What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-07-30 compared with 2026-04-30 · 218 added, 130 removed, 338 unchanged (51% of the section changed)

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We will continue to apply our standardized Turnaround management practices across all sites, including our revised Turnaround standardization, to support consistent execution and long-term asset reliability.

o During the second quarter we successfully completed an extensive and complex Turnaround of our El Dorado ammonia plant on time, within budget and injury free.

o In addition, we began Turnaround work at our Pryor Facility in the second quarter, accelerating the commencement date from its originally scheduled third quarter timeframe.

The shift forward in the commencement of the Turnaround moved the majority of the costs and lost production from the Turnaround from the third quarter to the second quarter.

The Turnaround at the Pryor Facility was completed during the third quarter.

▪ Mechanical Integrity:

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We believe that these initiatives and strategies, combined with continued expansion of our customer relationships, the robust market analysis capabilities we have developed, and the establishment of in-market tank storage and distribution terminals, will make us more effective in identifying and capitalizing on the most profitable distribution opportunities for our products, while making our financial results more stable and predictable.

Additionally,

we have completed and are advancing several capital improvement projects with the intention of increasing our sales volumes of higher value downstream products resulting in improvements in our overall profit margins.

Additionally, we have completed and are advancing several capital improvement projects with the intention of increasing our sales volumes of higher value downstream products resulting in improvements in our overall profit margins.

• Grow Our Platform.

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Summary of Low Carbon Ammonia Initiatives

In May 2026, we reached an agreement to assume full ownership of our project to capture and sequester CO 2 at our El Dorado Facility (the “Project”) from Lapis Carbon Solutions (“Lapis”).

The milestone-based structure of the agreement aligns our capital deployment with Project advancement, while limiting upfront capital exposure.

The Project is expected to be completed and operational in the first quarter of 2027, subject to United States Environmental Protection Agency (“EPA”) approval of our Class VI permit, at which time CO 2 injections are expected to begin.

Once operational, the Project will initially capture and sequester approximately 400,000 to 500,000 metric tons of CO 2 per year in underground saline aquifers.

The sequestered CO 2 is expected to reduce our overall scope 1 GHG emissions by approximately 25% from current levels.

In addition, the Project is expected to enable us to produce between 305,000 and 380,000 metric tons per year of low carbon ammonia, a product that could potentially be sold at higher price levels than conventional ammonia.

Key Project milestones include:

• In April 2022, we entered into an agreement with Lapis to develop the Project.

• In February 2023, a pre-construction Class VI permit application was filed with the EPA.

The EPA recognized the application as complete in March 2023 and is currently in the review process.

• In May 2024, we announced an agreement to supply, for a five-year period commencing January 1, 2025, up to 150,000 short tons per year of low carbon ammonium nitrate solution (“ANS”) to Freeport Minerals Corporation (“Freeport”).

In early 2025 we began supplying conventional ANS to Freeport from our El Dorado Facility and expect to phase in the low carbon contracted volume in late 2026.

In early 2025, we began supplying conventional ANS to Freeport from our El Dorado Facility and expect to phase-in the low carbon contracted volume in early 2027, once the Project is operational.

Freeport intends to use the low carbon ANS purchased from us for its United States copper mining operations.

In April 2022, we entered into an agreement with Lapis Carbon Solutions (“Lapis”) to develop a project to capture and sequester CO 2 at our El Dorado Facility.

Lapis, backed by Cresta Fund Management, a Dallas-based middle-market infrastructure investment firm, will invest the majority of the capital required for project development.

The project is expected to be completed and operational late in the fourth quarter of 2026 or the first quarter of 2027, subject to the approval of a Class VI permit, at which time CO 2 injections are expected to begin.

Once operational, the project at the El Dorado site will initially capture and sequester approximately 400,000 to 500,000 metric tons of CO 2 per year in underground saline aquifers.

The sequestered CO 2 generated from the facility’s ammonia production is expected to qualify for federal tax credits under Internal Revenue Code Section 45Q, which are $85 per metric ton of CO 2 captured and sequestered.

Lapis, as the majority owner of the carbon capture and sequestration equipment, will earn the 45Q tax credits and will pay us a fee for each ton of CO 2 captured and sequestered.

Once in operation, the sequestered CO 2 is expected to reduce our overall scope 1 GHG emissions by approximately 25% from current levels.

In addition, sequestering approximately 400,000 to 500,000 metric tons of CO 2 annually is expected to enable us to produce approximately 305,000 to 380,000 metric tons of low carbon ammonia annually, a product that could potentially be sold at higher price levels than conventional ammonia.

In February 2023, a key milestone was achieved in the advancement of our low carbon ammonia project at El Dorado by filing a pre-construction Class VI permit application with the United States Environmental Protection Agency (the “EPA”).

The EPA recognized the application as complete in March 2023 and is currently in the review process.

In June 2025, Lapis completed the drilling of a stratigraphic injection well at the El Dorado site and has been gathering data to support the EPA in its continuing technical review of our Class VI application.

Lapis resubmitted the pre-construction Class VI permit application to the EPA in December 2025.

• In June 2025, a stratigraphic injection well was drilled at the El Dorado site and data has been gathered to support the EPA in its continuing technical review of our Class VI application.

The pre-construction Class VI permit application was resubmitted to the EPA in December 2025.

Once the Project receives EPA approval, we intend to use this well for CO 2 injections.

