Knife River supplies construction materials and contracting services for public infrastructure projects across multiple U.S. regions.On January 28, Headland Capital disclosed in an SEC filing that it sold out its entire position in Knife River (KNF 0.49%), an estimated $4.89 million transaction based on quarterly average pricing.What happenedAccording to its SEC filing dated January 28, Headland Capital sold all 63,636 shares of Knife River (KNF 0.49%), with the estimated transaction value at approximately ...

On January 28, Paradice Investment Management disclosed a new position in Knife River (NYSE:KNF), acquiring 312,743 shares in the fourth quarter in a trade valued at $22.00 million given quarter-end prices. What happened According to a Securities and Exchange Commission (SEC) filing dated January 28, Paradice Investment Management established a new stake in Knife River, purchasing 312,743 shares during the fourth quarter. The post-trade position was valued at $22.00 million at quarter end, reflecting bot ...

Core Insights - Knife River Corporation has acquired the assets of Texcrete Operations LLC and TexAgg LLC to enhance its growth in the Texas Triangle [1][3] - Texcrete operates six ready-mix plants and 85 ready-mix trucks, serving rapidly growing counties in Texas [2] - The acquisition aligns with Knife River's strategy of focusing on materials-based, vertically integrated operations in high-growth markets [3] Company Overview - Knife River Corporation is a member of the S&P MidCap 400 index and specializes in mining aggregates and marketing construction materials, including ready-mix concrete and asphalt [4] - The company also provides vertically integrated contracting services, focusing on publicly funded projects and private sector work across various sectors [4] Market Context - The acquisition is expected to leverage existing Knife River operations and Texcrete's supply, enhancing growth potential in Texas and balancing seasonality in northern markets [3]

Core Insights - The Mairs & Power Small Cap Fund reported a return of 2.06% in the first nine months of 2025, underperforming the benchmark Russell 2000 Total Returns Index, which increased by 10.39% [1] - The market remains concentrated in 2025, with a few dominant mega-cap stocks related to artificial intelligence driving most favorable outcomes [1] Company Overview: Knife River Corporation (NYSE:KNF) - Knife River Corporation is a US-based provider of aggregates and construction materials, with a market capitalization of $4.311 billion as of December 10, 2025 [2] - The stock experienced a one-month return of 7.14% but has lost 27.65% of its value over the past 52 weeks [2] Performance Analysis - Knife River Corporation was noted as a significant detractor from the fund's relative performance, facing challenges due to federally funded construction program concerns, weather-related slowdowns, and environmental delays [3] - The number of hedge funds holding Knife River Corporation decreased from 24 in the previous quarter to 18 by the end of the third quarter [4] Investment Perspective - While Knife River Corporation is recognized for its potential, the company is considered less favorable compared to certain AI stocks that are believed to offer greater upside potential and lower downside risk [4]

Group 1 - Knife River Corporation has been awarded a $112 million materials and paving project in Texas [1] - The project, known as the "Big 6," involves the improvement of State Highway 6 in the Bryan/College Station area [1] - The highway reconstruction includes widening a 12-mile stretch from four lanes to six, aimed at enhancing capacity for commuters, freight, and emergency evacuation routes [1]

Financial Performance - Revenue for the three months ended September 30, 2025, increased by $98.4 million to $1,203.7 million, a 9% increase compared to $1,105.3 million in the same period of 2024[145]. - Gross profit for the three months ended September 30, 2025, improved by $11.3 million to $284.3 million, a 4% increase compared to $273.0 million in the same period of 2024[146]. - Net income for the three months ended September 30, 2025, decreased by 3% to $143.2 million compared to $148.1 million in the same period of 2024[1]. - EBITDA for the three months ended September 30, 2025, increased by 10% to $269.2 million, compared to $244.6 million in the same period of 2024[142]. - Total segment revenues for the three months ended September 30, 2025, were $1,229.4 million, up from $1,125.0 million in the same period of 2024[142]. - Revenue for the three months ended September 30, 2025, increased by 34% to $169.2 million compared to $125.9 million in 2024, driven by the acquisition of Albina Asphalt and a new processing plant[176]. - EBITDA for the same period improved by 18% to $39.7 million, although the EBITDA margin decreased to 23.4% from 26.8%[176]. - Revenue increased by $149.1 million for the nine months ended September 30, 2025, driven by contributions from acquired companies and mid-single digit price increases on aggregates and ready-mix[152]. - Revenue for the West segment increased by 1% to $921.7 million for the nine months ended September 30, 2025, with EBITDA rising by 2% to $177.5 million[161]. - Revenue for the Mountain segment decreased by 8% to $471.9 million for the nine months ended September 30, 2025, with EBITDA declining by 32% to $65.4 million[166]. - Revenue for the Central segment increased by 20% to $757.4 million for the nine months ended September 30, 2025, with EBITDA improving by 23% to $119.8 million[171]. Expenses and Costs - Selling, general and administrative expenses increased by $5.2 million to $69.1 million for the third quarter, primarily due to costs associated with acquired companies[147]. - Selling, general and administrative expenses rose by $27.8 million, mainly due to costs associated with acquired companies and increased labor-related expenses[154]. - Interest expense rose by $9.1 million to $23.0 million, driven by higher average debt balances from a new Term Loan B issued in March 2025[149]. - Interest expense increased by $18.8 million due to higher average debt balances from a new Term Loan B issued in March 2025[156]. - The effective tax rate decreased due to lower income before income taxes, resulting in a $600,000 decrease in income tax expense[151]. - Income tax expense decreased by $16.5 million, corresponding with lower income before income taxes[158]. Acquisitions and Growth Strategy - The company acquired High Desert Aggregate and Paving in Q3 2025, adding to its growth strategy through acquisitions[127]. - The acquisition of Albina Asphalt contributed an additional $10.7 million in revenue for the three months ended September 30, 2025[177]. - Total capital expenditures for the nine months ended September 30, 2025, amounted to $154.8 million, with an additional $663.5 million spent on growth initiatives, including $528.0 million on acquisitions[188][189]. Operational Efficiency and Initiatives - In 2023, the implementation of EDGE initiatives began, focusing on higher-margin bidding opportunities and operational efficiency[124]. - The Chief Excellence Officer position was created to lead standardization and process improvement efforts effective January 1, 2025[125]. - The Knife River Training Center provides training for new and existing employees, addressing industry-wide labor shortages[132]. Market and Project Backlog - Contracting services backlog as of September 30, 2025, was $995 million, with approximately 87% related to publicly funded projects[119]. - Expected completion of approximately $764 million of the backlog within 12 months following September 30, 2025[119]. - Public projects account for approximately 80% of historical contracting services revenue, providing stability through market cycles[118]. - Approximately 52% of the Infrastructure Investment and Jobs Act (IIJA) funding remains unspent in the company's operating markets[122]. Financial Position and Cash Flow - The company had unrestricted cash and cash equivalents of $30.7 million and working capital of $660.9 million as of September 30, 2025[184]. - Long-term debt increased by approximately $514.1 million due to the issuance of a new $500 million Term Loan B facility[196]. - Cash provided by operating activities decreased by $67.3 million to $82.6 million, largely due to higher working capital needs and a decrease in net income[191]. - The company expects capital expenditures for maintenance and improvement in 2025 to be between $160 million and $225 million[188]. Commodity and Interest Rate Risks - A hypothetical 1.00% increase in interest rates would raise the company's interest expense by $7.8 million over the next 12 months[210]. - The company had no outstanding interest rate hedges as of September 30, 2025[211]. - There were no material changes to commodity price risk compared to the previous year[212]. Non-GAAP Financial Measures - The company utilizes non-GAAP financial measures such as EBITDA and Adjusted EBITDA to provide clarity on operational results[203].

Financial Data and Key Metrics Changes - The company reported record financial results for Q3 2025, with revenue of $1.2 billion and adjusted EBITDA of $273 million, marking all-time quarterly highs [4][21] - Adjusted EBITDA margin improved to 22.7% for the quarter, reflecting strong contributions from recent acquisitions and cost control efforts [4][21] - Year-over-year revenue growth was driven by a 22% increase in revenue and a 56% increase in adjusted EBITDA over the past three years [14] Business Line Data and Key Metrics Changes - In the aggregates segment, prices increased by 8% and margins improved by 50 basis points [16] - Ready-mix volumes were up 16% with price increases of almost 6%, leading to a margin improvement of 160 basis points [17] - Asphalt volumes were down approximately 7% due to less paving work, but margins slightly improved compared to the previous year [18] Market Data and Key Metrics Changes - The Oregon market showed year-over-year improvements, with contracting services backlog approximately 90% of last year's level [7] - The Mountain segment experienced challenges due to less asphalt paving, but backlog remains at record levels [9] - The Central segment saw a substantial increase in backlog, up 83% year-over-year, driven by strong demand in Texas [10] Company Strategy and Development Direction - The company continues to focus on M&A as a core component of its competitive edge strategy, with multiple deals in the pipeline [5][12] - The competitive edge plan includes optimizing pricing and controlling costs, which has led to improved gross margins across product lines [4][12] - The company aims to achieve a long-term goal of a 20% adjusted EBITDA margin through ongoing process improvements and dynamic pricing [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stabilization of the Oregon market and the potential for continued growth in 2026 [31] - The company anticipates that public infrastructure investments will support profitable growth, with a record backlog and favorable weather conditions expected [6][21] - Management highlighted the importance of dynamic pricing and operational efficiencies in driving future performance [12][54] Other Important Information - The company ended the quarter with a net leverage position of 2.6 times and $457 million of borrowing capacity [20] - Capital expenditures are expected to be between 5% and 7% of revenue for the full year, with $664 million invested in growth initiatives through Q3 [20] Q&A Session Summary Question: Context for fourth quarter guidance and year-on-year growth - Management cited stabilization in Oregon, a strong backlog, and favorable weather as key factors supporting confidence in year-on-year growth [25][26] Question: Potential for rebound in Oregon next year - Management noted the need for stability in the Portland economy and the impact of the transportation funding bill on future results [30][31] Question: Performance of Strata and EBITDA contribution - Management expressed satisfaction with Strata's integration and performance, anticipating strong contributions in the coming year [32] Question: Insights on backlog and project types - Management indicated that while margins in backlog are slightly lower, the overall gross profit is higher due to increased asphalt paving [39][40] Question: Competitive bid dynamics in the Mountain region - Management acknowledged intensified competition but emphasized that the challenges are temporary and related to project timing rather than structural issues [47][49] Question: Future M&A activity - Management plans to focus on infill acquisitions in existing markets and adjacent markets, targeting higher-margin materials-led companies [84][85]

Q3 2025 Results Presentation November 4, 2025 Forward-Looking Statements The information in this presentation highlights the key growth strategies, projections and certain assumptions for the company and its subsidiaries, including with respect to the benefits of acquisitions. Many of these highlighted statements and other statements not historical in nature are "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Although the company believes th ...

Core Insights - Knife River reported quarterly earnings of $2.52 per share, exceeding the Zacks Consensus Estimate of $2.45 per share, but down from $2.6 per share a year ago, representing an earnings surprise of +2.86% [1] - The company posted revenues of $1.2 billion for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 0.80% and up from $1.11 billion year-over-year [2] - Knife River has underperformed the market, with shares down approximately 39.9% year-to-date compared to the S&P 500's gain of 16.5% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.38 on revenues of $730.6 million, and for the current fiscal year, it is $2.75 on revenues of $3.11 billion [7] - The earnings outlook is critical for assessing future stock performance, with recent estimate revisions trending unfavorably, resulting in a Zacks Rank 5 (Strong Sell) for the stock [6] Industry Context - Knife River operates within the Zacks Building Products - Miscellaneous industry, which is currently ranked in the bottom 39% of over 250 Zacks industries, indicating potential challenges ahead [8] - The performance of Knife River's stock may be influenced by the overall industry outlook, as historically, the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [8]

Financial Performance - Knife River Corporation reported third quarter 2025 revenue of $1,203.7 million, a 9% increase from $1,105.3 million in 2024[2]. - Net income for the third quarter was $143.2 million, down 3% from $148.1 million in the same period last year, resulting in a net income margin of 11.9%[2]. - Adjusted EBITDA increased by 11% to $272.8 million, with an adjusted EBITDA margin of 22.7%, up from 22.2% in 2024[2][5]. - Total revenue for Q3 2025 reached $1,203.7 million, a 8.9% increase from $1,105.3 million in Q3 2024[31]. - Construction materials revenue increased to $647.3 million, up 18.6% from $545.7 million year-over-year[31]. - Gross profit for the nine months ended September 30, 2025, was $432.0 million, down 5.2% from $455.7 million in the same period of 2024[31]. - Net income for Q3 2025 was $143.2 million, a decrease of 3.3% compared to $148.1 million in Q3 2024[31]. - Consolidated EBITDA for Q3 2025 was $269.2 million, with a margin of 22.4%, compared to $244.6 million and a margin of 22.1% in Q3 2024[36]. - The gross profit for the three months ended September 30, 2025, was $284.3 million, with a gross profit margin of 23.6%, compared to $273.0 million and a margin of 24.7% in 2024[40]. - EBITDA for the three months ended September 30, 2025, was $269.2 million, compared to $244.6 million in 2024, reflecting an increase of 10.0%[48]. - Adjusted EBITDA for the three months ended September 30, 2025, was $272.8 million, up from $245.2 million in the same period of 2024, indicating a growth of 11.3%[48]. Backlog and Future Revenue Potential - The company has a record backlog of $995 million, which is 32% higher than the same period last year, with 87% of this backlog being public work[6]. - The Central Segment backlog increased by 83% year-over-year, primarily due to increased activity in Texas and the acquisition of Strata Corporation[11]. - The Mountain Segment backlog reached a record $386 million, up 38% year-over-year, driven by growth in Idaho and increased bidding activity[11]. - The backlog for the company indicates strong future revenue potential, although specific figures were not disclosed in the provided content[36]. Capital Expenditures and Debt - Capital expenditures for the nine months ended September 30, 2025, totaled $154.8 million, with $663.5 million spent on growth initiatives, including $528 million on acquisitions[21]. - Capital expenditures for the nine months ended September 30, 2025, were $290.3 million, significantly higher than $127.2 million in the same period of 2024[35]. - The company issued $520.0 million in long-term debt during the nine months ended September 30, 2025[35]. - Total long-term debt as of September 30, 2025, is $1,176.0 million, with total debt at $1,187.8 million[52]. - As of September 30, 2025, Knife River had $30.7 million in unrestricted cash, $1.2 billion in gross debt, and a net leverage ratio of 2.6x[23]. - Adjusted EBITDA for the trailing twelve months ended September 30, 2025, is $458.3 million, resulting in a net leverage ratio of 2.6x[52]. Guidance and Projections - Knife River narrowed its full-year 2025 revenue guidance to a range of $3.1 billion to $3.15 billion and adjusted EBITDA guidance to $475 million to $500 million[10][24]. - Projected net income for 2025 ranges from $140.0 million to $160.5 million, with Adjusted EBITDA expected between $475.0 million and $500.0 million[53]. - The company anticipates a long-term Adjusted EBITDA margin, although specific projections for 2025 EBITDA contributions are not provided due to the unpredictability of non-GAAP adjustment items[53]. - Forward-looking statements highlight growth strategies and potential benefits from acquisitions, but there is no assurance these will be achieved[55]. - The company emphasizes that changes in assumptions could lead to actual results differing materially from forward-looking statements[56]. Pricing and Sales Volume - The company expects price increases of high-single digits for aggregates and mid-single digits for ready-mix, while asphalt pricing is anticipated to decrease slightly[24]. - The average selling price of aggregates increased to $18.78 per ton in Q3 2025 from $17.32 per ton in Q3 2024, a rise of 8.4%[39]. - The company reported a decrease in asphalt sales volume to 3,111 tons in Q3 2025 from 3,150 tons in Q3 2024, a decline of 1.2%[39]. - The company’s contracting services backlog is expected to have slightly lower margins as of September 30, 2025, compared to the previous year[37]. - Approximately 87% of the company's contracting services backlog is related to publicly funded projects, including street and highway construction[37].