What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-07 compared with 2025-08-01 · 92 added, 74 removed, 238 unchanged (41% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of the Company’s financial condition and results of operations, which we refer to as our “MD&A,” should be read in conjunction with the Condensed Consolidated Financial Statements and the notes thereto contained in this Quarterly Report on Form 10-Q (this "Form 10-Q"), as well as the MD&A section included in our Annual Report on Form 10-K for the year ended December 31, 2024 ("2024 Form 10-K").

The following discussion and analysis of the financial condition and results of operations, of AdvanSix Inc.

(“AdvanSix,” the “Company,” “we” or “our”), which we refer to as our “MD&A,” should be read in conjunction with the Condensed Consolidated Financial Statements and the notes thereto contained in this Quarterly Report on Form 10-Q (this "Form 10-Q"), as well as the MD&A section included in our Annual Report on Form 10-K for the year ended December 31, 2024 ("2024 Form 10-K").

Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

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the potential effects of inflationary pressures, tariffs or the imposition of new tariffs, trade wars, barriers or restrictions, or threats of such actions, changes in interest rates, labor market shortages and supply chain issues;

instability or volatility in financial markets or other unfavorable economic or business conditions caused by geopolitical concerns, including as a result of new or proposed legislation or regulatory, trade or other policies in or impacting the U.S., the conflict between Russia and Ukraine, the conflicts in Israel, Gaza and Iran, related uncertainty in the surrounding region, and the possible expansion of such conflicts;

government shutdown, the conflict between Russia and Ukraine, the conflicts in Israel, Gaza and Iran, and related instability in the surrounding region, and the uncertain outcomes of such conflicts;

the effect of any of the foregoing on our customers’ demand for our products and our suppliers’ ability to manufacture and deliver our raw materials, including implications of reduced refinery utilization in the U.S.;

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risks associated with our indebtedness including compliance with financial and restrictive covenants, and our ability to access capital on reasonable terms, at a reasonable cost, or at all, due to economic conditions or otherwise;

the impact of scheduled turnarounds and significant unplanned downtime and interruptions of production or logistics operations as a result of mechanical issues or other unanticipated events such as fires, severe weather conditions, natural disasters, pandemics and geopolitical conflicts and related events;

price fluctuations, cost increases and supply of raw materials;

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AdvanSix is a diversified chemistry company that produces essential materials for our customers in a wide variety of end markets and applications that touch people’s lives.

Our integrated value chain of our five U.S.-based manufacturing facilities plays a critical role in global supply chains and enables us to innovate and deliver essential products for our customers across building and construction, fertilizers, agrochemicals, plastics, solvents, packaging, paints, coatings, adhesives, electronics and

other end markets.

building and construction, fertilizers, agrochemicals, plastics, solvents, packaging, paints, coatings, adhesives, electronics and other end markets.

Guided by our core values of Safety, Integrity, Accountability and Respect, AdvanSix strives to deliver best-in-class customer experiences and differentiated products in the industries of nylon solutions, plant nutrients, and chemical intermediates.

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We internally polymerize caprolactam into Aegis® Nylon 6 Resins, and we also market and sell the caprolactam that is not consumed internally to customers who use it to manufacture polymer resins to produce fibers, compounds and other nylon products.

Our Hopewell, VA manufacturing facility is one of the world’s largest single-site producers of caprolactam as of June 30, 2025.

Our Hopewell, VA manufacturing facility is one of the world’s largest single-site producers of caprolactam as of September 30, 2025.

• Plant Nutrients – Our ammonium sulfate is used by customers as a fertilizer containing nitrogen and sulfur, two key plant nutrients.

Ammonium sulfate fertilizer is derived from the integrated operations at the Hopewell manufacturing facility.

Because of our Hopewell facility’s size, scale and technology design, we are the world’s largest single-site producer of ammonium sulfate fertilizer as of June 30, 2025.

Because of our Hopewell facility’s size, scale and technology design, we are the world’s largest single-site producer of ammonium sulfate fertilizer as of September 30, 2025.

We market and sell ammonium sulfate primarily to North American and South American distributors, farm cooperatives and retailers to fertilize crops.

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The new season fill begins in the third quarter and proceeds sequentially into the following spring, which is the peak period for crop fertilizer application.

As a result of this pattern, North American ammonium sulfate demand and pricing, particularly for our higher-value granular product, are typically strongest in the first half of the year through application for the spring crop and then decline in the second half of the year.

sulfate industry prices in the corn belt have declined approximately 10% from the second quarter to the third quarter, on average, since 2016.

