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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

 

Commission File Number 001-31303

 

Black Hills Corporation

 

Incorporated in South Dakota IRS Identification Number 46-0458824

 

7001 Mount Rushmore Road

Rapid City, South Dakota 57702

Registrant’s telephone number (605) 721-1700

 

Former name, former address, and former fiscal year if changed since last report

NONE

 

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large Accelerated Filer

x

 

Accelerated Filer

 

 

 

 

 

 

 

 

 

Non-accelerated Filer

 

Smaller Reporting Company

 

 

 

 

 

 

 

 

 

 

 

 

Emerging Growth Company

 

 

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

 

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes ☐ No

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

 

 

Common stock of $1.00 par value

 

BKH

 

New York Stock Exchange

 

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.

 

Class

Outstanding at April 30, 2024

 

 

Common stock, $1.00 par value

68,933,306

shares

 

 

 

 


 

TABLE OF CONTENTS

 

 

 

Page

Glossary of Terms and Abbreviations

3

Forward-Looking Information

6

 

 

 

PART I. FINANCIAL INFORMATION

7

 

 

 

Item 1.

Financial Statements - unaudited

7

 

Consolidated Statements of Income

7

 

Consolidated Statements of Comprehensive Income

8

 

Consolidated Balance Sheets

9

 

Consolidated Statements of Cash Flows

11

 

Consolidated Statements of Equity

12

 

Condensed Notes to Consolidated Financial Statements

13

 

Note 1. Management’s Statement

13

 

Note 2. Regulatory Matters

14

 

Note 3. Commitments, Contingencies and Guarantees

15

 

Note 4. Revenue

15

 

Note 5. Financing

16

 

Note 6. Earnings Per Share

17

 

Note 7. Risk Management and Derivatives

17

 

Note 8. Fair Value Measurements

20

 

Note 9. Other Comprehensive Income

22

 

Note 10. Employee Benefit Plans

23

 

Note 11. Income Taxes

23

 

Note 12. Business Segment Information

24

 

Note 13. Selected Balance Sheet Information

24

 

Note 14. Subsequent Events

25

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

26

 

Executive Summary

26

 

Recent Developments

26

 

Results of Operations

27

 

Consolidated Summary and Overview

27

 

Non-GAAP Financial Measure

28

 

Electric Utilities

28

 

Gas Utilities

31

 

Corporate and Other

32

 

Consolidated Interest Expense, Other Income and Income Tax Expense

33

 

Liquidity and Capital Resources

33

 

Cash Flow Activities

33

 

Capital Resources

35

 

Credit Ratings

35

 

Capital Requirements

35

 

Critical Accounting Estimates

36

 

New Accounting Pronouncements

36

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

36

Item 4.

Controls and Procedures

36

 

 

 

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

36

Item 1A.

Risk Factors

36

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

36

Item 4.

Mine Safety Disclosures

37

Item 5.

Other Information

37

Item 6.

Exhibits

37

 

 

 

Signatures

 

38

 

2


GLOSSARY OF TERMS AND ABBREVIATIONS

 

The following terms and abbreviations appear in the text of this report and have the definitions described below:

 

AFUDC

Allowance for Funds Used During Construction

AOCI

Accumulated Other Comprehensive Income (Loss)

APSC

Arkansas Public Service Commission

Arkansas Gas

Black Hills Energy Arkansas, Inc., an indirect, wholly-owned subsidiary of Black Hills Utility Holdings, providing natural gas services to customers in Arkansas (doing business as Black Hills Energy).

ASU

Accounting Standards Update as issued by the FASB

ATM

At-the-market equity offering program

Availability

The availability factor of a power plant is the percentage of the time that it is available to provide energy.

BHC

Black Hills Corporation; the Company

Black Hills Colorado IPP

Black Hills Colorado IPP, LLC a 50.1% owned subsidiary of Black Hills Electric Generation

Black Hills Electric Generation

Black Hills Electric Generation, LLC, a direct, wholly-owned subsidiary of Black Hills Non-regulated Holdings, providing wholesale electric capacity and energy primarily to our Electric Utilities.

