The Company is an essential services provider, and its strategy is to enhance
shareholder value by increasing market share and profitability in its regulated
energy delivery and construction materials and services businesses, and through
organic growth opportunities and a disciplined approach to strategic
acquisitions of well-managed companies and properties.
The Company operates a two-platform business model. Its regulated energy
delivery platform and its construction materials and services platform are each
comprised of different operating segments. Some of these segments experience
seasonality related to the industries in which they operate. The two-platform
approach helps balance this seasonality and the risk associated with each type
of industry. Through its regulated energy delivery platform, the Company
provides electric and natural gas services to customers; generates, transmits
and distributes electricity; and provides natural gas transportation, storage
and gathering services. These businesses are regulated by state public service
commissions and/or the FERC. The construction materials and services platform
provides construction services to a variety of industries, including commercial,
industrial and governmental, and provides construction materials through
aggregate mining and marketing of related products, such as ready-mixed concrete
and asphalt.
The Company is organized into five reportable business segments. These business
segments include: electric, natural gas distribution, pipeline, construction
materials and contracting, and construction services. The Company's business
segments are determined based on the Company's method of internal reporting,
which generally segregates the strategic business units based on differences in
products, services and regulation. The internal reporting of these segments is
defined based on the reporting and review process used by the Company's chief
executive officer.
The Company anticipates that all of the funds required for capital expenditures
for 2020 will be met from various sources, including internally generated funds;
credit facilities and commercial paper of the Company's subsidiaries, as
described later; and issuance of debt and equity securities if necessary.
For more information on the Company's capital expenditures, see Liquidity and
Capital Commitments.
Impact of the COVID-19 Pandemic on the Company
In March 2020, the World Health Organization declared the outbreak of COVID-19 a
pandemic, and the President of the United States declared the COVID-19 outbreak
as a national emergency. Most of the Company's products and services are
considered essential to our country and our communities; therefore, operations
have generally been permitted to continue. For more information on specific
impacts to each of the Company's business segments, see the respective Outlook
sections. The Company has been able to maintain employment for most of its
workforce and remains committed to the health and safety of its employees and
the communities where it operates. The MDU Resources Group Foundation also
accelerated and provided additional donations to charitable organizations
impacted by COVID-19 in the communities in which the Company operates.
In March 2020, the President of the United States signed into law the CARES Act
in response to the COVID-19 pandemic. The CARES Act provides approximately $2.3
trillion of economic relief and stimulus to support the national economy during
the pandemic including support for individuals and businesses affected by the
pandemic and economic downturn. The Company did not apply for, nor receive, any
loans through the programs made available as a result of the CARES Act. The
Company evaluated the provisions of the CARES Act and does not expect the
provisions to have a material effect on the Company's financial position or
liquidity.
The Company is adjusting its business in response to the pandemic while
positioning for an economic rebound and potential opportunities to enhance its
competitive position. The Company's business strategy incorporates preparation
for unexpected economic adversity, which includes maintaining a strong liquidity
position to weather a variety of economic scenarios, a strong balance sheet with
conservative debt leverage and financial flexibility to access diverse sources
of capital. For more information on the Company's liquidity, see Liquidity and
Capital Commitments. In addition, the Company is evaluating its planned capital
projects to identify potential expenditures for delay due to the economic
environment and to ensure projects will provide acceptable returns on
investment.
The Company established a task force to monitor developments related to the
pandemic and has implemented procedures consistent with both the CDC and state
health departments to protect employees. Procedures are established to promptly
notify employees, contractors and customers when individuals may have been
exposed to COVID-19 and need to be tested or self-quarantined due to potential
contact. Additionally, the Company has modified its work practices to include
social distancing measures and hygiene practices. Many employees that have the
capacity to do so are currently working from home. The Company has enacted
additional physical and cybersecurity measures to safeguard systems for remote
work locations.
Although there have been logistical and other challenges to date, there were no
material adverse impacts on the Company's first quarter 2020 results of
operations. Customer demand remains strong at the construction companies, as
evidenced by backlog levels at March 31, 2020. The situation surrounding
COVID-19 remains fluid and the potential for a material impact on the Company
increases the longer the virus impacts the level of economic activity in the
United States. There is a great deal of uncertainty around the overall economic
outlook due to the COVID-19 pandemic, and the Company is monitoring the
situation closely. For more information on the possible impacts, see Item 1A.
Risk Factors.

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