Okay, good morning, everyone, and thank you for joining us today for the Sidoti Microcap Conference. My name is Kyle May, and I'm one of the analysts at Sidoti and Company. The next presentation will be MDU Resources, the ticker is MDU. We're pleased to have Nicole Kivisto, President and CEO, Jason Vollmer, CFO, Jeff Thiede, President and CEO of Everus, and Brent Miller, Assistant Treasurer. For those who are watching the presentation, you can submit questions using the Q&A button at the bottom of your screen. And with that, I'll turn it over to Nicole for the presentation.
All right, thank you, Kyle, and thank you, everyone, for joining us. We appreciate your interest in our company. Really exciting time at our company right now, and I'll go ahead and get us started with a formal presentation and certainly leave some time at the end for questions that you may have. So during the course of the presentation, we will make forward-looking statements, so I'll just draw your attention to this slide before we get started, and with that, we can move right into the presentation. So MDU Resources is really at an exciting point in its company history as we embark on this year, celebrating our 100th year as a corporation. And throughout that 100-years per
iod, of course, if you're going to survive and sustain over 100 years, you do evolve and adapt over time, and we are doing that just now.
So we are in the midst of a transformation within our company and a real compelling investment opportunity where we see two real investment opportunities within one ticker, MDU. So we are committed to making decisions to create shareholder value over time, and on this slide, I just draw your attention to the most recent examples of that. We expanded into our construction materials business in 1993 through our first acquisition and expanded into our construction services business in 1997. We are currently embarking on the spin of our construction services business that we have rebranded to Everus, and I'll let Jeff talk in a little more detail about that here in a minute. But taking us back in time, in 2023, we did successfully spin Knife River into its own publicly traded company traded under the ticker KNF.
So when we think about our business today, we have essentially expanded over time into these businesses, created both businesses to be a size and scale that we felt they were standalone capable, and felt that the macroeconomic environment was right to spin these businesses to stand on their own to get us back to focusing on our core and our goal of being a pure-play regulated energy delivery business. And we've done all this and continued an 86-years trend of uninterrupted dividend payments, so a continued focus on shareholder value.
As we flip to the next slide, what we see today is really two compelling investment theses within one company: the regulated energy delivery model that we believe has a very compelling story as a regulated company, diversified across eight states in supportive regulatory environments with a strong balance sheet, an experienced management team with a track record of performance. Really, as we think about our long-term guidance that we just recently released at our Investor Day, we believe that sets us apart from our peers as a regulated energy delivery company announcing 6%-8% EPS growth with a compelling story around no equity issued until 2027. We'll achieve that growth without issuing equity, and I'll get into that in a minute.
Again, as previously mentioned, the launch of our Everus spin following the successful spin of Knife River, we believe this business is ready to stand on its own. It's got a strong track record of performance. Jeff will get into that in a little more detail. They've delivered record results year after year, scaled themselves through not only acquisition but organic growth as well. On their own, they will continue to produce strong cash flow, giving them optionality to continue to grow the business on a go-forward basis. To top it all off, we believe that the time is right from a macroeconomic tailwind perspective, whether it's reshoring of manufacturing, the electrification of the economy, the data center work that's going on. They are really the right business at the right time and will continue to see strong performance as we move forward.
So if we move to the next slide here, if we think about our path to becoming pure play, this slide shares the business mix as it exists today. From an earnings and EBITDA perspective, you can see the breakdown between our regulated businesses representing 55% of our earnings today and construction services or future Everus at 45%. The business models are quite different. As we think about the far right of the slide, capital-intensive nature of a regulated energy delivery business and less capital-intensive on the construction side of the business. When we think about our future state, the bottom circles demonstrate the contribution from our utility relative to the contribution from our regulated pipeline on a go-forward basis. Moving ahead to the next slide, Brent.
