Good day and thank you for standing by. Welcome to the Q3 2024 Black Hills Corporation Earnings Conference Call. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question-and-answer session. I would now like to hand the conference over to your speaker today Sal Diaz, Director of Investor Relations.

Thank you. Good morning and welcome to Black Hills Corporation's third quarter 2024 earnings conference call. You can find our earnings release and materials for our call this morning on our website at www.blackhillscorp.com under the Investor Relations heading. Before we begin today we would like to note that Black Hills will be attending the Edison Electric Institute's Financial Conference on November 10th through November 12th. Our leadership team will be meeting with investors and analysts at the conference and the investor presentation will be posted on our website prior to the event. Leading our quarterly earnings discussion today are Linn Evans, President and Chief Executive Officer; Kimberly Nooney, Senior Vice President and Chief Financial Officer; and Marne Jones, Senior Vice President Utilities. During our earnings discussion today, comments we make may contain forward-looking statements as defined by the Securities and Exchange Commission and there are a number of uncertainties inherent in such comments. Although we believe that our expectations are based on reasonable assumptions, actual results may differ materially. We direct you to our earnings release, Slide 2 of the investor presentation on our website, and our most recent Form 10-K and Form 10-Q filed with the Securities and Exchange Commission for a list of some of the factors that could cause future results to differ materially. I will now turn the call over to Linn Evans. Linn?

Thank you, Sal. Good morning and thank you all for joining us today. I'll begin my comments with a brief overview of the quarter, Kimberly will provide our financial update, and Marne will provide more detail on our team's operational performance and our strategic progress. Starting on Slide 3, I'm pleased with our progress on our customer-focused strategy, which is reflected in new margins and the advancement of our growth projects. As a team, we delivered excellent service to our customers, continued to execute on our financial targets, and advanced our regulatory and growth initiatives. We continue to deliver on our commitment to provide our customers with safe and reliable service during the quarter, including dependable energy delivery through near-peak demand levels for our South Dakota electric system. Despite unplanned generation outages, total availability for our fleet remained above the industry standard with 98% availability for our natural gas units and 95% total availability across our generation facilities. We also took the opportunity to bring forward and complete some future major maintenance on units that experienced unplanned outages. The reliability we deliver to our utility customers this quarter was excellent. Our focus on reliability is delivering value for all of our customers and is a key value driver in attracting new customers to our service territories. During the third quarter, we announced our plans to serve Meta's first data center in Cheyenne, Wyoming, starting in the 2026 timeframe. As we look to the future, we are excited to serve demand for hyperscalers with our capital-light model and continue to receive inbound requests to expand load beyond Cheyenne. We remain on track with our $800 million capital plan for the year. Our ongoing capital investment plan is critical to delivering upon the commitments we made to serve our customers and communities safely, reliably, and cost-effectively. This includes our Ready Wyoming electric transmission expansion project, which strategically interconnects our Wyoming and South Dakota transmission systems, enhancing the resiliency and capacity of our regional energy infrastructure. Notably, this will benefit our customers with cost stability and expanded energy market access. Maintaining our solid financial position remains a focus. We reached key milestones in our financial plan as we achieved our debt-to-capitalization target to maintain our BBB+ or equivalent credit rating. Our team completed our major financing needs for the year as we execute our strategy in funding our customer-focused growth. During the third quarter, we advanced our regulatory initiatives. We received approval of new customer rates for Arkansas Gas, which were implemented in October. We achieved a settlement for our rate review request at Iowa Gas, which is pending commission approval, and we continue through the regulatory process for new rates at Colorado Electric. We're currently targeting a cadence of three to four rate reviews annually driven by our investments to serve our customers' growing energy needs. We remain confident in our financial outlook provided on slide 4. We're on track to deliver on our earnings guidance range of $3.80 to $4 per share as originally issued in February. Our financial performance for the quarter and year-to-date were in line with our expectations as we successfully mitigated the impacts of mild weather, unplanned generation outages, and increased insurance expense. We entered the peak heating season with new rates or interim rates in place at four of our six gas utilities this year. Looking ahead, our strong growth opportunities and continued execution of our initiatives give us confidence in achieving our long-term 4% to 6% EPS growth target. Slide 5 displays our current five-year capital investment plan. Over our five-year plan period, we expect to invest $4.3 billion. In 2026, our $1.3 billion forecast includes generation investments resulting from our recent electric resource plans. As contracts are negotiated, the timing of these investments will be updated. Marne will cover the status of our resource plans and her business update. In 2027 and 2028, we anticipate incremental opportunities to be added to our plan as we gain more clarity around timing, costs, and the energy needs of our customers as indicated by the green arrows above the chart. As a reminder, at our fourth quarter earnings call in February, we will provide our 2025 earnings guidance and an updated capital forecast through 2029. Slide 6 provides a summary of our hyperscale data center and blockchain growth opportunities. For more than a decade, we have successfully served Microsoft's data center energy needs through a capital market energy procurement model. Our innovative tariff is instrumental in enabling a win-win of efficiently procuring market energy while providing a return in lieu of new generation investment. We continue to expect earnings from this type of customer to grow EPS contribution from 5% in 2023 to more than 10% of total EPS by 2028. In summary, before I turn the call over to Kimberly, I'm pleased with our strategic progress. Our service territories are stable and growing with strong electric and gas investment opportunities. Our financial position is solid and we are executing on regulatory recovery as we pursue our growth initiatives. With that I'll turn the call over to Kimberly for our financial update. Kimberly?

