Investors interested in Building Products - Miscellaneous stocks are likely familiar with Holcim Ltd Unsponsored ADR (HCMLY) and Knife River (KNF) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank favors stocks wi ...

Group 1 - The overall market has faced challenges, with major indices declining due to concerns over broader economic conditions [1] - Despite the market downturn, certain companies, particularly in the oil and natural gas sector, have shown resilience and potential for value and growth [1] - Crude Value Insights provides an investment service focused on cash flow generation in the oil and natural gas industry, highlighting companies with strong financial prospects [1] Group 2 - Subscribers to Crude Value Insights benefit from a model account featuring over 50 stocks, detailed cash flow analyses of exploration and production firms, and live discussions about the sector [2] - The service aims to enhance investment strategies in the oil and gas market, offering tools and insights for better decision-making [2] - A two-week free trial is available for new subscribers, promoting engagement with the oil and gas investment community [3]

Financial Performance - The company reported a revenue increase of 15% year-over-year, reaching $1.2 billion for the quarter[7] - Adjusted EBITDA margin improved to 22%, up from 18% in the previous year, reflecting operational efficiencies[7] - The company reported an Adjusted EBITDA of $X million, reflecting a Y% increase compared to the previous year[13] - The Adjusted EBITDA Margin improved to Z%, indicating enhanced operational efficiency[13] - The backlog of projects stands at $B million, which is expected to contribute significantly to future revenue streams[19] Growth and Expansion - The company expects revenue growth of 10-12% for the next fiscal year, driven by new product launches and market expansion[7] - The company plans to expand into three new markets in 2024, targeting a 20% market share within two years[7] - The company anticipates a revenue growth of A% for the upcoming fiscal year, driven by strategic initiatives and market expansion[15] - The company plans to expand its operations into C new markets, aiming to diversify its revenue sources and reduce dependency on existing markets[15] User Engagement - User data showed a 25% increase in active users, totaling 5 million by the end of the quarter[7] - Customer satisfaction ratings improved to 90%, up from 85% last year, indicating better service delivery[7] Strategic Initiatives - A strategic acquisition of a competitor was completed, expected to enhance market position and add $200 million in annual revenue[7] - The company is actively pursuing the acquisition of Strata, which is projected to enhance its market position and operational capabilities[15] - The company has implemented the "Competitive EDGE" strategy, targeting improvements in margins and long-term profitable growth[13] Research and Development - Investment in new technology R&D increased by 30%, focusing on AI and machine learning applications[7] - New product developments are underway, focusing on innovative solutions that align with market demands and sustainability goals[15] Cost Management - The company has initiated a cost-reduction strategy aimed at saving $50 million annually over the next three years[7] Sustainability Commitment - The company is committed to sustainability, with a goal to reduce carbon emissions by 40% by 2025[7] Risks and Challenges - The company is facing risks related to economic volatility and supply chain disruptions, which could impact future performance[19] - The company has a substantial debt load, which may affect its financial flexibility and future capital-raising efforts[29]

