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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 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.
GAAP EPS for Q3 2025 $0.34 per share, which included $0.10 of merger-related transaction costs. After adjusting for these costs, adjusted EPS was $0.45 for Q3 2025 compared to $0.35 per share for Q3 2024. The increase was driven by regulatory efforts providing $0.21 per share of new rates and rider recovery margin, which offset unfavorable weather, O&M costs, and a moderate increase in financing and depreciation expenses.
Weather impact on EPS for Q3 2025 Weather was a $0.07 headwind compared to the same quarter last year, primarily driven by lower agricultural irrigation demand in Nebraska.
O&M costs for Q3 2025 Higher by $0.08 per share, which included $0.10 of merger-related transaction costs. Excluding merger costs, O&M expenses were reduced by $0.02 compared to the same period last year.
Financing costs for Q3 2025 Increased $0.03 per share, which included $0.06 of higher interest expense, $0.01 of share dilution, and a benefit of $0.04 per share from AFUDC, driven by ongoing large construction projects.
Depreciation for Q3 2025 Higher by $0.02 per share, reflecting new assets placed in service.
Year-to-date GAAP EPS for 2025 $2.58, which included $0.11 of merger-related costs. Adjusted EPS was $2.68, an increase of 6.3% compared to $2.52 for the same period last year. Regulatory efforts delivered $0.68 of new rates and rider recovery, offsetting higher operating expenses, financing, and depreciation.
Weather impact on year-to-date EPS for 2025 Benefited from $0.07 of weather favorability, with $0.04 of milder-than-normal weather this year compared to $0.11 of milder-than-normal weather for the same period last year.
O&M costs year-to-date for 2025 Increased by $0.37, primarily due to merger-related expenses, employee costs, outside services, insurance premiums, and unplanned outages. Excluding merger-related costs, the company expects to manage 2025 O&M expenses to a compounded annual growth rate of approximately 3.5% off of 2023 O&M expense.
Financing and depreciation costs year-to-date for 2025 Increased by $0.34, which included $0.23 of higher interest expense due to higher interest rates, $0.11 of dilution from new shares issued, and a benefit of $0.09 from AFUDC. Depreciation expense increased by $0.09, driven by new assets placed in service.
Equity issuance for 2025 Completed with a total of $220 million of net proceeds, achieving the stated equity guidance range of $215 million to $235 million.
Debt issuance for 2025 Completed with $450 million of 4.55% notes, a portion to be used to pay off the January 2026 long-term debt maturity of $300 million.
Ready Wyoming transmission expansion project: 260-mile transmission expansion project on schedule to be completed by year-end.
Lange II generation project: 99-megawatt natural gas-fired generation project in Rapid City, South Dakota, under construction and expected to be operational in the second half of 2026.
Battery storage project: 50-megawatt utility-owned battery storage project approved to comply with the Colorado Clean Energy Plan, expected in 2027.
Data center demand: Growing demand from data centers, including Meta's AI data center and Microsoft's hyperscale data centers. Current plan includes 500 megawatts of data center demand by 2029, with potential for over 3 gigawatts of demand under negotiation.
Regulatory strategy: Secured settlement for Nebraska rate review, successfully completed 7 rate reviews since last year, and preparing for additional rate reviews in Arkansas and South Dakota.
Financial performance: Reaffirmed 2025 earnings guidance with adjusted EPS range of $4 to $4.20, representing 5% growth over 2024 EPS. Maintained strong investment-grade credit rating and completed planned financing activities for 2025.
Merger with NorthWestern Energy: Announced merger to create a stronger entity with greater scale and complementary strengths. Regulatory applications submitted, with merger expected to finalize in the second half of next year.
Regulatory and Growth Initiatives: The company faces challenges in managing multiple regulatory requests and securing approvals for key projects, such as the merger with NorthWestern Energy and the Colorado Clean Energy Plan. Regulatory hurdles could delay or impact the execution of strategic initiatives.
Capital Investments: The $4.7 billion capital plan includes significant investments in infrastructure, such as the Ready Wyoming transmission expansion and Lange II generation project. However, these projects require substantial funding and are subject to risks like cost overruns, delays, and regulatory approvals.
Data Center Demand: While data center demand presents growth opportunities, the company must negotiate service agreements and manage risks associated with increased load, system reliability, and potential incremental investments in generation and transmission.
Merger with NorthWestern Energy: The merger process involves regulatory approvals and procedural schedules, which could delay or complicate the integration process. Additionally, merger-related costs have already impacted financial performance.
Weather and Operational Costs: Unfavorable weather conditions, such as lower agricultural irrigation demand, have negatively impacted earnings. Higher operating and maintenance (O&M) costs, including merger-related expenses, also pose financial challenges.
Financing and Interest Rates: Higher interest rates and increased financing costs have impacted the company's financials. The issuance of new shares has also led to dilution, which could affect shareholder value.
Depreciation and Asset Management: Higher depreciation expenses due to new assets placed in service could strain financial performance. Managing these costs effectively is critical to maintaining profitability.
Earnings Guidance: Reaffirmed 2025 adjusted EPS guidance range of $4 to $4.20, representing a 5% growth rate at the midpoint over 2024 EPS. Long-term EPS growth target of 4% to 6%, with plans to deliver in the upper half of this range starting in 2026.
Capital Plan: $4.7 billion capital plan for 2025-2029, with an annual base investment of approximately $700 million. Major projects include Ready Wyoming transmission expansion (completion by year-end 2025), Lange II generation project (completion in the second half of 2026), and a battery storage project in 2027 to comply with the Colorado Clean Energy Plan.
Data Center Demand: Current plan includes 500 megawatts of data center demand by 2029, contributing over 10% of total EPS by 2028. Actively negotiating with partners for an additional 3 gigawatts of data center load, with potential service agreements starting as early as 2026.
Merger with NorthWestern Energy: Anticipates finalizing the merger in the second half of 2026, creating a stronger entity with greater scale and enhanced financial profile. Joint applications submitted to regulators in Montana, Nebraska, and South Dakota.
Regulatory Progress: Settlement reached for Nebraska rate review, providing $23.9 million in new annual revenue with new rates effective January 1, 2026. Preparing for additional rate reviews in Arkansas and South Dakota to recover investments and increased costs.
Dividend Track Record: Black Hills Corp. has an industry-leading dividend track record of 55 consecutive years. The company continues to target a 55% to 65% payout ratio. A dependable and increasing dividend is an important component of their strategy to deliver long-term value for shareholders.
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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