What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-07-31 compared with 2026-05-06 · 149 added, 68 removed, 200 unchanged (52% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included in Part I, Item 1 of this quarterly report on Form 10‑Q for the quarter ended March 31, 2026 (this “Quarterly Report”).

This Quarterly Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, such statements are subject to the “safe harbor” created by those sections and involve risks and uncertainties.

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Each business unit has a business unit manager, who is responsible for achieving targeted financial and operational results.

On July 30, 2026, the Company acquired the outstanding capital stock of Monaco Enterprises (“Monaco”) for a total cash purchase price, net of cash acquired of $120.0 million which was funded with cash on hand and proceeds from existing credit facilities.

Our focus is on maintaining our existing customers, expanding their utilization of our products and services, growing our business in the emerging technologies markets and growth through business acquisitions.

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As of 2020, the Wildland-Urban Interface (“WUI”) now includes 32% of all homes in the United States although it occupies 9.4% of the land area in the United States.

According to Proceedings of the National Academy of Sciences of the United States of America, when homes are built in the WUI, we expect that there will be more wildfires due to human ignitions, and wildfires that occur will pose a greater risk to lives and homes.

According to Proceedings of the National Academy of Sciences of the United States of America, when homes are built in the

WUI, we expect that there will be more wildfires due to human ignitions, and wildfires that occur will pose a greater risk to lives and homes.

As the WUI expands and the number of homes at risk from wildland fires increases, we expect the use of retardant to protect property and life from threatening wildfires to increase.

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While these actions are designed to offset the impact of inflationary pressures, the Company cannot provide assurance that they will be successful in fully offsetting increased costs resulting from inflationary pressure.

In addition, interest payments for borrowings under the Company’s amended and restated revolving credit facility are based on variable rates, and any continued increase in interest rates may reduce the Company’s cash flow available for other corporate purposes.

In addition, interest payments for borrowings under the Company’s Amended and Restated Revolving Credit Facility (as defined below) are based on variable rates, and any continued increase in interest rates may reduce the Company’s cash flow available for other corporate purposes.

Additionally, amid broader volatility in the global economy, certain raw materials and components used in our manufacturing processes may be subject to announced tariffs on imported goods by the United States, Canada, and other countries.

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Results of Operations

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

The following table sets forth our results of operations for each of the periods indicated (in thousands):

Three Months Ended March 31, Change

2026 2025 $ %

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

The following table sets forth our results of operations for each of the periods indicated:

Three Months Ended June 30, Change

In Thousands 2026 2025 $ %

Net sales $ 213,810 $ 162,639 $ 51,171 31 %

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Gross profit 117,868 101,496 16,372 16 %

Operating expenses (income):

Operating expenses:

Selling, general and administrative expense 26,993 15,967 11,026 69 %

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Other operating expense 3,614 268 3,346 1249 %

Total operating income (21,700) (49,654) 27,954 (56 %)

Operating income 72,487 77,807 (5,320) (7 %)

Total operating expenses 320,887 127,722 193,165 151 %

Operating loss (203,019) (26,226) (176,793) 674 %

Other expense (income):

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Foreign currency gain (1,203) (2,096) 893 (43 %)

Other (income) expense, net (364) 143 (507) (355 %)

Other expense (income), net 27 (212) 239 (113 %)

Total other expense, net 18,417 7,622 10,795 142 %

Income before income taxes 49,846 69,179 (19,333) (28 %)

Income tax benefit (expense) 23,090 (12,493) 35,583 (285 %)

Net income $ 72,936 $ 56,686 $ 16,250 29 %

Net sales increased by $53.0 million for the three months ended March 31, 2026, compared to the same period in 2025.

Net sales in the Fire Safety segment increased by $8.3 million, representing higher fire suppressant sales of $13.4 million offset by lower fire retardant sales of $5.1 million.

Fire suppressant sales increased $7.2 million in North America and $6.2 million in other geographies.

Fire retardant sales decreased $7.5 million in North America, offset by an increase of $2.4 million in other geographies.

Net sales in the Specialty Products segment increased $44.7 million, including a $41.4 million increase in revenue due to recently acquired businesses and a $3.3 million increase in base businesses.

