Mdu Resources Group, Inc. · NYSE:MDU
Mdu Resources — Investor Presentation (March 2020)
45 slides from Mdu Resources's investor presentation, Mar 4, 2020
Slide 1: March 2020 Investor Relations
MARCH 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 #53 460 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 Conductin
Slide 4: Company Overview
COMPANY OVERVIEW A strong infrastructure is the heart of the American economy. It is the natural gas and electricity that power business, industry and our daily lives. It is the pipes and wires that connect our homes, factories, offices and stores to bring them to life. It is the transportation netw
Slide 5: Competitive Position
COMPETITIVE POSITION • 2019 EPS - $1.69 Strong Financial Position • Annualized dividend of $0.83 per share • Strong balance sheet • Licensed to operate in 43 states Highly Scalable and Diversified • Constructive rate mechanisms coupled with frequent rate Operations filings mitigate regulatory lag •
Slide 6: Earnings Contributions
EARNINGS CONTRIBUTIONS FOR THE YEAR ENDED DECEMBER 31, 2019 EARNINGS Regulated Energy 37% Construction 63% EBITDA Regulated Construction Energy 54% 46% 6
Slide 7: Capital Expenditures
CAPITAL EXPENDITURES Electric and natural gas utility − System infrastructure upgrades and $900.00 replacements $20 $800.00 − Natural gas combustion turbine $700.00 $61 $154 Pipeline and midstream $600.00 $20 − North Bakken expansion (millions) $500.00 $167 Construction materials and $304 $157
Slide 8: Strong Financial Position
STRONG EBITDA as of December 31, 2019 is up $131.2 million FINANCIAL or 21% over last year POSITION Capitalization ratio of 55.9% equity EBITDA Growth (As of December 31) Strong investment grade credit ratings 800 $753.0 $621.8 600 Fitch BBB+ 400 2018 S&P BBB+ 200 2019 0 2018 2019 Capitalizati
Slide 9: Dividend Growth
DIVIDEND $0.85 GROWTH $0.83 82 consecutive years of $0.80 quarterly dividend payments Dividend increased Annualized Dividend Rate November 2019, making 29 $0.75 $0.75 consecutive years of increases Annualized dividend $0.83 per share $0.70 Member of S&P High-Yield Dividend Aristocrats index
Slide 10: Key Performance Indicators
KEY PERFORMANCE INDICATORS AS OF DECEMBER 31, 2019 Operating Revenues Net Income (in billions) (in millions) $335.5 $6.00 $5.33 $350.00 $4.53 $300.00 $272.3 $4.50 $250.00 $200.00 $3.00 $150.00 $1.50 $100.00 $50.00 $0.00 $0.00 2018 2019 2018 2019 EBITDA From Continuing Earnings Per Share Operations $
Slide 11: 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 12: Utility Electric & Natural Gas
UTILITY ELECTRIC & NATURAL GAS
Slide 13: Electric and Natural Gas
ELECTRIC AND NATURAL GAS 1,120,800 CUSTOMERS WA 800 MW 221,300 Customers 16.8% Rate Base MT ND OWNED GENERATION 111,500 Customers 206,200 Customers OR 12.4% Rate Base MN 37.7% Rate Base 8,100 77,300 Customers 5.1% Rate Base ID 22,100 Customers 1.3% Rate Base SD MILES OF TRANSMISSION 376,800 Customer
Slide 14: 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 14
Slide 15: 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 16: Regulatory Update
REGULATORY UPDATE Pending cases – MN natural gas: Formal hearing scheduled March 10-11 in St. Paul, MN. Request for $2.8 million annual increase. – ND advance determination of prudence for natural gas combustion turbine filed Aug. 28; formal hearing scheduled April 30 in Bismarck, ND.
Slide 17: Transitioning Our Electric Resources
TRANSITIONING OUR ELECTRIC RESOURCES BASED ON NAME PLATE RATING 11% 27% 28% 31% 20% Forecasted 2013 2018 46% 2023 69% 27% 41% Coal Gas Renewables 17
Slide 18: 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 19: Pipeline
MDU LISTED ==MDU RESOURCES | Building a Strong America’ NYSE
Slide 20: 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 20
Slide 21: 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® 21
Slide 22: 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® 22
Slide 23: 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 23
Slide 24: 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 350 Completed Growth Projects Project In-Service Date MMcf/d Demicks Lake Project
Slide 25: Pipeline Outlook
PIPELINE OUTLOOK North Bakken Expansion project – Will increase capacity, as designed, by an estimated 350 million cubic feet per day – Expected to start construction in early 2021 – Expected to be in service late 2021 Bakken natural gas production expected to remain at record levels demanding a
Slide 26: Construction Services
MDU LISTED EMDU RESOURCES | Building a Strong America: INWZy3 GROUPE
Slide 27: Construction Services
CONSTRUCTION SERVICES 7,200 EMPLOYEES AT PEAK 42 STATES OF OPERATION 6 OUTSIDE CONSTRUCTION COMPANIES 12 INSIDE CONSTRUCTION COMPANIES Ranked 12th on ENR’s Top 600 Specialty Contractors List 27
Slide 28: Service Offerings
SERVICE OFFERINGS TRANSMISSION EXCAVATION DISTRIBUTION RENEWABLES EQUIPMENT INDUSTRIAL STORM WORK FIRE SUPPRESSION 28
Slide 29: 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. 29
Slide 30: Revenue Growth
REVENUE GROWTH AS OF DECEMBER 31 $2,000.0 $1,800.0 14.8% CAGR $1,849.3 $1,600.0 $1,400.0 $1,367.6 $1,371.5 $1,200.0 millions $1,000.0 $1,073.3 $800.0 $926.4 $600.0 $400.0 $200.0 $0.0 2015 2016 2017 2018 2019 30
Slide 31: Earnings Growth
EARNINGS GROWTH $100.0 AS OF DECEMBER 31 $90.0 $93.0 $80.0 $70.0 $60.0 $64.3 millions $50.0 $53.3 $40.0 $30.0 $33.9 $20.0 $23.8 $10.0 $0.0 2015 2016 2017 2018 2019
Slide 32: Customer Satisfaction: Backlog
CUSTOMER SATISFACTION: BACKLOG FOR YEAR ENDED DECEMBER 31 $1,400 $1,200 $1,143 $1,000 $939 $800 millions $708 $600 $400 $493 $475 $200 $0 2015 2016 2017 2018 2019 32
Slide 33: Growing Our Operations
GROWING OUR OPERATIONS Pride Electric, Inc. acquisition completed PerLectric Inc. acquisition completed February September 2019 2020 Expands and strengthens the services portfolio in Expands the geographic footprint into the Mid- the Seattle, WA market Atlantic Region Founded in 1993, Prid
Slide 34: Outlook
OUTLOOK $1.14 billion of backlog, up 22% from 2019 – All-time record backlog High demand for specialty contracting work in the following areas: – High-tech, mission critical area – Gaming and hospitality – Medical and public sector – Electric transmission, distribution and gas utilities Evalua
Slide 35: Construction Materials
CONSTRUCTIONR GROUP INC. iEMDU RESOURCES | Building a Strong America° MDU LISTED NYSE
Slide 36: 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 36
Slide 37: 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 37
Slide 38: Construction Backlog
CONSTRUCTION BACKLOG FOR YEAR ENDED DECEMBER 31 $800.0 $700.0 $706 $693 $600.0 $500.0 $538 $490 $486 millions $400.0 $300.0 $200.0 $100.0 $0.0 2015 2016 2017 2018 2019 38
Slide 39: Revenue Growth
REVENUE GROWTH FOR YEAR ENDED DECEMBER 31 $2,500.0 $2,190.7 $2,000.0 $1,904.3 $1,874.3 $1,925.8 $1,812.5 $1,500.0 millions $1,000.0 $500.0 $0.0 2015 2016 2017 2018 2019 39
Slide 40: Volumes: Upside Potential
VOLUMES: UPSIDE POTENTIAL Aggregates (Tons) Asphalt (Tons) 35 8 Record: 47.2 in 2005 Record: 9.1 in 2005 30 32.3 7 7.2 29.8 6 6.7 6.7 6.8 6.7 25 27.0 27.6 28.2 6.3 6.2 6.1 6.2 25.8 6.0 23.3 24.7 23.3 24.7 5 20 Millions Millions 4 15 3 10 2 5 1 0 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 20
Slide 41: Growing Our Operations
GROWING OUR OPERATIONS GROWTH STRATEGY SPOKANE PRESTRESS Maintain vertical integration Doubles the size of our Prestress Grow in current markets operations – Organic – Bridge components and Commercial buildings – Bolt-On A market leader in the Pacific Explore new platforms Northwest – Focu
Slide 42: Outlook
OUTLOOK Backlog of $693 million as of December 31, 2019 Actively pursuing acquisition opportunities 42
Slide 43: Questions
INVESTOR RELATIONS QUESTIONS
Slide 44: Reconciliation of Non-GAAP Financial Measures: EBITDA 2019
APPENDIX RECONCILIATION OF NON-GAAP FINANCIAL MEASURES: EBITDA For the year ended December 31, 2019 (dollars in millions) Construction Construction Electric Natural Gas Pipeline Total Services Materials Income from $54.8 $39.5 $29.6 $93.0 $120.4 $335.2 continuing ops. Adjustments: Interest Expense 2
Slide 45: Reconciliation of Non-GAAP Financial Measures: EBITDA 2018
APPENDIX RECONCILIATION OF NON-GAAP FINANCIAL MEASURES: EBITDA For the year ended December 31, 2018 (dollars in millions) Construction Construction Electric Natural Gas Pipeline Total Services Materials Income from $47.0 $37.7 $28.5 $64.3 $92.6 $269.4 continuing ops. Adjustments: Interest Expense 25
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