• In May 2026, we reached an agreement to take full ownership of the Project.

The sequestered CO₂ generated from the facility's ammonia production is expected to qualify for the enhanced federal tax credit, currently $85 per metric ton of CO 2 , under Internal Revenue Code Section 45Q.

Based on expected capture volumes, the Company estimates the Project could generate approximately $25 million to $30 million of annual earnings when fully operational, net of operating costs, over the 12-year credit period, subject to continued qualification.

Although the credits are expected to be recognized in earnings as they are earned, the timing of related cash inflows may vary depending on the tax credit monetization method selected.

As a result, cash receipts may not coincide with earnings recognition.

Market Outlook

Demand for our industrial products remains consistent, including demand for AN for use in mining applications, which is robust across all commodities, particularly with copper and gold miners as they maximize production to take advantage of strong supply and demand fundamentals.

Supply of AN is constrained in North America due, in part, to producer outages.

These factors should continue to support AN demand well into 2026.

Demand for nitric acid is robust domestically, where it is supported by tariffs and countervailing duties on imports of methylene diphenyl diisocyanate (MDI) for five years, which was recently finalized on April 8, 2026.

While economic uncertainty remains a risk due to tariffs, the U.S.-Iran conflict, higher oil prices, and concerns about inflation, we believe that we have a meaningful degree of downside protection in our industrial business.

A significant portion of our volumes are already contracted, our customer base is diverse and almost entirely located in the U.S., and we have the ability to optimize our product mix.

Demand for our industrial products remains strong, including demand for AN, supported by continued mining-sector investment across North America and globally, as well as broader capital spending tied to AI-related infrastructure, data centers, power generation and electrification.

Favorable supply / demand fundamentals, further supported by producer outages, continue to underpin both spot

and contract pricing, while new mining and aggregate projects are expected to support medium to longer-term demand for explosives used in copper, iron ore, quarrying and infrastructure-related production.

We believe our industrial business provides a meaningful degree of downside protection from risks associated with economic uncertainty, including those related to tariffs, fluctuating oil and commodity prices, concerns about inflation and the ongoing instability in the Middle East, including the U.S.-Iran conflict.

A significant portion of our volumes are already contracted, our customer base is diverse and located almost entirely in the United States, and we have the ability to optimize our product mix.

In addition, we expect European marginal cost of production to be higher throughout the remainder of 2026, driven by elevated natural gas costs and a tight global market for nitrogen products, particularly as demand for fertilizers in India remains strong and export capacity from China and other sources continues to be limited.

Ammonia prices currently reflect significantly reduced ammonia supplies due to ammonia carrying vessels being unable to transit through the Strait of Hormuz, higher costs of production in Europe, ongoing curtailment of ammonia production in Trinidad and new production outages in Australia, increased import demand in India and potential export controls in China, gas supply disruptions in North Africa reducing ammonia production and the slow ramp up in new U.S.

production capacity which are constraining global supply availability.

Pricing for ammonia derivative fertilizer products remains strong.

Urea Ammonium Nitrate (“UAN”) prices recently improved, reflecting increased demand during the application season and constrained supply and a strengthening in urea prices.

Like ammonia,

urea prices have strengthened due to vessels being unable to transit through the Strait of Hormuz, leading to a tightening of urea supply and customers switching from urea to UAN, thereby driving up UAN demand.

Channel inventories remain on the tighter end of the range and are expected to remain so until late in the second quarter of 2026.

The fertilizer markets remain constructive as conditions continue to evolve following the Strait of Hormuz disruption earlier this year.

Ammonia prices remain elevated relative to historical averages, although they have moderated from first-half highs as seasonal demand normalizes and supply conditions improve.

Urea Ammonium Nitrate (UAN) pricing remains favorable even as prices normalize from elevated levels, with a constructive demand outlook expected to support increased demand in the second half of 2026.

Other developments that could impact product pricing include the continued attacks affecting Russian nitrogen plants, ports, and ships, as well as the ongoing risk related to instability in the Middle East, including the U.S.

– Iran conflict.

The outlook for U.S.

corn calls for demand to keep stocks-to-use only modestly above historical levels.

We are currently expecting approximately 95 million planted acres of corn for the 2027 season, underpinning nitrogen fertilizer demand levels in line with recent years.

corn calls for approximately 95 million planted acres of corn for the 2026/2027 marketing season with global ending stocks projected to be at the lowest levels in over a decade supporting improved corn prices.

We believe this will support strong fertilizer application rates and we anticipate robust nitrogen demand through the fall fertilizer application season.

Key Industry Factors

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Our LDAN and AN solutions are primarily used to produce AN fuel oil and specialty emulsions for use in explosives in the quarry and the construction industries, for metals mining and to a lesser extent, for coal.

AN demand for explosives for quarrying/aggregate production for infrastructure upgrade and expansion remains steady.

Demand for nitric acid is robust domestically, supported in part by anticipated antidumping duties on imports of methylene diphenyl diisocyanate (MDI) from China, a downstream product of nitric acid.

On April 8, 2026, the U.S.

Department of Commerce issued a final affirmative antidumping determination on Chinese MDI, where duties were established for a period of five years.

The International Trade Commission’s final injury determination remains pending.

The price at which our agricultural products are ultimately sold depends on numerous factors, including the supply and demand for nitrogen fertilizers which, in turn, depends upon world grain demand and production levels, the cost and availability of transportation and storage, weather conditions, competitive pricing and the availability of imports.

