What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-02-09 compared with 2025-11-10 · 36 added, 38 removed, 134 unchanged (36% of the section changed)

16 unchanged sentences

Results of Operations

Six Months Ended September 30, 2025 Compared to Six Months Ended September 30, 2024

During the six months ended September 30, 2025 (the “ 2025 period”), sales, cost of materials sold and adjusted gross profit increased approximately $65.9 million, $47.1 million and $18.7 million, r espectively, compared to the amounts recorded during the six months ended September 30, 2024 (the “ 2024 period”).

Nine Months Ended December 31, 2025 Compared to Nine Months Ended December 31, 2024

During the nine months ended December 31, 2025 (the “ 2025 period”), sales, cost of materials sold and adjusted gross profit increased approximately $139.8 million, $106.1 million and $33.7 million, r espectively, compared to the amounts recorded during the nine months ended December 31, 2024 (the “ 2024 period”).

Adjusted gross profit is a non-GAAP measure calculated as sales minus c ost of materials sold.

1 unchanged sentence

Sales volume for the 2025 period consisted of approximately 458,000 tons from inventory and another 59,000 to ns of toll processing customer owned material compared to the 2024 period volume consisting of approximately 353,000 tons from inventory and 60,000 tons of toll processing.

The increase in sales volume for the 2025 period was primarily related to a combination of stronger demand among some customers and successful commercial efforts to increase capacity utilization.

Same facility year-over-year growth accounted for approximately 89,500 tons of the sales volume increase and the acquisition of Century Metals & Supplies contributed approximately 14,500 tons.

Adjusted gross profit was approximately $85.9 million for the 2025 period compared to approximately $52.2 million for the 2024 period.

3 unchanged sentences

Entering the 2025 period, HRC price had reached the top of a price cycle.

Prices remained fairly stable for the first half of the 2025 period and then declined approximately 10% during the second half of the 2025 period.

As a result, the Company experienced stronger margins at the start of the 2025 period which then tapered off during the remainder of the period.

Prices declined approximately 15% from April 2025 until October 2025 when prices increased approximately 14% by the end of the 2025 period.

As a result, the Company experienced stronger margins at the start of the 2025 period which then tapered off until slight margin improvement to conclude the 2025 period.

Entering the 2024 period, HRC price was on a predominately declining trend dropping approximately 40% from January 2024 through the middle of August 2024.

From August 2024 to the end of the 2024 period, HRC price remained relatively stable.

As a result, the Company experienced compressed physical margins throughout the 2024 period.

8 unchanged sentences

Sales volume for the 2025 period consisted of approximately 429,000 tons from inventory and another 59,000 tons of toll processing customer owned material compared to the 2024 period volume consisting of approximately 326,000 tons from inventory and 60,000 tons of toll processing.

The increase in sales volume for the 2025 period was related to a combination of stronger demand among some customers and successful commercial efforts to increase capacity utilization.

The increase in sales volume for the 2025 period was related to a combination of stronger demand among some customers, successful commercial efforts to increase capacity utilization and the acquisition of Century.

Flat-roll segment operations recorded earnings from operations of approximately $21.8 million and $6.6 million for the 2025 period and 2024 period, respectively.

3 unchanged sentences

Tubular product segment sales for the 2025 period totaled approximately $34.7 million compared to approximately $28.5 million for the 2024 period.

Sales decreased primarily due to a decline in tons sold, offset by an increase in the average selling price per ton.

Tons sold decreased from approximately 19,000 tons in the 2024 period to approximately 16,500 tons in 2025 period.

Sales increased due to a combination of sales volume growth and an increase in the average selling price per ton.

Tons sold increased from approximately 26,500 tons in the 2024 period to approximately 29,000 tons in the 2025 period.

The average per ton selling price increased from approximately $1,065 per ton for the 2024 period to approximately $1,198 per ton for the 2025 period.

4 unchanged sentences

2025 period, selling, general and administrative costs increased approximately $6.6 million compared to the

This increase is primarily related to increased incentive compensation expense due to the higher earnings in the

2025 period compared to the

2024 period and approximately $1.1 million of non-recurring transaction related expenses associated with the acquisition of Century Metals & Supplies.

This increase was driven by $1.3 million of one-time, non-recurring transaction costs associated with the acquisition of Century, as well as $1.7 million of additional ongoing expenses related to the operation of Century.

The remaining increase was primarily attributable to an increase in personnel to support sales growth and execution of our strategic initiatives, along with increased incentive compensation resulting from improved profitability compared to the 2024 period.

