Slides
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2024 Fourth Quarter and Full Year Review Feb. 6, 2025
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Forward-looking Statements 2BKH | 2024 Fourth Quarter and Full Year Review | Feb. 6, 2025 | COMPANY INFORMATION Black Hills Corporation P.O. Box 1400 Rapid City, SD 57709-1400 NYSE Ticker: BKH www.blackhillscorp.com Company Contacts Kimberly Nooney Senior Vice President and CFO 605-721-2370 kim.nooney@blackhillscorp.com Sal Diaz Director of Investor Relations 605-399-5079 sal.diaz@blackhillscorp.com 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 2024 earnings guidance and long-term growth target. 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 2023 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 and growth target are 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; Our ability to obtain sufficient insurance coverage at acceptable costs and whether such coverage will protect us against significant losses; 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.
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Provided industry-leading reliability Delivered on earnings guidance Maintained solid financial position Achieved constructive regulatory outcomes Advanced strategic growth initiatives Increased dividend 55 consecutive years in 2025* 3BKH | 2024 Fourth Quarter and Full Year Review | Feb. 6, 2025 | Delivering Results for Stakeholders * Future dividends subject to board approval; 2025 dividend represents current quarterly dividend at annualized rate
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4BKH | 2024 Fourth Quarter and Full Year Review | Feb. 6, 2025 | * Average annual compound growth rate off 2023 base of $3.75 per share ** Future dividends subject to board approval Financial Outlook Increased dividend 4%; targeting 55% to 65% payout ratio**Dividend Affirmed 4% to 6% growth target*Long-term EPS Growth Increased five-year forecast by 10% to $4.7 billion (2025-2029)Capital Investment Initiated guidance range of $4.00 to $4.202025 EPS
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Key Investment Categories • Customer growth • Safety and system integrity projects • Replacement and modernization programs • Electric generation and transmission to serve growth and meet emissions reduction goals Opportunities Incremental to Plan • Electric generation and transmission to serve data center demand • Natural gas pipelines and storage • Other electric and gas projects in early development phase Capital Investment Forecasted Depreciation 5BKH | 2024 Fourth Quarter and Full Year Review | Feb. 6, 2025 | Investing for Customer Needs Drives Growth Capital Investment Forecast Increased by 10% to $4.7 billion 2025-2029* (millions) * Forecasted capital is subject to changes in timing and costs of projects and other factors; see Appendix for more detail of capital categories, recovery timing and historical trend of actual versus forecast $798 $1,002 $859 $822 $1,089 $909 $0 $200 $400 $600 $800 $1,000 $1,200 2024A 2025 2026 2027 2028 2029
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6BKH | 2024 Fourth Quarter and Full Year Review | Feb. 6, 2025 | Path to 1 GW of Data Center Load Approximately 500 MW of expected demand to be served by year-end 2029 through innovative tariffs with minimal capital investment More than 1 GW of expected data center demand from existing customers within the next 10 years Expect to more than double EPS contribution to 10%+ by 2029 Incremental demand likely to drive investment Evaluating additional opportunities in Colorado, South Dakota and Wyoming Strong and growing demand Serving ~500 MW of Demand by Year-end 2029
