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Core Viewpoint - Black Hills Corp. has filed a rate review application with the South Dakota Public Utilities Commission to recover capital infrastructure and operational costs for providing electric service to approximately 75,000 customers [1][2]. Group 1: Rate Review Application - The company is seeking $50.6 million in new annual revenue to recover about $523 million in critical investments made since the last rate review in 2014 [2]. - The investments aim to strengthen the electric grid, maintain reliability, and reduce wildfire risk [2]. Group 2: Company Background and Financial Structure - Black Hills Corp. has maintained unchanged base rates for over a decade while ensuring safe and reliable service for its customers [3]. - The capital structure for the rate review is composed of 53.2% equity and 46.8% debt, with a targeted return on equity of 10.5% [3]. - The company is requesting interim rates to take effect 180 days after the filing, with new rates expected to be finalized in the first quarter of 2027 [3]. Group 3: Company Overview - Black Hills Corp. is a growth-oriented utility company serving 1.37 million natural gas and electric utility customers across eight states [4].

Core Viewpoint - Black Hills Inc. stock is currently priced at $74.02, reflecting a slight decrease of 0.05% in the current market session, but has shown a monthly increase of 2.11% and a yearly increase of 25.23%, raising questions about its valuation despite current performance concerns [1] Group 1: Stock Performance - The current stock price of Black Hills Inc. is $74.02, with a decrease of 0.05% in the current session [1] - Over the past month, the stock has increased by 2.11% [1] - In the past year, the stock has appreciated by 25.23% [1] Group 2: P/E Ratio Analysis - The P/E ratio is a critical metric for assessing the company's current share price relative to its earnings per share (EPS), indicating investor expectations for future performance [2] - Black Hills has a lower P/E ratio compared to the Multi-Utilities industry average of 27.61, suggesting potential undervaluation despite the possibility of underperformance relative to peers [3]

Electric Demand and Capacity - System Peak Demand for Colorado Electric in Summer 2025 is 396 MW, a slight increase from 394 MW in Summer 2024, while Winter demand decreased from 311 MW in 2024 to 299 MW in 2025[34] - Total electric generating capacity owned by Electric Utilities as of December 31, 2025, is 1,386.4 MW, with significant contributions from natural gas and coal sources[35] - Coal accounted for 25.5% of the total power supply in 2025, down from 32.5% in 2024, while natural gas remained stable at 29.3%[38] Fuel Costs and Production - The weighted average cost of coal increased to $16.59 per MWh in 2025 from $13.87 in 2024, while the total weighted average fuel and purchased power cost rose to $26.98 per MWh[39] - The company produced approximately 3.3 million tons of low-sulfur coal in 2025, with recoverable reserves estimated at 172 million tons, providing a reserve life of about 51 years[40][42] Infrastructure and Service Capabilities - Electric Utilities own 2,214 miles of transmission lines and 7,264 miles of distribution lines as of December 31, 2025, enhancing their service capabilities[45] - The company operates 4,581 miles of transmission pipelines and 30,861 miles of gas distribution mains across various states, with a total of 13,979 service lines[57] - The company has a significant amount of infrastructure in place, including 875 miles of transmission pipelines in Arkansas and 1,313 miles in Nebraska[57] Customer Base and Demand Trends - The total number of natural gas retail customers increased to 1,138,152 in 2025, up from 1,128,355 in 2024, indicating a growth trend in customer base[54] - The demand for natural gas is significantly higher during the winter months, with a substantial portion of revenue recognized in the heating season, particularly in the first and fourth quarters[57] Regulatory and Competition Landscape - Competition in the electric utility sector remains limited, with potential regulatory changes aimed at increasing competition not yet having a material impact[48] - Regulatory oversight includes various federal and state commissions, which influence rates, service quality, and capital expenditures[60] - The company faces limited competition in retail natural gas distribution, although electrification initiatives could impact future demand[58] Financial Management and Cost Recovery - The company has implemented cost recovery mechanisms, such as the Gas Cost Adjustment (GCA) and Energy Efficiency Cost Recovery (EECR), to manage fluctuations in commodity costs[61] - The company has implemented various cost recovery mechanisms across its Gas Utilities, allowing for the passing of prudently incurred costs to customers[70] - The company has entered into commission-approved hedging programs to mitigate natural gas price volatility for its utility customers[312] Environmental Goals and Emissions - The company aims to reduce GHG emissions intensity for Electric Utilities by 40% by 2030 and 70% by 2040, with a target of 50% reduction for Gas Utilities by 2035, based on a 2005 baseline[83] - The company reported a 38% reduction in electric utility emissions since 2005 and is on track to meet its 2030 and 2040 emission reduction goals[84] - The company has a goal of achieving "Net Zero by 2035" for Gas Utilities, which includes all Scope 1 sources of methane emissions[83] Workforce and Labor Relations - As of December 31, 2025, the total number of employees is 2,795, with 421 in Electric Utilities and 1,184 in Gas Utilities[90] - The turnover rate for the year ended December 31, 2025, was 12%, up from 11% in the previous year[88] - Approximately 18% of total employees are eligible for retirement as of December 31, 2025[90] - The company has not experienced any labor stoppages in decades, indicating stable labor relations[91] Financial Risks and Credit Management - Commodity price risk is associated with retail natural gas services and wholesale electric power marketing, influenced by factors such as weather and geopolitical events[315] - As of December 31, 2025, 99.8% of the company's debt is fixed rate, limiting exposure to variable interest rate fluctuations[319] - A hypothetical 100 basis point increase in the benchmark rate on variable rate debt would not materially impact pre-tax interest expense for the years ended December 31, 2025, and 2024[319] - The company has no interest rate swaps in place as of December 31, 2025, to manage interest rate risk[318] - Credit risk is managed through guidelines established by the Black Hills Corporation Credit Policy, focusing on high credit quality entities[321] - The company conducts periodic credit evaluations and adjusts credit limits based on payment history and current creditworthiness[322] - A portion of over-the-counter swaps has been designated as cash flow hedges to mitigate commodity price risk for fixed price forward contracts[316] - Changes in interest rates impact pension and post-retirement benefit obligations, potentially increasing cash contribution requirements[320] - A 10% change in market prices for derivative instruments would not materially impact pre-tax income or fair values as of December 31, 2025[317] - The company maintains a provision for estimated credit losses based on historical experience and current market conditions[322]

