Content analysis
?Positive | ||
Negative | ||
Uncertain | ||
Constraining | ||
Legalese | ||
Litigous | ||
Readability |
H.S. freshman Bad
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Financial report summary
?Risks
- Knife River operates in a highly competitive industry.
- Knife River may not be able to secure, permit or economically mine strategically located aggregate reserves.
- Knife River is exposed to risk of loss resulting from the nonpayment and/or nonperformance by its customers and counterparties.
- The success of Knife River depends, in part, on the ability to execute on its acquisition strategy, to successfully integrate acquired businesses and to retain key employees of acquired businesses.
- Technology disruptions or cyberattacks could adversely impact operations.
- Artificial intelligence presents risks and challenges that can impact Knife River’s business by posing security risks to its confidential information, proprietary information and personal data.
- Knife River could experience temporary interruptions in its business operations and incur additional costs as it further develops information technology infrastructure and transitions its data to stand-alone systems.
- Knife River may be unable to protect its intellectual property, or may be alleged to have infringed upon the intellectual property rights of others, which could result in a loss of its competitive advantage and a diversion of resources.
- Knife River’s business is seasonal and subject to weather conditions that could adversely affect its operations.
- Significant changes in prices for commodities, labor, or other production and delivery inputs could negatively affect Knife River’s businesses.
- Supply chain disruptions may adversely affect Knife River’s operations.
- Knife River’s business is based in large part on government-funded infrastructure projects and building activities, and any reductions or reallocation of spending or related subsidies in these areas could have an adverse effect on the Company.
- Economic volatility affects Knife River’s operations, as well as the demand for its products and services.
- Pandemics, including COVID-19, may have a negative impact on Knife River’s business operations, revenues, results of operations, liquidity and cash flows.
- Knife River may be negatively impacted by pending and/or future litigation, claims or investigations.
- Knife River’s operations could be negatively impacted by import tariffs and/or other government mandates.
- Knife River’s operations are subject to environmental laws and regulations that may increase costs, impact or limit business plans, or expose Knife River to environmental liabilities.
- Knife River’s operations could be adversely impacted by climate change.
- Stakeholder actions and increased regulatory activity related to ESG, particularly climate change and reducing GHG emissions, could adversely impact the Company’s operations, costs of or access to capital and impact or limit business plans.
- Changes in tax law may negatively affect Knife River’s business.
- Knife River’s operations may be negatively affected if it is unable to obtain, develop and retain key personnel and skilled labor forces.
- Increasing costs associated with health care plans may adversely affect Knife River’s results of operations.
- Aggregate resource and reserve calculations are estimates and subject to uncertainty.
- Backlog may not accurately represent future revenue and gross margin.
- Knife River operates in a capital-intensive industry and is subject to capital market and interest rate risks.
- Financial market changes could impact Knife River’s defined benefit pension plans and obligations.
- Costs related to obligations under MEPPs could have a material negative effect on Knife River’s results of operations and cash flows.
- Knife River has substantial indebtedness and may incur substantial additional indebtedness, which could adversely affect its business, profitability and its ability to meet obligations.
- A lowering or withdrawal of the ratings, outlook or watch assigned to Knife River or its debt by rating agencies may increase its future borrowing costs and reduce its access to capital.
- Knife River has minimal history of operating as an independent, public company, and its historical financial information is not necessarily representative of the results that it would have achieved as a separate, publicly traded company and may not be a reliable indicator of its future results.
- If the Separation, together with certain related transactions, does not qualify as a transaction that is generally tax-free for U.S. federal income tax purposes, the Company could be subject to significant tax liabilities and, in certain circumstances, the Company could be required to indemnify MDU Resources for material taxes and other related amounts pursuant to indemnification obligations under the tax matters agreement.
- U.S. federal income tax consequences may restrict the Company’s ability to engage in certain desirable strategic or capital-raising transactions after the Separation.
- Knife River may not achieve some or all of the expected benefits of the Separation, and the Separation may materially and adversely affect its financial position, results of operations and cash flows.
- Knife River or MDU Resources may fail to perform under various transaction agreements executed as part of the Separation or the Company may fail to have necessary systems and services in place when certain of the transaction agreements expire.
- The Company’s inability to resolve favorably any disputes that arise between Knife River and MDU Resources with respect to their past and ongoing relationships may adversely affect the Company’s operating results.
- Following the Separation, certain members of management, directors and stockholders hold stock in both Knife River and MDU Resources, and as a result may face actual or potential conflicts of interest.
- Failure to maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act could materially and adversely affect Knife River.
- As an independent, publicly traded company, the Company may not enjoy the same benefits that it did as a segment of MDU Resources.
- In connection with the Separation from MDU Resources, MDU Resources agreed to indemnify Knife River for certain liabilities and Knife River agreed to indemnify MDU Resources for certain liabilities. If Knife River is required to pay MDU Resources under these indemnities, Knife River’s financial results could be negatively impacted. The MDU Resources indemnity may not be sufficient to hold Knife River harmless from the full amount of liabilities for which MDU Resources will be allocated responsibility, and MDU Resources may not be able to satisfy its indemnification obligations in the future.
- The trading market for Knife River common stock has existed only a short period following the Separation, and the market price and trading volume of its common stock may fluctuate significantly.
- If securities or industry analysts do not publish research or publish misleading or unfavorable research about the Company’s business, Knife River’s stock price and trading volume could decline.
- Stockholder percentage of ownership in Knife River may be diluted in the future.
- Knife River cannot guarantee the timing, declaration, amount or payment of dividends, if any, on its common stock.
- The Company’s amended and restated bylaws designates the Court of Chancery of the State of Delaware or, if the Court of Chancery of the State of Delaware does not have jurisdiction, another state court of the State of Delaware, or, if no state court located in the State of Delaware has jurisdiction, the federal court for the District of Delaware, as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by Knife River’s stockholders, which could discourage lawsuits against the Company and its directors and officers.
- Provisions in the Company’s amended and restated certificate of incorporation and amended and restated bylaws and Delaware law may prevent or delay an acquisition of Knife River, which could decrease the trading price of Knife River common stock.
Management Discussion
- *EBITDA and Adjusted EBITDA are non-GAAP financial measures. For more information and reconciliations to the nearest GAAP measures, see the section entitled “Non-GAAP Financial Measures.”
- *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.”
- *Other includes cement, merchandise, fabric, spreading and other products and services that individually are not considered to be a major line of business for the segment.