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1.28 1.30 1.31 1.33 1.34 1.35 +1.2% +1.4% +1.0% +1.1% +0.8% +1.1% -3.0% -2.5% -2.0% -1.5% -1.0% -0.5% 0.0% 0.5% 1.0% 1.5% 1.20 1.25 1.30 1.35 2019 2020 2021 2022 2023 2024 Customer Count Growth 7BKH | 2024 Fourth Quarter and Full Year Review | Feb. 6, 2025 | Strong Ongoing Customer Growth 1.8% 1.6% 1.3% 0.7% 0.7% 0.7% 0.6% 1.1% 0.6% 0.6% 1.0% 0.1% 0.4% 0.3% 0.2% 0.4% 0.4% 0.0% 0.2% 0.4% 0.6% 0.8% 1.0% 1.2% 1.4% 1.6% 1.8% 2.0% Colorado Arkansas South Dakota Kansas Wyoming Nebraska Iowa Total BKH States U.S. Average * Compound annual growth rate in customer count for year -end 2019-2024 and population growth rate by state and national average based on available data from the U.S. Bureau of Economic Analysis for year -end 2019 through Q3 2024 Customer Count Growth More than Double Population Growth* Black Hills Energy Customer Count CAGR (2019-2024) Population Growth CAGR (2019-Q3 2024*) Black Hills’ Customer Count and Annual Growth Average Customer Count Growth Rate by State and Population Growth Rate* Black Hills Energy Customer Count (millions)
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8BKH | 2024 Fourth Quarter and Full Year Review | Feb. 6, 2025 | 2024 Financial Review
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$3.91 $3.91 $0.66 ($0.15) $0.06 ($0.06) ($0.33) ($0.15) ($0.10) $0.07 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 2023 Margin Weather MTM O&M Financing D&A Income Taxes Other 2024 Strategic Execution Expense Management 4.3% growth off long- term base** 9BKH | 2024 Fourth Quarter and Full Year Review | Feb. 6, 2025 | 2024 EPS Earnings Drivers Compared to 2023 Interest Expense ($0.16) New shares ($0.17) O&M measures +$0.21 Higher insurance expense ($0.09) Unplanned generation outages ($0.05) 2023 gains on sale of assets and land ($0.13) 2023 Nebraska tax rate reduction ($0.12) New rates and rider recovery +$0.74* Customer growth +$0.08* Lower off- system sales ($0.09) Unplanned generation outages ($0.04) 2023 insurance recovery ($0.06) * New rates and rider recovery includes EPS of $0.56 from gas utilities and $0.18 from electric utilities; customer growth i ncludes EPS of $0.04 from gas utilities and $0.04 from electric utilities ** Long-term 4-6% EPS growth target based on 2023 earnings guidance midpoint of $3.75 Capital Plan Execution
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$3.75 $3.90 $3.91 $3.91 $3.50 $3.75 $4.00 $4.25 2023 2024 2025 2026-2029 $4.20 $4.00 10BKH | 2024 Fourth Quarter and Full Year Review | Feb. 6, 2025 | Strategic Growth Trajectory on Track 4% EPS Guidance Midpoint Actual EPS EPS Guidance Range 2026-2029 4-6% EPS Growth target off 2023 guidance midpoint of $3.75 ~5% Delivering on EPS Guidance and Long-term Growth Key Variances versus Normal One-time benefits Mild weather and MTM Key Variances versus Normal Significant O&M measures Mild weather, generation outages and higher insurance expense Key 2025 Guidance Assumptions • Normal weather • Constructive and timely outcomes of regulatory dockets • Excludes mark-to-market adjustments • No unplanned generation outages • O&M expense in line with ~3.5% CAGR off 2023 base of $552 million (excludes depreciation and amortization and taxes other than income taxes) • Equity issuance between $215 million and $235 million • Effective tax rate of ~13% for full year
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$0 $100 $200 $300 $400 $500 2025 2030 2035 2040 2045 2050 (millions) $0 $250 $500 $750 $1,000 $250 million accordion feature (with bank consent) 40% 45% 50% 55% 60% 65% Dec-21 Dec-22 Dec-23 Dec-24 $0 $1 $2 $3 $4 $5 Net Debt Equity* Net Debt to Capitalization* BKH | 2024 Fourth Quarter and Full Year Review | Feb. 6, 2025 | 11 Solid Investment-Grade Financial Position Capital Structure * Liquidity and Cash Flow Debt Maturities (millions) long-term target $613 million of available liquidity on revolving credit facility at year-end (billions) Credit Ratings FFO / Debt Long-term Target 14-15% * Net debt to capitalization is a non-GAAP measure reconciled on slide 26 in Appendix; equity excludes non- controlling interest Note: FFO / Debt is a non-GAAP measure in accordance with rating agencies’ methodologies 3-month average short-term borrowings Moody’s S&P Baa2 BBB+ Stable outlook Stable outlook $300 million, 3.95% notes due Jan. 15, 2026
