What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-04 compared with 2026-04-30 · 96 added, 66 removed, 174 unchanged (48% of the section changed)

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Because forward-looking statements are subject to certain risks and uncertainties, (including, without limitation, those set forth in the Company’s most recent Annual Report on Form 10-K or prior Quarterly Reports on Form 10-Q) actual results may differ materially from those expressed or implied by such forward-looking statements.

These forward-looking statements are qualified in their entirety by the specific cautionary factors identified below and the more detailed risk factor discussions contained in those filings.

Investors should not place undue reliance on any forward-looking statement.

There are a number of risks, uncertainties, and other important factors that could cause actual results to differ materially from the forward-looking statements, including, but not limited to:

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• Adverse impacts from inflation, an economic slowdown or recession and by disruption in capital and credit markets that might impede our access to credit, increase our borrowing costs and impair the financial soundness of our customers and suppliers;

• Proposed tariffs that may significantly and adversely impact our results of operations;

• Changes in trade policy, tariffs, or import/export restrictions that may significantly and adversely impact our results of operations;

• Expectations regarding our ability to attract, motivate, and retain the workforce necessary to execute our business strategy and other goals;

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Further information concerning important factors that could cause actual events or results to be materially different from the forward-looking statements can be found in the “Business Environment Overview and Trends” sections of this quarterly report, as well as in the Item 1A-“Risk Factors” section of our most recent Annual Report on Form 10-K.

The risk factors enumerated above and in those filings are intended to be meaningful cautionary statements for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, and such factors are specifically incorporated by reference herein.

Although we believe the expectations reflected in our other forward-looking statements are based on reasonable assumptions, it is not possible to foresee or identify all factors that could have a material and negative impact on our future performance.

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Packaging and Tissue continue to perform well, supported by growth across most regions.

Looking ahead to the remainder of 2026, we expect Packaging and Tissue to remain positive contributors, with sales in Europe and the Americas holding broadly stable, while Asia’s trajectory remains uncertain.

Looking ahead to the remainder of 2026, we expect Packaging and Tissue to remain positive contributors, with sales in Europe holding broadly stable, while trajectory in the Americas is impacted by cyclical moderation tied to customer consolidations.

Publication grades remained under structural pressure, and the MC segment expects publication grade paper demand to continue declining through 2026 and beyond, offset by growing demand for tissue grade products.

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Some of the markets in which MC's products are sold are expected to have volume trends that are in line with global GDP.

Despite pricing and demand pressures on revenue growth, the MC segment is expected to improve earnings in the future through technological innovations, manufacturing productivity efficiencies and cost controls.

The MC segment has been a significant generator of operating cash inflows for the Company.

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The AEC segment's strategy is to continue to build on its global brand by leveraging its industry leading performance to drive future growth through technology differentiation.

This includes continued investment in AEC's proprietary 3D-woven technology to accelerate solutions that can be offered across a set of broader applications;

and by leveraging the AEC's non-3D technology capabilities and capacity, on high-value aerospace (both commercial and defense) applications, and other emerging markets such as space and advanced air mobility ("AAM").

This includes continued investment in AEC's proprietary 3D-woven technology to accelerate solutions that can be offered across a set of broader applications, and by leveraging the AEC's non-3D technology capabilities and capacity, on high-value aerospace (both commercial and defense) applications, and other emerging markets such as space and advanced air mobility ("AAM").

The AEC segment provides longer-term growth potential for the Company as it ramps current production programs and captures new commercial and defense opportunities.

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In addition, as the AEC segment ramps-up larger complex programs, such as those associated with the CH-53 program, it continues to face challenges in staffing and training its workforce to support production rates, which has impacted operational productivity, particularly at its Salt Lake City facility, and contributed to increased labor and scrap costs.

During the fourth quarter of 2025, we announced that we will commence a strategic review of the Amelia Earhart Drive facility in Salt Lake City.

This review is expected to be completed by the end of 2026, and management expects the review to result in a sale of the facility, including the CH-53K contract work.

As of December 31, 2025, we determined that the assets and liabilities of this group meet the held-for-sale criteria, and they have been classified as such within

our consolidated balance sheets for all periods presented.

During the fourth quarter of 2025, we announced plans to commence a strategic review of the Amelia Earhart Drive facility in Salt Lake City.

