MDU Resources Group, Inc.

Hello, my name is Mike and I will be your conference facilitator. At this time, I would like to welcome everyone to the MDU Resources Group 2020 first quarter conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer period. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, press the pound key on your telephone keypad. This call will be available for replay beginning at 2 p.m. Eastern time today through 1159 p.m. Eastern on May 22nd. The conference ID number for the replay is 498-1249. Again, the conference ID number for the replay is 498-1249. The number to dial for the replay is 1-855-9000. 859-2056 or 404-537-3406. I would now like to turn the conference over to Jason Vollmer, Vice President, Chief Financial Officer and Treasurer of MDU Resources Group. Thank you, Mr. Vollmer. You may begin your conference.

Thank you, Mike. Good morning, everyone, and welcome to our first quarter 2020 earnings conference call. I hope you and your families are safe, and I thank you for joining us this morning. This conference call is being broadcast live to the public over the Internet, and slides will accompany our remarks. If you would like to view the slides, you can find them on the Events and Presentations page under the Investors tab of our website at www.mdu.com. Our earnings release is also available on our website. During the course of this presentation, we will make certain forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934. Although the company believes that its expectations and beliefs are based on reasonable assumptions, actual results may differ materially. For discussion of factors that may cause actual results to differ, refer to Item 1A, Risk Factors, in our most recent Form 10-K and our Form 10-Q, which was filed this morning. Given the current economic environment, our call this quarter will be slightly different from our previous discussions. In addition to covering our quarterly results, we will also plan to address our response to the COVID-19 global pandemic, how our businesses are performing in the current environment, and potential impacts that we are monitoring at each of our business lines. I will start by briefly covering this quarter's earnings results and then turn the presentation over to Dave Gooden, President and CEO of MDU Resources, for an update on our revised guidance and future outlook. After Dave's remarks, we will open the line for questions. In addition to Dave and myself, members of our management team who will be available to answer questions today and dialing in from multiple locations are Dave Barney, President and CEO of Knife River Corporation, Jeff Thiede, President and CEO of MDU Construction Services Group, Nicole Kivisto, President and CEO of our Utility Group, Trevor Hastings, President and CEO of WBI Energy, and Stephanie Barth, Vice President, Chief Accounting Officer and Controller of MDU Resources. Yesterday, we announced first quarter earnings of $25.1 million, or $0.13 per share, compared to first quarter 2019 earnings of $40.9 million, or $0.21 per share. Our combined utility business reported earnings of $43.7 million, down from $52 million in the first quarter of 2019. The electric utility segment reported earnings of $11.4 million for the quarter, compared to $15.5 million in 2019. This decrease in earnings was largely the result of a $2.2 million negative impact from lower investment returns on certain benefit plans and a 7.1% decrease in electric sales volumes driven largely by warmer winter weather. Higher depreciation, depletion, and amortization expense also contributed to the decrease. Partially offsetting the decrease was rate recovery in Montana. Our natural gas utility segment reported a net income of $32.3 million for the quarter compared to $36.5 million in the prior year. Net income was negatively impacted by lower investment returns of $3 million on certain benefit plans compared to the prior year and a 10.9% decrease in retail sales volumes, which impacted jurisdictions without weather normalization mechanisms in place. Higher depreciation, depletion, and amortization expense from increased property, plant, and equipment balances also contributed to the decrease. Approved rate recovery in certain jurisdictions partially offset the decrease. The pipeline business had earnings of $7.4 million in the first quarter compared to $6.8 million in 2019. This business saw increased transportation volumes and revenues in the quarter, primarily related to organic growth projects previously placed into service, and higher transportation rates associated with a FERC rate case that was settled in 2019. Partially offsetting the increase were higher depreciation, depletion and amortization expense from higher depreciation rates in the FERC rate case and higher property, plant and equipment balances. Lower investment returns on certain benefit plans were an offset in the quarter. Our construction services business reported first quarter net income of $16.8 million compared to $20 million in 2019 and record quarterly revenues of $514.7 million, up 22% from first quarter 2019 revenues of $420.9 million. First quarter net income was negatively impacted by a $6.7 million out-of-period adjustment. This adjustment was to correct revenue recognition on a construction contract. Higher selling, general and administrative expenses, primarily office and payroll costs, also had a negative impact in the quarter. This business continued to see increased workloads at both inside and outside specialty contracting lines. Inside specialty contracting remains very busy with hospitality and high-tech work and outside contracting workloads increased from high demand in the utility industry. Increased outside workloads were partially offset by a decrease in equipment sales and rentals in the quarter. Our construction materials business reported a seasonal loss of $38.2 million in the first quarter compared to a loss of $34.4 million in the same period of 2019. and also reported record first quarter revenues of $262.2 million up from first quarter 2019 revenues of $227.2 million. The increased loss was driven by a $2.4 million negative impact from lower investment returns on certain benefit plans and higher selling general and administrative expense largely the result of increased payroll related costs. Partially offsetting these impacts were higher construction and materials revenues as well as gross margins due to an earlier start to the construction season in some of our regions. Now I'd like to switch gears and discuss our corporate liquidity status. Given the uncertainty surrounding COVID-19 and any potential financial impacts, we have made liquidity management a priority for the company. As of March 31, the company had $116.5 million cash on the balance sheet and $431.8 million of credit facility capacity available to continue to provide essential services to our customers and fund our 2020 capital program. As noted in the news release shared yesterday, we do not have any revolving credit facilities maturing until 2024 and have no significant long-term debt maturities until 2022. In addition, one of our utility subsidiaries, Montana Dakota Utilities, entered into a $75 million term loan agreement in early April that was used to repay outstanding borrowings and free up additional credit capacity. Although there have been disruptions in the commercial paper markets, our backstop credit facilities have performed exactly as expected. From an equity perspective, we mentioned in the release, we have no current plans to issue equity under our ATM program in 2020, given our liquidity position and operating cash flow forecasts. We pride ourselves in being dedicated to a strong balance sheet and will remain disciplined in that approach as we navigate through this current pandemic. That summarizes the financial highlights for the quarter, and now I'd like to turn the call over to Dave for his formal remarks.

