MDU Resources Group has reported its third quarter earnings from continuing operations of $89.6 million, or 46 cents per share, compared to third quarter 2016 earnings from continuing operations of $88.2 million, or 45 cents per share.
Including discontinued operations, MDU Resources reported third quarter earnings of $87.4 million, or 45 cents per share, compared to earnings of $82.8 million, or 42 cents per share, in third quarter 2016.
For the nine months ended Sept. 30, MDU Resources reported earnings from continuing operations of $168.8 million, or 86 cents per share, compared to $166.0 million, or 85 cents per share, for the first nine months of 2016. Including discontinued operations, the company had earnings of $165.1 million, or 84 cents per share, for the period, compared to a loss of $1.8 million, or 1 cent per share, in 2016.
Highlights from the third quarter include:
- Construction services earns $13.1 million, up from $7.2 million in third quarter 2016; backlog of $676 million.
- Construction materials earns $63.2 million; backlog of $520 million.
- Electric and natural gas utility earns $4.8 million, up from $200,000 in third quarter 2016.
- Pipeline and midstream earns $6.0 million, with record transportation volumes.
“We are pleased to report that all of our businesses performed well in the third quarter,” said David L. Goodin, president and CEO of MDU Resources. “Earnings were up 82 percent at construction services on record revenues, reflecting continuing demand for high-tech work, stronger equipment sales, and emergency power line repair work in hurricane-ravaged areas of the South. Construction materials had a solid quarter, although down from last year’s record results.
“Our combined utilities earned $4.8 million in the third quarter, up significantly from last year, due to implemented rate relief, higher electric and natural gas retail sales volumes, and conservation adjustments and weather normalization. Our pipeline business also had a solid quarter, earning $6.0 million, with record transportation volumes helping offset the absence of earnings from the Pronghorn assets, which we sold at the start of the year.
“We are excited about our ongoing growth plans, including organic projects at our pipeline and utility businesses, as well as merger and acquisition opportunities we are pursuing on the construction side of our business. Our operations are well-positioned to continue building a strong America.”
Business Unit Results
Construction Materials and Services
Earnings at the construction services business were $13.1 million for the third quarter, up from $7.2 million in third quarter 2016. The increase reflects higher outside construction margins, including higher outside equipment sales and rentals, as well as higher inside construction margins. With record year-to-date revenues of more than $1 billion through Sept. 30, revenue guidance for this business has been increased to a range of $1.25 billion to $1.35 billion for the year. Work backlog for construction services was $676 million at the end of the third quarter, an increase of 31 percent over the same period last year.
Third quarter 2017 earnings at the construction materials business were $63.2 million, compared to a record $69.5 million in third quarter 2016. Lower asphalt product margins resulting from lower volumes and lower construction margins were partially offset by higher aggregate margins primarily due to higher sales volumes. Because of weather-related delays at the start of the 2017 construction materials season and lower workloads in energy-producing states, revenue guidance for this business has been lowered to a range of $1.7 billion to $1.8 billion for the year. Construction materials backlog at the end of the third quarter was $520 million compared to $580 million in third quarter 2016.
Combined construction backlog of approximately $1.2 billion at Sept. 30 was up 9 percent compared to the same time last year.
Regulated Energy Delivery
The electric and natural gas utility earned $4.8 million in the third quarter of 2017, compared to $200,000 in third quarter 2016. The increase was driven primarily by cost recovery through regulatory relief as well as conservation adjustments and weather normalization in certain jurisdictions. Both electric and natural gas retail sales volumes increased 2 percent. The utility continues to seek regulatory recovery for costs associated with upgrading and expanding facilities to safely meet customer demand, including natural gas rate proceedings filed in the third quarter in Montana, North Dakota and Washington. Customer growth is expected to average 1 to 2 percent per year.
The pipeline and midstream business earned $6.0 million in the third quarter, compared to $6.7 million in the third quarter 2016. The decrease reflects the absence of earnings from the previously announced Jan. 1 sale of the company’s interest in the Pronghorn assets, partially offset by revenues from record transportation volumes, which were up 22 percent for the quarter compared to last year.
Discontinued Operations and Other
The results of MDU Resources’ former exploration and production and refining businesses have been reported as discontinued operations. The company has included in the “other” category any continuing results from these businesses, such as general and administrative costs and interest expense.
Earnings Per Share Guidance
The company narrowed its 2017 earnings per share guidance to the range of $1.10 to $1.20.
Conference Call
MDU Resources will host a webcast at 2 p.m. EDT Nov. 2 to discuss third quarter 2017 earnings results. The event can be accessed at www.mdu.com. Webcast and audio replays will be available. The dial-in number for audio replay, available through Nov. 16, is 855-859-2056, or 404-537-3406 for international callers, conference ID 88177171.
