Knife River Corp

Previous wording

Our markets remain resilient and construction activity remains generally strong, despite ongoing general and economic challenges in the United States. While we experienced inflationary pressures in recent years, price increases for our products and services have generally outpaced these increased costs. Further, approximately 80 percent of our contracting services revenue each year comes from public-sector projects, enhancing stability through market cycles. For more information on factors that may negatively impact Knife River's business, see the section entitled "Item 1A. Risk Factors" in Part I of the Company's 2023 Annual Report.

Current wording

Our markets remain resilient and construction activity remains generally strong. Approximately 80 percent of our contracting services revenue each year comes from public-sector projects, enhancing stability through market cycles. For more information on factors that may negatively impact Knife River's business, see the section entitled "Item 1A. Risk Factors" in Part I of the Company's 2023 Annual Report.

Previous wording

Expected margins on backlog at June 30, 2024, were slightly higher than the expected margins on backlog at June 30, 2023. Of the $988.5 million of expected backlog at June 30, 2024, we expect to complete approximately $936.7 million in the 12 months following June 30, 2024. Approximately 87 percent of our backlog at June 30, 2024 relates to publicly funded projects, including street and highway construction projects, which are driven primarily by public works projects for state departments of transportation. 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.

Current wording

Expected margins on backlog at September 30, 2024, were slightly higher than the expected margins on backlog at September 30, 2023. Of the $755.1 million of backlog at September 30, 2024, we expect to complete approximately $688.9 million in the 12 months following September 30, 2024. While private work has softened to some extent, we continue to see strong bidding opportunities for public work across our states. Approximately 87 percent of our backlog at September 30, 2024, relates to publicly funded projects, including street and highway construction projects, which are driven primarily by public works projects for state departments of transportation. 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. States have moved forward with allocating funds from federal programs, such as the Infrastructure Investment and Jobs Act ("IIJA"), the American Rescue Plan Act and more. At the federal level, funding from IIJA is still being allocated. Approximately 56 percent of IIJA formula funding has yet to be obligated in our market areas. At the state level, eight of the 14 states in which we operate have introduced legislation to fund additional construction projects as of July 1, 2024. We continue to monitor the implementation and impact of these legislative items.

Current wording

Public Funding. Funding for public projects is dependent on federal and state funding, such as appropriations to the Federal Highway Administration. States have moved forward with allocating funds from federal programs, such as the Infrastructure Investment and Jobs Act ("IIJA"), which is expected to provide $1.2 trillion in funding through 2026. Approximately 48 percent of IIJA formula funding has yet to be obligated to projects in our market areas. At the state level, eight of the 14 states in which we operate have introduced legislation to fund additional construction projects as of September 1, 2024. We continue to monitor the implementation and impact of these legislative items. Additionally, Department of Transportation ("DOT") budgets in the states where we operate remain strong despite coming down from the prior years' record level.

Previous wording

Profitability. Our management team continually monitors our margins and has been proactive in applying strategies to increase margins to support our long-term profitability goals. In 2023, we began implementing EDGE initiatives and established teams to deliver training, assist with targeting higher-margin bidding opportunities across the regions and pursue growth opportunities. The process improvement team ("PIT crew") visited 10 of our largest locations in 2023, including quarries, asphalt plants and ready-mix plants. In 2024, the PIT crew has been expanded to extend its influence to more locations and standardize best practices. The PIT crew has visited 98 sites across 10 states through the second quarter of 2024 and we expect the PIT crew to reach 31 additional sites in the second half of 2024.

Current wording

Profitability. Our management team continually monitors our margins and has been proactive in applying strategies to increase margins to support our long-term profitability goals and to create shareholder value. In 2023, we began implementing EDGE initiatives and established teams to deliver training, assist with targeting higher-margin bidding opportunities across the regions and pursue growth opportunities, as well as looking for ways to increase efficiencies and reduce costs. The process improvement team ("PIT crew") visited 10 of our largest locations in 2023, including quarries, asphalt plants and ready-mix plants. In 2024, the PIT crew has been expanded to extend its influence to more locations and standardize best practices. The PIT crew has visited 58 plants across 8 states through the third quarter of 2024.

