Knife River Corp 10-Q

Item 1. Financial Statements Knife River Corporation Consolidated Statements of Operations (Unaudited) Three Months Ended March 31, 2026 2025 (In thousands, except per share amounts) Revenue: Construction materials $ 262,314 $ 213,407 Contracting services 147,817 140,064 Total revenue 410,131 353,471 Cost of revenue: Construction materials 272,943 233,763 Contracting services 139,960 129,303 Total cost of revenue 412,903 363,066 Gross loss ( 2,772 ) ( 9,595 ) Selling, general and administrative expenses 83,461 73,058 Operating loss ( 86,233 ) ( 82,653 ) Interest expense 20,741 15,263 Other (expense) income ( 632 ) 4,567 Loss before income taxes ( 107,606 ) ( 93,349 ) Income tax benefit ( 28,430 ) ( 24,639 ) Net loss $ ( 79,176 ) $ ( 68,710 ) Net loss per share Basic $ ( 1.40 ) $ ( 1.21 ) Diluted $ ( 1.40 ) $ ( 1.21 ) Weighted average common shares outstanding: Basic 56,710 56,626 Diluted 56,710 56,626 The accompanying notes are an integral part of these consolidated financial statements. 4 Index Knife River Corporation Consolidated Statements of Comprehensive Income (Unaudited) Three Months Ended March 31, 2026 2025 (In thousands) Net loss $ ( 79,176 ) $ ( 68,710 ) Other comprehensive income: Postretirement liability adjustment: Amortization of postretirement liability losses included in net periodic benefit cost, net of tax of $ 41 and $ 20 for the three months ended March 31, 2026 and 2025, respectively. 127 63 Postretirement liability adjustment 127 63 Other comprehensive income 127 63 Comprehensive loss attributable to common stockholders $ ( 79,049 ) $ ( 68,647 ) The accompanying notes are an integral part of these consolidated financial statements. 5 Index Knife River Corporation Consolidated Balance Sheets (Unaudited) March 31, 2026 March 31, 2025 December 31, 2025 (In thousands, except shares and per share amounts) Assets Current assets: Cash, cash equivalents and restricted cash $ 75,458 $ 138,482 $ 123,418 Receivables, net 227,281 238,066 278,030 Contract assets 77,188 28,505 77,528 Inventories 480,531 467,051 435,714 Prepayments and other current assets 81,853 74,600 46,232 Total current assets 942,311 946,704 960,922 Noncurrent assets: Net property, plant and equipment 2,158,337 1,743,513 2,028,933 Goodwill 573,093 449,554 519,668 Other intangible assets, net 38,144 41,967 32,680 Operating lease right-of-use assets 49,645 46,516 52,589 Investments and other 56,333 52,453 55,321 Total noncurrent assets 2,875,552 2,334,003 2,689,191 Total assets $ 3,817,863 $ 3,280,707 $ 3,650,113 Liabilities and Stockholders' Equity Current liabilities: Long-term debt - current portion $ 11,708 $ 11,780 $ 11,708 Accounts payable 131,353 111,962 145,581 Contract liabilities 30,301 42,016 33,773 Accrued compensation 23,068 18,983 44,253 Accrued interest 16,173 15,951 7,348 Current operating lease liabilities 15,632 13,398 15,942 Other taxes payable 14,308 14,195 11,252 Other accrued liabilities 109,745 93,781 108,132 Total current liabilities 352,288 322,066 377,989 Noncurrent liabilities: Long-term debt 1,421,620 1,160,385 1,153,830 Deferred income taxes 292,273 221,588 287,917 Noncurrent operating lease liabilities 34,013 33,118 36,647 Other 158,344 135,966 152,790 Total liabilities 2,258,538 1,873,123 2,009,173 Commitments and contingencies Stockholders' equity: Common stock, 300,000,000 shares authorized, $ 0.01 par value, 57,184,991 shares issued and 56,753,855 shares outstanding at March 31, 2026; 57,083,497 shares issued and 56,652,361 shares outstanding at March 31, 2025; 57,095,301 shares issued and 56,664,165 shares outstanding at December 31, 2025 572 571 571 Other paid-in capital 627,070 621,042 629,637 Retained earnings 945,444 798,836 1,024,620 Treasury stock held at cost - 431,136 shares ( 3,626 ) ( 3,626 ) ( 3,626 ) Accumulated other comprehensive loss ( 10,135 ) ( 9,239 ) ( 10,262 ) Total stockholders' equity 1,559,325 1,407,584 1,640,940 Total liabilities and stockholders' equity $ 3,817,863 $ 3,280,707 $ 3,650,113 The accompanying notes are an integral part of these consolidated financial statements. 6 Index Knife River Corporation Consolidated Statements of Equity (Unaudited) Common Stock Other Paid-in Capital Retained Earnings Treasury Stock Accumulated Other Comprehensive Loss Shares Amount Shares Amount Total (In thousands, except shares) At December 31, 2025 57,095,301 $ 571 $ 629,637 $ 1,024,620 ( 431,136 ) $ ( 3,626 ) $ ( 10,262 ) $ 1,640,940 Net loss — — — ( 79,176 ) — — — ( 79,176 ) Other comprehensive income — — — — — — 127 127 Stock-based compensation expense — — 2,859 — — — — 2,859 Common stock issued for employee compensation, net of tax withholding 89,690 1 ( 5,426 ) — — — — ( 5,425 ) At March 31, 2026 57,184,991 $ 572 $ 627,070 $ 945,444 ( 431,136 ) $ ( 3,626 ) $ ( 10,135 ) $ 1,559,325 The accompanying notes are an integral part of these consolidated financial statements. Knife River Corporation Consolidated Statements of Equity (Unaudited) Common Stock Other Paid-in Capital Retained Earnings Treasury Stock Accumulated Other Comprehensive Loss Shares Amount Shares Amount Total (In thousands, except shares) At December 31, 2024 57,043,841 $ 570 $ 620,897 $ 867,546 ( 431,136 ) $ ( 3,626 ) $ ( 9,302 ) $ 1,476,085 Net loss — — — ( 68,710 ) — — — ( 68,710 ) Other comprehensive income — — — — — — 63 63 Stock-based compensation expense — — 2,799 — — — — 2,799 Common stock issued for employee compensation, net of tax withholding 39,656 1 ( 2,654 ) — — — — ( 2,653 ) At March 31, 2025 57,083,497 $ 571 $ 621,042 $ 798,836 ( 431,136 ) $ ( 3,626 ) $ ( 9,239 ) $ 1,407,584 The accompanying notes are an integral part of these consolidated financial statements. 