Black Hills Corporation
05/07/2026 | Press release | Distributed by Public on 05/07/2026 09:47
Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussions should be read in conjunction with the Notes contained herein and Management's Discussion and Analysis of Financial Condition and Results of Operations appearing in our 2025 Annual Report on Form 10-K.
Executive Summary
We are a customer-focused energy solutions provider with a mission of Improving Life with Energy for more than 1.37 million customers and 800+ communities we serve. Our aspiration is to be the trusted energy partner across our growing eight-state footprint, including Arkansas, Colorado, Iowa, Kansas, Montana, Nebraska, South Dakota, and Wyoming. Our strategy is centered on four priorities: People & Culture-build a team that wins together, Operational Excellence-relentlessly deliver on our commitment to serve our customers, Transformation-be a simple and connected company and Growth-grow to be a dominant long-term energy provider.
We conduct our business operations through two operating segments: Electric Utilities and Gas Utilities. Certain unallocated corporate expenses that support our operating segments are presented as Corporate and Other. We conduct our utility operations under the name Black Hills Energy predominantly in rural areas of the Rocky Mountains and Midwestern states. We consider ourselves a domestic electric and natural gas utility company.
We have provided energy and served customers for 142 years, since the 1883 gold rush days in Deadwood, South Dakota. Throughout our history, the common thread that unites the past to the present is our commitment to serve our customers and communities. By being responsive and service focused, we can help our customers and communities thrive while meeting rapidly changing customer expectations.
Recent Developments
Pending Merger with NorthWestern
On August 18, 2025, we entered into the Merger Agreement with NorthWestern and Merger Sub. See Note 14 of the Condensed Notes to Consolidated Financial Statements for recent developments surrounding the pending Merger.
Business Segment Recent Developments
Electric Utilities
•
See Note 2 of the Condensed Notes to Consolidated Financial Statements for recent rate review activity for South Dakota Electric.
•
On April 22, 2026, Wyoming Electric entered into a generation reservation agreement with a prospective new customer seeking to construct a 1.8 GW data center under Wyoming Electric's LPCS Tariff. See Note 3 of the Condensed Notes to Consolidated Financial Statements for additional information.
•
On March 12, 2026, the state of South Dakota enacted comprehensive wildfire liability mitigation legislation (SB36), effective July 1, 2026. The legislation provides material liability protections for a utility that complies with its published wildfire mitigation plan. South Dakota Electric plans to file its WMP with the SDPUC in the second half of 2026. In 2025, the state of Wyoming enacted similar legislation. In November 2025, Wyoming Electric filed its WMP with the WPSC and anticipates approval by mid-2026.
•
During the first quarter of 2026, South Dakota Electric continued with construction of its Lange II project which is anticipated to be in service in the fourth quarter of 2026. The addition of these resources will replace generation facilities planned for retirement and support updated planning reserve margin requirements.
•
In 2025, Colorado Electric received CPUC approval for the addition of 250 MW of new renewable generation resources in support of its Clean Energy Plan, which included a 50-MW utility-owned battery storage project and a 200-MW solar PPA. During the fourth quarter of 2025, Colorado Electric commenced construction of the 50-MW battery storage project. The project is expected to be completed by year-end 2027. On February 18, 2026, Colorado Electric entered into a 200-MW solar PPA. See Note 3 of the Condensed Notes to Consolidated Financial Statements for additional information regarding the PPA.
•
In January 2026, Wyoming Electric set a new all-time peak load of 393 MW, surpassing the previous peak of 379 MW set on June 20, 2025.
Gas Utilities
•
See Note 2 of the Condensed Notes to Consolidated Financial Statements for recent rate review activity for Arkansas Gas, Kansas Gas and Nebraska Gas.
Corporate and Other
•
See Note 5 of the Condensed Notes to Consolidated Financial Statements for information regarding recent financing activities.
Results of Operations
Certain lines of business in which we operate are highly seasonal, and revenue from, and certain expenses for, such operations may fluctuate significantly among quarterly periods. Demand for electricity and natural gas is sensitive to seasonal cooling, heating and industrial load requirements. In particular, the normal peak usage season for our Electric Utilities is June through August while the normal peak usage season for our Gas Utilities is November through March. Significant earnings variances can be expected between the Gas Utilities segment's peak and off-peak seasons. Due to this seasonal nature, our results of operations for the three months ended March 31, 2026, and 2025, and our financial condition as of March 31, 2026, and December 31, 2025, are not necessarily indicative of the results of operations and financial condition to be expected as of or for any other period or for the entire year.