Thank you, Linn and good morning, everyone. As Linn mentioned, third quarter results were in line with our expectations and we are on track to deliver on our earnings guidance and financial targets for the year. We completed our key financing activities and achieved our net debt-to-capitalization target of 55%. We are executing on our strategy to deliver on the financial commitment we made to grow our compounded annual EPS growth rate by 4% to 6%. Despite mild weather and other unexpected cost pressures this year, we are delivering new margins and managing our costs to achieve our financial objectives. Slide 8 shows third quarter EPS drivers compared to the same period last year. We reported $0.35 per share compared to $0.67 per share in Q3 2023. New margins were offset by higher operating expenses, unplanned generation outages, lower off-system sales, and prior year one-time benefits. We delivered $0.16 of new margins, including new rates and rider recovery of $0.10 per share from our electric utilities, $0.05 from our gas utilities, and $0.01 per share of customer growth and usage. These positive margin drivers offset unplanned generation outages, lower off-system sales, and a prior year benefit from insurance proceeds. O&M increased $0.23, comprised of $0.15 from higher insurance premiums, employee costs and outside services, $0.03 of expenses associated with unplanned generation outages, and $0.05 due to a prior year gain on sale of land to a data center customer. Interest expense increased $0.05 per share driven primarily by higher interest rates, while new shares lowered EPS by $0.02. Depreciation expense increased $0.05 per share due to new assets placed in service. Slide 9 displays the earnings drivers year-to-date through Q3 2024. Through three quarters, we delivered a total of $0.57 per share of new margins, driven by the successful execution of our strategy. These new margins include $0.35 per share of new rates and rider recovery from our gas utilities and $0.17 from our electric utilities which includes data center demand. Additionally, we continued to experience customer growth and increased usage, which contributed $0.05 per share of margin. This margin growth was partially offset by our off-system sales, unplanned generation outages, and a prior year benefit from insurance proceeds. We experienced mild weather in our jurisdiction with $0.14 of unfavorable EPS year-to-date compared to the same period last year. Compared to normal weather, it was $0.11 unfavorable. As natural gas commodity prices moderated and became more stable in 2024, we recognized a mark-to-market benefit of $0.03 per share year-to-date year-over-year. Moving to O&M. I'm extremely pleased with our team's success in managing our expenses below our projected 3.5% year-over-year increase to mitigate mild weather, unplanned generation outages, and rising insurance costs. O&M increased $0.10 or 1.8% year-to-date compared to the same period last year. O&M expense benefited EPS by $0.09 per share, which was offset by $0.05 from unplanned generation outage expenses and $0.14 of prior year benefits related to gains on sales of assets and land. Throughout the year, we have prudently managed expenses and expect our annual O&M cost increase in 2024 to be no more than 2.5% over 2023. Financing costs included a $0.10 impact from new shares issued and $0.07 of interest expense driven by higher interest rates. Depreciation and amortization expense drove $0.12 of increase due to new assets placed in service. Income tax was higher due to a prior year benefit from a Nebraska state income tax rate decrease. In summary, excluding prior year one-time events, our strong margin growth and prudent O&M expense management more than offset mild weather, lower off-system sales, unplanned generation outages, and financing and depreciation costs incurred for the growth investments to serve our energy needs. Our strategic execution is delivering recurring earnings growth excluding prior one-time benefits of $0.32 per share; year-to-date EPS grew 4% compared to the same period last year. Further details on year-over-year changes can be found in our earnings release and 10-Q to be filed with the SEC later today. Turning to Slide 10, which depicts our solid financial position through the lens of credit quality, capital structure, and liquidity. We continue to reduce our net debt to total capitalization ratio and improve other key credit metrics and our commitment to maintain our BBB+ credit quality target. During the quarter, we issued $109 million of new equity under our at-the-market equity program which included a block equity trade. As a result, we have issued a total of $182 million year-to-date, which is within our planned equity issuance range of $170 million to $190 million for 2024. Our liquidity remained strong at quarter end with $729 million of availability under our revolving credit facility. We repaid our $600 million notes that matured in August and we are evaluating timing and options for refinancing our next maturity of $300 million in early 2026. Slide 11 illustrates our industry-leading dividend track record of 54 consecutive years. We anticipate growing our dividend at a rate comparable to earnings growth; a dependable and increasing dividend is an important component of our strategy for delivering long-term value for our shareholders. I will now turn the call over to Marne for our business update.