Black Hills Electric Parent Holdings

Black Hills Electric Utility Holdings, LLC., a direct, wholly-owned subsidiary of Black Hills Corporation

Black Hills Energy

The name used to conduct the business of our Utilities

Black Hills Energy Renewable Resources (BHERR)

Black Hills Energy Renewable Resources, LLC, a direct, wholly-owned subsidiary of Black Hills Non-regulated Holdings

Black Hills Energy Services

Black Hills Energy Services Company, an indirect, wholly-owned subsidiary of Black Hills Utility Holdings, providing natural gas commodity supply for the Choice Gas Programs (doing business as Black Hills Energy).

Black Hills Non-regulated Holdings

Black Hills Non-regulated Holdings, LLC, a direct, wholly-owned subsidiary of Black Hills Corporation

Black Hills Utility Holdings

Black Hills Utility Holdings, Inc., a direct, wholly-owned subsidiary of Black Hills Corporation (doing business as Black Hills Energy)

Black Hills Wyoming

Black Hills Wyoming, LLC, a direct, wholly-owned subsidiary of Black Hills Electric Generation

Choice Gas Program

Regulator-approved programs in Wyoming and Nebraska that allow certain utility customers to select their natural gas commodity supplier, providing for the unbundling of the commodity service from the distribution delivery service.

Chief Operating Decision Maker (CODM)

Chief Executive Officer

Clean Energy Plan

2030 Ready Plan that establishes a roadmap and preferred resource portfolio for Colorado Electric to cost-effectively achieve the State of Colorado’s requirement calling upon electric utilities to reduce greenhouse gas emissions by a minimum of 80% from 2005 levels by 2030. The recommended resource portfolio proposes the addition of 400 MW of clean energy resources to Colorado Electric's system. Colorado legislation allows electric utilities to own up to 50% of the renewable generation assets added to comply with the Clean Energy Plan.

CO2

Carbon dioxide

Colorado Electric

Black Hills Colorado Electric, LLC, a direct, wholly-owned subsidiary of Black Hills Electric Parent Holdings, providing electric services to customers in Colorado (doing business as Black Hills Energy).

Colorado Gas

Black Hills Colorado Gas, Inc., an indirect, wholly-owned subsidiary of Black Hills Utility Holdings, providing natural gas services to customers in Colorado (doing business as Black Hills Energy).

Common Use System

The Common Use System is a jointly operated transmission system we participate in with Basin Electric Power Cooperative and Powder River Energy Corporation. The Common Use System provides transmission service over these utilities' combined 230-kilovolt (kV) and limited 69-kV transmission facilities within areas of southwestern South Dakota and northeastern Wyoming.

Consolidated Indebtedness to Capitalization Ratio

Any indebtedness outstanding at such time, divided by capital at such time. Capital being consolidated net worth (excluding non-controlling interest) plus consolidated indebtedness (including letters of credit and certain guarantees issued) as defined within the current Revolving Credit Facility.

CP Program

Commercial Paper Program

CPUC

Colorado Public Utilities Commission

3


Dth

Dekatherm. A unit of energy equal to 10 therms or one million British thermal units (MMBtu)

EPA

Environmental Protection Agency

FASB

Financial Accounting Standards Board

Fitch

Fitch Ratings Inc.

GAAP

Accounting principles generally accepted in the United States of America

Heating Degree Day

A heating degree day is equivalent to each degree that the average of the high and the low temperatures for a day is below 65 degrees. The colder the climate, the greater the number of heating degree days. Heating degree days are used in the utility industry to measure the relative coldness of weather and to compare relative temperatures between one geographic area and another. Normal degree days are based on the National Weather Service data for selected locations.

HomeServe

We offer HomeServe products to our natural gas residential customers interested in purchasing additional home repair service plans.

Integrated Generation

Non-regulated power generation and mining businesses (Black Hills Electric Generation and WRDC) that are vertically integrated within our Electric Utilities segment.

Iowa Gas

Black Hills Iowa Gas Utility Company, LLC, a direct, wholly-owned subsidiary of Black Hills Utility Holdings, providing natural gas services to customers in Iowa (doing business as Black Hills Energy).

IPP

Independent Power Producer

IRS

United States Internal Revenue Service

IUB

Iowa Utilities Board

Kansas Gas

Black Hills Kansas Gas Utility Company, LLC, a direct, wholly-owned subsidiary of Black Hills Utility Holdings, providing natural gas services to customers in Kansas (doing business as Black Hills Energy).

MMBtu

Million British thermal units

Moody's

Moody's Investors Service, Inc.

