Q1 2024 Knife River Corp Earnings Call

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Operator: Good morning, ladies and gentlemen, and welcome to the Knife River first quarter results conference call. At this time, all lines are in a listen-only mode.

Good morning, ladies and gentlemen, and welcome.

Operator: <unk> first quarter results conference call.

Operator: Following the presentation, we will conduct a question and answer session. If anyone has any difficulties hearing the conference, please press 4-0 for operator assistance at any time. I would now like to turn the conference over to Nathan Ring, Chief Financial Officer. Please do so.

Operator: At this time all lines are in a listen only mode.

Nathan Ring: The window presentation.

Nathan Ring: We will conduct a question and answer session.

Nathan Ring: And you won't have any difficulties hearing the conference. Please press star zero for operator assistance at any time.

Nathan Ring: I would now like to turn the conference over to Nathan Wang Chief Financial Officer. Please go ahead.

Nathan Ring: Thank you, operator, and welcome to everyone joining us for the Knife River Corporation first quarter results conference call. My name is Nathan Ring, Chief Financial Officer of Knife River, and I'm joined by our President and Chief Executive Officer, Brian Gray.

Nathan Ring: Thank you operator, and welcome to everyone joining us for the Knife River Corporation first quarter results Conference call. My name is Nathan Ring, Chief Financial Officer of Knife River, and I'm joined by our President and Chief Executive Officer, Brian Great too.

Nathan Ring: Today's discussion will contain forward-looking statements about future businesses and financial expectations. However, actual results may differ significantly from those projected in today's forward-looking statements due to various risks and uncertainties, including the risks described in our periodic reports filed with the SEC. For further detail, please refer to the legal disclaimers contained in today's earnings release and other public filings, which are available on both our website and the SEC website. Except as required by law, we undertake no obligations to update our forward-looking statements. During this presentation, we will make references to certain non-GATT information. These non-GATT measures are defined and reconciled to the most directly comparable GATT measures in the appendix to today's presentation.

Nathan Ring: Today's discussion will contain forward looking statements about future business and financial expectations. Actual results may differ significantly from those projected in today's forward looking statements due to various risks and uncertainties, including the risks described in our periodic reports filed with the SEC.

Nathan Ring: For further detail please refer to the legal disclaimers contained in today's earnings release, and other public filings, which are available on both our website and the SEC website, except as required by law, we undertake no obligations to update our forward looking statements.

Nathan Ring: During this presentation, we will make references to certain non-GAAP information. These non-GAAP measures are defined and reconciled to the most directly comparable GAAP measures in the appendix to today's presentation.

Nathan Ring: These materials are also available on our website under the Investors tab. Brian Gray will begin today's call with a high-level overview of our first quarter 2024 results, followed by an update on our competitive edge plan and a segment recap. Following his remarks, I will provide a product line summary, a balance sheet update, and a review of our 2024 financial guidance. At the conclusion of our prepared remarks, we will open the floor for our question and answer session. With that, I'll now turn the call over to Brian.

Nathan Ring: These materials are also available on our website under the investors tab.

Brian Gray: Brian Great will begin today's call with a high level overview of our first quarter 2024 results followed by an update on our competitive edge plan and a segment recap.

Nathan Ring: Knowing his remarks I will provide a product line in summary, our balance sheet update and a review of our 2024 financial guidance.

Brian Gray: At the conclusion of our prepared remarks, we will open the line for a question and answer session with that I'll now turn the call over to Brian.

Brian Gray: Thank you, Nathan. Welcome, everyone, and thank you for joining us today. After a record-breaking year in 2023, we continue to have momentum heading into the 2024 construction season. I'm going to talk about what we see ahead for 2024, including our strong markets, improved backlog, growth opportunities, and favorable materials prices. Since this is our first time reporting work score results as a stand-alone company, we wanted to provide you with additional context for the quarter.

Brian Gray: Thank you Nathan welcome everyone and thank you for joining us today after a record breaking year in 2023, we continue to have momentum heading into the 2024 construction season I'm going to talk about what we see ahead for 2024, including our strong markets improved backlog growth opportunities and favorable materials pricing.

Brian Gray: Since this is our first time reporting first quarter result, as a Standalone company. We wanted to provide you with additional context for the quarter.

Brian Gray: Knife River traditionally spends the winter months preparing for the start of the construction season, which for us, ramps up in the second quarter. These preparations include maintenance on our equipment, mobilization of portable plants, and training for our team members. Typically, these pre-construction activities begin in the fourth quarter and last into the second quarter. However, due to the extended construction season last year and an earlier start this year, these activities were largely compressed into the first quarter.

Brian Gray: Traditionally it's been the winter months preparing for the start of the construction season, which for us ramp up in the second quarter. These preparations include maintenance on our equipment mobilization of portable plants and training for our team members.

Brian Gray: Typically these preconstruction activities begin in the fourth quarter and last into the second quarter. However, due to the extended construction season last year and an earlier start. This year. These activities were largely compressed into the first quarter. This earlier start contributed to record first quarter revenue, while the additional preseason expenses affected our adjusted EBITDA.

Brian Gray: This earlier start contributed to record first-quarter revenue. While the additional preseason expenses affected our adjusted EBITDA for the quarter, we fully anticipate we'll recoup most of these expenses in the second quarter. Adjusted EBITDA for the quarter was a loss of $17.7 million compared to a loss of $13.7 million in the prior year period.

Brian Gray: For the quarter, we fully anticipate we will recoup most of these expenses in the second quarter.

Brian Gray: Adjusted EBITDA for the quarter was a loss of $17 7 million compared to a loss of $13 $7 million in the prior year period.

Brian Gray: The difference was expected as we had the increased pre-construction expenses I just mentioned along with the additional cost of being a standalone business in the quarter that we didn't have in the first quarter of last year. Our crews and equipment are ready to get back to work, and we have a lot of work to do. As I mentioned during our year-end call, we noticed delayed bid lettings in the fourth quarter last year compared to normal.

Brian Gray: The difference was expected as we had the increased pre construction expenses I just mentioned along with the additional costs of being a standalone business in the quarter that we didn't have in the first quarter of last year, our crews and equipment are ready to get back to work and we have a lot of work to go perform.

Brian Gray: As I mentioned during our year end call, we noticed delayed bid lettings in the fourth quarter last year compared to normal that contributed to an increase of lettings in the first quarter and we picked up our fair share of new work or contracting services added nearly $423 million of our backlog during the first quarter, a 66% increase from what we captured during the same <unk>.

Brian Gray: That contributed to an increase in lettings in the first quarter, and we picked up our fair share of new work. Our contracting service added nearly $423 million to our backlog during the first quarter, a 66% increase from what we captured during the same period last year.

Brian Gray: Last year.

Brian Gray: This brings our backlog to similar levels we had at the same time last year, but this time at higher expected margins. We continue to be disciplined on bid day, incorporating new edge-related bidding tools and strategies. The transportation departments in Knife River's 14 states increased their total spending authority for this year by 16% from 2023.

Brian Gray: This brings our backlog of some of the levels. We had at the same time last year, but at this time at higher expected margins we.

Brian Gray: We continue to be disciplined on bid day, incorporating new edge related bidding tools and strategies.

Brian Gray: Transportation departments in knife river's 14 states increase our total spending authority for this year by 16% from 2023, we are already seeing the results in our backlog and we expect these tailwind coupled with continued pricing growth for our materials should provide momentum through the 'twenty 'twenty four construction season and beyond we.

