Black Hills Corporation (BKH) Q2 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The company reported a strong EPS increase and reaffirmed its earnings guidance, suggesting financial stability. The dividend track record and new partnerships with major companies like Meta and Microsoft are positive indicators. The Q&A revealed confidence in growth, particularly in data centers, despite some uncertainties. The stable insurance costs and recovery from outages further support a positive outlook. Given the market cap, the stock is likely to experience a moderate positive movement of 2% to 8%.
Key Financial Performance
Earnings Per Share (EPS) for Q2 2025 $0.38 per share, a 15.15% increase from $0.33 per share in Q2 2024. The increase was driven by new margins, including $0.17 of new rates and rider recovery, which offset higher operating expenses, financing costs, and depreciation expenses.
Year-to-date EPS for 2025 $2.24, a 2.28% increase from $2.19 in the same period of 2024. This was due to $0.49 of new rates and rider recovery and $0.14 of weather favorability, which offset $0.29 of higher O&M, $0.24 of higher financing costs, and $0.07 of higher depreciation expense.
Wyoming Electric Peak Load 379 megawatts in June 2025, a 21% increase from 2024 and a 10% increase from earlier in Q2 2025. This growth was attributed to increased demand from data center and blockchain customers.
Ready Wyoming Transmission Project Costs $350 million, with $40 million already placed in service and recovered through Wyoming transmission rider. The remaining costs will be recovered starting January 2026.
Kansas Gas Rate Review Revenue Increase $10.8 million annually, effective August 1, 2025. This increase supports safety and reliability-focused rider and includes a new insurance cost tracker.
Nebraska Rate Review Revenue Request $35 million annually, with interim rates effective August 1, 2025. Final rates are expected by Q1 2026.
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Operating Highlights
Ready Wyoming transmission expansion: 260-mile $350 million project on track for completion by year-end, enhancing system resiliency and reducing reliance on third-party transmission.
Lange II generation project: 99-megawatt natural gas-fired generation resource in South Dakota, expected to be operational in the second half of 2026.
Colorado Clean Energy Plan: Includes 350 megawatts of renewable resources (100 MW solar, 50 MW battery storage, 200 MW solar PPA) to reduce emissions by 80% by 2030.
Data center and blockchain demand: Wyoming Electric recorded a 21% increase in peak load due to growing demand from data centers and blockchain customers. Meta and Microsoft are key contributors, with Meta's new data center expected to begin operations in 2026.
Pipeline for data center demand: Developing plans to serve over 1 gigawatt of demand, including a new data center in Southeast Wyoming by Crusoe and Tallgrass.
Wildfire mitigation: Launched an emergency Public Safety Power Shutoff program to mitigate wildfire risks, involving proactive de-energizing of power lines in high-risk areas.
Regulatory strategy: Seven rate reviews since 2024, recovering over $1.3 billion in new system investments. Recent approvals include Kansas Gas rate review and active Nebraska rate review.
Capital investment plan: $4.7 billion capital plan through 2028, focusing on safety, reliability, and growth, with annual investments of $700-$750 million.
Earnings growth: Reaffirmed 2025 EPS guidance of $4-$4.20, representing 5% growth over 2024, with long-term EPS growth target of 4%-6% starting in 2026.
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Risk or Challenges
Unplanned Generation Outages: The company experienced approximately $5 million in additional pretax O&M costs related to unplanned generation outages, which impacted operational expenses and required offsetting measures.
Higher Operating and Financing Costs: The company faced $0.05 per share of higher O&M driven by increased insurance premiums and unplanned outages, $0.08 per share of higher financing costs, and $0.04 of higher depreciation expense from new assets placed in service.
Wildfire Risk: The company has implemented an emergency Public Safety Power Shutoff program to mitigate wildfire risks, reflecting the potential operational and safety challenges posed by extreme weather conditions.
Regulatory and Rate Review Challenges: The company is actively managing multiple rate reviews, including a $35 million revenue request in Nebraska and preparing for a rate review in Arkansas, which could pose challenges in achieving favorable outcomes.
Equity Issuance and Capital Needs: The company plans to issue $215 million to $235 million of new equity in 2025 to finance investments, which could dilute shareholder value and reflects reliance on external funding for capital projects.
Supply Chain and Project Execution Risks: The company is managing large-scale projects like the Ready Wyoming transmission expansion and Colorado Clean Energy Plan, which could face delays or cost overruns.
Economic and Market Demand Uncertainty: The company’s growth is tied to data center and blockchain demand, which could be impacted by broader economic conditions or shifts in market demand.
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Guidance & Outlook
Earnings Guidance: Reaffirmed 2025 earnings guidance range of $4 to $4.20, representing a 5% growth rate at the midpoint over 2024 EPS. Long-term EPS growth target of 4% to 6% starting in 2026, with expectations to deliver in the upper half of this range.
Capital Plan: $4.7 billion capital plan through 2028, with annual investments ranging from $700 million to $750 million. Key projects include Ready Wyoming transmission expansion (completion by year-end 2025), Lange II generation project (completion in 2026), and solar and battery projects for the Colorado Clean Energy Plan (completion in 2027-2028).
Customer Growth: Strong demand from data center and blockchain customers, with data center load expected to contribute more than 10% of total EPS by 2028. Current forecast includes 500 megawatts of data center demand by 2029, with plans to serve over 1 gigawatt of demand in the future.
Regulatory Progress: Active rate reviews and approvals in Kansas and Nebraska, with plans for a rate review in Arkansas in Q4 2025. Rate reviews support recovery of over $1.3 billion in new system investments.