MW

Megawatts

MWh

Megawatt-hours

N/A

Not applicable

Nebraska Gas

Black Hills Nebraska Gas, LLC, an indirect, wholly-owned subsidiary of Black Hills Utility Holdings, providing natural gas services to customers in Nebraska (doing business as Black Hills Energy).

Northern Iowa Windpower

Northern Iowa Windpower, LLC, a 87.1 MW wind farm located near Joice, Iowa, previously owned by Black Hills Electric Generation. In March 2023, Black Hills Electric Generation completed the sale of Northern Iowa Windpower assets to a third-party.

OCI

Other Comprehensive Income

PPA

Power Purchase Agreement

Ready Wyoming

A 260-mile, multi-phase transmission expansion project in Wyoming. This transmission project is expected to serve the growing needs of customers by enhancing resiliency of Wyoming Electric’s overall electric system and expanding access to power markets and renewable resources. The project is expected to help Wyoming Electric maintain top-quartile reliability and enable economic development in the Cheyenne, Wyoming region.

Revolving Credit Facility

Our $750 million credit facility used to fund working capital needs, letters of credit and other corporate purposes, which was amended on May 9, 2023 and will terminate on July 19, 2026. This facility includes an accordion feature that allows us to increase total commitments up to $1.0 billion with the consent of the administrative agent, the issuing agents and each bank increasing or providing a new commitment.

RNG

Renewable Natural Gas

SEC

United States Securities and Exchange Commission

Service Guard Comfort Plan

Appliance protection plan that provides home appliance repair services through on-going monthly service agreements to residential utility customers.

S&P

S&P Global Ratings, a division of S&P Global Inc.

South Dakota Electric

Black Hills Power, Inc., a direct, wholly-owned subsidiary of Black Hills Corporation, providing electric service to customers in Montana, South Dakota and Wyoming (doing business as Black Hills Energy).

4


Tech Services

Non-regulated product lines delivered by our Utilities that 1) provide electrical system construction services to large industrial customers of our Electric Utilities, and 2) serve gas transportation customers throughout its service territory by constructing and maintaining customer-owned gas infrastructure facilities, typically through one-time contracts.

Utilities

Black Hills' Electric and Gas Utilities

Wind Capacity Factor

Measures the amount of electricity a wind turbine produces in a given time period relative to its maximum potential.

Winter Storm Uri

February 2021 winter weather event that caused extreme cold temperatures in the central United States and led to unprecedented fluctuations in customer demand and market pricing for natural gas and energy.

WPSC

Wyoming Public Service Commission

WRDC

Wyodak Resources Development Corp., a coal mine which is a direct, wholly-owned subsidiary of Black Hills Non-regulated Holdings, providing coal supply primarily to five on-site, mine-mouth generating facilities at our Gillette Energy Complex (doing business as Black Hills Energy).

Wyoming Electric

Cheyenne Light, Fuel and Power Company, a direct, wholly-owned subsidiary of Black Hills Corporation, providing electric service to customers in the Cheyenne, Wyoming area (doing business as Black Hills Energy).

Wyoming Gas

Black Hills Wyoming Gas, LLC, an indirect, wholly-owned subsidiary of Black Hills Utility Holdings, providing natural gas services to customers in Wyoming (doing business as Black Hills Energy).

Wyoming Integrity Rider

The Wyoming Integrity Rider (WIR) is a WPSC-approved tariff that allows us to recover costs from customers associated with ongoing infrastructure replacement, gas meter and yard line replacement projects driven by federal regulation.

 

 

 

 

5


FORWARD-LOOKING INFORMATION

 

This Quarterly Report on Form 10-Q includes “forward-looking statements” as defined by the SEC. Forward-looking statements are all statements other than statements of historical fact, including without limitation those statements that are identified by the words “anticipates,” “estimates,” “expects,” “intends,” “plans,” “predicts” and similar expressions, and include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. We make these forward-looking statements in reliance on the safe harbor protections provided under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on assumptions which we believe are reasonable based on current expectations and projections about future events and industry conditions and trends affecting our business. However, whether actual results and developments will conform to our expectations and predictions is subject to a number of risks and uncertainties that, among other things, could cause actual results to differ materially from those contained in the forward-looking statements, including without limitation, the risk factors described in Item 1A of Part I of our 2023 Annual Report on Form 10-K, Part II, Item 1A of this Quarterly Report on Form 10-Q and other reports that we file with the SEC from time to time, and the following:

 