All amounts are presented on a pre-tax basis unless otherwise indicated. Minor differences in amounts may result due to rounding.
Consolidated Summary and Overview
|
Three Months Ended March 31, |
|||||||||
|
2026 |
2025 |
2026 vs 2025 Variance |
|||||||
|
(in millions, except per share amounts) |
|||||||||
|
Operating income (loss): |
|||||||||
|
Electric Utilities |
$ |
59.9 |
$ |
54.3 |
$ |
5.6 |
|||
|
Gas Utilities |
146.5 |
151.5 |
(5.0 |
) |
|||||
|
Corporate and Other (a) |
(4.5 |
) |
(0.8 |
) |
(3.7 |
) |
|||
|
Operating income |
201.9 |
205.0 |
(3.1 |
) |
|||||
|
Interest expense, net |
(51.9 |
) |
(51.3 |
) |
(0.6 |
) |
|||
|
Other income, net |
0.7 |
0.8 |
(0.1 |
) |
|||||
|
Income tax (expense) |
(17.6 |
) |
(18.1 |
) |
0.5 |
||||
|
Net income |
133.1 |
136.4 |
(3.3 |
) |
|||||
|
Net income attributable to non-controlling interest |
(2.1 |
) |
(2.1 |
) |
- |
||||
|
Net income available for common stock |
$ |
131.0 |
$ |
134.3 |
$ |
(3.3 |
) |
||
|
Weighted average common shares outstanding, Diluted |
75.6 |
71.8 |
3.8 |
||||||
|
Total earnings per share of common stock, Diluted |
$ |
1.73 |
$ |
1.87 |
$ |
(0.14 |
) |
||
(a)
Includes inter-segment eliminations.
Three Months Ended March 31, 2026, Compared to the Three Months Ended March 31, 2025:
•
Electric Utilities' operating income increased $5.6 million primarily due to new rates and rider recovery driven by the Colorado Electric rate review and Wyoming Electric's recently completed Ready Wyoming project partially offset by unfavorable weather and lower residential and commercial customer usage;
•
Gas Utilities' operating income decreased $5.0 million primarily due to unfavorable weather partially offset by new rates and rider recovery driven by the Kansas Gas and Nebraska Gas rate reviews and lower operating expenses; and
•
Corporate and Other operating loss increased $3.7 million primarily due to costs related to the pending merger with NorthWestern.
Segment Operating Results
A discussion of operating results from our business segments follows. Unless otherwise indicated, segment information does not include inter-segment eliminations.
Non-GAAP Financial Measures
The following discussion includes financial information prepared in accordance with GAAP and a "non-GAAP financial measure", Electric and Gas Utility margin. Generally, a non-GAAP financial measure is a numerical measure of a company's financial performance, financial position or cash flows that excludes (or includes) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP. We define Electric and Gas Utility margin as operating revenue less cost of fuel, purchased power and cost of natural gas sold. Electric and Gas Utility margin is a non-GAAP financial measure due to the exclusion of operation and maintenance expenses determined to be directly attributable to revenue-producing activities, depreciation and amortization expenses, and taxes other than income taxes from the measure.
We believe that Gas and Electric Utility margin provides a useful basis for evaluating our segment operating results since our Utilities have regulatory mechanisms that allow them to pass prudently incurred costs of energy through to the customer in current rates. As a result, management uses Gas and Electric Utility margin internally when assessing the financial performance of our operating segments as this measure excludes the majority of revenue fluctuations caused by changes in these costs of energy. Similarly, the presentation of Gas and Electric Utility margin is intended to supplement investors' understanding of operating performance.
