Q4 2023 Black Hills Corp Earnings Call

Operator: Good day, and thank you for standing by. Welcome to the Q4 and full year 2023 Black Hills Corporation earnings conference call. At this time, all participants are in a listen-only mode.

Okay.

Speaker Change: Good day and thank you for standing by welcome to the Q4 and full year 2023, Black Hills Corporation earnings Conference call. At this time, all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During this session. Please press star one one.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again.

Speaker Change: On your telephone and wait for your name to be announced to withdraw. Your question. Please press star. One again, please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today Jerome Nichols.

Operator: Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jerome Nichols, Director of Investor Relations. Thank you. Good morning, everyone.

Jerome E. Nichols: Every investor relations.

Jerome E. Nichols: Thank you good morning, everyone welcome to Black Hills Corporation's fourth quarter and full year 2023 earnings conference call.

Jerome E. Nichols: Welcome to Black Hills Corporation's fourth quarter and full year 2023 earnings conference call. You can find our earnings release and materials for our call this morning on our website at www.blackhillscorp.com under the investor relations heading. Leading our quarterly earnings discussion today are Linden Evans, President and Chief Executive Officer, and Kimberly Nooney, Senior Vice President and Chief Financial Officer. Also attending this morning are Marnie Jones, Senior Vice President, Utilities, and Todd Jacobs, Senior Vice President, Growth and Strategy. During our earnings discussion today, some of the comments we make may contain forward-looking statements as defined by the Securities and Exchange Commission, and there are a number of uncertainties inherent in such comments. Although we believe that our expectations and beliefs are based on reasonable assumptions, actual results may differ materially. We direct you to our earnings release, slide two of the investor presentation on our website, and our most recent Form 10-K and Form 10-Q filed with the Securities and Exchange Commission for a list of some of the factors that could cause future results to differ materially from our expectations. I will now turn the call over to Linden Evans.

Jerome E. Nichols: You can find our earnings release and materials for our call. This morning at our website at Www Dot Black Hills Corp, Dot com under the Investor Relations heading.

Jerome E. Nichols: Leading our quarterly earnings discussion today are Linn Evans, President and Chief Executive Officer.

Jerome E. Nichols: And Kimberly Nooney, senior Vice President and Chief Financial Officer.

Speaker Change: Also attending this morning, our Marni Jones, Senior Vice President utilities, and Todd Jacobs Senior Vice president of growth and strategy.

Jerome E. Nichols: During our earnings discussion today some of the comments, we make may contain forward looking statements as defined by the Securities and Exchange Commission.

Jerome E. Nichols: And there are a number of uncertainties inherent in such comments.

Jerome E. Nichols: Although we believe that our expectations and beliefs are based on reasonable assumptions actual results may differ materially.

Jerome E. Nichols: We direct you to our earnings release slide two of the Investor presentation on our website.

Jerome E. Nichols: And our most recent Form 10-K and Form 10-Q filed with the Securities and Exchange Commission for a list of some of the factors that could cause future results could differ materially from our expectations I.

Jerome E. Nichols: I will now turn the call over to Lynn Evans.

Linden R. Evans: Thank you, Jerome, and thank you all for joining us today. I'll provide an overview of the year, Kimberly will provide our financial update, and Marnie and Todd will provide more detail on how we advanced our operational performance and our strategic initiatives. I'll begin my comments on slide three.

Linden R. Evans: Thank you Jerome and thank you all for joining us today I'll provide an overview of the year Kimberly will provide our financial update and Marnie and Todd will provide more detail on how we advanced our operational performance and our strategic initiatives.

Linden R. Evans: I'll begin my comments on slide three in addition to our team's core focus of excellent operational performance. We achieved three key objectives for the year delivering on earnings guidance.

Linden R. Evans: In addition to our team's core focus on excellent operational performance, we achieved three key objectives for the year, delivering on earnings guidance, strengthening our financial position, and advancing our strategic growth plan. Most importantly, we continued our relentless focus on delivering safe, reliable, and cost-effective energy with another year of excellent reliability. This was never more important than during the severe cold weather our customers experienced over the last several winters, including recent temperatures that were well below zero a few weeks ago. At one point, every customer we served was persevering through below zero temperatures.

Linden R. Evans: Strengthening our financial position.

Linden R. Evans: Advancing our strategic growth plan. Most importantly, we continued our relentless focus on delivering safe reliable and cost effective energy with another year of excellent reliability. This is never more important than during the severe cold weather our customers experienced over the last several winters, including recent temperatures that were well below zero.

Linden R. Evans: A few weeks ago at one point every customer we serve was persevering through below zero temperatures. It highlights reminds us of the criticality of what we do everyday and how important our energy services are to our customers and the communities we serve.

Linden R. Evans: It highlights and reminds us of the criticality of what we do every day and how important our energy services are to our customers and the communities we serve. On the financial performance front, we delivered earnings above our guidance for the year and made notable progress strengthening our balance sheet as we previously projected, and our team continues to achieve constructive results through our regulatory strategy, filing two to three rate reviews each year. We flexed our organization and our team worked incredibly hard throughout 2023 to achieve our financial objective; new rates and customer growth, combined with cost management initiatives and our team delivering on strategic opportunities more than offset the impacts from inflation, interest rates, and weather, and Kimberly will speak to this in more detail. We successfully executed our financing strategy during the year, strengthening our balance sheet and improving our key credit metrics, reducing our debt to total capitalization ratio by 350 And in January, we increased our dividend for the 54th consecutive year, reflecting our confidence in the future.

Linden R. Evans: On the financial performance front, we delivered earnings above our guidance for the year and made notable progress strengthening our balance sheet as we previously projected.

Linden R. Evans: Our team continued to achieve constructive results through our regulatory strategy filing two to three rate reviews each year.

We flexed our organization and our team worked incredibly hard throughout 2023 to achieve our financial objectives, new rates and customer growth combined with cost management initiatives and our team delivering on strategic opportunities more than offset the impacts from inflation interest rates and weather and Kimberly will speak to this.

In more detail.

Kimberly Nooney: We successfully executed our financing strategy during the year strengthening our balance sheet and improving our key credit metrics, reducing our debt to total capitalization ratio by 350 basis points and in January we increased our dividend for the 54th consecutive year, reflecting our confidence in the future.

Linden R. Evans: We meaningfully executed on our strategic growth initiatives during the year. For example, we're advancing our electric resource plans for our Colorado and South Dakota utilities. We're in the final contracting phase for adding 100 megawatts of new renewable generation for our South Dakota electric utility. And in Colorado, we're evaluating bids to add 400 megawatts of renewable resources by year end 2029. We're also preparing to file a resource plan for Wyoming Electric later this year, which is required every three years. Construction is underway on our Ready Wyoming Electric Transmission project, which is expected to be completed in multiple phases this year and next year.

Kimberly Nooney: We meaningfully executed on our strategic growth initiatives during the year, we're advancing our electric resource plans for our Colorado and South Dakota utilities. We're in the final contracting phase, we're adding 100 megawatts of new renewable generation for our South Dakota electric utility and in Colorado, Reevaluating bids to add 400 megawatt.

Kimberly Nooney: That's a renewable resources by year end 2029.

Linden R. Evans: We're also preparing to file a resource plan for Wyoming Electric later this year, which is required every three years.

Linden R. Evans: Construction is underway on our ready Wyoming electric transmission project, which is expected to be completed in multiple phases. This year and next year. This is an important project for our customers to help stabilize cost and will provide a foundation for future opportunities.

Linden R. Evans: This is an important project for our customers to help stabilize costs and will provide a foundation for future opportunities, with Growing Energy Demand in Cheyenne, particularly around data centers and blockchain customers, or evaluating other electric transmission opportunities. Slide 4 lists our financial outlook. We remain confident in our long-term growth, and we continue to expect earnings growth to accelerate throughout our five-year plan. We are optimistic that recent downward trends in inflation, interest rates, and natural gas prices could provide tailwinds during the year. We initiated our 2024 earnings guidance range at $3.80 to $4 per share, which represents 4% growth off our 2023 guidance.

Linden R. Evans: Growing energy demand in Cheyenne, particularly around data centers and blockchain customers were evaluating other electric transmission opportunities.

