Good day, and thank you for standing by. Welcome to the Second Quarter 2025 Black Hills Corporation Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker today, Sal Diaz, Director of Investor Relations.

Thank you, operator. Good morning, and welcome to Black Hills Corporation's Second Quarter 2025 Earnings Conference Call. You can find our earnings release and materials for our call this morning on our website at blackhillscorp.com under the Investor Relations heading. Leading our quarterly earnings call are Linn Evans, President and Chief Executive Officer; Kimberly Nooney, Senior Vice President and Chief Financial Officer; and Marne Jones, Senior Vice President and Chief Utility Officer. During our earnings discussion today, 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 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 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. With that, I will now turn the call over to Linn Evans. Linn?

Thank you, Sal. Good morning, and thank you all for joining us today. I'll begin on Slide 3 with a summary of our quarter and our strategic outlook. Kimberly will provide our financial update, and Marne will discuss our operational performance and strategic progress. Among our key stakeholder commitments for the year are: first, deliver on our financial commitments, including a year- over-year earnings growth of 5% at the midpoint of guidance; second, execute on our regulatory and growth initiatives, including our $1 billion capital plan to support key projects that serve the growing needs of our customers; and third, provide excellent operational performance, including top quartile reliability and above industry average safety performance. I'm pleased to report we made strong progress on these 3 commitments in the second quarter, and I'm proud of the relentless drive of our team as we execute our customer-focused strategy. Together, we delivered on our financial commitments and made great progress on several large initiatives through the first half of 2025. We're on track to achieve our earnings guidance for the full year due to 3 primary drivers: new base rates, rider recovery and customer growth, and we continue to maintain a healthy balance sheet to help us execute on our strategic growth plan. We continue to make excellent progress on our regulatory strategy, including our recently approved Kansas Gas rate review and our active rate review in Nebraska, our 7 rate reviews since the beginning of 2024 reflect the strength and skill within our team to execute multiple rate reviews annually. Collectively, these rate reviews represent the recovery of over $1.3 billion of new system investments made to serve our customers. Our rider mechanisms are also instrumental in recovering investments in a timely manner and support our path to achieve our earnings guidance.…

Thank you, Linn, and good morning, everyone. Echoing Linn's introduction, we had a great quarter, and I'm proud of our team's execution to deliver strong results. The progress we made over the last quarter continues to lay the foundation for success in 2026 and beyond with transformative projects and regulatory progress supporting strong confidence in our ability to deliver on our earnings guidance and long-term growth target. Slide 8 compares Q2 2025 to Q2 2024. We delivered $0.38 per share this quarter compared to $0.33 per share for the same period last year. New margins more than overcame the impact of higher operating expenses and financing costs to achieve quarterly earnings within our expectations. We delivered $0.22 per share of new margins, including $0.17 of new rates and rider recovery. These margins more than offset $0.05 per share of higher O&M driven by increased insurance premiums and the impact of unplanned outages, $0.08 per share of higher financing costs and $0.04 of higher depreciation expense from new assets placed in service. Comparing this quarter to Q2 2024, our year-over-year weather impact resulted in $0.03 of positive weather. When compared to normal, weather drove $0.04 per share of unfavorability during Q2 2025. Turning to the year-to-date EPS drivers on Slide 9. Earnings per share increased to $2.24 from $2.19 for the same period last year. Our year-to-date margins are benefiting from the successful execution of our regulatory strategy, which delivered $0.49 of new rates and rider recovery. Along with weather favorability of $0.14 driven by very mild weather in the prior year, these benefits more than offset $0.29 per share of higher O&M, $0.24 of higher financing costs and $0.07 of higher depreciation expense. Year-to-date, we experienced approximately $5 million in additional pretax O&M costs or $0.06 per share related to…

Thank you, Kimberly, and good morning, everyone. Through the first half of the year, our team continued to deliver safe, reliable and cost-effective energy to our 1.35 million customers and made solid progress in executing our strategic priorities. Operationally, we are particularly excited about the opportunities in serving data centers that Linn highlighted in his remarks. Given we are a vertically integrated utility operating in a franchise service territory with an obligation to serve, we are well positioned to deliver value through both our current minimal capital service model and through a more traditional utility model, including investments in generation and transmission. Moving to Slide 14. Our 260-mile $350 million Ready Wyoming transmission project, the largest capital project in our company's history is on track for completion by year-end. This expansion strengthens our system by reducing reliance on third-party transmission, enhancing resiliency and increasing access to market energy, including renewables. By building a more interconnected and robust transmission network, we are supporting long-term price stability for our customers and enabling continued growth across our service territory. Approximately $40 million of project costs placed in service last year are currently being recovered through our Wyoming transmission rider, with the remaining costs to be recovered through the same rider starting in January 2026. Moving to Slide 15. We continue to execute on our Colorado Clean Energy plan. In 2024, we received approval for 350 megawatts of renewable resources to reduce emissions for Colorado customers by 80% by 2030. This includes a utility-owned 100-megawatt solar project, a utility-owned 50-megawatt battery storage project and a 200-megawatt solar power purchase agreement. In June, we requested a Certificate of Public Convenience and Necessity or CPCN for the battery project and expect approval by year-end, and we continue to negotiate with the developers of the 2 solar…

Thank you, Marne. Our solid second quarter financially and operationally provides strong confidence in achieving our 2025 guidance and our ability to deliver in the upper half of our long-term EPS CAGR starting next year. Through our robust pipeline of strategic opportunities, we are investing in safely and reliably serving our customers and mitigating risks. We're successfully and routinely executing on our regulatory plan, and we are innovatively developing customer solutions to enable data center and blockchain load growth. This concludes our prepared remarks, and we're happy to take your questions.

[Operator Instructions] Our first question comes from Chris Ellinghaus with Siebert Williams Shank.

The industrial growth for the quarter was 19%. Can you give us any kind of color on how we should anticipate that digital growth to proceed? Is it going to stay in that 20-plus kind of percent range on a linear basis? Or can you give us any color on what the shape looks like?

Chris, this is Marne. Thanks for the question. So yes, on the industrial side of it, so yes, we did see some good growth. And what we have seen in the past is it's not necessarily linear. We see different ramp rates depending on the type of the data center as well as the type of the blockchain load that's coming on. So really good growth that we saw this quarter. You noticed that with the peak in Cheyenne and while we expect to continue to see significant growth from data centers as well as blockchain going forward, I don't expect it to be just strictly linear.

Okay. And Linn, you talked about the new announcements for Wyoming. Was that part of the sort of incremental [ $500 million ] that was in your sort of pipeline? Or was that incremental to what your prior thinking was?

Chris, thanks for the question. It's incremental to our pipeline in total. This is relatively new announcement. So we're in discussions with the counterparties. We've, to date, not included anything other than to acknowledge it's part of our pipeline now, and we're going to take a very disciplined approach when we have agreements that are executed and signed, then we'll move that into our load forecast and move it into our financial forecast as well perhaps.

Okay. So your sort of 1,000 megawatt 10-year sort of outlook, do you expect that, that will sort of get updated over time as you get closer to MOUs or whatever -- even contracts, whatever your comfort level is?

Yes, we do, Chris. Thank you for that. We're cautious. We're conservative. We're very happy with the counterparties that we have agreements with today, that being Microsoft and Meta, watching them continue to grow. Meta is building their data center now. We're serving the construction load. We have not transitioned to the data center load, but that's coming, as we said in our comments in 2026. So as these data centers through our unique tariff because we can serve them in many different ways, as Marne pointed out in her prepared remarks, we -- this is a service territory that's franchised to us. So we can serve it in some very unique ways, and that's why we believe our these kind of customers are coming to us. It's a great service territory for lots of different reasons, including the tariffs that we provide and allow our customers to take advantage of with us. We're very watchful on how it impacts the shareholder, how it impacts our customers, how it impacts our communities. So we're being very disciplined and thoughtful about our counterparties.

Okay. Great. Kimberly, your insurance expenses were particularly high in the first quarter. Is the second quarter sort of down to the incremental rate that you expect through the rest of the year?

Yes. Thank you Chris. From an insurance perspective, we renew insurance rates July 1 through June 30. So as we talked to last year, we had some pretty significant increases. We just completed our renewals. And what we're seeing is flat year-over-year insurance costs when you compare July 1, 2025 through June 30, 2026. When you compare that period to last year, we see flat insurance rates, insurance expense going forward. So that will be a nice benefit as we look through the end of 2025 and going into 2026.

Our next question comes from Andrew Weisel with Scotiabank.

My first question for Kimberly. You're pointing to the upper half of the 4% to 6% range starting next year. Can you elaborate on what specifically is driving that? Does it mean more like 5% to 6% each year or on average depending on rate cases? Or is it generally or gradually accelerating as some of the large load customers ramp up? Just help us understand a little bit behind the thinking of that, please.

Yes, Andrew, thank you for the question. So as we've talked about being in the upper end of our growth guidance range of 4% to 6% starting next year, there are actually several drivers that are providing us the confidence to be able to achieve that upper half. So starting with some of the projects you heard Marne speak to, we have Ready Wyoming, which is a $350 million transmission investment. That will start full recovery of 1/1/2026. So that's a very beneficial driver. We have Lange II and Colorado CEP being put into service to some degree in '26 through '28. So there's benefits from those specific projects as well. We continue to see customer growth within our jurisdictions. Arkansas continues to grow. We're seeing growth here in South Dakota, the Front Range of Colorado. Those areas continue to grow as we've talked about in the past. And then as Linn and Marne just talked about from a data center perspective, we are continuing -- Meta ramps up in '26. And as we look for and are working with additional data centers to the extent that, that load is accelerated or comes to fruition in our 5-year plan, which we expect it to be, that would be additive. So when we say upper half, it doesn't include the data center growth that I just spoke to. But in general, it's going to be all those capital projects along with regulatory efforts that Marne talked about in Nebraska and Kansas when we get full year rates next year. So lots of great things happening that give us confidence to support that upper half of our growth range.

That's very helpful. And I appreciate that you clarified that, that does not include the data center growth, including this new customer that you were referring to. So thank you for clarifying that. My other question was you mentioned some unplanned outages. Can you get a little more specific what happened there? And are those plants back online? And were there any issues that might have impacts looking forward?

Yes, I'll let Marne talk about the operational side, and I'll address the financial side.

Yes, Andrew. So I'll say all of our generation is up and online and serving customers today. As you know, we've had some impacts from some outages over the course of this year. But our generation availability really continues to be in line with industry benchmarks. Our maintenance schedules are on track. And here, we've had the opportunity recently to really, I think, even mitigate some future risk with some spare turbines as well as a spare combustor. So we've had these, but I think we have hopefully successfully mitigated some of the impacts that we could see going forward. And like I said, all generation is up and running today. So we're very proud of that.

Yes. And Andrew, as you think about the financial side, we tried to call out that impact to O&M just because we've provided that earnings guidance run rate. So the $5 million is going to increase our overall O&M assumption. However, within the total financial package, when you look at EPS impact year-to-date, it's immaterial. And the big drivers are offsets related to noncontrolling interest because one of the outages was related to a facility that is partially owned by a third party. And then we had some negative margin last year that obviously, when you're comparing year-over-year became benefit. So those items are offsetting the $5 million of pretax O&M. So when you look at the total O&M rate that we've provided, if you exclude the $5 million, we are on target to achieve that compounded annual growth rate of 3.5% of O&M off of our 2023. So overall, an immaterial impact.

Okay. And it sounds like no impact going forward. Is that right?

[indiscernible]. And yes, and we've assumed no unplanned outages for the remainder of the year.

I would now like to turn the call back over to Linn Evans for any closing remarks.

Well, thank you very much for your interest in Black Hills and your time today. I want to once again extend my gratefulness to our employee team, our business partners. We delivered an excellent second quarter that's going to help us through the next several quarters in delivering on our promises to our shareholders, our customers and our communities. You may hear the rumble in the background, the Sturgis rally starting soon. So if you're in the area on your motorcycle or otherwise, stop by and say hello and enjoy Black Hills Energy Safe Day. Thank you again.

Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.