MDU Resources Reports Higher Second Quarter Earnings, Increases Guidance
For the six months ended June 30, 2023, MDU Resources had earnings on a GAAP basis of
For an explanation of non-GAAP adjustments, see the "Non-GAAP Financial Measures" section in this news release.
"While completing a historic quarter at MDU Resources with the successful separation of Knife River Corporation, we experienced outstanding performance from all our businesses and achieved record results in a number of areas, all thanks to the hard work and dedication of our employees," said David L. Goodin, president and CEO of MDU Resources.
"We expect our strong momentum to continue into the second half of the year as our utility and pipeline businesses have active regulatory schedules and a number of growth projects underway. Reflecting the robust start to the year, we are increasing our earnings guidance for our regulated energy delivery businesses from
"Our construction services business had record performance through the first half of the year and a record second quarter backlog. We announced on July 10, following a strategic review, that we intend to pursue a tax-advantaged separation of MDU Construction Services Group as we work toward achieving our objective of becoming a pure-play regulated energy delivery business."
Results at each of MDU Resources' businesses were positively impacted in the second quarter on a non-cash basis by higher investment returns on nonqualified benefit plans. Collectively, the positive earnings variance contributed approximately
Regulated Energy Delivery Highlights
Electric and Natural Gas Utility
The electric and natural gas utility earned
Rate relief in certain electric and natural gas jurisdictions contributed to the increase in earnings. With warmer temperatures impacting customers' energy usage and the electric utility bringing on a new large-volume customer during the quarter, electric retail sales volumes were
Regulatory update:
- On June 6, the North Dakota Public Service Commission approved an all-party settlement allowing for a
7.4% revenue increase of in the utility's electric rate case, with new rates effective July 1.$15.3 million - On June 12, the utility filed an all-party settlement for its electric rate case before the Montana Public Service Commission. If approved, it would result in a
9.1% annual revenue increase of .$6.1 million - On June 30, the Idaho Public Utilities Commission approved an all-party settlement allowing for a
0.73% revenue increase of in the utility's natural gas rate case, with new rates effective July 1.$3.1 million - On July 14, the utility filed with the North Dakota Public Service Commission an adjustment to its transmission cost adjustment tracker that reduces revenue collected from customers by approximately
.$10.7 million - Before year-end, the utility anticipates filing an electric rate case and a natural gas rate case in
South Dakota and a natural gas rate case inNorth Dakota .
The company is constructing an 88-megawatt natural gas-fired, simple-cycle combustion turbine electric generating facility near
Pipeline
The pipeline business earned
The company began construction in the second quarter on three pipeline expansion projects that are expected to be in service later in 2023. These projects are expected to add incremental natural gas transportation capacity of approximately 300 million cubic feet per day, increasing total transportation capacity from 2.4 billion to 2.7 billion cubic feet per day.
Regulatory update:
- The company filed a rate case in January with the Federal Energy Regulatory Commission in which it is seeking rate increases for its transportation and storage services. The company is working with the FERC and customers on a settlement agreement for new rates effective in August 2023, pending approval by the FERC.
Construction Services Highlights
The construction services business had record second quarter revenues of
The company experienced strong demand during the quarter for commercial work, including hospitality-related and data center construction services, and industrial work, including high tech construction services. It also saw higher demand for utility-related work, with stronger gross profit due to the type of work performed. Increased labor costs and interest expense offset some of the gains.
While completing a record amount of work as evidenced by record revenues during the quarter, MDU Construction Services Group continues to see strong demand for its services and had record second quarter backlog of
Discontinued Operations and Adjusted Earnings
On May 31, 2023, MDU Resources completed a spinoff of approximately
MDU Resources is reporting adjusted income from continuing operations that excludes the unrealized gain on the retained interest of the Knife River shares, as well as costs related to MDU Resources' other strategic initiatives. Adjusted income from continuing operations is a non-GAAP measure. For an explanation of non-GAAP earnings adjustments, see the "Non-GAAP Financial Measures" section in this news release. More information about the strategic initiatives can be found on the company's website at www.mdu.com.
