Knife River Corp

Previous wording

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended ("Exchange Act"). Forward-looking statements are all statements other than statements of historical fact, including without limitation those statements that are identified by the words "anticipates," "estimates," "expects," "intends," "plans," "predicts" and similar expressions, and include statements concerning plans, projections, objectives, goals, strategies, future events or performance, and underlying assumptions (many of which are based, in turn, upon further assumptions) and other statements that are other than statements of historical facts. From time to time, Knife River Corporation ("Knife River," the "Company," "we," "our," or "us") may publish or otherwise make available forward-looking statements of this nature, including statements related to its Competitive EDGE strategy (EDGE) implemented to improve margins and to execute on other strategic initiatives aimed at generating long-term profitable growth, shareholder value creation, expected long-term goals, expected backlog margin, acquisitions, financing plans, expected federal and state funding for infrastructure or other proposed strategies.

Current wording

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended ("Exchange Act"). Forward-looking statements are all statements other than statements of historical fact, including without limitation those statements that are identified by the words "anticipates," "estimates," "expects," "intends," "plans," "predicts" and similar expressions, and include statements concerning plans, projections, objectives, goals, strategies, future events or performance, and underlying assumptions (many of which are based, in turn, upon further assumptions) and other statements that are other than statements of historical facts. From time to time, Knife River Corporation ("Knife River," the "Company," "we," "our," or "us") may publish or otherwise make available forward-looking statements of this nature, including statements related to its Competitive EDGE strategy (EDGE) implemented to improve margins and to execute on other strategic initiatives aimed at generating long-term profitable growth, shareholder value creation, expected long-term goals, expected backlog margin, acquisitions, financing plans, expected federal and state funding for infrastructure or other proposed strategies.

Previous wording

At Knife River, we are a people-first construction materials and contracting services company. We provide construction materials and contracting services to build safe roads, bridges, airport runways and other critical infrastructure needs that connect people with where they want to go and with the supplies they need. We also champion a positive workplace culture by focusing on safety, training, inclusion, compensation and work-life balance.

Current wording

At Knife River, we are a people-first construction materials and contracting services company. We provide construction materials and contracting services to build safe roads, bridges, airport runways and other critical infrastructure needs that connect people with where they want to go and with the supplies they need. We also champion a positive workplace culture by focusing on safety, training, compensation and work-life balance.

Previous wording

We are one of the leading providers of crushed stone and sand and gravel in the U.S. and operate through four operating segments, which are also our reportable segments, across 14 states: West, Mountain, Central and Energy Services. The geographic segments primarily provide aggregates, asphalt and ready-mix concrete, as well as related contracting services such as heavy-civil construction, asphalt paving, concrete construction, site development and grading. The Energy Services segment produces and supplies liquid asphalt and related services, primarily for use in asphalt road construction.

Current wording

We are one of the leading providers of crushed stone and sand and gravel in the United States and operate through four reportable segments across 15 states: West, Mountain, Central and Energy Services. The geographic segments primarily provide aggregates, asphalt and ready-mix concrete, as well as related contracting services such as heavy-civil construction, asphalt paving, concrete construction, site development and grading. The Energy Services segment produces and supplies liquid asphalt and related services, primarily for use in asphalt road construction.

Previous wording

As an aggregates-led construction materials and contracting services company, we have 1.2 billion tons of aggregate reserves supporting our vertically integrated business strategy. About 37 percent of these aggregates are used internally to support value-added downstream products like ready-mix concrete and asphalt, as well as contracting services such as heavy-civil construction, asphalt paving, concrete construction, bridges and in some segments the manufacturing of prestressed concrete products. Our strategically located aggregate sites and associated asphalt and ready-mix plants near mid-sized, high-growth markets offer transportation advantages, enabling competitive pricing and higher margins. We serve both public and private markets, with public projects making up most of our work and providing stability through economic cycles, which helps offset the cyclical nature of the private markets.

Current wording

As an aggregates-based construction materials and contracting services company, we have 1.3 billion tons of aggregate reserves supporting our vertically integrated business strategy. About 35 percent of these aggregates are used internally to support value-added downstream products like ready-mix concrete and asphalt, as well as contracting services such as heavy-civil construction, asphalt paving, concrete construction, bridges and in some segments the manufacturing of prestressed concrete products. Our strategically located aggregate sites and associated asphalt and ready-mix plants near mid-sized, higher-growth markets offer transportation advantages, enabling competitive pricing and higher margins. We serve both public and private markets, with public projects making up most of our work and providing stability through economic cycles, which helps offset the cyclical nature of the private markets.

