What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-07 compared with 2026-05-08 · 204 added, 115 removed, 253 unchanged (56% of the section changed)

10 unchanged sentences

• an increase in the operating costs incurred by the Company’s business units, including, for example, the cost of raw materials and energy;

• noncompliance with any of the financial and other restrictive covenants in the ABL Facility;

• the risks associated with our cost-reduction and operational-improvement initiatives, including our ability to achieve the expected benefits within the expected timeframe or at all;

• failure to continue to attract, develop and retain certain key officers or employees;

11 unchanged sentences

• failure of the Company’s customers to achieve success or maintain market share;

• noncompliance with any of the financial and other restrictive covenants in the ABL Facility;

• failure to protect our intellectual property rights;

23 unchanged sentences

We believe that EBIT is a widely understood and utilized metric that is meaningful to certain investors and that including this financial metric in the reconciliation of management’s performance metric, EBITDA from ongoing operations, provides useful information to those investors that primarily utilize EBIT to analyze the Company’s core operations.

First quarter 2026 net income (loss) from continuing operations was $5.1 million ($0.15 per diluted share) compared to $0.7 million ($0.02 per diluted share) in the first quarter of 2025.

First Quarter Financial Results Highlights

• EBITDA from ongoing operations for Aluminum Extrusions was $11.7 million in the first quarter of 2026 versus $9.2 million in the first quarter of 2025 and versus $15.7 million in the fourth quarter of 2025.

• EBITDA from ongoing operations for High Performance Films was $5.1 million in the first quarter of 2026 versus $7.5 million in the first quarter of 2025 and versus $5.7 million in the fourth quarter of 2025.

Second quarter 2026 net income (loss) from continuing operations was $6.0 million ($0.17 per diluted share) compared to $1.8 million ($0.05 per diluted share) in the second quarter of 2025.

Second Quarter Financial Results Highlights

• EBITDA from ongoing operations for Aluminum Extrusions was $14.5 million in the second quarter of 2026 versus $9.3 million in the second quarter of 2025 and versus $11.7 million in the first quarter of 2026.

• EBITDA from ongoing operations for High Performance Films was $5.8 million in the second quarter of 2026 versus $6.7 million in the second quarter of 2025 and versus $5.1 million in the first quarter of 2026.

Results of Operations

First Quarter of 2026 Compared with the First Quarter of 2025 Results

The following table presents a bridge of consolidated net income (loss) from continuing operations from the first quarter of 2025 to the first quarter of 2026 with management's related discussion and analysis below the table.

Second Quarter of 2026 Compared with the Second Quarter of 2025 Results

The following table presents a bridge of consolidated net income (loss) from continuing operations from the second quarter of 2025 to the second quarter of 2026 with management's related discussion and analysis below the table.

(In thousands)

Net income (loss) from continuing operations for the three months ended March 31, 2025

Net income (loss) from continuing operations for the three months ended June 30, 2025

Income tax expense (benefit) 984

Income (loss) from continuing operations before income taxes for the three months ended March 31, 2025

Income (loss) from continuing operations before income taxes for the three months ended June 30, 2025

Change in income (loss) from increases (decreases) in the following items:

2 unchanged sentences

Cost of goods sold (32,249)

Freight (319)

Selling, general and administrative 432

1 unchanged sentence

Total (30,809)

Income (loss) from continuing operations before income taxes for the three months ended March 31, 2026

Income (loss) from continuing operations before income taxes for the three months ended June 30, 2026

Income tax expense (benefit) 1,731

Net income (loss) from continuing operations for the three months ended March 31, 2026

Sales in the first quarter of 2026 increased by $21.8 million compared with the first quarter of 2025.

Net income (loss) from continuing operations for the three months ended June 30, 2026

Sales in the second quarter of 2026 increased by $37.1 million compared with the second quarter of 2025.

Net sales (sales less freight) in Aluminum Extrusions increased $35.8 million, primarily due to the pass-through of higher metal costs, partially offset by lower volume.

Net sales in High Performance Films decreased $4.0 million, primarily due to a decrease in sales volume and unfavorable mix in surface protection films.

