管理層發言
Good morning, ladies and gentlemen, and welcome to the Knife River Corporation's third quarter results conference call. This call is being recorded on Tuesday, November 4, 2025. I would now like to turn the conference over to Nathan Ring. Please go ahead.
Thank you, and welcome to everyone joining us for the Knife River Corporation Third Quarter Results Conference Call. My name is Nathan Ring, Chief Financial Officer of Knife River, and I'm joined by our President and Chief Executive Officer, Brian Gray. 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 references 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. Brian will begin today's call with an overview of our third quarter 2025 results, followed by a segment recap and an update on our competitive EDGE plan. Following his remarks, I will provide a product line summary, a capital update and a review of our 2025 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. Good morning, everyone, and thank you for joining us. The third quarter is typically our most profitable, and we're pleased to report record financial results. Our revenue of $1.2 billion and adjusted EBITDA of $273 million were all-time quarterly highs, thanks to strong contributions from our recent acquisitions. M&A is a core component of our competitive EDGE strategy to drive long-term value. Another pillar of our EDGE plan is to optimize prices and control costs. I'd like to thank our Knife River team members for making important strides in this area during the quarter. Their efforts helped us grow adjusted EBITDA margin to 22.7% for the quarter. And equally impressive, we also improved gross margins across our aggregate, ready-mix and asphalt product lines. We did all this while facing headwinds that we didn't have last year, including wet weather, a sluggish Oregon economy and less asphalt paving across our segments. Delivering improved results in adverse conditions points to the fundamental strength of our business. Even without the addition of Strata Corporation, which is our largest acquisition ever, our third quarter revenue and adjusted EBITDA would have been records. Looking ahead, we're excited about our future. We're still in the early innings of our self-help initiatives, and we certainly expect the organic business to continue to grow as we fully implement dynamic pricing and operational improvements. We also continue to pursue strategic acquisitions, and our team currently has multiple deals in the pipeline. We have record third quarter backlog with more pull-through of higher-margin asphalt paving materials than we did last year. And our states continue to invest in public infrastructure at record levels. All in all, we expect the combination of our EDGE strategy and market fundamentals will continue to allow us to achieve profitable growth for our shareholders. As we look more closely at our third quarter results, I'll start with an update on Oregon. We don't typically provide financial results for an individual state, but there's been a lot of attention on Oregon, so I wanted to follow up with some additional detail. During the quarter, I'm pleased to say we saw year-over-year improvements in the state. As previously reported, this market was down in the first half of the year. And during that time, we moved quickly to right-size our team and reposition our crews to where the work is. We continue to optimize pricing to control costs, and we benefited from the financial contributions of recent acquisitions. In addition, we began to see aggregate volumes improve as third-party sales resumed on several jobs that have been delayed earlier in the year. Finally, our current contracting services backlog in Oregon is approximately 90% of where it was last year at this time. These factors led to third quarter financial results in Oregon that were higher than last year, suggesting the headwinds are beginning to calm. In addition, the recent passing of a 10-year $4.3 billion transportation funding package helped provide additional clarity in Oregon. One of the long-term fixed lawmakers originally proposed, we expect the bill at a minimum will help maintain current funding levels and improve upcoming bid schedules at the local agencies. Half of the funding is earmarked for cities and counties for the types of projects we most often perform. The other half of the new revenue stream will be added to Oregon's DOT budget. Total funding for the next biennium is now projected to be $6.1 billion, slightly below the record $6.2 billion from the previous 2-year cycle. Given the new funding, our improving aggregate sales, management's commitment to keeping costs in check, and ongoing contributions from M&A, we expect the stabilization to continue and currently anticipate overall 2026 results in Oregon will be similar to this year. Switching from Oregon to Mountain, this segment remains one of the fastest-growing areas in our footprint, and we continue to enjoy record backlog here. However, third quarter results were impacted by less asphalt paving, related to project timing, type of work, competitive bid dynamics, and delays caused by weather and project phasing. We experienced more scheduling delays this year than last year. The overall decrease in asphalt