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Item 2. Management’s Discussion and Analysis

2025-08-07 compared with 2025-05-07 · 138 added, 65 removed, 100 unchanged (67% of the section changed)

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Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to help the reader understand the results of operations and financial condition of NN, Inc.

and its consolidated subsidiaries for the three months ended March 31, 2025.

The financial information as of March 31, 2025, should be read in conjunction with the consolidated financial statements for the year ended December 31, 2024, contained in our 2024 Annual Report, and the Condensed Consolidated Financial Statements included in this Quarterly Report.

NN, Inc., a Delaware corporation, is a diversified industrial company that combines advanced engineering and production capabilities with in-depth materials science expertise to design and manufacture high-precision components and assemblies for a variety of end markets on a global basis.

As used in this Quarterly Report, the terms “NN,” the “Company,” “we,” “our,” or “us” refer to NN, Inc.

and its subsidiaries.

and its consolidated subsidiaries for the three and six months ended June 30, 2025.

The financial information as of June 30, 2025, should be read in conjunction with the consolidated financial statements for the year ended December 31, 2024, contained in our 2024 Annual Report, and the Condensed Consolidated Financial Statements included in this Quarterly Report.

Forward-Looking Statements

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the impact of climate change on our operations;

uncertainty of government policies and actions after recent U.S.

elections in respect to global trade, tariffs and international trade agreements;

uncertainty of government policies and actions in respect to global trade, tariffs and international trade agreements;

and cyber liability or potential liability for breaches of our or our service providers’ information technology systems or business operations disruptions.

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Risk Factors” in the 2024 Annual Report and this Quarterly Report.

Results of Operations

As used in this Quarterly Report, the terms “NN,” the “Company,” “we,” “our,” or “us” refer to NN, Inc.

and its subsidiaries.

Factors That May Influence Results of Operations

The following paragraphs describe factors that have influenced results of operations for the three months ended March 31, 2025, that management believes are important to provide an understanding of the business and results of operations or that may influence operations in the future.

We believe there are several important factors that have influenced and we expect will continue to influence our results of operations.

Macroeconomic Conditions

We continue to monitor the ongoing impacts of current macroeconomic and geopolitical events, including changing conditions from ongoing military conflicts, tariffs, inflationary cost pressures, elevated interest rates, supply chain disruptions, and labor shortages and disruptions.

Ongoing military conflicts continue to create volatility in global financial and energy markets, creating energy and supply chain shortages, which has added to the inflationary pressures experienced by the global economy.

We continue to actively work with our suppliers to minimize impacts of supply shortages on our manufacturing capabilities.

Although our business has not been materially impacted by these ongoing military conflicts as of the date of this filing, we cannot reasonably predict the extent to which our operations, or those of our customers or suppliers, will be impacted in the future, or the ways in which the conflicts may impact our business, financial condition, results of operations and cash flows.

economy has experienced inflationary increases and elevated interest rates, as well as supply issues in materials, services, and labor due to economic policy and military conflicts.

We cannot predict the future impact on our end-markets or input costs, including tariffs and their potential implications and ramifications, nor our ability to recover cost increases through pricing.

We continue to monitor the ongoing impacts of current macroeconomic and geopolitical events, including changing conditions from global trade negotiations and tariffs, inflationary cost pressures on metal, raw materials, and other manufacturing inputs, elevated interest rates, supply chain disruptions, and ongoing military conflicts.

Global trade negotiations continue to create volatility in the marketplace.

New trade restrictions and/or increases in tariffs could have a material impact on our business, financial condition, or results of operations by increasing our input costs and decreasing demand, although the nature of those trade restrictions and tariffs remains unclear.

Additionally, tariffs may increase the risk for elevated inflation more generally, which may drive an increase in other input costs.

We cannot predict the future impact on our end-markets or input costs, including tariffs and their potential implications and ramifications, nor our ability to recover all cost increases through pricing or the timing of such recoveries.

Footprint Optimization

We have taken specific steps to consolidate our footprint by identifying less profitable end markets and focusing our strategic growth initiatives in markets where we believe we will be able to maximize profitability.

During the second half of 2024, we identified two manufacturing facilities to close due to volume rationalization which will reduce costs and improve operational efficiency.

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Additionally, we continue to evaluate our global footprint, which may result in further consolidation actions to further improve our overall cost structure.