Net sales in High Performance Films increased $1.0 million, primarily due to an increase in sales volume in surface protection films, partially offset by unfavorable mix in surface protection films.

For more information on net sales and volume, see the Segment Operations Review below.

Consolidated gross profit (sales minus cost of goods sold and freight) as a percentage of sales (gross profit margin) was 12.6% in the first quarter of 2026 compared to 14.3% in the first quarter of 2025.

The gross profit margin in Aluminum Extrusions remains consistent with the prior period.

The gross profit margin in High Performance Films decreased due to a lower Surface Protection contribution margin associated with lower volume and unfavorable mix, partially offset by higher advanced packaging volume and favorable mix.

As a percentage of sales, selling, general and administrative (“SG&A”) and research and development ("R&D") expenses were 8.9% in the first quarter of 2026 compared with 12.6% in the first quarter of 2025.

First quarter sales increased 13.2% while SG&A decreased 20.5% compared to the prior period.

Lower SG&A spending was primarily due to lower professional fees associated with business development activities ($2.9 million), lower employee compensation ($0.7 million), and lower stock-based compensation ($0.4 million).

Interest expense was $0.4 million in the first quarter of 2026 in comparison to $1.0 million in the first quarter of 2025.

The decrease in interest expense was primarily due to lower weighted average total debt outstanding and lower interest rates.

The effective tax rate used to compute income taxes (benefit) from continuing operations in the first quarter of 2026 was 16.9% compared to 46.2% in the first quarter of 2025.

The effective tax rate for the first three months of 2026 varies from the statutory rate of 21% due to research and development tax credits while the effective tax rate for the first three months of 2025 varies from the statutory rate due to a mix of lower pre-tax income and higher nondeductible discrete items as a percentage of pre-tax income.

Pre-tax gains and losses associated with plant shutdowns, asset impairments, restructurings and other items for the first quarters of 2026 and 2025 detailed below are shown in the reconciliation of net sales and EBITDA from ongoing operations by segment in the table in the Segment Operations Review section below and are included in “Asset impairments and costs associated with exit and disposal activities, net of adjustments” in the condensed consolidated statements of income, unless otherwise noted.

Three Months Ended March 31,

Consolidated gross profit (sales minus cost of goods sold and freight) as a percentage of sales (gross profit margin) was 13.4% in the second quarter of 2026 compared to 13.6% in the second quarter of 2025.

The gross profit margin in Aluminum Extrusions remained consistent with the prior period.

The gross profit margin in High Performance Films decreased primarily due to a lower advanced packaging contribution margin associated with the pass-through lag associated with higher resin costs.

As a percentage of sales, selling, general and administrative (“SG&A”) and research and development ("R&D") expenses were 9.4% in the second quarter of 2026 compared with 11.6% in the second quarter of 2025.

Second quarter sales increased 20.7% while SG&A decreased 2.1% compared to the prior period.

Lower SG&A spending was primarily due to lower professional fees associated with business development activities ($1.1 million) and lower stock-based compensation ($0.4 million), partially offset by higher employee compensation ($0.8 million).

Interest expense was $0.5 million in the second quarter of 2026 in comparison to $1.8 million in the second quarter of 2025.

The decrease in interest expense was primarily due to the write-off of deferred financing fees related to Amendment No.

5 to the Company's Second Amended and Restated Credit Agreement of $0.8 million during the second quarter of 2025, lower weighted average total debt outstanding and lower interest rates.

The effective tax rate from continuing operations in the second quarter of 2026 was 22.3% compared to 35.0% in the second quarter of 2025.

The effective tax rate for the second quarter of 2026 was consistent with the U.S.

statutory rate of 21% while the effective tax rate for the second quarter of 2025 varied from the statutory rate due to a mix of lower pre-tax income and higher nondeductible discrete items as a percentage of pre-tax income.

Pre-tax gains and losses associated with plant shutdowns, asset impairments, restructurings and other items for the second quarters of 2026 and 2025 detailed below are shown in the reconciliation of net sales and EBITDA from ongoing operations by segment in the table in the Segment Operations Review section below and are included in “Asset impairments and costs associated with exit and disposal activities, net of adjustments” in the condensed consolidated statements of income, unless otherwise noted.