paving in the segment not only impacted contracting services, but also had a ripple effect through hot mix asphalt, aggregates, and the utilization of our equipment pool. Fortunately, this work remains in our backlog, and we continue to add paving tonnage for next year. DOT budgets are strong, backlog is at record levels, and we've added capacity in an effort to capture even more work heading into 2026. Continuing with our segments recap, let me move to the West. Since I already touched on Oregon, I'll focus on California, Hawaii, and Alaska. In these states, we saw healthy demand with pricing discipline and strong execution driving our results. We had increased ready-mix volumes and pricing in California where we added capacity and improved delivery efficiency. We also had higher contracting revenue margin in California, where we continue to see strong public agency demand. In Hawaii and Alaska, we had increased aggregate and ready-mix volumes, and we stand to benefit in both states from some large impact projects that are just beginning construction. With the stabilization in Oregon, we are optimistic about continued growth in the West in 2026. In the Central segment, our results were supported by the integration of Strata, which contributed to volume and margin improvement. Third quarter revenue and EBITDA were up substantially, and EBITDA margin was 23%, an all-time record. The strong quarter in Central could have been even better if not for the rain. The wet weather we reported in the second quarter continued into third, particularly in July and September, which delayed projects and negatively impacted operating conditions. Still, we achieved a record quarter and are excited about the year ahead. Backlog in this segment is up 83% year-over-year, driven primarily by an increase in Texas. We are seeing strong commercial and public work opportunities in our Texas footprint, and our teams there have secured major highway projects in the College Station area. In North Dakota, we are also set up favorably for 2026 with new infrastructure funding driving bidding opportunities and supporting the Knife River and Strata combined operations. The North Dakota state DOT intends to bid about $750 million of construction work in 2026, which is more than twice the $345 million they put out for bid in 2025. Throughout the Central segment, our markets appear poised for growth and our expanded teams are working closely together. And finally, at Energy Services, the segment delivered a strong quarter with revenue up 34% and EBITDA up 18%, primarily due to the acquisition of Albina Asphalt, and the new polymer modified liquid asphalt plant in South Dakota. The segment continues to benefit from vertical integration and disciplined bidding, and is on track to have another solid year. While 2025 has had its share of challenges, we continue to focus on our EDGE strategy and the opportunities we have to improve our performance and finish the year strong. As mentioned, EDGE includes acquisition growth, which contributed to our improved results for the quarter. M&A will remain an integral part of our strategy, and our corporate development team continues to add quality opportunities to the pipeline. We are focused on aggregates-led margin-accretive targets in our midsized high-growth markets. But M&A is just one component of EDGE. During the quarter, our process improvement teams, and field personnel were also hard at work, implementing efficiencies across our operations. At the same time, our sales teams continue to emphasize our dynamic pricing model, helping to better capture the full value of our products. These tandem efforts resulted in third quarter improvements to our aggregates, ready-mix and asphalt gross margin. While we're improving our processes, we are also improving our safety performance. I'm proud of the advancements our team continues to make on the I Choose Safety program. We believe a safe and engaged team is vital to our success. Combined, we expect each of the ongoing efforts in our competitive EDGE plan will help drive consistent EBITDA growth and enable us to achieve our long-term goal of 20% adjusted EBITDA margin. Before I turn the call over to Nathan, I'd like to take just a moment to reinforce our track record of meeting our goals. In our 30-year history, we have had 4 distinct periods. The first was to build scale. The second was to enhance our vertical integration and generate industry-leading return on invested capital. The third was to position Knife River to become an independent publicly traded company. And the fourth is where we are today, implementing our competitive EDGE strategy in an effort to grow EBITDA, and improve margins. We accomplished our goals in each of the first 3 phases, and we are on track to meet our EDGE goals as well. Over the past 3 years, on a trailing 12-month basis, we have grown revenue by 22%, adjusted EBITDA by 56% and adjusted EBITDA margin by 320 basis points. EDGE is working and the fundamentals of our business are only getting stronger. All this gives me great confidence that our dedicated team members will continue delivering profitable growth and create long-term value for our shareholders. With that, I'll turn the call over to Nathan.
