Achieved record second quarter revenue, net
income, EBITDA and backlog
Reduced net debt leverage to 2.3x EBITDA
Raised revenue and EBITDA guidance; initiated
adjusted EBITDA guidance
Knife River Corporation (NYSE: KNF), an aggregates-led,
vertically integrated construction materials and contracting
services company, today announced financial results for the second
quarter ended June 30, 2023.
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the full release here:
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Second Quarter Financial Highlights
(In millions, except per share)
2023
2022
% Change
Revenue
$785.2
$711.8
10%
Gross profit
$153.0
$103.3
48%
Net income
$56.8
$38.6
47%
EBITDA
$125.1
$87.3
43%
EBITDA margin
15.9%
12.3%
Adjusted EBITDA
$126.3
$90.4
40%
Adjusted EBITDA margin
16.1%
12.7%
Net income per diluted share
$1.00
$0.68
47%
Note: EBITDA, Adjusted EBITDA, EBITDA
margin and Adjusted EBITDA margin are non-GAAP financial measures.
For more information on all non-GAAP measures and a reconciliation
to the nearest GAAP measure, see the section entitled "Non-GAAP
Financial Measures."
"I am excited to highlight our record results, including our
all-time second quarter highs in revenue, net income and EBITDA,"
said Brian Gray, Knife River president and CEO. "I want to thank
our team members at Knife River for driving our success as a new
independent, public company. We successfully completed the tax-free
separation from MDU Resources Group, Inc. during the quarter, and
we are now better positioned to effectively allocate both capital
and resources, and to generate long-term value for our
shareholders.
"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," Gray continued. "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.
"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 said. "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, mid-sized markets in which we operate and are
further encouraged by aggregates opportunities currently within our
acquisition pipeline. Since our spin-off, we have paid down $35
million in debt to reduce our net leverage to 2.3x EBITDA,
providing us even more financial flexibility to invest and grow our
business."
Gray concluded, "Based on our results from the first half of
2023, and the demand we are anticipating for the remainder of the
second half of the year, we have raised our revenue guidance to a
range of $2.6 billion to $2.8 billion, and raised EBITDA guidance
to a range of $320 million to $370 million for fiscal year 2023. To
help provide a clear comparison to last year and account for
certain one-time costs related to our separation from MDU
Resources, we also are transitioning to adjusted EBITDA guidance of
$330 million to $380 million. We are highly committed to our EDGE
plan, including 15% annual adjusted EBITDA margins by 2025,
industry-leading return on invested capital and long-term value
creation."
Second Quarter Consolidated Company
Results
Knife River reported second quarter consolidated revenue of
$785.2 million, a 10% increase from the prior-year period, led by
strong results in each region and more than 10% price increases
across all consolidated product lines. EDGE-related price
adjustments and bidding strategies contributed to a 43%
year-over-year increase in EBITDA, to $125.1 million. Contracting
services backlog of $1.04 billion was a record for any quarter, and
reflects margins greater than the same time last year. For the
quarter, adjusted EBITDA was $126.3 million. See the section
entitled "Non-GAAP Financial Measures" for more information on all
non-GAAP measures and a reconciliation to the nearest GAAP
measure.
Financial and Operating Results by
Reporting Segment
Pacific
Alaska, California, Hawaii
Three Months Ended
Six Months Ended
June 30,
June 30,
2023
2022
% Change
2023
2022
% Change
(In millions)
Revenue
$
142.2
$
128.4
11
%
$
209.9
$
213.8
(2
)%
EBITDA
$
22.0
$
15.2
45
%
$
18.9
$
20.6
(8
)%
EBITDA margin
15.5
%
11.8
%
9.0
%
9.7
%
Second quarter revenue improved $13.8 million year-over-year to
$142.2 million, led by strengthened results in Hawaii as the local
economy continues to regain momentum through tourism and military
spending. The segment also benefited from strong product pricing
through continued EDGE-related pricing initiatives, as well as from
increased ready-mix volumes in Northern California based in part on
our late 2022 acquisition in Modesto. Partially offsetting the
region's increased revenues were lower asphalt volumes and
decreased contracting services revenues, both resulting from the
late start to the construction season. EBITDA increased $6.8
million year-over-year to $22.0 million, the highest level for the
second quarter since 2020, as the region saw higher realized prices
and lower equipment operating costs, mainly fuel.
