Good afternoon, ladies and gentlemen, and welcome to the Knife River Corporation Fourth Quarter and Full Year 2023 Results Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, February 15, 2024. I would now like to turn the conference over to Nathan Ring, Chief Financial Officer of Knife River. Please go ahead. Thank you, operator, and welcome to everyone joining us for the Knife River Corporation Fourth Quarter and Full Year 2023 Results C onference Call. My name is Nathan Ring, Chief Financial Officer of Knife River, and I'm joined by our President and CEO, Brian Gray. 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. 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 Securities and Exchange Commission's 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 measures in the appendix to today's presentation, as well as our filings with the SEC. These materials are also available on our website at www.kniferiver.com under the Investors tab. Brian Gray will begin today's call with a high-level overview of our fourth quarter and full year 2023 results, followed by an update on our strategic priorities as outlined within our Competitive EDGE plan. Following his prepared remarks, I will provide a product line summary, a balance sheet update, and a review of 2024 financial guidance. 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. Thank you, Nathan. Welcome, everyone, and thank you for joining us today. I'm excited to talk about our record year, our strategic priorities for continued profitable growth, and what we see ahead in 2024. We reached all-time annual records in 2023 for revenue, net income, EBITDA, and adjusted EBITDA. I'm incredibly proud of our team for safely delivering these impressive results, including revenue of $2.8 billion and adjusted EBITDA of $432 million. Each of our reporting segments saw improved year-over-year revenue and EBITDA as we benefited from strong markets, operational execution, and strategic efforts to optimize prices and improve margins. Combined, these efforts drove our adjusted EBITDA margins to 15.3% for 2023, an improvement of 280 basis points. We are very pleased to have surpassed our initial goal of 15% margins a full 2 years ahead of the schedule. Doing so is a testament to the strength of our team, the strength of our business, and the strength of our markets. While we certainly enjoy the moment and the milestone, we are now focused on our longer-term goal of 20%+ EBITDA margins. On our past 2 quarterly calls, I highlighted the early successes from our new Competitive EDGE strategy, and I will discuss drivers from that strategy again today. We believe our EDGE plan will continue to improve our adjusted EBITDA margins and deliver long-term value for our shareholders. Turning to slide 4, we launched our EDGE strategy at our 2023 Investor Day, and we have already enjoyed meaningful success. As we move forward, we will continue to focus on commercial and operational excellence, as well as disciplined capital allocation, which will drive margin expansion. As a recap, the letters in EDGE stand for EBITDA margin improvement, Discipline, Growth, and Excellence. Let me provide some updates on key developments in each of these areas, starting with margins. In 2023, we made good progress to our long-term target. We are on a solid path to achieving our long-term adjusted EBITDA margin goal of 20%+. We are focused on increasing aggregates as a percentage of our gross profit. We are continuing to build on the strategic positions we have in our mid-sized, high-growth markets, and we are driving productivity gains across the organization. We have seen early success with dynamic pricing and targeted bidding strategies, and we continue to refine each as we seek to optimize the value of our core products. We brought our sales managers and regional executives to the Knife River Training Center last fall for extensive training sessions on dynamic pricing and commercial excellence. We have also had promising early returns from our Process Improvement Team or what we call the PIT C rew. They have identified capital improvement opportunities, operating efficiencies, and cost controls that can be implemented throughout the company. The team visited 10 of our largest locations in 2023, including quarries, asphalt plants, and ready-mix plants. In 2024, we've expanded the team so we can extend its influence to more locations as we standardize best practices. Our entire team at Knife River is fully engaged in our continuous efforts to improve margins. With respect to Discipline, we are committed to a strong balance sheet and disciplined allocation of capital to drive long-term investor returns. We take a highly disciplined approach to managing our business, one that guides where and how we compete, how we manage our costs, and how we allocate capital. Over the last year, we continued to drive capital efficiency across the organization. We maximized free cash flow generation, we delivered improved operating leverage, and we significantly reduced our outstanding debt. Moving to Growth, M&A is part of our corporate DNA. Since 1992, we've completed 84 acquisitions, including 9 in the past five years... While our primary focus in 2023 was establishing ourselves as an independent company and then implementing