Three Months Ended June 30,

(In millions) 2026 2025

2 unchanged sentences

Consulting expenses for ERP/MES project 1

Storm damage to the Newnan, Georgia plant 1

Legal fees associated with the Aluminum Extruders Trade Case and other matters 1

Total for Aluminum Extrusions $ 0.3 $ —

(Gains) losses from sale of assets, investment writedowns and other items:

Professional fees associated with business development activities 1

Professional fees associated with the transition to the ABL Facility 1

Proceeds on the sale of corporate-owned land 2

Total for Corporate $ 0.2 $ —

Included in “Selling, general and administrative expenses” in the condensed consolidated statements of income.

Included in “Other income (expense), net” in the condensed consolidated statements of income.

Average total debt outstanding and interest rates were as follows:

Three Months Ended June 30,

(In millions, except percentages) 2026 2025

Floating-rate debt with interest charged on a rollover basis plus a credit spread:

Average total outstanding debt balance $ 45.5 $ 61.2

Average interest rate 5.6 % 6.7 %

First Six Months of 2026 Compared with the First Six Months of 2025 Results

The following table presents a bridge of consolidated net income (loss) from continuing operations from the first six months of 2025 to the first six months of 2026 with management's related discussion and analysis below the table.

(In thousands)

Net income (loss) from continuing operations for the six months ended June 30, 2025

Income tax expense (benefit) 1,560

Income (loss) from continuing operations before income taxes for the six months ended June 30, 2025

Change in income (loss) from increases (decreases) in the following items:

Other income (expense), net (1,293)

Change in income (loss) from (increases) decreases in the following items:

Cost of goods sold (54,102)

Freight (251)

Selling, general and administrative 4,676

Interest expense 1,974

Total (47,759)

Income (loss) from continuing operations before income taxes for the six months ended June 30, 2026

Income tax expense (benefit) 2,763

Net income (loss) from continuing operations for the six months ended June 30, 2026

Sales in the first six months of 2026 increased by $58.9 million compared with the first six months of 2025.

Net sales (sales less freight) in Aluminum Extrusions increased $61.6 million, primarily due to the pass-through of higher metal costs, partially offset by lower volume.

Net sales in High Performance Films decreased $3.0 million, primarily due to unfavorable mix in surface protection films.

For more information on net sales and volume, see the Segment Operations Review below.

Consolidated gross profit (sales minus cost of goods sold and freight) as a percentage of sales (gross profit margin) was 13.0% in the first six months of 2026 compared to 13.9% in the first six months of 2025.

The gross profit margin in Aluminum Extrusions remained consistent with the prior period.

The gross profit margin in High Performance Films decreased due to a lower Surface Protection contribution margin associated with lower volume, unfavorable mix, and the pass-through lag associated with higher resin costs, partially offset by favorable productivity and cost improvements.

As a percentage of sales, SG&A and R&D expenses were 9.2% in the first six months of 2026 compared with 12.1% in the first six months of 2025.

Sales increased 17.1% while SG&A decreased 11.3% compared to the prior period.

Lower SG&A spending was primarily due to lower professional fees associated with business development activities ($4.1 million) and lower stock-based compensation ($0.7 million).

Interest expense was $0.8 million in the first six months of 2026 in comparison to $2.8 million in the first six months of 2025.

The decrease was primarily due to the write-off of deferred financing fees related to Amendment No.

5 to the Second Amended and Restated Credit Agreement of $0.8 million during the first six months of 2025, lower weighted average total debt outstanding and lower interest rates.

The effective tax rate from continuing operations in the first six months of 2026 was 19.9% compared to 38.4% in the first six months of 2025.

The effective tax rate for the first six months of 2026 varied from the statutory rate of 21% due to research and development tax credits while the effective tax rate for the first six months of 2025 varied from the statutory rate due to a mix of lower pre-tax income and higher nondeductible discrete items as a percentage of pre-tax income.