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$2.70* 1970 1980 1990 2000 2010 2020 2025* 12BKH | 2024 Fourth Quarter and Full Year Review | Feb. 6, 2025 | Dividend Track Record 55 Consecutive Years of Annual Increases in 2025 and 83 Consecutive Years Paid* Annual Dividend Per Share * Future dividends subject to board approval; 2025 dividend represents current quarterly dividend at annualized rate 4.5% CAGR 2020-2025 Increased Quarterly Dividend 4.0% on Jan. 24. 2025
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13BKH | 2024 Fourth Quarter and Full Year Review | Feb. 6, 2025 | Business Update
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Operational Excellence Data Center Growth Regulatory Progress Ready Wyoming Transmission Expansion Colorado Clean Energy Plan South Dakota Integrated Resource Plan (99 MW Lange II) Wildfire Management and Risk Mitigation Delivering Safe, Reliable and Cost-effective Service and Strategic Progress Legislation PSPS Mitigation Plan 14BKH | 2024 Fourth Quarter and Full Year Review | Feb. 6, 2025 |
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Building on a Decade of Data Center Success 15BKH | 2024 Fourth Quarter and Full Year Review | Feb. 6, 2025 | More than 1 GW of Demand within the next 10 Years Ideal Location and Tariffs Well-positioned Infrastructure High-quality Customers Supportive Business Environment Scalable Service Model • Proven track record of partnering with hyperscale data centers to support their energy needs Microsoft 10+ years Meta starting in 2026 • Access to renewable resources • Current transmission capacity • Future infrastructure investment opportunities • Ideal Cheyenne attributes for data center operations and expansion • Innovative service tariff to serve customer needs
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16BKH | 2024 Fourth Quarter and Full Year Review | Feb. 6, 2025 | Ready Wyoming Electric Transmission Initiative 260-mile, $350-million Expansion and Interconnection of Electric System in Wyoming • Maintain long-term cost stability for customers • Enhance system resiliency • Expand access to power markets and provide flexibility as power markets develop in Western states • Support economic growth in Wyoming and attract data center and blockchain customer growth • Expand access to renewable resources and facilitate development of renewable development across wind- and sun-rich resource areas Black Hills’ SD/WY and Cheyenne electric system and service area Proposed transmission line route WYOMING SOUTH DAKOTA NEBRASKA COLORADO Map source: S&P Global Capital IQ Construction on 115kV lines near Cheyenne, Wyoming as part of Black Hills Energy's Ready Wyoming electric transmission project
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1H 2025 Contract negotiations 17BKH | 2024 Fourth Quarter and Full Year Review | Feb. 6, 2025 | Colorado Clean Energy Plan Clean Energy Plan Portfolio** • 100 MW solar build-transfer (utility owned) • 50 MW battery storage build-transfer (utility owned) • 200 MW solar power purchase agreement * Emissions reduction target for Colorado Electric from a 2005 baseline ** Timing of projects are subject to final contract negotiations 2027-2028** Place new resources in service Q4 2024 Obtained PUC approval of resource portfolio Adding New Renewable Resources to Reduce Emissions 80% by 2030* Key Milestones: Mid-2025 File CPCN for utility- owned resources
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18BKH | 2024 Fourth Quarter and Full Year Review | Feb. 6, 2025 | * The South Dakota Electric system serves customers in western South Dakota, eastern Wyoming and southeastern Montana ** Estimated investment is included in capital investment forecast Serving South Dakota Electric Resource Needs* 99 MW of Utility-Owned, Dispatchable Natural Gas Generation 2H 2026** Place new resource in service Q1 2025 File for CPCN from Wyoming Public Service Commission Key Milestones: 2H 2025 Obtain approval for CPCN from Wyoming Public Service Commission
