What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-02-20 compared with 2024-02-22 · 493 added, 812 removed, 1458 unchanged (47% of the section changed)

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/s/ Nicole A.

President and Chief Executive Officer Vice President, Chief Financial Officer and Treasurer

President and Chief Executive Officer Chief Financial Officer

MDU Resources Group, Inc.

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We have audited the accompanying consolidated balance sheets of MDU Resources Group, Inc.

and subsidiaries (the "Company") as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income, equity, and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and the schedules listed in the Index at Item 15 (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023 and December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

and subsidiaries (the "Company") as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, equity, and cash flows for each of the three years in the period ended December 31, 2024, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements").

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 20, 2025, expressed an unqualified opinion on the Company's internal control over financial reporting.

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The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Revenue from Contracts with Customers-Construction Contract Revenue-Refer to Notes 2 and 4 to the financial statements

Critical Audit Matter Description

The Company recognizes construction contract revenue over time using an input method based on the cost-to-cost measure of progress for contracts because it best depicts the transfer of assets to the customer, which occurs as the Company incurs costs on the contract.

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

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, and contract profits.

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

Assumptions as to the occurrence of future events and the likelihood and amount of variable consideration, including liquidated damages, performance bonuses or incentives, claims, unpriced change orders and penalties or index pricing are made during the contract performance period.

The Company estimates variable consideration at the most likely amount it expects to be entitled to or expects to incur and includes estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved.

For the year ended December 31, 2023, the Company recognized $2.8 billion of construction contract revenue.

Given the judgments necessary to account for the Company’s construction contracts including the use of estimates to determine the transaction price, total costs and profit for the performance obligations which are used to recognize revenue for construction contracts, auditing such estimates required extensive audit effort due to the volume and complexity of construction contracts and a high degree of auditor judgment when performing audit procedures and evaluating the results of those procedures.

64 MDU Resources Group, Inc.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to management’s estimates of total costs and profit for the performance obligations used to recognize revenue for construction contracts included the following, among others:

• We tested the design and operating effectiveness of management's controls over construction contract revenue, including those over management’s estimation of total costs and profit for the performance obligations.

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

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

• Evaluated whether the contracts were properly included in management’s calculation of construction contract 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.

• Observed the work sites and inspecting the progress to completion for certain construction contracts.

• Compared the transaction prices, including estimated variable consideration, to the consideration expected to be received based on current rights and obligations under the contracts and any modifications that were agreed upon with the customers.

• Evaluated management’s identification of distinct performance obligations by evaluating whether the underlying goods and services were highly interdependent and interrelated.

• Tested the accuracy and completeness of the costs incurred to date for the performance obligation.

• Compared the total estimated contract revenue, including estimated variable consideration, to the consideration expected to be received based on current rights and obligations under the contracts and any modifications that were agreed upon with the customers.

• We evaluated the reasonableness of the estimated variable consideration in the contract revenue by:

◦ Evaluating the information supporting management’s judgement as to the cause and contractual rights on the project

◦ Testing the accuracy of the identification of the underlying costs associated with the variable consideration.

• Evaluated the estimates of total cost and profit for the performance obligation by:

◦ Comparing total costs incurred to date to the costs management estimated to be incurred to date and selecting specific cost types to compare costs incurred to date to management's estimated costs at completion.

◦ Evaluating management’s ability to achieve the estimates of total cost and profit by performing corroborating inquiries with the Company’s project managers and engineers, and comparing the estimates to management’s work plans, engineering specifications, and supplier contracts.

◦ Comparing management’s estimates for the selected contracts to costs and profits of similar performance obligations, when applicable.

• Tested the mathematical accuracy of management’s calculation of construction contract 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.

Regulatory Matters—Impact of Rate Regulation on the Financial Statements—Refer to Notes 2, 6 and 20 to the financial statements

Critical Audit Matter Description

Through the Company’s regulated utility businesses, it provides electric and natural gas services to customers, and generates, transmits, and distributes electricity.

The Company is subject to rate regulation by federal and state utility regulatory agencies (collectively, the “Commissions”), which have jurisdiction with respect to the rates of electric and natural gas distribution companies in states where the Company operates.

The Company’s regulated utility businesses account for certain income and expense items under the provisions of regulatory accounting, which requires these businesses to defer as regulatory assets or liabilities certain items that would have otherwise been reflected as expense or income, respectively, based on the expected regulatory treatment in future rates.

The Company’s regulated businesses account for certain income and expense items under the provisions of regulatory accounting, which requires these businesses to defer as regulatory assets or liabilities certain items that would have otherwise been reflected as expense or income, respectively, based on the expected regulatory treatment in future rates.

The expected recovery, refund or future rate reduction of these deferred items generally is based on specific ratemaking decisions or precedent for each item.

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and income taxes.

Rates are determined and approved in regulatory proceedings based on an analysis of the Company’s costs to provide utility service and a return on the Company’s investment in the regulated utility businesses.

Regulatory decisions can have an impact on the recovery of costs, the rate of return earned on investment, and the timing and amount of assets to be recovered by rates.

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Decisions to be made by the Commissions in the future will impact the accounting for regulated operations.

We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management to support its assertions about impacted account balances and disclosures and the degree of subjectivity involved in assessing the impact of future regulatory orders on the

58 MDU Resources Group, Inc.

financial statements.

Management judgments include assessing the likelihood of (1) recovery in future rates of incurred costs and (2) refunds or future rate reduction to customers.

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Our audit procedures related to the uncertainty of future decisions by the Commissions included the following, among others:

• We tested the design and operating effectiveness of management’s controls over the evaluation of the likelihood of (1) the recovery in future rates of costs incurred as property, plant, and equipment and deferred as regulatory assets;

• We tested the effectiveness of management’s controls over the evaluation of the likelihood of (1) the recovery in future rates of costs incurred as property, plant, and equipment and deferred as regulatory assets;

and (2) a refund or a future reduction in rates that should be reported as regulatory liabilities.

We tested management’s controls over the initial recognition of amounts as regulatory assets or liabilities;

We tested the effectiveness of management’s controls over the initial recognition of amounts as regulatory assets or liabilities;

and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates or of a future reduction in rates.

• We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.

• We read relevant regulatory orders issued by the Commissions for the Company and other public utilities in the Company’s significant jurisdictions, procedural memorandums, filings made by the Company or interveners, and other publicly available information to assess the likelihood of recovery in future rates or of a future reduction in rates based on precedents of the treatment of similar costs under similar circumstances.

• We read relevant regulatory orders issued by the Commissions for the Company and other public utilities in the Company’s significant jurisdictions, and other publicly available information to assess the likelihood of recovery in future rates or of a future reduction in rates based on precedents of the treatment of similar costs under similar circumstances.

We evaluated the external information and compared to management’s recorded regulatory asset and liability balances for completeness, and for any evidence that might contradict management’s assertions.

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We also inquired of management regarding current year rate filings and new regulatory assets or liabilities.

Goodwill – Natural Gas Distribution Reporting Unit – Refer to Notes 2 and 8 to the financial statements

Operating Revenues of Discontinued Operations - Construction Contracts with Customers—Refer to Note 3 to the financial statements

Critical Audit Matter Description

The Company’s evaluation of goodwill for impairment involves the comparison of the fair value of the reporting unit to its carrying value.

The Company determines the fair value of its reporting units using the discounted cash flow model and the market approach.

The determination of the fair value using the discounted cash flow model requires management to make significant estimates and assumptions related to forecasts of future cash flows, earnings before interest, taxes, depreciation, and amortization (EBITDA), long-term growth rates, and discount rates.

The determination of the fair value using the market approach requires management to make significant assumptions related to EBITDA multiples and rate base transaction multiples.

Changes in these assumptions could have a significant impact on either the fair value or the amount of any goodwill impairment charge.

The goodwill balance was $489 million as of December 31, 2023, of which $346 million was allocated to the Natural Gas Distribution Reporting Unit (“Natural Gas Distribution”).

The fair value of Natural Gas Distribution exceeded its carrying value as of the measurement date and, therefore, no impairment was recognized.

We identified goodwill for Natural Gas Distribution as a critical audit matter because of the significant estimates and assumptions management makes to estimate the fair value and the difference between its fair value and carrying value.

This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists, when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to forecasts of future cash flows, EBITDA, and selection of the discount rate, the long-term growth rate, and EBITDA and rate base transaction multiples.

The Company recognized certain construction contract revenue over time using an input method based on the ratio of incurred costs to total estimated costs of the performance obligation (the cost-to-cost method) when this method was determined to best depict the transfer of the related performance obligation to the customer.

This method depends largely on the ability of management to make reasonably dependable estimates related to the extent of progress toward completion of the contract and the contract’s transaction price, which estimates involve management’s judgment.

The Company estimated variable consideration at the most likely amount it expects to be entitled and included those estimated amounts in the transaction price to the extent it was probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration was resolved.

Given the judgments necessary to account for the Company’s construction contracts including the use of estimates to determine the transaction price and total costs for the performance obligations which are used to recognize revenue for construction contracts, auditing such estimates required extensive audit effort due to the volume and complexity of construction contracts and a high degree of auditor judgment when performing audit procedures and evaluating the results of those procedures.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the forecasts of future cash flows EBITDA, the discount rate, long-term growth rate, EBITDA and the rate base transaction multiples used by management to estimate the fair value of Natural Gas Distribution included the following, among others:

• We tested the effectiveness of controls over management’s goodwill impairment evaluation, including those over the determination of the fair value of Natural Gas Distribution, such as controls related to management’s forecasts of future cash flows and EBITDA and the selection of the discount rate, long-term growth rate, EBITDA and rate base transaction multiples.

• We evaluated management’s ability to accurately forecast by comparing actual results to management’s historical forecasts.

• We evaluated the reasonableness of management’s forecasts by comparing the forecasts to (1) historical results, (2) internal communications to management and the Board of Directors, and (3) forecasted information included in the Company press releases as well as in analyst and industry reports of the Company and companies in its peer group.

• We evaluated the impact of changes in management’s forecasts from the October 31, 2023, annual measurement date to December 31, 2023.

Our audit procedures related to management’s estimates of the transaction price and total costs for the performance obligations used to recognize revenue for construction contracts included the following, among others:

MDU Resources Group, Inc.

• With the assistance of our fair value specialists, we evaluated the reasonableness of the valuation methodology, discount rate, and long-term growth rate, including testing the underlying source information and the mathematical accuracy of the calculations, and developing a range of independent estimates and comparing those to the discount rate and long-term growth rate selected by management.

• With the assistance of our fair value specialists, we evaluated the EBITDA transaction multiples, including testing the underlying source information and mathematical accuracy of the calculations, and comparing the multiples selected by management to its guideline companies and transactions.

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

– Evaluated whether the contracts were properly included in management’s calculation of construction contract 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.

– Observed the work sites and inspected the progress toward completion for certain construction contracts.

– Compared the transaction prices, including estimated variable consideration, to the consideration expected to be received based on current rights and obligations under the contracts and any modifications that were agreed upon with the customers.

– Confirmed the transaction prices with the customer.

– Evaluated management’s identification of distinct performance obligations by evaluating whether the underlying goods and services were highly interdependent and interrelated.

– Tested the accuracy and occurrence of the costs incurred to date for the performance obligation.

– We evaluated the reasonableness of the estimated variable consideration in the contract revenue by evaluating the information supporting management’s judgement as to their estimate of the most likely amount it expects to receive without a significant reversal of cumulative revenue occurring when the uncertainty associated with the variable consideration is resolved.

– Evaluated the estimates of total cost for the performance obligation by:

– Evaluating management’s ability to achieve the estimates of total cost and profit by performing corroborating inquiries with the Company’s project managers and engineers, and comparing the estimates to management’s work plans, engineering specifications, and/or supplier contracts for certain selected contracts.

– Comparing management’s estimates for the selected contracts to costs and profits of similar performance obligations, when applicable.

– Tested the mathematical accuracy of management’s calculation of construction contract revenue for the performance obligation for certain selected contracts.

/s/ Deloitte & Touche LLP

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Operating revenues $ 1,757,978 $ 1,803,352 $ 1,747,298

Electric, natural gas distribution and regulated pipeline $ 1,789,637 $ 1,736,397 $ 1,390,992

Non-regulated pipeline, construction services and other

2,867,703 2,705,387 2,063,444

Total operating revenues 4,657,340 4,441,784 3,454,436

Operating expenses:

Purchased natural gas sold 630,403 742,965 757,883

Electric fuel and purchased power 141,148 134,779 119,405

Operation and maintenance

Electric, natural gas distribution and regulated pipeline 397,037 375,347 367,234

Non-regulated pipeline, construction services and other

414,491 407,081 379,951

Total operation and maintenance 2,970,872 2,825,694 2,209,931

Purchased natural gas sold 742,965 757,883 483,118

Depreciation and amortization

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Taxes, other than income 106,216 103,133 100,629

Electric fuel and purchased power 107,881 92,007 74,105

Total operating expenses 1,492,336 1,578,408 1,546,428

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Receivables, net 274,303 250,153

Inventories 87,392 64,248

Current regulatory assets 215,436 172,492

Inventories 44,940 44,684

Prepayments and other current assets 64,676 66,431

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Goodwill 345,736 345,736

Other intangible assets, net 2,004 4,102

Regulatory assets 322,350 447,099

Investments 115,459 112,475

Operating lease right-of-use assets 74,363 73,502

Other 244,722 211,369

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Accounts payable 150,070 159,975

Regulatory liabilities due within one year 137,167 70,761

Taxes payable 43,372 49,553

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Accrued compensation 35,264 40,792

Operating lease liabilities due within one year 22,884 21,307

Regulatory liabilities due within one year 70,761 26,440

Other accrued liabilities 124,514 129,592

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Deferred income taxes 441,320 452,336

Asset retirement obligations 384,371 372,870

Regulatory liabilities 459,170 521,050

Operating lease liabilities 51,645 52,871

Asset retirement obligations 406,351 384,371

Other 231,895 209,882

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Accumulated other comprehensive loss ( 16,798 ) ( 18,384 )

Treasury stock at cost - 538,921 shares at December 31, 2022

Total stockholders' equity 2,690,574 2,905,233

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Years ended December 31, 2024, 2023 and 2022

Paid-in Capital Retained Earnings Accumu-lated

Other Compre-hensive Loss

Paid-in Capital Retained Earnings Accumu-

Other Compre-hensive

Common Stock Treasury Stock

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Net Income — — — 414,707 — — — 414,707

Other comprehensive income — — — — 10,421 — — 10,421

Other comprehensive loss

— — — — ( 107 ) — — ( 107 )

Dividends declared on common stock — — — ( 142,033 ) — — — ( 142,033 )

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Issuance of common stock upon vesting of stock-based compensation, net of shares used for tax withholdings — — ( 7,851 ) — — 153,622 4,811 ( 3,040 )

Separation of Knife River

( 538,921 ) ( 539 ) — ( 970,119 ) 12,306 538,921 3,626 ( 954,726 )

Issuance of common stock 65,197 65 1,268 — — — — 1,333

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Net income — — — 281,108 — — — 281,108

Other comprehensive loss

Other comprehensive income

— — — — 1,586 — — 1,586

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Employee stock-based compensation — — 9,572 — — — — 9,572

Repurchase of common stock — — — — — ( 153,622 ) ( 4,811 ) ( 4,811 )

Issuance of common stock upon vesting of stock-based compensation, net of shares used for tax withholdings 199,147 199 ( 2,822 ) — — — — ( 2,623 )

Separation of Knife River

Separation of Everus

— — — ( 400,316 ) — — — ( 400,316 )

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Net income $ 281,108 $ 414,707 $ 367,489

income (loss) from discontinued operations, net of tax ( 65,718 ) 116,721 135,609

Income from discontinued operations, net of tax 100,035 84,590 250,237

Income from continuing operations 181,073 330,117 117,252

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Pension and postretirement benefit plan net periodic benefit credit ( 3,837 ) ( 5,380 ) ( 7,323 )

Unrealized losses (gains) on investments ( 7,493 ) 10,207 ( 6,096 )

Gains on sales of assets ( 8,521 ) ( 6,631 ) ( 6,418 )

Unrealized (gains) losses on investments

( 5,942 ) ( 7,431 ) 10,119

(Gains) losses on sales of assets ( 857 ) ( 347 ) 15

Gain on tax-free exchange of the retained shares in Knife River

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Net cash provided by continuing operations 411,813 305,333 321,615

Net cash (used in) provided by discontinued operations ( 160,130 ) 202,411 196,830

Net cash provided by discontinued operations 90,505 27,294 188,449

Net cash provided by operating activities 502,318 332,627 510,064

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Capital expenditures ( 522,824 ) ( 484,136 ) ( 442,582 )

Acquisitions, net of cash acquired — — ( 2,500 )

Net proceeds from sale or disposition of property

16,474 11,340 14,585

Cost of removal, net of salvage value

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Investments ( 5,155 ) ( 2,423 ) ( 2,571 )

Proceeds from investment cost basis withdrawal 9,000 20,000 —

Net cash used in continuing operations ( 523,827 ) ( 465,129 ) ( 456,929 )

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Debt issuance costs ( 2,456 ) ( 2,521 ) ( 1,129 )

Proceeds from issuance of common stock — ( 150 ) 88,767

Costs of issuance of common stock

( 50 ) — ( 150 )

Dividends paid ( 102,939 ) ( 161,316 ) ( 176,915 )

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Tax withholding on stock-based compensation ( 2,623 ) ( 3,040 ) ( 4,904 )

Net cash provided by continuing operations 111,113 155,285 102,953

Net cash (used in) provided by continuing operations ( 76,603 ) 230,228 ( 2,792 )

Net cash provided by (used in) discontinued operations 116,899 ( 25,606 ) 157,965

Net cash provided by financing activities 40,296 204,622 155,173

Increase (decrease) in cash, cash equivalents and restricted cash ( 3,542 ) 26,356 ( 5,386 )

(Decrease) increase in cash, cash equivalents and restricted cash ( 10,071 ) ( 3,542 ) 26,356

Cash, cash equivalents and restricted cash - beginning of year

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Note 1 - Basis of Presentation

The abbreviations and acronyms used throughout are defined following the Notes to Consolidated Financial Statements.

