Mdu Resources Group, Inc. · NYSE:MDU
Mdu Resources — Investor Presentation (September 2021)
30 slides from Mdu Resources's investor presentation, Sep 22, 2021
Slide 1: Investor Presentation September 2021
SEPTEMBER 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: 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 5: Key Performance Indicators
KEY PERFORMANCE INDICATORS YTD AS OF JUNE 30, 2021 Operating Revenues Net Income (in billions) (in millions) $3.00 $2.56 $2.65 $200.00 $152.3 $150.00 $124.8 $2.00 $100.00 $1.00 $50.00 $0.00 $0.00 2020 2021 2020 2021 EBITDA From Continuing Earnings Per Share Operations $500.00 (in millions) $1.00 $38
Slide 6: EBITDA Mix Over Time
EBITDA MIX OVER TIME Fundamentally enhanced business mix and improved customer diversification since 2007 Divested volatile Oil & Gas business in 2014-16, eliminating majority of commodity exposure Improved mix of Regulated Energy Delivery earnings and EBITDA, increasing long-term visibility E
Slide 7: Capital Expenditures
CAPITAL EXPENDITURES MDU Resources’ organic investments remain the primary driver of high-quality earnings growth Regulated Energy Delivery Focus Capital Expenditure by Segment ($ in millions) Capital investments primarily in regulated businesses where rates of return have a high level of certaint
Slide 8: 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 $2,000 Knife River began in busines
Slide 9: Segment Overview
LISTED ==MDU RESOURCES | Building a Strong America’ NYSE GROUP.
Slide 10: Business Segment Overview
BUSINESS SEGMENT OVERVIEW Regulated Energy Delivery Businesses 2021 EBITDA1 YTD as of June 30 ($ in millions) Growing the business by investing in the safety and reliability of our existing system $90 Focused on organic growth first while managing $166 Electric and operating costs Natural Gas $8
Slide 11: Construction Services Snapshot
CONSTRUCTION SERVICES SNAPSHOT 7,900 EMPLOYEES AT PEAK 43 STATES OF OPERATION 6 OUTSIDE CONSTRUCTION COMPANIES Segment Revenue and Year-End Backlog Segment EBITDA1 12 ($ in millions) ($ in millions) INSIDE CONSTRUCTION Revenue Backlog COMPANIES $3,000 $200 $173 $2,096 $150 $2,000 Ranked 4th $1,273 $
Slide 12: Construction Services Second Quarter Earnings
CONSTRUCTION SERVICES SECOND QUARTER EARNINGS Reported record second quarter earnings EARNINGS of $28.9 million $35 – Increase driven by higher inside specialty contracting workloads from $30 $27.9 $28.9 strong demand from commercial and $25 industrial work, as well as higher outside specialty con
Slide 13: Supplemental Growth via M&A
SUPPLEMENTAL GROWTH VIA M&A 25 acquisitions since inception Expanding into new geographies and services Segment Revenue by acquiring complementary brands that ($ in millions) enhance our portfolio $2,500 Continued expansion into new product and geographic markets, helping to enhance scale and bran
Slide 14: Multiple High-Growth Opportunities
MULTIPLE HIGH-GROWTH OPPORTUNITIES Infrastructure spending gap creates multiple levers for long-term growth 2020-2029 Infrastructure Systems1 Funding Gap >$1.5 trillion spending gap in U.S. infrastructure Surface Transportation $1,205 drives large opportunity for MDU Construction Electricity $197
Slide 15: Construction Materials Snapshot
CONSTRUCTION MATERIALS SNAPSHOT NEARLY 6,000 EMPLOYEES AT PEAK SEASON 14 STATES OF OPERATION Segment Revenue and Period-End Backlog Segment EBITDA1 1.1 BILLION ($ 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 16: Construction Materials Second Quarter Earnings
CONSTRUCTION MATERIALS SECOND QUARTER EARNINGS Reported earnings of $51.4 million EARNINGS – Earnings decrease driven by higher $60 selling, general and administrative $53.0 $51.4 expense, primarily labor related $50 expenses – Lower returns on certain benefit plans $40 also negatively impacted re
Slide 17: Aggregates Focused
AGGREGATES FOCUSED KRC Aggregates Overview Aggregates Sales Volume Top 10 aggregate producer in the U.S. (Tons in millions) Well-positioned to expand market share given increasing reach and 34 32.3 32 30.9 robust aggregate reserves 29.8 30 28.2 Steady growth in aggregates sales volume since 20
Slide 18: Bolt-On M&A
BOLT-ON M&A Knife River was built through a combination of organic growth and 85 acquisitions Ample bolt-on M&A opportunities Segment Revenue ($ in millions) Familiarity with local markets Ongoing M&A focused on expanding vertically $2,500 Key areas of focus: integrated construction material f
Slide 19: Electric and Natural Gas Snapshot
ELECTRIC AND NATURAL GAS SNAPSHOT 1,147,050 WA CUSTOMERS 225,954 Customers As of 06.30.21 MT 112,176 Customers ND OR 207,208 Customers MN 765 MW 79,759 Customers 22,261 Customers ID OWNED GENERATION SD 392,367 Customers 71,301 Customers WY 36,024 Customers 28,900 MILES OF ELECTRIC AND GAS TRANSMISSI
Slide 20: Electric & Natural Gas Utility Second Quarter Earnings
ELECTRIC & NATURAL GAS UTILITY SECOND QUARTER EARNINGS Reported earnings of $9.6 million EARNINGS – Earnings were impacted by higher $20 operating expenses, primarily labor- related costs – Lower investment returns on certain benefit plans also impacted earnings $11.2 $9.6 millions – Rate recovery
Slide 21: Rate Base Organic Growth Drivers
RATE BASE ORGANIC GROWTH DRIVERS Continuous rate base growth supported by strong customer growth and system investments Historical MDU Utilities Group Customer Base Utility earnings growth is driven by capital deployment, resulting in rate base growth 1,150,000 1.7% CAGR (2015-20) Rates are agre
Slide 22: Pipeline Snapshot
PIPELINE SNAPSHOT 3,700 MILES OF PIPE OVER 2.2 BCF/D SYSTEM CAPACITY 13 INTERCONNECTING POINTS Rate Base1 (Regulated Energy Delivery) Segment EPS 325 ($ 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 23: Pipeline Second Quarter Earnings
PIPELINE SECOND QUARTER EARNINGS Reported earnings of $9.2 million EARNINGS – Higher non-regulated project revenues $10 $9.0 $9.2 and higher AFUDC drove the increase in earnings – Partially offset by higher operation and maintenance expense, primarily the result of costs associated with the millio
Slide 24: Pipeline Expansion
PIPELINE EXPANSION WBI Energy is actively expanding its services in North Dakota through two key projects North Bakken Expansion Wahpeton Expansion As designed, will provide an additional 250 million Constructing a 60 mile, 12-inch pipeline expansion cubic feet per day of natural gas transportat
Slide 25: Financial Guidance
FINANCIAL GUIDANCE AS OF AUGUST 4, 2021 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% - - Construction
Slide 26: Appendix
At i woke? 4 By a = MDU LISTED | Building a Strong America® NYSE HE MDU RESOURCES GROUP.
Slide 27: 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 $925.0 27
Slide 28: Reconciliation of EBITDA
RECONCILIATION OF EBITDA ($ 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 $390.5 Ops. Adjustments: Inte
Slide 29: Multi-Year Financials
MULTI-YEAR FINANCIALS ($ 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 30: Reconciliation of 2021 EBITDA
RECONCILIATION OF 2021 EBITDA ($ in millions) Six Months Ended June 30, 2021 Construction Construction Other & Electric Natural Gas Pipeline Total Services Materials Eliminations Income from $21.0 $35.5 $18.1 $58.7 $20.6 $(1.6) $152.3 Continuing Ops. Adjustments: Interest Expense 13.2 18.2 3.9 1.8 9
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