MDU Resources Group Q1 2025 Earnings Call Transcript

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Provided by Quartr
May 8, 2025
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Operator

my name is Inna, and I will be your conference facilitator. At this time, I would like to welcome everyone to the MDU Resources Group twenty twenty five First Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer period. The webcast can be accessed at ww.mdu.com under the Investors heading.

Operator

Select Events and Presentations and take Q1 twenty twenty five Earnings Conference Call. After the conclusion of the webcast, a replay will be available at the same location. I would now like to turn the conference over to Jason Volmer, Chief Financial Officer of MDU Resources Group. Thank you, Mr. Volmer.

Operator

You may begin your conference.

Jason Vollmer
Jason Vollmer
CFO at MDU Resources Group

You, and I'd like to welcome everyone to our first quarter twenty twenty five earnings conference call. You can find our earnings release and supplemental materials for this call on our website at www.mdu.com under the Investors tab. Leading today's discussion along with me is Nicole Cabisto, President and CEO of MDU Resources. During our call, we will make certain forward looking statements within the meaning of the securities laws federal securities laws. For more information about the risks and uncertainties that could cause our actual results to vary from any forward looking statements, please refer to our most recent SEC filings.

Jason Vollmer
Jason Vollmer
CFO at MDU Resources Group

I'll provide consolidated financial results later during the call, but first, we'll turn the call over to Nicole for her remarks. Nicole?

Nicole Kivisto
Nicole Kivisto
President & CEO at MDU Resources Group

Thank you, Jason, and thank you, everyone, for joining us today and for your continued interest in Immune Resources. We are off to a strong start in 2025. This morning, we reported income from continuing operations of $82,500,000 or $0.40 per share for the first quarter, a 10.4% increase compared to this time last year. Our pipeline and natural gas distribution segments grew earnings by 13.911.5% respectively year over year, driving our solid first quarter performance. I am extremely proud of our employees whose dedication to our core strategy continues to deliver exceptional performance and positions MDU Resources with compelling long term growth prospects.

Nicole Kivisto
Nicole Kivisto
President & CEO at MDU Resources Group

Our utility experienced 1.4% combined retail customer growth compared to a year ago, which is in line with our 1% to 2% annual projected growth rate. This growth reinforces our need to invest in our utility infrastructure to meet the demands of our growing customer base. At our Electric segment, we signed a purchase agreement to acquire a 49% ownership interest in the Badger Wind Farm during the quarter, which equates to 122.5 megawatts of the project's total two fifty eight megawatts of generation capacity. The purchase is contingent on certain regulatory approvals, and we have filed an advanced determination of prudence with the North Dakota Public Service Commission for this project. We also anticipate filing general rate cases in Montana and Wyoming at our Electric segment yet this year.

Nicole Kivisto
Nicole Kivisto
President & CEO at MDU Resources Group

From a legislative perspective, wildfire prevention and liability limitation bills have passed in three of our four electric states: Wyoming, North Dakota and Montana. While we remain focused on designing processes to prevent wildfires in our service territory, this legislation provides greater certainty going forward and limits liability. We continue to see data center opportunities, including the five eighty megawatts of data center load we have under signed electric service agreements. Of that total, 180 megawatts is currently online with an additional 100 megawatts expected to come online late this year and the balance expected to continue through the next few years. Our current approach is to serve these large customer opportunities with a capital light business model, which not only benefits our earnings and returns, but also provides cost savings to our other retail customers.

Nicole Kivisto
Nicole Kivisto
President & CEO at MDU Resources Group

At our Natural Gas Distribution segment, rate relief was a strong contributor to the quarterly results. In Washington, we received a final order approving our multiyear rate case with year one rates effective 03/05/2025 and year two rates effective 03/01/2026. Subsequently, we did file a revision to decrease revenue slightly due to forecasted plant that was not placed in service by 12/31/2024. In Montana, we received approval of interim rates effective February 1 and also filed a settlement agreement on 04/03/2025. In Wyoming, we have reached a settlement in principle in our rate case there and anticipate filing that settlement in the near term.