Dave? And thank you, Jason. Good morning, everyone. Let me start by expressing my sincere hope that everyone who joined us on this call is safe and healthy, and I want to thank you for your interest in MDU Resources. I would also like to acknowledge the unprecedented time that we're in and say that we have great respect and appreciation for those on the front lines fighting this pandemic and providing care for those who are sick. I would also recognize those in the workforce, like our own employees, for providing essential services each and every day, such as keeping the lights on, the gas flowing, and helping to construct America's infrastructure. I am honored to be part of an organization that has shown incredible spirit and strength in the face of this adversity. I cannot be more proud of our employees and how well our team members have stepped up to help provide essential services to the nation. in these challenging circumstances. COVID-19 is impacting all of us, both professionally and personally. For those MDU Resources employees personally affected by the virus, we've implemented supportive policies to protect their pay and benefits and allow them to take care of themselves along with their families. To date, we have nine known cases of COVID-19 affecting our workforce, and our thoughts are with these employees and their families as they work to recover. We continue to assess the safety of our employees and facilities to ensure their well-being. We are very fortunate that our products and services are considered essential to this country and our communities, so operations generally have been permitted to proceed, albeit with increased social distancing measures and recognition of other guidelines from the CDC and state and local governments for our various workplace settings. As of March 31st, our employee count was slightly over 14,000, up actually 1,500 over the same time period compared to 2019. This allows us to continue building a strong America as we provide the electricity, natural gas, and construction materials and services that are essential to daily life. All our businesses remain committed to the health and safety of our employees, customers, and our communities. Now I'd like to give some additional color on our first quarter results. As noted in the news release, mild winter weather ranging from 7 to 21 percent warmer than last year across our utility service territories had negative impacts on both our electric and natural gas sales volumes in the first quarter. Our utility business remains committed to providing safe and reliable service throughout this pandemic. To help ensure the safety of our employees and customers while providing this critical support during this challenging time, our utility companies have reduced the types of service orders being performed, including discontinuing disconnections of service. Late payment fees were also eliminated effective April 1st. These payment arrangements relate to those experiencing financial difficulties as a result of the pandemic. Moving on to our pipeline business, as Jason mentioned earlier, this business saw an increase in earnings year over year, really largely due to the organic growth projects this business has put into service in the second half of 2019. Currently, preparatory work on the North Bakken expansion project is well underway. The company filed its FERC application for the project here in February of 2020, and anticipates FERC approval of the project in early 2021. Construction is expected to begin in 2021 with a completion date later that year, dependent on regulatory along with environmental permitting. While a decrease in oil prices has slowed drilling activity, we continue to benefit from natural gas production in the Bakken and the low natural gas pricing environment is providing organic growth opportunities for industrial growth projects adjacent to our existing system. Our construction companies are also essential service providers. While both companies have experienced some inefficiencies as a result of social distancing measures and other CDC state and local guidelines, they have been able to continue their business operations without, say, minimal interruption. Construction Services reported record quarterly revenue of approximately $515 