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 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 with your operator. This call is being recorded on Tuesday, February 17, 2026. I would now let you turn the conference over to Dara Jerks, 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 Sarah 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. dollars. 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 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 midsize, 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, ReadyMix, 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 in 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 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 enter 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 made in 2025. Record profitability in our legacy Pacific operations is more than offset a software 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 P-209 dry dock project in Hawaii, where the Navy is investing approximately $3 billion on much-needed infrastructure improvements. We began supplying cement and radiomics 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 development. We will 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 close out 2025 with a strong fourth quarter. This is 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 quarter 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 quarter 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 Strata was 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. It 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 manufactured 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.

Thank you and good morning everyone. As Brian mentioned, we finished 2025 with an impressive fourth quarter that produced 47% higher adjusted EBITDA and a 340 basis point improvement in adjusted EBITDA margin. Across our product lines, gross profit was up 27% for the quarter, and we achieved record gross margin of nearly 19%. These positive results were driven by a combination of our cost controls, acquisition contributions, and more favorable weather. The quarter was especially strong for aggregates, with volumes increasing by 17%, partly related to our recent acquisitions, along with improved market conditions in the West. Aggregates pricing increased by 8%, supported by the strata acquisition. Even without strata, prices at our legacy operations would have had a solid increase of mid-single digits, and aggregates gross margins increased by 200 basis points, related to our ongoing pit crew improvements and recouping pre-production costs incurred earlier in the year. For 2026, we expect our aggregates volumes to grow mid-single digits as market demand continues to improve and the amount of our internal paving work increases. We also expect that pricing will increase mid-single digits as we continue our dynamic pricing discipline. With this backdrop and the continued focus on cost control and operational efficiencies, we anticipate continued aggregates margin expansion in 2026 of approximately 200 basis points. Moving to ReadyMix, we saw strong volume increases in the quarter of 20% and gross margin lift of 230 basis points. Similar to aggregates, the volume increase was supported by improved market conditions in the West, as well as the acquisitions of Strata and Texcrete in the Central. We see these contributions continuing into this year, with volumes improving in the mid-teens. Margin improvement was balanced across all geographic segments, with mountains showing the strongest gains, driven by the implementation of operational efficiencies identified by our pit crews. Asphalt benefited from more paving work in the quarter, producing an increase in internal sales volumes of more than 8%. Lower input costs of liquid asphalt put downward pressure on pricing. However, we manage the price cost spread effectively and maintain margins comparable to the prior year. Looking ahead, we anticipate volumes will increase mid-single digits as we expect more paving work in 2026 than we performed last year. In contracting services, revenue grew 15% with many locations enjoying favorable weather and availability of work. Mountain had the largest upside related to this extended season, with almost 20% more contracting services revenue. Overall, we did experience an anticipated decline in contracting services gross margin, largely related to lower margin on backlog, as well as the timing of project completion and job performance incentives compared to last year. Looking forward, backlog increased 38% to approximately $1 billion, with 75% expected to be completed in 2026. While expected backlog margins are lower than a year ago, we anticipate higher gross margin in contracting services in 2026, as we expect to self-perform more asphalt paving, which typically results in project performance gains and the opportunity for quality incentives. The increased paving in our backlog also provides the benefit of pulling through our higher-margin upstream materials, positively impacting product line gross margins. Switching to SG&A, the increase over fourth quarter last year was in line with our expectations and primarily related to business development costs associated with acquiring companies and the administrative costs that came with those acquisitions. In 2026, we expect SG&A to be in line with 2025 as a percentage of revenue and then begin trending lower in future years as we scale and fully capture synergies from acquisitions. Continuing with our growth strategy and capital deployment, we had a very productive year as we invested $789 million across our growth initiatives, including five acquisitions, four our aggregate reserve expansions, and multiple organic projects. We expect these investments to be accretive to our margin profile and help us achieve our EBITDA targets for 2026 and beyond. We also allocated capital to maintain our rolling stock and plants, as well as invest in improvements to increase production and efficiency. Our maintenance capital expenditures of $170 million, or 6% of revenue, were in line with their range of 5% to 7% given earlier in the year. For the full year 2026, the company expects capital expenditures for maintenance and improvement to remain between 5% and 7% of revenue and organic growth projects and reserve additions to be approximately $131 million. Capital expenditures for future acquisitions and new organic growth opportunities would be incremental to the outlined capital program. Because of our disciplined capital management, we are in a strong position to continue our strategic growth program. We ended the year with almost $75 million of unrestricted cash, approximately $475 million available on our revolving credit facility, and a net leverage position of 2.2 times, which is below our long-term target of 2.5 times. Looking at 2026, we have solid cash flow, balance sheet capacity, and liquidity to support our growth strategy. Turning to our guidance, as Brian mentioned, we have a lot to be excited about for this year. With a strong infrastructure backdrop, ongoing self-help initiatives, and the continued growth of the company. For 2026, we expect consolidated revenue between $3.3 and $3.5 billion and adjusted EBITDA between $520 and $560 million, which implies an adjusted EBITDA margin of approximately 16% at the midpoint. As usual, this guidance assumes normal weather, economic, and operating conditions. With that, I'll turn the call over to Brian to share his closing comments.

