What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-05 compared with 2025-05-06 · 212 added, 124 removed, 276 unchanged (55% of the section changed)

45 unchanged sentences

Recent Developments and Updates

Proxy Contest

On March 30, 2025, the company entered into a cooperation agreement (the “Cooperation Agreement”) with Vision One Fund, L.P.

and its affiliates (“Vision One”), a stockholder of the company.

Pursuant to the Cooperation Agreement, our Board of Directors (“Board”) agreed to appoint a new member to the company’s Board within one day of the 2025 annual meeting of stockholders (“Annual Meeting”), and Vision One agreed to withdraw its nominees for election at the Annual Meeting and to abide by certain customary standstill restrictions, mutual non-disparagement provisions, voting commitments and other obligations until the opening of the nomination window for the company’s 2026 annual meeting of stockholders.

In connection with the Cooperation Agreement, Vision One was entitled to the reimbursement of certain of its reasonable and documented out-of-pocket fees and expenses.

During the first quarter of 2025, we incurred costs of approximately $7.9 million in connection with our response to the proxy contest.

These costs, which were included within "Other (income) expense, net" on the condensed consolidated statements of operations, include legal and other professional service fees as well as incremental proxy solicitation costs related to the Annual Meeting.

We do not expect additional material costs related to the proxy contest to be incurred for the remainder of the year.

Measurement Alternative Investments

During the second quarter of 2025, the company identified a trigger event indicating that an investment being accounted for under the measurement alternative may be impaired.

For the three and six months ended June 30, 2025, the company recognized an impairment of $2.5 million recorded in "Other (income) expense, net" on the condensed consolidated statements of operations.

Goodwill Impairment Charge - Advanced Polymer Technologies

During the second quarter of 2025, the announcements and subsequent modifications of international tariffs escalated global trade tensions and contributed to increased consumer uncertainty, which negatively impacted parts of our businesses, particularly Advanced Polymer Technologies (“APT”).

As a result, we conducted an analysis of the APT reporting unit’s goodwill, intangible assets, and long-lived assets.

This analysis incorporated revised expectations regarding the pace and strength of industrial demand recovery in key markets.

In addition, the macroeconomic changes experienced during the quarter contributed to unfavorable movements in key valuation inputs, including an increase in the risk-free rate used in calculating the discount rate.

Our analysis included significant assumptions such as the revenue growth rate, earnings before interest, taxes, depreciation, and amortization ("EBITDA") margin, and discount rate, which are judgmental.

Variations in any assumptions could result in materially different calculations of fair value.

Based on the results of the quantitative analysis, we concluded that the carrying value of the APT reporting unit exceeded its fair value.

As a result, we recorded a non-cash goodwill impairment charge of $183.8 million, representing all of the goodwill associated with the APT reporting unit.

The charge is included within Goodwill impairment charge on the condensed consolidated statements of operations for the three and six months ended June 30, 2025.

Specific to our long-lived assets, we determined that the undiscounted cash flows were in excess of the carrying values and therefore concluded that no impairment existed.

One Big Beautiful Bill

On July 4, 2025, the President signed into law the One Big Beautiful Bill ("OBBB"), which includes a comprehensive tax reform package that significantly modifies U.S.

federal tax policy.

We are currently evaluating the impacts of the OBBB, with preliminary observations indicating a notable impact on cash taxes due to the ability to accelerate deductions.

We currently expect the OBBB will have minimal impact to our effective tax rate for 2025.

Performance Chemicals Repositioning

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These actions increased our focus on growing our most profitable Performance Chemicals product lines, such as road technologies, and diversifying our raw material stream to non-CTO based fatty acids.

The repositioning focused on reducing exposure to lower margin end-use

markets of our industrial specialties product line, such as adhesives, publication inks, and oilfield, representing approximately 45 percent of our industrial specialties product line historical annualized net sales.

The repositioning focused on reducing exposure to lower margin end-use markets of our industrial specialties product line, such as adhesives, publication inks, and oilfield, representing approximately 45 percent of our industrial specialties product line historical annualized net sales.

The repositioning included the closure of the Performance Chemicals CTO refinery and manufacturing plant located in DeRidder, Louisiana (the “DeRidder Plant”), including the polyol production assets associated with the Advanced Polymer Technologies ("APT") reportable segment.

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We expect to incur aggregate charges of approximately $365 million, excluding the CTO resale activity as described below, associated with the Performance Chemicals repositioning, consisting of approximately $255 million in asset-related charges, approximately $25 million in severance and other employee-related costs, and approximately $85 million in other restructuring costs, including decommissioning, dismantling and removal charges, and contract termination costs.

Through March 31, 2025, we have incurred $322.9 million associated with these actions, including $244.7 million of non-cash asset-related charges, excluding $7.4 million related to an asset retirement obligation ("ARO"), and $78.2 million of charges to be settled in cash, which include the aforementioned ARO.

As of March 31, 2025, $65.0 million of the charges to be settled in cash have been paid and all non-cash charges have been incurred.

In total, we expect approximately $110 million of cash charges, including approximately $25-$30 million during 2025.

Through June 30, 2025, we have incurred $335.1 million associated with these actions, including $248.0 million of non-cash asset-related charges, and $87.1 million of charges to be settled in cash.

As of June 30, 2025, $71.1 million of the charges to be settled in cash have been paid and all non-cash charges have been incurred.

In total, we expect approximately $110 million of cash charges, including approximately$10 to $15 million during the remainder of 2025.

Inventory Charges

The company believes the collective actions of workforce, operational, and regional business exits will hinder our ability to dispose of the associated inventory on hand.