our EDGE strategy, we expect to become more active on the acquisition front in 2024. We have an active pipeline of potential bolt-on and platform targets, and we intend to emphasize aggregates-led, materials-based transactions. We have reinforced our corporate development team to help pursue M&A opportunities, and we remain committed to reinvesting in organic growth at our operations as we aim to build our market positions and support profitability. Finally, the second E, Excellence. We are driven to be the best at all aspects of our business. Being a best-in-class operator starts with our people. We are committed to the health and safety of our team. We believe that excellence in these areas is integral to our long-term success. Our state-of-the-art Knife River Training Center hosted over 1,100 students last year, including interactive sessions on safety, sales, and operational performance. Core curriculum at the center also includes CDL training, Equipment Operator training, and Leadership Development. Investing in our team and advancing their skills through ongoing training is an investment in our future and is a pillar of our sustainability strategy. Putting people first and maintaining our unique Life at Knife culture brings us together, supports retention, and builds the teams that will help us achieve our business goals. While we take advantage of our self-help from our Competitive EDGE strategy, the underlying fundamentals of our business are strong. Our vertical integration, ability to serve public and private customers, and our strategic positions in mid-size, high-growth markets provide competitive advantages for Knife River. While we became a standalone, publicly traded company just 8 months ago, we have been in the construction materials and contracting services business for over 30 years. Knife River is well-established. In addition to being a top 10 aggregates producer in the United States with 1.1 billion tons of reserves, we provide value-added contracting services. Our vertically integrated model allows us to self-supply the majority of the aggregates used in the production of our downstream products, which are then supplied to contracting jobs. We have built a business that seeks to capture value and margin at every step of the value chain. Over 75% of the value of our contracting services contracts is in public projects, and we believe Knife River is uniquely positioned to capitalize on the significant growth in infrastructure funding from the federal, state, and local levels. Within the 14 states we operate, state transportation departments have increased their 2024 spending authorizations by more than $9 billion, which is up 16% from 2023. We will maintain a disciplined approach to project bidding, one that emphasizes backlog quality over quantity, consistent with our strategic focus on expanding EBITDA margins. Now we'll transition to providing some color on our reporting segments, starting with a structural update. Since our initial Investor Day in May, we have committed to being available, to listening, and to being transparent with our investors. As we aim to add clarity into our operating results, we have created a standalone product line segment for our liquid asphalt operations called Energy Services. This business has operations in Iowa, Nebraska, South Dakota, Texas, and Wyoming, and the segment now also includes the liquid asphalt operations in California that previously were part of our Pacific segment. While Energy Services is a new segment, liquid asphalt has been part of our vertically integrated value chain for nearly 20 years. It is a value-added construction material, and to give investors more clarity into this product line, we will begin providing EBITDA guidance specific to Energy Services. The other change is reporting our South Region with our North Central Region, now called the Central segment. Going forward, we'll reference the Pacific, Northwest, Mountain, and Central segments collectively as our geographic segments. With these updates, All Other has been eliminated and replaced simply with Corporate Services and Eliminations. Moving on to our results, I will start with the Pacific segment. We saw increased market activity in California and Hawaii in the fourth quarter, including more work for our contracting services business in Northern California, which helped grow revenues. For the full year, revenues increased 11% to a record $462 million. EBITDA increased 28% to $56 million. Entering 2024, we are optimistic about continued growth in Hawaii, which is seeing an increase in tourism spending and stands to benefit from multi-year military projects. In Northern California, we continue to see people moving out of the Bay Area into mid-sized markets where we have a strong presence. And in Alaska, there are several projects associated with the Anchorage Airport that are in the permitting stage, where we are in a good position to be one of the primary material suppliers. Next is the Northwest segment, where we had another record year. While fourth quarter EBITDA was down year-over-year, largely related to one-time items in the form of a non-cash aggregate impairment and lower gains on asset sales, the segment results reflect record revenue and EBITDA for the year. Revenue improved 