Key Takeaways MDU launches a $200M equity offering through forward sale agreements with major financial institutions.The deal includes a 30 days option for underwriters to buy up to $30M in additional shares.MDU will utilize proceeds to cut debts, capital needs and buy 49% stake in the Badger Wind Farm project.MDU Resource Group, Inc. (MDU) has announced a public offering of $200 million of equity shares, using a forward sale agreement structure with forward sellers — Wells Fargo, BofA Securities and J.P. M ...

Core Viewpoint - MDU Resources Group, Inc. has announced a public offering of 10,152,284 shares of its common stock at a price of $19.70 per share, with the offering expected to close on or about December 5, 2025 [1][2]. Group 1: Offering Details - The underwriters for the offering include Wells Fargo Securities, BofA Securities, and J.P. Morgan, with TD Securities also acting as a bookrunner [2]. - The underwriters have the option to purchase an additional 1,522,842 shares, which may lead to further forward sale agreements [1][2]. - MDU Resources will not initially receive proceeds from the sale of shares by the forward sellers to the underwriters [4]. Group 2: Forward Sale Agreements - MDU Resources has entered into forward sale agreements with Wells Fargo Bank, Bank of America, and JPMorgan Chase Bank, agreeing to sell 10,152,284 shares at the initial forward sale price equal to the offering price [3]. - Settlement of the forward sale agreements is expected to occur within 24 months following the offering's completion, with options for cash or net share settlement [3]. Group 3: Use of Proceeds - If MDU Resources opts for physical settlement of the forward sale agreements, it plans to use the net proceeds for general corporate purposes, including debt repayment, capital expenditures, and acquisitions [4].

Core Viewpoint - MDU Resources Group, Inc. has initiated a public offering of $200 million in common stock, with the potential for an additional $30 million, to support various corporate purposes including debt repayment and capital expenditures [1][2]. Offering Details - The offering consists of $200 million in common stock, with underwriters Wells Fargo Securities, BofA Securities, and J.P. Morgan acting as joint lead bookrunners [1]. - MDU Resources plans to grant underwriters an option to purchase up to $30 million in additional shares [1]. - Shares will be sold through various methods including transactions on the New York Stock Exchange and negotiated transactions [1]. Forward Sale Agreements - MDU Resources will enter into forward sale agreements with Wells Fargo Bank, Bank of America, and JPMorgan Chase Bank, agreeing to sell approximately $200 million in shares at an initial forward sale price equal to the underwriters' purchase price [1]. - Settlement of these agreements is expected within 24 months following the offering [1]. Use of Proceeds - MDU Resources will not receive initial proceeds from the forward sellers' sales to underwriters. However, if physical settlement occurs, proceeds will be used for general corporate purposes, including debt repayment, capital expenditures, and acquisitions [1][2]. Company Overview - MDU Resources Group, Inc. is a member of the S&P SmallCap 600 index, providing electric utility and natural gas distribution services to over 1.2 million customers [2]. - The company operates a 3,800-mile natural gas pipeline network, ensuring reliable energy delivery across the Northern Plains [2].

Core Viewpoint - MDU Resources Group, Inc. announced a capital investment plan of $3.4 billion for the period from 2026 to 2030, representing a 34% increase compared to the previous five-year plan, emphasizing the company's commitment to sustainable growth and reliable energy delivery infrastructure [1][2]. Capital Investment Plan - The planned capital investments will focus on enhancing the company's regulated electric, natural gas distribution, and pipeline businesses, with specific allocations for each segment [3][4]. - Total capital expenditures are forecasted as follows: - Electric: $1.377 billion - Natural Gas: $1.354 billion - Pipeline: $643 million - Total for 2026-2030: $3.374 billion [4]. Electric Utility Investments - Investments in the electric utility sector will support system upgrades, substation improvements, and generation projects, including the acquisition of a 49% stake in Badger Wind Farm and the Jamestown to Ellendale transmission line project [4][5]. Natural Gas Distribution Investments - The natural gas distribution investments will focus on system replacements, expansions, and modernization to meet the demands of a growing customer base, particularly in fast-growing regions [5]. Pipeline Business Investments - The pipeline segment will support customer-driven projects, including the Line Section 32 Expansion Project and the Minot Industrial Expansion Project, while also focusing on system maintenance and capacity expansion [6]. Funding Strategy - The company anticipates equity issuance of $150 million to $175 million in 2026 and $100 million to $125 million in 2027 to support capital expenditures, with additional funding expected from internally generated cash flows and debt financing [7]. Strategic Growth and Earnings - The capital investment plan is expected to facilitate rate base growth of 7%-8% annually across regulated operations and maintain a long-term earnings per share growth target of 6%-8% [8].

