Achieved record third quarter revenue, gross
profit and net income
Announced recent acquisition of aggregates and
liquid asphalt businesses
Narrowed guidance range on revenue and adjusted
EBITDA
Knife River Corporation (NYSE: KNF), an aggregates-led,
vertically integrated construction materials and contracting
services company, today announced financial results for the third
quarter ended September 30, 2024.
PERFORMANCE SUMMARY
Three Months Ended
Nine Months Ended
(In millions, except per share)
2024
2023
% Change
2024
2023
% Change
Revenue
$1,105.3
$1,090.4
1%
$2,241.8
$2,183.5
3%
Gross profit
$273.0
$269.4
1%
$455.7
$426.5
7%
Net income
$148.1
$146.7
1%
$178.4
$162.2
10%
Net income margin
13.4%
13.4%
8.0%
7.4%
Adjusted EBITDA
$245.2
$247.5
(1)%
$381.8
$360.0
6%
Adjusted EBITDA margin
22.2%
22.7%
17.0%
16.5%
Net income per share
$2.60
$2.58
1%
$3.14
$2.86
10%
Note: Adjusted EBITDA and Adjusted EBITDA
margin are non-GAAP financial measures. For more information on all
non-GAAP measures and a reconciliation to the nearest GAAP measure,
see the section entitled "Non-GAAP Financial Measures."
MANAGEMENT COMMENTARY
“Our third quarter results demonstrate the fundamental strength
of our business and the benefits of our segment diversity,” said
Knife River President and CEO Brian Gray. “We achieved record
quarterly revenue, gross profit and net income, and adjusted EBITDA
was near our record from the third quarter of 2023. Our geographic
segments contributed record EBITDA of $224.6 million for the
quarter, a combined 6 percent increase year-over-year across the
Pacific, Northwest, Mountain and Central segments, which helped us
overcome the anticipated EBITDA reduction at our Energy Services
segment.”
“We are also excited to announce that we have closed on
additional acquisitions, which we expect to generate an attractive
financial return,” Gray said. “Through Nov. 2, 2024, we have
deployed $129.3 million of capital on six acquisitions, with a
focus on aggregate reserves and construction materials. Purchase
multiples were between 6-8 times projected 2025 EBITDA.”
“Recent acquisitions include aggregate-specific purchases in key
markets, including the assets of Frank B. Marks & Son in
Northern California, Rock Products Manufacturing in Central Oregon
and a sand reserve in Sioux Falls, South Dakota,” Gray said. “Also,
on Nov. 2, we purchased the business of Albina Asphalt. Based in
Vancouver, Washington, Albina will expand the footprint of our
high-margin liquid asphalt materials product line, with terminals
in our most profitable geographic segment. While we incurred more
corporate development costs during the quarter related to increased
acquisition activity, we believe these investments will enhance our
long-term profitability. We are excited to have a full pipeline of
additional acquisition opportunities in front of us.”
“Growth is a key component of our ‘Competitive EDGE’ strategy,
and so are pricing optimization, cost control and continuous
improvements,” Gray said. “During the quarter, our teams continued
to optimize the pricing of our construction materials, control
production costs through our Process Improvement Teams and realize
higher margins on our contracting services. Our ‘EDGE’ strategy
guides our decisions on quality of work over quantity of work.”
“We also continue to benefit from a strong public funding
backdrop,” Gray said. “We are seeing continued opportunities to bid
on projects across our footprint, with record or near-record
budgets at most of our state departments of transportation. We have
a good schedule of DOT bid lettings coming up for 2025 across our
states. Our backlog of $755 million is higher than the same period
last year, with slightly higher expected margins. For the sixth
consecutive quarter, our year-over-year expected backlog margins
have improved, dating back to the launch of our EDGE plan.”
“As we look ahead at the full year, including expectations for
our segments in the fourth quarter and anticipated acquisition
expenses related to our growth program, we are narrowing guidance
for 2024 revenue and adjusted EBITDA,” Gray said. “We expect
revenue in the range of $2.85 billion to $2.95 billion, and
adjusted EBITDA in the range of $445 million to $465 million. We
are focused on a strong finish to the year and positioning our
business for long-term growth. Thank you to our team members for
working safely and for all they do to contribute to Knife River’s
continued success.”
THIRD QUARTER 2024 RESULTS
For the three months ended September 30, 2024, we reported
record consolidated revenue of $1.1 billion, a 1% increase from the
prior-year record revenue. Although volumes have declined as a
direct result of our quality over quantity approach, record revenue
was primarily driven by price increases in our aggregates and
ready-mix product lines and increased contracting services
revenues. We also reported record third quarter net income of
$148.1 million, compared to net income of $146.7 million in the
prior-year period. We had solid EBITDA contributions from each of
our geographic segments, totaling a 6% increase from the prior-year
period and a 14.8% increase in the first nine months of 2024,
compared to the same period in 2023. Across each of our segments,
we remain committed to continued improvement of our EDGE
initiatives to optimize materials pricing and seek higher margins
for contracting services. The results at our geographic segments
helped to offset decreased EBITDA at Energy Services, which was
expected and which we have guided to over the past few quarters, as
liquid asphalt pricing decreased. Consolidated adjusted EBITDA for
the quarter was $245.2 million, compared to $247.5 million in the
prior-year period.
