Summary of Key Points Core Viewpoint - Knife River Corporation (NYSE: KNF) is rated as a "Hold" due to slow growth despite a likely rebound, leading to a neutral valuation after a recent sell-off [1]. Company Analysis - The recent sell-off has negatively impacted the valuation of Knife River Corporation, making it appear neutral [1]. - The analyst expresses a belief in a potential rebound for the company, but slow growth is a significant concern [1].

[Part I -- Financial Information](index=5&type=section&id=Part%20I%20--%20Financial%20Information) [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) Knife River Corporation reported a net loss of $68.7 million in Q1 2025, widening from $47.6 million in Q1 2024, as revenue growth was offset by increased costs and acquisition-driven asset expansion [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) Knife River reported Q1 2025 total revenues of $353.5 million, but a gross loss of $9.6 million and a net loss of $68.7 million, significantly worsening from Q1 2024 due to increased costs Consolidated Statements of Operations (Q1 2025 vs Q1 2024) (In thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | **Total revenue** | **$353,471** | **$329,590** | | Construction materials revenue | $213,407 | $204,095 | | Contracting services revenue | $140,064 | $125,495 | | **Gross profit (loss)** | **($9,595)** | **$6,494** | | Selling, general and administrative expenses | $73,058 | $60,221 | | **Operating loss** | **($82,653)** | **($53,727)** | | **Net loss** | **($68,710)** | **($47,629)** | | **Net loss per share (Basic & Diluted)** | **($1.21)** | **($0.84)** | [Consolidated Balance Sheets](index=7&type=section&id=Consolidated%20Balance%20Sheets) Total assets increased to $3.28 billion as of March 31, 2025, primarily due to acquisition-driven growth in property, plant, and equipment and goodwill, alongside a rise in long-term debt Consolidated Balance Sheet Highlights (In thousands) | Metric | March 31, 2025 | March 31, 2024 | December 31, 2024 | | :--- | :--- | :--- | :--- | | Cash, cash equivalents and restricted cash | $138,482 | $170,658 | $281,134 | | Total current assets | $946,704 | $817,759 | $987,668 | | Net property, plant and equipment | $1,743,513 | $1,320,612 | $1,441,700 | | Goodwill | $449,554 | $274,478 | $297,225 | | **Total assets** | **$3,280,707** | **$2,513,643** | **$2,851,202** | | Long-term debt | $1,160,385 | $673,539 | $666,911 | | **Total liabilities** | **$1,873,123** | **$1,295,016** | **$1,375,117** | | **Total stockholders' equity** | **$1,407,584** | **$1,218,627** | **$1,476,085** | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities significantly increased to $125.3 million in Q1 2025, while investing activities surged to $503.6 million due to acquisitions, partially offset by $486.3 million from new debt Consolidated Cash Flow Summary (Q1 2025 vs Q1 2024) (In thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($125,277) | ($43,210) | | Net cash used in investing activities | ($503,633) | ($45,069) | | Net cash provided by (used in) financing activities | $486,258 | ($3,383) | | **Decrease in cash, cash equivalents and restricted cash** | **($142,652)** | **($91,662)** | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail segment reorganization, the **$454.0 million** Strata Corporation acquisition, related credit agreement amendments, and a **$938.7 million** backlog as of March 31, 2025 - In January 2025, the company reorganized its business segments, combining former Pacific and Northwest into the new West segment, and former North Central and South into the new Central segment, resulting in four reportable segments: West, Mountain, Central, and Energy Services[31](index=31&type=chunk)[81](index=81&type=chunk) - On March 7, 2025, Knife River acquired Strata Corporation for a total purchase price of **$454.0 million**, expanding operations in North Dakota and Minnesota, with a preliminary allocation adding **$152.3 million** to goodwill[34](index=34&type=chunk)[58](index=58&type=chunk)[62](index=62&type=chunk) - The company's remaining performance obligations (backlog) were **$938.7 million** at March 31, 2025, with approximately **$820.6 million** expected to be recognized within the next 12 months[55](index=55&type=chunk) - On March 7, 2025, the company amended its credit agreement, increasing its revolving credit facility to **$500 million** and adding