Atkore Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following information should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included in this report. The following discussion may contain forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in these forward- looking statements. Factors that could cause or contribute to these differences include those factors discussed below and included or referenced elsewhere in this report, particularly in the sections entitled “ Forward-Looking Statements ” and “ Risk Factors. ” Incremental Market Uncertainties Recent events, including the imposition of tariffs and other changes in international trade policy, central bank interest rate adjustments, inflation, and conflicts in Ukraine and the Middle East are creating additional uncertainty in the global economy, generally, and in the markets we operate in. The aforementioned conflicts and other factors have had and will continue to have adverse effects on global supply chains, which may impact some aspects of our business. Furthermore, we are mindful of the effects that adverse weather can have on our domestic supply chain. RESULTS OF OPERATIONS The consolidated results of operations for the three months ended March 28, 2025 and March 29, 2024 were as follows: Three months ended (in thousands) March 28, 2025 March 29, 2024 Change % Change Net sales $ 701,725 $ 792,911 $ (91,186) (11.5) % Cost of sales 516,608 501,336 15,272 3.0 % Gross profit 185,117 291,575 (106,458) (36.5) % Selling, general and administrative 99,040 98,544 496 0.5 % Intangible asset amortization 10,166 14,221 (4,055) (28.5) % Asset impairment charges 127,733 — 127,733 100.0 % Operating (loss) income (51,822) 178,810 (230,632) (129.0) % Interest expense, net 8,261 8,321 (60) (0.7) % Other expense, net 6,426 730 5,696 780.3 % (Loss) income before income taxes (66,509) 169,759 (236,268) (139.2) % Income tax (benefit) expense (16,452) 31,804 (48,256) (151.7) % Net (loss) income $ (50,057) $ 137,955 $ (188,012) (136.3) % Net sales % Change Volume 4.9 % Average selling prices (16.6) % Other 0.2 % Net sales (11.5) % 25 Net sales decreased by $91.2 million, or 11.5%, to $701.7 million for the three months ended March 28, 2025, compared to $792.9 million for the three months ended March 29, 2024. The decrease in net sales is primarily attributed to decreased average selling prices across the Company’s products of $131.4 million and partially offset by increased sales volume of $38.9 million. Cost of sales % Change Volume 4.4 % Average input costs (5.3) % Freight 1.7 % Other 2.2 % Cost of sales 3.0 % Cost of sales increased by $15.3 million, or 3.0%, to $516.6 million for the three months ended March 28, 2025 compared to $501.3 million for the three months ended March 29, 2024. The increase was primarily due to increased sales volume of $22.5 million, increased freight costs of $8.8 million, and a decrease in solar tax credits of $8.2 million partially offset by decreased input costs of $26.8 million. Selling, general and administrative Selling, general and administrative expenses increased by $0.5 million, or 0.5%, to $99.0 million for the three months ended March 28, 2025 compared to $98.5 million for the three months ended March 29, 2024. The increase was primarily due to increased investments in people and software of $4.4 million partially offset by decreases in productivity of $3.2 million and other expense categories of $0.7 million. Intangible asset amortization Intangible asset amortization expense decreased to $10.2 million for the three months ended March 28, 2025 compared to $14.2 million for the three months ended March 29, 2024. The decrease in amortization expense resulted from certain intangibles becoming fully amortized. Asset impairment charges Asset impairment charges increased to $127.7 million for the three months ended March 28, 2025 compared to no asset impairment charges for the three months ended March 29, 2024. The asset impairment charge were related to the impairment of HDPE assets as described in Note 14, “Fair Value Measurements”. Interest expense, net Interest expense, net decreased by $0.1 million, or 0.7% to $8.3 million for the three months ended March 28, 2025 compared to $8.3 million for the three months ended March 29, 2024. The decrease is primarily due to decreased interest rates on the Company’s Senior Secured Term Loan Facility. Other expense, net Other expense, net increased to $6.4 million for the three months ended March 28, 2025 compared to $0.7 million other expense for the three months ended March 29, 2024. This increase is primarily due to the loss on the sale of Northwest Polymers of $6.1 million. Income tax (benefit) expense The Company ’ s income tax rate increased to 24.7% for the three months ended March 28, 2025 compared to 18.7% for the three months ended March 29, 2024. The increase in the current period effective tax rate was driven by the discrete tax impact of the deductible impairment of the HDPE long-lived assets. 