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Item 2. Management’s Discussion and Analysis

2026-05-06 compared with 2025-10-29 · 106 added, 141 removed, 88 unchanged (74% 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 and nine months ended September 30, 2025.

The financial information as of September 30, 2025, should be read in conjunction with the consolidated financial statements for the year ended December 31, 2024, contained in our Form 10-K for the year ended December 31, 2024 (“2024 Annual Report”), and the Condensed Consolidated Financial Statements included in this Quarterly Report.

and its consolidated subsidiaries for the three months ended March 31, 2026.

The financial information as of March 31, 2026, should be read in conjunction with the consolidated financial statements for the year ended December 31, 2025, contained in our Form 10-K for the year ended December 31, 2025 (“2025 Annual Report”), and the Condensed Consolidated Financial Statements included in this Quarterly Report.

Forward-Looking Statements

This Quarterly Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and include this statement for purposes of complying with these safe harbor provisions.

These statements may discuss goals, intentions and expectations as to future trends, plans, events, results of operations or financial condition, or state other information relating to the Company, based on current beliefs of management as well as assumptions made by, and information currently available to, management.

Forward-looking statements generally will be accompanied by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “growth,” “guidance,” “intend,” “may,” “will,” “possible,” “potential,” “predict,” “project,” “trajectory” or other similar words, phrases or expressions.

Forward-looking statements involve a number of risks and uncertainties that are outside of management’s control and that may cause actual results to be materially different from such forward-looking statements.

Such factors include, among others, general economic conditions and economic conditions in the industrial sector;

the impacts of pandemics, epidemics, disease outbreaks and other public health crises on our financial condition, business operations and liquidity;

the potential impacts of tariffs on the U.S.

economy, the economy of other countries in which we conduct operations and our industry, as well as the potential implications and ramifications of tariffs on our business and the local and global supply chains supporting the same, and our ability to mitigate any adverse impacts of such;

competitive influences;

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quality issues;

material changes in the costs and availability of raw materials;

economic, social, political and geopolitical instability, military conflict, currency fluctuation, and other risks of doing business outside of the United States;

inflationary pressures and changes in the cost or availability of materials, supply chain shortages and disruptions, the availability of labor and labor disruptions along the supply chain;

inflationary pressures and material changes in the cost or availability of raw materials, supply chain shortages and disruptions, the availability of labor and labor disruptions along the supply chain;

our dependence on certain major customers, some of whom are not parties to long-term agreements (and/or are terminable on short notice);

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our ability to hire or retain key personnel;

the level of our indebtedness;

the restrictions contained in our debt agreements;

our ability to obtain financing at favorable rates, if at all, and to refinance existing debt as it matures;

the level of our indebtedness and our ability to obtain financing at favorable rates, if at all, or to refinance existing debt as it matures;

our ability to secure, maintain or enforce patents or other appropriate protections for our intellectual property;

new laws and governmental regulations;

the impact of climate change on our operations;

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.

The foregoing factors should not be construed as exhaustive and should be read in conjunction with the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2024 Annual Report and in this Quarterly Report.

Any forward-looking statement speaks only as of the date of this Quarterly Report, and we undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

New risks and uncertainties may emerge from time to time, and it is not possible for us to predict their occurrence or how they will affect the Company.

We qualify all forward-looking statements by these cautionary statements.

economic, social, political and geopolitical instability, military conflict, currency fluctuation, and other risks of doing business outside of the United States;

uncertainty of government policies and actions in respect to global trade and tariffs, including the potential impacts of tariffs on the United States economy, the economy of other countries in which we conduct operations and our industry, cyber liability or potential liability for breaches of our or our service providers’ information technology systems or business operations disruptions;

and other risks and uncertainties set forth in documents filed, or to be filed, with the Securities and Exchange Commission (the “SEC”).

For the reasons described above, the Company cautions against relying on any forward-looking statements, which should be read in conjunction with the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2025 Annual Report, this Quarterly Report and any of the Company’s subsequent filings made with the SEC.

