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What changed in MDU RESOURCES GROUP INC's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of MDU RESOURCES GROUP INC's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+320 added−358 removedSource: 10-K (2026-02-20) vs 10-K (2025-02-20)

Top changes in MDU RESOURCES GROUP INC's 2025 10-K

320 paragraphs added · 358 removed · 219 edited across 6 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

77 edited+39 added−5 removed97 unchanged
Biggest changeThe Company’s ability to make determinations on changing environmental regulations and economic conditions may be impacted by its rights and obligations under the co-ownership agreements and related agreements. Such a determination could impact the Company’s ability to effectively manage these changing conditions to meet its strategic objectives and could adversely impact its financial condition, results of operations and liquidity.
Biggest changeSuch a determination could impact the Company’s ability to effectively manage these changing conditions to meet its strategic objectives and could adversely impact its financial condition, results of operations and liquidity. MDU Resources Group, Inc. Form 10-K 27 Index Part I Environmental and Regulatory Risks The Company's operations could be adversely impacted by severe weather and changing weather patterns.
Additionally, the Company's electric generation and transmission systems and natural gas pipelines are part of interconnected systems with other operators’ facilities; therefore, a cyber-related disruption in another operator’s system could negatively impact the Company's business. The Company’s accounting systems and its ability to collect information and invoice customers for products and services could be disrupted.
Additionally, the Company's electric generation and transmission systems and natural gas pipelines are part of interconnected systems with other operators’ facilities; therefore, a cyber-related disruption in another operator’s system could negatively impact the Company's business. The Company’s accounting systems and its ability to collect information and invoice customers for services could be disrupted.
If, at the end of its life, the investment costs of a facility have not been fully recovered, the Company may be adversely affected if commissions do not allow such costs to be recovered in rates. Such impacts of aging infrastructure could adversely affect the Company’s results of operations and cash flows.
If, at the end of its life, the investment costs of a facility have not been fully recovered, the Company may be adversely affected if regulatory commissions do not allow such costs to be recovered in rates. Such impacts of aging infrastructure could adversely affect the Company’s results of operations and cash flows.
To the extent financial markets view climate change and emissions of GHGs as a financial risk, this could negatively affect the Company's ability to access capital markets or result in less competitive terms and conditions. MDU Resources Group, Inc.
To the extent financial markets view climate change and emissions of GHGs as a financial risk, this could negatively affect the Company's ability to access capital markets or result in less competitive terms and conditions. 28 MDU Resources Group, Inc.
Form 10-K 23 Index Part I The Company's operations are subject to environmental laws and regulations that may increase costs of operations, impact or limit business plans, or expose the Company to environmental liabilities.
Form 10-K Index Part I The Company's operations are subject to environmental laws and regulations that may increase costs of operations, impact or limit business plans, or expose the Company to environmental liabilities.
The Company maintains insurance coverages from third party insurers as part of its overall risk management strategy and most of its customer contracts require the Company to maintain specific insurance coverage limits.
The Company maintains insurance coverages from third party insurers as part of its overall risk management strategy and most of its contracts require the Company to maintain specific insurance coverage limits.
Complying with any new legislation and regulation at both the federal and state level related to health care, unemployment tax rates and workers' compensation rates, among others, could adversely affect the Company's results of operations as well change the Company's benefit program and costs.
Complying with any new legislation and regulation at both the federal and state levels related to health care, unemployment tax rates and workers' compensation rates, among others, could adversely affect the Company's results of operations as well as change the Company's benefit program and costs.
Economic volatility in the markets served, along with economic conditions such as increased unemployment which could impact the ability of the Company's customers to make payments, could adversely affect the Company's results of operations, cash flows and asset values.
Economic volatility in the markets served, along with economic conditions such as increased customer rates and unemployment which could impact the ability of the Company's customers to make payments, could adversely affect the Company's results of operations, cash flows and asset values.
If the Company cannot successfully execute its strategic growth initiatives or if the long-term plan does not adequately address the challenges or opportunities the Company faces, its financial condition and results of operations may be adversely affected.
If the Company cannot successfully execute its strategic growth initiatives, its capital investment plan, or if the long-term plan does not adequately address the challenges or opportunities the Company faces, its financial condition and results of operations may be adversely affected.
The Company's businesses are subject to comprehensive regulation by federal, state and local regulatory agencies with respect to, among other things, allowed rates of return and recovery of investments and costs; financing; rate structures; customer service; health care coverage and costs; taxes; franchises; recovery of fuel, purchased power and purchased natural gas costs; and construction and siting of generation and transmission facilities.
The Company's businesses are subject to comprehensive regulation by federal, state and local regulatory agencies with respect to, among other things, allowed rates of return and recovery of investments and costs; financing; rate structures; customer service; health care coverage and costs; taxes; franchises; recovery of fuel, purchased power and purchased natural gas costs; carbon compliance obligations costs; and construction and siting of generation, distribution and transmission facilities.
The Company's contracts may require it to indemnify its customers, project owners and other parties for injury, damage or loss arising out of the Company's presence at its customers’ location, or in the performance of the Company's work, in both cases regardless of fault, and provide for warranties of materials and workmanship.
The Company's contracts may require it to indemnify other parties for injury, damage or loss arising out of the Company's presence at its customers’ location, or in the performance of the Company's work, in both cases regardless of fault, and provide for warranties of materials and workmanship.
These governmental regulations significantly influence the Company's operating environment and may affect its ability to recover costs from its customers. The Company is unable to predict the impact on operating results from future regulatory activities of any of these agencies.
These governmental regulations significantly influence the Company's operating environment and may, among other things, affect its ability to recover costs from its customers. The Company is unable to predict the impact on operating results from future regulatory activities of any of these agencies.
Delays in the collection of environmental compliance costs, as compared to expenditures for environmental compliance costs, could also negatively impact the Company’s cash flows. The Company's operations could be negatively impacted by import tariffs and/or other government mandates.
Delays in the collection of environmental compliance costs, as compared to expenditures for environmental compliance costs, could also negatively impact the Company’s cash flows. The Company's operations could be negatively impacted by import tariffs, changes in trade policy, and/or other government mandates.
The degree to which pandemics impact the Company depends on, among other things, federal, state and local mandates, actions taken by governmental authorities, availability, timing and effectiveness of vaccines being administered, and the pace and extent to which the economy recovers and operates under normal market conditions.
The degree to which pandemics impact the Company depends on, among other things, federal, state and local mandates, actions taken by governmental authorities, availability, timing and effectiveness of vaccines being administered, and the pace and extent to which the economy recovers and operates under normal market conditions. MDU Resources Group, Inc.
The Company also may be required to name the customer and others as an additional insured party under its insurance policies. The Company maintains limited insurance coverage against these and other risks associated with its business.
The Company also may be required to name other parties as an additional insured party under its insurance policies. The Company maintains limited insurance coverage against these and other risks associated with its business.
A significant incident could also increase regulatory scrutiny and result in penalties and higher amounts of capital expenditures and operational costs. Losses not fully covered by insurance could have an adverse effect on the Company’s financial position, results of operations and cash flows.
A significant incident could also increase regulatory scrutiny and result in penalties and higher amounts of capital expenditures and operational costs. Losses not fully covered by insurance could have an adverse effect on the Company’s financial position, results of operations and cash flows. 22 MDU Resources Group, Inc.
Such activities could interfere with its ability to execute its business plans, affect the allocation of capital, be costly and time-consuming, disrupt operations, and divert the attention of management, any of which could have an adverse effect on the Company’s business or stock price. Technology disruptions or cyberattacks could adversely impact the Company's operations.
Such activities could interfere with its ability to execute its business plans, affect the allocation of capital, be costly and time-consuming, disrupt operations, and divert the attention of management, any of which could have an adverse effect on the Company’s business or stock price.
Delays in the collection of utility fuel cost recoveries, as compared to expenditures for fuel purchases, could also negatively impact the Company's cash flows. Increased labor costs, due to labor shortages, competition from other industries, or other factors, could negatively affect the Company's results of operations. 20 MDU Resources Group, Inc.
Delays in the collection of utility fuel cost recoveries, as compared to expenditures for fuel purchases, could also negatively impact the Company's cash flows. Increased labor costs, due to labor shortages, competition from other industries, or other factors, could negatively affect the Company's results of operations.
Such unanticipated events could negatively impact the Company's business, its results of operations and cash flows. Operating or other costs required to comply with current or potential pipeline safety regulations and potential new regulations under various agencies could be significant.
Such unanticipated events could negatively impact the Company's ability to execute on its capital plan, its business, and its results of operations and cash flows. Operating or other costs required to comply with current or potential pipeline safety regulations and potential new regulations under various agencies could be significant.
A disruption of the regional electric transmission grid, local distribution infrastructure or interstate natural gas infrastructure could negatively impact the Company's business and reputation. There have been cyber and physical attacks within the energy industry on energy infrastructure, such as substations, and such attacks may occur in the future.
Form 10-K Index Part I A disruption of the regional electric transmission grid, local distribution infrastructure or interstate natural gas infrastructure could negatively impact the Company's business and reputation. There have been cyber and physical attacks within the energy industry on energy infrastructure, such as substations, and such attacks may occur in the future.
Significant reductions in demand for the Company's services as a result of increased costs or emissions limitations could also adversely impact the results of operations and cash flows.
Significant reductions in demand for the Company's services as a result of increased costs or emissions limitations could also adversely impact the results of operations and cash flows. MDU Resources Group, Inc.
The construction, startup and operation of natural gas pipelines and electric power generation and transmission facilities involve many risks, which may include delays; breakdown or failure of equipment; inability to obtain required governmental permits and approvals; inability to obtain or renew easements; public opposition; inability to complete financing; inability to negotiate acceptable equipment acquisition, construction, fuel supply, off-take, transmission, transportation or other material agreements; contractor performance failures; changes in markets and market prices for power; cost increases and overruns; the risk of performance below expected levels of output or efficiency; and the inability to obtain full cost recovery in regulated rates.
The construction, startup and operation of natural gas pipelines and electric power generation and transmission facilities involve many risks, which may include delays; breakdown or failure of equipment; inability to obtain or remain in compliance with required governmental permits and approvals; inability to obtain or renew easements; public opposition; inability to complete financing; inability to negotiate acceptable equipment acquisition, construction, fuel supply, off-take, transmission, transportation or other material agreements; contractor performance failures; changes in markets and market prices for power; cost increases and overruns; the risk of performance below expected levels of output or efficiency; the inability to obtain full cost recovery in regulated rates; and the inability to recover preliminary costs incurred prior to receiving regulatory approval.
Fluctuations in oil and natural gas production, supplies and prices; fluctuations in commodity price basis differentials; political and economic conditions in oil-producing countries; actions of the Organization of Petroleum Exporting Countries; demand for oil due to economic conditions; war and other external factors impact the development of oil and natural gas supplies and the expansion and operation of natural gas pipeline systems.
Form 10-K Index Part I Fluctuations in oil and natural gas production, supplies and prices; fluctuations in commodity price basis differentials; political and economic conditions in oil-producing countries; actions of the Organization of Petroleum Exporting Countries; demand for oil due to economic conditions; war and other external factors impact the development of oil and natural gas supplies and the expansion and operation of natural gas pipeline systems.
Third-party service providers that perform critical business functions for the Company or have access to sensitive information within the Company also may be vulnerable to security breaches and information technology risks that could adversely affect the Company. 26 MDU Resources Group, Inc.
Third-party service providers that perform critical business functions for the Company or have access to sensitive information within the Company also may be vulnerable to security breaches and information technology risks that could adversely affect the Company.
Separation Risks If the completed separations of Knife River or Everus, together with certain related transactions, were to fail to qualify as transactions that are generally tax-free for U.S. federal income tax purposes, the Company and its stockholders could be subject to significant tax liabilities.
Form 10-K 33 Index Part I Separation Risks If the completed separations of Knife River or Everus, together with certain related transactions, were to fail to qualify as transactions that are generally tax-free for U.S. federal income tax purposes, the Company and its stockholders could be subject to significant tax liabilities.
Due to the changing workforce dynamics and an insufficient number of qualified applicants to replace skilled employees as they retire and remote work opportunities, among other things, competition for these employees is high. In some cases competition for these employees is on a regional or national basis.
Form 10-K 31 Index Part I Due to the changing workforce dynamics and an insufficient number of qualified applicants to replace skilled employees as they retire and remote work opportunities, among other things, competition for these employees is high. In some cases competition for these employees is on a regional or national basis.
The Company's inability to implement its long-term strategic plan may adversely affect future results. The Company’s ability to successfully implement and execute its long-term strategic plan is dependent on many factors. The Company’s strategies may require significant capital investment and management attention.
The Company’s ability to successfully implement and execute its long-term strategic plan is dependent on many factors. The Company’s strategies may require significant capital investment and management attention.
Where weather normalization mechanisms are in place, there is no assurance the Company will continue to receive such regulatory protection from adverse weather in future rates. 24 MDU Resources Group, Inc.
Where weather normalization mechanisms are in place, there is no assurance the Company will continue to receive such regulatory protection from adverse weather in future rates.
Form 10-K 25 Index Part I Costs related to obligations under a MEPP could have a material negative effect on the Company's results of operations and cash flows. An operating subsidiary of the Company participates in a MEPP for employees represented by a union.
Costs related to obligations under a MEPP could have a material negative effect on the Company's results of operations and cash flows. An operating subsidiary of the Company participates in a MEPP for employees represented by a union.
Form 10-K Index Part I The Company’s information systems experience ongoing and often sophisticated cyberattacks by a variety of sources with the apparent aim to breach the Company's cyber-defenses. The Company may face increased cyber risk due to the increased use of employee-owned devices, work from home arrangements, and the separation of Everus.
The Company’s information systems experience ongoing and often sophisticated cyberattacks by a variety of sources with the apparent aim to breach the Company's cyber-defenses. The Company may face increased cyber risk due to the increased use of employee-owned devices, and work from home arrangements.
Due to the uncertain availability of technologies to control GHG emissions and the unknown obligations that potential GHG emission legislation or regulations may create, the Company cannot determine the potential financial impact on its operations.