Thank you, Nathan. NYPD has enjoyed considerable growth over the last three years, with revenue improving by 24%, adjusted EBITDA by 58%, and adjusted EBITDA margin by 340 basis points. Our growth strategy has been working, and we believe we are just getting started. We like our growing markets, which present both organic and acquisition opportunities. We believe vertical integration enhances our value by supporting resiliency and being a profit multiplier. We have opportunities to keep improving our operations and our laser focus on controlling costs and optimizing prices and we have a skilled team dedicated to making it all happen. We have built good momentum and we are well positioned to deliver solid growth in 2026 and beyond. I am very excited about our future. We'll now open the call for questions.

Thank you ladies and gentlemen we will now begin the question-and-answer session. If you have a question please press star followed by one on your touchtone phone. You will hear a prompt that your hand has been raised. If you wish to decline from the polling process, please press star followed by two. One moment for your first question. Your first question comes from Brett Tellman with DA Davidson. Please go ahead.

Hey, thanks. Good morning. Congrats on a great finish of the year. Brian, I guess the first question was just on, I mean, look, you got a great backlog here entering But the West does carry the highest margins for you and was a bit lower. Maybe you could just talk about the opportunities to build on that backlog for that particular region just given its relevance to margins.

Yeah, Brent, we like the position we're in right now, record backlog up 38% at a billion But you're right. We definitely have seen a shift, a geographic shift of that work more in Mountain with a record backlog and Central with a record backlog, but we have very solid funding in California, Hawaii, and Alaska. Now we don't perform per se contracting services in Hawaii and Alaska, but we definitely supply a lot of contracting materials to subcontractors and suppliers, contractors up in those states in Hawaii and Alaska. California we benefited from a great year in California and that momentum and funding is continuing in our markets. Oregon was down and it continues our backlog is down but like I mentioned in my prepared remarks the fortunate thing is the DOT budget in Oregon is about flat slightly up a little bit and the asphalt paving tonnage is also slightly up for this year in 2026 versus 25 and we're out looking for work and you know our crews have shown this last year to be nimble and pursue work that fits them and that's you can see that in the strong second half that Oregon had and so not worried Brent about the backlog in the west but there definitely is a geographic shift of that backlog to states in the mountain and the central region.

Yep, okay, understood. And I guess my follow-up, Brian or Nathan, this is the second year in a row you've been able to drive aggregate average pricing at, you know, 9%. I know there's M&A sprinkled in there and yours and the industry expectations in the mid-single-digit range here for 2026. But maybe if you could just talk about the potential levers to outperform that, just given what you've been able to do here in the last couple of years on the pricing front.