Previous wording

Knife River operates in geographically diverse and competitive markets, and strives to maximize efficiencies, including transportation costs and economies of scale, to maintain strong margins. Our margins can experience negative pressure from competition, as well as impacts from the volatility in the cost of raw materials, such as diesel fuel, gasoline, natural gas, liquid asphalt, cement and steel, with fuel and liquid asphalt costs often having the most significant impact on results. Many of these raw materials are subject to factors that are beyond our control, including global economic and political events and new and changing governmental regulations. The Energy Services segment is particularly susceptible to variability in liquid asphalt costs, which can impact both cost of sales and revenues, for which we cannot reliably predict future pricing. Such variability and inflationary pressures may have an impact on our margins, including fixed-price contracting services contracts that are impacted by the variability of energy and material prices. We mitigate our exposure to these fluctuations by entering into various purchase commitments, as well as by generally including terms in our contracting services agreements that provide for price adjustments related to variations in raw materials costs.

Current wording

Knife River operates in geographically diverse and competitive markets, and strives to maximize efficiencies, including transportation costs and economies of scale, to further expand margins and profitability. Our margins can experience negative pressure from competition, as well as impacts from the variability in the cost of raw materials, such as diesel fuel, gasoline, natural gas, liquid asphalt, cement and steel, with fuel and liquid asphalt costs often having the most significant impact on results. Many of these raw materials are subject to factors that are beyond our control, including global economic and political events and new and changing governmental regulations. The Energy Services segment is particularly susceptible to variability in liquid asphalt costs, which can impact both cost of sales and revenues, for which we cannot reliably predict future pricing. Such variability and inflationary pressures may have an impact on our margins, including fixed-price contracting services contracts that are impacted by the variability of energy and material prices. We mitigate our exposure to these fluctuations by entering into various purchase commitments, as well as by generally including terms in our contracting services agreements that provide for price adjustments related to variations in raw materials costs.

Previous wording

Workforce. As a people-first company, we continually take steps to address the challenge of recruitment and retention of our employees. We continue to deploy significant resources to attract, develop and retain qualified and diverse talent. As the United States continues to face shortages in the availability of individuals to fill construction careers, we have taken significant steps to showcase construction as a career of choice. We own and operate a state-of-the-art training facility, the Knife River Training Center, which is used corporate-wide to enhance the skills of both our new and existing employees through both classroom education and hands-on experience. One of the most popular courses at the Knife River Training Facility is the commercial driver's license

Current wording

We continue to deploy resources to attract, develop and retain qualified and diverse talent. As the United States faces shortages in the availability of individuals to fill construction careers, we have taken significant steps to showcase construction as a career of choice. We own and operate a state-of-the-art training facility, the Knife River Training Center, which is used corporate-wide to enhance the skills of both our new and existing employees through classroom education and hands-on experience. One of the most popular courses at the Knife River Training Center is the commercial driver's license training, which is helping to address an industry-wide labor shortage. The training facility also offers a variety of courses around leadership development for all Knife River employees.

Previous 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; 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 corporate development, as well as costs related to segment and corporate management 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; 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

The discussion that follows focuses on the key financial measures the Company uses to evaluate the performance of its business, which include revenue, gross profit, gross margin, EBITDA and EBITDA margin. Gross margin is calculated by dividing gross profit by revenue. Gross margin reflects the percentage of revenue earned in comparison to cost. EBITDA and EBITDA margin are non-GAAP financial measures. For more information and reconciliations to the nearest GAAP measures, see the section entitled "Non-GAAP Financial Measures."

Current wording

by revenue. Gross margin reflects the percentage of revenue earned in comparison to cost. EBITDA and EBITDA margin are non-GAAP financial measures. For more information and reconciliations to the nearest GAAP measures, see the section entitled "Non-GAAP Financial Measures."

Previous wording

Interest expense decreased $800,000 due primarily to lower average debt balances, largely offset by higher average interest rates.

Current wording

Interest expense decreased $1.4 million due primarily to lower average debt balances.

Previous wording

Other income decreased $1.2 million, largely driven by decreased interest income on lower average cash balances.

Current wording

Other income improved $2.5 million, largely driven by increased interest income on higher average cash balances and higher returns on nonqualified benefit plan investments.

Previous wording

Income tax expense increased $6.1 million, corresponding with higher income before income taxes.

Current wording

Income tax expense increased $1.4 million, corresponding with higher income before income taxes.

Previous wording

Selling, general and administrative expenses increased $11.6 million. Our reportable segments had higher costs of $400,000, which were largely the result of higher payroll-related costs and professional services, partially offset by higher gains on asset sales of $2.3 million and lower bad debt expense.

