What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-04 compared with 2026-05-05 · 222 added, 118 removed, 323 unchanged (51% of the section changed)

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Forward-looking statements are all statements other than statements of historical fact, including without limitation those statements that are identified by the words "anticipates," "estimates," "expects," "intends," "plans," "predicts" and similar expressions, and include statements concerning plans, projections, objectives, goals, strategies, future events or performance, and underlying assumptions (many of which are based, in turn, upon further assumptions) and other statements that are other than statements of historical facts.

From time to time, Knife River Corporation ("Knife River," the "Company," "we," "our," or "us") may publish or otherwise make available forward-looking statements of this nature, including statements related to its Competitive EDGE strategy (EDGE) implemented to improve margins and to execute on other strategic initiatives aimed at generating long-term profitable growth, shareholder value creation, expected long-term goals, expected backlog margin, acquisitions, financing plans, expected federal and state funding for infrastructure or other proposed strategies.

From time to time, Knife River Corporation ("Knife River," the "Company," "we," "our," or "us") may publish or otherwise make available forward-looking statements of this nature, including statements related to strategic initiatives aimed at generating long-term profitable growth, shareholder value creation, expected long-term goals, expected backlog margin, acquisitions, financing plans, expected federal and state funding for infrastructure or other proposed strategies.

Forward-looking statements involve risks and uncertainties, which could cause actual results or outcomes to differ materially from those expressed.

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Our contracting services backlog was as follows:

March 31, 2026 March 31, 2025 December 31, 2025

June 30, 2026 June 30, 2025 December 31, 2025

(In millions)

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$ 1,216.0 $ 1,253.4 $ 1,032.1

Expected margins on backlog at March 31, 2026, were lower compared to the expected margins on backlog at March 31, 2025.

Of the $1.2 billion of backlog at March 31, 2026, we expect to complete approximately $914 million in the 12 months following March 31, 2026.

Approximately 88 percent of our backlog at March 31, 2026, is related to publicly funded projects, including street and highway construction projects, which are driven primarily by public works projects for state departments of transportation (DOT).

Expected margins on backlog at June 30, 2026, were slightly lower compared to the expected margins on backlog at June 30, 2025.

Of the $1.2 billion of backlog at June 30, 2026, we expect to complete approximately $984 million in the 12 months following June 30, 2026.

Approximately 85 percent of our backlog at June 30, 2026, is related to publicly funded projects, including street and highway construction projects, which are driven primarily by public works projects for state departments of transportation (DOT).

Further, there continues to be infrastructure development, as discussed in the following section on Public Funding, which is expected to continue to provide bidding opportunities in our markets.

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Funding for public projects is dependent on federal and state funding, such as appropriations to the Federal Highway Administration.

Currently, states have continued moving forward with allocating funds from federal programs, such as the Infrastructure Investment and Jobs Act (IIJA), which is authorized to provide $1.2 trillion in funding from 2022 through 2026.

As of March 2026, approximately 43 percent of IIJA formula funding had yet to be spent in our 15 state operating market.

As of May 2026, approximately 38 percent of IIJA formula funding had yet to be spent in our 15 state operating market.

While each market is unique, the DOT budgets in most of the states where we operate remain strong.

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In addition, we are rolling out new technologies designed to increase productivity and provide enhanced, real-time visibility into daily operations.

We could be subject to downward pressure on our margins due to competitive forces and fluctuations in the prices of raw materials, including diesel fuel, gasoline, natural gas, liquid asphalt, cement and steel.

To help offset these pressures, we have utilized various mitigation strategies, such as dynamic pricing, energy escalation clauses in our contracting services contracts, securing materials in advance including the prepurchasing of diesel, fuel surcharges and pursuing other cost-saving measures.

During the first quarter of 2026, our teams were successful with these mitigating controls and we have not seen a material impact to our results of operations as a result of the conflict in Iran.

We will continue to monitor the effects these economic conditions could have on our business.

We are subject to downward pressure on our margins due to competitive market dynamics and fluctuations in the prices of raw materials, including diesel fuel, gasoline, natural gas, liquid asphalt, cement and steel.

We are experiencing competitive market dynamics, primarily within contracting services, which is resulting in projects being more competitively bid and in turn compressing our contracting services margins.

To counteract the effects of raw material price fluctuations, we have utilized various mitigating strategies, such as dynamic pricing;

energy escalation clauses in our contracting services contracts;

securing materials in advance including the prepurchasing of diesel;

fuel surcharges and pursuing other cost-saving measures.

Energy escalation adjustments within contracting services are often subject to a recognition delay of a few months and are not reflected immediately in our results of operations.

During the first half of 2026, our teams were successful with these mitigating controls, however, our results of operations were still impacted, largely as a result of the timing of contract billings.

We will continue to monitor the effects these economic conditions have on our business.

Pursuing our strategic growth goals through targeted acquisitions is expected to drive an increase in selling, general and administrative expenses on a year-over-year basis.