Any forward-looking statement speaks only as of the date of this Quarterly Report, and the Company undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

For additional information concerning such risk factors and cautionary statements, please see the sections titled “Item 1A.

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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.

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, steel, copper, and precious metals, 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.

Footprint Optimization

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.

During the second half of 2024, we identified two manufacturing facilities to close due to volume rationalization which have reduced costs and improved operational efficiency.

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.

In addition, we implemented operational and cost optimization actions to reduce indirect and overhead costs.

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

Results of Operations

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

Consolidated Results

Three Months Ended September 30,

2025 2024 $ Change

Net sales $ 103,882 $ 113,587 $ (9,705)

Cost of sales (exclusive of depreciation and amortization shown separately below) 86,410 97,131 (10,721)

Selling, general, and administrative expense 11,059 10,257 802

Depreciation and amortization 9,064 10,844 (1,780)

Other operating income, net (404) (895) 491

Loss from operations (2,247) (3,750) 1,503

Interest expense 5,666 5,404 262

Other income, net (70) (5,315) 5,245

Loss before provision for income taxes and share of net income from joint venture (7,843) (3,839) (4,004)

Provision for income taxes (815) (903) 88

Share of net income from joint venture 1,979 2,185 (206)

Net loss $ (6,679) $ (2,557) $ (4,122)

Net sales decreased by $9.7 million, or 8.5%, during the three months ended September 30, 2025, compared to the three months ended September 30, 2024, primarily due to the rationalization of underperforming business and plants and lower volumes.

These decreases were partially offset by contribution of new business launches, higher precious metals pass-through pricing and favorable foreign exchange effects of $0.8 million.

Cost of Sales.

Cost of sales decreased by $10.7 million, or 11.0%, during the three months ended September 30, 2025, compared to the three months ended September 30, 2024, primarily due to the decrease in sales.

Selling, General, and Administrative Expense.

Selling, general, and administrative expense increased by $0.8 million during the three months ended September 30, 2025, compared to the three months ended September 30, 2024, primarily due to payroll and benefits compensation expense related to increase in expected bonus payments in our Power segment.

Depreciation and amortization .

Depreciation and amortization decreased by $1.8 million during the three months ended September 30, 2025, compared to the three months ended September 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 increased by $0.3 million during the three months ended September 30, 2025, compared to the three months ended September 30, 2024, primarily due to average debt balances, interest rates and amortization of debt issuance costs.

Three Months Ended September 30,

Interest on debt $ 5,724 $ 4,990

Gain recognized on interest rate swap — (150)

Amortization of debt issuance costs and discount 191 612

Capitalized interest (207) (224)

Other (42) 176

Total interest expense $ 5,666 $ 5,404

Other Income, Net.

Other income, net decreased by $5.2 million during the three months ended September 30, 2025, compared to the three months ended September 30, 2024, primarily due to lower noncash derivative mark-to-market losses recognized during the current quarter compared to the third quarter of 2024.

Provision For Income Taxes .

Our effective tax rate was (10.4)% for the three months ended September 30, 2025, compared to (23.5)% for the three months ended September 30, 2024.

The rate for the three months ended September 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 decreased during the three months ended September 30, 2025, compared to the three months ended September 30, 2024.

The JV, in which we own a 49% investment, recognized net sales of $33.3 million and $32.4 million for the three months ended September 30, 2025 and 2024, respectively.

Results by Segment

MOBILE SOLUTIONS

Three Months Ended September 30,

2025 2024 $ Change

Net sales $ 59,117 $ 70,678 $ (11,561)

Loss from operations $ (2,854) $ (1,441) $ (1,413)

Net sales decreased by $11.6 million, or 16.4%, during the three months ended September 30, 2025, compared to the three months ended September 30, 2024, primarily due to rationalization of underperforming business and plants, lower volume in North America customers and favorable foreign exchange effects of $0.8 million.