Linden R. Evans: Slide four lists our financial outlook, we remain confident in our long term growth and we continue to expect earnings growth to accelerate throughout our five year plan.

Linden R. Evans: We're optimistic that recent downward trends in inflation interest rates and natural gas prices could provide tailwind during the year.

Linden R. Evans: We initiated our 2024 earnings guidance range of $3 80 to $4 per share, which represents 4% growth off our 2023 guidance increasing clarity around growth opportunities provides us with confidence that we can grow earnings by 46% over the planned period, we also anticipate dividend growth to be.

Linden R. Evans: Increasing clarity around growth opportunities provides us with confidence that we can grow earnings by 4-6% over the planned period. We also anticipate dividend growth to be in line with EPS. We also updated our capital forecast for the five-year period through 2028. With more clarity around some of the larger strategic initiatives, we added the capital investment for these projects, increasing our five-year capital forecast by $800 million to $4.3 billion. Todd will provide additional details in a later slide.

Linden R. Evans: In line with EPS growth.

Linden R. Evans: We also updated our capital forecast for the five year period through 2028 with more clarity around some of the larger strategic initiatives. We added the capital investment for these projects, increasing our five year capital forecast by $800 million to $4 $3 billion and Todd will provide additional details later.

Slide.

Linden R. Evans: We're providing our scorecard for 2024 on slide five, re-initiating a practice we've used in the past to help stakeholders understand our key objectives for the year and to hold ourselves accountable to you, our shareholders. We've listed key milestones and goals for what we call our Big Four strategic objectives of growth and financial performance, operational excellence, transformation, and people and culture. We already have a solid start to achieving these objectives and key results, or OKRs, as we call them, a term our team has come to know very well over the last year across our entire organization. Before I turn the call over to Kimberly, I want to close by addressing the challenges and successes our team and our industry have encountered over the last year. It's been far from easy, to say the least, but we know addressing challenges head-on drives growth and innovation. Navigating the unique macroeconomic factors has driven us to critically evaluate how we do business on a deeper enterprise-wide level.

Linden R. Evans: We're providing our scorecard for 2024 on slide five re initiating our practice we've used in the past to help stakeholders understand our key objectives for the year and to hold ourselves accountable to you our shareholders.

Linden R. Evans: We've listed key milestones and goals for what we call our big four strategic objectives of growth and financial performance APA.

Linden R. Evans: Operational excellence transformation and people and culture.

Linden R. Evans: We already have a solid start to achieving these objectives and key results are okay ours as we call them a term our team has come to know very well over the last year across our entire organization.

Speaker Change: Before I turn the call over to Kimberly I want to close by addressing the challenges and successes our team in our industry have endured over the last year, it's been far from easy to say, the least but we know addressing challenges head on and drives growth and innovation.

Jerome E. Nichols: Navigating the unique macroeconomic factors has driven us to critically evaluate how we do business in a deeper enterprise wide level.

Linden R. Evans: Addressing these challenges together has made us a more resilient team with a stronger financial base and strategic position as we execute on our fundamental business and continually improve our processes and how we conduct our work every day. Our team has done an excellent job identifying and achieving ways to continuously improve how we serve our stakeholders. I'm extremely encouraged by our team's dedication and commitment to our vision, mission, and values. I want to pause today to recognize all we have achieved to position us for long-term success. With that, I'll turn it over to Kimberly for our financial update. Kimberly.

Kimberly: Addressing these challenges together has made us a more resilient team with a stronger financial base and strategic position as we execute on our fundamental business and continually improve our processes and how we conduct our work every day. Our team has done an excellent job of identifying and achieving ways to continuously improve how we serve our stakeholders I'm extremely encouraged.

Speaker Change: By our team's dedication and commitment to our vision mission and values I want to pause today to recognize all we have achieved to position us for long term success.

Linden R. Evans: With that I'll turn it over to Kimberly for our financial update Kimberly.

Kimberly Nooney: Thank you, Lynn, and good morning, everyone. Before I dive in, I also want to say how pleased I am with our financial results and the strategic progress we achieved during the year on behalf of our investors a year ago due to the uncertain macroeconomic environment and impacts from winter storms Uri and Elliot. We reset the 2023 earnings guidance range to $3.65 to $3.85 per share and our long-term earnings growth target to 4 to 6 percent. In addition, we committed to strengthening our balance sheet and improving our credit metric. We also noted that we expected the pressures from the macroeconomic environment to continue in the near term and ease in the long term.

Kimberly: Thank you Lynn and good morning, everyone.

Kimberly Nooney: Before I dive in I also want to say, how pleased I am with our financial results and strategic progress we achieved during the year on behalf of our investors a.

Kimberly Nooney: A year ago.

Kimberly Nooney: Due to the uncertain macroeconomic environment and.

Kimberly Nooney: And impacts from winter storm theory and Elliot.

Kimberly Nooney: We reset 2023 earnings guidance range to $3 65.

Kimberly Nooney: To $3 85 per share and our long term earnings growth target to 4% to 6%.

Kimberly Nooney: In addition, we committed to strengthening our balance sheet and improving our credit metrics.

Kimberly Nooney: We also noted that we expected the pressures from the macroeconomic environment to continue in the near term and is in the long term.

Kimberly Nooney: As demonstrated in 2023, our team will continue to be transparent about our objectives and reiterate our commitment to delivering on our short and long-term financial objectives for all stakeholders. To that point, we delivered 2023 earnings per share of $3.91, which was above our earnings guidance range. We issued $119 million of new equity.

Kimberly Nooney: As demonstrated in 2023, our team will continue to be transparent about our objective.

Kimberly Nooney: And reiterate our commitment to delivering on our short and long term financial objectives for all stakeholders.

Kimberly Nooney: To that point.

Kimberly Nooney: Delivered 2023 earnings per share of $3 91.

Kimberly Nooney: Which was above our earnings guidance range.

Kimberly Nooney: We issued a $119 million of new equity.

Kimberly Nooney: We managed our capital expenditures to approximately $600 million, and we improved our credit metrics to support a strengthened balance. Slide seven lists earnings per share compared to the same period last year. Slide 8 illustrates the drivers of the year-over-year changes in EPS from 2022 to 2023. Results benefited primarily from an increase of $0.63 per share from new rates and customer growth. These drivers offset 28 cents of negative weather and mark to market adjustments, and $0.18 of increased O&M. $0.10 related to the issuance of new shares and $0.09 of higher interest expense.

Kimberly Nooney: We managed our capital expenditures to approximately $600 million and we improved our credit metrics to support a strengthened balance sheet.

Kimberly Nooney: Slide seven lists earnings per share compared to the same period last year.

Kimberly Nooney: Slide eight illustrates the drivers of the year over year changes in EPS from 2022 to 2023.

Kimberly Nooney: Results benefited primarily from an increase of 63 per share from new rates and customer growth.

Kimberly Nooney: These drivers offset 28 cents of negative weather in mark to market adjustments.

Kimberly Nooney: 18 of increased O&M.

Kimberly Nooney: 10 cents related to issuance of new shares.

Kimberly Nooney: And <unk> <unk> of higher interest expense.

Kimberly Nooney: Embedded within our results are savings from our cost management initiative, interest income from cash balances, and other benefits. However, weather negatively impacted 2023 earnings by $0.06 per share compared to normal and $0.24 compared to last year. For the year, heating and cooling degree days were down 5% and 31%, respectively, compared to 2022.

Kimberly Nooney: Embedded within our results our savings from our cost management initiatives interest income from cash balances and other benefits.

Kimberly Nooney: Weather negatively impacted 2023 earnings by <unk> <unk> per share compared to normal and 24 compared to last year.

Kimberly Nooney: For the year heating and cooling degree days were down, 5% and 31% respectively compared to 2022.

Kimberly Nooney: As part of our financing plan, we issued 2 million new shares amounting to 10 cents of EPS impact. During the year, our cash position benefited from stronger-than-planned cash flows from operations and ongoing winter storm URI recovery. Interest income from cash balances helps partially offset increased interest expense resulting from higher interest rates.

Kimberly Nooney: As part of our financing plan, we issued 2 million new shares amounting to 10 cents of EPS impact.

Kimberly Nooney: During the year, our cash position benefited from stronger than planned cash flows from operations and ongoing winter storm here recovery.