Thank you, Kimberly, and good morning everyone. I'll start my comments on Slide 13. As Linn mentioned, we continue to demonstrate our strong culture of operational excellence during the third quarter. We upheld our reputation for industry-leading electric reliability, as reflected recently by EEI with all three of our electric utilities in the top quartile of reliability for the three-year average through 2023. And while reliability is critically important to our customers, it also supports our growing data center demand. During the quarter, we also advanced our plans for new generation resources to serve growth and meet our Colorado Clean Energy plan requirements, all while maintaining strong reliability and enhancing our resiliency. I'm also proud to share that last week the U.S. Department of Labor awarded Black Hills with the higher Vets Medallion award for the fifth consecutive year. This award recognizes organizations with employer efforts in recruiting, employing, and retaining our nation's veterans. We value our veteran colleagues and the dedication and leadership they bring to our team and culture. On Slide 14, I'll provide a status update on our rate reviews. We continued to reach constructive results during the quarter. In Arkansas, we received approval for new rates effective in October. The approved settlement allowed $25.4 million of new annual revenue, which includes a return on equity of 9.85% based on 46% equity. In Iowa, we reached a settlement for our rate review request pending approval by the IOU Commission. The confidential settlement allows $15 million of new annual revenue based on a 7.1% weighted average cost of capital. The settlement provides for implementation of final rates in the first quarter of 2025, which will replace the interim rates. Our other active rate review is for Colorado Electric. We received answer testimony from the interveners in October and we will respond with rebuttal testimony due later this week. Our hearing on the socket is scheduled for December. Slide 15 outlines our wildfire management and risk mitigation plans. We have been successful in reducing risk with our multilayered approach through asset programs, integrity programs, and operational response, which is detailed in our wildfire mitigation plan available on our website. We continue to engage stakeholders including community and local agencies, regulators, legislative bodies, and our industry peers to define, review, and advance our wildfire management and mitigation plans, including our Public Safety Power Shutoff program or PSPS, which we expect to formalize in the first half of 2025. Moving on to Slide 16. Our largest active capital project is our Ready Wyoming transmission project. The 260-mile line is being constructed on schedule and we are tracking to place in service our first segments later this year. The project is expected to be completed by year-end 2025. The investment for this project will be recovered through our Wyoming transmission rider as segments are placed in service. Slide 17 provides an update on our Colorado Clean Energy Plan. Yesterday, the Colorado Commission deliberated and verbally authorized 100 megawatts of utility-owned solar, 50 megawatts of utility-owned battery storage, and a 200-megawatt solar PPA. With the recent deliberations, we expect a final written commission decision before year-end and we expect to initiate contract negotiations with the selected counterparties following the written decision. Slide 18 outlines our South Dakota Electric resource plan. We continue to pursue 100 megawatts of utility-owned generation that will cost-effectively and reliably serve our customers. We are targeting an in-service date in the second half of 2026 for 100 megawatts of dispatchable natural gas-fired generation. We filed a pre-application with the South Dakota PUC during the third quarter and plan to request a certificate of public convenience and necessity from the Wyoming PSC and a permit to construct from the South Dakota PUC in early 2025. With that, I will turn the call back over to Linn.

