MDU - Earnings call transcript Q1 2024 | MDU Resources Group, Inc.

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Operator

Hello, everyone. My name is [ Bo ] and I will be your conference facilitator today. At this time, I would like to welcome everyone to the MDU Resources Group 2024 First Quarter Earnings Conference Call. [Operator Instructions] The webcast can be accessed at www.mdu.com under the Investors heading. Select Events & Presentations and click Q1 2024 Earnings Conference Call. After the conclusion of the webcast, a replay will be available at the same location.

to conference like to now would turn over the Mr. I Officer Vice of President, Vollmer, and Chief Jason Financial Treasurer Group. MDU Resources Mr. Vollmer, ahead. go please

Jason Vollmer

XXXX Thank our welcome, and earnings quarter you, conference everyone, call. Bo, first to

on discussion us Chief our are CEO of find MDU Utilities and answer and the supplemental this and Accounting www.mdu.com release Johnson, You today is our Leading Nicole can questions President, at prepared today's Sievert, Jeff Officer and our remarks Officer. of earnings website President Stephanie President tab. following CEO of Resources; MDU Chief with to Energy; Garret me materials Resources. Senger, and Controller for Also call Vice our with Investors President Rob under of Kivisto, Thiede, WBI Everus;

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

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

actual could about information our the more our also refer SEC please forward-looking most For vary refer uncertainties recent to non-GAAP filings. We risks that from certain information. statements, may any cause results to and to

of will later reconciliation a release. please earnings reference financial any I GAAP to non-GAAP our appropriate For the results call. during metric, the consolidated provide information

to I'll turn the for But first, remarks. call Nicole formal over Nicole? her

Nicole Kivisto

to we both hard work Services of start stated own interest strong solid accomplish enabling and these Thank of MDU employees' recently continued a Resources. us standing and year performance progress rebranded essential present their all capable our direct MDU proud in performance to services Everus. I'm as businesses from shows Resources This you, regulated our today goal is make of Construction MDU company, tax-free a energy employees, a planned for Resources our everyone, built be we as and past continue an meaningful our a exciting businesses. am into of result strong company. of had on and business It pure-play marked dedication customers. to have and spinoff of providing our by time you, I XXXth thank Jason, transforming to in for our spending the time to our your report towards us to delivery pleased to as with

We enhance expect this to this spinoff businesses of to significantly late the and value the on spinoff year. both of complete are Everus track

core Looking future, to are focused strategy customers the our excited communities, excellence, focus and and This core to we on operational returns strategy. emphasizes employee-driven.

our to be across we able momentum energy all XXXX, As a business regulated we results quarter specific models companies. outstanding reflecting policy. in observed strategy to strong and and business, pure-play financial the will pursue continue regulated The optimize capital first performance structure

we remain positive and New rates implemented electric, at expect and had busy natural pipeline businesses utility gas our regulatory group. result, activity for to a our

At Services record an with strong our Construction business, all-time momentum backlog. Everus very has

first quarter Our our long-term to higher in opportunities in volumes data The Electric operating our a increase for the little utility year. is were businesses Diving look of last future. like customer X% continue service business. area. retail we the to exciting I'd deeper, to the a start growth as result just center sales with than largely have

quarter Dakota also become to Public to data request in XXXX. expected We the operational filed with have another of center is North a second that Service serve Commission the

near XX-megawatt to generating quarter. Additionally, second gas-fired North natural IV, the facility operational Mandan, be electric an Unit we expect Heskett Dakota in

meet safe annually next service compounded We to of base grow and to to the years, to also infrastructure system, mainly delivery and over by X driven replacements in rate demand. the continue investments X% upgrades expect customer reliable ensure

on January interim March in gas South business implemented The North Dakota. rates gas also and interim electric X. utility Dakota X, utility the On rates business implemented in

commissions. filed the XX. March decisions case These the natural multiyear are cases rate respective a the pending Additionally, Utilities by Transportation Washington utility on Commission with gas and