Previous wording

Expected margins on backlog at September 30, 2025, were slightly lower compared to the expected margins on backlog at September 30, 2024. Of the $995 million of backlog at September 30, 2025, we expect to complete approximately $764 million in the 12 months following September 30, 2025. Approximately 87 percent of our backlog at September 30, 2025, related to publicly funded projects, including street and highway construction projects, which are driven primarily by public works projects for state departments of transportation (DOT). Further, there continues to be infrastructure development, as discussed in the following section on Public Funding, which is expected to continue to provide bidding opportunities in our markets. Oregon, however, has seen challenges with both public and private projects contributing to lower backlog in the West segment. On the public side, delays with the Oregon DOT budget, as discussed in the following section on Public funding, have created a headwind in 2025.

Current wording

Expected margins on backlog at March 31, 2026, were lower compared to the expected margins on backlog at March 31, 2025. Of the $1.2 billion of backlog at March 31, 2026, we expect to complete approximately $914 million in the 12 months following March 31, 2026. Approximately 88 percent of our backlog at March 31, 2026, is related to publicly funded projects, including street and highway construction projects, which are driven primarily by public works projects for state departments of transportation (DOT). Further, there continues to be infrastructure development, as discussed in the following section on Public Funding, which is expected to continue to provide bidding opportunities in our markets.

Previous wording

Public Funding. Funding for public projects is dependent on federal and state funding, such as appropriations to the Federal Highway Administration. Currently, states have continued moving forward with allocating funds from federal programs, such as the Infrastructure Investment and Jobs Act (IIJA), which is authorized to provide $1.2 trillion in funding from 2022 through 2026. As of August 2025, approximately 52 percent of IIJA formula funding had yet to be spent in our 14 state operating market. Additionally, DOT budgets in most of the states where we operate remain strong, which is expected to favorably affect bidding through the remainder of this year and into next year. Ten of our 14 states have record DOT budgets going into the 2026 fiscal year. In the second quarter of 2025, Washington, Idaho and North Dakota all passed bills that support their transportation funding. We continue to monitor the implementation and impact of these legislative items. Year-to-date, projects in Oregon have been delayed and funding has been diverted from maintenance and repair work, which includes asphalt paving, to megaprojects as a result of the state's DOT budget shortfall and general uncertainty for funding. However, in September 2025, Oregon passed a transportation bill to raise $4.3 billion over the next 10 years; approximately 50% of the funds from the new bill will be routed to cities and counties for road maintenance programs, which we expect will begin to become available in 2026. While the state DOT budget is not yet final, it is expected that the contributions from the new bill will bring total funding for the 2025-27 biennium to approximately $6.1 billion, compared to the record $6.2 billion for the previous two-year cycle.

Current wording

Public Funding. Funding for public projects is dependent on federal and state funding, such as appropriations to the Federal Highway Administration. Currently, states have continued moving forward with allocating funds from federal programs, such as the Infrastructure Investment and Jobs Act (IIJA), which is authorized to provide $1.2 trillion in funding from 2022 through 2026. As of March 2026, approximately 43 percent of IIJA formula funding had yet to be spent in our 15 state operating market. While each market is unique, the DOT budgets in most of the states where we operate remain strong. Eleven of our 15 states have record DOT budgets for the 2026 fiscal year, representing a combined 15 percent increase over 2025.

Previous wording

Earlier this year, the American Society of Civil Engineers published its 2025 Report Card for America's Infrastructure, assigning the United States roads a "D+" grade and estimating that between 2024 and 2033, the country will require more funding than what is currently authorized. It is estimated that a total of $2.2 trillion in funding will be needed for our roadway systems to reach a state of good repair during that time period.

Current wording

In 2025, the American Society of Civil Engineers published its 2025 Report Card for America's Infrastructure, assigning the United States roads a "D+" grade and estimating that between 2024 and 2033, the country will require more funding than what is currently authorized. It is estimated that a total of $2.2 trillion in funding will be needed for our roadway systems to reach a state of good repair during that time period.