11% to $666 million. EBITDA improved 17% to $121 million, and the segment improved its EBITDA margins to 18.2%. Entering 2024, our market conditions remain healthy, including a strong pipeline of work in our prestress division, where we opened a new production facility late last year. We are extremely pleased with the higher capacity and efficiencies of this new plant, which is featured as the cover story in this month's Concrete Products magazine. We look forward to strong contributions from our prestress business in 2024 and the years to come. We are also seeing solid DOT spending in Southern Oregon, with a near record amount of work on the books and more to come. We also see opportunities with microchip plants and data centers that look to begin construction later this year, which we expect will benefit our aggregates, ready-mix, and prestress operations. In our Mountain segment, we continue to enjoy strong demands. In the fourth quarter, we experienced volume growth across all product lines and contracting services, led by strong residential, commercial, and public activity. For the year, revenue improved 17% to a record $634 million, and EBITDA improved 42% to a record $103 million. The Mountain Region continues to be one of the fastest-growing areas in the United States. We have a strong position, and we look to take advantage of future growth in our footprint. Our key operations include Boise, Billings, Missoula, and Bozeman, all of which are benefiting from population growth. The state of Idaho has $500 million remaining to be spent in its Transportation Expansion and Congestion Mitigation Fund, which includes roads and bridge work. We have 2 airport projects in Western Montana in 2024, and we have opportunities with the continued expansion of wind farm projects in Wyoming. The Central segment, which includes North Dakota, South Dakota, Minnesota, Iowa, and now Texas, continues to benefit from a combination of EDGE-related business initiatives. We had strong pricing growth across the segment, as well as more profitable contracting work. Full year 2023 revenues improved 6% to a record $825 million, and EBITDA improved 35% to a record $117 million. Both Texas and Minnesota passed additional transportation funding packages in 2023 that will provide more bidding opportunities and infrastructure improvements. Texas was the fastest-growing state last year, and projections show population continuing to grow. In the Texas Triangle, that area between Dallas, Houston, and San Antonio, the current population is 21 million, and it is expected to grow to 30 million over the next six years. Our mid-sized market locations in Texas are positioned within that triangle and stand to benefit from this strong growth. Finally, onto our new segment, Energy Services. Our liquid asphalt business has been a solid, profitable contributor for us since we purchased it 19 years ago. EBITDA margins at Energy Services have been accretive to Knife River's overall consolidated margins in 18 out of those 19 years. We had exceptionally strong financial results at Energy Services in 2023, benefiting from historic price cost dynamics across our markets and a longer than expected paving season. We had record revenue of $292 million for the year and record EBITDA of $78 million. In 2024, we anticipate another strong year from our Energy Services, well above its historical average, but not at the all-time records we saw in 2023. The state DOTs in the markets where we provide liquid asphalt are continuing to invest in their roads. For context, about 94% of the nation's paved roads are paved with asphalt. Energy Services has been and will continue to be an integral part of Knife River's vertical integration strategy. In summary, the fundamentals of our businesses are strong. The federal, state, and local funding backdrop is at unprecedented levels. In 2024, we anticipate price growth across all of our product lines as the demand continues to build. At the same time, we anticipate volumes will be flat or slightly down as we maintain our disciplined approach to bidding and as we continue to implement dynamic pricing to improve margins. We had a remarkable year in 2023. We became an independent company, we achieved record financial results, and we've implemented a strategy to continue delivering long-term, profitable growth. At Knife River, we win as a team, and I would like to thank our entire team for what we accomplished together in 2023. I'm also excited about what we have ahead of us. Thank you for your continued interest in Knife River. I'll now turn the call over to Nathan for his remarks. Nathan? Thank you, Brian, and good afternoon, everyone. I'll begin my remarks with a review of our product line performance, followed by an update on our balance sheet and capital allocation priorities, and conclude with our 2024 financial guidance. As Brian mentioned, our fourth quarter results were a strong finish to our record year. We achieved record revenue for the quarter of $647 million, up 20% from 2022. Quarterly revenue also increased across all product lines compared to the prior year, benefiting from strong market demand, a longer construction season, and the first stages of our Competitive EDGE initiatives. On a full year basis, we reported record revenue of $2.8 billion, an increase of 12% from the prior year. Underpinning this revenue improvement was our continued pricing momentum in our product lines. Average selling prices increased across all product lines for the year, including 11.5% for aggregates, 12.3% for ready-mix, and 13.6% for asphalt. Although volumes have declined for the year in these product lines, our strategic focus on quality over quantity was exemplified with prices more than offsetting volume declines. Given these price and volume conditions, as well as productivity gains, the material product line saw a considerable improvement in gross margin for the year. Aggregates were up 600 basis points to 20% gross margin. Ready-mix was up 140 basis points, and asphalt, 380 basis points. Within contracting services, margins improved 300 basis points during the year. Our disciplined pricing and bidding strategy helps ensure that we capture the value of the materials and services we provide. This strategy, combined with solid execution, was successful, culminating in consolidated gross margin improvement of 480 basis points for the year. We believe this strategy will continue to positively impact future results. For the quarter, our contracting services backlog of $662 million was down from the prior year, as expected. While DOT funding and lettings activity remained strong across our footprint, we've adopted a more disciplined bidding strategy to prioritize our gross margin over the volume of projects. As a result of this bidding strategy, the margin profile of our existing backlog is higher than it was at the end of 2022. Furthermore, about 90% of our backlog is a diverse base of lower risk, short-duration work valued at less than $5 million per project. Our Competitive EDGE initiatives, while in the early stages, have set the groundwork for Knife River to maximize the value of our products and services, while optimizing the utilization of our resources, generating profitable and sustainable growth for our shareholders. As Brian referenced, one of the core pillars of our EDGE strategy involves operational and financial discipline. That includes maintaining a strong balance sheet, as well as a returns-focused approach to capital allocation. In 2023, we generated $336 million of cash from operations, a $128 million improvement year-over-year. Total free cash flow, which we calculate as operating cash flow, less total capital expenditures, plus proceeds from asset sales, was more than $220 million in 2023, an increase of more than $167 million from 2022, representing free cash conversion as a percent of net income of 120%. Furthermore, we ended 2023 with $219 million of available cash and $329 million of available capacity under our revolving credit facility. We believe our strong free cash generation, together with our nearly $550 million of cash and liquidity, position us to reinvest within our existing operations, as well as pursue strategic acquisitions. While our business development pipeline remains active, we intend to stay disciplined in our approach to capital allocation, ensuring that we pursue high-quality assets that support our growth strategy. In 2023, our capital expenditures totaled $124 million, the bulk of which was allocated to upgrade our quarries, fleet, and facilities. We reduced our ratio of net debt to adjusted EBITDA to 1.1 x at year-end, 2023, and we remain committed to a long-term annualized goal of approximately 2.5 x net leverage, providing Knife River the balance sheet flexibility to support our organic and inorganic growth objectives. Our capital allocation strategy will remain returns-focused. 2023 was a record year, one in which we exceeded our financial guidance. As we look to 2024, we see continued pathways towards adjusted EBITDA growth and margin expansion. Today, we are introducing financial guidance for the full year, 2024. Our guidance includes the following assumptions: In 2024, 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. Furthermore, we expect our Process Improvement Team initiatives will continue to identify operational efficiencies and improvements across the organization, as outlined within our EDGE strategy. In addition to the consolidated financial guidance we are providing, we have begun to report EBITDA guidance specific to the Energy Services segment, as Brian mentioned. Given the visibility we have into this product line segment, we wanted to provide additional clarity and transparency to our investors. To that end, for the full year 2024, we are providing the following financial guidance: Total revenue of between $2.75 billion and $2.95 billion, consolidated Adjusted EBITDA of between $425 million and $475 million. Adjusted EBITDA for our geographic segments, including Corporate Services, of between $375 million and $450 million. At Energy Services, Adjusted EBITDA of $50 million to $60 million. And lastly, we expect total capital expenditures of between 5% and 7% of revenue, excluding any potential future acquisitions. As you can see by the midpoints of our guidance, we expect to see continued margin expansion and EBITDA growth. At our geographic segments, the 2024 midpoint for Adjusted EBITDA is $395 million, which is 11.5% above 2023. In summary, we are pleased with our record results from 2023. Our markets and business fundamentals are strong, and we will continue to focus on commercial excellence, operational execution, and disciplined capital allocation as we build momentum into 2024. We are excited about the year ahead. With that, I'd like to open the call for questions. Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the number one on your telephone keypad. You will hear a three-tone prompt acknowledging your request, and your questions will be pulled in the order they are received. Should you wish to decline from the polling process, please press the star followed by the number two. If you're using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from the line of Sherif El-Sabbahy from Bank of America. Your line is open. Hi, good afternoon, and congratulations on a great quarter. Thank you. I was just wondering if you could give us a sense of seasonality over the course of 2024. It seems like Q4 came in with maybe a bit of an extended period due to better weather. Now, how should we think about Q1 sequentially and then just the cadence through 2024 more broadly? Yeah, we did have a lengthened construction season in the fourth quarter. We had very favorable weather in the, you know, last year. We are a seasonal company. We have a northern footprint, and so we do slow down obviously in the first quarter, the fourth quarter. The first quarter, we typically have somewhere in that 10% of our revenue. The second, third quarter is about 2/3 of our business comes in that second and third quarter. And then the fourth quarter again is somewhere in that 20%-25% of our revenue. So that's kind of the, the seasonality of our footprint. ... Understood. And you mentioned your expectation for pricing. What kind of cost inflation are you seeing? Yeah, we've introduced that mid-single to high single digit for prices on those core products. And last year, we had cost of goods on our material side of the business around 5%. And so we're kind of projecting that same mid-single digit price or costs for this upcoming year. Thank you. Your next question comes from the line of Garik Shmois from Loop Capital. Your line is open. Oh, hi. Thanks for taking my question. You talked about refocusing onto the acquisition pipeline in 2024. I was wondering if you could speak to some of the opportunities that are in front of you in that regard. And also, with respect to your balance sheet, and given that the net leverage is at 1.1 x, it's well below your target range, any updated thoughts on potentially tapping into the balance sheet to help drive further acquisitions? Yeah, Garik, I'll talk about the, the pipeline and kind of our strategy for M&A, and then I'll turn it over to Nathan to answer the, the balance sheet. So we have a lot of opportunities in the pipeline, and we're gonna continue to stay disciplined in our approach. We definitely look for aggregates-based companies in those mid-size, high-growth markets. We built this company at Knife River on, you know, over 80 acquisitions, and a majority of those, a lot of those are those bolt-on operations in that $10 million-$30 million range. We will absolutely look for platform operations. We've got some that we're looking at now, so we're not afraid to go out and do a larger acquisition, but we certainly are focused in those markets that we're already in and looking for those aggregates-based, materials-driven operations that support our vertical integration model. Those opportunities are out there. We, we drive that kind of that acquisition process really from our regional level with some, you know, corporate programming that we can kind of, you know, monitor at the corporate level, help build the models and assist the regions with their due diligence and integration, but it really is a regional-driven M&A acquisition, you know, strategy. So with that, I'll just turn it over to Nathan to maybe touch on the balance sheet. Yeah. Good afternoon, Garik. Thanks for the question. You talked a bit about tapping into the balance sheet and our, our capital that's available. I think first it'll be helpful just to look back at the cash that we have available and the revolver capacity. Those are two important, you know, points that we'll look at to fund our acquisition. So first, from just a cash flow standpoint, as we looked at the performance we had this year, which was outstanding. I mean, our Adjusted EBITDA grew $119 million, and a lot of that translated to our improvement in cash flows from operations, right from the cash flow statement of $128 million. We've been diligent about our balance sheet. In fact, our working capital as a percent of revenue decreased year-over-year, and our cash flow conversion improved to 120%. So all that said, the balance sheet has about $220 million of available, available cash, and our revolver capacity is about at $330 million. So $550 million on the balance sheet to tap, as I guess you said, to pursue these bolt-on and, and larger acquisitions, as well as organic growth. That's something that we've been successful with in the past as well. We've done a number of aggregate sites that we've grown, as well as, maintaining our fleet. And so I think, short of it is, we've got a strong balance sheet to support that. We'll continue to be disciplined, as Brian said, on how we