Mdu Resources Group, Inc. · NYSE:MDU
Mdu Resources — American Gas Association Financial Forum 2022
28 slides from Mdu Resources's conference presentation, May 18, 2022
Slide 1: American Gas Association – May 2022 Investor Presentation
AMERICAN GAS ASSOCIATION – MAY 2022 INVESTOR PRESENTATION
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS During the course of this presentation, we will make certain “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934. Although the company believes that its expectations and beliefs are based on reasonable assumptions, actual r
Slide 3: Vision and Mission
Vision: With integrity, Building a Strong America® while being a great and safe place to work Mission: Delivering superior value to stakeholders by providing essential infrastructure and services to America 3
Slide 4: Company Overview
COMPANY OVERVIEW Infrastructure is our business, and we are Building a Strong America®. Powering and connecting homes, factories, offices and stores. Building roads, highways, data infrastructure and airports. MDU Resources keeps our economy moving. High Quality Portfolio of Businesses Diversified E
Slide 5: First Quarter Earnings
MDU RESOURCES GROUP, INC. FIRST QUARTER EARNINGS EARNINGS EPS $60 $0.30 $52.1 $0.26 $50 $0.25 $40 $0.20 $31.7 $0.16 millions $30 $0.15 $20 $0.10 $10 $0.05 $- $- 2021 2022 2021 2022 5
Slide 6: Consolidated EPS Guidance
2022 EPS GUIDANCE AFFIRMED $2.00 - $2.15 Consolidated EPS Guidance Note: As of May 4, 2022 5 - 8% Long-Term Compound Annual Growth Rate Target 6
Slide 7: Investment Thesis
INVESTMENT THESIS 6.4% EBITDA1 CAGR (2016-2021) Consistent long-term growth 9.5% EPS CAGR (2016-2021) 54% Construction / 46% Regulated Energy Balance of cyclical and counter-cyclical businesses Delivery EBITDA mix (2021) Runway of attractive organic and inorganic growth >$1 trillion spending gap in
Slide 8: EBITDA Mix Over Time
EBITDA MIX OVER TIME Fundamentally enhanced business mix and improved customer diversification since 2007 Divested volatile Oil & Gas business in 2014-16, eliminating majority of commodity exposure Improved mix of Regulated Energy Delivery earnings and EBITDA, increasing long-term visibility E
Slide 9: Rate Base Organic Growth Drivers
RATE BASE ORGANIC GROWTH DRIVERS Continuous Rate Base growth supported by strong customer growth and system investments Utility earnings growth is driven by capital deployment, resulting in Historical MDU Utilities Group Customer Base growth in Rate Base 1.7% CAGR (2016-21) Organic growth is dri
Slide 10: Capital Expenditures
CAPITAL EXPENDITURES MDU Resources’ organic investments remain the primary driver of high-quality earnings growth Regulated Energy Delivery Focus Capital Expenditure by Segment ($ in millions) Capital investments primarily in regulated businesses where rates of return have a high level of certaint
Slide 11: Growth in Construction
GROWTH IN CONSTRUCTION Built through a combination of acquisitions and organic expansion, Construction Materials and Services provide high return, long-term growth Construction Revenue ($ in millions) $4,500 $4,000 $3,500 $3,000 $2,500 $2,000 Construction Services Knife River began in business began
Slide 12: Dividends
DIVIDENDS Long history of dividend increases coupled with payout ratio materially improving post-2015 84 consecutive years of quarterly dividend payments with 31 consecutive years of increases Payout ratio reached 80% following 2014-16 business divestitures – has steadily declined to <50% Long
Slide 13: Segment Overview
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Slide 14: Business Segment Overview
BUSINESS SEGMENT OVERVIEW Regulated Energy Delivery Businesses 2021 EBITDA1 ($ in millions) Growing the business by investing in the safety and reliability of our existing system $169 Focused on organic growth first while managing $321 Electric and operating costs Natural Gas Looking to expand
Slide 15: Electric and Natural Gas Snapshot
ELECTRIC AND NATURAL GAS SNAPSHOT 1,165,043 WA MT 113,011 Customers 228,940 Customers Customers As of 03.31.22 ND 208,487 Customers MN OR SD 735 MW 22,382 Customers 81,334 Customers ID WY 72,198 Customers 402,305 36,386 Owned Generation Customers Customers 29,800 Miles of Electric and Gas Transmissi