Loss before income taxes (221,436) (33,848) (187,588) 554 %

Income tax benefit 39,801 1,687 38,114 2259 %

Net loss $ (181,635) $ (32,161) $ (149,474) 465 %

Net sales increased by $51.2 million for the three months ended June 30, 2026, compared to the same period in 2025.

Net sales in the Fire Safety segment increased by $8.8 million, representing higher fire retardant sales of $6.4 million and higher suppressant sales of $2.4 million.

Fire retardant sales increased $7.3 million in North America, offset by a decrease of $0.9 million in other geographies.

Fire suppressant sales increased $5.9 million outside North America, offset by a decrease of $3.5 million in North America.

Net sales in the Specialty Products segment increased $42.4 million, including a $47.9 million increase in revenue due to recently acquired businesses, offset by a $5.5 million decrease in base businesses.

The Company considers that revenue attributable to base businesses includes revenue from acquired businesses that have been owned for a full four quarters after the date of acquisition.

Cost of Goods Sold.

Cost of goods sold increased $30.4 million for the three months ended March 31, 2026 compared to the same period in 2025, primarily due to recently acquired businesses.

Cost of goods sold increased $34.8 million for the three months ended June 30, 2026 compared to the same period in 2025, primarily due to recently acquired businesses.

Selling, General and Administrative Expense.

Selling, general and administrative expense increased by $6.8 million for the three months ended March 31, 2026 compared to the same period in 2025, primarily due to recently acquired businesses.

Selling, general and administrative expense increased by $11.0 million for the three months ended June 30, 2026 compared to the same period in 2025, primarily due to recently acquired businesses.

Amortization Expense.

Amortization expense increased by $9.4 million for the three months ended June 30, 2026 compared to the same period in 2025, primarily due to recently acquired businesses.

Founder Advisory Fees - related party.

Founder advisory fees - related party represents the change in the fair value of the liability-classified Fixed Annual Advisory Amount and Variable Annual Advisory Amount (collectively, the “Annual Advisory Amounts”).

The decrease in the fair value of the Annual Advisory Amounts for the three months ended March 31, 2026 of $76.4 million was primarily due to a decrease in the Company’s average price per share from $27.89 as of December 31, 2025 to $21.93 as of March 31, 2026.

The decrease in the fair value of the Annual Advisory Amounts for the three months ended March 31, 2025 of $80.6 million was primarily due to a decrease in the Company’s average price per share from $12.85 as of December 31, 2024, to $9.67 as of March 31, 2025.

The increase in the fair value of the Annual Advisory Amounts for the three months ended June 30, 2026 of $266.3 million was primarily due to an increase in the period end volume weighted average closing share price of the Company’s Common Stock for ten consecutive trading days (the “Average Price Per Share”) from $21.93 as of March 31, 2026 to $35.53 as of June 30, 2026.

The increase in the fair value of the Annual Advisory Amounts for the three

months ended June 30, 2025 of $96.9 million was primarily due to an increase in the Average Price Per Share from $9.67 as of March 31, 2025, to $13.62 as of June 30, 2025.

Other Operating Expense.

Other operating expense increased $8.5 million for the three months ended March 31, 2026, compared to the same period in 2025, primarily due to costs related to the Company’s acquisition of MMT in January 2026.

Other operating expense increased $3.3 million for the three months ended June 30, 2026, compared to the same period in 2025, primarily due to costs related to the Company’s recent acquisitions.

Interest Expense, net.

Interest expense, net increased $14.7 million for the three months ended March 31, 2026, compared to the same period in 2025, primarily due to higher average debt outstanding resulting from the Company’s offering of the 2034 Notes in January 2026.

Interest expense, net increased $9.7 million for the three months ended June 30, 2026, compared to the same period in 2025, primarily due to higher average debt outstanding resulting from the Company’s offering of the 2034 Notes in January 2026.

Income Tax Benefit .

Income tax benefit was $39.8 million for the three months ended June 30, 2026, compared to income tax benefit of $1.7 million in the same period in 2025.

The change is primarily due to increased benefits from stock-based compensation, permanently non-deductible compensation, withholding taxes accrued on unremitted earnings and the impact of foreign tax rate differences.

