Mdu Res Earnings Call: Mixed Sentiment and Future Optimism

Mdu Res ((MDU)) has held its Q3 earnings call. Read on for the main highlights of the call.

The recent earnings call for Mdu Res presented a mixed sentiment, highlighting both achievements and challenges faced by the company. While there was notable income growth and impressive pipeline performance, increased operating costs and declines in certain utility sectors were also evident. However, the positive adjustments to the EPS guidance reflect the company’s confidence in overcoming these hurdles.

Income from Continuing Operations Increase

The company reported an increase in income from continuing operations, reaching $18.4 million or $0.09 per share for Q3 2025. This marks an improvement of $2.8 million or $0.01 per share compared to Q3 2024, showcasing a positive trend in the company’s financial performance.

Pipeline Segment Performance

The pipeline segment was a standout performer, achieving record third-quarter earnings of $16.8 million, up from $15.1 million the previous year. This growth was primarily driven by higher transportation revenue from ongoing growth projects, underscoring the segment’s pivotal role in the company’s success.

Utility Customer Growth

The utility sector experienced a combined retail customer growth of 1.5% compared to the previous year, aligning with the company’s targeted annual growth rate of 1% to 2%. This steady growth reflects the company’s ability to maintain and expand its customer base effectively.

Electric Segment Investment Approval

A significant development for the electric segment was the approval by the North Dakota Public Service Commission for the acquisition of a 49% ownership interest in the Badger Wind Farm. This investment adds 122.5 megawatts of generation capacity, enhancing the company’s renewable energy portfolio.

Earnings Per Share Guidance Raised

In a show of confidence, the company raised the bottom end of its EPS guidance to a new range of $0.90 to $0.95 per share, up from the previous range of $0.88 to $0.95 per share. This adjustment signals optimism about future earnings potential.

Increased Operating Costs

Despite the positive financial results, increased operating costs across various business segments impacted the third-quarter results. Higher operation and maintenance expenses were particularly noted, posing a challenge to the company’s profitability.

Electric Utility Earnings Decrease

The electric utility segment reported a decrease in third-quarter earnings, dropping to $21.5 million from $24.3 million in 2024. This decline was attributed to higher operation and maintenance expenses, highlighting the need for cost management.

Natural Gas Segment Seasonal Loss

The natural gas utility reported a seasonal loss of $18.2 million in Q3, compared to a loss of $17.5 million in 2024. This was driven by increased operation and maintenance expenses, reflecting the challenges faced by this segment.

Forward-Looking Guidance

Looking ahead, Mdu Res has set ambitious targets, including a long-term EPS growth rate of 6% to 8% and a 60% to 70% annual dividend payout ratio. The company continues to focus on cost recovery for investments and expansions, with various rate cases filed and settled across multiple states.

In conclusion, the earnings call for Mdu Res highlighted a mixed sentiment with both achievements and challenges. While the company showed strong income growth and pipeline performance, increased operating costs and declines in some utility sectors were evident. Nevertheless, the positive EPS guidance adjustment reflects confidence in navigating these challenges and achieving future growth.