Cover - USD ($)	12 Months Ended
Cover - USD ($)	Dec. 31, 2023	Feb. 22, 2024	Jun. 30, 2023
Cover [Abstract]
Document Type	10-K
Document Annual Report	true
Current Fiscal Year End Date	--12-31
Document Period End Date	Dec. 31, 2023
Document Transition Report	false
Entity File Number	1-41642
Entity Registrant Name	Knife River Corporation
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	92-1008893
Entity Address, Address Line One	1150 West Century Avenue
Entity Address, Address Line Two	P.O. Box 5568
Entity Address, City or Town	Bismarck
Entity Address, State or Province	ND
Entity Address, Postal Zip Code	58506-5568
City Area Code	701
Local Phone Number	530-1400
Title of 12(b) Security	Common Stock, $0.01 par value
Trading Symbol	KNF
Security Exchange Name	NYSE
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	Yes
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
ICFR Auditor Attestation Flag	false
Document Financial Statement Error Correction [Flag]	false
Entity Shell Company	false
Entity Public Float			$ 2,460,630,309
Entity common stock, shares outstanding		56,578,406
Documents Incorporated by Reference	DOCUMENTS INCORPORATED BY REFERENCE Relevant portions of the registrant's 2024 Proxy Statement, to be filed no later than 120 days from December 31, 2023, are incorporated by reference in Part III, Items 10, 11, 12, 13 and 14 of this Annual Report on Form 10-K.
Entity Central Index Key	0001955520
Amendment Flag	false
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	FY

Audit Information	12 Months Ended
Audit Information	Dec. 31, 2023
Auditor [Abstract]
Auditor Name	Deloitte & Touche LLP
Auditor Location	Minneapolis, Minnesota
Auditor Firm ID	34

Consolidated Statements of Operations - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Revenue:
Revenue:	$ 2,830,350	$ 2,534,729	$ 2,228,930
Cost of revenue:
Cost of revenue:	2,291,415	2,173,835	1,881,981
Gross profit	538,935	360,894	346,949
Selling, general and administrative expenses	242,538	166,599	155,872
Operating income	296,397	194,295	191,077
Interest expense	58,096	30,121	19,218
Other (expense) income	7,007	(5,353)	1,355
Income before income taxes	245,308	158,821	173,214
Income taxes	62,436	42,601	43,459
Net income	$ 182,872	$ 116,220	$ 129,755
Net income per share:
Earnings per share – basic (in dollars per share)	$ 3.23	$ 2.05	$ 2.29
Earnings per share – diluted (in dollars per share)	$ 3.23	$ 2.05	$ 2.29
Weighted average common shares outstanding:
Weighted average common shares outstanding – basic (in shares)	56,568,000	56,566,000	56,566,000
Weighted average common shares outstanding – diluted (in shares)	56,668,000	56,566,000	56,566,000
Construction materials
Revenue:
Revenue:	$ 1,523,040	$ 1,347,008	$ 1,211,459
Cost of revenue:
Cost of revenue:	1,133,042	1,086,193	965,028
Contracting services
Revenue:
Revenue:	1,307,310	1,187,721	1,017,471
Cost of revenue:
Cost of revenue:	$ 1,158,373	$ 1,087,642	$ 916,953

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Statement of Comprehensive Income [Abstract]
Net income	$ 182,872	$ 116,220	$ 129,755
Other comprehensive income:
Reclassification adjustment for loss on derivative instruments included in net income, net of tax of $28, $107 and $107 in 2023, 2022 and 2021, respectively	90	328	332
Pension and postretirement liability adjustment:
Pension and postretirement liability gains arising during the period, net of tax of $252, $3,586 and $1,011 in 2023, 2022 and 2021, respectively	751	10,935	3,041
Amortization of pension and postretirement liability losses included in net periodic benefit cost, net of tax of $64, $292 and $363 in 2023, 2022 and 2021, respectively	192	875	1,090
Pension and postretirement liability adjustment	943	11,810	4,131
Other comprehensive income	1,033	12,138	4,463
Comprehensive income attributable to common stockholders	$ 183,905	$ 128,358	$ 134,218

Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Statement of Comprehensive Income [Abstract]
Reclassification adjustment for loss on derivative instruments included in net income (loss), tax	$ 28	$ 107	$ 107
Postretirement liability gains (losses) arising during the period, tax	252	3,586	1,011
Amortization of postretirement liability losses included in net periodic benefit cost, tax (expense) benefit	$ 64	$ 292	$ 363

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Current assets:
Cash, cash equivalents and restricted cash	$ 262,320	$ 10,090
Receivables, net	266,785	210,157
Costs and estimated earnings in excess of billings on uncompleted contracts	27,293	31,145
Due from related-party	0	16,050
Inventories	319,623	323,277
Prepayments and other current assets	37,522	17,848
Total current assets	913,543	608,567
Noncurrent assets:
Net property, plant and equipment	1,315,047	1,315,213
Goodwill	274,478	274,540
Other intangible assets, net	10,821	13,430
Operating lease right-of-use assets	44,706	45,873
Investments and other	41,218	36,696
Total noncurrent assets	1,686,270	1,685,752
Total assets	2,599,813	2,294,319
Current liabilities:
Long-term debt - current portion	7,082	211
Related-party notes payable - current portion	0	238,000
Accounts payable	107,656	87,370
Billings in excess of costs and estimated earnings on uncompleted contracts	51,376	39,843
Accrued compensation	48,098	29,192
Due to related-party	0	20,286
Current operating lease liabilities	12,948	13,210
Other accrued liabilities	120,111	88,778
Total current liabilities	347,271	516,890
Noncurrent liabilities:
Long-term debt	674,577	427
Related-party notes payable	0	446,449
Deferred income taxes	174,542	175,804
Noncurrent operating lease liabilities	31,758	32,663
Other	105,653	93,497
Total liabilities	1,333,801	1,265,730
Commitments and contingencies
Stockholders’ equity:
Common stock, 300,000,000 shares authorized, $0.01 par value, 57,009,542 shares issued and 56,578,406 shares outstanding at December 31, 2023; 80,000 shares authorized, issued and outstanding, $10 par value, at December 31, 2022	570	800
Other paid-in capital	614,513	549,106
Retained earnings	665,874	494,661
MDU Resources common stock held by subsidiary at cost - 538,921 shares	0	(3,626)
Treasury stock held at cost - 431,136 shares	(3,626)	0
Accumulated other comprehensive loss	(11,319)	(12,352)
Total stockholders’ equity	1,266,012	1,028,589
Total liabilities and stockholders’ equity	$ 2,599,813	$ 2,294,319

Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Common stock, par value (in dollars per share)	$ 0.01	$ 10
Common stock, shares authorized (in shares)	300,000,000	80,000
Common stock, shares issued (in shares)	57,009,542	80,000
Common stock, shares outstanding (in shares)	56,578,406	80,000
Common stock held by subsidiary (in shares)		538,921
Treasury stock held at cost (in shares)	431,136

Consolidated Statements of Equity - USD ($) $ in Thousands	Total	Common Stock	Other Paid-In Capital	Retained Earnings	MDU Resources’ Stock Held by Subsidiary	Treasury Stock	Accumulated Other Comprehensive Loss
Beginning balance (in shares) at Dec. 31, 2020		80,000
MDU Resources' stock held by subsidiary, beginning balance (in shares) at Dec. 31, 2020					538,921
Treasury stock, beginning balance (in shares) at Dec. 31, 2020						0
Beginning balance at Dec. 31, 2020	$ 878,244	$ 800	$ 550,262	$ 359,761	$ (3,626)	$ 0	$ (28,953)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	129,755			129,755
Other comprehensive income	4,463						4,463
Net transfers to Centennial	(59,618)		(548)	(59,070)
Ending balance (in shares) at Dec. 31, 2021		80,000
MDU Resources' stock held by subsidiary, ending balance (in shares) at Dec. 31, 2021					538,921
Treasury stock, ending balance (in shares) at Dec. 31, 2021						0
Ending balance at Dec. 31, 2021	952,844	$ 800	549,714	430,446	$ (3,626)	$ 0	(24,490)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	116,220			116,220
Other comprehensive income	12,138						12,138
Net transfers to Centennial	$ (52,613)		(608)	(52,005)
Ending balance (in shares) at Dec. 31, 2022	80,000	80,000
MDU Resources' stock held by subsidiary, ending balance (in shares) at Dec. 31, 2022	538,921				538,921
Treasury stock, ending balance (in shares) at Dec. 31, 2022						0
Ending balance at Dec. 31, 2022	$ 1,028,589	$ 800	549,106	494,661	$ (3,626)	$ 0	(12,352)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	182,872			182,872
Other comprehensive income	1,033						1,033
Stock-based compensation	2,851		2,888	(37)
Issuance of common stock to directors for services (in shares)		12,192
Issuance of common stock to directors for services	702		702
Retirement of historical common stock in connection with the Separation (in shares)		(80,000)
Retirement of historical common stock in connection with the Separation	0	$ (800)	800
Issuance of common stock in connection with the Separation (in shares)		56,997,350
Issuance of common stock in connection with the Separation	0	$ 570	(570)
Transfer of MDU Resources stock held by subsidiary (in shares)					538,921
Transfer of MDU Resources stock held by subsidiary	3,626				$ 3,626
Receipt of treasury stock at historical cost (in shares)						(431,136)
Receipt of treasury stock at historical cost	(3,626)					$ (3,626)
Net transfers from Centennial and MDU Resources including Separation adjustments	62,972		62,972
Net transfers to Centennial	$ (13,007)		(1,385)	(11,622)
Ending balance (in shares) at Dec. 31, 2023	57,009,542	57,009,542
MDU Resources' stock held by subsidiary, ending balance (in shares) at Dec. 31, 2023					0
Treasury stock, ending balance (in shares) at Dec. 31, 2023	431,136					(431,136)
Ending balance at Dec. 31, 2023	$ 1,266,012	$ 570	$ 614,513	$ 665,874	$ 0	$ (3,626)	$ (11,319)

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Operating activities:
Net income	$ 182,872	$ 116,220	$ 129,755
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization	123,805	117,798	100,974
Deferred income taxes	(1,606)	2,078	32,858
Provision for credit losses	2,001	538	48
Amortization of debt issuance costs	3,115	483	402
Employee stock-based compensation costs	2,888	1,272	1,852
Pension and postretirement benefit plan net periodic benefit cost	1,182	1,306	1,092
Unrealized (gains) losses on investments	(2,202)	2,525	(1,632)
Gains on sale of assets	(27)	(14,092)	(6,638)
Equity in (loss) earnings of unconsolidated affiliates	(286)	438	(373)
Changes in current assets and liabilities, net of acquisitions:
Receivables	(54,817)	(32,506)	15,357
Due from related-party	16,050	(8,004)	2,889
Inventories	3,654	(31,033)	(42,441)
Other current assets	(19,556)	44	(4,574)
Accounts payable	33,092	17,489	(13,899)
Due to related-party	(7,310)	3,578	(957)
Other current liabilities	48,977	21,417	(21,011)
Pension and postretirement benefit plan contributions	(1,756)	(426)	(392)
Other noncurrent changes	5,650	8,319	(12,070)
Net cash provided by operating activities	335,726	207,444	181,240
Investing activities:
Capital expenditures	(124,283)	(178,162)	(174,229)
Acquisitions, net of cash acquired	0	1,745	(235,218)
Net proceeds from sale or disposition of property and other	8,284	22,878	12,017
Investments	(1,890)	(2,339)	(837)
Net cash used in investing activities	(117,889)	(155,878)	(398,267)
Financing activities:
Issuance of current related-party notes	0	208,000	0
Issuance (repayment) of long-term related-party notes, net	205,275	(207,007)	281,983
Issuance of long-term debt	700,000	0	0
Repayment of long-term debt	(3,653)	(298)	(221)
Debt issuance costs	(16,640)	(807)	0
Net transfers to Centennial	(850,589)	(55,212)	(57,959)
Net cash provided by (used in) financing activities	34,393	(55,324)	223,803
Increase (decrease) in cash, cash equivalents and restricted cash	252,230	(3,758)	6,776
Cash, cash equivalents and restricted cash - beginning of year	10,090	13,848	7,072
Cash, cash equivalents and restricted cash - end of year	$ 262,320	$ 10,090	$ 13,848