Core Viewpoint - The comparison between Southwest Gas (SWX) and MDU Resources (MDU) indicates that SWX is currently the better option for investors seeking undervalued stocks due to its stronger earnings outlook and favorable valuation metrics [1][3][7]. Valuation Metrics - SWX has a forward P/E ratio of 21.94, while MDU has a forward P/E of 22.10, indicating that both companies are similarly valued in terms of earnings [5]. - The PEG ratio for SWX is 2.27, which is more favorable compared to MDU's PEG ratio of 3.26, suggesting that SWX has a better expected earnings growth relative to its price [5]. - SWX's P/B ratio is 1.46, compared to MDU's P/B of 1.53, further supporting the notion that SWX is relatively undervalued [6]. Zacks Rank - SWX holds a Zacks Rank of 2 (Buy), reflecting an improving earnings outlook, while MDU has a Zacks Rank of 5 (Strong Sell), indicating a negative earnings revision trend [3][7]. - The Zacks Rank system emphasizes companies with positive estimate revision trends, which currently favors SWX [2][3]. Value Grades - Based on various valuation metrics, SWX has earned a Value grade of B, while MDU has received a Value grade of D, highlighting SWX's superior valuation profile [6].

Core Insights - MDU Resources has joined the North Plains Connector utility consortium, marking its commitment to enhancing electrical infrastructure and reliability [1][3] - The consortium aims to develop a high-voltage direct current (HVDC) transmission line that will connect the Eastern and Western Interconnections, with MDU Resources securing 150 megawatts of capacity [1][2] - The North Plains Connector project is expected to significantly contribute to MDU's energy portfolio, representing over 15% of its 2024 peak load [2][3] Company Involvement - MDU Resources signed a non-binding memorandum of understanding (MOU) with North Plains Connector LLC for 150 megawatts of capacity on the 420-mile HVDC project [1][2] - The project will allow MDU Resources to own a portion of the 3,000-megawatt capacity once operational, enhancing its strategic investments in electrical infrastructure [2][3] - MDU Resources is the first utility from North Dakota to join the consortium, indicating a strong regional commitment to improving the electric grid [3] Project Details - The North Plains Connector project represents a multi-billion-dollar investment in Montana and North Dakota, expected to create over 800 jobs during construction [5] - The project will facilitate bidirectional power flow, accommodating various generation sources based on market needs [6] - Construction is anticipated to begin in 2028, with operations expected to start in 2032 [7] Industry Context - The North Plains Connector will be the first HVDC transmission connection among three regional electric energy markets, enhancing grid reliability and market connections [4] - Other utilities involved in the project include Puget Sound Energy, Portland General Electric, Avista, and NorthWestern Energy, all of which are expected to meet approximately 15% or more of their 2024 peak loads through this initiative [3][4]

Financial Performance - The Company reported a consolidated net income of $18.4 million for the three months ended September 30, 2025, a decrease of $46.2 million compared to $64.6 million in the same period of 2024[138]. - The absence of income from discontinued operations significantly impacted the Company's earnings for both the three and nine months ended September 30, 2025[140]. - The company reported a net income of $21.5 million in Q3 2025, a decrease of 11.5% from $24.3 million in Q3 2024[155]. - Operating income decreased by 11.5% to $28.4 million in Q3 2025, down from $32.1 million in Q3 2024[155]. - The Company reported a seasonal loss of $700,000 for the three months ended September 30, 2025, despite an increase in revenues[160]. - Net income for the pipeline segment rose by 11.3% to $16.8 million for the three months ended September 30, 2025, compared to $15.1 million in the same period of 2024[179]. - The company reported a decrease in net cash provided by operating activities to $392.8 million for the nine months ended September 30, 2025, down from $441.8 million in 2024, primarily due to the absence of cash from discontinued operations[194]. Revenue and Sales - In the three months ended September 30, 2025, operating revenues increased by 8.6% to $117.8 million compared to $108.5 million in the same period of 2024[155]. - Revenues for the three months ended September 30, 2025, increased by $10.7 million to $144.3 million compared to $133.6 million for the same period in 2024, driven by higher residential and commercial sales[160]. - For the nine months ended September 30, 2025, revenues increased by $95.9 million to $890.5 million compared to $794.6 million in 2024, largely due to higher purchased natural gas sold and rate relief[161]. - The natural gas distribution segment's operating revenues increased by 8.0% to $144.3 million in Q3 2025, compared to $133.6 million in Q3 2024[158]. - Operating revenues for the pipeline segment increased by 11.5% to $57.4 million for the three months ended September 30, 2025, compared to $51.5 million in the same period of 2024[179]. Expenses and Costs - The electric business earnings decreased due to higher operation and maintenance expenses, including increased payroll-related costs and higher contract services, partially offset by higher retail sales revenue[139]. - The natural gas distribution segment reported an increased seasonal loss primarily due to higher operation and maintenance expenses, although it was partially offset by higher retail sales revenue from rate relief in certain states[139]. - Electric fuel and purchased power costs rose by 26.8% to $41.2 million in Q3 2025, up from $32.5 million in Q3 2024, primarily due to higher commodity prices[155]. - Operation and maintenance expenses increased by $11.6 million for the nine months ended September 30, 2025, primarily due to higher payroll-related costs and conservation-related expenses[161]. - The Company experienced a 10.5% increase in operation and maintenance expenses, totaling $21.0 million for the three months ended September 30, 2025, compared to $19.0 million in the same period of 2024[179]. Strategic Initiatives - The Company is focused on modernizing utility infrastructure and managing operating costs while pursuing organic growth opportunities in its electric and natural gas distribution segments[146]. - The Company signed a power purchase agreement for 150 MW of output capacity from the Badger Wind Project to enhance its energy supply and reduce capacity purchase requirements[149]. - Montana-Dakota's JETx project is expected to be placed in service by the end of 2028, with regulatory approvals received in 2024[153]. - The Company is actively monitoring and implementing GHG emissions reduction strategies to minimize potential risks associated with regulatory changes[184]. - The Company continues to evaluate potential future acquisitions and growth opportunities, which may impact capital expenditures depending on economic conditions[201]. Capital Expenditures and Financing - Capital expenditures for the first nine months of 2025 were $379.5 million, slightly up from $377.3 million in 2024, with estimated capital expenditures for the full year expected to be approximately $531.7 million[199]. - The Company expects to fund its capital expenditures for 2025 through various sources, including internally generated funds and credit facilities[201]. - The Company had outstanding revolving credit facilities totaling $200.0 million, with $132.7 million drawn under the Montana-Dakota facility[204]. - Intermountain issued $25.0 million in senior notes on July 15, 2025, with a total expected issuance of $50.0 million at a 6.39% interest rate[208]. - Montana-Dakota entered into a NPA to issue $250.0 million of senior notes at a weighted average interest rate of 5.96%[209]. Market Conditions and Challenges - The Company continues to navigate inflationary pressures and supply chain disruptions while monitoring the impacts of changing tariffs and commodity price volatility[134]. - The company expects delays in raw material delivery and increased costs to continue due to high demand and inflationary pressures[152]. - The company is actively monitoring the impact of tariffs on costs, which could negatively affect construction projects and maintenance work[152]. - The Company continues to face challenges related to supply chain issues and inflationary pressures, which could affect construction and maintenance costs[175]. Debt and Interest Rates - Approximately 13.4% of the outstanding debt as of September 30, 2025, consisted of variable interest rate facilities, exposing the Company to interest rate risk[219]. - An increase of 1% in the interest rate on the Company's variable interest rate facilities would result in an estimated $3.2 million pre-tax annual increase in interest expense[219]. - The Company expects to contribute approximately $3.4 million to its pension plans in 2025, primarily due to accelerated contributions[215]. - The Company was in compliance with applicable covenants for its debt instruments as of September 30, 2025, except for certain non-compliance issues that were subsequently waived[208].

