QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||||||
Large Accelerated Filer | ☐ | Accelerated Filer | ☐ | ||||||||
☒ | Smaller Reporting Company | ||||||||||
Emerging Growth Company |
Index | |||||
Page | |||||
Abbreviation or Acronym | |||||
ASC | FASB Accounting Standards Codification | ||||
ASU | FASB Accounting Standards Update | ||||
Centennial | Centennial Energy Holdings, Inc., a direct wholly owned subsidiary of MDU Resources and the direct parent company of Knife River prior to the spinoff | ||||
Company | Knife River | ||||
COVID-19 | Coronavirus disease 2019 | ||||
Dodd-Frank Act | Dodd-Frank Wall Street Reform and Consumer Protection Act | ||||
EBITDA | Earnings before interest, taxes, depreciation, depletion and amortization | ||||
Exchange Act | Securities Exchange Act of 1934, as amended | ||||
FASB | Financial Accounting Standards Board | ||||
GAAP | Accounting principles generally accepted in the United States of America | ||||
Knife River | Knife River Corporation, a direct wholly owned subsidiary of Centennial | ||||
Knife River Holding Company | The holding company established in conjunction with the proposed spinoff of Knife River and a direct wholly owned subsidiary of MDU Resources | ||||
MDU Resources | MDU Resources Group, Inc., the indirect parent company of Knife River prior to the spinoff | ||||
SEC | United States Securities and Exchange Commission | ||||
SOFR | Secured Overnight Financing Rate | ||||
Knife River Corporation | ||||||||
Consolidated Statements of Operations | ||||||||
(Unaudited) | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2023 | 2022 | |||||||
(In thousands, except per share amounts) | ||||||||
Revenue: | ||||||||
Construction materials | $ | $ | ||||||
Contracting services | ||||||||
Total revenue | ||||||||
Cost of revenue: | ||||||||
Construction materials | ||||||||
Contracting services | ||||||||
Total cost of revenue | ||||||||
Gross profit | ||||||||
Selling, general and administrative expenses | ||||||||
Operating loss | ( | ( | ||||||
Interest expense | ||||||||
Other income (expense) | ( | |||||||
Loss before income taxes | ( | ( | ||||||
Income tax benefit | ( | ( | ||||||
Net loss | $ | ( | $ | ( | ||||
Net loss per share: | ||||||||
Basic | $ | ( | $ | ( | ||||
Diluted | $ | ( | $ | ( | ||||
Weighted average common shares outstanding: | ||||||||
Basic | ||||||||
Diluted |
Knife River Corporation | |||||||||||
Consolidated Statements of Comprehensive Income | |||||||||||
(Unaudited) | |||||||||||
Three Months Ended | |||||||||||
March 31, | |||||||||||
2023 | 2022 | ||||||||||
(In thousands) | |||||||||||
Net loss | $ | ( | $ | ( | |||||||
Other comprehensive income: | |||||||||||
Reclassification adjustment for loss on derivative instruments included in net loss, net of tax of $ | |||||||||||
Amortization of postretirement liability losses included in net periodic benefit cost, net of tax of $ | |||||||||||
Other comprehensive income | |||||||||||
Comprehensive loss attributable to common stockholders | $ | ( | $ | ( |
Knife River Corporation | ||||||||
Consolidated Balance Sheets | ||||||||
(Unaudited) | ||||||||
March 31, 2023 | December 31, 2022 | |||||||
Assets | (In thousands, except shares and per share amounts) | |||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | $ | ||||||
Receivables, net | ||||||||
Costs and estimated earnings in excess of billings on uncompleted contracts | ||||||||
Due from related-party | ||||||||
Inventories | ||||||||
Prepayments and other current assets | ||||||||
Total current assets | ||||||||
Noncurrent assets: | ||||||||
Property, plant and equipment | ||||||||
Less accumulated depreciation, depletion and amortization | ||||||||
Net property, plant and equipment | ||||||||
Goodwill | ||||||||
Other intangible assets, net | ||||||||
Operating lease right-of-use assets | ||||||||
Investments and other | ||||||||
Total noncurrent assets | ||||||||
Total assets | $ | $ | ||||||
Liabilities and Stockholder's Equity | ||||||||
Current liabilities: | ||||||||
Long-term debt - current portion | $ | $ | ||||||
Related-party notes payable - current portion | ||||||||
Accounts payable | ||||||||
Billings in excess of costs and estimated earnings on uncompleted contracts | ||||||||
Accrued compensation | ||||||||
Due to related-party | ||||||||
Current operating lease liabilities | ||||||||
Other accrued liabilities | ||||||||
Total current liabilities | ||||||||
Noncurrent liabilities: | ||||||||
Long-term debt | ||||||||
Related-party notes payable | ||||||||
Deferred income taxes | ||||||||
Noncurrent operating lease liabilities | ||||||||
Other | ||||||||
Total liabilities | ||||||||
Commitments and contingencies | ||||||||
Stockholder's equity: | ||||||||
Common stock, $ | ||||||||
Other paid-in capital | ||||||||
Retained earnings | ||||||||
Parent stock held by subsidiary at cost - | ( | ( | ||||||
Accumulated other comprehensive loss | ( | ( | ||||||
Total stockholder's equity | ||||||||
Total liabilities and stockholder's equity | $ | $ |
Knife River Corporation | ||||||||||||||||||||||||||
Consolidated Statements of Equity | ||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||
Common Stock | Other Paid-in Capital | Retained Earnings | Parent Stock Held by Subsidiary | Accumulated Other Comprehensive Loss | ||||||||||||||||||||||
Shares | Amount | Shares | Amount | Total | ||||||||||||||||||||||
(In thousands, except shares) | ||||||||||||||||||||||||||
At December 31, 2022 | $ | $ | $ | ( | $ | ( | $ | ( | $ | |||||||||||||||||
Net loss | — | — | — | ( | — | — | — | ( | ||||||||||||||||||
Other comprehensive income | — | — | — | — | — | — | ||||||||||||||||||||
Net transfers to Parent | — | — | ( | ( | — | — | — | ( | ||||||||||||||||||
At March 31, 2023 | $ | $ | $ | ( | $ | ( | $ | ( | $ | |||||||||||||||||
Common Stock | Other Paid-in Capital | Retained Earnings | Parent Stock Held by Subsidiary | Accumulated Other Comprehensive Loss | ||||||||||||||||||||||
Shares | Amount | Shares | Amount | Total | ||||||||||||||||||||||
(In thousands, except shares) | ||||||||||||||||||||||||||
At December 31, 2021 | $ | $ | $ | ( | $ | ( | $ | ( | $ | |||||||||||||||||
Net loss | — | — | — | ( | — | — | — | ( | ||||||||||||||||||
Other comprehensive income | — | — | — | — | — | — | ||||||||||||||||||||
Net transfers to Parent | — | — | ( | ( | — | — | — | ( | ||||||||||||||||||
At March 31, 2022 | $ | $ | $ | ( | $ | ( | $ | ( | $ | |||||||||||||||||
Knife River Corporation | ||||||||
Consolidated Statements of Cash Flows | ||||||||
(Unaudited) | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2023 | 2022 | |||||||
(In thousands) | ||||||||
Operating activities: | ||||||||
Net loss | $ | ( | $ | ( | ||||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation, depletion and amortization | ||||||||
Deferred income taxes | ( | ( | ||||||
Provision for credit losses | ( | |||||||
Amortization of debt issuance costs | ||||||||
Employee stock-based compensation costs | ||||||||
Pension and postretirement benefit plan net periodic benefit cost | ||||||||
Unrealized (gains) losses on investments | ( | |||||||
Gains on sales of assets | ( | ( | ||||||
Changes in current assets and liabilities, net of acquisitions: | ||||||||
Receivables | ||||||||
Due from related-party | ( | |||||||
Inventories | ( | ( | ||||||
Other current assets | ( | ( | ||||||
Accounts payable | ||||||||
Due to related-party | ||||||||
Other current liabilities | ( | ( | ||||||
Pension and postretirement benefit plan contributions | ( | ( | ||||||
Other noncurrent changes | ||||||||
Net cash used in continuing operations | ( | ( | ||||||
Investing activities: | ||||||||
Capital expenditures | ( | ( | ||||||
Acquisitions, net of cash acquired | ( | |||||||
Net proceeds from sale or disposition of property and other | ||||||||
Investments | ( | ( | ||||||
Net cash used in investing activities | ( | ( | ||||||
Financing activities: | ||||||||
Issuance of current related-party notes, net | ||||||||
Issuance of long-term related-party notes, net | ||||||||
Repayment of long-term debt | ( | ( | ||||||
Debt issuance costs | ( | ( | ||||||
Net transfers to Parent | ( | ( | ||||||
Net cash provided by financing activities | ||||||||
Decrease in cash and cash equivalents | ( | ( | ||||||
Cash and cash equivalents -- beginning of year | ||||||||
Cash and cash equivalents -- end of period | $ | $ |
March 31, 2023 | December 31, 2022 | |||||||