Organization and Basis of Presentation	12 Months Ended
Organization and Basis of Presentation	Dec. 31, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization and Basis of Presentation	Organization and Basis of Presentation Knife River is a people-first construction materials and contracting services company. The Company provides construction materials and contracting services to build safe roads, bridges and airport runways, and other critical infrastructure needs, that connect people with where they want to go and with the supplies they need. Knife River is one of the leading providers of crushed stone and sand and gravel in the United States and operates across 14 states. The Company conducts its operations through five reportable segments: Pacific, Northwest, Mountain, Central and Energy Services. In the fourth quarter of 2023, the Company completed a reorganization of its reporting structure which resulted in changes being made to the management of its business to best align with its strategies. As a result of the reorganization, a portion of the Pacific segment’s businesses are now reported under the Energy Services segment. In addition, the North Central and South operating regions have been aggregated into one reportable segment, Central. All periods have been recast to conform with the revised presentation. See Note 15 for additional information. Separation from MDU Resources On May 31, 2023, MDU Resources completed the previously announced separation of the Company through the distribution of approximately 90 percent of the outstanding shares of common stock, par value $.01 per share, of Knife River to the stockholders of record of MDU Resources as of the close of business on May 22, 2023. MDU Resources retained approximately 10 percent of the outstanding shares of Knife River common stock. The Distribution was structured as a pro rata distribution of one share of Knife River common stock for every four shares of MDU Resources common stock. In November 2023, MDU Resources disposed of all 5,656,621 retained shares of Knife River common stock in an underwritten public offering. As a result of the Distribution, Knife River is now an independent public company and its common stock is listed under the symbol “KNF” on the New York Stock Exchange. The Separation was completed pursuant to a separation and distribution agreement and other agreements with MDU Resources related to the Separation, including, but not limited to, a tax matters agreement, an employee matters agreement and a transition services agreement. For an interim period following the Separation, certain functions will continue to be provided by MDU Resources under a transition services agreement. For more information on the transition services agreement, see Note 19. The Company has incurred certain costs in its establishment as an independent, publicly traded company and expects to incur ongoing additional costs associated with operating as an independent, publicly traded company. All share and earnings per share information has been retroactively adjusted for all periods presented to reflect the Distribution. Basis of Presentation Prior to the Separation, Knife River operated as a wholly owned subsidiary of Centennial and an indirect, wholly owned subsidiary of MDU Resources and not as a stand-alone company. The accompanying audited consolidated financial statements and footnotes for the periods prior to the Separation were prepared on a “carve-out” basis using a legal entity approach in conformity with GAAP and were derived from the audited consolidated financial statements of MDU Resources as if the Company operated on a stand-alone basis during these periods. All revenues and costs as well as assets and liabilities directly associated with the business activity of the Company are included in the financial statements. In the periods prior to the Separation, the audited consolidated financial statements include expense allocations for certain functions provided by MDU Resources and Centennial, including, but not limited to certain general corporate expenses related to senior management, legal, human resources, finance and accounting, treasury, information technology, communications, procurement, tax, insurance and other shared services. These general corporate expenses are included in the Consolidated Statements of Operations within selling, general and administrative expenses and other income (expense). The amounts allocated to Knife River were $10.7 million, $18.0 million and $15.6 million for the years ended December 31, 2023, 2022 and 2021, respectively. These expenses were allocated to the Company on the basis of direct usage when identifiable, with the remainder principally allocated on the basis of percent of total capital invested or other allocation methodologies that were considered to be a reasonable reflection of the utilization of the services provided to the benefits received, including the following: number of employees paid and stated as cost per check; number of employees served; weighted factor of travel, managed units, national account spending equipment and fleet acquisitions; purchase order dollars spent and purchase order line count; number of payments; vouchers or unclaimed property reports; labor hours; time tracked; and projected workload. The allocations may not, however, reflect the expense the Company would have incurred as a stand-alone company for the periods presented. These costs also may not be indicative of the expenses that the Company will incur in the future or would have incurred if the Company had obtained these services from a third party. Prior to the Separation, Knife River participated in Centennial’s centralized cash management program, including its overall financing arrangements. Knife River also had related-party note agreements in place with Centennial for the financing of its capital needs, which are reflected as related-party notes payable on the Consolidated Balance Sheet at December 31, 2022. Interest expense in the Consolidated Statements of Operations, for the periods prior to the Separation, reflects the allocation of interest on borrowing and funding associated with the related-party note agreements. Upon the completion of the Separation, Knife River implemented its own financing agreements with lenders. For additional information on the Company’s current debt financing, see Note 8. Related-party transactions between the Company and MDU Resources or Centennial for general operating activities and intercompany debt have been included in the audited consolidated financial statements for periods prior to the Separation. Outstanding balances as of the periods presented were reflected on Consolidated Balance Sheets as “Due from related-party” or “Due to related-party” and “Related-party notes payable”. The cash settlement of these transactions are included in the Consolidated Statements of Cash Flows as operating or financing activities following the nature of the transactions. The aggregate net effect of related-party transactions not settled in cash as part of the Separation have been reflected in the Consolidated Balance Sheets and Statements of Stockholders’ Equity within “Other paid-in capital” and within the Consolidated Statements of Cash Flows following the nature of the transactions with a majority included in the financing section. See Note 19 for additional information on related-party transactions. Management has also evaluated the impact of events occurring after December 31, 2023, up to the date of issuance of these audited consolidated financial statements on February 27, 2024, that would require recognition or disclosure in the audited Consolidated Financial Statements. Principles of consolidation For all periods, the audited consolidated financial statements were prepared in accordance with GAAP and include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions between the businesses comprising the Company have been eliminated in the accompanying audited consolidated financial statements. Use of estimates The preparation of financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the audited consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Estimates are used for items such as long-lived assets and goodwill; fair values of acquired assets and liabilities under the acquisition method of accounting; aggregate reserves; property depreciable lives; tax provisions; revenue recognized using the cost-to-cost measure of progress for contracts; expected credit losses; environmental and other loss contingencies; costs on contracting services contracts; actuarially determined benefit costs; asset retirement obligations; lease classification; present value of right-of-use assets and lease liabilities; and the valuation of stock-based compensation. These estimates are based on management’s best knowledge of current events, historical experience, actions that the Company may undertake in the future and on various other assumptions that are believed to be reasonable under the circumstances. As additional information becomes available, or actual amounts are determinable, the recorded estimates are revised. Consequently, operating results can be affected by revisions to prior accounting estimates.

Significant Accounting Policies

12 Months Ended

Dec. 31, 2023

Accounting Policies [Abstract]

Significant Accounting Policies

New accounting standards

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


Standard	Description	Standard Effective Date	Impact on financial statements/disclosures
Recently issued ASU’s not yet adopted
ASU 2023-07 - Improvements to Reportable Segment Disclosures	In November 2023, the FASB issued guidance on modifying the disclosure requirements to improve reportable segment disclosure requirements through enhanced disclosures about significant segment expenses. The guidance also expands the interim disclosure requirements. The guidance is to be applied on a retrospective basis to the financial statements and footnotes and early adoption is permitted.	Fiscal periods beginning after December 15, 2023 and interim periods beginning after December 31, 2024	The Company is currently evaluating the impact the guidance will have on its disclosures for the year ended December 31, 2024 and interim periods for fiscal year 2025.
ASU 2023-09 - Improvements to Income Tax Disclosures	In December 2023, the FASB issued guidance on modifying the disclosure requirements to increase transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. The guidance is to be applied on a prospective basis to the financial statements and footnotes, however, retrospective adoption is also permitted. The guidance also permits early adoption.	Fiscal periods beginning after December 15, 2024	The Company is currently evaluating the impact the guidance will have on its disclosures for the year ended December 31, 2025.

Cash, cash equivalents and restricted cash

The Company considers all highly liquid investments with an original maturity of three months or less, when purchased, to be cash and cash equivalents. At December 31, 2023, the $262.3 million of cash, cash equivalents and restricted cash on the Consolidated Statements of Cash Flows is comprised of $219.3 million of cash and cash equivalents and $43.0 million of restricted cash. At December 31, 2022, the Company had no restricted cash. Restricted cash represents deposits held by Knife River’s captive insurance company that is required by state insurance regulations to remain in the captive insurance company

Revenue recognition

Revenue is recognized when a performance obligation is satisfied by transferring control over a product or service to a customer. Revenue is measured based on consideration specified in a contract with a customer and excludes any sales incentives and amounts collected on behalf of third parties. The Company is considered an agent for certain taxes collected from customers. As such, the Company presents revenues net of these taxes at the time of sale to be remitted to governmental authorities, including sales and use taxes.

The Company generates revenue from contracting services and construction materials sales. The Company focuses on the vertical integration of its contracting services with its construction materials to support the aggregate-based product lines. The Company provides contracting services to a customer when a contract has been signed by

both the customer and a representative of the Company obligating a service to be provided in exchange for the consideration identified in the contract. The nature of the services provided generally include integrating a set of services and related construction materials into a single project to create a distinct bundle of goods and services, which the Company has determined are single performance obligations. The Company determines the transaction price to include the fixed consideration required pursuant to the original contract price together with any additional consideration, to which the Company expects to be entitled to, associated with executed change orders plus the estimate of variable consideration to which the Company expects to be entitled, subject to the constraint discussed below.

The nature of the Company’s contracts gives rise to several types of variable consideration. Examples of variable consideration include: liquidated damages; performance bonuses or incentives and penalties; claims; 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.

Contracting services revenue is recognized over time using an input method based on the cost-to-cost measure of progress on a project. This is the preferred method of measuring revenue because the costs incurred have been determined to represent the best indication of the overall progress toward the transfer of such goods or services promised to a customer. 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. The percentage of completion is determined on a performance obligation basis.

The Company also sells construction materials to third parties and internal customers. The contract for material sales is the use of a sales order or an invoice, which includes the pricing and payment terms. All material contracts contain 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.

Receivables and allowance for expected credit losses

Receivables consist primarily of trade and contract receivables from the sale of goods and services net of expected credit losses. A majority of the Company’s receivables are due in 30 days or less. The total balance of receivables past due 90 days or more was $16.7 million and $11.2 million at December 31, 2023 and 2022, respectively. Receivables, net consisted of the following at December 31:


	2023		2022
	(In thousands)
Trade receivables	$	124,134	$	104,347
Contract receivables	112,037		82,428
Retention receivables	36,782		28,859
Receivables, gross	272,953		215,634
Less expected credit loss	6,168		5,477
Receivables, net	$	266,785	$	210,157

The Company’s expected credit losses are determined through a review using historical credit loss experience, changes in asset specific characteristics, current conditions and reasonable and supportable future forecasts, among other specific account data, and is performed at least quarterly. The Company develops and documents its methodology to determine its allowance for expected credit losses. Risk characteristics used by the Company may include customer mix, knowledge of customers and general economic conditions of the various local economies, among others. Specific account balances are written off when management determines the amounts to be uncollectible. Management has reviewed the balance reserved through the allowance for expected credit losses and believes it is reasonable.

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


	Pacific		Northwest		Mountain		Central		Energy Services		Total
	(In thousands)
At December 31, 2021	$	1,952	$	512	$	1,610	$	1,232	$	100	$	5,406
Current expected credit loss provision	21		946		(206)		(229)		6		538
Less write-offs charged against the allowance	28		205		126		102		6		467
At December 31, 2022	$	1,945	$	1,253	$	1,278	$	901	$	100	$	5,477
Current expected credit loss provision	161		842		1,109		(112)		1		2,001
Less write-offs charged against the allowance	53		1,091		94		71		1		1,310
At December 31, 2023	$	2,053	$	1,004	$	2,293	$	718	$	100	$	6,168

Inventories

Inventories at December 31 consisted of:


	2023		2022
	(In thousands)
Finished products	$	225,319	$	211,496
Raw materials	61,776		78,571
Supplies and parts	32,528		33,210
Total	$	319,623	$	323,277

Inventories are valued at the lower of cost or net realizable value using the average cost method. Inventories include production costs incurred as part of the Company’s aggregate mining activities. These inventoriable production costs include all mining and processing costs associated with the production of aggregates. Stripping costs incurred during the production phase, which represent costs of removing overburden and waste materials to access mineral deposits, are a component of inventoriable production costs.

Property, plant and equipment

Additions to property, plant and equipment are recorded at cost. Gains or losses resulting from the retirement or disposal of assets are recognized as a component of operating income. Generally, property, plant and equipment are depreciated on a straight-line basis over the average useful lives of the assets with the exception of large marine equipment, which is computed using units-of-production.

Aggregate mining development costs are capitalized and classified as land improvements and depreciated over the lower of the estimated life of the reserves or the life of the associated improvement. The Company begins capitalizing development costs at a point when reserves are determined to be proven or probable and economically mineable. Capitalization of these costs ceases when production commences. The cost of acquiring reserves in connection with a business combination are valued at fair value. Aggregate reserves, from both owned and leased mining sites, are a component within property, plant and equipment and are depleted using the units-of-production method. The Company uses proven and probable aggregate reserves as the denominator in its units-of production calculation. Exploration costs are expensed as incurred in cost of revenue and production costs are either expensed or capitalized to inventory.

Impairment of long-lived assets, excluding goodwill

The Company reviews the carrying values of its long-lived assets, including mining and related assets, whenever events or changes in circumstances indicate that such carrying values may not be recoverable. The Company tests long-lived assets for impairment at a level significantly lower than that of goodwill impairment testing. Long-lived assets or groups of assets that are evaluated for impairment at the lowest level of largely independent identifiable cash flows at an individual operation or group of operations collectively serving a local market. The determination of whether an impairment has occurred is based on an estimate of undiscounted future cash flows attributable to the assets, compared to the carrying value of the assets. If impairment has occurred, the amount of the impairment recognized is determined by estimating the fair value of the assets and recording a loss if the carrying value is greater than the fair value.

During the year ended December 31, 2023, the Company performed impairment testing on assets where triggering events were identified due to recent operating results or changes in plans with the asset groups. The undiscounted cash flows on an asset group with a net asset book value of $65 million indicated it was recoverable and not impaired. However, the Company recognized long-lived asset impairments of $5.8 million (before tax) in selling, general and administrative expenses on the Consolidated Statements of Operations as a result of certain other aggregate sites no longer being economically feasible to mine and having no remaining value. The impaired

assets are included as part of the Pacific and Northwest reportable segments. No impairment losses were recorded in 2022 or 2021.

Goodwill

Goodwill represents the excess of the purchase price over the fair value of identifiable net tangible and intangible assets acquired in a business combination. Goodwill is required to be tested for impairment annually, which the Company completes in the fourth quarter, or more frequently if events or changes in circumstances indicate that goodwill may be impaired.

The Company has determined that the reporting units for its goodwill impairment test are its operating segments as they constitute a business for which discrete financial information is available and for which management regularly reviews the operating results. For more information on the Company’s operating segments, see Note 15. Goodwill impairment, if any, is measured by comparing the fair value of each reporting unit to its carrying value. If the fair value of a reporting unit exceeds its carrying value, the goodwill of the reporting unit is not impaired. If the carrying value of a reporting unit exceeds its fair value, the Company must record an impairment loss for the amount that the carrying value of the reporting unit, including goodwill, exceeds the fair value of the reporting unit. For the years ended December 31, 2023, 2022 and 2021, there were no impairment losses recorded. The Company performed its annual goodwill impairment test in the fourth quarter of 2023 and determined the fair value of each of Knife River’s reporting units substantially exceeded the carrying value at October 31, 2023.

The Company uses a weighted average combination of both an income approach and a market approach to estimate the fair value of its reporting units for its goodwill impairment analysis. Determining the fair value of a reporting unit requires judgment and the use of significant estimates, which include assumptions about Knife River’s future revenue, profitability and cash flows, amount and timing of estimated capital expenditures, inflation rates, weighted average cost of capital, operational plans, and current and future economic conditions, among others. Knife River believes that the estimates and assumptions used in its impairment assessments are reasonable and based on available market information.

Investments

The Company’s investments include the cash surrender value of life insurance policies and insurance contracts. The Company measures its investment in the insurance contracts at fair value with any unrealized gains and losses recorded on the Consolidated Statements of Operations.

Government Assistance

The Company accounts for government assistance received for capital projects by reducing the cost of the project by the amount of assistance received. The Company records government assistance received as taxable income and writes-up the tax basis of the asset to include the amount of the assistance received.

