Black Hills (BKH) - 2025 Q2 - Quarterly Results

Financial Results and Highlights Black Hills Corp. reported strong Q2 2025 financial results, reaffirming its 2025 earnings guidance and advancing key capital projects Financial Performance Summary Black Hills Corp. reported strong financial results for the second quarter of 2025, with diluted earnings per share (EPS) rising to $0.38 from $0.33 in the prior-year period, driven by new rates and rider recovery Q2 & H1 2025 Financial Results (in millions, except per share) | | Three Months Ended June 30, | Six Months Ended June 30, | | :--- | :--- | :--- | :--- | | | 2025 | 2024 | 2025 | 2024 | | Operating Income | $82.5 | $70.6 | $287.4 | $264.0 | | Net income available for common stock | $27.5 | $22.8 | $161.7 | $150.6 | | Earnings per share, Diluted | $0.38 | $0.33 | $2.24 | $2.19 | - The company is executing a $1 billion capital plan for the year and remains on track to achieve its 2025 earnings guidance, which represents 5% year-over-year growth at the midpoint[2] - Key long-term growth projects are progressing, including the $350 million Ready Wyoming electric transmission project (completion by year-end 2025) and the $280 million Lange II generation project (in service H2 2026)[3] - The company forecasts that by 2028, over 10% of its EPS will come from serving data centers, with Meta's new Wyoming data center currently under construction[3] Q2 2025 Highlights and Recent Updates During the second quarter, the company reaffirmed its 2025 EPS guidance, established a new wildfire safety program, and achieved significant regulatory and operational milestones - Wyoming Electric experienced 19 consecutive years of increasing electric demand, recording four new all-time peak loads in H1 2025, culminating in a 379-megawatt peak on June 20, 2025, a 21% increase over the 2024 peak[5][6] - An Emergency Public Safety Power Shutoff (PSPS) program was established across all three electric utilities to mitigate wildfire risk[5][6] - Received approval for new rates at Kansas Gas, providing $10.8 million in new annual revenues[5][9] - Obtained a Certificate of Public Convenience and Necessity (CPCN) for South Dakota Electric's 99-megawatt Lange II generation project[5][9] Business Segment Updates The company's business segments are advancing major capital projects, securing favorable regulatory outcomes, and enhancing shareholder returns Electric Utilities The Electric Utilities segment is advancing major capital projects to enhance reliability and support growth, including the Ready Wyoming transmission project and the Lange II generation project - Construction continues on the 260-mile, $350 million Ready Wyoming electric transmission project, with an expected in-service date by year-end 2025[6] - South Dakota Electric received CPCN approval for the 99-megawatt, $280 million Lange II gas-fired generation project, scheduled to be in service in the second half of 2026[9] - Colorado Electric is advancing its Clean Energy Plan, which includes a 100 MW solar project, a 50 MW battery storage project, and a 200 MW solar power purchase agreement[9] Gas Utilities The Gas Utilities segment achieved a favorable regulatory outcome in Kansas and is pursuing another in Nebraska to recover system investments and higher operating costs - On July 24, Kansas Gas received approval for a settlement agreement providing approximately $10.8 million in new annual revenue, effective August 1, 2025[9] - On May 1, Nebraska Gas filed a rate review requesting $35 million in new annual revenue, with interim rates effective August 1, 2025[9] Corporate and Other Corporate actions in the second quarter focused on shareholder returns and financial management, including a dividend increase and the extension of the Revolving Credit Facility - The board of directors approved a quarterly dividend of $0.676 per share, representing 55 consecutive years of dividend increases[9] - The company extended the maturity of its Revolving Credit Facility to May 31, 2030[9] - Year-to-date, the company issued 1.1 million shares of new common stock for net proceeds of $65 million[9] 2025 Earnings Guidance Black Hills Corp. reaffirmed its full-year 2025 earnings guidance for diluted EPS to be in the range of $4.00 to $4.20, contingent on several key assumptions Guidance and Assumptions The company's reaffirmed 2025 EPS guidance of $4.00 to $4.20 is based on key operational and financial assumptions, including normal weather and constructive regulatory decisions 2025 Full-Year Guidance | Metric | Guidance Range | | :--- | :--- | | Earnings Per Share (Diluted) | $4.00 - $4.20 | - Key assumptions for 2025 guidance include: - Normal weather conditions - Constructive and timely regulatory outcomes - Equity issuance between $215 million and $235 million - An effective tax rate