Hello, my name is Regina, and I will be your conference facilitator. At this time, I would like to welcome everyone to the MDU Resources Group 2018 Year End Earnings Results and 2019 Guidance 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] This call will be available for replay beginning at 5:00 PM, Eastern Time today through 11:59 PM Eastern Time on February 20th. The conference ID number for the replay is 7586823. Again, the conference ID number for the replay is 7586823. 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, Regina. And welcome to our conference call covering our 2018 year-end earnings and 2019 guidance. This conference call is being broadcast live to the public over the Internet and slides will accompany our remarks.

If you'd like to view the slides, please go to our Web site at www.mdu.com and go to events and presentations page under the investors tab. Our earnings release is also available on our Web site.

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-K. For our call today, I will discuss key financial highlights and then turn the presentation over to Dave Goodin, President and CEO of MDU Resources for his formal remarks.

After Dave's remarks, we'll open the line for questions.

In addition to Dave and myself, members of our management team who will be available to answer questions today are; 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 Cascade Natural Gas, Great Plains Natural Gas, Intermountain Gas and Montana-Dakota Utilities; Trevor Hastings, President and CEO of WBI Energy; and Stephanie Barth, Vice President, Chief Accounting Officer and Controller of MDU Resources.

Yesterday, we announced 2018 earnings from continuing operations of $269.4 million or $1.38 per share, compared to 2017 earnings from continuing operations of $284.2 million or $1.45 per share. In the fourth quarter, earnings from continuing operations were $76 million or $0.39 per share compared to $115 million or $0.59 per share in 2017.

Results in 2017 included a one-time federal tax reform benefit in the fourth quarter of $39.5 million or $0.20 per share. For 2018, our combined utility business reported earnings of $84.7 million compared to $81.6 million in 2017.

2017 results included $6.4 million decrease related to a net differed tax asset adjustment resulting from the Tax Cuts and Jobs Act. Our electric utility segment earned $47 million in 2018 compared to the prior year earnings of $49.4 million, which included a $2.1 million additional income tax expense recorded in the fourth quarter of 2017.

Main drivers of the decrease in earnings were higher depreciation, depletion and amortization expense from increased plant asset additions and lower investment returns. Partially offsetting the decrease in earnings were 1.4% higher electric retail sales volumes.

Our natural gas utility segment had earnings of $37.7 million in 2018 compared to prior year earnings of $32.2 million, which included a $4.3 million additional income tax expense in the fourth quarter of 2017, resulting from the Tax Cuts and Jobs Act.

The increase in year-over-year earnings was largely due to higher retail sales margins as a result of weather normalization and conservation adjustments. These margin increases were partially offset by lower volumes in certain regions throughout the year.

The earnings increase was partially offset by increased operation and maintenance expense, lower investment returns and higher depreciation, depletion and amortization expense. At our pipeline and midstream business, earnings in 2018 were $28.5 million, compared to prior year earnings of $20.5 million.

The earnings increase was largely a result of higher transportation revenues and volumes from multiple organic growth projects that came online in 2017 and 2018.

Also contributing to the earnings increase was $4.2 million tax benefit recorded in the third quarter related to a final accounting order issued by the federal energy regulatory commission or FERC.

Partially offsetting these increases were higher operation and maintenance expense, decreased storage revenues and higher depreciation, depletion and amortization expense from increased plant asset additions.

Our construction services business reported record revenues of $1.37 billion and record earnings of $64.3 million in 2018, up from 2017 earnings of $53.3 million, which included a one-time $4.3 million tax benefit from the Tax Cut and Jobs Act.

This business' earnings increased due to higher outside specialty contracting workloads and margins larger from higher equipment sales and rentals, as well as an increase in power line recovery work related to natural disasters and of course, lower income tax expense.

Partially offsetting the increase were higher selling, general and administrative expense, primarily related to payroll costs, lower inside specialty contracting workloads and changes to estimates on certain construction projects. Construction services backlog at the end of the year was a record $939 million, up 33% from 2017.

Our construction materials business also reported record revenues at $1.93 billion and earnings of $92.6 million compared to 2017 earnings of $123.4 million, which included a one-time $41.9 million tax benefit as a result of the Tax Cut and Jobs Act.

Absent one-time impacts from tax reform in 2017, earnings increased due to lower income tax rates in 2018, as well as higher aggregate and asphalt product workloads and margins.