This review is progressing according to our planned timeline, and we have received multiple indications of interest with regards to a sale of the facility.

We continue to engage closely with our customers throughout the strategic assessment process.

This review is expected to be completed by the end of 2026.

As of December 31, 2025, we determined that the assets and liabilities of this group meet the held-for-sale criteria, and they have been classified as such within our consolidated balance sheets for all periods presented.

Upon classification as held for sale, the Company ceased depreciation and amortization of the related long-lived assets in accordance with applicable accounting guidance.

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The following table summarizes our Consolidated Net revenues and Gross profit:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in thousands, except percentages) 2026 2025 2026 2025

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Gross profit margin 32.7 % 31.3 % 32.4 % 32.3 %

Net revenues for the three months ended March 31, 2026 increased 7.8% as compared to the three months ended March 31, 2025 primarily due to higher volume in the AEC segment partially offset by softness in the US region and temporary production interruptions in the MC business.

Three Month Comparison

Net revenues for the three months ended June 30, 2026 increased $18.1 million or 5.8% as compared to the three months ended June 30, 2025 primarily due to higher activity levels in the AEC segment partially offset by softness in the MC business as a result of reduced activity levels in the Americas region and temporary production interruptions in the business.

Additionally, changes in currency translation rates increased comparative segment net revenues by $4.0 million as compared to the prior year.

The increase in gross profit for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025, was driven by the increased sales volume in AEC.

Despite the favorable change to gross profit, increased production costs resulting from changes in the product mix within the MC business are the primary driver for the slight gross profit margin decrease to 32.1% from 33.4% for the three months ended March 31, 2026 and March 31, 2025, respectively.

The increase in gross profit of $10.4 million for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025, was primarily driven by the increased sales volume.

Gross profit margin increased slightly to 32.7% from 31.3% for the three months ended June 30, 2026 and June 30, 2025, respectively.

Six Month Comparison

Net revenues for the six months ended June 30, 2026 increased $40.6 million or 6.8% as compared to the six months ended June 30, 2025 primarily due to higher activity levels in the AEC segment partially offset by softness in the MC business as a result of reduced activity levels in the Americas region and temporary production interruptions in the business.

Additionally, changes in currency translation rates increased comparative segment net revenues by $13.2 million as compared to the prior year.

The increase in gross profit of $13.7 million for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025, was driven by the increased sales volume.

Gross profit margin held stable at 32.4% and 32.3% for the six months ended June 30, 2026 and June 30, 2025, respectively.

Operating Expenses

The following table summarizes Consolidated Operating expenses by classification:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in thousands, except percentages) 2026 2025 2026 2025

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Total operating expenses as a % of net revenues 23.0 % 24.2 % 23.4 % 23.9 %

Consolidated Selling, general and administrative ("SG&A") expenses increased $4.5 million or 8.3% as compared to the three months ended March 31, 2025.

The overall changes are primarily the result of higher personnel costs as well as costs incurred related to the strategic review of the Amelia Earhart Drive facility.

Consolidated Technical and research expenses increased by $1.1 million as compared to the three months ended March 31, 2025, primarily due to new business ventures initiatives in 2026.

Restructuring expenses, net, of $3.2 million in the three months ended March 31, 2026, increased by $0.7 million compared to $2.5 million in the three months ended March 31, 2025.

The change in restructuring actions for the three month period are a result of workforce reductions and global production consolidation activities.

Three Month Comparison

Consolidated Selling, general and administrative ("SG&A") expenses decreased $2.4 million or 4.2% as compared to the three months ended June 30, 2025.

The overall changes are primarily the result of cost control actions and favorable foreign currency impacts particularly in the MC business.

Consolidated Technical and research expenses decreased by $0.8 million as compared to the three months ended June 30, 2025, primarily due to lower intellectual property-related defense costs in the current year.

Restructuring expenses, net of $8.0 million in the three months ended June 30, 2026, increased by $3.8 million compared to $4.2 million in the three months ended June 30, 2025.

The increase in restructuring expenses for the three month period is primarily a result of higher asset transfer costs related to site consolidations and higher consulting costs.

Six Month Comparison

Consolidated Selling, general and administrative ("SG&A") expenses increased $2.1 million or 1.8% as compared to the six months ended June 30, 2025.

