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Item 7. Management’s Discussion and Analysis

2025-02-20 compared with 2024-02-15 · 116 added, 107 removed, 152 unchanged (59% of the section changed)

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In 2024, our net sales were $1,877.5 million, sales volume was 934.8 kmt, net income was $44.2 million, and Adjusted EBITDA was $302.2 million.

• Specialty Carbon Black Segment —Adjusted EBITDA was $110.7 million, and the Adjusted EBITDA Margin was 18.1%.

• Specialty Carbon Black Segment —Adjusted EBITDA was $108.1 million.

This segment accounted for 34.4% of our total revenue, 35.8% of total Adjusted EBITDA and 26.3% of our total volume in kmt in 2024.

• Rubber Carbon Black Segment —Adjusted EBITDA was $221.6 million, and Adjusted EBITDA Margin was 17.3%.

• Rubber Carbon Black Segment —Adjusted EBITDA was $194.1 million.

This segment accounted for 65.6% of our total revenue, 64.2% of total Adjusted EBITDA and 73.7% of our total volume in kmt in 2024.

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General Economic Conditions, Cyclicality and Seasonality

Throughout 2024, Rubber Carbon Black markets faced headwinds from soft global demand, capacity additions and economic uncertainty.

Higher tire imports in the U.S.

and Europe also adversely impacted our Rubber Carbon Black segment.

In contrast, Specialty Carbon Black segment benefited from demand recovery.

In 2024, our Net income was $44.2 million.

We had a record Adjusted EBITDA of $332.3 million due to improved contractual pricing and favorable foreign currency exchange impact despite demand softening in both segments compared to 2022.

Operating results were driven by our ability to adjust sales prices to conform to energy prices, raw material costs and cost of utilities and to deliver products that drive enhanced performance in customers’ applications.

Our ability to generate a financial return from investments in debottlenecking, yield improvement technologies, and the U.S.

Environmental Protection Agency (“EPA”) related projects, contributed to improved operating results.

The Russia-Ukraine war, Hamas-Israel conflict, and China’s relations with the U.S.

and with the European Union (“EU”) significantly amplify geopolitical tensions among countries.

The extent or length of any adverse effects of the Russia-Ukraine war on the supply of oil and natural gas and the quality and availability of carbon black oil is difficult to quantify.

In addition, increased imports from China and Southeast Asia may impact our future operating and financial results.

The volatility in trading volumes, and prices in global crude oil and natural gas are expected to continue.

A criminal scheme that resulted in multiple fraudulently-induced outbound wire transfers to accounts controlled by unknown third parties aggregating to $42.9 million, net of $16.4 million of tax benefit, also adversely impacted our net income.

Adjusted EBITDA of $302.2 million was lower compared to 2023, primarily due to demand softening in the Rubber Carbon Black segment, higher fixed costs and lower cogeneration.

However, improved demand for Specialty Carbon Black products, across all regions, positively impacted our Adjusted EBITDA.

Availability of, and volatility in the prices for various carbon black feedstocks including those that are oil based, can be influenced by a variety of geopolitical considerations, for example, government policy on climate change, the ongoing Russian-Ukraine war, the Middle-East conflicts, and the incoming U.S.

administration’s energy policy in the United States, among others.

While it is reasonable to expect continued volatility in the global energy-related commodity markets, we have worked to mitigate risks associated with such volatility by incorporating the aforementioned raw material cost pass-through provisions in our supply agreements when possible, and by qualifying multiple sources of feedstocks and energy sources for our manufacturing operations.

Depending upon how the tariff measures unfold as discussed in Item 1A.

Risk Factors, increased imports may impact our future operating and financial results.

Reconciliation of Non-GAAP Financial Measures

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For a reconciliation of these non-GAAP financial measures to their nearest comparable GAAP measures, see section Reconciliation of Non-GAAP Financial Measures below.

These non-GAAP measures include, but are not limited to, Gross profit per metric ton, Adjusted EBITDA, Net Working Capital, Capital Expenditures and Segment Adjusted EBITDA Margin (in percentage).