In the fourth quarter of 2023, we realigned our reportable
segments to better support our operational strategies. The liquid
asphalt and related services portion of the Pacific segment’s
businesses are now reported under the Energy Services segment. In
addition, the North Central and South operating segments have been
aggregated into one reportable segment, Central. We also
reallocated certain amounts to the operating segments that were
previously reported within Corporate Services. All periods have
been recast to conform with the revised presentation.
See the section entitled “Non-GAAP Financial Measures” for more
information on all non-GAAP measures and a reconciliation to the
nearest GAAP measure.
REPORTING SEGMENT PERFORMANCE
Pacific
Alaska, California, Hawaii
Three Months Ended
Nine Months Ended
Sept. 30,
Sept. 30,
2024
2023
% Change
2024
2023
% Change
(In millions)
Revenue
$
165.0
$
157.3
5
%
$
375.2
$
348.1
8
%
Gross profit
$
34.3
$
33.3
3
%
$
60.2
$
59.8
1
%
Gross margin
20.8
%
21.1
%
16.0
%
17.2
%
EBITDA
$
29.5
$
28.6
3
%
$
46.5
$
46.1
1
%
EBITDA margin
17.9
%
18.2
%
12.4
%
13.3
%
Third quarter revenue increased to a record $165.0 million,
driven by continued construction activity in Northern California,
coupled with price increases in all product lines. Offsetting the
price increases were reduced volumes in all product lines, with
asphalt showing the largest decrease due to the nature of the
contracting work in the quarter being more geared to heavy-civil
construction than paving. EBITDA increased year-over-year, largely
due to margin increases across most product lines with price
increases outpacing costs and improved contracting services gross
profit from more work in Northern California.
Northwest
Oregon, Washington
Three Months Ended
Nine Months Ended
Sept. 30,
Sept. 30,
2024
2023
% Change
2024
2023
% Change
(In millions)
Revenue
$
218.1
$
209.4
4
%
$
539.7
$
504.2
7
%
Gross profit
$
57.4
$
50.2
14
%
$
129.1
$
107.9
20
%
Gross margin
26.3
%
24.0
%
23.9
%
21.4
%
EBITDA
$
55.9
$
48.5
15
%
$
126.8
$
101.3
25
%
EBITDA margin
25.6
%
23.2
%
23.5
%
20.1
%
Third quarter revenue increased 4% year-over-year to a record
$218.1 million, as a result of public-agency construction work in
the region, which also contributed to higher asphalt volumes.
EBITDA was a record $55.9 million for the quarter, a 15%
improvement year-over-year. The segment experienced improved
contracting services margins, partly related to favorable project
execution as well as efficiencies gained at its state-of-the-art
prestress facility in Spokane.
Mountain
Idaho, Montana, Wyoming
Three Months Ended
Nine Months Ended
Sept. 30,
Sept. 30,
2024
2023
% Change
2024
2023
% Change
(In millions)
Revenue
$
261.1
$
255.1
2
%
$
514.9
$
491.5
5
%
Gross profit
$
61.1
$
59.7
2
%
$
101.1
$
88.8
14
%
Gross margin
23.4
%
23.4
%
19.6
%
18.1
%
EBITDA
$
59.4
$
59.4
—
%
$
96.5
$
86.0
12
%
EBITDA margin
22.8
%
23.3
%
18.7
%
17.5
%
Third quarter revenue increased to a record $261.1 million,
driven by increased pricing on aggregates and ready-mix, as well as
contracting services activity. EBITDA remained unchanged
year-over-year, as lower aggregate and ready-mix volumes were
offset by improved contracting services margins as a result of
disciplined project bidding and project timing.
Central
Iowa, Minnesota, North Dakota, South
Dakota, Texas
Three Months Ended
Nine Months Ended
Sept. 30,
Sept. 30,
2024
2023
% Change
2024
2023
% Change
(In millions)
Revenue
$
354.9
$
354.9
—
%
$
630.5
$
643.6
(2
)%
Gross profit
$
85.4
$
80.4
6
%
$
110.6
$
101.1
9
%
Gross margin
24.1
%
22.6
%
17.5
%
15.7
%
EBITDA
$
79.8
$
74.8
7
%
$
97.3
$
86.3
13
%
EBITDA margin
22.5
%
21.1
%
15.4
%
13.4
%
Third quarter revenue remained flat year-over-year, positively
impacted by increased pricing, but offset by lower volumes as a
result of our EDGE-related initiative of quality of work over
quantity of work. EBITDA improved 7% to a third quarter record of
$79.8 million, which was the result of increased pricing for
ready-mix and asphalt as well as increased margins for contracting
services from disciplined project bidding and execution.
Energy Services
California, Iowa, Nebraska, South Dakota,
Texas, Wyoming
Three Months Ended
Nine Months Ended
Sept. 30,
Sept. 30,
2024
2023
% Change
2024
2023
% Change
(In millions)
Revenue
$
125.9
$
140.6
(10
)%
$
214.9
$
234.1
(8
)%
Gross profit
$
34.7
$
46.7
(26
)%
$
53.7
$
68.2
(21
)%
Gross margin
27.5
%
33.3
%
25.0
%
29.1
%
EBITDA
$
33.7
$
45.7
(26
)%
$
50.6
$
64.5
(22
)%
EBITDA margin
26.8
%
32.5
%
23.5
%
27.6
%
Third quarter revenue decreased year-over-year as anticipated
and previously disclosed, as pricing for liquid asphalt continued
to decrease across all markets. The decrease in pricing was
slightly offset by strong demand in California and Texas. EBITDA
decreased 26% year-over-year, as a result of lower market pricing
and higher operating costs associated with plant repairs at our
California terminal.
