Knife River Corporation Reports Fourth Quarter and Full-year 2024 Financial Results

Rhea-AI Summary

Knife River (NYSE: KNF) reported record financial results for Q4 and full-year 2024. The company achieved full-year revenue of $2.89 billion (up 2%), net income of $201.7 million (up 10%), and adjusted EBITDA of $463 million (up 7%).

Q4 2024 highlights include revenue of $657.2 million (up 2%), net income of $23.3 million (up 12%), and adjusted EBITDA of $81.2 million (up 12%). The company's backlog stands at $746 million, 13% higher than last year.

The company announced its pending acquisition of Strata for $454 million, expected to close in H1 2025. For 2025, Knife River provided guidance of $3.0-3.2 billion in revenue and $485-535 million in adjusted EBITDA, excluding the Strata acquisition impact.

Positive

• Record full-year revenue of $2.89 billion, up 2% YoY
• Net income increased 10% to $201.7 million
• Adjusted EBITDA margin improved to 16%
• Backlog increased 13% to $746 million
• Completed six acquisitions worth $131 million in 2024
• Strong balance sheet with 1.0x net leverage ratio

Negative

• Declining material volumes due to quality-over-quantity initiatives
• Energy Services segment EBITDA decreased 30% in Q4
• Energy Services revenue declined 6% for full-year 2024

Insights

Financial Analyst

Knife River's Q4 and full-year 2024 results showcase a company executing masterfully on multiple fronts, with several key developments warranting attention:

Margin Expansion Excellence: The improvement in adjusted EBITDA margin to 16% demonstrates successful implementation of the EDGE strategy, particularly through dynamic pricing initiatives that yielded high-single-digit aggregate price increases. This pricing power, combined with a 160 basis point improvement in contracting services gross margin, indicates strong market positioning and operational discipline.

Strategic Growth Trajectory: The company's capital deployment strategy is particularly noteworthy:

• The pending Strata acquisition at $454 million represents a strategic move to consolidate market position
• Six completed acquisitions totaling $131 million demonstrate aggressive but disciplined growth
• Robust $746 million backlog (13% YoY increase) provides strong revenue visibility
• Conservative leverage at 1.0x net debt/EBITDA maintains financial flexibility

Operational Excellence: The reorganization into four segments (West, Mountain, Central, and Energy Services) streamlines operations and should drive further efficiency gains. The expansion of Process Improvement Teams (PIT Crews) to 58 additional plants in 2024 showcases a systematic approach to operational enhancement that will be important for integrating acquisitions and achieving the 20%+ long-term EBITDA margin goal.

Market Position Strengthening: Record state and federal infrastructure budgets, combined with the company's strategic focus on high-value markets, position Knife River favorably for sustained growth. The $96 million Boise highway project exemplifies the company's ability to secure significant, multi-year contracts in key markets.

Achieved record full-year revenue, net income and adjusted EBITDA

Continued margin expansion toward long-term goal

Acquisition of Strata Corporation remains on track

Introduced full-year 2025 guidance

BISMARCK, N.D.--(BUSINESS WIRE)-- Knife River Corporation (NYSE: KNF), an aggregates-led, vertically integrated construction materials and contracting services company, today announced financial results for the fourth quarter and full-year ended December 31, 2024.

PERFORMANCE SUMMARY
	Three Months Ended December 31,				Twelve Months Ended December 31,
(In millions, except per share)	2024	2023	% Change		2024	2023	% Change
Revenue	$657.2	$646.9	2%		$2,899.0	$2,830.3	2%
Net income	$23.3	$20.7	12%		$201.7	$182.9	10%
Net income margin	3.5%	3.2%			7.0%	6.5%
Adjusted EBITDA	$81.2	$72.4	12%		$463.0	$432.4	7%
Adjusted EBITDA margin	12.4%	11.2%			16.0%	15.3%
Net income per share	$0.41	$0.36	14%		$3.55	$3.23	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

“For the second consecutive year, we delivered record financial results – a testament to our 6,000 team members and their commitment to our Competitive EDGE strategy,” said Brian Gray, Knife River President and CEO. “We achieved record full-year revenue, net income and adjusted EBITDA. We also improved our adjusted EBITDA margin for the year to a record 16 percent, continuing our progress toward our long-term goal of exceeding 20 percent.