Group 1 - The article does not provide any specific content related to company or industry analysis [1]

Core Viewpoint - The proposed sale of NorthWestern Energy Group, Inc. to Black Hills Corp. is under investigation by former Attorney General of Louisiana Charles C. Foti, Jr. and the law firm Kahn Swick & Foti, LLC to assess the fairness of the transaction for shareholders [1] Company Overview - NorthWestern Energy Group, Inc. (NasdaqGS: NWE) is set to be acquired by Black Hills Corp. (NYSE: BKH) [1] - Shareholders of NorthWestern will receive 0.98 shares of Black Hills for each share of NorthWestern they own as part of the proposed transaction [1]

Financial Data and Key Metrics Changes - The company achieved GAAP EPS of $3.98 for 2025, including $0.12 of merger-related transaction costs, and adjusted EPS of $4.10, a 5% increase from $3.91 in 2024 [11][12] - Operating and financing expenses increased, with O&M expenses rising by $0.36 per share, primarily due to higher employee costs and unplanned generation outages [12][13] - The company maintained a healthy balance sheet with a net debt to total capitalization of 55% and FFO to debt of 14%-15%, above the downgrade threshold [14] Business Line Data and Key Metrics Changes - The company successfully executed its regulatory strategy, delivering $0.95 per share of new rates and rider recovery margin, which offset higher operating expenses [12] - The data center pipeline was tripled to over 3 GW, with significant demand from large customers like Microsoft and Meta [4][7] Market Data and Key Metrics Changes - The company reported strong demand from large load customers, particularly data centers, contributing to solid economic development in its service territories [4] - The company anticipates delivering 6% year-over-year earnings growth in 2026, driven by ongoing customer growth and new rates [6][15] Company Strategy and Development Direction - The company is committed to a customer-centric strategy, focusing on innovative investments and regulatory progress, including the merger with NorthWestern Energy [5][9] - The merger is expected to enhance capabilities and create long-term value through increased scale and improved customer diversity [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving financial commitments and maintaining a strong investment-grade credit rating, with expectations for continued growth driven by data center demand [11][15] - The company is preparing for a rate review in South Dakota to recover customer-focused investments after holding base rates unchanged for over a decade [24] Other Important Information - The company increased its dividend for the 56th consecutive year in 2025, targeting a payout ratio of 55%-65% [17] - The company completed the 260-mile Ready Wyoming transmission project, enhancing reliability and access to market energy [20][21] Q&A Session Summary Question: Proportion of the 3 GW pipeline within the five-year window - Management indicated that 600 MW is expected by 2030, with ongoing negotiations for additional capacity beyond that timeframe [36][37] Question: Interface with the Montana Commission regarding the merger - Management stated they are in the discovery phase, receiving expected questions from regulators [40] Question: Scale of data centers in the pipeline - Management confirmed that Microsoft and Meta are the primary customers, with ongoing negotiations for additional large-scale data centers [41][42] Question: Regulatory filings for transmission infrastructure - Management confirmed plans for additional investments to accommodate data center demand, including the Robinson Substation [58] Question: Timing for energy service agreements with hyperscalers - Management noted that customers intend to begin taking service in Q1 2027, aligning efforts to meet both parties' goals [60]