CAPITAL ALLOCATION &
LIQUIDITY
Knife River is committed to disciplined use of capital,
including reinvesting in the company to maintain fixed assets,
improve operations and grow our business. For reporting purposes,
we allocate capital expenditures in two categories, which align
with our EDGE strategy: Disciplined use of capital and Growth of
our company.
- Discipline (Support and Improve Existing Operations)
- Maintenance: Plant and equipment; aggregate reserve
replacement.
- Improvements: Productivity, safety, quality, environmental
improvements that drive return on invested capital and support our
core values.
- Growth (Expand Operations)
- Organic: Greenfield growth in new markets; additional
operations in existing markets.
- Acquisition: Purchase bolt-on or new platform operations in
mid-sized, high-growth markets; focused on materials.
In the Discipline category, we estimate 2024 capital
expenditures to be between 5% and 7% of revenue guidance, with
$127.2 million spent as of Sept. 30, 2024. The majority has been
spent on routine replacement of vehicles and equipment, plant
improvements and buildings.
As of Nov. 4, we have invested $129.3 million in our Growth
category on six acquisitions, which include aggregate, ready-mix
and liquid asphalt operations. For the remainder of the year, we
have approved investments totaling $23.1 million for the initial
development of approved greenfield projects.
Capital expenditures for future acquisitions and organic
opportunities would be incremental to the outlined capital program;
these opportunities are dependent upon economic and other
competitive conditions. It is anticipated that capital expenditures
for 2024 will be funded by various sources, including internally
generated cash and debt.
As of September 30, 2024, Knife River had $220.4 million of
unrestricted cash and cash equivalents and had $691.7 million of
gross debt and $329.4 million of available capacity under its
revolving credit facility, net of outstanding letters of credit.
Net leverage, defined as the ratio of net debt to
trailing-twelve-month Adjusted EBITDA, was 1.0x at September 30,
2024.
2024 FINANCIAL GUIDANCE
Knife River narrowed our full year 2024 revenue and adjusted
EBITDA guidance ranges. Also for the full year 2024, we anticipate
price increases of high single digits for aggregates and ready-mix
and low single digits for asphalt. We expect continued pricing
momentum to be partially offset by volume declines for the
materials product lines, including mid single digits for
aggregates, high single digits for ready-mix and mid single digits
for asphalt. The guidance ranges are based on normal economic and
operating conditions.
Low
High
(In millions)
Revenue
Revenue (Knife River Consolidated)
$
2,850.0
$
2,950.0
Adjusted
EBITDA
Geographic Segments and Corporate
Services
$
390.0
$
405.0
Energy Services
$
55.0
$
60.0
Knife River Consolidated
$
445.0
$
465.0
THIRD QUARTER 2024 RESULTS CONFERENCE
CALL
Knife River will host a conference call at 11 a.m. EST on
November 4, 2024, to discuss third quarter results, 2024 guidance
and conduct a question-and-answer session. The event will be
webcast at https://events.q4inc.com/attendee/304447263.
To participate in the live call:
- Domestic: 1-800-549-8228
- International: 1-289-819-1520 Conference ID: 66729
ABOUT KNIFE RIVER CORPORATION
Knife River Corporation, a member of the S&P MidCap 400
index, mines aggregates and markets crushed stone, sand, gravel and
related construction materials, including ready-mix concrete,
asphalt and other value-added products. Knife River also performs
vertically integrated contracting services, specializing in
publicly funded DOT projects and private projects across the
industrial, commercial and residential space. For more information
about the company, visit www.kniferiver.com.
