Knife River Cuts 2026 Outlook to $3,375–$3,425 Million Despite 6% Revenue Growth
Key Facts
Knife River increased third-quarter 2026 revenue 6% year over year to $1,275.6 million, compared with $1,203.7 million in the same period of 2025, but lowered its full-year revenue and adjusted earnings outlook. The company set its fiscal-year revenue range at $3,375–$3,425 million and adjusted EBITDA at $475–$505 million. The results were announced on November 3, while the figures showed a divergence between strong aggregates performance and pressures on construction services. The CEO said pressures that emerged in the second quarter continued into the third quarter. He added that their impact was most evident in construction services.
In August, the company had raised its 2026 revenue range to $3,400–$3,600 million and kept its adjusted earnings outlook at $520–$560 million, according to its second-quarter filing. The new guidance lowers both the floor and ceiling of each range compared with that outlook. For the third quarter, net income fell 4% to $137.9 million from $143.2 million a year earlier. Net earnings per share declined to $2.43 from $2.52. Adjusted EBITDA was $271.7 million, compared with $272.8 million, while its margin fell to 21.3% from 22.7%.
The strongest performance came from the aggregates segment, where gross margin improved 240 basis points to a third-quarter record of 29.6%. The company attributed this to a 10% increase in aggregates sales volume, driven by internal sales related to its operations and higher sales to external customers. It also raised aggregates prices by a mid-single-digit rate while lowering variable production costs per unit. The company said these factors together drove the margin improvement. This performance highlights a divergence in the results, as broader revenue growth did not translate into comparable growth in net income or adjusted earnings.
The divergence also extended to geographic segment performance: Mountain segment revenue rose 34% to $308.1 million in the third quarter, compared with $229.8 million a year earlier. By contrast, West segment revenue fell 8% to $365.8 million from $396.0 million. The company attributed the decline in the West mainly to fewer available construction projects in Oregon and California. The CEO said the “market dynamics, project delays and higher fuel costs” the company faced in the second quarter carried into the third quarter. He added that the effect was “most evident in construction services,” linking the pressure on results to execution work and its costs.
Second-quarter results provide further context for this pressure: revenue then rose 13% to $938.6 million, while net income was $43.9 million and adjusted earnings were $139.7 million. Adjusted earnings margin in that quarter fell to 14.9% from 16.9% in the second quarter of 2025. In its report for that period, the CEO said energy costs, delayed project impact, the mix and timing of construction work pressured earnings and margins. He also pointed to asset-sale gains of $10.3 million in the second quarter of 2025, compared with $650,000 in the second quarter of 2026. As of June 30, 2026, the company had $40.7 million in unrestricted cash, total debt of $1.6 billion and $387.2 million of available capacity under its revolving credit facility.
For the rest of 2026, Knife River expects volumes of aggregates, ready-mix concrete and asphalt to grow at rates ranging from the high-single digits to the low double digits, with aggregates prices increasing at a mid-single-digit rate. The company said its “Sharper Edge” initiative is based on targeted capital improvements across operational, commercial and organizational areas. It added that it would present details of the initiative at an investor day in the coming months. The company had announced that its third-quarter results call would be held on November 3, 2026, at 11 a.m. Eastern Time, with a live webcast and slides available on its investor relations website. After the results announcement, shares fell 2.98% in premarket trading, according to Investing.com, which said the new guidance came in below analyst consensus.