Aggregate Reserves and Production - Knife River Corporation has 1.3 billion tons of aggregate reserves, with approximately 35% expected to be used internally by 2025 for downstream products and contracting services [19]. - The total annual aggregate production for 2025 was 27.7 million tons, with a breakdown of 10.6 million tons of crushed stone and 17.1 million tons of sand and gravel [205]. - The total aggregate reserves as of December 31, 2025, include 716,970 thousand tons of crushed stone and 440,362 thousand tons of sand and gravel [208]. - As of December 31, 2025, the company has total proven and probable reserves of 1.20 billion tons located on production stage properties and 104 million tons on developmental stage properties [212]. - Aggregate resources as of December 31, 2025, include 194,494 thousand tons of measured aggregate and 382,246 thousand tons of indicated aggregate [210]. - The estimated useful life of owned reserves is approximately 43 years based on the three-year average production from 2023 to 2025 [214]. - Knife River's aggregate sites contain both proven and probable mineral reserves, which are essential for construction and production of ready-mix concrete and asphalt [193][194][195]. Revenue and Financial Performance - The company operates 208 active aggregate sites, 135 ready-mix plants, and 55 asphalt plants across 14 states, generating total revenue of $3,196.9 million for the year ended December 31, 2025 [27]. - For the year ended December 31, 2025, Knife River sold 32.5 million tons of aggregates, with total revenue from contracting services amounting to $1,383.9 million, representing 36.6% of total gross revenue [45][46]. - The company's revenue composition includes 63% from construction materials and 37% from contracting services, with public-sector services accounting for 81% of total revenue [27]. - Knife River's core product lines generated total gross revenue of $3,777.2 million, with a total gross profit margin of 18.4% for the year ended December 31, 2025 [45]. - The company incurred $4.4 million and $3.1 million in capital expenditures related to environmental compliance in 2025 and 2024, respectively, and expects to incur $8.6 million in 2026, $6.8 million in 2027, and $9.8 million in 2028 [85]. - The company had $1,181.1 million in aggregate principal amount of indebtedness as of December 31, 2025, which could impact cash flow and operations [158]. Business Operations and Strategy - The acquisition of Strata Corporation on March 7, 2025, added approximately 30 years of aggregate reserves and 24 ready-mix plants for a purchase price of $454.0 million [23]. - Knife River's Adjusted EBITDA margin has improved since the implementation of the EDGE strategy in 2023, alongside the completion of 11 acquisitions [32]. - The reorganization of business segments in January 2025 resulted in four reportable segments: West, Mountain, Central, and Energy Services, enhancing operational efficiency [24][25]. - The company emphasizes a disciplined allocation of capital to support long-term profitable growth and value creation in a highly fragmented construction materials industry [34]. - The company is strategically focused on mid-size, higher-growth markets, leveraging its vertically integrated business model to drive long-term growth [29]. - The company operates across 135 owned properties, with 132 active sites, and 78 leased properties, of which 76 are active [214]. Employee and Workforce Management - The company employed 5,298 people as of December 31, 2025, with nearly 6,900 employees at peak construction season [67]. - The average tenure of employees in managerial or supervisory positions is 15 years, indicating strong employee retention [66]. - Approximately 11% of the workforce is covered by collective bargaining agreements, which could lead to additional costs if negotiations are unsuccessful [144]. - The company has a risk management program that includes a dedicated cybersecurity team with over 30 years of combined experience in information technology [190]. Environmental and Regulatory Compliance - The company is subject to comprehensive environmental permit requirements that vary widely by state, with some areas having minimal requirements while others have demanding regulations [84]. - The company is subject to environmental regulations that may increase operational costs and expose it to potential liabilities [130]. - The "I Choose Safety" initiative was launched in 2025 to strengthen the company's safety program, emphasizing that all injuries are preventable [76][78]. - The company faces challenges in securing, permitting, and economically mining strategically located aggregate reserves due to regulatory requirements and community resistance [93]. - The company may incur significant costs related to compliance with cybersecurity regulations, which could divert management's attention and resources [108]. Market and Economic Conditions - Economic volatility can negatively affect demand for construction materials and contracting services, impacting the company's earnings [126]. - Government spending on infrastructure projects is critical for the company's revenue, and any reductions in funding could limit available projects