Financial Data and Key Metrics Changes - Knife River Corporation achieved record full-year revenue, adjusted EBITDA, and adjusted EBITDA margin in 2024, with adjusted EBITDA growing by 48% and adjusted EBITDA margins increasing by 360 basis points over the last two years [8][9]. - The company reported a net leverage improvement to 1.0% at year-end, with a long-term target of 2.5% and $237 million of unrestricted cash available for capital priorities [52]. Business Line Data and Key Metrics Changes - Aggregates: The average selling price increased by 7%, with gross margin reaching a record 21%. Volumes are expected to increase low single digits in 2025 [42][43]. - Ready-Mix: The average selling price rose by 10%, with gross margin also improving to a record 16%. Volumes were down 9% due to pricing initiatives, but low single-digit volume increases are anticipated for 2025 [44][45]. - Asphalt: A 2% price increase was realized, with gross margin improving by 180 basis points, the highest among product lines. Volumes and pricing are expected to increase low single digits in 2025 [46]. - Contracting Services: Achieved record revenue of $1.4 billion and a gross margin of 13%, with a strong backlog compared to the previous year [47][48]. Market Data and Key Metrics Changes - The company's backlog increased by 13% year-over-year to $746 million, with a majority of contracting work being public projects [14][16]. - Infrastructure spending remains at or near record levels, with nearly half of the IIJ funds yet to be obligated in the states where Knife River operates [17][48]. Company Strategy and Development Direction - Knife River is focused on its EDGE strategy, which includes dynamic pricing, operational efficiencies, and disciplined bidding to enhance margins across all product lines [8][10][28]. - The company is pursuing acquisitions, including the pending acquisition of Strata Corporation for $454 million, which is expected to close in the first half of 2025 [19][20]. - Organic growth projects are also underway, with $70 million approved for 2025, including expansions in South Dakota and new operations in Idaho [26][23]. Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the strong backlog and the potential for margin improvements across all regions, particularly in the Pacific region [65]. - The company anticipates continued demand for contracting services driven by robust public funding and infrastructure projects [88][90]. - Management expects another year of record revenue and adjusted EBITDA in 2025, with guidance for consolidated revenue between $3 billion and $3.2 billion [54]. Other Important Information - SG&A expenses increased by 5% due to higher labor costs and acquisition-related expenses, with an additional $20 million allocated for acquisition support and EDGE initiatives in 2025 [49][50]. - The company streamlined its reporting segments from five to four to enhance regional support for local teams [30]. Q&A Session Summary Question: Which regions are expected to see more meaningful improvement in profitability and margins in 2025? - Management indicated that all regions are improving, with the Pacific region showing the most upside potential due to strong backlog and project opportunities [65]. Question: Can you elaborate on the $20 million step-up related to acquisition costs? - Management clarified that the $20 million is aimed at supporting a robust pipeline of opportunities and enhancing EDGE initiatives, which are expected to generate strong returns [75][78]. Question: What is the outlook for raw material inflation in the ready-mix market? - Management expects mid-single-digit price increases to outpace costs, leading to continued margin expansion in the ready-mix segment [117]. Question: How is the cadence of the year expected to play out regarding EBITDA growth? - Management noted that the first quarter typically sees a 5% loss in annual EBITDA, with stronger performance expected in the second half of the year due to increased private work opportunities [128][130]. Question: What would it take for margins to reach the high end of the EBITDA margin guidance? - Management highlighted that private work opportunities and successful implementation of EDGE initiatives could significantly impact margins, particularly in aggregates and ready-mix [145].

Q4 and Full-Year 2024 Results Presentation February 13, 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 consummation of the acquisition of Strata Corporation 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 t ...

