Hello, everyone. Thank you for joining us and welcome to the MDU Resources Group, Inc. Q1 2026 earnings conference call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Brent Miller, Treasurer.

Brent, please go ahead. Thank you, Warren, and welcome everyone to the MDU Resources Group First Quarter 2026 Earnings Conference Call. Our earnings release and supporting materials for this call are available on our website at mdu.com under the Investors section. Leading today's call are Nicole Cavisto, President and Chief Executive Officer, and Jason Vollmer, Chief Financial Officer of MDU Resources Group. During today's call, we will make certain forward-looking statements within the meaning of the federal securities laws. Please refer to our SEC filings for a discussion of risks and uncertainties that could cause actual results to differ. I will now turn the call over to Nicole for her prepared remarks. Nicole?

Thank you, Brent, and good afternoon, everyone. We appreciate you joining us today and for your continued interest in MD resources. This morning, we reported first quarter 2026 earnings of $80.8 million or 39 cents per share results reflected strong operational performance across our businesses offset by mild winter weather impacts which reduced earnings by approximately three cents per share at the same time rate relief and recent investments such as badger wind farm and other pipeline expansions contributed positive results and we continue to see encouraging demand trends including interest tied to data center development during the quarter we concluded our binding open season for the proposed bakken east pipeline project with continued strong interest received as a reminder we have not yet reached a final investment decision on this potential project but we are certainly encouraged with the approximate 1.4 billion cubic feet per day of submitted interest received in the open season of that total approximately 40 percent has been signed under precedent agreements with additional precedent agreements in active negotiation included in the signed precedent agreements is a firm capacity commitment of 50 million annually for 10 years from the state of North Dakota with these results we are now expecting the design of the potential project to include approximately 353 miles of 42 inch 36 inch and 30 inch diameter mainline pipe approximately 21 miles of 30 inch 24 inch and 20 inch diameter lateral pipelines additional compression at three existing compressor stations and the construction of three new compressor stations based on these assumptions we are projecting total capital investment for the potential project in the range of 2.7 billion to 3.2 billion which would be incremental to our current 3.1 billion dollar capital investment forecast we are encouraged by the level of interest and ongoing commercial discussions that demonstrate continued demand for additional takeaway capacity from the bakken region which the bakken east project could provide this potential project would also provide natural gas transportation service to meet growing customer demand from industrial power generation and local distribution companies in the region as we look to finance a project of this size and scope we will evaluate all options including using our balance sheet to finance the project pursuing potential partnerships and various other options also during the quarter we saw a continued ramp of our data center load we currently have 580 megawatts under signed electric service agreements of which 180 megawatts has been online since mid-year 2023. 50 megawatts from the second data center is currently online with an additional 50 megawatts currently ramping online an additional 150 megawatts is expected online later this year with a hundred with another 100 megawatts expected online in 2027 and the remaining 50 megawatts expected online in 2028 our current approach to serve these large load customer opportunities is with a capital light business model which not only benefits our earnings and returns but also provides cost savings to our other retail customers currently our average retail customer receives an approximate 70 per year credit on their bill from this approach and we anticipate this credit to increase to potentially over 200 per year when all volumes are fully online we do continue to pursue additional discussions with potential data center customers and will provide further updates when we reach executed electric service agreements depending on the structure of future agreements we would consider investing capital into new generation substation and transmission assets to serve the increased load aside from data center load we also continue to evaluate other potential capital projects related to safely and reliably meeting existing customer demand, as well as grid resiliency. On the regulatory front, we are continuing to execute on our plan of filing three to five rate cases annually in working to achieve constructive outcomes in all jurisdictions. At our electric segment, our Wyoming rate case was approved with rates effective April 1st, 2026. In our Montana case, interim rates were approved for an annual increase of $10.4 million with rates also effective April 1st, subject to refund. We also anticipate filing a general rate case in North Dakota yet this year. On a slightly separate but related note, during the quarter, the South Dakota legislature approved legislation enabling utilities to reduce wildfire risk through the submission of wildfire mitigation plans and providing associated liability protection with this action all four states in which we provide electric service now have wildfire fire mitigation and liability relief frameworks in place moving on to our natural gas regulatory update new rates from our idaho case were effective january 1st reflecting an annual increase of 13 million in washington year two rates under our approved multi-year rate plan representing an annual increase of 10.8 million were effective march 1st of 2026. in april we did file a revision to decrease revenue by 22.1 million annually due to forecasted capital investments excuse me that were not placed in service as of december 31st 2025. our organ rate case is still pending before the commission where we requested an annual increase of 16.4 million as we look ahead we anticipate filing another multi-year rate case in washington this year and also plan to file a general rate case in minnesota later in 2026 moving on to our pipeline segment we filed our section 7c application in march for our line section 32 expansion project marking an important regulatory milestone in this project's development this expansion will provide natural gas transportation service to an electric generating facility being constructed in northwest north dakota the project is dependent on regulatory approvals with construction targeted to be complete in late 2028 with the total capital investment of approximately 70 million which is included in our $3.1 billion capital plan. We also extended the signed agreement to support the early stage development of the potential Minot Industrial Pipeline project through late 2026. This project would be approximately a 90-mile pipeline from Tiowa, North Dakota to Minot, North Dakota, and would provide incremental natural gas transportation capacity for anticipated industrial demand should we decide to proceed. This project is included in our out of years of the $3.1 billion capital plan, and we will continue to provide updates as the project progresses. Looking ahead, continued strong customer demand at our pipeline segment and progress in our utility regulatory schedule should provide opportunities to meet our long-term EPS growth rate target as we move forward. In addition, our utility experienced combined retail customer growth of 1.4% when compared to this time last year, which is within our targeted annual growth rate of 1 to 2%. This demand and growth provide investment opportunity for customer-driven growth projects at our pipeline and in our utility infrastructure. I am proud of our employees whose dedication to our core strategy continues to drive our business to deliver exceptional performance and positions mdu resources with compelling long-term growth prospects despite the mild weather headwinds experienced in the first quarter we are affirming our 2026 earnings per share guidance range of 93 cents to a dollar per share we remain confident in our ability to execute our long-term growth strategy and believe our operational focus and financial discipline continue to position us well for delivering safe and reliable energy, customer value, and strong stockholder returns. We also continue to anticipate a long-term EPS growth rate of 6% to 8% while targeting a 60% to 70% annual dividend payout ratio. As always, MD Resources is committed to operating with integrity and with a focus on safety. We remain dedicated to delivering value as a leading energy provider and employer of choice. I will now turn the call over to Jason for a financial update. Jason.

