MDU Resources Group Inc. reported first-quarter earnings on a generally accepted accounting principles (GAAP) basis of $38.3 million, or 19 cents per share, with adjusted earnings of $46.6 million, or 23 cents per share, compared to first quarter 2022 GAAP earnings of $31.7 million, or 16 cents per share.
MDU Resources announced on Aug. 4, 2022, its intent to separate its construction materials subsidiary, Knife River Corp., into an independent, publicly traded company, and has now announced its board of directors has approved the separation through a pro rata distribution on May 31 to stockholders of record on May 22 of the outstanding shares of common stock of Knife River Holding Co. Related to the Knife River spinoff, an Investor Day is planned for May 18 at the New York Stock Exchange.
MDU Resources also announced on Nov. 3, 2022, that it was undertaking a strategic review of its construction services subsidiary, MDU Construction Services Group Inc., which it expects to complete in the second quarter of 2023. With the separation of Knife River and the strategic review of MDU Construction Services Group, MDU Resources is reporting adjusted earnings that exclude costs attributable to these strategic initiatives. Adjusted earnings are a non-GAAP measure.
“We are pleased with our strong first quarter results, and we look forward to completing the separation of Knife River into a standalone, publicly traded company following the announcement today of our board’s approval,” said David L. Goodin, president and CEO of MDU Resources. “Our construction services business had record revenues in the first quarter and more than $2 billion in backlog at March 31. Our regulated energy delivery businesses performed extremely well, and Knife River benefited from its stronger product pricing. We expect this momentum to carry through the rest of the year across all our businesses.”
The construction services business had record quarterly revenues of $754.3 million with earnings of $26.1 million in the first quarter, compared to revenues of $552.6 million and earnings of $21.3 million in first quarter 2022.
The company experienced particularly strong demand for high tech and hospitality-related construction services during the quarter. Higher labor costs impacted margins, and higher interest rates negatively impacted results.
Earnings before interest, taxes, depreciation and amortization (EBITDA) for construction services increased $8.7 million in the first quarter as revenues increased and the company recognized additional income on joint-venture arrangements.
MDU Construction Services Group’s backlog increased 26% to an all-time first quarter record of $2.1 billion at March 31, compared to $1.67 billion at March 31 last year. Current backlog includes projects that will replace backlog projects that have been completed or are nearing completion.