MDU Resources Group Inc. reported first quarter earnings of $31.7 million, or 16 cents per share, compared to first quarter 2021 earnings of $52.1 million, or 26 cents per share.
The construction materials business had a seasonal loss of $40.0 million in the first quarter, compared to a seasonal loss of $30.8 million in the first quarter of 2021. Although the business had record first-quarter revenues of $310.0 million, the higher sales were offset by higher operating expenses, including fuel, materials and labor costs.
The company has increased and continues to increase pricing to offset higher operating expenses. It expects to see greater benefit from these price increases as construction season gets underway and sales volumes ramp up, particularly across the company’s seasonally impacted northern U.S. operations. The construction materials backlog of work increased 15% to $940 million at March 31, compared to $819 million at March 31 last year.
The construction services business had record revenues of $552.6 million in the first quarter resulting in earnings of $21.3 million, compared to revenues of $518.5 million and record earnings of $29.8 million in first quarter 2021.
While the company had a larger volume of utility-related transmission and distribution work in first quarter 2022 compared to first quarter 2021, it had less storm-related, higher-margin repair work. Within its electrical and mechanical operations, the company had a larger volume of work, particularly renewable- and commercial-related projects, while seeing a decrease in industrial-related margins.
Construction services backlog increased 31% over the prior year, with an all-time high of $1.67 billion at March 31, compared to $1.27 billion at March 31 last year. A number of these projects are getting underway and are expected to contribute to 2022 results.
“We have a solid start to the year with higher revenues at all our businesses, including record revenues at our construction businesses. Although we continue, as expected, to experience inflationary headwinds, we remain optimistic about 2022 with an all-time record combined backlog of work at our construction companies and growth projects underway at our regulated energy delivery businesses,” said David L. Goodin, president and CEO of MDU Resources. “With good operational momentum and pricing increases primed to be impactful as construction season heats up, we are increasing revenue guidance for our construction materials business and maintaining our earnings per share guidance of $2.00 to $2.15 for 2022.”
The company plans to invest $770 million for capital projects in 2022. The capital program is expected to be largely funded from operating cash flows in the range of $550 million to $600 million. Future acquisitions are not included in this amount and would be incremental to the capital program.