Knife River
Corporation
Consolidated Statements of
Operations
(Unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2024
2023
2024
2023
(In millions, except per share
amounts)
Revenue:
Construction materials
$
545.7
$
553.1
$
1,185.0
$
1,177.7
Contracting services
559.6
537.3
1,056.8
1,005.8
Total revenue
1,105.3
1,090.4
2,241.8
2,183.5
Cost of revenue:
Construction materials
345.0
346.3
865.3
856.6
Contracting services
487.3
474.7
920.8
900.4
Total cost of revenue
832.3
821.0
1,786.1
1,757.0
Gross profit
273.0
269.4
455.7
426.5
Selling, general and administrative
expenses
63.9
59.2
183.6
167.3
Operating income
209.1
210.2
272.1
259.2
Interest expense
13.9
15.3
41.8
44.0
Other income
2.5
—
7.5
3.3
Income before income taxes
197.7
194.9
237.8
218.5
Income tax expense
49.6
48.2
59.4
56.3
Net income
$
148.1
$
146.7
$
178.4
$
162.2
Net income per share:
Basic
$
2.62
$
2.59
$
3.15
$
2.87
Diluted
$
2.60
$
2.58
$
3.14
$
2.86
Weighted average common shares
outstanding:
Basic
56.6
56.6
56.6
56.6
Diluted
56.9
56.7
56.8
56.6
Knife River
Corporation
Consolidated Balance
Sheets
(Unaudited)
September 30, 2024
September 30, 2023
December 31, 2023
Assets
(In millions, except shares and
per share amounts)
Current assets:
Cash, cash equivalents and restricted
cash
$
267.4
$
116.2
$
262.3
Receivables, net
449.2
491.9
266.8
Costs and estimated earnings in excess of
billings on uncompleted contracts
69.3
50.5
27.3
Inventories
347.3
314.7
319.6
Prepayments and other current assets
26.4
38.1
37.5
Total current assets
1,159.6
1,011.4
913.5
Noncurrent assets:
Property, plant and equipment
2,692.2
2,547.6
2,579.7
Less accumulated depreciation, depletion
and amortization
1,346.0
1,248.1
1,264.7
Net property, plant and equipment
1,346.2
1,299.5
1,315.0
Goodwill
275.3
274.5
274.5
Other intangible assets, net
9.8
11.5
10.8
Operating lease right-of-use assets
47.4
44.3
44.7
Investments and other
45.8
39.7
41.3
Total noncurrent assets
1,724.5
1,669.5
1,686.3
Total assets
$
2,884.1
$
2,680.9
$
2,599.8
Liabilities and Stockholders' Equity
Current liabilities:
Long-term debt - current portion
$
8.8
$
7.1
$
7.1
Accounts payable
180.6
149.0
107.7
Billings in excess of costs and estimated
earnings on uncompleted contracts
44.8
58.8
51.4
Taxes payable
16.0
53.3
9.3
Accrued compensation
42.1
37.9
48.1
Accrued interest
13.8
16.0
7.2
Current operating lease liabilities
13.5
13.7
12.9
Other accrued liabilities
106.5
89.2
103.6
Total current liabilities
426.1
425.0
347.3
Noncurrent liabilities:
Long-term debt
669.7
675.6
674.6
Deferred income taxes
187.9
174.0
174.5
Noncurrent operating lease liabilities
33.9
30.6
31.8
Other
117.6
132.7
105.6
Total liabilities
1,435.2
1,437.9
1,333.8
Commitments and contingencies
Stockholders' equity:
Common stock, 300,000,000 shares
authorized, $0.01 par value, 57,043,841 shares issued and
56,612,705 shares outstanding at September 30, 2024; 56,997,350
shares issued and 56,566,214 shares outstanding at September 30,
2023; 57,009,542 shares issued and 56,578,406 shares outstanding at
December 31, 2023
.6
.6
.6
Other paid-in capital
618.8
613.0
614.5
Retained earnings
844.2
645.2
665.8
Treasury stock held at cost - 431,136
shares
(3.6
)
(3.6
)
(3.6
)
Accumulated other comprehensive loss
(11.1
)
(12.2
)
(11.3
)
Total stockholders' equity
1,448.9
1,243.0
1,266.0
Total liabilities and stockholders'
equity
$
2,884.1
$
2,680.9
$
2,599.8
Knife River
Corporation
Consolidated Statements of
Cash Flows
(Unaudited)
Nine Months Ended
September 30,
2024
2023
(In millions)
Operating activities:
Net income
$
178.4
$
162.2
Adjustments to reconcile net income to net
cash provided by operating activities
115.1
93.0
Changes in current assets and liabilities,
net of acquisitions:
Receivables
(224.8
)
(302.5
)
Due from related-party
—
16.1
Inventories
(27.3
)
8.6
Other current assets
11.1
(20.2
)
Accounts payable
77.2
91.6
Due to related-party
—
(7.3
)
Other current liabilities
17.3
78.0
Pension and postretirement benefit plan
contributions
(2.5
)
(1.6
)
Other noncurrent changes
5.4
35.0
Net cash provided by operating
activities
149.9
152.9
Investing activities:
Capital expenditures
(127.2
)
(86.4
)
Acquisitions, net of cash acquired
(15.0
)
—
Net proceeds from sale or disposition of
property and other
7.6
5.2
Investments
(3.2
)
(1.7
)
Net cash used in investing activities
(137.8
)
(82.9
)
Financing activities:
Issuance of long-term related-party notes,
net
—
205.3
Issuance of long-term debt
—
700.0
Repayment of long-term debt
(5.3
)
(1.9
)
Debt issuance costs
—
(16.7
)
Tax withholding on stock-based
compensation
(1.7
)
—
Net transfers to Centennial Energy
Holdings Inc.