(In thousands) | ||||||||
Trade receivables | $ | $ | ||||||
Contracting services contract receivables | ||||||||
Retention receivables | ||||||||
Receivables, gross | ||||||||
Less expected credit loss | ||||||||
Receivables, net | $ | $ |
Pacific | Northwest | Mountain | North Central | All Other | Total | |||||||||||||||
(In thousands) | ||||||||||||||||||||
At December 31, 2022 | $ | $ | $ | $ | $ | $ | ||||||||||||||
Current expected credit loss provision | ( | ( | ||||||||||||||||||
Less write-offs charged against the allowance | ||||||||||||||||||||
At March 31, 2023 | $ | $ | $ | $ | $ | $ | ||||||||||||||
Pacific | Northwest | Mountain | North Central | All Other | Total | |||||||||||||||
(In thousands) | ||||||||||||||||||||
At December 31, 2021 | $ | $ | $ | $ | $ | $ | ||||||||||||||
Current expected credit loss provision | ( | ( | ( | ( | ||||||||||||||||
Less write-offs charged against the allowance | ||||||||||||||||||||
At March 31, 2022 | $ | $ | $ | $ | $ | $ | ||||||||||||||
March 31, 2023 | December 31, 2022 | |||||||
(In thousands) | ||||||||
Finished products | $ | $ | ||||||
Raw materials | ||||||||
Supplies and parts | ||||||||
Total | $ | $ |
Net Unrealized Loss on Derivative Instruments Qualifying as Hedges | Postretirement Liability Adjustment | Total Accumulated Other Comprehensive Loss | |||||||||
(In thousands) | |||||||||||
At December 31, 2022 | $ | ( | $ | ( | $ | ( | |||||
Amounts reclassified from accumulated other comprehensive loss | |||||||||||
Net current-period other comprehensive income | |||||||||||
At March 31, 2023 | $ | ( | $ | ( | $ | ( |
Net Unrealized Loss on Derivative Instruments Qualifying as Hedges | Postretirement Liability Adjustment | Total Accumulated Other Comprehensive Loss | |||||||||
(In thousands) | |||||||||||
At December 31, 2021 | $ | ( | $ | ( | $ | ( | |||||
Amounts reclassified from accumulated other comprehensive loss | |||||||||||
Net current-period other comprehensive income | |||||||||||
At March 31, 2022 | $ | ( | $ | ( | $ | ( |
Three Months Ended | Location on Consolidated Statements of Operations | ||||||||||
March 31, | |||||||||||
2023 | 2022 | ||||||||||
(In thousands) | |||||||||||
Reclassification adjustment for loss on derivative instruments included in net loss | $ | ( | $ | ( | Interest expense | ||||||
Income taxes | |||||||||||
( | ( | ||||||||||
Amortization of postretirement liability losses included in net periodic benefit cost | ( | ( | Other income | ||||||||
Income taxes | |||||||||||
( | ( | ||||||||||
Total reclassifications | $ | ( | $ | ( |
Three Months Ended March 31, 2023 | Pacific | Northwest | Mountain | North Central | All Other | Total | ||||||||||||||
(In thousands) | ||||||||||||||||||||
Aggregates | $ | $ | $ | $ | $ | $ | ||||||||||||||
Ready-mix concrete | ||||||||||||||||||||
Asphalt | ||||||||||||||||||||
Other | ||||||||||||||||||||
Contracting services public-sector | ||||||||||||||||||||
Contracting services private-sector | ||||||||||||||||||||
Internal sales | ( | ( | ( | ( | ( | ( | ||||||||||||||
Revenues from contracts with customers | $ | $ | $ | $ | $ | $ |
Three Months Ended March 31, 2022 | Pacific | Northwest | Mountain | North Central | All Other | Total | ||||||||||||||
(In thousands) | ||||||||||||||||||||
Aggregates | $ | $ | $ | $ | $ | $ | ||||||||||||||
Ready-mix concrete | ||||||||||||||||||||
Asphalt | ||||||||||||||||||||
Other | ||||||||||||||||||||
Contracting services public-sector | ||||||||||||||||||||
Contracting services private-sector | ||||||||||||||||||||
Internal sales | ( | ( | ( | ( | ( | ( | ||||||||||||||
Revenues from contracts with customers | $ | $ | $ | $ | $ | $ |
March 31, 2023 | December 31, 2022 | Change | Location on Consolidated Balance Sheets | |||||||||||
(In thousands) | ||||||||||||||
Contract assets | $ | $ | $ | ( | Costs and estimated earnings in excess of billings on uncompleted contracts | |||||||||
Contract liabilities | ( | ( | Billings in excess of costs and estimated earnings on uncompleted contracts | |||||||||||
Net contract liabilities | $ | ( | $ | ( | $ |
Balance at January 1, 2023 | Goodwill Acquired During the Year | Measurement Period Adjustments | Balance at March 31, 2023 | |||||||||||
(In thousands) | ||||||||||||||
Pacific | $ | $ | $ | $ | ||||||||||
Northwest | ||||||||||||||
Mountain | ||||||||||||||
North Central | ||||||||||||||
All Other | ||||||||||||||
Total | $ | $ | $ | $ |
March 31, 2023 | December 31, 2022 | |||||||
(In thousands) | ||||||||
Customer relationships | $ | $ | ||||||
Less accumulated amortization | ||||||||
Noncompete agreements | ||||||||
Less accumulated amortization | ||||||||
Other | ||||||||
Less accumulated amortization | ||||||||
Total | $ | $ |
Remainder of 2023 | 2024 | 2025 | 2026 | 2027 | Thereafter | |||||||||||||||
(In thousands) | ||||||||||||||||||||
Amortization expense | $ | $ | $ | $ | $ | $ |
Fair Value Measurements at March 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 March 31, 2023 | |||||||||||
(In thousands) | ||||||||||||||
Assets: | ||||||||||||||
Money market funds | $ | — | $ | $ | — | $ | ||||||||
Insurance contracts* | — | — | ||||||||||||
Total assets measured at fair value | $ | — | $ | $ | — | $ |
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 | $ | — | $ | $ | — | $ | ||||||||
Insurance contracts* | — | — | ||||||||||||
Total assets measured at fair value | $ | — | $ | $ | — | $ | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2023 | 2022 | |||||||
(In thousands) | ||||||||
Interest, net | $ | $ | ||||||
Income taxes paid, net | $ | $ |
March 31, 2023 | March 31, 2022 | |||||||
(In thousands) | ||||||||
Right-of-use assets obtained in exchange for new operating lease liabilities | $ | $ | ||||||
Property, plant and equipment additions in accounts payable | $ | $ | ||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2023 | 2022 | |||||||
(In thousands) | ||||||||
External operating revenues: | ||||||||
Pacific | $ | $ | ||||||
Northwest | ||||||||
Mountain | ||||||||
North Central | ||||||||
All Other | ||||||||
Total external operating revenues | $ | $ | ||||||
Intersegment operating revenues: | ||||||||
Pacific | $ | $ | ||||||
Northwest | ||||||||
Mountain | ||||||||
North Central | ||||||||
All Other | ||||||||
Total intersegment operating revenues | $ | $ | ||||||
EBITDA: | ||||||||
Pacific | $ | ( | $ | |||||
Northwest | ||||||||
Mountain | ( | ( | ||||||
North Central | ( | ( | ||||||
All Other | ( | |||||||
Total segment EBITDA | $ | ( | $ | ( |
Three Months Ended | ||||||||
March 31, | ||||||||
2023 | 2022 | |||||||
(In thousands) | ||||||||
Total reportable segment operating revenues | $ | $ | ||||||
Other operating revenues | ||||||||
Elimination of intersegment operating revenues | ( | ( | ||||||
Total consolidated operating revenues | $ | $ |
Three Months Ended | ||||||||
March 31, | ||||||||
2023 | 2022 | |||||||
(In thousands) | ||||||||
Total EBITDA for reportable segments | $ | ( | $ | ( | ||||
Other EBITDA | ( | |||||||
Depreciation, depletion and amortization | ||||||||
Interest | ||||||||
Total consolidated loss before income taxes | $ | ( | $ | ( |
Three Months Ended | ||||||||
March 31, | ||||||||
2023 | 2022 | |||||||
(In thousands) | ||||||||
Components of net periodic benefit cost: | ||||||||
Interest cost | $ | $ | ||||||
Expected return on assets | ( | ( | ||||||
Amortization of net actuarial loss | ||||||||
Net periodic benefit cost | $ | $ |
Three Months Ended | ||||||||
March 31, | ||||||||
2023 | 2022 | |||||||
(In thousands) | ||||||||
Components of net periodic benefit cost: | ||||||||
Service cost | $ | $ | ||||||
Interest cost | ||||||||
Expected return on assets | ( | |||||||
Amortization of prior service credit | ( | ( | ||||||
Amortization of net actuarial (gain) loss | ( | |||||||
Net periodic benefit cost | $ | $ |
Weighted average interest rate at March 31, 2023 | March 31, 2023 | December 31, 2022 | |||||||||
(In thousands) | |||||||||||
Centennial's term loan agreements with maturities ranging from September 15, 2023 to December 18, 2023 | % | $ | $ | ||||||||
Centennial's senior notes with maturities ranging from June 27, 2023 to April 4, 2034 | % | ||||||||||
Borrowing arrangement under Centennial's commercial paper program, supported by Centennial’s credit agreements | % | ||||||||||
Credit agreement due on December 19, 2024 | % | ||||||||||
Total related-party notes payable | |||||||||||
