MDU Resources Q3 2026 Earnings: Electric Gains Could Not Prevent a Profit Decline

MDU Resources (NYSE: MDU) reported Q3 2026 operating revenue of $347.8 million, up about 10.4% from $315.1 million a year earlier, while diluted EPS fell to $0.07 from $0.09. Operating income increased, but higher interest expense and lower other income contributed to a decline in net income, as stronger electric utility results were offset by weaker natural gas distribution and pipeline performance.

Core Earnings Data

Revenue increased by $32.7 million year over year, and operating income rose by $7.8 million as the company benefited from new utility rates and higher electric and natural gas retail volumes. However, consolidated net income declined to $14.0 million from $18.4 million.

Adjusted results remove the Knott Landfill renewable natural gas project loss and certain Bakken East advisory costs. Even after these adjustments, adjusted net income and adjusted EPS remained below the prior-year quarter.

Adjusted net income and adjusted EPS are non-GAAP measures. Q3 2026 adjustments included a $2.1 million after-tax loss from discontinuing the Knott Landfill project and $0.5 million of after-tax Bakken East advisory costs.

Business and Segment Performance

Electric utility was the only major operating segment to report higher quarterly net income. Natural gas distribution remained seasonally unprofitable, while pipeline earnings declined on higher costs and lower storage-related activity.

Electric Utility

Electric utility net income increased by $5.0 million. New rates in North Dakota, Montana, and Wyoming added $7.1 million of quarterly revenue, while Badger Wind Farm contributed $3.2 million of earnings.

Retail electric sales volumes rose 9.3% across customer classes, partly because of warmer weather. Sales to data center customers increased 18.4%, supporting commercial demand. Higher operating, depreciation, and interest costs associated with Badger Wind Farm partially offset the revenue and volume benefits.

MDU said infrastructure costs specifically required to serve large-load customers are assigned through contracts, tariffs, and regulatory approvals, reflecting its effort to prevent those costs from being shifted to existing customers.

Natural Gas Distribution

Natural gas distribution revenue increased by $8.7 million, but the seasonal net loss widened by $2.5 million. New rates in Idaho and Washington contributed $6.5 million of additional revenue, retail sales volumes rose 7.1%, and the customer count grew 1.5%.

Those benefits were more than offset by higher operation and maintenance costs, including payroll-related expenses, as well as higher interest expense and lower returns on nonqualified benefit plan investments. The segment also recorded the $2.1 million after-tax Knott Landfill project loss.

Pipeline

Pipeline net income declined by $3.7 million to $13.1 million. Higher payroll, material, consulting, and Bakken East advisory costs weighed on the segment, along with lower storage injections and lower interruptible transportation volumes.

Short-term natural gas transportation contracts and revenue from previously completed expansion projects provided a partial offset. The Other category also affected consolidated results, with its net loss widening to $4.9 million from $1.7 million because of higher captive insurer claims and income tax adjustments.

Higher Operating Profit Was Absorbed Below the Operating Line

MDU’s operating margin improved to about 13.7% from 12.6%, showing that revenue growth outpaced the increase in operating expenses. Operating income consequently rose by $7.8 million.

The improvement did not carry through to the bottom line. Other income fell to $1.4 million from $7.3 million, while interest expense increased to $32.6 million from $26.4 million. Together, those changes more than absorbed the operating income gain, reducing pretax income to $16.4 million from $20.7 million.

The decline was not solely the result of the Knott Landfill and Bakken East charges. Adjusted net income, which excludes those items, still fell to $16.6 million from $18.4 million.

Cash Flow, Balance Sheet, and Capital Spending

Cash flow figures were provided for the first nine months of 2026 rather than Q3 alone. Nine-month operating cash flow declined to $347.6 million from $392.8 million. Investing cash outflow was $344.3 million, compared with $359.8 million a year earlier, while financing cash outflow was $3.9 million.

Cash, cash equivalents, and restricted cash ended the period at $27.6 million, down from $75.9 million on September 30, 2025. Total debt increased to $2.60 billion from $2.35 billion, while total equity rose to $2.97 billion from $2.72 billion. Debt represented 46.6% of capitalization, compared with 46.4% a year earlier.

MDU estimates 2026 capital expenditures of $594 million on a net basis, excluding the Other category. That amount consists of $102 million for electric utility projects, $327 million for natural gas distribution, and $165 million for pipeline investments. The pipeline estimate increased after the Bakken East final investment decision, while electric and gas distribution estimates declined because of project timing and the decision to discontinue Knott Landfill development.

Bakken East Advances With a Narrower Capital Range

MDU’s board made a positive final investment decision on the Bakken East Pipeline on September 30, 2026. The estimated investment range narrowed to $2.8 billion to $3.1 billion from $2.7 billion to $3.2 billion; the midpoint remained unchanged at $2.95 billion.

The approximately 350-mile pipeline is designed to transport natural gas from western North Dakota to an area near Fargo. Initial capacity is planned at 1.4 billion cubic feet per day, with flexibility for future growth.

MDU is evaluating financing structures, including possible participation by financial or strategic investors, while expecting WBI Energy to retain majority ownership and operational control. The project remains subject to regulatory approval. Construction is expected during the 2028–2030 seasons, with the first phase targeted for late 2029 and the second for late 2030.

Earnings Guidance

Despite lower Q3 earnings, MDU reaffirmed its 2026 EPS guidance. The outlook assumes normal weather and operating conditions, continued customer growth, execution of approved capital programs, and constructive regulatory outcomes.

Risks Investors Should Watch

• Regulatory outcomes: Several requested or interim rate increases remain pending or subject to refund, including electric cases and the pipeline segment’s requested $31 million annual revenue increase before FERC.
• Bakken East financing and execution: The $2.8 billion to $3.1 billion project requires regulatory approval, substantial financing, materials procurement, and construction over multiple years.
• Cost and interest pressure: Higher payroll, material, consulting, and interest costs affected multiple segments in Q3 and could limit the earnings benefit from new rates and volume growth.
• Weather and demand variability: Warmer weather contributed to higher electric volumes during the quarter, while the full-year guidance assumes normal weather and continued customer growth.

Summary

MDU Resources delivered higher Q3 revenue and operating income, led by new electric utility rates, Badger Wind Farm earnings, and increased retail demand. Those gains did not translate into higher consolidated profit because natural gas distribution and pipeline results weakened, interest expense increased, and other income declined. The company maintained its 2026 EPS guidance, while Bakken East’s financing, regulatory process, and multiyear construction plan are becoming increasingly important to its capital requirements and long-term growth strategy.