pursue these acquisitions, but we're ready to get the job done. Great. No, I appreciate that. And then just looking at the EBITDA margin expansion that you expect this year. You know, you talked to the volume and pricing outlook. You talked a little bit around cost inflation. I'm just curious, just around, you know, the EDGE initiatives, PIT Crews, you know, things of that nature that are relatively newly implemented. Any sense as to, you know, how much of the margin expansion could be chalked up to some of the, you know, new company-specific cost initiatives? Yeah, I think there's definitely that self-help opportunity, Garik, with our EDGE, and I can tell you that the regions are leaning in hard on that. Hence, one of the reasons why we hit our 15% EBITDA margins two years earlier. We had that goal at our May Investor Day to hit 15% by 2025. We rolled out the EDGE initiatives early in the year. We started talking about dynamic pricing, but we really haven't not implemented dynamic pricing until the beginning of this year, and we're still. That's a process that will take several years to fully implement it throughout the regions. We deployed our PIT Crews, the Process Improvement Teams, and that's really a group of internal experts by product line and then external experts. They go out and spend a week at an individual facility and really just dissect every aspect of that operation, and so we've seen some real big wins. In fact, it's such in demand that we've had to double the size of that team, so we can deploy it even more, at more locations in the upcoming year. So yeah, we have lots of self-help, when it comes to the EDGE strategy, and that's built into our, you know, our projections for our guidance, on EBITDA. So we're excited that we can grow. You know, when we look at, you know, our growth rate in those geographic locations, the Northwest, Pacific Mountain, and Central Regions, that's an 11.5% growth over last year. So, you know, we've got the mid to high-digits price increases, controlling those costs, flat to slightly down volumes. So, you know, it's definitely some of that self-help is gonna help us achieve that 11.5% year-over-year growth. Understood. Well, thanks for that. I'll pass it on. Best of luck. Thank you. And your next question comes from the line of Brent Thielman from D.A. Davidson. Your line is open. Hi, thanks, guy. Good morning. I guess, Brian or Nathan, when do you anticipate seeing sort of more of the positive impacts of the dynamic pricing strategy sort of hit the P&L? I know these things sort of take time, and they're calculated, but I guess the question is kind of when, when might we, on the outside, sort of be able to better recognize the impact of it? Yeah, Brent. You know, we've been doing dynamic pricing in the Northwest Region for 7 years-8 years. We're not fully implemented, even in the Northwest Region. But I'd say that we're in that 7th, 8th inning when it comes to dynamic pricing. We brought over 100 of our sales managers and executives from around all of the different regions to the training center back in November and had a 3-day seminar class summit on dynamic pricing and commercial excellence. So we are in the process of doing that right now. You know, we did not send out nearly as the number of annual increase letters. The increase letters have different language in them, the ones that went out there, to really give us the opportunity to bid work in real time. So, again, the dynamic pricing is the opportunity for have our customers call us for aggregates, ready mix, and asphalt on their individual projects, allow us to look at our proximity of our locations to their job sites, to look at our backlog, to look at our current cost inputs, and really maximize, optimize that price that goes out on that job. So that's what dynamic pricing is all about. We're in the process of rolling that out in all the regions right now. But we're really in the you know, first, second innings of that rollout of the dynamic pricing. You'll see, that's baked into some of our, you know, increases for this year. So you'll begin to see some of those benefits this year. Okay. And then, Brian, how should we interpret the decline in backlog? I mean, I, I know you're being much more selective on what you're pursuing, in the, you know, the 14.5% gross margin in contracting services is pretty notable here in the fourth quarter. Is, is that what— Is that the type of margin you're starting to see come through on the work, work you're booking? Was that an anomaly this quarter? Just curious around all those things around backlog. Yeah, I think you should look at that over a full year, Brent, to get a good feel. We close out jobs in the fourth quarter, and so I think you know, looking at the 11.4% that we had for the full year is probably something you know, you could look at. I would say that the... You know, how you look at our lower backlog is intentional, and I think that we have been very disciplined in taking a different strategic approach to how we take on work and really taken on higher quality work instead of quantity. And we had seven consecutive quarters of record backlog, and you know, that was at some lower margins that did not fit our EDGE strategy. And so that's one way you could look at our lower backlog, is