Our Electric and Gas Utility margin measure may not be comparable to other companies' Electric and Gas Utility margin measures. The following table includes a reconciliation of Electric and Gas Utility margin to Gross margin, the most directly comparable GAAP measure:
|
Electric Utilities |
Gas Utilities |
|||||||||||
|
Three Months Ended March 31, |
Three Months Ended March 31, |
|||||||||||
|
2026 |
2025 |
2026 |
2025 |
|||||||||
|
(in millions) |
||||||||||||
|
Revenue |
$ |
241.6 |
$ |
236.7 |
$ |
543.1 |
$ |
572.4 |
||||
|
Fuel, purchased power and cost of natural gas sold |
(66.8 |
) |
(67.2 |
) |
(271.2 |
) |
(292.6 |
) |
||||
|
Operations and maintenance (a) |
(39.2 |
) |
(41.9 |
) |
(41.1 |
) |
(46.2 |
) |
||||
|
Depreciation and amortization |
(40.5 |
) |
(37.1 |
) |
(34.2 |
) |
(32.1 |
) |
||||
|
Taxes other than income taxes |
(9.2 |
) |
(9.3 |
) |
(8.9 |
) |
(8.3 |
) |
||||
|
Gross margin (GAAP) |
$ |
85.9 |
$ |
81.2 |
$ |
187.7 |
$ |
193.2 |
||||
|
Operations and maintenance (a) |
39.2 |
41.9 |
41.1 |
46.2 |
||||||||
|
Depreciation and amortization |
40.5 |
37.1 |
34.2 |
32.1 |
||||||||
|
Taxes other than income taxes |
9.2 |
9.3 |
8.9 |
8.3 |
||||||||
|
Electric and Gas Utility margin (non-GAAP) |
$ |
174.8 |
$ |
169.5 |
$ |
271.9 |
$ |
279.8 |
||||
(a)
Operations and maintenance expenses which are deemed to be directly attributable to revenue-producing activities include plant operations and maintenance expenses at our electric generation facilities, operations and maintenance expenses at our WRDC coal mine, and electric and gas transmission and distribution expenses. These amounts are included in the table above to calculate gross margin in accordance with GAAP. These amounts excluded operations and maintenance expenses not directly attributable to revenue-producing activities of $25.9 million and $26.9 million for the three months ended March 31, 2026, and 2025, respectively, for the Electric Utilities and $41.2 million and $41.7 million for the three months ended March 31, 2026, and 2025, respectively, for the Gas Utilities.
Electric Utilities
Operating results for the Electric Utilities were as follows:
|
Three Months Ended March 31, |
|||||||||
|
2026 |
2025 |
2026 vs 2025 Variance |
|||||||
|
(in millions) |
|||||||||
|
Revenue |
$ |
241.6 |
$ |
236.7 |
$ |
4.9 |
|||
|
Fuel and purchased power |
66.8 |
67.2 |
(0.4 |
) |
|||||
|
Electric Utility margin (non-GAAP) (a) |
174.8 |
169.5 |
5.3 |
||||||
|
Operations and maintenance |
65.1 |
68.8 |
(3.7 |
) |
|||||
|
Depreciation and amortization |
40.6 |
37.1 |
3.5 |
||||||
|
Taxes other than income taxes |
9.2 |
9.3 |
(0.1 |
) |
|||||
|
Total operating expenses (excluding Fuel and purchased power) |
114.9 |
115.2 |
(0.3 |
) |
|||||
|
Operating income |
$ |
59.9 |
$ |
54.3 |
$ |
5.6 |
|||
(a)
See Non-GAAP Financial Measures section above for reconciliation to Gross margin, the most directly comparable GAAP measure.
Three Months Ended March 31, 2026, Compared to the Three Months Ended March 31, 2025:
•
Electric Utility margin increased as a result of the following:
|
(in millions) |
|||
|
New rates and rider recovery |
$ |
13.3 |
|
|
Residential and commercial customer usage |
(3.6 |
) |
|
|
Weather |
(3.2 |
) |
|
|
Other |
(1.2 |
) |
|
|
$ |
5.3 |
||
•
Operations and maintenance expense decreased primarily due to $2.4 million of lower outside services expenses.
•
Depreciation and amortization increased primarily due to higher asset base driven by capital expenditures.
•
Taxes other than income taxes was comparable to the same period in the prior year.
Operating Statistics
|
Revenue |
Quantities Sold |
|||||||||||
|
Three Months Ended March 31, |
Three Months Ended March 31, |
|||||||||||
|
By Customer Class |
2026 |
2025 |
2026 |
2025 |
||||||||
|
(in millions) |
(in GWh) |
|||||||||||
|
Retail Revenue - |
||||||||||||
|
Residential |
$ |
63.1 |
$ |
66.4 |
358.9 |
406.4 |
||||||
|
Commercial |
70.0 |
68.8 |
492.2 |
517.2 |
||||||||
|
Industrial (a) |
56.2 |
48.2 |
707.4 |
609.8 |
||||||||
|
Municipal |
4.3 |
4.5 |
31.1 |
34.6 |
||||||||
|
Other Retail |
3.4 |
3.4 |
- |
- |
||||||||
|
Subtotal Retail Revenue - Electric |
197.0 |
191.3 |
1,589.6 |
1,568.0 |
||||||||
|
Wholesale |
6.0 |
7.1 |
140.1 |
147.8 |
||||||||
|
Market - off-system sales |
10.9 |
11.3 |
198.3 |
173.6 |
||||||||
|
Transmission |
12.0 |
12.1 |
- |
- |
||||||||
|
Other (b) |
15.7 |
14.9 |
- |
- |
||||||||
|
Total Revenue and Quantities Sold |
$ |
241.6 |
$ |
236.7 |
1,928.0 |
1,889.4 |
||||||
|
Other Uses, Losses, or Generation, net (c) |
103.2 |
94.1 |
||||||||||
|
Total Energy |
2,031.2 |
1,983.5 |
||||||||||
(a)
The increase in industrial quantities sold for the three months ended March 31, 2026, compared to the same period in 2025, was primarily driven by Wyoming Electric's BCIS Tariff customers.
