PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BLACK HILLS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
|
|
|
|
|
|
|
(unaudited) |
Three Months Ended
March 31, |
|
|
2026 |
|
2025 |
|
|
(in millions, except per share amounts) |
|
Revenue |
$ |
780.7 |
|
$ |
805.2 |
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
Fuel, purchased power and cost of natural gas sold |
|
337.9 |
|
|
359.7 |
|
Operations and maintenance |
|
148.0 |
|
|
153.7 |
|
Depreciation and amortization |
|
74.8 |
|
|
69.2 |
|
Taxes other than income taxes |
|
18.1 |
|
|
17.6 |
|
Total operating expenses |
|
578.8 |
|
|
600.2 |
|
|
|
|
|
|
Operating income |
|
201.9 |
|
|
205.0 |
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
Interest expense incurred net of amounts capitalized |
|
(53.1 |
) |
|
(51.7 |
) |
Interest income |
|
1.2 |
|
|
0.4 |
|
Other income, net |
|
0.7 |
|
|
0.8 |
|
Total other (expense) |
|
(51.2 |
) |
|
(50.5 |
) |
|
|
|
|
|
Income before income taxes |
|
150.7 |
|
|
154.5 |
|
Income tax (expense) |
|
(17.6 |
) |
|
(18.1 |
) |
Net income |
|
133.1 |
|
|
136.4 |
|
Net income attributable to non-controlling interest |
|
(2.1 |
) |
|
(2.1 |
) |
Net income available for common stock |
$ |
131.0 |
|
$ |
134.3 |
|
|
|
|
|
|
Earnings per share of common stock: |
|
|
|
|
Earnings per share, Basic |
$ |
1.74 |
|
$ |
1.87 |
|
Earnings per share, Diluted |
$ |
1.73 |
|
$ |
1.87 |
|
|
|
|
|
|
Weighted average common shares outstanding: |
|
|
|
|
Basic |
|
75.4 |
|
|
71.6 |
|
Diluted |
|
75.6 |
|
|
71.8 |
|
The accompanying Condensed Notes to Consolidated Financial Statements are an integral part of these Consolidated Financial Statements.
BLACK HILLS CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
|
|
|
|
|
|
(unaudited) |
Three Months Ended
March 31, |
|
|
2026 |
|
2025 |
|
|
(in millions) |
|
Net income |
$ |
133.1 |
|
$ |
136.4 |
|
|
|
|
|
|
Other comprehensive income (loss), net of tax; |
|
|
|
|
Reclassification of benefit plan liability |
|
0.1 |
|
|
- |
|
Derivative instruments designated as cash flow hedges: |
|
|
|
|
Reclassification of settled/amortized interest rate swaps |
|
0.6 |
|
|
0.6 |
|
Unrealized gain on commodity derivatives |
|
0.2 |
|
|
0.1 |
|
Reclassification of settled commodity derivatives |
|
1.3 |
|
|
0.3 |
|
Other comprehensive income (loss), net of tax |
|
2.2 |
|
|
1.0 |
|
|
|
|
|
|
Comprehensive income |
|
135.3 |
|
|
137.4 |
|
Less: comprehensive income attributable to non-controlling interest |
|
(2.1 |
) |
|
(2.1 |
) |
Comprehensive income available for common stock |
$ |
133.2 |
|
$ |
135.3 |
|
See Note 9 for additional disclosures.
The accompanying Condensed Notes to Consolidated Financial Statements are an integral part of these Consolidated Financial Statements.
BLACK HILLS CORPORATION
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
(unaudited) |
As of |
|
|
March 31, 2026 |
|
December 31, 2025 |
|
|
(in millions) |
|
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
$ |
23.6 |
|
$ |
182.8 |
|
Restricted cash and equivalents |
|
7.8 |
|
|
7.6 |
|
Accounts receivable, net |
|
383.4 |
|
|
389.0 |
|
Materials, supplies and fuel |
|
146.8 |
|
|
172.4 |
|
Income tax receivable, net |
|
22.6 |
|
|
23.3 |
|
Regulatory assets, current |
|
122.6 |
|
|
139.7 |
|
Other current assets |
|
81.4 |
|
|
81.1 |
|
Total current assets |
|
788.2 |
|
|
995.9 |
|
|
|
|
|
|
Property, plant and equipment |
|
10,556.4 |
|
|
10,344.9 |
|
Less: accumulated depreciation |
|
(2,162.6 |
) |
|
(2,110.7 |
) |
Total property, plant and equipment, net |
|
8,393.8 |
|
|
8,234.2 |
|
|
|
|
|
|
Other assets: |
|
|
|
|
Goodwill |
|
1,299.5 |
|
|
1,299.5 |
|
Intangible assets, net |
|
5.8 |
|
|
6.4 |
|
Regulatory assets, non-current |
|
251.7 |
|
|
255.0 |
|
Other assets, non-current |
|
81.0 |
|
|
78.8 |
|
Total other assets, non-current |
|
1,638.0 |
|
|
1,639.7 |
|
|
|
|
|
|
TOTAL ASSETS |
$ |
10,820.0 |
|
$ |
10,869.8 |
|
The accompanying Condensed Notes to Consolidated Financial Statements are an integral part of these Consolidated Financial Statements.
BLACK HILLS CORPORATION
CONSOLIDATED BALANCE SHEETS
(Continued)
|
|
|
|
|
|
|
(unaudited) |
As of |
|
|
March 31, 2026 |
|
December 31, 2025 |
|
|
(in millions) |
|
LIABILITIES AND EQUITY |
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable |
$ |
210.8 |
|
$ |
311.7 |
|
Accrued liabilities |
|
260.2 |
|
|
322.6 |
|
Derivative liabilities, current |
|
1.8 |
|
|
5.8 |
|
Regulatory liabilities, current |
|
85.9 |
|
|
99.9 |
|
Notes payable |
|
252.2 |
|
|
— |
|
Current maturities of long-term debt |
|
410.0 |
|
|
— |
|
Total current liabilities |
|
1,220.9 |
|
|
740.0 |
|
|
|
|
|
|
Long-term debt, net of current maturities |
|
3,992.5 |
|
|
4,701.1 |
|
|
|
|
|
|
Deferred credits and other liabilities: |
|
|
|
|
Deferred income tax liabilities, net |
|
736.6 |
|
|
697.9 |
|
Regulatory liabilities, non-current |
|
490.2 |
|
|
488.3 |
|
Benefit plan liabilities |
|
121.2 |
|
|
123.4 |
|
Other deferred credits and other liabilities |
|
231.7 |
|
|
213.4 |
|
Total deferred credits and other liabilities |
|
1,579.7 |
|
|
1,523.0 |
|
|
|
|
|
|
Commitments, contingencies and guarantees (Note 3) |
|
|
|
|
|
|
|
|
|
Equity: |
|
|
|
|
Stockholder's equity - |
|
|
|
|
Common stock $1 par value; 100,000,000 shares authorized; issued 76,174,264 and 75,520,234 shares, respectively |
|
76.2 |
|
|
75.5 |
|
Additional paid-in capital |
|
2,459.4 |
|
|
2,417.5 |
|
Retained earnings |
|
1,420.8 |
|
|
1,342.9 |
|
Treasury stock, at cost - 57,505 and 43,167 shares, respectively |
|
(3.7 |
) |
|
(2.6 |
) |
Accumulated other comprehensive (loss) |
|
(7.5 |
) |
|
(9.7 |
) |
Total stockholders' equity |
|
3,945.2 |
|
|
3,823.6 |
|
Non-controlling interest |
|
81.7 |
|
|
82.1 |
|
Total equity |
|
4,026.9 |
|
|
3,905.7 |
|
|
|
|
|
|
TOTAL LIABILITIES AND TOTAL EQUITY |
$ |
10,820.0 |
|
$ |
10,869.8 |
|
The accompanying Condensed Notes to Consolidated Financial Statements are an integral part of these Consolidated Financial Statements.
