MDU Resources (US:MDU)2023-05-04 20:15Financial Data and Key Metrics Changes - The company reported first quarter earnings of $38.3 million or $0.19 per share on a GAAP basis, with adjusted earnings of $46.6 million or $0.23 per share, compared to first quarter 2022 GAAP earnings of $31.7 million or $0.16 per share [6] - The combined utility business reported earnings of $55.5 million for the quarter compared to earnings of $47.6 million for the first quarter in 2022 [26] - The electric utility segment reported first quarter earnings of $16.6 million compared to $11.3 million for the same period in 2022 [26] Business Line Data and Key Metrics Changes - The natural gas utility segment reported first quarter earnings of $38.9 million compared to $36.3 million in the first quarter of 2022, driven by approved rate relief and a 4.2% increase in retail sales volumes [7] - Construction Services reported record quarterly revenue of $754.3 million in the first quarter, with earnings of $26.1 million compared to revenue of $552.6 million and earnings of $21.3 million for the same period in 2022 [8] - The Construction Materials business reported first quarter revenue of $307.9 million and a seasonal loss of $41.3 million compared to prior year first quarter revenue of $310 million and a seasonal loss of $40 million [9] Market Data and Key Metrics Changes - The company experienced record first quarter transportation volumes in its pipeline business, with increased transportation revenues due to the North Bakken expansion project [33] - The construction materials business was negatively impacted by unfavorable weather across most regions, particularly in the Pacific region, resulting in decreased volumes for certain products [9] Company Strategy and Development Direction - The company is constructing the Heskett Unit 4, an 88-megawatt natural gas-fired electric generating facility, expected to be operational this summer [11] - The company filed a rate case with the Federal Energy Regulatory Commission seeking rate increases for its transportation and storage services, with new rates expected to take effect August 1 [12] - The company is increasing its revenue guidance range for 2023 to $2.8 billion to $3 billion, expecting slightly higher margins compared to 2022 [13] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about growth opportunities in regulated energy delivery projects and strong demand for construction services [78] - The company expects its rate base to grow between 6% and 7% compounded annually over the next five years, driven by investments in system infrastructure upgrades [32] - Management noted that inflationary pressures have impacted margins but are being offset by price increases across product lines [9][35] Other Important Information - The spin-off of Knife River is expected to be completed on May 31, with stockholders receiving one share of Knife River stock for every four shares of MDU Resources stock owned [15] - The Board of Directors declared a quarterly dividend of $0.224 per share, unchanged from the previous quarter, payable on July 1 [16] Q&A Session Summary Question: What drove the light volumes in ready-mix concrete? - Management indicated that weather had a significant impact, with record snowfalls and rain affecting operations, along with the sale of the Beaumont operations and a softening residential market [53] Question: What is the status of the strategic review of the construction services business? - Management confirmed that the review is expected to be completed in the second quarter of 2023, with no conclusions drawn yet [42] Question: Can you provide details on the weather impact on contracting services? - Management noted that California's heavy rain led to a significant loss of operational days, but they expect to benefit from flood restoration and storm repair work [65] Question: What is the backlog status and margin outlook? - The company reported a record backlog of $959 million, with no cancellations of backlog projects, and expects margins to improve as inflationary pressures are addressed [66][68]