(b)
Includes Integrated Generation, inter-segment rent, and non-regulated services to our retail customers under the Service Guard Comfort Plan and Tech Services.
(c)
Includes company uses and line losses.
|
Revenue |
Quantities Sold |
|||||||||||
|
Three Months Ended March 31, |
Three Months Ended March 31, |
|||||||||||
|
By Business Unit |
2026 |
2025 |
2026 |
2025 |
||||||||
|
(in millions) |
(in GWh) |
|||||||||||
|
Colorado Electric |
$ |
69.2 |
$ |
72.4 |
495.9 |
532.3 |
||||||
|
South Dakota Electric |
86.7 |
86.9 |
679.7 |
682.0 |
||||||||
|
Wyoming Electric |
74.8 |
66.6 |
726.6 |
645.8 |
||||||||
|
Integrated Generation |
10.9 |
10.8 |
25.8 |
29.3 |
||||||||
|
Total Revenue and Quantities Sold |
$ |
241.6 |
$ |
236.7 |
1,928.0 |
1,889.4 |
||||||
|
Three Months Ended March 31, |
||||||
|
Quantities Generated and Purchased by Fuel Type |
2026 |
2025 |
||||
|
(in GWh) |
||||||
|
Generated: |
||||||
|
Coal (a) |
490.2 |
599.9 |
||||
|
Natural Gas and Oil |
441.7 |
512.1 |
||||
|
Wind |
186.8 |
175.4 |
||||
|
Total Generated |
1,118.7 |
1,287.4 |
||||
|
Purchased: |
||||||
|
Coal, Natural Gas, Oil, and Other Market Purchases |
562.4 |
375.7 |
||||
|
Wind and Solar |
350.1 |
320.4 |
||||
|
Total Purchased (b) |
912.5 |
696.1 |
||||
|
Total Generated and Purchased |
2,031.2 |
1,983.5 |
||||
(a)
The decrease in coal generation for the three months ended March 31, 2026, compared to the same period in 2025, is primarily due to generation outages at Wygen III (returned to service in mid-March 2026).
(b)
The increase in total purchases for the three months ended March 31, 2026, compared to the same period in 2025, was primarily driven by increased demand from Wyoming Electric's BCIS Tariff customers and generation outages at Wygen III as discussed in (a) above.
|
Three Months Ended March 31, |
||||||
|
Quantities Generated and Purchased by Business Unit |
2026 |
2025 |
||||
|
(in GWh) |
||||||
|
Generated: |
||||||
|
Colorado Electric |
143.8 |
184.3 |
||||
|
South Dakota Electric (a) |
400.6 |
478.9 |
||||
|
Wyoming Electric |
180.5 |
219.3 |
||||
|
Integrated Generation |
393.8 |
404.9 |
||||
|
Total Generated |
1,118.7 |
1,287.4 |
||||
|
Purchased: |
||||||
|
Colorado Electric |
104.5 |
90.2 |
||||
|
South Dakota Electric (a) |
300.3 |
211.3 |
||||
|
Wyoming Electric (b) |
491.2 |
376.1 |
||||
|
Integrated Generation |
16.5 |
18.5 |
||||
|
Total Purchased |
912.5 |
696.1 |
||||
|
Total Generated and Purchased |
2,031.2 |
1,983.5 |
||||
(a)
The shift in South Dakota Electric's generated and purchased GWh for the three months ended March 31, 2026, compared to the same period in 2025, is primarily driven by generation outages at Wygen III (returned to service in mid-March 2026).