As a result of this pattern, North American ammonium sulfate demand and pricing, particularly for our higher-value granular product, are typically strongest in

the first half of the year through application for the spring crop and then decline in the second half of the year.

Ammonium sulfate industry prices in the corn belt have declined approximately 12% from the second quarter to the third quarter, on average, since 2016.

Due to the ammonium sulfate fertilizer sales cycle, we occasionally build up higher inventory balances because our production is continuous throughout the year and not tied to seasonal demand for fertilizers.

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Recent Developments

Succession of Chief Financial Officer

As previously reported, effective as of July 9, 2025, the Company’s Board of Directors (the “Board”) appointed Christopher Gramm as Interim Chief Financial Officer, replacing Siddharth Manjeshwar, whose employment as Senior Vice President and Chief Financial Officer was terminated on July 9, 2025.

The Company has commenced a search for a permanent successor.

Amendment to Credit Agreement

On October 23, 2025, the Company entered into Amendment No.

2 (the “Amendment”) to the Credit Agreement (as defined below).

See “Liquidity and Capital Resources - Credit Agreement” for a discussion regarding the Amendment.

Anti-Dumping Duty Petition - Acetone

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

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Three Months Ended

June 30, 2025 Six Months Ended

June 30, 2025

September 30, 2025 Nine Months Ended

September 30, 2025

Volume (3.2)% (1.9)%

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(6.0)% (2.2)%

Sales decreased in the three months ended June 30, 2025 compared to the prior year period by $43.5 million (approximately 10%) due to (i) decreased volume (approximately 8%) primarily driven by softer demand in key nylon end markets and (ii) lower raw material pass through pricing (approximately 5%) following a net cost decrease in benzene and propylene (inputs to cumene which is a key feedstock to our products), partially offset by favorable market-based pricing (approximately 3%) driven by continued strength in Plant Nutrients reflecting favorable North American ammonium sulfate supply and demand conditions.

Sales were approximately flat in the six months ended June 30, 2025 compared to the prior year period due to decreased volume (approximately 1%) driven by softer demand in key nylon end markets partially offset by higher granular ammonium sulfate sales supported by our SUSTAIN (Sustainable U.S.

Sales decreased in the three months ended September 30, 2025 compared to the prior year period by $23.7 million (approximately 6%) due to (i) lower raw material pass through pricing (approximately 5%) following a net cost decrease in benzene and propylene (inputs to cumene which is a key feedstock to our products) and (ii) decreased volume (approximately 3%) primarily driven by softer demand in chemical intermediate and nylon end markets, partially offset by favorable market-based pricing (approximately 2%) driven by continued strength in Plant Nutrients reflecting favorable North American ammonium sulfate supply and demand conditions.

Sales decreased in the nine months ended September 30, 2025 compared to the prior year period by $26.2 million (approximately 2%) due to decreased volume (approximately 2%) driven by softer demand in nylon end markets partially offset by higher granular ammonium sulfate sales supported by our SUSTAIN (Sustainable U.S.

Sulfate to Accelerate Increased Nutrition) program.

This was offset by higher pricing (approximately 1%), primarily reflecting favorable market-based pricing across our Plant Nutrients and Nylon Solutions product lines partially offset by lower raw material pass through pricing following a net cost decrease in benzene and propylene.

Pricing was flat, primarily reflecting favorable market-based pricing across our Plant Nutrients and Nylon Solutions product lines offset by lower raw material pass through pricing following a net cost decrease in benzene and propylene.

Costs of Goods Sold

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

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Gross Margin percentage 6.8% 14.4% 11.8% 11.9%

Costs of goods sold decreased in the three months ended June 30, 2025 compared to the prior year period by $20.8 million (approximately 6%) due to decreased volume (approximately 9%) driven by lower nylon sales as a result of soft end market demand, partially offset by (i) increased operational costs (approximately 2%) driven by utility spend and (ii) increased raw material costs (approximately 1%) driven by natural gas and sulfur.

Costs of goods sold decreased in the six months ended June 30, 2025 compared to the prior year period by $30.3 million (approximately 4%) due to (i) insurance proceeds collected as a result of the PES supplier shutdown (approximately 4%), (ii) decreased operational costs (approximately 2%) primarily driven by improved operational performance, and (iii) decreased sales volume (approximately 2%), partially offset by increased raw material costs (approximately 3%) driven by natural gas and sulfur.