• Gross profit per metric ton —Gross profit divided by volume measured in metric tons.

• Adjusted EBITDA —Income from operations before depreciation and amortization, stock-based compensation, and non-recurring items (such as, restructuring expenses, legal settlement gain, etc.) plus Earnings in affiliated companies, net of tax.

These non-GAAP measures include, but are not limited to, Adjusted EBITDA, Net Working Capital and Capital Expenditures.

• Adjusted EBITDA —Income from operations before depreciation and amortization, stock-based compensation, and non-recurring items (such as, restructuring expenses, Loss due to misappropriation of assets, net, etc.) plus Earnings in affiliated companies, net of tax.

• Net Working Capital —Inventories, net plus Accounts receivable, net minus Accounts payable.

• Capital Expenditures —Cash paid for the acquisition of property, plant and equipment.

• Segment Adjusted EBITDA Margin (in percentage )—Segment Adjusted EBITDA divided by segment revenue.

Adjusted EBITDA is used by our chief operating decision maker (“CODM”) to evaluate our operating performance and to make decisions regarding allocation of capital, because it excludes the effects of items that have less bearing on the performance of our underlying core business.

Our operations are managed by senior executives who report to our Chief Executive Officer (“CEO”), the chief operating decision maker (“CODM”).

Adjusted EBITDA is used by CODM to evaluate our operating performance and to make decisions regarding allocation of capital, because it excludes the effects of items that have less bearing on the performance of our underlying core business.

We use this measure, together with other measures of performance under GAAP, to compare the relative performance of operations in planning, budgeting and reviewing our business.

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Non-GAAP measures are not performance measures under GAAP and should not be considered in isolation or construed as substitutes for Net sales, Net income, Income from operations, Gross profit and other GAAP measures as an indicator of our operations in accordance with GAAP.

Reconciliation of Non-GAAP Financial Measures

The following tables present a reconciliation of each Non-GAAP measure to the most directly comparable GAAP measure:

Gross profit per metric ton (A Non-GAAP Financial Measure)

Operating Result s

2024 Compared to 2023

Operating results for the periods discussed are as follows:

Year Ended December 31, Year-Over-Year

2024 2023 Delta

(In millions, except per ton data and percentage)

$ 1,893.9 $ 2,030.9 $ (137.0) (6.7) %

(In millions, except volume) %

Volume (in kmt) 934.8 932.1 2.7 0.3%

Net sales $ 1,877.5 $ 1,893.9 $ (16.4) (0.9)%

Cost of sales 1,448.7 1,442.9 5.8 0.4%

(1,442.9) (1,582.1) 139.2 (8.8) %

Gross profit 428.8 451.0 (22.2) (4.9)%

Volume (in kmt) 932.1 962.9 (30.8) (3.2) %

Gross profit per metric ton $ 483.9 $ 466.1 $ 17.8 3.8 %

Selling, general and administrative expenses 237.8 221.9 15.9 7.2%

Research and development costs 27.1 24.5 2.6 10.6%

Loss due to misappropriation of assets, net 59.3 — 59.3 —%

Other expense (income), net 1.9 (0.7) 2.6 (371.4)%

Income from operations 102.7 205.3 (102.6) (50.0)%

Interest and other financial expense, net 49.4 50.9 (1.5) (2.9)%

Reclassification of actuarial gains from AOCI — (8.9) 8.9 (100.0)%

Income before earnings in affiliated companies and income taxes 53.3 163.3 (110.0) (67.4)%