Our ability to obtain adequate cost recovery for our utility operations through regulatory proceedings and favorable rulings on periodic applications to recover costs for capital additions, plant retirements and decommissioning, fuel, transmission, purchased power, and other operating costs and the timing in which new rates would go into effect;

 

Our ability to complete our capital program in a cost-effective and timely manner;

 

Our ability to execute on our strategy;

 

Our ability to successfully execute our financing plans;

 

The effects of changing interest rates;

 

Our ability to achieve our greenhouse gas emissions intensity reduction goals;

 

Board of Directors’ approval of any future quarterly dividends;

 

The impact of future governmental regulation;

 

Our ability to overcome the impacts of supply chain disruptions on availability and cost of materials;

 

The effects of inflation and volatile energy prices; and

 

Other factors discussed from time to time in our filings with the SEC.

 

New factors that could cause actual results to differ materially from those described in forward-looking statements emerge from time-to-time, and it is not possible for us to predict all such factors, or the extent to which any such factor or combination of factors may cause actual results to differ from those contained in any forward-looking statement. We assume no obligation to update publicly any such forward-looking statements, whether as a result of new information, future events or otherwise.

6


PART I. FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

BLACK HILLS CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

 

(unaudited)

Three Months Ended
March 31,

 

 

2024

 

2023

 

 

(in millions, except per share amounts)

 

Revenue

$

726.4

 

$

921.2

 

 

 

 

 

Operating expenses:

 

 

 

 

Fuel, purchased power and cost of natural gas sold

 

316.6

 

 

526.3

 

Operations and maintenance

 

133.6

 

 

141.0

 

Depreciation and amortization

 

65.9

 

 

61.6

 

Taxes - property and production

 

17.0

 

 

17.4

 

Total operating expenses

 

533.1

 

 

746.3

 

 

 

 

 

Operating income

 

193.3

 

 

174.9

 

 

 

 

 

Other income (expense):

 

 

 

 

Interest expense incurred net of amounts capitalized

 

(46.0

)

 

(44.1

)

Interest income

 

2.0

 

 

0.6

 

Other income (expense), net

 

(0.8

)

 

0.7

 

Total other income (expense)

 

(44.8

)

 

(42.8

)

 

 

 

 

Income before income taxes

 

148.5

 

 

132.1

 

Income tax (expense)

 

(16.9

)

 

(14.7

)

Net income

 

131.6

 

 

117.4

 

Net income attributable to non-controlling interest

 

(3.7

)

 

(3.3

)

Net income available for common stock

$

127.9

 

$

114.1

 

 

 

 

 

Earnings per share of common stock:

 

 

 

 

Earnings per share, Basic

$

1.88

 

$

1.73

 

Earnings per share, Diluted

$

1.87

 

$

1.73

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

Basic

 

68.2

 

 

66.0

 

Diluted

 

68.3

 

 

66.1

 

 

The accompanying Condensed Notes to Consolidated Financial Statements are an integral part of these Consolidated Financial Statements.

 

7


BLACK HILLS CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 

(unaudited)

Three Months Ended
March 31,

 

 

2024

 

2023

 

 

(in millions)

 

Net income

$

131.6

 

$

117.4

 

 

 

 

 

Other comprehensive income (loss), net of tax;

 

 

 

 

Derivative instruments designated as cash flow hedges:

 

 

 

 

Reclassification of net realized (gains) losses on settled/amortized interest rate swaps (net of tax of $(0.1) and $(0.2), respectively)

 

0.6

 

 

0.6

 

Net unrealized gains (losses) on commodity derivatives
(net of tax of $
0.0 and $0.3, respectively)

 

(0.1

)

 

(0.9

)

Reclassification of net realized (gains) losses on settled commodity derivatives (net of tax of $(0.6) and $(0.5), respectively)

 

2.0

 

 

1.5

 

Other comprehensive income, net of tax

 

2.5

 

 

1.2

 

 

 

 

 

Comprehensive income

 

134.1

 

 

118.6

 

Less: comprehensive income attributable to non-controlling interest

 

(3.7

)

 

(3.3

)

Comprehensive income available for common stock

$

130.4

 

$

115.3

 

 

See Note 9 for additional disclosures.

 

The accompanying Condensed Notes to Consolidated Financial Statements are an integral part of these Consolidated Financial Statements.

