Black Hills Q2 Earnings Call Highlights

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Black Hills (NYSE:BKH) said it remains on track to meet its 2026 earnings guidance as new rates and rider recovery, large-load demand growth and ongoing capital investments supported second-quarter results.

The utility reported second-quarter GAAP earnings per share of $0.50, including $0.04 per share of merger-related transaction costs. Adjusted earnings were $0.54 per share, compared with $0.38 per share in the second quarter of 2025.

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For the first six months of 2026, GAAP earnings were $2.23 per share, including $0.10 per share of merger-related costs. Adjusted earnings totaled $2.33 per share, up from $2.24 per share in the prior-year period.

Chief Financial Officer Kimberly Nooney said the company benefited from $0.21 per share of new rates and rider recovery in the second quarter, which more than offset higher financing and depreciation expenses. The company also held operating and maintenance expenses flat for the quarter after excluding merger costs, while employee-cost reductions contributed $0.04 per share versus the prior year.

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Black Hills reaffirmed adjusted EPS guidance of $4.25 to $4.45 for 2026, representing 6% growth at the midpoint compared with 2025. Nooney said the company expects new rates, capital-project recovery, large-load demand and its financial position to support performance in the upper half of its long-term 4% to 6% growth target.

Data center pipeline expands

President and Chief Executive Officer Linn Evans highlighted growing electricity demand in Wyoming, where the company has recorded 20 consecutive years of rising peak system loads. Wyoming Electric’s July peak load reached 439 megawatts, up 16% from the prior-year peak and 183% above the level when Black Hills acquired the utility in 2005.

The company said its data-center opportunity pipeline exceeds 3 gigawatts. About 600 megawatts of that potential demand is included in its financial plan through 2030, primarily tied to Microsoft’s expansion and Meta’s planned artificial-intelligence data center in Cheyenne. Black Hills expects Meta’s customer load to begin ramping later this year.

Marne Jones, senior vice president and chief utility officer, said the company has served Microsoft’s hyperscale data-center growth for more than a decade, primarily through market-energy procurement. Black Hills expects to serve the demand currently included in its plan through a combination of market energy and contracted resources, with minimal incremental capital investment.

Beyond the 600 megawatts included in the plan, the company is negotiating more than 2.5 gigawatts of additional large-load opportunities in Wyoming. That pipeline includes a previously disclosed 1.8-gigawatt project.

Jones said Black Hills is in advanced negotiations for commercial agreements supporting a diversified resource portfolio for the 1.8-gigawatt opportunity. A generation reservation agreement with a prospective customer has been extended through Aug. 31 and includes up to $377 million of refundable customer advances for long-lead generation equipment. The company said it remains optimistic about reaching definitive agreements during the third quarter.

During the question-and-answer session, Evans said the exit of Caruso from the project had not affected negotiations because Black Hills has been negotiating with the hyperscale end user. He said the company is seeking to finalize the related agreements by the end of the third quarter, while emphasizing that it intends to prioritize appropriate risk and reward arrangements for the company, customers and shareholders.

Evans also said a separate 75-megawatt data-center opportunity is progressing and is unrelated to the 1.8-gigawatt project.

Regulatory activity and capital projects

Black Hills is executing a nearly $1 billion capital plan in 2026. Its 99-megawatt Lange II generation project, which will serve western South Dakota and northeastern Wyoming, remains on schedule for service in the fourth quarter. The project’s final long-lead component, a generation step-up transformer, was delivered to the site, according to Jones.

The company is advancing rate reviews for Arkansas Gas and South Dakota Electric, while filing a new rate request for Colorado Electric. The Colorado request seeks $26.7 million in annual revenue based on a 10.5% return on equity and a capital structure consisting of 49% debt and 51% equity.

Black Hills also received approval for an abbreviated Kansas rate review, with new rates effective July 1. In South Dakota, interim electric rates are scheduled to take effect Aug. 18, while an Arkansas gas rate-review hearing is set for Aug. 20.

In Wyoming, the company requested a Large Customer Transmission Cost Adjustment Mechanism intended to recover transmission-related investments and expenses directly from large-load customers that benefit from those facilities. Black Hills expects the tariff to become effective in January 2027.

The company’s Wyoming integrated resource plan, submitted June 30, identifies a near-term 95-megawatt capacity need for non-large-load customers. Black Hills recommended meeting that need through a combination of natural gas generation, battery storage and market-energy purchases.

NorthWestern Energy merger awaits Montana decision

Black Hills said it has received six of seven approvals required for its planned merger with NorthWestern Energy. The company received approval from the Federal Energy Regulatory Commission during the second quarter, as well as unanimous settlement approvals in Nebraska and South Dakota.

Montana remains the final approval needed to close the transaction. Evans said Black Hills reached settlements with several intervening parties in Montana, while two groups with environmental concerns did not settle. Final briefs were filed July 13, starting a 90-day decision period that could be extended by 30 days.

Evans said the company expects a Montana decision around mid-October or, if extended, by mid-November, keeping the transaction on track for a second-half 2026 closing.

Black Hills ended the quarter with more than $650 million available under its revolving credit facility. The company issued $50 million of equity through its at-the-market program year to date and is evaluating refinancing options ahead of a January 2027 maturity of $400 million in 3.15% notes.

About Black Hills (NYSE:BKH)

Black Hills Corporation is a diversified energy company based in Rapid City, South Dakota, that provides electricity and natural gas distribution services to residential, commercial and industrial customers. Through its regulated utility subsidiaries—Black Hills Power, Cheyenne Light Power, and Black Hills Energy—the company delivers reliable energy across Colorado, Kansas, Montana, Nebraska, South Dakota and Wyoming.

In addition to its distribution operations, Black Hills owns and operates a generation portfolio that includes natural gas–fired plants, coal-fired units, hydroelectric facilities and wind projects.

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