Hello. My name is. Maria, and I'll be your conference facilitator. At this time, I would like to welcome everyone to the MDU Resources Group 2020 Third Quarter Conference Call. [Operator Instructions] This call will be available for replay beginning at 5:00 PM Eastern today through 11:59 PM Eastern on November 19. The conference ID number for the replay is 1654638. Again the conference ID number for the replay is 1654638. 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, Chief Financial Officer and Treasurer of MDU Resources Group. Thank you, Mr. Vollmer. You may begin your conference.

Thank you, Maria, and welcome everyone to our third quarter 2020 earnings conference call. Our conference call is being broadcast live to the public over the Internet and slides will accompany our remarks. You would like to view the slides you can find them on the Events & Presentations page under the Investors tab of our website at www.mdu.com. Our news release detailing our third quarter results is also available on our 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, please refer to Item 1A Risk Factors in our most recent Form 10-Q and 10-K. We will also reference certain non-GAAP measures during the call, such as EBITDA, our construction operations and adjusted gross margin for our utility businesses. Definitions and reconciliations of non-GAAP measures to the nearest GAAP measure can be found in our earnings release issued last night. 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 beyond. 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 include; 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…

Well, thank you, Jason. And thank you for listening, everyone, and spending this time with us today. And for your continued interest in MDU Resources. We hope that, you are both, safe and healthy. Our balanced mix of regulated energy delivery and construction materials and services businesses continue, to allow us to post strong operating results, despite the challenges this pandemic has imposed on our nation. With the help of our more than 15,000 employees, we are able to continue providing essential services to customers across all our business lines during this challenging time. As Jason said, with strong performance we saw in the third quarter including record earnings at both construction companies and strong results from our regulated energy delivery companies, we are raising our earnings per share target for this year to a range of $1.80 to $1.90 per share. Looking at our forecasts for the remainder of 2020 and our performance in the third quarter, we are also narrowing revenue guidance for both construction services and construction materials. We have increased our expected revenues at construction services to now a range of $2 billion to $2.15 billion, with margins comparable to or slightly higher than 2019 levels; and adjusted construction material revenues to a range of $2.15 to $2.25 billion with margins higher than what we saw in 2019. To summarize activity by business unit, I'll start off with the regulated energy delivery side of our business mix. Our utility operations had solid performance through the third quarter, with earnings at the electric segment muted by a seasonal loss on the natural gas side. During the quarter, our regulatory team was very active with filings at both utility segments, producing several positive outcomes. On October 28, the North Dakota Public Service Commission approved a rate increase of…

[Operator Instructions] And our first question is coming from the line of Ryan Levine of Citi.

First question on the Pipeline segment, can you attack exactly what were the dynamics and how the contract has changed related to the one-year delay for certain customers on the North Bakken expansion?

Sure, Ryan. I'll ask Trevor Hastings to kind of outline what we're seeing today with North Bakken and just maybe a broad overview of the project. Because it's really a keynote project for WBI as we think about 2021 and beyond. Trevor?

Sure. Thanks, Dave. Thanks, Ryan. We remain excited about the project. As Dave noted, we anticipate our FERC approval early in 2021, construction to follow that with an in-service date that's unchanged to November of 2021. As we went through the kind of pandemic-related production declines in the Bakken from March through this summer, we had various conversations with our six customers and offered a first-year delay in a portion of their volumes. And then, as Dave noted in his opening remarks, basically we kept each of those customers' contracts on a net present value basis whole by then adjusting either some combination of rate volume or term. At the conclusion of those negotiations or conversations with customers, three customers elected to take a reduced volume, and then offset that impact in the first year with either an additional year in term or higher volume or rate increase. And so, over the look of the whole project from kind of a return hurdle standpoint, the product really remains full, other than we'll have lower year one volumes. And then actually we will end up with slightly higher year two volumes and a few contracts that will move, instead of through year 10, will move into year 11.

What percentage of the overall customer volume expectation was amended in this revision of the contract?

So our full year - let's call it, second year full volumes will be 245,000 Mcf a day. The first-year volumes will be 133,600 per day. And we'll still be positive from a net income and an EBITDA perspective in that first year. And then Ryan, in the - oh, go ahead.

Yes. I was going to ask if to the extent that DAPL is shut down, does that trigger any events in terms of customer demand for the system, or have any impact on this project commercial viability.

It shouldn't directly. It hasn't to this point. I wouldn't foresee that being an issue directly related to this project. It would have an impact overall to the Bakken potentially.

And then, switching gears to Construction Materials, I noticed the backlog had fallen. Would you be able to elaborate, as to the drivers of that? And what - how the composition of the project backlog is today, compared to maybe a year ago or prior quarters?

Ryan thanks for the question. We had Dave Barney dialed in from another state. I want to make sure Dave is here to answer that. Before he does that, I just want to maybe do a quick go back for your questions that related to North Bakken. You need to also understand that, actually the gas volumes in the Bakken, while they did come off on the early days of the pandemic, are actually back to about 85% of the volume flow in, which we saw pre-pandemic. And so there are certainly dynamics out there. And it's a demand in response. And drilling activity has tapered off some. But certainly there's been - it's largely returned to, again, nearly pre-pandemic levels on gas volumes. So, just - I think that goes in the context of why we feel confident and excited about this 2021 project. Sorry for that go back, but I think that just helps maybe a little more of the larger picture there. And then, I'll ask Dave Barney. Dave, hopefully you're still on the line. I know it was Ryan's question related to our backlog there and how we're thinking about that, what's changed on a year-over-year basis.

Thanks, Dave. Hi Ryan, yeah, a big portion of our backlog being down this year. Ryan, we were able to get out earlier. Weather was favorable early in the year. A lot of our regions were out in February and March. And the year before, it was April and May. Not that concerned about our backlog. It was a record backlog last year. But if you look at, we're about where we were in 2018 and we had record earnings, in 2020. Most of our work starts bidding in the first five to six months of this coming year, 2021. The bid schedule looks strong in most of our areas. So not really worried about, picking up backlog, we'll get our share.

Given the last few weeks, have you noticed any change in the margin profile, for your business? It seems like there was strong margins in the third quarter. Curious, if you're seeing that continues.

We really haven't seen any change in margins. Our margins are staying strong. We're holding our margins. So no change right now, on our margins, they're still strong. It's still rising in most areas. In some areas, they've flattened. But in most markets, they continue to hold or increase.

Okay. I appreciate it. Thank you.

Yes. Thanks for the question on that, Ryan. And as we noted, in our earnings guidance for Construction Materials that we do expect margins to be increasing in that segment. So thanks for the questions, Ryan.

This marks the last call for questions. [Operator Instructions] This call will be available for replay beginning at 5:00 p.m. Eastern today through 11:59 p.m. Eastern on November 19th. The conference ID number for the replay is 1654638. Again the conference ID number for the reply is 1654638. At this time, there are no further questions. I would like to turn the conference back over to management for closing remarks.

Well, thank you for taking the time to join us on our third quarter earnings call 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. And given our strong results for the first nine months of the year, we have increased our earnings per share guidance range to $1.80 to $1.90 per share for 2020. We have increased revenue guidance at our Construction Service business and expect margins to be higher at our Construction Materials business than prior year. Again, thank you. Thank you and we appreciate your continued interest in and support of MDU Resources. Operator?

Thank you. This concludes today's MDU Resources Group conference call. Thank you for your participation. You may now disconnect.