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Item 2. Management’s Discussion and Analysis

2026-08-05 compared with 2026-05-06 · 137 added, 118 removed, 76 unchanged (77% 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, 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.

and its consolidated subsidiaries for the three and six months ended June 30, 2026.

The financial information as of June 30, 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.

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 the negative of those terms, and similar expressions that convey uncertainty of future events or outcomes.

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;

competitive influences;

risks that current customers will commence or increase captive production;

risks of capacity underutilization;

quality issues;

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);

the impact of acquisitions and divestitures, as well as expansion of end markets and product offerings;

our ability to hire or retain key personnel;

the restrictions contained in our debt agreements;

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;

the impact of climate change on our operations;

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.

Risk Factors” in the 2025 Annual Report and this Quarterly Report.

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements generally can be identified by words such as, but not limited to, “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “predicts,” “projects,” “will,” and similar expressions.

These include, among other things, statements relating to the future growth of NN’s business and revenues, competitive position, expected new business wins, capital expenditures, and other aspects of the Company’s business operations, financial condition, and strategies.

Forward-looking statements may appear throughout this report and other documents we file with the Securities and Exchange Commission (SEC), including without limitation, the following sections:

Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report on Form 10-Q and Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, as updated in our subsequent Quarterly Reports on Form 10-Q.

These forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which could cause our actual results to differ materially from those reflected in the forward-looking statements.

The potential risks and uncertainties that could cause actual results to differ from the results predicted include, among others, those risks and uncertainties included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s filings made with the SEC, which are available on the SEC website at www.sec.gov.

We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law.

Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

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.

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and its subsidiaries.

Except for per share data, percentages, or as otherwise indicated, all dollar amounts and share counts presented in the tables in this Management's Discussion and Analysis of Financial Condition and Results of Operations are in thousands.

Private Placement

On June 30, 2026, we entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain institutional investors (the “Purchasers”), pursuant to which the Company agreed to sell and issue to the Purchasers 24,509,804 shares (the “Shares”) of our common stock in a private placement transaction (the “Private Placement”).

The purchase price per share of common stock in the Private Placement was $3.06 per share (the “Purchase Price”).

The closing of the Private Placement occurred on July 2, 2026 (the “Closing”).

We received total net proceeds from the Private Placement of $70.4 million, after deducting offering expenses paid by the Company.

Series D Perpetual Preferred Stock Redemption and Exchange

On August 5, 2026, we entered into an Exchange Agreement (the “Exchange Agreement”) with NHTV Holdings, LP (the “Holder”), the holder of the Series D Preferred Stock issued pursuant to the Certificate of Designation of Series D Perpetual Preferred Stock (the “Certificate of Designation”).

Pursuant to the terms of the Exchange Agreement, on August 5, 2026, we exchanged 9,850 shares of Series D Preferred Stock for 5,500,000 newly issued shares of our common stock, par value $0.01 per share (the “Common Stock” and the transaction, the “Exchange”).

The Exchange was conditioned upon the concurrent consummation of the Redemption (defined below).

In addition, pursuant to the Exchange Agreement, the Holder agreed to reduce (a) the Cash Dividend Rate (as defined in the Certificate of Designation) to an amount equal to 10.0% per annum of the then current Liquidation Preference (as defined in the Certificate of Designation) and (b) the Preference Accrual Rate (as defined in the Certificate of Designation) to an amount equal to 10.0% per annum of the then current Liquidation Preference, in each case through August 5, 2027.

After August 5, 2027, the Cash Dividend Rate and the Preference Accrual Rate will revert to the amounts as calculated in accordance with the Certificate of Designation.

The Holder also agreed that in the event we redeem in full for cash all of the then-outstanding Series D Preferred Stock from the Holder in accordance with the Certificate of Designation and pay the Holder the aggregate Redemption Price (as defined in the Certificate of Designation) otherwise payable in respect thereof on or before December 31,

2026 (the “Final Redemption”), the aggregate Redemption Price payable by us in respect of the Final Redemption Price will be reduced by $5.0 million.

On August 5, 2026, the Company redeemed 36,750 shares of Series D Preferred Stock pursuant to the optional redemption provision of the Certificate of Designation for an aggregate redemption price of $70.0 million (the “Redemption”).

The Redemption was conditioned upon the concurrent consummation of the Exchange.

Following the Exchange and the Redemption, on August 5, 2026, 18,400 shares of Series D Preferred Stock remained outstanding with an aggregate Liquidation Preference of $35.0 million.

Factors That May Influence Results of Operations

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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 and have made it more difficult to procure precious metals.

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.

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Results of Operations

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

Three Months Ended June 30, 2026 compared to the Three Months Ended June 30, 2025

Consolidated Results

Three Months Ended March 31,

Three Months Ended June 30,

2026 2025 $ Change

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Other operating income, net (1,041) (1,327) 286

Income (loss) from operations 1,005 (1,464) 2,469

Interest expense 5,720 5,657 63

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

Other income, net (217) (619) 402

Loss before provision for income taxes and share of net income from joint venture (4,498) (9,509) 5,011

Provision for income taxes (189) (774) 585

Share of net income from joint venture 2,420 2,181 239

Net loss $ (2,267) $ (8,102) $ 5,835

Net sales increased by $20.8 million, or 19.3%, during the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily due to higher selling prices, reflecting the pass-through of increased raw material costs to customers, higher volumes, and favorable foreign exchange effects.

Cost of Sales.

Cost of sales increased by $17.2 million, or 19.1%, during the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily due to raw material price increases, higher volumes, unfavorable plant mix, and unfavorable foreign exchange effects.

These increases are partially offset by rationalization efforts taken in 2025 providing benefits in the current year.

Selling, General, and Administrative Expense.

Selling, general, and administrative expense increased by $0.5 million during the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily due to higher compensation costs and unfavorable foreign exchange effects.

Depreciation and amortization .

Depreciation and amortization increased by $0.4 million during the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily due to the impact of capital expenditures placed in service in the current and prior year.

Interest Expense.

Interest expense increased by $0.1 million during the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily due to an increase in average debt balances.

Three Months Ended June 30,

Interest on debt $ 5,548 $ 5,377

Amortization of debt issuance costs and discount 250 308

Capitalized interest (340) (196)

Other 262 168

Total interest expense $ 5,720 $ 5,657

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.

No debt extinguishment has occurred during the three months ended June 30, 2026.

Other Income, Net.

Other income, net decreased by $0.4 million during the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily due to lower warrant revaluation impacts.

Provision for Income Taxes .

Our effective tax rate was (4.2)% for the three months ended June 30, 2026, compared to (8.1)% for the three months ended June 30, 2025.

The rate for the three months ended June 30, 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 Wuxi Weifu Autocam Precision Machinery Company, Ltd.

joint venture (the “JV”) increased during the three months ended June 30, 2026, compared to the three months ended June 30, 2025.

The JV, in which we own a 49% investment, recognized net sales of $38.8 million and $31.6 million for the three months ended June 30, 2026 and 2025, respectively.

Results by Segment

MOBILE SOLUTIONS

Three Months Ended June 30,

2026 2025 $ Change

Net sales $ 66,590 $ 63,391 $ 3,199

Loss from operations $ (1,947) $ (1,110) $ (837)

Net sales increased by $3.2 million, or 5.0%, during the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily due to higher selling prices, reflecting the pass-through of increased raw material costs to customers, higher volumes and favorable foreign exchange effects.

Loss from operations increased by $0.8 million or 75.4% during the three months ended June 30, 2026, compared to the same period in the prior year.

The increase was primarily due to higher costs from an unfavorable plant mix.

POWER SOLUTIONS

Three Months Ended June 30,

2026 2025 $ Change

Net sales $ 62,293 $ 44,641 $ 17,652

Income from operations $ 9,049 $ 5,782 $ 3,267

Net sales increased by $17.7 million, or 39.5%, during the three months ended June 30, 2026 compared to the three months ended June 30, 2025, primarily due to higher selling prices, reflecting the pass-through of increased raw material costs to customers, higher volumes, and favorable foreign exchange effects.

Income from operations increased by $3.3 million during the three months ended June 30, 2026 compared to the same period in the prior year, primarily due to higher selling prices, improved product mix, and higher volumes.

Six Months Ended June 30, 2026 compared to the Six Months Ended June 30, 2025

Consolidated Results

Six Months Ended June 30,

2026 2025 $ Change

Net sales $ 247,193 $ 213,609 $ 33,584

Cost of sales (exclusive of depreciation and amortization shown separately below) 205,894 181,345 24,549

Selling, general, and administrative expense 25,864 23,265 2,599

Depreciation and amortization 18,584 17,692 892

Other operating income, net (2,096) (2,440) 344

Loss from operations (1,053) (6,253) 5,200

Interest expense 11,489 10,851 638

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

Other expense (income), net 285 (2,788) 3,073

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Net loss $ (9,095) $ (14,787) $ 5,692

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.

Net sales increased by $33.6 million, or 15.7%, during the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily due to higher selling prices, reflecting the pass-through of increased raw material costs to customers, higher volumes, and favorable foreign exchange effects.

Cost of 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.

Cost of sales increased by $24.5 million, or 13.5%, during the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily due to raw material price increases, higher volumes, and unfavorable plant mix costs.

Selling, General, and Administrative Expense.

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.

Selling, general, and administrative expense increased by $2.6 million during the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily due to higher compensation costs, consulting fees, and legal fees.

The remaining impact was primarily driven by unfavorable foreign exchange and inflationary effects.