As a result, we recorded zero and $2.5 million of non-cash, lower of cost or market, inventory charges during the three months ended March 31, 2025, and 2024, respectively, to adjust the carrying value of the impacted inventory to what we expect to realize upon disposal, less disposal costs.

These inventory charges are recorded to "Cost of sales" on the condensed consolidated statements of operations.

The company believes the collective actions of workforce, operational, and regional business exits hindered our ability to dispose of the associated inventory on hand.

As a result, we recorded zero and $2.5 million of non-cash, lower of cost or market, inventory charges for the three and six months ended June 30, 2024, respectively.

These charges were made to adjust the carrying value of the affected inventory to its estimated realizable value, net of disposal costs, and are recorded to "Cost of sales" on the condensed consolidated statements of operations.

Since these inventory charges are directly attributable to the Performance Chemicals repositioning, that is, they do not represent normal, recurring expenses necessary to operate our business, we have excluded such impact from the financial results of our Performance Chemicals reportable segment.

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CTO Resale Activity

The CTO resale activity described below ended in 2024 and no excess CTO volumes were on hand at June 30, 2025.

The DeRidder Plant closure, and the corresponding reduction in CTO refining capacity, significantly reduced our CTO volume requirements.

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To manage this excess inventory, we sold CTO volumes (herein referred to as "CTO resales") in the open market.

For the three months ended March 31, 2025 and 2024, we have incurred zero and $26.5 million, respectively, of CTO resale losses, which are recorded as "Other (income) expense, net" on the condensed consolidated statements of operations.

For the three and six months ended June 30 2024, we incurred $23.5 million and $50.0 million, respectively, of CTO resale losses, which are recorded as "Other (income) expense, net" on the condensed consolidated statements of operations.

On July 1, 2024, the CTO supply contract that resulted in these excess CTO volumes was terminated.

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As a result of the termination, the purchases under the CTO supply contract ended effective June 30, 2024.

The CTO resale activity described above ended in 2024 and no excess CTO volumes were on hand at March 31, 2025.

Expected Savings and Impact

The Performance Chemicals repositioning, which began in November 2023, is focused on reducing exposure to lower margin end-use markets of our industrial specialties product line, such as adhesives, publication inks, and oilfield, representing approximately 45 percent of our industrial specialties product line historical annualized net sales.

As a result of this initiative, we expect to realize total cash savings of approximately $95 million to $100 million.

These cash savings will be derived from headcount reductions, plant operating efficiencies, and reduced supply chain costs.

Collectively, these savings are expected to be realized in the following financial statement captions:

70-80 percent in Cost of sales, 15-25 percent in Selling, general, and administrative expenses, and ~5 percent in Research and technical expenses, all presented on our condensed consolidated statements of operations.

In the first quarter of 2025, we realized cash savings of approximately $8 million, including $6 million in Cost of sales, $1 million in Selling, general, and administrative expenses, and $1 million in Research and technical expenses, respectively.

For the three and six months ended June 30, 2025, we realized cash savings of approximately $11 million and $19 million, including $8 million and $14 million in Cost of sales, $3 million and $4 million in Selling, general, and administrative expenses, and zero and $1 million in Research and technical expenses, respectively.

Since November of 2023, we have realized total cash savings of approximately $103 million, including $82 million in Cost of sales, $16 million in Selling, general, and administrative expenses, and $5 million in Research and technical expenses, respectively.

We expect to realize all remaining savings in 2025.

In addition to the cash savings, we expect to realize approximately $15 million to $17 million in lower full year depreciation and intangible amortization expenses, respectively.

To date, we realized savings of approximately $12 million.

We expect to realize the remaining savings in 2025.

The charges we currently expect to incur and the savings we expect to obtain in connection with these actions are subject to a number of assumptions and risks, and actual results may differ materially.

All cash savings have been realized as of June 30, 2025.

These cash savings have been derived from headcount reductions, plant operating efficiencies, and reduced supply chain costs.

Collectively, these savings have been realized in the following financial statement captions:

approximately 70-80 percent in Cost of sales, approximately 15-25 percent in Selling, general, and administrative expenses, and approximately 5 percent in Research and technical expenses, all presented on our condensed consolidated statements of operations.

In addition to the cash savings, we have realized savings of approximately $12 million in lower full year depreciation and intangible amortization expenses, respectively.

All savings have been realized as of June 30, 2025.

The charges we currently expect to incur in connection with these actions are subject to a number of assumptions and risks, and actual results may differ materially.

We may also incur other material charges not currently contemplated due to events that may occur as a result of, or in connection with, these actions.

Results of Operations

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

In millions 2025 2024 2025 2024

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Restructuring and other (income) charges, net 21.9 13.1 34.2 75.9

Goodwill impairment charge 183.8 349.1 183.8 349.1

Acquisition-related costs — (0.2) — 0.1

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Q2 2025 Performance Summary

The Net sales decrease was driven primarily by the Performance Chemicals industrial specialties product line due to repositioning actions which included the focus on reducing exposure to lower margin end-use markets and therefore reduced sales during the quarter by approximately $37 million.

Also contributing to the lower sales was continued weakness in certain industrial end markets that negatively impacted sales in our industrial specialties product line and our Advanced Polymer Technologies reportable segment, slightly offset by an increase in our Performance Materials reportable segment.

Net sales declined primarily due to reduced performance in the Performance Chemicals segment, specifically within the road technologies and industrial specialties product lines.