Three Months Ended March 31, 2025 compared to the Three Months Ended March 31, 2024

Results of Operations

Three Months Ended June 30, 2025 compared to the Three Months Ended June 30, 2024

Consolidated Results

Three Months Ended March 31,

Three Months Ended June 30,

2025 2024 $ Change

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Interest expense 5,657 5,873 (216)

Loss on extinguishment of debt 3,007 — 3,007

Other income, net (619) (3,461) 2,842

Loss before benefit (provision) for income taxes and share of net income from joint venture (9,509) (4,559) (4,950)

Benefit (provision) for income taxes (774) 215 (989)

Share of net income from joint venture 2,181 2,141 40

Net loss $ (8,102) $ (2,203) $ (5,899)

Net sales decreased by $15.1 million, or 12.3%, during the three months ended June 30, 2025, compared to the three months ended June 30, 2024, primarily due to the rationalization of underperforming business and plants, the sale of our Lubbock operations in 2024, lower volumes and unfavorable foreign exchange effects of $0.7 million.

These decreases were partially offset by contribution of new business launches and higher precious metals pass-through pricing.

Cost of Sales.

Cost of sales decreased by $11.6 million, or 11.4%, during the three months ended June 30, 2025, compared to the three months ended June 30, 2024, primarily due to the decrease in sales.

Selling, General, and Administrative Expense.

Selling, general, and administrative expense decreased by $1.4 million during the three months ended June 30, 2025, compared to the three months ended June 30, 2024, primarily due to lower compensation expense related to lower headcount.

Depreciation and amortization .

Depreciation and amortization decreased by $2.8 million during the three months ended June 30, 2025, compared to the three months ended June 30, 2024, primarily due to impact of historical purchase accounting step-up basis becoming fully depreciated in the second half of 2024.

Interest Expense.

Interest expense decreased by $0.2 million during the three months ended June 30, 2025, compared to the three months ended June 30, 2024, primarily due to lower average debt balances, lower interest rates and lower amortization of debt issuance costs.

These reductions were partially offset by the gain recognized on interest rate swap in 2024.

Three Months Ended June 30,

Interest on debt $ 5,377 $ 5,679

Gain recognized on interest rate swap — (449)

Amortization of debt issuance costs and discount 308 562

Capitalized interest (196) (193)

Other 168 274

Total interest expense $ 5,657 $ 5,873

Loss on Extinguishment of Debt.

Loss on extinguishment of debt was $3.0 million during the three months ended June 30, 2025 due to the termination of the 2021 Term Loan Facility, see Note 7 to the Condensed Consolidated Financial Statements.

Other Income, Net.

Other income, net decreased by $2.8 million during the three months ended June 30, 2025, compared to the three months ended June 30, 2024, primarily due to lower noncash derivative mark-to-market losses recognized during the current quarter compared to the second quarter of 2024.

Benefit (Provision) For Income Taxes .

Our effective tax rate was (8.1)% for the three months ended June 30, 2025, compared to 4.7% for the three months ended June 30, 2024.

The rate for the three months ended June 30, 2025 was unfavorably impacted due to the accrual of tax on non-permanently reinvested unremitted earnings of foreign subsidiaries and by the limitation of the amount of tax benefit recorded for losses in certain jurisdictions where we believe it is more likely than not that a future tax benefit may not be realized.

Share of Net Income from Joint Venture.

Share of net income from the JV was unchanged during the three months ended June 30, 2025, compared to the three months ended June 30, 2024.

The JV, in which we own a 49% investment, recognized net sales of $31.6 million and $31.6 million for the three months ended June 30, 2025 and 2024, respectively.

Results by Segment

MOBILE SOLUTIONS

Three Months Ended June 30,

2025 2024 $ Change

Net sales $ 63,391 $ 72,855 $ (9,464)

Loss from operations $ (1,110) $ (1,630) $ 520

Net sales decreased by $9.5 million, or 13.0%, during the three months ended June 30, 2025, compared to the three months ended June 30, 2024, primarily due to rationalized volume, lower volume and unfavorable foreign exchange effects of $0.3 million.

Loss from operations decreased by $0.5 million during the three months ended June 30, 2025, compared to the same period in the prior year, primarily due to lower depreciation expense partially offset by lower revenue.

POWER SOLUTIONS

Three Months Ended June 30,

2025 2024 $ Change

Net sales $ 44,641 $ 50,151 $ (5,510)

Income from operations $ 5,782 $ 5,320 $ 462

Net sales decreased by $5.5 million, or 11.0%, during the three months ended June 30, 2025 compared to the three months ended June 30, 2024, primarily due to the sale of our Lubbock operations in 2024, lower volumes and unfavorable foreign exchange effects of $0.4 million.