Income tax expense 9.7 60.3 (50.6) (83.9)%

Earnings in affiliated companies, net of tax 0.6 0.5 0.1 20.0%

Net income $ 44.2 $ 103.5 $ (59.3) (57.3)%

Other comprehensive income (loss), net of tax

Foreign currency translation adjustments (24.3) (7.6) (16.7) 219.7%

Net gains (losses) on derivatives (5.3) (8.3) 3.0 (36.1)%

Defined benefit plans, net (0.4) (11.5) 11.1 (96.5)%

Other comprehensive income (loss) (30.0) (27.4) (2.6) 9.5%

Comprehensive income $ 14.2 $ 76.1 $ (61.9) (81.3)%

Reconciliation of Non-GAAP Financial Measures

The following tables present a reconciliation of each Non-GAAP measure to the most directly comparable GAAP measure:

Reconciliation of Net income to Adjusted EBITDA (A Non-GAAP financial Measure)

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Net income $ 44.2 $ 103.5 $ (59.3) (57.3) %

Add back Income tax expense 60.3 51.5 8.8 17.1 %

Add back Earnings in affiliated companies, net of tax (0.5) (0.5) — — %

Add back Income tax (benefit) expense 9.7 60.3 (50.6) (83.9) %

Add back Equity in earnings of affiliated companies, net of tax (0.6) (0.5) (0.1) 20.0 %

Income before earnings in affiliated companies and income taxes 53.3 163.3 (110.0) (67.4) %

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Equity in earnings of affiliated companies, net of tax 0.6 0.5 0.1 20.0 %

Loss due to misappropriation of assets, net

Misappropriation of assets, net 55.7 — 55.7 — %

Professional fees related to misappropriation of assets 3.6 — 3.6 — %

Long term incentive plan 15.3 15.4 (0.1) (0.6) %

Environmental reserve (2.2) (0.4) (1.8) 450.0 %

Environmental reserves — (2.2) 2.2 (100.0) %

Other adjustments (1.0) 0.3 (1.3) (433.3) %

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$ 194.1 $ 221.6 $ (27.5) (12.4) %

Operating Result s

2023 Compared to 2022

Operating results for the periods discussed are as follows:

Year Ended December 31, Year-Over-Year

2023 2022 Delta

(In millions) %

Net sales $ 1,893.9 $ 2,030.9 $ (137.0) (6.7)%

Cost of sales 1,442.9 1,582.1 (139.2) (8.8)%

Gross profit 451.0 448.8 2.2 0.5%

Selling, general and administrative expenses 221.9 227.1 (5.2) (2.3)%

Research and development costs 24.5 21.7 2.8 12.9%

Other expenses/(income) (0.7) 2.9 (3.6) (124.1)%

Income from operations 205.3 197.1 8.2 4.2%

Interest and other financial expense, net 50.9 39.9 11.0 27.6%

Reclassification of actuarial (gains)/losses from AOCI (8.9) — (8.9) —%

Income before earnings in affiliated companies and income taxes 163.3 157.2 6.1 3.9%

Income tax expense 60.3 51.5 8.8 17.1%

Earnings in affiliated companies, net of tax 0.5 0.5 — —%

Net income $ 103.5 $ 106.2 $ (2.7) (2.5)%

Net sales decreased by $137.0 million, or 6.7%, from $2,030.9 million in 2022 to $1,893.9 million in 2023, driven primarily by the pass-through effect of declining oil prices and lower volume in both segments.

Those were partially offset by improved contractual pricing.

Volume decreased by 30.8 kmt, or 3.2%, to 932.1 kmt, year-over-year reflecting weaker demand across all regions in both segments .

Volume increased marginally by 2.7 kmt, or 0.3%, to 934.8 kmt, year-over-year, primarily due to higher Specialty Carbon Black segment volume, partially offset by lower Rubber Carbon Black segment volume .

Net sales decreased marginally by $16.4 million, or 0.9%, from $1,893.9 million in 2023 to $1,877.5 million in 2024, driven primarily by pass-through effect of lower oil prices, lower Rubber Carbon Black segment volume and unfavorable foreign currency translation impact, partially offset by broad-based recovery in the Specialty Carbon Black segment across all regions.

Cost of sales

Cost of sales decreased by $139.2 million, or 8.8%, from $1,582.1 million in 2022 to $1,442.9 million in 2023, primarily due the effect of declining oil prices and lower volume.