Less: current maturities | |||||||||||
Net related-party notes payable | $ | $ |
Product and services | Modes of transportation | ||||||||||||||||||||||||||||||||||
Precast/ | |||||||||||||||||||||||||||||||||||
Ready-mix | Construction | prestressed | Liquid | Heavy | |||||||||||||||||||||||||||||||
Aggregates | Asphalt | concrete | services | concrete | asphalt | Cement | equipment | Trucking | Rail | Barge | |||||||||||||||||||||||||
Pacific | X | X | X | X | X | X | X | X | X | X | X | ||||||||||||||||||||||||
Northwest | X | X | X | X | X | X | X | X | X | ||||||||||||||||||||||||||
Mountain | X | X | X | X | X | X | |||||||||||||||||||||||||||||
North Central | X | X | X | X | X | X | X | X | |||||||||||||||||||||||||||
All Other | X | X | X | X | X | X | X | X | X |
March 31, 2023 | March 31, 2022 | December 31, 2022 | |||||||||
(In millions) | |||||||||||
Pacific | $ | 75.1 | $ | 69.9 | $ | 72.2 | |||||
Northwest | 250.5 | 120.9 | 210.7 | ||||||||
Mountain | 366.1 | 263.9 | 313.5 | ||||||||
North Central | 209.4 | 239.4 | 147.3 | ||||||||
All Other | 57.4 | 83.9 | 75.2 | ||||||||
$ | 958.5 | $ | 778.0 | $ | 818.9 |
Three Months Ended | ||||||||
March 31, | ||||||||
2023 | 2022 | |||||||
(In millions) | ||||||||
Revenue | $ | 307.9 | $ | 310.0 | ||||
Cost of revenue | 303.8 | 308.9 | ||||||
Gross profit | 4.1 | 1.1 | ||||||
Selling, general and administrative expenses | 48.7 | 45.7 | ||||||
Operating loss | (44.6) | (44.6) | ||||||
Interest expense | 9.5 | 5.2 | ||||||
Other income (expense) | .9 | (2.0) | ||||||
Loss before income taxes | (53.2) | (51.8) | ||||||
Income tax benefit | (11.9) | (11.8) | ||||||
Net loss | $ | (41.3) | $ | (40.0) | ||||
EBITDA* | $ | (14.1) | $ | (18.2) | ||||
Adjusted EBITDA* | $ | (13.7) | $ | (16.0) |
Revenues | Gross profit | EBITDA* | ||||||||||||||||||||||||
Three Months Ended March 31, | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||
Pacific | $ | 67.8 | $ | 85.3 | $ | 1.8 | $ | 8.3 | $ | (3.1) | $ | 5.4 | ||||||||||||||
Northwest | 115.9 | 105.5 | 15.7 | 14.0 | 13.2 | 12.8 | ||||||||||||||||||||
Mountain | 60.6 | 58.5 | (5.8) | (5.8) | (6.6) | (8.1) | ||||||||||||||||||||
North Central | 21.0 | 22.8 | (20.2) | (21.1) | (23.6) | (24.3) | ||||||||||||||||||||
All Other | 44.0 | 39.9 | 12.6 | 5.7 | 6.0 | (4.0) | ||||||||||||||||||||
Intersegment eliminations | (1.4) | (2.0) | — | — | — | — | ||||||||||||||||||||
$ | 307.9 | $ | 310.0 | $ | 4.1 | $ | 1.1 | $ | (14.1) | $ | (18.2) |
Revenues | Gross margin | ||||||||||||||||
Three Months Ended March 31, | 2023 | 2022 | 2023 | 2022 | |||||||||||||
(In millions) | |||||||||||||||||
Aggregates | $ | 83.5 | $ | 77.6 | 2.8% | .5% | |||||||||||
Ready-mix concrete | 96.8 | 108.5 | 9.0% | 8.6% | |||||||||||||
Asphalt | 13.6 | 18.1 | (43.8)% | (28.9)% | |||||||||||||
Other* | 38.6 | 37.5 | (16.3)% | (31.0)% | |||||||||||||
Contracting services | 115.0 | 114.3 | 4.6% | 7.2% | |||||||||||||
Internal sales | (39.6) | (46.0) | —% | —% | |||||||||||||
$ | 307.9 | $ | 310.0 | 1.3% | .4% |
Three Months Ended March 31, | 2023 | 2022 | ||||||
Sales (thousands): | ||||||||
Aggregates (tons) | 4,868 | 4,970 | ||||||
Ready-mix concrete (cubic yards) | 561 | 734 | ||||||
Asphalt (tons) | 179 | 316 | ||||||
Average selling price:* | ||||||||
Aggregates (per ton) | $ | 17.16 | $ | 15.62 | ||||
Ready-mix concrete (per cubic yard) | $ | 172.64 | $ | 147.89 | ||||
Asphalt (per ton) | $ | 76.07 | $ | 57.21 |
Three months ended March 31, | 2023 | 2022 | Variance | ||||||||
(Dollars in millions) | |||||||||||
Revenue | $ | 67.8 | $ | 85.3 | (21)% | ||||||
Gross profit | $ | 1.8 | $ | 8.3 | (78)% | ||||||
Gross margin | 2.6% | 9.8% | |||||||||
EBITDA | $ | (3.1) | $ | 5.4 | (157)% | ||||||
EBITDA margin | (4.6)% | 6.4% |
Three months ended March 31, | 2023 | 2022 | ||||||
(In millions) | ||||||||
Revenues: | ||||||||
Aggregates | $ | 18.7 | $ | 19.1 | ||||
Ready-mix concrete | 26.2 | 30.0 | ||||||
Asphalt | 1.3 | 4.5 | ||||||
Other* | 26.0 | 26.9 | ||||||
Contracting services | 6.9 | 21.0 | ||||||
Internal sales | (11.3) | (16.2) | ||||||
$ | 67.8 | $ | 85.3 |
Three months ended March 31, | 2023 | 2022 | Variance | ||||||||
(Dollars in millions) | |||||||||||
Revenue | $ | 115.9 | $ | 105.5 | 10% | ||||||
Gross profit | $ | 15.7 | $ | 14.0 | 12% | ||||||
Gross margin | 13.6% | 13.3% | |||||||||
EBITDA | $ | 13.2 | $ | 12.8 | 3% | ||||||
EBITDA margin | 11.3% | 12.1% |
Three months ended March 31, | 2023 | 2022 | ||||||
(In millions) | ||||||||
Revenues: | ||||||||
Aggregates | $ | 42.6 | $ | 33.6 | ||||
Ready-mix concrete | 33.9 | 36.3 | ||||||
Asphalt | 6.9 | 8.5 | ||||||
Other* | 2.7 | 3.3 | ||||||
Contracting services | 42.8 | 37.2 | ||||||
Internal sales | (13.0) | (13.4) | ||||||
$ | 115.9 | $ | 105.5 |
Three Months Ended March 31, | 2023 | 2022 | Variance | ||||||||
(Dollars in millions) | |||||||||||
Revenue | $ | 60.6 | $ | 58.5 | 4% | ||||||
Gross profit | $ | (5.8) | $ | (5.8) | —% | ||||||
Gross margin | (9.6)% | (9.9)% | |||||||||
EBITDA | $ | (6.6) | $ | (8.1) | 19% | ||||||
EBITDA margin | (10.8)% | (13.8)% |
Three Months Ended March 31, | 2023 | 2022 | ||||||
(In millions) | ||||||||
Revenues: | ||||||||
Aggregates | $ | 9.6 | $ | 9.2 | ||||
Ready-mix concrete | 14.4 | 16.2 | ||||||
Asphalt | .8 | .3 | ||||||
Contracting services | 41.7 | 36.8 | ||||||
Internal sales | (5.9) | (4.0) | ||||||
$ | 60.6 | $ | 58.5 |
Three months ended March 31, | 2023 | 2022 | Variance | ||||||||
(Dollars in millions) | |||||||||||
Revenue | $ | 21.0 | $ | 22.8 | (8)% | ||||||
Gross profit | $ | (20.2) | $ | (21.1) | 4% | ||||||
Gross margin | (96.2)% | (92.3)% | |||||||||
EBITDA | $ | (23.6) | $ | (24.3) | 3% | ||||||
EBITDA margin | (112.3)% | (106.3)% |
Three Months Ended March 31, | 2023 | 2022 | ||||||
(In millions) | ||||||||
Revenues: | ||||||||
Aggregates | $ | 4.0 | $ | 4.0 | ||||
Ready-mix concrete | 12.3 | 12.4 | ||||||
Asphalt | .2 | — | ||||||
Other* | 1.6 | 2.1 | ||||||
Contracting services | 4.6 | 5.6 | ||||||
Internal sales | (1.7) | (1.3) | ||||||
$ | 21.0 | $ | 22.8 |
Three months ended March 31, | 2023 | 2022 | Variance | ||||||||
(Dollars in millions) | |||||||||||
Revenue | $ | 44.0 | $ | 39.9 | 10% | ||||||
Gross profit | $ | 12.6 | $ | 5.7 | 121% | ||||||
Gross margin | 28.8% | 14.1% | |||||||||
EBITDA | $ | 6.0 | $ | (4.0) | 250% | ||||||
EBITDA margin | 13.6% | (10.3)% |
Three Months Ended | ||||||||
March 31, | ||||||||
2023 | 2022 | |||||||
(In millions) | ||||||||
Intersegment transactions: | ||||||||
Revenue | $ | 1.4 | $ | 2.0 | ||||
Cost of revenue | $ | 1.4 | $ | 2.0 | ||||
Three Months Ended | ||||||||
March 31, | ||||||||
2023 | 2022 | |||||||
(In millions) | ||||||||
Net cash provided by (used in) | ||||||||
Operating activities | $ | (79.3) | $ | (76.2) | ||||
Investing activities | (40.8) | (40.2) | ||||||
Financing activities | 117.2 | 114.6 | ||||||
Decrease in cash and cash equivalents | (2.9) | (1.8) | ||||||
Cash and cash equivalents -- beginning of year | 10.1 | 13.8 | ||||||
Cash and cash equivalents -- end of period | $ | 7.2 | $ | 12.0 |
Three Months Ended | |||||||||||
March 31, | |||||||||||
2023 | 2022 | Variance | |||||||||
(In millions) | |||||||||||
Components of net cash used in operating activities: | |||||||||||
Net loss | $ | (41.3) | $ | (40.0) | $ | (1.3) | |||||
Adjustments to reconcile net loss to net cash used in operating activities | 26.5 | 25.1 | 1.4 | ||||||||
Changes in current assets and liabilities, net of acquisitions: | |||||||||||
Receivables | 34.2 | 10.8 | 23.4 | ||||||||
Due from related-party | (.8) | 4.6 | (5.4) | ||||||||
Inventories | (49.9) | (49.5) | (.4) | ||||||||
Other current assets | (18.4) | (22.7) | 4.3 | ||||||||
Accounts payable | 1.9 | 9.6 | (7.7) | ||||||||
Due to related-party | 4.6 | 5.9 | (1.3) | ||||||||
Other current liabilities | (36.3) | (20.7) | (15.6) | ||||||||
Pension and postretirement benefit plan contributions | (.2) | (.1) | (.1) | ||||||||
Other noncurrent charges | .4 | .8 | (.4) | ||||||||
Net cash used in operating activities: | $ | (79.3) | $ | (76.2) | $ | (3.1) |
Three Months Ended | |||||||||||
March 31, | |||||||||||
2023 | 2022 | Variance | |||||||||
(In millions) | |||||||||||
Capital expenditures | $ | (42.4) | $ | (40.8) | $ | (1.6) | |||||
Acquisitions, net of cash acquired | — | (.5) | .5 | ||||||||
Net proceeds from sale or disposition of property and other | 3.2 | 2.6 | .6 | ||||||||
Investments | (1.6) | (1.5) | (.1) | ||||||||
