Knife River Corp (KNF) · Nov 3, 2026 · Earnings
Miss — Diluted EPS $2.43 vs ~$2.60 consensus
Knife River’s third-quarter earnings missed consensus, while weaker contracting demand forced a major cut to 2026 revenue and EBITDA guidance.
Knife River is a vertically integrated construction-materials and contracting company using aggregates, acquisitions, and its EDGE operating program to expand margins and grow in mid-sized U.S. markets. Its pre-filing story was still growth-oriented: second-quarter guidance called for 2026 revenue of $3.4-$3.6 billion and Adjusted EBITDA of $520-$560 million, while the company was benefiting from acquisitions and infrastructure demand.
The quarter missed the market’s bar, not just last year’s numbers. Revenue rose 6% year over year, but diluted EPS fell 4% to $2.43 versus a published consensus near $2.60, while revenue of $1.276 billion was below the roughly $1.30 billion consensus. The key issue was profit conversion: contracting-services gross margin dropped to 8.5% from 11.5%, pulling Adjusted EBITDA essentially flat and reducing Adjusted EBITDA margin to 21.3% from 22.7% (Financial Highlights; Gross profit by product line). The company itself says second-quarter headwinds “carried into the third.” 〔0〕
The guidance cut is the bigger story and materially resets the 2026 outlook. Revenue guidance moved to $3.375-$3.425 billion from $3.4-$3.6 billion, while Adjusted EBITDA guidance fell to $475-$505 million from $520-$560 million. That is not a routine refinement: the EBITDA midpoint fell about 9% and the top end fell nearly 10%, confirming that the pressure is reaching full-year profitability rather than remaining a single-quarter issue (2026 Financial Guidance). The filing says the updated outlook reflects “continued near-term headwinds.”
| Metric | Current | Comparison | Market / previous |
|---|---|---|---|
| Revenue (Financial Highlights) | $1,275.6M (+6%) | $1,203.7M | ~$1,300M consensus |
| Diluted EPS (Income Statement) | $2.43 (-4%) | $2.52 | ~$2.60 consensus |
| Adjusted EBITDA (Financial Highlights) | $271.7M (—%) | $272.8M | |
| Adjusted EBITDA margin (Financial Highlights) | 21.3% | 22.7% | |
| FY26 revenue guidance (2026 Financial Guidance) | $3,375-$3,425M | $3,400-$3,600M | |
| FY26 Adjusted EBITDA guidance (2026 Financial Guidance) | $475-$505M | $520-$560M | |
| Net leverage (Net Debt and Net Leverage) | 2.9x |
The operating bright spot is real but not yet large enough to offset contracting weakness. Aggregates volumes rose 10%, pricing increased mid-single digits, and aggregate gross margin improved 240 basis points to a record 29.6%. 〔1〕 Mountain revenue and EBITDA also grew 34% and 10%, respectively, helped by acquisitions. But West revenue fell 8%, Energy Services EBITDA fell 18%, and backlog margins are expected to be lower than a year earlier, limiting how quickly the higher-margin materials gains can repair the contracting business. 〔2〕
The balance sheet gives Knife River room to keep investing, but the reset makes that investment more leveraged. The company ended the quarter with $1.6 billion of gross debt, $118.0 million of unrestricted cash, and 2.9x net leverage, while continuing to fund acquisitions and organic growth. That is not an immediate liquidity problem, but weaker EBITDA means the same acquisition-led growth plan now operates against a lower earnings base.
Bottom line: This is a clear step backward from Knife River’s prior growth-and-margin-expansion story. Aggregates execution remains encouraging, but the earnings miss and sizeable EBITDA guidance cut show that contracting headwinds are broader and more consequential than the company previously expected.
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