The overall changes are primarily the result of costs incurred related to the strategic review of the Amelia Earhart Drive facility.

Consolidated Technical and research expenses increased by $0.2 million as compared to the six months ended June 30, 2025, primarily due to costs associated with new business venture initiatives.

Restructuring expenses, net of $11.1 million in the six months ended June 30, 2026, increased by $4.4 million compared to $6.7 million in the six months ended June 30, 2025.

The increase in restructuring expenses for the six month period is primarily a result of higher asset transfer costs related to site consolidations and higher consulting costs.

Operating Income

See the Segment Results of Operations section of this Management Discussion and Analysis of Financial Condition and Results of Operations for significant drivers of Operating income/(loss) for each business segment.

See the Segment Results of Operations section of this Management's Discussion and Analysis of Financial Condition and Results of Operations for significant drivers of Operating income/(loss) for each business segment.

Other Earnings Items

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in thousands, except percentages) 2026 2025 2026 2025

Interest expense/(income), net $ 5,467 $ 3,655

Interest expense, net $ 6,068 $ 5,150 $ 11,535 $ 8,805

Other (income)/expense, net 39 3,534 (3,154) 4,517

Income tax expense 8,327 4,254 15,977 10,530

Net income/(loss) attributable to the noncontrolling interest 168 (6)

Net income attributable to the noncontrolling interest 290 149 458 143

Interest Expense, net

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Other (Income)/Expense, net

Other (income)/expense, net, included foreign currency related transactions which resulted in gains of $(2.2) million in the three months ended March 31, 2026, as compared to losses of $3.2 million in the same period last year.

Other (income)/expense, net, included foreign currency related activity which resulted in gains of $0.5 million and $2.7 million in the three and six months ended June 30, 2026, as compared to losses of $5.7 million and $8.8 million in the same periods last year.

These changes were primarily the result of unrealized gains and losses on intercompany loans.

In addition, changes in the fair value of derivative instruments included gains of $1.2 million in the three months ended March 31, 2026, as compared to gains of $2.5 million for the three months ended March 31, 2025.

In addition, changes in the fair value of derivative instruments included gains of $0.2 million and $1.5 million in the three and six months ended June 30, 2026, as compared to gains of $0.7 million and $3.3 million for the three and six months ended June 30, 2025.

Unrealized gains and losses on both derivative instruments and intercompany loans were driven by currency rate movements, most notably the Brazilian Real and Mexican Peso.

Components of net periodic pension and postretirement costs other than service costs constituted expenses of $1.5 million and $3.0 million in the three and six months ended June 30, 2026, as compared to income of $0.5 million for the three months ended June 30, 2025 and expenses of $0.3 million for the six months ended June 30, 2025.

See Note 6, Other (Income)/Expense, net, in the Notes to the Consolidated Financial Statements in Item 1, which is incorporated herein by reference.

Effective Income Tax Rate

Three months ended March 31,

Three months ended June 30, Six months ended June 30,

2026 2025 2026 2025

Effective income tax rate 32.0 % 31.3 % 32.5 % 28.3 %

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tax costs on foreign pre-tax earnings, and by discrete items that may occur in any given year but are not consistent from year to year.

The Company’s effective tax rate for the first quarter of 2026 was 33.1%, compared to 26.6% for the same period in 2025, mainly due to favorable discrete tax adjustments in the prior period.

The Company’s effective tax rate for the six months ended June 30, 2026 was 32.5%, compared to 28.3% for the same period in 2025, mainly due to unfavorable discrete tax adjustments recognized in the current period, partially offset by favorable discrete tax adjustments, compared to favorable discrete tax adjustments recognized in the prior period.

For more information, see Note 7, Income Taxes, in the Notes to the Consolidated Financial Statements in Item 1, which is incorporated herein by reference.

The Organization for Economic Co-operation and Development has issued Pillar Two model rules introducing a new global minimum tax of 15 percent intended to be effective on January 1, 2024.

While the U.S.

has not yet adopted the Pillar Two rules, various other governments around the world are enacting legislation.

The Organization for Economic Co-operation and Development has issued Pillar Two model rules introducing a new global minimum tax of 15 percent effective on January 1, 2024.

has not adopted the Pillar Two rules;

however, various other governments around the world are enacting legislation.