and decrease sales [123]. - Seasonal weather conditions significantly impact the company's operations, with adverse weather potentially delaying construction projects and affecting revenue [117]. - Fluctuations in commodity prices, particularly for labor and energy-related products, have led to elevated costs that could negatively impact the company's financial results [118]. - Supply chain disruptions, including delays and shortages, may adversely affect the company's operations and customer relationships [120]. Risks and Challenges - The company faces significant competition in the construction materials industry, which could lead to lower prices and negatively affect financial condition and results of operations [90]. - The company has a risk of loss from nonpayment and/or nonperformance by customers, particularly in a recessionary construction economy [94]. - The company is exposed to potential liabilities from acquired businesses, including environmental liabilities and compliance issues [100]. - The introduction of artificial intelligence tools may pose security risks to confidential information and proprietary data, potentially harming the company's reputation and operations [111]. - The company faces challenges in protecting its intellectual property, which could lead to a loss of competitive advantage and increased litigation costs [112]. - Severe weather events and climate change could disrupt operations and delay projects, leading to decreased revenue and increased costs [132]. - The company may face increased insurance costs and availability issues due to the impact of severe weather events on the insurance industry [134]. - Stakeholder scrutiny regarding sustainability practices could adversely impact operations and access to capital [136]. - Increased regulatory requirements related to climate change may lead to higher operational costs and disruptions [137]. - Compliance with new climate or GHG emission laws could result in increased costs for energy, production, and transportation [138]. - The economic health of communities may be negatively affected by rising energy costs due to climate-related regulations [139]. - Reputational risks associated with GHG emissions could lead to a decrease in stock price and difficulties in accessing capital [140]. - Changes in tax laws could adversely affect earnings and customer costs, potentially increasing the effective income tax rate [141]. - Competition for skilled labor may lead to increased labor expenses and decreased productivity [142]. - The trading price of Knife River's common stock has been volatile, which may lead to significant price variations [163]. - Knife River's stock price may be influenced by analysts' reports, and any unfavorable research could lead to a decline in stock price [166].

Core Insights - Knife River entered 2026 with a record backlog of approximately $1 billion, up 38% from the previous year, with about 90% tied to public work [2] - The company reported a strong fourth quarter in 2025, achieving a 47% increase in adjusted EBITDA and a gross margin of nearly 19%, driven by cost controls and favorable weather [4][6] - Management emphasized a favorable infrastructure environment, with healthy DOT budgets and significant IIJA funding remaining to be disbursed [3] Backlog and Project Focus - The backlog consists mainly of lower-risk public paving projects with contract values under $5 million, while private opportunities are emerging in data centers and manufacturing facilities [2] - The geographic mix of backlog has shifted towards the Mountain and Central regions, with Oregon experiencing softness [1] Segment Performance - In the West, profitability was driven by legacy Pacific operations despite a softer economy in Oregon, with significant projects in California and Hawaii [7] - The Mountain segment saw a nearly 20% increase in construction revenue year-over-year, with improved asphalt and ready-mix margins [8] - The Central segment was pivotal in 2025, with successful acquisitions and major contracting projects, including a $112 million project in Texas [9] - The Energy Services segment remains margin accretive, focusing on operational improvements and higher-margin products [10] Financial Performance and Guidance - Knife River's adjusted EBITDA grew 7% to $497 million in 2025, marking a company record [5] - For 2026, management guided consolidated revenue of $3.3 billion to $3.5 billion and adjusted EBITDA of $520 million to $560 million, implying an adjusted EBITDA margin of about 16% [15] - The company invested $789 million in growth initiatives in 2025, with expectations for maintenance and improvement capex to remain between 5% and 7% of revenue in 2026 [13][14] Pricing and Cost Management - Dynamic pricing strategies led to a 9% improvement in aggregates pricing in 2025, with expectations to continue optimizing pricing in 2026 [11] - The company anticipates mid-single-digit volume growth and pricing increases in aggregates for 2026, along with margin expansion [18]