a new **$500 million** Term Loan B, which was used to fund the Strata acquisition[78](index=78&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes Q1 2025 revenue growth to contracting services and price increases, but gross profit declined due to higher pre-production and acquisition-related costs, while maintaining a strong backlog and pursuing strategic growth initiatives [Market Conditions and Outlook](index=25&type=section&id=Market%20Conditions%20and%20Outlook) Resilient market conditions, strong public funding, and a **$938.7 million** contracting services backlog support the company's focus on profitability initiatives and strategic growth through acquisitions Contracting Services Backlog (in millions) | Segment | March 31, 2025 | March 31, 2024 | December 31, 2024 | | :--- | :--- | :--- | :--- | | West | $242.1 | $297.1 | $230.2 | | Mountain | $418.3 | $383.2 | $339.9 | | Central | $278.3 | $279.2 | $175.5 | | **Total** | **$938.7** | **$959.5** | **$745.6** | - Public funding remains strong, with over **60%** of IIJA formula funding yet to be spent in the company's 14 operating states as of January 2025, which is expected to provide continued bidding opportunities[107](index=107&type=chunk) - The company continues to pursue growth, highlighted by the March 2025 acquisition of Strata Corporation and an aggregate quarry in Washington, along with organic projects in South Dakota and Idaho[110](index=110&type=chunk)[111](index=111&type=chunk) [Consolidated Overview](index=27&type=section&id=Consolidated%20Overview) Q1 2025 consolidated revenue grew **7%** to **$353.5 million**, but gross profit declined to a **$9.6 million** loss, widening net loss to **$68.7 million** and Adjusted EBITDA loss to **$38.0 million** due to increased costs Consolidated Financial Summary (Q1 2025 vs Q1 2024) (In millions) | Metric | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $353.5 | $329.6 | 7% | | Gross profit (loss) | ($9.6) | $6.5 | (248)% | | Operating loss | ($82.7) | ($53.7) | (54)% | | Net loss | ($68.7) | ($47.6) | (44)% | | Adjusted EBITDA | ($38.0) | ($17.7) | (115)% | - The increase in revenue was driven by additional contracting services activity and mid-single-digit price increases across asphalt, aggregate, and ready-mix product lines[127](index=127&type=chunk) - The decrease in gross profit was attributed to higher pre-production costs in the aggregates line, seasonal costs at the newly acquired Albina operations, and lower margins on contracting services in the Mountain segment[128](index=128&type=chunk) [Business Segment Financial and Operating Data](index=30&type=section&id=Business%20Segment%20Financial%20and%20Operating%20Data) In Q1 2025, the West segment was profitable with **$24.9 million** EBITDA, while Mountain, Central, and Energy Services segments reported increased EBITDA losses due to higher costs and acquisition impacts Segment Revenue and EBITDA (Q1 2025) (In millions) | Segment | Revenue | EBITDA | EBITDA Margin | | :--- | :--- | :--- | :--- | | West | $208.3 | $24.9 | 12.0% | | Mountain | $66.0 | ($16.3) | (24.6)% | | Central | $67.9 | ($24.3) | (35.8)% | | Energy Services | $13.9 | ($7.8) | (56.0)% | - The West segment's EBITDA improved by **$5.5 million**, benefiting from strong market demand in Hawaii, favorable project execution in California, and a **$3.5 million** gain on a bargain purchase acquisition[138](index=138&type=chunk) - The Mountain segment's EBITDA decreased by **$10.2 million**, primarily due to **$7.6 million** in additional aggregate pre-production costs and lower contracting services margins[141](index=141&type=chunk) - The Central and Energy Services segments' performance was negatively impacted by costs associated with recent acquisitions (Strata and Albina, respectively)[144](index=144&type=chunk)[147](index=147&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2025, the company maintained **$86.1 million** in cash and **$477.1 million** in borrowing capacity, having amended its credit agreement to fund the Strata acquisition, with significant capital expenditures planned for 2025 - At March 31, 2025, liquidity consisted of **$86.1 million** in cash and **$477.1 million** available on its revolving credit facility[150](index=150&type=chunk) - The company amended its credit agreement on March 7, 2025, increasing its revolver to **$500 million** and adding a new **$500 million** Term Loan B to fund