Yeah, good morning Brent, this is Nathan. I'll take the first part of that question with the increase that we've seen here in 2025 on the aggregate pricing and then turn to Brian for the levers that we see going You're right, very strong year for us in terms of aggregate pricing, high single digits. And as you maybe heard in the prepared remarks, part of that has to do with strata. Strata does have higher pricing. Now, part of that does relate to the way which we account for delivery revenue. So, they do have areas that they reach and there's revenue included in their average selling price. So, it is higher as strata laps itself here year over year, that's where I mentioned in the repair remarks, we see that still continuing mid-single digits, so very strong for ongoing operations. But you're right, high single digits this year, mid-single digits next year. Part of that just has to do with strata overlapping or lapping itself year over year. As far as the levers that we'll pull on, I'll turn that over to Brian.

Yeah, Brent, our commercial excellence teams have been very active implementing the new dashboards and bidding tools to support our dynamic pricing. And we spent a fair amount of time in the classrooms this year going through a lot of training focused on commercial excellence. So as you know, our dynamic pricing allows us to bid work throughout the year, and so we don't have a single letter that goes out of November, December, or second ones mid-year. We'll do that throughout the year and continue to optimize prices. And so that rollout has been very successful. All of our legacy sites now have fully implemented dynamic pricing. As we bring on acquisitions, we'll roll that out into those new sites. But right now, very good traction on our dynamic pricing going into 2026.

Thank you. Just a reminder to limit yourself to one question and one follow-up. The next question comes from Trey Grooms of Stephen Bink. Please go ahead.

Hey, Brian and Nathan, this is Ethan on for Trey. Thanks for taking the question. I wanted to dive further into the puts and takes on the margin outlook that's baked into the guidance, because the full-year guidance seems to imply relatively modesty, but down margin improvement. I know you've mentioned that there's a geographic mix shift within the backlog, but it sounds like materials margins will be strong and services margins will also see a step up. And of course, we know weather was a pretty large headwind to 2025, so any more color on the puts and takes on the margin guidance for 2026 would be helpful.

Yeah, I'll take that one. So good talking to you. Yes, our EBITDA margin for the midpoint is going up, you know, 10 to 20 basis points from last year. And so if you look at our individual product lines gross profit as Nathan mentioned we're expecting to see you know somewhere that 200 gross basis points margin improvement and aggregates and frankly we're seeing you know margin improvements in our budgets in all of our product lines and that really is coming from our dynamic pricing model and our pit crew initiatives feeding into that because of the shift I mean and we've mentioned Oregon being flat this year and energy services being flat, we're definitely shifting more of our EBITDA contributions as a percent of total contribution to the mountain and the central regions. And those have slightly lower EBITDA margins, even though they, too, are seeing good traction and good movement in margin expansion in those regions. They are at a lower margin in the West. And so that's what's going on with that, but good traction, good movement on all of of our product lines for gross profit improvements.

Got it, that's super helpful. And for the follow-up, quickly, just a question on Oregon. So at what point could we return to year-over-year growth in Oregon, and how important is funding clarity to achieving this sort of leveling out, given the easy comps, especially in the 2Q and the 3Q of 2025? And also considering the private side in Oregon seems to be doing pretty well. So any more color there would be helpful.

Thank you. Yeah, the private site definitely rebounded well in the late third quarter and benefited us well into the fourth quarter and was a big part of the success that we had in Oregon of quarter over quarter improvements in the fourth quarter and third quarter. Public funding is a big part of our success also in Oregon, and clarity on that will be important. I can I think relatively safely say that we don't expect any major shifts at all at this point in time for 2026 and that a stable budget in Oregon with the tons that have already either been let or are in the bidding schedule to be relatively flat to last year. And so I feel comfortable saying that you know the results for Oregon in 2026 should be in line with what we had in 2025. And so yeah Yeah, we're very hopeful. The legislature is currently discussing infrastructure funding literally in their short session. It's in session now and expect that that conversation will really build into next year's longer session where we anticipate they would have a robust conversation and pass a longer term, much larger bill than the $4.3 billion stopgap bill they passed earlier. That should happen in 2027 if you talk to the legislatures in Salem, Oregon.