—
(850.6
)
Net cash provided by (used in) financing
activities
(7.0
)
36.1
Increase in cash, cash equivalents and
restricted cash
5.1
106.1
Cash, cash equivalents and restricted cash
-- beginning of year
262.3
10.1
Cash, cash equivalents and restricted cash
-- end of period
$
267.4
$
116.2
Segment Financial
Data and Highlights (Unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2024
2023
2024
2023
Dollars
Margin
Dollars
Margin
Dollars
Margin
Dollars
Margin
(Dollars in millions)
Revenues by segment:
Pacific
$
165.0
$
157.3
$
375.2
$
348.1
Northwest
218.1
209.4
539.7
504.2
Mountain
261.1
255.1
514.9
491.5
Central
354.9
354.9
630.5
643.6
Energy Services
125.9
140.6
214.9
234.1
Total segment revenues
1,125.0
1,117.3
2,275.2
2,221.5
Corporate Services and Eliminations
(19.7
)
(26.9
)
(33.4
)
(38.0
)
Consolidated revenues
$
1,105.3
$
1,090.4
$
2,241.8
$
2,183.5
Gross profit by segment:
Pacific
$
34.3
20.8
%
$
33.3
21.1
%
$
60.2
16.0
%
$
59.8
17.2
%
Northwest
57.4
26.3
%
50.2
24.0
%
129.1
23.9
%
107.9
21.4
%
Mountain
61.1
23.4
%
59.7
23.4
%
101.1
19.6
%
88.8
18.1
%
Central
85.4
24.1
%
80.4
22.6
%
110.6
17.5
%
101.1
15.7
%
Energy Services
34.7
27.5
%
46.7
33.3
%
53.7
25.0
%
68.2
29.1
%
Total segment gross profit
272.9
24.3
%
270.3
24.2
%
454.7
20.0
%
425.8
19.2
%
Corporate Services and Eliminations
0.1
(0.6
)%
(0.9
)
3.2
%
1.0
(3.0
)%
0.7
(1.6
)%
Consolidated gross profit
$
273.0
24.7
%
$
269.4
24.7
%
$
455.7
20.3
%
$
426.5
19.5
%
Net income by segment:
Pacific
$
23.4
14.2
%
$
23.1
14.7
%
$
28.5
7.6
%
$
30.2
8.7
%
Northwest
45.2
20.7
%
38.7
18.5
%
95.1
17.6
%
72.9
14.5
%
Mountain
52.7
20.2
%
53.1
20.8
%
76.8
14.9
%
67.4
13.7
%
Central
70.1
19.8
%
66.1
18.6
%
69.7
11.1
%
61.1
9.5
%
Energy Services
32.4
25.8
%
44.5
31.6
%
46.8
21.8
%
60.8
26.0
%
Total segment net income
223.8
19.9
%
225.5
20.2
%
316.9
13.9
%
292.4
13.2
%
Corporate Services and Eliminations
(a)
(75.7
)
N.M.
(78.8
)
N.M.
(138.5
)
N.M.
(130.2
)
N.M.
Consolidated net income
$
148.1
13.4
%
$
146.7
13.4
%
$
178.4
8.0
%
$
162.2
7.4
%
EBITDA by segment:
Pacific
$
29.5
17.9
%
$
28.6
18.2
%
$
46.5
12.4
%
$
46.1
13.3
%
Northwest
55.9
25.6
%
48.5
23.2
%
126.8
23.5
%
101.3
20.1
%
Mountain
59.4
22.8
%
59.4
23.3
%
96.5
18.7
%
86.0
17.5
%
Central
79.8
22.5
%
74.8
21.1
%
97.3
15.4
%
86.3
13.4
%
Energy Services
33.7
26.8
%
45.7
32.5
%
50.6
23.5
%
64.5
27.6
%
Total segment EBITDA (b)
258.3
23.0
%
257.0
23.0
%
417.7
18.4
%
384.2
17.3
%
Corporate Services and Eliminations
(13.7
)
N.M.
(15.6
)
N.M.
(42.3
)
N.M.
(31.8
)
N.M.
Consolidated EBITDA (b)
$
244.6
22.1
%
$
241.4
22.1
%
$
375.4
16.7
%
$
352.4
16.1
%
(a)
N.M. - not meaningful
(b)
EBITDA, segment EBITDA, EBITDA margin and
segment EBITDA margin are non-GAAP financial measures. For more
information and a reconciliation to the nearest GAAP measure, see
the section entitled "Non-GAAP Financial Measures."
The following table summarizes backlog for the company.
September 30, 2024
September 30, 2023
(In millions)
Pacific
$
114.9
$
69.8
Northwest
168.0
227.4
Mountain
279.9
251.1
Central
192.3
183.9
$
755.1
$
732.2
Margins on backlog at September 30, 2024, are expected to be
slightly higher than the margins on backlog at September 30, 2023.
Approximately 87% of the company's contracting services backlog
relates to publicly funded projects, including street and highway
construction projects. Period over period increases or decreases
should not be used as an indicator of future revenues or
earnings.
Three Months Ended
Nine Months Ended
September 30,
September 30,
2024
2023
2024
2023
Sales (thousands):
Aggregates (tons)
11,169
12,022
24,833
26,071
Ready-mix concrete (cubic yards)
1,148
1,271
2,653
2,944
Asphalt (tons)
3,150
3,349
5,183
5,441
Average selling price:*
Aggregates (per ton)
$
17.32
$
16.10
$
17.56
$
16.24
Ready-mix concrete (per cubic yard)
$
185.97
$
169.98
$
185.78
$
169.02
Asphalt (per ton)
$
68.28
$
66.51
$
67.68
$
66.41
* The average selling price includes
freight and delivery and other revenues.
