# Black Hills Corp: Form 10-Q for the period ended Sep 30, 2024

- Company: [Black Hills Corp](/companies/bkh.md) (CIK 1130464)
- Form: 10-Q
- Filed: 2024-11-07
- Accepted by EDGAR: Nov 7, 2024, 16:39 ET
- Period: 2024-09-30
- Accession: 0000950170-24-122969
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1130464/000095017024122969/bkh-20240930.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1130464/000095017024122969/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-07-01 to 2024-09-30 | $398.6m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2024-01-01 to 2024-09-30 | $1.51bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Operating income | 3 months, 2024-07-01 to 2024-09-30 | $75.8m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2024-01-01 to 2024-09-30 | $339.8m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2024-07-01 to 2024-09-30 | $2.9m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2024-01-01 to 2024-09-30 | $23.6m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-07-01 to 2024-09-30 | $24.4m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2024-01-01 to 2024-09-30 | $175.0m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-07-01 to 2024-09-30 | $0.35 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2024-01-01 to 2024-09-30 | $2.52 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-07-01 to 2024-09-30 | $0.35 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2024-01-01 to 2024-09-30 | $2.53 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-07-01 to 2024-09-30 | 70,600,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2024-01-01 to 2024-09-30 | 69,300,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2024-01-01 to 2024-09-30 | $566.1m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2024-01-01 to 2024-09-30 | $530.5m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 9 months, 2024-01-01 to 2024-09-30 | $135.8m | us-gaap:PaymentsOfDividends |
| Cash and equivalents | at 2024-09-30 | $12.5m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-09-30 | $599.5m | us-gaap:AssetsCurrent |
| Total assets | at 2024-09-30 | $9.72bn | us-gaap:Assets |
| Current liabilities | at 2024-09-30 | $536.2m | us-gaap:LiabilitiesCurrent |
| Long-term debt | at 2024-09-30 | $4.25bn | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2024-09-30 | $0 | us-gaap:LongTermDebtCurrent |
| Short-term borrowings | at 2024-09-30 | $17.5m | us-gaap:ShortTermBorrowings |
| Shareholders' equity | at 2024-09-30 | $3.45bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 40,705 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 provide 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 through our integrated resource plans and believe that costs incurred as a result of the new rules will be recoverable through our regulatory mechanisms.

### Business Segment Recent Developments

#### Electric Utilities

- See Note 2 of the Condensed Notes to Consolidated Financial Statements for recent rate review activity for Colorado Electric.
- South Dakota Electric continues to pursue adding 100 MW of utility-owned, dispatchable natural gas generation by the second half of 2026. During the first quarter of 2025, South Dakota Electric expects to file for a permit to construct the project in South Dakota and request a CPCN in Wyoming.
- Wyoming Electric continues construction on Ready Wyoming, which is on schedule and expected to be completed in multiple segments in 2024 and 2025.
- On July 11, 2024, Wyoming Electric announced its partnership with Meta to provide power for its newest AI data center to be constructed in Cheyenne, Wyoming. Wyoming Electric will serve Meta under its Large Power Contract Service tariff and will procure customized energy resources essential to Meta's operations and sustainability objectives.
- On April 17, 2024, Colorado Electric filed its 120-Day report with the CPUC recommending the addition of renewable energy resources to advance its Clean Energy Plan. The final composition of resources and timing is subject to review and approval by the CPUC, which is expected later this year.
- 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 non-regulated 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.

#### Corporate and Other

- See Note 5 of the Condensed Notes to Consolidated Financial Statements for information regarding our ATM program activity and our May 16, 2024, debt offering.
- On May 31, 2024, we amended and restated our corporate Revolving Credit Facility. See Note 5 of the Notes to Condensed Consolidated Financial Statements for further information.
- During the second quarter of 2024, we published our 2023 Corporate Sustainability Report, highlighting our environmental, social and governance impacts and our progress on major projects and climate goals. We reported a 27% reduction in greenhouse gas emissions from our natural gas distribution system since 2022 and are on track to achieve our goal of net zero emissions by 2035. Additionally, we have reduced our electric utility greenhouse gas emissions by nearly one-third since 2005 and are on track to achieve our goals to reduce electric emissions intensity by 40% by 2030 and 70% by 2040 compared to 2005.

### 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 and nine months ended September 30, 2024, and 2023, and our financial condition as of September 30, 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 September 30, 2024 | 2023 | 2024 vs 2023 Variance | Nine Months Ended September 30, 2024 | 2023 | 2024 vs 2023 Variance |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Electric Utilities | $65.1 | $83.0 | $(17.9) | $176.0 | $190.7 | $(14.7) |
| Gas Utilities | 10.9 | 15.4 | (4.5) | 164.6 | 147.7 | 16.9 |
| Corporate and Other (a) | (0.2) | (0.6) | 0.4 | (0.8) | (2.2) | 1.4 |
| Operating income | 75.8 | 97.8 | (22.0) | 339.8 | 336.2 | 3.6 |
| Interest expense, net | (45.2) | (41.0) | (4.2) | (131.9) | (126.0) | (5.9) |
| Other income (expense), net | (1.3) | (0.6) | (0.7) | (1.7) | (1.5) | (0.2) |
| Income tax benefit (expense) | (2.9) | (7.4) | 4.5 | (23.6) | (16.0) | (7.6) |
| Net income | 26.4 | 48.8 | (22.4) | 182.6 | 192.7 | (10.1) |
| Net income attributable to non-controlling interest | (2.0) | (3.4) | 1.4 | (7.6) | (10.2) | 2.6 |
| Net income available for common stock | $24.4 | $45.4 | $(21.0) | $175.0 | $182.5 | $(7.5) |
| Total earnings per share of common stock, Diluted | $0.35 | $0.67 | $(0.32) | $2.52 | $2.74 | $(0.22) |

(a) Includes inter-segment eliminations.

#### Three Months Ended September 30, 2024, Compared to the Three Months Ended September 30, 2023:

The variance to the prior year included the following:

- Electric Utilities’ operating income decreased $17.9 million primarily due to higher operating expenses and unfavorable impacts from current year unplanned generation outages partially offset by new rates and rider recovery; and prior-year one-time benefits from a gain on sale of land to support data center growth and a recovery from our business interruption insurance;
- Gas Utilities’ operating income decreased $4.5 million primarily due to higher operating expenses partially offset by new rates and rider recovery driven by the Colorado Gas, Iowa Gas, RMNG and Wyoming Gas rate reviews;
- Net interest expense increased $4.2 million primarily due to higher interest rates partially offset by increased interest income; and
- Income tax expense decreased $4.5 million primarily driven by lower pre-tax income.

#### Nine Months Ended September 30, 2024, Compared to the Nine Months Ended September 30, 2023:

The variance to the prior year included the following:

- Electric Utilities’ operating income decreased $14.7 million primarily due to higher operating expenses and unfavorable impacts from current year unplanned generation outages partially offset by new rates and rider recovery; and prior-year one-time benefits from a gain on the sale of Northern Iowa Windpower assets, a gain on sale of land to support data center growth, and a recovery from our business interruption insurance;
- Gas Utilities’ operating income increased $16.9 million primarily due to new rates and rider recovery driven by the Colorado Gas, Iowa Gas, RMNG and Wyoming Gas rate reviews and retail customer growth and usage partially offset by higher operating expenses and unfavorable weather;
- Net interest expense increased $5.9 million primarily due to higher interest rates partially offset by increased interest income;
- Income tax expense increased $7.6 million driven by a higher effective tax rate primarily due to a prior-year $8.2 million tax benefit from a Nebraska income tax rate decrease; and
- Net income attributable to non-controlling interest decreased $2.6 million due to lower net income from Colorado IPP primarily driven by an unplanned generation outage.

### Segment Operating Results

A discussion of operating results from our business segments follows. Unless otherwise indicated, segment information does not include inter-segment eliminations.

