MDU Resources Group, Inc.

Please stand by, we're about to begin. Hello, my name is Jamie and I will be your conference facilitator. At this time, I would like to welcome everyone to the MDU Resources Group 2024 second quarter earnings 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 star two on your telephone keypad. The webcast can be accessed at www.mdu.com. Under the investor's heading, select events and presentations and click Q2 2024 earnings conference call. After the conclusion of the webcast, a replay will be available at the same location. 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, Jamie, and welcome, everyone, to our second quarter 2024 earnings conference call. You can find our earnings release and supplemental materials for this call on our website at www.mdu.com under the Investors tab. Leading today's discussion with me is Nicole Cavisto, President and CEO of MDU Resources. Also with us today to answer questions following our prepared remarks are Stephanie Sievert, Vice President, Chief Accounting Officer and Controller of MDU Resources, Jeff Thede, President and CEO of Everest, Rob Johnson, President of WBI Energy, and Garrett Sanger, Chief Utilities Officer. During our call, 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 are based on reasonable assumptions, actual results may differ materially. For more information about risks and uncertainties that could cause our actual results to vary from any forward-looking statements, please refer to our most recent SEC filings. We may also refer to certain non-GAAP information. For reconciliation of any non-GAAP information to the appropriate GAAP metric, please reference our earnings release. I will provide consolidated financial results later during the call, but first we'll turn the call over to Nicole for her formal remarks. Nicole?

Thank you, Jason, and thank you everyone for spending time with us today and for your continued interest in MDU resources. I'm pleased to share our second quarter results with all of you. These results directly reflect the exceptional efforts and dedication of our employees, and I want to express my gratitude for their hard work. We continue to make great progress towards finalizing the tax-free spin of our construction services business, Everest. During the quarter, we announced the management team who will lead Everest following the spin. This team possesses the experience and expertise necessary to drive Everest's growth well into the future. We are on track to complete the spinoff later this year, and we will continue to provide updates as we reach future milestones. As we look ahead, we will remain focused on our core strategy with our pure play regulated energy delivery businesses, and we are well positioned for growth into the future. Our current long-term guidance forecasts 2.7 billion of regulated capital investment, driving 7% compound annual growth rate on our utility rate base, with an anticipated customer growth of 1 to 2% annually. We expect this to lead to long-term EPS growth of 6 to 8% and we are targeting a 60 to 70% annual dividend payout ratio with no anticipated equity needs until 2027. Our second quarter results maintain the positive momentum we have experienced in preceding quarters. Notably, our utility business has demonstrated solid results despite unfavorable weather, driven by strategic rate adjustments and expanding infrastructure investments. Meanwhile, our pipeline segment achieved unprecedented second quarter earnings, driven by record-breaking transportation volumes and increased storage revenues. Additionally, Everest experienced record second quarter earnings and all-time record backlog. All of these achievements across our businesses underscore our unwavering commitment to delivering safe and reliable service and sustainable growth with our dedicated employees playing a pivotal role in our continued success. Our businesses remain poised for compelling long-term growth prospects as we strategically position ourselves for the future. In the second quarter, our utility business faced challenges due to higher operation and maintenance expense and cooler weather. However, strategic rate relief helped offset the impact. Compared to the same time period in 2023, temperatures were 37% cooler, which negatively impacted electric volumes. Our total retail customer base grew by 1.5% in line with our projected 1 to 2% growth and surpassing the national average, which reinforces our company's need to proactively manage our utility infrastructure to meet the demands of our growing customer base. Additionally, Construction of the new Hesket 4 88 megawatt simple cycle combustion turbine is complete and in service as of July 8th. On July 15th, we filed a natural gas rate case in Montana requesting a $9.4 million annual revenue increase. The need for the request was driven by system investments and operating cost increases. Our focus remains on delivering safe and reliable electric and natural gas services to our expanding customer base with active efforts to seek regulatory recovery for our investments. We also are excited about the increasing opportunity we see from data center construction in our service territory. We received approval on May 23rd from the North Dakota Public Service Commission for an electric service agreement that will allow us to serve an additional 225 megawatt data center load near Ellendale, North Dakota. That data center addition will be built in phases with the first phase expected to begin coming online in late 2024. Additionally, on August 5th, we filed an electric service agreement with the South Dakota Public Utilities Commission to serve a 50 megawatt data center that will be located near Leola, South Dakota. Including our existing data center that we serve, we now have 455 megawatts of data center load under signed electric service agreement. Of that total, 180 megawatts is currently online, with the balance starting to come online later this year and continuing through the next few years. Our capital investment related to these data centers is minimal, and therefore the margin received is beneficial to our earnings and overall ROE enhancement. Our customers also benefit from lower transmission expenses, and we share a portion of the margin which results in beneficial bill reductions for our customers. This truly is a good design for our customers, our communities, and our shareholders. At our pipeline business, we achieved record second quarter earnings, nearly doubling compared to the same period last year. This segment is executing well on our core strategy in delivering strong results, driven by strategic expansion, increased demand for transportation and storage services, and a full quarter of benefit from new transportation and storage service rates. We remain committed to investing in future expansion projects to meet increasing customer demand, including strong interest from industrial customers and power generation projects. Recently, our pipeline business completed construction of its Line Section 28 expansion project, which was placed in service on July 1st. This project adds 137 million cubic feet of natural gas transportation capacity per day. Additionally, we have started construction on the Wahpeton Expansion Project in eastern North Dakota, which will provide approximately 20 million cubic feet of natural gas transportation capacity per day and is expected to be in service in late 2024. We are pleased to reaffirm our previously communicated regulated energy delivery guidance for 2024 We remain confident in our projected earnings guidance in the range of $170 million to $180 million. At Everest, we achieved record second quarter earnings and have an all-time record backlog of projects as of June 30th. Higher transmission and distribution revenues along with higher electrical and mechanical data center workloads partially offset a decrease in overall electrical and mechanical revenues from lower workloads due to the timing of projects. Everest reported an all-time record backlog of 2.4 billion compared to 1.94 billion at the same time period last year. Successfully replacing completed or near-completed projects has ensured a continuous flow of work and the business is well positioned heading into the end of 2024. Due to lower revenues experienced on a year-to-date basis, largely from the timing of projects, we are revising our revenue guidance for Everest to be in the range of $2.65 billion to $2.85 billion, down from previous guidance of $2.9 billion to $3.1 billion, with margins now expected to be higher than 2023. EBITDA is still expected to be in the range of $220 million to $240 million. Looking forward, Everest is well positioned to benefit from increased bidding opportunities. With the funding from the Infrastructure Investment and Jobs Act and the Inflation Reduction Act, as well as data center construction and continued reshoring of manufacturing, Everest expects to see increased demand for its services in the back half of 2024 and beyond. As I said previously, the spinoff of Everest is expected to be complete late this year. We plan to host an Everest Investor Day event ahead of the spin and will continue to keep you updated on our progress throughout the rest of the year. We are looking forward with great optimism. The prospects for continued customer and system growth in our electric and natural gas utilities, the strong performance of our pipeline with additional expansion projects underway, the consistent demand for additional pipeline services, and the high demand for our construction services are all very promising as we move through 2024. As always, MD Resources is committed to operating with integrity and with a focus on safety. We remain dedicated to creating superior shareholder value as we continue providing essential products and services to our customers while being a great and safe place to work. I will now turn the call back over to Jason for the financial update. Jason.