What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-02-21 compared with 2024-02-27 · 689 added, 673 removed, 1096 unchanged (55% of the section changed)

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Management’s Report on Internal Control Over Financial Reporting

The management of Knife River Corporation is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934.

The Company’s internal control system is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with generally accepted accounting principles in the United States of America.

All internal control systems, no matter how well designed, have inherent limitations.

Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may be inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2024.

In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013).

Based on our evaluation under the framework in Internal Control-Integrated Framework (2013), management concluded that the Company’s internal control over financial reporting was effective as of December 31, 2024 .

The scope of our assessment of the effectiveness of our internal control over financial reporting did not include Albina Asphalt as we acquired them on November 2, 2024.

The assets acquired from Albina were 4% of consolidated assets as of December 31, 2024 and revenues were less than 1% of consolidated revenue during the year ended December 31, 2024.

We excluded Albina from the scope of our assessment in accordance with the Securities and Exchange Commission’s guidance that allows a recently acquired business to be omitted from the scope of the assessment for one year from the date of its acquisition.

The effectiveness of the Company’s internal control over financial reporting as of December 31, 2024, has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report.

Gray /s/ Nathan W.

Gray Nathan W.

President and Chief Executive Officer Vice President and Chief Financial Officer

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholder and the Board of Directors of Knife River Corporation

To the shareholders and the Board of Directors of Knife River Corporation

Opinion on the Financial Statements

1 unchanged sentence

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 21, 2025, expressed an unqualified opinion on the Company’s internal control over financial reporting.

Basis for Opinion

1 unchanged sentence

Our responsibility is to express an opinion on the Company's financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

1 unchanged sentence

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

10 unchanged sentences

Revenues are recorded proportionately to the costs incurred.

This method depends largely on the ability to make reasonably dependable estimates related to the extent of progress

toward completion of the contract, contract revenues, contract costs.

This method depends largely on the ability to make reasonably dependable estimates related to the extent of progress toward completion of the contract, contract revenues, contract costs.

The accounting for these contracts involves judgment, particularly as it relates to the process of estimating total costs and profit for the performance obligation.

4 unchanged sentences

• We tested the operating effectiveness of management’s controls over contracting services revenue, including controls over management’s estimation of total costs and profit for the performance obligations.

• We developed an expectation of the amount of contracting services revenue for certain performance obligations based on prior year markups, and taking into account current year events, applied to the contracting services contract costs in the current year and compared our expectation to the amount of contracting services revenue recorded by management.

• We selected a sample of contracting services contracts and performed the following:

• For certain contracts, we developed an expectation of the amount of contracting services revenue based on prior year markups, and taking into account current year events, applied to the contracting services contract costs in the current year and compared our expectation to the amount of contracting services revenue recorded by management.

• For certain contracts, we selected a sample of contracting services contracts and performed the following:

– Evaluated whether the contracts were properly included in management’s calculation of contracting services revenue based on the terms and conditions of each contract, including whether continuous transfer of control to the customer occurred as progress was made toward fulfilling the performance obligation.

7 unchanged sentences

– Tested the mathematical accuracy of management’s calculation of contracting services revenue for the performance obligation.

• We evaluated management’s ability to estimate total costs and profits accurately by comparing actual costs and profits to management’s historical estimates for performance obligations that have been fulfilled.

• For certain contracts, we evaluated management’s ability to estimate total costs and profits accurately by comparing actual costs and profits to management’s historical estimates for performance obligations that have been fulfilled.

/s/ Deloitte & Touche LLP

2 unchanged sentences

We have served as the Company's auditor since 2002.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of Knife River Corporation

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Knife River Corporation and subsidiaries (the “Company”) as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2024, of the Company and our report dated February 21, 2025, expressed an unqualified opinion on those financial statements.

As described in Management’s Report on Internal Control Over Financial Reporting, management excluded from its assessment the internal control over financial reporting at Albina Asphalt, which was acquired on November 2, 2024, and whose financial statements constitute 4% of total assets and less than 1% of revenues of the consolidated financial statement amounts as of and for the year ended December 31, 2024.

Accordingly, our audit did not include the internal control over financial reporting at Albina Asphalt.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Control Over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Deloitte & Touche LLP

Minneapolis, Minnesota

February 21, 2025

KNIFE RIVER CORPORATION AND SUBSIDIARIES

23 unchanged sentences

55,242 58,096 30,121

Other (expense) income

Other income (expense)

10,042 7,007 ( 5,353 )

20 unchanged sentences

Amortization of pension and postretirement liability losses included in net periodic benefit cost, net of tax of $ 103 , $ 64 and $ 292 in 2024, 2023 and 2022, respectively

192 875 1,090

Pension and postretirement liability adjustment

13 unchanged sentences

31,283 27,293

Due from related-party

380,336 319,623

20 unchanged sentences

$ 10,475 $ 7,082

Related-party notes payable - current portion

Accounts payable

4 unchanged sentences

50,655 48,098

Due to related-party

Current operating lease liabilities

14,844 12,948

Other taxes payable

Accrued interest

Other accrued liabilities

4 unchanged sentences

Long-term debt

Related-party notes payable

666,911 674,577

Deferred income taxes

8 unchanged sentences

Common stock, 300,000,000 shares authorized, $ 0.01 par value, 57,043,841 shares issued and 56,612,705 shares outstanding at December 31, 2024;

80,000 shares authorized, issued and outstanding, $ 10 par value, at December 31, 2022

57,009,542 shares issued and 56,578,406 shares outstanding at December 31, 2023

Other paid-in capital

2 unchanged sentences

867,546 665,874

MDU Resources common stock held by subsidiary at cost - 538,921 shares

Treasury stock held at cost - 431,136 shares

( 3,626 ) ( 3,626 )

Accumulated other comprehensive loss

23 unchanged sentences

— — — — — — — — 1,033 1,033

Net transfers to Centennial

— — ( 608 ) ( 52,005 ) — — — — — ( 52,613 )

Balance at December 31, 2022 80,000 $ 800 $ 549,106 $ 494,661 ( 538,921 ) $ ( 3,626 ) — $ — $ ( 12,352 ) $ 1,028,589

— — — 182,872 — — — — — 182,872

Other comprehensive income

— — — — — — — — 1,033 1,033

Stock-based compensation — — 2,888 ( 37 ) — — — — — 2,851

— — 2,888 ( 37 ) — — — — — 2,851

Issuance of common stock to directors for services

12,192 — 702 — — — — — — 702

Common stock issued for board of director fees 12,192 — 702 — — — — — — 702

Retirement of historical common stock in connection with the Separation ( 80,000 ) ( 800 ) 800 — — — — — — —

( 80,000 ) ( 800 ) 800 — — — — — — —

Issuance of common stock in connection with the Separation 56,997,350 570 ( 570 ) — — — — — — —

56,997,350 570 ( 570 ) — — — — — — —

Transfer of MDU Resources stock held by subsidiary — — — — 538,921 3,626 — — — 3,626

— — — — 538,921 3,626 — — — 3,626

Receipt of treasury stock at historical cost — — — — — — ( 431,136 ) ( 3,626 ) — ( 3,626 )

— — — — — — ( 431,136 ) ( 3,626 ) — ( 3,626 )

Net transfers from Centennial and MDU Resources including Separation adjustments — — 62,972 — — — — — — 62,972

— — 62,972 — — — — — — 62,972

Net transfers to Centennial pre-Separation

1 unchanged sentence

Balance at December 31, 2023 57,009,542 $ 570 $ 614,513 $ 665,874 — $ — ( 431,136 ) $ ( 3,626 ) $ ( 11,319 ) $ 1,266,012

— — — 201,678 — — — — — 201,678

Other comprehensive income

— — — — — — — — 2,017 2,017

Stock-based compensation — — 8,057 ( 6 ) — — — — — 8,051

Common stock issued for employee compensation, net of tax withholding 31,298 — ( 1,673 ) — — — — — — ( 1,673 )

Common stock issued for board of director fees 3,001 — — — — — — — — —

Balance at December 31, 2024 57,043,841 $ 570 $ 620,897 $ 867,546 — $ — ( 431,136 ) $ ( 3,626 ) $ ( 9,302 ) $ 1,476,085

KNIFE RIVER CORPORATION AND SUBSIDIARIES

11 unchanged sentences

Provision for credit losses

1,099 2,001 538

Amortization of debt issuance costs

2,762 3,115 483

Employee stock-based compensation costs

Stock-based compensation costs

7,826 2,888 1,272

45 unchanged sentences

— ( 16,640 ) ( 807 )

Tax withholding on stock-based compensation ( 1,673 ) — —

Net transfers to Centennial

13 unchanged sentences

Knife River is a people-first construction materials and contracting services company.

The Company provides construction materials and contracting services to build safe roads, bridges and airport runways, and other critical infrastructure needs, that connect people with where they want to go and with the supplies they need.

Knife River is one of the leading providers of crushed stone and sand and gravel in the United States and operates across 14 states.

The Company conducts its operations through five reportable segments:

We provide construction materials and contracting services to build safe roads, bridges and 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 14 states.

As of December 31, 2024, we conducted our operations through five reportable segments:

Pacific, Northwest, Mountain, Central and Energy Services.

In the fourth quarter of 2023, the Company completed a reorganization of its reporting structure which resulted in changes being made to the management of its business to best align with its strategies.

As a result of the reorganization, a portion of the Pacific segment’s businesses are now reported under the Energy Services segment.

In addition, the North Central and South operating regions have been aggregated into one reportable segment, Central.

All periods have been recast to conform with the revised presentation.

See Note 15 for additional information.

Separation from MDU Resources

On May 31, 2023, MDU Resources completed the previously announced separation of the Company through the distribution of approximately 90 percent of the outstanding shares of common stock, par value $ .01 per share, of Knife River to the stockholders of record of MDU Resources as of the close of business on May 22, 2023.

On May 31, 2023, MDU Resources completed the previously announced separation of Knife River through the distribution of approximately 90 percent of the outstanding shares of common stock, par value $ .01 per share, of Knife River to the stockholders of record of MDU Resources as of the close of business on May 22, 2023.

MDU Resources retained approximately 10 percent of the outstanding shares of Knife River common stock.

3 unchanged sentences

The Separation was completed pursuant to a separation and distribution agreement and other agreements with MDU Resources related to the Separation, including, but not limited to, a tax matters agreement, an employee matters agreement and a transition services agreement.

For an interim period following the Separation, certain functions will continue to be provided by MDU Resources under a transition services agreement.

For an interim period following the Separation, certain functions continued to be provided by MDU Resources under a transition services agreement.

For more information on the transition services agreement, see Note 19.

The Company has incurred certain costs in its establishment as an independent, publicly traded company and expects to incur ongoing additional costs associated with operating as an independent, publicly traded company.

All share and earnings per share information has been retroactively adjusted for all periods presented to reflect the Distribution.

Basis of Presentation

Prior to the Separation, Knife River operated as a wholly owned subsidiary of Centennial and an indirect, wholly owned subsidiary of MDU Resources and not as a stand-alone company.

The accompanying audited consolidated financial statements and footnotes for the periods prior to the Separation were prepared on a “carve-out” basis using a legal entity approach in conformity with GAAP and were derived from the audited consolidated financial statements of MDU Resources as if the Company operated on a stand-alone basis during these periods.

All revenues and costs as well as assets and liabilities directly associated with the business activity of the Company are included in the financial statements.

Prior to the Separation, we operated as a wholly owned subsidiary of Centennial and an indirect, wholly owned subsidiary of MDU Resources and not as a stand-alone company.

The accompanying audited consolidated financial statements and footnotes for the periods prior to the Separation were prepared on a “carve-out” basis using a legal entity approach in conformity with GAAP and were derived from the audited consolidated financial statements of MDU Resources as if we operated on a stand-alone basis during these periods.

All revenues and costs as well as assets and liabilities directly associated with the business activity of Knife River are included in the financial statements.

In the periods prior to the Separation, the audited consolidated financial statements include expense allocations for certain functions provided by MDU Resources and Centennial, including, but not limited to certain general corporate expenses related to senior management, legal, human resources, finance and accounting, treasury, information technology, communications, procurement, tax, insurance and other shared services.

These general corporate expenses are included in the Consolidated Statements of Operations within selling, general and administrative expenses and other income (expense).

The amounts allocated

KNIFE RIVER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2023, 2022 and 2021

to Knife River were $ 10.7 million, $ 18.0 million and $ 15.6 million for the years ended December 31, 2023, 2022 and 2021, respectively.

These expenses were allocated to the Company on the basis of direct usage when identifiable, with the remainder principally allocated on the basis of percent of total capital invested or other allocation methodologies that were considered to be a reasonable reflection of the utilization of the services provided to the benefits received, including the following:

The amounts allocated to us were $ 10.7 million and $ 18.0 million for the years ended December 31, 2023 and 2022, respectively.

These expenses were allocated to us on the basis of direct usage when identifiable, with the remainder principally allocated on the basis of percent of total capital invested or other allocation methodologies that were considered to be a reasonable reflection of the utilization of the services provided to the benefits received, including the following:

number of employees paid and stated as cost per check;

6 unchanged sentences

and projected workload.

The allocations may not, however, reflect the expense the Company would have incurred as a stand-alone company for the periods presented.

These costs also may not be indicative of the expenses that the Company will incur in the future or would have incurred if the Company had obtained these services from a third party.

Prior to the Separation, Knife River participated in Centennial’s centralized cash management program, including its overall financing arrangements.

Knife River also had related-party note agreements in place with Centennial for the financing of its capital needs, which are reflected as related-party notes payable on the Consolidated Balance Sheet at December 31, 2022.

The allocations may not, however, reflect the expense we would have incurred as a stand-alone company for the periods presented.

These costs also may not be indicative of the expenses that we will incur in the future or would have incurred if we had obtained these services from a third party.

KNIFE RIVER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2024, 2023 and 2022

Prior to the Separation, we participated in Centennial’s centralized cash management program, including its overall financing arrangements.

Interest expense in the Consolidated Statements of Operations for the periods prior to the Separation reflects the allocation of interest on borrowing and funding associated with the related-party note agreements.

Upon the completion of the Separation, Knife River implemented its own financing agreements with lenders.

For additional information on the Company’s current debt financing, see Note 8.

Related-party transactions between the Company and MDU Resources or Centennial for general operating activities and intercompany debt have been included in the audited consolidated financial statements for periods prior to the Separation.

Outstanding balances as of the periods presented were reflected on Consolidated Balance Sheets as “Due from related-party” or “Due to related-party” and “Related-party notes payable”.

Upon the completion of the Separation, we implemented our own financing agreements with lenders.

For additional information on our current debt financing, see Note 9.

Related-party transactions between us and MDU Resources or Centennial for general operating activities and intercompany debt have been included in the audited consolidated financial statements for periods prior to the Separation.

The cash settlement of these transactions are included in the Consolidated Statements of Cash Flows as operating or financing activities following the nature of the transactions.

3 unchanged sentences

Principles of consolidation

For all periods, the audited consolidated financial statements were prepared in accordance with GAAP and include the accounts of the Company and its wholly owned subsidiaries.

All intercompany accounts and transactions between the businesses comprising the Company have been eliminated in the accompanying audited consolidated financial statements.

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 the Company 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 audited consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting period.

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 audited 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;

6 unchanged sentences

environmental and other loss contingencies;

costs on contracting services contracts;

estimated total costs on contracting services contracts;

actuarially determined benefit costs;

3 unchanged sentences

and the valuation of stock-based compensation.

These estimates are based on management’s best knowledge of current events, historical experience, actions that the Company may undertake in

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.