Current wording

Selling, general and administrative expenses increased $16.3 million. Our reportable segments had higher costs of $4.8 million, which was primarily higher payroll-related costs, largely due to additional staffing and competitive wage increases, and higher professional services of $3.0 million, partially offset by higher gains on asset sales of $2.5 million.

Previous wording

As a result of the Separation, Corporate Services experienced higher recurring costs as a publicly traded company of $16.3 million, including payroll-related costs of $9.5 million, largely due to additional staff and stock-based compensation expenses for the management team and board of directors; information technology costs of $2.8 million; professional services of $2.1 million; fees of $870,000 primarily related to fees on new debt issued in conjunction with the Separation; and insurance costs of $600,000. These recurring costs were partially offset by a reduction in general corporate expenses from MDU Resources of $9.6 million, as discussed in Note 2. Also, as part of the Separation, we incurred additional one-time costs of $860,000, primarily related to insurance costs and the transition services agreement with MDU Resources.

Current wording

Corporate Services had increased costs of $11.4 million. The increase in costs for non-Separation related expenses include higher health care costs of $4.6 million, partly due to 2023 claims being paid from the MDU Resources health and welfare trust, due diligence and integration costs related to corporate development of $2.6 million and higher information technology costs of $1.0 million, partially offset by a reduction in insurance loss reserves at our captive insurer of $2.6 million. As a result of the Separation, Corporate Services experienced higher recurring costs as a publicly traded company of $6.6 million, including payroll-related costs of $9.5 million, largely due to additional staff and stock-based compensation expenses for the management team and board of directors; information technology costs of $2.8 million; professional services of $2.0 million; fees of $870,000 primarily related to fees on new debt issued in conjunction with the Separation; and insurance costs of $600,000. These recurring costs were partially offset by a reduction in general corporate expenses from MDU Resources of $9.0 million, as discussed in Note 2. Also, as part of the Separation, we incurred less one-time costs of $2.8 million, primarily related to insurance costs and the transition services agreement with MDU Resources.

Previous wording

Interest expense decreased $5.2 million due primarily to lower average debt balances, offset in part by higher average interest rates.

Current wording

Interest expense decreased $2.2 million due primarily to lower average debt balances, offset by higher average interest rates.

Previous wording

Other income increased $1.8 million due to increased interest income on higher average cash balances.

Current wording

Other income increased $4.2 million due to increased interest income on higher average cash balances and higher returns on nonqualified benefit plan investments.

Previous wording

Income tax expense increased $1.8 million, corresponding with higher income before income taxes.

Current wording

Income tax expense increased $3.1 million, corresponding with higher income before income taxes.

Previous wording

A discussion of key financial data from Knife River’s business segments follows. Knife River provides segment-level information by revenue, gross profit, gross margin, EBITDA and EBITDA margin, as these are the measures of profitability used by our management to assess operational results. EBITDA and EBITDA margin are non-GAAP financial measures. For more information and reconciliations to the nearest GAAP measure, see the section entitled "Non-GAAP Financial Measures.”

Current wording

A discussion of key financial data from Knife River’s business segments follows. Knife River provides segment-level information by revenue, gross profit, gross margin, EBITDA and EBITDA margin, as these are the measures of profitability used by our chief operating decision maker to assess operational results. EBITDA and EBITDA margin are non-GAAP financial measures. For more information and reconciliations to the nearest GAAP measure, see the section entitled "Non-GAAP Financial Measures.”

Previous wording

Revenue increased $6.7 million as price increases across all product lines contributed an additional $8.4 million, which was mainly due to pricing initiatives and aggregate product mix sales differences. Public agency-related contracting services activity in Northern California continued to see an uptick in the second quarter, improving contracting services revenues by $1.5 million and leading to an increase in asphalt volumes. Offsetting the increases was a decline in ready-mix concrete volumes of $6.9 million due largely to the timing of projects.

Current wording

Revenue increased $7.7 million as price increases across its product lines contributed an additional $12.0 million, which was mainly due to pricing initiatives and aggregate product mix. The revenue increase was also driven by an increase in construction activity in Northern California of $11.5 million, which was largely related to additional public agency-related construction activity. Offsetting the price increases were reduced volumes of $12.9 million across all material product lines, partly due to increased competition and reduced demand in private markets.

Previous wording

EBITDA improved $400,000 year-over-year, largely due to improved contracting services margins, as previously discussed. Partially offsetting the increase was higher selling, general and administrative expenses primarily for additional professional services. EBITDA margin resulted in a decrease of 50 basis points, largely the result of the previously discussed lower gross margin.

