MDU Resources Group (MDU) Q2 2024 earnings summary

Executive summary

• Second quarter 2024 net income was $60.4 million, down from $130.7 million in Q2 2023, mainly due to the absence of a prior-year one-time gain and strategic initiative costs; adjusted income from continuing operations rose to $65.2 million from $60.0 million.

• The company is progressing toward the tax-free spin-off of Everus Construction, expected in late 2024, to become a pure-play regulated energy delivery company.

• Pipeline and construction services (Everus) segments delivered record Q2 earnings and backlog, while utility earnings declined due to cooler weather and higher expenses.

• The board targets a long-term dividend payout ratio of 60–70% of regulated energy delivery earnings, maintaining a long history of uninterrupted dividends.

Financial highlights

• Q2 2024 GAAP net income was $60.4 million ($0.30/share), down from $130.7 million ($0.64/share) in Q2 2023, reflecting the prior-year Knife River gain; adjusted income from continuing operations was $65.2 million ($0.32/share), up from $60.0 million ($0.29/share).

• Operating revenues for Q2 2024 were $1.05 billion, down from $1.09 billion in Q2 2023; six-month revenues were $2.26 billion, down 10% year-over-year.

• Pipeline segment posted record Q2 earnings of $17.3 million, nearly doubling from $8.7 million last year, driven by record transportation volumes and new rates.

• Everus (construction services) reported record Q2 earnings of $39.0 million, with a record backlog of $2.4 billion, despite lower revenues from project timing.

• Utility business earnings were $10.5 million, down from $13.1 million in Q2 2023, due to lower electric volumes and higher O&M expenses.

Outlook and guidance

• 2024 regulated energy delivery earnings guidance reaffirmed at $170–$180 million.

• Everus revenue guidance revised to $2.65–$2.85 billion (from $2.9–$3.1 billion), with higher expected margins and EBITDA of $220–$240 million.

• Long-term targets: 7% annual utility rate base growth, 1–2% customer growth, 6–8% EPS growth, $2.7 billion regulated capital investment, and 60–70% dividend payout ratio.

• No anticipated equity needs until 2027.