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MDU Resources Reports First Quarter Earnings, Reaffirms 2012 Earnings Guidance

The following information highlights the key growth strategies, projections and certain assumptions for the construction segments:

  • The construction materials work backlog as of March 31 was approximately $532 million, compared to approximately $569 million a year ago. The March 31 backlog at construction services was approximately $333 million, compared to approximately $347 million a year ago. The backlog includes a variety of projects such as highway paving projects, airports, bridge work, reclamation, harbor expansions, substation and line construction, solar and other commercial, institutional and industrial projects including refinery work.
  • The company's operations in the prolific Bakken area of North Dakota currently have approximately $35 million of backlog.
  • Projected revenues included in the company's 2012 earnings guidance are in the range of $1.3 billion to $1.4 billion for construction materials and $750 million to $850 million for construction services.
  • The company anticipates margins in 2012 to be higher than 2011 levels at construction materials and construction services.
  • The company continues to pursue opportunities for expansion in energy projects such as refineries, transmission, substations, utility services, solar, wind towers, and geothermal. Initiatives are aimed at capturing additional market share and expansion into new markets.
  • As the country's 5 th largest sand and gravel producer, the company will continue to strategically manage its 1.1 billion tons of aggregate reserves in all its markets, as well as take further advantage of being vertically integrated.

Other

 

 

Three Months Ended
    March 31,
    2012   2011  
(In millions)
Operating revenues   $ 2.1   $ 2.5  
Operating expenses:
Operation and maintenance 1.3 2.9
Depreciation, depletion and amortization .5 .4
Taxes, other than income     .1  
    1.8   3.4  
Operating income (loss)   .3   (.9 )
Income (loss) from continuing operations .5 (.1 )
Income (loss) from discontinued operations, net of tax   (.1 ) .5  
Earnings   $ .4   $ .4  
 

Risk Factors and Cautionary Statements that May Affect Future ResultsThe information in this release includes certain forward-looking statements, including earnings per share guidance and statements by the president and chief executive officer of MDU Resources, within the meaning of Section 21E of the Securities Exchange Act of 1934. Although the company believes that its expectations are based on reasonable assumptions, actual results may differ materially. Following are important factors that could cause actual results or outcomes for the company to differ materially from those discussed in forward-looking statements.

  • The company’s exploration and production and pipeline and energy services businesses are dependent on factors, including commodity prices and commodity price basis differentials, which are subject to various external influences that cannot be controlled.
  • The regulatory approval, permitting, construction, startup and operation of power generation facilities may involve unanticipated changes or delays that could negatively impact the company’s business and its results of operations and cash flows.
  • Economic volatility affects the company’s operations, as well as the demand for its products and services and the value of its investments and investment returns including its pension and other postretirement benefit plans and, may have a negative impact on the company’s future revenues and cash flows.
  • The company relies on financing sources and capital markets. Access to these markets may be adversely affected by factors beyond the company’s control. If the company is unable to obtain economic financing in the future, the company’s ability to execute its business plans, make capital expenditures or pursue acquisitions that the company may otherwise rely on for future growth could be impaired. As a result, the market value of the company’s common stock may be adversely affected. If the company issues a substantial amount of common stock it could have a dilutive effect on its existing shareholders.
  • The company is exposed to credit risk and the risk of loss resulting from the nonpayment and/or nonperformance by the company’s customers and counterparties.
  • The backlogs at the company’s construction materials and contracting and construction services businesses are subject to delay or cancellation and may not be realized.
  • Actual quantities of recoverable natural gas and oil reserves and discounted future net cash flows from those reserves may vary significantly from estimated amounts.
  • The company’s operations are subject to environmental laws and regulations that may increase costs of operations, impact or limit business plans, or expose the company to environmental liabilities.
  • Initiatives to reduce greenhouse gas emissions could adversely impact the company’s electric generation operations.
  • The company is subject to government regulations that may delay and/or have a negative impact on its business and its results of operations and cash flows. Statutory and regulatory requirements also may limit another party’s ability to acquire the company.
  • Weather conditions can adversely affect the company’s operations and revenues and cash flows.
  • Competition is increasing in all of the company’s businesses.
  • The company could be subject to limitations on its ability to pay dividends.
  • An increase in costs related to obligations under multiemployer pension plans could have a material negative effect on the company’s results of operations and cash flows.
  • The company's operations may be negatively impacted by cyber attacks or acts of terrorism.
  • Other factors that could cause actual results or outcomes for the company to differ materially from those discussed in forward-looking statements include:
    • Acquisition, disposal and impairments of assets or facilities.
    • Changes in operation, performance and construction of plant facilities or other assets.
    • Changes in present or prospective generation.
    • The ability to obtain adequate and timely cost recovery for the company’s regulated operations through regulatory proceedings.
    • The availability of economic expansion or development opportunities.
    • Population growth rates and demographic patterns.
    • Market demand for, available supplies of, and/or costs of, energy- and construction-related products and services.
    • The cyclical nature of large construction projects at certain operations.
    • Changes in tax rates or policies.
    • Unanticipated project delays or changes in project costs, including related energy costs.
    • Unanticipated changes in operating expenses or capital expenditures.
    • Labor negotiations or disputes.
    • Inability of the various contract counterparties to meet their contractual obligations.
    • Changes in accounting principles and/or the application of such principles to the company.
    • Changes in technology.
    • Changes in legal or regulatory proceedings.
    • The ability to effectively integrate the operations and the internal controls of acquired companies.
    • The ability to attract and retain skilled labor and key personnel.
    • Increases in employee and retiree benefit costs and funding requirements.

