MDU Resources Group, Inc.

Hello, my name is Erica and I will be your conference facilitator. At this time, I would like to welcome everyone to the NDU Resources Group 2021 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 5 p.m. Eastern Time today through 1159 p.m. Eastern Time on May 20th. The conference ID number for the replay is 2374997. Again, the conference ID number for the replay is 2374997. The number to dial for the replay is 1-855-859-2056 or 404-537-3406. I would now like to turn the conference over to Jason Vollmer, Vice President and Chief Financial Officer of MDU Resources Group. Thank you Mr. Vollmer. You may begin your conference.

Thank you, Erica, and welcome everyone to our first quarter 2021 earnings conference call. This 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, please visit our website at www.mdu.com and go to the Events and Presentations page under the Investors tab. Our earnings news release is also available on our website. During this presentation, we will make certain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Although the company believes that its expectations and beliefs are based upon reasonable assumptions, actual results may differ materially. For a discussion of factors that may cause results to differ, refer to Item 1A, Risk Factors, in our most recent Form 10-K and other filings with the SEC. We may also reference EBITDA and adjusted gross margin throughout the conference call, which are considered non-GAAP financial measures. For reconciliation of EBITDA and adjusted gross margin to net income, please refer to the earnings release filed yesterday. For our call today, I will discuss the key financial highlights and then turn the presentation over to Dave Gooden, President and CEO of MDU Resources. After Dave's remarks, we'll open the line for questions. In addition to Dave and myself, members of our management team who are available to answer questions today 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 WVI Energy, and Stephanie Barth, Vice President, Chief Accounting Officer and Controller of MD Resources. Yesterday we announced first quarter earnings of $52.1 million or $0.26 per share, doubling our first quarter 2020 earnings of $25.1 million or $0.13 per share. Our combined utility business performed well throughout the first quarter and reported earnings of $46.9 million up from $43.7 million in the first quarter of 2020. Our natural gas utility segment reported net income of $36.2 million for the quarter, compared to $32.3 million in the prior year. Higher adjusted gross margin from approved rate relief, weather normalization and decoupling mechanisms, as well as a 1.8% increase in natural gas retail sales volumes contributed to the increase in earnings. Higher investment income on certain benefit plans also had a positive impact on earnings. Partially offsetting the increase were higher operation and maintenance expense and higher depreciation, depletion, and amortization expense. At our electric utility segment, earnings decreased slightly year over year at $10.7 million for the first quarter compared to $11.4 million in 2020. This decrease in earnings was largely the result of higher operating expenses, primarily payroll-related costs, and increased depreciation, depletion, and amortization expense from electric transmission projects placed into service. Partially offsetting the decrease in earnings were higher returns on certain benefit plan investments. Adjusted gross margin also increased during the quarter as a result of higher transmission revenues and increased revenues associated with transmission interconnect upgrades. Adjusted gross margin was offset by a 2.2% decrease in electric sales volumes primarily to our commercial and industrial customers. The pipeline business had a record first quarter for earnings of $8.9 million compared to $7.4 million in 2020. The primary contributors to the increase in earnings were strong customer demand for natural gas storage services, as well as higher other income from increased allowance for funds used during construction and higher investment returns on certain benefit plans. Turning to the construction platform, our construction services business reported record first quarter earnings of $29.8 million compared to $16.8 million in 2020. and First Quarter revenues of $518.5 million, up from prior year revenues of $514.7 million. Construction services saw an increase in outside specialty contracting workloads and margins due to strong demand from its customers in the utility industry. Inside specialty contracting workloads decreased during the quarter, primarily from lower customer demand for refinery projects. Customer demand for high-tech projects, however, remained very strong throughout the quarter. As a reminder, 2020 first quarter net income for the construction services business was impacted by a $6.7 million out-of-period adjustment after tax. Our construction materials business reported a seasonal loss of $30.8 million in the first quarter compared to a loss of $38.2 million for the same period in 2020 and had record first quarter revenues of $265.7 million this year, up from 2020 revenues of $262.2 million. Increased materials pricing and higher contracting margins decreased the seasonal loss. An early start to the construction season and material sales season resulted in higher materials revenues. Higher investment returns on certain benefit plans and lower selling general administrative expenses were partially offset by increased payroll-related costs. In addition to the strong earnings performance in the first quarter, our consolidated EBITDA also grew 29% year-over-year. to $162.2 million compared to $125.3 million for the same period in 2020. That summarizes the financial highlights from the quarter, and now I'd like to turn the call over to Dave for his formal remarks. Dave?