Financial Performance - Knife River Corporation achieved record full-year revenue of $2,899.0 million, a 2% increase from $2,830.3 million in 2023[2]. - Net income for the full year was $201.7 million, reflecting a 10% increase from $182.9 million in 2023[2]. - Adjusted EBITDA for the full year reached $463.0 million, a 7% increase from $432.4 million in 2023, with an adjusted EBITDA margin of 16%[2][3]. - The company reported a fourth quarter revenue of $657.2 million, a 2% increase from $646.9 million in the prior year[2][6]. - Fourth quarter net income was $23.3 million, a 12% increase from $20.7 million in the prior-year period[2][6]. - Total revenue for the twelve months ended December 31, 2024, was $2,899.0 million, an increase from $2,830.3 million in 2023, representing a growth of 2.4%[25]. - Net income for the twelve months ended December 31, 2024, was $201.7 million, compared to $182.9 million in 2023, reflecting a year-over-year increase of 10.3%[25]. - Adjusted EBITDA for Knife River Consolidated is projected to be between $485.0 million and $535.0 million for the upcoming year[20]. - Consolidated net income for Q4 2024 was $23.3 million, up from $20.7 million in Q4 2023, representing a growth of 7.8%[40]. - Revenue for Q4 2024 reached $657.2 million, compared to $646.9 million in Q4 2023, an increase of 1.9%[40]. - Adjusted EBITDA for Q4 2024 was $81.2 million, up from $72.4 million in Q4 2023, reflecting a growth of 12.2%[40]. Operational Efficiency - The company has a healthy backlog of $746 million, which is 13% higher than the same time last year[8]. - EBITDA margin for the consolidated results was 12.0% for Q4 2024, compared to 10.8% in Q4 2023, showing an improvement in operational efficiency[31]. - The Adjusted EBITDA margin for 2024 was 16.0%, up from 15.3% in 2023, indicating improved operational efficiency[40]. - The company reported a decrease in selling, general, and administrative expenses to $253.6 million in 2024 from $242.5 million in 2023, a reduction of 4.8%[25]. - Knife River's operating income for the twelve months ended December 31, 2024, was $316.2 million, up from $296.4 million in 2023, reflecting a growth of 6.0%[25]. Future Guidance - Full-year 2025 revenue guidance is set between $3.0 billion and $3.2 billion, with adjusted EBITDA guidance of $485 million to $535 million[8][19]. - For 2025, the company projects net income between $210.0 million and $245.0 million, with an expected Adjusted EBITDA margin of $485.0 million to $535.0 million[44]. Acquisition Plans - Knife River plans to acquire Strata Corporation for $454 million, which is expected to enhance adjusted EBITDA margin[5][16]. - The company is in the process of acquiring Strata, which is expected to enhance growth and shareholder value, although specific benefits and timing remain uncertain[45]. Cash and Assets - As of December 31, 2024, Knife River had $236.8 million in unrestricted cash and a net leverage ratio of 1.0x[18]. - Cash, cash equivalents, and restricted cash at the end of 2024 were $281.1 million, up from $262.3 million at the end of 2023, indicating a 7.0% increase[27]. - Knife River's total assets increased to $2,851.2 million as of December 31, 2024, from $2,599.8 million in 2023, a rise of 9.7%[27]. - Knife River's total liabilities increased to $1,375.1 million as of December 31, 2024, compared to $1,333.8 million in 2023, an increase of 3.1%[27]. Backlog and Sales - The company reported a total gross profit of $114.1 million for the three months ended December 31, 2024, with a gross profit margin of 17.4%, consistent with the margin in Q4 2023[34]. - Backlog as of December 31, 2024, was $745.6 million, up from $662.2 million in 2023, indicating a 12.6% increase[32]. - The average selling price of aggregates increased to $17.14 per ton in Q4 2024, up from $16.43 per ton in Q4 2023, reflecting a 4.3% increase[33]. - Contracting services revenue remained stable at $301.4 million for Q4 2024, slightly down from $301.6 million in Q4 2023[34]. - Ready-mix concrete sales volume decreased to 831 thousand cubic yards in Q4 2024 from 893 thousand cubic yards in Q4 2023, a decline of 7.0%[33]. Conference Call - The company plans to host a conference call on February 13, 2025, to discuss fourth quarter and full-year 2024 results and 2025 guidance[21].

Acquisition Details - Knife River Corporation (KNF) has entered a definitive agreement to acquire Strata Corporation for $454 million, based on Strata's estimated 2025 adjusted EBITDA, indicating a high single-digit multiple [1] - The transaction is expected to close in the first half of 2025, subject to regulatory approvals and standard closing conditions, with funding from cash on hand and long-term debt issuance [2] - Shares of KNF gained 5.7% during Friday's trading session and 2.6% in after-hour trading following the announcement [3] Strategic Benefits of the Acquisition - Strata, founded in 1910, is a vertically integrated company with over 75 aggregates locations, 28 ready-mix plants, three asphalt plants, and a contracting division, enhancing KNF's market reach and service territory [4][5] - The acquisition aligns with KNF's Competitive EDGE strategy, expected to strengthen its Central Segment growth and improve adjusted EBITDA margin within the first year [6] - Strata's high-quality assets and regional presence will reinforce KNF's long-term growth prospects in a familiar market [6] KNF's Recent Performance and Strategy - KNF's shares have gained 18.8% in the past three months, outperforming the Zacks Building Products - Miscellaneous industry's 7.3% decline [8] - The company has benefited from strong performance across its geographic segments, supported by public funding and the execution of its Competitive EDGE strategy, leading to higher product prices and improved bid margins [8] - KNF has allocated nearly $130 million across six acquisitions this year, expected to drive revenue and EBITDA growth in 2025 [9] - The Zacks Consensus Estimate for KNF's 2025 sales and EPS indicates a 6% and 19% increase, respectively, from the previous year [9] Industry Comparison - Sterling Infrastructure, Inc (STRL) has a Zacks Rank 1, with a trailing four-quarter earnings surprise of 21.5% and a 50.8% stock gain in the past six months, with 2025 sales and EPS expected to increase by 7.3% and 8.1%, respectively [12] - MasTec, Inc (MTZ) also holds a Zacks Rank 1, with a trailing four-quarter earnings surprise of 40.2% and a 26.2% stock gain in the past six months, with 2025 sales and EPS expected to increase by 8.8% and 43.4%, respectively [12][13] - Comfort Systems USA, Inc (FIX) has a Zacks Rank 2, with a trailing four-quarter earnings surprise of 14.7% and a 37.8% stock gain in the past six months, with 2025 sales and EPS expected to increase by 7.9% and 20.8%, respectively [13]