Thank you, Marne. Once again, our team made strong progress on our strategic initiatives as we invest in safe, reliable, and resilient energy delivery for our customers. We continue to execute our regulatory plan and aggressively pursue our strategic growth opportunities including serving data center and blockchain load growth. Finally, I want to express my sincere appreciation to the Black Hills team for effectively and efficiently serving our customers while managing through unexpected challenges of the year. And with that, we'll be happy to take your questions.

Thank you. Our first question comes from Andrew Weisel with Scotiabank. You may proceed.

Hi. Good morning, everyone. My first question is you mentioned the unplanned outages a couple of times there. Can you give a little more detail on what exactly were the issues? And what was the O&M impact to earnings?

Good morning. Andrew, this is Marne and thanks for the question. I'll get us kicked off, and I'll let Kimberly jump in on the financial side of it. So this quarter, we had a rollover. Last quarter, we announced that we had a couple of outages driven by some components that failed. And one of those outages just rolled over into the early part of Q3. And so that was the impact. There was no additional outages this quarter. And I'll turn it over to Kimberly from the financial impact side of it.

Yeah. Are you asking for the quarter or for the year, Andrew?

Both if you can share that.

Yes, they're on the slides that you can look at, I believe it's $0.03 and $0.05, respectively. But when you look at it in total, you include the impact from the margin side as well. And so if you look at the slides, you can see the collective both from the margin impact and the O&M impact from the unplanned outages. Hopefully, that will get you what you need.

Perfect. Yeah. Great. I appreciate that. And then along those lines, I believe you're reiterating the guidance for the year. You mentioned those negatives and you're mitigating that with some better-than-expected O&M trends. Are you able to comment where within the range you might be trending high, middle, or low end?

Great question, Andrew. No, we don't comment on where we're at in the range. Just the fact that we have reaffirmed the range and we expect to achieve the financial objectives that we've laid out for the year.

Okay. Fair enough. Mix is a high-level question, and I realize it's only been a little more than 24 hours since we've known the election results, but you guys are very well positioned in terms of crypto and bitcoin and blockchain and all that. And obviously, President-elect Trump has made it clear that he supports those industries, and we've seen a huge spike in the price of crypto. Any early level thoughts on what the incoming administration might mean for that industry and how you and your service territory might be uniquely positioned to benefit.

Thank you for your question. I appreciate it. I like our strategy because it is focused on our customers and what's best for them in terms of how we help them meet their energy needs. We are quite agnostic to federal policy in this area. However, state policies significantly influence how we serve our customers, and that is where we concentrate our efforts. Your sentiment is accurate; we have been serving data centers for over a decade and excel in that area. We believe this will benefit us going forward.

Okay. You said data centers. I think you meant these other customers, though, right?

I did. It's just in general, we treat them all largely the same. We have different tariffs for each one, but we understand that reliability is critical to them. The service quality that we provide them is critical, et cetera. So we kind of serve them all kind of the same way, if you will, but obviously, different forms of tariffs and things of that nature.

That makes a lot of sense. Thank you very much.

Thank you, Andrew.

Thank you, Andrew.

Thank you. Our next question comes from Chris Ellinghaus with SWS. You may proceed.

Yeah, everybody, how are you? Linn, you've sort of persistently talked about the upside from the large load customers. Is there any kind of cadence to what you're expecting? Are there particular years you're expecting new loads? Can you give us any sort of insights on that?

Thank you, Chris, for that question. Having worked with one of our primary clients for over a decade, we have a solid understanding of their plans and they consistently meet their targets. This partnership has allowed our current data center operations to run smoothly. We announced our collaboration with Meta last quarter, with their integration starting at the end of 2026, and they will also phase in gradually. The advantage of working with these data centers is that they grow and expand in a predictable manner. I can also mention that they have purchased land around Cheyenne, indicating ongoing expansion in the future.

Are you seeing any acceleration given the investment in AI computing at this point?

I don't know if we've seen acceleration. We've seen stronger interest in terms of the inbound calls that we take. And historically for us, Cheyenne has been such a great place for data centers, still is because of the fiber optic network that is very rich in the Cheyenne region. And my understanding is with the AI there's less fiber dependent. And so we're actually encouraged by the possibility of having data centers and particularly AI centers in other parts of our service territory and then bringing our skill set that we've gained over the last decade we think that can give us some advantage.

The new intertie also factor into that?

It certainly impacts our reliability thinking. It always does for any kind of a customer, yes. It gives us some flexibility to take energy back and forth across two separate grids. The grid boundary is right here at Rapid City. So we're accustomed to that to know how to deal with that.