Net cash used in investing activities | $ | (40.8) | $ | (40.2) | $ | (.6) |
Three Months Ended | |||||||||||
March 31, | |||||||||||
2023 | 2022 | Variance | |||||||||
(In millions) | |||||||||||
Issuance of current related-party notes, net | $ | — | $ | 100.0 | $ | (100.0) | |||||
Issuance of long-term related-party notes, net | 131.6 | 31.7 | 99.9 | ||||||||
Repayment of long-term debt | — | (.1) | .1 | ||||||||
Debt issuance costs | — | (.7) | .7 | ||||||||
Net transfers to Parent | (14.4) | (16.3) | 1.9 | ||||||||
Net cash provided by financing activities | $ | 117.2 | $ | 114.6 | $ | 2.6 |
Three Months Ended March 31, | 2023 | 2022 | ||||||
(In millions) | ||||||||
Net income | $ | (41.3) | $ | (40.0) | ||||
Adjustments: | ||||||||
Income taxes | (11.9) | (11.8) | ||||||
Depreciation, depletion and amortization | 29.6 | 28.4 | ||||||
Interest | 9.5 | 5.2 | ||||||
EBITDA | $ | (14.1) | $ | (18.2) | ||||
Unrealized gains (losses) on benefit plan investments | (1.3) | 1.5 | ||||||
Stock-based compensation expense | .9 | .7 | ||||||
One-time separation costs | .8 | — | ||||||
Adjusted EBITDA | $ | (13.7) | $ | (16.0) | ||||
Revenues | $ | 307.9 | $ | 310.0 | ||||
Net income margin | (13.4)% | (12.9)% | ||||||
EBITDA margin | (4.6)% | (5.9)% |
Exhibits Index | |||||||||||||||||||||||
Incorporated by Reference | |||||||||||||||||||||||
Exhibit Number | Exhibit Description | Filed Herewith | Form | Period Ended | Exhibit | Filing Date | File Number | ||||||||||||||||
3(a) | X | ||||||||||||||||||||||
3(b) | X | ||||||||||||||||||||||
3(c) | X | ||||||||||||||||||||||
4.2 | 10- 12B/A | 4.2 | 4/7/23 | 1-41642 | |||||||||||||||||||
10.1 | 10- 12B/A | 10.16 | 4/7/23 | 1-41642 | |||||||||||||||||||
10.2 | X | ||||||||||||||||||||||
10.3 | X | ||||||||||||||||||||||
10.4 | X | ||||||||||||||||||||||
10.5 | X | ||||||||||||||||||||||
10.6 | X | ||||||||||||||||||||||
10.7 | X | ||||||||||||||||||||||
10.8 | X | ||||||||||||||||||||||
10.9 | X | ||||||||||||||||||||||
31(a) | X | ||||||||||||||||||||||
31(b) | X | ||||||||||||||||||||||
32 | X | ||||||||||||||||||||||
95 | X | ||||||||||||||||||||||
101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | ||||||||||||||||||||||
101.SCH | XBRL Taxonomy Extension Schema Document | ||||||||||||||||||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | ||||||||||||||||||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | ||||||||||||||||||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | ||||||||||||||||||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | ||||||||||||||||||||||
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
Knife River Holding Company | |||||||||||
DATE: | May 16, 2023 | BY: | /s/ Brian R. Gray | ||||||||
Brian R. Gray | |||||||||||
President and Chief Executive Officer | |||||||||||
BY: | /s/ Nathan W. Ring | ||||||||||
Nathan W. Ring | |||||||||||
Vice President and Chief Financial Officer |
MSHA Identification Number/Contractor ID | Section 104 S&S Citations (#) | Total Dollar Value of MSHA Assessments Proposed ($) | Legal Actions Pending as of Last Day of Period (#) | Legal Actions Initiated During Period (#) | Legal Actions Resolved During Period (#) | ||||||||||||
04-00081 | — | $ | 286 | — | — | — | |||||||||||
10-02089 | 1 | 772 | — | — | — | ||||||||||||
32-00950 | — | 133 | — | — | — | ||||||||||||
35-02906 | — | 143 | — | — | — | ||||||||||||
35-02968 | 1 | 1,070 | — | — | — | ||||||||||||
35-03131 | — | 143 | — | — | — | ||||||||||||
35-03321 | — | 143 | — | — | — | ||||||||||||
35-03404 | — | 143 | — | — | — | ||||||||||||
35-03478 | — | 143 | — | — | — | ||||||||||||
35-03558 | — | 143 | — | — | — | ||||||||||||
35-03581 | — | 143 | — | — | — | ||||||||||||
35-03595 | — | 143 | — | — | — | ||||||||||||
35-03605 | 1 | 632 | — | — | — | ||||||||||||
35-03639 | — | 286 | — | — | — | ||||||||||||
35-03642 | 1 | 892 | — | — | — | ||||||||||||
39-00008 | 1 | — | — | — | — | ||||||||||||
41-03931 | — | 133 | — | — | — | ||||||||||||
41-05492 | 1 | 438 | — | — | — | ||||||||||||
48-01518 | 1 | 6,220 | — | — | — | ||||||||||||
48-01598 | — | 1,208 | — | — | — | ||||||||||||
48-01569 | — | 715 | — | — | — | ||||||||||||
51-00171 | — | 133 | — | — | — | ||||||||||||
51-00192 | — | 133 | — | — | — | ||||||||||||
51-00195 | — | 143 | — | — | — | ||||||||||||
51-00241 | — | 143 | — | — | — | ||||||||||||
51-00242 | — | 143 | — | — | — | ||||||||||||
7 | $ | 14,624 | — | — | — |
MSHA Identification Number | Contests of Citations and Orders | Contests of Proposed Penalties | Complaints for Compensation | Complaints of Discharge, Discrimination or Interference | Applications for Temporary Relief | Appeals of Judges' Decisions or Orders to the Commission | ||||||||||||||
— | — | — | — | — | — | |||||||||||||||
— | — | — | — | — | — | |||||||||||||||
— | — | — | — | — | — |
/s/ Name: Travis C. Anderson-Hamilton Title: Incorporator |
Role | Base | % LTIP | Target | Time in Role | Target | ||||||||||||
President | $400,000 | 100% | $400,000 | Pro-rated 2/36 | $22,222 | ||||||||||||
President & CEO | $500,000 | 170% | $850,000 | Pro-rated 3/36 | $70,833 | ||||||||||||
President & CEO Stand-Alone KRC | $800,000 | 375% | $3,000,000 | Pro-rated 31/36 | $2,583,333 | ||||||||||||
Total for 2023 | $2,676,389 | ||||||||||||||||
Less Grant of 2/16/23 | ($775,000) | ||||||||||||||||
Additional Grant | $1,901,389 |
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Net loss | $ (41,320) | $ (40,010) |
Other comprehensive income: | ||
Reclassification adjustment for loss on derivative instruments included in net income (loss), tax | 15 | 27 |
Reclassification adjustment for loss on derivative instruments included in net income (loss), net of tax | 46 | 82 |
Postretirement liability adjustment: | ||
Amortization of postretirement liability losses included in net periodic benefit cost, tax | 15 | 71 |
Amortization of postretirement liability losses included in net periodic benefit cost, net of tax | 47 | 221 |
Other comprehensive income | 93 | 303 |
Comprehensive loss attributable to common stockholders | $ (41,227) | $ (39,707) |
Background |
3 Months Ended |
---|---|
Mar. 31, 2023 | |
Restructuring and Related Activities [Abstract] | |
Background | Background On August 4, 2022, MDU Resources announced that its board of directors approved a plan to pursue the separation of the Company from MDU Resources. The separation will result in two independent, publicly traded companies, MDU Resources Group, Inc. and Knife River Holding Company. On March 10, 2023, Knife River Holding Company filed publicly a draft Registration Statement on Form 10 with the SEC. On May 3, 2023, MDU Resources' board of directors approved the separation and the distribution of approximately 90 percent of the issued and outstanding shares of the Company to MDU Resources' stockholders. Stockholders of MDU Resources will receive one share of the Company's common stock for every four shares of MDU Resources common stock held on May 22, 2023, the record date for the distribution. MDU Resources will retain approximately 10 percent of the Company's common stock immediately following the separation with the intent to dispose of such shares within twelve months after the separation. Prior to completing the separation, MDU Resources may adjust the percentage of the Company's common stock to be distributed to MDU Resources' stockholders and retained by MDU Resources in response to market and other factors. The Registration Statement was declared effective by the SEC on May 10, 2023, and the separation is expected to be completed on May 31, 2023, subject to certain conditions. The separation of Knife River is planned as a tax-free spinoff transaction to MDU Resources' stockholders for U.S. federal income tax purposes. More information on the separation and distribution, as well as the Company's historical results, can be found within the Company's Registration Statement on Form 10. Until the separation is effective, the Company is the construction materials and contracting segment of MDU Resources. Its operations are located in the western and central regions of the United States. The Company mines, processes and sells construction aggregates (crushed stone and sand and gravel) and produces and sells asphalt and ready-mix concrete. The Company is focused on the vertical integration of its aggregates-based construction materials, which is used to support value-added downstream products and contracting services.