Kimberly Nooney: Interest income from cash balances helped partially offset increased interest expense, resulting from higher interest rates.

Kimberly Nooney: Additionally, Stronger Cash Flows positioned us to defer approximately $30 million of our planned 2023 equity. Further details on year-over-year changes in operating income can be found in the appendix of our investor presentation, our earnings release, and our 10-K to be filed on February 14. Moving to slide nine.

Kimberly Nooney: Additionally, stronger cash flows positioned us to defer approximately $30 million of our planned 2023 equity issuance.

Kimberly Nooney: Further details on year over year changes in operating income can be found in the appendix of our investor presentation, Our earnings release, and our 10-K to be filed on February 14th.

Kimberly Nooney: Moving to slide nine.

Kimberly Nooney: As promised, we continue to strengthen our balance sheet during the year with robust cash flows from operations, including recovery of fuel costs from prior winter storms. Disciplined Capital Investment and execution of our financing plan contributed to our success. This ongoing progress is reflected on slide 10, which displays our financial position through the lens of credit quality, capital structure, and liquidity. We remain focused on reducing our debt-to-total capitalization and improving the key credit metrics to maintain our BBB Plus equivalent credit rating. As the chart shows, our debt-to-total capitalization structure improved by 350 basis points from 60.8% at year-end 2022 to 57.3% at year-end 2023. We continue to target a long-term debt-to-total capitalization of 55% and FFO-to-debt of 14% to 15% to maintain BBB Plus credit quality. Our liquidity remains strong, with approximately $90 million of cash at year-end and $750 million of availability under our revolving credit facility.

Kimberly Nooney: As promised we continued to strengthen our balance sheet during the year.

Kimberly Nooney: Robust cash flows from operations, including recovery of fuel costs from prior winter storm.

Kimberly Nooney: Disciplined capital investment.

Kimberly Nooney: And execution of our financing plan contributed to our success.

Kimberly Nooney: This ongoing progress as reflected on slide 10.

Kimberly Nooney: Which displays our financial position through the lens of credit quality capital structure and liquidity.

Kimberly Nooney: We remain focused on reducing our debt to total capitalization.

Kimberly Nooney: And improving the key credit metrics to maintain on triple B plus equivalent credit rating.

Kimberly Nooney: As the chart shows our debt to total capitalization structure improved by 350 basis points from 68% at year end 2022 to 57, 3% at year end 2023.

Kimberly Nooney: Yeah.

Kimberly Nooney: We continue to target a long term debt to total capitalization of 55% and <unk> to debt of 14% to 15% to maintain triple B plus credit quality.

Kimberly Nooney: Our liquidity remains strong with approximately $90 million of cash at year end and $750 million of availability under our revolving credit facility.

Kimberly Nooney: On the debt side, we refinanced $525 million of notes, given strong liquidity in an elevated interest rate environment. We are evaluating options to refinance all or a portion of the $600 million of notes due in August 2020. Slide 11 displays our industry-leading dividend track record. As Lynn mentioned, we recently extended our track record to 54 consecutive years. A dependable and increasing dividend is a component of our strategy for growing long-term value for our shareholders. We anticipate dividend growth to be in line with EPS growth. I will now turn the call over to Marnie for a business update. Thank you, Kimberly.

Kimberly Nooney: On the debt side, we refinanced $525 million of notes last year.

Kimberly Nooney: Given strong liquidity and an elevated interest rate environment.

Marnie: We're evaluating options to refinance all or a portion of the $600 million of notes due in August 2024.

Kimberly Nooney: Slide 11 displays our industry, leading dividend track record.

Marnie: As Lynn mentioned, we recently extended our track record to 54 consecutive years.

Kimberly Nooney: A dependable and increasing dividend is a component of our strategy for growing long term value for our shareholders.

Kimberly Nooney: We anticipate dividend growth to be in line with EPS growth.

Marnie: I will now turn the call over to Marty for a business update.

Marnie: Thank you Kimberly I'll.

Marnie Jones: I'll start my comments on slide 13. We delivered solid operational performance in 2023, which has continued into early 2024 as we successfully operated through the latest widespread winter weather events. The critical nature of our electric and natural gas systems and the effectiveness of our team was showcased in January, which brought record-breaking and sustained cold temperatures and wind throughout our service territory for nearly two weeks. As an example, we delivered energy for three consecutive days of low temperatures that did not get above zero across our footprint. This included lows of minus 38 degrees in Wyoming and minus eight in Arkansas.

Marnie: I'll start my comments on slide 13.

Marnie Jones: We delivered solid operational performance in 2023, which is continued into early 2024 as he successfully operated to the latest widespread winter weather events.

Marnie Jones: The critical nature of our electric and natural gas systems and the effectiveness of our team with showcased in January which brought record breaking and sustained cold temperatures and win throughout our service territory lasting nearly two weeks.

Marnie Jones: As an example, we delivered energy for three consecutive days of low temperatures that did not get above zero across your footprint.

Marnie Jones: This included lows of minus 38 degrees in Wyoming to minus eight and Arkansas.

Marnie Jones: When winter weather hits the hardest, the reliability of our system is a critical safety need for our customers and businesses operating through sustained sub-zero conditions. I'm humbled by our dedicated operations teams as they work to keep our customers warm and safe and businesses operating through sustained sub-zero conditions. Also, in staying true to the nature of our industry, we had the opportunity to provide mutual aid to one of our neighboring gas utilities, assisting them in restoring service during the widespread outage in November. As we outlined last quarter, this slide illustrates our 2022 reliability. Our combined electric utilities continue to rank in the top quartile across our EEI peers as reliability remains a priority focus for our team. During 2023, we recorded our 10th consecutive year of new peak loads at Wyoming Electric, demonstrating the ongoing growth in the region. We also continue to achieve recognition for our support, as recognized by the U.S. Department of Labor's Platinum Status for Hiring Retirees.

Marnie Jones: When winter weather hits, the hardest the reliability of our system is a critical safety need for our customers.

Marnie Jones: Humbled by our dedicated operations teams as they work to keep our customers warm and safe.

Marnie Jones: <unk> business is operating pretty sustained subzero conditions.

Marnie Jones: Also staying true to the nature of our industry, we had the opportunity to provide mutual aid one of our neighboring gas utilities, assisting them and restoring service during the widespread outage in November.

Marnie Jones: As we outlined last quarter. This slide illustrates our 2022 reliability, our combined electric utilities continue to rank in the top quartile across our peers as reliability remains a priority focus for our teams.

Marnie Jones: During 2023, we recorded our 10th consecutive year of New peak loads at Wyoming electric demonstrating the ongoing growth in the region.

Marnie Jones: We also continued to achieve recognition for our support of that trend.

Marnie Jones: As recognized by the U S Department of Labor's platinum status for hiring veteran.

Marnie Jones: We're very proud of our veteran colleagues and the skills and perspective they bring to Black Hills. Moving to slide 14, as Lynn mentioned, the construction of our Ready Wyoming Transmission Project is underway. The 260-mile electric transmission project is being constructed in multiple phases and is targeted to be completed in 2025. As a reminder, the Ready Wyoming assets will be owned by our Wyoming Electric Utility, and recovery of the investment is expected through our Wyoming-based transmission writing. Slide 15 lays out our emissions reduction goal. We are continuing to make progress toward a goal of a 70% emission reduction by 2040 and 40% by 2030. Our electric resource plans for South Dakota Electric and our Colorado Clean Energy Plan support our progress toward these goals. These emission reduction goals are not dependent on future technology and are achievable through the addition of new renewable generation and the conversion of our coal-fired power plants at the end of their engineered life.

Marnie Jones: We're very proud of our veteran colleagues and the skills and perspectives, they bring to Black Hills energy.

Marnie Jones: Moving to slide 14, as Lynn mentioned, the construction of already Wyoming transmission project is underway.

Marnie Jones: The 260 mile Electric transmission project is being constructed in multiple phases and is targeted to be completed in 2025.

Marnie Jones: As a reminder, the ready Wyoming assets will be owned by our Wyoming electric utility and recovery of the investment is expected through our Wyoming based transmission rider.

Marnie Jones: Slide 15 lays out our emissions reduction goals, we are continuing to make progress toward our goal of a 70% emission reduction by 2040 and a 40% by 2030.