(b)
As discussed in footnote (b) in the Quantities Generated and Purchased by Fuel Type table above, the increase in Wyoming Electric's purchases is primarily driven by increased demand from BCIS Tariff customers.
|
Three Months Ended March 31, |
||||
|
2026 |
2025 |
|||
|
Degree Days |
Actual |
Variance from Normal |
Actual |
Variance from Normal |
|
Heating Degree Days: |
||||
|
Colorado Electric |
2,001 |
(21)% |
2,733 |
9% |
|
South Dakota Electric |
2,567 |
(22)% |
3,438 |
5% |
|
Wyoming Electric |
2,325 |
(23)% |
3,140 |
5% |
|
Combined (a) |
2.263 |
(22)% |
3,060 |
7% |
|
Cooling Degree Days: |
||||
|
Colorado Electric |
N/M |
--- |
--- |
|
|
South Dakota Electric |
--- |
--- |
--- |
--- |
|
Wyoming Electric |
--- |
--- |
--- |
--- |
|
Combined (a) |
N/M |
--- |
--- |
|
(a)
Degree days are calculated based on a weighted average of total customers by state.
Gas Utilities
Operating results for the Gas Utilities were as follows:
|
Three Months Ended March 31, |
|||||||||
|
2026 |
2025 |
2026 vs 2025 Variance |
|||||||
|
(in millions) |
|||||||||
|
Revenue |
$ |
543.1 |
$ |
572.4 |
$ |
(29.3 |
) |
||
|
Cost of natural gas sold |
271.2 |
292.6 |
(21.4 |
) |
|||||
|
Gas Utility margin (non-GAAP) (a) |
271.9 |
279.8 |
(7.9 |
) |
|||||
|
Operations and maintenance |
82.3 |
87.9 |
(5.6 |
) |
|||||
|
Depreciation and amortization |
34.2 |
32.1 |
2.1 |
||||||
|
Taxes other than income taxes |
8.9 |
8.3 |
0.6 |
||||||
|
Total operating expenses (excluding Cost of natural gas sold) |
125.4 |
128.3 |
(2.9 |
) |
|||||
|
Operating income |
$ |
146.5 |
$ |
151.5 |
$ |
(5.0 |
) |
||
(a)
See Non-GAAP Financial Measures section above for reconciliation to Gross margin, the most directly comparable GAAP measure.
Three Months Ended March 31, 2026, Compared to the Three Months Ended March 31, 2025:
•
Gas Utility margin decreased as a result of the following:
|
(in millions) |
|||
|
Weather |
$ |
(13.2 |
) |
|
Retail customer usage |
(2.1 |
) |
|
|
Mark-to-market on non-utility natural gas commodity contracts |
(0.7 |
) |
|
|
New rates and rider recovery |
8.8 |
||
|
Other |
(0.7 |
) |
|
|
$ |
(7.9 |
) |
|
•
Operations and maintenance expense decreased primarily due to $4.4 million of lower employee costs.
•
Depreciation and amortization increased primarily due to higher asset base driven by capital expenditures.
•
Taxes other than income taxes was comparable to the same period in the prior year.
Operating Statistics
|
Revenue |
Quantities Sold and Transported |
|||||||||||
|
Three Months Ended March 31, |
Three Months Ended March 31, |
|||||||||||
|
By Customer Class |
2026 |
2025 |
2026 |
2025 |
||||||||
|
(in millions) |
(Dth in millions) |
|||||||||||
|
Retail Revenue - |
||||||||||||
|
Residential |
$ |
311.7 |
$ |
344.1 |
25.2 |
30.7 |
||||||
|
Commercial |
125.5 |
134.3 |
12.2 |
14.0 |
||||||||
|
Industrial |
6.9 |
6.6 |
0.9 |
1.0 |
||||||||
|
Other Retail (a) |
14.6 |
14.7 |
- |
- |
||||||||
|
Subtotal Retail Revenue - Gas |
458.7 |
499.7 |
38.3 |
45.7 |
||||||||
|
Transportation |
54.5 |
57.7 |
46.2 |
50.4 |
||||||||
|
Other (b) |
29.9 |
15.0 |
- |
- |
||||||||
|
Total Revenue and Quantities Sold |
$ |
543.1 |
$ |
572.4 |
84.5 |
96.1 |
||||||
(a)
Includes Black Hills Energy Services revenue under the Choice Gas Program.