These decreases were partially offset by higher precious metals pass-through pricing.

Income from operations increased by $0.5 million during the three months ended June 30, 2025 compared to the same period in the prior year, primarily due to the lower compensation costs due to headcount reduction, partially offset by lower revenues and the sale of the Lubbock operations in 2024.

Six Months Ended June 30, 2025 compared to the Six Months Ended June 30, 2024

Consolidated Results

Six Months Ended June 30,

2025 2024 $ Change

Net sales $ 213,609 $ 244,190 $ (30,581)

Cost of sales (exclusive of depreciation and amortization shown separately below) 181,345 202,343 $ (20,998)

Selling, general, and administrative expense 23,265 26,859 (3,594)

Depreciation and amortization 17,692 24,308 (6,616)

Other operating income, net (2,440) (2,390) (50)

Loss from operations (6,253) (6,930) 677

Interest expense 10,851 11,239 (388)

Loss on extinguishment of debt 3,007 — 3,007

Other expense (income), net (2,788) 692 (3,480)

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Net loss $ (14,787) $ (14,740) $ (47)

Net sales decreased by $15.5 million, or 12.8%, during the three months ended March 31, 2025, compared to the three months ended March 31, 2024, primarily due to the rationalization of underperforming business and plants, the sale of our Lubbock operations in 2024, lower volumes and unfavorable foreign exchange effects of $2.8 million.

These decreases were partially offset by higher precious metals pass-through pricing.

Net sales decreased by $30.6 million, or 12.5%, during the six months ended June 30, 2025, compared to the six months ended June 30, 2024, primarily due to the rationalization of underperforming business and plants, the sale of our Lubbock operations, lower volumes and unfavorable foreign exchange effects of $3.5 million.

These decreases were partially offset by contribution of new business launches and higher precious metals pass-through pricing.

Cost of Sales.

Cost of sales decreased by $9.4 million, or 9.3%, during the three months ended March 31, 2025, compared to the three months ended March 31, 2024, primarily due to the decrease in sales.

Cost of sales decreased by $21.0 million, or 10.4%, during the six months ended June 30, 2025, compared to the six months ended June 30, 2024, primarily due to the decrease in sales.

Selling, General, and Administrative Expense.

Selling, general, and administrative expense decreased by $2.2 million during the three months ended March 31, 2025, compared to the three months ended March 31, 2024, primarily due to lower incentive compensation expense.

Selling, general, and administrative expense decreased by $3.6 million during the six months ended June 30, 2025, compared to the six months ended June 30, 2024, primarily due to lower compensation expense due to a reduction in headcount.

Depreciation and amortization .

Depreciation and amortization decreased by $3.8 million during the three months ended March 31, 2025, compared to the three months ended March 31, 2024, primarily due to impact of historical purchase accounting step-up basis becoming fully depreciated.

Other Operating Income, Net.

Other operating income, net increased by $0.1 million during the three months ended March 31, 2025, compared to the three months ended March 31, 2024, primarily due to an increase in gains on sale of equipment and higher sublease income.

Depreciation and amortization decreased by $6.6 million during the six months ended June 30, 2025, compared to the six months ended June 30, 2024, primarily due to impact of historical purchase accounting step-up basis becoming fully depreciated in the second half of 2024.

Interest Expense.

Interest expense decreased by $0.2 million during the three months ended March 31, 2025, compared to the three months ended March 31, 2024, primarily due to lower average debt balances and lower interest rates.

These reductions were partially offset by a decrease in the gain recognized on interest rate swap and an increase in the amortization of debt issuance costs and a lower amount of capitalized interest.

Three Months Ended March 31,

Interest expense decreased by $0.4 million during the six months ended June 30, 2025, compared to the six months ended June 30, 2024, primarily due to lower average debt balances and lower interest rates.

These reductions were partially offset by the gain recognized on interest rate swap in 2024 and a lower amount of capitalized interest during 2025.

Six Months Ended June 30,

Interest on debt $ 9,782 $ 11,355

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Total interest expense $ 10,851 $ 11,239

Loss on Extinguishment of Debt.

Loss on extinguishment of debt was $3.0 million during the six months ended June 30, 2025 due to the termination of the 2021 Term Loan Facility, see Note 7 to the Condensed Consolidated Financial Statements.

Other Expense (Income), Net.