Northwest
Oregon, Washington
Three Months Ended
Six Months Ended
June 30,
June 30,
2023
2022
% Change
2023
2022
% Change
(In millions)
Revenue
$
179.0
$
151.0
19
%
$
294.9
$
256.5
15
%
EBITDA
$
40.7
$
23.2
75
%
$
53.8
$
36.0
49
%
EBITDA margin
22.7
%
15.4
%
18.3
%
14.0
%
Second quarter revenue improved $28.0 million year-over-year to
$179.0 million, led by strong product pricing and increased demand
for contracting services. EBITDA increased $17.5 million
year-over-year to $40.7 million, supported by consistent market
demand and continued EDGE-related pricing initiatives. Contracting
services backlog increased 52% year-over-year to an all-time record
$257.3 million.
Mountain
Idaho, Montana, Wyoming
Three Months Ended
Six Months Ended
June 30,
June 30,
2023
2022
% Change
2023
2022
% Change
(In millions)
Revenue
$
175.8
$
170.4
3
%
$
236.4
$
228.9
3
%
EBITDA
$
32.6
$
28.6
14
%
$
26.0
$
20.6
26
%
EBITDA margin
18.5
%
16.8
%
11.0
%
9.0
%
Second quarter revenue improved $5.4 million year-over-year to
$175.8 million, with strong product pricing more than offsetting
the absence of a significant airport project that largely occurred
in the prior-year period. EBITDA increased $4.0 million
year-over-year to $32.6 million, supported by demand and pricing
momentum. Contracting services remains highly active across all
markets, with backlog at an all-time second quarter high of $377.3
million, an 8% increase year-over-year.
North Central
Iowa, Minnesota, North Dakota, South
Dakota
Three Months Ended
Six Months Ended
June 30,
June 30,
2023
2022
% Change
2023
2022
% Change
(In millions)
Revenue
$
187.6
$
167.2
12
%
$
208.6
$
190.1
10
%
EBITDA
$
24.4
$
16.1
52
%
$
.9
$
(8.2
)
n.m.
EBITDA margin
13.0
%
9.6
%
.4
%
(4.3
)%
Second quarter revenue improved $20.4 million year-over-year to
$187.6 million, led by strong product pricing across all product
lines. EDGE-related aggregate price increases in the region more
than offset lower volumes. EBITDA increased $8.3 million
year-over-year to $24.4 million. Contracting services also began to
benefit from the new EDGE-aligned bidding strategy, positively
impacting current results and backlog margins. Second quarter
backlog decreased 13% year-over-year to $255.4 million.
All Other and intersegment
eliminations
Iowa, Nebraska, North Dakota, South
Dakota, Texas, Wyoming
Three Months Ended
Six Months Ended
June 30,
June 30,
2023
2022
% Change
2023
2022
% Change
(In millions)
Revenue
$
100.6
$
94.8
6
%
$
143.3
$
132.5
8
%
EBITDA
$
5.4
$
4.2
29
%
$
11.4
$
.1
n.m.
EBITDA margin
5.3
%
4.4
%
7.9
%
.1
%
Second quarter revenue improved $5.8 million year-over-year to
$100.6 million, as a result of higher average selling prices for
asphalt products and ready-mix concrete, offset in part by the sale
of non-strategic assets in southeast Texas in December 2022. EBITDA
improved $1.2 million year-over-year to $5.4 million as a result of
increased pricing, partially offset by higher corporate costs as a
result of Knife River standing itself up as a publicly traded
company.
Liquidity and Capital
Allocation
As of June 30, 2023, Knife River held $68.5 million of cash,
cash equivalents and restricted cash, and $839.1 million of
outstanding debt. The company had $155 million outstanding of the
$350 million revolving credit facility at June 30, 2023. Net debt
to trailing-twelve-month EBITDA was 2.3x. The company remains
committed to the stated long-term annualized goal of approximately
2.5x net debt to trailing-twelve-month EBITDA.
Knife River has spent approximately $56.0 million of the planned
$125 million of capital projects for 2023, with the majority
allocated to maintenance projects. Future acquisitions are not
included in this amount and would be incremental to the capital
program. The company remains focused on its EDGE strategy,
including a disciplined capital allocation plan.
