8-K: Everus Construction Group Spin-Off from MDU Resources Approved, Trading to Commence Soon

Everus Construction Group, a wholly-owned subsidiary of MDU Resources, is set to become an independent public company following the effectiveness of its Form 10 registration statement and planned distribution of shares to MDU Resources stockholders.

Summary

• Everus Construction Group, Inc. is being spun off from MDU Resources Group, Inc.
• The spin-off was approved on October 17, 2024, with the registration statement on Form 10 being declared effective.
• MDU Resources stockholders will receive one share of Everus common stock for every four shares of MDU Resources common stock held.
• The record date for the distribution is October 21, 2024.
• The distribution is expected to occur on October 31, 2024, at 11:59 p.m. Eastern time.
• Everus common stock is expected to begin trading on a when-issued basis on the New York Stock Exchange (NYSE) under the ticker symbol ECG WI on October 28, 2024.
• Regular-way trading of Everus common stock on the NYSE under the ticker symbol ECG is expected to begin on November 1, 2024.
• MDU Resources will continue to trade on the NYSE under the symbol MDU.
• The separation is intended to be generally tax-free to MDU Resources stockholders for U.S. federal income tax purposes, except with respect to any cash received in lieu of fractional shares.
• Everus has a successful track record of growth, with more than 25 acquisitions since 1997.
• Everus currently has approximately 7,600 employees and is authorized to work in more than 40 states and the District of Columbia.
• Everus had a 2023 backlog of $2.01 billion and revenue of $2.85 billion.
• Everus EBITDA was $222.6 million in 2023.

Sentiment

Score: 8

Explanation: The document is generally positive, highlighting the strategic benefits of the spin-off and Everus's strong market position and growth prospects. While it acknowledges risks, the overall tone is optimistic and forward-looking.

Positives

• The spin-off will allow Everus to focus exclusively on its construction services business.
• Everus will have enhanced ability to align resource and capital allocation decisions to its focused business strategy.
• The separation will give MDU Resources stockholders equity ownership in both MDU Resources and Everus.
• The separation is intended to qualify as generally tax-free to MDU Resources stockholders for U.S. federal income tax purposes.
• Everus has a successful track record of growth and has made more than 25 acquisitions since 1997.
• Everus is poised to benefit from significant investments at the federal and local levels in infrastructure development and upgrades.

Negatives

• The document mentions potential concerns when evaluating the separation, including risks associated with creating a new public company, possible cost increases and one-time separation costs.
• There can be no assurance of the ultimate timing of the distribution or that the distribution will be completed.

Risks

• Actual results may differ materially from the projected results expressed in the forward-looking statements.
• There can be no assurance of the ultimate timing of the distribution or that the distribution will be completed.
• The document includes a cautionary note on forward-looking statements, indicating that actual results may differ materially from projections.
• The document mentions risks associated with creating a new public company, possible cost increases and one-time separation costs.

Future Outlook

The document includes forward-looking statements about the planned separation, distribution of Everus common stock, and the future state of Everus, but notes that actual results may differ materially.

Management Comments

• MDU Resources board of directors believes that separating Everus Construction from our remaining businesses is in the best interest of MDU Resources and our stockholders.
• The separation will allow us to achieve our previously stated goal of transforming MDU Resources into a pure-play regulated energy delivery business.
• The separation will create two publicly traded companies, MDU Resources and Everus, both with proven long-term strategies, sufficient scale and financial strength, that will be well-positioned to lead in their industries.
• Our stockholder value proposition is simple: provide outstanding returns to our stockholders by maintaining a leading position in the construction services industry, investing in the growth of Everus and generating strong cash flows.

Industry Context

The spin-off is part of a broader trend of companies focusing on core businesses and unlocking value through separation. The construction services industry is highly fragmented, and Everus is positioning itself to capitalize on growth opportunities in infrastructure development and upgrades.

Comparison to Industry Standards

• Everus ranks as the 10th largest specialty contractor in the United States according to the Engineering News-Record.
• The document notes that the markets for E&M and T&D services are rapidly expanding, with total construction spending growing from $1.65 trillion in 2021 to $1.98 trillion in 2023, at a CAGR of 9.7%.
• The document notes that the E&M market is highly fragmented with the top 50 contractors holding only a 35% and 20% share of the electrical and mechanical construction services markets, respectively.

Stakeholder Impact

• MDU Resources stockholders will receive shares of Everus common stock, giving them ownership in two separate public companies.
• Employees of Everus will transition to the new company, with potential changes in compensation and benefits.
• Customers of Everus will continue to receive services from the newly independent company.
• The separation will allow investors to separately value MDU Resources and Everus based on each companys unique investment identities.

Next Steps

• Everus common stock is expected to commence trading on a when-issued basis on October 28, 2024.
• Regular-way trading of Everus common stock is expected to commence on November 1, 2024.
• MDU Resources stockholders will receive their shares of Everus common stock on October 31, 2024.

Key Dates

Keywords

spin-off, construction, MDU Resources, Everus Construction Group, distribution, NYSE, stock, trading, infrastructure, capital markets