|
Basis of presentation |
3 Months Ended |
---|---|
Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation [Text Block] | Basis of presentation The accompanying consolidated interim financial statements were prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Interim financial statements do not include all disclosures provided in annual financial statements and, accordingly, these financial statements should be read in conjunction with the Form 10. The information is unaudited but includes adjustments that are, in the opinion of management, necessary for a fair presentation of the accompanying consolidated interim financial statements and are of a normal recurring nature. Knife River has historically 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 consolidated financial statements and footnotes, which were prepared on a “carve-out” basis in connection with the expected separation, were derived from the consolidated financial statements of MDU Resources as if the Company operated on a stand-alone basis during the periods presented, and were prepared utilizing the legal entity approach in conformity with GAAP. The Company utilized allocations and carve-out methodologies to prepare its consolidated financial statements. The consolidated financial statements herein may not be indicative of the Company's future performance or actual expenses that would have been incurred as a stand-alone company for the periods presented. These consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements included in the Company's Registration Statement on Form 10. All revenues and costs, as well as assets and liabilities, directly associated with the business activity of the Company are included in the consolidated financial statements. The consolidated financial statements also 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. The amounts allocated were $4.6 million and $4.9 million for the three months ended March 31, 2023 and 2022, respectively. These expenses have been 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 are considered to be a reasonable reflection of the utilization of the services provided to the benefits received. Following the separation from MDU Resources, the Company may perform certain functions using its own resources or contracted services. For an interim period following the separation, however, some of these functions will continue to be provided by MDU Resources under a transition services agreement. Historically, Knife River has participated in Centennial’s centralized cash management program, including its overall financing arrangements. Knife River has 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 Sheets. Interest expense in the Consolidated Statements of Operations reflects the allocation of interest on borrowing and funding associated with the related-party note agreements. MDU Resources maintains various benefit and stock-based compensation plans at a corporate level while certain defined pension benefit plans are maintained at a subsidiary level. The Company’s employees participate in these aforementioned plans and the costs associated with its employees are included in the Company’s consolidated financial statements, as well as any net benefit plan assets or obligations. Management has also evaluated the impact of events occurring after March 31, 2023, up to the date of issuance of these consolidated interim financial statements on May 16, 2023, that would require recognition or disclosure in the Consolidated Financial Statements. For more information on subsequent events, see Note 17. Principles of consolidation The 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 consolidated financial statements. Related-party transactions between the Company and MDU Resources or Centennial for general operating activities and intercompany debt have been included in the consolidated financial statements. These related-party transactions have historically been settled in cash and are reflected in the Consolidated Balance Sheets as “Due from related-party” or “Due to related-party” with the aggregate net effect reflected in the Consolidated Statements of Cash Flows within operating activities and “Related-party notes payable” with the aggregate net effect reflected in the Consolidated Statements of Cash Flows within financing activities. The aggregate net effect of related-party transactions not settled in cash have been reflected in the Consolidated Balance Sheets within “Other paid-in capital” and in the Consolidated Statements of Cash Flows as “Net transfers to Parent” in financing activities. See Note 16 for additional information on related-party transactions. 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 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 There have been no recent accounting standards that are expected to materially affect the Company.
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Seasonality of operations |
3 Months Ended |
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Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Seasonality of operations | Some of the Company's operations are seasonal and revenues from, and certain expenses for, such operations may fluctuate significantly among quarterly periods, with lower activity in the winter months and higher activity in the summer months. Accordingly, the interim results for particular segments, and for the Company as a whole, may not be indicative of results for the full fiscal year. |
Receivables and allowance for expected credit losses |
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Credit Loss [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables and allowance for expected credit loss | Receivables consist primarily of trade and contracting services contract receivables for 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 $13.7 million and $11.2 million at March 31, 2023 and December 31, 2022, respectively. Receivables were as follows:
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:
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Inventories |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories on the Consolidated Balance sheets were as follows:
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.
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Accumulated other comprehensive loss |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated other comprehensive loss | The after-tax changes in the components of accumulated other comprehensive loss were as follows:
The following amounts were reclassified out of accumulated other comprehensive loss into net loss. The amounts presented in parenthesis indicate a decrease to net loss on the Consolidated Statements of Operations. The reclassifications were as follows:
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Revenue from contracts with customers |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from contracts with customers | 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. Disaggregation In the following tables, revenue is disaggregated by category for each 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 13. 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 downstream materials and contracting services to arrive at the external operating revenues.
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Uncompleted Contracts |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Uncompleted contracts | The timing of revenue recognition may differ from the timing of invoicing to customers. The timing of invoicing to customers does not necessarily correlate with the timing of revenues being recognized under the cost-to-cost method of accounting. Contracts from contracting services are billed as work progresses in accordance with agreed upon contractual terms. Generally, billing to the customer occurs contemporaneous to revenue recognition. A variance in timing of the billings may result in a contract asset or a contract liability. A contract asset occurs when revenues are recognized under the cost-to-cost measure of progress, which exceeds amounts billed on uncompleted contracts. Such amounts will be billed as standard contract terms allow, usually based on various measures of performance or achievement. A contract liability occurs when there are billings in excess of revenues recognized under the cost-to-cost measure of progress on uncompleted contracts. Contract liabilities decrease as revenue is recognized from the satisfaction of the related performance obligation. The changes in contract assets and liabilities were as follows:
The Company recognized $20.3 million in revenue for the three months ended March 31, 2023, which was previously included in contract liabilities at December 31, 2022. The Company recognized $20.0 million in revenue for the three months ended March 31, 2022, which was previously included in contract liabilities at December 31, 2021. The Company recognized a net increase in revenues of $3.6 million and $4.8 million for the three months ended March 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 March 31, 2023, the Company's remaining performance obligations were $958.5 million. The Company expects to recognize the following revenue amounts in future periods related to these remaining performance obligations: $863.8 million within the next 12 months or less; $70.8 million within the next 13 to 24 months; and $23.9 million in 25 months or more.
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Business Combinations |
3 Months Ended |
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Mar. 31, 2023 | |
Business Combinations [Abstract] | |
Business Combinations | The following acquisition was accounted for as a business combination in accordance with ASC 805 - Business Combinations. The results of the business combination have been included in the Company's Consolidated Financial Statements beginning on the acquisition date. Pro forma financial amounts reflecting the effects of the business combination are not presented, because it was not material to the Company's financial position or results of operations. Acquisitions are also subject to customary adjustments based on, among other things, the amount of cash, debt and working capital in the business as of the closing date. The amounts included in the Consolidated Balance Sheets for these adjustments are considered provisional until final settlement has occurred. The Company had no acquisitions in the three months ended March 31, 2023. In December 2022, the Company's Pacific segment acquired Allied Concrete and Supply Co., a producer of ready-mixed concrete in California. At March 31, 2023, the purchase price allocation was considered preliminary and will be finalized within 12 months of the acquisition date. The total purchase price for the acquisition that occurred in 2022 was $8.9 million, subject to certain adjustments, with cash acquired totaling $2.8 million. The purchase price includes consideration paid of $1.5 million, a $70,000 holdback liability and 273,153 shares of MDU Resources' common stock with a market value of $8.4 million as of the respective acquisition date. Due to the holding period restriction on the common stock, the share consideration was discounted to a fair value of approximately $7.3 million. The amounts allocated to the aggregated assets acquired and liabilities assumed during 2022 were as follows: $1.7 million to current assets; $5.9 million to property, plant and equipment; $200,000 to goodwill; $100,000 to current liabilities; $500,000 to noncurrent liabilities - other; and $1.2 million to deferred tax liabilities. Costs incurred for acquisitions are included in selling, general and administrative expenses on the Consolidated Statements of Operations and were immaterial for both the three months ended March 31, 2023 and 2022.