Okay. The upside to the CapEx slide, have you got any color that you want to add to that in terms of the types of investments that you're thinking about?

The types of investments tend to be right down the center of the fairway for us to use the golf analogy, transmission on both electric and gas side. We have perhaps some gas storage opportunities. We've got frankly more capital projects than maybe you could argue that our customers could afford. So it's always a balance of what's best for customer, what allows us to serve them effectively that costs us effectively and then make sure we generate that return for the shareholder.

Okay. And Kimberly can I ask the guidance question a little differently? Given the third quarter results and where the range is suggests a pretty strong fourth quarter. Can you address any of the bigger issues that you are expecting to drive the fourth quarter? And is that O&M number for the year part of that factor?

When considering our full year performance and reflecting on Q1 and Q2, our operating and maintenance expenses were actually better than those of the previous year. We've managed these expenses effectively. The year began with relatively mild weather, which has persisted. Our focus has been on managing these expenses to cover unexpected outages and rising insurance costs. Looking ahead, we initially planned for approximately a 3.5% year-over-year increase in these expenses. However, we are now facing unexpected challenges related to weather and insurance that we need to address. Additionally, we are being careful with our capital investments for our customers. I believe the guidance we've provided should support our anticipated growth of 4% to 6% and our earnings expectations for the year.

And Chris, this is Linn. I could not be more proud of how our team has stepped up in an incredible way, very laser-focused on how we control costs on behalf of customers and then provide the shareholders that return as well. So I just want to take a moment to say a big shout out to our team and how focused they've been and how helpful they've been this past year and going into the fourth quarter.

I don't remember who mentioned it, possibly Marne, but someone said you took advantage of the outages to perform some longer-term maintenance. Will that impact 2025, or which period was some of that maintenance O&M drawn forward from?

Yeah, this is Marne. So when we do have these larger outages where we're opening up more of the machine, it's an opportunity to pull forward some of that maintenance. Typically, you're looking out one to two years of pulling that forward. It's really dependent on what we find when we open that up.

Okay. I appreciate it. Thanks for the color.

Thanks, Chris.

Thanks, Chris.

Thank you. Our next question comes from Julien Dumoulin-Smith with Jefferies. You may proceed.

Hi, it's Brian Russo on for Julien.

Hey, Brian.

Hi.

Is there any opportunity given your commentary around these data center growth, the 5% of current EPS contribution growing to 10% by 2028? Is that really just the anchor tenant? And also, the Meta project announced a month or two ago? Or is there more projects that are driving that now?

Yes, Brian, this is Kimberly. I want to make a couple of comments. Generally, I would consider it an anchor tenant, which includes Microsoft and Meta. As mentioned, the data center loads are evolving over time. Linn talked about the land they are purchasing, which presents future opportunities. Right now, we are focused on achieving that 5% to 10% growth. We are working with both Meta and Microsoft to assess their forecasts and will update that as we approach Q4 when we announce our capital and earnings guidance in February. Additionally, we are receiving more inquiries beyond Wyoming, involving discussions in Colorado and South Dakota, which will also contribute to our future EPS growth as we consider partnerships with potential data centers in our region.

Yes, that was actually going to be my next question outside of Wyoming. A lot of these customers you mentioned are very active in the Dakotas and Colorado as well. Will you look to set up some sort of a similar kind of LPCS or BCIS tariff structure that these customers are receptive to that in Wyoming in these other states?

Brian, this is Linn. Thank you for that question. The answer is uncertain. We take pride in doing what we believe is best for our customers and shareholders. Therefore, we will remain flexible. We have various tariffs and options available to serve our customers. Given our size and agility, we can adjust our approach to benefit the customer while also ensuring we safeguard the interests of our shareholders. That's my perspective on the matter.

Okay. Thank you very much.

Thank you, Brian.

Thank you. I would now like to turn the call back over to Linn Evans for any closing remarks.

Well, good morning again and thank you for joining us today and especially thank you for your interest in Black Hills. We'll be seeing a number of you starting this weekend at EEI, so please travel safe. We look forward to engaging with you there. And once again, I want to say a sincere thank you to the Black Hills team. I just really appreciate how all of us has stepped up this year to make sure we serve our customers and our shareholders excellently. And you've done that. So thank you so much. I encourage everybody to have a Black Hills Energy safe day. Take care.

Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.