This increase in earnings was partially offset by higher selling and general administrative expense, higher interest expense and lower ready mix margins of volumes, which was largely related to weather conditions in certain regions. Construction materials backlog at the end of the year was also a record at $706 million, up 45% from the previous year.

And now, I will turn the call over to Dave for his formal remarks..

Thank you, Jason and good afternoon everyone. Thank you for your interest in MDU resources and for taking the time to join us today to discuss our results for 2018 and for our outlook for 2019. I am pleased with our 2018 business performance.

I commend the employees of our MDU Resource companies for their strong operating performance, their expertise, innovation and overall commitment to operating with integrity, while building a strong America allowed us to provide solid operating results.

Our 2017 earnings of $1.45 per share included a one-time tax reform adjustment of $39.5 million or $0.20 per share. In comparison, our strong performance in 2018 allowed us to report earnings of $1.38.

We are very proud of our record of consistently rewarding our shareholders with a growing dividend, while also investing in our businesses to fund growth opportunities across all business lines.

Our utility companies, which represent a strong foundation of earnings and operating cash flows, had a solid year, driven by customer growth of 1.8% and higher electric sales volumes.

Our utility segment announced at the beginning of the fourth quarter that the purchase of the Thunder Spirit Wind farm expansion in Southwest North Dakota was completed. This expansion increased production capacity at the wind farm to approximately 155 MW, bringing our electric generation portfolio to now 27% renewables.

On February 5th, our Big Stone South to Ellendale joint venture transmission line was put into service. The utility invested approximately $130 million in constructing this MISO approved 345 KV transmission facility.

The utility also announced just yesterday that they are also extending natural gas service to customers in Gwinner and Milnor North Dakota. Construction to extend service to both residential and commercial customers is expected to begin this spring with completion in late 2019.

Over the next five years, our utility expects its 1.1 million customer base to grow annually by 1% to 2% and expects rate base growth of 5% compounded annually over the next five years.

Our utility remains focused on regulatory recovery for costs associated with upgrading and expanding our facilities, so we can safely meet our growing customer demand. The pipeline business performed very well throughout 2018, and completed two key expansion projects in the year that increased capacity by approximately 240 million cubic feet per day.

These two projects, in addition to the projects that were placed into service in 2017, allowed us to transport record volumes of natural gas through our pipeline system for the eighth consecutive quarter. The Company's natural gas transportation capacity now exceeds 1.8 billion cubic feet per day.

The Company also filed a rate case with the FERC in October. This pending case is in accordance with the Company's settlement agreement, which was reached in 2014 and its customers with the FERC. Looking forward, we plan construction on the Demicks Lake and Line Section 22 expansion projects, which we'll be getting this spring.

The Demicks Lake pipeline will be constructed in McKenzie County, North Dakota, and will add 175 million cubic feet per day of capacity. Line Section 22 near Billings, Montana, will add 22.5 million cubic feet per day of capacity. Both projects have long-term customer commitments and are expected to be completed in late 2019.

This business recently announced that we have plans to construct the North Bakken expansion project, here a 67 mile 20 inch natural gas pipeline that will transport natural gas from core Bakken production areas to Western North Dakota.

As designed this project would provide 200 million cubic feet per day of natural gas transportation capacity to the Company system. Depending on agreements with customers, contracts and required permitting, this $220 million project is expected to begin construction in early 2021 and to be completed later that same year.

Now, I would like to turn our attention to our construction businesses. The construction services group produced exceptional earnings growth and as you heard from Jason, ended the year with both record revenues, earnings and backlog.

The Company continues to see strong demand for its outsized specialty contracting work and saw increased workloads for electrical transmission, distribution and substation work really throughout the year.

Backlog also includes a significant amount of inside specialty work, including projects for the high-tech, manufacturing and hospitality industries. We certainly look forward to successfully executing this year on projects included in our record $939 million of backlog, while continue to focus on both cost and efficiencies.

At our construction materials business, we also had a strong finish to 2018 with record revenues and year-end backlog. While we had some areas that face short-term challenges, certain regions are performing well and we are confident in our ability to achieve long-term growth.

This business completed four acquisitions in 2018, adding to our 1 billion tons of aggregate reserves along with expanding our market coverage in Central Minnesota, the Sioux Falls South Dakota area along the general area of Portland, Oregon.

For 2019, we continue to evaluate acquisition opportunities at both our construction services and construction materials companies. We expect our construction companies to report full year revenues in the range of $3.35 billion to $3.65 billion, with margins comparable to or slightly higher than our 2018 levels.