Guidance
For the full year 2023, Knife River is increasing its guidance
ranges on revenue and EBITDA to better reflect momentum in pricing
strength, cost optimization, federal funding tailwinds, and
continued positive impacts from the EDGE initiatives. The company
also is transitioning to adjusted EBITDA guidance to more clearly
account for certain one-time costs related to the tax-free
separation from MDU Resources.
- Revenues in the range of $2.6 billion to $2.8 billion.
- EBITDA in the range of $320 million to $370 million.
- Adjusted EBITDA in the range of $330 million to $380
million.
- Capital expenditures of approximately $125 million.*
* Future acquisitions are not included in this amount and would
be incremental to the capital program
Conference Call
Knife River will host a conference call at 10 a.m. EDT on August
8, 2023, to discuss second quarter results and answer questions.
The event will be webcast at
https://events.q4inc.com/attendee/986161993. To participate in the
live call:
- Domestic: 1-888-396-8049
- International: 1-416-764-8646
About Knife River
Corporation
Knife River Corporation, a member of the S&P MidCap 400
index, mines aggregates and markets crushed stone, sand, gravel and
related construction materials, including ready-mix concrete,
asphalt and other value-added products. Knife River also performs
vertically integrated contracting services, specializing in
publicly funded DOT projects and private projects across the
industrial, commercial and residential space. For more information
about the company, visit www.kniferiver.com.
Forward-Looking
Statements
The information in this news release highlights the key growth
strategies, projections and certain assumptions for the company and
its subsidiaries. Many of these highlighted statements and other
statements not historical in nature are “forward-looking
statements” within the meaning of Section 21E of the Securities
Exchange Act of 1934. Although the company believes that its
expectations are based on reasonable assumptions, there is no
assurance the company’s projections or estimates for growth,
shareholder value creation and financial guidance or other proposed
strategies will be achieved. Please refer to assumptions contained
in this news release, as well as the various important factors
listed in Part I, Item 1A - Risk Factors in the company's
registration statement on Form 10 and subsequent filings with the
Securities and Exchange Commission.
Changes in such assumptions and factors could cause actual
future results to differ materially from growth and financial
guidance. All forward-looking statements in this news release are
expressly qualified by such cautionary statements and by reference
to the underlying assumptions. Undue reliance should not be placed
on forward-looking statements, which speak only as of the date they
are made. Except as required by law, the company does not undertake
to update forward-looking statements, whether as a result of new
information, future events or otherwise.
Throughout this news release, the company presents financial
information prepared in accordance with GAAP, as well as EBITDA,
EBITDA margin, Adjusted EBITDA and Adjusted EBITDA margin,
including those measures by segment, which are considered non-GAAP
financial measures. The use of these non-GAAP financial measures
should not be construed as alternatives to net income or net income
margin. The company believes the use of these non-GAAP financial
measures are beneficial in evaluating the company's operating
performance. Please refer to the "Non-GAAP Financial Measures"
section contained in this document for additional information.
Knife River
Corporation
Consolidated Statements of
Operations
(Unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2023
2022
2023
2022
(In millions, except per share
amounts)
Revenue:
Construction materials
$
431.8
$
381.1
$
624.7
$
576.8
Contracting services
353.4
330.7
468.4
445.0
Total revenue
785.2
711.8
1,093.1
1,021.8
Cost of revenue:
Construction materials
316.2
303.5
510.3
506.3
Contracting services
316.0