Income taxes increased from a provision for the 2024 period of approximately $0.1 million to a provision for the 2025 period of approximately $3.3 million.

This increase was primarily related to increased earnings before taxes for the 2025 period.

The income tax provision as a percentage of earnings before tax was approximately 24.5% and 21.1% for the six months ended September 30, 2025 and 2024, respectively.

The income tax provision as a percentage of earnings before tax was approximately 24.3% and 12.4% for the nine months ended December 31, 2025 and 2024, respectively.

For the 2025 period , the effective tax rate differed from the federal statutory rate due primarily to the inclusion of state tax expenses in the provision.

For the 2024 period , the effective tax rate differed from the federal statutory rate due primarily to the inclusion of state tax expenses in the provision with this impact partially reduced by the tax effect of restricted stock vesting during the periods.

Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024

During the three months ended September 30, 2025 (the “ 2025 quarter”), sales, cost of materials sold and adjusted gro ss profit increased approximately $45.6 million, $37.3 million and $8.3 million, respectively, compared to the amounts recorded during the three months ended September 30, 2024 (the “2024 quarter”).

For the 2024 period , the effective tax rate differed from the federal statutory rate due primarily to the tax effect of restricted stock vesting during the period with this impact partially reduced by the inclusion of state tax expenses in the provision.

Three Months Ended December 31, 2025 Compared to Three Months Ended December 31, 2024

During the three months ended December 31, 2025 (the “ 2025 quarter”), sales, cost of materials sold and adjusted gro ss profit increased approximately $73.9 million, $59.0 million and $14.9 million, respectively, compared to the amounts recorded during the three months ended December 31, 2024 (the “2024 quarter”).

Adjusted gross profit is a non-GAAP measure calculated as sales minus cost of materials sold.

1 unchanged sentence

Sales volume for the 2025 quarter consisted of approximately 162,000 tons from inventory and another 15,500 tons of toll pr ocessing customer owned material compared to the 2024 quarter volume consisting of approximately 112,500 tons from inventory and 18,000 tons of toll processing.

The increase in sales volume for the 2025 quarter was primarily related to a combination of stronger demand among some customers and successful commercial efforts to increase capacity utilization.

Same facility year-over-year growth accounted for approximately 36,000 tons of the sales volume increase and the acquisition of Century Metals & Supplies contributed approximately 11,000 tons.

Adjusted gross profit was approximately $30.5 million for the 2025 quarter compared to approximately $15.6 million for the 2024 quarter.

2 unchanged sentences

Most of the Company's revenue is generated from the processing of hot-rolled steel coil ("HRC") or derivative products from HRC.

Both the 2025 quarter and the 2024 quarter experienced compressed physical margins associated with declining HRC prices.

HRC price was on a declining trend entering the 2025 quarter but stabilized during October 2025 and increased approximately 11% to end the 2025 quarter.

As a result, the Company experienced slight margin improvement at the conclusion of the 2025 quarter.

Entering the 2024 quarter, HRC price had reached the bottom of a price cycle after a prolonged decline and remained relatively stable near the bottom during the 2024 quarter.

As a result, the Company experienced compressed margins throughout the 2024 quarter.

The Company utilizes HRC futures, options and swaps to partially manage exposure to commodity price risk.

7 unchanged sentences

Sales volume for the 2025 quarter consisted of approxi mately 149,500 tons from inventory and another 15,500 tons of toll processing customer owned material compared to the 2024 quarter volume consisting of approximately 105,000 tons from inventory and 18,000 tons of toll processing.

The increase in sales volume for the 2025 quarter was related to a combination of stronger demand among some customers and successful commercial efforts to increase capacity utilization.

The increase in sales volume for the 2025 quarter was related to a combination of stronger demand among some customers, successful commercial efforts to increase capacity utilization and the acquisition of Century.

Flat-roll segment operations recorded earnings from operations of approximately $7.3 million and $1.3 million for the 2025 quarter and 2024 quarter, respectively.

3 unchanged sentences

Tubular product segment sales for the 2025 quarter totaled approximately $14.9 million compared to approximately $7.9 million for the 2024 quarter.

Sales decreased primarily due to a decline in tons sold, offset by an increase in the average selling price per ton.

Tons sold decreased from approximately 9,000 tons in the 2024 quarter to approximately 7,500 tons in 2025 quarter.

Sales increased due to a combination of sales volume growth and an increase in the average selling price per ton.

Tons sold increased from approximately 8,000 tons in the 2024 quarter to approximately 12,500 tons in 2025 quarter.

The average per ton selling price increased from approximately $1,013 per ton for the 2024 quarter to approximately $1,201 per ton for the 2025 quarter.