The consolidated financial statements of the Company include the accounts of the following businesses:

electric, natural gas distribution, pipeline, construction services and other.

The electric and natural gas distribution businesses, as well as a portion of the pipeline business, are regulated.

Construction services and other, as well as a portion of the pipeline business, are non-regulated.

electric, natural gas distribution, pipeline and other.

For further descriptions of the Company's businesses, see Note 17.

The Company announced strategic initiatives in 2022 as part of the Company's continuous review of its business.

On May 31, 2023, the Company completed the separation of Knife River, formerly the construction materials and contracting segment, which resulted in two independent, publicly traded companies, MDU Resources Group, Inc.

and Knife River.

On May 31, 2023, the Company completed the separation of Knife River, formerly the construction materials and contracting segment, resulting in Knife River becoming an independent, publicly-traded company.

The Company's board of directors approved the distribution of approximately 90 percent of the issued and outstanding shares of Knife River to the Company's stockholders.

Stockholders of the Company received one share of Knife River common stock for every four shares of the Company's common stock held on May 22, 2023, the record date for the distribution.

The Company retained approximately 10 percent or 5.7 million shares of Knife River common stock immediately following the separation, which was disposed of in a tax-free exchange in November 2023.

The Company retained approximately 10 percent or 5.7 million shares of Knife River common stock immediately following the separation, which were disposed of in a tax-free exchange in November 2023.

The separation of Knife River was a tax-free spinoff transaction to the Company's stockholders for U.S.

federal income tax purposes.

The Company's consolidated financial statements and accompanying notes for the current and prior periods have been restated to present the results of operations and the assets and liabilities of Knife River as discontinued operations, other than certain corporate overhead costs of the Company historically allocated to Knife River, which are reflected in Other.

Also included in discontinued operations in the Consolidated Statements of Income are the supporting activities of Fidelity and certain interest expense related to financing activity associated with the Knife River separation.

federal income tax purposes, except for cash received in lieu of fractional shares.

On October 31, 2024, the Company completed the separation of Everus, its construction services business, resulting in Everus becoming an independent, publicly-traded company.

The Company's board of directors approved the distribution of all the outstanding shares of Everus common stock to the Company's stockholders.

Stockholders of the Company received one share of Everus common stock for every four shares of the Company's common stock held as of the close of business on October 21, 2024, the record date for the distribution.

The separation of Everus was a tax-free spinoff transaction to the Company's stockholders for U.S.

federal income tax purposes, except for cash received in lieu of fractional shares.

The Company's consolidated financial statements and accompanying notes for the current and prior periods have been restated to present the results of operations and the assets and liabilities of Knife River and Everus as discontinued operations, other than certain corporate overhead costs of the Company historically allocated to Knife River and Everus, which are reflected in Other.

The assets and liabilities of the Company's discontinued operations are included in current assets of discontinued operations, noncurrent assets of discontinued operations, current liabilities of discontinued operations and noncurrent liabilities of discontinued operations on the Consolidated Balance Sheets.

Unless otherwise indicated, the amounts presented in the accompanying notes to the consolidated financial statements relate to the Company's continuing operations.

On November 2, 2023, the Company announced its intent to pursue a tax-free spinoff of its wholly owned construction services business, MDU Construction Services.

The Company's board of directors believes a tax-free spinoff of the construction services business supports the Company's goal of enhancing value for stockholders by becoming a pure-play regulated energy delivery company.

For more information on discontinued operations, see Note 3.

Additionally, certain amounts recorded in prior year financial statements have been reclassified to conform to the current year presentation.

The Company has reclassified $ 26.9 million and $ 27.4 million of transmission-related expenses from operation and maintenance to electric fuel and purchased power for the years ended December 31, 2023 and 2022, respectively, in the Consolidated Statements of Income.

These transmission-related expenses are an integral component of the cost of electricity sold to customers and therefore, more appropriately reflected in electric fuel and purchased power than operation and maintenance expense.

These reclassifications had no effect on previously reported results of operations or cash flows.

Management has also evaluated the impact of events occurring after December 31, 2024, up to the date of issuance of these consolidated financial statements on February 20, 2025, that would require recognition or disclosure in the financial statements.

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The consolidated financial statements were prepared in accordance with GAAP and include the accounts of the Company and its wholly-owned subsidiaries.

All intercompany balances and transactions have been eliminated in consolidation, except for certain transactions related to the Company's regulated operations in accordance with GAAP.

All intercompany balances and transactions have been eliminated in consolidation, except for certain transactions related to regulated operations in accordance with GAAP.

For more information on intercompany revenues, see Note 17.

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Recently adopted accounting standards

ASU 2020-04 - Reference Rate Reform In March 2020, the FASB issued optional guidance to ease the facilitation of the effects of reference rate reform on financial reporting.

The guidance applies to certain contract modifications, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.

Beginning January 1, 2022, LIBOR or other discontinued reference rates cannot be applied to new contracts.

New contracts will incorporate a new reference rate, which includes SOFR.

LIBOR or other discontinued reference rates cannot be applied to contract modifications or hedging relationships entered into or evaluated after December 31, 2022.

Existing contracts referencing LIBOR or other reference rates expected to be discontinued must identify a replacement rate by June 30, 2023.

Effective as of March 12, 2020 through December 31, 2022 For more information, see ASU 2022-06 - Reference Rate Reform:

Deferral of Sunset Date below.

ASU 2022-06 - Reference Rate Reform:

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December 31, 2024 The Company has updated its credit agreements to include language regarding the successor or alternate rate to LIBOR.

The Company does not expect the guidance to have a material impact on its results of operations, financial position, cash flows or disclosures.

Recently issued accounting standards not yet adopted

ASU 2023-05 Business Combinations - Joint Venture Formations - Recognition and Initial Measurement

In August 2023, the FASB issued guidance on accounting for contributions made to a joint venture, upon formation, in a joint venture's separate financial statement in order to provide decision-useful information to investors and other allocators of capital (collectively investors) in a joint venture's financial statements and reduce diversity in practice.

The new basis of accounting will require that a joint venture, upon formation, will recognize and initially measure its assets and liabilities at fair value (with the exceptions to fair value measurement that are consistent with the business combinations guidance).

A joint venture that was formed before January 1, 2025 may elect to apply the guidance retrospectively if it has sufficient information.

Effective prospectively for all joint venture formations with a formation date on or after January 1, 2025.

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

The Company did not have a material impact on its results of operations, financial position, cash flows or disclosures.

ASU 2023-07 Segment Reporting - Improvements to Reportable Segment Disclosures

In November 2023, the FASB issued guidance on improving financial reporting by requiring disclosure of incremental segment information, primarily through enhanced disclosures about significant segment expenses, on an annual and interim basis for all public entities to enable investors to develop more decision-useful financial analyses.

Effective for fiscal year December 31, 2024 and interim periods beginning January 1, 2025, with prior periods disclosed in the period of adoption.

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

December 31, 2024 The Company identified and updated disclosures to ensure compliance with the new guidance.

Recently issued accounting standards not yet adopted

ASU 2023-09 Income Taxes - Improvements to Income Tax Disclosures an Amendment, December 2023

The FASB issued guidance to address investors requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information and effectiveness of income tax disclosures.

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

MDU Resources Group, Inc.

In December 2023, the FASB issued guidance to address investors requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information and effectiveness of income tax disclosures.

Effective for annual reporting periods beginning after 2024 on a prospective basis.

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

ASU 2024-01 Compensation - Stock Compensation In March 2024, the FASB issued Improvements to GAAP through an example to demonstrate application of the scope of paragraph 718-10-15-3 to determine whether profits interest and similar awards should be accounted in Compensation - Stock Compensation.

Effective for fiscal year 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.

ASU 2024-03 Disaggregation of Income Statement Expenses

In November 2024, the FASB issued guidance to improve the disclosures about a public business entity's expenses and address requests from investors for more detailed information about the types of expenses (including purchases of inventory, employee compensation, depreciation, amortization, and depletion) in commonly presented expense captions (such as cost of sales, selling, general, and administrative;

and research and development).

Effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

The Company is currently evaluating the impact the guidance will have on its disclosures for the year ended December 31, 2027.

Cash, cash equivalents and restricted cash

2 unchanged sentences

The Company had restricted cash of $ 16.7 million and $ 13.2 million at December 31, 2024 and 2023, respectively.

68 MDU Resources Group, Inc.

Revenue recognition

25 unchanged sentences

At this time, the segment has no material obligations for returns, refunds or other similar obligations.

The construction services segment generates revenue from specialty contracting services which also includes the sale of construction equipment and other supplies.

This segment provides specialty contracting services to a customer when a contract has been signed by both the customer and a representative of the segment obligating a service to be provided in exchange for the consideration identified in the contract.

The nature of the services this segment provides generally includes multiple promised goods and services in a single project to create a distinct bundle of goods and services, which the Company has determined are single performance obligations.

The transaction price includes 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 following constraint.

The nature of the segment's contracts gives rise to several types of variable consideration.

Examples of variable consideration include:

liquidated damages;

performance bonuses or incentives and penalties;

unpriced change orders;

and index pricing.

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.

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.

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.

Contract revenue is recognized over time using the input method based on the measurement of progress on a project.

This is the preferred method of measuring revenue because the costs incurred have been determined to

76 MDU Resources Group, Inc.

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.

Revenues are recorded proportionately to the costs incurred.

This segment also sells construction equipment and other supplies to third parties and internal customers.

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

All such contracts include a single performance obligation for the delivery of a single distinct product or a distinct separately identifiable bundle of products and services.

Revenue is recognized at a point in time when the performance obligation has been satisfied with the delivery of the products or services.

The warranties associated with the sales are those consistent with a standard warranty that the product meets certain specifications for quality or those required by law.

For most contracts, amounts billed to customers are due within 30 days of receipt.

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

The Company recognizes all other revenues when services are rendered or goods are delivered.

The Company expenses external legal fees as they are incurred.

The Company generally expenses external legal fees as they are incurred unless it has specific circumstances to defer, such as probable recovery in a rate proceeding.

Receivables and allowance for expected credit losses

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

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

The Company's trade receivables are all due in 12 months or less.

5 unchanged sentences

Management has reviewed the balance reserved through the allowance for expected credit losses and believes it is reasonable.

MDU Resources Group, Inc.

Details of the Company's expected credit losses were as follows:

Electric Natural gas

distribution Pipeline Construction

services Total

distribution Pipeline Total

(In thousands)

12 unchanged sentences

Accrued unbilled revenue at MDU Energy Capital was $ 143.2 million and $ 132.0 million at December 31, 2024 and 2023, respectively.

Amounts representing balances billed but not paid by customers under retainage provisions in contracts at December 31 were as follows:

(In thousands)

Short-term retainage*

$ 84,474 $ 91,474

Long-term retainage**

21,355 19,511

Total retainage $ 105,829 $ 110,985

* Expected to be paid within 12 months or less and included in receivables, net.

** Included in noncurrent assets - other.

MDU Resources Group, Inc.

Inventories and natural gas in storage

Natural gas in storage for the Company's regulated operations is generally valued at lower of cost or market using the last-in, first-out method or lower of cost or net realizable value using the average cost or first-in, first-out method.

Natural gas in storage is generally valued at lower of cost or market using the last-in, first-out method or lower of cost or net realizable value using the average cost or first-in, first-out method.

The majority of all other inventories are valued at the lower of cost or net realizable value using the average cost method.

3 unchanged sentences

Natural gas in storage (current) $ 40,073 $ 39,377

Merchandise for resale 34,955 27,910

Materials and supplies 5,460 6,846

Other 7,600 6,959

Fuel stock 4,867 5,307

Total $ 44,940 $ 44,684

The remainder of natural gas in storage, which largely represents the cost of gas required to maintain pressure levels for normal operating purposes, was included in noncurrent assets - other and was $ 48.5 million and $ 47.5 million at December 31, 2023 and 2022, respectively.

Property, plant and equipment

12 unchanged sentences

These amounts are recorded as regulatory liabilities on the Consolidated Balance Sheets.

70 MDU Resources Group, Inc.

Impairment of long-lived assets, excluding goodwill

7 unchanged sentences

Unforeseen events and changes in circumstances could require the recognition of impairment losses at some future date.

Natural gas costs recoverable or refundable through rate adjustments

Under the terms of certain orders of the applicable state public service commissions, the Company is deferring natural gas commodity, transportation and storage costs that are greater or less than amounts presently being recovered through its existing rate schedules.

Such orders generally provide that these amounts are recoverable or refundable through rate adjustments .

Natural gas costs recoverable through rate adjustments were $ 154.3 million and $ 141.3 million at December 31, 2023 and 2022, respectively, which were included in current regulatory assets and noncurrent assets - regulatory assets on the Consolidated Balance Sheets.

Natural gas costs refundable through rate adjustments were $ 43.2 million and $ 1.0 million at December 31, 2023 and 2022, respectively, which were included in regulatory liabilities due within one year on the Consolidated Balance Sheets.

78 MDU Resources Group, Inc.

Electric fuel and purchased power deferral

Under the terms of certain orders of the applicable state public service commissions, the Company is deferring electric fuel and purchased power costs that are greater or less than amounts presently being recovered through its existing rate schedules.

Such orders generally provide that these amounts are recoverable or refundable through rate adjustments.

Electric fuel and purchased power costs recoverable were $ 33.9 million and $ 2.7 million at December 31, 2023 and 2022, respectively, which were included in current regulatory assets on the Consolidated Balance Sheets.

Electric fuel and purchased power costs refundable was $ 4.9 million at December 31, 2022, which was included in regulatory liabilities due within one year on the Consolidated Balance Sheets.

Regulatory assets and liabilities

The Company's regulated businesses are subject to various state and federal agency regulations.

The accounting policies followed by these businesses are generally subject to the Uniform System of Accounts of the FERC as well as the provisions of ASC 980 - Regulated Operations .

The Company is subject to various state and federal agency regulations.

The accounting policies followed by the Company are generally subject to the Uniform System of Accounts of the FERC as well as the provisions of ASC 980 - Regulated Operations .

These accounting policies differ in some respects from those used by the Company's non-regulated businesses.

The Company's regulated businesses account for certain income and expense items under the provisions of regulatory accounting, which requires these businesses to defer as regulatory assets or liabilities certain items that would have otherwise been reflected as expense or income, respectively.

The Company accounts for certain income and expense items under the provisions of regulatory accounting, which requires the Company to defer as regulatory assets or liabilities certain items that would have otherwise been reflected as expense or income, respectively.

The Company records regulatory assets or liabilities at the time the Company determines the amounts to be recoverable in current or future rates.

4 unchanged sentences

The Company has determined that the reporting units for its goodwill impairment test are its operating segments, or components of an operating segment, that constitute a business for which discrete financial information is available and for which segment management regularly reviews the operating results.

As of December 31, 2024, the only operating segment with goodwill was the natural gas distribution segment.

For more information on the Company's operating segments, see Note 17.

17 unchanged sentences

MDU Resources Group, Inc.