305.0
425.7
411.0
Total cost of revenue
632.2
608.5
936.0
917.3
Gross profit
153.0
103.3
157.1
104.5
Selling, general and administrative
expenses
59.5
42.9
108.1
88.7
Operating income
93.5
60.4
49.0
15.8
Interest expense
19.1
7.4
28.7
12.7
Other income (expense)
2.5
(2.8
)
3.3
(4.8
)
Income (loss) before income taxes
76.9
50.2
23.6
(1.7
)
Income tax expense (benefit)
20.1
11.6
8.1
(.2
)
Net income (loss)
$
56.8
$
38.6
$
15.5
$
(1.5
)
Earnings (loss) per share:
Basic
$
1.00
$
.68
$
.27
$
(.03
)
Diluted
$
1.00
$
.68
$
.27
$
(.03
)
Weighted average common shares
outstanding:
Basic
56.6
56.6
56.6
56.6
Diluted
56.6
56.6
56.6
56.6
Knife River
Corporation
Consolidated Balance
Sheets
(Unaudited)
June 30, 2023
December 31, 2022
Assets
(In millions, except shares and per share
amounts)
Current assets:
Cash, cash equivalents and restricted
cash
$
68.5
$
10.1
Receivables, net
418.6
210.2
Costs and estimated earnings in excess of
billings on uncompleted contracts
58.0
31.1
Due from related-party
—
16.1
Inventories
374.4
323.3
Prepayments and other current assets
38.8
17.8
Total current assets
958.3
608.6
Noncurrent assets:
Property, plant and equipment
2,533.4
2,489.4
Less accumulated depreciation, depletion
and amortization
1,221.9
1,174.2
Net property, plant and equipment
1,311.5
1,315.2
Goodwill
274.5
274.5
Other intangible assets, net
12.1
13.4
Operating lease right-of-use assets
45.9
45.9
Investments and other
40.6
36.7
Total noncurrent assets
1,684.6
1,685.7
Total assets
$
2,642.9
$
2,294.3
Liabilities and Stockholders' Equity
Current liabilities:
Long-term debt - current portion
$
7.1
$
.2
Related-party notes payable - current
portion
—
238.0
Accounts payable
174.6
87.4
Billings in excess of costs and estimated
earnings on uncompleted contracts
44.6
39.8
Taxes payable
29.9
8.5
Accrued compensation
26.0
29.2
Due to related-party
—
20.3
Current operating lease liabilities
14.1
13.2
Other accrued liabilities
88.1
80.3
Total current liabilities
384.4
516.9
Noncurrent liabilities:
Long-term debt
832.0
.4
Related-party notes payable
—
446.4
Deferred income taxes
170.5
175.8
Noncurrent operating lease liabilities
31.9
32.7
Other
129.2
93.5
Total liabilities
1,548.0
1,265.7
Commitments and contingencies
Stockholders' equity:
Common stock, 300,000,000 shares
authorized, $0.01 par value, 56,997,350 shares
issued and 56,566,214 shares outstanding
at June 30, 2023; 80,000 shares authorized,
issued and outstanding, $10 par value at
December 31, 2022
.6
.8
Other paid-in capital
611.6
549.1
Retained earnings
498.5
494.7
MDU Resources common stock held by
subsidiary at cost - 538,921 shares at
December 31, 2022
—
(3.6
)
Treasury stock held at cost - 431,136
shares
(3.6
)
—
Accumulated other comprehensive loss
(12.2
)
(12.4
)
Total stockholders' equity
1,094.9
1,028.6
Total liabilities and stockholders'
equity
$
2,642.9
$
2,294.3
Knife River
Corporation
Consolidated Statements of
Cash Flows
(Unaudited)
Six Months Ended
June 30,
2023
2022
(In millions)
Operating activities:
Net income (loss)
$
15.5
$
(1.5
)
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
55.1
58.6
Changes in current assets and liabilities,
net of acquisitions:
Receivables
(236.4
)
(215.2
)
Due from related-party
16.1
1.0
Inventories
(51.1
)
(66.3
)
Other current assets
(20.9
)
(16.8
)
Accounts payable
102.6
73.1
Due to related-party
(7.3
)
9.8
Other current liabilities
25.6
8.9
Pension and postretirement benefit plan
contributions
(.3
)
(.2
)
Other noncurrent changes
30.7
.8
Net cash used in operating activities
$
(70.4
)
$
(147.8
)
Investing activities:
Capital expenditures
(66.6
)
(80.3
)
Acquisitions, net of cash acquired
—
(.5
)
Net proceeds from sale or disposition of
property and other
4.1
4.3
Investments
(1.6
)
(1.6
)
Net cash used in investing activities
$
(64.1
)
$
(78.1
)
Financing activities:
Issuance of current related-party notes,
net
—
100.0
Issuance of long-term related-party notes,
net
205.3
154.9
Issuance of long-term debt
855.0
—
Repayment of long-term debt
(.1
)
(.1
)
Debt issuance costs
(16.7
)
(.7
)
Net transfers to Centennial Energy
Holdings Inc.