Guidance
Because of MDU Resources' strategic initiatives, the company is providing guidance for 2023 results by business. For 2023, MDU Resources expects:
- Earnings from its regulated energy delivery businesses in the range of
to$150 million , up from$160 million to$140 million .$150 million - Construction services revenues in the range of
to$2.80 billion , with slightly higher margins compared to 2022, and EBITDA of$3.00 billion to$200 million .$225 million
Conference Call
MDU Resources' management will discuss second quarter results on a webcast at 2 p.m. EDT today. The webcast can be accessed at www.mdu.com under the "Investor Relations" heading. Select "Events & Presentations," and click on "2Q 2023 Earnings Conference Call." A replay of the webcast will be available at the same location.
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, 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: 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, including 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.
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, EBITDA from continuing operations, adjusted EBITDA from continuing operations, 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, 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.
Consolidated Statements of Income | ||||
Three Months Ended | Six Months Ended | |||
June 30, | June 30, | |||
2023 | 2022 | 2023 | 2022 | |
(In millions, except per share amounts) | ||||
Operating revenues: | (Unaudited) | |||
Electric, natural gas distribution and regulated pipeline | $ 340.5 | $ 323.6 | $ 1,014.4 | $ 877.3 |
Non-regulated pipeline, construction services and other | 750.6 | 686.2 | 1,506.8 | 1,239.6 |
Total operating revenues | 1,091.1 | 1,009.8 | 2,521.2 | 2,116.9 |
Operating expenses: | ||||
Operation and maintenance: | ||||
Electric, natural gas distribution and regulated pipeline | 95.5 | 94.5 | 197.5 | 192.3 |
Non-regulated pipeline, construction services and other | 674.1 | 615.1 | 1,368.5 | 1,117.8 |
Total operation and maintenance | 769.6 | 709.6 | 1,566.0 | 1,310.1 |
Purchased natural gas sold | 115.9 | 115.3 | 487.0 | 382.7 |
Depreciation, depletion and amortization | 53.5 | 54.9 | 105.7 | 106.8 |
Taxes, other than income | 49.7 | 45.5 | 117.1 | 99.0 |
Electric fuel and purchased power | 20.4 | 21.9 | 44.8 | 48.3 |
Total operating expenses | 1,009.1 | 947.2 | 2,320.6 | 1,946.9 |
Operating income | 82.0 | 62.6 | 200.6 | 170.0 |
Unrealized gain on investment in Knife River | 140.0 | — | 140.0 | — |
Other income (expense) | 10.0 | (2.3) | 20.3 | (3.2) |
Interest expense | 26.5 | 19.2 | 50.4 | 38.1 |
Income before income taxes | 205.5 | 41.1 | 310.5 | 128.7 |
Income tax expense | 57.9 | 5.3 | 79.0 | 24.2 |
Income from continuing operations | 147.6 | 35.8 | 231.5 | 104.5 |
Discontinued operations, net of tax | (16.9) | 34.9 | (62.5) | (2.1) |
Net income | $ 130.7 | $ 70.7 | $ 169.0 | $ 102.4 |
Earnings per share – basic: | ||||
Income from continuing operations | $ .72 | $ .18 | $ 1.14 | $ .51 |
Discontinued operations, net of tax | (.08) | .17 | (.31) | (.01) |
