MDU Resources Reports Third Quarter Earnings, Increases Guidance
- MDU Resources reported strong Q3 earnings with income from continuing operations of $78.2 million, a significant increase from $42.3 million in Q3 2022.
- The company announced a tax-free spinoff of its construction services subsidiary, MDU Construction Services Group, to focus on energy delivery.
- For the nine months ended Sept. 30, 2023, MDU Resources had earnings of $244.0 million, slightly lower than the $250.4 million in the same period last year.
- None.
Third quarter 2023 income from continuing operations, which reflects the May 31 spinoff of Knife River Corporation, was
When adjusting for items related to the spinoff of Knife River, including the unrealized gain on the approximately
"We continue to see very strong results from all our companies," said David L. Goodin, president and CEO of MDU Resources. "Our construction services business had record third quarter earnings and EBITDA. Our pipeline business also had record third quarter earnings and natural gas transportation volumes. Our electric utility saw significant commercial retail volume increases related to serving a data center in its territory and has filed a request with the North Dakota Public Service Commission to serve another data center that is expected to come on line in 2024."
Today, in addition to announcing third quarter results, MDU Resources announced in a separate news release that it intends to pursue a tax-free spinoff of its construction services subsidiary, MDU Construction Services Group. MDU Resources intends to become a pure-play energy delivery business.
For the nine months ended Sept. 30, 2023, MDU Resources had earnings on a GAAP basis of
Income from continuing operations for the same period in 2023 was
For the nine months ended Sept. 30, 2023, income from continuing operations when adjusted for the items previously noted was
Results at each of MDU Resources' businesses were positively impacted for the first nine months of the year on a noncash basis by higher investment returns on nonqualified benefit plans. Collectively through Sept. 30, the positive earnings variance is approximately
For an explanation of non-GAAP adjustments, see the "Non-GAAP Financial Measures" section in this news release.
"With the outstanding performance we've seen for the first nine months of the year and continued strength of our operations, we are increasing our guidance for 2023 results," Goodin said.
Regulated Energy Delivery Highlights
Electric and Natural Gas Utility
The electric and natural gas utility earned
Residential electric use decreased during the quarter with cooler temperatures, however commercial volumes were higher primarily from a data center that came on line earlier this year in the company's service territory. Total electric retail sales volumes were
Higher utility operation and maintenance expense, primarily payroll-related costs, negatively impacted earnings, which was largely offset by rate relief in certain electric and natural gas jurisdictions.
Regulatory update:
- New
North Dakota electric rates took effect July 1, as approved June 6 by the North Dakota Public Service Commission, allowing for a7.4% revenue increase of$15.3 million - New
Idaho natural gas rates took effect July 1, as approved June 30 by the Idaho Public Utilities Commission, allowing for a0.73% revenue increase of$3.1 million - New
Montana electric rates took effect Oct. 1, as approved Aug. 8 by the Montana Public Service Commission, allowing for a9.1% annual revenue increase of$6.1 million - On Aug. 15, the utility filed with the South Dakota Public Utilities Commission an electric rate case requesting a
17.3% revenue increase of$3 million - On Aug. 15, the utility filed with the South Dakota Public Utilities Commission a natural gas rate case requesting an
11.2% revenue increase of$7.4 million - On Oct. 2, the utility filed with the North Dakota Public Service Commission an electric service agreement request to serve an additional data center in its service territory.
- On Nov. 1, the utility filed with the North Dakota Public Service Commission a natural gas rate case requesting a
7.5% revenue increase of$11.6 million
The company's new Heskett Unit IV, an 88-megawatt natural gas-fired, simple-cycle combustion turbine electric generating facility near
Pipeline
The pipeline business had record third quarter earnings of
- Record quarterly natural gas transportation volumes, largely from increased contracted volume commitments on its North Bakken Expansion project that was placed in service in February 2022.
- Higher storage-related revenues.
- The implementation of new transportation and storage settlement rates, which are pending FERC approval.