Joint ventures

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

The Company currently holds interests of 50 percent in joint ventures 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 balance sheet and results of operations.

For those joint ventures accounted for using proportionate consolidation, the Company recorded in its Consolidated Statements of Income $ 7.8 million, $ 14.8 million, and $ 14.7 million of revenue for the years ended December 31, 2023, 2022 and 2021, respectively, and $ 2.1 million, $ 3.0 million and $ 4.7 million of operating income for the years ended December 31, 2023, 2022 and 2021, respectively.

At December 31, 2023 and 2022, the Company had interest in assets from these joint ventures of $ 1.8 million and $ 2.4 million, respectively.

For those joint ventures accounted for under the equity method, the Company's investment balances for the joint venture is 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 Income.

The Company’s investments in equity method joint ventures were net assets of $ 6.2 million and $ 1.3 million at December 31, 2023 and 2022, respectively.

In 2023, 2022 and 2021, the Company recognized income from equity method joint ventures of $ 4.9 million, $ 5.9 million and $ 878,000 , respectively.

Derivative instruments

3 unchanged sentences

The Company does not enter into any derivatives for trading or other speculative purposes.

The Company did not enter into any commodity price derivative contracts during 2023 or 2022.

The Company did not have any material commodity price derivative contracts at December 31, 2024 or 2023.

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

13 unchanged sentences

Upon settlement of the liability, the Company either settles the obligation for the recorded amount or incurs a gain or loss at its non-regulated operations or incurs a regulatory asset or liability at its regulated operations.

80 MDU Resources Group, Inc.

Stock-based compensation

The Company determines compensation expense for stock-based awards based on the estimated fair values at the grant date and recognizes the related compensation expense over the vesting period.

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

The Company uses the straight-line amortization method to recognize compensation expense related to RSUs, 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.

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

The Company recognized compensation expense related to PSAs that vest based on performance metrics and service conditions on a straight-line basis over the service period.

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

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

Outstanding performance share awards were converted to restricted stock units in connection with the completed separation of Knife River through the spinoff.

The Company records the compensation expense for performance share awards using an estimated forfeiture rate.

The Company recognized compensation expense related to PSAs with market-based performance metrics on a straight-line basis over the requisite service period.

Outstanding PSAs were converted to RSUs in connection with the completed separation of Knife River through the spinoff.

The Company records the compensation expense for PSAs using an estimated forfeiture rate.

The estimated forfeiture rate is calculated based on an average of actual historical forfeitures.

5 unchanged sentences

Common stock outstanding includes issued shares less shares held in treasury.

As a result of the separation, the Company retained legal ownership of 538,921 shares of the Company's common stock that were historically owned by a subsidiary of Knife River and recorded in Treasury stock at cost.

As a result of the 2023 Knife River separation, the Company retained legal ownership of 538,921 shares of the Company's common stock that were historically owned by a subsidiary of Knife River and recorded in Treasury stock at cost.

Following the separation, the 538,921 treasury shares were retired.

2 unchanged sentences

A reconciliation of the weighted average common shares outstanding used in the basic and diluted earnings per share calculations follows:

72 MDU Resources Group, Inc.

2024 2023 2022

7 unchanged sentences

Discontinued operations, net of tax

( .32 ) .58 .67

Earnings per share - basic

4 unchanged sentences

Discontinued operations, net of tax

( .33 ) .58 .67

Earnings per share - diluted

11 unchanged sentences

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

MDU Resources Group, Inc.

Note 3 - Discontinued Operations

On May 31, 2023, the Company completed the previously announced separation of Knife River, its former construction materials and contracting segment, into a new publicly traded company.

On May 31, 2023, the Company completed the separation of Knife River, its former construction materials and contracting segment, into a new independent publicly-traded company.

The separation was achieved through the Company's pro-rata distribution of approximately 90 percent of the outstanding shares of Knife River to the Company's common stockholders.

To effect the separation, the Company distributed to its stockholders one share of Knife River common stock for every four shares of the Company's common stock held on May 22, 2023, the record date for the distribution, with the Company retaining approximately 10 percent, or 5.7 million shares of Knife River common stock immediately following the separation.

In the fourth quarter of 2023, the Company completed the tax-free exchange of its retained shares, reversed the associated deferred tax liability and recognized a gain of $ 186.6 million, which was reflected in continuing operations because the Company did not have continuing significant involvement in Knife River.

As a result of the separation, the historical assets and liabilities for Knife River have been classified as assets and liabilities of discontinued operations and the historical results of operations are shown in discontinued operations, net of tax, other than allocated general corporate overhead costs of the Company, which do not meet the criteria for income (loss) from discontinued operations.

In November 2023, the Company completed the tax-free exchange of its retained shares and recognized a gain of $ 186.6 million, which was reflected in continuing operations because the Company did not have continuing significant involvement in Knife River.

The separation of Knife River was a tax-free spinoff transaction to the Company's stockholders for U.S.

federal income tax purposes, except for cash received in lieu of fractional shares.

On October 31, 2024, the Company completed the separation of Everus, its former construction services segment, into a new independent, publicly-traded company.

The Company's board of directors approved the distribution of all the outstanding shares of Everus common stock to the Company's stockholders.

The separation of Everus was a tax-free spinoff transaction to the Company's stockholders for U.S.

federal income tax purposes, except for cash received in lieu of fractional shares.

As a result of the separations, the historical results of operations are shown in discontinued operations, net of tax, except for allocated general corporate overhead costs of the Company, which did not meet the criteria for discontinued operations.

The Company’s consolidated financial statements and accompanying notes for prior periods have been restated.

For the comparative periods, Knife River's operations are only reflected through May 2023, whereas 2022 and 2021 include the full twelve months from Knife River's operations.

For the comparative periods, Everus' operations are only reflected through October 2024 compared to the full year in 2023 and 2022 and Knife River's operations are only reflected through May 2023 compared to the full year in 2022.

MDU Resources Group, Inc.

On April 25, 2023, Knife River issued $ 425.0 million of senior notes, pursuant to an indenture, due in 2031 to qualified institutional buyers.

2 unchanged sentences

Centennial used the entirety of these proceeds from Knife River to repay a portion of its existing third-party indebtedness.

Following the separation, the 538,921 treasury shares were retired.

The Company will provide to Knife River and Knife River will provide to the Company transition services in accordance with the TSA entered into on May 31, 2023.

For the twelve months ended December 31, 2023, the Company received $ 2.9 million;

As a result of the separation of Knife River, the Company retained legal ownership of 538,921 shares of the Company's common stock that were historically owned by a subsidiary of Knife River and recorded in Treasury stock at cost.

Following the separation of Knife River, the 538,921 treasury shares were retired.

The Company provided to Knife River and Knife River provided to the Company transition services in accordance with the transition services agreement entered into on May 31, 2023.

For the twelve months ended December 31, 2024 and 2023, the Company received $ 1.5 million and $ 2.9 million, respectively;

and paid $ 159,000 and $ 823,000 , respectively, for these related activities.

All transition services were completed as of October 2024.

The Company provided and will provide to Everus and Everus provided and will provide to the Company transition services in accordance with the transition services agreement entered into on October 31, 2024.

For the twelve months ended December 31, 2024, the Company received $ 727,000 ;

and paid $ 47,000 , for these related activities.

The majority of the transition services are expected to be provided for a period of one year, however, no longer than two years after the separation.

Separation related costs of $ 47.8 million and $ 9.0 million, net of tax, were incurred during the twelve months ended December 31, 2023 and 2022, respectively.

Separation costs incurred are presented in income (loss) from discontinued operations in the Consolidated Statements of Income.

The majority of the transition services are expected to be provided for a period of approximately eighteen months , however, no longer than two years after the separation.

Separation related costs of $ 41.7 million, $ 58.6 million and $ 11.5 million net of tax, were incurred during the twelve months ended December 31, 2024, 2023 and 2022, respectively.

Certain separation costs incurred are presented in discontinued operations, net of tax in the Consolidated Statements of Income.

These charges primarily relate to transaction and third-party support costs, one-time business separation fees and related tax charges.

The Company had no assets or liabilities related to the discontinued operations of Knife River on its balance sheet as of December 31, 2023.

The carrying amounts of the major classes of assets and liabilities of discontinued operations included in the Company’s Consolidated Balance Sheet at December 31, 2022 were as follows:

74 MDU Resources Group, Inc.

The Company had no assets or liabilities related to the discontinued operations of Knife River on its balance sheet as of December 31, 2024 and 2023.

The carrying amounts of the major classes of assets and liabilities related to the discontinued operations of Everus included in the Company’s Consolidated Balance Sheet at December 31, 2023 were as follows:

December 31, 2023

15 unchanged sentences

Current liabilities:

Short-term borrowings $ 208,000

Long-term debt due within one year 30,211

Accounts payable $ 315,240

7 unchanged sentences

Deferred income taxes 6,212

Asset retirement obligations 33,015

Operating lease liabilities 32,504

1 unchanged sentence

Total liabilities of discontinued operations $ 622,930

The reconciliation of the major classes of income and expense constituting pretax income (loss) from discontinued operations to the after-tax income (loss) from discontinued operations on the Consolidated Statements of Income were as follows:

The reconciliation of the major classes of income and expense constituting pretax income from discontinued operations to the after-tax income from discontinued operations on the Consolidated Statements of Income were as follows:

2024 2023 2022

6 unchanged sentences

Interest expense 7,118 47,229 38,590

(Loss) income from discontinued operations before income taxes

Income from discontinued operations before income taxes

141,498 130,228 338,887

8 unchanged sentences

As part of the adoption of ASC 606 - Revenue from Contracts with Customers , the Company elected the practical expedient to recognize the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that the Company otherwise would have recognized is 12 months or less.

Changes in cost estimates on certain contracts may result in the issuance of change orders, which can be approved or unapproved by the customer, or the assertion of contract claims.

The Company recognizes amounts associated with change orders and claims as revenue if it is probable that the contract price will be adjusted and the amount of any such adjustment can be reasonably estimated.

Change orders and claims are negotiated in the normal course of business and represent management’s estimates of additional contract revenues that have been earned and are probable of collection.

The Company received notification from a customer on a large project with a contract that was billed on a time and materials basis with no stated maximum price, that it is withholding payment of approximately $ 31.0 million on remaining outstanding billings, including retention.

The Company believes it has substantial defenses against these claims based upon the terms of the contract and the Company's belief that it has performed under the terms of the contract.

The Company believes collection of the remaining outstanding billings, including retention is probable and, as a result, the Company has recognized the revenue from this project in its results.

However, there is uncertainty surrounding this matter, including the potential long-term nature of dispute resolution, the Company filing a lien on the property and the broad range of possible consideration amounts as a result of negotiations and potential litigation to resolve the dispute.

Disaggregation

3 unchanged sentences

For more information on the Company's business segments, see Note 17.

Year ended December 31, 2023 Electric Natural gas distribution Pipeline Construction services Other Total

Year ended December 31, 2024 Electric Natural gas distribution Pipeline Other Total

(In thousands)

6 unchanged sentences

Natural gas storage — — 23,690 — 23,690

Electrical & mechanical specialty contracting — — — 2,125,536 — 2,125,536

Transmission & distribution specialty contracting — — — 683,342 — 683,342

Other 59,288 40,703 13,139 195 113,325

3 unchanged sentences

Total external operating revenues $ 414,406 $ 1,200,975 $ 142,597 $ — $ 1,757,978

84 MDU Resources Group, Inc.

Year ended December 31, 2022 Electric Natural gas distribution Pipeline Construction services Other Total

Year ended December 31, 2023 Electric Natural gas distribution Pipeline Other Total

(In thousands)

5 unchanged sentences

Natural gas storage — — 18,254 — 18,254

Electrical & mechanical specialty contracting — — — 1,988,729 — 1,988,729

Transmission & distribution specialty contracting — — — 662,705 — 662,705

Other 54,508 15,141 13,874 119 83,642

3 unchanged sentences

Total external operating revenues $ 401,037 $ 1,287,236 $ 115,079 $ — $ 1,803,352

Year ended December 31, 2021 Electric Natural gas distribution Pipeline Construction services Other Total

76 MDU Resources Group, Inc.

Year ended December 31, 2022 Electric Natural gas distribution Pipeline Other Total

(In thousands)

5 unchanged sentences

Natural gas storage — — 14,583 — 14,583

Electrical & mechanical specialty contracting — — — 1,324,419 — 1,324,419

Transmission & distribution specialty contracting — — — 677,074 — 677,074

Other 45,608 13,617 11,450 86 70,761

3 unchanged sentences

Total external operating revenues $ 377,015 $ 1,273,588 $ 96,695 $ — $ 1,747,298

Contract balances

The timing of revenue recognition may differ from the timing of invoicing to customers.

The timing of invoicing to customers does not necessarily correlate with the timing of revenues being recognized under the cost‐to‐cost method of accounting.

Contracts from contracting services are billed as work progresses in accordance with agreed upon contractual terms.

Generally, billing to the customer occurs contemporaneous to revenue recognition.

A variance in timing of the billings may result in a contract asset or a contract liability.

A contract asset occurs when revenues are recognized under the cost-to-cost measure of progress, which exceeds amounts billed on uncompleted contracts.

Such amounts will be billed as standard contract terms allow, usually based on various measures of performance or achievement.

A contract liability occurs when there are billings in excess of revenues recognized under the cost-to-cost measure of progress on uncompleted contracts.

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

The changes in contract assets and liabilities were as follows:

December 31, 2023 December 31, 2022 Change Location on Consolidated Balance Sheets

(In thousands)

Contract assets

$ 158,861 $ 154,144 $ 4,717 Receivables, net

Contract liabilities - current ( 202,144 ) ( 168,361 ) ( 33,783 ) Accounts payable

Contract liabilities - noncurrent ( 291 ) ( 6 ) ( 285 ) Noncurrent liabilities - other

Net contract liabilities $ ( 43,574 ) $ ( 14,223 ) $ ( 29,351 )

MDU Resources Group, Inc.

December 31, 2022 December 31, 2021 Change Location on Consolidated Balance Sheets

(In thousands)

Contract assets

$ 154,144 $ 103,737 $ 50,407 Receivables, net

Contract liabilities - current ( 168,361 ) ( 146,792 ) ( 21,569 ) Accounts payable

Contract liabilities - noncurrent ( 6 ) ( 118 ) 112 Noncurrent liabilities - other

Net contract liabilities $ ( 14,223 ) $ ( 43,173 ) $ 28,950

The Company recognized $ 167.7 million and $ 143.6 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 $ 45.7 million and $ 46.9 million for the years ended December 31, 2023 and 2022, respectively, from performance obligations satisfied in prior periods.

Remaining performance obligations

The remaining performance obligations, also referred to as backlog, at the construction services segment include unrecognized revenues that the Company reasonably expects 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.

Excluded from remaining performance obligations are potential orders under master service agreements.

The majority of the Company's construction contracts have an original duration of less than two years.

The remaining performance obligations at the pipeline segment include firm transportation and storage contracts with fixed pricing and fixed volumes.

The Company has applied the practical expedient that does not require additional disclosures for contracts with an original duration of less than 12 months to certain firm transportation and non-regulated contracts.

The Company's firm transportation and storage contracts included in the remaining performance obligations have weighted average remaining durations of less than five years and two years , respectively.

At December 31, 2023, the Company's remaining performance obligations were $ 2.6 billion.

At December 31, 2024, the Company's remaining performance obligations were $ 606.5 million.

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

$ 1.6 billion within the next 12 months or less;

$ 82.1 million within the next 12 months or less;

$ 81.5 million within the next 13 to 24 months;

and $ 442.9 million in 25 months or more.