million for the quarter, up 22% on a year-over-year basis, and now stands at an all-time record backlog of nearly $1.3 billion as of March 31st. Big bidding environments across our footprint have been strong in the first quarter, and we're optimistic that our high quality of service and skilled workforce, which actually increased year over year, will help us to continue to aid in securing new jobs. Looking at our operating environment, our crews are still working hard at both inside and outside contracting lines, albeit with necessary changes as a result of this pandemic. At construction materials, We reported a normal seasonal loss slightly higher than the prior year and backlog that was just shy of last year's record with $905 million here standing at the end of the first quarter. The warmer winter weather that had negative impacts on our utility business in the first quarter allowed our construction material crews to get out and begin work earlier this season. One of the COVID-related risks that we are monitoring at this business is the decrease in fuel consumption and the result of many stay-at-home orders. Many states, cities, and counties across the country have also been impacted by lower sales tax and other revenues as a result of the pandemic. These decreased tax collections could impact funds available for state infrastructure projects. As you heard from Jason, our first quarter operations were solid, but our earnings were disappointing, driven by three primary factors. The first one being impacts from warmer weather across our utility operational footprint. That's 7% to 21% warmer than normal. Two, we had an out-of-period adjustment on a project at Construction Services Group. and three, we had much lower investment returns on certain benefit plans at all of our businesses. As we looked ahead, due to potential impacts from COVID-19 related disruptions, combined with a dramatic decrease in the demand and prices for oil and related projects, and pairing this with our lower than expected first quarter results, we are lowering our 2020 earnings per share guidance to a range now at $1.50 to $1.70, but expect our long-term compounded annual earnings per share growth to remain between 5% and 8%. As you will note in the capital expenditures section of our news release, we have also decreased our planned CapEx as a result of economic uncertainties surrounding COVID-19 pandemic. Looking forward, We are confident that our companies will be able to continue providing the company with essential services for the remainder of the year and beyond. We are affirming the Construction Services Group revenue guidance in the range of $1.85 to $2.05 billion and are slightly decreasing the revenue guidance at construction materials to a range of $2.1 to $2.3 billion for the year. As always, we will continue to provide updates to our guidance estimates as we go throughout the year. In closing, while our backlog at the end of the first quarter is strong, we do anticipate that with the uncertainty related to COVID-19, there will be increased pressure on revenues and margins for future work as our economy gradually reopens. Our workforce levels continue to be quite consistent on a year-over-year basis, and as of just last week, our workforce at the services business was actually approximately 4% higher than the same time last year. And our workforce at our materials business stood at 98% of last year's levels. As for the communities where employees live and work, we recently announced that MDU Resources, through our foundation, donated 500,000 to a variety of organizations to support coronavirus relief efforts. This is in addition to the 2.2 million that the MD Resources Foundation had already committed to charitable organizations here in the 2020 calendar year. I offer my sincere thanks to our employees and our customers for doing their part to stay healthy and safe during this crisis. Your well-being is, above all, the most important thing As always, MDA Resources is committed to operating with integrity and a focus on safety while creating superior shareholder value as we continue to act on our tagline of building a strong America. I appreciate your interest in and commitment to MDA Resources and ask now that we open the line to questions. Operator?