KNIFE RIVER CORPORATION AND SUBSIDIARIES

1 unchanged sentence

Years Ended December 31, 2024, 2023 and 2022

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.

Note 2 – Significant Accounting Policies

New accounting standards

The following table provides a brief description of the accounting pronouncements applicable to the Company and the potential impact on its audited consolidated financial statements and/or disclosures:

The following table provides a brief description of the accounting pronouncements applicable to us and the potential impact on our audited consolidated financial statements and/or disclosures:

Standard Description Standard Effective Date

Impact on financial statements/disclosures

Recently issued ASU’s not yet adopted

Recently adopted ASU’s

ASU 2023-07 - Improvements to Reportable Segment Disclosures

2 unchanged sentences

The guidance is to be applied on a retrospective basis to the financial statements and footnotes and early adoption is permitted.

Fiscal periods beginning after December 15, 2023 and interim periods beginning after December 31, 2024

The Company is currently evaluating the impact the guidance will have on its disclosures for the year ended December 31, 2024 and interim periods for fiscal year 2025.

Adopted for the year ended December 31, 2024.

We updated our disclosures for the year ended December 31, 2024, to incorporate the required changes.

ASU 2023-09 - Improvements to Income Tax Disclosures

2 unchanged sentences

The guidance also permits early adoption.

Fiscal periods beginning after December 15, 2024

The Company is currently evaluating the impact the guidance will have on its disclosures for the year ended December 31, 2025.

Cash, cash equivalents and restricted cash

The Company considers all highly liquid investments with an original maturity of three months or less, when purchased, to be cash and cash equivalents.

At December 31, 2023, the $ 262.3 million of cash, cash equivalents and restricted cash on the Consolidated Statements of Cash Flows is comprised of $ 219.3 million of cash and cash equivalents and $ 43.0 million of restricted cash.

At December 31, 2022, the Company had no restricted cash.

Restricted cash represents deposits held by Knife River’s captive insurance company that is required by state insurance regulations to remain in the captive insurance company .

Revenue recognition

Revenue is recognized when a performance obligation is satisfied by transferring control over a product or service to a customer.

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.

The Company is considered an agent for certain taxes collected from customers.

As such, the Company presents revenues net of these taxes at the time of sale to be remitted to governmental authorities, including sales and use taxes.

The Company generates revenue from contracting services and construction materials sales.

The Company focuses on the vertical integration of its contracting services with its construction materials to support the aggregate-based product lines.

The Company provides contracting services to a customer when a contract has been signed by

Adopted for the year ended December 31, 2024.

We updated our disclosures, which were not material, for the year ended December 31, 2024.

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.

KNIFE RIVER CORPORATION AND SUBSIDIARIES

1 unchanged sentence

Years Ended December 31, 2024, 2023 and 2022

both the customer and a representative of the Company obligating a service to be provided in exchange for the consideration identified in the contract.

The nature of the services provided generally include integrating a set of services and related construction materials into a single project to create a distinct bundle of goods and services, which the Company has determined are single performance obligations.

The Company determines the transaction price to include the fixed consideration required pursuant to the original contract price together with any additional consideration, to which the Company expects to be entitled to, associated with executed change orders plus the estimate of variable consideration to which the Company expects to be entitled, subject to the constraint discussed below.

The nature of the Company’s contracts gives rise to several types of variable consideration.

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 at December 31 was comprised of:

(In thousands)

Cash and cash equivalents $ 236,799 $ 219,324

Restricted cash 44,335 42,996

Cash, cash equivalents and restricted cash $ 281,134 $ 262,320

Business combinations

For all business combinations, we preliminarily allocate the purchase price of the acquisitions to the assets acquired and liabilities assumed based on their estimated fair values as of the acquisition dates and are considered provisional until final fair values are determined, or the measurement period has passed.

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.

The excess of the purchase price over the aggregate fair value is recorded as goodwill.

We calculated the fair value of the assets acquired in 2024 using a market or cost approach (or a combination of both).

Fair values for some of the assets were determined based on Level 3 inputs including estimated future cash flows, discount rates, growth rates, sales projections, retention rates and terminal values, all of which required significant management judgment and are susceptible to change.

The final fair value of the net assets acquired may result in adjustments to the assets and liabilities, including goodwill, and will be made as soon as practical, but no later than 12 months from the respective acquisition dates.

Any subsequent measurement period adjustments are not expected to have a material impact on our results of operations.

Revenue recognition

Revenue is recognized when a performance obligation is satisfied by transferring control over a product or service to a customer.

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.

We generate revenue from contracting services and construction materials sales.

We focus on the vertical integration of our contracting services with our construction materials to support the aggregate-based product lines.

We provide contracting services to a customer when a contract has been approved by both the customer and a representative of Knife River, obligating a service to be provided in exchange for the consideration identified in the contract.

The nature of the services provided generally include integrating a set of services and related construction materials into a single project to create a distinct bundle of goods and services, which we have determined are generally a single performance obligation.

We determine the transaction price to include the fixed consideration required pursuant to the original contract price together with any additional consideration, to which we expect to be entitled to, associated with executed change orders plus the estimate of variable consideration to which we expect to be entitled, subject to the constraint discussed below.

The nature of our contracts gives rise to several types of variable consideration.

Examples of variable consideration include:

4 unchanged sentences

The variable amounts usually arise upon achievement of certain performance metrics or change in project scope.

The Company estimates the amount of revenue to be recognized on variable consideration using one of the two prescribed estimation methods, the expected value method or the most likely amount method, depending on which method best predicts the most likely amount of consideration the Company expects to be entitled to or expects to incur.

Assumptions as to the occurrence of future events and the likelihood and amount of variable consideration are made during the contract performance period.

We estimate the amount of revenue to be recognized on variable consideration using the most likely amount method, which best predicts the most likely amount of consideration we expect to be entitled to or expect to incur.

Assumptions as to the occurrence of future events and the likelihood and amount of

KNIFE RIVER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2024, 2023 and 2022

variable consideration are made during the contract performance period.

Estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on the assessment of anticipated performance and all information (historical, current and forecasted) that is reasonably available to management.

The Company only includes variable consideration in the estimated transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur or when the uncertainty associated with the variable consideration is resolved.

We only include variable consideration in the estimated transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur or when the uncertainty associated with the variable consideration is resolved.

Changes in circumstances could impact management’s estimates made in determining the value of variable consideration recorded.

When determining if the variable consideration is constrained, the Company considers if factors exist that could increase the likelihood or the magnitude of a potential reversal of revenue.

The Company updates its estimate of the transaction price each reporting period and the effect of variable consideration on the transaction price is recognized as an adjustment to revenue on a cumulative catch-up basis.

When determining if the variable consideration is constrained, we consider if factors exist that could increase the likelihood or the magnitude of a potential reversal of revenue.

We update our estimate of the transaction price each reporting period and the effect of variable consideration on the transaction price is recognized as an adjustment to revenue on a cumulative catch-up basis.

Contracting services revenue is recognized over time using an input method based on the cost-to-cost measure of progress on a project.

This is the preferred method of measuring revenue because the costs incurred have been determined to represent the best indication of the overall progress toward the transfer of such goods or services promised to a customer.

We have determined this method to be appropriate for measuring revenue because the costs incurred have been determined to represent the best indication of the overall progress toward the transfer of such goods or services promised to a customer.

Under the cost-to-cost measure of progress, the costs incurred are compared with total estimated costs of a performance obligation.

1 unchanged sentence

The percentage of completion is determined on a performance obligation basis.

The Company also sells construction materials to third parties and internal customers.

We also sell construction materials to external customers and internal customers.

The contract for material sales is the use of a sales order or an invoice, which includes the pricing and payment terms.

4 unchanged sentences

There are no material obligations for returns, refunds or other similar obligations.

KNIFE RIVER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2023, 2022 and 2021

Receivables and allowance for expected credit losses

Receivables consist primarily of trade and contract receivables from the sale of goods and services net of expected credit losses.

A majority of the Company’s receivables are due in 30 days or less.

A majority of our receivables are due in 30 days or less.

The total balance of receivables past due 90 days or more was $ 14.3 million and $ 16.7 million at December 31, 2024 and 2023, respectively.

12 unchanged sentences

$ 267,240 $ 266,785

The Company’s 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.

The Company develops and documents its methodology to determine its allowance for expected credit losses.

Risk characteristics used by the Company may include customer mix, knowledge of customers and general economic conditions of the various local economies, among others.

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 we use may include customer mix, knowledge of customers and general economic conditions of 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 the Company’s expected credit losses were as follows:

KNIFE RIVER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2024, 2023 and 2022

Details of our expected credit losses were as follows:

Pacific Northwest Mountain Central Energy Services Total

14 unchanged sentences

$ 1,857 $ 621 $ 780 $ 921 $ 166 $ 4,345

KNIFE RIVER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2023, 2022 and 2021

__________________

* Includes the impact of businesses acquired.

Inventories at December 31 consisted of:

8 unchanged sentences

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 the Company’s aggregate mining activities.

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.

5 unchanged sentences

Aggregate mining development costs are capitalized and classified as land improvements and depreciated over the lower of the estimated life of the reserves or the life of the associated improvement.

The Company begins capitalizing development costs at a point when reserves are determined to be proven or probable and economically mineable.

We begin capitalizing development costs at a point when reserves are determined to be proven or probable and economically mineable.

Capitalization of these costs ceases when production commences.

1 unchanged sentence

Aggregate reserves, from both owned and leased mining sites, are a component within property, plant and equipment and are depleted using the units-of-production method.

The Company uses proven and probable aggregate reserves as the denominator in its units-of production calculation.

We use proven and probable aggregate reserves as the denominator in our units-of production calculation.

Exploration costs are expensed as incurred in cost of revenue and production costs are either expensed or capitalized to inventory.

KNIFE RIVER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2024, 2023 and 2022

Capitalized interest

The interest cost on capital projects is capitalized and included in the cost of the project.

Capitalization commences in the pre-acquisition or construction stage of the project and continues until the project is substantially complete and ready for its intended use.

When no debt is incurred specifically for a project, interest is capitalized using the weighted average cost of our outstanding borrowings.

For the year ended December 31, 2024, the amount we capitalized into net property, plant and equipment on the Consolidated Balance Sheet was immaterial.

Impairment of long-lived assets, excluding goodwill

The Company reviews the carrying values of its long-lived assets, including mining and related assets, whenever events or changes in circumstances indicate that such carrying values may not be recoverable.

The Company tests long-lived assets for impairment at a level significantly lower than that of goodwill impairment testing.

We review the carrying values of our long-lived assets, including mining and related assets, whenever events or changes in circumstances indicate that such carrying values may not be recoverable.

We test long-lived assets for impairment at a level significantly lower than that of goodwill impairment testing.

Long-lived assets or groups of assets that are evaluated for impairment at the lowest level of largely independent identifiable cash flows at an individual operation or group of operations collectively serving a local market.

1 unchanged sentence

If impairment has occurred, the amount of the impairment recognized is determined by estimating the fair value of the assets and recording a loss if the carrying value is greater than the fair value.

During the year ended December 31, 2023, the Company performed impairment testing on assets where triggering events were identified due to recent operating results or changes in plans with the asset groups.

The undiscounted cash flows on an asset group with a net asset book value of $ 65 million indicated it was recoverable and not impaired.

However, the Company recognized long-lived asset impairments of $ 5.8 million (before tax) in selling, general and administrative expenses on the Consolidated Statements of Operations as a result of certain other aggregate sites no longer being economically feasible to mine and having no remaining value.

KNIFE RIVER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2023, 2022 and 2021

assets are included as part of the Pacific and Northwest reportable segments.

No impairment losses were recorded in 2024 or 2022.

During the year ended December 31, 2023, we recognized non-cash asset impairments of $ 5.8 million as a result of certain aggregate sites no longer being economically feasible to mine and having no remaining value.

Goodwill represents the excess of the purchase price over the fair value of identifiable net tangible and intangible assets acquired in a business combination.

Goodwill is required to be tested for impairment annually, which the Company completes in the fourth quarter, or more frequently if events or changes in circumstances indicate that goodwill may be impaired.

The Company has determined that the reporting units for its goodwill impairment test are its operating segments as they constitute a business for which discrete financial information is available and for which management regularly reviews the operating results.

For more information on the Company’s operating segments, see Note 15.

Goodwill is required to be tested for impairment annually, which we complete in the fourth quarter, or more frequently if events or changes in circumstances indicate that goodwill may be impaired.

We have determined the reporting units for our goodwill impairment test are our operating segments as they each constitute a business for which discrete financial information is available and for which management regularly reviews the operating results.

For more information on our operating segments, see Note 15.

Goodwill impairment, if any, is measured by comparing the fair value of each reporting unit to its carrying value.

If the fair value of a reporting unit exceeds its carrying value, the goodwill of the reporting unit is not impaired.

If the carrying value of a reporting unit exceeds its fair value, the Company must record an impairment loss for the amount that the carrying value of the reporting unit, including goodwill, exceeds the fair value of the reporting unit.

If the carrying value of a reporting unit exceeds its fair value, we must record an impairment loss for the amount that the carrying value of the reporting unit, including goodwill, exceeds the fair value of the reporting unit.

For the years ended December 31, 2024, 2023 and 2022, there were no impairment losses recorded.

The Company performed its annual goodwill impairment test in the fourth quarter of 2023 and determined the fair value of each of Knife River’s reporting units substantially exceeded the carrying value at October 31, 2023.

The Company uses a weighted average combination of both an income approach and a market approach to estimate the fair value of its reporting units for its goodwill impairment analysis.

Determining the fair value of a reporting unit requires judgment and the use of significant estimates, which include assumptions about Knife River’s future revenue, profitability and cash flows, amount and timing of estimated capital expenditures, inflation rates, weighted average cost of capital, operational plans, and current and future economic conditions, among others.

Knife River believes that the estimates and assumptions used in its impairment assessments are reasonable and based on available market information .

The Company’s investments include the cash surrender value of life insurance policies and insurance contracts.

The Company measures its investment in the insurance contracts at fair value with any unrealized gains and losses recorded on the Consolidated Statements of Operations.

Government Assistance

The Company accounts for government assistance received for capital projects by reducing the cost of the project by the amount of assistance received.

The Company records government assistance received as taxable income and writes-up the tax basis of the asset to include the amount of the assistance received.

Government assistance received by the Company for the years ended December 31, 2023, 2022 and 2021, was not material.

Joint Ventures

The Company accounts for unconsolidated joint ventures using either the equity method or proportionate consolidation.

As of December 31, 2023, the Company held an interest of 25 percent in a joint venture formed primarily for the purpose of pooling resources on construction contracts.

Proportionate consolidation is used for joint ventures that include unincorporated legal entities and activities of the joint venture which are construction-related.

For those joint ventures accounted for under proportionate consolidation, only the Company’s pro rata share of assets, liabilities, revenues and expenses are included in the Company’s Consolidated Balance Sheets and Consolidated Statements of Operations.

Our annual goodwill impairment test was performed in the fourth quarter of 2024 and determined the fair value of each of our reporting units substantially exceeded the carrying value as of October 31, 2024.

We use a weighted average combination of both an income approach and a market approach to estimate the fair value of our reporting units for our goodwill impairment analysis.

Determining the fair value of a reporting unit requires judgment and the use of significant estimates, which include assumptions about our future revenue, profitability and cash flows, amount and timing of estimated capital expenditures, inflation rates, weighted average cost of capital, operational plans, and current and future economic conditions, among others.

We believe the estimates and assumptions used in our impairment assessments are reasonable and based on available market information .

Our investments include the cash surrender value of life insurance policies and insurance contracts.

We measure our investment in the insurance contracts at fair value with any unrealized gains and losses recorded on the Consolidated Statements of Operations.