Financial Data and Key Metrics Changes - In 2025, the company achieved a record Adjusted EBITDA of $497 million, representing a 7% increase year-over-year [4] - The fourth quarter saw a 47% increase in Adjusted EBITDA and a 340 basis point improvement in Adjusted EBITDA margin [18] - Gross profit for the fourth quarter increased by 27%, achieving a record gross margin of nearly 19% [18] Business Line Data and Key Metrics Changes - Aggregates volumes increased by 17% in the fourth quarter, with pricing up by 8% [18] - Ready Mix volumes rose by 20% in the fourth quarter, with gross margin lifting by 230 basis points [20] - Contracting services revenue grew by 15%, with the Mountain region experiencing nearly 20% growth [22] Market Data and Key Metrics Changes - The company entered 2026 with a record backlog of $1 billion, a 38% increase from the previous year [11] - Approximately 46% of IIJA funding remains to be disbursed across the company's 14 states, indicating strong public budgets [11] - The company anticipates continued growth in states with higher infrastructure spending, particularly in California, Alaska, and Hawaii [12] Company Strategy and Development Direction - The company focuses on four growth components: market positioning, vertical integration, self-help initiatives, and a strong corporate culture [6] - The acquisition program ramped up in 2025, with five deals completed and expectations for continued activity in 2026 [4][7] - The company aims to enhance margins through continuous improvement and operational excellence initiatives [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's position for growth, citing favorable market conditions and strong infrastructure funding [5][11] - The company expects consolidated revenue for 2026 to be between $3.3 billion and $3.5 billion, with Adjusted EBITDA between $520 million and $560 million [26] - Management highlighted the importance of cost control and dynamic pricing strategies to drive future profitability [38] Other Important Information - The company invested $789 million in growth initiatives in 2025, including acquisitions and organic projects [23] - Maintenance capital expenditures were in line with expectations at 6% of revenue [24] - The company ended the year with nearly $75 million in unrestricted cash and a net leverage position of 2.2 times [25] Q&A Session Summary Question: Opportunities to build on backlog in the West region - Management acknowledged a geographic shift in backlog but expressed confidence in funding and opportunities in California, Hawaii, and Alaska [32][33] Question: Potential levers to outperform aggregate pricing expectations - Management noted strong pricing performance in 2025 and highlighted the implementation of dynamic pricing strategies as a key lever for future pricing [34][38] Question: Margin outlook for 2026 - Management indicated expectations for modest margin improvement, driven by dynamic pricing and operational efficiencies [42][44] Question: Return to year-over-year growth in Oregon - Management expects Oregon's performance in 2026 to be in line with 2025 results, contingent on public funding clarity [46][48] Question: Contribution of acquisitions to 2026 growth - Management stated that the contributions from acquisitions would offset seasonal losses and emphasized organic growth in guidance [88][90] Question: Data centers and backlog conversion - Management reported significant opportunities in data centers, primarily in material supply, with a strong pipeline of pending work [78][80]

Financial Data and Key Metrics Changes - In 2025, the company achieved a record Adjusted EBITDA of $497 million, representing a 7% increase year-over-year [4] - The fourth quarter saw a 47% increase in Adjusted EBITDA and a 340 basis point improvement in Adjusted EBITDA margin [18] - Gross profit for the fourth quarter increased by 27%, achieving a record gross margin of nearly 19% [18] Business Line Data and Key Metrics Changes - Aggregates volumes increased by 17% in the fourth quarter, with pricing up by 8% [18] - Ready-mix volumes rose by 20% in the fourth quarter, with gross margin lifting by 230 basis points [20] - Contracting services revenue grew by 15%, with the Mountain region experiencing nearly 20% growth [22] Market Data and Key Metrics Changes - The company entered 2026 with a record backlog of $1 billion, a 38% increase from the previous year [11] - Approximately 46% of IIJA funding remains to be disbursed across the company's 14 states, indicating strong public budgets [11] - The company is seeing increased private opportunities, including data centers and distribution facilities [11] Company Strategy and Development Direction - The company focuses on four growth components: markets, vertical integration, self-help initiatives, and a strong corporate culture [6] - The acquisition program ramped up in 2025 with five completed deals, and the company expects another busy year in 2026 [4][7] - The strategy emphasizes being an aggregates-based, end-to-end provider to enhance value and improve margins [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence entering 2026, citing strong momentum and favorable market conditions [5] - The company anticipates continued growth driven by infrastructure investments and a disciplined focus on cost control and pricing optimization [10][25] - Management expects consolidated revenue for 2026 to be between $3.3 billion and $3.5 