BLACK HILLS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
(unaudited) |
Three Months Ended March 31, |
|
|
2026 |
|
2025 |
|
Operating activities: |
(in millions) |
|
Net income |
$ |
133.1 |
|
$ |
136.4 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
Depreciation and amortization |
|
74.8 |
|
|
69.2 |
|
Deferred financing cost amortization |
|
2.5 |
|
|
2.4 |
|
Stock compensation |
|
3.2 |
|
|
2.6 |
|
Deferred income taxes |
|
31.8 |
|
|
33.2 |
|
Employee benefit plans |
|
1.6 |
|
|
2.2 |
|
Other adjustments |
|
1.4 |
|
|
3.3 |
|
Changes in certain operating assets and liabilities: |
|
|
|
|
Materials, supplies and fuel |
|
24.5 |
|
|
25.3 |
|
Accounts receivable and other current assets |
|
20.5 |
|
|
(42.6 |
) |
Accounts payable and other current liabilities |
|
(119.3 |
) |
|
(56.0 |
) |
Regulatory assets |
|
5.4 |
|
|
52.6 |
|
Other operating activities, net |
|
(3.3 |
) |
|
(0.8 |
) |
Net cash provided by operating activities |
|
176.2 |
|
|
227.8 |
|
|
|
|
|
|
Investing activities: |
|
|
|
|
Property, plant and equipment additions |
|
(267.4 |
) |
|
(152.9 |
) |
Other investing activities |
|
(2.6 |
) |
|
(2.3 |
) |
Net cash (used in) investing activities |
|
(270.0 |
) |
|
(155.2 |
) |
|
|
|
|
|
Financing activities: |
|
|
|
|
Dividends paid on common stock |
|
(53.1 |
) |
|
(48.6 |
) |
Common stock issued |
|
40.7 |
|
|
45.6 |
|
Net borrowings (payments) of Revolving Credit Facility and CP Program |
|
252.2 |
|
|
(73.9 |
) |
Long-term debt - repayments |
|
(300.0 |
) |
|
— |
|
Distributions to non-controlling interests |
|
(2.5 |
) |
|
(3.8 |
) |
Other financing activities |
|
(2.5 |
) |
|
(1.2 |
) |
Net cash (used in) financing activities |
|
(65.2 |
) |
|
(81.9 |
) |
|
|
|
|
|
Net change in cash, restricted cash and cash equivalents |
|
(159.0 |
) |
|
(9.3 |
) |
|
|
|
|
|
Cash, restricted cash, and cash equivalents beginning of period |
|
190.4 |
|
|
23.4 |
|
Cash, restricted cash, and cash equivalents end of period |
$ |
31.4 |
|
$ |
14.1 |
|
|
|
|
|
|
Supplemental cash flow information: |
|
|
|
|
Cash (paid) received during the period: |
|
|
|
|
Interest (net of amounts capitalized) |
$ |
(51.1 |
) |
$ |
(48.8 |
) |
Income taxes, net of transferred tax credits (Note 11) |
|
14.8 |
|
|
15.2 |
|
Non-cash investing and financing activities: |
|
|
|
|
Accrued property, plant, and equipment purchases at March 31, |
|
87.7 |
|
|
86.8 |
|
The accompanying Condensed Notes to Consolidated Financial Statements are an integral part of these Consolidated Financial Statements.
BLACK HILLS CORPORATION
Condensed Notes to Consolidated Financial Statements
(unaudited)
(Reference is made to Notes to Consolidated Financial Statements
included in the Company’s 2025 Annual Report on Form 10-K)
(1)Management’s Statement
The unaudited Consolidated Financial Statements included herein have been prepared by Black Hills Corporation (together with our subsidiaries the “Company”, “us”, “we”, or “our”), pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations; however, we believe that the footnotes adequately disclose the information presented. These Consolidated Financial Statements should be read in conjunction with the consolidated financial statements and the notes included in our 2025 Annual Report on Form 10-K.
Use of Estimates and Basis of Presentation
The information furnished in the accompanying Consolidated Financial Statements reflects certain estimates required and all adjustments, including accruals, which are, in the opinion of management, necessary for a fair presentation of the March 31, 2026, December 31, 2025, and March 31, 2025, financial information. Certain lines of business in which we operate are highly seasonal and our interim results of operations are not necessarily indicative of the results of operations to be expected for an entire year.
Recently Issued Accounting Standards
Disaggregation of Income Statement Expenses, ASU 2024-03
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures, and in January 2025, the FASB issued ASU 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures: Clarifying the Effective Date. ASU 2024-03 requires public entities to disclose, in the notes to financial statements, certain costs and expenses, such as purchases of inventory, employee compensation, and costs related to depreciation and amortization. ASU 2024-03, as clarified by ASU 2025-01, is effective for our Annual Report on Form 10-K for the fiscal year ended December 31, 2027, and subsequent interim periods, with early adoption permitted. We are currently evaluating the impact of these standards on our consolidated financial statement disclosures.
Targeted Improvements to the Accounting for Internal-Use Software, ASU 2025-06
In September 2025, the FASB issued ASU 2025-06, Targeted Improvements to the Accounting for Internal-Use Software, which amends the accounting guidance for internal-use software under ASC 350-40. The amendments are intended to modernize the recognition and capitalization framework to better reflect current software development practices, particularly agile methodologies. ASU 2025-06 is effective for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the impact of ASU 2025-06 on our consolidated financial statements and related disclosures.
We had the following regulatory assets and liabilities:
|
|
|
|
|
|
|
|
As of |
|
As of |
|
|
March 31, 2026 |
|
December 31, 2025 |
|
|
(in millions) |
|
Regulatory assets |
|
|
|
|
Winter Storm Uri |
$ |
24.0 |
|
$ |
50.7 |
|
Deferred energy and fuel cost adjustments |
|
90.7 |
|
|
83.3 |
|
Deferred gas cost adjustments |
|
8.6 |
|
|
10.2 |
|
Gas price derivatives |
|
— |
|
|
4.6 |
|
Deferred taxes on AFUDC |
|
11.0 |
|
|
10.6 |
|
Employee benefit plans and related deferred taxes |
|
86.6 |
|
|
87.4 |
|
Environmental |
|
13.1 |
|
|
13.1 |
|
Loss on reacquired debt |
|
13.7 |
|
|
14.1 |
|
Deferred taxes on flow through accounting |
|
97.4 |
|
|
94.8 |
|
Other regulatory assets |
|
29.2 |
|
|
25.9 |
|
Total regulatory assets |
|
374.3 |
|
|
394.7 |
|
Less current regulatory assets |
|
(122.6 |
) |
|
(139.7 |
) |
Regulatory assets, non-current |
$ |
251.7 |
|
$ |
255.0 |
|
|
|
|
|
|
Regulatory liabilities |
|
|
|
|
Deferred energy and fuel cost adjustments |
|
14.4 |
|
$ |
12.3 |
|
Deferred gas cost adjustments |
|
31.2 |
|
|
51.5 |
|
Employee benefit plan costs and related deferred taxes |
|
35.9 |
|
|
36.2 |
|
Cost of removal |
|
220.6 |
|
|
216.5 |
|
Excess deferred income taxes |
|
227.2 |
|
|
230.3 |
|
Colorado renewable energy |
|
36.3 |
|
|
33.2 |
|
Other regulatory liabilities |
|
10.5 |
|
|
8.2 |
|
Total regulatory liabilities |
|
576.1 |
|
|
588.2 |
|
Less current regulatory liabilities |
|
(85.9 |
) |
|
(99.9 |
) |
Regulatory liabilities, non-current |
$ |
490.2 |
|
$ |
488.3 |
|
Recent Rate Review Activity
Arkansas Gas
On December 5, 2025, Arkansas Gas filed a rate review with the APSC seeking recovery of infrastructure investments in its natural gas pipeline system. The rate review requested $29.4 million in new annual revenue with a capital structure of 50% equity and 50% debt and a return on equity of 10.5%. The request seeks to implement new rates in the fourth quarter of 2026.
Kansas Gas
On February 3, 2025, Kansas Gas filed a rate review with the KCC seeking recovery of infrastructure investments and increased operations and maintenance costs driven by inflation and operational needs to serve customers. On July 24, 2025, Kansas Gas received final approval from the KCC for a Black-box Settlement agreement for a general rate increase expected to generate $10.8 million in new annual revenue and shift $4.4 million of GSRS rider revenue to base rates. New rates were enacted on August 1, 2025. The settlement also included approval for Kansas Gas to file an abbreviated case in first quarter of 2026 that includes the addition of capital placed in service through December 31, 2025. On March 2, 2026, Kansas Gas filed the abbreviated case, which was limited in scope and requested increases in base rate revenues of $2.4 million with new rates effective in the second half of 2026.
Nebraska Gas
On May 1, 2025, Nebraska Gas filed a rate review with the NPSC seeking recovery of infrastructure investments and increased operations and maintenance costs driven by inflation and operational needs to serve customers. On December 9, 2025, Nebraska Gas received final approval from the NPSC for a settlement agreement for a general rate increase. The settlement is expected to generate $23.9 million in new annual revenue with a capital structure of 51% equity and 49% debt and a return on equity of 9.85%. The settlement also includes renewal of Nebraska Gas' SSIR for five years and the development of a two-year pilot program for a weather normalization adjustment rider. New rates were enacted on January 1, 2026, which replaced interim rates effective in August 2025. Nebraska Gas customers are entitled to a $4.7 million refund due to the interim rate increase exceeding the final approved rate increase, which was retroactive to August 2025. These amounts are expected to be refunded to customers as a one-time bill credit during the second quarter of 2026.
South Dakota Electric
On February 19, 2026, South Dakota Electric filed a rate review with the SDPUC seeking recovery of infrastructure investments and increased operations and maintenance costs driven by inflation and operational needs to serve customers since its last rate review in 2014. The rate review requested $50.6 million in new annual revenue with a capital structure of 53% equity and 47% debt and a return on equity of 10.5%. The request seeks interim rates to be effective 180 days after the filing, with new rates expected to be finalized in the first quarter of 2027.
On March 18, 2026, South Dakota Electric filed a rate review with the WPSC seeking recovery of infrastructure investments and increased operations and maintenance costs driven by inflation and operational needs to serve customers since its last rate review in 2014 The company is seeking an annual base rate increase to retail electric service rates of $5.1 million based on a similar capital structure and return on equity requested in South Dakota. New rates are expected to be finalized in the first quarter of 2027.
(3)Commitments, Contingencies, and Guarantees
Deborah Ferrari et al. v. Colorado Electric, Case No. 2024CV31889 (District Court for the City and County of Denver, Colorado)
During the year ended December 31, 2025, Colorado Electric settled a legal matter involving an auto accident. As part of the settlement, Colorado Electric recognized a legal liability of $20 million, which was paid in the first quarter of 2026. In connection with this matter, Colorado Electric also recognized a loss recovery receivable of $20 million under its insurance coverage, which was received in the first quarter of 2026. We do not expect additional material losses related to this matter.
Generation Reservation Agreement with Prospective Data Center Customer
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. Under the agreement, the prospective customer will provide a refundable CIAC to Wyoming Electric to support milestone payments to suppliers to secure long lead-time generation equipment for potential company‑owned generation to serve the customer. To date, Wyoming Electric has received approximately $201 million in refundable CIAC payments from the prospective customer. Unless otherwise extended by the parties, this generation reservation agreement will terminate on June 30, 2026. This agreement is a bridge agreement to support long lead-time items while Wyoming Electric continues to negotiate definitive agreements with the prospective customer.
Power Purchase Agreement for Clean Energy Plan
On February 18, 2026, Colorado Electric executed a PPA with Honors Energy, LLC to purchase up to 200 MW of solar energy upon construction of a new renewable generation facility, which is expected to be completed by mid-2029. The agreement will expire 15 years after construction completion. The solar energy from this PPA will be used to support Colorado Electric's Clean Energy Plan.
The following tables depict the disaggregation of revenue, including intercompany revenue, from contracts with customers by customer type and timing of revenue recognition for each of the reportable segments for the three months ended March 31, 2026, and 2025. Sales tax and other similar taxes are excluded from revenues.
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2026 |
Electric Utilities |
|
Gas Utilities |
|
Inter-segment Eliminations |
|
Total |
|
Customer types: |
(in millions) |
|
Retail |
$ |
197.0 |
|
$ |
458.7 |
|
$ |
— |
|
$ |
655.7 |
|
Transportation |
|
— |
|
|
54.5 |
|
|
(0.1 |
) |
|
54.4 |
|
Wholesale |
|
6.0 |
|
|
— |
|
|
— |
|
|
6.0 |
|
Market - off-system sales |
|
10.9 |
|
|
— |
|
|
— |
|
|
10.9 |
|
Transmission |
|
12.0 |
|
|
0.2 |
|
|
— |
|
|
12.2 |
|
Other revenues |
|
14.8 |
|
|
11.9 |
|
|
(3.9 |
) |
|
22.8 |
|
Revenue from contracts with customers |
$ |
240.7 |
|
$ |
525.3 |
|
$ |
(4.0 |
) |
$ |
762.0 |
|
Alternative revenue and other |
|
0.9 |
|
|
17.8 |
|
|
— |
|
|
18.7 |
|
Total revenues |
$ |
241.6 |
|
$ |
543.1 |
|
$ |
(4.0 |
) |
$ |
780.7 |
|
|
|
|
|
|
|
|
|
|
Timing of revenue recognition: |
|
|
|
|
|
|
|
|
Services transferred at a point in time |
$ |
8.8 |
|
$ |
— |
|
$ |
— |
|
$ |
8.8 |
|
Services transferred over time |
|
231.9 |
|
|
525.3 |
|
|
(4.0 |
) |
|
753.2 |
|
Revenue from contracts with customers |
$ |
240.7 |
|
$ |
525.3 |
|
$ |
(4.0 |
) |
$ |
762.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2025 |
Electric Utilities |
|
Gas Utilities |
|
Inter-segment Eliminations |
|
Total |
|
Customer types: |
(in millions) |
|
Retail |
$ |
191.3 |
|
$ |
499.7 |
|
$ |
— |
|
$ |
691.0 |
|
Transportation |
|
— |
|
|
57.7 |
|
|
(0.1 |
) |
|
57.6 |
|
Wholesale |
|
7.1 |
|
|
— |
|
|
— |
|
|
7.1 |
|
Market - off-system sales |
|
11.3 |
|
|
— |
|
|
— |
|
|
11.3 |
|
Transmission |
|
12.1 |
|
|
0.2 |
|
|
— |
|
|
12.3 |
|
Other revenues |
|
13.8 |
|
|
11.1 |
|
|
(3.8 |
) |
|
21.1 |
|
Revenue from contracts with customers |
$ |
235.6 |
|
$ |
568.7 |
|
$ |
(3.9 |
) |
$ |
800.4 |
|
Alternative revenue and other |
|
1.1 |
|
|
3.7 |
|
|
— |
|
|
4.8 |
|
Total revenues |
$ |
236.7 |
|
$ |
572.4 |
|
$ |
(3.9 |
) |
$ |
805.2 |
|
|
|
|
|
|
|
|
|
|
Timing of revenue recognition: |
|
|
|
|
|
|
|
|
Services transferred at a point in time |
$ |
8.1 |
|
$ |
— |
|
$ |
— |
|
$ |
8.1 |
|
Services transferred over time |
|
227.5 |
|
|
568.7 |
|
|
(3.9 |
) |
|
792.3 |
|
Revenue from contracts with customers |
$ |
235.6 |
|
$ |
568.7 |
|
$ |
(3.9 |
) |
$ |
800.4 |
|
Short-term Debt
Revolving Credit Facility and CP Program
Our Revolving Credit Facility and CP Program, which are classified as Notes payable on the Consolidated Balance Sheets, had the following borrowings, outstanding letters of credit, and available capacity as of:
|
|
|
|
|
|
|
|
March 31, 2026 |
|
December 31, 2025 |
|
|
(dollars in millions) |
|
Amount outstanding |
$ |
252.2 |
|
$ |
— |
|
Letters of credit (a) |
|
3.2 |
|
|
3.2 |
|
Available capacity |
|
494.6 |
|
|
746.8 |
|
Weighted average interest rates |
|
3.95 |
% |
N/A |
|
(a)Letters of credit are off-balance sheet commitments that reduce the borrowing capacity available on our corporate Revolving Credit Facility.
Revolving Credit Facility and CP Program borrowing activity was as follows:
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
2026 |
|
2025 |
|
|
(dollars in millions) |
|
Maximum amount outstanding (based on daily outstanding balances) |
$ |
338.0 |
|
$ |
263.6 |
|
Average amount outstanding (based on daily outstanding balances) |
|
182.6 |
|
|
87.1 |
|
Weighted average interest rates |
|
3.88 |
% |
|
4.55 |
% |
Long-term Debt
On October 2, 2025, we completed a public debt offering of $450 million, 4.55% senior unsecured notes due January 31, 2031. Proceeds from the offering, which were reduced by $4.0 million of deferred financing costs, were used to repay all $300 million principal amount outstanding of our 3.95% senior unsecured notes at their January 15, 2026, maturity date and for other general corporate purposes.
Financial Covenants
Revolving Credit Facility
We were in compliance with all of our Revolving Credit Facility covenants as of March 31, 2026. We are required to maintain a Consolidated Indebtedness to Capitalization Ratio not to exceed 0.65 to 1.00. Subject to applicable cure periods, a violation of this covenant would constitute an event of default that entitles the lenders to terminate their remaining commitments and accelerate all principal and interest outstanding. As of March 31, 2026, our Consolidated Indebtedness to Capitalization Ratio was 0.54 to 1.00.
Wyoming Electric
Wyoming Electric was in compliance with all covenants within its financing agreements as of March 31, 2026. Wyoming Electric is required to maintain a debt to capitalization ratio of no more than 0.60 to 1.00. As of March 31, 2026, Wyoming Electric's debt to capitalization ratio was 0.50 to 1.00.
Equity
ATM
ATM activity was as follows:
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
2026 |
|
2025 |
|
June 16, 2023 ATM Program |
(in millions, except Average price per share amounts) |
|
Proceeds, (net of issuance costs of $0.0 and $(0.5), respectively) |
$ |
— |
|
$ |
45.7 |
|
Number of shares issued |
|
— |
|
|
0.8 |
|
|
|
|
|
|
May 8, 2025 ATM Program |
|
|
|
|
Proceeds, (net of issuance costs of $(0.4) and $0.0, respectively) |
$ |
40.7 |
|
$ |
— |
|
Number of shares issued |
|
0.6 |
|
|
— |
|
|
|
|
|
|
Total activity under both ATM Programs |
|
|
|
|
Proceeds, (net of issuance costs of $(0.4) and $(0.5), respectively) |
$ |
40.7 |
|
$ |
45.7 |
|
Number of shares issued |
|
0.6 |
|
|
0.8 |
|
Average price per share |
$ |
73.42 |
|
$ |
60.44 |
|
A reconciliation of share amounts used to compute earnings per share in the accompanying Consolidated Statements of Income was as follows:
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
2026 |
|
2025 |
|
|
(in millions, except per share amounts) |
|
Net income available for common stock |
$ |
131.0 |
|
$ |
134.3 |
|
|
|
|
|
|
Weighted average shares - basic |
|
75.4 |
|
|
71.6 |
|
Dilutive effect of equity compensation |
|
0.2 |
|
|
0.2 |
|
Weighted average shares - diluted |
$ |
75.6 |
|
$ |
71.8 |
|
|
|
|
|
|
Net income available for common stock, per share - Diluted |
$ |
1.73 |
|
$ |
1.87 |
|
Anti-dilutive shares excluded from the diluted earnings per share computation were not material for the three months ended March 31, 2026, and 2025.
(7)Risk Management and Derivatives
Market and Credit Risk Disclosures
Our activities in the energy industry expose us to a number of risks in the normal operations of our businesses. Depending on the activity, we are exposed to varying degrees of market risk and credit risk.
Market Risk
Market risk is the potential loss that may occur as a result of an adverse change in market price, rate or supply. We are exposed but not limited to, the following market risks:
•Commodity price risk associated with our retail natural gas and wholesale electric power marketing activities and our fuel procurement for several of our gas-fired generation assets, which include market fluctuations due to unpredictable factors such as weather, geopolitical events, pandemics, market speculation, imposition of new tariffs, recession, inflation, pipeline constraints, and other factors that may impact natural gas and electric supply and demand; and
•Interest rate risk associated with future debt, including reduced access to liquidity during periods of extreme capital markets volatility.
Credit Risk
Credit risk is the risk of financial loss resulting from non-performance of contractual obligations by a counterparty.