Thank you, Nicole. This morning we announced first quarter earnings of $80.8 million or $0.39 per share compared to first quarter 2025 earnings of $82 million or 40 cents per share as nicole mentioned in her opening comments milder weather had an approximate impact of three cents per share on a consolidated basis for the quarter turning to our individual businesses our electric utility reported first quarter earnings of 14.5 million compared to 15 million for the same period in 2025. the first full quarter of badger wind farm being in service was a benefit in the quarter but was more than offset by lower retail sales volumes from 10 to 30 percent milder weather across our service territory which impacted earnings results by approximately 2 million when compared to the first quarter of 2025. Our natural gas utility reported earnings of 44.2 million in the first quarter compared to 44.7 million in 2025. Similar to our electric results warmer weather impacted volumes for the quarter resulting in approximately five million dollar impact to earnings compared to last year including temperatures 20 percent warmer in Idaho, 30% warmer in Montana, and 10 to 30% higher across the rest of our service territory when compared to the prior year. Weather normalization mechanisms in certain states helped offset the warmer temperatures experienced in the quarter. Largely offsetting the lower volumes was rate relief in Washington, Idaho, Montana, and Wyoming. The pipeline reported earnings of $15.3 million compared to first quarter record earnings of 17.2 MILLION LAST YEAR. THE DECREASED EARNINGS WAS DRIVEN BY LOWER INTERRUPTIBLE NATURAL GAS STORAGE WITHDRAWALS ALONG WITH HIGHER OPERATION AND MAINTENANCE EXPENSE PRIMARILY DUE TO INCREASED MATERIAL COSTS AND PAYROLL RELATED EXPENSES. HIGHER MONTANA PROPERTY TAX ACCURALS ALSO CONTRIBUTED TO THE DECREASED EARNINGS. PARTIALLY OFFSETTING THE IMPACTS WITH STRONG CUSTOMER DEMAND FOR SHORT-TERM NATURAL GAS TRANSPORTATION CONTRACTS AS WELL AS CONTRIBUTIONS FROM THE Minot expansion project placed in service late last year. Finally, MDE Resources continues to maintain a strong balance sheet and has ample access to working capital to finance our operations through our peak seasons. In connection with the company's December 2025 follow-on equity offering, a portion of the related forward sales agreements were settled in March 2026, resulting in the issuance of 4.3 million shares of new common stock for proceeds of approximately $81.3 million. That summarizes the financial highlights for the quarter. We appreciate your interest in MDU resources and ask now that we would open the line for questions.