Dividend Strategy: Targeting a 55% to 65% payout ratio, with a focus on delivering long-term value for shareholders through dependable and increasing dividends.
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Shareholder Return Plan
Dividend Track Record: Black Hills Corporation has an industry-leading dividend track record of 55 consecutive years. The company continues to target a 55% to 65% payout ratio. A dependable and increasing dividend is an important component of their strategy to deliver long-term value for shareholders.
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Key Q&A
Q:The industrial growth for the quarter was 19%. Can you give us any kind of color on how we should anticipate that digital growth to proceed? Is it going to stay in that 20-plus kind of percent range on a linear basis? Or can you give us any color on what the shape looks like?
A:Marne M. Jones explained that while there was good growth in the industrial sector, it is not necessarily linear. Growth rates depend on the type of data center and blockchain load. Significant growth is expected to continue, but not in a strictly linear fashion.
Q:Was the new announcement for Wyoming part of the incremental $500 million in your pipeline, or was it incremental to your prior thinking?
A:Linden R. Evans clarified that the new announcement is incremental to the pipeline. It is a relatively new development, and discussions with counterparties are ongoing. It will be included in the load and financial forecasts once agreements are executed and signed.
Q:Do you expect your 1,000 megawatt 10-year outlook to get updated over time as you get closer to MOUs or contracts?
A:Linden R. Evans confirmed that the outlook will be updated over time. He emphasized a cautious and disciplined approach, highlighting agreements with Microsoft and Meta. Meta's data center is under construction, with data center load expected in 2026. The company is focused on serving customers uniquely and ensuring positive impacts on shareholders, customers, and communities.
Q:Your insurance expenses were particularly high in the first quarter. Is the second quarter down to the incremental rate you expect through the rest of the year?
A:Kimberly F. Nooney stated that insurance costs are flat year-over-year for the period July 1, 2025, through June 30, 2026. This stability will benefit the company through the end of 2025 and into 2026.
Q:You're pointing to the upper half of the 4% to 6% range starting next year. Can you elaborate on what specifically is driving that?
A:Kimberly F. Nooney outlined several drivers, including the $350 million Ready Wyoming transmission investment, projects like Lange II and Colorado CEP, customer growth in Arkansas, South Dakota, and Colorado, and Meta's data center ramping up in 2026. The upper half of the growth range does not include additional data center growth.
Q:You mentioned some unplanned outages. Can you get a little more specific about what happened there? Are those plants back online? Were there any issues that might have impacts looking forward?
A:Marne M. Jones confirmed that all generation is up and running. Maintenance schedules are on track, and future risks have been mitigated with spare turbines and combustors. Kimberly F. Nooney added that the financial impact of outages was immaterial, with offsets from noncontrolling interests and negative margin comparisons. No unplanned outages are assumed for the remainder of the year.
Q:Review of Unclear Management Responses
A:Management did not avoid giving direct answers to any of the questions. All responses were detailed and addressed the queries raised.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Chief Utility
Clean Energy
Colorado Clean
Energy Plan
Research Division
Slide share
Utility Officer
base
battery project
beginning
box settlement
capital project
capital service
cash flow
center demand
commitment
customer demand
decade experience
demand opportunity
emergency
end megawatt
expansion
financing
generation project
midpoint
model investment
outage
peak
plan approval
power
prevention
priority
rate rider
rate tomorrow
rider recovery
risk area
safety need
safety reliability
share period
strength
tech demand
BKH Transcript
Black Hills Corporation (BKH) Q1 2026 Earnings Call Transcript
Positive5-8
The financial performance shows solid growth in revenue, net income, and EPS, with effective cost management. Cash flow from operations also increased significantly. While there are risks related to market conditions and regulatory changes, the overall financial health appears strong. The absence of strategic initiatives or operational updates in the call is a minor concern, but the financial metrics and optimistic earnings guidance support a positive sentiment. Given the market cap, the stock is likely to see a moderate positive reaction.
Black Hills Corporation (BKH) Q4 2025 Earnings Call Transcript
Positive2-5
The earnings call summary indicates strong financial performance with a 5% EPS increase, a consistent dividend increase, and a robust capital investment plan. The Q&A revealed positive sentiment towards data center demand and merger progress, although some management responses lacked clarity. The reaffirmed guidance and strong partnerships with Microsoft and Meta suggest optimism. Given the market cap of $3.7 billion, the stock is likely to react positively, within the 2% to 8% range, over the next two weeks.
Black Hills Corporation (BKH) Q3 2025 Earnings Call Transcript
Positive11-6
The earnings call highlights strong financial performance with a 28.6% YoY EPS increase, driven by regulatory efforts. Despite weather and cost headwinds, the company maintained positive guidance, supported by strong demand and strategic projects. The Q&A revealed no major concerns, with management confident in regulatory processes and economic conditions. The reaffirmed growth guidance and capital plan, alongside a dividend strategy, further bolster sentiment. Given the market cap, the stock is likely to see a positive movement, albeit not exceedingly strong, due to the absence of groundbreaking announcements.
Black Hills Corporation (BKH) Q2 2025 Earnings Call Transcript
Positive7-31
The company reported a strong EPS increase and reaffirmed its earnings guidance, suggesting financial stability. The dividend track record and new partnerships with major companies like Meta and Microsoft are positive indicators. The Q&A revealed confidence in growth, particularly in data centers, despite some uncertainties. The stable insurance costs and recovery from outages further support a positive outlook. Given the market cap, the stock is likely to experience a moderate positive movement of 2% to 8%.
BKH Slides
BKH Report
Frequently Asked Questions
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