Pre-tax gains and losses associated with plant shutdowns, asset impairments, restructurings and other items for the first six months of 2026 and 2025 detailed below are shown in the reconciliation of net sales and EBITDA from ongoing operations by segment in the table in the Segment Operations Review section below and are included in “Asset impairments and costs associated with exit and disposal activities, net of adjustments” in the condensed consolidated statements of income, unless otherwise noted.

Six Months Ended June 30,

(In millions) 2026 2025

Aluminum Extrusions:

(Gains) losses from sale of assets, investment writedowns and other items:

Consulting expenses for ERP/MES project 1

Storm damage to the Newnan, Georgia plant 1

Legal fees associated with the Aluminum Extruders Trade Case and other matters 1

Aluminum premium charge as a result of unplanned maintenance interruptions 2

6 unchanged sentences

Professional fees associated with the transition to the ABL Facility 1

Initial installment proceeds on the sale of corporate-owned land 3

Proceeds on the sale of corporate-owned land 3

Total for Corporate $ (0.1) $ 2.8

3 unchanged sentences

Average total debt outstanding and interest rates were as follows:

Three Months Ended March 31,

Six Months Ended June 30,

(In millions, except percentages) 2026 2025

4 unchanged sentences

Aluminum Extrusions

A summary of results for Aluminum Extrusions is provided below:

Three Months Ended Favorable/

(In thousands, except percentages) March 31, (Unfavorable)

2026 2025 % Change

A summary of results for Aluminum Extrusions (also "Bonnell Aluminum") is provided below:

Three Months Ended Favorable/ Six Months Ended Favorable/

(In thousands, except percentages) June 30, (Unfavorable) June 30, (Unfavorable)

2026 2025 % Change 2026 2025 % Change

Sales volume (lbs) 38,318 40,690 (5.8)% 73,481 78,608 (6.5)%

5 unchanged sentences

11,028 10,129 (8.9)% 19,933 19,541 (2.0)%

(263) 326 NM*

(345) 1,136 NM* (607) 1,462 NM*

EBITDA from ongoing operations $ 14,510 $ 9,283 56.3% $ 26,192 $ 18,441 42.0%

7 unchanged sentences

*Not meaningful (“NM”)

The following table presents the sales volume by end use market for the three months ended March 31, 2026 and 2025, and the three months ended December 31, 2025.

Three Months Ended Favorable/ Three Months Ended Favorable/

(In millions of lbs) March 31, (Unfavorable) December 31, (Unfavorable)

2026 2025 % Change 2025 % Change

The following table presents the sales volume by end use market for the three and six months ended June 30, 2026 and 2025, and the three months ended March 31, 2026.

Three Months Ended Favorable/ Three Months Ended Favorable/ Six Months Ended Favorable/

(In millions of lbs) June 30, (Unfavorable) March 31, (Unfavorable) June 30, (Unfavorable)

2026 2025 % Change 2026 % Change 2026 2025 % Change

Sales volume by end-use market:

4 unchanged sentences

Total 38.3 40.7 (5.8) % 35.2 8.8 % 73.5 78.6 (6.5) %

First Quarter 2026 Results vs.

First Quarter 2025 Results

Net sales in the first quarter of 2026 increased 19.3% versus the first quarter of 2025 primarily due to the pass-through of higher metal costs, partially offset by lower volume.

Sales volume in the first quarter of 2026 decreased 7.3% versus the first quarter of 2025 and 5.4% versus the fourth quarter of 2025.

The Company reported a 6% decline in nonresidential building and construction volume, driven by higher costs and ongoing economic uncertainty.

Within the specialty market, electrical shipments decreased 45% following the expiration of federal tax credits for solar panels.

Also in the specialty market, TSLOTS TM shipments, representing approximately 13% of total volume, increased 70%, supported by increased demand for data‑containment and data‑center infrastructure.

Automotive and transportation volume declined 19% as manufacturers continued to face rising cost pressures.

Net new orders in the first quarter of 2026 decreased 20% versus the first quarter of 2025 from an average of 3.4 million pounds per week in the first quarter of 2025 to 2.8 million pounds per week in the first quarter of 2026.

