Record volume, thinner margin. That’s the 2026 aggregates market in one print.
Knife River Corp. reported second-quarter results on Aug. 4 showing aggregates volumes up 13.7% to 10.03 million tons and product-mix-adjusted pricing up 8%. Adjusted EBITDA still fell 1% to $139.7 million, and margin dropped 200 basis points to 14.9%. The stock lost about 12%.
Where the spread went
Revenue rose 13% to $938.6 million from $833.8 million. Net income fell 13% to $43.9 million, with EPS at $0.77 against $0.89. Some of that gap is clean comparison noise: the prior-year quarter carried $10.3 million in asset sale gains against just $650,000 this time. The rest is energy costs, weather, and mix.
Average realized price came in at $19.41 a ton against $18.80. Aggregates segment revenue hit $194.7 million with gross profit of $38.8 million, a 19.9% margin. Contracting services revenue rose 20%, and that’s part of the margin problem rather than a solution to it, because contracting carries a thinner spread than materials.
Geography split hard. Pacific revenue fell 9% on less available public agency work in Oregon plus phasing and weather delays in Hawaii and Alaska. Central rose 28%, helped by the Texcrete acquisition.
The guidance tells you what management believes
Knife River raised full-year revenue guidance to $3.4 billion to $3.6 billion, up from $3.3 billion to $3.5 billion. It left adjusted EBITDA guidance untouched at $520 million to $560 million. More revenue, same earnings. That’s a company telling you it expects the volume to keep coming and the margin not to recover this year.
Updated assumptions: aggregates volumes up high single digits, aggregates pricing up mid single digits, ready-mix volumes up mid teens, asphalt volumes up high single digits. Backlog sits at $1.2 billion, up sequentially, about 85% publicly funded street and highway work. Net leverage is 3.2 times against $1.6 billion of gross debt and $387.2 million of available revolver.
What buyers should take from it
CEO Brian Gray called the fundamentals strong, and on volume he’s right. But a vertically integrated producer with a public-backlog cushion that can’t convert 13.7% volume growth into margin growth is not a producer that’s about to discount. The pattern matches what Vulcan reported a week earlier from the other direction: price held, volume moved, margin didn’t follow.
Expect price optimization in Q3 quotes, not relief.