Group 1 - Knife River Corporation (NYSE:KNF) is highlighted as a strong infrastructure stock with significant upside potential, receiving an Equal Weight rating from Wells Fargo with a price target of $261 [1][2] - Wells Fargo's coverage of the US building materials sector indicates a preference for early-cycle beneficiaries of interest rate cuts, particularly in cement, wallboard, and home improvement [1] - Despite a cautious outlook on construction through 2026, Wells Fargo anticipates a recovery in late 2026 into 2027, with home improvement potentially recovering sooner [2] Group 2 - DA Davidson recently lowered its price target for Knife River from $105 to $95 while maintaining a Buy rating, citing weather-related challenges and market pressures in Oregon [2] - Knife River operates in the US construction materials sector, providing aggregates-led construction materials and contracting services through various segments including Pacific, Northwest, Mountain, Central, and Energy Services [3]

BISMARCK, N.D.--(BUSINESS WIRE)--Knife River Corporation (NYSE: KNF), an aggregates-led, vertically integrated construction materials and contracting services company, will host its third quarter 2025 earnings conference call at 11 a.m. EST Tuesday, Nov. 4, 2025. Financial results for the quarter will be released that morning before the NYSE market opens. A live webcast of the call, along with presentation slides, will be available in the Investors section of the Knife River website at investor. ...

Core Insights - Crude Value Insights provides an investment service and community focused on the oil and natural gas sector, emphasizing cash flow generation and growth potential [1] - Subscribers benefit from a model account featuring over 50 stocks, detailed cash flow analyses of exploration and production (E&P) firms, and live discussions about the sector [1] Subscription Offer - A two-week free trial is available for new subscribers, allowing them to explore the oil and gas investment opportunities [2]

Group 1 - Knife River Corporation (KNF) is a vertically integrated building materials company with a current share price of approximately $78.88 and a price target of $115, indicating over 40% upside potential [2][5] - The company has improved margins through pricing power and cost discipline, and has executed accretive bolt-on deals while maintaining volume growth despite challenging market conditions [2][3] - KNF's stock has underperformed year-to-date, down 20%, primarily due to management commentary on weather-related project delays and stalled infrastructure funding in Oregon [2][3] Group 2 - The market has compressed KNF's multiple by 30%, reflecting overstated structural concerns, as the company operates in localized oligopolies with limited new entrants [3] - The recent acquisition of Strata is expected to provide further upside through synergies, and the board is focused on maximizing shareholder value [3][4] - KNF presents a compelling 3:1 risk-reward ratio, with potential for multiple expansion and steady high-single-digit EBITDA growth supporting a 20%+ internal rate of return (IRR) over the medium term [4] Group 3 - Catalysts for KNF include low expectations for the upcoming Q2 earnings report, incremental margin gains from the EDGE initiative, and potential infrastructure funding from Oregon and federal support [5] - The company offers resilient cash generation, pricing power, and strategic optionality, making current weakness a potential buying opportunity [5] - KNF's strong M&A optionality, both as an acquirer and a target, further de-risks the investment story, with potential takeout bids providing additional upside [4]

Core Insights - NWPX Infrastructure (NWPX) is currently more attractive to value investors compared to Knife River (KNF) based on various financial metrics and analyst outlooks [1][3][7] Valuation Metrics - NWPX has a forward P/E ratio of 16.82, while KNF has a significantly higher forward P/E of 27.81 [5] - The PEG ratio for NWPX is 3.36, indicating a more favorable expected EPS growth rate compared to KNF's PEG ratio of 6.44 [5] - NWPX's P/B ratio stands at 1.26, contrasting with KNF's P/B ratio of 3.43, suggesting that NWPX is undervalued relative to its book value [6] Analyst Outlook - NWPX holds a Zacks Rank of 2 (Buy), indicating positive earnings estimate revisions, while KNF has a Zacks Rank of 5 (Strong Sell), reflecting a less favorable analyst outlook [3][7] - The Value grade for NWPX is B, whereas KNF has a Value grade of F, further supporting the conclusion that NWPX is the superior option for value investors [6][7]