billion, with Adjusted EBITDA between $520 million and $560 million [26] Other Important Information - The company invested $789 million in growth initiatives in 2025, including acquisitions and organic projects [23] - Maintenance capital expenditures were $170 million, or 6% of revenue, consistent with previous guidance [24] - The company ended the year with nearly $75 million in unrestricted cash and a net leverage position of 2.2x [25] Q&A Session Summary Question: Opportunities to build on backlog in the West region - Management acknowledged a geographic shift in backlog but expressed confidence in California, Hawaii, and Alaska's funding [32] Question: Potential levers to outperform aggregate pricing expectations - Management highlighted the success of dynamic pricing strategies and ongoing training to optimize pricing [38] Question: Margin outlook for 2026 - Management indicated expected margin improvements across all product lines, driven by dynamic pricing and operational excellence initiatives [44] Question: Return to year-over-year growth in Oregon - Management expects Oregon's performance in 2026 to be broadly in line with 2025 results, pending clarity on public funding [48] Question: Contribution of acquisitions to 2026 growth - Management stated that the full-year contribution from TexCrete would offset seasonal losses from Strata, indicating strong organic growth [90]

Financial Data and Key Metrics Changes - In 2025, the company achieved a record Adjusted EBITDA of $497 million, representing a 7% increase year-over-year [4] - The fourth quarter of 2025 saw a 47% increase in Adjusted EBITDA and a 340 basis point improvement in Adjusted EBITDA margin [16] - Gross profit for the fourth quarter increased by 27%, achieving a record gross margin of nearly 19% [16] Business Line Data and Key Metrics Changes - Aggregates volume increased by 17% in the fourth quarter, with pricing up by 8% [16] - Ready-mix volumes rose by 20% in the fourth quarter, with gross margin improving by 230 basis points [18] - Contracting services revenue grew by 15%, with the Mountain region experiencing nearly 20% growth [20] Market Data and Key Metrics Changes - The company entered 2026 with a record backlog of $1 billion, a 38% increase from the previous year [10] - Approximately 46% of IIJA funding remains to be disbursed across the company's 14 states, indicating strong public budgets for infrastructure [10] - The company anticipates continued growth in states with higher growth forecasts, particularly in the Mountain and Central regions [6] Company Strategy and Development Direction - The company focuses on four growth components: market positioning, vertical integration, self-help initiatives, and a strong corporate culture [5] - The acquisition program is ramping up, with five deals completed in 2025 and more expected in 2026 [4][6] - The company aims to enhance margins through continuous improvement and operational efficiencies [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's position for growth in 2026, citing strong market conditions and a favorable infrastructure funding backdrop [5][10] - The company expects to maintain a disciplined focus on cost control and pricing optimization to drive EBITDA growth [8][24] - Management highlighted the importance of a stable budget in Oregon for future growth, with expectations for performance to align with 2025 results [43] Other Important Information - The company invested $789 million in growth initiatives in 2025, including acquisitions and organic projects [21] - Capital expenditures for maintenance and improvement are expected to remain between 5% and 7% of revenue in 2026 [22] - The company ended 2025 with $75 million in unrestricted cash and a net leverage position of 2.2 times, below the long-term target of 2.5 times [23] Q&A Session Summary Question: Opportunities to build on backlog in the West region - Management acknowledged a geographic shift in backlog but expressed confidence in the funding and opportunities in California, Hawaii, and Alaska [30] Question: Potential levers to outperform aggregate pricing expectations - Management discussed the success of dynamic pricing strategies and ongoing training to optimize pricing [35] Question: Margin outlook for 2026 - Management indicated expectations for margin improvements across all product lines, driven by dynamic pricing and operational efficiencies [40] Question: Return to year-over-year growth in Oregon - Management expects Oregon's performance in 2026 to be in line with 2025 results, contingent on public funding clarity [44] Question: Impact of acquisitions on 2026 outlook - Management stated that the contributions from acquisitions would offset seasonal losses and that organic growth is expected to be strong [86]

4Q and Full-Year 2025 Results Presentation February 17, 2026 Forward-Looking Statements The information in this presentation highlights the key growth strategies, projections and certain assumptions for the company and its subsidiaries, including with respect to the benefits of acquisitions. Many of these highlighted statements and other statements not historical in nature are "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Although the comp ...

