Black Hills (NYSE:BKH) executives used the company’s fourth-quarter and full-year 2025 earnings call to highlight execution against guidance, a growing large-load opportunity tied to data centers in Wyoming, and progress toward its planned merger with NorthWestern Energy. Management also outlined a 2026 outlook that targets earnings growth in the upper half of its long-term range and emphasized ongoing regulatory activity across its jurisdictions.
2025 results and drivers
Senior Vice President and Chief Financial Officer Kimberly Nooney said Black Hills delivered GAAP earnings per share (EPS) of $3.98 for 2025, which included $0.12 of merger-related transaction costs. On an adjusted basis, the company reported $4.10 in 2025 adjusted EPS, up 5% from $3.91 in 2024, and in line with the midpoint of its guidance, according to management.
Expenses rose year over year. Nooney said operations and maintenance (O&M) was higher by $0.36 per share, including the $0.12 of merger transaction costs. Excluding merger costs, O&M increased $0.24 per share, driven primarily by higher employee and outside service costs, higher insurance costs, and unplanned generation outages. Financing costs increased $0.33 per share, including higher interest expense and share dilution, partially offset by higher AFUDC benefits tied to large construction projects. Depreciation increased $0.15 per share on new assets placed in service.
Balance sheet, financing, and dividend
Management emphasized maintaining investment-grade credit ratings and keeping key credit metrics within targeted ranges. Nooney said Black Hills remains within targets of 55% net debt to total capitalization and 14%–15% FFO to debt, describing the latter as 100 basis points above the company’s downgrade threshold of 13%.
During 2025, Black Hills issued $220 million of equity. Nooney said the company expects a “significantly lower” equity need of $50 million–$70 million for 2026, citing stronger forecasted cash flows tied to capital investments, regulatory plans, and increasing data center load growth.
In October, the company completed a debt offering, issuing $450 million of 4.55% notes, with a portion used to pay off $300 million of 3.95% notes due January 2026. The next maturity is $400 million of 3.15% notes in January 2027. Nooney also said the company ended the year with more than $700 million of availability under its revolving credit facility.
On shareholder returns, management said the dividend was increased in January, extending Black Hills’ streak of consecutive annual dividend increases to 56 years in 2026. The company reiterated a targeted payout ratio of 55%–65%.
2026 guidance and capital plan
For 2026, Nooney initiated adjusted EPS guidance of $4.25–$4.45, which she said represents 6% growth at the midpoint over 2025. Management reiterated its long-term 4%–6% EPS growth target (with 2023 as the base year) and said it has greater clarity and confidence around delivering in the upper half of that range.
Chief Executive Officer Linn Evans pointed to a $4.7 billion capital plan focused on safety, reliability, and growth across electric and natural gas operations. Evans and other executives also characterized the company’s current five-year plan as including only “minimal investments” to support expected data center load from existing customers, while noting that additional investments in generation and transmission could be developed if more of the pipeline materializes.
Operational and regulatory updates
Senior Vice President and Chief Utility Officer Marne Jones said operational performance remained strong, citing top-quartile reliability and emphasizing work on electric transmission and generation projects, gas safety and integrity projects, and wildfire risk initiatives. She described a December extreme wind event in Rapid City, South Dakota, with winds reaching 100 miles per hour, and said crews and mutual aid partners restored service while replacing damaged poles and lines.
Jones and Evans highlighted several major projects and approvals:
- Ready Wyoming transmission project: Jones said the company completed construction of the 260-mile line and energized the final segments on schedule in December. She said the project reduces reliance on third-party transmission, enhances resiliency, and increases access to market energy, with most of the investment recovered through the Wyoming Transmission Rider.
- Lange II generation project: Jones said Black Hills broke ground on the 99-MW natural gas-fired facility in Rapid City in 2025 and expects it to be in service in Q4 2026. She said major components, including six reciprocating engines, are already on site and the investment is planned to be recovered through the South Dakota Generation Rider.
- Colorado Clean Energy Plan: Jones said a 50-MW utility-owned battery storage project was approved in November and is planned for service in 2027, and that the company is negotiating a 200-MW solar PPA with an expectation to sign in the first quarter.
On the regulatory front, Jones said Black Hills typically executes 3–4 rate reviews annually and completed three rate reviews in 2025 representing more than $52 million in new annual revenue. She also said the company received approval for deferred accounting insurance trackers in Kansas and Nebraska and a weather normalization pilot program in Nebraska, describing these as mechanisms to reduce future earnings volatility.
Jones said Black Hills filed a new Arkansas Gas rate review in December seeking recovery of $147 million of investments since its last review in 2023, requesting $29.4 million in new annual revenue at a 10.5% return on equity with an approximately 50/50 capital structure, with new rates anticipated in the second half of the year. She also said the company plans to file an abbreviated rate review in Kansas in the first quarter and is preparing for a South Dakota rate review after holding base rates unchanged since 2014.
Data center pipeline and merger progress
A central theme of the call was growing large-load demand. Evans said the company tripled its data center pipeline in 2025 to more than 3 GW, and management emphasized that the pipeline consists of “high-quality” companies under nondisclosure agreements.
Executives said Meta is ramping up a new data center and Microsoft’s demand continues to grow, with combined load expected to reach about 600 MW by 2030 under what Evans called a “minimal capital investment model” relying on market energy procurement and contracted generation. Evans said that beginning in 2028, the company expects data center demand to contribute more than 10% of consolidated EPS as that contribution ramps. In Q&A, management clarified that this contribution is within its long-term 4%–6% EPS growth target, not incremental to it.
Jones said Meta’s Cheyenne data center is expected to transition from construction power to permanent service this quarter. She added that while the company expects to serve 600 MW from existing data center customers by 2030, demand at that level would require investment in generation and transmission infrastructure under current market conditions, and could be accelerated if load comes sooner.
Management also discussed the Crusoe and Tallgrass project, which Jones said could ultimately support 1.8 GW of demand. She said Black Hills filed a certificate of public convenience and necessity (CPCN) with the Wyoming Public Service Commission for a substation supporting the project and noted that resource mix discussions include options such as market energy, contracted generation (including co-located generation), and potential utility-owned generation and transmission investments. Executives repeatedly said contract structures and details would be provided when binding service agreements are signed, and Evans said a customer intention is to begin taking service in Q1 2027.
On the planned merger with NorthWestern Energy, Evans reiterated strategic rationale such as increased scale, improved customer diversity, a larger balance sheet, and procurement and best-practice efficiencies. He said joint applications have been filed with regulators in Montana, Nebraska, and South Dakota and the process is in the discovery phase. Evans said the company filed its Form S-4 with the SEC and plans to hold special shareholder meetings in early April, with the goal of closing the merger in the second half of the year, subject to approvals.
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.