7 Index Knife River Corporation Consolidated Statements of Cash Flows (Unaudited) Three Months Ended March 31, 2026 2025 (In thousands) Operating activities: Net loss $ ( 79,176 ) $ ( 68,710 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation, depletion and amortization 52,150 38,762 Deferred income taxes ( 4,211 ) 437 Provision for credit losses 901 335 Amortization of debt issuance costs 979 787 Employee stock-based compensation costs 2,859 2,799 Pension and postretirement benefit plan net periodic benefit cost 464 360 Unrealized losses on investments 760 692 Gains on sales of assets ( 1,981 ) ( 2,410 ) Gain on bargain purchase — ( 3,547 ) Equity in (losses) earnings of unconsolidated affiliates ( 165 ) 15 Changes in current assets and liabilities, net of acquisitions: Receivables 52,549 41,081 Inventories ( 41,095 ) ( 50,360 ) Other current assets ( 33,469 ) ( 35,473 ) Accounts payable ( 5,285 ) ( 12,772 ) Other current liabilities ( 8,455 ) ( 40,255 ) Pension and postretirement benefit plan contributions ( 137 ) ( 158 ) Other noncurrent changes 4,762 3,140 Net cash used in operating activities ( 58,550 ) ( 125,277 ) Investing activities: Capital expenditures ( 77,316 ) ( 74,958 ) Acquisitions, net of cash acquired ( 174,228 ) ( 443,439 ) Net proceeds from sale or disposition of property and other 3,101 17,524 Investments ( 2,612 ) ( 2,760 ) Net cash used in investing activities ( 251,055 ) ( 503,633 ) Financing activities: Issuance of long-term debt 270,000 500,000 Repayment of long-term debt ( 2,930 ) ( 19 ) Debt issuance costs — ( 11,070 ) Tax withholding on stock-based compensation ( 5,425 ) ( 2,653 ) Net cash provided by financing activities 261,645 486,258 Decrease in cash, cash equivalents and restricted cash ( 47,960 ) ( 142,652 ) Cash, cash equivalents and restricted cash -- beginning of year 123,418 281,134 Cash, cash equivalents and restricted cash -- end of period $ 75,458 $ 138,482 The accompanying notes are an integral part of these consolidated financial statements. 8 Index Knife River Corporation Notes to Consolidated Financial Statements March 31, 2026 and 2025 (Unaudited) Note 1 - Background At Knife River, we are a people-first construction materials and contracting services company. We provide construction materials and contracting services to build safe roads, bridges, airport runways and other critical infrastructure needs that connect people with where they want to go and with the supplies they need. We are one of the leading providers of crushed stone and sand and gravel in the United States and operate across 15 states. We conduct our operations through four reportable segments: West, Mountain, Central and Energy Services. Note 2 - Basis of Presentation The accompanying consolidated interim financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Interim financial statements do not include all disclosures provided in annual financial statements and, accordingly, these financial statements should be read in conjunction with the Company's 2025 Annual Report on Form 10-K (Annual Report). The information is unaudited but includes adjustments that are, in the opinion of management, necessary for a fair presentation of the accompanying consolidated interim financial statements and are of a normal recurring nature. All revenues and costs, as well as assets and liabilities, directly associated with our business activities are included in the consolidated financial statements. General corporate expenses are included in the Consolidated Statements of Operations within selling, general and administrative expenses and other income. On March 7, 2025, we acquired Strata Corporation (Strata), a leading construction materials and contracting services provider in North Dakota and northwestern Minnesota. The purchase price for Strata totaled $ 454.0 million and was subject to post-closing adjustments. The results of operations and balance sheet accounts for Strata are included in the consolidated financial statements from the date of acquisition. In December 2025, we reclassified our retention receivables of $ 42.8 million on a contract-by-contract basis from accounts receivable. The reclassification resulted in an increase to contract assets of $ 31.8 million and a decrease to contract liabilities of $ 11.0 million. This reclassification was due to FASB’s clarification of retention receivables under ASC 606 and was applied on a prospective basis. Prior years quarters were not revised. Management has also evaluated the impact of events occurring after March 31, 2026, up to the date of issuance of these consolidated interim financial statements on May 5, 2026, that would require recognition or disclosure in the Consolidated Financial Statements. Principles of consolidation For all periods, the audited consolidated financial statements were prepared in accordance with GAAP and include the accounts of Knife River and our wholly owned subsidiaries. All intercompany accounts and transactions between our businesses have been eliminated in the accompanying audited consolidated financial statements. Use of estimates The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Estimates are used for items such as long-lived assets and goodwill; fair values of acquired assets and liabilities under the acquisition method of accounting; aggregate reserves; property depreciable lives; tax provisions; revenue recognized using the cost-to-cost measure of progress for contracts; expected credit losses; environmental and other loss contingencies; costs on contracting services contracts; actuarially determined benefit costs; asset retirement obligations; present value of right-of-use assets and lease liabilities; and the valuation of stock-based compensation. These estimates are based on management’s best knowledge of current events, historical experience, actions that we may undertake in the future and on various other assumptions that are believed to be reasonable under the circumstances. As additional information becomes available, or actual amounts are determinable, the recorded estimates are revised. Consequently, operating results can be affected by revisions to prior accounting estimates. 