Gross profit increased by $2.2 million or 0.5%, from $448.8 million in 2022 to $451.0 million in 2023, and gross profit per metric ton increased by 3.8% or $17.8 to $483.9.

The increase was primarily driven by improved contractual pricing, partially offset by lower volume in both segments and lower cogeneration effects due to European electricity prices.

Cost of sales increased marginally by $5.8 million, or 0.4%, from $1,442.9 million in 2023 to $1,448.7 million in 2024, primarily to associated costs of higher Specialty Carbon Black segment volume and higher fixed costs.

Gross profit decreased by $22.2 million or 4.9%, from $451.0 million in 2023 to $428.8 million in 2024.

The decrease was primarily driven by higher fixed costs, unfavorable impact from pass-through of raw material costs and lower cogeneration.

Selling, general and administrative expenses

Selling, general and administrative expenses decreased by $5.2 million, or 2.3%, from $227.1 million in 2022 to $221.9 million in 2023 driven primarily by lower freight costs due to lower volume in both segments.

Selling, general and administrative expenses increased by $15.9 million, or 7.2%, from $221.9 million in 2023 to $237.8 million in 2024 driven primarily by higher freight and personnel costs.

Loss due to misappropriation of assets, net

During the third quarter of 2024, we were the target of a criminal scheme that resulted in multiple fraudulently induced outbound wire transfers to accounts controlled by unknown third parties aggregating to $55.7 million, net of recoveries.

In addition, we incurred $3.6

million of professional fees in connection with our investigations.

For more information, refer to Note Q.

Commitments and Contingencies to the Condensed Consolidated Financial Statements.

Income tax expense

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The 2024 effective income tax rate was 18.0% compared with 36.9% in 2023.

The increase in the effective tax rate was mainly due to the increase of valuation allowance, income taxes for prior years and the increase of non-deductible business expenses and taxes.

Those were partially offset by the effects of earnings in various countries with lower statutory tax rates and tax-free income.

For details regarding this deviation, see Item 8.

Financial Statements and Supplementary Data and Note P.

Income Taxes to the audited Consolidated Financial Statements.

The decrease in the effective tax rate was mainly due to the release of uncertain tax positions and impacts from changes in U.S.

international tax laws.

Those were partially offset by the effects of valuation allowances on tax losses and nondeductible expenses.

We recognized $16.4 million of tax benefit related to Loss due to misappropriation of assets, net.

For further discussion refer to Note Q.

Commitments and Contingencies to the Condensed Consolidated Financial Statements.

The 2024 effective tax rate was particularly impacted by:

• the release of uncertain tax positions of $13.3 million and associated interest, and

• benefits from the changes in U.S.

international laws of $9.6 million.

For further details, see Note P.

Income Taxes in Item 8.

Financial Statements and Supplementary Data, to the audited Consolidated Financial Statements.

Adjusted EBITDA (A Non-GAAP Financial Measure)

Adjusted EBITDA increased by $20.0 million, or 6.4%, from $312.3 million in 2022 to $332.3 million in 2023.

The increase was primarily due to improved contractual pricing.

Those were partially offset by lower volume and cogeneration effects in both segments.

Comprehensive Income

Year Ended December 31, Year-Over-Year

2023 2022 Delta

(In millions)

Adjusted EBITDA decreased by $30.1 million, or 9.1%, from $332.3 million in 2023 to $302.2 million in 2024.

The decrease was primarily due to higher selling, general and administrative expenses, lower Rubber Carbon Black segment volume and lower cogeneration.

Those were partially offset by higher volume in the Specialty Carbon Black segment.

Comprehensive Income

$ 76.1 $ 142.2 $ (66.1)

2023 vs 2022 ―Comprehensive income decreased by $66.1 million, from $142.2 million to $76.1 million, primarily due to:

• $43.5 million related to net unfavorable impacts related to financial derivative instruments primarily driven by net periodic changes in cross currency and interest rate swaps, and

• $25.7 million related to net unfavorable changes in defined pension and other post-retirement benefits.

