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Introduction & Market Context
Black Hills Corporation (NYSE:BKH) presented its second quarter 2025 results on July 31, highlighting solid financial performance and strategic initiatives to drive future growth. The utility provider, which serves 1.35 million customers across eight states, reported quarterly earnings per share of $0.38, up from $0.33 in the same period last year, while reaffirming its full-year guidance.
The company’s stock closed at $60.04 on October 14, 2025, up 1.68% for the day, and has traded between $54.92 and $65.59 over the past 52 weeks. Following the Q2 earnings announcement in July, the stock had risen modestly by 1%, reflecting investor confidence in the company’s stable performance and growth outlook.
Quarterly Performance Highlights
Black Hills delivered year-over-year EPS growth in Q2 2025 despite challenges from weather impacts and higher costs. The company’s quarterly EPS of $0.38 represented a 15% increase from $0.33 in Q2 2024, primarily driven by new rates and rider recovery mechanisms.
As shown in the following waterfall chart of Q2 EPS drivers, the company benefited from $0.17 in new rates and rider recovery, which helped offset negative impacts from weather (-$0.04), higher insurance premiums (-$0.03), unplanned generation outages (-$0.03), increased interest expense (-$0.07), new shares (-$0.02), and higher depreciation and amortization (-$0.04):
On a year-to-date basis, Black Hills reported EPS of $2.24, compared to $2.19 in the same period of 2024. The following chart illustrates the key drivers of this performance, with significant positive contribution from new rates and rider recovery (+$0.49) partially offset by higher employee-related expenses, insurance premiums, and financing costs:
The company’s revenue for Q2 2025 reached $439 million, exceeding analyst forecasts of $412.68 million by 6.38%, according to the earnings report. This revenue outperformance highlights the company’s ability to execute on its strategic initiatives despite challenging operating conditions.
Strategic Growth Initiatives
Black Hills is positioning itself for long-term growth through strategic investments in infrastructure and a growing focus on the data center market. The company highlighted its expanding data center pipeline, which now exceeds 1 gigawatt, with plans to serve 500 MW by 2029 under the current capital plan.
As illustrated in the following slide, the company expects data center EPS contribution to grow to more than 10% beginning in 2028, providing a significant new growth driver:
The company’s Ready Wyoming transmission expansion project, a 260-mile, $350 million investment, remains on track for completion by year-end 2025. This project will enhance system resiliency, expand access to power markets, and support economic growth in the region.
Black Hills is also advancing its Colorado Clean Energy Plan, which aims to reduce emissions by 80% by 2030. The plan includes a portfolio of renewable and storage resources, with key milestones already achieved in 2025:
To meet growing resource needs in South Dakota, the company is adding 99 MW of dispatchable natural gas generation through the Lange II project, scheduled for completion in the second half of 2026. This $280 million investment is included in the company’s capital forecast and has received necessary regulatory approvals.
Financial Outlook and Guidance
Black Hills reaffirmed its 2025 EPS guidance range of $4.00 to $4.20, representing approximately 5% growth at the midpoint compared to 2024. The company also maintained its long-term EPS growth target of 4% to 6%, with plans to deliver in the upper half of that range starting in 2026.
The following chart illustrates the company’s strategic growth trajectory and guidance:
Supporting this growth outlook is a robust capital investment plan totaling $4.7 billion from 2025 to 2029, with $1 billion planned for 2025 alone. These investments focus on customer growth, safety and system integrity, modernization, and electric generation and transmission projects:
Black Hills maintains a solid investment-grade financial position with credit ratings of Baa2 (Stable) from Moody’s and BBB+ (Stable) from S&P. The company reported $623 million of available liquidity on its revolving credit facility at quarter-end and has been steadily improving its debt-to-capitalization ratio, which stood at 54.6% as of June 2025, down from 59.1% a year earlier.
The company’s commitment to shareholder returns remains strong, with 55 consecutive years of annual dividend increases as of 2025. The current annual dividend of $2.70 per share represents a 4.5% compound annual growth rate since 2020, supported by a target payout ratio of 55% to 65%.
Competitive Industry Position
Black Hills emphasized its industry-leading reliability metrics, which not only enhance customer satisfaction but also reduce wildfire risk. As shown in the following chart, the company’s System Average Interruption Duration Index (SAIDI) performance is significantly better than industry peers:
This reliability advantage, combined with a low vegetation-caused outage rate of approximately 3.5% over the last five years (compared to an industry average of around 20%), positions Black Hills favorably in terms of wildfire risk mitigation.
The company’s diversified utility portfolio, spanning both electric and gas operations across multiple states, provides stability and regulatory diversity. Recent regulatory progress includes approval of rate reviews and rider renewals in Kansas, with additional proceedings advancing in Nebraska and planned for Arkansas.
Forward-Looking Statements
Looking ahead, Black Hills expressed strong confidence in its long-term growth outlook, targeting the upper half of its 4% to 6% EPS growth range beginning in 2026. The company’s growth strategy leverages its integrated pure-play utility profile, diversified business mix, and constructive regulatory relationships.
Key growth drivers include the expanding data center opportunity, the Ready Wyoming transmission project, and generation investments to meet resource needs. The company also highlighted potential incremental opportunities beyond its current capital plan, including additional electric generation and transmission to serve data center demand, natural gas pipelines and storage, and other projects in early development.
Management remains focused on maintaining the company’s solid financial position while executing its capital investment strategy. With a clear roadmap for growth and a track record of delivering on commitments, Black Hills appears well-positioned to navigate industry challenges and capitalize on emerging opportunities in the evolving energy landscape.
Full presentation:
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