# Black Hills Corp: Form 10-Q for the period ended Mar 31, 2024

- Company: [Black Hills Corp](/companies/bkh.md) (CIK 1130464)
- Form: 10-Q
- Filed: 2024-05-09
- Accepted by EDGAR: May 9, 2024, 15:35 ET
- Period: 2024-03-31
- Accession: 0000950170-24-056459
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1130464/000095017024056459/bkh-20240331.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1130464/000095017024056459/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-01-01 to 2024-03-31 | $717.2m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Operating income | 3 months, 2024-01-01 to 2024-03-31 | $193.3m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2024-01-01 to 2024-03-31 | $16.9m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-01-01 to 2024-03-31 | $127.9m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-01-01 to 2024-03-31 | $1.87 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-01-01 to 2024-03-31 | $1.88 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-01-01 to 2024-03-31 | 68,300,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2024-01-01 to 2024-03-31 | $233.4m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2024-01-01 to 2024-03-31 | $176.2m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 3 months, 2024-01-01 to 2024-03-31 | $44.4m | us-gaap:PaymentsOfDividends |
| Cash and equivalents | at 2024-03-31 | $123.0m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-03-31 | $797.6m | us-gaap:AssetsCurrent |
| Total assets | at 2024-03-31 | $9.68bn | us-gaap:Assets |
| Current liabilities | at 2024-03-31 | $1.09bn | us-gaap:LiabilitiesCurrent |
| Long-term debt | at 2024-03-31 | $3.80bn | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2024-03-31 | $600.0m | us-gaap:LongTermDebtCurrent |
| Short-term borrowings | at 2024-03-31 | $0 | us-gaap:ShortTermBorrowings |
| Shareholders' equity | at 2024-03-31 | $3.33bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 29,238 characters.

The following discussions should be read in conjunction with the Notes contained herein and Management's Discussion and Analysis of Financial Condition and Results of Operations appearing in the 2023 Form 10-K.

### Executive Summary

We are a customer-focused energy solutions provider with a mission of *Improving Life with Energy* for more than 1.3 million customers and 800+ communities we serve. Our aspiration is to be the trusted energy partner across our growing eight-state footprint, including Arkansas, Colorado, Iowa, Kansas, Montana, Nebraska, South Dakota and Wyoming. Our strategy is centered on four critical priorities: *Growth—*to grow strategically and achieve strong financial performance, *Operational Excellence—*delivering safe, reliable and cost-effective energy to meet our customers’ needs, *Transformation—*be a simple and connected company positioned for growth, and *People & Culture—*retain and attract a talented, engaged and thriving team.

We conduct our business operations through two operating segments: Electric Utilities and Gas Utilities. Certain unallocated corporate expenses that support our operating segments are presented as Corporate and Other. We conduct our utility operations under the name Black Hills Energy predominantly in rural areas of the Rocky Mountains and Midwestern states. We consider ourself a domestic electric and natural gas utility company.

We have provided energy and served customers for 140 years, since the 1883 gold rush days in Deadwood, South Dakota. Throughout our history, the common thread that unites the past to the present is our commitment to serve our customers and communities. By being responsive and service focused, we can help our customers and communities thrive while meeting rapidly changing customer expectations.

### Recent Developments

### Environmental Matters - Power Plant Greenhouse Gas Regulations

In April 2024, the EPA published final rules addressing control of CO2 emissions from the power sector. The rules regulate new natural gas generating units and emission guidelines for existing coal and certain natural gas generation. The rules create subcategories of coal units based on planned retirement date and subcategories of natural gas combustion turbines and combined cycle units based on utilization. The CO2 control requirements vary by subcategory. We are currently evaluating the impact of these rules and believe that most costs incurred as a result of the new rules will be recoverable through our regulatory mechanisms.