The decrease in industrial specialties sales was largely driven by strategic repositioning efforts aimed at reducing exposure to lower-margin end-use markets, resulting in an estimated $5 million reduction in quarterly sales.

Additionally, unusually wet weather across much of the U.S.

delayed road construction projects, negatively impacting the road technologies line.

Further contributing factors included weaker customer demand, that accelerated toward the end of the quarter as a result of indirect tariff impacts within the Advanced Polymer Technologies reportable segment.

The table below shows the 2025 Net sales and variances from 2024:

In millions Prior year Net sales Volume Price/Mix Currency effect Current year Net sales

Three months ended March 31, 2025 vs.

Three months ended June 30, 2025 vs.

$ 390.6 (37.6) 10.5 1.6 $ 365.1

Three Months Ended March 31, 2025 vs.

The Net sales decrease of $56.1 million in 2025 was driven by volume decline of $55.4 million (16 percent), and unfavorable foreign currency exchange of $0.7 million (zero percent).

Three Months Ended March 31, 2025 vs.

Gross profit increase of $13.7 million was driven primarily by decreased manufacturing costs of $18.1 million, LIFO liquidation benefit of $4.5 million, and favorable foreign currency exchange of $0.4 million.

This increase was partially offset by unfavorable sales volume of $7.7 million, and unfavorable pricing and sales composition (mix) of $1.6 million.

Gross profit for the three months ended March 31, 2025 includes realized savings of $6.0 million from the Performance Chemicals repositioning actions initiated in 2023.

Six months ended June 30, 2025 vs.

$ 730.7 (93.0) 10.5 0.9 $ 649.1

Three Months Ended June 30, 2025 vs 2024

The Net sales decrease of $25.5 million in 2025 was driven by a volume decline of $37.6 million (10 percent).

This decline was partially offset by favorable pricing and sales mix of $10.5 million (three percent) and favorable foreign currency exchange of $1.6 million (zero percent).

Six Months Ended June 30, 2025 vs.

The Net sales decrease of $81.6 million in 2025 was driven by a volume decline of $93.0 million (13 percent).

This decline was partially offset by favorable pricing and sales mix of $10.5 million (one percent) and favorable foreign currency exchange of $0.9 million (zero percent).

Three Months Ended June 30, 2025 vs.

Gross profit increase of $14.7 million was driven primarily by favorable pricing and sales mix of $11.4 million, decreased manufacturing costs of $11.2 million, and a LIFO liquidation benefit of $4.1 million.

This increase was partially offset by unfavorable sales volume of $11.5 million, and unfavorable foreign currency exchange of $0.5 million.

Gross profit for the three months ended June 30, 2025 includes realized savings of $8.0 million from the Performance Chemicals repositioning actions initiated in 2023.

Six Months Ended June 30, 2025 vs.

Gross profit increase of $28.4 million was driven primarily by decreased manufacturing costs of $29.4 million, favorable pricing and sales mix of $9.8 million, and a LIFO liquidation benefit of $8.6 million.

This increase was partially offset by unfavorable sales volume of $19.2 million, and unfavorable foreign currency exchange of $0.2 million.

Gross profit for the six months ended June 30, 2025 includes realized savings of $14.0 million from the Performance Chemicals repositioning actions initiated in 2023.

Selling, general and administrative expenses

Three Months Ended March 31, 2025 vs.

SG&A was $43.1 million (15 percent of Net sales) and $47.2 million (14 percent of Net sales) for the three months ended March 31, 2025 and 2024, respectively.

Overall, SG&A decreased by $4.1 million or nine percent driven by our Performance Chemicals repositioning actions that reduced non-cash intangible amortization expense by $1.9 million and included $1.0 million in cash savings.

SG&A was further reduced by decreased spending on commercial activities of $1.2 million.

Three Months Ended June 30, 2025 vs 2024

SG&A was $44.2 million (12 percent of Net sales) and $41.4 million (11 percent of Net sales) for the three months ended June 30, 2025 and 2024, respectively.

Overall, SG&A increased by $2.8 million (seven percent) driven by increased variable incentive compensation of $3.8 million, and increased spending on commercial activities of $2.0 million.

These increased costs were partially offset by savings related to our Performance Chemicals repositioning actions of $3.0 million.

Six Months Ended June 30, 2025 vs.

SG&A was $87.3 million (13 percent of Net sales) and $88.6 million (12 percent of Net sales) for the six months ended June 30, 2025 and 2024, respectively.

Overall, SG&A decreased by $1.3 million (one percent) driven by our Performance Chemicals repositioning actions which included $4.0 million in cash savings, and reduced non-cash intangible amortization expense of $2.0 million.

These savings were offset by increased variable incentive compensation of $3.7 million, and increased spending on commercial activities of $1.0 million.

Research and technical expenses

Three Months Ended March 31, 2025 vs.

Research and technical expenses as a percentage of Net sales remained relatively consistent period over period, at 2.7 percent and 2.0 percent for the three months ended March 31, 2025 and 2024, respectively.

Three Months Ended June 30, 2025 vs 2024

Research and technical expenses as a percentage of Net sales was 2.1 percent and 1.9 percent for the three months ended June 30, 2025 and 2024, respectively.

Research and technical expenses as a percentage of Net sales increased due to lower sales.

Overall, Research and technical expenses increased by $0.5 million, compared to the prior year quarter, primarily driven by an increase within our Performance Materials reportable segment.

Six Months Ended June 30, 2025 vs.

Research and technical expenses as a percentage of Net sales was 2.4 percent and 1.9 percent for the six months ended June 30, 2025 and 2024, respectively.