“In 2024, we built on our prior success by continuing to execute on our EDGE initiatives,” Gray said. “We implemented dynamic pricing in more of our markets, which resulted in high-single-digit price increases for our aggregates. We continued to practice disciplined bidding, helping us achieve a 160 basis-point improvement in our contracting services gross margin. Our Process Improvement Teams (PIT Crews) visited 58 additional plants, finding more operational efficiencies. We also invested $131 million on six acquisitions and announced our definitive agreement to acquire Strata Corporation for $454 million."

Strategic Acquisitions

• The strategic acquisition of Strata Corporation is expected to add high-quality, complementary assets to Knife River and be accretive to adjusted EBITDA margin.
  • Strata is an aggregates-led, vertically integrated company.
  • The transaction is under customary regulatory review, with an anticipated closing in the first half of the year.
• Our deal pipeline is robust, and our strong capital position gives us ample capacity to pursue strategic growth opportunities in addition to Strata.

EDGE Strategy Driving Growth

Our EDGE strategy contributed directly to our record 2024 performance. In 2025, we are expanding these efforts, including:

• Expediting the expansion of our PIT Crews, led by our new Chief Excellence Officer.
  • These teams are focused on three areas: Commercial Excellence, Operational Excellence and Standardization.
  • These efforts support our current operations and allow for quicker integration of acquisitions.
• Increasing investment in organic and acquisition growth, with $454 million approved for the acquisition of Strata and $68 million approved for identified organic growth projects.
• Reorganized segments to streamline operations and further facilitate EDGE implementation.
  • Standardizing processes across all segments and providing resources for local operations to meet their EDGE goals.
  • Combined the Pacific and Northwest into the West Segment. Beginning with first quarter 2025, our reporting segments will be West, Mountain, Central and Energy Services.

Infrastructure Funding and Strong Backlog

• Healthy fourth quarter backlog of $746 million, 13% higher than the same time last year.
• Backlog includes $96 million, three-year highway reconstruction project near Boise, Idaho.
• Budgets at the local, state and federal levels are near all-time records.

Guidance

• Introducing full-year 2025 revenue guidance of $3.0 billion to $3.2 billion and full-year adjusted EBITDA guidance of $485 million to $535 million.
• Guidance does not include the expected impact of the Strata acquisition or any other potential acquisitions.

“I’m proud of our team for working safely and producing record results,” Gray said. “We had a great year in 2024, with a strong finish, and we look forward to what's ahead in 2025 as we maintain our focus on our EDGE strategy.”

FOURTH QUARTER 2024 RESULTS

For the three months ended December 31, 2024, we reported record consolidated revenue of $657.2 million, a 2% increase from the prior-year record revenue. Record revenue was primarily driven by price increases in our aggregates, ready-mix and asphalt product lines, partially offset by declines in our material volumes, which were directly related to our quality-over-quantity initiatives. We reported fourth quarter net income of $23.3 million, compared to $20.7 million in the prior-year period, and record fourth quarter adjusted EBITDA of $81.2 million, a 12% increase from the prior-year period. We had solid EBITDA contributions from each of our geographic segments, totaling a 13% increase from the prior-year period. The results at our geographic segments helped to offset the expected decrease in EBITDA at Energy Services, related to lower liquid asphalt pricing.

In the fourth quarter of 2023, we 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									Twelve Months Ended
	Dec. 31,									Dec. 31,
		2024			2023		% Change				2024			2023		% Change
	(In millions)
Revenue	$	117.9		$	114.1		3	%		$	493.1		$	462.2		7	%
EBITDA	$	13.4		$	10.0		33	%		$	59.9		$	56.2		7	%
EBITDA margin		11.3	%		8.8	%					12.1	%		12.2	%

Fourth quarter revenue increased to a record $117.9 million, driven by price increases in all product lines as a result of our EDGE-related pricing initiatives. We also saw higher cement volumes in Hawaii, largely due to increased demand related to an improved construction sector. Offsetting the increases were reduced volumes in all other product lines, partially due to timing and availability of paving projects. EBITDA increased year-over-year, largely related to a gain of $2.2 million on equipment sales in our California operations.