[Part I -- Financial Information](index=5&type=section&id=Part%20I%20--%20Financial%20Information) [Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) The unaudited consolidated financial statements for Q2 and YTD June 2025 show a net loss, significant asset growth, and increased debt, primarily due to recent acquisitions [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) For Q2 2025, total revenues increased, but gross profit, operating income, and net income declined, leading to a year-to-date net loss compared to prior-year income Consolidated Statements of Operations Highlights (In thousands, except per share amounts) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | $833,759 | $806,906 | $1,187,231 | $1,136,496 | | **Gross Profit** | $157,246 | $176,220 | $147,652 | $182,713 | | **Operating Income** | $88,076 | $116,746 | $5,424 | $63,018 | | **Net Income (Loss)** | $50,603 | $77,929 | $(18,107) | $30,301 | | **Diluted EPS** | $0.89 | $1.37 | $(0.32) | $0.53 | [Consolidated Balance Sheets](index=7&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets significantly increased to $3.63 billion, primarily due to acquisitions boosting property, plant, and equipment and goodwill, while long-term debt also rose to $1.34 billion Key Balance Sheet Items (In thousands) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $1,103,280 | $987,668 | | **Net Property, Plant and Equipment** | $1,924,220 | $1,441,700 | | **Goodwill** | $464,133 | $297,225 | | **Total Assets** | $3,631,463 | $2,851,202 | | **Total Current Liabilities** | $397,206 | $370,037 | | **Long-term Debt** | $1,341,174 | $666,911 | | **Total Liabilities** | $2,170,346 | $1,375,117 | | **Total Stockholders' Equity** | $1,461,117 | $1,476,085 | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the first half of 2025, cash usage significantly increased in operating and investing activities, primarily due to a net loss, working capital needs, and substantial acquisition-related spending, largely funded by new long-term debt Cash Flow Summary - Six Months Ended June 30 (In thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | **Net Cash Used in Operating Activities** | $(167,847) | $(89,777) | | **Net Cash Used in Investing Activities** | $(701,945) | $(110,198) | | **Net Cash Provided by (Used in) Financing Activities** | $666,326 | $(5,176) | | **Decrease in Cash** | $(203,466) | $(205,151) | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies, segment reorganization, the significant Strata Corporation acquisition, credit agreement amendments for financing, and the company's $1.25 billion backlog - In January 2025, the company reorganized its business into **four new reportable segments: West, Mountain, Central, and Energy Services**. All prior period data has been recast to reflect this new structure[13](index=13&type=chunk)[32](index=32&type=chunk)[85](index=85&type=chunk) - On March 7, 2025, the company acquired **Strata Corporation** for a total purchase price of **$454.0 million**. The acquisition contributed **$49.8 million in revenue** and a **net loss of $7.0 million** for the period ended June 30, 2025[35](index=35&type=chunk)[59](index=59&type=chunk)[65](index=65&type=chunk) - As of June 30, 2025, the company's remaining performance obligations (backlog) totaled **$1.25 billion**, of which **$998.5 million** is expected to be recognized as revenue within the next 12 months[56](index=56&type=chunk) - The company amended its senior secured credit agreement in March 2025, increasing its **revolving credit facility to $500 million** and adding a **new $500 million Term Loan B** to fund acquisitions and other activities[82](index=82&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=27&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the year-to-date revenue increase to acquisitions and pricing, while gross profit and Adjusted EBITDA declined due to lower volumes, competitive pressures, and integration costs, with backlog growing due to public funding and capital focused on strategic growth and efficiency Consolidated Financial Overview (In millions) | Metric | YTD 2025 | YTD 2024 | % Change | | :--- | :--- | :--- | :--- | | **Revenue** | $1,187.2 | $1,136.5 | 4% | | **Gross Profit** | $147.6 | $182.7 | (19)% | | **Net Income (Loss)** | $(18.1) | $30.3 | (160)% | | **Adjusted EBITDA** | $102.8 | $136.6 | (25)% | - Contracting services backlog increased to **$1.25 billion** at June 30, 2025, up from **$988.5 million** a year prior. Approximately **91%** of the current backlog relates to publicly funded projects[114](index=114&type=chunk) - The