8-K: Black Hills Corp. Reaffirms 2025 Earnings Guidance After Solid Q1 Performance

Black Hills Corp. reports steady Q1 2025 results, reaffirms its full-year earnings guidance of $4.00 to $4.20 per share, and highlights progress on key growth initiatives.

Summary

• Black Hills Corp. announced its financial results for the first quarter of 2025, reporting operating income of $205.0 million compared to $193.3 million in Q1 2024.
• Net income available for common stock was $134.3 million, consistent with $127.9 million in the same period last year.
• Earnings per share remained flat at $1.87.
• The company reaffirmed its 2025 earnings guidance of $4.00 to $4.20 per share.
• Black Hills Corp. is targeting a long-term EPS growth rate of 4% to 6% and expects data center demand to contribute over 10% to earnings by 2028.
• The company obtained all rights-of-way for a 260-mile electric transmission expansion in Wyoming.

Sentiment

Score: 7

Explanation: The document presents a stable outlook with reaffirmed guidance and progress on key projects. While there are some challenges noted, the overall tone is positive and suggests continued growth.

Positives

• The company reaffirmed its 2025 earnings guidance.
• The company is confident in its 4-6% EPS growth rate outlook.
• The company secured all rights-of-way for the 260-mile electric transmission expansion in Wyoming.
• Wyoming Electric experienced a nearly 10% increase in peak load compared to 2024.
• New rates in Colorado are expected to generate $17.5 million in new annual revenue.
• Wildfire legislation enacted in Wyoming protects utilities from liability for damages when following commission-approved wildfire mitigation plans.
• The company's board approved a quarterly dividend of $0.676 per share.

Negatives

• Electric Utilities operating income decreased $10.3 million primarily due to higher operating expenses and current year unplanned generation outages.
• Interest expense, net increased $7.3 million primarily due to higher interest rates and lower interest income on lower cash and cash equivalents balances.
• Net income attributable to non-controlling interest decreased $1.6 million due to lower net income from Black Hills Colorado IPP primarily driven by unplanned generation outages.

Risks

• The accuracy of the company's assumptions on which its earnings guidance and long-term growth target is based.
• The company's ability to obtain adequate cost recovery for its utility operations through regulatory proceedings.
• The company's ability to complete its capital program in a cost-effective and timely manner.
• The effects of changing interest rates.
• The impact of future governmental regulation.
• The company's ability to overcome the impacts of supply chain disruptions on availability and cost of materials.
• The effects of inflation, tariffs and volatile energy prices.

Future Outlook

Black Hills Corp. reaffirms its 2025 earnings guidance and expresses confidence in its long-term EPS growth target of 4% to 6%, driven by core utility rate base growth and increasing data center demand.

Management Comments

• We are reaffirming our full-year earnings guidance, which represents a 5% annual growth rate, as we continue to make progress on our regulatory and growth initiatives, said Linn Evans, president and CEO of Black Hills Corp.
• Looking ahead, our core utility rate base growth and earnings from our growing data center demand provides strong confidence in our 4% to 6% long-term EPS growth target, concluded Evans.

Industry Context

The announcement highlights the increasing demand for electricity from data centers and blockchain operations, a growing trend in the utility industry. The company's focus on renewable energy and transmission infrastructure aligns with broader industry efforts to modernize the grid and reduce carbon emissions.

Comparison to Industry Standards

• Black Hills Corp.'s reaffirmed earnings guidance of $4.00 to $4.20 per share is in line with industry peers such as Xcel Energy (XEL) and CMS Energy (CMS), which also target consistent earnings growth.
• The company's 4-6% long-term EPS growth target is comparable to the growth targets of other regulated utilities like WEC Energy Group (WEC) and DTE Energy (DTE).
• The Ready Wyoming transmission project is similar to other large-scale transmission projects being developed across the US to improve grid reliability and facilitate the integration of renewable energy sources.
• The company's focus on serving data center demand mirrors the strategies of utilities like Dominion Energy (D) and NV Energy, which are also actively pursuing opportunities in this sector.

Stakeholder Impact

• Shareholders will benefit from the reaffirmed earnings guidance and continued dividend payments.
• Customers will benefit from improved reliability and cost stability through infrastructure investments.
• Employees will have opportunities for growth and development through the company's expansion projects.
• Communities will benefit from economic growth and job creation associated with the company's investments.

Next Steps

• Complete the Ready Wyoming electric transmission expansion project by year-end 2025.
• Advance plans to deliver new electric generation resources in South Dakota and Colorado.
• File a request for a CPCN for the battery storage project during the second quarter.
• Negotiate with counterparties for the 100-megawatt utility-owned solar project and a 200-megawatt solar power purchase agreement.
• Obtain new final rates in the first quarter of 2026 for Nebraska Gas.
• Obtain new rates in the second half of 2025 for Kansas Gas.

Key Dates

Keywords

earnings, guidance, utilities, growth, revenue, electric, gas, Black Hills Corp