Previous wording

Profitability. The management team consistently monitors profit margins and has adopted a proactive approach in supporting long-term profitability objectives and creating shareholder value. In 2023, we began the implementation of our EDGE initiatives and established specialized teams tasked with delivering training, facilitating the pursuit of higher-margin bidding opportunities across various regions, and identifying growth prospects. Furthermore, these teams have been engaged in the identification and execution of measures aimed at increasing operational efficiency and reducing costs. Since its establishment, the Materials Process Improvement Team, also referred to as the Materials PIT Crew, has conducted visits at 27 locations within the organization’s operational footprint, encompassing 178 individual aggregate, asphalt, and ready-mix concrete plants, representing approximately 70% of our materials sales volumes. This PIT Crew has rolled out new technologies and training programs to boost productivity across the product lines and provide more real-time visibility into daily operations.

Current wording

Profitability. The management team consistently monitors profit margins and has adopted a proactive approach in supporting long-term profitability objectives and creating shareholder value. In 2023, we launched our EDGE initiatives and established specialized

Previous wording

Growth. Our management team continues to evaluate growth opportunities, both through organic growth and acquisitions they believe will generate shareholder value. Our business development team is focused on our growth with materials-led businesses in mid-size, high growth markets, and has several targets at various stages of completion in our acquisition pipeline. In the third quarter of 2025, we acquired High Desert Aggregate and Paving, an aggregates-led construction materials and contracting services business in central Oregon. This is in addition to the acquisitions completed in the first half of 2025 that included an aggregates and contracting services business in central Minnesota and Strata Corporation, which are both included in our Central segment, as well as an aggregate quarry operation in Washington, adding to the West segment.

Current wording

Growth. Our management team continues to evaluate growth opportunities, both through organic growth and acquisitions they believe will generate shareholder value. Our business development team is focused on our growth with materials-led businesses in mid-size, higher growth markets, and has several targets at various stages of completion in our acquisition pipeline. During the first quarter of 2026, we finalized three acquisitions within the Mountain region. Two of these transactions will allow us to broaden our presence in Montana, enhancing our ability to supply aggregates and ready-mix concrete to the expanding market in western Montana. Additionally, the acquisition of Morgan Asphalt marks our entry into the Utah market. This acquisition includes aggregate crushing and production operations with reserves projected to last over 30 years, an asphalt manufacturing facility and a range of contracting services such as asphalt paving, excavation and grading, serving both public and private sector customers.

Previous wording

In addition, we are investing in multiple organic projects, including an aggregates expansion project in South Dakota that will increase our production capabilities in the Sioux Falls market. This project is scheduled to be operational in 2027. Earlier this year we completed construction of a processing plant to manufacture polymer modified asphalt (PMA) and add liquid asphalt storage in our South Dakota operations, which will allow us to more cost effectively supply this local market. In Twin Falls, Idaho, we are greenfielding new ready-mix operations, which allows us to build a local team in this high-growth market, and are expected to be operating in the first quarter of 2026.

Current wording

In addition, we are investing in multiple organic projects, including an aggregates expansion project in South Dakota that will increase our production capabilities in the Sioux Falls market. This project is scheduled to be operational in 2027. In Twin Falls, Idaho, we greenfielded new ready-mix operations, which allows us to build a local team in this higher-growth market. The Twin Falls plant is expected to be fully operational in the second quarter of 2026.

Previous wording

Our training and development team, based out of the Knife River Training Center, is comprised of professional instructors, who bring a wealth of knowledge and experience to the learning environment. This dedicated team has a long-standing tradition of delivering quality training programs that are both comprehensive and practical. Their expertise helps ensure that every employee receives the highest standard of education and skill development.

Current wording

Our training and development team, based out of the Knife River Training Center, is comprised of professional instructors, who bring a wealth of knowledge and experience to the learning environment. This dedicated team has a long-standing tradition of delivering quality training programs that are both comprehensive and practical. Their expertise helps ensure that our team members receive the highest standard of education and skill development.

Previous wording

Gross profit includes revenue less cost of revenue, as defined above, and is the difference between revenue and the cost of making a product or providing a service, before deducting selling, general and administrative expenses, income taxes and interest expense.

Current wording

Gross (loss) profit includes revenue less cost of revenue, as defined above, and is the difference between revenue and the cost of making a product or providing a service, before deducting selling, general and administrative expenses, income taxes and interest expense.