Thank you, Brian. As we take a closer look at our financial results, you'll see that it was also a positive turning point in the year for our materials product lines. In particular, aggregates, ready-mix, and asphalt saw margin improvement over the third quarter last year. In aggregates, prices increased 8% and margins improved 50 basis points. As we mentioned last quarter, we anticipated that the early season pre-production work and our team's ongoing efforts to create operating efficiencies would begin to produce improved financial results. We're taking these efficiencies and scaling them. As we assess our operations, we believe the upside in margins for aggregates provides one of the most compelling opportunities for earnings growth. Volumes also increased in the quarter, thanks to contributions from Strata, as well as Alaska and Hawaii. Looking at the full year, we expect volumes to be flat as a result of the increased rainfall and less paving work performed earlier in the year. We anticipate that pricing will remain strong and increase high single-digits for the full year. Switching to ready-mix, we had one of our best quarters ever. We had price increases of almost 6%, volumes were up 16% and margins improved 160 basis points over third quarter last year. Much of the improvement comes from our dynamic pricing model, along with operating efficiencies at the batch plants and product delivery. Volumes were up mainly due to the addition of Strata's 24 ready-mix plants, and also because of increased commercial work in Alaska, California and Hawaii. We expect full year volumes to be up by low double-digits and pricing to increase mid-single digits. The asphalt product line was directly impacted by less paving work in contracting services. Almost 70% of asphalt volumes are sold internally, and internal sales were down approximately 7% for the quarter. Prices were also down compared to last year, directly related to lower liquid asphalt input costs. Despite the lower volumes and pricing, we have been able to manage our cost structure and slightly improve margins over third quarter of last year. For the full year, we expect volumes and pricing to be down by low single-digits. In contracting services, the revenue and gross profit declines were largely related to less paving work for the quarter. Our contracting services margin was also down due to slightly lower margin available on the backlog work we performed, fewer project bonus opportunities because of the type of work, and delays in job site challenges from adverse weather. Looking ahead, our backlog is 32% higher than last year with significantly more paving work secured, and we are also seeing additional paving jobs in the upcoming bid schedule from what we did at this time last year. Even though the expected margin in our backlog is slightly lower year-over-year, we expect this will be more than offset by the anticipated benefit of additional volumes of upstream higher-margin materials. Moving to SG&A, the increase over third quarter last year is primarily related to overhead that came with acquisitions we have made in the last 12 months. Although costs are higher year-over-year, they are coming in lower than we had forecast, partly due to the benefit of higher gains recognized on the sale of assets and lower payroll incentives. As we look forward, we anticipate that fourth quarter SG&A will be higher than last year by mid-single digits, plus increases from the recent acquisitions. As we look at our balance sheet, we ended the quarter with a net leverage position of 2.6x and $457 million of borrowing capacity on the revolver. For capital deployment, we have invested $664 million on growth initiatives through the third quarter, including acquisitions, aggregates expansion, and greenfield projects. For the remainder of 2025, we expect to spend approximately $32 million on organic growth projects. For maintenance and improvement, we continue to expect capital expenditures to be between 5% and 7% of revenue for the full year. Our balance sheet remains strong with available financial capacity for future acquisitions and new organic growth opportunities, which will be incremental to our outlined capital program. As we consider the full year, we are narrowing our financial guidance. Our updated guidance is based on normal weather, economic and operating conditions for the remainder of the year, and includes consolidated revenue between $3.1 billion and $3.15 billion, and adjusted EBITDA between $475 million and $500 million. Our teams have done an excellent job managing through the challenges we faced this year, and the third quarter results proved that the fundamentals of our operations are strong. Our EDGE strategy is working. The markets we operate in have solid public funding. Our initiatives are producing financial results, and we believe Knife River is well positioned to deliver long-term value to our shareholders for years to come. I would now like to open the call for questions.