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Additionally, changes in corn prices, as well as soybean, cotton and wheat prices, can affect the number of acres of corn planted in a given year and the number of acres planted will drive the level of nitrogen fertilizer consumption, likely affecting fertilizer prices.

According to the World Agricultural Supply and Demand Estimates Report dated April 9, 2026 (the “April Report”), farmers planted approximately 98.8 million acres of corn in the 2025 planting season, up 8.7% compared to the 2024 planting season.

According to the April Report, the U.S.

According to the World Agricultural Supply and Demand Estimates Report dated July 10, 2026 (the “July Report”), farmers planted approximately 95.3 million acres of corn in the 2026 planting season, down 3.5% compared to the 2025 planting season.

According to the July Report, the U.S.

Department of Agriculture (“USDA”) estimates the U.S.

ending stocks for the 2025 Harvest will be approximately 54.0 million metric tons, a 37.1% increase from the 2024 Harvest.

The USDA's expected yield per acre for the 2025 Harvest is 186.5 bushels, up approximately 4.0% from a year ago.

The following April 2026 estimates are associated with the corn market:

ending stocks for the 2026 Harvest will be approximately 45.5 million metric tons, a 11.3% decrease from the 2025 Harvest.

The USDA's expected yield per acre for the 2026 Harvest is 183.0 bushels, down approximately 1.9% from a year ago.

The following July 2026 estimates are associated with the corn market:

(2026 Harvest)

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(2024 Harvest)

April Report (1)

July Report (1)

Area Planted (Million acres)

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World Ending Stocks (Million metric tons)

Information obtained from the April Report for the 2025/2026 (“2026 Crop”), 2024/2025 (“2025 Crop”) and 2023/2024 (“2024 Crop”) corn marketing years.

Information obtained from the July Report for the 2026/2027 (“2027 Crop”), 2025/2026 (“2026 Crop”) and 2024/2025 (“2025 Crop”) corn marketing years.

The marketing year is the twelve-month period during which a crop normally is marketed.

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Represents the percentage change between the 2027 Crop amounts compared to the 2025 Crop amounts.

The current USDA corn outlook for the U.S.

is unchanged relative to the last month report.

ending stocks remain at 54.0 million metric tons, up 14.3% from the 2024 harvest.

Both acres planted and yields are up from the 2024 Harvest, 8.7% and 4.0%, respectively.

Corn production for the 2025 Harvest is forecast at 17.0 billion bushels.

If realized, harvested area would be the highest since 1933 and planted area of 98.8 million acres the highest since 1936.

The current USDA corn outlook compared to the prior report for the U.S.

is for smaller supplies, greater exports, and reduced ending stocks.

Corn beginning stocks were reduced reflecting an increase in feed and residual use that is partly offset by a reduction in corn used for ethanol.

The yield is unchanged at 183.0 bushels per acre from the prior month’s report.

Natural Gas Prices

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The following table shows the volume of natural gas utilized to produce the goods we sold and the associated average cost per MMBtu:

Three Months Ended March 31,

Three Months Ended June 30,

Natural gas volumes (MMBtu in millions)

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Planned downtime, including a planned major maintenance activity (each such activity, a “Turnaround”), and unplanned downtime can adversely affect results of operations through reduced sales volumes, lower fixed cost absorption, and increased repair and maintenance costs, which are expensed as incurred.

We performed major Turnaround activities at our Pryor Facility during the third quarter of 2024 and at our Cherokee Facility during the fourth quarter of 2024.

Minor planned outages were executed at our El Dorado Facility in July 2024 to replace the ammonia primary reformer catalyst.

We did not perform any major planned ammonia Turnaround events during 2025 at the El Dorado Facility, although a minor Turnaround was completed on our nitric acid plants at our El Dorado Facility during 2025.

Based on our current maintenance schedule, Turnaround activities in 2026 are expected to include an ammonia plant Turnaround at our El Dorado Facility during the second quarter and a full-site Turnaround at our Pryor Facility during the third quarter.

Additionally, a minor Turnaround on the urea plant at our Cherokee Facility is planned for the third quarter of 2026.

We recently completed the scheduled ammonia plant Turnaround at our El Dorado Facility, which commenced during the second quarter of 2026.

Additionally, we made the decision to pull forward the commencement of scheduled Turnaround work at our Pryor Facility from the third quarter into the second quarter of 2026.

We did not perform any major planned ammonia Turnaround events during 2025.

Ammonia Production

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Fixing the selling prices of our products months in advance of their ultimate delivery to customers typically causes our reported selling prices and margins to differ from spot market prices and margins available at the time of shipment.

Consolidated Results of the First Quarter of 2026

Our consolidated net sales for the first quarter of 2026 were $169.5 million compared to $143.4 million for the same period in 2025.

Our consolidated operating income for the first quarter of 2026 was $23.2 million compared to $4.5 million for the same period in 2025.

Consolidated Results of the Second Quarter of 2026

Our consolidated net sales for the second quarter of 2026 were $168.1 million compared to $151.3 million for the same period in 2025.

Our consolidated operating loss for the second quarter of 2026 was $2.7 million compared to operating income of $10.5 million for the same period in 2025.

The items impacting our operating results are discussed in more detail below and under “Results of Operations.”

