Slide 1: Fourth Quarter and Full-Year 2023 Results Presentation
Fourth Quarter and Full-Year 2023 Results Presentation February 15, 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: Record 2023 Results
Record 2023 Results Full-Year Record Revenue, Net Income, EBITDA, Adjusted EBITDA 4Q Earnings Snapshot Full-Year 2023 Results 2024 Outlook Revenue Revenue Adj. EBITDA1 Adj. EBITDA Strong Market ($ in millions) ($ in millions) Margin1 $646.9MM Fundamentals + 12% + 38% + 290bps +20% Continued Adoption
Slide 4: Executing on Our Competitive Edge Strategy
Executing on Our Competitive Edge Strategy EBITDA Margin Discipline Growth Excellence Improvement Strengthen market position Commercial and operational Strong balance sheet and Be best in class in all aspects through organic and inorganic excellence initiatives disciplined allocation of capital of t
Slide 5: Leading Vertically Integrated Materials and Services Provider
Leading Vertically Integrated Materials and Services Provider REVENUE MIX BY PRODUCT 4,5 AGGREGATES – 16% OF REVENUE • 1.1 billion tons of reserves with strategic locations near end users and/or multi-modal transportation. Reliable supply of high-quality materials is a competitive advantage. READY-M
Slide 6: Rising Transportation Infrastructure Spending
Rising Transportation Infrastructure Spending Key Highlights DOT Budget Tailwinds State-Level Funding Tailwinds State-Level Funding Remains Robust with Texas and Projected Growth in 2024 DOT Budgets Across Minnesota Passing New Major Funding Packages in Pace of public infrastructure spending is Knif
Slide 7: Re-Segmentation to Improve Transparency
Re-Segmentation to Improve Transparency Going forward, the company will reference its Pacific, Northwest, Mountain and Central segments as geographic segments Energy Services is a standalone product line segment, and now includes: • Liquid Asphalt and Related Operations previously held within “All O
Slide 8: Regaining Momentum in the Pacific
Regaining Momentum in the Pacific Full-Year Revenue, EBITDA, EBITDA Margins Improve Significantly in 2023 FINANCIAL PERFORMANCE 2022 2023 Change Revenue $418.1MM $462.2MM +11% 2024 OUTLOOK EBITDA1 $44.0MM $56.2MM +28% Strong spending: ▪ Continued growth in Hawaii – tourism and military-related spend
Slide 9: Northwest Remains a Top Performer
Northwest Remains a Top Performer Record Full-Year Revenue, EBITDA, EBITDA Margin FINANCIAL PERFORMANCE 2022 2023 Change Revenue $600.2MM $666.1MM +11% 2024 OUTLOOK EBITDA1 $103.9MM $121.1MM +17% Regional Growth: ▪ Prestress Concrete Division continues to grow regional presence EBITDA Margin1 17.3%
Slide 10: Mountain Benefits from Strong Population Growth
Mountain Benefits from Strong Population Growth Record Full-Year Revenue, EBITDA, EBITDA Margin FINANCIAL PERFORMANCE 2022 2023 Change Revenue $542.0MM $634.0MM +17% 2024 OUTLOOK EBITDA1 $72.6MM $103.2MM +42% Population Drivers: ▪ In-migration supporting sustained market activity EBITDA Margin1 13.4
Slide 11: Central Embraces EDGE, Driving Margin Expansion
Central Embraces EDGE, Driving Margin Expansion Record Full-Year Revenue, EBITDA, EBITDA Margin FINANCIAL PERFORMANCE 2022 2023 Change Revenue $779.8MM $825.0MM +6% 2024 OUTLOOK EBITDA1 $86.6MM $116.6MM +35% Budget: ▪ Significant YoY DOT budget improvement EBITDA Margin1 11.1% 14.1% +300 bps Margin
Slide 12: A Historic Year for Energy Services
A Historic Year for Energy Services Record Full-Year Revenue, EBITDA, EBITDA Margin FINANCIAL PERFORMANCE 2022 2023 Change Revenue $238.4MM $292.3MM +23% 2024 OUTLOOK EBITDA1 $28.3MM $78.1MM +176% Pricing: ▪ Continuation of favorable price-cost dynamics EBITDA Margin1 11.9% 26.7% +1,480 bps Margins:
Slide 13: Product Lines Reflect Robust Pricing Growth in 2023
