[Performance Summary](index=1&type=section&id=Performance%20Summary) Knife River Corporation achieved record third-quarter and nine-month financial results, driven by strategic initiatives [Key Financial Results](index=1&type=section&id=Key%20Financial%20Results) Knife River Corporation reported record third-quarter and nine-month financial results, with revenue increasing to **$1.105 billion** in Q3 2024 and net income growing to **$148.1 million** | Indicator | Q3 2024 (in millions) | Q3 2023 (in millions) | % Change | Nine Months 2024 (in millions) | Nine Months 2023 (in millions) | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Revenue** | $1,105.3 million | $1,090.4 million | 1% | $2,241.8 million | $2,183.5 million | 3% | | **Gross Profit** | $273.0 million | $269.4 million | 1% | $455.7 million | $426.5 million | 7% | | **Net Income** | $148.1 million | $146.7 million | 1% | $178.4 million | $162.2 million | 10% | | **Adjusted EBITDA** | $245.2 million | $247.5 million | (1)% | $381.8 million | $360.0 million | 6% | | **Net Income per Share** | $2.60 | $2.58 | 1% | $3.14 | $2.86 | 10% | [Management Commentary](index=1&type=section&id=Management%20Commentary) Management highlighted the company's fundamental strength and segment diversity, driving record quarterly results and active growth through acquisitions - Geographic segments (Pacific, Northwest, Mountain, Central) contributed a combined record EBITDA of **$224.6 million**, a **6% year-over-year** increase, offsetting the expected decline in the Energy Services segment[3](index=3&type=chunk) - The company has deployed **$129.3 million** on six acquisitions through Nov. 2, 2024, focusing on aggregate reserves and construction materials. Recent acquisitions include Frank B. Marks & Son, Rock Products Manufacturing, a sand reserve in Sioux Falls, and Albina Asphalt[3](index=3&type=chunk) - The company's backlog stands at **$755 million**, higher than the same period last year, with expected margins improving for the sixth consecutive quarter due to the 'EDGE' strategy[4](index=4&type=chunk) - Full-year 2024 guidance has been narrowed to a revenue range of **$2.85 billion** to **$2.95 billion** and an adjusted EBITDA range of **$445 million** to **$465 million**[4](index=4&type=chunk) [Detailed Financial Performance](index=2&type=section&id=Detailed%20Financial%20Performance) Analysis of Knife River's consolidated and segment-specific Q3 2024 financial results, detailing key performance indicators [Consolidated Third Quarter 2024 Results](index=2&type=section&id=Consolidated%20Third%20Quarter%202024%20Results) Knife River achieved record consolidated revenue of **$1.1 billion** in Q3 2024, driven by price increases and strong geographic segment EBITDA - Record Q3 revenue of **$1.1 billion** was primarily driven by price increases in aggregates and ready-mix product lines, along with increased contracting services revenues[5](index=5&type=chunk) - EBITDA contributions from geographic segments increased by **6% year-over-year** for the quarter and **14.8%** for the first nine months of 2024, offsetting decreased EBITDA at the Energy Services segment[5](index=5&type=chunk) [Segment Performance](index=3&type=section&id=Segment%20Performance) Geographic segments demonstrated strong Q3 2024 performance, with Northwest leading in EBITDA growth, while Energy Services saw an anticipated decline [Pacific](index=3&type=section&id=Pacific) The Pacific segment reported record Q3 revenue of **$165.0 million**, with EBITDA increasing by **3%** due to improved margins and contracting services | Metric | Q3 2024 (in millions) | Q3 2023 (in millions) | % Change | | :--- | :--- | :--- | :--- | | **Revenue** | $165.0 million | $157.3 million | 5% | | **Gross Profit** | $34.3 million | $33.3 million | 3% | | **EBITDA** | $29.5 million | $28.6 million | 3% | [Northwest](index=3&type=section&id=Northwest) The Northwest segment achieved record Q3 revenue of **$218.1 million** and record EBITDA of **$55.9 million**, driven by public-agency work and asphalt volumes | Metric | Q3 2024 (in millions) | Q3 2023 (in millions) | % Change | | :--- | :--- | :--- | :--- | | **Revenue** | $218.1 million | $209.4 million | 4% | | **Gross Profit** | $57.4 million | $50.2 million | 14% | | **EBITDA** | $55.9 million | $48.5 million | 15% | [Mountain](index=3&type=section&id=Mountain) The Mountain segment's Q3 revenue increased **2%** to **$261.1 million**, though EBITDA remained flat due to offsetting volume declines | Metric | Q3 2024 (in millions) | Q3 2023 (in millions) | % Change | | :--- | :--- | :--- | :--- | | **Revenue** | $261.1 million | $255.1 million | 2% | | **Gross Profit** | $61.1 million | $59.7 million | 2% | | **EBITDA** | $59.4 million | $59.4 million | 0% | [Central](index=3&type=section&id=Central) The Central segment's Q3 revenue was flat at **$354.9 million**, but EBITDA improved by **7%** to a record **$79.8 million** from disciplined bidding | Metric | Q3 2024 (in millions) | Q3 2023 (in millions) | % Change | | :--- | :--- | :--- | :--- | | **Revenue** | $354.9 million | $354.9 million | 0% | | **Gross Profit** | $85.4 million | $80.4 million | 6% | | **EBITDA** | $79.8 million | $74.8 million | 7% | [Energy Services](index=4&type=section&id=Energy%20Services) The Energy Services segment's Q3 revenue decreased **10%** to **$125.9 million**, with EBITDA falling **26%** due to lower liquid asphalt pricing | Metric | Q3 2024 (in millions) | Q3 2023 (in millions) | % Change | | :--- | :--- | :--- | :--- | | **Revenue** | $125.9 million | $140.6 million | (10)% | | **Gross Profit** | $34.7 million | $46.7 million | (26)% | | **EBITDA** | $33.7 million | $45.7 million | (26)% | [Capital Management and Outlook](index=4&type=section&id=Capital%20Management%20and%20Outlook) Review of Knife River's capital allocation strategy, liquidity, and updated full-year 2024 financial guidance [Capital Allocation & Liquidity](index=4&type=section&id=Capital%20Allocation%20%26%20Liquidity) Knife River maintains a disciplined capital allocation strategy, investing **$129.3 million** in acquisitions, and boasts strong liquidity with **$220.4 million** cash - Capital