Research and technical expenses as a percentage of Net sales increased due to lower sales.

Overall, Research and technical expenses increased by $1.4 million, compared to the prior year quarter, driven by a $2.4 million increase primarily within our Performance Materials reportable segment.

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Restructuring and other (income) charges, net

Three Months Ended March 31, 2025 vs.

Three Months Ended March 31,

Three and Six Months Ended June 30, 2025 vs.

Three Months Ended June 30, Six Months Ended June 30,

In millions 2025 2024 2025 2024

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(1) See Note 11 for more information.

Goodwill impairment charge

Three and Six Months Ended June 30, 2025 vs.

Goodwill impairment charge of $183.8 million for the three and six months ended June 30, 2025 within our Advanced Polymer Technologies reportable segment.

Goodwill impairment charge of $349.1 million for the three and six months ended June 30, 2024 within our Performance Chemicals reportable segment.

See Note 7 for more information.

Acquisition-related costs

Three Months Ended March 31, 2025 vs.

Acquisition-related (income) costs were zero and $0.3 million for the three months ended March 31, 2025 and 2024, respectively.

Three and Six Months Ended June 30, 2025 vs.

Acquisition-related (income) costs were zero for the three and six months ended June 30, 2025, and $(0.2) million and $0.1 million for the three and six months ended June 30, 2024, respectively.

All charges relate to the integration of Ozark Materials into our Performance Chemicals reportable segment.

Other (income) expense, net

Three Months Ended March 31, 2025 vs.

Three Months Ended March 31,

Three and Six Months Ended June 30, 2025 vs.

Three Months Ended June 30, Six Months Ended June 30,

In millions 2025 2024 2025 2024

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Loss on CTO resales (1)

— 23.5 — 50.0

(Gain) loss on strategic investments (2)

2.5 (0.1) 2.5 4.7

Proxy contest charges (3)

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Interest expense, net

Three Months Ended March 31, 2025 vs.

Three Months Ended March 31,

Three and Six Months Ended June 30, 2025 vs.

Three Months Ended June 30, Six Months Ended June 30,

In millions 2025 2024 2025 2024

Accounts receivable securitization (1)

$ 1.1 $ 1.4 $ 1.8 $ 2.8

Finance lease obligations (1)

1.8 1.8 3.6 3.6

Interest rate swap (2)

(0.3) — (0.5) —

Litigation related interest expense (3)

1.2 1.3 2.5 2.6

Revolving Credit Facility and other lines of credit (1)

10.3 14.0 21.7 27.2

Senior notes (1)

5.6 5.6 11.2 11.2

Other interest (income) expense, net (1.1) (0.9) (2.3) (1.9)

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Provision (benefit) for income taxes

Three Months Ended March 31, 2025 vs.

For the three months ended March 31, 2025 and 2024, our effective tax rate was 23.5 percent and 22.1 percent, respectively.

Excluding discrete items, the effective rate was 22.6 percent compared to 24.2 percent in the three months ended March 31, 2025 and 2024, respectively.

Three and Six Months Ended June 30, 2025 vs.

For the three months ended June 30, 2025 and 2024, our effective tax rate was (2.7) percent and 15.2 percent, respectively.

Excluding discrete items, the effective rate was 22.2 percent compared to 33.5 percent in the three months ended June 30, 2025 and 2024, respectively.

See Note 12 for more information.

For the six months ended June 30, 2025 and 2024, our effective tax rate was (8.7) percent and 16.4 percent, respectively.

Excluding discrete items, the effective rate was 22.3 percent compared to 34.5 percent in the six months ended June 30, 2025 and 2024, respectively.

See Note 12 for more information.

Segment Operating Results

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Our segments are (i) Performance Materials, (ii) Performance Chemicals and (iii) Advanced Polymer Technologies.

Segment Earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA") is the primary measure used by the company's chief operating decision maker to evaluate the performance of and allocate resources among our operating segments.

Segment EBITDA is defined as segment net sales less segment operating expenses (segment operating expenses consist of costs of sales, selling, general and administrative expenses, research and technical expenses, other (income) expense, net, excluding depreciation and amortization).

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Q2 2025 Performance Summary

Performance Materials Net sales increased one percent compared to the prior year quarter driven by slightly higher volume and price and sales mix.

There are two components to mix that are key to understanding this reportable segment.

The segment benefits from production of larger vehicles, such as trucks and sport utility vehicles, as well as more hybrids and internal combustion engine vehicles versus all electric vehicles, as these vehicles contain more of our activated carbon content.

Regional mix is also important as North America, which is nearly 50 percent of Performance Material sales, is our most profitable region due to the typica lly larger size of vehicles requiring more content, and this region also has the highest emissions control standards in the world requiring more advanced forms of our activated carbon product.

Asia Pacific is also an important region, representing about 40 percent of total Performance Materials net sales.

Within Asia Pacific, about half of our net sales are in China and the remaining are made up primarily of South Korea and Japan.

All of these countries have strict emissions control standards or strong export markets where our activated carbon plays an important role in meeting regulations.

Europe is our least impactful region due to the regulatory environment favoring electric vehicles, and also because European emissions standards lag behind North America and Asia Pacific.

Segme nt EBITDA for Performance Materials increased $1.1 million or one percent and Segment EBITDA margin was flat compared to the prior year quarter.

In millions Three Months Ended March 31,

Performance Materials Net sales decreased two percent compared to the prior year quarter.

Sales in North America was offset by declines in Europe and Asia, excluding China where sales were flat year over year.

