Mdu Resources Group, Inc. · NYSE:MDU

Mdu Resources — Investor Presentation (September 2019)

43 slides from Mdu Resources's investor presentation, Sep 19, 2019

  1. Slide 1: Investor Relations September 2019

    SEPTEMBER 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® ion #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 to work. Company founded in 1924 | * Headquartered in Bismarck, ND Conducting

  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: Year-to-Date Results

    YEAR-TO-DATE RESULTS* AS OF JUNE 30, 2019 EARNINGS EPS $120 $0.60 $102.7 $0.52 $100 $0.50 $86.2 $0.44 $80 $0.40 millions $60 $0.30 $40 $0.20 $20 $0.10 $0 $0.00 2018 2019 2018 2019 * Includes both continuing and discontinued operations 5

  6. Slide 6: Earnings Contributions

    EARNINGS CONTRIBUTIONS TRAILING TWELVE MONTH ENDING JUNE 30, 2019 EARNINGS Regulated Energy 42% Construction 58% EBITDA1 Regulated Energy Construction 50% 50% 1 - See Appendix for reconciliation of NON-GAAP financial measures 6

  7. Slide 7: 2019-23 Capital Program

    2019-23 CAPITAL Utility Construction Pipeline & Midstream PROGRAM $3,000 TOTAL CAPITAL FORECAST OF $2,740*  Electric and natural gas utility − System infrastructure upgrades and $2,500 $473 replacements − Natural gas combustion turbine  Pipeline and midstream $2,000 − Demicks Lake project $787 mil

  8. Slide 8: Sound Financial Position

    SOUND FINANCIAL POSITION FOR QUARTER ENDED JUNE 30 52% Equity / 48% Debt $6,000 $5,000 $4,000 millions $3,000 $2,000 $1,000 $0 2015 2016 2017 2018 2019 Equity Debt 8

  9. Slide 9: Dividend Growth

    DIVIDEND $0.85 GROWTH $0.81  81 consecutive years of $0.80 quarterly dividend payments  Dividend increased Annualized Dividend Rate November 2018, making 28 $0.75 consecutive years of increases $0.73  2018 annualized dividend $0.81 per share $0.70  Member of S&P High-Yield Dividend Aristocrats i

  10. Slide 10: Construction Services

    INVESTOR RELATIONS SEPTEMBER 2019 CONSTRUCTION SERVICES

  11. Slide 11: 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

  12. Slide 12: 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 12

  13. Slide 13: Outside Companies

    OUTSIDE COMPANIES  Capital Electric Line Builders  International Line Builders  Lone Mountain Excavation  Loy Clark Construction  Rocky Mountain Contractors  Wagner-Smith Equipment 13

  14. Slide 14: Inside Companies

    INSIDE COMPANIES  Bell Electrical  ESI Electrical Contractors Contractors  Bombard  Lone Mountain Electric Excavation  Bombard  OEG, Inc Mechanical  USI Industrial  Capital Electric  Wagner Construction Industrial Electric  Desert Fire Protection  Duro Electric 14

  15. Slide 15: Revenue Growth

    REVENUE YEAR-TO-DATE ENDING JUNE 30 GROWTH $1,000.0 $900.0 $885.7  Year-To-Date revenues $800.0 of $885.7 million as of June 30 $700.0 $657.6  Record year-to-date $600.0 $635.9 earnings of $42.9 million millions $500.0 $542.0  2019 revenue guidance $400.0 $462.1 $1.6 billion to $1.8 billion $300.

  16. Slide 16: Earnings

    EARNINGS $50.0 YTD as of June 30 $40.0 $42.9 $30.0 millions $29.2 $20.0 $19.8 $10.0 $13.0 $11.8 $0.0 2015 2016 2017 2018 2019

  17. Slide 17: Customer Satisfaction: Backlog

    CUSTOMER SATISFACTION: BACKLOG FOR QUARTER ENDED JUNE 30 $1,400 $1,200 $1,148 $1,000 $800 $888 millions $600 $596 $508 $400 $429 $200 $0 2015 2016 2017 2018 2019 17

