MDU Resources Group Q1 Earnings Call Highlights

Key Points

• MDU Resources reported slightly lower Q1 2026 earnings of $80.8 million, or $0.39 per share, as mild winter weather hurt utility volumes, but the company reaffirmed full-year guidance of $0.93 to $1.00 per share.
• The proposed Bakken East Pipeline Project is drawing strong interest, with about 1.4 billion cubic feet per day of submitted demand and roughly 40% already backed by precedent agreements, though MDU has not made a final investment decision.
• MDU’s data center load continues to ramp, with 580 megawatts under signed agreements and more capacity expected online through 2028, while the company also continues an active series of rate cases and regulatory filings across its utility businesses.

MDU Resources Group NYSE: MDU reported slightly lower first-quarter earnings as mild winter weather weighed on utility volumes, while executives highlighted progress on major pipeline opportunities, data center demand and regulatory filings.

The company reported first-quarter 2026 earnings of $80.8 million, or $0.39 per share, compared with $82 million, or $0.40 per share, in the first quarter of 2025. President and CEO Nicole Kivisto said results reflected “strong operational performance across our businesses,” offset by mild winter weather that reduced earnings by about $0.03 per share.

Despite the weather impact, MDU Resources affirmed its 2026 earnings guidance range of $0.93 to $1.00 per share. The company also reiterated its long-term earnings-per-share growth target of 6% to 8% and its annual dividend payout ratio target of 60% to 70%.

Bakken East pipeline draws strong interest

A major focus of the call was the proposed Bakken East Pipeline Project. Kivisto said the company completed its binding open season for the project and received about 1.4 billion cubic feet per day of submitted interest. About 40% of that total has been signed under precedent agreements, with additional agreements in active negotiation.

Included in the signed precedent agreements is a firm capacity commitment of $50 million annually for 10 years from the state of North Dakota, Kivisto said.

Based on current assumptions, the project would include approximately 353 miles of 42-inch, 36-inch and 30-inch diameter mainline pipe; approximately 21 miles of lateral pipelines; additional compression at three existing compressor stations; and three new compressor stations. MDU Resources now estimates total capital investment for the potential project at $2.7 billion to $3.2 billion, which would be incremental to its existing $3.1 billion capital investment forecast.

Kivisto emphasized that the company has not made a final investment decision. In response to a question from Jefferies analyst Julien Dumoulin-Smith, she said the company is encouraged by the level of signed agreements and active negotiations. She said MDU Resources has agreed “in large part” to many key business terms with remaining customers, while the next steps include finalizing design and working with the board on a final investment decision.

Kivisto also noted that the company pre-filed the project with the Federal Energy Regulatory Commission in December and remains comfortable with a schedule that contemplates filing a Section 7(c) application in the third quarter of this year.

Financing options remain under review

CFO Jason Vollmer said the size of the Bakken East project would be significant relative to the company’s current $3.1 billion capital plan. He said “all options are on the table” for financing, including using the balance sheet, partnerships or other structures.

Vollmer said a FERC-regulated project with long-term contracted demand should have multiple financing paths. If MDU Resources pursues a partnership, he said the company would want to maintain a majority stake because the project would connect to its existing system.

In response to Citi analyst Ryan Levine, Vollmer said the Bakken East interest is being driven by demand from industrial customers, power generation and local distribution companies, rather than supplier-driven volumes. He said the cost range reflects remaining uncertainty around labor, steel prices, compression equipment and construction contracting. Vollmer said the company has permission to survey about 97% of the route.

Data center load continues to ramp

Kivisto said MDU Resources currently has 580 megawatts under signed electric service agreements related to data center load. Of that amount, 180 megawatts has been online since mid-2023. Another 50 megawatts from a second data center is online, with an additional 50 megawatts currently ramping.

The company expects an additional 150 megawatts to come online later this year, 100 megawatts in 2027 and the remaining 50 megawatts in 2028.

Kivisto said MDU Resources’ current approach to serving these large-load customers is a “capital light business model” that benefits earnings and returns while providing cost savings to other retail customers. She said the average retail customer currently receives an approximate $70 annual bill credit from this approach, which could rise to more than $200 per year when all volumes are fully online.

The company continues to discuss potential additional data center opportunities. Kivisto said future agreements could lead MDU Resources to consider capital investments in generation, substations and transmission assets to serve increased load.

Utility results affected by weather

Vollmer said the electric utility reported first-quarter earnings of $14.5 million, compared with $15 million a year earlier. The first full quarter of the Badger Wind Farm being in service benefited results, but was more than offset by lower retail sales volumes caused by weather that was 10% to 30% milder across the service territory. That weather impact reduced earnings by about $2 million compared with the prior year.

The natural gas utility reported earnings of $44.2 million, down from $44.7 million a year earlier. Vollmer said warmer weather reduced earnings by about $5 million compared with last year, although weather normalization mechanisms in certain states helped offset the impact. Rate relief in Washington, Idaho, Montana and Wyoming largely offset lower volumes.

The pipeline segment reported earnings of $15.3 million, compared with first-quarter record earnings of $17.2 million last year. Vollmer said the decline was driven by lower interruptible natural gas storage withdrawals and higher operation and maintenance expenses, including increased material costs and payroll-related expenses. Higher Montana property tax accruals also contributed to the decline. Strong demand for short-term natural gas transportation contracts and contributions from the Minot Expansion Project partially offset those impacts.

Regulatory activity continues

Kivisto said MDU Resources continues to target three to five rate case filings annually. At the electric segment, the company’s Wyoming rate case was approved with rates effective April 1, 2026. In Montana, interim rates were approved for an annual increase of $10.4 million, also effective April 1 and subject to refund. The company expects to file a general rate case in North Dakota later this year.

On the natural gas side, new Idaho rates took effect Jan. 1, reflecting an annual increase of $13 million. In Washington, second-year rates under an approved multi-year rate plan took effect March 1, representing an annual increase of $10.8 million. The company later filed a revision to decrease revenue by $2.1 million annually due to forecasted capital investments that were not placed in service as of Dec. 31, 2025. MDU Resources’ Oregon rate case remains pending, with a requested annual increase of $16.4 million.

The company also filed a FERC Section 7(c) application in March for its Line Section 32 Expansion Project, which would serve an electric generating facility under construction in northwest North Dakota. The project carries an estimated capital investment of about $70 million and is included in the company’s current $3.1 billion capital plan.

Vollmer said MDU Resources maintained a strong balance sheet and had “ample access to working capital.” He also noted that the company settled a portion of forward sales agreements tied to its December 2025 follow-on equity offering, issuing 4.3 million shares of common stock for proceeds of about $81.3 million.

About MDU Resources Group NYSE: MDU

MDU Resources Group, Inc is a diversified energy and services holding company headquartered in Bismarck, North Dakota. The company operates through two primary segments: Utilities and Construction Services and Pipelines & Midstream. Serving a broad geographic footprint across the upper Midwest and Pacific Northwest, MDU provides essential energy distribution and infrastructure services to residential, commercial and industrial customers.

The Utilities segment delivers electric and natural gas distribution services in Montana, North Dakota, South Dakota, Minnesota, Kansas, Wisconsin, Michigan and Washington.

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