Black Hills (US:BKH)2026-02-05 17:02Financial 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]