Europe’s decline was attributed to tariff related uncertainty and the decline in Asia, excluding China, was due to timing of customer orders which benefited Q2 last year.

Segme nt EBITDA for Performance Materials decreased $5.1 million or six percent, and Segment EBITDA margin declined to 50.1 percent.

Segment EBITDA declined due to lower Net sales, investments in innovation, and one-time employee compensation costs.

In millions Three Months Ended June 30, Six Months Ended June 30,

2025 2024 2025 2024

Total Performance Materials - Net sales $ 153.9 $ 157.2 $ 300.7 $ 302.3

Segment EBITDA $ 77.1 $ 82.2 $ 156.2 $ 160.2

Net Sales Comparison of Three Months Ended March 31, 2025 and March 31, 2024:

Net Sales Comparison of Three and Six Months Ended June 30, 2025 and June 30, 2024:

Prior year Net sales Volume Price/Mix Currency effect Current year Net sales

Three months ended March 31, 2025 vs.

Three months ended June 30, 2025 vs.

$ 157.2 (6.5) 3.2 — $ 153.9

Three Months Ended March 31, 2025 vs.

Six months ended June 30, 2025 vs.

$ 302.3 (5.7) 4.1 — $ 300.7

Three Months Ended June 30, 2025 vs.

Segment net sales.

The increase of $1.7 million in 2025 was driven by favorable pricing and sales mix of $0.9 million (one percent), and volume growth of $0.8 million (zero percent).

The decrease of $3.3 million in 2025 was driven by a volume decline of $6.5 million (four percent), partially offset by favorable pricing and sales mix of $3.2 million (two percent).

Segment EBITDA.

The increase of $1.1 million in 2025 was driven by volume growth of $0.5 million, decreased foreign currency exchange and other charges of $3.2 million, and decreased manufacturing costs of $1.4 million.

was partially offset by LIFO charges of $2.0 million, unfavorable pricing and sales composition (mix) of $0.7 million, and increased SG&A and research and technical expenses of $1.3 million.

The decrease of $5.1 million in 2025 was driven by a volume decline of $4.0 million, increased SG&A and research and technical expenses of $3.1 million, increased foreign currency exchange and other charges of $1.7 million, LIFO charges of $0.2 million, and increased manufacturing costs of $0.2 million.

The decrease was partially offset by favorable pricing and sales mix of $4.1 million.

Six Months Ended June 30, 2025 vs.

Segment net sales.

The decrease of $1.6 million in 2025 was driven by a volume decline of $5.7 million (two percent), partially offset by favorable pricing and sales mix of $4.1 million (one percent).

Segment EBITDA.

The decrease of $4.0 million in 2025 was driven by increased SG&A and research and technical expenses of $4.4 million, volume decline of $3.5 million, and LIFO charges of $2.2 million.

The decrease was partially offset by favorable pricing and sales mix of $3.4 million, favorable foreign currency exchange and other charges of $1.5 million, and decreased manufacturing costs of $1.2 million.

Performance Chemicals

Q2 2025 Performance Summary

Performance Chemicals net sales decreased $52.0 million (35 percent) compared to the prior year quarter, primarily as a result of our repositioning actions.

Performance Chemicals Net sales decreased $17.6 million (nine percent) compared to the prior year quarter, primarily as a result of our repositioning actions.

Approximately $5 million of the decline in net sales reflects the exit of lower-margin end markets in our industrial specialties product line as we continue to focus on maximizing profitability.

The remaining net sales decline was primarily due to a slower start to the road paving season, and weakness in industrial demand within our industrial specialties product line.

Segment EBITDA improved $10.3 million compared to the prior year quarter, reflecting the positive impact of repositioning actions, including benefits from cost savings actions and lower raw material costs.

Three Months Ended March 31,

The remaining Net sales decline was primarily due to wet weather across much of the U.S.

that delayed road construction projects, impacting our road technologies product line, and weakness in industrial demand within our industrial specialties product line.

Segment EBITDA improved $22.7 million compared to the prior year quarter, reflecting the positive impact of repositioning actions, including benefits from cost savings actions and lower raw material costs, primarily CTO.

Three Months Ended June 30, Six Months Ended June 30,

In millions 2025 2024 2025 2024

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Segment EBITDA $ 32.0 $ 9.3 $ 31.7 $ (1.3)

Net Sales Comparison of Three Months Ended March 31, 2025 and March 31, 2024:

Net Sales Comparison of Three and Six Months Ended June 30, 2025 and June 30, 2024:

Prior year Net sales Volume Price/Mix Currency effect Current year Net sales

Three months ended March 31, 2025 vs.

Three months ended June 30, 2025 vs.

$ 185.5 (26.4) 8.2 0.6 $ 167.9

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Industrial Specialties product line 56.4 (14.2) 5.7 0.5 48.4

Three Months Ended March 31, 2025 vs.

Six months ended June 30, 2025 vs.

$ 332.5 (78.6) 8.4 0.6 $ 262.9

Road Technologies product line 174.8 (14.5) 3.4 0.1 163.8

Industrial Specialties product line 157.7 (64.1) 5.0 0.5 99.1

Three Months Ended June 30, 2025 vs.

Segment net sales.

The decrease of $17.6 million in 2025 was driven by a volume decline of $26.4 million (14 percent), as a result of a decrease in industrial specialties ($14.2 million) and road technologies ($12.2 million).

This was partially offset by favorable pricing and sales mix of $0.2 million (zero percent), attributable to an increase in road technologies ($0.9 million), partially offset by a decrease in industrial specialties ($0.7 million).

