MANITOWOC CO INC 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 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 Condition and Results of Operations unless otherwise indicated. Cautionary Statements Regarding Forward-Looking Information All of the statements in this Quarterly Report on Form 10-Q, other than historical facts, are forward-looking statements, including, without limitation, the statements made in the “Management's Discussion and Analysis of Financial Condition and Results of Operations.” As a general matter, forward-looking statements are those focused upon anticipated events or trends, expectations and beliefs relating to matters that are not historical in nature. The words “could,” “should,” “may,” “feel,” “anticipate,” “aim,” “preliminary,” “expect,” “believe,” “estimate,” “intend,” “intent,” “plan,” “will,” “foresee,” “project,” “forecast,” or the negative thereof or variations thereon, and similar expressions identify forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for these forward-looking statements. In order to comply with the terms of the safe harbor, the Company notes that forward-looking statements are subject to known and unknown risks, uncertainties and other factors relating to the Company's operations and business environment, all of which are difficult to predict and many of which are beyond the control of the Company. These known and unknown risks, uncertainties and other factors could cause actual results to differ materially from those matters expressed in, anticipated by or implied by such forward-looking statements. These risks, uncertainties, and other factors include, but are not limited to: • 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, 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, have 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; • changes in revenues, margins and costs; 22 • the ability to increase operational efficiencies across Manitowoc and to capitalize on those efficiencies; • the ability to generate cash and manage working capital consistent with Manitowoc’s stated goals; • work stoppages, labor negotiations, labor rates and labor costs; • the Company’s ability to attract and retain qualified personnel; • changes in the capital and financial markets; • the ability to complete and appropriately integrate acquisitions, strategic alliances, joint ventures or other significant transactions; • issues associated with the availability and viability of suppliers; • the ability to significantly improve profitability; • realization of anticipated earnings enhancements, cost savings, strategic options and other synergies, and the anticipated timing to realize those enhancements, savings, synergies and options; • the replacement cycle of technologically obsolete products; • foreign currency fluctuation and its impact on reported results; • risks associated with data security and technological systems and protections; • the ability to direct resources to those areas that will deliver the highest returns; • risks associated with manufacturing or design defects; • natural disasters, other weather events, pandemics and other public health crises disrupting commerce in one or more regions of the world; • issues relating to the ability to timely and effectively execute on manufacturing strategies, general efficiencies and capacity utilization of the Company’s facilities; • the ability to focus and capitalize on product and service quality and reliability; • issues associated with the quality of materials, components and products sourced from third parties and the ability to successfully resolve those issues; • changes in laws throughout the world, including governmental regulations on climate change; • the inability to defend against potential infringement claims on intellectual property rights; • the ability to sell products and services through distributors and other third parties; • issues affecting the effective tax rate for the year; • acts of terrorism; and • other risks and factors detailed in Manitowoc's 2024 Annual Report on Form 10-K, as such may be amended or supplemented in Manitowoc's subsequently filed Quarterly Reports on Form 10-Q (including this report) and its other filings with the United States Securities and Exchange Commission. These statements reflect the current views and assumptions of management with respect to future events. Except to the extent required by the federal securities laws, the Company does not undertake, and hereby disclaims, any duty to update these forward-looking statements, even though its situation and circumstances may change in the future. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this report. 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. 