BISMARCK, N.D. ,
Feb. 8,
2024 /PRNewswire/ --
- Record electric retail sales volumes.
- Record pipeline earnings and natural gas transportation
volumes.
- Record construction services revenues, earnings and
EBITDA.
- 2024 guidance: Regulated energy delivery earnings in the range
of $170 million to $180 million; construction services revenues of
$2.9 billion to $3.1 billion with EBITDA of $220 million to $240
million.
- Investor Day scheduled for March
13 at NYSE.
MDU Resources Group, Inc. (NYSE: MDU) today reported strong 2023
results from its utility, pipeline and construction services
businesses. It also completed in the fourth quarter of 2023 the
tax-free exchange of its retained shares in Knife River
Corporation, the construction materials business that it spun off
on May 31, 2023.
"Through the hard work and dedication of our employees, 2023 was
truly an outstanding year for MDU Resources as we continue to
transform our company," said Nicole A.
Kivisto, president and CEO of MDU Resources. "In addition to
successfully completing the spinoff of Knife River Corporation as
we work toward becoming a pure-play regulated energy delivery
company, we had record results across our remaining businesses. Our
pipeline business had record earnings with continued system
expansion and strong demand for storage services, and our utility
business benefited from rate relief in certain jurisdictions as
well as customer and demand growth. Our construction services
business also had a fantastic year, with record revenue, earnings
and EBITDA."
The following table summarizes the company's results:
|
Twelve months ended
Dec. 31,
|
|
2023
|
2022
|
|
(in millions, except
per share amounts)
|
Net income
|
$
414.7
|
$
367.5
|
Earnings per share,
diluted
|
$
2.03
|
$
1.81
|
|
|
|
Income from continuing
operations1
|
$
480.4
|
$
250.8
|
Earnings per share from
continuing operations, diluted1
|
$
2.36
|
$
1.23
|
|
|
|
Adjusted income from
continuing operations2,3
|
$
305.1
|
$
254.5
|
Adjusted earnings per
share from continuing operations, diluted2,3
|
$
1.50
|
$
1.25
|
|
|
|
Regulated energy
delivery earnings
|
$
167.0
|
$
137.6
|
|
|
|
Construction
services
|
|
|
Revenue
|
$
2,854.4
|
$
2,699.2
|
Earnings
|
$
137.2
|
$
124.8
|
EBITDA3
|
$
222.7
|
$
193.4
|
|
1 Includes the gain of $186.6 million
on the tax-free exchange of the retained shares of Knife River in
the fourth quarter 2023. MDU Resources has reported Knife River's
results and the transaction costs and certain interest expenses
associated with the spinoff as discontinued operations, and MDU
Resources' prior period results have been restated to reflect the
spinoff.
|
2 Adjusted income from continuing
operations excludes the gain on the tax-free exchange of the
retained shares of Knife River as well as costs associated with MDU
Resources' strategic initiatives.
|
3Adjusted
income from continuing operations, adjusted earnings per share from
continuing operations and EBITDA are non-GAAP financial measures.
Additional explanation is provided in the "Non-GAAP Financial
Measures" section of this news release.
|
|
"We expect this strong momentum to continue into 2024 as we
invest in transmission and distribution upgrades across our utility
footprint and additional expansion projects at our natural gas
pipeline business. Our construction services business also
continues its growth trajectory, with strong backlog and margins,
as we work toward the planned spinoff of this business in late
2024," Kivisto said. "We look forward to providing more detail
about our expectations for the future at our investor day on
March 13 at the New York Stock
Exchange."
In the fourth quarter of 2023, the company on a GAAP basis
earned $170.7 million, or
84 cents per share, compared to
fourth quarter 2022 GAAP earnings of $117.1
million, or 57 cents per
share. Fourth quarter 2023 income from continuing operations was
$170.7 million, or 84 cents per share, compared to fourth quarter
2022 income from continuing operations of $103.9 million, or 51
cents per share. Adjusted income from continuing operations
for fourth quarter 2023 was $98.8
million, or 48 cents per
share, compared to adjusted income from continuing operations for
fourth quarter 2022 of $107.6
million, or 53 cents per
share. Additional information about the fourth quarter results is
available following each business segment's financial table.
Results at each of MDU Resources' continuing businesses were
positively impacted in 2023 on a non-cash basis by higher
investment returns on nonqualified benefit plans. Collectively, the
positive earnings variance was approximately $17.7 million, or 9
cents per share, compared to 2022. In the fourth quarter of
2023, the positive earnings variance was approximately $1.8 million, or 1
cent per share, compared to fourth quarter 2022. The company
attributes this change in investment returns to fluctuations in the
financial markets.
Regulated Energy Delivery Highlights
Electric and
Natural Gas Utility
The electric and natural gas utility
earned $120.1 million in 2023,
compared to $102.3 million in 2022.
Results were driven by:
- Approved rate relief in certain electric and natural gas
jurisdictions.
- Electric retail sales volumes increasing 25.5% compared to
2022, to an all-time record high for the company. The increase was
primarily from electricity usage at a data center that began
operating in the company's service territory in mid-2023.
- Natural gas retail sales volumes decreasing 6.6% compared to
2022, largely related to warmer weather across the company's
service territory.
- Several non-recurring items with a net benefit of $3 million in 2023.
The utility, which serves 1.2 million customers, saw customer
growth of 1.3% in 2023. It expects customer growth to continue at a
rate of 1%-2% annually and rate base to grow approximately 7% on a
compounded annual basis over the next five years.
Regulatory update:
- On Aug. 15, 2023, the utility filed with the South Dakota
Public Utilities Commission an electric rate case requesting a
revenue increase of $3 million, or
17.3%, and a natural gas rate case requesting a revenue increase of
$7.4 million, or 11.2%. The requests
are pending decisions by the commission. On Jan. 26, 2024, the utility requested an interim
electric rate revenue increase of $2.7
million, or 15.4%, and an interim natural gas rate increase
of $7.4 million, or 11.2%, to be
effective March 1, 2024. The interim
rates are subject to refund based on the commission's decisions in
the cases.
- On Oct. 2, 2023, the utility
filed with the North Dakota Public Service Commission an electric
service agreement request to serve an additional data center that
is expected to be online in mid-2024 in its service territory. The
request is pending a decision by the commission.
- On Nov. 1, 2023, the utility
filed with the North Dakota Public Service Commission a natural gas
rate case requesting a revenue increase of $11.6 million, or 7.5%. The utility implemented
interim natural gas rates effective Jan. 1,
2024, that will increase revenue $10.1 million, or 6.5%. The interim rates are
subject to refund based on the commission's decision in the
case.
- In 2024, the utility expects to file a multiyear natural gas
rate case in Washington and
natural gas rate cases in Montana,
Oregon and Wyoming.