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Goodwill and other intangible assets |
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and other intangible assets | The changes in the carrying amount of goodwill were as follows:
Other amortizable intangible assets were as follows:
The previous tables include goodwill and intangible assets associated with the business combination completed during 2022. For more information related to this business combination, see Note 9. Amortization expense for amortizable intangible assets for the three months ended March 31, 2023 and 2022, was $667,000 and $621,000, respectively. Estimated amortization expense for identifiable intangible assets as of March 31, 2023, was:
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Fair value measurements |
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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 ASC establishes a hierarchy for grouping assets and liabilities, based on the significance of inputs. The estimated fair values of the Company's assets and liabilities measured on a recurring basis are determined using the market approach. The 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 as a participant in MDU Resources' 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 $22.4 million and $20.1 million, at March 31, 2023 and December 31, 2022, respectively, are classified as investments on the Consolidated Balance Sheets. The net unrealized gain on these investments was $827,000 for the three months ended March 31, 2023. The net unrealized loss on these investments was $1.0 million for the three months ended March 31, 2022. 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. The Company's assets measured at fair value on a recurring basis were as follows:
* The insurance contracts invest approximately 61 percent in fixed-income investments, 15 percent in common stock of large-cap companies, 8 percent in common stock of mid-cap companies, 7 percent in target date investments, 6 percent in common stock of small-cap companies, 2 percent in cash equivalents and 1 percent in international investments.
* 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. 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 performed fair value assessments of the assets acquired and liabilities assumed in the business combination that occurred during 2022. The fair value of these assets and liabilities were determined based on Level 2 and Level 3 inputs.
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Cash flow information |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash flow information | Cash expenditures for interest and income taxes were as follows:
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Business segment data |
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Mar. 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 organized by geographic region in the United States due to the cyclical nature of the construction work performed. The Company’s reportable segments are those that are based on the Company’s method of internal reporting and management of the business and are Pacific, Northwest, Mountain and North Central. The South and Energy Services operating segments do not meet the criteria to be reportable segments and, as such, are combined with its corporate services in All Other. Each segment is led by a segment president that reports to the Company’s chief executive 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 EBITDA. All of the reportable segments mine, process and sell construction aggregates (crushed stone and sand and gravel); produce and sell asphalt; and produce and sell ready-mix concrete, as well as vertically integrating its contracting services to support the aggregate-based product lines including heavy-civil construction, asphalt and concrete paving, and site development and grading, and in some segments the manufacturing of prestressed concrete products. Although not common to all locations, All Other includes the sale of cement, production and distribution of modified liquid asphalt, merchandise and other building materials and related services. The information below follows the same accounting policies as described in the audited financial statements and notes included in the Company's Registration Statement on Form 10. Information on the Company's segments was as follows:
A reconciliation of reportable segment operating revenues to consolidated operating revenues is as follows:
A reconciliation of reportable segment EBITDA to consolidated loss before income taxes is as follows:
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Employee benefit plans |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee benefit plans | Pension and other postretirement plans The Company has noncontributory qualified defined benefit pension plans and other postretirement benefit plans for certain eligible employees and also participates in other postretirement benefit plans of MDU Resources. Components of net periodic benefit cost for the Company's pension benefit plans were as follows:
Components of net periodic benefit cost for the Company's other postretirement benefit plans were as follows:
The components of net periodic benefit cost, other than the service cost component, are included in other income on the Consolidated Statements of Operations. The service cost component is included in selling, general and administrative expenses on the Consolidated Statements of Operations.
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Contingencies |
3 Months Ended |
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Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
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 March 31, 2023 and December 31, 2022, the Company accrued contingent liabilities, which have not been discounted, of $2.0 million and $1.0 million, respectively. At March 31, 2023 and December 31, 2022, the Company also recorded corresponding insurance receivables of $1.3 million and $325,000, respectively, related to the accrued liabilities. The accruals are for contingencies resulting from litigation and environmental matters. This includes amounts that have been accrued for matters discussed in Environmental matters within this note. 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 The Company is a party to claims for the cleanup of a superfund site in Portland, Oregon. There were no material changes to the Company's environmental matters that were previously reported in the audited financial statements and notes included in the Company's Registration Statement on Form 10. Guarantees Certain subsidiaries of the Company have outstanding guarantees to third parties that guarantee their performance. These guarantees are related to contracts for contracting services, insurance deductibles and loss limits, and certain other guarantees. At March 31, 2023, the fixed maximum amounts guaranteed under these agreements aggregated to $11.5 million, all of which has 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 March 31, 2023. In the event of default under these guarantee obligations, the subsidiary issuing the guarantee for that particular obligation would be required to make payments under its guarantee. Certain subsidiaries of the Company have outstanding letters of credit to third parties related to insurance policies, cement purchases and other agreements. At March 31, 2023, the fixed maximum amounts guaranteed under these letters of credit aggregated $4.9 million. At March 31, 2023, the amounts of scheduled expiration of the maximum amounts guaranteed under these letters of credit aggregate to $4.6 million in 2023 and $332,000 in 2024. There were no amounts outstanding under the previously mentioned letters of credit at March 31, 2023. In the event of default under these letter of credit obligations, the subsidiary guaranteeing the letter of credit would be obligated for reimbursement of payments made under the letter of credit. In addition, Centennial has issued guarantees to third parties related to the routine purchase of materials for which no fixed maximum amounts have been specified. These guarantees have no scheduled maturity date. These guarantees include the performance of Centennial's subsidiaries. If a subsidiary, including the Company, were to default under the obligations of the agreement, Centennial would be required to make payments under the guarantee. There were no amounts outstanding as of March 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 March 31, 2023, approximately $822.7 million of surety bonds were outstanding, which were not reflected on the Consolidated Balance Sheet.
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Related Party Disclosures |
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Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions Disclosure | Allocation of corporate expenses Centennial and MDU Resources provide expense allocations for corporate services provided to the Company, including costs related to senior management, legal, human resources, finance and accounting, treasury, information technology, communications, procurement, tax, insurance and other shared services. Some of these services will continue to be provided by Centennial and MDU Resources on a temporary basis after the separation is completed under a transition services agreement. For the three months ended March 31, 2023 and 2022, the Company was allocated $4.6 million and $4.9 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. 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 has a central cash management and financing program in which the Company participates. Through the use of these programs, Centennial is able to more effectively direct and manage the daily cash requirements and financing needs for each wholly owned subsidiaries through the consolidation of all cash activity. As cash is received and disbursed by Centennial, it is accounted for by the Company through related-party receivables and payables. The Company has related-party note agreements in place with Centennial for the financing of its capital needs. Centennial has committed to continue funding the Company through the central cash management and financing program to allow the Company to meet its obligations as they become due for at least one year and a day following the date that the consolidated financial statements are issued. As discussed in Note 2, MDU Resources announced plans to pursue a separation of the Company from MDU Resources. Upon separation, the Company plans to rely 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. Related-party notes payable Centennial enters into short-term and long-term borrowing arrangements for the benefit of certain subsidiaries of the Company. The Company has access to borrowings by participation in Centennial's commercial paper program, as well as a centralized cash management program at Centennial. These borrowings have been included in both current and noncurrent liabilities in related-party notes payable in the Consolidated Balance Sheets. Related-party short-term and long-term borrowing arrangements were as follows:
The amounts of scheduled related-party notes payable maturities for the five years and thereafter following March 31, 2023, aggregate $238.0 million for the remainder of 2023; $198.1 million in 2024; $10.0 million in 2025; $0 in 2026; $65.0 million in 2027 and $305.0 million thereafter. Certain debt instruments of Centennial, including those discussed below, contain restrictive covenants and cross-default provisions. In order to borrow under the respective credit agreements Centennial and its subsidiaries must be in compliance with the applicable covenants and certain other conditions. In the event Centennial and its subsidiaries do not comply with the applicable covenants and other conditions, alternative sources of funding may need to be pursued. Centennial's revolving credit agreement contains customary covenants and provisions, including a covenant of Centennial not to permit, as of the end of any fiscal quarter, the ratio of total consolidated debt to total consolidated capitalization to be greater than 65 percent. Other covenants include restricted payments, restrictions on the sale of certain assets, limitations on subsidiary indebtedness, minimum consolidated net worth, limitations on priority debt and the making of certain loans and investments. Certain of Centennial's financing agreements contain cross-default provisions. These provisions state that if Centennial or any subsidiary of Centennial fails to make any payment with respect to any indebtedness or contingent obligation, in excess of a specified amount, under any agreement that causes such indebtedness to be due prior to its stated maturity or the contingent obligation to become payable, the applicable agreements will be in default. Related-party transactions The Company provides contracting services to MDU Resources and affiliated companies. The amount charged for these services was $131,000 and $130,000 as of March 31, 2023 and 2022, respectively. Related-party transactions that are expected to be settled in cash have been included as related-party receivables or payables in the Consolidated Balance Sheets. Related-party transactions that are not expected to be settled in cash have been included within Other paid-in capital in the Consolidated Balance Sheets. See Note 2 for further information.