Earnings per share – basic | $ .64 | $ .35 | $ .83 | $ .50 |
Earnings per share – diluted: | ||||
Income from continuing operations | $ .72 | $ .18 | $ 1.14 | $ .51 |
Discontinued operations, net of tax | (.08) | .17 | (.31) | (.01) |
Earnings per share – diluted | $ .64 | $ .35 | $ .83 | $ .50 |
Weighted average common shares outstanding – basic | 203.6 | 203.4 | 203.6 | 203.4 |
Weighted average common shares outstanding – diluted | 203.9 | 203.4 | 203.9 | 203.4 |
Selected Cash Flows Information* | ||
Six Months Ended | ||
June 30, | ||
2023 | 2022 | |
(In millions) | ||
Net cash provided by operating activities | $ 73.1 | $ 119.2 |
Net cash used in investing activities | (276.6) | (291.1) |
Net cash provided by financing activities | 183.8 | 184.8 |
Increase (decrease) in cash and cash equivalents | (19.7) | 12.9 |
Cash and cash equivalents - beginning of year | 70.4 | 40.8 |
Cash and cash equivalents - end of period | $ 50.7 | $ 53.7 |
*Includes cash flows from discontinued operations. |
Capital Expenditures | ||||
Business Line | 2023 | 2024 | 2025 | 2023 - 2027 |
(In millions) | ||||
Electric | $ 98 | $ 127 | $ 130 | $ 810 |
Natural gas distribution | 245 | 311 | 260 | 1,287 |
Pipeline | 145 | 117 | 127 | 459 |
Construction services | 38 | 34 | 34 | 178 |
Total capital expenditures* | $ 526 | $ 589 | $ 551 | $ 2,734 |
* Excludes "Other" category, as well as net proceeds from the sale or disposition of property | ||||
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 pursuit of a tax-advantaged 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, 2023 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, depletion and amortization; EBITDA from continuing operations as income (loss) from continuing operations before interest; taxes; and depreciation, depletion and amortization; and adjusted EBITDA from continuing operations as income (loss) from continuing operations before interest; taxes; and depreciation, depletion 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 unrealized gain on the investment 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 investment in Knife River and the one-time 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 internally 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 for actual as well as forecasted results. The reconciliation for each operating segment's EBITDA is included within each operating segment's condensed income statement.
Three Months Ended | Six Months Ended | |||
June 30, | June 30, | June 30, | June 30, | |
2023 | 2022 | 2023 | 2022 | |
(In millions, except per share amounts) | ||||
(Unaudited) | ||||
Income from continuing operations | $ 147.6 | $ 35.8 | $ 231.5 | $ 104.5 |
Adjustments: | ||||
Less: Unrealized gain on investment in Knife River, net of tax* | 90.8 | — | 90.8 | — |
Costs attributable to strategic initiatives, net of tax* | 3.2 | .3 | 6.5 | .3 |
Adjusted income from continuing operations | $ 60.0 | $ 36.1 | $ 147.2 | $ 104.8 |
* Includes unrealized gain of | ||||
Earnings Per Share Reconciliation | ||||
