What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-04 compared with 2025-03-06 · 131 added, 88 removed, 133 unchanged (62% of the section changed)

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Overview and Management Focus

During 2024, the Company continued its enterprise transformation plan to grow sales, profits, free cash flow and shareholder value.

The main tenets of the Company’s transformation plan are:

• Strengthening our team with new executive and functional leadership;

• Fixing unprofitable areas of the business;

• Advancing and strengthening profitability;

• Improving our balance sheet;

• Accelerating sales growth.

We continue to execute our transformation plan through:

During 2025, the Company continued to execute on its enterprise transformation plan through:

• Obtaining new business wins in targeted growth areas;

• Cost improvement plans and the rationalizing of our footprint;

• Improving underperforming plants;

• Intentionally shifting the business portfolio by expanding in targeted growth markets;

• Expanding margins through improved sales mix;

• Cost improvement plans and streamlining headcount;

• Improving underperforming plants and strategically rationalizing our footprint;

• Achieving net cost-down through our continuous improvement program;

• Reduced leverage through improved operating performance and a strategic divestiture;

• Lowering our cost of capital and improving our capital structure.

We are a strategic partner to a diversified and global customer base with long standing business relationships and long-running business streams.

We participate in growing and attractive end markets, including global automotive parts and passenger vehicles, commercial vehicles, grid and electrical investment, and medical components.

• Improved operating performance;

• Refinancing of our term loan.

We are a strategic partner to a diversified and global customer base wit h long standing business relationships and long-running business streams.

We participate in growing and attractive end markets, including grid a nd electrical distribution, defense and electronics, high-value global automotive parts and passenger vehicles, commercial vehicle and medical components.

Management generally focuses on these trends and relevant market indicators:

• Trends related to the geographic migration of competitive manufacturing, electric vehicles, and electrification;

• Trends related to the geographic migration of competitive manufacturing, electric vehicles, electrification, electrical distribution and infrastructure, and defense technologies;

• Costs subject to regional and global inflationary environments, including, but not limited to:

• Raw materials;

• Raw materials including precious metals;

• Wages and benefits, including health care costs;

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• Currency and exchange rate movements and trends;

• Electric grid and data center investment trends;

• Automation and processing speed trends for the type of equipment needed to manufacture the Company’s products;

• Global prices for the types of metals and precious metals the Company uses in its products;

• Interest rate levels and expectations;

• Changes in tariff regulations.

Results of Operations

Factors That May Influence Results of Operations

The following paragraphs describe factors that have influenced results of operations for the year ended December 31, 2024, that management believes are important to provide an understanding of the business and results of operations or that may influence operations in the future.

The following paragraphs describe several important factors that have influenced, and we expect will continue to influence our results of operations for the year ended December 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.

Macroeconomic Conditions

We continue to monitor the ongoing impacts of current macroeconomic and geopolitical events, including changing conditions from ongoing military conflicts, 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 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 and have made it more difficult to procure precious metals.

In particular, prices for commodities and certain metals, including, but not limited to, gold, silver and copper, have recently shown increased volatility.

Significant price increases for these commodities and precious metals have, and could continue to have, an adverse effect on our liquidity and operating profits if we cannot timely mitigate the price increases by successfully sourcing lower cost commodities or precious metals or by passing the increased costs on to customers.

See “Item 1A.

Risk Factors— Increased prices or significant shortages of the commodities that we use in our businesses have had, and could continue to have, a material adverse effect on our business, prospects, financial condition, liquidity, results of operations or cash flows.

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, including the cost of raw materials, 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.

In January 2025, we ceased production activities at our Mobile Solutions plant in Juarez, Mexico.

We plan to stop production activity at our Mobile Solutions plant in Dowagiac, Michigan by the end of the first quarter of 2025.

During the first quarter of 2025, we ceased production activities at our Mobile Solutions plants in Juarez, Mexico and Dowagiac, Michigan.

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

Sales Concentration

During the year ended December 31, 2025, a customer in our Mobile Solutions segment represented 11% of consolidated net sales.

During the years ended December 31, 2024 and 2023, no single customer accounted for 10% or more of consolidated net sales.