2024 vs 2023 ―Comprehensive income decreased by $61.9 million, from $76.1 million to $14.2 million, primarily due to a decrease in net income.

The activities from the remaining components of Comprehensive income are discussed below.

• $16.7 million unfavorable foreign currency translation adjustments due to U.S.

dollar versus euro.

Those decreases were partially offset by:

• $5.8 million of net favorable impacts of unrealized changes in foreign currency translation adjustments.

• $11.1 million related to net favorable changes in defined pension and other post-retirement benefits, and

• $3.0 million related to net favorable impacts related to financial derivative instruments primarily driven by net periodic changes in cross currency swaps.

Segment Discussion

Our business operations are divided into two operating segments—Specialty Carbon Black and Rubber Carbon Black.

We use Segment Adjusted EBITDA as measures of segment performance and profitability.

We use Segment Adjusted EBITDA as a measure of segment performance and profitability.

The table below presents our segment results for 2024 and 2023.

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Specialty Carbon Black

Volume (kmt) 245.8 221.4 24.4 11.0 %

Net sales $ 646.3 $ 610.6 $ 35.7 5.8 %

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Gross profit $ 151.9 $ 160.3 $ (8.4) (5.2) %

Volume (kmt) 221.4 224.3 (2.9) (1.3) %

Adjusted EBITDA $ 108.1 $ 110.7 $ (2.6) (2.3) %

Adjusted EBITDA Margin (%) 18.1 21.3 (3.2) (15.0) %

Rubber Carbon Black

Volume (kmt) 689.0 710.7 (21.7) (3.1) %

Net sales $ 1,231.2 $ 1,283.3 $ (52.1) (4.1) %

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Gross profit $ 276.9 $ 290.7 $ (13.8) (4.7) %

Volume (kmt) 710.7 738.6 (27.9) (3.8) %

Adjusted EBITDA $ 194.1 $ 221.6 $ (27.5) (12.4) %

Adjusted EBITDA Margin (%) 17.3 12.4 4.9 39.5 %

Specialty Carbon Black

2024 Compared to 2023

Net sales of the Specialty Carbon Black segment decreased by $64.8 million, or 9.6%, from $675.4 million in 2022 to $610.6 million in 2023.

The net sales decrease in 2023 was primarily driven by the pass-through effect of declining oil prices.

Volume of the Specialty Carbon Black segment decreased by 2.9 kmt, or 1.3%, from 224.3 kmt in 2022 to 221.4 kmt in 2023.

The volume was lower primarily due to weakness across most geographies.

Gross profit of the Specialty Carbon Black segment decreased by $40.4 million, or 20.1%, from $200.7 million in 2022 to $160.3 million in 2023, primarily driven by the lower margin due to lower demand, unfavorable product mix, and lower cogeneration effects.

Segment Adjusted EBITDA of the Specialty Carbon Black segment decreased by $33.2 million, or 23.1%, from $143.9 million in 2022 to $110.7 million in 2023.

The decrease was primarily due to unfavorable geographic and product mix and lower cogeneration effects due to lower European electricity prices.

Specialty Carbon Black segment volume increased by 24.4 kmt, or 11.0%, from 221.4 kmt in 2023 to 245.8 kmt in 2024, primarily due to demand recovery across all regions and end markets.

Net sales of the Specialty Carbon Black segment increased by $35.7 million, or 5.8%, from $610.6 million in 2023 to $646.3 million in 2024.

The net sales increase in 2024 was primarily due to higher volume across all regions, partially offset by unfavorable product mix and unfavorable foreign currency translation impact.

Gross profit of the Specialty Carbon Black segment decreased by $8.4 million, or 5.2%, from $160.3 million in 2023 to $151.9 million in 2024, primarily driven by higher fixed costs and lower cogeneration, partially offset by higher volume.

Adjusted EBITDA of the Specialty Carbon Black segment decreased by $2.6 million, or 2.3%, from $110.7 million in 2023 to $108.1 million in 2024.

The decrease was primarily due to higher fixed costs and lower cogeneration.

Those were partially offset by higher volume.

Rubber Carbon Black

2024 Compared to 2023

Net sales of the Rubber Carbon Black segment decreased by $72.2 million, or 5.3%, from $1,355.5 million in 2022 to $1,283.3 million in 2023.

The decrease was primarily due to the pass-through effect of declining oil prices and lower volume, partially offset by improved contractual pricing.

Volume of the Rubber Carbon Black segment decreased by 21.7 kmt, or 3.1%, from 710.7 kmt in 2023 to 689.0 kmt in 2024.

The decrease was primarily due to lower demand in the Americas and EMEA region.

Gross profit of the Rubber Carbon Black segment increased by $42.6 million, or 17.2%, from $248.1 million in 2022 to $290.7 million in 2023.

The increase in the period was primarily driven by improved contractual pricing, partially offset by lower cogeneration effects.

Segment Adjusted EBITDA of the Rubber Carbon Black segment increased by $53.2 million, or 31.6%, from $168.4 million in 2022 to $221.6 million in 2023.

The increase was primarily due to improved contractual pricing, partially offset by lower volume and cogeneration effects.

The decrease was primarily due to lower demand in the Americas region.

Net sales of the Rubber Carbon Black segment decreased by $52.1 million, or 4.1%, from $1,283.3 million in 2023 to $1,231.2 million in 2024.

The decrease was primarily due to lower volume and the pass-through effect of lower oil prices, partially offset by favorable price.

Gross profit of the Rubber Carbon Black segment decreased by $13.8 million, or 4.7%, from $290.7 million in 2023 to $276.9 million in 2024.

The decrease in the period was primarily driven by lower volume and lower cogeneration, partially offset by favorable price.

Adjusted EBITDA of the Rubber Carbon Black segment decreased by $27.5 million, or 12.4%, from $221.6 million in 2023 to $194.1 million in 2024.

The decrease was primarily due to lower volume in Americas region, lower cogeneration and higher fixed costs.

Those were partially offset by favorable price.

Liquidity and Capital Resources

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Operating Activities —Cash provided by operating activities primarily reflected our Net income, adjusted for non-cash items and changes in working capital.

The change in working capital was primarily due to improved payment terms and factoring of certain Accounts receivable.

Investing Activities— Cash used by investing activities primarily reflects $143.7 million expenditures for safety, maintenance and growth investments and $29.1 million to install emissions reduction technology to meet the Environmental Protection Agency (“EPA”) requirements in the U.S.

Financing Activities— Net cash used by financing activities was $197.1 million.

These outflows primarily consisted of $97.5 million, net related to repayment of our prior revolving credit facility (the “Prior RCF”) and ancillary credit facilities, $65.6 million for repurchase of common stock under the Stock Repurchase Program and $36.3 million repayment of the repurchase agreement to sell European Emission Allowance certificates (“Repurchase agreement”).

Those were partially offset by proceeds of borrowings to partially finance the construction of our Huaibei facility, China and working capital requirements in Korea.

The $55.7 million Loss due to misappropriation of assets, net of recoveries, $3.6 million of related professional fees and $16.4 million associated tax benefit are also included in cash provided by operating activities.

Investing Activities— Cash used by investing activities amounted to $206.7 million.

The expenditures were primarily related to maintenance and growth investments, including $66.4 million related to construction of the facility in La Porte, Texas.

Financing Activities— Net cash provided by financing activities was $89.3 million.

These inflows primarily consisted of $68.2 million, net borrowings under our ancillary credit facilities and $48.0 million related to other short-term debt borrowings.

Those were partially offset by scheduled debt repayments, dividend distributions and repurchase of shares of Common stock.

Debt and Other Obligations to the accompanying Consolidated Financial Statements for further information regarding the Company’s indebtedness.

