Black Hills Surpasses EPS Targets, Eyes 600 Megawatts for 2030

Date of Call: Feb 5, 2026

Financials Results

• EPS: $3.98 per share (GAAP), $4.10 adjusted per share, up 5% compared to $3.91 per share in 2024 (adjusted EPS)

Guidance:

• Adjusted EPS guidance for 2026 of $4.25 to $4.45 per share, representing 6% growth at the midpoint over 2025.
• Expect equity need of $50 million to $70 million for 2026, down from $220 million in 2025.
• Plan to serve 600 megawatts of data center demand by 2030, contributing more than 10% to consolidated EPS from 2028 onward.

Business Commentary:

Financial Performance and Growth:

• Black Hills Corporation reported GAAP EPS of $3.98 for 2025, which included $0.12 of merger-related transaction costs. Adjusted EPS was $4.10, an increase of 5% compared to $3.91 per share in 2024.
• The company achieved this by fulfilling its financial commitments, executing its regulatory strategy, and overcoming higher operating expenses and depreciation.

Data Center Demand and Investment:

• The company's data center pipeline has grown to more than 3 gigawatts, with an expectation to serve 600 megawatts of demand by 2030.
• This growth is driven by strong demand from large load customers such as Meta and Microsoft, and the company is actively negotiating to serve this demand with minimal capital investment.

Transmission and Generation Projects:

• Black Hills completed the 260-mile Ready Wyoming transmission project, enhancing its interconnected transmission network, and is constructing the 99-megawatt Lange II generation project.
• These projects are part of the company's strategy to replace aging resources, enhance reliability, and support long-term growth.

Regulatory Progress and Rate Reviews:

• The company completed three rate reviews in 2025, resulting in over $52 million in new annual revenue.
• This progress is a result of the company's strategy to manage its diverse systems and deliver long-term value through regulatory approvals.

Dividend Growth and Financial Stability:

• Black Hills increased its dividend for the 56th consecutive year, maintaining a target payout ratio of 55% to 65%.
• The increase is supported by the company's strong financial position, with credit metrics within targets and significant liquidity.

Sentiment Analysis:

Overall Tone: Positive

• "We achieved the key commitments we made at the beginning of the year, setting the stage for ongoing success." "Our team did an exceptional job of delivering on our strategy and financial commitments for 2025." "We are very committed to the merger because combining these two companies makes great sense for our stakeholders." "I'm excited about all that we've accomplished as a Black Hills team over the past year."

Q&A:

• Question from Christopher Ellinghaus (Siebert Williams Shank): Linn, vis-a-vis the 3 gigawatt pipeline. Can you give us any sense of what proportion that might fall within your 5-year window? Or how much of it is beyond the 5-year plan? Can you give us any color on timings or even geography?
  Response: The 600 megawatts from existing customers (Microsoft, Meta) is targeted by 2030; additional pipeline projects beyond that are being negotiated for potential service around 2027, with ramp-up thereafter.

• Question from Christopher Ellinghaus (Siebert Williams Shank): Can you file CPCNs in advance of having exact specificity of what resources you might need to sort of get that ball rolling and maybe get some greater security for yourself in terms of trying to get in equipment queues and whatnot?
  Response: Filing CPCNs is possible with available details; the company is navigating the process to bring them as quickly as possible while working through the resource mix.

• Question from Christopher Ellinghaus (Siebert Williams Shank): And as far as the NorthWestern merger goes, you've made filings, but have you had any significant interface with the Montana Commission to sort of gauge what their attitude is at this point?
  Response: The process is in the discovery phase with Montana regulators, proceeding according to plan and expectations with standard questions being asked.

• Question from Christopher Ellinghaus (Siebert Williams Shank): Can you give us any sense of the scale or numbers of data centers in your pipeline? Or is there a bunch of data centers in your pipeline? Are they sort of moderate scale? Can you give us any sense of how many candidates there are in the queue?
  Response: The pipeline is led by Microsoft, Meta, and projects like Tallgrass and Crusoe; data centers are likely large hyperscale due to available, inexpensive land in the region.

• Question from Andrew Weisel (Scotiabank): Given this interconnection, do you see -- do these assets essentially ensure that the entire data center project will be grid connected? And therefore, would all related spending qualify for the LPCS tariff, is that your expectation?
  Response: Microgrid management fees are applied to peak demand based on the resource type used (market, contracted, or utility-owned), and negotiations are ongoing for the specific mix.

• Question from Andrew Weisel (Scotiabank): Could you just elaborate? Is there anything about fuel cells or anything else? How should we think about all those billions of dollars and whether or not that would apply to your fee structure?
  Response: The resource mix for serving load is still being evaluated; pricing is based on the type of resource and is applied to peak demand, with the possibility of utility returns on investments.

• Question from Andrew Weisel (Scotiabank): Are there other assets that you're looking to fast track to accommodate this or other big data center customers? Should we expect more filings like that Robinson substation filing?
  Response: Additional investment beyond the current plan is anticipated to accommodate the pipeline, depending on resource mix and timing.

• Question from Andrew Weisel (Scotiabank): By when would you need to sign and announce something to keep everything on track? Is there some kind of time frame we should be watching for on the calendar?
  Response: The customer intends to begin taking service in Q1 2027; the company is working in alignment with them to meet that goal.

• Question from Ross Fowler (BofA Securities): We have 600 megawatts currently in the plan. And we know that, that is 200 megawatts from Microsoft. Is the other 400 megawatts of that, the meta site or is there something else in that gap?
  Response: The company does not disclose specific megawatts from Microsoft or Meta; combined, they anticipate 600 megawatts by 2030.