Loss from operations increased by $1.4 million or 98.1% during the three months ended September 30, 2025, compared to the same period in the prior year, primarily related to reduced revenue resulting in lower gross profits and an increase in China related operational costs.

POWER SOLUTIONS

Three Months Ended September 30,

2025 2024 $ Change

Net sales $ 44,948 $ 42,935 $ 2,013

Income from operations $ 5,432 $ 2,505 $ 2,927

Net sales increased by $2.0 million, or 4.7%, during the three months ended September 30, 2025 compared to the three months ended September 30, 2024, due to increase in precious metals pass-through pricing offset by lower volumes and favorable foreign exchange effects of $0.1 million.

Income from operations increased by $2.9 million during the three months ended September 30, 2025 compared to the same period in the prior year, primarily due improved margins and lower compensation costs due to headcount reductions.

Nine Months Ended September 30, 2025 compared to the Nine Months Ended September 30, 2024

Three Months Ended March 31, 2026 compared to the Three Months Ended March 31, 2025

Consolidated Results

Nine Months Ended September 30,

Three Months Ended March 31,

2026 2025 $ Change

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Interest expense 5,769 5,194 575

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

Other income, net (2,858) (4,623) 1,765

Other expense (income), net 502 (2,169) 2,671

Loss before provision for income taxes and share of net income from joint venture (8,329) (7,814) (515)

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Net loss $ (6,828) $ (6,685) $ (143)

Net sales decreased by $40.3 million, or 11.3%, during the nine months ended September 30, 2025, compared to the nine months ended September 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 $2.7 million.

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

Net sales increased by $12.8 million, or 12.1%, during the three months ended March 31, 2026, compared to the three months ended March 31, 2025, primarily due to the contribution of new business launches, higher precious metals pass-through pricing, higher volumes in certain areas and favorable foreign exchange effects of $3.1 million.

Cost of Sales.

Cost of sales decreased by $31.7 million, or 10.6%, during the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024, primarily due to the decrease in sales.

Cost of sales increased by $7.4 million, or 8.1%, during the three months ended March 31, 2026, compared to the three months ended March 31, 2025, primarily due to the increase in sales.

Selling, General, and Administrative Expense.

Selling, general, and administrative expense decreased by $2.8 million during the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024, primarily due to lower compensation expense due to a reduction in headcount.

Selling, general, and administrative expense increased by $2.1 million during the three months ended March 31, 2026, compared to the three months ended March 31, 2025, primarily due to payroll and benefits compensation expense related to an increase in bonus expense and medical benefits.

Depreciation and amortization .

Depreciation and amortization decreased by $8.4 million during the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024, primarily due to impact of historical purchase accounting step-up basis becoming fully depreciated in the second half of 2024.

Depreciation and amortization increased by $0.5 million during the three months ended March 31, 2026, compared to the three months ended March 31, 2025, primarily due to the impact of capital expenditures placed in service in the current and prior year.

Interest Expense.

Interest expense decreased by $0.1 million during the nine months ended September 30, 2025, compared to the nine months ended September 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.

Nine Months Ended September 30,

Interest expense increased by $0.6 million during the three months ended March 31, 2026, compared to the three months ended March 31, 2025, primarily due to an increase in average debt balances and interest rates.

The increases are partially offset by a decrease in amortization of debt issuance costs and discount.

Three Months Ended March 31,

Interest on debt $ 5,516 $ 4,405

Gain recognized on interest rate swap — (1,048)

Amortization of debt issuance costs and discount 249 716

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Total interest expense $ 5,769 $ 5,194

Loss on Extinguishment of Debt.

Loss on extinguishment of debt was $3.0 million during the nine months ended September 30, 2025 due to the termination of the 2021 Term Loan Facility, see Note 8 to the Condensed Consolidated Financial Statements.

Other Income, Net.

Other income, net changed unfavorably by $1.8 million during the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024, primarily due to noncash derivative mark-to-market gains recognized during 2025 and unfavorable foreign exchange effects associated with intercompany borrowings.