Items Affecting Comparability of Results of the First Quarter

Stock Based Compensation

During the first quarter of 2026, we modified certain equity awards held by our Chief Executive Officer to allow for accelerated vesting in the event of a qualifying retirement.

As a result, we accelerated recognition of the remaining compensation cost associated with those grants in the amount of $3.1 million during the quarter.

Items Affecting Comparability of Results of the Second Quarter

Selling Prices

For the second quarter of 2026, average selling prices for all of our major products increased compared to the second quarter of 2025.

Turnaround Activities

As discussed above, during the second quarter of 2026, we performed major Turnaround activities at our El Dorado Facility and started a full plant Turnaround at our Pryor Facility.

The Pryor Facility Turnaround was completed during the third quarter of 2026.

When such activities are performed, overall results are negatively impacted.

This impact includes lost contribution margin from lost sales, lost fixed cost absorption from lower production, and increased costs associated with repairs and maintenance.

In addition, Turnaround-related costs may be incurred in periods earlier than the actual outage of the plant for activities such as planning and procurement of materials.

Turnaround costs for the three months ended June 30, 2026 and 2025, were $28.8 million and $2.6 million, respectively, while Turnaround costs for the six months ended June 30, 2026 and 2025, were $32.7 million and $4.6 million, respectively.

Chief Executive Officer One-Time Retention Award (2026 only)

During the second quarter of 2026,we granted a one-time retention award of 706,880 restricted stock units (“RSUs”) to Mark T.

Behrman, our Chief Executive Officer, which award is subject to cliff vesting and will vest on March 31, 2029.

This award will increase stock-based compensation expense on a quarterly basis by approximately $0.9 million.

See our discussion in “Equity Awards” in Note 1.

Plant, Property and Equipment Impairments (2025 only)

For the second quarter of 2025, we recorded asset write-downs primarily related to assets no longer in use in the amount of $2.5 million.

These write-downs are included in “Other expense, net” on our condensed consolidated statements of operations.

Loss on Extinguishment of Senior Secured Notes (2025 only)

During the second quarter of 2025 we repurchased $32.4 million in principal amount of our Senior Secured Notes due 2028 (“Senior Secured Notes”) for approximately $32.1 million, which was accounted for as an extinguishment of debt.

Including our write-off of the associated remaining portion of unamortized debt issuance costs, we recognized a loss on extinguishment of debt of approximately $0.1 million.

Shift in Production Mix

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This shift in production mix is consistent with our strategy to transition a portion of our sales from agricultural sales made at spot market pricing, which can be volatile, to sales under multi-year contracts that provide the pass-through of natural gas feedstock costs.

Selling Prices

For the first quarter of 2026, average selling prices for all of our major products increased compared to the first quarter of 2025.

Results of Operations

The following is a discussion and analysis of our condensed consolidated results of operations for the three months ended March 31, 2026 and 2025.

Net sales to unaffiliated customers are reported in the condensed consolidated financial statements and gross profit represents net sales less cost of sales.

The following is a discussion and analysis of our condensed consolidated results of operations for the three and six months ended June 30, 2026 and 2025.

Net sales to unaffiliated customers are reported in the condensed consolidated financial statements.

Gross profit represents net sales less cost of sales.

Net sales are reported on a gross basis with the cost of freight being recorded in cost of sales.

Three Months Ended March 31, 2026 Compared to Three Months Ended March 31, 2025

The following table sets forth certain financial information for the three months ended March 31, 2026 and 2025, the increase or decrease between those periods, and the percentage increase or decrease between those periods with respect to each line item:

Three Months Ended March 31,

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

The following table sets forth certain financial information for the three months ended June 30, 2026 and 2025, the increase or decrease between those periods, and the percentage increase or decrease between those periods with respect to each line item:

Three Months Ended June 30,

(Dollars In Thousands)

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Selling, general and administrative expense

Other income, net

Other expense, net

Operating (loss) income

Interest expense, net

Loss on extinguishment of debt

Non-operating other income, net

(Benefit) provision for income taxes

Net (loss) income

Other information:

Gross profit percentage (3)

Adjusted gross profit percentage (3)

Property, plant and equipment expenditures

Development of carbon capture and sequestration facility

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N/M-Not meaningful.

Represents amount classified as cost of sales.

Represents a non-GAAP measure since the amount excludes unallocated depreciation, amortization and Turnaround expenses.

As a percentage of the total net sales.

The following tables provide key operating metrics for the fertilizer and major industrial products, the increase or decrease between those periods, and the percentage increase or decrease between those periods with respect to each line item:

Three Months Ended June 30,

Product (tons sold)

AN & Nitric Acid

Urea ammonium nitrate (UAN)

Three Months Ended June 30,

Gross Average Selling Prices (price per ton)

AN & Nitric Acid

Urea ammonium nitrate (UAN)

Three Months Ended June 30,

Average Benchmark Prices (price per ton)

Tampa Ammonia Benchmark

We recorded net sales of $168.1 million during the second quarter of 2026 compared to $151.3 million for the second quarter of 2025, representing an increase of $16.8 million.

The increase was primarily due to higher sales prices on all our products partially offset by volume decreases resulting from of Turnarounds at two of our facilities.

In addition to the impact of the Turnarounds, UAN volumes were lower as production shifted to AN and Nitric Acid as part of our product mix strategy in response to tight market conditions.

