DECEMBER 2017 INVESTOR RELATIONS BUILDING A STRONG AMERICA
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
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…
REGULATED ENERGY DELIVERY RATE BASE EARNINGS Pipeline 15% Pipeline 19% Electric Electric 45% 46% Natural Gas Natural Gas 40% 35% AS OF DECEMBER 31, 2016 TRAILING TWELVE MONTHS AS OF SEPTEMBER 30, 2017 BUILDING A STRONG…
CONSTRUCTION MATERIALS & SERVICES REVENUES EARNINGS Materials Materials Services 63% Services 59% 41% 37% TRAILING TWELVE MONTHS AS OF SEPTEMBER 30, 2017 BUILDING A STRONG AMERICA 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…
2018 - 2022 Utility Construction Pipeline & Midstream CAPITAL 2,500 TOTAL CAPITAL FORECAST OF 2,323* PROGRAM Electric and natural gas Utility 349 2,000 345-kilovolt transmission line Thunder Spirit Wind farm expansion 466…
INVESTOR RELATIONS DECEMBER 2017 ELECTRIC & NATURAL GAS UTILITY BUILDING A STRONG AMERICA
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
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…
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…
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…
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…
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…
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…
EARNINGS COMPARISON YTD 2016 vs. YTD 2017 The electric and natural gas utility 60 year-to-date earnings increased 50 42 percent year over year 52.1 Higher natural gas and electric retail 40 sales volumes and margins 36.7…
OUTLOOK Customer growth expected to average 1 to 2 percent per year Projecting 5% CAGR in rate base for 2018-2022 Organic growth opportunities are expected to result in substantial growth in rate base, 1.9 billion at year-end 2016;…
INVESTOR RELATIONS DECEMBER 2017 PIPELINE & MIDSTREAM BUILDING A STRONG AMERICA
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…
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…
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…
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…
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…
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…
EARNINGS COMPARISON YTD 2016 vs. YTD 2017 Pipeline and midstream year-to- 20 date earnings decreased from 18 18.3 18.3 million to 15.1 million 16 Decrease reflects the absence of 14 15.1 Pronghorn assets 12 millions…
INVESTOR RELATIONS DECEMBER 2017 CONSTRUCTION MATERIALS BUILDING A STRONG AMERICA
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…
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…
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…
PRODUCTS Aggregates Asphalt Building materials Cement Liquid asphalt Prestress/Precast Ready-mix concrete BUILDING A STRONG AMERICA 32
SERVICES General contractor Subcontractor Aggregate laydown Asphalt paving Concrete construction Site development Underground utilities Railroad work Bridges Marine construction BUILDING A STRONG AMERICA 33
EARNINGS COMPARISON YTD 2016 vs. YTD 2017 Slower start than 2016 due to weather- 100 related delays across many areas of 90 88.8 operation 80 70 Lower asphalt product margins 60 64.5 Lower construction margins millions…
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 35
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…
INVESTOR RELATIONS DECEMBER 2017 CONSTRUCTION SERVICES BUILDING A STRONG AMERICA
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…
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…
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…
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…
INDUSTRIAL COMPANIES USI Industrial Turnarounds Capital projects Maintenance Wagner Industrial Electric Refineries Automotive Mission critical BUILDING A STRONG AMERICA 42
EQUIPMENT & SUPPLY Increased capacity Equipment and tools National footprint Six strategic locations One-day service BUILDING A STRONG AMERICA 43
EARNINGS COMPARISON YTD 2016 vs. YTD 2017 Construction services year-to-date 35 earnings increased 63 percent 30 32.9 year over year Higher workloads and margins in both 25 the outside and inside areas 20 millions 20.2…
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…
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 46
FINANCIAL OVERVIEW JASON VOLLMER Vice President, Chief Financial Officer & Treasurer BUILDING A STRONG AMERICA
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…
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…
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…
CONSTRUCTION MATERIALS THIRD QUARTER 2017 Earnings Reported earnings of 63.2 million 80 Lower asphalt product margins Higher aggregate volumes 70 69.5 60 63.2 Backlog of 520 million compared 50 to 580 million in the third…
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…
2017 EPS GUIDANCE Consolidated 1.10 to 1.20 Note: As of November 1, 2017 BUILDING A STRONG AMERICA 55
DIVIDEND 0.80 80 Consecutive 0.79 GROWTH 0.70 Years 80 consecutive years of quarterly dividend 0.60 payments Annualized Dividend Rate 0.50 Dividend increased November 2017, 0.40 making 27 consecutive years of increases…
BUILDING A STRONG AMERICA QUESTIONS AND ANSWERS BUILDING A STRONG AMERICA
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