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 speakers’ remarks, there will be a question-and-answer period. [Operator Instructions] The webcast can be accessed at www.mdu.com, under the Investors heading, select Events & 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. Leading today’s discussion with me is Nicole Kivisto, 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 Senger, 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 a reconciliation of any non-GAAP information to the appropriate GAAP metric, please reference our earnings release. With the completion of the Everus Construction Group spinoff occurring on October 31, third quarter results for Everus are included in MDU Resources quarterly results. However, we will be focusing our discussion on our remaining utility and pipeline business results for the quarter. Everus 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 MDU Resources. With the completion of the Everus spinoff on October 31, 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 MDU 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% to 2% annually and expected long-term EPS growth of 6% to 8%, while targeting a 60% to 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…

Thanks, Nicole. I’m pleased to share the details of our third quarter results. As a reminder, with the Everus spin-off occurring on October 31, third quarter results from Everus are included in the following numbers. In future reporting periods, Everus results will be reclassified as discontinued operations and comparative data will be recast. This morning, we announced third quarter earnings of $64.6 million or $0.32 per share on a GAAP basis compared to third quarter 2023 GAAP earnings of $74.9 million or $0.37 per share. Third quarter income from continuing operations was $62.2 million or $0.31 per share, compared to $78.2 million or $0.38 per share in 2023. It’s important to note that certain costs associated with the spin-off of Knife River last year are reported as discontinued operations in our GAAP based results for the prior year. In addition, we experienced an unrealized gain on the retained shares of Knife River in the third quarter of 2023. This gain was $22.8 million net of tax and was reported in continuing operations for 2023. With the completion of the Knife River spin-off and work performed on the Everus spin-off, we are also reporting adjusted income from continuing operations to provide financial results that more closely correlate with and better outline the strength of our ongoing business operations. For more information on these adjustments, please see the first table in our earnings release. We experienced solid results from all of our businesses in the quarter with adjusted income from continuing operations of $65.5 million or $0.32 per share compared to third quarter 2023 adjusted income from continuing operations of $58.6 million or $0.29 per share. As we turn to our individual businesses, our utility business reported earnings of $6.8 million for the quarter compared to earnings of $3.2 million in the…

[Operator Instructions] Your first question will come from Chris Ellinghaus with Siebert Williams Shank. Please go ahead.

Can you hear me?

Good afternoon, Chris. We can hear you.

Hey, Nicole.

Hello.

The increase in the guidance, have you got any color you want to add to? Was it – the weather was good in the quarter, so was that a big piece of the guidance or what are the pieces you’re thinking about?

Yes, Chris. So essentially, as we looked at our performance on a year-to-date basis and the momentum we have heading into the end of the year here. We looked at the range that we had out there and decided to increase it on an overall basis. Certainly contributing to that increase was some weather related impacts as you already highlighted in the quarter, as well as the very strong momentum we’re seeing at the pipeline this year and we’ve got that also kind of laid out in the news release as well.

Was the – were the pipeline results better than you expected and why would that be?

So as we think about the pipeline, I can let Rob add some color commentary here. Certainly, the new rates that we put in place, we had those on the radar. Those were implemented last August, and – but we are seeing year-over-year impact from that. But we are also seeing record transportation in addition to that, storage was certainly much stronger than we expected this year. But, Rob, any other color you would provide there?

No. Nicole, I think you summarized it well. Storage was a primary driver. The growth projects we expected and we expect to continue. But storage market has just been extremely strong and the primary driver for that increase.

Okay, great. Can you provide any color on the pipeline acquisition? What was your thinking there simply the volumes increasing to that processing plant that you saw as an opportunity?

Yes. We certainly see it as a strategic acquisition here. But I can get – turn it over to Rob for some details there, Chris.

Yes. Thanks, Chris. This particular pipeline from this processing facility, we currently have a pipeline that runs from this facility. This additional acquisition does a couple things. Long-term, it’s a very strategic fit for our assets in the Bakken. This was a smaller acquisition. $17 million of capital, another $0.75 million in integrity testing. It’ll generate approximately $3 million in earnings annually and can expect kind of a normalized regulated return on those assets.