26 SEGMENT RESULTS The Electrical segment manufactures high quality products used in the construction of electrical power systems including conduit, cable and installation accessories. This segment serves contractors in partnership with the electrical wholesale channel. The Safety & Infrastructure segment designs and manufactures solutions including metal framing, mechanical pipe, perimeter security and cable management for the protection and reliability of critical infrastructure. These solutions are marketed to contractors, original equipment manufacturers and end users. Both segments use Adjusted EBITDA as the primary measure of profit and loss. Segment Adjusted EBITDA is income (loss) before income taxes, adjusted to exclude unallocated expenses, depreciation and amortization, interest expense, net, stock-based compensation, loss on extinguishment of debt, gains and losses on the divestiture of a business, asset impairment charges, certain legal matters, and other items, such as inventory reserves and adjustments, (gain) loss on disposal of property, plant and equipment, insurance recovery related to damages of property, plant and equipment, release of indemnified uncertain tax positions, realized or unrealized gain (loss) on foreign currency impacts of intercompany loans and related forward currency derivatives, gain on purchase of business, loss on assets held for sale, restructuring costs and transaction costs. We define segment Adjusted EBITDA margin as segment Adjusted EBITDA as a percentage of segment Net sales. Electrical Three months ended (in thousands) March 28, 2025 March 29, 2024 Change % Change Net sales $ 492,677 $ 590,820 $ (98,143) (16.6) % Adjusted EBITDA $ 90,943 $ 195,752 $ (104,809) (53.5) % Adjusted EBITDA margin 18.5 % 33.1 % Net sales % Change Volume 3.6 % Average selling prices (19.5) % Other (0.7) % Net sales (16.6) % Net sales decreased by $98.1 million, or 16.6%, to $492.7 million for the three months ended March 28, 2025 compared to $590.8 million for the three months ended March 29, 2024. The decrease in net sales is primarily attributed to decreased average selling prices of $115.5 million and partially offset by increased sales volume of $21.5 million. Adjusted EBITDA Adjusted EBITDA for the three months ended March 28, 2025 decreased by $104.8 million, or 53.5%, to $90.9 million from $195.8 million for the three months ended March 29, 2024. Adjusted EBITDA margin decreased to 18.5% for the three months ended March 28, 2025 compared to 33.1% for the three months ended March 29, 2024. The decrease in Adjusted EBITDA and Adjusted EBITDA margin were largely due to lower average selling prices. 27 Safety & Infrastructure Three months ended (in thousands) March 28, 2025 March 29, 2024 Change % Change Net sales $ 209,272 $ 202,419 $ 6,853 3.4 % Adjusted EBITDA $ 36,064 $ 25,529 $ 10,535 41.3 % Adjusted EBITDA margin 17.2 % 12.6 % Net sales % Change Volume 8.6 % Average selling prices (7.9) % Solar energy tax credits 2.9 % Other (0.2) % Net sales 3.4 % Net sales increased by $6.9 million, or 3.4%, for the three months ended March 28, 2025 to $209.3 million compared to $202.4 million for the three months ended March 29, 2024. The increase is primarily attributed to higher sales volume of $17.4 million and lower solar credit rebates of $5.8 million partially offset by lower selling prices of $15.9 million. Adjusted EBITDA Adjusted EBITDA increased by $10.5 million, or 41.3%, to $36.1 million for the three months ended March 28, 2025 compared to $25.5 million for the three months ended March 29, 2024. Adjusted EBITDA margin increased to 17.2% for the three months ended March 28, 2025 compared to 12.6% for the three months ended March 29, 2024. The increase in Adjusted EBITDA and Adjusted EBITDA margin was largely due to higher than expected margins in the construction business. The consolidated results of operations for the six months ended March 28, 2025 and March 29, 2024 were as follows: Six months ended (in thousands) March 28, 2025 March 29, 2024 Change % Change Net sales $ 1,363,322 $ 1,591,392 $ (228,070) (14.3) % Cost of sales 1,007,117 1,009,277 (2,160) (0.2) % Gross profit 356,205 582,115 (225,910) (38.8) % Selling, general and administrative 190,492 199,160 (8,668) (4.4) % Intangible asset amortization 21,864 28,688 (6,824) (23.8) % Asset impairment charges 127,733 — 127,733 100.0 % Operating (loss) income 16,116 354,267 (338,151) (95.5) % Interest expense, net 16,470 16,114 356 2.2 % Other expense, net 7,559 742 6,817 918.7 % (Loss) income before income taxes (7,913) 337,411 (345,324) (102.3) % Income tax (benefit) expense (4,193) 61,076 (65,269) (106.9) % Net income $ (3,720) $ 276,335 $ (280,055) (101.3) % 28 Net sales % Change Volume (0.3) % Average selling prices (14.3) % Solar energy tax credits to be transferred 0.5 % Other (0.2) % Net sales (14.3) % Net sales decreased by $228.1 million, or 14.3%, to $1,363.3 million for the six months ended March 28, 2025, compared to $1,591.4 million for the six months ended March 29, 2024. The decrease in net sales is primarily attributed to decreased average selling prices of $227.7 million and lower sales volume of $4.9 million, partially offset by fewer solar energy tax credits to be transferred to certain customers of $8.3 million. Cost of sales % Change Volume (0.3) % Average input costs (2.3) % Solar energy tax credits generated 1.3 % Freight 1.4 % Other (0.3) % Cost of sales (0.2) % Cost of sale s