Knife River Completes Acquisition of Strata Corporation
Knife River (NYSE: KNF) has completed its acquisition of Strata for $454 million, representing approximately 9x Strata's projected 2025 EBITDA. The acquisition strengthens Knife River's Central Region operations and includes significant assets:
- Extensive aggregate reserves with 3 million tons sold in 2024
- Transportation fleet including 7 locomotives and 400+ railcars
- 28 ready-mix plants with ~120 trucks
- 3 asphalt plants for public works
- Contracting services division for asphalt paving and concrete construction
The deal brings aboard 900+ seasonal team members, including Strata President Paddy Murphy, who will lead Knife River's North Dakota operations. The acquisition was financed through cash and a $500 million Term Loan B. Knife River expects the acquisition to be accretive to Adjusted EBITDA margin within the first year and will update its 2025 financial guidance in Q1 earnings.
Knife River (NYSE: KNF) ha completato l'acquisizione di Strata per 454 milioni di dollari, che rappresenta circa 9 volte l'EBITDA previsto di Strata per il 2025. Questa acquisizione rafforza le operazioni della Knife River nella Regione Centrale e include beni significativi:
- Risorse aggregate estese con 3 milioni di tonnellate vendute nel 2024
- Flotta di trasporto composta da 7 locomotive e oltre 400 carri ferroviari
- 28 impianti di calcestruzzo preconfezionato con circa 120 camion
- 3 impianti di asfalto per lavori pubblici
- Divisione servizi di contrattazione per asfaltatura e costruzione in calcestruzzo
L'accordo coinvolge oltre 900 membri stagionali del team, incluso il presidente di Strata, Paddy Murphy, che guiderà le operazioni della Knife River nel Dakota del Nord. L'acquisizione è stata finanziata tramite contante e un prestito a termine B di 500 milioni di dollari. Knife River si aspetta che l'acquisizione contribuisca al margine EBITDA rettificato entro il primo anno e aggiornerà le previsioni finanziarie per il 2025 nei risultati del primo trimestre.
Knife River (NYSE: KNF) ha completado la adquisición de Strata por 454 millones de dólares, lo que representa aproximadamente 9 veces el EBITDA proyectado de Strata para 2025. La adquisición fortalece las operaciones de Knife River en la Región Central e incluye activos significativos:
- Extensas reservas de agregados con 3 millones de toneladas vendidas en 2024
- Flota de transporte que incluye 7 locomotoras y más de 400 vagones de ferrocarril
- 28 plantas de concreto premezclado con aproximadamente 120 camiones
- 3 plantas de asfalto para obras públicas
- División de servicios de contratación para pavimentación de asfalto y construcción de concreto
El acuerdo incorpora a más de 900 miembros estacionales del equipo, incluido el presidente de Strata, Paddy Murphy, quien liderará las operaciones de Knife River en Dakota del Norte. La adquisición se financió a través de efectivo y un préstamo a plazo B de 500 millones de dólares. Knife River espera que la adquisición sea accretiva al margen EBITDA ajustado dentro del primer año y actualizará su guía financiera para 2025 en los resultados del primer trimestre.
Knife River (NYSE: KNF)는 Strata를 4억 5천 4백만 달러에 인수 완료했으며, 이는 Strata의 2025년 예상 EBITDA의 약 9배에 해당합니다. 이번 인수는 Knife River의 중앙 지역 운영을 강화하고 중요한 자산을 포함합니다:
- 2024년에 300만 톤 판매된 광범위한 골재 매장량
- 7대의 기관차와 400대 이상의 화물차를 포함한 운송 차량
- 약 120대의 트럭을 갖춘 28개의 레미콘 공장
- 공공 작업을 위한 3개의 아스팔트 공장
- 아스팔트 포장 및 콘크리트 건설을 위한 계약 서비스 부서
이번 거래는 Strata의 사장인 Paddy Murphy를 포함하여 900명 이상의 계절 팀원을 영입하며, 그는 Knife River의 노스다코타 운영을 이끌 것입니다. 인수는 현금과 5억 달러 규모의 대출을 통해 자금 조달되었습니다. Knife River는 이번 인수가 첫 해 내에 조정 EBITDA 마진에 긍정적인 기여를 할 것으로 예상하며, 2025년 재무 가이드를 1분기 실적 발표에서 업데이트할 예정입니다.
