Knife River cuts 2026 revenue outlook to $3.375–$3.425 billion
Key Facts
On November 3, Knife River cut its fiscal 2026 guidance, setting revenue at $3.375–$3.425 billion and adjusted EBITDA at $475–$505 million. The company said the update reflected ongoing near-term headwinds. The announcement accompanied third-quarter results showing revenue growth and declines in net income and earnings per share compared with the same period last year. Adjusted earnings per share also fell short of analysts’ consensus, while the midpoint of the new revenue range was below their full-year estimate. Shares fell 2.98% in premarket trading, according to Investing.com.
Revenue for the quarter ended September 30, 2026, was $1,275.6 million, up 6% from $1,203.7 million in the third quarter of 2025. But net income fell to $137.9 million from $143.2 million, and earnings per share declined to $2.43 from $2.52. Investing.com put actual adjusted earnings per share at $2.43, versus analyst consensus of $3.21, a shortfall of $0.78. The divergence between sales growth and lower earnings reflects a trajectory in which higher revenue did not translate into comparable growth in net income. The company also reported adjusted EBITDA of $271.7 million, compared with $272.8 million a year earlier.
Adjusted EBITDA margin fell to 21.3% from 22.7% in the year-earlier quarter, despite higher revenue. Knife River said stronger demand for asphalt paving and aggregates supported sales growth, while the gross margin in its aggregates business improved 240 basis points to a quarterly record of 29.6%. Chief Executive Brian Gray said aggregate volumes rose 10% during the quarter, driven by internal pull-through and third-party sales. He added that the company raised aggregate prices by a mid-single-digit amount and reduced variable production costs per unit. That puts strong aggregates performance alongside weakness in the company’s overall adjusted gross margin, highlighting uneven results across its businesses.
By segment, West revenue fell 8% to $365.8 million from $396 million, with the company attributing the decline mainly to lower available construction services work in Oregon and California. Mountain revenue rose 34% to $308.1 million from $229.8 million, supported by growth in construction services, higher volumes and prices, and contributions from first-quarter acquisitions. The Central segment posted revenue of $462 million, up 6% year over year. Energy Services revenue increased to $133.7 million from $131.6 million in the year-earlier period. The results show uneven geographic growth, with declines in the West offset by gains in Mountain and Central.
The company narrowed its annual revenue range from $3.4–$3.6 billion in its August guidance to $3.375–$3.425 billion. It also cut its adjusted EBITDA range from $520–$560 million to $475–$505 million. The August guidance followed the second quarter, when the company reported revenue of $938.6 million, up 13% year over year, while net income fell 13% to $43.9 million. According to Investing.com, the midpoint of the new revenue range was $3.40 billion, below analyst consensus of $3.43 billion. The chief executive said the market dynamics, project delays and higher fuel costs the company faced in the second quarter continued into the third quarter, with the clearest impact in construction services.
Business and financing figures provide additional context for the revised guidance. A pre-earnings report said the backlog stood at $1.2 billion, with about 88% tied to publicly funded projects. The company said about 82% of its construction services backlog was also tied to such projects, including street and highway construction. It said bidding opportunities in some markets were lower during the quarter than in the same period last year, and that backlog margins at September 30 were expected to be below those at the same point in 2025. The P-209 project in Hawaii was also deferred to 2027, while major infrastructure projects in Texas progressed more slowly than expected. Net leverage was 2.9 times at September 30, while EBITDA for the twelve months ended on that date reached $499 million.
The guidance cut coincided with broader debate over margins: an Investing.com report said activist investor Starboard Value had called for raising them from about 15% to 22% by fiscal 2029 or considering a sale of the company. Management, meanwhile, expected construction services margins to range from 9% to 10% in the second half of 2026. The earnings-per-share consensus had fallen 8.42% over the sixty days before the announcement, according to the same report, while estimates were stable in the preceding week. Before the results announcement, the stock closed at $57.73 on November 2, then declined in premarket trading on November 3. The company announced Sharper EDGE initiatives for targeted improvements and said it would provide details at an investor day in the coming months.