Earnings per share from continuing operations | $ .72 | $ .18 | $ 1.14 | $ .51 |
Adjustments: | ||||
Less: Earnings per share attributable to unrealized gain on investment in Knife River | .45 | — | .45 | — |
Loss per share attributable to strategic initiative costs | .02 | — | .03 | — |
Adjusted earnings per share from continuing operations | $ .29 | $ .18 | $ .72 | $ .51 |
Three Months Ended | Six Months Ended | |||
June 30, | June 30, | |||
2023 | 2022 | 2023 | 2022 | |
(In millions) | ||||
Net income | $ 130.7 | $ 70.7 | $ 169.0 | $ 102.4 |
Discontinued operations, net of tax | (16.9) | 34.9 | (62.5) | (2.1) |
Income from continuing operations | 147.6 | 35.8 | 231.5 | 104.5 |
Adjustments: | ||||
Interest expense | 26.5 | 19.2 | 50.4 | 38.1 |
Income taxes | 57.9 | 5.3 | 79.0 | 24.2 |
Depreciation, depletion and amortization | 53.5 | 54.9 | 105.7 | 106.8 |
EBITDA from continuing operations | $ 285.5 | $ 115.2 | $ 466.6 | $ 273.6 |
Adjustments: | ||||
Less: Unrealized gain on investment in Knife River, net of tax* | 90.8 | — | 90.8 | — |
Costs attributable to strategic initiatives, net of tax* | 3.2 | .3 | 6.5 | .3 |
Adjusted EBITDA from continuing operations | $ 197.9 | $ 115.5 | $ 382.3 | $ 273.9 |
EBITDA Guidance Reconciliation for 2023 | ||
Construction Services | ||
Low | High | |
(In millions) | ||
Income from continuing operations | $ 120.0 | $ 140.0 |
Adjustments: | ||
Interest expense | 15.0 | 15.0 |
Income taxes | 40.0 | 45.0 |
Depreciation, depletion and amortization | 25.0 | 25.0 |
EBITDA from continuing operations | $ 200.0 | $ 225.0 |
Electric | Three Months Ended | Six Months Ended | |||||
June 30, | June 30, | ||||||
2023 | 2022 | Variance | 2023 | 2022 | Variance | ||
(In millions) | |||||||
Operating revenues | $ 91.0 | $ 85.5 | 6 % | $ 186.7 | $ 179.3 | 4 % | |
Operating expenses: | |||||||
Electric fuel and purchased power | 20.4 | 21.9 | (7) % | 44.8 | 48.3 | (7) % | |
Operation and maintenance | 28.4 | 31.5 | (10) % | 58.3 | 62.3 | (6) % | |
Depreciation, depletion and amortization | 16.2 | 19.4 | (16) % | 31.8 | 36.3 | (12) % | |
Taxes, other than income | 4.4 | 4.4 | — % | 9.1 | 9.1 | — % | |
Total operating expenses | 69.4 | 77.2 | (10) % | 144.0 | 156.0 | (8) % | |
Operating income | 21.6 | 8.3 | 160 % | 42.7 | 23.3 | 83 % | |
Other income (expense) | .9 | (1.0) | 190 % | 2.1 | (1.2) | 275 % | |
Interest expense | 6.7 | 7.0 | (4) % | 13.4 | 14.0 | (4) % | |
Income before taxes | 15.8 | .3 | NM | 31.4 | 8.1 | 288 % | |
Income tax benefit | (.5) | (4.3) | (88) % | (1.5) | (7.8) | (81) % | |
Net income | $ 16.3 | $ 4.6 | 254 % | $ 32.9 | $ 15.9 | 107 % | |
Adjustments: | |||||||
Interest expense | 6.7 | 7.0 | (4) % | 13.4 | 14.0 | (4) % | |
Income tax benefit | (.5) | (4.3) | (88) % | (1.5) | (7.8) | (81) % | |
Depreciation, depletion and amortization | 16.2 | 19.4 | (16) % | 31.8 | 36.3 | (12) % | |
EBITDA | $ 38.7 | $ 26.7 | 45 % | $ 76.6 | $ 58.4 | 31 % | |
NM - not meaningful |
Operating Statistics | Three Months Ended | Six Months Ended | |||
June 30, | June 30, | ||||
2023 | 2022 | 2023 | 2022 | ||
Revenues (millions) | |||||