分组1 - Knife River reported quarterly earnings of $0.56 per share, exceeding the Zacks Consensus Estimate of $0.41 per share, and showing an increase from $0.41 per share a year ago, resulting in an earnings surprise of +37.42% [1] - The company achieved revenues of $755.1 million for the quarter ended December 2025, surpassing the Zacks Consensus Estimate by 4.67%, and up from $657.2 million in the same quarter last year [2] - Knife River has outperformed the S&P 500, with shares increasing by about 14.8% since the beginning of the year, while the S&P 500 has declined by 0.1% [3] 分组2 - The earnings outlook for Knife River is uncertain, with current consensus EPS estimates for the upcoming quarter at -$1.35 on revenues of $372.85 million, and $3.18 on revenues of $3.3 billion for the current fiscal year [7] - The Zacks Industry Rank indicates that the Building Products - Miscellaneous sector is currently in the bottom 39% of over 250 Zacks industries, suggesting potential underperformance compared to higher-ranked industries [8] - The estimate revisions trend for Knife River was unfavorable prior to the earnings release, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expectations of underperformance in the near future [6]

Financial Performance - Fourth quarter 2025 revenue reached $755.1 million, a 15% increase from $657.2 million in Q4 2024, driven by acquisitions and higher aggregate and ready-mix volumes[2]. - Net income for Q4 2025 was $32.0 million, up 38% from $23.3 million in Q4 2024, while full-year net income decreased 22% to $157.1 million from $201.7 million[2]. - Adjusted EBITDA for Q4 2025 increased 47% to $119.4 million, with an adjusted EBITDA margin of 15.8%, compared to 12.4% in Q4 2024[2][4]. - Consolidated revenues for the twelve months ended December 31, 2025, reached $3,146.0 million, an increase of 8.5% compared to $2,899.0 million in 2024[31]. - Total segment EBITDA for the twelve months ended December 31, 2025, was $548.2 million, up from $515.0 million in 2024, indicating a growth of approximately 6.4%[31]. - Adjusted EBITDA for the twelve months ended December 31, 2025, was $496.5 million, up from $463.0 million in 2024, reflecting a margin of 15.8%[43]. - The total gross profit for the twelve months ended December 31, 2025, was $577.3 million, compared to $569.8 million in 2024, with an overall gross margin of 18.4%[36]. Acquisitions and Growth Initiatives - The company completed five acquisitions in 2025, including Texcrete, which is expected to more than double ready-mix volumes in the Texas Triangle in 2026[5]. - Capital expenditures for 2025 totaled $169.5 million for equipment replacement and $788.6 million for growth initiatives, including $610 million on acquisitions[17]. - The company is focused on strategic growth initiatives, including potential acquisitions and market expansion, to enhance shareholder value[47]. - Knife River's strategic M&A activity is expected to continue in 2026, with a deal pipeline similar to that of 2025[6]. Backlog and Future Projections - Knife River has a record year-end backlog of $1 billion, which is anticipated to support higher-margin materials in 2026[6]. - Full-year 2026 revenue guidance is projected between $3.3 billion and $3.5 billion, with adjusted EBITDA expected between $520 million and $560 million[11]. - The company expects aggregates volumes to increase mid-single digits and ready-mix volumes to increase mid-teens in 2026[13]. Financial Position - As of December 31, 2025, Knife River had $73.8 million in unrestricted cash, $1.2 billion in gross debt, and a net leverage ratio of 2.2x[19]. - The company reported a net leverage ratio of 2.2x as of December 31, 2025, with total net debt of $1,107.3 million[46]. - Cash, cash equivalents, and restricted cash decreased to $123.4 million at the end of 2025 from $281.1 million at the end of 2024, a decline of about 56%[27]. - The company issued $500.0 million in long-term debt during the financing activities of 2025, compared to no