Northwest
Oregon, Washington	Three Months Ended									Twelve Months Ended
	Dec. 31,									Dec. 31,
		2024			2023		% Change				2024			2023		% Change
	(In millions)
Revenue	$	152.7		$	161.8		(6	)%		$	692.4		$	666.1		4	%
EBITDA	$	22.9		$	19.8		16	%		$	149.8		$	121.1		24	%
EBITDA margin		15.0	%		12.2	%					21.6	%		18.2	%

Fourth quarter revenue decreased 6% year-over-year to $152.7 million, primarily related to the timing of construction projects in comparison to the prior-year period and lower volumes across the material product lines as a result of our EDGE-related price initiatives and market conditions. Higher ready-mix and aggregate pricing partially offset the decline in revenue. EBITDA was $22.9 million for the quarter, a 16% increase year-over-year, as the segment benefited from improved ready-mix margins, partially related to favorable project execution in southern Oregon.

Mountain
Idaho, Montana, Wyoming	Three Months Ended									Twelve Months Ended
	Dec. 31,									Dec. 31,
		2024			2023		% Change				2024			2023		% Change
	(In millions)
Revenue	$	148.2		$	142.5		4	%		$	663.1		$	634.0		5	%
EBITDA	$	17.0		$	17.2		(1	)%		$	113.5		$	103.2		10	%
EBITDA margin		11.5	%		12.0	%					17.1	%		16.3	%

Fourth quarter revenue increased to a record $148.2 million, driven by increased contracting services activity, which also drove higher asphalt volumes, and improved pricing on ready-mix and asphalt. EBITDA decreased slightly for the quarter due to the timing of job completions, as well as the mix of work in our contracting services product line, as compared to the prior year. This decline was mostly offset by increased gross profit from EDGE-related pricing initiatives and increased asphalt sales volumes.

Central
Iowa, Minnesota, North Dakota, South Dakota, Texas	Three Months Ended									Twelve Months Ended
	Dec. 31,									Dec. 31,
		2024			2023		% Change				2024			2023		% Change
	(In millions)
Revenue	$	187.5		$	181.4		3	%		$	818.1		$	825.0		(1	)%
EBITDA	$	34.3		$	30.4		13	%		$	131.6		$	116.6		13	%
EBITDA margin		18.3	%		16.7	%					16.1	%		14.1	%

Fourth quarter revenue increased 3% year-over-year to a record $187.5 million, driven by increased construction activity in Texas as well as higher aggregate sales volumes across the region. EBITDA improved 13% to a fourth quarter record of $34.3 million as our aggregate and asphalt margins benefited from EDGE-related pricing initiatives. In addition, we saw higher margins in our Texas contracting services product line as a result of disciplined bidding and project performance.

Energy Services
California, Iowa, Nebraska, Oregon, South Dakota, Texas, Washington, Wyoming	Three Months Ended									Twelve Months Ended
	Dec. 31,									Dec. 31,
		2024			2023		% Change				2024			2023		% Change
	(In millions)
Revenue	$	60.8		$	58.3		4	%		$	275.7		$	292.3		(6	)%
EBITDA	$	9.6		$	13.6		(30	)%		$	60.2		$	78.1		(23	)%
EBITDA margin		15.7	%		23.3	%					21.8	%		26.7	%

Fourth quarter revenue increased 4% year-over-year, primarily due to contributions from the acquisition of Albina Asphalt and increased demand in South Dakota and California, partially offset by lower pricing for liquid asphalt across most markets. EBITDA decreased 30% year-over-year as anticipated and previously disclosed, a result of lower market pricing bringing our margins back within a normal range.

CAPITAL ALLOCATION & LIQUIDITY

Knife River is committed to disciplined capital allocation, including reinvesting in the company to maintain fixed assets, improve operations and grow our business.

We have approved 2025 capital expenditures for maintenance and improvement to be between 5% and 7% of revenue guidance. In 2024, we spent $170.5 million largely on the replacement of depleting aggregate reserves, construction equipment, plant improvements and buildings.