expenditures are categorized into 'Discipline' (maintenance, improvements) and 'Growth' (organic, acquisitions)[14](index=14&type=chunk)[15](index=15&type=chunk)[16](index=16&type=chunk) - As of Nov. 4, the company has invested **$129.3 million** in six acquisitions and has approved an additional **$23.1 million** for greenfield projects for the remainder of the year[17](index=17&type=chunk) - As of September 30, 2024, the company had **$220.4 million** in cash, **$329.4 million** available under its revolving credit facility, and a net leverage ratio of **1.0x**[18](index=18&type=chunk) [2024 Financial Guidance](index=5&type=section&id=2024%20Financial%20Guidance) Knife River narrowed its full-year 2024 guidance, expecting consolidated revenue between **$2.85 billion** and **$2.95 billion** and Adjusted EBITDA from **$445 million** to **$465 million** Reconciliation of Forecasted Net Income to Adjusted EBITDA (2024 Guidance) | (In millions) | Low (in millions) | High (in millions) | | :--- | :--- | :--- | | **Net income** | $190.0 | $205.0 | | Interest expense, net | $46.0 | $46.0 | | Income taxes | $65.0 | $70.0 | | Depreciation, depletion and amortization | $135.9 | $135.9 | | **EBITDA** | **$436.9** | **$456.9** | | Other Adjustments | $8.1 | $8.1 | | **Adjusted EBITDA** | **$445.0 million** | **$465.0 million** | - The company anticipates price increases of **high single digits** for aggregates and ready-mix, and **low single digits** for asphalt, partially offset by volume declines[19](index=19&type=chunk) [Financial Statements](index=6&type=section&id=Financial%20Statements) Presentation of Knife River's consolidated statements of operations, balance sheets, and cash flows [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) The Consolidated Statements of Operations detail the company's revenues, costs, and expenses, resulting in a net income of **$148.1 million** for Q3 2024 | (In millions) | Q3 2024 | Q3 2023 | Nine Months 2024 | Nine Months 2023 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | $1,105.3 | $1,090.4 | $2,241.8 | $2,183.5 | | **Gross Profit** | $273.0 | $269.4 | $455.7 | $426.5 | | **Operating Income** | $209.1 | $210.2 | $272.1 | $259.2 | | **Net Income** | $148.1 | $146.7 | $178.4 | $162.2 | | **Diluted EPS** | $2.60 | $2.58 | $3.14 | $2.86 | [Consolidated Balance Sheets](index=7&type=section&id=Consolidated%20Balance%20Sheets) The balance sheet as of September 30, 2024, shows total assets of **$2.88 billion**, with total stockholders' equity growing to **$1.45 billion** | (In millions) | Sept 30, 2024 | Sept 30, 2023 | | :--- | :--- | :--- | | **Total Current Assets** | $1,159.6 | $1,011.4 | | **Total Assets** | $2,884.1 | $2,680.9 | | **Total Current Liabilities** | $426.1 | $425.0 | | **Total Liabilities** | $1,435.2 | $1,437.9 | | **Total Stockholders' Equity** | $1,448.9 | $1,243.0 | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended September 30, 2024, net cash provided by operating activities was **$149.9 million**, with a net increase in cash of **$5.1 million** | (In millions) | Nine Months 2024 | Nine Months 2023 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $149.9 | $152.9 | | **Net cash used in investing activities** | ($137.8) | ($82.9) | | **Net cash provided by (used in) financing activities** | ($7.0) | $36.1 | | **Increase in cash, cash equivalents and restricted cash** | $5.1 | $106.1 | [Supplemental Financial Data](index=9&type=section&id=Supplemental%20Financial%20Data) Additional financial insights including backlog information and detailed product line sales and pricing trends [Backlog Information](index=10&type=section&id=Backlog%20Information) As of September 30, 2024, the company's total backlog was **$755.1 million**, with expected higher margins and **87%** publicly funded projects | Segment (In millions) | Sept 30, 2024 | Sept 30, 2023 | | :--- | :--- | :--- | | Pacific | $114.9 | $69.8 | | Northwest | $168.0 | $227.4 | | Mountain | $279.9 | $251.1 | | Central | $192.3 | $183.9 | | **Total** | **$755.1** | **$732.2** | [Product Line Sales and Pricing](index=10&type=section&id=Product%20Line%20Sales%20and%20Pricing) In Q3 2024, sales volumes for key products decreased, while average selling prices increased across all three product lines Sales Volumes (Thousands) | Product | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Aggregates (tons) | 11,169 | 12,022 | | Ready-mix concrete (cubic yards) | 1,148 | 1,271 | | Asphalt (tons) | 3,150 | 3,349 | Average Selling Price | Product | Q3 2024 (per unit) | Q3 2023 (per unit) | | :--- | :--- | :--- | | Aggregates (per ton) | $17.32 | $16.10 | | Ready-mix concrete (per cubic yard) | $185.97 | $169.98 | | Asphalt (per ton) | $68.28 | $66.51 | [Non-GAAP Financial Measures](index=11&type=section&id=Non-GAAP%20Financial%20Measures) Explanation and reconciliation of non-GAAP financial measures used to assess operational performance [Explanation and Reconciliation of Non-GAAP Measures](index=11&type=section&id=Explanation%20and%20Reconciliation%20of%20Non-GAAP%20Measures) The company uses non-GAAP measures like EBITDA and Adjusted EBITDA to provide investors with meaningful information about operational efficiency and financial health - The company uses non-GAAP measures like EBITDA and Adjusted EBITDA to provide insight into operational efficiency, compare performance against peers, and assess borrowing capacity[35](index=35&type=chunk) Reconciliation of Forecasted Net Income to Adjusted EBITDA (2024 Guidance) | (In millions) | Low (in millions) | High (in millions) | | :--- | :--- | :--- | | **Net income** | $190.0 | $205.0 | | Interest expense, net | $46.0 | $46.0 | | Income taxes | $65.0 | $70.0 | | Depreciation, depletion and amortization | $135.9 | $135.9 | | **EBITDA** | **$436.9** | **$456.9** | | Other Adjustments | $8.1 | $8.1 | | **Adjusted EBITDA** | **$445.0 million** | **$465.0 million** | Net Leverage Calculation (as of Sept 30, 2024) | (In millions) | Amount | | :--- | :--- | | Total debt, gross | $691.7 | | Less: Cash and cash equivalents | $220.4 | | **Total debt, net** | **$471.3** | | Trailing-twelve-months Adjusted EBITDA | $454.2 | | **Net leverage** | **1.0x** |