I believe strongly that our geographic diversity and industry diversity between our companies will provide solid earnings in the future. That completes our individual business company discussion. Now, I would like to pivot and look at our overall Corporation as we are initiating our 2019 earnings guidance in the range of $1.35 to $1.55 per share.

This range, it reflects normal operating, economic and weather conditions, including precipitation in temperatures, across all our service areas and also anticipates an investment of $579 million for capital projects across all of our business lines.

Earnings from acquisitions made throughout the year would be incremental to this range and are not included in our capital forecast.

MDU Resources has performed well in 2018, and I'm optimistic that we are well positioned to produce significant long-term value as we execute on our business plans and explore potential acquisitions and organic growth opportunities. We continue to maintain a strong balance sheet, solid credit ratings and excellent liquidity position.

And for 81 years, we have continued to provide a competitive dividend to our shareholders. As always, MDU Resources is committed to operating with both integrity and a focus on safety, while creating shareholder value that’s superior as we continue to build a strong America.

I appreciate your interest in and commitment to MDU Resources, and ask now that we open the line for questions.

Operator?.

[Operator Instructions] Your first question comes from the line of Chris Ellinghaus with Williams Capital. Please go ahead..

Dave, you said construction materials had some challenges.

Could you elaborate on that a little bit?.

I'll touch on it little bit. I know we have talked earlier in the year, weather had an impact to us at the early start of the year. And I'll say some challenging economic times up in Alaska, as we saw effects from the energy industry there.

I'll hand it over to Dave Barney, though, maybe you can talk a little bit around these areas as to any particulars there that he'd have..

Dave, really hit on it, and a lot do with weather in Texas we just continue to -- we got hammered with rain there early in the year and later in the year. And weather in Minnesota, Ohio and as Dave touched on, our energy states, they are down. But that was the biggest impact of weather this year..

Are you anticipating any difficulties not knowing the weather of course being able to recapture some of that later in the year?.

Well, you saw our backlog. We have a large backlog and we need the weather to cooperate at least normal weather, so we can get out there and execute on the backlog we have. And we are hoping the weather will cooperate we will have a good year if it does..

Dave, the guidance as is typical scarce people at the beginning of the year. With the discussion of the construction businesses' revenue outlook and the potential for flat to slightly higher margins.

What would you have to see in order to achieve towards the lower end? Because the details in the guidance, which certainly suggests higher earnings for the year versus 2018.

So what things go into the lower end of the guidance that would have to happen to achieve that number?.

Chris, you are spot on so far. As we are starting this year, we noted the record backlog at both of our construction businesses. You noted to the margins being comparable to actually slightly increasing in those segments. So it is a very good starting point for the year.

More particularly to the question, though, and Dave touched on it earlier, there's always an effective weather if you would depending on how soon we can get out and get after that backlog. So that could have some variable to it as we execute on the projects.

We assume that there will be nothing material relative to any government shutdown or delays there associated with. They could have an effect on our businesses unknowing, whether it would be permitting for pipelines or DOT related from the material segment. There could be something there as well I think.

And I do want to remind you and others, we are tied to the economy. We think we've got a very good start to the year. We also have a backlog about not that we work it all off in the same year, but a strong majority of that, that's about half of what we are getting from an overall revenue perspective in our businesses.

So we still need to secure and win additional projects, which I have confidence in our team. I would point to those as couple of the elements that could drive those to the lower end of that range..

Jeff, the guidance for revenues [Technical Difficulty] is not [Technical Difficulty].

Is there labor constraints that are driving your expectations for revenues for the year?.

You bring up a good point regarding labor. And we do see pressure on available labor in most of our markets. There is always a need for more alignment. We are seeing in some of the regions we work unanswered calls from the union halls and especially in the Ohio region.

So we are looking ahead at selective opportunities that are going to fit our resources and a lot of it has to do with timing. So we are still out pursuing projects. We still have the capacity to add to our backlog. But a lot of it comes down to labor availability, resources and alignment with our client needs..

Your next question comes from the line of Paul Ridzon with KeyBanc. Please go ahead..

Can you quantify the reserve you took in the electric segment in the fourth quarter?.

Paul, was your question quantify what we reserved in the electric segment for the fourth quarter?.

Yes..

Paul, this is Jason.

Just trying to confirm, are you talking about the reserves for 2017 from a comparative standpoint?.

Maybe I misread the release, okay….

