What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-06 compared with 2026-05-06 · 98 added, 97 removed, 225 unchanged (46% of the section changed)

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We estimate approximately 60% to 65% of our fiscal 2025 net sales were associated with the repair and replacement of municipal water infrastructure, approximately 25% to 30% were related to residential construction activity and approximately 10% were related to natural gas utilities and industrial applications.

On February 9, 2026, Ms.

Marietta Edmunds Zakas retired as the Company’s Chief Executive Officer and as a member of the Company’s Board of Directors.

Paul McAndrew started serving as the Company’s President and Chief Executive Officer on this date.

In October 2023, the Israel-Hamas war caused a temporary shutdown in our facility in Ariel, Israel.

We reopened the facility in November 2023, but the war caused supply chain challenges that reduced the manufacturing efficiencies for our products

produced in Israel.

We reopened the facility in November 2023, but the war caused supply chain challenges that reduced the manufacturing efficiencies for our products produced in Israel.

While the facility was adversely impacted by this event, we have mitigated operational risk by adding suppliers and improving throughput in order to increase production levels and to meet customer delivery times.

While net sales levels have returned to pre-war levels, margin expansion has been hindered by tariffs on products manufactured in Israel and imported into the United States (“U.S.”).

While net sales

levels have returned to pre-war levels, margin expansion has been hindered by tariffs on products manufactured in Israel and imported into the United States (“U.S.”).

While tariffs are adversely impacting several product lines, Repair and Specialty Valve product lines are bearing most of the higher costs.

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that are produced by our Krausz business, which have borne most of the higher costs.

As previously disclosed, we have taken, and intend to continue to take, actions intended to mitigate these increases through, among other things, pricing actions and adding suppliers.

Despite these actions, Section 232 tariffs are likely to continue to negatively impact the Company’s business, results of operations, and financial condition during fiscal 2026.

As previously disclosed, we have taken, and intend to continue to take, actions to mitigate these increases through, among other things, pricing and supply chain actions.

Despite these actions, Section 232 tariffs are likely to continue to negatively impact the Company’s business, results of operations, and financial condition during the remainder of fiscal 2026.

The ultimate impact of Section 232 tariffs remains to be determined and will depend on several factors, including our ability to successfully mitigate their impact and whether additional or incremental U.S.

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As part of our overall strategy, we will continue investing in our foundries to expand capacity, increase manufacturing efficiencies, and position ourselves to respond to the expected increase in demand for domestic product given the uncertainty in the current geopolitical and tariff environment.

The Company expects to incur certain costs related to the decommissioning and demolition of its legacy foundry, the amount of which is not estimable at this time.

For fiscal year 2026, we anticipate that consolidated net sales will increase between 2.8% and 3.5% as compared with fiscal 2025.

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Results of Operations

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

Three months ended March 31, 2026

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

Three months ended June 30, 2026

Water Flow Solutions Water Management Solutions Corporate Total

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Non-operating expenses:

Pension expense other than service 0.1

Interest expense, net 0.7

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Net income $ 67.3

Three months ended March 31, 2025

Three months ended June 30, 2025

Water Flow Solutions Water Management Solutions Corporate Total

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Non-operating expenses:

Pension benefit other than service (0.1)

Interest expense, net 1.7

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Consolidated Analysis

Net sales for the three months ended March 31, 2026 were $384.4 million as compared with $364.3 million in the prior year period, an increase of $20.1 million or 5.5%, primarily as a result of higher pricing across most product lines and increased volumes.

Gross profit for the three months ended March 31, 2026 was $144.5 million as compared with $128.0 million in the prior year period, an increase of $16.5 million or 12.9%.

Gross margin was 37.6% in the three months ended March 31, 2026 as compared with 35.1% in the prior year period.

Gross margin increased 250 basis points primarily as a result of favorable pricing

across most product lines, manufacturing efficiencies, and higher volumes.

Gross profit was negatively impacted by increased tariffs as well as approximately 4% inflation.

Selling, general and administrative expenses (“SG&A”) for the three months ended March 31, 2026 were $59.7 million as compared with $55.7 million in the prior year period, an increase of $4.0 million or 7.2%, primarily due to unfavorable foreign currency exchange and inflation of approximately 4%.

SG&A as a percentage of net sales was 15.5% and 15.3% for the three months ended March 31, 2026 and 2025, respectively.

Strategic reorganization and other charges for the three months ended March 31, 2026 were $4.4 million and consisted primarily of expenses associated with our leadership transition, certain transaction-related expenses, and severance.

Strategic reorganization and other charges for the three months ended March 31, 2025 were $2.4 million and consisted of expenses associated with our leadership transition, a non-cash asset impairment, and certain transaction-related expenses.

Net interest expense for the three months ended March 31, 2026 was $1.6 million as compared with $2.3 million in the prior year period, a decrease of $0.7 million or 30.4%, primarily due to higher interest income.

Net sales for the three months ended June 30, 2026 were $395.9 million as compared with $380.3 million in the prior year period, an increase of $15.6 million or 4.1%, primarily as a result of higher pricing across most product lines partially offset by lower volumes.

Gross profit for the three months ended June 30, 2026 was $155.8 million as compared with $145.7 million in the prior year period, an increase of $10.1 million or 6.9%.

Gross margin was 39.4% in the three months ended June 30, 2026 as compared with 38.3% in the prior year period.

Gross margin increased 110 basis points primarily as a result of favorable pricing across

most product lines and non-recurring tariff refunds.

Gross profit was negatively impacted by approximately 4% inflation, performance, lower volumes, $3.1 million of portfolio optimization costs, and product mix.

Selling, general and administrative expenses (“SG&A”) for the three months ended June 30, 2026 were $64.0 million as compared with $71.0 million in the prior year period, a decrease of $7.0 million or 9.9%, primarily due to lower unfavorable impact of foreign currency exchange and incentive-based compensation partially offset by inflation of approximately 3%.

SG&A as a percentage of net sales was 16.2% and 18.7% for the three months ended June 30, 2026 and 2025, respectively.

Strategic reorganization and other charges for the three months ended June 30, 2026 were $11.2 million and consisted primarily of certain transaction-related expenses, non-cash asset impairment expenses in our Water Management Solutions segment, severance, and expenses associated with our leadership transition.

Strategic reorganization and other charges for the three months ended June 30, 2025 were $1.0 million and consisted of expenses associated with our leadership transition.

Net interest expense for the three months ended June 30, 2026 was $0.7 million as compared with $1.7 million in the prior year period, a decrease of $1.0 million or 58.8%, primarily due to higher interest income.

The components of net interest expense are as shown below:

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Interest expense, net $ 0.7 $ 1.7

Income tax expense for the three months ended March 31, 2026 was $19.7 million as compared with $16.4 million in the prior year period, an increase of $3.3 million or 20.1%, driven by higher pre-tax income.

The effective tax rate for the three months ended March 31, 2026 was 25.0% as compared with 24.2% in the prior year.

The effective tax rate increased primarily due to lower excess tax benefits on stock compensation.

Income tax expense for the three months ended June 30, 2026 was $12.5 million as compared with $19.5 million in the prior year period, a decrease of $7.0 million or 35.9%, primarily attributable to a tax benefit resulting from the recognition of a loss on a foreign subsidiary investment, partially offset by higher pre-tax income and a valuation allowance on foreign pre-tax earnings.

The effective tax rate for the three months ended June 30, 2026 was 15.7% as compared with 27.1% in the prior year.

The effective tax rate decreased primarily due to a tax benefit from the recognition of a loss on a foreign subsidiary investment, partially offset by a valuation allowance related to the Company's foreign operations.

Segment Analysis

Water Flow Solutions

Net sales for the three months ended March 31, 2026 were $218.3 million as compared with $216.2 million in the prior year period, an increase of $2.1 million or 1.0%, primarily as a result of higher pricing across most product lines partially offset by lower volumes.