We recognized a gross profit of $11.5 million for the second quarter of 2026 compared to $23.2 million for the same period in 2025, or an $11.7 million reduction.

Overall, our gross profit percentage for the second quarter of 2026 was 6.8% compared to 15.3% for the same period in 2025.

Our adjusted gross profit percentage increased to 37.0% for the second quarter of 2026 from 30.7% for the second quarter of 2025.

Our gross profit for the second quarter of 2026 was lower compared to the same period of 2025 primarily due to the cost of the two major Turnarounds, partially offset by an increase in sales, as discussed above.

Selling, General and Administrative

Our SG&A expenses were higher for the second quarter of 2026 compared to the same period of 2025, primarily due to an increase in salaries and wages, short term incentive compensation, stock-based compensation from a one-time retention grant (see “Equity Awards” in Note 1) and professional fees.

Other Expense, net

Other expense, net, during the second quarter of 2026 consisted primarily of asset write-offs partially offset by sales and use tax recoveries resulting from our ongoing review whereas other expense, net, during the second quarter of 2025 consisted primarily of asset write-downs.

Interest Expense

Interest expense for the second quarter of 2026 was $7.1 million compared to $7.9 million for the same period in 2025.

The decrease was primarily due to a lower outstanding balance on our Senior Secured Notes as a result of repurchases in 2025.

Loss on Extinguishment of Debt

During the second quarter of 2025, we repurchased $32.4 million in principal amount of our Senior Secured Notes for approximately $32.1 million, which was accounted for as an extinguishment of debt.

Including our write-off of the associated remaining portion of unamortized debt issuance costs, we recognized a loss on extinguishment of debt of approximately $0.1 million.

There were no repurchases during the second quarter of 2026.

Non-operating Other Income, net

Non-operating other income, net for the second quarter of 2026 was $1.7 million compared to $1.5 million for the same period of 2025, primarily related to interest income earned during both periods from our short-term investments.

Our average short-term investments balance including cash equivalents, was higher during the second quarter of 2026 but interest rates were lower during this period compared to the second quarter of 2025.

(Benefit) Provision for Income Taxes

The benefit for income taxes for the second quarter of 2026 was $1.9 million compared to a provision for income taxes of $1.1 million for the same period of 2025.

The resulting effective tax rate for the second quarter of 2026 was a benefit on pre-tax loss of 23.7% compared to a provision for income taxes of 26.5% for the same period of 2025.

For the second quarter of 2026, the effective tax rate was higher than the statutory rate primarily due to state taxes and deferred benefits from state tax law changes, partially offset by nondeductible compensation expense.

For the second quarter of 2025, the effective tax rate was higher than the statutory rate primarily due to nondeductible compensation expense and state taxes.

See discussion in Note 7.

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

The following table contains certain financial information for the six months ended June 30, 2026 and 2025, the increase or decrease between those periods, and the percentage increase or decrease between those periods with respect to each line item:

Six Months Ended June 30,

(Dollars In Thousands)

AN & Nitric Acid

Urea ammonium nitrate (UAN)

Total net sales

Depreciation and amortization (1)

Turnaround expense

Adjusted gross profit (2)

Selling, general and administrative expense

Other expense, net

Operating income

Interest expense, net

Loss on extinguishment of debt

Non-operating other income, net

Benefit for income taxes

Net income (loss)

(Benefit) provision for income taxes

Other information:

2 unchanged sentences

Property, plant and equipment expenditures

Development of carbon capture and sequestration facility

_____________________________

4 unchanged sentences

Three Months Ended March 31,

Six Months Ended June 30,

Product (tons sold)

1 unchanged sentence

Urea ammonium nitrate (UAN)

Three Months Ended March 31,

Six Months Ended June 30,

Gross Average Selling Prices (price per ton)

1 unchanged sentence

Urea ammonium nitrate (UAN)

Three Months Ended March 31,

Six Months Ended June 30,

Average Benchmark Prices (price per ton)

Tampa Ammonia Benchmark

We recorded net sales of $169.5 million during the first quarter of 2026 compared to $143.4 million for the first quarter of 2025, representing an increase of $26.1 million.

The increase was primarily driven by higher sales prices on all our products.

Decreases in ammonia and UAN sales volumes were offset by an increase in AN and Nitric Acid volumes as part of our product mix strategy, which includes upgrading ammonia to maximize higher value downstream products.

We recognized a gross profit of $35.8 million for the first quarter of 2026 compared to $14.4 million for the same period in 2025, or a $21.4 million increase.

Overall, our gross profit percentage for the first quarter of 2026 was 21.1% compared to 10.0% for the same period in 2025.

Our adjusted gross profit percentage increased to 35.7% for the first quarter of 2026 from 25.4% for the first quarter of 2025.

Our gross profit for the first quarter of 2026 was higher compared to the same period of 2025 primarily due to higher selling prices and improved product mix partially offset by increased cost of sales stemming from higher natural gas and sulfur costs.

Net sales of our primary products increased during the first half of 2026 compared to the prior year period primarily due to higher sales prices on all our products partially offset by volume decreases resulting from Turnarounds at two of our facilities.

In addition to the impact of the Turnarounds, UAN volumes were lower as production shifted to AN and Nitric Acid as part of our product mix strategy in response to current market conditions, while ammonia volumes were lower as more was utilized downstream on upgraded product.

