Related Party Transactions

9 Months Ended

Sep. 30, 2025

Related Party Transactions [Abstract]

Related Party Transactions

Related-Party Transactions

Transition Services Agreement

On October 31, 2024, as part of the Separation, the Company and MDU Resources entered into a transition services agreement whereby the Company and MDU Resources provide certain transition services to each other. The transition services agreement outlines services that are provided between parties related to tax, legal, treasury, human resources, information technology, risk management and other general and administrative functions. For the three and nine months ended September 30, 2025, the Company incurred $1.1 million and $3.7 million of transition services expenses related to services from MDU Resources, respectively, which were reflected in Selling, general and administrative expenses on the unaudited condensed consolidated statements of income. During the second quarter of 2025, the Company deemed $0.5 million of transition services expenses from the first quarter of 2025 to be recurring in nature and thus, not transition services expenses. For both of the three and nine months ended September 30, 2025, the Company received an immaterial amount for its services to MDU Resources, which was reflected in Other income, net on the unaudited condensed consolidated statements of income. The majority of the transition services are expected to be completed over a period of 20 months, but no longer than two years, after the Separation.

Allocation of Corporate Expenses

Prior to the Separation, Centennial and MDU Resources allocated expenses for corporate services provided to the Company, including costs related to senior management, legal, human resources, finance and accounting, treasury, information technology, internal audit, risk management and other shared services. The amounts allocated were $4.9 million and $27.6 million for the three and nine months ended September 30, 2024, respectively.

These expenses were allocated to the Company on the basis of direct usage where identifiable, with the remainder allocated on the basis of percentage of total capital invested, percentage of total average cash management program borrowings with MDU Resources, percentage of total average commercial paper borrowings with Centennial or other allocation methodologies that were considered to be a reasonable reflection of the utilization of the services provided to the benefits received. Some of the utilization factors considered include 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.

These cost allocations were a reasonable reflection of the utilization of services provided to, or the benefit derived by, the Company during the periods presented prior to the Separation. However, the allocations may not be indicative of the actual expenses that would have been incurred had the Company operated as a standalone company. Actual costs as a standalone company depend on a number of factors, including the chosen organizational structure, whether functions are outsourced or performed by Company employees, and strategic decisions made in areas such as selling and marketing, information technology and infrastructure. Refer to Note 2 – Basis of Presentation and Summary of Significant Accounting Policies for additional information.

Cash Management and Financing

Prior to the second quarter of 2023, Centennial had a commercial paper program and long-term borrowing arrangements in which the Company and certain of its subsidiaries participated. Centennial repaid all of its outstanding debt in the second quarter of 2023, and subsequently MDU Resources supported the Company’s borrowing needs through Centennial. The Company accounted for cash receipts and disbursements from MDU Resources and Centennial, through related-party receivables and payables. Until the Separation, the Company had related-party agreements in place with Centennial, via MDU Resources, for the financing of its capital needs. Following the Separation, the Company relies on its own credit and financing arrangements.

The Company was allocated interest based on borrowings from or lending to the cash management and financing program as well as the funding related to these agreements as described above. The related-party interest expense associated with the Company’s participation in the cash management and financing program prior to the Separation was $3.0 million and $9.1 million for the three and nine months ended September 30, 2024, respectively.