As currently designed, Pillar Two will ultimately apply to our worldwide operations.

Although we do not expect these rules to materially increase our global tax costs in 2026, there remains uncertainty as to the final Pillar Two model rules.

Certain foreign subsidiaries subject to the Pillar Two regime file reports to comply with locally enacted guidance.

On January 1, 2026, the Pillar Two Side-by-Side (SbS) Safe Harbor agreement became effective, and the US is a Qualified SbS Regime.

Therefore, a qualified US-headquartered multinational corporation may elect the SbS Safe Harbor and be exempt from minimum top-up tax.

AIC intends to make the election.

We do not expect the Pillar Two rules to materially increase our global tax costs in 2026, though uncertainty remains as the rules develop.

We will continue to monitor U.S.

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Machine Clothing Segment

The MC segment accounted for 53.3% of our consolidated revenues for the three months ended March 31, 2026.

A summary of MC's selected financial results is as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in thousands, except percentages) 2026 2025 2026 2025

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% of net revenues 19.4 % 20.8 % 19.3 % 21.4 %

Net revenues for the three months ended March 31, 2026 decreased 5.0% as compared to the three months ended March 31, 2025, driven by reduced sales volume in the US region, primarily due to temporary production interruptions, including scheduled maintenance at certain plants.

This decline is slightly offset by a strong performance within the European market, particularly related to the Engineered Fabrics program.

Further, changes in currency translation rates had the effect of increasing Net revenues by $6.1 million for the three months ended March 31, 2026, as compared to this period in 2025.

Gross profit for the three months ended March 31, 2026 decreased by $4.8 million as compared to the three months ended March 31, 2025, primarily driven by the volume declines noted above;

with gross profit margin also decreasing slightly from 45.7% to 45.2% in the three months ended March 31, 2025 and 2026, respectively.

Net revenues for the three months ended June 30, 2026 decreased 1.2% as compared to the three months ended June 30, 2025, driven by reduced demand in the Americas region partially offset by strong performance within the European market and stable performance in Asia.

Further, changes in currency translation rates had the effect of increasing Net revenues by $2.1 million for the three months ended June 30, 2026, as compared to this period in 2025.

Net revenues for the six months ended June 30, 2026 decreased 3.1% as compared to the six months ended June 30, 2025, driven by reduced demand in the Americas region and temporary production interruptions partially offset by strong performance within the European market and stable performance in Asia.

Further, changes in currency translation rates had the effect of increasing Net revenues by $8.3 million for the six months ended June 30, 2026, as compared to this period in 2025.

Gross profit for the three months ended June 30, 2026 decreased by $2.8 million as compared to the three months ended June 30, 2025, primarily driven by the volume declines noted above, with gross profit margin also decreasing slightly from 46.3% to 45.3% in the three months ended June 30, 2025 and 2026, respectively.

Gross profit for the six months ended June 30, 2026 decreased by $7.7 million as compared to the six months ended June 30, 2025, primarily driven by the volume declines noted above, with gross profit margin also decreasing slightly from 46.0% to 45.3% in the six months ended June 30, 2025 and 2026, respectively.

Operating Income

Operating income for the three months ended March 31, 2026 decreased $6.5 million or 16.9% as compared to the three months ended March 31, 2025, primarily as a result of gross profit declines and restructuring costs.

Incremental restructuring expenses were primarily a result of manufacturing footprint optimization in connection with the Heimbach acquisition.

Operating income for the three months ended June 30, 2026 decreased $3.0 million or 7.9% as compared to the three months ended June 30, 2025, primarily as a result of gross profit declines and higher restructuring costs, offset by SG&A cost containment.

Incremental restructuring expenses were primarily a result of higher asset transfer costs related to site consolidations and higher consulting costs.

Operating income for the six months ended June 30, 2026 decreased $9.5 million or 12.4% as compared to the six months ended June 30, 2025, primarily as a result of gross profit declines and restructuring costs.

Incremental restructuring expenses were primarily a result of higher asset transfer costs related to site consolidations and higher consulting costs.

Albany Engineered Composites Segment

The AEC segment accounted for 46.7% of our consolidated net revenues for the three months ended March 31, 2026.