At this time, I would like to remind everyone, if you would like to ask a question, please press star, then the number one on your telephone keypad. If you would like to withdraw your question, press the pound key on your telephone keypad. If you are on a speakerphone, please pick up your handset before entering your request. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Ryan Levine from Citi. Good morning. Morning, Ryan.

How are you?

We're doing fine. How are you doing, Ryan?

Good. Can you talk about the North Bakken expansion project and what are the underlying assumptions for your customer contracts there? And in light of the lower production outlook for the basin, is there any potential to scale back the scope of that project?

Sure, Ryan. Trevor Hastings, he's with us actually in the small group we have assembled here in Bismarck. I'll turn that over to Trevor.

Thanks, Ryan. We continue to move forward on North Bakken as we filed it with FERC. I think it was middle of February this year. At this point, we continue to move forward. We are actively monitoring, evaluating the impacts out of the Bakken, as you mentioned, as we've seen some oil well shut-ins and gas decreasing. But at this point in time, we've got an obligation to move forward and get that project in service by late 2021. Okay.

And then in the presentation material, it was highlighted that you're looking at tangential or adjacent midstream acquisitions or expansions. Can you comment around the appetite or the opportunity set that you may be pursuing there?

Sure. So those are not acquisitions. They're actually just we're seeing a number of different industrial customers look for gas service in and adjacent to our existing service territory. So this would be essentially organic growth opportunities off of our existing system, which is what we've been doing for the last five to ten years. And that's really related to just the kind of low price deck on natural gas that we've seen over the last few years as well as just that continued outlook for low gas prices is one of the main drivers.

Okay. And maybe switching gears to your construction service business, What percentage of your backlog is Las Vegas or related to airports, and what's the outlook for those markets within the construction service?

Jeff, would you take that one?

Absolutely. Thank you. We're very busy in Las Vegas, and our backlog is about 25% of our total there. As a reminder, we've got four companies, our electrical, mechanical, fire protection, underground utilities, and they perform very well. We've got one project that's been put on hold, but we're expecting it's going to ramp back up in this quarter. And we've got another project that's been postponed. The three airport projects we have, there are three different regions, so not quite at 25% of our backlog, but the largest one is in Portland, Oregon, the other one's in Kansas City, and we also have one in CBG. We're doing a little bit of work at SFO. You take a look at just the Pacific Northwest region where we have four of our companies operating. We have a similar level of backlog as we do in Las Vegas. In addition to that, our outside line backlog is very strong in the Midwest, in the Rocky Mountain regions, and up and down the West Coast. So that really shows our diversification. If you look at our record backlog, it also demonstrates that we have a A strong demand from our services, and that's due to our proven ability to perform. And our team has adjusted to COVID-19 just admirably. And we are making sure that we're putting people in safe work environments and adjusting, working with our customers to these changing conditions.

And just to follow up on that, so in light of the COVID-19 environment with reduced airport activity, Did that create an increased opportunity to enhance margins on those projects in the near term, and are you seeing any of that backlog starting to slip in light of the current environment?

Good question. I have not seen any of those projects in our airport work slip at all. There's less activity there, so you would think with less congestion and less access challenges and issues, That could only help margins. But then again, we're also seeing additional PPE. People are going through temperature checks on many of our jobs. And they're also having to wear face coverings and sometimes even face shields to protect them, protect their safety. So we have not seen those airport projects slow down at all.

OK. And then last question for me on the utility. Can you speak to what you're assuming in terms of your bad debt expense for this year and your guidance and any regulatory mechanisms that you could potentially get recovery on some of that customer nonpayment?

Nicole, you'll take that one, please.

Yes, certainly. Thanks for the question. Yeah, although it's early, we did take a look at our bad debt in the first quarter here and did make a slight adjustment to our assumption in terms of increasing our bad debt expense in the first quarter, again, only slightly. As we look to April here, we are seeing some increases in our accounts and arrears. I would comment, though, that our customer experience team is proactively reaching out and assisting customers with payment plans, providing the assistance they need as well as helping them access available funds. So as we look to the year, we do have that baked into the guidance that we provided. And then the other thing that I would comment on is us along with pretty much most of the industry did provide relief with the institution of a moratorium on disconnect and the waiving of late payment fees. In terms of filing regulatory mechanisms, we have proceeded with COVID-related filings in four of our states, and we'll be doing a fifth state today here yet with a filing, and then continuing to look at the remaining three states. So as you bring up, certainly we did include in those filings the ability to have the potential to recover some of the increased exposure on bad debt.

Thank you. Thank you, Ryan. At this time, I would like to remind everyone, if you would like to ask a question, please press star, then the number one on your telephone keypad. If you would like to withdraw your question, press the pound key on your telephone keypad. If you are on a speakerphone, please pick up your handset before entering your request. Your next question comes from the line of Chris Ellinghus from Seabird.

Hey, everybody. How are you?

Hi, Chris. We're doing fine. How are you doing?

