MDU - Earnings call transcript Q1 2018 | MDU Resources Group, Inc.

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Operator

Hello. My name is Shelby, and I’ll be your conference facilitator. At this time, I would like to welcome everyone to the MDU Resources Group 2018 First Quarter Conference Call. [Operator Instructions] This call will be available for replay beginning at 5:00 pm Eastern Time today through 11:59 pm Eastern Time on May 17. The conference ID number for the replay is 5478625; again the conference ID number for the replay is 5478625. for is dial or to number the XXXX-XXX-XXXX replay XXX-XXX-XXXX. The MDU the now Financial to of like would call Officer Group. to Treasurer Chief I President, turn over Vice Jason and Resources Vollmer, Thank you. Mr. begin may conference. Vollmer, you your

Jason Vollmer

Thank you, Welcome first broadcast conference XXXX accompany quarter and live This remarks. afternoon, to release call. over is our to slides the conference Internet, our earnings call and Shelby, good everyone. being the public will

at www.mdu.com If go website you would to the to the to follow please slides, and conference like view link the our call.

on Our is also earnings release our available website.

will During of certain the course Securities of this of XXE statements presentation, Exchange meaning we the of XXXX. make within the Act forward-looking Section

differ company and its expectations believes on beliefs the reasonable that results materially. based Although may are assumptions, actual

that actual refer cause discussion For Form results Factors, our factors a Item to most of differ, XX-K. in recent Risk XA, to may

call For his we’ll over line will and presentation financial key the questions. open of our Resources, turn CEO Goodin, today, then Dave’s remarks, I and for remarks. After MDU Dave highlights to the discuss President formal for

Trevor and Jeff $X.XX were per a $XX.X members CEO share Vice quarter $X.XX or MDU $X.XX In President Natural On Dave share million and compared President are Natural Construction of Great consolidated from MDU CEO Yesterday, first in Intermountain to Group; Resources. per Cascade Energy; Barney, share Gas, or who million President, earnings million River answer $XX.X to XXXX. or basis, Accounting questions $XX.X myself, in for available Plains and Controller of operations we and CEO President Chief earnings $X.XX or compared share per WBI Stephanie Gas, $XX.X Officer to of XXXX. today Dave team our and per Barth, and and continuing Knife announced Nicole million Kivisto, of will Thiede, Hastings, addition Utilities; President be Corporation; management to Services Montana-Dakota of CEO of and Gas

growth the Act million quarter, the our utility business utility last combined from of quarter in million $XX.X regulatory X.X revenue million the in amortization our the majority and compared offset reported driven were regulatory were by amortization the had The retail earnings the for rate completed also projects impact that customer XXXX. earnings X%, to to asset in will reflects were higher quarter $XX.X by organic taxes increase all electric customers. depreciation, X.X income compared in primarily earnings were The $XX.X gas experienced utility was in in Partially quarter to first partially higher result compared quarter be costs depletion Tax our of which driven of higher of for the offset million higher the Act as refunded maintenance and as to business, higher adjusted pending filings. This recovery. of last segment, reduced midstream taxes, the amounts growth earnings resulting This At higher Jobs reserved lower planned to as and up million depletion the second million Tax $XX.X earned outcome the income The resulted expense operating revenues the enactment transportation partially year and income higher reflects For by well pipeline and related company’s minimal in first classes. expense lower costs, segment first in quarter This Cuts Jobs At earnings approved organic from offset XXXX. Tax from balances. company increase $XX.X tax and by revenues sales operating million, earnings and the increase Act. offsetting volumes Cuts assumes had taxes $XX.X expense, depreciation resulting in This a XXXX. depreciation, our increased depletion amortization margins a of expense by was the This business Cuts benefits due million natural increased increase to gross the the of of and since year. earnings decrease we of partially overall but higher and enactment operation recovery. the of Jobs and and of operating enactment projects. on