AEC has contracts with certain customers, including its contract for the LEAP program, where revenue is determined by a cost-plus-fee agreement.

Revenue earned under these arrangements accounted for approximately 33% and 35% of segment revenue for the three months ended March 31, 2026 and 2025, respectively.

Revenue earned under this arrangement accounted for approximately 34% and 34% of segment revenue for the six months ended June 30, 2026 and 2025, respectively.

In addition, AEC has long-term contracts in which the selling price is fixed.

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A summary of AEC's selected financial results is as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in thousands, except percentages) 2026 2025 2026 2025

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% of net revenues 7.6 % (2.0) % 6.8 % (0.4) %

Net revenues for the three months ended March 31, 2026 increased 27.4%, primarily driven by higher activity levels on various programs including ASC, GE LEAP Platforms, and B787 Frames, as well as lower unfavorable long-term contract adjustments.

Further, changes in currency translation rates had the effect of increasing Net revenues by $3.1 million for the three months ended March 31, 2026, as compared to this period in 2025.

Gross profit for the three months ended March 31, 2026 increased $8.1 million as compared to the three months ended March 31, 2025, and Gross profit margin increased from 14.5% to 17.0% in the three months ended March 31, 2025 and 2026, respectively.

The change was driven primarily by increases in revenue, as well as performance improvements on various programs, resulting in lower unfavorable EAC adjustments.

Operating Income/(Loss)

Operating income for the three months ended March 31, 2026 increased $7.0 million as compared to the three months ended March 31, 2025, principally due to favorable changes to Gross profit as noted above and the conclusion of restructuring activities from 2025.

This was slightly offset by an increase in SG&A expenses of $1.5 million from the prior period, driven by personnel-related costs.

Additionally, Technical and research expenses increased $0.9 million for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, driven by increased consulting costs to assist with continued innovation within the segment.

Net revenues for the three months ended June 30, 2026 increased 15.6%, primarily driven by higher activity levels on various programs including LEAP platforms, B787 Frames, and Boeing Tanks, as well as lower unfavorable long-term contract adjustments.

Further, changes in currency translation rates had the effect of increasing Net revenues by $1.8 million for the three months ended June 30, 2026, as compared to this period in 2025.

Net revenues for the six months ended June 30, 2026 increased 21.1%, primarily driven by higher activity levels on various programs including LEAP platforms, B787 Frames, F-35, and BETA Technologies, as well as lower unfavorable long-term contract adjustments.

Further, changes in currency translation rates had the effect of increasing Net revenues by $5.0 million for the six months ended June 30, 2026, as compared to this period in 2025.

Gross profit for the three months months ended June 30, 2026 increased $13.2 million as compared to the three months ended June 30, 2025, and Gross profit margin increased from 10.5% to 17.9% in the three months ended June 30, 2025 and 2026, respectively.

The change was driven primarily by increases in revenue and lower depreciation related to held for sale accounting, as well as performance improvements on various programs, resulting in lower unfavorable long-term contract adjustments.

Gross profit for the six months ended June 30, 2026 increased $21.4 million as compared to the six months ended June 30, 2025, and Gross profit margin increased from 12.4% to 17.5% in the six months ended June 30, 2025 and 2026, respectively.

Operating Income

Operating income for the three months ended June 30, 2026 increased $14.1 million as compared to the three months ended June 30, 2025, principally due to favorable changes to Gross profit as noted above and the conclusion of restructuring activities from 2025.

Operating income was further increased by a slight decrease in SG&A expenses of $0.5 million from the prior period as a result of cost containment efforts.

Operating income for the six months ended June 30, 2026 increased $21.1 million as compared to the six months ended June 30, 2025, principally due to favorable changes to Gross profit as noted above and the conclusion of restructuring activities from 2025.

This was slightly offset by an increase in SG&A expenses of $1.0 million from the prior period.

Additionally, Technical and research expenses increased $1.0 million for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, driven by increased consulting costs to assist with continued innovation within the segment.

Working Capital, Liquidity and Capital Structure

Cash Flow Summary

Three months ended March 31,

Six months ended June 30,

(in thousands)

Net income/(loss) $ 15,449 $ 17,349

Net income $ 33,153 $ 26,681

Depreciation and amortization 34,147 43,042

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Net cash used in investing activities (19,522) (27,288)

Net cash provided by financing activities 13,769 15,091

Net cash used in financing activities (19,200) (24,508)

Effect of exchange rate changes on cash and cash equivalents 729 8,369

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(a) Includes Accounts receivable, Contract assets, Inventories, Accounts payable, and Accrued liabilities.