(b)
Includes inter-segment rent and non-regulated services under the Service Guard Comfort Plan, Tech Services, and HomeServe.
|
Revenue |
Quantities Sold and Transported |
|||||||||||
|
Three Months Ended March 31, |
Three Months Ended March 31, |
|||||||||||
|
By Business Unit |
2026 |
2025 |
2026 |
2025 |
||||||||
|
(in millions) |
(Dth in millions) |
|||||||||||
|
Arkansas Gas |
$ |
122.1 |
$ |
124.8 |
11.5 |
13.2 |
||||||
|
Colorado Gas |
90.2 |
115.8 |
10.8 |
13.2 |
||||||||
|
Iowa Gas |
93.8 |
86.8 |
14.1 |
15.2 |
||||||||
|
Kansas Gas |
60.6 |
66.1 |
10.2 |
11.7 |
||||||||
|
Nebraska Gas |
130.9 |
130.2 |
26.2 |
29.6 |
||||||||
|
Wyoming Gas |
45.5 |
48.7 |
11.7 |
13.2 |
||||||||
|
Total Revenue and Quantities Sold |
$ |
543.1 |
$ |
572.4 |
84.5 |
96.1 |
||||||
|
Three Months Ended March 31, |
||||
|
2026 |
2025 |
|||
|
Heating Degree Days |
Actual |
Variance from Normal |
Actual |
Variance from Normal |
|
Arkansas Gas (a) |
1,572 |
(16)% |
1,957 |
2% |
|
Colorado Gas |
2,059 |
(27)% |
2,837 |
2% |
|
Iowa Gas |
2,994 |
(9)% |
3,288 |
(1)% |
|
Kansas Gas (a) |
2,034 |
(15)% |
2,616 |
10% |
|
Nebraska Gas (a) |
2,545 |
(15)% |
3,039 |
2% |
|
Wyoming Gas |
2,464 |
(24)% |
3,323 |
3% |
|
Combined (b) |
2,513 |
(18)% |
3,082 |
1% |
(a)
Arkansas Gas and Kansas Gas have weather normalization mechanisms that mitigate the weather impact on Gas Utility margins. Nebraska Gas received NPSC approval to implement a two-year pilot program for a weather normalization mechanism which was effective August 1, 2025.
(b)
The combined heating degree days are calculated based on a weighted average of total customers by state excluding Kansas Gas and Nebraska Gas (effective in August 2025) due to its weather normalization mechanism. Arkansas Gas is partially excluded based on the weather normalization mechanism in effect from November through April.
Corporate and Other
Corporate and Other operating results, including inter-segment eliminations, were as follows:
|
Three Months Ended March 31, |
|||||||||
|
2026 |
2025 |
2026 vs 2025 Variance |
|||||||
|
(in millions) |
|||||||||
|
Operating income (loss) |
$ |
(4.5 |
) |
$ |
(0.8 |
) |
$ |
(3.7 |
) |
Three Months Ended March 31, 2026, Compared to the Three Months Ended March 31, 2025:
•
Operating loss increased primarily due to $4.6 million of costs related to the pending merger with NorthWestern.
Consolidated Interest Expense, Other Income and Income Tax Expense
|
Three Months Ended March 31, |
|||||||||
|
2026 |
2025 |
2026 vs 2025 Variance |
|||||||
|
(in millions) |
|||||||||
|
Interest expense, net |
$ |
(51.9 |
) |
$ |
(51.3 |
) |
$ |
(0.6 |
) |
|
Other income, net |
0.7 |
0.8 |
(0.1 |
) |
|||||
|
Income tax (expense) |
(17.6 |
) |
(18.1 |
) |
0.5 |
||||
Three Months Ended March 31, 2026, Compared to the Three Months Ended March 31, 2025:
•
Interest expense, net, was comparable to the same period in the prior year as higher interest expense primarily driven by higher debt balances was mostly offset by higher interest income driven by higher cash and cash equivalents balances.
•
Other income, net, was comparable to the same period in the prior year.
•
Income tax (expense) was comparable to the same period in the prior year. For the three months ended March 31, 2026, the effective tax rate was 11.7%, which was comparable to 11.7% for the same period in 2025.
Liquidity and Capital Resources
The following table provides an informational summary of our liquidity and capital structure as of:
|
March 31, 2026 |
December 31, 2025 |
|||||
|
(dollars in millions) |
||||||
|
Cash and cash equivalents |
$ |
23.6 |
$ |
182.8 |
||
|
Available capacity under Revolving Credit Facility and CP Program (a) |
494.6 |
746.8 |
||||
|
Available liquidity |
$ |
518.2 |
$ |
929.6 |
||
|
Capital structure |
||||||
|
Short-term debt |
$ |
662.2 |
$ |
- |
||
|
Long-term debt |
3,992.5 |
4,701.1 |
||||
|
Total debt |
4,654.7 |
4,701.1 |
||||
|
Total stockholders' equity (excludes non-controlling interest) |
3,945.2 |
3,823.6 |
||||
|
Total capitalization |
$ |
8,599.9 |
$ |
8,524.7 |
||
|
Debt to capitalization |
54.1 |
% |
55.1 |
% |
||
|
Long-term debt to total debt |
85.8 |
% |
100.0 |
% |
||
(a)
Available capacity under Revolving Credit Facility and CP Program represents $750 million of total borrowing capacity less outstanding borrowings and letters of credit. See Note 5 of the Notes to Consolidated Financial Statements for more information.
