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BKH - Black Hills News Story

$69.86 -0.6  -0.8%

Last Trade - 22/04/21

Sector
Utilities
Size
Large Cap
Market Cap £3.18bn
Enterprise Value £5.95bn
Revenue £1.22bn
Position in Universe 1506th / 6851

Black Hills Corp. Reports Strong 2020 Fourth Quarter and Full Year Results and Provides Five-year Growth Outlook

Tue 9th February, 2021 9:15pm
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* Reports 2020 GAAP EPS of $3.65 and EPS of $3.73, as adjusted
* Increases 2021 guidance to $3.80 to $4.00 per share
* Initiates 2022 guidance of $3.95 to $4.15 per share
* Targets 5% to 7% long-term EPS growth rate
* Increases expected five-year capital investment to $3.0+ billion
RAPID CITY, S.D., Feb. 09, 2021 (GLOBE NEWSWIRE) -- Black Hills Corp. (NYSE:
BKH) today announced financial results for the fourth quarter and full year
ended Dec. 31, 2020. Net income and net income, as adjusted (non-GAAP) for the
fourth quarter and full year 2020 compared to the fourth quarter and full year
2019 were:

                                          Three Months Ended Dec. 31,                                            Twelve Months Ended Dec. 31,                                           
                                          2020                                 2019                              2020                                  2019                             
 (in millions, except per share amounts)  Income          EPS                  Income          EPS               Income           EPS                  Income           EPS             
 GAAP:                                                                                                                                                                                  
 Net income                               $    77.2       $    1.23            $    69.2       $    1.13         $    227.6       $    3.65            $    199.3       $    3.28       
                                                                                                                                                                                        
 Non-GAAP:                                                                                                                                                                              
 Net income, as adjusted (*)              $    77.2       $    1.23            $    69.2       $    1.13         $    232.9       $    3.73            $    214.5       $    3.53       

* A schedule for the GAAP to non-GAAP adjustment reconciliation is provided
below.

“I'm pleased to report strong financial performance with an increase of 5.7%
year-over-year in adjusted earnings per share. Positive results were driven by
strong contributions from our natural gas utilities, diligent expense
management and constructive regulatory outcomes,” said Linn Evans, president
and CEO of Black Hills Corp. “Our team kept safety and customer service at
the forefront and rose to every challenge with incredible determination,
exemplifying our Ready to Serve commitment when our customers and communities
needed us most.

“Through our team’s resilient execution, we navigated the challenges of
2020 while preparing for the future needs of our customers. In 2020, we
invested $755 million to upgrade and expand our infrastructure, including the
new 52.5-megawatt Corriedale wind project, which is now generating renewable
energy for customers in South Dakota and Wyoming. We also celebrated 50 years
of consecutive dividend increases.

“Looking forward, we are excited about Black Hills’ future as a
customer-focused, pure-play utility with strong, sustainable growth. During
the next five years, we anticipate investing over $3 billion prioritizing
safety, reliability and growth projects. To demonstrate our confidence and
provide greater transparency into our future, we are increasing our earnings
guidance for 2021, initiating guidance for 2022 and announcing a 5% to 7%
compound annual growth target from 2022 to 2025. Our long-term earnings
outlook and emissions goals published in November provide greater clarity for
stakeholders as we continue improving lives with energy,” concluded Evans.

FOURTH QUARTER AND FULL YEAR 2020 HIGHLIGHTS AND UPDATES

Electric Utilities
* On Nov. 30, South Dakota Electric and Wyoming Electric placed in service the
$79 million, 52.5-megawatt Corriedale Wind Energy Project. The wind facility
was constructed near Cheyenne, Wyoming, and is jointly owned by South Dakota
Electric and Wyoming Electric. The project is serving large commercial and
industrial customers and governmental agencies participating in the
subscription-based Renewable Ready program.


* On Oct. 15, Wyoming Electric and affiliate Black Hills Wyoming received
final approval from the Federal Energy Regulatory Commission of a power
purchase agreement to continue serving Wyoming Electric with 60 megawatts of
capacity and energy from the Wygen I power plant owned by Black Hills Wyoming.
The new agreement begins Jan. 1, 2022, and runs through Dec. 31, 2032. 


* On Sept. 23, Colorado Electric received approval from the Colorado Public
Utilities Commission for its Renewable Advantage program. The program plans to
add 200 megawatts of renewable solar energy in Colorado by year-end 2023
through a power purchase agreement.


* On July 10, Wyoming Electric set a new all-time peak load of 271 megawatts,
surpassing the previous peak of 265 megawatts set in July 2019. 


* On May 5, citizens in Pueblo, Colorado, voted overwhelmingly to retain
Colorado Electric as its electric utility provider by 75.6% of votes cast. The
current franchise agreement continues through 2030.
Gas Utilities
* On Jan. 26, 2021, Nebraska Gas received approval from the Nebraska Public
Service Commission for new rates and the extension of the company’s system
safety and integrity rider for five years. The new, single statewide rate
structure will successfully complete the consolidation process of two natural
gas utilities in the state. The extension of the integrity rider aligns the
integrity investment recovery mechanism across the consolidated utility. Final
rates will be implemented on March 1, 2021, to replace interim rates enacted
Sept. 1, 2020. The settlement will shift approximately $4.6 million of rider
revenue to base rates and will generate an estimated $6.5 million in new
annual revenues with a capital structure of 50% debt and 50% equity and a
return on equity of 9.5%. 


* On Sept. 11, Colorado Gas filed a rate review application with the Colorado
commission seeking recovery on significant infrastructure investments in its
7,000-mile natural gas pipeline system. The rate review requested $13.5
million in new revenue with a capital structure of 50% debt and 50% equity and
a return on equity of 9.95%. The request sought to implement new rates in the
second quarter of 2021. The company also requested a System Safety and
Integrity Rider for five years to recover safety-focused investments in its
system. On Jan. 6, 2021, the Colorado Public Utilities Commission dismissed
the rate review. On Jan. 26, 2021, Colorado Gas filed a request for rehearing,
reargument or reconsideration regarding the dismissal of the rate review. The
SSIR request continues to proceed as requested.


* On March 1, Wyoming Gas enacted new rates and implemented a new rider to
recover integrity investments. The new, single statewide rate structure
successfully completed the consolidation process of four natural gas utilities
in the state. The new rate structure and consolidated tariffs will contribute
to improvements in customers service and reduce the complexity and number of
rate reviews and other regulatory filings.
Power Generation
* On Oct. 15, Black Hills Wyoming and affiliate Wyoming Electric received
final approval from the Federal Energy Regulatory Commission of a power
purchase agreement - see highlight in Electric Utilities above for more
detail.
Corporate
* On Jan. 27, 2021, Black Hills’ board of directors declared a quarterly
dividend on the common stock. Shareholders of record at the close of business
on Feb. 12, 2021, will receive $0.565 per share, payable on March 1, 2021. 


* On Oct. 27, Black Hills’ board of directors approved a quarterly dividend
rate of $0.565 per share, up 5.6% from $0.535 per share. In 2020, Black Hills
celebrated 50 consecutive years of dividend increases.


* On Oct. 1, Barry M. Granger and Scott M. Prochazka joined Black Hills’
board of directors. In anticipation of future board retirements, the board
also temporarily increased its size from 10 to 12 directors to ensure seamless
transitions. 


* On Aug. 3, Black Hills filed a shelf registration statement and dividend
reinvestment and direct stock purchase program with the Securities and
Exchange Commission. In conjunction with these filings, the company also
renewed its at-the-market equity offering program under which it may sell from
time to time shares of its common stock.


* On Aug. 1, Black Hills consolidated the leadership structure of its two
Colorado utilities, Colorado Gas and Colorado Electric, under a single
strategic leader. The new management structure positions the company to
further define and execute the company’s overall Colorado strategy, improve
customer and key stakeholder relationships and deliver improved results for
the business. 


* On June 17, Black Hills issued $400 million of 2.50% 10-year senior notes
due 2030. Proceeds were used to repay short-term debt, working capital and for
general corporate purposes. 


* On Feb. 27, Black Hills issued 1.2 million shares of common stock for net
proceeds of $99 million.
2021 EARNINGS GUIDANCE INCREASED

Black Hills is increasing its guidance for 2021 earnings per share available
for common stock to be in the range of $3.80 to $4.00 from $3.75 to $3.95,
based on the following updated assumptions:
* Normal weather conditions within our utility service territories including
temperatures, precipitation levels and wind conditions;
* Normal operations and weather conditions for planned construction,
maintenance and/or capital investment projects;
* Completion of utility regulatory dockets;
* No significant unplanned outages at any of our generating facilities;
* Production tax credits of $20 million associated with wind generation
assets;
* Capital investment of $647 million in 2021;
* Equity issuance of $100 million to $120 million through the at-the-market
equity offering program in 2021; and
* No material net impact from COVID-19.
2022 EARNINGS GUIDANCE INITIATED

Black Hills is initiating its guidance for 2022 earnings per share available
for common stock in a range of $3.95 to $4.15, based on the following updated
assumptions:
* Normal weather conditions within our utility service territories including
temperatures, precipitation levels and wind conditions;
* Normal operations and weather conditions for planned construction,
maintenance and/or capital investment projects;
* Completion of utility regulatory dockets;
* No significant unplanned outages at any of our generating facilities;
* Adjusted contract price for Wygen I power purchase agreement beginning Jan.
1, 2022;
* Production tax credits of $20 million associated with wind generation
assets;
* Capital investment of $647 million in 2021 and $600 million in 2022; and
* Equity issuance of $100 million to $120 million in 2021 and $60 million to
$80 million in 2022 through the at-the-market equity offering program.
BLACK HILLS CORPORATION
CONSOLIDATED FINANCIAL RESULTS (Unaudited)

(Minor differences may result due to rounding)

                                                     Three Months Ended Dec. 31,                   Twelve Months Ended Dec. 31,              
                                                     2020                 2019                     2020                 2019                 
                                                                                                                                             
                                                     (in millions)                                                                           
 Adjusted operating income ((a) ):                                                                                                           
 Electric Utilities                                  $      34.3          $      35.1              $      156.1         $      160.3         
 Gas Utilities                                       76.6                 73.4                     215.9                190.0                
 Power Generation                                    10.6                 10.8                     42.1                 44.8                 
 Mining                                              2.8                  3.3                      12.8                 12.6                 
 Corporate and Other                                 1.5                  (1.2          )          1.4                  (1.6          )      
 Operating income                                    126.0                121.4                    428.3                406.0                
                                                                                                                                             
 Interest expense, net                               (36.4         )      (35.2         )          (143.5        )      (137.7        )      
 Impairment of investment                            —                    —                        (6.9          )      (19.7         )      
 Other income (expense), net                         (1.6          )      (5.8          )          (2.3          )      (5.7          )      
 Income tax benefit (expense)                        (7.4          )      (7.5          )          (32.9         )      (29.6         )      
 Net income                                          80.5                 72.9                     242.8                213.3                
 Net income attributable to noncontrolling interest  (3.3          )      (3.7          )          (15.2         )      (14.0         )      
 Net income available for common stock               $      77.2          $      69.2              $      227.6         $      199.3         

(a)   Adjusted operating income removes the impacts of finance lease
accounting relating to the 20-year PPA between Black Hills Colorado IPP and
Colorado Electric for the Electric Utilities and Power Generation segments and
Corporate and Other. This presentation of segment information does not impact
consolidated financial results.

                                                             Three Months Ended Dec. 31,                 Twelve Months Ended Dec. 31,              
                                                             2020                 2019                   2020                 2019                 
 Weighted average common shares outstanding (in thousands):                                                                                        
 Basic                                                       62,581               61,265                 62,378               60,662               
 Diluted                                                     62,661               61,418                 62,439               60,798               
                                                                                                                                                   
 Earnings per share:                                                                                                                               
 Earnings per share, Basic                                   $      1.23          $      1.13            $      3.65          $      3.29          
 Earnings per share, Diluted                                 $      1.23          $      1.13            $      3.65          $      3.28          

CONFERENCE CALL AND WEBCAST

Black Hills will host a live conference call and webcast at 11 a.m. EST on
Wednesday, Feb. 10, 2021, to discuss our financial and operating performance.

To access the live webcast and download a copy of the investor presentation,
go to the Black Hills website at www.blackhillscorp.com, and click on
“Events and Presentations” in the “Investor Relations” section. The
presentation will be posted on the website before the webcast. Listeners
should allow at least five minutes for registering and accessing the
presentation. Those interested in asking a question during the live broadcast
or those without Internet access can call 866-544-7741 if calling within the
United States. International callers can call 724-498-4407. All callers need
to enter the passcode 3372129 when prompted.

For those unable to listen to the live broadcast, a replay will be available
on the company’s website.

ANNUAL MEETING OF SHAREHOLDERS

The company’s annual meeting of shareholders will be held on Tuesday, April
27, 2021, at 9:30 a.m. local time, at Black Hills’ company headquarters
located at 7001 Mt. Rushmore Road in Rapid City, South Dakota. The company
plans to mail the Annual Report and Proxy Statement on or about March 18,
2021, to shareholders of record as of March 8, 2021.

USE OF NON-GAAP FINANCIAL MEASURES

As noted in this news release, in addition to presenting its earnings
information in conformity with Generally Accepted Accounting Principles
(GAAP), the company has provided non-GAAP earnings data reflecting adjustments
for special items as specified in the GAAP to non-GAAP adjustment
reconciliation table below. Net income available for common stock, as
adjusted, is defined as Net income, adjusted for expenses and gains that the
company believes do not reflect the company’s core operating performance.
The company believes that non-GAAP financial measures are useful to investors
because the items excluded are not indicative of the company’s continuing
operating results. The company’s management uses these non-GAAP financial
measures as an indicator for planning and forecasting future periods. These
non-GAAP measures have limitations as analytical tools and should not be
considered in isolation or as a substitute for analysis of our results as
reported under GAAP. The presentation of these non-GAAP financial measures
should not be construed as an inference that future results will not be
affected by unusual, non-routine, or non-recurring items.

                                                                Three Months Ended Dec. 31,                                            Twelve Months Ended Dec. 31,                                           
                                                                2020                                 2019                              2020                                  2019                             
 (In millions, except per share amounts)                        Income          EPS                  Income          EPS               Income           EPS                  Income           EPS             
 Net income available for common stock (GAAP)                   $    77.2       $    1.23            $    69.2       $    1.13         $    227.6       $    3.65            $    199.3       $    3.28       
 Adjustments:                                                                                                                                                                                                 
 Impairment of investment                                       —               —                    —               —                 6.9              0.11                 19.7             0.32            
                                                                                                                                                                                                              
 Tax on Adjustments:                                                                                                                                                                                          
 Impairment of investment                                       —               —                    —               —                 (1.6        )    (0.03      )         (4.5        )    (0.07      )    
                                                                                                                                                                                                              
 Adjustments, net of tax                                        —               —                    —               —                 5.3              0.08                 15.2             0.25            
                                                                                                                                                                                                              
 Net income available for common stock, as adjusted (non-GAAP)  $    77.2       $    1.23            $    69.2       $    1.13         $    232.9       $    3.73            $    214.5       $    3.53       

Gross margin (revenue less cost of sales) is considered a non-GAAP financial
measure due to the exclusion of depreciation and amortization from the
measure. The presentation of gross margin is intended to supplement
investors’ understanding of operating performance. Gross margin for our
Electric Utilities is calculated as operating revenue less cost of fuel and
purchased power. Gross margin for our Gas Utilities is calculated as operating
revenue less cost of gas sold. Our gross margin is impacted by the
fluctuations in power purchases and natural gas and other fuel supply costs.
However, while these fluctuating costs impact gross margin as a percentage of
revenue, they only impact total gross margin if the costs cannot be passed
through to customers. Our gross margin measure may not be comparable to other
companies’ gross margin measures. Furthermore, this measure is not intended
to replace operating income as determined in accordance with GAAP as an
indicator of operating performance.

SEGMENT PERFORMANCE SUMMARY

Our segment highlights for the three and twelve months ended Dec. 31, 2020,
compared to the three months and twelve months ended Dec. 31, 2019, are
discussed below.

The following segment information does not include certain intercompany
eliminations. Minor differences in comparative amounts may result due to
rounding. All amounts are presented on a pre-tax basis unless otherwise
indicated.

Electric Utilities

                                Three Months Ended Dec. 31,               Variance                Twelve Months Ended Dec. 31,              Variance             
                                2020                 2019                 2020 vs. 2019           2020                 2019                 2020 vs. 2019        
                                (in millions)                                                                                                                    
 Gross margin (non-GAAP)        $      110.2         $      110.8         $      (0.6   )         $      447.0         $      444.5         $      2.5           
                                                                                                                                                                 
 Operations and maintenance     51.8                 52.5                 (0.7          )         196.8                195.6                1.2                  
 Depreciation and amortization  24.0                 23.2                 0.8                     94.2                 88.6                 5.6                  
 Adjusted operating income      $      34.3          $      35.1          $      (0.8   )         $      156.1         $      160.3         $      (4.2   )      



                                                              Three Months Ended Dec. 31,               Twelve Months Ended Dec. 31,            
 Operating Statistics:                                        2020            2019                      2020                2019                
 Quantities Sold (MWh):                                                                                                                         
 Retail Sales                                                 1,294,777       1,352,386                 5,404,574           5,440,514           
 Contracted Wholesale ((a))                                   143,646         (260,850        )         492,637             368,360             
 Off-system/Power Marketing Wholesale                         179,338         247,934                   648,928             701,633             
 Total energy sold                                            1,617,761       1,339,470                 6,546,139           6,510,507           
                                                                                                                                                
 Contracted generating facilities availability by fuel type:                                                                                    
 Coal                                                         93.9    %       98.3    %                 94.1      %         92.1      %         
 Natural gas and diesel fuel                                  81.1    %       82.1    %                 80.6      %         87.9      %         
 Wind                                                         98.4    %       97.6    %                 98.1      %         95.6      %         
 Total availability                                           87.2    %       88.6    %                 87.0      %         89.9      %         
                                                                                                                                                
 Wind capacity factor                                         40.3    %       43.5    %                 38.9      %         38.7      %         

___________________
(a)   In the fourth quarter of 2019 we adjusted year-to-date revenue and
purchased power, as well as associated quantities, for a wholesale contract to
be presented on a net basis.  This presentation change had no impact on gross
margin.

Fourth Quarter 2020 Compared with Fourth Quarter 2019

Gross margin decreased as a result of:

                                            (in millions)        
 Lower commercial and industrial demand     $      (1.8   )      
 Weather                                    (1.2          )      
 COVID-19 impacts                           (0.1          )      
 Transmission services                      1.7                  
 Rider recovery                             1.0                  
 Other                                      (0.2          )      
 Total decrease in Gross margin (non-GAAP)  $      (0.6   )      

Operations and maintenance expense decreased primarily due to $1.9 million of
lower employee costs and lower outside services related expenses partially
offset by $1.1 million of higher COVID-19 related expenses.

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

Full Year 2020 Compared to Full Year 2019

Gross margin increased as a result of:

                                            (in millions)        
 Release of TCJA revenue reserves ((a))     $      2.7           
 Rider recovery and true-up ( (b))          2.3                  
 Transmission services                      1.4                  
 Residential customer growth                0.9                  
 Lower commercial and industrial demand     (2.7          )      
 COVID-19 impacts ((c))                     (1.8          )      
 Weather                                    (0.3          )      
 Total increase in Gross margin (non-GAAP)  $      2.5           

___________________
(a) In July 2020, regulatory proceedings resolved the last of the Company's
open dockets seeking approval of its TCJA plans. As a result, the Company
reversed certain TCJA-related liabilities, which resulted in an increase to
Gross margin of $2.7 million.
(b) Gross margin increased due to $3.5 million of rider revenues, which was
partially offset by decreases from $1.2 million of rider true-ups.
(c) The impacts to Electric Utilities gross margin from COVID-19 were driven
by reduced commercial volumes and waived customer late payment fees partially
offset by higher residential usage.

Operations and maintenance expense increased primarily due to COVID-19 impacts
which included $2.2 million of expenses related to the sequestration of
essential employees and $0.8 million of additional bad debt expense which were
partially offset by $1.2 million of lower travel, training and outside
services related expenses. Additionally, lower employee costs of $1.9 million
were partially offset by $1.0 million of higher property taxes due to a higher
asset base driven by prior and current year capital expenditures.

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

Gas Utilities

                                Three Months Ended Dec. 31,               Variance                Twelve Months Ended Dec. 31,              Variance             
                                2020                 2019                 2020 vs. 2019           2020                 2019                 2020 vs. 2019        
                                (in millions)                                                                                                                    
 Gross margin (non-GAAP)        $      181.2         $      174.1         $      7.1              $      620.0         $      584.1         $      35.9          
                                                                                                                                                                 
 Operations and maintenance     80.2                 76.6                 3.6                     303.6                301.8                1.8                  
 Depreciation and amortization  24.4                 24.2                 0.2                     100.6                92.3                 8.3                  
 Adjusted operating income      $      76.6          $      73.4          $      3.2              $      215.9         $      190.0         $      25.9          



                                         Three Months Ended Dec. 31,                 Twelve Months Ended Dec. 31,                  
 Operating Statistics:                   2020                 2019                   2020                   2019                   
 Quantities Sold and Transported (Dth):                                                                                            
 Distribution                            31,910,390           34,762,775             97,627,844             105,745,544            
 Transport and Transmission              40,095,295           42,466,737             149,062,476            153,101,264            

Fourth Quarter 2020 Compared with Fourth Quarter 2019

Gross margin increased as a result of:

                                                                (in millions)        
 New rates                                                      $      10.6          
 Customer growth - distribution                                 2.0                  
 Weather                                                        (2.6          )      
 Mark-to-market on non-utility natural gas commodity contracts  (0.9          )      
 COVID-19 impacts                                               (0.1          )      
 Other                                                          (1.9          )      
 Total increase in Gross margin (non-GAAP)                      $      7.1           

Operations and maintenance expense increased primarily due to $3.0 million of
higher outside services expenses. Fourth quarter COVID-19 impacts decreased
operations and maintenance expense by $0.5 million driven primarily by
favorable adjustments to bad debt expense and lower travel and training
expenses. Various other expenses comprised the remainder of the difference
when compared to the same period in the prior year.

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

Full Year 2020 Compared to Full Year 2019

Gross margin increased as a result of:

                                                                (in millions)        
 New rates                                                      $      25.4          
 Customer growth - distribution                                 5.6                  
 Mark-to-market on non-utility natural gas commodity contracts  3.3                  
 Prior year amortization of excess deferred income taxes        2.6                  
 Weather                                                        (1.8          )      
 COVID-19 impacts ((a))                                         (1.8          )      
 Other                                                          2.6                  
 Total increase in Gross margin (non-GAAP)                      $      35.9          

___________________
(a) The impacts to Gas Utilities’ gross margin from COVID-19 were primarily
driven by reduced volumes from certain transport customers and waived customer
late payment fees.

Operations and maintenance expense increased primarily due to higher property
taxes due to a higher asset base driven by prior and current year capital
expenditures. Lower employee costs were mostly offset by various other current
year expenses. COVID-19 impacts to operations and maintenance expense included
$2.5 million of additional bad debt expense which was partially offset by $2.4
million of lower travel, training, and outside services related expenses.

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

Power Generation

                                Three Months Ended Dec. 31,               Variance                Twelve Months Ended Dec. 31,              Variance             
                                2020                 2019                 2020 vs. 2019           2020                 2019                 2020 vs. 2019        
                                (in millions)                                                                                                                    
 Revenue                        $      26.4          $      25.5          $      0.9              $      105.0         $      101.3         $      3.7           
                                                                                                                                                                 
 Fuel expense                   2.3                  2.1                  0.2                     9.0                  9.1                  (0.1          )      
 Operations and maintenance     8.8                  7.6                  1.2                     33.7                 28.4                 5.3                  
 Depreciation and amortization  4.7                  4.9                  (0.2          )         20.2                 19.0                 1.2                  
 Adjusted operating income      $      10.6          $      10.8          $      (0.2   )         $      42.1          $      44.8          $      (2.7   )      



                                                              Three Months Ended Dec. 31,           Twelve Months Ended Dec. 31,            
 Operating Statistics:                                        2020              2019                2020                2019                
 Contracted generating facilities availability by fuel type:                                                                                
 Coal                                                         98.2     %        92.3     %          95.4      %         94.5      %         
 Natural gas                                                  99.2     %        99.1     %          99.5      %         98.6      %         
 Wind                                                         92.9     %        92.0     %          92.8      %         90.6      %         
 Total availability                                           96.7     %        95.4     %          96.4      %         95.0      %         
                                                                                                                                            
 Wind capacity factor                                         29.2     %        27.5     %          26.6      %         23.5      %         

Fourth Quarter 2020 Compared with Fourth Quarter 2019

Adjusted operating income was comparable to the same period in the prior year.

Full Year 2020 Compared to Full Year 2019

Revenue increased in the current year due to increased wind megawatt hours
sold primarily driven by the Busch Ranch II Wind Farm which was placed in
service in November 2019, increased Black Hills Colorado IPP fired-engine
hours and higher power sales agreement prices and volumes. Operating expenses
increased in the current year primarily due to a $3.1 million expense related
to the early retirement of certain assets and higher depreciation and
maintenance expense from new wind assets. COVID-19 impacts included $0.4
million of expenses related to the sequestration of essential employees which
were mostly offset by lower travel and training expenses.

Mining

                                           Three Months Ended Dec. 31,               Variance                Twelve Months Ended Dec. 31,              Variance             
                                           2020                 2019                 2020 vs. 2019           2020                 2019                 2020 vs. 2019        
                                           (in millions)                                                                                                                    
 Revenue                                   $      15.2          $      16.6          $      (1.4   )         $      61.1          $      61.6          $      (0.5   )      
                                                                                                                                                                            
 Operations and maintenance                10.6                 11.0                 (0.4          )         39.0                 40.0                 (1.0          )      
 Depreciation, depletion and amortization  1.9                  2.3                  (0.4          )         9.2                  9.0                  0.2                  
 Adjusted operating income                 $      2.8           $      3.3           $      (0.5   )         $      12.8          $      12.6          $      0.2           



                                  Three Months Ended Dec. 31,                   Twelve Months Ended Dec. 31,              
 Operating Statistics:            2020                 2019                     2020                 2019                 
                                  (in thousands)                                                                          
 Tons of coal sold                929                  996                      3,737                3,716                
 Cubic yards of overburden moved  2,047                2,156                    8,120                8,534                
                                                                                                                          
 Revenue per ton                  $      15.78         $      16.04             $      15.67         $      15.94         

Fourth Quarter and Full Year 2020 Compared with Fourth Quarter and Full Year
2019

Adjusted operating income was comparable to the same period in the prior year.

Corporate and Other

Corporate and Other represents certain unallocated expenses for administrative
activities that support our reportable operating segments. Corporate and Other
also includes business development activities that are not part of our
operating segments.

                                   Three Months Ended Dec. 31,               Variance             Twelve Months Ended Dec. 31,                     Variance             
                                   2020              2019                    2020 vs. 2019        2020                 2019                        2020 vs. 2019        
                                   (in millions)                                                                                                                        
 Adjusted operating income (loss)  $     1.5         $     (1.2  )           $      2.7           $      1.4           $      (1.6   )             $      3.0           

Fourth Quarter and Full Year 2020 Compared with Fourth Quarter and Full Year
2019

The variance in Adjusted operating income (loss) was primarily due to lower
unallocated employee costs.

Consolidated Interest Expense, Impairment of Investment, Other Income
(Expense) and Income Tax Benefit (Expense)

                               Three Months Ended Dec. 31,               Variance                Twelve Months Ended Dec. 31,                Variance             
                               2020                 2019                 2020 vs. 2019           2020                  2019                  2020 vs. 2019        
                                                                                                                                                                  
                               (in millions)                                                                                                                      
 Interest expense, net         $      (36.4  )      $      (35.2  )      $      (1.2   )         $      (143.5  )      $      (137.7  )      $      (5.8   )      
 Impairment of investment      —                    —                    —                       (6.9           )      (19.7          )      12.8                 
 Other income (expense), net   (1.6          )      (5.8          )      4.2                     (2.3           )      (5.7           )      3.4                  
 Income tax benefit (expense)  (7.4          )      (7.5          )      0.1                     (32.9          )      (29.6          )      (3.3          )      

Interest expense, net

Fourth Quarter and Full Year 2020 Compared with Fourth Quarter and Full Year
2019

The increase in Interest expense, net was driven by higher debt balances
partially offset by lower interest rates.

Impairment of Investment

Full Year 2020 Compared to Full Year 2019

In the current year, we recorded a pre-tax non-cash write-down of $6.9 million
in our investment in equity securities of a privately held oil and gas
company, compared to a $20 million write-down in the prior year. The
impairments in both years were triggered by continued adverse natural gas
prices and liquidity concerns at the privately held oil and gas company. The
remaining book value of our investment is $1.5 million, and this is our only
remaining investment in oil and gas exploration and production activities.

Other Income (Expense)

Fourth Quarter and Full Year 2020 Compared with Fourth Quarter and Full Year
2019

The variance in Other income (expense), net was due to the prior year
expensing of $5.4 million of development costs related to projects we no
longer intend to construct which was partially offset by higher current year
non-service defined benefit plan costs primarily driven by lower discount
rates.

Income Tax Benefit (Expense)

Fourth Quarter 2020 Compared with Fourth Quarter 2019

For the three months ended Dec. 31, 2020, the effective tax rate was 8.5%
compared to 9.3% for the same period in 2019. The lower effective tax rate is
primarily due to increased tax benefits from federal production tax credits
associated with new wind assets and one-time research and development tax
credits partially offset by a prior year tax benefit from a federal tax loss
carry-back claim including interest.

Full Year 2020 Compared to Full Year 2019

For the year ended Dec. 31, 2020, the effective tax rate was 11.9% compared to
12.2% in 2019. The lower effective tax rate is primarily due to increased tax
benefits from federal production tax credits associated with new wind assets
and one-time research and development tax credits partially offset by a prior
year tax benefit from a federal tax loss carry-back claim including interest.

ABOUT BLACK HILLS CORP.

Black Hills Corp. (NYSE: BKH) is a customer-focused, growth-oriented utility
company with a tradition of improving life with energy and a vision to be the
energy partner of choice. Based in Rapid City, South Dakota, the company
serves 1.28 million natural gas and electric utility customers in eight
states: Arkansas, Colorado, Iowa, Kansas, Montana, Nebraska, South Dakota and
Wyoming. More information is available at www.blackhillscorp.com,
www.blackhillscorp.com/corporateresponsibility and www.blackhillsenergy.com

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

This news release includes “forward-looking statements” as defined by the
Securities and Exchange Commission. We make these forward-looking statements
in reliance on the safe harbor protections provided under the Private
Securities Litigation Reform Act of 1995. All statements, other than
statements of historical facts, included in this news release that address
activities, events or developments that we expect, believe or anticipate will
or may occur in the future are forward-looking statements. This includes,
without limitations, our 2021 and 2022 earnings guidance and 2022 to 2025
compounded annual growth target and the impacts of the COVID-19 pandemic on
our business. 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 2019 Annual
Report on Form 10-K, and other reports that we file with the SEC from time to
time, and the following:
* The accuracy of our assumptions on which our earnings guidance is based;


* 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, including: targeting a 50 to 60
percent dividend payout ratio and continuing our track record of continuous
annual dividend increases;


* Our ability to successfully execute our financing plans;


* Board of Directors' approval of any future quarterly dividends;


* The impact of future governmental regulation; 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.

(Minor differences may result due to rounding.)

                                             Consolidating Income Statement (Unaudited)                                                                                                                                      
 Three Months Ended Dec. 31, 2020            Electric Utilities                           Gas Utilities        Power Generation        Mining         Corporate         Other Inter-Co Eliminations         Total            
                                             (in millions)                                                                                                                                                                   
 Revenue                                     $              169.4                         $      307.2         $       1.8             $    8.0       $     —           $           —                       $    486.4       
 Intercompany revenue                        6.4                                          1.7                  24.6                    7.3            93.9              (133.9                  )           —                
 Fuel, purchased power and cost of gas sold  65.6                                         127.6                2.3                     —              —                 (34.4                   )           161.2            
 Gross margin (non-GAAP)                     110.2                                        181.2                24.1                    15.2           93.8              (99.5                   )           325.2            
                                                                                                                                                                                                                             
 Operations and maintenance                  51.8                                         80.2                 8.8                     10.6           74.4              (81.6                   )           144.2            
 Depreciation, depletion and amortization    24.0                                         24.4                 4.7                     1.9            6.0               (5.9                    )           55.0             
 Adjusted operating income (loss)            $              34.3                          $      76.6          $       10.6            $    2.8       $     13.4        $           (11.9       )           $    126.0       
                                                                                                                                                                                                                             
 Interest expense, net                                                                                                                                                                                      (36.4       )    
 Impairment of investment                                                                                                                                                                                   —                
 Other income (expense), net                                                                                                                                                                                (1.6        )    
 Income tax benefit (expense)                                                                                                                                                                               (7.4        )    
 Net income                                                                                                                                                                                                 80.5             
 Net income attributable to noncontrolling interest                                                                                                                                                         (3.3        )    
 Net income available for common stock                                                                                                                                                                      $    77.2        



                                                                                                                                                                                                                                 
                                             Consolidating Income Statement (Unaudited)                                                                                                                                          
 Twelve Months Ended Dec. 31, 2020           Electric Utilities                           Gas Utilities        Power Generation        Mining          Corporate         Other Inter-Co Eliminations         Total               
                                             (in millions)                                                                                                                                                                       
 Revenue                                     $              690.1                         $      969.7         $       7.7             $    29.5       $     —           $           —                       $     1,696.9       
 Intercompany revenue                        23.9                                         5.0                  97.4                    31.6            353.1             (511.0                  )           —                   
 Fuel, purchased power and cost of gas sold  267.0                                        354.6                9.0                     —               0.1               (138.4                  )           492.4               
 Gross margin (non-GAAP)                     447.0                                        620.0                96.1                    61.1            353.1             (372.7                  )           1,204.5             
                                                                                                                                                                                                                                 
 Operations and maintenance                  196.8                                        303.6                33.7                    39.0            284.5             (305.8                  )           551.8               
 Depreciation, depletion and amortization    94.2                                         100.6                20.2                    9.2             25.2              (24.9                   )           224.5               
 Adjusted operating income (loss)            $              156.1                         $      215.9         $       42.1            $    12.8       $     43.4        $           (42.0       )           $     428.3         
                                                                                                                                                                                                                                 
 Interest expense, net                                                                                                                                                                                       (143.5         )    
 Impairment of investment                                                                                                                                                                                    (6.9           )    
 Other income (expense), net                                                                                                                                                                                 (2.3           )    
 Income tax benefit (expense)                                                                                                                                                                                (32.9          )    
 Net income                                                                                                                                                                                                  242.8               
 Net income attributable to noncontrolling interest                                                                                                                                                          (15.2          )    
 Net income available for common stock                                                                                                                                                                       $     227.6         



                                             Consolidating Income Statement (Unaudited)                                                                                                                                      
 Three Months Ended Dec. 31, 2019            Electric Utilities                           Gas Utilities        Power Generation        Mining         Corporate         Other Inter-Co Eliminations         Total            
                                             (in millions)                                                                                                                                                                   
 Revenue                                     $              165.6                         $      302.3         $       2.3             $    7.5       $     —           $           —                       $    477.7       
 Intercompany revenue                        6.5                                          0.5                  23.2                    9.1            88.6              (127.9                  )           —                
 Fuel, purchased power and cost of gas sold  61.3                                         128.6                2.1                     —              0.1               (34.8                   )           157.3            
 Gross margin (non-GAAP)                     110.8                                        174.1                23.4                    16.6           88.5              (93.1                   )           320.3            
                                                                                                                                                                                                                             
 Operations and maintenance                  52.5                                         76.6                 7.6                     11.0           74.9              (78.4                   )           144.3            
 Depreciation, depletion and amortization    23.2                                         24.2                 4.9                     2.3            5.8               (5.7                    )           54.6             
 Adjusted operating income (loss)            $              35.1                          $      73.4          $       10.8            $    3.3       $     7.8         $           (9.0        )           $    121.4       
                                                                                                                                                                                                                             
 Interest expense, net                                                                                                                                                                                      (35.2       )    
 Impairment of investment                                                                                                                                                                                   —                
 Other income (expense), net                                                                                                                                                                                (5.8        )    
 Income tax benefit (expense)                                                                                                                                                                               (7.5        )    
 Net income                                                                                                                                                                                                 72.9             
 Net income attributable to noncontrolling interest                                                                                                                                                         (3.7        )    
 Net income available for common stock                                                                                                                                                                      $    69.2        



                                                                                                                                                                                                                                   
                                             Consolidating Income Statement (Unaudited)                                                                                                                                            
 Twelve Months Ended Dec. 31, 2019           Electric Utilities                           Gas Utilities          Power Generation        Mining          Corporate         Other Inter-Co Eliminations         Total               
                                             (in millions)                                                                                                                                                                         
 Revenue                                     $              689.6                         $      1,007.6         $       9.4             $    28.3       $     —           $           —                       $     1,734.9       
 Intercompany revenue                        23.1                                         2.5                    91.8                    33.4            344.2             (495.0                  )           —                   
 Fuel, purchased power and cost of gas sold  268.3                                        425.9                  9.1                     —               0.3               (132.7                  )           570.8               
 Gross margin (non-GAAP)                     444.5                                        584.1                  92.2                    61.6            343.9             (362.3                  )           1,164.1             
                                                                                                                                                                                                                                   
 Operations and maintenance                  195.6                                        301.8                  28.4                    40.0            286.8             (303.8                  )           548.9               
 Depreciation, depletion and amortization    88.6                                         92.3                   19.0                    9.0             22.1              (21.8                   )           209.1               
 Adjusted operating income (loss)            $              160.3                         $      190.0           $       44.8            $    12.6       $     35.1        $           (36.7       )           $     406.0         
                                                                                                                                                                                                                                   
 Interest expense, net                                                                                                                                                                                         (137.7         )    
 Impairment of investment                                                                                                                                                                                      (19.7          )    
 Other income (expense), net                                                                                                                                                                                   (5.7           )    
 Income tax benefit (expense)                                                                                                                                                                                  (29.6          )    
 Net income                                                                                                                                                                                                    213.3               
 Net income attributable to noncontrolling interest                                                                                                                                                            (14.0          )    
 Net income available for common stock                                                                                                                                                                         $     199.3         



 Investor Relations:                                             
 Jerome E. Nichols                                               
 Phone                     605-721-1171                          
 Email                     investorrelations@blackhillscorp.com  
                                                                 
 Media Contact:                                                  
 24-hour Media Assistance  888-242-3969                          

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