The Company believes this year-over-year decline reflects both softer U.S.

demand and the continued undervaluation of imported extrusions, attributed to the tariff structure associated with the increase of Section 232 tariffs on aluminum products to 50%, discussed below.

Open orders at the end of the first quarter of 2026 were 19 million pounds versus 25 million pounds at the end of the first quarter of 2025 and 17 million pounds at the end of the fourth quarter of 2025.

This level of open orders falls below the normalized level that is typically associated with stable demand patterns and healthy market dynamics.

Effective June 4, 2025, Section 232 tariffs on aluminum products increased to 50%, following a prior increase from 10% to 25% in March 2025, with the United Kingdom as the only exception.

In April 2026, federal policymakers updated several elements of Section 232, including measures intended to close the loophole that allowed undervalued aluminum extrusions to enter the U.S.

While these changes are expected to help restore fair competition for domestic producers, U.S.

extruders have emphasized the need for clear, uniform, and predictable enforcement to avoid near‑term market disruption.

The Company continues to participate in a coalition of downstream aluminum manufacturers that engages with policymakers on issues affecting the competitiveness of the U.S.

aluminum extrusion industry.

Second Quarter 2026 Results vs.

Second Quarter 2025 Results

Net sales in the second quarter of 2026 increas ed 24.1% ve rsus the second quarter of 2025 primarily due to the pass-through of higher metal costs, partially offset by lower volume.

Sales volume in the second quarter of 2026 decrease d 5.8% ver sus the second quarter of 2025 and increa sed 8.8% versus the first quarter of 2026.

Bonnell Aluminum experienced a 16% decline in nonresidential building and construction volume, driven by higher costs, including significantly higher metal costs, and ongoing economic uncertainty.

Nonresidential building and construction volume represented approximately 48% of total volume and remains Bonnell Aluminum’s most significant end-use market.

Within the specialty market, consumer durables volume, representing 8% of total volume, decreased 18% due to consumer cautionary spending on discretionary purchases.

Also within the specialty market, TSLOTS TM shipments, representing approximately 11% of total volume, increased 45%, supported by increased demand for data‑containment and data‑center infrastructure.

Automotive and transportation volume declined 16%, reflecting continued cost pressures on manufacturers and lower sales compared with the prior year period, which benefited from tariff-related pull-forward demand in the second quarter of 2025.

Automotive and transportation represents approximately 7% of total volume.

Net new orders in the second quarter of 2026 increased slightly to an average of 3.2 million pounds per week versus an average of 3.1 million pounds per week in the second quarter of 2025, supported by increased activity in TSLOTS TM for modular aluminum framing systems and renewable energy applications.

Open orders at the end of the second quarter of 2026 were 23 million pounds versus 25 million pounds at the end of the second quarter of 2025 and 19 million pounds at the end of

the first quarter of 2026.

This level of open orders falls within the normalized level that is typically associated with stable demand patterns and healthy market dynamics.

Market conditions remain impacted by U.S.

trade policy.

Following the increase in Section 232 aluminum tariffs to 50% in June 2025, Bonnell Aluminum experienced a decline in new orders of approximately 20%.

Changes to the tariff structure announced in April 2026, which include measures intended to close the loophole that allowed undervalued aluminum extrusions to enter the U.S., appear to be contributing to a more balanced competitive environment.

Tariffs and duties continue to be passed through to customers under the Company’s metal‑cost adjustment mechanism.

The Company implemented additional price increases in the first quarter of 2026 and the third quarter of 2025 to offset tariff‑related costs not covered by that mechanism.

EBITDA from ongoing operations in the first quarter of 2026 increased $2.5 million versus the first quarter of 2025, primarily due to:

EBITDA from ongoing operations in the second quarter of 2026 increased $5.2 million versus the second quarter of 2025, primarily due to:

• A $5.2 million increase in contribution margin (net sales less variable costs) associated with:

◦ Pricing increases ($4.6 million) and lower manufacturing costs associated with material yield ($2.0 million favorable in the first quarter of 2026 versus $0.1 million unfavorable in the first quarter of 2025), partially offset by lower volume ($2.1 million), higher labor rates ($0.7 million), unfavorable labor productivity ($0.6 million), higher maintenance and supply expense ($0.8 million), higher freight expense ($0.4 million), higher utilities ($0.5 million), and higher die expense ($0.8 million).

