Knife River Corporation Q4 FY2025 earnings call

• 2025 was a year of meaningful strategic progress with growing adjusted EBITDA 7% to $497M, completed five acquisitions in 2025 and expect busy 2026. - Focus areas: markets where Knight River states grow twice as fast as non-Knight River states, vertical integration enhancing value and providing multiple opportunities to win work, self help with actions to drive EBITDA growth and margin expansion like standardizing best practices and optimizing pricing, life at Knife culture putting people first for retaining and attracting team members. - 2026 backlog at record $1B, 38% increase from last year, 90% of backlog is public work with some private opportunities like data centers.

In 2025, adjusted EBITDA grew 7% to $497,000,000. For segments: West - legacy Pacific operations had record profitability, California, Alaska and Hawaii saw elevated public activity including military spending, Oregon's financial results were better than the previous year with EBITDA margins above 20% in 2025; Mountain - strong fourth quarter driven by good weather, construction revenue up almost 20% for the quarter, asphalt margins improved 400 basis points, ready mix had margin improvements of 400 basis points; Central - completed three acquisitions, Strata integration going well, expecting volume growth from Texcrete addition, Central Region saw improved public infrastructure spending; Energy services - remains margin accretive, looking forward to second full year of operations at Albina Asphalt and targeting sale of higher margin value added products.

For 2026, expects consolidated revenue between $3,300,000,000 and $3,500,000,000 and adjusted EBITDA between $520,000,000 and $560,000,000 implying adjusted EBITDA margin of approximately 16% at midpoint, assumes normal weather, economic, and operating conditions.

Q: Brent Edward Thielman with D. A. Davidson asked about opportunities to build on backlog in West region.

A: Brian R. Gray said there is a shift of backlog to mountain and central regions but there is solid funding in California, Hawaii, and Alaska, and Oregon's DOT budget is flat with slightly up asphalt paving tonnage and crews are pursuing work.

Q: Brent Edward Thielman asked about levers to outperform aggregate pricing in 2026.

A: Nathan W. Ring said part of 2025 aggregate pricing was due to Strata and mid single digit expected in 2026, Brian R. Gray said commercial excellence teams implemented new dashboards and bidding tools for dynamic pricing with legacy sites fully implementing and new acquisitions to roll it out.

Q: Ethan on for Trey Grooms asked about margin outlook in guidance.

A: Brian R. Gray said EBITDA mid margin going up, gross profit expecting 200 basis points margin improvement in aggregates and margin improvements in all product lines with shift in EBITDA contribution to mountain and central regions.

Q: Kathryn Thompson asked about what drove outside gains in West and mountain divisions and self help vs pricing.

A: Brian R. Gray said favorable weather, contributions from acquisitions, and operational execution and edge initiatives with cost controls.

Q: Kathryn Thompson asked about pipeline for M and A and organic initiatives.

A: Brian R. Gray said disciplined approach looking for strategic fits, pipeline is robust with aggregates based, vertically integrated, infill bolt ons, and Nathan W. Ring said liquidity, solid cash flows from operations, and net leverage position support capital deployment.

Q: Garik Simha Shmois asked about SG and A inflation and volumes.

A: Nathan W. Ring said SG and A increase related to acquisition administrative cost and business development team, volumes related to aggregates mid single digits and ready mix mid teens due to factors like Texcrete addition.

Q: Ian Alton Zaffino asked about data centers and margins.

A: Brian R. Gray said little backlog related to data centers but pending work and higher margin upstream materials, and margin progress with improved gross profit margins in various product lines.

Q: Garrett Greenblatt asked about impact of acquisitions in 2025 and organic assumption.

A: Brian R. Gray said acquisition contributions and organic business growth with midpoint guidance implying 9% growth rate on organic business.

Q: Ivan Yi asked about full year guidance trajectory and pricing for ready mix and asphalt.

A: Nathan W. Ring said seasonality impact with strata, Brian R. Gray said input costs and commercial excellence initiatives influencing pricing for ready mix and asphalt.