Form 10-K 29 Index Part I Due to the uncertain availability of technologies to control GHG emissions and the unknown obligations that potential GHG emission legislation or regulations may create, the Company cannot determine the potential financial impact on its operations.
As a result, the Company's ability to maintain productivity, relationships with customers, competitive costs, and quality services is limited by the ability to employ, retain and train the necessary personnel and could negatively affect the Company's results of operations, financial position and cash flows. The Company is a holding company and relies on cash from its subsidiaries to pay dividends.
As a result, the Company's ability to maintain productivity, relationships with customers, competitive costs, and quality services is limited by the ability to employ, retain and train the necessary personnel and could negatively affect the Company's results of operations, financial position and cash flows.
Prolonged lead times on the delivery of raw materials and further tariff increases on raw materials and finished products could adversely affect the Company's business, financial condition and results of operations. Reductions in the Company's credit ratings could increase financing costs.
Prolonged lead times on the delivery of raw materials and further tariff increases on raw materials and finished products could adversely affect the Company's business, financial condition and results of operations.
A major incident involving another natural gas system could lead to additional capital expenditures, increased regulation, and fines and penalties on natural gas utilities and pipelines. The occurrence of any of these events could adversely affect the Company’s results of operations, financial position and cash flows. The Company's utility and pipeline operations are subject to planning risks.
A major incident involving another natural gas system could lead to additional capital expenditures, increased regulation, and fines and penalties on natural gas utilities and pipelines. The occurrence of any of these events could adversely affect the Company’s results of operations, financial position and cash flows. 26 MDU Resources Group, Inc.
Regulatory, contractual and legal limitations, as well as their capital requirements, affect the ability of the subsidiaries to pay dividends to the Company and thereby could restrict or influence the Company's ability or decision to pay dividends on its common stock, which could adversely affect the Company's stock price. MDU Resources Group, Inc.
Regulatory, contractual and legal limitations, as well as their capital requirements, affect the ability of the subsidiaries to pay dividends to the Company and thereby could restrict or influence the Company's ability or decision to pay dividends on its common stock, which could adversely affect the Company's stock price. The Company may face risks associated with stockholder activism.
If the Company's risk exposure increases as a result of adverse changes in its insurance coverage, the Company could be subject to increased liabilities that could negatively affect its business, financial condition, results of operations and cash flows. In addition, the Company performs work in hazardous environments and its employees are exposed to a number of hazards.
If the Company's risk exposure increases as a result of adverse changes in its insurance coverage, the Company could be subject to increased liabilities that could negatively affect its business, financial condition, results of operations and cash flows. MDU Resources Group, Inc.
Even if properly maintained, reliability may ultimately deteriorate and negatively affect the Company’s ability to serve its customers, which could result in increased costs associated with regulatory oversight.
Aging infrastructure is more prone to failure, which increases maintenance costs, unplanned outages and the need to replace facilities. Even if properly maintained, reliability may ultimately deteriorate and negatively affect the Company’s ability to serve its customers, which could result in increased costs associated with regulatory oversight.
Experiencing a cybersecurity incident could cause the Company to be non-compliant with applicable laws and regulations, causing the Company to incur costs related to legal claims, proceedings and regulatory fines or penalties.
As these regulations evolve, the Company may experience increased compliance costs and may be at higher risk for violating these standards. Experiencing a cybersecurity incident could cause the Company to be non-compliant with applicable laws and regulations, causing the Company to incur costs related to legal claims, proceedings and regulatory fines or penalties.
These systems may be vulnerable to physical and cybersecurity failures or unauthorized access, due to hacking, human error, theft, sabotage, malicious software, ransomware, third-party compromise, acts of terrorism, acts of war, acts of nature or other causes. Should a compromise or system failure occur, interdependencies to technology may disrupt the Company's ability to fulfill critical business functions.
These systems may be vulnerable to physical and cybersecurity failures or unauthorized access, due to hacking, human error, theft, sabotage, malicious software, ransomware, third-party compromise, acts of terrorism, acts of war, acts of nature or other causes.
A breach of the Company's systems could compromise sensitive data and could go unnoticed for some time. Such an event could result in negative publicity and reputational harm, remediation costs, legal claims and fines that could have an adverse effect on the Company's financial results.
Such an event could result in negative publicity and reputational harm, remediation costs, legal claims and fines that could have an adverse effect on the Company's financial results.
The Company's results of operations could be affected by changes in the weather. Weather conditions influence the demand for electricity and natural gas and affect the price of energy commodities.
Other Risks The Company's businesses are seasonal and subject to weather conditions that could adversely affect the Company's operations, revenues, and cash flows. The Company's results of operations could be affected by changes in the weather. Weather conditions influence the demand for electricity and natural gas and affect the price of energy commodities.
Changes in regulations or the imposition of additional regulations could have an adverse impact on the Company's results of operations and cash flows. There can be no assurance that applicable regulatory commissions will determine that the Company's costs have been prudent, which could result in the disallowance of costs in setting rates for customers.
There can be no assurance that applicable regulatory commissions will determine that the Company's costs have been prudent, which could result in the disallowance of costs in setting rates for customers.
Certain risks increase as the Company's energy delivery infrastructure ages, including breakdown or failure of equipment, pipeline leaks and fires developing from power lines, all of which have occurred and may reoccur in the future resulting in material costs. Aging infrastructure is more prone to failure, which increases maintenance costs, unplanned outages and the need to replace facilities.
The aging infrastructure may require significant additional maintenance or replacement that could adversely affect the Company’s results of operations. Certain risks increase as the Company's energy delivery infrastructure ages, including breakdown or failure of equipment, pipeline leaks and fires developing from power lines, all of which have occurred and may reoccur in the future resulting in material costs.
Approval from federal and state regulatory agencies would be needed for acquisition of the Company, as well as for certain acquisitions by the Company. The approval process could be lengthy and the outcome uncertain, which may deter potential acquirers from approaching the Company or impact the Company's ability to pursue acquisitions.
The approval process could be lengthy and the outcome uncertain, which may deter potential acquirers from approaching the Company or impact the Company's ability to pursue acquisitions.
These changes could impact the assumptions and negatively affect the value of assets held in the Company's pension and other postretirement benefit plans and may increase the amount and accelerate the timing of required funding contributions for those plans. MDU Resources Group, Inc.
These changes could impact the assumptions and negatively affect the value of assets held in the Company's pension and other postretirement benefit plans and may increase the amount and accelerate the timing of required funding contributions for those plans. Operational Risks Significant portions of the Company’s natural gas pipelines and power generation and transmission facilities are aging.
Disruptions or delays in receiving materials; price increases from suppliers or manufacturers; or inability to source needed materials, which have occurred and could reoccur, could adversely affect the Company’s capital expenditure programs, results of operations, financial condition and cash flows. 22 MDU Resources Group, Inc.
Disruptions or delays in receiving materials; price increases from suppliers or manufacturers; or inability to source needed materials, which have occurred and could reoccur, could adversely affect the Company’s capital expenditure programs, growth plans, results of operations, financial condition and cash flows. Joint ownership of coal-fired generation facilities could impact the Company’s ability to manage changing regulations and economic conditions.
Most electric and natural gas utility investments, including natural gas transmission pipeline investments, are made with the intent of being used for decades.
Form 10-K Index Part I The Company's utility and pipeline operations are subject to planning risks. Most electric and natural gas utility investments, including natural gas transmission pipeline investments, are made with the intent of being used for decades.
Such efforts, if successfully directed at the Company, could increase the costs of or access to capital or insurance and interfere with business operations and ability to make capital expenditures. Other Risks The Company's businesses are seasonal and subject to weather conditions that could adversely affect the Company's operations, revenues and cash flows.
Such efforts, if successfully directed at the Company, could increase the costs of or access to capital or insurance and interfere with business operations and ability to make capital expenditures.
The Company's operations may be negatively affected if it is unable to obtain, develop and retain key personnel and skilled labor forces. The Company must attract, develop and retain executive officers and other professional, technical and skilled labor forces with the skills and experience necessary to successfully manage, operate and grow the Company's businesses.
The Company must attract, develop and retain executive officers and other professional, technical and skilled labor forces with the skills and experience necessary to successfully manage, operate and grow the Company's businesses. MDU Resources Group, Inc.
Form 10-K Index Part I Adverse weather conditions, which have occurred and may reoccur, such as heavy or sustained rainfall or snowfall, droughts, storms, wind and colder weather may affect ongoing operation and maintenance and construction activities for the electric and natural gas transmission and distribution businesses.
Adverse weather conditions, which have occurred and may reoccur, such as heavy or sustained rainfall or snowfall, droughts, storms, wind and colder weather may affect ongoing operation and maintenance and construction activities for the electric and natural gas transmission and distribution businesses. In addition, severe weather can be destructive, causing outages and property damage, which could require additional remediation costs.
Economic volatility affects the Company's operations, as well as the demand for its products and services. Economic conditions and population growth affect the electric and natural gas distribution businesses' growth in service territory, customer base and usage demand.
Failure to obtain or renew franchise agreements on acceptable terms could materially affect the Company's ability to serve its customers in those jurisdictions. Economic volatility affects the Company's operations, as well as the demand for its services. Economic conditions and population growth affect the electric and natural gas distribution businesses' growth in service territory, customer base and usage demand.
NERC issues comprehensive regulations and standards surrounding the security of bulk power systems and continually updates these requirements, as well as establishing new requirements with which the utility industry must comply. As these regulations evolve, the Company may experience increased compliance costs and may be at higher risk for violating these standards.
NERC issues comprehensive regulations and standards surrounding the security of bulk power systems and continually updates these requirements, as well as establishing new requirements with which the utility industry must comply. TSA cybersecurity directives for pipeline operators introduces heightened compliance obligations.
The Company's operations are exposed to fluctuations in prices for labor, petroleum products, raw materials and services. Prices are generally subject to change in response to fluctuations in supply and demand and other general economic and market conditions beyond the Company's control.
Prices are generally subject to change in response to fluctuations in supply and demand and other general economic and market conditions beyond the Company's control. 24 MDU Resources Group, Inc.
Any future damages caused by the Company's services that are not covered by insurance or are in excess of policy limits could negatively affect its business, financial condition, results of operations and cash flows. MDU Resources Group, Inc. Form 10-K 19 Index Part I The Company is subject to capital market, debt and interest rate risks.
Any future damages caused by the Company's services that are not covered by insurance or are in excess of policy limits could negatively affect its business, financial condition, results of operations and cash flows.
Climate change could change the frequency and severity of these weather events, which may create physical and financial risks to the Company. Such risks could have an adverse effect on the Company's financial condition, results of operations and cash flows.
Such risks could have an adverse effect on the Company's financial condition, results of operations and cash flows.
The SEC has adopted rules that require the Company to provide disclosures around cybersecurity risk management, strategy, and governance, as well as disclose the occurrence of material cybersecurity incidents. These rules may also require the Company to report a cybersecurity incident before the Company has been able to fully assess its impact or remediate the underlying issue.
Additionally, costs incurred to comply with cybersecurity directives or to remediate a cybersecurity incident may not be fully recoverable through customer rates. The SEC has adopted rules that require the Company to provide disclosures around cybersecurity risk management, strategy, and governance, as well as disclose the occurrence of material cybersecurity incidents.
Further, any material decreases in customers' energy demand, for economic or other reasons, could have an adverse impact on the Company's earnings and results of operations. 18 MDU Resources Group, Inc. Form 10-K Index Part I The Company's operations involve risks that may result from catastrophic events.
Further, any material decreases in customers' energy demand, for economic or other reasons, could have an adverse impact on the Company's earnings and results of operations. Demand for energy from high volume customers may impact the Company's business.
The Company's operations require significant capital investment. Consequently, the Company relies on financing sources and capital markets as sources of liquidity for capital requirements not satisfied by cash flows from operations.
Consequently, the timing, magnitude, and sources of capital required may exceed cash flows from operations and, as such, the Company relies on financing sources and capital markets as sources of liquidity for capital requirements and may require non-traditional financing sources, such as partnerships.
Adverse changes in economic indicators, such as consumer spending, inflation data, interest rate changes, political developments and threats of terrorism, among other things, can create volatility in the financial markets.
Assumptions regarding future costs, returns on investments, interest rates and other actuarial assumptions have a significant impact on the funding requirements and expense recorded relating to these plans. Adverse changes in economic indicators, such as consumer spending, inflation data, interest rate changes, political developments and threats of terrorism, among other things, can create volatility in the financial markets.
The Company's credit ratings may also change as a result of the differing methodologies or changes in the methodologies used by the rating agencies. Increasing costs associated with health care plans and changes in employment laws or regulations may adversely affect the Company's results of operations. The Company's self-insured costs of health care benefits for eligible employees continues to increase.
MDU Resources Group, Inc. Form 10-K 25 Index Part I Increasing costs associated with health care plans and changes in employment laws or regulations may adversely affect the Company's results of operations. The Company's self-insured costs of health care benefits for eligible employees continues to increase.
There is no assurance the Company's current credit ratings, or those of its subsidiaries, will remain in effect or that a rating will not be lowered or withdrawn by a rating agency. Events affecting the Company's financial results may impact its cash flows and credit metrics, potentially resulting in a change in the Company's credit ratings.
Reductions in the Company's credit ratings or inability to obtain a credit rating could increase financing costs. There is no assurance the Company's current credit ratings, or those of its subsidiaries, will remain in effect or that a rating will not be lowered or withdrawn by a rating agency.
Environmental and Regulatory Risks The Company's operations could be adversely impacted by severe weather. Severe weather events, such as tornadoes, fires, rain, drought, ice and snowstorms, and high and low temperature extremes, occur in regions in which the Company operates and maintains infrastructure.
Changing weather patterns and severe weather events, such as tornadoes, fires, rain, drought, ice and snowstorms, and high and low temperature extremes, occur in regions in which the Company operates and maintains infrastructure. Climate change could change the frequency and severity of these weather events, which may create physical and financial risks to the Company.
Such actions could adversely affect the Company's ability to secure tax credits and other incentives that support the development of renewable energy projects. Regulation incorporates changes in tax law into the rate-setting process, which could create timing delays before the impact of changes are realized. Financial market changes could impact the Company’s pension and postretirement benefit plans and obligations.