9 Index Cash, cash equivalents and restricted cash We consider all highly liquid investments with an original maturity of three months or less, when purchased, to be cash and cash equivalents. Restricted cash represents deposits held by our captive insurance company that is required by state insurance regulations to remain in the captive insurance company. Cash, cash equivalents and restricted cash on the Consolidated Balance Sheets is comprised of: March 31, 2026 March 31, 2025 December 31, 2025 (In thousands) Cash and cash equivalents $ 13,346 $ 86,118 $ 73,821 Restricted cash 62,112 52,364 49,597 Cash, cash equivalents and restricted cash $ 75,458 $ 138,482 $ 123,418 Seasonality of operations Some of our operations are seasonal and revenues from, and certain expenses for, such operations may fluctuate significantly among quarterly periods, with lower activity in the winter months and higher activity in the summer months. Accordingly, the interim results for particular segments, and for Knife River as a whole, may not be indicative of results for the full fiscal year or other future periods. Note 3 - New Accounting Standards The following table provides a brief description of the accounting pronouncements applicable to us and the potential impact on our consolidated financial statements and/or disclosures: Recently issued ASU's not yet adopted ASU 2024-03 -Disaggregation of Income Statement Expenses In November 2024, the FASB issued guidance on modifying the disclosure requirements to improve the disclosures for a public entity's expenses and address requests from investors for more detailed information about the types of expenses in commonly presented expense captions. The guidance is to be applied either on a prospective basis to the financial statements issued for reporting periods after the effective date or on a retrospective basis to the financial statements to all prior periods presented in the financial statements. Early adoption is permitted. Annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. We are currently evaluating the impact the guidance will have on our disclosures for the year ended December 31, 2027 and interim periods for fiscal year 2028. ASU 2025-06 - Targeted Improvements to the Accounting for Internal-Use Software In September 2025, the FASB issued guidance to provide targeted improvements to the accounting for internal-use software which is intended to modernize the recognition and capitalization framework to reflect current software development practices. Under this guidance, eligible software development costs will begin capitalization when management has authorized and committed to funding the software project, and it is probable that the project will be completed and the software will be used to perform the function intended. Annual reporting periods beginning after December 15, 2027 and interim reporting periods within those annual reporting periods. Early adoption is permitted as of the beginning of an annual reporting period. We are currently evaluating the impact this guidance will have on our financial statements and disclosures. Note 4 - Receivables and Allowance for Expected Credit Losses Receivables consist primarily of trade and contract receivables for the sale of goods and services net of expected credit losses. A majority of our receivables are due in 30 days or less. The total balance of receivables past due 90 days or more was $ 23.2 million, $ 27.3 million and $ 15.3 million at March 31, 2026, March 31, 2025 and December 31, 2025, respectively. Receivables were as follows: March 31, 2026 March 31, 2025 December 31, 2025 (In thousands) Trade receivables $ 139,789 $ 122,828 $ 155,836 Contract receivables 92,547 119,556 127,383 Receivables, gross 232,336 242,384 283,219 Less expected credit loss 5,055 4,318 5,189 Receivables, net $ 227,281 $ 238,066 $ 278,030 Our expected credit losses are determined through a review using historical credit loss experience; changes in asset specific characteristics; current conditions; and reasonable and supportable future forecasts, among other specific account data, and is performed at least quarterly. We develop and document our methodology to determine our allowance for expected credit losses. Risk characteristics used by management may include customer mix, knowledge of customers and general economic conditions of 10 Index the various local economies, among others. Specific account balances are written off when management determines the amounts to be uncollectible. Management has reviewed the balance reserved through the allowance for expected credit losses and believes it is reasonable. Details of our expected credit losses were as follows: West Mountain Central Energy Services Total (In thousands) As of December 31, 2025 $ 2,405 $ 274 $ 1,602 $ 908 $ 5,189 Current expected credit loss provision 67 ( 34 ) 70 37 140 Less write-offs charged against the allowance 174 52 11 37 274 At March 31, 2026 $ 2,298 $ 188 $ 1,661 $ 908 $ 5,055 West Mountain Central Energy Services Total (In thousands) As of December 31, 2024 $ 2,478 $ 780 $ 921 $ 166 $ 4,345 Current expected credit loss provision — 42 30 263 335 Less write-offs charged against the allowance 73 8 18 263 362 At March 31, 2025 $ 2,405 $ 814 $ 933 $ 166 $ 4,318 Note 5 - Inventories Inventories on the Consolidated Balance Sheets were as follows: March 31, 2026 March 31, 2025 December 31, 2025 (In thousands) Finished products $ 319,045 $ 299,032 $ 304,281 Raw materials 114,830 126,949 91,069 Supplies and parts 46,656 41,070 40,364 Total $ 480,531 $ 467,051 $ 435,714 Inventories are valued at the lower of cost or net realizable value using the average cost method. Inventories include production costs incurred as part of our aggregate mining activities. These inventoriable production costs include all mining and processing costs associated with the production of aggregates. Stripping costs incurred during the production phase, which represent costs of removing overburden and waste materials to access mineral deposits, are a component of inventoriable production costs. 