Previous wording

projects in process and the number of employees assigned to estimating and bidding activities. Other general and administrative expenses include outside services; information technology; depreciation and amortization; training, travel and entertainment; office supplies; allowance for expected credit losses; gains or losses on the sale of assets; and other miscellaneous expenses.

Current wording

Selling, general and administrative expenses include the costs for estimating, bidding and business development, as well as costs related to corporate and administrative functions. Selling expenses can vary depending on the volume of projects in process and the number of employees assigned to estimating and bidding activities. Other general and administrative expenses include outside services; healthcare; information technology; depreciation and amortization; training, travel and entertainment; office supplies; allowance for expected credit losses; gains or losses on the sale of assets; and other miscellaneous expenses.

Previous wording

Other income includes net periodic benefit costs for our benefit plan expenses, other than service costs; interest income; realized and unrealized gains and losses on investments for our nonqualified benefit plans; earnings or losses on joint venture arrangements; gain on bargain purchase; and other miscellaneous income or expenses, including expenses related to the transition services agreement with MDU Resources Group, Inc.

Current wording

Other (expense) income includes net periodic benefit costs for our benefit plan expenses, other than service costs; interest income; realized and unrealized gains and losses on investments for our nonqualified benefit plans; earnings or losses on joint venture arrangements; gain on bargain purchase; and other miscellaneous income or expenses.

Previous wording

Interest expense increased $9.1 million due primarily to higher average debt balances with the issuance of a new Term Loan B in March of 2025 and borrowings under our revolving credit facility, offset in part by lower average interest rates.

Current wording

Interest expense increased $5.4 million due primarily to higher average debt balances with the issuance of a Term Loan B in March of 2025 and borrowings under our revolving credit facility, offset in part by lower average interest rates.

Previous wording

Other income increased $500,000, largely driven by a one-time gain of $3.5 million on the bargain purchase of an aggregate quarry operation in the West segment, offset in part by a decrease in interest income of $2.2 million as a result of less cash on hand and lower investment returns on our nonqualified defined benefit plans.

Current wording

Other income decreased $5.2 million, largely due to the absence of a one-time gain of $3.5 million on the bargain purchase of an aggregate quarry operation in the West segment in prior year, as well as decreased interest income as a result of less cash on hand.

Previous wording

At September 30, 2025, we had unrestricted cash and cash equivalents of $30.7 million, working capital of $660.9 million and borrowing capacity of $456.6 million on our revolving credit facility, net of our outstanding letters of credit. Working capital is calculated as current assets less current liabilities. As of September 30, 2025, we had sufficient liquid assets and borrowing capacity to meet our financial commitments, debt obligations and anticipated capital expenditures for at least the next 12 months.

Current wording

At March 31, 2026, we had unrestricted cash and cash equivalents of $13.3 million, working capital of $590.0 million and borrowing capacity of $178.2 million on our revolving credit facility, net of our outstanding letters of credit. Working capital is calculated as current assets less current liabilities. As of March 31, 2026, we had sufficient liquid assets and borrowing capacity to meet our financial commitments, debt obligations and anticipated capital expenditures for at least the next 12 months.

Previous wording

We currently estimate total 2025 capital expenditures for maintenance and improvement to be between $160 million and $225 million. For the nine months ended September 30, 2025, we spent $154.8 million, largely on the replacement of depleting aggregate reserves, construction equipment and plant improvements.

Current wording

We currently estimate total 2026 capital expenditures for maintenance and improvement to be between $170 million and $235 million. For the three months ended March 31, 2026, we spent $42.3 million, largely on the replacement of construction equipment and plant improvements.

Previous wording

Additionally, for the nine months ended September 30, 2025, we spent $663.5 million on growth initiatives, which comprised of $528.0 million on acquisitions and $135.5 million on aggregate expansion and greenfield projects. In connection with the Strata acquisition, we also received proceeds of $14.5 million on the sale of four ready-mix plant operations. For the remainder of 2025, we estimate to spend $32.2 million on organic growth projects. Capital expenditures for future acquisitions and new organic growth opportunities would be incremental to our outlined capital program. It is anticipated that capital expenditures for the remainder of 2025 will be funded by various sources, including internally generated cash and debt facilities.

