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Item 2. Management’s Discussion and Analysis

2026-08-05 compared with 2026-05-06 · 123 added, 67 removed, 85 unchanged (69% of the section changed)

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Executive Summary

Highlights of our financial results for the three months ended March 31, 2026 as compared to the same period of the prior year include the following:

Highlights of our financial results for the three months ended June 30, 2026 as compared to the same period of the prior year include the following:

• Net sales were $408.1 million, an increase of 23.6%

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We expect the project to conclude in 2028 or 2029 with total approximate implementation costs anticipated to range from $180 to $200 million.

Through the first quarter of 2026, we have incurred total implementation costs of approximately $154 million.

See Note 11, Strategic Transformation and Other Operating Gains, net of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional discussion of the costs related to these strategic initiatives.

Through the second quarter of 2026, we have incurred total implementation costs of approximately $158 million.

See Note 11, Strategic Transformation, Restructuring Charges and Other Operating Gains, net of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional discussion of the costs related to these strategic initiatives.

Economic Conditions – We monitor macroeconomic and other factors that may affect our business such as steel and oil prices and geopolitical conflicts, among others.

Steel is a major component of our equipment.

Fluctuations in steel prices throughout 2025 resulted in a relatively stable average price for the year overall.

However, continued low levels of steel imports, rising steel demand in certain markets and elevated freight and energy costs have driven increased steel prices in the first quarter of 2026.

We anticipate that steel prices will remain elevated during 2026.

Increased steel demand in certain markets and elevated freight and energy costs have driven increased steel prices in the first half of 2026.

We anticipate that steel prices will remain elevated during the remainder of 2026.

Additionally, significant portions of our revenues from the Infrastructure Solutions segment relate to the sale of equipment involved in the production, handling, recycling or application of asphalt mix.

Liquid asphalt is a by-product of oil refining, and changes in the price of oil impact the cost of asphalt, which is in turn likely to alter demand for asphalt and therefore affect demand for certain of our products.

Oil prices have routinely fluctuated in recent years and have experienced a significant rise in the first quarter of 2026 due to the conflict in the Middle East.

Oil prices have routinely fluctuated in recent years and have experienced a significant rise in the first half of 2026 due to the conflict in the Middle East.

We anticipate that these high prices will persist in the short term.

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Results of Operations

Net sales for the first quarter of 2026 were $396.3 million compared to $329.4 million for the first quarter of 2025, an increase of $66.9 million, or 20.3%.

The increase in net sales was primarily driven by net favorable volume and mix coupled with favorable pricing from both organic and inorganic contributions that generated increases in (i) equipment sales of $42.9 million, (ii) parts and component sales of $20.0 million and (iii) service and equipment installation revenue of $4.0 million.

These increases were partially offset by decreased other revenues of $1.0 million.

Net sales for the second quarter of 2026 were $408.1 million compared to $330.3 million for the second quarter of 2025, an increase of $77.8 million, or 23.6%.

The increase in net sales was primarily driven by net favorable volume and mix coupled with favorable pricing that generated increases in equipment sales of $42.6 million and parts and service revenues of $35.0 million.

Included in the net increase is $48.6 million of incremental net sales from acquired businesses.

Sales reported by our foreign subsidiaries in U.S.

dollars for the first quarter of 2026 would have been $4.5 million lower had foreign exchange rates been the same as 2025 rates.

Domestic sales for the first quarter of 2026 were $319.0 million, or 80.5% of consolidated net sales, compared to $273.8 million, or 83.1% of consolidated net sales, for the first quarter of 2025, an increase of $45.2 million, or 16.5%.

Domestic sales increased primarily due to increases in (i) equipment sales of $27.5 million, (ii) parts and component sales of $16.7 million and (iii) service and equipment installation revenue of $3.9 million.

These increases were partially offset by decreases in used equipment sales and other revenues of $2.3 million and $1.2 million, respectively.

International sales for the first quarter of 2026 were $77.3 million, or 19.5% of consolidated net sales, compared to $55.6 million, or 16.9% of consolidated net sales, for the first quarter of 2025, an increase of $21.7 million, or 39.0%.