As noted in the table above, we recognized a gross profit of $47.3 million for the first half of 2026 compared to $37.6 million for the same period in 2025, a $9.7 million increase.

Overall, our gross profit percentage was 14.0% compared to a gross profit percentage of 12.7% for the same period in 2025.

Our adjusted gross profit percentage was 36.3% for the first half of 2026 compared to 28.1% for the same period in 2025.

Our gross profit for the first half of 2026 was higher compared to the same period of 2025 primarily due to the increase in sales discussed above, partially offset by Turnaround costs, higher natural gas and sulfur costs and higher depreciation due to recent investments in our facilities.

Selling, General and Administrative

Our SG&A expenses were higher for the first quarter of 2026 compared to the same period of 2025, primarily due to an increase in stock based compensation from the acceleration of expense recognition for certain executive grants (see “Equity Awards” in Note 1) and an increase in short-term incentive compensation, which were partially offset by decreases in insurance and other miscellaneous expenses.

Other income, net

Other income, net for the first quarter of 2026 includes gains from the sale of real estate and tangible property for a former agricultural retail location that had ceased operations, partially offset by asset write-downs.

Other income, net, was higher in 2026 compared to 2025 due to the disposal gain discussed above.

Our SG&A expenses were higher for the first half of 2026 compared to the same period of 2025, primarily due to an increase in salaries and wages, short-term incentive compensation and stock-based compensation (see discussion of the Side Letter and retention grant within “Equity Awards” in Note 1) and professional fees.

Interest Expense

Interest expense for the first quarter of 2026 was $7.1 million compared to $8.1 million for the same period in 2025.

The decrease was primarily due to a lower outstanding balance on our Senior Secured Notes as a result of repurchases in the second and fourth quarters of 2025.

Interest expense for the first half of 2026 was $14.2 million compared to $16.0 million for the same period in 2025.

The decrease primarily related to reduced interest expense as a result of repurchases of Senior Secured Notes made during the second and fourth quarters of 2025.

Loss on Extinguishment of Debt

During the first half of 2025, we repurchased $32.4 million in principal amount of our Senior Secured Notes for approximately $32.1 million, which was accounted for as an extinguishment of debt.

Including our write-off of the associated remaining portion of unamortized debt issuance costs, we recognized a loss on extinguishment of debt of approximately $0.1 million.

There have been no repurchases so far during 2026.

Other Expense, net

Other expense, net during the first half of 2026 includes write-downs of assets no longer being used in operations, partially offset by gains from the sale of real estate and tangible property of certain former agricultural retail locations that had ceased operations and sales and use tax recoveries resulting from our ongoing review.

Other expense, net, during the first half of 2025 consisted of asset write-downs related to assets no longer being used in operations.

Non-operating Other Income, net

Non-operating other income, net for the first quarter of 2026 was $1.5 million compared to $1.7 million for the same period of 2025, primarily related to interest income earned during both periods from our short-term investments.

Our average short-term investments balance including cash equivalents, was higher during the first quarter of 2026 but interest rates were lower during this period compared to the first quarter of 2025.

Benefit for Income Taxes

The benefit for income taxes for the first quarter of 2026 was $2.1 million compared to a benefit for income taxes of $0.3 million for the same period of 2025.

The resulting effective tax rate for the first quarter of 2026 was a benefit on pre-tax income of 12.1% compared to a benefit on pre-tax loss of 14.7% for the same period of 2025.

For the first quarter of 2026, the effective tax rate was lower than the statutory rate primarily due to the release of state valuation allowances, partially offset by nondeductible compensation expense.

For the first quarter of 2025, the effective tax rate was lower than the statutory rate primarily due to changes in valuation allowance and nondeductible compensation, partially offset by state taxes.

Non-operating other income, net for the first half of 2026 and 2025 was $3.2 million for both periods and primarily related to interest income earned during both periods from our short-term investments.

Our average short-term investments balance including cash equivalents, was higher during the first half of 2026 but interest rates were lower during this period compared to the first half of 2025.

(Benefit) Provision for Income Taxes

The benefit for income taxes for the first half of 2026 was $4.0 million compared to a provision for income taxes of $0.8 million for the same period of 2025.

The resulting effective tax rate for the first half of 2026 was a benefit of 42.8% compared to a provision for income taxes of 37.0% for the same period of 2025.

For the first half of 2026, the effective tax rate was lower than the statutory rate primarily due to the release of state valuation allowances, partially offset by nondeductible compensation expense.

For the first half of 2025, the effective tax rate was higher than the statutory rate primarily due to nondeductible compensation expense and state taxes.

See discussion in Note 7.

LIQUIDITY AND CAPITAL RESOURCES

The following table summarizes our cash flow activities for the three months ended March 31:

The following table summarizes our cash flow activities for the six months ended June 30:

(In Thousands)

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Net Cash Flow from Operating Activities

Net cash provided by operating activities was $51.8 million for the first three months of 2026 compared to $6.8 million for the same period of 2025, a change of $45.0 million.

Net cash provided by operating activities was $111.2 million for the first six months of 2026 compared to $25 million for the same period of 2025, a change of $86.2 million.

The increase was primarily a result of improved operating income and changes in working capital.

Net Cash Flow from Investing Activities

Net cash used by investing activities was $45.5 million for the first three months of 2026 compared to $5.3 million for the same period of 2025, a change of $40.2 million.