The company's new Heskett Unit IV, an 88-megawatt natural
gas-fired electric generating facility near Mandan, North Dakota, was expected to be
online in 2023. Initial testing identified certain performance
concerns. Modifications are being made and, barring any setbacks,
the facility is now expected to be fully operational in the second
quarter of 2024.
Pipeline
The pipeline business had record earnings of
$46.9 million in 2023, up 33%
compared to $35.3 million in 2022.
Results were driven by:
- Record annual transportation volumes, which increased 17%
compared to 2022. The volume increases were largely from higher
contracted volume commitments on the North Bakken Expansion
project and other expansion projects placed in service in 2022 and
2023. The company now has capacity to transport approximately 2.6
billion cubic feet of natural gas per day.
- Higher revenue from new transportation and storage rates, as
approved by the Federal Energy Regulatory Commission, that were
effective Aug. 1.
- Higher natural gas storage service usage.
The pipeline business has a number of additional growth projects
underway:
- The 2023 Line Section 27 expansion project in northwestern
North Dakota is expected to be in
service in the first quarter of 2024. It will add 175 million cubic
feet of natural gas transportation capacity per day.
- Construction is expected to begin in the second quarter on
the Wahpeton expansion project, which will add approximately
20 million cubic feet of natural gas transportation capacity per
day in eastern North Dakota. The
project is expected to cost approximately $75 million and be in service in late 2024.
- The Line Section 28 expansion will serve a natural gas-fired
power plant in northwestern North
Dakota, which is supported by a long-term negotiated
customer agreement. Construction is anticipated to begin in the
second quarter and the project is expected to be in service in the
third quarter of 2024. It will add 137 million cubic feet of
natural gas transportation capacity per day.
Construction Services Highlights
The construction
services business had record revenues of $2.85 billion and record earnings of $137.2 million in 2023, compared to revenues of
$2.7 billion and earnings of
$124.8 million in 2022. It also had
record EBITDA of $222.7 million,
compared to EBITDA of $193.4 million
in 2022.
Results were driven by:
- Strong demand for commercial and institutional services work,
particularly for hospitality, high-tech, data center and health
care clients.
- Strong demand for utility-related transmission, distribution
and underground work.
- Margin improvement from efficiency gains on projects and the
overall combination of the type of work performed.
- Higher interest expense and labor costs.
Backlog for construction services remained strong at
$2.01 billion as of Dec. 31, compared to $2.13
billion at Dec. 31, 2022.
As previously announced, MDU Resources is working toward a
tax-free spinoff of its construction services business into a
separate, publicly traded company. The spinoff is expected to be
complete in late 2024.
Discontinued Operations and Adjusted Earnings
On
May 31, 2023, MDU Resources completed
a spinoff of approximately 90% of the outstanding shares of its
construction materials subsidiary, Knife River, which became an
independent, publicly traded company. MDU Resources completed a
tax-free exchange of its retained shares of Knife River in the
fourth quarter of 2023, and the gain is reported as part of MDU
Resources' Other segment. MDU Resources has reported Knife River's
results and the transaction costs and certain interest expenses
associated with the spinoff as discontinued operations, and MDU
Resources' prior period results have been restated to reflect the
spinoff.
MDU Resources is reporting adjusted income from continuing
operations that excludes the gain on the tax-free exchange of
the retained shares of Knife River as well as costs associated with
MDU Resources' strategic initiatives. Adjusted income from
continuing operations is a non-GAAP measure. The "Non-GAAP
Financial Measures" section of this news release explains the
earnings adjustments. More information about MDU Resources'
strategic initiatives can be found on the company's website at
www.mdu.com.
Guidance
Because of MDU Resources' ongoing strategic
initiatives, the company is providing guidance for 2024 results by
business. Guidance does not include transaction costs associated
with the strategic initiatives or costs associated with standing up
the construction services business as a public company. For 2024,
MDU Resources expects:
- Earnings from its regulated energy delivery businesses in the
range of $170 million to $180 million.
- Construction services revenues in the range of $2.9 billion to $3.1
billion, with margins comparable to 2023, and EBITDA of
$220 million to $240 million.
The expected 2024 results are based on these assumptions:
- Normal weather for the year, including precipitation and
temperatures, across all company markets.
- Normal economic and operating conditions.
- Continued availability of necessary equipment and
materials.
- Electric and natural gas customer growth continuing at a rate
of 1%-2% annually.
- No planned equity issuances.
Conference Call
MDU Resources' management will discuss
on a webcast at 2 p.m. EST today the
company's 2023 results. The webcast can be accessed at www.mdu.com
under the "Investor Relations" heading. Select "Events &
Presentations," and click on "Year-End 2023 Earnings Conference
Call." A replay of the webcast will be available at the same
location.
On March 13, MDU Resources will
host an investor day at the New York Stock Exchange. The event also
will be webcast. During the event, executive management will
provide updates on operational strategy and financial plans as well
as the expected tax-free spinoff of MDU Construction Services
Group. Additional details about the investor day and webcast will
be available on MDU Resources' website at www.mdu.com.
About MDU Resources
MDU Resources Group, Inc., a
member of the S&P MidCap 400 index, provides essential products
and services through its regulated energy delivery and construction
services businesses. For more information about MDU Resources,
visit 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: Brent
Miller, assistant treasurer, 701-530-1730
Forward-Looking Statements
The information in this news 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 the company's projections, including estimates for
growth, shareholder value creation and financial guidance or other
proposed strategies such as the pursuit of a tax-advantaged
separation of its construction services business and proposed
future structure of a pure-play regulated energy delivery company,
will be achieved. Please refer to assumptions contained in this
news 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 Securities and Exchange
Commission, including the company's Form 10-Q for the period ended
Sept. 30, 2023.
Changes in such assumptions and factors could cause actual
future results to differ materially from growth and financial
guidance. All forward-looking statements in this news 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. Except as required by law, the company does not undertake
to update forward-looking statements, whether as a result of new
information, future events or otherwise.
Throughout this news release, the company presents financial
information prepared in accordance with GAAP, as well as EBITDA by
operating segment, EBITDA from continuing operations, adjusted
EBITDA from continuing operations, 2024 EBITDA guidance, adjusted
income from continuing operations, and adjusted earnings per share
from continuing operations, which are considered non-GAAP financial
measures. The use of these non-GAAP financial measures should not
be construed as alternatives to earnings, earnings per share,
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, its impacts related to the Knife River separation, and
non-recurring costs associated with other strategic initiatives.
Please refer to the "Non-GAAP Financial Measures" section contained
in this document for additional information.
