MDU Resources (US:MDU)2022-11-03 12:10Financial Performance - The Company reported consolidated earnings of $147.9 million for the three months ended September 30, 2022, an increase of $8.6 million compared to $139.0 million in the same period of 2021[149]. - For the nine months ended September 30, 2022, consolidated earnings decreased by $41.2 million to $250.3 million, primarily due to increased operating expenses and lower returns on nonqualified benefit plan investments[151]. - Operating revenues for the electric segment increased by 4% to $278.6 million for the nine months ended September 30, 2022, compared to $267.7 million in the same period of 2021[164]. - Operating revenues for the natural gas distribution segment increased by 29% to $793.3 million for the nine months ended September 30, 2022, compared to $614.8 million in the same period of 2021[169]. - Operating revenues for the three months ended September 30, 2022, were $975.4 million, a 17% increase from $831.3 million in the same period of 2021[203]. - Operating income for the nine months ended September 30, 2022, decreased by 8% to $157.1 million compared to $171.3 million in the prior year[203]. - Net income for the three months ended September 30, 2022, rose by 21% to $28.0 million, compared to $23.1 million in the same period of 2021[220]. Business Segments Performance - The construction materials and contracting business saw earnings benefit from higher average pricing on materials and increased workloads, despite inflationary pressures impacting costs[150]. - The electric business experienced positive impacts from interim rate relief and lower operation costs due to coal-fired plant closures, while the natural gas distribution business faced increased seasonal losses[150]. - The construction services business reported increased earnings driven by higher commercial and service margins, despite overall inflationary pressures[151]. - The pipeline segment's operating revenues for the three months ended September 30, 2022, were $39.7 million, a 14% increase from $34.9 million in the same period of 2021[185]. - The construction services segment's revenue increased by $266.4 million, driven by higher average selling prices and increased asphalt and aggregate sales volumes[210]. Strategic Initiatives - The Company is planning a tax-free spinoff of Knife River, expected to be completed in 2023, subject to regulatory approvals and other conditions[141]. - The Company is pursuing a strategic review process to create two pure-play companies, enhancing focus on construction materials and regulated energy delivery[142]. - The company plans to separate its construction materials and contracting segment into a standalone publicly traded company, expected to be completed in 2023[208]. - The company is focused on organic growth and operational improvements in its electric and natural gas distribution segments, with an emphasis on infrastructure modernization and customer base expansion[155]. Economic and Market Conditions - Rising inflation and interest rates are expected to continue impacting the Company's operations, with increased borrowing costs and potential effects on customer purchasing power[143]. - The company is actively monitoring supply chain disruptions and inflationary pressures affecting raw materials and equipment delivery, anticipating these challenges to persist into 2023[161]. - The company anticipates continued inflationary pressures and national supply chain challenges throughout 2022 and into 2023, impacting operating results[217]. Capital Expenditures and Financing - Capital expenditures for the first nine months of 2022 were $451.1 million, compared to $507.9 million in the same period of 2021[240]. - The company expects total capital expenditures for 2022 to be approximately $702 million, reflecting updates due to project timeline and scope changes[240]. - The Company issued $50.0 million of senior notes at a weighted average interest rate of 4.50% with maturity dates from June 15, 2032, to June 15, 2052[251]. - Future estimated interest payments increased by 12% since December 31, 2021, due to higher debt balances and rising interest rates[261]. Backlog and Future Growth - The construction materials and contracting segment's backlog was strong at $895.0 million as of September 30, 2022, compared to $651.7 million a year earlier[212]. - The company expects to complete an estimated $1.67 billion of its backlog within the next 12 months[225]. - The company expects customer growth to average 1% to 2% per year, with a projected 5% annual growth in rate base over the next five years[172].