Other Expense (Income), Net.

Other expense (income), net decreased by $2.7 million during the three months ended March 31, 2026, compared to the three months ended March 31, 2025, primarily due to noncash derivative mark-to-market loss recognized during the first quarter of 2026 compared to noncash derivative mark-to-market gain the first quarter of 2025.

Provision for Income Taxes .

Our effective tax rate was (11.5)% for the nine months ended September 30, 2025, compared to (5.3)% for the nine months ended September 30, 2024.

The rate for the nine months ended September 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.

Our effective tax rate was (8.6)% for the three months ended March 31, 2026, compared to (16.8)% for the three months ended March 31, 2025.

The rate for the three months ended March 31, 2026 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 remained unchanged during the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.

The JV, in which we own a 49% investment, recognized net sales of $97.7 million and $95.1 million for the nine months ended September 30, 2025 and 2024, respectively.

Share of net income from the Wuxi Weifu Autocam Precision Machinery Company, Ltd.

joint venture (the “JV”) decreased during the three months ended March 31, 2026, compared to the three months ended March 31, 2025.

The JV, in which we own a 49% investment, recognized net sales of $32.2 million and $32.7 million for the three months ended March 31, 2026 and 2025, respectively.

Results by Segment

MOBILE SOLUTIONS

Nine Months Ended September 30,

Three Months Ended March 31,

2026 2025 $ Change

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Loss from operations $ (2,075) $ (2,687) $ 612

Net sales decreased by $31.8 million, or 14.7%, during the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024, primarily due to rationalization of underperforming business and plants, lower volume in North America customers and unfavorable foreign exchange effects of $1.5 million.

Loss from operations increased by $1.4 million or 27.6% during the nine months ended September 30, 2025 and 2024, primarily related to lower gross profits and an increase in China costs.

Net sales increased by $0.9 million, or 1.4%, during the three months ended March 31, 2026, compared to the three months ended March 31, 2025, primarily due to favorable growth in North America, South America, and Europe and foreign exchange effects of $2.6 million.

These increases were partially offset by soft China volumes.

Loss from operations decreased by $0.6 million during the three months ended March 31, 2026, compared to the three months ended March 31, 2025, primarily related to improved operating performance, partially offset by increase in selling, general, and administrative costs.

POWER SOLUTIONS

Nine Months Ended September 30,

Three Months Ended March 31,

2026 2025 $ Change

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Income from operations $ 6,297 $ 3,023 $ 3,274

Net sales decreased by $8.2 million, or 5.8%, during the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024, primarily due to the sale of our Lubbock operations in 2024, lower volumes and unfavorable foreign exchange effects of $1.2 million.

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

Income from operations increased by $2.4 million during the nine months ended September 30, 2025 compared to the same period in the prior year, primarily due to lower compensation costs and higher precious metals pass-through pricing.

This increase was partially offset by the sale of our Lubbock operations.

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

From December 31, 2024 to September 30, 2025, total assets decreased by $5.9 million, primarily due to decrease in property, plant and equipment, right-of-use assets, intangible assets offset by increases in accounts receivable and inventories.

From December 31, 2024 to September 30, 2025, total liabilities increased by $5.2 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 $4.6 million, from December 31, 2024 to September 30, 2025.

The change was primarily due to a decrease in cash and accrued salaries, wages and benefits offset by an increase in accounts payable and other current portion of debt.

Cash provided by operations was $7.1 million for the nine months ended September 30, 2025, compared with $4.4 million for the nine months ended September 30, 2024.

The favorable change is primarily due to improved management of working capital.

Cash used in investing activities decreased by $11.1 million during the nine months ended September 30, 2025, compared with the same period in 2024, due to sale of business in 2024 and fewer purchases of property, plant and equipment in 2025.

Cash used in financing activities decreased by $10.4 million during the nine months ended September 30, 2025 and 2024.