Results of Operations

Year Ended December 31, 2025 compared to the Year Ended December 31, 2024

Financial Data as a Percentage of Net Sales

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Net loss (8.1) % (8.2) % (10.2) %

Year Ended December 31, 2024 compared to the Year Ended December 31, 2023

Consolidated Results

Years Ended December 31,

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Loss on extinguishment of debt 3,007 349 2,658

Other expense (income), net (4,558) 10,730 (15,288)

Other income, net (4,568) (4,558) (10)

Loss before provision for income taxes and share of net income from joint venture (39,721) (45,434) 5,713

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Net loss $ (34,004) $ (38,273) $ 4,269

Net sales decreased by $25.0 million, or 5.1%, during the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to the sale of our Lubbock operations, customer settlements received in 2023, rationalized volume at plants undergoing turnarounds and unfavorable foreign exchange effects of $3.5 million.

These decreases were partially offset by the net impact of contractual pass-through material pricing provisions.

Net sales decreased by $42.1 million, or 9.1% , during the year ended December 31, 2025, compared to the year ended December 31, 2024, primarily due to the rationalization of underperforming business and plants, the sale of our Lubbock operations, lower volumes an d unfavorable foreign exchange effects of $0.6 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 $24.4 million, or 5.8%, during the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to lower sales volume and lower labor costs associated with facility closures.

Cost of sale s decreased by $32.0 million, or 8.1% , during the year ended December 31, 2025, compared to the year ended December 31, 2024, primarily due to the decrease in sales.

Selling, General, and Administrative Expense.

Selling, general, and administrative expense increased by $2.0 million during the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to higher travel, stock compensation and severance expense, partially offset by lower salaries due to a reduction in headcount.

Selling, general, and administrative expense decreased by $3.3 million, or 6.7%, during the year ended December 31, 2025, compared to the year ended December 31, 2024, primarily due to lower compensation expense due to a reduction in headcount.

Depreciation and Amortization .

Depreciation and amortization decreased by $9.4 million or 20.7% during the year ended December 31, 2025, compared to the year ended December 31, 2024 primarily due to the impact of historical purchase accounting step-up basis becoming fully depreciated in the second half of 2024.

Other Operating Expense (Income), Net.

Other operating expense (income), net changed unfavorably by $3.9 million primarily due to the impairment of machinery and equipment at a plant that will close in 2025, partially offset by increased sublease income earned on closed facilities and gains on sale of property, plant and equipment.

Other operating expense (income), net changed favorably by $6.1 million primarily due to the impairment of machinery and equipment recorded in 2024 at a plant that closed in 2025.

Interest Expense.

Interest expense increased by $1.0 million during the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to a decrease in the gain recognized on interest rate swap and an increase in the amortization of debt issuance costs.

These were partially offset by lower interest rates and lower outstanding balances.

Interest expense increased by $0.3 million during the year ended December 31, 2025, compared to the year ended December 31, 2024, primarily due to a decrease in the gain recognized on interest rate swap in 2024 The change is partially offset by a decrease in the amortization of debt issuance costs, lower average debt balances and lower interest rates.

Years Ended December 31,

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Total interest expense $ 22,367 $ 22,095

Other Expense (Income), Net.

Other expense (income), net changed favorably by $15.3 million during the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to the $7.2 million gain on sale of the Lubbock operations and a $10.8 million decrease in noncash derivative mark-to-market losses, partially offset by unfavorable foreign exchange effects associated with intercompany borrowings.

Loss on Extinguishment of Debt.

Loss on extinguishment of debt was $3.0 million during the year ended December 31, 2025 due to the termination of the 2021 Term Loan Facility, see Note 9 to the Consolidated Financial Statements.

Other Income, Net.

Other income, net remained consistent during the year ended December 31, 2025, compared to the year ended December 31, 2024.

Provision for Income Taxes.

Our effective tax rate was (7.9)% for the year ended December 31, 2025, compared to (5.3)% for the year ended December 31, 2024.

Our effective tax rate for the years ended December 31, 2024 and 2023 were unfavorably impacted by 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 loss carryforwards in certain jurisdictions where we believe it is more likely than not that a portion of the future tax benefit may not be realized.

The effective tax rate for the years ended December 31, 2024 and

2023 were favorably impacted by the recording of interest income on the Company’s federal income tax refund requested as a result of the Coronavirus Aid, Relief, and Economic Security Act, as well as the recording of a benefit of a state refund claim.

Our effective tax rate for the years ended December 31, 2025 and 2024 were unfavorably

impacted by 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 loss carryforwards in certain jurisdictions where we believe it is more likely than not that a portion of the future tax benefit may not be realized.