Company Overview - Knife River (KNF) is expected to report a year-over-year increase in earnings, with a projected EPS of $2.82, reflecting a +9.3% change, and revenues of $1.13 billion, which is a 4% increase from the previous year [3] Earnings Expectations - The upcoming earnings report is anticipated to be released on November 4, and the stock price may rise if the actual results exceed expectations, while a miss could lead to a decline [2][3] - The consensus EPS estimate has been revised down by 19.44% over the last 30 days, indicating a bearish sentiment among analysts regarding the company's earnings prospects [4][10] Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that Knife River has a negative Earnings ESP of -0.53%, suggesting that the Most Accurate Estimate is lower than the Zacks Consensus Estimate [10] - Despite the negative Earnings ESP, the company holds a Zacks Rank of 3, making it challenging to predict an earnings beat conclusively [10] Historical Performance - In the last reported quarter, Knife River exceeded the expected EPS of $1.18 by delivering $1.37, resulting in a surprise of +16.10% [11] - Over the past four quarters, the company has beaten consensus EPS estimates three times [12] Industry Context - Otis Worldwide (OTIS), a peer in the Zacks Building Products - Miscellaneous industry, is expected to report an EPS of $0.97, reflecting a +2.1% year-over-year change, with revenues projected at $3.59 billion, up 2% from the previous year [16]

