Mdu Resources Group Inc Q3 FY2022 Earnings Call

Hello. My name is Lisa, and I will be your conference facilitator. At this time, I would like to welcome everyone to the MDU Resources Group 2022 Third Quarter Conference Call. The webcast can be accessed at www.mdu.com under the Investor Relations heading. Select Events and Presentations and click Q3 2022 Earnings Conference Call. After the completion 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 and Chief Financial Officer of MDU Resources Group. Thank you, Mr. Vollmer. You may now begin your conference.

Thank you, Lisa, and welcome, everyone, to our Third Quarter 2022 Earnings Conference Call. You can find our earnings release and supplemental materials for this call on our website at www.mdu.com under the Investor Relations tab. Leading today’s discussion along with me will be Dave Goodin, President and Chief Executive Officer of MDU Resources. Also along with us today to answer questions following our prepared remarks will be Dave Barney, President and CEO of Knife 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. During our call this morning, 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 more information about the risks and uncertainties that could cause actual results to differ 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. As a reminder from our second quarter earnings call, we have previously announced our plan to separate Knife River Corporation, which is expected to be effective through a tax-free spin-off to MDU Resources shareholders. This transaction is well underway and expected to become complete in 2023. Today, we are also announcing that MDU Resources' Board of Directors has authorized management to conduct a strategic review intended to separate MDU resources into two pure-play publicly-traded entities. One being a regulated energy delivery company, the other a leading construction materials company. MDU Resources remains committed to managing its business to deliver best-in-class operating performance and value for all stakeholders. Dave will provide additional information on our strategy during his remarks later this morning. Prior to handing the call over to Dave for his comments and forward look, I will provide an overview of the consolidated financial results for the third quarter. This morning, we announced third quarter earnings of $147.9 million or $0.73 per share on a GAAP basis with adjusted earnings of $152 million or $0.75 per share compared to third quarter 2021 earnings of $139.3 million or $0.68 per share. Due to the previously announced plan to separate Knife River, we are reporting adjusted earnings that exclude costs related to the anticipated separation transaction. Our combined utility business reported earnings of $3.5 million for the quarter compared to earnings of $5.2 million in the third quarter of 2021. The electric utilities segment reported third quarter earnings of $21.6 million compared to $20.6 million for the same period in 2021. This increase was largely the result of lower operation and maintenance expense due to lower payroll-related and materials costs, partially associated with the coal-fired Heskett Station and Lewis & Clark Station plant closures as well as the absence of costs from a planned outage at Big Stone Station during 2021. Higher revenues associated with North Dakota interim rate relief were offset by decreased retail sales volumes. Our natural gas utilities segment reported a third quarter seasonal loss of $18.1 million compared to a loss of $15.4 million in the third quarter of 2021. Results were impacted by increased operating expense, including higher subcontractor costs and depreciation expense. Also contributing to the loss was increased interest expense as a result of increased debt balances to fund capital expenditures and higher average interest rates. Partially offsetting these higher costs was higher rate recovery through decoupling mechanisms. The pipeline business earned $9.8 million in the third quarter compared to $10.6 million in the third quarter of 2021. The company experienced higher transportation revenues and record transportation volumes during the quarter, with growth largely attributed to the North Bakken expansion project that was placed in service earlier this year. The increase in revenues was offset in part by a lower allowance for funds used during construction, which is reflected in other income, and higher depreciation expense associated primarily with the North Bakken project. Further offsetting the increase was higher interest expense. As we’ve noted in the past, 2022 includes a delay on a portion of the North Bakken expansion project's committed volumes, and we expect to see increased benefit from this project in 2023 based on contracted volume commitments. Our construction services business reported all-time record quarterly revenue of $737 million and earnings of $28 million compared to revenue of $514.8 million and earnings of $23.1 million for the same period in 2021. Record revenues were primarily driven by approximately 70% higher electrical and mechanical workloads. Commercial workloads were favorably impacted by the progress on large hospitality projects and a number of data center projects started during the quarter. The industrial and institutional business lines also benefited from the mix of projects during the quarter. This business saw a lower margin percentage on record revenues for the quarter, attributed mostly to higher operating costs related to inflation, including material and labor costs. Earnings for the quarter were negatively impacted by $7.5 million, after tax, due to adjustments made to estimates on certain construction contracts compared to a negative impact of $5.5 million after tax in Q3 of 2021 for similar adjustments. Our construction materials business reported all-time record quarterly revenue of $975.4 million and earnings of $102.8 million compared to the prior year third quarter revenue of $831.3 million and earnings of $96.3 million. Higher contracting workloads and price increases across all product lines drove the topline revenue growth, up 17% from the third quarter in 2021, largely as a result of strong demand in most markets and the impacts of recent acquisitions. This business saw slightly lower margin percentages on record revenues for the quarter, primarily due to higher operating costs related to inflation, including higher diesel fuel, materials costs, labor, equipment, and transportation costs. Also impacting the quarter was higher interest expense as a result of higher average debt balances and higher rates, as well as higher selling, general, and administrative costs largely due to labor-related expenses. Results at each of MDU Resources’ businesses have been negatively impacted on a non-cash basis by lower unrealized investment returns on non-qualified benefit plans. Collectively, the negative earnings variance in the third quarter compared to last year was approximately $2.5 million or $0.01 per share. The company attributes this change in investment returns to significant fluctuations in the financial markets that have been experienced during 2022. The company continues to maintain a strong balance sheet and ample access to working capital to finance our operations through their peak seasons. That summarizes the financial highlights for the quarter. And now I’ll turn the call over to Dave for his formal remarks.

