What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-06 compared with 2026-02-09 · 26 added, 75 removed, 95 unchanged (52% of the section changed)

16 unchanged sentences

Results of Operations

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.

The increase in sales was primarily due to an increase in sales volume.

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.

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.

Adjusted gross profit as a percentage of sales was approximately 18.9% for the 2025 period compared to approximately 16.6% for the 2024 period.

Our operating results are significantly impacted by the market prices of the metals we purchase.

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

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

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.

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

The Company recognized hedging related gains of approximately $2.5 million in the 2025 period compared to hedging related gains of approximately $5.8 million in the 2024 period.

Flat-roll Segment

Flat-roll product segment sales for the 2025 period totaled approximately $420.4 million compared to approximately $286.9 million for the 2024 period.

For a more complete understanding of the average selling prices of goods sold, it is helpful to exclude any sales generated from processing or storage of customer owned material.

Sales generated from processing or storage of customer owned material totaled approximately $3.9 million for the 2025 period and approximately $3.7 million for the 2024 period.

Sales generated from flat-roll segment inventory totaled approximately $416.5 million for the 2025 period compared to approximately $283.2 million for the 2024 period.

The average per ton selling price related to these shipments increased from approximately $868 per ton in the 2024 period to approximately $970 per ton in the 2025 period.

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, 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.

The Company’s flat-roll segment purchases its inventory from a limited number of suppliers.

Loss of any of these suppliers could have a material adverse effect on the Company’s business.

Tubular Segment

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

The tubular segment recorded earnings from operations of approximat ely $3.6 million for t he 2025 period compared to a loss from operations of approximately $2.0 million for the 2024 period.

The tubular segment purchases its inventory from a limited number of suppliers.

Loss of any of these suppliers could have a material adverse effect on the Company’s business.

General, Selling and Administrative Costs

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

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 24.3% 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 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”).

Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025

During the three months ended June 30, 2026 (the “ 2026 quarter”), sales, cost of materials sold and adjusted gro ss profit increased approximately $105.2 million, $78.5 million and $26.7 million, respectively, compared to the amounts recorded during the three months ended June 30, 2025 (the “2025 quarter”).

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

The increase in sales was primarily due to an increase in sales volume.

The increase in sales was due to an increase in the average selling price per ton and an increase in sales volume.

Sales volume for the 2026 quarter consisted of approximately 188,500 tons from inventory and another 17,500 tons of toll pr ocessing customer owned material compared to the 2025 quarter volume consisting of approximately 141,500 tons from inventory and 19,000 tons of toll processing.

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Adjusted gross profit as a percentage of sales was approximately 23.2% for the 2026 quarter compared to approximately 21.6% for the 2025 quarter.

Our operating results are significantly impacted by the market prices of the metals we purchase.

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

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.

Our operating results are influenced by changes in the market prices of the metals we purchase.

The majority of the Company's revenue is generated from processing hot-rolled steel coil ("HRC") and products derived from HRC.

Entering the 2026 quarter, HRC prices were in a sustained upward trend, increasing approximately 28% during the preceding quarter and an additional 10% throughout the 2026 quarter.

This favorable pricing environment contributed to margin expansion during the quarter.

By comparison, entering the 2025 quarter, HRC prices had reached the peak of a pricing cycle and remained relatively stable before declining modestly toward the end of the quarter.

As a result, the Company also experienced favorable margins during the 2025 quarter, although the margin expansion was less pronounced than in the 2026 quarter.

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

The Company recognized hedging related gains of approximately $1.4 million and $0.3 million in the 2025 and 2024 quarters, respectively.

The Company recognized hedging related losses of approximately $2.8 million in the 2026 quarter compared to hedging related gains of approximately $0.3 million in the 2025 quarter.

Flat-roll Segment

1 unchanged sentence

For a more complete understanding of the average selling prices of goods sold, it is helpful to exclude any sales generated from processing or storage of customer owned material.

Sales generated from processing or storage of customer owned material totaled approximately $1.1 million for the 2025 quarter and approximately $1.0 million for the 2024 quarter.

Sales generated from processing or storage of customer owned material totaled approximately $1.2 million for both the 2026 quarter and the 2025 quarter.

Sales generated from flat-roll segment inventory totaled approximately $220.6 million for the 2026 quarter compared to approximately $122.9 million for the 2025 quarter.

8 unchanged sentences

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.

Tons sold increased from approximately 9,000 tons in the 2025 quarter to approximately 13,500 tons in the 2026 quarter.

The average per ton selling price increased from approximately $1,206 per ton for the 2025 quarter to approximately $1,341 per ton for the 2026 quarter.

The tubular segment recorded earnings from operations of approxi mately $1.4 million for t he 2025 quarter compared to a loss from operations of approximately $0.2 million for the 2024 quarter.

The tubular segment recorded earnings from operations of approximately $2.1 million and $1.3 million for the 2026 quarter and 2025 quarter, respectively.

The tubular segment purchases its inventory from a limited number of suppliers.

1 unchanged sentence

General, Selling and Administrative Costs

2025 quarter, selling, general and administrative costs increased approximately $3.3 million compared to the

2024 quarter.

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.

During the 2026 quarter, selling, general and administrative costs increased approximately $5.4 million compared to the 2025 quarter.

This increase was primarily driven by profit-based and volume-based incentive compensation being approximately $3.1 million higher for the 2026 quarter combined with approximately $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.

Income taxes increased from a provision for the 2025 quarter of approximately $1.6 million to a provision for the 2026 quarter of approximat ely $4.2 million.

This increase was primarily related to increased earnings before taxes for the 2026 quarter.

The income tax provision or benefit as a percentage of earnings before tax was approximately 24.0% and 25.7% for the 2025 quarter and 2024 quarter, respectively.

The income tax provision as a percentage of earnings before tax was approximately 24.7% and 24.3% for the 2026 quarter and 2025 quarter, respectively.

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

7 unchanged sentences

THREE MONTHS ENDED

NINE MONTHS ENDED

Gross profit (GAAP measure)

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FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES

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’s current ratio was 2.9 a t June 30, 2026 and 3.4 at March 31, 2026 .

Working capital was approx imately $190.8 million at June 30, 2026 and $180.9 million at March 31, 2026 .

During the three months ended June 30, 2026, 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.

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 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.

The Company has a $140 million asset-based lending facility ("ABL Facility") led by JPMorgan Chase Bank, N.A.

with Wells Fargo Bank, N.A.

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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 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.

At June 30, 2026, the Company had a balance of approximately $91.5 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 $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.

The Company recognized a loss of approximately $2.8 million during the three months ended June 30, 2026 and a gain of $0.3 million during the three months ended June 30, 2025 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.

3 unchanged sentences

generally accepted accounting principles may require management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.

The determination of fair values related to the Century Metals & Supplies business combination accounting involves significant estimates and judgements in the valuation process.

The determination of fair values related to the Century Metals & Supplies business combination accounting involves significant estimates and judgments in the valuation process.

Actual results could differ from any estimates.

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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