### Business Segment Recent Developments

#### Electric Utilities

- On April 17, 2024, Colorado Electric filed its 120-Day report with the CPUC, recommending 400 MW of renewable energy resources to advance its Clean Energy Plan. Colorado Electric is proposing a preferred portfolio of resources that will add a 200 MW utility-scale solar build-transfer project, 150 MW of wind energy through a power purchase agreement, and a 50 MW battery storage build-transfer project. The energy resources are expected to be in service between 2026 and 2027 and achieve greenhouse gas emission reductions of an estimated 89% by 2030 off a 2005 base. The final composition of resources and timing is subject to review and approval by the CPUC, which is expected in the third quarter of 2024.
- On January 11, 2024 Wyoming Electric set a new all-time and winter peak load of 314 MW, surpassing the previous winter peak of 301 MW set on December 26, 2023 and all-time peak of 312 MW set on July 24, 2023.

#### Gas Utilities

- See Note 2 of the Condensed Notes to Consolidated Financial Statements for recent rate review activity for Arkansas Gas, Colorado Gas, Iowa Gas and Wyoming Gas.
- In January 2024, Black Hills Energy Renewable Resources acquired a RNG production facility at a landfill in Dubuque, Iowa. The facility currently injects RNG into the natural gas distribution system serving Dubuque, which is owned and operated by Iowa Gas. This acquisition represents our entry into the production of RNG as a nonregulated business while leveraging our expertise in owning and operating regulated natural gas pipeline systems, including RNG interconnections. The RNG produced from the landfill facility captures methane that would otherwise vent into the atmosphere. It is delivered under long-term contracts to a third party that purchases the RNG and its related environmental attributes, in conformity with the EPA's Renewable Fuel Standard Program.

### Results of Operations

Certain lines of business in which we operate are highly seasonal, and revenue from, and certain expenses for, such operations may fluctuate significantly among quarterly periods. Demand for electricity and natural gas is sensitive to seasonal cooling, heating and industrial load requirements. In particular, the normal peak usage season for our Electric Utilities is June through August while the normal peak usage season for our Gas Utilities is November through March. Significant earnings variances can be expected between the Gas Utilities segment’s peak and off-peak seasons. Due to this seasonal nature, our results of operations for the three months ended March 31, 2024 and 2023, and our financial condition as of March 31, 2024 and December 31, 2023, are not necessarily indicative of the results of operations and financial condition to be expected as of or for any other period or for the entire year.

All amounts are presented on a pre-tax basis unless otherwise indicated. Minor differences in amounts may result due to rounding.

### Consolidated Summary and Overview

*(in millions, except per share amounts)*

| Operating income (loss): | Three Months Ended March 31, 2024 | 2023 | 2024 vs 2023 Variance |
| --- | ---: | ---: | ---: |
| Electric Utilities | $64.6 | $61.1 | $3.5 |
| Gas Utilities | 130.8 | 114.6 | 16.2 |
| Corporate and Other (a) | (2.1) | (0.8) | (1.3) |
| Operating income | 193.3 | 174.9 | 18.4 |
| Interest expense, net | (44.0) | (43.5) | (0.5) |
| Other income (expense), net | (0.8) | 0.7 | (1.5) |
| Income tax (expense) | (16.9) | (14.7) | (2.2) |
| Net income | 131.6 | 117.4 | 14.2 |
| Net income attributable to non-controlling interest | (3.7) | (3.3) | (0.4) |
| Net income available for common stock | $127.9 | $114.1 | $13.8 |
| Total earnings per share of common stock, Diluted | $1.87 | $1.73 | $0.14 |

(a) Includes inter-segment eliminations.

#### Three Months Ended March 31, 2024 Compared to the Three Months Ended March 31, 2023:

The variance to the prior year included the following:

- Electric Utilities’ operating income increased $3.5 million primarily due to new rates and rider recovery driven by the Wyoming Electric rate review and lower operating expenses partially offset by a prior year one-time gain on the sale of Northern Iowa Windpower;
- Gas Utilities’ operating income increased $16.2 million primarily due to new rates and rider recovery driven by the Colorado Gas and Wyoming Gas rate reviews, favorable mark-to-market adjustments on wholesale commodity contracts and lower operating expenses partially offset by unfavorable weather;
- Income tax expense increased $2.2 million primarily driven by higher pre-tax income.