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

The following table sets forth our results of operations for each of the periods indicated:

Six Months Ended June 30, Change

In Thousands 2026 2025 $ %

Net sales $ 338,879 $ 234,669 $ 104,210 44 %

Cost of goods sold 170,224 105,020 65,204 62 %

Gross profit 168,655 129,649 39,006 30 %

Operating expenses:

Selling, general and administrative expense 50,054 32,266 17,788 55 %

Amortization expense 46,624 28,703 17,921 62 %

Founders advisory fees - related party 189,877 16,270 173,607 1067 %

Other operating expense 12,632 829 11,803 1424 %

Total operating expenses 299,187 78,068 221,119 283 %

Operating (loss) income (130,532) 51,581 (182,113) (353 %)

Other expense (income):

Interest expense, net 43,949 19,574 24,375 125 %

Foreign currency gain (2,554) (3,255) 701 (22 %)

Other income, net (337) (69) (268) 388 %

Total other expense, net 41,058 16,250 24,808 153 %

(Loss) income before income taxes (171,590) 35,331 (206,921) (586 %)

Income tax benefit (expense) 62,891 (10,806) 73,697 (682 %)

Income tax benefit was $23.1 million for the three months ended March 31, 2026, compared to income tax expense of $12.5 million for the same period in 2025.

The change is primarily due to increased benefits from stock-based compensation and non-deductible compensation.

Net (loss) income $ (108,699) $ 24,525 $ (133,224) (543 %)

Net sales increased by $104.2 million for the six months ended June 30, 2026, compared to the same period in 2025.

Net sales in the Fire Safety segment increased by $17.1 million, representing higher fire suppressant sales of $15.8 million and higher fire retardant sales of $1.3 million.

Fire suppressant sales increased $12.1 million outside North America and $3.7 million in North America.

Fire retardant sales increased $1.5 million outside North America, offset by a decrease of $0.2 million in North America.

Net sales in the Specialty Products segment increased $87.1 million, including a $88.5 million increase in revenue due to recently acquired businesses, offset by a $1.4 million decrease in base businesses.

The Company considers that revenue attributable to base businesses includes revenue from acquired businesses that have been owned for a full four quarters after the date of acquisition.

Cost of Goods Sold.

Cost of goods sold increased $65.2 million for the six months ended June 30, 2026 compared to the same period in 2025, primarily due to recently acquired businesses.

Selling, General and Administrative Expense.

Selling, general and administrative expense increased by $17.8 million for the six months ended June 30, 2026 compared to the same period in 2025, primarily due to recently acquired businesses.

Amortization Expense.

Amortization expense increased by $17.9 million for the six months ended June 30, 2026 compared to the same period in 2025, primarily due to recently acquired businesses.

Founder Advisory Fees - related party.

Founder advisory fees - related party represents the change in the fair value of the Annual Advisory Amounts.

The increase in the fair value of the Annual Advisory Amounts for the six months ended June 30, 2026 of $189.9 million was primarily due to an increase in the Average Price Per Share from $27.89 as of December 31, 2025 to $35.53 as of June 30, 2026.

The increase in the fair value of the Annual Advisory Amounts for the six months ended June 30, 2025 of $16.3 million was primarily due to an increase in the Average Price Per Share from $12.85 as of December 31, 2024, to $13.62 as of June 30, 2025.

Other Operating Expense.

Other operating expense increased $11.8 million for the six months ended June 30, 2026, compared to the same period in 2025, primarily due to costs related to the Company’s recent acquisitions.

Interest Expense, net.

Interest expense, net increased $24.4 million for the six months ended June 30, 2026, compared to the same period in 2025, primarily due to higher average debt outstanding resulting from the Company’s offering of the 2034 Notes in January 2026.

Income Tax Benefit (Expense) .

Income tax benefit was $62.9 million for the six months ended June 30, 2026, compared to income tax expense of $10.8 million for the same period in 2025.

Business Segments

Segment Adjusted EBITDA is defined as income (loss) before income taxes plus net interest and other financing expenses, and depreciation and amortization, adjusted on a consistent basis for certain non-recurring, unusual or non-operational items.

These items include (i) restructuring, (ii) acquisition related costs, (iii) founder advisory fee expenses, (iv) stock-based compensation expense, (v) purchase accounting impact and (vi) foreign currency loss (gain).

