On August 6, 2024, Knife River Holding Co (KNF, Financial) released its 8-K filing for the second quarter ended June 30, 2024. The company, which provides construction materials and contracting services across the western, central, and southern United States, reported record revenue and net income, surpassing analyst estimates.
Company Overview
Knife River Holding Co, formerly Knife River Corp, produces and delivers aggregates and markets crushed stone, sand, gravel, and related construction materials, including ready-mix concrete, asphalt, and other value-added products. The company also distributes cement and asphalt oil and performs integrated contracting services for various construction projects. With over 1 billion tons of aggregate reserves, 110 ready-mix plants, 50 asphalt plants, and substantial storage capacity, Knife River is a significant player in the construction materials industry.
Second Quarter Financial Highlights
Knife River reported record consolidated revenue of $806.9 million, a 3% increase from the prior-year period, driven by price increases in aggregates and higher contracting services revenues. The company also achieved a record net income of $77.9 million, a 37% increase from $56.8 million in the previous year. Earnings per share (EPS) for the quarter were $1.37, significantly higher than the analyst estimate of $1.24.
| Metric | Q2 2024 | Q2 2023 | % Change |
|---|---|---|---|
| Revenue | $806.9 million | $785.2 million | 3% |
| Gross Profit | $176.2 million | $153.0 million | 15% |
| Net Income | $77.9 million | $56.8 million | 37% |
| Adjusted EBITDA | $154.3 million | $126.3 million | 22% |
| Net Income per Share | $1.37 | $1.00 | 37% |
Management Commentary
“We had a very strong second quarter and start to our construction season, and I’d like to thank our team for their continued effort to execute on our Competitive EDGE plan to help deliver record results,” Knife River President and CEO Brian Gray said. “We are pleased to report record second quarter revenue, net income and Adjusted EBITDA, building upon the previous records set in the second quarter of 2023. We also continued to improve our Adjusted EBITDA margin. On a trailing-twelve-month basis through June 30, Adjusted EBITDA margin grew by 240 basis points, to 15.9%.”
Segment Performance
Knife River's performance across its geographic segments showed positive trends. The Pacific segment reported a 5% increase in revenue to $131.8 million, driven by price increases in all product lines. The Northwest segment saw a 12% increase in revenue to $201.2 million, attributed to additional public agency construction work. Both segments experienced improved contracting services margins and favorable project execution.
Financial Metrics and Analysis
Key financial metrics for Knife River include a gross profit of $176.2 million, a 15% increase from the previous year, and an Adjusted EBITDA of $154.3 million, a 22% increase. The company's net income margin improved to 9.7% from 7.2%, reflecting effective cost management and pricing strategies.
Knife River's balance sheet remains strong with $15.5 million in unrestricted cash and cash equivalents, $693.5 million in gross debt, and $329.1 million of available capacity under its revolving credit facility. The company's net leverage ratio stands at 1.5x, indicating a healthy financial position.
Outlook and Guidance
Given the strong second-quarter results and positive market conditions, Knife River has raised its guidance for 2024. The company now anticipates revenue in the range of $2.8 billion to $3.0 billion and Adjusted EBITDA between $445 million and $485 million. This revised guidance reflects the company's confidence in its pricing strength, cost optimization, and continued positive impact from its EDGE initiatives.
For more detailed information, please refer to the full 8-K filing.
Explore the complete 8-K earnings release (here) from Knife River Holding Co for further details.