Regulation incorporates changes in tax law into the rate-setting process, which could create timing delays before the impact of changes are realized. Financial market changes could impact the Company’s pension and postretirement benefit plans and obligations. The Company has pension and postretirement defined benefit plans for some of its current and former employees.
Form 10-K Index Part I Joint ownership of coal-fired generation facilities could impact the Company’s ability to manage changing regulations and economic conditions. The Company has an ownership interest in three coal-fired electric generating facilities jointly with other co-owners who have varying ownership interests in the facilities.
The Company has an ownership interest in three coal-fired electric generating facilities jointly with other co-owners who have varying ownership interests in the facilities. The Company’s ability to make determinations on changing environmental regulations and economic conditions may be impacted by its rights and obligations under the co-ownership agreements and related agreements.
The Company may be the target of this type of litigation in the future, which could result in substantial expenses and divert management’s attention. Significant changes in prices for commodities, labor or other production and delivery inputs and other environmental compliance costs could negatively affect the Company's businesses.
The Company may be the target of this type of litigation in the future, which could result in substantial expenses and divert management’s attention.
Form 10-K Index Part I In 2024, 2023 and 2022, the Company experienced elevated commodity and supply chain costs including the costs of labor, raw materials, energy-related products and other inputs used in the production and distribution of its products and services.
In 2025, 2024 and 2023, the Company experienced elevated commodity and supply chain costs at varying degrees over the 3-year timeframe, including the costs of labor, raw materials, energy-related products and other inputs used for constructing the facilities the Company uses to provide its services.
In addition, severe weather can be destructive, causing outages and property damage, which could require additional remediation costs. As a result, unusual or adverse weather conditions could negatively affect the Company's results of operations, financial position and cash flows. Competition exists in all of the Company's businesses. The Company's businesses are subject to competition.
As a result, unusual or adverse weather conditions could negatively affect the Company's results of operations, financial position and cash flows. Competition exists in all of the Company's businesses. The Company's businesses are subject to competition. The electric utility and natural gas businesses experience competitive pressures as a result of consumer demands, technological advances, and other factors.
Statutory and regulatory requirements also may limit another party's ability to acquire the Company or impose conditions on an acquisition of or by the Company.
Ownership of the Company's Common Stock Risks Statutory, legal, and regulatory requirements may limit another party's ability to acquire the Company or impose conditions on an acquisition of or by the Company. Approval from federal and state regulatory agencies would be needed for acquisition of the Company, as well as for certain acquisitions by the Company.
If the Company’s operations are disrupted, it could result in decreased revenues and remediation costs that could adversely affect the Company's results of operations and cash flows. The Company is subject to cybersecurity and privacy laws, regulations and security directives of many government agencies, including TSA, FERC and NERC.
If the Company’s operations are disrupted, it could result in decreased revenues and remediation costs that could adversely affect the Company's results of operations and cash flows. 32 MDU Resources Group, Inc.
Efforts to comply with such reporting requirements could divert management's attention from the Company's incident response and could potentially reveal system vulnerabilities to threat actors. Failure to timely report incidents under these or other similar rules could also result in monetary fines, sanctions or subject the Company to other forms of liability.
These rules may also require the Company to report a cybersecurity incident before the Company has been able to fully assess its impact or remediate the underlying issue. Efforts to comply with such reporting requirements could divert management's attention from the Company's incident response and could potentially reveal system vulnerabilities to threat actors.
Additionally, failure to meet stockholder expectations, particularly with respect to financials, cost-cutting programs, operating margins, and earnings per share, could result in volatility in the market value of the Company’s stock. The regulatory approval, permitting, construction, startup and/or operation of pipelines, power generation and transmission facilities may involve unanticipated events, delays and unrecoverable costs.
Additionally, failure to meet stockholder expectations, particularly with respect to financials, cost-cutting programs, operating margins, and earnings per share, could result in volatility in the market value of the Company’s stock. The Company is a holding company and relies on cash from its subsidiaries to pay dividends.
New acquisition opportunities are subject to competitive bidding environments which impact prices the Company must pay to successfully acquire new properties and acquisition opportunities to grow its business. The Company's failure to effectively compete could negatively affect the Company's results of operations, financial position and cash flows.
The pipeline business competes with several pipelines for access to natural gas supplies and for transportation and storage business. New acquisition opportunities are subject to competitive bidding environments which impact prices the Company must pay to successfully acquire new properties and acquisition opportunities to grow its business.
Significant changes to corporate tax rates could result in the impairment of deferred tax assets that are established based on existing law at the time of deferral. The U.S. administration has introduced uncertainty regarding the continuation of the IRA and a potential shift in federal energy policies regarding clean energy projects.
Significant changes to corporate tax rates could result in the impairment of deferred tax assets that are established based on existing law at the time of deferral. The electric business owns and operates renewable energy generating facilities. These facilities generate production tax credits used to reduce the Company's federal income tax liability.
The Company could also incur an additional withdrawal liability if its withdrawal from the plan is determined by that plan to be part of a mass withdrawal. The Company may face risks associated with stockholder activism. Publicly-traded companies are subject to campaigns by stockholders advocating corporate actions related to matters, such as corporate governance, operational practices, and strategic direction.
Publicly-traded companies are subject to campaigns by stockholders advocating corporate actions related to matters, such as corporate governance, operational practices, and strategic direction. The Company has, and may again in the future, become subject to such stockholder activity and demands.
This regulatory environment is increasingly challenging and may present material obligations and risks to the Company's business, including significantly expanded compliance burdens, costs, and enforcement risks. The Company, through the ordinary course of business, requires access to sensitive customer, supplier, employee and Company data.
Failure to timely report incidents under these or other similar rules could also result in monetary fines, sanctions or subject the Company to other forms of liability. This regulatory environment is increasingly challenging and may present material obligations and risks to the Company's business, including significantly expanded compliance burdens, costs, and enforcement risks.
Certain stakeholders of the Company, such as investors, customers, employees and lenders, have increased their scrutiny of the impacts and social cost associated with ESG matters, including climate change. Concern that GHG emissions contribute to global climate change has led to international, federal, state and local legislative and regulatory proposals to reduce or mitigate the effects of GHG emissions.
Certain stakeholders of the Company, such as investors, customers, employees, and lenders, have increased their scrutiny of the impacts and social cost associated with ESG matters, including climate change and certain stakeholders may hold divergent opinions on these issues. Certain states and customers are seeking cleaner energy sources and may demand alternatives to traditional energy sources.
The Company's stock price may be volatile and the value of its common stock may decline.
Any delay or prevention of a change of control or change in management that stockholders might otherwise consider to be favorable could cause the market price of the Company’s common stock to decline. The Company's stock price may be volatile and the value of its common stock may decline.
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Changes in regulations that impact the value of various tax credits, including production tax credits could change the economics of resources and the resource selection could impact current and/or future projects for the electric generation business and the development of other renewable energy projects, such as RNG.
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Changes in regulations or the imposition of additional regulations could also have an adverse impact on the Company's results of operations and cash flows. MDU Resources Group, Inc.
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The Company has pension and postretirement defined benefit plans for some of its current and former employees. Assumptions regarding future costs, returns on investments, interest rates and other actuarial assumptions have a significant impact on the funding requirements and expense recorded relating to these plans.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe audit committee of the board of directors receives presentations and reports from the CIO on cybersecurity related issues which include information security, technology risks and risk mitigation programs regularly at the quarterly board meetings. In addition to scheduled meetings, the CIO and audit committee of the board of directors maintain an ongoing dialogue regarding emerging or potential cybersecurity risks.
Biggest changeManagement's Role Managing Risk The Company's CIO plays a large role in informing the audit committee of the board of directors on cybersecurity risks. The audit committee of the board of directors receives presentations and reports from the CIO on cybersecurity related issues which include information security, technology risks and risk mitigation programs regularly at the quarterly board meetings.
See “Item 1A – Risk Factors – Other Risks – Technology disruptions or cyberattacks could adversely impact the Company's operations.” Governance Board of Directors Oversight The Company's board of directors, as a whole and through its committees, has responsibility for oversight of risk management.
See Item 1A – Risk Factors – Other Risks – Technology disruptions or cyberattacks could adversely impact the Company's operations. Governance Board of Directors Oversight The Company's board of directors, as a whole and through its committees, has responsibility for oversight of risk management.
Oversee Third-party Risk The Company has implemented a third-party management risk program to help monitor and reduce risks associated with the Company's vendors, which includes processes such as completing due diligence on third party service providers before engaging with them for their services; assessing the third party’s cybersecurity posture by reviewing audit reports of the third party, completing cyber questionnaires, and reviewing applicable certification; including cybersecurity contractual language in contracts to limit risk; and monitoring and reassessing third party’s to ensure ongoing compliance with their cybersecurity obligations.
Form 10-K Index Part I Oversee Third-party Risk The Company has implemented a third-party management risk program to help monitor and reduce risks associated with the Company's vendors, which includes processes such as completing due diligence on third party service providers before engaging with them for their services; assessing the third party’s cybersecurity posture by reviewing audit reports of the third party, completing cyber questionnaires, and reviewing applicable certification; including cybersecurity contractual language in contracts to limit risk; and monitoring and reassessing third party’s to ensure ongoing compliance with their cybersecurity obligations.
In its risk oversight role, the board of directors has the responsibility to satisfy itself that the risk management processes designed and implemented by management are adequate for identifying, assessing, and managing risk. The audit committee of the board of directors of the Company is responsible for oversight of risks from cybersecurity threats. 28 MDU Resources Group, Inc.
In its risk oversight role, the board of directors has the responsibility to satisfy itself that the risk management processes designed and implemented by management are adequate for identifying, assessing, and managing risk. The audit committee of the board of directors of the Company is responsible for oversight of risks from cybersecurity threats.
Employee phishing tests are conducted on a monthly basis. Engage Third-parties on Risk Management Periodic external reviews, including penetration tests and security framework assessments, are conducted by auditors, external assessors, and/or consultants to assess and ensure compliance with the Company’s information security programs and practices. Internal and external auditors assess the Company’s information technology general controls on an annual basis.
Employee phishing tests are conducted on a monthly basis. Engage Third-parties on Risk Management Periodic external reviews, including penetration tests and security framework assessments, are conducted by auditors, external assessors, and/or consultants to assess and ensure compliance with the Company’s information security programs and practices.
There are processes around access management, data security, encryption, asset management, secure system development, security operations, network and device security to provide safeguards from a cybersecurity incident along with continual monitoring of various threat intelligence feeds. Cyber Risk Management Personnel The Company's director of cybersecurity reports to the CIO and the CIO reports directly to the Company's chief executive officer.
There are processes around access management, data security, encryption, asset management, secure system development, security operations, network and device security to provide safeguards from a cybersecurity incident along with continual monitoring of various threat intelligence feeds. MDU Resources Group, Inc.
Cybersecurity Incident Response The Company has an incident response plan to identify, protect, detect, respond to, and recover from cybersecurity threats and incidents that is also tested on an annual basis. The incident response plan is updated based on results of the test or as new cyber related developments occur.
In addition to scheduled meetings, the CIO and audit committee of the board of directors maintain an ongoing dialogue regarding emerging or potential cybersecurity risks. Cybersecurity Incident Response The Company has an incident response plan to identify, protect, detect, respond to, and recover from cybersecurity threats and incidents that is also tested on an annual basis.
A new CIO from within the Company was named to succeed the retiring CIO and holds both a bachelor's and master's degree in business administration with over 25 years of information technology experience in the energy and utilities business.
Form 10-K 35 Index Part I Cyber Risk Management Personnel The Company's director of cybersecurity reports to the CIO and the CIO reports directly to the Company's chief executive officer. The Company's CIO holds both a bachelor's and master's degree in business administration with over 25 years of information technology experience in the energy and utilities business.
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Form 10-K Index Part I Management's Role Managing Risk The Company's CIO plays a large role in informing the audit committee of the board of directors on cybersecurity risks.
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Internal and external auditors assess the Company’s information technology general controls on an annual basis. 34 MDU Resources Group, Inc.
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The Company's CIO who served as the first CIO of the Company since 2016, oversaw the information technology and cybersecurity portfolios until her retirement on January 10, 2025.
Added
The incident response plan is updated based on results of the test or as new cyber related developments occur.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changePursuant to SEC regulations, the Company has adopted a threshold of $1.0 million for purposes of determining whether disclosure of any such proceedings is required. For information regarding legal proceedings required by this item, see Item 8 - Note 21, which is incorporated herein by reference. MDU Resources Group, Inc. Form 10-K 29 Index Part II
Biggest changePursuant to SEC regulations, the Company has adopted a threshold of $1.0 million for purposes of determining whether disclosure of any such proceedings is required. For information regarding legal proceedings required by this item, see Item 8 - Note 17, which is incorporated herein by reference.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe following table includes information with respect to the Company's purchase of equity securities: ISSUER PURCHASES OF EQUITY SECURITIES Period Total Number of Shares (or Units) Purchased (1) Average Price Paid per Share (or Unit) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (2) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (2) October 1 through October 31, 2024 — — — — November 1 through November 30, 2024 46,341 $18.34 — — December 1 through December 31, 2024 — — — — Total 46,341 $18.34 — — (1) Represents MDU original issue shares of common stock in connection with annual stock grants made to the Company's non-employee directors.
Biggest changeThe following table includes information with respect to the Company's purchase of equity securities: ISSUER PURCHASES OF EQUITY SECURITIES Period Total Number of Shares (or Units) Purchased (1) Average Price Paid per Share (or Unit) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (2) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (2) October 1 through October 31, 2025 — — — — November 1 through November 30, 2025 51,651 $20.61 — — December 1 through December 31, 2025 — — — — Total 51,651 $20.61 — — (1) Represents MDU original issue shares of common stock in connection with annual stock grants made to the Company's non-employee directors.
For more information on factors that may limit the Company's ability to pay dividends, see Item 8 - Note 12.
For more information on factors that may limit the Company's ability to pay dividends, see Item 8 - Note 11.