### Segment Operating Results

A discussion of operating results from our business segments follows. Unless otherwise indicated, segment information does not include inter-company eliminations and amounts are presented on a pre-tax basis.

### Non-GAAP Financial Measures

The following discussion includes financial information prepared in accordance with GAAP, as well as another financial measure, Electric and Gas Utility margin, that is considered a “non-GAAP financial measure.” Generally, a non-GAAP financial measure is a numerical measure of a company’s financial performance, financial position or cash flows that excludes (or includes) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP. Electric and Gas Utility margin (revenue less cost of sales) is a non-GAAP financial measure due to the exclusion of operation and maintenance expenses, depreciation and amortization expenses, and property and production taxes from the measure.

Electric Utility margin is calculated as operating revenue less cost of fuel and purchased power. Gas Utility margin is calculated as operating revenue less cost of natural gas sold. Our Electric and Gas Utility margin is impacted by the fluctuations in power and natural gas purchases and other fuel supply costs. However, while these fluctuating costs impact Electric and Gas Utility margin as a percentage of revenue, they only impact total Electric and Gas Utility margin if the costs cannot be passed through to our customers.

Our Electric and Gas Utility margin measure may not be comparable to other companies’ Electric and Gas Utility margin measures. Furthermore, this measure is not intended to replace operating income as determined in accordance with GAAP as an indicator of operating performance.

### Electric Utilities

Operating results for the Electric Utilities were as follows:

*(in millions)*

| Revenue: | Three Months Ended March 31, 2024 | 2023 | 2024 vs 2023 Variance |
| --- | ---: | ---: | ---: |
| Electric - regulated | $210.8 | $206.7 | $4.1 |
| Other - non-regulated | 11.4 | 12.0 | (0.6) |
| Total revenue | 222.2 | 218.7 | 3.5 |
| Cost of fuel and purchased power: |  |  |  |
| Electric - regulated | 54.3 | 54.7 | (0.4) |
| Other - non-regulated | 0.5 | 0.7 | (0.2) |
| Total cost of fuel and purchased power | 54.8 | 55.4 | (0.6) |
| Electric Utility margin (non-GAAP) | 167.4 | 163.3 | 4.1 |
| Operations and maintenance | 57.5 | 57.4 | 0.1 |
| Depreciation and amortization | 35.3 | 35.1 | 0.2 |
| Taxes - property and production | 10.0 | 9.7 | 0.3 |
|  | 102.8 | 102.2 | 0.6 |
| Operating income | $64.6 | $61.1 | $3.5 |

#### Three Months Ended March 31, 2024, Compared to the Three Months Ended March 31, 2023:

Electric Utility margin increased as a result of the following:

*(in millions)*

|  |  |
| --- | ---: |
| New rates and rider recovery | $8.8 |
| Off-system excess energy sales | (2.3) |
| Weather | (1.2) |
| Other | (1.2) |
|  | $4.1 |

28

Operations and maintenance expense was comparable to the same period in the prior year primarily due to $4.5 million of lower outside services expenses, $2.0 million of lower employee-related expenses and $1.3 million of lower generation expenses driven by the timing of planned outages offset by a prior year one-time $7.7 million gain on the sale of Northern Iowa Windpower assets.

Depreciation and amortization was comparable to the same period in the prior year.

Taxes - property and production was comparable to the same period in the prior year.

#### Operating Statistics

|  | Revenue (in millions) Three Months Ended March 31, 2024 | 2023 | Quantities Sold (GWh) Three Months Ended March 31, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Residential | $62.5 | $59.8 | 388.8 | 393.9 |
| Commercial | 66.7 | 62.1 | 511.8 | 510.8 |
| Industrial | 44.1 | 38.9 | 553.6 | 455.9 |
| Municipal | 4.3 | 4.3 | 34.2 | 35.8 |
| Subtotal Retail Revenue - Electric | 177.6 | 165.1 | 1,488.4 | 1,396.4 |
| Contract Wholesale | 5.4 | 5.4 | 148.0 | 144.7 |
| Off-system/Power Marketing Wholesale (a) | 3.4 | 16.1 | 115.6 | 256.9 |
| Other (b) | 24.4 | 20.1 | - | - |
| Total Regulated | 210.8 | 206.7 | 1,752.0 | 1,798.0 |
| Non-Regulated (c) | 11.4 | 12.0 | 28.0 | 54.4 |
| Total Revenue and Quantities Sold | $222.2 | $218.7 | 1,780.0 | 1,852.4 |
| Other Uses, Losses or Generation, net (d) |  |  | 101.8 | 138.3 |
| Total Energy |  |  | 1,881.8 | 1,990.7 |