We have also approved investments of approximately $522 million, which includes the pending acquisition of Strata for $454 million, as well as organic growth projects in 2025. In 2024, we invested $132.9 million on six acquisitions, which included aggregate, ready-mix and liquid asphalt operations, and initial greenfield projects.

Capital expenditures for future acquisitions and other organic growth projects 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 2025 will be funded by various sources, including internally generated cash and debt. In addition to cash on hand, Knife River intends to use the proceeds from a new $500 million Term Loan B facility to finance a portion of Strata's purchase price. Separately, Knife River also intends to increase the total commitments under its existing revolving credit facility from $350 million to $500 million and extend the maturity date of its existing senior secured credit facilities from 2028 to 2030.

As of December 31, 2024, Knife River had $236.8 million of unrestricted cash and cash equivalents and had $690.0 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 December 31, 2024.

2025 FINANCIAL GUIDANCE

Knife River expects full-year 2025 financial results in the ranges noted in the following table. We expect price increases of mid-single digits for aggregates and ready-mix and low-single digits for asphalt. We expect low-single-digit volume increases for all product lines. The guidance ranges are based on normal weather and normal economic and operating conditions, and do not include the expected impact of the Strata acquisition or any other potential acquisitions.

	Low		High
	(In millions)
Revenue
Revenue (Knife River Consolidated)	$	3,000.0	$	3,200.0
Adjusted EBITDA
Geographic Segments and Corporate Services		420.0		460.0
Energy Services		65.0		75.0
Knife River Consolidated	$	485.0	$	535.0

FOURTH QUARTER AND FULL-YEAR 2024 RESULTS CONFERENCE CALL

Knife River will host a conference call at 11 a.m. EST on February 13, 2025, to discuss fourth quarter and full-year 2024 results, 2025 guidance and conduct a question-and-answer session. The event will be webcast at https://events.q4inc.com/attendee/518807572.

To participate in the live call:

• Domestic: 1-800-549-8228
• International: 1-289-819-1520
  Conference ID: 23801

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					Twelve Months Ended
	December 31,					December 31,
		2024		2023			2024		2023
	(In millions, except per share amounts)
Revenue:
Construction materials	$	355.8	$	345.3		$	1,540.8	$	1,523.0
Contracting services		301.4		301.6			1,358.2		1,307.3
Total revenue		657.2		646.9			2,899.0		2,830.3
Cost of revenue:
Construction materials		282.2		276.4			1,147.5		1,133.0
Contracting services		260.9		258.0			1,181.7		1,158.4
Total cost of revenue		543.1		534.4			2,329.2		2,291.4
Gross profit		114.1		112.5			569.8		538.9
Selling, general and administrative expenses		70.1		75.3			253.6		242.5
Operating income		44.0		37.2			316.2		296.4
Interest expense		13.4		14.1			55.2		58.1
Other income		2.5		3.7			10.0		7.0
Income before income taxes		33.1		26.8			271.0		245.3
Income tax expense		9.8		6.1			69.3		62.4
Net income	$	23.3	$	20.7		$	201.7	$	182.9
Net income per share:
Basic	$	.41	$	.37		$	3.56	$	3.23
Diluted	$	.41	$	.36		$	3.55	$	3.23
Weighted average common shares outstanding:
Basic		56.6		56.6			56.6		56.6
Diluted		56.9		56.8			56.8		56.7