Item 5. Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The Company's common stock is listed on the NYSE under the symbol "MDU." As of February 13, 2025, the Company's common stock was held by approximately 8,700 stockholders of record.
Item 5. Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The Company's common stock is listed on the NYSE under the symbol "MDU." As of February 13, 2026, the Company's common stock was held by approximately 8,200 stockholders of record.
Based on the Company becoming a pure-play regulated energy delivery business, the Company's board of directors established a long-term dividend payout ratio target of 60 percent to 70 percent of regulated energy delivery earnings. The Company has an 87-year history of uninterrupted dividend payments to stockholders and remains committed to paying a competitive dividend.
As a pure-play regulated energy delivery business, the Company's board of directors established a long-term dividend payout ratio target of 60 percent to 70 percent of regulated energy delivery earnings. The Company has an 88-year history of uninterrupted dividend payments to stockholders and remains committed to paying a competitive dividend.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

123 edited+60 added−131 removed49 unchanged
Biggest changeForm 10-K Index Part II • Electric fuel and purchased power increased $6.4 million, largely the result of higher commodity prices. • Operation and maintenance increased $2.3 million, largely the result of increased contract services and higher payroll-related costs. • Depreciation and amortization increased $2.3 million. ◦ Largely due to: ▪ Increased depreciation of $2.2 million associated with higher property, plant and equipment balances, as a result of transmission projects placed in service to improve reliability and update aging infrastructure. ▪ Higher depreciation rates, which are recovered in operating revenues. • Taxes, other than income increased $900,000, largely as a result of higher payroll tax and higher property tax, primarily in Montana. • Other income increased $2.4 million, primarily from: ◦ Higher interest income of $2.7 million, largely related to a data center project of $1.6 million. ◦ Higher short term investment balances. ◦ Amounts related to higher deferred fuel and purchased power balances. • Interest expense increased $2.0 million, largely the result of higher long-term interest expense due to incremental debt issuances. • Income tax benefit increased $1.4 million, primarily due to higher production tax credits due to higher wind production. 2023 compared to 2022 Electric earnings increased $14.5 million as a result of: • Revenue increased $24.1 million. ◦ Largely attributable to: ▪ Higher fuel and purchased power costs of $15.4 million recovered in customer rates and offset in expense, as described below. ▪ Rate relief of $4.4 million in North Dakota and Montana. ▪ Higher data center revenue of $3.4 million, including net transmission. ▪ Higher transmission interconnect upgrades of $2.9 million. ◦ Partially offset by lower retail sales volumes of $2.4 million, driven primarily by lower residential volumes, largely due to cooler weather in the third quarter of the year.
Biggest changeForm 10-K 43 Index Part II 2025 compared to 2024 Electric earnings decreased $9.9 million as a result of: • Revenue increased $23.8 million. ◦ Largely attributable to: ▪ Higher fuel and purchased power costs of $17.8 million recovered in customer rates and offset in expense, as described below. ▪ Higher net transmission revenue of $3.5 million, including data center revenue. ▪ Higher retail sales volumes of $1.2 million, driven primarily by higher residential volumes, largely due to colder weather in the first quarter of the year, and higher commercial volumes from the data center as further discussed in the Outlook section. ◦ Partially offset by lower renewable tracker revenues, partially associated with higher production tax credits offset in income tax benefit, as described below. • Electric fuel and purchased power increased $17.8 million, largely the result of higher retail sales volumes and higher commodity prices. • Operation and maintenance increased $16.3 million. ◦ Largely the result of: ▪ Higher payroll-related costs of $5.7 million. ▪ Higher contract services related to Coyote generating station planned outage-related costs of $3.5 million. ▪ Increased software expense of $3.2 million. ▪ Higher insurance expense. ◦ Also reflected are higher costs associated with services provided to Everus as part of the transition services agreement, offset in other income, as described below.
The EPA did not issue a federal implementation plan in place of the state plan and would have two years from state plan disapproval to either propose a federal plan or approve a new state plan.
The EPA did not issue a federal implementation plan in place of the state plan and would have two years from the state plan disapproval to either propose a federal plan or approve a new state plan.
As a result of these separations, the historical results of operations for Knife River and Everus are shown in discontinued operations, net of tax, except for allocated general corporate overhead costs of the company, which did not meet the criteria for discontinued operations and are reflected in Other.
As a result of these separations, the historical results of operations for Knife River and Everus are shown in discontinued operations, net of tax, except for allocated general corporate overhead costs of the Company, which did not meet the criteria for discontinued operations and are reflected in Other.
For more information on the assumptions used in determining plan costs, see Item 8 - Note 18. Income taxes The Company is required to make judgments regarding the potential tax effects of various financial transactions and ongoing operations to estimate the Company's obligation to taxing authorities. These tax obligations include income, property, franchise and sales/use taxes.
For more information on the assumptions used in determining plan costs, see Item 8 - Note 15. Income taxes The Company is required to make judgments regarding the potential tax effects of various financial transactions and ongoing operations to estimate the Company's obligation to taxing authorities. These tax obligations include income, property, franchise and sales/use taxes.
With the exception of the rate base trading multiple, the Company adds a reasonable control premium when calculating the fair value utilizing the peer multiples, which is estimated as the premium that would be received in a sale in an orderly transaction between market participants. The Company used a 20 percent control premium in 2024, 2023 and 2022.
With the exception of the rate base trading multiple, the Company adds a reasonable control premium when calculating the fair value utilizing the peer multiples, which is estimated as the premium that would be received in a sale in an orderly transaction between market participants. The Company used a 20 percent control premium in 2025, 2024, and 2023.
For more information on possible impacts to the Company's businesses, see the Outlook for each segment below and Item 1A - Risk Factors. MDU Resources Group, Inc. Form 10-K 31 Index Part II Consolidated Earnings Overview The following table summarizes the contribution to the consolidated income by each of the Company's business segments.
For more information on possible impacts to the Company's businesses, see the Outlook for each segment below and Item 1A - Risk Factors. 38 MDU Resources Group, Inc. Form 10-K Index Part II Consolidated Earnings Overview The following table summarizes the contribution to the consolidated income by each of the Company's business segments.
Differences between actuarial assumptions and actual plan results are deferred and amortized into expense when the accumulated differences exceed 10 percent of the greater of the projected benefit obligation or the market-related value of plan assets. Therefore, this change in asset values will be reflected in future expenses of the plans beginning in 2025.
Differences between actuarial assumptions and actual plan results are deferred and amortized into expense when the accumulated differences exceed 10 percent of the greater of the projected benefit obligation or the market-related value of plan assets. Therefore, this change in asset values will be reflected in future expenses of the plans beginning in 2026.
The Company may also be required to make additional contributions to its MEPP as a result of its funded status. For more information, see Item 1A - Risk Factors and Item 8 - Note 18. New Accounting Standards For information regarding new accounting standards, see Item 8 - Note 2, which is incorporated herein by reference.
The Company may also be required to make additional contributions to its MEPP as a result of its funded status. For more information, see Item 1A - Risk Factors and Item 8 - Note 15. New Accounting Standards For information regarding new accounting standards, see Item 8 - Note 2, which is incorporated herein by reference.
Based on this assessment, management must evaluate the need for, and amount of, a valuation allowance against the deferred tax assets. As facts and circumstances change, adjustment to the valuation allowance may be required. MDU Resources Group, Inc. Form 10-K 55 Index Part II
Based on this assessment, management must evaluate the need for, and amount of, a valuation allowance against the deferred tax assets. As facts and circumstances change, adjustment to the valuation allowance may be required. MDU Resources Group, Inc. Form 10-K 61 Index Part II
If the carrying value of a reporting unit exceeds its fair value, the Company must record an impairment loss for the amount that the carrying value of the reporting unit, including goodwill, exceeds the fair value of the reporting unit. For the years ended December 31, 2024, 2023 and 2022, there were no impairment losses recorded.
If the carrying value of a reporting unit exceeds its fair value, the Company must record an impairment loss for the amount that the carrying value of the reporting unit, including goodwill, exceeds the fair value of the reporting unit. For the years ended December 31, 2025, 2024, and 2023, there were no impairment losses recorded.
The segment regularly experiences extended lead times on raw materials that are critical to the segment's construction and maintenance work which could delay maintenance work and construction projects potentially causing lost revenues and/or increased costs. The Company is partially mitigating these challenges by planning for extended lead times further in advance.
The segment regularly experiences extended lead times on raw materials that are critical to the segment's construction and maintenance work which could delay maintenance work and construction projects potentially causing lost revenues and/or increased costs. The Company is partially mitigating these challenges by planning for extended lead times further in advance. The Company expects these delays to continue.
With MISO's filed changes in resources adequacy at FERC and the adoption of direct loss of load accreditation for generation resources around riskiest hours on the system versus peak load hours, Montana-Dakota is seeing the need to add additional capacity resources to its system in 2028 versus 2034 as identified in its previous IRP.
With MISO's filed changes in resources adequacy at FERC and the adoption of direct loss of load accreditation for generation resources around riskiest hours on the system versus peak load hours, Montana-Dakota identified the need to add additional capacity resources to its system by 2028 versus 2034 as identified in its previous IRP.
To assist in the recovery of the higher electric fuel and purchased power costs, Montana-Dakota filed waiver requests with the NDPSC and SDPUC, which were approved deferring the increased costs to the annual fuel clause adjustment. In Montana, the waiver request is filed monthly and was unopposed by the MTPSC.
To assist in the recovery of the higher electric fuel and purchased power costs, Montana-Dakota filed waiver requests with the NDPSC and SDPUC, deferring the increased costs to the annual fuel clause adjustment. In Montana, the waiver request is filed monthly and was unopposed by the MTPSC.
Material short-term cash requirements of the Company include repayment of outstanding borrowings and interest payments on those agreements, payments on operating lease agreements, payment of obligations on purchase commitments and asset retirement obligations. At December 31, 2024, the current portion of asset retirement obligations was $296,000 and was included in Other accrued liabilities on the Consolidated Balance Sheets.
Material short-term cash requirements of the Company include repayment of outstanding borrowings and interest payments on those agreements, payments on operating lease agreements, payment of obligations on purchase commitments and asset retirement obligations. At December 31, 2025, the current portion of asset retirement obligations was $329,000 and was included in Other accrued liabilities on the Consolidated Balance Sheets.
As of December 31, 2024, the only operating segment with goodwill was the natural gas distribution segment. For more information on the Company's operating segments, see Item 8 - Note 17. Goodwill impairment, if any, is measured by comparing the fair value of each reporting unit to its carrying value.
As of December 31, 2025, the only operating segment with goodwill was the natural gas distribution segment. For more information on the Company's operating segments, see Item 8 - Note 14. Goodwill impairment, if any, is measured by comparing the fair value of each reporting unit to its carrying value.
The Company is focused on modernizing utility infrastructure to meet the varied energy needs of both its customers and communities while ensuring the delivery of safe, reliable, affordable and environmentally responsible energy. The segments continue to invest in facility upgrades to be in compliance with existing and known future regulations.
The Company is focused on modernizing utility infrastructure to meet the varied energy needs of both its customers and communities while working to deliver safe, reliable, affordable and environmentally responsible energy. The segments continue to invest in facility upgrades to be in compliance with existing and known future regulations.
Market Trends The Company continues to manage the inflationary pressures experienced throughout the United States, including the impact that inflation, higher interest rates, commodity price volatility and supply chain disruptions may have on its business and customers and proactively looks for ways to lessen the impact to its business.
Market Trends The Company continues to manage the inflationary pressures experienced throughout the United States, including the impact that inflation, interest rates, changes in tariffs, commodity price volatility and supply chain disruptions may have on its business and customers and proactively looks for ways to lessen the impact to its business.
At full capacity, the data center requires 180 megawatts of electricity, which is the equivalent of about 28 percent of the Company's generation portfolio. Applied Digital's load is purchased from the MISO market and does not impact other customers' power supply.
At full capacity, the data center requires 180 MW of electricity, which is the equivalent of about 21 percent of the Company's generation portfolio. Applied Digital's load is purchased from the MISO market and does not impact other customers' power supply.
The Company retained approximately 10 percent or 5.7 million shares of Knife River common stock immediately following the separation, which were disposed of in a tax-free exchange in November 2023. The separation of Knife River was a tax-free spinoff transaction to the Company's stockholders for U.S. federal income tax purposes.
The Company retained approximately 10 percent or 5.7 million shares of Knife River common stock immediately following the separation, which were disposed of in a tax-free exchange in November 2023. The separation of Knife River was a tax-free spinoff transaction to the Company's stockholders for U.S. federal income tax purposes, except for cash received in lieu of fractional shares.
Consequently, the Company's financial position or results of operations may be materially different when reported under different conditions or when using different assumptions in the application of the following critical accounting estimates. 52 MDU Resources Group, Inc. Form 10-K Index Part II Goodwill The Company performs its goodwill impairment testing annually in the fourth quarter.
Form 10-K Index Part II Consequently, the Company's financial position or results of operations may be materially different when reported under different conditions or when using different assumptions in the application of the following critical accounting estimates. Goodwill The Company performs its goodwill impairment testing annually in the fourth quarter.
For more information on the Company's tracking mechanisms and recent rate cases, see Items 1 and 2 - Business Properties and Item 8 - Note 20. These segments are also subject to extensive regulation related to certain operational and environmental compliance, cybersecurity, permit terms and system integrity.
For more information on the Company's tracking mechanisms and recent rate cases, see Item 1 - Business and Item 8 - Note 6. These segments are also subject to extensive regulation related to certain operational and environmental compliance, cybersecurity, permit terms and system integrity.
On December 2, 2024, the EPA issued a final decision on the NDDEQ's state implementation plan, maintaining the proposed disapproval of the state's conclusion that no additional controls are warranted during this implementation period.
In December 2024, the EPA issued a final decision on the NDDEQ's Regional Haze state implementation plan, maintaining the proposed disapproval of the state's conclusion that no additional controls are warranted during this implementation period.
On August 5, 2024, the Company filed a request with the SDPUC seeking approval on an electric service agreement to provide up to 50 megawatts of electricity to a data center near Leola, South Dakota.