5 unchanged sentences

2024 quarter.

This increase is primarily related to increased incentive compensation expense due to the higher earnings in the

2025 quarter compared to the

2024 quarter and approximately $0.9 million of non-recurring transaction related expenses associated with the acquisition of Century Metals & Supplies..

This increase was driven by $1.4 million of additional ongoing expenses related to the operation of Century, as well as $0.2 million of one-time, non-recurring transaction costs associated with the acquisition.

Income taxes increased from a benefit for the 2024 quarter of approximately $0.4 million to a provision for the 2025 quarter of approximat ely $1.0 million.

10 unchanged sentences

THREE MONTHS ENDED

SIX MONTHS ENDED

SEPTEMBER 30,

NINE MONTHS ENDED

Gross profit (GAAP measure)

4 unchanged sentences

FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES

The Company’s current ratio was 3.2 a t September 30, 2025 and 4.3 at March 31, 2025 .

Working capital was approx imately $159.9 million at September 30, 2025 and $128.1 million at March 31, 2025 .

During the six months ended September 30, 2025, the Company maintained assets and liabilities at levels it believed were commensurate with operations.

The Company’s current ratio was 3.6 a t December 31, 2025 and 4.3 at March 31, 2025 .

Working capital was approx imately $167.0 million at December 31, 2025 and $128.1 million at March 31, 2025 .

During the nine months ended December 31, 2025, the Company maintained assets and liabilities at levels it believed were commensurate with operations.

Changes in balance sheet amounts occurred in the ordinary course of business and due to the acquisition of Century Metals & Supplies resulting in notable increases to accounts receivable, inventory, fixed assets, accounts payable and ABL facility debt.

The Company ex pects to continue to monitor, evaluate and manage balance sheet components depending on changes in market conditions and the Company’s operations.

On August 29, 2025, the Company renewed its asset-based lending facility ("ABL Facility") led by JPMorgan Chase Bank, N.A by executing the fifth amendment to the credit agreement.

Wells Fargo Bank, N.A.

became the only syndicated participant of the ABL facility with a 40% holding.

The $125 million ABL Facility matures on August 29, 2030 and is secured by substantially all of the assets of the Company.

On December 9, 2025, the Company executed the sixth amendment to its asset-based lending facility ("ABL Facility") increasing the facility size from $125 million to $140 million.

The ABL Facility is led by JPMorgan Chase Bank, N.A.

with Wells Fargo Bank, N.A.

as a 40% syndicated participant.

The ABL Facility matures on August 29, 2030 and is secured by substantially all of the assets of the Company.

The Company can elect borrowings on a floating rate basis or a term basis.

7 unchanged sentences

If certain conditions precedent are satisfied, the ABL facility may be increased up to an aggregate of $60 million, in minimum increments of $5 million.

At September 30, 2025, the Company had a balance of approximately $83.5 million under the ABL Facility with an applicable interest rate of 5.8%.

As of the filing date of this Form 10-Q, the Company had borrowings of approximately $84.2 million outstanding under the ABL Facility and the Company's most recent borrowing base calculation supported full access to the ABL Facility.

At December 31, 2025, the Company had a balance of approximately $88.6 million under the ABL Facility with an applicable interest rate of 5.3% and the Company's borrowing base calculation supported full access to the ABL Facility.

The Company believes that its current cash position along with cash flows from operations and borrowing capability due to its financial position are adequate to fund its expected cash requirements for the next 12 months.

3 unchanged sentences

Hedging decisions are intended to protect the value of the Company's inventory and produce more consistent financial results over price cycles.

The Company recognized gains of approximately $1.1 million and $5.6 million in the six months ended September 30, 2025 and 2024, respectively, related to hedging activities with all of this being classified as economic hedges of risk.

The Company recognized gains of approximately $2.5 million and $5.8 million in the nine months ended December 31, 2025 and 2024, respectively, related to hedging activities with all of this being classified as economic hedges of risk.

With MTM accounting treatment, it is possible that hedging related gains or losses might be recognized in a different fiscal quarter or fiscal year than the corresponding improvement or contraction in our physical margins.

See Note 9 for additional information related to the Company's hedging activities.

The Company anticipates that third quarter fiscal 2026 sales volume will remain consistent with second quarter levels, as the additional volume from the Century Metals & Supplies acquisition is expected to offset the anticipated holiday-related slowdown during the quarter.

Margins are expected to improve modestly quarter over quarter, driven by anticipated increases in metals pricing during the third quarter.

CRITICAL ACCOUNTING ESTIMATES

19 unchanged sentences

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