For the first three months of 2026, the net cash used by investing activities primarily related to purchases of short-term investments of $105.7 million and expenditures for property, plant and equipment of $17.0 million partially offset by proceeds from short-term investments and proceeds from sales of property, plant and equipment totaling $77.2 million.

For the first three months of 2025, the net cash used by investing activities primarily related to purchases of short-term investments of $49.0 million and expenditures for property, plant and equipment of $20.9 million, partially offset by proceeds from short-term investments of $64.5 million.

Net cash used by investing activities was $101.0 million for the first six months of 2026 compared to net cash provided by investing activities of $4.8 million for the same period of 2025, a change of $105.8 million.

For the first six months of 2026, the net cash used by investing activities primarily related to purchases of short-term investments of $215.8 million, expenditures for property, plant and equipment of $46.2 million and development of our CO 2 capture and sequestration project of $10.8 million partially offset by proceeds from short-term investments, a recovery of PP&E costs and proceeds from sales of property, plant and equipment totaling $171.8 million.

For the first six months of 2025, the net cash provided by investing activities primarily related to proceeds from short-term investments of $154.6 million, partially offset by purchases of short-term investments of $110.3 million and expenditures for property, plant and equipment of $39.3 million.

Net Cash Flow from Financing Activities

Net cash used by financing activities was $5.2 million for the first three months of 2026 compared to $6.8 million for the same period of 2025, a change of $1.6 million.

For the first three months of 2026, the net cash used by financing activities primarily consisted of payments on short-term financing and finance leases of $3.7 million and $1.5 million for tax withholding obligations related to the vesting of equity awards.

For the first three months of 2025, the net cash used by financing activities primarily consisted of payments on other long-term debt and short-term financing of $5.6 million and $1.2 million for tax withholding obligations related to the vesting of equity awards.

Net cash used by financing activities was $9.4 million for the first six months of 2026 compared to $44.4 million for the same period of 2025, a change of $35.1 million.

For the first six months of 2026, the net cash used by financing activities primarily consisted of payments on short-term financing and finance leases of $7.4 million and $2.1 million for tax withholding obligations related to the vesting of equity awards.

For the first six months of 2025, the net cash used by financing activities primarily consisted of repurchases of our Senior Secured Notes of $32.1 million, payments on a secured financing due 2025 and short-term financing of $11.3 million and $1.2 million for tax withholding obligations related to the vesting of equity awards.

Capitalization

The following table summarizes our total cash and cash equivalents, short-term investments, long-term debt and stockholders’ equity as of March 31, 2026 and December 31, 2025:

March 31, 2026

The following table summarizes our total cash and cash equivalents, short-term investments, long-term debt and stockholders’ equity as of June 30, 2026 and December 31, 2025:

June 30, 2026

December 31, 2025

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(1) See discussion contained in Note 4.

(2) Debt issuance costs as of March 31, 2026 and December 31, 2025 of approximately $0.4 million and $0.5 million, respectively, relating to our Revolving Credit Facility are not included in Unamortized debt issuance costs.

(2) Debt issuance costs as of June 30, 2026 and December 31, 2025 of approximately $0.4 million and $0.5 million, respectively, relating to our Revolving Credit Facility are not included in Unamortized debt issuance costs.

These costs are included in our condensed consolidated balance sheets in Intangible and other assets, net.

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The Revolving Credit Facility provides for a sub-facility for the issuance of letters of credit in an aggregate amount not to exceed $10 million, with the outstanding amount of any such letters of credit reducing availability for borrowings.

As of March 31, 2026, our Revolving Credit Facility was undrawn and had approximately $59 million of availability.

As of June 30, 2026, our Revolving Credit Facility was undrawn and had approximately $51 million of availability.

See Note 4 for further discussion of the Revolving Credit Facility.

For the full year of 2026, we expect capital expenditures to be approximately $75 million, of which $55 million is expected to be spent on sustaining production with the remainder spent on growth initiatives.

As of March 31, 2026, we had approximately $181.6 million of cash and short-term investments.

For the full year of 2026, we expect capital expenditures for our core nitrogen-based business to be approximately $80 million, of which $63 million is expected to be spent on sustaining production and the remainder spent on growth initiatives.

Additionally, we also expect to expend approximately $95 million on the acquisition and development of our CO 2 capture and sequestration project, with a significant majority of that cost incurred in 2026.

As of June 30, 2026, we had approximately $218.0 million of cash and short-term investments.

From time to time, we may seek to deploy capital through common stock repurchases or the repurchase of outstanding debt.

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As discussed in Note 4, the Revolving Credit Facility does not include financial covenant requirements unless a defined covenant trigger event has occurred and is continuing.

As of March 31, 2026, no trigger event had occurred.

As of June 30, 2026, no trigger event had occurred.

Loan Agreements

Senior Secured Notes due 2028 – We had $438.6 million aggregate principal amount of Senior Secured Notes outstanding as of March 31, 2026.

Senior Secured Notes due 2028 – We had $438.6 million aggregate principal amount of Senior Secured Notes outstanding as of June 30, 2026.

Interest is to be paid semiannually in arrears on May 15 th and October 15 th .

The Senior Secured Notes mature on October 15, 2028.

Revolving Credit Facility – At March 31, 2026, our Revolving Credit Facility was undrawn and had approximately $59 million of availability, based on our eligible collateral, less outstanding letters of credit as of that date.

Revolving Credit Facility – At June 30, 2026, our Revolving Credit Facility was undrawn and had approximately $51 million of availability, based on our eligible collateral, less outstanding letters of credit as of that date.

Also see discussion above under “Compliance with Long-Term Debt Covenants.”

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Most of our railcar leases are classified as operating leases.

Capital Expenditures – First Three Months of 2026

For the first three months of 2026, capital expenditures relating to property, plant and equipment were $17.0 million.

Of the expenditures for the first three months of 2026, approximately $14.8 million was spent on projects to sustain our production capacity while approximately $2.2 million was spent on growth initiatives.

Capital Expenditures – First Half of 2026

For the first half of 2026, capital expenditures relating to property, plant and equipment were $46.2 million.

Of the expenditures for the first half of 2026, approximately $41.6 million was spent on projects to sustain our production capacity while approximately $4.7 million was spent on growth initiatives.

In addition, we expended $10.8 million for the development of our CO 2 capture and sequestration project.

The capital expenditures were funded primarily from cash and working capital.

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We are subject to specific federal and state environmental compliance laws, regulations and guidelines.

As a result, our expenses were $1.5 million for the first three months ended March 31, 2026 in connection with environmental projects.

As a result, our expenses were $2.7 million for the first six months ended June 30, 2026 in connection with environmental projects.

For the remainder of 2026, we expect to incur expenses ranging from $2.6 million to $2.9 million in connection with additional environmental projects.

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These insurance bonds primarily represent guarantees of future performance of our subsidiaries.

As of March 31, 2026, we have agreed to indemnify the sureties for payments, up to $10.2 million, made by them in respect of such bonds.

As of June 30, 2026, we have agreed to indemnify the sureties for payments, up to $10.2 million, made by them in respect of such bonds.

New Accounting Pronouncements

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Significant judgment is applied in evaluating the need for and the magnitude of appropriate valuation allowances against deferred tax assets.

It is also reasonably possible that the estimates and assumptions utilized as of March 31, 2026, could change in the near term.

It is also reasonably possible that the estimates and assumptions utilized as of June 30, 2026, could change in the near term.

Actual results could differ materially from these estimates and judgments, as additional information becomes known.

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Adjusted gross profit is a metric that provides investors with greater transparency to the information used by management in its financial and operational decision-making.

We believe this metric is useful to investors because it facilitates comparisons of our core business operations across periods on a consistent basis.

We believe this metric is useful to investors because it facilitates comparisons of our core

business operations across periods on a consistent basis.

Management believes that the non-GAAP measure presented in this Form 10-Q, when viewed in combination with our results prepared in accordance with United States generally accepted accounting principles (“U.S.

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The following table reconciles gross profit to adjusted gross profit.

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(In Thousands)

Reconciliation of Gross Profit to Adjusted Gross Profit:

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As a result, we could be exposed to embedded losses should our product costs exceed the firm sales prices at the end of a reporting period.

At March 31, 2026, we had no embedded losses associated with sales commitments with firm sales prices.

At June 30, 2026, we had no embedded losses associated with sales commitments with firm sales prices.

Commodity Price Risk

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Generally, these contracts are considered normal purchases because they provide for the purchase of natural gas that will be delivered in quantities expected to be used over a reasonable period of time in the normal course of business, and as such, are exempt from derivative accounting requirements.

At March 31, 2026, we had no outstanding natural gas contracts which are subject to derivative accounting requirements.

At June 30, 2026, we had no outstanding natural gas contracts which are subject to derivative accounting requirements.

Interest Rate Risk

We may be exposed to variable interest rate risk with respect to our Revolving Credit Facility when there are outstanding borrowings.

As of March 31, 2026, we had no outstanding borrowings on this credit facility and no other variable rate borrowings and, as a result, we currently do not hedge our interest rate risk associated with any variable interest rate loan.

As of June 30, 2026, we had no outstanding borrowings on this credit facility and no other variable rate borrowings and, as a result, we currently do not hedge our interest rate risk associated with any variable interest rate loan.

Control s and Procedures

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These include controls and procedures designed to ensure that this information is accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Management, with the participation of the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company's disclosure controls and procedures as of March 31, 2026.

Based on this evaluation, the Company's Chief Executive Officer and Chief Financial Officer have concluded that the Company's disclosure controls and procedures were effective as of March 31, 2026, at the reasonable assurance level.

There were no changes to our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended March 31, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management, with the participation of the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company's disclosure controls and procedures as of June 30, 2026.

There were no changes to our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended June 30, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

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• our ongoing initiatives to increase the distribution of our products within our industrial end markets;

• the execution and success of our advanced low carbon ammonia initiatives;

• the execution and success of our advanced low carbon ammonia initiatives, including the Project;

• our expectations regarding future ammonia pricing;

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• the ability to enter into the additional borrowings;

• the anticipated cost and timing of our capital projects;

• the anticipated cost and timing of our capital projects, including the Project;

• certain costs covered under warranty provisions;

• our ability to pass to our customers cost increases in the form of higher prices;

• our ability to pass cost increases to our customers in the form of higher prices;

• our belief as to whether we have sufficient sources for materials and components;

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• limitations due to financial covenants;

• our ability to obtain required regulatory approvals and satisfy other requirements for our carbon capture and sequestration project at our El Dorado Facility;

• changes in competition;

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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