Consolidated
Statements of Income
|
|
|
|
Three Months
Ended
|
Twelve Months
Ended
|
|
December 31,
|
December 31,
|
|
2023
|
2022
|
2023
|
2022
|
|
(In millions, except
per share amounts)
|
Operating
revenues:
|
(Unaudited)
|
Electric, natural gas
distribution and regulated pipeline
|
$
495.7
|
$
595.4
|
$
1,789.6
|
$
1,736.4
|
Non-regulated pipeline,
construction services and other
|
639.6
|
727.1
|
2,867.7
|
2,705.4
|
Total operating
revenues
|
1,135.3
|
1,322.5
|
4,657.3
|
4,441.8
|
Operating
expenses:
|
|
|
|
|
Operation and
maintenance:
|
|
|
|
|
Electric, natural gas
distribution and regulated pipeline
|
100.2
|
93.5
|
397.0
|
375.3
|
Non-regulated
pipeline, construction services and other
|
565.9
|
654.7
|
2,573.9
|
2,450.4
|
Total operation and
maintenance
|
666.1
|
748.2
|
2,970.9
|
2,825.7
|
Purchased natural gas
sold
|
200.1
|
313.4
|
742.9
|
757.9
|
Depreciation and
amortization
|
54.7
|
51.5
|
213.6
|
210.0
|
Taxes, other than
income
|
39.5
|
46.8
|
196.0
|
186.2
|
Electric fuel and
purchased power
|
34.1
|
23.6
|
107.9
|
92.0
|
Total operating
expenses
|
994.5
|
1,183.5
|
4,231.3
|
4,071.8
|
Operating
income
|
140.8
|
139.0
|
426.0
|
370.0
|
Gain on tax-free
exchange of retained shares in Knife River
|
16.4
|
—
|
186.6
|
—
|
Other income
|
12.4
|
8.7
|
41.6
|
11.2
|
Interest
expense
|
31.7
|
22.4
|
114.3
|
80.7
|
Income before income
taxes
|
137.9
|
125.3
|
539.9
|
300.5
|
Income tax expense
(benefit)
|
(32.8)
|
21.4
|
59.5
|
49.7
|
Income from continuing
operations
|
170.7
|
103.9
|
480.4
|
250.8
|
Discontinued
operations, net of tax
|
—
|
13.2
|
(65.7)
|
116.7
|
Net income
|
$
170.7
|
$
117.1
|
$
414.7
|
$
367.5
|
|
|
|
|
|
Earnings per share –
basic:
|
|
|
|
|
Income from continuing
operations
|
$
.84
|
$
.51
|
$
2.36
|
$
1.23
|
Discontinued
operations, net of tax
|
—
|
.06
|
(.32)
|
.58
|
Earnings per share –
basic
|
$
.84
|
$
.57
|
$
2.04
|
$
1.81
|
Earnings per share –
diluted:
|
|
|
|
|
Income from continuing
operations
|
$
.84
|
$
.51
|
$
2.36
|
$
1.23
|
Discontinued
operations, net of tax
|
—
|
.06
|
(.33)
|
.58
|
Earnings per share –
diluted
|
$
.84
|
$
.57
|
$
2.03
|
$
1.81
|
Weighted average common
shares outstanding – basic
|
203.7
|
203.4
|
203.6
|
203.4
|
Weighted average common
shares outstanding – diluted
|
204.1
|
203.8
|
203.9
|
203.5
|
Selected Cash Flows
Information1
|
|
2023
|
2022
|
|
(In
millions)
|
Net cash provided by
operating activities
|
$
332.6
|
$
510.0
|
Net cash used in
investing activities
|
(540.8)
|
(638.9)
|
Net cash provided by
financing activities
|
204.7
|
155.2
|
Increase (decrease) in
cash and cash equivalents
|
(3.5)
|
26.3
|
Cash and cash
equivalents - beginning of year
|
80.5
|
54.2
|
Cash and cash
equivalents - end of year
|
$
77.0
|
$
80.5
|
1Includes
cash flows from discontinued operations.
|
|
|
Capital
Expenditures
|
|
|
|
|
|
Business
Line
|
2023
Actual
|
2024
Estimated
|
2025
Estimated
|
2026
Estimated
|
2024
- 2028
Total
Estimated
|
|
|
|
(In
millions)
|
|
|
Electric
|
$
110
|
$
113
|
$
154
|
$
199
|
$
880
|
Natural gas
distribution
|
275
|
337
|
301
|
288
|
1,423
|
Pipeline
|
116
|
107
|
77
|
42
|
405
|
Construction
services2
|
35
|
52
|
—
|
—
|
52
|
Total capital
expenditures1
|
$
536
|
$
609
|
$
532
|
$
529
|
$
2,760
|
1Excludes
"Other" category, as well as net proceeds from the sale or
disposition of property
|
2Assumes
proposed tax-free spinoff completed in late 2024
|
Note: Total capital
expenditures is presented on a gross basis.
|
The capital program is subject to continued review and
modification by the company. Actual expenditures may vary from the
estimates due to changes in load growth, regulatory decisions and
other factors, including the proposed separation of MDU
Construction Services Group.
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, EBITDA
from continuing operations, adjusted EBITDA from continuing
operations, 2024 EBITDA guidance, adjusted income from continuing
operations, and adjusted earnings per share from continuing
operations. The company defines EBITDA as net income (loss)
attributable to the operating segment before interest; taxes; and
depreciation and amortization; EBITDA from continuing operations as
income (loss) from continuing operations before interest; taxes;
and depreciation and amortization; and adjusted EBITDA from
continuing operations as income (loss) from continuing operations
before interest; taxes; and depreciation and amortization before
any transaction-related impacts from strategic initiatives. The
company defines adjusted income (loss) from continuing operations
as income from continuing operations attributable to the company
before any transaction-related impacts from strategic initiatives,
including the gain on the tax-free exchange of its retained shares
in Knife River; and adjusted earnings per share from continuing
operations as earnings per share from continuing operations before
any transaction-related impacts from strategic initiatives,
including the realized gain on the tax-free exchange of the
retained shares in Knife River.