Slide 16: Electric & Natural Gas Utility First Quarter Earnings
ELECTRIC & NATURAL GAS UTILITY FIRST QUARTER EARNINGS Reported earnings of $47.6 million EARNINGS – Electric retail sales volumes increased $60 2.5% and natural gas retail sales $47.6 $50 $46.9 volumes increased 9.0% – Rate recovery in several jurisdictions $40 and higher electric transmission rev
Slide 17: Pipeline Snapshot
PIPELINE SNAPSHOT 3,800 Miles of Pipe OVER 2.4 BCF/D System Capacity 14 Interconnecting Points Rate Base1 (Regulated Energy Delivery) Segment EPS 315 ($ in millions) $5,000 $4,363 Employees $4,000 $3,468 $0.25 $0.20 $3,000 $0.20 $0.18 $1,772 $0.15 LARGEST $2,000 $1,000 $0.10 Storage Field in $0 $0.0
Slide 18: Pipeline First Quarter Earnings
PIPELINE FIRST QUARTER EARNINGS EARNINGS $10 Reported earnings of $7.3 million $9 $8.9 – Higher transportation revenue due to $8 $7.3 the North Bakken Expansion project $7 – More than offset by lower storage- $6 related revenue, higher operating millions $5 expenses and lower investment returns $4
Slide 19: Construction Services Snapshot
CONSTRUCTION SERVICES SNAPSHOT 8,300+ Skilled Employees at Peak 43 States of Operation 6 Transmission and Distribution Construction Companies Segment Revenue and Year-End Backlog Segment EBITDA1 10 ($ in millions) ($ in millions) Electrical & Mechanical Revenue Backlog Construction Companies $3,000
Slide 20: Construction Services First Quarter Earnings
CONSTRUCTION SERVICES FIRST QUARTER EARNINGS Reported earnings of $21.3 million EARNINGS – Decrease was largely driven by lower $35 margins $29.8 $30 T&D performed less storm-repair and fire- hardening power line work than prior year $25 $21.3 E&M had lower industrial margins due to $20 projec
Slide 21: Construction Materials Snapshot
CONSTRUCTION MATERIALS SNAPSHOT 5,600+ Employees at Peak 14 States of Operation VERTICAL INTEGRATION Segment Revenue and Period-End Backlog Segment EBITDA1 Which lowers risk and ($ in millions) ($ in millions) captures values Revenue Backlog $2,500 $2,229 $400 $1,877 $293 $2,000 $300 $245 $1,500 $20
Slide 22: Construction Materials First Quarter Earnings
CONSTRUCTION MATERIALS FIRST QUARTER EARNINGS Reported a seasonal loss of $40.0 SEASONAL LOSS million 2021 2022 $- – Earnings decrease was driven by higher operating expenses, including fuel, $(10) materials and labor costs – Partially offset by increased average product pricing $(20) millions R
Slide 23: Appendix
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Slide 24: Financial Guidance
FINANCIAL GUIDANCE 2022 Guidance Select Historical Results Forward Guidance Framework As of May 4, 2022 2016-2021 ($ in millions except EPS) 2016 2021 CAGR Electric & Natural Gas Utility 5% Rate Base CAGR over 5 years $69.3 $103.5 8.4% - Earnings Customer Growth: 1-2% annually Pipeline Earnings $23.
Slide 25: Reconciliation of EBITDA Guidance
RECONCILIATION OF EBITDA GUIDANCE (in millions) Low High Income from continuing operations $390.0 $430.0 Adjustments: Interest expense 95.0 95.0 Income taxes 95.0 105.0 Depreciation, depletion and amortization 320.0 320.0 EBITDA from continuing operations $900.0 $950.0 25
Slide 26: Reconciliation of EBITDA
RECONCILIATION OF EBITDA ($ in millions) For the year ended December 31 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Income from Continuing $307.8 $322.8 $293.7 ($123.3) $244.0 $226.0 ($14.3) $168.7 $185.0 $176.4 $233.1 $285.0 $269.4 $335.2 $390.5 $377.7 Ops. Adjus
Slide 27: Multi-Year Financials
MULTI-YEAR FINANCIALS ($ in millions, except per share data) For the year ended December 31 2015 2016 2017 2018 2019 2020 2021 Revenue $4,014 $4,129 $4,443 $4,532 $5,337 $5,533 $5,681 Operating Profit $326 $409 $424 $402 $481 $545 $534 Operating Margin 8.1% 9.9% 9.5% 8.9% 9.0% 9.8% 9.4% EBITDA1 $550
Slide 28: Reconciliation of 2021 EBITDA
RECONCILIATION OF 2021 EBITDA ($ in millions) For the year ended December 31, 2021 Construction Construction Other & Electric Natural Gas Pipeline Total Services Materials Eliminations Income from $51.9 $51.6 $40.9 $109.4 $129.8 $(5.9) $377.7 Continuing Ops. Adjustments: Interest Expense 26.7 37.3 7
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