Knife River Corporation
Consolidated Balance Sheets
(Unaudited)
	December 31, 2024				December 31, 2023
Assets	(In millions, except shares and per share amounts)
Current assets:
Cash, cash equivalents and restricted cash	$	281.1			$	262.3
Receivables, net		267.3				266.8
Costs and estimated earnings in excess of billings on uncompleted contracts		31.3				27.3
Inventories		380.3				319.6
Prepayments and other current assets		27.7				37.5
Total current assets		987.7				913.5
Noncurrent assets:
Property, plant and equipment		2,805.7				2,579.7
Less accumulated depreciation, depletion and amortization		1,364.0				1,264.7
Net property, plant and equipment		1,441.7				1,315.0
Goodwill		297.2				274.5
Other intangible assets, net		29.4				10.8
Operating lease right-of-use assets		49.4				44.7
Investments and other		45.8				41.3
Total noncurrent assets		1,863.5				1,686.3
Total assets	$	2,851.2			$	2,599.8
Liabilities and Stockholders' Equity
Current liabilities:
Long-term debt - current portion	$	10.5			$	7.1
Accounts payable		140.8				107.7
Billings in excess of costs and estimated earnings on uncompleted contracts		42.1				51.4
Accrued compensation		50.7				48.1
Current operating lease liabilities		14.8				12.9
Taxes payable		8.3				9.3
Accrued interest		5.5				7.2
Other accrued liabilities		97.3				103.6
Total current liabilities		370.0				347.3
Noncurrent liabilities:
Long-term debt		666.9				674.6
Deferred income taxes		174.7				174.5
Noncurrent operating lease liabilities		34.5				31.8
Other		129.0				105.6
Total liabilities		1,375.1				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 December 31, 2024; 57,009,542 shares issued and 56,578,406 shares outstanding at December 31, 2023		.6				.6
Other paid-in capital		620.9				614.5
Retained earnings		867.5				665.8
Treasury stock held at cost - 431,136 shares		(3.6	)			(3.6	)
Accumulated other comprehensive loss		(9.3	)			(11.3	)
Total stockholders' equity		1,476.1				1,266.0
Total liabilities and stockholders' equity	$	2,851.2			$	2,599.8

Knife River Corporation
Consolidated Statements of Cash Flows
(Unaudited)
	Twelve Months Ended
	December 31,
		2024				2023
	(In millions)
Operating activities:
Net income	$	201.7			$	182.9
Adjustments to reconcile net income to net cash provided by operating activities		137.4				128.8
Changes in current assets and liabilities, net of acquisitions:
Receivables		14.1				(54.8	)
Due from related-party		—				16.1
Inventories		(44.3	)			3.7
Other current assets		10.9				(19.6	)
Accounts payable		7.3				33.1
Due to related-party		—				(7.3	)
Other current liabilities		(4.0	)			49.0
Pension and postretirement benefit plan contributions		(2.7	)			(1.8	)
Other noncurrent changes		1.9				5.6
Net cash provided by operating activities		322.3				335.7
Investing activities:
Capital expenditures		(172.4	)			(124.3	)
Acquisitions, net of cash acquired		(131.0	)			—
Net proceeds from sale or disposition of property and other		12.0				8.3
Investments		(3.4	)			(1.9	)
Net cash used in investing activities		(294.8	)			(117.9	)
Financing activities:
Issuance of long-term related-party notes, net		—				205.3
Issuance of long-term debt		—				700.0
Repayment of long-term debt		(7.0	)			(3.6	)
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		(8.7	)			34.4
Increase in cash, cash equivalents and restricted cash		18.8				252.2
Cash, cash equivalents and restricted cash -- beginning of year		262.3				10.1
Cash, cash equivalents and restricted cash -- end of period	$	281.1			$	262.3

Segment Financial Data and Highlights (Unaudited)
	Three Months Ended												Twelve Months Ended
	December 31,												December 31,
	2024						2023						2024						2023
	Dollars			Margin			Dollars			Margin			Dollars			Margin			Dollars			Margin
	(Dollars in millions)
Revenues by segment:
Pacific	$	117.9					$	114.1					$	493.1					$	462.2
Northwest		152.7						161.8						692.4						666.1
Mountain		148.2						142.5						663.1						634.0
Central		187.5						181.4						818.1						825.0
Energy Services		60.8						58.3						275.7						292.3
Total segment revenues		667.1						658.1						2,942.4						2,879.6
Corporate Services and Eliminations		(9.9	)					(11.2	)					(43.4	)					(49.3	)
Consolidated revenues	$	657.2					$	646.9					$	2,899.0					$	2,830.3
EBITDA by segment:
Pacific	$	13.4		11.3	%		$	10.0		8.8	%		$	59.9		12.1	%		$	56.2		12.2	%
Northwest		22.9		15.0	%			19.8		12.2	%			149.8		21.6	%			121.1		18.2	%
Mountain		17.0		11.5	%			17.2		12.0	%			113.5		17.1	%			103.2		16.3	%
Central		34.3		18.3	%			30.4		16.7	%			131.6		16.1	%			116.6		14.1	%
Energy Services		9.6		15.7	%			13.6		23.3	%			60.2		21.8	%			78.1		26.7	%
Total segment EBITDA (b)		97.2		14.6	%			91.0		13.8	%			515.0		17.5	%			475.2		16.5	%
Corporate Services and Eliminations		(18.4	)	N.M.				(21.4	)	N.M.				(60.7	)	N.M.				(53.2	)	N.M.
Consolidated EBITDA (b)	$	78.8		12.0	%		$	69.6		10.8	%		$	454.3		15.7	%		$	422.0		14.9	%
(a) N.M. - not meaningful (b) EBITDA, total segment EBITDA, EBITDA margin and total 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.