Thank you, Jason, and thank you, everyone, for spending time with us today and for your continued interest in MDU Resources. I’d like to begin with an update regarding our announcement this morning about our goals for the future structure of MDU Resources. In August, we announced our plan to separate Knife River Corporation, creating two publicly-traded companies. Our team has continued working diligently towards completing this separation. As a reminder, this separation of Knife River is expected to be enacted as a tax-free spin-off to MDU Resources shareholders and to be completed in 2023. We are pleased with the progress we have made and look forward to further enhancing shareholder value with this transaction. We were also pleased to hear positive investor feedback regarding the original announcement. Further, as the next step in our strategic planning process, the Board of Directors has unanimously determined that the best way to optimize value would be to create two pure-play public companies—a leading construction materials company and a pure-play regulated energy delivery company. To achieve this outcome, we will work to complete the separation of Knife River, and we will commence a strategic review process to explore alternatives for our construction services business. We believe these steps will unlock significant value for MDU shareholders and provide each company with the opportunity to execute on their respective business plans and achieve industry-leading performance. We intend to discuss in detail our long-term company strategy during analyst events in 2023, including Analyst Days for each entity as we near the completion of the Knife River spin transaction. More information regarding event details and presentations will be available on the company’s website when these events are scheduled. Now I’d like to turn to the discussion of our quarterly operating results. Our construction businesses both reported all-time record quarterly revenues and combined record third quarter backlog, now standing at $2.9 billion, which is up over 50% from the same time a year ago. Our utility and natural gas pipeline businesses continued to perform well but have been negatively impacted by higher interest costs. We also continue to experience and adapt to inflationary pressures across all lines of business. To summarize activity by business segment, I’d like to start off with the regulated energy delivery businesses. At our utility business, we have grown our customer base by 1.6% on a year-over-year basis, and we expect this growth to be between 1% and 2% compounded annually over the next five years. We expect our rate base to grow by 5%, compounded annually over the next five years, driven primarily by investments in system infrastructure upgrades and replacements to safely meet this growing customer demand. In August, it was announced that our electric utility, along with Otter Tail Power Company, plans to jointly develop, construct, and own approximately a 95-mile 345 kV transmission line from Jamestown, North Dakota to Ellendale, North Dakota. This is one of 18 transmission projects recently approved by MISO as part of its first phase of a multiyear-long-range transmission planning initiative. This project allows both companies to create a more resilient regional transmission grid while continuing to provide reliable, affordable electricity to customers. The transmission line is projected to be in service by late 2028, with a current estimated cost of $439 million. This business continues to seek regulatory recovery for our investments associated with providing safe and reliable electric and natural gas service to our growing customer base. An interim electric rate increase of 5.3% was implemented in mid-July in North Dakota, pending a decision on the requested increase of 12.3% before the state’s Public Service Commission. The Washington Utilities and Transportation Commission approved the utility's request for an approximate 4% natural gas rate increase, which was effective on September 1. Here in the fourth quarter, the utility intends to file a request for an electric rate increase with the Montana Public Service Commission and a request for a natural gas rate increase with the Idaho Public Utilities Commission. You can read more about this and other regulatory filings in our Form 10-Q filed