International sales increased primarily due to increases in (i) equipment sales of $15.4 million, (ii) parts and component sales of $3.3 million and (iii) used equipment sales of $2.7 million.

Gross profit for the first quarter of 2026 was $99.1 million, or 25.0% of net sales, as compared to $92.4 million, or 28.1% of net sales, for the first quarter of 2025, an increase of $6.7 million or 7.3%.

The increase in gross profit was primarily driven by (i) the impact of net favorable volume and mix coupled with favorable pricing of $25.3 million, (ii) lower warranty program costs of $3.2 million and (iii) net favorable inventory adjustments of $1.6 million.

These increases were partially offset by (i) the impacts of manufacturing variances partially due to freight, duties and tariffs of $16.1 million, (ii) the impact of inflation on materials, labor and overhead of $6.2 million and (iii) the amortization of acquisition-related inventory fair value step-up of $1.4 million.

dollars for the second quarter of 2026 would have been $4.0 million lower had second quarter 2026 foreign exchange rates been the same as second quarter 2025 rates.

Net sales for the first six months of 2026 were $804.4 million compared to $659.7 million for the first six months of 2025, an increase of $144.7 million, or 21.9%.

The increase in net sales was primarily driven by net favorable volume and mix coupled with favorable pricing that generated increases in equipment sales of $85.9 million and parts and service revenues of $59.0 million.

Included in the net increase is $98.1 million of incremental net sales from acquired businesses.

Sales reported by our foreign subsidiaries in U.S.

dollars for the first six months of 2026 would have been $8.5 million lower had the first six months of 2026 foreign exchange rates been the same as the first six months of 2025 rates.

Domestic sales for the second quarter of 2026 were $332.6 million, or 81.5% of consolidated net sales, compared to $262.0 million, or 79.3% of consolidated net sales, for the second quarter of 2025, an increase of $70.6 million, or 26.9%.

Domestic sales increased primarily due to higher equipment sales of $44.3 million and parts and service revenues of $26.1 million.

Included in the net increase is $37.0 million of incremental net sales from acquired businesses.

Domestic sales for the first six months of 2026 were $651.6 million, or 81.0% of consolidated net sales, compared to $535.8 million, or 81.2% of consolidated net sales, for the first six months of 2025, an increase of $115.8 million, or 21.6%.

Domestic sales increased primarily due to higher equipment sales of $69.5 million and parts and service revenues of $46.7 million.

Included in the net increase is $79.0 million of incremental net sales from acquired businesses.

International sales for the second quarter of 2026 were $75.5 million, or 18.5% of consolidated net sales, compared to $68.3 million, or 20.7% of consolidated net sales, for the second quarter of 2025, an increase of $7.2 million, or 10.5%.

International sales increased primarily due to higher parts and service revenues of $8.9 million partially offset by lower equipment sales of $1.7 million.

Included in the net increase is $11.6 million of incremental net sales from acquired businesses.

International sales for the first six months of 2026 were $152.8 million, or 19.0% of consolidated net sales, compared to $123.9 million, or 18.8% of consolidated net sales, for the first six months of 2025, an increase of $28.9 million, or 23.3%.

International sales increased primarily due to higher equipment sales of $16.4 million and parts and service revenues of $12.3 million.

Included in the net increase is $19.1 million of incremental net sales from acquired businesses.

Gross profit for the second quarter of 2026 was $106.8 million, or 26.2% of net sales, as compared to $88.3 million, or 26.7% of net sales, for the second quarter of 2025, an increase of $18.5 million, or 21.0%.

The increase in gross profit was primarily driven by the impact of net favorable volume and mix coupled with favorable pricing of $41.0 million and lower warranty program costs of $1.0 million.

This increase was partially offset by (i) manufacturing inefficiencies, inclusive of freight, duties and tariffs, of $8.6 million, (ii) the impact of inflation on materials, labor and overhead of $8.4 million and (iii) net unfavorable inventory adjustments of $6.4 million.

Gross profit for the first six months of 2026 was $205.9 million, or 25.6% of net sales, as compared to $180.7 million, or 27.4% of net sales, for the first six months of 2025, an increase of $25.2 million, or 13.9%.

