MDU Resources Group Inc. reported third-quarter earnings of $139.3 million, or 68 cents per share, compared to third-quarter 2020 earnings of $153.1 million, or 76 cents per share. For the nine months ended Sept. 30, MDU Resources earned $291.6 million, or $1.44 per share, compared to $277.9 million, or $1.39 per share, in 2020.
“This was a solid quarter for MDU Resources. Although results did not quite reach the level we expected, all our business lines continue to perform very well,” said David L. Goodin, president and CEO of MDU Resources. “Our regulated utility and natural gas pipeline businesses both had very strong results for the quarter, and our construction businesses’ performance also remains solid although slightly behind last year’s record third-quarter earnings.
“Third-quarter construction results this year were impacted by higher asphalt oil and fuel costs, timing of available work, labor constraints, weather-related effects in some areas, and adjustments to estimates on a construction services contract. With our results through the third quarter, we are adjusting our revenue and margin guidance for the year as well as our earnings per share guidance, which we now anticipate being in the range of $1.90 to $2.05. We are well-positioned for growth with a combined construction backlog of $1.92 billion as of Sept. 30, which is 3% higher than the same period last year.”
The construction materials business earned $96.3 million in the third quarter, compared to last year’s record third-quarter earnings of $107.3 million. The decrease in earnings was largely from lower asphalt and asphalt-related product sales and margins, as well as lower construction revenues and margins, primarily from less available public work in certain regions.
Higher fuel costs also negatively impacted margins. Demand for aggregate and ready-mix remains strong across the company. The construction materials backlog of work at Sept. 30 was 14% higher at $652 million, compared to $571 million at Sept. 30, 2020.
The construction services business earned $23.1 million in the third quarter, compared to a record $29.8 million in the third quarter of 2020. Earnings were negatively impacted by adjustments of $5.5 million, after tax, to estimates on a construction contract.
The company also saw a decrease in weather-related utility recovery work during the quarter compared to third quarter 2020. This business continues to see high demand for its services, particularly in the commercial sector. The construction services backlog of work at Sept. 30 was $1.27 billion, compared to a record $1.28 billion at Sept. 30, 2020.
The electric and natural gas utility earned $5.2 million in the third quarter, compared to a loss of $800,000 in the third quarter of 2020. Earnings increased with higher sales volumes and rate relief in certain jurisdictions. Electric retail sales volumes were 11.1% higher and natural gas retail sales volumes were 2.0% higher during the quarter compared to third quarter 2020. Customer growth also continued, increasing 1.7% over last year.
The company is preparing for construction kickoff in early 2022 on its Heskett Station Unit IV, an 88-megawatt natural gas-fired combustion turbine in Mandan, N.D., that is expected to be in service in early 2023. Retirement of Heskett Station Units I and II, coal-fired electric generation facilities, also is slated for early 2022.
The pipeline business earned $10.6 million in the third quarter, compared to $8.0 million in the third quarter last year. The company benefited from income allowed by the Federal Energy Regulatory Commission for funds used during construction on the company’s North Bakken Expansion project.
The pipeline extension in western North Dakota is expected to be in service in early 2022 and will have capacity to transport 250 million cu. ft. of natural gas per day. The company also recently received approval from the FERC to use the pre-filing review process for its Wahpeton Expansion Project. Construction is planned for 2024 on the 60-mile natural gas pipeline expansion, which will add 20 million cu. ft. per day of natural gas capacity in southeastern North Dakota.