86 MDU Resources Group, Inc.

Note 5 - Property, Plant and Equipment

6 unchanged sentences

Transmission 662,466 639,999 65

Construction in progress 115,103 87,003 0

81,316 115,103 0

Other 176,007 153,248 15

4 unchanged sentences

General 229,034 215,572 13

Construction in progress 70,373 55,759 0

74,207 70,373 0

Other 282,007 246,991 15

1 unchanged sentence

Storage 61,369 57,160 53

Construction in progress 55,832 34,655 0

Other 63,867 59,917 18

Non-regulated:

Construction in progress 1,206 49 0

Other 4,327 6,950 9

Construction services:

Land 8,662 8,234 0

Buildings and improvements 52,667 50,776 23

Machinery, vehicles and equipment 191,802 179,459 7

Other 6,718 6,642 4

Land 2,289 2,648 0

29,629 57,038 0

Other 73,749 68,194 17

Land and other

4,148 31,654 7

Less accumulated depreciation and amortization

9 unchanged sentences

$ 91,091 $ 98,844

Electric fuel and purchased power deferral Up to 1 year

Environmental compliance programs Up to 1 year

Conservation programs Up to 1 year

19,123 14,425

Electric fuel and purchased power deferral Up to 1 year

Decoupling mechanisms Up to 1 year

Cost recovery mechanisms Up to 1 year

Environmental compliance programs Up to 1 year

Other Up to 1 year

3 unchanged sentences

76,542 85,944

Environmental compliance programs - 66,806 —

Natural gas costs recoverable through rate adjustments Up to 2 years

Plant costs/asset retirement obligations Over plant lives 47,042 46,009

1 unchanged sentence

Taxes recoverable from customers Over plant lives 12,221 12,249

Electric fuel and purchased power deferral Up to 2 years

Covid-19 deferred costs - 4,167 2,746

Long-term debt refinancing costs Up to 36 years

Plant to be retired - 772 21,525

Environmental compliance programs - — 66,806

Natural gas costs recoverable through rate adjustments Up to 2 years

Other Up to 14 years

2 unchanged sentences

Regulatory liabilities:

Environmental compliance Up to 1 year

Natural gas costs refundable through rate adjustments Up to 1 year

45,427 43,161

Provision for rate refund Up to 1 year

Cost recovery mechanisms Up to 1 year

Margin sharing Up to 1 year

Provision for rate refund Up to 1 year

Taxes refundable to customers Up to 1 year

Conservation programs Up to 1 year

Refundable fuel & electric costs Up to 1 year

Electric fuel and purchased power deferral Up to 1 year

Cost recovery mechanisms Up to 1 year

Other Up to 1 year

2 unchanged sentences

Taxes refundable to customers Over plant lives 185,402 193,578

Environmental compliance programs - 61,941 —

Cost recovery mechanisms Up to 17 years

2 unchanged sentences

Pension and postretirement benefits ** 4,862 6,044

Environmental compliance programs - — 61,941

Other Up to 13 years

6 unchanged sentences

As of December 31, 2024 and 2023, approximately $ 181.2 million and $ 194.3 million, respectively, of regulatory assets were not earning a rate of return but are expected to be recovered from customers in future rates.

These assets are largely comprised of the unfunded portion of pension and postretirement benefits, asset retirement obligations, certain pipeline integrity costs, the estimated future cost of manufactured gas plant site remediation and the costs associated with environmental compliance.

These assets are largely comprised of the unfunded portion of pension and postretirement benefits, asset retirement obligations, certain pipeline integrity costs and the estimated future cost of manufactured gas plant site remediation.

The Company is subject to environmental compliance regulations in certain states which require natural gas distribution companies to reduce overall GHG emissions to certain thresholds as established by each applicable state.

1 unchanged sentence

Emission allowances are allocated by the respective states to the Company at no cost, of which a portion is required to be sold at auction.

The Company expects the compliance costs for these regulations and the revenues from the sale of the allocated emissions allowances will be passed through to customers in rates and has, accordingly, deferred the environmental compliance costs as a regulatory asset and proceeds from the sale of allowances as a regulatory liability.

In the last half of 2021 through 2022, the Company experienced high natural gas costs due to increase in demand outpacing the supply along with the impact of global events.

Additionally, in December 2022 and January 2023, natural gas prices significantly increased across the Pacific Northwest from multiple price-pressuring events including wide-spread below-normal temperatures and higher natural gas consumption;

reduced natural gas flows due to pipeline constraints, including maintenance in West Texas;

and historically low regional natural gas storage levels.

The compliance costs for these regulations and the revenues from the sale of the allocated emissions allowances are passed through to customers in rates and the Company has, accordingly, deferred the environmental compliance costs as a regulatory asset and proceeds from the sale of allowances as a regulatory liability.

For a discussion of the Company's most recent cases by jurisdiction, see Note 20.

In February 2019, the Company announced the retirement of three aging coal-fired electric generating units.

The Company accelerated the depreciation related to these facilities in property, plant and equipment and recorded the difference between the accelerated depreciation, in accordance with GAAP, and the depreciation approved for rate-making purposes as regulatory assets.

Requests were filed with the NDPSC, MTPSC and SDPUC, and subsequently approved, to offset the savings associated with the cessation of operations of these units with the amortization of the deferred regulatory assets.

The Company ceased operations of Lewis & Clark Station in March 2021 and Units 1 and 2 at Heskett Station in February 2022.

The Company subsequently reclassified the costs being recovered for these facilities from plant retirement to cost recovery mechanisms in the previous table and began amortizing the associated plant retirement and closure costs.

If, for any reason, the Company's regulated businesses cease to meet the criteria for application of regulatory accounting for all or part of their operations, the regulatory assets and liabilities relating to those portions ceasing to meet such criteria would be removed from the balance sheet and included in the statement of income or accumulated other comprehensive loss in the period in which the discontinuance of regulatory accounting occurs.

If, for any reason, the Company's regulated businesses cease to meet the criteria for application of regulatory accounting for all or part of their operations, the regulatory assets and liabilities relating to those portions ceasing to meet such criteria would be written off and included in the statement of income or accumulated other comprehensive loss in the period in which the discontinuance of regulatory accounting occurs.

Note 7 - Environmental Allowances and Obligations

3 unchanged sentences

Environmental allowances are included in Prepayments and other current assets and noncurrent assets - Other on the Consolidated Balance Sheets.

At December 31, 2023, the Company had $ 72.7 million of environmental allowances.

Environmental compliance obligations, which are based on GHG emissions, are measured at the carrying value of environmental allowances held plus the estimated value of additional allowances necessary to satisfy the compliance obligation.

Environmental compliance obligations are included in current liabilities - Other accrued liabilities and noncurrent liabilities - Other on the Consolidated Balance Sheets.

At December 31, 2023, the Company accrued $ 66.8 million in compliance obligations.

The Company recognizes revenue from the sale of emissions allowances allocated under the environmental programs when the allowances are sold at auction.

The revenues associated with the sale of these allowances are deferred as a component of the respective jurisdiction’s regulatory liability for environmental compliance.

At December 31, 2023, the Company received $ 61.9 million for the sale of emissions allowances.

As environmental allowances are surrendered, the segment reduces the associated environmental compliance assets and liabilities from the Consolidated Balance Sheets.

The expenses and revenues associated with the Company’s environmental allowances and obligations are deferred as regulatory assets and liabilities.

The expenses and revenues associated with the Company’s environmental allowances and obligations are deferred as regulatory assets and liabilities and recognized as a component of purchased natural gas sold as recovered in customer rates.

For more information on the Company’s regulatory assets and liabilities, see Note 6.

MDU Resources Group, Inc.

Note 8 - Goodwill and Other Intangible Assets

The carrying amount of goodwill at the natural gas distribution and construction services segments, which remained unchanged, was $ 345.7 million and $ 143.2 million, respectively, at both December 31, 2023 and 2022.

Note 8 - Goodwill

The carrying amount of goodwill at the natural gas distribution segment, which remained unchanged, was $ 345.7 million, respectively, at both December 31, 2024 and 2023.

No impairments of goodwill have been recorded in these periods.

At October 31, 2023, the fair value substantially exceeded the carrying value at the Company's construction services reporting unit.

The Company's annual impairment testing indicated the natural gas distribution reporting units fair value is not substantially in excess of its carrying value ("cushion").

Based on the Company's assessment, the estimated fair value of the natural gas distribution reporting unit exceeded its carrying value, which includes $ 345.7 million of goodwill, by approximately 4 percent as of October 31, 2023.

The decrease in the natural gas distribution reporting unit's cushion from the prior year was primarily attributable to the risk adjusted cost of capital increasing from 6.4 percent in 2022 to 6.7 percent 2023, which directly correlates with the treasury rates at the date of the test.

The natural gas distribution reporting unit is at risk of future impairment if projected operating results are not met or other inputs into the fair value measurement model change.

Other amortizable intangible assets at December 31 were as follows:

(In thousands)

Customer relationships $ 10,450 $ 10,450

Less accumulated amortization 8,446 6,356

Noncompete agreements 292 552

Less accumulated amortization 292 544

Total $ 2,004 $ 4,102

Amortization expense for amortizable intangible assets for the years ended December 31, 2023, 2022 and 2021, was $ 2.1 million, $ 2.2 million and $ 2.5 million, respectively.

The amounts of estimated amortization expense for identifiable intangible assets as of December 31, 2023, were:

2024 2025 2026 2027 2028 Thereafter

(In thousands)

Amortization expense $ 1,888 $ 116 $ — $ — $ — $ —

MDU Resources Group, Inc.

Note 9 - Fair Value Measurements

3 unchanged sentences

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

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 executive officers and certain key management employees and invests in these fixed-income and equity securities for the purpose of earning investment returns and capital appreciation.

These investments, which totaled $ 59.3 million and $ 62.9 million at December 31, 2024 and 2023, respectively, are classified as investments on the Consolidated Balance Sheets.

The net unrealized gain on these investments for the year ended December 31, 2023, was $ 7.5 million.

The net unrealized gain on these investments for the year ended December 31, 2024 and 2023, was $ 5.9 million and $ 7.4 million, respectively.

The net unrealized loss on these investments for the year ended December 31, 2022 was $ 11.2 million.

The net unrealized gain on these investments for the year ended December 31, 2021 was $ 5.8 million.

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 Income.

In 2023, the Company withdrew $ 20.0 million of its cost basis, which reduced investments on the Consolidated Balance Sheets at December 31, 2023.

In the first quarter of 2024 and the fourth quarter of 2023, the Company withdrew $ 9.0 million and $ 20.0 million, respectively, of its cost basis, which reduced Investments on the Consolidated Balance Sheets.

The Company did not elect the fair value option, which records gains and losses in income, for its available-for-sale securities, which include mortgage-backed securities and U.S.

1 unchanged sentence

These available-for-sale securities are recorded at fair value and are classified as Investments on the Consolidated Balance Sheets.

Unrealized gains or losses are recorded in accumulated other comprehensive loss.

Unrealized gains or losses are recorded in Accumulated other comprehensive loss on the Consolidated Balance Sheets.

Details of available-for-sale securities were as follows:

5 unchanged sentences

Total $ 11,878 $ 84 $ 384 $ 11,578

90 MDU Resources Group, Inc.

December 31, 2023 Cost Gross

4 unchanged sentences

Total $ 11,755 $ 45 $ 478 $ 11,322

80 MDU Resources Group, Inc.

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

11 unchanged sentences

Total assets measured at fair value $ — $ 83,739 $ — $ 83,739

* The insurance contracts invest approximately 60 percent in fixed-income investments, 15 percent in common stock of large-cap companies, 8 percent in target date investments, 7 percent in common stock of mid-cap companies, 5 percent in common stock of small-cap companies, 3 percent in cash equivalents, 1 percent in high yield investments and 1 percent in international investments.

* The insurance contracts invest approximately 58 percent in fixed-income investments, 17 percent in common stock of large-cap companies, 8 percent in target date investments, 8 percent in common stock of mid-cap companies, 4 percent in common stock of small-cap companies, 4 percent in cash equivalents, and 1 percent in international investments.

Fair Value Measurements at December 31, 2023, Using

10 unchanged sentences

Total assets measured at fair value $ — $ 80,667 $ — $ 80,667

* 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 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.

1 unchanged sentence

Treasury securities are based on comparable market transactions, other observable inputs or other sources, including pricing from outside sources.

The estimated fair value of the Company's insurance contracts is based on contractual cash surrender values that are determined primarily by investments in managed separate accounts of the insurer.

The estimated fair value of the Company's 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.

1 unchanged sentence

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.

MDU Resources Group, Inc.

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

1 unchanged sentence

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.

MDU Resources Group, Inc.

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.

8 unchanged sentences

Refer to Note 3 for additional information related to the repayment of debt associated with the Knife River separation.

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

In order to borrow under the respective debt instruments, the subsidiary companies must be in compliance with the applicable covenants and certain other conditions, all of which the subsidiaries, as applicable, were in compliance with at December 31, 2023.

In the event the subsidiaries do not comply with the applicable covenants and other conditions, alternative sources of funding may need to be pursued.

The following table summarizes the outstanding revolving credit facilities of the Company's subsidiaries:

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

In order to borrow under the respective debt agreements, the Company and its subsidiaries must be in compliance with the applicable covenants and certain other conditions, all of which the Company and its subsidiaries, as applicable, were in compliance with at December 31, 2024.

In the event the Company or its subsidiaries do not comply with the applicable covenants and other conditions, alternative sources of funding may need to be pursued.

The following table summarizes the outstanding revolving credit facilities of the Company and its subsidiaries:

Company Facility Facility

10 unchanged sentences

Revolving credit agreement

$ 100.0 (d) $ 30.7 $ 85.6 $ — 10/13/27

Centennial Energy Holdings, Inc.

Commercial paper/Revolving credit agreement (e) $ — $ — $ 231.6 $ — 12/19/24

MDU Resources Group, Inc.

Revolving credit agreement

$ 105.1 $ 30.7 $ — 6/20/29

1 unchanged sentence

Revolving credit agreement

$ — $ — $ 8.9 5/31/28

$ — $ — $ 12.1 (c) 5/31/28

(a) The commercial paper program is supported by a revolving credit agreement with various banks (provisions allow for increased borrowings, at the option of Montana-Dakota on stated conditions, up to a maximum of $ 250.0 million).

3 unchanged sentences

(d) Certain provisions allow for increased borrowings, up to a maximum of $ 250.0 million.

(e) Centennial repaid all of its outstanding debt in the second quarter of 2023, which was funded by the Knife River repayment and the Company entering into various new debt instruments.

The commercial paper program was supported by a revolving credit agreement with various banks (provisions allow for increased borrowings, at the option of Centennial on stated conditions, up to a maximum of $ 700.0 million).

At December 31, 2022, there was no amount outstanding under the revolving credit agreement.

(f) Certain provisions allow for increased borrowings, up to a maximum of $ 250.0 million.

Montana-Dakota's commercial paper programs are supported by a revolving credit agreement.

While the amount of commercial paper outstanding does not reduce available capacity under the revolving credit agreement, Montana-Dakota does not issue commercial paper in an aggregate amount exceeding the available capacity under their credit agreement.

Montana-Dakota's commercial paper program is supported by a revolving credit agreement.

The commercial paper and revolving credit agreement borrowings may vary during the period, largely the result of fluctuations in working capital requirements due to the seasonality of certain operations of Montana-Dakota.

92 MDU Resources Group, Inc.

Short-term debt

1 unchanged sentence

On December 5, 2023, Cascade paid down $ 100.0 million of the outstanding balance.

On January 19, 2024, Cascade made the final $ 50.0 million repayment on the term loan agreement.

Intermountain On January 20, 2023, Intermountain entered into a $ 125.0 million term loan agreement with a SOFR-based variable interest rate and a maturity date of January 19, 2024.

In March, April and May 2023, Intermountain paid down $ 20.0 million, $ 30.0 million, and $ 30.0 million, respectively, of the outstanding balance.

Centennial On March 18, 2022, Centennial entered into a $ 100.0 million term loan agreement with a SOFR-based variable interest rate and a maturity date of March 17, 2023.

On March 17, 2023, Centennial amended the agreement to extend the maturity date to September 15, 2023.

On May 31, 2023, Centennial repaid the full balance outstanding under the term loan agreement.

On December 19, 2022, Centennial entered into a $ 135.0 million term loan agreement with a SOFR-based variable interest rate and a maturity date of December 18, 2023.

On May 31, 2023, Centennial repaid the full balance outstanding under the term loan agreement.

On January 19, 2024 Intermountain made the final $ 45.0 million repayment on the term loan agreement.

MDU Resources Group, Inc.

On May 1, 2023, the Company entered into a $ 75.0 million term loan agreement with a SOFR-based variable interest rate and a maturity date of November 1, 2023.

On May 31, 2023, the Company repaid the full balance outstanding under the term loan agreement.

On May 31, 2023, the Company entered into a $ 150.0 million revolving credit agreement with a SOFR-based variable interest rate and a maturity date of May 29, 2024.

At December 31, 2023, the Company had no amount outstanding.

The agreement contains customary covenants and provisions, including a covenant of the Company not to permit, at any time, the ratio of total debt to total capitalization to be greater than 65 percent.

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

As discussed in Note 3, the Company retained 10 percent of the shares of Knife River with the intent to monetize its investment and provide proceeds to the Company.

On November 6, 2023, the Company entered into a $ 310.0 million term loan agreement which was used to facilitate the tax-free debt for equity exchange.

