Summary of Black Hills Corporation Q2 2026 Earnings Call

1Key Financial Results and Metrics

Earnings Per Share (EPS): Reported GAAP EPS of $0.50, adjusted EPS of $0.54 (up from $0.38 in Q2 2025).

Year-to-Date EPS: GAAP EPS of $2.23, adjusted EPS of $2.33 (compared to $2.24 in H1 2025).

Revenue Drivers: $0.21 per share from new rates and rider recovery, offsetting $0.12 from higher financing and depreciation costs.

Operational Efficiency: O&M expenses held flat, with a $0.04 reduction in employee costs year-over-year.

Financial Position: Strong liquidity with over $650 million available under revolving credit; net debt to total capitalization better than 55%.

2Strategic Updates and Business Highlights

Capital Investments: Executing a nearly $1 billion capital plan, including the 99 MW Lange II generation project, set to be operational in Q4 2026.

Large Load Demand Pipeline: Over 3 GW of data center opportunities, with 600 MW included in the current plan, primarily from Microsoft and Meta.

Merger Progress: Received approvals from FERC and unanimous settlements in Nebraska and South Dakota for the merger with Northwestern Energy; awaiting final approval from Montana.

Regulatory Activities: Ongoing rate reviews in multiple states, including Arkansas and South Dakota, with new rates effective in Kansas.

3Forward Guidance and Outlook

Earnings Guidance: Reaffirmed adjusted EPS guidance of $4.25 to $4.45 for the year, indicating 6% growth at the midpoint over 2025.

Dividend Policy: Continued commitment to a 55% to 65% payout ratio, with a 56-year track record of dividend increases.

4Bad News, Challenges, or Points of Concern

Merger Delays: While progress is being made, the final approval from Montana is still pending, with potential delays in decision-making.

Higher Costs: Increased financing and depreciation costs are impacting margins, although mitigated by new rates.

Complex Negotiations: The ongoing negotiations for the 1.8 GW data center project are complicated, and while there is optimism, the outcomes are not guaranteed.

5Notable Q&A Insights

Impact of Crusoe Exit: Management indicated that Crusoe's exit from the market has not negatively impacted negotiations for the 1.8 GW project, emphasizing a focus on securing agreements with hyperscale end users.

New Customer Opportunities: A separate 75 MW data center opportunity is advancing, distinct from the larger project, indicating ongoing demand.

Montana Merger Approval Timeline: Management expects a decision from the Montana commission possibly by mid-October, with a potential extension into November. Overall, Black Hills Corporation demonstrated solid financial performance and strategic progress in Q2 2026, with a focus on large load demand growth and regulatory advancements, while also navigating challenges related to merger approvals and rising costs.