Knife Riv Holding Co.

Good morning, ladies and gentlemen, and welcome to the Knife River Corporation fourth quarter and full year 2025 results conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you need assistance, please press star zero for the operator. This call is being recorded on Tuesday, February 17, 2026. I would now like to turn the conference over to Dara Dirks, VP of Investor Relations. Please go ahead.

Thank you and welcome to everyone joining us for the Knife River Corporation fourth quarter and full year results conference call. My name is Dara Dirks, VP of IR at Knife River. I'm joined by our President and Chief Executive Officer Brian Gray and Chief Financial Officer Nathan Ring. Today's discussion will contain forward-looking statements about future operational and financial expectations. Actual results may differ materially from those projected in today's forward-looking statements. For further detail, please refer to today's earnings release and the risk factors disclosed in our most recent filings with the SEC, which are available on our website and the SEC website. Except as required by law, we undertake no obligation to update our forward-looking statements. During this presentation, we will make reference to certain non-GAAP information, These non-GAAP measures are defined and reconciled to the most directly comparable GAAP measure in today's earnings release and investor presentation. These materials are also available on our website. For today's call, first Brian will begin with an overview of our 2025 results, followed by a segment recap and areas of focus for 2026 and beyond. After that, Nathan will provide quarterly details, a capital update, and our 2026 guidance. At the conclusion of our prepared remarks, we will open the line for a question and answer session. With that, I'll turn the call over to Brian.

Thank you, Dara. Good morning, everyone, and thank you for joining us. 2025 was a year of meaningful strategic progress. At the start of the year, I mentioned three focus areas, and today I am pleased to report strong progress in all of them. First, we said that we were in a position to have our most profitable year ever, and we did. growing adjusted EBITDA 7% to $497 million. Second, we highlighted that our acquisition program was ramping into full swing. We completed five deals in 2025 and expect to have another busy year in 2026. And third, that we will continue to invest in our competitive edge initiatives to support long-term growth. We have, and our results reinforce that this strategy is working. There's no question we are a better company today than we were a year ago. While 2025 started slower than anticipated, We finished strong. Our teams advanced our edge initiatives throughout the year, building momentum in the second half that resulted in a very good fourth quarter. We entered 2026 with confidence and clear sense of momentum. We believe we are well positioned to continue growing our business. We have built the right team, we operate in the right markets, and we're executing the right strategy. There are four components to our growth strategy that we believe differentiate Knife River as the employer, supplier, acquirer, and investment of choice. First is our markets. Second is vertical integration. Third is the opportunity for self-help to improve margins. And fourth is our life at Knife culture and relentless drive for excellence. These factors are key to growing our business and creating long-term shareholder value. Let me tell you how. First, our markets. Knife River states are forecasted to grow twice as fast as non-Knife River states over the next 20 years. Our strong position in these higher growth areas present many opportunities for expansion, whether it's through the organic growth as people migrate to our states, or growth through M&A. There are literally hundreds of opportunities to expand within our territory, as family-owned, vertically integrated companies look to sell. Often, Knife River is the first call, as they want to work with a company they know and they trust. 2025 was an active year for acquisitions, and we expect an equally busy year in 2026. We've completed one bolt-on deal already in Montana, and expect that we'll be announcing more deals before the busy construction season starts. We will maintain a disciplined focus on aggregates-based, vertically integrated opportunities in mid-sized, higher growth markets. Knife River is truly the acquirer of choice in our expanding markets. Moving from markets to vertical integration, we believe our strategy to be an aggregates-based, end-to-end provider enhances our value. Our balanced mix of aggregates, ready mix, asphalt, and contracting services supports resiliency through economic cycles. In addition, being vertically integrated gives us multiple opportunities to win work. either as a general contractor, subcontractor, or materials provider. For our customers, being vertically integrated means greater supply chain reliability and improved job site coordination. For us, it enhances our financial performance by generating more gross profit and capturing higher margins on the pull-through of upstream materials. Vertical integration also provides more acquisition opportunities as we look to add aggregates, ready mix, and asphalt companies to our integrated portfolio. Our next focus area is self-help. we believe in continuous improvement in all aspects of our business. We are taking actions intended to drive EBITDA growth and margin expansion for all of our product lines. We are standardizing best practices, optimizing prices, and controlling costs. Our commercial excellence teams are utilizing our pricing and coding tools to get the most value for our materials. Our dynamic pricing strategy helped drive 9% improvements in aggregates in 2025 and will continue to focus on optimizing pricing in 2026. At the same time, We are intent on managing our costs. In the West and Mountain segments, our aggregates cost per ton were down in the second half of 2025 compared to the same period last year. We continue to find opportunities to lower variable operating costs and aggregates. And this is a major focus of our pit crews and production teams in 2026. Finally, what differentiates Knife River and makes this company so special to me is our life at Knife culture. We believe that putting people first will retain and attract team members. who are driven to win and who are committed to helping us be excellent in everything we do. We believe an engaged team is a safer team and a more profitable team. We just had our safest year ever, and I look forward to the ideas, improvements, and growth opportunities that our engaged team will help us achieve in 2026 and beyond. Combined, we believe these factors will help us generate unprecedented growth for Knife River. Moving from our strategy to our markets, we continue to enjoy a favorable backdrop. In addition to population growth, we stand to benefit from increased federal, state, and local funding to maintain and rebuild America's infrastructure. Our states are investing in infrastructure at record levels. DOT budgets across our segments are very healthy, and in our 14 states, approximately 46% of IIJA funding remains to be dispersed. Strong public budgets provide multi-year visibility, and we fully expect Congress to reauthorize another long-term infrastructure bill. Because of these strong budgets, we entered 2026 with record backlog of $1 billion, a 38% increase from this time last year. While approximately 90% of our backlog is public work, we're beginning to see more private opportunities. This includes data centers as well as distribution and manufacturing facilities. But again, the bulk of our backlog is lower risk public paving projects with contract values of less than $5 million. Next, I'll discuss what we see ahead in each of our segments. Starting with the West, We're excited with the progress we've made in 2025. Record profitability in our legacy Pacific operations more than offset a softer economy in Oregon. We continue to view the West as being well-positioned for growth in 2026. In California, Alaska, and Hawaii, we are seeing elevated levels of public activity, including heightened military spending. An example of this is the P209 dry dock project in Hawaii, where the Navy is investing approximately $3 billion on much needed infrastructure improvements. We began supplying cement and radio mix to this project in the fourth quarter and anticipate strong volumes in 2026. We're also seeing opportunities on the private side, including residential in California and work on the North Slope in Alaska. Moving to Oregon, I'm happy to report that our financial results were once again better this quarter than a year ago, and EBITDA margins for the year remained above 20%. The DOT funding landscape continues to be fluid. but Oregon's approved construction budget for 2026 is comparable to 2025, and the state forecast a similar amount of asphalt paving this year. The legislature is currently discussing the future of infrastructure funding, and although there are differences of opinion on the next steps, they agree on one thing. Oregon needs funding to fix its deteriorating roads and bridges. Meanwhile, we are seeing encouraging signs in the private market, including increased activity in data centers, warehouses, and pockets of residential developments. We'll continue monitoring conditions closely, but based on what we know today, we expect Oregon's performance in 2026 to be broadly in line with 2025 results, while the remainder of the west segment continues to grow. In the mountain segment, we closed out 2025 with a strong fourth quarter. This was driven largely by good weather, which allowed us to work late into December. Construction revenue was up almost 20% for the quarter, compared to the same time last year. The work performed included asphalt paving, which positively impacted our upstream materials division. Asphalt margins for the corridor improved 400 basis points, and we stand to benefit from record backlog entering 2026, which contains more asphalt paving than we performed in all of 2025. We also had a strong corridor ready mix. Pricing outpaced costs, resulting in margin improvements of 400 basis points. We continue to strengthen our leadership team with more materials-focused talent, and we believe these actions have put the region in an even better position to perform work on a growing list of private projects. In particular, Data Center work in Wyoming and semiconductor construction in Idaho are creating significant new bidding opportunities for the mountain region. Turning to the central segment, 2025 was a pivotal year. We completed three acquisitions, combined the legacy North Central and South regions, and made important progress with several competitive edge initiatives. These efforts are enhancing operational success and setting the stage for improved performance this year. The addition of Strato is Knife River's largest acquisition ever, and we are pleased with the integration. We expect Strata to continue performing well in 2026 as we fully leverage our synergies and take advantage of North Dakota's record DOT budget. We're also expecting meaningful volume growth from the addition of TexCrete, our new ready mix operations in central Texas. The central region continues to see improved public infrastructure spending, is expected to have its busiest contracting services a year ever, as our teams start construction on the $112 million Highway 6 project in Texas and the $62 million Highway 85 project in North Dakota. Lastly, turning to energy services, this segment remains margin and creative and an important component of our vertically integrated business model. We look forward to the second full year of operations at Albina Asphalt as we begin to fully implement and realize the operational improvements we've been making. Also in 2026, we'll continue targeting the sale of higher margin value added products, which we manufacture through one of our nine terminals. All in all, we are well positioned for growth in 2026. With that, I'll turn the call over to Nathan to walk through our financial results for the fourth quarter.