This was partially offset by favorable pricing and sales mix of $8.2 million (four percent), attributable to an increase in industrial specialties ($5.7 million) and road technologies ($2.5 million).

Net sales was also impacted by favorable foreign currency exchange of $0.6 million (zero percent).

Segment EBITDA.

The increase of $10.3 million in 2025 was driven by lower manufacturing costs of $6.5 million, primarily due to lower cost CTO, LIFO liquidation benefit of $6.5 million, lower SG&A of $1.9 million, which benefited from the Performance Chemicals repositioning, decreased foreign currency exchange and other charges of $1.9 million, and favorable pricing and sales mix of $0.2 million.

The increase of $22.7 million in 2025 was driven by lower manufacturing costs of $13.9 million, primarily due to lower cost CTO, favorable pricing and sales mix of $8.2 million, LIFO liquidation benefit of $4.3 million, lower SG&A of $1.3 million, which benefited from the Performance Chemicals repositioning, and decreased foreign currency exchange and other charges of $0.7 million.

The increase was partially offset by a volume decline of $5.7 million.

Six Months Ended June 30, 2025 vs.

Segment net sales.

The decrease of $69.6 million in 2025 was driven by a volume decline of $78.6 million (24 percent), as a result of a decrease in industrial specialties ($64.1 million) and road technologies ($14.5 million).

This was partially offset by favorable pricing and sales mix of $8.4 million (three percent), attributable to an increase in industrial specialties ($5.0 million) and road technologies ($3.4 million).

Net sales was also impacted by favorable foreign currency exchange of $0.6 million (zero percent).

Segment EBITDA.

The increase of $33.0 million in 2025 was driven by lower manufacturing costs of $20.4 million, primarily due to lower cost CTO, LIFO liquidation benefit of $10.8 million, favorable pricing and sales mix of $8.4 million,

lower SG&A of $3.2 million, which benefited from the Performance Chemicals repositioning, and decreased foreign currency exchange and other charges of $2.6 million.

The increase was partially offset by a volume decline of $12.4 million.

Advanced Polymer Technologies

Q2 2025 Performance Summary

Advanced Polymer Technologies net sales decreased 12 percent compared to the prior year quarter primarily due to a volume decline from continued market weakness across Asia and unfavorable overall product mix and selective price concessions.

S egment EBITDA increased by 32 percent, primarily driven by higher utilization rates as we built inventory in preparation for a planned extended outage in the second quarter to install new boilers.

In millions Three Months Ended March 31,

Advance d Polymer Technologies Net sales decreased 10 percent compared to the prior year quarter primarily due to weaker customer demand, partly attributed to tariff uncertainty, and price concessions to address competitive pressures.

S egment EBITDA decreased by 91 percent, primarily driven by a planned extended outage in the second quarter to install new boilers, and lower volumes stemming from tariff-related pressures.

In millions Three Months Ended June 30, Six Months Ended June 30,

2025 2024 2025 2024

Total Advanced Polymer Technologies - Net sales $ 43.3 $ 47.9 $ 85.5 $ 95.9

Segment EBITDA $ 0.9 $ 9.8 $ 13.4 $ 19.3

Net Sales Comparison of Three Months Ended March 31, 2025 and March 31, 2024:

Net Sales Comparison of Three and Six Months Ended June 30, 2025 and June 30, 2024:

Prior year Net sales Volume Price/Mix Currency effect Current year Net sales

Three months ended March 31, 2025 vs.

Three months ended June 30, 2025 vs.

$ 47.9 (4.7) (0.9) 1.0 $ 43.3

Three Months Ended March 31, 2025 vs.

Six months ended June 30, 2025 vs.

$ 95.9 (8.7) (2.0) 0.3 $ 85.5

Three Months Ended June 30, 2025 vs.

Segment net sales.

The decrease of $5.8 million in 2025 was driven by a volume decline of $4.0 million (eight percent), unfavorable pricing and sales mix of $1.1 million (two percent), and unfavorable foreign currency exchange of $0.7 million (one percent).

The decrease of $4.6 million in 2025 was driven by a volume decline of $4.7 million (10 percent), and unfavorable pricing and sales mix of $0.9 million (two percent).

The decrease was partially offset by favorable foreign currency exchange of $1.0 million (two percent).

Segment EBITDA.

The increase of $3.0 million in 2025 was driven by decreased manufacturing costs of $6.1 million.

The increase was partially offset by a volume decline of $1.5 million, unfavorable pricing and sales mix of $1.1 million, increased foreign currency exchange and other charges of $0.3 million, and increased SG&A of $0.2 million.

The decrease of $8.9 million in 2025 was driven by increased manufacturing costs of $5.0 million, a volume decline of $1.8 million, increased SG&A of $1.0 million, unfavorable pricing and sales mix of $0.9 million, and increased foreign currency exchange and other charges of $0.2 million.

Six Months Ended June 30, 2025 vs.

Segment net sales.

The decrease of $10.4 million in 2025 was driven by a volume decline of $8.7 million (nine percent), and unfavorable pricing and sales mix of $2.0 million (two percent).

The decrease was partially offset by favorable foreign currency exchange of $0.3 million (zero percent).

Segment EBITDA.

The decrease of $5.9 million in 2025 was driven by a volume decline of $3.3 million, unfavorable pricing and sales mix of $2.0 million, increased SG&A of $1.2 million, and increased foreign currency exchange and other charges of $0.5 million.

The decrease was partially offset by decreased manufacturing costs of $1.1 million.