Three Months Ended
Nine Months Ended
September 30,
September 30,
2024
2023
2024
2023
Dollars
Margin
Dollars
Margin
Dollars
Margin
Dollars
Margin
(Dollars in millions)
Revenues by product line:
Aggregates
$
193.4
$
193.6
$
436.2
$
423.5
Ready-mix concrete
213.5
216.0
492.8
497.7
Asphalt
215.1
222.8
350.8
361.3
Liquid asphalt
110.9
122.6
187.3
203.8
Other*
89.7
91.5
206.4
192.1
Contracting services
559.6
537.3
1,056.8
1,005.8
Internal sales
(276.9
)
(293.4
)
(488.5
)
(500.7
)
Total revenues
$
1,105.3
$
1,090.4
$
2,241.8
$
2,183.5
Gross profit by product line:
Aggregates
$
51.7
26.7
%
$
51.8
26.7
%
$
96.1
22.0
%
$
90.6
21.4
%
Ready-mix concrete
39.6
18.6
%
37.7
17.4
%
78.1
15.8
%
74.5
15.0
%
Asphalt
43.1
20.0
%
39.4
17.7
%
54.7
15.6
%
49.7
13.8
%
Liquid asphalt
28.8
26.0
%
39.2
32.0
%
43.7
23.3
%
57.4
28.1
%
Other*
37.5
41.8
%
38.7
42.3
%
47.1
22.8
%
48.9
25.5
%
Contracting services
72.3
12.9
%
62.6
11.7
%
136.0
12.9
%
105.4
10.5
%
Total gross profit
$
273.0
24.7
%
$
269.4
24.7
%
$
455.7
20.3
%
$
426.5
19.5
%
* Other includes cement, merchandise,
fabric and spreading, and other products and services that
individually are not considered to be a core line of business.
NON-GAAP FINANCIAL
MEASURES
EBITDA, EBITDA margin, Adjusted EBITDA, Adjusted EBITDA margin,
including those measures by segment, as applicable, net debt and
net leverage are considered non-GAAP measures of financial
performance. These non-GAAP financial measures are not measures of
financial performance under GAAP. The items excluded from these
non-GAAP financial measures are significant components in
understanding and assessing financial performance. Therefore, these
non-GAAP financial measures should not be considered substitutes
for the applicable GAAP metric.
EBITDA, EBITDA margin, Adjusted EBITDA and Adjusted EBITDA
margin are most directly comparable to the corresponding GAAP
measures of net income and net income margin. Net debt and net
leverage are most directly comparable to the corresponding GAAP
measures of total debt. We believe these non-GAAP financial
measures, in addition to corresponding GAAP measures, are useful to
investors by providing meaningful information about operational
efficiency compared to our peers by excluding the impacts of
differences in tax jurisdictions and structures, debt levels and
capital investment. We believe Adjusted EBITDA and Adjusted EBITDA
margin are useful performance measures because they allow for an
effective evaluation of our operating performance by excluding
stock-based compensation and unrealized gains and losses on benefit
plan investments as they are considered non-cash and not part of
our core operations. We also exclude the one-time, non-recurring
costs associated with the separation of Knife River from MDU
Resources as those are not expected to continue. We believe EBITDA
and Adjusted EBITDA assist rating agencies and investors in
comparing operating performance across operating periods on a
consistent basis by excluding items management does not believe are
indicative of the company's operating performance, including using
EBITDA and Adjusted EBITDA to calculate Knife River’s leverage as a
multiple of EBITDA and Adjusted EBITDA. Additionally, EBITDA and
Adjusted EBITDA are important financial metrics for debt investors
who utilize debt to EBITDA and debt to Adjusted EBITDA ratios. We
believe EBITDA and EBITDA margin, including those measures by
segment, are useful performance measures because they provide
clarity as to the operational results of the company. Management
believes net debt and net leverage are useful performance measures
because they provide a measure of how long it would take the
company to pay back its debt if net debt and Adjusted EBITDA were
constant. Net leverage also allows management to assess our
borrowing capacity and optimal leverage ratio. Our management uses
these non-GAAP financial measures in conjunction with GAAP results
when evaluating our operating results internally and calculating
employee incentive compensation, and leverage as a multiple of
Adjusted EBITDA to determine the appropriate method of funding our
operations.
EBITDA is calculated by adding back income taxes, interest
expense (net of interest income) and depreciation, depletion and
amortization expense to net income. EBITDA margin is calculated by
dividing EBITDA by revenues. Adjusted EBITDA is calculated by
adding back unrealized gains and losses on benefit plan
investments, stock-based compensation and one-time separation
costs, to EBITDA. Adjusted EBITDA margin is calculated by dividing
Adjusted EBITDA by revenues. Net debt is calculated by adding
unamortized debt issuance costs to the total debt balance presented
on the balance sheet, less any unrestricted cash. Net leverage is
calculated by dividing net debt by trailing-twelve-month Adjusted
EBITDA. These non-GAAP financial measures are calculated the same
for both the segment and consolidated metrics and should not be
considered as alternatives to, or more meaningful than, GAAP
financial measures such as net income, net income margin and total
debt and are intended to be helpful supplemental financial measures
for investors’ understanding of our operating performance. Our
non-GAAP financial measures are not standardized; therefore, it may
not be possible to compare these financial measures with other
companies’ EBITDA, EBITDA margin, Adjusted EBITDA, Adjusted EBITDA
margin, net debt and net leverage measures having the same or
similar names.
The following information reconciles segment and consolidated
net income (loss) to EBITDA and Adjusted EBITDA and provides the
calculation of EBITDA margin, Adjusted EBITDA margin, net debt and
net leverage. Interest expense, net, is net of interest income that
is included in other income (expense) on the Consolidated
Statements of Operations.