Marnie Jones: Our electric resource plans for South Dakota Electric and our Colorado Clean energy plan support our progress toward these goals.

Marnie Jones: These emission reduction goals are not dependent on future technology and are achievable through the addition of new renewable generation and the conversion of our coal fired power plant at the end of their engineered lives.

Marnie Jones: Advancements in cost-effective technology will further accelerate and enhance our achievement of these goals. For example, last year, we invested over $200 million in integrity programs focused on removing aging and at-risk materials.

Marnie Jones: Advancements in cost effective technology will further accelerate and enhance our achievement of these goals.

Marnie Jones: Our net zero by 2035 natural gas coal is progressing last.

Marnie Jones: Last year, we invested over $200 million in integrity programs focused on removing aging and at risk materials.

Marnie Jones: Additionally, we met our annual target to reduce third-party damages by approximately 10% year-over-year and expanded our voluntary renewable natural gas offering to customers. Slide 16 is an update on our South Dakota Electric Resource. We are moving forward with adding 100 megawatts of utility-owned renewable generation for our South Dakota utility. Our team is in the final stages of project contracting, and we've added the estimated investment to our five-year capital plan. We will file a certificate of public convenience and necessity with the Wyoming Public Service Commission in the second quarter.

Marnie Jones: Additionally, we met our annual target to reduce third party damages by approximately 10% year over year.

Marnie Jones: And expanded our voluntary renewable natural gas offering to customers.

Marnie Jones: Slide 16 is an update on our South Dakota Electric resource plan, we are moving forward on adding 100 megawatts of utility owned renewable generation for our South Dakota utility.

Marnie Jones: Our team is in the final stages of project contracting and we've added the estimated investment to our five year capital plan.

Marnie Jones: We will file a certificate of public convenience and necessity with the Wyoming Public Service Commission in the second quarter.

Marnie Jones: Construction for the new renewable generation is expected to commence in 2025 with a mid-2026 in-service date. Moving to slide 17, in Colorado, we received a strong and diverse response to our request for proposals supporting our clean energy plan. We are currently evaluating bids for 400 megawatts of renewable resources and will provide our findings via the 120-day report to the Colorado Public Utility Commission in the second quarter. We expect a decision on phase two of our plan in late 2024. The estimated investment for up to 50 percent of these renewable resources has been included in our five-year capital.

Marnie Jones: Construction for the new renewable generation is expected to commence in 2025 with a mid 2026 in service date.

Marnie Jones: Moving to slide 17 in Colorado, we received a strong and diverse response to a request for proposal supporting our clean energy plan. We are currently evaluating bids for 400 megawatts of renewable resources.

Marnie Jones: And we will provide our findings via the 120 day report to the Colorado Public utility Commission in the second quarter.

Marnie Jones: We expect a decision on phase two of our plan in late 2020 for the estimated investment for up to 50% of these renewable resources has been included in our five year capital forecast.

Marnie Jones: In summary, we are delivering strong operational performance and making consistent progress on our mission of improving life with energy by delivering safe, reliable, and cost-effective energy while prudently investing in long-term assets to serve our customers. With that, I will turn it over to Todd for an update on our regulatory activities, strategy, and growth. Thanks, Marty.

Marnie Jones: In summary, we are delivering strong operational performance and making consistent progress on our mission of improving life with energy by delivering safe reliable and cost effective energy, while prudently investing in long term assets to serve our customers.

Marnie Jones: With that I will turn it over to Todd for an update on our regulatory activities and strategy and growth progress.

Todd Jacobs: I'll start with a regulatory update on slide 19. We made significant progress on a regulatory plan in 2023 with proposed settlements, commission approvals, and new filings in five separate rate reviews. In early 2023, we received approval of our Wyoming Electric Settlement, and in July, we received final commission approval on our Rocky Mountain Natural Gas Pipeline Settlement. We also reached constructive settlements for our Colorado gas and Wyoming gas rate review. The Wyoming gas settlement was approved by the Wyoming Public Service Commission last month, with rates effective February 1st.

Todd: Thanks, Marni I'll start with a regulatory update on slide 19, we.

Todd Jacobs: We made significant progress on our regulatory plan in 2023 with proposed settlements Commission approvals and new filings in five separate rate reviews and.

Todd Jacobs: In early 2023, we received approval of our Wyoming electric settlement.

Todd Jacobs: And in July we received final commission approval on our Rocky Mountain natural gas pipeline settlement.

Todd Jacobs: We also reached constructive settlements for our Colorado gas in Wyoming gas rate reviews.

Todd Jacobs: The Wyoming gas settlement was approved by the Wyoming Public Service Commission last month with rates effective February one.

Todd Jacobs: Our proposed Colorado settlement is pending, with a final decision expected late in the first quarter. We appreciate the engagement of the many stakeholders who worked together to settle these cases. Our Arkansas gas rate review was filed last December and is advancing as planned. The table on slide 19 also lists our planned regulatory activity in 2024, which will include two new rate review filings in Iowa and Colorado. Our Iowa gas rate review will be filed during the second quarter and will allow us to implement interim rates effective 10 days after filing, subject to refund.

Todd Jacobs: Our proposed Colorado settlement is pending with a final decision expected late in the first quarter.

Todd Jacobs: We appreciated the engagement of the many stakeholders who work together to settle these cases.

Todd Jacobs: Our Arkansas gas rate review was filed last December and is advancing as planned.

Todd Jacobs: The table on Slide 19 also lists our planned regulatory activity in 2024, which will include two new rate review filings in Iowa and Colorado.

Todd Jacobs: Our Iowa gas rate review will be filed during the second quarter and will allow us to implement interim rates effective 10 days after filing subject to refund.

Todd Jacobs: Also in the second quarter, we plan to file a rate review for Colorado Electric. I'd note that our last rate review there was completed in 2016. The table also provides details for each rate review, including the requested or approved capital structure and ROE, plus the new revenue.

Todd Jacobs: Also in the second quarter, we plan to file a rate review for Colorado Electric.

Todd Jacobs: Note that our last rate review there was completed in 2016.

Todd Jacobs: The table also provides details for each rate review.

Todd Jacobs: Including the requested or approved capital structure and ROE plus.

Todd Jacobs: To frame our results, I'd note that the four rate reviews that have either been approved or are pending final decisions will provide $51 million in total new revenue annually. Our pending Arkansas gas rate review is requesting $ 44 million in new annual revenue. The table is also meant to illustrate the pace of our regulatory activity and our plan to file two to three rate reviews annually. From a regulatory strategy standpoint, we are focused on maintaining strong regulatory relationships and ensuring cost-effective energy for our customers, all while maintaining a cadence of rate reviews designed to reduce the lag in our revenues and embed inflationary impact in rates. Our regulatory efforts will continue to be a strategic priority.

Todd Jacobs: Plus the new revenue to.

Todd Jacobs: To frame our results I'd note that the four rate reviews that have either been approved or are pending final decision will provide $51 million in total new revenue annually.

Todd Jacobs: Our pending Arkansas gas rate review is requesting $44 million of new annual revenue.

Todd Jacobs: The tables also meant to illustrate the pace of our regulatory activity and our plan to file two to three rate reviews annually.

Todd Jacobs: From a regulatory strategy standpoint, we are focused on maintaining strong regulatory relationships and ensuring cost effective energy for our customers.

Todd Jacobs: All while maintaining our cadence of rate reviews designed to reduce the lag in our revenues and embed inflationary impact in rates.

Todd Jacobs: Our regulatory efforts will continue to be a strategic priority and.

Todd Jacobs: And we have a demonstrated history of working with stakeholders to obtain constructive results. Slide 20 shows our capital investment forecast over our five-year plan period. We increased our capital plan by $800 million to $4.3 billion.

Todd Jacobs: And we have a demonstrated history of working with stakeholders to obtain constructive results.

Todd Jacobs: Slide 20 shows our capital investment forecast over our five year plan period.

Todd Jacobs: We increased our capital plan by $800 million to $4 3, Billion% to 23% increase from our prior five year plan.

Todd Jacobs: 23% increase from our prior five-year plan. The increase includes investment for some of our ongoing strategic initiatives, including renewable generation for South Dakota and Colorado and electric transmission. Several of these projects are currently included in 2026, and the timing may shift as they progress.