23 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. During the 90-day suspension, the United States government announced non-binding trade deals with certain countries including the European Union, Japan, and the United Kingdom, among others. The trade deals include varying baseline tariffs and specific industry exemptions or incremental tariffs. Approximately 50% of the Company's total net sales are generated in the United States. While most of the Company's products are manufactured domestically, tariffs may affect demand, raise product costs, or disrupt the Company's supply chain. Considerable uncertainty regarding industry specific exemptions and the final resolution of tariffs with other countries remain, however, the Company is assessing the impact and what measures can be taken to mitigate the 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. Management uses orders and backlog for capacity and resource planning. The Company believes this information is useful to investors to provide an indication of future revenues. Backlog represents the dollar value of orders which are expected to be recognized in net sales in the future. 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 June 30, 2025 increased 6.0% to $453.9 million from $428.4 million for the same period in 2024. The increase was primarily attributable to higher demand in the Americas segment and for tower product offerings in the EURAF segment. Orders were favorably impacted by $8.6 million from changes in foreign currency exchange rates. Orders for the six months ended June 30, 2025 increased 8.3% to $1,064.2 million from $982.5 million for the same period in 2024. The increase was primarily attributable to higher demand in the Americas segment and for tower product offerings in the EURAF segment. Orders were favorably impacted by $2.7 million from changes in foreign currency exchange rates. As of June 30, 2025, total backlog was $729.3 million, a 12.2% increase from the December 31, 2024 backlog of $650.2 million, and a 12.8% decrease from the June 30, 2024 backlog of $836.3 million. Backlog was favorably impacted from changes in foreign currency exchange rates by $26.6 million and $20.8 million from December 31, 2024 and June 30, 2024, respectively. Results of Operations For The Three and Six Months Ended June 30, 2025 and 2024: Three Months Ended June 30, Six Months Ended June 30, 2025 2024 Percentage Change 2025 2024 Percentage Change Net sales 539.5 562.1 (4.0 )% 1,010.4 1,057.2 (4.4 )% Gross profit 99.0 99.7 (0.7 )% 188.8 192.2 (1.8 )% Gross profit % 18.4 % 17.7 % 18.7 % 18.2 % Engineering, selling and administrative expenses 87.4 83.7 4.4 % 170.3 159.7 6.6 % Interest expense 9.2 9.6 (4.2 )% 17.9 18.8 (4.8 )% Other income (expense) - net 1.0 0.3 * (4.0 ) 1.0 * Provision (benefit) for income taxes (0.2 ) 1.6 * (2.7 ) 3.5 * Net Sales Consolidated net sales for the three months ended June 30, 2025 decreased 4.0% to $539.5 million from $562.1 million in the same period in 2024. This decrease was primarily attributable to $28.7 million of lower new machine sales in the Company's mobile product line in the EURAF segment and $23.6 million of lower new machine sales in the MEAP segment primarily due to lower crane shipments. This was partially offset by $13.5 million of higher new machine sales in the Americas segment primarily due to favorable product mix and $17.0 million of higher non-new machine sales in the Americas and EURAF segments. Net sales were favorably impacted by $8.4 million from changes in foreign currency exchange rates. Consolidated net sales for the six months ended June 30, 2025 decreased 4.4% to $1,010.4 million from $1,057.2 million for the same period in 2024. This decrease was primarily attributable to $49.0 million of lower new machine sales in the Company's mobile product line in the EURAF segment due to lower crane shipments, $24.2 million of lower new machine sales in the MEAP segment due to unfavorable product mix, and $17.7 million of lower new machine sales in the Americas 24 segment due to unfavorable product mix. This was partially offset by $14.5 million of higher new machine sales in the Company's tower crane product line in the EURAF segment and $33.8 million of higher non-new machine sales in the Americas and EURAF segments. Net sales were favorably impacted by $2.6 million from changes in foreign currency exchange rates. Gross Profit Gross profit for the three months ended June 30, 2025 remained relatively flat at $99.0 million as compared to $99.7 million for the same period in 2024. The lower net sales and lower absorbed costs due to lower manufacturing volume in the Americas segment were partially offset by favorable product mix. Gross profit was favorably impacted by $1.2 million from changes in foreign currency exchange rates. Gross profit percentage for the three months ended June 30, 2025 remained relatively flat at 18.4% as compared to 17.7% for the same period in 2024. Favorable product mix was partially offset by lower absorbed costs due to lower manufacturing volume in the Americas segment. Gross profit for the six months ended June 30, 2025 decreased 1.8% to $188.8 million from $192.2 million for the same period in 2024. The decrease was primarily attributable to the 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 favorably impacted by $0.1 million from changes in foreign currency exchange rates. Gross profit percentage for the six months ended June 30, 2025 remained relatively flat at 18.7% from 18.2% for the same period in 2024. Favorable product mix was 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 for the three months ended June 30, 2025 increased 4.4% to $87.4 million from $83.7 million for the same period in 2024. The increase was primarily due to costs for the triennial bauma trade show and higher employee related costs. This was partially offset by a $5.3 million charge related to a legal matter with the U.S. Environmental Protection Agency ("EPA") in the prior year. Engineering, selling, and administrative expenses were unfavorably impacted by $1.8 million from changes in foreign currency exchange rates. Engineering, selling and administrative expenses for the six months ended June 30, 2025 increased 6.6% to $170.3 million from $159.7 million for the same period in 2024. The increase was primarily due to costs for the triennial bauma trade show, higher employee related costs, and higher new product development costs This was partially offset by a $5.3 million charge related to a legal matter with the EPA in the prior year. Engineering, selling, and administrative expenses were unfavorably impacted by $0.4 million from changes in foreign currency exchange rates. Interest Expense Interest expense for the three months ended June 30, 2025 was $9.2 million as compared to $9.6 million for the same period in 2024. Interest expense decreased year-over-year primarily due to lower interest rates on borrowings from the Company's ABL revolving credit facility. See further detail at Note 11, “Debt” to the Condensed Consolidated Financial Statements. Interest expense for the six months ended June 30, 2025 was $17.9 million as compared to $18.8 million for the same period in 2024. Interest expense decreased year-over-year primarily due to lower interest rates on borrowings from the Company's ABL revolving credit facility. See further detail at Note 11, “Debt” to the Condensed Consolidated Financial Statements. Other Income (Expense) - Net Other income was $1.0 million during the three months ended June 30, 2025 and $0.3 million for the same period in 2024. Other income during the three months ended June 30, 2025 was primarily composed of $2.0 million of currency gain. This was partially offset by $0.5 million of pension related costs and $0.6 million of interest related to settlement of the matter with the U.S. Environmental Protection Agency ("EPA"). Other income during the three months ended June 30, 2024 was primarily composed of $0.7 million of currency gain, partially offset by $0.7 million of pension related costs. Other income (expense) - net was $(4.0) million during the six months ended June 30, 2025 and $1.0 million for the same period in 2024. Other income (expense) - net during the six months ended June 30, 2025 was primarily composed of $2.9 million of currency loss and $1.0 million of pension related costs and $0.6 million of interest related to settlement of the matter with the EPA. Other income (expense) – net during the six months ended June 30, 2024 was primarily composed of $1.8 million of currency gain, partially offset by $1.5 million of pension related costs. 25 Provision (Benefit) for Income Taxes For the three months ended June 30, 2025, and 2024, the Company recorded a benefit for income taxes of $0.2 million and a provision for income taxes of $1.6 million, respectively. For the six months ended June 30, 2025 and 2024, the Company recorded a benefit for income taxes of $2.7 million and a provision for income taxes of $3.5 million, respectively. Changes to jurisdictional mix and a year-to-date loss before income taxes resulted in a benefit for income taxes in the three and six months ended June 30, 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 The Company manages its business primarily on a geographic basis. The Company has three reportable segments: the Americas segment, EURAF segment and MEAP segment. Further information regarding the Company’s reportable segments can be found in Note 17, “Segments,” to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q. Three Months Ended June 30, Six Months Ended June 30, 2025 2024 Dollar Change Percentage Change 2025 2024 Dollar Change Percentage Change Net Sales Americas $ 323.2 $ 296.7 $ 26.5 8.9 % $ 582.5 $ 579.9 $ 2.6 0.4 % EURAF 152.5 176.2 (23.7 ) (13.5 )% 298.1 319.2 (21.1 ) (6.6 )% MEAP 63.8 89.2 (25.4 ) (28.5 )% 129.8 158.1 (28.3 ) (17.9 )% Segment Operating Income (Loss) Americas $ 26.1 $ 23.9 $ 2.2 9.2 % $ 43.8 $ 53.4 $ (9.6 ) (18.0 )% EURAF (14.6 ) (6.8 ) (7.8 ) * (25.9 ) (18.6 ) (7.3 ) * MEAP 9.8 9.3 0.5 5.4 % 21.2 17.5 3.7 21.1 % *Measure not meaningful Americas Americas segment net sales increased 8.9% for the three months ended June 30, 2025 to $323.2 million from $296.7 million for the same period in 2024. The increase was primarily attributable to $13.5 million of higher new machine sales due to favorable product mix, partially offset by lower new crane shipments. Non-new machine sales for the three months ended June 30, 2025 increased $12.9 million when compared to the same period in 2024, primarily due to higher used crane shipments. Americas segment operating income increased $2.2 million for the three months ended June 30, 2025 to $26.1 million from $23.9 million for the same period in 2024. The increase was primarily attributable to higher net sales and favorable product mix. This was partially offset by lower absorbed costs due to lower manufacturing volume. Americas segment net sales remained relatively flat for the six months ended June 30, 2025 at $582.5 million as compared to $579.9 million for the same period in 2024. Non-new machine sales for the six months ended June 30, 2025 increased $20.4 million when compared to the same period in 2024, primarily due to higher used crane shipments. This was partially offset by $17.7 million in lower new machine sales due to unfavorable product mix. Americas segment operating income decreased $9.6 million for the six months ended June 30, 2025 to $43.8 million from $53.4 million for the same period in 2024. The decrease was primarily attributable lower absorbed costs due to lower manufacturing volume, partially offset by favorable product mix. EURAF EURAF segment net sales decreased 13.5% for the three months ended June 30, 2025 to $152.5 million from $176.2 million for the same period in 2024. The decrease was primarily attributable to $28.7 million of lower mobile crane sales. This was partially offset by $2.0 million of higher tower cranes shipments and $4.1 million of higher non-new machine sales. Segment net sales were favorably impacted by $7.9 million from changes in foreign currency exchange rates. 26 EURAF segment operating loss increased $7.8 million for the three months ended June 30, 2025 to $14.6 million from $6.8 million for the same period in 2024. The increase in operating loss was primarily attributable to the lower net sales and higher engineering, selling and administrative expenses due to the triennial bauma trade show and higher new product development costs. Segment operating income was unfavorably impacted by $0.7 million from changes in foreign currency exchange rates. EURAF segment net sales decreased 6.6% for the six months ended June 30, 2025 to $298.1 million from $319.2 million for the same period in 2024. The decrease was primarily attributable to $49.0 million of lower mobile cranes shipments. This was partially offset by $14.5 million of higher tower crane shipments and $13.4 million of higher non-new machine sales. Segment net sales were favorably impacted by $4.7 million from changes in foreign currency exchange rates. EURAF segment operating loss increased $7.3 million for the six months ended June 30, 2025 to $25.9 million from $18.6 million for the same period in 2024. The increase in operating loss was primarily attributable to the lower net sales and higher engineering, selling and administrative expenses due to the triennial bauma trade show and higher new product development costs. Segment operating income was unfavorably impacted by $0.3 million from changes in foreign currency exchange rates. MEAP MEAP segment net sales decreased 28.5% for the three months ended June 30, 2025 to $63.8 million from $89.2 million for the same period in 2024. The decrease was primarily attributable to $23.6 million of lower new machine sales due to unfavorable product mix and $2.8 million of lower non-new machine sales. Segment net sales were favorably impacted by $0.7 million from changes in foreign currency exchange rates. MEAP segment operating income remained relatively flat for the three months ended June 30, 2025 at $9.8 million compared to $9.3 million for the same period in 2024, due to product mix. Segment operating income was favorably impacted by $0.1 million from changes in foreign currency exchange rates. MEAP segment net sales decreased 17.9% for the six months ended June 30, 2025 to $129.8 million from $158.1 million for the same period in 2024. The decrease was primarily attributable to $24.2 million of lower new machine sales due to unfavorable product mix and $4.1 million of lower non-new machine sales. Segment net sales were unfavorably impacted by $1.5 million from changes in foreign currency exchange rates. MEAP segment operating income increased $3.7 million for the six months ended June 30, 2025 to $21.2 million from $17.5 million for the same period in 2024. The increase was primarily due to higher absorbed costs due to higher manufacturing volume. Segment operating income was unfavorably impacted by $0.2 million from changes in foreign currency exchange rates. Financial Condition Cash Flows A summary of cash flows for the six months ended June 30, 2025 and 2024 are as follows: Six Months Ended June 30, 2025 2024 Dollar Change Net cash used for operating activities $ (54.8 ) $ (19.6 ) $ (35.2 ) Net cash used for investing activities (29.5 ) (21.6 ) (7.9 ) Net cash provided by financing activities 67.0 45.7 21.3 Cash and cash equivalents 32.9 38.1 (5.2 ) Cash Flows From Operating Activities Cash flows used for operating activities of $54.8 million for the six months ended June 30, 2025 increased $35.2 million from $19.6 million for the same period in 2024. The increase in net cash used for operating activities was primarily due to lower net income adjusted for non-cash items and $24.5 million of higher cash outflows related to net working capital. The higher cash outflow in net working capital was primarily driven by additional cash outflows of $34.1 million for accounts receivable, $22.4 million for other assets, and $11.3 million for inventory. This was partially offset by $59.3 million of additional cash inflows for accounts payable. Cash Flows From Investing Activities Net cash used for investing activities of $29.5 million for the six months ended June 30, 2025 increased $7.9 million from $21.6 million for the same period in 2024. The increase in net cash used for investing activities was primarily due to $12.9 27 million of cash outflows related to the purchase of certain assets and territory from Ring Power Corporation and $3.3 million of lower proceeds from the sale of property, plant, and equipment. This was partially offset by $8.3 million of lower capital expenditures. Cash Flows From Financing Activities Net cash provided by financing activities of $67.0 million for the six months ended June 30, 2025 increased $21.3 million from $45.7 million for the same period in 2024. The increase in net cash provided by financing activities was primarily due to $24.5 million of additional net borrowings under the revolving credit facility. Liquidity and Capital Resources The Company’s liquidity position as of June 30, 2025, December 31, 2024 and June 30, 2024 is summarized as follows: June 30, 2025 December 31, 2024 June 30, 2024 Cash and cash equivalents $ 32.9 $ 48.0 $ 38.1 Revolver borrowing capacity 325.0 325.0 275.0 Other debt availability 47.8 42.4 43.8 Less: Borrowings on revolver (156.9 ) (79.0 ) (107.5 ) Less: Borrowings on other debt (7.8 ) (12.1 ) (20.3 ) Less: Outstanding letters of credit (3.4 ) (3.4 ) (3.4 ) Total liquidity $ 237.6 $ 320.9 $ 225.7 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. Cash Sources 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, 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. The Loan Parties’ obligations under the ABL Revolving Credit Facility are secured on a first-priority basis, subject to certain exceptions and permitted liens, by substantially all of the personal property and fee-owned real property of the Loan Parties. 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 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 facilities, of which five facilities are denominated in Euros totaling €37.0 million and one facility denominated in Chinese Yuan totaling ¥30.0 million. Total U.S. dollar availability as of June 30, 2025 for the six facilities was $47.8 million, with $7.8 million outstanding. 28 Debt Outstanding debt as of June 30, 2025 and December 31, 2024 is summarized as follows: June 30, 2025 December 31, 2024 Borrowings under senior secured asset based revolving credit facility $ 156.9 $ 79.0 Senior secured second lien notes due 2031 300.0 300.0 Other debt 18.4 16.4 Deferred financing costs (4.8 ) (5.2 ) Total debt 470.5 390.2 Short-term borrowings and current portion of long-term debt (10.7 ) (13.1 ) Long-term debt $ 459.8 $ 377.1 Both the ABL Revolving Credit Facility and 2031 Notes include customary covenants and events of default. Refer to Note 11, “Debt,” to the Condensed Consolidated Financial Statements for additional discussions of covenants under the ABL Revolving Credit Facility and 2031 Notes. As of June 30, 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. From time to time, the Company seeks to opportunistically raise capital in the debt capital markets and bank credit markets. Non-GAAP Measures The Company uses EBITDA, adjusted EBITDA, adjusted operating income, Adjusted ROIC and free cash flows, which are financial measures that are not prepared in accordance with GAAP, as additional metrics to evaluate the Company’s performance. The Company believes these non-GAAP measures provide important supplemental information to readers regarding business trends that can be used in evaluating its results because these financial measures provide a consistent method of comparing financial performance and are commonly used by investors to assess performance. These non-GAAP financial measures should be considered together with, and are not substitutes for, the GAAP financial information provided herein. Adjusted ROIC Adjusted ROIC measures how efficiently the Company uses invested capital in its operations. Adjusted ROIC is not a measure defined by GAAP and the Company’s methodology for determining Adjusted ROIC may vary from the methodology used by other companies. Management and the Board of Directors use Adjusted ROIC as a measure to assess operational performance and capital allocation. The Company believes this information is useful to investors as it provides a measure of value creation as a percentage of capital invested. Adjusted ROIC is determined by dividing adjusted net operating profit after tax (“Adjusted NOPAT”) for the trailing twelve-months 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. 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 June 30, 2025 was 4.2%. Below is the calculation of Adjusted ROIC as of June 30, 2025. 29 Three Months Ended June 30, 2025 March 31, 2025 December 31, 2024 September 30, 2024 Trailing Twelve Months Operating income $ 9.8 $ 5.3 $ 16.2 $ 7.5 $ 38.8 Amortization of intangible assets 0.8 0.8 0.7 0.7 3.0 Restructuring expense 1.0 0.8 1.2 0.5 3.5 Other non-recurring items - net (1) — — 1.0 2.6 3.6 Adjusted operating income 11.6 6.9 19.1 11.3 48.9 Provision for income taxes (1.7 ) (1.0 ) (2.9 ) (1.7 ) (7.3 ) Adjusted NOPAT $ 9.9 $ 5.9 $ 16.2 $ 9.6 $ 41.6 June 30, 2025 March 31, 2025 December 31, 2024 September 30, 2024 June 30, 2024 5-Quarter Average Total assets $ 1,883.8 $ 1,763.8 $ 1,660.0 $ 1,776.7 $ 1,747.9 $ 1,766.4 Total liabilities (1,202.5 ) (1,112.2 ) (1,019.9 ) (1,169.1 ) (1,155.6 ) (1,131.9 ) Net total assets 681.3 651.6 640.1 607.6 592.3 634.6 Cash and cash equivalents (32.9 ) (41.4 ) (48.0 ) (22.9 ) (38.1 ) (36.7 ) Short-term borrowings and current portion of long-term debt 10.7 17.6 13.1 40.5 21.4 20.7 Long-term debt 459.8 381.4 377.1 426.7 406.3 410.3 Income tax assets - net (68.1 ) (69.4 ) (66.9 ) (10.1 ) (4.4 ) (43.8 ) Invested capital $ 1,050.8 $ 939.8 $ 915.4 $ 1,041.8 $ 977.5 $ 985.1 Adjusted ROIC 4.2 % (1) Other non-recurring items – net for the trailing twelve months relate to $3.6 million of costs associated with a legal matter with the EPA. 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 and September 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 certain other non-recurring items. The reconciliation of net income (loss) to EBITDA, and further to adjusted EBITDA for the three and six months ended June 30, 2025 and 2024 and trailing twelve months is summarized as follows. Three Months Ended June 30, Six Months Ended June 30, Trailing Twelve 2025 2024 2025 2024 Months Net income (loss) $ 1.5 $ 1.6 $ (4.8 ) $ 6.1 $ 44.9 Interest expense and amortization of deferred financing fees 9.5 10.0 18.6 19.5 38.8 Provision (benefit) for income taxes (0.2 ) 1.6 (2.7 ) 3.5 (50.3 ) Depreciation expense 14.7 14.6 29.5 29.3 60.2 Amortization of intangible assets 0.8 0.8 1.6 1.5 3.0 EBITDA 26.3 28.6 42.2 59.9 96.6 Restructuring expense 1.0 2.3 1.8 2.9 3.5 Other non-recurring items - net (1) — 5.4 — 5.5 3.6 Other (income) expense - net (2) (1.0 ) (0.3 ) 4.0 (1.0 ) 5.4 Adjusted EBITDA $ 26.3 $ 36.0 $ 48.0 $ 67.3 $ 109.1 Adjusted EBITDA margin percentage 4.9 % 6.4 % 4.8 % 6.4 % 4.9 % (1) Other non-recurring items - net for the three months ended June 30, 2024 relate to $5.3 million of costs associated with a legal matter with the EPA and $0.1 million of one-time costs. Other non-recurring items - net for the six months ended June 30, 2024 relate to $5.3 million of costs associated with a legal matter with the EPA and $0.2 million of one-time costs. 30 (2) Other (income) expense - net includes net foreign currency (gains) losses, other components of net periodic pension costs, and other items in the three, six, and trailing twelve months ended June 30, 2025 and the three and six months ended June 30, 2024. Free Cash Flows Free cash flows is defined as net cash 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 six months ended June 30, 2025 and 2024 is summarized as follows. Six Months Ended June 30, 2025 2024 Net cash used for operating activities $ (54.8 ) $ (19.6 ) Capital expenditures (16.8 ) (25.1 ) Free cash flows $ (71.6 ) $ (44.7 ) Critical Accounting Policies The Company's critical accounting policies have not materially changed since the 2024 Annual Report on Form 10-K was filed. Refer to the Critical Accounting Policies in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Annual Report on Form 10-K for the year ended December 31, 2024 for information about the Company’s policies, methodology and assumptions related to critical accounting policies. Item 3. Quantitative and Qualita tive Disclosure about Market Risk The Company’s market risk disclosures have not materially changed since the 2024 Annual Report on Form 10-K was filed. The Company’s quantitative and qualitative disclosures about market risk are incorporated by reference from Part II, Item 7A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.