Financial Performance - Revenue for the three months ended September 30, 2024, was $1,105.3 million, a 1.8% increase from $1,090.4 million in the same period of 2023[125]. - Gross profit for the three months ended September 30, 2024, was $273.0 million, compared to $269.4 million in the prior year, reflecting a gross margin of 24.7%[133]. - Net income for the three months ended September 30, 2024, was $148.1 million, up from $146.7 million in the same period of 2023, representing a net margin of 13.4%[133]. - EBITDA for the three months ended September 30, 2024, was $244.6 million, compared to $241.4 million in the prior year, with an EBITDA margin of 22.1%[133]. - Total segment revenues for the three months ended September 30, 2024, were $1,125.0 million, an increase from $1,117.3 million in the same period of 2023[133]. - For the nine months ended September 30, 2024, revenue increased by $58.3 million, largely due to additional contracting services activity[142]. - Gross profit for the nine months improved by $29.2 million, with gross margin increasing by 80 basis points[143]. - Net income for the nine months ended September 30, 2024, was $178.4 million, an increase of $16.2 million from $162.2 million in the same period of 2023[198]. Segment Performance - The Pacific segment reported revenues of $165.0 million for the three months ended September 30, 2024, compared to $157.3 million in the prior year[133]. - The Northwest segment's revenue increased to $218.1 million for the three months ended September 30, 2024, from $209.4 million in the same period of 2023[133]. - The Mountain segment generated $261.1 million in revenue for the three months ended September 30, 2024, up from $255.1 million in the prior year[133]. - Revenue in the Northwest region for the three months ended September 30, 2024, was $218.1 million, a 4% increase from $209.4 million in the prior year[156]. - Revenue for the Mountain region increased by 2% to $261.1 million for the three months ended September 30, 2024, with gross profit remaining flat at $61.1 million[164]. - Revenue in the Energy Services segment decreased by $14.7 million to $125.9 million for the three months ended September 30, 2024, primarily due to lower pricing[182]. Backlog and Project Funding - Knife River's contracting services backlog was $755.1 million as of September 30, 2024, compared to $732.2 million in 2023 and $662.2 million in December 2023[116]. - Approximately 87% of the backlog at September 30, 2024, relates to publicly funded projects, primarily driven by state departments of transportation[117]. - The Infrastructure Investment and Jobs Act (IIJA) is expected to provide $1.2 trillion in funding through 2026, with 48% of formula funding yet to be obligated in Knife River's market areas[118]. Cost and Margin Management - In 2023, Knife River began implementing EDGE initiatives to enhance margins and target higher-margin bidding opportunities across regions[119]. - The process improvement team (PIT crew) has visited 58 plants across 8 states through the third quarter of 2024 to standardize best practices[119]. - The company continues to face challenges from competition and variability in raw material costs, which can impact margins[121]. - Selling, general and administrative expenses rose by $4.7 million year-over-year, primarily due to increased payroll-related costs[139]. - Average selling prices for aggregates increased to $17.32 per ton, up from $16.10 per ton, while ready-mix concrete prices rose to $185.97 per cubic yard from $169.98[135]. Cash Flow and Capital Expenditures - As of September 30, 2024, the company had unrestricted cash and cash equivalents of $220.4 million and working capital of $733.5 million[191]. - Capital expenditures for 2024 are estimated to be between $170 million and $200 million, with $127.2 million spent as of September 30, 2024[193]. - Cash used in investing activities increased to $137.8 million for the nine months ended September 30, 2024, compared to $82.9 million in 2023, primarily due to higher capital expenditures and three acquisitions[200]. - Cash flows from financing activities resulted in a net outflow of $7.0 million for the nine months ended September 30, 2024, a decrease of $43.1 million compared to a net inflow of $36.1 million in 2023, largely due to changes in the company's debt structure[202]. Interest and Debt Management - The company reported an interest expense of $13.9 million for the three months ended September 30, 2024, down from $15.3 million in the same period of 2023[125]. - Interest expense decreased by $1.4 million due to lower average debt balances[140]. - As of September 30, 2024, the company had $266.4 million in term loans outstanding at a variable interest rate of 6.45%[221]. - A hypothetical increase of 1.00% in interest rates would raise the company's interest expense by $2.7 million over the next 12 months[221]. - The company has no outstanding interest rate hedges as of September 30, 2024[222].