Knife River (NYSE: KNF) a finalisé l'acquisition de Strata pour 454 millions de dollars, représentant environ 9 fois l'EBITDA projeté de Strata pour 2025. Cette acquisition renforce les opérations de Knife River dans la région centrale et comprend des actifs significatifs :
- Réserves de granulats étendues avec 3 millions de tonnes vendues en 2024
- Flotte de transport comprenant 7 locomotives et plus de 400 wagons de fret
- 28 centrales à béton prêt à l'emploi avec environ 120 camions
- 3 centrales d'asphalte pour les travaux publics
- Division de services de sous-traitance pour le pavage en asphalte et la construction en béton
L'accord intègre plus de 900 membres saisonniers de l'équipe, y compris le président de Strata, Paddy Murphy, qui dirigera les opérations de Knife River dans le Dakota du Nord. L'acquisition a été financée par des liquidités et un prêt à terme B de 500 millions de dollars. Knife River s'attend à ce que l'acquisition soit bénéfique pour la marge EBITDA ajustée dans la première année et mettra à jour ses prévisions financières pour 2025 lors des résultats du premier trimestre.
Knife River (NYSE: KNF) hat die Übernahme von Strata für 454 Millionen Dollar abgeschlossen, was etwa dem 9-fachen des prognostizierten EBITDA von Strata für 2025 entspricht. Die Übernahme stärkt die Aktivitäten von Knife River in der Zentralregion und umfasst bedeutende Vermögenswerte:
- Umfangreiche Aggregatreserven mit 3 Millionen Tonnen, die 2024 verkauft werden
- Transportflotte mit 7 Lokomotiven und über 400 Güterwagen
- 28 Fertigmischanlagen mit etwa 120 Lastwagen
- 3 Asphaltanlagen für öffentliche Arbeiten
- Vertragsdienstleistungsabteilung für Asphaltbelag und Betonbau
Der Deal bringt über 900 saisonale Teammitglieder an Bord, darunter den Präsidenten von Strata, Paddy Murphy, der die Aktivitäten von Knife River in North Dakota leiten wird. Die Übernahme wurde durch Bargeld und ein 500 Millionen Dollar umfassendes Term Loan B finanziert. Knife River erwartet, dass die Übernahme im ersten Jahr positiv zum bereinigten EBITDA-Margen beiträgt und wird seine Finanzprognose für 2025 im Ergebnis des ersten Quartals aktualisieren.
- Strategic expansion in Central Region with new market access
- Acquisition expected to be EBITDA margin accretive within first year
- Secured 30+ years of aggregate reserves
- Vertical integration with significant ready-mix and asphalt assets
- Strong transportation infrastructure with rail distribution network
- Substantial debt increase with $500M Term Loan B financing
- High acquisition multiple at 9x projected 2025 EBITDA
Insights
Knife River's $454 million acquisition of Strata represents a significant strategic expansion that strengthens its construction materials footprint in the Central Region. The 9x projected 2025 EBITDA multiple indicates a reasonably-valued transaction for a vertically integrated operator with substantial assets.
The acquisition brings impressive operational scale: over 30 years of aggregate reserves, 28 ready-mix plants, 3 asphalt plants, and a specialized contracting division. Particularly notable is the logistics infrastructure - 7 locomotives and over 400 railcars serving 8 rail distribution yards - which provides a competitive advantage in materials distribution where transportation costs significantly impact margins.
Management's projection that the acquisition will be accretive to Adjusted EBITDA margin within the first year signals confidence in rapid integration and synergy realization. This aligns with their "Competitive EDGE" growth strategy and suggests the operational similarities between the companies will facilitate a smooth transition.
The financing structure uses existing cash and a $500 million Term Loan B, indicating Knife River possessed the financial flexibility to execute this sizeable transaction. The appointment of Strata's President to lead Knife River's North Dakota operations should maintain operational continuity and local market expertise.
The planned update to 2025 financial guidance with Q1 results will likely provide greater visibility into the expected financial contribution from this acquisition.
Strata is an aggregates-led, vertically integrated company that employs over 900 team members during peak construction season. The transaction included:
- Well over 30 years of aggregate reserves for Strata’s operations. Its aggregates support its downstream products and services, as well as third-party sales. In 2024, Strata sold approximately 3 million tons of aggregates. In addition to its trucking fleet, Strata owns seven locomotives and over 400 railcars to deliver aggregates to market at eight strategically located rail distribution yards.
- 28 ready-mix plants and approximately 120 ready-mix trucks. Strata’s ready-mix operations specialize in high-specification concrete for commercial, industrial, residential and public work.
- Three asphalt plants that provide material for Strata’s internal contracting services division. Its asphalt is primarily used for public paving work, including airports, highways and streets.
- A contracting services division that performs asphalt paving and concrete construction, specializing in technical and higher-specification work. Having an internal source of high-quality materials in strategic locations provides Strata the opportunity to optimize margins.
-
A highly skilled and respected team, including Strata President Paddy Murphy, who was appointed president of Knife River’s
North Dakota operations in connection with the closing of the acquisition. Prior to Strata, Murphy was a general manager for Holcim.
“We’re excited to welcome Strata to the Knife River family of companies as we continue to execute on our Competitive EDGE plan to profitably grow our business,” said Knife River President and CEO Brian Gray. “Strata provides infill growth in our Central Region, along with access to new markets, and we expect it will be accretive to Knife River’s Adjusted EBITDA margin within the first year.
“Strata is a well-run, well-respected company,” Gray said. “We are already in the process of integrating its operations and look forward to profitable returns from this acquisition in 2025 and beyond.”
“Knife River and Strata have similar cultures, with similar business models, and we are excited to have joined their team,” Murphy said. “We expect that Knife River’s EDGE strategy, procurement synergies and internal efficiencies, combined with Strata’s operational platform, will have a positive and immediate impact on the Central Region.”
Knife River intends to update its consolidated 2025 financial guidance when it issues its first quarter 2025 earnings results. In addition to cash on hand, Knife River used a portion of the proceeds from the issuance of a Term Loan B in the amount of
About Knife River
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.
Forward-Looking Statements
The information in this news release highlights the key growth strategies, projections and certain assumptions for the company and its subsidiaries, including with respect to the benefits of the acquisition of Strata. 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 company believes that its expectations are expressed in good faith and based on reasonable assumptions, there is no assurance the company’s statements with respect to “Competitive EDGE,” projections or estimates for growth, shareholder value creation, long-term goals, statements related to the acquisition of Strata 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 2024 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 those expressed in the forward-looking statements. 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, Knife River does not undertake to update forward-looking statements, whether as a result of new information, future events or otherwise.
Non-GAAP Financial Measures
Adjusted EBITDA margin is considered a non-GAAP measure of financial performance. This non-GAAP financial measure is not a measure of financial performance under GAAP. The items excluded from this non-GAAP financial measure are significant components in understanding and assessing financial performance. Therefore, this non-GAAP financial measure should not be considered a substitute for the applicable GAAP metric.
Adjusted EBITDA margin is most directly comparable to the corresponding GAAP measure of net income margin. We believe this non-GAAP financial measure, in addition to the corresponding GAAP measure, is 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 margin is a useful performance measure because it allows 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 believe Adjusted EBITDA margin is a useful performance measure because it provides clarity as to the operational results of the company. Our management uses this non-GAAP financial measure in conjunction with GAAP results when evaluating our operating results internally and calculating employee incentive compensation.
EBITDA is calculated by adding back income taxes, interest expense (net of interest income) and depreciation, depletion and amortization expense to net income. Adjusted EBITDA is calculated by adding back unrealized gains and losses on benefit plan investments and stock-based compensation to EBITDA. Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by revenues. This non-GAAP financial measure should not be considered as an alternative to, or more meaningful than, the GAAP financial measure of net income margin and is intended to be a helpful supplemental financial measure for investors’ understanding of our operating performance. Our non-GAAP financial measure is not standardized; therefore, it may not be possible to compare this financial measure with other companies’ Adjusted EBITDA margin measure having the same or a similar name.
Knife River’s projection for Adjusted EBITDA margin and Strata’s projected 2025 EBITDA are non-GAAP financial measures that exclude or otherwise have been adjusted for non-GAAP adjustment items from Knife River’s or Strata’s GAAP financial statements, as applicable. When the company provides its forward-looking projection for Adjusted EBITDA margin and Strata’s projected 2025 EBITDA, it does not provide a reconciliation of these non-GAAP financial measures as Knife River is unable to predict with a reasonable degree of certainty the actual impact of the non-GAAP adjustment items. By their very nature, non-GAAP adjustment items are difficult to anticipate with precision because they are generally associated with unexpected and unplanned events that impact our company and its financial results, including, but not limited to, the potentially high variability, complexity and low visibility with respect to the items that would be excluded from the applicable GAAP measure in the relevant future period, such as unusual gains and losses, the impact and timing of potential acquisitions and divestitures, certain financing costs and other structural changes or their probable significance. Therefore, Knife River is unable to provide a reconciliation of these measures without unreasonable efforts.
View source version on businesswire.com: https://www.businesswire.com/news/home/20250310382691/en/
Media Contact:
Tony Spilde, Vice President of Communications, 541-693-5949
Investor Contact:
Zane Karimi, Director of Investor Relations, 503-944-3508
Source: Knife River Corporation
FAQ
What is the value of Knife River's acquisition of Strata ?
What assets did Knife River (KNF) acquire in the Strata deal?
How did Knife River (KNF) finance the Strata acquisition?
When will Knife River (KNF) update its 2025 financial guidance following the Strata acquisition?
What is the expected financial impact of the Strata acquisition on Knife River (KNF)?