Got it. That's very helpful. Thank you, and I'll pass it on.

Thank you. The next question comes from Catherine Thompson at Thompson Research Group.

Please go ahead. Hi. Thank you for taking my questions today. You had, in your prepared commentary, talked a bit about self-help versus pricing and transitioning from not just focusing on pricing but also acute focus on cost controls to drive margins. When you look at a regional standpoint for both your west and your mountain divisions, which showed barely outsized performance in the quarter, what drove these outside gains and how much was self-help versus pricing? Thank you.

I appreciate that, Catherine. We had a fantastic fourth quarter. It was up 47% over last year. And I would say, Captain, I think you could just put that in three big buckets, that variance year over year. The first one is we certainly had favorable weather, and in particular in the mountain region, which allowed us to do more asphalt paving. We also – it benefited really a lot of our regions as it relates to just staying out working. Aggregate sales, ready mix sales were solid. We were able to utilize our equipment pool more efficiently in that fourth quarter. And so one of those large benefits and variances for the fourth quarter was definitely favorable weather. The second one was we had good contributions from our acquisitions led by Strata, but we also had another, you know, four other very nice acquisitions last year. Texcrete came in mid-December and very excited about that acquisition and then other contributions from the acquisitions. That was part of our positive variance for the fourth quarter. And the last one was what you mentioned, just the operational execution and implementing edge initiatives. Now, we obviously had a partial benefit of, you know, recouping some of those pre-production costs that we incurred earlier in the year. Those came back to benefit us in the fourth quarter. But more importantly, it was our teams executing on our edge initiatives and really looking at their costs and controlling our costs very tightly and very proud of the team and the work they did and the focus on cost controls that really are going to bleed into this year as a big part of our focus in 2026 to continue those cost controls measures and, you know, looking at KPIs and just really focus specifically on aggregates, but frankly, all the product lines will benefit from that this year.

Okay, great. We also talked about getting capital allocation or capital, plenty of capital to deploy into calendar of 2026. Could you just tell us a little bit more or give some broader stroke color on what you're seeing in your pipeline for M&A, so inorganic, and then other organic initiatives that you're hoping to execute and to share? Thank you.

Yeah. We're very excited about our growth strategy, and I'll start off talking about the pipeline and the organic opportunities, then turn it over to Nathan to talk about a strong balance sheet and capacity to go out and continue our growth strategy. So we have a very disciplined approach, and we're looking for strategic fits that fit both our cultural fit and a financial expectation that we'd have. All the deals we did last year, Catherine, and the deals we were looking at in our pipeline, And our pipeline, when I say it looks very similar to last year, I'm talking about the types of deals in there, the size of the deals, and the location of the deals. They're aggregate-based. Many of them are vertically integrated. Most of them are infill, bolt-ons to our existing operations. We certainly will look at states adjacent to our current footprint or current states or regions that we do business in. They're in these midsize, higher-growth markets. and we are you know looking to continue to balance our portfolio and the nice thing about this it all starts at the local level with local relationships and just like all of the deals we did last year they're negotiated deals directly with the sellers at those high single digit multiples very attractive multiples so the pipeline is robust the pipeline is full I've talked about the hundreds of opportunities in our states that we do business in and because we're vertically integrated, where we will look at aggregates, ready-to-mix asphalt, contracting services, opportunities, as long as we can continue to focus on the supply of aggregates to those operations, either from new resources or from our existing resources. I would say that the last thing before I turn it over to Nathan that, you know, is a very important part of this process is just a playbook that is proven and one that we've been using for over 30 years. We continue to refine it we've done almost a hundred deals now since the early 90s and really it's just it's very focused on getting the right deals in the pipeline being very disciplined at the deals we put in the pipeline and going out and courting those relationships the second part of that is doing a very thorough job disciplined job of due diligence and both of those activities are led by our local regional teams, which then feeds into the third phase, which is integration. And that is also heavy influence with the local team at the regional level with oversight and support from corporate. So very proud of our M&A program, our growth strategy, what we've done in the last two years since the spin. Organically, we have identified a number of very exciting projects that have, frankly, higher returns than even our M&A opportunities, and continue to go out and execute on the organic growth. We are entering new markets in Idaho, and we've expanded our capacity as we see more asphalt paving coming on. We've added capacity to Texas and South Dakota, so it's certainly spending some money organically as well. So with that, Nathan, I'll just let you talk a little bit about the capacity.