the Strata acquisition[153](index=153&type=chunk)[156](index=156&type=chunk) - Total estimated capital expenditures for 2025 are between **$155 million** and **$215 million** for maintenance and improvement, with an additional **$57 million** planned for organic growth[154](index=154&type=chunk)[155](index=155&type=chunk) - Cash used in operating activities increased to **$125.3 million** in Q1 2025 from **$43.2 million** in Q1 2024, mainly due to higher working capital needs[158](index=158&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risk from interest rate fluctuations on its **$764.7 million** variable-rate debt, where a **1.00%** increase would raise annual interest expense by **$7.6 million** - The company has **$764.7 million** in variable-rate term loans outstanding as of March 31, 2025[176](index=176&type=chunk) - A hypothetical **1.00%** increase in interest rates would increase annual interest expense by approximately **$7.6 million**[176](index=176&type=chunk)[177](index=177&type=chunk) [Controls and Procedures](index=38&type=section&id=Controls%20and%20Procedures) Management concluded disclosure controls were effective as of March 31, 2025, while integrating internal controls for recently acquired Albina Asphalt and Strata Corporation, which are temporarily excluded from assessment - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[179](index=179&type=chunk) - The company is currently integrating the internal controls of the recently acquired Albina Asphalt (Nov 2024) and Strata Corporation (Mar 2025) and has excluded them from its assessment of internal control over financial reporting for this period[180](index=180&type=chunk) [Part II -- Other Information](index=39&type=section&id=Part%20II%20--%20Other%20Information) [Legal Proceedings](index=39&type=section&id=Item%201.%20Legal%20Proceedings) No material changes to the company's legal proceedings were reported from those in the 2024 Annual Report - No material changes to legal proceedings were reported during the quarter[184](index=184&type=chunk) [Risk Factors](index=39&type=section&id=Item%201A.%20Risk%20Factors) The company refers to risk factors in its 2024 Annual Report on Form 10-K, with no material changes or new significant risks reported for the quarter - The company directs investors to the risk factors section of its 2024 Annual Report, implying no material updates for the quarter[185](index=185&type=chunk) [Mine Safety Disclosures](index=39&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine safety disclosures, including violations and regulatory matters, are provided in Exhibit 95 of the Form 10-Q - Mine safety disclosures are available in Exhibit 95 of the report[188](index=188&type=chunk)

Financial Data and Key Metrics Changes - The company is positioned for its most profitable year in history, forecasting record revenue, net income, and adjusted EBITDA [6][9] - The first quarter results were in line with expectations, with a seasonal loss of approximately 8% of annual EBITDA, which is an increase from the historical 5% due to recent acquisitions [10][11] - The company spent approximately $8 million in the first quarter on SG&A, primarily related to acquisitions and business development activities [10][30] Business Line Data and Key Metrics Changes - Aggregate volumes are expected to increase by high single digits for the full year, despite a 9% decline in the first quarter due to lower demand in Oregon and weather impacts [26][50] - Ready mix revenue increased by 9% due to higher average selling prices and volume growth, with expectations for high teens volume growth for the full year [28] - Asphalt activity was light in the first quarter, which typically accounts for less than 5% of the full year's volume, but is expected to pick up in the second quarter [28] Market Data and Key Metrics Changes - The company has a strong backlog, with public projects representing 87% of it, and has seen increased bidding activity compared to last year [18][19] - The company is tracking 51 transportation funding bills at the state level, with significant funding approved in states like Idaho and North Dakota [16][17] - The company is experiencing pressure in private construction markets, particularly in Oregon and Montana, while seeing strength in Hawaii, California, and Texas [41][42] Company Strategy and Development Direction - The company is actively pursuing an acquisition