Energy and construction materials company MDU Resources (NYSE: MDU) fell short of the market’s revenue expectations in Q1 CY2026, with sales falling 10.2% year on year to $606 million. Its GAAP profit of $0.39 per share was 9.5% below analysts’ consensus estimates.

Is now the time to buy MDU? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

MDU Resources’ first quarter results fell short of Wall Street’s revenue and earnings expectations, driven primarily by significantly milder winter weather across its utility service territories. Management highlighted that lower retail sales volumes, especially in its electric and natural gas utilities, resulted in decreased earnings compared to last year. CEO Nicole Kivisto directly attributed the softer quarter to weather, noting that “mild winter weather impacts reduced earnings by approximately $0.03 per share.” Operational improvements, such as the Badger Wind Farm coming online and rate relief in select regions, partially offset these weather-related declines.

Looking forward, MDU Resources’ guidance for 2026 is shaped by ongoing regulatory execution, the ramp-up of data center loads, and the advancement of major pipeline projects. Management emphasized the company’s strategy to balance capital-light approaches for serving large-load customers with the potential for more capital-intensive investments as demand grows. CFO Jason Vollmer cautioned that the timing and structure of the proposed Bakken East pipeline, as well as future rate case outcomes, will be key variables, stating, “All options are on the table as we look at ways to finance this.”

Key Insights from Management’s Remarks

Management pointed to weather-driven volume declines as a major factor behind the quarter’s shortfall, while underscoring progress on strategic growth projects and regulatory achievements.

• Weather-driven volume declines: Unseasonably warm temperatures led to lower retail electric and natural gas sales, affecting utility segment results across multiple states, with Idaho and Montana experiencing up to 30% milder weather than last year.
• Badger Wind Farm contributions: The Badger Wind Farm, which completed its first full quarter in service, provided incremental benefit to the electric utility segment, partially offsetting weather-related headwinds.
• Data center load expansion: Management reported continued ramp-up of data center customer load, with 580 megawatts now under signed electric service agreements. The capital-light approach to serving these customers has yielded ongoing credits to retail customers’ bills, and additional load is expected to come online through 2028.
• Bakken East pipeline progress: The binding open season for the proposed Bakken East pipeline project attracted approximately 1.4 billion cubic feet per day of interest, with 40% already secured under precedent agreements. Negotiations continue for the remainder, and the project could require up to $3.2 billion in capital investment if approved.
• Regulatory and rate case milestones: MDU advanced several key rate cases, including approvals in Wyoming and interim relief in Montana, supporting future earnings stability and ongoing investment in infrastructure.

Drivers of Future Performance

Management expects future performance to be driven by regulatory outcomes, new capital projects, and continued growth in large-load customers, particularly data centers.

• Capital deployment and project execution: The outcome and timing of the potential Bakken East pipeline, along with other major infrastructure projects such as Align Section 32 and the Minot Industrial Pipeline, will influence capital needs and long-term earnings growth. Management is evaluating financing options, including partnerships, to manage risk and return.
• Data center and industrial demand: The company anticipates further increases in large-load customer demand, especially from data centers and industrial clients, which could trigger additional investments in generation, substations, and transmission assets. This demand is expected to provide incremental earnings and customer bill credits.
• Regulatory and rate case results: The pace and outcome of ongoing and upcoming rate cases in multiple jurisdictions are expected to impact revenue and margin stability. Management highlighted that constructive regulatory environments are crucial for achieving its targeted 6% to 8% long-term EPS growth.

Catalysts in Upcoming Quarters

In upcoming quarters, our analysts will watch (1) the pace of securing final Bakken East pipeline agreements and any decisions on project financing or partnerships; (2) continued growth and monetization of data center loads, including new service agreements and the ramp-up of online capacity; and (3) progress and outcomes in pending rate cases, especially in Montana and Oregon. These milestones will provide important signals on whether MDU Resources is delivering against its operational and strategic priorities.

MDU Resources currently trades at $22.47, in line with $22.30 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).

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