Brian Gray: We are already seeing the results in our backlog, and we expect these tailwinds, coupled with continued price growth for our materials, to provide momentum through the 2024 construction season and beyond. We operate in healthy markets, the fundamentals of our business are strong, and we believe we are well positioned for a good year. Next, I'd like to update you on a number of growth initiatives we are pursuing, along with other important components of our competitive edge plan. If you are new to our calls, Knife River's competitive edge strategy is our plan to improve our adjusted EBITDA margins and deliver long-term value for our shareholders.

Brian Gray: We operate in healthy markets. The fundamentals of our business are strong and we believe we are well positioned for a good year.

Brian Gray: Next I'd like to update you on a number of growth initiatives, we are pursuing along with other important components of our competitive edge plan.

Brian Gray: If you are new to our calls knife river's competitive edge strategy is our plan to improve our adjusted EBITDA margins and deliver long term value for our shareholders.

Brian Gray: EDGE stands for EBITDA Margin Improvement, Discipline, Growth, and Excellence. On our year-end call, we spent some time discussing our EBITDA margin improvement, including that we achieved our stated goal of 15% adjusted EBITDA margins two years ahead of schedule. Our next goal is to reach 20% adjusted EBITDA margins, and we are making good progress towards that goal. Let me provide you some insights from the first quarter.

Brian Gray: <unk> stands for EBITDA margin improvement discipline growth and excellence.

Brian Gray: On our year end call. We spent some time discussing our EBITA margin improvement, including that we achieved our stated goal of 15% adjusted EBITDA margins. Two years ahead of schedule. Our next goal is to reach 20% adjusted EBITDA margins and we are making good progress towards that goal. Let me provide you some insights from the first quarter.

Brian Gray: Starting with EBITDA margin improvement, we are focused on a number of initiatives to optimize pricing and lower our costs. The success of the process improvement teams that I have mentioned on previous calls has led to the development of additional such teams, each with a different area of focus. We now have a process improvement team dedicated to providing targeted training on a commercial basis, with an early emphasis on dynamic pricing. We have introduced new tools to help us analyze daily margins at the transactional level.

Brian Gray: Starting with EBITDA margin improvement, we are focused on a number of initiatives to optimize pricing and lower our costs. The success of the process improvement teams that I have mentioned on previous calls has led to the development of additional such teams each with a different area of focus.

Brian Gray: We now have a process improvement team dedicated providing targeted training on our commercial excellence with an early emphasis on dynamic pricing. We have introduced new tools to help us analyze daily margins at the transactional level. We have implemented these tools at our aggregates operations and are now moving forward at our ready mix operations. In addition to new tool.

Brian Gray: We have implemented these tools at our aggregates operations and are now moving forward at our ready mix operations. In addition to new tools, our senior leadership team has committed to a company-wide sales training program to develop, support, and educate our sales force. We have hired a full-time sales training instructor and partnered with a national third-party sales training provider to support our sales team and their efforts to optimize pricing. We're also in the first phase of streamlining the applications and systems we use in our sales process, from order to cash.

Brian Gray: <unk>, our senior leadership team committed to our company wide sales training program to develop support and educate our sales professionals. We have hired a full time sales training instructor and partnered with a national third party sales for any provider to support our sales team and their efforts to optimize pricing.

Brian Gray: We're also in the first phase of streamlining the applications and systems, we use in our sales process from order to cash. This in depth review of business applications and systems will help us support our commercial teams and customers.

Brian Gray: This in-depth review of business applications and systems will help us support our commercial teams and customers. Lastly, under the first E in EDGE, I want to give you an update on our Original Process Improvement Team, or PIT crew, which is focused on operational... We launched this initiative last year to identify and share areas for improvement at our Aggregates, Asphalt, and ReadyMix plants. The team visited 10 of our larger locations last year, and we have increased its size this year to help us drive operational improvements in the field.

Brian Gray: Lastly, under the first E and edge I want to give you an update on our original process improvement team or pit crew, which is focused on operational excellence. We launched this initiative last year to identify and share areas for improvement at our aggregates asphalt and ready mix plants.

Brian Gray: The team visited 10 of our larger locations last year and we have increased the size of this year to help us drive operational improvements in the field. The team. This year hit the ground running and has already identified opportunities at several of our locations to reduce production costs improved runtime and support faster truck loading.

Brian Gray: The team this year hit the ground running and has already identified opportunities at several of our locations to reduce production costs, improve runtime, and support faster truck loading. We have company-wide support for each of these commercial and operational excellence initiatives with the goal of continuing to improve our margins. Moving to the D in EDGE, we remain disciplined in our approach to bidding and continue our disciplined allocation of capital. I highlighted the fact that we picked up 66% more work in the first quarter at higher expected margins. Our sales and construction estimating teams continue to be disciplined on bid day, utilizing new bidding tools with an emphasis on optimizing margins and targeting work that meets our edge initiatives.

Brian Gray: We have company wide support for each of these commercial and operational excellence initiatives with the goal of continuing to improve our margins.

Brian Gray: Moving to the D and edge, we remain disciplined on our approach to bidding and continue our disciplined allocation of capital I highlighted the fact that we picked up 66% more work in the first quarter at higher expected margins, our sales and construction estimating teams continue to be disciplined on bid day, utilizing new bidding tools with an emphasis on optimizing margins and targeting work that.

Brian Gray: Meets our edge initiatives.

Brian Gray: Also, during the quarter, we remain committed to the discipline and allocation of capital towards strategic growth projects. We've had a number of organic growth investments, focusing our capital on areas where we believe we can achieve strong returns. Nathan will talk more about our balance sheet and healthy financial position in his remarks, and I'll share some news on the progress we made in the first quarter related to growth. First, our intent in 2024 is to utilize approximately $40 to $50 million from our CapEx budget toward edge-related growth initiatives.

Brian Gray: Also during the quarter, we remain committed to the disciplined allocation of capital towards strategic growth projects. We've had a number of organic growth investments focusing our capital on areas, where we believe we can achieve strong returns Nathan will talk more about our balance sheet and healthy financial position in his remarks I'll share. Some news on advances we made in the first quarter relay.

Brian Gray: To growth.

Brian Gray: Our intent in 2024 is a utilized approximately $40 million to $50 million from our capex budget towards edge related growth initiatives. During the first quarter, we advanced a number of these initiatives, including a greenfield ready mix operation in Iowa, a liquid asphalt expansion in South Dakota, and multiple plant upgrades to reduce production costs are picked up.

Brian Gray: During the first quarter, we advanced a number of these initiatives, including a greenfield ready mix operation in Iowa, a liquid asphalt expansion in South Dakota, and multiple plant upgrades to reduce production costs. Our pit crews and regional operations teams continue to identify organic growth opportunities to help us achieve our goals. Also, as noted in our earnings release, we acquired a small ReadyMix operation in South Dakota on April 3rd. This business adds two ReadyMix plants and ten trucks between our Sioux Falls and Yankton operations, providing infill development in the rapidly growing Sioux Falls market area.

Brian Gray: <unk> and regional operations teams continue to identify organic growth opportunities to help us achieve our goals.

Brian Gray: Also as noted in our earnings release, we acquired a small ready mix operation in South Dakota on April 3rd this business adds to ready mix plants in 10 trucks between our Sioux falls in Yankton operations, providing infill development in the rapidly growing Sioux falls market area.

Brian Gray: Our acquisition pipeline is active, and we are looking at several potential deals with a focus on aggregates and materials-led operations in mid-size, high-growth markets. We continue to add resources to our corporate development team, and we have line-of-sight opportunities to grow in each of our existing operating segments and product lines. And finally, our second E in EDGE is Excellence, which is our relentless drive to be the best at everything we do.

Brian Gray: Our acquisition pipeline is active and we are looking at several potential deals with a focus on aggregate. The materials led operations in mid size high growth markets. We continue to add resources to our corporate development team and we have line of sight opportunities to grow in each of our existing operating segments and product lines.

