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Date

Thursday, February 5, 2026 at 2 p.m. ET

Call participants

  • President and Chief Executive Officer — Nicole Kivisto
  • Chief Financial Officer and Treasurer — Jason L. Vollmer

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Takeaways

  • 2025 Income from Continuing Operations -- $191.4 million, or $0.93 per diluted share, increased from $181.1 million, or $0.88 per diluted share, in 2024.
  • Electric Utility Segment Earnings -- $64.9 million, down from $74.8 million, with higher retail sales and volumes offset by increased operation and maintenance costs, primarily from payroll, contract services, software, and insurance.
  • Natural Gas Utility Segment Earnings -- $56.1 million, a 19.6% increase over $46.9 million, driven by rate relief in several jurisdictions and higher retail sales revenue, partially offset by higher insurance, payroll, and software expenses.
  • Pipeline Segment Earnings -- $68.2 million, a record, up from $68.0 million, primarily due to expansion projects and short-term firm contracts, but partly offset by increased operation and maintenance expenses, higher depreciation, property taxes, and absence of $2.7 million in prior-year one-time items.
  • 2025 Full-Year Net Earnings -- $190.4 million, or $0.93 per share, compared to $281.1 million, or $1.37 per share, with the change reflecting the Everest spin-off and associated discontinued operations.
  • 2026 Earnings Guidance -- Initiated range of $0.93 to $1.00 per share, reflecting ongoing segment performance and equity financing activity for growth projects.
  • Long-Term EPS Growth Outlook -- Maintained at 6%-8% with annual dividend payout ratio target of 60%-70%.
  • December 2025 Equity Offering -- Roughly 11.7 million shares of common stock are expected to meet all of the company's 2026 equity issuance needs and a significant portion of 2027 equity needs, pursuant to forward sale agreements settled at a public offering price of $19.70 per share.
  • Debt to Capitalization -- Increased to 49.1% following Badger Wind Farm acquisition; expected to decline as equity forward sales settle.
  • Montana Electric Interim Rate Request -- Denied by Public Service Commission; reconsideration request filed in December, with no action as of February 3.
  • Wyoming Electric Settlement -- $5.8 million annual increase with reliability and safety rider withdrawn; rates effective April 1, 2026.
  • Wildfire Mitigation Filings -- Submitted in late December for North Dakota, Montana, and Wyoming.
  • Idaho Natural Gas Rate Case Settlement -- Approved December 30 for $13 million annual increase, effective January 1, 2026.
  • Washington Natural Gas Rate Plan -- Second-year increase of $10.8 million to be implemented March 1, 2026, pending plant review.
  • Oregon Natural Gas General Rate Case -- Filed November 25, with rates targeted for October 31, 2026.
  • Data Center Electric Demand -- 585 megawatts of contracted load; 180 megawatts online since May 2023, 100 megawatts ramping, 150 megawatts expected later in 2026, and 150 megawatts in 2027.
  • Capital-Light Data Center Model -- Employed for major new demand, benefiting earnings and retail customer cost structure through lower transmission allocation and margin sharing.
  • Pipeline Segment Project Updates -- FERC application for Line Section 32 expansion targeted March; Bakken East Pipeline open season began February 2 and closes March 13, with final design and FERC 7C filing pending binding commitments, and projected commercial operation dates in late 2029 (western) and late 2030 (eastern).
  • Potential Minot Industrial Pipeline Project -- Early-stage agreement signed for 90-mile route supporting anticipated industrial demand, with development updates ongoing.
  • Financing Approach for Bakken East Project -- Management stated, "we will evaluate all options, including using our balance sheet to finance the project, pursuing potential partnerships, and various other options."
  • Spin-Off of Everest -- Completed October 31, 2024; activity for ten months reported in discontinued operations, with corporate and overhead costs now reallocated to remaining segments.

Summary

MDU Resources Group (MDU 4.30%) highlighted ongoing contract negotiations tied to the Bakken East Pipeline, with a binding open season concluding March 13 and customer agreements necessary before a final investment decision and FERC 7C filing. Management specified that the Bakken East project is not included in the current five-year capital forecast and any eventual investment will be incremental. The company confirmed its capital-light strategy for meeting data center electric demand while stating willingness to consider future capital investment if additional load agreements are secured.

  • The equity raised through the December offering, combined with forward sale agreements, is expected to fully fund equity needs for 2026 and most of 2027.
  • Montana's regulatory outcome remains unresolved due to the Public Service Commission denying interim rates and taking no action on reconsideration as of February 3.
  • Record pipeline segment earnings were attributed to recently completed expansions and increased short-term contracts, though partially offset by higher expenses and the absence of prior-year, nonrecurring benefits.
  • Segment-level performance diverged, as electricity earnings declined on cost pressure, while gas saw growth from favorable rate reliefs, and pipelines achieved new highs following capacity additions.

Industry glossary

  • FERC 7C Filing: A formal application to the Federal Energy Regulatory Commission for a certificate of public convenience and necessity required for constructing and operating interstate natural gas pipelines in the United States.
  • Binding open season: A fixed period in which customers make legally binding commitments for pipeline capacity, determining demand and contractual support for potential pipeline projects.
  • Capital-light business model: A strategy emphasizing expansion or service provision without significant new capital investments in owned infrastructure, typically through utilization of existing assets or partnerships.

Full Conference Call Transcript

Nicole Kivisto: Thirtieth, 2025. Which also included recovery of Badger Wind Farm, along with other investments made since our last regulatory proceeding in 2023, as well as increased operating costs. The Montana Public Service Commission has nine months to rule on the case. We had requested interim rates to be effective January 1, 2026. However, the Montana PSC denied the interim rate relief. We subsequently filed a request for reconsideration of rates in December. The request for reconsideration went before the Montana PSC on February 3. However, no action was taken. In our Wyoming Electric case, a settlement agreement was filed with an annual increase of $5.8 million in a stipulation to withdraw the requested reliability and safety rider.

Rates are anticipated to be effective April 1, 2026. The final item I would like to comment on regarding the electric side of the business would be on the filings of our wildfire mitigation plans in North Dakota, Montana, and Wyoming, and those were filed late in December. On the gas side of the business, our natural gas general rate case settlement agreement in Idaho was approved on December 30, for an annual increase of $13 million with rates effective January 1, 2026.

In the state of Washington, our second-year rate increase from our multi-year rate plan will go into effect on March 1, 2026, reflecting an increase from rates currently in effect of $10.8 million annually, subject to the completion of a provisional plant review. We also did file a general rate case in Oregon on November 25, 2025, with rates anticipated to be effective October 31, 2026. Moving on to the data center front, we currently have 585 megawatts, excuse me, of data center load under signed electric service agreements.

Of that total, 180 megawatts have been online since May 2023, with an additional 100 megawatts ramping online currently, an additional 150 megawatts expected online later this year, and the remaining 150 expected online in 2027. Our current approach to serve these large customer opportunities is with a capital-light business model, which not only benefits our earnings and returns but also provides cost savings to our other retail customers through a lower transmission allocation and margin sharing. We continue to pursue additional discussions with potential data center customers. Should these discussions progress to signed agreements, we would consider investing capital into new generation transmission and related assets to serve the increased load.

Aside from data center load, we also continue to evaluate other potential capital projects related to safely and reliably meeting existing customer demand as well as grid resiliency. At our Pipeline segment, we continue to make progress on required surveys for our Line Section 32 expansion project, which will provide natural gas transportation service to an electric generation facility being constructed in Northwest North Dakota. We anticipate filing our FERC application in March for this project and are targeting construction to be complete in late 2028. We also signed an agreement to support the early-stage development of the potential Minot industrial pipeline project through 2026.

This project could consist of an approximately 90-mile pipeline from Tioga, North Dakota, to Minot, North Dakota, and provide incremental natural gas transportation capacity for anticipated industrial demand. We will continue to provide updates as this project progresses. In regard to our proposed Bakken East Pipeline project, the FERC pre-filing request was submitted on December 23, 2025. A binding open season began on February 2 and will close on March 13. The company continues contract negotiation with several interested parties. Pursuant to the results of the open season and these negotiations, we would look to confirm the final design of the project in order to make a final investment decision.

Upon that decision, we would plan to make our FERC seven filing and update the market on any relevant changes to our capital investment forecast as well as growth targets. As a reminder, projected in-service dates for the proposed project are late 2029 for the western portion and late 2030 for the eastern portion of the pipeline. This project would provide natural gas transportation service for additional industrial, power generation, and local distribution companies to meet growing demand and also provide much-needed takeaway capacity to meet forecasted natural gas production growth in the Bakken region. This project is not currently in our five-year capital forecast and would be incremental should we determine to proceed.

