Black Hills Corporation

The Q1 2025 Black Hills Corporation Earnings Conference Call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question and answer session. To ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. I would now like to hand the conference over to your speaker today, Sal Diaz. Director of Investor Relations.

Thank you, operator. Good morning and welcome to Black Hills Corporation's first quarter 2025 earnings conference call. You can find our earnings release and materials for our call this morning on our investor relations website at www.blackhillscorp.com. Leading our quarterly earnings call are Lynn Evans, President and Chief Executive Officer, Kimberly Nooney, Senior Vice President and Chief Financial Officer, and Marnie Jones, Senior Vice President and Chief Utility Officer. 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 two 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 from our expectations. With that, I will now turn the call over to Lynn Evans. Lynn?

Thank you, Sal. Good morning, and thank you all for joining us today. I'll begin my comments with a summary of the quarter and our strategic outlook. Kimberly will provide our financial update and Marnie will discuss our operational performance and strategic progress. Starting on slide three, three of our key objectives for the year include delivering on our 5% year-over-year earnings growth, executing on our regulatory initiatives and our $1 billion capital plan, and providing top quartile reliability to our growing customer base while exceeding industry average safety performance. I'm pleased to report we are making excellent progress toward these objectives. Our full year earnings growth is driven by three key drivers, new base rates, rider recovery mechanisms, and customer growth. We have successfully implemented new rates through five rate reviews since the beginning of 2024, and we also have two active rate reviews requested to be in effect later this year. Collectively, regulatory execution by our team on these seven rate reviews reflects the recovery of more than $1.3 billion of new system investments. Additionally, rider mechanisms are providing material investment recovery, including the $40 million first phase of our $350 million Ready Wyoming transmission expansion project, which remains on schedule. And we are serving strong customer growth across our regions. A recent example includes serving two new all-time customer peak loads at Wyoming Electric, driven largely by ongoing data center and blockchain growth. These new record peaks reflect an increase of nearly 10% over our prior all-time peak in January 2024 and mark 19 consecutive years of increasing demand. To cost-effectively and reliably serve our customers and position the company for ongoing growth, We are strategically expanding our infrastructure by advancing our electric transmission project and our plans for new generation. We are well positioned to maximize opportunities for future growth as we experience the benefits of reshoring in our service territories due to attractive land prices, favorable business and regulatory climates, and a quality workforce. As we leverage our opportunities, we are also mitigating risk for our business and for our customers. For example, in Wyoming, very positive wildfire legislation was enacted during the quarter, which sets a standard of care and protects us from liability when we adhere to a commission approved wildfire mitigation plan. Our financial outlook is provided on slide four, which is consistent with our fourth quarter call. We are reaffirming our 2025 earnings guidance range of $4 to $4.20. which is a 5% growth rate at the midpoint over our 2024 EPS. Strong customer demand, our pipeline of growth opportunities, and cost discipline all support our expected 2025 results. As we evaluate trade tariffs and potential amendments to federal legislation, we do not expect material impacts to our five-year outlook. The materials for the majority of our 2025 capital projects are already sourced, and our historical spend from foreign sources has been less than 3%. We think this data point is a consistent indicator of the potential impact of our future capital investments. Additionally, while the future of the Inflation Reduction Act is uncertain, our strategic exposure is minimal. We have less than $20 million in annual production tax credits with limited reliance on the transferability of those credits. We have strong confidence in our long-term EPS growth target, 4% to 6%, given our robust balance sheet, capital forecasts, incremental investment potential, and our other growth opportunities highlighted by increasing demand from our data center customers. Our multi-state footprint provides valuable regulatory, weather, and customer diversification, further supporting EPS stability and growth. These factors, coupled with our industry-leading dividend track record, offer an attractive value proposition for shareholders, and we believe we are well positioned to accelerate EPS growth in the upper half of our 4% to 6% compound annual growth rate starting in 2026. To quickly summarize our capital plan on the next slide, we expect to invest $4.7 billion over our five-year plan period through 2029. Our plan prioritizes safety and system integrity projects, modernization programs, and infrastructure expansion to support growing demands. Moving to slide six. In addition to our capital plan, we are building upon our decade of successfully serving a growing data center demand and continue to be excited about the upside potential. Our current forecast reflects approximately 500 megawatts of data center demand by the end of 2029. We expect EPS contribution from data centers to double to more than 10% of total EPS in 2028, with this contribution continuing into 2029. Over the next decade, we expect a pipeline of more than one gigawatt of demand likely to come from existing customers and a growing and more diverse group of select, quality, and stable customers as we see broader interest in our unique data center offerings. Companies are recognizing the ideal attributes of Cheyenne, Wyoming as a choice location for their data center operations and future expansion, given our industry-leading reliability, Wyoming's economic incentives, a rich fiber backbone, plentiful renewable generation opportunities, and favorable weather and climate conditions for their significant cooling needs. We are also continuing to evaluate data center and blockchain opportunities in Colorado and South Dakota, and we are working to implement a tariff construct which could add to future growth. With that update, I'll turn it over to Kimberly for our financial update. Kimberly?