Utility and midstream company MDU Resources Group Inc. continues to expect its electric and natural gas utility customer base to grow in the coming years after those businesses achieved record-high earnings in 2019.
The company, which held its fourth-quarter 2019 earnings call Feb. 5, maintained projections for those business segments to see 5% compounded annual rate base growth over the next five years and for its customer base to keep expanding by 1% to 2% annually. MDU's utility companies serve roughly 1.1 million customers across eight states in the Pacific Northwest and Great Plains.
In 2019, the company's electric and natural gas utility division reported record-high earnings of $94.3 million, up from $84.7 million in 2018. The increase was driven by higher natural gas distribution retail sales margins amid a 9.9% jump in volumes. Results were also helped by improved electric margins stemming from a rate recovery approval from the state of Montana.
MDU's pipeline and midstream business also had a robust 2019. Full-year earnings for that division edged up to $29.6 million from $28.5 million in 2018 in response to record transportation volumes and higher customer rates. Those businesses could also benefit from two new expansion projects: the Demicks Lake project in North Dakota, which entered service Feb. 4 and will increase capacity by 175 million cubic feet per day, and the North Bakken expansion project that is expected to enter service in late 2021 and will increase capacity by 350 million cubic feet per day.
On Feb. 4, MDU reported fourth-quarter 2019 earnings from continuing operations of $94.8 million, or 47 cents per share, compared with $76.0 million, or 39 cents per share, in the prior-year period. Those results beat the S&P Global Market Intelligence consensus normalized EPS estimate for the quarter of 37 cents.
For full year 2019, earnings from continuing operations rose to $335.2 million, or $1.69 per share, from $269.4 million, or $1.38 per share, in 2018.
MDU Resources is targeting EPS of $1.65 to $1.85 in 2020, assuming normal weather and operation conditions. Results could vary based on weather and on potential incremental gains from further acquisitions by the company's construction services and materials businesses, MDU CEO Dave Goodin said. On Feb. 3, MDU announced it completed the acquisition of electric construction company PerLectric Inc.'s stock for an undisclosed sum.