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    MDU
    Earnings call· Mar 2026(Q1 FY26)

    MDU RESOURCES GROUP Q1 FY26 earnings call MDU

    May 7, 2026 Source

    Executive summary

    MDU Resources Group Inc. Q1 FY26 — Strong Operational Performance and Bakken East Pipeline Progress

    MDU Resources Group reported Q1 FY26 earnings reflecting strong operational performance across its businesses, partially offset by mild winter weather. The company affirmed its full-year EPS guidance, buoyed by significant progress on the Bakken East Pipeline project and growing data center demand. Management is evaluating financing options for the substantial pipeline investment and considering a more capital-intensive approach for future data center opportunities, while maintaining a focus on regulatory engagement and long-term EPS growth.

    Highlights

    5

    • Affirmed 2026 EPS guidance of $0.93 to $1.00 per share, despite mild weather headwinds.

    • Bakken East Pipeline project received approximately 1.4 Bcf/d of submitted interest, with 40% already signed under precedent agreements.

    • Data center load under signed electric service agreements reached 580 MW, with 180 MW online since mid-2023 and an additional 100 MW ramping online.

    • Retail customer growth of 1.4% year-over-year, within the targeted annual growth rate of 1% to 2%.

    • Average retail customer receives an approximate $70 per year bill credit from data center load, anticipated to increase to over $200 per year.

    Concerns

    4

    • Mild winter weather impacts reduced Q1 FY26 earnings by approximately $0.03 per share.

    • Electric utility earnings decreased by $0.5 million to $14.5 million, primarily due to lower retail sales volumes from 10% to 30% milder weather.

    • Natural gas utility earnings decreased by $0.5 million to $44.2 million, impacted by approximately $5 million due to warmer weather.

    • Pipeline segment earnings decreased by $1.9 million to $15.3 million, driven by lower interruptible natural gas storage withdrawals and higher O&M expenses.

    Guidance & targets

    11
    CategoryTargetConfidence
    Adjusted EPS
    $0.93 to $1.00 per share
    high materiality
    High
    Long-term EPS growth rate
    6% to 8%
    high materiality
    High
    Annual dividend payout ratio
    60% to 70%
    medium materiality
    High
    Bakken East Pipeline capital investment
    $2.7 billion to $3.2 billion
    high materiality
    Medium
    Bakken East Pipeline FERC 7C application filing
    Q3 2026
    medium materiality
    High
    Bakken East Pipeline construction completion (first in-service)
    Late 2029
    high materiality
    Medium
    Bakken East Pipeline construction completion (second phase in-service)
    Late 2030
    high materiality
    Medium
    North Dakota general rate case filing
    Yet this year
    medium materiality
    High
    Washington multiyear rate case filing
    This year
    medium materiality
    High
    Minnesota general rate case filing
    Later in 2026
    medium materiality
    High
    Line Section 32 expansion construction completion
    Late 2028
    low materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Electric Utility
    Earnings decreased due to lower retail sales volumes from milder weather, partially offset by the first full quarter of Badger Wind Farm in service.
    Earnings: $14.5 million (Q1 FY26)Earnings (Q1 FY25): $15 millionWeather impact: -$2 million (vs Q1 FY25)Retail sales volumes: Lower (10% to 30% milder weather)
    		———$14.5 million
    Natural Gas Utility
    Earnings decreased due to warmer weather impacting volumes, largely offset by rate relief in Washington, Idaho, Montana, and Wyoming, and weather normalization mechanisms.
    Earnings: $44.2 million (Q1 FY26)Earnings (Q1 FY25): $44.7 millionWeather impact: -$5 million (vs Q1 FY25)Temperatures: 20% warmer in Idaho, 30% warmer in Montana, 10% to 30% higher across rest of service territory
    		———$44.2 million
    Pipeline Segment
    Earnings decreased from record prior-year levels due to lower storage withdrawals and higher O&M, partially offset by strong short-term contract demand and the Minot expansion.
    Earnings: $15.3 million (Q1 FY26)Earnings (Q1 FY25): $17.2 millionDriver: Lower interruptible natural gas storage withdrawalsDriver: Higher O&M expense (increased material costs, payroll)Driver: Higher Montana property tax accrualsOffset: Strong customer demand for short-term natural gas transportation contractsOffset: Contributions from Minot expansion project
    		———$15.3 million

    Operational metrics

    10
    Consolidated earnings impact from mild weather
    $0.03
    Q1 FY26

    Mild winter weather impacts reduced earnings.