### Non-GAAP Financial Measures

The following discussion includes financial information prepared in accordance with GAAP and a “non-GAAP financial measure", Electric and Gas Utility margin. 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 September 30, 2024 | 2023 | 2024 vs 2023 Variance | Nine Months Ended September 30, 2024 | 2023 | 2024 vs 2023 Variance |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Electric - regulated | $220.6 | $221.7 | $(1.1) | $626.4 | $611.2 | $15.2 |
| Other - non-regulated | 11.9 | 15.6 | (3.7) | 33.4 | 37.9 | (4.5) |
| Total revenue | 232.5 | 237.3 | (4.8) | 659.8 | 649.1 | 10.7 |
| Cost of fuel and purchased power: |  |  |  |  |  |  |
| Electric - regulated | 54.3 | 55.0 | (0.7) | 154.4 | 145.7 | 8.7 |
| Other - non-regulated | 0.6 | 0.4 | 0.2 | 1.3 | 1.5 | (0.2) |
| Total cost of fuel and purchased power | 54.9 | 55.4 | (0.5) | 155.7 | 147.2 | 8.5 |
| Electric Utility margin (non-GAAP) | 177.6 | 181.9 | (4.3) | 504.1 | 501.9 | 2.2 |
| Operations and maintenance | 65.1 | 53.9 | 11.2 | 190.5 | 176.8 | 13.7 |
| Depreciation and amortization | 38.0 | 35.8 | 2.2 | 108.9 | 106.7 | 2.2 |
| Taxes - property and production | 9.4 | 9.2 | 0.2 | 28.7 | 27.7 | 1.0 |
|  | 112.5 | 98.9 | 13.6 | 328.1 | 311.2 | 16.9 |
| Operating income | $65.1 | $83.0 | $(17.9) | $176.0 | $190.7 | $(14.7) |

32

#### Three Months Ended September 30, 2024, Compared to the Three Months Ended September 30, 2023:

Electric Utility margin decreased as a result of the following:

*(in millions)*

|  |  |
| --- | ---: |
| New rates and rider recovery | $4.2 |
| Weather | 1.6 |
| Retail customer growth and usage | 1.1 |
| Prior Year Wygen I revenue recovery under business interruption insurance (a) | (5.0) |
| Off-system excess energy sales | (2.8) |
| Unplanned generation outages | (2.3) |
| Other | (1.1) |
|  | $(4.3) |

(a) In 2021, Wygen I experienced an unplanned outage which resulted in lost revenue. A claim for these losses was submitted under our business interruption insurance policy. During the third quarter of 2023, we recovered $5.0 million from our business interruption insurance which was recognized as Revenue.

Operations and maintenance expense increased primarily due to a prior-year $3.9 million gain on sale of land, $3.2 million of costs related to unplanned generation outages, $1.6 million of higher office, facility and IT-related expenses, $1.4 million of higher insurance expense and $1.1 million of higher employee costs.

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

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

#### Nine Months Ended September 30, 2024, Compared to the Nine Months Ended September 30, 2023:

Electric Utility margin increased as a result of the following:

*(in millions)*

|  |  |
| --- | ---: |
| New rates and rider recovery | $14.7 |
| Weather | 2.8 |
| Off-system excess energy sales | (5.6) |
| Prior Year Wygen I revenue recovery under business interruption insurance (a) | (5.0) |
| Unplanned generation outages | (4.7) |
|  | $2.2 |

(a) In 2021, Wygen I experienced an unplanned outage which resulted in lost revenue. A claim for these losses was submitted under our business interruption insurance policy. During the third quarter of 2023, we recovered $5.0 million from our business interruption insurance which was recognized as Revenue.

Operations and maintenance expense increased primarily due to a prior-year one-time $7.7 million gain on the sale of Northern Iowa Windpower assets, a prior-year $3.9 million gain on sale of land, $4.2 million of costs related to unplanned generation outages and $3.0 million of higher insurance expense, partially offset by $2.1 million of lower employee-related expenses driven by lower headcount. Other favorable variances, none of which were individually significant, comprised the remainder of the difference when compared to the same period in the prior year.