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19BKH | 2024 Fourth Quarter and Full Year Review | Feb. 6, 2025 | * Information included in Black Hills’ rebuttal testimony; new rates and timing subject to final commission decision ** As requested in filing; excludes ongoing rider recovery requested to be included in base rates Jurisdiction Filing Date Annual Revenue Increase ROE Debt / Equity New Rates Comments / Status Arkansas Gas Docket 23-074-U Dec. 4, 2023 $25.4 million 9.85% 54% / 46% Oct. 14, 2024 Settlement approved Iowa Gas Docket RPU-2024-0001 May 1, 2024 $15.0 million Black Box Settlement Jan. 1, 2025 Settlement approved; final rates replaced interim rates in place since May 11, 2024 Colorado Electric Docket 24AL-0275E June 14, 2024 $25.1 million* 9.83%* 47% / 53%* tbd* Hearing complete; awaiting final decision Kansas Gas Feb. 3, 2025 $17.2 million** 10.5%** 49.6% / 50.4%** 2H 2025** Requesting recovery of $118 million investments and inflationary impacts; allows for future rider recovery Nebraska Gas Q2 2025 tbd tbd tbd tbd Rate Review Progress • Implemented new approved final base rates for Iowa Gas on Jan. 1, 2025 • Awaiting final decision for Colorado Electric rate review • Requested rate review and rider renewal for Kansas Gas • Preparing to file rate review for Nebraska Gas in the second quarter of 2025
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20BKH | 2024 Fourth Quarter and Full Year Review | Feb. 6, 2025 | Operational Response Wildfire Management & Risk Mitigation Integrity Programs • Prioritization of wildfire management and risk mitigation for decades within safety culture and reliability goals • Wildfire Mitigation Plan available at: www.blackhillsenergy.com/wildfire-safety • Partnering with communities, local agencies, regulators and other stakeholders to define and formalize a Public Safety Power Shutoff program in mid-2025 • Engaged with industry peers and legislators on public policy Supporting wildfire liability bills in South Dakota (SB 134) and Wyoming (HB 192) • Vegetation management • Transmission line inspection and Distribution management (5-year cycle) • Pole inspections • 25% of distribution lines undergrounded • Enhanced risk assessment, forecasting and proactive field work management Asset Programs
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BKH | 2024 Fourth Quarter and Full Year Review | Feb. 6, 2025 | Strong Long-term Growth Outlook 4% to 6% Long-term EPS growth target* $4.7billion Capital investment 2025-2029 with incremental upside opportunities • Integrated pure-play utility profile • Diversified mix of electric and gas businesses • Stable and growing service territories * Average annual compound growth rate off 2023 base of $3.75 per share ** Future dividends subject to board approval 21 • Constructive regulatory jurisdictions • Solid financial position and liquidity • Robust capital plan with timely recovery 10%+ Data center EPS contribution to more than double by year-end 2029 55%-65% dividend payout target**
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22BKH | 2024 Fourth Quarter and Full Year Review | Feb. 6, 2025 | Questions
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23BKH | 2024 Fourth Quarter and Full Year Review | Feb. 6, 2025 | Appendix
