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Item 2. Management’s Discussion and Analysis

2025-05-07 compared with 2024-10-31 · 105 added, 168 removed, 159 unchanged (63% of the section changed)

1 unchanged sentence

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, including the financial statements, accompanying notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations therein, and the interim condensed consolidated financial statements and accompanying notes included in this Quarterly Report on Form 10-Q.

All dollar amounts are in millions throughout the tables included in Management’s Discussion and Analysis of Financial Conditions and Results of Operations unless otherwise indicated.

All dollar amounts are in millions throughout the tables included in Management’s Discussion and Analysis of Financial Condition and Results of Operations unless otherwise indicated.

Cautionary Statements Regarding Forward-Looking Information

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These risks, uncertainties, and other factors include, but are not limited to:

• Macroeconomic conditions, including inflation, high interest rates and recessionary concerns, as well as continuing global supply chain constraints, labor constraints, logistics constraints and cost pressures such as changes in raw material and commodity costs, have had, and may continue to have, a negative impact on Manitowoc’s ability to convert backlog into revenue which could, and has, impacted its financial condition, cash flows, and results of operations (including future uncertain impacts);

• Macroeconomic conditions, including inflation, elevated interest rates, and tariffs, as well as prior supply chain, labor and logistics constraints, have had, and may continue to have, a negative impact on Manitowoc’s ability to convert backlog into revenue which could, and has, impacted its financial condition, cash flows, and results of operations (including future uncertain impacts);

• actions of competitors;

• changes in economic or industry conditions generally or in the markets served by Manitowoc;

• geopolitical events, including the ongoing conflicts in Ukraine and in the Middle East, other political and economic conditions and risks and other geographic factors, has had and may continue to lead to market disruptions, including volatility in commodity prices (including oil and gas), raw material and component costs, energy prices, inflation, consumer behavior, supply chain, and credit and capital markets, and could result in the impairment of assets;

• changes in economic or industry conditions generally or in the markets served by Manitowoc, including tariffs;

• geopolitical events, including the ongoing conflicts in Ukraine and in the Middle East, tariffs, other political and economic conditions and risks and other geographic factors, has had and may continue to lead to market disruptions, including volatility in commodity prices (including oil and gas), raw material and component costs, energy prices, inflation, consumer behavior, supply chain, and credit and capital markets, and could result in the impairment of assets;

• changes in customer demand, including changes in global demand for high-capacity lifting equipment, changes in demand for lifting equipment in emerging economies and changes in demand for used lifting equipment including changes in government approval and funding of projects;

• the ability to convert backlog, orders, and order activity into sales and the timing of those sales;

• adverse changes to trade policy, including export duties, tariffs, import controls and trade barriers (including quotas);

• the ability to focus on customers, new technologies, and innovation;

• uncertainties associated with new product introductions, the successful development and market acceptance of new and innovative products that drive growth;

• failure to comply with regulatory requirements related to the products and aftermarket services the Company sells;

• the ability to capitalize on key strategic opportunities and the ability to implement Manitowoc’s long-term initiatives;

• the ability of Manitowoc's customers to receive financing;

• risks associated with high debt leverage;

• impairment of goodwill and/or intangible assets;

9 unchanged sentences

• realization of anticipated earnings enhancements, cost savings, strategic options and other synergies, and the anticipated timing to realize those savings, synergies and options;

• the ability to focus on customers, new technologies and innovation;

• uncertainties associated with new product introductions, the successful development and market acceptance of new and innovative products that drive growth;

• the replacement cycle of technologically obsolete products;

• risks associated with high debt leverage;

• foreign currency fluctuation and its impact on reported results;

• the ability of Manitowoc's customers to receive financing;

• risks associated with data security and technological systems and protections;

5 unchanged sentences

• issues associated with the quality of materials, components and products sourced from third parties and the ability to successfully resolve those issues;

• issues related to workforce reductions and potential subsequent rehiring;

• changes in laws throughout the world, including governmental regulations on climate change;

8 unchanged sentences

The inclusion of any statement in this report does not constitute an admission by the Company or any other person that the events or circumstances described in such statement are material.

Current Events

As disclosed in Part I, Item 1A:

Risk Factors, of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, the company’s business is subject to risks related to, among other factors, tariffs and other trade protection measures put in place by the United States or other countries, as well as U.S.

international trade relations, including those with China and the European Union.

Starting in early 2025, the United States government announced reciprocal tariffs on imported goods from numerous countries.

In response, certain foreign governments imposed tariffs on imported American goods.

The United States government shortly thereafter declared a 90-day suspension of reciprocal tariffs and implemented a 10% tariff on all imports, except for those from China, which are subject to a higher tariff.

Approximately 50% of the Company’s total net sales are generated in the United States.

While most products are manufactured domestically, tariffs may affect demand, raise product costs, or disrupt the supply chain.

Considerable uncertainty regarding the final resolution of tariffs remain, however, the Company is assessing the impact and what measures can be taken to mitigate their effects.

Orders and Backlog

Orders and backlog are not measures defined by GAAP and our methodology for determining orders and backlog may vary from the methodology used by other companies.

Orders and backlog are not measures defined by accounting principles generally accepted in the United States of America ("GAAP") and our methodology for determining orders and backlog may vary from the methodology used by other companies.

Management uses orders and backlog for capacity and resource planning.

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Orders are included in backlog when an executed binding contract with a price that has a floor has been received but has not been recognized in net sales.

Orders for the three months ended September 30, 2024 decreased 20.0% to $424.7 million from $531.2 million for the same period in 2023.

The decrease was primarily attributable to lower demand in the Americas.

Demand was impacted by uncertainty related to the U.S.

presidential election and the high-interest rate environment.

Orders were favorably impacted by $1.5 million from changes in foreign currency exchange rates.

Orders for the nine months ended September 30, 2024 decreased 12.4% to $1,407.2 million from $1,606.5 million for the same period in 2023.

The decrease was primarily attributable to lower demand in the Americas and EURAF segments.

the Americas was impacted by uncertainty related to the U.S.

presidential election and the high-interest rate environment.

Orders were favorably impacted by $1.5 million from changes in foreign currency exchange rates.

As of September 30, 2024, total backlog was $742.1 million, a 19.1% decrease from the December 31, 2023 backlog of $917.2 million, and a 27.8% decrease from the September 30, 2023 backlog of $1,028.1 million.

The decrease in backlog from December 31, 2023, was primarily attributable to lower demand during the year.

Backlog was favorably impacted from changes in foreign currency exchange rates by $1.4 million and $11.4 million from December 31, 2023 and September 30, 2023, respectively.

Results of Operations For The Three and Nine Months Ended September 30, 2024 and 2023:

Orders for the three months ended March 31, 2025 increased 10.1% to $610.3 million from $554.1 million for the same period in 2024.

The increase was primarily attributable to higher demand in the Americas segment and tower product offerings in the EURAF segment.

Orders were unfavorably impacted by $5.9 million from changes in foreign currency exchange rates.

As of March 31, 2025, total backlog was $797.8 million, a 22.7% increase from the December 31, 2024 backlog of $650.2 million, and a 17.9% decrease from the March 31, 2024 backlog of $971.3 million.

Backlog was favorably impacted by $9.3 million and $0.4 million from December 31, 2024 and March 31, 2024, respectively, from changes in foreign currency exchange rates.

Results of Operations for the three months ended March 31, 2025 and 2024:

Three Months Ended

September 30,

Nine Months Ended

September 30,

Percentage Change

Gross profit %

Engineering, selling and

administrative expenses

Engineering, selling, and administrative

Interest expense

Other income (expense) - net

Provision (benefit) for income taxes

*Measure not meaningful

Consolidated net sales for the three months ended September 30, 2024 were relatively flat at $524.8 million compared to $520.9 million in the same period in 2023.

During the three months ended September 30, 2024, there were a lower number of new crane shipments in the EURAF segment, primarily in the Company’s tower crane product offerings.

This was partially offset by a higher number of new crane shipments in the Americas segment.

Non-new machine sales for the three months ended September 30, 2024 increased $14.5 million when compared to the same period for 2023, primarily due to higher used crane sales.

Net sales were favorably impacted by $2.2 million from changes in foreign currency exchange rates.

Consolidated net sales for the nine months ended September 30, 2024 decreased 3.1% to $1,582.0 million from $1,632.0 million for the same period in 2023.

The decrease was primarily attributable to a lower number of tower crane shipments in the EURAF segment.

Non-new machine sales for the nine months ended September 30, 2024 increased $4.8 million when compared to the same period for 2023.

Net sales were favorably impacted by $1.9 million from changes in foreign currency exchange rates.

Gross profit for the three months ended September 30, 2024 was $87.6 million, a decrease of $9.2 million as compared to $96.8 million for the same period in 2023.

The decrease was primarily attributable to unfavorable product mix and lower absorbed costs due to lower manufacturing volume in the EURAF segment.

Gross profit was favorably impacted by $0.4 million from changes in foreign currency exchange rates.

Gross profit percentage decreased in the three months ended September 30, 2024 to 16.7% from 18.6% for the same period in 2023 primarily due to unfavorable product mix and lower absorbed costs due to lower manufacturing volume in the EURAF segment.

Gross profit for the nine months ended September 30, 2024 was $279.8 million, a decrease of $46.3 million as compared to $326.1 million for the same period in 2023.

The decrease was primarily attributable to the lower net sales, unfavorable product mix and lower absorbed costs due to lower manufacturing volume in the EURAF segment.

Gross profit was favorably impacted by $0.4 million from changes in foreign currency exchange rates.

Gross profit percentage decreased during the nine months ended September 30, 2024 to 17.7% from 20.0% for the same period in 2023 primarily due to unfavorable product mix and lower absorbed costs due to lower manufacturing volume in the EURAF segment.

Consolidated net sales for the three months ended March 31, 2025 decreased 4.9% to $470.9 million from $495.1 million for the same period in 2024.

This decrease was primarily attributable to $39.6 million of lower new machine sales in all segments as a result of product mix.

This was partially offset by $15.4 million of higher non-new machine sales primarily in the Americas and EURAF segments.

Net sales were unfavorably impacted by $5.7 million from changes in foreign currency exchange rates.

Gross profit for the three months ended March 31, 2025 decreased 2.9% to $89.8 million from $92.5 million for the same period in 2024.

This decrease was primarily due to lower net sales and lower absorbed costs due to lower manufacturing volume in the Americas segment, partially offset by favorable product mix.

Gross profit was unfavorably impacted by $1.1 million from changes in foreign currency exchange rates.

Gross profit percentage increased in the three months ended March 31, 2025 to 19.1% from 18.7% for the same period in 2024.

This increase was primarily due to favorable product mix, partially offset by lower absorbed costs due to lower manufacturing volume in the Americas segment.

Engineering, Selling, and Administrative Expenses

Engineering, selling, and administrative expenses remained relatively flat at $78.9 million for the three months ended September 30, 2024 as compared to $77.4 million for the same period in 2023.

During the three months ended September 30, 2024, there was $2.6 million of costs associated with a legal matter with the U.S.

EPA, which was partially offset by lower employee related costs.

Engineering, selling, and administrative expenses were unfavorably impacted by $0.4 million from changes in foreign currency exchange rates.

Engineering, selling and administrative expenses remained relatively flat at $238.6 million for the nine months ended September 30, 2024 as compared to $240.1 million for the same period in 2023.

The decrease is primarily due to $2.9 million of lower costs associated with a legal matter with the U.S.

EPA when compared to the prior year.

Engineering, selling, and administrative expenses were unfavorably impacted by $0.4 million from changes in foreign currency exchange rates.

Engineering, selling, and administrative expenses for the three months ended March 31, 2025 increased 9.1% to $82.9 million from $76.0 million for the same period in 2024.

The increase was primarily due to costs for the triennial bauma trade show, higher professional services fees, and higher new product development costs.

Engineering, selling, and administrative expenses were favorably impacted by $1.4 million from changes in foreign currency exchange rates.

Interest Expense

Interest expense for the three months ended September 30, 2024 was $9.6 million as compared to $8.4 million for the same period in 2023.

Interest expense increased year-over-year primarily due to higher average debt during the period and higher interest rates on borrowings from the Company's ABL revolving credit facility.

See further detail at Note 10, “Debt” to the Condensed Consolidated Financial Statements.

Interest expense for the nine months ended September 30, 2024 was $28.4 million as compared to $25.5 million for the same period in 2023.

Interest expense increased year-over-year primarily due to higher average debt during the period and higher interest rates on borrowings from the Company's ABL revolving credit facility.

See further detail at Note 10, “Debt” to the Condensed Consolidated Financial Statements.

Other Income (Expense) - Net

Other income (expense) - net was $(4.9) million during the three months ended September 30, 2024 and $1.1 million for the same period in 2023.

Other income (expense) – net during the three months ended September 30, 2024 was primarily composed of $3.2 million of currency loss and $1.1 million of non-cash losses associated with the refinancing of the Company’s 2026 Notes.

Other income (expense) – net during the three months ended September 30, 2023 was primarily composed of $3.0 million of net foreign currency transaction gains, partially offset by $1.5 million of pension benefit and postretirement health costs.

Other income (expense) - net was $(3.9) million during the nine months ended September 30, 2024 and $(10.0) million for the same period in 2023.

Other income (expense) - net during the nine months ended September 30, 2024 was primarily composed of $2.2 million of pension related costs, $1.4 million of currency loss, and $1.1 million of non-cash losses associated with the refinancing of the Company’s 2026 Notes, partially offset by $0.7 million of interest income.

Other income (expense) – net during the nine months ended September 30, 2023 was primarily composed of a $9.3 million non-cash write-off of foreign currency translation adjustments related to the curtailment of operations in Russia and $4.5 million of pension benefit and postretirement health costs, partially offset by $4.8 million of net foreign currency transaction gains.

Interest expense for the three months ended March 31, 2025 decreased 5.4% to $8.7 million from $9.2 million for the same period in 2024.

The decrease was primarily due to lower average debt and lower interest rates on borrowings from the Company’s ABL revolving credit facility.

Provision (benefit) for Income Taxes

For the three months ended September 30, 2024, and 2023, the Company recorded a benefit for income taxes of $0.3 million and zero, respectively.

The year-over-year increase in the Company’s benefit for income taxes for the three months ended September 30, 2024, is driven by the tax impact of lower income compared to the prior year.

This was partially offset by $2.0 million of discrete tax expense recorded in the current year as compared to $3.1 million of discrete tax benefit recorded in the prior year.

For the nine months ended September 30, 2024, and 2023, the Company recorded a provision for income taxes of $3.2 million and a benefit for income taxes of $1.0 million, respectively.

The increase in the Company’s tax provision for the nine months ended September 30, 2024, relative to the prior year primarily relates to changes in the discrete tax recorded year over year, partially offset by lower income compared to the prior year.

For the three months ended March 31, 2025 and 2024, the Company recorded a benefit for income taxes of $2.5 million and a provision for income taxes of $1.9 million, respectively.

Changes to jurisdictional mix and a year-to-date loss before income taxes resulted in a benefit for income taxes for the three months ended March 31, 2025 as compared to the prior year’s provision for income taxes.

In addition, the Company’s effective tax rate varies from the U.S.

federal statutory rate of 21% due to results of foreign operations that are subject to income taxes at different statutory rates and losses in certain jurisdictions where no tax benefit can be realized.

Segment Operating Performance

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Three Months Ended

September 30,

Nine Months Ended

September 30,

Dollar Change

Percentage Change

Dollar Change

Percentage Change

Segment Operating Income (Loss)

Segment Operating

Income (Loss)

*Measure not meaningful

Americas segment net sales increased 3.7% for the three months ended September 30, 2024 to $287.1 million from $276.8 million for the same period in 2023.

The increase was primarily attributable to higher new crane shipments.

Non-new machine sales for the three months ended September 30, 2024 increased $2.6 million when compared to the same period in 2023, primarily due to higher used crane shipments and remanufacturing work.

Americas segment operating income remained relatively flat at $23.1 million for the three months ended September 30, 2024 as compared to $23.5 million for the same period in 2023.

The decline was primarily due to unfavorable product mix, offset by higher net sales.

Americas segment net sales for the nine months ended September 30, 2024 was $867.0 million as compared to the $860.6 million for the same period in 2023.

The increase was primarily attributable to higher new crane shipments.

Non-new machine sales for the nine months ended September 30, 2024 were flat when compared to the same period in 2023.

Americas segment operating income decreased $5.1 million for the nine months ended September 30, 2024 to $76.5 million from $81.6 million for the same period in 2023.

The decrease was primarily attributable to unfavorable product mix, $2.3 million of higher engineering, selling, and administrative expenses and $0.6 million of higher restructuring costs.

This was partially offset by higher net sales.

EURAF segment net sales decreased 15.8% for the three months ended September 30, 2024 to $126.8 million from $150.6 million for the same period in 2023.

The decrease was primarily attributable to a lower number of new crane shipments, primarily in the Company’s tower crane product offering.

Non-new machine sales for the three months ended September 30, 2024 increased $2.7 million when compared to the same period in 2023, primarily due to an increase in field service work.

Segment net sales was favorably impacted by $1.6 million from changes in foreign currency exchange rates.

EURAF segment operating loss increased $7.2 million for the three months ended September 30, 2024 to $14.9 million from $7.7 million for the same period in 2023.

The increase in operating loss was primarily attributable to the lower net sales and lower absorbed costs due to lower manufacturing volume.

EURAF segment net sales decreased 13.3% for the nine months ended September 30, 2024 to $446.0 million from $514.6 million for the same period in 2023.

The decrease was primarily attributable to a lower number of new crane shipments.

Non-new machine sales for the nine months ended September 30, 2024 declined $6.2 million when compared to the same period in 2023, primarily due to lower aftermarket parts and used crane shipments.

Segment net sales was favorably impacted by $2.3 million from changes in foreign currency exchange rates.

EURAF segment operating loss increased $35.8 million for the nine months ended September 30, 2024 to $33.5 million from operating income of $2.3 million for the same period in 2023.

The increase in operating loss was primarily attributable to the lower net sales and lower absorbed costs due to lower manufacturing volume.

MEAP segment net sales increased 18.6% for the three months ended September 30, 2024 to $110.9 million from $93.5 million for the same period in 2023.

The increase was primarily attributable to $9.1 million of higher non-new machine sales, as a

result of higher used crane shipments.

Segment net sales was favorably impacted by $0.8 million from changes in foreign currency exchange rates.

MEAP segment operating income decreased $2.7 million for the three months ended September 30, 2024 to $10.0 million from $12.7 million for the same period in 2023.

The decrease was primarily attributable to unfavorable product mix.

MEAP segment net sales increased 4.8% for the nine months ended September 30, 2024 to $269.0 million from $256.8 million for the same period in 2023.

The increase was primarily attributable to $11.2 million of higher non-new machine sales, as a result of higher used crane shipments.

Segment net sales was unfavorably impacted by $0.6 million from changes in foreign currency exchange rates.

MEAP segment operating income decreased $12.8 million for the nine months ended September 30, 2024 to $27.5 million from $40.3 million for the same period in 2023.

The decrease was primarily attributable to higher manufacturing costs and unfavorable product mix.

Americas segment net sales decreased 8.4% for the three months ended March 31, 2025 to $259.3 million from $283.2 million for the same period in 2024.

The decrease was primarily attributable to $31.2 million of lower new machine sales, partially offset by $7.5 million of higher non-new machine sales.

Americas segment operating income decreased 40.0% for the three months ended March 31, 2025 to $17.7 million from $29.5 million for the same period in 2024.

The decrease was primarily due to lower net sales, lower absorbed costs due to lower manufacturing volume, and higher engineering, selling, and administrative expenses.

EURAF segment net sales increased 1.8% for the three months ended March 31, 2025 to $145.6 million from $143.0 million for the same period in 2024.

The increase was primarily due to higher tower crane sales and $10.2 million of higher non-new machine sales mainly from higher used crane sales.

This was partially offset by $7.7 million of lower new machine sales, mainly due to a lower number of mobile crane shipments.

Segment net sales were unfavorably impacted by $3.2 million from changes in foreign currency exchange rates.

EURAF segment operating loss remained relatively flat at $11.3 million for the three months ended March 31, 2025 as compared to $11.8 million for the same period in 2024.

Segment operating income was favorably impacted by $0.4 million from changes in foreign currency exchange rates.

MEAP segment net sales remained relatively flat at $66.0 million for the three months ended March 31, 2025 as compared to $68.9 million for the same period in 2024.

Segment net sales were unfavorably impacted by $2.2 million from changes in foreign currency exchange rates.

MEAP segment operating income increased 39.0% for the three months ended March 31, 2025 to $11.4 million from $8.2 million for the same period in 2024.

The increase was primarily due to higher absorbed costs.

Segment operating income was unfavorably impacted by $0.4 million from changes in foreign currency exchange rates.

Financial Condition

A summary of cash flows for the nine months ended September 30, 2024 and 2023 are as follows:

Nine Months Ended

September 30,

Dollar Change

A summary of cash flows for the three months ended March 31, 2025 and 2024 are as follows:

Three Months Ended

Net cash provided by (used for) operating activities

2 unchanged sentences

Cash and cash equivalents

Cash Flows From Operating Activities

Cash flows used for operating activities of $63.2 million for the nine months ended September 30, 2024 increased $86.4 million from cash flows provided by operating activities of $23.2 million for the same period in 2023.

The increase in net cash used for operating activities was primarily due to lower net income (loss) adjusted for non-cash items and an increase in net working capital primarily related to higher inventory.

C ash Flows From Operating Activities

Net cash provided by operating activities of $12.9 million for the three months ended March 31, 2025 increased $43.5 million from net cash used for operating activities of $30.6 million for the same period in 2024.

This increase in net cash provided by operating activities was primarily due to $55.2 million of lower cash use from changes in operating assets and liabilities.

The lower cash use was primarily due to $23.1 million of lower cash outflows for inventory, $21.8 million of additional cash provided by accounts payable, accrued expenses, and other liabilities, and $11.7 million of additional cash provided by accounts receivable when compared to the prior year.

This was partially offset by lower net income (loss) adjusted for non-cash items.

Cash Flows From Investing Activities

Net cash used for investing activities of $29.1 million for the nine months ended September 30, 2024 decreased $25.5 million from $54.6 million for the same period in 2023.

The decrease in net cash used for investing activities was due to $25.5 million of lower capital expenditures.

Net cash used for investing activities of $23.6 million for the three months ended March 31, 2025 increased $11.6 million from $12.0 million for the same period in 2024.

The increase in net cash used for investing activities was primarily due to $12.9 million of cash outflows related to the purchase of certain assets and territory from Ring Power Corporation.

Cash Flows From Financing Activities

Net cash provided by financing activities of $81.0 million for the nine months ended September 30, 2024 increased $73.6 million from $7.4 million for the same period in 2023.

The increase in net cash provided by financing activities was primarily due to $77.4 million of additional proceeds from the revolving credit facility and a $9.6 million increase of proceeds from other debt – net when compared to the prior year.

This was partially offset by $6.7 million of payments for other financing activities and $6.2 million of payments for debt issuance costs related to the refinancing of the ABL Revolving Credit Facility and 2026 Notes.

Net cash provided by financing activities of $3.2 million for the three months ended March 31, 2025 decreased $37.0 million from $40.2 million for the same period in 2024.

The decrease in net cash provided by financing activities was primarily driven by $15.0 million of payments on the revolving credit facility in the current year and $25.8 million of lower proceeds from other debt - net when compared to the prior year.

This is partially offset by $3.9 million of additional proceeds from the revolving credit facility when compared to the prior year.

Liquidity and Capital Resources

The Company’s liquidity position as of September 30, 2024, December 31, 2023 and September 30, 2023 is summarized as follows:

September 30, 2024

The Company’s liquidity position as of March 31, 2025 and December 31, 2024 is summarized as follows:

March 31, 2025

December 31, 2024

September 30, 2023

Cash and cash equivalents

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The Company believes its liquidity and expected cash flows from operations are sufficient to meet expected working capital, capital expenditure, and other general ongoing operational needs in the subsequent twelve months.

The Company has historically relied primarily on cash flows from operations, borrowings under revolving credit facilities and overdraft facilities, issuances of notes, and other forms of debt financing as its sources of cash.

The maximum availability under the Company’s current ABL Revolving Credit Facility is $325.0 million.

The Company has historically relied primarily on cash flows from operations, borrowings under revolving credit facilities, issuances of notes and other forms of debt financing as its sources of cash.

The maximum availability under the Company’s current ABL Revolving Credit Facility is $325.0 million, of which $100.0 million is available to our German subsidiary.

The borrowing capacity under the ABL Revolving Credit Facility is based on the value of inventory, accounts receivable, and certain fixed assets of the Loan Parties.

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The liens securing the ABL Revolving Credit Facility are senior in priority to the second-priority liens securing the obligations under the 2031 Notes and the related guarantees.

The ABL Revolving Credit Facility has a maturity date of September 18, 2029, and includes a $75.0 million letter of credit sub-facility, $10.0 million of which is available to the German Borrower.

The ABL Revolving Credit Facility has a maturity date of September 18, 2029, and includes a $75.0 million letter of credit sub-facility, $10.0 million of which is available to the Company's German subsidiary that is a borrower under this facility.

In addition to the ABL Revolving Credit Facility, the Company has access to committed and non-committed lines of credit to fund working capital in Europe and China.

There are six lines of credit, of which five are denominated in Euros totaling €37.0 million and one denominated in Chinese Yuan for ¥30.0 million.

dollar availability as of September 30, 2024 for the six lines of credit is $45.5 million, with $39.5 million outstanding.

Outstanding debt as of September 30, 2024 and December 31, 2023 is summarized as follows:

September 30, 2024

There are six facilities, of which five facilities are denominated in Euros totaling €37.0 million and one facility denominated in Chinese Yuan totaling ¥30.0 million.

dollar availability as of March 31, 2025 for the six overdraft facilities is $44.2 million, with $16.8 million outstanding.

Outstanding debt as of March 31, 2025 and December 31, 2024 is summarized as follows:

March 31, 2025

December 31, 2024

Borrowings under senior secured asset based revolving credit facility

Senior secured second lien notes due 2026

Borrowing under senior secured asset based

revolving credit facility

Senior secured second lien notes due 2031

Deferred financing costs

Short-term borrowings and current portion

of long-term debt

Short-term borrowings and current portion of long-term

Long-term debt

Both the ABL Revolving Credit Facility and 2031 Notes include customary covenants and events of default.

Refer to Note 10, “Debt,” to the Condensed Consolidated Financial Statements for additional discussions of covenants for the ABL Revolving Credit Facility and 2031 Notes.

Refer to Note 11, “Debt,” to the Condensed Consolidated Financial Statements for additional discussions of the covenants for the ABL Revolving Credit Facility and the 2031 Notes.

As of March 31, 2025, the Company was in compliance with all affirmative and negative covenants in its debt instruments, inclusive of the financial covenants pertaining to the ABL Revolving Credit Facility and 2031 Notes.

Based upon management’s current plans and outlook, the Company believes it will be able to comply with these covenants during the subsequent twelve months.

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Adjusted ROIC is determined by dividing adjusted net operating profit after tax (“Adjusted NOPAT”) for the trailing twelve-months ended by the five-quarter average of invested capital.

Adjusted NOPAT is calculated for each quarter by taking operating income plus the addback of amortization of intangible assets, and the addback or subtraction of restructuring expenses, other non-recurring items – net, and provision for income taxes, which is determined using a 15% tax rate.

Adjusted NOPAT is calculated by taking operating income plus the addback of amortization of intangible assets and the addback or subtraction of restructuring expenses, other non-recurring items - net, and provision for income taxes, which is determined using a 15% tax rate.

Invested capital is defined as net total assets less cash and cash equivalents and income tax assets - net plus short-term and long-term debt.

Income taxes are defined as income tax payables/receivables, net deferred tax assets/liabilities, and uncertain tax positions.

The Company’s Adjusted ROIC as of September 30, 2024 was 6.2%.

Below is the calculation of Adjusted ROIC as of September 30, 2024.

The Company’s Adjusted ROIC as of March 31, 2025 was 5.1%.

Below is the calculation of Adjusted ROIC as of March 31, 2025.

Three Months Ended

September 30, 2024

June 30, 2024

March 31, 2025

December 31, 2024

September 30, 2024

June 30, 2024

Trailing Twelve Months

4 unchanged sentences

Adjusted operating income

Provision for income taxes

Provision for income taxes at 15%

Adjusted NOPAT

September 30, 2024

June 30, 2024

March 31, 2025

1 unchanged sentence

September 30, 2024

June 30, 2024

March 31, 2024

5-Quarter Average

2 unchanged sentences

Cash and cash equivalents

Short-term borrowings and current portion of long-term debt

Short-term borrowings and current portion

of long-term debt

Long-term debt

2 unchanged sentences

Adjusted ROIC

(1) Other non-recurring items - net for the three months ended September 30, 2024 relate to $2.6 million of costs associated with a legal matter with the U.S.

(1) Other non-recurring items – net for the trailing twelve months relate to $8.9 million of costs associated with a legal matter with the U.S.

EPA and $0.1 million of one-time costs.

Refer to the Company’s previously filed Form 10-K and Form 10-Qs for a description of other non-recurring items - net for the three months ended June 30, 2024, March 31, 2024, and December 31, 2023.

Refer to the Company’s previously filed Form 10-K and Form 10-Qs for a description of other non-recurring items - net for the three months ended December 31, 2024, September 30, 2024, and June 30, 2024.

EBITDA and Adjusted EBITDA

The Company defines EBITDA as net income (loss) before interest, taxes, depreciation, and amortization.

The Company defines adjusted EBITDA as EBITDA plus the addback or subtraction of restructuring expense, other (income) expense - net, and other non-recurring items - net.

The reconciliation of net income (loss) to EBITDA, and further to adjusted EBITDA for the three and nine months ended September 30, 2024 and 2023 and trailing twelve months is summarized as follows.

The Company defines adjusted EBITDA as EBITDA plus the addback or subtraction of restructuring expense, other income (expense) - net, and certain other non-recurring items.

The reconciliation of net income (loss) to EBITDA and further to adjusted EBITDA for the three months ended March 31, 2025 and 2024, is summarized as follows:

Three Months Ended

September 30,

Nine Months Ended

September 30,

Trailing Twelve

10 unchanged sentences

Adjusted EBITDA margin percentage

(1) Other non-recurring items - net for the three months ended September 30, 2024 relate to $2.6 million of costs associated with a legal matter with the U.S.

Other non-recurring items - net for the nine months ended September 30, 2024 relate to $7.9 million of costs associated with a legal matter with the U.S.

EPA and $0.2 million of one-time costs.

Other non-recurring items - net for the three months ended September 30, 2023 relate to $0.2 million of one-time costs.

Other non-recurring items - net for the nine months ended September 30, 2023 relate to $10.8 million of costs associated with a legal matter with the U.S.

EPA and $0.2 million of one-time costs.

(1) Other non-recurring items - net for the three months ended March 31, 2024 relate to $0.1 million of one-time costs.

Other non-recurring items - net for the trailing twelve months relate to $8.9 million of costs associated with a legal matter with the U.S.

EPA and $0.1 million of one-time costs.

(2) Other (income) expense - net includes net foreign currency gains (losses), other components of net periodic pension costs, and other items in the three, nine, and trailing twelve months ended September 30, 2024 and the three and nine months ended September 30, 2023.

Other expense – net for the nine and trailing twelve months ended September 30, 2023 includes a $9.3 million write-off of non-cash foreign currency translation adjustments from the curtailment of operations in Russia.

(2) Other (income) expense - net includes net foreign currency gains (losses), other components of net periodic pension costs, and other items in the three and trailing twelve months ended March 31, 2025 and the three months ended March 31, 2024.

Free Cash Flows

Free cash flows is defined as net cash provided by (used for) operating activities less cash outflow from investment in capital expenditures.

The reconciliation of net cash used for operating activities to f ree cash flows for the nine months ended September 30, 2024 and 2023 is summarized as follows.

Nine Months Ended

September 30,

The reconciliation of net cash provided by (used for) operating activities to free cash flows for the three months ended March 31, 2025 and 2024 are summarized as follows:

Three Months Ended

Net cash provided by (used for) operating activities

9 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