Good morning, Kathryn. So good news here is that to support the capital deployment, all the good things we've got going on that Brian talked about, we've been disciplined in how we've maintained our balance sheet and we have solid cash flow. So Catherine, I'll put it in the three buckets for you that give me confidence in what we've got from a balance sheet or support perspective for this growth that we've talked about. First we have the liquidity to act quickly. As I mentioned, we've got end of the year with 75 million of cash on hand, 475 million available on our revolver. So, as deals come up, we have the ability to move quickly on them. Secondly, we expect solid cash flows from our operations. In fact, for this year, 2026, we expect our cash flow from operations to be about the post of the historical average of two-thirds of EBITDA, and so we've got cash flow coming from operations. And then the third part is the balance sheet itself, the net leverage position. We ended the year at 2.2 times net leverage. As I've shared before, our target is 2.5 times, so we're below that. And I think for the right deal, if it's our strategy, has the right financial metrics with it, we'd be willing to go higher to that, maybe closer to three for a short duration and then see that long-term go back to 2.5. So we got the liquidity, the cash flows, and the balance sheet, all the support deals, and that's where we want to put our capital to work is growing this company.

Thanks very much for that, Carlos.

Good luck.

Thank you.

Thank you. The next question comes from Garrick Schmoy at Loop Capital. Please go ahead.

Oh, hi, thanks, congrats on the quarter. First off, just on SG&A, just to piggyback off on the last set of questions, how should we think about SG&A inflation this year, both from an underlying standpoint, plus any incremental that you have with respect to the inorganic growth plan?

Yeah, I'll take that one. Good morning, Garrett, good to hear from you. So SG&A, the first part here is we take a look at 2025 and the increase that we had this year. I'll just identify the key buckets there, and we talked about them a fair amount throughout the year. And kind of back to the last question, they all relate to growing this company, which is the exciting part of it. So the largest increase that we had, the largest bucket for the increase we had in SG&A was really related to the administrative costs that came with our acquisitions. Did five acquisitions last year, and they brought some SG&A with them. So that was the largest piece. The second largest also relates to growth, and we talked about this throughout the year, that one-time step up related to our business development team and getting them in place to pursue acquisitions, as well as our edge teams to pursue like the pit crew and the opportunities they're going after. So the two largest components really of our SG&A increase relate to growing the company. The next piece really is, as I shared before, the ongoing cost, so I call it, of the operations or the SG&A grew mid-single digits, which is what I shared at the beginning of the year. So, Garrett, 24 to 25, those are the three buckets that cause the increases. As we look forward, I mentioned earlier that we expect SG&A as a percent of revenue to be in line year over year. If you look closer at that, again, similarly, the ongoing costs in there we see growing mid-single digits, very comparable to what we see throughout the organization, mid-single digit increase in cost, maybe towards the lower end of that range. And if you're wondering, well, what else could be impacting that? One thing that I'd add to it is that in 25, we did have higher gains on the sale of assets. Most notably that East Texas sale that we started a few years ago, we finished that. So that's a gain that we don't obviously anticipate for 26. That would be part of the increase you see going from 25 to 26. But outside of that, the underlying cost increasing mid or maybe on the low end of that mid range single digits. Hopefully that's helpful.

No, that is. My follow-up question is on volumes. Your guidance is considerably stronger than other public peers. I'm wondering if you can unpack that a little bit more. You talked a little bit about the regions, a little bit about, you know, some of the infrastructure projects and the pull-through from contracting services. I'm wondering if there's anything else maybe on the private side. And then also is there any weather catch-up considering that was such a headwind, particularly through the first three quarters, so 25.