Retail sales: | |||||
Residential | $ 30.2 | $ 28.8 | $ 66.4 | $ 64.0 | |
Commercial | 36.2 | 33.3 | 71.0 | 66.9 | |
Industrial | 10.1 | 10.7 | 20.5 | 20.5 | |
Other | 1.6 | 1.8 | 3.3 | 3.4 | |
78.1 | 74.6 | 161.2 | 154.8 | ||
Other | 12.9 | 10.9 | 25.5 | 24.5 | |
$ 91.0 | $ 85.5 | $ 186.7 | $ 179.3 | ||
Volumes (million kWh) | |||||
Retail sales: | |||||
Residential | 266.5 | 244.1 | 623.8 | 601.8 | |
Commercial | 542.3 | 329.3 | 927.8 | 693.4 | |
Industrial | 144.9 | 147.7 | 292.2 | 288.0 | |
Other | 20.7 | 20.6 | 40.9 | 40.1 | |
974.4 | 741.7 | 1,884.7 | 1,623.3 | ||
Average cost of electric fuel and purchased power per kWh | $ .020 | $ .028 | $ .022 | $ .028 |
The electric business reported net income of
The previous table also reflects items that are passed through to customers resulting in no impact to earnings. These items include
The electric business's EBITDA increased
Natural Gas Distribution | Three Months Ended | Six Months Ended | |||||
June 30, | June 30, | ||||||
2023 | 2022 | Variance | 2023 | 2022 | Variance | ||
(In millions) | |||||||
Operating revenues | $ 219.0 | $ 210.6 | 4 % | $ 784.7 | $ 661.1 | 19 % | |
Operating expenses: | |||||||
Purchased natural gas sold | 123.6 | 122.7 | 1 % | 520.8 | 415.9 | 25 % | |
Operation and maintenance | 52.6 | 50.8 | 4 % | 109.8 | 105.0 | 5 % | |
Depreciation, depletion and amortization | 23.5 | 22.4 | 5 % | 46.7 | 44.7 | 4 % | |
Taxes, other than income | 16.9 | 15.3 | 10 % | 46.5 | 39.9 | 17 % | |
Total operating expenses | 216.6 | 211.2 | 3 % | 723.8 | 605.5 | 20 % | |
Operating income (loss) | 2.4 | (.6) | 500 % | 60.9 | 55.6 | 10 % | |
Other income (expense) | 4.9 | (.7) | 800 % | 9.8 | (1.1) | 991 % | |
Interest expense | 13.7 | 9.7 | 41 % | 27.7 | 19.2 | 44 % | |
Income (loss) before taxes | (6.4) | (11.0) | 42 % | 43.0 | 35.3 | 22 % | |
Income tax (benefit) expense | (3.2) | (3.5) | (9) % | 7.2 | 6.5 | 11 % | |
Net income (loss) | $ (3.2) | $ (7.5) | 57 % | $ 35.8 | $ 28.8 | 24 % | |
Adjustments: | |||||||
Interest expense | 13.7 | 9.7 | 41 % | 27.7 | 19.2 | 44 % | |
Income tax (benefit) expense | (3.2) | (3.5) | 9 % | 7.2 | 6.5 | 11 % | |
Depreciation, depletion and amortization | 23.5 | 22.4 | 5 % | 46.7 | 44.7 | 4 % | |
EBITDA | $ 30.8 | $ 21.1 | 46 % | $ 117.4 | $ 99.2 | 18 % |
Operating Statistics | Three Months Ended | Six Months Ended | |||
June 30, | June 30, | ||||
2023 | 2022 | 2023 | 2022 | ||
Revenues (millions) | |||||
Retail Sales: | |||||
Residential | $ 121.4 | $ 115.1 | $ 446.7 | $ 373.6 | |
Commercial | 70.7 | 71.1 | 273.6 | 233.8 | |
Industrial | 9.2 | 9.0 | 25.9 | 22.0 | |
201.3 | 195.2 | 746.2 | 629.4 | ||
Transportation and other | 17.7 | 15.4 | 38.5 | 31.7 | |
$ 219.0 | $ 210.6 | $ 784.7 | $ 661.1 | ||
Volumes (MMdk) | |||||
Retail sales: | |||||
Residential | 10.2 | 11.8 | 42.5 | 42.8 | |
Commercial | 7.3 | 8.2 | 28.7 | 28.7 | |
Industrial | 1.0 | 1.2 | 2.9 | 3.0 | |
18.5 | 21.2 | 74.1 | 74.5 | ||
Transportation sales: | |||||
Commercial | .4 | .4 | 1.1 | 1.1 | |
Industrial | 37.0 | 34.9 | 85.8 | 75.9 | |
37.4 | 35.3 | 86.9 | 77.0 | ||