program, having closed on Strata Corporation and evaluating additional deals [7][11] - Investments in operational improvements and competitive edge strategies are ongoing, including dynamic pricing initiatives and technology deployment [12][13] - The company is focused on maintaining a disciplined approach to bidding and project selection to optimize margins and minimize risk [19][84] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term strategy and the potential for record results in 2025, despite macroeconomic uncertainties [7][9] - The company is well-positioned to benefit from infrastructure investments, with significant funding available for public projects [15][34] - Management noted that while private projects have seen some delays, they expect many to resume in the second half of the year [96] Other Important Information - The company has raised its full-year guidance, expecting consolidated revenue between $3.25 billion and $3.45 billion, and adjusted EBITDA between $530 million and $580 million [33] - SG&A expenses are expected to increase by $20 million for the full year, primarily due to acquisition-related costs and business development activities [30][60] Q&A Session Summary Question: Resiliency in private construction markets - Management noted that private construction is strong in Hawaii, California, and Texas, while facing pressure in Oregon and Montana [41][42] Question: Update on Strata integration - Integration is going well, with expectations for positive contributions to margins and overall operations [44] Question: Volumes across segments - Management indicated that aggregate volumes were down 9% in the first quarter but are expected to increase in the coming months [50][51] Question: End market mix post-acquisitions - The company remains heavily exposed to public works, with 87% of construction revenue coming from public projects [52][54] Question: SG&A breakdown for the quarter - SG&A increased by $13 million, with $8 million related to the step-up in investment and $4 million from acquisitions [62][63] Question: Impact of oil price decline on costs - Management stated that the decline in oil prices has not materially changed cost expectations across segments [86] Question: Future investment cycles - The company views the current $20 million step-up in SG&A as a one-time investment to support future growth [94] Question: Delayed private projects - Delays are primarily in private contracts, with expectations for many to resume in the third quarter [96][97]

Financial Data and Key Metrics Changes - The company is positioned for its most profitable year in history, forecasting record revenue, net income, and adjusted EBITDA [5][22] - The first quarter results were in line with expectations, with a seasonal loss of approximately 8% of annual EBITDA due to recent acquisitions [8][10] - SG&A expenses increased by $13 million compared to the prior year, primarily due to acquisition-related costs and business development activities [29][30] Business Line Data and Key Metrics Changes - Aggregate product line saw a 6% year-over-year increase in average selling price, but overall volumes were down 9% due to lower demand in Oregon and weather impacts [25][26] - Ready mix revenue increased by 9% driven by higher average selling prices and volume growth, with expectations for high teens volume growth for the full year [26][27] - Contracting services experienced higher revenues, particularly in the Mountain segment, but gross profit was lower compared to the previous year due to project types and incentives recognized [27][28] Market Data and Key Metrics Changes - The company has a strong public project backlog, representing 87% of total backlog, with increased bidding activity noted in recent months [16][17] - The West segment saw revenue and EBITDA increases, particularly in Hawaii and California, while Oregon faced decreased demand due to funding issues [19][20] - The Mountain segment is benefiting from new transportation funding in Idaho, with positive signs for future growth [20][21] Company Strategy and Development Direction - The company is actively pursuing an acquisition program, having closed on Strata Corporation and planning further deals focused on materials-led companies [6][10] - Investments in operational improvements and competitive edge strategies are expected to drive long-term profitable growth [6][12] - The company is