Product Lines Reflect Robust Pricing Growth in 2023 Double-Digit Pricing Growth Across All Core Product Lines Average Selling Price1 2022 2023 % Change Volume 2022 2023 % Change Aggregates (per ton) $14.61 $16.29 11% Aggregates (tons) 33,994 33,637 (1)% Ready-mix concrete (per cubic yard) $151.80 $1
Slide 14: Disciplined, Returns-Focused Capital Management
Disciplined, Returns-Focused Capital Management Disciplined capital allocation, prioritizing aggregates-led, materials-based transactions Debt Schedule Free Cash Flow1 Key Highlights 4Q 2023 (in millions) (in millions) Senior Notes $425.0 $250.0 140% 7.75% Due 2031 $550 million Term Loan Agreement ~
Slide 15: Guidance: 2024 Expectations Build on Record 2023 Results
Guidance: 2024 Expectations Build on Record 2023 Results FY 2024 Guidance FY 2024 Guidance Midpoint 2023 ($ in millions) vs. 2023 Results Results ($ in millions) Low High $Δ %Δ Revenue (Knife River Consolidated) $2,830.3 $2,750 $2,950 +$19.7MM +0.7% Adjusted EBITDA1 All Geographic Segments & Corpora
Slide 16: 2024 Adjusted EBITDA Guidance
2024 Adjusted EBITDA Guidance Expect Adjusted EBITDA Growth of 11.5% for all Geographic Segments1 and normalization of Energy Services ($ in millions) +4.1% $450 $432.4 Pacific, Northwest, Mountain, Central & Corporate Services and Eliminations Energy Services • Building on record 2023 results $354.
Slide 17: Appendix and Non-GAAP Financial Measures
APPENDIX AND NON-GAAP FINANCIAL MEASURES
Slide 18: Adjusted EBITDA Margins Exceed Expectations; Near-Term Opportunities Remain
Adjusted EBITDA Margins Exceed Expectations; Near-Term Opportunities Remain Fourth Quarter and Full-Year Segment Overview Energy Pacific Northwest Mountain Central Consolidated Services 4Q 2023 4Q 2023 4Q 2023 4Q 2023 4Q 2023 4Q 2023 FY’23 Revenue $114.1MM $161.8MM $142.5MM $181.4MM $58.3MM $646.9MM
Slide 19: Fourth Quarter Product Lines Remained Resilient
Fourth Quarter Product Lines Remained Resilient Healthy consolidated margin improvement Average Selling Price1 4Q 2022 4Q 2023 % Change Volume 4Q 2022 4Q 2023 % Change Aggregates (per ton) $15.60 $16.43 5% Aggregates (tons) 7,104 7,566 7% Ready-mix concrete (per cubic yard) $160.19 $175.01 9% Ready-
Slide 20: Net Leverage
Net Leverage Twelve-Months Ended (in millions) December 31, 2023 Net income (loss) $182.9 Depreciation, depletion and amortization 123.8 Interest expense, net 52.9 Income taxes 62.4 EBITDA $422.0 Unrealized (gains) losses on benefit plan investments (2.7) Stock-based compensation expense 3.1 One-tim
Slide 21: Adjusted EBITDA
Adjusted EBITDA Corporate Three Months Ended December 31, 2023 Pacific Northwest Mountain Central Energy Services Services and Consolidated (in millions) Eliminations Net income (loss) $4.7 $8.7 $10.4 $20.7 $12.4 $(36.2) $20.7 Depreciation, depletion and amortization 5.3 9.7 6.3 8.5 1.2 .3 31.3 Inte
Slide 22: Adjusted EBITDA (Cont'd)
Adjusted EBITDA (Cont’d) 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 amortization 21.3 38.0 24.7 33.
Slide 23: Free Cash Flow Conversion Reconciliation
Free Cash Flow Conversion Reconciliation Twelve-Months Ended Twelve-Months Ended Twelve-Months Ended (in millions) December 31, 2023 December 31, 2022 December 31, 2021 Cash from Operations $335.7 $207.5 $181.2 Capital expenditures (124.3) (178.2) (174.2) Proceeds from asset sales 8.3 22.9 12.0 Free
Slide 24: Adjusted EBITDA Guidance
Adjusted EBITDA Guidance Full-Year Guidance 2024 (in millions) Low High Net Income (loss) $180.0 $215.0 Interest expense, net 45.0 45.0 Income taxes 60.0 75.0 Depreciation, depletion and amortization 130.5 130.5 EBITDA $415.5 $465.5 Unrealized (gains) losses on benefit plan investments — — Stock-bas
Slide 25: Disclaimer
Disclaimer Our guidance for Adjusted EBITDA margin expansion by 2025, long-term Adjusted EBITDA margin, and long-term 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 guida