The company began construction in the second quarter on three pipeline expansion projects. Two of those projects were placed in service on Nov. 1 and will add natural gas transportation capacity of 119 million cubic feet per day. The third project is expected to be complete in early 2024, adding an additional 175 million cubic feet per day.
Regulatory update:
- The company settled its rate case with customers and FERC staff, and it implemented the new transportation and storage service rates as of Aug. 1. The rates, which are pending final FERC approval, are expected to result in a
7% revenue increase of approximately$10 million - On Oct. 19, the company received FERC approval for its Wahpeton Expansion project in eastern
North Dakota . The project, expected to cost approximately$75 million
Construction Services Highlights
The construction services business had record third quarter earnings of
The company experienced continued strong demand for its institutional construction services work, particularly for health care and government clients, as well as higher demand for utility-related transmission and distribution work. Margins increased due to efficiency gains on projects. The earnings increase was somewhat offset by higher labor costs and interest expense.
Backlog for construction services remained strong at
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 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' strategic initiatives, the company is providing guidance for its 2023 results by business. It also is raising guidance for 2023 as it now expects:
- Earnings from its regulated energy delivery businesses in the range of
$155 million $165 million $150 million $160 million - Construction services revenues in the range of
$2.80 billion $3.00 billion $210 million $230 million $200 million $225 million
Conference Call
MDU Resources' management will discuss on a webcast at 2 p.m. EDT today the company's third quarter results and the planned spinoff of MDU Construction Services Group. The webcast can be accessed at www.mdu.com under the "Investor Relations" heading. Select "Events & Presentations," and click on "3Q 2023 Earnings Conference Call." A replay of the webcast will be available at the same location.
MDU Resources also will postpone its Analyst and Investor Day, originally slated for Nov. 21, until late in the first quarter of 2024 to provide more details on the planned spinoff of MDU Construction Services Group.
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 by operating segment, EBITDA from continuing operations, 2023 EBITDA guidance, 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 | Nine Months Ended | |||
September 30, | September 30, | |||
2023 | 2022 | 2023 | 2022 | |
(In millions, except per share amounts) | ||||
Operating revenues: | (Unaudited) | |||
Electric, natural gas distribution and regulated pipeline | $ 279.5 | $ 263.8 | $ 1,294.0 | $ 1,141.0 |
Non-regulated pipeline, construction services and other | 721.3 | 738.7 | 2,228.0 | 1,978.3 |