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24BKH | 2024 Fourth Quarter and Full Year Review | Feb. 6, 2025 | 2024 Scorecard Growth & Financial Performance Operational Excellence Transformation People & Culture EPS, growth targets, credit metrics and utility growth Utilize consistent and efficient processes to deliver safe, reliable and cost-effective energy and a great customer experience Implement simple processes and efficient systems that enable future business transformation Retain and attract a talented, engaged and thriving team Achieve earnings guidance Increase dividend 54th consecutive year Maintain solid BBB+ equivalent credit ratings and metrics Refinance $600 million notes maturing August 2024 Complete Arkansas Gas rate review File rate review for Iowa Gas File rate review for Colorado Electric Support expansion of new and existing data center and blockchain customers (Announced service to Meta’s new planned data center) Expand RNG portfolio, including RNG production Achieve internal customer satisfaction and effort scores Increase safety awareness and safety event reporting Deliver top-quartile customer reliability Execute $840 million capital plan (invested $798 million) Finalize South Dakota 99 MW generation project plans Advance Colorado Clean Energy Plan Execute pipeline replacement program supporting Net Zero by 2035 goal Identify and deliver new process improvements Finalize implementation of field service management system Transition to new outage management system Complete data center migration to cloud Advance gas system mapping Increase strong employee engagement scores Increase employee retention rates Increase internal career opportunities Achieve DART employee safety metric of 0.7 or less
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25BKH | 2024 Fourth Quarter and Full Year Review | Feb. 6, 2025 | Ready Wyoming Electric Transmission Project Update Project CPCN approved in Q4 2022 for approximately 260-mile expansion First segment completed in late 2024 (~$40 million of ~$350 million project) On track with remaining phases by year-end 2025 • ~150-mile 230-kV line • 1 substation • Interconnects with South Dakota Electric system on western end • ~85-mile 230-kV line • 1 substation • Construction underway • Interconnects with South Dakota Electric system on eastern end Northeast line from Cheyenne Northwest line from Cheyenne Cheyenne Area Infrastructure 12 of 26 miles in service (115kV line) 2 of 4 substations in service
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26BKH | 2024 Fourth Quarter and Full Year Review | Feb. 6, 2025 | Capital Structure * Excludes noncontrolling interest ** Net debt is a non-GAAP measure which includes total debt net of cash and cash equivalents ($ in millions) Dec-21 Mar-22 Jun-22 Sep-22 Dec-22 Mar-23 Jun-23 Sep-23 Dec-23 Mar-24 Jun-24 Sep-24 Dec-24 Capitalization Short-term Debt 420 342 335 501 1,061 525 525 1,125 600 600 600 18 134 Long-term Debt 4,127 4,128 4,130 4,131 3,607 3,954 3,956 3,800 3,801 3,803 4,247 4,249 4,250 Total Debt 4,547 4,470 4,465 4,632 4,668 4,479 4,481 4,925 4,401 4,403 4,847 4,266 4,384 Equity* 2,787 2,872 2,885 2,887 2,995 3,098 3,110 3,167 3,215 3,334 3,357 3,447 3,501 Total Capitalization 7,334 7,342 7,350 7,519 7,663 7,577 7,591 8,092 7,617 7,737 8,204 7,713 7,886 Net Debt to Net Capitalization** Debt 4,547 4,470 4,465 4,632 4,668 4,479 4,481 4,925 4,401 4,403 4,847 4,266 4,384 Cash and Cash Equivalents (9) (16) (10) (12) (21) (39) (153) (594) (87) (123) (625) (13) (16) Net Debt 4,538 4,454 4,455 4,621 4,647 4,440 4,328 4,330 4,315 4,280 4,222 4,254 4,368 Net Capitalization 7,325 7,325 7,340 7,507 7,641 7,538 7,438 7,498 7,530 7,614 7,580 7,700 7,869 Debt to Capitalization 62.0% 60.9% 60.7% 61.6% 60.9% 59.1% 59.0% 60.9% 57.8% 56.9% 59.1% 55.3% 55.6% Net Debt to Capitalization* 62.0% 60.8% 60.7% 61.5% 60.8% 58.9% 58.2% 57.8% 57.3% 56.2% 55.7% 55.2% 55.5% Long-term Debt to Total Debt 90.8% 92.4% 92.5% 89.2% 77.3% 88.3% 88.3% 77.2% 86.4% 86.4% 87.6% 99.6% 96.9%