We use Segment Adjusted EBITDA, to evaluate operating performance by segment, for business planning purposes and to allocate resources.

The following tables provide information for our net sales and Segment Adjusted EBITDA (in thousands) for the three months ended March 31, 2026 compared to the same period in 2025:

Three Months Ended March 31, 2026 Three Months Ended March 31, 2025

Fire Safety Specialty

The following tables provide information for our net sales and Segment Adjusted EBITDA (in thousands) for the three and six months ended June 30, 2026 compared to the same period in 2025:

Three Months Ended June 30, 2026 Three Months Ended June 30, 2025

In Thousands Fire Safety Specialty

Products Total Fire Safety Specialty

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Segment Adjusted EBITDA $ 78,759 $ 26,831 $ 105,590 $ 77,659 $ 13,679 $ 91,338

Segment Adjusted EBITDA for our Fire Safety segment increased by $8.6 million during the three months ended March 31, 2026 compared with the same period in 2025.

Segment Adjusted EBITDA for our Fire Safety segment increased by $1.1 million during the three months ended June 30, 2026 compared with the same period in 2025.

The increase was primarily due to higher net sales, as described above.

Costs grew at a slower pace than revenues due to strong cost control, product mix and fixed costs leverage.

Segment Adjusted EBITDA for our Specialty Products segment increased by $14.5 million during the three months ended March 31, 2026 compared with the same period in 2025.

Segment Adjusted EBITDA for our Specialty Products segment increased by $13.2 million during the three months ended June 30, 2026 compared with the same period in 2025.

The increase was primarily due to contributions from recently acquired businesses.

Six Months Ended June 30, 2026 Six Months Ended June 30, 2025

In Thousands Fire Safety Specialty

Products Total Fire Safety Specialty

Products Total

Net sales $ 174,537 $ 164,342 $ 338,879 $ 157,447 $ 77,222 $ 234,669

Segment Adjusted EBITDA $ 97,450 $ 49,299 $ 146,749 $ 87,744 $ 21,677 $ 109,421

Segment Adjusted EBITDA for our Fire Safety segment increased by $9.7 million during the six months ended June 30, 2026 compared with the same period in 2025.

The increase was primarily due to higher net sales, as described above.

Costs grew at a slower pace than revenues due to strong cost control, product mix and fixed costs leverage.

Segment Adjusted EBITDA for our Specialty Products segment increased by $27.6 million during the six months ended June 30, 2026 compared with the same period in 2025.

The increase was primarily due to contributions from recently acquired businesses.

The following table provides a reconciliation of financial measures that are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

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Segment Adjusted EBITDA should not be considered an alternative to net income (loss), operating income (loss), cash flows provided by (used in) operating activities or any other measure of financial performance or liquidity presented in accordance with U.S.

GAAP (in thousands):

(Unaudited) Three Months Ended March 31, 2026 Three Months Ended March 31, 2025

Fire Safety Specialty

(Unaudited) Three Months Ended June 30, 2026 Three Months Ended June 30, 2025

In Thousands Fire Safety Specialty

Products Total Fire Safety Specialty

Products Total

Income (loss) before income taxes $ 62,127 $ (12,281) $ 49,846 $ 58,878 $ 10,301 $ 69,179

Loss before income taxes $ (179,329) $ (42,107) $ (221,436) $ (27,068) $ (6,780) $ (33,848)

Depreciation and amortization 14,258 14,650 28,908 13,620 4,304 17,924

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Stock-based compensation expense 2,009 883 2,892 2,007 231 2,238

Purchase accounting impact (2)

Purchase accounting impact - inventory step up (2)

— 4,480 4,480 — — —

Foreign currency gain (1,170) (33) (1,203) (522) (1,574) (2,096)

Segment Adjusted EBITDA $ 78,759 $ 26,831 $ 105,590 $ 77,659 $ 13,679 $ 91,338

(1) For the three months ended June 30, 2026, $1.4 million was related to restructuring and other non-recurring costs and $1.1 million was related to litigation costs arising from a contractual dispute regarding control of the P 2 S 5 facility, which is currently operated by Flexsys Chemical Company.

For the three months ended June 30, 2025, $0.1 million was related to restructuring and other non-recurring costs.