 

8


BLACK HILLS CORPORATION

CONSOLIDATED BALANCE SHEETS

 

(unaudited)

As of

 

 

March 31, 2024

 

December 31, 2023

 

 

(in millions)

 

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

$

123.0

 

$

86.6

 

Restricted cash and equivalents

 

6.7

 

 

6.4

 

Accounts receivable, net

 

334.4

 

 

350.3

 

Materials, supplies and fuel

 

130.6

 

 

160.9

 

Income tax receivable, net

 

18.2

 

 

18.5

 

Regulatory assets, current

 

147.3

 

 

175.7

 

Other current assets

 

37.4

 

 

28.2

 

Total current assets

 

797.6

 

 

826.6

 

 

 

 

 

Property, plant and equipment

 

9,068.4

 

 

8,917.2

 

Less: accumulated depreciation

 

(1,845.3

)

 

(1,797.9

)

Total property, plant and equipment, net

 

7,223.1

 

 

7,119.3

 

 

 

 

 

Other assets:

 

 

 

 

Goodwill

 

1,299.5

 

 

1,299.5

 

Intangible assets, net

 

8.4

 

 

8.4

 

Regulatory assets, non-current

 

283.8

 

 

304.4

 

Other assets, non-current

 

64.3

 

 

62.2

 

Total other assets, non-current

 

1,656.0

 

 

1,674.5

 

 

 

 

 

TOTAL ASSETS

$

9,676.7

 

$

9,620.4

 

 

The accompanying Condensed Notes to Consolidated Financial Statements are an integral part of these Consolidated Financial Statements.

 

9


BLACK HILLS CORPORATION

CONSOLIDATED BALANCE SHEETS

(Continued)

 

(unaudited)

As of

 

 

March 31, 2024

 

December 31, 2023

 

(in millions)

 

LIABILITIES AND EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

$

132.6

 

$

186.4

 

Accrued liabilities

 

263.9

 

 

293.3

 

Derivative liabilities, current

 

2.0

 

 

6.5

 

Regulatory liabilities, current

 

89.9

 

 

98.9

 

Notes payable

 

-

 

 

-

 

Current maturities of long-term debt

 

600.0

 

 

600.0

 

Total current liabilities

 

1,088.4

 

 

1,185.1

 

 

 

 

 

Long-term debt, net of current maturities

 

3,802.8

 

 

3,801.2

 

 

 

 

 

Deferred credits and other liabilities:

 

 

 

 

Deferred income tax liabilities, net

 

576.1

 

 

548.0

 

Regulatory liabilities, non-current

 

463.5

 

 

467.7

 

Benefit plan liabilities

 

124.1

 

 

123.9

 

Other deferred credits and other liabilities

 

199.3

 

 

188.7

 

Total deferred credits and other liabilities

 

1,363.0

 

 

1,328.3

 

 

 

 

 

Commitments, contingencies and guarantees (Note 3)

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

Stockholder's equity -

 

 

 

 

Common stock $1 par value; 100,000,000 shares authorized; issued 68,969,578 and 68,265,042 shares, respectively

 

69.0

 

 

68.3

 

Additional paid-in capital

 

2,040.2

 

 

2,007.7

 

Retained earnings

 

1,241.7

 

 

1,158.2

 

Treasury stock, at cost - 82,343 and 68,073 shares, respectively

 

(4.7

)

 

(4.1

)

Accumulated other comprehensive income (loss)

 

(12.3

)

 

(14.8

)

Total stockholders' equity

 

3,333.9

 

 

3,215.3

 

Non-controlling interest

 

88.6

 

 

90.5

 

Total equity

 

3,422.5

 

 

3,305.8

 

 

 

 

 

TOTAL LIABILITIES AND TOTAL EQUITY

$

9,676.7

 

$

9,620.4

 

 

The accompanying Condensed Notes to Consolidated Financial Statements are an integral part of these Consolidated Financial Statements.

