MDU Q4 Deep Dive: Regulatory Wins and Data Center Expansion Shape Cautious Outlook

Energy and construction materials company MDU Resources (NYSE:MDU) missed Wall Street’s revenue expectations in Q4 CY2025, with revenue of $534 million. Its GAAP profit of $0.37 per share increased from $0.27 in the same quarter last year.

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’ fourth quarter results fell short of Wall Street’s revenue and adjusted EBITDA expectations, prompting a negative market reaction. Management attributed the underperformance to higher operating costs, particularly in the electric utility segment, where increased payroll, contract services for generation station outages, and insurance expenses offset higher retail sales. CEO Nicole Kivisto highlighted customer growth and accelerated capital investment, including the early completion of the Badger Wind Farm acquisition, as key operational achievements. Management also pointed to robust performance in the pipeline business, noting increased demand for short-term transportation contracts and the successful execution of expansion projects.

Looking ahead, MDU Resources’ guidance is shaped by ongoing regulatory developments, continued capital investment, and the ramp-up of new data center loads. Management expects steady earnings growth but acknowledges that equity financing for large-scale growth projects will weigh on near-term results. CFO Jason Vollmer explained that 2026 guidance incorporates “partial impacts” from new rate cases and benefits from the Badger Wind Farm, while also reflecting dilution from recent equity issuances. Kivisto emphasized the importance of finalizing customer agreements and regulatory approvals for major pipeline initiatives, stating, “We remain confident in our ability to execute our long-term growth strategy.”

Key Insights from Management’s Remarks

Management attributed the quarter’s performance to increased utility operating costs, regulatory actions, and significant capital deployment, while emphasizing growth in data center-related load and project execution.

• Utility cost pressures: Higher expenses in payroll, contract services, and insurance at the electric utility offset gains from retail sales growth, impacting segment profitability for the quarter.
• Regulatory progress: The company achieved key approvals for cost recovery on major investments like the Badger Wind Farm, with regulatory filings in multiple states supporting future rate base growth.
• Data center expansion: MDU secured 580 megawatts under signed electric service agreements for data centers, with a phased ramp-up expected through 2027; this represents a strategic move into high-demand load opportunities.
• Pipeline segment momentum: The pipeline business delivered record earnings, driven by expansion projects and increased demand for firm transportation contracts, though partially offset by higher payroll and absence of prior year settlement benefits.
• Capital-light approach: For large customers like data centers, the company continues to pursue a capital-light model, balancing earnings potential with risk management and maintaining flexibility to invest further as customer commitments solidify.

Drivers of Future Performance

MDU Resources’ outlook centers on sustained customer growth, regulatory approvals, and the ability to fund and execute capital investments while managing equity dilution and cost pressures.

• Rate case outcomes: Future earnings are highly dependent on approvals for pending rate cases in Montana, South Dakota, Wyoming, and Oregon, which will determine cost recovery and return on new investments such as the Badger Wind Farm.
• Data center load ramp-up: The continued onboarding of contracted data center megawatts is expected to drive incremental electric utility demand, but management cautions that new capital commitments will depend on the pace of customer agreements and regulatory clarity.
• Equity issuance and cost discipline: The company’s need for equity financing to support large-scale projects introduces near-term earnings dilution, while ongoing cost management efforts and operating efficiency initiatives are expected to partially offset margin pressures.

Catalysts in Upcoming Quarters

Looking forward, the StockStory team will be monitoring (1) the outcomes of ongoing rate cases and regulatory filings, particularly in Montana and Oregon, (2) the pace at which contracted data center load ramps online and drives incremental demand, and (3) progress toward customer commitments and final investment decisions for major pipeline projects like Bakken East. Updates on capital allocation and cost discipline will also be important markers of execution.

MDU Resources currently trades at $20.17, down from $21.03 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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