committed to safety and operational excellence as part of its corporate culture [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term strategy despite macroeconomic uncertainties, highlighting a resilient business model insulated from tariff impacts [6][7] - The company anticipates benefiting from significant infrastructure investment needs, with a strong funding backdrop for public projects [14][15] - Management remains optimistic about achieving record results for the full year, supported by recent acquisitions and ongoing operational improvements [22][32] Other Important Information - The company has approved $68 million for organic growth projects for the full year, with significant capital expenditures planned [30][31] - The company ended the quarter with $86 million in unrestricted cash and no borrowings on its revolver, indicating strong liquidity [32] Q&A Session Summary Question: Resiliency in private construction markets - Management noted that Hawaii, California, and Texas are showing positive activity in private construction, while Oregon and Montana are experiencing pressure [38][40] Question: Update on Strata integration - The integration of Strata is progressing well, with expectations for positive contributions to margins and overall operations [41][44] Question: Volumes across segments - Management indicated that while the first quarter saw a 9% decline in aggregate volumes, 70% of states experienced increases, and they remain confident in achieving guidance numbers [49][50] Question: End market mix post-acquisitions - The company confirmed that 87% of construction contracting revenue is from public works, with Strata's addition slightly increasing private market influence [52][53] Question: SG&A clarification - Management provided a breakdown of the $13 million increase in SG&A, attributing $8 million to the step-up in investment and $4 million to acquisition-related costs [60][62] Question: Impact of delayed private projects - Delays are primarily in private projects, with expectations for many to resume in the third quarter, particularly in the West Coast region [96][100] Question: Future investment and margin targets - The $20 million step-up in SG&A is seen as an investment in future growth, with management confident in reaching long-term margin targets [92][95]

Financial Performance & Guidance - Q1 2025 revenue increased to $353.5 million, compared to $329.6 million in Q1 2024[8] - Adjusted EBITDA for Q1 2025 was $(38.0) million, compared to $(17.7) million in Q1 2024[8] - The company projects full-year 2025 revenue between $3.25 billion and $3.45 billion[8] - Full-year 2025 Adjusted EBITDA is projected between $530 million and $580 million, with an Adjusted EBITDA margin of 16.6%[8] Strategic Investments & Acquisitions - SG&A expenses increased due to investments in business development and EDGE initiatives, with approximately $8 million in Q1[15] - The company closed on the acquisition of Strata Corporation and Kalama River Quarry in Q1 for $419 million and $10 million respectively[23, 28] - $68 million of Capex approved for organic growth initiatives in 2025[21] Backlog & Infrastructure Funding - Q1 2025 backlog stands at $938.7 million, near the 1Q24 record of $959.5 million[17] - Approximately 87% of the backlog is public work, with an average project size of $3 million and approximately 87% completed within one year[17] Operational Excellence - PIT Crew investments at aggregates plants in Q1 are expected to improve margins[21] - PIT Crew aggregate plant improvements are expected to result in a 30% to 40% average improvement in production capacity[32] Capital Management - The company has a net leverage of 2.5x, in line with its long-term target[21, 43] - Available liquidity stands at $477 million from the Revolver[21, 43]