Nicole Kivisto
Nicole Kivisto
President & CEO at MDU Resources Group

We also anticipate filing a general rate case in Idaho yet in the second quarter. Moving on to our pipeline segment. We achieved record first quarter earnings, up 13.9% from the first quarter of twenty twenty four. The segment is executing well on our core strategy and delivering strong results, driven by strategic expansion and increased demand for transportation and storage services. We remain committed to investing in future expansion projects to meet increasing customer demand for services, including strong interest from industrial customers and power generation projects.

Nicole Kivisto
Nicole Kivisto
President & CEO at MDU Resources Group

In January 2025, we completed a nonbinding open season for our proposed Bakken East Pipeline project that could run approximately three seventy five miles from the Bakken region to Eastern North Dakota. This project would provide much needed takeaway capacity to meet the forecasted natural gas production growth in the region and provide natural gas transportation service to industrial, power generation and local distribution companies. Currently, we are engaged in planning and discussions with potential customers and landowners along the proposed route, and we are targeting an in service date of late twenty twenty nine for the first phase of this project and late two thousand thirty for the second phase. As a reminder, this project is not currently in our

Nicole Kivisto
Nicole Kivisto
President & CEO at MDU Resources Group

five year capital forecast and would be incremental should we determine to proceed. Additionally, in April, we announced a binding open season for

Nicole Kivisto
Nicole Kivisto
President & CEO at MDU Resources Group

the Baker storage field enhancement and transportation expansion project. The proposed project could add 72,000,000 cubic feet per day of new firm natural gas storage deliverability and transportation service. The open season runs through 05/20/2025. Looking at the full year for MD Resources, we are affirming our earnings per share guidance in the range of $0.88 to $0.98 per share. This range reflects continued strong performance across our segments coming off a strong first quarter.

Nicole Kivisto
Nicole Kivisto
President & CEO at MDU Resources Group

As we look ahead, we are focused on our core strategy, which emphasizes customers and communities, operational excellence, returns focus and employee driven. We believe we are well well positioned for growth into the future with anticipated capital investment of $3,100,000,000 over the next five years, seven percent to 8% compound annual utility rate base growth and customer growth expected in the 1% to 2% range annually. We also anticipate a long term EPS growth rate of 6% to eight percent while targeting a 60% to 70% annual dividend payout ratio. As always, MBU Resources is committed to operating with integrity and with a focus on safety. We remain dedicated to delivering value as a leading energy provider and employer of choice.

Nicole Kivisto
Nicole Kivisto
President & CEO at MDU Resources Group

I will now turn the call back over to Jason for the financial update. Jason?

Jason Vollmer
Jason Vollmer
CFO at MDU Resources Group

Thank you, Nicole, and I'm pleased to share the details of our first quarter results. This morning, we announced first quarter earnings of $82,000,000 or $0.40 per diluted share compared to first quarter twenty twenty four earnings of $100,900,000 or $0.49 per diluted share. First quarter income from continuing operations was $82,500,000 or $0.40 per share compared to $74,700,000 or $0.37 per share in the prior year. As we look at our individual businesses, our electric utility reported first quarter earnings of $15,000,000 compared to $17,900,000 for the same period in 2024. Retail sales revenue increased due to higher volumes for residential customers due to colder weather and from higher data center volumes.

Jason Vollmer
Jason Vollmer
CFO at MDU Resources Group

This increase was more than offset by higher operation and maintenance expense largely from higher contract services for outage related costs at two electric generating stations, increased software and insurance expenses and higher payroll related costs. Lower returns on non qualified benefit plan investments also impacted results. Our natural gas utility segment reported earnings of $44,700,000 in the first quarter, an 11.5% increase over the first quarter of twenty twenty four, which was $40,100,000 The improvement was largely the result of higher retail sales revenue due to rate relief in Washington, Montana and South Dakota as well as increased volumes due to colder weather. These increases were partially offset by higher operation and maintenance expense and lower investment returns on non qualified benefit plans. The pipeline segment posted record first quarter earnings of $17,200,000 compared to $15,100,000 in the first quarter last year.

