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, reflecting strong operational execution, pricing discipline, and public sector demand.

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

• Backlog reached $755 million, up year-over-year, with 87% tied to public projects and improved expected margins for the sixth consecutive quarter.

• Public funding and EDGE strategy initiatives drove results, with a continued focus on quality over quantity and margin expansion.

• 2024 guidance narrowed for both revenue ($2.85–$2.95 billion) and adjusted EBITDA ($445–$465 million), reflecting strong pricing and margin outlook.

Financial highlights

• Third quarter revenue was $1,105.3 million, up 1% year-over-year; gross profit was $273 million, and net income was $148.1 million.

• Adjusted EBITDA for Q3 2024 was $245.2 million, nearly flat year-over-year, with a margin of 22.2%.

• EPS for Q3 was $2.60 diluted, up from $2.58 in Q3 2023; nine-month diluted EPS was $3.14, up from $2.86.

• SG&A expenses increased, mainly due to M&A and healthcare costs; interest expense decreased due to lower average debt balances.

• Cash flow from operations for nine months was $149.9 million; capital expenditures were $127.2 million, with $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-digit for asphalt; volumes expected down mid- to high-single digits.

• Backlog at September 30, 2024, was $755.1 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 $170–$200 million.