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27BKH | 2024 Fourth Quarter and Full Year Review | Feb. 6, 2025 | EPS, as Adjusted Normalized for Weather and Mark-to-Market* * Earnings per share, as adjusted is a non-GAAP measure and is reconciled to GAAP in the appendix; normalized total excludes weather impact versus normal and mark-to-market impacts on energy contracts Note: differences in totals due to rounding and timing of dilution driven by weighted average number of shares outstanding • Q1 and Q4 seasonality driven by peak heating demand at gas utilities • Q2 and Q3 driven by peak cooling demand, off-system energy sales opportunities and agricultural irrigation for gas utilities $1.61 $0.30 $0.49 $1.09 $1.60 $0.31 $0.53 $1.25 $1.63 $0.41 $0.62 $1.29 $1.72 $0.54 $0.45 $1.10 $1.73 $0.36 $0.65 $1.28 $1.94 $0.39 $0.32 $1.47 $0.00 $0.50 $1.00 $1.50 $2.00 Q1 Q2 Q3 Q4 2019* 2020* 2021 2022 2023 2024 $3.49 $3.68 $3.78 $3.79 $4.02 $4.10 $2.00 $2.25 $2.50 $2.75 $3.00 $3.25 $3.50 $3.75 $4.00 $4.25 Full Year $0.00 EPS, as adjusted* Q1 Q2 Q3 Q4 Full Year 2019* $1.73 $0.24 $0.44 $1.13 $3.53 2020* $1.59 $0.33 $0.58 $1.23 $3.73 2021 $1.54 $0.40 $0.70 $1.11 $3.74 2022 $1.82 $0.52 $0.54 $1.11 $3.97 2023 $1.73 $0.35 $0.67 $1.17 $3.91 2024 $1.87 $0.33 $0.35 $1.37 $3.91 Weather impact versus normal Q1 Q2 Q3 Q4 Full Year 2019* $0.12 ($0.04) ($0.05) $0.04 $0.06 2020* ($0.04) $0.02 $0.05 ($0.01) $0.03 2021 $0.07 $0.01 $0.00 ($0.16) ($0.07) 2022 $0.06 $0.01 $0.07 $0.05 $0.19 2023 $0.03 ($0.02) $0.02 ($0.09) ($0.06) 2024 ($0.07) ($0.06) $0.03 ($0.10) ($0.20) Mark-to-Market energy contract impact Q1 Q2 Q3 Q4 Full Year 2019* $0.00 ($0.02) $0.00 $0.00 ($0.02) 2020* $0.03 $0.00 $0.00 ($0.01) $0.02 2021 ($0.01) ($0.02) $0.08 ($0.02) $0.03 2022 $0.04 ($0.03) $0.02 ($0.04) ($0.01) 2023 ($0.04) $0.01 $0.00 ($0.02) ($0.05) 2024 $0.01 $0.00 $0.00 $0.00 $0.01 Weather and MTM normalized EPS, as adjusted* Q1 Q2 Q3 Q4 Full Year 2019* $1.61 $0.30 $0.49 $1.09 $3.49 2020* $1.60 $0.31 $0.53 $1.25 $3.68 2021 $1.63 $0.41 $0.62 $1.29 $3.78 2022 $1.72 $0.54 $0.45 $1.10 $3.79 2023 $1.73 $0.36 $0.65 $1.28 $4.02 2024 $1.94 $0.39 $0.32 $1.47 $4.10
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28BKH | 2024 Fourth Quarter and Full Year Review | Feb. 6, 2025 | Customer Safety, Reliability and Integrity $3,634 Growth $574 General Plant $330 Corporate, $143 Growth $574 Minimal Lag $1,600 Rider Eligible $1,351 Other $1,156 Customer Focused Timely Recovery Focused on safety, reliability and growth $4.7 Billion Capital Investment Forecast (2025-2029) Primarily rider eligible, minimal lag and growth* * Growth Capital – primarily generates immediate revenue on customer connections Minimal Lag Capital – capital investment with regulatory lag of less than one year or incurred during expected regulatory test periods; includes nonregulated investment Rider Eligible Capital – capital investment recovered through state specific tariffs and meets Minimal Lag Capital definition Other Capital – capital investment recovered through standard rate review process; includes corporate Investing for Customer Needs Drives Growth Utility Investment Electric Utilities $2,415 Gas Utilities $2,123 Corporate $143 (in millions) Diverse mix of electric and gas utility investment
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$550 $432 $383 $615 $435 $0 $100 $200 $300 $400 $500 $600 $700 2025 2026 2027 2028 2029 CO 38% SD 36% WY 26% Growth 5% Minimal Lag 41% Rider Eligible 26% Other 28% 29BKH | 2024 Fourth Quarter and Full Year Review | Feb. 6, 2025 | Electric Utilities Capital Investment Five-year Forecast of $2.4 Billion Focused on Safety, System Integrity and Growth (millions) Forecasted Capital by State * Growth Capital - generates immediate revenue upon customer connections Minimal Lag Capital – capital expenditures with regulatory lag of less than one year or incurred during expected regulatory test periods Rider Eligible Capital - capital expenditures recovered through state specific tariffs or FERC formula rates and meets Minimal Lag Capital definition Forecasted Capital Investment By Type 72% with Timely Recovery* Safety, Reliability and Integrity Growth General Plant Depreciation 2025-20292025-2029