Operating Activities —Cash provided by operating activities primarily reflected our Net income, adjusted for non-cash items and changes in working capital.

Investing Activities— Cash used by investing activities primarily reflects $165.8 million expenditures for safety, maintenance and growth investments and $67.0 million to install emissions reduction technology to meet the Environmental Protection Agency (“EPA”) requirements in the U.S.

Commitments and Contingencies” to the accompanying Consolidated Financial Statements for further discussion of the Company’s commitments and contingencies relating to the EPA.

Financing Activities— $149.3 million of cash provided by financing activities primarily reflects $91.0 million of net borrowings under our Prior RCF and ancillary facilities, $47.8 million to partially finance the construction of our Huaibei facility, China, $36.3 million proceeds from Repurchase agreement, and Other short-term debt and obligations, net.

Those were partially offset by a $30.2 million reduction in local uncommitted credit lines, scheduled debt repayments, dividend distributions and stock buybacks.

Debt and Other Obligations to the accompanying Consolidated Financial Statements for further discussion on our Term-loan refinancing.

Sources of Liquidity

Our principal sources of liquidity are the net cash generated (i) from operating activities, primarily driven by our operating results and changes in working capital requirements and (ii) from financing activities, primarily driven by borrowing amounts available under our committed multicurrency, senior secured Revolving credit facility and related ancillary facilities, various uncommitted local credit lines, and, from time to time, term loan borrowings and Accounts receivable factoring.

Our principal sources of liquidity are the net cash generated (i) from operating activities, primarily driven by our operating results and changes in working capital requirements and (ii) from financing activities, primarily driven by borrowing amounts available under our committed multicurrency, senior secured Revolving credit facility and related ancillary facilities, uncommitted local credit lines and, from time to time, term loan borrowings and Accounts receivable factoring.

We believe our anticipated future operating cash flow, the capacity under our existing credit facilities and uncommitted bilateral lines of credit, along with access to surety bonds, will be sufficient to finance our planned capital expenditures, settle our commitments and contingencies and address our normal anticipated working capital needs for the foreseeable future.

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Conversely, decreases in the cost of raw materials lead to a decrease in our Net Working Capital requirements over the same period of time.

Our Net Working Capital decreased to $344.4 million as of December 31, 2023 compared to $461.6 million as of December 31, 2022.

The decrease in working capital was primarily due to improved payment terms and factoring of certain Accounts receivable.

Our Net Working Capital increased to $346.1 million as of December 31, 2024 compared to $344.4 million as of December 31, 2023.

The primary working capital change drivers, year over year, were as follows:

• Accounts receivable, net —Improved payment terms and the factoring of certain Accounts receivable reduced this balance.

Accounts Receivable to the accompanying Consolidated Financial Statements for further information on the factoring agreement.

This was partially offset by:

• Accounts payable —Decrease in accounts payable was primarily due to timing of payments and lower production.

Capital Requirements

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We plan to finance our capital expenditures with cash generated by our operating activities and or utilizing existing debt capacity.

We currently do not have any material commitments to make capital expenditures and do not plan to make capital expenditures outside the ordinary course of our business.

Debt and Other Obligations —Our gross debt balance as of December 31, 2023 was $818.2 million, a decrease of $101.5 million compared to December 31, 2022.

We currently do not have material commitments to make capital expenditures except for the under-construction facility at La Porte, Texas.

We do not plan to make any other capital expenditures outside the ordinary course of our business.

Debt and Other Obligations —Our gross debt balance as of December 31, 2024 was $908.7 million, an increase of $90.5 million compared to December 31, 2023.

In 2025, we will repay $8.7 million of long-term debt from cash in hand and cash generated by operating activities.

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Leases to the accompanying Consolidated Financial Statements.

Trend Information

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Recent Developments and Certain Known Trends.

Critical Accounting Policies and Estimates

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

What changed 10-K

Item 7. Management’s Discussion and Analysis