This term loan was repaid through a noncash exchange of the Company's shares in Knife River for $ 293.2 million and the remaining balance of this term loan was repaid in cash on November 10, 2023.

At December 31, 2023, the Company had no amount outstanding, which remained that way until this agreement matured and subsequently terminated in May 2024.

82 MDU Resources Group, Inc.

Long-term debt

2 unchanged sentences

(In thousands)

Senior Notes due on dates ranging from July 15, 2024 to June 15, 2062

Senior notes due on dates ranging from August 23, 2025 to June 15, 2062

4.57 % $ 1,947,000 $ 1,882,000

Commercial paper supported by revolving credit agreements

Credit agreements due on June 20, 2029

5.79 % 169,700 46,100

Term Loan Agreements due on May 31, 2025 and September 3, 2032

Commercial paper supported by revolving credit agreement

4.76 % 81,400 144,200

Credit agreements due on October 13, 2027 and November 30, 2027

Term loan agreements due on dates ranging from September 3, 2032 to April 1, 2039

4.44 % 65,600 64,300

4 unchanged sentences

Less unamortized debt issuance costs 6,436 6,357

Less discount — 286

Total long-term debt 2,292,610 2,166,223

6 unchanged sentences

Other covenants include limitations on the sale of certain assets and on the making of certain loans and investments.

On July 11, 2024, Montana-Dakota issued $ 125.0 million of senior notes under a note purchase agreement with maturity dates ranging from July 11, 2039 to July 11, 2054, at a weighted average interest rate of 5.96 percent.

The agreement contains customary covenants and provisions, including a covenant of Montana-Dakota not to permit, at any time, the ratio of total debt to capitalization to be greater than 65 percent.

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

Montana-Dakota's ratio of total debt to total capitalization at December 31, 2024, was 48 percent.

MDU Resources Group, Inc.

Cascade Any borrowings under the revolving credit agreement are classified as long-term debt as they are intended to be refinanced on a long-term basis through continued borrowings.

Cascade On June 20, 2024, Cascade amended and restated its revolving credit agreement to increase the borrowing capacity from $ 100.0 million to $ 175.0 million and extend the maturity date to June 20, 2029.

Any borrowings under the revolving credit agreement are classified as long-term debt as they are intended to be refinanced on a long-term basis through continued borrowings.

The credit agreement contains customary covenants and provisions, including a covenant of Cascade not to permit, at any time, the ratio of total debt to total capitalization to be greater than 65 percent.

Other covenants include restrictions on the sale of certain assets, limitations on indebtedness and the making of certain investments.

On November 29, 2023, Cascade issued $ 100.0 million of senior notes under a note purchase agreement with a maturity date of November 30, 2033 and an interest rate of 6.39 percent.

The agreement contains customary covenants and provisions, including a covenant of Cascade not to permit, at any time, the ratio of debt to total capitalization to be greater than 65 percent.

Other covenants include restrictions on the sale of certain assets, limitations on indebtedness and the making of certain investments.

Cascade's ratio of total debt to total capitalization at December 31, 2024, was 50 percent.

Intermountain Any borrowings under the revolving credit agreement are classified as long-term debt as they are intended to be refinanced on a long-term basis through continued borrowings.

Intermountain On June 20, 2024, Intermountain amended and restated its revolving credit agreement to increase the borrowing capacity from $ 100.0 million to $ 175.0 million and extend the maturity date to June 20, 2029.

Any borrowings under the revolving credit agreement are classified as long-term debt as they are intended to be refinanced on a long-term basis through continued borrowings.

The credit agreement contains customary covenants and provisions, including a covenant of Intermountain not to permit, at any time, the ratio of total debt to total capitalization to be greater than 65 percent.

Other covenants include restrictions on the sale of certain assets, limitations on indebtedness and the making of certain investments.

On November 29, 2023, Intermountain issued $ 25.0 million of senior notes under a note purchase agreement with a maturity date of November 30, 2033 and an interest rate of 6.19 percent.

The agreement contains customary covenants and provisions, including a covenant of Intermountain not to permit, at any time, the ratio of debt to total capitalization to be greater than 65 percent.

Other covenants include restrictions on the sale of certain assets, limitations on indebtedness and the making of certain investments.

Intermountain's ratio of total debt to total capitalization at December 31, 2024, was 60 percent.

Centennial On June 9, 2023, Centennial repaid the full balances outstanding on all its long-term senior note debt, which aggregated $ 455.0 million.

MDU Resources Group, Inc.

4 unchanged sentences

On May 31, 2023, the Company entered into a $ 375.0 million term loan agreement with a SOFR-based variable interest rate and a maturity date of May 31, 2025.

On November 15, 2023, the Company paid down $ 185.0 million of this term loan.

The term loan agreement contains customary covenants and provisions, including a covenant of the Company not to permit, at any time, the ratio of total debt to total capitalization to be greater than 65 percent.

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

On November 15, 2023, the Company paid down $ 185.0 million of the term loan agreement.

On November 1, 2024, the Company repaid its remaining outstanding balance of $ 190.0 million and the term loan agreement subsequently terminated.

The Company's repayment was

MDU Resources Group, Inc.

funded by the Everus repayment of debt in connection with the separation.

Refer to Note 3 for additional information related to the repayment of debt associated with the Everus separation.

The Company's ratio of total debt to total capitalization at December 31, 2024, was 46 percent.

WBI Energy Transmission WBI Energy Transmission has a $ 350.0 million uncommitted note purchase and private shelf agreement with an expiration date of December 22, 2025.

2 unchanged sentences

Other covenants include a limitation on priority debt, restrictions on the sale of certain assets and the making of certain investments.

On April 1, 2024, WBI Energy Transmission entered into a $ 60.0 million term loan agreement with an interest rate of 4.52 percent and a maturity date of April 1, 2039, with the principal to be repaid in equal annual installments of $ 4.0 million each, beginning March 2025 and continuing through the maturity date.

The agreement contains customary covenants and provisions, including a covenant of WBI Energy Transmission not to permit, at any time, the ratio of total debt to total capitalization to be greater than 65 percent.

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

WBI Energy Transmission's ratio of total debt to total capitalization at December 31, 2024, was 40 percent.

3 unchanged sentences

Long-term debt maturities $ 161,700 $ 144,700 $ 24,700 $ 161,100 $ 244,400 $ 1,562,446

94 MDU Resources Group, Inc.

Note 11 - Leases

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

The Company also leases certain equipment to third parties through its utility and construction services businesses.

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.

The recognition of leases requires the Company 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 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.

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 liabilities - operating lease liabilities.

The corresponding lease costs are included in operation and maintenance expense on the Consolidated Statements of Income.

Generally, the leases for vehicles and equipment have a term of five years or less and buildings and easements 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.

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

2023 2022 2021

(In thousands)

Short-term lease cost $ 101,610 $ 104,447 $ 79,433

Operating lease cost 29,257 27,016 24,708

Variable lease cost 1,891 1,641 1,431

$ 132,758 $ 133,104 $ 105,572

2023 2022 2021

(Dollars in thousands)

Weighted average remaining lease term 3.20 years 3.17 years 3.27 years

Weighted average discount rate 4.92 % 4.04 % 3.48 %

Cash paid for amounts included in the measurement of lease liabilities

$ 29,678 $ 26,572 $ 21,575

The reconciliation of future undiscounted cash flows to operating lease liabilities presented on the Consolidated Balance Sheet at December 31, 2023, was as follows:

(In thousands)

2024 $ 25,916

Thereafter 25,724

Less discount 16,187

Total operating lease liabilities $ 74,529

Lessor accounting

The Company leases certain equipment to third parties through its utility and construction services businesses, which are considered short-term operating leases with terms of less than 12 months.

The Company recognized revenue from operating leases of $ 46.0 million, $ 47.9 million and $ 50.1 million for the years ended December 31, 2023, 2022 and 2021, respectively.

At December 31, 2023, the Company had $ 9.4 million of lease receivables with a majority due within 12 months or less.

MDU Resources Group, Inc.

Note 11 - Asset Retirement Obligations

9 unchanged sentences

* Includes $ 19.6 million and $ 18.9 million in 2024 and 2023, respectively, recorded to regulatory assets.

The 2022 revisions in estimates consist principally of updated asset retirement obligation costs associated with natural gas distribution and transmission lines at the natural gas distribution segment.

The 2024 revisions in estimates consist principally of updated asset retirement obligation costs resulting from decommissioning studies performed for electric generating facilities at the electric segment.

The Company believes that largely all expenses related to asset retirement obligations at the Company's regulated operations will be recovered in rates over time and, accordingly, defers such expenses as regulatory assets.

4 unchanged sentences

For the years ended December 31, 2024, 2023 and 2022, dividends declared on common stock were $ .5100 , $ .6950 and $ .8750 per common share, respectively.

Dividends on common stock are paid quarterly to the stockholders of record less than 30 days prior to the distribution date.

Dividends on common stock are paid quarterly to the stockholders as of the record date.

For the years ended December 31, 2024, 2023 and 2022, the dividends declared to common stockholders were $ 103.9 million, $ 141.5 million and $ 177.9 million, respectively.

84 MDU Resources Group, Inc.

The declaration and payment of dividends of the Company is at the sole discretion of the board of directors.

6 unchanged sentences

Any public offer and sale of such securities will be made only by means of a prospectus meeting the requirements of the Securities Act and the rules and regulations thereunder.

In August 2020, the Company amended the Distribution Agreement dated February 22, 2019, with J.P.

Morgan Securities LLC and MUFG Securities Americas Inc., as sales agents.

This agreement, as amended, allows the offering, issuance and sale of up to 6.4 million shares of the Company's common stock in connection with an “at-the-market” offering.

On August 10, 2023, the Company terminated the distribution agreement.

Prior to the termination, the Company had capacity to issue up to 3.6 million additional shares of common stock under the "at-the-market" offering program.

The Company was not subject to any termination penalties related to the termination of the distribution agreement.

The Company had no issuances of shares under the "at-the-market" offering program for both the twelve months ended December 31, 2023 and 2022.

The K-Plan provides participants the option to invest in the Company's common stock.

For the years ended December 31, 2023, 2022 and 2021, the K-Plan purchased shares of common stock on the open market or issued original issue common stock of the Company.

For the years ended December 31, 2024, 2023 and 2022, the K-Plan purchased shares of common stock on the open market.

At December 31, 2024, there were 7.2 million shares of common stock reserved for original issuance under the K-Plan.

1 unchanged sentence

At December 31, 2024 and 2023, there were no shares outstanding.

96 MDU Resources Group, Inc.

Note 13 - Stock-Based Compensation

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

The Company has stock-based compensation plans under which it is currently authorized to grant RSUs and other stock awards.

As of December 31, 2024, there were 2.3 million remaining shares available to grant under these plans.

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

Separation of Knife River

In connection with the completed separation of Knife River through the spinoff, the provisions of the existing compensation plans required adjustments to the number and terms of outstanding employee time-vested restricted stock units and performance share awards to preserve the intrinsic value of the awards immediately prior to the separation.

Separations of Knife River and Everus

In connection with the completed separations of Knife River and Everus through spinoffs, the provisions of the existing compensation plans required adjustments to the number and terms of outstanding employee time-vested RSUs and PSAs to preserve the intrinsic value of the awards immediately prior to each separation.

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

However, the outstanding performance share awards will no longer be subject to performance-based vesting conditions.

The number of performance share awards were first adjusted for performance.

The outstanding PSAs in place at the time of the Knife River spinoff were modified to no longer be subject to performance-based vesting conditions.

The number of PSAs were first adjusted for performance.

The combined performance factors were determined based on the performance of the Company as of December 31, 2022.

Outstanding awards at the time of the spinoff were converted into awards of the holder’s employer following separation.

The Company incurred $ 204,000 of incremental compensation expense related to the conversion of the restricted stock units, which is being recognized in expense over the remaining service periods of the applicable awards.

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

As a result, there were no outstanding PSAs at December 31, 2023.

Outstanding awards at the time of the spinoffs were converted into awards of the holder’s employer following each separation.

The Company incurred $ 1.7 million of incremental compensation expense related to the conversion of the RSUs associated with the Everus spinoff, of which $ 854,000 was recognized in 2024 and the remainder will be recognized in expense over the remaining service periods of the applicable awards.

Total stock-based compensation expense (after tax) was $ 7.1 million, $ 5.1 million and $ 6.9 million in 2024, 2023 and 2022, respectively.

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

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

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

The Company recognized compensation expense related to PSAs with market-based performance metrics on a straight-line basis over the requisite service period.

As of December 31, 2024, total remaining unrecognized compensation expense related to stock-based compensation was approximately $ 8.4 million (before income taxes) which will be amortized over a weighted average period of 1.3 years.

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

There were 50,717 shares with a fair value of $ 950,000 , 40,800 shares with a fair value of $ 1.2 million and 41,925 shares with a fair value of $ 1.2 million issued to non-employee directors during the years ended December 31, 2023, 2022 and 2021, respectively.

Restricted stock units

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

There were 46,341 shares with a fair value of $ 850,000 , 50,717 shares with a fair value of $ 950,000 and 40,800 shares with a fair value of $ 1.2 million issued to non-employee directors during the years ended December 31, 2024, 2023 and 2022, respectively.

In February 2024, 2023 and 2022, key employees were granted RSUs under the 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 unit award grants.

2 unchanged sentences

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

As previously discussed, adjustments were made to the number of restricted stock units to preserve the intrinsic value of the awards in connection with the spinoff of Knife River and outstanding performance share awards were converted to restricted stock units.

Target grants of restricted stock units outstanding at December 31, 2023, were as follows:

As previously discussed, adjustments were made to the number of RSUs to preserve the intrinsic value of the awards in connection with the spinoffs of Knife River and Everus and outstanding PSAs in place at the time of the Knife River spinoff were converted to RSUs.

MDU Resources Group, Inc.

Target grants of RSUs outstanding at December 31, 2024, were as follows:

Grant Date Performance Period Target Grant of Shares

February 2022 2022-2024 403,088

February 2023/ July 2023 2023-2025 542,233

Historical performance share awards

In February 2022 and 2021 key employees were granted performance share awards under the long-term performance-based incentive plan authorized by the Company's compensation committee.

February 2024/ June 2024 2024-2026 698,284

A summary of the status of the RSUs for the year ended December 31, 2024, was as follows:

Number of Shares

Fair Value **

Nonvested at beginning of period 873,300 $ 21.16

Granted pre-separation of Everus

478,938 20.89

( 112,826 ) 21.35

Non-vested pre-separation of Everus

Adjustments related to the Everus separation*

Vested shares

( 662,556 ) 12.04

Nonvested at end of period 1,240,517 $ 12.56

* Includes the conversion adjustments to preserve the intrinsic value of the awards and the cancellation of outstanding awards held by employees that transferred to Everus, which were replaced with awards issued by Everus as part of the separation.

** Weighted average grant-date fair values post-separation of Everus reflects incremental fair value related to modifying the awards and the Company's adjusted stock price due to the separation.

Historical PSAs

In February 2022, key employees were granted PSAs under the 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.

1 unchanged sentence

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

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

As a result, there were no outstanding performance shares at December 31, 2023.

MDU Resources Group, Inc.

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

However, in connection with the spinoff of Knife River, the outstanding PSAs were converted to RSUs.

As a result, there were no outstanding PSAs at December 31, 2024.

Under the market condition for these PSAs, participants could earn from zero to 200 percent of the apportioned target grant of shares based on the Company's 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 initial grants applicable to the market condition for certain performance shares issued in 2022 and 2021 were:

Assumptions used for initial grants applicable to the market condition for certain PSAs issued in 2022 were:

Weighted average grant-date fair value $ 36.25

Blended volatility range 24.07 % - 31.41 %

35.37 % - 46.35 %

Risk-free interest rate range .71 % - 1.68 %

.02 % - 0.20 %

Weighted average discounted dividends per share $ 2.93

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

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

The performance conditions were based on the Company's 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 $ 7.6 million and $ 13.7 million, respectively.

A summary of the status of the restricted stock units and performance share awards for the year ended December 31, 2023, was as follows:

Performance Share Awards

Restricted Stock Units

Shares Weighted

Fair Value Number of Shares

Fair Value **

Nonvested at beginning of period 565,545 $ 32.32 188,499 $ 27.54

Granted pre-separation of Knife River

— 432,557 30.42

Adjustments for performance

( 114,543 ) —

( 1,858 ) 30.47 ( 5,532 ) 30.43

Non-vested pre-separation of Knife River

449,144 615,524

Adjustments related to the Knife River separation*

( 449,144 ) 562,944

Granted post-separation of Knife River

— 21,159 22.48

Vested shares

— ( 326,327 ) 18.68

Nonvested at end of period — 873,300 $ 21.16

* Includes the conversion adjustments to preserve the intrinsic value of the awards and the cancellation of outstanding awards held by employees that transferred to Knife River, which were replaced with awards issued by Knife River as part of the separation.