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Subsequent Events |
3 Months Ended |
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Mar. 31, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events | On April 25, 2023, Knife River Holding Company issued $425.0 million of 7.75 percent senior notes due May 1, 2031, pursuant to an indenture agreement. The proceeds from the issuance of these notes will be held in escrow until the effective date of the Knife River separation, or if the separation does not occur within the time frame specified, released back to the lenders, along with accrued interest. On May 3, 2023, MDU Resources' board of directors approved the separation and the distribution of approximately 90 percent of the issued and outstanding shares of the Company to MDU Resources' stockholders. Stockholders of MDU Resources will receive one share of the Company's common stock for every four shares of MDU Resources' common stock held on May 22, 2023, the record date for the distribution. MDU Resources will retain approximately 10 percent of the Company's common stock immediately following the separation with the intent to dispose of such shares within twelve months after the separation. Prior to completing the separation, MDU Resources may adjust the percentage of the Company's common stock to be distributed to MDU Resources' stockholders and retained by MDU Resources in response to market and other factors. On May 10, 2023, the SEC declared the Registration Statement for Knife River Holding Company effective. The separation is expected to be complete on May 31, 2023, subject to certain conditions.
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Basis of presentation (Policies) |
3 Months Ended |
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Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of presentation | The accompanying consolidated interim financial statements were prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Interim financial statements do not include all disclosures provided in annual financial statements and, accordingly, these financial statements should be read in conjunction with the Form 10. The information is unaudited but includes adjustments that are, in the opinion of management, necessary for a fair presentation of the accompanying consolidated interim financial statements and are of a normal recurring nature. Knife River has historically 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 consolidated financial statements and footnotes, which were prepared on a “carve-out” basis in connection with the expected separation, were derived from the consolidated financial statements of MDU Resources as if the Company operated on a stand-alone basis during the periods presented, and were prepared utilizing the legal entity approach in conformity with GAAP. The Company utilized allocations and carve-out methodologies to prepare its consolidated financial statements. The consolidated financial statements herein may not be indicative of the Company's future performance or actual expenses that would have been incurred as a stand-alone company for the periods presented. These consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements included in the Company's Registration Statement on Form 10. All revenues and costs, as well as assets and liabilities, directly associated with the business activity of the Company are included in the consolidated financial statements. The consolidated financial statements also 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. The amounts allocated were $4.6 million and $4.9 million for the three months ended March 31, 2023 and 2022, respectively. These expenses have been 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 are considered to be a reasonable reflection of the utilization of the services provided to the benefits received. Following the separation from MDU Resources, the Company may perform certain functions using its own resources or contracted services. For an interim period following the separation, however, some of these functions will continue to be provided by MDU Resources under a transition services agreement. Historically, Knife River has participated in Centennial’s centralized cash management program, including its overall financing arrangements. Knife River has 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 Sheets. Interest expense in the Consolidated Statements of Operations reflects the allocation of interest on borrowing and funding associated with the related-party note agreements. MDU Resources maintains various benefit and stock-based compensation plans at a corporate level while certain defined pension benefit plans are maintained at a subsidiary level. The Company’s employees participate in these aforementioned plans and the costs associated with its employees are included in the Company’s consolidated financial statements, as well as any net benefit plan assets or obligations. Management has also evaluated the impact of events occurring after March 31, 2023, up to the date of issuance of these consolidated interim financial statements on May 16, 2023, that would require recognition or disclosure in the Consolidated Financial Statements. For more information on subsequent events, see Note 17.
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Consolidation, Policy | The 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 consolidated financial statements. Related-party transactions between the Company and MDU Resources or Centennial for general operating activities and intercompany debt have been included in the consolidated financial statements. These related-party transactions have historically been settled in cash and are reflected in the Consolidated Balance Sheets as “Due from related-party” or “Due to related-party” with the aggregate net effect reflected in the Consolidated Statements of Cash Flows within operating activities and “Related-party notes payable” with the aggregate net effect reflected in the Consolidated Statements of Cash Flows within financing activities. The aggregate net effect of related-party transactions not settled in cash have been reflected in the Consolidated Balance Sheets within “Other paid-in capital” and in the Consolidated Statements of Cash Flows as “Net transfers to Parent” in financing activities. See Note 16 for additional information on related-party transactions. |
Use of Estimates, Policy | 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 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 | There have been no recent accounting standards that are expected to materially affect the Company. |
Receivables and allowance for expected credit losses (Policies) |
3 Months Ended |
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Mar. 31, 2023 | |
Credit Loss [Abstract] | |
Accounts receivable and allowance for doubtful accounts | Receivables consist primarily of trade and contracting services contract receivables for 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 loss | 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. |
Revenue from contracts with customers (Policies) |
3 Months Ended |
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Mar. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Revenue from contracts with customers | 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. |
Business Combinations (Policies) |
3 Months Ended |
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Mar. 31, 2023 | |
Business Combinations [Abstract] | |
Business Combinations Policy | The following acquisition was accounted for as a business combination in accordance with ASC 805 - Business Combinations. The results of the business combination have been included in the Company's Consolidated Financial Statements beginning on the acquisition date. Pro forma financial amounts reflecting the effects of the business combination are not presented, because it was not material to the Company's financial position or results of operations. |
Fair value disclosures (Policies) |
3 Months Ended |
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Mar. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair value measurements | The Company measures its investments in certain fixed-income and equity securities at fair value with changes in fair value recognized in income. |
Business segment data (Policies) |
3 Months Ended |
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Mar. 31, 2023 | |
Segment Reporting [Abstract] | |
Business segment data | The Company’s reportable segments are those that are based on the Company’s method of internal reporting and management of the business and are Pacific, Northwest, Mountain and North Central. The South and Energy Services operating segments do not meet the criteria to be reportable segments and, as such, are combined with its corporate services in All Other. Each segment is led by a segment president that reports to the Company’s chief executive 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 EBITDA. |
Contingencies (Policies) |
3 Months Ended |
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Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
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. |
Receivables and allowance for expected credit losses (Tables) |
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Credit Loss [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accounts, Notes, Loans and Financing Receivable | Receivables were as follows:
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Accounts Receivable, Allowance for Credit Loss | Details of the Company's expected credit losses were as follows:
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Inventories (Tables) |
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Inventories | Inventories on the Consolidated Balance sheets were as follows:
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Accumulated other comprehensive loss (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated comprehensive loss | The after-tax changes in the components of accumulated other comprehensive loss were as follows:
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Reclassification out of accumulated other comprehensive loss | The following amounts were reclassified out of accumulated other comprehensive loss into net loss. The amounts presented in parenthesis indicate a decrease to net loss on the Consolidated Statements of Operations. The reclassifications were as follows:
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Revenue from contracts with customers (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of revenue | 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 downstream materials and contracting services to arrive at the external operating revenues.
|
Uncompleted contracts (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contract balances | The changes in contract assets and liabilities were as follows:
|
Goodwill and other intangible assets (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in the carrying amount of goodwill | The changes in the carrying amount of goodwill were as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other amortizable intangible assets | Other amortizable intangible assets were as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Estimated amortization expense | Estimated amortization expense for identifiable intangible assets as of March 31, 2023, was:
|
Fair value measurements (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets and liabilities measured at fair value on a recurring basis | The Company's assets measured at fair value on a recurring basis were as follows:
* The insurance contracts invest approximately 61 percent in fixed-income investments, 15 percent in common stock of large-cap companies, 8 percent in common stock of mid-cap companies, 7 percent in target date investments, 6 percent in common stock of small-cap companies, 2 percent in cash equivalents and 1 percent in international investments.