Brian Gray: And finally, our second <unk> and edge is excellence, which is our relentless drive to be the best at everything we do I mentioned that we've partnered with our corporate sales training consultant hired a sales training manager and formed a new pit crew to help us become best in class a commercial excellence. We also launched a training works off our dispatch teams in February with a focus on excellent customer service.

Brian Gray: I mentioned that we've partnered with a corporate sales training consultant, hired a sales training manager, and formed a new pit crew to help us become best-in-class at commercial excellence. We also launched a training workshop for our dispatch teams in February with a focus on excellent customer service while reducing our delivery costs, and we continue to focus on efforts to keep improving our safety performance. As a People First company, the safety and well-being of our team is paramount, and we are intent on becoming best in class.

Brian Gray: While reducing our delivery costs.

Brian Gray: And we continue to focus on efforts to keep improving our safety performance as a people first company the safety and wellbeing of our team is Paramount and we are intent on becoming best in class.

Brian Gray: Each of our segments is committed to these EDGE initiatives, and our operations teams have led the way in implementing them. I'm very pleased with the progress we have made, and I'll now provide a quick recap of each segment's performance for the quarter. As a quick reminder, in the fourth quarter last year, we realigned our reportable segments to better support our operational strategy. For example, the liquid asphalt business from the Pacific segment is now reported in Energy Services.

Brian Gray: Each of our segments is committed to these edge initiatives and our operations teams have led the way in implementing them.

Brian Gray: In addition, the north-central and south off-ridges both now report as a new central segment. Starting in the Pacific segment, we were able to get into the field earlier and more frequently in California than we were last year, which contributed to a 19% increase in revenue. However, Steve it out for this segment decreased $800,000 year over year, largely related to the timing of expenses for repair and maintenance.

Brian Gray: I am very pleased with the progress we have made and I will now provide a quick recap of each segment's performance for the quarter as a quick reminder, in the fourth quarter last year, we realigned our reportable segments to better support our operational strategies the liquid asphalt business from the Pacific segment is now reported in energy services. In addition, the north central.

Brian Gray: As south averages both now report as the new Central segment.

Brian Gray: Starting the specific segment, we were able to get into the field earlier and more frequently in California than we were last year, which contributed to a 19% increase in revenue EBIT.

Brian Gray: EBITDA for the segment decreased $800000 year over year largely related to the timing of expenses for repair and maintenance looking ahead. We anticipate continued strength in the public works residential warehouse markets in northern California to positively impact the segment, along with strong military spending in Hawaii and Alaska.

Brian Gray: Looking ahead, we anticipate continued strength in the public works, residential, and warehouse markets in Northern California to positively impact the segment, along with strong military spending in Hawaii and Alaska. In the Northwest segment, we achieved record first-quarter revenue in EBITDA. The segment had improved growth margins in contracting services and aggregates, both driven by edge-related pricing initiatives and solid execution of early-season construction work. The outlook in the Portland metro area is strong for aggregates, related in part to investments from the CHIPS Act and increased residential spending.

Brian Gray: And the northwest segment, we achieved record first quarter revenue and EBITDA.

Brian Gray: The segment had improved gross margins and contracting services in aggregate, both driven by edge related pricing initiatives and solid execution of early season construction work.

Brian Gray: The outlook in the Portland Metro area are strong for aggregates related in part to investments from the chips Act and increased residential spending.

Brian Gray: The segment's Pre-Stressed Concrete Division also has a lot of work in the pipeline for 2024, and the Northwest is poised for another solid year. In our mountain segment, we had a similar start to last year's record year, though EBITDA was down $2.3 million, largely related to the absence of asset sales from the first quarter of 2023 that totaled about $2 million.

Brian Gray: The segment's pre stressed concrete division also has a lot of work in the pipeline for 2024 and the northwest is poised for another solid year.

Brian Gray: In our mountain segment, we had a similar start to last year's record year, though EBITDA was down $2 3 million largely related to the absence of asset sales from the first quarter of 2023 that totaled about $2 million.

Brian Gray: We expect a strong and earlier start to the construction season, particularly in our Idaho and Montana markets. We have a good backlog in the segment, including four airport projects in Montana and one in Wyoming that total approximately $60 million. Demand in the Boise and Boasman and Boise City markets is strong, and this region remains one of the fastest growing and desirable places to live in the country.

Brian Gray: We expect a strong an earlier start to the construction season, particularly in our Idaho and Montana markets. We have good backlog in this segment, including for airport projects in Montana, and one in Wyoming that total approximately $60 million demand in the Boise and Bozeman markets is strong in this region remains one of the fastest growing and desirable places to live in the <unk>.

Brian Gray: The Central Segment had improved revenue on increased pricing across all four products. The segment recognized a normal seasonal loss in the quarter, as less construction activity is typically completed in the first quarter in its northern market. This was partially offset by the strong aggregate margins in Texas, driven by increased pricing and continued production improvements at our Honey Creek quarry. Aggregate demand in Texas remains strong, and the Texas bidding schedule has its busiest month coming up.

Brian Gray: The Central segment had improved revenue on increased pricing across all core product lines. The segment recognized a normal seasonal loss in the quarter as less construction activity is typically completed in the first quarter and its northern markets. This was partially offset by the strong aggregates margins in Texas, driven by increased pricing and continued production improvements at our hunting.

Speaker Change: Great Corey.

Brian Gray: Hydrogen demand in Texas remains strong and the Texas bidding schedule has its busiest month coming up we secured a 30000 cubic yard concrete project at Texas, A&M University and there continues to be good material supply opportunities at our Texas footprint.

Brian Gray: We secured a 30,000 cubic yard concrete project at Texas A&M University, and there continues to be good material supply opportunities in our Texas footprint. Our North Central markets have secured more backlog this year compared to the same time last year, and we continue to see good bidding opportunities. And finally, the energy services segment delivered solid revenue growth in this quarter. As a reminder, this is our liquid asphalt business, which includes operations in California, Iowa, Nebraska, South Dakota, Texas, and Wyoming.

Brian Gray: Our north central markets have secured more backlog this year compared to the same time last year and we continue to see good bidding opportunities.

Brian Gray: And finally, the energy services segment delivered solid revenue growth in this quarter.

Brian Gray: As a reminder, this is our liquid asphalt business, which includes operations in California, Iowa, Nebraska, South Dakota, Texas, and Wyoming. The segment benefited during the quarter from strong demand in the California, and Texas markets and revenue improvement was largely related to product mix and the timing of sales.

Brian Gray: The segment benefited during the quarter from strong demand in the California and Texas markets, and revenue improvement was largely related to product mix and the timing of sales. As noted during our year-end call, this business segment has good visibility into its input costs and sales contracts with customers. Therefore, we provided specific guidance for 2024. Based on current sales contracts and the cost of inventory, we are reaffirming guidance of $50 to $60 million for the energy services segment.

Brian Gray: As noted during our year end call. This business segment had a good visibility into as input costs and sales contracts with customers. Therefore, we provided specific guidance for 2024 based on current sales contracts and the cost of inventory, we are reaffirming guidance of $50 million to $60 million for the energy services segment.

Brian Gray: In summary, we are in a good position as we head into the heart of the construction season. Our winter maintenance activities were largely completed by the end of the first quarter, and we were able to get into the field earlier than last year.

Brian Gray: In summary, we are in a good position as we head into the heart of the construction season, our winter maintenance activities were largely completed by the end of the first quarter and we are able to get into field earlier than last year Federal state and local funding for infrastructure development continues to provide tailwind for our contracting services business and the pull through of our higher margin construction materials are back.