** Weighted average grant-date fair values post-separation of Knife River reflects the Company's adjusted stock price due to the separation.

The weighted average grant-date fair value per share for the PSAs applicable to these performance conditions issued in 2022 was $ 27.73 .

The fair value of the PSAs that vested during the year ended December 31, 2022, was $ 7.6 million.

86 MDU Resources Group, Inc.

10 unchanged sentences

Other comprehensive income (loss) before reclassifications — ( 646 ) 173 ( 473 )

Amounts reclassified to accumulated other comprehensive loss from a regulatory asset — ( 3,265 ) — ( 3,265 )

Amounts reclassified from accumulated other comprehensive loss 81 242 43 366

Net current-period other comprehensive income (loss) 81 ( 404 ) 216 ( 107 )

Amounts reclassified related to the separation of Knife River 44 12,262 — 12,306

At December 31, 2023 — ( 18,042 ) ( 342 ) ( 18,384 )

Other comprehensive income (loss) before reclassifications — ( 646 ) 173 ( 473 )

Other comprehensive income before reclassifications

— 1,049 85 1,134

Amounts reclassified from accumulated other comprehensive loss — 432 20 452

Net current-period other comprehensive income (loss) 81 ( 404 ) 216 ( 107 )

Amounts reclassified related to the separation of Knife River 44 12,262 — 12,306

Net current-period other comprehensive income

— 1,481 105 1,586

At December 31, 2024 $ — $ ( 16,561 ) $ ( 237 ) $ ( 16,798 )

7 unchanged sentences

— 15 Income taxes

( 81 ) ( 413 )

Amortization of postretirement liability losses included in net periodic benefit credit ( 577 ) ( 320 ) Other income

11 unchanged sentences

United States $ 198,662 $ 340,330 $ 123,447

Foreign — — —

Income before income taxes from continuing operations $ 198,662 $ 340,330 $ 123,447

4 unchanged sentences

State 3,255 3,251 1,857

Foreign — — —

33,667 11,522 ( 13,992 )

8 unchanged sentences

Deferred tax assets:

Postretirement $ 28,953 $ 30,228

Environmental compliance $ 33,730 $ 28,873

Pension and postretirement 25,508 27,584

Compensation-related 15,651 17,106

Operating lease liabilities 14,242 13,914

Customer advances 9,719 8,312

Cost recovery mechanisms 7,402 5,314

Legal and environmental contingencies 5,317 4,881

3 unchanged sentences

Basis differences on property, plant and equipment 426,493 404,039

Postretirement 39,110 47,340

Pension and postretirement 48,355 39,110

Purchased gas adjustment 20,441 34,618

Environmental compliance 17,260 16,221

Operating lease right-of-use-assets 14,116 13,667

Intangible assets 12,756 12,032

Cost recovery mechanisms 19,245 22,604

Legal and environmental contingencies 6,300 5,902

Other 19,931 33,947

2 unchanged sentences

Net deferred income tax liability $ 441,320 $ 452,336

As of December 31, 2023 and 2022, the Company had various state income tax net operating loss carryforwards of $ 816,000 and $ 785,000 , respectively, and state income tax credit carryforwards, excluding alternative minimum tax credit carryforwards, of $ 33.7 million and $ 35.1 million, respectively.

As of both December 31, 2024 and 2023, the Company had various state income tax net operating loss carryforwards of $ 1.0 million and state income tax credit carryforwards, excluding alternative minimum tax credit carryforwards, of $ 31.6 million and $ 33.7 million, respectively.

The state income tax credit carryforwards are due to expire between 2026 and 2038.

5 unchanged sentences

Excess deferred income tax amortization ( 8,121 )

Deferred taxes associated with other comprehensive loss ( 46 )

Deferred taxes associated with other comprehensive income

Deferred income tax expense for the period $ ( 16,078 )

8 unchanged sentences

4,047 2.0 3,605 1.1 2,484 2.0

Tax-free debt for equity exchange ( 38,967 ) ( 7.2 ) — — — —

State investment tax credit, net of federal income tax 2,400 1.2 1,545 .5 1,624 1.3

Executive compensation 2,111 1.1 564 .2 683 .6

Federal renewable energy credit

1 unchanged sentence

Excess deferred income tax amortization ( 8,121 ) ( 4.1 ) ( 8,383 ) ( 2.5 ) ( 9,008 ) ( 7.3 )

State tax rate change ( 2,317 ) ( 1.2 ) ( 9 ) — ( 3 ) —

Research and development tax credit ( 1,465 ) ( .7 ) ( 1,985 ) ( .6 ) ( 1,692 ) ( 1.4 )

Nonqualified benefit plans ( 1,142 ) ( .6 ) ( 1,313 ) ( .4 ) 1,516 1.2

Tax-free debt for equity exchange — — ( 38,967 ) ( 11.4 ) — —

Other ( 2,772 ) ( 1.4 ) ( 1,138 ) ( .3 ) 10 —

1 unchanged sentence

The Company's effective tax rate for 2024 differs from the U.S.

federal statutory rate of 21 percent due primarily to the permanent difference on the gain on the Knife River retained shares due to the tax-free treatment of the disposition of the shares through the debt-for-equity exchange that was completed in November 2023, the impact of credits and deductions provided by law, and excess deferred income tax amortization.

The debt-for equity exchange included an exchange of the approximately 10 percent of Knife River retained shares owned by the Company.

federal statutory rate of 21 percent due primarily to the impact of credits and deductions provided by law and excess deferred income tax amortization.

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

2 unchanged sentences

federal, non-U.S., state or 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.

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.

5 unchanged sentences

$ 108,242 $ 112,839 $ 49,036

Income taxes paid, net** $ 64,484 $ 5,317 $ 36,295

Income taxes paid (refunded), net**

$ 43,572 $ 12,162 $ ( 27,884 )

* AFUDC - borrowed was $ 11.0 million, $ 10.0 million and $ 2.2 million for the years ended December 31, 2024, 2023 and 2022, respectively.

8 unchanged sentences

MDU Resources Group, Inc.

Form 10-K 101

Note 17 - Business Segment Data

The Company's reportable segments are those that are based on the Company's method of internal reporting, which generally segregates the strategic business units due to differences in products, services and regulation.

The internal reporting of these operating segments is defined based on the reporting and review process used by the Company's chief executive officer.

The Company's reportable segments are those that are based on the Company's method of internal reporting, which generally segregates the strategic business activities due to differences in products, services and regulation.

The internal reporting of these operating segments is defined based on the reporting and review process used by the Company's CODM, the chief executive officer.

The Company's operations are located within the United States.

The Company’s CODM regularly reviews discrete financial information of each reportable segment and uses net income to assess performance of each reportable segment.

The CODM uses this information to assess performance and make decisions about resources to be allocated to each reportable segment, including capital and personnel.

The information provided to the CODM is prepared at the reportable segment level in quarterly financial packages and on a more summarized basis monthly.

Budget and forecast information is also provided to the CODM at the reportable segment level.

The electric segment generates, transmits and distributes electricity in Montana, North Dakota, South Dakota and Wyoming.

1 unchanged sentence

These operations also supply related value-added services.

The pipeline segment provides natural gas transportation and underground storage services through a regulated pipeline system primarily in the Rocky Mountain and northern Great Plains regions of the United States.

This segment also provides non-regulated cathodic protection services.

The construction services segment provides a full spectrum of construction services through its electrical and mechanical and transmission and distribution specialty contracting services across the United States.

These specialty contracting services are provided to utilities, manufacturing, transportation, commercial, industrial, institutional, renewable and governmental customers.

Its electrical and mechanical contracting services include construction and maintenance of electrical and communication wiring and infrastructure, fire suppression systems, and mechanical piping and services.

Its transmission and distribution contracting services include construction and maintenance of overhead and underground electrical, gas and communication infrastructure, as well as manufacturing and supplying transmission and distribution line construction equipment and tools.

The pipeline segment provides natural gas transportation and underground storage services through a FERC regulated pipeline system primarily in the Rocky Mountain and northern Great Plains regions of the United States.

This segment also provides non-regulated energy-related services, including cathodic protection.

The Other category includes the activities of Centennial Capital, which, through its subsidiary InterSource Insurance Company, insures various types of risks as a captive insurer for certain of the Company's subsidiaries.

The function of the captive insurer is to fund the self-insured layers of the insured Company's general liability, automobile liability, pollution liability and other coverages.

Centennial Capital also owns certain real and personal property.

Centennial Capital also owns certain personal property.

In addition, the Other category includes certain assets, liabilities and tax adjustments of the holding company primarily associated with corporate functions, as well as the gain on the tax-free exchange of the retained shares in Knife River and costs associated with certain strategic initiatives.

Also included are certain general and administrative costs (reflected in operation and maintenance expense) and interest expense, which were previously allocated to the refining business, Fidelity and Knife River and do not meet the criteria for income (loss) from discontinued operations.

Discontinued operations includes Knife River's operations and its associated separation costs and interest on debt facilities repaid in connection with the Knife River separation.

For the comparative periods below, Knife River's operations are only reflected through May 2023, whereas 2022 and 2021 include the full year from Knife River's operations.

Also included are certain general and administrative costs (reflected in operation and maintenance expense) and interest expense, which were previously allocated to Knife River, Everus, Fidelity and the refining business and did not meet the criteria for discontinued operations.

Discontinued operations includes the results of operations for Knife River and Everus and certain associated separation costs, including interest on certain debt facilities repaid in connection with the separations.

For the comparative periods below, Everus' operations are only reflected through October 2024 compared to the full year in 2023 and 2022 and Knife River's operations are only reflected through May 2023, compared to the full year in 2022.

Discontinued operations also includes the supporting activities of Fidelity other than certain general and administrative costs and interest expense as described above.

90 MDU Resources Group, Inc.

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

Year ended December 31, 2024 Electric Natural gas distribution Pipeline Other Consolidated

(In thousands)

Operating revenues:

External operating revenues $ 414,406 $ 1,200,975 $ 142,597 $ — $ 1,757,978

Regulated operations:

Electric $ 400,901 $ 376,936 $ 349,412

Natural gas distribution 1,287,121 1,273,530 971,640

Pipeline 101,615 85,931 69,940

Intersegment operating revenues 72 130 69,222 195 69,619

Operation and maintenance:

External operation and maintenance 94,897 231,087 75,456 13,051 414,491

Intersegment operation and maintenance 72 130 324 195 721

Purchased natural gas sold:

External purchased natural gas sold — 630,403 — — 630,403

Intersegment purchased natural gas sold — 68,898 — — 68,898

Electric fuel and purchased power

141,148 — — — 141,148

Non-regulated operations:

Pipeline 13,457 10,764 13,126

Construction services 2,854,246 2,694,623 2,050,234

Depreciation and amortization 66,524 101,958 29,362 2,234 200,078

Taxes, other than income 17,605 76,042 12,175 394 106,216

Other income:

External other income

8,205 25,509 5,850 1,803 41,367

Total external operating revenues $ 4,657,340 $ 4,441,784 $ 3,454,436

102 MDU Resources Group, Inc.

Intersegment other income

— — 655 14,798 15,453

Interest expense:

External interest expense 30,058 63,185 10,862 4,242 108,347

Intersegment interest expense — — 4,633 10,820 15,453

Income tax expense (benefit)

( 2,414 ) 7,974 17,470 ( 5,441 ) 17,589

Income (loss) from continuing operations

74,793 46,937 68,042 ( 8,699 ) 181,073

Discontinued operations, net of tax — — — 100,035 100,035

Net income $ 74,793 $ 46,937 $ 68,042 $ 91,336 $ 281,108

Capital expenditures (a)

$ 110,812 $ 286,152 $ 126,806 $ 1,728 $ 525,498

Assets $ 1,976,912 (b)

$ 3,730,532 (b) $ 1,151,317 $ 180,057 (c)

Property, plant and equipment $ 2,480,816 (b) $ 3,731,093 (b) $ 1,338,006 $ 4,148 $ 7,554,063

Accumulated depreciation and amortization

$ 716,736 (b)

$ 1,139,223 (b)

$ 351,045 $ 2,767 $ 2,209,771

(a) Capital expenditures include noncash transactions such as capital expenditure-related accounts payable and AFUDC totaling $ 7.1 million.

(b) Includes allocations of common utility property for the Electric and Natural gas distribution segments.

cash, cash equivalents and restricted cash, certain accounts receivable, certain investments and other miscellaneous current and deferred assets).

MDU Resources Group, Inc.

Year ended December 31, 2023 Electric Natural gas distribution Pipeline Other Consolidated

(In thousands)

Operating revenues:

External operating revenues $ 401,037 $ 1,287,236 $ 115,079 $ — $ 1,803,352

Intersegment operating revenues 138 301 62,533 119 63,091

Regulated operations:

Electric $ 274 $ 137 $ 170

Natural gas distribution 416 274 300

Pipeline 62,211 58,369 58,989

62,901 58,780 59,459

Non-regulated operations:

Pipeline 329 515 481

Construction services 143 4,627 1,403

Other 7,941 5,840 4,522

Operation and maintenance:

External operation and maintenance 92,521 219,481 70,386 24,693 407,081

Intersegment operation and maintenance 138 301 431 119 989

Purchased natural gas sold:

External purchased natural gas sold — 742,965 — — 742,965

Intersegment purchased natural gas sold — 62,102 — — 62,102

Electric fuel and purchased power

134,779 — — — 134,779

Total Intersegment operating revenues $ 71,314 $ 69,762 $ 65,865

Depreciation and amortization 64,253 95,300 26,811 4,086 190,450

Electric $ 64,253 $ 67,802 $ 66,750

Natural gas distribution 95,300 89,466 86,065

Pipeline 26,811 26,857 20,569

Construction services 23,148 21,468 20,270

Other 4,086 4,435 4,586

Total depreciation and amortization

$ 213,598 $ 210,028 $ 198,240

Operating income (loss):

Electric $ 92,789 $ 79,655 $ 66,335

Natural gas distribution 92,181 91,889 89,173

Pipeline 69,162 55,466 48,078

Construction services 190,541 164,644 145,754

Other ( 18,695 ) ( 21,655 ) ( 18,289 )

Total operating income $ 425,978 $ 369,999 $ 331,051

Taxes, other than income 16,695 75,207 10,822 409 103,133

Realized gain on tax-free exchange of the retained shares in Knife River — — — 186,556 186,556

Other income:

External other income 5,815 20,867 3,675 3,097 33,454

Intersegment other income — — 217 13,431 13,648

Interest expense:

Electric $ 28,064 $ 28,526 $ 26,712

Natural gas distribution 57,601 42,126 37,265

Pipeline 13,270 10,102 6,705

Construction services 10,057 165 ( 130 )

Other 18,964 415 260

Intersegment eliminations ( 13,648 ) ( 636 ) ( 103 )

Total interest expense $ 114,308 $ 80,698 $ 70,709

External interest expense 28,064 57,601 9,428 9,531 104,624

Intersegment interest expense — — 3,842 9,806 13,648

Income tax expense (benefit)

Electric $ ( 1,019 ) $ ( 5,420 ) $ ( 7,626 )

Natural gas distribution 6,927 7,805 8,366

Pipeline 12,409 10,522 9,672

Construction services 46,968 42,298 36,322

Other ( 5,812 ) ( 5,444 ) ( 3,190 )

Total income tax expense $ 59,473 $ 49,761 $ 43,544

Net income (loss):

Regulated operations:

Electric $ 71,559 $ 57,077 $ 51,906

Natural gas distribution 48,520 45,171 51,596

Pipeline 46,233 36,253 39,796

( 1,019 ) 6,927 12,409 ( 8,104 ) 10,213

MDU Resources Group, Inc.

Form 10-K 103

Income from continuing operations

71,559 48,520 47,375 162,663 330,117

Discontinued operations, net of tax — — ( 457 ) 85,047 84,590

Net income $ 71,559 $ 48,520 $ 46,918 $ 247,710 $ 414,707

Capital expenditures (a)

$ 109,805 $ 274,836 $ 115,903 $ ( 2,825 ) $ 497,719

Assets $ 1,955,644 (b)

$ 3,532,142 (b)

$ 1,045,704 $ 1,299,669 (c)

Property, plant and equipment

$ 2,369,039 (b)

$ 3,462,187 (b)

$ 1,218,387 $ 31,654 $ 7,081,267

Accumulated depreciation and amortization

$ 660,438 (b)

$ 1,068,037 (b)

$ 328,010 $ 19,890 $ 2,076,375

(a) Capital expenditures include noncash transactions such as capital expenditure-related accounts payable and AFUDC totaling $( 13.6 ) million.