Net cash provided by operating activities during the three months ended March 31, 2026 was $5.6 million, compared to $2.1 million in the three months ended March 31, 2025.

The increase was primarily driven by improved working capital management primarily driven by favorable cash collection activities at AEC.

Net cash used in investing activities included capital expenditures totaling $9.3 million and $15.6 million for the three months ended March 31, 2026 and March 31, 2025, respectively, with continued maintenance capital and capital designed to improve operating efficiencies across the Company.

Net cash provided by financing activities was $13.8 million for the three months ended March 31, 2026 as compared to net cash used of $15.1 million for the three months ended March 31, 2025.

During 2026, we had net borrowings of $23.0 million as compared to $94.0 million of borrowings in the prior year, which were offset by share repurchases of $69.2 million.

Additionally, the Company has returned cash to shareholders through dividends of $7.9 million in the first three months of 2026.

Net cash provided by operating activities during the six months ended June 30, 2026 was $3.0 million, compared to $34.8 million in the six months ended June 30, 2025.

The decrease was driven by lower cash generated by working capital primarily related to inventory growth in connection with seasonal activity levels in MC and customer demand in AEC.

Net cash used in investing activities included capital expenditures totaling $21.2 million and $30.5 million for the six months ended June 30, 2026 and June 30, 2025, respectively, with continued growth capital and capital designed to improve operating efficiencies across the Company.

Net cash used in financing activities was $19.2 million for the six months ended June 30, 2026 as compared to net cash used of $24.5 million for the six months ended June 30, 2025.

During 2026, we had net repayments of debt of $2.0 million as compared to $113.9 million of borrowings in the prior year, which were offset by share repurchases of $120.4 million.

Additionally, the Company has returned cash to shareholders through dividends of $15.9 million in the first six months of 2026, a $0.8 million improvement in cash flow as compared to prior year.

Liquidity and Capital Structure

We finance our business activities principally with cash generated from operations and borrowings, largely through our revolving credit agreement as discussed below.

As of March 31, 2026, $476.5 million of borrowings were outstanding under our $800 million unsecured committed Amended Credit Agreement.

As of March 31, 2026, we had cash and cash equivalents of $122.6 million and borrowing capacity under our Amended Credit Agreement of $323.5 million, for a total liquidity of approximately $446.0 million.

As of June 30, 2026, $450.7 million of borrowings were outstanding under our $800 million unsecured committed Amended Credit Agreement.

As of June 30, 2026, we had cash and cash equivalents of $77.3 million and borrowing capacity under our Amended Credit Agreement of $349.3 million, for a total liquidity of approximately $426.7 million.

We believe cash flows from operations and the availability of funds under our Amended Credit Agreement will be adequate to fund our operations and business needs over the next twelve months.

As of March 31, 2026, $101.2 million of our total cash and cash equivalents were held by non-U.S.

As of June 30, 2026, $68.2 million of our total cash and cash equivalents were held by non-U.S.

subsidiaries.

The accumulated undistributed earnings of the Company’s foreign operations not targeted for repatriation to the U.S.

were in excess of $158.9 million , as of March 31, 2026 and are intended to remain indefinitely invested in foreign operations.

were in excess of $156.1 million, as of June 30, 2026 and are intended to remain indefinitely invested in foreign operations.

Our cash planning strategy includes repatriating current earnings in excess of working capital requirements from certain countries in which our subsidiaries operate.

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The Company is party to certain off-balance sheet arrangements, including certain guarantees.

The Company provides financial assurance, such as payment guarantee and letters of credit and surety bonds, primarily to support workers’ compensation programs and customs clearance, of less than $11 million.

There were no material changes in the Company’s off-balance sheet arrangements during the first quarter of 2026.

The Company provides financial assurance, such as payment guarantees and letters of credit and surety bonds, primarily to support

workers’ compensation programs and customs clearance, of less than $10 million.

There were no material changes in the Company’s off-balance sheet arrangements during the second quarter of 2026.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis