Knife River Holding Co (KNF, Financial) released its Q3 2023 earnings report on November 6, 2023. The company achieved all-time quarterly records for revenue, net income, and Adjusted EBITDA. The Competitive EDGE initiatives drove strong margin improvement, leading to a significant increase in gross profit and net income.
Financial Highlights
KNF reported a 12% increase in revenue, reaching $1,090.4 million in Q3 2023, up from $975.4 million in Q3 2022. Gross profit saw a significant increase of 46%, from $184.5 million in Q3 2022 to $269.4 million in Q3 2023. Net income also increased by 47% to $146.7 million, up from $99.7 million in the same period last year.
EBITDA and Adjusted EBITDA also saw substantial increases. EBITDA rose by 40% to $241.4 million, while Adjusted EBITDA increased by 43% to $247.5 million. The EBITDA margin and Adjusted EBITDA margin stood at 22.1% and 22.7% respectively, showing a significant improvement from the previous year.
“We have achieved record financial results in consecutive quarters, driven in part by our 'Competitive EDGE' strategy and in part by the strong markets where we operate,” said Brian Gray, Knife River president and CEO.
Company's Performance and Future Outlook
KNF's strong performance in Q3 2023 was driven by its Competitive EDGE strategy, which focuses on optimizing pricing to fully realize the value of core products and services. The company's price increases outpaced costs for the quarter, contributing positively to the margins.
Looking ahead, KNF remains optimistic about the long-term strength of its markets, including the positive impact from local, state, and federal funding. The company has raised and narrowed its guidance for revenue and Adjusted EBITDA for the full year 2023. It expects full-year 2023 revenue in the range of $2.7 billion to $2.8 billion and Adjusted EBITDA in the range of $400 million to $430 million.
As of September 30, 2023, Knife River had $84.0 million of cash and cash equivalents, and $698.7 million of gross debt. The company had no borrowings outstanding under its $350.0 million revolving credit facility as of September 30, 2023, having paid down the balance during the third quarter. Net leverage was 1.4x. Knife River remains committed to the stated long-term annualized goal of approximately 2.5x net leverage.
Explore the complete 8-K earnings release (here) from Knife River Holding Co for further details.
