MDU Resources Reports Strong Start to 2025 Earnings

Mdu Res ((MDU)) has held its Q1 earnings call. Read on for the main highlights of the call.

MDU Resources Group’s recent earnings call revealed a positive start to 2025, marked by significant income growth and strategic investments in infrastructure and renewable energy. While the company is experiencing robust growth, particularly in its pipeline and natural gas distribution segments, challenges persist in the electric segment due to increased operational costs and lower investment returns.

Strong Start to 2025 with Income Increase

MDU Resources reported a notable increase in income from continuing operations, reaching $82.5 million or $0.40 per share for the first quarter. This represents a 10.4% increase compared to the previous year, signaling a strong start to 2025.

Pipeline and Natural Gas Distribution Segments Growth

The company saw impressive growth in its Pipeline and Natural Gas Distribution segments, with earnings rising by 13.9% and 11.5% year-over-year, respectively. This growth underscores the strength of these segments in driving the company’s financial performance.

Utility Customer Growth and Infrastructure Investment

MDU’s utility segment experienced a 1.4% increase in combined retail customer growth, highlighting the ongoing need for infrastructure investment to support this expanding customer base.

Electric Segment Strategic Acquisition

MDU Resources has signed a purchase agreement for a 49% ownership stake in the Badger Wind Farm, a strategic move pending regulatory approvals. This acquisition aligns with the company’s focus on renewable energy investments.

Pipeline Segment Record Earnings

The pipeline segment achieved record first-quarter earnings, up 13.9% from the previous year, showcasing its critical role in the company’s overall growth strategy.

Future Growth Prospects

MDU Resources has outlined an ambitious plan for future growth, with an anticipated capital investment of $3.1 billion over the next five years and a projected EPS growth rate of 6% to 8%.

Electric Utility Earnings Decline

The electric utility segment reported a decline in first-quarter earnings, dropping to $15 million from $17.9 million the previous year, primarily due to higher operation and maintenance expenses.

Operational Challenges in Electric Segment

Increased operation and maintenance costs, driven by outage-related expenses and higher payroll costs, have posed challenges for the electric segment, impacting its profitability.

Lower Investment Returns Impact

The company’s financial results were affected by lower returns on non-qualified benefit plan investments, impacting various segments across the board.

Forward-Looking Guidance

MDU Resources Group remains optimistic about its future, affirming its full-year earnings per share guidance of $0.88 to $0.98. The company plans significant capital investments totaling $3.1 billion over the next five years and aims for a long-term EPS growth rate of 6% to 8%. Additionally, MDU targets a 60% to 70% annual dividend payout ratio, reflecting its commitment to returning value to shareholders.

In summary, MDU Resources Group’s earnings call highlighted a strong start to 2025, driven by growth in key segments and strategic investments. Despite challenges in the electric segment, the company’s forward-looking guidance and commitment to infrastructure and renewable energy investments position it well for continued success.