The increase in proceeds from the new term loan in 2025 resulted in a decrease in net debt payments, which was offset by the proceeds from the sale-leaseback transactions in 2024 that did not occur in 2025.

Net sales increased by $11.9 million, or 27.3%, during the three months ended March 31, 2026 compared to the three months ended March 31, 2025, due to sales mix, an increase in precious metals pass-through pricing, higher volumes in certain areas and favorable foreign exchange effects of $0.5 million.

Income from operations increased by $3.3 million during the three months ended March 31, 2026 compared to the same period in the prior year, primarily due to a better sales mix and operating performance.

Changes in Financial Condition from December 31, 2025 to March 31, 2026

From December 31, 2025 to March 31, 2026, total assets increased by $12.6 million, primarily due to increases in accounts receivable, inventories and prepaid assets.

The increases are partially offset by decreases in cash and cash equivalents, property, plant and equipment, right-of-use assets, and intangible assets.

From December 31, 2025 to March 31, 2026, total liabilities increased by $15.1 million, primarily due to increases in accrued salaries, wages and benefits, other current liabilities and long-term debt due to $10.0 million of proceeds from the Delayed Draw Term Loan (as described below).

These increases were partially offset by a decrease in operating lease liabilities and other non-current liabilities.

Working capital, which consists of current assets less current liabilities, increased by $9.4 million, from December 31, 2025 to March 31, 2026.

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

Cash used in operations was $8.6 million for the three months ended March 31, 2026, compared with $3.3 million for the three months ended March 31, 2025.

The unfavorable change was primarily due to an increase in accounts receivable, inventories, and other operating assets, partially offset by change in other operating liabilities.

Cash used in investing activities decreased by $0.5 million during the three months ended March 31, 2026, compared with the three months ended March 31, 2025, due to a decrease in purchases of property, plant and equipment in 2026.

Cash provided by financing activities increased by $7.4 million during the three months ended March 31, 2026, compared with the three months ended March 31, 2025.

The increase was primarily due to $10.0 million of proceeds from Delayed Draw Term Loan (as described below), offset by lower net proceeds from our asset backed credit facilities (as described below).

Liquidity and Capital Resources

Credit Facilities

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.

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 March 31, 2026, we had $11.4 million of outstanding letters of credit issued under the ABL Facility and $30.7 million in undrawn 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 September 30, 2025, was $119.8 million, without regard to unamortized debt issuance costs and discount.

As of September 30, 2025, there were no outstanding borrowings under the ABL Facility and $29.3 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 September 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.

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 in our 2025 Annual Report).

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.

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%;

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 the financial covenants of the Term Loan Facility and ABL Facility as of September 30, 2025.

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

At March 31, 2026, the Term Loans bore interest, including amounts we have elected to pay as PIK interest, based on one-month Adjusted Term SOFR, at 13.52% .

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.

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 would have voluntarily prepaid borrowings prior to April 16, 2026, we would have been 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 March 31, 2026.

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.

In January 2026, we capitalized an additional $0.1 million in debt issuance costs as part of the borrowings under the Delayed Draw Term Loan.

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 March 31, 2026, based on an Alternative Base 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.

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

As of March 31, 2026, we had $5.0 million outstanding borrowings under the ABL Facil ity, $11.4 million of outstanding letters of credit, and $30.7 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 covenant 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 March 31, 2026.

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 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.

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.

7 unchanged sentences

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.

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

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

2 unchanged sentences

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

Including interest accrued on the initial refund amount, we have a $12.7 million tax refund receivable at September 30, 2025, which is being processed for refund at the IRS service center.

Including interest accrued on the initial refund amount, we have a $13.1 million tax refund receivable at March 31, 2026, which is being processed for refund at the IRS service center.

Seasonality and Fluctuation in Quarterly Results

5 unchanged sentences

Our most critical accounting estimates are discussed in the Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the 2025 Annual Report.

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

There have been no material changes to our significant accounting policies or critical accounting estimates during the three months ended March 31, 2026.

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