(850.6
)
(29.3
)
Net cash provided by financing
activities
$
192.9
$
224.8
Increase (decrease) in cash, cash
equivalents and restricted cash
58.4
(1.1
)
Cash, cash equivalents and restricted cash
-- beginning of year
10.1
13.8
Cash, cash equivalents and restricted cash
-- end of period
$
68.5
$
12.7
Segment Financial Data and Highlights
(Unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2023
2022
2023
2022
Amount
% of Revenues
Amount
% of Revenues
Amount
% of Revenues
Amount
% of Revenues
(Dollars in millions)
Revenues by operating segment:
Pacific
$
142.2
$
128.4
$
209.9
$
213.8
Northwest
179.0
151.0
294.9
256.5
Mountain
175.8
170.4
236.4
228.9
North Central
187.6
167.2
208.6
190.1
All Other and internal sales
100.6
94.8
143.3
132.5
Total revenues
$
785.2
$
711.8
$
1,093.1
$
1,021.8
Gross profit by operating segment:
Pacific
$
27.2
19.1
%
$
18.3
14.2
%
$
28.9
13.8
%
$
26.6
12.4
%
Northwest
43.1
24.0
%
24.2
16.1
%
58.8
19.9
%
38.3
14.9
%
Mountain
34.4
19.6
%
29.5
17.3
%
28.6
12.1
%
23.8
10.4
%
North Central
28.4
15.2
%
17.9
10.7
%
8.2
4.0
%
(3.1
)
(1.6
)%
All Other
19.9
19.8
%
13.4
14.1
%
32.6
22.7
%
18.9
14.3
%
Total gross profit
$
153.0
19.5
%
$
103.3
14.5
%
$
157.1
14.4
%
$
104.5
10.2
%
EBITDA*:
Pacific
$
22.0
15.5
%
$
15.2
11.8
%
$
18.9
9.0
%
$
20.6
9.7
%
Northwest
40.7
22.7
%
23.2
15.4
%
53.8
18.3
%
36.0
14.0
%
Mountain
32.6
18.5
%
28.6
16.8
%
26.0
11.0
%
20.6
9.0
%
North Central
24.4
13.0
%
16.1
9.6
%
.9
.4
%
(8.2
)
(4.3
)%
All Other
5.4
5.3
%
4.2
4.4
%
11.4
7.9
%
.1
.1
%
Total EBITDA*
$
125.1
15.9
%
$
87.3
12.3
%
$
111.0
10.2
%
$
69.1
6.8
%
* EBITDA, Segment EBITDA, and EBITDA
margin are non-GAAP financial measures. For more information and a
reconciliation to the nearest GAAP measure, see the section
entitled "Non-GAAP Financial Measures."
The following table summarizes backlog for the company.
June 30, 2023
June 30, 2022
(In millions)
Pacific
$
78.3
$
92.5
Northwest
257.3
169.4
Mountain
377.3
348.9
North Central
255.4
294.9
All Other
72.6
71.7
$
1,040.9
$
977.4
Margins on backlog at June 30, 2023, are higher than the margins
on backlog at June 30, 2022. Approximately 84% of the company's
contracting services backlog relates to publicly funded projects,
including street and highway construction projects, which are
driven primarily by public works projects for state departments of
transportation. Period over period increases or decreases cannot be
used as an indicator of future revenues or earnings.
Three Months Ended
Six Months Ended
June 30,
June 30,
2023
2022
2023
2022
Sales (thousands):
Aggregates (tons)
9,181
9,521
14,049
14,491
Ready-mix concrete (cubic yards)
1,113
1,140
1,674
1,873
Asphalt (tons)
1,913
2,101
2,092
2,417
Average selling price:*
Aggregates (per ton)
$
15.95
$
14.33
$
16.37
$
14.77
Ready-mix concrete (per cubic yard)
$
166.11
$
147.53
$
168.30
$
147.67
Asphalt (per ton)
$
65.32
$
57.85
$
66.24
$
57.77
* The average selling price includes
freight and delivery and other revenues.