The company believes these non-GAAP financial measures provide
meaningful information to investors about operational efficiency
compared to the company's peers by excluding the impacts of
differences in tax jurisdictions and structures, debt levels,
capital investment, the gain on the tax-free exchange of retained
shares in Knife River and the non-recurring costs associated with
the company's strategic initiatives. 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 tables provide a reconciliation of consolidated
income from continuing operations to adjusted income from
continuing operations, earnings per share from continuing
operations to adjusted earnings per share from continuing
operations, GAAP net income to EBITDA from continuing operations,
and GAAP net income to adjusted EBITDA from continuing operations
for actual as well as forecasted results, as applicable. The
reconciliation for each operating segment's EBITDA is included
within each operating segment's condensed income statement.
|
Three Months
Ended
|
Twelve Months
Ended
|
|
December 31,
|
December 31,
|
|
2023
|
2022
|
2023
|
2022
|
|
(In millions, except
per share amounts)
|
|
(Unaudited)
|
Income from continuing
operations
|
$
170.7
|
$
103.9
|
$
480.4
|
$
250.8
|
Adjustments:
|
|
|
|
|
Less: Gain on
tax-free exchange of retained shares in Knife
River1
|
16.4
|
—
|
186.6
|
—
|
Less: Reversal
of previously recorded income taxes associated with
the retained shares in Knife River
|
56.6
|
—
|
—
|
—
|
Costs attributable to
strategic initiatives, net of tax2,3
|
1.1
|
3.7
|
11.3
|
3.7
|
Adjusted income from
continuing operations
|
$
98.8
|
$
107.6
|
$
305.1
|
$
254.5
|
|
|
|
|
|
Earnings Per Share
Reconciliation
|
|
|
|
|
Earnings per share from
continuing operations
|
$
.84
|
$
.51
|
$
2.36
|
$
1.23
|
Adjustments:
|
|
|
|
|
Less: Earnings
per share attributable to gain on tax-free exchange
of retained shares in Knife River1
|
.08
|
—
|
.91
|
—
|
Less: Earnings
per share attributable to the reversal of previously
recorded income tax associated with the retained shares in
Knife
River
|
.28
|
—
|
—
|
—
|
Loss per share
attributable to strategic initiative costs2,3
|
—
|
.02
|
.05
|
.02
|
Adjusted earnings per
share from continuing operations
|
$
.48
|
$
.53
|
$
1.50
|
$
1.25
|
|
|
|
|
Three Months
Ended
|
Twelve Months
Ended
|
|
December 31,
|
December 31,
|
|
2023
|
2022
|
2023
|
2022
|
|
(In
millions)
|
Net income
|
$
170.7
|
$
117.1
|
$
414.7
|
$
367.5
|
Discontinued
operations, net of tax
|
—
|
13.2
|
(65.7)
|
116.7
|
Income from continuing
operations
|
170.7
|
103.9
|
480.4
|
250.8
|
Adjustments:
|
|
|
|
|
Interest
expense
|
31.7
|
22.4
|
114.3
|
80.7
|
Income tax expense
(benefit)
|
(32.8)
|
21.4
|
59.5
|
49.7
|
Depreciation and
amortization
|
54.7
|
51.5
|
213.6
|
210.0
|
EBITDA from continuing
operations
|
$
224.3
|
$
199.2
|
$
867.8
|
$
591.2
|
Adjustments:
|
|
|
|
|
Less: Gain on
tax-free exchange of retained shares in Knife
River1
|
16.4
|
—
|
186.6
|
—
|
Costs attributable to
strategic initiatives, net of tax2,3
|
1.1
|
3.7
|
11.3
|
3.7
|
Adjusted EBITDA from
continuing operations
|
$
209.0
|
$
202.9
|
$
692.5
|
$
594.9
|
|
1 Includes
gain of $16.4 million for the quarter and $186.6 million for the
year ended 2023 associated with the tax-free
exchange of retained shares in Knife River.
2 Costs
attributable to strategic initiatives in 2023 of $1.5 million, net
of tax of $0.4 million for the quarter and $15.0 million,
net of tax of $3.7 million for the year. Costs attributable to
strategic initiatives in 2022 of $4.9 million, net of tax of
$1.2
million for both the quarter and the year.
3 For
comparability, strategic initiative costs originally reported in
2022 have been adjusted. 2022 strategic initiative costs
associated with the Knife River separation are now reflected in
discontinued operations.
|
EBITDA Guidance
Reconciliation for 2024
|
|
Construction
Services
|
|
Low
|
High
|
|
(In
millions)
|
Income from continuing
operations
|
$
135.0
|
$
150.0
|
Adjustments:
|
|
|
Interest
expense
|
15.0
|
15.0
|
Income
taxes
|
45.0
|
50.0
|
Depreciation and
amortization
|
25.0
|
25.0
|
EBITDA from continuing
operations
|
$
220.0
|
$
240.0
|
Electric
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
December 31,
|
|
December 31,
|
|
2023
|
2022
|
Variance
|
|
2023
|
2022
|
Variance
|
|
(In
millions)
|
Operating
revenues
|
$ 106.3
|
$ 98.4
|
8 %
|
|
$ 401.2
|
$ 377.1
|
6 %
|
Operating
expenses:
|
|
|
|
|
|
|
|
Electric fuel and
purchased power
|
34.1
|
23.6
|
44 %
|
|
107.9
|
92.0
|
17 %
|
Operation and
maintenance
|
31.1
|
29.7
|
5 %
|
|
119.6
|
120.7
|
(1) %
|
Depreciation and
amortization
|
16.3
|
15.9
|
3 %
|
|
64.2
|
67.8
|
(5) %
|
Taxes, other than
income
|
3.4
|
3.4
|
— %
|
|
16.7
|
16.9
|
(1) %
|
Total operating
expenses
|
84.9
|
72.6
|
17 %
|
|
308.4
|
297.4
|
4 %
|
Operating
income
|
21.4
|
25.8
|
(17) %
|
|
92.8
|
79.7
|
16 %
|
Other income
|
2.4
|
1.3
|
85 %
|
|
5.8
|
0.5
|
NM
|
Interest
expense
|
7.6
|
7.5
|
1 %
|
|
28.0
|
28.5
|
(2) %
|
Income before
taxes
|
16.2
|
19.6
|
(17) %
|
|
70.6
|
51.7
|
37 %
|
Income tax
benefit
|
(1.5)
|
—
|
100 %
|
|
(1.0)
|
(5.4)
|
(81) %
|
Net income
|
$ 17.7
|
$ 19.6
|
(10) %
|
|
$ 71.6
|
$ 57.1
|
25 %
|
Adjustments:
|
|
|
|
|
|
|
|
Interest
expense
|
7.6
|
7.5
|
1 %
|
|
28.0
|
28.5
|
(2) %
|
Income tax
benefit
|
(1.5)
|
—
|
100 %
|
|
(1.0)
|
(5.4)
|
(81) %
|
Depreciation and
amortization
|
16.3
|
15.9
|
3 %
|
|
64.2
|
67.8
|
(5) %
|
EBITDA
|
$ 40.1
|
$ 43.0
|
(7) %
|
|
$ 162.8
|
$ 148.0
|
10 %
|
NM - not
meaningful
|
Operating
Statistics
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
December 31,
|
|
December 31,
|
|
2023
|
2022
|
|
2023
|
2022
|
Revenues
(millions)
|
|
|
|
|
|
Retail
sales:
|
|
|
|
|
|
Residential
|
$
33.7
|
$
34.8
|
|
$
134.1
|
$
135.4
|
Commercial
|
45.1
|
37.4
|
|
164.1
|
142.7
|
Industrial
|
11.2
|
11.7
|
|
42.3
|
43.0
|
Other
|
1.9
|
1.9
|
|
7.1
|
7.3
|
|
91.9
|
85.8
|
|
347.6
|
328.4
|
Other
|
14.4
|
12.6
|
|
53.6
|
48.7
|
|
$
106.3
|
$
98.4
|
|
$
401.2
|
$
377.1
|
Volumes (million
kWh)
|
|
|
|
|
|
Retail
sales:
|
|
|
|
|
|
Residential
|
280.9
|
319.7
|
|
1,180.2
|
1,226.4
|
Commercial
|
730.6
|
386.0
|
|
2,350.5
|
1,437.7
|
Industrial
|
148.0
|
164.4
|
|
583.7
|
596.1
|
Other
|
20.3
|
22.0
|
|
81.8
|
83.7
|
|
1,179.8
|
892.1
|
|
4,196.2
|
3,343.9
|
Average cost of
electric fuel and purchased power
per kWh
|
$
.027
|
$
.025
|
|
$
.024
|
$
.026
|
The electric business reported net income of $17.7 million for the fourth quarter of 2023,
compared to $19.6 million for
the same period in 2022. This decrease was largely the result of
lower residential volumes due to warmer weather; a
North Dakota earnings sharing
accrual; and higher operation and maintenance expense, primarily
payroll-related costs. The decrease in net income was partially
offset by increased retail sales revenue, including an electric
service agreement to provide power to a data center near
Ellendale, North Dakota, higher
transmission interconnect upgrades, and rate relief in Montana. The business also experienced higher
investment returns on nonqualified benefit plans during the
quarter.
