Mdu Resources Group, Inc. · NYSE:MDU
Mdu Resources — Q3 2023 Earnings Presentation
28 slides from Mdu Resources's earnings presentation, Nov 2, 2023
Slide 1: Third Quarter Earnings Call
THIRD QUARTER EARNINGS CALL November 2, 2023
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: MDU Resources Group, Inc. Vision, Mission and Values
MDU Resources Group, Inc. Our Vision: With integrity, Building a Strong America® while being a great and safe place to work. Our Mission: Deliver superior value to stakeholders by providing essential infrastructure and services to America. Our Values: 3
Slide 4: Leadership Team
LEADERSHIP TEAM Dave Goodin Nicole Kivisto President & CEO Utilities Group President & CEO Jason Vollmer Rob Johnson Vice President, CFO & Treasurer WBI Energy President Stephanie Barth Jeff Thiede Vice President, CAO & Controller MDU Construction Services Group President & CEO 4
Slide 5: Spinoff Announcement
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Slide 6: Announced Plan to Spin Off Construction Services Business
ANNOUNCED PLAN TO SPIN OFF CONSTRUCTION SERVICES BUSINESS MDU Resources’ Board of Directors approved a plan to spin off MDU Construction Services Group from the Company – Spinoff will result in two independent, publicly traded companies – Expected to be effected as a tax-free spinoff to MDU shareh
Slide 7: Financial Results
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Slide 8: Third Quarter Earnings
MDU RESOURCES GROUP, INC. THIRD QUARTER EARNINGS GAAP EARNINGS GAAP EPS $160 $0.80 $147.9 $0.73 $140 $0.70 $120 $0.60 $100 $0.50 millions $80 $74.9 $0.40 $0.37 $60 $0.30 $40 $0.20 $20 $0.10 $- $- 2022 2023 2022 2023 8
Slide 9: Third Quarter Adjusted Income from Continuing Operations
MDU RESOURCES GROUP, INC. THIRD QUARTER ADJUSTED INCOME FROM CONTINUING OPERATIONS ADJUSTED INCOME* ADJUSTED EPS* $70 $0.35 $60 $58.6 $0.30 $0.29 $50 $0.25 $42.3 $0.21 $40 $0.20 millions $30 $0.15 $20 $0.10 $10 $0.05 $- $- 2022 2023 2022 2023 *Adjusted to reflect the unrealized gain on the retained
Slide 10: Electric & Natural Gas Utility
ELECTRIC & NATURAL GAS UTILITY THIRD QUARTER EARNINGS Earnings of $3.2 million GAAP EARNINGS $4 – Higher total electric retail sales volumes, $3.5 largely due to a new large-volume $3.2 commercial customer $3 – Lower residential volumes due to cooler weather millions $2 – Higher utility operation
Slide 11: Pipeline
PIPELINE THIRD QUARTER EARNINGS Record third quarter earnings of GAAP EARNINGS $11.9 million $14 $11.9 – Record quarterly transportation volumes, $12 largely from increased contracted volume $9.8 $10 commitments on the North Bakken Expansion project $8 millions – Higher storage-related revenues $6
Slide 12: Construction Services
CONSTRUCTION SERVICES THIRD QUARTER EARNINGS Record third quarter earnings of GAAP EARNINGS $36.0 million $40 $36.0 – Strong demand for institutional work, $35 particularly heath care and government $30 $28.0 clients $25 – Higher demand for utility-related millions transmission and distribution wo
Slide 13: Regulatory Update
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Slide 14: Regulatory Update
REGULATORY UPDATE Annual Revenue Annual Revenue Business Jurisdiction Filing Date Status Increase (%) Increase (in millions) Electric North Dakota Approved June 6, 2023 May 16, 2022 7.4% $15.3M Utility Electric New rates effective July 1, 2023 Natural Gas Idaho Natural Approved June 30, 2023 Dec. 1,
Slide 15: Segment Outlook
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Slide 16: Electric & Natural Gas Outlook
ELECTRIC & NATURAL GAS OUTLOOK Expects to grow rate base by 6-7% compounded annually over the next five years Safely meet customer demand by upgrading and expanding infrastructure and facilities Customer base expected to continue growing by 1-2% annually. Focused on timely regulatory recover
Slide 17: Pipeline Outlook
PIPELINE OUTLOOK Will continue to benefit from increased North Bakken Expansion contracted volume commitments, which began Feb. 1, 2023 Will continue to benefit from new transportation and storage service rates, which were effective Aug. 1, 2023 The company began construction in the second qua
Slide 18: Construction Services Outlook
CONSTRUCTION SERVICES OUTLOOK Announced plan to spin off this business into an independent publicly traded company Third quarter backlog of $1.85 billion, compared to $2.0 billion in 2022 The Infrastructure Investment and Jobs Act and Inflation Reduction Act propose billions of dollars of inve
Slide 19: 2023 Guidance
2023 GUIDANCE Regulated Energy Delivery Businesses Increased earnings guidance range to $155 million to $165 million, up $5 million from previous range of $150 million to $160 million Construction Services Revenues expected to be in the range of $2.80 billion to $3.00 billion in 2023, with h
Slide 20: Spinoff Overview
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Slide 21: Strategic Rationale
STRATEGIC RATIONALE Heightened strategic focus to pursue individualized strategies specific to the industries in which each company operates Optimized capital structures and distinct financial policies tailored to their separate business profiles and needs Tailored capital allocation strategies with
Slide 22: Creating Two Publicly Traded Companies
CREATING TWO PUBLICLY TRADED COMPANIES 22
Slide 23: Transaction Details
TRANSACTION DETAILS • Planned as a spinoff that is tax-free to MDU Resources shareholders Transaction • Upon completion of the spinoff, MDU Resources shareholders will retain current shares Structure of MDU Resources stock and receive a pro-rata distribution of shares of MDU Construction Services Gr
Slide 24: Leadership Transition
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Slide 25: Leadership Transition
LEADERSHIP TRANSITION DAVID GOODIN Has been w ith MDU Resources for 40 years and has serv ed as CEO for 10 years Prev iously served as President and CEO for Cascade Natural Gas, Great Plains Natural Gas, I ntermountain Gas and Montana-Dakota Utilities Announced intent to retire, effective Jan.
Slide 26: Questions
QUESTIONS
Slide 27: Appendix
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Slide 28: Reconciliation of EBITDA Guidance
RECONCILIATION OF EBITDA GUIDANCE ($ in millions) As of November 2, 2023 Construction Services Low High Income from continuing operations $125.0 $140.0 Adjustments: Interest expense 20.0 20.0 Income taxes 40.0 45.0 Depreciation, depletion and 25.0 25.0 amortization EBITDA from continuing operations1