Gross profit for the three months ended March 31, 2026 was $87.1 million as compared with $77.0 million in the prior year period, an increase of $10.1 million or 13.1%.

This increase was primarily a result of manufacturing efficiencies and higher pricing across most product lines, partially offset by increased tariffs, approximately 6% inflation, and lower volumes.

Gross margin was 39.9% in the three months ended March 31, 2026 and 35.6% in the prior year period.

SG&A was $21.9 million for both the three months ended March 31, 2026 and 2025.

SG&A was flat year-over-year as inflation of approximately 3% was offset by lower personnel-related costs, including incentive-based compensation.

SG&A as a percentage of net sales was 10.0% and 10.1% in the three months ended March 31, 2026 and 2025, respectively.

Net sales for the three months ended June 30, 2026 were $215.3 million as compared with $216.6 million in the prior year period, a decrease of $1.3 million or 0.6%, primarily as a result of lower volumes mostly offset by higher pricing across most product lines.

Gross profit for the three months ended June 30, 2026 was $89.5 million as compared with $83.8 million in the prior year period, an increase of $5.7 million or 6.8%.

This increase was primarily a result of higher pricing across most product lines, non-recurring tariff refunds, and performance partially offset by lower volumes, approximately 5% inflation, and product mix.

Gross margin was 41.6% in the three months ended June 30, 2026 and 38.7% in the prior year period.

SG&A for the three months ended June 30, 2026 was $23.5 million as compared with $23.3 million in the prior year period, an increase of $0.2 million or 0.9%, primarily as a result of inflation of approximately 4%, higher personnel costs and unfavorable foreign currency impact.

These increases were mostly offset by lower third-party fees.

SG&A as a percentage of net sales was 10.9% and 10.8% in the three months ended June 30, 2026 and 2025, respectively.

Water Management Solutions

Net sales for the three months ended March 31, 2026 were $166.1 million as compared with $148.1 million in the prior year period, an increase of $18.0 million or 12.2%, primarily as a result of increased volumes and higher pricing across most product lines.

Gross profit for the three months ended March 31, 2026 was $57.4 million as compared with $51.0 million in the prior year period, an increase of $6.4 million or 12.5%.

The increase was primarily a result of higher pricing and volumes which were partially offset by increased tariffs, unfavorable manufacturing efficiencies, and approximately 3% inflation.

Gross margin was 34.6% in the three months ended March 31, 2026 as compared with 34.4% in the prior year period.

SG&A for the three months ended March 31, 2026 was $21.9 million as compared with $19.6 million in the prior year period, an increase of $2.3 million or 11.7%, primarily due to unfavorable foreign currency exchange and approximately 4% inflation.

SG&A as a percentage of net sales was 13.2% for both of the three month periods ended March 31, 2026 and 2025.

SG&A for the three months ended March 31, 2026 was $15.9 million as compared with $14.2 million in the prior year period, an increase of $1.7 million or 12.0% is primarily a result of higher third-party fees and approximately 3% inflation.

Six months ended March 31, 2026 Compared to Six months ended March 31, 2025

Six months ended March 31, 2026

Net sales for the three months ended June 30, 2026 were $180.6 million as compared with $163.7 million in the prior year period, an increase of $16.9 million or 10.3%, primarily as a result of increased volumes and higher pricing across most product lines.

Gross profit for the three months ended June 30, 2026 was $66.3 million as compared with $61.9 million in the prior year period, an increase of $4.4 million or 7.1%.

The increase was primarily a result of higher pricing across most product lines, increased volumes, and non-recurring tariff refunds, which were partially offset by performance, $3.1 million of portfolio optimization costs, and approximately 3% inflation.

Gross margin was 36.7% in the three months ended June 30, 2026 as compared with 37.8% in the prior year period.

