Higher Costs, Labor Issues Impact MDU Resources 2021 Results

MDU Resources Group Inc. announced earnings of $378.1 million, or $1.87 per share, in 2021, compared to $390.2 million, or $1.95 per share, in 2020. In the fourth quarter, the company earned $86.5 million, or 42 cents per share, compared to $112.3 million, or 56 cents per share, in the fourth quarter of 2020.

“We achieved our third-best annual earnings in company history, though our results were less than we forecasted,” said David L. Goodin, president and CEO of MDU Resources. “I’m proud of our team’s effort to adapt to changing economic conditions and escalating inflationary pressures.

“We have strong momentum going into 2022. Each of our construction lines had a record year-end backlog of work, for a combined construction backlog of $2.1 billion. With our recently completed North Bakken Expansion Project, we are transporting additional volumes through our natural gas pipeline system and will continue work on a number of other expansion projects. Construction gets underway this year on the 88-megawatt natural gas-fired turbine we’re adding in North Dakota. We anticipate growing demand for energy, data and telecommunications infrastructure, and for construction materials and services, as funding from the $1.2 trillion Infrastructure Investment and Jobs Act begins to be distributed across the country. We expect to continue to see some inflationary pressures, and our team will remain diligent in addressing these challenges as we continue building a strong America,” Goodin said.

The construction materials business earned $129.8 million in 2021, compared to a record $147.3 million in 2020. Revenues, at $2.2 billion, were comparable to the prior year. Margins decreased on asphalt and asphalt-related products, aggregates and contracting services, primarily from higher equipment, asphalt oil, fuel and labor costs, including health care. Labor shortages, particularly a lack of commercially licensed drivers, also impacted operations. 

The company continues to increase its product pricing to keep pace with rising costs. This business in the fourth quarter announced it had acquired Baker Rock Resources and Oregon Mainline Paving, both located in Oregon. 

Due to acquisition timing, these operations did not have a significant impact on 2021 results and are expected to be a future contributor. The company continues to explore additional strategic acquisition opportunities. The construction materials backlog of work at Dec. 31 was a record $708 million, compared to $673 million at Dec. 31, 2020.

The construction services business earned $109.4 million, on par with 2020’s record earnings of $109.7 million. Revenues were $2.05 billion, compared to $2.10 billion in 2020. Demand remains strong for electrical and mechanical construction, particularly from industrial customers and service contracts, as well as for utility-related transmission and distribution work. The construction services backlog of work at Dec. 31 was an all-time record $1.38 billion, compared to $1.27 billion at Dec. 31, 2020.

Related posts