XXXX quarter. higher million. rentals which and compared projects is margins and as general to from services these in to higher This construction up equipment workloads the were and higher and construction margins. number offsetting also in margins the the record to XXX.X by of Our revenues XXX labor revenues up the end administrative outside for of additional reported Higher million, from at customer by XX% quarter performance. areas size quarter quarter activity of first earnings well earnings the in successful XXX.X business’s selling, as backlog job attributable services of and workloads Construction higher and outside The quarter first X.X XXXX. decreased business increased costs, specialty were was contributed and to Partially million expense. of increase storm increases sales the million, impacted driven first XX.X of higher a million of result in outside construction contracting inside due increase demand XXXX

tax for construction and Jobs of million quarter compared XXX.X of largely benefit normal lower The period a the in Act. in revenues materials Tax a first million and loss XXX.X of million of was seasonal the million, XX.X the earnings first XXXX XXXX a revenues first due loss to Cuts XX.X decrease in the the enactment from business reported same of million. in to up quarter related quarter income Our to X.X

loss million, in at impacted margins, the line workloads Dave? remarks. And was the some turn bottom a positively higher million in Dave demand strong to business were the XXX to XXXX. While up of states I’d operating favorable materials this increased XXXX of loss the experienced like was as end from of our for weather well end reported as regions. construction Construction now that decreased which for by pretax in first formal over from his backlog the call quarter XXX larger,

Dave Goodin

Well, everyone. afternoon, We and time for taking your join today our good first in and Thank earnings released first you, the Resources the for to you to Jason, results. yesterday. us interest MDU after closed thank our quarter quarter stock market discuss

per start our to and to a from $X.XX in share We’re operations XXXX increase compared continuing earnings to off XXXX. a strong reported

throughout the our of well with the All quarter, performed we results. very pleased businesses are and

final with a couple major annually. of project group. is larger of projected turbine of been on Wind have in plans we rate areas. of year for X.X quarter in fall track weather materials, that saw update utility driven gross are natural normalization All to and reported our conditions site. relief billion Approved be sales, provide investing and utility received the companies next over largely first The our on the X% distribution earnings, to Thunder base projects to components, completed I’d rate to Spirit utility our XXX project offset a and the compounded outlook delivery awaiting in Our adjusted for the this like five at combined wind record helped expansion including margins. this gas an million growth the winter by increase warmer a quick approximately year. business some years includes The

with In along Ellendale This second kV in XX-mile for volumes earnings under schedule Line heart This Eastern first month MDU’s the and Dakota through business the the in has helped addition, million XX-mile at Dakota North project year on up projected some the an in project with increased Minnesota, quarter expected now we natural on Northwestern updated to on Bakken. the South the construction a the XXX ahead, budget, to and system, begin the in quarter North excellent projects with move is is Stone transport had X line Western year-over-year. Project expansion completed and first At XX XX% Big with resumed the the to of investment season. XXXX business, year-over-year that of company Section record $XXX quarter this construction Valley pipeline XX%. The of full million. Expansion gas by volumes higher $XXX were

Both in project the by Montana the cubic day date in earnings $XX and is will in in organic pipeline in the begin to with projects million. in-service longer-term XXXX the project here commitments Demicks customer our allow these is feet projects at earlier to million earnings release will talked growth driven an to and is called a at projects project, begin continue pipeline in-service is to by million Expansion. The demand expected the this have announce Construction We’re like our scheduled to Section Expansion million $XX transport being later is we year, lead system This $XX really Lake XXXX natural to new to growth. estimated increased this area County. and Line now and date an news increase of fall seminar, increasing XX-mile, XXXX. secured Construction our that pipeline in between XXXX. gas XX.X project pleased also yesterday Billings is X group capacity cost business. expansion per McKenzie And of these will XX about volumes proceed. sufficient in with Billings, analyst project

This along This report coast. particularly mild our which X operation Knife utility to from repair revenues construction is this and fleet. Ranch to earnings group, for and rock electrical tons We equipment Fischer leading business sent than more year enhance our River, in record and teams of normal business million. line the And tools businesses. continues which At strong. doubled last Pacific revenue while first quarry. power reserves perform provider earnings I’d of and forward. group between service, headquartered revenues loss, quarry reported Northwest equipment also the area they construction it its construction in first the that weather in in growth. about with construction the X saw to also Teevin following Northeast optimistic crushing expand Now $XXX.X acquisition a like quarter, deliver helped a severe increase unit storms, million year-over-year, quarter Oak the to and million our compared of $XX.X increase the Oregon, several trucking its will an materials announced turn we’re -- reported and manufactures. rental a earnings & we’ve includes the and severe exceptional work material Quarry, year At going an to Seaside, construction Throughout the Oregon prospect in sales aggregate this started the demand in and recently split services construction its Seaside services and aggregate is seasonal at group