In August 2024, the Company filed a request with the SDPUC seeking approval on an electric service agreement to provide up to 50 MW of electricity to a data center near Leola, South Dakota.
The Company's critical accounting estimates are subject to judgments and uncertainties that affect the application of its significant accounting policies discussed in Item 8 - Note 2. As additional information becomes available, or actual amounts are determinable, the recorded estimates are revised.
The Company's critical accounting estimates are subject to judgments and uncertainties that affect the application of its significant accounting policies discussed in Item 8 - Note 2. As additional information becomes available, or actual amounts are determinable, the recorded estimates are revised. 58 MDU Resources Group, Inc.
There were no minimum required contributions for the years ended December 31, 2023, or 2022 due to an additional contribution of $20.0 million in 2019, which created prefunding credits that were used in future periods. For more information on the Company's pension plans, see Item 8 - Note 18.
There were no minimum required contributions for the year ended December 31, 2023, due to an additional contribution of $20.0 million in 2019, which created prefunding credits that were used in future periods. For more information on the Company's pension plans, see Item 8 - Note 15.
Material long-term cash requirements of the Company include repayment of outstanding borrowings and interest payments on those agreements, payments on operating lease agreements, payment of obligations on purchase commitments and asset retirement obligations. At December 31, 2024, the Company had total liabilities of $406.6 million related to asset retirement obligations that are excluded from the table above.
Material long-term cash requirements of the Company include repayment of outstanding borrowings and interest payments on those agreements, payments on operating lease agreements, payment of obligations on purchase commitments and asset retirement obligations. At December 31, 2025, the Company had total liabilities of $431.9 million related to asset retirement obligations that are excluded from the table above.
The Company is pursuing various opportunities under the Grid Resilience and Innovative Partnerships Program, which is a part of the Infrastructure Investment and Jobs Act, and is also pursuing a biogas property at the Knott Landfill site in Bend, Oregon which may qualify for an investment tax credit and clean fuel production credits as part of the IRA.
The Company continues to pursue various opportunities under the Grid Resilience and Innovative Partnerships Program, and is also pursuing a biogas property at the Knott Landfill site in Bend, Oregon which may qualify for an investment tax credit and clean fuel production credits as part of the IRA.
Due to the nature of these obligations, the Company cannot determine precisely when the payments will be made to settle these obligations. For more information, see Item 8 - Note 11. Not reflected in the previous table are $1.4 million in uncertain tax positions at December 31, 2024.
Due to the nature of these obligations, the Company cannot determine precisely when the payments will be made to settle these obligations. For more information, see Item 8 - Note 10. Not reflected in the previous table are $1.5 million in uncertain tax positions at December 31, 2025.
In 2024 and 2023, these segments experienced retail customer growth of approximately 1.4 percent and 1.3 percent, respectively, and the Company expects customer growth to continue to average 1 percent to 2 percent per year.
In 2025 and 2024, these segments experienced retail customer growth of approximately 1.5 percent and 1.4 percent, respectively, and the Company expects customer growth to continue to average 1 percent to 2 percent per year.
Form 10-K Index Part II Pipeline Strategy and challenges The pipeline segment provides natural gas transportation, underground storage and energy-related services, including cathodic protection, as discussed in Items 1 and 2 - Business Properties.
Form 10-K 49 Index Part II Pipeline Strategy and challenges The pipeline segment provides natural gas transportation, underground storage and energy-related services, including cathodic protection, as discussed in Item 1 - Business.
The Company's minimum funding requirements for its defined benefit pension plans for 2025, which are not reflected in the previous table, is $1.7 million. For information on potential contributions above the funding minimum requirements, see item 8 - Note 18. The Company's MEPP contributions are based on union employee payroll, which cannot be determined in advance for future periods.
The Company's minimum funding requirements for its defined benefit pension plans for 2026, which are not reflected in the previous table, is $3.8 million. For information on potential contributions above the funding minimum requirements, see item 8 - Note 15. The Company's MEPP contributions are based on union employee payroll, which cannot be determined in advance for future periods.
Form 10-K 49 Index Part II The Company continues to evaluate potential future acquisitions and other growth opportunities that would be incremental to the outlined capital program; however, they are dependent upon the availability of economic opportunities and, as a result, capital expenditures may vary significantly from the estimates in the preceding table.
The Company continues to evaluate potential future acquisitions and other growth opportunities that would be incremental to the outlined capital program; however, they are dependent upon the availability of economic opportunities and, as a result, capital expenditures may vary significantly from the estimates in the preceding table.
Capital resources The Company requires significant cash to support and grow its businesses. The primary sources of cash other than cash generated from operating activities are cash from revolving credit facilities, the issuance of long-term debt and the sale of equity securities.
Form 10-K Index Part II Capital resources The Company requires significant cash to support and grow its businesses. The primary sources of cash other than cash generated from operating activities are cash from revolving credit facilities, the issuance of long-term debt and the sale of equity securities.
If the owners decide to incur such costs, the costs could, dependent on determination by state regulatory commissions on approval to recover such costs from customers, negatively impact the Company's results of operations, financial position and cash flows.
These costs could, dependent on determination by state regulatory commissions on approval to recover such costs from customers, negatively impact the Company's results of operations, financial position and cash flows.
Natural gas weather normalization and decoupling mechanisms in certain jurisdictions have been implemented to largely mitigate the effect that would otherwise be caused by variations in volumes sold to these customers due to weather and changing consumption patterns on the Company's distribution margins, as further discussed in Items 1 and 2 - Business Properties.
Natural gas weather normalization and decoupling mechanisms in certain jurisdictions have been implemented to largely mitigate the effect that would otherwise be caused by variations in volumes sold to these customers due to weather and changing consumption patterns on the Company's distribution margins, as further discussed in Item 1 - Business. MDU Resources Group, Inc.
Form 10-K 43 Index Part II Earnings overview - The following information summarizes the performance of the pipeline segment. 2024 vs. 2023 2023 vs. 2022 Years ended December 31, 2024 2023 2022 Variance Variance (In millions) Operating revenues $ 211.8 $ 177.6 $ 155.6 19 % 14 % Operating expenses: Operation and maintenance 75.7 70.8 60.9 7 % 16 % Depreciation and amortization 29.4 26.8 26.9 10 % — % Taxes, other than income 12.2 10.8 12.3 13 % (12) % Total operating expenses 117.3 108.4 100.1 8 % 8 % Operating income 94.5 69.2 55.5 37 % 25 % Other income 6.5 3.9 1.3 67 % 200 % Interest expense 15.5 13.3 10.1 17 % 32 % Income before income taxes 85.5 59.8 46.7 43 % 28 % Income tax expense 17.5 12.4 10.5 41 % 18 % Income from continuing operations 68.0 47.4 36.2 43 % 31 % Discontinued operations, net of tax* — (.5) (.9) (100) % (44) % Net income $ 68.0 $ 46.9 $ 35.3 45 % 33 % *Discontinued operations includes interest on debt facilities repaid in connection with the Knife River separation.
Form 10-K Index Part II Earnings overview - The following information summarizes the performance of the pipeline segment. 2025 vs. 2024 2024 vs. 2023 Years ended December 31, 2025 2024 2023 Variance Variance (In millions) Operating revenues $ 229.2 $ 211.8 $ 177.6 8.2 % 19.3 % Operating expenses: Operation and maintenance 81.8 75.7 70.8 8.1 % 6.9 % Depreciation and amortization 32.1 29.4 26.8 9.2 % 9.7 % Taxes, other than income 14.2 12.2 10.8 16.4 % 13.0 % Total operating expenses 128.1 117.3 108.4 9.2 % 8.2 % Operating income 101.1 94.5 69.2 7.0 % 36.6 % Other income 3.7 6.5 3.9 (43.1) % 66.7 % Interest expense 16.7 15.5 13.3 7.7 % 16.5 % Income before income taxes 88.1 85.5 59.8 3.0 % 43.0 % Income tax expense 19.9 17.5 12.4 13.7 % 41.1 % Income from continuing operations 68.2 68.0 47.4 .3 % 43.5 % Discontinued operations, net of tax* — — (.5) — % (100.0) % Net income $ 68.2 $ 68.0 $ 46.9 .3 % 45.0 % *Discontinued operations includes interest on debt facilities repaid in connection with the Knife River separation.
The Company expects to meet its obligations for debt maturing within one year and its other operating and capital requirements from various sources, including internally generated funds; credit facilities and commercial paper of the Company and its subsidiaries, as described in Capital resources; and issuance of debt and equity securities if necessary.
The Company expects to meet its obligations for debt maturing within one year and its other operating and capital requirements from various sources, including internally generated funds; credit facilities and commercial paper of the Company and its subsidiaries, as described in Capital resources; and issuance of debt securities and equity securities using the Company's FSA and ATM program as needed.
The Company believes that the accounting subject to rate regulation remains appropriate and its regulatory assets are probable of recovery in current rates or in future rate proceedings. At December 31, 2024 and 2023, the Company's regulatory assets were $537.8 million and $619.6 million, respectively, and regulatory liabilities were $596.3 million and $591.8 million, respectively.
The Company believes that the accounting subject to rate regulation remains appropriate and its regulatory assets are probable of recovery in current rates or in future rate proceedings. At December 31, 2025 and 2024, the Company's regulatory assets were $476.8 million and $537.8 million, respectively, and regulatory liabilities were $620.9 million and $596.3 million, respectively.
(c) 2024 capital expenditures were funded by cash provided from operating activities, long-term debt issuances and borrowings under credit facilities and issuance of commercial paper of the Company and its subsidiaries. (d) Excludes Other category.
(c) 2025 capital expenditures were funded by cash provided from operating activities, long-term debt issuances and borrowings under credit facilities and issuance of commercial paper of the Company and its subsidiaries.
Form 10-K Index Part II The Company makes various assumptions when determining plan costs, including the current discount rates and the expected long-term return on plan assets, actuarially determined mortality data and health care cost trend rates.
The Company makes various assumptions when determining plan costs, including the current discount rates and the expected long-term return on plan assets, actuarially determined mortality data and health care cost trend rates.
At October 31, 2024, the Company's annual impairment testing indicated there was no impairment at its natural gas distribution reporting unit or Everus, its former construction services reporting unit. The estimated fair value of the natural gas distribution reporting unit substantially exceeded its carrying value ("cushion"), which includes $345.7 million of goodwill, by approximately 31 percent.
At October 31, 2025, the Company's annual impairment testing indicated there was no impairment at its natural gas distribution reporting unit. The estimated fair value of the natural gas distribution reporting unit substantially exceeded its carrying value ("cushion"), which includes $345.7 million of goodwill, by approximately 41 percent.
Years ended December 31, 2024 2023 2022 (In millions, except per share amounts) Electric $ 74.8 $ 71.6 $ 57.1 Natural gas distribution 46.9 48.5 45.2 Pipeline 68.0 47.4 36.2 Other (8.6) 162.6 (21.2) Income from continuing operations 181.1 330.1 117.3 Discontinued operations, net of tax 100.0 84.6 250.2 Net income $ 281.1 $ 414.7 $ 367.5 Earnings per share - basic: Income from continuing operations $ .89 $ 1.62 $ .58 Discontinued operations, net of tax .49 .42 1.23 Earnings per share - basic $ 1.38 $ 2.04 $ 1.81 Earnings per share - diluted: Income from continuing operations $ .88 $ 1.62 $ .58 Discontinued operations, net of tax .49 .41 1.23 Earnings per share - diluted $ 1.37 $ 2.03 $ 1.81 The Company completed the separations of Knife River on May 31, 2023, its former construction materials and contracting segment, and of Everus on October 31, 2024, its former construction services segment, into new independent publicly-traded companies.
Years ended December 31, 2025 2024 2023 (In millions, except per share amounts) Electric $ 64.9 $ 74.8 $ 71.6 Natural gas distribution 56.1 46.9 48.5 Pipeline 68.2 68.0 47.4 Other 2.2 (8.6) 162.6 Income from continuing operations 191.4 181.1 330.1 Discontinued operations, net of tax (1.0) 100.0 84.6 Net income $ 190.4 $ 281.1 $ 414.7 Earnings per share - basic: Income from continuing operations $ .94 $ .89 $ 1.62 Discontinued operations, net of tax (.01) .49 .42 Earnings per share - basic $ .93 $ 1.38 $ 2.04 Earnings per share - diluted: Income from continuing operations $ .93 $ .88 $ 1.62 Discontinued operations, net of tax — .49 .41 Earnings per share - diluted $ .93 $ 1.37 $ 2.03 The Company completed the separations of Knife River on May 31, 2023, its former construction materials and contracting segment, and of Everus on October 31, 2024, its former construction services segment, into new independent publicly-traded companies.
Capital expenditures for 2024, and estimated expenditures for 2025 through 2027 are reported on a net basis. (b) Capital expenditures for 2024, 2023 and 2022 include noncash transactions such as capital expenditure-related accounts payable and AFUDC totaling $7.1 million, $(13.6) million and $4.4 million, respectively.
Capital expenditures for 2024 and 2025 as well as estimated expenditures for 2026 through 2028 are reported on a net basis. (b) Capital expenditures for 2023, 2024 and 2025 include noncash transactions such as capital expenditure-related accounts payable and AFUDC totaling $(13.6) million, $7.1 million, and $(10.8) million, respectively.
Bakken natural gas production is currently at or near record levels and the outlook remains positive with continued growth expected due to new oil wells and increasing gas to oil ratios. Increases in national and global natural gas supply have moderated pressure on natural gas prices and price volatility.
Bakken natural gas production is currently at or near record levels and the outlook remains positive with continued growth expected due to increasing gas to oil ratios which may moderate recent decreases in drilling activity. Increases in national and global natural gas supply have moderated pressure on natural gas prices and price volatility.
Both values are discounted using a rate which reflects the best estimate of the risk adjusted cost of capital at each reporting unit. The risk adjusted cost of capital was 5.9 percent, 6.7 percent and 6.4 percent for 2024, 2023 and 2022, respectively for its natural gas distribution reporting unit.
Both values are discounted using a rate which reflects the best estimate of the risk adjusted cost of capital at each reporting unit. The risk adjusted cost of capital was 5.8 percent, 5.9 percent and 6.7 percent for 2025, 2024, and 2023, respectively.
Cash flows Years ended December 31, 2024 2023 2022 (In millions) Net cash provided by (used in) Operating activities $ 502.3 $ 332.6 $ 510.0 Investing activities (552.7) (540.7) (638.9) Financing activities 40.3 204.6 155.2 (Decrease) increase in cash, cash equivalents and restricted cash (10.1) (3.5) 26.3 Cash, cash equivalents and restricted cash -- beginning of year 77.0 80.5 54.2 Cash, cash equivalents and restricted cash -- end of year $ 66.9 $ 77.0 $ 80.5 Operating activities 2024 vs. 2023 2023 vs. 2022 Years ended December 31, 2024 2023 2022 Variance Variance (In millions) Income from continuing operations $ 181.1 $ 330.1 $ 117.3 $ (149.0) $ 212.8 Adjustments to reconcile net income to net cash provided by operating activities 190.2 3.3 225.8 186.9 (222.5) Changes in current assets and current liabilities, net of acquisitions: Receivables (30.3) 79.1 (91.2) (109.4) 170.3 Inventories .2 (21.7) .2 21.9 (21.9) Other current assets 81.0 (48.5) 14.5 129.5 (63.0) Accounts payable (.4) (87.2) 84.6 86.8 (171.8) Other current liabilities (5.3) 73.4 (26.9) (78.7) 100.3 Pension and postretirement benefit plan contributions (3.0) (7.6) (.1) 4.6 (7.5) Other noncurrent changes (1.7) (15.6) (2.6) 13.9 (13.0) Net cash provided by continuing operations 411.8 305.3 321.6 106.5 (16.3) Net cash provided by discontinued operations 90.5 27.3 188.4 63.2 (161.1) Net cash provided by operating activities $ 502.3 $ 332.6 $ 510.0 $ 169.7 $ (177.4) The changes in cash flows from operating activities generally follow the results of operations as discussed in Business Segment Financial and Operating Data and are affected by changes in working capital.
Cash flows Years ended December 31, 2025 2024 2023 (In millions) Net cash provided by (used in) Operating activities $ 473.4 $ 502.3 $ 332.6 Investing activities (780.9) (552.7) (540.7) Financing activities 268.8 40.3 204.6 Decrease in cash, cash equivalents and restricted cash (38.7) (10.1) (3.5) Cash, cash equivalents and restricted cash -- beginning of year 66.9 77.0 80.5 Cash, cash equivalents and restricted cash -- end of year $ 28.2 $ 66.9 $ 77.0 Operating activities 2025 vs. 2024 2024 vs. 2023 Years ended December 31, 2025 2024 2023 Variance Variance (In millions) Income from continuing operations $ 191.4 $ 181.1 $ 330.1 $ 10.3 $ (149.0) Adjustments to reconcile net income to net cash provided by operating activities 204.9 190.2 3.3 14.7 186.9 Changes in current assets and current liabilities, net of acquisitions: Receivables 8.4 (30.3) 79.1 38.7 (109.4) Inventories 4.3 .2 (21.7) 4.1 21.9 Other current assets 54.5 81.0 (48.5) (26.5) 129.5 Accounts payable (9.6) (.4) (87.2) (9.2) 86.8 Other current liabilities 24.4 (5.3) 73.4 29.7 (78.7) Pension and postretirement benefit plan contributions (3.1) (3.0) (7.6) (.1) 4.6 Other noncurrent changes (1.1) (1.7) (15.6) .6 13.9 Net cash provided by continuing operations 474.1 411.8 305.3 62.3 106.5 Net cash (used in) provided by discontinued operations (.7) 90.5 27.3 (91.2) 63.2 Net cash provided by operating activities $ 473.4 $ 502.3 $ 332.6 $ (28.9) $ 169.7 The changes in cash flows from operating activities generally follow the results of operations as discussed in Business Segment Financial and Operating Data and are affected by changes in working capital.
Although changes in the price of natural gas are passed through to customers and have minimal impact on the Company's earnings, the natural gas distribution segment's customers benefit from lower natural gas prices through the Company's utilization of storage and fixed price contracts.
Although changes in the price of natural gas are passed through to customers and have minimal impact on the Company's earnings, the natural gas distribution segment's customers may benefit through the Company's utilization of storage and fixed price contracts to help manage price volatility.
Form 10-K 45 Index Part II Other 2024 vs. 2023 2023 vs. 2022 Years ended December 31, 2024 2023 2022 Variance Variance (In millions) Operating revenues $ .2 $ .2 $ .1 — % 100 % Operating expenses: Operation and maintenance 13.3 24.9 21.6 (47) % 15 % Depreciation and amortization 2.2 4.1 4.4 (46) % (7) % Taxes, other than income .4 .4 .3 — % 33 % Total operating expenses 15.9 29.4 26.3 (46) % 12 % Operating loss (15.7) (29.2) (26.2) (46) % 11 % Gain on tax-free exchange of retained shares in Knife River — 186.6 — (100) % 100 % Other income (expense) 16.6 16.4 (1.3) 1 % NM Interest expense 15.0 19.3 .5 (22) % NM Income (loss) before income taxes (14.1) 154.5 (28.0) (109) % NM Income tax benefit (5.5) (8.1) (6.8) (32) % 19 % Income (loss) from continuing operations (8.6) 162.6 (21.2) (105) % NM Discontinued operations, net of tax 100.0 85.1 251.1 18 % (66) % Net income $ 91.4 $ 247.7 $ 229.9 (63) % 8 % NM - not meaningful The Company completed the separations of Knife River, its former construction materials and contracting segment, on May 31, 2023 and Everus, its former construction services segment, on October 31, 2024, into new independent publicly-traded companies.
Form 10-K Index Part II Other 2025 vs. 2024 2024 vs. 2023 Years ended December 31, 2025 2024 2023 Variance Variance (In millions) Operating revenues $ .7 $ .2 $ .2 250.0 % — % Operating expenses: Operation and maintenance .5 13.3 24.9 (96.2) % (46.6) % Depreciation and amortization — 2.2 4.1 (100.0) % (46.3) % Taxes, other than income — .4 .4 (100.0) % — % Total operating expenses .5 15.9 29.4 (96.9) % (45.9) % Operating income (loss) .2 (15.7) (29.2) 101.3 % (46.2) % Gain on tax-free exchange of retained shares in Knife River — — 186.6 — % (100.0) % Other income 6.6 16.6 16.4 (60.2) % 1.2 % Interest expense 4.9 15.0 19.3 (67.3) % (22.3) % Income (loss) before income taxes 1.9 (14.1) 154.5 113.5 % (109.1) % Income tax benefit (.3) (5.5) (8.1) (94.5) % (32.1) % Income (loss) from continuing operations 2.2 (8.6) 162.6 125.6 % (105.3) % Discontinued operations, net of tax (1.0) 100.0 85.1 (101.0) % 17.5 % Net income $ 1.2 $ 91.4 $ 247.7 (98.7) % (63.1) % The Company completed the separations of Knife River, its former construction materials and contracting segment, on May 31, 2023 and Everus, its former construction services segment, on October 31, 2024, into new independent publicly-traded companies.
The amounts related to these items were as follows: Years ended December 31, 2024 2023 2022 (In millions) Intersegment transactions: Operating revenues $ 69.6 $ 63.1 $ 59.3 Operation and maintenance $ 0.7 $ 1.0 $ 1.1 Purchased natural gas sold $ 68.9 $ 62.1 $ 58.2 Other income $ 15.4 $ 13.6 $ 0.6 Interest expense $ 15.4 $ 13.6 $ 0.6 For more information on intersegment eliminations, see Item 8 - Note 17. 46 MDU Resources Group, Inc.
The amounts related to these items were as follows: Years ended December 31, 2025 2024 2023 (In millions) Intersegment transactions: Operating revenues $ 76.6 $ 69.6 $ 63.1 Operation and maintenance $ 1.8 $ 0.7 $ 1.0 Purchased natural gas sold $ 74.8 $ 68.9 $ 62.1 Other income $ 5.2 $ 15.4 $ 13.6 Interest expense $ 5.2 $ 15.4 $ 13.6 For more information on intersegment eliminations, see Item 8 - Note 14.
The project increased system capacity by 94 MMcf of natural gas per day. • In November 2023, the Line Section 15 Expansion project was placed in service and increased system capacity by 25 MMcf of natural gas per day. • In March 2024, the 2023 Line Section 27 Expansion project was placed in service and increased system capacity by 175 MMcf of natural gas per day. • In July 2024, the Line Section 28 Expansion project was placed in service and increased system capacity by 137 MMcf of natural gas per day. • In November 2024, the Company closed on the purchase of a 28-mile natural gas pipeline lateral in northwestern North Dakota. • In December 2024, the Wahpeton Expansion project was placed in service and increased system capacity by approximately 20 MMcf of natural gas per day.
In support of this strategy, the Company completed the following growth projects in 2024 and 2025: • In March 2024, the 2023 Line Section 27 Expansion project was placed in service and increased system capacity by 175 MMcf of natural gas per day. • In July 2024, the Line Section 28 Expansion project was placed in service and increased system capacity by 137 MMcf of natural gas per day. • In November 2024, the Company closed on the purchase of a 28-mile natural gas pipeline lateral in northwestern North Dakota. • In December 2024, the Wahpeton Expansion project was placed in service and increased system capacity by approximately 20 MMcf of natural gas per day. • In November 2025, the Minot Expansion Project was placed in service and increased system capacity by 7 MMcf of natural gas per day.
A discussion of key financial data from the Company's business segments follows. Business Segment Financial and Operating Data Following are key financial and operating data for each of the Company's business segments. Also included are highlights on key growth strategies, projections and certain assumptions for the Company and its subsidiaries and other matters of the Company's business segments.
Business Segment Financial and Operating Data The following are key financial and operating data for each of the Company's business segments. Highlights of key growth strategies, projections and certain assumptions for the Company and its subsidiaries, and other matters concerning the Company's business segments are included below.
Dividend restrictions For information on the Company's dividends and dividend restrictions, see Item 8 - Note 12. MDU Resources Group, Inc. Form 10-K 51 Index Part II Material cash requirements For more information on the Company's contractual obligations on long-term debt, operating leases and purchase commitments, see Item 8 - Notes 10 and 21.
MDU Resources Group, Inc. Form 10-K 57 Index Part II Material cash requirements For more information on the Company's contractual obligations on long-term debt, operating leases and purchase commitments, see Item 8 - Notes 9 and 17.
Form 10-K 37 Index Part II Earnings overview - The following information summarizes the performance of the natural gas distribution segment. 2024 vs. 2023 2023 vs. 2022 Years ended December 31, 2024 2023 2022 Variance Variance (In millions) Operating revenues $ 1,201.1 $ 1,287.5 $ 1,273.8 (7) % 1 % Operating expenses: Purchased natural gas sold 699.3 805.1 816.1 (13) % (1) % Operation and maintenance 231.2 219.7 205.3 5 % 7 % Depreciation and amortization 102.0 95.3 89.4 7 % 7 % Taxes, other than income 76.0 75.2 71.1 1 % 6 % Total operating expenses 1,108.5 1,195.3 1,181.9 (7) % 1 % Operating income 92.6 92.2 91.9 — % — % Other income 25.5 20.8 3.3 23 % NM Interest expense 63.2 57.6 42.2 10 % 36 % Income before income taxes 54.9 55.4 53.0 (1) % 5 % Income tax expense 8.0 6.9 7.8 16 % (12) % Net income $ 46.9 $ 48.5 $ 45.2 (3) % 7 % Operating statistics 2024 2023 2022 Revenues (millions) Retail sales: Residential $ 651.8 $ 726.1 $ 715.5 Commercial 400.8 441.2 450.9 Industrial 42.7 45.0 41.5 1,095.3 1,212.3 1,207.9 Transportation and other 105.8 75.2 65.9 $ 1,201.1 $ 1,287.5 $ 1,273.8 Volumes (MMdk) Retail sales: Residential 67.2 69.3 74.8 Commercial 46.9 47.9 51.0 Industrial 5.4 5.4 5.4 119.5 122.6 131.2 Transportation sales: Commercial 1.9 1.9 2.0 Industrial 192.6 188.4 165.7 194.5 190.3 167.7 Total throughput 314.0 312.9 298.9 Average cost of natural gas per dk $ 5.85 $ 6.57 $ 6.22 Heating degree days (% colder (warmer) than prior year) 1 Idaho (7.3) % (9.0) % 16.1 % Minnesota (12.6) % (11.9) % 18.0 % Montana (4.6) % (2.8) % 0.8 % North Dakota 2 (9.9) % 0.3 % 9.5 % Oregon 2 (4.3) % (5.5) % 10.1 % South Dakota 2 (10.0) % (0.2) % 0.4 % Washington 2 (0.2) % (8.5) % 11.9 % Wyoming (9.8) % 1.4 % 1.6 % 1 Heating degree days are a measure of the daily temperature demand for energy for heating. 2 Weather normalization or decoupling mechanisms are in place that minimize the weather impact. 38 MDU Resources Group, Inc.
Form 10-K Index Part II Earnings overview - The following information summarizes the performance of the natural gas distribution segment. 2025 vs. 2024 2024 vs. 2023 Years ended December 31, 2025 2024 2023 Variance Variance (In millions) Operating revenues $ 1,283.5 $ 1,201.1 $ 1,287.5 6.9 % (6.7) % Operating expenses: Purchased natural gas sold 746.3 699.3 805.1 6.7 % (13.1) % Operation and maintenance 241.2 231.2 219.7 4.3 % 5.2 % Depreciation and amortization 105.0 102.0 95.3 2.9 % 7.0 % Taxes, other than income 81.5 76.0 75.2 7.2 % 1.1 % Total operating expenses 1,174.0 1,108.5 1,195.3 5.9 % (7.3) % Operating income 109.5 92.6 92.2 18.3 % .4 % Other income 15.8 25.5 20.8 (38.0) % 22.6 % Interest expense 59.6 63.2 57.6 (5.7) % 9.7 % Income before income taxes 65.7 54.9 55.4 19.7 % (.9) % Income tax expense 9.6 8.0 6.9 20.0 % 15.9 % Net income $ 56.1 $ 46.9 $ 48.5 19.6 % (3.3) % Operating statistics 2025 2024 2023 Revenues (millions) Retail sales: Residential $ 680.0 $ 651.8 $ 726.1 Commercial 423.9 400.8 441.2 Industrial 45.2 42.7 45.0 1,149.1 1,095.3 1,212.3 Transportation and other 134.4 105.8 75.2 $ 1,283.5 $ 1,201.1 $ 1,287.5 Volumes (MMdk) Retail sales: Residential 65.8 67.2 69.3 Commercial 49.4 46.9 47.9 Industrial 5.0 5.4 5.4 120.2 119.5 122.6 Transportation sales: Commercial 1.9 1.9 1.9 Industrial 168.4 192.6 188.4 170.3 194.5 190.3 Total throughput 290.5 314.0 312.9 Average cost of natural gas per dk $ 6.21 $ 5.85 $ 6.57 Heating degree days (% colder (warmer) than prior year) 1 Idaho (6.1) % (7.3) % (9.0) % Minnesota 12.8 % (12.6) % (11.9) % Montana 4.5 % (4.6) % (2.8) % North Dakota 2 9.7 % (9.9) % 0.3 % Oregon 2 (1.2) % (4.3) % (5.5) % South Dakota 2 4.0 % (10.0) % (0.2) % Washington 2 (5.2) % (0.2) % (8.5) % Wyoming 7.6 % (9.8) % 1.4 % 1 Heating degree days are a measure of the daily temperature demand for energy for heating. 2 Weather normalization or decoupling mechanisms are in place that minimize the weather impact.
Capital expenditures The Company's capital expenditures, excluding discontinued operations, for 2022 through 2024 and as anticipated for 2025 through 2027 are summarized in the following table.
Capital expenditures The Company's capital expenditures, excluding discontinued operations, for 2023 through 2025 and as anticipated for 2026 through 2028 are summarized in the following table.
The long-term growth rates are developed by management based on industry data, management's knowledge of the industry and management's strategic plans, which was 3.0 percent in 2024 and 2023 and 2.85 percent in 2022. Regulatory accounting The Company is subject to rate regulation by state public service commissions and/or the FERC.
The long-term growth rates are developed by management based on industry data, management's knowledge of the industry and management's strategic plans, which was 3.0 percent in 2025, 2024, and 2023. MDU Resources Group, Inc. Form 10-K 59 Index Part II Regulatory accounting The Company is subject to rate regulation by state public service commissions and/or the FERC.
MDU Resources Group, Inc. Form 10-K 33 Index Part II The electric and natural gas distribution segments are subject to extensive regulation in the jurisdictions where they conduct operations with respect to costs, timely recovery of investments and permitted returns on investment.
The electric and natural gas distribution segments are subject to extensive regulation in the jurisdictions where they conduct operations with respect to costs, timely recovery of investments and permitted returns on investment.
The industry in which it operates relies on a skilled workforce to construct energy infrastructure and operate existing infrastructure in a safe manner. A shortage of skilled personnel can create a competitive labor market which could increase costs incurred by the segment. Competition from other pipeline companies can also have a negative impact on the segment. MDU Resources Group, Inc.
The industry in which it operates relies on a skilled workforce to construct energy infrastructure and operate existing infrastructure in a safe manner. A shortage of skilled personnel can create a competitive labor market which could increase costs incurred by the segment.
Recently, MISO and NERC announced concerns with reliability of the electric grid due to rapid expansion of renewables and retirement of baseload resources such as coal and the uncertainty of adequate energy production during certain periods of time, while load growth has increased faster than expected. Montana-Dakota filed its 2024 IRP with the NDPSC on July 12, 2024.
MISO and NERC announced concerns with reliability of the electric grid due to rapid expansion of renewables and retirement of baseload resources such as coal and the uncertainty of adequate energy production during certain periods of time, while load growth has increased faster than expected due to growth in the data center industry.
The Company will continue to monitor the progress of these changes and assess the potential impacts they may have on its stakeholders, business processes, results of operations, cash flows and disclosures.
The Company will continue to monitor the progress of these changes, including the impacts associated with the implementation of MISO's direct loss of load accreditation in 2028, and assess the potential impacts they may have on its stakeholders, business processes, results of operations, cash flows and disclosures.
Stockholders of the Company received one share of Knife River common stock for every four shares of the Company's common stock held on May 22, 2023, the record date for the distribution.
The Company's board of directors approved the distribution of approximately 90 percent of the issued and outstanding shares of Knife River to the Company's stockholders. Stockholders of the Company received one share of Knife River common stock for every four shares of the Company's common stock held on May 22, 2023, the record date for the distribution.
The Company continues to monitor and assess these rulemakings and the potential impacts they may have on its business processes, current and future projects, results of operations and disclosures.
The Company continues to comply with rules as they remain in effect, and to monitor and assess these rulemaking changes and the potential impacts they may have on its business processes, current and future projects, results of operations and disclosures.
Pretax pension income reflected in the Consolidated Statements of Income for the years ended December 31, 2023 and 2022, was $580,000 and $2.3 million, respectively. The Company's pension expense is currently projected to be approximately $3.4 million in 2025. Funding for the pension plans is actuarially determined.
Form 10-K 55 Index Part II December 31, 2025 and 2024, was $3.4 million and $835,000, respectively. Pretax pension income reflected in the Consolidated Statements of Income for the year ended December 31, 2023 was $580,000. The Company's pension expense is currently projected to be approximately $4.7 million in 2026. Funding for the pension plans is actuarially determined.
Initiative Measure No. 2066, which was approved by voters, prohibits the Washington State Energy Code from "in any way prohibit, penalize, or discourage the use of gas for any form of heating, or for uses related to any appliance or equipment, in any building." It is being challenged in the King County Superior Court.
Initiative Measure No. 2066, which was approved by voters, does not allow the Washington State Energy Code to "in any way prohibit, penalize, or discourage the use of gas for any form of heating, or for uses related to any appliance or equipment, in any building." In May 2025, the King County Superior Court filed an order ruling Initiative Measure No. 2066 unconstitutional.
Coyote Station co-owners filed a petition for review with the Eighth Circuit Court of Appeals on January 31, 2025, challenging EPA's NDDEQ state plan disapproval, and filed a petition for reconsideration with the EPA on February 6, 2025.
Coyote Station co-owners filed a petition for review with the Eighth Circuit in January 2025, challenging EPA's NDDEQ state plan disapproval, and in February 2025, filed a petition for reconsideration with the EPA, which was granted in April 2025.
The construction of new electric generating facilities, transmission lines and other service facilities is subject to increasing costs and lead times, extensive permitting procedures, and federal and state legislative and regulatory initiatives, which may necessitate increases in electric energy prices. As the industry continues to expand the use of renewable energy sources, the need for additional transmission infrastructure is growing.
The construction of new electric generating facilities, transmission lines and other service facilities is subject to higher costs and long lead times for equipment, extensive permitting procedures, and federal and state legislative and regulatory initiatives, which may necessitate increases in electric energy prices.
Outlook In 2024, the utility business experienced rate base growth of 6.8 percent and expects these segments will grow rate base by approximately 7 percent to 8 percent annually over the next five years on a compound basis. Operations are spread across eight states where the Company expects customer growth to be higher than the national average.
These segments grew rate base by 8.7 percent annually over the last five years on a compound basis and expects to invest approximately $2.5 billion of capital expenditures over the next five years. Operations are spread across eight states where the Company expects customer growth to be higher than the national average.
This was caused by transmission congestion in northwest North Dakota due to delays in additional SPP transmission line build-out, as well as additional load growth in the Bakken region. Electric fuel and purchased power prices remained elevated through January 2024.
Form 10-K 41 Index Part II In the second half of 2023, electric fuel and purchased power prices increased across Montana-Dakota's integrated system and remained elevated through January 2024. This was caused by transmission congestion in northwest North Dakota due to delays in additional SPP transmission line build-out, as well as additional load growth in the Bakken region.
Partially offsetting the decrease in net income was lower operation and maintenance expense, largely a result of corporate overhead costs classified as continuing operations allocated to the construction materials business in 2023, which are not included in Other in 2024, and lower strategic initiative costs.
Partially offsetting the decrease was lower operation and maintenance expense, largely a result of corporate overhead costs classified as continuing operations allocated to the construction services business in 2024, which are not included in Other in 2025. A discussion of key financial data from the Company's business segments follows.
Form 10-K Index Part II Liquidity and Capital Commitments At December 31, 2024, the Company had cash, cash equivalents and restricted cash of $66.9 million and available borrowing capacity of $484.6 million under the outstanding credit facilities of the Company and its subsidiaries.
MDU Resources Group, Inc. Form 10-K 53 Index Part II Liquidity and Capital Commitments At December 31, 2025, the Company had cash, cash equivalents and restricted cash of $28.2 million and available borrowing capacity of $418.1 million under the outstanding credit facilities of the Company and its subsidiaries.
The Company expects to contribute the minimum funding requirement of $1.7 million in 2025. For the year ended December 31, 2024, the Company contributed the minimum funding requirement of $2.9 million.
The Company expects to contribute the minimum funding requirement of $3.8 million in 2026. For the years ended December 31, 2025 and 2024, the Company contributed the minimum funding requirement of $3.4 million and $2.9 million, respectively.
A 50 basis point change in the assumed discount rate and the expected long-term return on plan assets would have had the following effects at December 31, 2024: Pension Benefits Other Postretirement Benefits 50 Basis Point Increase 50 Basis Point Decrease 50 Basis Point Increase 50 Basis Point Decrease Discount rate (In millions) Projected benefit obligation as of December 31, 2024 $ (10.5) $ 11.3 $ (1.5) $ 1.6 Net periodic benefit cost (credit) for 2025 $ .1 $ (.1) $ (.2) $ .2 Expected long-term return on plan assets Net periodic benefit cost (credit) for 2025 $ (1.3) $ 1.3 $ (.4) $ .4 A 100 basis point change in the assumed health care cost trend rates would have had the following effects at December 31, 2024: 100 Basis Point Increase 100 Basis Point Decrease (In millions) Service and interest cost components for 2025 $ — $ — Postretirement benefit obligation as of December 31, 2024 $ 0.3 $ (0.3) The Company plans to continue to use its current methodologies to determine plan costs.
A 50 basis point change in the assumed discount rate and the expected long-term return on plan assets would have had the following effects at December 31, 2025: Pension Benefits Other Postretirement Benefits 50 Basis Point Increase 50 Basis Point Decrease 50 Basis Point Increase 50 Basis Point Decrease Discount rate (In millions) Projected benefit obligation as of December 31, 2025 $ (10.2) $ 11.0 $ (1.5) $ 1.6 Net periodic benefit cost (credit) for 2026 $ .1 $ (.1) $ — $ — Expected long-term return on plan assets Net periodic benefit cost (credit) for 2026 $ (1.2) $ 1.2 $ (.4) $ .4 60 MDU Resources Group, Inc.
The Company has been able to minimize the effects by working closely with suppliers or obtaining additional suppliers, as well as modifying project plans to accommodate extended lead times and increased costs. The Company expects these delays and inflationary pressures to continue. The ability to grow through acquisitions is subject to significant competition and acquisition premiums.
The Company has been able to minimize the effects by working closely with suppliers or obtaining additional suppliers, as well as modifying project plans to accommodate extended lead times and increased costs. The Company expects these delays to continue. Inflationary pressures have moderated but costs for goods and services remain high.
Form 10-K 35 Index Part II Earnings overview - The following information summarizes the performance of the electric segment. 2024 vs. 2023 2023 vs. 2022 Years ended December 31, 2024 2023 2022 Variance Variance (In millions) Operating revenues $ 414.5 $ 401.2 $ 377.1 3 % 6 % Operating expenses: Electric fuel and purchased power 141.2 134.8 119.4 5 % 13 % Operation and maintenance 95.0 92.7 93.3 2 % (1) % Depreciation and amortization 66.5 64.2 67.8 4 % (5) % Taxes, other than income 17.6 16.7 16.9 5 % (1) % Total operating expenses 320.3 308.4 297.4 4 % 4 % Operating income 94.2 92.8 79.7 2 % 16 % Other income 8.2 5.8 .5 41 % NM Interest expense 30.0 28.0 28.5 7 % (2) % Income before income taxes 72.4 70.6 51.7 3 % 37 % Income tax benefit (2.4) (1.0) (5.4) 140 % (81) % Net income $ 74.8 $ 71.6 $ 57.1 4 % 25 % Operating statistics 2024 2023 2022 Revenues (millions) Retail sales: Residential $ 139.9 $ 134.1 $ 135.4 Commercial 165.8 164.1 142.7 Industrial 42.3 42.3 43.0 Other 7.8 7.1 7.3 355.8 347.6 328.4 Other 58.7 53.6 48.7 $ 414.5 $ 401.2 $ 377.1 Volumes (million kWh) Retail sales: Residential 1,159.5 1,180.2 1,226.4 Commercial 2,474.5 2,350.5 1,437.7 Industrial 528.9 583.7 596.1 Other 81.6 81.8 83.7 4,244.5 4,196.2 3,343.9 Average cost of electric fuel and purchased power per kWh $ .025 $ .024 $ .026 Cooling degree days (% warmer (colder) than prior year) 1 Montana (0.7) % (1.0) % (16.1) % North Dakota (2.2) % (5.4) % (26.8) % South Dakota (27.0) % (9.8) % (15.0) % Wyoming 46.1 % (26.4) % (9.3) % 1 Cooling degree days are a measure of the energy demand for cooling. 2024 compared to 2023 Electric earnings increased $3.2 million as a result of: • Revenue increased $13.3 million. ◦ Largely attributable to: ▪ Rate relief of $7.1 million in North Dakota, South Dakota and Montana. ▪ Higher fuel and purchased power costs of $6.4 million recovered in customer rates and offset in expense, as described below. ▪ Higher miscellaneous revenue of $2.4 million, including higher transmission interconnect upgrades. ◦ Partially offset by lower retail sales volumes of $2.6 million, driven primarily by lower residential volumes due to 37.0 percent cooler weather in the second quarter of 2024.
Form 10-K Index Part II Earnings overview - The following information summarizes the performance of the electric segment. 2025 vs. 2024 2024 vs. 2023 Years ended December 31, 2025 2024 2023 Variance Variance (In millions) Operating revenues $ 438.3 $ 414.5 $ 401.2 5.7 % 3.3 % Operating expenses: Electric fuel and purchased power 159.0 141.2 134.8 12.6 % 4.7 % Operation and maintenance 111.3 95.0 92.7 17.2 % 2.5 % Depreciation and amortization 69.6 66.5 64.2 4.7 % 3.6 % Taxes, other than income 18.8 17.6 16.7 6.8 % 5.4 % Total operating expenses 358.7 320.3 308.4 12.0 % 3.9 % Operating income 79.6 94.2 92.8 (15.5) % 1.5 % Other income 7.4 8.2 5.8 (9.8) % 41.4 % Interest expense 31.7 30.0 28.0 5.7 % 7.1 % Income before income taxes 55.3 72.4 70.6 (23.6) % 2.5 % Income tax benefit (9.6) (2.4) (1.0) 300.0 % 140.0 % Net income $ 64.9 $ 74.8 $ 71.6 (13.2) % 4.5 % Operating statistics 2025 2024 2023 Revenues (millions) Retail sales: Residential $ 136.7 $ 139.9 $ 134.1 Commercial 179.0 165.8 164.1 Industrial 37.8 42.3 42.3 Other 7.4 7.8 7.1 360.9 355.8 347.6 Other 77.4 58.7 53.6 $ 438.3 $ 414.5 $ 401.2 Volumes (million kWh) Retail sales: Residential 1,191.1 1,159.5 1,180.2 Commercial 2,820.5 2,474.5 2,350.5 Industrial 485.7 528.9 583.7 Other 81.8 81.6 81.8 4,579.1 4,244.5 4,196.2 Average cost of electric fuel and purchased power per kWh $ .026 $ .025 $ .024 Cooling degree days (% warmer (colder) than prior year) 1 Montana (5.4) % (0.7) % (1.0) % North Dakota (6.9) % (2.2) % (5.4) % South Dakota 16.8 % (27.0) % (9.8) % Wyoming (24.8) % 46.1 % (26.4) % 1 Cooling degree days are a measure of the energy demand for cooling.
Form 10-K 47 Index Part II Investing activities 2024 vs. 2023 2023 vs. 2022 Years ended December 31, 2024 2023 2022 Variance Variance (In millions) Capital expenditures $ (522.8) $ (484.1) $ (442.5) $ (38.7) $ (41.6) Net proceeds from sale or disposition of property 0.7 0.2 — .5 .2 Cost of removal, net of salvage value (5.5) 1.2 (11.8) (6.7) 13.0 Investments (5.2) (2.4) (2.6) (2.8) .2 Proceeds from investment cost basis withdrawal 9.0 20.0 — (11.0) 20.0 Net cash used in continuing operations (523.8) (465.1) (456.9) (58.7) (8.2) Net cash used in discontinued operations (28.9) (75.6) (182.0) 46.7 106.4 Net cash used in investing activities $ (552.7) $ (540.7) $ (638.9) $ (12.0) $ 98.2 The increase in cash used in investing activities in 2024 from 2023 was primarily due to higher capital expenditures at the natural gas distribution business, increased capital expenditures at the pipeline businesses for its expansion projects and lower receipt of proceeds from the withdrawal of cost basis from insurance policies in 2024 than in 2023.
Form 10-K Index Part II Investing activities 2025 vs. 2024 2024 vs. 2023 Years ended December 31, 2025 2024 2023 Variance Variance (In millions) Capital expenditures $ (770.4) $ (522.8) $ (484.1) $ (247.6) $ (38.7) Net proceeds from sale or disposition of property — 0.7 0.2 (.7) .5 Cost of removal, net of salvage value (11.3) (5.5) 1.2 (5.8) (6.7) Investments (4.2) (5.2) (2.4) 1.0 (2.8) Proceeds from investment excess cash and cost basis withdrawal 5.0 9.0 20.0 (4.0) (11.0) Net cash used in continuing operations (780.9) (523.8) (465.1) (257.1) (58.7) Net cash used in discontinued operations — (28.9) (75.6) 28.9 46.7 Net cash used in investing activities $ (780.9) $ (552.7) $ (540.7) $ (228.2) $ (12.0) The increase in cash used in investing activities in 2025 from 2024 was primarily due to higher capital expenditures at the electric business, largely related to the Badger Wind Farm, partially offset by lower capital expenditures at the pipeline business due to the absence of the 2024 Wahpeton Expansion project.
MISO filed a petition for review of the FERC decision on January 8, 2025. On December 26, 2024, Montana-Dakota filed a request with the NDPSC for authorization to defer external legal expenses related to this congestion litigation and record those deferred expenses into a regulatory asset.
In July 2025, the NDPSC approved Montana-Dakota's request to defer external legal expenses related to this congestion litigation and record those deferred expenses into a regulatory asset. Montana-Dakota and MISO each filed a petition for review of the FERC decision with the Eighth Circuit with a decision expected in the first half of 2026.
Financing activities 2024 vs. 2023 2023 vs. 2022 Years ended December 31, 2024 2023 2022 Variance Variance (In millions) Issuance of short-term borrowings $ — $ 810.0 $ 11.5 $ (810.0) $ 798.5 Repayment of short-term borrowings (95.0) (433.9) — 338.9 (433.9) Issuance of long-term debt 308.6 594.7 215.0 (286.1) 379.7 Repayment of long-term debt (182.1) (568.9) (38.8) 386.8 (530.1) Debt issuance costs (2.5) (2.5) (1.1) — (1.4) Costs of issuance of common stock (.1) — (.2) (.1) .2 Dividends paid (102.9) (161.3) (176.9) 58.4 15.6 Repurchase of common stock — (4.8) (7.4) 4.8 2.6 Tax withholding on stock-based compensation (2.6) (3.1) (4.9) .5 1.8 Net cash (used in) provided by continuing operations (76.6) 230.2 (2.8) (306.8) 233.0 Net cash provided by (used in) discontinued operations 116.9 (25.6) 158.0 142.5 (183.6) Net cash provided by financing activities $ 40.3 $ 204.6 $ 155.2 $ (164.3) $ 49.4 The decrease in cash provided by financing activities in 2024 from 2023 was primarily due to the absence of the 2023 issuance of short-term borrowings associated with the debt for equity exchange of the Knife River retained shares, as well as the absence of the 2023 issuance of short-term borrowings at the natural gas distribution business used to fund higher natural gas costs.
Financing activities 2025 vs. 2024 2024 vs. 2023 Years ended December 31, 2025 2024 2023 Variance Variance (In millions) Issuance of short-term borrowings $ — $ — $ 810.0 $ — $ (810.0) Repayment of short-term borrowings — (95.0) (433.9) 95.0 338.9 Issuance of long-term debt 565.4 308.6 594.7 256.8 (286.1) Repayment of long-term debt (179.5) (182.1) (568.9) 2.6 386.8 Debt issuance costs (4.3) (2.5) (2.5) (1.8) — Costs of issuance of common stock (.1) (.1) — — (.1) Dividends paid (108.2) (102.9) (161.3) (5.3) 58.4 Repurchase of common stock — — (4.8) — 4.8 Tax withholding on stock-based compensation (4.5) (2.6) (3.1) (1.9) .5 Net cash provided by (used in) continuing operations 268.8 (76.6) 230.2 345.4 (306.8) Net cash provided by (used in) discontinued operations — 116.9 (25.6) (116.9) 142.5 Net cash provided by financing activities $ 268.8 $ 40.3 $ 204.6 $ 228.5 $ (164.3) The increase in cash provided by financing activities in 2025 from 2024 was primarily due higher long-term debt issuance proceeds used to finance capital expenditure projects, primarily at the electric business.
In the event the Company or its subsidiaries do not comply with the applicable covenants and other conditions, alternative sources of funding may need to be pursued. As of December 31, 2024, the Company had investment grade credit ratings at all entities issuing debt which carried public ratings.
The Company and its subsidiaries were in compliance with applicable covenants at December 31, 2025. In the event the Company or its subsidiaries do not comply with the applicable covenants and other conditions, alternative sources of funding may need to be pursued.
The Company intends to meet its obligations through surrendering no cost emissions allowances and will fill remaining compliance obligations by investing in additional customer conservation and energy efficiency programs, purchasing community climate investment credits, and purchasing low carbon fuels such as RNG. Cascade is evaluating customer bill impacts from the new rule.
The Company intends to meet its obligations first through no-cost emissions allowances and will fill remaining compliance obligations by investing in additional customer conservation and energy efficiency programs, purchasing community climate investment credits, and acquiring environmental attributes from low-carbon fuel projects such as RNG. Compliance costs for these regulations are being recovered through customer rates.
Plan assets consist of investments in equity and fixed-income securities. Various actuarial assumptions are used in calculating the benefit expense (income) and liability (asset) related to the pension plans. Actuarial assumptions include assumptions about the discount rate and expected return on plan assets.
Various actuarial assumptions are used in calculating the benefit expense (income) and liability (asset) related to the pension plans. Actuarial assumptions include assumptions about the discount rate and expected return on plan assets. For 2025, the Company assumed a long-term rate of return on its qualified defined pension plan assets of 6.5 percent.
Also included in discontinued operations are certain strategic initiative costs associated with the separations of Knife River and Everus. Also included in Other is insurance activity at the Company's captive insurer and general and administrative costs and interest expense previously allocated to the exploration and production and refining businesses that did not meet the criteria for discontinued operations.
Also included in Other is insurance activity at the Company's captive insurer and general and administrative costs and interest expense previously allocated to the exploration and production and refining businesses that did not meet the criteria for discontinued operations. For the full year, Other reported net income of $1.2 million compared to net income of $91.4 million for 2024.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeInterest rate risk The Company uses fixed and variable rate long-term debt to partially finance capital expenditures, including acquisitions, and mandatory debt retirements. These debt agreements expose the Company to market risk related to changes in interest rates. The Company manages this risk by attempting to take advantage of favorable market conditions when timing the placement of long-term financing.
Biggest changeItem 7A. Quantitative and Qualitative Disclosures About Market Risk Interest rate risk The Company uses fixed and variable rate long-term debt to partially finance operations and capital expenditures which exposes the Company to market risk related to changes in interest rates.
For additional information on the Company's long-term debt, see Item 8 - Notes 9 and 10. At December 31, 2024 and 2023, the Company had no outstanding interest rate hedges.
For additional information on the Company's long-term debt, see Item 8 - Notes 8 and 9. At December 31, 2025 and 2024, the Company had no outstanding interest rate hedges.
At December 31, 2024 and 2023, these contracts were not material. For more information on the Company's derivatives, see Item 8 - Note 2. 56 MDU Resources Group, Inc. Form 10-K Index Part II
At December 31, 2025 and 2024, these contracts were not material. For more information on the Company's derivatives, see Item 8 - Note 2. 62 MDU Resources Group, Inc. Form 10-K Index Part II
An increase of 1 percent in the interest rate on the Company's outstanding variable interest rate facilities over the next 12 months, based on the balances outstanding for these borrowings as of December 31, 2024, would result in an estimated $2.5 million pre-tax annual increase in interest expense.
Based on balances outstanding for these borrowings as of December 31, 2025, an increase of 1 percent in the interest rate on the Company's outstanding variable interest rate facilities would result in an estimated $3.3 million pre-tax annual increase in interest expense over the next twelve months.
The following table shows the amount of long-term debt, which excludes unamortized debt issuance costs and discount, and related weighted average interest rates, both by expected maturity dates, as of December 31, 2024. 2025 2026 2027 2028 2029 Thereafter Total Fair Value (Dollars in millions) Long-term debt: Fixed rate $ 161.7 $ 144.7 $ 24.7 $ 79.7 $ 74.7 $ 1,562.4 $ 2,047.9 $ 1,718.7 Weighted average interest rate 4.0 % 5.7 % 6.9 % 4.4 % 4.5 % 4.5 % 4.6 % Variable rate $ — $ — $ — $ 81.4 $ 169.7 $ — $ 251.1 $ 251.1 Weighted average interest rate — % — % — % 4.8 % 5.8 % — % 5.5 % Commodity price risk The Company enters into commodity price derivative contracts to minimize the price volatility associated with natural gas costs for its customers at its natural gas distribution segment.
The following table shows the amount of long-term debt, which excludes unamortized debt issuance costs and discount, and related weighted average interest rates, both by expected maturity dates, as of December 31, 2025. 2026 2027 2028 2029 2030 Thereafter Total Fair Value (Dollars in millions) Long-term debt: Fixed rate $ 144.7 $ 274.7 $ 79.7 $ 74.7 $ 146.7 $ 1,635.7 $ 2,356.2 $ 2,064.5 Weighted average interest rate 5.7 % 4.9 % 4.4 % 4.5 % 4.9 % 4.7 % 4.8 % Variable rate $ — $ — $ — $ — $ 328.7 $ — $ 328.7 $ 328.7 Weighted average interest rate — % — % — % — % 4.7 % — % 4.7 % Commodity price risk The Company enters into commodity price derivative contracts to minimize the price volatility associated with natural gas costs for its customers at its natural gas distribution segment.
As of December 31, 2024, approximately 10.9 percent of the outstanding debt recorded on the balance sheet consisted of variable interest rate facilities (which uses SOFR as the benchmark rate).
Higher interest rates have resulted in and will likely continue to result in higher borrowing costs on new debt and existing variable interest rate debt. As of December 31, 2025, approximately 12.2 percent of the outstanding debt recorded on the balance sheet consisted of variable interest rate facilities (which uses SOFR as the benchmark rate).
Removed
Item 7A. Quantitative and Qualitative Disclosures About Market Risk The Company is exposed to the impact of market fluctuations associated with commodity prices and interest rates. The Company has policies and procedures to assist in controlling these market risks and from time to time has utilized derivatives to manage a portion of its risk.

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