Knife River (NYSE:KNF) management said the company delivered its “most profitable year ever” in 2025, highlighted by a strong fourth quarter, an active acquisition year, and continued progress on its Competitive EDGE operational initiatives. On the company’s fourth-quarter and full-year results call, executives also issued 2026 guidance calling for higher revenue and adjusted EBITDA, supported by a record backlog and continued pricing and cost-control efforts.
2025 results: record adjusted EBITDA and a strong fourth quarter
Chief Executive Officer Brian Gray said 2025 marked “meaningful strategic progress” across three focus areas the company laid out at the start of the year: profitability, acquisitions, and EDGE investments. Knife River grew adjusted EBITDA 7% to $497 million for the year, which Gray described as a company record.
Backlog reaches $1 billion as infrastructure funding supports visibility
Management emphasized a favorable infrastructure environment across Knife River’s footprint. Gray said DOT budgets across the company’s segments are “very healthy,” and noted that in its 14 states, approximately 46% of IIJA funding remains to be disbursed.
The company entered 2026 with record backlog of approximately $1 billion, up 38% from the prior year, with about 90% tied to public work. Ring added that roughly 75% of backlog is expected to be completed in 2026. Gray described most of the backlog as lower-risk public paving projects with contract values under $5 million, while noting that the company is beginning to see more private opportunities such as data centers and distribution and manufacturing facilities.
In the Q&A session, Gray acknowledged a geographic mix shift in backlog toward the Mountain and Central regions, while the West—typically a higher-margin region—has seen Oregon softness. He said California, Hawaii, and Alaska have strong funding and activity, including elevated public work and heightened military spending, while Oregon’s DOT budget for 2026 is comparable to 2025 with similar asphalt tonnage forecasts.
Segment commentary: West, Mountain, Central, and Energy Services
In the West, Gray said record profitability at legacy Pacific operations more than offset a softer economy in Oregon. He pointed to activity in California, Alaska, and Hawaii, citing the Navy’s P-209 dry dock project in Hawaii, where the company began supplying cement and ready-mix in the fourth quarter and expects strong volumes in 2026.
In the Mountain segment, Gray said the company benefited from good weather that allowed work late into December. He reported construction revenue was up almost 20% in the fourth quarter year over year, with asphalt margins improving 400 basis points for the quarter. Ready-mix also posted margin improvement of 400 basis points, aided by pricing outpacing costs. Gray said the region is seeing bidding opportunities tied to data centers in Wyoming and semiconductor construction in Idaho.
In the Central segment, Gray called 2025 “pivotal,” noting three acquisitions and the combination of the legacy North Central and South regions. He said the integration of Strata—Knife River’s largest acquisition—has gone well, and he highlighted expectations for volume growth from TexCrete, which added ready-mix operations in Central Texas. Gray also cited major contracting projects, including the $112 million Highway 6 project in Texas and the $62 million Highway 85 project in North Dakota.
In Energy Services, Gray said the segment remains margin accretive and highlighted the second full year at Albina Asphalt as the company continues to implement operational improvements and targets higher-margin, value-added products manufactured through its terminals.
Pricing, costs, and EDGE initiatives: focus on self-help and margin expansion
Management repeatedly returned to pricing discipline and cost controls as key drivers. Gray said dynamic pricing helped drive a 9% improvement in aggregates pricing in 2025 and that the company will continue optimizing pricing in 2026. He also said aggregates cost per ton in the West and Mountain segments declined in the second half of 2025 compared with the same period in 2024.
Ring provided additional detail on fourth-quarter performance by product line:
- Aggregates: Volumes increased 17% and pricing rose 8% in the quarter, with gross margins up 200 basis points. Ring attributed the strength partly to acquisitions and improved conditions in the West. For 2026, Knife River expects mid-single-digit volume growth, mid-single-digit pricing increases, and roughly 200 basis points of margin expansion in aggregates.
- Ready-mix: Fourth-quarter volumes rose 20% and gross margin improved 230 basis points, supported by market conditions and contributions from Strata and TexCrete. For 2026, the company expects volumes to improve in the mid-teens.
- Asphalt: Internal sales volumes increased more than 8% in the quarter, and while lower liquid asphalt input costs pressured pricing, the company maintained margins comparable to the prior year. Ring said 2026 asphalt volumes are expected to increase mid-single digits due to more paving work.
- Contracting services: Revenue increased 15% in the quarter, but gross margin declined as expected due to lower-margin backlog and timing of project completion and incentives. Ring said that despite expected backlog margins being lower than a year ago, the company anticipates higher contracting gross margin in 2026 as it self-performs more asphalt paving, which can create project performance gains and quality incentive opportunities.
Asked about the margin trajectory implied in 2026 guidance, Gray said budgets reflect margin improvements across product lines, but that mix shift—more contribution from Mountain and Central, which have slightly lower EBITDA margins than the West—affects consolidated margin improvement. He also said Oregon and Energy Services are expected to be flat in 2026.
Capital deployment, acquisitions, and 2026 guidance
Ring said the company invested $789 million in 2025 across growth initiatives, including five acquisitions, four aggregates reserve expansions, and multiple organic projects. Maintenance capex was $170 million, or about 6% of revenue, within the company’s stated 5%–7% range. For 2026, Knife River expects maintenance and improvement capex to remain between 5% and 7% of revenue, and expects organic growth projects and reserve additions of about $131 million, with acquisitions incremental to that plan.
On liquidity, Ring said Knife River ended the year with nearly $75 million of unrestricted cash and about $475 million available on its revolver, with net leverage of 2.2x, below its long-term target of 2.5x. He added the company expects 2026 cash flow from operations near its historical average of about two-thirds of EBITDA and said Knife River could move leverage closer to 3x for a short duration for the right deal.
For 2026, management guided to consolidated revenue of $3.3 billion to $3.5 billion and adjusted EBITDA of $520 million to $560 million, implying an adjusted EBITDA margin of about 16% at the midpoint, assuming normal weather and operating conditions.
During Q&A, Gray said the company is currently supplying materials to 21 data centers, but that “virtually zero” backlog dollars are related to data centers because much of the work is materials supply rather than contracted projects. He characterized data centers as a potential upside opportunity not baked into the midpoint of guidance.
About Knife River (NYSE:KNF)
Knife River Corporation, headquartered in Bismarck, North Dakota, is a leading integrated construction materials and contracting company in the western United States. The company specializes in producing and supplying aggregates, asphalt mix, ready-mixed concrete and other heavy construction materials used in highway, commercial and residential projects.
In addition to material production, Knife River offers a comprehensive suite of contracting services, including heavy civil construction, road building, underground and open-pit mining and logistics support.