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

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

#### Operating Statistics

| By customer class | Revenue (in millions) Three Months Ended September 30, 2024 | 2023 | Nine Months Ended September 30, 2024 | 2023 | Quantities Sold (GWh) Three Months Ended September 30, 2024 | 2023 | Nine Months Ended September 30, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Residential | $66.1 | $63.1 | $179.4 | $170.3 | 411.1 | 393.9 | 1,123.4 | 1,090.6 |
| Commercial | 71.3 | 69.5 | 202.6 | 195.1 | 571.9 | 567.1 | 1,590.6 | 1,576.1 |
| Industrial | 42.0 | 43.0 | 128.4 | 116.4 | 531.5 | 553.5 | 1,643.4 | 1,511.6 |
| Municipal | 4.4 | 4.7 | 12.8 | 13.2 | 41.4 | 42.7 | 111.7 | 116.1 |
| Subtotal Retail Revenue - Electric | 183.8 | 180.3 | 523.2 | 495.0 | 1,555.9 | 1,557.2 | 4,469.1 | 4,294.4 |
| Contract Wholesale | 3.8 | 6.8 | 13.2 | 15.4 | 99.4 | 140.6 | 385.0 | 403.7 |
| Off-system/Power Marketing Wholesale (a) | 7.4 | 9.6 | 14.8 | 31.7 | 227.0 | 138.4 | 506.8 | 518.5 |
| Other (b) | 25.6 | 25.0 | 75.2 | 69.1 | - | - | - | - |
| Total Regulated | 220.6 | 221.7 | 626.4 | 611.2 | 1,882.3 | 1,836.2 | 5,360.9 | 5,216.6 |
| Non-Regulated (c) | 11.9 | 15.6 | 33.4 | 37.9 | 25.0 | 25.4 | 74.2 | 102.6 |
| Total Revenue and Quantities Sold | $232.5 | $237.3 | $659.8 | $649.1 | 1,907.3 | 1,861.6 | 5,435.1 | 5,319.2 |
| Other Uses, Losses, or Generation, net (d) |  |  |  |  | 110.7 | 97.7 | 237.5 | 345.6 |
| Total Energy |  |  |  |  | 2,018.0 | 1,959.3 | 5,672.6 | 5,664.8 |

(a) Off-system/Power Marketing Wholesale revenues decreased for the nine months ended September 30, 2024, compared to the same period in the prior year primarily due to lower excess capacity and lower commodity prices.

(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.

| By business unit | Revenue (in millions) Three Months Ended September 30, 2024 | 2023 | Nine Months Ended September 30, 2024 | 2023 | Quantities Sold (GWh) Three Months Ended September 30, 2024 | 2023 | Nine Months Ended September 30, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Colorado Electric | $74.9 | $80.8 | $208.7 | $216.9 | 675.4 | 653.2 | 1,816.8 | 1,794.5 |
| South Dakota Electric | 86.0 | 83.0 | 242.5 | 240.6 | 669.8 | 622.7 | 1,882.3 | 1,876.7 |
| Wyoming Electric | 60.3 | 58.4 | 176.7 | 155.0 | 537.1 | 560.3 | 1,661.8 | 1,545.4 |
| Integrated Generation | 11.3 | 15.1 | 31.9 | 36.6 | 25.0 | 25.4 | 74.2 | 102.6 |
| Total Revenue and Quantities Sold | $232.5 | $237.3 | $659.8 | $649.1 | 1,907.3 | 1,861.6 | 5,435.1 | 5,319.2 |

| Quantities Generated and Purchased by Fuel Type (GWh) Generated: | Three Months Ended September 30, 2024 | 2023 | Nine Months Ended September 30, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Coal | 645.7 | 704.2 | 1,804.5 | 2,000.1 |
| Natural Gas and Oil | 714.4 | 540.9 | 1,689.3 | 1,493.2 |
| Wind | 141.8 | 138.6 | 477.5 | 519.9 |
| Total Generated | 1,501.9 | 1,383.7 | 3,971.3 | 4,013.2 |
| Purchased: |  |  |  |  |
| Coal, Natural Gas, Oil, and Other Market Purchases | 223.5 | 459.1 | 863.0 | 1,370.0 |
| Wind and Solar (a) | 292.6 | 116.5 | 838.3 | 281.6 |
| Total Purchased | 516.1 | 575.6 | 1,701.3 | 1,651.6 |
| Total Generated and Purchased | 2,018.0 | 1,959.3 | 5,672.6 | 5,664.8 |

(a) Renewable energy purchases increased for the three and nine months ended September 30, 2024, compared to the same period in the prior year primarily due to new wind and solar energy PPAs. In 2022, Wyoming Electric entered into two new PPAs with third parties to purchase up to 106 MW of wind energy and up to 150 MW of solar energy, upon construction of new renewable generation facilities (owned by third parties). The new wind generation facility was placed in service in December 2023 and the solar facility was placed in service in March 2024. The renewable energy from these PPAs is used to serve our expanding partnerships with data centers.

