MDU Resources' (MDU) Another Acquisition To Expand Business
Zacks Investment Research | Feb 17, 2020 10:06PM ET
MDU Resources Group, Inc. (NYSE:MDU) recently announced that it has acquired the assets of Washington-based Oldcastle Infrastructure Spokane (“Spokane”) — a precast and prestressed concrete component producer.
This acquisition will expand the operational area of the Knife River Corporation, which is a construction materials subsidiary of the company. Along with Oregon, Alaska and the growing Pacific Northwest, Knife River will now operate in the markets of Washington, Idaho and Oregon where Spokane has operations.
Acquisition Strategy
The company generally maintains a consistent and disciplined approach toward acquisitions to maintain steady performance. Its Construction Materials business continues to successfully acquire businesses to expand aggregate reserves and market coverage across the western half of the nation.
Since April 2018, the company has completed many acquisitions to expand the operation of Knife River. In 2019, the Construction Materials and Contracting segment generated $2.19 billion revenues compared with $1.93 billion in 2018. Moreover, at the end of 2019, it had a backlog of $693 million that indicates high number of projects in hand based on customer demand.
For 2020, the company expects the construction materials revenues in the band of $2.2-$2.4 billion. We expect the acquisitions and increasing backlogs to further boost earnings and revenues.
What Lies Ahead?
MDU Resources believes that overall economic growth and infrastructure spending will drive demand for construction materials and services. To achieve the growth, the company plans to invest $2,926 million through 2020-2024.
For 2020, the company will continue to evaluate additional acquisition opportunities. It anticipates to successfully execute on projects that are in backlog. These investments and business expansions through acquisitions are likely to boost the Construction Materials business and will increase reliability of services.
Zacks Rank & Price Performance
MDU Resources currently sports a Zacks Rank #1 (Strong Buy). You can see Zacks Investment Research
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