Todd Jacobs: The increase includes investment for some of our ongoing strategic initiatives, including renewable generation for South Dakota, and Colorado and electric transmission.

Todd Jacobs: Several of these projects are currently included in 2026, and the timing may shift as they progress.

Todd Jacobs: Beyond 2026, we continue to evaluate potential projects that will be incremental to this plan. Slide 21 outlines several of our customer-focused initiatives, but I'll focus on our renewable natural gas efforts, and then I'll touch on data center and blockchain customers on the next slide. R&G continues to be an area of optimism and opportunity and is a small but growing piece of our business. We operate in agriculturally rich service territories and, therefore, have seen significant RNG project activity, including pipeline and interconnection opportunities.

Todd Jacobs: Beyond 2026, we continue to evaluate potential projects that will be incremental to this plan.

Todd Jacobs: Slide 21 outlines several of our customer focused initiatives, but I'll focus on our renewable natural gas efforts and then I'll touch on datacenter and blockchain customers on the next slide.

Todd Jacobs: R&D continues to be an area of optimism and opportunity and is a small but growing piece of our business.

Todd Jacobs: We operate in agriculture Rich service territories.

Todd Jacobs: And therefore have seen significant RMG project activity <unk>.

Todd Jacobs: Including pipeline interconnection opportunities.

Todd Jacobs: To leverage this, we formed a small team in late 2022 with a mix of commercial and engineering expertise. This team's mission is to develop strong projects and drive growth in this expanding market, with an investment thesis focused on long-term offtake agreements and stable revenue streams. We are adding four InterConnect projects in 2024, which will bring our total to 10 across our service territory. We are very excited to have just announced the acquisition of our first RNG production asset, a biogas production facility at a landfill in Dubuque, Iowa, which has the potential for future production expansion.

Todd Jacobs: To leverage this we formed a small team in late 2022.

Todd Jacobs: Who have a mix of commercial and engineering expertise.

Todd Jacobs: This team's mission is to develop strong projects and drive growth in this expanding market.

Todd Jacobs: With an investment thesis focused on long term off take agreements and stable revenue streams.

Todd Jacobs: We are adding for interconnect projects in 2024, which will bring our total to 10 across our service territory.

Todd Jacobs: We are very excited to have just announced last week, an acquisition of our first RMG production asset.

Todd Jacobs: A biogas production facility at a landfill in Dubuque, Iowa, which has the potential for future production expansion.

Todd Jacobs: We continue to evaluate strategic R&G opportunities that could be meaningful for both earnings contribution and that fit our long-term strategy. Before I leave our customer-focused initiative slide, I'll note that as a management team, we continue to be focused on customer costs, with an aim to be a more effective and efficient energy provider. We have several high-profile internal initiatives to improve processes and systems and to reduce costs. Moving to slide 22.

Todd Jacobs: We continue to evaluate strategic R&D opportunities.

Todd Jacobs: There could be meaningful for both earnings contribution and that fit our long term strategy.

Todd Jacobs: Before I leave our customer focused initiatives slide.

Todd Jacobs: Note that as a management team, we continue to be focused on customer costs with an aim to be a more effective and efficient energy provider.

Todd Jacobs: We have several high profile internal initiatives to improve processes and systems and to reduce costs.

Todd Jacobs: Moving to slide 22.

Todd Jacobs: In addition to executing on traditional utility capital projects, we want to spend time this quarter discussing data center and blockchain customers, both of which are a growing part of our revenue. We have an innovative and attractive tariff for both data center and blockchain customers that generally requires smaller to no capital investment as compared to traditional utility rate based projects, which we refer to as capital light projects. This is an area that we are enthusiastic about, given the upside potential that it offers to our earnings with little to no capital requirement. We have served data center customers in Cheyenne for over a decade.

Todd Jacobs: In addition to executing on traditional utility capital projects.

Todd Jacobs: We want to spend time this quarter discussing datacenter and blockchain customers both of which are a growing part of our revenues.

Todd Jacobs: We have an innovative and attractive tariff for both data center and blockchain customers.

Todd Jacobs: That generally require smaller to no capital investment as compared to traditional utility rate based projects, which we refer to as capital light projects.

Todd Jacobs: This is an area that we are enthusiastic about <unk>.

Todd Jacobs: Given the upside potential that it offers to our earnings with little to no capital requirements.

Todd Jacobs: We observe datacenter customers in Cheyenne for a decade.

Todd Jacobs: And we recently added a blockchain customer. Cheyenne is a highly attractive location for these customers, and we have developed two innovative terms, the Large Power Contract Service and blockchain interruptible service tariffs, in order to facilitate growth. The LPCS tariff was developed in partnership with one of our early data center customers and is designed to serve growing industrial and data center load while protecting other customers from risks associated with large-scale capacity additions and further protecting customers from rate impact. The tariff allows us to tailor solutions to meet the specific and unique needs of data center customers. Under this tariff, we purchase power from the market, or we work with the customer to procure specific dedicated resources to serve their load. Eligibility under this tariff requires customers to meet specific capacity requirements.

Todd Jacobs: And we recently added a blockchain customer.

Todd Jacobs: <unk> is a highly attractive location for these customers.

Todd Jacobs: And we have developed two innovative tariffs.

Todd Jacobs: The large power contract service and blockchain Interruptible service tariffs in order to facilitate growth.

Todd Jacobs: The LPC S. Tariff was developed in partnership with one of our early data center customers and is designed to serve growing industrial and data center load, while protecting other customers from risks associated with large scale capacity additions and further protecting customers from rate impacts.

Todd Jacobs: The tariff allows us to tailor solutions to meet the specific and unique needs of datacenter customers.

Todd Jacobs: Under this tariff we purchase power from the market or we work with the customer to procure specific dedicated resources to serve their load.

Todd Jacobs: Eligibility under the tariff requires customers to meet specific capacity requirements.

Todd Jacobs: Customers on the LPCS tariff pay a negotiated rate for service, which allows us to generate revenues under this model in lieu of generation investment. Hence, hence our use of the term capital light. Nationally, the demand from data center and blockchain customers is increasing. And in tandem with technological advances, artificial intelligence, and cloud services, we see opportunity to serve a growing number of these customers over the long term. We have partnered with these customers, our communities, and our state legislators to provide enabling legislation and a welcoming business environment. We were pleased to see Microsoft's expansion to its second and third data centers in Cheyenne in 2023, as well as the addition of a blockchain customer that we expect to grow even more in 2024. As the demand from these customers grows, their contribution to earnings is also growing. However, understandably, due to the confidential nature of these customers' loads, we have less ability to highlight their specific demand and contribution.

Todd Jacobs: Customers on the <unk> tariff pay a negotiated rate for service.

Todd Jacobs: Which allows us to generate revenues under this model in lieu of generation investment again, hence our use of the term capital light.

Todd Jacobs: Nationally the demand from data center and blockchain customers is increasing.

Todd Jacobs: And in tandem with technology advances artificial intelligence and cloud services, we see opportunity to serve a growing number of these customers over the long term.

Todd Jacobs: We have partnered with these customers our communities and our state legislators to.

Todd Jacobs: To provide enabling legislation and in welcoming business environment.

Todd Jacobs: We were pleased to see Microsoft's expansion to its second and third data centers and Cheyenne in 2023 as well as the addition of a blockchain customer that we expect to grow even more in 2024.

Todd Jacobs: As the demand from these customers grows their contribution to earnings is also growing.

Todd Jacobs: Understandably due to the confidential nature of these customers loads, we have less ability to highlight the specific demand and contributions to.

Todd Jacobs: To help with that issue, we have grouped our data center and blockchain customers together to provide directional earnings contribution estimates. In general, we view the impact from these customers as representing around 5% of our total EPS in the early years of our five-year plan and continuing to grow to around 10% of total EPS by the end of our five-year plan. We foresee growing earnings from stable and long-term customers throughout our planned period and beyond. As a recap, and before I turn it back to Linden, our team made meaningful progress in 2023 in key areas, executing our regulatory plan, developing our strategic growth projects, and expanding our blockchain and data center opportunities. All of these efforts are aimed at driving more effective service to our customers and profitable growth for our business. With that, I'll turn it back to Lynn for his final comment.

Linden: To help with that issue.

