
Six Months Ended June 30, 2023, Compared with Six Months
Ended June 30, 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 June 30, |
|
Variance |
|
Six Months Ended June 30, |
|
Variance |
|
|
2023 |
|
2022 |
|
2023 vs. 2022 |
|
2023 |
|
2022 |
|
2023 vs. 2022 |
|
|
(in thousands) |
|
Interest expense, net |
$ |
(41.5 |
) |
$ |
(38.8 |
) |
$ |
(2.8 |
) |
$ |
(85.0 |
) |
$ |
(77.3 |
) |
$ |
(7.7 |
) |
Other income (expense),
net |
$ |
(1.5 |
) |
$ |
1.6 |
|
$ |
(3.1 |
) |
$ |
(0.9 |
) |
$ |
2.3 |
|
$ |
(3.1 |
) |
Income tax benefit
(expense) |
$ |
6.1 |
|
$ |
0.7 |
|
$ |
5.4 |
|
$ |
(8.6 |
) |
$ |
(13.8 |
) |
$ |
5.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2023, Compared with Three
Months Ended June 30, 2022
Interest Expense, net
The increase in Interest expense, net was due to higher interest
rates.
Other Income (Expense), net
Other expense, net increased due to higher costs for our
non-qualified benefit plans which were driven by market performance
and higher non-service benefit plan costs driven by higher discount
rates.
Income Tax Benefit
Income tax benefit increased primarily due to lower pre-tax
income and a lower effective tax rate. For the three months ended
June 30, 2023, the effective tax rate was (29.8)% compared to
(1.9)% for the same period in 2022. The lower effective tax rate
was primarily due to a $8.2 million tax benefit from a Nebraska
income tax rate decrease compared to a $3.8 million benefit from a
similar Nebraska tax rate decrease in 2022 and $2.3 million of
lower wind PTCs driven by the March 2023 sale of Northern Iowa
Windpower assets.
Six Months Ended June 30, 2023, Compared with Six Months
Ended June 30, 2022
Interest Expense, net
The increase in Interest expense, net was due to higher interest
rates.
Other Income (Expense), net
Other expense, net increased primarily due to higher costs for
our non-qualified benefit plans which were driven by market
performance and higher non-service benefit plan costs driven by
higher discount rates.
Income Tax Expense
Income tax expense decreased primarily due to lower pre-tax
income and a lower effective tax rate. For the six months ended
June 30, 2023, the effective tax rate was 5.6% compared to
8.1% for the same period in 2022. The lower effective tax rate was
primarily due to a $8.2 million tax benefit from a Nebraska income
tax rate decrease compared to a $3.8 million benefit from a similar
Nebraska tax rate decrease in 2022 and $3.0 million of lower wind
PTCs driven by the March 2023 sale of Northern Iowa Windpower
assets.
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 June 30, 2023 |
Electric Utilities |
|
Gas Utilities |
|
Corporate and Other |
|
Total |
|
|
(in millions) |
|
Revenue |
$ |
193.1 |
|
$ |
222.7 |
|
$ |
(4.5 |
) |
$ |
411.3 |
|
|
|
|
|
|
|
|
|
|
Fuel, purchased power and cost of natural gas sold |
|
36.4 |
|
|
85.0 |
|
|
(0.1 |
) |
|
121.2 |
|
Operations and maintenance |
|
74.2 |
|
|
91.2 |
|
|
(3.6 |
) |
|
161.8 |
|
Depreciation, depletion and amortization |
|
35.8 |
|
|
28.8 |
|
|
0.1 |
|
|
64.7 |
|
Operating income (loss) |
|
46.6 |
|
|
17.7 |
|
|
(0.8 |
) |
|
63.5 |
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
|
|
|
|
|
(41.5 |
) |
Other income (expense), net |
|
|
|
|
|
|
|
(1.5 |
) |
Income tax benefit (expense) |
|