in operation, in Seaside is to the One to to self-performed use projects our construction back-office ability addition areas. these synergies, of surrounding Knife the aggregates the advantages River brings the in and

with Our with our respect multiple along to diversification to spreads geographic local economies. exposure location climates,

to As with company This opportunities, After unit nearly quarter billion range Knife completes to $X.XX reaffirming year Combined, anticipates reiterate that the to as growth about we’re key earnings our the success discussion. overall continues think share additional to long-term is our backlog, acquisition rate. current the X% first our And to it $X.XX. our for ended construction quarter Furthermore, we business would this to are we are will we about the results, as as companies corporation, annual on XXXX these River looking be we a of evaluate track expectations. that we compounded like the with forward. I and opportunities per X% look excited businesses current beyond. go at our individual $X.X in diversification and

to and growth significant Our focus here at we including targeted execute plans, we’re organic been doing that. as and our value has acquisitions, produce just long-term business MDU Resources projects

And balance years, maintain and for a solid consecutive we provide to have liquidity. our We continue ratings continued to sheet, credit shareholders. a competitive XX dividend good strong for

operating your ask value that Resources integrity strong on always, and is as to now we creating commitment America. focus shareholder a Operator? act high we continue to appreciate is, tagline, questions. interest open As to MDU Resources while in a that line and to and committed superior MDU with building our the safety I on

Operator

[Operator comes first Instructions] Ridzon Your from question Paul KeyBanc. of

Paul Ridzon

in does -- Is -- work, services, construction question lower cite your how performance. costs around had attributable to job I you labor discussion that sorry? that successful on a

Dave Goodin

Paul? Could up a you question, just little that You of repeat just first the bit. broke part

Paul Ridzon

services performance successful construction some trying to just does discussion cite job labor costs interpret I’m how Is decreased that to of around your where award? some work? that Or performance. dynamic kind attributable you of

Dave Goodin

for Thanks I’ll Paul. Thiede, question. turn it Jeff over the to

Jeff Thiede

beat it’s to it’s labor And to Yes, that offsite being teams construction. planning, due to in our units the attributed due to that our able it’s modular prefabrication, due had estimate. is we to

with hit we’ll and really good improve. some milestones we’ve continue So company, our to

Paul Ridzon

about I you have kind help do Analyst What’s Can talked traction the know you at of Day. you modular the what construction some there? upside? -- of

Dave Goodin

said regard modular construction, with Paul? to You

Paul Ridzon

Yes.

Jeff Thiede

Yes.

building helped So we offsite we’ve constraints can And we’ve done of and that productivity also work part a schedule. confined doing out field buildings area And in hours the us client instead get on more been an them safety that mechanical in in involved with of more includes and -- infrastructure. work electrical a congestion this has an better the have when control moved the and and a confidential in there’s the earlier on dropped place. in shipped and work the those project

Paul Ridzon

your to reach taxes? and the that margin get of you’re at businesses, experiencing try taste have through And competitive a from customers seen lower -- you the

Dave Goodin

a question. going and ask we’ll Jeff business, and that’s Barney I’m on to touch actually to touch on great Paul, switch Yes, have his gears then Dave his.

Dave Barney

We not any the tax impact have reform. seen from

margins impact all at our from on and that. backlog, actually Our construction so we seen increased haven’t really an have

Jeff Thiede

the Paul, this is answer is The same. Jeff. about

to excitement We’re investment and going in and on the have tax economy, industry. which seeing our growth reform, an our with impact is

XXX,XXX Bureau estimating jobs by straight the jobs If where of month we’re the they’re and jobs report, Friday non-farms another you Statistics April, yesterday, the Labor tomorrow economy sixth increase over according ADP report grew to that’s XXX,XXX the forward report the ADP looking looked at increase. U.S. for the from of and to for

We’ll but those have. for to labor some So good have are good constraints us. signs on availability, challenges

customers. We’re the our working on risks labor solutions for ourselves for mitigating for and

Paul Ridzon

little we up, of we indicated tick was looking mean, -- could you I to those comparable up look we think should -- Should guidance for So bit? ‘XX. a kind to your I margins, last