KNIFE RIVER CORPORATION AND SUBSIDIARIES

1 unchanged sentence

Years Ended December 31, 2024, 2023 and 2022

For those joint ventures accounted for using proportionate consolidation, the Company recorded in its Consolidated Statements of Operations $ 4.9 million, $ 9.1 million, and $ 10.1 million of revenue for the years ended December 31, 2023, 2022 and 2021, respectively.

The Company also reported an operating loss of $ 1.9 million for the year ended December 31, 2023, and operating income of $ 823,000 and $ 1.3 million for the years ended December 31, 2022 and 2021, respectively.

As of December 31, 2023, 2022 and 2021, the Company had interest in assets from these joint ventures of $ 45,000 , $ 912,000 and $ 643,000 , respectively.

For joint ventures accounted for under the equity method, the Company’s investment balances for the joint ventures are included in Investments in the Consolidated Balance Sheets and the Company’s pro rata share of net income is included in Other income in the Consolidated Statements of Operations.

The Company’s investments in equity method joint ventures were a net asset of $ 68,000 and $ 13,000 for December 31, 2023 and 2022, respectively.

In 2023, 2022 and 2021, the Company recognized income (loss) from equity method joint ventures of $ 55,000 , $( 426,000 ) and $ 14,000 , respectively.

The recognition of leases requires the Company to make estimates and assumptions that affect the lease classification and the assets and liabilities recorded.

Government Assistance

We account for government assistance received for capital projects by reducing the cost of the project by the amount of assistance received.

We record government assistance received as taxable income and write-up the tax basis of the asset to include the amount of the assistance received.

Government assistance received for the years ended December 31, 2024, 2023 and 2022, was not material.

Joint Ventures

We account for unconsolidated joint ventures using either the equity method or proportionate consolidation.

As of December 31, 2024, we held an interest of 25 percent in a joint venture formed primarily for the purpose of pooling resources on construction contracts.

Proportionate consolidation is used for joint ventures that include unincorporated legal entities and activities of the joint venture which are construction-related.

For those joint ventures accounted for under proportionate consolidation, only our pro rata share of assets, liabilities, revenues and expenses are included in the Consolidated Balance Sheets and Consolidated Statements of Operations.

For those joint ventures accounted for using proportionate consolidation, we recorded in our Consolidated Statements of Operations revenue of $ 0 , $ 4.9 million, and $ 9.1 million for the years ended December 31, 2024, 2023 and 2022, respectively.

Also for the years ended December 31, 2024 and 2023, we reported operating losses of $ 3,000 and $ 1.9 million, respectively, and operating income of $ 823,000 for the year ended December 31, 2022.

We had interest in assets from these joint ventures of $ 45,000 for both December 31, 2024 and 2023 and $ 912,000 as of 2022.

For joint ventures accounted for under the equity method, our investment balances for the joint ventures are included in Investments in the Consolidated Balance Sheets and our pro rata share of net income is included in Other income in the Consolidated Statements of Operations.

Our investments in equity method joint ventures were a net asset of $ 1.9 million and $ 68,000 for December 31, 2024 and 2023, respectively.

In 2024 and 2023, we recognized income from equity method joint ventures of $ 279,000 and $ 55,000 , respectively, and a loss from equity method joint ventures of $ 426,000 in 2022.

The recognition of leases requires us to make estimates and assumptions that affect the lease classification and the assets and liabilities recorded.

The accuracy of lease assets and liabilities reported on the audited Consolidated Financial Statements depends on, among other things, management’s estimates of interest rates used to discount the lease assets and liabilities to their present value, as well as the lease terms based on the unique facts and circumstances of each lease.

Lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected lease term.

The Company recognizes leases with an original lease term of 12 months or less in income on a straight-line basis over the term of the lease and does not recognize a corresponding right-of-use asset or lease liability.

The Company determines the lease term based on the non-cancelable and cancelable periods in each contract.

We recognize leases with an original lease term of 12 months or less in income on a straight-line basis over the term of the lease and do not recognize a corresponding right-of-use asset or lease liability.

We determine the lease term based on the non-cancelable and cancelable periods in each contract.

The non-cancelable period consists of the term of the contract that is legally enforceable and cannot be canceled by either party without incurring a significant penalty.

The cancelable period is determined by various factors that are based on who has the right to cancel a contract.

If only the lessor has the right to cancel the contract, the Company will assume the contract will continue.

If the lessee is the only party that has the right to cancel the contract, the Company looks to asset, entity and market-based factors.

If both the lessor and the lessee have the right to cancel the contract, the Company assumes the contract will not continue.

If only the lessor has the right to cancel the contract, we will assume the contract will continue.

If the lessee is the only party that has the right to cancel the contract, we look to asset, entity and market-based factors.

If both the lessor and the lessee have the right to cancel the contract, we assume the contract will not continue.

The discount rate used to calculate the present value of the lease liabilities is based upon the implied rate within each contract.

If the rate is unknown or cannot be determined, the Company uses an incremental borrowing rate, which is determined by the length of the contract, asset class and the Company’s borrowing rates, as of the commencement date of the contract.

Knife River’s wholly-owned captive insurance company, Spring Creek Insurance Company, which is subject to applicable insurance rules and regulations, insures the Company’s exposure related to workers’ compensation, general liability and automobile liability on a primary basis.

Knife River also purchases excess coverage from unrelated insurance carriers and obtains third-party coverage for other forms of insurance including, but not limited to, excess liability, contractor’s pollution liability, marine liability, directors and officers liability and employment practices liability.

Spring Creek Insurance Company establishes a reserve for estimated ultimate losses on reported claims and those incurred but no yet reported utilizing actuarial projections.

The reserves are classified within Other accrued liabilities or Noncurrent liabilities - other on the Consolidated Balance Sheets based on projections of when the estimated loss will be paid.

The estimates that are utilized to record potential losses on claims are inherently subjective, and actual claims could differ from amounts recorded, which could result in increased or decreased expense in future periods.

If the rate is unknown or cannot be determined, we use an incremental borrowing rate, which is determined by the length of the contract, asset class and our borrowing rates, as of the commencement date of the contract.

KNIFE RIVER CORPORATION AND SUBSIDIARIES

1 unchanged sentence

Years Ended December 31, 2024, 2023 and 2022

Additionally, Knife River maintains a self-insurance reserve for health insurance programs offered to eligible employees, included within Other accrued liabilities on the Consolidated Balance Sheets.

Our wholly-owned captive insurance company, Spring Creek Insurance Company, which is subject to applicable insurance rules and regulations, insures our exposure related to workers’ compensation, general liability and automobile liability on a primary basis.

We also purchase excess coverage from unrelated insurance carriers and obtain third-party coverage for other forms of insurance including, but not limited to, excess liability, contractor’s pollution liability, marine liability, directors and officers liability and employment practices liability.

Spring Creek Insurance Company establishes a reserve for estimated ultimate losses on reported claims and those incurred but not yet reported utilizing actuarial projections.

The reserves are classified within other accrued liabilities or noncurrent liabilities - other on the Consolidated Balance Sheets based on projections of when the estimated loss will be paid.

Additionally, we maintain a self-insurance reserve for health insurance programs offered to eligible employees, included within other accrued liabilities on the Consolidated Balance Sheets.

The reserve includes an estimate for losses on reported claims as well as for amounts incurred but not yet reported, based on historical trends.

Asset retirement obligations

The Company records the fair value of a liability for an asset retirement obligation in the period in which it is incurred.

When the liability is initially recorded, the Company capitalizes a cost by increasing the carrying amount of the related long-lived asset.

We record the fair value of a liability for an asset retirement obligation in the period in which it is incurred.

When the liability is initially recorded, we capitalize a cost by increasing the carrying amount of the related long-lived asset.

Over time, the liability is accreted to its present value each period and the capitalized cost is depreciated over the useful life of the related asset.

Upon settlement of the liability, the Company either settles the obligation for the recorded amount or incurs a gain or loss.

Earnings per share

The calculation for basic and diluted earnings per share for any period presented prior to the Separation have been retrospectively adjusted to the number of shares outstanding on May 31, 2023, the Separation and Distribution date.

Upon settlement of the liability, we either settle the obligation for the recorded amount or incur a gain or loss.

Net income per share

The calculation for basic and diluted net income per share for any period presented prior to the Separation have been retrospectively adjusted to the number of shares outstanding on May 31, 2023, the Separation and Distribution date.

For periods prior to the Separation, it is assumed that there are no dilutive equity instruments as there were no Knife River stock-based awards outstanding at the time.

Basic earnings per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the applicable period.

Diluted earnings per share is computed by dividing net income by the total of the weighted average number of shares of common stock outstanding during the applicable period, plus the effect of non-vested restricted stock units.

Weighted average common shares outstanding is comprised of issued shares of 57,009,542 less shares held in treasury of 431,136 , as described in Note 11.

Basic and diluted earnings per share are calculated as follows, based on a reconciliation of the weighted-average common shares outstanding on a basic and diluted basis:

Basic net income per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the applicable period.

Diluted net income per share is computed by dividing net income 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 share awards and restricted stock units.

Weighted average common shares outstanding is comprised of issued shares of 57,043,841 less shares held in treasury of 431,136 .

Basic and diluted net income per share are calculated as follows, based on a reconciliation of the weighted-average common shares outstanding on a basic and diluted basis:

Years ended December 31,

(In thousands, except per share amounts)

1 unchanged sentence

Weighted average common shares outstanding - basic 56,607 56,568 56,566

Effect of dilutive restricted stock units 100 — —

Effect of dilutive performance share awards and restricted stock units

Weighted average common shares outstanding - diluted 56,844 56,668 56,566

2 unchanged sentences

Net income per share - diluted $ 3.55 $ 3.23 $ 2.05

KNIFE RIVER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2024, 2023 and 2022

Stock-based compensation

Prior to the Separation, key employees of the Company participated in various stock-based compensation plans authorized and managed by MDU Resources.

All awards granted under the plans were based on MDU Resources’ common shares, however, Knife River recognized the expense for its participants in its financial statements.

We determine compensation expense for stock-based compensation awards based on the estimated fair values at the grant date and recognize the related compensation expense over the vesting period.

We use the straight-line amortization method to recognize compensation expense related to restricted stock units, which only has a service condition.

This method recognizes stock compensation expense on a straight-line basis over the requisite service period for the entire award.

We recognize compensation expense related to performance awards that vest based on performance metrics and service conditions on a straight-line basis over the service period.

Inception-to-date expense is adjusted based upon the determination of the potential achievement of the performance target at each reporting date.

We recognize compensation expense related to performance awards with market-based performance metrics on a straight-line basis over the requisite service period.

Forfeitures are recognized as they occur, and expenses are adjusted on a cumulative catch-up basis at the time of any forfeitures.

Prior to the Separation, key employees participated in various stock-based compensation plans authorized and managed by MDU Resources.

All awards granted under the plans were based on MDU Resources’ common shares, however, we recognized the expense for our participants in our financial statements.

At the time of the Separation, each outstanding MDU Resources’ time-vested restricted stock unit and performance share awards held by a Knife River employee was converted into Knife River time-vested restricted stock units.

The converted awards will continue to vest over the original vesting period, which is generally three years from the grant date.

The converted awards continue to vest over the original vesting period, which is generally three years from the grant date.

All performance share awards that were converted at the time of the Separation were first adjusted using a combined performance factor based on MDU Resources’ actual performance as of December 31, 2022.

The number of restricted stock units was determined by taking the closing per share price of MDU Resources on May 31, 2023, and dividing by the closing per share price of Knife River on June 1, 2023.

The ratio used to convert the MDU Resources’ share-based awards was designed to preserve the aggregate intrinsic value of the award immediately after the Separation when compared to the aggregate intrinsic value of the award immediately

KNIFE RIVER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2023, 2022 and 2021

prior to the Separation.

The ratio used to convert the MDU Resources’ stock-based compensation awards was designed to preserve the aggregate intrinsic value of the award immediately after the Separation when compared to the aggregate intrinsic value of the award immediately prior to the Separation.

The existing unvested stock-based awards issued through MDU Resources’ stock-based compensation plans were modified in connection with the Separation to maintain an equivalent value immediately before and after Separation.

Incremental fair value for unvested awards will be recorded over the remaining vesting periods.

In July 2023, the Company issued restricted stock units to certain key employees under the Knife River Long-Term Incentive Plan.

The Company records the compensation expense for restricted stock units using a straight-line amortization method over the requisite service period.

The cost for such awards is measured at the grant date fair value.

The Company recognizes forfeitures as they occur and trues up expense on a cumulative catch-up basis at the time of any forfeitures.

Knife River and its subsidiaries file consolidated federal income tax returns and combined and separate state income tax returns.

1 unchanged sentence

However, all income tax expense is reported within the Corporate Services segment.

Knife River makes a similar allocation for state income taxes paid in connection with combined state filings.

The Company provides deferred federal and state income taxes on all temporary differences between the book and tax basis of the Company’s assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse.

We make a similar allocation for state income taxes paid in connection with combined state filings.

We provide deferred federal and state income taxes on all temporary differences between the book and tax basis of our assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse.

The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

The Company records uncertain tax positions in accordance with accounting guidance on accounting for income taxes on the basis of a two-step process in which (1) the Company determines whether it is more-likely-than-not that the tax position will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of the tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.

We record uncertain tax positions in accordance with accounting guidance on accounting for income taxes on the basis of a two-step process in which (1) we determine whether it is more-likely-than-not that the tax position will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of the tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.

Tax positions that do not meet the more-likely-than-not criteria are reflected as a tax liability.

The Company recognizes interest and penalties accrued related to unrecognized tax benefits in income taxes.

Note 3 – Disaggregation of Revenue

In the following table, revenue is disaggregated by category for each reportable segment.

The Company believes 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.

Presented in the following tables are the 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

We recognize interest and penalties accrued related to unrecognized tax benefits in income taxes.

KNIFE RIVER CORPORATION AND SUBSIDIARIES

1 unchanged sentence

Years Ended December 31, 2024, 2023 and 2022

used in the contracting services to arrive at the external operating revenues.

Due to the restructuring of segments the 2022 and 2021 information has been recast.

Note 3 – Acquisitions

In 2024, we acquired the assets of two separate aggregate providers, one in Oregon and one in South Dakota.

The acquisitions were considered asset purchases, therefore, the purchase price was allocated to the assets acquired based on their respective fair values and no goodwill was recognized.

The aggregate purchase price for these transactions was $ 10.3 million.

In 2024, we completed four acquisitions which were accounted for as business combinations under ASC 805 - Business Combinations .

The business combinations included operations that expanded our aggregates, ready-mix and liquid asphalt operations in our current geographic locations.

The aggregate purchase price for these acquisitions totaled $ 120.7 million, subject to future post-closing adjustments.

The results of these acquisitions have been included in our audited 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.

The estimated fair value of the assets acquired and liabilities assumed are preliminary, 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, or the measurement period has passed.

We engaged a third-party valuation firm to assist us in the analysis of the fair value of Albina Asphalt.

All estimates, key assumptions, and forecasts were either provided by or reviewed by management.

While we chose to utilize a third-party valuation firm, 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 was 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.

See Note 7 for further information on the amount of goodwill recognized in each segment and the amortization periods of the intangible assets identified.

However, any subsequent measurement period adjustments are not expected to have a material impact on our results of operations.