safe As those we we regulatory providing remain actively on service recovery to electric expanding are our investments. and focused seeking reliable and for gas customer base, natural

pursue utility year, the Wyoming. pipeline well Oregon in which natural natural increase gas Expansion from North Bakken gas first This expansion record in XXXX, we placed early and business additional commitments transportation to 'XX volumes. the XXXX. projects 'XX February beginning service In plans by cases Montana, contract same to volumes is quarter increased when as to attributable largely as and higher business, late our period in earnings, XX% were achieved At last compared driven of record additional

from The for earnings demand along natural rates, August continued services. gas X, on effective were includes which and benefit with storage strong storage also new and transportation XXXX,

April Line is and added natural gas several service project same Section cubic gas-fired day. per million capacity projects. 'XX. natural will Once it pipeline in began add Line plant. feet growth North transportation currently the The feet region business to in XXX serve X cubic The Our of in undertaking northwestern expected placed Dakota power million expansion expansion XX located per XX on of XXXX was of March a XXX in construction Section and is day completed, capacity

We in third will anticipate service project this in quarter be XXXX. the of

in day. 'XX. approximately on in natural in gas per our project begin be to late project Dakota feet to capacity which million also This Wahpeton XX scheduled expected increase North will June, are cubic construction eastern the is transportation service in We expansion by

communicated million. XXXX continuing range million of future at expansions to planning a guidance pleased that $XXX $XXX energy number We businesses, regulated early of projected At our in are for the reaffirm are with in stages. look the we delivery earnings are to to previously

pure-play updated a the that in at guidance business, regulated Day. delivery remain confident long-term as ranges energy we ahead, we Looking Investor

quarter-over-quarter confident maintaining dividend rate to we of And utility Given do ratio. to plans plan XXXX. until our XX% current regulated the at while capital of base X% over a a to and rate years, to growth. X businesses to with billion We the and of results, rate no X% all a growth payout X% historic track annual equity next strong $X.X XX% EPS issue record long-term this growth to in invest feel customer X% plan X%, we on

Moving gains Services well Everus. on results Construction of and time higher at projects. particularly work billion by as last on efficiency backlog all-time compared demand, record as earnings were driven billion higher saw EBITDA. Everus We institutional to to record $X.X the same for $X.XX an year. The reported

flow projects near of or completed replaced, a completed Additionally, work. ensuring continuous been successfully have

$XXX Everus reaffirming of $XXX of billion We guidance guidance in are revenue with XXXX EBITDA million. to $X.X and range billion, the $X.X in to to margins the comparable range for million

bidding and from the well is and beyond. the to to Jobs expects Inflation funding reshoring investment manufacturing, Everus Act as and demand as XXXX services from the increased opportunities Everus Act with data benefit see positioned increased of construction continued Reduction forward, center throughout well infrastructure Looking and for

the late you is continue completed and progress an the be in expected Day on updated of throughout We Investor previously the Everus of mentioned, year. Everus to spinoff, to to plan As XXXX. host keep our we'll spinoff event ahead

are we of We gas and as are steady electric pipeline Opportunities ahead. for and and very system through at robust optimistic as XXXX. services a and we natural customer progress demand our for services expansion encouraging slate projects pipeline growth for high demand construction utilities, look the ongoing

essential As focus customers, shareholder superior a and dedicated and providing remain is on to value safety. integrity Resources we creating We services to to a safe being always, with MDU continue to committed as great place while with products and operating our work.

