MDU Resources Reports Third Quarter Earnings; Board Authorizes Strategic Review for MDU Construction Services Group
MDU Resources Group, Inc. (NYSE: MDU) today reported third quarter earnings on a generally accepted accounting principles (GAAP) basis of $147.9 million, or 73 cents per share, with adjusted earnings of $152.0 million, or 75 cents per share, compared to third quarter 2021 GAAP earnings of $139.3 million, or 68 cents per share.
For the nine months ended Sept. 30, MDU Resources on a GAAP basis earned $250.4 million, or $1.23 per share, with adjusted earnings of $254.5 million, or $1.25 per share, compared to GAAP earnings of $291.6 million, or $1.44 per share, for the same period in 2021.
MDU Resources announced on Aug. 4 its intent to separate its construction materials subsidiary, Knife River Corporation, into a standalone publicly traded company, and for that reason is reporting adjusted earnings that exclude costs attributable to the separation transaction. Adjusted earnings are a non-GAAP measure. For an explanation of non-GAAP earnings adjustments, see the “Non-GAAP Measures” section in this news release. Additional information about the proposed separation can be found on the company’s website at www.mdu.com.
“Our quarter over quarter results have improved, with very strong demand for construction materials and construction services as evidenced by record revenues and record backlogs at both our construction businesses. With the strong year-to-date results and growing backlog, we increased our annual revenue guidance range at construction services by an estimated $100 million. While we continue to experience and adapt to inflationary pressures across our businesses, we are gaining momentum on recovering from these impacts,” said David L. Goodin, president and CEO of MDU Resources. “Our utility and natural gas pipeline businesses continue to perform well, though higher interest costs impacted results.”
Corporate Strategy Updates
As the next step of MDU Resources’ strategic planning, the board of directors has unanimously determined the best way to optimize value would be to create two pure-play companies: a leading construction materials company and a pure-play regulated energy delivery company. Accordingly, the board has authorized management to commence a strategic review process for MDU Construction Services Group, Inc. with the objective of achieving the board’s goal of creating two pure-play public companies.
MDU Resources is working to complete the separation of Knife River, which, as previously announced, is expected to be effected as a tax-free spinoff to MDU Resources shareholders to be completed in 2023. Knife River is a top producer of construction aggregates in the United States.
“We believe these steps will unlock significant value for MDU shareholders,” Goodin said. “Having two pure-play companies would provide each company the opportunity to execute its individual business plans and achieve industry-leading performance.”