The increase in gross profit was primarily driven by the impact of net favorable volume and mix coupled with favorable pricing of $66.4 million and lower warranty program costs of $4.2 million.

This increase was partially offset by (i) manufacturing inefficiencies, inclusive of freight, duties and tariffs, of $24.8 million, (ii) the impact of inflation on materials, labor and overhead of $14.6 million and (iii) net unfavorable inventory adjustments of $4.8 million.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $90.2 million, or 22.8% of net sales, for the first quarter of 2026, compared to $71.9 million, or 21.8% of net sales, for the first quarter of 2025, an increase of $18.3 million, or 25.5%, primarily due to (i) increased personnel-related costs of $7.8 million, (ii) increased intangible asset amortization expense of $7.2 million, (iii) increased exhibit and promotional costs of $3.0 million primarily due to the ConExpo industry trade show held once every three years, (iv) increased travel expense of $1.1 million and (v) increased acquisition and integration costs of $0.7 million.

Selling, general and administrative expenses were $85.5 million or 21.0% of net sales, for the second quarter of 2026, compared to $67.0 million, or 20.3% of net sales, for the second quarter of 2025, an increase of $18.5 million, or 27.6%, primarily due to (i) increased intangible asset amortization expense of $7.2 million, (ii) increased personnel-related costs of $5.3 million, (iii) increased technology support costs of $1.8 million, (iv) increased costs related to our strategic transformation program of $1.2 million, (v) increased professional service costs of $1.1 million and (vi) increased dealer commissions of $0.9 million.

Selling, general and administrative expenses were $175.7 million, or 21.8% of net sales, for the first six months of 2026, compared to $138.9 million, or 21.1% of net sales, for the first six months of 2025, an increase of $36.8 million, or 26.5%, primarily due to (i) increased intangible asset amortization expense of $14.4 million, (ii) increased personnel-related costs of $13.1 million, (iii) increased exhibit and promotional costs of $3.6 million primarily due to the ConExpo industry trade show held once every three years, (iv) increased technology support costs of $1.8 million and (v) increased dealer commissions of $1.7 million.

These increases were partially offset by lower costs related to our strategic transformation program of $1.9 million.

Interest Expense

Interest expense of $7.4 million was incurred in the three months ended March 31, 2026, as compared to $2.0 million in the three months ended March 31, 2025, primarily related to higher average outstanding borrowings coupled with higher interest rates on the 2025 Credit Facilities as compared to our previous credit facilities, which were replaced by the 2025 Credit Facilities.

Our income tax expense for the first quarter of 2026 was $1.5 million compared to $5.4 million for the first quarter of 2025.

Our effective income tax rate was 53.6% for the first quarter of 2026 compared to 27.4% for the first quarter of 2025.

The income tax expense for three months ended March 31, 2026 was lower compared to the same period in 2025, primarily due to lower pretax book income and changes in the relative weighting of jurisdictional income and loss.

Interest expense of $7.1 million and $14.5 million was incurred in the three and six months ended June 30, 2026, respectively, as compared to $2.1 million and $4.1 million in the three and six months ended June 30, 2025, respectively, primarily related to higher average outstanding borrowings coupled with higher interest rates on the 2025 Credit Facility as compared to our previous credit facility.

Our income tax expense for the second quarter of 2026 was $4.5 million compared to $5.8 million for the second quarter of 2025.

Our effective income tax rate was 30.0% for the second quarter of 2026 compared to 25.7% for the second quarter of 2025.

The income tax expense for the three months ended June 30, 2026 was lower compared to the same period in 2025 primarily due to lower pretax book income and changes in the relative weighting of jurisdictional income and loss.

Our income tax expense for the first six months of 2026 was $6.0 million compared to $11.2 million for the first six months of 2025.

Our effective tax rate was 33.7% for the first six months of 2026 compared to 26.5% for the first six months of 2025.

The income tax expense for the six months ended June 30, 2026 was lower compared to the same period in 2025 primarily due to lower pretax book income and changes in the relative weighting of jurisdictional income and loss.

(in millions, except percentage data) 2026 2025 $ Change % Change

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International Backlog 99.7 72.7 27.0 37.1 %

Uncertainty driven by macroeconomic factors, such as changing interest rates, global tariff policies and geopolitical conflicts, as well as seasonality, have historically had an impact on our backlog.