decreased by $2.2 million, or 0.2% to $1,007.1 million for the six months ended March 28, 2025 compared to $1,009.3 million for the six months ended March 29, 2024. The decrease in cost of sales was primarily due to lower input costs of $22.7 million and lower sales volume of $3.4 million, partially offset by decreased benefit of solar energy tax credits of $13.2 million and higher freight costs of $13.7 million. Selling, general and administrative Selling, general and administrative expenses decreased by $8.7 million, or 4.4%, to $190.5 million for the six months ended March 28, 2025, compared to $199.2 million for the six months ended March 29, 2024. The decrease was primarily due to increased productivity of $8.0 million, decrease in administrative costs due to a divested business of $3.1 million and decreased costs of other general and administrative expenses of $5.8 million, partially offset by increased spending on business improvement initiatives of $7.6 million, higher stock compensation of $3.9 million and higher costs of $0.6 million spread across a variety of other spend categories. Intangible asset amortization Intangible asset amortization expense decreased to $21.9 million for the six months ended March 28, 2025, compared to $28.7 million for the six months ended March 29, 2024. The decrease in amortization expense resulted from certain intangibles becoming fully amortized. Asset impairment charges Asset impairment charges increased to $127.7 million for the six months ended March 28, 2025 compared to no asset impairment charges for the six months ended March 29, 2024. The asset impairment charge were related to the impairment of HDPE assets as described in Note 14, “Fair Value Measurements”. 29 Interest expense, net Interest expense, net, increased by $0.4 million, or 2.2%, to $16.5 million for the six months ended March 28, 2025, compared to $16.1 million for the six months ended March 29, 2024. The increase is primarily due to increased interest rates on the Company’s Senior Secured Term Loan Facility. Other expense, net Other expense, net increased to $7.6 million for the six months ended March 28, 2025, compared to $0.7 million for the six months ended March 29, 2024. This increase is primarily due to the loss on the sale of Northwest Polymers of $6.1 million. Income tax (benefit) expense The Company ’ s income tax rate increased to 53.0% for the six months ended March 28, 2025, compared to 18.1% for the six months ended March 29, 2024. The increase in the current period effective tax rate was driven by the discrete tax impact of the deductible impairment of the HDPE long-lived assets. SEGMENT RESULTS Electrical Six months ended (in thousands) March 28, 2025 March 29, 2024 Change % Change Net sales $ 958,032 $ 1,184,481 $ (226,449) (19.1) % Adjusted EBITDA $ 183,330 $ 400,112 $ (216,782) (54.2) % Adjusted EBITDA margin 19.1 % 33.8 % Net sales % Change Volume (1.0) % Average selling prices (17.8) % Other (0.3) % Net sales (19.1) % Net sales decreased by $226.4 million, or 19.1%, to $958.0 million for the six months ended March 28, 2025, compared to $1,184.5 million for the six months ended March 29, 2024. The decrease in net sales is primarily attributed to decreased average selling prices of $211.2 million and decreased sales volume of $11.8 million. Adjusted EBITDA Adjusted EBITDA for the six months ended March 28, 2025 decreased by $216.8 million, or 54.2%, to $183.3 million from $400.1 million for the six months ended March 29, 2024. Adjusted EBITDA margin decreased to 19.1% for the six months ended March 28, 2025, compared to 33.8% for the six months ended March 29, 2024 . The decrease in Adjusted EBITDA and Adjusted EBITDA margin was largely due to the decrease in average selling prices. 30 Safety & Infrastructure Six months ended (in thousands) March 28, 2025 March 29, 2024 Change % Change Net sales $ 405,997 $ 407,545 $ (1,548) (0.4) % Adjusted EBITDA $ 51,643 $ 45,042 $ 6,601 14.7 % Adjusted EBITDA margin 12.7 % 11.1 % Net sales Change (%) Volume 1.7 % Average selling prices (4.0) % Solar energy tax credits to be transferred 2.0 % Other (0.1) % Net sales (0.4) % Net sales decreased by $1.5 million, or 0.4%, to $406.0 million for the six months ended March 28, 2025, compared to $407.5 million for the six months ended March 29, 2024. The decrease is primarily due to decreased average selling prices of $16.5 million, partially offset by higher volumes of $6.9 million, and decreased economic value of solar energy tax credits to be transferred to certain customers of $8.3 million. Adjusted EBITDA Adjusted EBITDA increased $6.6 million, or 14.7%, to $51.6 million for the six months ended March 28, 2025, compared to $45.0 million for the six months ended March 29, 2024. Adjusted EBITDA margin increased to 12.7% for the six months ended March 28, 2025, compared to 11.1% for the six months ended March 29, 2024. The increase in Adjusted EBITDA and Adjusted EBITDA margin was largely due to decreases in costs outpacing decreases in average selling price and higher volume. LIQUIDITY AND CAPITAL RESOURCES We believe we have sufficient liquidity to support our ongoing operations and to invest in future growth and create value for stockholders. Our cash