Yeah, Derek, we had that benefit a little bit in the fourth quarter with positive, favorable weather in the fourth quarter. And so I would say that, you know, the backlog that we've got going into next year would not be a lot of, you know, delayed work. It certainly impacted at the beginning of the year and caused some challenges at the beginning of the year, but we had a strong fourth quarter and have a good backlog going into next year. The volumes being up mid-single digits for aggregates, I'll start with that one, really is also related to ReadyMix volumes being up mid-teens. The addition of Texcrete more than doubles our supply in the Texas Triangle, and so that would be a large part of our mid-teen increase. and being – supplying aggregates to that operation would also be part of the mid-single-digit increase on aggregates. But it's not just Texcrete – Nathan and I talked about the additional asphalt paving that we have in our backlog, and so we see strong pull-through of aggregates going into our asphalt plants. And then the aggregate sales are just – are becoming stronger in markets like Oregon. And you saw that again in the fourth quarter results, those higher margin third-party aggregate sales in the metropolitan market in, you know, Portland certainly benefited us. So we continue to focus additional third-party sales in central region. So I would say all of those factors give me good confidence in our volume projections of mid-single digits for aggregates and the mid-teens on ReadyMix. Great. That's helpful.

Thank you very much.

Thank you. The next question comes from Ian Zafino at Oppenheimer. Please go ahead.

All right, great. Thank you very much. Why don't you just kind of drill in on the comment about data centers. Can you give us a little bit more color there, you know, be it, you know, growth rates that you're seeing, kind of portion of the backlog you're seeing, or maybe how quickly these jobs convert, you know, so what's happening as far as backlogging to conversion? and any other kind of margins and any other type of color you could give us on that, thanks.

Yeah, thanks, Ian. I would say that virtually zero amount of dollars in our backlog related to data centers. We have a lot of data centers that we're working on right now, but most of that would be on the material supply of the business. Have just some very small paving projects, but that would not move the dial at all on our record backlog of a billion dollars. we are currently working on 21 data centers and again most of that would be through the supply of aggregates or concrete mostly to those projects and you know I think that is the tip of the iceberg if you look at the amount of work that we have out there pending bids there out there that we have provided in the last you know say two months it's significantly more than what we currently have supply contracts for and so a very big upside you know each one of our states several of our states are you know Wyoming has a lot of opportunities North Dakota is currently working on some data centers Oregon is working on data centers so you know we're in the heart of our some of our home operations where we have local aggregates and ready-to-mix plants data centers are being built and so we see that as a very bright spot frankly all anything that we would be securing as new work would be on the upside of our range as a guidance and so we've not baked in any expectations for our midpoint of our guide on data centers but I can tell you that in my career I mean just even the last two years we've never seen this level of pending work and bids that we've got out there and very good negotiations going on right now and you know they're higher margin upstream materials for the most part it's aggregate supply ready mix supply with either an on-site batch plant or a local batch plant close by and then asphalt paving going into some of these new greenfield sites so very excited about the opportunities and data centers okay thanks so then you know how do we then think about just margins going forward right so you're getting a favorable mix for from this you're getting your success on the edge program there's a lot of other initiatives that are kind of firing on call it all cylinders and so how do we kind of put this all together as you try to hit your 20 margin target you know you know just are you accelerating it or you know when do we actually kind of see you achieve those levels bikes yeah i think um we are proud of the progress we've made in, you know, call it two and a half years since we've spun, and three years really since we started implementing our edge initiatives. And let me just give you the success, you know, some numbers here of the progress we've made in those three years. For gross profit margins on aggregates, we've improved 450 basis points in three years. On ReadyMix, we've improved 300 basis points, asphalt 570 basis points, liquid asphalt 450 basis points, and contracting services 280 basis points from the end of 2022 to the end of 2025. And so, Ian, I mean, I think we've been pulling hard on, obviously, the pricing dynamic, commercial excellence levers, shifting our attention, more focus on the operational excellence and the cost controls and it's not linear as you know you pick up some lower hanging fruits sometimes and so we do expect margin expansion to continue in all of these product lines and you know we're very excited about that now yeah I just I would leave it at that all right thank you very much yep gentlemen as a reminder should you have any questions please press star 1

The next question comes from Garrett Greenblatt from J.P. Morgan. Please go ahead.

