Knife River Corporation — Third Quarter 2026 Earnings Summary

Financial Performance:

• Revenue increased 6% year-over-year to $1,275.6 million for the quarter ended September 30, 2026, compared to $1,203.7 million in the prior year period.
• Net income decreased 4% year-over-year to $137.9 million, down from $143.2 million in the prior year.
• Net income margin was 10.8%, down from 11.9% in the prior year.
• Adjusted EBITDA was $271.7 million, essentially flat compared to $272.8 million in the prior year.
• Adjusted EBITDA margin decreased to 21.3% from 22.7% in the prior year.
• Net income per share was $2.43, down from $2.52 in the prior year.
• As of September 30, 2026, the company held $118.0 million in unrestricted cash and cash equivalents.
• Gross debt stood at $1.6 billion, with $448.2 million of available capacity under the revolving credit facility, net of outstanding letters of credit.
• Net leverage was 2.9x as of September 30, 2026.
• For the nine months ended September 30, 2026, capital expenditures totaled $127.6 million for maintenance and improvement, and $266.7 million for growth initiatives ($185.7 million on acquisitions and $81.0 million on aggregate expansions and greenfield projects).

Guidance and Future Outlook:

• Updated full-year 2026 guidance to reflect near-term headwinds.
• Revised 2026 revenue guidance to a range of $3,375.0 million to $3,425.0 million.
• Revised 2026 Adjusted EBITDA guidance to a range of $475.0 million to $505.0 million.
• Full-year 2026 guidance expects aggregates volumes to increase high-single digits to low-double digits and pricing to increase mid-single digits.
• Full-year 2026 guidance expects ready-mix volumes to increase high-single digits to low-double digits.
• Full-year 2026 guidance expects asphalt volumes to increase high-single digits to low-double digits.
• Full-year 2026 guidance expects depreciation, depletion, and amortization to increase mid-teens.
• Guidance ranges are based on normal weather, economic, and operating conditions and do not include the expected impact of future acquisitions.
• The company anticipates spending $55.4 million on organic growth projects for the remainder of 2026.

Business Segments and Product Lines:

• West Segment: Revenue decreased 8% to $365.8 million; EBITDA decreased 1% to $91.4 million; EBITDA margin improved 180 basis points to 25.0%. Performance was driven by higher aggregate and ready-mix pricing, partially offset by less available contracting services work in Oregon and California.
• Mountain Segment: Revenue increased 34% to $308.1 million; EBITDA increased 10% to $55.8 million; EBITDA margin decreased to 18.1% from 22.1%. Growth was driven by increased contracting services revenue, higher volumes across all materials product lines, higher pricing in ready-mix and aggregates, and acquisitions completed in the first quarter.
• Central Segment: Revenue increased 6% to $462.0 million; EBITDA increased 2% to $102.1 million; EBITDA margin declined 90 basis points to 22.1%. Growth was driven by higher aggregate and contracting services revenue and contributions from the Texcrete acquisition.
• Energy Services Segment: Revenue was flat at $168.4 million; EBITDA decreased 18% to $32.4 million; EBITDA margin decreased to 19.3% from 23.4%. Performance was impacted by lower sales volumes in certain markets and higher material input costs, partially offset by pricing and volume increases in California.
• Aggregate Margin: Improved 240 basis points year-over-year to a third-quarter record of 29.6%, driven by internal pull-through, higher third-party sales (10% volume increase), mid-single-digit pricing increases, and reduced per-unit variable production costs.
• Product Volumes: Aggregates sales increased to 12,747 thousand tons; Ready-mix concrete sales were 1,338 thousand cubic yards; Asphalt sales were 3,368 thousand tons.

Market and Competitive Landscape:

• External headwinds including market dynamics, project delays, and higher fuel costs carried into the third quarter, with the most pronounced impact in contracting services.
• The company noted fewer bidding opportunities in certain markets compared to the same period last year.
• Approximately 82% of the company's contracting services backlog relates to publicly funded projects, including street and highway construction.
• The company is pursuing more private-work opportunities and targeting more third-party materials sales.
• The company has an active M&A pipeline and completed acquisitions in the first quarter of 2026.
• Margins on backlog at September 30, 2026, are expected to be lower than margins on backlog at September 30, 2025.

Risks and Challenges:

• Near-term headwinds including market dynamics, project delays, and higher fuel costs.
• Competitive market dynamics affecting contracting services work.
• Higher material input costs impacting the Energy Services segment.
• Fewer bidding opportunities in certain markets.
• Forward-looking statements regarding EDGE initiatives, growth, and guidance are subject to risks and uncertainties, including the variability of non-GAAP adjustment items and the timing of acquisitions.

Management Commentary and Tone:

• CEO Brian Gray described the quarter as "solid" despite a "challenging operating environment."
• Management expressed confidence that external headwinds are temporary and that they have successfully managed through similar environments before.
• The company is building upon its Competitive EDGE program to drive EBITDA growth and margin improvement through self-help initiatives.
• Knife River announced "Sharper EDGE" initiatives focused on targeted capital improvements to deliver meaningful benefits in operational, commercial, and organizational areas.
• Since launching EDGE in 2023, the company has delivered a 530 basis point improvement in aggregate gross margin.
• Management remains focused on disciplined execution and investing in areas to create long-term shareholder value.
• Details on Sharper EDGE initiatives will be discussed at an investor day in the coming months.

Other Key Points:

• Total backlog at September 30, 2026, was $857.2 million, down from $994.6 million at September 30, 2025.
• The company estimates total 2026 capital expenditures for maintenance and improvement to be between 5% and 6% of revenue.
• Capital expenditures for future acquisitions and new growth opportunities would be incremental to the outlined capital program.
• The company is a member of the S&P MidCap 400 index.
• The company hosts a conference call to discuss results and conduct a Q&A session.