[First Quarter 2025 Financial Results](index=1&type=section&id=First%20Quarter%202025%20Financial%20Results) Knife River's Q1 2025 revenue increased 7% to $353.5 million, but net loss widened 44% to $68.7 million, and Adjusted EBITDA decreased 115% to negative $38.0 million [Performance Summary](index=1&type=section&id=Performance%20Summary) Q1 2025 saw revenue growth but increased net loss and negative Adjusted EBITDA, reflecting seasonal trends Q1 2025 Performance Summary | (In millions, except per share) | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | **Revenue** | $353.5 | $329.6 | 7% | | **Net loss** | $(68.7) | $(47.6) | (44)% | | **Net loss margin** | (19.4)% | (14.5)% | - | | **Adjusted EBITDA** | $(38.0) | $(17.7) | (115)% | | **Adjusted EBITDA margin** | (10.7)% | (5.4)% | - | | **Net loss per share** | $(1.21) | $(0.84) | (44)% | [Management Commentary and Outlook](index=1&type=section&id=Management%20Commentary%20and%20Outlook) Management anticipates a record 2025 despite Q1 seasonal loss, driven by acquisitions and strong infrastructure funding - The company is on track for a **record year in 2025** for revenue, net income, and adjusted EBITDA, despite a seasonal Q1 loss that was in line with expectations[3](index=3&type=chunk) - The acquisition of Strata Corporation is expected to contribute approximately **$45 million in EBITDA** for the full year 2025, with margins accretive to Knife River[3](index=3&type=chunk) - SG&A expenses increased by **$13 million year-over-year**, with about **$8 million incurred in Q1** as part of an expected **$20 million annual step-up**, largely for corporate development, Strata, and Albina[5](index=5&type=chunk) - The company's backlog at the end of Q1 was **$938.7 million**, near the record level of the previous year, with similar expected margins[11](index=11&type=chunk) - Public funding for infrastructure remains strong, with Knife River tracking **51 related bills** in its 14 states, and new transportation funding packages recently passed in Idaho, North Dakota, and Washington[11](index=11&type=chunk) [Reporting Segment Performance](index=3&type=section&id=Reporting%20Segment%20Performance) Q1 2025 segment results varied, with West showing growth while Mountain, Central, and Energy Services faced EBITDA declines due to costs and seasonality - In January 2025, the company reorganized its operating segments, combining the former Pacific and Northwest into the new West segment, and North Central and South into the new Central segment[9](index=9&type=chunk) [West Segment](index=3&type=section&id=West%20Segment) The West segment achieved 5% revenue growth and 28% EBITDA increase, driven by higher pricing and strong project execution West Segment Performance (Q1 2025 vs Q1 2024) | (In millions) | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | **Revenue** | $208.3 | $198.7 | 5% | | **EBITDA** | $24.9 | $19.4 | 28% | | **EBITDA margin** | 12.0% | 9.8% | - | [Mountain Segment](index=3&type=section&id=Mountain%20Segment) Mountain segment revenue grew 10%, but EBITDA declined significantly due to higher pre-production costs and weather impacts Mountain Segment Performance (Q1 2025 vs Q1 2024) | (In millions) | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | **Revenue** | $66.0 | $59.8 | 10% | | **EBITDA** | $(16.3) | $(6.1) | (168)% | | **EBITDA margin** | (24.6)% | (10.1)% | - | [Central Segment](index=3&type=section&id=Central%20Segment) Central segment revenue increased 11%, yet EBITDA decreased due to higher pre-production costs and seasonal losses from the Strata acquisition Central Segment Performance (Q1 2025 vs Q1 2024) | (In millions) | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | **Revenue** | $67.9 | $61.0 | 11% | | **EBITDA** | $(24.3) | $(18.7) | (30)% | | **EBITDA margin** | (35.8)% | (30.7)% | - | [Energy Services Segment](index=4&type=section&id=Energy%20Services%20Segment) Energy Services revenue rose 9% from the Albina acquisition, but EBITDA sharply declined due to seasonal losses and maintenance costs Energy Services Segment Performance (Q1 2025 vs Q1 2024) | (In millions) | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | **Revenue** | $13.9 | $12.8 | 9% | | **EBITDA** | $(7.8) | $(2.5) | (214)% | | **EBITDA margin** | (56.0)% | (19.4)% | - | [Capital Allocation & Liquidity](index=4&type=section&id=Capital%20Allocation%20%26%20Liquidity) Knife River allocated $440 million to growth, primarily the Strata acquisition, funded by new debt, maintaining a 2.5x net leverage ratio - Capital expenditures for maintenance and improvement are approved to be between **5% and 7% of revenue guidance** for 2025. Q1 spending was **$63.9 million**[17](index=17&type=chunk) - Spent **$440 million on growth initiatives** in Q1, including **$419 million for the Strata acquisition** (net of adjustments), **$10 million for Kalama River Quarry**, and **$11 million for greenfield projects**[18](index=18&type=chunk) - Financed the Strata acquisition partly through a new **$500 million Term