|
|
|
|
|
|
6.1 |
|
Net income |
|
|
|
|
|
|
|
26.5 |
|
Net income attributable to non-controlling interest |
|
|
|
|
|
|
|
(3.5 |
) |
Net income available for common stock |
|
|
|
|
|
|
$ |
23.1 |
|
|
Consolidating Income Statement |
|
Six Months Ended June 30, 2023 |
Electric Utilities |
|
Gas Utilities |
|
Corporate and Other |
|
Total |
|
|
(in millions) |
|
Revenue |
$ |
411.8 |
|
$ |
929.6 |
|
$ |
(9.0 |
) |
$ |
1,332.4 |
|
|
|
|
|
|
|
|
|
|
Fuel, purchased power and cost of natural gas sold |
|
91.8 |
|
|
555.9 |
|
|
(0.2 |
) |
|
647.5 |
|
Operations and maintenance |
|
141.4 |
|
|
186.1 |
|
|
(7.2 |
) |
|
320.2 |
|
Depreciation, depletion and amortization |
|
70.9 |
|
|
55.3 |
|
|
0.1 |
|
|
126.4 |
|
Operating income (loss) |
|
107.7 |
|
|
132.4 |
|
|
(1.6 |
) |
|
238.4 |
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
|
|
|
|
|
(85.0 |
) |
Other income (expense), net |
|
|
|
|
|
|
|
(0.9 |
) |
Income tax benefit (expense) |
|
|
|
|
|
|
|
(8.6 |
) |
Net income |
|
|
|
|
|
|
|
143.9 |
|
Net income attributable to non-controlling interest |
|
|
|
|
|
|
|
(6.8 |
) |
Net income available for common stock |
|
|
|
|
|
|
$ |
137.1 |
|
|
Consolidating Income Statement |
|
Three Months Ended June 30, 2022 |
Electric Utilities |
|
Gas Utilities |
|
Corporate and Other |
|
Total |
|
|
(in millions) |
|
Revenue |
$ |
204.4 |
|
$ |
274.2 |
|
$ |
(4.4 |
) |
$ |
474.2 |
|
|
|
|
|
|
|
|
|
|
Fuel, purchased power and cost of natural gas sold |
|
56.6 |
|
|
131.7 |
|
|
(0.2 |
) |
|
188.2 |
|
Operations and maintenance |
|
69.0 |
|
|
83.7 |
|
|
(3.2 |
) |
|
149.5 |
|
Depreciation, depletion and amortization |
|
33.5 |
|
|
30.5 |
|
|
0.1 |
|
|
64.1 |
|
Operating income (loss) |
|
45.2 |
|
|
28.2 |
|
|
(1.0 |
) |
|
72.4 |
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
|
|
|
|
|
(38.8 |
) |
Other income (expense), net |
|
|
|
|
|
|
|
1.6 |
|
Income tax benefit (expense) |
|
|
|
|
|
|
|
0.7 |
|
Net income |
|
|
|
|
|
|
|
35.8 |
|
Net income attributable to non-controlling interest |
|
|
|
|
|
|
|
(2.4 |
) |
Net income available for common stock |
|
|
|
|
|
|
$ |
33.4 |
|
|
Consolidating Income Statement |
|
Six Months Ended June 30, 2022 |
Electric Utilities |
|
Gas Utilities |
|
Corporate and Other |
|
Total |
|
|
(in millions) |
|
Revenue |
$ |
410.9 |
|
$ |
895.6 |
|
$ |
(8.7 |
) |
$ |
1,297.8 |
|
|
|
|
|
|
|
|
|
|
Fuel, purchased power and cost of natural gas sold |
|
109.0 |
|
|
516.5 |
|
|
(0.4 |
) |
|
625.1 |
|
Operations and maintenance |
|
138.7 |
|
|
170.1 |
|
|
(6.5 |
) |
|
302.3 |
|
Depreciation, depletion and amortization |
|
67.2 |
|
|
57.2 |
|
|
0.1 |
|
|
124.6 |
|
Operating income (loss) |
|
96.0 |
|
|
151.7 |
|
|
(2.0 |
) |
|
245.7 |
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
|
|
|
|
|
(77.3 |
) |
Other income (expense), net |
|
|
|
|
|
|
|
2.3 |
|
Income tax benefit (expense) |
|
|
|
|
|
|
|
(13.8 |
) |
Net income |
|
|
|
|
|
|
|
156.9 |
|
Net income attributable to non-controlling interest |
|
|
|
|
|
|
|
(5.9 |
) |
Net income available for common stock |
|
|
|
|
|
|
$ |
150.9 |
|
Investor Relations: |
|
Jerome E. Nichols |
|
Phone |
605-721-1171 |
Email |
investorrelations@blackhillscorp.com |
|
|
Media
Contact: |
|
24-hour Media Assistance |
888-242-3969 |
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