Brian Gray: Federal, state, and local funding for infrastructure development continues to provide tailwinds for our contracting services business and the pull-through of our higher-margin construction materials. Our backlog is up from last year, with higher expected margins, and we continue to see momentum on our materials prices. We are 100% committed to our competitive edge plan, and we will continue to invest in our business where we believe we can achieve the best returns with a focus on aggregates and materials-led, vertically-integrated companies in our mid-size, high-growth market.

Brian Gray: Log is up from last year with higher expected margins and we continue to see momentum on our materials pricing.

Brian Gray: We are 100% committed to our competitive edge plan and we will continue to invest in our business, where we believe we can achieve the best returns with a focus on aggregate them materials Ladd vertically integrated companies and our mid sized high growth markets.

Brian Gray: Lastly, before I turn the call over to Nathan for his remarks, I'd like to thank our entire Knife River team for all their efforts in the quarter, helping to position us for what we believe will be another good year. I'm very grateful for our team and look forward to what is ahead in the next three quarters. Nathan will provide more detail on our first quarter performance and touch on our guidance for 2024.

Speaker Change: Lastly, before I turn the call over to Nathan for his remarks I'd like to thank our entire knife River team for all their efforts in the quarter, helping to position us for what we believe will be another good year I'm very grateful for our team and look forward to what is ahead. The next three quarters Nathan will provide more detail on our first quarter performance and touch on our guidance for 2020 for Nathan.

Nathan Ring: Thank you, Brian, and good morning, everyone. I'll begin my remarks with a review of our performance for the quarter, followed by an update on our liquidity position and capital allocation priorities, and then conclude by revisiting our 2024 guidance. As Brian mentioned, our first quarter generally contributes a smaller portion of our consolidated full-year results. To put that into perspective, over the last five years, from 2019 through 2023, our first quarter revenue provided an average of 12% of our annual results.

Nathan Ring: Thank you, Brian and good morning, everyone I'll begin my remarks with a review of our performance for the quarter, followed by an update on our liquidity position and capital allocation priorities and then conclude by revisiting our 2024 guidance as Brian mentioned, our first quarter generally contributes a smaller portion of our consolidated full year results.

Nathan Ring: To put that into perspective over the last five years from 2019 through 2023, our first quarter revenue provided an average of 12% of our annual results and while we experienced record first quarter revenue in 2024. It only reflects an estimated 12% of our 2020 for revenue at the midpoint of guidance.

Nathan Ring: And while we experienced record first quarter revenue in 2024, it only reflects an estimated 12% of our 2024 revenue at the midpoint of guidance. Similarly, at the product line level, our first quarter revenues represent a relatively low percentage of our total annual revenue.

Nathan Ring: Yes.

Nathan Ring: Similarly at the product line level, our first quarter revenues represent a relatively low percentage of our total annual revenues.

Nathan Ring: Based on the last three years, first quarter aggregate revenue accounts for 16% of annual revenue, ready mix 17%, and asphalt just 4% of total revenue. Despite this being a nominal quarter relative to the full year, we have been actively preparing for the construction season, and we are encouraged by the improvements made this quarter on our EDGE initiative, particularly those related to pricing for materials, bidding margins, and backlog, and investment in growth projects.

Nathan Ring: Just on the last three years first quarter aggregate revenue accounts for 16% of annual revenue ready-mix, 17% in asphalt just 4% of total revenue.

Nathan Ring: Despite this being a nominal quarter relative to the full year, we have been actively preparing for the construction season and we are encouraged by the improvements made this quarter on our edge initiatives, particularly those related to pricing of materials bidding margins in backlog and investment in growth projects. We.

Nathan Ring: We continue to see traction with our pricing initiatives in the quarter, with the average selling price for aggregates up 15% and ReadyMix up 9%. Asphalt pricing was down slightly from last year, reflecting a reduction in input costs, but we continue to see margin improvements.

Nathan Ring: We continue to see traction with our pricing initiatives in the quarter with the average selling price for aggregates up 15% and ready mix up 9%.

Nathan Ring: Asphalt pricing was down slightly from last year, reflecting a reduction in input costs, but we continue to see margin improvement.

Nathan Ring: Our contracting services backlog of $959.5 million was higher than the prior year and increased by nearly $423 million during the quarter, up from the approximately $255 million we captured during the same period last year. It also includes higher expected margins as we continue our disciplined bidding strategy of prioritizing gross margin over the volume of projects. Additionally, about 85% of our backlog is related to public projects, with an average duration of less than 12 months and a $2 million project size that generally represents lower-risk work.

Nathan Ring: Our contracting services backlog of $959 $5 million was higher than the prior year and increased by nearly $423 million during the quarter up from the approximately $255 million, we captured during the same period last year.

Nathan Ring: It also includes higher expected margins as we continue our disciplined bidding strategy prioritizing gross margin over the volume with projects. Additionally, about 85% of our backlog is related to public projects with an average duration of less than 12 months and $2 million project size that generally represents lower risk work.

Nathan Ring: In many cases, this work also provides for the opportunity to supply internal materials to the jobs, supporting our vertically integrated model. On a consolidated basis, revenue was up 7% from the same period last year. However, adjusted EBITDA was lower by $4 million.

Nathan Ring: In many cases. This work also provides for the opportunity to supply internal materials to the jobs supporting our vertically integrated model.

Nathan Ring: On a consolidated basis revenue was up 7% from the same period last year. However, adjusted EBITDA was lower by $4 million.

Nathan Ring: As Brian highlighted, these results reflect expenses incurred earlier in the year as we were able to ramp up our preconstruction activities sooner than we were able to do in 2023. We believe the higher expenses in the quarter, including repair and maintenance expenses that increased by $8.6 million from the prior period, are timing-related and will be in line with the prior year on an annualized basis. We also had a full quarter of stand-alone costs related to our separation from MDR resources that we didn't have in 2020, which had an impact of $6.4 million, of which $1.5 million is one-tenth.

Nathan Ring: As Brian highlighted these results reflect expenses incurred earlier in the year as we were able to ramp up our preconstruction activities sooner than we were able to do in 2023.

Nathan Ring: We believe the higher expenses in the quarter, including repair and maintenance expenses increased by $8 $6 million from the prior period are timing related and will be in line with the prior year on an annualized basis. We also had a full quarter of standalone costs related to our separation from MDU resources that we didn't have in 2023, which had an impact of <unk>.

Nathan Ring: $6 $4 million of which $1 $5 million is one time.

Nathan Ring: All in all, our business is well positioned heading into the busier second quarter. Along with the strength of our markets, we are also in a healthy financial position to capitalize on growth opportunities. One of the core components of our EDGE strategy is financial discipline. That includes maintaining a strong balance sheet, as well as a disciplined approach to capital allocation. We continue to improve our cash flow from operations and ended the quarter with $128 million of available cash compared to $7.2 million at the same time last month.

Nathan Ring: All in all our business is well positioned heading into the busier second quarter.

Nathan Ring: Along with the strength of our markets. We are also in a healthy financial position to capitalize on growth opportunities one of the core components of our edge strategy is financial discipline that includes maintaining a strong balance sheet as well as a disciplined approach to capital allocation.

Nathan Ring: We continue to improve our cash flow from operations and ended the quarter with $128 million of available cash compared to $7 $2 million at the same time last year. We also ended the quarter with $329 million, although available capacity under our revolving credit facility.

Nathan Ring: We also entered the quarter with $329 million of available capacity under our revolving credit facility. Furthermore, we ended the quarter with a net leverage position of 1.3x adjusted EBITDA compared to our long-term target of 2.5x. We believe our strong cash generation, together with our nearly $460 million of liquidity and net leverage position, positions us to reinvest within our existing operations, as well as pursue strategic acquisitions. Brian mentioned some of the organic investments we made in the quarter, and then on April 3rd, we acquired a small ready mix operation.