Thank you, Jason, and good afternoon, everyone, and thank you for joining us here today. We're off to a very strong start in 2021, doubling our first quarter earnings compared to 2020. All our businesses performed well during the quarter with record earnings at construction services and our pipeline group. Record revenues from an early start to the year at construction materials and our utility continued to provide safe and reliable service to customers, even as other areas of the country were impacted by weather-related outages. With this strong first quarter performance, We are narrowing our 2021 earnings per share guidance to a range now of $2 to $2.15, raising the low end of the range from $1.95. I will now walk and talk through each of our business lines to give additional color on our results and update everyone on the opportunities that we see ahead of us for the remainder of 2021 and beyond. Our combined utility had a very successful first quarter. reporting a 7% increase in earnings, along with a busy regulatory activity as we continue to work on recovering investments made to strengthen the safety and reliability of both our natural gas and electric systems. Our outlook for utility businesses includes plans to invest $328 million this year and approximately $1.6 billion over the next five years with a projected rate-based growth of 5% compounded annually. Throughout the remainder of the year, the electric utility business will continue with plans to retire the Heskett coal-fired stations in early 2022 and is nearing the completion of its integrated resource planning process with an expected release date here in the summer of 2021. Turning to our pipeline business, they had an excellent first quarter and, as I mentioned earlier, reported record first quarter earnings. We own the largest natural gas storage field in North America, and demand for our natural gas storage-related services contributed strongly to the earnings growth. Our pipeline group is currently awaiting the final Federal Energy Regulatory Commission certificate for its North Bakken expansion project. As a reminder, this is a 250 million cubic feet per day expansion project with long-term customer commitments that will help decrease natural gas flaring within the Bakken. FERC approval for this expansion was expected during the first quarter, and since it has not yet been received, the company is adjusting its construction schedule to reflect this delay. The in-service date, which was previously expected to be in late 2021, will also be impacted by this delay. With natural gas production levels remaining strong in the Bakken and low natural gas prices, we are experiencing sustained demand for our transportation and storage services and continue to evaluate other organic growth projects across the pipeline operations. Now I'd like to turn to our construction platform of businesses. At Construction Services, here we reported strong first quarter revenues, record first quarter earnings, and record first quarter backlog of now at $1.273 billion. This record backlog really showcases, I'll say, the success of our diverse operations, as well as the bidding environments that we see across our footprint throughout the first quarter. We are confident that our high quality of service and skilled workforce will continue to be in demand for new jobs. At Construction Materials, we reported a lower seasonal loss. Here, favorable weather gave us an early start to the construction and materials sales season, allowing this business to complete projects ahead of schedule and also take advantage of new bidding opportunities for the remainder of the year. Even with this early start to the season, Backlog remained strong and was $819 million as of March 31st. As noted in prior news releases, Knife River completed its first acquisition of 2021 with an aggregates operation in the Portland, Oregon area. The Mount Hood Rock acquisition strengthens our position in the Portland metro area and will also provide an estimated 20 years of aggregate reserves. Knife River also received a very key permit to expand operations at our Honey Creek Aggregate Quarry in Texas, just outside of Austin. Combined, our construction businesses ended the quarter with nearly $2.1 billion in backlog, and we do anticipate construction revenues on a combined basis to be between $4.2 billion and $4.6 billion for 2021. We are excited about the opportunities in front of us both of our business platforms present. The discussion surrounding a new federally funded infrastructure package, while not built into any of our forecasts for this year, is a positive development that could provide substantial longer-term growth opportunities for both platforms of businesses. Our focus here at MD Resources has been to produce significant long-term value as we execute our business plans Organic Growth Projects, and Targeted Acquisitions, and that's exactly what we're doing. We continue to maintain a strong balance sheet, solid credit ratings, a good liquidity position, and for the last 83 consecutive years, we've provided a competitive dividend to our shareholders. As always, MDU Resources is committed to operating with integrity and a focus on safety while creating superior shareholder value as we continue along our tagline of building a strong America. I appreciate your interest in and commitment to MD resources and ask now that we open the line for questions. Turning it back to you, 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 is from Darius Lozny with Bank of America.