• Question from Ross Fowler (BofA Securities): And then we know that Meta's data center is in Wyoming County. And there's about 1,150 megawatts of generation in the interconnection queue filings in Wyoming County. So the rest of that beyond whatever I estimate Meta might be of the 600, where is that coming from?
  Response: Negotiations are ongoing to determine the resource mix; not all interconnection queue projects are additive as some customers take market energy.

• Question from Ross Fowler (BofA Securities): And then the 4% to 6% EPS CAGR, right, through '28, that is inside or I should say, the 4% to 6% EPS CAGR includes that 10% EPS contribution. It's not on top of the 4% to 6%, right? It's within the 4% to 6%.
  Response: Yes, the 10% EPS contribution from data centers is within the 4% to 6% long-term growth target.

Contradiction Point 1

Long-term EPS Growth Target Composition

Contradiction on whether the 10% EPS contribution from data centers is additive or inclusive within the 4-6% CAGR target.

Is the 10% EPS contribution included in the 4% to 6% EPS CAGR through 2028 or is it an additional factor? - Ross Fowler (BofA Securities)

2025Q4: Confirmed that the 10% EPS contribution from data centers is within the overall 4% to 6% long-term EPS growth target, not additive to it. - [Marne Jones](CFO)

What gives you confidence in the 4-6% long-term growth target through 2024 despite interest expense and one-time item headwinds? - Julien Dumoulin-Smith (Bank of America)

2023Q3: The growth target is based on the 2023 midpoint and considers macroeconomic challenges like higher interest costs and inflation. The company has already replaced its 2023 debt and issued equity, factoring these into the model. They are confident in controlling costs and taking momentum from 2023 into 2024, supported by continued customer load growth. - [Linden Evans](CEO) and [Kimberly Nooney](CFO)

Contradiction Point 2

Strategy and Flexibility on Utility-Owned Investment

Contradiction on the company's preference and approach regarding utility-owned versus other generation models for data center projects.

Linn, regarding the 3 gigawatt pipeline, what proportion is within the 5-year window versus beyond it, and can you provide details on timing and geography? - Christopher Ellinghaus (Siebert Williams Shank & Co., L.L.C.)

2025Q4: The pipeline includes major customers like Meta and Microsoft, with active negotiations for service agreements. The company is navigating the Complex and multi-party nature of projects and will provide details upon signing binding agreements. - [Marne Jones](SVP & Chief Utility Officer)

Do you have any considerations or thoughts on nonregulated generation transmission? - Christopher Ellinghaus (Siebert Williams Shank)

2025Q3: The company is not rigid on the ownership structure; the flexibility of the LPCS tariff is key. It allows earning a utility-like return without requiring rate base investment. - [Marne Jones](SVP & Chief Utility Officer)

Contradiction Point 3

Scale and Status of the Data Center Pipeline

Contradiction on whether new pipeline projects are incremental or part of the formal forecast.

What is the scale or number of data centers in your pipeline? - Christopher Ellinghaus (Siebert Williams Shank & Co., L.L.C.)

2025Q4: The pipeline includes major customers like Meta and Microsoft, with active negotiations for service agreements... The company is navigating the Complex and multi-party nature of projects and will provide details upon signing binding agreements. - [Marne Jones](Chief Utility Officer) and [Linden Evans](CEO)

Are the new Wyoming announcements part of the incremental 500 megawatt pipeline? - Christopher Ronald Ellinghaus (Siebert Williams Shank & Co., L.L.C.)

2025Q2: The new potential data center customer (Crusoe and Tallgrass) is incremental to the existing pipeline and not yet included in the formal load or financial forecast. The company will update its forecast only after contracts are executed. - [Linden Evans](CEO)

Contradiction Point 4

Timeline for Regulatory Filings and Project Execution

Contradiction on the expected timing for customer service in relation to regulatory processes.

Given the CPCN filing's in-service target of March next year, by when must you sign and announce to stay on track? - Andrew Weisel (Scotiabank Global Banking and Markets)

2025Q4: The customer intends to begin taking service in Q1 2027, and the company is working in alignment with all parties to meet that goal, ensuring all processes (including CPCN and service agreements) are synchronized. - [Marne Jones](Chief Utility Officer)

Will your 1,000 MW 10-year outlook be updated as MOUs or contracts approach? - Christopher Ronald Ellinghaus (Siebert Williams Shank & Co., L.L.C.)

2025Q2: Meta's load is expected to come online in 2026. - [Linden Evans](CEO)

Contradiction Point 5

Status of the Long-Term EPS Growth Guidance

Contradiction on when the company intends to update its long-term EPS growth guidance regarding data center contributions.

Is the 10% EPS contribution included in the 4% to 6% EPS CAGR through 2028, or is it in addition to it? - Ross Fowler (BofA Securities)

2025Q4: Confirmed that the 10% EPS contribution from data centers is within the overall 4% to 6% long-term EPS growth target, not additive to it. - [Marne Jones](SVP & Chief Utility Officer)

If data center growth is incorporated before the merger closes, will the growth outlook be updated, or is the 4-6% range fixed until the deal closes? - Andrew Weisel (Scotiabank Global Banking and Markets)

2025Q3: An update to the long-term earnings guidance (4%-6% range) will be considered and provided when contracts are signed and it is appropriate to change guidance. - [Kimberly Nooney](Senior VP & CFO)