company is focused on its **'EDGE' strategy** to improve margins through process improvement teams (PIT Crews), standardization, and commercial and operational excellence initiatives[119](index=119&type=chunk)[120](index=120&type=chunk) [Market Conditions and Outlook](index=28&type=section&id=Market%20Conditions%20and%20Outlook) The market outlook is positive due to strong infrastructure funding and increased backlog, despite challenges from project delays, Oregon's funding shortfall, and business seasonality, with the company pursuing growth through acquisitions and organic projects Contracting Services Backlog (In millions) | Segment | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | West | $282.4 | $320.8 | | Mountain | $483.4 | $365.5 | | Central | $487.6 | $302.2 | | **Total** | **$1,253.4** | **$988.5** | - Strong public funding continues, with the **Infrastructure Investment and Jobs Act (IIJA)** providing a significant tailwind. However, **Oregon's DOT budget shortfall** is creating a headwind for 2025[118](index=118&type=chunk) - Growth initiatives include the recent acquisition of **Strata Corporation** and a subsequent acquisition in **Central Oregon**, alongside organic projects like an **aggregates expansion in South Dakota** and a **new ready-mix operation in Idaho**[122](index=122&type=chunk)[123](index=123&type=chunk) [Business Segment Financial and Operating Data](index=33&type=section&id=Business%20Segment%20Financial%20and%20Operating%20Data) Q2 2025 segment performance varied, with Central and Energy Services showing revenue growth driven by acquisitions, while West and Mountain segments experienced declines due to project timing and weather, and Energy Services' EBITDA margin compressed due to competitive pressures Segment EBITDA - Q2 2025 vs Q2 2024 (In millions) | Segment | Q2 2025 EBITDA | Q2 2024 EBITDA | % Change | | :--- | :--- | :--- | :--- | | West | $60.7 | $68.5 | (11)% | | Mountain | $30.9 | $43.1 | (28)% | | Central | $44.4 | $36.2 | 23% | | Energy Services | $17.1 | $19.4 | (12)% | | **Total Segment EBITDA** | **$153.1** | **$167.2** | **(8)%** | - The **Central segment's** performance was significantly boosted by the **Strata acquisition**, which contributed **$46.9 million in revenue** in Q2 2025[166](index=166&type=chunk) - The **West and Mountain segments** experienced **revenue and EBITDA declines** due to **reduced public-agency work in Oregon**, project timing, and unfavorable weather[156](index=156&type=chunk)[161](index=161&type=chunk) [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, the company maintained liquidity with cash and credit availability, but cash used in operations increased, while significant capital expenditures and acquisitions were largely funded by a new $500 million Term Loan B - At June 30, 2025, the company had **total liquidity of approximately $320.6 million**, consisting of **$26.6 million in cash** and **$294.0 million in borrowing capacity**[178](index=178&type=chunk) - For the first six months of 2025, the company spent **$501.9 million on acquisitions** and **$228.6 million on total capital expenditures**[183](index=183&type=chunk)[186](index=186&type=chunk) - Long-term debt increased by approximately **$680.0 million** from year-end 2024, primarily from a **new $500 million Term Loan B** and **$183 million drawn on the revolving credit facility**[190](index=190&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=42&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate exposure from its variable-rate debt, where a 1.00% increase would raise annual interest expense by $9.4 million, with no material changes to commodity price risk - A hypothetical **1.00% increase in interest rates** would increase the company's annual interest expense by **$9.4 million** based on the **$944.8 million of variable-rate debt** outstanding at June 30, 2025[203](index=203&type=chunk) [Controls and Procedures](index=42&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with recent acquisitions, Albina Asphalt and Strata Corporation, temporarily excluded from internal control assessment during integration - The CEO and CFO concluded that disclosure controls and procedures were **effective** as of the end of the reporting period[206](index=206&type=chunk) - The internal controls of the recently acquired **Albina Asphalt and Strata Corporation** are currently **excluded from management's assessment of internal control over financial reporting**[207](index=207&type=chunk) [Part II -- Other Information](index=43&type=section&id=Part%20II%20--%20Other%20Information) [Legal Proceedings](index=43&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no material changes to legal proceedings previously disclosed in its 2024 Annual Report on Form 10-K - There were **no material changes** to the Company's legal proceedings from the 2024 Annual Report[211](index=211&type=chunk) [Risk Factors](index=43&type=section&id=Item%201A.