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Record Earnings at Construction Materials Business Leads MDU Resources' Third Quarter

Nov 02, 2016
  • Construction materials business has record third quarter earnings; backlog up 9 percent.
  • Construction services earnings up 53 percent; backlog up 13 percent.
  • Pipeline proceeding with Valley Expansion project.
  • Electric and natural gas utilities continue infrastructure investments and associated rate recovery.
  • 2016 earnings per share guidance from continuing operations narrowed to $1.05 to $1.15; including discontinued operations, EPS narrowed to 20 cents to 30 cents.

 BISMARCK, N.D. - Nov. 2, 2016 - MDU Resources Group, Inc. (NYSE: MDU) today reported third quarter earnings from continuing operations of $88.2 million, or 45 cents per common share, compared to earnings from continuing operations of $73.7 million, or 38 cents per common share, for the third quarter of 2015. Including discontinued operations, primarily the exploration and production and refining businesses, the company reported earnings of $82.8 million, or 42 cents per common share, for third quarter 2016, compared to a loss of $139.6 million, or 72 cents per share, for third quarter 2015.

For the nine months ended Sept. 30, MDU Resources reported earnings from continuing operations of $166.0 million, or 85 cents per common share, compared to $120.0 million, or 62 cents per share, for the first nine months of 2015. Including discontinued operations, the company had a loss of $1.8 million, or 1 cent per share, for the nine months ended Sept. 30, compared to a loss of $675.5 million, or $3.47 per share, in 2015.

“We have streamlined our company and our two primary business lines, construction materials and services and regulated energy delivery, are providing solid results,” said David L. Goodin, president and CEO of MDU Resources. “Our construction businesses continue to experience strong momentum as the country turns more attention to needed infrastructure improvements. Our construction materials segment achieved record third quarter earnings for the second consecutive year, and our construction services business improved earnings by 53 percent.

“Our regulated energy delivery businesses are focused on growth, including pipeline expansion projects, utility system upgrades and expanding infrastructure,” Goodin said. “The Valley Expansion project in eastern North Dakota and far western Minnesota is proceeding, and construction continues on the 345-kilovolt transmission line from Ellendale, North Dakota, to Big Stone City, South Dakota.”

Business Unit Results
Construction Materials and Services
The construction materials business reported record third quarter earnings of $69.5 million, up from record third quarter 2015 earnings of $68.8 million. This business saw higher construction margins with increased construction activity in the Pacific and northwestern areas of the U.S. and lower selling, general and administrative expense. Backlog at construction materials is $580 million, which is up 9 percent from last year.

Third quarter earnings at the construction services business were $7.2 million, up $2.5 million from third quarter 2015, with higher workloads and margins on inside electrical and outside work in the western area of the U.S. The construction services backlog of $518 million, which is up 13 percent from last year, includes projects from a broad variety of service areas and across geographic regions.

Regulated Energy Delivery
Earnings at the pipeline and midstream business were $6.7 million, compared to a loss of $3.2 million for third quarter 2015. The pipeline and midstream business reduced its operating costs and benefited from the absence of an $8.7 million after-tax impairment on certain natural gas gathering assets that was recorded in third quarter 2015. Utilization of natural gas storage services continues to be higher than a year ago. The pipeline business in October received Federal Energy Regulatory Commission approval on its pre-filing for the Valley Expansion project. The company is proceeding with survey work and expects to begin construction in early 2018 on the project, which initially is designed to deliver 40 million cubic feet of natural gas per day to eastern North Dakota and far western Minnesota.

The electric and natural gas utility earnings for third quarter were virtually unchanged from the same period in 2015. The electric utility earned $12.7 million, with rate recovery offset by higher operating expenses and depreciation. The natural gas utility had a normal seasonal loss of $12.5 million for the third quarter. Rate relief and higher sales volumes in certain areas were offset by increased operating expenses and depreciation. The utility continues to seek regulatory recovery for costs associated with upgrading and expanding infrastructure to meet current and future customer demands, including anticipated 1 to 2 percent customer growth.

2016 Guidance
MDU Resources is narrowing 2016 earnings guidance from continuing operations to $1.05 to $1.15 per common share. Including discontinued operations, the company expects 2016 earnings of 20 cents to 30 cents per share.

The results of MDU Resources’ exploration and production and refining businesses have been reported as discontinued operations. Any continuing results from MDU Resources’ exploration and production and refining businesses, such as general and administrative expenses, have been included in the “other” category. To reflect this change, MDU Resources is providing guidance in two formats that meet generally accepted accounting principles: one guidance range reflects continuing operations and the other includes discontinued operations. The continuing operations range is similar to the company’s previously reported “adjusted earnings” guidance in that they both exclude results from the exploration and production and refining businesses. The discontinued operations guidance range includes the results from the exploration and production and refining businesses, as well as associated impairments.

Conference Call
The company will host a webcast at 10 a.m. EDT Nov. 3 to discuss third quarter 2016 results. The event can be accessed at www.mdu.com. Webcast and audio replays will be available through Nov. 17. The dial-in number for audio replay is 855-859-2056, or 404-537-3406 for international callers, conference ID 86987581.

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 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.

Contacts
Financial: Janelle Steiner, assistant treasurer, 701-530-1031
Media: Laura Lueder, manager of communications and public relations, 701-530-1095