◦ The timing of the flow-through under the first-in, first-out ("FIFO") method of aluminum raw materials costs, which were previously acquired in a quickly changing commodity pricing environment, causing a temporary mismatch in the change in the cost of raw materials included in variable costs and the pass through to customers included in sales, resulted in a benefit of $2.9 million in the first quarter of 2026 versus a benefit of $1.7 million in the first quarter of 2025.

• Higher fixed costs primarily associated with wage increases ($0.5 million).

• Lower SG&A expenses primarily associated with lower employee-related compensation and lower routine environmental compliance expense ($0.5 million).

• Lower other expense for employee-related medical costs associated with medical claims ($0.6 million).

◦ Lower volume ($1.9 million), higher labor rates ($2.0 million), unfavorable labor productivity primarily due to more labor intensive requirements for higher-value products ($1.0 million), higher maintenance, supply and die expense, partially associated with tariff impact ($0.8 million), and higher freight expense ($0.8 million), partially offset by pricing increases ($0.6 million) and favorable manufacturing costs primarily associated with casting capabilities due to scrap spreads, reflecting a wider cost differential between primary aluminum and recycled scrap input, and higher scrap utilization ($5.1 million favorable in the second quarter of 2026 versus $0.7 million unfavorable in the second quarter of 2025).

◦ The timing of the flow-through under the first-in, first-out ("FIFO") method of aluminum raw materials costs, which were previously acquired in a quickly changing commodity pricing environment, causing a temporary mismatch in the change in the cost of raw materials included in variable costs and the pass through to customers included in sales, resulted in a benefit of $4.9 million in the second quarter of 2026 versus a charge of $0.7 million in the second quarter of 2025.

• Higher fixed costs primarily associated with wage and benefits increases ($0.5 million).

• Higher SG&A expenses primarily associated with incentive compensation expense ($0.9 million).

• Lower other expense for lower employee-related medical costs associated with medical claims ($1.5 million).

The Company expects the benefit associated with FIFO inventory positions and metal price trends to be substantially neutralized during the third quarter.

First Six Months of 2026 Results vs.

First Six Months of 2025 Results

Net sales in the first six months of 2026 increased 21.8% versus the first six months of 2025 primarily due to the pass-through of higher metal costs, partially offset by lower sales volume.

Sales volume in the first six months of 2026 decreased 6.5% versus the first six months of 2025.

EBITDA from ongoing operations in the first six months of 2026 increased $7.8 million in comparison to the first six months of 2025 primarily due to:

• A $7.2 million increase in contribution margin associated with:

◦ Favorable mix ($5.5 million) and favorable manufacturing costs primarily associated with casting capabilities due to scrap spreads, reflecting a wider cost differential between primary aluminum and recycled scrap input, and higher scrap utilization ($7.0 million favorable in the first six months of 2026 versus $0.9 million unfavorable in the first six months of 2025), partially offset by lower volume ($4.1 million), higher labor rates ($3.7 million), decreased labor productivity primarily due to more labor intensive requirements for higher-value products ($0.7 million), higher maintenance expense, primarily associated with downed equipment in the first quarter of 2026 and tariff impacts ($1.1 million), higher die expense, including tariff impact ($1.3 million), higher freight ($1.2 million), and higher utilities ($0.5 million).

◦ The timing of the flow-through under the FIFO method of aluminum raw material costs, which were previously acquired in a quickly changing commodity pricing environment and passed through to customers, resulted in a benefit of $7.8 million in the first six months of 2026 versus a benefit of $1.0 million in the first six months of 2025.

• Higher fixed costs primarily associated with wage and benefits-related expense increases ($1.1 million).