Current wording

EBITDA improved $900,000 year-over-year, largely due to improved gross profit, as previously discussed. Slightly offsetting the increase was higher selling, general and administrative costs, largely payroll-related costs and professional services. EBITDA margin resulted in a decrease of 30 basis points, largely the result of the previously discussed lower gross margin.

Previous wording

Revenue increased $19.5 million across all core product lines. This increase resulted from increased prices contributing $14.6 million, strong asphalt sales volumes of $3.4 million and public agency-related construction work contributing to an increase on contracting services revenue of $8.2 million. Partially offsetting the increased revenues were lower aggregate volumes resulting from the absence of some larger projects this year compared to last year in Hawaii and California and lower ready-mix concrete volumes across the segment's markets.

Current wording

Revenue increased $27.1 million across all core product lines. This increase resulted from increased pricing of $26.6 million primarily from pricing initiatives and additional construction activity in Northern California of $20.8 million, which was largely related to public agency-related construction work. Partially offsetting the increased revenues were lower aggregate and ready-mix concrete volumes of $11.9 million across the segment's markets related to the timing of projects and reduced private-market demand.

Previous wording

Revenue increased $26.6 million, largely the result of higher contracting services revenue of $22.6 million due to increased public agency work. Also contributing to the increase was improved pricing on ready-mix concrete and aggregates of $12.9 million, which was mostly offset by lower ready-mix sales volumes due to reduced demand resulting from EDGE-related price initiatives and market conditions.

Current wording

Revenue increased $35.5 million, largely the result of higher contracting services revenue due to increased public agency-related construction work in the region, which also contributed to higher asphalt volumes. Also contributing to the increase was improved pricing on ready-mix concrete and aggregates of $22.4 million, which was more than offset by lower ready-mix concrete and aggregates volumes of $24.7 million resulting from EDGE-related price initiatives and market conditions.

Previous wording

Revenue increased $18.2 million due to increased contracting services activity, largely resulting from additional airport work and more Idaho public agency work, which also positively impacted asphalt sales volumes. Improved pricing across its core product lines also contributed $9.6 million. Partially offsetting the increase were lower ready-mix concrete and aggregate sales volumes due to the timing of certain projects.

Current wording

Revenue increased $6.0 million due to higher pricing on aggregates and ready-mix concrete, which contributed $9.4 million to the overall increase in revenue. Also contributing to revenue was increased contracting services activity, largely resulting from more public agency and airport construction work, which also positively impacted asphalt volumes. Largely offsetting the increase was lower ready-mix concrete and aggregate volumes due to the timing of projects.

Previous wording

Revenue increased $17.4 million primarily the result of higher average selling prices across all core product lines contributing $13.3 million of additional revenues. Contracting services revenue increased by $11.8 million resulting from additional airport work and more Idaho public agency work, which also positively impacted asphalt sales volumes. These increases were partially offset by a reduction in aggregate and ready-mix concrete sales volumes due to the timing of certain projects.

Current wording

Revenue increased $23.4 million primarily the result of increased pricing across all core product lines contributing $22.3 million of additional revenues and increased contracting services activity due to more Idaho public agency construction work and additional airport work, which also positively impacted asphalt volumes. These increases were partially offset by lower ready-mix concrete and aggregate volumes due to timing of projects.

Previous wording

EBITDA improved $10.5 million and EBITDA margin improved 340 basis points, largely the result of improved gross profit, as previously discussed, and lower bad debt expense. Partially offsetting the increase was the absence of asset sale gains of $2.0 million in the prior year.

Current wording

EBITDA improved $10.5 million and EBITDA margin improved 120 basis points, largely the result of improved gross profit, as previously discussed. Partially offsetting the increase was the absence of asset sale gains of $2.0 million in the prior year.

Previous wording

EBITDA improved $5.9 million and EBITDA margin improved 230 basis points, driven by higher gross profit, as previously discussed, and higher gains on asset sales of $3.0 million. Partially offsetting the increase was higher selling, general and administrative expenses, largely related to higher payroll-related costs.

Current wording

EBITDA improved $11.0 million and EBITDA margin improved 200 basis points driven by increased gross profit, as previously discussed, and higher gains on asset sales of $2.7 million. Partially offsetting the increase was higher selling, general and administrative costs due to higher payroll-related costs.

Previous wording

EBITDA decreased $1.9 million and EBITDA margin decreased 110 basis points, which was related to decreased gross profit, as previously discussed, offset in part by lower selling, general and administrative costs related to lower payroll-related costs.

Current wording

EBITDA decreased $12.0 million and EBITDA margin decreased 570 basis points, which was related to decreased gross profit, as previously discussed.

Previous wording

Revenue decreased $4.5 million due to reduced market pricing across most of the segment's markets as a result of lower input costs. Liquid asphalt sales volumes were up slightly, primarily from strong demand in California and Texas, which were partially offset by decreased volumes in the Midwest due to heavy rainfall in the second quarter of 2024. Also improving revenues were increased spreading rates, as well as higher burner fuels pricing and sales volume related to project timing.

Current wording

Revenue decreased $19.2 million due to lower pricing as a result of reduced supply input costs across our market areas. Liquid asphalt sales volumes were up slightly, primarily from strong demand in California and Texas, which were partially offset by decreased volumes in the Midwest due to less carryover jobs year-over-year.

Previous wording

Gross profit decreased $3.0 million and gross margin decreased 100 basis points, driven by the reduced market pricing. Partially offsetting the decrease was increased margins on liquid asphalt spreading, fabric installation services and lower maintenance costs.

Current wording

Gross profit decreased $14.5 million and gross margin decreased 410 basis points, driven by the reduced market pricing in addition to increased operating costs.

Previous wording

EBITDA decreased $2.4 million and EBITDA margin decreased 50 basis points, which was related to decreased gross profit, as previously discussed, offset in part by lower selling, general and administrative costs related to lower payroll-related costs.

Current wording

EBITDA decreased $13.9 million and EBITDA margin decreased 410 basis points, which was related to decreased gross profit, as previously discussed, offset in part by lower selling, general and administrative costs related to lower payroll-related costs.

Previous wording

As a result of the Separation, Corporate Services experienced higher recurring costs as a publicly traded company of $6.9 million, including payroll-related costs of $4.0 million, largely due to additional staff and stock-based compensation expenses for the management team and board of directors; information technology costs of $1.4 million; professional services of $850,000; fees of $350,000, primarily related to new debt issued in conjunction with the Separation; and insurance costs of $200,000. These recurring costs were partially offset by a reduction in general corporate expenses from MDU Resources of $4.7 million, as discussed in Note 2. Also, as part of the Separation, we incurred less one-time costs of $750,000, primarily related to insurance costs and the transition services agreement with MDU Resources.

Current wording

Corporate Services contributed negative EBITDA of $42.3 million, or $10.5 million less EBITDA compared to the prior year. Corporate Services had increased selling, general and administrative costs of $11.5 million. The increase in costs for non-Separation related expenses include higher health care costs of $4.6 million, partly due to 2023 claims being paid from the MDU Resources health and welfare trust, due diligence and integration costs related to corporate development of $2.6 million and higher information technology costs of $1.0 million, partially offset by a reduction in insurance loss reserves at our captive insurer of $2.6 million. As a result of the Separation, Corporate Services experienced higher recurring costs as a publicly traded company of $6.6 million, including payroll-related costs of $9.5 million, largely due to additional staff and stock-based compensation expenses for the management team and board of directors; information technology costs of $2.8 million; professional services of $2.0 million; fees of $870,000 primarily related to fees on new debt issued in conjunction with the Separation; and insurance costs of $600,000. These recurring costs were partially offset by a reduction in general corporate expenses from MDU Resources of $9.0 million, as discussed in Note 2. Also, as part of the Separation, we incurred less one-time costs of $2.8 million, primarily related to insurance costs and the transition services agreement with MDU Resources.

Previous wording

At June 30, 2024, we had cash and cash equivalents of $15.5 million, working capital of $571.4 million and borrowing capacity of $329.1 million on our revolving credit agreement, net of our outstanding letters of credit. Working capital is calculated as current assets less current liabilities. As of June 30, 2024, we have sufficient liquid assets, cash flows from operations and borrowing capacity to meet our financial commitments, debt obligations and anticipated capital expenditures for at least the next 12 months.

Current wording

At September 30, 2024, we had unrestricted cash and cash equivalents of $220.4 million, working capital of $733.5 million and borrowing capacity of $329.4 million on our revolving credit agreement, net of our outstanding letters of credit. Working capital is calculated as current assets less current liabilities. As of September 30, 2024, we have sufficient liquid assets, cash flows from operations and borrowing capacity to meet our financial commitments, debt obligations and anticipated capital expenditures for at least the next 12 months.