The effective tax rate for the years ended December 31, 2025 and 2024 were favorably impacted by the recording of interest income on our federal income tax refund requested as a result of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), as well as the recording of a benefit of a state refund claim in 2024.

Share of Net Income from Joint Venture.

Share of net income from the joint venture increased by $3.8 million during the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to higher sales and increased margin partially offset by higher fixed costs, depreciation and income taxes.

Share of net income from the joint venture decreased by $0.7 million during the year ended December 31, 2025, compared to the year ended December 31, 2024, primarily due to higher fixed costs, depreciation and income taxes partially offset by higher sales and increased margin.

The joint venture, in which we own a 49% investment, recognized net sales of $133.6 million and $130.8 million for the years ended December 31, 2025 and 2024, respectively.

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Loss from operations $ (8,021) $ (18,078) $ 10,057

Net sales decreased by $19.4 million, or 6.4%, during the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due rationalized volume at plants undergoing turnarounds, contractual reduction in customer pass-through material pricing, a customer settlement received in 2023 and unfavorable foreign exchange effects of $3.3 million.

Loss from operations changed unfavorably by $6.3 million during the year ended December 31, 2024 compared to the prior year, primarily due to the impairment of machinery and equipment at a plant that will close in 2025.

The change was also impacted by higher depreciation expense and selling, general and administrative costs.

Net sale s decreased by $39.9 million, or 14.1% , during the year ended December 31, 2025, compared to the year ended December 31, 2024, primarily due to rationalization of underperforming business and plants, lower volume in North America partially offset by favorable foreign exchange effects of $0.2 million .

Loss from operations change d favorably by $10.1 million during the year ended December 31, 2025 compared to the prior year, primarily due to impairment of machinery and equipment recorded in 2024 related to a plant that closed in 2025 and lower depreciation expense due to the impact of historical purchase accounting step-up basis becoming fully depreciated in the second half of 2024.

The changes are also impacted by lower gross profits.

POWER SOLUTIONS

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Income from operations $ 10,321 $ 13,111 $ (2,790)

Net sales decreased by $5.4 million, or 2.9%, during the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to the sale of our Lubbock operations, premium pricing received on a certain customer project during the first quarter of 2023 and unfavorable foreign exchange effects of $0.2 million.

Net sales decreased by $1.9 million, or 1.1% , during the year ended December 31, 2025, compared to the year ended December 31, 2024, primarily due to the sale of our Lubbock operations, lower volumes, and unfavorable foreign exchange effects of $0.8 million.

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

Income from operations increased by $2.0 million during the year ended December 31, 2024 compared to the same period in the prior year, primarily due to an increase in sublease income earned on closed facilities and lower depreciation and amortization expense due to sold or fully utilized assets.

Income from operations decreased by $2.8 million during the year ended December 31, 2025 compared to the year ended December 31, 2024, primarily due to the sale of our Lubbock operations and lower volumes.

The decrease is partially offset by lower administrative costs and lower depreciation and amortization expense due to sold or fully utilized assets.

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

From December 31, 2023 to December 31, 2024, total assets decreased by $54.0 million primarily due to decreases in property, plant and equipment and intangible assets due to depreciation and amortization as well as the impairment of machinery and equipment at a plant that will close in 2025.

Additionally, accounts receivable, inventory and property, plant and equipment decreased due to the sale of our Lubbock operations during the year.

These decreases were partially offset by increases in our investment in a joint venture.

From December 31, 2023 to December 31, 2024, total liabilities decreased by $19.2 million, primarily due to a decrease in accounts payable, a decrease in other non-current liabilities due to the exercise of warrants in 2024 and a reduction in long-term debt due to the partial pay down of the outstanding balance with proceeds from the sale of our Lubbock operations.

These decreases were partially offset by an increase in accrued salaries, wages and benefits.

From December 31, 2024 to December 31, 2025, total asset s decreased by $16.1 million primarily due to decreases in cash and decreases in property, plant and equipment and intangible assets.

Additionally, accounts receivable and property, plant and equipment decreased due to the sale of our Lubbock operations during the year.

These decreases were partially offset by increases in our investment in a joint venture and increases in inventories.

From December 31, 2024 to December 31, 2025, total liabilities increased by $5.5 million , primarily due to an increase in accounts payable and long-term debt.