Use of Non-GAAP Financial Measure - Adjusted EBITDA

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Reconciliation of Net Income (Loss) to Adjusted EBITDA

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

In millions 2025 2024 2025 2024

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Depreciation and amortization (1)

25.6 27.3 50.5 56.9

Restructuring and other (income) charges, net (2)

21.9 13.1 34.2 75.9

Goodwill impairment charge (3)

183.8 349.1 183.8 349.1

Acquisition and other-related (income) costs, net (4)

— (0.2) — 0.1

Loss on CTO resales (5)

— 23.5 — 50.0

(Gain) loss on strategic investments (6)

2.5 (0.1) 2.5 4.7

Proxy contest charges (7)

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Refer to Note 11 for more information.

(3) Refer to Note 7 for more information.

(4) Charges represent costs incurred to complete and integrate acquisitions and other strategic investments, and include the expensing of the inventory fair value step-up resulting from the application of purchase accounting for acquisitions, and certain legal and professional fees associated with the completion of acquisitions and strategic investments.

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Since these CTO resale activities are directly attributable to the Performance Chemicals repositioning, that is, they do not represent normal, recurring expenses necessary to operate our business, we have excluded the CTO resale (income) charges for the purposes of calculating our non-GAAP financial performance measures.

For the three months ended March 31, 2024, the loss on CTO resales relates to the Performance Chemicals segment.

For the three and six months ended June 30, 2024, the loss on CTO resales relates to the Performance Chemicals segment.

Refer to Note 11 for more information.

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Adjusted EBITDA

Three Months Ended March 31, 2025 vs.

Three and Six Months Ended June 30, 2025 vs.

The factors that impacted adjusted EBITDA period to period are the same factors that affected earnings discussed in the Results of Operations and Segment Operating Results sections included within this MD&A.

Current Full Year Company Outlook vs.

We continue to monitor the evolving macroeconomic landscape, including the implications of recent tariffs and broader trade uncertainty.

We are adjusting the lower end of our previously disclosed outlook to Net sales between $1.25 billion and $1.4 billion for 2025.

This change reflects updated industry forecasts that estimate an approximate 10 percent reduction in North America light vehicle production.

As such, we would expect Net sales in our Performance Materials reportable segment to be flat or down compared to the prior year.

For our Performance Chemicals reportable segment, we expect Net sales in our road technologies product line to improve compared to 2024 we have moved away from lower margin products and adverse weather conditions experienced in key states within the U.S.

negatively impacted 2024.

Our industrial specialties product line remains focused on higher margin end markets and is expected to deliver Net sales between $160 and $200 million.

Additionally, our Advanced Polymer Technologies reportable segment anticipates Net sales flat to prior year due to weak end market demand and continued competitive dynamics, particularly in Asia.

Our Adjusted EBITDA outlook, which has been adjusted to incorporate the ~10 percent reduction in North America light vehicle production, is expected to be between $380 million and $415 million for 2025.

If the forecasts suggesting a ~10 percent reduction in North America light vehicle production are true than we expect our Performance Materials reportable segment EBITDA to decline compared to the prior year.

We expect to maintain segment EBITDA margins around 50 percent based on improved pricing and continued operational efficiencies.

Our Performance Chemicals reportable segment EBITDA is expected to improve due to revenue growth in our road technologies product line, lower CTO costs, and further savings from our repositioning actions.

We expect segment EBITDA margins in the mid-to-high single digits.

We anticipate that our Advanced Polymer Technologies segment EBITDA will modestly improve versus prior year as our enacted pricing and mix strategies will produce segment EBITDA margins of around 20 percent.

We continue to closely monitor the evolving macroeconomic environment, including the impacts of recent tariffs and ongoing trade uncertainty.

Despite these challenges, we are reaffirming our prior 2025 outlook for Net sales between $1.25 billion and $1.4 billion.

This guidance reflects current industry forecasts, which project a ~4 percent decline in North America light vehicle production when compared to 2024.

As a result, we expect Net sales in our Performance Materials reportable segment to be similar to prior year.

In our Performance Chemicals reportable segment:

• The road technologies product line is expected to see modest growth over 2024.

• The industrial specialties product line is projected to deliver Net sales between $160 million and $200 million.

For our Advanced Polymer Technologies reportable segment, we expect Net sales to be down mid-to-high single digits versus the prior year, reflecting weaker end-market demand due to the impact of tariffs and continued competitive pressures.

Our Adjusted EBITDA outlook for 2025 has been revised to reflect improved profitability in Performance Chemicals and current forecasts of North America light vehicle production.

We expect Adjusted EBITDA to be between $390 million and $415 million.

Should the forecasted ~4 percent reduction in North America light vehicle production versus 2024 materialize, we anticipate EBITDA in our Performance Materials reportable segment will decline compared to the prior year.

However, we expect to maintain Performance Materials segment EBITDA margins of around 50 percent, supported by improved pricing and continued operational efficiencies.

In our Performance Chemicals reportable segment, we expect segment EBITDA to improve, driven by:

• Modest revenue growth in our road technologies product line,

• Lower CTO input costs, and

• The benefits of successfully executed repositioning actions.

We anticipate Performance Chemicals segment EBITDA margins to be in the high-single to low-double digits.

For our Advanced Polymer Technologies reportable segment, as a result of expected weaker end-market demand impacting volumes, segment EBITDA margins are expected to be in the mid-teens to-low twenty percent range.

A reconciliation of net income to adjusted EBITDA as projected for 2025 is not provided.

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We expect our cash flow provided by operations combined with cash on hand and available capacity under our revolving credit facility to be sufficient to fund our planned operations and meet our interest and other contractual obligations for at least the next twelve months.

