Black Hills Corp: Form 10-Q for the period ended Sep 30, 2025

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 2024 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 1.35 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 141 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 further discussion about the pending Merger.

One Big Beautiful Bill Act

See Note 11 of the Condensed Notes to Consolidated Financial Statements for discussion surrounding the OBBBA.

Trade Tariffs

Trade tariffs have been enacted over the last several months through presidential executive orders affecting products exported by several U.S. trading partners, and retaliatory tariffs have been imposed by some of these trading partners. While some tariffs scheduled to take effect were temporarily suspended, broad tariffs remain in effect with the possibility of additional tariffs being imposed. We are currently unable to predict the impact that recently imposed and possible future tariffs may have on our business. Trade tariffs have not had a material impact on our operations or financial performance to date. We are closely monitoring the impacts of trade tariffs and the potential effect they may have on our financial position, results of operations, or cash flows.

Business Segment Recent Developments

Electric Utilities

• See Note 2 of the Condensed Notes to Consolidated Financial Statements for recent rate review activity for Colorado Electric.
• On March 6, 2025, the state of Wyoming enacted comprehensive wildfire mitigation legislation (HB0192), effective July 1, 2025. The legislation provides material liability protections for a utility that complies with its commission-approved wildfire mitigation plan. The legislation provides a utility a presumption of meeting an appropriate level of operating care for compliance with an approved wildfire mitigation plan. We plan to file our wildfire mitigation plan with the WPSC in the fourth quarter of 2025.
• In 2024, we published our formal WMP, which is an overview of our three-layered approach to manage wildfire risks driven by asset-based risk assessments that include asset programs, integrity programs and operational response. On June 30, 2025, we established our Emergency PSPS program across all three of our electric utilities to promote customer safety and mitigate wildfire risk. In establishing the Emergency PSPS program, we engaged with wildfire experts and key stakeholders including customers, community and local agencies, regulators and community leaders.
• In the first half of 2025, Wyoming Electric set four new all-time peak loads, including an all-time peak of 379 MW on June 20, 2025. Prior to 2025, the previous all-time peak was 314 MW set on January 11, 2024.
• In 2024, Colorado Electric received CPUC approval for the addition of 350 MW of new renewable generation resources in support of its Clean Energy Plan, which included a 50-MW utility-owned battery storage project, a 200-MW solar PPA and a 100-MW utility-owned solar project. On October 8, 2025, Colorado Electric filed a settlement with the CPUC for its request for a CPCN for the 50-MW battery storage project and anticipates a decision by year-end. On October 29, 2025, the CPUC recommended continuing negotiations on the 200-MW solar PPA but recommended no further action on the 100-MW utility-owned solar project.
• On March 28, 2025, South Dakota Electric filed a CPCN with the WPSC for the Lange II project, which was approved in June 2025. The new facility began construction in the third quarter of 2025 and is anticipated to be in service in the second half of 2026.
• During the third quarter of 2025, Wyoming Electric continued construction of its approximately 260-mile, $350 million Ready Wyoming electric transmission expansion project. The project is on track and expected to be completed and in service by year-end 2025.

Gas Utilities

• See Note 2 of the Condensed Notes to Consolidated Financial Statements for recent rate review activity for Iowa Gas, Kansas Gas and Nebraska Gas.

Corporate and Other

• See Note 5 of the Condensed Notes to Consolidated Financial Statements for information regarding our corporate Revolving Credit Facility, October 2, 2025, debt offering and ATM program activity.
• During the second quarter of 2025, we published our 2024 Corporate Sustainability Report, highlighting our environmental, social and governance impacts and our progress on major projects and climate goals.
• On January 17, 2025, Fitch affirmed BHC's long-term issuer rating at BBB+ with a negative outlook. Following the affirmation, the parties jointly withdrew the rating. See Liquidity and Capital Resources section below for additional information on our credit ratings.

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 and nine months ended September 30, 2025, and 2024, and our financial condition as of September 30, 2025, and December 31, 2024, 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

(in millions, except per share amounts)

(a) Includes inter-segment eliminations.

Three Months Ended September 30, 2025, Compared to the Three Months Ended September 30, 2024

• Electric Utilities' operating income decreased $2.7 million primarily due to milder weather and higher operating expenses partially offset by new rates and rider recovery;
• Gas Utilities' operating income increased $9.9 million primarily due to new rates and rider recovery driven by the Arkansas Gas, Kansas Gas, and Nebraska Gas rate reviews and lower operating expenses partially offset by the unfavorable margin impacts of wet summer weather on Nebraska irrigation loads;
• Corporate and Other operating loss increased $4.3 million primarily due to NorthWestern merger-related costs partially offset by an unallocated favorable true-up of operating expenses; and
• Interest expense, net, increased $4.2 million primarily due to higher CP Program borrowings and lower interest income on lower cash and cash equivalents balances partially offset by higher AFUDC debt driven by construction work-in-progress balances related to the Lange II and Ready Wyoming projects.