Three Months Ended September 30, 2024
Pacific
Northwest
Mountain
Central
Energy Services
Corporate Services and
Eliminations
Consolidated
(In millions)
Net income (loss)
$
23.4
$
45.2
$
52.7
$
70.1
$
32.4
$
(75.7
)
$
148.1
Depreciation, depletion and
amortization
6.1
10.7
6.7
9.7
1.3
0.3
34.8
Interest expense, net
—
—
—
—
—
12.1
12.1
Income taxes
—
—
—
—
—
49.6
49.6
EBITDA
$
29.5
$
55.9
$
59.4
$
79.8
$
33.7
$
(13.7
)
$
244.6
Unrealized (gains) losses on benefit plan
investments
$
(1.2
)
$
(1.2
)
Stock-based compensation expense
1.8
1.8
Adjusted EBITDA
$
(13.1
)
$
245.2
Revenue
$
165.0
$
218.1
$
261.1
$
354.9
$
125.9
$
(19.7
)
$
1,105.3
Net Income Margin
14.2
%
20.7
%
20.2
%
19.8
%
25.8
%
N.M.
13.4
%
EBITDA Margin
17.9
%
25.6
%
22.8
%
22.5
%
26.8
%
N.M.
22.1
%
Adjusted EBITDA Margin
N.M.
22.2
%
* N.M. - not meaningful
Three Months Ended September 30, 2023
Pacific
Northwest
Mountain
Central
Energy Services
Corporate Services and
Eliminations
Consolidated
(In millions)
Net income (loss)
$
23.1
$
38.7
$
53.1
$
66.1
$
44.5
$
(78.8
)
$
146.7
Depreciation, depletion and
amortization
5.5
9.8
6.3
8.7
1.2
0.3
31.8
Interest expense, net
—
—
—
—
—
14.7
14.7
Income taxes
—
—
—
—
—
48.2
48.2
EBITDA
$
28.6
$
48.5
$
59.4
$
74.8
$
45.7
$
(15.6
)
$
241.4
Unrealized (gains) losses on benefit plan
investments
$
0.6
$
0.6
Stock-based compensation expense
1.5
1.5
One-time separation costs
4.0
4.0
Adjusted EBITDA
$
(9.5
)
$
247.5
Revenue
$
157.3
$
209.4
$
255.1
$
354.9
$
140.6
$
(26.9
)
$
1,090.4
Net Income Margin
14.7
%
18.5
%
20.8
%
18.6
%
31.6
%
N.M.
13.4
%
EBITDA Margin
18.2
%
23.2
%
23.3
%
21.1
%
32.5
%
N.M.
22.1
%
Adjusted EBITDA Margin
N.M.
22.7
%
* N.M. - not meaningful
Nine Months Ended September 30, 2024
Pacific
Northwest
Mountain
Central
Energy Services
Corporate Services and
Eliminations
Consolidated
(In millions)
Net income (loss)
$
28.5
$
95.1
$
76.8
$
69.7
$
46.8
$
(138.5
)
$
178.4
Depreciation, depletion and
amortization
18.0
31.7
19.6
27.6
3.8
0.8
101.5
Interest expense, net
—
—
0.1
—
—
36.0
36.1
Income taxes
—
—
—
—
—
59.4
59.4
EBITDA
$
46.5
$
126.8
$
96.5
$
97.3
$
50.6
$
(42.3
)
$
375.4
Unrealized (gains) losses on benefit plan
investments
$
(2.8
)
$
(2.8
)
Stock-based compensation expense
5.4
5.4
One-time separation costs
3.8
3.8
Adjusted EBITDA
$
(35.9
)
$
381.8
Revenue
$
375.2
$
539.7
$
514.9
$
630.5
$
214.9
$
(33.4
)
$
2,241.8
Net Income Margin
7.6
%
17.6
%
14.9
%
11.1
%
21.8
%
N.M.
8.0
%
EBITDA Margin
12.4
%
23.5
%
18.7
%
15.4
%
23.5
%
N.M.
16.7
%
Adjusted EBITDA Margin
N.M.
17.0
%
* N.M. - not meaningful
Nine Months Ended September 30, 2023
Pacific
Northwest
Mountain
Central
Energy Services
Corporate Services and
Eliminations
Consolidated
(In millions)
Net income (loss)
$
30.2
$
72.9
$
67.4
$
61.1
$
60.8
$
(130.2
)
$
162.2
Depreciation, depletion and
amortization
15.9
28.4
18.5
25.2
3.7
0.8
92.5
Interest expense, net
—
—
0.1
—
—
41.3
41.4
Income taxes
—
—
—
—
—
56.3
56.3
EBITDA
$
46.1
$
101.3
$
86.0
$
86.3
$
64.5
$
(31.8
)
$
352.4
Unrealized (gains) losses on benefit plan
investments
$
(1.1
)
$
(1.1
)
Stock-based compensation expense
2.3
2.3
One-time separation costs
6.4
6.4
Adjusted EBITDA
$
(24.2
)
$
360.0
Revenue
$
348.1
$
504.2
$
491.5
$
643.6
$
234.1
$
(38.0
)
$
2,183.5
Net Income Margin
8.7
%
14.5
%
13.7
%
9.5
%
26.0
%
N.M.