分析師問答
Your first question comes from the line of Brent Thielman from D.A. Davidson.
Maybe just, Brian on, I guess, a shorter term question, just kind of backing into the math for the fourth quarter with the revised guidance here implies decent year-on-year growth in EBITDA. Just wanted to maybe get a little more context of what you're seeing on the ground right now that kind of gives you confidence in that year-on-year growth range? I know there's been challenges through the year, and delays and pushouts with weather, but any more context there would be helpful?
No, I appreciate that, Brent. And so, yes, 3 factors really. The Oregon stabilization and their ability to actually produce more profit for the third quarter, that momentum will continue. That stabilization in Oregon will continue. A few of those jobs we talked about earlier in the year that were delayed have resumed construction, and so, that is part of the fourth quarter guide. The other thing is our record backlog, and the additional paving that we have in our backlog with favorable weather, and I would say that we had a good October as far as weather. And so, we obviously have 2 more months left, that begins to change on us. But if we get a couple more weeks of good weather, that gives us confidence we can get that work done. And so really, it's the turn, the stabilization in Oregon, the strong backlog that we've got that has additional pull-through of those higher-margin asphalt paving materials and then normal weather, and we had a good month in October.
I appreciate the details about what's happening in Oregon. Brian, you mentioned that you expect results in 2026 to be similar to what we are seeing this year. What factors are you considering over the next few months that could lead to more than just stability, possibly a rebound in Oregon next year? I'm interested in what you think might influence that.
I'm pleased with how management is quickly adjusting to the new level of work by repositioning crews in areas of the state where we're busier, particularly in Oregon, where some markets remain strong. The Portland market continues to be a significant contributor to our volumes, and we're hoping for additional market stability there. Current trade discussions are affecting the Portland economy due to imports and the impact of tariffs on major employers. We're also waiting for the governor to sign the transportation bill, which we expect will happen, and we need to see the upcoming bid lettings, as 50% of those funds are allocated to counties and cities, which should benefit us. We're approaching our peak bidding season, so we're looking for stability. Overall, I see many positive indicators in Oregon from the last 90 days, and we want that momentum to carry into next year. We will provide more guidance in February, but for now, we feel confident that Oregon is stabilizing, and we anticipate results next year in 2026 to be flat compared to this year.
Okay. Just last one on Strata, realize that conditions have been sort of atrocious in that region, probably tough to get to that $45 million bogey for this year. But maybe kind of what's under the hood that you're seeing, that you really like about that business? And as we think about a year where we don't have some of these challenges from weather is $45 million sort of contribution to EBITDA from that business still very, very reasonable to you?
Yes. Brent, we're very pleased with what we've seen, extremely pleased with the integration that our team and their teams are coming together as one. You look at the DOT budget in North Dakota, more than double than what we had this year, and we are well positioned to take advantage of that. You look at our ready-mix results for this quarter, and Strata is a large contributor to that success. And so they absolutely are performing as we had modeled, as we anticipated, with the one exception that you mentioned was a very wet summer for those days. But other than weather, they absolutely are on track, both to capture the synergies that we modeled. The volumes are in line with what we modeled, and it's really performing very well, and we're excited about next year with the North Dakota bid letting schedule coming up.
Your next question comes from the line of Kathryn Thompson from Thompson Research Group.
I just want to dig a little bit more into backlogs, had a nice increase, very solid contribution from public, as is typical. But could you give a little bit more color in 2 different buckets; one, the type of projects, really more color specifically on contracting? And then the type of product, the asphalt type jobs and what this means for margins overall on a go-forward basis?
Let me start with the margins in our backlog. We have slightly lower margins, but I am very proud of our teams as we start with industry-leading margins. The margins in our backlog come from our pull-through of the downstream materials. When we are doing asphalt paving, which is a significant portion of our backlog, this more than offsets the margins in aggregates and asphalt. These margins are not related to contracting services, and they more than compensate for the slight decline in our backlog margins. If we look at it from an enterprise and consolidated level, our backlog has more gross profit than in the past, even with the slightly lower margins in contracting services, as they are offset by the benefits of higher volumes of asphalt paving due to the pull-through of the higher-margin material. Additionally, we have significantly more asphalt paving in our backlog, although we did not secure as much work as we had anticipated this year, partly due to weather and delays. The good news is that this work remains in our backlog, providing us with significantly more asphalt paving that will benefit various business lines. To give you some perspective, at the end of September, the Mountain region had 23% more backlog of asphalt paving than what was performed all year. The Central region picked up some very large jobs, resulting in an 83% increase in backlog and more than double the amount of asphalt paving planned for next year compared to the previous year. These data points emphasize the substantial increase in asphalt paving in our backlog. I am not concerned about the slightly lower margins because of the strong benefit we will receive from the downstream higher-margin material. Lastly, we are entering our busiest time of the year for bidding, and we have 32% more backlog than last year as we head into our bidding season with strong DOT budgets, many at record or near-record levels. I feel very positive about our current position regarding our backlog.
Okay. Great. Can you give us your thoughts on your backlog and how its composition today compares to a year ago? Are you satisfied with that balance, and what differences in the type of mix are you observing now? Additionally, if not from a year ago, how does it compare to six months ago? Is there anything changing in that overall mix?
Yes. I think the change is what I've mentioned is, we have a lot more of that higher margin pull-through of materials in our backlog. The other thing that's changed is we've added some larger jobs over the last couple of quarters. And so our burn rate has changed over 1 year ago. And so, we typically burn about 90% of our backlog off in 12 months. And so, with the larger amount of backlog we have, some of those larger jobs are multiyear jobs. And so that burn rate now is at 77%. But if you do the math, I mean, we still have an 11% increase in expected revenue in our backlog, even with that lower burn rate. And so stronger revenue projections with a larger percentage of that work being directed towards asphalt paving, which does benefit our downstream materials in asphalt and aggregates.
Your next question comes from the line of Trey Grooms from Stephens.
So I guess starting off, asphalt paving in Mountain, seeing some challenges there. Sorry if you touched on this, but you mentioned the competitive bid dynamics. Has that intensified in this market? Is this something that's expected to continue? And then also, is this isolated to the region? Or are you seeing it kind of creeping into other markets? Or how widespread is it?
Yes, that’s a good question, Trey. I want to highlight that our business operates on a very local and regional level. The headwinds we are experiencing this year, such as the timing, type, and phasing of work, as well as weather and our limited asphalt paving, are challenges that our local competitors also face. This has led to some changes in bidding dynamics. We have secured a significant amount of work, with our backlog up 32% due to more asphalt paving. However, we did not achieve the level of asphalt paving we expected in the Mountain region this year, and weather has also affected us in the Central region. As we discussed in our last call, the type of work being released and its timing for large civil interstate projects, which involve a lot of earthwork and paving, is a critical factor. We had anticipated a job in Idaho with 70,000 tons of paving to begin this summer, but it has been delayed to the fourth quarter or possibly next year depending on the weather. Additionally, the work is not in our key markets in Montana, as we previously mentioned. The type of projects that DOTs are funding also varies, which affects the distribution of dollars between bridges, heavy civil projects, and asphalt paving. I believe we are facing a temporary challenge in Montana and some areas of Idaho and Wyoming. On a positive note, the Mountain region has a record backlog, exceeding $100 million more than last year, and it remains one of our fastest-growing regions. I am confident about its future, despite the asphalt paving shortfall that kept our crews and plants less busy this summer. This situation is primarily due to the timing and type of work rather than being a fundamental issue. We are adaptable and can respond quickly to changes in the bidding environment. The level of new competition hasn’t significantly changed, and while our margins are slightly lower, they are more than compensated by the increased demand for materials. Overall, there aren’t any structural issues or major problems ahead.
Yes, that's helpful. Regarding the ready-mix business, your margins are up nicely year-over-year. There may be some benefits from acquisitions. As we look ahead at the ready-mix business, what are your thoughts on the balance of pricing and costs? Asphalt is facing some challenges, as we've discussed, but ready-mix seems to be performing quite well despite the tough operating environment.
If you look at our margins of 20% for the quarter, those are going to be industry-leading margins. So very proud of the work that our teams are doing. Our sales initiatives and our dynamic pricing have a lot to do with that success. So obviously, Strata is a large contributor to that. But even without Strata, we had very good numbers in our ready-mix business units. So we do see that momentum carrying into next year. Our dynamic pricing model is being embraced both internally, and our customers have received that modeling well. As long as we're providing the value of the materials through quality and customer service, they will pay the prices that we are asking for, our dynamic pricing. And you couple that with dispatch efficiencies, some new KPIs, and dashboards we're putting in place to help us manage our costs. You look at the purchasing power we have in our regional markets for our input costs. I think I like the position that we're in for ready-mix going forward with prices exceeding costs.
If I could add one more point, the pricing for aggregates is very strong. Several of our larger competitors have been discussing general expectations for aggregates in terms of pricing and volume. Given the markets you operate in, could you share any insights on how to think about pricing or volume related to your aggregates business as we look toward next year?
Yes. I would say, I've mentioned on previous calls, that we think that with our commercial excellence and dynamic pricing model, that mid-single digits for aggregate pricing is something that's sustainable. We've enjoyed high single-digit price increases this year, and that has a lot to do with the acquisition of Strata and their pricing cost structure up in that market with the rail. Keep in mind, our average selling price includes delivery and freight. And so the addition of Strata pushed that up to high single-digits this year. But Trey, our legacy operations are continuing to perform at mid-single digits, and we do feel like that is sustainable going forward. The volumes, that's been a little bit of a different story this year. The addition of Strata has given us positive volume growth for the quarter, but our legacy operations are still down, and that is primarily due to, again, the 2 factors, the less asphalt paving and the pull-through that that brings and then the weather. And so you look at the DOT budgets, you look at our backlog going forward, I look forward to providing specific guidance on volume during the next quarter's call.
Your next question comes from the line of Garik Shmois from Loop Capital.
You there, Garik?
Hi. Can you hear me?
Yes, we can hear you now.
Sorry.
You're a little bit difficult to hear.
Apologies. I wanted to ask on the fourth quarter guidance. What's going to have to happen for you to hit the upper end or lower end of the guidance range?
I would say that our midpoint is based on normal weather and the favorable weather we experienced in October. The weather in November and December can greatly influence our results, swinging us toward the high or low end of our projections. Weather is a significant factor. The ongoing stabilization work in Oregon and the continuation of third-party private projects into the fourth quarter should benefit us, as we saw in October and expect to see continue in the coming months. We have a considerable backlog, so we have a lot of work ahead this year. It ultimately hinges on the weather. We have some larger projects, such as providing stone for the Pier G project in Southern California and the P209 project at Pearl Harbor in Honolulu. The latter was scheduled to start pouring concrete in the third quarter but has now been moved to the fourth quarter, and we're not fully operational on that yet. If they manage to ramp up production and exceed expectations, it could push us toward the high end of our guidance, but if it continues to lag, we might end up at the low end. Are there any additional points you would like to address, Nathan?
Give it all.
I mean, I think I got most of those, Garik.
Okay. That's helpful. Follow-up question is just on some of the private construction projects. You had earlier in the year spoken to non-residential delays in particular. You sound a little bit more positive on that based on your prepared remarks. Just want to confirm that and if you could speak to some of those projects that are trying to come back?