Three Months Ended
Six Months Ended
June 30,
June 30,
2023
2022
2023
2022
Amount
% of Revenues
Amount
% of Revenues
Amount
% of Revenues
Amount
% of Revenues
(Dollars in millions)
Revenues by product line:
Aggregates
$
146.4
$
136.4
$
229.9
$
214.0
Ready-mix concrete
184.9
168.1
281.7
276.6
Asphalt
125.0
121.5
138.5
139.7
Other*
143.2
124.3
181.8
161.8
Contracting services
353.4
330.7
468.4
445.0
Internal sales
(167.7
)
(169.2
)
(207.2
)
(215.3
)
Total revenues
$
785.2
$
711.8
$
1,093.1
$
1,021.8
Gross profit by product line:
Aggregates
$
36.4
24.9
%
$
29.7
21.8
%
$
38.8
16.9
%
$
30.0
14.0
%
Ready-mix concrete
28.1
15.2
%
23.4
13.9
%
36.8
13.1
%
32.7
11.8
%
Asphalt
16.4
13.1
%
11.4
9.4
%
10.3
7.5
%
6.3
4.5
%
Other*
34.7
24.2
%
13.1
10.5
%
28.5
15.6
%
1.5
.9
%
Contracting services
37.4
10.6
%
25.7
7.8
%
42.7
9.1
%
34.0
7.6
%
Total gross profit
$
153.0
19.5
%
$
103.3
14.5
%
$
157.1
14.4
%
$
104.5
10.2
%
* Other includes cement, liquid asphalt,
merchandise, fabric and spreading, and other products and services
that individually are not considered to be a major line of
business.
Non-GAAP Financial
Measures
EBITDA, EBITDA margin, Adjusted EBITDA and Adjusted EBITDA
Margin, including those measures by segment, are considered
non-GAAP financial measures and are most directly comparable to the
corresponding GAAP measures of net income, net income margin, gross
profit and gross margin. Knife River believes these non-GAAP
financial measures, in addition to corresponding GAAP measures, are
useful to investors by providing meaningful information about
operational efficiency compared to its peers by excluding the
impacts of differences in tax jurisdictions and structures, debt
levels and capital investment. Management believes Adjusted EBITDA
is a useful performance measure because it allows for an effective
evaluation of the company's operating performance by excluding
stock-based compensation and unrealized gains and losses on benefit
plan investments as they are considered non-cash and not part of
the company's core operations. The company also excludes the
one-time, non-recurring costs associated with the separation of
Knife River from MDU Resources as those are not expected to
continue. Rating agencies and investors also use EBITDA and
Adjusted EBITDA to calculate Knife River’s leverage as a multiple
of EBITDA and Adjusted EBITDA. Additionally, EBITDA and Adjusted
EBITDA are important financial metrics for debt investors who
utilize debt to EBITDA and debt to Adjusted EBITDA ratios.
Management believes EBITDA and EBITDA margin, including those
measures by segment, are useful performance measures because they
provide clarity as to the operational results of the company. Knife
River’s management uses these non-GAAP financial measures in
conjunction with GAAP results when evaluating its operating results
internally and calculating employee incentive compensation, and
leverage as a multiple of EBITDA and Adjusted EBITDA to determine
the appropriate method of funding operations of the company.
EBITDA is calculated by adding back income taxes, interest
expense and depreciation, depletion and amortization expense to net
income. EBITDA margin is calculated by dividing EBITDA by revenues.
Adjusted EBITDA is calculated by adding back unrealized gains and
losses on benefit plan investments, stock-based compensation and
one-time separation costs, to EBITDA. Adjusted EBITDA Margin is
calculated by dividing Adjusted EBITDA by revenues. These non-GAAP
financial measures are calculated the same for both the segment and
consolidated metrics and should not be considered as alternatives
to, or more meaningful than, GAAP financial measures such as net
income or net income margin and are intended to be helpful
supplemental financial measures for investors’ understanding of
Knife River’s operating performance. Knife River’s non-GAAP
financial measures are not standardized; therefore, it may not be
possible to compare these financial measures with other companies’
EBITDA, EBITDA margin, Adjusted EBITDA and Adjusted EBITDA Margin
measures having the same or similar names.
The following information reconciles segment and consolidated
net income to EBITDA and EBITDA to Adjusted EBITDA and provides the
calculation of EBITDA margin and adjusted EBITDA margin.