    Average retail customer bill credit from data centers
    $70
    Current

    Current approach to serve large load customer opportunities is with a capital-light business model, which provides cost savings to other retail customers.

    Projected average retail customer bill credit from data centers
    $200+
    Future

    Anticipate this credit to increase to potentially over $200 per year when all volumes are fully online.

    Wyoming electric rate case annual increase
    —
    Annual

    Wyoming rate case was approved with rates effective April 1, 2026.

    Montana electric rate case interim annual increase
    $10.4
    Annual

    In our Montana case, interim rates were approved for an annual increase of $10.4 million with rates also effective April 1, subject to refund.

    Idaho natural gas rate case annual increase
    $13
    Annual

    New rates from our Idaho case, were effective January 1, reflecting an annual increase of $13 million.

    Washington natural gas rate plan year 2 annual increase
    $10.8
    Annual

    In Washington, year 2 rates under our approved multiyear rate plan, representing an annual increase of $10.8 million, were effective March 1, 2026.

    Washington natural gas revenue decrease revision
    $2.1
    Annual

    In April, we did file a revision to decrease revenue by $2.1 million annually due to forecasted capital investments that were not placed in service as of December 31, 2025.

    Oregon natural gas rate case annual increase requested
    $16.4
    Annual

    Our Oregon rate case is still pending before the commission, where we requested an annual increase of $16.4 million.

    Equity offering proceeds
    $81.3
    Q1 FY26

    A portion of the related forward sales agreements were settled in March 2026, resulting in the issuance of 4.3 million shares of new common stock for proceeds of approximately $81.3 million.

    Industry KPIs

    6
    MetricValueDetails
    Retail sales growth1.4%YoY
    Adjusted operating EPS$0.39per share
    Dividend per share growth60% to 70%payout ratio
    Equity hybrid financing atm issuance$81.3 millionUSD
    Large load data center demand pipeline580MW
    CAPEX multi year capital investment plan$3.1 billionUSD

    Orderbook & backlog

    2
    Bakken East Pipeline submitted interest1.4 Bcf/dQ1 FY26

    Approximately 40% signed under precedent agreements, additional in active negotiation. Includes $50 million annually for 10 years from North Dakota.

    Data center load under signed electric service agreements580 MWQ1 FY26

    180 MW online since mid-2023; 50 MW (second data center) online; additional 50 MW ramping online; 150 MW expected online later 2026; 100 MW expected online 2027; 50 MW expected online 2028.

    Capital programs

    3
    Bakken East Pipeline ProjectUnder development$2.7 billion to $3.2 billion
    Funding: Balance sheet, potential partnerships, various other options

    Benefit: Approx. 1.4 Bcf/d transportation capacity; 353 miles of mainline pipe; 21 miles of lateral pipelines; 3 new compressor stations

    Projected capital investment is incremental to current $3.1 billion capital investment forecast. Pre-filed with FERC in December 2025, 7C application targeted for Q3 2026. Team focused on getting to a final investment decision.

    Line Section 32 Expansion ProjectUnder development$70 million

    Benefit: Natural gas transportation service to an electric generating facility in Northwest North Dakota

    Included in the $3.1 billion capital plan. FERC Section 7C application filed in March 2026. Project is dependent on regulatory approvals.

    Minot Industrial Pipeline ProjectEarly-stage development

    Benefit: Approx. 90-mile pipeline from Tioga, North Dakota, to Minot, North Dakota, providing incremental natural gas transportation capacity for anticipated industrial demand.

    Signed agreement to support early-stage development extended through late 2026. Included in outer years of the $3.1 billion capital plan.

    Risks & headwinds

    5
    Mild winter weather impactsQ1 FY26

    Reduced earnings by approximately $0.03 per share consolidated; $2 million impact on electric utility earnings; $5 million impact on natural gas utility earnings.

    Mitigation: Weather normalization mechanisms in certain states helped to offset the warmer temperatures.

    Higher operation and maintenance expenseQ1 FY26

    Contributed to decreased pipeline segment earnings.

    Lower interruptible natural gas storage withdrawalsQ1 FY26

    Contributed to decreased pipeline segment earnings.

    Regulatory approval risk for Bakken East PipelineQ3 2026 (7C filing), construction target late 2029-2030

    Project dependent on FERC 7C application approval.

    Mitigation: Pre-filed with FERC in December 2025; targeting 7C application in Q3 2026.

    Financing for Bakken East PipelineLong-term

    Projected capital investment of $2.7 billion to $3.2 billion, incremental to current capital plan.

    Mitigation: Evaluating all options, including balance sheet, potential partnerships, and various other options; aiming to maintain majority stake.

    What to watch in Q2 FY26

    5

    Bakken East Pipeline precedent agreements

    Next quarter
    Current40% signed
    TargetIncreased percentage of signed agreements

    Why it matters

    Securing additional precedent agreements is crucial for the final investment decision and derisking the substantial capital project.

    In terms of the 40%, very encouraged that we have 40% of that under signed and executed precedent agreements. That's as of this date. We -- as we mentioned on the call and in the earnings release, we're in active negotiations on the remaining.

    Q&A highlights

    7

    Seeking more detail on the 40% signed precedent agreements for Bakken East and the timeline to finalize the remaining 60%.

    Nicole Kivisto stated that the current progress aligns with initial expectations. The 40% is signed, and active negotiations are ongoing for the remainder, with key business terms largely agreed upon. The company aims for a Final Investment Decision (FID) as soon as practical, with a FERC 7C filing still targeted for Q3 2026.

    “In terms of the 40%, very encouraged that we have 40% of that under signed and executed precedent agreements. That's as of this date. We -- as we mentioned on the call and in the earnings release, we're in active negotiations on the remaining.”

    asked by Julien Dumoulin-Smith · answered by Nicole Kivisto

    2 min read5 chapters

    Detailed Narrative

    01

    Bakken East Pipeline Project Advancement

    MDU Resources announced significant progress on the proposed Bakken East Pipeline, with approximately 1.4 Bcf/d of submitted interest from the binding open season. Notably, 40% of this interest is already secured under precedent agreements, including a $50 million annual commitment from North Dakota for 10 years. The project's estimated capital investment is now between $2.7 billion and $3.2 billion, incremental to the company's existing capital plan, and management is exploring various financing options, including partnerships.

    02

    Growing Data Center Demand and Strategy

    The company is experiencing substantial growth in data center load, with 580 MW under signed electric service agreements. Currently, 230 MW are online or ramping, with an additional 150 MW expected online later in 2026, 100 MW in 2027, and 50 MW in 2028. MDU Resources is currently employing a capital-light model for these loads, which provides an approximate $70 annual bill credit to average retail customers, projected to increase to over $200. However, management is considering future capital investments in generation, substation, and transmission assets for new agreements.

    03

    Active Regulatory Engagement

    MDU Resources continues its strategy of filing 3 to 5 rate cases annually. In the electric segment, a Wyoming rate case was approved, and Montana received interim rates for a $10.4 million annual increase. The natural gas segment saw new rates in Idaho ($13 million annual increase) and Washington ($10.8 million annual increase). The company plans to file additional general rate cases in North Dakota, Washington, and Minnesota later in 2026, demonstrating ongoing efforts to secure constructive regulatory outcomes.

    04

    Strategic Pipeline Expansions

    Beyond Bakken East, the company is advancing other key pipeline projects. The FERC Section 7C application was filed for the Line Section 32 expansion, a $70 million project included in the current capital plan, targeting completion in late 2028 to serve an electric generating facility. Additionally, the early-stage development agreement for the Minot industrial pipeline, a potential 90-mile project, was extended through late 2026, indicating continued evaluation of customer-driven growth opportunities.

    05

    Financial Performance and Capital Management

    Despite mild weather headwinds🌐 impacting Q1 FY26 earnings by $0.03 per share, MDU Resources affirmed its full-year EPS guidance of $0.93 to $1.00 per share and reiterated its long-term EPS growth target of 6% to 8%. The company settled 4.3 million shares from its December 2025 equity offering in March 2026, generating $81.3 million in proceeds, reinforcing its strong balance sheet and access to capital for future investments.

    AI-generated summary of the company’s earnings call. Not investment advice.