Good day, ladies and gentlemen, and welcome to the Black Hills Corporation's Third Quarter 2022 Earnings Conference Call. My name is Liz, and I will be your coordinator for today. At this time, all participants are in a listen-only mode. Following the prepared remarks, there will be a question-and-answer session. [Operator Instructions]. As a reminder, this conference is being recorded for replay purposes. I would now like to turn the presentation over to Mr. Jerome Nichols, Director of Investor Relations of Black Hills Corporation. Please proceed sir.

Thank you, and good morning, everyone. Welcome to Black Hills Corporation's third quarter 2022 earnings conference call. You can find our earnings release and materials for our call this morning at our website at www.blackhillscorp.com, under the Investor Relations heading. Before we begin today, we would like to note that Black Hills leadership will be attending the EEI Financial Conference starting November 13 in Hollywood, Florida. Materials for our investor meetings will be posted on our website prior to the start of the conference. Leading our quarterly earnings discussion today are Linn Evans, President and Chief Executive Officer; and Rich Kinzley, Senior Vice President and Chief Financial Officer. Also in attendance this morning is Kimberly Nooney, Vice President, Corporate Controller and Treasurer. 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 2 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 Linn Evans.

Thank you, Jerome. Hello, everyone, and thank you for joining us this morning. As Jerome noted, I'm pleased to have Rich and Kimberly with me this morning. We issued a news release last week announcing that Rich has provided notice of his attempt to retire mid-year 2023. We will enjoy celebrating his retirement at a future date, but I want to take this early opportunity to thank Rich for his exemplary contributions to our company and of course, wish he and his family the very best in their next chapter. Rich has proven to be a great partner and friend and he will be missed. And now I have the pleasure to introduce Kimberly, our current Vice President, Corporate Controller and Treasurer, who many of you already know well. She will become our CFO in April 1 of next year, and she will continue to work closely with Rich over the next several months to ensure a smooth transition. For those of you that already know Kimberly, she has been a passionate leader within Black Hills for the past 26 years, and she brings deep experience and terrific leadership skills to the CFO role. I look forward to working with Kimberly to continue executing our strategy and delivering shareholder value. Moving to the investor presentation. I'll start my comments on Slide 4. I'm very pleased with our team's strong execution of our strategy and solid financial performance for the year. Through September, earnings per share were at 9% compared to the same period last year driven by solid operations performance, great regulatory execution, and continued customer growth. Yesterday, we affirmed our 2022 earnings guidance and we initiated 2023 earnings guidance in the range of $4 to $4.20 per share. We increased our capital forecast by $250 million to a total…

Very good. Thanks, Linn, and good morning, everyone. And a thank you to Linn for your kind words about my retirement and I'm excited for Kimberly and her appointment as the next CFO. I look forward to assisting Kimberly with the transition and the great things she and the company will accomplish. As Linn noted, we've had strong performance through the first three quarters of the year. As a reminder, our team is focused on long-term benefits for customers and sustaining long-term value for shareholders. With that said, you will see more emphasis in our future earnings reports on year-to-date results versus quarterly. Since we operate both electric and gas utilities, we have seasonal variations in earnings driven by weather, which have been dramatic in recent years. Rather than trying to explain these variances every quarter, we'll focus more on year-to-date results, which will help investors better understand our operations. I'll start on Slide 13, which shows our EPS and segment operating income. EPS was $0.54 compared to an exceptional $0.70 last year in Q3 2021. Year-to-date, we delivered EPS of $2.86 compared to $2.63 in the same period during 2021, an increase of 9%. Our solid execution on our strategy more than offset the impacts of interest rates and inflation year-to-date. During the third quarter, we experienced our peak cooling season for our electric utilities and peak irrigation demand for our gas utilities. While hot and dry weather was a tailwind for the quarter and the year, the dominant earnings drivers were new rates and rider recovery. Slides 14 and 15 illustrate the detailed drivers of change in net income year-over-year for the third quarter and year-to-date. All amounts are after-tax with more detail available in our earnings release distributed yesterday and in our 10-Q to be filed later…

Ladies and gentlemen, we are ready to open the lines for your questions. [Operator Instructions]. Your first question comes from Paul Zimbardo with Bank of America.

Following up where you left off on the equity side, just given the equity you've issued to-date in 2022 and the guidance for full-year 2022, it kind of implies a more of a block type transaction. Just wanted to see if that's kind of the message you're sending or do you have some flexibility to defer that into next year?

Well, Paul, I'd say it's a combination of all that. Certainly, there's enough trading days that we think we can through the ATM dribble, that kind of level if we need to. And if a block's attractive, we could do that within the ATM. And certainly, if a little of it bleeds into next year, it's not the end of the world, but we're going to work to get that done this year.

Okay. Understood. And then going to the multi-year caterer that you reaffirmed implies that if you use 2023 as a base, it's more meaningful growth probably above the high-end to get you back towards that trajectory. Should we think about 2024 is having that meaningful improvement or is it more back-end weighted to like the 2025/2026?

Paul, that's very insightful and thank you for the question. Yes. If you look at our growth off of 2023, we agree we'd be toward the high-end of that 5% to 7% CAGR growth. And we've got opportunity in 2022 through 2023, and that's why we gave you some of the data we did in our assumptions around our earnings guidance for next year, how we would be impacted by inflation, how we could be impacted by interest rates, et cetera. In fact, you can kind of see that for the large part, O&M was kind of flat year-over-year. And of course, we're focused on a lot of our growth initiatives. Our base plan off of 2022 gets us into the range, perhaps low -- to the lower end of the range, but as we look at our growth initiatives, our hyperscale data centers as examples, the in migration of customer growth, our efforts around cost control, our focus on regulatory relationships, et cetera, I think you're -- you're spot on by indicating that we'll be toward that higher end of that growth rate in those outer years.

Okay. Excellent. And then just quick to clarify, I think I heard you say that the kind of a strategic financing transaction that is not contemplating the guidance, that would be outside of Uri?

You are correct, Paul, that that does not contemplate in our guidance.

Okay. Excellent. See you all soon. Thank you.

Thank you, Paul.

Thank you, Paul.

Your next question comes from Brandon Lee with Mizuho. Your line is now open.

Hey, Linn. Hey, Rich. Just a quick question on the investment by the partner, what would the potential regulatory approval process look like for that? Would you need approval from all the commissions in all the gas states?

Good morning, Brandon, and thank you for that question. Good question. The short answer is no. We would be looking at a potential investor that would not require any regulatory approvals.

Okay. Got it. That's all I had. Thanks a lot.

Thank you.

[Operator Instructions]. Your next question comes from Brian Russo with Sidoti. Your line is now open.

Yes. Hi, good morning. Just a follow-up on, I guess the EPS -- just a follow-up on the EPS CAGR up to 2023 is the bias towards the high-end also driven by the incremental $215 million CapEx, most of it in 2024. And what is that CapEx for? And is most of that recovered through -- recover rider mechanisms or is that something you need to file rate cases for?

Yes, this is Rich, Brian. It's kind of a combination of all that. Certainly the bulky CapEx in 2024 is going to be helpful to 2025 and 2026 earnings, right? So -- and it's a combination of rider it's growth. Some of it will require some rate review activity. And you can see that in our disclosures in terms of how we showed you the breakout to the different CapEx totals. So hopefully that answers your question.

And Brian, this is Linn and Rich -- Rich is nice job answering. I think it just shows once again, as we fill out our opportunities with respect to clarity and gain good insight into what our capital opportunities are. That's a function of that and that ongoing exercise within our organization.

With no further questions, I will return the call back to Linn Evans for closing remarks.

Well, thank you, everyone. We appreciate your time, your questions, and certainly your interest in Black Hills. We'll look forward to seeing many of you, I think in about 9 or 10 days at the EEI Financial Conference. We'll look forward to seeing each other in-person and visiting further. But please enjoy a safe and productive day. And again, thanks for your interest in us. Take care.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Have a good day.