5 Must-Read Analyst Questions From MDU Resources's Q1 Earnings Call
MDU Resources' first quarter results showed a mix of strong revenue growth and lower-than-expected profitability, with management attributing performance to higher earnings in its Pipeline and Natural Gas Distribution segments. The company benefited from increased demand for natural gas transportation and storage, alongside rate relief in key utility markets and robust customer growth—particularly within its electric and natural gas service territories. CEO Nicole Kivisto noted that 'our Pipeline and Natural Gas Distribution segments grew earnings by 13.9% and 11.5% respectively, year-over-year, driving our solid first quarter performance.' However, higher operating and maintenance expenses, including outage-related costs, and lower returns on non-qualified benefit plan investments, weighed on overall profitability.
Is now the time to buy MDU? Find out in our full research report (it's free).
Revenue: $674.8 million vs analyst estimates of $653.1 million (14.7% year-on-year growth, 3.3% beat)
EPS (GAAP): $0.40 vs analyst expectations of $0.47 (14.9% miss)
Adjusted EBITDA: $167 million vs analyst estimates of $166.1 million (24.7% margin, 0.5% beat)
EPS (GAAP) guidance for the full year is $0.93 at the midpoint, roughly in line with what analysts were expecting
Operating Margin: 16.9%, in line with the same quarter last year
Market Capitalization: $3.38 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Chris Ellinghaus (Siebert Williams Shank) asked about the accretiveness of capital light contracts for large customers. CEO Nicole Kivisto explained that these arrangements, especially at the Ellendale site, are immediately beneficial to earnings and spread transmission costs among customers.
Chris Ellinghaus (Siebert Williams Shank) inquired about the impact of Bakken oil and gas dynamics. Kivisto and CFO Jason Vollmer responded that rising gas-to-oil ratios and industrial demand support long-term pipeline growth despite oil price fluctuations.
Chris Ellinghaus (Siebert Williams Shank) raised concerns about housing starts and customer growth in Boise. Kivisto noted that Boise remains a higher-growth market relatively insulated from economic swings, supporting utility customer additions.
Brian Russo (Jefferies) questioned why electric segment earnings fell despite higher volumes. Vollmer attributed it to increased operations and maintenance costs, data center ramp-up effects, and lower investment returns on benefit plans.
Ryan Levine (Citi) pressed on progress for the Bakken East pipeline project and the role of tariffs. Vollmer stated that while tariffs may affect material costs, they are manageable within project planning and are not expected to derail the project.
Looking forward, our analysts will closely watch (1) the ramp-up of additional data center capacity and its contribution to electric segment earnings, (2) regulatory progress and outcomes on pending rate cases in Montana, Wyoming, and Idaho, and (3) milestones in the Bakken East pipeline and Baker Storage expansion projects. The pace of infrastructure investment and execution on planned capital projects will also remain key areas of focus.
MDU Resources currently trades at $16.71, down from $17.60 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it's free).
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