Operator. We will now begin the question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality.

If you are muted locally, please remember to unmute your device please stand by while we compile the q a roster your first question comes from the line of julian dumoulin smith with jeffries your line is open please go ahead hey team thank you guys very much for the time and again congratulations just really great outcomes here of late so kudos to you guys uh on that front look if i if i could um just kick it off here i mean it's just a remarkable backdrop just wanted to talk a little bit more about this 40% signed under precedent agreements relative to the remaining 60%. I know you guys talk about a $3 billion plus number here now, but just kind of backing that with customers, investors have been really focused on that today. Can you talk a little bit about that, the timeline to really zip that up, if you will?

Yeah, absolutely. And thank you, Julian, for the question. So as we think about where we are today, maybe I'll just take a step back. you know when we entered into uh the binding open season from the start really what ended up showing up and what we reported today is is what we expected so we feel really encouraged in terms of where we are and in our initial expectations on the overall project so encouraged by that in terms of the the 40 percent uh very encouraged that we have 40 of that under signed and execute precedent agreements you know that's as of this date we as we mentioned on this on the call and in the earnings release. We're in active negotiations on the remaining. You know, we believe we've agreed in large part to many of the key business terms with these remaining customers, but we'll continue to work through those. In terms of the overall kind of next steps following that, certainly as we move forward with executing the remaining agreements, you know, the next step is obviously to finalize design based on what shows up there, and then certainly work with our board on a final investment decision. As you know, we did pre-file this project with FERC December of last year. In that filing, we laid out a schedule that would indicate that we would file the 7C here in the third quarter of this year. So as I think about where we're at today, I'm comfortable with the schedule to date, and certainly both WBI and our potential customers hope to reach an FID as soon as practical.

Got it, right. So you feel pretty You're pretty good about getting it done if you're still on track with that third quarter target timeline, I suspect. Maybe if I can follow this up real quickly here. How do you think about laterals here? I mean, whether it's Ellendale or, frankly, some of these other potential customers, and maybe related to that, as far as laterals go, how do you think about the gas strategy perhaps leading an electric or electric gas gen strategy here on the utility side as well? So very much appreciate what you're doing and the expanding scope of what you're doing with this pipeline. But how do you think about that marrying up with what you have on the utility front at the same time, whether that's incremental laterals or actually building gas gen here? And I'll note your comments in the remarks about being capital light thus far. How do you think about that being more capital intensive, respectively?

Yeah, so there are a couple of questions packed in there. I'll see, maybe take them in the order that I kind of heard them. But, you know, let me talk about the utility first. As we think about where we're at there, you know that our method has really been we've come forward with to the market when we've got signed ESAs. So what we did talk about here today in the script is that we continue in conversations with others. Noting those conversations, we also leaned into, and I talked about the fact that we may consider changing that strategy a bit and leaning into some investment. And so more to follow in terms of those final decisions being made, but we are continuing to discuss with potential customers the ability to serve them from a large load perspective. Now, as it relates to the pipeline, one of the things that we've talked about that I think is, you know, beneficial for our company, and we've talked about this with investors for a while, is as we think about the data center theme and that build out, whether our utility can serve that or not is, to me, kind of obviously some upside, but the pipeline has the opportunity to serve that, whether the utility would be the provider of that data center or not. So certainly as you're referencing our proposed Bacchonese pipeline, you know, we continue to think about how do we serve some of that data center load, but there, if we don't, it still is a benefit to the overall potential project at large. So my point being the theme of data center development is certainly a benefit on both sides of our business, whether that be the utility and the pipeline. your questions on on laterals certainly as we think about uh the finalizing our precedent agreements with our customers we will keep those in mind and i think as as what what we've seen across the country in some in some particular cases is once these pipelines do become announced to the extent we get to a final investment decision other you know opportunities may come forward and we've seen that in some of our peer companies as well so we will be thinking about that also it looks like jason you might want to add something here too we're just going to drop