As we look to finance a project of this size and scope, we will evaluate all options, including using our balance sheet to finance the project, pursuing potential partnerships, and various other options. We will continue to provide updates on this potential project as we learn more. As we look forward to 2026, we are initiating earnings per share guidance in the range of $0.93 to $1.00 per share. This range reflects continued strong performance across our segments while also accounting for equity financing used for our growth projects.

We remain confident in our ability to execute our long-term growth strategy and believe our operational focus and financial discipline continue to position us well for delivering safe and reliable energy, customer value, and strong stockholder returns. We also continue to anticipate a long-term EPS growth rate of 6% to 8%, while targeting a 60% to 70% annual dividend payout ratio. As always, MDU Resources Group, Inc. 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.

Before I turn over the discussion to Jason for the financial update, I want to close with a thank you to all of our employees for their hard work and dedication as we worked through a very successful year. Throughout 2025, our employees worked tirelessly to ensure our customers received safe and reliable energy while also executing the significant milestones I noted and countless other projects. We could not be successful without these efforts. I will now turn the call over to Jason for the financial update. Jason?

Jason L. Vollmer: Thanks, Nicole.

Jason L. Vollmer: Excited to share our results for 2025. This morning, we announced our full-year earnings of $190.4 million or $0.93 per share compared to 2024 earnings of $281.1 million or $1.37 per share. Important to note that certain costs associated with the spin-off of Everest in October 2024 as well as its historical results of operations are reported in discontinued operations in our results. 2025 income from continuing operations was $191.4 million or $0.93 per share diluted, compared to $181.1 million or $0.88 per diluted share in 2024. As we turn to our individual segments, our Electric Utility reported earnings of $64.9 million compared to $74.8 million in 2024.

Higher retail sales revenue and volumes positively impacted results for the year, but were more than offset by higher operation and maintenance expenses. Primarily from higher payroll-related costs, higher contract services related to electric generation station outages, higher software expense, and higher insurance expense. Our natural gas utility reported earnings of $56.1 million compared to $46.9 million in 2024, which is a 19.6% year-over-year increase. This increase was driven primarily by higher retail sales revenue, largely from rate relief across multiple jurisdictions, including Washington, Montana, South Dakota, and Wyoming. Higher operation and maintenance expenses, primarily higher insurance, payroll-related costs, and software expenses partially offset the increase.

Our pipeline business posted record earnings of $68.2 million in 2025, which compares to $68 million last year. A slight increase in earnings was driven by expansion projects placed in service throughout 2024 and late in 2025 and customer demand for short-term firm transportation contracts. Increased earnings were partially offset by higher operation and maintenance expenses, primarily due to payroll-related costs. The increase was further offset by the absence of proceeds received in 2024 from a customer settlement as well as the absence of a benefit from an adjustment related to a rate change in the company's effective state income tax rate, which together totaled about a $2.7 million benefit in 2024.

Higher depreciation expense due to capital investments and higher property taxes primarily in Montana further offset the increase in earnings. As I noted earlier, the spin-off of Everest was completed on October 31, 2024. Activity for the ten months that Everest was part of MDU Resources Group, Inc. is accounted for in discontinued operations in other as shown in our press release. The results shown in other for 2025 are expected to be more reflective of our future expectations as activity from our strategic separations falls away in future periods. Corporate and overhead costs that were previously allocated to Everest are now allocated to the remaining business segments.

Finally, MDU Resources Group, Inc. continues to maintain a strong balance sheet and have ample access to working capital to finance our through our peak seasons. In December, we completed a follow-on public offering of over 10,150,000 shares of common stock and a public offering price of $19.7 per share. In addition, the underwriters exercised their option to purchase 1,500,000 additional shares of common stock. Pursuant to forward sales agreements entered into in connection with the offering, the company has discretion to settle the forward sale agreements on one or more settlement dates prior to December 6, 2027.