For the full year, the electric business reported net income of
$71.6 million, compared to
$57.1 million in 2022. This
increase was primarily the result of higher retail sales revenue
due to rate relief in North Dakota
and Montana, the electric service
agreement as previously discussed, and higher transmission
interconnect upgrades. Net income also was favorably impacted by
higher returns on nonqualified benefit plans of $4.7 million. Lower residential volumes,
primarily from cooler weather in the third quarter, partially
offset the increases.
The previous table also includes items that are passed through
to customers resulting in no impact to earnings. These items
include $10.5 million and
$15.9 million higher electric fuel
and purchased power costs for the fourth quarter and the year ended
2023, respectively, which increased both operating revenues and
electric fuel and purchased power.
The electric business's EBITDA increased $14.8 million in 2023 compared to 2022, primarily
the result of higher retail sales revenue and increased investment
returns, partially offset by lower residential sales volumes, as
previously discussed.
Natural Gas
Distribution
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
December 31,
|
|
December 31,
|
|
2023
|
2022
|
Variance
|
|
2023
|
2022
|
Variance
|
|
(In
millions)
|
Operating
revenues
|
$ 367.8
|
$ 480.5
|
(23) %
|
|
$
1,287.5
|
$
1,273.8
|
1 %
|
Operating
expenses:
|
|
|
|
|
|
|
|
Purchased natural gas
sold
|
224.7
|
334.9
|
(33) %
|
|
805.1
|
816.1
|
(1) %
|
Operation and
maintenance
|
54.4
|
50.8
|
7 %
|
|
219.7
|
205.3
|
7 %
|
Depreciation and
amortization
|
24.8
|
22.1
|
12 %
|
|
95.3
|
89.4
|
7 %
|
Taxes, other than
income
|
17.4
|
19.7
|
(12) %
|
|
75.2
|
71.1
|
6 %
|
Total operating
expenses
|
321.3
|
427.5
|
(25) %
|
|
1,195.3
|
1,181.9
|
1 %
|
Operating
income
|
46.5
|
53.0
|
(12) %
|
|
92.2
|
91.9
|
— %
|
Other income
|
6.4
|
2.9
|
121 %
|
|
20.8
|
3.3
|
NM
|
Interest
expense
|
15.4
|
12.3
|
25 %
|
|
57.6
|
42.2
|
36 %
|
Income before
taxes
|
37.5
|
43.6
|
(14) %
|
|
55.4
|
53.0
|
5 %
|
Income tax
expense
|
7.0
|
9.2
|
(24) %
|
|
6.9
|
7.8
|
(12) %
|
Net income
|
$ 30.5
|
$ 34.4
|
(11) %
|
|
$ 48.5
|
$ 45.2
|
7 %
|
Adjustments:
|
|
|
|
|
|
|
|
Interest
expense
|
15.4
|
12.3
|
25 %
|
|
57.6
|
42.2
|
36 %
|
Income tax
expense
|
7.0
|
9.2
|
(24) %
|
|
6.9
|
7.8
|
(12) %
|
Depreciation and
amortization
|
24.8
|
22.1
|
12 %
|
|
95.3
|
89.4
|
7 %
|
EBITDA
|
$ 77.7
|
$ 78.0
|
— %
|
|
$ 208.3
|
$ 184.6
|
13 %
|
NM - not
meaningful
|
Operating
Statistics
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
December 31,
|
|
December 31,
|
|
2023
|
2022
|
|
2023
|
2022
|
Revenues
(millions)
|
|
|
|
|
|
Retail
Sales:
|
|
|
|
|
|
Residential
|
$
209.9
|
$
277.0
|
|
$
726.1
|
$
715.5
|
Commercial
|
126.6
|
172.6
|
|
441.2
|
450.9
|
Industrial
|
11.9
|
12.3
|
|
45.0
|
41.5
|
|
348.4
|
461.9
|
|
1,212.3
|
1,207.9
|
Transportation and
other
|
19.4
|
18.6
|
|
75.2
|
65.9
|
|
$
367.8
|
$
480.5
|
|
$
1,287.5
|
$
1,273.8
|
Volumes
(MMdk)
|
|
|
|
|
|
Retail
sales:
|
|
|
|
|
|
Residential
|
22.7
|
27.5
|
|
69.3
|
74.8
|
Commercial
|
15.4
|
18.1
|
|
47.9
|
51.0
|
Industrial
|
1.6
|
1.5
|
|
5.4
|
5.4
|
|
39.7
|
47.1
|
|
122.6
|
131.2
|
Transportation
sales:
|
|
|
|
|
|
Commercial
|
.5
|
.6
|
|
1.9
|
2.0
|
Industrial
|
52.5
|
47.7
|
|
188.4
|
165.7
|
|
53.0
|
48.3
|
|
190.3
|
167.7
|
Total
throughput
|
92.7
|
95.4
|
|
312.9
|
298.9
|
Average cost of natural
gas per dk
|
$
5.65
|
$
7.11
|
|
$
6.57
|
$
6.22
|
The natural gas distribution business reported net income of
$30.5 million in the fourth
quarter of 2023, compared to $34.4 million for the same period in
2022. The decrease was primarily driven by 15.7% lower natural
gas retail sales volumes, largely within the residential and
commercial customer classes as a result of warmer weather, with the
impact partially offset by weather normalization and decoupling
mechanisms. Higher operation and maintenance expense also decreased
net income, primarily higher payroll-related costs and increased
depreciation expense, largely due to increased asset additions.
