MDU Resources Group, Inc. (MDU) Income Statement

The 10-quarter revenue series shows a clear seasonal pattern, with Q1 peaks around $600M and Q3 troughs near $300M. However, the 6.8% year-over-year growth in 2026Q2, following a 1.9% increase in 2025Q2, indicates a slight acceleration in the non-peak quarters. This may reflect customer growth in the Williston Basin and increased pipeline throughput, though the absolute revenue level remains modest relative to peers like NiSource.

The gross margin in 2026Q2 is reported at 100% with zero COGS, which is inconsistent with the utility business model. This likely indicates a data anomaly or a quarter where purchased gas costs were zero due to regulatory deferrals. Excluding that quarter, gross margins have ranged from 25% to 36%, with a declining trend from 2024Q1 (31%) to 2026Q1 (25%). This suggests that while commodity costs are generally passed through, there may be some margin compression in the distribution segment, possibly due to rate case timing or changes in sales mix.

The fixed-cost nature of utility infrastructure is clear: operating income scales disproportionately with revenue. In 2026Q1, revenue of $606M generated $115.7M operating income, while 2026Q2's $375.2M revenue produced only $47.9M. This operating leverage amplifies the seasonal revenue swings, but also means that any sustained volume growth could drive margin expansion. However, the 2026Q2 operating margin of 12.8% is below the 2025Q2 level of 8.6%, suggesting some improvement, though still below the 2024Q2 margin of 11.5%.

The primary cost driver is COGS, which includes the cost of natural gas and electricity for resale. While these costs are largely passed through to customers, the gross margin has been relatively stable in the 25-36% range (excluding the anomalous 2026Q2). SG&A and R&D are not separately disclosed, but the operating margin of 12-20% suggests that overhead is well-controlled. The company's ability to maintain operating margins despite seasonal revenue swings indicates disciplined O&M spending, though the recent trend of declining gross margins from 2024 to 2026 may signal rising purchased gas costs that are not fully recovered in rates.

The most significant inflection is the strategic separation of construction businesses, which has fundamentally altered the revenue and cost structure. The 10-quarter data shows a clear break: pre-spin quarters (2024Q1-2025Q1) had revenue as high as $674.8M, while post-spin quarters (2025Q2 onwards) show a lower base, with 2026Q1 at $606M. This makes year-over-year growth rates unreliable without pro-forma adjustments. The spin-off appears to have improved net margins in some quarters (e.g., 2026Q1 net margin of 13.3% vs. 2025Q1's 12.1%), but the overall earnings quality remains clouded by one-time items.