Other expense (income), net changed favorably by $6.3 million during the three months ended March 31, 2025, compared to the three months ended March 31, 2024, primarily due to noncash derivative mark-to-market gains recognized during the current quarter compared to derivative losses recognized in the first quarter of 2024.

Provision For Income Taxes .

Our effective tax rate was (16.8)% for the three months ended March 31, 2025, compared to (3.5)% for the three months ended March 31, 2024.

The rate for the three months ended March 31, 2025 was unfavorably impacted due to the accrual of tax on non-permanently reinvested unremitted earnings of foreign subsidiaries and by the limitation of the amount of tax benefit recorded for losses in certain jurisdictions where we believe it is more likely than not that a future tax benefit may not be realized.

Other expense (income), net changed favorably by $3.5 million during the six months ended June 30, 2025, compared to the six months ended June 30, 2024, primarily due to noncash derivative mark-to-market gains recognized during 2025 and favorable foreign exchange effects associated with intercompany borrowings.

Benefit (Provision) for Income Taxes.

Our effective tax rate was (12.0)% for the six months ended June 30, 2025, compared to (1.5)% for the six months ended June 30, 2024.

The rate for the six months ended June 30, 2025 was unfavorably impacted due to the accrual of tax on non-permanently reinvested unremitted earnings of foreign subsidiaries and by the limitation on the

amount of tax benefit recorded for losses in certain jurisdictions where we believe it is more likely than not that a future tax benefit may not be realized.

Share of Net Income from Joint Venture.

Share of net income from the JV increased by $0.2 million during the three months ended March 31, 2025, compared to the three months ended March 31, 2024, primarily due to higher sales.

The JV, in which we own a 49% investment, recognized net sales of $32.7 million and $31.1 million for the three months ended March 31, 2025 and 2024, respectively.

Share of net income from the JV increased by $0.2 million during the six months ended June 30, 2025, compared to the six months ended June 30, 2024, primarily due to higher sales and increased margin partially offset by higher fixed costs, depreciation and interest expense.

The JV, in which we own a 49% investment, recognized net sales of $64.3 million and $62.7 million for the six months ended June 30, 2025 and 2024, respectively.

Results by Segment

MOBILE SOLUTIONS

Three Months Ended March 31,

Six Months Ended June 30,

2025 2024 $ Change

1 unchanged sentence

Loss from operations $ (3,797) $ (3,773) $ (24)

Net sales decreased by $10.8 million, or 14.8%, during the three months ended March 31, 2025, compared to the three months ended March 31, 2024, primarily due to the closure of our Juarez, Mexico plant, lower volumes and unfavorable foreign exchange effects of $1.9 million.

Loss from operations increased by $0.5 million during the three months ended March 31, 2025, compared to the same period in the prior year, primarily due to the lower revenue, partially offset by lower depreciation expense.

Net sales decreased by $20.3 million, or 13.9%, during the six months ended June 30, 2025, compared to the six months ended June 30, 2024, primarily due to rationalized volume, lower volume and unfavorable foreign exchange effects of $2.2 million.

Loss from operations was unchanged at $3.8 million during the six months ended June 30, 2025 and 2024.

The decrease in depreciation expense was offset by the lower revenues.

POWER SOLUTIONS

Three Months Ended March 31,

Six Months Ended June 30,

2025 2024 $ Change

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Income from operations $ 8,805 $ 9,299 $ (494)

Net sales decreased by $4.7 million, or 9.8%, during the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily due to the sale of our Lubbock operations in 2024, lower volumes and unfavorable foreign exchange effects of $0.8 million.

Net sales decreased by $10.2 million, or 10.4%, during the six months ended June 30, 2025, compared to the six months ended June 30, 2024, primarily due to the sale of our Lubbock operations in 2024, lower volumes and unfavorable foreign exchange effects of $1.3 million.

These decreases were partially offset by higher precious metals pass-through pricing

Income from operations decreased by $1.0 million during the three months ended March 31, 2025 compared to the same period in the prior year, primarily due to the lower revenues and unfavorable product mix, partially offset by lower operating costs due to the sale of the Lubbock operations in 2024.

Changes in Financial Condition from December 31, 2024 to March 31, 2025

From December 31, 2024 to March 31, 2025, total assets increased by $3.8 million primarily due to increases in accounts receivable, prepaid assets and our investment in a joint venture.

Income from operations decreased by $0.5 million during the six months ended June 30, 2025 compared to the same period in the prior year, primarily due to the sale of our Lubbock operations and lower sales.