In the initial year of an acquisition, additional payroll-related costs associated with the acquired company, third-party consulting commitments, and newly recognized intangible assets contributing to elevated amortization expense are all anticipated.

Upon complete integration of the acquired entities, operational synergies with our existing business can be realized, generating cost efficiencies.

Our management team continues to evaluate growth opportunities, both through organic growth and acquisitions they believe will generate shareholder value.

Our business development team is focused on our growth with materials-led businesses in mid-size, higher growth markets, and has several targets at various stages of completion in our acquisition pipeline.

During the first quarter of 2026, we finalized three acquisitions within the Mountain region.

Two of these transactions will allow us to broaden our presence in Montana, enhancing our ability to supply aggregates and ready-mix concrete to the expanding market in western Montana.

Additionally, the acquisition of Morgan Asphalt marks our entry into the Utah market.

This acquisition includes aggregate crushing and production operations with reserves projected to last over 30 years, an asphalt manufacturing facility and a range of contracting services such as asphalt paving, excavation and grading, serving both public and private sector customers.

In addition, we are investing in multiple organic projects, including an aggregates expansion project in South Dakota that will increase our production capabilities in the Sioux Falls market.

This project is scheduled to be operational in 2027.

In Twin Falls, Idaho, we greenfielded new ready-mix operations, which allows us to build a local team in this higher-growth market.

The Twin Falls plant is expected to be fully operational in the second quarter of 2026.

We typically experience seasonal losses in the first quarter due to a large portion of our markets being geographically located in the northern part of the country.

During the first half of 2026, we finalized three aggregates-based acquisitions within the Mountain region and one in the West region.

Two of these transactions broadens our presence in Montana, enhancing our ability to supply aggregates and ready-mix concrete to the expanding market in western Montana.

The acquisition in the West expands our footprint in the Southwest Oregon markets.

Additionally, the acquisition of Morgan Asphalt marked our entry into the Utah market.

This acquisition included aggregate crushing and production operations with reserves projected to last over 30 years, an asphalt manufacturing facility and a range of contracting services such as asphalt paving, excavation and grading, serving both public and private sector customers.

In addition, we continue to invest in multiple organic projects, including an aggregates expansion project in South Dakota and ready-mix operations in both Minnesota and Texas.

The aggregate expansion project will increase our production capabilities in the Sioux Falls market and is scheduled to be operational in 2027.

In Minnesota, we are redeploying a portable ready-mix plant to an existing aggregate site north of the Twin Cities metro area.

The addition of this plant expands our ability to serve the central Minnesota market and is anticipated to be operational in the third quarter of 2026.

In Texas, we purchased a ready-mix site in April 2026 located in the Conroe, Texas area that is complementary to locations included in the TexCrete acquisition.

Site improvements are currently underway and a new plant is expected to be located on this site by the end of 2026.

Further, we completed greenfielded ready-mix operations located in the Twin Falls market, which became fully operational in the second quarter of 2026.

Our operations can be impacted by weather especially due to a large portion of our markets being geographically located in the northern part of the country.

Generally, construction activity increases in the second quarter and continues throughout the year, contributing to both materials and contracting services volumes.

For this reason, we see more pre-production activity and site improvements in the first quarter as we prepare for the upcoming construction season, which provides a benefit to us for the remainder of the year as volumes and sales increase.

However, an unusually wet spring or longer winter can lead to reduced construction activity, which would also impact our aggregate and asphalt product lines.

Due to the seasonality of our operations, we see more pre-production activity and site improvements in the first quarter and early second quarter as we prepare for the upcoming construction season.

These pre-production activities will provide a benefit to us the remainder of the year as volumes and sales increase.

Some of this pre-production work includes stripping and harvesting at our aggregate sites as well as repairing and mobilizing equipment.

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Our training and development team, based out of the Knife River Training Center, is comprised of professional instructors, who bring a wealth of knowledge and experience to the learning environment.

This dedicated team has a long-standing tradition of delivering quality training programs that are both comprehensive and practical.

This dedicated team has a long-standing tradition of

delivering quality training programs that are both comprehensive and practical.

Their expertise helps ensure that our team members receive the highest standard of education and skill development.

Consolidated Overview

Three Months Ended

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June 30, June 30,

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(In millions)

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Cost of revenue 775.8 676.5 15 % 1,188.7 1,039.6 14 %

(2.8) (9.6) 71 %

Gross profit 162.8 157.3 3 % 160.0 147.6 8 %

Selling, general and administrative expenses 81.7 69.2 18 % 165.1 142.2 16 %

Operating loss (86.3) (82.7) (4) %

Operating income (loss) 81.1 88.1 (8) % (5.1) 5.4 (194) %

Interest expense 24.5 22.3 10 % 45.3 37.6 20 %

Other (expense) income

(0.6) 4.6 (113) %

Loss before income taxes

(107.6) (93.4) (15) %

Income tax benefit

(28.4) (24.7) (15) %

$ (79.2) $ (68.7) (15) %

Other income 3.3 2.2 50 % 2.6 6.8 (62) %

Income (loss) before income taxes 59.9 68.0 (12) % (47.8) (25.4) (88) %

Income tax expense (benefit) 16.0 17.4 (8) % (12.5) (7.3) (71) %

Net income (loss) $ 43.9 $ 50.6 (13) % $ (35.3) $ (18.1) (95) %

EBITDA* $ 140.2 $ 139.7 — % $ 104.8 $ 98.2 7 %

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Cost of revenue also includes depreciation, depletion and amortization attributable to the assets used in the production process.

Gross (loss) profit includes revenue less cost of revenue, as defined above, and is the difference between revenue and the cost of making a product or providing a service, before deducting selling, general and administrative expenses, income taxes and interest expense.

Gross profit includes revenue less cost of revenue, as defined above, and is the difference between revenue and the cost of making a product or providing a service, before deducting selling, general and administrative expenses, income taxes and interest expense.

Selling, general and administrative expenses include the costs for estimating, bidding and business development, as well as costs related to corporate and administrative functions.

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and other miscellaneous expenses.

Other (expense) income includes net periodic benefit costs for our benefit plan expenses, other than service costs;

Other income includes net periodic benefit costs for our benefit plan expenses, other than service costs;

interest income;

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earnings or losses on joint venture arrangements;

gain on bargain purchase;

gains on bargain purchases;

and other miscellaneous income or expenses.

Income tax (benefit) expense consists of corporate income taxes related to our net income (loss).

Income tax expense (benefit) consists of corporate income taxes related to our net income (loss).

Income taxes are presented at the corporate services level and not at the individual segments.

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The following tables summarize our operating results.

Three Months Ended

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2026 2025 2026 2025

Dollars Margin Dollars Margin

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- not meaningful

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Sales (thousands):

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* The average selling price includes freight and delivery and other revenues.

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Dollars Margin Dollars Margin

(In millions)

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Liquid asphalt

91.4 85.9 109.5 98.1

Other* 83.7 79.6 130.3 123.0

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Total revenues $ 938.6 $ 833.8 $ 1,348.7 $ 1,187.2

Gross (loss) profit by product line:

Gross profit by product line:

Aggregates $ 38.8 19.9 % $ 34.6 20.8 % $ 35.1 11.8% $ 28.6 11.6%

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Contracting services 30.9 7.6 % 40.8 12.0 % 38.8 7.0% 51.5 10.7%

Total gross loss

$ (2.8) (0.7)% $ (9.6) (2.7)%

Total gross profit $ 162.8 17.3% $ 157.3 18.9% $ 160.0 11.9% $ 147.6 12.4%

* Other includes cement, merchandise, fabric and spreading, and other products and services that individually are not considered to be a core line of business.

Three Months Ended March 31, 2026, Compared to Three Months Ended March 31, 2025

Revenue increased $56.6 million, led mostly by ready-mix volumes contributing $35.8 million to the increase followed by an increase in aggregate volumes of $21.5 million, largely driven by recent acquisitions as well as favorable weather allowing for early season contracting services work.

Partially offsetting the increased revenue was lower volumes in Hawaii due to significant flooding in the state.

Gross loss improved $6.8 million, largely the result of higher revenues noted above, as well as a decrease in maintenance and pre-production costs.

Three Months Ended June 30, 2026, Compared to Three Months Ended June 30, 2025

Revenue increased $104.8 million or 13 percent, led by double-digit volume increases for ready-mix, asphalt and aggregates, and an increase in contracting services.

The increase in contracting services was largely the result of more asphalt paving work, which also drove an increase in asphalt and aggregates.

Acquisitions this past year further contributed to the increases across all product lines.

We also continue to focus on our pricing, which contributed another $15.3 million in the quarter.

Gross profit improved $5.5 million, largely due to the additional product line volumes noted above and price increases on liquid asphalt, aggregates and cement.

Partially offsetting the increase was lower margins on contracting services work due to the timing and type of projects, as well as competitive market dynamics.

Aggregates gross profit benefited from fuel surcharges and higher delivery revenues, however, these are dilutive to our aggregates gross margin because fuel surcharges are billed at cost and there is minimal margin on delivery costs.

Selling, general and administrative expenses

As a percentage of revenues, selling, general and administrative expense was 20.4 percent in the first quarter of 2026 compared to 20.7 percent in 2025.

Due to the seasonality of our operations, our first quarter selling, general and administrative costs as a percent of revenue are higher than our annualized costs.

For the first quarter of 2026, we experienced higher costs, largely as a result of the additional costs associated with the companies acquired in 2025 and the first quarter of 2026, including additional payroll and payroll-related costs and $2.1 million higher purchase accounting-related intangible asset amortization.

As a percentage of revenues, selling, general and administrative expense was 8.7 percent in the second quarter of 2026 compared to 8.3 percent in 2025.

For the second quarter of 2026, we experienced higher costs, largely related to the absence of gains on asset sales recognized in the second quarter of 2025 of $10.3 million.

