MDU Resources Group Inc. reported 2022 earnings on a generally accepted accounting principles (GAAP) basis of $367.5 million, or $1.81 per share, with adjusted earnings of $380.2 million, or $1.87 per share, compared to 2021 GAAP earnings of $378.1 million, or $1.87 per share.
In the fourth quarter, the company on a GAAP basis earned $117.1 million, or 57 cents per share, with adjusted earnings of $125.7 million, or 61 cents per share, compared to fourth quarter 2021 GAAP earnings of $86.5 million, or 42 cents per share.
MDU Resources announced on Aug. 4 its intent to separate its construction materials subsidiary, Knife River Corp., into a standalone publicly traded company, and on Nov. 3 announced a strategic review of its construction services subsidiary, MDU Construction Services Group Inc.
MDU Resources is reporting adjusted earnings that exclude costs attributable to these strategic initiatives. Adjusted earnings are a non-GAAP measure. For an explanation of non-GAAP earnings adjustments, see the “Non-GAAP Measures” section in this news release. Additional information about the proposed strategic initiatives can be found on the company’s website at www.mdu.com.
“Our businesses performed very well in 2022 and finished the year strong. We are particularly pleased with results in the latter half of the year as we saw our operational adjustments, including product pricing, offsetting inflationary pressures,” said David L. Goodin, president and CEO of MDU Resources. “We see this momentum continuing into 2023 as we remain focused on safely and efficiently providing essential products and services to our customers while making great progress toward completing the planned spinoff of our construction materials business, Knife River Corporation, and the strategic review of our construction services business, MDU Construction Services Group. We are optimistic about the future as combined backlog at our construction businesses is at an all-time high of more than $3 billion, and we have $2.5 billion in capital investments planned within our regulated energy delivery businesses over the next five years.”
Results at each of MDU Resources’ businesses were negatively impacted in 2022 on a non-cash basis by lower investment returns on nonqualified benefit plans. Collectively, the negative earnings variance for 2022 was approximately $21 million, or 10 cents per share, compared to 2021. The company attributes this change in investment returns to significant fluctuations in the financial markets.
The construction materials business had record revenues of $2.53 billion in 2022 and earned $116.2 million, compared to revenues of $2.23 billion and earnings of $129.8 million in 2021. While performance improved in the second half of the year as adjustments in response to inflationary pressures took effect, Knife River’s full-year margins decreased because of higher costs on asphalt oil, labor, fuel and cement.
Higher interest expense also negatively impacted results. Unfavorable weather early in the year and during the fourth quarter across the majority of Knife River’s markets shortened the company’s construction season. Demand remains strong for construction materials and contracting work as evidenced by a record backlog at Dec. 31 of $935 million, up 32% compared to $708 million at Dec. 31, 2021.
- The electric and natural gas utility earned $102.3 million in 2022, compared to earnings of $103.5 million in 2021.
- The construction services business had record revenues of $2.70 billion and record earnings of $124.8 million in 2022, compared to revenues of $2.05 billion and earnings of $109.4 million in 2021.
- The pipeline business earned $35.3 million in 2022, compared to $40.9 million in 2021.