Loan B facility** and increased its revolving credit facility from **$350 million to $500 million**[19](index=19&type=chunk) - As of March 31, 2025, net leverage (net debt to trailing-twelve-month Adjusted EBITDA) was **2.5x**, aligning with the company's long-term target[20](index=20&type=chunk) [2025 Financial Guidance](index=5&type=section&id=2025%20Financial%20Guidance) Knife River projects full-year 2025 consolidated revenue between $3.25 billion and $3.45 billion and Adjusted EBITDA between $530 million and $580 million Full-Year 2025 Financial Guidance | (In millions) | Low | High | | :--- | :--- | :--- | | **Revenue (Consolidated)** | $3,250.0 | $3,450.0 | | **Adjusted EBITDA (Consolidated)** | $530.0 | $580.0 | - Guidance is based on expected price increases of **mid-single digits for aggregates and ready-mix**, and **low-single digits for asphalt**[22](index=22&type=chunk) - Expected consolidated volume increases are **high-single-digits for aggregates**, **high-teens for ready-mix**, and **low-single-digits for asphalt**[22](index=22&type=chunk) [Consolidated Financial Statements](index=6&type=section&id=Consolidated%20Financial%20Statements) Consolidated statements show a Q1 2025 net loss of $68.7 million, increased assets and liabilities from acquisitions, and significant cash usage in operations and investing [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) Q1 2025 total revenue increased to $353.5 million, but higher costs resulted in a gross loss and a net loss of $68.7 million Consolidated Statements of Operations (Unaudited) | (In millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | **Total revenue** | $353.5 | $329.6 | | **Gross profit (loss)** | $(9.6) | $6.5 | | **Operating loss** | $(82.7) | $(53.7) | | **Net loss** | $(68.7) | $(47.6) | | **Net loss per share** | $(1.21) | $(0.84) | [Consolidated Balance Sheets](index=7&type=section&id=Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets grew to $3.28 billion and liabilities to $1.87 billion, primarily due to acquisition-related increases in debt and goodwill Consolidated Balance Sheets (Unaudited) | (In millions) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total current assets** | $946.7 | $987.7 | | **Total noncurrent assets** | $2,334.0 | $1,863.5 | | **Total assets** | $3,280.7 | $2,851.2 | | **Total current liabilities** | $322.0 | $370.0 | | **Total liabilities** | $1,873.1 | $1,375.1 | | **Total stockholders' equity** | $1,407.6 | $1,476.1 | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Q1 2025 saw net cash used in operating activities of $125.3 million and investing activities of $503.6 million, largely offset by financing activities Consolidated Statements of Cash Flows (Unaudited) | (In millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | **Net cash used in operating activities** | $(125.3) | $(43.2) | | **Net cash used in investing activities** | $(503.6) | $(45.1) | | **Net cash provided by (used in) financing activities** | $486.3 | $(3.3) | | **Decrease in cash, cash equivalents and restricted cash** | $(142.6) | $(91.6) | [Product Line Data](index=10&type=section&id=Product%20Line%20Data) Q1 2025 average selling prices increased across all product lines, while aggregates and asphalt volumes decreased, and ready-mix volumes slightly increased Average Selling Price (Q1 2025 vs Q1 2024) | Product Line | 2025 | 2024 | | :--- | :--- | :--- | | Aggregates (per ton) | $21.05 | $19.80 | | Ready-mix concrete (per cubic yard) | $199.26 | $188.41 | | Asphalt (per ton) | $81.05 | $74.50 | Sales Volumes (in thousands) (Q1 2025 vs Q1 2024) | Product Line | 2025 | 2024 | | :--- | :--- | :--- | | Aggregates (tons) | 3,867 | 4,255 | | Ready-mix concrete (cubic yards) | 544 | 530 | | Asphalt (tons) | 199 | 221 | [Non-GAAP Financial Measures](index=11&type=section&id=Non-GAAP%20Financial%20Measures) This section reconciles non-GAAP metrics like EBITDA and Adjusted EBITDA to GAAP net loss, providing insights into operational performance and leverage [Reconciliation of Net Loss to Adjusted EBITDA](index=12&type=section&id=Reconciliation%20of%20Net%20Loss%20to%20Adjusted%20EBITDA) Q1 2025 net loss of $68.7 million reconciles to an Adjusted EBITDA of negative $38.0 million after standard adjustments Reconciliation of Net Loss to Adjusted EBITDA (Q1 2025) | (In millions) | Q1 2025 | | :--- | :--- | | **Net loss** | $(68.7) | | Depreciation, depletion and