Also contributing was the additional costs associated with companies acquired, including additional payroll and payroll-related costs, which was offset slightly by $1.7 million lower purchase accounting-related intangible asset amortization.

Interest expense

Interest expense increased $5.4 million due primarily to higher average debt balances with the issuance of a Term Loan B in March of 2025 and borrowings under our revolving credit facility, offset in part by lower average interest rates.

Other income (expense)

Other income decreased $5.2 million, largely due to the absence of a one-time gain of $3.5 million on the bargain purchase of an aggregate quarry operation in the West segment in prior year, as well as decreased interest income as a result of less cash on hand.

Interest expense increased $2.2 million due primarily to higher average debt balances with the additional $400 million of borrowings under the Term Loan B amended in May of 2026, offset in part by lower average interest rates.

Other income increased $1.1 million, due to increased investment returns on our nonqualified defined benefit plans.

Income tax expense

Income tax expense decreased $1.4 million, corresponding with lower income before income taxes, offset slightly by a higher effective tax rate.

Our effective tax rate for the second quarters of 2026 and 2025 was 26.7 percent and 25.5 percent, respectively.

The increase in the effective tax rate is primarily due to a decrease in tax benefits.

Six Months Ended June 30, 2026, Compared to Six Months Ended June 30, 2025

Revenue increased $161.5 million, led by double-digit volume increases for ready-mix, aggregates and asphalt, and an increase in contracting services.

These increases were the direct result of favorable weather allowing for an early start to work in certain segments and increased asphalt paving projects, as well as our acquisition activity.

Pricing also positively contributed to the year.

Gross profit improved $12.4 million, largely due to the additional product line volumes noted above and price increases on aggregates, cement and liquid asphalt.

Partially offsetting the increase was lower margins on contracting services work due to the timing and type of projects, as well as competitive market dynamics.

Selling, general and administrative expenses

As a percentage of revenues, selling, general and administrative expense was 12.2 percent in the first half of 2026 compared to 12.0 percent in 2025.

For the first half of 2026, we experienced higher costs, largely related to lower gains on asset sales of $10.2 million.

Also, contributing was the additional costs associated with the companies acquired, including additional payroll and payroll-related costs and $400,000 of additional purchase accounting-related intangible asset amortization.

Interest expense

Interest expense increased $7.7 million due primarily to higher average debt balances with the additional $400 million of borrowings under the Term Loan B amended in May of 2026 and borrowings under our revolving credit facility, offset in part by lower average interest rates.

Other income decreased $4.2 million, largely due to the absence of a one-time gain of $3.5 million on the bargain purchase of an aggregate quarry operation in the West segment in the prior year.

In addition, we had a decrease in interest income of $1.7 million as a result of less cash on hand, which was mostly offset by increased investment returns on our nonqualified defined benefit plans.

Income tax benefit

Income tax benefit increased $3.7 million, corresponding with higher loss before income taxes.

Our effective tax rate for 2026 and 2025 was 26.4 percent.

Income tax benefit increased $5.2 million, corresponding with higher loss before income taxes, offset in part by lower effective tax rate.

Our effective tax rate for the first half of 2026 and 2025 was 26.1 percent and 28.7 percent, respectively.

The decrease in the effective tax rate is due to non-deductible expenses for tax purposes in the first half of 2025.

Business Segment Financial and Operating Data

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Results of Operations - West

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EBITDA margin 17.0 % 19.1 % 14.2 % 16.3 %

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* Other includes cement, merchandise, transportation services and other products that individually are not considered to be a core line of business for the segment.

Three Months Ended March 31, 2026, Compared to Three Months Ended March 31, 2025

Revenue increased $3.5 million for the quarter, primarily due to higher aggregate, ready-mix and asphalt sales volumes in Oregon of $16.8 million, driven by stronger demand in the private sector, timing of projects and contributions from acquisitions completed in 2025.

In addition, California's public agency market remained strong and contributed an additional $10.6 million in contracting services and aggregate sales volumes.

These improvements were partially offset by lower aggregate, cement and ready-mix sales volumes in Hawaii of $9.3 million due to significant flooding conditions, as well as a decline in contracting services in Oregon due to less available agency work.

EBITDA decreased 11 percent for the quarter, primarily related to the absence of a one-time gain of $3.5 million related to an acquisition recognized as a bargain purchase in the first quarter of 2025.

In addition, the significant flooding in Hawaii contributed to the EBITDA decrease.

This was partially offset by higher aggregate and ready-mix gross margins in Oregon due to improved volumes mentioned above.

Three Months Ended June 30, 2026, Compared to Three Months Ended June 30, 2025

Revenue decreased $27.0 million for the quarter, largely due to less available public-agency work in the segment resulting in lower contracting services revenue in Oregon, as well as 12% lower ready-mix volumes in Oregon due to less available private work.

Also, weather-related delays in Alaska resulted in a late start to the construction season, reducing their material product sales volumes.

Partially offsetting these decreases were increased pricing of $14.3 million across the segment on aggregates, ready-mix and cement, and contributions from acquisitions.

EBITDA decreased 19 percent for the quarter, driven primarily by lower revenues, as previously mentioned, and lower margin contracting services work related to competitive market dynamics as a result of less available public-agency work in Oregon, as well as the type of work.

Gains on asset sales were also lower by $1.7 million in 2026.

Increased pricing, as previously mentioned, offset some of the decreases in the quarter.

Six Months Ended June 30, 2026, Compared to Six Months Ended June 30, 2025

Revenue decreased $23.5 million, largely due to less available public-agency work resulting in lower contracting services revenue in Oregon and California.

In addition, Hawaii had lower material sales volumes reducing revenue by $12.5 million, mostly due to significant flooding conditions in the first quarter, and Alaska's material sales volumes were down $8.4 million in revenue due to unfavorable weather resulting in a late start to the construction season.

Partially offsetting these decreases were increased pricing of $19.7 million across the segment on ready-mix, cement and aggregates, and contributions from acquisitions.

EBITDA decreased 17 percent year-over-year, primarily a result of lower revenues, as previously mentioned, as well as lower margin contracting services work related to competitive market dynamics due to less public-agency work and the type of work.

Results were further impacted by the absence of a $3.5 million one-time gain recognized in the first quarter of 2025 due to an acquisition being a bargain purchase and lower gains on asset sales of $2.5 million in 2026.

Increased pricing, as previously mentioned, offset some of the decreases to EBITDA.

Results of Operations - Mountain

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EBITDA margin 13.1 % 17.6 % 7.2 % 6.0 %

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Asphalt 42.6 28.8 45.4 29.3

Other* 1.2 — 1.2 —

Contracting services 163.4 110.7 214.2 158.7

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$ 236.5 $ 176.1 $ 317.7 $ 242.1

Three Months Ended March 31, 2026, Compared to Three Months Ended March 31, 2025

Revenue increased $15.2 million in the quarter, mainly driven by favorable weather increasing volumes, along with higher pricing for ready-mix, aggregate and asphalt, which contributed $16.9 million of additional revenue to our legacy operations.

The favorable weather also allowed for early season contracting services work across the segment, resulting in an additional $1.6 million of revenue.

Acquisitions made during the quarter further added to the overall revenue growth.

EBITDA improved $8.1 million for the quarter, largely due to higher revenues as noted above, as well as production cost efficiencies for all product lines.

Slightly offsetting was $2.4 million higher selling, general and administrative costs mostly related to additional overhead costs from the three acquired companies during the quarter and increased labor costs.

* Other includes merchandise and other products that individually are not considered to be a core line of business for the segment.

Three Months Ended June 30, 2026, Compared to Three Months Ended June 30, 2025

Revenue increased $60.4 million in the quarter, largely resulting from increased contracting services, led by Idaho with $29.3 million as a result of project timing and strong momentum from an early start to the season, and contributions from the three companies acquired in the first quarter of 2026.

In addition, our legacy operations realized volume and pricing improvements across all product lines.

EBITDA improved $100,000 for the quarter, largely due to higher revenues, as previously mentioned, and production cost efficiencies on our asphalt and ready-mix product lines.

Mostly offsetting the increase was lower margin contracting services work due to the type of work and the impact of increased competition, as well as timing of project performance gains.

Further, selling, general and administrative costs were $3.5 million higher, primarily related to additional overhead costs from the three companies acquired in the first quarter of 2026, as well as increased payroll-related costs.

Six Months Ended June 30, 2026, Compared to Six Months Ended June 30, 2025

Revenue increased $75.6 million, mostly driven by favorable weather allowing for early season work, which positively impacted all product lines in Idaho, as well as contributions from the three companies acquired in the first quarter of 2026.

In addition, higher pricing for ready-mix, and aggregates contributed $6.4 million of additional revenue to our legacy operations.

EBITDA improved 56 percent year-over-year, largely due to higher revenues, as previously mentioned, as well as production cost efficiencies across all product lines.

Slightly offsetting was $5.8 million higher selling, general and administrative costs mostly related to additional overhead costs from the three acquired companies during the first quarter and increased payroll-related costs.

Results of Operations - Central

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EBITDA margin 16.5 % 17.4 % 6.3 % 6.2 %

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* Other includes merchandise and other products that individually are not considered to be a core line of business for the segment.

Three Months Ended March 31, 2026, Compared to Three Months Ended March 31, 2025

Revenue increased $33.3 million for the quarter, primarily driven by contributions from companies acquired in 2025.

Among these, the acquisition of Texcrete in December led to ready-mix volumes that were more than twice as high in Texas as the prior year.

In addition, legacy contracting services increased $3.3 million across the segment as a result of more available work and aggregate volumes increased $5.6 million, largely as a result of data center projects.

EBITDA decreased $2.5 million, largely the result of two additional months of seasonal losses at Strata in 2026 and higher selling, general and administrative expenses mostly related to additional overhead costs from the companies acquired in 2025 and increased labor costs.