As of March 31, 2025, our undrawn capacity under our revolving credit facility was $309.4 million.

As of June 30, 2025, our undrawn capacity under our revolving credit facility was $400.0 million.

Over the next twelve months, we expect to fund the following:

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In connection with such transactions, or to fund other anticipated uses of cash, we may modify our existing revolving credit facility, redeem all or part of our outstanding senior notes, seek additional debt financing, issue equity securities, or some combination thereof.

Cash and cash equivalents totaled $71.5 million at March 31, 2025.

Cash and cash equivalents totaled $76.9 million at June 30, 2025.

We continuously monitor deposit concentrations and the credit quality of the financial institutions that hold our cash and cash equivalents, as well as the credit quality of our insurance providers, customers, and key suppliers.

Due to the global nature of our operations, a portion of our cash is held outside the U.S.

The cash and cash equivalents balance at March 31, 2025, included $67.5 million held by our foreign subsidiaries.

The cash and cash equivalents balance at June 30, 2025, included $65.7 million held by our foreign subsidiaries.

Cash and earnings of our foreign subsidiaries are generally used to finance our foreign operations and their capital expenditures.

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Shares under the 2022 Authorization may be purchased through open market or privately negotiated transactions at the discretion of management based on its evaluation of market prevailing conditions and other factors, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Exchange Act.

During the three months ended March 31, 2025 and 2024, we repurchased no common stock.

At March 31, 2025, $353.4 million remained unused under the 2022 Authorization.

During the three and six months ended June 30, 2025 and 2024, we repurchased no common stock.

At June 30, 2025, $353.4 million remained unused under the 2022 Authorization.

Capital Expenditures

Projected 2025 capital expenditures are $50-70 million.

We have no material commitments associated with these projected capital expenditures as of March 31, 2025 .

Cash flow comparison of the Three Months Ended March 31, 2025 and 2024

Three Months Ended March 31,

We have no material commitments associated with these projected capital expenditures as of June 30, 2025 .

Cash flow comparison of the Six Months Ended June 30, 2025 and 2024

Six Months Ended June 30,

In millions 2025 2024

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Cash flows provided by (used in) operating activities

Cash provided by operating activities, which consists of net income (loss) adjusted for non-cash items including the cash impact from changes in operating assets and liabilities (i.e., working capital), totaled $25.4 million for the three months ended March 31, 2025.

Cash provided by operating activities for the three months ended March 31, 2025, when compared to the three months ended March 31, 2024, increased by $37.5 million.

This increase was driven by a decrease in CTO resale cash outflows of $26.0 million, increased cash earnings of $7.9 million, a net reduction in trade working capital of $10.2 million (including accounts receivable, inventory, and accounts payable), and lower cash interest paid of $2.4 million.

Partially offsetting these cash inflows was increased employee compensation payments of $5.9 million, increased spending on restructuring initiatives of $1.6 million, and an increase in tax payments of $1.5 million as a result of the higher cash earnings.

Cash provided by operating activities, which consists of net income (loss) adjusted for non-cash items including the cash impact from changes in operating assets and liabilities (i.e., working capital), totaled $104.4 million for the six months ended June 30, 2025.

Cash provided by operating activities for the six months ended June 30, 2025, when compared to the six months ended June 30, 2024, increased by $86.8 million.

This increase was driven by a decrease in CTO resale cash outflows of $51.5 million, increased cash earnings of $2.1 million, a decrease in tax payments of $16.6 million, a net reduction in trade working capital of $19.8 million (including accounts receivable, inventory, and accounts payable), and lower cash interest paid of $5.1 million.

Partially offsetting these cash inflows was increased employee compensation payments of $3.9 million, and increased spending on restructuring initiatives of $0.2 million.

Cash flows provided by (used in) investing activities

Cash used in investing activities in the three months ended March 31, 2025 was $11.5 million and was primarily driven by capital expenditures of $10.0 million.

In the three months ended March 31, 2025 and 2024, capital spending included the base maintenance capital supporting ongoing operations, and growth and cost improvement spending.

Cash used in investing activities in the six months ended June 30, 2025 was $14.3 million and was primarily driven by capital expenditures of $22.2 million.

In the six months ended June 30, 2025 and 2024, capital spending included the base maintenance capital supporting ongoing operations, and growth and cost improvement spending.

The decrease in Net cash used in investing activities when compared to the prior year period is primarily due to reduced capital expenditures of $12.5 million.

Capital expenditure categories Three Months Ended March 31,

Capital expenditure categories Six Months Ended June 30,

In millions 2025 2024

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Cash flows provided by (used in) financing activities

Cash used in financing activities in the three months ended March 31, 2025, was $11.0 million and was primarily driven by payments on our revolving credit facility of $100.3 million, partially offset by borrowings on our revolving credit facility and other borrowings of $92.3 million.

Cash provided by financing activities in the three months ended March 31, 2024 was $23.4 million and was primarily driven by borrowings on our revolving credit facility of $81.4 million, partially offset by payments on our revolving credit facility of $55.0 million.

Cash used in financing activities in the six months ended June 30, 2025, was $74.0 million and was primarily driven by payments on our revolving credit facility and other borrowings of $229.3 million, partially offset by proceeds from our revolving credit facility and other borrowings of $158.5 million.

Cash provided by financing activities in the six months ended June 30, 2024 was $33.7 million and was primarily driven by proceeds from our revolving credit facility and other borrowings of $120.2 million, partially offset by payments on our revolving credit facility and other borrowings of $83.1 million.

New Accounting Guidance

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis