Upon completing MDU Resources Group, Inc.’s previously announced strategic review of its wholly owned construction services business, MDU Construction Services Group Inc., the MDU Resources board of directors has determined that it will pursue a potential tax-advantaged separation of the construction services business from MDU Resources.
The board said a tax-advantaged separation of the construction services business supports MDU Resources’ goal of enhancing value for stockholders by becoming a pure-play regulated energy delivery company, an objective MDU Resources first announced in late 2022.
“After an extensive strategic review, the board decided our best path forward to optimize value for stockholders is a potential tax-advantaged separation of MDU Construction Services Group. This decision reflects the strong financial performance of this business and long-term growth opportunities tied to continued electrification of the economy, as well the tax basis of the business and current market conditions,” said David L. Goodin, president and CEO of MDU Resources. “We are focused on determining the best method and timeline to effect a separation.”
MDU Construction Services Group has experienced record-breaking performance in recent years, with record revenue of $2.7 billion in 2022 and a record backlog of $2.13 billion of work at Dec. 31. For 2023, MDU Resources most recently reported it expects revenue from its construction services business of $2.8 billion to $3.0 billion, with margins slightly higher compared to 2022, and earnings before interest, taxes, depreciation and amortization (EBITDA) in the range of $200 million to $225 million.