• Higher SG&A expenses primarily associated with higher incentive compensation, partially offset by lower routine environmental compliance expense ($0.4 million).

• Lower other expense for lower employee-related medical costs associated with medical claims ($2.1 million).

Conflict-driven disruptions in the Strait of Hormuz beginning in March 2026 have constrained shipments and raised costs, contributing to historically low U.S.

inventory levels.

In response to recent geopolitical tensions in the Middle East and resulting contraction of the global aluminum market, we have proactively diversified our supply chain portfolio to support long-term stability.

Through the third quarter of 2026, we have successfully transitioned nearly all of our aluminum supply previously sourced from the Middle East to North American partners.

In response to ongoing geopolitical tensions in the Middle East and resulting contraction of the global aluminum market, we have proactively diversified Bonnell Aluminum’s supply chain portfolio to support long-term stability.

Through the remainder of 2026, we have successfully secured nearly all of Bonnell Aluminum’s aluminum supply requirements and are proactively reviewing Bonnell Aluminum’s 2027 supply needs and sources to minimize exposure to the Middle East.

Simultaneously, we are optimizing billet casting operations at our Carthage, TN, and Newnan, GA facilities to overcome localized production constraints.

These strategic shifts in our supply chain and internal capabilities continue to strengthen our operational resilience, positioning the Company to meet customer demand through 2026.

These strategic shifts in our supply chain and internal capabilities continue to strengthen our operational resilience, positioning Bonnell Aluminum to meet customer demand.

Refer to Item 3.

4 unchanged sentences

Amortization expense is projected to be $2 million in 2026.

The Company anticipates capital spending to increase from the levels of the past two years and return to a pattern more closely aligned with depreciation and amortization, consistent with long-term historical patterns.

The Company anticipates capital spending for Bonnell Aluminum to increase from the levels of the past two years and return to a pattern more closely aligned with depreciation and amortization, consistent with long-term historical patterns.

This approach supports ongoing maintenance and efficiency initiatives while maintaining disciplined capital allocation.

1 unchanged sentence

A summary of results for High Performance Films is provided below:

Three Months Ended Favorable/

(In thousands, except percentages) March 31, (Unfavorable)

2026 2025 % Change

Three Months Ended Favorable/ Six Months Ended Favorable/

(In thousands, except percentages) June 30, (Unfavorable) June 30, (Unfavorable)

2026 2025 % Change 2026 2025 % Change

Sales volume (lbs) 9,724 9,798 (0.8)% 18,695 19,437 (3.8)%

5 unchanged sentences

2,857 2,867 0.3% 5,450 5,459 0.2%

(27) (11) NM*

(39) 87 NM* (66) 76 NM*

EBITDA from ongoing operations $ 5,780 $ 6,711 (13.9)% $ 10,854 $ 14,233 (23.7)%

7 unchanged sentences

*Not meaningful (“NM”)

First Quarter 2026 Results vs.

First Quarter 2025 Results

Net sales in the first quarter of 2026 decreased 15.7% versus the first quarter of 2025 due to a decrease in sales volume and unfavorable mix in surface protection films.

Surface Protection sales volume decreased 17.5% in the first quarter of 2026 versus the first quarter of 2025.

Sales volume for surface protection films declined in the first quarter of 2026 as expected due to a significant customer’s inventory correction and scheduled maintenance activity for another customer.

Second Quarter 2026 Results vs.

Second Quarter 2025 Results

Net sales in the second quarter of 2026 increased 4.2% versus the second quarter of 2025 due to an increase in sales volume for surface protection films, partially offset by unfavorable mix in surface protection films.

Surface Protection sales volume increased 17.8% in the second quarter of 2026 versus the second quarter of 2025.

Volume for advanced packaging films, which are predominantly manufactured and sold in the U.S.

and used in consumer staple items, increased 5.6% in the first quarter of 2026 versus the first quarter of 2025.

The top four customers comprised 87% and 91% of the net sales for High Performance Films for the first three months of 2026 and first three months of 2025, respectively.

Surface Protection has not experienced an adverse impact on customer demand related to tariff actions;

however, the situation remains fluid and the impact on consumer electronics is uncertain.