| Quantities Generated and Purchased (GWh) Generated: | Three Months Ended September 30, 2024 | 2023 | Nine Months Ended September 30, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Colorado Electric | 275.3 | 211.4 | 659.9 | 492.0 |
| South Dakota Electric | 549.1 | 489.2 | 1,503.5 | 1,500.7 |
| Wyoming Electric | 227.9 | 222.0 | 630.9 | 667.7 |
| Integrated Generation | 449.6 | 461.1 | 1,177.0 | 1,352.8 |
| Total Generated | 1,501.9 | 1,383.7 | 3,971.3 | 4,013.2 |
| Purchased: |  |  |  |  |
| Colorado Electric | 67.2 | 116.2 | 330.1 | 442.2 |
| South Dakota Electric | 161.8 | 177.4 | 425.4 | 438.7 |
| Wyoming Electric | 269.0 | 267.6 | 894.5 | 723.5 |
| Integrated Generation | 18.1 | 14.4 | 51.3 | 47.2 |
| Total Purchased | 516.1 | 575.6 | 1,701.3 | 1,651.6 |
| Total Generated and Purchased | 2,018.0 | 1,959.3 | 5,672.6 | 5,664.8 |

| Degree Days Heating Degree Days: | Three Months Ended September 30, 2024 Actual | Variance from Normal | 2023 Actual | Variance from Normal | Nine Months Ended September 30, 2024 Actual | Variance from Normal | 2023 Actual | Variance from Normal |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Colorado Electric | 19 | (57)% | 26 | (42)% | 3,050 | (8)% | 3,365 | 5% |
| South Dakota Electric | 48 | (71)% | 140 | (15)% | 4,080 | (12)% | 4,621 | 2% |
| Wyoming Electric | 109 | (35)% | 152 | (12)% | 4,135 | (8)% | 4,534 | 4% |
| Combined (a) | 47 | (58)% | 91 | (19)% | 3,624 | (10)% | 4,031 | 4% |
| Cooling Degree Days: |  |  |  |  |  |  |  |  |
| Colorado Electric | 904 | 5% | 909 | 6% | 1,247 | 10% | 1,040 | (10)% |
| South Dakota Electric | 789 | 57% | 460 | (11)% | 903 | 48% | 496 | (21)% |
| Wyoming Electric | 368 | (6)% | 315 | (20)% | 486 | 6% | 329 | (30)% |
| Combined (a) | 756 | 17% | 635 | (2)% | 975 | 19% | 710 | (15)% |

(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 September 30, 2024 | 2023 | Nine Months Ended September 30, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Coal (b) | 90.7% | 96.3% | 87.3% | 93.7% |
| Natural gas and diesel oil (b) | 98.0% | 94.2% | 95.4% | 94.0% |
| Wind | 92.3% | 93.4% | 91.6% | 93.4% |
| Total Availability | 95.1% | 94.7% | 92.5% | 93.8% |
| Wind Capacity Factor (a) | 32.0% | 31.3% | 36.2% | 37.9% |

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

(b) 2024 included unplanned outages at Wygen I and Colorado IPP.

### Gas Utilities

Operating results for the Gas Utilities were as follows:

*(in millions)*

| Revenue: | Three Months Ended September 30, 2024 | 2023 | 2024 vs 2023 Variance | Nine Months Ended September 30, 2024 | 2023 | 2024 vs 2023 Variance |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Natural gas - regulated | $157.3 | $159.5 | $(2.2) | $825.6 | $1,041.0 | $(215.4) |
| Other - non-regulated | 16.3 | 14.8 | 1.5 | 58.6 | 62.9 | (4.3) |
| Total revenue | 173.6 | 174.3 | (0.7) | 884.2 | 1,103.9 | (219.7) |
| Cost of natural gas sold: |  |  |  |  |  |  |
| Natural gas - regulated | 35.2 | 43.3 | (8.1) | 353.9 | 578.9 | (225.0) |
| Other - non-regulated | 4.5 | 3.6 | 0.9 | 9.0 | 24.0 | (15.0) |
| Total cost of natural gas sold | 39.7 | 46.9 | (7.2) | 362.9 | 602.9 | (240.0) |
| Gas Utility margin (non-GAAP) | 133.9 | 127.4 | 6.5 | 521.3 | 501.0 | 20.3 |
| Operations and maintenance | 84.8 | 75.7 | 9.1 | 242.6 | 246.8 | (4.2) |
| Depreciation and amortization | 31.3 | 29.0 | 2.3 | 92.8 | 84.4 | 8.4 |
| Taxes - property and production | 6.9 | 7.3 | (0.4) | 21.3 | 22.1 | (0.8) |
|  | 123.0 | 112.0 | 11.0 | 356.7 | 353.3 | 3.4 |
| Operating income | $10.9 | $15.4 | $(4.5) | $164.6 | $147.7 | $16.9 |

#### Three Months Ended September 30, 2024, Compared to the Three Months Ended September 30, 2023:

Gas Utility margin increased as a result of the following:

*(in millions)*

|  |  |
| --- | ---: |
| New rates and rider recovery | $8.5 |
| Weather | (1.1) |
| Mark-to-market on non-utility natural gas commodity contracts | (0.4) |
| Other | (0.5) |
|  | $6.5 |

Operations and maintenance expense increased primarily due to $3.5 million of higher insurance expense, $3.0 million of higher employee-related expenses and $2.8 million of higher outside services expenses.

