Mdu Resources Group, Inc. · NYSE:MDU
Mdu Resources — 2021 AGA Financial Forum
28 slides from Mdu Resources's conference presentation, May 19, 2021
Slide 1: Investor Presentation June 2021
JUNE 2021 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: MDU Resources is Building a Strong America
MDU Resources is Building a Strong America® eA oh ce 4 With integrity, create superior shareholder value by expanding upon our expertise to be the supplier of choice in all of our markets while being a safe and great place to work. Company founded in 1924 | * Headquartered in Bismarck, ND Utilities
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
FIRST QUARTER EARNINGS EARNINGS EPS $60 $0.30 $52.1 $0.26 $50 $0.25 $40 $0.20 millions $30 $0.15 $0.13 $25.1 $20 $0.10 $10 $0.05 $- $0.00 2020 2021 2020 2021
Slide 6: 2021 EPS Guidance Updated
2021 EPS GUIDANCE UPDATED $2.00 - $2.15 Consolidated EPS Guidance Note: As of May 5, 2021 5 - 8% Long-Term Compound Annual Growth Rate Target 6
Slide 7: Investment Thesis
INVESTMENT THESIS 9.3% EBITDA1 CAGR (2015-2020) Consistent long-term growth 16.7% EPS CAGR (2015-2020) 56% Construction / 44% Regulated Energy Balance of cyclical and counter-cyclical businesses Delivery EBITDA mix (2020) >$1 trillion spending gap in US infrastructure2; Runway of attractive organic
Slide 8: EBITDA Mix Over Time
EBITDA MIX OVER TIME Fundamentally enhanced business mix and improved customer diversification since 2007 Divested volatile Oil & Gas business in 2014-16, eliminating majority of commodity exposure Improved mix of Regulated Energy Delivery earnings and EBITDA, increasing long-term visibility E
Slide 9: Rate Base Organic Growth Drivers
RATE BASE ORGANIC GROWTH DRIVERS Continuous Rate Base growth supported by strong customer growth and system investments Utility earnings growth is driven by capital deployment, resulting in Historical MDU Utilities Group Customer Base growth in Rate Base Organic growth driven in part by positive
Slide 10: Capital Expenditures
CAPITAL EXPENDITURES MDU Resources’ organic investments remain the primary driver of high-quality earnings growth Regulated Energy Delivery Focus Capital Expenditure by Segment ($ 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) $5,000 $4,500 $4,000 $3,500 $3,000 $2,500 Construction Services $2,000 Knife River began in busines
Slide 12: Dividends
DIVIDENDS Long history of dividend increases coupled with payout ratio materially improving post-2015 83 consecutive years of quarterly dividend payments with 30 consecutive years of increases Payout ratio reached 80% following 2014-16 business divestitures – has steadily declined to <50% Memb
Slide 13: Appendix
LISTED EE MDU RESOURCES | Building a Strong America’ [Naas GROUP. NC
Slide 14: Business Segment Overview
BUSINESS SEGMENT OVERVIEW Regulated Energy Delivery Businesses 2020 EBITDA1 ($ in millions) Growing the business by investing in the safety and reliability of our existing system $173 $305 Focused on organic growth first while managing Electric and operating costs Natural Gas Looking to expand
Slide 15: Electric and Natural Gas Snapshot
ELECTRIC AND NATURAL GAS SNAPSHOT 1,145,903 WA CUSTOMERS 225,924 Customers As of 03.31.21 MT 112,262 Customers ND OR 207,599 Customers MN 800 MW 79,660 Customers 22,323 Customers ID OWNED GENERATION SD 390,991 Customers 71,314 Customers WY 35,830 Customers 28,900 MILES OF ELECTRIC AND GAS TRANSMISSI
Slide 16: Electric & Natural Gas Utility
ELECTRIC & NATURAL GAS UTILITY FIRST QUARTER EARNINGS Reported earnings of $46.9 million EARNINGS – Rate relief and increased retail sales $60 volumes at the natural gas segment drove the increase in earnings $50 $46.9 $43.7 – Other income increased during the $40 quarter, primarily higher investm
Slide 17: Pipeline Snapshot
PIPELINE SNAPSHOT 3,700 MILES OF PIPE OVER 2.2 BCF/D SYSTEM CAPACITY 13 INTERCONNECTING POINTS Rate Base1 (Regulated Energy Delivery) Segment EPS 325 ($ in millions) $5,000 $4,229 EMPLOYEES $4,000 $0.25 $3,133 $0.19 $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
PIPELINE FIRST QUARTER EARNINGS Reported record first quarter EARNINGS earnings of $8.9 million $10 $8.9 – Higher customer demand for natural gas storage services was the primary $7.4 contributor to the increase in earnings – Higher AFUDC and higher investment millions returns related to certain b
Slide 19: Construction Services Snapshot
CONSTRUCTION SERVICES SNAPSHOT 7,900 EMPLOYEES AT PEAK 45 STATES OF OPERATION 6 OUTSIDE CONSTRUCTION COMPANIES Segment Revenue and Year-End Backlog Segment EBITDA1 12 ($ in millions) ($ in millions) INSIDE CONSTRUCTION Revenue Backlog COMPANIES $3,000 $200 $173 $2,096 $150 $2,000 Ranked 11th $1,273
Slide 20: Construction Services
CONSTRUCTION SERVICES FIRST QUARTER EARNINGS Reported record first quarter earnings of EARNINGS $29.8 million $35 – Earnings increased as a result of higher outside $30 $29.8 specialty contracting workloads and margins, driven by strong utility customer demand $25 – Partially offsetting the increa
Slide 21: Construction Materials Snapshot
CONSTRUCTION MATERIALS SNAPSHOT NEARLY 6,000 EMPLOYEES AT PEAK SEASON 15 STATES OF OPERATION Segment Revenue and Period-End Backlog Segment EBITDA1 1.1 BILLION ($ in millions) ($ in millions) TONS OF RESERVES $2,500 Revenue Backlog $2,178 $400 $1,877 $305 $2,000 $300 $245 $1,500 TOP 10 $1,000 $483 $
Slide 22: Construction Materials
CONSTRUCTION MATERIALS FIRST QUARTER EARNINGS Reported a lower seasonal loss of SEASONAL LOSS $30.8 million $0 2020 2021 – Gross margin increased during the quarter from higher materials pricing and contracting margins -$10 – Other income increased as a result of higher investment returns on certa
Slide 23: Appendix
At i woke? 4 By a = MDU LISTED | Building a Strong America® NYSE GE MDU RESOURCES GROUP. NC
Slide 24: Financial Guidance
FINANCIAL GUIDANCE Select Historical Results 2021 Guidance Forward Guidance Framework 2015-2020 2015 2020 CAGR Electric & Natural Gas EPS: 5% Rate Base CAGR over 5 years $0.31 $0.50 10% - Utility EPS Customer Growth: 1-2% annually Pipeline EPS $0.07 $0.19 22.1% - - Revenue: $2.1 billion to $2.3 bill
Slide 25: Reconciliation of EBITDA Guidance
RECONCILIATION OF EBITDA GUIDANCE (in millions) Low High Income from continuing operations $393.0 $434.0 Adjustments: Interest expense 95.0 95.0 Income taxes 90.0 99.0 Depreciation, depletion and amortization 297.0 297.0 EBITDA from continuing operations $875.0 $925.0
Slide 26: Reconciliation of EBITDA
RECONCILIATION OF EBITDA ($ in millions) For the year ended December 31 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 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 $390.5 Ops. Adjustments: Inte
Slide 27: Multi-Year Financials
MULTI-YEAR FINANCIALS ($ in millions, except per share data) For the year ended December 31 2015 2016 2017 2018 2019 2020 Revenue $4,014 $4,129 $4,443 $4,532 $5,337 $5,533 Operating Profit $326 $409 $424 $402 $481 $545 Operating Margin 8.1% 9.9% 9.5% 8.9% 9.0% 9.8% EBITDA1 $550 $630 $640 $622 $753 $
Slide 28: Reconciliation of 2020 EBITDA
RECONCILIATION OF 2020 EBITDA ($ in millions) For the year ended December 31, 2020 Construction Construction Other & Electric Natural Gas Pipeline Total Services Materials Eliminations Income from $55.6 $44.0 $37.0 $109.7 $147.3 $(3.1) $390.5 Continuing Ops. Adjustments: Interest Expense 26.7 36.8 7