BKH — Black Hills Corporation

Black Hills Corporation (BKH) Q1 2026 Earnings Call Summary

1. Key Financial Results and Metrics:

• GAAP EPS: Reported at $1.73, including $0.05 of merger-related costs; adjusted EPS was $1.79, down from $1.87 in Q1 2025.
• Weather Impact: Warm weather negatively affected demand, contributing to an 18¢ decline in EPS compared to Q1 2025.
• O&M Expenses: Excluding merger costs, O&M expenses decreased by 10¢ year-over-year, driven by lower employee costs.
• Financing Costs: Increased by 10¢ per share due to new shares and higher interest expenses.
• Capital Structure: Maintained strong liquidity with approximately $500 million available under its revolving credit facility.

2. Strategic Updates and Business Highlights:

• Merger with Northwestern Energy: Progressing well, with favorable shareholder votes and regulatory settlements in Montana, Nebraska, and South Dakota. Anticipates final approvals in H2 2026.
• Capital Investment: Announced a $4.7 billion five-year capital plan focused on safety, reliability, and growth, including a 99-megawatt generation project and a 50-megawatt battery storage project.
• Large Load Opportunities: Targeting over 3 gigawatts of potential demand, with ongoing negotiations for a 1.8-gigawatt data center in Cheyenne, Wyoming.
• Regulatory Progress: Filed rate reviews in Arkansas and South Dakota, seeking recovery for customer-focused investments.

3. Forward Guidance and Outlook:

• Earnings Guidance: Reaffirmed adjusted EPS guidance of $4.25 to $4.45 for 2026, representing a 6% growth at the midpoint over 2025.
• Long-term Growth: Large load demand expected to contribute over 10% to consolidated EPS beginning in 2028.

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

• Weather Impact: Record warm temperatures negatively affected demand, raising concerns about future earnings volatility due to weather patterns.
• Increased Financing Costs: Higher costs associated with new shares and interest expenses could pressure margins.
• Regulatory Risks: Ongoing regulatory reviews and hearings may introduce uncertainty regarding rate approvals and merger timelines.

5. Notable Q&A Insights:

• Data Center Agreements: Clarified that the $201 million in refundable contributions is part of a short-term financing bridge for a long-term generation agreement, not included in the rate base for retail customers.
• Merger Timeline: Settlements are beneficial but not expected to accelerate the merger closing timeline; hearings in Montana and South Dakota are upcoming.
• Weather Normalization: Management is working with regulators on weather normalization strategies to mitigate future impacts on earnings.

Overall, Black Hills Corporation demonstrated solid financial execution despite weather-related challenges, with a strong focus on strategic growth and regulatory progress. The merger with Northwestern Energy is on track, but potential risks remain related to weather impacts and regulatory approvals.