Full Transcript: MDU Resources Gr Q2 2026 Earnings Call

MDU Resources Gr (NYSE: MDU ) held its second-quarter earnings conference call on Thursday. Below is the complete transcript from the call. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

07 per share, in Q2 2025, driven by strong performance in regulated utility and pipeline businesses. 4 billion cubic feet per day. The final investment decision is expected before the FERC Section 7C filing in Q4 2026. MDU continues to develop data center opportunities, entering an electric service agreement with Applied Digital for a 430 MW AI factory in North Dakota, pending regulatory approval.

5 million annual revenue increase, with similar filings in other states to support infrastructure investments and operational improvements. 1 billion capital program from 2026 to 2030. Management expressed confidence in financing options for the Bakken East project and emphasized the capital-light model for data centers, which benefits both the company and retail customers. Full Transcript OPERATOR (Operator) Ladies and gentlemen, thank you for joining us and welcome to the MDU Resources Gr Q2 2026 earnings conference call.

After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please raise your hand. If you've dialed in to today's call, please press Star 1 to raise your hand. I will now hand the conference over to Brent Miller, Treasurer of MDU Resources Gr.

Brent, please go ahead. Brent Miller, Treasurer Thank you and welcome everyone to the MDU Resources Gr second quarter 2026 earnings conference call. com under the Investors section. Leading today's call are Nicole Kavisto, President and Chief Executive Officer, and Jason Vollmer, Chief Financial Officer, of MDU Resources Gr.

During today's call we will make certain forward-looking statements within the meaning of the federal securities laws. Please refer to our SEC filings for a discussion of risks and uncertainties that could cause actual results to differ. I will now turn the call over to Nicole for her prepared remarks. Nicole Kavisto, President and Chief Executive Officer Thank you, Brent, and good afternoon, everyone.

We appreciate you joining us today and for your continued interest in MDU Resources Gr. 10 per share. Our results reflected continued execution across our regulated utility and pipeline businesses. New rates, customer growth, investments such as Badger Wind Farm, and higher retail sales volumes helped drive the results.

We delivered solid results while also continuing to advance strategic infrastructure opportunities that continue to support long-term growth. A key highlight for the quarter was certainly the continued advancement of the proposed Bakken East pipeline project. 2 billion cubic feet per day of transportation capacity. 4 billion cubic feet per day of transportation capacity.

Overall project design is being finalized based on confirmed customer volumes and delivery locations before a final investment decision is made, which is expected ahead of a FERC Section 7C filing. This application is now anticipated to be filed in the fourth quarter of 2026. The proposed in-service dates of phase one in late 2029 and phase two in late 2030 remain unchanged. 2 billion project.

The potential Bakken East investment remains incremental to our current capital program. We also continue to see encouraging development activity across our service territory, including data center opportunities and broader infrastructure demand. Our approach to serving data centers is grounded in protecting existing customers and ensuring that growth creates value for the communities we serve. Data center customers are responsible for paying the costs associated with connecting to and being served by the electric system, including infrastructure and energy-related expenses.

At the same time, the additional revenue generated from serving these customers can help support the electric system and contribute to reducing certain fixed costs for existing retail customers by allocating them across a broader customer base. This current approach creates benefits for all customers. During the quarter, we did enter into an electric service agreement with Applied Digital to serve Polaris Forge 3, an AI factory near Center, North Dakota. At full capacity, the campus would require 430 megawatts of electricity.

Approval of the ESA and other regulatory filings by the North Dakota Public Service Commission is pending. We now have over 1 GW of data center load under signed ESAs, with approximately 240 megawatts currently online, with additional volumes expected over the next few years as additional buildings are constructed. 3 million requested to begin on September 1st of this year. The filing reflects electric infrastructure investments, normal depreciation, reliability improvements, system safety, and higher operation and maintenance expense.

4 million remain in effect, subject to refund, and a settlement agreement of 10 million has been filed and is pending Commission approval. 8 million, with rates effective April 1, 2026. Also in June, the North Dakota Public Service Commission approved a route permit for the Jamestown to Ellendale Transmission Project. This project is expected to enhance reliability, improve resiliency, reduce transmission congestion, and support access to lower-cost energy across the region.

At our natural gas distribution segment, positive regulatory outcomes in Idaho, Washington, Montana, and Wyoming, as well as higher retail sales volumes and continued customer growth, supported improved year-over-year results. 1 million in year two. 2 million. We also do anticipate filing a Minnesota general rate case later this year.

At our pipeline segment, strategic growth initiatives continue to advance. The Line Section 32 expansion project remains on schedule following our FERC Section 7C application filing in March of 2026 and continues to target a late 2028 in-service date, subject to regulatory approvals. Development activities for the potential Minot industrial project also continue under agreements currently extended through late 2026. In addition, our pipeline business filed a FERC rate case on May 29th of this year requesting a $31,000,000 annual revenue increase.

Approximately 30% of the requested revenue increase is due to proposed new depreciation and amortization rates. FERC accepted and suspended the proposed rates on June 30, with rates to become effective December 1, 2026, subject to refund and the outcome of hearing procedures if a settlement with our customers and FERC is not reached. 00. This guidance is based on assumptions including normal weather, economic and operating conditions for the remainder of the year, continued customer growth, successful execution of approved capital investment programs, and constructive regulatory outcomes.

Our long-term earnings per share growth objective remains at 6% to 8%. 4 billion at our natural gas distribution business, and 643 million at our pipeline. We remain focused on disciplined execution of this plan while advancing additional infrastructure opportunities that support customers, communities, and stockholders. As always, MDU Resources Gr is committed to operating with integrity and with a focus on safety.

