• Second-Quarter Earnings: $60.4 million or $0.30 per share on a GAAP basis.

• Adjusted Income from Continuing Operations: $65.2 million or $0.32 per share.

• Utility Business Earnings: $10.5 million for the quarter.

• Electric Utilities Segment Earnings: $15.5 million.

• Natural Gas Utility Segment Loss: $5 million seasonal loss.

• Pipeline Business Earnings: Record $17.3 million for the quarter.

• Everus Earnings: Record $39 million for the second quarter.

• Everus Backlog: All-time record of $2.4 billion.

• Revenue Guidance for Everus: Revised to $2.65 billion to $2.85 billion.

• Long-term EPS Growth Forecast: 6% to 8% annually.

• Dividend Payout Ratio Target: 60% to 70% annually.

• Warning! GuruFocus has detected 10 Warning Signs with MDU.

Release Date: August 08, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• MDU Resources Group Inc (NYSE:MDU) reported record second-quarter earnings in its pipeline segment, driven by unprecedented transportation volumes and increased storage revenues.

• The company is on track to complete the tax-free spin-off of its Construction Services business, Everus, later this year, with a strong management team in place to drive future growth.

• MDU Resources Group Inc (NYSE:MDU) has a long-term guidance forecasting $2.7 billion of regulated capital investment, driving a 7% compound annual growth rate on its utility rate base.

• The utility business demonstrated solid results despite unfavorable weather, supported by strategic rate adjustments and infrastructure investments.

• Everus achieved record second-quarter earnings and an all-time record backlog, indicating strong future demand and growth potential.

Negative Points

• MDU Resources Group Inc (NYSE:MDU) experienced a decrease in second-quarter earnings compared to the same period last year, with GAAP earnings dropping from $130.7 million to $60.4 million.

• The utility business faced challenges due to higher operation and maintenance expenses and cooler weather, negatively impacting electric volumes.

• The natural gas utility segment reported a seasonal loss, primarily due to higher operation and maintenance expenses and increased depreciation and amortization.

• Everus reported lower second-quarter revenues due to the timing of projects, impacting overall electrical and mechanical revenues.

• The company revised its revenue guidance for Everus downward, reflecting lower revenues experienced on a year-to-date basis.

Q & A Highlights

Q: Can you discuss the quality of the backlog being added at Everus and how it influences the margin profile going forward? A: Jeffrey Thiede, President and CEO of Everus, explained that data center work is a significant part of the backlog, along with semiconductors and industrial work. The market remains competitive, but margins are comparable, and they aim for margin uplift through project execution and operational excellence.