Good morning. Thanks for taking my question. Just as we think about 2026 and the outlook you provided, I was wondering if you could go into a little more detail or quantification around the impact of acquisitions you did in 2025 and what that organic assumption looked like in 2026.

Yeah, so I think that the acquisition that we did late in the year, Texcrete, you could look at the contributions from Texcrete in 2026 all of 2026 to offset the seasonal losses that we did not incur earlier in the year last year in the first quarter from the the acquisition of strata that was in March and so that comes with a headwind in the first three months that we will experience this year and the benefits of the full year of Texcrete more than offsets that and so So if you look at our growth year over year, really you could look at all of that growth as being organic at this point in time. I mean, we've not included any future acquisitions in our guidance, and our guidance of midpoint of 540 would imply about a 9% growth rate really on that organic business. And then, you know, I've mentioned that Oregon is going to be flat, and you take, you know, Oregon being flat, that would imply that we're mid-teams, 14%, 15% on the remainder part of that business, which would be Central, Mountain, Legacy, Pacific, and so we see solid growth going into this year as it relates to the organic business and the contributions from the acquisitions we did last year.

Thank you.

Thank you. The next question comes from Ivan E. at Wolf Research. Please go ahead.

Yes, good morning. Thanks for the time. Now, I know you guys don't provide quarterly guidance, but can you give some color on the trajectory of your full-year guidance for 26? What should we expect in terms of ag volumes, price or margins, and 1Q specifically? Anything outside of normal seasonality? Any additional color would be great.

Thanks. Yeah, I'll start with the seasonality piece of that, and then we can get into the ag volumes in the outlook for the maybe quarter and for the year. So we did share last year at this point, Ivan, you might be able to go back and take a look of the seasonality change that we did have coming with strata. And so that did increase at that time we said 8% would be the seasonal loss that we'd have for the first quarter now with strata in place. Now Brian just mentioned two pieces that do kind of offset each other. He mentioned Texcrete for the full year, but he had mentioned that we do have that loss with strata that was baked in last year so maybe some of the benefit from Texcrete this year softens that eight percent but that does give you an idea of what the seasonality would be for the first quarter and then the benefit of that coming later in the year probably predominantly in the third quarter maybe a little bit in the fourth yes as my following you've got your you provided guidance on the volume for ready mix and asphalt can you give more color and expectations for the pricing for those two segments thank you yep so as you know the input costs have a

pretty big impact on our cost and therefore pricing and so on ready mix the two biggest factors that really are outside of our control is the cement pricing and then the products that our customers are asking for which would be mixed design you know different mix designs and so you could look at a job like we have right now, that P209 project that I mentioned in Hawaii, the price of that material is much, much higher than it would be for, let's say, residential, which is a lot of what the Texcrete acquisition does. And so, what I can tell you on ready mix pricing and asphalt pricing, because it's a big influence by liquid asphalt, is that our commercial excellence initiatives, our teams, our sales teams are totally focused on optimizing prices, they're continuing to use dynamic pricing, and we see that momentum that we've had in the previous years, you know, continue forward as we roll out and continue to implement the new dashboards and tools that we've given our sales team. So solid traction on pricing going forward, but heavily influenced by product mix and by input costs such as cement and liquid asphalt.

Yep.

Thank you. We have no further questions. I will turn the call back over to Brian Bray for closing comments.

Well, thank you again for joining us today. Thank you to our Knight River team members, a fantastic job last year. We really appreciate that. We have good momentum going into 2026, and I'm excited for what we accomplish in the year ahead. With that, I'll say goodbye.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and we ask that you please disconnect your lines.