Knife River (KNF) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenue increased 7% year-over-year to $353.5 million, driven by higher contracting services and pricing initiatives across product lines.

• Net loss widened to $68.7 million from $47.6 million in Q1 2024, reflecting higher SG&A expenses, seasonal factors, and acquisition-related costs.

• Adjusted EBITDA was negative $38.0 million, with margin at (10.7)%, compared to negative $17.7 million and (5.4)% margin last year.

• Major acquisitions included Strata Corporation ($419–$454 million) and Kalama Quarry, expanding the Central segment and aggregate reserves.

• Backlog at March 31, 2025, was $938.7 million, with 87% related to public projects, supporting future revenue stability.

Financial highlights

• Gross profit turned negative at $(9.6) million versus $6.5 million last year, with a margin of (2.7)%.

• SG&A expenses rose 21% to $73.1 million, mainly due to acquisition integration, higher labor costs, and corporate development.

• Interest expense increased 10% to $15.3 million, reflecting higher average debt balances post-acquisition.

• Operating cash flow was negative $125.3 million, primarily due to higher working capital needs and net loss.

• Capital expenditures in Q1 totaled $63.9 million, with $429–$454.5 million spent on acquisitions and growth initiatives.

Outlook and guidance

• Full-year 2025 revenue guidance raised to $3.25–$3.45 billion; Adjusted EBITDA guidance increased to $530–$580 million, reflecting Strata acquisition.

• Aggregate volumes expected to increase high single digits year-over-year; ready-mix volumes to rise high teens; pricing for both to grow mid-single digits.

• Contracting services margins expected to be in line with 2024; guidance assumes normal weather and economic conditions.

• SG&A for 2025 projected as 2024 base plus mid-single-digit inflation, $20 million step-up, and Strata's run-rate.

• 2025 capital expenditures projected between $155 million and $215 million, funded by cash and debt facilities.