%20Risk%20Factors) The report refers investors to the risk factors disclosed in Part I, Item 1A of its 2024 Annual Report on Form 10-K for a comprehensive discussion of potential risks - The company directs readers to its **2024 Annual Report** for a full description of risk factors[212](index=212&type=chunk) [Mine Safety Disclosures](index=43&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Information regarding mine safety violations and other regulatory matters, as required by the Dodd-Frank Act, is provided in Exhibit 95 to this Form 10-Q - Mine safety disclosures are provided in **Exhibit 95** to the Form 10-Q[215](index=215&type=chunk)

Financial Data and Key Metrics Changes - The company reported a record backlog of $1,300 million, the highest in its history, with a $650 million increase in new projects secured during the quarter compared to the previous year [18][19] - Adjusted EBITDA guidance was lowered by $55 million, primarily due to a softer Oregon market and wet weather, with updated guidance for consolidated revenue between $3,100 million and $3,300 million [36][37] - The company ended the quarter with nearly $1,400 million of long-term debt, resulting in a net leverage position of 3.1 times, which is expected to decrease below the long-term target of 2.5 times by year-end [35][36] Business Line Data and Key Metrics Changes - Contracting services revenue declined by 8.5% year-over-year, while asphalt revenue volumes decreased by 9% [28][30] - Aggregate revenue increased due to the acquisition of Strata, with prices improving by almost 12%, although lower volumes impacted gross margins [30][31] - Ready mix volume and price improved, resulting in a 15% increase in revenue, with significant contributions from the Central segment and higher demand in Hawaii and Alaska [31] Market Data and Key Metrics Changes - In Oregon, aggregate volumes were down about 25% year-over-year, significantly impacting consolidated financial results, with over 50% of EBITDA variance attributed to this state [11][28] - The company noted strong demand in California, Hawaii, and Alaska, with aggregate volumes up almost 60% in Alaska and a 30% increase in contracting services revenue in California [12][31] - Record DOT budgets in the company's operating states are growing at 14% for fiscal year 2026, compared to just 3% for the U.S. average [19][80] Company Strategy and Development Direction - The company is focused on its competitive edge strategy, aiming for a long-term goal of a 20% adjusted EBITDA margin, with multiple paths identified to achieve this [20][100] - Recent acquisitions, including Kramer Trucking and High Desert Aggregates, align with the company's growth strategy and are expected to enhance its market presence [21][22] - The company continues to invest in process improvement teams to drive standardization, cost control, and pricing optimization [23] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the impact of unfavorable weather and project delays in Oregon, but expressed confidence in the overall demand for infrastructure work and the company's ability to recover [5][36] - The integration of Strata is progressing well, and management remains optimistic about the contributions from recent acquisitions [41][58] - The company expects to see improved volumes and pricing in the second half of the year, driven by a strong backlog and favorable market conditions [20][30] Other Important Information - The company has maintained an active deal pipeline and continues to pursue acquisitions and organic growth opportunities that fit its strategic goals [23][90] - SG&A expenses increased by $9.7 million due to overhead costs from acquisitions and higher business development costs, but are still in line with expectations [32][33] - The company anticipates maintenance capital expenditures to be 5% to 7% of revenue for the full year [34] Q&A Session Summary Question: What are the expectations for the Oregon market in the second half of the year? - Management noted that the integration of Strata is on track, but the Oregon legislature's failure to pass a comprehensive transportation funding bill is a concern, impacting paving work for the year [41][42][43] Question: What factors might