Knife River pany(KNF) - 2025 Q1 - Quarterly Results

First Quarter 2025 Financial Results 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 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 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] - 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] - 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] - 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] - 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] Reporting Segment Performance 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] West Segment 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 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 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 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 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] - 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] - 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] - 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] 2025 Financial Guidance 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] - Expected consolidated volume increases are high-single-digits for aggregates, high-teens for ready-mix, and low-single-digits for asphalt[22] Consolidated Financial Statements 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 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 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 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 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 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 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 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 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 |