	December 31, 2024			December 31, 2023
	(In millions)
Pacific	$	100.9		$	51.2
Northwest		129.3			196.2
Mountain		339.9			256.7
Central		175.5			158.1
	$	745.6		$	662.2

Margins on backlog at December 31, 2024, are expected to be comparable to the margins on backlog at December 31, 2023. Approximately 86% 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					Twelve Months Ended
	December 31,					December 31,
		2024		2023			2024		2023
Sales (thousands):
Aggregates (tons)		6,999		7,566			31,832		33,637
Ready-mix concrete (cubic yards)		831		893			3,484		3,837
Asphalt (tons)		1,271		1,319			6,454		6,760
Average selling price:*
Aggregates (per ton)	$	17.14	$	16.43		$	17.47	$	16.29
Ready-mix concrete (per cubic yard)	$	195.57	$	175.01		$	188.11	$	170.42
Asphalt (per ton)	$	71.32	$	69.04		$	68.40	$	66.92
* The average selling price includes freight and delivery and other revenues.

	Three Months Ended												Twelve Months Ended
	December 31,												December 31,
	2024						2023						2024						2023
	Dollars			Margin			Dollars			Margin			Dollars			Margin			Dollars			Margin
	(Dollars in millions)
Revenues by product line:
Aggregates	$	120.0					$	124.3					$	556.1					$	547.9
Ready-mix concrete		162.6						156.2						655.5						653.9
Asphalt		90.6						91.1						441.5						452.4
Liquid asphalt		51.7						49.4						238.9						253.2
Other*		59.4						57.0						265.8						249.0
Contracting services		301.4						301.6						1,358.2						1,307.3
Internal sales		(128.5	)					(132.7	)					(617.0	)					(633.4	)
Total revenues	$	657.2					$	646.9					$	2,899.0					$	2,830.3
Gross profit by product line:
Aggregates	$	18.3		15.2	%		$	19.1		15.4	%		$	114.3		20.6	%		$	109.7		20.0	%
Ready-mix concrete		27.9		17.2	%			26.7		17.1	%			106.0		16.2	%			101.2		15.5	%
Asphalt		13.4		14.8	%			11.8		12.9	%			68.2		15.4	%			61.5		13.6	%
Liquid asphalt		7.8		15.2	%			12.4		25.0	%			51.5		21.6	%			69.7		27.5	%
Other*		6.2		10.4	%			(1.1	)	(1.9	)%			53.3		20.1	%			47.9		19.2	%
Contracting services		40.5		13.4	%			43.6		14.5	%			176.5		13.0	%			148.9		11.4	%
Total gross profit	$	114.1		17.4	%		$	112.5		17.4	%		$	569.8		19.7	%		$	538.9		19.0	%
* 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, as well as total segment measures, 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, EBITDA margin, Adjusted EBITDA and Adjusted 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.

The following table provides the reconciliation of net income to EBITDA and Adjusted EBITDA.