this morning. The utility segment began construction in May 2022 on Heskett Unit 4, which is on track and expected to be in service during the first half of 2023. At our pipeline business, we reported earnings of $9.8 million. As Jason noted, this business recorded record higher transportation revenues and record transportation volumes, driven primarily by the North Bakken expansion project that was placed in service earlier this year. This project is well-positioned in the Bakken and can be readily expanded in the future for forecasted natural gas production growth. The company continues to work on several expansion projects across its system that are expected to add incremental natural gas transportation capacity of more than 300 million cubic feet per day and are expected to be completed throughout 2023 and 2024, pending regulatory approvals. Now I’d like to switch gears and move on to our construction businesses. At our Construction Services Group, we had all-time record revenue during this quarter, up 43% from a year ago. We experienced strong demand for electrical and mechanical-related work, with an overall increase in revenues of approximately 70%, especially for hospitality, data center, and renewable projects. We also saw consistent demand for transmission and distribution-related work, which also contributed to the quarter. Construction services ended the quarter with all-time record backlog of $2 billion, up 57% from the prior year. The company expects to complete approximately 80% of this backlog within the following 12 months. We are very well positioned to complete these projects safely and efficiently, with our ability to successfully attract and retain a skilled workforce of over 9,100 employees across our footprint. Given the successful first three quarters of the year, we have also increased our 2022 revenue guidance range by $100 million, now set at $2.5 billion to $2.7 billion, with margins expected to be lower than 2021, reflecting the current inflationary environment. Moving on to construction materials, our construction materials business also had all-time record revenues for the quarter, with increases across all product lines. This business completed a significant portion of work that was delayed earlier in the year due to unfavorable weather conditions, and we benefited from higher average material pricing across its product lines. The company also reported a record third quarter backlog of $895 million, up 37% from the same time last year, and expects to complete an estimated 92% of the backlog within the following 12 months. Given the strong backlog and record third quarter revenues, we are affirming the revenue guidance range of $2.45 billion to $2.65 billion, with margins slightly lower than 2021, reflecting the current inflationary environment. Looking ahead, both our construction services and construction materials businesses are well-positioned to benefit from the Infrastructure Investment and Jobs Act and the Inflation Reduction Act, which we anticipate will begin to positively impact bidding opportunities here in late 2022 and particularly in 2023 and beyond. This completes our individual business unit discussion. Looking ahead, we are very encouraged by the opportunities for customer growth at our utility and electric business, a strong set of pipeline projects across our pipeline business, record levels of construction backlog, and our ability to maintain a skilled employee base as well. We are affirming our 2022 earnings guidance to a range of $1.75 to $1.90 per share, with EBITDA guidance in the range of $875 million to $925 million. We have a robust capital plan of $702 million planned for 2022. Our future capital expenditures include line of sight opportunities, like the completion of Heskett Station Unit 4 and other infrastructure development at the utility, expansion projects at the pipeline, and ongoing equipment replacements at our construction businesses. As always, MDU Resources is committed to operating with integrity and with a focus on safety while creating superior shareholder value as we continue to provide essential services to our customers and deliver on our mission of building a strong America while being a great and safe place to work. I appreciate your interest and commitment to MDU Resources and ask now that we open the line to questions.