Current wording

Additionally, for the three months ended March 31, 2026, we spent $209.2 million on growth initiatives, which comprised of $174.2 million on acquisitions and $35.0 million on aggregate expansion and greenfield projects. For the remainder of 2026, we estimate to spend $101.4 million on organic growth projects. Capital expenditures for future acquisitions and new organic growth opportunities would be incremental to our outlined capital program. It is anticipated that capital expenditures for the remainder of 2026 will be funded by various sources, including cash flows from operations and debt.

Previous wording

Cash provided by operating activities at September 30, 2025, decreased $67.3 million, largely related to higher working capital needs and a decrease in net income. Cash used by working capital components totaled $189.8 million for the nine months ended September 30, 2025, compared to $146.5 million for the nine months ended September 30, 2024. This increase in cash usage was primarily the result of higher working capital needs due to the increase in revenues, as discussed in Business Segment Financial and Operating Data, and timing of prepaid insurance, offset in part by lower liquid asphalt and cement inventory balances.

Current wording

Cash used in operating activities at March 31, 2026, decreased $66.7 million, largely related to lower working capital needs, offset by a higher net loss in the period. Cash used by working capital components totaled $35.9 million for the three months ended March 31, 2026, compared to $97.9 million for the three months ended March 31, 2025. This reduction in cash usage in 2026 was primarily the result of decreased incentive payments, higher collections on receivables balances, timing of taxes paid, decreased aggregate inventory and the fluctuation in payments on accounts payable.

Previous wording

The increase in cash used in investing activities for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024, was primarily due to additional investments to grow our company. We spent $513.0 million more on acquisitions in 2025, including the acquisition of Strata, as discussed in Note 10. We also spent $163.1 million more on capital expenditures, including the replenishment of depleting aggregate reserves and greenfield projects. The increase in cash usage was offset in part by proceeds from the sale of ready-mix operations in the Central segment in the first quarter of 2025, as discussed in Note 10, and non-strategic asset sales in both the West and Central segments.

Current wording

The decrease in cash used in investing activities for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, was primarily the result of decreased cash used in acquisition activity, partially offset by the absence of prior year proceeds from the sale of ready-mix operations in the Central segment.

Previous wording

At September 30, 2025, our long-term debt reflected an increase of approximately $514.1 million from the balance at December 31, 2024. This increase is due to issuing a new $500 million Term Loan B facility with the proceeds being used to fund a portion of Strata's purchase price in addition to borrowing $20 million under our revolving credit facility.

Current wording

At March 31, 2026, our long-term debt reflected an increase of approximately $267.1 million from the balance at December 31, 2025. This increase is due to borrowing $270 million under our revolving credit facility to fund seasonal working capital needs and additional acquisitions.

Previous wording

At September 30, 2025, our total estimated interest payments over the life of our debt reflected an increase of approximately $184.1 million from the total estimated interest payments at December 31, 2024. This increase is primarily due to the change in long-term debt outstanding related to the new Term Loan B and borrowings under our revolving credit facility, as previously mentioned.

Current wording

At March 31, 2026, our total estimated interest payments over the life of our debt reflected an increase of approximately $67.7 million from the total estimated interest payments at December 31, 2025. This increase is primarily due to the borrowings under our revolving credit facility, as previously mentioned.

Previous wording

At September 30, 2025, our purchase commitments reflected a decrease of approximately 22 percent from the balance at December 31, 2024. This decrease is primarily due to the seasonality of work and the third quarter being in our peak construction season, our purchase commitments saw an expected decrease from the balance at June 30, 2025. We expect purchase commitments to continue to decrease throughout the remainder of 2025 as obligations continue to be satisfied during the construction season.

Current wording

At March 31, 2026, our purchase commitments reflected an increase of approximately 12 percent from the balance at December 31, 2025. This increase is primarily due to the seasonality of work and preparing for our peak construction season during the first quarter. We expect purchase commitments to continue to decrease throughout the remainder of 2026 as obligations continue to be satisfied during the construction season.

