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01/11 03:35
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents mixed signals: positive elements include a strong dividend track record, new revenue from rate adjustments, and optimistic guidance. However, there are concerns about increased O&M expenses and equity issuance, which may dilute shares. The Q&A reveals uncertainties around the capital structure and potential litigation impacts. The market cap suggests moderate volatility, leading to a neutral prediction. Despite positive long-term growth targets, immediate factors like equity needs and cost increases balance the outlook.
Earnings Per Share (EPS) $0.29 per share of new margins, with $0.26 from new rates and rider recovery, and $0.03 from customer growth and usage. This is a positive margin that offsets capital plan execution costs of $0.21 per share.
Capital Plan Execution Costs $0.21 per share, comprised of $0.09 from new share issuance, $0.08 from higher interest expense, and $0.04 of additional depreciation expense.
Weather Impact on EPS Favorable by $0.11 of EPS compared to Q1 2024 due to colder-than-normal winter, with $0.04 per share favorability when compared to normal.
O&M Expense Increase Higher by $0.24 primarily driven by increases in employee costs, outside services, and higher insurance costs.
Liquidity Nearly $700 million of availability under revolving credit facility and short-term borrowings of approximately $60 million under commercial paper program.
New Equity Issuance Approximately $46 million of new equity issued through ATM program during the quarter.
Dividend Payout Ratio Targeting a 55% to 65% payout ratio, with a history of 55 consecutive years of dividend payments.
Capital Investment for 2025 $1 billion planned capital investment for the year.
New Annual Revenue from Rate Adjustments $17 million in new annual revenue from new rates in Colorado, adjusted to $17.5 million.
Gas Rate Review in Kansas Filed for $17.2 million in new annual revenue based on a 10.5% return on equity.
Gas Rate Review in Nebraska Requesting $34.9 million of new annual revenue based on a similar ROE and capital structure.
5-Year Capital Plan Investment Expected to invest $4.7 billion over the 5-year plan period through 2029.
Data Center Demand: We expect EPS contribution from data centers to double to more than 10% of total EPS in 2028, with this contribution continuing into 2029.
Renewable Resources: In 2024, we received approval for 350 megawatts of renewable resources to reduce emissions for Colorado customers 80% by 2030.
Natural Gas Generation Resource: The Lange II project, a 99-megawatt utility-owned natural gas fire generation resource, continues to progress and is expected to be in service in the second half of 2026.
Customer Growth: We are serving strong customer growth across our regions, with two new all-time customer peak loads at Wyoming Electric.
Data Center Expansion: Companies are recognizing the ideal attributes of Cheyenne, Wyoming as a choice location for their data center operations.
Regulatory Approvals: We have made significant progress with all regulatory approvals and land rights in place for our Ready Wyoming electric transmission expansion.
Operational Efficiency: We are managing our full year O&M expense to an average annual increase of approximately 3.5% off our 2023 base year.
Wildfire Risk Mitigation: Our wildfire mitigation plan has been successful in reducing operational risk with a multi-layered approach.
Capital Investment: We expect to invest $4.7 billion over our 5-year plan period through 2029.
Regulatory Initiatives: We are executing on our regulatory initiatives and our $1 billion capital plan.
Regulatory Risks: The company is actively engaged in multiple rate reviews, with two additional reviews requested to be effective later this year, reflecting the recovery of over $1.3 billion in new system investments. However, the outcomes of these reviews could impact financial performance.
Economic Factors: The company is monitoring trade tariffs and potential amendments to federal legislation, although they do not expect material impacts on their 5-year outlook. The majority of materials for 2025 capital projects are already sourced domestically, limiting exposure to tariffs.
Wildfire Risk: The company has enacted a wildfire mitigation plan that provides liability protections when adhering to a commission-approved plan. However, ongoing engagement with stakeholders is necessary to advance wildfire management and mitigation efforts.
Operational Costs: Increased operational and maintenance (O&M) costs were noted, driven by higher employee costs, outside services, and insurance costs, which could affect profitability.
Customer Demand Risks: While there is strong customer demand, there are concerns regarding potential delays in data center expansion plans from major clients like Microsoft, which could impact future growth.
Capital Investment Risks: The company plans to invest $4.7 billion over the next five years, with a focus on safety and system integrity. However, any shifts in timing or costs related to these investments could pose risks.
Key Objectives for 2025: Delivering on 5% year-over-year earnings growth, executing on regulatory initiatives and a $1 billion capital plan, and providing top quartile reliability.
Capital Investment: Expect to invest $4.7 billion over the 5-year plan period through 2029, prioritizing safety, system integrity, modernization, and infrastructure expansion.
Data Center Demand: Forecast approximately 500 megawatts of data center demand by the end of 2029, with EPS contribution from data centers expected to double to over 10% of total EPS in 2028.
Ready Wyoming Project: The $350 million transmission expansion project is on schedule for completion by year-end 2025.
Wildfire Legislation: New legislation in Wyoming provides liability protections for utilities adhering to approved wildfire mitigation plans.
2025 Earnings Guidance: Reaffirming guidance range of $4 to $4.20 per share, reflecting a 5% growth rate at the midpoint over 2024 EPS.
Long-term EPS Growth Target: Targeting 4% to 6% EPS growth, with confidence in achieving upper half starting in 2026.
Capital Projects: Materials for most 2025 capital projects are sourced, with minimal impact from trade tariffs.
Dividend Policy: Targeting a 55% to 65% payout ratio, maintaining a strong dividend track record.
Dividend Track Record: Black Hills Corporation has an industry-leading dividend track record of 55 consecutive years.
Payout Ratio Target: The company targets a payout ratio of 55% to 65%.
New Equity Issuance: During the quarter, approximately $46 million of new equity was issued through the ATM program.
Future Equity Needs: Annual equity needs in 2026 and beyond are expected to be lower than 2025.
The earnings call highlights strong financial performance with a 28.6% YoY EPS increase, driven by regulatory efforts. Despite weather and cost headwinds, the company maintained positive guidance, supported by strong demand and strategic projects. The Q&A revealed no major concerns, with management confident in regulatory processes and economic conditions. The reaffirmed growth guidance and capital plan, alongside a dividend strategy, further bolster sentiment. Given the market cap, the stock is likely to see a positive movement, albeit not exceedingly strong, due to the absence of groundbreaking announcements.
The company reported a strong EPS increase and reaffirmed its earnings guidance, suggesting financial stability. The dividend track record and new partnerships with major companies like Meta and Microsoft are positive indicators. The Q&A revealed confidence in growth, particularly in data centers, despite some uncertainties. The stable insurance costs and recovery from outages further support a positive outlook. Given the market cap, the stock is likely to experience a moderate positive movement of 2% to 8%.
The earnings call presents mixed signals: positive elements include a strong dividend track record, new revenue from rate adjustments, and optimistic guidance. However, there are concerns about increased O&M expenses and equity issuance, which may dilute shares. The Q&A reveals uncertainties around the capital structure and potential litigation impacts. The market cap suggests moderate volatility, leading to a neutral prediction. Despite positive long-term growth targets, immediate factors like equity needs and cost increases balance the outlook.
The earnings call presents a mixed picture: positive EPS growth and dividend increase are offset by operational risks like unplanned outages and rising insurance costs. The Q&A reveals some concerns over CapEx timing and unclear management responses, particularly regarding future data center investments. However, the strong liquidity position and strategic initiatives, like the Meta data center, provide optimism. Given the company's market cap, these factors suggest a neutral stock price movement, with potential volatility due to economic and regulatory uncertainties.
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