Dave Goodin

the and Yes. to about release, through from noted said we that far And services, that as we reach -- margins the noted you Paul, think you this it construction of we’re some Act that well Jobs materials as and expect again Dave to both -- in as businesses seen it year, comparable increasing But we Cuts yet Tax in Cuts be affect to for termed as Tax to owners from comparable both in early Act. environments. seeing competitive was seeing how increasing. slightly when heard our would we I -- actually comment actually when Job construction of businesses, bidding talked slightly the so Barney and not

very space active blessed services. their backlog really X a construction demand for strong have We’re having really businesses in that by strong the and

Operator

Your Chris question the from Capital. comes of of Ellinghaus next line Williams

Chris Ellinghaus

a Oregon acquisition, the transaction? that stock-type was typical Jason,

Dave Goodin

-- Again, say stock-type you we maybe a did have was Chris? transaction, tough it typical a

Chris Ellinghaus

that been have looked materials stock what construction transaction. typical financing the Is Your like? a Oregon

Jason Vollmer

So Chris, this Jason. is

the more a that itself. we for of But as I little this is Dave us in no. to I’ll in talk a great not let financed, that areas bit or maybe a kind think reserves is bolt-on that really and some case, look have -- acquisition those the about acquisition quarry asset expands this some of that. acquire couple we area this of acquisition stock a a in transaction smaller

Dave Goodin

No, should in that be Yes. cash.

Chris Ellinghaus

of proportion you a work? from give Can terms in restoration the construction services Was that of the quarter? in storm the significant any in quarter the Okay. the in color first benefit us improvement

Jeff Thiede

company inside center, Jeff. health education a companies in this a higher strong businesses very mission-critical and contribution who from quarter. quarter, It well, quarter. our work, as ones they and our mean, We is our the our Chris, had only contribution, I care, good our data outside weren’t had strong strong industrial a good had work. made a our

out we’ve points just got diversified that good, and So a that very company people. exceptional

Chris Ellinghaus

your were that common have this the that’s advantage? a point? that therefore, Jeff, modular with done might at the costs. is something about has something talking competitive Okay. how you is generally construction pretty you you you’re when Is being bidding, helped Or labor that throughout industry,

Jeff Thiede

this has our and start in have. with can grow ability we very us been and initial the competitors area. allow And for brand-new see the that this demand industry, going to some we positive, not of longer provide. that It’s have But we’ve than been our service continue our connections in our to involved to we of type it that customers got in do are to and

Chris Ellinghaus

Can project in Okay. One center a lot projects. downtown. has Vegas? last some projects in give you question. Vegas of got just pretty what Echelon you’re project. has seeing Wynn of There’s us convention significant some Las sense the deal, the The

Jeff Thiede

starting. very positive just We’re it’s a market, strong signs and seeing of

that’s ground. stadium broke we also have the football built, just being So it

So there more. several are the you projects, named some of

mapping operate that so to of we’re certainly all all, these those we’re to and talking able going our be high just to opportunities to can’t are customers continue level. them you resources So a mentioned. and at We we making that in we involved the provide sure do many but

Chris Ellinghaus

the they Have -- as far you Wynn project, are advancing? as seen

Jeff Thiede

Yes.

Chris Ellinghaus

remember Echelon Okay. do the under what what And old but scale I can’t know construction, it you but is? name the of that they’re of the I is, know site,

Jeff Thiede

We and be on are haven’t the activity we hoping project, seeing seen activity involved but much in Resorts Elon to World, that. we’re on some

Operator

This The through like further over p.m. no there Eastern back XXXXXXX. X:XX replay remarks. replay Eastern today At conference turn beginning now for available Instructions] the May management at XX:XX call are I will time, Time to to [Operator XX. for for conference ID Time the questions. p.m. this is be number would closing on

Dave Goodin

Thank you, Shelby.

good first noted earlier, As start results represent to XXXX. quarter a our we

the of year We’re opportunities a with and the optimistic along beyond. being America strong to and building rest for committed our about

thank to over continued interest the in MDU the call do your and We turn Resources. operator. it appreciate also you participation back your I’ll now and today for appreciate on

Operator

call. participation. Group MDU conference This Resources you concludes for Thank today’s your

You disconnect. may now

MDU Resources (MDU) 6 May 182018 Q1 Earnings call transcript