(2) For the three months ended June 30, 2026, $4.5 million was primarily related to the impact of purchase accounting on the cost of inventory sold.

The acquired inventory was recorded at fair value, resulting in a step-up in basis.

(Unaudited) Six Months Ended June 30, 2026 Six Months Ended June 30, 2025

In Thousands Fire Safety Specialty

Products Total Fire Safety Specialty

Products Total

(Loss) income before income taxes $ (117,202) $ (54,388) $ (171,590) $ 31,810 $ 3,521 $ 35,331

Depreciation and amortization 28,750 27,297 56,047 26,385 8,432 34,817

Interest and financing expense 19,049 24,900 43,949 12,134 7,440 19,574

Founders advisory fees - related party 166,290 23,587 189,877 13,992 2,278 16,270

Non-recurring expenses (1)

1,349 1,585 2,934 261 686 947

Acquisition costs 10 12,516 12,526 96 732 828

Stock-based compensation expense 2,725 2,765 5,490 3,583 1,326 4,909

Purchase accounting impact - inventory step up (2)

— 10,070 10,070 — — —

Foreign currency (gain) loss (3,521) 967 (2,554) (517) (2,738) (3,255)

Segment Adjusted EBITDA $ 97,450 $ 49,299 $ 146,749 $ 87,744 $ 21,677 $ 109,421

(1) For the three months ended March 31, 2026, $0.3 million was related to litigation costs arising from a contractual dispute regarding control of the P 2 S 5 facility, which is currently operated by Flexsys Chemical Company, and $0.1 million was related to restructuring and other non-recurring costs.

For the three months ended March 31, 2025, $0.5 million was related to restructuring and other non-recurring costs, and $0.4 million was related to the Redomiciliation Transaction.

(2) For the three months ended March 31, 2026, $5.6 million was primarily related to the impact of purchase accounting on the cost of inventory sold.

The inventory acquired received a purchase accounting step-up in basis.

(1) For the six months ended June 30, 2026, $1.5 million was related to restructuring and other non-recurring costs and $1.4 million was related to litigation costs arising from a contractual dispute regarding control of the P 2 S 5 facility, which is currently operated by Flexsys Chemical Company.

For the six months ended June 30, 2025, $0.6 million was related to restructuring and other non-recurring costs and $0.4 million was related to the Redomiciliation Transaction.

(2) For the six months ended June 30, 2026, $10.1 million was primarily related to the impact of purchase accounting on the cost of inventory sold.

The acquired inventory was recorded at fair value, resulting in a step-up in basis.

Liquidity and Capital Resources

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However, future cash flows are subject to a number of variables, including the length and severity of the fire season, growth of the wildland urban interface and the availability of air tanker capacity, and higher costs from inflation, all of which could negatively impact revenues, earnings and cash flows, and potentially our liquidity if we do not moderate our expenditures accordingly.

We believe that our existing cash and cash equivalents of $91.6 million, net cash flows generated from operations and availability under the Amended and Restated Revolving Credit Facility as of March 31, 2026 will be sufficient to meet our current capital expenditures, working capital, and debt service requirements for at least 12 months from the filing date of this Quarterly Report.

As of March 31, 2026, we expect our remaining fiscal year 2026 capital expenditure budget to cover both our maintenance and growth capital expenditures.

We believe that our existing cash and cash equivalents of $82.8 million, net cash flows generated from operations and availability under the Amended and Restated Revolving Credit Facility as of June 30, 2026 will be sufficient to meet our current capital expenditures, working capital, and debt service requirements for at least 12 months from the filing date of this Quarterly Report.

As of June 30, 2026, we expect our remaining fiscal year 2026 capital expenditure budget to cover both our maintenance and growth capital expenditures.

We may also raise capital through other various financing sources available to us, including the issuance of equity and/or debt securities through public offerings or private placements, to fund our acquisitions, the Annual Advisory Amounts and long-term liquidity needs.

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The applicable margin is 2.75% in the case of Term SOFR-based loans and 1.75% in the case of base rate-based loans, with two step-ups of 0.25% each based upon the achievement of certain leverage ratios.

As of March 31, 2026, the Company did not have any outstanding borrowings under the Amended and Restated Revolving Credit Facility and was in compliance with all covenants, including the financial covenants.

As of June 30, 2026, the Company did not have any outstanding borrowings under the Amended and Restated Revolving Credit Facility and was in compliance with all covenants, including the financial covenants.

On November 9, 2021, Perimeter Holdings, LLC (“Perimeter Holdings”), an indirect wholly owned subsidiary of the Company, assumed $675.0 million principal amount of 5.00% senior secured notes due October 30, 2029 (the “2029 Notes”), under an indenture dated as of October 22, 2021.

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The indentures governing the 2029 Notes and the 2034 Notes also contain customary events of default and remedies (including acceleration).

As of March 31, 2026, the Company was in compliance with all covenants, including financial covenants.

Debt issuance costs incurred in connection with securing the 2029 Notes and the 2034 Notes were capitalized and are amortized using the effective interest method over the term of the 2029 Notes and the 2034 Notes and included in interest expense in the accompanying condensed consolidated statements of operations and comprehensive income.

As of June 30, 2026, the Company was in compliance with all covenants, including financial covenants.

The unamortized portion of the debt issuance costs is included as a reduction to the carrying value of the 2029 Notes and the 2034 Notes which have been recorded as long-term debt, net in the accompanying condensed consolidated balance sheets.

The Company incurred $10.1 million of debt issuance costs as a result of the 2034 Notes for the three months ended March 31, 2026.

The Company incurred $10.1 million of debt issuance costs as a result of the 2034 Notes for the six months ended June 30, 2026.

For additional information about our long-term debt, refer to Note 6, “Long-Term Debt and Preferred Stock,” in the notes to the condensed consolidated financial statements included in this Quarterly Report.

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The Company expects to periodically re-establish the limit for Common Stock repurchases.

The approximate dollar value of shares that may yet be repurchased under the Share Repurchase Plan was $100.0 million as of March 31, 2026.

During the three months ended March 31, 2026, the Company did not repurchase any shares

under its Share Repurchase Plan.

During the three months ended March 31, 2025, the Company repurchased 888,454 shares.

The approximate dollar value of shares that may yet be repurchased under the Share Repurchase Plan was $100.0 million as of June 30, 2026.

During the three and six months ended June 30, 2026, the Company did not repurchase any shares under its Share Repurchase Plan.

During the three and six months ended June 30, 2025, the Company repurchased 2,886,221 and 3,774,675 shares, respectively.

The repurchased shares are recorded at cost and are being held in treasury.

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Under the Founder Advisory Agreement, at the election of the EverArc Founder Entity, at least 50% of the Advisory Amounts will be paid in shares of Common Stock and the remainder in cash.

For 2025, the EverArc Founder Entity was entitled to receive a Fixed Annual Advisory Amount of 2,357,061 shares of Common Stock or a value of $65.7 million, based on an average price of $27.89 per share (the “2025 Fixed Amount”).

The EverArc Founder Entity was also entitled to receive a Variable Annual Advisory Amount for 2025 of 14,462,123 shares of Common Stock, or a value of $403.4 million (the “2025 Variable Amount” and together with the 2025 Fixed Amount, the “2025 Advisory Amounts”).

The EverArc Founder Entity elected to receive approximately 79.6% of the 2025 Advisory Amounts in shares of Common Stock (13,387,003 Common Shares) and approximately 20.4% of the 2025 Advisory Amounts in cash ($95.7 million).

the 2025 Fixed Amount, the “2025 Advisory Amounts”).

The EverArc Founder Entity elected to receive approximately 79.6% of the 2025 Advisory Amounts in shares of Common Stock (13,387,003 shares of Common Stock) and approximately 20.4% of the 2025 Advisory Amounts in cash ($95.7 million).

To satisfy the 2025 Advisory Amounts, the Company paid $95.7 million in cash on February 19, 2026 and issued 13,387,003 shares of Common Stock on March 3, 2026.

For additional information about the Founder Advisory Agreement, refer to Note 10, “Stock-Based Compensation,” Note 11 “Fair Value Measurements” and Note 12, “Related Parties,” in the notes to the condensed consolidated financial statements included in this Quarterly Report.

The summary of our cash flows is as follows (in thousands):

Three Months Ended March 31,

The summary of our cash flows is as follows:

Six Months Ended June 30,

In Thousands 2026 2025

Cash (used in) provided by:

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Operating Activities

Cash used in operating activities was $89.0 million for the three months ended March 31, 2026 and cash provided by operating activities was $23.7 million for the three months ended March 31, 2025.

For the three months ended March 31, 2026, the primary components of operating cash flows were net income of $72.9 million, non-cash benefits of $69.9 million and net operating asset investments of $92.0 million.

For the three months ended March 31, 2025, the primary components of operating cash flows were net income of $56.7 million, non-cash benefits of $49.6 million and net operating asset reductions of $16.6 million.

Cash used in operating activities was $89.6 million for the six months ended June 30, 2026 and cash provided by operating activities was $20.9 million for the six months ended June 30, 2025.

For the six months ended June 30, 2026, the primary components of operating cash flows were net loss of $108.7 million, non-cash charges of $186.0 million and net operating asset investments of $166.9 million.

For the six months ended June 30, 2025, the primary components of operating cash flows were net income of $24.5 million, non-cash charges of $48.9 million and net operating asset investments of $52.5 million.

Investing Activities

Cash used in investing activities was $688.1 million and $14.8 million for the three months ended March 31, 2026 and 2025, respectively.

During the three months ended March 31, 2026, we purchased a business for $682.3 million and purchased property and equipment of $5.8 million.

During the three months ended March 31, 2025, we purchased a business for $10.0 million and purchased property and equipment of $4.8 million.

Cash used in investing activities was $700.8 million and $42.8 million for the six months ended June 30, 2026 and 2025, respectively.

During the six months ended June 30, 2026, we purchased a business for $682.3 million and purchased property and equipment of $18.5 million.

During the six months ended June 30, 2025, we purchased property and equipment of $17.6 million, purchased intangible assets of $15.2 million, and purchased a business for $10.0 million.

Financing Activities

Cash provided by financing activities was $542.8 million for the three months ended March 31, 2026 and cash used in financing activities was $8.4 million for the three months ended March 31, 2025.

During the three months ended March 31, 2026, we received proceeds from an issuance of long term debt of $550.0 million and received proceeds from exercises of options of $3.0 million, offset by payment of debt issuance costs of $10.1 million and $0.1 million in principal payments on finance lease obligations.

During the three months ended March 31, 2025, we repurchased shares of outstanding Common Stock for $8.2 million and made $0.2 million in principal payments on finance lease obligations.

Cash provided by financing activities was $547.2 million for the six months ended June 30, 2026 and cash used in financing activities was $40.6 million for the six months ended June 30, 2025.

During the six months ended June 30, 2026, we received proceeds from an issuance of long term debt of $550.0 million and received proceeds from exercises of options of $7.6 million, offset by payment of debt issuance costs of $10.1 million and $0.3 million in principal payments on finance lease obligations.

During the six months ended June 30, 2025, we repurchased shares of outstanding Common Stock for $40.4 million, made $0.5 million in principal payments on finance lease obligations, and received proceeds from exercises of options of $0.3 million.

Critical Accounting Estimates and Policies

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Our significant accounting policies and estimates are consistent with those discussed in Note 2, “Summary of Significant Accounting Policies and Recent Accounting Pronouncements” of our consolidated financial statements included in our 2025 Annual Report filed on Form 10-K with the SEC on February 26, 2026.

Significant estimates made by management in connection with the preparation of the accompanying condensed consolidated financial statements include the fair value of purchase consideration and assets acquired and liabilities assumed in a business combination, stock options and founder advisory fees.

We are not presently aware of any events or circumstances that would require us to update our estimates, assumptions or revise the carrying value of our assets or liabilities.

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As a result, actual results may differ significantly from our estimates, and any such differences may be material to our financial statements.

For information on the impact of recently issued accounting pronouncements, see Note 2, “Summary of Significant Accounting Policies and Recent Accounting Pronouncements” in the notes to the condensed consolidated financial statements included in this Quarterly Report.

For information on the impact of recently issued accounting pronouncements, see Note 2, “Recent Accounting Pronouncements” in the notes to the condensed consolidated financial statements included in this Quarterly Report.

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