These decreases were partially offset by lower compensation costs and higher precious metals pass-through pricing

Changes in Financial Condition from December 31, 2024 to June 30, 2025

From December 31, 2024 to June 30, 2025, total assets increased by $3.9 million primarily due to increases in accounts receivable, property, plant and equipment and our investment in a joint venture.

These increases were partially offset by decreases in intangible assets due to amortization.

From December 31, 2024 to March 31, 2025, total liabilities increased by $6.6 million, primarily due to increases in accounts payable, other current liabilities and long-term debt.

These increases were partially offset by the decrease other noncurrent liabilities due to a decrease in the fair value of outstanding warrants.

Working capital, which consists of current assets less current liabilities, was $82.9 million as of March 31, 2025, compared to $83.7 million as of December 31, 2024.

The decrease in working capital was primarily due to increases in accounts payable and other current liabilities, partially offset by increases in accounts receivable and prepaid assets.

Cash used in operations was $3.3 million for the three months ended March 31, 2025, compared with cash provided of $0.7 million for the three months ended March 31, 2024.

From December 31, 2024 to June 30, 2025, total liabilities increased by $9.8 million, primarily due to increases in accounts payable, other current liabilities and long-term debt.

These increases were partially offset by a decrease in accrued salaries, wages and benefits due to reduced compensation costs.

Working capital, which consists of current assets less current liabilities, decreased by $0.8 million, from December 31, 2024 to June 30, 2025.

The change was primarily due to an increase in accounts receivable and a decrease in accrued salaries, wages and benefits, partially offset by increases in accounts payable and other current liabilities.

Cash used in operations was $4.0 million for the six months ended June 30, 2025, compared with $0.6 million for the six months ended June 30, 2024.

The unfavorable change is primarily due to lower gross margin contributions due to lower sales, and an increase in working capital.

Cash used in investing activities decreased by $1.6 million during the three months ended March 31, 2025, compared with the same period in 2024, due to lower expenditures for property, plant and equipment.

Cash provided by financing activities decreased by $3.0 million during the three months ended March 31, 2025 compared with the same period in 2024, primarily due to proceeds from the sale-leaseback transactions in 2024, partially offset by lower repayments of long-term debt.

Cash used in investing activities decreased by $1.6 million during the six months ended June 30, 2025, compared with the same period in 2024, due to lower purchases of property, plant and equipment in 2025.

Cash provided by financing activities was unchanged at $1.6 million during the six months ended June 30, 2025 and 2024.

The increase in proceeds from the new term loan in 2025 was offset by the proceeds from the sale-leaseback transactions in 2024.

Liquidity and Capital Resources

Credit Facilities

The principal amount outstanding under our 2021 Term Loan Facility as of March 31, 2025, was $114.3 million, without regard to unamortized debt issuance costs and discount.

As of March 31, 2025, we had $8.0 million outstanding borrowings under the ABL Facility and $18.3 million available for future borrowings under the ABL Facility.

This amount of borrowing capacity is net of $10.4 million of outstanding letters of credit at March 31, 2025, which are considered as usage of the ABL Facility.

On April 16, 2025, we entered into a Term Loan Credit Agreement by and among the Company, the lenders from time to time party thereto and Alter Domus (US) LLC, as administrative agent for the Lenders.

The Term Loan Credit Agreement establishes a new, $128.0 million senior secured Term Loan Facility consisting of (i) $118.0 million of term loans funded in full on the Closing Date and (ii) $10.0 million of delayed draw term loan commitments.

The Term Loans mature on April 16, 2030.

We used the net proceeds from the Closing Date Term Loan to repay all of our outstanding obligations under our previous 2021 Term Loan Facility.

The principal amount outstanding under our Term Loan Facility as of June 30, 2025, was $118.9 million, without regard to unamortized debt issuance costs and discount.

As of June 30, 2025, we had $5.0 million outstanding borrowings under the ABL Facility and $24.2 million available for future borrowings under the ABL Facility.

This amount of borrowing capacity is net of $10.9 million of outstanding letters of credit at June 30, 2025, which are considered as usage of the ABL Facility.

Outstanding borrowings under the Term Loan Facility currently bear interest at either:

1) one-month, three-month, or six-month term secured overnight finance rate with a duration adjustment, subject to a 2.00% floor, plus an applicable margin of 9.25%;

or 2) the greater of various benchmark rates, with certain adjustments, plus an applicable margin of 8.25%.

For interest payments due before April 16, 2027, we may elect to pay a portion of interest in-kind, subject to a minimum cash interest of 5.25% for Adjusted Term SOFR Rate Loans and 4.25%% for Base Rate Loans.