Todd Jacobs: We have grouped our datacenter and blockchain customers together to provide directional earnings contribution estimates.

Todd Jacobs: In general we view the impact from these customers as representing around 5% of our total EPS in the early years of our five year plan and continuing to grow to around 10% of total EPS by the end of our five year plan.

Linden: We foresee growing earnings.

Linden: The stable and long term customers throughout our planned period and beyond.

Linden: As a recap and before I turn it back to Lynn.

Linden: Our team made meaningful progress in 2023 and key areas.

Linden: Executing our regulatory plan.

Todd Jacobs: Developing our strategic growth projects, and expanding our blockchain and data center opportunities.

Todd Jacobs: All of these efforts are aimed at driving more effective service to our customers.

Linden: And profitable growth for our business with that I'll turn it back to Lynn for his final comments.

Linden R. Evans: Thanks, Todd. Slides 23 and 24 display our last five years' financial results and the next five years' expectations. Over the last five years, we have delivered average growth of 10 percent in rate base, 6% in earnings, and 5% in our dividends. While earnings have been relatively strong, EPS growth has reflected macroeconomic conditions.

Linden: Thanks, Todd slides 23, and 'twenty four display our last five years financial results in the next five years expectations over the last five years, we have delivered average growth of 10% in rate base, 6% and earnings and 5% and our dividend while earnings have been relatively strong EPS growth has reflected.

Linden R. Evans: Looking ahead to the next five years, I'm excited about our compelling investment thesis supported by our $4.3 billion capital plan, our growing portfolio of strategic and incremental opportunities, margin expansion, and process improvement initiatives. With that, we're happy to entertain questions. Thank you. As a reminder, to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again.

Linden R. Evans: Amid conditions.

Linden R. Evans: Looking ahead to the next five years I am excited about our compelling investment thesis is supported by our $4 3 billion capital plan, our growing portfolio of strategic and incremental opportunities margin expansion and process improvement initiatives with that we're happy to entertain questions.

Linden R. Evans: Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, one moment for questions.

Operator: One moment for questions. Our first question comes from Anthony Crowdell with Mizuho. You may proceed. Hey, good morning team.

Anthony Crowdell: Our first question comes from Anthony <unk> with Mizuho you May proceed.

Anthony Crowdell: Congratulations on a good quarter. Just a couple quick follow-ups. I guess if I could bounce to slide 8, just so you could help us out when I'm modeling for 2024.

Anthony Crowdell: Hey, good morning team congrats on a good quarter just a couple quick follow ups.

Anthony Crowdell: Yes, if I, if I could balance to slide eight.

Anthony Crowdell: Just if you could help us out when I'm modeling for 2024.

Anthony Crowdell: Some non-recurring items there, or maybe recurring, if you could help us out on, you know, what we shouldn't include for 2024 numbers, or just directionally, maybe for the other segments. Hey, good to see you. Good morning.

Anthony Crowdell: Some some some nonrecurring items they are just or maybe recurring if you could help us out on.

Anthony Crowdell: What what we've shared include for 2024 numbers or just Directionally, maybe for the other segment.

Speaker Change: Hey, good to see you.

Linden R. Evans: Yeah, as you know, as you heard on the call, and we're looking back, we had a lot of macroeconomic challenges in the rear view mirror. We think they're behind us, but as you look at the specific 23 numbers and you think about how you need to, you know, model for 2024, the way we looked at it and why we specifically in 2023 guided to the midpoint of our earnings guidance of 375 is the base. If you take that 391 and you add back weather and mark to market, and then you take out the 2023 one-time activities, you basically get to that midpoint. So think about it from that perspective.

Speaker Change: Good morning.

Speaker Change: <unk> you.

Linden R. Evans: As you heard on the call.

Linden R. Evans: We're looking back we had a lot of macroeconomic challenges in the rearview mirror, we think they are behind us but.

Linden R. Evans: But as you look at the specific 23 numbers and you think about how you need to model for 2020 for the way we looked at it and why we specifically in 2023.

Linden R. Evans: <unk> guided to the midpoint of our earnings guidance of $3 75 is the base.

Linden R. Evans: If you take that $3 91, and you add back weather in Mark to market and then you take out the 2023, one time activities you basically get to that midpoint. So think about it from that perspective and then.

Linden R. Evans: And then, you know, assume that we've embedded what I'd call more inflationary type rates into our plan. So when you look at O&M, think about an average run rate related to CPI of around three and a half percent. You know, think about interest in the current interest rate environment. All of those costs have been embedded into our plan. So when you think about the four to six percent growth, you know, that's why we're really confident because we really feel like we've gotten over that macroeconomic environment hump that we had to... be challenged with for 2023. Oh, great. Thanks. And I think you also give a target of, I believe, debt to total cap of 55%. When do you guys think you'll achieve the target?

Speaker Change: Assume that we've embedded what I'd call more inflationary type rates into our plan. So when you look at O&M think about.

Speaker Change: Average run rate related to CPI of around three 5% you know.

Speaker Change: Think about.

Speaker Change: Interest in the current interest rate environment all of those costs have been embedded into our plan. So when you think about the 4% to 6% growth.

Speaker Change: That's why we're really confident because we really feel like we've gotten over that macroeconomic environment hump that we.

Linden R. Evans: <unk> had to.

Speaker Change: The challenge with for 2023.

Speaker Change: Great. Thanks, and I think you also give a target.

Speaker Change: I believe debt to total cap of 55%.

Speaker Change: When do you guys think youll achieve the target.

Linden R. Evans: Yeah, we're focused on achieving that in 2024. OK. And then just lastly, really appreciate the Clarion Data Center has become a big focus in the industry. You know, doing it, I guess you guys have been doing it for 10 years plus, it seems you may be one of the pioneers in this. Just curious when you think about the rest of the industry, just the power consumption or what's advertised, has that been your experience of what you've seen?

Speaker Change: Yeah, we're focused on achieving that in 2024.

Linden R. Evans: Okay, and then just lastly.

Linden R. Evans: Really appreciate the clarity on data centers as it has become a big focus in the industry.

Linden R. Evans: Doing it I guess you guys already 10 years plus it seems you've made would be one of the pioneers in is just curious when you think about for the rest of the industry just has the power consumption or the.

Linden R. Evans: Whats advertise has that been your experience of what you've seen and then if I think of that you can provide maybe potentially 10 cents of earnings contribution I'm sorry, 10% of contribution by 2028, if we could just separate that is that mainly related to rate base investment or is that maybe margin on sales.

Anthony Crowdell: And then if I think of the you provide maybe potentially 10 cents of earnings contribution, I'm sorry, 10 percent of contribution by 2028. If we could just like separate that, is that mainly related to rate-based investment or is that maybe margin on sales? And I'll jump back in the queue after that. Hi, Anthony. This is Lynn. It's really the latter.

Lynn: Jump back in the queue after that.

Anthony Crowdell: Hi, Anthony this is Lynn it's really the ladder. These are margins on sales. So what we have done with these particular customers under an approved tariff with our Wyoming Commission is they would they pay us a fee for essentially helping them procure that energy and that fee represents a.

Linden R. Evans: These are margins on sales. So what we have done with these particular customers, under an approved tariff with our Wyoming Commission, is they pay us a fee for essentially helping them procure that energy. And that fee represents a lost opportunity, perhaps, with respect to generation.

Lynn: Lost opportunity, perhaps with respect to generation. So in other words that fee represents what we would otherwise earn on a generation investment.

Linden R. Evans: So in other words, that fee represents what we would otherwise earn on a generation investment, which really helps us protect our other customers with respect to these loads. And we're really happy with these loads. We like them.

Linden R. Evans: It's really helps us protect our other customers.

Linden R. Evans: With respect to these loads and we're really happy with these loads we like these loads.

Linden R. Evans: And we really enjoy serving these customers, and we see great opportunity as we go forward. Great. Thanks for taking my question. Thank you, Anthony. You're welcome.

Linden R. Evans: And we really enjoy serving these customers and we see great opportunity as we go forward.

Speaker Change: Great. Thanks for taking my questions.

Speaker Change: Thank you Anthony Youre welcome Thanks Anthony.

Linden R. Evans: Thanks, Anthony. Thank you. One moment for questions.

Speaker Change: Thank you.

Linden R. Evans: One moment for questions.

Operator: Our next question comes from Julian DeMoulin-Smith with Bank of America. You may proceed. Hey, good morning team.

Speaker Change: Our next question comes from Julien Dumoulin Smith with Bank of America You May proceed.

Julian DeMoulin-Smith: Thank you guys very much for your time here. I appreciate it. If I can, just to kick things off back on the earnings front, just really quickly here, just as you think about the parent refinancing and the 24 here and the back half here, I know you've alluded to it, but what are you assuming there in terms of the guidance, as well as how are you thinking about offsets to O&M, including potential asset sales here, just to kind of clear that out real quick. Yeah, good morning

Operator: Okay.

Julian DeMoulin-Smith: Hey, good morning team. Thank you guys very much for the time here I appreciate it.

Julian DeMoulin-Smith: If I can just just to kick things off back on the earnings front, just really quickly here just as you think about the parent refinancing into 24 here and on the back half here I know you've alluded to it but what are you assuming there in terms of the guidance as well as how are you thinking about offsets O&M, including potential asset sale.

Julian DeMoulin-Smith: Here, just to kind of clear that out real quickly.

Speaker Change: Yeah, good morning, Julien so refinancing burst.

Kimberly Nooney: So refinancing first. We have $600 million coming due in August. We have strong cash flows in the plan that are continuing from Storm Uri, which are about $100 million, so incorporating those in the plan. We're still assessing the amount and don't want to give too much of a detail here, but we're expecting to refinance something less than the $600 million that we have in the plan.

Kimberly Nooney: We have $600 million coming due in August.

Kimberly Nooney: We have strong cash flows and the plan that are continuing from storm, Yuri which are about 100 million. So incorporating those into plan, we're still assessing the.

Kimberly Nooney: A mountain.

Kimberly Nooney: Don't want to give.

Kimberly Nooney: Too much of a detail here, but.

Kimberly Nooney: We're expecting to refinance something less than the $600 million that we have in the plan I just want to reiterate that we are assuming higher interest rates on that in the plan for 2024.

Kimberly Nooney: I just want to reiterate that we're assuming higher interest rates on that in the plan for 2024. So, I guess I just ask you to think about it that way with the strong cash flows from StormURI being included in that assessment. Offsets related to O&M, from an earnings guidance perspective, we assume normal weather, no mark-to-market. We have not included any major one-time activities within our earnings guidance.

Kimberly Nooney: No.

Kimberly Nooney: I guess I'd just ask you to think about it that way with the strong cash flows from storm Yuri being included in.

Kimberly Nooney: That assessment offsets related to O&M from an earnings guidance perspective, we assume normal weather no mark to market.

Kimberly Nooney: We have not included any major one time activities within our earnings guidance. So.

Kimberly Nooney: So, you know, we're really focused on our ability to run the business going forward, and that's really what's demonstrated and illustrated in our financial plan that we've laid out for 2024 and in our future growth. Got it. No asset sales, no property sales, or what have you.

Kimberly Nooney: We're really focused on our ability to run the business going forward and Thats really whats demonstrated an illustrated in our financial plan that we've laid out for 2024 and in our future growth.

Speaker Change: Got it so no no asset sales no property sales were heavier right.

Kimberly Nooney: Correct, nothing of a material nature that we, you know, dealt with this year. Wonderful. All right. Excellent. Thanks for clarifying that.

Kimberly Nooney: Correct nothing of material nature that we dealt with this year.

Kimberly Nooney: Wonderful alright excellent. Thanks for clarifying that I appreciate it and then just moving back here to somebody the other commentary they saw the R&D updates here of late.

Julian DeMoulin-Smith: I appreciate it. And then, just moving back here to some of the other commentators, I saw the R&G updates here of late, and I'm curious just to understand what you are thinking on that front as you kind of delve into that space, both in the current year and then as you look forward through the plan. You know, how much growth is potentially reflected in this novel segment? Julian, this is Todd.

Todd Jacobs: I'm curious just to understand what are you reflecting on that front here.

Todd Jacobs: As you kind of delve into that space. Both in the current year and then as you look forward through the plan how much growth is there potentially reflected in this novel segment.

Todd Jacobs: We haven't categorized it, but we define it as a small but growing part of our overall earnings. We see opportunity in the space. The way that I like to characterize this is that it's really a confluence of opportunity with our geography. We live in and operate in very much agriculture-rich areas.

Julian DeMoulin-Smith: Julian This is Todd we havent categorized it we define it is small but growing part of our overall earnings.

Todd Jacobs: We see opportunity in this space the way that I would like to characterize this is that it's really a confluence of opportunity with our geography, we live in and operate in very much agriculture risk rich areas.

Todd Jacobs: We have expertise in the space and the fact that we understand pipelines and gas quality. We've seen a lot of interest. What we've done is, we talked in the past about our interconnect projects. We're growing to 10 in 2024. What we've seen is further opportunities that we wanted to get a small but dedicated team, really with a really good background in engineering and commercial expertise, to go after more interesting and potentially more lucrative projects. What we announced just a couple weeks ago was the acquisition of a production facility in Dubuque, Iowa. That's our first foray really into the non-regulated space, and we plan to keep it relatively small to start.

Todd Jacobs: We have expertise in this space with it and the fact that we understand pipelines.

Todd Jacobs: And gas quality and so we've seen a lot of interest and so what we've done is as we've talked in the past about our interconnect projects.

Todd Jacobs: We're growing to 10 in 2024.

Todd Jacobs: But what we've seen is further opportunities that we wanted to get a small but dedicated team really with a really good background on engineering and commercial expertise to go after more interesting and potentially more lucrative projects and so what we announced just a couple of weeks ago was an acquisition of a production facility.

Todd Jacobs: In Dubuque, Iowa.

Todd Jacobs: It's our first foray really into the nonregulated space.

Todd Jacobs: We plan to keep it relatively small to start if we get into more material space, We'll certainly talk about that more publicly.

Todd Jacobs: If we get into more material space, we'll certainly talk about that more publicly. We do see opportunity. We see a lot of interest in our service territory. We're excited about the business. We think it's a good overall story for removing methane that would otherwise be released into the atmosphere and putting that into the natural gas system.

Todd Jacobs: But we do see opportunity, we see a lot of interest in our service territory. We're excited about the business. We think it's a good overall story for removing methane that would've otherwise been released into the atmosphere and.

Todd Jacobs: And putting that into the natural gas system. There is a lot of interest from other utilities and other producers within our service territory for these type of assets. So we see upside in the future, but we do see it's small to start with increasing in the future.

Todd Jacobs: There's a lot of interest from other utilities and other producers within our service territory for these types of assets. We see upside in the future, but it does start small but increases in the future. And Julian, the only thing I would add is think about it as utility-like or better returns, even though it's immaterial. Just think about it from that perspective.

Todd Jacobs: Julien the only thing I would add is think about it as utility like or better returns, even though it's immaterial just think about it from that perspective, yes and.

Todd Jacobs: Yep. And the only other thing I'd add to that is that we want to maintain a very solid investment thesis, Julian, where we're looking at long-term offtakes, reliable revenues, and really staying away from commodity risk. So it's utility-like, but we do want greater uptake. Right, so it's fairly contracted R&D assets that you're looking at.

Julian DeMoulin-Smith: The only other thing I'd add to that is that we want to maintain a very solid investment thesis.

Todd Jacobs: Julian where we're looking at long term off takes reliable revenues and really staying away from commodity risks. So it's utility like.

Todd Jacobs: But we do want greater upside.

Todd Jacobs: Alright, so its fairly contracted.

Todd Jacobs: Alright assets that Youre looking at correct. Indeed, that's correct Axa and small wonderful excellent and then just to clarify that the data center.

Todd Jacobs: Correct. Indeed. That's correct. Excellent. And small, yeah, wonderful.

Julian DeMoulin-Smith: Excellent. And then just clarifying the data center commentary and the tariff commentary, just so it basically goes from five to 10% EPS contribution through the forecast period implies about 1% of the growth here per annum is driven by this tariff and associated load. How do you think about, you know, the mix between Bitcoin and data centers and specifically within that? How do you think about, you know, the sort of reliability characteristics that are being offered?

Julian DeMoulin-Smith: Inventory in the tariff commentary, just so basically going from 5% to 10% EPS contribution through the forecast period implies about 1% of the growth here per annum is driven by this tariff.

Julian DeMoulin-Smith: And associated with load how do you think about the mix between bitcoin and Datacenters and specifically within that how do you think about the.

Julian DeMoulin-Smith: Sort of the reliability characteristics that are being offered is there some potential to effectively upsell. These customers over time into more and more firm products considering I suppose historically have talked more about corn customers with you guys. If you will versus more of the data set of types.

Todd Jacobs: Is there some potential to effectively upsell these customers over time into a more firm product considering, I suppose, historically we've talked more about coin customers with you guys, if you will, versus more of the data center type? Yeah, what I can say is that we have been very selective about the customers that we've chosen. We actually, just given the demand from blockchain customers, a couple of years ago, we did a reverse RFP. And so we were very selective about who we chose, somebody with a good operational background, somebody who was financially sound.

Todd Jacobs: Yes.

Todd Jacobs: What I can say is that we have been very selective about the customers that we've chosen.

Todd Jacobs: We actually just given the demand from blockchain customers a couple of years ago, we actually did a reverse RFP and so we were very selective about who we chose.

Todd Jacobs: Somebody with a good operational background somebody who is financially sound. We've had a lot of success with that customer and I would say that they would say the same about us.

Todd Jacobs: They have access to market energy, we have quite a few protections for our customers in the sense, we talked about the concept of capital light meaning.

Todd Jacobs: We've had a lot of success with that customer, and I would say that they would say the same about us. They have access to market energy.

Todd Jacobs: Meaning that the customer makes those investments and infrastructure and to serve that load and then we offer access to the market. So it's really that idea of <unk>.

Todd Jacobs: We have quite a few protections for our customers in the sense that we talk about the concept of capital light, meaning that the customer makes those investments in infrastructure and to serve that load, and then we offer access to the market. So it's really that idea of access to the market for those customers.

Todd Jacobs: Access to the market for those customers. So we see the particularly.

Todd Jacobs: Particularly the customers that chosen as being solid customers with long term long term agreements and again they found it beneficial to the way we set up these contracts as well I hope that answered your question Julien.

Todd Jacobs: So we see, particularly the customers that we've chosen, as being solid customers with long-term agreements. And again, they find it beneficial the way we set up these contracts as well. I hope that answered your question, Julian. Yeah, fair enough.

Speaker Change: Yeah fair enough great guys. Thank you so much I appreciate it best of luck.

Speaker Change: Thank you Julien Julien.

Todd Jacobs: Thank you and as a reminder to ask a question. Please press star one on your telephone one moment for questions.

Julian DeMoulin-Smith: Great guys. Thank you so much. I appreciate it. Best of luck. Thank you, Julian. Thank you. And as a reminder, to ask a question, please press star one one on your telephone. One moment for questions.

Todd Jacobs: Our next question comes from Andrew Weisel with Scotiabank you May proceed.

Speaker Change: Hi, good morning, everybody.

Speaker Change: Good morning, Andrew.

Speaker Change: First question just to clarify does the 2024 EPS guidance reflect the freezing cold January weather.

Operator: Our next question comes from Andrew Eisel at Scotiabank. You may proceed. Good morning, everybody.

Julian DeMoulin-Smith:

Andrew Eisel: In our earnings guidance assume normal weather and so note that upsides downsides that'll be part of our 2024 numbers.

Andrew Eisel: Good morning, Andrew. First question, just to clarify: does the 2024 EPS guidance reflect the freezing cold January weather? We, in our earnings guidance, assume normal weather.

Andrew Eisel: Okay, great. Good start there then.

Andrew Eisel: Next you mentioned the potential for EPS to EPS growth to accelerate over the years did you mean that in sort of a gradually accelerating outlook or will it be lumpy, specifically I'm looking at the Capex Spike in 2026, I imagine that would drive strong growth in 2027 am I right there.

Kimberly Nooney: And so note that upsides and downsides, it'll be part of our 2024 numbers. Good start there then. Next, you mentioned the potential for EPS growth to accelerate over the years. Did you mean that as sort of a gradually accelerating outlook, or will it be lumpy? Specifically, I'm looking at the CAPEX spike in 2026. I imagine that would drive strong growth in 2027. Am I right there?

Speaker Change: Actually it will it will drive strong growth in 2026 and forward when you think about the overall capital plan so what.

Kimberly Nooney: What we've said is our growth will be.

Kimberly Nooney: 4% in the front of the plan accelerating over time and you can see that as a result of the capital investments that we've outlined.

Andrew Eisel: Actually, it will drive strong growth in 2026 and forward when you think about the overall, you know, capital plan. So what we've said is our growth will be 4 percent in the first year of the plan, accelerating over time. And you can see that as a result of the capital investments that we've outlined. Okay, great. And then a third one, if I may, FFO to debt. I know you've been pretty clear about the target is 14 to 15%. But what was the actual figure for 2023? And is that target a good range for 2024?

Andrew Eisel: Yeah.

Speaker Change: Okay great.

Speaker Change: And then a third one if I may.

Andrew Eisel: <unk> that I know you've been pretty clear about the targeted 14% to 15% what was the actual for 2023 and is that targeted range for 2024.

Speaker Change: Absolutely Andrew So we're still targeting the 14% to 15% as we noted.

Andrew Eisel: With Moody's we have.

Andrew Eisel: In excess of that for S&P, we're closer to the 13% it will be marching to the 14% and then.

Andrew Eisel: With Fitch when you include the.

Andrew Eisel: Absolutely, Andrew. So, we're still targeting the 14 to 15 percent, as we noted. With Moody's, we have, we're in excess of that. For S&P, we're closer to the 13 percent, and we'll be marching to the 14 percent. And then with Fitch, when you include the StormURI cash flows, we're around 5 to 5.2 times for their FFO adjusted leverage.

Andrew Eisel: Storm Yuri.

Andrew Eisel: Cash flows were around 5252 times for their <unk> adjusted leverage.

Andrew Eisel: Yeah.

Speaker Change: Okay, great. Thank you very much that's helpful.

Speaker Change: Thank you Andrew.

Andrew Eisel: Thank you I would now like to turn the call back over to Linn Evans for any closing remarks.

Speaker Change: Well, thank you very much Josh and thank you for your interest in Black Hills, and those who dialed in this morning, we really appreciate you I also want to say thank you to my 2900 coworkers.

Kimberly Nooney: Okay, great. Thank you very much. That's helpful.

Andrew Eisel: Thank you, Andrew. Thank you. I would now like to turn the call back over to Linden Evans for any closing remarks.

Linden R. Evans: You are the heart and soul of what we do everyday. Thank you so much for how well you're represented US last year and all that we accomplished in 2023. Thank you I'm also very proud of the fuels that we produce and sell.

Linden R. Evans: Well, thank you very much, Josh. And thank you for your interest in Black Hills and those who dialed in this morning. We really appreciate you. I also want to say thank you to my 2,900 coworkers. You are the heart and soul of what we do every day. Thank you so much for how well you represented us last year and all that we accomplished in 2023. Thank you. I'm also very proud of the fuels that we produce and sell. Without the gas that we have distributed to our customers a lot in January, life would have been much, much different across our eight States. So I'm just very proud of the fuel that we produce and how well our base load electric generation held up as well to keep our customers with lights and with heat. So thank you to our team. So again, well done and thank you, but I ask that you please enjoy a Black Hills energy safe day. We'll look forward to catching up with you next quarter. Take care. Thank you for your participation; you may now disconnect. Who are our next guests?

Linden R. Evans: Without the gas that we have distributed to our customers in January.

Linden R. Evans: Life would have been much much across our eight states. So it just very proud of that fuel that we produce and how well our base load electric generation held up as well to keep our customers with lights and with heat. So thank you to our team. So again well done and thank you, but ask that you. Please enjoy a black hills energy Safe day, and we'll look forward to catching up with you next quarter take care.

Speaker Change: Thank you for your participation you may now disconnect.

Linden R. Evans: [music].

Linden R. Evans: Okay.

Linden R. Evans: Yeah.

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Linden R. Evans: Yeah.

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Linden R. Evans: Yes.

Linden R. Evans: Dan.

Linden R. Evans: Sure.

Linden R. Evans: [music].