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November 2017 EEI Financial Presentation – MDU Resources Group Inc.

MDU Resources Group Inc. · Nov 3, 2017 · 56 slides

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Slides

  1. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 1
    NOVEMBER 2017 EEI FINANCIAL CONFERENCE BUILDING A STRONG AMERICA
  2. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 2
    With integrity, create superior shareholder value by expanding upon our expertise to be the supplier of choice in all of our markets while being a safe and great place to work. BUILDING A STRONG AMERICA 3
  3. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 3
    TWO PILLAR BUSINESS MODEL Completed exit of E&P business, sold interest in refining business and natural gas processing plant; lower overall business risk profile Focused on growing our two Regulated Energy Construction Materials…
  4. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 4
    REGULATED ENERGY DELIVERY FOR THE YEAR ENDING DECEMBER 31, 2016 RATE BASE EARNINGS Pipeline 15% Pipeline 25% Electric Electric 45% 46% Natural Gas Natural Gas 40% 29% BUILDING A STRONG AMERICA 5
  5. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 5
    CONSTRUCTION MATERIALS & SERVICES FOR THE YEAR ENDING DECEMBER 31, 2016 REVENUES EARNINGS Services 25% Services 36% Materials Materials 64% 75% BUILDING A STRONG AMERICA 6
  6. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 6
    RESULTS FROM CONTINUING OPERATIONS FOR THE 9 MONTHS ENDING SEPTEMBER 30, 2017 EARNINGS FROM EPS FROM CONTINUING CONTINUING OPERATIONS OPERATIONS 200 1.00 180 0.90 160 166.0 168.8 140 0.80 0.85 0.86 0.70 120 0.60…
  7. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 7
    2017 CAPITAL 300 PROGRAM 250 247 Capital expenditures for 2017 include line-of-sight 200 opportunities at the companys business units as well as additional growth millions 150 capital Additional growth capital of 150…
  8. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 8
    INVESTOR RELATIONS NOVEMBER 2017 ELECTRIC & NATURAL GAS UTILITY BUILDING A STRONG AMERICA
  9. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 9
    ELECTRIC AND NATURAL GAS 1,068,000 electric and natural gas customers in 448 communities Electric Natural Gas 143,000 customers 925,000 customers 758 MW of owned generation BUILDING A STRONG AMERICA 10
  10. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 10
    STRATEGY Provide safe, reliable and economic service Focus on organic growth through investments needed to provide these services Look to expand into areas where similar operating and growth objectives exist Be one of the top…
  11. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 11
    CUSTOMER GROWTH NATURAL GAS ELECTRIC 950,000 145,000 140,000 900,000 135,000 850,000 130,000 800,000 125,000 750,000 120,000 700,000 115,000 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016 National Average…
  12. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 12
    BIG STONE SOUTH TO ELLENDALE MISO multivalue 345-kilovolt transmission line; 160 miles from Big Stone City, SD, to Ellendale, ND All necessary easements secured Recovery through MISO tariff Expected completion 2019 BUILDING A…
  13. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 13
    THUNDER SPIRIT WIND EXPANSION In December 2016, signed 25-year power purchase agreement, with purchase option Fully permitted for a 150 megawatt wind project Current generation at 107.5 megawatts Acquisition costs estimated at 85…
  14. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 14
    22% ELECTRIC GENERATION 51% Increased renewable generation from 11 percent 27% to 22 percent of portfolio since 2010 Thunder Spirit II expansion will increase renewable generation to 27 percent 2016 Generation 2017 North Dakota and…
  15. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 15
    ELECTRIC REGULATORY MECHANISMS MT ND SD WY Fuel Clause Adjustment Transmission Rider Environmental/ Renewable Rider Generation Rider Property Tax Tracker Interim Rate Relief Forecasted Test Period Forward Year Test…
  16. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 16
    NATURAL GAS REGULATORY MECHANISMS MN MT ND SD WY ID WA OR Purchased Gas Adjustment Full Decoupling Weather Normalization Full Fixed General Service Rate Pipeline Replacement / Integrity Tracker Property Tax Tracker Earnings…
  17. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 17
    OUTLOOK Customer growth expected to average 1 to 2 percent per year Organic growth opportunities are expected to result in substantial growth in rate base, 1.9 billion at year-end 2016 Update to be provided in late November…
  18. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 18
    INVESTOR RELATIONS NOVEMBER 2017 PIPELINE & MIDSTREAM BUILDING A STRONG AMERICA
  19. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 19
    WBI ENERGY ASSETS Regulated operations Approx. 4,000 miles of pipe Over 1.5 Bcf/d system capacity 193 Bcf working storage Non-regulated operations Gas gathering Cathodic protection Energy management BUILDING A STRONG AMERICA…
  20. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 20
    OUR STRENGTHS High-quality customers Low risk, stable returns with regulated business 75 percent of revenue backed by firm capacity commitments Five-year average term remaining Bakken hometown advantage Experienced, talented team…
  21. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 21
    WBI ENERGY STRATEGY Leverage our strengths to be the pipeline of choice in the Bakken Organic growth in Tier 1 Bakken acreage Low-cost provider Competitors use us to construct gas pipelines Build for 5x-7x EBITDA Only one rate case…
  22. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 22
    2017 ORGANIC GROWTH CHARBONNEAU & LINE SECTION 25 EXPANSIONS Project Overview New compression station as well as other compression additions and enhancements at existing stations New station near Tioga New unit at Williston Two new…
  23. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 23
    2017-18 ORGANIC GROWTH VALLEY EXPANSION PROJECT Project Overview 38-mile pipeline, approximately 55 million - 60 million, FERC-regulated project to deliver natural gas supply to eastern ND and far western MN Timeline 2016 open…
  24. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 24
    2018 ORGANIC GROWTH LINE SECTION 27 EXPANSION Project Overview Approximately 13 miles of new pipeline and associated facilities in the Bakken producing area in northwestern North Dakota Project, as designed, will increase capacity by…
  25. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 25
    INVESTOR RELATIONS NOVEMBER 2017 CONSTRUCTION MATERIALS BUILDING A STRONG AMERICA
  26. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 26
    WHO WE ARE One of the top U.S. aggregate producers 5th sand and gravel 1.0 billion tons of reserves Operations in 15 states 5,000 employees in peak season 1.7 billion to 1.8 billion in revenue projected for 2017 BUILDING A…
  27. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 27
    KNIFE RIVER STRATEGY Success through People, Safety, Quality, Environment Focused on solid ROI Provide strong cash returns Take advantage of vertical integration Grow operations through M&A and greenfield BUILDING A STRONG…
  28. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 28
    KNIFE RIVER STRENGTHS Aggregates Vertical integration Advantage over competition Adds margin Safety, Quality, Environmental leader Recruiting/retention Good reputation Share resources between regions Geographic diversity…
  29. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 29
    PRODUCTS Aggregates Asphalt Building materials Cement Liquid asphalt Prestress/Precast Ready-mix concrete BUILDING A STRONG AMERICA 30
  30. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 30
    SERVICES General contractor Subcontractor Aggregate laydown Asphalt paving Concrete construction Site development Underground utilities Railroad work Bridges Marine construction BUILDING A STRONG AMERICA 31
  31. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 31
    EARNINGS KNIFE RIVER EARNINGS GROWTH 120.0 Four years of strong 100.0 102.7 growth 33 percent CAGR 80.0 89.1 2015 and 2016 recorded back-to-back millions 60.0 years of record earnings 50.9 51.5 40.0 32.4 20.0…
  32. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 32
    EARNINGS COMPARISON YTD 2016 vs. YTD 2017 Earnings by Quarter 80 Slower start than 2016 due to 70 69.5 weather-related delays across 60 63.2 many areas of operation 50 40 33.7 30 3rdquarter earnings of 63.2 20 21.2…
  33. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 33
    CONSTRUCTION AS OF SEPTEMBER 30 BACKLOG 700.0 600.0 580 500.0 525 533 520 476 400.0 millions 300.0 200.0 100.0 0.0 2013 2014 2015 2016 2017 BUILDING A STRONG AMERICA 34
  34. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 34
    INFRASTRUCTURE OPPORTUNITIES California Road Repair and Accountability Act of 2017 Over the next ten years, this bill is expected to raise 52.4 billion Funds allocated to road maintenance and rehabilitation Oregon HB 2017 5.3…
  35. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 35
    INVESTOR RELATIONS NOVEMBER 2017 CONSTRUCTION SERVICES BUILDING A STRONG AMERICA
  36. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 36
    CONSTRUCTION SERVICES Outside Inside Industrial Equipment & supply Power lines Electrical Refinery mechanical Equipment & tools Substations Mechanical Automotive Rental and sales Excavation & Fire suppression Water treatment…
  37. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 37
    STRATEGY Go & Grow Organically Grow existing market share Leverage renewable expertise Add satellite operations in growing markets Secure selective large projects Acquisition Expand services and geographic locations…