Total throughput | 55.9 | 56.5 | 161.0 | 151.5 | |
Average cost of natural gas per dk | $ 6.68 | $ 5.80 | $ 7.03 | $ 5.58 |
The natural gas distribution business reported a seasonal loss of
The previous table also reflects items that are passed through to customers resulting in no impact to earnings. These items include
The natural gas distribution business's EBITDA increased
Pipeline | Three Months Ended | Six Months Ended | |||||
June 30, | June 30, | ||||||
2023 | 2022 | Variance | 2023 | 2022 | Variance | ||
(In millions) | |||||||
Operating revenues | $ 42.1 | $ 37.6 | 12 % | $ 82.9 | $ 74.7 | 11 % | |
Operating expenses: | |||||||
Operation and maintenance | 18.1 | 14.8 | 22 % | 35.7 | 30.2 | 18 % | |
Depreciation, depletion and amortization | 6.8 | 6.8 | — % | 13.7 | 13.1 | 5 % | |
Taxes, other than income | 3.3 | 3.4 | (3) % | 6.6 | 6.9 | (4) % | |
Total operating expenses | 28.2 | 25.0 | 13 % | 56.0 | 50.2 | 12 % | |
Operating income | 13.9 | 12.6 | 10 % | 26.9 | 24.5 | 10 % | |
Other income (expense) | .7 | (.7) | 200 % | 1.4 | (.6) | 333 % | |
Interest expense | 3.1 | 2.5 | 24 % | 6.2 | 4.9 | 27 % | |
Income before taxes | 11.5 | 9.4 | 22 % | 22.1 | 19.0 | 16 % | |
Income tax expense | 2.5 | 2.1 | 19 % | 4.7 | 4.3 | 9 % | |
Income from continuing operations | 9.0 | 7.3 | 23 % | 17.4 | 14.7 | 18 % | |
Discontinued operations, net of tax* | (.3) | (.2) | 50 % | (.5) | (.2) | 150 % | |
Net income | $ 8.7 | $ 7.1 | 23 % | $ 16.9 | $ 14.5 | 17 % | |
Adjustments: | |||||||
Interest expense | 3.1 | 2.5 | 24 % | 6.2 | 4.9 | 27 % | |
Interest expense included in discontinued operations, net of tax | .3 | .2 | 50 % | .5 | .2 | 150 % | |
Income tax expense | 2.5 | 2.1 | 19 % | 4.7 | 4.3 | 9 % | |
Depreciation, depletion and amortization | 6.8 | 6.8 | — % | 13.7 | 13.1 | 5 % | |
EBITDA | $ 21.4 | $ 18.7 | 14 % | $ 42.0 | $ 37.0 | 14 % | |
*Discontinued operations includes interest on debt facilities repaid in connection with the Knife River separation. |
Operating Statistics | Three Months Ended | Six Months Ended | |||
June 30, | June 30, | ||||
2023 | 2022 | 2023 | 2022 | ||
Transportation volumes (MMdk) | 142.6 | 115.7 | 272.3 | 226.2 | |
Customer natural gas storage balance (MMdk): | |||||
Beginning of period | 9.0 | 2.8 | 21.2 | 23.0 | |
Net injection (withdrawal) | 18.8 | 12.0 | 6.6 | (8.2) | |
End of period | 27.8 | 14.8 | 27.8 | 14.8 |
The pipeline business reported net income of
The pipeline business's EBITDA increased
Construction Services | Three Months Ended | Six Months Ended | |||||
June 30, | June 30, | ||||||
2023 | 2022 | Variance | 2023 | 2022 | Variance | ||
(In millions) | |||||||
Operating revenues | $ 747.0 | $ 685.4 | 9 % | $ 1,501.3 | $ 1,238.0 | 21 % | |
Cost of sales: | |||||||
Operation and maintenance | 629.3 | 585.1 | 8 % | 1,283.2 | 1,056.2 | 21 % | |
Depreciation, depletion and amortization | 4.7 | 4.2 | 12 % | 8.9 | 8.3 | 7 % | |
Taxes, other than income | 23.8 | 21.3 | 12 % | 52.0 | 40.3 | 29 % | |
Total cost of sales | 657.8 | 610.6 | 8 % | 1,344.1 | 1,104.8 | 22 % | |
Gross profit | 89.2 | 74.8 | 19 % | 157.2 | 133.2 | 18 % | |
Selling, general and administrative expense: | |||||||
Operation and maintenance | 32.4 | 26.5 | 22 % | 62.4 | 52.6 | 19 % | |
Depreciation, depletion and amortization | 1.2 | 1.1 | 9 % | 2.4 | 2.2 | 9 % | |
Taxes, other than income | 1.3 | 1.1 | 18 % | 2.9 | 2.8 | 4 % | |
Total selling, general and administrative expense | 34.9 | 28.7 | 22 % | 67.7 | 57.6 | 18 % | |
Operating income | 54.3 | 46.1 | 18 % | 89.5 | 75.6 | 18 % | |
Other income | 2.7 | .9 | 200 % | 5.5 | 1.1 | 400 % | |
Interest expense | 1.9 | — | — % | 1.9 | — | — % | |
Income before taxes | 55.1 | 47.0 | 17 % | 93.1 | 76.7 | 21 % | |
Income tax expense | 14.0 | 11.6 | 21 % | 23.1 | 19.3 | 20 % | |
Income from continuing operations | 41.1 | 35.4 | 16 % | 70.0 | 57.4 | 22 % | |
Discontinued operations, net of tax* | (2.5) | (.9) | 178 % | (5.3) | (1.6) | 231 % | |
Net income | $ 38.6 | $ 34.5 | 12 % | $ 64.7 | $ 55.8 | 16 % | |
Adjustments: | |||||||
Interest expense | 1.9 | — | — % | 1.9 | — | — % | |
Interest expense included in discontinued operations, net of tax | 2.5 | .9 | 178 % | 5.3 | 1.6 | 231 % | |
Income tax expense | 14.0 | 11.6 | 21 % | 23.1 | 19.3 | 20 % | |
Depreciation, depletion and amortization | 5.9 | 5.3 | 11 % | 11.3 | 10.5 | 8 % | |
EBITDA | $ 62.9 | $ 52.3 | 20 % | $ 106.3 | $ 87.2 | 16 % | |
*Discontinued operations includes interest on debt facilities repaid in connection with the Knife River separation. |
Operating Statistics | Revenue | Gross profit | |||||||
Three Months Ended | Six Months Ended | Three Months Ended | Six Months Ended | ||||||
June 30, | June 30, | June 30, | June 30, | ||||||
2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | ||
Business Line: | (In millions) | ||||||||
Electrical & mechanical | |||||||||
Commercial | $ 335.1 | $ 242.0 | $ 681.2 | $ 430.0 | $ 37.1 | $ 25.1 | $ 67.1 | $ 45.4 | |
Industrial | 123.6 | 112.1 | 251.3 | 207.1 | 13.8 | 12.3 | 26.9 | 22.1 | |
Institutional | 63.4 | 55.3 | 118.9 | 96.0 | 4.0 | .6 | 5.7 | 1.2 | |
Renewables | 13.0 | 54.5 | 24.7 | 79.4 | 1.0 | 3.0 | .5 | 4.0 | |
Service & other | 35.1 | 45.2 | 87.2 | 91.7 | 5.1 | 5.4 | 10.7 | 11.1 | |
570.2 | 509.1 | 1,163.3 | 904.2 | 61.0 | 46.4 | 110.9 | 83.8 | ||
Transmission & distribution | |||||||||
Utility | 167.7 | 154.8 | 320.1 | 297.9 | 27.8 | 26.5 | 45.7 | 46.4 | |
Transportation | 12.4 | 25.5 | 24.9 | 43.4 | .4 | 1.9 | .6 | 3.0 | |
180.1 | 180.3 | 345.0 | 341.3 | 28.2 | 28.4 | 46.3 | 49.4 | ||
Intrasegment eliminations | (3.3) | (4.0) | (7.0) | (7.5) | — | — | — | — | |
Total | $ 747.0 | $ 685.4 | $ 1,501.3 | $ 1,238.0 | $ 89.2 | $ 74.8 | $ 157.2 | $ 133.2 |
Backlog at June 30, | ||
2023 | 2022 | |
(In millions) | ||
Electrical & mechanical | $ 1,536 | $ 1,691 |
Transmission & distribution | 401 | 233 |
$ 1,937 | $ 1,924 |
Backlog at the construction services business remains strong with a second quarter record backlog reported as of June 30, 2023. The business has secured additional projects to replace backlog projects that have been completed or are nearing the end of the project life cycle.
The construction services business reported net income of
The construction services business's EBITDA increased
Other | |||||||
Three Months Ended | Six Months Ended | ||||||
June 30, | June 30, | ||||||
2023 | 2022 | Variance | 2023 | 2022 | Variance | ||
(In millions) | |||||||
Operating revenues | $ 3.1 | $ 1.5 | 107 % | $ 4.7 | $ 2.9 | 62 % | |
Operating expenses: | |||||||
Operation and maintenance | 12.2 | 4.3 | 184 % | 21.9 | 9.7 | 126 % | |
Depreciation, depletion and amortization | 1.1 | 1.0 | 10 % | 2.2 | 2.2 | — % | |
Total operating expenses | 13.3 | 5.3 | 151 % | 24.1 | 11.9 | 103 % | |
Operating loss | (10.2) | (3.8) | 168 % | (19.4) | (9.0) | 116 % | |
Unrealized gain on investment in Knife River | 140.0 | — | NM | 140.0 | — | NM | |
Other income (expense) | 3.1 | (.8) | NM | 4.1 | (1.3) | NM | |
Interest expense | 3.4 | — | NM | 3.8 | .1 | NM | |
Income (loss) before income taxes | 129.5 | (4.6) | NM | 120.9 | (10.4) | NM | |
Income tax expense | 45.1 | (.6) | NM | 45.5 | 1.9 | NM | |
Income (loss) from continuing operations | 84.4 | (4.0) | NM | 75.4 | (12.3) | 713 % | |
Income (loss) from discontinued operations, net of tax | (14.1) | 36.0 | (139) % | (56.7) | (.3) | NM | |
Net income (loss) | $ 70.3 | $ 32.0 | 120 % | $ 18.7 | $ (12.6) | 248 % | |
Income (loss) from continuing operations | $ 84.4 | $ (4.0) | NM | $ 75.4 | $ (12.3) | NM | |
Adjustments*: | |||||||
Less: Unrealized gain on investment in Knife River, net of tax* | 90.8 | — | NM | 90.8 | — | NM | |
Costs attributable to strategic initiatives, net of tax* | 3.2 | .3 | NM | 6.5 | .3 | NM | |
Adjusted loss from continuing operations | $ (3.2) | $ (3.7) | 14 % | $ (8.9) | $ (12.0) | 26 % | |
* Includes unrealized gain on investment of | |||||||
NM - not meaningful |
On May 31, 2023, the company completed the previously announced separation of Knife River, its 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, other than allocated general corporate overhead costs of the company, which 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 second quarter, Other benefited from an increase of
Also included in Other is insurance activity at the company's captive insurer and 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 | ||
June 30, | ||
2023 | 2022* | |
(In millions, except per share | ||
(Unaudited) | ||
Book value per common share | $ 13.29 | $ 16.66 |
Market price per common share | $ 20.94 | $ 26.99 |
Market value as a percent of book value | 157.6 % | 162.0 % |
Total assets | $ 7,685 | $ 9,319 |
Total equity | $ 2,706 | $ 3,387 |
Total debt | $ 2,592 | $ 3,028 |
Capitalization ratios: | ||
Total equity | 51.1 % | 52.8 % |
Total debt | 48.9 % | 47.2 % |
100.0 % | 100.0 % | |
*2022 amounts include Knife River |
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SOURCE MDU Resources Group, Inc.