The backlog of orders as of March 31, 2026 was $549.2 million compared to $402.6 million as of March 31, 2025, an increase of $146.6 million, or 36.4%.

The backlog of orders as of June 30, 2026 was $601.1 million compared to $380.8 million as of June 30, 2025, an increase of $220.3 million, or 57.9%.

The increases in backlog are driven by organic growth due to increased demand in the aggregates business, partially attributable to large data center projects, and inorganic contributions.

Net Sales by Segment

Three Months Ended March 31,

(in millions, except percentage data) 2026 2025 $ Change % Change

Segment Net Sales – Three Months Ended :

Three Months Ended June 30, $ Change % Change

(in millions, except percentage data) 2026 2025

Infrastructure Solutions $ 228.3 $ 204.6 $ 23.7 11.6 %

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Infrastructure Solutions

Sales in this segment were $237.0 million for the first quarter of 2026 compared to $236.0 million for the same period in 2025, an increase of $1.0 million, or 0.4%.

The increase was primarily driven by favorable pricing partially offset by net unfavorable volume and mix that generated increases in equipment sales and service and equipment installation revenue of $2.6 million and $1.2 million, respectively.

These increases were partially offset by lower used equipment sales of $2.1 million.

Domestic sales for the Infrastructure Solutions segment decreased $1.2 million, or 0.5%, for the first quarter of 2026 compared to the same period in 2025, primarily due to lower used equipment sales of $2.1 million.

These decreases were partially offset by higher service and equipment installation revenue and parts and component sales of $1.2 million and $1.1 million, respectively.

International sales for the Infrastructure Solutions segment increased $2.2 million, or 15.4%, for the first quarter of 2026 compared to the same period in 2025, primarily due to higher equipment sales of $3.1 million partially offset by lower parts and component sales of $0.8 million.

Sales in this segment were $228.3 million for the second quarter of 2026 compared to $204.6 million for the same period in 2025, an increase of $23.7 million, or 11.6%.

The increase was primarily driven by net favorable volume and mix coupled with favorable pricing that generated increases in equipment sales of $20.6 million and parts and service revenues of $2.9 million.

Included in the net increase is $8.0 million of incremental net sales from the acquired CWMF business.

Domestic sales for the Infrastructure Solutions segment increased $29.6 million, or 15.9%, for the second quarter of 2026 compared to the same period in 2025 primarily due to higher equipment sales of $25.9 million and parts and service revenues of $3.5 million.

Included in the net increase is $8.0 million of incremental net sales from the acquired CWMF business.

International sales for the Infrastructure Solutions segment decreased $5.9 million, or 32.6%, for the second quarter of 2026 compared to the same period in 2025 primarily due to lower equipment sales of $5.3 million.

Materials Solutions

Sales in this segment were $159.3 million for the first quarter of 2026 compared to $93.4 million for the same period in 2025, an increase of $65.9 million, or 70.6%.

The increase was primarily driven by net favorable volume and mix coupled with favorable pricing that generated increases in (i) equipment sales of $40.3 million, (ii) parts and component sales of $19.7 million, (iii) service and installation revenue of $2.8 million, (iv) used equipment sales of $2.5 million and (v) freight revenue of $1.3 million.

Domestic sales for the Materials Solutions segment increased by $46.4 million, or 89.1%, for the first quarter of 2026 compared to the same period in 2025, primarily due to higher (i) equipment sales of $28.0 million, (ii) service and installation revenue of $15.6 million, (iii) used equipment sales of $2.7 million and (iv) freight revenue of $1.2 million.

These increases were partially offset by lower other revenue of $0.9 million.

International sales for the Materials Solutions segment increased $19.5 million, or 47.2%, for the first quarter of 2026 compared to the same period in 2025, primarily due to higher (i) equipment sales of $12.3 million, (ii) parts and component sales of $4.1 million and (iii) used equipment sales of $2.7 million.

Sales in this segment were $179.8 million for the second quarter of 2026 compared to $125.7 million for the same period in 2025, an increase of $54.1 million, or 43.0%.