KNIFE RIVER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2024, 2023 and 2022

The preliminary allocation of the aggregate purchase price for these individually immaterial acquisitions during 2024 is as follows:

2024 Acquisitions

(In thousands)

Current assets:

Receivables, net

Other current assets

Total current assets

Property, plant and equipment

Noncurrent assets:

Other intangible assets

Total deferred charges and other assets

Total assets acquired

Current liabilities:

Accounts payable

Current operating lease liabilities

Other accrued liabilities

Total current liabilities

Noncurrent liabilities:

Noncurrent operating lease liabilities

Total noncurrent liabilities

Total liabilities assumed

Total consideration (fair value)

For the year ended December 31, 2024, we incurred acquisition costs of $ 7.7 million.

These costs are included in selling, general and administrative expenses on the Consolidated Statement of Operations.

KNIFE RIVER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2024, 2023 and 2022

Note 4 – Revenue from contracts with customers

In the following table, revenue is disaggregated by category for each reportable segment.

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.

Revenue for contracting services is recognized over time while revenue for construction materials is recognized at a point in time.

For more information on our reportable segments, see Note 15.

Presented in the following tables are the 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 the contracting services to arrive at the external operating revenues.

Year ended December 31, 2024 Pacific Northwest Mountain Central Energy Services Corporate Services Total

5 unchanged sentences

Other 149,317 18,044 36 31,734 50,585 16,104 265,820

Contracting services publicsector

101,692 249,685 360,790 410,072 — — 1,122,239

Contracting services privatesector

40,194 75,090 98,268 22,465 — — 236,017

3 unchanged sentences

$ 493,066 $ 689,893 $ 662,892 $ 817,872 $ 234,652 $ 630 $ 2,899,005

KNIFE RIVER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2024, 2023 and 2022

Year ended December 31, 2023 Pacific Northwest Mountain Central Energy Services Corporate Services Total

5 unchanged sentences

142,742 15,751 16 28,745 49,363 12,414 249,031

Contracting services publicsector

71,362 197,372 308,711 426,318 — — 1,003,763

Contracting services privatesector

54,978 103,011 124,282 21,276 — — 303,547

3 unchanged sentences

$ 462,162 $ 663,681 $ 633,617 $ 824,908 $ 245,186 $ 796 $ 2,830,350

KNIFE RIVER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2023, 2022 and 2021

Year ended December 31, 2022 Pacific Northwest Mountain Central Energy Services Corporate Services Total

5 unchanged sentences

114,079 14,844 36 24,956 45,245 618 199,778

Contracting services publicsector

81,989 173,981 249,573 412,487 — — 918,030

Contracting services privatesector

47,497 88,713 119,136 14,345 — — 269,691

3 unchanged sentences

$ 418,030 $ 598,774 $ 541,910 $ 777,150 $ 198,713 $ 152 $ 2,534,729

KNIFE RIVER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2024, 2023 and 2022

Note 5 – Uncompleted contracts

5 unchanged sentences

222,368 208,926

Estimated revenue on uncompleted contracts

1,523,037 1,604,529

3 unchanged sentences

$ ( 10,843 ) $ ( 24,083 )

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.

6 unchanged sentences

Contract liabilities decrease as revenue is recognized from the satisfaction of the related performance obligation.

KNIFE RIVER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2023, 2022 and 2021

Such amounts are included in the accompanying Consolidated Balance Sheets at December 31 under the following captions:

9 unchanged sentences

Net contract liabilities $ ( 24,083 ) $ ( 8,698 ) $ ( 15,385 )

The Company recognized $ 37.5 million and $ 30.2 million in revenue for the years ended December 31, 2023 and 2022, respectively, which was previously included in contract liabilities at December 31, 2022 and 2021, respectively.

The Company recognized a net increase in revenues of approximately $ 12.3 million and $ 11.0 million for the years ended December 31, 2023 and 2022, respectively, from performance obligations satisfied in prior periods.

We recognized $ 50.6 million and $ 37.5 million in revenue for the years ended December 31, 2024 and 2023, respectively, which was previously included in contract liabilities at December 31, 2023 and 2022, respectively.

We recognized a net increase in revenues of approximately $ 32.6 million and $ 12.3 million for the years ended December 31, 2024 and 2023, respectively, from performance obligations satisfied in prior periods.

Remaining performance obligations

The remaining performance obligations, also referred to as backlog, include unrecognized revenues that the Company reasonably expects to be realized.

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 the Company’s contracts for contracting services have an original duration of less than one year.

At December 31, 2023, the Company’s remaining performance obligations were $ 662.2 million.

The Company expects to recognize the following revenue amounts in future periods related to these remaining performance obligations:

$ 610.8 million within the next 12 months;

$ 37.1 million within the next 13 to 24 months;

and $ 14.3 million thereafter.

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

KNIFE RIVER CORPORATION AND SUBSIDIARIES

1 unchanged sentence

Years Ended December 31, 2024, 2023 and 2022

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 December 31, 2024, our remaining performance obligations were $ 745.6 million.

We expect to recognize the following revenue amounts in future periods related to these remaining performance obligations:

$ 630.5 million within the next 12 months;

$ 77.2 million within the next 13 to 24 months;

and $ 37.9 million thereafter.

Note 6 – Property, Plant and Equipment

Property, plant and equipment at December 31 was as follows:

2023 2022 Weighted Average

Depreciable Life in

2024 2023 Depreciable Lives

(In thousands)

10 unchanged sentences

Note 7 – Goodwill and other intangible assets

In the fourth quarter of 2023, in connection with the reorganization of the Company’s reporting structure, a portion of the Pacific reporting unit’s businesses were reorganized into the Energy Services reporting unit.

As a result of the reorganization, the Company reallocated $ 5.7 million of the goodwill balance associated with the Pacific reporting unit to the Energy Services reporting unit based on the relative fair values of the Pacific reporting unit components.

The estimated fair values were determined using the income approach.

The Company reassessed the goodwill in connection with the reorganization and determined there was no impairment.

The changes in the carrying amount of goodwill were as follows:

28 unchanged sentences

$ 274,540 $ — $ ( 62 ) $ — $ 274,478

In the fourth quarter of 2023, in connection with the reorganization of our reporting structure, a portion of the Pacific reporting unit’s businesses were reorganized into the Energy Services reporting unit.

As a result of the reorganization, we reallocated $ 5.7 million of the goodwill balance associated with the Pacific reporting unit to the Energy Services reporting unit based on the relative fair values of the Pacific reporting unit components.

The estimated fair values were determined using the income approach.

We reassessed the goodwill in connection with the reorganization and determined there was no impairment.

Other amortizable intangible assets at December 31, were as follows:

7 unchanged sentences

Less accumulated amortization

$ 29,414 $ 10,821

The previous tables include goodwill and intangible assets associated with the business combinations completed during 2024.

For our acquisitions in 2024, the weighted average useful life for customer relationships was ten years , noncompete agreements was three years , tradename was ten years and other intangible assets was 11 years.

For more information related to these business combinations, see Note 3.

Amortization expense for amortizable intangible assets for the years ended December 31, 2024, 2023 and 2022, was $ 2.5 million, $ 2.6 million and $ 2.8 million, respectively.

Estimated amortization expense for identifiable intangible assets as of December 31, 2024, was:

KNIFE RIVER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2024, 2023 and 2022

2025 2026 2027 2028 2029 Thereafter

5 unchanged sentences

The fair value guidance establishes a hierarchy for grouping assets and liabilities, based on the significance of inputs.

The estimated fair values of the Company’s assets and liabilities measured on a recurring basis are determined using the market approach.

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

The Company measures its investments in certain fixed-income and equity securities at fair value with changes in fair value recognized in income.

The Company anticipates using these investments, which consist of insurance contracts, to satisfy its obligations under its unfunded, nonqualified defined benefit and defined contribution plans for the Company’s executive officers and certain key management employees, and invests in these fixed-income and

KNIFE RIVER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2023, 2022 and 2021

equity securities for the purpose of earning investment returns and capital appreciation.

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 $ 28.4 million and $ 24.9 million as of December 31, 2024 and 2023, respectively, are classified as investments on the Consolidated Balance Sheets.

2 unchanged sentences

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.

As part of the Separation, the Company retired certain insurance contracts used to satisfy its obligations under its unfunded, nonqualified defined contribution plan for the Company's executive officers and certain key management employees.

The proceeds of the retired contracts totaled $ 5.3 million, which were used to purchase life insurance policies and re-invested in fixed-income and equity securities in the fourth quarter of 2023.

The Company’s assets measured at fair value on a recurring basis were as follows:

Our assets measured at fair value on a recurring basis were as follows:

Fair Value Measurements at December 31, 2024, Using

14 unchanged sentences

$ — $ 32,459 $ — $ 32,459

__________________

* The insurance contracts invest approximately 40 percent in fixed-income investments, 19 percent in common stock of large-cap companies, 18 percent in cash equivalents, 8 percent in target date investments, 8 percent in common stock of mid-cap companies, 6 percent in common stock of small-cap companies and 1 percent in international investments.

KNIFE RIVER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2024, 2023 and 2022

Fair Value Measurements at December 31, 2023, Using

15 unchanged sentences

$ — $ 28,137 $ — $ 28,137

__________________

* The insurance contracts invest approximately 63 percent in fixed-income investments, 15 percent in common stock of large-cap companies, 8 percent in common stock of mid-cap companies, 6 percent in common stock of small-cap companies, 6 percent in target date investments and 2 percent in cash equivalents.

The Company’s 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 Company’s Level 2 insurance contracts are based on contractual cash surrender values that are determined primarily by investments in managed separate accounts of the insurer.

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 are 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.

KNIFE RIVER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2023, 2022 and 2021

Though the Company believes 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.

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

The Company applies the provisions of the fair value measurement standard to its nonrecurring, non-financial measurements, including long-lived asset impairments.

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.

The Company reviews the carrying value of its long-lived assets, excluding goodwill, whenever events or changes in circumstances indicate that such carrying amounts may not be recoverable.

The Company's 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.

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 during 2024 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 Level 3 fair value measurements, see Note 3.

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 the Company's Level 2 long-term debt was as follows:

December 31, 2023

The estimated fair value of our Level 2 long-term debt was as follows:

December 31, 2024 December 31, 2023

(In thousands)

1 unchanged sentence

Fair value $ 707,853 $ 725,086

The carrying amounts of the Company's remaining financial instruments included in current assets and current liabilities approximate their fair values.

The carrying amounts of our remaining financial instruments included in current assets and current liabilities approximate their fair values.

KNIFE RIVER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2024, 2023 and 2022

Note 9 – Debt

Certain debt instruments of the Company contain restrictive and financial covenants and cross-default provisions.

In order to borrow under the debt instruments, the Company must be in compliance with the applicable covenants and certain other conditions, all of which management believes the Company, as applicable, was in compliance with at December 31, 2023.

In the event the Company does not comply with the applicable covenants and other conditions, it would be in default on its agreements and alternative sources of funding may need to be pursued.

Certain debt instruments of ours contain restrictive and financial covenants and cross-default provisions.

In order to borrow under the debt instruments, 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 December 31, 2024.

In the event we do not comply with the applicable covenants and other conditions, we would be in default on our agreements and 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 December 31, 2023 December 31, 2023

Weighted Average Interest Rate at December 31, 2024

December 31, 2024 December 31, 2023

(In thousands)

5 unchanged sentences

Less unamortized debt issuance costs

12,564 15,326

Total long-term debt

677,386 681,659

Less current maturities

Net long-term debt

On April 25, 2023, the Company issued $ 425.0 million of 7.75 percent senior notes due May 1, 2031, pursuant to an indenture.

KNIFE RIVER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2023, 2022 and 2021

$ 666,911 $ 674,577

On April 25, 2023, we issued $ 425.0 million of 7.75 percent senior notes due May 1, 2031, pursuant to an indenture.

Term Loan and Revolving Credit Facility

On May 31, 2023, the Company entered into a five-year secured credit agreement, which provides for a $ 275.0 million term loan and a $ 350.0 million revolving credit facility.

As of December 31, 2023, the Company had no borrowings outstanding under the revolving credit facility and had a borrowing capacity of $ 329.0 million under the revolving credit facility, which is net of $ 21.0 million of outstanding letters of credit.

The secured credit agreement bears interest equal to, at the Company’s option, either (i) a base rate determined by reference to the highest of (a) the prime rate, (b) the federal funds rate plus 0.50 percent, and (c) SOFR plus 1.10 percent, plus an applicable margin of 0.75 percent to 1.50 percent, based upon the Company’s leverage ratio, for base rate loans or (ii) a SOFR rate determined by the interest period relevant to such borrowing plus an applicable margin of 1.75 percent to 2.50 percent, based upon the Company’s leverage ratio.

The Company will incur a quarterly commitment fee on the undrawn portion of the revolving credit facility of 0.25 percent to 0.50 percent, based on the Company’s leverage ratio.

On May 31, 2023, we entered into a five-year secured credit agreement, which provides for a $ 275.0 million term loan and a $ 350.0 million revolving credit facility.

As of December 31, 2024, we had no borrowings outstanding under the revolving credit facility and had a borrowing capacity of $ 329.4 million under the revolving credit facility, which is net of $ 20.6 million of outstanding letters of credit.

The secured credit agreement bears interest equal to, at our option, either (i) a base rate determined by reference to the highest of (a) the prime rate, (b) the federal funds rate plus 0.50 percent, and (c) SOFR plus 1.10 percent, plus an applicable margin of 0.75 percent to 1.50 percent, based upon our leverage ratio, for base rate loans or (ii) a SOFR rate determined by the interest period relevant to such borrowing plus an applicable margin of 1.75 percent to 2.50 percent, based upon our leverage ratio.

We will incur a quarterly commitment fee on the undrawn portion of the revolving credit facility of 0.25 percent to 0.50 percent, based on our leverage ratio.

The term loan has a mandatory annual amortization of 2.50 percent for years one and two, 5.00 percent for years three and four, and 7.50 percent in the fifth year.

The agreement contains customary covenants and provisions, including a covenant of Knife River not to permit, at any time, the ratio of total debt to trailing twelve month Adjusted EBITDA, as defined by the agreement, to be greater than 4.75 to 1.00.

The agreement also contains an interest coverage ratio covenant stating that Knife River’s trailing twelve month Adjusted EBITDA, as defined by the agreement, to interest expense is to be no less than 2.25 to 1.00.

The agreement contains customary covenants and provisions, including a covenant of us not to permit, at any time, the ratio of total debt to trailing twelve month Adjusted EBITDA, as defined by the agreement, to be greater than 4.75 to 1.00.

The agreement also contains an interest coverage ratio covenant stating that our trailing twelve month Adjusted EBITDA, as defined by the agreement, to interest expense is to be no less than 2.25 to 1.00.

The covenants also include restrictions on the sale of certain assets, loans and investments.

KNIFE RIVER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2024, 2023 and 2022

Schedule of Debt Maturities Long-term debt maturities, which excludes unamortized debt issuance costs, for the five years and thereafter following December 31, 2024, were as follows:

3 unchanged sentences

Note 10 – Leases

Most of the leases the Company enters into are for equipment, buildings and vehicles as part of their ongoing operations.

The Company determines if an arrangement contains a lease at inception of a contract and accounts for all leases in accordance with ASC 842 - Leases .

Most of the leases we enter into are for equipment, buildings and vehicles as part of our ongoing operations.

We determine if an arrangement contains a lease at inception of a contract and account for all leases in accordance with ASC 842 - Leases .

Lessee accounting

The leases the Company has entered into as part of its ongoing operations are considered operating leases and are recognized on the Consolidated Balance Sheets as operating lease right-of-use assets, current operating lease liabilities and noncurrent operating lease liabilities.

The leases we have entered into as part of our ongoing operations are considered operating leases and are recognized on the Consolidated Balance Sheets as operating lease right-of-use assets, current operating lease liabilities and noncurrent operating lease liabilities.