Jason Vollmer
Jason Vollmer
CFO at MDU Resources Group

The earnings increase was driven by growth projects placed in service throughout 2024 and customer demand for short term firm capacity contracts. Higher storage related revenue further drove the increase. Partially offsetting the increase was higher operational maintenance expense, primarily higher payroll related costs. The business also incurred higher depreciation expense due to the growth projects we previously discussed and lower investment returns on nonqualified benefit plans. Finally, MDR Resources continues to manage a strong balance sheet and maintain ample access to working capital to finance its operations throughout our peak seasons.

Jason Vollmer
Jason Vollmer
CFO at MDU Resources Group

While we have no equity needs in 2025 based on our current capital plan, our $3,100,000,000 capital investment program over the next five years will likely require some access to the equity capital markets. As such, we plan to reestablish an ATM program in the near term to meet those future needs. Business momentum is strong as we close out the first quarter of twenty twenty five, and we will continue to provide updates regarding our 2025 guidance and outlook as we progress throughout the year. That summarizes financial highlights for the quarter. We appreciate your interest in and commitment to MD Resources and ask that we now open the line for questions.

Jason Vollmer
Jason Vollmer
CFO at MDU Resources Group

Operator?

Operator

Thank you. Your first question comes from the line of Chris Hellinghouse from Seabrook Williams. Please go ahead.

Christopher Ellinghaus
Managing Director at Siebert Williams Shank

Hey, everybody. How are you? Nicole, the large customer load strategy that you guys are deploying being capital light, Are the rates that you're are the tariffs that you're seeing demanded from the large customers not accretive for new resources in what you're seeing?

Nicole Kivisto
Nicole Kivisto
President & CEO at MDU Resources Group

Yes. Good afternoon, Chris, and thanks for the question. So as we think about our opportunity on the data center front, I would describe what we have right now in terms of the five eighty megawatts of ESAs. Five thirty of that is in our Ellendale location. And there was really a unique opportunity there to serve that load in a capital light manner because we had a situation where there was basically constrained area or pocket within our system where there was generation that was not getting to market.

Nicole Kivisto
Nicole Kivisto
President & CEO at MDU Resources Group

So how I would describe that opportunity is it was best for us to think about that on a capital light manner because, one, it was accretive incrementally right away, as I mentioned in the script, to our earnings and ROE, but also provided benefit because that transmission then cost was shared with this large customer, and that benefit then went back to our retail customer base. So that strategy in that particular pocket was the right strategy for that time. What I will say is we continue to evaluate in conversations with other customers if it would make sense to look at incremental generation. Of course, that is going to have to make sense for us financially. It will have to make sense for our regulators and also certainly not have impact to our overall retail customer base.

Nicole Kivisto
Nicole Kivisto
President & CEO at MDU Resources Group

So we continue to look for opportunities to think differently going forward. But currently, today, we like the model that we have.

Christopher Ellinghaus
Managing Director at Siebert Williams Shank

Okay.

Christopher Ellinghaus
Managing Director at Siebert Williams Shank

The there's an awful lot of potential disruption to the economy. Have you got any thoughts that certainly, there's some potential disruption to the Bakken, certainly with oil prices where they are and the type of oil resource that the Bakken is. Have you got any thoughts on how it might affect particularly North Dakota?

Nicole Kivisto
Nicole Kivisto
President & CEO at MDU Resources Group

Yes. I would say overall, Chris, the way we look at the Bakken play is this is a long term play. And the I guess, what I would describe as a couple of things in terms of how that relates to MDU Resources in total. One would be and we've shared in the past with investors, how you look at that gas to oil ratio increasing over time. It certainly is an oil play.

Nicole Kivisto
Nicole Kivisto
President & CEO at MDU Resources Group

It's very important to the state of North Dakota. And so as you can imagine, the state is very interested in the Bakken region in totality. But as it relates specifically to MDU Resources, one of the things that we see is that there is more need for takeaway capacity. And we've talked to investors about that in the past. And that one of the drivers is because the gas to oil ratio has been increasing over time.

Nicole Kivisto
Nicole Kivisto
President & CEO at MDU Resources Group

So yes, the pricing environment does ebb and flow, but we do believe long term in what's happening in the Bakken and believe that there are long term benefits, not only producer push benefits from but customer pull. Industrial demand has increased. We've talked about natural gas fired generation being a driver for growth in the future. All of those fundamentals we still think hold.

Christopher Ellinghaus
Managing Director at Siebert Williams Shank

Okay. So your thought is the gas side is, at least in the long term, more of an offset to whatever kind of pressures there might be on oil in the near term?

Nicole Kivisto
Nicole Kivisto
President & CEO at MDU Resources Group

Yes. For the most part, I would say you summarized that right. Mean yes, go ahead, Jason. Were you going to add to that?

Jason Vollmer
Jason Vollmer
CFO at MDU Resources Group

Yes. Was going to say, certainly, if the projections that we see from whether it's North Dakota Pipeline Authority or other places would show that even if oil stays relatively flat, so again, not a lot of drilling. But you're going to see the gas to oil ratio continue to climb where gas continues to be a benefit here. Again, gas is not the target in the Bakken. Oil is the target.

Jason Vollmer
Jason Vollmer
CFO at MDU Resources Group

So that does have some impact on the capital dollars flowing into drilling opportunities. But gas is an ever increasing commodity being produced in the Bakken, and we think that's going to provide long term benefits both for our pipeline business and our utility customers with a cost source of natural gas.

Christopher Ellinghaus
Managing Director at Siebert Williams Shank

Sure.

Christopher Ellinghaus
Managing Director at Siebert Williams Shank

There's also some concern about sort of housing starts and I guess that's really more of a residential type of concern. So just thinking about your service areas and what might be impacted, I was kind of curious your thoughts on this. One of your higher growth areas is Boise. And just given the type of economic development in Boise, would you be thinking that, that area is somewhat insulated from economic sensitivity given the types of large customer growth that is taking place there and therefore the residential growth that you benefit from might be more or less economically sensitive?

Nicole Kivisto
Nicole Kivisto
President & CEO at MDU Resources Group

Yes. I would say that's fair. I mean, Chris, the way I would look at this is over time, as we think about the customer growth rate, whether and again, I would say we look at this from an overall perspective, we have been riding in that range of 1%. Within that 1% to 2%, and that is carried through periods of slowdown and acceleration. And so economic conditions obviously do matter.

Nicole Kivisto
Nicole Kivisto
President & CEO at MDU Resources Group

But I would say fundamentally, we have been able to kind of stay within that range. Now as it relates to Idaho specific, you are correct. We have as we thought about that market, we have certainly seen that as being one of the faster growing areas within our service territory. And again, that has ebbed and flowed a little bit, but continues to rise to the top in terms of one of our higher customer addition areas. That all being said, as you know, rate base is also certainly a consideration as we think about earnings potential within utility.

Nicole Kivisto
Nicole Kivisto
President & CEO at MDU Resources Group

And so I would take you back to as we think about our ability to grow rate base within our utility, we're still very focused on achieving that seven to 8% rate base growth, which ultimately drives earnings growth as we think about the forward look.

Christopher Ellinghaus
Managing Director at Siebert Williams Shank

Okay. That's helpful. Jason, can I ask you sort of an accounting question here? In your restated number versus last year's reported. Obviously, you're pulling out construction services as discontinued.