Nathan Ring: Furthermore, we ended the quarter with a net leverage position of one three times adjusted EBITDA compared to our long term target of two five times.

Nathan Ring: We believe our strong cash generation together with our nearly $460 million of liquidity and net leverage position situate us to reinvest within our existing operations as well as pursue strategic acquisitions, Brian mentioned some of the organic investments we've made in the quarter and then on April 3rd we acquired a small ready mix operations.

Nathan Ring: Our corporate development pipeline remains active, and we intend to stay disciplined in our approach to capital allocation, ensuring that we pursue high-quality assets that support our growth strategy, return on invested capital, and margin improvement. As we look ahead to the 2024 construction season, we are optimistic about our markets and our competitive edge strategy. Today, we are reaffirming financial guidance for the full year 2024. Our guidance is based on normal weather, economic, and operating conditions and continues to include the following assumptions.

Nathan Ring: Our corporate development pipeline remains active and we intend to stay disciplined in our approach to capital allocation, ensuring that we pursue high quality assets that support our growth strategy return on invested capital and margin improvement.

Nathan Ring: As we look ahead to the 2024 construction season, we are optimistic about our markets and our competitive edge strategy. Today, we are reaffirming financial guidance for the full year of 2024.

Nathan Ring: We anticipate average selling prices for our product lines to improve mid to high single digits, while volumes are expected to be flat to down low single digits when compared to 2023. In addition to the consolidated guidance, we are also reaffirming EBITDA guidance specific to the geographic and energy services segments. For the full year 2024, we are reaffirming the following financial guidance: consolidated revenue between $2.75 billion and $2.95 billion, and consolidated Adjusted EBITDA between $425 million and $475 million, which is comprised of these two components.

Nathan Ring: Our guidance is based on normal weather economic and operating conditions and continues to include the following assumptions, we anticipate average selling prices for our product lines to improve mid to high single digits. While volumes are expected to be flat to down low single digits when compared to 2023.

Nathan Ring: In addition to the consolidated guidance. We are also reaffirming EBITDA guidance specific to the geographic and energy services segments for.

Nathan Ring: For the full year 2024, we are reaffirming the following financial guidance.

Nathan Ring: Consolidated revenue between $2 75 billion and $2 $95 billion.

Nathan Ring: Consolidated adjusted EBITDA between $425 million and $475 million, which is comprised of these two components first adjusted EBITDA of our geographic segments, including corporate services between $375 million and $415 million and second at energy.

Nathan Ring: First, adjusted EBITDA of our geographic segments, including corporate services, between $375 million and $415 million. And second, at Energy Services, adjusted EBITDA between $50 million and $60 million. And lastly, we expect total capital expenditures between 5% and 7% of revenue, excluding any potential future act. We have the momentum to build on our results from 2023, supported by our EDGE initiatives and infrastructure funding tailwind. As we move into the busier construction months, we are excited about what we see ahead. With that, I'd like to open the call to questions.

Nathan Ring: Services, adjusted EBITDA between $50 million to $60 million.

Nathan Ring: And lastly, we expect total capital expenditures between five and 7% of revenue excluding any potential future acquisitions.

Nathan Ring: We have the momentum to build on our record results from 2023.

Nathan Ring: Supported by our edge initiatives and infrastructure funding tailwind as we move into the busier construction months. We are excited about what we see ahead with that I'd like to open the call for questions.

Operator: Thank you. Ladies and gentlemen, if you would like to ask a question, please press star followed by one on a touch-tone phone. You will then hear a three-tone prompt acknowledging your request. And if you would like to withdraw from the question queue, simply press the star followed by two. And if you're using a speakerphone, please lift the handset first before pressing any key. And your first question will be from Brent Thielman at Davidson. Please go ahead.

Speaker Change: Thank you.

Speaker Change: Ladies and gentlemen, if you would like to ask a question. Please press star followed by one on your Touchtone phone you will then hear a suite on prompt acknowledging your request and if you would like to withdraw from the question queue simply press star followed by two and if you're using a speaker phone. Please lift the handset first before pressing Andy keys and you first question.

Operator: <unk> will be from Brent Thielman of Davidson. Please go ahead.

Brent Edward Thielman: Hey, thanks. Good morning. I guess my first question, Brian or Nathan, is the margin profile embedded in the backlog here relative to last year. Any way to quantify that or characterize that further as we think about the impact of the business going forward?

Brent Edward Thielman: Hey, Thanks, good morning.

Brent Edward Thielman: I guess first question, Brian or Nathan.

Brent Edward Thielman: The margin profile embedded in the backlogs year.

Brent Edward Thielman: Relative to last year any way to quantify that or characterize that further as we think about the.

Brent Edward Thielman: The impact in the business going forward.

Brian Gray: Yeah, Brent, this is Brian. So yeah, I'd look at that really on an annualized basis. You can look at our year-end, how we finished last year. And I think that would be a good indication.

Brent Edward Thielman: Yeah, Brian This is Brian So I would look at that really on an annualized basis, you can look at our year and how we finished last year.

Brian Gray: And I think that would be a good indication I mean, I think we've mentioned that we have a backlog that's similar to last year. The same period of time and we've stated it at higher margins.

Brian Gray: I mean, I think we've mentioned that we have a backlog that's similar to last year at the same period of time, although we've stated it's at higher margins. We've performed very well in the fourth quarter and this quarter and the first quarter in contracting services, and so it is at higher margins. But I would look at that on an annualized basis. There's a lot of noise that goes on in the fourth quarter and the first quarter with relatively small volumes compared to the whole year. So I definitely would just kind of point you in the direction of how we ended last year for contracting services.

Brian Gray: We've performed very well in the fourth quarter and this quarter in the first quarter.

Brian Gray: Contracting services and so it is at higher margins, but I would look at that on an annualized basis Theres a lot of noise that goes on in the fourth quarter and the first quarter.

Brian Gray: With relatively small volumes compared to the whole year. So I definitely would just kind of point you to the direction of how we ended last year for contracting services.

Brian Gray: Okay.

Brent Edward Thielman: And then your aggregate to average selling price saw a pretty significant improvement this quarter. And I guess, Brian, I'm just wondering how you would attribute that to the discipline, some of the initiatives internally that you've been imposing versus the kind of overall industry price increases we're seeing in the market today. Yeah, we're...

Brian Gray: And then you are.

Brian Gray: <unk> average selling price dropped pretty significant improvement this quarter and I guess, Brian I'm just wondering.

Brent Edward Thielman: How you would attribute that to the discipline and some of the initiatives internally that you have been imposing versus kind of overall.

Brent Edward Thielman: Industry price increases, we're seeing in the market today.

Brian Gray: Yeah, we're very pleased and excited with the momentum we've got going into this year, Brent. We did a lot of work last year in beginning to roll out what we call dynamic pricing. But, as you recall, we honored all of our prices last year from the traditional way of pricing that. So we've done a lot of additional training.

Brent Edward Thielman: Yes.

Speaker Change: Pleased and excited with the momentum we've got going into this year brand we.

Brian Gray: I mean, we did a lot of work last year and beginning to roll out what we call dynamic pricing.

Brian Gray: As you recall, we honored all of our prices last year.

Brian Gray: From the traditional way of pricing that and so we've done a lot of additional training.