of approximately 13%[9] Consolidated Financial Statements Black Hills Corp. reported increased revenue and net income for Q2 and H1 2025, driven by growth in the Gas Utilities segment and partially offset by higher operating expenses Consolidated Income Statement For the second quarter of 2025, Black Hills reported revenue of $439.0 million and net income available for common stock of $27.5 million, compared to $402.6 million and $22.8 million respectively in Q2 2024 Consolidated Financial Results (in millions) | | Three Months Ended June 30, | Six Months Ended June 30, | | :--- | :--- | :--- | :--- | :--- | | | 2025 | 2024 | 2025 | 2024 | | Revenue | $439.0 | $402.6 | $1,244.2 | $1,129.0 | | Operating income | $82.5 | $70.6 | $287.4 | $264.0 | | Net income available for common stock | $27.5 | $22.8 | $161.7 | $150.6 | Consolidating Income Statements & Analysis A segment-level analysis shows that for Q2 2025, the Gas Utilities segment was the primary driver of growth, with operating income increasing by $12.5 million due to new rates and favorable weather Operating Income by Segment - Q2 2025 vs Q2 2024 (in millions) | Segment | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Electric Utilities | $49.0 | $46.3 | +$2.7 | | Gas Utilities | $35.5 | $23.0 | +$12.5 | Operating Income by Segment - H1 2025 vs H1 2024 (in millions) | Segment | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Electric Utilities | $103.3 | $110.9 | -$7.6 | | Gas Utilities | $187.0 | $153.7 | +$33.3 | - The decrease in H1 2025 Electric Utilities' operating income was primarily due to higher operating expenses and unplanned generation outages, which were partially offset by new rates and rider recovery[16] - Net interest expense increased by $6.3 million in Q2 and $13.6 million in H1 2025 compared to the same periods in 2024, driven by higher interest rates and increased borrowings[15][17] Operating Statistics Operating statistics show strong growth in electric industrial sales and overall increases in gas utility revenue and volumes, despite some unplanned outages Electric Utilities Operating Statistics Electric utility operations showed strong growth in the industrial sector, with revenues and quantities sold increasing significantly in both Q2 and the first half of 2025, primarily driven by customers in Wyoming Electric Industrial Sales - Q2 2025 vs Q2 2024 | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Industrial Revenue (millions) | $49.3 | $41.7 | +18.2% | | Industrial Quantities Sold (GWh) | 663.9 | 558.3 | +18.9% | - The increase in industrial revenues and sales volumes was primarily driven by Wyoming Electric LPCS Tariff and BCIS Tariff customers[18] Generating Facilities Availability | Period | 2025 | 2024 | | :--- | :--- | :--- | | Q2 Ended June 30 | 87.2% | 87.1% | | H1 Ended June 30 | 88.1% | 91.3% | - The lower availability in 2025 was impacted by unplanned outages at Wygen III, Pueblo Airport Generation, and Busch Ranch facilities[22] Gas Utilities Operating Statistics The Gas Utilities segment saw increased revenue and volumes sold and transported in Q2 and H1 2025, with total revenue growing 10.4% in Q2 and 11.9% in H1 year-over-year Gas Utilities Total Revenue & Quantities - YoY Comparison | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue (millions) | $223.0 | $202.0 | $795.4 | $710.6 | | Quantities Sold/Transported (Dth millions) | 48.8 | 47.1 | 145.0 | 135.5 | - Arkansas Gas and Kansas Gas have weather normalization mechanisms that mitigate the impact of weather variations on revenue[25] Other Information This section provides details on the upcoming conference call, an overview of Black Hills Corp., and a caution regarding forward-looking statements Conference Call and Webcast Black Hills will host a conference call and webcast on Thursday, July 31, 2025, at 11 a.m. EDT to discuss these financial results - A live conference call and webcast to discuss financial results is scheduled for 11 a.m. EDT on Thursday, July 31, 2025[27] About Black Hills Corp. Black Hills Corp. (NYSE: BKH) is a customer-focused utility company headquartered in Rapid City, South Dakota, serving 1.35 million natural gas and electric utility customers across eight states - The company serves 1.35 million natural gas and electric utility customers in eight states[29] Caution Regarding Forward-Looking Statements This report includes forward-looking statements, such as the 2025 earnings guidance and long-term growth targets, which are subject to risks and uncertainties - Forward-looking statements, including 2025 earnings guidance, are subject to significant risks and uncertainties[30] - Identified risks include the ability to obtain adequate cost recovery, complete capital programs, execute strategy, manage interest rate effects, and overcome supply chain disruptions[32]