11 Index Note 6 - Net Loss Per Share Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the applicable period. Diluted earnings per share is computed by dividing net loss by the total of the weighted average number of shares of common stock outstanding during the applicable period, plus the effect of non-vested performance shares and restricted stock units. Our potentially dilutive securities have been excluded from the computation of diluted net loss per share as the effect would reduce the net loss per share and is considered antidilutive. Basic and diluted net loss per share are calculated as follows, based on a reconciliation of the weighted-average common shares outstanding on a basic and diluted basis: Three Months Ended March 31, 2026 2025 (In thousands, except per share amounts) Net loss $ ( 79,176 ) $ ( 68,710 ) Weighted average common shares outstanding - basic 56,710 56,626 Effect of dilutive performance shares and restricted stock units — — Weighted average common shares outstanding - diluted 56,710 56,626 Shares excluded from the calculation of diluted loss per share 173 274 Net loss per share-basic $ ( 1.40 ) $ ( 1.21 ) Net loss per share-diluted $ ( 1.40 ) $ ( 1.21 ) Note 7 - Accumulated Other Comprehensive Loss Comprehensive income (loss) is comprised of net income (loss) and other comprehensive income (loss). The only component of other comprehensive income (loss) is the amortization of postretirement liability losses for our benefit plans. As of March 31, 2026 and 2025, and December 31, 2025, accumulated other comprehensive loss was $ 10.1 million, $ 9.2 million and $ 10.3 million, respectively. For the three months ended March 31, 2026 and 2025, we amortized $ 127,000 and $ 63,000 , respectively, of expense into other income, and $ 41,000 and $ 20,000 , respectively, into income taxes. Note 8 - Revenue from Contracts with Customers Revenue is recognized when a performance obligation is satisfied by transferring control over a product or service to a customer. Revenue includes revenue from the sales of construction materials and contracting services. Revenue is measured based on consideration specified in a contract with a customer and excludes any sales incentives and amounts collected on behalf of third parties. We are considered an agent for certain taxes collected from customers. As such, we present revenues net of these taxes at the time of sale to be remitted to governmental authorities, including sales and use taxes. Revenue for construction materials is recognized at a point in time when delivery of the products has taken place. Contracting services revenue is recognized over time using an input method based on the cost-to-cost measure of progress on a project. 12 Index Disaggregation In the following tables, revenue is disaggregated by category for each segment and includes sales of materials to both third parties and internal customers. Due to consolidation requirements, the internal sales revenues must be eliminated against the construction materials product used in downstream materials and contracting services to arrive at the external operating revenues. We believe this level of disaggregation best depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. For more information on the Company’s reportable segments, see Note 15. Three Months Ended March 31, 2026 West Mountain Central Energy Services Corporate Services and Eliminations Total (In thousands) Aggregates $ 64,772 $ 13,564 $ 25,177 $ — $ — $ 103,513 Ready-mix concrete 73,951 22,636 47,958 — — 144,545 Asphalt 12,759 2,797 5,419 — — 20,975 Liquid asphalt — — — 18,192 — 18,192 Other 34,609 1 4,017 4,029 3,932 46,588 Contracting services public-sector 47,406 40,041 26,609 — — 114,056 Contracting services private-sector 20,363 10,805 2,593 — — 33,761 Internal sales ( 42,876 ) ( 8,608 ) ( 10,579 ) ( 5,642 ) ( 3,794 ) ( 71,499 ) Revenues from contracts with customers $ 210,984 $ 81,236 $ 101,194 $ 16,579 $ 138 $ 410,131 Three Months Ended March 31, 2025 West Mountain Central Energy Services Corporate Services and Eliminations Total (In thousands) Aggregates $ 56,257 $ 8,043 $ 17,092 $ — $ — $ 81,392 Ready-mix concrete 69,780 13,087 25,591 — — 108,458 Asphalt 8,866 498 6,770 — — 16,134 Liquid asphalt — — — 12,228 — 12,228 Other 34,406 3 2,418 2,995 3,669 43,491 Contracting services public-sector 38,772 36,179 24,276 — — 99,227 Contracting services private-sector 28,836 11,829 172 — — 40,837 Internal sales ( 28,899 ) ( 3,645 ) ( 8,478 ) ( 3,678 ) ( 3,596 ) ( 48,296 ) Revenues from contracts with customers $ 208,018 $ 65,994 $ 67,841 $ 11,545 $ 73 $ 353,471 Note 9 - Uncompleted Contracts The timing of revenue recognition may differ from the timing of invoicing to customers. The timing of invoicing to customers does not necessarily correlate with the timing of revenues being recognized under the cost-to-cost method of accounting. Contracts from contracting services are billed as work progresses in accordance with agreed upon contractual terms. Generally, billing to the customer occurs contemporaneous to revenue recognition. A variance in timing of the billings may result in a contract asset or a contract liability. A contract asset occurs when revenues are recognized under the cost-to-cost measure of progress, which exceeds amounts billed on uncompleted contracts. Such amounts will be billed as standard contract terms allow, usually based on various measures of performance or achievement. A contract liability occurs when there are billings in excess of revenues recognized under the cost-to-cost measure of progress on uncompleted contracts. Contract liabilities decrease as revenue is recognized from the satisfaction of the related performance obligation. The changes in contract assets and liabilities were as follows: March 31, 2026 December 31, 2025 Change (In thousands) Contract assets 1 $ 77,188 $ 77,528 $ ( 340 ) Contract liabilities 1 ( 30,301 ) ( 33,773 ) 3,472 Net contract assets $ 46,887 $ 43,755 $ 3,132 1 Following the issuance of the FASB Staff Educational Paper on Topic 606: Presentation and Disclosure of Retainage for Construction Contractors, we have reclassed retention receivables on a contract-by-contract basis from accounts receivable to contract assets and liabilities. The change in presentation was on a prospective basis beginning with balances as of December 31, 2025. 13 Index March 31, 2025 December 31, 2024 Change (In thousands) Contract assets $ 28,505 $ 31,283 $ ( 2,778 ) Contract liabilities ( 42,016 ) ( 42,126 ) 110 Net contract liabilities $ ( 13,511 ) $ ( 10,843 ) $ ( 2,668 ) We recognized $ 27.6 million in revenue for the three months ended March 31, 2026, which was previously included in contract liabilities at December 31, 2025. We recognized $ 28.2 million in revenue for the three months ended March 31, 2025, which was previously included in contract liabilities at December 31, 2024. We recognized a net increase in revenues of $ 4.2 million and $ 8.0 million for the three months ended March 31, 2026 and 2025, respectively, from performance obligations satisfied in prior periods. Remaining performance obligations The remaining performance obligations, also referred to as backlog, include unrecognized revenues that we reasonably expect to be realized. These unrecognized revenues can include: projects that have a written award, a letter of intent, a notice to proceed, an agreed upon work order to perform work on mutually accepted terms and conditions, and change orders or claims to the extent management believes additional contract revenues will be earned and are deemed probable of collection. The majority of our contracts for contracting services have an original duration of less than one year. At March 31, 2026, our remaining performance obligations were $ 1.2 billion. We expect to recognize the following revenue amounts in future periods related to these remaining performance obligations: $ 913.9 million within the next 12 months or less; $ 155.3 million within the next 13 to 24 months; and $ 99.6 million in 25 months or more. Note 10 - Acquisitions and Dispositions Acquisitions The following acquisitions were accounted for as business combinations in accordance with ASC 805 - Business Combinations . The results of the business combinations have been included in the Company's Consolidated Financial Statements beginning on the acquisition dates. Pro forma financial amounts reflecting the effects of the business combinations are not presented, as none of these business combinations, individually or in the aggregate, were material to our financial position or results of operations. Acquisitions are also subject to customary adjustments based on, among other things, the amount of cash, debt and working capital in the business as of the closing date. The amounts included in the Consolidated Balance Sheets for these adjustments are considered provisional until final settlement has occurred. As of March 31, 2026, the estimated fair value of the assets acquired and liabilities for the acquisitions completed in 2026 were considered provisional as we continue to gather information to finalize the valuation of these assets and liabilities. The fair values are considered provisional until final fair values are determined during the measurement period. We expect to record adjustments as we accumulate the information needed to estimate the fair value of assets acquired and liabilities assumed, including working capital balances, estimated fair value of identifiable intangible assets, property, plant and equipment, total consideration and goodwill. We will utilize market and cost approaches to estimate the fair value of the property, plant and equipment, excluding aggregate reserves. The fair value of aggregate reserves and intangible assets are determined using the income approach. All estimates, key assumptions, and forecasts were either provided by or reviewed by management. We have engaged third-party valuation firms to assist in the analysis and valuation of certain assets. While we chose to utilize third-party valuation firms, the fair value analysis and related valuations represent the conclusions of management and not the conclusions or statements of any third party. The excess of the total purchase price over the fair value of assets acquired and liabilities assumed has been allocated to goodwill. We believe that the goodwill relates to several factors, including potential synergies related to market opportunities for multiple product offerings and economies of scale expected from combining our operations with the businesses acquired. During the first three months of 2026, we completed the following three acquisitions: • Two Montana aggregates-based operations within the Mountain segment; one operation consists of a ready-mix concrete business supported by owned aggregate reserves, while the other includes owned aggregate reserves, ready-mix operations and precast concrete manufacturing capabilities. • A Utah aggregates-based company in the Mountain segment that consists of owned aggregate reserves, asphalt production and contracting services; this acquisition expanded our footprint into a new state. 14 Index The aggregated purchase consideration for these three acquisitions was $ 174.2 million, net of cash assumed, and subject to post-closing adjustments. These acquisitions were not considered material separately or in the aggregate. The acquisitions resulted in the recognition of $ 8.6 million of current assets; $ 120.8 million of assets in property, plant and equipment; $ 54.2 million of goodwill; $ 5.3 million of intangible assets, which included $ 4.1 million of backlog and $ 1.2 million of customer relationships; $ 8.5 million deferred income tax liability; $ 5.7 million of current liabilities; and $ 547,000 of noncurrent liabilities - other. The revenue and net income (loss) of these acquisitions was immaterial for the three months ended March 31, 2026. During 2025, we completed five acquisitions with an aggregated purchase price of $ 622.2 million, subject to future post-closing adjustments. As of March 31, 2026, the purchase accounting was complete on three of the acquisitions and no material adjustments were needed. During the first quarter of 2026, we recorded a reduction to goodwill of $ 780,000 , related to an increase of $ 3.0 million in intangibles and a decrease of $ 2.2 million in property, plant and equipment for acquisitions completed in 2025. For the three months ended March 31, 2026 and 2025, we incurred acquisition-related costs on completed and other potential acquisitions of $ 2.0 million and $ 5.3 million, respectively. These costs are included in our Corporate Services in selling, general and administrative expenses on the Consolidated Statement of Operations. Dispositions On March 7, 2025, we sold four ready-mix plant operations for total proceeds of $ 14.5 million. The ready-mix plant operations were acquired by us as part of the Strata acquisition and subsequently sold to a third-party. The ready-mix plants were included in assets held for sale on the opening balance sheet for Strata at the time of the acquisition. Note 11 - Goodwill and Other Intangible Assets The changes in the carrying amount of goodwill were as follows: Balance at January 1, 2026 Goodwill Acquired During the Year Measurement Period Adjustments Balance at March 31, 2026 (In thousands) West $ 137,575 $ — $ 306 $ 137,881 Mountain 26,816 54,205 — 81,021 Central 323,903 — ( 1,086 ) 322,817 Energy Services 31,374 — — 31,374 Total $ 519,668 $ 54,205 $ ( 780 ) $ 573,093 Balance at January 1, 2025 Goodwill Acquired During the Year Measurement Period Adjustments Balance at March 31, 2025 (In thousands) West $ 123,674 $ — $ — $ 123,674 Mountain 26,816 — — 26,816 Central 115,322 152,329 — 267,651 Energy Services 31,413 — — 31,413 Total $ 297,225 $ 152,329 $ — $ 449,554 Balance at January 1, 2025 Goodwill Acquired During the Year Measurement Period Adjustments Balance at December 31, 2025 (In thousands) West $ 123,674 $ 11,904 $ 1,997 $ 137,575 Mountain 26,816 — — 26,816 Central 115,322 212,962 ( 4,381 ) 323,903 Energy Services 31,413 — ( 39 ) 31,374 Total $ 297,225 $ 224,866 $ ( 2,423 ) $ 519,668 15 Index Other amortizable intangible assets were as follows: March 31, 2026 March 31, 2025 December 31, 2025 (In thousands) Customer relationships $ 33,030 $ 30,703 $ 34,699 Less accumulated amortization 14,064 11,798 15,789 18,966 18,905 18,910 Noncompete agreements 2,655 3,107 3,107 Less accumulated amortization 2,502 2,743 2,904 153 364 203 Tradename 7,470 7,470 7,470 Less accumulated amortization 1,058 188 871 6,412 7,282 6,599 Backlog 7,517 9,890 10,395 Less accumulated amortization 754 32 9,052 6,763 9,858 1,343 Other 6,220 6,688 5,968 Less accumulated amortization 370 1,130 343 5,850 5,558 5,625 Total $ 38,144 $ 41,967 $ 32,680 The previous tables include goodwill and intangible assets associated with the business combinations completed in 2026 and 2025. For more information related to these business combinations, see Note 10. Amortization expense for amortizable intangible assets for the three months ended March 31, 2026 and 2025 was $ 3.1 million and $ 1.1 million, respectively. Estimated amortization expense for identifiable intangible assets as of March 31, 2026, was: Remainder of 2026 2027 2028 2029 2030 Thereafter (In thousands) Amortization expense $ 9,830 $ 4,823 $ 4,335 $ 3,731 $ 2,940 $ 12,485 Note 12 - Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. The fair value guidance establishes a hierarchy for grouping assets and liabilities, based on the significance of inputs. The estimated fair values of the assets and liabilities measured on a recurring basis are determined using the market approach. Financial instruments measured at fair value on a recurring basis We measure our investments in certain fixed-income and equity securities at fair value with changes in fair value recognized in income. We anticipate using these investments, which consist of insurance contracts, to satisfy our obligations under our unfunded, nonqualified defined benefit and defined contribution plans for our executive officers and certain key management employees, and invest in these fixed-income and equity securities for the purpose of earning investment returns and capital appreciation. These investments, which totaled $ 35.7 million, $ 30.5 million and $ 34.0 million at March 31, 2026 and 2025, and December 31, 2025, respectively, are classified as investments on the Consolidated Balance Sheets. The net unrealized losses on these investments were $ 761,000 and $ 692,000 for the three months ended March 31, 2026 and 2025, respectively. The change in fair value, which is considered part of the cost of the plan, is classified in other income on the Consolidated Statements of Operations. 16 Index The Company's assets measured at fair value on a recurring basis were as follows: Fair Value Measurements at March 31, 2026, Using Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Balance at March 31, 2026 (In thousands) Assets: Money market funds $ — $ 2,799 $ — $ 2,799 Insurance contracts — 35,707 — 35,707 Total assets measured at fair value $ — $ 38,506 $ — $ 38,506 Fair Value Measurements at March 31, 2025, Using Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Balance at March 31, 2025 (In thousands) Assets: Money market funds $ — $ 4,125 $ — $ 4,125 Insurance contracts — 30,451 — 30,451 Total assets measured at fair value $ — $ 34,576 $ — $ 34,576 Fair Value Measurements at December 31, 2025, Using Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Balance at December 31, 2025 (In thousands) Assets: Money market funds $ — $ 2,775 $ — $ 2,775 Insurance contracts — 33,982 — 33,982 Total assets measured at fair value $ — $ 36,757 $ — $ 36,757 Our Level 2 money market funds are valued at the net asset value of shares held at the end of the period, based on published market quotations on active markets, or using other known sources including pricing from outside sources. The estimated fair value of the Level 2 insurance contracts is based on contractual cash surrender values that are determined primarily by investments in managed separate accounts of the insurer. These amounts approximate fair value. The managed separate accounts are valued based on other observable inputs or corroborated market data. Though we believe the methods used to estimate fair value are consistent with those used by other market participants, the use of other methods or assumptions could result in a different estimate of fair value. Nonfinancial instruments measured at fair value on a nonrecurring basis We apply the provisions of the fair value measurement standard to our nonrecurring, non-financial measurements, including long-lived asset impairments. These assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances. We review the carrying value of our long-lived assets, excluding goodwill, whenever events or changes in circumstances indicate that such carrying amounts may not be recoverable. The assets and liabilities of the acquisitions that occurred through March 31, 2026 and 2025 were calculated using a market or cost approach. The fair value of some of the assets was determined based on Level 3 inputs including estimated future cash flows, discount rates, growth rates and sales projections, all of which require significant management judgment. For more information on these Level 2 and 3 fair value measurements, see Note 10. 17 Index Our long-term debt is not measured at fair value on the Consolidated Balance Sheets and the fair value is being provided for disclosure purposes only. The fair value was categorized as Level 2 in the fair value hierarchy and was based on discounted cash flows using current market interest rates. The estimated fair value of our Level 2 long-term debt was as follows: March 31, 2026 March 31, 2025 December 31, 2025 (In thousands) Carrying amount $ 1,448,212 $ 1,189,931 $ 1,181,142 Fair value $ 1,463,925 $ 1,208,611 $ 1,202,247 The carrying amounts of our remaining financial instruments included in current assets and current liabilities approximate their fair values. Note 13 - Debt Certain debt instruments of ours contain restrictive covenants and cross-default provisions. In order to borrow under the debt agreements, we must be in compliance with the applicable covenants and certain other conditions, all of which management believes we, as applicable, were in compliance with at March 31, 2026. In the event we do not comply with the applicable covenants and other conditions, alternative sources of funding may need to be pursued. Long-term Debt Outstanding Long-term debt outstanding was as follows: Weighted Average Interest Rate at March 31, 2026 March 31, 2026 March 31, 2025 December 31, 2025 (In thousands) Term loan A agreement due on March 7, 2030 5.45 % $ 258,070 $ 264,688 $ 259,725 Term loan B agreement due on March 8, 2032 5.67 % 495,000 500,000 496,250 Revolving credit agreement 6.46 % 270,000 — — Senior notes due on May 1, 2031 7.75 % 425,000 425,000 425,000 Other notes due on January 1, 2061 — % 141 243 167 Less unamortized debt issuance costs 14,883 17,766 15,604 Total long-term debt 1,433,328 1,172,165 1,165,538 Less current maturities 11,708 11,780 11,708 Net long-term debt $ 1,421,620 $ 1,160,385 $ 1,153,830 Schedule of Debt Maturities Long-term debt maturities, which excludes unamortized debt issuance costs, at March 31, 2026, were as follows: Remainder of 2026 2027 2028 2029 2030 Thereafter (In thousands) Long-term debt maturities $ 8,803 $ 16,631 $ 18,234 $ 23,197 $ 485,096 $ 896,250 18 Index Note 14 - Cash Flow Information Cash expenditures for interest and income taxes were as follows: Three Months Ended March 31, 2026 2025 (In thousands) Interest paid, net $ 10,985 $ 4,731 Income taxes paid, net $ 41 $ 2,883 Noncash investing and financing transactions were as follows: Three Months Ended March 31, 2026 2025 (In thousands) Property, plant and equipment additions in accounts payable $ 8,673 $ 5,023 Right-of-use assets obtained in exchange for new operating lease liabilities $ 1,587 $ 1,179 Accrual for holdback payment related to a business combination $ 5,695 $ — Note 15 - Business Segment Data We focus on the vertical integration of our products and services by offering customers a single source for construction materials and related contracting services. We operate in 15 states across the United States through our four operating segments: West, Mountain, Central and Energy Services, each of which is also a reportable segment. Each segment’s performance is evaluated based on segment results without allocating corporate expenses, which include corporate costs associated with accounting, legal, treasury, business development, information technology, human resources, and other corporate expenses that support the operating segments. Three of our reportable segments are aligned by key geographic areas due to the production of construction materials and related contracting services and one is based on product line. Each segment is led by a segment manager who reports to our chief operating officer, who is also our chief operating decision maker, along with the chief executive officer. Our chief operating decision maker uses EBITDA to evaluate the performance of the segments, perform analytical comparisons to budget and uses historical and projected EBITDA to allocate resources, including capital allocations. Each geographic segment offers a vertically integrated suite of products and services, including aggregates, ready-mix concrete, asphalt and contracting services, while the Energy Services segment produces and supplies liquid asphalt, primarily for use in asphalt road construction, and is a supplier to some of the other segments. Each geographic segment mines, processes and sells construction aggregates (crushed stone and sand and gravel); produces and sells asphalt; and produces and sells ready-mix concrete as well as vertically integrating its contracting services to support the aggregate-based product lines including heavy-civil construction, asphalt and concrete paving, and site development and grading. Although not common to all locations, the geographic segments also sell cement, merchandise and other building materials and related services . Corporate Services represents the unallocated costs of certain corporate functions, such as accounting, legal, treasury, business development, information technology, human resources and other corporate expenses that support the operating segments. Corporate Services also includes an immaterial amount of external revenue from the Knife River Training Center. We account for intersegment sales and transfers as if the sales or transfers were to third parties. The accounting policies applicable to each segment are consistent with those used in the audited consolidated financial statements. The preceding information follows the same accounting policies as described in the audited financial statements and notes included in the Company's 2025 Annual Report. Information on our segments was as follows: 19 Index Three Months Ended March 31, 2026 Three Months Ended March 31, 2025 West Mountain Central Energy Services Total West Mountain Central Energy Services Total (In thousands) Revenues from external customers $ 210,984 $ 81,236 $ 101,194 $ 16,579 $ 409,993 $ 208,018 $ 65,994 $ 67,841 $ 11,545 $ 353,398 Intersegment revenues 793 — 13 3,870 4,676 274 — 13 2,398 2,685 Total segment revenue 211,777 81,236 101,207 20,449 414,669 208,292 65,994 67,854 13,943 356,083 Other revenues 1 512 530 Less: Elimination of intersegment revenue 5,050 3,142 Total consolidated revenue $ 410,131 $ 353,471 Cost of revenue excluding depreciation, depletion and amortization 166,014 77,766 104,776 21,336 165,013 72,955 73,655 17,617 Selling, general and administrative expenses excluding depreciation, depletion and amortization 23,090 11,663 23,270 3,713 21,646 9,299 18,470 4,099 Other segment items 2 ( 461 ) ( 29 ) 5 ( 29 ) 3,281 ( 7 ) ( 21 ) ( 29 ) Total segment EBITDA $ 22,212 $ ( 8,222 ) $ ( 26,834 ) $ ( 4,629 ) $ ( 17,473 ) $ 24,914 $ ( 16,267 ) $ ( 24,292 ) $ ( 7,802 ) $ ( 23,447 ) Consolidated loss before income taxes ( 107,606 ) ( 93,349 ) Plus: Depreciation, depletion and amortization 52,150 38,762 Interest expense, net 3 20,066 13,123 Less unallocated amounts: Other corporate revenue 139 73 Other corporate expenses ( 18,056 ) ( 18,090 ) Total segment EBITDA $ ( 17,473 ) $ ( 23,447 ) Capital expenditures $ 10,396 $ 19,243 $ 29,350 $ 2,198 $ 61,187 $ 26,921 $ 13,929 $ 25,893 $ 1,617 $ 68,360 Assets $ 1,483,533 $ 564,497 $ 1,348,898 $ 272,557 $ 3,669,485 $ 1,265,438 $ 350,259 $ 1,138,931 $ 285,681 $ 3,040,309 Other assets 5,478,819 4,778,400 Elimination of intercompany receivables and investment in subsidiaries 5,330,441 4,538,002 Total consolidated assets $ 3,817,863 $ 3,280,707 1 Other revenues is comprised of revenue included within our corporate services. 2 Other segment items is comprised of other income (expense) items on the income statement. 3 Interest expense, net is interest expense net of interest income. 20 Index Note 16 - Commitments and Contingencies We are party to claims and lawsuits arising out of our business and that of our consolidated subsidiaries, which may include, but are not limited to, matters involving property damage, personal injury, and environmental, contractual and statutory obligations. We accrue a liability for those contingencies when the incurrence of a loss is probable, and the amount can be reasonably estimated. If a range of amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then the minimum of the range is accrued. We do not accrue liabilities when the likelihood that the liability has been incurred is probable, but the amount cannot be reasonably estimated or when the liability is believed to be only reasonably possible or remote. For contingencies where an unfavorable outcome is probable or reasonably possible and which are material, we disclose the nature of the contingency and, in some circumstances, an estimate of the possible loss. Accruals are based on the best information available, but in certain situations management is unable to estimate an amount or range of a reasonably possible loss, including, but not limited to, when: (1) the damages are unsubstantiated or indeterminate, (2) the proceedings are in the early stages, (3) numerous parties are involved, or (4) the matter involves novel or unsettled legal theories. At March 31, 2026 and 2025, and December 31, 2025, we accrued contingent liabilities as a result of litigation, which have not been discounted, of $ 3.2 million, $ 3.4 million and $ 3.3 million, respectively. At March 31, 2026, we also recorded corresponding insurance receivables of $ 145,000 . At March 31, 2025 and December 31, 2025, there were no corresponding insurance receivables recorded. The accruals are for contingencies, including litigation and environmental matters. Most of these claims and lawsuits are covered by insurance, thus our exposure is typically limited to our deductible amount. We will continue to monitor each matter and adjust accruals as might be warranted based on new information and further developments. Management believes that the outcomes with respect to probable and reasonably possible losses in excess of the amounts accrued, net of insurance recoveries, while uncertain, either cannot be estimated or will not have a material effect upon the Company's financial position, results of operations or cash flows. Unless otherwise required by GAAP, legal costs are expensed as they are incurred. Environmental matters Knife River Corporation - Northwest is a party to claims for the cleanup of a superfund site in Portland, Oregon. There were no material changes to the environmental matters that were previously reported in the audited financial statements and notes included in our 2025 Annual Report. Guarantees We have outstanding obligations to third parties where we have guaranteed our performance. These guarantees are related to contracts for contracting services and certain other guarantees. At March 31, 2026, the fixed maximum amounts guaranteed under these agreements aggregated to $ 11.5 million, all of which have no scheduled maturity date. Certain of the guarantees also have no fixed maximum amounts specified. There were no amounts outstanding under the previously mentioned guarantees at March 31, 2026. We have outstanding letters of credit to third parties related to insurance policies and other agreements. At March 31, 2026, the fixed maximum amounts guaranteed under these letters of credit aggregated to $ 51.8 million. At March 31, 2026, the amounts of scheduled expiration of the maximum amounts guaranteed under these letters of credit aggregate to $ 756,000 in 2026, $ 50.9 million in 2027, and $ 175,000 in 2028. There were no amounts outstanding under the previously mentioned letters of credit at March 31, 2026. In the normal course of business, we have surety bonds related to contracts for contracting services, reclamation obligations and insurance policies of its subsidiaries. In the event a subsidiary of Knife River does not fulfill a bonded obligation, we would be responsible to the surety bond company for completion of the bonded contract or obligation. A large portion of the surety bonds are expected to expire within the next 12 months; however, we will likely continue to enter into surety bonds for our subsidiaries in the future. At March 31, 2026, approximately $ 990.4 million of surety bonds were outstanding, which were not reflected on the Consolidated Balance Sheet. 21 Index