Hello. My name is Laurie, and I will be your conference facilitator. At this time, I would like to welcome everyone to the MDU Resources Group 2020 Second Quarter Conference Call. [Operator Instructions] This call will be available for replay beginning at 5:00 p.m. Eastern Time today through 11:59 p.m. Eastern Time on August 19. The conference ID number for the replay is 8684589. The number to dial for the replay is one 1-855-859-2056 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.

Thank you, Laurie, and welcome, everyone, to our Second Quarter 2020 Earnings Release Conference Call. We sincerely hope that you and your families are well during this time. Our 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 news release is also available on the website. During the course of 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 on reasonable assumptions, actual results may differ materially. For a discussion of factors that may cause actual results to differ, refer to Item 1A Risk Factors in our most recent Form 10-K. Today, I will start by briefly covering this quarter's financial results and then turn the presentation over to Dave Goodin, President and CEO of MDU Resources, for an update on our forecast for the remainder of 2020 and looking forward. 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 are dialing in from multiple locations are: Dave Barney, President and CEO of Knight 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 second quarter earnings of $99.7 million or $0.50 per share compared to second quarter 2019 earnings of $61.8 million…

Well, thank you, Jason, and thank you to everyone listening for spending your time with us today and for your continued interest in MDU Resources. We hope that everyone there is safe and healthy. I want to start out by saying thank you to our more than 15,000 employees for making this a very successful quarter. Our financial results, which we released yesterday, show the continued strength of our two platform business model and underscores our ability to continue providing essential services across our business lines during this challenging economic time. Given the strong performance that we saw in the quarter with record revenues at both construction companies, new record combined construction backlog and the excellent results from our regulated energy delivery companies, we are raising our earnings per share guidance for 2020 to now a range of $1.65 to $1.85 per share. Looking at our forecast for the remainder of 2020 and our performance in the second quarter, we're also raising revenue guidance for both construction services and construction materials as well as reinstating margin guidance. We now expect construction services to end the year with revenues in a range from $1.9 billion to $2.1 billion with margins comparable to 2019 levels, and construction materials revenues now in a range of $2.2 billion to $2.4 billion with margins actually slightly higher than what we saw in 2019. Turning to the regulated energy delivery platform. Our utility business filed several regulatory cases to record costs incurred associated with providing safe and reliable electric and natural gas service to our now 1.13 million customers. We continue to see strong customer growth across our service territory. In fact, on a year-over-year basis, customer growth has been slightly higher than 2%. During this quarter, the utility received approval from the Montana Public Service…

[Operator Instructions] Our first question comes from the line of Chris Ellinghaus of Siebert Williams.

Hey everybody. How are you.

I'm good. How are you, Chris.

Good. But should we think about the second quarter for construction materials? If you had a jump-start as the weather, should we be thinking about you've shifted some from the third quarter? Or does that give you extra capacity to go out and work in the third quarter? And how should we be thinking about timing of construction?

Sure, Chris. I'll ask Dave Barney to touch on that. Dave?

Chris, yes, we did get out to a good second quarter, but you see, we have that record second best record backlog going into that third quarter. So we definitely have the capacity to do more work in the third quarter. Last year, in September, we had quite a bit of rain that affected some of our regions. So we're excited about the third quarter. We're excited about this year. It looks good for us for the rest of the year.

It looks like the weather has been pretty cooperative in July. Is that the way you see it?

Absolutely. We've had no effect from the weather in July.

Okay. It looks like there's been some slowdown in your ability to add back to backlog in the quarter. Is that a state budgetary constraint because of COVID-19? Is that commercial activity? What can you give us a little color on that?

Really, Chris, it's we burned through more backlog in the second quarter because of the favorable weather. We've pretty much seen we don't do a lot of bidding in the second and third quarter. Most typically, most of our bidding starts in January and February for next year. We'll burn through most of our backlog that we have right now, probably have about 20% that carries over to next year. But we've seen a few jobs cancel or delay, but not that many right now.

Okay, great. Can you give me a little color on what you're seeing in the Vegas market? Is there some slowdown in expected projects there from obviously, they've got some revenue problems?

Yes. Thank you, Chris. We'll turn it over to Jeff Thiede to touch on the CSG businesses in that Vegas market. Jeff?

Thanks for the question, Chris. We're very busy in Las Vegas. Our hours are up and we have quite a bit of backlog, about 30% of our backlog is in the Vegas market where we're working on, of course, the hospitality work but also mission-critical work. And we just finished up the Allegiant football stadium on the fire protection side and then the headquarters and practice facility on the mechanical side. So an example of our diversified business. There has been a project that we were involved in and it was not in our backlog that did get postponed indefinitely. And there is another project that we have reduced our workforces temporarily. And we're looking for that job to restart.

Okay. And one last thing. Some states are looking to accelerate some infrastructure spend to stimulate their local economies. Can you talk about what you've been hearing from your various states in terms of their desire to use the utilities as sort of economic stimulus?

Yes, Chris. Nicole is here with us. She can touch on that. I know Minnesota is one of the states that you're touching you're talking about.

So Chris, just to clarify from a utility perspective, I'm not sure if you're asking it from a broader perspective, but I will certainly answer on behalf of the utility. We have seen that coming out of our eight states, in particular, Minnesota has highlighted that. And you've probably seen some of our peer companies do some announcements on that. Certainly, when we look at our Minnesota operations, we're obviously a smaller player in that state. But we are doing what we can to accelerate a few of the projects that we have in that area and commit to the capital that we had already budgeted in that state. We are currently in an active rate case in that state as well. So hopefully, that answers your question from a utility perspective.

Well, I'm just curious whether Minnesota is not the only state that has done this before. I'm just curious whether it's spreading to some of your other jurisdictions or whether you want to recommend that or have recommended that to some of the other states?

Yes. From a utility-specific perspective, we haven't seen a whole lot of other activity in some of our other states. So and are we pushing it might be your other question that you're asking. As we look at our capital program, we've got a fair amount in the pipeline already, Chris. And we, obviously, as we think about the economic environment that we're in, we're doing our best to manage as we think about what the impact to some of these capital programs might be for our customers. And so certainly, we're well aware of that and are doing what we can to continue to invest in the communities and manage our capital accordingly. So again, no, I would just, in summary, say, not a significant impact in any of our other states.

Chris, I'll jump in and ask Jeff Thiede to comment. But certainly, we've got utility customers as it relates to our CSG lines of business. Anything to add there, Jeff, from our outside line business that we would see from our utility clients there?

Yes, we're seeing continued strong demand for our services and the transmission distribution, power, gas, and also communications. Our employment levels are up with all of our businesses. We have strong forecast for these businesses as we continue to see demand for our services with our utility customers.

Okay, thanks everybody. Appreciate your color.

Yeah. Thank you. Chris, appreciate.

[Operator Instructions] Your next question comes from the line of Ryan Levine of Citi.

Hi, good afternoon. Ryan.

Good afternoon. You mentioned the legal challenges for some of the other Bakken pipelines. Could you comment on the current key milestones for getting the North Bakken expansion in service by late 2021 target?

Sure. Ryan. Trevor Hastings is with us today. I'll ask Trevor to touch on that one.

Sure. The I think the primary challenge that we had run into was the Montana district court ruling on the Keystone XL project, which had basically removed the nationwide Permit 12 for new gas and oil pipelines. In early July, I think it was July 6, the Supreme Court basically overturned that. So that the ruling just resulted in a stay on Keystone XL, but opened up the nationwide Permit 12 to the to new oil and gas pipelines. So from that standpoint, it put back in play that as an option, which is the permit we typically use on our projects. Our time line is we have filed with FERC early this year, we filed the amendment, as referenced in Dave's notes in the earnings release, here last week. And we'll be making our permit filing, I think it's in the next one to two months probably, Ryan. And then really, from that point, our FERC approval is the next main approval or certificate to proceed. And so that should be in early 2021 and then construction would begin sometime in the spring time frame.

Okay. So there's no legal challenges outside of the FERC process from your perspective?

Not at this point in time, No.

Okay. Switching gears, what's your current volume growth outlook for aggregates in the second half of the year that's embedded in guidance? And what drove the material change in construction guidance from a few months ago?

You're talking in the construction materials space, correct, Ryan? You broke up just a little bit there.

Yes. In construction materials, specifically in the aggregate volume outlook?

Dave Barney, could you address that?

Yes. Ryan, aggregate volume outlook for the rest of the year? Is that what you're talking about?

Correct.

Okay. Yes. We're looking at being about where we were last year. As far as the aggregate, it's not a big increase in additional volumes. It's staying pretty steady. We are getting price increases on our aggregate. So that's definitely helping the margins.

And in terms of the inputs that drove the guidance revision in this division from the guidance last quarter, is it primarily a pricing outlook difference or a volume outlook difference or a weather? Or are there other factors at play?

Well, I think it had a lot to do with that we had a record second quarter. That definitely helped. And with our second strongest backlog going into the third quarter, I think that was that played a part, too, Chris Ryan.

Okay. And then in terms of contribution on EBITDA from acquisitions that's embedded in the division, is there a way to break that out or provide any color if that was a factor in year-over-year comparison?

Yes. I don't have definite numbers on that, Ryan. But the new companies, the new acquisitions played a very small part. Most of the EBITDA came from existing companies.

[Operator Instructions] Again, this call will be available for replay beginning at 5:00 p.m. Eastern Time today through 11:59 p.m. Eastern Time on August 19. The conference ID number for the replay is 8684589. At this time, there are no further questions. So I would now like to turn the conference back over to management for closing remarks.

Well, I'd like to thank you for taking the time to join us on our second quarter earnings call here today. As a reminder, we were able to post record results at our businesses while all working under modified conditions as it relates to the COVID-19 pandemic. Given our strong results in the first half of the year, we have increased our earnings per share guidance range to now to $1.65 to $1.85 for 2020, along with having reinstated guidance margins at both of our construction businesses. Thank you, again, for taking the time to join us on the second quarter earnings call, and we do appreciate your continued interest and the support of MDU Resources. And with that, I will turn this back to the operator.

Thank you, this concludes today’s MDU Resources Group Conference Call. We thank you for your participation. You may now disconnect.