Nine Months Ended September 30, 2025, Compared to the Nine Months Ended September 30, 2024:

• Electric Utilities’ operating income decreased $10.3 million primarily due to higher operating expenses, unplanned generation outages, lower transmission services revenues and unfavorable weather partially offset by new rates and rider recovery;
• Gas Utilities’ operating income increased $43.1 million primarily due to new rates and rider recovery driven by the Arkansas Gas, Iowa Gas, Kansas Gas, and Nebraska Gas rate reviews and favorable weather partially offset by higher operating expenses;
• Corporate and Other operating loss increased $6.5 million primarily due to NorthWestern merger-related costs;
• Interest expense, net, increased $17.7 million due to higher interest rates on long-term debt, higher CP Program borrowings and lower interest income on lower cash and cash equivalents balances partially offset by higher AFUDC debt driven by construction work-in-progress balances related to the Lange II and Ready Wyoming projects;
• Other income, net, increased $2.8 million primarily due to higher AFUDC equity driven by construction work-in-progress balances related to the Lange II and Ready Wyoming projects;
• Income tax expense increased $2.9 million primarily due to higher pre-tax income; and
• Net income attributable to non-controlling interest decreased $3.1 million due to lower net income from Black Hills Colorado IPP primarily driven by current year unplanned generation outages.

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:

(in millions)

(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 $25.4 million, $27.1 million, $77.7 million, and $74.0 million for the three and nine months ended September 30, 2025, and 2024, respectively, for the Electric Utilities and $38.3 million, $40.5 million, $119.5 million, and $113.2 million for the three and nine months ended September 30, 2025, and 2024, respectively, for the Gas Utilities.

Electric Utilities

Operating results for the Electric Utilities were as follows:

(in millions)

(a) See Non-GAAP Financial Measures section above for reconciliation to Gross margin, the most directly comparable GAAP measure.

Three Months Ended September 30, 2025, Compared to the Three Months Ended September 30, 2024:

• Electric Utility margin increased as a result of the following:

(in millions)

• Operations and maintenance expense increased primarily due to higher outside services expenses and higher generation expenses.
• Depreciation and amortization was comparable to the same period in the prior year.
• Taxes other than income taxes was comparable to the same period in the prior year.

Nine Months Ended September 30, 2025, Compared to the Nine Months Ended September 30, 2024:

• Electric Utility margin increased as a result of the following:

(in millions)

• Operations and maintenance expense increased primarily due to $5.7 million of higher outside services expenses, $4.8 million of higher expenses related to unplanned generation outages, $2.5 million of higher generation expenses, $2.1 million of higher insurance expense and $1.9 million of higher employee related 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

(in millions)

(a) The increase in industrial revenues and quantities sold for the three and nine months ended September 30, 2025, compared to the same periods in 2024, was primarily driven by Wyoming Electric LPCS Tariff and 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.

(in millions)

38

(a) The decrease in coal generation for the three and nine months ended September 30, 2025, compared to the same period in 2024 is primarily due to unplanned outages at Wygen III.

(b) The increase in total purchases for the three and nine months ended September 30, 2025, compared to the same periods in 2024, was primarily driven by increased demand from Wyoming Electric LPCS Tariff and BCIS Tariff customers and unplanned outages at Wygen III as discussed in (a) above.

(a) The shift in South Dakota Electric's generated and purchased GWh for the three and nine months ended September 30, 2025, compared to the same period in 2024 is primarily driven by unplanned outages at Wygen III.

(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 LPCS Tariff and BCIS Tariff customers.

(a) Degree days are calculated based on a weighted average of total customers by state.

(a) Availability and Wind Capacity Factor are calculated using a weighted average based on capacity of our generating fleet.

(b) 2025 included unplanned outages at Wygen III, Pueblo Airport Generation #4-5 and Busch Ranch I and II. 2024 included unplanned outages at Wygen I and Pueblo Airport Generation #4-5.

Gas Utilities

Operating results for the Gas Utilities were as follows:

(in millions)

(a) See Non-GAAP Financial Measures section above for reconciliation to Gross margin, the most directly comparable GAAP measure.

Three Months Ended September 30, 2025, Compared to the Three Months Ended September 30, 2024:

• Gas Utility margin increased as a result of the following:

(in millions)

• Operations and maintenance expense decreased primarily due to lower employee related expenses.
• Depreciation and amortization was comparable to the same period in the prior year.
• Taxes other than income taxes was comparable to the same period in the prior year.

Nine Months Ended September 30, 2025, Compared to the Nine Months Ended September 30, 2024:

• Gas Utility margin increased as a result of the following:

(in millions)

• Operations and maintenance expense increased primarily due to $3.8 million of higher insurance expense and $1.2 million of higher bad debt expense driven by increased revenues and lower prior year write-offs.
• 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

(in millions)

(Dth in millions)

(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.

(in millions)

(Dth in millions)

(a) Arkansas Gas and Kansas Gas have weather normalization mechanisms that mitigate the weather impact on revenue.

(b) The combined heating degree days are calculated based on a weighted average of total customers by state excluding Kansas Gas 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:

(in millions)

Three Months Ended September 30, 2025, Compared to the Three Months Ended September 30, 2024:

• Operating loss increased primarily due to $8.4 million of NorthWestern merger-related costs partially offset by an unallocated favorable true-up of operating expenses.

Nine Months Ended September 30, 2025, Compared to the Nine Months Ended September 30, 2024:

• Operating loss increased primarily due to $8.4 million of NorthWestern merger-related costs.

Consolidated Interest Expense, Other Income and Income Tax Expense

(in millions)

42

Three Months Ended September 30, 2025, Compared to the Three Months Ended September 30, 2024:

• Interest expense, net, increased due to higher CP Program borrowings and lower interest income on lower cash and cash equivalents balances partially offset by higher AFUDC debt driven by construction work-in-progress balances related to the Lange II and Ready Wyoming projects.
• Other income (expense), 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 September 30, 2025, the effective tax rate was 13.5%, compared to 10.0% for the same period in 2024. The higher effective tax rate was primarily driven by non-deductibility of certain NorthWestern merger-related expenses.