  38. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 38
    OUTSIDE COMPANIES International Line Builders OR, CA, WA, ID Loy Clark Pipeline OR, CA, WA, ID Rocky Mountain Contractors MT, ND, ID Capital Electric Line Builders MO, IA, OK, AK, IL, OH Lone Mountain Excavation NV PROJECT TYPES AND…
  39. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 39
    INSIDE COMPANIES Bell Electrical Contractors St. Louis, MO Bombard Electric, Bombard Mechanical, Desert Fire Protection, Lone Mountain Excavation NV, CA Capital Electric Construction Kansas City, MO Duro Electric Denver, CO ESI…
  40. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 40
    INDUSTRIAL COMPANIES USI Industrial Turnarounds Capital projects Maintenance Wagner Industrial Electric Refineries Automotive Mission critical BUILDING A STRONG AMERICA 41
  41. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 41
    EQUIPMENT & SUPPLY Increased capacity Equipment and tools National footprint Six strategic locations One-day service BUILDING A STRONG AMERICA 42
  42. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 42
    FOR NINE MONTHS ENDED SEPTEMBER 30 REVENUE GROWTH 1,200.0 1,000.0 Record year-to-date 1,010.4 revenues of more than 1.0 billion 800.0 842.8 822.8 781.1 2017 revenue guidance millions increased from 1.2 billion to 600.0…
  43. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 43
    EARNINGS COMPARISON YTD 2016 vs. YTD 2017 Construction services year-to-date 35 earnings increased 63 percent 30 year over year 32.9 Higher workloads and margins in both 25 the outside and inside areas 20 millions 20.2…
  44. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 44
    CONSTRUCTION BACKLOG AS OF SEPTEMBER 30 800 700 676 600 500 518 millions 400 458 433 300 348 200 100 0 2013 2014 2015 2016 2017 BUILDING A STRONG AMERICA 45
  45. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 45
    FINANCIAL OVERVIEW JASON VOLLMER Vice President, Chief Financial Officer & Treasurer BUILDING A STRONG AMERICA
  46. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 46
    RESULTS FROM CONTINUING OPERATIONS THIRD QUARTER 2017 EARNINGS EPS 100 0.50 90 0.45 89.6 0.45 0.46 80 88.2 0.40 70 0.35 60 0.30 millions 50 0.25 40 0.20 30 0.15 20 0.10 10 0.05 0 0.00 2016 2017 2016 2017…
  47. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 47
    CONSOLIDATED RESULTS* THIRD QUARTER 2017 EARNINGS EPS 100 0.50 90 0.45 87.4 0.45 80 0.40 82.8 0.42 70 0.35 60 0.30 millions 50 0.25 40 0.20 30 0.15 20 0.10 10 0.05 - - 2016 2017 2016 2017 *Includes both…
  48. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 48
    ELECTRIC & NATURAL GAS UTILITY THIRD QUARTER 2017 Earnings Reported earnings of 4.8 million Higher natural gas and electric retail 6 sales volumes and margins 5 4.8 Since January 1, 2017, the utility has 4 received approval…
  49. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 49
    PIPELINE & MIDSTREAM THIRD QUARTER 2017 Earnings Reported earnings of 6.0 million 8 Decrease reflects lower earnings due 7 to the sale of Pronghorn assets in 6.7 January 2017 6 Decrease partially offset by record 5 6.0…
  50. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 50
    CONSTRUCTION SERVICES THIRD QUARTER 2017 Reported earnings of 13.1 million, up from 7.2 Earnings million in third quarter 2016 14 Higher outside construction margins resulting from higher workloads in areas impacted by hurricane 12…
  51. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 51
    CONSTRUCTION MATERIALS THIRD QUARTER 2017 Earnings Reported earnings of 63.2 million 2016 2017 80 Lower asphalt product margins Higher aggregate volumes 70 69.5 60 63.2 Backlog of 520 million compared 50 to 580 million in…
  52. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 52
    SOUND FINANCIAL POSITION 58% Equity / 42% Debt As of September 30, 2017 6,000 5,000 4,000 millions 3,000 2,000 1,000 0 12/31/2012 12/31/2013 12/31/2014 12/31/2015 12/31/2016 09/30/2017 Equity Debt BUILDING A…
  53. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 53
    FUNDING PLAN FOR 2017 Based on current estimates, the companys gross capital expenditures for its continuing operations and dividends are expected to be funded with operating cash flows, asset sales and small debt issuances No…
  54. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 54
    NARROWING 2017 EPS GUIDANCE Consolidated 1.10 to 1.20 Note: As of November 1, 2017 BUILDING A STRONG AMERICA 55
  55. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 55
    DIVIDEND 0.80 79 Consecutive 0.77 GROWTH 0.70 Years 79 consecutive years of quarterly dividend 0.60 payments Annualized Dividend Rate 0.50 Dividend increased November 2016, 0.40 making 26 consecutive years of increases…
  56. November 2017 EEI Financial Presentation – MDU Resources Group Inc. – slide 56
    BUILDING A STRONG AMERICA QUESTIONS AND ANSWERS BUILDING A STRONG AMERICA

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