Brian Gray: We've put a lot of new tools in place, dashboards to really help us analyze at that transactional level, by customer level, which products and customers are providing the best margins and opportunities to optimize pricing. So we're in the early innings, again, of rolling out that dynamic pricing. The first quarter, I mean, yeah, we're pleased with the momentum on aggregates through ReadyMix, in particular with our pricing initiatives. Keep in mind, as Nathan mentioned, that our first quarter is small.

Brian Gray: But a lot of new tools in place dashboards that really help us analyze at that transactional level or by a customer level, which products, which customers are providing the best margins and opportunities to optimize pricing and so we're in the early innings again of rolling out that dynamic pricing.

Brian Gray: First quarter I mean, yes, we're pleased with that momentum on aggregates ready mix in particular with our pricing initiatives keep in mind as Nathan mentioned that our first quarter. It's small.

Brian Gray: And it accounts for about 12% of our total revenue. And so some small fluctuations in product mix can actually have an impact on those percentages, both on the volume side and on the pricing side. So I think you've got to put it into perspective. And we still see that momentum going into this year in our pricing. And there is a lot of that self-help related to our edge initiatives and the training that we're doing on dynamic pricing and the rollout of that whole commercial excellence initiative. And so we stand by our mid-to-high single-digit price increases for the full year.

Brian Gray: And it's about 12% of our total revenue.

Brian Gray: So.

Brian Gray: Some small fluctuations.

Brian Gray: Product mix can actually have an impact on those percentages both on the volume side.

Brian Gray: And on the pricing side, so I think he's got to put it into perspective, and we still see that momentum going into this year in our pricing and there is a lot of that self help related to our edge initiatives. Andy the training that we're doing on dynamic pricing and the rollout of that whole commercial excellence initiative and so.

Brian Gray: Stan through our mid to high single digit price increases for the for the full year.

Brent Edward Thielman: Okay, maybe just the last one. I was a little surprised to see some of the variability in volumes across the different product lines. I know this is one of those quarters where I don't want to read too much into it, but you know, aggregate's down 13, ready mix down six, but your asphalt volumes are up quite a bit. Any way to interpret that? What may be driving that? Or is that just specific to some of the seasonality, as you saw across?

Speaker Change: Okay, maybe just last one I was a little surprised to see some of that variability in volumes across the different product lines. I know this is one of those quarters, where I don't want to read too much into it but aggregates down 13 ready mix down, but your asphalt volumes are up quite a bit.

Brian Gray: [inaudible]

Brian Gray: <unk>.

Brian Gray: Any way to parse out what may be driving that or is that just.

Brian Gray: I think with some of the seasonality that you saw across the business.

Brian Gray: Yeah, again, I think our total revenue in asphalt for the first quarter typically is about 4% of our annualized revenues. So again, small tonnages, Brent, can have a pretty big impact on volumes, particularly in asphalt paving at this time of year.

Brian Gray: So our.

Brian Gray: Our total <unk>.

Brian Gray: Revenue in the asphalt for the first quarter typically is like 4% of our.

Brian Gray: Annualized revenue is so again.

Brian Gray: Small tonnages, Brian can have a pretty big impact on volumes in particular.

Brian Gray: In asphalt paving this time of year and so.

Brian Gray: And so we were up; we were busy paving in southern Oregon and in northern California. We certainly had some opportunities to do some paving in Texas. And so we were predominantly shut down in a lot of our markets for asphalt paving contracting services this time of year in the northern markets, but we certainly got out in the field earlier in California. We had a strong backlog and continue to have a good backlog in Oregon.

Brian Gray: We're up we were busy paving in southern Oregon, and Northern California, We certainly had some opportunities to do some <unk> in Texas and so we were predominantly shutdown and a lot of our markets for asphalt paving contracting services. This time of year in the northern markets, but we've certainly got out in the field earlier in California, We had a strong backlog and continue to have good backlog in Oregon.

Brian Gray: So the states that we could work in, we did do some work more this year than we did last year. But I just, again, I put that into perspective both on the aggregates being down and the asphalt being way up. On such small volumes, they just had large percentage increases, variances during that first quarter for us.

Brian Gray: So the things that we could work and we did do some work more this year than we did last year, but I just again I put that into perspective, both on the aggregates being down in the asphalt being way up on such small volumes. They just have large percentage increases variances during that first quarter for us.

Brent Edward Thielman: Understood. Okay. Thank you. I'll pass it on.

Speaker Change: Understood. Okay. Thank you I'll pass it on.

Operator: Thank you. Thanks, Brent. The next question will be from Garrick Chamois at Loop Capital. Please go ahead.

Brent Edward Thielman: Thank you. Thanks, Brian next question will be from Derek somewhat at loop capital. Please go ahead.

Garrick Chamois: Oh, hi, thank you. Congratulations on the quarter. I wanted to ask this, first off, some of the repair and maintenance expenses that you saw in the first quarter. Sounds like some of them were pulled forward. Is there any way to quantify how much was pulled forward into the first quarter? I'm assuming that it's coming at the benefit of the second quarter.

Garrick Chamois: Oh, hi, Thank you congrats on the quarter I wanted to ask you first off some of the repair and maintenance expenses that you saw in the first quarter sounds like some of them were pulled forward.

Garrick Chamois: Is there any way to quantify how much was pulled forward into the first quarter.

Garrick Chamois: I'm assuming.

Garrick Chamois: That it's coming at the benefit of the second quarter.

Brian Gray: Yep, that's right, Garrick. And I'll let Nathan answer the specifics on that, but again, you know, we had that favorable weather at the end of last year. So our crews were out working a little longer than we traditionally would, and we would normally begin that winter maintenance in the fourth quarter. But because we had favorable weather in the first quarter, and it really looks like we're going to be able to get back to work a little bit earlier than we traditionally would in the second quarter, we did condense and compact that maintenance into the first quarter. So I'll let Nathan just answer to give you some specifics on the dollar amounts there.

Speaker Change: Yes, that's right Gary so all of that Nathan and answer the specifics on that but again, we had a favorable weather at the end of last year. So our crews are out working a little longer than we traditionally would and we would normally begin that winter maintenance in the fourth quarter.

Brian Gray: We had favorable weather in the first quarter and it really looks like rate have you all get to back to work a little bit earlier than we traditionally would in the second quarter, we did condense compact that maintenance that winter maintenance into the first quarter. So I will let Nathan just answer I'll give you some specific on the dollar amount there.

Nathan Ring: Yeah, Garrett, good morning. We talked a little bit about maintenance and also training, getting the folks ready, and then mobilization. Of those three categories, as I noted in the prepared remarks, the maintenance is a larger piece of that $8.6 million variance year over year. Your question is, how much of that do we see pulled through in the first quarter here that will benefit future quarters? I would say pretty much all of that we see is benefiting the second and third quarter. So that $8.6 million, with maybe some minor differences, would be a tailwind for us going into the remainder of the year.

Nathan Ring: Yes, Garrett good morning, we did talk a little bit about the maintenance and also training getting the folks ready and then mobilization.

Nathan Ring: Of those three categories as I noted in the prepared remarks, the maintenance is a larger piece of that $8 $6 million variance year over year. Your question is how much of that do we see as pulled through in the first quarter here that will benefit the future growth I would say pretty much all of that we see is benefiting the second and third quarter, so that $8.

Nathan Ring: Six with maybe some minor differences would be.

Nathan Ring: Tailwind for us going into the next the remainder of the year.

Brian Gray: Okay, that's great. Also, you know, thanks for the information regarding the seasonal contribution of your businesses. You know, is there anything that you're seeing right now that would imply anything other than a seasonal ramp the rest of the way?

Garrett: Okay, that's great.

Speaker Change: Also thanks for the color.

Garrett: Information regarding the contribution of your businesses.