Jason? will financial the now turn the update. to back over I call Jason for

Jason Vollmer

of our $XX.X details and results Thank basis a quarter of earnings $X.XX to quarter share. outstanding pleased I'm per we the GAAP first of the $X.XX you, first per share or Nicole, share million compared morning, $XXX.X to million earnings or GAAP quarter. This announced first XXXX on for

from XXXX. First or per $X.XX or quarter million $XX.X continuing operations income share to compared per in $XXX.X $X.XX share was million

Knife year, River the Important River the reported results May related as for and in that results operations completed to with year. our of XX note GAAP-based are prior last Knife of impacts other discontinued spinoff

continuing the results River operations. operations correlate more our continuing the also With better the and reporting of from financial provide spinoff to spinoff, with we work of to strength the completion adjusted ongoing are Knife on outline income and Everus closely business

please experienced our per share per businesses information strong compared the from adjusted of operations quarter from continuing on first $X.XX see adjustments, or We continuing million from $X.XX $XX.X in adjusted all first to in share. XXXX table For results earnings quarter of our income with operations or the $XXX.X million release. these the more of income

our individual businesses. to Turning

in residential of for same in quarter reported and Increase relief of reported the rate $XX earnings quarter to was first period million earnings of the new compared the Electric compared retail Our was The mid-XXXX. a for to XXXX. sales and center Utility primarily data to of utility costs. $XX.X volumes operation due revenue for Montana expense, largely result Dakota million offset partially $XX.X of million customer $XX.X XXXX. and by first maintenance the million quarter contract lower services earnings addition and the in higher business of increase higher North

relief earnings result first project Our $XX.X result of XXXX. interim and higher increased earned of the in compared natural XXXX largely Dakota quarter last $XX.X gas increased utility of all in Also as $X.X decrease growth the higher million Dakota for by first which expansion These of quarter first $XX.X first in pipeline Bakken from primarily and customer volumes interest and part the in the earnings year. mechanisms. normalization XXXX revenue, in was due placed quarter volumes North service and was partially mitigated weather The million contracted and rate operation additions million was transportation transportation year. driven of asset increase offset first in income decoupling expenses. The the increased November customers. in maintenance warm quarter depreciation X% were March volume to in reported commitments compared The of impacting a of earnings was million from weather, and industrial increase last a to South serve earnings and sales and expense North record the projects increases generation February higher record electric beginning in organic and of to to to classes by retail quarter by

million for first strong healthcare compared institutional projects. of the $XX.X the in work first of operation interest debt helped and increase earnings. storage-related revenue quarter This of higher was and in interest higher expense earnings rates. Everus maintenance increased both million New storage result compared quarter of million. higher part in year to by to in expense a X record XXXX. $XX.X EBITDA transportation rates period in and effective was balances first million the drive and of last $XX.X demand August earnings government for quarter $X.X last reported from also the increased same earnings and year for offset The increase and increase higher to

decreased Margin the as related expense, distribution in costs, increases efficiencies had increased equipment benefited and the general in XXXX. mentioned up also for and joint services other when income Backlog professional payroll-related administrative billion, the expense and utilization period labor X% higher $X.XX backlog an due the well to quarter Everus utility and all-time increased had transmission was selling, largely quarter. mechanical compared costs, to market previously, as also in same up rent higher of and as Nicole with X% electrical record, ventures. to including

XXXX is operations and Finally, updates we of we maintain Business the continue a and to quarter out and XXXX, year. closed to the our finance momentum seasons. provide as balance continues we our to throughout sheet to peak progress regarding throughout will working outlook MDU Resources as ample strong first capital guidance access strong

for quarter. to line the to the your MDU We now and and in interest we commitment that highlights appreciate financial questions. ask summarizes Bo? open That Resources

Operator

Ryan Levine Citi. Instructions] We'll of to [Operator this go first afternoon

Ryan Levine

the of in business growth looking other To And centers meaningful on mix years? the drivers is there as key Everus backlog buckets we start percentage at should coming What off are that data mix. or now? be your

Nicole Kivisto

Yes, turn the question. to for Ryan. over Thanks it I'll Jeff.

Jeffrey Thiede

for Thanks question, the Ryan.

multitude in area, primarily of has really we major of our commercial our and know significantly which going backlog all We're semi-negotiated clients, backlog strongest our confidential and been But this clients, data markets as for course. our due that centers in we so our but quality. upon built add of us to have forward. been safety, able doing about that is serve, data we diversified businesses productivity the see then success negotiated, our Our one get a centers. the we in and to repeat the drivers performance, to primarily And for our all business,

Ryan Levine

that numbers certain any or to states high-level you're And to share magnitude you're able market the there are Is there for that any even color geographically, percentage levered maybe more there? around you? of

Jason Vollmer

the on the that out off the start between break T&D I'll break of Jason. We and market percentage numbers. out typically is it this Ryan, E&M market. We it don't way.

what on space, is part and talking the that percentages diversity want I'll certainly this Jeff But to far would no center data disclose just But maybe geographic let we're about as at E&M Jeff, be here. in So we've as market. seeing been to as of builds. But as point this geographic in you weigh the far address able markets. Jeff may what as

Jeffrey Thiede

contributing data Ohio, hardening, of transportation is our center a our growth And also amount the in renewables in and primary contributing doing, Southwest Pacific record there's Those to where our complement data and work, the doing undergrounding backlog of course, space, We're grid institutional up in and work, the you T&D services backlog. with to electrical center course, areas Right. we're there. work tremendous and the We're backlog. record are of the we're of of our the Northwest. that the healthcare

Ryan Levine

then And demand implications the that on low seeing? are outlook terms in electric your for And growth Are growth territories? acceleration side of the capital you what has service any business, in the trends -- in your you electricity budgets? any for seeing of

Nicole Kivisto

on have question Ryan, in that to terms center. in script calls of but data Garret we what ones queue, commented of of related various as get my the the kind centers. in in answer I'll come -- Yes, we're that terms to in they continuing data I let my

that want at to Garret, So do on you expand all?

Garret Senger

we those to come And second interest place by and in -- requests thank Service quarter be we Public center the additional for they the have this Nicole then. mentioned, pursue have Commission as Senger, our this Garret Dakota of we hope data front that the for front that We continued in should territory, as across of question. you is in had approved North Just in. and and that

Ryan Levine

just demand are service terms Great. growth, X outlook any that growth in And type? other your in to of your than was, customer activity commercial guess, I to Or that see longer-term electricity changes due more broad you or territories?

Garret Senger

in normal in growth is growth road, customers. We've couple X% There's market. range as a residential -- seen interest the well as data years There's commercial expanding in of operations. there also as an 'XX annually in loads. terms the increase customers well total an industrial our as average maybe there's that terms center really of of And down just in

Nicole Kivisto

clarify then just, serving center customers in is terms growth those Ryan, the maybe generation. And had, our of that data not to thing X that we've we're the from way is

ROE expense to And we've then as in centers is margin, X ROE So terms just benefit in back to clear be to tying a there, to given investment enhancement. our the we right have as sharing it also which of back market. to benefit the customers got our transmission the MISO and the a of get now company well obviously the these that's data across

modeled the require right generation. build see do our within now doesn't we us these way centers to so And system, data it we have

clarify So that. to just I wanted

Operator

[Operator comments. www.mdu.com call. webcast accessed heading. QX under be available further at be Instructions] Again, XXXX to you, I'd will a hand After the webcast, for at we conclusion to & Earnings the of this any ladies gentlemen, things closing Investors same the location. And it have Presentations Events and replay Select the ma'am can Conference and Kivisto. questions that afternoon, like back appears Ms. no click

Nicole Kivisto

you we very and your to and everyone Resources. Thank interest right. time in MDU All want for thank much,

for time. MDU that, of call our and outlook interest thank businesses spinoff the to operator. the Everus delivery and your We you over your appreciate well as optimistic with again growth this planned are opportunities And our and back continued regulated We year. support for Resources. the We the later of certainly about future I'll energy as you, turn

Operator

thank Kivisto, disconnect. may that does your call. Group conclude today's Again, you Resources now Ms. Ladies thank and you you. for MDU conference and participation, gentlemen,

MDU Resources (MDU) 2 May 242024 Q1 Earnings call transcript