The corresponding lease costs are included in cost of revenue and selling, general and administrative expenses on the Consolidated Statements of Operations.

Generally, the leases for vehicles and equipment have a term of five years or less and buildings have a longer term of up to 35 years or more.

To date, the Company does not have any residual value guarantee amounts probable of being owed to a lessor, financing leases or material agreements with related parties.

KNIFE RIVER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2023, 2022 and 2021

The following tables provide information on the Company’s operating leases at and for the years ended December 31:

To date, we do not have any residual value guarantee amounts probable of being owed to a lessor, financing leases or material agreements with related parties.

The following tables provide information on operating leases at and for the years ended December 31:

2024 2023 2022

11 unchanged sentences

$ 18,844 $ 18,199

KNIFE RIVER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2024, 2023 and 2022

The reconciliation of future undiscounted cash flows to operating lease liabilities presented on the Consolidated Balance Sheet at December 31, 2024, was as follows (in thousands):

4 unchanged sentences

Note 11 – Asset Retirement Obligations

The Company has asset retirement obligations, which are liabilities associated with its legally required obligations to reclaim owned and leased aggregate properties, asphalt plant sites, ready-mix plant sites and other properties.

For the years ended December 31, 2023 and 2022, the current portion of the Company’s liability, which is included in other accrued liabilities, was $ 6.9 million and $ 4.4 million, respectively, and the noncurrent amount, which is included in other liabilities, was $ 34.9 million and $ 33.0 million, respectively.

We have asset retirement obligations, which are liabilities associated with our legally required obligations to reclaim owned and leased aggregate properties, asphalt plant sites, ready-mix plant sites and other properties.

For the years ended December 31, 2024 and 2023, the current portion of our liability, which is included in other accrued liabilities, was $ 7.1 million and $ 6.9 million, respectively.

The noncurrent amount, which is included in other liabilities, was $ 52.3 million and $ 34.9 million, respectively.

Total accretion and depreciation expenses for the years ended December 31, 2024, 2023 and 2022, were $ 3.4 million, $ 2.6 million and $ 2.1 million, respectively, and are included in cost of revenue on the Consolidated Statements of Operations.

A reconciliation of the Company’s liability for the years ended December 31 was as follows:

A reconciliation of our liability for the years ended December 31 was as follows:

(In thousands)

Balance at beginning of year $ 41,782 $ 37,361

Revisions in estimated cash flows

Liabilities incurred

2 unchanged sentences

Balance at end of year $ 59,430 $ 41,782

Note 12 – Stock-Based Compensation

Periods Prior to the Separation

Prior to the Separation, certain key employees participated in stock-based compensation plans sponsored by MDU Resources.

Under these plans, employees were granted time-vested restricted stock units and performance share awards.

The shares vest over three years , contingent on continued employment.

As previously discussed in Note 2, the outstanding restricted stock units and performance share awards granted to our employees were converted to restricted stock units of Knife River at the time of the Separation.

Prior to the Separation, stock-based compensation expense in the Consolidated Statements of Operations is representative of those employees of Knife River.

Additionally, stock-based compensation expense was allocated to Knife River for corporate employees of MDU Resources.

This stock-based compensation expense was allocated using a proportional cost allocation method and is included as a component of corporate allocations for periods prior to the Separation.

The amounts presented for the periods prior to the Separation are not necessarily indicative of future awards and do not necessarily reflect the costs that we would have incurred as an independent company.

KNIFE RIVER CORPORATION AND SUBSIDIARIES

1 unchanged sentence

Years Ended December 31, 2024, 2023 and 2022

Note 11 – Equity

On May 31, 2023, the Company issued 56,997,350 shares of common stock with a par value of $ 0.01 in connection with the Separation.

The Company historically held 538,921 shares of MDU Resources common stock through one of its subsidiaries.

The historical shares are presented as MDU Resources’ stock held by subsidiary on the Consolidated Statements of Equity.

In connection with the Separation, Knife River entered into an agreement with MDU Resources to transfer the stock of MDU Resources held by its subsidiary to MDU Resources in exchange for 431,136 shares of Knife River common stock.

The number of shares transferred to Knife River was based on the value of the stock at the time of the Separation.

The historical MDU Resources common stock held by the subsidiary at cost of $ 3.6 million at December 31, 2023, on the Consolidated Balance Sheets reflects the value of the MDU Resources common stock at the time it was granted to Knife River’s subsidiary.

The 431,136 shares of Knife River common stock are presented as Treasury stock held at cost in the Consolidated Balance Sheet and reduce the number of common stock shares outstanding.

Note 12 – Stock-Based Compensation

Prior to the Separation, key employees of the Company participated in various stock-based compensation plans authorized and managed by MDU Resources.

All awards granted under the plans were based on MDU Resources’ common shares, however, Knife River recognized the expense for its participants in its financial statements.

At the time of Separation, all outstanding stock-based compensation shares of MDU Resources were converted into Knife River restricted stock units.

Restricted stock units are valued based on the closing stock price on the grant date.

Periods Post Separation

At the time of the Separation, each outstanding MDU Resources’ time-vested restricted stock unit and performance share award held by a Knife River employee was converted into Knife River time-vested restricted stock units.

The conversion of the stock and the fair value of the awards was determined using the policies described in Note 2.

As a result of the modification, Knife River incurred $ 194,000 of incremental compensation expense related to the conversion of only the restricted stock units, which is being recognized over the remaining service periods of the applicable awards.

As a result of the award modification, we will incur $ 185,000 of incremental stock-based compensation expense.

Of this amount, $ 53,000 and $ 88,000 was recognized during the years ended December 31, 2024 and 2023, respectively, and approximately $ 44,000 will be recognized in 2025.

There was no incremental compensation expense incurred related to the performance share awards.

The Company has a stock-based compensation plan under which it is currently authorized to grant 2.5 million restricted stock units and other stock awards.

Effective June 1, 2023, we established a stock-based compensation plan under which we are currently authorized to grant 2.5 million restricted stock units and other stock awards.

As of December 31, 2024, there were 2.4 million shares available to grant under this plan.

The Company either purchases shares on the open market or issues new shares of common stock to satisfy the vesting of stock-based awards.

Total stock-based compensation expense (after tax) was $ 2.7 million, $ 1.2 million and $ 1.4 million in 2023, 2022 and 2021, respectively.

The Company uses the straight-line amortization method to recognize compensation expense related to restricted stock units, which only has a service condition.

As of December 31, 2023, total remaining unrecognized compensation expense related to the restricted stock units was approximately $ 5.0 million (before income taxes), which will be amortized over a weighted average period of 1.8 years.

Non-employee directors receive shares of common stock in addition to and in lieu of cash payments for directors’ fees.

There were 12,192 shares with a fair value of $ 702,000 issued to non-employee directors during the year ended December 31, 2023.

Shares are either purchased on the open market or new shares of common stock are issued to satisfy the vesting of stock-based awards.

The following table summarizes stock-based compensation expense recorded in selling, general and administrative expense on the Consolidated Statements of Operations:

Years ended December 31,

(In thousands)

Restricted stock units

In February 2023, 2022 and 2021, key employees of the Company were granted restricted stock units under MDU Resources’ long-term performance-based incentive plan authorized by MDU Resources’ compensation committee.

The compensation committee has the authority to select the recipients of awards, determine the type and size of awards, and establish certain terms and conditions of award grants.

The shares vest over three years , contingent on continued employment.

Compensation expense is recognized over the vesting period.

As previously discussed, the outstanding restricted stock awards granted to Knife River employees were converted to restricted

KNIFE RIVER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2023, 2022 and 2021

stock units of Knife River in connection with the Separation.

At the time of the Separation, the outstanding performance share awards were also converted to restricted stock units of Knife River as shown in the table later in this Note.

In July 2023, key employees of the Company were granted restricted stock units under Knife River’s long-term performance-based incentive plan authorized by the Company’s compensation committee.

The compensation committee has the authority to select the recipients of awards, determine the type and size of awards, and establish certain terms and conditions of award grants.

The shares vest over three years , contingent on continued employment.

Compensation expense is recognized over the vesting period.

As of December 31, 2023, the outstanding restricted stock units were as follows:

Service Period

$ 4,384 $ 2,921 $ 1,272

Performance share awards

Tax benefit associated with stock-based compensation 2,933 1,219 288

As of December 31, 2024, total remaining unrecognized compensation expense related to stock-based compensation was approximately $ 11.1 million (before income taxes), which will be amortized over a weighted average period of 1.8 years.

For the year ended December 31, 2024, the following summarizes the activity of the performance share awards and restricted stock units.

Performance Share Awards

Restricted Stock Units

Number of Shares

Weighted Average Grant-Date Fair Value Number of Shares

Weighted Average Grant-Date Fair Value

Nonvested at the beginning of period

— $ — 221,217 $ 38.67

101,688 85.99 68,859 73.02

Vested shares

— — ( 67,656 ) 37.00

Historical performance share awards

In February 2022 and 2021, key employees of the Company were granted performance share awards under MDU Resources’ long-term performance-based incentive plan authorized by MDU Resources’ compensation committee.

The compensation committee has the authority to select the recipients of awards, determine the type and size of awards, and establish certain terms and conditions of award grants.

Share awards are generally earned over a three-year vesting period and tied to specific financial metrics.

Upon vesting, participants may receive dividends that accumulate during the vesting period.

Share awards were generally earned over a three-year vesting period and tied to financial metrics.

However, as previously discussed, the outstanding performance share awards of Knife River employees were converted to restricted stock units of Knife River in connection with the Separation.

Under the market condition for these performance share awards, participants may earn from zero to 200 percent of the apportioned target grant of shares based on MDU Resources’ total stockholder return relative to that of the selected peer group.

Nonvested at end of period

101,688 $ 85.99 222,420 $ 49.82

Restricted Stock Units

During the year ended December 31, 2024, we granted 68,859 restricted stock units to certain executive officers, employees and members of our board of directors.

The restricted stock units generally vest over three years , contingent on continued employment for employees, and over one year for our board of directors.

We use the straight-line amortization method to recognize compensation expense related to restricted stock units, which only has a service condition.

The fair value of all restricted stock units is based on the market value of our stock on the date of grant.

KNIFE RIVER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2024, 2023 and 2022

The weighted average grant-date fair value per share for the restricted stock units granted in 2024 and 2023 was $ 73.02 and $ 39.57 , respectively.

The total fair value of restricted stock units that vested during the years ended December 31, 2024 and 2023, was $ 2.5 million and $ 2.0 million, respectively.

Performance Share Awards

During the year ended December 31, 2024, we granted 101,688 performance share awards to certain executive officers and employees.

The performance share awards vest over three years , contingent on continued employment for employees, and are tied to either a market condition or performance metric.

We recognize compensation expense related to performance share awards with performance-based metrics on a straight-line basis over the requisite service period.

Under the performance metric for these performance share awards, participants may earn from zero to 200 percent of the apportioned target grant of shares.

The performance metric is based on adjusted EBITDA margin growth.

The weighted average grant-date fair value per share granted in 2024 was $ 72.14 .

Under the market condition for these performance share awards, participants may earn from zero to 200 percent of the apportioned target grant of performance share awards based on our total stockholder return relative to that of the selected peer group.

Compensation expense was based on the grant-date fair value as determined by Monte Carlo simulation.

2 unchanged sentences

Treasury security rates in effect as of the grant date.

Assumptions used for grants applicable to the market condition for certain performance shares issued in 2022 and 2021 were:

Assumptions used for grants applicable to the market condition for shares granted in 2024 were:

Weighted average grant date fair value

$ 36.25 $ 37.96

Blended volatility range

2 unchanged sentences

4.62 % - 5.30 %

Weighted average discounted dividends per share

$ 2.93 $ 3.16

Under the performance conditions for these performance share awards, participants may earn from zero to 200 percent of the apportioned target grant of shares.

The performance conditions were based on MDU Resources’ compound annual growth rate in earnings from continuing operations.

The weighted average grant-date fair value per share for the performance shares applicable to these performance conditions issued in 2022 and 2021 was $ 27.73 and $ 27.35 , respectively.

The fair value of the performance shares that vested during the years ended December 31, 2022 and 2021, was $ 962,000 and $ 1.7 million, respectively.

KNIFE RIVER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2023, 2022 and 2021

For the year ended December 31, 2023, the following summarizes the activity of the performance share awards to the converted Knife River restricted stock units.

Performance Share Awards

Restricted Stock Units

Number of Shares

Weighted Average Grant-Date Fair Value

Number of Shares

Weighted Average Grant-Date Fair Value

Nonvested at the beginning of period

69,601 $ 32.32 23,197 $ 27.54

Granted pre-Separation by MDU Resources

— 81,507 $ 31.16

Adjustments for performance

( 13,261 ) $ 32.51 —

Forfeited pre-Separation

( 4,510 ) $ 32.29 ( 4,941 ) $ 30.06

Nonvested pre-Separation

51,830 $ 32.27 99,763 $ 30.37

Conversion to Knife River restricted stock units

( 51,830 ) 125,050

Granted post Separation

Vested shares

Forfeited post Separation

Nonvested at end of period

Note 13 – Accumulated other comprehensive loss

The Company’s accumulated other comprehensive loss is comprised of losses on derivative instruments qualifying as hedges and postretirement liability adjustments.

The after-tax changes in the components of accumulated other comprehensive loss were as follows:

1 unchanged sentence

Qualifying as

Post-retirement

Postretirement

Comprehensive

3 unchanged sentences

Other comprehensive income before reclassifications

— 10,935 10,935

Amounts reclassified from accumulated other comprehensive loss

328 875 1,203

Net current-period other comprehensive income

328 11,810 12,138

At December 31, 2023

1 unchanged sentence

Other comprehensive income before reclassifications

— 1,709 1,709

Amounts reclassified from accumulated other comprehensive loss

Net current-period other comprehensive income

— 2,017 2,017

At December 31, 2024

14 unchanged sentences

Amortization of postretirement liability losses included in net periodic benefit cost

( 256 ) ( 1,167 ) ( 1,453 ) Other income (expense)

( 411 ) ( 256 ) ( 1,167 ) Other income

103 64 292 Income taxes

20 unchanged sentences

$ — $ 383 $ 7,304

Debt assumed in connection with a business combination $ — $ — $ 10

Accrual for holdback payment related to a business combination $ — $ — $ 70

Note 15 – Business Segment Data

The Company focuses on the vertical integration of its products and services by offering customers a single-source for construction materials and related contracting services.

The Company operates in 14 states across the United States.

Its operating segments include:

Pacific, Northwest, Mountain, North Central, South and Energy Services.

The operating segments are used to determine the Company’s reportable segments and are based on the Company’s method of internal reporting and management of the business.

There are five reportable segments, four of which are aligned by key geographic areas due to the production of construction materials and related contracting services and one of which is based on product line.

The Energy Services segment, which has locations throughout

KNIFE RIVER CORPORATION AND SUBSIDIARIES

1 unchanged sentence

Years Ended December 31, 2024, 2023 and 2022

the Company’s geographic footprint, produces and supplies liquid asphalt and related services.

Each segment is led by a segment manager that reports to the Company’s chief operating officer who is also the Company’s chief operating decision maker.

The Company’s chief operating decision maker evaluates the performance of the segments and allocates resources to them based on earnings before interest, taxes, depreciation, depletion and amortization.

In the fourth quarter of 2023, the Company completed a reorganization of its reporting structure, which has resulted in changes being made to the management of its business to best align with its strategies.

Based on how the chief operating decision maker manages the Company, the reportable segments are:

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 14 states across the United States.

Our operating segments include:

Pacific, Northwest, Mountain, North Central, South and Energy Services.