These increases were partially offset by a decrease in accrued salaries, wages and benefits and reduction in net lease liabilities.

Working capital, which consists of current assets less current liabilities, was $74.2 million as of December 31, 2025, compared to $83.7 million as of December 31, 2024.

The decrease in working capital was primarily due to decreases in accounts receivable and inventory, and an increase in accrued salaries, wages and benefits.

These were partially offset by a decrease in accounts payable.

The decrease in working capital was primarily due to decreases in cash and accounts receivable along with a decrease in accrued salaries, wages and benefits.

These were partially offset by an increase in accounts payable.

Cash provided by operations was $5.7 million for the year ended December 31, 2025, compared with $11.1 million for the year ended December 31, 2024.

The decline was due to decreases in accounts receivable and inventory during 2023 compared

with a decrease in accounts payable during 2024.

These declines were partially offset by a larger dividend received from the JV in 2024.

Cash used in investing activities was $1.0 million for the year ended December 31, 2024, compared with cash used in investing activities of $17.6 million for the year ended December 31, 2023.

The favorable change is primarily due to the $17.0 million received for the sale of the Lubbock operations during 2024.

Cash used in financing activities increased by $10.4 million during the year ended December 31, 2024 compared to the same period in 2023, primarily due to higher repayments of long-term debt and debt issuance costs in 2024, partially offset by proceeds from the sale-leaseback transactions in 2024 and proceeds from international loans in 2023.

The decline was due to a decrease in other operating liabilities, an increase in inventory and timing of dividend received from the joint venture.

This decrease was partially offset by lower accounts receivable and higher accounts payable.

Cash used in investing activities was $11.0 million f or the year ended December 31, 2025, compared with cash used in investing activities of $1.0 million for the year ended December 31, 2024.

The un favorable change is primarily due to the $17.0 million received for the sale of the Lubbock operations during 2024 partially offset by the reduction in capital expenditures.

Cash used in financing activities was $2.5 million d uring the year ended December 31, 2025 compared with $13.2 million for the year ended December 31, 2024, primarily due to higher net borrowings partially offset by the reduction in proceeds from sale leasebacks.

Liquidity and Capital Resources

Credit Facilities

The principal amount outstanding under our Term Loan Facility as of December 31, 2024, was $114.4 million, without regard to unamortized debt issuance costs and discount.

As of December 31, 2024, we had $5.4 million outstanding borrowings under the ABL Facility and $15.0 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 December 31, 2024, which are considered as usage of the ABL Facility.

The Term Loan Facility requires quarterly principal payments of $0.4 million with the remaining unpaid principal amount due on the final maturity date of September 22, 2026.

We may be required to make additional principal payments annually that are calculated as a percentage of our excess cash flow, as defined by the lender, based on our net leverage ratio.

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

1) one-month, three-month, or six-month Adjusted Term SOFR, subject to a 1.00% floor, plus an applicable margin of 6.875%;

or 2) the greater of various benchmark rates plus an applicable margin of 5.875%.

Beginning with the second quarter of 2023, interest was increased on a paid-in-kind basis at a rate between 1.00% and 2.00%, dependent on our net leverage ratio, for the most recently reported fiscal quarter and subject to reduction upon the occurrence of certain conditions as set forth in the credit agreement governing the Term Loan Facility.

Based on the interest rate in effect at December 31, 2024, annual cash interest payments would be approximately $13.0 million, with an additional $1.1 million accrued as paid-in-kind interest.

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”);

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 1.0%, 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 Term Loan Facility and ABL Facility as of December 31, 2024.

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

Term Loan Facility

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

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

As of December 31, 2025, we had $11.4 million of outstanding letters of credit issued under the ABL Facility and $26.7 million in undrawn commitments, as well as $10.0 million in delayed draw term loan commitments, which was fully drawn in January 2026.

The Term Loans mature on April 16, 2030.

We used the proceeds from the Closing Date Term Loan to repay all of our outstanding obligations under our outstanding term loan facility (see Note 9 to the Consolidated Financial Statements).

Under the Term Loan Credit Agreement, interest rates on the Term Loans are determined based on the type of Term Loan, the length of the interest period, and our Consolidated Net Leverage Ratio (as defined in the Term Loan Credit Agreement).