Subject to certain price adjustments as set forth in the forward sale agreements as well as adjustments for transaction and other associated fees. Roughly 11,700,000 shares of common stock are expected to meet all of the company's 2026 equity issuance needs to fund growth and a significant portion of 2027 equity needs as well. As a result of the Badger Wind Farm acquisition that closed right at year-end, our consolidated debt to capitalization ratio increased slightly to 49.1% debt as a percentage of our total capitalization. We expect to reduce this percentage as we settle the forward sale agreements from the follow-on offering that we completed in December. That summarizes our financial highlights for the year.

Appreciate your interest in and commitment to MDU Resources Group, Inc. And would ask that we now open the line for questions. Operator?

Operator: We will now begin the question and answer session. If you would like to ask a question, please raise your hand now. Reminder that if you have dialed into today's call, please press 9 to raise your hand. 6 to unmute. Please standby as we And your first question comes from the line of Julien Dumoulin Smith with Jefferies. Your line is open. Please go ahead.

Tanner: Hi, team. This is Tanner on for Julian. Thanks for taking my question.

Nicole Kivisto: Absolutely.

Tanner: Yeah. Maybe first here on the 2026 guidance. Just eyeballing the math here, if you delivered even just 6% EPS growth year over year, you'd kind of be toward the top end of the EPS range for the year. What are the year-over-year headwinds embedded in the guidance formally?

Jason L. Vollmer: Yeah. Thanks, Tanner. Happy to jump in and walk through that. So as we look at the growth that we saw in 2025, certainly excited with how we finished the year on that front. As we look forward into 2026 and look at the guidance there, you know, long-term guidance range, we do push a 6% to 8% guidance range that we expect 6% to 8% EPS, excuse me, 6% to 8% EPS growth rate over the long term. And I think as we've said before, you know, that we will have years where we exceed that. We will have years where we probably don't meet that full amount.

As we look into 2026, we've got a lot of exciting things underway. We've got a lot of rate case activity in front of us here, which we will see some, you know, partial impacts from throughout the year. The addition of the Badger Wind Farm as we see in 2026 will be a benefit here as well. Certainly, of that growth has taken some equity issuance on our side as well, so we do see some impacts of that as we look for that piece of it.

But overall, as we look in 2026, we are expecting, you know, growth as we look at from that perspective, the midpoint of our range would show growth over where we ended this year. Your point, if you look at the midpoint of the range, it probably doesn't meet that 6% to 8% long-term range that we've talked about, but we are certainly over the long term, expecting that will hold true for us over the next several years.

Tanner: You appreciate that. And can you elaborate on the continued contract negotiations with several interested parties for the Bakken East pipeline? And I see on the slide you provide the path toward FID, but there aren't any formal dates attached. Could you maybe help set a rough expectation for how we should be thinking about some of the more important parts of the process? Like FID and then formal integration into the CapEx plan.

Nicole Kivisto: Yeah, absolutely. So, kind of what I hear you asking is, how do we articulate next steps as it relates to Bakken East? And as we disclosed in the script and otherwise, we've got the open season out publicly right now, so that goes through March 13 or mid-March. And so as we think about the binding open season, it's probably a little bit too early to discuss results coming out of that. As you know, we've been in ongoing discussions with customers on the project and are certainly pleased with the level of interest we're seeing. We like our strategic location. You know, as a reminder, this is really a demand-pull type of project versus producer push.

And so, you know, you're really getting to, how do we continue to advance this? And so, open season, I mentioned, we will continue with discussions to get committed interest. Following that, we would look to finalize the ultimate design of the project, execute customer agreements, and then essentially at that juncture be prepared to make a final investment decision on the project. We did do our pre-filing with FERC in December, and in that filing, we also included some timelines as it relates to a final 7C with FERC in 2026.

So those are kind of the timelines we're looking at right now, but certainly continue to be pleased with the level of interest and the discussions we're having with customers.

Tanner: Great. Thank you very much.

Operator: Please raise your hand. And if you have dialed in to today's call, please press 9 to raise your hand and 6 to unmute. I see no further questions at this time. I will now turn the call back to Nicole Kivisto for closing remarks.

Nicole Kivisto: All right. We want to thank you all again for joining us today, and I want to thank our employees again for a successful 2025. We certainly appreciate your interest and support of MDU Resources Group, Inc., and look forward to connecting with you as we progress throughout 2026. With that, I will turn the call back over to you, operator.

Operator: Thank you. This concludes today's call. Thank you for attending. You may now disconnect.