  18. Slide 18: Outlook

    OUTLOOK  $1.15 billion of backlog, up 30% from 2018 – Record second quarter backlog  2019 revenue guidance $1.6 billion to $1.8 billion – Margins expected to be comparable to 2018  Currently staffing at record levels with over 6,500 employees  High demand for specialty contracting work in the fo

  19. Slide 19: Construction Materials

    INVESTOR RELATIONS SEPTEMBER 2019 CONSTRUCTION MATERIALS

  20. Slide 20: 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  $2.0B - $2.2B in revenue projected for 2019 20

  21. Slide 21: 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 21

  22. Slide 22: Vertical Integration

    VERTICAL INTEGRATION  Aggregates-based  Asphalt, concrete, liquid asphalt, cement, construction  Advantage over competition  Adds margin 22

  23. Slide 23: Services

    SERVICES  General Contractor  Subcontractor  Aggregate Laydown  Asphalt Paving  Concrete Construction  Site Development  Underground Utilities  Railroad Work  Bridges  Marine Construction 23

  24. Slide 24: Construction Backlog

    CONSTRUCTION BACKLOG FOR QUARTER ENDED JUNE 30 $1,200.0 $1,000.0 $1,042 $800.0 $833 $805 $766 $731 millions $600.0 $400.0 $200.0 $0.0 2015 2016 2017 2018 2019 24

  25. Slide 25: 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

  26. Slide 26: Outlook

    OUTLOOK  Backlog of $1.04 billion as of June 30, 2019, up 42% from first quarter 2018 − All-time record backlog  2019 revenue guidance range of $2.0 billion to $2.2 billion − Margins expected to be comparable to or slightly higher than 2018  Actively pursuing acquisition opportunities 26

  27. Slide 27: Utility Electric & Natural Gas

    INVESTOR RELATIONS SEPTEMBER 2019 UTILITY ELECTRIC & NATURAL GAS

  28. Slide 28: Electric and Natural Gas

    ELECTRIC AND NATURAL GAS WA 217,600 Customers MT ND 110,800 Customers 205,000 Customers MN OR 21,500 Customers 75,800 Customers ID SD 368,300 Customers 69,500 Customers WY 35,100 Customers  1,103,600 electric and natural gas customers in 459 communities Electric Natural Gas  143,400 customers  96

  29. Slide 29: 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

  30. Slide 30: Transitioning Our Electric Resources

    TRANSITIONING OUR ELECTRIC RESOURCES BASED ON NAME PLATE RATING 11% 27% 20% 46% 2013 2018 69% 27% Coal Gas Renewables 30

  31. Slide 31: 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

  32. Slide 32: 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 32

  33. Slide 33: 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

  34. Slide 34: 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

  35. Slide 35: Pipeline & Midstream

    INVESTOR RELATIONS SEPTEMBER 2019 PIPELINE & MIDSTREAM

  36. Slide 36: WBI Energy Assets and Operations

    WBI ENERGY ASSETS AND OPERATIONS  Regulated (Approx. 90%) – Approx. 4,000 miles of pipe – Over 1.8 Bcf/d system capacity – 13 Interconnecting points – Largest storage field in N. America  Non-regulated (Approx. 10%) – Gas gathering – Cathodic protection – Energy management 36

  37. Slide 37: 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® 37

  38. Slide 38: 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® 38

  39. Slide 39: 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 23 of 30 natural gas plants  6 Bakken interconnects  WBI moves over 50% of Bakken gas  More takeaway capacity needed 39

  40. Slide 40: 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 Demicks Lake 2019 175 Billings (LS 22) 2019 22.5 Demicks Lake 2020 175 Expansion North Bakken 2021 300 Expans

  41. Slide 41: Midstream Outlook

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

  42. Slide 42: Questions

    INVESTOR RELATIONS QUESTIONS

  43. Slide 43: Appendix: Reconciliation of Non-GAAP Financial Measures: EBITDA

    APPENDIX RECONCILIATION OF NON-GAAP FINANCIAL MEASURES: EBITDA Trailing Twelve Month Ended June 30, 2019 (dollars in millions) Construction Construction Electric Natural Gas Pipeline Services Materials Earnings $47.8 $42.2 $31.4 $78.0 $86.5 Adjustments: Interest Expense 25.4 33.0 7.1 4.2 21.3 Income

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