MDU Resources Group, Inc. Q2 FY2025 earnings call

• Nicole Kivisto noted income from continuing operations of $14.1 million or $0.07 per diluted share for Q2 2025, impacted by unfavorable weather and increased costs, but highlighted strong customer demand in pipeline and utility, retail customer growth, electric segment rate cases in Wyoming and plan for Montana, Badger Wind Farm hearing scheduled for September 9, wildfire mitigation plans filing later, 580 MW of data center load under electric service agreements for utility, natural gas segment rate cases in Idaho and Wyoming, pipeline segment execution and expansion plans. - Jason Vollmer provided consolidated financial results, compared Q2 2025 earnings to prior year, discussed strong balance sheet, $3.1 billion capital investment plan over 5 years, and plan to reestablish ATM program for equity needs.

Electric utility: Second quarter earnings of $10.4 million compared to $15.5 million in 2024. Higher payroll-related costs and outage costs at Coyote generating station were offset by increased commercial sales volumes (largely from data center load) and rate relief in South Dakota. Natural gas utility: Seasonal loss of $7.4 million in Q2 2025 vs $5 million in 2024. Higher O&M expenses, lower volumes due to warmer weather (especially in Idaho) were partially offset by higher retail sales revenues (due to rate relief) and higher transportation revenue. Pipeline business: Earnings of $15.4 million in Q2 2025 vs $17.3 million in 2024. Higher O&M expenses were partially offset by higher transportation revenue from the Walton expansion project and customer demand for short-term natural gas transportation contracts.

• Narrowed EPS guidance to $0.88 to $0.95 per share from previous $0.88 to $0.98. - Confident in long-term growth strategy with $3.1 billion capital investment over 5 years, 7%-8% compounded annual utility rate base growth, 1%-2% annual customer growth, 6%-8% long-term EPS growth rate, and targeted 60%-70% annual dividend payout ratio.

• Unfavorable weather impacting Natural Gas Distribution segment. - Increased operating costs across the business. - Uncertainty in utility rate cases (electric segment rate cases in Wyoming and Montana, natural gas segment rate cases). - Potential impacts from regulatory proceedings (Badger Wind Farm hearing, wildfire mitigation plans filing). - Weather-related volume impacts on natural gas utility due to non-weather normalized states in Idaho and Montana.

Q: What impact is the lower storage project size have on the potential scale of the Bakken East pipe? And can you just kind of walk through the implications of the revised scale of the storage facility?

A: Nicole Kivisto stated Bakken East and Baker storage projects are separate; Bakken East could provide incremental storage expansion opportunity if pursued.

Q: In terms of the revised EPS guidance range. Given the drivers of the revision there, how does that impact your longer-term EPS outlook? Does that signal you're moving towards the certain end of the range?

A: Jason Vollmer explained planned outage was part of original guidance, weather had volume impacts, and inflationary costs but not a long-term trend.

Q: What can we expect regarding the North Dakota Industrial Commission meeting on August 21 regarding the Bakken East project?

A: Nicole Kivisto said state support could enhance the project, timing is uncertain but state is focused on getting a project done, and next step is binding open season.

Q: When will kind of end the capital-light strategy in the ESAs, right? When do you think that these pockets of excess capacity can be absorbed before MDU would need to build generation infrastructure to serve that incremental demand?

A: Nicole Kivisto said conversations continue, approach is to share when energy service agreements are in place, and there are pockets for capital-light strategy with potential for investment in transmission/generation for incremental load.