Core Viewpoint - Knife River (KNF) has received an upgrade to a Zacks Rank 2 (Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system is based on changes in earnings estimates, which have a strong correlation with near-term stock price movements [4][6]. - An increase in earnings estimates typically leads to higher fair value calculations by institutional investors, resulting in buying or selling pressure that affects stock prices [4]. Company Performance Indicators - Knife River is projected to earn $3.72 per share for the fiscal year ending December 2024, reflecting a year-over-year increase of 15.2% [8]. - Over the past three months, the Zacks Consensus Estimate for Knife River has risen by 6%, indicating a positive trend in earnings expectations [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with only the top 20% receiving a 'Strong Buy' or 'Buy' rating [9][10]. - Knife River's upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [10].

Group 1: Market Overview - Several construction sector stocks have been added to the Zacks Rank 1 (Strong Buy) list, indicating a positive outlook for the industry [1] - The broader market is starting to stabilize and rebound, creating opportunities in the construction sector [1] Group 2: Knife River Corporation (KNF) - Knife River Corporation has increased over +100% since its spin-off from MDU Resources Group in 2023 [2] - The company has shown increased profitability and is ranked in the top 40% of over 250 Zacks industries [3] - KNF trades at a forward earnings multiple of 19.7X, with EPS expected to rise 10% in fiscal 2024 and another 13% in FY25 to $4.05 per share [3] Group 3: MasTec (MTZ) - MasTec benefits from increased infrastructure spending in the US and is a leading company in engineering, building, installation, and maintenance [5] - The company is in the top 6% of all Zacks industries, with its stock climbing +42% year to date [6] - Total sales are projected to increase 4% this year and another 8% in FY25 to $13.45 billion, with high double-digit EPS growth forecasted for FY24 and FY25 [6] Group 4: Meritage Homes (MTH) - Meritage Homes operates in the Building Products-Home Builders Industry, which is in Zacks' top 7% [6] - The company trades at a forward earnings multiple of 8.1X, with robust bottom line growth expected to expand 5% in FY24 and another 5% in FY25 to $21.98 per share [6] - Despite a recent dip of -12%, MTH is still up +2% year to date and has gained +30% over the last year [7] Group 5: Conclusion - The construction sector presents abundant opportunities due to infrastructure-related activities and steady demand for new homes post-pandemic [7] - Recent market volatility has created better buying opportunities for highly-ranked construction sector stocks [7]