Garrett: Is there anything that youre seeing right now that would imply anything other than seasonal ramp.

Brian Gray: The rest of the way.

Brian Gray: No, I think we've got the backlog to go out and work. We've got the crews back to work, trained. We've got inventory. And so I think we're well-prepared to hit the ground running in the second quarter. There can be some seasonal impacts in the second quarter as we begin to work in some of those northern states.

Speaker Change: No I think I mean, we've got the backlog to go out and work we've got the crews.

Brian Gray: Back to work trained we've got inventory so I think we're.

Brian Gray: Well prepared to hit the ground running.

Brian Gray: Second quarter.

Brian Gray: There can be some seasonal impact.

Brian Gray: Impacts in the second quarter as we begin to work in some of those northern states, but right now.

Brian Gray: But right now, I would say that we're very well-prepared. Plants are where they need to be. We've put some new plants in some sites that traditionally might be on the road traveling, taking some portable plants and fixing them in some commercial sites. And so I think right now, everything that we see with the backlog that we've got, the price and momentum that we've got, that we're geared for a solid year again, Garrett.

Brian Gray: I'd say that were very well prepared plants are where they need to be we've put some new plants and some sites that traditionally you might be on the road traveling taken some portable plants in the fixed Amazon commercial sides and so I think right now everything that we see with the backlog that we've got.

Brian Gray: This momentum that we've got that we're really geared for a solid year again garik.

Garrick Chamois: Okay, great. And just lastly, I just want to follow up on Brent's question on aggregate pricing. You know, is there any way to parse out how much mixed weather product or geographic mix benefited? Obviously, it's a seasonally slow quarter. You know, don't want to read too much into it, but it was a fairly impressive year over year improvement. Would I be, you know, reading too much into, you know, there could be potential upside to your aggregates pricing guidance and just anything to kind of call out in the first quarter that might have been, you know, a bit more unusual than the underlying pricing and aggregates.

Garrett: Okay, Great and just lastly, I just wanted to follow up on Brents question on aggregates pricing.

Garrick Chamois: Is there any way to parse out how much mix when their product or geographic mix benefit and then obviously with a seasonally slow quarter.

Garrick Chamois: Don't want to read too much into it.

Garrick Chamois: It was a fairly impressive year over year improvement.

Garrick Chamois: Would I be.

Garrick Chamois: Reading too much into.

Garrick Chamois: There could be potential upside to your aggregates pricing guidance and just anything to kind of call out in the first quarter that might've been a bit more unusual than the underlying pricing in aggregates.

Brian Gray: Yeah, I'll give you one example. You know, our volumes are up, or I'm sorry, volumes are down by, you know, a little over 400,000 tons. And 200,000 of those tons were from a pit run project that we had last year in Idaho. And as you know, our pit run, basically raw material, is sold at a lower price. And so just that alone, that one job with the volumes we're talking about, can have a pretty significant impact, both on our volumes being down by 13%, and yet our prices are up by 15%.

Speaker Change: Yes, I mean I'll just give you one example.

Brian Gray: So our volumes were up I'm, sorry, your volumes were down by little over 400000 tons and 200000 of those tons.

Brian Gray: We're from a pit run project that we had last year in Idaho.

Brian Gray: And as you know our pit Ron basically raw material is sold at a lower price and so.

Brian Gray: Just that alone that one job with the volumes we're talking about.

Brian Gray: And I have a pretty significant impact both on our volumes being down.

Brian Gray: By 13% and yet our prices are up by 15%. So as we look at it on an annualized basis, we still feel feel very committed is strong that our aggregate volumes should be flat to slightly down maybe low single digits and that our pricing.

Brian Gray: And so, you know, as we look at it on an annualized basis, we still feel very committed and strong that our aggregate volumes should be flat to slightly down, maybe low single digits, and that our pricing should be in the mid to high single digits.

Brian Gray: Be in that mid to high single digits. So that's one example, I mean there is other examples there was a project last year in Hawaii, we're doing some contract crushing again at a lower selling price and this year. We don't have that that was the tune of about 130000 tons or so that would impact that is just timing of projects I mean, it's not that.

Brian Gray: So that's one example. I mean, there are other examples. There was a project last year in Hawaii where, you know, last year in Hawaii, we were doing some contract crushing, again, at a lower selling price. And this year, we don't have that. That was the tune of about 130,000 tons.

Brian Gray: And so that would impact the timing of projects. I mean, it's not that we're concerned that those jobs are going away. They're just impact jobs that you have one quarter versus the other quarter. And in the first quarter, those can have more significant swings as a percentage of the total. So that's kind of, those are two examples that led to the higher 15% improvement in pricing and the lower volumes down by 13%. Okay.

Brian Gray: We're concerned that those jobs are going away, they're just impact jobs that you have one quarter versus the other quarter than in the first quarter. Those can have more significant swings as a percentage of the total so that's kind of those are those are two examples that led to the higher 15% improvement in pricing and the lower volume is down by 13%.

Garrick Chamois: Okay, that's great, Collar. I appreciate it, and I guess I'll stop there and pass it on.

Brian Gray: Okay.

Speaker Change: Great color I appreciate it I guess I'll stop there and perhaps at all.

Collar: Thanks Garik.

Operator: Thank you. As a reminder, ladies and gentlemen, if you do have any questions, please press star followed by 1 on your touch-tone phone. And your next question will be from Ian Zaffino at Oppenheimer. Please go ahead.

Speaker Change: Thank you.

Speaker Change: Ladies and gentlemen, if you do have any questions. Please press star followed by one on your Touchtone phone.

Ian Alton Zaffino: And your next question will be from Ian.

Ian Alton Zaffino: Zaffino Oppenheimer. Please go ahead.

Ian Alton Zaffino: I agree, thank you very much. I wanted to ask, on the pricing outlook, you know, how much of your book have you moved to call it dynamic pricing versus, you know, annual or some annual letters, you know, and how are you thinking about that in your guidance for the up-pricing?

Ian Alton Zaffino: Great. Thank you very much.

Speaker Change: Wanted to ask on the pricing outlook.

Ian Alton Zaffino: How much of your book, if you move to dynamic pricing versus annual or semi annual letters.

Ian Alton Zaffino: And how are you thinking about that inside your guidance for the up pricing.

Brian Gray: We've talked about rolling out dynamic pricing. It's a process, and you don't do it overnight. You don't do it in one quarter, and frankly, you don't do it in one year.

Ian Alton Zaffino: Yes.

Ian Alton Zaffino: Talked about rolling out dynamic pricing, it's a process and you don't do it overnight.

Brian Gray: In one quarter and frankly, you don't do it in one year.

Brian Gray: And so we are in the process of implementing that throughout all of our segments, all of our regions. We're in the process of continuing to do training, continuing to roll out tools to assist our sales teams to provide that commercial excellence, to optimize pricing, and implement that dynamic pricing. And frankly, in some of our markets, we're still hiring sales professionals to help us implement that dynamic pricing, which, as you know, is we ask our customers for all their projects; they would call, and we would quote those materials just in time to take into consideration our current cost structure, look at our current backlog, look at the proximity of that job to our locations, and optimize pricing.

Brian Gray: And so we are in the process of implementing that throughout all of our segments all of our regions were in the process of.

Brian Gray: You're continuing to do training continue to rollout tools to assist our sales teams.

Brian Gray: To provide that commercial excellence to optimize pricing and implement that dynamic pricing frankly in some of our markets were still hiring our sales professionals to help us implement that that dynamic pricing, which as you know as.

Brian Gray: As we're asking our customers for all their projects they recall and we would quote those materials just in time to take into consideration. Our current cost structure look at our current backlog look at the proximity of that job to our locations and optimize pricing and so that process. I mean, there is some training done with our.

