Black Hills Q2 2026 Earnings: Rate Recovery Lifts Adjusted EPS

Black Hills Corp. (NYSE: BKH) reported Q2 2026 revenue of $452.8 million, up 3.1% from $439.0 million a year earlier, while diluted GAAP EPS rose to $0.50 from $0.38. Adjusted EPS reached $0.54 after excluding $0.04 per share of after-tax costs related to the pending NorthWestern Energy merger. New rates and rider recovery lifted operating results enough to offset higher depreciation and financing costs.

Core Earnings Data

Revenue grew modestly, but operating profit increased at a faster pace. Total operating expenses were nearly unchanged at $355.8 million because lower fuel, purchased power and natural gas costs offset increases in operations and maintenance, depreciation and other taxes.

Net income available to common shareholders increased by approximately 39%. EPS grew more slowly than net income because diluted weighted-average shares rose to 76.1 million from 72.4 million.

Adjusted results exclude $3.3 million, or $0.04 per share, of after-tax merger-related costs in Q2 2026.

Business and Segment Performance

Both utility segments contributed to the increase in operating income. Electric Utilities benefited primarily from new rates and rider recovery associated with Wyoming Electric’s completed Ready Wyoming project, while Gas Utilities benefited from rate reviews at Nebraska Gas and Kansas Gas, partially offset by higher operating expenses.

Corporate and Other recorded a wider operating loss because of costs associated with the proposed NorthWestern Energy merger.

Wyoming Data-Center Demand Is Raising Both Load and Capital Requirements

Large-load demand was visible in the quarterly operating statistics. Electric industrial volumes increased approximately 18.1% to 784.0 GWh, primarily because of large-load customers served by Wyoming Electric. Wyoming Electric’s total volumes rose approximately 16.8% to 777.1 GWh, while its revenue increased approximately 16.5% to $75.5 million.

After the quarter ended, Wyoming Electric recorded a customer load peak of 439 MW on July 20, 2026, 16% above the 379 MW peak recorded on June 20, 2025. The company’s current financial plan includes 600 MW of large-load demand by 2030, driven by Microsoft’s expansion and Meta’s new AI data center.

A separate prospective 1.8 GW data-center project is not yet covered by definitive agreements. The customer had provided $285 million of refundable advances through June 30 to support generation-equipment milestone payments. In July, the agreement was amended to increase total refundable advances to $377 million, with an August 31, 2026 maturity date.

Black Hills has also proposed a tariff mechanism intended to recover transmission investment costs directly from the large-load customers using those facilities. Regulatory approval remains pending, making contract completion and cost recovery important to the economics of this demand pipeline.

Profitability and Financing Costs

Depreciation and amortization increased 7.9% to $75.3 million as capital investments entered service, while net interest expense rose 5.5% to $51.6 million because of higher rates on increased debt. Rate recovery more than offset these pressures during Q2, but both expenses remain important as Black Hills executes its capital plan.

Dilution also affected per-share growth. The company issued 0.1 million common shares for $9 million of net proceeds during the quarter and 0.7 million shares for $50 million year to date under its at-the-market program. The year-to-date issuance has reached the lower end of the company’s full-year equity issuance assumption.

2026 Guidance

Black Hills reaffirmed its 2026 adjusted EPS range of $4.25 to $4.45. The outlook excludes merger-related costs, mark-to-market adjustments and the effects of the proposed NorthWestern Energy transaction, which is expected to close by year-end 2026 subject to the remaining Montana regulatory approval and other closing conditions.

The guidance also assumes constructive and timely outcomes for utility regulatory proceedings. Management said the core business and large-load opportunities support confidence in reaching the upper half of its 4% to 6% long-term EPS growth target, although the prospective 1.8 GW project is additive to the current financial plan and remains under negotiation.

Recent Insider Transactions

Available insider data shows 68,873 shares purchased across 19 transactions and 4,109 shares sold in one transaction during the past six months, resulting in net purchases of 64,764 shares. The latest 10 reported records consisted of one sale and nine stock-award grants; share quantities were not supplied for the grants.

The transaction data alone does not establish insiders’ views about the company’s outlook.

Risks Investors Should Watch

• Regulatory timing and cost recovery: The earnings outlook assumes constructive and timely outcomes. Delays or less favorable decisions could affect revenue recovery and returns on completed investments.
• Large-load project execution: The prospective 1.8 GW data-center project remains subject to definitive agreements, and the related customer advances are refundable. Black Hills must also secure appropriate generation and transmission arrangements.
• Financing and depreciation pressure: Continued capital investment is increasing depreciation and interest expense, which could offset part of the benefit from new rates.
• Weather variability: Mild weather reduced year-to-date EPS by $0.18 per share, while the full-year outlook assumes normal weather conditions.
• Merger completion and costs: The NorthWestern Energy merger still requires Montana regulatory approval. Merger-related costs are excluded from adjusted guidance, and closing remains subject to outstanding conditions.

Conclusion

Black Hills’ Q2 2026 improvement was driven by rate recovery across both utility segments, producing operating-margin and EPS growth despite higher depreciation, interest expense and merger costs. The central issues ahead are whether regulatory recovery keeps pace with capital spending, whether Wyoming’s large-load pipeline converts into definitive agreements, and whether the NorthWestern Energy merger clears its final approval condition.