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

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

#### Nine Months Ended September 30, 2024, Compared to the Nine Months Ended September 30, 2023:

Gas Utility margin increased as a result of the following:

*(in millions)*

|  |  |
| --- | ---: |
| New rates and rider recovery | $30.5 |
| Retail customer growth and usage | 4.1 |
| Mark-to-market on non-utility natural gas commodity contracts | 2.8 |
| Weather | (14.7) |
| Other | (2.4) |
|  | $20.3 |

Operations and maintenance expense decreased primarily due to $8.5 million of lower employee-related expenses driven by lower headcount and $2.8 million decreased bad debt expense attributable to lower customer billings partially offset by $3.8 million of higher insurance expense and $2.9 million of higher office, facilities and IT-related expenses.

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

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

#### Operating Statistics

| By customer class | Revenue (in millions) Three Months Ended September 30, 2024 | 2023 | Nine Months Ended September 30, 2024 | 2023 | Quantities Sold and Transported (Dth in millions) Three Months Ended September 30, 2024 | 2023 | Nine Months Ended September 30, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Residential | $76.3 | $75.1 | $481.9 | $620.3 | 3.5 | 3.5 | 38.2 | 41.1 |
| Commercial | 27.5 | 28.6 | 185.8 | 255.4 | 2.4 | 2.4 | 19.3 | 20.5 |
| Industrial | 7.6 | 9.9 | 18.5 | 26.2 | 2.4 | 2.1 | 5.1 | 4.5 |
| Other | 2.6 | 3.1 | 8.0 | 7.3 | - | - | - | - |
| Total Distribution (a) | 114.0 | 116.7 | 694.2 | 909.2 | 8.3 | 8.0 | 62.6 | 66.1 |
| Transportation and Transmission | 43.3 | 42.8 | 131.4 | 131.8 | 35.8 | 36.8 | 117.0 | 118.2 |
| Total Regulated | 157.3 | 159.5 | 825.6 | 1,041.0 | 44.1 | 44.8 | 179.6 | 184.3 |
| Non-regulated Services (b) | 16.3 | 14.8 | 58.6 | 62.9 | - | - | - | - |
| Total Revenue and Quantities Sold | $173.6 | $174.3 | $884.2 | $1,103.9 | 44.1 | 44.8 | 179.6 | 184.3 |

(a) Gas distribution revenues decreased for the three and nine months ended September 30, 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.

| By business unit | Revenue (in millions) Three Months Ended September 30, 2024 | 2023 | Nine Months Ended September 30, 2024 | 2023 | Quantities Sold and Transported (Dth in millions) Three Months Ended September 30, 2024 | 2023 | Nine Months Ended September 30, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Arkansas Gas | $25.4 | $27.2 | $167.2 | $189.0 | 4.5 | 4.3 | 21.5 | 21.0 |
| Colorado Gas | 31.5 | 31.5 | 191.5 | 227.9 | 3.3 | 3.6 | 21.3 | 23.3 |
| Iowa Gas | 21.0 | 18.7 | 110.4 | 168.1 | 5.8 | 5.8 | 26.4 | 27.2 |
| Kansas Gas | 19.6 | 22.8 | 90.8 | 118.5 | 8.5 | 9.1 | 26.1 | 27.4 |
| Nebraska Gas | 54.2 | 55.3 | 218.9 | 277.9 | 16.5 | 17.0 | 58.1 | 59.8 |
| Wyoming Gas | 21.9 | 18.8 | 105.4 | 122.5 | 5.5 | 5.0 | 26.2 | 25.6 |
| Total Revenue and Quantities Sold | $173.6 | $174.3 | $884.2 | $1,103.9 | 44.1 | 44.8 | 179.6 | 184.3 |