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

Joint Ventures

The Company accounts for unconsolidated joint ventures using either the equity method or proportionate consolidation. As of December 31, 2023, the Company held an interest of 25 percent in a joint venture formed primarily for the purpose of pooling resources on construction contracts. Proportionate consolidation is used for joint ventures that include unincorporated legal entities and activities of the joint venture which are construction-related. For those joint ventures accounted for under proportionate consolidation, only the Company’s pro rata share of assets, liabilities, revenues and expenses are included in the Company’s Consolidated Balance Sheets and Consolidated Statements of Operations.

For those joint ventures accounted for using proportionate consolidation, the Company recorded in its Consolidated Statements of Operations $4.9 million, $9.1 million, and $10.1 million of revenue for the years ended December 31, 2023, 2022 and 2021, respectively. The Company also reported an operating loss of $1.9 million for the year ended December 31, 2023, and operating income of $823,000 and $1.3 million for the years ended December 31, 2022 and 2021, respectively. As of December 31, 2023, 2022 and 2021, the Company had interest in assets from these joint ventures of $45,000, $912,000 and $643,000, respectively.

For joint ventures accounted for under the equity method, the Company’s investment balances for the joint ventures are included in Investments in the Consolidated Balance Sheets and the Company’s pro rata share of net income is included in Other income in the Consolidated Statements of Operations. The Company’s investments in equity method joint ventures were a net asset of $68,000 and $13,000 for December 31, 2023 and 2022, respectively. In 2023, 2022 and 2021, the Company recognized income (loss) from equity method joint ventures of $55,000, $(426,000) and $14,000, respectively.

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

Lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected lease term. The Company recognizes leases with an original lease term of 12 months or less in income on a straight-line basis over the term of the lease and does not recognize a corresponding right-of-use asset or lease liability. The Company determines the lease term based on the non-cancelable and cancelable periods in each contract. The non-cancelable period consists of the term of the contract that is legally enforceable and cannot be canceled by either party without incurring a significant penalty. The cancelable period is determined by various factors that are based on who has the right to cancel a contract. If only the lessor has the right to cancel the contract, the Company will assume the contract will continue. If the lessee is the only party that has the right to cancel the contract, the Company looks to asset, entity and market-based factors. If both the lessor and the lessee have the right to cancel the contract, the Company assumes the contract will not continue.

The discount rate used to calculate the present value of the lease liabilities is based upon the implied rate within each contract. If the rate is unknown or cannot be determined, the Company uses an incremental borrowing rate, which is determined by the length of the contract, asset class and the Company’s borrowing rates, as of the commencement date of the contract.

Insurance

Knife River’s wholly-owned captive insurance company, Spring Creek Insurance Company, which is subject to applicable insurance rules and regulations, insures the Company’s exposure related to workers’ compensation, general liability and automobile liability on a primary basis. Knife River also purchases excess coverage from unrelated insurance carriers and obtains third-party coverage for other forms of insurance including, but not limited to, excess liability, contractor’s pollution liability, marine liability, directors and officers liability and employment practices liability.

Spring Creek Insurance Company establishes a reserve for estimated ultimate losses on reported claims and those incurred but no yet reported utilizing actuarial projections. The reserves are classified within Other accrued liabilities or Noncurrent liabilities - other on the Consolidated Balance Sheets based on projections of when the estimated loss will be paid. The estimates that are utilized to record potential losses on claims are inherently subjective, and actual claims could differ from amounts recorded, which could result in increased or decreased expense in future periods.

Additionally, Knife River maintains a self-insurance reserve for health insurance programs offered to eligible employees, included within Other accrued liabilities on the Consolidated Balance Sheets. The reserve includes an estimate for losses on reported claims as well as for amounts incurred but not yet reported, based on historical trends.

Asset retirement obligations

The Company records the fair value of a liability for an asset retirement obligation in the period in which it is incurred. When the liability is initially recorded, the Company capitalizes a cost by increasing the carrying amount of the related long-lived asset. Over time, the liability is accreted to its present value each period and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the liability, the Company either settles the obligation for the recorded amount or incurs a gain or loss.

Earnings per share

The calculation for basic and diluted earnings per share for any period presented prior to the Separation have been retrospectively adjusted to the number of shares outstanding on May 31, 2023, the Separation and Distribution date. For periods prior to the Separation, it is assumed that there are no dilutive equity instruments as there were no Knife River stock-based awards outstanding at the time.

Basic earnings per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the applicable period. Diluted earnings per share is computed by dividing net income by the total of the weighted average number of shares of common stock outstanding during the applicable period, plus the effect of non-vested restricted stock units. Weighted average common shares outstanding is comprised of issued shares of 57,009,542 less shares held in treasury of 431,136, as described in Note 11. Basic and diluted earnings per share are calculated as follows, based on a reconciliation of the weighted-average common shares outstanding on a basic and diluted basis:


	2023		2022		2021
	(In thousands, except per share amounts)
Net income	$	182,872	$	116,220	$	129,755
Weighted average common shares outstanding - basic	56,568		56,566		56,566
Effect of dilutive restricted stock units	100		—		—
Weighted average common shares outstanding - diluted	56,668		56,566		56,566
Shares excluded from the calculation of diluted earnings per share	—		—		—
Net income per share - basic	$	3.23	$	2.05	$	2.29
Net income per share - diluted	$	3.23	$	2.05	$	2.29

Stock-based compensation

Prior to the Separation, key employees of the Company participated in various stock-based compensation plans authorized and managed by MDU Resources. All awards granted under the plans were based on MDU Resources’ common shares, however, Knife River recognized the expense for its participants in its financial statements.

At the time of the Separation, each outstanding MDU Resources’ time-vested restricted stock unit and performance share awards held by a Knife River employee was converted into Knife River time-vested restricted stock units. The converted awards will continue to vest over the original vesting period, which is generally three years from the grant date. All performance share awards that were converted at the time of the Separation were first adjusted using a combined performance factor based on MDU Resources’ actual performance as of December 31, 2022. The number of restricted stock units was determined by taking the closing per share price of MDU Resources on May 31, 2023, and dividing by the closing per share price of Knife River on June 1, 2023. The ratio used to convert the MDU Resources’ share-based awards was designed to preserve the aggregate intrinsic value of the award immediately after the Separation when compared to the aggregate intrinsic value of the award immediately

prior to the Separation. The existing unvested stock-based awards issued through MDU Resources’ stock-based compensation plans were modified in connection with the Separation to maintain an equivalent value immediately before and after Separation. Incremental fair value for unvested awards will be recorded over the remaining vesting periods.

In July 2023, the Company issued restricted stock units to certain key employees under the Knife River Long-Term Incentive Plan. The Company records the compensation expense for restricted stock units using a straight-line amortization method over the requisite service period. The cost for such awards is measured at the grant date fair value. The Company recognizes forfeitures as they occur and trues up expense on a cumulative catch-up basis at the time of any forfeitures.

Income taxes

Knife River and its subsidiaries file consolidated federal income tax returns and combined and separate state income tax returns. Pursuant to the tax sharing agreement that exists between Knife River and its subsidiaries, federal income taxes paid by Knife River, as parent of the consolidated group, are allocated to the individual subsidiaries based on separate company computations of tax. However, all income tax expense is reported within the Corporate Services segment. Knife River makes a similar allocation for state income taxes paid in connection with combined state filings.

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

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

Disaggregation of Revenue

12 Months Ended

Dec. 31, 2023

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

In the following table, revenue is disaggregated by category for each reportable segment. The Company believes this level of disaggregation best depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. For more information on the Company’s reportable segments, see Note 15.

Presented in the following tables are the sales of materials to both third parties and internal customers. Due to consolidation requirements, the internal sales revenues must be eliminated against the construction materials product

used in the contracting services to arrive at the external operating revenues. Due to the restructuring of segments the 2022 and 2021 information has been recast.


Year ended December 31, 2023	Pacific		Northwest		Mountain		Central		Energy Services		Corporate Services		Total
	(In thousands)
Aggregates	$	104,726	$	189,946	$	100,505	$	152,691	$	—	$	—	$	547,868
Ready-mix concrete	142,291		163,382		120,534		227,735		—		—		653,942
Asphalt	32,178		103,327		112,897		204,018		—		—		452,420
Liquid asphalt	—		—		—		—		253,196		—		253,196
Other	142,742		15,751		16		28,745		49,363		12,414		249,031
Contracting services publicsector	71,362		197,372		308,711		426,318		—		—		1,003,763
Contracting services privatesector	54,978		103,011		124,282		21,276		—		—		303,547
Internal sales	(86,115)		(109,108)		(133,328)		(235,875)		(57,373)		(11,618)		(633,417)
Revenues from contracts with customers	$	462,162	$	663,681	$	633,617	$	824,908	$	245,186	$	796	$	2,830,350


Year ended December 31, 2022	Pacific		Northwest		Mountain		Central		Energy Services		Corporate Services		Total
	(In thousands)
Aggregates	$	92,266	$	171,633	$	83,343	$	149,419	$	—	$	—	$	496,661
Ready-mix concrete	127,569		157,951		106,654		217,335		—		—		609,509
Asphalt	35,735		97,299		93,263		201,171		—		—		427,468
Liquid asphalt	—		—		—		—		207,474		—		207,474
Other	114,079		14,844		36		24,956		45,245		618		199,778
Contracting services publicsector	81,989		173,981		249,573		412,487		—		—		918,030
Contracting services privatesector	47,497		88,713		119,136		14,345		—		—		269,691
Internal sales	(81,105)		(105,647)		(110,095)		(242,563)		(54,006)		(466)		(593,882)
Revenues from contracts with customers	$	418,030	$	598,774	$	541,910	$	777,150	$	198,713	$	152	$	2,534,729


Year ended December 31, 2021	Pacific		Northwest		Mountain		Central		Energy Services		Corporate Services		Total
	(In thousands)
Aggregates	$	89,913	$	135,182	$	72,567	$	146,348	$	—	$	—	$	444,010
Ready-mix concrete	123,905		152,079		100,412		207,993		—		—		584,389
Asphalt	26,348		78,937		69,310		165,251		—		—		339,846
Liquid asphalt	—		—		—		—		166,052		—		166,052
Other	104,804		12,786		91		22,807		37,714		4		178,206
Contracting services publicsector	83,013		118,970		211,603		363,172		—		—		776,758
Contracting services privatesector	44,603		68,171		112,058		15,881		—		—		240,713
Internal sales	(75,837)		(91,184)		(86,498)		(200,681)		(46,844)		—		(501,044)
Revenues from contracts with customers	$	396,749	$	474,941	$	479,543	$	720,771	$	156,922	$	4	$	2,228,930

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 9
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-9

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 10
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-10

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 15
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-15

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-12

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-12

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-12

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-12

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Subparagraph (e)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-12

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Subparagraph (b)(2)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-13

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Name Accounting Standards Codification
-Topic 606
-Publisher FASB
-URI https://asc.fasb.org//606/tableOfContent

+ Details

Uncompleted Contracts

12 Months Ended

Dec. 31, 2023

Revenue from Contract with Customer [Abstract]

Uncompleted Contracts

Costs, estimated earnings, and billings on uncompleted contracts at December 31 are summarized as follows:


	2023		2022
	(In thousands)
Costs incurred on uncompleted contracts	$	1,395,603	$	1,217,480
Estimated earnings	208,926		153,317
	1,604,529		1,370,797
Less billings to date	(1,628,612)		(1,379,495)
Net contract liability	$	(24,083)	$	(8,698)

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.

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


	2023		2022		Change		Location on Consolidated Balance Sheet
	(In thousands)
Contract assets	$	27,293	$	31,145	$	(3,852)	Costs and estimated earnings in excess of billings on uncompleted contracts
Contract liabilities	(51,376)		(39,843)		(11,533)		Billings in excess of costs and estimated earnings on uncompleted contracts
Net contract liabilities	$	(24,083)	$	(8,698)	$	(15,385)


	2022		2021		Change		Location on Consolidated Balance Sheet
	(In thousands)
Contract assets	$	31,145	$	22,005	$	9,140	Costs and estimated earnings in excess of billings on uncompleted contracts
Contract liabilities	(39,843)		(32,348)		(7,495)		Billings in excess of costs and estimated earnings on uncompleted contracts
Net contract liabilities	$	(8,698)	$	(10,343)	$	1,645

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

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

Remaining performance obligations

The remaining performance obligations, also referred to as backlog, 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. The majority of the Company’s contracts for contracting services have an original duration of less than one year.

At December 31, 2023, the Company’s remaining performance obligations were $662.2 million. The Company expects to recognize the following revenue amounts in future periods related to these remaining performance obligations: $610.8 million within the next 12 months; $37.1 million within the next 13 to 24 months; and $14.3 million thereafter.

Property, Plant and Equipment

12 Months Ended

Dec. 31, 2023

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

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


	2023		2022		Weighted Average Depreciable Life in Years
	(In thousands)
Land	$	154,475	$	150,809	—
Aggregate reserves	589,034		592,097		*
Buildings and improvements	216,473		165,833		22.32
Machinery, vehicles and equipment	1,590,908		1,492,506		11.68
Construction in progress	28,844		88,163		—
Less: accumulated depreciation and depletion	1,264,687		1,174,195
Net property, plant and equipment	$	1,315,047	$	1,315,213

__________________

*Depleted on the units-of-production method based on proven and probable aggregate reserves.

Total depreciation and depletion expense was $119.2 million, $113.6 million and $93.9 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

In the fourth quarter of 2023, in connection with the reorganization of the Company’s reporting structure, a portion of the Pacific reporting unit’s businesses were reorganized into the Energy Services reporting unit. As a result of the reorganization, the Company reallocated $5.7 million of the goodwill balance associated with the Pacific reporting unit to the Energy Services reporting unit based on the relative fair values of the Pacific reporting unit components. The estimated fair values were determined using the income approach. The Company reassessed the goodwill in connection with the reorganization and determined there was no impairment.