Total operating revenues | 1,000.8 | 1,002.5 | 3,522.0 | 3,119.3 |
Operating expenses: | ||||
Operation and maintenance: | ||||
Electric, natural gas distribution and regulated pipeline | 99.3 | 89.7 | 296.8 | 281.9 |
Non-regulated pipeline, construction services and other | 639.3 | 677.8 | 2,008.0 | 1,795.7 |
Total operation and maintenance | 738.6 | 767.5 | 2,304.8 | 2,077.6 |
Purchased natural gas sold | 56.0 | 61.8 | 542.8 | 444.5 |
Depreciation, depletion and amortization | 53.1 | 51.8 | 158.9 | 158.6 |
Taxes, other than income | 39.5 | 40.3 | 156.5 | 139.3 |
Electric fuel and purchased power | 29.0 | 20.1 | 73.8 | 68.3 |
Total operating expenses | 916.2 | 941.5 | 3,236.8 | 2,888.3 |
Operating income | 84.6 | 61.0 | 285.2 | 231.0 |
Unrealized gain on investment in Knife River | 30.2 | — | 170.2 | — |
Other income | 8.8 | 5.8 | 29.2 | 2.5 |
Interest expense | 32.1 | 20.2 | 82.6 | 58.3 |
Income before income taxes | 91.5 | 46.6 | 402.0 | 175.2 |
Income tax expense | 13.3 | 4.3 | 92.3 | 28.3 |
Income from continuing operations | 78.2 | 42.3 | 309.7 | 146.9 |
Discontinued operations, net of tax | (3.3) | 105.6 | (65.7) | 103.5 |
Net income | $ 74.9 | $ 147.9 | $ 244.0 | $ 250.4 |
Earnings per share – basic: | ||||
Income from continuing operations | $ .38 | $ .21 | $ 1.52 | $ .72 |
Discontinued operations, net of tax | (.01) | .52 | (.32) | .51 |
Earnings per share – basic | $ .37 | $ .73 | $ 1.20 | $ 1.23 |
Earnings per share – diluted: | ||||
Income from continuing operations | $ .38 | $ .21 | $ 1.52 | $ .72 |
Discontinued operations, net of tax | (.01) | .52 | (.32) | .51 |
Earnings per share – diluted | $ .37 | $ .73 | $ 1.20 | $ 1.23 |
Weighted average common shares outstanding – basic | 203.6 | 203.4 | 203.6 | 203.4 |
Weighted average common shares outstanding – diluted | 203.9 | 203.6 | 203.9 | 203.4 |
Selected Cash Flows Information* | ||
Nine Months Ended | ||
September 30, | ||
2023 | 2022 | |
(In millions) | ||
Net cash provided by operating activities | $ 174.9 | $ 284.9 |
Net cash used in investing activities | (415.7) | (465.4) |
Net cash provided by financing activities | 192.8 | 200.9 |
Increase (decrease) in cash and cash equivalents | (48.0) | 20.4 |
Cash and cash equivalents - beginning of year | 80.5 | 54.2 |
Cash and cash equivalents - end of period | $ 32.5 | $ 74.6 |
*Includes cash flows from discontinued operations. | ||
Capital Expenditures | |
Business Line | 2023 |
(In millions) | |
Electric | $ 102 |
Natural gas distribution | 256 |
Pipeline | 134 |
Construction services | 38 |
Total capital expenditures* | $ 530 |
* 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 project timing.
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; 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 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 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 | Nine Months Ended | |||
September 30, | September 30, | September 30, | September 30, | |
2023 | 2022 | 2023 | 2022 | |
(In millions, except per share amounts) | ||||
(Unaudited) | ||||