Yes. We secured close to a dozen purchase orders and began construction on some projects early in the year, around January and February, but they were delayed. We discussed these delays quite a bit in the first and second quarters, and now in the third quarter, a few of those projects have resumed construction. There is a slide in our presentation that shows our aggregate volumes in Oregon decreased by 3% year-over-year, compared to a decline of 25% to 26% quarter-over-quarter in the second quarter and a similar drop of 26% year-over-year in the first quarter. For the third quarter, the decrease is only 2%, indicating that the quarter-over-quarter comparisons are beginning to stabilize. We began experiencing some of the challenges around this time last year, particularly in the fourth quarter, which gives me confidence that aggregate volumes are stabilizing, and we will continue our private work. Our major market driving most of the volume for aggregates is Portland, Oregon, where we hold a strong market position, and we are seeing some of that work resume construction.
Your next question is from the line of Ian Zaffino from Oppenheimer.
On Oregon, can you share what the pricing was in the past quarter? I'm trying to understand this because it's generally seen as an optimized area, so I would expect the pricing to reflect that. Could you provide some insight on this? Additionally, regarding the funding package, it’s one-third of what it should have been. Does that imply, based on your near-term guidance, that we might see a quicker roll-off of that business? Or was the expectation that the business would be significantly ahead with a $12 billion package, and now it’s just somewhat flat compared to before?
I'll start by mentioning that while Nathan will discuss the pricing in Oregon, we don't provide specific pricing results or guidance by state. However, there is certainly momentum and many positive aspects arising from our dynamic pricing strategy that originated in that area. Regarding the Oregon situation, the new 10-year bill is significantly lower than what the legislature requested and what is needed to maintain the current repair levels, which are not satisfactory. To make progress, they will require additional funding every year. The $4.3 billion can be broken down into $430 million annually over ten years, although it's not always evenly distributed. Half goes to the states, while the other half is allocated to cities and counties. We anticipate benefiting from the portion going to cities and counties starting next year, which will create real jobs and advantages in the small and midsized communities we operate in across the state. These include projects worth between $2 million and $5 million, such as small bridge repairs, which are a staple of our work. Although this will have a positive impact for us next year, it may not be as significant as we had hoped given the larger proposed bill of $12.1 billion, but it will still be meaningful. On the other hand, I don’t expect the revenue going to ODOT to greatly improve construction, as without this funding, they would have needed to lay off hundreds of workers responsible for road maintenance and snow plowing. Therefore, I view the $4.3 billion as a temporary solution at the state level, and it will require ongoing discussions among the legislature, the governor, and taxpayers to find more funding for the budget through a new transportation bill to address the backlog of maintenance issues that have been accumulating in Oregon for years. The roads are in need of repairs, and as someone who lives there, I can attest to the condition of many old bridges that exceed their design life. Oregonians need to address this issue. Now, I'll turn it over to Nathan for insights on pricing.
Good to hear from you. On the pricing, first, just as Brian said, I mean, we don't necessarily give the pricing for any particular market. But maybe to help you understand how the markets are performing. So, Brian talked a moment ago about some of the key markets that are impacting volumes year-over-year. If you look at those markets, they are seeing pricing improvement over last year. And if you look at Oregon overall, including both the larger key markets like you mentioned in the Portland area, but even the other ones, you'll see that Oregon overall is up in its pricing. So an indication that, that dynamic pricing model is working even in those markets where you may see downward volumes.
There are no further questions at this time. So I'd like to turn the call back to Mr. Brian Gray for closing comments. Sir, please go ahead.
I just want to thank you all again for joining us today. Just equally importantly, I want to thank our team for delivering record results in the third quarter. Our EDGE plan is working. The fundamentals of our business are strong, and we believe we are well positioned for long-term success. We appreciate your continued interest and support. And with that, we'll turn the call back over to the operator.
Thank you, sir. Ladies and gentlemen, this concludes today's conference call. Thank you very much for your participation. You may now disconnect.