Knife Riv Holding Co. · NYSE:KNF
Knife Riv — Q3 2024 Earnings Presentation
25 slides from Knife Riv's earnings presentation, Nov 4, 2024
Slide 1: Third Quarter 2024 Results Presentation
Third Quarter 2024 Results Presentation November 4, 2024
Slide 2: Forward Looking Statements
Forward Looking Statements The information in this presentation 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 t
Slide 3: Third Quarter Highlights
Third Quarter Highlights Record Third Quarter Revenue, Gross Profit, and Net Income; Narrowed 2024 Guidance 2024 Guidance Third Quarter Results Third Quarter Recap Revenue Revenue Adj. EBITDA1 Adj. EBITDA Combined Geographic (millions) (millions) Margin1 Segments Produce $2.85B - $2.95B Record EBITD
Slide 4: Adjusted EBITDA Breakout
Adjusted EBITDA Breakout1 Record Third Quarter Geographic Segment EBITDA1 Third Quarter Recap Third Quarter Adjusted EBITDA1 Geographic Segments $247.5 $245.2 • Record combined EBITDA, led by Northwest’s 15% Y/Y improvement1 Geographic Segments +6% Energy Services Energy Services Corporate Services
Slide 5: Operations PIT Crews
Operations PIT Crews Process Improvements and Best Practices Continue to be Implemented Sites Visited Key Outcomes & Findings 2024 Progress Honey Creek Quarry and Medford Aggregates 58 Plants Visited Action: Implemented plant and equipment maintenance recommendations from the PIT Crews Cost: <$500k
Slide 6: Acquisition Update
Acquisition Update Six Acquisitions Completed in 2024; Pipeline Remains Strong Pipeline 2024 Acquisitions Regions Key Products Close Date Deal Size Markets Weidenbach Central Ready-Mix Second Quarter Concrete Graves Northwest Aggregates Second Quarter Quarry > $200M Adjacent Frank B. Markets Pacific
Slide 7: Backlog
Backlog Public Funding Remains Strong, Driving Increased Backlog Backlog Projects in Backlog Funding Sources of Backlog (millions) (millions) $755 $732 Central Central Greater than $184 $192 6% Private $10 13% Mountain Mountain $251 $280 $5 - $10 8% Public Northwest 87% Northwest $168 $227 Less than
Slide 8: Infrastructure Funding
Infrastructure Funding Federal, State, Local Budgets Remain Near Record Levels DOT Budget Backdrop1 IIJA Funds2,3 DOT Budgets Remain at Record Levels 48% of IIJA-related funds within Knife River’s footprint have yet to be obligated (billions) $66 $64 $56 IIJA Highway/Bridge Funds Yet to be $54 3 $50
Slide 9: Third Quarter: Segment Performance
Third Quarter: Segment Performance Record Geographic Segments EBITDA; 6% Growth Y/Y1 Geographic Energy Pacific Northwest Mountain Central Segments2 Consolidated3 Services 3Q24 $165.0M $218.1M $261.1M $354.9M $999.1M $125.9M $1,105M Revenue 3Q24 Revenue 5% 4% 2% 0% 2% (10%) 1% Growth 3Q24 Adjusted $2
Slide 10: Product Line Results
Product Line Results Aggregate and Ready-Mix Pricing Momentum Continues YTD YTD Volume 3Q23 3Q24 Change Average Selling Price1 3Q23 3Q24 Change Change1 Change1 Aggregates (tons) 12,022 11,169 (7%) (5%) Aggregates (per ton) $16.10 $17.32 8% 8% Ready-mix concrete (cubic yards) 1,271 1,148 (10%) (10%)
Slide 11: Capital Structure
Capital Structure Strong Balance Sheet Supports our Ability to Pursue Growth Opportunities Available Liquidity Debt Schedule 3Q24 Net Leverage2 (millions) (millions) Senior Notes $425.0 7.75% Due 2031 Term Loan Agreement $266.4 2.5x LT Target 6.45% Due 2028 2.3x Revolving Credit Agreement $0.0 Revol
Slide 12: Capital Allocation
Capital Allocation Discipline and Growth-Based Strategy Discipline Growth Maintenance Improvements Organic Acquisition Plant & equipment and EDGE-related upgrades to Greenfield growth in new Target mid-sized, high-growth aggregate reserve replacement existing operations to increase markets or new op
Slide 13: 2024 Guidance
2024 Guidance Narrowed Full-Year Revenue and Adjusted EBITDA Guidance1 FY 2024 Guidance Key Assumptions2 (millions) Low High Pricing Volume Revenue $2,850 $2,950 High-Single-Digit Mid-Single-Digit (Knife River Consolidated) Aggregates Increase Decline Adjusted EBITDA1 High-Single-Digit High-Single-D
