Black Hills Corp. Reports 2026 Third-Quarter Results and Reaffirms 2026 Earnings Guidance

Black Hills posts strong earnings growth and secures major long-term utility contracts.

What the company is saying

Black Hills Corp. highlights a significant year-over-year increase in both GAAP and adjusted earnings, with third-quarter GAAP net income rising to $41.0 million and diluted EPS to $0.54. The company attributes these gains to new rates, rider recovery, and favorable weather, which more than offset higher operating and financing costs. CEO Linn Evans emphasizes strategic progress, including binding agreements to serve Google's planned data center, projecting $150 million in net income by 2030 from $1.8 billion invested in new generation. The narrative underscores regulatory wins, such as rate approvals in South Dakota and Arkansas, and a four-year rate moratorium in South Dakota. The company reaffirms its 2026 adjusted EPS guidance of $4.25 to $4.45 and notes the pending closure of its merger with NorthWestern Energy, awaiting only Montana regulatory approval. Dividend growth is also stressed, with a 56-year streak of increases and a new quarterly dividend of $0.703 per share. The tone is confident, focusing on both realised financial results and the upside from large-scale, long-dated projects.

What the data suggests

The disclosed figures show robust financial improvement: third-quarter GAAP net income rose from $24.9 million to $41.0 million, and diluted EPS increased from $0.34 to $0.54 year-over-year. Adjusted earnings and EPS also improved, reaching $43.6 million and $0.57, respectively, for the quarter. Year-to-date GAAP net income stands at $210.2 million, up from $186.6 million, with adjusted EPS at $2.89 versus $2.68. These gains are primarily driven by $0.15 per share from new rates and rider recovery and $0.06 per share from favorable weather in the quarter, and $0.63 per share from new rates and customer growth year-to-date, offsetting $0.12 per share from mild weather and higher costs. The company secured $27.4 million in new annual revenue for South Dakota Electric and $4.0 million for Wyoming Electric, and $17.9 million for Arkansas Gas. Major capital projects are in the pipeline, including $1.8 billion for the Google data center initiative, $686 million in Wyoming transmission expansion, and an additional $2.5 billion in potential investments. The Google contract is de-risked by definitive agreements, but most other projects remain at the regulatory or planning stage. The company reaffirmed its 2026 adjusted EPS guidance and continues to issue equity, raising $69 million year-to-date. Dividend growth remains uninterrupted. Overall, the data supports a narrative of improving core earnings and a pipeline of large, capital-intensive projects with long-term upside.

Analysis

The announcement presents a positive tone, supported by clear, realised improvements in GAAP and non-GAAP net income and EPS for both the quarter and year-to-date periods. These realised financial results are well substantiated with specific figures, satisfying the disclosure completeness rule for a strong_positive signal. However, the release also highlights several large, long-term capital projects (notably the $1.8 billion Google data center initiative and $686 million in transmission investments) whose benefits are projected to materialise over several years, with major earnings contributions not expected until 2027–2030. While the Google project is de-risked by signed definitive agreements, other projects (e.g., Clean Energy Plan, additional $2.5 billion investment) are still at the proposal or regulatory approval stage, and their outcomes remain uncertain. The narrative is somewhat inflated by the emphasis on long-term upside and large forecasted cash flows, but this is balanced by the robust, realised financial performance and the presence of binding agreements for the largest project. The gap between narrative and evidence is moderate: realised earnings growth is strong, but some future-oriented claims are presented optimistically without immediate operational progress.

Risk flags

• ●Execution risk is high for the $1.8 billion Google data center project and the $2.5 billion in planned generation and transmission investments, as these require timely regulatory approvals, on-budget construction, and successful integration of new assets. Delays or cost overruns could materially impact projected returns.
• ●A substantial portion of the projected upside is long-dated, with major earnings contributions from the Google project not expected until 2027–2030 and full cash flow realisation through 2048. This exposes the company to long-term demand, regulatory, and technology risks that could erode anticipated returns.
• ●The company’s capital structure will be increasingly leveraged as it pursues multiple large-scale projects simultaneously, raising the risk of higher financing costs or balance sheet strain if market conditions shift or if regulatory outcomes are less favorable than expected.
• ●Pending regulatory approvals for key projects and the NorthWestern Energy merger introduce uncertainty. While most approvals are in hand, the final Montana Public Service Commission decision remains outstanding, and any adverse ruling could delay or derail the transaction.
• ●Dividend growth and equity issuance are being maintained, but sustained capital outlays and operational risks from new projects could pressure free cash flow and future dividend capacity if project economics deteriorate or execution falters.

Bottom line

Black Hills Corp. is delivering clear earnings growth, with third-quarter and year-to-date results showing strong improvements driven by new rates, customer growth, and favorable weather. The company is aggressively pursuing large-scale, long-term utility contracts, most notably a binding agreement to serve Google’s planned data center, which is set to drive $150 million in net income by 2030 and generate $2.4 billion in free cash flow through 2048. While the Google contract is largely de-risked, the bulk of the company’s capital plan remains subject to regulatory approvals and multi-year execution timelines, introducing significant operational and financial risk. Dividend growth continues, but the company’s capital intensity and reliance on future project success mean investors should watch for regulatory decisions, project milestones, and any signs of cost overruns or delays. The most important takeaway is that Black Hills is transitioning from stable utility earnings to a high-growth, high-capex profile, with future value contingent on flawless execution of its ambitious capital program.

Announcement summary

(NYSE:BKH) Black Hills Corp. announced financial results for the third quarter ended September 30, 2026. For the three months ended September 30, 2026, GAAP net income available for common stock was $41.0 million, compared to $24.9 million in the same period in 2025. GAAP diluted earnings per share (EPS) for the quarter was $0.54, up from $0.34 in 2025. Non-GAAP adjusted earnings for the quarter were $43.6 million, compared to $32.5 million in 2025, and adjusted EPS was $0.57, up from $0.45. For the nine months ended September 30, 2026, GAAP net income was $210.2 million versus $186.6 million in 2025, and GAAP diluted EPS was $2.76 compared to $2.58. Non-GAAP adjusted earnings for the nine months were $220.2 million, up from $194.2 million, and adjusted EPS was $2.89, up from $2.68. Merger-related costs were $0.03 and $0.13 per share for the three and nine months ended September 30, 2026, respectively, compared to $0.10 and $0.11 per share in the same periods in 2025. Third-quarter adjusted EPS benefited from $0.15 per share of new rates and rider recovery and $0.06 per share of weather favorability, offsetting higher operating, financing, and depreciation costs. Year-to-date adjusted EPS benefited from $0.63 per share of new rates, rider recovery, and customer growth, offsetting $0.12 per share of unfavorable weather and higher costs. Black Hills Corp. signed definitive agreements through 2048 with Google and other partners to serve a planned data center in Cheyenne, Wyoming, with earnings expected to begin mid-2027 and increase to approximately $150 million of net income in 2030, based on $1.8 billion investment in 564 MW of new generation and microgrid management fees. The project is contracted to be served through 2.7 GW of resources, including 2.1 GW of third-party contracted resources, and is forecasted to generate unlevered free cash flow of approximately $2.4 billion after netting out $1.8 billion of investment through 2048. Black Hills requested Certificates of Public Convenience and Necessity (CPCNs) for $686 million of electric transmission expansion investments in Wyoming. Additional investment of $2.5 billion in generation and transmission to serve large-load data center demand in Wyoming is identified as significant upside to the current plan. The 99-MW Lange II generation facility is on track to be in service in the fourth quarter of 2026 in South Dakota. South Dakota Electric received approval for a settlement providing $27.4 million in new annual revenue, with a four-year base rate moratorium until August 2030 and new rates effective December 2026. South Dakota Electric also received approval from the Wyoming Public Service Commission for a settlement providing $4.0 million in new annual revenue, with new rates effective December 1, 2026. Wyoming Electric filed for a new Large Customer Transmission Cost Adjustment Mechanism (LCTCAM) and CPCNs for two transmission projects totaling $686 million. The South Cheyenne Transmission Project is an $80 million project with phased service in late 2027 through 2028. The Aeolus Transmission Project is a $606 million project with completion expected by mid-2029. Colorado Electric filed its 2026 Clean Energy Plan, proposing 100 MW of wind, 200 MW of battery storage, and 125 MW of natural gas-fired generation. Colorado Electric also filed a rate review seeking approval to recover $184 million of investments and $26.7 million of new annual revenue. Arkansas Gas received approval for new rates to recover $147 million of system investments, providing $17.9 million of new annual revenue, effective October 12, 2026. Black Hills’ board approved a quarterly dividend of $0.703 per share, payable December 1, 2026, marking 56 consecutive years of increases. Year to date, the company issued 1.0 million shares for net proceeds of $69 million under its at-the-market equity offering program. Black Hills reaffirmed its 2026 adjusted EPS guidance of $4.25 to $4.45, assuming normal weather, constructive regulatory outcomes, a 3.5% increase in operations and maintenance expense off 2025’s $580 million, equity issuance between $50 million and $70 million, and an effective tax rate of approximately 14%. The merger with NorthWestern Energy, announced August 19, 2025, is expected to close by year-end 2026, pending final regulatory approval from the Montana Public Service Commission; all other approvals and conditions have been satisfied.

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