The Term Loans currently bear interest at either:

1) one-month, three-month, or six-month term secured overnight finance rate (“SOFR”) with a credit spread adjustment, subject to a 2.00% floor, plus an applicable margin ranging from 8.75% to 9.75% based on our Consolidated Net Leverage Ratio (as defined therein) (“Adjusted Term SOFR Rate Loans”);

or 2) the greater of various benchmark rates, with certain adjustments, plus an applicable margin ranging from 7.75% to 8.75% based on our Consolidated Net Leverage Ratio (“Base Rate Loans”).

For interest payments due before April 16, 2027, we may elect to pay a portion of interest in-kind (“PIK Election”), 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.

At December 31, 2025, the Term Loans bore interest, including amounts we have elected to pay as PIK interest, based on one-month Adjusted Term SOFR, at 13.57%.

On January 29, 2026, we borrowed $10.0 million on the Delayed Draw Term Loans.

As a result of borrowing the Delayed Draw Term Loans, the applicable margin for all Term Loans increased by 0.50%.

Through January 29, 2026, we incurred a 1.00% commitment fee on undrawn amounts under the Delayed Draw, payable quarterly in arrears.

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.

We may voluntarily prepay the Term Loans, in whole or part without premium or penalty following April 16, 2027.

If we voluntarily prepay borrowings prior to April 16, 2026, we are subject to a prepayment premium equal to the present value at the prepayment date of (i) 2.00% of the outstanding principal amount of the Term Loans to be prepaid, plus (ii) all remaining scheduled interest payments due on such Term Loans through April 16, 2026 (excluding accrued but unpaid interest to, but not including, the prepayment date), computed using a discount rate equal to the Treasury Rate (determined as of the Business Day prior to such date of prepayment) plus 50 basis points.

If we voluntarily prepay borrowings following April 16, 2026 and prior to April 16, 2027, we are subject to a prepayment premium equal to 2.00% of the principal amount prepaid.

The Term Loan Credit Agreement includes customary representations, warranties and covenants, including, but not limited to, certain financial covenants, such as maximum Consolidated Net Leverage Ratio and minimum Domestic Liquidity (as defined

in the Term Loan Credit Agreement), subject, in the case of the Consolidated Net Leverage Ratio covenant, to certain equity cure rights.

We were in compliance with the financial covenants of the Term Loan Facility as of December 31, 2025.

Our obligations under the Term Loan Credit Agreement are guaranteed by certain of our subsidiaries and are required to be guaranteed by certain of our later formed or acquired subsidiaries (collectively, the “Guarantors”).

Our obligations under the Term Loan Credit Agreement are collateralized by substantially all of our and the Guarantors’ assets.

The Term Loan Agent, for itself and on behalf of the Lenders, has a first lien on all domestic assets, other than accounts receivable and inventory, and certain foreign assets and has a second lien on domestic accounts receivable and inventory.

The Term Loan Credit Agreement contains customary events of default relating to, among other things, payment defaults, breach of covenants, cross acceleration to material indebtedness, bankruptcy-related defaults, judgment defaults, and the occurrence of certain change of control events.

If an event of default occurs, the lenders under the Term Loan Credit Agreement will be entitled to take various actions, including the termination of any undrawn commitments and the acceleration of amounts due under the Term Loan Credit Agreement.

The Term Loan Facility was issued at a $2.5 million discount and we capitalized an additional $0.7 million in debt issuance costs.

These costs are recorded as a direct reduction to the carrying amount of the associated long-term debt and amortized over the term of the debt.

On December 30, 2024, we entered into a Revolving Credit and Security Agreement by and among the Company and PNC Bank National Association as lender and administrative agent (in such capacity, the “ABL Agent”) (as amended from time to time, including by the First Amendment to Revolving Credit and Security Agreement, dated as of April 16, 2025, the “ABL Credit Agreement”).

The ABL Credit Agreement established a new $50 million senior secured asset backed credit facility (the “ABL Facility”) which provides for senior secured revolving loans (“Revolving Loan”) in the amount of $50.0 million, and permits the issuance of letters of credit thereunder subject to a $15.0 million sublimit.

The availability under the ABL Facility is limited by a borrowing base calculation derived from accounts receivable and inventory held in the United States, less customary reserves and other items.

The final maturity date of the ABL Facility is the earlier of:

1) December 30, 2029;

or 2) 91 days prior to the loan maturity date of the Term Loan Facility.

Under the ABL Facility, Revolving Loans bear interest as either 1) one, three or six month SOFR plus 1.50%, plus an adjustment of 0.10% (“Term SOFR Rate”);

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 (“Alternative Base Rate”).

At December 31, 2025, based on an Alternative Base Rate Rate, the interest rate on outstanding borrowings under the ABL Facility was 7.25% .

We incur a commitment fee of 0.25% for unused capacity under the ABL Facility and a 1.85% fee on the amount of letters of credit outstanding.

The final maturity date of the ABL Facility is the earlier of:

1) December 30, 2029;

or 2) 91 days prior to the loan maturity date of the Term Loan Facility.

We capitalized a total of $1.2 million in new debt issuance costs related to the ABL Facility.

As of December 31, 2025, we had $4.7 million outstanding borrowings under the ABL Facility, $11.4 million o f outstanding letters of credit, and $26.7 million available for future borrowings under the ABL Facility.

The ABL Credit Agreement includes customary representations, warranties and covenants, including, but not limited to, a financial covenants as to a minimum Fixed Charge Coverage Ratio (as defined in the ABL Credit Agreement).

We were in compliance with the financial covenants of the ABL Facility as of December 31, 2025.

Our obligations under the ABL Credit Agreement are guaranteed by certain of our subsidiaries and are required to be guaranteed by certain of our later formed or acquired subsidiaries (collectively, the “Guarantors”).

Our obligations under the ABL Credit Agreement are collateralized by substantially all of our and the Guarantors’ assets.

The ABL Agent, for itself and on behalf of the Lenders, has a first lien on accounts receivable and inventory.

The ABL Credit Agreement contains customary events of default relating to, among other things, payment defaults, breach of covenants, cross acceleration to material indebtedness, bankruptcy-related defaults, judgment defaults, and the occurrence of certain change of control events.

If an event of default occurs, the lenders under the ABL Credit Agreement will be entitled to take various actions, including the termination of any undrawn commitments and the acceleration of amounts due under the ABL Credit Agreement.

Sale Leaseback Transactions

During the year ended December 31, 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 Term Loan Facility.

The effective interest rate of 9.715% on this transaction, which terminates in 2044, was lower than the borrowings on the Term Loan Facility.

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 Term Loan Facility and the balance used for ongoing operational investments

During 2025 and 2024, we entered into several sale-leaseback tran sactions 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 9.17%, requires monthly payments and terminate in 2044.

In addition, we received $11.0 million from the sale and leaseback of equipment.

These financing obligations have a weighted average effective interest rate of 8.26%, require monthly payments and have a weighted average remaining term of 3.3 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

We participate in programs established by our customers which allows us to sell certain receivables from that customer on a non-recourse basis to a third-party financial institution.

In exchange, we receive payment on the receivables, less a discount, sooner than under the customary credit terms we have extended to that customer.

We participate in programs established by our customers and financial institutions which allow us to sell certain receivables from customers on a non-recourse basis to a third-party financial institution.

In exchange, we receive payment on the receivables, less a discount, sooner than under the customary credit terms we have extended to customer.

These programs allow us to improve working capital and cash flows at the same or lower interest rates as available on our ABL Facility.

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 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 $12.3 million tax refund receivable at December 31, 2024, which is in the process of IRS review.

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

In 2021, we filed a refund claim with the IRS as a result of the CARES Act.

Including interest accrued on the initial refund amount, we have a $12.9 million t ax refund receivable at December 31, 2025, which is being processed for refund at the IRS service center.

Functional Currencies

18 unchanged sentences

We eliminate disproportionate tax effects from accumulated other comprehensive income (loss) when the circumstances upon which they are premised cease to exist.

The calculation of tax assets, liabilities, and expenses under U.S.

The calculation of tax assets, liabilities, and expenses under accounting principles generally accepted in the United States (“U.S.

GAAP”) is largely dependent on management judgment of the current and future deductibility and utilization of taxable expenses and benefits using a more likely than not threshold.

1 unchanged sentence

A significant piece of objective negative evidence evaluated is cumulative losses incurred over the three-year period ended December 31, 2025.

Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future earnings growth.

Such objective evidence limits the ability to consider other subjective

evidence, such as our projections for future earnings growth.

We have recorded a U.S.

12 unchanged sentences

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

What changed 10-K

Item 7. Management’s Discussion and Analysis