it's very intentional. It's very calculated. We are targeting projects and customers that fit us to pull through higher margin upstream materials. And the other thing—I'd like to say is that, you know, we had $50 million of additional revenue in the fourth quarter from contracting from that favorable weather. And so that's definitely had an impact on our, you know, year-end backlog. But what I tell you is that it's opened up more capacity for us to go out and pursue some of those higher margin projects. And the good news for us is, the states that we operate in, we've got 16% larger DOT budgets. The tailwinds in infrastructure funding at the state, local, federal level really allows us to be more selective on the type of work that we do. Very good. Thank you. Yep. Your next question comes from the line of Ian Zaffino from Oppenheimer. Your line is open. Hey, Ian. How are you? Ian Zaffino, your line is open. All right, and your next question comes from the line of Michael Dudas from Vertical Research. Your line is open. Good afternoon, Nathan, Brian. Hi, Michael. So following up on the discussion on competition and discipline, if you could share, like, maybe on a regional basis, given the exposure you have towards public markets and also the competition that might be occurring because of all the activity on the construction side, which areas seem to be more contributory towards the growth outlook you're looking at? Which ones may lag a little bit slower in that front? And is the market, you talk about discipline on bidding and on your contracting, but also on the side. Is the volumes of work opportunities increasing at a much greater rate than you've witnessed the last 6 months-12 months? Is there a lot more opportunities to bid and gives you a better chance to be selective? Yeah, I will take that, and I'll start with the volume question. Yeah, there is. It's been a little bit, Michael, it's been a little bit slow to let this year. And I think that the extended season for us in the fourth quarter was also extended seasons for the DOTs. And so I would say that they were out inspecting work being built instead of out designing and getting it let. And so I think part of, again, our lower backlog is a timing issue, but what we see in the horizons, in the pipeline, and our bid schedules is strong. And so the volume of work is just not dollars because of inflation. There is more work to go out and bid, and again, that really does allow us to look at how can we maximize, optimize the upstream materials. And you know, when we bid work. We don't just bid it as a prime contractor. We're gonna try to get as many bites of that apple as we possibly can to get work. And so we may bid one of those DOT jobs as a prime contractor. We certainly would bid it as a subcontractor, and we'll absolutely always bid it as a material supplier. And so we're gonna try to, you know, get as many bites of that apple as we can. As far as, you know, the markets, I would say that it's early in the season, and I would say it's not that different than it has been in the past. I mean, to bid federal, state highway, you know, work, there is some nuances that go into that. You've got to know what you're doing, and you just don't jump from the private market to the public markets. And so we see the same, kind of the typical bidders. And, you know, each region, each state, each bid, will range in the number of bidders, on that. Early in the year, we obviously see more bidders, and we are in the early parts of the bidding season right now, and that typically is where you're gonna see some of the lower margin work that goes out as well. So we're gonna be patient, we're gonna be disciplined, and we will get the amount of work that we need to be successful in 2024. That's, that's a good answer, Brian. Then my follow-up would be back to the acquisition discussion. As you're targeting what's called the bolt-on ones, as opposed to platform enhancing, is there a focus on leveraging your contracting business with materials to build? Or, you know, if the bolt-ons are, if the returns are there and the market's there for just selling the material as opposed to not having it downstream, which do you lean towards? Or is there a difference in which ones you would rather focus on as you execute this plan over the next couple of years? Yeah. So we're gonna absolutely focus on aggregates-led companies. And, you know, we may, because it's a bolt-on, we may have a local pit, to where we'd go out and look at one of those downstream products, or contracting services if it, if we were able to, sell more of our rocks somewhere else. And so, we would go out and do a pure play downstream, acquisition if we had a quarry, that could supply that. You know, typically, the synergies that we get, from bolting on those, operations, obviously, all the back office functions, we get immediate, synergies on. But we also... You know, we can move jobs around and customers around, and, you know, we may be delivering to a project that was at a 20-minute or 30-minute disadvantage from the pit that we just purchased. So a lot of times, because the cost of delivering these materials, whether that's asphalt, ready-mix, or aggregates, is a bulk, is a large part of getting and being competitive and getting