Black Hills Corp. Reports 2024 Fourth-Quarter and Full-Year Results and Initiates 2025 Earnings Guidance

• Delivered 2024 EPS of $3.91, or 4.3% growth from the midpoint of 2023 earnings guidance
• Increasing five-year capital forecast by 10% to $4.7 billion for 2025 through 2029, including $1.0 billion for 2025
• Projecting total data center load exceeding one gigawatt from existing customers
• Increased quarterly dividend by 4%, extending track record of annual dividend increases to 55 consecutive years
• Initiating 2025 earnings guidance range at $4.00 to $4.20 per share

Earnings of $3.91 per share for 2024 benefited from $0.82 per share of new rates, rider recovery, and customer growth. Significant expense management measures offset the impacts of mild weather, unplanned generation outages and higher insurance expense.

"We advanced our regulatory and growth initiatives and delivered strong earnings,” said Linn Evans, president and CEO of Black Hills Corp. "I'm proud of our team's execution and our relentless commitment to providing safe, reliable, and cost-effective service. We reached constructive settlements for our natural gas rate reviews in Arkansas and Iowa. We also maintained our solid financial position and credit ratings, achieving our long-term capitalization target during the year. On behalf of our customers, we invested approximately $800 million in our electric and gas infrastructure. This included energizing the first phase of our Ready Wyoming transmission expansion, the largest transmission project in our company's history.

"As we roll forward our five-year plan, I'm confident in our 4% to 6% long-term EPS growth target given our customer-focused capital outlook and growth opportunities. We increased our capital forecast by 10% through 2029 to $4.7 billion. We have a pipeline of data center demand exceeding one gigawatt from existing customers within the next 10 years. Approximately 500 megawatts of that demand is expected to be served by the end of 2029 through our innovative tariff that requires minimal capital. We expect this demand to more than double EPS contribution to greater than 10% by year-end 2029. Additionally, upside potential from data centers and other organic growth in our service territories is expected to drive future transmission and generation investment opportunities above and beyond our current five-year plan,” concluded Evans.

FOURTH-QUARTER AND FULL-YEAR 2024 HIGHLIGHTS AND RECENT UPDATES

Electric Utilities

• On Jan. 20, 2025, Wyoming Electric set a new all-time peak load of 318 megawatts for the nineteenth consecutive year, surpassing the previous winter and all-time peak on Jan. 11, 2024, of 314 megawatts. Prior to 2024, the previous winter peak was 301 megawatts in December 2023 and the all-time peak was 312 megawatts in July 2023.

• On Dec. 19, Wyoming Electric placed in service the initial phase of its approximately 260-mile, $350-million Ready Wyoming electric transmission expansion project. The first 12-mile transmission line segment and two substations near Cheyenne, Wyoming, were completed and energized, adding approximately $40 million of rate base being recovered through the transmission rider. Construction is on schedule for the two major lines heading northeast and northwest from Cheyenne, with both lines interconnecting with the South Dakota Electric system. The project is being constructed in multiple segments and is expected to be completed and in service by year-end 2025.

• During the fourth quarter, Colorado Electric received final approval of its Clean Energy Plan from the Colorado Public Utilities Commission for 350 megawatts of new renewable generation resources. The decision includes a 100-megawatt utility-owned solar project, 50-megawatt utility-owned battery storage project and a 200-megawatt solar power purchase agreement.
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• During the fourth quarter, South Dakota Electric continued to pursue the addition of 99 megawatts of utility-owned, dispatchable natural gas resources by the second half of 2026. During the first quarter of 2025, the company expects to request a certificate of public convenience and necessity (CPCN) in Wyoming.

• On July 11, Wyoming Electric announced its partnership with Meta to provide power for its newest AI data center to be constructed in Cheyenne, Wyoming. The company will serve Meta under its Large Power Contract Service tariff and procure customized energy resources essential to Meta's operations and sustainability objectives.

• On June 14, Colorado Electric filed a rate review request with the Colorado Public Utilities Commission seeking the recovery of significant infrastructure investments in its 3,200-mile electric distribution and 600-mile electric transmission systems. The company expects a final decision on the request from the CPUC in the first quarter or early second quarter of 2025. Timing and implementation of new rates will be subject to a final decision.

• On Feb. 3, 2025, Kansas Gas filed a rate review request with the Kansas Corporation Commission seeking approval to recover approximately $118 million of system investments and inflationary impacts on expenses to serve customers. The rate review requested $17 million of new annual revenue based on a capital structure of approximately 50% equity and 50% debt and a return on equity of 10.5%. New rates are requested in the second half of 2025.

• On Jan. 1, 2025, new final rates were effective for Iowa Gas resulting from an approved settlement agreement for its rate review request filed May 1, 2024. The approved black box settlement provides $15 million of new annual revenue based on a weighted average cost of capital of 7.21%.

• On Oct. 1, new rates were effective for Arkansas Gas resulting from an approved settlement agreement for its rate review request filed in December 2023. The settlement provides $25 million of new annual revenue based on a capital structure of 46% equity and 54% debt and a return on equity of 9.85%.

• On Feb. 13, new rates were effective for Colorado Gas resulting from an approved settlement agreement for its rate review request filed in May 2023. The settlement provides for $20 million in new annual revenue based on a capital structure of 51% equity and 49% debt and a return on equity of 9.3%.
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• On Feb. 1, 2024, new rates were effective for Wyoming Gas resulting from an approved settlement agreement for its rate review request filed in May 2023. The settlement provides for $14 million in new annual revenue based on a capital structure of 51% equity and 49% debt and a return on equity of 9.9%. The agreement also provides for a four-year renewal of the company's integrity investment rider.

• On Jan. 31, 2024, Black Hills Energy Renewable Resources, a non-regulated subsidiary of Black Hills Corp., acquired a renewable natural gas (RNG) production facility at a landfill in Dubuque, Iowa. The purchase includes producing biogas wells and rights to production, including the ability to drill additional wells. The acquisition represents the company's first entry into the production of RNG.

• On Jan. 24, 2025, Black Hills' board of directors approved a quarterly dividend of $0.676 per share payable on March 1, 2025, to common shareholders of record at the close of business on Feb. 18, 2025. The dividend represents an increase in the quarterly dividend of $0.026 per share, or 4.0%. On an annualized rate, the dividend represents 55 consecutive years of increases, the second-longest track record in the electric and natural gas industry.
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• During 2024, the company issued a total of 3.3 million shares of new common stock for net proceeds of $182 million.

• On May 31, Black Hills amended and restated its revolving credit facility with similar terms as the former facility, maintaining total commitments of $750 million and extending the term through May 31, 2029.

• On May 16, Black Hills completed a public debt offering of $450 million, 6.00% senior unsecured notes due Jan. 15, 2035. Proceeds were used for general corporate purposes and, along with available cash or short-term borrowings under the company's existing facilities, to repay the $600 million notes which were due Aug. 23, 2024.

• Black Hills maintained its solid investment-grade credit ratings by rating agencies covering the company.
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  • On Jan. 17, 2025, Fitch affirmed Black Hills' long-term issuer rating at BBB+ with a negative outlook. Following the affirmation, the parties jointly withdrew the rating.
  • On Jan. 8, 2025, Moody's Investor Service affirmed Black Hills' long-term issuer rating at Baa2 with a stable outlook.
  • On May 9, 2024, S&P Global Ratings affirmed Black Hills' issuer credit rating at BBB+ with a stable outlook.

Black Hills initiates its guidance for 2025 earnings per share available for common stock to be in the range of $4.00 to $4.20, based on the following assumptions:

• Normal weather conditions within our utility service territories;
• Constructive and timely outcomes of utility regulatory dockets;
• Excludes mark-to-market adjustments;
• No unplanned outages at our generation facilities;
• Compounded annual growth rate of approximately 3.5% for operations and maintenance expense (excludes depreciation and amortization and taxes other than income taxes) off 2023 of $552 million
• Equity issuance between $215 million and $235 million; and
• An effective tax rate of approximately 13% for the full year.