Future Financing Plans
We plan to fund our capital plan and strategic objectives by using cash generated from operating activities and various financing alternatives, which could include our Revolving Credit Facility, our CP Program, and the issuance of common stock under our ATM or in a secondary offering. Our current shelf registration statement expires in the second quarter of 2026 and we expect to file a new shelf registration statement to replace it. Additionally, we plan to re-finance our $400 million, 3.15%, senior unsecured notes due January 2027, at or before the maturity date.
CASH FLOW ACTIVITIES
The following tables summarize our cash flows for the three months ended March 31, 2026:
Operating Activities:
|
Three Months Ended March 31, |
|||||||||
|
2026 |
2025 |
2026 vs 2025 Variance |
|||||||
|
(in millions) |
|||||||||
|
Net income |
$ |
133.1 |
$ |
136.4 |
$ |
(3.3 |
) |
||
|
Non-cash adjustments to Net income |
115.3 |
112.9 |
2.4 |
||||||
|
Total earnings |
$ |
248.4 |
$ |
249.3 |
$ |
(0.9 |
) |
||
|
Changes in certain operating assets and liabilities: |
|||||||||
|
Materials, supplies and fuel, Accounts receivable and other current assets |
45.0 |
(17.3 |
) |
62.3 |
|||||
|
Accounts payable and other current liabilities |
(119.3 |
) |
(56.0 |
) |
(63.3 |
) |
|||
|
Regulatory assets |
5.4 |
52.6 |
(47.2 |
) |
|||||
|
Net inflow (outflow) from changes in certain operating assets and liabilities |
$ |
(68.9 |
) |
$ |
(20.7 |
) |
$ |
(48.2 |
) |
|
Other operating activities |
(3.3 |
) |
(0.8 |
) |
(2.5 |
) |
|||
|
Net cash provided by operating activities |
$ |
176.2 |
$ |
227.8 |
$ |
(51.6 |
) |
||
Three Months Ended March 31, 2026, Compared to the Three Months Ended March 31, 2025
•
Total earnings (net income plus non-cash adjustments) were comparable to the same period in the prior year, as new rates and rider recovery were offset by unfavorable weather and lower retail customer usage.
•
Net outflows from changes in certain operating assets and liabilities were $48.2 million higher, primarily attributable to:
o
Cash inflows increased by $62.3 million as a result of changes in accounts receivable and other current assets primarily driven by fluctuations in commodity prices and weather, and receipt of an insurance loss recovery receivable related to a legal settlement in Colorado;
o
Cash outflows increased by $63.3 million as a result of changes in accounts payable and other current liabilities primarily driven by fluctuations in commodity prices, payment of a legal liability from settlement in Colorado and changes in other working capital requirements; and
o
Cash inflows decreased by $47.2 million as a result of changes in our regulatory assets and liabilities primarily due to lower recoveries of gas and fuel cost adjustments driven by fluctuations in commodity prices, and lower recoveries of our Winter Storm Uri regulatory asset as recovery is now complete in most of our jurisdictions.
•
Cash outflows from other operating activities increased by $2.5 million primarily driven by settlement of contractor retainage balances from Wyoming Electric's recently completed Ready Wyoming project and higher cloud computing licensing costs.
Investing Activities:
|
Three Months Ended March 31, |
|||||||||
|
2026 |
2025 |
2026 vs 2025 Variance |
|||||||
|
(in millions) |
|||||||||
|
Capital expenditures |
$ |
(267.4 |
) |
$ |
(152.9 |
) |
$ |
(114.5 |
) |
|
Other investing activities |
(2.6 |
) |
(2.3 |
) |
(0.3 |
) |
|||
|
Net cash (used in) investing activities |
$ |
(270.0 |
) |
$ |
(155.2 |
) |
$ |
(114.8 |
) |
Three Months Ended March 31, 2026, Compared to the Three Months Ended March 31, 2025
•
Cash outflows from capital expenditures (which are net of non-refundable CIACs) increased $114.5 million primarily driven by Wyoming Electric's milestone payments for long lead-time generation equipment. See Note 3 of the Condensed Notes to Consolidated Financial Statements for additional information.