Core Insights - MDU Resources Group Inc. reported third-quarter 2025 operating earnings per share (EPS) of 9 cents, exceeding the Zacks Consensus Estimate of 7 cents by 28.6%, but reflecting a significant decrease of 71.9% year over year [1][8]. Revenue Performance - Total operating revenues for the third quarter increased by 8.8% to $315.1 million, compared to $289.6 million in the same period of 2024 [2][8]. Expense and Income Analysis - Total operating expenses rose to nearly $275.3 million, marking an 8% increase from $254.8 million in the prior year [3]. - Operating income was reported at $39.8 million, which is a 14.4% increase from $34.8 million in the year-ago quarter [3]. Financial Position - As of September 30, 2025, cash and cash equivalents stood at $75.9 million, up from $66.9 million as of December 31, 2024 [4]. - For the first nine months of 2025, net cash provided by operating activities was $392.8 million, down from $441.8 million in the same period last year [4]. Guidance and Projections - MDU Resources has narrowed its earnings guidance for 2025 to a range of 90-95 cents per share, with the Zacks Consensus Estimate at 92 cents, slightly below the midpoint of the guidance [5]. - The company expects utility customer growth to continue at an annual rate of 1-2% and anticipates a long-term EPS growth rate of 6-8% [5]. - Capital expenditure for 2025 is projected to be $531 million [5]. Market Position - MDU Resources currently holds a Zacks Rank of 4 (Sell) [6].

Financial Data and Key Metrics Changes - The company reported income from continuing operations of $18.4 million, or $0.09 per share, for Q3 2025, an increase of $2.8 million, or $0.01 per share, compared to Q3 2024 [3][12] - Third quarter earnings decreased from $64.6 million, or $0.32 per share in Q3 2024 to $18.4 million, or $0.09 per share in Q3 2025 [13] - The company raised the bottom end of its earnings per share guidance to a new range of $0.90-$0.95 per share from the previous range of $0.88-$0.95 per share [12] Business Line Data and Key Metrics Changes - The electric utility segment reported earnings of $21.5 million in Q3 2025, down from $24.3 million in Q3 2024, impacted by higher operation and maintenance expenses [14] - The natural gas utility reported a seasonal loss of $18.2 million in Q3 2025, compared to a loss of $17.5 million in Q3 2024, driven by increased operation and maintenance expenses [15] - The pipeline segment posted record earnings of $16.8 million in Q3 2025, up from $15.1 million in Q3 2024, due to higher transportation revenue from growth projects [16] Market Data and Key Metrics Changes - The utility experienced combined retail customer growth of 1.5% compared to the same time last year, aligning with the targeted annual growth rate of 1%-2% [4] - The company has 580 megawatts of data center load under signed electric service agreements, with 180 megawatts currently online [6] Company Strategy and Development Direction - The company is focused on delivering exceptional performance while positioning itself for long-term growth, with a targeted long-term EPS growth rate of 6%-8% and a 60%-70% annual dividend payout ratio [12] - The company plans to pursue additional capital projects to meet existing customer demand and enhance grid resiliency [8] Management's Comments on Operating Environment and Future Outlook - Management noted that strong customer demand at the pipeline segment and progress in utility regulatory schedules should provide opportunities moving forward [3] - The company remains confident in its ability to execute its long-term growth strategy and deliver strong stockholder returns [12] Other Important Information - The North Dakota Public Service Commission approved the acquisition of a 49% ownership interest in the Badger Wind Farm, expected to be completed upon commercial operation around year-end [4][5] - The company has reestablished an ATM program to meet future equity capital needs [16] Q&A Session Summary - There were no questions during the Q&A session [17]

Financial Performance - The company's net income for the third quarter of 2025 was $18.4 million, resulting in earnings per share (EPS) of $0.09 [29] - This compares to a net income of $15.6 million and EPS of $0.08 in the third quarter of 2024 [29] - Income from continuing operations for the third quarter of 2025 was also $18.4 million, with an EPS of $0.09, compared to $64.6 million and $0.32 in 2024 [29, 30] Business Segment Performance - The Electric Utility segment reported earnings of $21.5 million in the third quarter of 2025, down from $24.3 million in 2024, impacted by increased operation and maintenance expenses [34, 35] - The Natural Gas Utility segment experienced a seasonal loss of $18.2 million in the third quarter of 2025, compared to a loss of $17.5 million in 2024, with rate relief partially offsetting seasonal losses and a 1.6% year-over-year increase in natural gas customer count [37, 38] - The Pipeline segment reported earnings of $16.8 million in the third quarter of 2025, up from $15.1 million in 2024, driven by expansion projects and increased transportation volumes [40, 41] Regulatory and Growth Initiatives - The company anticipates continued growth in utility customers at 1%-2% annually [12, 26] - The company has 580 MW of data center load under signed electric service agreements [12, 16] - The company received approval for a 49% ownership interest in the Badger Wind Project, with an estimated cost of $294 million [12, 21]