Gross margin percentage decreased in the three months ended June 30, 2025 compared to the prior year period (approximately 4%) due primarily to (i) increased plant costs (approximately 2%) driven by utility spend and (ii) the impact of market-based pricing, net of raw material costs (approximately 2%).

Gross margin percentage increased by approximately 4% in the six months ended June 30, 2025 compared to the prior year period due to (i) insurance proceeds collected as a result of the PES supplier shutdown (approximately 3%), (ii) decreased plant costs (approximately 1%) primarily driven by improved operational performance, and (iii) the net impact of lower sales volume and change in sales mix (approximately 1%), partially offset by the impact of market-based pricing, net of raw material costs (approximately 2%).

Costs of goods sold increased in the three months ended September 30, 2025 compared to the prior year period by $8.2 million (approximately 2%) due to (i) increased plant costs (approximately 2%) driven primarily by utility costs and (ii) increased raw material costs (approximately 1%) driven by sulfur and natural gas.

Costs of goods sold decreased in the nine months ended September 30, 2025 compared to the prior year period by $22.1 million (approximately 2%) due to (i) insurance proceeds collected as a result of the PES supplier shutdown (approximately 3%),and (ii) decreased sales volume (approximately 3%), partially offset by (i) increased raw material costs (approximately 2%) driven by sulfur and natural gas and (ii) increased plant costs driven primarily by utility costs (approximately 1%).

Gross margin percentage decreased in the three months ended September 30, 2025 compared to the prior year period (approximately 8%) due primarily to (i) the impact of pricing, net of raw material costs (approximately 3%), (ii) increased plant costs driven primarily by utility costs (approximately 2%), and (iii) lower sales volumes as discussed above (approximately 2%).

Gross margin percentage was approximately flat in the nine months ended September 30, 2025 compared to the prior year period due to insurance proceeds collected as a result of the PES supplier shutdown (approximately 2%), offset by the impact of pricing, net of raw material costs (approximately 2%).

Selling, General and Administrative Expenses

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

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Percentage of Sales 7.3% 6.1% 6.6% 6.1%

Selling, general and administrative expenses increased by $1.0 million in the three months ended June 30, 2025 compared to the prior year period due primarily to the planned investment to upgrade our enterprise resource planning system.

Selling, general and administrative expenses increased by $0.8 million in the six months ended June 30, 2025 compared to the prior period due primarily to the planned investment to upgrade our enterprise resource planning system.

Income Tax Expense

Selling, general and administrative expenses increased by $3.2 million in the three months ended September 30, 2025 compared to the prior year period due primarily to legal and professional fees associated with strategic regulatory matters and potential inorganic growth options, and the planned investment to upgrade our enterprise resource planning system.

Selling, general and administrative expenses increased by $4.0 million in the nine months ended September 30, 2025 compared to the prior period due primarily to legal and professional fees associated with strategic regulatory matters and potential inorganic growth options, and the planned investment to upgrade our enterprise resource planning system.

Income Tax Expense (Benefit)

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

Income tax expense $ 279 $ 13,145 $ 5,864 $ 7,124

Income tax expense (benefit) $ (909) $ 7,479 $ 4,955 $ 14,603

Effective tax rate 25.6% 25.1% 8.7% 25.0%

The Company’s provision for income taxes in interim periods is computed by applying an estimated annual effective tax rate against Income before taxes for the period in addition to recording any tax effects of discrete items for the quarter.

The Company’s effective tax rate for the three and six months ended June 30, 2025 differed from the U.S.

federal statutory rate due to state taxes and executive compensation deduction limitations which generally increase the rate, offset by research tax credits that generally decrease the rate.

Additionally, discrete tax adjustments recorded in the first and second quarter of the year related to Internal Revenue Code (IRC) Section 45Q tax credits of $1.8 million and $7.9 million, respectively, offset slightly by state tax legislation resulted in a net 24.7% and 15.7% decrease in the rate for the three and six months ended June 30, 2025, respectively.

The Company’s effective tax rate for the three and six months ended June 30, 2024 was higher than the U.S.

federal statutory rate, due to the impacts of state taxes and executive compensation deduction limitations which generally increase the tax rate, partially offset by tax credits which generally decrease the tax rate.

The Company’s effective tax rate for the three and six months ended June 30, 2025 was lower than the prior year period due primarily to the impact of the IRC Section 45Q tax credits recorded in the first half of the current year compared to the first half of the prior year.

On July 4, 2025, President Trump signed into law legislation commonly referred to as the One Big Beautiful Bill Act (the "Act"), which includes numerous tax reform provisions affecting businesses, including extending and modifying certain provisions of the Tax Cuts and Jobs Act (both domestic and international), while also introducing major changes to federal energy policy by rolling back many clean energy provisions enacted as part of the Inflation Reduction Act.

The Act includes a broad array of business-related provisions, including the full expensing of domestic research and experimental expenditures (i.e., R&D costs), modification of the limitation on business interest and making permanent full expensing for certain business property (i.e., 100 percent bonus depreciation).

While we do not currently anticipate that the clean energy provisions will have a material impact on our financial results, we continue to evaluate these provisions.

However, we do anticipate that the changes to R&D costs and the 100 percent bonus deprecation provisions will result in lower cash taxes in future periods.

Due to the elective applicability of these provisions, we are still in the process of modeling and performing a full evaluation before determining the full impact and timing that these provisions will have on our financial results.

Since the Act was enacted after the June 30 period-end date, no provisions are accounted for in our current financial statements.

Due to the variety of effective dates for key provisions, we anticipate only certain provisions will impact our third and fourth quarter financial statements but the Company is unable to reasonably estimate the full impact of the Act on its financial statements at this time.

The Company’s provision (benefit) for income taxes in interim periods is computed by applying an estimated annual effective tax rate against Income (loss) before taxes for the period in addition to recording any tax effects of discrete items for the quarter.

The Company’s effective tax rate for the three and nine months ended September 30, 2025 and 2024 differed from the U.S.

federal statutory rate due to state taxes and executive compensation deduction limitations which generally increase the rate, offset by research tax credits and the foreign-derived intangible income deduction that generally decrease the rate.

During the nine months ended September 30, 2025, discrete tax adjustments recorded relating to Internal Revenue Code (IRC) Section 45Q tax credits of $9.7 million and return to provision adjustments related to the filing of the Company's 2024 U.S.

federal income tax return of $0.2 million, offset slightly by state tax legislation changes and the vesting of equity compensation, resulted in a net 5% increase and 17% decrease in the estimated annual effective tax rate for the three and nine months ended September 30, 2025, respectively.

In 2024, the Company recorded discrete tax adjustments related to the vesting of equity compensation, changes to state tax legislation, and return to provision adjustments related to the filing of the Company's 2023 U.S.

federal income tax return which resulted in a net 3.3% and 1.5% increase to the estimated annual effective tax rate for the three and nine months ended September 30, 2024, respectively.

The Company’s effective tax rate for the three months ended September 30, 2025 was marginally higher than the prior year period.

The increase was mainly attributed to the effect of return-to-provision adjustments on the tax rate during the three months ended September 30, 2025, relative to the prior year period, partially offset by a reduction in state taxes during the three months ended September 30, 2025 relative to the prior year period.

The Company’s effective tax rate for the nine months ended September 30, 2025 was lower than the prior year period due primarily to the impact of the IRC Section 45Q tax credits recorded in the current year-to-date period compared to the prior year-to-date period.

On July 4, 2025, President Trump signed into law legislation commonly referred to as the One Big Beautiful Bill Act (the "Act"), which includes numerous tax provisions affecting businesses, including the reinstatement of full expensing of domestic research and experimental expenditures, modification of the limitation on business interest and making permanent full expensing for certain business property.

These provisions resulted in an approximate $10 million reduction in cash taxes in our financial results for the three and nine months ended September 30, 2025 and we anticipate that it will also reduce our cash taxes in future periods.

However, due to the elective applicability of these provisions, we are still evaluating the full impact and timing that these provisions will have on our financial results.

We do not currently anticipate that the Act will have a material impact on our effective tax rate.

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

Net income $ 31,371 $ 38,927 $ 54,715 $ 21,531

As a result of the factors described above, Net income was $31.4 million and $54.7 million for the three and six months ended June 30, 2025, respectively, as compared to $38.9 million and $21.5 million in the corresponding prior year period.

Net income (loss) $ (2,638) $ 22,266 $ 52,077 $ 43,797

As a result of the factors described above, Net income (loss) was ($2.6) million and $52.1 million for the three and nine months ended September 30, 2025, respectively, as compared to $22.3 million and $43.8 million in the corresponding prior year period.

Non-GAAP Measures

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

Net income $ 31,371 $ 38,927 $ 54,715 $ 21,531

Net income (loss) $ (2,638) $ 22,266 $ 52,077 $ 43,797

Non-cash stock-based compensation 1,632 1,559 5,919 5,963

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Non-cash amortization from acquisitions 532 531 1,595 1,595

Non-recurring M&A costs — — — —

Strategic advisory and professional fees** 4,000 — 4,000 —

Income tax benefit relating to reconciling items (1,378) (367) (2,287) (1,594)

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alliance during the third quarter of 2023.

** Legal and professional fees associated with strategic regulatory matters and potential inorganic growth options.

*** Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by Sales.

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

Net income $ 31,371 $ 38,927 $ 54,715 $ 21,531

Net income (loss) $ (2,638) $ 22,266 $ 52,077 $ 43,797

Adjusted Net income (non-GAAP) 2,148 23,989 61,304 50,961

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(Dollars in thousands, unless otherwise noted)

We believe that cash balances and operating cash flows, together with available capacity under our credit agreement, as utilized in the second quarter of 2025, will provide adequate funds to support our current short-term operating objectives as well as our longer-term strategic plans, subject to the risks and uncertainties outlined below, in our "Note Regarding Forward-Looking Statements" above, and in the risk factors previously disclosed in Item 1A of Part I of our 2024 Form 10-K.

We believe that cash balances and operating cash flows, together with available capacity under our credit agreement, as utilized in the third quarter of 2025, will provide adequate funds to support our current short-term operating objectives as well as our longer-term strategic plans, subject to the risks and uncertainties outlined below, in our "Note Regarding Forward-Looking Statements" above, and in the risk factors previously disclosed in Item 1A of Part I of our 2024 Form 10-K.

Our principal source of liquidity is our cash flow generated from operating activities, which is expected to provide us with the ability to meet the majority of our short-term funding requirements for the next twelve months and beyond.

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Our ability to fund our capital needs, however, will depend on our ongoing ability to generate cash from operations and access to credit and capital markets, both of which are subject to the risk factors previously disclosed in Item 1A of Part I of our 2024 Form 10-K, as well as general economic, financial, competitive, regulatory and other factors that are beyond our control.

As of the end of the second quarter of 2025, the Company had approximately $18.4 million of cash on hand with approximately $259 million of additional capacity available under the revolving credit facility.

As of the end of the third quarter of 2025, the Company had approximately $23.7 million of cash on hand with approximately $249 million of additional capacity available under the revolving credit facility.

The Company’s Consolidated Leverage Ratio financial covenant of its credit facility allows it to net up to $75 million of cash with debt.

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We expect that our primary cash requirements for 2025 will be to fund costs associated with ongoing operations, capital expenditures, and amounts related to other contractual obligations.

The Company made no cash contributions to the defined benefit pension plan during the six months ended June 30, 2025 as there were no funding requirements for the period.

The Company made no cash contributions to the defined benefit pension plan during the nine months ended September 30, 2025 as there were no funding requirements for the period.

Additional contributions may be made in future periods sufficient to satisfy pension funding requirements in those periods or on a discretionary basis.

On February 17, 2023, the Board authorized a share repurchase program to repurchase shares of the Company's common stock.

As of June 30, 2025, the Company has repurchased a total of 6,308,099 shares of common stock life-to-date, including 1,062,643 shares withheld to cover tax withholding obligations in connection with the vesting of awards, for an aggregate of $194.0 million at a weighted average market price of $30.75 per share.

As of June 30, 2025, approximately $62.0 million remained available for share repurchases under the currently authorized repurchase program.

During the period July 1, 2025 through July 25, 2025, no additional shares were repurchased for tax withholding obligations or under the currently authorized repurchase program.

As of September 30, 2025, the Company has repurchased a total of 6,313,789 shares of common stock life-to-date, including 1,068,333 shares withheld to cover tax withholding obligations in connection with the vesting of awards, for an aggregate of $194.1 million at a weighted average market price of $30.74 per share.

As of September 30, 2025, approximately $62.0 million remained available for share repurchases under the current authorization approved by the Board on February 17, 2023.

During the period October 1, 2025 through October 31, 2025, no additional shares were repurchased for tax withholding obligations or under the currently authorized repurchase program.

Repurchases may be made from time to time on the open market in accordance with Rule 10b-18 of the Exchange Act, including through the use of trading plans intended to qualify under Rule 10b5-1 of the Exchange Act.

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The par value of the shares repurchased is applied to Treasury stock and the excess of the purchase price over par value is applied to Additional paid-in capital.

As of June 30, 2025, the Company did not have any off-balance sheet arrangements as described in Instruction 8 to Item 303(b) of Regulation S-K and did not have any material changes in the commitments or contractual obligations detailed in the 2024 Form 10-K (see Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" under "Liquidity and Capital Resources - Liquidity").

As of September 30, 2025, the Company did not have any off-balance sheet arrangements as described in Instruction 8 to Item 303(b) of Regulation S-K and did not have any material changes in the commitments or contractual obligations detailed in the 2024 Form 10-K (see Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" under "Liquidity and Capital Resources - Liquidity").

The Company has not guaranteed any debt or commitments of other entities or entered into any options on non-financial assets.

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5/2/2025 5/13/2025 5/27/2025 $0.16 $4.3

2/21/2025 3/10/2025 3/24/2025 $0.16 $4.3

The timing, declaration, amount and payment of future dividends to stockholders, if any, will fall within the discretion of our Board.

preferred stock that may be outstanding, legal requirements, regulatory constraints, industry practice and other factors that our Board deems relevant.

Holders of shares of our common stock will be entitled to receive dividends when, and if, declared by our Board at its discretion out of funds legally available for that purpose, subject to the terms of our indebtedness, the preferential rights of any preferred stock that may be outstanding, legal requirements, regulatory constraints, industry practice and other factors that our Board deems relevant.

Credit Agreement

On October 27, 2021, the Company entered into a Credit Agreement (the “Credit Agreement”), among the Company, the lenders party thereto, the swing line lenders party thereto, the letter of credit issuers party thereto and Truist Bank, as administrative agent, which provides for a senior secured revolving credit facility in an aggregate principal amount of $500 million (the “Revolving Credit Facility”).

On October 27, 2021, the Company entered into a Credit Agreement, as amended on June 27, 2023 (the “Credit Agreement”), among the Company, the lenders party thereto, the swing line lenders party thereto, the letter of credit issuers party thereto and Truist Bank, as administrative agent, which provides for a senior secured revolving credit facility in an aggregate principal amount of $500 million (the “Revolving Credit Facility”).

Borrowings under the Revolving Credit Facility are subject to customary borrowing conditions.

The Revolving Credit Facility has a scheduled maturity date of October 27, 2026, which the Company expects to refinance before such date.

The Revolving Credit Facility provided for a scheduled maturity date of October 27, 2026.

The Credit Agreement permits the Company to utilize up to $40 million of the Revolving Credit Facility for the issuance of letters of credit and up to $40 million for swing line loans.

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The Credit Agreement contains customary covenants limiting the ability of the Company and its subsidiaries to, among other things, pay cash dividends, incur debt or liens, redeem or repurchase stock of the Company, enter into transactions with affiliates, make investments, make capital expenditures, merge or consolidate with others or dispose of assets.

The Credit Agreement also contains financial covenants that require the Company to maintain a Consolidated Interest Coverage Ratio (as defined in the Credit Agreement) of not less than 3.00 to 1.00 and to maintain a Consolidated Leverage Ratio of 3.75 to 1.00 or less (subject to the Company’s option to elect a consolidated leverage ratio increase in connection with certain acquisitions).

The Credit Agreement also contains financial covenants that require the Company to maintain a Consolidated Interest Coverage Ratio (as defined in the Credit Agreement) of not less than 3.00 to 1.00 and to maintain a Consolidated Leverage Ratio of (ii) 3.75 to 1.00 or less (subject to the Company’s option to elect a consolidated leverage ratio increase in connection with certain acquisitions).

If the Company does not comply with the covenants in the Credit Agreement, the lenders may, subject to customary cure rights, require the immediate payment of all amounts outstanding under the Revolving Credit Facility.

We were in compliance with all of our covenants at June 30, 2025 and through the date of the filing of this Form 10-Q.

We were in compliance with all of our covenants at September 30, 2025 and through the date of the filing of this Form 10-Q.

We had a borrowed balance of $195 million under the Revolving Credit Facility at December 31, 2024.

We borrowed an incremental net amount of $45 million during the six months ended June 30, 2025, bringing the balance under the Revolving Credit Facility to $240 million, and available credit for use of approximately $259 million as of June 30, 2025.

We borrowed an incremental net amount of $55 million during the nine months ended September 30, 2025, bringing the balance under the Revolving Credit Facility to $250 million, and available credit for use of approximately $249 million as of September 30, 2025.

We expect that Cash provided by operating activities will fund future interest payments on the Company's outstanding indebtedness.

On October 23, 2025, the Company entered into Amendment No.

2 (the “Amendment”) to the Credit Agreement, (as further amended by the Amendment, the “Amended Credit Agreement”), among the Company, the guarantors, the lenders party thereto and Truist Bank, as administrative agent.

The Credit Agreement includes a senior secured revolving credit facility with aggregate commitments of $500 million (the “Revolving Credit Commitments”).

Pursuant to the Amendment, the Credit Agreement was amended to, among other things:

(i) extend the maturity date of revolving credit commitments of participating Revolving Credit Lenders, as defined in the Amended Credit Agreement, in an aggregate principal amount of $452 million to the earlier of (x) October 27, 2027 and (y) the date of the termination in whole of the Revolving Credit Commitments, pursuant to the terms of the Amended Credit Agreement, and (ii) effect certain other conforming changes and modifications consistent with the foregoing.

The remaining $48 million of revolving credit commitments under the Credit Agreement that were not extended will continue to mature on the earlier of (x) October 27, 2026 and (y) the date of the termination in whole of the Revolving Credit Commitments, pursuant to the terms of the Amended Credit Agreement.

Cash Flow Summary

Six Months Ended

Nine Months Ended

September 30,

Cash provided by (used for):

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Net change in cash and cash equivalents $ 4,132 $ (12,470)

Cash provided by operating activities increased by $18.6 million for the six months ended June 30, 2025 versus the prior year period due primarily to a $33.2 million increase in net income, partially offset by (i) the unfavorable cash impact of $9.6 million from Taxes receivable and Income taxes payable combined, driven by the timing of tax payments and (ii) a $5.6 million

unfavorable cash impact from Accrued liabilities due primarily to the timing of payments and accruals during the six months ended June 30, 2025 compared to the prior year period.

Cash used for investing activities decreased by $4.4 million for the six months ended June 30, 2025 versus the prior year period due primarily to the timing of cash payments for capital expenditures and other enterprise programs.

Cash provided by financing activities decreased by $6.4 million for the six months ended June 30, 2025 versus the prior year period due primarily to net borrowings of $45.0 million during the six months ended June 30, 2025 compared to net borrowings of $60.0 million during the prior year period, partially offset by payments for share repurchases of $1.5 million during the six months ended June 30, 2025 compared to $10.4 million during the prior year period.

Cash provided by operating activities decreased by $12.1 million for the nine months ended September 30, 2025 versus the prior year period due primarily to (i) the unfavorable cash impact of $17.7 million from Taxes receivable and Income taxes payable combined, driven by the timing of tax receipts and (ii) a $11.6 million unfavorable cash impact from working capital (comprised of Accounts and other receivables, Inventories, Accounts payable and Deferred income and customer advances) with $56.0 million unfavorable cash impact from working capital for the nine months ended September 30, 2025 compared to a $44.4 million unfavorable cash impact in the prior year period.

These net unfavorable impacts were partially offset by (i) a favorable impact of $10.8 million from Deferred income taxes and (ii) an $8.3 million increase in Net income.

Cash used for investing activities decreased by $10.4 million for the nine months ended September 30, 2025 versus the prior year period due primarily to the timing of cash payments for capital expenditures and other enterprise programs.

Cash provided by financing activities increased by $18.3 million for the nine months ended September 30, 2025 versus the prior year period due primarily to (i) net borrowings of $55.0 million during the nine months ended September 30, 2025 compared to net borrowings of $45.0 million during the prior year period and (ii) payments for share repurchases of $1.7 million during the nine months ended September 30, 2025 compared to $10.4 million during the prior year period.

Capital Expenditures

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The following table summarizes ongoing and expansion capital expenditures:

Six Months Ended

June 30, 2025

Nine Months Ended

September 30, 2025

Capital expenditures in Accounts payable at December 31, 2024

Purchases of property, plant and equipment 80,098

Capital expenditures in Accounts payable at June 30, 2025

Capital expenditures in Accounts payable at September 30, 2025

Cash paid for capital expenditures $ 88,849

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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