 

10


BLACK HILLS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(unaudited)

Three Months Ended March 31,

 

 

2024

 

2023

 

Operating activities:

(in millions)

 

Net income

$

131.6

 

$

117.4

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

Depreciation and amortization

 

65.9

 

 

61.6

 

Deferred financing cost amortization

 

2.7

 

 

2.4

 

Stock compensation

 

2.4

 

 

1.8

 

Deferred income taxes

 

16.7

 

 

14.9

 

Employee benefit plans

 

3.0

 

 

3.0

 

Other adjustments, net

 

(0.3

)

 

(2.9

)

Changes in certain operating assets and liabilities:

 

 

 

 

Materials, supplies and fuel

 

30.4

 

 

76.1

 

Accounts receivable and other current assets

 

(11.3

)

 

28.7

 

Accounts payable and other current liabilities

 

(59.6

)

 

(127.2

)

Regulatory assets

 

54.8

 

 

154.7

 

Other operating activities, net

 

(2.9

)

 

(1.8

)

Net cash provided by operating activities

 

233.4

 

 

328.7

 

 

 

 

 

Investing activities:

 

 

 

 

Property, plant and equipment additions

 

(176.2

)

 

(119.1

)

Other investing activities

 

(0.7

)

 

17.6

 

Net cash (used in) investing activities

 

(176.9

)

 

(101.5

)

 

 

 

 

Financing activities:

 

 

 

 

Dividends paid on common stock

 

(44.4

)

 

(41.4

)

Common stock issued

 

31.2

 

 

27.4

 

Net borrowings (payments) of Revolving Credit Facility and CP Program

 

-

 

 

(535.6

)

Long-term debt - issuance

 

-

 

 

350.0

 

Distributions to non-controlling interests

 

(5.6

)

 

(4.5

)

Other financing activities

 

(1.0

)

 

(5.0

)

Net cash (used in) financing activities

 

(19.8

)

 

(209.1

)

 

 

 

 

Net change in cash, restricted cash and cash equivalents

 

36.7

 

 

18.1

 

 

 

 

 

Cash, restricted cash and cash equivalents beginning of period

 

93.0

 

 

27.0

 

Cash, restricted cash and cash equivalents end of period

$

129.7

 

$

45.1

 

 

 

 

 

Supplemental cash flow information:

 

 

 

 

Cash (paid) refunded during the period:

 

 

 

 

Interest (net of amounts capitalized)

$

(33.6

)

$

(27.6

)

Non-cash investing and financing activities:

 

 

 

 

Accrued property, plant and equipment purchases at March 31,

 

37.7

 

 

42.1

 

 

The accompanying Condensed Notes to Consolidated Financial Statements are an integral part of these Consolidated Financial Statements.

 

11


BLACK HILLS CORPORATION

CONSOLIDATED STATEMENTS OF EQUITY

 

(unaudited)

Common Stock

 

Treasury Stock

 

 

 

 

 

 

 

 

 

 

 

(in millions except share amounts)

Shares

 

Value

 

Shares

 

Value

 

Additional Paid in Capital

 

Retained Earnings

 

AOCI

 

Non-controlling Interest

 

Total

 

December 31, 2023

 

68,265,042

 

$

68.3

 

 

68,073

 

$

(4.1

)

$

2,007.7

 

$

1,158.2

 

$

(14.8

)

$

90.5

 

$

3,305.8

 

Net income

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

127.9

 

 

-

 

 

3.7

 

 

131.6

 

Other comprehensive income, net of tax

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

2.5

 

 

-

 

 

2.5

 

Dividends on common stock ($0.65 per share)

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(44.4

)

 

-

 

 

-

 

 

(44.4

)

Share-based compensation

 

104,181

 

 

0.1

 

 

14,270

 

 

(0.6

)

 

1.9

 

 

-

 

 

-

 

 

-

 

 

1.4

 

Issuance of common stock

 

600,355

 

 

0.6

 

 

-

 

 

-

 

 

30.9

 

 

-

 

 

-

 

 

-

 

 

31.5

 

Issuance costs

 

-

 

 

-

 

 

-

 

 

-

 

 

(0.3

)

 

-

 

 

-

 

 

-

 

 

(0.3

)

Distributions to non-controlling interest

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(5.6

)

 

(5.6

)

March 31, 2024

 

68,969,578

 

$

69.0

 

 

82,343

 

$

(4.7

)

$

2,040.2

 

$

1,241.7

 

$

(12.3

)

$

88.6

 

$

3,422.5

 

 

(unaudited)

Common Stock

 

Treasury Stock

 

 

 

 

 

 

 

 

 

 

 

(in millions except share amounts)

Shares

 

Value

 

Shares

 

Value

 

Additional Paid in Capital

 

Retained Earnings

 

AOCI

 

Non-controlling Interest

 

Total

 

December 31, 2022

 

66,140,396

 

$

66.1

 

 

36,726

 

$

(2.4

)

$

1,882.7

 

$

1,064.1

 

$

(15.6

)

$

95.0

 

$

3,089.9

 

Net income

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

114.1

 

 

-

 

 

3.3

 

 

117.4

 

Other comprehensive income, net of tax

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

1.2

 

 

-

 

 

1.2

 

Dividends on common stock ($0.625 per share)

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(41.4

)

 

-

 

 

-

 

 

(41.4

)

Share-based compensation

 

84,735

 

 

0.1

 

 

4,388

 

 

(0.3

)

 

1.9

 

 

-

 

 

-

 

 

-

 

 

1.7

 

Issuance of common stock

 

445,578

 

 

0.5

 

 

-

 

 

-

 

 

27.2

 

 

-

 

 

-

 

 

-

 

 

27.7

 

Issuance costs

 

-

 

 

-

 

 

-

 

 

-

 

 

(0.3

)

 

-

 

 

-

 

 

-

 

 

(0.3

)

Distributions to non-controlling interest

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(4.5

)

 

(4.5

)

March 31, 2023

 

66,670,709

 

$

66.7

 

 

41,114

 

$

(2.7

)

$

1,911.5

 

$

1,136.8

 

$

(14.4

)

$

93.8

 

$

3,191.7

 

 

12


BLACK HILLS CORPORATION

 

Condensed Notes to Consolidated Financial Statements

(unaudited)

(Reference is made to Notes to Consolidated Financial Statements

included in the Company’s 2023 Annual Report on Form 10-K)

 

(1)
Management’s Statement

 

The unaudited Consolidated Financial Statements included herein have been prepared by Black Hills Corporation (together with our subsidiaries the “Company”, “us”, “we” or “our”), pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations; however, we believe that the footnotes adequately disclose the information presented. These Consolidated Financial Statements should be read in conjunction with the consolidated financial statements and the notes included in our 2023 Annual Report on Form 10-K.

 

Use of Estimates and Basis of Presentation

 

The information furnished in the accompanying Consolidated Financial Statements reflects certain estimates required and all adjustments, including accruals, which are, in the opinion of management, necessary for a fair presentation of the March 31, 2024, December 31, 2023 and March 31, 2023 financial information. Certain lines of business in which we operate are highly seasonal, and our interim results of operations are not necessarily indicative of the results of operations to be expected for an entire year.

 

Recently Issued Accounting Standards

 

Improvements to Reportable Segment Disclosures, ASU 2023-07

 

In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosures, which expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly reviewed by the CODM and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. The ASU also allows, in addition to the measure that is most consistent with GAAP, the disclosure of additional measures of segment profit or loss that are used by the CODM in assessing segment performance and deciding how to allocate resources. The ASU is effective for our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, and subsequent interim periods, with early adoption permitted. We do not expect the ASU to have an impact on our financial position, results of operations and cash flows; however, are currently evaluating the impact on our consolidated financial statement disclosures.

 

Improvements to Income Tax Disclosures, ASU 2023-09

 

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which expands public entities’ annual disclosures by requiring disclosure of tax rate reconciliation amounts and percentages for specific categories, income taxes paid disaggregated by federal and state taxes, and income tax expense disaggregated by federal and state taxes jurisdiction. The ASU is effective for our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, with early adoption permitted. We do not expect the ASU to have an impact on our financial position, results of operations and cash flows; however, are currently evaluating the impact on our consolidated financial statement disclosures.

 

13


(2)
Regulatory Matters

 

We had the following regulatory assets and liabilities (in millions):

 

 

As of

 

As of

 

 

March 31, 2024

 

December 31, 2023

 

Regulatory assets

 

 

 

 

Winter Storm Uri

$

144.9

 

$

199.6

 

Deferred energy and fuel cost adjustments

 

57.5

 

 

55.1

 

Deferred gas cost adjustments

 

8.1

 

 

4.1

 

Gas price derivatives

 

-

 

 

5.1

 

Deferred taxes on AFUDC

 

7.4

 

 

7.1

 

Employee benefit plans and related deferred taxes

 

88.2

 

 

89.3

 

Environmental

 

5.9

 

 

2.9

 

Loss on reacquired debt

 

17.0

 

 

17.4

 

Deferred taxes on flow through accounting

 

80.5

 

 

74.7

 

Decommissioning costs

 

2.4

 

 

2.4

 

Other regulatory assets

 

19.2

 

 

22.4

 

Total regulatory assets

 

431.1

 

 

480.1

 

Less current regulatory assets

 

(147.3

)

 

(175.7

)

Regulatory assets, non-current

$

283.8

 

$

304.4

 

 

 

 

 

Regulatory liabilities

 

 

 

 

Deferred energy and gas costs

$

85.7

 

$

88.9

 

Employee benefit plan costs and related deferred taxes

 

35.7

 

 

36.2

 

Cost of removal

 

182.2

 

 

181.9

 

Excess deferred income taxes

 

243.2

 

 

247.1

 

Other regulatory liabilities

 

6.6

 

 

12.5

 

Total regulatory liabilities

 

553.4

 

 

566.6

 

Less current regulatory liabilities

 

(89.9

)

 

(98.9

)

Regulatory liabilities, non-current

$

463.5

 

$

467.7

 

 

Regulatory Activity

 

Arkansas Gas

 

On December 4, 2023, Arkansas Gas filed a rate review with the APSC seeking recovery of significant infrastructure investments in its 7,200-mile natural gas pipeline system. The rate review requests $44.1 million in new annual revenue with a capital structure of 48% equity and 52% debt and a return on equity of 10.5%. The request seeks to finalize rates in the fourth quarter of 2024.

 

Colorado Gas

 

On May 9, 2023, Colorado Gas filed a rate review with the CPUC seeking recovery of significant infrastructure investments in its 10,000-mile natural gas pipeline system. In March 2024, Colorado Gas received final approval for a settlement agreement for a general rate increase which is expected to generate $20.2 million of new annual revenue with a capital structure of 51% equity and 49% debt and a return on equity of 9.3%. Final rates were enacted on May 1, 2024, and replaced interim rates effective February 13, 2024.

 

Iowa Gas

 

On May 1, 2024, Iowa Gas filed a rate review with the IUB seeking recovery of significant infrastructure investments in its 5,000-mile natural gas pipeline system. The rate review requests $20.7 million in new annual revenue with a capital structure of 51% equity and 49% debt and a return on equity of 10.5%. Iowa statute allows implementation of interim rates 10 days after filing a rate review and Iowa Gas plans to implement interim rates, subject to adjustment or refund, effective in May, 2024. The request seeks to finalize rates in the first quarter of 2025.

 

Wyoming Gas

 

On May 18, 2023, Wyoming Gas filed a rate review with the WPSC seeking recovery of significant infrastructure investments in its 6,400-mile natural gas pipeline system. On January 17, 2024, the WPSC approved a settlement agreement for a general rate increase which is expected to generate $13.9 million in new annual revenue with a capital structure of 51% equity and 49% debt and a return on equity of 9.9%. New rates were effective February 1, 2024. The agreement also included approval of a four-year extension of the Wyoming Integrity Rider.

14


 

(3)
Commitments, Contingencies and Guarantees

 

There have been no significant changes to commitments, contingencies and guarantees from those previously disclosed in Note 3 of our Notes to the Consolidated Financial Statements in our 2023 Annual Report on Form 10-K.

 

 

(4)
Revenue

 

The following tables depict the disaggregation of revenue, including intercompany revenue, from contracts with customers by customer type and timing of revenue recognition for each of the reportable segments for the three months ended March 31, 2024 and 2023. Sales tax and other similar taxes are excluded from revenues.

 

Three Months Ended March 31, 2024

Electric Utilities

 

Gas Utilities

 

Inter-segment Eliminations

 

Total

 

Customer types:

(in millions)

 

Retail

$

188.3

 

$

437.4

 

$

-

 

$

625.7

 

Transportation

 

-

 

 

51.7

 

 

(0.1

)

 

51.6

 

Wholesale

 

8.5

 

 

-

 

 

-

 

 

8.5

 

Market - off-system sales

 

6.6

 

 

-

 

 

-

 

 

6.6

 

Transmission/Other

 

18.0

 

 

11.2

 

 

(4.4

)

 

24.8

 

Revenue from contracts with customers

$

221.4

 

$

500.3

 

$

(4.5

)

$

717.2

 

Other revenues

 

0.8

 

 

8.4

 

 

-

 

 

9.2

 

Total revenues

$

222.2

 

$

508.7

 

$

(4.5

)

$

726.4

 

 

 

 

 

 

 

 

 

Timing of revenue recognition:

 

 

 

 

 

 

 

 

Services transferred at a point in time

$

8.7

 

$

-

 

$

-

 

$

8.7

 

Services transferred over time

 

212.7