Income from continuing operations | $ 78.2 | $ 42.3 | $ 309.7 | $ 146.9 |
Adjustments: | ||||
Less: Unrealized gain on investment in Knife River, net of tax* | 22.8 | — | 113.6 | — |
Costs attributable to strategic initiatives, net of tax* | 3.2 | — | 9.8 | — |
Adjusted income from continuing operations | $ 58.6 | $ 42.3 | $ 205.9 | $ 146.9 |
* Includes unrealized gain of | ||||
Earnings Per Share Reconciliation | ||||
Earnings per share from continuing operations | $ .38 | $ .21 | $ 1.52 | $ .72 |
Adjustments: | ||||
Less: Earnings per share attributable to unrealized gain on investment in Knife River | .11 | — | .56 | — |
Loss per share attributable to strategic initiative costs | .02 | — | .05 | — |
Adjusted earnings per share from continuing operations | $ .29 | $ .21 | $ 1.01 | $ .72 |
Three Months Ended | Nine Months Ended | |||
September 30, | September 30, | |||
2023 | 2022 | 2023 | 2022 | |
(In millions) | ||||
Net income | $ 74.9 | $ 147.9 | $ 244.0 | $ 250.4 |
Discontinued operations, net of tax | (3.3) | 105.6 | (65.7) | 103.5 |
Income from continuing operations | 78.2 | 42.3 | 309.7 | 146.9 |
Adjustments: | ||||
Interest expense | 32.1 | 20.2 | 82.6 | 58.3 |
Income taxes | 13.3 | 4.3 | 92.3 | 28.3 |
Depreciation, depletion and amortization | 53.1 | 51.8 | 158.9 | 158.6 |
EBITDA from continuing operations | $ 176.7 | $ 118.6 | $ 643.5 | $ 392.1 |
Adjustments: | ||||
Less: Unrealized gain on investment in Knife River, net of tax* | 22.8 | — | 113.6 | — |
Costs attributable to strategic initiatives, net of tax* | 3.2 | — | 9.8 | — |
Adjusted EBITDA from continuing operations | $ 157.1 | $ 118.6 | $ 539.7 | $ 392.1 |
EBITDA Guidance Reconciliation for 2023 | ||
Construction Services | ||
Low | High | |
(In millions) | ||
Income from continuing operations | $ 125.0 | $ 140.0 |
Adjustments: | ||
Interest expense | 20.0 | 20.0 |
Income taxes | 40.0 | 45.0 |
Depreciation, depletion and amortization | 25.0 | 25.0 |
EBITDA from continuing operations | $ 210.0 | $ 230.0 |
Electric | Three Months Ended | Nine Months Ended | |||||
September 30, | September 30, | ||||||
2023 | 2022 | Variance | 2023 | 2022 | Variance | ||
(In millions) | |||||||
Operating revenues | $ 108.1 | $ 99.3 | 9 % | $ 294.8 | $ 278.6 | 6 % | |
Operating expenses: | |||||||
Electric fuel and purchased power | 29.0 | 20.1 | 44 % | 73.8 | 68.3 | 8 % | |
Operation and maintenance | 30.1 | 28.7 | 5 % | 88.5 | 91.0 | (3) % | |
Depreciation, depletion and amortization | 16.0 | 15.7 | 2 % | 47.8 | 52.0 | (8) % | |
Taxes, other than income | 4.3 | 4.4 | (2) % | 13.3 | 13.5 | (1) % | |
Total operating expenses | 79.4 | 68.9 | 15 % | 223.4 | 224.8 | (1) % | |
Operating income | 28.7 | 30.4 | (6) % | 71.4 | 53.8 | 33 % | |
Other income (expense) | 1.3 | .5 | 160 % | 3.4 | (0.8) | NM | |
Interest expense | 7.0 | 7.0 | — % | 20.5 | 21.0 | (2) % | |
Income before taxes | 23.0 | 23.9 | (4) % | 54.3 | 32.0 | 70 % | |
Income tax (benefit) expense | 2.1 | 2.3 | (9) % | 0.4 | (5.5) | 107 % | |
Net income | $ 20.9 | $ 21.6 | (3) % | $ 53.9 | $ 37.5 | 44 % | |