Great. That’s helpful. Nicole, the Montana interim increase, have you got any thoughts on what that tells us about the Montana regulatory climate, at least for you or for gas or whatever thoughts you might have there?

Yes. As we look at our request there, Chris, I’m assuming you’re referring to our request for reconsideration on our interim ask there. On an overall basis, I would say, as we look at Montana and our overall portfolio, we’re moving forward with the reconsideration as it relates to the interim request. To just size that maybe for you, though, as we think about that piece of our business, it represents about 5% of our overall rate base. So we continue to – like the state of Montana as part of our overall portfolio, but I will say we continue to also appreciate the diversity that we have across our 13 jurisdictions.

Okay. All right, thanks. I appreciate the details.

Thank you, Chris.

Thank you. [Operator Instructions] Your next question comes from the line of Ryan Levine with Citi. Please go ahead.

Hi, everybody.

Good afternoon, Ryan.

Congratulations on – good and congratulations on the spin being complete. I guess, it looks like you wasted no time with the first day post spin to announce this acquisition. Should we look for the new MDU to be more focused on acquisitions going forward or any thoughts that you’re able to share around your strategic outlook for M&A?

Yes. Thanks for the question, Ryan. How I would summarize that is kind of how we’ve talked in the past. I mean, as we think about, first of all, I guess making sure that I acknowledge the significant and monumental efforts of the team as we’ve arrived at our future state here, couldn’t be happier with the results in terms of overall shareholder return created. And here, we are today now arrived at where we said we were seeking a couple years back. So putting us in a place, and you heard me talk about it in the script, where I really believe strongly we’ve got future organic growth in front of us. So I’m very excited about our future from an organic growth perspective. As you look at the capital that we have and the outlay of capital, how we’ve grown in the past, we’ve got plenty of opportunities to grow organically. That being said, we have been acquisitive in the past. We have grown our utility business through acquisition. You just alluded to the pipeline acquisition that we’ve done here. We will look at opportunities to grow acquisitively as well, but we’re only going to do it if that makes sense for shareholders, customers and our employees.

Historically, the midstream business hasn’t been a focus of M&A. Is that still the case or is there more commercial opportunities that you see?

I’m sorry, could you repeat that? What you saying historically, our pipeline, Chris, is that what you were asking specifically?

Yes. Your pipeline acquisition business, yes, is that an area that you see in organic growth opportunities?

Yes. I can let Rob also add some color commentary here, but as we look at our pipeline, I would probably say, kind of summarize it the same way, just summarize our total company. I mean, there’s a lot of customer demand projects that are driving organic growth opportunities within our system. Our strategic positioning within the Bakken is certainly a huge value add for our pipeline business. But that being said, just like I reiterated on a total company basis, the pipeline is going to look at opportunities, which could include acquisition of pipe. So, Rob, anything further on that?

No, I think you summarize that as well. It’s – we got supply push projects we’re looking at, a lot of demand projects we’re looking at, data centers are part of that power gen, LDC growth, et cetera. So really, potential projects in kind of all areas of our industry.

Appreciate the color there. And then on the gas storage asset in particular, what was the contribution for that asset this quarter? And given the contract portfolio, is that expected to continue into next year or any kind of duration that you see in terms of the outperformance there?

Yes. On the storage side, I don’t – we probably don’t quantify that and break that out specifically in terms of what the incremental add was there. Certainly it was, as we mentioned, outsized relative to what we had anticipated. That being said, I think we do see strong demand for storage services as we look at basis differentials and winter summer differentials going forward. So as we think about the outlook 2025 and beyond, as I’m assuming is kind of what your question is teeing up to, we will certainly be evaluating that and providing our guidance to the market in February for 2025, but it certainly has been a benefit to 2024.

Great. Thanks for taking my questions.

Thank you.

Thank you. [Operator Instructions] At this time, there were no further questions. I would now like to turn the conference back over to management for closing remarks.

Okay. Thank you. Thank you, everyone for taking the time to join us today for our third quarter 2024 earnings call. As you have probably heard, we are very optimistic about our growth opportunities and future projects as we move forward and execute on our core strategy as a pure-play regulated energy delivery business. We thank you again and we appreciate your continued interest and support of MDU Resources. And with that, I’ll turn the call back to you. Operator?

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