drive lower margins in the backlog? - Management indicated that shifting revenue from higher-margin Oregon to other regions and larger projects with lower margins are contributing to the lower margins observed [48][49] Question: How sustainable is the improvement in aggregate pricing? - Management credited the disciplined implementation of dynamic pricing and the acquisition of Strata for the improved average selling price, raising guidance for pricing increases to high single digits [50][51] Question: How are the Strata and Albina acquisitions performing? - Both acquisitions accounted for about 8% of total revenue for the quarter, with expectations for increased contributions in the second half of the year [59][60] Question: What is the company's appetite for M&A? - Management expressed a strong focus on integrating Strata while maintaining an active pipeline for future acquisitions that align with the company's growth strategy [90][91]

Financial Data and Key Metrics Changes - The company reported a record backlog of $1.3 billion, the highest in its history, with $650 million in new projects secured during the quarter, a $250 million increase from the same time last year [16][17]. - Adjusted EBITDA guidance was lowered by $55 million, primarily due to headwinds from a softer Oregon market and wet weather, with updated guidance for consolidated revenue between $3.1 billion and $3.3 billion [33][34]. Business Line Data and Key Metrics Changes - Contracting services revenue declined by 8.5% compared to last year, while asphalt revenue saw a 9% decline, although gross profit per ton improved by almost 8% [26][28]. - Aggregate revenue increased due to the acquisition of Strata, with prices rising by almost 12%, but lower volumes and production costs impacted gross margins [29]. - Ready mix volume and price improved, resulting in a 15% increase in revenue, with dynamic pricing contributing to an 8% price increase over last year [29]. Market Data and Key Metrics Changes - The Oregon market faced significant challenges, with aggregate volumes down about 25% year-over-year, impacting overall financial results [10]. - In contrast, the West region, particularly California, Hawaii, and Alaska, saw strong performance, with aggregate volumes up nearly 60% in Alaska and a 30% increase in contracting services revenue in California [11][12]. Company Strategy and Development Direction - The company is focused on a competitive edge strategy aimed at improving EBITDA margins, with a long-term goal of achieving a 20% adjusted EBITDA margin [19][98]. - Recent acquisitions, including Kramer Trucking and High Desert Aggregates, align with the company's growth strategy, targeting mid-sized high-growth markets [20][21][88]. Management's Comments on Operating Environment and Future Outlook - Management acknowledged the impact of unfavorable weather and project delays in Oregon, but expressed confidence in the overall demand for infrastructure work and the strength of DOT budgets in other states [5][9][27]. - The company remains optimistic about the second half of the year, expecting strong demand and volume growth driven by record backlog and ongoing infrastructure investments [19][24]. Other Important Information - The company has maintained a strong focus on dynamic pricing initiatives, which have contributed to improved pricing across product lines [23][96]. - SG&A expenses increased by $9.7 million due to overhead costs from recent acquisitions, but the company expects these costs to align with previous guidance for the year [30][31]. Q&A Session Summary Question: What are the expectations for the Oregon market in the second half of the year? - Management noted that the integration of Strata is on track, but the Oregon legislature's failure to pass a comprehensive transportation funding bill may delay paving work [39][40][41]. Question: What factors might drive lower margins in the backlog? - Management indicated that shifting revenue from higher-margin Oregon to other regions and the nature of larger projects could contribute to lower margins [46][47]. Question: How are the Strata and Albina acquisitions performing? - Both acquisitions are performing well, contributing about 8% to total revenue for the quarter, with expectations for increased contributions in the second half of the year [58][61]. Question: What is the company's approach to dynamic pricing? - The company is approximately 50% through the implementation of dynamic pricing, which has shown positive momentum and is expected to contribute to achieving the long-term EBITDA margin goal [96][98].

Financial Performance & Guidance - Q2 2025 revenue was $833.8 million[42], while adjusted EBITDA was $140.8 million[42], and adjusted EBITDA margin was 16.9%[8] - 2025 full-year revenue guidance is $3.10 billion to $3.30 billion[8], revised down from the previous guidance of $3.25 billion to $3.45 billion[8] - 2025 full-year adjusted EBITDA guidance is $475 million to $525 million[8], revised down from the previous guidance of $530 million to $580 million[8] - 2025 adjusted EBITDA margin guidance is 15.6%[8], revised down from the previous guidance of 16.6%[8] Factors Affecting Results - Wet weather impacted volumes and margins in Q2 2025, particularly in the Central and Mountain regions[7, 12] - The Oregon economy's reduced demand impacted results, with DOT construction budget diverted from asphalt paving to megaprojects[7, 15, 20] Backlog & Infrastructure Funding - Record backlog driven by infrastructure investment, with a 27% increase from Q2 2024 to Q2 2025, reaching $1.3 billion[22] - Secured backlog includes 91% dedicated public funding[22] - DOT budgets in KNF states are growing 14% for fiscal year 2026[32] Segment Performance - West segment revenue was $317.4 million, down 5%[42], with adjusted EBITDA of $60.7 million[42] and a TTM adjusted EBITDA margin of 17.6%[42] - Mountain segment revenue was $176.1 million, down 9%[42], with adjusted EBITDA of $30.9 million[42] and a TTM adjusted EBITDA margin of 14.0%[42] - Central segment revenue was $255.2 million, up 19%[42], with adjusted EBITDA of $44.4 million[42] and a TTM adjusted EBITDA margin of 15.5%[42] - Energy Services revenue was $97.4 million, up 28%[42], with adjusted EBITDA of $17.1 million[42] and a TTM adjusted EBITDA margin of 17.6%[42] Capital Management - Net debt is $1.3434 billion[51], with a net leverage ratio of 3.1x[51] - Available liquidity is $321 million, including $294 million from the revolver[51] Product Line Results - Aggregates volume decreased by 6% from 9.408 million tons in Q2 2024 to 8.826 million tons in Q2 2025, but average selling price increased by 12% from $16.84 per ton to $18.80 per ton[45] - Asphalt volume decreased by 9% from 1.813 million tons in Q2 2024 to 1.643 million tons in Q2 2025, but average selling price increased by 3% from $65.82 per ton to $67.45 per ton[45]

分组1 - Knife River reported quarterly earnings of $0.89 per share, missing the Zacks Consensus Estimate of $1.27 per share, and down from $1.37 per share a year ago, representing an earnings surprise of -29.92% [1] - The company posted revenues of $833.8 million for the quarter ended June 2025, missing the Zacks Consensus Estimate by 3.52%, but up from $806.9 million year-over-year [2] - Over the last four quarters, Knife River has surpassed consensus EPS estimates only once and has topped consensus revenue estimates two times [2] 分组2 - The stock has underperformed the market, losing about 17% since the beginning of the year compared to the S&P 500's gain of 7.6% [3] - The current consensus EPS estimate for the coming quarter is $2.94 on $1.26 billion in revenues, and for the current fiscal year, it is $3.69 on $3.26 billion in revenues [7] - The Zacks Industry Rank for Building Products - Miscellaneous is currently in the bottom 35% of over 250 Zacks industries, indicating potential underperformance compared to higher-ranked industries [8]