Business Context and Reporting Period
Company: Black Hills Corporation (BKH)
Filing Type: Form 10-Q (Unaudited)
Reporting Period: Quarter and six months ended June 30, 2026
Business Overview: A regulated electric and natural gas utility holding company serving over 1.37 million customers across eight states (Arkansas, Colorado, Iowa, Kansas, Montana, Nebraska, South Dakota, and Wyoming). Operations are divided into Electric Utilities and Gas Utilities segments.
Key Financial Metrics
| Metric (in millions) | Three Months Ended June 30, 2026 | Six Months Ended June 30, 2026 |
|---|---|---|
| Revenue | $452.8 | $1,233.5 |
| Operating Income | $97.0 | $299.0 |
| Net Income (Available to Common) | $38.2 | $169.2 |
| Diluted EPS | $0.50 | $2.23 |
| Operating Cash Flow (6mo) | N/A | $371.3 |
| Capital Expenditures (6mo) | N/A | $485.5 (Cash Used) |
| Total Debt | N/A | $4,778.9 |
| Debt to Capitalization | N/A | 54.8% |
| Cash & Equivalents | N/A | $71.5 |
Material Changes vs. Prior Period
- Revenue: For the six months ended June 30, 2026, consolidated revenue decreased slightly by $10.7 million (0.9%) compared to the prior year, primarily due to lower residential and commercial usage and unfavorable weather in the Electric Utilities segment, partially offset by new rate recoveries.
- Operating Income: Increased by $11.6 million (4.0%) for the six-month period.
- Electric Utilities: Operating income rose $16.9 million, driven by new rates and rider recovery (Ready Wyoming project, Colorado Electric rate review) despite lower usage.
- Gas Utilities: Operating income increased $1.0 million, aided by rate reviews in Nebraska, Kansas, and Arkansas, offset by unfavorable weather.
- Corporate & Other: Operating loss widened by $6.3 million due to costs associated with the pending merger with NorthWestern.
- Net Income: Increased $8.3 million for the six-month period, driven by higher operating margins in utility segments.
- Interest Expense: Net interest expense increased $3.2 million for the six-month period due to higher debt balances and interest rates, partially offset by higher Allowance for Funds Used During Construction (AFUDC).
Guidance, Outlook, and Material Events
- Pending Merger: The company is in the final stages of a merger with NorthWestern Energy Group, Inc. (NorthWestern).
- Shareholders of both companies approved the all-stock merger in April 2026.
- Regulatory approvals received from the Nebraska Public Service Commission (NPSC), South Dakota Public Utilities Commission (SDPUC), and Federal Energy Regulatory Commission (FERC).
- Antitrust clearance (HSR Act) was completed in April 2026.
- Remaining approval is pending from the Montana Public Service Commission (MPSC).
- Closing is anticipated by year-end 2026.
- Capital Projects:
- Lange II Project: A 99 MW dual-fuel generation facility in South Dakota, expected to be in service in Q4 2026. An application for a Phase-in Plan Rate (PIPR) rider to recover $320 million in costs was filed in August 2026.
- Ready Wyoming: A 260-mile transmission expansion project completed in 2025, driving rate recovery in the current period.
- Data Center Expansion: Wyoming Electric entered a generation reservation agreement with a prospective 1.8 GW data center customer, receiving $285 million in refundable advances (amended to $377 million in July 2026).
- Rate Reviews: Active filings include South Dakota Electric (seeking $50.6M annual revenue increase) and Colorado Electric (seeking $26.7M annual revenue increase). Kansas Gas and Nebraska Gas recently implemented new rates.
- Dividends: Quarterly dividend declared at $0.703 per share, payable September 1, 2026.
- Risks: Key risks include regulatory approval timelines for the merger, execution of capital investment programs, interest rate volatility, and severe weather impacts on demand.
Investor Verification Checklist
- Merger Closing Conditions: Verify the status of the remaining Montana Public Service Commission (MPSC) approval required to close the NorthWestern merger.
- Refundable Advances: Monitor the $377 million refundable advance from the prospective data center customer, which matures August 31, 2026, and the company's financing strategy if the definitive agreement is not finalized.
- Regulatory Rate Cases: Track the outcomes of the South Dakota Electric and Colorado Electric rate reviews filed in early 2026, which seek significant revenue increases.
- Capital Expenditure Execution: Review progress on the Lange II generation project and the Ready Wyoming transmission project to ensure timely in-service dates and cost recovery.
- Debt Maturities: Note the upcoming maturity of $400 million in senior unsecured notes in January 2027 and the company's refinancing plans.