Your first question comes from Brian Russo from Sidoti.

Just quickly on Knife River. What are the regulatory milestones that we should be looking for as we progress into 2023 in terms of the private letter ruling from the IRS, I think, and then any SEC approvals needed? And maybe if we can kind of look at the calendar, are we talking first half 2023 or second half of 2023 for completion?

Sure. I understand that question, Brian. I will start and maybe ask Jason to give a little more detail that we can. I would say, in short, we are focused internally and on track as we’ve laid out our project here, certainly, again, a high priority internally. 2023 is the—I know it’s a wide window of time, but that’s the timeline we provided. And clearly, there will be some milestones. I’ll turn it over to Jason, while not probably depicting dates, just to give you some color on the work stream.

Yes. Thanks, Brian. It’s a great question. And we’re certainly, as Dave mentioned, working quickly towards this. I think what you would see—what you mentioned were two items that really are some of the regulatory workflows I would consider, one being a private letter ruling from the IRS. I mean, that process is well underway here. We’ll be working with the IRS here in the coming months to work through that process. In addition, I think in the Form 10, which will be the filing with the SEC, we would expect in the coming months as well, to file on a confidential basis, that with the SEC, which we would then work with them to get to a public document sometime ahead of the spin as we get into 2023. So not real definitive on dates, but I think those are two of the big milestones that are a little bit outside of our control as far as the timing of the review process, but certainly within our control is how quickly we can get those filed and get working with those various groups.

Okay. Great. And then on the construction services segment, what are the strategic alternatives? Is it an outright sale and/or a spin-off similar to Knife River? And when do you think you might conclude the review and provide an update?

Yes. No, I appreciate that question, Brian. I’ll actually expand on it maybe just a little bit, but I thought it might be more about why didn’t we announce this back in August or why now, why not then, and just kind of the separation. And I’ll get to your question. But really, I would say we’ve always said that the Board continually evaluates our portfolio of businesses to make sure that the company is best positioned to unlock value for our shareholders. Going back to our August announcement, at that time, we were really able to make clear two specific decisions, one that we felt Knife River would be better positioned to create value for our shareholders as a stand-alone company. And also, we didn’t feel, and we voiced this, that it didn’t make sense, probably industrial logic, to spin Knife River and CSG as a combined entity. So hence, the announcement back in August. As our Board and management have been working through how our shareholders are best served by keeping CSG with regulated energy or exploring other alternatives for CSG, we really felt that, as we continued to analyze CSG, the most desirable outcome is to move towards this two pure-play publicly traded company structure that we announced here today. One being regulated energy, our utility companies, combined with our pipeline business, along with the construction materials being the other. I am confident in that structure. Regarding your question, it's really the start of the review, if you will, as a strategic review and looking at various options with our announcement today. We will be looking at all alternatives and ways in which to maximize value here. I feel very strongly CSG is a very valuable business. If you look at all the financial metrics, whether it's year-to-date net income at record levels, if you look at employment levels at 9,100 employees, if you look at backlog up some 50% on a year-over-year basis, it’s really a high-performing business. Hence, we’re going to be very judicious in our review as we look at alternatives to really maximize or optimize the value of our CSG business.

Okay. One last question on the utility. It seems like you have a very active regulatory calendar with rate cases pending or expected to be filed. I’m sensing you’re under-earning basically in 2022, which is why you’re filing these cases. When we look forward, assuming manageable equity needs, and your reaffirmation of the 5% rate base CAGR, can we see the utility growing earnings at a consistent rate with the rate base growth rate of 5%? Is that realistic in the near term?

Yes, Brian. I mean, as utilities make investments for that safe and reliable service, clearly, we look to the regulators to go through that rate making process to ensure everything is reasonable and prudent, but that rate base growth should translate to some correlation to earnings growth. Certainly, subject to regulatory lag, subject to making sure that our investments were truly reasonable and prudent as well. I think given we are outspending our depreciation rates at our utilities, so we’re growing rate base at that 5% compounded annual growth, there’s kind of an inherent regulatory lag in that process because we’re outspending the depreciation rate. So what you noted for an expectation would clearly be an expectation I would have. It might be choppy only because rate cases come every 9 to 12 months from a regulatory cycle there. But you can clearly see, Nicole and her team are very focused on closing that regulatory gap. As we think about the number of cases that were just filed. And I think I probably answered the question. I’m looking at Nicole, if anything to add there, but I think, I got it all, unless you have a follow-up, Brian.

Your next question comes from Ryan Levine with Citibank.

In terms of the strategic announcement or potential strategic review that you initiated this morning, to the extent it’s not successful, what entity would construction service remain with? And to the extent you go forward with the potential transaction, curious as to how the capital structure would travel with the assets and how you’re envisioning financing attributes of this portfolio of assets?

Sure. Both kind of future questions to be answered if you think of it that way, Ryan. Clearly, the strategic review, we’re going to look at all options here to optimize the value of the business that could be in the form of a number of different types of transactions, whether it’s a sale, whether it’s a spin, whether it’s a merger, whether it’s a combination of those or some other type of structure. That will be part of the review. The results of that outcome will then lead into the second part of your question regarding capital structure or use of whether there will be proceeds or ultimately shareholder value creation here and how we best deploy that for our two pure-play businesses. Jason?

