10-Q · May 5, 2026
Knife River Corporation reported Q1 2026 revenue of $410.1 million, a 16% increase from $353.5 million in Q1 2025, driven by strong demand, particularly in ready-mix concrete and aggregate segments. However, the company…
Earnings analysis · 10-Q
KNF earnings analysis
Filed August 4, 2026 · Our reading of the company's report
The latest report
Knife River delivered Q2 revenue growth of 13% to $938.6 million, including broad strength in Central, Mountain and Energy Services, but profitability lagged: gross margin fell to 17.3%, operating income declined 8%,…
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Knife River delivered Q2 revenue growth of 13% to $938.6 million, including broad strength in Central, Mountain and Energy Services, but profitability lagged: gross margin fell to 17.3%, operating income declined 8%, and diluted EPS was $0.77. Higher volumes, acquisitions, early favorable weather and $15.3 million of pricing supported sales, while contracting-services competition, lower-margin project mix, acquisition overhead and higher interest expense restrained earnings. Liquidity is adequate, but debt rose approximately $454.1 million since year-end and first-half free cash flow was negative $283.8 million amid seasonal working-capital investment and growth spending.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
Where revenue came from
The business segments reported by the company.
Shares of the segments disclosed in this filing, largest first.
Reported figures
- Earnings per share
- $0.77
What stood out
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Revenue grew 13% on volume and pricing
Second-quarter revenue increased $104.8 million, or 13%, to $938.6 million from $833.8 million, led by double-digit volume growth in ready-mix, asphalt and aggregates. Pricing added $15.3 million of revenue in the quarter.
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Central segment delivered strongest profit growth
Central was the largest growth contributor: revenue increased $70.4 million, or 28%, to $325.6 million and EBITDA rose $9.2 million, or 21%, to $53.6 million. Aggregate volumes added $18.5 million of revenue, including data-center work in North Dakota and Texas.
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Mountain gained from weather and acquisitions
Mountain revenue rose $60.4 million, or 34%, to $236.5 million, supported by Idaho project timing, an early season start and three first-quarter acquisitions. First-half Mountain EBITDA increased 56% to $22.8 million.
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Energy Services expanded margin
Energy Services revenue increased $5.6 million, or 6%, to $103.0 million, while EBITDA rose $2.7 million, or 16%, to $19.8 million. Its EBITDA margin expanded to 19.2% from 17.5%.
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Public funding supports demand visibility
Public-market exposure and infrastructure budgets remain supportive: approximately 85% of the $1.2 billion backlog is publicly funded, and 11 of 15 operating states have record 2026 DOT budgets, collectively 15% above 2025.
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Liquidity remains adequate despite investment cycle
The company reported $794.4 million of working capital, $387.2 million of revolver availability and stated it has sufficient liquidity for financial commitments, debt obligations and anticipated capex over at least the next 12 months.
What to watch
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Profit and margin contraction
Despite 13% revenue growth, net income decreased 13% to $43.9 million and diluted EPS was $0.77. Gross margin declined 160 basis points to 17.3%, while operating income fell 8% to $81.1 million.
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Contracting margins faced competitive pressure
Contracting-services gross margin fell to 7.6% from 12.0%, reducing gross profit to $30.9 million from $40.8 million. Management cited project timing and type of work as well as more competitive bidding.
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Debt and variable-rate exposure increased
Long-term debt increased approximately $454.1 million from December 31, 2025, following a $400.0 million Term Loan B increase; variable-rate borrowings totaled $1.2 billion at a 5.52% weighted-average rate. A 1.00 percentage-point rate increase would add $12.1 million of annual interest expense.
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Seasonal working-capital use kept FCF negative
First-half operating cash flow remained negative at $133.6 million and capital expenditures were $150.2 million, implying free cash flow of negative $283.8 million. Receivables consumed $233.2 million and inventories consumed $66.2 million of cash.
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West segment declined on work availability and weather
West revenue declined $27.0 million, or 9%, to $290.4 million and EBITDA declined $11.5 million, or 19%, to $49.2 million. Management attributed weakness to less public-agency work in Oregon and weather-related delays in Alaska.
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Backlog and expected margins softened
Backlog was $1.216 billion at June 30, 2026, down from $1.253 billion a year earlier, and expected backlog margins were slightly lower year over year. The company expects approximately $984 million of backlog to be completed in the following 12 months.
Management's outlook
The 10-Q provides no quantitative revenue or EPS outlook. Management estimates 2026 maintenance and improvement capital expenditures of $170 million to $235 million, plus $76.4 million of remaining organic-growth spending; acquisition spending would be incremental.
Earlier filings 1
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.