BKH — Black Hills Corporation

Black Hills Corporation (BKH) Q4 2025 Earnings Call Summary

1. Key Financial Results and Metrics:

• GAAP EPS: Reported at $3.98, including $0.12 in merger-related costs; adjusted EPS was $4.10, a 5% increase from $3.91 in 2024.
• Revenue Drivers: Achieved $0.95 per share from new rates and rider recovery, offsetting higher operating, financing, and depreciation expenses.
• O&M Expenses: Increased by $0.36 per share, driven by higher employee costs, insurance, and generation outages.
• Capital Investment: Successfully funded a $900 million capital investment plan while maintaining a strong investment-grade credit rating.
• Dividend: Increased for the 56th consecutive year, reflecting a commitment to shareholder returns.

2. Strategic Updates and Business Highlights:

• Merger with NorthWestern Energy: Announced in August, aimed at creating a stronger utility company with enhanced scale and customer diversity. Regulatory applications have been submitted, with approvals expected in the second half of 2026.
• Data Center Pipeline: Tripled to over 3 gigawatts, with significant demand from Microsoft and Meta, expected to contribute over 10% to EPS starting in 2028.
• Major Projects: Completed the 260-mile Ready Wyoming transmission project and broke ground on the Lange II 99-megawatt generation project in Rapid City.
• Regulatory Progress: Completed three rate reviews in 2025, resulting in over $52 million in new annual revenue.

3. Forward Guidance and Outlook:

• 2026 Adjusted EPS Guidance: Projected between $4.25 and $4.45, indicating a 6% growth at the midpoint compared to 2025.
• Capital Plan: $4.7 billion capital plan focused on safety, reliability, and growth, with expectations for continued customer growth and data center demand.
• Long-term Growth Target: Maintained a long-term EPS growth target of 4% to 6%, with confidence in achieving the upper half of this range.

4. Bad News, Challenges, or Points of Concern:

• O&M Cost Increases: Higher operating costs, including merger-related expenses, could pressure margins moving forward.
• Weather Impact: While weather was favorable in 2025, it was still a headwind compared to normal conditions, indicating potential volatility in future earnings.
• Regulatory Risks: The merger and ongoing regulatory reviews could face scrutiny, and any delays or rejections could impact growth plans.
• Equipment Queue Tightness: Challenges in securing necessary equipment for data center projects could delay timelines and affect service delivery.

5. Notable Q&A Insights:

• Data Center Demand: Management indicated that the 600 megawatts of anticipated demand by 2030 would primarily come from existing customers Microsoft and Meta, with additional large-scale opportunities in the pipeline.
• Merger Progress: The company is currently in the discovery phase with regulators, and interactions have been positive but require careful navigation.
• CPCN Process: Management emphasized the importance of having substantial details before filing for Certificates of Public Convenience and Necessity (CPCNs) but is actively working to expedite this process to meet customer demands.
• Investment Needs: Future investments may be necessary to accommodate additional data center demand beyond the current capital plan, indicating potential for increased capital expenditures.

This summary encapsulates the key takeaways from Black Hills Corporation's Q4 2025 earnings call, highlighting financial performance, strategic initiatives, and future outlook while addressing potential challenges and insights from the Q&A session.