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30BKH | 2024 Fourth Quarter and Full Year Review | Feb. 6, 2025 | Natural Gas Utilities Capital Investment Five-year Forecast of $2.1 Billion Focused on Safety, System Integrity and Growth Forecasted Capital by State 85% with Timely Recovery* * Growth Capital - generates immediate revenue upon customer connections Minimal Lag Capital – capital expenditures with regulatory lag of less than one year or incurred during expected regulatory test periods Rider Eligible Capital - capital expenditures recovered through state specific tariffs and meets Minimal Lag Capital definition Forecasted Capital Investment By Type (millions) AR 25% CO 17% IA 11% KS 8% NE 27%WY 12% Growth 22% Minimal Lag 29% Rider Eligible 34% Other 15% $431 $386 $412 $447 $447 $0 $100 $200 $300 $400 $500 2025 2026 2027 2028 2029 2025-20292025-2029 Safety, Reliability and Integrity Growth General Plant Depreciation
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2024A 2025F 2026F 2027F 2028F 2029F 2025-2029F Safety, Reliability and Integrity1 $325 $489 $388 $334 $563 $396 $2,169 Growth2 29 36 17 18 24 19 115 General Plant 29 25 27 31 28 21 131 Electric Utilities $382 $550 $432 $383 $615 $435 $2,415 Safety, Reliability and Integrity1 252 266 269 301 316 312 1,464 Growth2 105 124 87 78 84 86 459 General Plant 46 41 30 33 47 48 199 Gas Utilities $403 $431 $386 $412 $447 $447 $2,123 Total Utilities $785 $981 $817 $795 $1,062 $882 $4,538 Corporate 13 21 41 27 27 27 143 Total Black Hills Forecast $798 $1,002 $859 $822 $1,089 $909 $4,681 31BKH | 2024 Fourth Quarter and Full Year Review | Feb. 6, 2025 | Regulated Utility Capital Investment by Type (in millions) 1 Safety, Reliability and Integrity Capital - capital expenditures related to improving or maintaining system integrity 2 Growth Capital - generates immediate revenue on customer connections Note: Forecasted amounts are subject to change in timing and costs of projects and other factors; some totals may differ due to rounding Incremental Opportunities Likely
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2024A 2025F 2026F 2027F 2028F 2029F 2025-2029F Minimal Lag Capital - Electric Utilities1 $54 $282 $120 $127 $334 $115 $978 Rider Eligible Capital - Electric Utilities2 166 180 101 129 78 147 637 Growth Capital - Electric Utilities3 29 36 17 18 24 19 115 Other 134 52 193 108 179 154 686 Electric Utilities $382 $550 $432 $383 $615 $435 $2,415 Minimal Lag Capital - Gas Utilities1 82 77 102 101 231 112 622 Rider Eligible Capital - Gas Utilities2 119 134 139 177 128 137 714 Growth Capital - Gas Utilities3 105 124 87 78 84 86 459 Other 97 96 59 56 4 112 328 Gas Utilities $403 $431 $386 $412 $447 $447 $2,123 Total Utilities $785 $981 $817 $795 $1,062 $882 $4,538 Corporate 13 21 41 27 27 27 143 Total Capital Investment $798 $1,002 $859 $822 $1,089 $909 $4,681 32BKH | 2024 Fourth Quarter and Full Year Review | Feb. 6, 2025 | Capital Investment by Segment and Recovery 1 Minimal Lag Capital - investment with regulatory lag of less than one year or incurred during expected regulatory test periods 2 Rider Eligible Capital - capital expenditures recovered through state specific tariffs or FERC formula rates and meets minimal l ag capital definition 3 Growth Capital - generates immediate revenue on customer connections Note: Forecasted amounts are subject to change in timing and costs of projects and other factors; some totals may differ due to rounding (in millions) Incremental Opportunities Likely
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33BKH | 2024 Fourth Quarter and Full Year Review | Feb. 6, 2025 | Estimated Rate Base by State and Segment 2019 2020 2021 2022 2023 2024 Colorado $803 South Dakota (all jurisdictions) $1,086 Wyoming $702 Total Electric Utilities $1,747 $1,954 $2,077 $2,212 $2,398 $2,591 Arkansas $838 Colorado $631 Iowa $378 Kansas $296 Nebraska $831 Wyoming $471 Total Gas Utilities $2,180 $2,464 $2,760 $3,049 $3,246 $3,445 Total Utilities $3,927 $4,418 $4,837 $5,261 $5,644 $6,035 Note: Estimated rate base at year-end calculated using state specific requirements and is representative of the entire value of rate base, including the value recovered through riders.