Nine Months Ended September 30, 2025, Compared to the Nine Months Ended September 30, 2024:

• Interest expense, net, increased due to higher interest rates on long-term debt, higher CP Program borrowings and lower interest income on lower cash and cash equivalents balances partially offset by higher AFUDC debt driven by construction work-in-progress balances related to the Lange II and Ready Wyoming projects.
• Other income, net, increased primarily due to higher AFUDC equity driven by construction work-in-progress balances related to the Lange II and Ready Wyoming projects;
• Income tax (expense) was comparable to the same period in the prior year. For the nine months ended September 30, 2025, the effective tax rate was 12.2%, which was comparable to 11.4% for the same period in 2024.

Liquidity and Capital Resources

The following table provides an informational summary of our liquidity and capital structure as of:

(dollars in millions)

(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.

(b) On October 2, 2025, we completed a public debt offering of $450 million, 4.55% senior unsecured notes due January 31, 2031. Net proceeds from the offering will be used to repay our $300 million, 3.95% senior unsecured notes at or before their January 2026 maturity and for other general corporate purposes.

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. We plan to repay our $300 million, 3.95%, senior unsecured notes due January 2026, at or before the maturity date.

CASH FLOW ACTIVITIES

The following tables summarize our cash flows for the nine months ended September 30, 2025:

Operating Activities:

(in millions)

Nine Months Ended September 30, 2025, Compared to the Nine Months Ended September 30, 2024

• Total earnings (net income plus non-cash adjustments) were $21.6 million higher for the nine months ended September 30, 2025, compared to the same period in the prior year primarily as a result of increased Electric and Gas Utility margins due to new rates and rider recovery partially offset by higher operating expenses, NorthWestern merger-related costs and higher financing costs.
• Net inflows from changes in certain operating assets and liabilities were $86.1 million lower, primarily attributable to:
• Cash inflows decreased by approximately $63.0 million as a result of changes in accounts receivable and other current assets primarily driven by fluctuations in commodity prices;
• Cash outflows increased by approximately $8.6 million as a result of increases in accounts payable and other current liabilities primarily driven by fluctuations in commodity prices, remediation costs for our manufactured gas plant site in Iowa and changes in other working capital requirements; and
• Cash inflows decreased by approximately $14.5 million as a result of changes in our regulatory assets and liabilities primarily due to lower recoveries of our Winter Storm Uri regulatory asset as recovery is now complete in several of our jurisdictions.
• Cash outflows decreased $3.7 million from other operating activities primarily due to lower costs from cloud computing arrangements.

Investing Activities:

(in millions)

Nine Months Ended September 30, 2025, Compared to the Nine Months Ended September 30, 2024

• Cash outflows from capital expenditures (which are net of contributions in aid of construction) increased $19.7 million primarily as a result of the Ready Wyoming and Lange II projects and prior year receipts related to contributions in aid of construction for data center projects in Wyoming partially offset by prior year expenditures from Black Hills Energy Renewable Resources' acquisition of an RNG production facility at a landfill in Dubuque, Iowa; and
• Cash outflows increased by $4.7 million for other investing activities primarily due to higher AFUDC debt driven construction work-in-progress balances related to the Lange II and Ready Wyoming projects.

Financing Activities:

(in millions)

Nine Months Ended September 30, 2025, Compared to the Nine Months Ended September 30, 2024

• Dividends paid on common stock increased $11.0 million due to the increased dividend rate per share and increased number of common shares outstanding;
• Cash inflows increased $37.6 million due to increased issuances of common stock;
• Net cash outflows decreased $124.7 million primarily as a result of net repayment activity under our CP Program and the prior year repayment of $600 million, 1.04% senior unsecured notes on their August 2024 maturity date partially offset by prior year proceeds from the May 2024, debt offering of $450 million, 6.00% senior unsecured notes;
• Distributions to non-controlling interests decreased $7.3 million due to lower net income from Black Hills Colorado IPP primarily driven by unplanned generation outages; and
• Cash outflows decreased $5.7 million from other financing activities primarily due to prior year financing costs from the May 2024 debt offering.

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:

(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:

45

CAPITAL REQUIREMENTS

Capital Expenditures

(in millions)

(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.

(c) Includes actual capital expenditures for the nine months ended September 30, 2025.

Common Stock Dividends

Dividends paid on our common stock totaled $146.8 million for the nine months ended September 30, 2025, or $0.676 per share. On October 28, 2025, our board of directors declared a quarterly dividend of $0.676 per share payable December 1, 2025, equivalent to an annual dividend of $2.704 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 2024 Annual Report on Form 10-K. There were no material changes made as of September 30, 2025.

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.

There have been no material changes to our quantitative and qualitative disclosures about market risk previously disclosed in Item 7A of our 2024 Annual Report on Form 10-K.

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 September 30, 2025. Based on their evaluation, they have concluded that our disclosure controls and procedures were effective at September 30, 2025.

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 September 30, 2025, 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.

There are no material changes to the risk factors previously disclosed in Item 1A of Part I in our 2024 Annual Report on Form 10-K except as described below.

Risks Related to the Merger

The ability of Black Hills and NorthWestern to complete the Merger is subject to various closing conditions, including the receipt of approval of Black Hills and NorthWestern shareholders and the receipt of consents and approvals from various governmental authorities, which may impose conditions that could adversely affect Black Hills or NorthWestern or cause the Merger to be abandoned. Failure to complete the Merger, or significant delays in completing the Merger, could negatively affect the trading price of Black Hills common stock or other securities and the future business and financial results of Black Hills.

To complete the Merger, Black Hills and NorthWestern shareholders must vote to approve a number of proposals related to the Merger and the Merger Agreement. Further, the Merger is subject to the satisfaction or waiver of certain closing conditions, including, (1) the effectiveness of a registration statement on Form S-4 to be filed in connection with the Merger; (2) subject to certain conditions, the receipt of certain regulatory approvals, including expiration or termination of the applicable waiting period under the HSR Act, and approval from the FERC and certain state regulatory commissions, in each case on such terms and conditions that would not result in a material adverse effect on the combined company; (3) the absence of any court order or regulatory injunction prohibiting completion of the Merger; (4) the authorization for listing of shares of Black Hills Common Stock to be issued in connection with the Merger on the NYSE or other mutually-agreed stock exchange; (5) subject to specified materiality standards, the accuracy of the representations and warranties of each party; (6) compliance by each party in all material respects with its covenants under the Merger Agreement; (7) the absence of a material adverse effect on each party; and (8) receipt by each party of an opinion relating to the anticipated tax-free treatment of the Merger. If the foregoing conditions are not satisfied or waived, one or both of Black Hills or NorthWestern would not be required to complete the Merger.

Black Hills and NorthWestern have not yet obtained shareholder approval or the regulatory consents and approvals required to complete the Merger. Governmental or regulatory agencies could seek to block or challenge the Merger or could impose restrictions they deem necessary or desirable in the public interest as a condition to approving the Merger. Black Hills and NorthWestern will be unable to complete the Merger until the waiting period under the HSR Act has expired or been terminated and the required governmental approvals have been received. Regulatory authorities may impose certain requirements or obligations as conditions for their approval. The Merger Agreement may require Black Hills and/or NorthWestern to accept conditions from these regulators that could adversely impact the combined company. If the required governmental approvals are not received, or they are not received on terms that satisfy the conditions set forth in the Merger Agreement, then neither Black Hills nor NorthWestern will be obligated to complete the Merger.

There can be no assurance that a challenge to the Merger on antitrust grounds will not be made or, if such a challenge is made, of the result of such challenge.

Additionally, even after the statutory waiting period under the antitrust laws and even after completion of the Merger, governmental authorities could seek to block or challenge the Merger as they deem necessary or desirable in the public interest. In addition, in some jurisdictions, a private party could initiate an action under the antitrust laws challenging or seeking to enjoin the Merger, before or after they are completed. Black Hills or NorthWestern may not prevail and may incur significant costs in defending or settling any action under the antitrust laws.

The special meetings at which the Black Hills shareholders and the NorthWestern shareholders will vote on the transactions contemplated by the Merger Agreement may take place before all regulatory approvals have been obtained and, in cases where they have not been obtained, before the terms of any conditions to obtain such regulatory approvals that may be imposed are known. As a result, if shareholder approval of the transactions contemplated by the Merger Agreement is obtained at such meetings, Black Hills and NorthWestern may make decisions after the meetings to waive a condition or approve certain actions required to obtain the necessary approvals without seeking further shareholder approval. Such actions could have an adverse effect on the combined company.

If Black Hills and NorthWestern are unable to complete the Merger, or there is a significant delay in completing the Merger, Black Hills would be subject to a number of risks, including the following:

• Black Hills would not realize the anticipated benefits of the Merger, including, among other things, increased operating efficiencies and future cost savings;
• the attention of management of Black Hills may have been diverted to the Merger rather than to its own operations and the pursuit of other opportunities that could have been beneficial to Black Hills;
• the potential loss of key personnel during the pendency of the Merger as employees may experience uncertainty about their future roles with the combined company;
• Black Hills will have been subject to certain restrictions on the conduct of its business, which may prevent Black Hills from making certain acquisitions or dispositions or pursuing certain business opportunities while the Merger is pending;
• the trading price of Black Hills common stock or other securities may decline to the extent that the current market prices reflect a market assumption that the Merger will be completed; and
• the parties may be liable for damages to one another, or have to pay a termination fee, under the Merger Agreement.

Black Hills can provide no assurance that the various closing conditions will be satisfied and that the required governmental approvals and other approvals will be obtained, or that any required conditions will not materially adversely affect the combined company following the Merger. In addition, Black Hills can provide no assurance that these conditions will not result in the abandonment or delay of the Merger. The occurrence of these events individually or in combination could have a material adverse effect on Black Hills’ results of operations and the trading price of Black Hills common stock or other securities.

The Merger Agreement contains provisions that limit Black Hills’ ability to pursue alternatives to the Merger, could discourage a potential acquirer of Black Hills from making a favorable alternative transaction proposal and, in certain circumstances, could require Black Hills to pay a termination fee to NorthWestern.

