BISMARCK, N.D., Aug. 4, 2020 /PRNewswire/ -- MDU Resources Group,
Inc. (NYSE: MDU) today reported second quarter earnings of
$99.7 million, or 50 cents per share, a 61% increase over second
quarter 2019 earnings of $61.8
million, or 31 cents per
share. For the six months ended June
30, MDU Resources earned $124.8
million, or 62 cents per
share, compared to $102.7 million, or
52 cents per share, in 2019.
"Our employees have done an outstanding job of continuing to
provide essential services to our customers while safely working
under modified conditions as prescribed by local, state and federal
guidelines relating to COVID-19," said David L. Goodin, president and CEO of MDU
Resources. "Our operations performed extremely well in the quarter,
with record revenues and earnings at both our construction
businesses and very strong results from our regulated energy
delivery businesses.
"Our geographic diversity and focus on midsize markets has
served us well as businesses have generally remained open. Our
utility and pipeline operations continue to provide needed energy
to customers, and our total construction backlog remains at a
near-record level of nearly $2.2
billion. Our team remains focused on safely providing the
essential services that are critical to Building a Strong
America."
Based on strong year-to-date performance and the company's
outlook for the remainder of the year, MDU Resources is restoring
its original 2020 earnings guidance to $1.65 to $1.85 per
share. The company also is increasing revenue guidance for its
construction materials and construction services businesses.
Business Unit Highlights
Construction Materials and Services
The construction materials business had record second quarter
revenues and earnings. Revenues were $621.1
million, compared to $596.0
million for the same period last year, and earnings of
$53.0 million were an 82% increase
over second quarter 2019 earnings of $29.2
million. Favorable weather across the majority of the
company's market area allowed the company to complete more
contracting work in the quarter compared to last year. Recent
acquisitions also contributed to the increase. The construction
materials backlog of work at June 30
was $875 million, the second-highest
in the company's history behind last year's record $1.04 billion at June
30.
The construction services business also had record revenues and
earnings for the second quarter. Revenue was $497.2 million this quarter, compared to
$464.9 million in second quarter
2019. Earnings were up 22% at $27.9
million, compared to last year's record second quarter
earnings of $22.8 million. Higher
workloads and acquisitions contributed to the earnings increase.
While some projects have experienced slowdowns as a result of the
COVID-19 pandemic, overall the company continues to see strong
demand for its services. The construction services backlog of work
at June 30 was an all-time record
$1.31 billion, compared to last
year's record $1.15 billion at
June 30.
Regulated Energy Delivery
The electric and natural gas utility earned $11.2 million in the second quarter, compared to
$1.2 million in second quarter 2019.
This business benefited in the quarter from lower operating costs,
particularly for contract services, as well as higher investment
returns and the absence of a write-down on a non-utility investment
recorded in the second quarter of 2019. Natural gas sales were
approximately 4.3% higher in the quarter compared to last year and
electric sales were approximately 0.5% lower, with an increase in
residential sales and a decrease in commercial and industrial sales
for both products. On June 18, the
Montana Public Service Commission approved the company's request to
defer accounting for costs related to the retirement of the Lewis
& Clark and Heskett electric generating facilities. The company
has reached a settlement agreement for an advance determination of
prudence on its proposed 88-megawatt natural gas-fired electric
generating facility and expects the North Dakota Public Service
Commission to reach a final decision on the request soon. The
company has filed with each utility commission in all eight states
in its service territory a request to defer accounting for costs
related to the COVID-19 pandemic. The company has received approval
from the utility commissions in Idaho, Minnesota and Wyoming on this request; it awaits decisions
from the other utility commissions.
The pipeline business earned $9.0
million in the second quarter, compared to $7.1 million in the second quarter last year. The
company benefited from higher revenue associated with its Demicks
Lake, Demicks Lake Expansion and Line
Section 22 growth projects, which were placed in service in
late 2019 and early 2020. Volumes of natural gas being moved into
storage also were higher during the quarter as customers took
advantage of commodity price differentials. The company continues
preparatory work on its North Bakken Expansion Project in western
North Dakota and expects to begin
construction in early 2021. On July
28, the company filed an amendment to its application with
the Federal Energy Regulatory Commission for this project that
reflects a decrease to the design capacity to 250 million cubic
feet per day and lower project cost. The decrease is due to delays
in forecasted growth of natural gas production in the Bakken. The
cut in initial capacity will be achieved by reducing compression,
which will allow the company to readily expand the pipeline's
capacity with additional compression as Bakken production
rebounds.
Additional Highlights
Each of MDU Resources' businesses benefited in the second quarter
from higher returns on certain benefit plan investments.
Collectively, the positive earnings variance in the quarter was
approximately $6.2 million; however,
the year-to-date variance on these returns remains an approximately
$3.9 million negative impact. The
company attributes this change in investment returns to significant
fluctuations in financial markets.
Guidance
MDU Resources expects earnings per share in the range of
$1.65 to $1.85 in 2020, based on these assumptions:
- Under COVID-19-related modified working conditions, a continued
gradual reopening of the national economy.
- Normal weather conditions, including precipitation and
temperatures, across all service areas.
- No significant acquisitions or divestitures.
- Investing $614 million for
capital projects.
- Construction services revenues in the range of $1.90 billion to $2.10
billion with margins comparable to 2019 and construction
materials revenues in the range of $2.20
billion to $2.40 billion with
margins slightly higher than 2019.
Corporate Strategy
MDU Resources' strategy is to increase market share and
profitability in its regulated energy delivery and construction
materials and services businesses, while enhancing value through
organic growth opportunities and strategic acquisitions of
well-managed companies and properties. The company, on a
consolidated basis, anticipates 5% to 8% long-term compound annual
growth on earnings per share.