Christopher Ellinghaus
Managing Director at Siebert Williams Shank

But what else goes in there? I mean, we can do the math of pulling out what you reported for construction services last year, but it's incremental to that. What's the incremental part versus what you were on a reported basis last year?

Jason Vollmer
Jason Vollmer
CFO at MDU Resources Group

Yes. So if we look back to last year, there's a couple of things when you look at the restated numbers. So it would be accounting for, as you mentioned, Everest being pulled out as a discontinued operation. We would also have probably some costs still continuing as we went through the process of separating Knife River the year before that some of that would flow through as continuing or discontinued operations in the prior year. And even going back as far as when we separated previous businesses before like Fidelity, if you remember that part of the business in the past, there are a few things that end up in discontinued operations that flow through those numbers.

Jason Vollmer
Jason Vollmer
CFO at MDU Resources Group

The bulk of what's there is going be Everest related. I think if you look at just the regulated energy delivery earnings we posted last year and divide that out by our number of shares, it would have gotten you in that probably $0.35 0 3 6 dollars range per share. Our number that we're showing now is $0.37 for the prior year, so there's not a lot of impacts in there outside of the Everest transaction would be the biggest piece of it.

Christopher Ellinghaus
Managing Director at Siebert Williams Shank

Is any portion of that your assessment of the dis synergies of the separation?

Jason Vollmer
Jason Vollmer
CFO at MDU Resources Group

No. The dis synergies actually those are costs that would be end up flowing through O and M on the remaining businesses here. So that actually is in continuing operations and is reflected in the $0.40 that we showed for the quarter here, this $0.25

Christopher Ellinghaus
Managing Director at Siebert Williams Shank

All right. That's what I wanted to figure out. Thanks so much for the details, guys. Appreciate it.

Nicole Kivisto
Nicole Kivisto
President & CEO at MDU Resources Group

Chris. Thank you.

Operator

Thank you. And your next question comes from the line of Julien Dumoulin Smith from Jefferies. Please go ahead.

Brian Russo
Brian Russo
Analyst at Jefferies

Yes. Hi, it's Brian Russo on for Julian.

Nicole Kivisto
Nicole Kivisto
President & CEO at MDU Resources Group

Hello, Brian.

Brian Russo
Brian Russo
Analyst at Jefferies

Hello. Hey, just if we could just focus on the electric segment first. The earnings were down year over year. You did report retail electric volumes up 25%. I was just wondering if maybe we could unpack kind of the positive drivers like sales versus some of the negative drivers like the outages and maybe quantify what the lower returns on the nonqualified plants look like.

Brian Russo
Brian Russo
Analyst at Jefferies

It just seemed like retail volumes were so strong that I'm surprised it was down as much as it was year over year.

Jason Vollmer
Jason Vollmer
CFO at MDU Resources Group

Yes. Thanks, Brian. I can jump in and field some of those, and we'll quantify some as we can along the way here. But for the most part, if you look at the electric on a year over year basis, if you think back to our previous few years, we've been through a lot of rate case activity in the electric side of the business. And we really didn't have much of that that would have been incremental in Q1 of this year, right?

Jason Vollmer
Jason Vollmer
CFO at MDU Resources Group

So that was those rates were primarily put in effect in prior years. So we did not have a significant amount of, what I'll call, regulatory rate relief in Q1 versus prior year on that one. What we did have is, of course, some higher O and M, which you would expect as we've seen payroll increases and just general cost increases along the way. And some of that O and M was related to the generating station outages, as you mentioned as well, and I can cover off on that in a minute. I think generally speaking, if you look at the increase in volume, you may remember last year in the first part of the year, our data center customer, the 180 megawatts that's currently in service, was not online at that point in time.