Under the Merger Agreement, Black Hills and NorthWestern have agreed, subject to certain exceptions with respect to unsolicited proposals, not to directly or indirectly solicit competing acquisition proposals or to enter into discussions concerning, or provide confidential information in connection with, any unsolicited alternative acquisition proposals. Additionally, the Black Hills board of directors and the NorthWestern board of directors are each required to recommend the approval of the applicable transaction-related proposals to its respective shareholders, subject to certain exceptions. Prior to the approval of the transaction-related proposals by their respective shareholders, the Black Hills board of directors or the NorthWestern board of directors may change its recommendation in response to an unsolicited proposal for an alternative transaction, if such board of directors determines in good faith after consultation with its outside legal counsel and financial advisor that the proposal constitutes or would reasonably be expected to lead to a “Superior NorthWestern Proposal” or “Superior Black Hills Proposal”, as applicable (as such terms are defined in the Merger Agreement), and that failure to take such action would be inconsistent with their fiduciary duties under applicable law to the applicable company and its shareholders under applicable law, subject to complying with certain procedures set forth in the Merger Agreement. Prior to the approval of the transaction-related proposals by their respective shareholders, the Black Hills board of directors and the NorthWestern board of directors may also change its recommendation upon the occurrence of a “NorthWestern Intervening Event” or “Black Hills Intervening Event”, as applicable (as such terms are defined in the Merger Agreement), and such board of directors determines in good faith after consultation with its outside legal counsel and financial advisor that failing to change its recommendation would be inconsistent with its fiduciary duties under applicable law, subject to complying with certain procedures set forth in the Merger Agreement. The Merger Agreement is subject to a “force-the-vote” provision, which means neither Black Hills nor NorthWestern would have an independent right to terminate the Merger Agreement to accept a superior proposal. These provisions could discourage a third party that may have an interest in acquiring all or a significant part of Black Hills from considering or proposing that acquisition, even if such third party were prepared to pay consideration with a higher market value than the market value proposed to be received or realized in the merger, or might result in a potential acquirer proposing to pay a lower price than it would otherwise have proposed to pay. As a result of these restrictions, Black Hills may not be able to enter into an agreement with respect to a more favorable alternative transaction, or may be able to do so only by incurring potentially significant liability to NorthWestern.

The Merger Agreement contains certain customary termination rights for each of Black Hills and NorthWestern; provided, that, either party would be required to pay to the other a termination fee equal to $100 million upon termination of the Merger Agreement in certain circumstances involving (i) a change in recommendation by such party’s board of directors (including, in certain circumstances, the failure of such party to publicly reaffirm its recommendation upon request) or (ii) a party entering into a definitive agreement in respect of a competing transaction within twelve months of termination of the Merger Agreement in certain circumstances involving a potential competing acquisition proposal.

Uncertainties associated with the Merger may cause a loss of management personnel and other key employees of Black Hills and NorthWestern, which could adversely affect the future business and operations of the combined company following the Merger.

Each of Black Hills and NorthWestern depends on the experience and industry knowledge of its officers and other key employees to execute its business plans. The success of the combined company after the Merger will depend in part on its ability to retain key management personnel and other key employees. Current and prospective employees of Black Hills and NorthWestern may experience uncertainty about their roles within the combined company following the Merger or other concerns regarding the timing and completion of the Merger or the operations of the combined company following the Merger, any of which may have an adverse effect on the ability of Black Hills and NorthWestern to retain or attract key management and other key personnel. If Black Hills or NorthWestern is unable to retain personnel, including Black Hills’ or NorthWestern’s key management, who are critical to the future operations of the companies, Black Hills and NorthWestern could face disruptions in their operations, loss of existing customers, loss of key information, expertise or know-how and unanticipated additional recruitment and training costs. In addition, the loss of key Black Hills and NorthWestern personnel could diminish the anticipated benefits of the Merger. No assurance can be given that the combined company, following the Merger, will be able to retain or attract key management personnel and other key employees of Black Hills and NorthWestern to the same extent that Black Hills and NorthWestern have previously been able to retain or attract their own employees.

The business relationships of Black Hills and NorthWestern may be subject to disruption due to uncertainty associated with the Merger, which could have a material effect on the business, financial condition, cash flows and results of operations of Black Hills or NorthWestern pending the combined company and following the Merger.

Parties with which Black Hills or NorthWestern do business may experience uncertainty associated with the Merger, including with respect to current or future business relationships with Black Hills or NorthWestern following the Merger. Black Hills’ and NorthWestern’s business relationships may be subject to disruption as customers, distributors, suppliers, vendors, landlords, joint venture participants and other third parties with whom they do business may attempt to delay or defer entering into new business relationships, negotiate changes in existing business relationships or consider entering into business relationships with parties other than Black Hills or NorthWestern following the Merger. These disruptions could have a material and adverse effect on the business, financial condition, cash flows and results of operations, of Black Hills or NorthWestern, regardless of whether the Merger is completed, as well as a material and adverse effect on the combined company’s ability to realize the expected cost savings and other benefits of the Merger. The risk, and adverse effects, of any disruption could be exacerbated by a delay in completion of the Merger or termination of the Merger Agreement.

Black Hills is subject to risk of the Merger having an adverse impact on its credit rating, both while the Merger is pending and following completion of the Merger.

Black Hills cannot be assured that its credit ratings will not be lowered as a result of the Merger or for any other reason, including the failure to consummate the Merger. Any reduction in Black Hills’ credit ratings, or the criteria used by rating agencies to determine such ratings, could adversely affect its ability to complete the Merger, its access to capital, its cost of capital and its other operating costs, and its ability to refinance or repay Black Hills’ existing debt and complete new financings, which could have a material adverse effect on Black Hills’ business, financial condition, results of operations or the trading price of its common stock or other securities.

The market prices of Black Hills common stock and other securities may be subject to fluctuation while the Merger is pending and after the Merger is completed.

The market price of Black Hills common stock and other securities may fluctuate significantly while the Merger is pending, or after it is completed, and any adverse developments related to the Merger or otherwise could result in holders of Black Hills common stock or other securities losing some or all of the value of their investment. In addition, if the stock market experiences significant price and volume fluctuations, such fluctuations could be exacerbated by the pendency of the Merger, which could adversely affect the market for, or liquidity of, Black Hills common stock or other securities, regardless of Black Hills’ or the combined company’s actual operating performance.

