Knife River reported higher third-quarter revenue but lower net income, as stronger demand for aggregates and asphalt paving was offset by pressure in its contracting business. The construction-materials company also announced a new round of operational improvement efforts and said it had revised its 2026 guidance to account for near-term headwinds.
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Revenue rose 6% to $1.28 billion in the quarter ended Sept. 30, from $1.20 billion a year earlier. Net income fell 4% to $137.9 million, and earnings per share declined to $2.43 from $2.52.
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Adjusted EBITDA was essentially flat at $271.7 million, compared with $272.8 million a year earlier. Its margin narrowed to 21.3% from 22.7%. Net income margin also declined, to 10.8% from 11.9%.
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Aggregates were a relative bright spot. Volumes increased 10%, helped by internal demand from Knife River’s own businesses and higher sales to outside customers. The company raised aggregate prices by a mid-single-digit percentage and lowered variable production costs per unit. Aggregate gross margin improved by 240 basis points to a third-quarter record of 29.6%.
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Contracting services faced the sharpest pressure. Knife River said market conditions, project delays and higher fuel costs continued to weigh on results, with the impact most pronounced in contracting. The company said it is seeking more third-party materials sales and private-work opportunities, and adjusting crews and equipment to local conditions.
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The company is expanding its cost and performance program. Its existing Competitive EDGE program has contributed to a 530-basis-point improvement in aggregate gross margin since its 2023 launch, according to management. The new “Sharper EDGE” effort will focus on targeted capital improvements and changes in operational, commercial and organizational areas. Knife River plans to discuss the initiative at an investor day in the coming months.
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Knife River cited organic investment and acquisitions as additional growth avenues. Management said it has an active acquisition pipeline, alongside investment in its existing operations.
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2026 guidance has been updated to reflect near-term headwinds. The revised forecast figures and specific changes were not included in the results information provided here.
The quarter showed a contrast between stronger aggregates performance and weaker conditions in contracting: revenue grew, but net income declined and adjusted EBITDA margin compressed. The new initiatives are intended to build on the company’s existing margin-improvement program, while the updated guidance reflects the operating pressures management described.