•
Cash outflows from other investing activities were comparable to the same period in the prior year.
Financing Activities:
|
Three Months Ended March 31, |
|||||||||
|
2026 |
2025 |
2026 vs 2025 Variance |
|||||||
|
(in millions) |
|||||||||
|
Dividends paid on common stock |
$ |
(53.1 |
) |
$ |
(48.6 |
) |
$ |
(4.5 |
) |
|
Common stock issued |
40.7 |
45.6 |
(4.9 |
) |
|||||
|
Short-term and long-term debt borrowings (repayments), net |
(47.8 |
) |
(73.9 |
) |
26.1 |
||||
|
Distributions to non-controlling interests |
(2.5 |
) |
(3.8 |
) |
1.3 |
||||
|
Other financing activities |
(2.5 |
) |
(1.2 |
) |
(1.3 |
) |
|||
|
Net cash provided by (used in) financing activities |
$ |
(65.2 |
) |
$ |
(81.9 |
) |
$ |
16.7 |
|
Three Months Ended March 31, 2026, Compared to the Three Months Ended March 31, 2025
•
Dividends paid on common stock increased $4.5 million due to the increased dividend rate per share and increased number of common shares outstanding.
•
Cash inflows decreased $4.9 million due to decreased issuances of common stock under our ATM.
•
Net cash outflows decreased $26.1 million primarily as a result of net borrowing activity under our CP Program partially offset by the repayment of $300 million, 3.95% senior unsecured notes on their January 15, 2026 maturity date.
•
Distributions to non-controlling interests were comparable to the same period in the prior year.
•
Cash outflows from other financing activities were comparable to the same period in the prior year.
CAPITAL RESOURCES
See Note 5 of the Condensed Notes to Consolidated Financial Statements for recent financing updates and financial covenants information.
CREDIT RATINGS
The following table represents the credit ratings and outlook and risk profile of BHC as of the date of this report:
|
Rating Agency |
Senior Unsecured Rating |
Outlook |
|
S&P (a) |
BBB+ |
Stable |
|
Moody's (b) |
Baa2 |
Stable |
(a)
On August 19, 2025, S&P affirmed our BBB+ rating and maintained a Stable outlook.
(b)
On August 19, 2025, Moody's affirmed our Baa2 rating and maintained a Stable outlook.
The following table represents the credit rating of South Dakota Electric as of the date of this report:
|
Rating Agency |
Senior Secured Rating |
|
S&P |
A |
CAPITAL REQUIREMENTS
Capital Expenditures
|
Actual (a) |
Forecasted (b) |
||||||||||||||||
|
Capital Expenditures by Segment |
Three Months Ended |
2026 |
2027 |
2028 |
2029 |
2030 |
|||||||||||
|
(in millions) |
|||||||||||||||||
|
Electric Utilities |
$ |
$ |
471 |
$ |
367 |
$ |
455 |
$ |
356 |
$ |
391 |
||||||
|
Gas Utilities |
396 |
455 |
507 |
591 |
552 |
||||||||||||
|
Corporate and Other |
39 |
22 |
21 |
22 |
25 |
||||||||||||
|
$ |
$ |
906 |
$ |
844 |
$ |
983 |
$ |
969 |
$ |
968 |
|||||||
(a)
Includes accruals for property, plant and equipment as disclosed in supplemental cash flow information in the Consolidated Statements of Cash Flows in the Consolidated Financial Statements. Capital expenditures are presented net of CIACs in the Consolidated Statements of Cash Flows.
(b)
Projects are being evaluated by our segments for timing, cost, and other factors.
Common Stock Dividends
Dividends paid on our common stock totaled $53.1 million for the three months ended March 31, 2026, or $0.703 per share. On April 28, 2026, our board of directors declared a quarterly dividend of $0.703 per share payable June 1, 2026, equivalent to an annual dividend of $2.812 per share. The amount of any future cash dividends to be declared and paid, if any, will depend upon, among other things, our financial condition, funds from operations, the level of our capital expenditures, restrictions under our Revolving Credit Facility, and our future business prospects.
Critical Accounting Estimates
A summary of our critical accounting estimates is included in our 2025 Annual Report on Form 10-K. There were no material changes made as of March 31, 2026.
New Accounting Pronouncements
See Note 1 of the Condensed Notes to Consolidated Financial Statements for a description of recent accounting pronouncements, if any, and our expectation of their impact on our results of operations and financial condition.
Black Hills Corporation published this content on May 07, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on May 07, 2026 at 15:47 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]