Because the Merger Agreement contemplates that Black Hills will issue shares of Black Hills common stock to NorthWestern’s shareholders based upon a fixed exchange ratio, developments with respect to NorthWestern and its shares of common stock may affect Black Hills common stock irrespective of their relevance to standalone Black Hills and even though Black Hills may have no control over, or knowledge of, such developments. As a result, the market price of Black Hills common stock during the pendency of the Merger may not accurately reflect the value of Black Hills absent the Merger.

Black Hills is subject to contractual restrictions in the Merger Agreement that may hinder its operations while the Merger is pending. The corollary restrictions applicable to NorthWestern may not prevent NorthWestern from taking actions that are adverse to Black Hills or its shareholders.

The Merger Agreement includes certain customary restrictions with respect to the operation of Black Hills’ and NorthWestern’s respective businesses between the date of the Merger Agreement and the consummation of the Merger. These restrictions may prevent Black Hills from pursuing otherwise attractive business opportunities and making other changes to its business prior to completion of the Merger or termination of the Merger Agreement.

Despite these mutual restrictions, Black Hills and NorthWestern will continue to operate their businesses independently of one another during the pendency of the Merger. The restrictions in the Merger Agreement, which are subject to numerous exceptions, may not be adequate to prevent NorthWestern from taking actions that are adverse to Black Hills or its shareholders.

Black Hills will incur significant transaction and other costs in connection with the Merger.

Black Hills has incurred and expects to incur additional significant costs associated with the Merger, including transaction fees and costs of combining the operations of the two companies. Additional unanticipated costs also may be incurred in the integration of the businesses of Black Hills and NorthWestern. Any net benefit from any anticipated elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the businesses, may not be achieved in the near term or at all. Transaction costs could have a material adverse impact on the results of operations of Black Hills, and the failure to achieve the anticipated benefits and efficiencies from the Merger, or the incurrence of additional expenses, could have a material adverse impact on the results of operations of the combined company and its ability to pay dividends after closing. In turn, the current or future market value of Black Hills common stock or other securities could be adversely impacted.

The Merger may not be accretive to Black Hills’ or NorthWestern’s earnings and may cause dilution to Black Hills’ or NorthWestern’s earnings per share, which may negatively affect the current or future market price of Black Hills common stock or other securities.

Expectations that the Merger will be accretive to earnings per share on a standalone basis are based on preliminary estimates any of which may prove to be incorrect or may change materially. Black Hills and NorthWestern may encounter additional transaction and integration-related costs other than those they currently anticipate, may fail to realize all of the benefits anticipated in the Merger or may be subject to other factors that affect preliminary estimates or the ability of either company to realize operational efficiencies. Any of these factors could cause a decrease in Black Hills’ and NorthWestern’s earnings per share, or negatively affect the current or future market price of Black Hills common stock or other securities.

Black Hills and/or NorthWestern may be subject to litigation challenging the Merger while it is pending, and an unfavorable judgment or ruling in any such lawsuits could prevent or delay the consummation of the Merger and/or result in substantial costs.

Lawsuits in connection with the Merger while it is pending may be filed against Black Hills, NorthWestern, any parties to the Merger Agreement and/or their respective directors and officers, which could prevent or delay the consummation of the Merger and/or result in additional costs to us. The ultimate resolution of any such lawsuit cannot be predicted with certainty, and an adverse ruling in any such lawsuit may cause the Merger to be delayed or not to be completed and/or result in additional costs to Black Hills and NorthWestern, which could cause Black Hills and NorthWestern not to realize some or all of the anticipated benefits of the Merger. The defense or settlement of any lawsuit that remains unresolved at the time the Merger is consummated may adversely affect the combined company’s business, financial condition, results of operations and cash flows. Black Hills cannot currently predict the outcome of or reasonably estimate the possible loss or range of loss from any such lawsuit.

Risks Relating to the Combined Company Following Completion of the Merger

Failure to successfully combine the businesses of Black Hills and NorthWestern in the expected time frame or at all may adversely affect the future results of the combined company, and, consequently, the value of the Black Hills common stock after the Merger.

The success of the Merger will depend, in part, on the ability of the combined company to realize in a timely fashion the anticipated benefits and efficiencies from combining the businesses of Black Hills and NorthWestern. The process of integration may reveal that benefits and efficiencies are less than anticipated and may result in additional expenses, all of which could reduce the anticipated benefits of the Merger.

Achieving the anticipated benefits of the Merger is subject to a number of uncertainties, including:

• whether U.S. federal and state public utility, antitrust and other regulatory authorities whose approval is required to complete the Merger impose conditions on the Merger, which may have an adverse effect on the combined company, including its ability to achieve the anticipated benefits of the Merger;
• the ability of the two companies to combine certain of their operations or take advantage of expected growth opportunities;
• general market and economic conditions;
• general competitive factors in the marketplace; and
• higher than expected costs required to achieve the anticipated benefits of the Merger.

Failure to achieve the anticipated benefits and efficiencies from the Merger, or the occurrence of additional expenses, could have a material adverse impact on the results of operations of the combined company and its ability to pay dividends after closing. In turn, the market value of the combined company’s common stock could be adversely impacted.

Black Hills shareholders will have a reduced ownership and voting interest after the Merger and will exercise less influence over management.

