MDU Resources Group, Inc.

Hello, my name is Todd, and I will be your conference facilitator. At this time, I would like to welcome everyone to the MDU Resources Group 2024 Third 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, please press star 2 on your telephone keypad. The webcast can be accessed at www.mdu.com under the investors heading. Select events and presentations and click Q3 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, Todd, and welcome everyone to our third 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. Meeting today's discussion along 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, Rob Johnson, President of WBI Energy, and Garrett Singer, our 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 the 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 refer to our earnings release. With the completion of the Everest Construction Group spin-off occurring on October 31st, third quarter results for Everest are included in MD Resources quarterly results. However, we will be focusing our discussion on our remaining utility and pipeline business results for the quarter. Everest hosted a call earlier today during which they discussed their quarterly results, and I will refer you to their replay and transcript for further details. 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?

All right. Thank you, Jason, and thank you, everyone, for spending time with us today and for your continued interest in MD resources. With the completion of the Everest spinoff on October 31st, which followed the spinoff of Knife River last year, we have reached our stated goal of becoming a pure play regulated energy delivery business. As I reflect on the last few years, it is phenomenal how much has been accomplished. We have transformed our company, created shareholder value, and positioned MD resources for future success. I am so proud of our employees who have not only dedicated countless hours to these strategic initiatives, but also remain steadfast and focused on the operations and performance of our businesses, which have continued to deliver strong results throughout this period. As we look ahead, we are focused on our core strategy, which emphasizes customers and communities, operational excellence, returns focused, and employee driven. We are well positioned for growth into the future with anticipated customer growth of 1-2% annually and expected long-term EPS growth of 6-8% while targeting a 60-70% annual dividend payout ratio. Our third quarter results maintain the positive momentum we have experienced throughout 2024. Notably, at our utility business, we have demonstrated solid results driven by strategic rate adjustments and expanding infrastructure investments. Meanwhile, our pipeline segment again achieved record earnings for the quarter, driven by record third-quarter transportation volumes and increased storage revenues. 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 business remains poised for compelling long-term growth prospects. In the third quarter, our utility business delivered solid performance, particularly at our electric segment due to rate relief and increased volumes due to warmer weather. Our combined retail customer base grew by 1.5%, which reinforces our company's need to proactively manage our utility infrastructure to meet the demands of our growing customer base. On the regulatory front, it certainly was a busy quarter at our utility business. We filed a natural gas rate case in Montana. settled our South Dakota electric and natural gas rate cases, and filed an all-party settlement agreement on our North Dakota natural gas rate case, which is now pending before the Commission. Moving to the data center front, 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. In addition, we filed an amendment to the electric service agreement that was previously approved by the North Dakota Public Service Commission, increasing the service provided from 225 megawatts to 350 megawatts, including the existing data center we serve. We now have 580 megawatts of data center load under signed electric service agreements. Of that total, 180 megawatts are currently online, with the balance starting to come online next year and continuing through the next few years. We also had some additional regulatory activity over this past week. On October 30th, we provided notice to the administrative law judge that a settlement in principle has been reached in our Washington multi-year rate case. The next step will be filing the settlement agreement with the Commission in the near term. In addition, on October 31st, we filed a natural gas rate case in Wyoming requesting an annual increase of $2.6 million or 14%. 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 at our pipeline business we achieved record third quarter earnings up 27 percent from the third quarter of 2023. this segment is executing well on our core strategy and delivering strong results driven by strategic expansion increased demand for transportation and storage services and continued benefit from new transportation and storage rates that were effective August 1, 2023. We remain committed to investing in future expansion projects to meet increasing customer demand for services, including strong interest from industrial customers and power generation projects. Our Line Section 28 expansion project, placed in service during the quarter, added 137 million cubic feet of natural gas transportation capacity per day to our system. Construction continues on our Wahpeton expansion project in eastern North Dakota, which will provide approximately 20 million cubic feet of natural gas transportation capacity per day and is anticipated to be in service in the fourth quarter of 2024. On November 1st, we also closed on the purchase of a 28 mile natural gas pipeline lateral in northwestern North Dakota. So this lateral extends our pipeline system to a natural gas processing plant in the Bakken. With our performance senior to date, we now expect to finish the year above the top end of our previous guidance range and are increasing and narrowing our regulated energy delivery earnings guidance for 2024 now to a range of $180 million to $185 million. We are looking forward with great optimism. The prospects for continued customer and system growth in our electric and natural gas utilities and the strong performance of our pipeline with additional expansion projects underway as well as the consistent demand for pipeline services are all promising as we finish out 2024. As always, MDU 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.