Black Hills Corporation

Good day, ladies and gentlemen, and welcome to the Black Hills Corporation first quarter 2021 earnings conference call. My name is Peter, and I'll be your conference coordinator for today. At this time, all participants are in the listen-only mode. Following the prepared remarks, there will be a question and answer session. If you would like to participate in this portion of the call, please press star followed by one at any time during the conference. If assistance is needed at any time during the call, please press star followed by zero, and the conference coordinator will be happy to assist you. As a reminder, this conference is being recorded for replay purposes. I would now like to turn the presentation over to Mr. Jerome Nichols, Director of Investor Relations of Black Hills Corporation. Please proceed, sir. Jerome Nichols Thank you, Peter.

Good morning, everyone. Welcome to Black Hills Corporation's first quarter 2021 Earnings Conference Call. You can find our earnings release and materials for our call this morning at our website at www.blackhillscorp.com under the Investor Relations heading. Leading our quarterly earnings discussion today are Lynn Evans, President and Chief Executive Officer, and Rich Kinsley, Senior Vice President and Chief Financial Officer. During our earnings discussion today, some of the 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 and beliefs are based on reasonable assumptions, actual results may differ materially. We direct you to our earnings release, slide two of the investor presentation on our website, in 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 from our expectations. I will now turn the call over to Lin Evans.

Thank you, Jerome. Good morning, everyone. Thank you for joining us today. I'll begin on slide four, which lists our key achievements during the first quarter. Our top priority of Black Hills Corporation is safety, which works hand-in-hand with reliability in our predominantly cold weather service territories. I'm proud of our team's exceptional and resilient performance. The Black Hills team, along with our electric and natural gas systems and our generating fleet, performed very well through the historic deep freeze of the winter storm Uri. We successfully served extraordinary demand, keeping our customers safe through life-threatening cold conditions across our service territories. Our balanced mix of power generation resources, including reliable and dispatchable generation capacity, allowed us to completely avoid rolling blackouts experienced in other areas of the country, even while our South Dakota electric utility served a new winter peak load. Of course, our success in serving our customers during winter storm Yuri didn't happen by chance. Rather, it was a result of our relentless focus on our customers and ongoing investments for our safe, reliable, and resilient infrastructure. Winter storm Uri demonstrated how critical energy is to our daily lives. The storm highlighted the need for safe, reliable natural gas utilities and reliable generation capacity when our customers experienced temperatures as low as 27 degrees below zero, setting numerous all-time record lows across our communities. As an example, Lincoln, Nebraska reported 11 straight days of temperatures below zero in February with lows in the minus 20s. Recognize the essential value of natural gas during these weather events. We're pleased that four of our six gas states, Arkansas, Iowa, Kansas, and Wyoming, recently passed legislation that protects our customers' freedom to choose a type of energy that's right for them. Last week, we announced we joined the One Future Coalition of gas utility companies who are voluntarily reducing emissions. This is in addition to our previously announced participation in the in the EPA's methane challenge as we enhance our commitment to modernize and make our pipelines more resilient. Continuing on slide four, we remain encouraged by the ongoing steady growth in new customer connections driven by population migration into our service territories. Our team also showcased our agility and the strength of our financing strategy during the first quarter. Given the unprecedented and unforeseeable market pricing for natural gas in February, we immediately supplemented our liquidity with additional short-term financing by securing an $800 million term loan on favorable terms. This term loan and other ongoing cash conservation initiatives ensures our ability to continue funding our strong capital investment program. Slide 5 sets out our financial outlook. Our first quarter financial performance was tempered by costs brought about by Storm Uri, as outlined in our earnings release. However, absent these storm costs, our financial results were otherwise strong. During the February storm, we immediately implemented expense and cash management initiatives and were executing on other opportunities to mitigate the impact of the storm. Rich will cover the details in his financial update. Given these ongoing initiatives and the opportunities we see for the remainder of this year, our 2021 earnings guidance remains unchanged. We also reaffirmed our 2022 earnings guidance, and we remain confident in our long-term growth targets, including 5% to 7% earnings growth for 2023 through 2025, and at least 5% annual dividend growth. Slide 6 illustrates our disciplined growth plan with upside potential. We plan on capital investments of more than $3 billion through 2025, and we expect to identify and develop incremental projects. We're also developing other growth opportunities, including less capital-intensive projects, such as data center load additions, and other innovative customer solutions, including renewables and other technologies. I noted already that we're seeing accelerated population migration into our service territories, and we're gaining confidence this trend will continue. The last item on this slide is a focus on cost discipline and continuous improvement. These are long-term initiatives for leaner, more efficient processes and the use of new technologies to be better every day. Moving to slide seven, we've made progress on our regulatory initiatives. Our team is finalizing three rate review applications to be filed in the second quarter. We plan to file a new rate review for Colorado Gas, and we recently completed a hearing before the Commission regarding our ongoing safety and integrity investment rider. In Kansas, we're filing our first rate review in seven years, which renews our five-year system safety and integrity investment rider. And in Iowa, we plan to file our first rate review in more than a decade, including a request for a new system safety and integrity investment rider. In addition to our normal regulatory activity, We're engaged with regulators regarding recovery for costs associated with storm fury. Moving to slide eight, for our electric utilities, resource planning is a key focus as we determine how best to reliably and cost-effectively serve growing customer demand and achieve our greenhouse gas emission goals. We're targeting early July to submit our integrated resource plan for our jointly operated South Dakota and Wyoming electric systems. We're modeling various scenarios to meet our growing customer demand. Initial modeling, which is always subject to change, indicates a need to add renewable and dispatchable natural gas generation, battery storage, additional transmission, and upgraded pipeline capacity. These scenarios consider customer impacts in achieving our greenhouse gas emission goals. We're also modeling a scenario that considers the Biden administration's economy-wide greenhouse gas emission goals and what that would cost customers. I'm excited about this process as we look to provide greater clarity into these future opportunities in the upcoming months. And finally, on slide nine, we're well positioned as an integrated utility with a strong long-term growth outlook. We're executing our customer-focused strategy and are confident in our future. I'll now turn it over to Rich for the financial update.