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


	Balance at January 1, 2023		Goodwill Acquired During the Year		Measurement Period Adjustments		Reallocation of Goodwill		Balance at December 31, 2023
	(In thousands)
Pacific	$	38,339	$	—	$	(62)	$	(5,656)	$	32,621
Northwest	90,978		—		—		—		90,978
Mountain	26,816		—		—		—		26,816
North Central	75,879		—		—		—		75,879
South	38,708		—		—		—		38,708
Energy Services	3,820		—		—		5,656		9,476
Total	$	274,540	$	—	$	(62)	$	—	$	274,478


	Balance at January 1, 2022		Goodwill Acquired During the Year		Measurement Period Adjustments		Reallocation of Goodwill		Balance at December 31, 2022
	(In thousands)
Pacific	$	38,101	$	238	$	—	$	—	$	38,339
Northwest	93,102		—		(2,124)		—		90,978
Mountain	26,816		—		—		—		26,816
North Central	75,879		—		—		—		75,879
South	38,708		—		—		—		38,708
Energy Services	3,820		—		—		—		3,820
Total	$	276,426	$	238	$	(2,124)	$	—	$	274,540

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


	Average Useful Life In Years	2023		2022
		(In thousands)
Customer relationships	2-7	$	18,540	$	18,540
Less accumulated amortization		9,102		7,367
		9,438		11,173
Noncompete agreements	1-3	4,039		4,039
Less accumulated amortization		3,473		2,985
		566		1,054
Other	15-20	2,479		5,279
Less accumulated amortization		1,662		4,076
		817		1,203
Total		$	10,821	$	13,430

Amortization expense for amortizable intangible assets for the years ended December 31, 2023, 2022 and 2021, was $2.6 million, $2.8 million and $2.6 million, respectively. Estimated amortization expense for identifiable intangible assets as of December 31, 2023, was:


	2024	2025	2026	2027	2028	Thereafter
	(In thousands)
Amortization expense	$2,228	$1,919	$1,739	$1,716	$1,672	$1,547

Fair Value Measurements

12 Months Ended

Dec. 31, 2023

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. The fair value guidance establishes a hierarchy for grouping assets and liabilities, based on the significance of inputs. The estimated fair values of the Company’s assets and liabilities measured on a recurring basis are determined using the market approach.

Financial Instruments Measured at Fair Value on a Recurring Basis

The Company measures its investments in certain fixed-income and equity securities at fair value with changes in fair value recognized in income. The Company anticipates using these investments, which consist of insurance contracts, to satisfy its obligations under its unfunded, nonqualified defined benefit and defined contribution plans for the Company’s executive officers and certain key management employees, and invests in these fixed-income and

equity securities for the purpose of earning investment returns and capital appreciation. These investments, which totaled $24.9 million and $20.1 million as of December 31, 2023 and 2022, respectively, are classified as investments on the Consolidated Balance Sheets. The net unrealized gains on these investments for the years ended December 31, 2023 and 2021, were $1.9 million and $1.4 million, respectively. The net unrealized losses on these investments for the year ended December 31, 2022, were $2.8 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 Operations.

As part of the Separation, the Company retired certain insurance contracts used to satisfy its obligations under its unfunded, nonqualified defined contribution plan for the Company's executive officers and certain key management employees. The proceeds of the retired contracts totaled $5.3 million, which were used to purchase life insurance policies and re-invested in fixed-income and equity securities in the fourth quarter of 2023.

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


	Fair Value Measurements at December 31, 2023, Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at December 31, 2023
	(In thousands)
Assets:
Money market funds	$	—	$	3,241	$	—	$	3,241
Insurance contracts*	—		24,896		—		24,896
Total assets measured at fair value	$	—	$	28,137	$	—	$	28,137

__________________

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


	Fair Value Measurements at December 31, 2022, Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at December 31, 2022
	(In thousands)
Assets:
Money market funds	$	—	$	2,448	$	—	$	2,448
Insurance contracts*	—		20,083		—		20,083
Total assets measured at fair value	$	—	$	22,531	$	—	$	22,531

__________________

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

The Company’s Level 2 money market funds are valued at the net asset value of shares held at the end of the period, based on published market quotations on active markets, or using other known sources including pricing from outside sources. The estimated fair value of the Company’s Level 2 insurance contracts are based on contractual cash surrender values that are determined primarily by investments in managed separate accounts of the insurer. These amounts approximate fair value. The managed separate accounts are valued based on other observable inputs or corroborated market data.

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.

Nonfinancial Instruments Measured at Fair Value on a Nonrecurring Basis

The Company applies the provisions of the fair value measurement standard to its nonrecurring, non-financial measurements, including long-lived asset impairments. These assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances. The Company reviews the carrying value of its long-lived assets, excluding goodwill, whenever events or changes in circumstances indicate that such carrying amounts may not be recoverable.

The Company's long-term debt is not measured at fair value on the Consolidated Balance Sheets and the fair value is being provided for disclosure purposes only. The fair value was categorized as Level 2 in the fair value hierarchy and was based on discounted cash flows using current market interest rates. The estimated fair value of the Company's Level 2 long-term debt was as follows:


	December 31, 2023
	(In thousands)
Carrying amount	$	696,985
Fair value	$	725,086

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

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Debt

12 Months Ended

Dec. 31, 2023

Debt Disclosure [Abstract]

Debt

Certain debt instruments of the Company contain restrictive and financial covenants and cross-default provisions. In order to borrow under the debt instruments, the Company must be in compliance with the applicable covenants and certain other conditions, all of which management believes the Company, as applicable, was in compliance with at December 31, 2023. In the event the Company does not comply with the applicable covenants and other conditions, it would be in default on its agreements and alternative sources of funding may need to be pursued.

Long-term Debt Outstanding Long-term debt outstanding was as follows:


	Weighted Average Interest Rate at December 31, 2023		December 31, 2023
			(In thousands)
Term loan agreement due on May 31, 2028	7.24	%	$	271,562
Senior notes due on May 1, 2031	7.75	%	425,000
Other notes due on January 1, 2061	—	%	423
Less unamortized debt issuance costs			15,326
Total long-term debt			681,659
Less current maturities			7,082
Net long-term debt			$	674,577

Senior Notes

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

Term Loan and Revolving Credit Facility

On May 31, 2023, the Company entered into a five-year secured credit agreement, which provides for a $275.0 million term loan and a $350.0 million revolving credit facility. As of December 31, 2023, the Company had no borrowings outstanding under the revolving credit facility and had a borrowing capacity of $329.0 million under the revolving credit facility, which is net of $21.0 million of outstanding letters of credit.

The secured credit agreement bears interest equal to, at the Company’s option, either (i) a base rate determined by reference to the highest of (a) the prime rate, (b) the federal funds rate plus 0.50 percent, and (c) SOFR plus 1.10 percent, plus an applicable margin of 0.75 percent to 1.50 percent, based upon the Company’s leverage ratio, for base rate loans or (ii) a SOFR rate determined by the interest period relevant to such borrowing plus an applicable margin of 1.75 percent to 2.50 percent, based upon the Company’s leverage ratio. The Company will incur a quarterly commitment fee on the undrawn portion of the revolving credit facility of 0.25 percent to 0.50 percent, based on the Company’s leverage ratio.

The term loan has a mandatory annual amortization of 2.50 percent for years one and two, 5.00 percent for years three and four, and 7.50 percent in the fifth year. The agreement contains customary covenants and provisions, including a covenant of Knife River not to permit, at any time, the ratio of total debt to trailing twelve month Adjusted EBITDA, as defined by the agreement, to be greater than 4.75 to 1.00. The agreement also contains an interest coverage ratio covenant stating that Knife River’s trailing twelve month Adjusted EBITDA, as defined by the agreement, to interest expense is to be no less than 2.25 to 1.00. The covenants also include restrictions on the sale of certain assets, loans and investments.

Schedule of Debt Maturities Long-term debt maturities, which excludes unamortized debt issuance costs, for the five years and thereafter following December 31, 2023, were as follows:


	2024		2025		2026		2027		2028		Thereafter
	(In thousands)
Long-term debt maturities	$	7,082	$	10,520	$	13,759	$	17,187	$	223,437	$	425,000

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1B
-Subparagraph (h)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 235
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(c))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1

Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
-Topic 470
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org//470/tableOfContent

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1B
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
-Section 50
-Paragraph 1B
-Subparagraph (g)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
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-Name Accounting Standards Codification
-Section 50
-Paragraph 1B
-Subparagraph (i)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
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-Name Accounting Standards Codification
-Section 50
-Paragraph 1C
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
-Section 50
-Paragraph 1E
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1E

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
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-Name Accounting Standards Codification
-Section 50
-Paragraph 1I
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
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-Section 50
-Paragraph 1I
-Subparagraph (b)
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-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1I
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I

+ Details

Leases

12 Months Ended

Dec. 31, 2023

Leases [Abstract]

Leases

Most of the leases the Company enters into are for equipment, buildings and vehicles as part of their ongoing operations. The Company determines if an arrangement contains a lease at inception of a contract and accounts for all leases in accordance with ASC 842 - Leases.

Lessee accounting

The leases the Company has entered into as part of its ongoing operations are considered operating leases and are recognized on the Consolidated Balance Sheets as operating lease right-of-use assets, current operating lease liabilities and noncurrent operating lease liabilities. The corresponding lease costs are included in cost of revenue and selling, general and administrative expenses on the Consolidated Statements of Operations.

Generally, the leases for vehicles and equipment have a term of five years or less and buildings have a longer term of up to 35 years or more. To date, the Company does not have any residual value guarantee amounts probable of being owed to a lessor, financing leases or material agreements with related parties.

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


	2023		2022		2021
	(In thousands)
Lease costs:
Operating lease cost	$	18,199	$	17,941	$	21,914
Variable lease cost	383		98		84
Short-term lease cost	53,987		55,871		53,016
Total lease costs	$	72,569	$	73,910	$	75,014


	2023			2022
	(Dollars in thousands)
Weighted average remaining lease term	1.62 years			2.03 years
Weighted average discount rate	5.13		%	4.05		%
Cash paid for amounts included in the measurement of lease liabilities	$	18,199		$	17,941

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	$	14,128
2025	10,286
2026	7,207
2027	5,115
2028	3,174
Thereafter	13,329
Total	53,239
Less discount	8,533
Total operating lease liabilities	$	44,706

Asset Retirement Obligations

12 Months Ended

Dec. 31, 2023

Asset Retirement Obligation Disclosure [Abstract]

Asset Retirement Obligations

The Company has asset retirement obligations, which are liabilities associated with its legally required obligations to reclaim owned and leased aggregate properties, asphalt plant sites, ready-mix plant sites and other properties. For the years ended December 31, 2023 and 2022, the current portion of the Company’s liability, which is included in other accrued liabilities, was $6.9 million and $4.4 million, respectively, and the noncurrent amount, which is included in other liabilities, was $34.9 million and $33.0 million, respectively. Total accretion and depreciation expenses for the years ended December 31, 2023, 2022 and 2021, were $2.6 million, $2.1 million and $2.1 million, respectively, and are included in cost of revenue on the Consolidated Statements of Operations. A reconciliation of the Company’s liability for the years ended December 31 was as follows:


	2023		2022
	(In thousands)
Balance at beginning of year	$	37,361	$	33,406
Liabilities incurred	5,190		4,657

Liabilities settled	(2,726)		(2,117)
Accretion expense	1,957		1,415
Balance at end of year	$	41,782	$	37,361

Equity	12 Months Ended
Equity	Dec. 31, 2023
Equity [Abstract]
Equity	Equity On May 31, 2023, the Company issued 56,997,350 shares of common stock with a par value of $0.01 in connection with the Separation. The Company historically held 538,921 shares of MDU Resources common stock through one of its subsidiaries. The historical shares are presented as MDU Resources’ stock held by subsidiary on the Consolidated Statements of Equity. In connection with the Separation, Knife River entered into an agreement with MDU Resources to transfer the stock of MDU Resources held by its subsidiary to MDU Resources in exchange for 431,136 shares of Knife River common stock. The number of shares transferred to Knife River was based on the value of the stock at the time of the Separation. The historical MDU Resources common stock held by the subsidiary at cost of $3.6 million at December 31, 2023, on the Consolidated Balance Sheets reflects the value of the MDU Resources common stock at the time it was granted to Knife River’s subsidiary. The 431,136 shares of Knife River common stock are presented as Treasury stock held at cost in the Consolidated Balance Sheet and reduce the number of common stock shares outstanding.

- Definition

The entire disclosure for equity.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-13

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
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-Subparagraph (h)
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-URI https://asc.fasb.org//1943274/2147481112/505-10-50-13

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
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-Name Accounting Standards Codification
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-Paragraph 14
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-14

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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-SubTopic 235
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481062/946-235-50-2

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
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-Name Accounting Standards Codification
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-Paragraph 2
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481062/946-235-50-2

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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-Paragraph 6
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-URI https://asc.fasb.org//1943274/2147481004/946-505-50-6

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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-Paragraph 6
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480237/815-40-50-6

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.3-04)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480008/505-10-S99-1

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 235
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-Name Accounting Standards Codification
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-Paragraph 1
-Subparagraph (SX 210.4-08(e)(1))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1

Reference 10: http://fasb.org/us-gaap/role/ref/legacyRef
-Topic 505
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org//505/tableOfContent

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
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-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-13

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
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-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Subparagraph (g)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-13

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Subparagraph (i)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-13

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
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-Name Accounting Standards Codification
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-Publisher FASB
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Reference 15: http://www.xbrl.org/2003/role/disclosureRef
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Reference 16: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
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Reference 17: http://www.xbrl.org/2003/role/disclosureRef
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-URI https://asc.fasb.org//1943274/2147481112/505-10-50-18

Reference 18: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
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-Subparagraph (b)
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-URI https://asc.fasb.org//1943274/2147481112/505-10-50-18

Reference 19: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
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-Section 50
-Paragraph 18
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-18

+ Details

Stock-Based Compensation

12 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

Prior to the Separation, key employees of the Company participated in various stock-based compensation plans authorized and managed by MDU Resources. All awards granted under the plans were based on MDU Resources’ common shares, however, Knife River recognized the expense for its participants in its financial statements.

At the time of Separation, all outstanding stock-based compensation shares of MDU Resources were converted into Knife River restricted stock units. Restricted stock units are valued based on the closing stock price on the grant date. The conversion of the stock and the fair value of the awards was determined using the policies described in Note 2. As a result of the modification, Knife River incurred $194,000 of incremental compensation expense related to the conversion of only the restricted stock units, which is being recognized over the remaining service periods of the applicable awards. There was no incremental compensation expense incurred related to the performance share awards.

The Company has a stock-based compensation plan under which it is currently authorized to grant 2.5 million restricted stock units and other stock awards. As of December 31, 2023, there were 2.4 million shares available to grant under this plan. The Company either purchases shares on the open market or issues new shares of common stock to satisfy the vesting of stock-based awards.