Also decreasing net income was higher interest expense from higher
debt balances and increased interest rates, largely offset by
increased interest income associated with higher purchased gas
costs. These decreases were partially offset by increased retail
sales revenue, primarily due to higher basic service charges, a gas
cost-sharing mechanism in Oregon,
and pipeline replacement mechanisms. The business was also
favorably impacted by lower property taxes and 9.6% higher
transportation volumes to electric generation and industrial
customers.
For the full year, the natural gas distribution business
reported net income of $48.5 million, compared to $45.2 million in 2022. This increase was
primarily the result of higher retail sales revenue due to rate
relief in Idaho and Washington, higher basic service charges, and
recovery of short-term debt interest expense in Idaho related to increased gas costs. The
business also benefited from an increase in investment returns on
nonqualified benefit plans of $6.9
million. These increases were largely offset by higher
operation and maintenance expense, primarily due to higher
payroll-related costs. The business also experienced a 6.6%
decrease in retail sales volumes to all customer classes, largely
due to warmer weather, which was partially offset by weather
normalization and decoupling mechanisms.
The previous table also includes items that are passed through
to customers resulting in no impact to earnings. These items
include $110.2 million and
$11.0 million in lower natural gas
costs for the fourth quarter and the year ended 2023, respectively,
which decreased both operating revenues and purchased natural gas
sold; $1.2 million lower
revenue-based taxes for the fourth quarter that decreased both
operating revenues and taxes, other than income; and
$6.1 million in higher revenue-based
taxes for the year ended 2023, that increased both operating
revenues and taxes, other than income.
The natural gas distribution business's EBITDA increased
$23.7 million in 2023 compared to
2022, primarily the result of higher retail sales and increased
investment returns, partially offset by higher operation and
maintenance expense and lower volumes, as previously discussed.
Pipeline
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
December 31,
|
|
December 31,
|
|
2023
|
2022
|
Variance
|
|
2023
|
2022
|
Variance
|
|
(In millions)
|
Operating
revenues
|
$ 50.7
|
$ 41.3
|
23 %
|
|
$ 177.6
|
$ 155.6
|
14 %
|
Operating
expenses:
|
|
|
|
|
|
|
|
Operation and
maintenance
|
18.2
|
16.1
|
13 %
|
|
70.8
|
60.9
|
16 %
|
Depreciation and
amortization
|
6.8
|
6.9
|
(1) %
|
|
26.8
|
26.9
|
— %
|
Taxes, other than
income
|
1.2
|
2.3
|
(48) %
|
|
10.8
|
12.3
|
(12) %
|
Total operating
expenses
|
26.2
|
25.3
|
4 %
|
|
108.4
|
100.1
|
8 %
|
Operating
income
|
24.5
|
16.0
|
53 %
|
|
69.2
|
55.5
|
25 %
|
Other income
|
1.4
|
1.3
|
8 %
|
|
3.9
|
1.3
|
200 %
|
Interest
expense
|
3.7
|
2.6
|
42 %
|
|
13.3
|
10.1
|
32 %
|
Income before
taxes
|
22.2
|
14.7
|
51 %
|
|
59.8
|
46.7
|
28 %
|
Income tax
expense
|
4.2
|
3.3
|
27 %
|
|
12.4
|
10.5
|
18 %
|
Income from continuing
operations
|
18.0
|
11.4
|
58 %
|
|
47.4
|
36.2
|
31 %
|
Discontinued
operations, net of tax1
|
—
|
(.4)
|
(100) %
|
|
(.5)
|
(.9)
|
(44) %
|
Net income
|
$ 18.0
|
$ 11.0
|
63 %
|
|
$ 46.9
|
$ 35.3
|
33 %
|
Adjustments:
|
|
|
|
|
|
|
|
Interest
expense
|
3.7
|
2.6
|
42 %
|
|
13.3
|
10.1
|
32 %
|
Interest expense
included in discontinued
operations, net of tax
|
—
|
.4
|
(100) %
|
|
.5
|
.9
|
(44) %
|
Income tax
expense
|
4.2
|
3.3
|
27 %
|
|
12.4
|
10.5
|
18 %
|
Depreciation and
amortization
|
6.8
|
6.9
|
(1) %
|
|
26.8
|
26.9
|
— %
|
EBITDA
|
$ 32.7
|
$ 24.2
|
35 %
|
|
$ 99.9
|
$ 83.7
|
19 %
|
1Discontinued operations includes interest
on debt facilities repaid in connection with the Knife River
separation.
|
Operating
Statistics
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
December 31,
|
|
December 31,
|
|
2023
|
2022
|
|
2023
|
2022
|
Transportation volumes
(MMdk)
|
148.0
|
125.8
|
|
567.2
|
482.9
|
Customer natural gas
storage balance (MMdk):
|
|
|
|
|
|
Beginning of
period
|
42.8
|
28.1
|
|
21.2
|
23.0
|
Net injection
(withdrawal)
|
(5.1)
|
(6.9)
|
|
16.5
|
(1.8)
|
End of
period
|
37.7
|
21.2
|
|
37.7
|
21.2
|
The pipeline business reported net income of $18.0 million in the fourth quarter of 2023,
compared to $11.0 million for
the same period in 2022. The increase was driven by higher
transportation volumes primarily from organic growth projects
placed in service in November 2023
and increased contracted volume commitments from the North Bakken
Expansion project. New transportation and storage rates effective
Aug. 1, 2023, and higher
storage-related revenue also contributed to the increase. The
business benefited from lower property taxes and increased
non-regulated project margin. The increase was offset in part by
higher operation and maintenance expense primarily attributable to
payroll-related costs. The business also incurred higher interest
expense as a result of higher interest rates and higher debt
balances.
For the full year, the pipeline business reported net income of
$46.9 million, compared to
$35.3 million in 2022. The
earnings increase was driven by higher transportation volumes,
primarily from increased contracted volume commitments on the North
Bakken Expansion project and a full year of benefit from this
project; as well as organic growth projects placed in service in
November 2023 and August 2022. In addition, revenues increased from
new transportation and storage service rates effective Aug. 1, 2023, and higher storage-related
activity. The business also benefited from higher investment
returns of $2.4 million on
nonqualified benefit plans, higher allowance for funds used during
construction on the pipeline's organic growth projects, lower
property taxes and higher non-regulated project margin. The
increase was offset in part by higher operation and maintenance
expense primarily attributable to payroll-related costs and
contract services. The business also incurred higher interest
expense as a result of higher interest rates and higher debt
balances.
The pipeline business's EBITDA increased $16.2 million in 2023 compared to 2022, primarily
from higher transportation and storage revenues, partially offset
by higher operating costs, as previously discussed.