(a) Off-system/Power Marketing Wholesale revenues decreased for the three months ended March 31, 2024 compared to the same period in the prior year primarily due to lower excess capacity, lower commodity prices and warmer winter weather.

(b) Primarily related to transmission revenues from the Common Use System.

(c) Includes Integrated Generation and non-regulated services to our retail customers under the Service Guard Comfort Plan and Tech Services.

(d) Includes company uses and line losses.

|  | Revenue (in millions) Three Months Ended March 31, 2024 | 2023 | Quantities Sold (GWh) Three Months Ended March 31, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Colorado Electric | $69.7 | $73.8 | 555.7 | 604.5 |
| South Dakota Electric | 80.6 | 86.6 | 621.1 | 708.8 |
| Wyoming Electric | 60.8 | 46.7 | 575.2 | 484.7 |
| Integrated Generation | 11.1 | 11.6 | 28.0 | 54.4 |
| Total Revenue and Quantities Sold | $222.2 | $218.7 | 1,780.0 | 1,852.4 |

| Quantities Generated and Purchased by Fuel Type (GWh) Generated: | Three Months Ended March 31, 2024 | 2023 |
| --- | ---: | ---: |
| Coal | 680.7 | 675.0 |
| Natural Gas and Oil | 523.4 | 501.1 |
| Wind (a) | 174.0 | 230.7 |
| Total Generated | 1,378.1 | 1,406.8 |
| Purchased: |  |  |
| Coal, Natural Gas, Oil and Other Market Purchases | 288.9 | 489.8 |
| Wind and Solar (b) | 214.8 | 94.1 |
| Total Purchased | 503.7 | 583.9 |
| Total Generated and Purchased | 1,881.8 | 1,990.7 |

(a) Wind generation decreased for the three months ended March 31, 2024 compared to the same period in the prior year primarily due to the sale of Northern Iowa Windpower assets in March 2023.

(b) Renewable energy purchases increased for the three months ended March 31, 2024, compared to the same period in the prior year primarily due to a new wind energy PPA. In 2022, Wyoming Electric entered into a new PPA with a third party to purchase up to 106 MW of wind energy upon construction of a new renewable generation facility (owned by third party). The new wind generation facility was placed in service in December 2023. The renewable energy from this PPA is used to serve our expanding partnerships with data centers.

| Quantities Generated and Purchased (GWh) Generated: | Three Months Ended March 31, 2024 | 2023 |
| --- | ---: | ---: |
| Colorado Electric | 161.6 | 160.2 |
| South Dakota Electric | 534.6 | 564.0 |
| Wyoming Electric | 215.2 | 230.6 |
| Integrated Generation | 466.7 | 452.0 |
| Total Generated | 1,378.1 | 1,406.8 |
| Purchased: |  |  |
| Colorado Electric | 90.2 | 197.6 |
| South Dakota Electric | 100.6 | 157.0 |
| Wyoming Electric | 295.7 | 209.8 |
| Integrated Generation | 17.2 | 19.5 |
| Total Purchased | 503.7 | 583.9 |
| Total Generated and Purchased | 1,881.8 | 1,990.7 |

| Degree Days Heating Degree Days: | Three Months Ended March 31, 2024 Actual | Variance from Normal | 2023 Actual | Variance from Normal |
| --- | ---: | ---: | ---: | ---: |
| Colorado Electric | 2,507 | (6)% | 2,751 | 8% |
| South Dakota Electric | 3,134 | (9)% | 3,446 | 5% |
| Wyoming Electric | 2,986 | (5)% | 3,301 | 10% |
| Combined (a) | 2,820 | (7)% | 3,099 | 7% |

(a) Degree days are calculated based on a weighted average of total customers by state.

| Contracted generating facilities Availability(a) by fuel type | Three Months Ended March 31, 2024 | 2023 |
| --- | ---: | ---: |
| Coal | 95.6% | 92.7% |
| Natural gas and diesel oil | 96.7% | 94.3% |
| Wind | 90.3% | 92.5% |
| Total Availability | 95.5% | 93.6% |
| Wind Capacity Factor (a) | 39.8% | 48.1% |

(a) Availability and Wind Capacity Factor are calculated using a weighted average based on capacity of our generating fleet.

### Gas Utilities

Operating results for the Gas Utilities were as follows:

*(in millions)*

| Revenue: | Three Months Ended March 31, 2024 | 2023 | 2024 vs 2023 Variance |
| --- | ---: | ---: | ---: |
| Natural gas - regulated | $481.7 | $674.8 | $(193.1) |
| Other - non-regulated | 27.0 | 32.1 | (5.1) |
| Total revenue | 508.7 | 706.9 | (198.2) |
| Cost of natural gas sold: |  |  |  |
| Natural gas - regulated | 259.9 | 454.1 | (194.2) |
| Other - non-regulated | 2.0 | 16.9 | (14.9) |
| Total cost of natural gas sold | 261.9 | 471.0 | (209.1) |
| Gas Utility margin (non-GAAP) | 246.8 | 235.9 | 10.9 |
| Operations and maintenance | 78.6 | 87.1 | (8.5) |
| Depreciation and amortization | 30.4 | 26.5 | 3.9 |
| Taxes - property and production | 7.0 | 7.7 | (0.7) |
|  | 116.0 | 121.3 | (5.3) |
| Operating income | $130.8 | $114.6 | $16.2 |

#### Three Months Ended March 31, 2024, Compared to the Three Months Ended March 31, 2023:

Gas Utility margin increased as a result of the following:

*(in millions)*

|  |  |
| --- | ---: |
| New rates and rider recovery | $13.1 |
| Mark-to-market on non-utility natural gas commodity contracts | 3.7 |
| Retail customer growth and usage | 1.1 |
| Weather | (7.4) |
| Other | 0.4 |
|  | $10.9 |

Operations and maintenance expense decreased primarily due to $5.3 million of lower employee-related expenses, $1.6 million of lower bad debt expense attributable to lower customer billings and $1.2 million of lower travel expenses.

Depreciation and amortization increased primarily due to a higher asset base driven by prior year capital expenditures.

Taxes - property and production was comparable to the same period in the prior year.

#### Operating Statistics

|  | Revenue (in millions) Three Months Ended March 31, 2024 | 2023 | Quantities Sold and Transported (Dth in millions) Three Months Ended March 31, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Residential | $302.0 | $428.6 | 27.8 | 29.9 |
| Commercial | 119.8 | 182.5 | 13.0 | 14.0 |
| Industrial | 5.1 | 9.2 | 0.9 | 1.1 |
| Other | 2.8 | 1.4 | - | - |
| Total Distribution (a) | 429.7 | 621.7 | 41.7 | 45.0 |
| Transportation and Transmission | 52.0 | 53.1 | 46.7 | 47.2 |
| Total Regulated | 481.7 | 674.8 | 88.4 | 92.2 |
| Non-regulated Services (b) | 27.0 | 32.1 | - | - |
| Total Revenue and Quantities Sold | $508.7 | $706.9 | 88.4 | 92.2 |

(a) Gas distribution revenues decreased for the three months ended March 31, 2024, compared to the same period in the prior year primarily due to lower commodity prices. Our Utilities have regulatory mechanisms that allow them to pass prudently incurred costs of energy through to the customer. Customer billing rates are adjusted periodically to reflect changes in our cost of energy.

(b) Includes Black Hills Energy Services and non-regulated services under the Service Guard Comfort Plan, Tech Services and HomeServe.

|  | Revenue (in millions) Three Months Ended March 31, 2024 | 2023 | Quantities Sold and Transported (Dth in millions) Three Months Ended March 31, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Arkansas Gas | $110.7 | $126.6 | 12.0 | 11.5 |
| Colorado Gas | 117.7 | 144.9 | 12.9 | 14.1 |
| Iowa Gas | 61.8 | 125.5 | 13.5 | 14.3 |
| Kansas Gas | 50.3 | 72.2 | 9.7 | 11.2 |
| Nebraska Gas | 114.3 | 164.9 | 27.1 | 27.1 |
| Wyoming Gas | 53.9 | 72.8 | 13.2 | 14.0 |
| Total Revenue and Quantities Sold | $508.7 | $706.9 | 88.4 | 92.2 |

| Heating Degree Days | Three Months Ended March 31, 2024 Actual | Variance from Normal | 2023 Actual | Variance from Normal |
| --- | ---: | ---: | ---: | ---: |
| Arkansas Gas (a) | 1,772 | (12)% | 1,666 | (18)% |
| Colorado Gas | 2,743 | (3)% | 3,087 | 10% |
| Iowa Gas | 2,898 | (16)% | 3,247 | (6)% |
| Kansas Gas (a) | 2,291 | (7)% | 2,373 | (4)% |
| Nebraska Gas | 2,802 | (9)% | 3,054 | --% |
| Wyoming Gas | 3,156 | (3)% | 3,624 | 21% |
| Combined (b) | 2,865 | (8)% | 3,196 | 4% |

(a) Arkansas Gas and Kansas Gas have weather normalization mechanisms that mitigate the weather impact on gross margins.

(b) The combined heating degree days are calculated based on a weighted average of total customers by state excluding Kansas Gas due to its weather normalization mechanism. Arkansas Gas is partially excluded based on the weather normalization mechanism in effect from November through April.

### Corporate and Other

Corporate and Other operating results, including inter-segment eliminations, were as follows:

*(in millions)*

|  | Three Months Ended March 31, 2024 | 2023 | 2024 vs 2023 Variance |
| --- | ---: | ---: | ---: |
| Operating (loss) | $(2.1) | $(0.8) | $(1.3) |

#### Three Months Ended March 31, 2024, Compared to the Three Months Ended March 31, 2023:

Operating loss was comparable to the same period in the prior year.

### Consolidated Interest Expense, Other Income and Income Tax Expense

*(in millions)*

|  | Three Months Ended March 31, 2024 | 2023 | 2024 vs 2023 Variance |
| --- | ---: | ---: | ---: |
| Interest expense, net | $(44.0) | $(43.5) | $(0.5) |
| Other income (expense), net | (0.8) | 0.7 | (1.5) |
| Income tax (expense) | (16.9) | (14.7) | (2.2) |

#### Three Months Ended March 31, 2024, Compared to the Three Months Ended March 31, 2023:

Interest expense, net was comparable to the same period in the prior year.

Other income (expense), net was comparable to the same period in the prior year.

Income tax (expense) increased primarily due to higher pre-tax income. The effective tax rate was comparable to the same period in the prior year. See Note 11 of the Condensed Notes to Consolidated Financial Statements for further information on the effective tax rate.

### Liquidity and Capital Resources

There have been no material changes in Liquidity and Capital Resources from those reported in Item 7 of our 2023 Annual Report on Form 10-K except as described below.