Yes, I would just add to—I think your part of your original question, Ryan, was where would services lie here. I think, I just want to come back to the focus. We’re diligently working towards the separation of Knife River into a stand-alone company. That’s really what we’ve been working on for quite some time. We will be looking through strategic alternatives for the services business as well, but that will be kind of a separate process in that piece. We haven’t been definitive on a timeline with that at this point either, so I think it’s a little early to hypothesize, I guess, about where things would end up after the fact. Just want to emphasize that we really are seeing Knife River as a stand-alone pure-play materials company, and the future state for MDU Resources will be a stand-alone pure-play regulated energy delivery company.

Okay. Because that envisions—there’s a possibility to take—there could be three stand-alone public companies as an outcome of the strategic review? Or is it focused more around attracting third-party strategic or financial buyers?

I think all options are on the table as we think about that, Ryan. I wouldn’t preclude anything at this point. Again, our announcement today is really letting the world know of what our future plans and structure as we see it. We’ll look to again, optimize the value of Construction Services Group, a very valuable company, as it’s performing today.

Okay. And given there are a number of potential transactions in the works over the next 12 months, how are you looking to evolve current M&A or transaction strategy in terms of bolt-on acquisitions between the three key business units?

Yes. Certainly, that’s part of our DNA, Ryan, as we look—I mean, that’s really what has grown our materials business into what it is today and what we intend it to be, down the road, a stand-alone public company, a top-performing materials business. It’s also in the DNA of construction services and into the valuable business, as I noted today. I think that’s still part of what we would continue to look at. Clearly, we have other major work streams undergoing as well. But I wouldn’t preclude that. At the same time, we’ve been very successful at organic growth in these businesses as well. I think there’s optionality we have in each of those construction lines.

Okay. And then—in terms of construction services, historically, you’ve been reluctant to part ways with that asset because of the tax basis issues and certain strategic and commercial benefits. What has changed on that front? And are there any dis-synergies that you would envision with any separation of that business?

Yes. Certainly, that will be part of this analysis as we think about the various transactions and the types I outlined earlier. Those all will be considerations when we think about that. But again, it’s a strong performing business today, and we think there will be likely a reaction to our announcement today. We’re starting that process right now.

Okay. And then one on the utility. I think in your prepared comments, you highlighted some other funded pension or certain obligations there. Can you elaborate on where you sit from that standpoint and how that could impact your outlook?

I think what you’re noting is some of our non-qualified benefit plans. We’ve noted throughout the year, given the markets this year, it’s roughly $20 million or about $0.10 per share on a year-over-year basis. Just a little background, Jason, as to that. We want that to be known because it’s a large enough number investors should know that.

Yes. This is—to your question, Ryan, here, as far as pension, this is a little bit different than our traditional pension. This is really the non-qualified programs that we have. We have liabilities certainly on our balance sheet for that. We have funded some assets to offset those liabilities. These assets are marked-to-market on a monthly basis. So these are all non-cash, unrealized gains and losses that have been—or losses this year, I guess, as you would say that we’ve experienced on these assets. Don't expect this to have a significant impact on ongoing future benefit expense or anything along that line. This is really related to these non-qualified plans, not getting into kind of the traditional defined benefit pension plans that we have at our various businesses. We have frozen all of our defined benefit pension plans across the corporation many years ago, as they’re really kind of in a liability-reduction mode at this point versus something that’s a large ongoing cost to the company.

Your next question comes from Dariusz Lozny with Bank of America.

Can I just maybe start with thinking about the growth rate at the RemainCo after the two processes that you have ongoing are concluded? I think in the past, you framed your 5% to 8% long-term CAGR as sort of on the low end for the utilities and the upside there towards the 8% is driven by the construction businesses. Post these two transactions, would you envision having any latitude to accelerate that rate base growth and, correspondingly, the EPS growth at the RemainCo?