	Three Months Ended							Twelve Months Ended
	December 31,							December 31,
		2024			2023				2024			2023
	(In millions)
Net income	$	23.3		$	20.7			$	201.7		$	182.9
Depreciation, depletion and amortization		35.4			31.3				136.9			123.8
Interest expense, net		10.3			11.5				46.4			52.9
Income taxes		9.8			6.1				69.3			62.4
EBITDA	$	78.8		$	69.6			$	454.3		$	422.0
Unrealized (gains) losses on benefit plan investments		—			(1.5	)			(2.9	)		(2.7	)
Stock-based compensation expense		2.4			0.8				7.8			3.1
One-time separation costs		—			3.5				3.8			10.0
Adjusted EBITDA	$	81.2		$	72.4			$	463.0		$	432.4
Revenue	$	657.2		$	646.9			$	2,899.0		$	2,830.3
Net Income Margin		3.5	%		3.2	%			7.0	%		6.5	%
EBITDA Margin		12.0	%		10.8	%			15.7	%		14.9	%
Adjusted EBITDA Margin		12.4	%		11.2	%			16.0	%		15.3	%

The following table provides the reconciliation of consolidated net income to total segment EBITDA.

	Three Months Ended							Twelve Months Ended
	December 31,							December 31,
		2024			2023				2024			2023
	(In millions)
Consolidated net income	$	23.3		$	20.7			$	201.7		$	182.9
Depreciation, depletion and amortization		35.4			31.3				136.9			123.8
Interest expense, net		10.3			11.5				46.4			52.9
Income taxes		9.8			6.1				69.3			62.4
EBITDA	$	78.8		$	69.6			$	454.3		$	422.0
Less corporate services EBITDA		(18.4	)		(21.4	)			(60.7	)		(53.2	)
Total segment EBITDA	$	97.2		$	91.0			$	515.0		$	475.2

The following table provides the reconciliation of the net leverage calculation of net debt to Adjusted EBITDA.

	Twelve Months Ended December 31, 2024
	(In millions)
Long-term debt	$	666.9
Long-term debt - current portion		10.5
Total debt		677.4
Add: Unamortized debt issuance costs		12.6
Total debt, gross		690.0
Less: Cash and cash equivalents, excluding restricted cash		236.8
Total debt, net	$	453.2
Trailing-twelve-months ended December 31, 2024, Adjusted EBITDA	$	463.0
Net leverage		1.0	x

The following table provides a reconciliation of consolidated GAAP net income to EBITDA and Adjusted EBITDA for forecasted results.

	2025
	Low		High
	(In millions)
Net income	$	210.0	$	245.0
Adjustments:
Interest expense, net		44.0		44.0
Income taxes		71.0		86.0
Depreciation, depletion and amortization		148.0		148.0
EBITDA	$	473.0	$	523.0
Unrealized (gains) losses on benefit plan investments		—		—
Stock-based compensation expense		12.0		12.0
Adjusted EBITDA	$	485.0	$	535.0

Knife River’s long-term goal for Adjusted EBITDA margin and projection for 2025 Adjusted EBITDA margin are non-GAAP financial measures that exclude or otherwise have been adjusted for non-GAAP adjustment items from Knife River’s financial statements. When the company provides its forward-looking long-term goal for Adjusted EBITDA margin and projection for 2025 Adjusted EBITDA margin, 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.

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 consummation of the acquisition of Strata and the timing and benefits thereof. 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 projections or estimates for growth, shareholder value creation, financial guidance, expected long-term goals, backlog margin, statements related to the acquisition of Strata, financing plans 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 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, 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/20250213314936/en/

IR Contact: Zane Karimi, Director of Investor Relations, 503-944-3508

Media Contact: Tony Spilde, Vice President of Communications, 541-693-5949

Source: Knife River Corporation

FAQ

What were Knife River's (KNF) key financial results for full-year 2024?

Knife River reported full-year 2024 revenue of $2.89 billion (up 2%), net income of $201.7 million (up 10%), and adjusted EBITDA of $463 million (up 7%).

How much is Knife River (KNF) paying for the Strata acquisition?

Knife River is acquiring Strata for $454 million, with the deal expected to close in the first half of 2025.

What is Knife River's (KNF) revenue guidance for 2025?

Knife River provided 2025 revenue guidance of $3.0-3.2 billion and adjusted EBITDA guidance of $485-535 million, excluding the Strata acquisition impact.

What was Knife River's (KNF) backlog as of Q4 2024?

Knife River's backlog stood at $746 million at the end of Q4 2024, representing a 13% increase from the previous year.

How many acquisitions did Knife River (KNF) complete in 2024?

Knife River completed six acquisitions in 2024, investing $131 million in aggregate, ready-mix and liquid asphalt operations.