* 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.
|
Cash flow information (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash expenditures for interest and income taxes and noncash investing and financing transactions | Cash expenditures for interest and income taxes were as follows:
|
Business segment data (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Information on the Company's businesses | Information on the Company's segments was as follows:
|
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Reconciliation of Revenue from Segments to Consolidated | A reconciliation of reportable segment operating revenues to consolidated operating revenues is as follows:
|
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Segment, Reconciliation of Other Items from Segments to Consolidated | A reconciliation of reportable segment EBITDA to consolidated loss before income taxes is as follows:
|
Employee benefit plans (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of net benefit costs | Components of net periodic benefit cost for the Company's pension benefit plans were as follows:
Components of net periodic benefit cost for the Company's other postretirement benefit plans were as follows:
|
Related Party Disclosures (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Related Party Transactions | Related-party short-term and long-term borrowing arrangements were as follows:
|
Background (Details) - Subsequent Event [Member] |
May 03, 2023 |
---|---|
Spin Distribution Percentages [Line Items] | |
Percent of Shares Distributed in Conjunction with Spinoff | 90.00% |
Percent of Shares, Retained by Parent, in Conjunction with Spinoff | 10.00% |
Basis of presentation (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Costs and Expenses, Related Party | $ 4.6 | $ 4.9 |
Receivables and allowance for expected credit losses (Details) - USD ($) $ in Millions |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Credit Loss [Abstract] | ||
Accounts Receivable, Noncurrent, 90 Days or More Past Due, Still Accruing | $ 13.7 | $ 11.2 |
Receivables and allowance for expected credit losses (Details 2) - Trade Accounts Receivable - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
Mar. 31, 2022 |
Dec. 31, 2021 |
---|---|---|---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Trade receivables | $ 100,487 | $ 104,347 | ||
Contracting services contract receivables | 52,487 | 82,428 | ||
Retention receivables | 27,438 | 28,859 | ||
Receivables, gross | 180,412 | 215,634 | ||
Less expected credit loss | 5,822 | 5,477 | $ 5,126 | $ 5,406 |
Receivables, net | $ 174,590 | $ 210,157 |
Inventories (Details) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Finished products | $ 220,234 | $ 211,496 |
Raw materials | 114,735 | 78,571 |
Supplies and parts | 38,246 | 33,210 |
Total | $ 373,215 | $ 323,277 |
Contract Balances (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
Dec. 31, 2022 |
|
Revenue from Contract with Customer [Abstract] | |||
Contract assets | $ 30,974 | $ 31,145 | |
Change in contract assets | (171) | ||
Contract liabilities | (37,375) | $ (39,843) | |
Contract with Customer, Liability, Current Change | 2,468 | ||
Net contract liabilities | (6,401) | $ (8,698) | |
Change in net contract assets (liabilities) | 2,297 | ||
Amounts included in contract liability at the beginning of the period | 20,300 | 20,000 | |
Contract with customer, performance obligation satisfied in previous period | $ 3,600 | $ 4,800 |
Business Combinations (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Mar. 31, 2023 |
|
Business Acquisition [Line Items] | ||
Goodwill | $ 274,540,000 | $ 274,540,000 |
2022 Acquisition | ||
Business Acquisition [Line Items] | ||
Gross Aggregate Consideration | 8,900,000 | |
Cash Assumed | 2,800,000 | |
Business Combination, Consideration Transferred | 1,500,000 | |
Business Combination, Consideration Transferred, Liabilities Incurred | 70,000 | |
Current Assets | 1,700,000 | |
Property, Plant, and Equipment | 5,900,000 | |
Goodwill | 200,000 | |
Current Liabilities | 100,000 | |
Noncurrent Liabilities - Other | 500,000 | |
Deferred Tax Liabilities | $ 1,200,000 | |
2022 Acquisition | Common stock | ||
Business Acquisition [Line Items] | ||
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares | 273,153 | |
Business Acquisition, Equity Interest Issued or Issuable, Value Assigned | $ 8,400,000 | |
Equity Issued in Business Combination, Fair Value Disclosure | $ 7,300,000 |
Business Combinations - Acquisition Costs Incurred (Details 2) - USD ($) |
Mar. 31, 2023 |
Mar. 31, 2022 |
---|---|---|
Operating Expense [Member] | ||
Business Acquisition [Line Items] | ||
Business Acquisition, Transaction Costs | $ 0 | $ 0 |
Future amortization expense (Details 3) $ in Thousands |
Mar. 31, 2023
USD ($)
|
---|---|
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |
Remainder of 2023 | $ 1,826 |
2024 | 2,361 |
2025 | 2,084 |
2026 | 1,782 |
2027 | 1,759 |
Thereafter | $ 2,951 |
Fair value measurements Insurance contracts (Details) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
Dec. 31, 2022 |
|
Fair Value Disclosures [Abstract] | |||
Investments used to satisfy nonqualified benefit plans obligations | $ 22,400,000 | $ 20,100,000 | |
Net unrealized gain (loss) on investments used to satisfy obligations under nonqualified benefit plans | $ 827,000 | $ (1,000,000) |
Cash flow information (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Supplemental Cash Flow Information [Abstract] | ||
Interest, net | $ 7,081 | $ 704 |
Income taxes paid, net | 150 | 5 |
Right-of-use assets obtained in exchange for new operating lease liabilities | 1,894 | 2,071 |
Property, plant and equipment additions in accounts payable | $ 2,607 | $ 4,921 |
Business segment data operating revenues reconciliation (Details 2) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Revenues | $ 307,900 | $ 309,966 |
Operating Segments | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Revenues | 297,161 | 307,097 |
Corporate, Non-Segment | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Revenues | 50,324 | 48,903 |
Internal sales | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Revenues | $ (39,585) | $ (46,034) |
Business segment data EBITDA reconciliation (Details 3) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Segment, Reconciliation of Other Items from Segments to Consolidated [Line Items] | ||
EBITDA: | $ (14,108) | $ (18,191) |
Depreciation, Depletion and Amortization | 29,629 | 28,350 |
Interest expense | 9,495 | 5,266 |
Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest | (53,232) | (51,807) |
Operating Segments | ||
Segment, Reconciliation of Other Items from Segments to Consolidated [Line Items] | ||
EBITDA: | (20,089) | (14,097) |
Corporate, Non-Segment | ||
Segment, Reconciliation of Other Items from Segments to Consolidated [Line Items] | ||
EBITDA: | $ 5,981 | $ (4,094) |
Employee benefit plans (Details) - Qualified plan - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Underfunded plan | Pension benefits | ||
Defined benefit plan disclosure, net periodic benefit cost [Line Items] | ||
Interest cost | $ 408 | $ 282 |
Expected return on assets | (450) | (493) |
Amortization of net actuarial (gain) loss | 128 | 214 |
Net periodic benefit cost (credit) | 86 | 3 |
Overfunded Plan | Other postretirement benefits | ||
Defined benefit plan disclosure, net periodic benefit cost [Line Items] | ||
Service cost | 89 | 131 |
Interest cost | 181 | 128 |
Expected return on assets | 7 | (3) |
Amortization of prior service credit | (20) | (20) |
Amortization of net actuarial (gain) loss | (45) | 88 |
Net periodic benefit cost (credit) | $ 212 | $ 324 |
Litigation (Details) - USD ($) |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Loss Contingencies [Line Items] | ||
Potential liabilities related to litigation and environmental matters | $ 2,000,000 | $ 1,000,000 |
Insurance Receivable | $ 1,300,000 | $ 325,000 |
Guarantees (Details 2) |
Mar. 31, 2023
USD ($)
|
---|---|
Guarantor Obligations [Line Items] | |
Guarantor obligations, maximum exposure, undiscounted | $ 11,500,000 |
Amount outstanding under guarantees that is reflected on balance sheet | 0 |
Letters of credit | 4,900,000 |
Letters of credit set to expire - 2023 | 4,600,000 |
Letters of credit set to expire - 2024 | 332,000 |
Outstanding letters of credit | 0 |
Amount of surety bonds outstanding | $ 822,700,000 |
Related Party Disclosures (Details 1) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Related Party Transactions [Abstract] | ||
Costs and Expenses, Related Party | $ 4.6 | $ 4.9 |
Related Party Disclosures (Details 2) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Related Party Transaction [Line Items] | ||
Long-term debt | $ 359 | $ 427 |
Related Party | ||
Related Party Transaction [Line Items] | ||
Debt, Long-Term and Short-Term, Combined Amount | 816,060 | 684,449 |
Debt, Current | 238,000 | 238,000 |
Long-term debt | $ 578,060 | 446,449 |
Related Party | Senior Notes | ||
Related Party Transaction [Line Items] | ||
Weighted Average Interest Rate | 4.34% | |
Long-term debt | $ 410,000 | 410,000 |
Related Party | Commercial Paper | ||
Related Party Transaction [Line Items] | ||
Weighted Average Interest Rate | 6.30% | |
Long-term debt | $ 165,599 | 66,449 |
Related Party | Credit Agreements | ||
Related Party Transaction [Line Items] | ||
Weighted Average Interest Rate | 8.05% | |
Long-term debt | $ 32,461 | 0 |
Related Party | Short-Term Debt | ||
Related Party Transaction [Line Items] | ||
Short-Term Debt, Weighted Average Interest Rate, at Point in Time | 5.96% | |
Short-Term Debt | $ 208,000 | $ 208,000 |
Related Party Disclosures (Details 3) - Related Party - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Long-term debt maturities [Line Items] | ||
Remainder of 2023 | $ 238,000 | $ 238,000 |
2024 | 198,100 | |
2025 | 10,000 | |
2026 | 0 | |
2027 | 65,000 | |
Thereafter | $ 305,000 |
Related Party Disclosures (Details 4 ) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Related Party Transactions [Abstract] | ||
Related Party Transaction, Amounts of Transaction | $ 131,000 | $ 130,000 |
Subsequent Events (Details) - Senior Notes - Subsequent Event [Member] $ in Millions |
Apr. 25, 2023
USD ($)
|
---|---|
Long-term debt outstanding [Line Items] | |
Long-term debt | $ 425.0 |
Long-Term Debt, Percentage Bearing Fixed Interest, Percentage Rate | 7.75% |
Subsequent Events (Details 2) - Subsequent Event [Member] |
May 03, 2023 |
---|---|
Subsequent Event [Line Items] | |
Percent of Shares Distributed in Conjunction with Spinoff | 90.00% |
Percent of Shares, Retained by Parent, in Conjunction with Spinoff | 10.00% |
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