Construction
Services
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
December 31,
|
|
December 31,
|
|
2023
|
2022
|
Variance
|
|
2023
|
2022
|
Variance
|
|
(In
millions)
|
Operating
revenues
|
$ 635.7
|
$ 724.2
|
(12) %
|
|
$
2,854.4
|
$
2,699.2
|
6 %
|
Cost of
sales:
|
|
|
|
|
|
|
|
Operation and
maintenance
|
535.0
|
617.9
|
(13) %
|
|
2,426.1
|
2,325.9
|
4 %
|
Depreciation and
amortization
|
4.6
|
4.2
|
10 %
|
|
18.3
|
16.9
|
8 %
|
Taxes, other than
income
|
16.3
|
20.0
|
(19) %
|
|
88.1
|
80.4
|
10 %
|
Total cost of
sales
|
555.9
|
642.1
|
(13) %
|
|
2,532.5
|
2,423.2
|
5 %
|
Gross profit
|
79.8
|
82.1
|
(3) %
|
|
321.9
|
276.0
|
17 %
|
Selling, general and
administrative expense:
|
|
|
|
|
|
|
|
Operation and
maintenance
|
26.5
|
25.4
|
4 %
|
|
121.4
|
101.5
|
20 %
|
Depreciation and
amortization
|
1.3
|
1.3
|
— %
|
|
4.9
|
4.6
|
7 %
|
Taxes, other than
income
|
1.1
|
1.3
|
(15) %
|
|
5.1
|
5.3
|
(4) %
|
Total selling, general
and administrative expense
|
28.9
|
28.0
|
3 %
|
|
131.4
|
111.4
|
18 %
|
Operating
income
|
50.9
|
54.1
|
(6) %
|
|
190.5
|
164.6
|
16 %
|
Other income
|
1.5
|
2.7
|
(44) %
|
|
9.0
|
7.3
|
23 %
|
Interest
expense
|
3.5
|
.1
|
NM
|
|
10.1
|
.2
|
NM
|
Income before
taxes
|
48.9
|
56.7
|
(14) %
|
|
189.4
|
171.7
|
10 %
|
Income tax
expense
|
12.4
|
13.8
|
(10) %
|
|
47.0
|
42.2
|
11 %
|
Income from continuing
operations
|
36.5
|
42.9
|
(15) %
|
|
142.4
|
129.5
|
10 %
|
Discontinued
operations, net of tax1
|
—
|
(1.9)
|
(100) %
|
|
(5.2)
|
(4.7)
|
11 %
|
Net income
|
$ 36.5
|
$ 41.0
|
(11) %
|
|
$ 137.2
|
$ 124.8
|
10 %
|
Adjustments:
|
|
|
|
|
|
|
|
Interest
expense
|
3.5
|
.1
|
NM
|
|
10.1
|
.2
|
NM
|
Interest expense
included in discontinued
operations, net of tax
|
—
|
1.9
|
(100) %
|
|
5.2
|
4.7
|
11 %
|
Income tax
expense
|
12.4
|
13.8
|
(10) %
|
|
47.0
|
42.2
|
11 %
|
Depreciation and
amortization
|
5.9
|
5.5
|
7 %
|
|
23.2
|
21.5
|
8 %
|
EBITDA
|
$ 58.3
|
$ 62.3
|
(6) %
|
|
$ 222.7
|
$ 193.4
|
15 %
|
1Discontinued operations includes interest
on debt facilities repaid in connection with the Knife River
separation.
|
NM - not
meaningful
|
Operating
Statistics
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
Gross profit
|
|
Three Months
Ended
|
Twelve Months
Ended
|
|
Three Months
Ended
|
Twelve Months
Ended
|
|
December 31,
|
December 31,
|
|
December 31,
|
December 31,
|
|
2023
|
2022
|
2023
|
2022
|
|
2023
|
2022
|
2023
|
2022
|
Business
Line:
|
(In
millions)
|
Electrical &
mechanical
|
|
|
|
|
|
|
|
|
|
Commercial
|
$ 256.2
|
$ 337.5
|
$
1,204.0
|
$
1,082.5
|
|
$ 29.3
|
$ 33.0
|
$ 129.1
|
$ 105.2
|
Industrial
|
106.0
|
104.7
|
473.3
|
405.7
|
|
10.1
|
15.0
|
45.3
|
43.4
|
Institutional
|
67.2
|
60.5
|
262.4
|
215.5
|
|
4.5
|
1.5
|
16.3
|
3.8
|
Renewables
|
11.5
|
28.3
|
55.4
|
151.1
|
|
1.2
|
(.7)
|
3.5
|
(.6)
|
Service &
other
|
13.8
|
16.1
|
139.8
|
143.0
|
|
5.3
|
5.0
|
19.6
|
19.8
|
|
454.7
|
547.1
|
2,134.9
|
1,997.8
|
|
50.4
|
53.8
|
213.8
|
171.6
|
Transmission &
distribution
|
|
|
|
|
|
|
|
|
|
Utility
|
168.6
|
167.6
|
677.5
|
645.1
|
|
28.3
|
28.1
|
105.1
|
100.3
|
Transportation
|
16.5
|
12.8
|
57.1
|
72.3
|
|
1.1
|
.2
|
3.0
|
4.1
|
|
185.1
|
180.4
|
734.6
|
717.4
|
|
29.4
|
28.3
|
108.1
|
104.4
|
Intrasegment
eliminations
|
(4.1)
|
(3.3)
|
(15.1)
|
(16.0)
|
|
—
|
—
|
—
|
—
|
Total
|
$ 635.7
|
$ 724.2
|
$
2,854.4
|
$
2,699.2
|
|
$ 79.8
|
$ 82.1
|
$ 321.9
|
$ 276.0
|
|
Backlog at December
31,
|
|
2023
|
2022
|
|
(In
millions)
|
Electrical &
mechanical
|
$
1,686
|
$
1,861
|
Transmission &
distribution
|
325
|
270
|
|
$
2,011
|
$
2,131
|
The construction services business reported net income of
$36.5 million in the fourth quarter
of 2023, compared to $41.0 million
for the same period in 2022. The decrease in net income was driven
by lower electrical and mechanical gross profit in the industrial
and commercial business lines due to project mix, as well as lower
commercial workloads due to completion of large hospitality
projects. Partially offsetting these items were higher
institutional and renewable gross margins as a result of efficiency
on certain projects in labor and materials costs compared to last
year. The business also was negatively impacted by higher reserves
for uncollectible accounts on certain projects, lower income from
joint ventures, and increased interest expense due to higher
interest rates. The decreases in net income were partially offset
by increased transmission and distribution revenues, largely from
higher transportation and utility-related workloads.
