MDU Resources Group Inc. reported first quarter earnings of $25.1 million, or 13 cents per share, compared to first quarter 2019 earnings of $40.9 million, or 21 cents per share.
“While our operations continue to perform well as our country responds to the COVID-19 pandemic, earnings in the first quarter were adversely impacted by much lower investment returns, milder weather at our utility operations, and an adjustment on a construction contract. We are confident of our ability to continue to provide our customers with the essential services they need, however significant uncertainty exists about the economic impact that may be seen from COVID-19 and lower energy prices and demand,” said David L. Goodin, president and CEO of MDU Resources.
“Our companies are essential service providers, and our work remains vital to Building a Strong America as the country recovers from the pandemic and beyond. Our balance sheet is strong with ample liquidity, and we expect solid operational performance the remainder of the year while maintaining modified work practices in light of health guidelines around COVID-19. Our construction services business has an all-time record backlog of work and our construction materials business’s backlog is near last year’s record level. We anticipate our utility business and natural gas pipeline business will continue with near-normal operations.”
Comparing first quarter 2020 to first quarter 2019, MDU Resources’ businesses collectively experienced an earnings variance of approximately $10.1 million from lower returns on certain benefit plan investments. The company attributes this change in investment returns to the recent downturn in financial markets compared to strong market performance in the first quarter of 2019.
The construction materials business experienced a seasonal loss in the first quarter of $38.2 million compared to a loss of $34.4 million in first quarter 2019. Although favorable weather in the quarter allowed the company to begin construction work in certain areas earlier than last year, earnings in the quarter were negatively impacted by higher payroll-related costs and lower investment returns.
As previously announced, this business in February acquired a precast and prestressed concrete operation in Spokane, Wash., which complements the company’s existing prestressed operations in the Northwest. The construction materials backlog of work at March 31 was $905 million, compared to a record $943 million at March 31 last year.
The construction services business in the first quarter had record revenues, up approximately 22% over last year’s record first quarter revenues. Earnings were $16.8 million for the quarter, compared to $20.0 million in first quarter 2019.
Earnings were negatively impacted by an out-of-period adjustment of $6.7 million, after tax, to correct revenue recognition on a construction contract. This adjustment was related to, but not material to, the prior year’s results. The company continues to see strong demand for its services. Its backlog of work at March 31 was a record $1.27 billion, compared to last year’s record $1.02 billion at March 31. As previously announced, this business in February acquired PerLectric Inc., in Fairfax, Virginia.