in i think that's uh thanks to cole for that uh lead in there i think when you talk you mentioned specifically the ellendale lateral julian as part of your question if you look at the updated map in there you will not see that lateral built into that map right now so as you think about the open season process we did not get interest at that location for delivering gas to that site but i what I will say is right where Nicole was, as far as the volumes that we're seeing on the initial pipe compared to what we had expected going into the open season, we did see volume show up along the main line that really are in the same, get us to the same point along that way. So we will see additional laterals, I believe, develop over time off of this pipe. It is a good growth process going forward should we decide to proceed with it. But that L&D lateral is currently not contemplated in in the design and the new map that you would see there today.

Right. So the current CapEx budget doesn't necessarily include and could be itself upsized yet again in the context of any lateral, it would seem. But quickly, Jason, while you've got the mic, just with respect to financing this, I mean, this is just an incredibly big bite now that you're contemplating. How do you think about financing this? Are there partnerships? Are there selldowns to get this done? I mean, just curious if you can tackle that one real quickly.

Yeah, no, I appreciate the question, Julian. And certainly, you know, we've been clear before, I think, with the market that we weren't giving a number until we got to a point where we had more clarity around the size, scope, design of the project. So certainly by coming out with a range today, we've got, you know, a much better view of that today. So really wanted to get this new market update out there for everyone there. It is a very large number, especially in consideration of, you know, like current capital plan that we have of $3.1 billion without this project included. You know, we've got, this would be a significant bite in addition to that. I would say all options are on the table as we look at ways to finance this. So we've mentioned, you know, is there, again, I think a FERC regulated project with contracted demand for a long period of time is going to have a lot of ways of getting that financing done, whether that's, you know, doing that ourselves, whether it's incorporating partnerships along the way or various other things we'd look at. I think we will look at all options here. our primary focus is going to be trying to find an option that provides the best return for our shareholders over the long term uh but also gives us the ability to to uh you know have a majority uh stake in this uh project that is going to be you know connected to our existing system as we stand today so uh very important that uh you know that we're sitting in a majority partnership along that way if we do go down the partnership path yep absolutely all right excellent well thank you so very much really appreciate it all right thank you thank you as a reminder if you would like to ask a question please press star one to raise your hand your next question comes from the line of

ryan levine with city your line is open please go ahead regarding the montana rate case any color around if you're still pursuing a settlement there given the deadlines coming up later this week Yeah, thanks, Ryan.

I can take that one. So Montana rate case, certainly, you know, encouraged by having interim rates were approved, which went into effect here on April 1st, subject to refund, of course, until we get through the actual rate case process. As of right now, we have a hearing, I think, scheduled for July or later this summer here that we'll be looking towards on the next steps on that. Typically, as we look at these types of cases, we look for potential settlements along the way where we can, and certainly we'll continue to be in discussions on that. So nothing to state here other than certainly a settlement would be something we would be open to along the way, but we're just proceeding to the next hearing date, and we will continue to update once we find out more.

Okay. In terms of the Bakken needs more broadly, given crude price evolution as negotiations continue and the potential increase in associated gas production from the region, how is that impacting your contracting conversations from the supply side and any incremental opportunities that that could enable?

Yeah, great question. And certainly market dynamics right now are interesting in the commodity space. All of the interest that we've talked about with the Bakken East project has been demand pull. So this is industrial customers, power gen, LDCs, not driven by supplier push. I certainly think this is a project that will have interest from suppliers once it's in service and we move forward, but we are not relying on supplier push to get to the volumes we're talking about here today. This is all demand pull.

And in the cost estimate that's outlined in your slides, what are the key variables that push you to the higher or lower end of that range?

