MDU Resources Earnings Call Reveals Mixed Results

Mdu Res ((MDU)) has held its Q4 earnings call. Read on for the main highlights of the call.

MDU Resources Reports Mixed Sentiment During Earnings Call

The latest earnings call from MDU Resources Group conveyed a mixed sentiment, reflecting both optimism and challenges. The company reported significant growth in adjusted earnings per share and record performance in its pipeline segment, signaling strategic investments for future growth. However, there were notable declines in GAAP earnings and the natural gas segment, alongside impacts from non-recurring items and dissynergies, painting a multifaceted picture of the company’s financial health.

Adjusted Earnings Per Share Growth

MDU Resources Group showcased a commendable increase in adjusted earnings per share from continuing operations, which rose by 22% year-over-year to $0.90 per share. This growth underscores the company’s ability to enhance shareholder value despite challenging market conditions.

Pipeline Segment Record Earnings

The pipeline segment emerged as a standout performer, achieving record earnings in 2024 with a remarkable 45% increase year-over-year. This success was driven by record transportation volumes and increased storage revenue, highlighting the segment’s pivotal role in MDU’s growth strategy.

Utility Customer Base Growth

MDU’s utility segment demonstrated resilience with a 1.4% increase in the combined retail customer base and a 6.8% rate base growth in 2024. These metrics indicate a steady expansion in the utility sector, contributing to the company’s overall growth trajectory.

Capital Investment Plans

Looking ahead, MDU Resources plans a substantial capital investment of $3.1 billion over the next five years. This investment aims to support a 7% to 8% utility rate base growth and 1% to 2% annual customer growth, reinforcing the company’s commitment to long-term development.

GAAP Earnings Decline

Despite achievements in other areas, MDU faced a decline in full-year GAAP earnings, which fell from $414.7 million or $2.03 per share in 2023 to $281.1 million or $1.37 per share in 2024. This decrease was largely attributed to costs associated with spin-offs, reflecting a challenging fiscal environment.

Natural Gas Segment Earnings Decline

The natural gas segment reported a slight downturn in earnings, amounting to $46.9 million compared to $48.5 million in 2023. This decline was mainly due to higher operation and maintenance expenses, as well as increased depreciation and amortization expenses.

Non-recurring Items and Dissynergies

MDU’s 2025 earnings guidance takes into account a $0.04 per share impact from non-recurring items in 2024 and dissynergies stemming from the spin-off of Everus, providing a clear picture of the financial adjustments anticipated in the coming year.

Forward-looking Guidance

MDU Resources provided a comprehensive outlook for 2025 during the earnings call. The company anticipates earnings per share guidance to range between $0.88 and $0.98, reflecting robust performance across segments while accounting for impacts from non-recurring items and dissynergies. With a planned $3.1 billion capital investment over five years and expected utility rate base growth of 7% to 8%, MDU aims for a long-term EPS growth of 6% to 8%. The company emphasized its strategic focus on maintaining a capital-light business model to support cost-effective customer growth.

In conclusion, MDU Resources’ earnings call presented a nuanced picture of the company’s current performance and future outlook. While the company celebrated significant gains in adjusted earnings and pipeline performance, challenges remain with GAAP earnings and the natural gas segment. MDU’s forward-looking strategies, including substantial capital investments and a focus on customer growth, aim to navigate these challenges and drive sustainable growth in the coming years.