issuance in 2024[27]. Segment Performance - The Energy Services segment reported revenues of $338.0 million for the twelve months ended December 31, 2025, up from $275.7 million in 2024, marking an increase of approximately 22.6%[31]. - Revenues from contracting services for the twelve months ended December 31, 2025, were $1,383.9 million, compared to $1,358.2 million in 2024, indicating a slight increase[36]. Pricing and Margins - Average selling price for aggregates increased to $18.99 per ton in 2025 from $17.47 per ton in 2024, reflecting an increase of approximately 8.7%[34]. - The gross profit margin for aggregates improved to 18.5% in 2025 from 20.6% in 2024, while ready-mix concrete saw a margin decrease to 17.1% from 16.2%[36].

Company Overview - Knife River is a leading U.S.-based supplier of aggregates-based construction materials and related contracting services, operating across multiple regional segments [5] - The company generates revenue through the extraction, processing, and sale of aggregates and related materials, as well as through construction contracting services supporting public infrastructure projects [8] - As of January 27, Knife River's market capitalization is $3.91 billion, with a revenue of $3.05 billion and a net income of $148.32 million [4] Recent Developments - On January 28, Headland Capital disclosed that it sold all 63,636 shares of Knife River, with an estimated transaction value of approximately $4.89 million [2] - Despite a solid recent earnings report, Knife River's shares are down more than 31% over the past year, significantly underperforming the S&P 500 by 47.5 percentage points [3][9] - The company reported record third-quarter revenue of $1.2 billion, up 9% year over year, driven largely by acquisitions and pricing gains [6] Market Position and Challenges - Knife River's backlog reached a record $995 million, with approximately 87% tied to public infrastructure projects, most of which are expected to convert within a year [6] - The company is facing margin pressures in certain regions and has experienced weather disruptions affecting volumes [9] - In Oregon, Knife River is working to "right-size" its team and find operating efficiencies to adapt to current market conditions [9]

Company Overview - Knife River is a leading U.S. provider of construction materials and contracting services, with a diversified presence across multiple regions [6] - The company leverages vertical integration in aggregates, asphalt, and ready-mix concrete to serve large-scale infrastructure and public works projects [6] - Primary customers include federal, state, and municipal governments, focusing on public infrastructure projects such as highways, bridges, airports, and public buildings [9] Financial Performance - Revenue for the trailing twelve months (TTM) is $3.05 billion, with a net income of $148.32 million [4] - In the latest quarter, revenue rose 9% year over year to $1.2 billion, while adjusted EBITDA climbed 11% to $272.8 million [11] - Backlog reached a record $995 million, up 32% from a year earlier, with 87% tied to public work and more than three-quarters expected to convert to revenue within 12 months [11] Investment Insights - Paradice Investment Management established a new stake in Knife River, acquiring 312,743 shares valued at $22.00 million [1][2] - This new holding represented 4.28% of Paradice's 13F reportable assets at the end of December [3] - The transaction reflects a rotation toward assets with visible demand and pricing power, with earnings increasingly driven by backlog and public funding [10] Market Position - As of January 27, Knife River shares were priced at $68.59, down 31.4% over the past year, underperforming the S&P 500 by 47.46 percentage points [3] - The company continues to invest aggressively, spending $528 million on acquisitions in the first nine months of the year [11] - Knife River maintains net leverage around 2.6 times adjusted EBITDA, targeting further improvement by year's end [11]