MDU Resources Group, Inc. (MDU) | The Buildout — AI Infrastructure

The Verdict

MDU Resources Group is a regulated energy delivery company. It generates, transmits and distributes electricity, sells natural gas at retail, and owns a FERC-regulated interstate pipeline. Its place in the AI buildout is load: data-center developers in North Dakota buy firm electric capacity from its utility, and part of the demand behind its proposed Bakken East pipeline is power generation that may serve data centers. MDU does not sell compute, cooling or any AI value-chain product. It sells the power and the pipeline capacity those campuses need. The current data-center model is capital-light: the customer pays for the connection, and a share of the benefit flows back to retail customers as a bill credit.

Earnings Beat

MDU reported Q2 2026 results on August 6, 2026: revenue of $375.2 million and EBITDA of $157.3 million, a 41.9% EBITDA margin. Net earnings were $21.3 million, up 55.5% from $13.7 million a year earlier. Data-center load under signed electric service agreements rose from 580 MW to over 1,000 MW quarter over quarter, with approximately 240 MW online versus 180 MW, and the quarter included a new 430 MW agreement with Applied Digital for its Polaris Forge 3 campus. Year-to-date 2026 net earnings were $102.1 million, or $0.49 per share, versus $95.7 million, or $0.47 per share, in the first six months of 2025.

Management tone: Management's tone shifted toward greater confidence on financing and delivered a concrete commercial step. On the Q1 2026 call the Bakken East financing answer was that all options were on the table and that a majority stake mattered; on the Q2 2026 call management said it feels very confident in the ability to finance a project like this and pointed to appetite for these types of assets. The data-center discussion moved from pursuing additional customers to a named 430 MW electric service agreement. Against that, the Section 7(c) filing slipped a quarter, and management declined to date the investment decision beyond saying it would come before the filing. The transcript-intelligence file notes that the phrase about being comfortable with the schedule preceded the prior slip and reappeared in the Q2 Q&A.

Management Guidance

Management reaffirmed 2026 EPS guidance of $0.93–$1.00 and its long-term EPS growth objective of 6%–8%, and kept the 2026–2030 capital program at approximately $3.1 billion: approximately $1.1 billion electric, $1.4 billion natural gas distribution and $643 million pipeline. Bakken East remains incremental to that plan. The 430 MW Polaris Forge 3 agreement is excluded from guidance and from the long-term growth rate until North Dakota Public Service Commission approval. The targeted annual customer growth rate is 1%–2%. The 60%–70% dividend payout ratio target was stated on the Q1 2026 call and was not repeated on the Q2 2026 call.

Trajectory

MDU's reported revenue line moves with pass-through natural gas costs, which run through revenue and expense together, so the top line is not a clean read on momentum. Revenue was $606.0 million in Q1 2026 versus $674.8 million a year earlier, and $375.2 million in Q2 2026; the Q1 decline was largely lower purchased natural gas sold, recovered in customer rates. EBITDA margins are expanding: Q1 2026 came in at 28.0% and Q2 2026 at 41.9%, against 24.3% and 23.4% a year earlier. The segments point three ways — the electric utility is up on rate recovery and early data-center load, natural gas distribution operating income rose on lower gas costs and new rates while higher interest expense pulled at the bottom line, and the pipeline is down on higher depreciation from newly placed assets and lower other income. Trailing-twelve-month revenue is $1,830.3 million and EBITDA $578.0 million, a 31.6% margin, against negative free cash flow as capital spending runs ahead of cash generation.

The Model

The model projects FY+1 revenue of $1,855.7 million and EBITDA of $546 million, a 29.4% margin, and FY+2 revenue of $2,057 million and EBITDA of $613 million, a 29.8% margin. For a regulated utility the forward earnings trajectory is a function of rate-base growth minus financing cost, and the rate-case calendar is where that resolves — which anchors the near term, alongside the data-center load already online. FY+2 carries the next step of the data-center ramp. The FY+2 revenue spread across the five model runs is 12%, from $1,980 million to $2,224 million. Bakken East's in-service dates of late 2029 and late 2030 sit outside both projection years.