Yes, I know I missed here from this. So we saw some impacts last year as it relates to the Tax Cuts and Jobs Act. So we had some -- we took a adjustment I would say in 2017 that reflected that as we talked about in our release.

Really nothing that I would qualify as a significant reserve that we took in the fourth quarter of this year for anything at utility business are versus work through the Tax Cut and Jobs Act filings throughout the year. We certainly did see some impact, so that’s throughout the year with that. Nicole can elaborate a little bit if needed..

And then weather in the fourth quarter in construction materials, how much of a drag did that caused versus planned?.

It was a big drag compared to 2017. That was the biggest cause of the lower earnings in the fourth quarter was weather. And like I said in Texas, I don't think we got any work done in Texas in all of October and most of November. And as we said Iowa and Minnesota, it was just the early weather and it hurt us.

We still made money but though it did hurt our earnings in the fourth quarter..

And then is there any way to quantify we had another 30 day government shutdown.

What that could mean?.

I could tell you, we saw no impact from this last shutdown. We don’t feel -- we don't think it would be a large impact to our company. Most of the jobs that are in our backlog is funded. And even in the past when you look at California, they did some payment awards to get people through. So, we don't believe it will have a big impact.

It should have some type of impact when you are looking to get federal permits for jobs you already have, but we don't believe it will be a big impact. But we won't know until it happens obviously, right..

Paul, this is Dave, just maybe to expand on it. You qualified your question as a 30 day shutdown. And clearly, I think opinion wise 30 day would not have a material effect on the year.

But if it got extended beyond that then you start looking at permitting and right-of-way and federal agencies, the wild life services, the Corps of Engineers and even presiding of our other growth projects on our pipeline. So Dave touched on from a DOT funding. But if it got longer than that, it's yet to be seen.

We really haven't been in that territory. So it's unknown to us exactly how that might be played out..

And is the fact that the past, the most recent shutdown had a little impact, because it happened in January basically?.

Yes, it was in the holidays and through January. But we still have some work out there not a lot, and we really didn't see any impact. We saw bidding continue to go through that time period. And we would expect, I mean if we had a shutdown in late February, like I said, it might have a little impact.

But I don’t think it would be a big impact to our company..

And then last, I know I ask this every quarter.

But have you seen any more competitive pressures even into the savings from TCJA?.

No, our margins continue to grow. We are continuing to get price increases on our products almost all our products. And we really haven't seen any pressure at all given anything back on the taxes..

Paul, I'm going to ask Jeff to comment on services on the same question..

We are not really seeing much of an impact to either, so not materially..

Your next question comes from the line of Andrew Levi with ExodusPoint. Please go ahead..

Just a couple of follow-ups, just I want to get a better understanding of the guidance. You ended up being a bit light relative to what maybe [Technical Difficulty]. Did you build in anything for the weather up to now? I mean, I know you're only four five weeks into it.

But was January's weather a factor anyway?.

No, we would have not factored in any of January into how we are viewing 2019..

And then also in 2019, I know that you have a ramp up in capital costs regarding the construction materials business. And I guess that is for equipment. Is that correct….

Yes, some of that is I'll say normal O&M, I mean normal capital from -- keep the equipment in the fleet fresh, some of it's also taking out leases and putting them on the balance sheet instead from a lease perspective.

And we do not have any capital included in materials or services relative to any M&A activity, so it's kind of a just ongoing capital needs..

No, but if I remember correct, I think it was either in the third quarter call or in December, you've increased the CapEx for that segment?.

We did move it up some over the five year period certainly from where it had been. It had been almost at historic lows for the prior five years..

Is that a drag at all in '19 just because whether it's taking, dealing with leases or buying new equipments?.

This is Jason. Yes, you could see a little bit of that I think as you look at just from the fact that as you add more assets, you are going to have a little bit higher DD&A. Expense is flow through the income statements which could have some impact there. From a cash flow standpoint, I can help you from an expense standpoint too.

Some of the new tax reform regulations that we have all they are being able to adjust that. So it's kind of a little bit of a flip between O&M and DD&A in some cases.

So I don’t think we would have a significant impact of any sort because, if you are buying out equipment versus leasing, it's really not going to have that much impact on your bottom line..

So the ramp up in that I was wondering, if it's really '19 is a little bit of a drag and then as things get kicking in '21 that drag no better ways that's where it gets stored by top line growth or more....

No, I would say not really a huge impact on '19 based on that. I don’t see that being a huge drag forward..

Was that pension an issue in '19 at all, at a higher pension expenses?.