The operating segments are used to determine our reportable segments and are based on our method of internal reporting and management of the business.

As of December 31, 2024, our reportable segments were:

Pacific, Northwest, Mountain, Central and Energy Services.

The Company also has the Corporate Services segment.

As a result of the reorganization, the liquid asphalt and related services portion of the Pacific segment’s businesses are now reported under the Energy Services segment.

In addition, the North Central and South operating regions have been aggregated into one reportable segment, Central.

All periods have been recast to conform with the revised presentation.

Our reportable segments are aligned by key geographic areas due to the production of construction materials and related contracting services and one of which is based on product line.

Each segment is led by a segment manager that reports to our chief operating officer.

The chief executive officer and the chief operating officer are considered our chief operating decision maker.

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.

1 unchanged sentence

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.

and produces and sells ready-mix concrete as well as vertically integrating our 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, information technology, human resources;

and other corporate expenses that support the operating segments.

The Company accounts for intersegment sales and transfers as if the sales or transfers were to third parties.

and other corporate expenses that support the operating segments and is excluded from our segment results.

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 information below follows the same accounting policies as described in Note 2.

Information on the Company’s segments as of December 31, and for the years then ended was as follows:

2023 2022 2021

(In thousands)

External operating revenues:

Pacific $ 462,162 $ 418,030 $ 396,749

Northwest 663,681 598,774 474,941

Mountain 633,617 541,910 479,543

Central 824,908 777,150 720,771

Energy Services 245,186 198,713 156,922

Corporate Services 796 152 4

Total external operating revenues $ 2,830,350 $ 2,534,729 $ 2,228,930

Information on our segments as of December 31, and for the years then ended was as follows:

KNIFE RIVER CORPORATION AND SUBSIDIARIES

1 unchanged sentence

Years Ended December 31, 2024, 2023 and 2022

2023 2022 2021

For the year ended December 31, 2024

Pacific Northwest Mountain Central Energy Services Total

(In thousands)

Intersegment operating revenues:

Pacific $ 86,115 $ 81,105 $ 75,837

Northwest 109,108 105,647 91,184

Mountain 133,328 110,095 86,498

Central 235,875 242,563 200,681

Energy Services 57,373 54,006 46,844

Corporate Services 11,618 466 —

Total intersegment operating revenues $ 633,417 $ 593,882 $ 501,044

Pacific $ 56,206 $ 44,044 $ 57,915

Northwest 121,098 103,885 80,624

Mountain 103,142 72,604 65,017

Central 116,653 86,572 81,459

Energy Services 78,124 28,310 31,564

Corporate Services ( 53,219 ) ( 28,675 ) ( 23,173 )

Revenues from external customers $ 493,066 $ 689,893 $ 662,892 $ 817,872 $ 234,652 $ 2,898,375

Intersegment revenues 86,884 110,190 135,947 213,672 54,872 601,565

Total segment revenue 579,950 800,083 798,839 1,031,544 289,524 3,499,940

Other revenues 1

Elimination of intersegment revenue 617,039

Total consolidated revenue $ 2,899,005

Cost of revenue excluding depreciation, depletion and amortization

480,142 604,177 652,066 843,977 219,255

Selling, general and administrative expenses excluding depreciation, depletion and amortization

39,284 45,430 33,377 56,460 10,207

Other segment items 2

( 625 ) ( 706 ) 108 502 104

Total segment EBITDA $ 59,899 $ 149,770 $ 113,504 $ 131,609 $ 60,166 $ 514,948

Consolidated income before income taxes $ 270,994

Depreciation, depletion and amortization 136,871

Interest expense, net 3

Less unallocated amounts:

Other corporate revenue

Other corporate expenses

Total segment EBITDA $ 514,948

Capital Expenditures $ 32,641 $ 58,771 $ 48,322 $ 55,365 $ 117,730 $ 312,829

Pacific $ 21,512 $ 31,462 $ 25,154

Northwest 31,653 60,697 278,946

Mountain 25,506 35,098 47,648

Central 39,302 46,574 51,144

Energy Services 4,099 5,651 4,577

Corporate Services 918 2,365 10,055

Total capital expenditures*

Assets $ 451,050 $ 825,408 $ 355,078 $ 706,795 $ 252,130 $ 2,590,461

Other assets 4,560,924

Elimination of intercompany receivables and investment in subsidiaries 4,300,183

Total consolidated assets $ 2,851,202

__________________

Pacific $ 432,820 $ 408,805 $ 384,573

Northwest 781,640 772,159 714,098

Mountain 315,661 293,121 278,608

Central 663,134 607,200 603,008

Energy Services 128,383 138,323 131,244

Corporate Services 278,175 74,711 70,293

Total assets $ 2,599,813 $ 2,294,319 $ 2,181,824

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.

KNIFE RIVER CORPORATION AND SUBSIDIARIES

1 unchanged sentence

Years Ended December 31, 2024, 2023 and 2022

2023 2022 2021

Year ended December 31, 2023

Pacific Northwest Mountain Central Energy Services Total

(In thousands)

Property, plant and equipment:

Pacific $ 528,008 $ 517,794 $ 490,499

Northwest 839,060 813,513 759,482

Mountain 419,537 400,907 369,732

Central 646,929 615,893 594,330

Energy Services 102,844 98,698 93,272

Corporate Services 43,356 42,603 40,383

Less accumulated depreciation and depletion 1,264,687 1,174,195 1,097,388

Net property, plant and equipment $ 1,315,047 $ 1,315,213 $ 1,250,310

Revenues from external customers

$ 462,162 $ 663,681 $ 633,617 $ 824,908 $ 245,186 $ 2,829,554

* Capital expenditures for 2023, 2022 and 2021 include noncash transactions for capital expenditure-related accounts payable, the issuance of equity securities in connection with an acquisition and accrual of a holdback payment in connection with an acquisition totaling $( 910,000 ), $( 5.4 ) million and $( 8.1 ) million, respectively.

A reconciliation of reportable segment operating revenues to consolidated operating revenues is as follows:

Intersegment revenues

86,115 109,108 133,328 235,875 57,373 621,799

(In thousands)

Total reportable segment operating revenues $ 3,451,353 $ 3,127,993 $ 2,729,970

Corporate Services revenue

Elimination of intersegment operating revenues 633,417 593,882 501,044

Total consolidated operating revenues $ 2,830,350 $ 2,534,729 $ 2,228,930

A reconciliation of reportable segment assets to consolidated assets is as follows:

Total segment revenue

548,277 772,789 766,945 1,060,783 302,559 3,451,353

(In thousands)

Total assets for reportable segments $ 2,321,637 $ 2,219,608 $ 2,111,531

Other assets 4,049,800 3,439,435 3,239,393

Elimination of intercompany receivables and investment in subsidiaries

Other revenues 1

Elimination of intersegment revenue

Total consolidated revenue

Cost of revenue excluding depreciation, depletion and amortization

449,853 603,178 633,596 893,412 214,668

Selling, general and administrative expenses excluding depreciation, depletion and amortization

41,584 47,913 30,264 51,049 9,809

Other segment items 2

( 634 ) ( 600 ) 57 331 42

Total segment EBITDA

$ 56,206 $ 121,098 $ 103,142 $ 116,653 $ 78,124 $ 475,223

Consolidated income before income taxes

Depreciation, depletion and amortization 123,805

Interest expense, net 3

Less unallocated amounts:

Other corporate revenue

Other corporate expenses

Total segment EBITDA

Capital Expenditures

$ 21,512 $ 31,653 $ 25,506 $ 39,302 $ 4,099 $ 122,072

$ 432,820 $ 781,640 $ 315,661 $ 663,134 $ 128,383 $ 2,321,638

Elimination of intercompany receivables and investment in subsidiaries

Total consolidated assets

A reconciliation of reportable segment EBITDA to consolidated income before income taxes is as follows:

__________________

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.

KNIFE RIVER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2024, 2023 and 2022

Year ended December 31, 2022

Pacific Northwest Mountain Central Energy Services Total

(In thousands)

Total EBITDA for reportable segments $ 475,223 $ 335,415 $ 316,579

Corporate Services EBITDA

Revenues from external customers $ 418,030 $ 598,774 $ 541,910 $ 777,150 $ 198,713 $ 2,534,577

Intersegment revenues 81,105 105,647 110,095 242,563 54,006 593,416

Total segment revenue 499,135 704,421 652,005 1,019,713 252,719 3,127,993

Other revenues 1

Elimination of intersegment revenue 593,882

Total consolidated revenue $ 2,534,729

Cost of revenue excluding depreciation, depletion and amortization

424,417 564,555 552,215 896,919 216,787

Selling, general and administrative expenses excluding depreciation, depletion and amortization

29,972 35,459 27,171 36,165 7,624

Other segment items 2

( 702 ) ( 522 ) ( 15 ) ( 57 ) 2

Total segment EBITDA $ 44,044 $ 103,885 $ 72,604 $ 86,572 $ 28,310 $ 335,415

Consolidated income before income taxes 158,821

Depreciation, depletion and amortization 117,798

Interest expense, net 3

52,891 30,121 19,218

Total consolidated income before income taxes $ 245,308 $ 158,821 $ 173,214

Less unallocated amounts:

Other corporate revenues

Other corporate expenses

Total segment EBITDA $ 335,415

Capital Expenditures $ 31,462 $ 60,697 $ 35,098 $ 46,574 $ 5,651 $ 179,482

Assets $ 408,805 $ 772,159 $ 293,121 $ 607,200 $ 138,323 $ 2,219,608

Other assets 3,439,435

Elimination of intercompany receivables and investment in subsidiaries 3,364,724

Total consolidated assets $ 2,294,319

__________________

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.

18 unchanged sentences

Deferred compensation/compensation related $ 23,751 $ 22,358

Operating lease liabilities 11,468 11,804

Asset retirement obligations 15,420 10,862

Net operating loss/credit carryforward 10,811 12,039

Operating lease liabilities 12,725 11,468

Accrued pension costs 9,528 10,556

Capitalized inventory overheads 8,359 7,388

Net operating loss/credit carryforward 5,528 10,811

Section 174 costs

Other 4,645 6,251

9 unchanged sentences

Net deferred income tax liability $ ( 174,727 ) $ ( 174,542 )

As of December 31, 2023 and 2022, the Company had various state income tax net operating loss carryforwards of $ 133.6 million and $ 160.1 million, respectively, and federal and state income tax credit carryforwards, excluding alternative minimum tax credit carryforwards, of $ 591,000 for both years.

The state income tax credit carryforwards

As of December 31, 2024 and 2023, we had various state income tax net operating loss carryforwards of $ 98.6 million and $ 133.6 million, respectively, and federal and state income tax credit carryforwards, excluding alternative minimum tax credit carryforwards, of $ 591,000 for 2023.

The state income tax net operating loss

KNIFE RIVER CORPORATION AND SUBSIDIARIES

1 unchanged sentence

Years Ended December 31, 2024, 2023 and 2022

are due to expire in 2024.

carryforwards are due to expire between 2025 and 2044.

Changes in tax regulations or assumptions regarding current and future taxable income could require additional valuation allowances in the future.

2 unchanged sentences

Change in net deferred income tax liability from the preceding table $ 185 $ ( 1,262 )

Deferred income taxes established due to an acquisition — ( 1,215 )

Deferred taxes associated with other comprehensive loss ( 670 ) ( 344 )

8 unchanged sentences

State income taxes, net of federal income tax*

14,559 5.4 12,977 5.3 10,725 6.7

Depletion allowance ( 2,767 ) ( 1.0 ) ( 2,808 ) ( 1.1 ) ( 2,068 ) ( 1.3 )

Other 921 0.4 1,669 1.0 ( 452 ) ( 0.2 )

Nondeductible expenses

1,258 0.5 2,299 0.9 1,068 0.7

( 720 ) ( 0.3 ) ( 1,722 ) ( 0.7 ) ( 494 ) ( 0.3 )

Unrecognized tax benefits

77 — 175 0.1 17 —

Total income tax expense $ 69,316 25.6 $ 62,436 25.5 $ 42,601 26.8

The Company and its subsidiaries file income tax returns in the U.S.

__________________

* State taxes in Oregon, Minnesota and California constitute the majority (greater than 50%) in this category.

The following table provides cash taxes paid for the year end December 31, 2024:

Jurisdiction 2024

(In thousands)

Federal $ 46,000

Minnesota 4,396

Other States/Cities 9,747

Total $ 67,372

Knife River and its subsidiaries file income tax returns in the U.S.

federal jurisdiction, and various state and local jurisdictions.

The Company is no longer subject to U.S.

We are no longer subject to U.S.

federal or non-U.S.

income tax examinations by tax authorities for years ending prior to 2021.

With few exceptions, as of December 31, 2023, the Company is no longer subject to state and local income tax examinations by tax authorities for years ending prior to 2020.

For the years ended December 31, 2023, 2022 and 2021, total reserves for uncertain tax positions were not material.

The Company recognizes interest and penalties accrued relative to unrecognized tax benefits in income tax expense.

With few exceptions, as of December 31, 2024, we are no longer subject to state and local income tax examinations by tax authorities for years ending prior to 2021.

Total reserves for uncertain tax positions were not material.

We recognize interest and penalties accrued relative to unrecognized tax benefits in income tax expense.

KNIFE RIVER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2024, 2023 and 2022

Note 17 – Employee Benefit Plans

Pension and other postretirement benefit plans

The Company participates in self-sponsored qualified defined benefit pension plans which are accounted for as single-employer plans and are reflected in the Company’s audited consolidated financial statements.

The Company uses a measurement date of December 31 for all its pension and postretirement benefit plans.

We participate in self-sponsored qualified defined benefit pension plans which are accounted for as single-employer plans and are reflected in our audited consolidated financial statements.

We use a measurement date of December 31 for all our pension and postretirement benefit plans.

Prior to 2010, defined benefit pension plan benefits and accruals for the nonunion plan were frozen and on June 30, 2015, the remaining union plan was frozen.

These employees were eligible to receive additional defined contribution plan benefits.

Prior to the Separation, the Company participated in a multiple-employer postretirement benefit plan sponsored by MDU Resources.

In connection with the Separation, the Company assumed all the obligations and liabilities of Knife River’s employees in that plan, along with all MDU Resources employees that transferred to Knife River as a result of the Separation.

Subsequent to the Separation, the postretirement benefit plans in which the Company participates are single employer plans.

Employees hired after December 31, 2010 are not eligible for retiree medical

KNIFE RIVER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2023, 2022 and 2021

Prior to the Separation, we participated in a multiple-employer postretirement benefit plan sponsored by MDU Resources.

In connection with the Separation, we assumed all the obligations and liabilities of our employees in that plan, along with all MDU Resources employees that transferred to Knife River as a result of the Separation.

Subsequent to the Separation, the postretirement benefit plans in which we participate are single employer plans.

Employees hired after December 31, 2010 are not eligible for retiree medical benefits.

Effective January 1, 2011, eligibility to receive retiree medical benefits was modified such that eligible employees who attained age 55 with 10 years of continuous, full‐time service by December 31, 2010, will have an option to select one of two retiree medical insurance benefits.

2 unchanged sentences

Employees hired after December 31, 2014 are not eligible for retiree medical benefits.

In 2012, the Company modified health care coverage for certain retirees.

In 2012, we modified health care coverage for certain retirees.

Effective January 1, 2013, post-65 coverage was replaced by a fixed-dollar subsidy for retirees and spouses to be used to purchase individual insurance through a healthcare exchange.