amortization | $38.8 | | Interest expense, net | $13.1 | | Income taxes | $(24.7) | | **EBITDA** | **$(41.5)** | | Unrealized (gains) losses on benefit plan investments | $0.7 | | Stock-based compensation expense | $2.8 | | **Adjusted EBITDA** | **$(38.0)** | [Net Leverage Calculation](index=12&type=section&id=Net%20Leverage%20Calculation) As of March 31, 2025, the net leverage ratio was 2.5x, calculated from $1.10 billion net debt and $442.7 million TTM Adjusted EBITDA Net Leverage Calculation as of March 31, 2025 | (In millions) | Amount | | :--- | :--- | | Total debt, gross | $1,190.0 | | Less: Cash and cash equivalents, excluding restricted cash | $86.1 | | **Total debt, net** | **$1,103.9** | | Trailing-twelve-months ended March 31, 2025, Adjusted EBITDA | $442.7 | | **Net leverage** | **2.5x** | [Reconciliation of Forecasted Results](index=13&type=section&id=Reconciliation%20of%20Forecasted%20Results) Full-year 2025 net income guidance of $200.0 million to $240.0 million reconciles to an Adjusted EBITDA range of $530.0 million to $580.0 million 2025 Forecasted Reconciliation (Net Income to Adjusted EBITDA) | (In millions) | Low | High | | :--- | :--- | :--- | | **Net income** | $200.0 | $240.0 | | Interest expense, net | $68.8 | $68.8 | | Income taxes | $72.0 | $82.0 | | Depreciation, depletion and amortization | $177.0 | $177.0 | | **EBITDA** | **$517.8** | **$567.8** | | Stock-based compensation expense | $11.5 | $11.5 | | **Adjusted EBITDA** | **$530.0** | **$580.0** |

Core Viewpoint - Knife River (KNF) is anticipated to report a year-over-year decline in earnings despite an increase in revenues for the quarter ended March 2025, with the consensus outlook indicating a potential impact on the stock price based on actual results compared to estimates [1][2]. Earnings Expectations - The consensus estimate suggests a quarterly loss of $0.89 per share, reflecting a year-over-year change of -6%, while revenues are projected to be $340.9 million, representing a 3.4% increase from the previous year [3]. Estimate Revisions - The consensus EPS estimate has remained unchanged over the last 30 days, indicating that analysts have not significantly altered their initial projections during this period [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that the Most Accurate Estimate for Knife River is higher than the Zacks Consensus Estimate, resulting in an Earnings ESP of +2.83%, suggesting a more optimistic outlook from analysts [10]. Zacks Rank and Predictive Power - Despite the positive Earnings ESP, Knife River currently holds a Zacks Rank of 4, which complicates the prediction of an earnings beat [11]. Historical Performance - In the last reported quarter, Knife River exceeded the consensus EPS estimate by delivering earnings of $0.41 per share against an expectation of $0.40, resulting in a surprise of +2.50%. Over the last four quarters, the company has beaten consensus EPS estimates twice [12][13]. Conclusion - While Knife River does not appear to be a strong candidate for an earnings beat, it is essential for investors to consider other factors when making decisions regarding the stock ahead of its earnings release [16].

Core Viewpoint - Holcim Ltd Unsponsored ADR (HCMLY) is currently viewed as a better value opportunity compared to Knife River (KNF) based on various financial metrics and rankings [1][3]. Group 1: Zacks Rank and Earnings Outlook - Holcim Ltd has a Zacks Rank of 2 (Buy), indicating a strong earnings outlook, while Knife River has a Zacks Rank of 4 (Sell) [3]. - The improvement in earnings outlook for HCMLY is stronger than that of KNF, making it more appealing for value investors [3]. Group 2: Valuation Metrics - HCMLY has a forward P/E ratio of 15.22, significantly lower than KNF's forward P/E of 23.57, suggesting that HCMLY is undervalued relative to KNF [5]. - The PEG ratio for HCMLY is 2.20, while KNF's PEG ratio is slightly higher at 2.26, indicating that HCMLY may offer better value considering its expected earnings growth [5]. - HCMLY's P/B ratio stands at 1.97, compared to KNF's P/B of 3.65, further supporting the argument that HCMLY is the superior value option [6]. Group 3: Value Grades - Based on the analysis of various valuation metrics, HCMLY holds a Value grade of B, while KNF has a Value grade of C, reinforcing HCMLY's position as the better value investment [6].

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]