Three Months Ended June 30, 2023
Pacific
Northwest
Mountain
North Central
All Other and Intersegment
Eliminations
Consolidated
(In millions)
Net income (loss)
$
16.5
$
31.0
$
26.4
$
18.3
$
(35.4
)
$
56.8
Depreciation, depletion and
amortization
5.5
9.7
6.2
6.1
3.6
31.1
Interest expense, net*
—
—
—
—
17.1
17.1
Income taxes
—
—
—
—
20.1
20.1
EBITDA
$
22.0
$
40.7
$
32.6
$
24.4
$
5.4
$
125.1
Unrealized (gains) losses on benefit plan
investments
(.4
)
(.4
)
Stock-based compensation expense
(.1
)
(.1
)
One-time separation costs
1.7
1.7
Adjusted EBITDA
$
6.6
$
126.3
Revenue
$
142.2
$
179.0
$
175.8
$
187.6
$
100.6
$
785.2
Net Income Margin
11.6
%
17.3
%
15.0
%
9.8
%
(35.2
)%
7.2
%
EBITDA Margin
15.5
%
22.7
%
18.5
%
13.0
%
5.3
%
15.9
%
Adjusted EBITDA Margin
6.6
%
16.1
%
Three Months Ended June 30, 2022
Pacific
Northwest
Mountain
North Central
All Other and Intersegment
Eliminations
Consolidated
(In millions)
Net income (loss)
$
9.9
$
14.3
$
22.8
$
9.9
$
(18.3
)
$
38.6
Depreciation, depletion and
amortization
5.3
8.9
5.8
6.2
3.5
29.7
Interest expense, net*
—
—
—
—
7.4
7.4
Income taxes
—
—
—
—
11.6
11.6
EBITDA
$
15.2
$
23.2
$
28.6
$
16.1
$
4.2
$
87.3
Unrealized (gains) losses on benefit plan
investments
2.4
2.4
Stock-based compensation expense
.7
.7
Adjusted EBITDA
$
7.3
$
90.4
Revenue
$
128.4
$
151.0
$
170.4
$
167.2
$
94.8
$
711.8
Net Income Margin
7.7
%
9.5
%
13.4
%
5.9
%
(19.3
)%
5.4
%
EBITDA Margin
11.8
%
15.4
%
16.8
%
9.6
%
4.4
%
12.3
%
Adjusted EBITDA Margin
7.7
%
12.7
%
Six Months Ended June 30, 2023
Pacific
Northwest
Mountain
North Central
All Other and Intersegment
Eliminations
Consolidated
(In millions)
Net income (loss)
$
7.9
$
35.2
$
13.8
$
(10.9
)
$
(30.5
)
$
15.5
Depreciation, depletion and
amortization
11.0
18.6
12.1
11.8
7.2
60.7
Interest expense, net*
—
—
.1
—
26.6
26.7
Income taxes
—
—
—
—
8.1
8.1
EBITDA
$
18.9
$
53.8
$
26.0
$
.9
$
11.4
$
111.0
Unrealized (gains) losses on benefit plan
investments
(1.7
)
(1.7
)
Stock-based compensation expense
.8
.8
One-time separation costs
2.4
2.4
Adjusted EBITDA
$
12.9
$
112.5
Revenue
$
209.9
$
294.9
$
236.4
$
208.6
$
143.3
$
1,093.1
Net Income Margin
3.8
%
11.9
%
5.8
%
(5.2
)%
(21.3
)%
1.4
%
EBITDA Margin
9.0
%
18.3
%
11.0
%
.4
%
7.9
%
10.2
%
Adjusted EBITDA Margin
9.0
%
10.3
%
Six months ended June 30, 2022
Pacific
Northwest
Mountain
North Central
All Other and Intersegment
Eliminations
Consolidated
(In millions)
Net income (loss)
$
10.1
$
18.8
$
9.2
$
(20.0
)
$
(19.6
)
$
(1.5
)
Depreciation, depletion and
amortization
10.5
17.2
11.3
11.8
7.3
58.1
Interest expense, net*
—
—
.1
—
12.6
12.7
Income taxes
—
—
—
—
(.2
)
(.2
)
EBITDA
$
20.6
$
36.0
$
20.6
$
(8.2
)
$
.1
$
69.1
Unrealized (gains) losses on benefit plan
investments
4.0
4.0
Stock-based compensation expense
1.4
1.4
Adjusted EBITDA
$
5.5
$
74.5
Revenue
$
213.8
$
256.5
$
228.9
$
190.1
$
132.5
$
1,021.8
Net Income Margin
4.7
%
7.3
%
4.0
%
(10.5
)%
(14.8
)%
(.1
)%
EBITDA Margin
9.7
%
14.0
%
9.0
%
(4.3
)%
.1
%
6.8
%
Adjusted EBITDA Margin
4.2
%
7.3
%
Twelve months ended June 30, 2023
Pacific
Northwest
Mountain
North Central
All Other and Intersegment
Eliminations
Consolidated
(In millions)
Net income (loss)
$
32.0
$
85.2
$
54.3
$
50.5
$
(88.8
)
$
133.2
Depreciation, depletion and
amortization
22.1
36.5
23.5
23.6
14.7
120.4
Interest expense, net*
—
—
.2
—
43.9
44.1
Income taxes
—
—
—
—
50.9
50.9
EBITDA
$
54.1
$
121.7
$
78.0
$
74.1
20.7
348.6
Unrealized (gains) losses on benefit plan
investments
(1.7
)
(1.7
)
Stock-based compensation expense
2.1
2.1
One-time separation costs
2.4
2.4
Adjusted EBITDA
$
23.5
$
351.4
Revenue
$
464.7
$
638.6
$
549.5
$
626.6
$
326.6
$
2,606.0
Net Income Margin
6.9
%
13.3
%
9.9
%
8.1
%
(27.2
)%
5.1
%
EBITDA Margin
11.6
%
19.1
%
14.2
%
11.8
%
6.3
%
13.4
%
Adjusted EBITDA Margin
7.2
%
13.5
%
Twelve months ended June 30, 2022
Pacific
Northwest
Mountain
North Central
All Other and Intersegment
Eliminations
Consolidated
(In millions)
Net income (loss)
$
40.5
$
52.5
$
46.4
$
29.1
$
(60.8
)
$
107.7
Depreciation, depletion and
amortization
20.9
30.0
21.2
23.6
14.6
110.3
Interest expense, net*
—
—
.2
—
22.2
22.4
Income taxes
—
—
—
—
34.7
34.7
EBITDA
$
61.4
$
82.5
$
67.8
$
52.7
10.7
275.1
Unrealized (gains) losses on benefit plan
investments
(2.9
)
(2.9
)
Stock-based compensation expense
2.4
2.4
Adjusted EBITDA
$
10.2
$
274.6
Revenue
$
446.3
$
523.5
$
521.9
$
559.2
$
300.3
$
2,351.2
Net Income Margin
9.1
%
10.0
%
8.9
%
5.2
%
(20.2
)%
4.6
%
EBITDA Margin
13.8
%
15.8
%
13.0
%
9.4
%
3.6
%
11.7
%
Adjusted EBITDA Margin
3.4
%
11.7
%
* Interest, net is interest expense, net
of interest income.
The following tables provide the reconciliation to trailing
twelve month EBITDA as of June 30, 2023, as well as the leverage
calculation of net debt to trailing twelve month EBITDA.
Twelve Months Ended June 30,
2023
Six Months Ended June 30,
2023
Twelve Months Ended December 31,
2022
Six Months Ended June 30,
2022
(In millions)
Net income (loss)
$
133.2
$
15.5
$
116.2
$
(1.5
)
Depreciation, depletion and
amortization
120.4
60.7
117.8
58.1
Interest expense, net
44.1
26.7
30.1
12.7
Income taxes
50.9
8.1
42.6
(.2
)
EBITDA
$
348.6
$
111.0
$
306.7
$
69.1
Unrealized (gains) losses on benefit plan
investments
(1.7
)
(1.7
)
4.0
4.0
Stock-based compensation expense
2.1
.8
2.7
1.4
One-time separation costs
2.4
2.4
—
—
Adjusted EBITDA
$
351.4
$
112.5
$
313.4
$
74.5
Twelve Months Ended June 30,
2023
(In millions)
Long-term debt
$
848.4
Long-term debt - current portion
7.1
Total debt
855.5
Less: Cash and cash equivalents, excluding
restricted cash
40.1
Total net debt
$
815.4
Net debt to June 30, 2023, trailing twelve
month EBITDA
2.3
x
The following table provides a reconciliation of consolidated
GAAP net income to EBITDA and adjusted EBITDA for forecasted
results.
2023
Low
High
(In millions)
Net income
$
110.0
$
140.0
Adjustments:
Interest expense
55.0
55.0
Income taxes
35.0
55.0
Depreciation, depletion and
amortization
120.0
120.0
EBITDA
$
320.0
$
370.0
Unrealized (gains) losses on benefit plan
investments
—
—
Stock-based compensation expense
3.5
3.5
One-time separation costs
6.5
6.5
Adjusted EBITDA
$
330.0
$
380.0
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230808919416/en/
Media Contact: Tony Spilde, Senior Director of
Communications, 541-693-5949 Financial Contact: Zane Karimi,
Director of Investor Relations, 503-944-3508
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