The applicable margin increases by 0.50% on borrowings to which the PIK Election is made.

Subject to certain exceptions, we are required to make principal payments (i) annually that are calculated as a percentage, based on our Consolidated Net Leverage Ratio, of our Excess Cash Flow (as defined in the Term Loan Credit Agreement), (ii) Net Cash Proceeds (as defined in the Term Loan Credit Agreement) of certain non-ordinary course Dispositions (as defined in the Term Loan Credit Agreement) within 10 business days of receipt thereof, and (iii) Net Cash Proceeds from certain insurance events.

The ABL Facility bears interest on a variable borrowing rate based on either:

1) the one, three or six month SOFR plus 1.50%, plus an adjustment of 0.10% (“Term SOFR Rate”);

1) the one, three or six month SOFR plus 1.50%, plus an adjustment of 0.10%;

or 2) the highest of the base commercial lending rate of the lender or various benchmark rates plus an applicable margin of 0.50% or 1.00%, depending on the benchmark.

We pay a commitment fee of 0.25% for unused capacity under the ABL Facility.

We were in compliance with all requirements under our 2021 Term Loan Facility and ABL Facility as of March 31, 2025.

We were in compliance with the financial covenants of the Term Loan Facility and ABL Facility as of June 30, 2025.

Both credit facilities allow for optional expansion of available borrowings, subject to certain terms and conditions.

On April 16, 2025, we repaid all of our outstanding obligations under the 2021 Term Loan Facility with the proceeds from a new term loan arrangement that has an initial principal balance of $118.0 million.

See Note 18 to the Condensed Consolidated Financial Statements.

Sale Leaseback Transactions

During 2024, we entered into several sale-leaseback transactions.

We received $16.9 million from the sale and leaseback of three properties, with the net proceeds used to repay a portion of the outstanding borrowings under the 2021 Term Loan Facility.

This financing obligation has an effective fixed interest rate of 9.715%, requires monthly payments and terminates in 2044.

In addition, we received $8.3 million from the sale and leaseback of equipment, with $3.4 million of the net proceeds used to repay a portion of the outstanding borrowings under the 2021 Term Loan Facility and the balance used for ongoing operational investments.

During 2024 and 2025, we entered into several sale-leaseback transactions and received a total of $21.2 million from the sale and leaseback of several properties.

These financing obligations have a weighted average effective fixed interest rate of 9.500%, requires monthly payments and terminate in 2044.

In addition, we received $10.6 million from the sale and leaseback of equipment.

These financing obligations have a weighted average effective interest rate of 9.170%, require monthly payments and have a weighted average remaining term of 3.8 years.

Working Capital Management

We manage our liquidity and working capital to fund our operations, meet debt service obligations, finance capital expenditures and fund other business initiatives.

The cost of raw materials, primarily for steel, copper and precious metals is subject to price volatility due to tariffs, supply chain constraints and market supply and demand.

A significant increase in the prices we pay for raw materials may cause our working capital needs to increase, which could reduce our liquidity and borrowing availability.

Accounts Receivable Sales Programs

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Our access to these programs is dependent on our customers’ ongoing agreements with the third-parties.

Our participation in these programs is based on our

specific cash needs throughout the year, the discount charged to receive payment earlier, the length of the payment terms with our customers, as well being subject to limits in our ABL Facility and 2021 Term Loan Facility agreements.

Our participation in these programs is based on our specific cash needs throughout the year, the discount charged to receive payment earlier, the length of the payment terms with our customers, as well being subject to limits in our ABL Facility and Term Loan Facility agreements.

Other Receivables

In 2021, we filed a refund claim with the IRS as a result of the Coronavirus Aid, Relief, and Economic Security Act.

Including interest accrued on the initial refund amount, we have a $12.4 million tax refund receivable at March 31, 2025, which is in the process of IRS review.

The timing of the receipt of the refund is expected in the first half of 2025.

Including interest accrued on the initial refund amount, we have a $12.6 million tax refund receivable at June 30, 2025, which is being processed for refund at the IRS service center.

The timing of the receipt of the refund is expected in 2025.

Seasonality and Fluctuation in Quarterly Results

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Our most critical accounting estimates are discussed in the Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the 2024 Annual Report.

There have been no material changes to our significant accounting policies or critical accounting estimates during the three months ended March 31, 2025.

There have been no material changes to our significant accounting policies or critical accounting estimates during the six months ended June 30, 2025.

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