work, you know, that's one of the big opportunities that we have when we do these bolt-ons. We also, you know, frankly, we have a lot of internal expertise when it comes to our technical resources team, and we're very effective at going into a site that may be nearing depletion and meet with the local regulators and take our technical services team and be able to expand those reserves. So there's a number of different strategic opportunities for us, that's one of the reasons we really do target those bolt-on operations. Again, we're not afraid of platform operations. We've done platform operations in the past, and we certainly would do them again. Very helpful. Thank you, Brian. Thank you. And once again, if you would like to ask a question, simply press star followed by the number one on your telephone keypad. Your next question comes from the line of Ian Zaffino from Oppenheimer. Your line is open. Okay, great. Can you hear me now? Hey, Ian, we can hear you. All right. Sorry, I don't know what happened there. You know, as far as the aggregates mix, and I guess this is maybe answered a little bit, but when you think about expanding your aggregates mix, how much is that gonna come from M&A, and then how much can come from, you know, just organic activity? And you know, what might that be and how do you kinda get there? Thanks. Yeah, we are certainly focused, as we, you know, target that 20%+ long-term EBITDA margin, is to grow that aggregate mix. And we can do it both ways. We can do it organically. We have the capacity at our sites to continue to sell more rock and be more competitive by, you know, different delivery methods. And so whether that's by rail, by barge, we have a large fleet of our own trucks. We can control that supply chain and be competitive and provide a service that the customers really want. And so we can, and we have been, and we will continue to increase organically. But yes, I think you know, when you're selling $16-$17 a ton of material, you need a lot more of that to move that dial as we move that 16% of our total revenue and aggregates up. And so that will be through acquisitions. And so, you know, Ian, as we grow our product mix and grow that revenue on aggregates, it will be both organic and through acquisitions. Okay, thanks. And then, maybe a region that's kind of dear to you is the Northwest. Continuing margins go up there. You know, what's going on there? And I guess my understanding is that, you know, the playbook that was implemented there is what will be kind of implemented across system-wide, which then brings you to your margin expansion targets. You know, given what you're seeing maybe there, does that give you even more confidence in hitting that 20% number and then maybe even exceeding that 20% number? Thanks. Yeah, absolutely. And I think the, you know, the roadmap of EDGE really did come from the framework around Northwest Region. So there's a couple of things we did in the Northwest Region. They grew their aggregates, and, you know, like, from 18%-24% over a 10-year period, and so they certainly had more of their revenue geared towards aggregates, and that was both organic and through acquisitions. So that's, that helped. I mean, we remain to be vertically integrated in the Northwest Region, and so it's very important that we take those rocks, and we sell approximately 40% of those to ourselves to make concrete and asphalt. We take those materials, we go perform contracting services in the Northwest Region. We also do prestress, which is also another margin accretive opportunity for us. So it's. We're committed to the vertical integration. That model that we have in the Northwest Region is the same that we'll have in those other regions as well. The dynamic pricing, they have been effective at doing that for the last eight years, and I think that's had a lot to do with their success. And then just the, you know, the team that we've got in the Northwest, similar to all the teams we've got throughout the, you know, all of the segments, we've got unbelievable talent, and they've. They're committed to margin expansion. They talk about it at meetings we go to right now, they're learning about it, and they're all focused on that, and that region is no different than the rest of our other regions. So we're gonna get there. There's multiple paths that we get to the top of the mountain for that 20%, and it's not just, you know, doing exactly what the Northwest Region did, but that certainly is the framework of what we built the EDGE model around. Okay. Thank you very much. Thank you, and there are no further questions at this time. I would like to turn it back to Brian Gray, President and CEO, for closing remarks. Thank you. Well, thank you for joining us today. 2023 was a historic year for Knife River, from ringing the bell at the New York Stock Exchange on our first day of trading to delivering record results. I am very proud of the team that got us here, and that will help us continue to grow. Our business is fundamentally strong, and we are focused on delivering long-term, profitable growth for our investors. We appreciate the interest and support, and now I'll turn the call back over to the operator. Thank you. Thank you, presenters, and ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.