BKH — Black Hills Corporation

Summary of Black Hills Corp. Q3 2025 Earnings Call

1. Key Financial Results and Metrics

• GAAP EPS: Reported at $0.34, including $0.10 of merger-related costs.
• Adjusted EPS: $0.45 for Q3 2025, up from $0.35 in Q3 2024.
• Year-to-Date EPS: GAAP EPS of $2.58 (including $0.11 of merger costs), adjusted EPS at $2.68, reflecting a 6.3% increase from the previous year.
• Regulatory Contributions: New rates and rider recovery contributed $0.21 per share in Q3.
• O&M Costs: Increased by $0.08 per share, primarily due to merger-related expenses, but reduced by $0.02 when excluding these costs.

2. Strategic Updates and Business Highlights

• Merger with NorthWestern Energy: Joint applications submitted for regulatory approval; expected to enhance scale and financial profile.
• Capital Plan: $4.7 billion capital plan with $700 million annual investment focusing on safety and reliability.
• Key Projects:
  • Ready Wyoming transmission expansion on track for completion by year-end.
  • Lange II generation project in South Dakota commenced construction.
• Data Center Demand: Engaged with partners for over 3 gigawatts of demand, with significant contributions expected to EPS by 2028.

3. Forward Guidance and Outlook

• 2025 Earnings Guidance: Reaffirmed adjusted EPS range of $4.00 to $4.20, representing a 5% growth at the midpoint over 2024.
• Long-Term Growth: Anticipate achieving upper half of 4% to 6% long-term EPS growth target starting in 2026, supported by strong customer demand and capital investments.

4. Bad News, Challenges, or Points of Concern

• Weather Impact: Unfavorable weather conditions reduced earnings by $0.07 per share compared to the previous year.
• O&M Cost Pressures: Continued increase in operating expenses due to merger-related costs and other factors.
• Economic Conditions: While current conditions are stable, the company is monitoring potential economic weaknesses and impacts on service areas.

5. Notable Q&A Insights

• Data Center Strategy: Flexibility in serving data center demand through various models (utility-owned, contracted, market purchases) is crucial.
• Merger Approval Concerns: Management remains optimistic about the merger approval process in Montana despite recent regulatory activity.
• Fourth Quarter Outlook: No significant negative issues anticipated, but weather remains a key variable affecting earnings.
• Coal Mine Asset: The company is keeping options open regarding its coal mine, acknowledging potential rare earth minerals but not viewing them as a significant monetization opportunity at this time.

Overall, Black Hills Corp. reported a strong quarter with solid financial performance and strategic initiatives in place, while also navigating challenges related to weather and operating costs. The merger with NorthWestern Energy is positioned as a key growth driver moving forward.