KNIFE RIVER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2024, 2023 and 2022

Changes in benefit obligation and plan assets and amounts recognized in the Consolidated Balance Sheets at December 31, were as follows:

7 unchanged sentences

1,542 1,633 697 721

Plan participants’ contributions

Actuarial (gain) loss

11 unchanged sentences

2,100 1,170 552 586

Plan participants’ contributions

Benefits paid

5 unchanged sentences

Amounts recognized in the Consolidated Balance Sheets at December 31:

Other accrued liabilities

Other accrued assets

$ 140 $ — $ — $ —

Other accrued liabilities

Noncurrent liabilities - other

485 3,193 13,353 14,060

Benefit obligation liabilities

Benefit obligation assets (liabilities) - net

$ ( 345 ) $ ( 3,193 ) $ ( 14,055 ) $ ( 14,759 )

4 unchanged sentences

$ 16,742 $ 17,780 $ ( 3,663 ) $ ( 2,590 )

$ 17,780 $ 19,087 $ ( 2,590 ) $ ( 2,166 )

Employer contributions and benefits paid in the preceding table include only those amounts contributed directly to, or paid directly from, plan assets.

KNIFE RIVER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2023, 2022 and 2021

In 2024, the actuarial gains recognized in the pension and postretirement benefit obligations was primarily the result of an increase in the discount rate.

In 2023, the actuarial loss recognized in the pension benefit obligation was largely the combination of losses resulting from decreased discount rates, offset in part by higher asset gains.

The actuarial gain recognized in the other postretirement benefit obligation was largely the combinations of gains due to a decrease in expected claims, offset in part by losses resulting from decreased discount rates.

In 2022, the actuarial gain recognized in the benefit obligation was primarily the result of an increase in the discount rate.

For more information on the discount rates, see the table below.

Unrecognized pension actuarial gains and losses in excess of 10 percent of the greater of the projected benefit obligation or the market-related value of assets are amortized over the average life expectancy of plan participants for frozen plans.

The market-related value of assets is determined using a five years average of assets.

The market-related value of assets is determined using a 5 year average of assets.

KNIFE RIVER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2024, 2023 and 2022

The pension plans all have accumulated benefit obligations in excess of plan assets.

4 unchanged sentences

Fair value of plan assets $ 30,375 $ 30,187

The components of net periodic benefit cost (credit), other than the service cost component, are included in other income (expense) on the Consolidated Statements of Operations.

Prior service credit is amortized on a straight-

KNIFE RIVER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2023, 2022 and 2021

line basis over the average remaining service period of active participants.

These components related to the Company’s pension and other postretirement benefit plans for the years ended December 31, were as follows:

The components of net periodic benefit cost, other than the service cost component, are included in other income (expense) on the Consolidated Statements of Operations.

Prior service credit is amortized on a straight-line basis over the average remaining service period of active participants.

The components related to our pension and other postretirement benefit plans for the years ended December 31, were as follows:

Pension Benefits Other Postretirement Benefits

1 unchanged sentence

(In thousands)

Components of net periodic benefit cost (credit):

Components of net periodic benefit cost:

$ — $ — $ — $ 372 $ 361 $ 522

7 unchanged sentences

559 510 856 ( 118 ) ( 175 ) 351

Net periodic benefit cost (credit)

Net periodic benefit cost

289 343 10 921 839 1,296

8 unchanged sentences

( 1,038 ) ( 1,307 ) 299 ( 1,073 ) ( 424 ) ( 5,105 )

Total recognized in net periodic benefit cost (credit) and accumulated other comprehensive loss

Total recognized in net periodic benefit cost and accumulated other comprehensive loss

$ ( 749 ) $ ( 964 ) $ 309 $ ( 152 ) $ 415 $ ( 3,809 )

KNIFE RIVER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2024, 2023 and 2022

Weighted average assumptions used to determine benefit obligations at December 31, were as follows:

4 unchanged sentences

Rate of compensation increase N/A N/A 4.00 % 4.00 %

Weighted average assumptions used to determine net periodic benefit cost (credit) for the years ended December 31, were as follows:

Weighted average assumptions used to determine net periodic benefit cost for the years ended December 31, were as follows:

Pension Benefits Other Postretirement Benefits

3 unchanged sentences

Rate of compensation increase N/A N/A 4.00 % 3.00 %

KNIFE RIVER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2023, 2022 and 2021

The expected rate of return on pension plan assets is based on a targeted asset allocation range determined by the funded ratio of the plan.

As of December 31, 2024, the expected rate of return on pension plan assets is based on the targeted asset allocation range of 20 percent to 30 percent equity securities and 70 percent to 80 percent fixed-income securities and the expected rate of return from these asset categories.

Health care rate assumptions for the Company’s other postretirement benefit plans as of December 31, were as follows:

Health care rate assumptions for our other postretirement benefit plans as of December 31, were as follows:

Health care trend rate assumed for next year 8.5 % 7.5 %

1 unchanged sentence

Year in which ultimate trend rate achieved 2035 2034

The Company’s other postretirement benefit plans include health care and life insurance benefits for certain retirees.

Our other postretirement benefit plans include health care and life insurance benefits for certain retirees.

The plans underlying these benefits may require contributions by the retiree depending on such retiree’s age and years of service at retirement or the date of retirement.

The Company contributes a flat dollar amount to the monthly premiums, which is updated annually on January 1.

The Company expects to contribute $ 912,000 and $ 700,000 to its defined benefit pension and postretirement benefit plans in 2024, respectively.

We contribute a flat dollar amount to the monthly premiums, which is updated annually on January 1.

We do not expect to contribute to our defined pension plans in 2025.

We expect to contribute approximately $ 702,000 to our postretirement benefit plans in 2025.

The following benefit payments, which reflect future service, as appropriate, at December 31, 2024, are as follows:

7 unchanged sentences

2029 2,590 1,215

Outside investment managers manage the Company’s pension and postretirement assets.

The Company’s investment policy with respect to pension and other postretirement assets is to make investments solely in the interest of the participants and beneficiaries of the plans and for the exclusive purpose of providing benefits accrued and defraying the reasonable expenses of administration.

The Company strives to maintain investment diversification to assist in minimizing the risk of large losses.

The Company’s policy guidelines allow for investment of funds in cash equivalents, fixed-income securities and equity securities.

KNIFE RIVER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2024, 2023 and 2022

Outside investment managers manage our pension assets.

Our investment policy with respect to the pension assets is to make investments solely in the interest of the participants and beneficiaries of the plans and for the exclusive purpose of providing benefits accrued and defraying the reasonable expenses of administration.

We strive to maintain investment diversification to assist in minimizing the risk of large losses.

Our policy guidelines allow for investment of funds in cash equivalents, fixed-income securities and equity securities.

The guidelines prohibit investment in commodities and futures contracts, equity private placement, employer securities, leveraged or derivative securities, options, direct real estate investments, precious metals, venture capital and limited partnerships.

The guidelines also prohibit short selling and margin transactions.

The Company’s practice is to periodically review and rebalance asset categories based on its targeted asset allocation percentage policy.

Our practice is to periodically review and rebalance asset categories based on our targeted asset allocation percentage policy.

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 ASC establishes a hierarchy for grouping assets and liabilities, based on the significance of inputs.

The estimated fair values of the Company’s pension plans’ assets are determined using the market approach.

KNIFE RIVER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2023, 2022 and 2021

The estimated fair values of our pension plans’ assets are determined using the market approach.

The carrying value of the pension plans’ Level 2 cash equivalents approximates fair value and is determined using observable inputs in active markets or the net asset value of shares held at year end, which is determined using other observable inputs, including pricing from outside sources.

The carrying value of the pension plan’s 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 pension plans’ Level 1 and Level 2 equity securities are based on the closing price reported on the active market on which the individual securities are traded or other known sources including pricing from outside sources.

The estimated fair value of the pension plans’ Level 1 and Level 2 collective and mutual funds are based on the net asset value of shares held at year end, based on either published market quotations on active markets or other known sources, including pricing from outside sources.

The estimated fair value of the pension plans’ Level 2 corporate and municipal bonds is determined using other observable inputs, including benchmark yields, reported trades, broker/dealer quotes, bids, offers, future cash flows and other reference data.

The estimated fair value of the pension plans’ Level 1 U.S.

Government securities are valued based on quoted prices on an active market.

The estimated fair value of the pension plans’ Level 2 U.S.

Government securities are valued mainly using other observable inputs, including benchmark yields, reported trades, broker/dealer quotes, bids, offers, to be announced prices, future cash flows and other reference data.

The estimated fair value of the pension plans’ Level 2 pooled separate accounts are determined using observable inputs in active markets or the net asset value of shares held at year end, or other observable inputs.

Some of these securities are valued using pricing from outside sources.

All investments measured at net asset value in the tables that follow are invested in commingled funds, separate accounts or common collective trusts which do not have publicly quoted prices.

1 unchanged sentence

The fair value of the underlying investments held by the commingled funds, separate accounts and common collective trusts is generally based on quoted prices in active markets.

The fair value of the Company’s pension plans’ assets by class were as follows:

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.

The fair value of our pension plans’ assets by class were as follows:

Fair Value Measurements at December 31, 2024, Using

7 unchanged sentences

Cash equivalents $ — $ 297 $ — $ 297

Collective and mutual funds (a)

Collective and mutual funds

28,374 1,672 — 30,046

Investments measured at net asset value (b)

Money market funds

Total assets measured at fair value $ 28,374 $ 2,001 $ — $ 30,375

__________________

(a) Collective and mutual funds invest approximately 33 percent in corporate bonds, 23 percent in U.S.

Government securities, 15 percent in common stock of large-cap U.S.

companies, 13 percent in other investments, 8 percent in common stock of international companies and 8 percent in cash and cash equivalents.

(b) In accordance with ASC 820 - Fair Value, Measurements certain investments that were measured at net asset value per share (or its equivalent) have not been classified in the fair value hierarchy.

The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the line items presented in the Consolidated Balance Sheets.

KNIFE RIVER CORPORATION AND SUBSIDIARIES

10 unchanged sentences

Cash equivalents $ — $ 1,021 $ — $ 1,021

Equity securities:

companies 777 — — 777

International companies — 49 — 49

Collective and mutual funds (a)

Collective and mutual funds

25,981 2,565 — 28,546

Corporate bonds — 8,554 — 8,554

Municipal bonds — 621 — 621

Government securities 320 92 — 412

Pooled separate accounts (b)

Investments measured at net asset value (c)

Investments measured at net asset value*

Total assets measured at fair value $ 25,981 $ 3,586 $ — $ 30,187

__________________

(a) Collective and mutual funds invest approximately 29 percent in corporate bonds, 24 percent in common stock of large-cap U.S.

companies, 16 percent in common stock of international companies, 7 percent in cash and cash equivalents, 7 percent in U.S.

Government securities and 17 percent in other investments.

(b) Pooled separate accounts are invested 100 percent in cash and cash equivalents.

(c) In accordance with ASC 820 - Fair Value, Measurements certain investments that were measured at net asset value per share (or its equivalent) have not been classified in the fair value hierarchy.

* In accordance with ASC 820 - Fair Value, Measurements certain investments that were measured at net asset value per share (or its equivalent) have not been classified in the fair value hierarchy.

The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the line items presented in the Consolidated Balance Sheets.

The estimated fair values of the Company’s other postretirement benefit plans’ assets are determined using the market approach.

The estimated fair value of the other postretirement benefit plans’ Level 2 cash equivalents is valued at the net asset value of shares held at year end, based on published market quotations on active markets, or using other known sources including pricing from outside sources.

The estimated fair value of the other postretirement benefit plans’ Level 1 and Level 2 equity securities is based on the closing price reported on the active market on which the individual securities are traded or other known sources, including pricing from outside sources.

The estimated fair value of the other postretirement benefit plans’ Level 2 insurance contract 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.

Due to the Separation, there are no assets in the postretirement benefit plans as of May 31, 2023.

The fair value of the Company’s other postretirement benefit plans’ assets (excluding cash) by asset class were as follows:

KNIFE RIVER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2023, 2022 and 2021

Fair Value Measurements at December 31, 2022, Using

Quoted Prices in

Active Markets for

Identical Assets

Significant Other

Observable Inputs

December 31, 2022

(In thousands)

Cash equivalents $ — $ ( 17 ) $ — $ ( 17 )

Equity securities:

companies ( 11 ) — — ( 11 )

Insurance contract*

— ( 286 ) — ( 286 )

Total assets measured at fair value $ ( 11 ) $ ( 303 ) $ — $ ( 314 )

__________________

* The insurance contract invests approximately 69 percent in corporate bonds, 14 percent in common stock of large-cap U.S.

companies, 13 percent in U.S.

government securities, and 4 percent in common stock of small-cap U.S.

Nonqualified benefit plans

Prior to the Separation, the Company participated in unfunded, nonqualified defined benefit plans sponsored by MDU Resources.

In connection with the Separation, the Company assumed all the obligations and liabilities of Knife River’s employees in those plans, along with all MDU Resources employees that transferred to Knife River as a result of the Separation.

Subsequent to the Separation, the unfunded, nonqualified defined benefit plans in which the Company participates are single employer plans for executive officers and certain key management employees.

Prior to the Separation, we participated in unfunded, nonqualified defined benefit plans sponsored by MDU Resources.

In connection with the Separation, we assumed all the obligations and liabilities of our employees in those plans, along with all MDU Resources employees that transferred to Knife River as a result of the Separation.

Subsequent to the Separation, the unfunded, nonqualified defined benefit plans in which we participate are single employer plans for executive officers and certain key management employees.

The plans generally provide for defined benefit payments at age 65 following the employee’s retirement or, upon death, to their beneficiaries for a 15-year period.

In February 2016, MDU Resources froze the unfunded, nonqualified defined benefit plans to new participants and eliminated benefit increases.

In February 2016, the unfunded, nonqualified defined benefit plans were frozen to new participants and eliminated benefit increases.

Vesting for participants not fully vested was retained.

The projected benefit obligation and accumulated benefit obligation for the Company’s participants in these plans at December 31, were as follows:

The projected benefit obligation and accumulated benefit obligation for our participants in these plans at December 31, were as follows:

(In thousands)

2 unchanged sentences

The components of net periodic benefit cost are included in other income (expense) on the Consolidated Statements of Operations.

These components related to the Company’s participation in the nonqualified defined benefit plans for the years ended December 31, were as follows:

The components related to our participation in the nonqualified defined benefit plans for the years ended December 31, were as follows:

2024 2023 2022

16 unchanged sentences

Nonqualified benefits $ 1,720 $ 1,690 $ 1,650 $ 1,690 $ 1,400 $ 5,090

Prior to the Separation, the Company participated in nonqualified defined contribution plans for certain key management employees sponsored by MDU Resources.

In connection with the Separation, the Company assumed all the obligations and liabilities of Knife River’s employees in those plans, along with all MDU Resources’ employees that transferred to Knife River as a result of the Separation.

In 2020, the MDU Resources’ plan was frozen to new participants and no new Company contributions were made to the plan after December 31, 2020.

Prior to the Separation, we participated in nonqualified defined contribution plans sponsored by MDU Resources.

In 2020, the plan established in 2012 was frozen to new participants and no new employer contributions were made to the plan after December 31, 2020.

Vesting for participants not fully vested was retained.

MDU Resources adopted a new nonqualified defined contribution plan in 2020, effective January 1, 2021, to replace the plan originally established in 2012 with similar provisions.

Expenses incurred by Knife River under these plans for 2023, 2022 and 2021 were $ 1.5 million, $ 1.2 million and $ 900,000 , respectively.

The amount of investments that the Company anticipates using to satisfy obligations under these plans at December 31, was as follows:

Effective January 1, 2021, a new nonqualified defined contribution plan was adopted, to replace the plan originally established in 2012 with similar provisions.