SG&A for the three months ended June 30, 2026 was $23.8 million as compared with $31.6 million in the prior year period, a decrease of $7.8 million or 24.7%, primarily due to lower unfavorable impact of foreign currency exchange, third-party fees and incentive-based compensation partially offset by approximately 2% inflation.

SG&A as a percentage of net sales was 13.2% and 19.3% in the three month periods ended June 30, 2026 and 2025, respectively.

SG&A for the three months ended June 30, 2026 was $16.7 million as compared with $16.1 million in the prior year period, an increase of $0.6 million or 3.7% primarily a result of higher third-party fees and approximately 3% inflation mostly offset by lower unfavorable impact of foreign currency exchange.

Nine months ended June 30, 2026 Compared to Nine months ended June 30, 2025

Nine months ended June 30, 2026

Water Flow Solutions Water Management Solutions Corporate Total

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Non-operating expenses:

Pension expense other than service 0.1

Interest expense, net 3.3

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Net income $ 169.6

Six months ended March 31, 2025

Nine months ended June 30, 2025

Water Flow Solutions Water Management Solutions Corporate Total

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Consolidated Analysis

Net sales for the six months ended March 31, 2026 were $702.6 million as compared with $668.6 million in the prior year period, an increase of $34.0 million or 5.1%, primarily as a result of higher pricing across most product lines.

Gross profit for the six months ended March 31, 2026 was $264.3 million as compared with $231.0 million in the prior year period, an increase of $33.3 million or 14.4%.

Gross margin was 37.6% in the six months ended March 31, 2026 as compared with 34.5% in the prior year period.

Gross margin increased 310 basis points primarily as a result of higher pricing, manufacturing efficiencies largely driven by the legacy brass foundry closure in Decatur, Illinois, a $4.1 million write-down of

inventory and other assets associated with our legacy brass foundry in the prior year period, and increased volumes.

Gross margin was negatively impacted by increased tariffs and approximately 4% inflation.

SG&A for the six months ended March 31, 2026 was $119.5 million as compared with $109.6 million in the prior year period, an increase of $9.9 million or 9.0%, primarily due to unfavorable foreign currency exchange and approximately 3% inflation.

SG&A as a percentage of net sales was 17.0% and 16.4% for the six months ended March 31, 2026 and March 31, 2025, respectively.

Strategic reorganization and other charges for the six months ended March 31, 2026 were $7.7 million and consisted of expenses associated with our leadership transition, severance, and certain transaction-related expenses.

Strategic reorganization and other charges for the six months ended March 31, 2025 were $4.1 million and consisted of expenses associated with our leadership transition, a non-cash asset impairment, and certain transaction-related expenses.

Net interest expense for the six months ended March 31, 2026 was $2.6 million as compared with $3.9 million in the prior year period, a decrease of $1.3 million or 33.3%, primarily due to higher interest income.

Net sales for the nine months ended June 30, 2026 were $1,098.5 million as compared with $1,048.9 million in the prior year period, an increase of $49.6 million or 4.7%, primarily as a result of higher pricing across most product lines slightly offset by lower volumes.

Gross profit for the nine months ended June 30, 2026 was $420.1 million as compared with $376.7 million in the prior year period, an increase of $43.4 million or 11.5%.

Gross margin was 38.2% in the nine months ended June 30, 2026 as compared with 35.9% in the prior year period.

Gross margin increased 230 basis points primarily as a result of higher pricing across most

product lines, performance largely driven by the legacy brass foundry closure in Decatur, Illinois, as well as the favorable comparison to a $4.1 million write-down of inventory and other assets associated with our legacy brass foundry recorded in the prior year period.

Gross margin was negatively impacted by approximately 4% inflation, increased tariffs, net of non-recurring tariff refunds, and $3.1 million of portfolio optimization costs in the current period.

SG&A for the nine months ended June 30, 2026 was $183.5 million as compared with $180.6 million in the prior year period, an increase of $2.9 million or 1.6%, primarily due to approximately 3% inflation and higher personnel costs partially offset by lower incentive-based compensation and reduced unfavorable foreign currency exchange impact.

SG&A as a percentage of net sales was 16.7% and 17.2% for the nine months ended June 30, 2026 and June 30, 2025, respectively.

Strategic reorganization and other charges for the nine months ended June 30, 2026 were $18.9 million and consisted of certain transaction-related expenses, expenses associated with our leadership transition, non-cash asset impairment expenses in our Water Management Solutions segment, and severance.

Strategic reorganization and other charges for the nine months ended June 30, 2025 were $5.1 million and consisted of expenses associated with our leadership transition, non-cash asset impairment expenses in our Water Flow Solutions segment, and certain transaction-related expenses.

Net interest expense for the nine months ended June 30, 2026 was $3.3 million as compared with $5.6 million in the prior year period, a decrease of $2.3 million or 41.1%, primarily due to higher interest income.

The components of net interest expense are as shown below:

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Interest expense, net $ 3.3 $ 5.6

Income tax expense for the six months ended March 31, 2026 was $32.2 million as compared with $26.9 million in the prior year period, an increase of $5.3 million or 19.7%, driven by higher pre-tax income.

The effective tax rate for the six months ended March 31, 2026 was 23.9% as compared with 23.7% in the prior year.

The effective tax rate increased primarily due to lower excess tax benefits on stock compensation largely offset by a reduction in nondeductible compensation.

Income tax expense for the nine months ended June 30, 2026 was $44.7 million as compared with $46.4 million in the prior year period, a decrease of $1.7 million or 3.7%, primarily attributable to a tax benefit resulting from the recognition of a loss on a foreign subsidiary investment, partially offset by higher pre-tax income and a valuation allowance on foreign pre-tax earnings.

The effective tax rate for the nine months ended June 30, 2026 was 20.9% as compared with 25.0% in the prior year.

The effective tax rate decreased primarily due to a tax benefit from the recognition of a loss on a foreign subsidiary investment.

Segment Analysis

Water Flow Solutions

Net sales for the six months ended March 31, 2026 were $391.3 million as compared with $390.8 million in the prior year period, an increase of $0.5 million or 0.1%, primarily as a result of higher pricing across most product lines offset by lower volumes.

Gross profit for the six months ended March 31, 2026 was $157.9 million as compared with $132.1 million in the prior year period, an increase of $25.8 million or 19.5%.

This increase was primarily a result of favorable manufacturing efficiencies and higher pricing across most product lines, partially offset by increased tariffs, approximately 5% inflation, and lower volumes.

Gross margin was 40.4% in the six months ended March 31, 2026 and 33.8% in the prior year period.

SG&A for the six months ended March 31, 2026 was $43.3 million as compared with $41.7 million in the prior year period, an increase of $1.6 million or 3.8%, primarily as a result of inflation of approximately 3%.

SG&A as a percentage of net sales was 11.1% and 10.7% in the six months ended March 31, 2026 and 2025, respectively.

Net sales for the nine months ended June 30, 2026 were $606.6 million as compared with $607.4 million in the prior year period, a decrease of $0.8 million or 0.1%, primarily as a result of lower volumes mostly offset by higher pricing across most product lines.

Gross profit for the nine months ended June 30, 2026 was $247.4 million as compared with $215.9 million in the prior year period, an increase of $31.5 million or 14.6%.

This increase was primarily a result of higher pricing across most product lines and performance, partially offset by lower volumes, approximately 5% inflation and product mix.

Gross margin was 40.8% in the nine months ended June 30, 2026 and 35.5% in the prior year period.

SG&A for the nine months ended June 30, 2026 was $66.8 million as compared with $65.0 million in the prior year period, an increase of $1.8 million or 2.8%, primarily as a result of inflation of approximately 3%, higher personnel related expenses, and unfavorable foreign currency impact.

SG&A as a percentage of net sales was 11.0% and 10.7% in the nine months ended June 30, 2026 and 2025, respectively.

Water Management Solutions

Net sales for the six months ended March 31, 2026 were $311.3 million as compared with $277.8 million in the prior year period, an increase of $33.5 million or 12.1%, primarily as a result of higher volumes and higher pricing across most product lines.

Gross profit for the six months ended March 31, 2026 was $106.4 million as compared with $98.9 million in the prior year period, an increase of $7.5 million or 7.6%.

The increase was primarily driven by higher pricing across most product lines and increased volumes.

Gross margin was negatively impacted by increased tariffs and approximately 3% inflation.

Gross margin was 34.2% in the six months ended March 31, 2026 as compared with 35.6% in the prior year period.

SG&A for the six months ended March 31, 2026 was $46.4 million as compared with $39.9 million in the prior year period, an increase of $6.5 million or 16.3%, primarily due to unfavorable foreign currency exchange, approximately 3% inflation, and higher personnel-related expenses.

SG&A as a percentage of net sales was 14.9% and 14.4% in the six months ended March 31, 2026 and 2025, respectively.

SG&A for the six months ended March 31, 2026 was $29.8 million as compared with $28.0 million in the prior year period, an increase of $1.8 million or 6.4%.

The increase was primarily driven by inflation of approximately 3% and higher personnel-related expenses.

Net sales for the nine months ended June 30, 2026 were $491.9 million as compared with $441.5 million in the prior year period, an increase of $50.4 million or 11.4%, primarily as a result of higher volumes and higher pricing across most product lines.

Gross profit for the nine months ended June 30, 2026 was $172.7 million as compared with $160.8 million in the prior year period, an increase of $11.9 million or 7.4%.

The increase was primarily driven by higher pricing across most product lines, increased volumes, and product mix.

Gross margin was negatively impacted by performance, increased tariffs, net of non-recurring tariff refunds, approximately 3% inflation and $3.1 million of portfolio optimization costs.

Gross margin was 35.1% in the nine months ended June 30, 2026 as compared with 36.4% in the prior year period.

SG&A for the nine months ended June 30, 2026 was $70.2 million as compared with $71.5 million in the prior year period, a decrease of $1.3 million or 1.8%, primarily due to reduced incentive-based compensation and lower unfavorable impact of foreign currency exchange, partially offset by approximately 3% inflation and higher personnel costs.

SG&A as a percentage of net sales was 14.3% and 16.2% in the nine months ended June 30, 2026 and 2025, respectively.

SG&A for the nine months ended June 30, 2026 was $46.5 million as compared with $44.1 million in the prior year period, an increase of $2.4 million or 5.4%.

The increase was primarily driven by inflation of approximately 3%, higher personnel-related expenses and third-party fees partially offset by lower unfavorable impact of foreign currency exchange.

Liquidity and Capital Resources

We had cash and cash equivalents on hand of $421.0 million as of March 31, 2026 and $163.7 million of additional borrowing capacity under our asset-based lending arrangement (the “ABL”).

As of March 31, 2026, cash and cash equivalents included $91.8 million, $9.4 million, and $9.2 million in Israel, Canada, and China, respectively.

We had cash and cash equivalents on hand of $495.3 million as of June 30, 2026 and $163.7 million of additional borrowing capacity under our asset-based lending arrangement (the “ABL”).

As of June 30, 2026, cash and cash equivalents included $98.2 million, $9.4 million, and $9.0 million in Israel, Canada, and China, respectively.

Historically, we have funded our liquidity requirements through cash flows from operating activities, borrowings under our credit facilities, and working capital management activities.

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The program does not commit us to any particular timing or quantity of purchases, and we may suspend or discontinue the program at any time.

We repurchased $5.5 million of our outstanding common stock during the six months ended March 31, 2026 under our publicly announced share repurchase program, and as of March 31, 2026, we had $59.5 million remaining under our share repurchase authorization.

During the six months ended March 31, 2025, we repurchased $5.0 million of our outstanding common stock.

We repurchased $15.5 million of our outstanding common stock during the nine months ended June 30, 2026 under our publicly announced share repurchase program, and as of June 30, 2026, we had $49.5 million remaining under our share repurchase authorization.

During the nine months ended June 30, 2025, we repurchased $15.0 million of our outstanding common stock.

ABL Agreement

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Borrowings under the ABL bear interest at a floating rate equal to Secured Overnight Financing Rate (“SOFR”) plus an adjustment of 10 basis points and an applicable margin range of 150 to 175 basis points, or a base rate (as defined in the ABL) plus an applicable margin range of 50 to 75 basis points.

As of March 31, 2026, the applicable margin was 150 basis points for SOFR-based loans and 50 basis points for base rate loans.

As of June 30, 2026, the applicable margin was 150 basis points for SOFR-based loans and 50 basis points for base rate loans.

The ABL is subject to mandatory prepayments if total outstanding borrowings under the ABL are greater than the aggregate commitments under the revolving credit facility or if we dispose of overdue accounts receivable in certain circumstances.

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The ABL includes a commitment fee for any unused borrowing capacity of 37.5 basis points per annum when the unused capacity is above 50% of the credit commitments, with a step down to 25.0 basis points per annum when unused capacity is less than or equal to 50% of the credit commitments.

As of March 31, 2026, the commitment fee was 37.5 basis points.

As of June 30, 2026, the commitment fee was 37.5 basis points.

Borrowings are not subject to any financial maintenance covenants unless excess availability is less than the greater of $17.5 million and 10% of the Loan Cap as defined in the ABL.

Excess availability based on March 31, 2026 data was $163.7 million, as reduced by $11.1 million of outstanding letters of credit and $0.2 million of accrued fees and expenses.

We were in compliance with all required covenants under the ABL as of March 31, 2026.

Excess availability based on June 30, 2026 data was $163.7 million, as reduced by $11.1 million of outstanding letters of credit and $0.2 million of accrued fees and expenses.

We were in compliance with all required covenants under the ABL as of June 30, 2026.

4.0% Senior Unsecured Notes

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subsidiaries guarantee the 4.0% Senior Notes, which are subordinate to borrowings under our ABL.

Based on quoted market prices, the outstanding 4.0% Senior Notes had a fair value of $434.6 million as of March 31, 2026.

Based on quoted market prices, the outstanding 4.0% Senior Notes had a fair value of $436.1 million as of June 30, 2026.

An indenture governing the 4.0% Senior Notes (“Indenture”) contains customary covenants and events of default, including covenants that limit our ability to incur certain debt and liens.

We were in compliance with all required covenants under the Indenture as of March 31, 2026.

We were in compliance with all required covenants under the Indenture as of June 30, 2026.

There are no financial maintenance covenants associated with the Indenture.

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The table below summarizes net cash flows provided by (used in) operating activities, investing activities, and financing activities:

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(in millions)

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Net Cash Flows Provided by Operating Activities

Cash flows provided by operating activities decreased $20.0 million to $48.4 million during the six months ended March 31, 2026 compared with $68.4 million in the prior year period.

This was driven by a $57.2 million change in working capital and other assets and liabilities, partially offset by an increase in net income of $15.7 million and higher non-cash adjustments of $21.5 million.

Cash flows provided by operating activities increased $18.4 million to $154.2 million during the nine months ended June 30, 2026 compared with $135.8 million in the prior year period.

This was driven by higher non-cash adjustments of $40.5 million and an increase in net income of $30.5 million, partially offset by a $52.6 million change in working capital and other assets and liabilities.

Net Cash Flows Used in Investing Activities

Cash flows used in investing activities increased $10.8 million to $31.8 million during the six months ended March 31, 2026 compared with $21.0 million in the prior year period.

Capital expenditures were $31.9 million in the six months ended March 31, 2026 as compared with $21.1 million in the prior year period.

Cash flows used in investing activities increased $9.7 million to $42.4 million during the nine months ended June 30, 2026 compared with $32.7 million in the prior year period.

Capital expenditures were $43.6 million in the nine months ended June 30, 2026 as compared with $32.8 million in the prior year period.

Capital expenditures increased primarily as a result of higher expenditures associated with our iron foundries as compared with the prior year period.

Net Cash Flows Used in Financing Activities

Cash flows used in financing activities increased $3.6 million to $30.5 million during the six months ended March 31, 2026 as compared with $26.9 million in the prior year period.

This was driven primarily by $2.6 million in less cash provided by common stock issuances, an increase of $0.9 million in dividends paid to shareholders, and an increase of $0.5 million in repurchases of common stock under the share repurchase program, partially offset by a decrease of $0.6 million in amounts withheld to pay employee taxes related to share-based compensation.

Cash flows used in financing activities increased $4.3 million to $51.5 million during the nine months ended June 30, 2026 as compared with $47.2 million in the prior year period.

This was driven primarily by $2.4 million in less cash provided by common stock issuances, an increase of $1.4 million in dividends paid to shareholders, and an increase of $0.5 million in repurchases of common stock under the share repurchase program.

Credit Ratings

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Moody’s Standard & Poor’s

March 31, September 30, March 31, September 30,

June 30, September 30, June 30, September 30,

2026 2025 2026 2025

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We enter into a variety of contractual obligations as part of our normal operations in addition to capital expenditures.

As of March 31, 2026, we had (i) debt obligations related to our $450.0 million 4.0% Senior Notes which mature in 2029 and include annual cash interest payments of $18.0 million in 2026 through 2029;

As of June 30, 2026, we had (i) debt obligations related to our $450.0 million 4.0% Senior Notes which mature in 2029 and include annual cash interest payments of $18.0 million in 2026 through 2029;

(ii) cumulative cash obligations of $40.1 million for operating leases through 2037 and $5.4 million for finance leases through 2031;

and (iii) purchase obligations for raw materials

and other purchased parts of approximately $122.5 million which we expect to incur during the next 12 months and $2.1 million beyond March 31, 2027.

and (iii) purchase obligations for raw materials and other purchased parts of approximately $108.1 million which we expect to incur during the next 12 months and $2.2 million

beyond June 30, 2027.

Additionally, we expect to invest to strengthen our information technology systems, cybersecurity training, policies, programs, response plans and other similar measures.

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We intend to increase capital investments in our facilities to expand production capacity and enhance operational capabilities, including investment in our two iron foundries.

We declared a quarterly dividend of $0.070 per share on April 28, 2026, payable on or about May 20, 2026 to stockholders of record as of May 11, 2026, which will result in an estimated $11.0 million cash outlay.

We declared a quarterly dividend of $0.070 per share on July 28, 2026, payable on or about August 20, 2026 to stockholders of record as of August 10, 2026, which will result in an estimated $10.9 million cash outlay.

Off-Balance Sheet Arrangements

We do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as “structured finance” or “special purpose” entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

In addition, as of March 31, 2026, we did not have any undisclosed borrowings, debt, derivative contracts, or synthetic leases.

In addition, as of June 30, 2026, we did not have any undisclosed borrowings, debt, derivative contracts, or synthetic leases.

Therefore, we were not exposed to any financing, liquidity, market, or credit risk that could have arisen had we engaged in such relationships.

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and most of Canada generally face weather conditions that restrict significant construction activity.

Therefore, the results of operations for the three and six months ended March 31, 2026 are not necessarily indicative of operating results that may be achieved for any other interim period or the full year.

Therefore, the results of operations for the three and nine months ended June 30, 2026 are not necessarily indicative of operating results that may be achieved for any other interim period or the full year.

Critical Accounting Estimates

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There have been no changes in the Company’s determination of critical accounting estimates since September 30, 2025.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in the information called for by this item since the disclosure in Part II, Item 7A of our 2025 Annual Report on Form 10-K.

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