MDU Resources (MDU) - 2025 Q1 - Quarterly Report

Part I -- Financial Information Financial Statements Operating revenues increased, but net income declined to $82.0 million due to discontinued operations, with total assets at $6.96 billion Consolidated Statements of Income Consolidated Income Statement Highlights (Q1 2025 vs. Q1 2024) | Metric | Three Months Ended March 31, 2025 ($) | Three Months Ended March 31, 2024 ($) | | :--- | :--- | :--- | | Operating Revenues | $674.8 million | $588.3 million | | Operating Income | $112.9 million | $96.7 million | | Income from Continuing Operations | $82.5 million | $74.7 million | | Discontinued Operations, net of tax | ($0.5 million) | $26.2 million | | Net Income | $82.0 million | $100.9 million | | Diluted EPS from Continuing Operations | $0.40 | $0.37 | | Diluted EPS | $0.40 | $0.49 | Consolidated Balance Sheets Consolidated Balance Sheet Highlights | Metric | March 31, 2025 ($) | March 31, 2024 ($) | December 31, 2024 ($) | | :--- | :--- | :--- | :--- | | Total Current Assets | $541.6 million | $1,319.9 million | $666.3 million | | Net Property, Plant and Equipment | $5,378.6 million | $5,060.2 million | $5,344.3 million | | Total Assets | $6,961.5 million | $7,839.9 million | $7,038.8 million | | Total Current Liabilities | $634.6 million | $922.8 million | $678.6 million | | Long-Term Debt | $2,032.0 million | $2,193.7 million | $2,130.9 million | | Total Stockholders' Equity | $2,743.1 million | $2,980.9 million | $2,690.6 million | - The significant decrease in current assets and liabilities compared to March 31, 2024, is primarily due to the reclassification of the Everus business as discontinued operations following its separation on October 31, 2024, resulting in no assets or liabilities of discontinued operations on the balance sheet as of March 31, 2025[29][39][47] Consolidated Statements of Cash Flows Consolidated Cash Flow Highlights (Q1 2025 vs. Q1 2024) | Metric | Three Months Ended March 31, 2025 ($) | Three Months Ended March 31, 2024 ($) | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $217.5 million | $165.1 million | | Net Cash Used in Investing Activities | ($94.7 million) | ($117.3 million) | | Net Cash Used in Financing Activities | ($130.1 million) | ($35.5 million) | | (Decrease) Increase in Cash | ($7.4 million) | $12.3 million | Notes to Consolidated Financial Statements Notes detail the Everus spin-off, revenue recognition, regulatory assets, debt, and a new $294.0 million wind project agreement - On October 31, 2024, the company completed the tax-free spin-off of its Everus construction services business, with historical results now presented as discontinued operations[15][38][43] - At the pipeline segment, remaining performance obligations for firm transportation and storage contracts totaled $587.7 million as of March 31, 2025, with $82.6 million expected to be recognized within the next 12 months[60][61] - Montana-Dakota entered an agreement to purchase a 49% interest (122.5 MW) in a 250 MW wind project for $294.0 million, contingent on regulatory approval, which will reduce its power purchase requirements[107] Disaggregated Revenue from Contracts with Customers (Q1 2025) | Revenue Type | Electric ($ Millions) | Natural Gas Distribution ($ Millions) | Pipeline ($ Millions) | Total ($ Millions) | | :--- | :--- | :--- | :--- | :--- | | Residential utility sales | $39.7 | $289.2 | - | $328.9 | | Commercial utility sales | $48.5 | $192.3 | - | $240.8 | | Industrial utility sales | $9.2 | $15.5 | - | $24.6 | | Natural gas transportation | - | $17.7 | $49.3 | $67.0 | | Natural gas storage | - | - | $6.0 | $6.0 | Management's Discussion and Analysis of Financial Condition and Results of Operations Consolidated earnings decreased to $82.0 million due to the Everus spin-off, despite strong natural gas and pipeline segment performance, as the company targets a 60-70% dividend payout ratio - The company completed the separation of its Everus construction services business on October 31, 2024, transforming into a pure-play regulated energy delivery company[116] - A long-term dividend payout ratio target of 60% to 70% of regulated energy delivery earnings has been established[118] Segment Net Income Contribution (Q1 2025 vs. Q1 2024) | Segment | Q1 2025 ($ Millions) | Q1 2024 ($ Millions) | | :--- | :--- | :--- | | Electric | $15.0 | $17.9 | | Natural gas distribution | $44.7 | $40.1 | | Pipeline | $17.2 | $15.1 | | Other | $5.6 | $1.6 | | Income from continuing operations | $82.5 | $74.7 | | Discontinued operations, net of tax | ($0.5) | $26.2 | | Net income | $82.0 | $100.9 | Business Segment Financial and Operating Data Electric segment net income decreased to $15.0 million, while natural gas distribution and pipeline segments saw earnings growth to $44.7 million and $17.2 million respectively - Electric business earnings decreased due to higher operation and maintenance expenses, including generation station outage costs, and lower investment returns[128] - Natural gas distribution earnings increased due to rate relief in Washington, Montana, and South Dakota, and higher volumes from colder weather[128] - Pipeline earnings grew due to growth projects placed in service in 2024 and strong demand for short-term firm capacity contracts[128] Liquidity and Capital Commitments The company maintains strong liquidity with $59.5 million cash and $580.0 million available borrowing capacity, projecting $536.3 million in 2025 capital expenditures - At March 31, 2025, the Company had $59.5 million in cash and $580.0 million available borrowing capacity under its credit facilities[178] - Capital expenditures for 2025 are estimated to be approximately $536.3 million, focused on utility investments and pipeline system growth[184] - Total equity as a percent of total capitalization was 56% at March 31, 2025, compared to 54% at year-end 2024[191] Quantitative and Qualitative Disclosures About Market Risk No material changes to market risks were reported compared to the 2024 Annual Report - There were no material changes in the Company's market risks from those reported in the 2024 Annual Report[199] Controls and Procedures Management concluded disclosure controls and procedures were effective, with no material changes to internal control over financial reporting - The CEO and CFO concluded that as of the end of the period, the company's disclosure controls and procedures were effective at a reasonable assurance level[200] - No material changes occurred in the Company's internal control over financial reporting during the three months ended March 31, 2025[201] Part II -- Other Information Legal Proceedings No material changes to legal proceedings were reported compared to the 2024 Annual Report - There were no material changes to the Company's legal proceedings as reported in the 2024 Annual Report[203] Risk Factors No material changes to risk factors were noted, but new risks from U.S. government tariffs and trade policy were highlighted - A new risk factor was highlighted: U.S. government tariffs and changes in trade policy could increase the cost of raw materials and equipment, cause supply chain disruptions, and negatively impact financial results if increased costs are not recoverable through rates[205] Unregistered Sales of Equity Securities and Use of Proceeds The company withheld 265,964 shares at $16.83 per share for tax obligations related to incentive plan vesting - In February 2025, 265,964 shares were withheld by the Company at an average price of $16.83 to pay taxes in connection with the vesting of shares from its Long-Term Performance-Based Incentive Plan[207] Other Information No director or officer adopted or terminated Rule 10b5-1 trading arrangements during the first quarter of 2025 - During the three months ended March 31, 2025, no director or officer of the Company adopted or terminated a Rule 10b5-1 trading arrangement[209] Exhibits This section indexes exhibits filed with the Form 10-Q, including CEO/CFO certifications and XBRL data