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34BKH | 2024 Fourth Quarter and Full Year Review | Feb. 6, 2025 | Last Approved Utility Rate Review Results by Jurisdiction Note: Information from last approved rate review in each jurisdiction * Excludes amounts to serve non-jurisdictional and agriculture customers Jurisdiction Utility Effective Date Authorized Return on Equity Authorized Capital Structure Authorized Rate Base (in millions) Arkansas Arkansas Gas Oct. 2024 9.85% 54% debt / 46% equity $823.4 Colorado Colorado Electric Jan. 2017 9.37% 47.61% debt / 52.39% equity $597.5 Colorado Colorado Gas Feb. 2024 9.30% 49.13% debt / 50.87% equity $378.4 Colorado RMNG July 2023 9.50% to 9.70% 48-50% debt / 50-52% equity $209.3 Iowa Iowa Gas Jan. 2025 Black Box Settlement Black Box Settlement $393.8 Kansas Kansas Gas Jan. 2022 Black Box Settlement Black Box Settlement Black Box Settlement Nebraska Nebraska Gas March 2021 9.50% 50% debt / 50% equity $504.2*_ South Dakota South Dakota Electric Oct. 2014 Black Box Settlement Black Box Settlement $543.9 Wyoming South Dakota Electric Oct. 2014 9.90% 46.68% debt / 53.32% equity $46.8 Wyoming Wyoming Electric March 2023 9.75% 48% debt / 52% equity $506.4 Wyoming Wyoming Gas Feb. 2024 9.85% 49% debt / 51% equity $450.8
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35BKH | 2024 Fourth Quarter and Full Year Review | Feb. 6, 2025 | 2025 Earnings Guidance Assumptions Black Hills initiated its guidance for 2025 EPS available for common stock to be in the range of $4.00 to $4.20, based on the following assumptions: • Normal weather conditions within our utility service territories; • Constructive and timely outcomes of utility regulatory dockets; • Excludes mark-to-market adjustments; • No unplanned outages at our generation facilities; • Compounded annual growth rate of approximately 3.5% for operations and maintenance expense (excluding depreciation and amortization and taxes other than income taxes) off 2023 of $552 million; • Equity issuance between $215 million and $235 million; and • An effective tax rate of approximately 13% for the full year.
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36BKH | 2024 Fourth Quarter and Full Year Review | Feb. 6, 2025 | Net Income Available for Common Stock, as adjusted We have provided non-GAAP earnings data reflecting adjustments for special items as specified in the GAAP to non-GAAP reconciliation table in this presentation. Net income available for common stock, as adjusted, is defined as GAAP Net income available for common stock, adjusted for expenses, gains and losses that the Company believes do not reflect the Company’s core operating performance. The Company believes that this non-GAAP financial measure is useful to investors because the items excluded are not indicative of the Company’s continuing operating results. The Company’s management uses this non-GAAP financial measure as an indicator for evaluating current periods and planning and forecasting future periods. Earnings per share, as adjusted We have provided non-GAAP earnings data reflecting adjustments for special items as specified in the GAAP to non-GAAP reconciliation table in this presentation. Earnings per share, as adjusted, is defined as GAAP Earnings per share, diluted, adjusted for expenses, gains and losses that the Company believes do not reflect the Company’s core operating performance. The Company believes that this non-GAAP financial measure is useful to investors because the items excluded are not indicative of the Company’s continuing operating results. The Company’s management uses this non-GAAP financial measure as an indicator for evaluating current periods and planning and forecasting future periods. Limitations on the Use of Non-GAAP Measures Non-GAAP measures have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Our presentation of these non-GAAP financial measures should not be construed as an inference that our future results will not be affected by unusual, non-routine, or non-recurring items. The Company is not able to provide a forward-looking quantitative GAAP to Non-GAAP reconciliation for non-GAAP measures because the Company does not know the unplanned or unique events that may occur later during the year. Non-GAAP measures should be used in addition to and in conjunction with results presented in accordance with GAAP. Non-GAAP measures should not be considered as an alternative to net income, operating income or any other operating performance measure prescribed by GAAP, nor should these measures be relied upon to the exclusion of GAAP financial measures. Our non-GAAP measures reflect an additional way of viewing our operations that we believe, when viewed with our GAAP results and the reconciliation to the corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting our business than could be obtained absent this disclosure. Management strongly encourages investors to review our financial information in its entirety and not rely on a single financial measure. Non-GAAP Financial Measures
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37BKH | 2024 Fourth Quarter and Full Year Review | Feb. 6, 2025 | Non-GAAP Financial Measures 2019 2020 2021 2022 2023 2024 2019 2020 2021 2022 2023 2024 Net income available for common stock (G AAP) 199.3$ 227.6$ 236.7$ 258.4$ 262.2$ 273.1$ 3.28$ 3.65$ 3.74$ 3.97$ 3.91$ 3.91$ Adjustments, after tax Impairment of investment 15.2 5.3 - - - - 0.25 0.08 - - - - Total Non-GAAP adjustments 15.2 5.3 - - - - 0.25 0.08 - - - - Net income available for common stock, as adjusted (Non-GAAP) 214.5$ 232.9$ 236.7$ 258.4$ 262.2$ 273.1$ 3.53$ 3.73$ 3.74$ 3.97$ 3.91$ 3.91$ Earnings, as adjusted (in millions) Earnings Per Share, as adjusted