The increase was primarily driven by net favorable volume and mix coupled with favorable pricing that generated increases in parts and service revenues of $32.1 million and equipment sales of $22.0 million.

Included in the net increase is $40.6 million of incremental net sales from the acquired TerraSource business.

Domestic sales for the Materials Solutions segment increased by $41.0 million, or 54.3%, for the second quarter of 2026 compared to the same period in 2025, primarily due to higher parts and service revenues of $22.6 million and equipment sales of $18.4 million.

Included in the net increase is $29.0 million of incremental net sales from the acquired TerraSource business.

International sales for the Materials Solutions segment increased $13.1 million, or 26.1%, for the second quarter of 2026 compared to the same period in 2025 primarily due to higher parts and service revenues of $9.5 million and equipment sales of $3.6 million.

Included in the net increase is $11.6 million of incremental net sales from the acquired TerraSource business.

Segment Net Sales – Six Months Ended :

Six Months Ended June 30, $ Change % Change

(in millions, except percentage data) 2026 2025

Infrastructure Solutions $ 465.3 $ 440.6 $ 24.7 5.6 %

Materials Solutions 339.1 219.1 120.0 54.8 %

Infrastructure Solutions

Sales in this segment were $465.3 million for the first six months of 2026 compared to $440.6 million for the same period in 2025, an increase of $24.7 million, or 5.6%.

The increase was primarily driven by net favorable volume and mix coupled with favorable pricing that generated increases in equipment sales of $21.1 million and parts and service revenues of $4.4 million.

Included in the net increase is $25.9 million of incremental net sales from the acquired CWMF business.

Domestic sales for the Infrastructure Solutions segment increased $28.4 million, or 7.0%, for the first six months of 2026 compared to the same period in 2025 primarily due to higher equipment sales of $23.3 million and parts and service revenues of $5.8 million.

Included in the net increase is $25.9 million of incremental net sales from the acquired CWMF business.

International sales for the Infrastructure Solutions segment decreased $3.7 million, or 11.4%, for the first six months of 2026 compared to the same period in 2025 primarily due to lower equipment sales of $2.2 million and parts and service revenues of $1.4 million.

Materials Solutions

Sales in this segment were $339.1 million for the first six months of 2026 compared to $219.1 million for the same period in 2025, an increase of $120.0 million, or 54.8%.

The increase was primarily driven by net favorable volume and mix coupled with

favorable pricing that generated increases in equipment sales of $64.8 million and parts and service revenues of $54.6 million.

Included in the net increase is $72.2 million of incremental net sales from the acquired TerraSource business.

Domestic sales for the Materials Solutions segment increased by $87.4 million, or 68.5%, for the first six months of 2026 compared to the same period in 2025, primarily due to higher equipment sales of $46.2 million and parts and service revenues of $40.9 million.

Included in the net increase is $53.1 million of incremental net sales from the acquired TerraSource business.

International sales for the Materials Solutions segment increased $32.6 million, or 35.6%, for the first six months of 2026 compared to the same period in 2025 primarily due to higher equipment sales of $18.6 million and parts and service revenues of $13.7 million.

Included in the net increase is $19.1 million of incremental net sales from the acquired TerraSource business.

Segment Operating Adjusted EBITDA

Segment Operating Adjusted EBITDA is the measure of segment profit or loss used by the CEO, who is the CODM, to evaluate performance and allocate resources to the reportable segments.

Segment Operating Adjusted EBITDA is the measure of segment profit or loss used by our CEO, who is the CODM, to evaluate performance and allocate resources to the reportable segments.

Segment Operating Adjusted EBITDA is defined as net income or loss before the impact of interest income or expense, income taxes, depreciation and amortization and certain other adjustments that are not considered by the CODM in the evaluation of ongoing operating performance.

See Note 10, Operations by Industry Segment and Geographic Area, of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for a reconciliation of Segment Operating Adjusted EBITDA to total consolidated income before income taxes.

Three Months Ended March 31, $ Change % Change

Segment Operating Adjusted EBITDA – Three Months Ended:

Three Months Ended June 30, $ Change % Change

(in millions, except percentage data) 2026 2025

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Infrastructure Solutions

Segment Operating Adjusted EBITDA for the Infrastructure Solutions segment was $34.8 million for the first quarter of 2026 compared to $42.9 million for the same period in 2025, a decrease of $8.1 million or 18.9%.