We remain dedicated to delivering safe, reliable, cost-effective, and environmentally responsible energy services while positioning the company for compelling long-term growth. And with that I will now turn the call over to Jason for the financial update. Jason Vollmer, Chief Financial Officer Thank you, Nicole. 07 per share, for the second quarter of 2025.

47 per share, for the first six months of last year. 4 million for the same period in 2025. 3 million in earnings during the quarter. Interim rates in Montana and new rates in Wyoming, along with higher retail sales volumes across all major customer classes, also contributed to the increase.

4 million in the second quarter of 2025. The improved year-over-year result was primarily driven by new rates in Idaho, Washington, Montana, and Wyoming, as well as higher retail sales volumes across all customer classes. 6% year over year. These benefits were partially offset by higher interest expense resulting from higher long-term debt balances.

4 million in the same period in 2025. The decrease was driven by lower other income and higher depreciation and amortization expense from a growth project placed in service. These impacts were partially offset by continued customer demand for short-term natural gas transportation contracts and interruptible storage services, along with contributions from previously constructed growth projects, including a contracted volume increase. 7 million in the same period last year.

5 million tax benefit related to strategic initiative costs. We continue to maintain a strong balance sheet and ample access to working capital to finance operations through our peak periods. That summarizes our financial highlights for the quarter. We appreciate your interest in MDU Resources Gr and ask now that we open the line for questions.

Operator. OPERATOR (Operator) Thank you. We will now begin the question and answer session. If you would like to ask a question, please raise your hand now.

If you have dialed in to today's call, please press Star 1 to raise your hand. Please stand by while we compile the Q and A roster. Your first question comes from the line of Konstantin Lednev with Wells Fargo. Your line is open.

Please go ahead. Andrew Kudavian, Analyst at Wells Fargo Hi, actually it's Andrew Kudavian for Konstantin right now. Maybe on the financing options for Bakken East. We've seen some peers use a variety of instruments to finance these bigger projects.

Are you seeing any favorable markets out there that could help you efficiently finance the project? Jason Vollmer, Chief Financial Officer Yeah, certainly. This is Jason. I can field that one, I think.

Again, as we have stated before, at this point we're very excited to have executed all of the precedent agreements we have in place. As we've been working toward that progress, we continue to look at all options as we think about financing a project of this size and scope, and I think, as you mentioned, we've seen others out there too. We've been very focused on getting these precedent agreements signed and getting to the point of a decision and, of course, need to get in front of our board to look at a final investment decision on this project.

So I think it's safe to say we'll look at all options out there, but feel very confident in the ability to finance a project like this, and certainly there's some good appetite out there for these types of assets today. Yeah. So right now what we've stated, a little bit of a new update in our release this quarter: we are looking to make our 7(c) filing in the fourth quarter. I think we would have previously looked at third quarter based on the schedule.

Certainly some of the precedent agreement negotiations took a little bit longer. As Nicole mentioned, some of these have been recently signed here. So we will continue to bring our board up to speed on where we're at with the project. They've been certainly involved all the way along.

Work is continuing on this project and has continued from the beginning since we started looking at this. So I'm not going to be specific on a timeline date yet. I think we need to go through the process of now getting the right information in front of our board and make a decision in the right manner. But it certainly would happen ahead of the 7(c) filing, which we are now expecting to happen in the fourth quarter.

OPERATOR (Operator) Your next question comes from the line of Julian de Lamoula Smith with Jefferies. Your line is open. Please go ahead. Ashley Tanner, Analyst at Jefferies Hi team, it's Ashley Tanner on for Julian.

Good afternoon. Nicole Kavisto, President and Chief Executive Officer Good afternoon, Tanner. Ashley Tanner, Analyst at Jefferies Thank you, and thanks for the new Bakken East disclosures here. Could you maybe provide a little more information on the negotiated option in place, the strategic rationale behind it, and how you would classify the commercial alternatives in not taking the option?

Thanks. Nicole Kavisto, President and Chief Executive Officer Yeah, I can take that. So appreciate the question, and I guess I just want to start by echoing what Jason said. I really want to give a shout-out to the WBI team.

Extremely proud of the milestone here that we announced today with the recently signed precedent agreements that get us to all customers, really, that were in the nonbinding open season showed up here. So that's real positive news. We did reference the option, as you mentioned, and essentially what we've done with that customer is, you know, they're working—all customers are working—on, you know, timing with their applicable customers. And so we worked an arrangement out where they have an option to essentially add more volumes at an already negotiated agreement.

And so essentially, if that happens, what we alluded to in the release is that gets us very close to that open season amount. 4 Bcf a day. So feel good about that. And then, you know, just highlighting a couple of the other key updates, which Jason alluded to too, which is with the precedent agreements being recently signed, we did allude to moving that 7(c) filing back to the fourth quarter and note that we would make a final investment decision ahead of that.

In-service dates, as we mentioned, will remain unchanged. Ashley Tanner, Analyst at Jefferies Understood. Great, thanks. Is the state's backstop a portion of the executed agreements, or have they—or have you found an offtaker to stand in their place?

Nicole Kavisto, President and Chief Executive Officer Yes, the state is part of the precedent agreements that we have signed. Ashley Tanner, Analyst at Jefferies Understood, thanks. And then maybe just following up on the Polaris Forge 3 ESA, you're in front of the Commission requesting approval. Can you speak to the magnitude of margin uplift here relative to what we're seeing at the Ellendale campus?

And maybe zooming out, since you've also recently just filed your electric rate case in the state, does this give you confidence to be able to elongate the period between filings given the support to earned ROEs from the capital-light ESAs? Nicole Kavisto, President and Chief Executive Officer Yeah, absolutely. We certainly are excited about the ESA that we signed. As we disclosed, it's 430 megawatts, as you mentioned.