Knife River's Q4 2024: Unpacking Contradictions in Private Work, Expenses, and Pricing Strategies

These are the key contradictions discussed in Knife River's latest 2024Q4 earnings call, specifically including: Private Work Expectations and Timing, SG&A Expense Growth, Dynamic Pricing Strategy, and Aggregates Pricing Increases:



Record Financial Performance:
- Knife River Corporation reported record full year revenue, adjusted EBITDA, and adjusted EBITDA margin in 2024.
- This performance was driven by a 48% increase in adjusted EBITDA and a 360 basis points increase in adjusted EBITDA margins over the previous 2 years.
- The success was attributed to the company's Competitive EDGE strategy, which includes optimized pricing and operational efficiencies.

Pricing and Strategy:
- The company achieved annual price increases of 7% for aggregates and 10% for ready-mix.
- These pricing strategies were part of the Competitive EDGE plan to focus on quality over quantity, improving margins, and extending demand for their products.

Regional Growth and Infrastructure Spending:
- In the Pacific region, revenue and EBITDA increased by 7%, driven by price increases and strong contracting services activity.
- The Mountain region saw record backlog and increased demand, particularly in residential subdivisions and commercial and industrial spending.
- Growth in these regions was supported by strong infrastructure spending, both public and private, and the securing of large projects like the $96 million highway reconstruction project in Idaho.

EDGE Strategy and Operational Efficiencies:
- The company's EDGE initiatives, including PIT Crews and sales training, have improved operational efficiencies and contributed to record EBITDA results.
- Initiatives focused on commercial excellence, operational excellence, and standardization are expected to continue driving margin improvements across all product lines.