Black Hills (NYSE:BKH) executives said the utility remained on track to meet its 2026 earnings targets despite unusually warm winter weather that weighed on first-quarter demand, while also outlining progress on its pending merger with NorthWestern Energy and a growing pipeline of large-load data center opportunities.
On the company’s first-quarter 2026 earnings call, President and Chief Executive Officer Linn Evans said Black Hills was “off to a solid start,” citing reaffirmed earnings guidance, continued construction of major energy projects and regulatory progress across several states. Evans said the company continues to expect completion of its planned merger with NorthWestern Energy in the second half of the year, subject to remaining regulatory approvals.
Senior Vice President and Chief Financial Officer Kimberly Nooney said Black Hills reported first-quarter GAAP earnings per share of $1.73, including $0.05 per share of merger-related transaction costs. Excluding those costs, adjusted EPS was $1.79, compared with $1.87 in the first quarter of 2025.
Nooney said one of the warmest winters in the company’s history, including record warm temperatures in Wyoming and Colorado, reduced demand by $0.18 per share compared with the year-earlier period. The weather impact was $0.13 per share unfavorable compared with normal weather assumptions used in setting the company’s guidance.
Despite the headwind, Nooney said Black Hills maintained confidence in its full-year outlook. The company reaffirmed adjusted EPS guidance of $4.25 to $4.45, which Nooney said represents 6% growth at the midpoint over 2025.
Positive drivers in the quarter included $0.24 per share from new rates and rider recovery margin and $0.10 per share from lower operations and maintenance expenses, excluding merger costs. Those items offset $0.16 per share of higher financing and depreciation expenses and part of the weather and retail usage impacts.
In response to an analyst question about how the company could maintain guidance after a large weather impact, Nooney said Black Hills would continue to manage risks through O&M optimization and capital timing. Evans added that the company had begun responding to mild weather conditions in the fourth quarter of last year and praised employees for helping the company stay on track.
Nooney said Black Hills remains focused on maintaining investment-grade credit metrics, targeting funds from operations to debt of 14% to 15% and net debt to total capitalization at or below 55%. She said the company expects a lower equity need in 2026 of $50 million to $70 million, compared with last year, due to stronger forecast cash flows from capital projects, regulatory initiatives and large-load customer growth.
During the first quarter, Black Hills issued $41 million of equity through its at-the-market program, leaving “minimal equity needs” for the rest of the year, Nooney said. The company’s next debt maturity is $400 million of 3.15% notes due in January 2027, and management is evaluating refinancing options for later this year. Black Hills had about $500 million of availability under its revolving credit facility at quarter-end.
Nooney also highlighted the company’s dividend record, saying Black Hills increased its dividend in January and extended its streak of annual dividend increases to 56 years in 2026, based on the current annualized dividend. The company continues to target a dividend payout ratio of 55% to 65%.
Merger With NorthWestern Energy Advances
Evans said Black Hills and NorthWestern Energy made “solid progress” on their pending merger during the quarter. Shareholders of both companies approved the transaction on April 2, and the Hart-Scott-Rodino antitrust waiting period expired on April 20, satisfying an antitrust condition to closing.
The companies have also reached settlements with certain key interveners in Montana, Nebraska and South Dakota, Evans said. Black Hills expects to secure all state regulatory approvals and approval from the Federal Energy Regulatory Commission in time to complete the merger in the second half of 2026.
Asked whether the settlements could accelerate the closing timeline, Evans said settlements are helpful but did not suggest a faster schedule. He noted a Montana hearing scheduled for the following week, a completed Nebraska hearing on a full settlement and South Dakota hearings scheduled for June.
Data Center Demand Remains a Major Growth Driver
Executives described large-load customers, including hyperscale data centers, as a significant growth opportunity for Black Hills. Evans said the company’s large-load pipeline represents more than 3 gigawatts of potential demand, including 600 megawatts by 2030 that is already included in the company’s five-year financial plan.
Senior Vice President and Chief Utility Officer Marne Jones said the 600 MW in the plan is primarily driven by Microsoft and Meta. Black Hills has served Microsoft’s hyperscale data center growth for more than a decade through market energy procurement, she said, while Meta’s new artificial intelligence data center in Cheyenne is expected to begin ramping later this year.
Jones said Black Hills expects to serve the planned 600 MW mostly through market energy and contracted resources, requiring minimal capital investment. However, demand at or above 600 MW is expected to require additional investment in generation and transmission infrastructure.
The company is negotiating with partners to serve more than 2.5 GW of additional large-load requests. One of those opportunities is a 1.8 GW project in Cheyenne. Jones said Black Hills has executed a short-term generation reservation agreement with the prospective customer for company-owned generation. The agreement provides customer-funded milestone payments to support long-lead-time generation equipment as part of a broader resource mix.
Jones said the customer has provided $201 million in refundable Contribution in Aid of Construction to secure the equipment through the term of the agreement. Evans said the payment helps protect customers and the company’s balance sheet while negotiations continue.
During the question-and-answer session, Jones clarified that the potential generation facilities would not become part of the overall rate base for Wyoming retail customers. Instead, they would be tied to a negotiated long-term agreement with the specific end-use customer, with a focus on customer protections and avoiding stranded assets.
Capital Projects and Regulatory Filings Continue
Black Hills is pursuing a $4.7 billion five-year capital plan focused on safety, reliability and growth across its natural gas and electric systems. Evans said the plan includes minimal investment for the 600 MW of data center demand already included in the financial forecast, while potential generation and transmission investments for additional large-load demand are not yet in the plan.
Jones said construction continues on the company’s 99 MW Lange II natural gas-fired generation project, which will serve western South Dakota and northeastern Wyoming. The project remains on schedule to enter service in the fourth quarter and will replace aging generation facilities with modern Wärtsilä engines.
In Colorado, construction also continued on a utility-owned 50 MW battery storage project expected to be completed and in service in late 2027. Jones said Black Hills signed a 200 MW solar power purchase agreement during the first quarter, as previously approved by the Colorado Public Utilities Commission, as part of the state’s Clean Energy Plan and its goal of reducing emissions 80% by 2030.
On the regulatory front, Jones said the company’s Arkansas Gas rate review continues to progress, with new rates requested in the second half of the year. Black Hills also filed new rate review requests for South Dakota Electric, seeking $50.6 million of new annual revenue in South Dakota and $5.1 million in Wyoming, based on a 10.5% return on equity and a capital structure of 47% debt and 53% equity.
Jones said Black Hills also filed an abbreviated rate review in Kansas to recover capital invested through 2025. In South Dakota, wildfire liability legislation was enacted in March and becomes effective July 1, 2026, providing protections for utilities that comply with wildfire plans filed with and published by the commission.
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.
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