Conference Call
MDU Resources will discuss second quarter results on a webcast at
2 p.m. EDT Aug. 5. The event can be accessed
at www.mdu.com. Audio and webcast replays will be available
through Aug. 19 at 855-859-2056, or
404-537-3406 for international callers, conference ID 8684589.
About MDU Resources
MDU Resources Group, Inc., a member of the S&P MidCap 400
index and the S&P High-Yield Dividend Aristocrats index, is
Building a Strong America® by providing essential products and
services through its regulated energy delivery and construction
materials and services businesses. For more information about MDU
Resources, see the company's website at www.mdu.com or contact the
Investor Relations Department at
investor@mduresources.com.
Media Contact: Laura Lueder, manager of
communications and public relations, 701-530-1095
Financial Contact: Jason Vollmer, vice president, chief
financial officer and treasurer, 701-530-1755
Forward-Looking Statements
The information contained in this press release highlights
the key growth strategies, projections and certain assumptions for
the company and its subsidiaries and other matters for each of the
company's businesses. Many of these highlighted statements and
other statements not historical in nature are "forward-looking
statements" within the meaning of Section 21E of the Securities
Exchange Act of 1934. Although the company believes that its
expectations are based on reasonable assumptions, there is no
assurance that the company's projections, including estimates for
growth and financial guidance, will in fact be achieved. Please
refer to assumptions contained in this press release, as well as
the various important factors listed in Part I, Item 1A - Risk
Factors in the company's most recent Form 10-K and subsequent
filings with the SEC, including the company's Form 10-Q for the
period ending June 30, 2020.
Changes in such assumptions and factors could cause actual
future results to differ materially from growth and earnings
projections. All forward-looking statements in this press release
are expressly qualified by such cautionary statements and by
reference to the underlying assumptions. Undue reliance should not
be placed on forward-looking statements, which speak only as of the
date they are made. The company does not undertake to update
forward-looking statements, whether as a result of new information,
future events or otherwise.
Throughout this press release, the company presents financial
information prepared in accordance with GAAP, as well as EBITDA,
EBITDA from continuing operations, and adjusted gross margin, which
are considered non-GAAP financial measures. The use of these
non-GAAP financial measures should not be construed as alternatives
to earnings, operating income or operating cash flows. The company
believes the use of these non-GAAP financial measures are
beneficial in evaluating the company's financial performance due to
its diverse operations. Please refer to the "Non-GAAP Financial
Measures" section contained in this document for additional
information.
Performance Summary and Future Outlook
Earnings
|
|
Business
Line
|
Second
Quarter
2020
Earnings
|
Second
Quarter
2019
Earnings
|
YTD
June 30,
2020
Earnings
|
YTD
June 30,
2019
Earnings
|
|
(In millions, except
per share amounts)
|
Regulated energy
delivery
|
$
|
20.2
|
|
$
|
8.3
|
|
$
|
71.2
|
|
$
|
67.3
|
|
Construction
materials and services
|
80.9
|
|
52.0
|
|
59.6
|
|
37.6
|
|
Other and
eliminations
|
(1.3)
|
|
2.8
|
|
(5.5)
|
|
(.7)
|
|
Income from
continuing operations
|
99.8
|
|
63.1
|
|
125.3
|
|
104.2
|
|
Loss from
discontinued operations, net of tax
|
(.1)
|
|
(1.3)
|
|
(.5)
|
|
(1.5)
|
|
Net
income
|
$
|
99.7
|
|
$
|
61.8
|
|
$
|
124.8
|
|
$
|
102.7
|
|
Earnings per
share:
|
|
|
|
|
Income from continuing
operations
|
$
|
.50
|
|
$
|
.32
|
|
$
|
.62
|
|
$
|
.53
|
|
Discontinued
operations, net of tax
|
—
|
|
(.01)
|
|
—
|
|
(.01)
|
|
Earnings per
share
|
$
|
.50
|
|
$
|
.31
|
|
$
|
.62
|
|
$
|
.52
|
|
|
|
Consolidated
Statements of Income
|
|
|
|
Three Months
Ended
|
Six Months
Ended
|
|
June 30,
|
June 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
(In millions, except
per share amounts)
|
Operating
revenues:
|
(Unaudited)
|
Electric, natural gas
distribution and regulated pipeline
|
$
|
241.3
|
|
$
|
236.3
|
|
$
|
660.0
|
|
$
|
675.9
|
|
Nonregulated
pipeline, construction materials and contracting, construction
services and other
|
1,121.6
|
|
1,067.3
|
|
1,900.3
|
|
1,718.9
|
|
Total operating
revenues
|
1,362.9
|
|
1,303.6
|
|
2,560.3
|
|
2,394.8
|
|
Operating
expenses:
|
|
|
|
|
Operation and
maintenance:
|
|
|
|
|
Electric, natural gas
distribution and regulated pipeline
|
83.1
|
|
88.4
|
|
170.7
|
|
176.2
|
|
Nonregulated pipeline,
construction materials and contracting, construction services and
other
|
946.0
|
|
932.6
|
|
1,679.5
|
|
1,547.8
|
|
Total operation and
maintenance
|
1,029.1
|
|
1,021.0
|
|
1,850.2
|
|
1,724.0
|
|
Purchased natural gas
sold
|
56.8
|
|
54.9
|
|
222.2
|
|
238.7
|
|
Depreciation,
depletion and amortization
|
71.5
|
|
63.0
|
|
140.8
|
|
122.9
|
|
Taxes, other than
income
|
52.6
|
|
48.0
|
|
116.7
|
|
102.0
|
|
Electric fuel and
purchased power
|
14.6
|
|
19.4
|
|
35.1
|
|
45.7
|
|
Total operating
expenses
|
1,224.6
|
|
1,206.3
|
|
2,365.0
|
|
2,233.3
|
|
Operating
income
|
138.3
|
|
97.3
|
|
195.3
|
|
161.5
|
|
Other
income
|
10.0
|
|
1.6
|
|
9.0
|
|
9.2
|
|
Interest
expense
|
24.8
|
|
25.4
|
|
49.3
|
|
48.8
|
|
Income before
income taxes
|
123.5
|
|
73.5
|
|
155.0
|
|
121.9
|
|
Income
taxes
|
23.7
|
|
10.4
|
|
29.7
|
|
17.7
|
|
Income from
continuing operations
|
99.8
|
|
63.1
|
|
125.3
|
|
104.2
|
|
Loss from
discontinued operations, net of tax
|
(.1)
|
|
(1.3)
|
|
(.5)
|
|
(1.5)
|
|
Net
income
|
$
|
99.7
|
|
$
|
61.8
|
|
$
|
124.8
|
|
$
|
102.7
|
|
|
|
|
|
|
Earnings per share
– basic:
|
|
|
|
|
Income from continuing
operations
|
$
|
.50
|
|
$
|
.32
|
|
$
|
.62
|
|
$
|
.53
|
|
Discontinued
operations, net of tax
|
—
|
|
(.01)
|
|
—
|
|
(.01)
|
|
Earnings per share
– basic
|
$
|
.50
|
|
$
|
.31
|
|
$
|
.62
|
|
$
|
.52
|
|
Earnings per share
– diluted:
|
|
|
|
|
Income from continuing
operations
|
$
|
.50
|
|
$
|
.32
|
|
$
|
.62
|
|
$
|
.53
|
|
Discontinued
operations, net of tax
|
—
|
|
(.01)
|
|
—
|
|
(.01)
|
|
Earnings per share
– diluted
|
$
|
.50
|
|
$
|
.31
|
|
$
|
.62
|
|
$
|
.52
|
|
Weighted average
common shares outstanding – basic
|
200.5
|
|
198.3
|
|
200.5
|
|
197.3
|
|
Weighted average
common shares outstanding – diluted
|
200.5
|
|
198.3
|
|
200.5
|
|
197.4
|
|
Selected Cash
Flows Information
|
|
Six Months
Ended
|
|
June 30,
|
|
2020
|
2019
|
|
(In
millions)
|
Operating
activities:
|
|
|
Net cash provided by
(used in) continuing operations
|
$
|
261.8
|
|
$
|
(23.6)
|
|
Net cash provided by
(used in) discontinued operations
|
(.4)
|
|
.7
|
|
Net cash provided by
(used in) operating activities
|
261.4
|
|
(22.9)
|
|
Investing
activities:
|
|
|
Net cash used in
continuing operations
|
(296.5)
|
|
(305.1)
|
|
Net cash provided by
discontinued operations
|
—
|
|
—
|
|
Net cash used in
investing activities
|
(296.5)
|
|
(305.1)
|
|
Financing
activities:
|
|
|
Net cash provided by
continuing operations
|
33.0
|
|
346.0
|
|
Net cash provided by
discontinued operations
|
—
|
|
—
|
|
Net cash provided by
financing activities
|
33.0
|
|
346.0
|
|
Increase (decrease)
in cash and cash equivalents
|
(2.1)
|
|
18.0
|
|
Cash and cash
equivalents - beginning of year
|
66.5
|
|
54.0
|
|
Cash and cash
equivalents - end of period
|
$
|
64.4
|
|
$
|
72.0
|
|
Outstanding
Revolving Credit Facilities
|
Balance at
June 30, 2020
|
Company
|
|
Facility
|
|
Facility
Limit
|
|
Amount
Outstanding
|
|
Letters
of Credit
|
|
Expiration
Date
|
|
|
|
|
(In
millions)
|
|
Montana-Dakota
Utilities Co.
|
|
Commercial
paper/Revolving credit agreement
|
(a)
|
$
|
175.0
|
|
|
$
|
35.0
|
|
|
$
|
—
|
|
|
12/19/24
|
Cascade Natural Gas
Corporation
|
|
Revolving credit
agreement
|
|
$
|
100.0
|
|
(b)
|
$
|
—
|
|
|
$
|
2.2
|
|
(c)
|
6/7/24
|
Intermountain Gas
Company
|
|
Revolving credit
agreement
|
|
$
|
85.0
|
|
(d)
|
$
|
11.2
|
|
|
$
|
1.4
|
|
(c)
|
6/7/24
|
Centennial Energy
Holdings, Inc.
|
|
Commercial
paper/Revolving credit agreement
|
(e)
|
$
|
600.0
|
|
|
$
|
255.1
|
|
|
$
|
—
|
|
|
12/19/24
|
|
|
(a)
|
The commercial paper
program is supported by a revolving credit agreement with various
banks (provisions allow for increased borrowings, at the option of
Montana-Dakota on stated conditions, up to a maximum of
$225.0 million). At June 30, 2020, there were no amounts
outstanding under the revolving credit agreement.
|
(b)
|
Certain provisions
allow for increased borrowings, up to a maximum of
$125.0 million.
|
(c)
|
Outstanding letter(s)
of credit reduce the amount available under the credit
agreement.
|
(d)
|
Certain provisions
allow for increased borrowings, up to a maximum of
$110.0 million.
|
(e)
|
The commercial paper
program is supported by a revolving credit agreement with various
banks (provisions allow for increased borrowings, at the option of
Centennial on stated conditions, up to a maximum of
$700.0 million). At June 30, 2020, there were no amounts
outstanding under the revolving credit agreement.
|
|
|
|
|
|
|
|
|
Capital
Expenditures
|
|
|
Business
Line
|
2020
Estimated
|
2021
Estimated
|
2022
Estimated
|
2020 - 2024
Total
Estimated
|
|
(In
millions)
|
Regulated energy
delivery
|
|
|
|
|
Electric
|
$
|
104
|
|
$
|
137
|
|
$
|
148
|
|
$
|
572
|
|
Natural gas
distribution
|
182
|
|
207
|
|
196
|
|
933
|
|
Pipeline
|
83
|
|
256
|
|
38
|
|
513
|
|
|
369
|
|
600
|
|
382
|
|
2,018
|
|
Construction
materials and services
|
|
|
|
|
Construction
services
|
79
|
|
20
|
|
20
|
|
160
|
|
Construction materials
and contracting
|
161
|
|
154
|
|
157
|
|
697
|
|
|
240
|
|
174
|
|
177
|
|
857
|
|
Other
|
5
|
|
3
|
|
3
|
|
17
|
|
Total capital
expenditures
|
$
|
614
|
|
$
|
777
|
|
$
|
562
|
|
$
|
2,892
|
|
Note: Total capital
expenditures are presented on a gross basis.
|
Capital expenditures for 2020 include line-of-sight
opportunities at the company's business units. Capital expenditures
have been updated to reflect project timeline and scope changes
made throughout the quarter. Acquisitions would be incremental to
the outlined capital program. Operating cash flows are projected to
be $575 million to $625 million
in 2020.
Non-GAAP Financial Measures
The company, in addition to presenting its earnings in conformity
with GAAP, has provided non-GAAP financial measures of EBITDA by
operating segment and EBITDA from continuing operations. The
company defines EBITDA as net income (loss) attributable to the
operating segment before interest; taxes; and depreciation,
depletion and amortization; and EBITDA from continuing operations
as income (loss) from continuing operations before interest; taxes;
and depreciation, depletion and amortization.
The company presents EBITDA by operating segment and EBITDA from
continuing operations on a consolidated basis in this news release.
The company believes EBITDA and EBITDA from continuing operations
are useful financial measures in providing meaningful information
about operational efficiency compared to the company's peers by
excluding the impacts of differences in tax jurisdictions and
structures, debt levels and capital investment. The presentation of
EBITDA and EBITDA from continuing operations also is provided for
investment professionals who use such metrics in their analyses.
The investment community often uses these metrics to assess the
operating performance of a company's business and to provide a
consistent comparison of performance from period to period. The
company's management uses the non-GAAP financial measures in
conjunction with GAAP results when evaluating the company's
operating results and calculating compensation packages. Non-GAAP
financial measures are not standardized; therefore, it may not be
possible to compare such financial measures with other companies'
non-GAAP financial measures having the same or similar names. The
presentation of this additional information is not meant to be
considered a substitution for financial measures prepared in
accordance with GAAP. The company strongly encourages investors to
review the consolidated financial statements in their entirety and
to not rely on any single financial measure.
The following table provides a reconciliation of consolidated
GAAP net income to EBITDA from continuing operations. The
reconciliation for each operating segment's EBITDA is included
within each operating segments' condensed income statement.
|
Three Months
Ended
|
Six Months
Ended
|
|
June 30,
|
June 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
(In
millions)
|
Net
income
|
$
|
99.7
|
|
$
|
61.8
|
|
$
|
124.8
|
|
$
|
102.7
|
|
Loss from discontinued
operations, net of tax
|
.1
|
|
1.3
|
|
.5
|
|
1.5
|
|
Income from
continuing operations
|
99.8
|
|
63.1
|
|
125.3
|
|
104.2
|
|
Adjustments:
|
|
|
|
|
Interest
expense
|
24.8
|
|
25.4
|
|
49.3
|
|
48.8
|
|
Income
taxes
|
23.7
|
|
10.4
|
|
29.7
|
|
17.7
|
|
Depreciation,
depletion and amortization
|
71.5
|
|
63.0
|
|
140.8
|
|
122.9
|
|
EBITDA from
continuing operations
|
$
|
219.8
|
|
$
|
161.9
|
|
$
|
345.1
|
|
$
|
293.6
|
|
The discussion that follows also includes adjusted gross margin,
which is considered a non-GAAP financial measure as it relates to
the company's electric and natural gas distribution segments. This
financial measure, adjusted gross margin, can be used in addition
to operating revenues and operating expenses when evaluating the
results of operations for the electric and natural gas distribution
segments. Adjusted gross margin for the electric and natural gas
distribution segments is calculated by adding back adjustments to
operating income (loss). These add-back adjustments include:
operation and maintenance expense; depreciation, depletion and
amortization expense; and certain taxes, other than income.
The presentation of adjusted gross margin is intended to be a
helpful supplemental financial measure for investors' understanding
of the segments' operating performance. This non-GAAP financial
measure should not be considered as an alternative to, or more
meaningful than, GAAP financial measures such as operating income
(loss) or net income (loss). The company's non-GAAP financial
measure, adjusted gross margin, may not be comparable to other
companies' gross margin measures.
Adjusted gross margin includes operating revenues less the cost
of electric fuel and purchased power, purchased natural gas sold
and certain taxes, other than income. These taxes, other than
income, included as a reduction to adjusted gross margin relate to
revenue taxes. These segments pass on to their customers the
increases and decreases in the wholesale cost of power purchases,
natural gas and other fuel supply costs in accordance with
regulatory requirements. As such, the segments' revenues are
directly impacted by the fluctuations in such commodities. Revenue
taxes, which are passed back to customers, fluctuate with revenues
as they are calculated as a percentage of revenues. For these
reasons, period over period, the segments' operating income (loss)
is generally not impacted. The company's management believes the
adjusted gross margin is a useful supplemental financial measure as
these items are included in both operating revenues and operating
expenses. The company's management also believes that adjusted
gross margin and the remaining operating expenses that calculate
operating income (loss) are useful in assessing the company's
utility performance as management has the ability to influence
control over the remaining operating expenses.
The following tables provide reconciliations of the company's
electric and natural gas distribution segment's operating income to
adjusted gross margin.
Electric
|
|
|
|
|
|
Three Months
Ended
|
Six Months
Ended
|
|
June 30,
|
June 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
(In millions)
|
Operating
income
|
$
|
12.8
|
|
$
|
9.8
|
|
$
|
27.6
|
|
$
|
27.8
|
|
Adjustments:
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
Operation and
maintenance
|
29.0
|
|
33.6
|
|
59.7
|
|
63.8
|
|
Depreciation,
depletion and amortization
|
15.7
|
|
13.9
|
|
31.3
|
|
27.6
|
|
Taxes, other than
income
|
4.4
|
|
4.2
|
|
8.7
|
|
8.4
|
|
Total
adjustments
|
49.1
|
|
51.7
|
|
99.7
|
|
99.8
|
|
Adjusted gross
margin
|
$
|
61.9
|
|
$
|
61.5
|
|
$
|
127.3
|
|
$
|
127.6
|
|
Natural Gas
Distribution
|
|
|
Three Months
Ended
|
Six Months
Ended
|
|
June 30,
|
June 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
(In millions)
|
Operating income
(loss)
|
$
|
.7
|
|
$
|
(2.6)
|
|
$
|
50.7
|
|
$
|
47.7
|
|
Adjustments:
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
Operation and
maintenance
|
43.1
|
|
43.6
|
|
89.1
|
|
90.0
|
|
Depreciation,
depletion and amortization
|
21.0
|
|
19.7
|
|
41.8
|
|
39.1
|
|
Taxes, other than
income
|
6.0
|
|
5.6
|
|
12.1
|
|
11.8
|
|
Total
adjustments
|
70.1
|
|
68.9
|
|
143.0
|
|
140.9
|
|
Adjusted gross
margin
|
$
|
70.8
|
|
$
|
66.3
|
|
$
|
193.7
|
|
$
|
188.6
|
|
|
|
Regulated Energy
Delivery
|
|
|
|
|
|
Electric
|
Three Months
Ended
|
Six Months
Ended
|
|
June 30,
|
June 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
(Dollars in millions,
where applicable)
|
Operating
revenues
|
$
|
76.6
|
|
$
|
81.0
|
|
$
|
162.7
|
|
$
|
173.6
|
|
Electric fuel and
purchased power
|
14.6
|
|
19.4
|
|
35.1
|
|
45.7
|
|
Taxes, other than
income
|
.1
|
|
.1
|
|
.3
|
|
.3
|
|
Adjusted gross
margin
|
61.9
|
|
61.5
|
|
127.3
|
|
127.6
|
|
Operating
expenses:
|
|
|
|
|
Operation and
maintenance
|
29.0
|
|
33.6
|
|
59.7
|
|
63.8
|
|
Depreciation,
depletion and amortization
|
15.7
|
|
13.9
|
|
31.3
|
|
27.6
|
|
Taxes, other than
income
|
4.4
|
|
4.2
|
|
8.7
|
|
8.4
|
|
Total operating
expenses
|
49.1
|
|
51.7
|
|
99.7
|
|
99.8
|
|
Operating
income
|
12.8
|
|
9.8
|
|
27.6
|
|
27.8
|
|
Other income
(expense)
|
2.5
|
|
(.1)
|
|
2.1
|
|
2.1
|
|
Interest
expense
|
6.8
|
|
6.2
|
|
13.6
|
|
12.7
|
|
Income before
income taxes
|
8.5
|
|
3.5
|
|
16.1
|
|
17.2
|
|
Income
taxes
|
(3.7)
|
|
(4.0)
|
|
(7.4)
|
|
(5.8)
|
|
Net
income
|
$
|
12.2
|
|
$
|
7.5
|
|
$
|
23.5
|
|
$
|
23.0
|
|
Adjustments:
|
|
|
|
|
Interest
expense
|
6.8
|
|
6.2
|
|
13.6
|
|
12.7
|
|
Income
taxes
|
(3.7)
|
|
(4.0)
|
|
(7.4)
|
|
(5.8)
|
|
Depreciation,
depletion and amortization
|
15.7
|
|
13.9
|
|
31.3
|
|
27.6
|
|
EBITDA
|
$
|
31.0
|
|
$
|
23.6
|
|
$
|
61.0
|
|
$
|
57.5
|
|
Retail sales
(million kWh):
|
|
|
|
|
Residential
|
257.7
|
|
226.6
|
|
588.3
|
|
606.2
|
|
Commercial
|
323.7
|
|
336.7
|
|
699.5
|
|
742.9
|
|
Industrial
|
115.9
|
|
136.2
|
|
268.9
|
|
275.7
|
|
Other
|
20.4
|
|
22.1
|
|
40.8
|
|
44.0
|
|
|
717.7
|
|
721.6
|
|
1,597.5
|
|
1,668.8
|
|
Average cost of
electric fuel and purchased power per kWh
|
$
|
.019
|
|
$
|
.024
|
|
$
|
.020
|
|
$
|
.025
|
|
The electric business reported net income of $12.2 million in the second quarter of 2020,
compared to $7.5 million for the same
period in 2019. The increase in net income was largely the result
of a $4.6 million decrease in
operation and maintenance expense, mainly due to the absence of a
prior year planned outage at Coyote Station, lower payroll-related
costs and decreased miscellaneous employee expenses. Also
contributing to the increase in net income were higher investment
returns on certain benefit plans and the absence of a write-down on
a non-utility investment made in the prior year. Electric retail
sales margins increased during the quarter driven by higher
residential sales volumes, offset by lower industrial and
commercial volumes. Partially offsetting the increase was higher
depreciation, depletion and amortization expense.
The electric business's EBITDA increased $7.4 million in the second quarter of 2020,
compared to 2019, primarily the result of lower operation and
maintenance expense and higher investment returns, as previously
discussed.
Natural Gas
Distribution
|
Three Months
Ended
|
Six Months
Ended
|
|
June 30,
|
June 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
(Dollars in millions,
where applicable)
|
Operating
revenues
|
$
|
141.7
|
|
$
|
133.9
|
|
$
|
468.3
|
|
$
|
476.0
|
|
Purchased natural gas
sold
|
64.6
|
|
62.3
|
|
255.2
|
|
270.0
|
|
Taxes, other than
income
|
6.3
|
|
5.3
|
|
19.4
|
|
17.4
|
|
Adjusted gross
margin
|
70.8
|
|
66.3
|
|
193.7
|
|
188.6
|
|
Operating
expenses:
|
|
|
|
|
Operation and
maintenance
|
43.1
|
|
43.6
|
|
89.1
|
|
90.0
|
|
Depreciation,
depletion and amortization
|
21.0
|
|
19.7
|
|
41.8
|
|
39.1
|
|
Taxes, other than
income
|
6.0
|
|
5.6
|
|
12.1
|
|
11.8
|
|
Total operating
expenses
|
70.1
|
|
68.9
|
|
143.0
|
|
140.9
|
|
Operating income
(loss)
|
.7
|
|
(2.6)
|
|
50.7
|
|
47.7
|
|
Other
income
|
4.1
|
|
.8
|
|
4.4
|
|
3.7
|
|
Interest
expense
|
9.0
|
|
8.8
|
|
18.1
|
|
17.1
|
|
Income (loss)
before income taxes
|
(4.2)
|
|
(10.6)
|
|
37.0
|
|
34.3
|
|
Income
taxes
|
(3.2)
|
|
(4.3)
|
|
5.6
|
|
4.0
|
|
Net income
(loss)
|
$
|
(1.0)
|
|
$
|
(6.3)
|
|
$
|
31.4
|
|
$
|
30.3
|
|
Adjustments:
|
|
|
|
|
Interest
expense
|
9.0
|
|
8.8
|
|
18.1
|
|
17.1
|
|
Income
taxes
|
(3.2)
|
|
(4.3)
|
|
5.6
|
|
4.0
|
|
Depreciation,
depletion and amortization
|
21.0
|
|
19.7
|
|
41.8
|
|
39.1
|
|
EBITDA
|
$
|
25.8
|
|
$
|
17.9
|
|
$
|
96.9
|
|
$
|
90.5
|
|
Volumes
(MMdk)
|
|
|
|
|
Retail
sales:
|
|
|
|
|
Residential
|
9.7
|
|
8.8
|
|
37.4
|
|
40.2
|
|
Commercial
|
6.3
|
|
6.4
|
|
25.1
|
|
27.3
|
|
Industrial
|
1.0
|
|
1.1
|
|
2.5
|
|
2.7
|
|
|
17.0
|
|
16.3
|
|
65.0
|
|
70.2
|
|
Transportation
sales:
|
|
|
|
|
Commercial
|
.4
|
|
.4
|
|
1.1
|
|
1.2
|
|
Industrial
|
30.2
|
|
31.6
|
|
75.8
|
|
72.2
|
|
|
30.6
|
|
32.0
|
|
76.9
|
|
73.4
|
|
Total
throughput
|
47.6
|
|
48.3
|
|
141.9
|
|
143.6
|
|
Average cost of
natural gas per dk
|
$
|
3.81
|
|
$
|
3.83
|
|
$
|
3.93
|
|
$
|
3.85
|
|
The natural gas distribution business reported a seasonal loss
of $1.0 million in the second quarter of 2020, compared to a
loss of $6.3 million for the same
period in 2019. The decreased loss was driven by an increase in
adjusted gross margin, the result of weather normalization and
conservation adjustments, approved rate recovery in certain
jurisdictions and a 4.3% increase in sales volumes. Higher
investment returns on certain benefit plans and the absence of a
write-down on a non-utility investment made in the prior year also
had a positive impact on net income. Partially offsetting the
decreased loss was higher depreciation, depletion and amortization
expense from increased property, plant and equipment
balances.
The natural gas distribution business's EBITDA increased
$7.9 million in the second quarter of
2020, compared to 2019, primarily the result of higher adjusted
gross margins and investment returns, as previously discussed.
Pipeline
|
Three Months
Ended
|
Six Months
Ended
|
|
June 30,
|
June 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
(Dollars
in millions)
|
Operating
revenues
|
$
|
35.7
|
|
$
|
36.2
|
|
$
|
71.5
|
|
$
|
68.8
|
|
Operating
expenses:
|
|
|
|
|
Operation and
maintenance
|
15.1
|
|
16.9
|
|
30.1
|
|
31.5
|
|
Depreciation,
depletion and amortization
|
5.3
|
|
5.3
|
|
11.2
|
|
10.1
|
|
Taxes, other than
income
|
3.1
|
|
3.3
|
|
6.6
|
|
6.6
|
|
Total operating
expenses
|
23.5
|
|
25.5
|
|
47.9
|
|
48.2
|
|
Operating
income
|
12.2
|
|
10.7
|
|
23.6
|
|
20.6
|
|
Other
income
|
1.0
|
|
.2
|
|
1.0
|
|
.8
|
|
Interest
expense
|
1.9
|
|
1.8
|
|
3.9
|
|
3.6
|
|
Income before
income taxes
|
11.3
|
|
9.1
|
|
20.7
|
|
17.8
|
|
Income
taxes
|
2.3
|
|
2.0
|
|
4.4
|
|
3.8
|
|
Net
income
|
$
|
9.0
|
|
$
|
7.1
|
|
$
|
16.3
|
|
$
|
14.0
|
|
Adjustments:
|
|
|
|
|
Interest
expense
|
1.9
|
|
1.8
|
|
3.9
|
|
3.6
|
|
Income
taxes
|
2.3
|
|
2.0
|
|
4.4
|
|
3.8
|
|
Depreciation,
depletion and amortization
|
5.3
|
|
5.3
|
|
11.2
|
|
10.1
|
|
EBITDA
|
$
|
18.5
|
|
$
|
16.2
|
|
$
|
35.8
|
|
$
|
31.5
|
|
Transportation
volumes (MMdk)
|
95.6
|
|
110.1
|
|
207.3
|
|
208.8
|
|
Natural gas
gathering volumes (MMdk)
|
2.1
|
|
3.5
|
|
5.4
|
|
6.9
|
|
Customer natural
gas storage balance (MMdk):
|
|
|
|
Beginning of
period
|
3.8
|
|
2.3
|
|
16.2
|
|
13.9
|
|
Net injection
(withdrawal)
|
15.3
|
|
9.1
|
|
2.9
|
|
(2.5)
|
|
End of
period
|
19.1
|
|
11.4
|
|
19.1
|
|
11.4
|
|
The pipeline business reported net income of $9.0 million in the second quarter of 2020,
compared to $7.1 million in
2019. The increase in net income was driven by higher revenues from
organic growth projects placed in service in the second half of
2019 and early 2020, as well as demand for the company's storage
services. Higher investment returns on certain benefit plans also
had a positive impact on the quarter.
Lower revenues from non-regulated projects and the sale of
gathering assets was partially offset by lower operation and
maintenance expense from associated projects and the absence of
costs associated with the gathering assets.
The pipeline business's EBITDA increased $2.3 million in the second quarter of 2020,
compared to 2019, primarily from higher revenues, as
previously discussed.
Construction
Materials and Services
|
|
|
|
|
|
Construction
Services
|
Three Months
Ended
|
Six Months
Ended
|
|
June 30,
|
June 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
(In
millions)
|
Operating
revenues
|
$
|
497.2
|
|
$
|
464.9
|
|
$
|
1,011.9
|
|
$
|
885.7
|
|
Cost of
sales:
|
|
|
|
|
Operation and
maintenance
|
411.1
|
|
391.1
|
|
847.3
|
|
742.7
|
|
Depreciation,
depletion and amortization
|
4.0
|
|
3.7
|
|
7.9
|
|
7.3
|
|
Taxes, other than
income
|
17.2
|
|
14.6
|
|
40.6
|
|
30.5
|
|
Total cost of
sales
|
432.3
|
|
409.4
|
|
895.8
|
|
780.5
|
|
Gross
margin
|
64.9
|
|
55.5
|
|
116.1
|
|
105.2
|
|
Selling, general
and administrative expense:
|
|
|
|
|
Operation and
maintenance
|
23.5
|
|
22.1
|
|
47.4
|
|
42.4
|
|
Depreciation,
depletion and amortization
|
2.4
|
|
.4
|
|
4.2
|
|
.8
|
|
Taxes, other than
income
|
1.1
|
|
1.0
|
|
2.8
|
|
2.6
|
|
Total selling,
general and administrative expense
|
27.0
|
|
23.5
|
|
54.4
|
|
45.8
|
|
Operating
income
|
37.9
|
|
32.0
|
|
61.7
|
|
59.4
|
|
Other
income
|
.5
|
|
.6
|
|
.7
|
|
1.2
|
|
Interest
expense
|
1.1
|
|
1.4
|
|
2.3
|
|
2.5
|
|
Income before
income taxes
|
37.3
|
|
31.2
|
|
60.1
|
|
58.1
|
|
Income
taxes
|
9.4
|
|
8.4
|
|
15.3
|
|
15.2
|
|
Net
income
|
$
|
27.9
|
|
$
|
22.8
|
|
$
|
44.8
|
|
$
|
42.9
|
|
Adjustments:
|
|
|
|
|
Interest
expense
|
1.1
|
|
1.4
|
|
2.3
|
|
2.5
|
|
Income
taxes
|
9.4
|
|
8.4
|
|
15.3
|
|
15.2
|
|
Depreciation,
depletion and amortization
|
6.4
|
|
4.1
|
|
12.1
|
|
8.1
|
|
EBITDA
|
$
|
44.8
|
|
$
|
36.7
|
|
$
|
74.5
|
|
$
|
68.7
|
|
The construction services business reported net income of
$27.9 million in the second
quarter of 2020, compared to $22.8 million for the same period in 2019.
The increase in net income was primarily the result of higher
outside and inside workloads. Outside specialty contracting has
seen an increase in workloads from utility customers while inside
specialty contracting workloads benefited from strong hospitality,
data center and commercial customer demand. Higher selling, general
and administrative costs, primarily payroll-related costs,
partially offset the increase in net income.
The construction services business's EBITDA increased
$8.1 million in the second quarter of
2020, compared to 2019, primarily a result of the previously
discussed increase in outside and inside specialty contracting
workloads.
Construction
Materials and Contracting
|
Three Months
Ended
|
Six Months
Ended
|
|
June 30,
|
June 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
(Dollars in
millions)
|
Operating
revenues
|
$
|
621.1
|
|
$
|
596.0
|
|
$
|
883.3
|
|
$
|
823.2
|
|
Cost of
sales:
|
|
|
|
|
Operation and
maintenance
|
487.9
|
|
494.7
|
|
738.7
|
|
715.5
|
|
Depreciation,
depletion and amortization
|
21.2
|
|
18.7
|
|
40.8
|
|
35.5
|
|
Taxes, other than
income
|
13.6
|
|
13.0
|
|
23.0
|
|
21.4
|
|
Total cost of
sales
|
522.7
|
|
526.4
|
|
802.5
|
|
772.4
|
|
Gross
margin
|
98.4
|
|
69.6
|
|
80.8
|
|
50.8
|
|
Selling, general
and administrative expense:
|
|
|
|
|
Operation and
maintenance
|
21.6
|
|
21.8
|
|
43.8
|
|
41.8
|
|
Depreciation,
depletion and amortization
|
1.3
|
|
.7
|
|
2.3
|
|
1.5
|
|
Taxes, other than
income
|
.8
|
|
.9
|
|
3.2
|
|
2.9
|
|
Total selling,
general and administrative expense
|
23.7
|
|
23.4
|
|
49.3
|
|
46.2
|
|
Operating
income
|
74.7
|
|
46.2
|
|
31.5
|
|
4.6
|
|
Other
income
|
1.9
|
|
—
|
|
.7
|
|
1.3
|
|
Interest
expense
|
5.7
|
|
6.8
|
|
10.9
|
|
12.1
|
|
Income (loss)
before income taxes
|
70.9
|
|
39.4
|
|
21.3
|
|
(6.2)
|
|
Income
taxes
|
17.9
|
|
10.2
|
|
6.5
|
|
(.9)
|
|
Net income
(loss)
|
$
|
53.0
|
|
$
|
29.2
|
|
$
|
14.8
|
|
$
|
(5.3)
|
|
Adjustments:
|
|
|
|
|
Interest
expense
|
5.7
|
|
6.8
|
|
10.9
|
|
12.1
|
|
Income
taxes
|
17.9
|
|
10.2
|
|
6.5
|
|
(.9)
|
|
Depreciation,
depletion and amortization
|
22.5
|
|
19.4
|
|
43.1
|
|
37.0
|
|
EBITDA
|
$
|
99.1
|
|
$
|
65.6
|
|
$
|
75.3
|
|
$
|
42.9
|
|
Sales
(000's):
|
|
|
|
|
Aggregates
(tons)
|
8,739
|
|
9,084
|
|
12,956
|
|
12,955
|
|
Asphalt
(tons)
|
2,166
|
|
1,913
|
|
2,393
|
|
2,079
|
|
Ready-mixed concrete
(cubic yards)
|
1,119
|
|
1,144
|
|
1,823
|
|
1,752
|
|
The construction materials and contracting business reported net
income of $53.0 million in the second
quarter of 2020, compared to $29.2
million in the same period in 2019. The increase in net
income was driven by higher contracting and material margins and
revenues. Favorable weather across the company's footprint allowed
for more product sales and the ability to work through more backlog
than typically completed in the second quarter, which drove the
increase in margins. Higher investment returns on certain benefit
plans also had a positive impact on the quarter.
The construction materials and contracting business's EBITDA
increased $33.5 million in the second
quarter of 2020, compared to 2019. The increased EBITDA was the
result of higher margins, as previously discussed.
Other
|
|
|
|
|
|
Three Months
Ended
|
Six Months
Ended
|
|
June 30,
|
June 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
(In
millions)
|
Operating
revenues
|
$
|
2.9
|
|
$
|
2.9
|
|
$
|
5.9
|
|
$
|
10.7
|
|
Operating
expenses:
|
|
|
|
|
Operation and
maintenance
|
2.3
|
|
1.1
|
|
4.4
|
|
8.2
|
|
Depreciation,
depletion and amortization
|
.6
|
|
.6
|
|
1.3
|
|
1.0
|
|
Taxes, other than
income
|
—
|
|
—
|
|
—
|
|
.1
|
|
Total operating
expenses
|
2.9
|
|
1.7
|
|
5.7
|
|
9.3
|
|
Operating
income
|
—
|
|
1.2
|
|
.2
|
|
1.4
|
|
Other
income
|
—
|
|
.2
|
|
.2
|
|
.3
|
|
Interest
expense
|
.3
|
|
.5
|
|
.6
|
|
1.0
|
|
Income (loss)
before income taxes
|
(.3)
|
|
.9
|
|
(.2)
|
|
.7
|
|
Income
taxes
|
1.0
|
|
(1.9)
|
|
5.3
|
|
1.4
|
|
Net income
(loss)
|
$
|
(1.3)
|
|
$
|
2.8
|
|
$
|
(5.5)
|
|
$
|
(.7)
|
|
The net loss for Other reflects income tax adjustments related
to the consolidated company's annualized estimated tax rate.
General and administrative costs and interest expense previously
allocated to the exploration and production and refining businesses
that do not meet the criteria for income (loss) from discontinued
operations also are included in Other.
Other Financial
Data
|
|
|
|
June 30,
|
|
2020
|
|
2019
|
|
|
(In millions, except
per share amounts)
|
|
(Unaudited)
|
Book value per common
share
|
$
|
14.45
|
|
$
|
13.37
|
|
Market price per common
share
|
$
|
22.18
|
|
$
|
25.80
|
|
Dividend yield
(indicated annual rate)
|
3.7%
|
|
3.1%
|
|
Price/earnings from
continuing operations ratio (12 months ended)
|
12.5x
|
|
17.7x
|
|
Market value as a
percent of book value
|
153.5%
|
|
193.0%
|
|
Net operating cash flow
(year to date)
|
$
|
261
|
|
$
|
(23)
|
|
Total assets
|
$
|
7,911
|
|
$
|
7,591
|
|
Total equity
|
$
|
2,898
|
|
$
|
2,660
|
|
Total debt
|
$
|
2,357
|
|
$
|
2,470
|
|
Capitalization
ratios:
|
|
|
Total
equity
|
55.1%
|
|
51.9%
|
|
Total debt
|
44.9
|
|
48.1
|
|
|
100.0%
|
|
100.0%
|
|
View original content to download
multimedia:http://www.prnewswire.com/news-releases/mdu-resources-reports-61-increase-in-second-quarter-earnings-increases-guidance-301106051.html
SOURCE MDU Resources Group, Inc.