Black Hills ((BKH)) has held its Q4 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Black Hills Corporation conveyed a generally positive sentiment, despite some challenges. The company’s strong financial performance, strategic growth plans, and regulatory achievements were prominent themes, overshadowing the hurdles posed by mild weather, unexpected outages, and rising costs. Ultimately, the sentiment remained upbeat due to the company’s growth prospects and strategic initiatives.
EPS Growth and Financial Stability
Black Hills Corporation reported a 4.3% growth in earnings per share (EPS) for 2024, with expectations to deliver around 5% growth by 2025. The company successfully reached its capitalization target and maintained solid investment-grade credit ratings, highlighting its financial stability.
Significant Investment and Growth Plans
The company invested over $800 million in 2024 and outlined an ambitious five-year capital investment plan of $4.7 billion, marking a 10% increase from the previous plan. This investment underscores Black Hills’ commitment to growth and expansion.
Data Center Demand and Growth
Black Hills announced its service for Meta’s new AI data center and projected a pipeline of over one gigawatt in data center demand over the next decade. The company expects the EPS contribution from data centers to more than double by 2029, reflecting significant growth potential in this sector.
Dividend Increase
Continuing its tradition, Black Hills increased its dividend by 4%, marking 55 consecutive years of dividend hikes. This move underscores the company’s commitment to returning value to shareholders.
Regulatory Success
The company successfully implemented constructive settlements for Arkansas Gas and Iowa Gas rate reviews in 2024, showcasing its ability to navigate regulatory landscapes effectively.
Challenges Due to Mild Weather and Outages
Earnings were impacted by mild weather and unplanned generation outages, leading to a reduction of $0.20 in EPS compared to normal weather conditions. These challenges highlighted the operational risks the company faces.
Higher Costs and Expenses
The company encountered higher insurance costs and increased expenses related to financing and depreciation, attributed to its capital investments, which affected its financial results.
Delay in Clean Energy Projects
There was a slight delay in the timeline for the Colorado Clean Energy Plan projects, now expected to be completed between 2027 and 2028. This delay may impact the company’s clean energy goals.
Forward-Looking Guidance
Black Hills Corporation provided optimistic forward-looking guidance during the call. They reported meeting their 2024 EPS growth guidance midpoint of $3.75 and projected a growth of approximately 5% for 2025, with an earnings range of $4.00 to $4.20. The company aims for a long-term EPS growth target of 4% to 6%, supported by a $1 billion capital investment plan for 2025 and a planned equity issuance of $215 to $235 million.
In summary, Black Hills Corporation’s earnings call highlighted a positive outlook, driven by robust financial performance and strategic growth initiatives. Despite facing some operational challenges, the company’s forward-looking guidance and investment plans suggest a promising future. Investors can take note of the company’s resilience and commitment to long-term growth, evident in its consistent dividend increases and ambitious capital projects.