It is currently anticipated that Black Hills shareholders and NorthWestern shareholders will hold approximately 56 percent and 44 percent, respectively, of the combined company’s common stock then-issued and outstanding after the completion of the Merger. Consequently, Black Hills shareholders, as a group, will have reduced ownership and voting power in the combined company compared to their current ownership and voting power in Black Hills. As a result of the reduced ownership percentages, current Black Hills shareholders will have less influence on the management and policies of the combined company than they had with Black Hills. Further, provisions of the Merger Agreement will result in individuals designated by NorthWestern, and not previously subject to a vote of Black Hills shareholders, holding five out of eleven positions on the Black Hills board of directors and there will be changes to the Black Hills Management.

The market price of Black Hills common stock after the completion of the Merger may be affected by factors different from those that historically have affected or currently affect Black Hills common stock.

Upon completion of the Merger, NorthWestern shareholders who receive Merger consideration will become holders of Black Hills common stock, which will trade on the NYSE or other mutually-agreeable exchange under a new name and ticker to be announced. Black Hills’ business differs from that of NorthWestern and certain adjustments may be made to the combined company as a result of the Merger. The financial position of the combined company after completion of the Merger may differ from Black Hills’ financial position before the completion of the Merger, and the results of operations and/or cash flows of Black Hills after the completion of the Merger may be affected by factors different from those currently affecting the financial position or results of operations and/or cash flows of Black Hills and NorthWestern, respectively. Accordingly, the market price of Black Hills common stock after the completion of the Merger may be affected by factors different from those currently affecting the market prices of Black Hills common stock and NorthWestern common stock, respectively, in the absence of the Merger. In addition, general fluctuations in stock markets could adversely affect the market for, or liquidity of, Black Hills common stock, regardless of the combined company’s actual operating performance.

Each of Black Hills and NorthWestern may have liabilities that are not known to the other party.

Each of Black Hills and NorthWestern may have liabilities that the other party failed, or was unable, to discover in the course of performing its respective due diligence investigations. Black Hills and NorthWestern may learn additional information about the other party that materially adversely affects it, such as unknown or contingent liabilities and liabilities related to compliance with applicable laws. As a result of these factors, the combined company may incur additional costs and expenses and may be forced to later write-down or write-off assets, restructure operations or incur impairment or other charges that could result in the combined company reporting losses. Even if Black Hills’ and NorthWestern’s respective due diligence has identified certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with its expectations. If any of these risks materialize, this could adversely affect the combined company’s financial condition and results of operations and could contribute to negative market perceptions about, or price movements of, the combined company’s common stock following the Merger.

Each of NorthWestern and Black Hills and their respective subsidiaries has substantial amounts of indebtedness. Consequently, the combined company will have substantial indebtedness following the Merger. As a result, the rating of the combined company’s indebtedness could be downgraded, and it may be difficult for the combined company to pay or refinance its debts or take other actions, and the combined company may need to divert its cash flow from operations to debt service payments.

The combined company’s debt service obligations could have an adverse impact on its earnings and cash flows for as long as the indebtedness is outstanding.

The combined company’s indebtedness could also have important consequences for holders of Black Hills common stock. For example, it could:

• make it more difficult for the combined company to pay or refinance its debts as they become due during adverse economic and industry conditions because any decrease in revenues could cause the combined company to not have sufficient cash flows from operations to make its scheduled debt payments;
• require a substantial portion of the combined company’s cash flows from operations to be used for debt service payments, thereby reducing the availability of its cash flow to fund working capital, capital expenditures, acquisitions, dividend payments and other general corporate purposes;
• result in a downgrade in the rating of the combined company’s indebtedness, which could limit its ability to borrow additional funds or increase the interest rates applicable to its indebtedness;
• increasing the risk of default on debt obligations of the combined company;
• limiting the flexibility of the combined company in planning for or reacting to changes in its business and the industry in which it operates;
• increasing the exposure of the combined company to a rise in interest rates, which would generate greater interest expense or the costs of obtaining applicable interest rate fluctuation hedges; or
• require that additional or more stringent terms, conditions or covenants be placed on Black Hills.

There can be no assurance that the combined company will be able to repay or refinance such borrowings and obligations. In addition, the Merger will result in NorthWestern becoming a wholly owned subsidiary of Black Hills. The combined company may decide to incur additional indebtedness at subsidiaries of Black Hills, which could have an effect on outstanding securities, including because such subsidiary indebtedness is “structurally senior” to the indebtedness of its parent company with respect to the assets of such subsidiary.

The future results of the combined company following the Merger will suffer if the combined company does not effectively manage its expanded operations.

Following the Merger, the size, geographic footprint and complexity of the combined company will increase significantly compared to the business of each of Black Hills and NorthWestern. The combined company’s future success will depend, in part, upon its ability to manage this expanded business, which will pose substantial challenges for management, including challenges related to the management and monitoring of new operations and geographies and associated increased costs and complexity. The combined company may also face increased scrutiny from, and/or additional regulatory requirements of, governmental authorities as a result of the significant increase in the size, geographic footprint and complexity of its business. There can be no assurances that the combined company will be successful or that it will realize the expected operating efficiencies, cost savings or other benefits currently anticipated from the Merger.

There is no guarantee regarding dividends following the Merger.

