Knife River (KNF) Q3 2024 earnings summary

Executive summary

• Achieved record third-quarter revenue of $1,105.3 million, gross profit of $273 million, and net income of $148.1 million, driven by strong geographic segment performance and pricing initiatives, with all segments posting record or near-record EBITDA.

• Six acquisitions totaling $129.3 million were completed in 2024, expanding aggregates and liquid asphalt operations, with purchase multiples of 6–8x projected 2025 EBITDA and benefits expected in 2025.

• Backlog reached $755 million as of September 30, 2024, with 87% public projects and improved expected margins for the sixth consecutive quarter.

• Public funding and robust DOT bid schedules continue to support growth, with about 48–50% of IIJA funds in the company’s footprint yet to be allocated.

• 2024 guidance narrowed for revenue ($2.85–$2.95 billion) and adjusted EBITDA ($445–$465 million), reflecting high single-digit price increases and mid- to high-single-digit volume declines.

Financial highlights

• Q3 2024 revenue was $1,105.3 million (+1% year-over-year); gross profit $273 million (+1%); net income $148.1 million (+1%); adjusted EBITDA $245.2 million (down 1%).

• Gross margin for Q3 was 24.7%; adjusted EBITDA margin 22.2%; net income margin 13.4%.

• EPS for Q3 was $2.60 (up 1%); nine-month EPS $3.14 (up 10%).

• Average selling prices: aggregates up 8%, ready-mix up 10%, asphalt up 2% year-to-date; volumes declined 5–10%.

• Cash flow from operations for nine months was $149.9 million; capital expenditures $127.2 million; $129.3 million invested in acquisitions.

Outlook and guidance

• Full-year 2024 revenue guidance narrowed to $2.85–$2.95 billion; adjusted EBITDA guidance to $445–$465 million.

• High single-digit price increases expected for aggregates and ready-mix, low single digits for asphalt; volumes expected down mid- to high-single digits.

• Backlog at September 30, 2024, was $755 million, with 87% public projects; $688.9 million expected to complete in the next 12 months.

• Guidance assumes normal economic and operating conditions for the remainder of the year.

• 2024 capital expenditures for maintenance and improvements estimated at 5–7% of revenue ($170–$200 million).