Depreciation and amortization .

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.

Depreciation and amortization increased by $0.9 million during the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily due to the impact of capital expenditures placed in service in the current and prior year.

Interest Expense.

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 expense increased by $0.6 million during the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily due to higher average debt balances offset by lower amortization of debt issuance costs and discounts.

Six Months Ended June 30,

Interest on debt $ 11,064 $ 9,782

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Total interest expense $ 11,489 $ 10,851

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.

No debt extinguishment has occurred during the six months ended June 30, 2026.

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.

Other expense (income), net changed unfavorably by $3.1 million during the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily due to noncash derivative mark-to-market loss recognized during the first six months of 2026 compared to noncash derivative mark-to-market gain in the first six months of 2025.

Provision for Income Taxes.

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.

Our effective tax rate was (7.1)% for the six months ended June 30, 2026, compared to (12.0)% for the six months ended June 30, 2025.

The rate for the six months ended June 30, 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 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.

Share of net income from the JV remained unchanged during the six months ended June 30, 2026, compared to the six months ended June 30, 2025.

The JV, in which we own a 49% investment, recognized net sales of $71.0 million and $64.3 million for the six months ended June 30, 2026 and 2025, respectively.

Results by Segment

MOBILE SOLUTIONS

Three Months Ended March 31,

Six Months Ended June 30,

2026 2025 $ Change

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Loss from operations $ (4,022) $ (3,797) $ (225)

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.

Net sales increased by $4.1 million, or 3.2%, during the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily due to favorable foreign currency effects, higher selling prices reflecting the pass-through of increased raw material costs to customers, and higher sales volumes, partially offset by the impact of rationalization actions taken in 2025 to improve profitability.

Loss from operations increased by $0.2 million or 5.9% during the six months ended June 30, 2026 compared to the six months ended June 30, 2025, primarily related to unfavorable raw material price increases and an unfavorable plant mix.

These were partially offset by lower costs due to plant rationalization benefits and favorable foreign exchange effects.

POWER SOLUTIONS

Three Months Ended March 31,

Six Months Ended June 30,

2026 2025 $ Change

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Income from operations $ 15,346 $ 8,805 $ 6,541

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).

Net sales increased by $29.5 million, or 33.5%, during the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily due to higher selling prices, reflecting the pass-through of increased raw material costs to customers and higher volumes.

Income from operations increased by $6.5 million during the six months ended June 30, 2026 compared to the same period in the prior year, primarily due to higher selling prices, improved product mix, and higher volumes.

Sources and Uses of Cash December 31, 2025 to June 30, 2026

Cash provided by operations was $11.8 million for the six months ended June 30, 2026, compared to cash used in operations of $4.0 million for the six months ended June 30, 2025.

The favorable change is primarily due to a $12.7 million collection of a tax refund claim and other favorable operating impacts.

Cash used in investing activities was $8.4 million for the six months ended June 30, 2026, compared with $7.2 million for the six months ended June 30, 2025.

The higher use of cash is primarily due to additional purchases of property, plant and equipment.

Cash provided by financing activities decreased by $1.0 million during the six months ended June 30, 2026, compared with the same period in 2025.

The decrease is primarily due to net repayments made against our asset backed credit facilities, offset by the $10.0 million of proceeds from the Delayed Draw Term Loan.

Liquidity and Capital Resources

As of June 30, 2026, our primary sources of liquidity were cash and cash equivalents, availability under our ABL Facility, and cash flows from operating activities.

On July 2, 2026, we received net proceeds of approximately $70.4 million from the closing of the Private Placement.

On August 5, 2026, we completed the Redemption utilizing cash received in the Private Placement and completed the Exchange.

We believe that the execution of these transactions will help support our long-term liquidity.

Based on our current cash position, anticipated cash flows from operating activities, and anticipated borrowing capacity under the ABL Facility, we believe we will have sufficient liquidity to fund our operations, capital expenditures, and debt service requirements for the next 12 months.

Our ability to meet these requirements is subject to the factors described in Item 1A, "Risk Factors," in our 2025 Annual Report, including the level and timing of future cash flows, prevailing economic conditions, and restrictions under our credit agreements.

As of June 30, 2026, we had total available liquidity of:

June 30, 2026

Cash & Cash Equivalents $ 16,450

Undrawn Commitments 35,342

Total Availability $ 51,792

Credit Facilities

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 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.

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.

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 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 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 3.0 years.

The debt and credit facilities descriptions in Note 8 are incorporated in this section by reference.

We are currently in compliance with all covenants as of June 30, 2026.

Working Capital Management

9 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 $13.1 million tax refund receivable at March 31, 2026, which is being processed for refund at the IRS service center.

In May 2026, we received a refund check of $12.7 million in full payment of our claim, including interest.

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 three months ended March 31, 2026.

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