Yes. Great question, Dariusz. Yes, I mean the 5% to 8% is our long-term EPS growth as MDU Resources as we see it today. I know we had countless meetings with you and other investors walking us through how each of the businesses contribute to that 5% to 8% and how we think about that. As you’re describing this pure-play regulated business, our future state as we envision today, we talked about a 5% CAGR in rate base growth, certainly at our utility business. That’s really coming off about a 7% CAGR over the prior five years. If it went back two years before that, the prior five years were more like a 12% CAGR. It’s been growing quite nicely over time. Certainly, it’s currently at a 5%. I would say looking forward, as we think about our CapEx discussion with our board in a couple of weeks, we would be expecting to let the market know what the refresh on our five-year looks like, probably that week of Thanksgiving or so, just to give a sense there. I think that’s probably a contributor. Certainly, the pipeline business would have experienced a stronger CAGR than that over the recent years, which I think would tend to elevate that EPS. If you think about the projects I noted in my comments—the multiple projects, the $300 million a day of commitments from customers that Trevor and his group have signed up, if you will, between those are 2023 and 2024 projects, very much line of sight. I would expect that this would be more on the high end of that range, if not raising that rate. But that’s as we see it today. The other part of this is the pure-play, we also think we’ll have a certain appeal in the marketplace as a pure-play regulated business as we think about that. We’ll also be really focused on a defined capital structure, and capital allocation will be very targeted as we think about that management team that’s dialed in for that business as well. I think those are all attributes to consider as we describe the future state of MDU Resources, particularly for the regulated energy business.

No, that’s great and very comprehensive. I appreciate it. One more, if I can, and this relates to your ‘22 guidance. It looks like your revenue guidance for the services business ticked up, but the margin language maybe ticked down a little bit, while the materials, which I think had a weaker first half of the year, seems to be steady-state as far as the composition of your guidance. Can you maybe talk a little bit about the dynamics there, what are you seeing specifically on the services relative to the materials? And then also maybe the backlog growth and the services side was very robust. Can you talk a little bit about the dynamics there and what specifically drove that really strong increase in the backlog?

Absolutely, Dariusz. I’m going to just give a couple of comments, but then I think we will be well-served to get more details from each of those business heads. I’ll start with Jeff Thiede and then ask Dave Barney to weigh in on materials. I mean, clearly, you look at a high level where our activities have been in both of those lines of business, as you noted, elevating services by $100 million in revenue guidance. As we think about the year, our backlog growth there has been astounding. I’ll have Jeff kind of talk about just the dynamics in that business, which I think will also lead to your margin question a little bit as well. Jeff?

Thanks, Dave. We’ve had pressure from inflation, labor, materials, and subcontractors. That’s contributed to the margin impact, that supply chain issues, which affect productivity. As noted in the release, we’ve had a couple of write-downs given the nature of our work and our historical strong performance, including our record quarter revenue and a record year-to-date earnings. In Q3, our earnings that were 21% higher this year than last year, write-downs are part of our business, and they should be overcome and will be overcome by strong performance on a majority of our projects. We’ve got exceptional teams focused on getting work and being selective, and our backlog remains consistent among our electrical and mechanical group, which is about 80% of our backlog versus our transmission and distribution group, which is about 20%. The largest component of that work is our commercial, which includes hospitality, airport, data center work, and industrial. We have several renewable projects and two more pending that we anticipate getting. We’re doing electric vehicle charging stations and seeing great growth in our service work and our special projects.

Dariusz, any follow-up for Jeff? Or I’ll go on then to Dave Barney. Just want to make sure Jeff answered your question.

Yes. Yes. Yes. That was very helpful.

Okay. Very good. Dave Barney, can you just touch on the dynamics that you’re seeing out there and what your team is doing to get ahead of them?

Sure. Dariusz, we had a record revenue in the quarter due mainly to higher prices in almost every product line. We have a record backlog across almost all our regions, and I can tell you, our bid schedule looks strong. We’ll continue to pick up work. Demand is strong. Our price increases have largely been accepted by our customers and we continue to raise prices. In October, we implemented another price increase on aggregate. So going forward, we expect our margins to continue to improve. Does that answer your question?

Thank you, Dave. Anything else, Dariusz?

No, I think that’s everything. I appreciate the color.

Excellent. Thank you for calling in and for the questions, Dariusz.

The webcast can be accessed at www.mdu.com under the Investor Relations heading. Select Events and Presentations, and then click Q3 2022 Earnings Conference Call. After the conclusion of the webcast, a replay will be available at the same location. At this time, there are no further questions. I would now like to turn the conference back to management for closing remarks.

Thank you, Lisa, and thank you all for taking the time to join us here on our Third Quarter Earnings Call. We are optimistic about our growth opportunities with record combined construction backlog and our ongoing and future regulated energy delivery projects. We look forward to connecting with you again as we close out the year and prepare for 2023. Again, thank you. We appreciate your continued interest in and support of MDU Resources. And with that, I’ll turn this back to the operator.

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