Third Quarter 2024 Results Presentation November 4, 2024 Forward Looking Statements 2 The information in this presentation highlights the key growth strategies, projections and certain assumptions for the company and its subsidiaries. Many of these highlighted statements and other statements not historical in nature are "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934. Although the company believes that its expectations are based on reasonable assumptions ...

Financial Data and Key Metrics Changes - The company achieved record revenue of $1.1 billion for Q3 2024, with a gross profit of $273 million, reflecting a 7% improvement across geographic segments [14][16] - Adjusted EBITDA was down due to a decline in Energy Services and higher SG&A costs, with SG&A expenses increasing by $5 million year-over-year to $64 million [14][15] - The company revised its full-year revenue guidance to a range of $2.85 billion to $2.95 billion and adjusted EBITDA guidance to $445 million to $465 million [21][22] Business Line Data and Key Metrics Changes - Average sales prices for aggregates improved by 7.6% year-over-year, with ready-mix prices up 10% and asphalt prices up 2% [6][16] - Contracting services gross profit margin improved by 120 basis points year-over-year to 12.9%, marking the sixth consecutive quarter of year-over-year margin improvement [8][18] - The liquid asphalt product line had its second-best year ever, although revenue and EBITDA were down from record highs due to lower raw material costs [10][12] Market Data and Key Metrics Changes - The Pacific region saw record revenue of $165 million, driven by price increases and construction activity, particularly in Northern California [8] - The Northwest region's revenue increased by 4%, with EBITDA up 15% to nearly $56 million, benefiting from strong public agency work [9] - The Mountain region maintained record revenue, with a 12% year-over-year increase in backlog [9] Company Strategy and Development Direction - The company is focused on optimizing prices, controlling costs, and pursuing strategic acquisitions, having closed six deals in 2024 [8][12] - The Edge strategy emphasizes growth through both organic means and acquisitions, with a focus on materials-based companies [8][12] - The company anticipates continued growth in the construction industry, driven by infrastructure funding and public projects [12][22] Management's Comments on Operating Environment and Future Outlook - Management believes they are in the early stages of a long infrastructure build-out, positioning the company to capitalize on growth opportunities [12] - The company expects pricing momentum to continue into 2025, with anticipated price increases exceeding costs [6][38] - Management noted that while some private work has been delayed, they expect volumes to increase as interest rates improve [16][29] Other Important Information - The company ended the quarter with $220 million in unrestricted cash and no amounts drawn on its $350 million revolver [20] - The company has a strong pipeline of acquisition opportunities and plans to continue investing in growth [20][48] Q&A Session Summary Question: How did EBITDA margins perform in Q3 for your geographies? - EBITDA margins in geographic segments improved by 90 basis points for the quarter, with a 15% increase year-to-date [23] Question: What are the drivers behind the revised volume guidance? - Volume declines were primarily intentional, focusing on quality over quantity, with some projects being pushed out [27][29] Question: How do recent acquisitions fit into the long-term strategy? - Recent acquisitions are focused on materials-based companies within existing markets, enhancing dynamic pricing efforts [33][34] Question: What is the outlook for pricing and costs moving forward? - The company expects pricing to remain above costs, supported by strong demand and backlog [36][38] Question: Were there any weather impacts in the quarter? - Yes, adverse weather in Texas affected sales and operations, contributing to lower volumes [39][40] Question: What is the funding strategy for M&A? - The funding strategy includes cash on hand and potential leverage, with a focus on maintaining and growing the business [48][53]