and cash equivalents were $330.4 million as of March 28, 2025, of which $82.1 million was held at non-U.S. subsidiaries. Those cash balances at foreign subsidiaries may be subject to withholding or local country taxes if the Company ’ s intention to permanently reinvest such income were to change and cash was repatriated to the United States. In general, we require cash to fund working capital investments, acquisitions, capital expenditures, debt repayment, interest payments, taxes, share repurchases and dividend payments. We have access to the ABL Credit Facility to fund operational needs. As of March 28, 2025, there were no outstanding borrowings under the ABL Credit Facility and no letters of credit issued under the ABL Credit Facility. The borrowing base was estimated to be $325.0 million and approximately $325.0 million was available under the ABL Credit Facility as of March 28, 2025. Outstanding letters of credit count as utilization of the commitments under the ABL Credit Facility and reduce the amount available for borrowings. The agreements governing the Senior Secured Term Loan Facility and the ABL Credit Facility (collectively, the "Credit Facilities") contain covenants that limit or restrict AII’s ability to incur additional indebtedness, repurchase debt, incur liens, sell assets, make certain payments (including dividends) and enter into transactions with affiliates. AII has been in compliance with the covenants under the agreements for all periods presented. 31 We may from time to time repurchase our debt or take other steps to reduce our debt. These actions may include open market repurchases, negotiated repurchases or opportunistic refinancing of debt. The amount of debt, if any, that may be repurchased or refinanced will depend on market conditions, trading levels of our debt, our cash position, compliance with debt covenants and other considerations. Our use of cash may fluctuate during the year and from year to year due to differences in demand and changes in economic conditions primarily related to the prices of the commodities we purchase. Capital expenditures have historically been necessary to expand and update the production capacity and improve the productivity of our manufacturing operations. Our ongoing liquidity needs are expected to be funded by cash on hand, net cash provided by operating activities and, as required, borrowings under the ABL Credit Facility. We expect that cash provided from operations and available capacity under the ABL Credit Facility will provide sufficient funds to operate our business, make expected capital expenditures and meet our liquidity requirements for at least the next twelve months, including payments of interest and principal on our debt. There have been no material changes in our contractual obligations and commitments since the filing of our Annual Report on Form 10-K. Limitations on distributions and dividends by subsidiaries AI and AII are each holding companies, and as such have no independent operations or material assets other than ownership of equity interests in their respective subsidiaries. Each company depends on its respective subsidiaries to distribute funds to it so that it may pay obligations and expenses, including satisfying obligations with respect to indebtedness. The ability of our subsidiaries to make distributions and dividends to us depends on their operating results, cash requirements and financial and general business conditions, as well as restrictions under the laws of our subsidiaries' jurisdictions. The agreements governing the Credit Facilities significantly restrict the ability of our subsidiaries, including AII, to pay dividends, make loans or otherwise transfer assets from AII and, in turn, to us. Further, AII's subsidiaries are permitted under the terms of the Credit Facilities to incur additional indebtedness that may restrict or prohibit the making of distributions, the payment of dividends or the making of loans by such subsidiaries to AII and, in turn, to us. The Senior Secured Term Loan Facility requires AII to meet a certain consolidated coverage ratio on an incurrence basis in connection with additional indebtedness. The ABL Credit Facility contains limits on additional indebtedness based on various conditions for incurring the additional debt. AII has been in compliance with the covenants under the agreements for all periods presented. The table below summarizes cash flow information derived from our statements of cash flows for the periods indicated: Six months ended (in thousands) March 28, 2025 March 29, 2024 Cash flows provided by (used in): Operating activities $ 160,941 $ 245,323 Investing activities (48,022) (78,971) Financing activities (129,213) (187,529) Operating activities During the six months ended March 28, 2025, the Company was provided $160.9 million cash flow by operating activities compared to $245.3 million during the six months ended March 29, 2024 . The $84.4 million decrease in cash provided was primarily due to decreased operating income of $345.3 million partially offset by less working capital used of $68.5 million, the non-cash asset impairment charge of $127.7 million in operating income and the impact of taxes of $56.8 million. 32 Investing activities During the six months ended March 28, 2025, the Company used $48.0 million in investing activities compared to $79.0 million during the six months ended March 29, 2024. The $30.9 million decrease in cash used in investing activities was primarily due to a decrease of $9.9 million in capital expenditures, proceeds from the sale of properties and equipment of $7.1 million and proceeds from the sale of Northwest Polymers of $6.7 million. Additionally, in fiscal 2024, the Company paid $6.0 million of purchase price payable related to the fiscal 2022 acquisition of Cascade Poly Pipe & Conduit and Northwest Polymers. No additional activity related to acquisitions occurred during the six months ended March 28, 2025. Financing Activities During the six months ended March 28, 2025, the Company used $129.2 million in financing activities compared to $187.5 million used during the six months ended March 29, 2024. The decrease in cash used in financing activities is primarily due to $56.0 million less cash used to repurchase common stock during the six months ended March 28, 2025 and $13.1 million less in issuance of common stock, net of shares withheld for tax, partially offset by an increase in dividends paid of $10.3 million. CHANGES IN CRITICAL ACCOUNTING POLICIES AND ESTIMATES As described in Note 14 “Fair Value Measurements,” the Company recorded an asset impairment charge of $ 127,733 . Of this charge, $ 92,397 was recorded against intangible assets, predominantly customer relationship intangibles. As a result of the conditions related to this asset impairment charge, the estimated remaining weighted average useful life for customer relationships intangibles has been reduced from 7 years to 3 years, as of March 28, 2025. As a result of the asset impairment charge, the GAAP basis for the amortization of customer relationship intangibles has been adjusted. The Company will record amortization expense in future periods based upon the new GAAP basis and estimated useful life. RECENT ACCOUNTING STANDARDS See Note 1, “Basis of Presentation and Summary of Significant Accounting Policies” to our unaudited condensed consolidated financial statements. FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q contains forward-looking statements and cautionary statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on management’s beliefs and assumptions and information currently available to management. Some of the forward-looking statements can be identified by the use of forward-looking terms such as “believes,” “expects,” “may,” “will,” “shall,” “should,” “would,” “could,” “seeks,” “aims,” “projects,” “is optimistic,” “intends,” “plans,” “estimates,” “anticipates” or other comparable terms. Forward-looking statements include, without limitation, all matters that are not historical facts. They appear in a number of places throughout this Quarterly Report on Form 10-Q and include, without limitation, statements regarding our intentions, beliefs, assumptions or current expectations concerning, among other things, financial position; results of operations; cash flows; prospects; growth strategies or expectations; customer retention; the outcome (by judgment or settlement) and costs of legal, administrative or regulatory proceedings, investigations or inspections, including, without limitation, collective, representative or class action litigation; and the impact of prevailing economic conditions. Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control. We caution you that forward-looking statements are not guarantees of future performance or outcomes and that actual performance and outcomes, including, without limitation, our actual results of operations, financial condition and liquidity, and the development of the 33 market in which we operate, may differ materially from those made in or suggested by the forward-looking statements contained in this Quarterly Report. In addition, even if our results of operations, financial condition and cash flows, and the development of the market in which we operate, are consistent with the forward-looking statements contained in this Quarterly Report, those results or developments may not be indicative of results or developments in subsequent periods. A number of important factors, including, without limitation, the risks and uncertainties disclosed in the Company’s filings with the SEC, including but not limited to the Company’s most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, could cause actual results and outcomes to differ materially from those reflected in the forward-looking statements. Additional factors that could cause actual results and outcomes to differ from those reflected in forward-looking statements include, without limitation: • declines in, and uncertainty regarding, the general business and economic conditions in the United States and international markets in which we operate; • weakness or another downturn in the United States non-residential construction industry; • pricing pressure, reduced profitability, or loss of market share due to intense competition; • availability and cost of third-party freight carriers and energy; • changes in prices of raw materials; • high levels of imports of products similar to those manufactured by us; • changes in federal, state, local and international governmental regulations and trade policies, including application of tariffs; • adverse weather conditions; • increased costs relating to future capital and operating expenditures to maintain compliance with environmental, health and safety laws; • reduced spending by, deterioration in the financial condition of, or other adverse developments, including inability or unwillingness to pay our invoices on time, with respect to one or more of our top customers; • increases in our working capital needs, which are substantial and fluctuate based on economic activity and the market prices for our main raw materials, including as a result of failure to collect, or delays in the collection of, cash from the sale of manufactured products; • work stoppage or other interruptions of production at our facilities as a result of disputes under existing collective bargaining agreements with labor unions or in connection with negotiations of new collective bargaining agreements, as a result of supplier financial distress, or for other reasons; • widespread outbreak of diseases; • changes in our financial obligations relating to pension plans that we maintain in the United States; • reduced production or distribution capacity due to interruptions in the operations of our facilities or those of our key suppliers; • loss of a substantial number of our third-party agents or distributors or a dramatic deviation from the amount of sales they generate; • security threats, attacks, or other disruptions to our information systems, or failure to comply with complex network security, data privacy and other legal obligations or the failure to protect sensitive information; • possible impairment of goodwill or other long-lived assets as a result of future triggering events, such as declines in our cash flow projections or customer demand and changes in our business and valuation assumptions; • safety and labor risks associated with the manufacture and in the testing of our products; • product liability, construction defect and warranty claims and litigation relating to our various products, as well as government inquiries and investigations, and consumer, employment, tort and other legal proceedings; • our ability to protect our intellectual property and other material proprietary rights; • risks inherent in doing business internationally; • changes in foreign laws and legal systems; • our inability to introduce new products effectively or implement our innovation strategies; • our inability to continue importing raw materials, component parts and/or finished goods; • the incurrence of liabilities and the issuance of additional debt or equity in connection with acquisitions, joint ventures or divestitures and the failure of indemnification provisions in our acquisition agreements to fully protect us from unexpected liabilities; 34 • failure to manage acquisitions successfully, including identifying, evaluating, and valuing acquisition targets and integrating acquired companies, businesses or assets; • the incurrence of additional expenses, increases in the complexity of our supply chain and potential damage to our reputation with customers resulting from regulations related to “conflict minerals”; • disruptions or impediments to the receipt of sufficient raw materials resulting from various anti-terrorism security measures; • restrictions contained in our debt agreements; • failure to generate cash sufficient to pay the principal of, interest on, or other amounts due on our debt; • failure to generate cash sufficient to pay dividends; • challenges attracting and retaining key personnel or high-quality employees; • future changes to tax legislation; • failure to generate sufficient cash flow from operations or to raise sufficient funds in the capital markets to satisfy existing obligations and support the development of our business; and • other risks and factors described in this Quarterly Report and from time to time in documents that we file with the SEC. You should read this Quarterly Report completely and with the understanding that actual future results may be materially different from expectations. All forward-looking statements attributable to us or persons acting on our behalf that are made in this Quarterly Report are qualified in their entirety by these cautionary statements. These forward-looking statements are made only as of the date of this Quarterly Report, and we do not undertake any obligation, other than as may be required by law, to update or revise any forward-looking or cautionary statements to reflect changes in assumptions, the occurrence of events, unanticipated or otherwise, and changes in future operating results over time or otherwise. Comparisons of results for current and any prior periods are not intended to express any future trends, or indications of future performance, unless expressed as such, and should only be viewed as historical data. Item 3. Quantitative and Qualitative Disclosures about Market Risk There have been no material changes to the quantitative and qualitative disclosures about market risks previously disclosed in our Annual Report on Form 10-K.