Although each of Black Hills and NorthWestern has returned capital to its respective shareholders in the past, including through cash dividends on their respective shares of common stock, the board of directors of the combined company may determine not to declare dividends or use other means to return capital to its shareholders in the future or may reduce the amount, proportion or rate of capital returned to its shareholders through dividends or other means in the future. Decisions on whether, when, by what means and in what amounts to return capital to its shareholders will remain in the discretion of the board of directors of the combined company (as reconstituted following the Merger). Any dividend payment or share repurchase amounts will be determined by the board of directors of the combined company from time to time, and it is possible that the board of directors of the combined company may increase or decrease the amount of dividends paid or shares repurchased in the future, or determine not to declare dividends and/or repurchase shares in the future, at any time and for any reason. Black Hills expects that any such decisions will depend on the combined company’s financial condition, results of operations, cash balances, cash requirements, future prospects, the outlook for commodity prices and other considerations that the board of directors of the combined company deems relevant, including, but not limited to:

• whether the combined company has enough discretionary cash flow to return capital to its shareholders due to its cash requirements, capital spending plans, cash flows or financial position;
• the combined company’s desire to maintain or improve the credit ratings on its debt; and
• applicable restrictions under South Dakota law. Shareholders should be aware that they have no contractual or other legal right to dividends that have not been declared.

The combined company is expected to record a significant amount of goodwill as a result of the Merger, and such goodwill could become impaired in the future.

Accounting standards in the United States require that one party to the Merger be identified as the acquirer. In accordance with these standards, the Merger will be accounted for as an acquisition of NorthWestern’s common stock by Black Hills and will follow the acquisition method of accounting for business combinations. NorthWestern assets and liabilities will be consolidated with those of Black Hills on the combined company’s financial statements. The excess of the consideration transferred over the fair values of NorthWestern’s assets and liabilities will be recorded as goodwill.

Black Hills will be required to assess goodwill for impairment at least annually. To the extent goodwill becomes impaired, Black Hills may be required to incur material charges relating to such impairment. Such a potential impairment charge could have a material impact on Black Hills’ future operating results and statements of financial position which may, in turn, have a material adverse effect on the trading price or liquidity of Black Hills securities.

Black Hills’ ability to utilize its and/or NorthWestern’s historic net operating loss carryforwards and certain other tax attributes may be limited.

As of December 31, 2024, NorthWestern had U.S. federal net operating loss carryforwards (“NOLs”) of approximately $486.6 million, which do not expire. As of December 31, 2024, Black Hills had NOLs of approximately $547.2 million, which also do not expire. However, the NOLs of each of NorthWestern and Black Hills can only be used to offset 80% of U.S. federal taxable income. Black Hills’ ability to utilize these NOLs and other tax attributes to reduce future taxable income following the closing of the Merger depends on many factors, including its future income, which cannot be assured, and which will be determined after the Merger on a consolidated basis with that of NorthWestern. It is possible that the amount of NOLs and other tax attributes that Black Hills is able to utilize in any tax period ending after the closing of the Merger may be less than the amount that Black Hills and NorthWestern together (or either of them separately) would have been able to use had the Merger not taken place.

Additionally, Section 382 of the Code (“Section 382”) and Section 383 of the Code generally impose an annual limitation on the amount of NOLs and certain other tax attributes that may be used to offset taxable income when a corporation has undergone an “ownership change” (as determined under Section 382). An ownership change generally occurs if one or more shareholders (or groups of shareholders) who are each deemed to own at least 5% of such corporation’s stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. In the event that an ownership change occurs with respect to Black Hills and/or NorthWestern, utilization of Black Hills and/or NorthWestern’s NOLs would be subject to an annual limitation under Section 382, generally determined by multiplying (1) the fair market value of its stock at the time of the ownership change by (2) the long-term tax-exempt rate published by the IRS for the month in which the ownership change occurs, subject to certain adjustments. Any unused annual limitation may be carried over to later years.

The completion of the Merger may cause Black Hills and/or NorthWestern to undergo an ownership change under Section 382, which would trigger a limitation (calculated as described above) on Black Hills’ ability to utilize its and/or NorthWestern’s historic NOLs and other tax attributes.

Future sales or issuances of Black Hills common stock could have a negative impact on the Black Hills common stock price.

Under the terms of the Merger Agreement, NorthWestern shareholders will receive a fixed exchange ratio of 0.98 shares of Black Hills common stock for each share of NorthWestern common stock they own at the close of the Merger. Based on the 61,393,380 shares of NorthWestern common stock outstanding as of July 25, 2025, Northwestern shareholders would receive approximately 60,165,512 shares of Black Hills common stock upon the closing of the Merger. The treatment of outstanding equity awards of each of Black Hills and NorthWestern will vary depending on the type of award, its terms and conditions, and determinations made or to be made by each company or its board of directors, but additional shares, or cash in respect of share equivalents, would be issued to settle equity awards, and such shares are not reflected in the share totals included in the preceding sentence. The Black Hills common stock that NorthWestern shareholders will receive upon the exchange of NorthWestern common stock for the Merger consideration or in settlement of outstanding equity awards generally may be sold immediately in the public market. It is possible that some former NorthWestern shareholders may seek to sell some or all of the shares of Black Hills common stock they receive as Merger consideration, and the Merger Agreement contains no restriction on the ability of former NorthWestern shareholders to sell such shares of Black Hills common stock following completion of the Merger. Other Black Hills shareholders may also seek to sell shares of Black Hills common stock held by them following completion of the Merger. These sales or other dispositions of a significant number of shares of Black Hills common stock (or the perception that such sales or other dispositions may occur), coupled with the increase in the outstanding number of shares of Black Hills common stock as a result of the Merger (as well as any increase resulting from future issuances of Black Hills common stock), may affect the market for Black Hills common stock in an adverse manner and may cause the price of Black Hills common stock to fall.