Expenses we incurred under these plans for 2024, 2023 and 2022 were $ 800,000 , $ 1.5 million and $ 1.2 million, respectively.

The amount of investments that we anticipate using to satisfy obligations under these plans at December 31, was as follows:

(In thousands)

Insurance contract 1

$ 28,377 $ 24,896

Life insurance 2

4 unchanged sentences

2 Investments of life insurance are carried on plan participants (payable upon the employee’s death).

Defined contribution plans

Knife River sponsors a defined contribution plan in which the Company participates.

The costs incurred by the Company under this plan for eligible employees were $ 31.1 million, $ 27.6 million and $ 26.6 million in 2023, 2022 and 2021, respectively.

KNIFE RIVER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2023, 2022 and 2021

Defined contribution plan

We sponsor a defined contribution plan in which our employees participate.

The costs incurred by us under this plan for eligible employees were $ 33.9 million, $ 31.1 million and $ 27.6 million in 2024, 2023 and 2022, respectively.

Multiemployer plans

The Company contributes to a number of MEPPs under the terms of collective-bargaining agreements that cover its union-represented employees.

We contribute to a number of MEPPs under the terms of collective-bargaining agreements that cover our union-represented employees.

The risks of participating in these multiemployer plans are different from single-employer plans in the following aspects:

• Assets contributed to the MEPP by one employer may be used to provide benefits to employees of other participating employers.

KNIFE RIVER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2024, 2023 and 2022

• If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers.

• If the Company chooses to stop participating in some of its MEPPs, the Company may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability.

The Company’s participation in these plans is outlined in the following table.

• If we choose to stop participating in some of our MEPPs, we may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability.

Our participation in these plans is outlined in the following table.

Unless otherwise noted, the most recent Pension Protection Act zone status available in 2024, 2023 and 2022 is for the plan’s year-end at December 31, 2023, December 31, 2022 and December 31, 2021, respectively.

The zone status is based on information that the Company received from the plan and is certified by the plan’s actuary.

The zone status is based on information that we received from the plan and is certified by the plan’s actuary.

Among other factors, plans in the “red zone,” or critical status, are generally less than 65 percent funded, plans in the “yellow zone,” or endangered status, are between 65 percent and 80 percent funded, and plans in the “green zone,” or healthy status, are at least 80 percent funded.

6 unchanged sentences

(In thousands)

Alaska Laborers Employer Retirement Fund 916028298-001

Red as of 6/30/22

Red as of 6/30/21

Implemented $ 887 $ 805 $ 737 No 12/31/2023 *

Minnesota Teamsters Construction Division Pension Fund 416187751-001

416187751-001

Green Green No 367 418 644 No 4/30/2027

Pension Trust Fund for Operating Engineers 946090764-001

Yellow Yellow Implemented 2,476 2,484 2,495 No 3/31/2026-

Green Yellow No 2,746 2,476 2,484 No 3/31/2026-

Western Conference of Teamsters Pension Plan 916145047-001

5 unchanged sentences

* Plan includes contributions required by collective bargaining agreements which have expired but contain provisions automatically renewing their terms in the absence of a subsequent negotiated agreement.

KNIFE RIVER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2023, 2022 and 2021

The Company was listed in the plans’ Forms 5500 as providing more than 5 percent of the total contributions for the following plans and plan years:

We were listed in the plans’ Forms 5500 as providing more than 5 percent of the total contributions for the following plans and plan years:

Pension Fund Year Contributions to Plan Exceeded More Than 5 Percent of

2 unchanged sentences

Minnesota Teamsters Construction Division Pension Fund 2023 and 2022

Southwest Marine Pension Trust 2022 and 2021

The Company also contributes to a number of multiemployer other postretirement plans under the terms of collective-bargaining agreements that cover its union-represented employees.

Southwest Marine Pension Trust 2022

We also contribute to a number of multiemployer other postretirement plans under the terms of collective-bargaining agreements that cover our union-represented employees.

These plans provide benefits such as health insurance, disability insurance and life insurance to retired union employees.

Many of the multiemployer other postretirement plans are combined with active multiemployer health and welfare plans.

The Company’s total contributions to its multiemployer other postretirement plans, which also includes contributions to active multiemployer health and welfare plans, were $ 1.8 million, $ 1.8 million and $ 3.2 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Our total contributions to the multiemployer other postretirement plans, which also includes contributions to active multiemployer health and welfare plans, were $ 2.0 million, $ 1.8 million and $ 1.8 million for the years ended December 31, 2024, 2023 and 2022, respectively.

KNIFE RIVER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2024, 2023 and 2022

Note 18 – Commitments and contingencies

The Company is party to claims and lawsuits arising out of its business and that of its consolidated subsidiaries, which may include, but are not limited to, matters involving property damage, personal injury, and environmental, contractual and statutory obligations.

The Company accrues a liability for those contingencies when the incurrence of a loss is probable and the amount can be reasonably estimated.

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.

The Company does 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, the Company discloses the nature of the contingency and, in some circumstances, an estimate of the possible loss.

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 December 31, 2023 and 2022, the Company accrued liabilities which have not been discounted, of $ 873,000 and $ 1.0 million, respectively.

At December 31, 2023 and 2022, the Company also recorded corresponding insurance receivables of $ 42,000 and $ 325,000 , respectively, related to the accrued liabilities.

At December 31, 2024 and 2023, we accrued liabilities which have not been discounted, of $ 6.6 million and $ 873,000 , respectively.

At December 31, 2024 and 2023, we also recorded corresponding insurance receivables of $ 459,000 and $ 42,000 , respectively, related to the accrued liabilities.

The accruals are for contingencies, including litigation and environmental matters.

Most of these claims and lawsuits are covered by insurance, thus the Company’s exposure is typically limited to its deductible amount.

The Company 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.

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 our financial position, results of operations or cash flows.

Unless otherwise required by GAAP, legal costs are expensed as they are incurred.

KNIFE RIVER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2023, 2022 and 2021

Environmental matters

16 unchanged sentences

It is not possible to estimate the costs of natural resource damages until an assessment is completed and allocations are undertaken.

KNIFE RIVER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2024, 2023 and 2022

At this time, Knife River - Northwest does not believe it is a responsible party and has notified Georgia-Pacific West, Inc., that it intends to seek indemnity for liabilities incurred in relation to the above matters pursuant to the terms of their sale agreement.

The Company believes it is not probable that it will incur any material environmental remediation costs or damages in relation to the above referenced matter.

We believe it is not probable that we will incur any material environmental remediation costs or damages in relation to the above referenced matter.

Purchase commitments

The Company has entered into various commitments, largely purchased cement, liquid asphalt, minimum royalties and fuel.

We have entered into various commitments, largely purchased cement, liquid asphalt, minimum royalties and fuel.

The commitment terms vary in length, up to 24 years.

3 unchanged sentences

Purchase commitments $ 52,762 $ 28,025 $ 2,660 $ 2,116 $ 1,929 $ 7,593

These commitments were not reflected in the Company’s audited consolidated financial statements.

These commitments were not reflected in our audited consolidated financial statements.

Amounts purchased under various commitments for the years ended December 31, 2024, 2023 and 2022 were $ 128.3 million, $ 128.7 million and $ 167.6 million, respectively.

KNIFE RIVER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2023, 2022 and 2021

Certain subsidiaries of the Company have outstanding guarantees to third parties where the Company has guaranteed their performance.

We have outstanding obligations to third parties where we have guaranteed their performance.

These guarantees are related to contracts for contracting services and certain other guarantees.

2 unchanged sentences

There were no amounts outstanding under the previously mentioned guarantees at December 31, 2024.

The Company has outstanding letters of credit to third parties related to insurance policies, reclamation obligations and other agreements.

We have outstanding letters of credit to third parties related to insurance policies, reclamation obligations and other agreements.

At December 31, 2024, the fixed maximum amounts guaranteed under these letters of credit aggregated to $ 20.6 million.

The amounts of scheduled expiration of the maximum amounts guaranteed under these letters of credit aggregate to $ 20.7 million in 2024 and $ 300,000 in 2025.

The amounts of scheduled expiration of the maximum amounts guaranteed under these letters of credit aggregate to $ 20.5 million in 2025, $ 0 in 2026 and $ 104,000 in 2027.

There were no amounts outstanding under the previously mentioned letters of credit at December 31, 2024.

In the normal course of business, the Company has surety bonds related to contracts for contracting services and reclamation obligations of its subsidiaries.

In the event a subsidiary of the Company does not fulfill a bonded obligation, the Company would be responsible to the surety bond company for completion of the bonded contract or obligation.

In the normal course of business, we have surety bonds related to contracts for contracting services and reclamation obligations of its subsidiaries.

In the event a subsidiary of ours 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 is expected to expire within the next 12 months;

however, the Company will likely continue to enter into surety bonds for its subsidiaries in the future.

however, we will likely continue to enter into surety bonds for its subsidiaries in the future.

At December 31, 2024, approximately $ 638.1 million of surety bonds were outstanding, which were not reflected on the Consolidated Balance Sheet.

1 unchanged sentence

Allocation of corporate expenses

Prior to the Separation, Centennial and MDU Resources provided expense allocations for corporate services provided to the Company, including costs related to senior management, legal, human resources, finance and accounting, treasury, information technology, and other shared services.

Some of these services will continue to be provided by MDU Resources on a temporary basis under a transition services agreement.

For the years ended December 31, 2023, 2022 and 2021, the Company was allocated $ 10.7 million, $ 18.0 million and $ 15.6 million, respectively, for these corporate services.

These expenses have been allocated to the Company on the basis of direct usage when identifiable, with the remainder allocated on the basis of percent of total capital invested, the percent of total average commercial paper borrowings at Centennial or other allocation methodologies that are considered to be a reasonable reflection of the utilization of the services provided to the benefits received, including the following:

Prior to the Separation, Centennial and MDU Resources provided expense allocations for corporate services provided to us, including costs related to senior management, legal, human resources, finance and accounting, treasury, information technology, and other shared services.

Some of these services were provided by MDU Resources on a temporary basis under a transition services agreement.

For the years ended December 31, 2023 and 2022, we were allocated $ 10.7 million and $ 18.0 million, respectively, for these corporate services.

These expenses have been allocated to us on the basis of direct usage when identifiable, with the remainder allocated on the basis of percent of total capital invested, the percent of total average commercial paper borrowings at Centennial or other allocation methodologies that are considered to be a reasonable reflection of the utilization of the services provided to the benefits received, including the following:

number of employees paid and stated as cost per check;

number of employees served;

KNIFE RIVER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2024, 2023 and 2022

employees served;

weighted factor of travel, managed units, national account spending, equipment and fleet acquisitions;

3 unchanged sentences

and projected workload.

Management believes these cost allocations are a reasonable reflection of the utilization of services provided to, or the benefit derived by, the Company during the periods presented.

The allocations may not, however, be indicative of the actual expenses that would have been incurred had the Company operated as a stand-alone public company for these periods.

Actual costs that would have been incurred if the Company had been a stand-alone public company would depend on a number of factors, including the chosen organizational structure, whether functions were outsourced or performed by Company employees, and strategic decisions made in areas such as selling and marketing, information technology and infrastructure.

See Note 2 for further information.

Cash management and financing

Centennial had a central cash management and financing program in which the Company participated until the Separation.

Through the use of these programs, Centennial was able to more effectively direct and manage the daily cash requirements and financing needs for each wholly owned subsidiary through the consolidation of all cash

KNIFE RIVER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2023, 2022 and 2021

activity at the Centennial level.

As cash was received and disbursed by Centennial, it was accounted for by the Company through related-party receivables and payables.

Until the Separation, the Company had related-party note agreements in place with Centennial for the financing of its capital needs.

Post Separation, the Company has relied on its own credit.

Interest expense in the Consolidated Statements of Operations reflects the allocation of interest on borrowing and funding related to these note agreements.

The Company’s cash that was not included in the central cash management program is classified as cash and cash equivalents on the Consolidated Balance Sheets.

See Note 2 for further information.

Related-party notes payable

The related-party notes payable to Centennial at May 30, 2023, was $ 889.7 million.

As part of the Separation, Centennial made an equity contribution to the Company to release the Company of its obligation related to the outstanding notes payable.

Also as part of the Separation, the Company issued $ 425.0 million of 7.75 percent senior notes due May 1, 2031, a credit agreement consisting of a $ 275.0 million term loan and a $ 350.0 million revolving credit facility, of which $ 190.0 million was drawn down at the time of the Separation.

On May 31, 2023, the Company paid a dividend of $ 825.0 million from these proceeds to Centennial, which Centennial used to repay a portion of the Company’s outstanding indebtedness.

These transactions resulted in the Company receiving a net equity contribution of $ 64.7 million and is included in “Net transfers from Centennial and MDU Resources including separation adjustments” in the Consolidated Statement of Equity.

Refer to Note 8 for additional information on the debt facilities entered into in connection with the Separation.

These borrowings have been included in both current and noncurrent liabilities in related-party notes payable in the Consolidated Balance Sheets.

Intercompany short-term and long-term borrowing arrangements at December 31, 2022 was as follows:

Weighted average Interest rate at December 31, 2022

(In thousands)

Centennial term loan agreements with maturities ranging from March 17, 2023 to December 18, 2023

5.44 % $ 208,000

Centennial senior notes with maturities ranging from June 27, 2023 to April 4, 2034

4.34 % 410,000

Borrowing arrangements under Centennial commercial paper program, supported by Centennial’s credit agreements

5.27 % 66,449

Total long-term related-party notes payable

current maturities

Net long-term related-party notes payable

Management believes these cost allocations are a reasonable reflection of the utilization of services provided to, or the benefit derived by, us during the periods presented.

The allocations may not, however, be indicative of the actual expenses that would have been incurred had we operated as a stand-alone public company for these periods.

Actual costs that would have been incurred if we had been a stand-alone public company would depend on a number of factors, including the chosen organizational structure, whether functions were outsourced or performed by our employees, and strategic decisions made in areas such as selling and marketing, information technology and infrastructure.

Transition services agreements

As part of the Separation, MDU Resources is providing transition services to the Company and the Company is providing transition services to MDU Resources in accordance with the Transition Services Agreement entered into on May 30, 2023.

For the year December 31, 2023, the Company paid $ 3.0 million related to these activities, which was reflected in selling, general and administrative expenses on the Consolidated Statements of Operations.

For the year ended December 31, 2023, the Company received $ 824,000 related to these activities, which was reflected in other income (expense) on the Consolidated Statements of Operations.

The majority of the transition services are expected to be completed over a period of one year, but no longer than two years after the Separation.

As part of the Separation, MDU Resources provided transition services to us and we provided transition services to MDU Resources in accordance with the Transition Services Agreement entered into on May 30, 2023.

For the years ended December 31, 2024 and 2023, we paid $ 1.2 million and $ 3.0 million, respectively, related to these activities, which was reflected in selling, general and administrative expenses on the Consolidated Statements of Operations.

For the years ended December 31, 2024 and 2023, we received $ 156,000 and $ 824,000 , respectively, related to these activities, which was reflected in other income on the Consolidated Statements of Operations.

The majority of the transition services were completed over a period of 1 year after the Separation and, as of December 31, 2024, no further obligation for services exists for either party.

Note 20 – Subsequent Event

On January 1, 2025, we completed a reorganization of our operating segments, including the management of the segments, to align with our business strategy.

In the first quarter of 2025, we will begin reporting our financial information under four operating segments:

West, Mountain, Central and Energy Services.

Under the new operating structure, the previous Pacific and Northwest operating segments will become the West operating segment and the North Central and South operating segments will become the Central operating segment.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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-K

Item 8. Financial Statements and Supplementary Data