Knife River Corp 10-K

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to certain market risks arising from transactions that are entered into in the normal course of business. We have policies and procedures to assist in controlling these market risks and from time to time have utilized derivatives to manage a portion of our risk. Interest rate risk As of December 31, 2025, we had $756.0 million in term loans outstanding which bear interest at a variable rate. As of December 31, 2025, the rate in effect was 5.63 percent, therefore, a hypothetical increase of 1.00 percent to the interest rate at December 31, 2025, would have increased the all-in rate to 6.63 percent, the effect of which would increase our interest expense by $7.6 million over the next 12 months based on the balances outstanding for these borrowings as of December 31, 2025. We use fixed and variable rate long-term debt to partially finance capital expenditures, including acquisitions, and mandatory debt retirements. These debt agreements expose us to market risk related to changes in interest rates. We manage this risk by attempting to take advantage of favorable market conditions when timing the placement of long-term financing. We may take advantage of interest rate swap agreements in the future to minimize our interest rate risk. For additional information on our long-term debt, see Item 8 - Notes 8 and 9. At December 31, 2025 and 2024, we had no outstanding interest rate hedges. Commodity price risk We are subject to commodity price risk with respect to price changes in diesel fuel, liquid asphalt and cement. While we generally use price increases, escalation clauses in construction services contracts, fuel surcharges and purchase commitments to mitigate the impacts of higher costs, these measures may not be sufficient to offset these increased costs. For the year ended December 31, 2025, our costs associated with diesel fuel, liquid asphalt and cement were $672.8 million. Accordingly, a hypothetical 10 percent increase or decrease could increase or decrease, respectively, our operating results over the next 12 months by $67.3 million based on the costs associated with diesel fuel, liquid asphalt and cement for the year ended December 31, 2025. 56 Index Equity price risk We are exposed to price fluctuations in equity markets, primarily through our defined benefit pension plan assets and other equity security investments. The equity securities held by the pension plan and in such accounts are diversified to achieve broad market participation and reduce the impact of any single investment, sector or geographic region. We have established asset allocation targets for the pension plan holdings, which are described in Item 8 - Note 17. 57 Index