Slide 14: Appendix and Non-GAAP Financial Measures
APPENDIX AND NON-GAAP FINANCIAL MEASURES
Slide 15: Product Line Results YTD
Product Line Results YTD1 Consolidated Margin Trends Remain Aligned with EDGE Strategy Volume YTD23 YTD24 % Change Average Selling Price2 YTD23 YTD24 % Change Aggregates (tons) 26,071 24,833 (5%) Aggregates (per ton) $16.24 $17.56 8% Ready-mix concrete (cubic yards) 2,944 2,653 (10%) Ready-mix concr
Slide 16: EBITDA and Adjusted EBITDA – Segment Reconciliation
EBITDA and Adjusted EBITDA – Segment Reconciliation Corporate Three Months Ended September 30, 2024 Pacific Northwest Mountain Central Energy Services Services and Consolidated ($ in millions) Eliminations Net income (loss) $23.4 $45.2 $52.7 $70.1 $32.4 $(75.7) $148.1 Depreciation, depletion and amo
Slide 17: EBITDA and Adjusted EBITDA – Segment Reconciliation
EBITDA and Adjusted EBITDA – Segment Reconciliation Corporate Nine Months Ended September 30, 2024 Pacific Northwest Mountain Central Energy Services Services and Consolidated ($ in millions) Eliminations Net income (loss) $28.5 $95.1 $76.8 $69.7 $46.8 $(138.5) $178.4 Depreciation, depletion and amo
Slide 18: EBITDA and Adjusted EBITDA – Segment Reconciliation
EBITDA and Adjusted EBITDA – Segment Reconciliation Corporate Twelve Months Ended December 31, 2023 Pacific Northwest Mountain Central Energy Services Services and Consolidated ($ in millions) Eliminations Net income (loss) $34.9 $83.1 $78.3 $82.9 $73.1 $(169.4) $182.9 Depreciation, depletion and am
Slide 19: Net Leverage Reconciliation
Net Leverage Reconciliation September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 September 30, 2023 June 30, 2023 ($ in millions, except net leverage) Long-term debt $669.7 $672.5 $673.5 $674.6 $675.6 $832.0 Long-term debt – current portion 8.8 7.1 7.1 7.1 7.1 7.1 Total debt $678.5 $679
Slide 20: Net Leverage Reconciliation
Net Leverage Reconciliation Twelve Months Ended Nine Months Ended Twelve Months Ended Nine Months Ended ($ in millions) September 30, 2024 September 30, 2024 December 31, 2023 September 30, 2023 Net income (loss) $199.1 $178.4 $182.9 $162.2 Depreciation, depletion and amortization 132.8 101.5 123.8
Slide 21: Net Leverage Reconciliation
Net Leverage Reconciliation Twelve Months Ended Three Months Ended Twelve Months Ended Three Months Ended ($ in millions) March 31, 2024 March 31, 2024 December 31, 2023 March 31, 2023 Net income (loss) $176.6 $(47.6) $182.9 $(41.3) Depreciation, depletion and amortization 126.4 32.2 123.8 29.6 Inte
Slide 22: Net Leverage Reconciliation
Net Leverage Reconciliation Twelve Months Ended Nine Months Ended Twelve Months Ended Nine Months Ended ($ in millions) September 30, 2023 September 30, 2023 December 31, 2022 September 30, 2022 Net income (loss) $180.2 $162.2 $116.2 $98.2 Depreciation, depletion and amortization 121.7 92.5 117.8 88
Slide 23: Adjusted EBITDA Guidance Table
Adjusted EBITDA Guidance Table Full-Year Guidance 2024 (In millions) Low High Net income (loss) $190.0 $205.0 Interest expense, net 46.0 46.0 Income taxes 65.0 70.0 Depreciation, depletion and amortization 135.9 135.9 EBITDA $436.9 $456.9 Unrealized (gains) losses on benefit plan investments (2.9) (
Slide 24: Return on Invested Capital (ROIC)
Return on Invested Capital (ROIC) Twelve Months Ended Nine Months Ended Twelve Months Ended Nine Months Ended ($ in millions, except for ROIC value) September 30, 2024 September 30, 2024 December 31, 2023 September 30, 2023 Operating Income $309.4 $272.1 $296.4 $259.2 Average Shareholders’ Equity $1
Slide 25: Disclaimer
Disclaimer Our guidance for long-term Adjusted EBITDA margin, projected EBITDA contributions, and net leverage are non-GAAP financial measures that exclude or otherwise have been adjusted for non-GAAP adjustment items from our U.S. GAAP financial statements. When we provide guidance for these non-GA