How Knife River performed in the second quarter

By Kevin Yanik| August 9, 2023

Knife River Corp. reported its first financial results as an independent, public company, noting that it set all-time second-quarter highs in revenue, net income and EBITDA.

The company, which now trades on the New York Stock Exchange, completed its spinoff from MDU Resources in June.

“Reflecting on the quarter, each of our regions benefited from disciplined materials pricing, targeted bidding and solid execution, which are key components of our Competitive EDGE strategy – Knife River’s plan for increasing adjusted EBITDA margins and executing on other key initiatives aimed at continued profitable growth,” says Brian Gray, president and CEO of Knife River. “As we head into the heart of the construction season, we look to further leverage our aggregates-led, vertically integrated business model to take advantage of industry tailwinds.”

Second-quarter specifics

Knife River reported second-quarter consolidated revenue of $785.2 million, a 10 percent increase from the prior-year period. The company says each of its regional segments performed well and that 10 percent price increases were established across all consolidated product lines.

In the Pacific segment, which Knife River characterizes as Alaska, California and Hawaii, second-quarter revenue improved $13.8 million year over year to $142.2 million. The company says Hawaii stood out, as the economy there continues to regain momentum through tourism and military spending. The Pacific segment also benefited from strong product pricing, as well as from increased ready-mixed concrete volumes in Northern California.

In the Northwest, where Knife River operates in Oregon and Washington, second-quarter revenue improved $28 million year over year to $179 million. Strong product pricing and increased demand for contracting services contributed to growth, the company says.

In the Mountain segment (Idaho, Montana and Wyoming), second-quarter revenue improved $5.4 million year over year to $175.8 million. Knife River says strong product pricing more than offset the absence of a significant airport project that largely occurred in the prior-year period. EBITDA increased $4 million year over year in the segment to $32.6 million. Demand and pricing momentum supported this, Knife River adds.

Knife River’s North Central segment consisting of Iowa, Minnesota, North Dakota and South Dakota also made gains, with second-quarter revenue improving $20.4 million year over year to $187.6 million. Strong product pricing across all product lines and aggregate price increases in the region more than offset lower volumes, the company says.

“Looking to the future, we remain optimistic that the demand environment – including local, state and federal funding – will continue to support strong construction activity,” Gray says. “This funding has contributed to a record $1.04 billion in contracting services backlog at improved margins. We anticipate steady demand in the high-growth, midsized markets in which we operate and are further encouraged by aggregates opportunities currently within our acquisition pipeline.”