For a further discussion of these risk factors and cautionary statements, refer to Item 1A – Risk Factors in the company’s most recent Form 10-K.

MDU Resources Group, Inc.    
Three Months Ended
    March 31,
    2012   2011    

 

(In millions, except per share amounts)

(Unaudited)
Operating revenues   $ 852.8   $ 901.8    
Operating expenses:
Fuel and purchased power 18.4 16.9
Purchased natural gas sold 185.4 244.7
Operation and maintenance 444.5 427.7
Depreciation, depletion and amortization 85.4 84.7
Taxes, other than income   48.0   49.7    
    781.7   823.7    
Operating income 71.1 78.1
Earnings from equity method investments 1.2 .5
Other income 1.1 1.9
Interest expense   19.4   22.1    
Income before income taxes 54.0 58.4
Income taxes   18.1   15.9   *
Income from continuing operations 35.9 42.5
Income (loss) from discontinued operations, net of tax   (.1 ) .5    
Net income 35.8 43.0
Dividends declared on preferred stocks   .2   .2    
Earnings on common stock   $ 35.6   $ 42.8    
 
Earnings per common share – basic:
Earnings before discontinued operations $ .19 $ .22
Discontinued operations, net of tax     .01    
Earnings per common share – basic   $ .19   $ .23    
Earnings per common share – diluted:
Earnings before discontinued operations $ .19 $ .22
Discontinued operations, net of tax     .01    
Earnings per common share – diluted   $ .19   $ .23    
Dividends declared per common share   $ .1675   $ .1625    
Weighted average common shares outstanding – basic   188.8   188.7    
Weighted average common shares outstanding – diluted   189.2   188.8    
 

* Including the effect of an approximate $4 million benefit related to the favorable resolution of certain tax matters.

  Three Months Ended
March 31,
2012   2011
(Unaudited)
 
Other Financial Data
Book value per common share $ 14.61 $ 14.16
Market price per common share $ 22.39 $ 22.97
Dividend yield (indicated annual rate) 3.0 % 2.8 %
Price/earnings ratio* 20.7x 17.9x
Market value as a percent of book value 153.3 % 162.2 %
Return on average common equity* 7.5 % 9.1 %
Total assets** $ 6.5 $ 6.2
Total equity** $ 2.8 $ 2.7
Total debt ** $ 1.4 $ 1.4
Capitalization ratios:
Total equity 66 % 65 %
Total debt 34   35  
100 % 100 %
 
*   Represents 12 months ended
** In billions




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