7.4
%
EBITDA Margin
13.3
%
20.1
%
17.5
%
13.4
%
27.6
%
N.M.
16.1
%
Adjusted EBITDA Margin
N.M.
16.5
%
* N.M. - not meaningful
The following tables provide the reconciliation to
trailing-twelve-month EBITDA and Adjusted EBITDA as of September
30, 2024, as well as the net leverage calculation of net debt to
trailing-twelve-month Adjusted EBITDA.
Twelve Months Ended September 30,
2024
Nine Months Ended September 30,
2024
Twelve Months Ended December 31,
2023
Nine Months Ended September 30,
2023
(In millions)
Net income
$
199.1
$
178.4
$
182.9
$
162.2
Depreciation, depletion and
amortization
132.8
101.5
123.8
92.5
Interest expense, net
47.6
36.1
52.9
41.4
Income taxes
65.5
59.4
62.4
56.3
EBITDA
$
445.0
$
375.4
$
422.0
$
352.4
Unrealized (gains) losses on benefit plan
investments
(4.4
)
(2.8
)
(2.7
)
(1.1
)
Stock-based compensation expense
6.2
5.4
3.1
2.3
One-time separation costs
7.4
3.8
10.0
6.4
Adjusted EBITDA
$
454.2
$
381.8
$
432.4
$
360.0
Revenue
$
2,888.6
$
2,241.8
$
2,830.3
$
2,183.5
Net Income Margin
6.9
%
8.0
%
6.5
%
7.4
%
EBITDA Margin
15.4
%
16.7
%
14.9
%
16.1
%
Adjusted EBITDA Margin
15.7
%
17.0
%
15.3
%
16.5
%
Twelve Months Ended September 30,
2023
Nine Months Ended September 30,
2023
Twelve Months Ended December 31,
2022
Nine Months Ended September 30,
2022
(In millions)
Net income
$
180.2
$
162.2
$
116.2
$
98.2
Depreciation, depletion and
amortization
121.7
92.5
117.8
88.6
Interest expense, net
50.0
41.4
30.1
21.5
Income taxes
66.0
56.3
42.6
32.9
EBITDA
$
417.9
$
352.4
$
306.7
$
241.2
Unrealized (gains) losses on benefit plan
investments
(1.9
)
(1.1
)
4.0
4.8
Stock-based compensation expense
3.4
2.3
2.7
1.6
One-time separation costs
6.4
6.4
—
—
Adjusted EBITDA
$
425.8
$
360.0
$
313.4
$
247.6
Revenue
$
2,721.0
$
2,183.5
$
2,534.7
$
1,997.2
Net Income Margin
6.6
%
7.4
%
4.6
%
4.9
%
EBITDA Margin
15.4
%
16.1
%
12.1
%
12.1
%
Adjusted EBITDA Margin
15.6
%
16.5
%
12.4
%
12.4
%
The following table provides the reconciliation of the net
leverage calculation of net debt to Adjusted EBITDA.
Twelve Months Ended September 30,
2024
(In millions)
Long-term debt
$
669.7
Long-term debt - current portion
8.8
Total debt
678.5
Add: Unamortized debt issuance costs
13.2
Total debt, gross
691.7
Less: Cash and cash equivalents, excluding
restricted cash
220.4
Total debt, net
$
471.3
Trailing-twelve-months ended September 30,
2024, Adjusted EBITDA
$
454.2
Net leverage
1.0
x
The following table provides a reconciliation of consolidated
GAAP net income to EBITDA and Adjusted EBITDA for forecasted
results.
2024
Low
High
(In millions)
Net income
$
190.0
$
205.0
Adjustments:
Interest expense, net
46.0
46.0
Income taxes
65.0
70.0
Depreciation, depletion and
amortization
135.9
135.9
EBITDA
$
436.9
$
456.9
Unrealized (gains) losses on benefit plan
investments
(2.9
)
(2.9
)
Stock-based compensation expense
7.2
7.2
One-time separation costs
3.8
3.8
Adjusted EBITDA
$
445.0
$
465.0
FORWARD-LOOKING
STATEMENTS
The information in this news release highlights the key growth
strategies, projections and certain assumptions for the company and
its subsidiaries. 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. Although the company believes that its
expectations are based on reasonable assumptions, there is no
assurance the company’s projections or estimates for growth,
shareholder value creation, financial guidance, expected backlog
margin or other proposed strategies will be achieved. Please refer
to assumptions contained in this news release, as well as the
various important factors listed in Part I, Item 1A - Risk Factors
in the company's 2023 Form 10-K and subsequent filings with the
Securities and Exchange Commission.
Changes in such assumptions and factors could cause actual
future results to differ materially from growth and financial
guidance. All forward-looking statements in this news release are
expressly qualified by such cautionary statements and by reference
to the underlying assumptions. Undue reliance should not be placed
on forward-looking statements, which speak only as of the date they
are made. Except as required by law, the company does not undertake
to update forward-looking statements, whether as a result of new
information, future events or otherwise.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241104754022/en/
Media Contact: Tony Spilde, Senior Director of
Communications, 541-693-5949 IR Contact: Zane Karimi,
Director of Investor Relations, 503-944-3508
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