Projections are the median of 5 independent model runs. The model’s revenue sits 5.8% below analyst consensus.

Management reaffirmed 2026 EPS guidance of $0.93–$1.00 and its long-term EPS growth objective of 6%–8%, and kept the 2026–2030 capital program at approximately $3.1 billion: approximately $1.1 billion electric, $1.4 billion natural gas distribution and $643 million pipeline. Bakken East remains incremental to that plan. The 430 MW Polaris Forge 3 agreement is excluded from guidance and from the long-term growth rate until North Dakota Public Service Commission approval. The targeted annual customer growth rate is 1%–2%. The 60%–70% dividend payout ratio target was stated on the Q1 2026 call and was not repeated on the Q2 2026 call.

What Could Go Right — and Wrong

Looking Ahead

Over the next twelve months the nearest dated item is the North Dakota electric rate case, where approximately $26.3 million of interim relief was requested to begin September 1, 2026 within an approximately $34.5 million annual ask. The Bakken East Section 7(c) filing is now expected in the fourth quarter of 2026, with a final investment decision intended ahead of it, and management pointed to its normal late-November 2026 capital update as the point where a revised Bakken East range could appear. FERC pipeline rates take effect December 1, 2026 subject to refund; Montana's $10 million settlement and Oregon's approximately $12.2 million settlement are pending; and a Minnesota gas rate case is anticipated later in 2026. The North Dakota Public Service Commission decision on the 430 MW Polaris Forge 3 agreement has no stated date, and Bakken East first in-service is not until late 2029.

Financials

Annual Summary

Key Ratios (Trailing)

The Company

MDU Resources Group describes itself as a pure-play regulated energy delivery business. It generates, transmits and distributes electricity and provides natural gas distribution, transportation and storage services, regulated by state public service commissions and/or the FERC. It became this deliberately: the company separated its former construction-services segment, Everus, into an independent public company on October 31, 2024, with transition services completed as of March 31, 2026. The electric utility serves retail customers in 185 communities and adjacent rural areas. Natural gas distribution serves 343 communities across eight states. The pipeline business, WBI Energy Transmission, runs over 3,800 miles of FERC-regulated natural gas transmission and storage lines and made up approximately 94% of segment revenue in 2025.

The utility operates through wholly-owned subsidiaries: Montana-Dakota for electric and gas, Cascade and Intermountain for gas, and WBI Energy for the pipeline and a non-regulated cathodic-protection business. MDU holds ownership stakes in generation rather than owning it outright — 25% of the 427-MW Coyote Station, 22.7% of the 475-MW Big Stone Station, 25% of the 100-MW Wygen III, 49.0% of the 250-MW Badger Wind Farm, plus the 88-MW Heskett Unit 4 peaking turbine. Earnings come through rate cases rather than commodity spreads, and management describes a standing plan of filing three to five rate cases annually. Combined retail customer growth was 1.4% year over year as of Q1 2026, within a targeted 1%–2%. The quarterly dividend was raised to $0.145 per share, or $0.56 annualized, on August 13, 2026.

Business Segments

Competitive Landscape

The 10-K names what MDU's electric segment competes against: rural electric cooperatives, on-site generators, co-generators and municipally owned systems. The evidence set adds a structural alternative — behind-the-meter generation, where a data center builds its own plant rather than buying delivered power. WMB delivered 200 MW at its Socrates project in under 18 months, and Applied Digital, MDU's named data-center customer, owns roughly 10% of Base Electron, a roughly 1.2 GW front-of-the-meter gas generation developer in the Dakotas. The intel file reads that ownership as potentially complementing or competing with MDU-supplied power, and labels the read as inferred. MDU's own defense is the customer bill credit, which is designed to keep it the preferred counterparty for regulators and communities.

Supply Chain

MDU buys coal and purchased power, holds minority stakes in generation, and delivers electricity and natural gas to retail customers across eight states plus FERC-regulated pipeline service. Its data-center customers sit downstream of it. No neighbor transcript in the source set names MDU.