Financial Data and Key Metrics Changes - The company achieved GAAP EPS of $3.98 for 2025, including $0.12 of merger-related transaction costs, and adjusted EPS of $4.10, a 5% increase from $3.91 in 2024 [11][12] - Operating and financing expenses increased, with O&M expenses rising by $0.36 per share, primarily due to higher employee costs and unplanned outages [12][13] - The company maintained a healthy balance sheet with a net debt to total capitalization of 55% and FFO to debt of 14%-15%, above the downgrade threshold [14] Business Line Data and Key Metrics Changes - The company successfully executed its regulatory strategy, delivering $0.95 per share of new rates and rider recovery margin, which offset higher operating costs [12] - The data center pipeline was tripled to over 3 gigawatts, with significant demand from large customers like Microsoft and Meta [4][7] Market Data and Key Metrics Changes - The company anticipates delivering 6% year-over-year earnings growth in 2026, driven by ongoing customer growth and increasing data center demand [6][15] - The company is actively pursuing additional data center pipeline demand that would contribute upside to earnings over time [16] Company Strategy and Development Direction - The company is committed to a customer-centric strategy, focusing on innovative investments and regulatory progress [6][9] - The merger with NorthWestern Energy is expected to create a stronger utility company, enhancing capabilities and growth opportunities [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving financial commitments and maintaining a strong investment-grade credit rating [11] - The company is preparing for a rate review in South Dakota to recover customer-focused investments after holding base rates unchanged for over a decade [24] Other Important Information - The company increased its dividend for the 56th consecutive year in 2025, targeting a payout ratio of 55%-65% [17] - The company completed the 260-mile Ready Wyoming transmission project, enhancing service reliability and cost-effectiveness [20] Q&A Session Summary Question: Proportion of the 3-gigawatt pipeline within the five-year window - Management indicated that 600 MW is expected by 2030, with additional demand anticipated beyond that timeframe [36][37] Question: Filing CPCNs in advance of resource specificity - Management noted the importance of having facts present for CPCN filings and is navigating the process to ensure timely approvals [38][39] Question: Scale of data centers in the pipeline - Management confirmed that Microsoft and Meta are the primary customers, with ongoing negotiations for additional large-scale data centers [41][42] Question: Crusoe Tallgrass project and regulatory filings - Management discussed the unique setup for customer-funded construction to alleviate risks and costs for other customers [49][50] Question: Additional investments for data center customers - Management acknowledged the need for further investment beyond the current plan to accommodate growing demand [58]

Financial Data and Key Metrics Changes - The company reported GAAP EPS of $3.98 for 2025, including $0.12 of merger-related transaction costs, and adjusted EPS of $4.10, a 5% increase from $3.91 in 2024 [11][12] - Operating and financing expenses increased, with O&M expenses rising by $0.36 per share, primarily due to higher employee costs and unplanned generation outages [12][13] - The company maintained a healthy balance sheet with a net debt to total capitalization of 55% and FFO to debt of 14%-15%, above the downgrade threshold [14] Business Line Data and Key Metrics Changes - The company achieved strong earnings through new base rates and rider recovery, with $0.95 per share from new rates and ongoing customer growth [12][13] - The data center pipeline was tripled to over 3 gigawatts, with significant demand from large customers like Microsoft and Meta [4][7] Market Data and Key Metrics Changes - The company anticipates delivering 6% year-over-year earnings growth in 2026, driven by customer growth and data center demand [6][15] - The company is actively pursuing additional data center pipeline demand that could contribute to earnings over time [16][25] Company Strategy and Development Direction - The company is committed to a customer-centric strategy, focusing on regulatory progress and capital investments to meet growing customer demand [6][9] - The strategic merger with NorthWestern Energy is expected to enhance capabilities and create long-term value through increased scale and improved customer diversity [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving financial commitments and maintaining a strong investment-grade credit rating, with expectations for continued growth in customer demand and regulatory approvals [11][16] - The company is preparing for a rate review in South Dakota to recover investments and increased costs, marking the first change in base rates in over a decade [24] Other Important Information - The company increased its dividend for the 56th consecutive year in 2025, targeting a payout ratio of 55%-65% [17] - The company completed the 260-mile Ready Wyoming transmission project, enhancing reliability and access to market energy [20][21] Q&A Session Summary Question: Proportion of the 3-gigawatt pipeline within the five-year window - Management indicated that 600 MW is expected by 2030, with additional demand anticipated beyond that timeframe [35][36] Question: Interface with the Montana Commission regarding the merger - Management stated they are in the discovery phase with the Montana Commission, receiving expected questions and information requests [40] Question: Scale of data centers in the pipeline - Management confirmed that Microsoft and Meta are the primary customers, with ongoing negotiations for additional large-scale data centers [41][42] Question: Regulatory filings for the Crusoe Tallgrass project - Management explained that the customer would pay for construction to alleviate risk and costs, and they are evaluating how to serve the load with various resources [50][56] Question: Timing for signing agreements for the Crusoe project - Management noted that the customer intends to begin taking service in Q1 2027, and they are working to align timelines [61]

2025 Fourth Quarter and Full Year Review Feb. 5, 2026 Forward-looking Statements COMPANY INFORMATION Black Hills Corporation P.O. Box 1400 Rapid City, SD 57709-1400 NYSE Ticker: BKH www.blackhillscorp.com Company Contacts Kimberly Nooney Senior Vice President and CFO 605-721-2370 kim.nooney@blackhillscorp.com Sal Diaz Director of Investor Relations 605-399-5079 sal.diaz@blackhillscorp.com This presentation includes "forward-looking statements" as defined by the Securities and Exchange Commission. We make th ...