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MDU Resources Construction Materials Business Reports Record Earnings

MDU Resources Group Inc. reported 2016 earnings from continuing operations of $232.4 million, or $1.19 per share, compared to 2015 earnings from continuing operations of $175.7 million, or 90 cents per share. In the fourth quarter of 2016, earnings from continuing operations were $66.3 million, or 33 cents per share, compared to $55.7 million, or 29 cents per share, in 2015.

Including discontinued operations, primarily the exploration and production and refining businesses, MDU Resources reported 2016 earnings of $63.7 million, or 33 cents per share, compared to a loss of $623.1 million, or $3.20 per share, in 2015. In the fourth quarter of 2016, earnings including discontinued operations were $65.5 million, or 33 cents per share, compared to fourth quarter 2015’s earnings of $52.4 million, or 27 cents per share.

The company's construction materials business reported record earnings of $102.7 million for 2016, up 15 percent from record earnings of $89.1 million in 2015. This business saw higher construction margins and demand in all regions except the North Central, where activity was down in North Dakota.

In addition, asphalt and aggregate volumes and margins increased. Construction materials had a record year-end backlog of $538 million, which is 10 percent higher than the previous record year-end backlog of $491 million set in 2015.

Earnings at the construction services business were $33.9 million, up 43 percent from $23.8 million in 2015 on 16 percent revenue growth. The increase was driven mainly by higher construction workloads and margins in the Western region. In the fourth quarter, this business completed the sale of one of the largest community solar projects in the United States, on which it provided turnkey engineering, procurement and construction. This business ended 2016 with backlog of $475 million, down slightly from $493 million in 2015, but sees a strong bidding environment in 2017.

“We are building a strong America and have solid momentum going into 2017,” said David L. Goodin, president and CEO of MDU Resources. “We successfully completed several strategic moves, including fully exiting from our exploration and production business, the refining business and, more recently, our interest in the Pronghorn natural gas processing plant, which have lowered our business risk profile and positioned us for future growth.

“Our continuing operations increased earnings per share by 32 percent in 2016, led by record results at our construction materials business,” Goodin said. “As we move into 2017, we expect to build on our momentum through organic growth opportunities, and we are open to strategic acquisitions as they are identified by our construction materials and services and regulated energy delivery businesses. We previously announced our five-year, $1.9 billion capital plan with an additional $300 million available in 2017 and 2018 for high-value projects.

“Also in 2017, our construction materials business anticipates more projects being bid from the FAST Act, and our construction services business is focused on projects with strong margins. Our utility operations continue to pursue regulatory recovery for costs associated with serving steady customer growth. Our pipeline and midstream business also continues to work on projects to serve customer growth with added capacity and improved reliability, like the Valley Expansion pipeline in eastern North Dakota and far western Minnesota that’s expected to be under construction in early 2018,” Goodin said.