Total stock-based compensation expense (after tax) was $2.7 million, $1.2 million and $1.4 million in 2023, 2022 and 2021, respectively. The Company uses the straight-line amortization method to recognize compensation expense related to restricted stock units, which only has a service condition. As of December 31, 2023, total remaining unrecognized compensation expense related to the restricted stock units was approximately $5.0 million (before income taxes), which will be amortized over a weighted average period of 1.8 years.

Stock Awards

Non-employee directors receive shares of common stock in addition to and in lieu of cash payments for directors’ fees. There were 12,192 shares with a fair value of $702,000 issued to non-employee directors during the year ended December 31, 2023.

Restricted stock units

In February 2023, 2022 and 2021, key employees of the Company were granted restricted stock units under MDU Resources’ long-term performance-based incentive plan authorized by MDU Resources’ compensation committee. The compensation committee has the authority to select the recipients of awards, determine the type and size of awards, and establish certain terms and conditions of award grants. The shares vest over three years, contingent on continued employment. Compensation expense is recognized over the vesting period. As previously discussed, the outstanding restricted stock awards granted to Knife River employees were converted to restricted

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

In July 2023, key employees of the Company were granted restricted stock units under Knife River’s long-term performance-based incentive plan authorized by the Company’s compensation committee. The compensation committee has the authority to select the recipients of awards, determine the type and size of awards, and establish certain terms and conditions of award grants. The shares vest over three years, contingent on continued employment. Compensation expense is recognized over the vesting period.

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


Grant Date	Service Period	Number of Shares	Weighted Average Grant-Date Fair Value
May 2023	2022-2024	66,887	$	36.60
May 2023	2023-2025	82,680	$	36.60
July 2023	2023-2025	71,650	$	43.00

Historical performance share awards

In February 2022 and 2021, key employees of the Company were granted performance share awards under MDU Resources’ long-term performance-based incentive plan authorized by MDU Resources’ compensation committee. The compensation committee has the authority to select the recipients of awards, determine the type and size of awards, and establish certain terms and conditions of award grants. Share awards are generally earned over a three-year vesting period and tied to specific financial metrics. Upon vesting, participants may receive dividends that accumulate during the vesting period. Share awards were generally earned over a three-year vesting period and tied to financial metrics. However, as previously discussed, the outstanding performance share awards of Knife River employees were converted to restricted stock units of Knife River in connection with the Separation.

Under the market condition for these performance share awards, participants may earn from zero to 200 percent of the apportioned target grant of shares based on MDU Resources’ total stockholder return relative to that of the selected peer group. Compensation expense was based on the grant-date fair value as determined by Monte Carlo simulation. The blended volatility term structure ranges are comprised of 50 percent historical volatility and 50 percent implied volatility. Risk-free interest rates were based on U.S. Treasury security rates in effect as of the grant date. Assumptions used for grants applicable to the market condition for certain performance shares issued in 2022 and 2021 were:


	2022					2021
Weighted average grant date fair value	$36.25					$37.96
Blended volatility range	24.07	%	-	31.41	%	35.37	%	-	46.35	%
Risk-free interest rate range	0.71	%	-	1.68	%	0.02	%	-	0.20	%
Weighted average discounted dividends per share	$2.93					$3.16

Under the performance conditions for these performance share awards, participants may earn from zero to 200 percent of the apportioned target grant of shares. The performance conditions were based on MDU Resources’ compound annual growth rate in earnings from continuing operations. The weighted average grant-date fair value per share for the performance shares applicable to these performance conditions issued in 2022 and 2021 was $27.73 and $27.35, respectively. The fair value of the performance shares that vested during the years ended December 31, 2022 and 2021, was $962,000 and $1.7 million, respectively.

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


	Performance Share Awards			Restricted Stock Units
	Number of Shares	Weighted Average Grant-Date Fair Value		Number of Shares	Weighted Average Grant-Date Fair Value
Nonvested at the beginning of period	69,601	$	32.32	23,197	$	27.54
Granted pre-Separation by MDU Resources	—			81,507	$	31.16
Adjustments for performance	(13,261)	$	32.51	—
Forfeited pre-Separation	(4,510)	$	32.29	(4,941)	$	30.06
Nonvested pre-Separation	51,830	$	32.27	99,763	$	30.37
Conversion to Knife River restricted stock units	(51,830)			125,050
Granted post Separation	—			71,650
Vested shares	—			(53,958)
Forfeited post Separation	—			(21,288)
Nonvested at end of period	—			221,217

Accumulated Other Comprehensive Loss

12 Months Ended

Dec. 31, 2023

Equity [Abstract]

Accumulated Other Comprehensive Loss

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

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


	Net Unrealized Loss on Derivative Instruments Qualifying as Hedges		Post-retirement Liability Adjustment		Total Accumulated Other Comprehensive Loss
	(In thousands)
At December 31, 2021	$	(418)	$	(24,072)	$	(24,490)
Other comprehensive income before reclassifications	—		10,935		10,935
Amounts reclassified from accumulated other comprehensive loss	328		875		1,203
Net current-period other comprehensive income	328		11,810		12,138
At December 31, 2022	(90)		(12,262)		(12,352)
Other comprehensive income before reclassifications	—		751		751
Amounts reclassified from accumulated other comprehensive loss	90		192		282
Net current-period other comprehensive income	90		943		1,033
At December 31, 2023	$	—	$	(11,319)	$	(11,319)

The following amounts were reclassified out of accumulated other comprehensive loss into net income. The amounts presented in parentheses indicate a decrease to net income on the Consolidated Statements of Operations. The reclassifications for the years ended December 31 were as follows:


	2023		2022		2021		Location on Consolidated Statements of Income
	(In thousands)
Reclassification adjustment for loss on derivative instruments included in net income	$	(118)	$	(435)	$	(439)	Interest expense
	28		107		107		Income taxes
	(90)		(328)		(332)
Amortization of postretirement liability losses included in net periodic benefit cost	(256)		(1,167)		(1,453)		Other income (expense)
	64		292		363		Income taxes
	(192)		(875)		(1,090)
Total reclassifications	$	(282)	$	(1,203)	$	(1,422)

Cash Flow Information

12 Months Ended

Dec. 31, 2023

Supplemental Cash Flow Information [Abstract]

Cash Flow Information

Cash expenditures for interest and income taxes for the years ended December 31 were as follows:


	2023		2022		2021
	(In thousands)
Interest paid, net	$	54,925	$	28,148	$	19,121
Income taxes paid, net	$	76,689	$	21,186	$	34,784

Noncash investing and financing transactions at December 31 were as follows:


	2023		2022		2021
	(In thousands)
Property, plant and equipment additions in accounts payable	$	12,672	$	13,965	$	15,840
Right-of-use assets obtained in exchange for new operating lease liabilities	$	14,967	$	11,763	$	11,497
Equity contribution from Centennial related to the Separation	$	64,724	$	—	$	—
Equity contribution to MDU Resources for asset/liability transfers related to the Separation	$	(1,537)	$	—	$	—
MDU Resources’ stock issued in connection with a business combination	$	383	$	7,304	$	—
Debt assumed in connection with a business combination	$	—	$	—	$	10
Accrual for holdback payment related to a business combination	$	—	$	70	$	—

Business Segment Data

12 Months Ended

Dec. 31, 2023

Segment Reporting [Abstract]

Business Segment Data

The Company focuses on the vertical integration of its products and services by offering customers a single-source for construction materials and related contracting services. The Company operates in 14 states across the United States. Its operating segments include: Pacific, Northwest, Mountain, North Central, South and Energy Services. The operating segments are used to determine the Company’s reportable segments and are based on the Company’s method of internal reporting and management of the business. There are five reportable segments, four of which are aligned by key geographic areas due to the production of construction materials and related contracting services and one of which is based on product line. The Energy Services segment, which has locations throughout

the Company’s geographic footprint, produces and supplies liquid asphalt and related services. Each segment is led by a segment manager that reports to the Company’s chief operating officer who is also the Company’s chief operating decision maker. The Company’s chief operating decision maker evaluates the performance of the segments and allocates resources to them based on earnings before interest, taxes, depreciation, depletion and amortization.

In the fourth quarter of 2023, the Company completed a reorganization of its reporting structure, which has resulted in changes being made to the management of its business to best align with its strategies. Based on how the chief operating decision maker manages the Company, the reportable segments are: Pacific, Northwest, Mountain, Central and Energy Services. The Company also has the Corporate Services segment. As a result of the reorganization, the liquid asphalt and related services portion of the Pacific segment’s businesses are now reported under the Energy Services segment. In addition, the North Central and South operating regions have been aggregated into one reportable segment, Central. All periods have been recast to conform with the revised presentation.

Each geographic segment offers a vertically integrated suite of products and services, including aggregates, ready-mix concrete, asphalt, and contracting services, while the Energy Services segment produces and supplies liquid asphalt, primarily for use in asphalt road construction, and is a supplier to some of the other segments. Each geographic segment mines, processes, and sells construction aggregates (crushed stone and sand and gravel); produces and sells asphalt; and produces and sells ready-mix concrete as well as vertically integrating its contracting services to support the aggregate based product lines including heavy-civil construction, asphalt and concrete paving, and site development and grading. Although not common to all locations, the geographic segments also sell cement, merchandise and other building materials and related services.

Corporate Services represents the unallocated costs of certain corporate functions, such as accounting, legal, treasury, information technology, human resources; and other corporate expenses that support the operating segments. The Company accounts for intersegment sales and transfers as if the sales or transfers were to third parties. The accounting policies applicable to each segment are consistent with those used in the audited consolidated financial statements.

The information below follows the same accounting policies as described in Note 2. Information on the Company’s segments as of December 31, and for the years then ended was as follows:


	2023		2022		2021
	(In thousands)
External operating revenues:
Pacific	$	462,162	$	418,030	$	396,749
Northwest	663,681		598,774		474,941
Mountain	633,617		541,910		479,543
Central	824,908		777,150		720,771
Energy Services	245,186		198,713		156,922
Corporate Services	796		152		4
Total external operating revenues	$	2,830,350	$	2,534,729	$	2,228,930


	2023		2022		2021
	(In thousands)
Intersegment operating revenues:
Pacific	$	86,115	$	81,105	$	75,837
Northwest	109,108		105,647		91,184
Mountain	133,328		110,095		86,498
Central	235,875		242,563		200,681
Energy Services	57,373		54,006		46,844
Corporate Services	11,618		466		—
Total intersegment operating revenues	$	633,417	$	593,882	$	501,044

EBITDA:
Pacific	$	56,206	$	44,044	$	57,915
Northwest	121,098		103,885		80,624
Mountain	103,142		72,604		65,017
Central	116,653		86,572		81,459
Energy Services	78,124		28,310		31,564
Corporate Services	(53,219)		(28,675)		(23,173)
Total segment EBITDA	$	422,004	$	306,740	$	293,406

Capital expenditures:
Pacific	$	21,512	$	31,462	$	25,154
Northwest	31,653		60,697		278,946
Mountain	25,506		35,098		47,648
Central	39,302		46,574		51,144
Energy Services	4,099		5,651		4,577
Corporate Services	918		2,365		10,055
Total capital expenditures*	$	122,990	$	181,847	$	417,524

Assets:
Pacific	$	432,820	$	408,805	$	384,573
Northwest	781,640		772,159		714,098
Mountain	315,661		293,121		278,608
Central	663,134		607,200		603,008
Energy Services	128,383		138,323		131,244
Corporate Services	278,175		74,711		70,293
Total assets	$	2,599,813	$	2,294,319	$	2,181,824


	2023		2022		2021
	(In thousands)
Property, plant and equipment:
Pacific	$	528,008	$	517,794	$	490,499
Northwest	839,060		813,513		759,482
Mountain	419,537		400,907		369,732
Central	646,929		615,893		594,330
Energy Services	102,844		98,698		93,272
Corporate Services	43,356		42,603		40,383
Less accumulated depreciation and depletion	1,264,687		1,174,195		1,097,388
Net property, plant and equipment	$	1,315,047	$	1,315,213	$	1,250,310

__________________

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

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


	2023		2022		2021
	(In thousands)
Total reportable segment operating revenues	$	3,451,353	$	3,127,993	$	2,729,970
Corporate Services revenue	12,414		618		4
Less:
Elimination of intersegment operating revenues	633,417		593,882		501,044
Total consolidated operating revenues	$	2,830,350	$	2,534,729	$	2,228,930

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


	2023		2022		2021
	(In thousands)
Total assets for reportable segments	$	2,321,637	$	2,219,608	$	2,111,531
Other assets	4,049,800		3,439,435		3,239,393
Less:
Elimination of intercompany receivables and investment in subsidiaries	3,771,624		3,364,724		3,169,100
Total consolidated assets	$	2,599,813	$	2,294,319	$	2,181,824

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


	2023		2022		2021
	(In thousands)
Total EBITDA for reportable segments	$	475,223	$	335,415	$	316,579
Corporate Services EBITDA	(53,219)		(28,675)		(23,173)
Less:
Depreciation, depletion and amortization	123,805		117,798		100,974


Interest expense, net*	52,891		30,121		19,218
Total consolidated income before income taxes	$	245,308	$	158,821	$	173,214

__________________

*Interest expense, net is interest expense net of interest income

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 22
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-22

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 15
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-15

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
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-URI https://asc.fasb.org//1943274/2147482810/280-10-50-31

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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-Paragraph 42
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-42

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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-URI https://asc.fasb.org//1943274/2147482810/280-10-50-32

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
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-Name Accounting Standards Codification
-Section 50
-Paragraph 40
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-40

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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-URI https://asc.fasb.org//280/tableOfContent

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
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-Section 50
-Paragraph 26
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-URI https://asc.fasb.org//1943274/2147482810/280-10-50-26

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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-Paragraph 34
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-34

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
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-Paragraph 41
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-41

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
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-Paragraph 21
-Subparagraph (a)
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-URI https://asc.fasb.org//1943274/2147482810/280-10-50-21

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
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-Name Accounting Standards Codification
-Section 50
-Paragraph 21
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-21

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 32
-Subparagraph (e)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-32

+ Details

Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income tax expense on the Consolidated Statements of Operations for the years ended December 31 was as follows:


	2023		2022		2021
	(In thousands)
Current:
Federal	$	45,746	$	27,293	$	4,270
State	18,296		13,230		6,331
	64,042		40,523		10,601
Deferred:
Income taxes:
Federal	263		1,715		26,793
State	(1,869)		363		6,065
	(1,606)		2,078		32,858
Total income tax expense	$	62,436	$	42,601	$	43,459

Components of deferred tax assets and deferred tax liabilities at December 31 were as follows:


	2023		2022
	(In thousands)
Deferred tax assets:
Deferred compensation/compensation related	$	22,358	$	15,329
Operating lease liabilities	11,468		11,804
Asset retirement obligations	10,862		9,687
Net operating loss/credit carryforward	10,811		12,039
Accrued pension costs	10,556		11,070
Capitalized inventory overheads	7,388		7,260
Other	9,458		8,412
Total deferred tax assets	$	82,901	$	75,601


	2023		2022
	(In thousands)
Deferred tax liabilities:
Basis differences on property, plant and equipment	$	206,507	$	203,099
Intangible assets	12,220		10,975
Operating lease right-of-use-assets	11,468		11,804
Other	16,437		13,488
Total deferred tax liabilities	246,632		239,366
Valuation allowance	10,811		12,039
Net deferred income tax liability	$	(174,542)	$	(175,804)

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

are due to expire in 2024. Changes in tax regulations or assumptions regarding current and future taxable income could require additional valuation allowances in the future.

