Mdu Resources Group, Inc. · NYSE:MDU
Mdu Resources — December 2020 Bank of America Utility Conference
39 slides from Mdu Resources's conference presentation, December 2020
Slide 1: Investor Relations December 2020
DECEMBER 2020 INVESTOR RELATIONS
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® ion #53 40 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 fo work. Company founded in 1924 | * Headquartered in Bismarck, ND Conducting
Slide 4: Competitive Position
COMPETITIVE POSITION • 2020 YTD EPS of $1.39; Up 16% from same period in 2019 • Annualized dividend of $0.85 per share. 83 consecutive years Strong Financial Position of quarterly dividend payments • Increased 2020 EPS guidance to a range of $1.80 - $1.90 • Licensed to operate in 43 states Highly Sc
Slide 5: Key Performance Indicators
KEY PERFORMANCE INDICATORS YTD AS OF SEPTEMBER 30, 2020 Operating Revenues Net Income (in billions) (in millions) $5.00 $300.00 $277.9 $3.96 $4.15 $240.4 $4.00 $250.00 $200.00 $3.00 $150.00 $2.00 $100.00 $1.00 $50.00 $0.00 $0.00 2019 2020 2019 2020 EBITDA From Continuing Earnings Per Share Operation
Slide 6: Company Overview
COMPANY OVERVIEW Diversified Earnings Contribution YTD AS OF SEPTEMBER 30, REVENUES EBITDA EARNINGS CEO EARNINGS 2020 (IN MILLIONS) (IN MILLIONS) (IN MILLIONS) EXPERIENCE Regulated ELECTRIC $250.4 $99.1 $40.3 26 YEARS Energy 29% NATURAL GAS $563.2 $102.0 $13.8 26 YEARS Construction 71% PIPELINE $107
Slide 7: Capital Expenditures
CAPITAL EXPENDITURES Electric and natural gas utility − System infrastructure upgrades and $900 $46 replacements $800 − Natural gas combustion turbine $700 $189 $34 Pipeline $35 $600 − North Bakken expansion $154 (millions) $500 Construction materials and $230 $150 $74 services $400 $110 − Equ
Slide 8: Capital Allocation Framework
CAPITAL ALLOCATION FRAMEWORK MDU Resources’ long operating history in local markets brings insight into the highest return investment opportunities Capital Allocation Philosophy Capital Allocation History ($ in millions) Approach each opportunity with an owner mindset – capital is scarce and shoul
Slide 9: Dividend Growth
DIVIDEND $0.90 GROWTH $0.85 $0.85 83 consecutive years of quarterly dividend payments Dividend increased $0.80 Annualized Dividend Rate November 2020, making 30 consecutive years of increases $0.75 $0.75 Annualized dividend $0.85 per share Member of S&P High-Yield $0.70 Dividend Aristocrats
Slide 10: Board Governance and Leadership
BOARD GOVERNANCE AND LEADERSHIP Committees of the Board of Directors 1 Director 20+ Years Director Audit Compensation Environmental Nominating & & Sustainability Governance Chenxi Wang 4 Directors 10-20 Years David M. Sparby 5 Directors Edward A. Ryan 1-10 Years John K. Wilson Karen B. Fagg Mark A.
Slide 11: COVID-19 – Our Response
COVID-19 – OUR RESPONSE Our products and services considered essential – Operations permitted to proceed with increased social distancing measures for our more than 15,600 employees Health and safety of employees, customers and communities a priority – Implemented work from home policies where a
Slide 12: Utility Electric & Natural Gas
UTILITY ELECTRIC & NATURAL GAS
Slide 13: Electric and Natural Gas
ELECTRIC AND NATURAL GAS 1,130,920 CUSTOMERS WA 800 MW 222,520 Customers MT ND OWNED GENERATION 111,700 Customers 206,900 Customers OR MN 8,100 78,100 Customers ID 22,100 Customers SD MILES OF ELECTRIC T&D 383,350 Customers 70,580 Customers 20,300 WY 35,670 Customers MILES OF GAS DISTRIBUTION 1,600
Slide 14: Strategy
STRATEGY Grow the business by investing in the safety and reliability of our existing system Focus on organic growth first while managing operating costs Look to expand into areas where similar operating and growth objectives exist Pillars to success –Integrity, safety, employees, customers
Slide 15: Customer Growth Rates
CUSTOMER GROWTH RATES Combined Utility 1,150,000 1.33% 5-Year CAGR 1,100,000 1,050,000 1,000,000 950,000 900,000 850,000 800,000 750,000 700,000 2015 2016 2017 2018 2019 15
Slide 16: Regulatory Filings Update
REGULATORY FILINGS UPDATE Montana - $8.56 million natural gas rate increase request filed June 22, 2020 – Effective date to be determined – Requested interim of $4.8 million; not to be implemented before February 1, 2021 North Dakota - $8.97 million general natural gas rate increase request file
Slide 17: Utility Electric & Natural Gas Outlook
UTILITY ELECTRIC & NATURAL GAS OUTLOOK Safely meet customer demand by upgrading and expanding infrastructure and facilities Customer base expected to continue growing by 1-2% annually Expects to grow rate base by 5% compounded annually over the next five years Focused on timely regulatory re
Slide 18: Pipeline
MDU LISTED ==MDU RESOURCES | Building a Strong America’ NYSE
Slide 19: WBI Energy Assets and Operations
WBI ENERGY ASSETS AND OPERATIONS 4,000 MILES OF PIPE OVER 2.2 BCF/D SYSTEM CAPACITY 14 INTERCONNECTING POINTS 335 EMPLOYEES LARGEST STORAGE FIELD IN N. AMERICA 19
Slide 20: Strategy Statement
STRATEGY STATEMENT Building upon our core strengths and expertise, WBI Energy will become a leader in the Mid-Continent and Rocky Mountain regions in meeting North America’s energy needs BUILDING A STRONG AMERICA® 20
Slide 21: Our Strengths
OUR STRENGTHS Low risk, stable returns with regulated business Integrated pipeline, storage and interconnects in heart of Bakken Experienced, talented team Design, engineer, construct and operate capability BUILDING A STRONG AMERICA® 21
Slide 22: WBI in the Bakken
WBI Energy Transmission Non-WBI Transmission Pipeline Gas storage field Pipeline Interconnect Non-WBI Gas Plants WBI in the Bakken Service to 24 of 31 natural gas plants 6 Bakken interconnects WBI moves over 50% of Bakken gas More takeaway capacity needed 22
Slide 23: Upcoming and Completed Growth Projects
WBI Energy-Transmission Non-WBI Transmission Pipeline Gas storage field Demicks Lake Projects Pipeline Interconnect Expansion Projects Upcoming Growth Projects Project In-Service Date MMcf/d North Bakken Expansion 2021 250 Completed Growth Projects Project In-Service Date MMcf/d Demicks Lake Project
Slide 24: Pipeline Outlook
PIPELINE OUTLOOK North Bakken Expansion project – FERC application filed in February 2020 – Filed FERC amendment application decreasing design capacity and associated project costs in July 2020 – Negotiated adjustments to certain customer contracts and a portion of their first-year committed volum
Slide 25: Construction Services
MDU LISTED EMDU RESOURCES | Building a Strong America: INWZy3 GROUPE
Slide 26: Construction Services
CONSTRUCTION SERVICES 7,900 EMPLOYEES AT PEAK 42 STATES OF OPERATION 6 OUTSIDE CONSTRUCTION COMPANIES 12 INSIDE CONSTRUCTION COMPANIES Ranked 11th on ENR’s Top 600 Specialty Contractors List 26
Slide 27: Service Offerings
SERVICE OFFERINGS TRANSMISSION EXCAVATION INSIDE ELECTRICAL RENEWABLES EQUIPMENT INDUSTRIAL STORM WORK FIRE SUPPRESSION 27
Slide 28: Strategy
STRATEGY To be a top-tier national specialty contractor providing services and support to the electrical and mechanical industries by attracting and retaining a quality workforce across the United States and being a safe and great place to work. 28
Slide 29: Revenue Growth
REVENUE GROWTH YEAR TO DATE ENDING SEPTEMBER 30 $1,800.0 $1,600.0 $1,562.9 $1,400.0 $1,365.4 $1,200.0 $1,000.0 millions $1,010.4 $988.1 $800.0 $822.8 $600.0 $400.0 $200.0 $0.0 2016 2017 2018 2019 2020 29
Slide 30: Earnings Growth
EARNINGS GROWTH $80.0 YEAR TO DATE ENDING SEPTEMBER 30 $70.0 $74.5 $60.0 $64.0 $50.0 millions $40.0 $38.5 $30.0 $32.9 $20.0 $20.2 $10.0 $0.0 2016 2017 2018 2019 2020
Slide 31: Outlook
OUTLOOK $1.28 billion of backlog as of September 30 High demand for specialty contracting work in the following areas: – High-tech, mission critical area – Medical and public sector – Electric transmission, distribution and gas utilities Evaluating additional acquisition opportunities 31
Slide 32: Construction Materials
CONSTRUCTIONR GROUP INC. iEMDU RESOURCES | Building a Strong America° MDU LISTED NYSE
Slide 33: Construction Materials
CONSTRUCTION MATERIALS NEARLY 6,000 EMPLOYEES AT PEAK SEASON 15 STATES OF OPERATION 1.1 BILLION TONS OF RESERVES TOP 10 U.S AGGREGATE PRODUCER 33
Slide 34: Knife River Strategy
KNIFE RIVER STRATEGY Create value by treating our people well and leading our markets in quality, service and safety Enhance shareholder value by generating cash and continued meaningful growth Grow through M&A and greenfield Take advantage of our vertical integration 34
Slide 35: Revenue Growth
REVENUE GROWTH YEAR TO DATE ENDING SEPTEMBER 30 $1,800.0 $1,600.0 $1,692.7 $1,705.9 $1,400.0 $1,476.1 $1,466.9 $1,388.7 $1,200.0 millions $1,000.0 $800.0 $600.0 $400.0 $200.0 $0.0 2016 2017 2018 2019 2020 35
Slide 36: Earnings Growth
EARNINGS GROWTH YEAR TO DATE ENDING SEPTEMBER 30 $140.0 $120.0 $122.1 $100.0 $97.3 $80.0 $88.7 millions $79.7 $60.0 $64.5 $40.0 $20.0 $0.0 2016 2017 2018 2019 2020 36
Slide 37: Outlook
OUTLOOK Backlog of $571 million as of September 30, 2020 Actively pursuing acquisition opportunities Monitoring opportunities surrounding the one-year extension of the FAST Act 37
Slide 38: Questions
INVESTOR RELATIONS QUESTIONS
Slide 39: Reconciliation of Non-GAAP Financial Measures: EBITDA
APPENDIX RECONCILIATION OF NON-GAAP FINANCIAL MEASURES: EBITDA Year to Date as of September 30, 2020 (dollars in millions) Construction Construction Other & Electric Natural Gas Pipeline Total Services Materials Eliminations Income from $40.3 $13.8 $24.3 $74.5 $122.1 $3.4 $278.4 continuing ops. Adju
MDU Resources Group — December 2020 Bank of America Utility Conference on 6ix