Yeah, I think where we sit today on that range would be a couple of things. So the construction period of this is 2029-2030 timeframe for the first in-service, late 29 for the second piece of this, or second phase, late 2030 in-service timeframe. We have not reached our final decision yet, so therefore we have not locked up contractors, as an example. So there could be some variability in labor as we kind of see that progress. Steel prices have been moving a little bit as we've looked at this, so we wanted to have a range that could encapsulate some of that. So I think there's a few things that would push us throughout that. I think where we're at at this point, understanding at least now from the customer demand side of things, where they would like to see facilities located and where it would interconnect with their projects they have underway. We've got a better thought on that front. We've got, I think, 97% of the route with permission to survey on that. So we've been able to line a lot of that out along the way. So I think we're in a good spot from that perspective. It really ends up being just uncertainty around until we get steel prices locked in for the pipe itself, compression ordered to understand what that looks like, and get the labor figured out from the construction of this. There's just a little bit of some variables there yet until we get to that point. So we wanted to give a range to at least get the market to understand the size and scope of how exciting this project can be, but also be thoughtful that things can move around a little bit before we get locked down.

Great. Thanks for taking my questions.

Your next question comes from the line of Aidan Kelly with J.P. Morgan. Your line is open. Please go ahead.

Hey, guys. Thanks for the time today. Just want to pick up on the, you know, Bacchonese project. I guess from a different angle a bit, could you talk about the data center opportunities on top of what you've already been, you know, talking about the pipeline, you know, specifically the power plants to be built off laterals in certain towns? Are there conversations occurring with large load customers around this opportunity?

So, yeah, certainly I'll take that. One of the things to think about is, as Jason mentioned, is we think about the scope of what showed up here in the binding open season and those that we have press and agreements signed. we're we indicated that's demand pull right and so as we think about demand pull well what's in that number um it some of that is power gen so um a piece of what's showing up here is power generation to serve uh potential data centers now saying that i think your question goes beyond that in terms of you know is the utility working with uh you know some of these customers or not or is there opportunity to have additional power gen that shows up after we've made a final investment decision on this pipeline. And that's yet to be seen in terms of where those things land. So, but where we are at today, this is a demand pool project and, you know, there is power generation that's showing up within the binding open season.

Great. Makes sense. Thanks for, you know, walking through that. And then just separately on kind of like the equity side again, you know, obviously it's a big CapEx project.

It's got maybe some thinking along the lines of, you know, potential partnership opportunities could you just kind of comment to to what extent you kind of see that as a possibility and then if so how we should kind of think about that whether that be another you know utility or like some kind of you know private equity arrangement just just any thoughts on your appetite to kind of partner up with anyone yeah thanks adele i'll address that i think uh as i mentioned in the previous question i think we're all options are kind of on the table as we think about financing a project of this size and scope you know given the again how excited we are about how big this project could be uh for the company here yeah right now the team is focused on getting to us getting us to uh final investment decision that's the primary focus i would say certainly how we finance it once we get to that point will be uh you know the next key step along with that so we're certainly thinking about that uh but really just getting to the point where we are are getting the rest of these uh pressing agreements executed and getting to a position where we can get in front of our board and discuss a final investment decision on this project going forward. If we do decide to go down the partnership path, I think then we would step back and take a look at what, again, makes the most sense for the shareholder over the long term here is this, you know, strategic partners certainly could have a fit. I think, you know, financial partners would certainly probably have appetite here too, but we're going to step back and really analyze that and make sure that we take a look at what makes the most long-term sense for the shareholders for what's going to be a very long-lived and important project for the company should we decide to proceed.

Great. Appreciate the insight. Thanks for the time. I'll leave it there.

Thank you.

There are no further questions at this time. I will now turn the call back to Nicole Cavisto, President and CEO, for closing remarks.

Thank you again for joining us today and for your thoughtful questions. We certainly appreciate your continued interest in and support of MD Resources. As we move through the remainder of 2026, we remain focused on disciplined execution of our capital plan, constructive regulatory engagement, and delivering safe, reliable, and affordable energy for our customers. Finally, I do want to close once again by thanking all of our employees for their dedication and commitment. And with that, we look forward to staying engaged with you throughout the year. Operator, you may now conclude the call.

This concludes today's call. Thank you for attending. You may now disconnect.