No, not really. We have had -- most of our pensions that we have are frozen, so I mean, we don't really have a lot of impact from ongoing.

Now, you have certainly got -- if you look at the back half of the year, we saw quite a bit of change in asset returns obviously which can have some impacts over the longer-term on, some of these plans, but spread out over quite a bit of time will just smoothing.

Discount rate adjustments going to have some impacts too, the fact that the interest rates have come down a little bit here again towards the end of the year, but no significant impact really or a driver for as I would say in 2018..

So to be honest with you, I'm kind of a little bit had a loss so I'm looking, what you earned in 2018 and your guidance your midpoint your guidance $1.45, so getting kind of back to what Chris already had talked about.

Why would there be no significant growth '19 over '18? I know what your stated growth rate is, as if you were coming out of a $1.45 versus $1.38. It doesn’t achieve the growth rate. Obviously, your $1.55 does. So, I'm just a little confused to be honest with you and so maybe you can walk us through.

How you came up with the midpoint? Why at the midpoint there would be no significant growth '19 over '18? Or is that $1.45 conservative and you would expect that towards the high end of the guidance?.

Yes, I think, Andrew, as you looked at the range there, certainly, we have a probably wider range in some of our utility brethren and out there, and we provide a range to some of our materials and services brethren and don’t provide a range at all.

So I think when you think of the range, the upper end of that range certainly provides I think a nice percentage of growth on a year-over-year basis even the midpoint of the range would be catching if you will our 5% to 8% that we talked about on a longer-term basis.

And there's some variability as I commented earlier in our business so whether it would be weather affects and how soon we get out in the field and execution of our strong backlog that we have. And so there is some variability certainly as we get out of the gate here in the first quarter, we would look to update that throughout the year.

And as we know more we will firm that up and adjust accordingly throughout the year but this is how we are starting the year and certainly I would just ask you to stay tune as we go throughout the year..

Your next question comes from the line of Vedula Murti with Avon Capital. Please go ahead..

I was wondering in terms of going through the business lines and the capital opportunities as well as potential M&A.

Can you -- I came in a little bit late, but can you -- is there -- in terms of looking at the M&A landscape across your businesses, is there anything right now you are kind of prioritizing? And given where your balance sheet is right now, can you give us a sense as to what type of capacity you feel like would be comfortable with, if you found something that match your criteria with regards to potential acquisition relative to the size of your balance sheet?.

So, as we think about each of our construction businesses, we have stated for some period of time now that we have resumed our business development teams in both services and in materials. We announced throughout last year four acquisitions in our material segment.

Those were all certainly executed last year also our business development teams are very active there. Services while we didn’t announce anything last year. we have business development teams active there and looking at those markets. On the regulated side, I would say, our focus there is more from an organic growth perspective.

We have got 5% CAGR at our utility over the next five years from a rate based investment opportunities all organic.

And then if you take a look at our pipeline group the projects that were completed last year on-time on budget whether it was Valley expansion or Line Section 27, we announced the Line Section 22 near Billings, also the Demicks Lake are nice organic growth projects and then the one we just recently announced, a very sizable project that will be a 2021 project the North Bakken expansion, which is 220 million.

So I see that is much more likely in line of say from organic growth at both the pipeline and the utility group.

And so I think the part two of your question was about balance sheet capacity here and so I'll turn that over to Jason Vollmer, and he can touch on that a little bit, I mean that’s always situational specific certainly, but just give you a sense..

Yes, certainly I can touch on that briefly. We do feel that we have got a strong balance sheet we are well positioned to experience some additional growth here and potentially look at some acquisitions as we go through the year as we did in the 2018.

So, we are being able to make some acquisitions there without significant impacts to the balance sheets or any changes to our credit ratings. We are BBB plus rated with both S&P and Fitch at this point in time.

And those targets that they look at from that perspective are typically either FFO to debt target or a debt to EBITDA type target, and we feel like we have got some room there.

I guess it's hard to quantify that it depends specific to each individual acquisition you can look at as far as what kind of additional EBITDA or FFO those acquisitions would create. But we feel like we have got some room to continue to grow and maintain the credit ratings where we are at today which we really like that stable BBB plus type rating..

So, it's just unclear, it seems like that the net focus on anything that would be outside of what's in the current capital program or that’s outside of organic within all the business lines anything that's outside of organic would be focused more towards the materials and services area this time?.

I think that's fair to say, but still at the same time, we wouldn’t dismiss opportunities that we would have, both from capital deployment both at the pipeline, along with the utility. And so, I wouldn't preclude that. I would just say, it's much more line of sight and that's what's currently included in our five-year plan..

So I am also just curious just when you take a look at the regulatory side of the business and pipelines. Valuations to some extent had been somewhat elevated and I think we've discussed this in the past.

I am kind of curious how you view that today? And kind of how are you looking at things going forward and putting that in context?.

Sure, I mean, the elevated value as some of the reason why we are probably less focused on M&A opportunities because of the challenge there to ensure that they are shareholder value created. So that poses its own set of challenges, if you well. And again, we are very focused on what's right in front of us from the organic growth opportunities set..

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

Couple of questions on the construction materials segment.

Will you be able to breakout contribution from recent acquisitions for the quarter in both backlog and in terms of the EBITDA? Was that meaningful for the Q4 performance? And is there a way to comment around how the recent acquisitions have been performing relative to expectations? And if there is any noise that is baked into your '19 guidance?.

Ryan, great questions, I'll ask Dave, maybe start with the first Dave about just how are the operations functioning and being integrated and just given, we have had one here just in the fourth quarter and then three earlier in the year..

Yes, well, on South Dakota materials, we just purchased into the fourth quarter and we are just getting them within our….

Integrated….

Integrated, yes, that is the word I was looking for -- integrated within our companies and that comes along fine. They really don't have the backlog they are materials company so there is no backlog that we would put within our $700 million number. You are not going to see any backlog there.

And the Tri-Cities, a small amount of backlog we have those integrated they are working well right now. They didn’t contribute that much to our earnings in 2018. We are looking for more of that contribution in 2019.

That answered your question?.

Is there any 2019 volatility associated with the recent acquisitions?.

Not that I know of..

Any sort of earnings..

I would see all upside..

And in terms of the EBITDA contribution from the quarter, do you know what those acquisitions collectively providing? Trying to understand what's organic versus inorganic in construction material group?.

This is Jason. I would just jump in quick. I would say, it's really hard to pull what is a lot is bolt on type acquisitions really get integrated with our operations that we have within those areas.

I would say largely as far as impacts in the fourth quarter, as Dave mentioned, Sweetman was probably the more significant acquisition that we made which was happened in the fourth quarter here. So I really didn't have a whole lot of track record behind it as we acquire that and brought it in.

And really just from an integration strategy throughout the I mean we have certainly incurred some expenses to acquire these companies as well which probably offset any additional impacts of those teams so I'll call it kind of wash on the year and certainly on the fourth quarter..

And then in terms of the M&A market going forward, are you seeing any change in pricing or terms in light of the competitive dynamics for ag or other construction material or service businesses?.

Yes, we will start with back to Dave Barney in the materials then we will move on to Jeff Thiede for services..

Ryan, our sweet spot, what fits us well is that $30 million to $60 million M&A deals, and so we're trying to stay out of the large platform deal that you're going to see the double-digit multiples.

So the multiples we're seeing are between 6 and maybe 8, we're willing to pay depending on what kind of synergies we'll get from those companies as we integrate them within our companies, but right now there's -- we're getting calls all the time.

We're working on a few as we speak right now, and hopefully we can announce some here in the next couple of months..

Jeff?.

Yes, we're seeing higher premiums and about similar multiples. Our business is similar to Knife River's, but unique.

We're continuing to evaluate companies that will add to our growth and our priorities of -- two major priorities which is adding a company that fits our culture with services that are complementary to what we currently provide, and second, looking to grow outside of our current markets and in areas that are business friendly, and areas that have diversified economies.

So we can't get more specific than that, but we can tell you we're looking to grow. We have the backing to grow. We also have the M&A team seek, evaluate and integrate additional companies into our organization..

This marks the last call for questions. [Operator Instructions] This call will be available for replay beginning at 5:00 PM Eastern Time today, through 11:59 PM Eastern Time on February 20th. The conference ID number for the replay is 7586823. Again, the conference ID number for the replay is 7586823. At this time there are no further questions.

I would now like to turn the conference back over to management for closing remarks..

Well, thank you. 2018 was certainly a solid year for all of our businesses and in which we executed well on both our strategies and our long-term way to create shareholder value. We are committed to building a strong America and being optimistic about our opportunities for 2019 and beyond.

We certainly appreciate your participation on our call today and we thank you for your continued interest in MDU Resources. With that, I'll turn it back to the operator..

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