(b) Includes allocations of common utility property for the Electric and Natural gas distribution segments.

cash, cash equivalents and restricted cash, certain accounts receivable, certain investments and other miscellaneous current and deferred assets).

92 MDU Resources Group, Inc.

Year ended December 31, 2022 Electric Natural gas distribution Pipeline Other Consolidated

(In thousands)

Non-regulated operations:

Pipeline 1,142 ( 59 ) 1,327

Construction services 142,444 129,460 112,176

Other 170,527 ( 17,134 ) ( 14,279 )

Operating revenues:

External operating revenues $ 377,015 $ 1,273,588 $ 96,695 $ — $ 1,747,298

Intersegment operating revenues 58 216 58,884 86 59,244

Operation and maintenance:

External operation and maintenance 93,236 205,009 60,300 21,406 379,951

Intersegment operation and maintenance 58 216 638 86 998

Purchased natural gas sold:

External purchased natural gas sold — 757,883 — — 757,883

Intersegment purchased natural gas sold — 58,246 — — 58,246

Electric fuel and purchased power

119,405 — — — 119,405

Income from continuing operations 480,425 250,768 242,522

Depreciation and amortization 67,802 89,466 26,857 4,435 188,560

Taxes, other than income 16,917 71,095 12,318 299 100,629

Other income:

External other income 528 3,213 1,272 ( 1,753 ) 3,260

Intersegment other income — — 80 556 636

Interest expense:

External interest expense 28,526 42,126 9,966 65 80,683

Intersegment interest expense — — 136 500 636

Income tax expense (benefit)

( 5,420 ) 7,805 10,522 ( 6,712 ) 6,195

Income (loss) from continuing operations

57,077 45,171 36,194 ( 21,190 ) 117,252

Discontinued operations, net of tax — — ( 906 ) 251,143 250,237

Net income $ 57,077 $ 45,171 $ 35,288 $ 229,953 $ 367,489

Capital expenditures:

Electric $ 109,805 $ 133,970 $ 82,427

Natural gas distribution 274,836 240,064 170,411

Pipeline 115,903 61,923 234,803

Construction services 35,096 36,413 29,140

Other ( 2,825 ) 2,272 1,501

Total capital expenditures (a) $ 532,815 $ 474,642 $ 518,282

Electric (b) $ 1,955,644 $ 1,856,258 $ 1,810,695

Natural gas distribution (b) 3,532,142 3,214,452 2,929,519

Pipeline 1,045,704 961,893 913,945

Construction services 1,106,570 1,126,323 845,262

Other (c) 193,099 2,501,855 2,411,014

Total assets $ 7,833,159 $ 9,660,781 $ 8,910,435

Capital expenditures (a)

$ 133,970 $ 240,064 $ 61,923 $ 2,272 $ 438,229

Assets $ 1,856,258 (b)

$ 3,214,452 (b)

$ 961,893 $ 3,628,178 (c)

Property, plant and equipment

Electric (b) $ 2,369,039 $ 2,276,613 $ 2,295,646

Natural gas distribution (b) 3,462,187 3,208,059 3,015,164

Pipeline 1,218,387 1,108,141 1,051,868

Construction services 259,849 245,111 225,758

Other 31,654 36,705 36,717

Less accumulated depreciation and amortization

$ 2,276,613 (b)

$ 3,208,059 (b)

$ 1,108,141 $ 36,705 $ 6,629,518

Net property, plant and equipment $ 5,120,910 $ 4,776,331 $ 4,506,079

(a) Capital expenditures for 2023, 2022 and 2021 include noncash transactions such as capital expenditure-related accounts payable and AFUDC totaling $ 13.1 million, $( 3.8 ) million and $ 30.6 million, respectively.

(b) Includes allocations of common utility property.

Accumulated depreciation and amortization

$ 625,813 (b)

$ 1,009,788 (b)

$ 308,516 $ 19,143 $ 1,963,260

(a) Capital expenditures include noncash transactions such as capital expenditure-related accounts payable and AFUDC totaling $ 4.4 million.

(b) Includes allocations of common utility property for the Electric and Natural gas distribution segments.

cash, cash equivalents and restricted cash, certain accounts receivable, certain investments and other miscellaneous current and deferred assets).

22 unchanged sentences

All other eligible employees must meet the new eligibility criteria of age 60 and 10 years of continuous service at the time they retire to be eligible for a specified company funded Retiree Reimbursement Account.

Employees hired after December 31, 2009, will not be eligible for retiree medical benefits at certain of the Company's businesses.

Employees hired after December 31, 2009, will not be eligible for retiree medical benefits.

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

12 unchanged sentences

Plan participants' contributions — — 412 479

Actuarial loss/(gain)

Actuarial (gain) loss

( 11,040 ) 5,395 ( 3,420 ) ( 215 )

22 unchanged sentences

94 MDU Resources Group, Inc.

Form 10-K 105

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

1 unchanged sentence

For more information on regulatory assets and liabilities, see Note 6.

In 2023, the actuarial loss recognized in the benefit obligation was primarily the result of a decrease in the discount rate.

In 2024, the actuarial gain recognized in the benefit obligation was primarily the result of an increase in the discount rate.

In 2023, the actuarial loss recognized in the benefit obligation was primarily the result of a decrease in the discount rate.

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

13 unchanged sentences

2024 2023 2022 2024 2023 2022

Components of net periodic benefit credit:

Components of net periodic benefit cost (credit):

(In thousands)

3 unchanged sentences

Amortization of prior service credit — — — ( 1,318 ) ( 1,318 ) ( 1,318 )

— — — ( 1,318 ) ( 1,318 ) ( 1,318 )

Recognized net actuarial loss (gain) 4,149 3,093 5,826 ( 288 ) ( 504 ) ( 570 )

Net periodic benefit credit, including amount capitalized ( 580 ) ( 2,260 ) ( 1,735 ) ( 4,693 ) ( 4,888 ) ( 4,105 )

Net periodic benefit cost (credit), including amount capitalized

835 ( 580 ) ( 2,260 ) ( 4,579 ) ( 4,693 ) ( 4,888 )

Less amount capitalized — — — — 107 175

Net periodic benefit cost (credit)

835 ( 580 ) ( 2,260 ) ( 4,579 ) ( 4,800 ) ( 5,063 )

Other changes in plan assets and benefit obligations recognized in accumulated comprehensive loss:

Net (gain) loss 187 2,369 ( 265 ) ( 604 ) ( 4,141 ) ( 2,811 )

Amortization of actuarial (loss) gain

Net loss (gain)

401 187 2,369 71 ( 604 ) ( 4,141 )

Amortization of actuarial (loss) gain ( 359 ) ( 292 ) ( 1,310 ) 130 108 ( 281 )

Amortization of prior service credit — — — 45 78 125

1 unchanged sentence

Total recognized in accumulated other comprehensive loss 42 ( 105 ) 6,402 246 ( 418 ) ( 5,289 )

( 105 ) 6,402 ( 1,551 ) ( 418 ) ( 5,289 ) ( 2,846 )

Other changes in plan assets and benefit obligations recognized in regulatory assets or liabilities:

Net (gain) loss 1,826 9,757 ( 5,116 ) ( 107 ) 11,920 ( 6,292 )

Amortization of actuarial (loss) gain

Net loss (gain)

3,520 1,826 9,757 ( 472 ) ( 107 ) 11,920

Amortization of actuarial (loss) gain ( 3,790 ) ( 2,801 ) ( 5,373 ) 158 304 500

Amortization of prior service credit — — — 1,273 1,273 1,273

— — — 1,273 1,273 1,298

Reclassification of postretirement liability adjustment from regulatory asset — — ( 5,343 ) — — 992

Total recognized in regulatory assets or liabilities ( 270 ) ( 975 ) ( 959 ) 959 1,470 14,685

( 975 ) ( 959 ) ( 11,847 ) 1,470 14,685 ( 4,884 )

Total recognized in net periodic benefit credit, accumulated other comprehensive loss and regulatory assets or liabilities $ 607 $ ( 1,660 ) $ 3,183 $ ( 3,374 ) $ ( 3,748 ) $ 4,333

17 unchanged sentences

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

Health care trend rate assumed for next year 6.5 % 6.5 %

Health care trend rate assumed for next year (pre-65/post-65)

8.5 %/ 6.25 %

Health care cost trend rate - ultimate 4.5 % 4.5 %

Year in which ultimate trend rate achieved 2033 2032

Year in which ultimate trend rate achieved (pre-65/post-65)

2035/2034 2034/2033

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

23 unchanged sentences

96 MDU Resources Group, Inc.

Form 10-K 107

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.

30 unchanged sentences

Total assets measured at fair value $ 106,391 $ 123,975 $ — $ 230,626

(a) Collective and mutual funds invest approximately 51 percent in corporate bonds, 15 percent in common stock of international companies, 11 percent in common stock of large-cap and mid-cap U.S.

companies, 7 percent cash and cash equivalents, 7 percent in U.S.

Government securities and 9 percent in other investments.

(a) Collective and mutual funds invest approximately 39 percent in corporate bonds, 19 percent in U.S.

Government securities, 17 percent in other investments, 15 percent in common stock of international companies, 9 percent in common stock of large-cap and mid-cap U.S.

companies, and 1 percent 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.

11 unchanged sentences

companies ( 2 ) — — ( 2 )

International companies — 418 — 418

Collective and mutual funds (a) 84,761 88,219 — 172,980

Corporate bonds — 72,809 — 72,809

Municipal bonds — 5,283 — 5,283

Government securities 30,162 33,141 — 63,303

Pooled separate accounts (b) — 2,904 — 2,904

Investments measured at net asset value (c) — — — 4,977

Investments measured at net asset value (b)

Total assets measured at fair value $ 114,921 $ 128,557 $ — $ 248,558

(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 cash and cash equivalents, 7 percent in U.S.

(a) Collective and mutual funds invest approximately 51 percent in corporate bonds, 15 percent in common stock of international companies, 11 percent in common stock of large-cap and mid-cap U.S.

companies, 7 percent cash and cash equivalents, 7 percent in U.S.

Government securities and 9 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.

(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.

18 unchanged sentences

Insurance contract (a) — 71,512 — 71,512

— 72,303 — 72,303

Total assets measured at fair value $ 2,880 $ 75,885 $ — $ 78,765

(a) The insurance contract invests approximately 60 percent in corporate bonds, 16 percent in common stock of large-cap U.S.

companies, 15 percent in U.S.

Government securities, 5 percent in common stock of small-cap U.S.

(a) The insurance contract invests approximately 41 percent in corporate bonds, 28 percent in U.S.

Government securities, 19 percent in common stock of large-cap U.S.

companies, 6 percent in common stock of small-cap U.S.

companies and 6 percent in other investments.

98 MDU Resources Group, Inc.

Form 10-K 109

Fair Value Measurements

8 unchanged sentences

companies 2,369 — — 2,369

Collective and mutual funds (a) 5 5 — 10

Insurance contract (b) — 69,834 — 69,834

Insurance contract (a) — 72,303 — 72,303

Total assets measured at fair value $ 2,369 $ 76,865 $ — $ 79,234

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

(a) The insurance contract invests approximately 60 percent in corporate bonds, 16 percent in common stock of large-cap U.S.

companies, 15 percent in U.S.

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

Government securities, 5 percent in common stock of small-cap U.S.

companies and 4 percent in other investments.

Nonqualified benefit plans

28 unchanged sentences

A new nonqualified defined contribution plan was adopted in 2020, effective January 1, 2021, to replace the plan originally established in 2012 with similar provisions.

Expenses incurred under these plans for 2023, 2022 and 2021 were $ 5.5 million, $ 2.2 million and $ 1.5 million, respectively.

Expenses incurred under these plans for 2024, 2023 and 2022 were $ 4.0 million, $ 2.7 million and $ 538,000 , respectively.

The amount of investments that the Company anticipates using to satisfy obligations under these plans at December 31 was as follows:

9 unchanged sentences

Multiemployer plans

The Company contributes to a number of MEPPs under the terms of collective-bargaining agreements that cover its union-represented employees.

The risks of participating in these multiemployer plans are different from single-employer plans in the following aspects:

The Company contributes to a MEPP under the terms of a collective-bargaining agreement that covers its union-represented employees.

The risks of participating in this multiemployer plan is 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

• 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.

Unless otherwise noted, the most recent Pension Protection Act zone status available in 2023 and 2022 is for the plan's year-end at December 31, 2022, and December 31, 2021, respectively.

• If the Company chooses to stop participating in its MEPP, 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 this plan is outlined in the following table.

Unless otherwise noted, the most recent Pension Protection Act zone status available in 2024 and 2023 is for the plan's year-end status at December 31, 2023, and December 31, 2022, respectively.

The zone status is based on information that the Company received from the plan and is certified by the plan's actuary.

Among other factors, plans in the red zone are generally less than 65 percent funded, plans in the yellow zone are between 65 percent and 80 percent funded, and plans in the green zone are at least 80 percent funded.

MDU Resources Group, Inc.

Form 10-K 111

Among other factors, a plan in the red zone is generally less than 65 percent funded, a plan in the yellow zone is between 65 percent and 80 percent funded, and a plan in the green zone is at least 80 percent funded.

EIN/Pension Plan Number Pension Protection Act Zone Status FIP/RP Status Pending/Implemented Contributions Surcharge Imposed Expiration Date

2 unchanged sentences

(In thousands)

Edison Pension Plan 936061681 - 001

Green Green No $ 16,957 $ 18,750 $ 18,331 No 12/31/2026

IBEW Local 212 Pension Trust 316127280 - 001

Green as of 4/30/2022

Green as of 4/30/2021

No 1,350 1,622 1,733 No 6/1/2025

IBEW Local 357 Pension Plan A 886023284 - 001

Green Green No 18,936 12,876 6,485 No 5/31/2024

IBEW Local 82 Pension Plan 316127268 - 001

Green as of 6/30/2023

Green as of 6/30/2022

No 2,149 1,854 1,353 No 12/6/2026

IBEW Local 683 Pension Fund Pension Plan 341442087 - 001

Green Green No 3,986 3,362 1,238 No 5/26/2024

Idaho Plumbers and Pipefitters Pension Plan 826010346 - 001

2 unchanged sentences

No $ 1,434 $ 1,690 $ 1,613 No 3/31/2027

National Electrical Benefit Fund 530181657 - 001

Green Green No 19,040 18,060 14,361 No 12/31/2023 - 12/27/2027

Pension and Retirement Plan of Plumbers and Pipefitters Local 525 886003864 - 001

Green as of 6/30/2022

No 8,020 6,304 4,345 No 9/30/2024

Sheet Metal Workers Pension Plan of Southern CA, AZ, and NV 956052257 - 001

Green Green No 3,631 3,400 2,615 No 6/30/2024

Other funds 21,289 20,437 17,930

Total contributions $ 1,434 $ 1,690 $ 1,613

* 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.

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:

1 unchanged sentence

of Total Contributions (as of December 31 of the Plan's Year-End)

Edison Pension Plan 2022 and 2021

Eighth District Electrical Pension Fund 2022

Electrical Workers Local No.

26 Pension Fund 2022

IBEW Local 82 Pension Plan 2022 and 2021

IBEW Local 124 Pension Trust Fund 2022 and 2021

IBEW Local 212 Pension Trust Fund 2022 and 2021

IBEW Local 357 Pension Plan A 2021

IBEW Local 648 Pension Plan 2022 and 2021

IBEW Local 683 Pension Fund Pension Plan 2022 and 2021

Idaho Plumbers and Pipefitters Pension Plan 2023 and 2022

National Electrical Benefit Fund 2022

Pension and Retirement Plan of Plumbers and Pipefitters Local 525 2022 and 2021

Sheet Metal Workers Pension Plan of Southern CA, AZ, and NV 2022

Western States Insulators and Allied Workers' Pension Plan 2022

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.

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 $ 86.6 million, $ 79.1 million and $ 64.4 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Amounts contributed in 2023, 2022 and 2021 to defined contribution multiemployer plans were $ 73.3 million, $ 67.6 million and $ 54.6 million, respectively.