Brian Gray: And so that process, I mean, there's some training done with our customers, and so we are in the early phase of that. It's been built into our guidance when we gave out guidance in February, and so we kind of know where we're at in the process. We certainly had some good traction last year, and that led to us hitting our adjusted EBITDA goals two years earlier. And so commercial excellence and dynamic pricing certainly was a part of that, but we are in the early innings of that rollout, but that is baked into our guidance.

Brian Gray: <unk> and so we are in the early phases of that.

Brian Gray: Been built into our.

Brian Gray: Guidance.

Brian Gray: We gave that guidance in February and so we kind of know where we're at in the process. We certainly had some good traction.

Brian Gray: During last year that led to our hitting our adjusted EBITDA goals two years earlier, and so commercial excellence and dynamic pricing and certainly was a part of that but we are in the early innings of that rollout so but that is baked into our guidance.

Ian Alton Zaffino: Okay, understood. And then, you know, can you maybe talk about the acquisition environment for ROC at the moment, aggregates, and what type of multiples you are seeing, and what we should expect here? Because there's been organic growth, and then, you know, you get a ready-mix deal. But how are we thinking about, in general, multiples and sort of where they've gone and the likelihood of seeing something, I don't know, sometime in the next quarter?

Brian Gray: Okay.

Brian Gray: And then.

Ian Alton Zaffino: Let me talk about the acquisition environment for rocket the moments.

Ian Alton Zaffino: Hi.

Ian Alton Zaffino: And what.

Ian Alton Zaffino: What kind of multiples are you seeing and what should we expect here because there has been organic growth.

Ian Alton Zaffino: You said ready next deal.

Ian Alton Zaffino: But how are we thinking about yes.

Ian Alton Zaffino: General.

Ian Alton Zaffino: Multiples and sort of where they are gone and the likelihood of seeing something sometime in the next quarter. Okay. Thanks.

Brian Gray: Yeah, no, we're really excited about the growth opportunities this year at Knife River, both the organic growth, and we're certainly adding reserves, strategic reserve increases next to our existing sites as part of our organic growth. But in terms of M&A, we have an active pipeline, and we certainly have bolstered our corporate development team and continue to add resources in that area. And I can tell you that management, our board, all of us are very focused on those opportunities, and there are a lot of them that we're working on, and many of those are pure play aggregate sites, pure play aggregate locations, and businesses that are existing right now in the markets that we serve.

Speaker Change: Yeah, No. We're really excited about the growth opportunities this year at knife River, both organic growth and we're certainly adding reserves strategic.

Brian Gray: Reserve.

Brian Gray: Increases next to our existing sites as part of our organic growth, but the M&A. We have an active pipeline and we certainly have bolstered our corporate development team and continue to add resources in that area and I can tell you that management and our board are all of US are very focused on those opportunities and there are a lot.

Brian Gray: Of them that we're working on in and many of those are pure play aggregates sites.

Brian Gray: Peer play aggregate locations and businesses are existing right now in the markets that we serve we certainly are very focused in those markets that we can continue to bolt on and tuck in operations that have those immediate synergies within the region that we're operating in today were looking adjacent to the regions that we operate in but we.

Brian Gray: We certainly are very focused on those markets that we can continue to bolt on and tuck in operations and have those immediate synergies within the region that we're operating in today. We're looking adjacent to the regions that we operate in, but we are absolutely committed to growing our product line in aggregates, and those opportunities are out there. As far as multiples go, we've talked in the past that we operate in a unique part of the United States where we don't have a lot of overlap with our national peers, and we have strong market positions in a lot of those states, and we are the logical preferred acquirer in those states.

Brian Gray: Are absolutely committed to growing our product line.

Brian Gray: Aggregates and those opportunities are out there as far as multiples.

Brian Gray: We've talked in the past that we operated a unique part of the United States, where we don't have a lot of overlap with our national peers, and we are we have strong market positions and a lot of those states and we are the logical preferred acquire in those states and so many of those opportunities that we've done out of those 85.

Brian Gray: And so many of those opportunities that we've done out of those 85 acquisitions that we've done, many of them fall in that $30 million to $40 million range, which a lot of times are not brokered; they're negotiated deals. And so we continue.

Brian Gray: <unk> that we've done many of them following that 30% to $40 million range, which a lot of times are not brokered a negotiated deals and so we continue our pipeline is full of those opportunities along with the.

Brian Gray: Our pipeline is full of those opportunities, along with opportunities that are being brokered, some larger platform businesses that are absolutely aggregate-based, and Knife River is in the hunt for those projects, and will be competitive on those projects. We'll stay disciplined to our strategy, and that is to grow margins, maintain our industry-leading return on invested capital, and continue to look at a balanced portfolio that supports our vertical integration and aggregates-led strategy.

Brian Gray: Well the opportunities that are being brokered some larger platform businesses that are absolutely aggregates based and knife rivers in the hunt on those projects will be competitive on those projects, we will stay disciplined to R. R.

Brian Gray: Our strategy and that is to grow margins and maintain our industry, leading return on invested capital and.

Brian Gray: And continue to look at a balanced portfolio that supports our vertical integration and aggregates led strategy and so those opportunities are out there and it would be.

Brian Gray: And so those opportunities are out there, Ian. It would be, you know, those multiples can range literally from a 5 to a 20. I mean, there's no one answer for that. It really is that every deal is different. Every deal has its own financial or, you know, strategic justification.

Brian Gray: Those multiples can range.

Brian Gray: Literally from a five to a 'twenty I mean, there is no one answer for that it really is every deal is different every deal has its own financial or.

Brian Gray: Strategic.

Brian Gray: Yes.

Brian Gray: Suffocation and so.

Brian Gray: Each deal is different.

Ian Alton Zaffino: All right, great. Thank you very much for the call. Thanks again.

Speaker Change: Alright, great. Thank you very much for the color.

Speaker Change: Thanks Ian.

Operator: Once again, ladies and gentlemen, if you do have any questions, please press star followed by 1 on your telephone. And at this time, we have no other questions. Instead, sir, please proceed with the closing remarks.

Speaker Change: Once again, ladies and gentlemen, if you do have any questions. Please press star followed by one on it.

Operator: Yes.

Speaker Change: And at this time, we have no other questions registered please proceed with closing remarks.

Brian Gray: Again, thank you for joining us today. Our business is fundamentally strong, and we feel we are poised to take advantage of our momentum. We have a strong backlog of work and a talented team to go perform it. I'm looking forward to what we have ahead of us as we head into the construction season. We are focused on working safely, continually improving our margins, and delivering long-term profitable growth for our investors. We appreciate the interest and support and will now turn the call back over to the operator. Thank you.

Speaker Change: Again, thank you for joining us today, our business is fundamentally strong and we feel we are poised to take advantage of our moment momentum we have a strong backlog of work and a talented team to go perform it I'm looking forward to what we have ahead of us as we head into the construction season, we are focused on working safely continually improving our margins and delivering long term.

Brian Gray: Profitable growth for our investors, we appreciate the interest and support and we'll now turn the call back over to the operator. Thank you.

Operator: Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. At this time, we ask that you please disconnect your lines. Enjoy the rest of your day.

Speaker Change: Thank you, Sir ladies and gentlemen, this does indeed conclude your conference call for today. Once again. Thank you for attending at this time, we ask that you. Please disconnect your lines Android divest of your day.

Operator: Okay.

Operator: Okay.

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Operator: Sure.

Operator: Yes.

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Operator: Okay.

Operator: Okay.

Operator: [music].

Operator: Okay.

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Operator: Okay.

Operator: Okay.

Operator: Yeah.