Hey, team. This is Darius here. Good afternoon.

Good afternoon, Darius. How are you?

I'm very well. Thank you for taking my questions. I just wanted to briefly come back to the Bakken expansion project. It sounded like clearly there's a delay in the construction schedule. You didn't say that it may go into 2022. Can you maybe just kind of talk about the puts and takes and potentially any flex in your plan as far as when the in-service date may move to? and a part B to that would be in your queue there's a little bit of a disclosure about the FERC reforming the way in which it analyzes greenhouse gas emissions and I was wondering if you could sort of tie that into the overall delays that you're experiencing the project to the extent that you can.

Sure. Darius, I'll ask Trevor Hastings who's the CEO at WBA Energy to touch on both parts of your questions.

Okay, thanks for the question. So to the first one, just in terms of the delay on timing, our timing on the project will be predicated on when we get our FERC certificate and then ultimately the notice to proceed with construction. So at this moment in time, if we were to get our certificate at the May meeting and a notice to proceed, you know, the end of June, early July, we would be able to achieve an in-service date by the end of the year or very early in 2022, depending on the weather. If it delays past that, obviously our project team continues to work on this as we move forward, and we would just need to go back and look at it. But at this point in time, we could hit an end of the year early next year. Related to the greenhouse gas portion of it, So with the new administration and Chairman Glick at the FERC, one of the early things he's done is implemented a greenhouse gas review. The first order that it came out on was actually a replacement project to do a significance determination. So as it relates to the North Bakken project, the In terms of direct assessment from the project, our view would be the direct greenhouse gas emissions are insignificant. And as it relates to the downstream, not knowing fully how FERC's going to do it on an expansion project, because we haven't seen an order with it in an expansion project yet, but just looking downstream, In terms of those impacts, we're falling into a full pipe, and so our argument would be there really wouldn't be any material change in terms of downstream emissions. And then from the project standpoint, you know, this project running through the heart of the Bakken really helps reduce flaring today and into the future as the Bakken continues to grow.

Darius, both parts of your question with that?

Certainly, yeah. Very insightful answers. Thank you for that. If I can just sneak one more in here. Just wanted to discuss a little bit the composition of your services results and two parts to that. If you can talk a little bit to how much contribution came from storm repair work. It sounded like it might have been significant. and also the comments about lower demand from refinery and commercial projects. Is that something that you expect to be temporary or do you expect that to be more of a longer term shift and then obviously look to backfill that with more kind of tech industry type work?

Sure, Darius. I'll ask Jeff Thiede to weigh in on that. I'll say, you know, storm work, while a portion of our first quarter work wasn't necessarily material to the results, it was certainly helpful but not material, but Jeff, you can add more color to that along with the second part of Darius's question relative to the refining area.

Okay. Hello, Darius. We really respect our essential workers and appreciate them responding to the storm work that we had in Q1. We sent many crews to Arkansas, Missouri, and Oklahoma. In fact, we still have crews in Arkansas right now. Our team helped restore power and even communications to homes and businesses and services for those in need. And the storm work contributed to our success, but it was not material to earnings. So, again, we're pleased to be able to respond, but it wasn't material to our earnings in Q1.

And then, Jeff, I think Darius had a second part relative to the refining area.

Yes. So, we had, in In 2020, we had a big project and big opportunity, and looking at that period versus 2021, we were down, obviously. But our backlog and our work opportunities within the turnaround services at our petrochemical refinery customers' locations, in addition to capital projects and even maintenance project, is picking up speed, and we see it increasing throughout the rest of the year.