When I talk about focusing on our core and bringing us back to the core of where we started 100 years ago, we are continuing to focus and always have, but highlighting it more prevalent for the investment community as well as our employees. What do we mean by focusing on our core? C is customers and community. O, operational excellence. R, returns focused. And E, employee-driven. So just highlighting a couple of areas within each of these, certainly from a customer perspective, we want to continue to receive best-in-class customer satisfaction at competitive rates and have reliable service. From an operational excellence perspective, our approach to operating safely, keeping a keen focus on operating costs and an allocation of capital while being an environmental steward to the environment and the communities in which we operate. Returns focused, of course, attractive and earnings rate-based growth.
We've had a historic track record of delivering there, and we believe that sets us up to have compelling long-term guidance on a go-forward basis that we believe is achievable based on our history of achieving that in the past. We continue to focus on ROE enhancement to deliver strong shareholder returns. Then lastly, our employees are really driving this success for us, so we need to continue to focus on our employees' retention and recruitment as we move forward. The compelling investment thesis for our regulated energy delivery company is really noted here. We believe we have a strong regulated business mix.
As we think about ourselves following the spin of Everus, we will have 100% primarily regulated cash flow contribution driven by cash flow, 72% utility, 28% pipeline driven, diversification in terms of our operational footprint, serving eight states and 13 jurisdictions with a 55%-45% split on rate base. Then our pipeline operates across five states and transports over 50% of the gas produced in the Bakken. Supportive regulatory environment is obviously key to our success as we move forward. We have that across our state footprint, but 25% of our rate base is FERC regulated. Why we highlight that is when we think about FERC-regulated assets, those are generally at a higher ROE. So we believe we got attractive ROEs on the FERC side of the business and generally minimal regulatory lag on the FERC side.
Very strong balance sheet as we think about ourselves as a standalone basis, pure play business with minimal equity needs, and we've highlighted that no near-term equity needs through 2027. So growing the business with a starting point of a very strong balance sheet. And then an experienced management team. We have a management team that has a solid track record of delivering, and that gives us confidence as we move to the future. So just diving a little bit deeper into our overall footprint on the regulated side of our business, here is our utility footprint serving 1.2 million customers, again, across those eight states through 1,500 dedicated employees across the footprint. When we think about our utility, the way we would describe it from a Rate Base and customer perspective is our three biggest states are North Dakota, Idaho, and Washington.
You can see that laid out here. We believe that is a positive as we think about the regulatory environments of those three states in particular. North Dakota on the electric side of the business is a pretty significant state for us, and we do see favorable regulatory mechanisms within that state such as interim rate relief, forecasted test period, and tracker mechanisms. Moving to the next slide, we highlight our pipeline overall footprint. As you can see here, one of the strategic advantages of our pipeline is that it does overlay the Bakken. We believe there is significant opportunity as we think forward on the takeaway capacity out of the Bakken, growth projects that are customer-driven benefit our pipeline and our overall investor. In addition to that, we believe these businesses, our pipeline and our utility, strategically fit very well together.
The pipeline transports 84% of Montana- Dakota's natural gas. Then, of course, WBI has the largest storage field in North America, which provides benefits to our gas LDC customers having access to the low cost of natural gas. In terms of the breakdown of our rate base, you can see here our total rate base is represented at $4.1 billion, with 80% of that being utility, 20% of that being our pipeline business. As previously mentioned, state versus FERC-regulated, 25% of that overall rate base is FERC-regulated, again, with a higher ROE and minimal lag. So again, the punchline really on this slide is we see diversification of our rate base over 14 jurisdictions and eight states. Back to my previous comments on a history of growth, which sets us up for future long-term success.
Really, we have grown our rate base on a combined basis at 8% between these two businesses, with the utility growing at 7% over the prior five years and the pipeline growing at 16%. This is driven by customer growth, system expansions, as well as system enhancements and capacity additions. That rate base growth then has delivered exceptional earnings growth over that same time period with our compound growth rate at 8% on a combined basis, 7% delivered at the utility, and 11% at our pipeline. So where's that earnings growth historically coming from? Clearly, the previous slide, some of that is coming from our ability to grow rate base over that time period. But certainly, our customer growth is also important. We're growing higher than the national average at 1.6% from a customer perspective. And then we've seen data center growth being an adder.