Group 1: Royal Caribbean Cruises (RCL) - Royal Caribbean Cruises primarily serves the contemporary, premium, and deluxe segments of the cruise vacation industry [1] - The company has a Zacks Rank of 1 (Strong Buy) [1] - The Zacks Consensus Estimate for its current year earnings has increased by 2.4% over the last 60 days [1] - The price-to-earnings ratio (P/E) is 0.43, significantly lower than the industry average of 1.61 [2] - The company possesses a Value Score of A [2] Group 2: Meritage Homes (MTH) - Meritage Homes is a leading designer and builder of single-family homes [1] - The company also carries a Zacks Rank of 1 [1] - The Zacks Consensus Estimate for its current year earnings has increased by 5.1% over the last 60 days [1] - The price-to-earnings ratio (P/E) is 8.73, compared to the industry average of 10.60 [3] - The company possesses a Value Score of B [3] Group 3: Knife River Corporation (KNF) - Knife River Corporation mines aggregates and markets crushed stone, sand, gravel, and related construction materials [1] - The company holds a Zacks Rank of 1 [1] - The Zacks Consensus Estimate for its next year earnings has increased by 1.5% over the last 60 days [1] - The price-to-earnings ratio (P/E) is 19.70, slightly lower than the industry average of 20.70 [4] - The company possesses a Value Score of B [4]

1 KNIFE RIVER Second Quarter 2024 Results Presentation August 6, 2024 NYSE Forward Looking Statements 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 reason ...

Knife River (KNF) came out with quarterly earnings of $1.37 per share, beating the Zacks Consensus Estimate of $1.18 per share. This compares to earnings of $1 per share a year ago. These figures are adjusted for nonrecurring items. This quarterly report represents an earnings surprise of 16.10%. A quarter ago, it was expected that this construction materials company would post a loss of $0.80 per share when it actually produced a loss of $0.84, delivering a surprise of -5%. Over the last four quarters, the ...

Core Viewpoint - Investors in the Building Products - Miscellaneous sector should consider Knife River (KNF) as a potentially undervalued stock compared to James Hardie (JHX) [1] Valuation Metrics - Knife River has a P/B ratio of 3.32, while James Hardie has a P/B ratio of 7.72, indicating that KNF is more favorably valued in terms of book value [3] - KNF's forward P/E ratio is 20.30, compared to JHX's forward P/E of 21.82, suggesting that KNF may be a better value option [5] - The PEG ratio for KNF is 2.68, while JHX has a PEG ratio of 2.85, further supporting the notion that KNF is more attractively priced relative to its expected earnings growth [5] Earnings Outlook - Knife River has a stronger earnings outlook compared to James Hardie, which is reflected in their respective Zacks Ranks of 2 (Buy) for KNF and 5 (Strong Sell) for JHX [4] Value Grades - Based on various valuation metrics, Knife River holds a Value grade of B, while James Hardie has a Value grade of D, indicating that KNF is perceived as a better value investment [9]

Core Insights - The article compares two stocks, Knife River (KNF) and James Hardie (JHX), to determine which presents a better value opportunity for investors [4][5]. Valuation Metrics - KNF has a P/B ratio of 3.19, while JHX has a P/B ratio of 7.17, indicating that KNF is valued more favorably in terms of its book value [3]. - The forward P/E ratio for KNF is 19.56, compared to JHX's 20.26, suggesting that KNF may be a more attractive option based on earnings expectations [6]. - KNF's PEG ratio is 2.58, while JHX's PEG ratio is 2.65, indicating that KNF has a slightly better valuation when considering expected earnings growth [6]. Zacks Rank and Style Scores - KNF has a Zacks Rank of 2 (Buy), while JHX has a Zacks Rank of 4 (Sell), reflecting a more favorable earnings outlook for KNF [5][7]. - The Style Score Value grade for KNF is B, while JHX has a Value grade of C, further supporting the notion that KNF is the better value investment [9].

Group 1 - Knife River (KNF) has experienced a downtrend with a 15% decline over the past four weeks due to excessive selling pressure, but it is now in oversold territory, indicating a potential turnaround [1] - The Relative Strength Index (RSI) is a key technical indicator used to determine if a stock is oversold, with a reading below 30 typically indicating oversold conditions [2] - The RSI for KNF is currently at 28.8, suggesting that heavy selling may be exhausting itself, which could lead to a price rebound [5] Group 2 - There is strong consensus among sell-side analysts that KNF will report better earnings than previously predicted, with the consensus EPS estimate increasing by 0.6% over the last 30 days [6] - KNF holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, indicating a strong potential for a near-term turnaround [7]