Okay, great. Thank you very much for those responses. That's it for me. Thank you, Darius.

Your next question is from Ryan Levine with Citi.

Hi, everybody. Hi, Ryan. Hi, Dave. Maybe just wanted to start off in terms of the construction materials and service business. Curious if you're seeing any inflation on the cost side or any that you're able to pass on to customers. both during the quarter and over the last few weeks.

Sure. We'll start maybe with Dave Barney on the materials side, and then we'll shift over to Jeff Thiede on the services relative to your question on inflationary pressures. Dave?

All right. Yeah, we're definitely seeing some inflationary pressure on materials. on steel and other products, but we have been able to pass those costs on in our bids or in our materials side.

Okay.

What about in terms of the actual commodity in terms of the ag or ready mix? Are you seeing any inflation there?

Well, we've been raising our prices internally for aggregates and ready mix. We are seeing people that rarely buy from our agri-site increase agri-pricing like we are. But not significant. And there's no shortage of it right now. It's gonna be tight this year in some areas on aggregate. We're really busy in some parts of our region and it's gonna be really tight. We'll continue to monitor as we go forward.

Is there a margin expansion opportunity in light of that dynamic?

Yes, there is.

Jeff, do you want to touch on in services?

You bet. Availability is also an issue in addition to the price increases that we're seeing. And there has been some impact from steel. Copper, Aluminum, and PVC products. They've sharply risen over the last six months. We're timely and proactively notifying our customers while also working with our suppliers to mitigate the impact to our backlog margins. We've had some success in anticipating these increases. We've also used our purchasing power and our financial strength to both purchase wire in some of our markets.

On the services side, on the existing contracts, How did they address that potential issue? Are there a lot of pass-throughs or does the company have negative margin pressure if prices increase?

Mostly on our GMP projects, there are pass-throughs in a lot of our pricing since we started to experience and anticipate working closely with our suppliers. We've identified a certain level of pricing and have qualified Our bid proposals with those levels and then provide impacts to our customers to let them know if we wait two months to make this purchase, it will impact us by X dollars. And so we get them involved and mitigate those risks. And we are mostly being able to pass those costs on to our customers when we're in the pre-construction on our GMP jobs.

And maybe one follow-up. In terms of the backlog numbers that you posted for the quarter, has the business mix shifted at all in light of some of those dynamics?

For services, our backlog, you know, it's divided up into our outside backlog versus our inside. And it's always been about 80% inside and 20%. Thank you. Thank you. Thank you.

Ryan, did your question extend over to materials then relative to the backlog makeup too?

I mean, that would be helpful if Dave was able to share that commentary.

Yeah. Dave Barney?

As far as our backlog, Ryan, we're still about 70% public, 30% private on our work, and we haven't seen much change on that over the last couple of years.

Okay. And then maybe one question, another question on the pipeline segment. In light of some of these inflationary pressures, given potential pipeline or timing delay with the FERC process, how is the contract structured with your customers to the extent the bill costs were to go up versus what was originally budgeted when you filed the application?

Hey, Ryan, this is Trevor. You know, first of all, thinking back, you know, this project would have started in 2019. As we work through the project schedule, the engineering procurement is a big part of that. So, you know, at this point in time, we were anticipating... So from the procurement side and our main contract side, we're actually fully procured and have all of our contracts in place. So as it relates to North Bakken, it shouldn't be a material issue.

So to the extent that the pricing were to change the contract, you've already locked in the pricing and terms on that supply agreement?

Yeah, so I was speaking to the material procurement side and the major subcontractor side to build that project out. It's covered on that side of it. And so from the customer side, yeah, we should be covered.

Okay, appreciate the cover. Thank you.

Yeah, thanks for the questions, Ryan. And maybe just as a, you know, I think more from a high level, relative to your Inflationary question on materials and services. We do note in our guidance that we expect margins in those businesses to be either comparable if not slightly increasing on a year-over-year basis. So while there's many moving parts there, skilled labor costs, material costs, type of agreement, GMP or other cost plus with customers, end of the day we believe those margins to be comparable to actually slightly increasing on a year-over-year basis. So Appreciate the questions, Ryan. Back to you, operator.