Previous wording

GAAP measures, are useful to investors by providing meaningful information about operational efficiency compared to our peers by excluding the impacts of differences in tax jurisdictions and structures, debt levels and capital investment. We believe Adjusted EBITDA and Adjusted EBITDA margin are useful performance measures because they allow for an effective evaluation of our operating performance by excluding stock-based compensation, unrealized gains and losses on benefit plan investments and the impact of selling acquired inventory after markup to fair value as part of acquisition accounting as they are considered non-cash and not part of our core operations. We also exclude the one-time, non-recurring costs associated with the Separation as those are not expected to continue. We believe EBITDA and Adjusted EBITDA assist rating agencies and investors in comparing operating performance across operating periods on a consistent basis by excluding items management does not believe are indicative of our operating performance. Additionally, EBITDA and Adjusted EBITDA are important financial metrics for debt investors who utilize debt to EBITDA and debt to Adjusted EBITDA ratios. We believe these non-GAAP financial measures, including total segment measures, as applicable, are useful performance measures because they provide clarity as to our operational results. Our management uses these non-GAAP financial measures in conjunction with GAAP results when evaluating our operating results internally and calculating employee incentive compensation.

Current wording

EBITDA, EBITDA margin, Adjusted EBITDA and Adjusted EBITDA margin are most directly comparable to the corresponding GAAP measures of net income (loss) and net income (loss) margin. We believe these non-GAAP financial measures, in addition to corresponding GAAP measures, are useful to investors by providing meaningful information about operational efficiency compared to our peers by excluding the impacts of differences in tax jurisdictions and structures, debt levels and capital investment. We believe Adjusted EBITDA and Adjusted EBITDA margin are useful performance measures because they allow for an effective evaluation of our operating performance by excluding unrealized gains and losses on benefit plan investments and stock-based compensation as they are considered non-cash and not part of our core operations. We believe EBITDA and Adjusted EBITDA assist rating agencies and investors in comparing operating performance across operating periods on a consistent basis by excluding items management does not believe are indicative of our operating performance. Additionally, EBITDA and Adjusted EBITDA are important financial metrics for debt investors who utilize debt to EBITDA and debt to Adjusted EBITDA ratios. We believe these non-GAAP financial measures, including total segment measures, as applicable, are useful performance measures because they provide clarity as to our operational results. Our management uses these non-GAAP financial measures in conjunction with GAAP results when evaluating our operating results internally and calculating employee incentive compensation.

Previous wording

EBITDA is calculated by adding back income taxes, interest expense (net of interest income) and depreciation, depletion and amortization expense to net income (loss). EBITDA margin is calculated by dividing EBITDA by revenues. Adjusted EBITDA is calculated by adding back unrealized gains and losses on benefit plan investments, stock-based compensation, impact of selling acquired inventory after markup to fair value as part of acquisition accounting, and one-time Separation costs, to EBITDA. Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by revenues. These non-GAAP financial measures are calculated the same for both the total segment and consolidated metrics and should not be considered as alternatives to, or more meaningful than, GAAP financial measures such as net income or net income margin, and are intended to be helpful supplemental financial measures for investors’ understanding of our operating performance. Our non-GAAP financial measures are not standardized; therefore, it may not be possible to compare these financial measures with other companies’ EBITDA, EBITDA margin, Adjusted EBITDA and Adjusted EBITDA margin measures having the same or similar names.

Current wording

EBITDA is calculated by adding back income taxes, interest expense (net of interest income) and depreciation, depletion and amortization expense to net income (loss). EBITDA margin is calculated by dividing EBITDA by revenues. Adjusted EBITDA is calculated by adding back unrealized gains and losses on benefit plan investments and stock-based compensation to EBITDA. Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by revenues. These non-GAAP financial measures are calculated the same for both the total segment and consolidated metrics and should not be considered as alternatives to, or more meaningful than, GAAP financial measures such as net income or net income margin, and are intended to be helpful supplemental financial measures for investors’ understanding of our operating performance. Our non-GAAP financial measures are not standardized; therefore, it may not be possible to compare these financial measures with other companies’ EBITDA, EBITDA margin, Adjusted EBITDA and Adjusted EBITDA margin measures having the same or similar names.

Previous wording

Our critical accounting estimates include revenue recognized using the cost-to-cost measure of progress for contracts; fair values of acquired assets and liabilities assumed under the acquisition method of accounting; impairment testing of goodwill; and impairment testing of long-lived assets excluding goodwill. There were no material changes in the Company's critical accounting estimates from those that were previously reported in the Company's 2024 Annual Report.

Current wording

Our critical accounting estimates include revenue recognized using the cost-to-cost measure of progress for contracts; fair values of acquired assets and liabilities assumed under the acquisition method of accounting; impairment testing of goodwill; and impairment testing of long-lived assets excluding goodwill. There were no material changes in our critical accounting estimates from those that were previously reported in our 2025 Annual Report.