Knife River Corporation ((KNF)) has held its Q4 earnings call. Read on for the main highlights of the call.
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During the recent earnings call, Knife River Corporation conveyed an optimistic outlook, as evidenced by their record-breaking results in 2024. The company’s strategic price adjustments, successful acquisitions, and a robust project backlog were key drivers of this success. Despite some challenges in the Energy Services segment and increased SG&A costs, the company’s growth strategy and enhanced margins signal a promising trajectory for 2025.
Record-Breaking Revenue and Growth
Knife River Corporation has achieved remarkable financial results, with record full-year revenue, adjusted EBITDA, and margin improvements in 2024. Over the past two years, the company saw a 48% increase in adjusted EBITDA and a significant 360 basis point improvement in margins, showcasing the effectiveness of their strategic initiatives.
Price Increases and Margin Improvements
The company successfully implemented annual price increases of 7% for aggregates and 10% for ready-mix products. These price adjustments contributed to improved margins across key product lines, including aggregates, ready-mix, and asphalt, reinforcing the company’s profitability.
Strong Backlog and New Projects
Knife River begins 2025 with a strong backlog valued at $746 million, marking a 13% increase from the previous year. This includes a significant $96 million, three-year road construction project in Idaho, which underscores the company’s robust project pipeline and future growth potential.
Strategic Acquisitions and Growth Initiatives
In 2024, Knife River invested $131 million in six acquisitions, demonstrating its commitment to expansion. The company has approved $522 million for growth capital expenditures in 2025, including a pending $454 million acquisition of Strata Corporation, indicating a focused approach to strategic growth.
Segment Performance and Opportunities
All geographic segments of the company reported record EBITDA in 2024, with the Northwest region experiencing a 24% increase. The Central region also started 2025 with a higher backlog, highlighting regional growth opportunities.
Energy Services Segment Decline
The Energy Services segment faced a decline in revenue and EBITDA compared to 2023. However, the company remains optimistic about future growth opportunities within this segment, aiming to address challenges and capitalize on potential.
SG&A Costs and Investment Needs
The company’s SG&A expenses rose by 5% over the previous year, driven by increased labor costs and acquisition-related expenses. This led to a $20 million step-up in investment for 2025, reflecting the company’s commitment to sustaining growth.
Forward-Looking Guidance
Looking ahead to 2025, Knife River Corporation projects consolidated revenue between $3 billion and $3.2 billion, with adjusted EBITDA anticipated to range from $485 million to $535 million. The company emphasizes its dedication to the EDGE strategy, which has already fostered significant growth and margin improvements. With expectations of mid-single-digit price increases and low single-digit volume growth, Knife River aims to leverage public infrastructure spending and private sector opportunities.
In summary, Knife River Corporation’s latest earnings call reflects an optimistic sentiment, driven by record financial results and strategic growth initiatives. Despite some challenges, the company remains well-positioned for continued success in 2025, as evidenced by robust guidance and a strong project backlog.