For the full year, the construction services business reported
record net income of $137.2 million, compared to $124.8 million in 2022. The business had record
revenue of $2.9 billion driven by
higher electrical and mechanical workloads. Commercial workloads
were favorably impacted by progress on large hospitality and data
center projects. The institutional business line had higher margins
due to efficiency in labor and material costs. Transmission and
distribution revenues also increased, with higher distribution,
transmission, and gas and underground utility projects, partially
offset by lower transportation workloads, such as street lighting
and government projects. Higher selling, general and administrative
expense, largely attributable to increased payroll-related costs
associated with operational growth, and higher reserve for
uncollectible accounts on certain projects partially offset the
income increases. Also decreasing net income was higher interest
expense due to higher working capital needs and interest rates.
The construction services business's EBITDA increased
$29.3 million in 2023 compared to
2022, primarily the result of higher gross profit, driven by the
increase in revenues, offset in part by higher selling, general and
administrative costs, as previously discussed.
Other
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
December 31,
|
|
December 31,
|
|
2023
|
2022
|
Variance
|
|
2023
|
2022
|
Variance
|
|
(In
millions)
|
Operating
revenues
|
$
1.5
|
$
1.5
|
— %
|
|
$
8.0
|
$
5.8
|
38 %
|
Operating
expenses:
|
|
|
|
|
|
|
|
Operation and
maintenance
|
3.0
|
10.2
|
(71) %
|
|
22.5
|
22.9
|
(2) %
|
Depreciation and
amortization
|
.9
|
1.1
|
(18) %
|
|
4.1
|
4.4
|
(7) %
|
Taxes, other than
income
|
.1
|
.1
|
— %
|
|
.1
|
.2
|
(50) %
|
Total operating
expenses
|
4.0
|
11.4
|
(65) %
|
|
26.7
|
27.5
|
(3) %
|
Operating
loss
|
(2.5)
|
(9.9)
|
(75) %
|
|
(18.7)
|
(21.7)
|
(14) %
|
Gain on tax-free
exchange of retained shares in
Knife River
|
16.4
|
—
|
NM
|
|
186.6
|
—
|
NM
|
Other income
|
5.8
|
.8
|
NM
|
|
15.7
|
(.6)
|
NM
|
Interest
expense
|
6.6
|
.2
|
NM
|
|
18.9
|
.3
|
NM
|
Income (loss) before
taxes
|
13.1
|
(9.3)
|
(241) %
|
|
164.7
|
(22.6)
|
NM
|
Income tax
benefit
|
(54.9)
|
(4.9)
|
NM
|
|
(5.8)
|
(5.4)
|
7 %
|
Income (loss) from
continuing operations
|
68.0
|
(4.4)
|
NM
|
|
170.5
|
(17.2)
|
NM
|
Discontinued
operations, net of tax1,2
|
—
|
15.5
|
(100) %
|
|
(60.0)
|
122.3
|
(149) %
|
Net income
|
$ 68.0
|
$ 11.1
|
513 %
|
|
$ 110.5
|
$ 105.1
|
5 %
|
NM - not
meaningful
|
|
|
|
|
|
|
|
|
Income from continuing
operations
|
$ 68.0
|
$
(4.4)
|
NM
|
|
$ 170.5
|
$ (17.2)
|
NM
|
Adjustments:
|
|
|
|
|
|
|
|
Less: Gain on
tax-free exchange of retained
shares in Knife River1
|
16.4
|
—
|
NM
|
|
186.6
|
—
|
NM
|
Less: Reversal
of previously recorded income
taxes associated with the retained shares in Knife
River
|
56.6
|
—
|
NM
|
|
—
|
—
|
— %
|
Costs attributable to
strategic initiatives, net of
tax2,3
|
1.1
|
3.7
|
NM
|
|
11.3
|
3.7
|
67 %
|
Adjusted income (loss)
from continuing operations
|
$
(3.9)
|
$
(.7)
|
457 %
|
|
$
(4.8)
|
$ (13.5)
|
64 %
|
1 Includes
gain of $16.4 million for the quarter and $186.6 million for the
year ended 2023 associated with the tax-free exchange
of retained shares in Knife River.
2 Costs
attributable to strategic initiatives in 2023 of $1.5 million, net
of tax of $0.4 million for the quarter and $15.0 million, net
of tax of $3.7 million year to date. Costs attributable to
strategic initiatives in 2022 of $4.9 million, net of tax of $1.2
million for
both the quarter and year to date.
3For
comparability, strategic initiative costs originally reported in
2022 have been adjusted. 2022 strategic costs associated with
the Knife River separation are now reflected in discontinued
operations.
|
NM - not
meaningful
|
On May 31, 2023, the company
completed the separation of Knife River, its former construction
materials and contracting segment, into a new publicly traded
company. As a result of the separation, the historical results of
operations for Knife River are shown in income (loss) from
discontinued operations, except for allocated general corporate
overhead costs of the company that do not meet the criteria for
income (loss) from discontinued operations. Also included in
discontinued operations are strategic initiative costs associated
with the separation of Knife River.
During the fourth quarter of 2023, the company completed a
tax-free exchange of its 5.7 million shares of its retained
interest in Knife River, which is reflected in Other. This tax-free
exchange resulted in a gain of $16.4
million for the fourth quarter. Other also experienced a
benefit from the reversal of income taxes of $56.6 million associated with the company's
previously recorded unrealized gain on the retained shares in Knife
River. The company recorded income tax expense on the unrealized
gain and once it completed the tax-free monetization of the
retained interest, the taxes were reversed. Also contributing to
the increase in net income was lower operation and maintenance
expense due to lower strategic initiative costs, partially offset
by higher interest expense.
For the full year, Other experienced a gain of $186.6 million related to the tax-free exchange
of its retained shares in Knife River and higher interest income.
Higher interest expense, primarily related to debt issued in
connection with the Knife River separation, partially offset the
increases in net income. Other also benefited from improved claims
experience in 2023 at the captive insurer compared to 2022 due to
the Knife River separation.
Also included in Other are 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.
Other Financial
Data
|
December 31,
|
|
2023
|
2022*
|
|
(In millions, except
per share amounts)
|
|
(Unaudited)
|
Book value per common
share
|
$
14.26
|
$
17.62
|
Market price per common
share
|
$
19.80
|
$
30.34
|
Market value as a
percent of book value
|
138.8 %
|
172.2 %
|
Total assets
|
$
7,833
|
$
9,661
|
Total equity
|
$
2,905
|
$
3,587
|
Total debt
|
$
2,393
|
$
2,404
|
Capitalization
ratios:
|
|
|
Total equity
|
54.8 %
|
59.9 %
|
Total debt
|
45.2 %
|
40.1 %
|
|
100.0 %
|
100.0 %
|
*2022 amounts include
Knife River
|
|
|
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SOURCE MDU Resources Group, Inc.