We attempt to mitigate our credit exposure by conducting business primarily with high credit quality entities, setting tenor and credit limits commensurate with counterparty financial strength, obtaining master netting agreements, and mitigating credit exposure with less creditworthy counterparties through parental guarantees, cash collateral requirements, letters of credit, and other security agreements.
We perform periodic credit evaluations of our customers and adjust credit limits based upon payment history and the customers’ current creditworthiness, as determined by review of their current credit information. We maintain a provision for estimated credit losses based upon historical experience, changes in current market conditions, expected losses, and any specific customer collection issue that is identified.
Derivatives and Hedging Activity
Our derivative and hedging activities included in the accompanying Consolidated Balance Sheets, Consolidated Statements of Income, and Consolidated Statements of Comprehensive Income are detailed below and in Note 8.
The operations of our Utilities, including natural gas sold by our Gas Utilities and natural gas used by our Electric Utilities’ generation plants or those plants under PPAs where our Electric Utilities must provide the generation fuel (tolling agreements), expose our utility customers to natural gas price volatility. Therefore, as allowed or required by state utility commissions, we have entered into commission approved hedging programs utilizing natural gas futures, options, over-the-counter swaps, and basis swaps to reduce our customers’ underlying exposure to these fluctuations. These transactions are considered derivatives, and in accordance with accounting standards for derivatives and hedging, mark-to-market adjustments are recorded as Derivative assets or Derivative liabilities on the accompanying Consolidated Balance Sheets, net of balance sheet offsetting as permitted by GAAP.
For our regulated Utilities’ hedging plans, unrealized and realized gains and losses, as well as option premiums and commissions on these transactions, are recorded as Regulatory assets or Regulatory liabilities in the accompanying Consolidated Balance Sheets in accordance with the state regulatory commission guidelines. When the related costs are recovered through our rates, the hedging activity is recognized in the Consolidated Statements of Income.
Through Black Hills Energy Services, our non-regulated natural gas commodity supplier, we buy, sell, and deliver natural gas in Nebraska and Wyoming at competitive prices by managing commodity price risk. As a result of these activities, this area of our business is exposed to risks associated with changes in the market price of natural gas. We manage our exposure to such risks using over-the-counter and exchange traded options and swaps with counterparties in anticipation of forecasted purchases and sales through September 2028. A portion of our over-the-counter swaps have been designated as cash flow hedges to mitigate the commodity price risk associated with deliveries under fixed price forward contracts to deliver gas to our Choice Gas Program customers. The gain or loss on these designated derivatives is reported in AOCI in the accompanying Consolidated Balance Sheets and reclassified into earnings in the same period that the underlying hedged item is recognized in earnings. Effectiveness of our hedging position is evaluated at least quarterly.
The contract or notional amounts and terms of the electric and natural gas derivative commodity instruments held at our Utilities are composed of both long and short positions. We had the following net long and (short) positions as of:
|
|
|
|
|
|
|
|
|
|
March 31, 2026 |
December 31, 2025 |
|
Notional Amounts (MMBtus) |
|
Maximum Term (months) (a) |
Notional Amounts (MMBtus) |
|
Maximum Term (months) (a) |
Natural gas futures purchased |
|
— |
|
N/A |
|
620,000 |
|
3 |
Natural gas options purchased, net |
|
— |
|
N/A |
|
2,750,000 |
|
3 |
Natural gas basis swaps purchased |
|
— |
|
N/A |
|
1,040,000 |
|
3 |
Natural gas over-the-counter swaps, net (b) |
|
2,610,000 |
|
29 |
|
3,430,000 |
|
23 |
Natural gas physical contracts, net (c) |
|
(942,398 |
) |
12 |
|
14,285,200 |
|
10 |
(a)Term reflects the maximum forward period hedged.
(b)As of March 31, 2026, 625,000 MMBtus of natural gas over-the-counter swaps purchases were designated as cash flow hedges.
(c)Volumes exclude contracts that qualify for the normal purchases and normal sales exception under GAAP.
We have certain derivative contracts which contain credit provisions. These credit provisions may require the Company to post collateral when credit exposure to the Company is in excess of a negotiated line of unsecured credit. At March 31, 2026, the Company had no amount related to such provisions, which would be included in Other current assets on the Consolidated Balance Sheets.
Derivatives by Balance Sheet Classification
The following table presents the fair value and balance sheet classification of our derivative instruments as of:
|
|
|
|
|
|
|
|
|
Balance Sheet Location |
March 31,
2026 |
|
December 31,
2025 |
|
|
|
(in millions) |
|
Derivatives designated as hedges: |
|
|
|
|
|
Liability derivative instruments: |
|
|
|
|
|
Current commodity derivatives |
Derivative liabilities, current |
$ |
(0.7 |
) |
$ |
(2.8 |
) |
Total derivatives designated as hedges |
|
$ |
(0.7 |
) |
$ |
(2.8 |
) |
|
|
|
|
|
|
Derivatives not designated as hedges: |
|
|
|
|
|
Liability derivative instruments: |
|
|
|
|
|
Current commodity derivatives |
Derivative liabilities, current |
$ |
(1.1 |
) |
$ |
(3.0 |
) |
Total derivatives not designated as hedges |
|
$ |
(1.1 |
) |
$ |
(3.0 |
) |
Derivatives Designated as Hedge Instruments
The impact of cash flow hedges on our Consolidated Statements of Comprehensive Income and Consolidated Statements of Income are presented below for the three months ended March 31, 2026, and 2025. Note that this presentation does not reflect the gains or losses arising from the underlying physical transactions; therefore, it is not indicative of the economic profit or loss we realized when the underlying physical and financial transactions were settled.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31, |
|
|
Three Months Ended
March 31, |
|
|
2026 |
|
2025 |
|
|
2026 |
|
2025 |
|
Derivatives in Cash Flow Hedging Relationships |
Amount of Gain/(Loss) Recognized in OCI |
|
Income Statement Location |
Amount of Gain/(Loss) Reclassified from AOCI into Income |
|
|
(in millions) |
|
|
(in millions) |
|
Interest rate swaps |
$ |
0.7 |
|
$ |
0.8 |
|
Interest expense |
$ |
(0.7 |
) |
$ |
(0.8 |
) |
Commodity derivatives |
|
2.0 |
|
|
0.5 |
|
Fuel, purchased power, and cost of natural gas sold |
|
(1.7 |
) |
|
(0.4 |
) |
Total |
$ |
2.7 |
|
$ |
1.3 |
|
|
$ |
(2.4 |
) |
$ |
(1.2 |
) |
As of March 31, 2026, $2.2 million of net losses related to our interest rate swaps and commodity derivatives are expected to be reclassified from AOCI into earnings within the next 12 months. As market prices fluctuate, estimated and actual realized gains or losses will change during future periods.
Derivatives Not Designated as Hedge Instruments
The following table summarizes the impacts of derivative instruments not designated as hedge instruments on our Consolidated Statements of Income for the three months ended March 31, 2026, and 2025. Note that this presentation does not reflect the expected gains or losses arising from the underlying physical transactions; therefore, it is not indicative of the economic profit or loss we realized when the underlying physical and financial transactions were settled.
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2026 |
|
2025 |
|
Derivatives Not Designated as Hedging Instruments |
Location of Gain/(Loss) on Derivatives Recognized in Income |
Amount of Gain/(Loss) on Derivatives Recognized in Income |
|
|
|
(in millions) |
|
Commodity derivatives |
Fuel, purchased power, and cost of natural gas sold |
$ |
0.3 |
|
$ |
1.1 |
|
|
|
$ |
0.3 |
|
$ |
1.1 |
|
As discussed above, financial instruments used in our regulated Gas Utilities are not designated as cash flow hedges. However, there is no earnings impact because the unrealized gains and losses arising from the use of these financial instruments are recorded as Regulatory assets or Regulatory liabilities. The net unrealized losses included in our Regulatory asset accounts related to these financial instruments were $0.0 million and $4.6 million as of March 31, 2026, and December 31, 2025, respectively.
(8)Fair Value Measurements
We use the following fair value hierarchy for determining inputs for our financial instruments. Our assets and liabilities for financial instruments are classified and disclosed in one of the following fair value categories:
Level 1 — Unadjusted quoted prices available in active markets that are accessible at the measurement date for identical unrestricted assets or liabilities. Level 1 instruments primarily consist of highly liquid and actively traded financial instruments with quoted pricing information on an ongoing basis.
Level 2 — Pricing inputs include quoted prices for identical or similar assets and liabilities in active markets other than quoted prices in Level 1, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, and inputs that are derived principally from, or corroborated by, observable market data by correlation or other means.
Level 3 — Pricing inputs are generally less observable from objective sources. These inputs reflect management’s best estimate of fair value using its own assumptions about the assumptions a market participant would use in pricing the asset or liability.
Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the placement within the fair value hierarchy levels. We record transfers, if necessary, between levels at the end of the reporting period for all of our financial instruments.
Transfers into Level 3, if any, occur when significant inputs used to value the derivative instruments become less observable, such as a significant decrease in the frequency and volume in which the instrument is traded, negatively impacting the availability of observable pricing inputs. Transfers out of Level 3, if any, occur when the significant inputs become more observable, such as when the time between the valuation date and the delivery date of a transaction becomes shorter, positively impacting the availability of observable pricing inputs.
Recurring Fair Value Measurements
Derivatives
The commodity contracts for our Utilities segments are valued using the market approach and include forward strip pricing at liquid delivery points, exchange-traded futures, options, basis swaps, and over-the-counter swaps and options (Level 2) for wholesale electric energy and natural gas contracts. For exchange-traded futures, options, and basis swap assets and liabilities, fair value was derived using broker quotes validated by the exchange settlement pricing for the applicable contract. For over-the-counter instruments, the fair value is obtained by utilizing a nationally recognized service that obtains observable inputs to compute the fair value, which we validate by comparing our valuation with the counterparty. The fair value of these swaps includes a credit valuation adjustment based on the credit spreads of the counterparties when we are in an unrealized gain position or on our own credit spread when we are in an unrealized loss position. For additional information, see Note 1 of our Notes to the Consolidated Financial Statements in our 2025 Annual Report on Form 10-K.
The following tables set forth, by level within the fair value hierarchy, our gross assets and gross liabilities and related offsetting as permitted by GAAP that were accounted for at fair value on a recurring basis for derivative instruments.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2026 |
|
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Cash Collateral and Counterparty Netting (a) |
|
Total |
|
|
(in millions) |
|
Assets: |
|
|
|
|
|
|
|
|
|
|
Commodity derivatives - Gas Utilities |
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
Total |
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
Commodity derivatives - Gas Utilities |
$ |
— |
|
$ |
1.8 |
|
$ |
— |
|
$ |
— |
|
$ |
1.8 |
|
Total |
$ |
— |
|
$ |
1.8 |
|
$ |
— |
|
$ |
— |
|
$ |
1.8 |
|
(a)As of March 31, 2026, $0.0 million of our commodity derivative assets and $1.8 million of our commodity derivative liabilities, as well as related gross collateral amounts, were subject to master netting agreements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2025 |
|
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Cash Collateral and Counterparty Netting (a) |
|
Total |
|
|
(in millions) |
|
Assets: |
|
|
|
|
|
|
|
|
|
|
Commodity derivatives - Gas Utilities |
$ |
— |
|
$ |
2.0 |
|
$ |
— |
|
$ |
(2.0 |
) |
$ |
— |
|
Total |
$ |
— |
|
$ |
2.0 |
|
$ |
— |
|
$ |
(2.0 |
) |
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
Commodity derivatives - Gas Utilities |
$ |
— |
|
$ |
8.8 |
|
$ |
— |
|
$ |
(3.0 |
) |
$ |
5.8 |
|
Total |
$ |
— |
|
$ |
8.8 |
|
$ |
— |
|
$ |
(3.0 |
) |
$ |
5.8 |
|
(a)As of December 31, 2025, $2.0 million of our commodity derivative assets and $3.0 million of our commodity derivative liabilities, as well as related gross collateral amounts, were subject to master netting agreements.
Pension and Postretirement Plan Assets
The fair value of our pension and postretirement plan assets is presented in Note 13 to the Consolidated Financial Statements included in our 2025 Annual Report on Form 10-K.
Captive Insurance Cell Investments
We have investments in the Captive that may be used to pay insurance losses in the event of certain insured loss events. The Captive may hold investment assets in cash, cash equivalents, and equity and fixed income instruments. These investments are restricted for insured loss events. Additional information regarding the Captive is presented in Note 12 to the Consolidated Financial Statements included in our 2025 Annual Report on Form 10-K.
Other Fair Value Measures
The carrying amount of cash and cash equivalents, restricted cash and equivalents, and short-term borrowings approximates fair value due to their liquid or short-term nature. Cash, cash equivalents, and restricted cash are classified in Level 1 in the fair value hierarchy. Notes payable consist of commercial paper borrowings and are not traded on an exchange; therefore, they are classified as Level 2 in the fair value hierarchy.
The following table presents the carrying amounts and fair values of financial instruments not recorded at fair value on the Consolidated Balance Sheets as of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2026 |
|
December 31, 2025 |
|
|
Carrying Amount |
|
Fair Value |
|
Carrying Amount |
|
Fair Value |
|
|
(in millions) |
|
Long-term debt, including current maturities (a) |
$ |
4,402.5 |
|
$ |
4,264.7 |
|
$ |
4,701.1 |
|
$ |
4,639.0 |
|
(a)Long-term debt is valued based on observable inputs available either directly or indirectly for similar liabilities in active markets and therefore is classified in Level 2 in the fair value hierarchy. Carrying amount of long-term debt is net of deferred financing costs.
(9)Other Comprehensive Income
We record deferred gains (losses) in AOCI related to interest rate swaps designated as cash flow hedges, commodity contracts designated as cash flow hedges, and the amortization of components of our defined benefit plans. Deferred gains (losses) for our commodity contracts designated as cash flow hedges are recognized in earnings upon settlement, while deferred gains (losses) related to our interest rate swaps are recognized in earnings as they are amortized.
The following table details reclassifications out of AOCI and into Net income. The amounts in parentheses below indicate decreases to Net income in the Consolidated Statements of Income for the period, net of tax:
|
|
|
|
|
|
|
|
|
|
Amount Reclassified from AOCI |
|
|
|
Three Months Ended March 31, |
|
|
Location on the Consolidated Statements of Income |
2026 |
|
2025 |
|
|
|
(in millions) |
|
Gains and (losses) on cash flow hedges: |
|
|
|
|
|
Interest rate swaps |
Interest expense |
$ |
(0.7 |
) |
$ |
(0.8 |
) |
Commodity contracts |
Fuel, purchased power, and cost of natural gas sold |
|
(1.7 |
) |
|
(0.4 |
) |
|
|
$ |
(2.4 |
) |
$ |
(1.2 |
) |
Income tax |
Income tax (expense) benefit |
|
0.5 |
|
|
0.3 |
|
Total reclassification adjustments related to cash flow hedges, net of tax |
|
$ |
(1.9 |
) |
$ |
(0.9 |
) |
|
|
|
|
|
|
Amortization of components of defined benefit plans: |
|
|
|
|
|
Actuarial (loss) |
Operations and maintenance |
|
(0.1 |
) |
|
— |
|
Total reclassification adjustments related to defined benefit plans, net of tax |
|
$ |
(0.1 |
) |
$ |
— |
|
Total reclassifications |
|
$ |
(2.0 |
) |
$ |
(0.9 |
) |
Balances by classification included within AOCI, net of tax on the accompanying Consolidated Balance Sheets were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives Designated as Cash Flow Hedges |
|
|
|
|
|
|
Interest Rate Swaps |
|
Commodity Derivatives |
|
Employee Benefit Plans |
|
Total |
|
|
(in millions) |
|
As of December 31, 2025 |
$ |
(1.6 |
) |
$ |
(2.2 |
) |
$ |
(5.9 |
) |
$ |
(9.7 |
) |
Other comprehensive income (loss) before reclassifications |
|
— |
|
|
0.2 |
|
|
— |
|
|
0.2 |
|
Amounts reclassified from AOCI |
|
0.6 |
|
|
1.3 |
|
|
0.1 |
|
|
2.0 |
|
As of March 31, 2026 |
$ |
(1.0 |
) |
$ |
(0.7 |
) |
$ |
(5.8 |
) |
$ |
(7.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives Designated as Cash Flow Hedges |
|
|
|
|
|
|
Interest Rate Swaps |
|
Commodity Derivatives |
|
Employee Benefit Plans |
|
Total |
|
|
(in millions) |
|
As of December 31, 2024 |
$ |
(3.8 |
) |
$ |
(0.3 |
) |
$ |
(5.3 |
) |
$ |
(9.4 |
) |
Other comprehensive income (loss) before reclassifications |
|
— |
|
|
0.1 |
|
|
— |
|
|
0.1 |
|
Amounts reclassified from AOCI |
|
0.6 |
|
|
0.3 |
|
|
— |
|
|
0.9 |
|
As of March 31, 2025 |
$ |
(3.2 |
) |
$ |
0.1 |
|
$ |
(5.3 |
) |
$ |
(8.4 |
) |
(10)Employee Benefit Plans
Components of Net Periodic Expense
The components of net periodic expense were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined Benefit Pension Plan |
|
Supplemental Non-qualified Defined Benefit Plans |
|
Non-pension Defined Benefit Postretirement Healthcare Plan |
|
Three Months Ended March 31, |
2026 |
|
2025 |
|
2026 |
|
2025 |
|
2026 |
|
2025 |
|
|
(in millions) |
|
Service cost |
$ |
0.4 |
|
$ |
0.4 |
|
$ |
— |
|
$ |
0.2 |
|
$ |
0.4 |
|
$ |
0.4 |
|
Interest cost |
|
3.6 |
|
|
4.0 |
|
|
0.3 |
|
|
0.3 |
|
|
0.5 |
|
|
0.6 |
|
Expected return on plan assets |
|
(4.2 |
) |
|
(4.2 |
) |
|
— |
|
|
— |
|
|
(0.1 |
) |
|
(0.1 |
) |
Net amortization of prior service costs |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
0.1 |
|
|
0.1 |
|
Recognized net actuarial loss |
|
0.6 |
|
|
0.5 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Net periodic expense |
$ |
0.4 |
|
$ |
0.7 |
|
$ |
0.3 |
|
$ |
0.5 |
|
$ |
0.9 |
|
$ |
1.0 |
|
Plan Contributions
Contributions made in the first three months of 2026 and additional contributions anticipated for the remainder of 2026 are as follows:
|
|
|
|
|
|
|
|
Contributions
Made |
|
Additional Contributions |
|
|
Three Months Ended March 31, 2026 |
|
Anticipated for 2026 |
|
|
(in millions) |
|
Defined Benefit Pension Plan |
$ |
— |
|
$ |
1.6 |
|
Non-pension Defined Benefit Postretirement Healthcare Plan |
|
1.3 |
|
|
3.2 |
|
Supplemental Non-qualified Defined Benefit and Defined Contribution Plans |
|
0.7 |
|
|
2.1 |
|
Transfers of Production Tax Credits
In January 2025 and 2026, we entered into agreements with a third party to sell 2024 and 2025 generated PTCs for $16.0 million and $15.3 million, respectively. We expect to continue to explore monetization of our tax credits through third party transferability agreements.
Income Tax (Expense) and Effective Tax Rates
Three Months Ended March 31, 2026, Compared to the Three Months Ended March 31, 2025
Income tax (expense) for the three months ended March 31, 2026, was $(17.6) million compared to $(18.1) million reported for the same period in 2025. 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.
(12)Business Segment Information
We are a holding company that, through our subsidiaries, conducts our operations through the following two reportable segments: Electric Utilities and Gas Utilities. Certain unallocated corporate expenses that support our reportable segments are presented as Corporate and Other.
Our operating segments, which are equivalent to our reportable segments, are based on our method of internal reporting, which is generally segregated by differences in products and services. All of our operations and assets are located within the United States.
Our Electric Utilities segment includes the operating results of the regulated electric utility operations of Colorado Electric, South Dakota Electric, and Wyoming Electric, which supply regulated electric utility services to areas in Colorado, Montana, South Dakota, and Wyoming. We also own and operate non-regulated power generation and mining businesses that are vertically integrated with our Electric Utilities.
Our Gas Utilities segment consists of the operating results of our regulated natural gas utility subsidiaries in Arkansas, Colorado, Iowa, Kansas, Nebraska, and Wyoming.
Corporate and Other consists of certain unallocated expenses for administrative activities that support our operating segments. Corporate and Other also includes our captive insurance cell, business development activities that are not part of our operating segments, and inter-segment eliminations.
Our Chief Executive Officer, who is considered to be our CODM, sets financial performance objectives and budgets and establishes separate targets based on operating income for our Electric Utilities segment as well as our Gas Utilities segment. Our CODM assesses segment financial performance, including quarterly and annual budget-to-actual and year-over-year variances in revenues and expenses, to inform operating decisions, capital investments and cost recovery strategies. Our CODM reviews capital expenditures by operating segment rather than any individual or total asset amount.
|
|
|
|
|
|
|
Capital Expenditures (a) for the three months ended March 31, |
2026 |
|
2025 |
|
|
(in millions) |
|
Electric Utilities |
$ |
189.5 |
|
$ |
102.1 |
|
Gas Utilities |
|
68.4 |
|
|
59.0 |
|
Corporate and Other |
|
1.9 |
|
|
1.3 |
|
Total capital expenditures |
$ |
259.8 |
|
$ |
162.4 |
|
(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.
(13)Selected Balance Sheet Information
Accounts Receivable and Allowance for Credit Losses
Following is a summary of Accounts receivable, net included in the accompanying Consolidated Balance Sheets as of:
|
|
|
|
|
|
|
|
March 31, 2026 |
|
December 31, 2025 |
|
|
(in millions) |
|
Billed Accounts Receivable |
$ |
269.4 |
|
$ |
223.3 |
|
Unbilled Revenue |
|
117.5 |
|
|
168.1 |
|
Less: Allowance for Credit Losses |
|
(3.5 |
) |
|
(2.4 |
) |
Account Receivable, net |
$ |
383.4 |
|
$ |
389.0 |
|
Changes to allowance for credit losses for the three months ended March 31, 2026, and 2025, respectively, were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at Beginning of Year |
|
Additions Charged to Costs and Expenses |
|
Recoveries and Other Additions |
|
Write-offs and Other Deductions |
|
Balance at March 31, |
|
|
(in millions) |
|
2026 |
$ |
2.4 |
|
$ |
2.0 |
|
$ |
0.8 |
|
$ |
(1.7 |
) |
$ |
3.5 |
|
2025 |
$ |
2.1 |
|
$ |
3.4 |
|
$ |
0.9 |
|
$ |
(1.5 |
) |
$ |
4.9 |
|
Materials, Supplies and Fuel
The following amounts by major classification are included in Materials, supplies, and fuel on the accompanying Consolidated Balance Sheets as of:
|
|
|
|
|
|
|
|
March 31, 2026 |
|
December 31, 2025 |
|
|
(in millions) |
|
Materials and supplies |
$ |
119.3 |
|
$ |
117.3 |
|
Fuel - Electric Utilities |
|
6.4 |
|
|
6.4 |
|
Natural gas in storage |
|
21.1 |
|
|
48.7 |
|
Total materials, supplies, and fuel |
$ |
146.8 |
|
$ |
172.4 |
|
Accrued Liabilities
The following amounts by major classification are included in Accrued liabilities on the accompanying Consolidated Balance Sheets as of:
|
|
|
|
|
|
|
|
March 31, 2026 |
|
December 31, 2025 |
|
|
(in millions) |
|
Accrued employee compensation, benefits, and withholdings |
$ |
60.3 |
|
$ |
92.8 |
|
Accrued property taxes |
|
56.9 |
|
|
54.8 |
|
Customer deposits and prepayments |
|
45.4 |
|
|
59.0 |
|
Accrued interest |
|
56.7 |
|
|
57.2 |
|
Other (none of which is individually significant) |
|
40.9 |
|
|
58.8 |
|
Total accrued liabilities |
$ |
260.2 |
|
$ |
322.6 |
|
(14)Pending Merger with NorthWestern
On August 18, 2025, we entered into an Agreement and Plan of Merger (the “Merger Agreement”), with NorthWestern and Merger Sub. The Merger Agreement provides for Merger Sub to merge with and into NorthWestern (the “Merger”), with NorthWestern continuing as the surviving entity and a direct wholly owned subsidiary of Black Hills Corporation, which will assume a new corporate name as the resulting parent company of the combined corporate group. At the effective time of the Merger (the “Effective Time”), each share of common stock of NorthWestern, par value $0.01 per share, issued and outstanding as of immediately prior to the Effective Time will be converted into the right to receive 0.98 validly issued, fully paid and non-assessable shares of our common stock, par value $1.00 per share (or cash-in-lieu of fractional shares thereof), in each case upon and subject to the terms and conditions of the Merger Agreement.
The Merger Agreement, which was unanimously approved on August 18, 2025, by both the board of directors of Black Hills Corporation and the board of directors of NorthWestern, provides for a tax-free, all-stock business combination of Black Hills Corporation and NorthWestern upon the terms and subject to the conditions set forth therein. Such conditions include, among other things, clearance under the HSR Act, consent of the FCC, approval from each company's shareholders, and regulatory approvals, including approval from the SDPUC, NPSC and MPSC, as well as the FERC. To date, the status of these matters is as follows:
•In October 2025, we filed joint applications for approval with the MPSC, NPSC, and SDPUC. In March 2026, we reached a settlement agreement with all intervening parties in Nebraska. A hearing before the NPSC was held in April 2026. In April 2026, we reached settlements agreements with several parties in Montana, which were filed with the MPSC. Also in April 2026, we reached a settlement with the SDPUC Staff, which was filed with the SDPUC. Hearings before the MPSC and SDPUC are scheduled in the second quarter of 2026. All settlement agreements are subject to approval by the respective regulatory commissions.
•On December 22, 2025, we filed a joint application with the FERC. The initial public comment period closed on January 20, 2026. We expect a decision from the FERC by mid-2026.
•On January 30, 2026, the Form S-4, which contains a joint proxy statement/prospectus for the Black Hills Corporation and NorthWestern, was publicly filed with the SEC. On February 6, 2026, the Form S-4 was declared effective by the SEC. On April 2, 2026, shareholders from both Black Hills Corporation and NorthWestern voted to approve the proposed all-stock merger.
•On March 19, 2026, we filed an application for clearance under the HSR Act. The waiting period under the HSR Act was completed on April 20, 2026, satisfying a U.S. antitrust condition to closing.
We anticipate the transaction closing in the second half of 2026, subject to the satisfaction of certain closing conditions including receipt of certain regulatory approvals as mentioned above.
Except as described below, there have been no events subsequent to March 31, 2026, which would require recognition in the Consolidated Financial Statements or disclosures.
See Note 3 for information regarding Wyoming Electric's generation reservation agreement.
See Note 14 for information regarding the pending merger with NorthWestern.
ITEM 2. 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 |
|
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 |
11 |
N/M |
--- |
--- |
South Dakota Electric |
--- |
--- |
--- |
--- |
Wyoming Electric |
--- |
--- |
--- |
--- |
Combined (a) |
5 |
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 |
) |
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:
oCash 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;
oCash 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
oCash 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
(minor differences may result due to rounding) |
Three Months Ended
March 31, 2026 |
2026 |
|
2027 |
|
2028 |
|
2029 |
|
2030 |
|
|
(in millions) |
|
Electric Utilities |
$ |
190 |
$ |
471 |
|
$ |
367 |
|
$ |
455 |
|
$ |
356 |
|
$ |
391 |
|
Gas Utilities |
|
68 |
|
396 |
|
|
455 |
|
|
507 |
|
|
591 |
|
|
552 |
|
Corporate and Other |
|
2 |
|
39 |
|
|
22 |
|
|
21 |
|
|
22 |
|
|
25 |
|
|
$ |
260 |
$ |
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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes to our quantitative and qualitative disclosures about market risk previously disclosed in Item 7A of our 2025 Annual Report on Form 10-K.
ITEM 4. CONTROLS AND PROCEDURES
Our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of March 31, 2026. Based on their evaluation, they have concluded that our disclosure controls and procedures were effective at March 31, 2026.
Our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
During the quarter ended March 31, 2026, there have been no changes in our internal controls over financial reporting that have materially affected, or are reasonably likely, to materially affect our internal control over financial reporting.