Previous wording

Knife River’s ability to fund its cash needs will depend on the ongoing ability to generate cash from operations and obtain debt financing with competitive rates. Knife River relies on access to capital markets as sources of liquidity for capital requirements not satisfied by cash flows from operations, particularly in the first half of the year due to the seasonal nature of the industry. Our principal uses of cash in the future will be to fund our operations, working capital needs, capital expenditures, repayment of debt and strategic business development transactions.

Current wording

Knife River’s ability to fund its cash needs will depend on the ongoing ability to generate cash from operations and obtain debt financing with competitive rates. Knife River relies on access to capital markets as sources of liquidity for capital requirements not satisfied by cash flows from operations, particularly in the first half of the year due to the seasonal nature of the business. Our principal uses of cash in the future will be to fund our operations, working capital needs, capital expenditures, repayment of debt and strategic business development transactions.

Previous wording

While the 2024 budgeted capital expenditures includes organic growth projects, future acquisitions and other growth opportunities that support our EDGE strategy would be incremental to the outlined capital program; however, these opportunities are dependent upon economic and other competitive conditions. It is anticipated that capital expenditures for 2024 will be funded by various sources, including internally generated cash and debt.

Current wording

Capital expenditures for future acquisitions and organic opportunities would be incremental to the outlined capital program; these opportunities are dependent upon economic and other competitive conditions. It is anticipated that capital expenditures for 2024 will be funded by various sources, including internally generated cash and debt.

Previous wording

Cash used in operating activities at June 30, 2024, increased $19.3 million, largely related to higher working capital needs. Cash used by working capital components totaled $195.9 million for the six months ended June 30, 2024, compared to $171.4 million for the six months ended June 30, 2023. This increase in cash usage in 2024 was primarily the result of higher payroll-related costs due in part to additional employees associated with the Separation. Also impacting working capital were higher liquid asphalt inventory balances largely related to filling a large tank that was out service in the previous year; timing of prepaid insurance due to the Separation; the removal of all related-party balances due to the Separation; and fluctuations in the timing of payment on accounts payable. Partially offsetting these decreases were stronger collections on receivables balances during 2024 and higher net income.

Current wording

Cash provided by operating activities at September 30, 2024, decreased $3.0 million, largely related to higher working capital needs. Cash used by working capital components totaled $146.5 million for the nine months ended September 30, 2024, compared to $135.7 million for the nine months ended September 30, 2023. This increase in cash usage in 2024 was the result of higher accrued compensation due in part to additional employees associated with the Separation; higher liquid asphalt and aggregate inventory balances, due in part to higher costs of aggregate inventory; timing of prepaid insurance due to the Separation; the removal of all related-party balances due to the Separation; and fluctuations in the timing of payment on accounts payable. Partially offsetting these decreases were stronger collections on receivables balances during 2024 and higher net income.

Previous wording

The increase in cash used in investing activities for the six months ended June 30, 2024, compared to the six months ended June 30, 2023, was primarily due to higher capital expenditures, including a liquid asphalt expansion project and routine replacement of vehicles and equipment. In addition, two acquisitions were completed in the first half of 2024.

Current wording

The increase in cash used in investing activities for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, was primarily due to higher capital expenditures, including a liquid asphalt expansion project and routine replacement of vehicles and equipment. In addition, three acquisitions were completed in the first nine months of 2024.

Previous wording

The decrease in cash flows provided by financing activities for the six months ended June 30, 2024, compared to the six months ended June 30, 2023, was largely related to changes in the Company's debt structure as a result of the Separation, which included the issuance of senior notes, term loans and a revolving credit facility, and a transfer of the majority of the proceeds to Centennial.

Current wording

The decrease in cash flows provided by financing activities for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, was largely related to changes in the Company's debt structure as a result of the Separation, which included the issuance of senior notes, term loans and a revolving credit facility, and a transfer of the majority of the proceeds to Centennial.

Previous wording

There were no material changes in the contractual obligations related to estimated interest payments, purchase commitments, asset retirement obligations, uncertain tax positions and minimum funding requirements for its defined benefit plans for 2024 from those reported in the 2023 Annual Report. For more information on our contractual obligations on long-term debt, operating leases and purchase commitments, see Part II, Item 7 in the 2023 Annual Report.

Current wording

There were no material changes in the contractual obligations from those reported in the 2023 Annual Report other than as set forth below. For more information on our contractual obligations on long-term debt, operating leases and purchase commitments, see Part II, Item 7 in the 2023 Annual Report.