In 2023, we welcomed our largest ever electric customer, which was a data center that we serve in North Dakota here. We have filed for an expansion at that data center, and we have that currently in front of the North Dakota Public Service Commission. Our pipeline transportation capacity over this time period has grown at 6.6% compounded annually. We've seen significant historic growth, which sets us up well for the future. As we think about looking at the FERC side of the business specifically, I wanted to dive a little deeper into this where we think about our pipeline FERC-regulated only and then our utility mostly state-regulated, with 5% of that being FERC-regulated.
So at our pipeline, the thing to highlight there on the FERC side is we do have, and again, a 60% equity layer, which means we are able to earn on a higher equity layer at our pipeline in terms of overall return. And then at the utility, what's driving that FERC-regulated rate base? It really is our opportunity to participate in MISO value-added projects. So we have our first project that we did was our Big Stone South to Ellendale transmission project. The benefit of these projects, again, is they garner a larger return, and the cost is shared among all of the MISO region. And so it has certainly a lower impact to our overall customer base. We have an opportunity within our five-years forecast to participate in yet another one of those projects as part of MISO's tranche one opportunity.
We can talk about that in a little more detail. Generally, as you can see, the authorized ROE on these projects is in that 10.52%, somewhat higher than what we receive on a state-regulated basis. Electric rate base breakdown here, as I mentioned earlier, you can see North Dakota is certainly a significant share of the overall pie here. Our current allowed ROE in the state of North Dakota is at 9.75%. Our last case there was filed in 2022. This just highlights the diversification of our overall business mix, but also highlights North Dakota as our biggest state on the electric side, as I previously discussed. On the gas side of the business, you can see the breakdown here. I had highlighted Washington and Idaho earlier. We currently have a case that was just filed in the state of Washington.
It's a multi-year case, and we will continue to work with the state on implementation of that multi-year rate case filing. Our last case in the state of Idaho was filed in 2022, and we are receiving a 9.5% return on our rate base in that state. Switching gears to WBI, we are continuing to grow that business, certainly in a significant way. One of the things that we want to highlight is we have exited all gathering and processing services as of 2020. As part of a strategic review, that really is highlighted here in this slide where you can see that that has increased the stability of this business. We have not only increased the stability of the business, but we've continued to drive revenue increases on a FERC-regulated transportation and storage revenue basis that provide low-risk, stable returns back to our investors.
Next slide kind of continues this theme here in terms of really where we're headed with WBI that I would highlight the fixed versus variable revenue mix where we historically have been at 50/50. And now in 2023, our fixed revenue is driving 80% of the business. So again, increasing the stability from a regulated energy delivery perspective. I will now turn the presentation over to Jeff. In summary, on the regulated energy delivery side, solid history of performance and really compelling long-term targets as we move forward. And turn it over to Jeff to talk about why now is the time to spin Everus and the really exciting opportunities in front of us for Everus. So Jeff, take it over.
Thank you, Nicole. At our investor day, the New York Stock Exchange in March, we announced changing our name from MDU Construction Services Group to Everus Construction Group. This new brand helps us separate from MDU as we prepare to be spun off as a separately publicly traded company later this year. I'm going to go very high level here today. We will have much more detail about our financial metrics and strategy at our investor event later this year. We've got a new name, and we're going to become our own standalone company. We're going to still be the outstanding business we are today. We remain one of the top 10 largest specialty construction services contractors in the country. We've got over 9,000 people at peak. Most of them are direct labor.
We're very focused on our field operations and, of course, our management and leadership support as well. On the next slide, we'll talk about our two segments that we go to market. And that is, one, electrical and mechanical, which includes construction and maintenance of electrical and communication wiring and infrastructure, fire suppression systems and mechanical, plumbing, piping, HVAC. If you think about the Las Vegas Strip, our operating companies have completed the inside electrical wiring and communications lines and HVAC systems, fire suppression systems, and even solar panel installations within and around the majority of the hotels and attractions. We're also experts in performing work within data centers, semiconductor manufacturing, healthcare, education facilities. We've got significant success with long-term master service agreements in our E&M segment. Our transmission and distribution segment involves constructing and maintaining overhead and underground electrical, natural gas, and communications infrastructure.
We also manufacture and sell or rent specialty power line construction equipment and tools. In simple terms, the vast majority of our T&D work is for utility companies that are longstanding customers, some relationships we've had for over 25 years. We perform work like building power lines and other energy and communication infrastructure. We build large-scale transmission lines. We convert overhead power lines to underground lines and install gas services. A recent example of the type of project we're involved in is the power line restoration and repair following the massive storms and floods that California had earlier this year. We were able to respond to our utility customers to restore these essential services and these must-have energy and communication services for communities and businesses. On the next slide, you can see that we have had significant historical growth.
We've got record performance in the last six of the past seven years and a compound annual growth rate of 17% over the past five years. Our 2024 EBITDA forecast, you can see, is from $220 million - $240 million, and our revenue guidance is between $2.9 billion and $3.1 billion. Our return on invested capital at the end of 2023 was 22%. This demonstrates our financial discipline and strong performance. As we report at the end of Q1 this year, our backlog is at record level, and we had a record Q1 earnings for the company. This, again, demonstrates our continued consistent high demand for our services, these essential services that we provide across the country. We expect our growth to continue with significant project opportunities on the horizon and the ability to be able to be more strategically focused on growing our business as a standalone company.
We will accomplish our goals mostly through organic growth, and we'll also look for these strategic acquisitions. On the next slide, you'll see that we are a people-first business. We're not a high-capital-intensive business. As you can see, our CapEx has historically been below 2% of our revenue, and we expect that to continue in the future. This is going to allow us to reinvest our cash flow directly into growing our business and ensuring that we've got the highest quality team, our people, equipment, tools, technology, and resources to pursue our project opportunities. In addition, with a strong balance sheet, we'll have optionality for strategic acquisitions to complement and support our growth strategy. The next slide shows our forever strategy. It starts with our employees. And this part of our strategy is going to be about recruiting, engaging, training, developing, and rewarding for performance our team members.
Value is going to contain all of our financial metrics, creating value for our shareholders and our team members and our other stakeholders. Our execution is how we work. All of our operational initiatives will be contained in this part of our strategy. This will further exemplify that safety and productivity go hand in hand. It's about doing the job every day, focusing on the field, and focusing on repeat business with our customers, which is the R, relationships, our stakeholders' satisfaction, building connections with our key stakeholders, leveraging our performance, and being able to earn repeat business with these customers. I really am looking forward to talking more about our strategy and our financial metrics during our investor and analyst event later this year. Let me go to the next slide.
As we look forward and we see so many opportunities continue our record performance and growth, we're an essential services provider. Businesses and communities need our services, electrical wiring, power line construction, and other services we provide in order to function in their daily lives. Take a look at these federal and local entities and funding that's coming to our customers through the IIJA, the IRA, and the CHIPS Act. This is going to provide, in addition to the work we have, it's going to provide additional tailwinds on a macroeconomic level for our company. You want to go to the next slide? Oh, there we go. So I'll turn it over to Jason.
No, I appreciate it. And Kyle, I know we've got a lot of information on our slide. It's posted on our website later on. So if folks want to peruse the rest of the deck and there's more information there, we can do that. But we'd love to take a few questions here with the time that we have left.
Yeah, absolutely. Great overview. Really appreciate that. We have a number of questions that are already coming in. Anybody else who's listening in, feel free to submit more questions to the Q&A, and we'll try and get through as many as we can. Maybe one to start us off. How are you thinking about strategic growth or partnering within the core business once Everus is spun off?
Yeah. So I actually am looking at the Q&A in front of me right now, trying to figure out how we get all of these questions answered, Kyle. But I'll start with that one. I think we kind of covered that in my talking points, and so maybe it was asked right before we covered it. But basically, I see our ability to lean in near-term to organic growth. We've got plenty of $2.7 billion of investment opportunity across our regulated energy delivery business. An ability to generate earnings, EPS growth over the past gives us confidence on our long-term target in the future. So I believe we've got plenty of organic growth opportunity, not only at our utility business, but customer-driven demand growth at our pipeline business as well. And we continue to pursue that. So that's how I would respond to that question.
Anything you would add there, Jason?
No, I think that's perfectly fine. We can follow up from there if anybody has other questions. But let's go on to the next one.
Yep.
Great. And maybe looking more a little closely at the spend. So you submitted the Form 10 for Everus to the regulators. How's the feedback been, and are you able to disclose any more specifics around the timeframe?
Yeah.
Jason, you want to take that?
Yeah. Made our initial filing of the Form 10 to the SEC earlier, well, just in the first quarter here, and had a public announcement when we did that. So that's a confidential filing to start. We've been working with the SEC on that. This really is going to be the foundational document for a new organization. That'll be something that'll be made public later in the process, closer to the spin date. There'll be a few iterations as we work back and forth with the SEC on that front. But feedback so far from the SEC side of things has been, I think, very cooperative as we work through just really setting up that initial document. So far, so good. We feel like we're very much on track to complete our spin of the Everus business later this year.
Right now, we're targeting late 2024, which would, I guess, from that perspective, you could think fourth quarter most likely. So far, with where we're at, no changes to that timeline. We're right on track.
Okay. Great. Maybe looking at a different topic. So as we're thinking about the Infrastructure Investment and Jobs Act and the Inflation Reduction Act, can you share any contributions that you're seeing thus far with infrastructure spending from those bills?
Yes. Transportation. If you take a look at one of the projects we just finished, the Kansas City Airport, beautiful project. We're very proud of our team. We executed that project very successfully. And then also, we're working at the Portland International Airport. You look at the CHIPS Act, the CHIPS Act is going to provide funding to one of our major customers with whom we've had a nearly 30-years relationship with. We are serving this customer in the semiconductor manufacturing space in two regions and looking for a third region. And renewables. We've expanded our footprint in renewables. We've been primarily in the Pacific Northwest and in the Southwest, but our most recent growth in that market has been in the Midwest.
We're looking at this funding and seeing how it aligns with our expertise to be able to build upon our growth and continue our success and provide that great return for our investors.
Great. And are you seeing any difference between the federal and state level for infrastructure demand?
It's pretty consistent. And sometimes, we don't know where the funding is coming from, whether the CHIPS funding actually got to our customers. But we're way involved in these projects much earlier than normal competitors are. And we're trying to align and position ourselves so we can get selected for price, of course, and non-price, then that's our expertise of our people. So we have some states that have their own CHIPS Act to be able to support the growth in some of these factories that we are operating in, in two of the regions that we serve. So we're seeing some consistency there, but mostly driven from what we're all reading about and hearing about at the federal level.
I think I would just add on that front too, Kyle. I mean, the Everus business has got a diverse customer set here, right? And even beyond the federal and state funding packages that are out there, there's just a lot of consistent demand, whether it be utility capital expenditures on the T&D side or whether it be, as an example, large technology companies just continuing to spend to grow their suite of products and maybe invest in the hyperscaling and AI future that we all see as pretty positive right now. So it's not necessarily a business that's dependent on federal or state-level funding, but certainly has some tailwinds that helps the business and creates more demand.
Great. I think we have time for one more. Can you discuss the current labor environment, including availability, pricing, rates, and any regional differences?
At Everus, we're seeing some pressure, of course, on increase in labor. The advantage for us being involved early on these projects is we are involved in labor negotiations at the local and regional level, but we're also updating our pricing and capturing these increased costs within our MSAs and also our medium and large-sized projects. So the labor is a challenge, having capable labor on our projects. But because we treat our people with a high degree of respect to the individual, we value safety like a lot of our competitors do. But we are able to attract, retain, and train and reward for performance the highest caliber people in the industry.
Well, I think we're out of time for today, but really appreciate you joining us. Thank you for everybody at MDU for the time this morning. It was a great overview. If you have any follow-up questions, please feel free to reach out to the company. I'm sure they'll be happy to answer any additional questions we didn't get to.
Thank you, everyone. Appreciate your interest. Thank you.