Partially offsetting these decreases was higher ready-mix gross profit as a result of the additional volumes mentioned above and higher contracting services gross profit at our legacy operations.

Three Months Ended June 30, 2026, Compared to Three Months Ended June 30, 2025

Revenue increased $70.4 million for the quarter, primarily driven by contracting services as a result of large projects in North Dakota and more available public-agency work in both North Dakota and Minnesota, which also contributed to an increase in asphalt volumes.

In addition, aggregate volumes contributed $18.5 million of additional revenue in the quarter, largely related to supplying data center projects in North Dakota and Texas, as well as more available work, as previously mentioned.

Further, contributions from the December 2025 acquisition of Texcrete led to ready-mix volumes that were more than twice as high in Texas as the prior year.

Slightly offsetting the increases was decreased consolidated average pricing due to product mix and pricing differentials as a result of contributions from different locations as compared to the prior year.

EBITDA improved $9.2 million, largely the result of higher revenues, as previously mentioned, as well as production efficiencies and lower input material costs.

Margins on contracting services work also improved in the quarter largely due to favorable project execution.

Partially offsetting the increase was the absence of gains on asset sales of $7.9 million from the prior year, primarily in Texas.

Six Months Ended June 30, 2026, Compared to Six Months Ended June 30, 2025

Revenue increased $103.7 million, primarily driven by contracting services revenue as a result of more available public-agency work in North Dakota and Minnesota, which also contributed to an increase in asphalt volumes.

In addition, contributions from the acquisition of Texcrete in December 2025 led to ready-mix volumes that were more than twice as high in Texas as the prior year.

Aggregate volumes also contributed $24.1 million of additional revenue, largely related to supplying data center projects in North Dakota and Texas, as well as more available work, as previously mentioned.

EBITDA improved $6.7 million, largely the result of higher revenues, as previously mentioned, as well as production efficiencies across the product lines.

Margins on contracting services work also improved slightly in the year largely due to favorable project execution.

Partially offsetting the increase was higher selling, general and administrative costs of $13.1 million, largely from additional overhead costs from companies acquired and increased payroll-related costs, and the absence of gains on asset sales of $8.0 million from the prior year, primarily in Texas.

Results of Operations - Energy Services

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EBITDA margin 19.2 % 17.5 % 12.3 % 8.3 %

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* Other includes fabric and spreading, burner fuels, merchandise and other products that individually are not considered to be a core line of business for the segment.

Three Months Ended March 31, 2026, Compared to Three Months Ended March 31, 2025

Revenue increased $6.5 million, primarily driven by higher sales volumes due to favorable weather across the segment.

EBITDA improved $3.2 million, largely as a result of increased sales volumes, as well as lower operating costs due to lower input costs and the absence of boiler repairs and railcar maintenance incurred in the prior year.

Three Months Ended June 30, 2026, Compared to Three Months Ended June 30, 2025

Revenue increased $5.6 million, primarily driven by higher pricing and sales volumes due to improved market opportunities in California.

Partially offsetting were lower volumes in other markets resulting from competitive market dynamics.

EBITDA improved $2.7 million, largely as a result of increased revenue, as mentioned previously, as well as lower operating costs due to the absence of boiler repairs and railcar maintenance incurred in the prior year.

Six Months Ended June 30, 2026, Compared to Six Months Ended June 30, 2025

Revenue increased $12.2 million, primarily driven by higher sales volumes in California due to improved pricing and market conditions, which contributed $14.7 million of additional revenue.

This increase was slightly offset by lower volumes in other markets resulting from competitive market dynamics.

EBITDA improved $5.9 million, largely as a result of increased revenue, as mentioned previously, as well as lower operating costs due to the absence of boiler repairs and railcar maintenance incurred in the prior year.

Corporate Services and Eliminations

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and unrealized gains or losses on investments for nonqualified benefit plans.

Three Months Ended March 31, 2026, Compared to Three Months Ended March 31, 2025

During the first quarter of 2026, Corporate Services contributed negative EBITDA of $18.0 million, which was comparable to the prior year, as a result of flat selling, general and administrative costs year-over-year.

Three Months Ended June 30, 2026, Compared to Three Months Ended June 30, 2025

During the second quarter of 2026, Corporate Services contributed negative EBITDA of $13.4 million, which was comparable to the prior year, as a result of flat selling, general and administrative costs year-over-year.

Increased investment returns on our nonqualified defined benefit plans and lower due diligence and integration costs related to corporate development and completed acquisitions were offset by increased salaries and burden.

Six Months Ended June 30, 2026, Compared to Six Months Ended June 30, 2025

During the first half of 2026, Corporate Services contributed negative EBITDA of $31.4 million, which was comparable to the prior year, as a result of flat selling, general and administrative costs year-over-year.

Lower due diligence and integration costs related to corporate development and completed acquisitions were offset by increased salaries and burden.

Liquidity and Capital Resources

At March 31, 2026, we had unrestricted cash and cash equivalents of $13.3 million, working capital of $590.0 million and borrowing capacity of $178.2 million on our revolving credit facility, net of our outstanding letters of credit.

At June 30, 2026, we had unrestricted cash and cash equivalents of $40.7 million, working capital of $794.4 million and borrowing capacity of $387.2 million on our revolving credit facility, net of our outstanding letters of credit.

Working capital is calculated as current assets less current liabilities.

As of March 31, 2026, we had sufficient liquid assets and borrowing capacity to meet our financial commitments, debt obligations and anticipated capital expenditures for at least the next 12 months.

As of June 30, 2026, we had sufficient liquid assets and borrowing capacity to meet our financial commitments, debt obligations and anticipated capital expenditures for at least the next 12 months.

On May 15, 2026, we entered into a second amendment to our secured credit agreement, increasing our Term Loan B by an aggregate principal amount of $400.0 million and reducing the interest rate margin by 0.25%.

After the second amendment, the aggregate principal amount of the Term Loan B outstanding was $895.0 million.

Given the seasonality of our business, we typically experience significant fluctuations in working capital needs and balances throughout the year.

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We currently estimate total 2026 capital expenditures for maintenance and improvement to be between $170 million and $235 million.

For the three months ended March 31, 2026, we spent $42.3 million, largely on the replacement of construction equipment and plant improvements.

Additionally, for the three months ended March 31, 2026, we spent $209.2 million on growth initiatives, which comprised of $174.2 million on acquisitions and $35.0 million on aggregate expansion and greenfield projects.

For the six months ended June 30, 2026, we spent $90.1 million, largely on the replacement of construction equipment and plant improvements.

Additionally, for the six months ended June 30, 2026, we spent $244.5 million on growth initiatives, which comprised of $184.4 million on acquisitions and $60.1 million on aggregate expansion and greenfield projects.

For the remainder of 2026, we estimate to spend $76.4 million on organic growth projects.

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It is anticipated that capital expenditures for the remainder of 2026 will be funded by various sources, including cash flows from operations and debt.

Three Months Ended

Six Months Ended

(In millions)

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Operating activities

Three Months Ended

Six Months Ended

2026 2025 Variance

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Net cash used in operating activities $ (133.6) $ (167.8) $ 34.2

Cash used in operating activities at March 31, 2026, decreased $66.7 million, largely related to lower working capital needs, offset by a higher net loss in the period.

Cash used by working capital components totaled $35.9 million for the three months ended March 31, 2026, compared to $97.9 million for the three months ended March 31, 2025.

This reduction in cash usage in 2026 was primarily the result of decreased incentive payments, higher collections on receivables balances, timing of taxes paid, decreased aggregate inventory and the fluctuation in payments on accounts payable.

Cash used in operating activities at June 30, 2026, improved $34.2 million, largely related to lower working capital needs, offset by a higher net loss in the period.

Cash used by working capital components totaled $217.6 million for the six months ended June 30, 2026, compared to $234.8 million for the six months ended June 30, 2025.

This reduction in cash used in 2026 was primarily the result of decreased incentive payments in 2026 and the timing of interest payments, primarily associated with the Term Loan B that was amended May 15, 2026.

Partially offsetting these decreases was an increase in our taxes receivable due to the increase in net loss and the timing of taxes paid.

Investing activities

Three Months Ended

Six Months Ended

2026 2025 Variance

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Net cash used in investing activities $ (332.6) $ (701.9) $ 369.3

The decrease in cash used in investing activities for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, was primarily the result of decreased cash used in acquisition activity, partially offset by the absence of prior year proceeds from the sale of ready-mix operations in the Central segment.

The decrease in cash used in investing activities for the six months ended June 30, 2026, compared to the six months ended June 30, 2025, was primarily the result of decreased cash used for acquisition activity and aggregate reserve replacements, partially offset by the absence of prior year proceeds from the sale of ready-mix operations in the Central segment.

Financing activities

Three Months Ended

Six Months Ended

2026 2025 Variance

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Net cash provided by financing activities $ 444.8 $ 666.3 $ (221.5)

Cash flows provided by financing activities for the three months ended March 31, 2026 decreased compared to the three months ended March 31, 2025.

In the first quarter of 2026, we borrowed $270 million against our revolving credit facility while in 2025 we issued a $500 million Term Loan B.

Cash flows provided by financing activities for the six months ended June 30, 2026 decreased compared to the six months ended June 30, 2025.

In the second quarter of 2026, we entered into a second amendment to our secured credit agreement, increasing our Term Loan B by an aggregate principal amount of $400 million, while in 2025 we issued $500 million against our Term Loan B.

Further, in 2026 we borrowed less against our revolving credit facility.

Material cash requirements

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Our material short-term and long-term cash requirements include repayment of third-party long-term debt and related interest payments, payments on operating lease agreements, payments of obligations on purchase commitments and asset retirement obligations.

At March 31, 2026, our long-term debt reflected an increase of approximately $267.1 million from the balance at December 31, 2025.

This increase is due to borrowing $270 million under our revolving credit facility to fund seasonal working capital needs and additional acquisitions.

At March 31, 2026, our total estimated interest payments over the life of our debt reflected an increase of approximately $67.7 million from the total estimated interest payments at December 31, 2025.

This increase is primarily due to the borrowings under our revolving credit facility, as previously mentioned.

At March 31, 2026, our purchase commitments reflected an increase of approximately 12 percent from the balance at December 31, 2025.

This increase is primarily due to the seasonality of work and preparing for our peak construction season during the first quarter.

At June 30, 2026, our long-term debt reflected an increase of approximately $454.1 million from the balance at December 31, 2025.

This increase is primarily due to the second amendment to our secured credit facility increasing our Term Loan B facility by $400.0 million and outstanding borrowings of $61.0 million under our revolving credit facility.

The funds from the Term Loan B were used to repay borrowings under the revolving credit agreement, working capital needs and general corporate purposes.

At June 30, 2026, our total estimated interest payments over the life of our debt reflected an increase of approximately $90.3 million from the total estimated interest payments at December 31, 2025.

This increase is primarily due to the amendment to our Term Loan B facility and borrowings under our revolving credit facility, as previously mentioned.

At June 30, 2026, our purchase commitments reflected an increase of approximately 14 percent from the balance at December 31, 2025.

This increase is primarily due to the seasonality of work and preparing for our peak construction season.

We expect purchase commitments to continue to decrease throughout the remainder of 2026 as obligations continue to be satisfied during the construction season.

Off-Balance Sheet Arrangements

Surety Bonds and Letters of Credit

In the normal course of business, we have surety bonds and letters of credit related to contracts for contracting services, reclamation obligations and insurance policies of our subsidiaries.

In the event a subsidiary of Knife River does not fulfill a bonded obligation, we would be responsible to the surety bond company or for a draw on our letter of credit for completion of the 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 June 30, 2026, approximately $1.1 billion of surety bonds and $51.9 million of letters of credit were outstanding, of which the total of letters of credit balance reduced availability under our revolving credit facility.

These balances were not reflected on the Consolidated Balance Sheet.

Other than the surety bonds and letters of credit above, we did not have any off-balance sheet arrangements as of June 30, 2026.

Defined benefit pension plans

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We believe these non-GAAP financial measures, in addition to corresponding GAAP measures, are useful to investors by providing meaningful information about operational efficiency compared to our peers by excluding the impacts of differences in tax jurisdictions and structures, debt levels and capital investment.

We believe Adjusted EBITDA and Adjusted EBITDA margin are useful performance measures because they allow for an effective evaluation of our operating performance by excluding unrealized gains and losses on benefit plan investments and stock-based compensation as they are considered non-cash and not part of our core operations.

We believe EBITDA and Adjusted EBITDA assist rating agencies and investors in comparing operating performance across operating periods on a consistent basis by excluding items management does not believe are indicative of our operating performance.

We believe Adjusted EBITDA and Adjusted EBITDA margin are useful performance measures because they allow for an effective evaluation of our operating performance by excluding unrealized gains and losses on benefit plan investments, stock-based compensation, and the impact of selling acquired inventory after markup to fair value as part of acquisition accounting as they are considered non-cash and not part of our core operations.

We believe EBITDA and Adjusted EBITDA assist rating agencies and investors in comparing operating performance across operating periods on a consistent basis by excluding items management does

not believe are indicative of our operating performance.

Additionally, EBITDA and Adjusted EBITDA are important financial metrics for debt investors who utilize debt to EBITDA and debt to Adjusted EBITDA ratios.

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EBITDA margin is calculated by dividing EBITDA by revenues.

Adjusted EBITDA is calculated by adding back unrealized gains and losses on benefit plan investments and stock-based compensation to EBITDA.

Adjusted EBITDA is calculated by adding back unrealized gains and losses on benefit plan investments, stock-based compensation and the impact of selling acquired inventory after markup to fair value as part of acquisition accounting to EBITDA.

Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by revenues.

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Interest expense, net, is net of interest income that is included in other income on the Consolidated Statements of Operations.

Three Months Ended

(In millions)

Three Months Ended Six Months Ended

June 30, June 30,

2026 2025 2026 2025

(In millions)

Net income (loss) $ 43.9 $ 50.6 $ (35.3) $ (18.1)

Depreciation, depletion and amortization 56.4 50.2 108.5 88.9

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Stock-based compensation expense 2.6 2.9 5.4 5.7

Impact of selling acquired inventory after markup to fair value as part of acquisition accounting

Adjusted EBITDA $ 139.7 $ 140.8 $ 107.9 $ 102.8

Revenue $ 938.6 $ 833.8 $ 1,348.7 $ 1,187.2

Net loss margin

(19.3) % (19.4) %

Net income (loss) margin 4.7 % 6.1 % (2.6) % (1.5) %

EBITDA margin 14.9 % 16.8 % 7.8 % 8.3 %

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis