Mdu Resources Group, Inc. · NYSE:MDU

Mdu Resources — Investor Presentation (December 2019)

42 slides from Mdu Resources's investor presentation, Dec 10, 2019

  1. Slide 1: Investor Relations December 2019

    DECEMBER 2019 INVESTOR RELATIONS

  2. 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

  3. Slide 3: MDU Resources is Building a Strong America

    MDU Resources is Building a Strong America® ior #5 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 Conductin

  4. 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

  5. Slide 5: Earnings Contributions

    EARNINGS CONTRIBUTIONS TRAILING TWELVE MONTH ENDED SEPTEMBER 30, 2019 EARNINGS Regulated Energy 37% Construction 63% 5

  6. Slide 6: 2020-24 Capital Program

    2020-24 CAPITAL Utility Construction Pipeline & Midstream PROGRAM $3,000 TOTAL CAPITAL FORECAST OF $2,870*  Electric and natural gas utility − System infrastructure upgrades and $2,500 $564 replacements − Natural gas combustion turbine  Pipeline and midstream $2,000 − Demicks Lake expansion $805 m

  7. Slide 7: Sound Financial Position

    SOUND FINANCIAL POSITION FOR QUARTER ENDED SEPTEMBER 30 54% Equity / 46% Debt $6,000 $5,000 $4,000 millions $3,000 $2,000 $1,000 $0 2015 2016 2017 2018 2019 Equity Debt 7

  8. Slide 8: 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  2019 annualized dividend $0.83 per share $0.70  Member of S&P High-Yield Dividend Aristocrats i

  9. Slide 9: Utility Electric & Natural Gas

    UTILITY ELECTRIC & NATURAL GAS

  10. Slide 10: Electric and Natural Gas

    ELECTRIC AND NATURAL GAS WA 218,200 Customers MT ND 110,900 Customers 204,900 Customers MN OR 21,400 Customers 76,000 Customers ID SD 370,500 Customers 69,600 Customers WY 35,200 Customers  1,106,700 electric and natural gas customers in 459 communities Electric Natural Gas  143,500 customers  96

  11. Slide 11: 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

  12. Slide 12: 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 12

  13. Slide 13: Electric Generation

    ELECTRIC GENERATION  Announced in February plans to retire aging coal-fired units – Lewis & Clark Station around the end of March 2021 – Heskett Station Units 1 & 2 around the end of March 2022  Construct simple cycle natural gas combustion turbine – 88 megawatts; located adjacent to similar turbi

  14. Slide 14: Electric Regulatory Mechanisms

    ELECTRIC REGULATORY MECHANISMS MT ND SD WY Fuel Clause Adjustment Transmission Rider Environmental/ Renewable Rider Generation Rider Property Tax Tracker Interim Rate Relief Forecasted Test Period Forward Year Test Period 14

  15. Slide 15: Natural Gas Regulatory Mechanisms

    NATURAL GAS REGULATORY MECHANISMS MN MT ND SD WY ID WA OR Purchased Gas Adjustment Full Decoupling Weather Normalization Full Fixed General Service Rate Pipeline Replacement / Integrity Tracker Property Tax Tracker Earnings Sharing Interim Rate Relief Forecasted Test Period Forward Year Test Period

  16. Slide 16: 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

  17. Slide 17: Pipeline & Midstream

    MDU LISTED ==MDU RESOURCES | Building a Strong America’ NYSE

  18. Slide 18: WBI Energy Assets and Operations

    WBI ENERGY ASSETS AND OPERATIONS  Regulated (Approx. 90%) – Approx. 4,000 miles of pipe – Over 2.0 Bcf/d system capacity – 13 Interconnecting points – Largest storage field in N. America  Non-regulated (Approx. 10%) – Gas gathering – Cathodic protection – Energy management 18

  19. Slide 19: 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® 19

  20. Slide 20: 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® 20

  21. Slide 21: 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 21

  22. Slide 22: Upcoming Growth Projects

    WBI Energy-Transmission Non-WBI Transmission Pipeline Gas storage field Demicks Lake Projects Pipeline Interconnect Expansion Projects Upcoming Growth Projects In-Service Project MMcf/d Date Billings (LS 22) 2019 22.5 Demicks Lake 2020 175 Expansion North Bakken 2021 350 Expansion 22

  23. Slide 23: Pipeline & Midstream Outlook

    PIPELINE & MIDSTREAM OUTLOOK  Line Section 22 Expansion project – Will increase capacity, as designed, by 22.5 million cubic feet per day – Expected to be in service in late 2019  Demicks Lake Expansion project – Will increase capacity, as designed, by 175 million cubic feet per day – Expected to

  24. Slide 24: Construction Services

    MDU LISTED EMDU RESOURCES | Building a Strong America: INWZy3 GROUPE

  25. Slide 25: Construction Services

    CONSTRUCTION SERVICES Outside Inside  Power lines  Electrical (43)  Substations  Mechanical  Excavation &  Fire suppression underground  Refineries utilities  Automotive  Equipment & tools  Water treatment rentals and sales Ranked 11th on ENR’s Top 600 Specialty Contractors List  Currentl

  26. Slide 26: Strategy

    STRATEGY  Industry-best safety results  Organic & M&A growth  Earnings growth  Strong cash flow  Retain and attract top talent  Strong customer base, locally and nationally 26

  27. Slide 27: Outside Companies

    OUTSIDE COMPANIES  Capital Electric Line Builders  International Line Builders  Lone Mountain Excavation  Loy Clark Construction  Rocky Mountain Contractors  Wagner-Smith Equipment 27

  28. Slide 28: Inside Companies

    INSIDE COMPANIES  Bell Electrical  Duro Electric Contractors  ESI Electrical  Bombard Contractors Electric  Lone Mountain  Bombard Excavation Mechanical  OEG, Inc  Capital Electric  USI Industrial Construction  Desert Fire Protection 28

  29. Slide 29: Revenue Growth

    REVENUE YEAR-TO-DATE ENDING SEPTEMBER 30 GROWTH $1,600.0 $1,400.0  Year-To-Date revenues of $1,365.4 $1,365.4 million as of $1,200.0 September 30 $1,000.0  2019 revenue guidance $1,010.4 $988.0 $1.75 billion to $1.85 billion millions $800.0 $822.8  2019 margins expected to $687.9 be comparable to

  30. Slide 30: Earnings

    EARNINGS $70.0 YEAR-TO-DATE AS OF SEPTEMBER 30 $60.0 $64.0 $50.0 $40.0 millions $38.5 $30.0 $32.9 $20.0 $20.2 $16.5 $10.0 $0.0 2015 2016 2017 2018 2019

  31. Slide 31: Customer Satisfaction: Backlog

    CUSTOMER SATISFACTION: BACKLOG FOR QUARTER ENDED SEPTEMBER 30 $1,400 $1,200 $1,202 $1,000 $896 $800 millions $600 $676 $518 $400 $458 $200 $0 2015 2016 2017 2018 2019 31

  32. Slide 32: Growing Our Operations

    GROWING OUR OPERATIONS  Pride Electric, Inc. acquisition completed September 2019  Purchase expands and strengthens the services portfolio in the Seattle, WA market  Founded in 1993, Pride Electric provides high-end commercial, industrial and tenant improvement electrical construction, along with

  33. Slide 33: Outlook

    OUTLOOK  $1.20 billion of backlog, up 34% from 2018 – All-time record backlog  2019 revenue guidance $1.75 billion to $1.85 billion – Margins expected to be comparable to or slightly higher than 2018  Currently staffing at record levels with over 7,200 employees  High demand for specialty contra

  34. Slide 34: Construction Materials

    CONSTRUCTIONR GROUP INC. iEMDU RESOURCES | Building a Strong America° MDU LISTED NYSE

  35. Slide 35: Who We Are

    WHO WE ARE  Top 10 U.S. aggregate producer – 6th sand and gravel – 1.0B tons of reserves  Operations in 15 states  5,700 employees in peak season  $2.1B - $2.2B in revenue projected for 2019 35

  36. Slide 36: 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 36

  37. Slide 37: Vertical Integration

    VERTICAL INTEGRATION  Aggregates-based  Asphalt, concrete, liquid asphalt, cement, construction  Advantage over competition  Adds margin 37

  38. Slide 38: Services

    SERVICES  General Contractor  Subcontractor  Aggregate Laydown  Asphalt Paving  Concrete Construction  Site Development  Underground Utilities  Railroad Work  Bridges  Marine Construction 38

  39. Slide 39: Construction Backlog

    CONSTRUCTION BACKLOG FOR QUARTER ENDED SEPTEMBER 30 $800.0 $700.0 $747 $600.0 $580 $590 $500.0 $533 $520 millions $400.0 $300.0 $200.0 $100.0 $0.0 2015 2016 2017 2018 2019 39

  40. Slide 40: Growing Our Operations

    GROWING OUR OPERATIONS Viesko Redi-Mix Molalla Redi-Mix  March 2019  July 2018  Salem, OR  Molalla, OR Honey Creek Deposits Tri-City Paving  February 2019  June 2018  Marble Falls, TX  Little Falls, MN Sweetman Const. Co. Teevin & Fischer  October 2018  April 2018  Sioux Falls, SD  Seasi

  41. Slide 41: Outlook

    OUTLOOK  Backlog of $747 million as of September 30, 2019, up 27% from third quarter 2018 − Record third quarter backlog  2019 revenue guidance range of $2.1 billion to $2.2 billion − Margins expected to be comparable to or slightly higher than 2018  Actively pursuing acquisition opportunities 41

  42. Slide 42: Questions

    INVESTOR RELATIONS QUESTIONS

MDU Resources Group — Investor Presentation (December 2019) on 6ix