Your next question is from Chris Ellinghouse with Sievert Williams.

Hey, everybody. How are you?

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

Doing okay. Trevor, can we go back to the expansion and the permit? It seems to me that the net... The carbon situation relative to the reduction in flaring is so flaringly obvious that I'm not sure I understand what the FERC could be up to in trying to make sort of a net determination. Can you elaborate on that a little bit?

Sure. Give me one second. So this is somewhat tied into historical court cases and outcomes of that. So not to dive all the way into the weeds, but there was a court outcome suggesting that the FERC needed to incorporate greenhouse gas emissions determinations in issuing pipeline certificate orders in the past. And so with previously that had been done and then really hadn't been done and then now underneath of the new administration and Chairman Glick with the first replacement project I referenced earlier, they had done the greenhouse gas math to do a significance determination which they had done. Other than that project from January timeframe to today, there haven't been any expansion projects that have been on the agenda or any certificate orders issued. So we're unclear in terms of how exactly the FERC will be doing the greenhouse gas significance determination on an expansion project. So it's related into that was my earlier response to the Q disclosure around FERC moving into greenhouse gases. So from our project standpoint, There's kind of the direct, the upstream and downstream emissions. Our view would be, obviously, it's not a significant, wouldn't achieve a significance determination. But at this point, we don't know how FERC is actually going to apply it to expansion projects.

Okay. Dave, you mentioned something about construction materials bidding having gotten an early start to the construction season. Maybe Dave can address that. But are you suggesting that you're getting an early bidding season as well? And does that – how is that helpful to you necessarily?

Yep. Dave Barney, you want to take that one, please?

Yeah, Chris. We really aren't getting an early bidding season. Our bid schedule looks good. It's been strong. but as far as the early bid schedule, no, we just got out early and mainly it was on the aggregates and ready mix side that we benefited from that getting out early. Most of our construction work doesn't start till a little later in the year, except for on the private side, we can get out and do the work, but the bid schedule really hasn't changed much. Okay.

Can you, just sort of everybody, I guess, really, probably mostly on the construction side, but maybe also how this might influence your IRP with the Biden proposal. How do you see what the provisions of the Biden plan might bring in terms of opportunity or You know, just sort of what your general thoughts of the provisions in the various areas that influence you look like.

Chris, that would be relative to the electric generation IRP, the utilities right in the midst of doing currently?

Yeah, I mean, my thought was it could directly influence your IRP thought process with extensions of tax credits and then obviously the infrastructure issues will influence both of the construction companies. So I just wanted to know if you had any general thoughts on having seen all the provisions at this point, what you're thinking.

I'll actually start with some kind of overall comments on that, Chris. Certainly, we're watching very closely and participating as we are able to with the discussion within The administration and within Washington, we appreciate the added emphasis on infrastructure, certainly, and I think that's what part of your question is. We're able to participate in that depending on what shape or form that infrastructure becomes, whether it's the traditional roads, bridges, highways, airports, materials obviously directly affected with that, any of our pre-stress products for bridges and those kinds of things. And then when you think of, you know, renewables and other clean energy sources and getting that into the grid and grid upgrades and or transmission upgrades, those are all right in the wheelhouse of our outside T&V group within services. So I think, you know, we kind of stand to benefit, if you will, depending on the nature and form of that. And you think, too, of within services, you I mean, other forms of clean energy, whether it's photovoltaic, you know, we do that kind of work for others. We've done some, you know, utility scale, PV farms as well. So, you know, I think we stand to benefit from that. Broadband is another area that we would, we do that work quite extensively in certain parts of our services group, too. So, you know, it kind of depends your definition of infrastructure and what's all developed there. Specific to some other of the administration's plans relative to the electric and natural gas industries, I'm going to turn to Nicole because she's front and center so far as relative to the IRP and is how we're thinking about that. In short, we've been making transition into renewables since 2007. Clearly, there's some accelerated timelines here, but I'll ask Nicole without speaking entirely for her here. to maybe a little more in the detail the thinking currently on at the utility group. Nicole?

Sure. Thanks, Dave. I think you hit it on the head here by kind of your overall summary in terms of we've been on a pathway already in terms of our renewable progress, but when you start with our overall mission in terms of safe, reliable, affordable, environmentally friendly energy, certainly there's areas of the clean electricity standard that is being proposed that fit within that wheelhouse. I think as we look at this, you know, as we think about the timeline, all that Dave mentioned here, we do have maybe some concerns in terms of challenges in meeting the timeline. So, again, we've been on a path for renewables for quite some time. As you think about the accelerated timeline, us, along with the industry, are looking at what technology advancements would be needed. The transmission build-out that Dave already referenced, not only the build-out but the permitting of that build-out. And then just ensuring that we've got the appropriate reliability and what kind of redundancy is needed as you develop this pathway to 80% clean by 2030 and 100% clean by 2035. So, again, we're evaluating the proposals as they stand. Certainly, as you mentioned, Chris, you're exactly right, we will be looking at how to address this in terms of where it stands by the time we put out our IRP. So it'll be a part of our overall mix as we put our integrated resource plan together. But again, it's still in the proposal stages and we continue to evaluate it along with what we currently were contemplating. Obviously, the acceleration, it was not built into our forecast in terms of our capital and our rate-based projections that you're seeing. So certainly, Any kind of firm guidance here or firm legislation here would accelerate some of those generation replacements. So hopefully that answers your question. I'd be happy to answer any further if you have a follow-up, Chris.

Nicole, does this also influence the speed at which you want to address carbonization as well?

Yeah, I think some of this would certainly accelerate some of the things that we were currently contemplating, and that's where we're trying to ensure that we've got, again, back to the balancing act of safe, reliable, affordable, and environmentally friendly. We tend to make sure that we're trying to evaluate all buckets, right? And so certainly, you know, this has some impact on those.

Right.

And the timeline, yep.

Trevor, the FERC process, is that more a function of their changing their administrative process as opposed to the math on carbon is really seems quite simple?

That's a tough one to answer. I mean, at We're not exactly sure what the delay is on bringing any expansion projects forward at this point in time. It could be related to trying to figure out and make that policy determination and how that's going to be applied. To this point, Chairman Glick has stated publicly that he doesn't intend to sit on certificate orders for natural gas pipeline projects. Our hope is that he's true to his word and we start to see some of these expansion projects and the North Bakken project come forward in some of the near future commission meetings.

Okay. One last thing. Vis-a-vis the Biden plan, Jeff, do you see or expect a couple of things out of that one? You see maybe a lot more water work for you. And two, there's a lot of things that are in the Biden plan that are encouraging a private, particularly manufacturing type of investment. Do you anticipate that maybe the bidding for a manufacturing type construction work might sort of be ahead of the curve of where maybe public construction materials type projects might come in after that legislation sort of gets more detail?

Yeah, and certainly until we see the specifics of the plan, it's difficult to anticipate. I think we're very well positioned with water work, the manufacturing work, which we're doing a lot of, also mission critical work. and of course our outside business with our support services on the power, gas and communications in addition to our equipment company is going to help us capture the opportunities in our selected markets. Our backlog levels I think will remain strong and that will help carry us through bidding opportunities we're seeing in the near term. telling us that our services are still in demand. And I'm humbled to say that since 2015, our field professionals and management professionals have grown our business revenue by 126% and our earnings 362%. So we're going to continue to remain disciplined with our bidding margins, look to build upon our success, and we're not yet maxed out.

Okay. Thanks, everybody. I appreciate the details.

Thank you, Chris. Appreciate the questions.

As a reminder, if you would like to ask a question at this time, simply press star, then the number one on your telephone keypad. Your next question is from Andrew Levi with Height Hedge.

Hey, guys. How are you? Hi. We're good. How are you, Andy? I'm doing really well. Thank you. Your stock's done really well. Thank you again. Knock on wood, I don't want to jinx you.

Yep. Appreciate you calling in, Andy. I'm sure you got a dozen good questions for us.

No, we only have a couple because there were a dozen good questions asked before. Okay. Just to summarize, just kind of on the construction materials, and I think you kind of did, Dave, but I guess net-net between let's say inflationary pressures on on your supplies from a better way to put it. And then obviously the ability to pass some of that through whether the contract gets probably or not completely fixed. And then on top of that, looking at your aggregate business, the ability to raise prices there because whether it's, you know, lumber or aggregates or whatever it may be, everything's kind of going through the roof right now. and then on top of that, just the demand for construction in general, net-net at this stage of the year, you're looking at, you know, to kind of mix it all together, no pun intended, you're looking at a benefit and you kind of, you know, do the pluses and minuses. Is that what you were trying to say before, David?

Yeah, that's what I was trying to kind of, you know, All the puts and takes of the year. Think about our guidance that we believe margins will be comparable to actually slightly increasing year over year with, you know, puts and takes, all the variables that you mentioned as we think about the businesses. Absolutely.

Okay, great. And then just one other question. So just, again, you know, I think it was asked already, but just on the Biden infrastructure bill, assuming it gets done in some type of form, Where do you see the biggest benefit, whether, you know, you could point to a couple, for MDU and the way that you're structured, whether it's on the aggregate side or beyond the aggregate side?

Yeah, I appreciate the softball on that, Andy, because, I mean, it really hits the wheelhouse of our two platforms. And within the construction platform, again, we – probably typically people think, me included, infrastructure is kind of roads and bridges and highways and airports. Well, that's obviously the materials group, wheelhouse, whether it's ready mix, whether it's asphalt, whether it's pre-stressed products or just base aggregate material or other products like that. What the Biden administration is talking about in addition to that, though, would be things like broadband, things like talking about more infrastructure so far as outside transmission, electric transmission build. You know, that very much hits right in the wheelhouse of our services business too. And so, again, there's many shapes or forms of what infrastructure is to differing people, but the fact that we have optionality and other skilled labor lines within our construction businesses certainly fits that. And, you know, even back to our North Bakken project, and, you know, you've heard from Trevor, as to the, you know, some delay with FERC here as we think about that. I mean, this is a very environmentally friendly project that will lessen the flaring in the Bakken. And from a downstream perspective, we're displacing gas that's already in a full pipe, so we don't believe there's any downstream effects there, too. So I believe it's an environmentally friendly project as well. So and we've already touched base a little bit on the utility and uncertainty if you think about that from a generation mix. Certainly a timeline there is of importance to us as we look to decarbonize the fleet over a reasonable period of time. So it really will touch all of our business lines and I'm thankful that we have the two platforms that we do.

And just to follow up on the close part, geographically the way that you're set up, So getting back to where we may see the biggest benefits in the Biden plan, can you kind of just touch on geographically where your assets and people are relative to what may come out of the plan?

Sure. So I'll touch on it. And if you want more detail, we can dive into the Business Heads, but we're really in 15 western states with materials, so think of the Mississippi and look west, and that includes both Hawaii and also Alaska. We touch many of those states with our operations, so it's pretty geographically diversified, and that's really by our design that we have differing states with differing economies so that we have an ability. Sometimes markets are up or down, but we have a lot of geographically Thank you very much. Appreciate the questions, Andy.

This marks the last call for questions. If you would like to ask a question, please press star then the number one on your telephone keypad. This call will be available for replay beginning at 5 p.m. Eastern Time today through 1159 p.m. Eastern Time on May 20th. The conference ID number for the replay is 2374997. Again, the conference ID number for the replay is 2374997. At this time, there are no further questions. I would now like to turn the conference back over to management for closing remarks.

Thank you, operator. Well, as we noted earlier, we're off to a very strong start here in 2021, and certainly we have many opportunities in front of us at all of our lines of business. We are committed to building a strong America while ensuring the safety of our nearly 14,000 employees who are providing essential services to our customers, those services they need during this challenging time and beyond. We appreciate your participation on our call today. And as always, we thank you for your continued interest in MDU Resources. And with that, I'll turn it back to the operator.