MDU Resources (US:MDU)2025-05-08 19:02Financial Data and Key Metrics Changes - The company reported income from continuing operations of $82.5 million or $0.40 per share for Q1 2025, a 10.4% increase compared to the same period last year [4] - First quarter earnings were $82 million or $0.40 per diluted share, compared to $100.9 million or $0.49 per diluted share in Q1 2024 [12] - The natural gas utility segment reported earnings of $44.7 million, an 11.5% increase from $40.1 million in Q1 2024 [14] Business Line Data and Key Metrics Changes - The electric utility segment reported earnings of $15 million, down from $17.9 million in the same period last year, despite a 25% increase in retail electric volumes [12][39] - The pipeline segment achieved record first quarter earnings of $17.2 million, up from $15.1 million in Q1 2024, driven by growth projects and increased demand for services [9][15] Market Data and Key Metrics Changes - The utility experienced a 1.4% combined retail customer growth compared to a year ago, aligning with the projected annual growth rate of 1% to 2% [5] - The company signed electric service agreements for 580 megawatts of data center load, with 180 megawatts currently online and an additional 100 megawatts expected to come online later this year [7] Company Strategy and Development Direction - The company is focused on a core strategy emphasizing customer and community engagement, operational excellence, and employee-driven initiatives, with a capital investment plan of $3.1 billion over the next five years [11] - The company anticipates a long-term EPS growth rate of 6% to 8% while targeting a 60% to 70% annual dividend payout ratio [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term potential of the Bakken region, highlighting the increasing gas-to-oil ratio and the need for takeaway capacity [22][24] - The company remains committed to wildfire prevention and has seen legislative support in three of its operating states, which will help limit liability and enhance mitigation efforts [6][58] Other Important Information - The company plans to reestablish an ATM program to meet future equity needs as part of its capital investment strategy [16] - The company is affirming its earnings per share guidance in the range of $0.88 to $0.98 for the full year [10] Q&A Session Summary Question: Are the tariffs from large customers not accretive for new resources? - Management indicated that the current capital-light strategy for data centers is beneficial, as it allows for shared costs with large customers, which in turn benefits retail customers [18][19] Question: How might disruptions in the Bakken affect North Dakota? - Management believes in the long-term viability of the Bakken, noting that while oil prices fluctuate, the increasing gas production will provide benefits for the pipeline business and utility customers [22][24] Question: How does the company view housing starts in relation to economic sensitivity? - Management noted that customer growth has remained stable within the 1% to 2% range, even during economic fluctuations, with Idaho being a particularly strong growth area [28][30] Question: What are the next steps for the Bakken East project? - Management stated that conversations with customers are ongoing, and they are encouraged by the feedback received, but further steps will depend on route design and customer needs [48][49] Question: How will recent wildfire legislation impact mitigation plans? - Management indicated that the legislation will help formalize existing mitigation plans and limit liability, while prevention remains the top priority [58][59] Question: What is the anticipated size of the ATM program? - Management has not yet determined the size of the ATM program but plans to size it appropriately to meet future needs [60] Question: What is the starting point for the long-term growth rate? - Management clarified that the long-term growth rate guidance is based on the adjusted 2024 number or the 2025 range provided earlier this year [63]