The decrease in Segment Operating Adjusted EBITDA resulted primarily from (i) material variances of $6.6 million, (ii) the impact of inflation on materials, labor and overhead of $4.5 million, (iii) higher exhibit and promotional costs of $2.0 million and (iv) increases in personnel-related costs of $1.2 million.

These decreases were reduced by the impact of favorable pricing partially offset by net unfavorable volume and mix that generated $2.8 million higher gross profit and lower quality-related costs of $1.8 million.

Segment Operating Adjusted EBITDA for the Infrastructure Solutions segment was $32.9 million for the second quarter of 2026 compared to $32.2 million for the same period in 2025, an increase of $0.7 million, or 2.2%.

The increase in Segment Operating Adjusted EBITDA was primarily driven by the sales impact of net favorable pricing, volume and mix that generated higher gross profit of $10.3 million and lower quality-related expenses of $2.8 million.

These increases were partially offset by (i) the impact of inflation on materials, labor and overhead of $5.9 million, (ii) unfavorable inventory adjustments of $5.4 million and (iii) manufacturing inefficiencies, inclusive of freight, duties and tariffs, of $1.3 million.

Materials Solutions

Segment Operating Adjusted EBITDA for the Materials Solutions segment was $8.9 million for the first quarter of 2026 compared to $5.2 million for the same period in 2025, an increase of $3.7 million, or 71.2%.

The increase in Segment Operating Adjusted EBITDA resulted primarily from the impact of net favorable volume and mix coupled with favorable pricing that generated $22.6 million higher gross profit and lower quality-related costs of $1.8 million.

These increases were reduced by (i) manufacturing variances partially due to freight, duties and tariffs of $9.1 million, (ii) increases in personnel-related costs of $6.5 million, (iii) the impact of inflation on materials, labor and overhead of $1.7 million and (iv) higher exhibit and promotional costs of $0.8 million.

Segment Operating Adjusted EBITDA for the Materials Solutions segment was $22.1 million for the second quarter of 2026 compared to $14.3 million for the same period in 2025, an increase of $7.8 million, or 54.5%.

The increase in Segment Operating Adjusted EBITDA was primarily driven by the sales impact of net favorable volume and mix coupled with favorable pricing that generated higher gross profit of $30.7 million.

These increases were partially offset by (i) manufacturing inefficiencies, inclusive of freight, duties and tariffs, of $7.0 million, (ii) higher personnel-related costs of $6.2 million, (iii) the impact of inflation on materials, labor and overhead of $2.5 million, (iv) net foreign currency transaction gains of $2.1 million in the prior year, (v) net unfavorable inventory adjustments of $1.0 million, (vi) increased dealer commissions of $0.9 million and (vii) higher quality-related expenses of $0.8 million.

Segment Operating Adjusted EBITDA – Six Months Ended :

Six Months Ended June 30, $ Change % Change

(in millions, except percentage data) 2026 2025

Infrastructure Solutions $ 67.7 $ 75.1 $ (7.4) (9.9) %

Materials Solutions 31.0 19.5 11.5 59.0 %

Infrastructure Solutions

Segment Operating Adjusted EBITDA for the Infrastructure Solutions segment was $67.7 million for the first six months of 2026 compared to $75.1 million for the same period in 2025, a decrease of $7.4 million, or 9.9%.

The decrease in Segment Operating Adjusted EBITDA was primarily driven by (i) the impact of inflation on materials, labor and overhead of $10.4 million, (ii) manufacturing inefficiencies, inclusive of freight, duties and tariffs, of $8.0 million, (iii) net unfavorable inventory adjustments of $4.7 million and (iv) higher exhibit and promotional costs of $1.9 million.

These decreases were partially offset by the sales impact of net favorable pricing, volume and mix of $13.1 million and lower quality-related expenses of $4.6 million.

Materials Solutions

Segment Operating Adjusted EBITDA for the Materials Solutions segment was $31.0 million for the first six months of 2026 compared to $19.5 million for the same period in 2025, an increase of $11.5 million, or 59.0%.

These increases were partially offset by (i) manufacturing inefficiencies, inclusive of freight, duties and tariffs, of $16.1 million, (ii) higher personnel-related costs of $12.7 million, (iii) the impact of inflation on materials, labor and overhead of $4.2 million, (iv) increased dealer commissions of $1.7 million, (v) net foreign currency transaction gains of $1.9 million in the prior year and (vi) net unfavorable impact of the exhibit and promotion expense of $1.4 million.

Corporate and Other Operations

Corporate and Other operations, which are not an operating segment or included in one of the other reportable segments, had net expenses of $13.4 million for the first quarter of 2026 compared to $12.9 million for the same period in 2025, an increase of $0.5 million, or 3.9%.

Corporate and Other operations, which are not an operating segment or included in one of the other reportable segments, had net expenses of $12.4 million for the second quarter of 2026 compared to $12.7 million for the same period in 2025, a decrease of $0.3 million, or 2.4%.

Corporate and Other operations had net expenses of $25.8 million for the first six months of 2026 compared to $25.6 million for the first six months of 2025, an increase of $0.2 million, or 0.8%.

Liquidity and Capital Resources

Our primary sources of liquidity and capital resources are cash and cash equivalents on hand, borrowing capacity under our 2025 Credit Facilities and cash flows from operations.

As of March 31, 2026, our total liquidity was $267.5 million, consisting of $73.4 million of cash and cash equivalents available for operating purposes and $194.1 million available for additional borrowings under the 2025 Revolving Credit Facility, to the extent our compliance with financial covenants permits such borrowings.

As of June 30, 2026, our total liquidity was $265.8 million, consisting of $75.7 million of cash and cash equivalents available for operating purposes and $190.1 million available for additional borrowings under the 2025 Revolving Credit Facility, to the extent our compliance with financial covenants permits such borrowings.

Our foreign subsidiaries held $36.5 million of cash and cash equivalents available for operating purposes, which is considered to be indefinitely invested in those jurisdictions.

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On July 1, 2025, we entered into the 2025 Credit Agreement that provides for (i) the 2025 Revolving Credit Facility, a term loan facility, a swingline facility and a letter of credit facility, in an initial aggregate amount of up to $600.0 million and (ii) an incremental facilities limit in an aggregate amount not to exceed $150.0 million.

We had outstanding principal indebtedness on the term loan facility of $336.9 million and $50.0 million outstanding borrowings under the 2025 Revolving Credit Facility as of March 31, 2026.

Our outstanding letters of credit totaling $5.9 million decreased borrowing availability to $194.1 million under the 2025 Revolving Credit Facility as of March 31, 2026.

We had outstanding principal indebtedness on the term loan facility of $332.5 million and $54.0 million outstanding borrowings under the 2025 Revolving Credit Facility as of June 30, 2026.

Our outstanding letters of credit totaling $5.9 million decreased borrowing availability to $190.1 million under the 2025 Revolving Credit Facility as of June 30, 2026.

Certain of our international subsidiaries in Australia, Brazil, Canada, South Africa and the United Kingdom each have separate credit facilities with local financial institutions primarily to finance short-term working capital needs, as well as to cover foreign exchange contracts, performance letters of credit, advance payment and retention guarantees.

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We regularly enter into agreements, primarily to purchase inventory, in the ordinary course of business.

As of March 31, 2026, open purchase obligations totaled $189.5 million, of which $186.3 million are expected to be fulfilled within the remainder of 2026.

As of June 30, 2026, open purchase obligations totaled $196.0 million, of which $179.4 million are expected to be fulfilled within the remainder of 2026.

We estimate that our capital expenditures will be between $35.0 million and $45.0 million for the year ending December 31, 2026, which may be impacted by general economic, financial or operational changes and competitive, legislative and regulatory factors, among other considerations.

The following table summarizes cash flows during the three months ended March 31, 2026 and 2025, respectively:

Three Months Ended March 31,

The following table summarizes cash flows during the six months ended June 30, 2026 and 2025, respectively:

Six Months Ended June 30,

(in millions) 2026 2025

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Effect of exchange rates on cash (0.5) 1.4

Increase in cash, cash equivalents and restricted cash 3.0 1.8

Increase (decrease) in cash, cash equivalents and restricted cash 4.8 (2.1)

Cash, cash equivalents and restricted cash, end of period $ 76.8 $ 88.7

Net cash provided by operating activities

Our operating activities provided net cash of $40.7 million for the three months ended March 31, 2026 as compared to $20.5 million for the three months ended March 31, 2025.

Our operating activities provided net cash of $52.8 million for the six months ended June 30, 2026 as compared to $33.4 million for the six months ended June 30, 2025.

This increase is primarily due to net cash provided by our operating assets and liabilities of $22.6 million partially offset by decreased cash inflows from net income reduced by non-cash charges of $3.6 million.

The net cash provided by our operating assets and liabilities was mainly driven by fluctuations in (i) inventories of $16.5 million, (ii) trade and other receivables of $9.0 million and (iii) customer deposits of $7.4 million.

The net cash provided was partially offset by fluctuations in prepaid and refundable income taxes of $4.3 million and higher employee-related payments of $3.0 million.

The net cash provided by our operating assets and liabilities was mainly driven by fluctuations in inventories of $37.9 million and prepaid and refundable income taxes of $5.2 million.

The net cash provided was partially offset by fluctuations in (i) customer deposits of $13.2 million, (ii) trade and other receivables of $7.9 million and (iii) higher employee-related payments of $6.4 million.

Net cash used in investing activities

Net cash used in investing activities was $76.2 million during the three months ended March 31, 2026 as compared to $4.2 million during the three months ended March 31, 2025, primarily due to the CWMF acquisition and increased capital expenditures of $4.2 million.

Net cash used in investing activities was $83.7 million during the six months ended June 30, 2026 as compared to $7.7 million during the six months ended June 30, 2025, primarily due to the CWMF acquisition and increased capital expenditures of $7.7 million.

Net cash provided by (used in) financing activities

Net cash provided by financing activities was $39.0 million during the three months ended March 31, 2026 as compared to a net use of $15.0 million during the three months ended March 31, 2025, primarily due to higher net debt borrowings in 2026 as compared to 2025.

We paid quarterly dividends of $0.13 per common share to shareholders in the first quarter of both 2026 and 2025.

Net cash provided by financing activities was $36.2 million during the six months ended June 30, 2026 as compared to a net use of $29.2 million during the six months ended June 30, 2025, primarily due to higher net debt borrowings in 2026 as compared to net repayments in 2025.

We paid quarterly dividends of $0.13 per common share to shareholders in the second quarter of both 2026 and 2025.

Financial Condition

Our total current assets increased to $819.5 million as of March 31, 2026 from $816.6 million as of December 31, 2025, an increase of $2.9 million, or 0.4%, due primarily to increases in inventories and cash, cash equivalents and restricted cash of $3.8 million and $3.0 million, respectively.

These increases were partially offset by a decrease in trade and other receivables of $3.1 million.

Our total current liabilities increased to $349.6 million as of March 31, 2026 from $328.0 million as of December 31, 2025, an increase of $21.6 million, or 6.6%, due primarily to increases in accounts payables and customer deposits of $14.7 million and $12.4 million, respectively.

These increases were partially offset by decreases in accrued employee-related liabilities and accrued product warranties of $2.6 million and $2.0 million, respectively.

Our total current assets decreased to $816.4 million as of June 30, 2026 from $816.6 million as of December 31, 2025, a decrease of $0.2 million.

Decreases in inventories and prepaid and other assets of $5.7 million and $1.8 million, respectively, were offset by increases in cash, cash equivalents and restricted cash and prepaid and refundable income taxes of $4.8 million and $2.4 million, respectively.

Our total current liabilities decreased to $324.4 million as of June 30, 2026 from $328.0 million as of December 31, 2025, a decrease of $3.6 million, or 1.1%, due primarily to decreases in (i) customer deposits of $10.5 million, (ii) accrued employee-related liabilities of $6.4 million and (iii) accrued product warranties of $3.2 million.

These decreases were partially offset by increases in accounts payable and other current liabilities of $14.1 million and $2.7 million, respectively.

Critical Accounting Estimates

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What changed 10-Q

Item 2. Management’s Discussion and Analysis