Adjustments: | |||||||
Interest expense | 7.0 | 7.0 | — % | 20.5 | 21.0 | (2) % | |
Income tax (benefit) expense | 2.1 | 2.3 | (9) % | 0.4 | (5.5) | 107 % | |
Depreciation, depletion and amortization | 16.0 | 15.7 | 2 % | 47.8 | 52.0 | (8) % | |
EBITDA | $ 46.0 | $ 46.6 | (1) % | $ 122.6 | $ 105.0 | 17 % | |
NM - not meaningful | |||||||
Operating Statistics | Three Months Ended | Nine Months Ended | |||
September 30, | September 30, | ||||
2023 | 2022 | 2023 | 2022 | ||
Revenues (millions) | |||||
Retail sales: | |||||
Residential | $ 33.6 | $ 36.6 | $ 100.0 | $ 100.6 | |
Commercial | 47.1 | 38.4 | 118.1 | 105.3 | |
Industrial | 10.5 | 10.8 | 31.0 | 31.3 | |
Other | 1.8 | 2.0 | 5.1 | 5.4 | |
93.0 | 87.8 | 254.2 | 242.6 | ||
Other | 15.1 | 11.5 | 40.6 | 36.0 | |
$ 108.1 | $ 99.3 | $ 294.8 | $ 278.6 | ||
Volumes (million kWh) | |||||
Retail sales: | |||||
Residential | 275.5 | 304.9 | 899.3 | 906.7 | |
Commercial | 692.1 | 358.3 | 1,619.9 | 1,051.7 | |
Industrial | 143.5 | 143.7 | 435.7 | 431.7 | |
Other | 20.6 | 21.6 | 61.5 | 61.7 | |
1,131.7 | 828.5 | 3,016.4 | 2,451.8 | ||
Average cost of electric fuel and purchased power per kWh | $ .024 | $ .022 | $ .023 | $ .026 | |
The electric business reported net income of
The previous table also reflects items that are passed through to customers resulting in minimal impact to earnings. These items include
The electric business's EBITDA decreased
Natural Gas Distribution | Three Months Ended | Nine Months Ended | |||||
September 30, | September 30, | ||||||
2023 | 2022 | Variance | 2023 | 2022 | Variance | ||
(In millions) | |||||||
Operating revenues | $ 135.0 | $ 132.2 | 2 % | $ 919.7 | $ 793.3 | 16 % | |
Operating expenses: | |||||||
Purchased natural gas sold | 59.6 | 65.3 | (9) % | 580.3 | 481.3 | 21 % | |
Operation and maintenance | 55.5 | 49.5 | 12 % | 165.3 | 154.4 | 7 % | |
Depreciation, depletion and amortization | 23.9 | 22.7 | 5 % | 70.6 | 67.4 | 5 % | |
Taxes, other than income | 11.3 | 11.4 | (1) % | 57.8 | 51.3 | 13 % | |
Total operating expenses | 150.3 | 148.9 | 1 % | 874.0 | 754.4 | 16 % | |
Operating income (loss) | (15.3) | (16.7) | 8 % | 45.7 | 38.9 | 17 % | |
Other income | 4.7 | 1.4 | 236 % | 14.5 | 0.3 | NM | |
Interest expense | 14.4 | 10.7 | 35 % | 42.2 | 29.8 | 42 % | |
Income (loss) before taxes | (25.0) | (26.0) | 4 % | 18.0 | 9.4 | 91 % | |
Income tax (benefit) expense | (7.3) | (7.9) | (8) % | — | (1.4) | (100) % | |
Net income (loss) | $ (17.7) | $ (18.1) | 2 % | $ 18.0 | $ 10.8 | 67 % | |
Adjustments: | |||||||
Interest expense | 14.4 | 10.7 | 35 % | 42.2 | 29.8 | 42 % | |
Income tax (benefit) expense | (7.3) | (7.9) | 8 % | — | (1.4) | 100 % | |
Depreciation, depletion and amortization | 23.9 | 22.7 | 5 % | 70.6 | 67.4 | 5 % | |
EBITDA | $ 13.3 | $ 7.4 | 80 % | $ 130.8 | $ 106.6 | 23 % | |
NM - not meaningful | |||||||
Operating Statistics | Three Months Ended | Nine Months Ended | |||
September 30, | September 30, | ||||
2023 | 2022 | 2023 | 2022 | ||
Revenues (millions) | |||||
Retail Sales: | |||||
Residential | $ 69.5 | $ 64.9 | $ 516.2 | $ 438.5 | |
Commercial | 41.0 | 44.5 | 314.6 | 278.3 | |
Industrial | 7.2 | 7.2 | 33.1 | 29.2 | |
117.7 | 116.6 | 863.9 | 746.0 | ||
Transportation and other | 17.3 | 15.6 | 55.8 | 47.3 | |
$ 135.0 | $ 132.2 | $ 919.7 | $ 793.3 | ||
Volumes (MMdk) | |||||
Retail sales: | |||||
Residential | 4.0 | 4.5 | 46.5 | 47.3 | |
Commercial | 3.8 | 4.2 | 32.5 | 32.9 | |
Industrial | .9 | .9 | 3.8 | 3.9 | |
8.7 | 9.6 | 82.8 | 84.1 | ||
Transportation sales: | |||||
Commercial | .3 | .3 | 1.4 | 1.4 | |
Industrial | 50.1 | 42.1 | 135.9 | 118.0 | |
50.4 | 42.4 | 137.3 | 119.4 | ||
Total throughput | 59.1 | 52.0 | 220.1 | 203.5 | |
Average cost of natural gas per dk | $ 6.85 | $ 6.82 | $ 7.01 | $ 5.72 | |
The natural gas distribution business reported a seasonal loss of
The previous table also reflects items that are passed through to customers resulting in minimal impact to earnings. These items include
The natural gas distribution business's EBITDA increased
Pipeline | Three Months Ended | Nine Months Ended | |||||
September 30, | September 30, | ||||||
2023 | 2022 | Variance | 2023 | 2022 | Variance | ||
(In millions) | |||||||
Operating revenues | $ 44.1 | $ 39.7 | 11 % | $ 127.0 | $ 114.3 | 11 % | |
Operating expenses: | |||||||
Operation and maintenance | 17.0 | 14.6 | 16 % | 52.7 | 44.9 | 17 % | |
Depreciation, depletion and amortization | 6.3 | 6.9 | (9) % | 20.0 | 20.0 | — % | |
Taxes, other than income | 3.0 | 3.2 | (6) % | 9.6 | 10.0 | (4) % | |
Total operating expenses | 26.3 | 24.7 | 6 % | 82.3 | 74.9 | 10 % | |
Operating income | 17.8 | 15.0 | 19 % | 44.7 | 39.4 | 13 % | |
Other income | .9 | .6 | 50 % | 2.3 | — | NM | |
Interest expense | 3.3 | 2.6 | 27 % | 9.5 | 7.4 | 28 % | |
Income before taxes | 15.4 | 13.0 | 18 % | 37.5 | 32.0 | 17 % | |
Income tax expense | 3.5 | 2.8 | 25 % | 8.1 | 7.2 | 13 % | |
Income from continuing operations | 11.9 | 10.2 | 17 % | 29.4 | 24.8 | 19 % | |
Discontinued operations, net of tax* | — | (.4) | (100) % | (.5) | (.5) | — % | |
Net income | $ 11.9 | $ 9.8 | 21 % | $ 28.9 | $ 24.3 | 19 % | |
Adjustments: | |||||||
Interest expense | 3.3 | 2.6 | 10 % | 9.5 | 7.4 | 17 % | |
Interest expense included in discontinued operations, net of tax | — | .4 | (100) % | .5 | .5 | — % | |
Income tax expense | 3.5 | 2.8 | 25 % | 8.1 | 7.2 | 16 % | |
Depreciation, depletion and amortization | 6.3 | 6.9 | (9) % | 20.0 | 20.0 | — % | |
EBITDA | $ 25.0 | $ 22.5 | 11 % | $ 67.0 | $ 59.4 | 12 % | |
*Discontinued operations includes interest on debt facilities repaid in connection with the Knife River separation. | |||||||
Operating Statistics | Three Months Ended | Nine Months Ended | |||
September 30, | September 30, | ||||
2023 | 2022 | 2023 | 2022 | ||
Transportation volumes (MMdk) | 146.9 | 130.9 | 419.2 | 357.1 | |
Customer natural gas storage balance (MMdk): | |||||
Beginning of period | 27.8 | 14.8 | 21.2 | 23.0 | |
Net injection | 15.0 | 13.3 | 21.6 | 5.1 | |
End of period | 42.8 | 28.1 | 42.8 | 28.1 | |
The pipeline business reported record net income of
The pipeline business's EBITDA increased
Construction Services | Three Months Ended | Nine Months Ended | |||||
September 30, | September 30, | ||||||
2023 | 2022 | Variance | 2023 | 2022 | Variance | ||
(In millions) | |||||||
Operating revenues | $ 717.4 | $ 737.0 | (3) % | $ 2,218.7 | $ 1,975.1 | 12 % | |
Cost of sales: | |||||||
Operation and maintenance | 607.9 | 651.8 | (7) % | 1,891.1 | 1,708.1 | 11 % | |
Depreciation, depletion and amortization | 4.7 | 4.3 | 9 % | 13.6 | 12.6 | 8 % | |
Taxes, other than income | 19.9 | 20.2 | (1) % | 71.9 | 60.5 | 19 % | |
Total cost of sales | 632.5 | 676.3 | (6) % | 1,976.6 | 1,781.2 | 11 % | |
Gross profit | 84.9 | 60.7 | 40 % | 242.1 | 193.9 | 25 % | |
Selling, general and administrative expense: | |||||||
Operation and maintenance | 32.6 | 23.5 | 39 % | 94.9 | 76.0 | 25 % | |
Depreciation, depletion and amortization | 1.2 | 1.2 | — % | 3.7 | 3.3 | 12 % | |
Taxes, other than income | 1.0 | 1.1 | (9) % | 3.9 | 4.0 | (3) % | |
Total selling, general and administrative expense | 34.8 | 25.8 | 35 % | 102.5 | 83.3 | 23 % | |
Operating income | 50.1 | 34.9 | 44 % | 139.6 | 110.6 | 26 % | |
Other income | 2.0 | 3.5 | (43) % | 7.5 | 4.7 | 60 % | |
Interest expense | 4.7 | — | NM | 6.6 | .2 | NM | |
Income before taxes | 47.4 | 38.4 | 23 % | 140.5 | 115.1 | 22 % | |
Income tax expense | 11.4 | 9.2 | 24 % | 34.5 | 28.5 | 21 % | |
Income from continuing operations | 36.0 | 29.2 | 23 % | 106.0 | 86.6 | 22 % | |
Discontinued operations, net of tax* | — | (1.2) | (100) % | (5.2) | (2.8) | 86 % | |
Net income | $ 36.0 | $ 28.0 | 29 % | $ 100.8 | $ 83.8 | 20 % | |
Adjustments: | |||||||
Interest expense | 4.7 | — | 176 % | 6.6 | .2 | 74 % | |
Interest expense included in discontinued operations, net of tax | — | 1.2 | (100) % | 5.2 | 2.8 | 86 % | |
Income tax expense | 11.4 | 9.2 | 31 % | 34.5 | 28.5 | 25 % | |
Depreciation, depletion and amortization | 5.9 | 5.5 | 7 % | 17.3 | 15.9 | 9 % | |
EBITDA | $ 58.0 | $ 43.9 | 32 % | $ 164.4 | $ 131.2 | 21 % | |
*Discontinued 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 | Nine Months Ended | Three Months Ended | Nine Months Ended | ||||||
September 30, | September 30, | September 30, | September 30, | ||||||
2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | ||
Business Line: | (In millions) | ||||||||
Electrical & mechanical | |||||||||
Commercial | $ 266.6 | $ 276.6 | $ 947.8 | $ 706.6 | $ 32.7 | $ 21.8 | $ 99.8 | $ 67.2 | |
Industrial | 116.0 | 132.3 | 367.3 | 339.4 | 8.3 | 11.3 | 35.2 | 33.4 | |
Institutional | 76.3 | 58.9 | 195.2 | 155.0 | 6.1 | 1.0 | 11.8 | 2.3 | |
Renewables | 19.2 | 43.4 | 43.9 | 122.8 | 1.8 | (3.9) | 2.3 | .1 | |
Service & other | 38.8 | 35.3 | 126.0 | 127.0 | 3.6 | 3.7 | 14.3 | 14.7 | |
516.9 | 546.5 | 1,680.2 | 1,450.8 | 52.5 | 33.9 | 163.4 | 117.7 | ||
Transmission & distribution | |||||||||
Utility | 188.8 | 179.6 | 508.9 | 477.5 | 31.1 | 25.8 | 76.9 | 72.2 | |
Transportation | 15.7 | 16.1 | 40.6 | 59.5 | 1.3 | 1.0 | 1.8 | 4.0 | |
204.5 | 195.7 | 549.5 | 537.0 | 32.4 | 26.8 | 78.7 | 76.2 | ||
Intrasegment eliminations | (4.0) | (5.2) | (11.0) | (12.7) | — | — | — | — | |
Total | $ 717.4 | $ 737.0 | $ 2,218.7 | $ 1,975.1 | $ 84.9 | $ 60.7 | $ 242.1 | $ 193.9 | |
Backlog at September 30, | ||
2023 | 2022 | |
(In millions) | ||
Electrical & mechanical | $ 1,526 | $ 1,724 |
Transmission & distribution | 324 | 278 |
$ 1,850 | $ 2,002 | |
The construction services business reported record third quarter net income of
The construction services business's EBITDA increased
Other | |||||||
Three Months Ended | Nine Months Ended | ||||||
September 30, | September 30, | ||||||
2023 | 2022 | Variance | 2023 | 2022 | Variance | ||
(In millions) | |||||||
Operating revenues | $ 1.7 | $ 1.5 | 13 % | $ 6.4 | $ 4.4 | 45 % | |
Operating expenses: | |||||||
Operation and maintenance | (2.6) | 3.0 | (187) % | 19.4 | 12.9 | 50 % | |
Depreciation, depletion and amortization | 1.0 | 1.1 | (9) % | 3.2 | 3.3 | (3) % | |
Total operating expenses | (1.6) | 4.1 | (139) % | 22.6 | 16.2 | 40 % | |
Operating income (loss) | 3.3 | (2.6) | NM | (16.2) | (11.8) | 37 % | |
Unrealized gain on investment in Knife River | 30.2 | — | NM | 170.2 | — | NM | |
Other income (expense) | 5.8 | — | NM | 10.0 | (1.3) | NM | |
Interest expense | 8.6 | .1 | NM | 12.3 | .2 | NM | |
Income (loss) before income taxes | 30.7 | (2.7) | NM | 151.7 | (13.3) | NM | |
Income tax expense | 3.6 | (2.2) | NM | 49.3 | (0.5) | NM | |
Income (loss) from continuing operations | 27.1 | (0.5) | NM | 102.4 | (12.8) | NM | |
Discontinued operations, net of tax* | (3.3) | 105.6 | (103) % | (60.0) | 106.8 | (156) % | |
Net income | $ 23.8 | $ 105.1 | (77) % | $ 42.4 | $ 94.0 | 55 % | |
Income (loss) from continuing operations | $ 27.1 | $ (0.5) | NM | $ 102.4 | $ (12.8) | NM | |
Adjustments*: | |||||||
Less: Unrealized gain on investment in Knife River, net of tax* | 22.8 | — | NM | 113.6 | — | NM | |
Costs attributable to strategic initiatives, net of tax* | 3.2 | — | NM | 9.8 | — | NM | |
Adjusted income (loss) from continuing operations | $ 7.5 | $ (.5) | NM | $ (1.4) | $ (12.8) | 89 % | |
* Includes unrealized gain on investment in Knife River retained shares of | |||||||
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, 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 third quarter, Other benefited from an increase of
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 | ||
September 30, | ||
2023 | 2022* | |
(In millions, except per share amounts) | ||
(Unaudited) | ||
Book value per common share | $ 13.54 | $ 16.39 |
Market price per common share | $ 19.58 | $ 29.67 |
Market value as a percent of book value | 144.6 % | 181.0 % |
Total assets | $ 7,869 | $ 9,607 |
Total equity | $ 2,757 | $ 3,492 |
Total debt | $ 2,648 | $ 3,028 |
Capitalization ratios: | ||
Total equity | 51.0 % | 52.8 % |
Total debt | 49.0 % | 47.2 % |
100.0 % | 100.0 % | |
*2022 amounts include Knife River | ||
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SOURCE MDU Resources Group, Inc.
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