Jason Vollmer
Jason Vollmer
CFO at MDU Resources Group

They had some outages on their end, So they were not taking as much power. So a lot of that retail electric volume increase was really that data center now being online for the full first quarter where it had not been for the first quarter and actually a little bit in the second quarter last year as well. As far as the outages that we saw, we did have a planned outage in our estimates this year as we thought about setting guidance. That was for our coiled station. So that was an outage that we knew was going to have some sort of an impact for us here as we went through the year and really probably largely gets completed by the end of Q2.

Jason Vollmer
Jason Vollmer
CFO at MDU Resources Group

The other one was an unplanned outage actually at the co owned facility that we have with WyeGen. And that was, again, unplanned outage, we had a little bit of an impact from there. So all of those things though I think as we set our guidance earlier in the year and as we've reaffirmed our guidance range here today, those are all included in those numbers. So didn't expect to see a big impact. The other item that you didn't ask about was the nonqualified benefit plan.

Jason Vollmer
Jason Vollmer
CFO at MDU Resources Group

So again, if you remember the equity markets in the first part of last year had a equity and debt market, so I guess probably had a pretty strong return profile. And there are some assets set aside here to cover liabilities for these nonqualified plans that we do end up seeing some income statement impact to. What we really saw was just a different performance in the investments in the first quarter here than we saw in the first quarter of last year. So not a significant impact. You would see it as a driver in each of the segments.

Jason Vollmer
Jason Vollmer
CFO at MDU Resources Group

It was I'll quantify it probably in total somewhere in the neighborhood of $0 per share for the entire organization, not just for electric but across all of our segments. But overall, I guess, not significantly different than what we would have seen previously. So hopefully, that answers your question.

Brian Russo
Brian Russo
Analyst at Jefferies

Yes, that's helpful. And then just maybe to follow on now that you have the 180 megawatts from Applied Digital online annual for the year of course, is North Dakota in the sharing band this year versus not last year while that ESA volumes ramped up?

Jason Vollmer
Jason Vollmer
CFO at MDU Resources Group

Yes. So our ESA does have some band around sharing and I would hesitate to give you an answer on that right now because it really will depend on how our performance is throughout the year, not just on a quarter by quarter basis. So we do an annual filing on that with the state as we look through that piece. So depending on performance throughout the year, we can probably update you with that later in the year. But we haven't been in a situation in prior years where we have had to share some with the state of North Dakota, which again is a good measure for those that may not be familiar.

Jason Vollmer
Jason Vollmer
CFO at MDU Resources Group

If we get above a 10% ROE, we end up having to share some of that back with our customers and we get to keep a portion of that as well. So that's a good position to be in and we have been in that in the past. Whether we're going be in there in 2025 or not yet to be determined.

Brian Russo
Brian Russo
Analyst at Jefferies

Okay, great. And then on the Bakken I'm sorry, the pipeline segment, the Bakken East project. Are you more confident in that in successful development following the conclusion of the open season? And then what are the next milestones assuming a late twenty twenty nine and 02/1930 Phase one, Phase two start?

Nicole Kivisto
Nicole Kivisto
President & CEO at MDU Resources Group

Yes. I would characterize it as conversations continue. So you heard us on last quarter call talk about that we continue conversations with customers, and that is certainly what we are doing. And so those conversations will really inform us in terms of overall route timing, etcetera. And so I would characterize it probably as we did really last quarter.

Nicole Kivisto
Nicole Kivisto
President & CEO at MDU Resources Group

We're encouraged by the feedback that we're getting from customers. But on the same token, we want to be mindful of making sure that we continue to work with them on overall route design, etcetera. So that's

Jason Vollmer
Jason Vollmer
CFO at MDU Resources Group

how

Nicole Kivisto
Nicole Kivisto
President & CEO at MDU Resources Group

I would summarize it. I think we what I would say, though, is we like our strategic position in terms of our pipeline, our access to storage, our access to other pipelines as well. So more to follow as we know more. And as I mentioned previously, this is not currently in our five year capital forecast. And to the extent that we get new information and get more clarity here, we will certainly be providing that to investors as we move forward.

Brian Russo
Brian Russo
Analyst at Jefferies

Okay, great. Thank you very much.

Operator

Thank you. Your next question comes from the line of Fran Levin from Citi. Please go ahead.

Ryan Levine
Ryan Levine
Analyst at Citigroup

Hi, everybody. A couple of questions. Good afternoon, On Bakken East, recognizing production outlooks continue to evolve and you did the open season in January, would there be a more comprehensive or an updated open season anticipated? Or do you think these more bespoke one off conversations are enough to inform your commercial project?

Jason Vollmer
Jason Vollmer
CFO at MDU Resources Group

Yes. Ryan, I can jump in here a little bit, and Nicole can certainly add in along the way too. I think this is the next step, right? So we are really working with the individuals that responded the company has responded to our original open season to really understand what's the timing, what's the need, what's the amount that they may be looking at for deliverability, then it would proceed to more of a formal agreement after that. Whether we actually go forward with a binding open season or whether we'd actually move forward with new precedent agreements, in some cases, with various parties, Those are things that would happen down the road.

Jason Vollmer
Jason Vollmer
CFO at MDU Resources Group

So right now, I think this is really setting the stage. But eventually, we'll want to get to a point where we have a route, we have a design, we have a size, we have a kind of a final cost estimate that we'd look at, which gets us to being able to really enter into firm agreements here and then being able to subsequently file for FERC approval at some point in the future as well.

Ryan Levine
Ryan Levine
Analyst at Citigroup

And what role does the recent tariffs play in terms of the commercial attractiveness of Bakken East? How material are the current tariff proposals or current tariffs that are in place to the cost structure for that project?

Jason Vollmer
Jason Vollmer
CFO at MDU Resources Group

Yes. If we look at the current tariffs today, and again, it's early in the trade discussions process right now and certainly tariffs. I mean, I think there was announcements today. I haven't had a chance to catch up yet, but as far as potential deals getting done in certain areas. But it's early in that process.

Jason Vollmer
Jason Vollmer
CFO at MDU Resources Group

I would say this, when you look at a large project like this, there's a lot of components to it, There is securing right away. There is engineering and design things. Some of those things we can do in house. Will have to hire third parties. The materials piece of that is certainly an important part of that.

Jason Vollmer
Jason Vollmer
CFO at MDU Resources Group

But even with some tariffs on a piece of the materials, pipe as an example or whatever the measurement items would be to go along with that, that will have some impact. But it's probably not it's probably something we can plan for and design around as we look at that and be able to get final numbers in place to put in front of someone for an approval. So don't see that as something that would derail the project as we look at it today.

Ryan Levine
Ryan Levine
Analyst at Citigroup

Okay. And then unrelated, in terms of wildfire legislation in some of the states that you operate, how do you see that impacting or potential legislation impacting future wildfire mitigation plans or any type of derisking effort that the company may be pursuing?

Nicole Kivisto
Nicole Kivisto
President & CEO at MDU Resources Group

Yes. Good question, Ryan. So essentially, as I mentioned on the call, we did get legislation passed in three of our states. I would say as it relates to our mitigation plans, the company certainly was already proactive and had plans in place to do what we could to prevent on an overall basis. So what I see in terms of the benefits of this legislation really is going to be that we can formalize those plans more officially with folks.

Nicole Kivisto
Nicole Kivisto
President & CEO at MDU Resources Group

And obviously, that formalization of the plan is dependent on the state. So state by state, I can talk to you about that. There's a little bit of variations between the states. But once we've done that, then that kind of proves then to that regulatory body that we have done our part. And then ultimately, the benefit gets to limiting liability if something were indeed to happen.

Nicole Kivisto
Nicole Kivisto
President & CEO at MDU Resources Group

But obviously, our first and most biggest priority, I guess, I should say, would be prevention in the first place. And the company is active in doing what we can there.

Ryan Levine
Ryan Levine
Analyst at Citigroup

Great. And then just two quick clarifying questions. I think it was mentioned the potential ATM filing. Is there a size anticipated? And then in terms of your 68% EPS growth, what's your starting point that you're growing off of that?

Ryan Levine
Ryan Levine
Analyst at Citigroup

Is that actual 24%? Or can you just clarify the starting point for the long term growth rate?

Jason Vollmer
Jason Vollmer
CFO at MDU Resources Group

Yes. No, that's a great question. I'll start with the ATM question first. So we have not determined the size of that yet. Again, we are working through that process.

Jason Vollmer
Jason Vollmer
CFO at MDU Resources Group

We're looking forward to future needs. Again, right now, current capital plan would show we do not have any equities in 2025. We would see some potential starting in 2026, as we've talked about before. So as we look through, typically, an ATM program has probably got about a three year time horizon to it. So we try to size it to an appropriate amount to maybe offset our needs during that time period.

Jason Vollmer
Jason Vollmer
CFO at MDU Resources Group

But that's yet to be determined. We'll follow-up with public filings on that later this year. And the second question on the six to eight percent long term growth rate. Maybe help me with the last part of that question again, Ryan?

Ryan Levine
Ryan Levine
Analyst at Citigroup

Just to clarify the starting point. Was that off of the original '24 estimate or the actual estimate the actual results?

Jason Vollmer
Jason Vollmer
CFO at MDU Resources Group

Yes. So I think what we have said when we came out with that guidance range in February of this year was we were basing it off of our 2025 where we expect to be only for the reason that if you look back historically given the spin offs and the transaction costs that we had as part of our last few years have kind of made the historical look back kind of noisy on that front from a public standpoint. So I would tell you that it's probably the same range if you use the adjusted 2024 number. It's going to you could use either one and you end up in the same spot. So I think from that perspective, we would I'd be comfortable saying it's based on that adjusted 2024 number or on the 2025 range we put out this year.

Ryan Levine
Ryan Levine
Analyst at Citigroup

Great. Thanks for taking my questions. Thank you. Thank you.

Operator

Thank you. At this time, there are no further questions. I would now like to turn the conference back over to management for closing remarks.

Nicole Kivisto
Nicole Kivisto
President & CEO at MDU Resources Group

All right. Thank you again for joining us today. We appreciate your interest in and support of MDU Resources and look forward to connecting with you throughout the year. And with that, I'll turn the call back over to you, operator.

Operator

Thank you. And this concludes today's MDU Resources Group conference call. Thank you for your participation. You may now disconnect.

Executives
Analysts
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Key Takeaways

  • MDU reported income from continuing operations of $82.5 million or $0.40 per share in Q1 2025, a 10.4% increase year-over-year driven by 13.9% pipeline growth and 11.5% natural gas distribution growth.
  • Combined retail utility customer growth was 1.4%, in line with the 1%–2% annual target, underpinning the need for infrastructure investment and supporting a 7%–8% compound annual rate base growth outlook.
  • In the Electric segment, MDU signed a purchase agreement for a 49% stake in the Badger Wind Farm (122.5 MW), filed Montana and Wyoming rate cases, and secured wildfire legislation in three states to limit liability.
  • The company has 580 MW of data center load under signed electric service agreements, with 180 MW online, 100 MW coming late 2025, and the balance phased in over the next few years under a capital-light model that boosts returns and aids retail customers.
  • The Pipeline segment posted record first quarter earnings and is advancing the Bakken East Pipeline project (375 miles) targeting late-2029 in-service, plus a binding open season for 72 MMcf/d Baker storage expansion through May 20.
AI Generated. May Contain Errors.
Earnings Conference Call
MDU Resources Group Q1 2025
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