The following table reconciles the change in the net deferred income tax liability from December 31, 2022, to December 31, 2023, to deferred income tax expense:


	2023		2022
	(In thousands)
Change in net deferred income tax liability from the preceding table	$	(1,262)	$	7,278
Deferred income taxes established due to an acquisition	—		(1,215)
Deferred taxes associated with other comprehensive loss	(344)		(3,985)
Deferred income tax expense for the period	$	(1,606)	$	2,078

Total income tax expense differs from the amount computed by applying the statutory federal income tax rate to income before taxes. The reasons for this difference were as follows:


Years ended December 31,	2023			2022			2021
	Amount		%	Amount		%	Amount		%
	(Dollars in thousands)
Computed tax at federal statutory rate	$	51,515	21.0	$	33,353	21.0	$	36,375	21.0
Increases (reductions) resulting from:
State income taxes, net of federal income tax	12,756		5.2	9,702		6.1	9,429		5.4
Depletion allowance	(2,756)		(1.1)	(2,123)		(1.3)	(1,893)		(1.1)
Other	921		0.4	1,669		1.0	(452)		(0.2)
Total income tax expense	$	62,436	25.5	$	42,601	26.8	$	43,459	25.1

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, and various state and local jurisdictions. The Company is no longer subject to U.S. federal or non-U.S. income tax examinations by tax authorities for years ending prior to 2020. With few exceptions, as of December 31, 2023, the Company is no longer subject to state and local income tax examinations by tax authorities for years ending prior to 2020.

For the years ended December 31, 2023, 2022 and 2021, total reserves for uncertain tax positions were not material. The Company recognizes interest and penalties accrued relative to unrecognized tax benefits in income tax expense.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480990/946-20-50-13

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 235
-SubTopic 10
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-Paragraph 1
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
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-Paragraph 2
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 30
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482603/740-30-50-2

+ Details

Employee Benefit Plans

12 Months Ended

Dec. 31, 2023

Retirement Benefits [Abstract]

Employee Benefit Plans

Pension and other postretirement benefit plans

The Company participates in self-sponsored qualified defined benefit pension plans which are accounted for as single-employer plans and are reflected in the Company’s audited consolidated financial statements. The Company uses a measurement date of December 31 for all its pension and postretirement benefit plans. Prior to 2010, defined benefit pension plan benefits and accruals for the nonunion plan were frozen and on June 30, 2015, the remaining union plan was frozen. These employees were eligible to receive additional defined contribution plan benefits.

Prior to the Separation, the Company participated in a multiple-employer postretirement benefit plan sponsored by MDU Resources. In connection with the Separation, the Company assumed all the obligations and liabilities of Knife River’s employees in that plan, along with all MDU Resources employees that transferred to Knife River as a result of the Separation. Subsequent to the Separation, the postretirement benefit plans in which the Company participates are single employer plans. Employees hired after December 31, 2010 are not eligible for retiree medical

benefits. Effective January 1, 2011, eligibility to receive retiree medical benefits was modified such that eligible employees who attained age 55 with 10 years of continuous, full‐time service by December 31, 2010, will have an option to select one of two retiree medical insurance benefits. All other eligible employees must meet the new eligibility criteria of age 60 and 10 years of continuous, full‐time service at the time they retire. These employees will be eligible for a company funded retiree reimbursement account. Employees hired after December 31, 2014 are not eligible for retiree medical benefits.

In 2012, the Company modified health care coverage for certain retirees. Effective January 1, 2013, post-65 coverage was replaced by a fixed-dollar subsidy for retirees and spouses to be used to purchase individual insurance through a healthcare exchange.

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


	Pension Benefits				Other Postretirement Benefits
	2023		2022		2023		2022
	(In thousands)
Change in benefit obligation:
Benefit obligation at beginning of year	$	33,758	$	44,363	$	14,616	$	19,480
Service cost	—		—		361		522
Interest cost	1,633		1,127		721		514
Plan participants’ contributions	—		—		—		3
Actuarial (gain) loss	477		(9,174)		(346)		(5,319)
Benefits paid	(2,488)		(2,558)		(593)		(584)
Benefit obligation at end of year	33,380		33,758		14,759		14,616
Change in net plan assets:
Fair value of plan assets at beginning of year	28,431		39,345		(314)		314
Actual return on plan assets	3,074		(8,356)		321		(473)
Employer contribution	1,170		—		586		426
Plan participants’ contributions	—		—		—		3
Benefits paid	(2,488)		(2,558)		(593)		(584)
Fair value of net plan assets at end of year	30,187		28,431		—		(314)
Funded status - under	$	(3,193)	$	(5,327)	$	(14,759)	$	(14,930)
Amounts recognized in the Consolidated Balance Sheets at December 31:
Other accrued liabilities	$	—	$	—	$	699	$	1,044
Noncurrent liabilities - other	3,193		5,327		14,060		13,886
Benefit obligation liabilities	$	3,193	$	5,327	$	14,759	$	14,930
Amounts recognized in accumulated other comprehensive loss consist of:
Actuarial (gain) loss	$	17,780	$	19,087	$	(2,560)	$	(2,057)
Prior service credit	—		—		(30)		(109)
Total	$	17,780	$	19,087	$	(2,590)	$	(2,166)

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

In 2023, the actuarial loss recognized in the pension benefit obligation was largely the combination of losses resulting from decreased discount rates, offset in part by higher asset gains. The actuarial gain recognized in the other postretirement benefit obligation was largely the combinations of gains due to a decrease in expected claims, offset in part by losses resulting from decreased discount rates. In 2022, the actuarial gain recognized in the benefit obligation was primarily the result of an increase in the discount rate. For more information on the discount rates, see the table below. Unrecognized pension actuarial gains and losses in excess of 10 percent of the greater of the projected benefit obligation or the market-related value of assets are amortized over the average life expectancy of plan participants for frozen plans. The market-related value of assets is determined using a five years average of assets.

The pension plans all have accumulated benefit obligations in excess of plan assets. The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for these plans at December 31, were as follows:


	2023		2022
	(In thousands)
Projected benefit obligation	$	33,380	$	33,758
Accumulated benefit obligation	$	33,380	$	33,758
Fair value of plan assets	$	30,187	$	28,431

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

line basis over the average remaining service period of active participants. These components related to the Company’s pension and other postretirement benefit plans for the years ended December 31, were as follows:


	Pension Benefits						Other Postretirement Benefits
	2023		2022		2021		2023		2022		2021
	(In thousands)
Components of net periodic benefit cost (credit):
Service cost	$	—	$	—	$	—	$	361	$	522	$	567
Interest cost	1,633		1,127		1,053		721		514		492
Expected return on assets	(1,800)		(1,973)		(2,028)		11		(12)		(19)
Amortization of prior service credit	—		—		—		(79)		(79)		(79)
Amortization of actuarial gain (loss)	510		856		971		(175)		351		135
Net periodic benefit cost (credit)	343		10		(4)		839		1,296		1,096
Other changes in plan assets and benefit obligations recognized in accumulated other comprehensive loss:
Net (gain) loss	(797)		1,155		(162)		(678)		(4,833)		(2,763)
Amortization of actuarial gain (loss)	(510)		(856)		(1,108)		175		(351)		(135)
Amortization of prior service credit	—		—		—		79		79		90
Total recognized in accumulated other comprehensive loss	(1,307)		299		(1,270)		(424)		(5,105)		(2,808)
Total recognized in net periodic benefit cost (credit) and accumulated other comprehensive loss	$	(964)	$	309	$	(1,274)	$	415	$	(3,809)	$	(1,712)

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


	Pension Benefits				Other Postretirement Benefits
	2023		2022		2023		2022
Discount rate	4.83	%	5.06	%	4.84	%	5.07	%
Expected return on plan assets	6.50	%	6.50	%	—	%	6.00	%
Rate of compensation increase	N/A		N/A		4.00	%	3.00	%

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


	Pension Benefits				Other Postretirement Benefits
	2023		2022		2023		2022
Discount rate	5.06	%	2.62	%	5.06	%	2.69	%
Expected return on plan assets	6.50	%	6.00	%	6.00	%	5.50	%
Rate of compensation increase	N/A		N/A		3.00	%	3.00	%

The expected rate of return on pension plan assets is based on a targeted asset allocation range determined by the funded ratio of the plan. As of December 31, 2023, the expected rate of return on pension plan assets is based on the targeted asset allocation range of 40 percent to 50 percent equity securities and 50 percent to 60 percent fixed-income securities and the expected rate of return from these asset categories.

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


	2023		2022
Health care trend rate assumed for next year	7.5	%	7.5	%
Health care cost trend rate – ultimate	4.5	%	4.5	%
Year in which ultimate trend rate achieved	2034		2033

The Company’s other postretirement benefit plans include health care and life insurance benefits for certain retirees. The plans underlying these benefits may require contributions by the retiree depending on such retiree’s age and years of service at retirement or the date of retirement. The Company contributes a flat dollar amount to the monthly premiums, which is updated annually on January 1.

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

The following benefit payments, which reflect future service, as appropriate, at December 31, 2023, are as follows:


Years	Pension Benefits		Other Postretirement Benefits
	(In thousands)
2024	$	2,890	$	695
2025	2,780		867
2026	2,740		1,053
2027	2,680		1,136
2028	2,620		1,235
2029-2033	12,200		6,507

Outside investment managers manage the Company’s pension and postretirement assets. The Company’s investment policy with respect to pension and other postretirement assets is to make investments solely in the interest of the participants and beneficiaries of the plans and for the exclusive purpose of providing benefits accrued and defraying the reasonable expenses of administration. The Company strives to maintain investment diversification to assist in minimizing the risk of large losses. The Company’s policy guidelines allow for investment of funds in cash equivalents, fixed-income securities and equity securities. The guidelines prohibit investment in commodities and futures contracts, equity private placement, employer securities, leveraged or derivative securities, options, direct real estate investments, precious metals, venture capital and limited partnerships. The guidelines also prohibit short selling and margin transactions. The Company’s practice is to periodically review and rebalance asset categories based on its targeted asset allocation percentage policy.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. The fair value ASC establishes a hierarchy for grouping assets and liabilities, based on the significance of inputs. The estimated fair values of the Company’s pension plans’ assets are determined using the market approach.

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

The estimated fair value of the pension plans’ Level 1 and Level 2 equity securities are based on the closing price reported on the active market on which the individual securities are traded or other known sources including pricing from outside sources. The estimated fair value of the pension plans’ Level 1 and Level 2 collective and mutual funds are based on the net asset value of shares held at year end, based on either published market quotations on active markets or other known sources, including pricing from outside sources. The estimated fair value of the pension plans’ Level 2 corporate and municipal bonds is determined using other observable inputs, including benchmark yields, reported trades, broker/dealer quotes, bids, offers, future cash flows and other reference data. The estimated fair value of the pension plans’ Level 1 U.S. Government securities are valued based on quoted prices on an active market. The estimated fair value of the pension plans’ Level 2 U.S. Government securities are valued mainly using other observable inputs, including benchmark yields, reported trades, broker/dealer quotes, bids, offers, to be announced prices, future cash flows and other reference data. The estimated fair value of the pension plans’ Level 2 pooled separate accounts are determined using observable inputs in active markets or the net asset value of shares held at year end, or other observable inputs. Some of these securities are valued using pricing from outside sources.

All investments measured at net asset value in the tables that follow are invested in commingled funds, separate accounts or common collective trusts which do not have publicly quoted prices. The fair value of the commingled funds, separate accounts and common collective trusts are determined based on the net asset value of the underlying investments. The fair value of the underlying investments held by the commingled funds, separate accounts and common collective trusts is generally based on quoted prices in active markets.

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.

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


	Fair Value Measurements at December 31, 2023, Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at December 31, 2023
	(In thousands)
Assets:
Cash equivalents	$	—	$	1,021	$	—	$	1,021


Collective and mutual funds(a)	25,981		2,565		—		28,546



Investments measured at net asset value(b)	—		—		—		620
Total assets measured at fair value	$	25,981	$	3,586	$	—	$	30,187

__________________

(a)Collective and mutual funds invest approximately 33 percent in corporate bonds, 23 percent in U.S. Government securities, 15 percent in common stock of large-cap U.S. companies, 13 percent in other investments, 8 percent in common stock of international companies and 8 percent in cash and cash equivalents.

(b)In accordance with ASC 820 - Fair Value, Measurements certain investments that were measured at net asset value per share (or its equivalent) have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the line items presented in the Consolidated Balance Sheets.


	Fair Value Measurements at December 31, 2022, Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at December 31, 2022
	(In thousands)
Assets:
Cash equivalents	$	—	$	859	$	—	$	859
Equity securities:
U.S. companies	777		—		—		777
International companies	—		49		—		49
Collective and mutual funds(a)	12,729		3,508		—		16,237
Corporate bonds	—		8,554		—		8,554
Municipal bonds	—		621		—		621
U.S. Government securities	320		92		—		412
Pooled separate accounts(b)	—		337		—		337
Investments measured at net asset value(c)	—		—		—		585
Total assets measured at fair value	$	13,826	$	14,020	$	—	$	28,431

__________________

(a)Collective and mutual funds invest approximately 29 percent in corporate bonds, 24 percent in common stock of large-cap U.S. companies, 16 percent in common stock of international companies, 7 percent in cash and cash equivalents, 7 percent in U.S. Government securities and 17 percent in other investments.

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

(c)In accordance with ASC 820 - Fair Value, Measurements certain investments that were measured at net asset value per share (or its equivalent) have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the line items presented in the Consolidated Balance Sheets.

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

The estimated fair value of the other postretirement benefit plans’ Level 2 cash equivalents is valued at the net asset value of shares held at year end, based on published market quotations on active markets, or using other known sources including pricing from outside sources. The estimated fair value of the other postretirement benefit plans’ Level 1 and Level 2 equity securities is based on the closing price reported on the active market on which the individual securities are traded or other known sources, including pricing from outside sources. The estimated fair value of the other postretirement benefit plans’ Level 2 insurance contract is based on contractual cash surrender values that are determined primarily by investments in managed separate accounts of the insurer. These amounts approximate fair value. The managed separate accounts are valued based on other observable inputs or corroborated market data.

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.

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

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


	Fair Value Measurements at December 31, 2022, Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at December 31, 2022
	(In thousands)
Assets:
Cash equivalents	$	—	$	(17)	$	—	$	(17)
Equity securities:
U.S. companies	(11)		—		—		(11)
Insurance contract*	—		(286)		—		(286)
Total assets measured at fair value	$	(11)	$	(303)	$	—	$	(314)

__________________

*The insurance contract invests approximately 69 percent in corporate bonds, 14 percent in common stock of large-cap U.S. companies, 13 percent in U.S. government securities, and 4 percent in common stock of small-cap U.S. companies.

Nonqualified benefit plans

Prior to the Separation, the Company participated in unfunded, nonqualified defined benefit plans sponsored by MDU Resources. In connection with the Separation, the Company assumed all the obligations and liabilities of Knife River’s employees in those plans, along with all MDU Resources employees that transferred to Knife River as a result of the Separation. Subsequent to the Separation, the unfunded, nonqualified defined benefit plans in which the Company participates are single employer plans for executive officers and certain key management employees. The plans generally provide for defined benefit payments at age 65 following the employee’s retirement or, upon death, to their beneficiaries for a 15-year period. In February 2016, MDU Resources froze the unfunded, nonqualified defined benefit plans to new participants and eliminated benefit increases. Vesting for participants not fully vested was retained.

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


	2023		2022
	(In thousands)
Projected benefit obligation	$	15,873	$	16,047
Accumulated benefit obligation	$	15,873	$	16,047

The components of net periodic benefit cost are included in other income (expense) on the Consolidated Statements of Operations. These components related to the Company’s participation in the nonqualified defined benefit plans for the years ended December 31, were as follows:


	2023		2022		2021
	(In thousands)
Components of net periodic benefit cost:
Interest cost	$	765	$	460	$	407
Recognized net actuarial loss	—		39		223
Net periodic benefit cost	$	765	$	499	$	630

Weighted average assumptions used at December 31, were as follows:


	2023		2022
Benefit obligation discount rate	4.74	%	4.97	%
Benefit obligation rate of compensation increase	N/A		N/A
Net periodic benefit cost discount rate	4.93	%	2.38	%
Net periodic benefit cost rate of compensation increase	N/A		N/A

The amount of future benefit payments for the unfunded, nonqualified defined benefit plans at December 31, 2023 are expected to aggregate as follows:


	2024		2025		2026		2027		2028		2029-2033
	(In thousands)
Nonqualified benefits	$	1,620	$	1,720	$	1,700	$	1,650	$	1,690	$	5,600

Prior to the Separation, the Company participated in nonqualified defined contribution plans for certain key management employees sponsored by MDU Resources. In connection with the Separation, the Company assumed all the obligations and liabilities of Knife River’s employees in those plans, along with all MDU Resources’ employees that transferred to Knife River as a result of the Separation. In 2020, the MDU Resources’ plan was frozen to new participants and no new Company contributions were made to the plan after December 31, 2020. Vesting for participants not fully vested was retained. MDU Resources adopted a new nonqualified defined contribution plan in 2020, effective January 1, 2021, to replace the plan originally established in 2012 with similar provisions. Expenses incurred by Knife River under these plans for 2023, 2022 and 2021 were $1.5 million, $1.2 million and $900,000, respectively.

The amount of investments that the Company anticipates using to satisfy obligations under these plans at December 31, was as follows:


	2023		2022
	(In thousands)
Investments
Insurance contract*	$	24,896	$	20,083
Life insurance**	7,175		7,234
Other	3,241		2,448
Total investments	$	35,312	$	29,765

__________________

*For more information on the insurance contract, see Note 7.

**Investments of life insurance are carried on plan participants (payable upon the employee’s death).

Defined contribution plans

Knife River sponsors a defined contribution plan in which the Company participates. The costs incurred by the Company under this plan for eligible employees were $31.1 million, $27.6 million and $26.6 million in 2023, 2022 and 2021, respectively.

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:

•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, 2022 and 2021 is for the plan’s year-end at December 31, 2022, December 31, 2021 and December 31, 2020, 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,” or critical status, are generally less than 65 percent funded, plans in the “yellow zone,” or endangered status, are between 65 percent and 80 percent funded, and plans in the “green zone,” or healthy status, are at least 80 percent funded.


Pension Fund	EIN/Pension Plan Number	Pension Protection Act Zone Status		FIP/RP Status Pending/ Implemented	Contributions						Surcharge Imposed	Expiration Date of Collective Bargaining Agreement
		2023	2022		2023		2022		2021
					(In thousands)
Alaska Laborers Employer Retirement Fund	916028298-001	Red as of 6/30/22	Red as of 6/30/21	Implemented	$	887	$	805	$	737	No	12/31/2023	*
Minnesota Teamsters Construction Division Pension Fund	416187751-001	Green	Green	No	418		644		713		No	4/30/2024
Pension Trust Fund for Operating Engineers	946090764-001	Yellow	Yellow	Implemented	2,476		2,484		2,495		No	3/31/2026- 6/30/2026
Western Conference of Teamsters Pension Plan	916145047-001	Green	Green	No	3,307		3,127		3,006		No	07/01/2023- 6/30/2026	*
Other funds					5,653		5,938		5,519
Total contributions					$	12,741	$	12,998	$	12,470

__________________

*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:


Pension Fund						Year Contributions to Plan Exceeded More Than 5 Percent of Total Contributions (as of December 31, of the Plan’s Year-End)
DB Pension Plan of AGC-IUOE Local 701 Pension Trust Fund						2022 and 2021
Minnesota Teamsters Construction Division Pension Fund						2022 and 2021
Southwest Marine Pension Trust						2022 and 2021

The Company also contributes to a number of multiemployer other postretirement plans under the terms of collective-bargaining agreements that cover its union-represented employees. These plans provide benefits such as health insurance, disability insurance and life insurance to retired union employees. Many of the multiemployer other postretirement plans are combined with active multiemployer health and welfare plans. The Company’s total contributions to its multiemployer other postretirement plans, which also includes contributions to active multiemployer health and welfare plans, were $1.8 million, $1.8 million and $3.2 million for the years ended December 31, 2023, 2022 and 2021, respectively.

- Definition

The entire disclosure for retirement benefits.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-SubTopic 70
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480794/715-70-50-1

Reference 2: http://www.xbrl.org/2003/role/exampleRef
-Topic 715
-SubTopic 20
-Name Accounting Standards Codification
-Section 55
-Paragraph 17
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480482/715-20-55-17

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (d)(iv)(03)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480506/715-20-50-1

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (d)(i)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480506/715-20-50-1

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (q)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480506/715-20-50-1

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (l)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480506/715-20-50-1

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org//715/tableOfContent

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (d)(iii)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480506/715-20-50-1

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (o)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480506/715-20-50-1

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (p)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480506/715-20-50-1

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (r)(1)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480506/715-20-50-1

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (r)(2)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480506/715-20-50-1

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-SubTopic 20
-Name Accounting Standards Codification
-Section S99
-Paragraph 2
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480126/715-20-S99-2

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-SubTopic 60
-Name Accounting Standards Codification
-Section 50
-Paragraph 3
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480266/715-60-50-3

+ Details

Commitments and Contingencies

12 Months Ended

Dec. 31, 2023

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

The Company is party to claims and lawsuits arising out of its business and that of its consolidated subsidiaries, which may include, but are not limited to, matters involving property damage, personal injury, and environmental, contractual and statutory obligations. The Company accrues a liability for those contingencies when the incurrence of a loss is probable and the amount can be reasonably estimated. If a range of amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then the minimum of the range is accrued. The Company does not accrue liabilities when the likelihood that the liability has been incurred is probable but the amount cannot be reasonably estimated or when the liability is believed to be only reasonably possible or remote. For contingencies where an unfavorable outcome is probable or reasonably possible and which are material, the Company discloses the nature of the contingency and, in some circumstances, an estimate of the possible loss. Accruals are based on the best information available, but in certain situations management is unable to estimate an amount or range of a reasonably possible loss, including, but not limited to, when: (1) the damages are unsubstantiated or indeterminate, (2) the proceedings are in the early stages, (3) numerous parties are involved, or (4) the matter involves novel or unsettled legal theories.

At December 31, 2023 and 2022, the Company accrued liabilities which have not been discounted, of $873,000 and $1.0 million, respectively. At December 31, 2023 and 2022, the Company also recorded corresponding insurance receivables of $42,000 and $325,000, respectively, related to the accrued liabilities. The accruals are for contingencies, including litigation and environmental matters. Most of these claims and lawsuits are covered by insurance, thus the Company’s exposure is typically limited to its deductible amount. The Company will continue to monitor each matter and adjust accruals as might be warranted based on new information and further developments. Management believes that the outcomes with respect to probable and reasonably possible losses in excess of the amounts accrued, net of insurance recoveries, while uncertain, either cannot be estimated or will not have a material effect upon the Company’s financial position, results of operations or cash flows. Unless otherwise required by GAAP, legal costs are expensed as they are incurred.

Environmental matters

Portland Harbor Site. In December 2000, Knife River - Northwest was named by the EPA as a PRP in connection with the cleanup of the riverbed site adjacent to a commercial property site acquired by Knife River - Northwest from Georgia-Pacific West, Inc. along the Willamette River. The riverbed site is part of the Portland, Oregon, Harbor Superfund Site where the EPA wants responsible parties to share in the costs of cleanup. The EPA entered into a consent order with certain other PRPs referred to as the Lower Willamette Group for a remedial investigation and feasibility study. The Lower Willamette Group has indicated that it incurred over $115 million in investigation related costs before it concluded its work and disbanded. Knife River - Northwest has joined with approximately 100 other PRPs, including the former Lower Willamette Group members, in a voluntary process to establish an allocation of costs for the site. Costs to be allocated would include costs incurred by the Lower Willamette Group as well as costs incurred by other participants to implement and fund remediation of the site.

In January 2017, the EPA issued a Record of Decision adopting a selected remedy which is expected to take 13 years to complete with a then estimated present value of approximately $1 billion. Corrective action will not be taken until remedial design/remedial action plans are approved by the EPA. In 2020, the EPA encouraged certain PRPs to enter into consent agreements to perform remedial design covering the entire site and proposed dividing the site into multiple subareas for remedial design. Certain PRPs executed consent agreements for remedial design work and certain others were issued unilateral administrative orders to perform design work. Knife River - Northwest is not subject to either a voluntary agreement or unilateral order to perform remedial design work. In February 2021, the EPA announced that 100 percent of the site’s area requiring active cleanup are in the remedial design process. The remedial design work is ongoing and site-wide remediation activities are not expected to commence for a number of years.

Knife River - Northwest was also notified that the Portland Harbor Natural Resource Trustee Council intends to perform an injury assessment to natural resources resulting from the release of hazardous substances at the site. It is not possible to estimate the costs of natural resource damages until an assessment is completed and allocations are undertaken.

At this time, Knife River - Northwest does not believe it is a responsible party and has notified Georgia-Pacific West, Inc., that it intends to seek indemnity for liabilities incurred in relation to the above matters pursuant to the terms of their sale agreement.

The Company believes it is not probable that it will incur any material environmental remediation costs or damages in relation to the above referenced matter.

Purchase commitments

The Company has entered into various commitments, largely purchased cement, liquid asphalt, minimum royalties and fuel. The commitment terms vary in length, up to 25 years. The commitments under these contracts as of December 31, 2023, were:


	2024		2025		2026		2027		2028		Thereafter
	(In thousands)
Purchase commitments	$	59,211	$	27,758	$	27,342	$	2,028	$	1,542	$	8,212

These commitments were not reflected in the Company’s audited consolidated financial statements. Amounts purchased under various commitments for the years ended December 31, 2023, 2022 and 2021 were $128.7 million, $167.6 million and $137.4 million, respectively.

Guarantees

Certain subsidiaries of the Company have outstanding guarantees to third parties where the Company has guaranteed their performance. These guarantees are related to contracts for contracting services and certain other guarantees. At December 31, 2023, the fixed maximum amounts guaranteed under these agreements aggregated $11.5 million, all of which have no scheduled maturity date. Certain of the guarantees also have no fixed maximum amounts specified. There were no amounts outstanding under the previously mentioned guarantees at December 31, 2023.

The Company has outstanding letters of credit to third parties related to insurance policies, reclamation obligations and other agreements. At December 31, 2023, the fixed maximum amounts guaranteed under these letters of credit aggregated to $21.0 million. The amounts of scheduled expiration of the maximum amounts guaranteed under these letters of credit aggregate to $20.7 million in 2024 and $300,000 in 2025. There were no amounts outstanding under the previously mentioned letters of credit at December 31, 2023.

In the normal course of business, the Company has surety bonds related to contracts for contracting services and reclamation obligations of its subsidiaries. In the event a subsidiary of the Company does not fulfill a bonded obligation, the Company would be responsible to the surety bond company for completion of the bonded contract or obligation. A large portion of the surety bonds is expected to expire within the next 12 months; however, the Company will likely continue to enter into surety bonds for its subsidiaries in the future. At December 31, 2023, approximately $597.5 million of surety bonds were outstanding, which were not reflected on the Consolidated Balance Sheet.

Related-Party Transactions

12 Months Ended

Dec. 31, 2023

Related-party Transactions

Related-Party Transactions

Allocation of corporate expenses

Prior to the Separation, Centennial and MDU Resources provided expense allocations for corporate services provided to the Company, including costs related to senior management, legal, human resources, finance and accounting, treasury, information technology, and other shared services. Some of these services will continue to be provided by MDU Resources on a temporary basis under a transition services agreement. For the years ended December 31, 2023, 2022 and 2021, the Company was allocated $10.7 million, $18.0 million and $15.6 million, respectively, for these corporate services. These expenses have been allocated to the Company on the basis of direct usage when identifiable, with the remainder allocated on the basis of percent of total capital invested, the percent of total average commercial paper borrowings at Centennial or other allocation methodologies that are considered to be a reasonable reflection of the utilization of the services provided to the benefits received, including the following: number of employees paid and stated as cost per check; number of employees served; weighted factor of travel, managed units, national account spending, equipment and fleet acquisitions; purchase order dollars spent and purchase order line count; number of payments, vouchers or unclaimed property reports; labor hours; time tracked; and projected workload.

Management believes these cost allocations are a reasonable reflection of the utilization of services provided to, or the benefit derived by, the Company during the periods presented. The allocations may not, however, be indicative of the actual expenses that would have been incurred had the Company operated as a stand-alone public company for these periods. Actual costs that would have been incurred if the Company had been a stand-alone public company would depend on a number of factors, including the chosen organizational structure, whether functions were outsourced or performed by Company employees, and strategic decisions made in areas such as selling and marketing, information technology and infrastructure. See Note 2 for further information.

Cash management and financing

Centennial had a central cash management and financing program in which the Company participated until the Separation. Through the use of these programs, Centennial was able to more effectively direct and manage the daily cash requirements and financing needs for each wholly owned subsidiary through the consolidation of all cash

activity at the Centennial level. As cash was received and disbursed by Centennial, it was accounted for by the Company through related-party receivables and payables. Until the Separation, the Company had related-party note agreements in place with Centennial for the financing of its capital needs. Post Separation, the Company has relied on its own credit. Interest expense in the Consolidated Statements of Operations reflects the allocation of interest on borrowing and funding related to these note agreements. The Company’s cash that was not included in the central cash management program is classified as cash and cash equivalents on the Consolidated Balance Sheets. See Note 2 for further information.

Related-party notes payable

The related-party notes payable to Centennial at May 30, 2023, was $889.7 million. As part of the Separation, Centennial made an equity contribution to the Company to release the Company of its obligation related to the outstanding notes payable. Also as part of the Separation, the Company issued $425.0 million of 7.75 percent senior notes due May 1, 2031, a credit agreement consisting of a $275.0 million term loan and a $350.0 million revolving credit facility, of which $190.0 million was drawn down at the time of the Separation. On May 31, 2023, the Company paid a dividend of $825.0 million from these proceeds to Centennial, which Centennial used to repay a portion of the Company’s outstanding indebtedness. These transactions resulted in the Company receiving a net equity contribution of $64.7 million and is included in “Net transfers from Centennial and MDU Resources including separation adjustments” in the Consolidated Statement of Equity. Refer to Note 8 for additional information on the debt facilities entered into in connection with the Separation. These borrowings have been included in both current and noncurrent liabilities in related-party notes payable in the Consolidated Balance Sheets. Intercompany short-term and long-term borrowing arrangements at December 31, 2022 was as follows:


	Weighted average Interest rate at December 31, 2022		2022
			(In thousands)
Centennial term loan agreements with maturities ranging from March 17, 2023 to December 18, 2023	5.44	%	$	208,000
Centennial senior notes with maturities ranging from June 27, 2023 to April 4, 2034	4.34	%	410,000
Borrowing arrangements under Centennial commercial paper program, supported by Centennial’s credit agreements	5.27	%	66,449
Total long-term related-party notes payable			684,449
Less: current maturities			238,000
Net long-term related-party notes payable			$	446,449

Transition services agreements

As part of the Separation, MDU Resources is providing transition services to the Company and the Company is providing transition services to MDU Resources in accordance with the Transition Services Agreement entered into on May 30, 2023. For the year December 31, 2023, the Company paid $3.0 million related to these activities, which was reflected in selling, general and administrative expenses on the Consolidated Statements of Operations. For the year ended December 31, 2023, the Company received $824,000 related to these activities, which was reflected in other income (expense) on the Consolidated Statements of Operations. The majority of the transition services are expected to be completed over a period of one year, but no longer than two years after the Separation.

- Definition

The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

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+ Details

Pay vs Performance Disclosure - USD ($) $ in Thousands	12 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Pay vs Performance Disclosure
Net income	$ 182,872	$ 116,220	$ 129,755

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

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-URI https://asc.fasb.org//1943274/2147483621/220-10-S99-2

Reference 39: http://fasb.org/us-gaap/role/ref/legacyRef
-Topic 942
-SubTopic 220
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.9-04(22))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483589/942-220-S99-1

+ Details

Insider Trading Arrangements	3 Months Ended
Insider Trading Arrangements	Dec. 31, 2023
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2023

Accounting Policies [Abstract]

Basis of presentation

Knife River operated as a wholly owned subsidiary of Centennial and an indirect, wholly owned subsidiary of MDU Resources and not as a stand-alone company. The accompanying audited consolidated financial statements and footnotes for the periods prior to the Separation were prepared on a “carve-out” basis using a legal entity approach in conformity with GAAP and were derived from the audited consolidated financial statements of MDU Resources as if the Company operated on a stand-alone basis during these periods.For all periods, the audited consolidated financial statements were prepared in accordance with GAAP and include the accounts of the Company and its wholly owned subsidiaries.

Use of estimates

The preparation of financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the audited consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Estimates are used for items such as long-lived assets and goodwill; fair values of acquired assets and liabilities under the acquisition method of accounting; aggregate reserves; property depreciable lives; tax provisions; revenue recognized using the cost-to-cost measure of progress for contracts; expected credit losses; environmental and other loss contingencies; costs on contracting services contracts; actuarially determined benefit costs; asset retirement obligations; lease classification; present value of right-of-use assets and lease liabilities; and the valuation of stock-based compensation. These estimates are based on management’s best knowledge of current events, historical experience, actions that the Company may undertake in

the future and on various other assumptions that are believed to be reasonable under the circumstances. As additional information becomes available, or actual amounts are determinable, the recorded estimates are revised. Consequently, operating results can be affected by revisions to prior accounting estimates.

New accounting standards

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


Standard	Description	Standard Effective Date	Impact on financial statements/disclosures
Recently issued ASU’s not yet adopted
ASU 2023-07 - Improvements to Reportable Segment Disclosures	In November 2023, the FASB issued guidance on modifying the disclosure requirements to improve reportable segment disclosure requirements through enhanced disclosures about significant segment expenses. The guidance also expands the interim disclosure requirements. The guidance is to be applied on a retrospective basis to the financial statements and footnotes and early adoption is permitted.	Fiscal periods beginning after December 15, 2023 and interim periods beginning after December 31, 2024	The Company is currently evaluating the impact the guidance will have on its disclosures for the year ended December 31, 2024 and interim periods for fiscal year 2025.
ASU 2023-09 - Improvements to Income Tax Disclosures	In December 2023, the FASB issued guidance on modifying the disclosure requirements to increase transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. The guidance is to be applied on a prospective basis to the financial statements and footnotes, however, retrospective adoption is also permitted. The guidance also permits early adoption.	Fiscal periods beginning after December 15, 2024	The Company is currently evaluating the impact the guidance will have on its disclosures for the year ended December 31, 2025.

Cash, cash equivalents and restricted cash

The Company considers all highly liquid investments with an original maturity of three months or less, when purchased, to be cash and cash equivalents. At December 31, 2023, the $262.3 million of cash, cash equivalents and restricted cash on the Consolidated Statements of Cash Flows is comprised of $219.3 million of cash and cash equivalents and $43.0 million of restricted cash. At December 31, 2022, the Company had no restricted cash. Restricted cash represents deposits held by Knife River’s captive insurance company that is required by state insurance regulations to remain in the captive insurance company

Revenue recognition

Revenue is recognized when a performance obligation is satisfied by transferring control over a product or service to a customer. Revenue is measured based on consideration specified in a contract with a customer and excludes any sales incentives and amounts collected on behalf of third parties. The Company is considered an agent for certain taxes collected from customers. As such, the Company presents revenues net of these taxes at the time of sale to be remitted to governmental authorities, including sales and use taxes.

The Company generates revenue from contracting services and construction materials sales. The Company focuses on the vertical integration of its contracting services with its construction materials to support the aggregate-based product lines. The Company provides contracting services to a customer when a contract has been signed by

both the customer and a representative of the Company obligating a service to be provided in exchange for the consideration identified in the contract. The nature of the services provided generally include integrating a set of services and related construction materials into a single project to create a distinct bundle of goods and services, which the Company has determined are single performance obligations. The Company determines the transaction price to include the fixed consideration required pursuant to the original contract price together with any additional consideration, to which the Company expects to be entitled to, associated with executed change orders plus the estimate of variable consideration to which the Company expects to be entitled, subject to the constraint discussed below.

The nature of the Company’s contracts gives rise to several types of variable consideration. Examples of variable consideration include: liquidated damages; performance bonuses or incentives and penalties; claims; 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.

Contracting services revenue is recognized over time using an input method based on the cost-to-cost measure of progress on a project. This is the preferred method of measuring revenue because the costs incurred have been determined to represent the best indication of the overall progress toward the transfer of such goods or services promised to a customer. 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. The percentage of completion is determined on a performance obligation basis.

The Company also sells construction materials to third parties and internal customers. The contract for material sales is the use of a sales order or an invoice, which includes the pricing and payment terms. All material contracts contain 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.

Receivables

Receivables consist primarily of trade and contract receivables from the sale of goods and services net of expected credit losses. A majority of the Company’s receivables are due in 30 days or less.

Expected credit losses

The Company’s expected credit losses are determined through a review using historical credit loss experience, changes in asset specific characteristics, current conditions and reasonable and supportable future forecasts, among other specific account data, and is performed at least quarterly. The Company develops and documents its methodology to determine its allowance for expected credit losses. Risk characteristics used by the Company may include customer mix, knowledge of customers and general economic conditions of the various local economies, among others. Specific account balances are written off when management determines the amounts to be uncollectible.

Inventories

Inventories are valued at the lower of cost or net realizable value using the average cost method. Inventories include production costs incurred as part of the Company’s aggregate mining activities. These inventoriable production costs include all mining and processing costs associated with the production of aggregates. Stripping costs incurred during the production phase, which represent costs of removing overburden and waste materials to access mineral deposits, are a component of inventoriable production costs.

Property, plant and equipment

Additions to property, plant and equipment are recorded at cost. Gains or losses resulting from the retirement or disposal of assets are recognized as a component of operating income. Generally, property, plant and equipment are depreciated on a straight-line basis over the average useful lives of the assets with the exception of large marine equipment, which is computed using units-of-production.

Aggregate mining development costs are capitalized and classified as land improvements and depreciated over the lower of the estimated life of the reserves or the life of the associated improvement. The Company begins capitalizing development costs at a point when reserves are determined to be proven or probable and economically mineable. Capitalization of these costs ceases when production commences. The cost of acquiring reserves in connection with a business combination are valued at fair value. Aggregate reserves, from both owned and leased mining sites, are a component within property, plant and equipment and are depleted using the units-of-production method. The Company uses proven and probable aggregate reserves as the denominator in its units-of production calculation. Exploration costs are expensed as incurred in cost of revenue and production costs are either expensed or capitalized to inventory.

Impairment of long-lived assets, excluding goodwill

The Company reviews the carrying values of its long-lived assets, including mining and related assets, whenever events or changes in circumstances indicate that such carrying values may not be recoverable. The Company tests long-lived assets for impairment at a level significantly lower than that of goodwill impairment testing. Long-lived assets or groups of assets that are evaluated for impairment at the lowest level of largely independent identifiable cash flows at an individual operation or group of operations collectively serving a local market. The determination of whether an impairment has occurred is based on an estimate of undiscounted future cash flows attributable to the assets, compared to the carrying value of the assets. If impairment has occurred, the amount of the impairment recognized is determined by estimating the fair value of the assets and recording a loss if the carrying value is greater than the fair value.

Goodwill

Goodwill represents the excess of the purchase price over the fair value of identifiable net tangible and intangible assets acquired in a business combination. Goodwill is required to be tested for impairment annually, which the Company completes in the fourth quarter, or more frequently if events or changes in circumstances indicate that goodwill may be impaired.

The Company has determined that the reporting units for its goodwill impairment test are its operating segments as they constitute a business for which discrete financial information is available and for which management regularly reviews the operating results. For more information on the Company’s operating segments, see Note 15. Goodwill impairment, if any, is measured by comparing the fair value of each reporting unit to its carrying value. If the fair value of a reporting unit exceeds its carrying value, the goodwill of the reporting unit is not impaired. If the carrying value of a reporting unit exceeds its fair value, the Company must record an impairment loss for the amount that the carrying value of the reporting unit, including goodwill, exceeds the fair value of the reporting unit. For the years ended December 31, 2023, 2022 and 2021, there were no impairment losses recorded. The Company performed its annual goodwill impairment test in the fourth quarter of 2023 and determined the fair value of each of Knife River’s reporting units substantially exceeded the carrying value at October 31, 2023.

The Company uses a weighted average combination of both an income approach and a market approach to estimate the fair value of its reporting units for its goodwill impairment analysis. Determining the fair value of a reporting unit requires judgment and the use of significant estimates, which include assumptions about Knife River’s future revenue, profitability and cash flows, amount and timing of estimated capital expenditures, inflation rates, weighted average cost of capital, operational plans, and current and future economic conditions, among others. Knife River believes that the estimates and assumptions used in its impairment assessments are reasonable and based on available market information

Investments

The Company’s investments include the cash surrender value of life insurance policies and insurance contracts. The Company measures its investment in the insurance contracts at fair value with any unrealized gains and losses recorded on the Consolidated Statements of Operations.

Government assistance

The Company accounts for government assistance received for capital projects by reducing the cost of the project by the amount of assistance received. The Company records government assistance received as taxable income and writes-up the tax basis of the asset to include the amount of the assistance received.

Joint ventures accounted for using proportionate consolidation

Proportionate consolidation is used for joint ventures that include unincorporated legal entities and activities of the joint venture which are construction-related. For those joint ventures accounted for under proportionate consolidation, only the Company’s pro rata share of assets, liabilities, revenues and expenses are included in the Company’s Consolidated Balance Sheets and Consolidated Statements of Operations.

Joint ventures accounted for under the equity method

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