100 MDU Resources Group, Inc.

10 unchanged sentences

Utility plant in service $ 155,302 $ 159,437

Construction work in progress 197 231

Less accumulated depreciation 55,327 52,264

1 unchanged sentence

Utility plant in service $ 111,043 $ 107,260

Construction work in progress — —

Less accumulated depreciation 10,359 8,111

2 unchanged sentences

Utility plant in service $ 160,343 $ 160,208

Construction work in progress 159 1,807

Less accumulated depreciation 115,133 113,187

1 unchanged sentence

Utility plant in service $ — $ —

Construction work in progress 1,372 —

Less accumulated depreciation — —

$ 6,112 $ 1,372

Utility plant in service $ 67,851 $ 66,852

Construction work in progress 127 273

Less accumulated depreciation 15,340 13,728

10 unchanged sentences

The Company is unable to predict the ultimate outcome of these matters, the timing of final decisions of the various regulators and courts, or the effect on the Company's results of operations, financial position or cash flows.

On July 15, 2024, Montana-Dakota filed a request with the MTPSC for a natural gas general rate increase of approximately $ 9.4 million annually or 11.1 percent above current rates.

The requested increase is primarily to recover investments in system upgrades and pipeline replacement projects enhancing the reliability, safety and integrity of the natural gas system, as well as increased costs to operate and maintain that system.

On October 15, 2024, the MTPSC denied Montana-Dakota's request for an interim rate increase of approximately $ 8.0 million annually or 10.2 percent above current rates.

On October 25, 2024, Montana-Dakota filed a motion for reconsideration of the interim rate increase.

On January 14, 2025, the MTPSC approved an interim increase of approximately $ 7.7 million with interim rates effective on and after February 1, 2025.

On November 1, 2023, Montana-Dakota filed a request with the NDPSC for a natural gas general rate increase of approximately $ 11.6 million annually or 7.5 percent above current rates.

1 unchanged sentence

On December 13, 2023, the NDPSC approved an interim rate increase of approximately $ 10.1 million annually or 6.5 percent above current rates, subject to refund, for service rendered on and after January 1, 2024.

This matter is pending before the NDPSC.

On September 16, 2024, an all-party settlement agreement was filed reflecting an annual revenue increase of $ 9.4 million or 6.1 percent overall.

The reduction from the original filing includes lower incentives and a decreased return on equity.

On November 7, 2024, the NDPSC approved the settlement with rates effective on and after December 1, 2024.

Montana-Dakota has a renewable resource cost adjustment rate tariff that allows for annual adjustments for recent projected capital costs and related expenses for projects determined to be recoverable under the tariff.

On October 31, 2023, Montana-Dakota filed an annual update to its renewable resource cost adjustment requesting to recover a revenue requirement of approximately $ 21.0 million annually, which was revised to $ 19.5 million on January 29, 2024.

The update reflects an increase of approximately $ 4.2 million from the revenues currently included in rates.

The NDPSC approved the renewable resource cost adjustment on February 7, 2024, with rates effective March 1, 2024.

On August 15, 2023, Montana-Dakota filed a request with the SDPUC for an electric general rate increase of approximately $ 3.0 million annually or 17.3 percent above current rates.

On November 1, 2024, Montana-Dakota filed an annual update to its renewable resource cost adjustment requesting to recover a revenue requirement of approximately $ 18.3 million annually.

The update reflects a decrease of approximately $ 2.8 million annually from the revenues currently included in rates.

The NDPSC approved the renewable resource cost adjustment on January 22, 2025, with rates effective February 1, 2025.

On March 29, 2024, Cascade filed a request with the WUTC for a multi-year natural gas general rate increase of $ 43.8 million or 11.6 percent effective March 1, 2025 and $ 11.7 million or 2.8 percent to be effective March 1, 2026.

Multi-year filings are now required by Washington law that went into effect on January 1, 2022.

The requested increase is primarily to recover infrastructure investments necessary to provide safe and reliable service and higher operating costs due to inflation.

On December 11, 2024, a multi-party settlement agreement was filed reflecting rate increases of $ 29.8 million or 7.9 percent proposed to be effective March 1, 2025, and $ 10.8 million or 2.6 percent proposed to be effective March 1, 2026.

On October 31, 2024, Montana-Dakota filed a request with the WYPSC for a natural gas general rate increase of approximately $ 2.6 million annually or 14.0 percent above current rates.

On January 26, 2024, Montana-Dakota filed a notice of intent to implement interim rates of $ 2.7 million annually or 15.4 percent above current rates, which reflects the removal of Heskett Unit 4 due to the project delay caused by unforeseen operational setbacks.

The interim rates, subject to refund, will be effective March 1, 2024.

This matter is pending before the SDPUC.

On August 15, 2023, Montana-Dakota filed a request with the SDPUC for a natural gas general rate increase of approximately $ 7.4 million annually or 11.2 percent above current rates.

The requested increase is primarily to recover investments and the associated depreciation, operation and maintenance expenses and taxes associated with the increased investment.

On January 26, 2024, Montana-Dakota filed a notice of intent to implement interim rates, subject to refund, effective March 1, 2024.

This matter is pending before the SDPUC.

On January 27, 2023, WBI Energy Transmission filed a general rate case with the FERC for increases in its transportation and storage services rates that also includes a Greenhouse Gas Cost Recovery Mechanism for anticipated future costs.

In August 2023, the Company reached a rate case settlement agreement with its customers and FERC staff and the agreed-upon rates were placed into effect as of August 1, 2023.

The settlement agreement did not include a Greenhouse Gas Cost Recovery Mechanism.

On October 17, 2023, the Administrative Law Judge certified the Company's rate case settlement agreement to the FERC for final approval.

On November 27, 2023, the request was approved by FERC.

On August 31, 2023, Montana-Dakota filed an update to its transmission formula rate under the MISO tariff for its multi-value project and network upgrade charges for $ 15.2 million, which was updated to $ 15.4 million on November 16, 2023.

This matter is pending before the WYPSC.

On August 29, 2024, Montana-Dakota filed an update to its transmission formula rate under the MISO tariff for its multi-value project and network upgrade changes for $ 19.7 million.

Rates were effective January 1, 2025.

9 unchanged sentences

At December 31, 2024 and 2023, the Company accrued liabilities which have not been discounted of $ 24.1 million and $ 22.5 million, respectively.

At December 31, 2023 and 2022, the Company also recorded corresponding insurance receivables of $ 202,000 and $ 10.0 million, respectively, and regulatory assets of $ 21.6 million and $ 20.9 million, respectively, related to the accrued liabilities.

At December 31, 2024 and 2023, the Company also recorded corresponding insurance receivables of $ 24,000 and $ 152,000 , respectively, and regulatory assets of $ 22.9 million and $ 21.6 million, respectively, related to the accrued liabilities.

The accruals are for contingencies resulting from litigation and environmental matters.

33 unchanged sentences

The WUTC approved the petition in September 2010, subject to conditions set forth in the order.

A significant portion of the costs incurred to date have been recovered by insurance.

MDU Resources Group, Inc.

5 unchanged sentences

The other PRPs developed a cleanup action plan and completed public review in 2020.

The development of the remediation design is underway, with the Pre-Remedial Design Investigation Data Report submitted to Washington Ecology on June 28, 2023.

The remedy construction is expected to occur following the approval of the final design.

The development of the remediation design is underway, with the Pre-Remedial Design Investigation Data Report and Engineering Design Report submitted to Washington Ecology in June 2023 and November 2024, respectively.

The remedy construction is expected to commence in 2028 following the approval of the final design.

Cascade believes its proportional share of any liability will be relatively small in comparison to other PRPs.

17 unchanged sentences

These commitments were not reflected in the Company's consolidated financial statements.

Amounts purchased under various commitments for the years ended December 31, 2023, 2022 and 2021, were $ 1.0 billion, $ 870.6 million and $ 711.9 million, respectively.

Certain subsidiaries of the Company have outstanding guarantees to third parties that guarantee the performance of other subsidiaries of the Company.

These guarantees are related to construction contracts, insurance deductibles and loss limits, and certain other guarantees.

At December 31, 2023, the fixed maximum amounts guaranteed under these agreements aggregated $ 341.4 million.

Certain of the guarantees also have no fixed maximum amounts specified.

The amounts of scheduled expiration of the maximum amounts guaranteed under these agreements aggregate to $ 80.9 million in 2024;

$ 255.1 million in 2025;

$ 4.1 million in 2026;

$ 1.0 million in 2027;

$ 300,000 in 2028;

and $ 0 thereafter.

There were no amounts outstanding under the previously mentioned guarantees at December 31, 2023.

In the event of default under these guarantee obligations, the subsidiary issuing the guarantee for that particular obligation would be required to make payments under its guarantee.

Amounts purchased under various commitments for the years ended December 31, 2024, 2023 and 2022, were $ 841.7 million, $ 1.0 billion and $ 870.6 million, respectively.

The Company and certain subsidiaries have outstanding letters of credit to third parties related to insurance policies and other agreements, some of which are guaranteed by other subsidiaries of the Company.

3 unchanged sentences

In the event of default under these letter of credit obligations, the Company or subsidiary guaranteeing the letter of credit would be obligated for reimbursement of payments made under the letter of credit.

In addition, Centennial and MDU Construction Services have issued guarantees to third parties related to the routine purchase of maintenance items, materials and lease obligations for which no fixed maximum amounts have been specified.

These guarantees have no scheduled maturity date.

In the event a subsidiary of the Company defaults under these obligations, Centennial or MDU Construction Services would be required to make payments under these guarantees.

Any amounts outstanding by subsidiaries of the Company were reflected on the Consolidated Balance Sheet at December 31, 2023.

In the normal course of business, Centennial has surety bonds related to construction contracts and reclamation obligations of its subsidiaries.

In the event a subsidiary of Centennial does not fulfill a bonded obligation, Centennial 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, Centennial will likely continue to enter into surety bonds for its subsidiaries in the future.

In the normal course of business, the Company and its subsidiaries have surety bonds.

In the event the Company or its subsidiaries do not fulfill a bonded obligation, the Company or its subsidiaries would be responsible to the surety bond company for completion of the bonded contract or obligation.

At December 31, 2024, approximately $ 15.6 million of surety bonds were outstanding, which were not reflected on the Consolidated Balance Sheet.

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

The Company also leases certain equipment to third parties through its utility business.

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.

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

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 noncurrent assets - other, current liabilities - other accrued liabilities and noncurrent liabilities - other .

The corresponding lease costs are included in operation and maintenance expense on the Consolidated Statements of Income.

Generally, the leases for equipment have a term of five years or less and buildings and easements 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.

104 MDU Resources Group, Inc.

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

2024 2023 2022

(In thousands)

Short-term lease cost $ 1,549 $ 1,646 $ 1,373

Operating lease cost 3,069 2,871 2,497

Variable lease cost 819 676 413

$ 5,437 $ 5,193 $ 4,283

2024 2023 2022

(Dollars in thousands)

Weighted average remaining lease term 12.65 years 15.35 years 15.15 years

Weighted average discount rate 6.08 % 4.88 % 4.65 %

Cash paid for amounts included in the measurement of lease liabilities

$ 3,063 $ 2,868 $ 2,500

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)

Thereafter 20,808

Less discount 10,654

Total operating lease liabilities $ 20,909

Lessor accounting The Company leases certain equipment to third parties through its utility businesses, which are considered short-term operating leases with terms of less than 12 months.

Lease revenue was not material for the years ended December 31, 2024, 2023 and 2022, respectively.

Variable interest entities

7 unchanged sentences

At December 31, 2024, the Company's exposure to loss as a result of the Company's involvement with the VIE, based on the Company's ownership percentage, was $ 25.6 million.

Note 23 - Subsequent Events

On January 19, 2024, Cascade made the final $ 50.0 million repayment on the $ 150.0 million term loan agreement which Cascade had entered into on January 20, 2023, with a SOFR-based variable interest rate and a maturity date of January 19, 2024.

On January 19, 2024, Intermountain made the final $ 45.0 million repayment on the $ 125.0 million term loan agreement which Intermountain had entered into on January 20, 2023, with a SOFR-based variable interest rate and a maturity date of January 19, 2024.

MDU Resources Group, Inc.

Form 10-K 105

The following abbreviations and acronyms used in Notes to Consolidated Financial Statements are defined below:

Abbreviation or Acronym

AFUDC Allowance for funds used during construction

ASC FASB Accounting Standards Codification

ASU FASB Accounting Standards Update

Big Stone Station 475-MW coal-fired electric generating facility near Big Stone City, South Dakota (22.7 percent ownership)

BSSE 345-kV transmission line from Ellendale, North Dakota, to Big Stone City, South Dakota (50 percent ownership)

Cascade Cascade Natural Gas Corporation, an indirect wholly owned subsidiary of MDU Energy Capital

Centennial CEHI, LLC, a direct wholly owned subsidiary of the Company, formally known as Centennial Energy Holdings, Inc.

prior to the separation of Knife River from the Company.

References to Centennial's historical business and operations refer to the business and operations of Centennial Energy Holdings, Inc.

Centennial Capital Centennial Holdings Capital LLC, a direct wholly owned subsidiary of Centennial

Company MDU Resources Group, Inc.

Coyote Creek Coyote Creek Mining Company, LLC, a subsidiary of The North American Coal Corporation

Coyote Station 427-MW coal-fired electric generating facility near Beulah, North Dakota (25 percent ownership)

EBITDA Earnings before interest, taxes, depreciation and amortization

EIN Employer Identification Number

EPA United States Environmental Protection Agency

FASB Financial Accounting Standards Board

FERC Federal Energy Regulatory Commission

Fidelity Fidelity Exploration & Production Company, a direct wholly owned subsidiary of WBI Holdings (previously referred to as the Company's exploration and production segment)

FIP Funding improvement plan

GAAP Accounting principles generally accepted in the United States of America

Great Plains Great Plains Natural Gas Co., a public utility division of Montana-Dakota

IBEW International Brotherhood of Electrical Workers

Intermountain Intermountain Gas Company, an indirect wholly owned subsidiary of MDU Energy Capital

IPUC Idaho Public Utilities Commission

IRS Internal Revenue Service

345-kV transmission line from Jamestown, North Dakota to Ellendale, North Dakota (50 percent ownership)

Knife River Established as Knife River Corporation prior to the separation from the Company, a direct wholly owned subsidiary of Centennial.

Knife River refers to Knife River Corporation, during the period prior to separation, now known as "KRC Materials, Inc." Following the separation Knife River refers to Knife River Holding Company, now known as Knife River Corporation.

K-Plan Company's 401(k) Retirement Plan

LIBOR London Inter-bank Offered Rate

MDU Construction Services MDU Construction Services Group, Inc., a direct wholly owned subsidiary of Centennial

MDU Energy Capital MDU Energy Capital, LLC, a direct wholly owned subsidiary of the Company

MEPP Multiemployer pension plan

MISO Midcontinent Independent System Operator, Inc., the organization that provides open-access transmission services and monitors the high-voltage transmission system in the Midwest United States and Manitoba, Canada and a southern United States region which includes much of Arkansas, Mississippi and Louisiana

MNPUC Minnesota Public Utilities Commission

Montana-Dakota Montana-Dakota Utilities Co.

a direct wholly owned subsidiary of MDU Energy Capital

MTPSC Montana Public Service Commission

NDPSC North Dakota Public Service Commission

PRP Potentially Responsible Party

RP Rehabilitation plan

SDPUC South Dakota Public Utilities Commission

118 MDU Resources Group, Inc.

SEC United States Securities and Exchange Commission

Securities Act Securities Act of 1933, as amended

SOFR Secured Overnight Financing Rate

VIE Variable interest entity

Washington DOE Washington State Department of Ecology

WBI Energy Transmission WBI Energy Transmission, Inc., an indirect wholly owned subsidiary of WBI Holdings

WBI Holdings WBI Holdings, Inc., a direct wholly owned subsidiary of Centennial

WUTC Washington Utilities and Transportation Commission

Wygen III 100-MW coal-fired electric generating facility near Gillette, Wyoming (25 percent ownership)

Note 22 - Subsequent Events

On February 13, 2025, Montana-Dakota entered into a definitive purchase and sale agreement with Badger Wind, LLC, a subsidiary of Orsted Onshore North America, LLC.

Pursuant to the terms of the agreement, Montana-Dakota will purchase a 49 percent undivided ownership interest in a wind project being constructed and located in North Dakota that is anticipated to have a net generating capacity of approximately 250 MW for a purchase price of $ 294.0 million, which would represent 122.5 MW of wind generation to be owned by Montana-Dakota.

The purchase agreement is contingent on regulatory approval from the NDPSC.

This transaction would reduce Montana-Dakota's purchase requirements under the existing power purchase agreement with Badger Wind, LLC, dated November 4, 2024.

106 MDU Resources Group, Inc.

Form 10-K 119

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