### CASH FLOW ACTIVITIES

The following tables summarize our cash flows for the three months ended March 31, 2024:

### Operating Activities:

*(in millions)*

|  | Three Months Ended March 31, 2024 | 2023 | 2024 vs 2023 Variance |
| --- | ---: | ---: | ---: |
| Net income | $131.6 | $117.4 | $14.2 |
| Non-cash adjustments to Net income | $90.4 | $80.8 | $9.6 |
| Total earnings | $222.0 | $198.2 | $23.8 |
| Changes in certain operating assets and liabilities: |  |  |  |
| Accounts receivable and other current assets | 19.1 | 104.8 | (85.7) |
| Accounts payable and accrued liabilities | (59.6) | (127.2) | 67.6 |
| Regulatory assets | 54.8 | 154.7 | (99.9) |
|  | $14.3 | $132.3 | $(118.0) |
| Other operating activities | (2.9) | (1.8) | (1.1) |
| Net cash provided by operating activities | $233.4 | $328.7 | $(95.3) |

#### Three Months Ended March 31, 2024, Compared to the Three Months Ended March 31, 2023

Net cash provided by operating activities was $95.3 million lower than the same period in 2023. The variance to the prior year was primarily attributable to:

- Total earnings (net income plus non-cash adjustments) were $23.8 million higher for the three months ended March 31, 2024 compared to the same period in the prior year primarily due to increased Electric and Gas Utility margins driven by new rates and increased rider revenues and lower operating expenses.
- Net inflows from changes in certain operating assets and liabilities were $118.0 million lower, primarily attributable to:
- Cash inflows decreased by $85.7 million as a result of changes in accounts receivable and other current assets primarily driven by fluctuations in commodity prices and weather conditions;
- Cash outflows decreased by $67.6 million as a result of changes in accounts payable and accrued liabilities primarily driven by fluctuations in commodity prices, payment timing of natural gas and power purchases and changes in other working capital requirements; and
- Cash inflows decreased by $99.9 million as a result of changes in our regulatory assets and liabilities primarily due to lower recoveries of deferred gas and fuel cost adjustments driven by fluctuations in commodity prices.
- Cash outflows increased by $1.1 million for other operating activities.

### Investing Activities:

*(in millions)*

|  | Three Months Ended March 31, 2024 | 2023 | 2024 vs 2023 Variance |
| --- | ---: | ---: | ---: |
| Capital expenditures | $(176.2) | $(119.1) | $(57.1) |
| Other investing activities | (0.7) | 17.6 | (18.3) |
| Net cash (used in) investing activities | $(176.9) | $(101.5) | $(75.4) |

#### Three Months Ended March 31, 2024, Compared to the Three Months Ended March 31, 2023

Net cash used in investing activities was $75.4 million higher than the same period in 2023. The variance to the prior year was primarily attributable to:

- Cash outflows increased by $57.1 million as a result of higher capital expenditures which were primarily driven by Wyoming Electric's *Ready Wyoming* electric transmission expansion project and Black Hills Energy Renewable Resources' acquisition of a RNG production facility at a landfill in Dubuque, Iowa; and
- Cash inflows decreased by $18.3 million for other investing activities primarily due to prior year proceeds from the sale of Northern Iowa Windpower assets.

### Financing Activities:

*(in millions)*

|  | Three Months Ended March 31, 2024 | 2023 | 2024 vs 2023 Variance |
| --- | ---: | ---: | ---: |
| Dividends paid on common stock | $(44.4) | $(41.4) | $(3.0) |
| Common stock issued | 31.2 | 27.4 | 3.8 |
| Short-term and long-term debt borrowings, net | - | (185.6) | 185.6 |
| Distributions to non-controlling interests | (5.6) | (4.5) | (1.1) |
| Other financing activities | (1.0) | (5.0) | 4.0 |
| Net cash (used in) financing activities | $(19.8) | $(209.1) | $189.3 |

#### Three Months Ended March 31, 2024, Compared to the Three Months Ended March 31, 2023

Net cash used in financing activities was $189.3 million lower than the same period in 2023. The variance to the prior year was primarily attributable to:

- Cash outflows decreased $185.6 million as a result of prior year net repayment activity under our Revolving Credit Facility and CP Program;
- Cash inflows increased $3.8 million due to higher issuances of common stock;
- Cash outflows increased $3.0 million due to increased dividends paid on common stock; and
- Cash outflows decreased by $4.0 million for other financing activities.

### CAPITAL RESOURCES

See Note 5 of the Condensed Notes to Consolidated Financial Statements for recent financing updates.

### Covenant Requirements

The Revolving Credit Facility and Wyoming Electric’s financing agreements contain covenant requirements. We were in compliance with these covenants as of March 31, 2024. See Note 5 of the Condensed Notes to Consolidated Financial Statements for more information.

### Future Financing Plans

We will continue to assess debt and equity needs to support our capital investment plans and other strategic objectives. We plan to fund our capital plan and strategic objectives by using cash generated from operating activities and various financing alternatives, which could include our Revolving Credit Facility, our CP Program, the issuance of common stock under our ATM program or in an opportunistic block trade. We plan to re-finance our $600 million, 1.037%, senior unsecured notes due August 23, 2024, at or before maturity date.

### CREDIT RATINGS

The following table represents the credit ratings and outlook and risk profile of BHC at March 31, 2024:

| Rating Agency | Senior Unsecured Rating | Outlook |
| --- | --- | --- |
| S&P | BBB+ | Stable |
| Moody's | Baa2 | Stable |
| Fitch (a) | BBB+ | Negative |

(a) On January 26, 2024, Fitch reported BBB+ rating and revised to a Negative outlook.

The following table represents the credit ratings of South Dakota Electric at March 31, 2024:

| Rating Agency | Senior Secured Rating |
| --- | --- |
| S&P | A |
| Fitch | A |

### CAPITAL REQUIREMENTS

### Capital Expenditures

*(in millions)*

| Capital Expenditures by Segment | Actual Three Months Ended March 31, 2024 (a) | Forecasted 2024 (b) | 2025 | 2026 | 2027 | 2028 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Electric Utilities | $87 | $409 | $287 | $466 | $199 | $264 |
| Gas Utilities | 85 | 407 | 387 | 368 | 372 | 373 |
| Corporate and Other | 2 | 24 | 29 | 29 | 27 | 29 |
| Incremental Projects (c) | - | - | 100 | 400 | 50 | 50 |
|  | $174 | $840 | $803 | $1,263 | $648 | $716 |

(a) Includes accruals for property, plant and equipment as disclosed in supplemental cash flow information in the Consolidated Statements of Cash Flows in the Consolidated Financial Statements.

(b) Includes actual capital expenditures for the three months ended March 31, 2024.

(c) These represent projects that are being evaluated by our segments for timing, cost and other factors.

### Dividends

Dividends paid on our common stock totaled $44.4 million for the three months ended March 31, 2024, or $0.65 per share. On April 22, 2024, our board of directors declared a quarterly dividend of $0.65 per share payable June 1, 2024, equivalent to an annual dividend of $2.60 per share. The amount of any future cash dividends to be declared and paid, if any, will depend upon, among other things, our financial condition, funds from operations, the level of our capital expenditures, restrictions under our Revolving Credit Facility and our future business prospects.

### Critical Accounting Estimates

A summary of our critical accounting estimates is included in our 2023 Annual Report on Form 10-K. There were no material changes made as of March 31, 2024.

### New Accounting Pronouncements

Other than the pronouncements reported in our 2023 Annual Report on Form 10-K and those discussed in Note 1 of the Condensed Notes to Consolidated Financial Statements, there have been no new accounting pronouncements that are expected to have a material effect on our financial position, results of operations or cash flows.

## Market risk

As filed, 173 characters.

There have been no material changes to our quantitative and qualitative disclosures about market risk previously disclosed in Item 7A of our 2023 Annual Report on Form 10-K.

## Controls and procedures

As filed, 1,189 characters.

Our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of March 31, 2024. Based on their evaluation, they have concluded that our disclosure controls and procedures were effective at March 31, 2024.

Our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

### Changes in Internal Control over Financial Reporting

During the quarter ended March 31, 2024, there have been no changes in our internal controls over financial reporting that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

## Risk factors

As filed, 131 characters.

There are no material changes to the risk factors previously disclosed in Item 1A of Part I in our 2023 Annual Report on Form 10-K.

Filed May 9, 2024.
Source: SEC EDGAR, the filing index for accession 0000950170-24-056459. Last ingested by Listed: Oct 24, 2026, 15:05 ET. No prices; not investment advice.