| Heating Degree Days | Three Months Ended September 30, 2024 Actual | Variance from Normal | 2023 Actual | Variance from Normal | Nine Months Ended September 30, 2024 Actual | Variance from Normal | 2023 Actual | Variance from Normal |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Arkansas Gas (a) | 9 | (40)% | --- | (100)% | 1,925 | (18)% | 1,944 | (18)% |
| Colorado Gas | 80 | (29)% | 91 | (22)% | 3,613 | (5)% | 4,078 | 7% |
| Iowa Gas | 45 | (47)% | 37 | (59)% | 3,450 | (19)% | 3,867 | (10)% |
| Kansas Gas (a) | 19 | (26)% | 6 | (78)% | 2,576 | (11)% | 2,749 | 6% |
| Nebraska Gas | 22 | (65)% | 21 | (67)% | 3,281 | (12)% | 3,591 | (5)% |
| Wyoming Gas | 132 | (37)% | 180 | 5% | 4,384 | (6)% | 4,953 | 14% |
| Combined (b) | 50 | (43)% | 56 | (35)% | 3,502 | (11)% | 3,926 | 1% |

(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 September 30, 2024 | 2023 | 2024 vs 2023 Variance | Nine Months Ended September 30, 2024 | 2023 | 2024 vs 2023 Variance |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Operating income, (loss) | $(0.2) | $(0.6) | $0.4 | $(0.8) | $(2.2) | $1.4 |

#### Three Months Ended September 30, 2024, Compared to the Three Months Ended September 30, 2023:

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

#### Nine Months Ended September 30, 2024, Compared to the Nine Months Ended September 30, 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 September 30, 2024 | 2023 | 2024 vs 2023 Variance | Nine Months Ended September 30, 2024 | 2023 | 2024 vs 2023 Variance |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Interest expense, net | $(45.2) | $(41.0) | $(4.2) | $(131.9) | $(126.0) | $(5.9) |
| Other income (expense), net | (1.3) | (0.6) | (0.7) | (1.7) | (1.5) | (0.2) |
| Income tax benefit (expense) | (2.9) | (7.4) | 4.5 | (23.6) | (16.0) | (7.6) |

#### Three Months Ended September 30, 2024, Compared to the Three Months Ended September 30, 2023:

Interest expense, net increased primarily due to higher interest rates partially offset by increased interest income.

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

Income tax (expense) decreased primarily due to lower pre-tax income. For the three months ended September 30, 2024, the effective tax rate was 10.0% compared to 13.1% for the same period in 2023. The lower effective tax rate was primarily driven by favorable return-to-accrual adjustments.

#### Nine Months Ended September 30, 2024, Compared to the Nine Months Ended September 30, 2023:

Interest expense, net increased primarily due to higher interest rates partially offset by increased interest income.

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

Income tax (expense) increased primarily due to a higher effective tax rate. For the nine months ended September 30, 2024, the effective tax rate was 11.4% compared to 7.6% for the same period in 2023. The higher effective tax rate was primarily driven by a prior-year $8.2 million tax benefit from a Nebraska income tax rate decrease.

### Liquidity and Capital Resources

### CASH FLOW ACTIVITIES

The following tables summarize our cash flows for the nine months ended September 30, 2024:

### Operating Activities:

*(in millions)*

|  | Nine Months Ended September 30, 2024 | 2023 | 2024 vs 2023 Variance |
| --- | ---: | ---: | ---: |
| Net income | $182.6 | $192.7 | $(10.1) |
| Non-cash adjustments to Net income | $264.9 | $220.6 | $44.3 |
| Total earnings | $447.5 | $413.3 | $34.2 |
| Changes in certain operating assets and liabilities: |  |  |  |
| Materials, supplies and fuel, Accounts receivable and other current assets | 134.8 | 346.3 | (211.5) |
| Accounts payable and other current liabilities | (61.8) | (186.5) | 124.7 |
| Regulatory assets | 61.6 | 199.1 | (137.5) |
| Net inflow from changes in certain operating assets and liabilities | $134.6 | $358.9 | $(224.3) |
| Other operating activities | (16.0) | (16.2) | 0.2 |
| Net cash provided by operating activities | $566.1 | $756.0 | $(189.9) |

#### Nine Months Ended September 30, 2024, Compared to the Nine Months Ended September 30, 2023:

Net cash provided by operating activities was $189.9 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 $34.2 million higher for the nine months ended September 30, 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.
- Net inflows from changes in certain operating assets and liabilities were $224.3 million lower, primarily attributable to:
- Cash inflows decreased by $211.5 million as a result of changes in materials, supplies, fuel, accounts receivable, and other current assets primarily driven by fluctuations in commodity prices and weather conditions;
- Cash outflows decreased by $124.7 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 $137.5 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 and lower recoveries of Winter Storm Uri costs from customers.