Not too bad. I hope everybody across the company is doing well. Jeff, the project that's across the street from the Wynn, is that the one that's on hold at the moment?

No. Resorts World is moving very well. We've got the electrical and the mechanical contracts there. It's the MSG project. that has been put on hold, but we think it's going to start back up.

Okay, great. The change in the CapEx, Jason, can you talk about where is that coming from and why?

Certainly, Chris. I think, you know, take a look at our earnings release. We got a little more detail on there, and you'll see it really comes out into two of our business lines. It's primarily at the utility, and then at Knife River. So at the utility, it's looking at just some delays probably given the current environment that we're in, some of the shelter-in-place orders, maybe some changes in growth expectations as we, a little uncertainty here I think as we look at where the year will play out as the primary driver for timing there. Those are really projects that are being pushed into future years, so not changing our forward look on CapEx here, but really changing some timing. and then the other piece would be at Knife River in the construction materials side where it's really timing of fleet replacements and making some decisions in certain cases to lease versus buy equipment and those types of items. That's the primary drivers that we see in the CapEx reduction for 2020.

The investment returns, I assume that's a Coley product and You gave us sort of the year-over-year changes, but what was the aggregate, I assume it was a loss for the quarter, but what was that aggregate number for the company for Q1?

Yeah, so that is a Coley product, you're correct. So for others on the phone, it's a company-owned life insurance product. So it really is investment returns, difference year-over-year. So we talked about $10.1 million in the release. I'm just going to ballpark it. It was about a $4 million loss this year. and compared to about a $6 million gain that we would have seen in the prior year. We talked about that in last year's release as well, seeing some above average gains there. So that's the net difference. So about $4 million for the quarter is this year's impact.

Okay, great. Thanks. And Jeff, in Vegas, what are you hearing about the opening up of the town and how do you anticipate You know, what's happened to Vegas affecting future projects or future developments? Have you heard much in that regard?

We're at the edge of our seats waiting for the governor to open the state back up so we can get customers back into those facilities. So we are daily listening, reading, and our presidents have real strong connections within the community. Obviously, with no work in many of our customers' facilities, mostly our small projects have been postponed, not a huge impact. But last week on our call with our presidents, we heard that we're going to be entering back into some of those facilities to do some of the preparatory work. And we've also been involved in some adjustments to be made for the customers when they do come back. to make sure that their facilities are safe. So we're starting to see some activity in anticipation of the state order being lifted and bringing customers back into those facilities. As far as larger projects, future projects, we do have a number of them on our radar, and we are providing estimates and pre-construction cost analysis for those projects, and we have not heard Thank you very much for the call. I appreciate it. Everybody take care. Thank you, Chris. Appreciate you getting on the call.

Your next question comes from the line of Bill Apicelli from Exodus Point.

Hi, good morning. Good morning, Bill. Just following up on an earlier question, on the North Bakken pipe, is that fully subscribed or fully contracted at the moment?

This is Trevor with WBI. At this point in time, we have signed contracts for 243,000 MCF a day, not fully subscribed to the design as filed with FERC. And as we roll forward, as we do with every project, we look for ways to de-risk it, whether that's on the material side and purchase strategy to the contract strategy to just overall scope and schedule. And we continue to do that on this project as well.

Okay. And then if it stays contracted at that level, is that enough to go FID and move forward with construction? Yes. Okay. And then I guess it's just the FERC application. Is there next steps beyond that before you would start construction in early 21?

Well, there's a number of permits that we're required to get, whether they're state, local, or federal, that we just normally work through. The FERC application, our expectation is we should, our schedule shows early of 2021 to receive the FERC certificate to proceed with the project. Construction wouldn't commence prior to receipt of the FERC application, or the FERC certificate, sorry.

And then if you move forward at the current level of contracted, then you would just sort of have walk-up volumes on the open piece until you're able to contract that in the future? Is that how that would work?

Correct, yeah.

Okay. All right, and then just switching gears, on the utility side, can you speak to what you're seeing on the sales side in terms of the impact, you know, from the COVID as it relates to residential sales versus C&I? Yeah, Nicole?

Yeah, sure. Thanks for the question. As we look at, maybe I'll start with just the quarter. As we look to the quarter, you heard Dave comment in the script in the call here this morning, as well as covered in the news release, that really when we look at volume impact for the quarter, that was largely driven by weather consideration. We didn't see much of a COVID impact through March 31st. Looking at our April volumes, As we look at those year over year, really on the electric side of the business, our volumes were really quite comparable to last year. However, as you noted, we did see some differences in the split. And so as we looked at our electric residential volumes, we saw them pick up compared to last year to the tune of around 19% and really saw an offset there on electric commercial and industrial load, which was down around 8%. Again, these are on a preliminary basis here. But as we look to the gas side of the business, we really saw a bit of an increase on the gas side in April year over year. And again, did see some differences in the load with a 13% pickup on residential load, around a 2% on commercial, and that was offset by a 7% decrease on industrial. So as we look to the remainder of the year, We are uncertain exactly what will happen here, but do anticipate that some of this trend may continue in terms of higher levels of residential being somewhat offset by commercial industrial.

Okay. So, I mean, is that a net positive then for you? or, I mean, in terms of the residential being up that much and C&I being down, I'm not sure how the margins work. Obviously, it's probably higher margin on the residential, but... Yeah, yeah, yeah.

So, again, volume's comparable. So, again, volume's pretty comparable year over year in April, but as you know, we do see higher margin per unit on our residential sales.

Okay. And then, lastly, on the guidance reduction, I know you guided down the revenue at the materials business. Is that the bulk of the guide down or is it sort of spread around the other businesses as well?

Yeah, Bill, this is Dave. So we lowered guidance both on the top side and the bottom side by 15 cents. Some of the drivers there, certainly the first quarter on a year-over-year basis, We're off $0.08. And we talked about those three items, right? Weather at the utility, the investment returns, and then the single contract that we talked about at construction services. So that plays into part of that. The other part is we did lower guidance from a revenue perspective at Knife River by $100 million. And We mentioned in the earlier comments that while we're at record revenues in that business for the first quarter, that would indicate our forecast is that we see our reloaded backlog will have some challenges with it. It's uncertain at this time, but we're anticipating that with lower consumption taxes, lower gasoline taxes, things like that may have an impact on municipalities' and states thinking about their spend. But we're still guiding to $2.1 to $2.3 billion. So that would play into that. We also, while off to a record start at construction services, you know, $520 million all-time quarter revenue record for the CSG, were maintaining our guidance there for the rest of the year. So there may be some implication that while we're off to a great start, we may find that same pace may be hard to continue the rest of the year. Again, $1.85 to $2.05 billion. So some of it we're viewing as some revenue challenges on the construction side. We did pull our margin guidance because we're uncertain at this point what margins will look like as we next steps here. I can tell you at the end of the first quarter, our margins in our backlog looked comparable on the services side. Actually, margins were up in backlog on the material side, but it's the uncertainty as we go through the rest of the year. And so those were the main factors, some in the first quarter, but primarily what we're thinking about for the COVID uncertainty is the remainder of the year, particularly on the construction side.

Okay. And then just one last follow-up there. I mean, on the backlog for at Knight River, how much of that is tied to some of these municipalities and things that may be, you know, during a lower tax receipt period for a while here?

I'll start that answer, but then I'll turn it over to Dave Barney. Again, what we have in backlog are actually signed contracts and commitments by the counterparty Whether it's a state or a city or federal agency and ourselves. So those are signed contracts. But Dave Barney, would you want to touch on our split between public and private? I think that might go to Bill's question.

Yeah, Bill. Our backlog, about over 80% is public work. And we don't anticipate any of that to be pulled back. So Our backlog looks good. We continue to pick up work. We're busy out there. So we'll just see what happens in the coming months.

I mean, do they have discretion in terms of the timing? I mean, obviously they're signed contracts, but can they sort of push things out a bit and just say we need more time before we sort of commence the project?

They can do that, and we've seen a few private side contracts say, let's put it on hold and wait a month or two to see what shakes out. But that's been a real modest pullback. Most of our work is going forward. We haven't had anybody say, hey, we're going to cancel this job for sure. Let's just put it on hold for now. Okay, great. Well, thank you so much. That's mostly on the private side, nothing on the public side.

Okay, all right, great. Well, thank you so much. Thank you, Bill.

Your next question comes from the line of Chris Ellinghaus from Sievert.

Hey, guys. Jason, just vis-a-vis the guidance, obviously, COLE returns can fluctuate period to period. When you revise the guidance, are you assuming just where you stood at the end of the quarter for coli returns without looking into April and on the rebound so far?

Yeah, Chris, great question. Thanks. I think as we look at that, obviously we've seen markets perform a little bit more solidly here in April. So as we looked at the total impact in the first quarter, I will say that we're assuming a little bit of that probably coming back in our guidance, but certainly assuming a lower return profile than what we normally would see on those plans. We typically don't plan for a lot in that anyway. It's not an operating item that we focus on, but we certainly are planning on lower investment returns than last year, given the fact that we saw a very strong result last year.

Okay, thank you.

Thank you, Chris. This marks the last call for questions. If you would like to ask a question, press star, then the number one on your telephone keypad. This call will be available for replay beginning at 2 p.m. Eastern time today through 1159 p.m. Eastern on May 22nd. The conference ID number for the replay is 498- Your next question comes from the line of Carl Seligson from Utility Financial.

Hi, Dave. How are you guys?

Hi, Carl. We're doing well. Hope you're doing well.

Well, personally doing well, but I've got a little bit of cabin fever. I've been locked in my apartment with my wife for, I don't know, a month or so. So it's very hard to keep up. Plus the fact that my equipment has broken down.

That's understandable, Carl, but I'm glad you're staying safe and staying well.

That's it. Thank you very much. Appreciate it. Of course, I wish I was at the Stack Exchange with you guys because that's always a good meeting. And I wanted to tell you that I appreciate it. And my big question relates to the, I guess you'd call it the morale of the people who work for you. What are people saying and thinking about about are they on, some of them on the work-at-home type things and others just giving up for a while or retiring? What's going on personnel-wise?

Carl, I mean, I appreciate that question, and hopefully you gathered from the comments within my earlier comments about our focus on employees, employee well-being, and obviously the communities that we're in. And that well-being, it's probably got a reflection on us. I'll share with you, Carl, that we ramped up, if you will, of our 14,000 employee plus or minus at any given point over about a two-week period. We went from having a few hundred folks that were routinely dialing in whatever technology happened to be accessing the cloud from their mobile workforce to actually 3,500. We ramped that up over about a two-week period and really proud and pleased of the infrastructure that our IT folks have put together, the ability of the workforce to, again, if you could work from home, we've We've asked you to go home and just de-risk, if you will, the work environment and social distancing and all those kinds of things. So we're able to accommodate it. I think the other part of your question to what I heard on general kind of demeanor and more, you know, how are people thinking about it? I wouldn't say we're surprised, but we're pleased with our ability to continue to move the enterprise forward, whether it's engineering or accounts payable or treasury services or legal services or project managers. It's not gone without some challenges, i.e., but we're really using technology, Microsoft Teams for team meetings. I mean, you name the kind of software, and so... There's concern in the workforce and locations about health and well-being, and depending if one has underlying health considerations, we're accommodating those. And so many different situations to address, but I couldn't be prouder of how we've been able to move the enterprise forward on a situation. We've been in the 24-hour-a-day business, i.e. utilities, for 95 years. You know, 99, 96 years, I guess. I think we're used to responding. But this is across every business in every state. And so we're very pleased with that. I have no doubt there's locations like you noted about, you know, maybe a little cabin fever or stir craziness or maybe. But mind you, we've got employees that are homeschooling their children and daycares have been affected and still trying to do their work while one parent's doing this and the other. And so that's probably a longer answer than you expected, but it gives you a flavor, if you will, that we held daily meetings with our senior team for about a three-week period just to keep a pulse on the organization. I mean, Jason and his team went out and increased some liquidity within the businesses and some term loans, and we've been able to Thank you for calling in, Carl, and appreciate the comments and hope you stay well.

Thank you.

At this time, there are no further questions. I would now like to turn the conference back over to Dave Gooden for final comments.

Thank you, Operator. As I noted earlier, while there is a great deal of uncertainty surrounding economic impacts from the COVID-19 pandemic, our construction companies are at record levels of combined backlog and our workforce remains intact as we anticipate our pipeline and utility businesses will continue with what I'll say is near normal operations. We are committed to building a strong America while ensuring the safety of our nearly 14,000 employees who are providing the essential services our customers need during this challenging time and beyond. We appreciate your participation in our call today. and we do thank you for your continued interest in MDU Resources. And with that, I'll turn it back to the operator.

This concludes today's MDU Resources Group conference call. Thank you for your participation. You may now disconnect.