### Investing Activities:

*(in millions)*

|  | Nine Months Ended September 30, 2024 | 2023 | 2024 vs 2023 Variance |
| --- | ---: | ---: | ---: |
| Capital expenditures | $(530.5) | $(421.8) | $(108.7) |
| Other investing activities | (1.5) | 18.0 | (19.5) |
| Net cash (used in) investing activities | $(532.0) | $(403.8) | $(128.2) |

#### Nine Months Ended September 30, 2024, Compared to the Nine Months Ended September 30, 2023:

Net cash used in investing activities was $128.2 million higher than the same period in 2023. The variance to the prior year was primarily attributable to:

- Cash outflows increased by $108.7 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 outflows increased by $19.5 million for other investing activities primarily due to prior year proceeds from the sale of Northern Iowa Windpower assets.

### Financing Activities:

*(in millions)*

|  | Nine Months Ended September 30, 2024 | 2023 | 2024 vs 2023 Variance |
| --- | ---: | ---: | ---: |
| Dividends paid on common stock | $(135.8) | $(125.4) | $(10.4) |
| Common stock issued | 181.6 | 107.4 | 74.2 |
| Short-term and long-term debt borrowings (repayments), net | (132.5) | 264.4 | (396.9) |
| Distributions to non-controlling interests | (12.5) | (12.9) | 0.4 |
| Other financing activities | (8.3) | (12.2) | 3.9 |
| Net cash provided by (used in) financing activities | $(107.5) | $221.3 | $(328.8) |

#### Nine Months Ended September 30, 2024, Compared to the Nine Months Ended September 30, 2023:

Net cash used in financing activities was $328.8 million higher than the same period in 2023. The variance to the prior year was primarily attributable to:

- Cash outflows increased $10.4 million due to increased dividends paid on common stock;
- Cash inflows increased $74.2 million due to higher issuances of common stock;
- Cash outflows increased $396.9 million as a result of repayments of debt in excess of proceeds from debt offerings; and
- Cash outflows decreased $3.9 million for other financing activities due to lower financing costs from the May 16, 2024, debt offering compared to the March 7, 2023 and September 15, 2023 debt offerings.

### CAPITAL RESOURCES

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

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.

### CREDIT RATINGS

The following table represents the credit ratings and outlook and risk profile of BHC at September 30, 2024:

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

(a) On May 9, 2024, S&P reported BBB+ rating and maintained a Stable outlook.

(b) 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 September 30, 2024:

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

### CAPITAL REQUIREMENTS

### Capital Expenditures

*(in millions)*

| Capital Expenditures by Segment (minor differences may result due to rounding) | Actual Nine Months Ended September 30, 2024 (a) | Forecasted 2024 (b) | 2025 | 2026 | 2027 | 2028 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Electric Utilities | $247 | $409 | $287 | $466 | $199 | $264 |
| Gas Utilities | 308 | 407 | 387 | 368 | 372 | 373 |
| Corporate and Other | 11 | 24 | 29 | 29 | 27 | 29 |
| Incremental Projects (c) | - | - | 100 | 400 | 50 | 50 |
|  | $566 | $840 | $803 | $1,263 | $648 | $717 |

(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 nine months ended September 30, 2024.

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

### Repayments of Indebtedness

For information relating to recent repayments of our long-term debt, see Note 5 of the Condensed Notes to Consolidated Financial Statements.

### Dividends

Dividends paid on our common stock totaled $135.8 million for the nine months ended September 30, 2024, or $0.65 per share. On October 28, 2024, our board of directors declared a quarterly dividend of $0.65 per share payable December 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 September 30, 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, 1,203 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 September 30, 2024. Based on their evaluation, they have concluded that our disclosure controls and procedures were effective at September 30, 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 September 30, 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 Nov 7, 2024.
Source: SEC EDGAR, the filing index for accession 0000950170-24-122969. Last ingested by Listed: Oct 24, 2026, 15:05 ET. No prices; not investment advice.