EBITDA from ongoing operations in the first quarter of 2026 decreased $2.4 million versus the first quarter of 2025, primarily due to:

and used in consumer staple items, decreased 17.8% in the second quarter of 2026 versus the second quarter of 2025.

EBITDA from ongoing operations in the second quarter of 2026 decreased $0.9 million versus the second quarter of 2025, primarily due to:

• A decrease in contribution margin of $0.7 million resulting from:

◦ A $2.8 million decrease from Surface Protection associated with lower volume and unfavorable mix ($3.4 million), partially offset by cost improvements and favorable productivity ($0.6 million).

◦ A $0.4 million increase from advanced packaging films primarily due to higher volume, favorable mix and unfavorable pricing ($0.5 million), partially offset by unfavorable productivity ($0.1 million).

◦ A $0.1 million increase from Surface Protection primarily due to favorable productivity and cost improvements ($0.8 million), partially offset by unfavorable mix ($0.2 million) and the pass-through lag

associated with higher resin costs (a charge of $0.5 million in the second quarter of 2026 versus no charge or benefit in the second quarter of 2025).

◦ A $0.8 million decrease from advanced packaging films primarily due to the pass-through lag associated with higher resin costs (a charge of $0.7 million in the second quarter of 2026 versus no charge or benefit in the second quarter of 2025).

• Higher fixed costs associated with employee-related compensation ($0.4 million).

• Lower SG&A expense associated with lower employee-related compensation ($0.3 million).

• A foreign currency transaction loss of $0.3 million in the first quarter of 2026 versus no gain or loss in the first quarter of 2025.

• A foreign currency transaction loss of $0.3 million in the second quarter of 2026 versus no gain or loss in the second quarter of 2025.

There have been significant cyclical swings in the sales volume and EBITDA from ongoing operations for High Performance Films since the beginning of 2022, largely due to the unprecedented downturn in the display industry during the second half of 2022 and first half of 2023.

EBITDA from ongoing operations for the past 4.5 years has averaged approximately $5.0 million per quarter.

First Six Months of 2026 Results vs.

First Six Months of 2025 Results

Net sales in the first six months of 2026 decreased 5.9% compared to the first six months of 2025 primarily due to unfavorable mix in surface protection films.

Surface Protection sales volume decreased 0.8% in the first six months of 2026 versus the first six months of 2025.

Sales volume for surface protection films declined in the first six months of 2026 versus the first six months of 2025 as expected due to a significant customer’s inventory correction and scheduled maintenance activity for another customer in the first six months of 2026.

Volume for advanced packaging films decreased 6.9% in the first six months of 2026 versus the first six months of 2025 primarily due to lower margin product.

The top four customers comprised 85% and 86% of the net sales for High Performance Films for the first six months of 2026 and first six months of 2025, respectively.

EBITDA from ongoing operations in the first six months of 2026 decreased $3.4 million versus the first six months of 2025, primarily due to:

• A decrease in contribution margin of $3.1 million resulting from:

◦ A $2.7 million decrease from Surface Protection associated with lower volume and unfavorable mix ($3.4 million) and the pass-through lag associated with higher resin costs (a charge of $0.6 million in the first six months of 2026 versus a charge of $0.1 million in the first six months of 2025), partially offset by favorable productivity and cost improvements ($1.3 million).

◦ A $0.4 million decrease from advanced packaging films primarily due to lower volume ($0.3 million), unfavorable productivity ($0.5 million) and the pass-through lag associated with higher resin costs (a charge of $0.8 million in the first six months of 2026 versus a charge of $0.1 million in the first six months of 2025), partially offset by favorable mix ($1.1 million).

• Higher fixed costs primarily associated with employee-related compensation ($0.4 million).

• Lower SG&A expense associated with lower employee-related compensation ($0.6 million).

• A foreign currency transaction loss of $0.6 million in the first six months of 2026 versus no gain or loss in the first six months of 2025.

Although the conflict-driven disruptions in the Strait of Hormuz beginning in March 2026 have caused an increase to resin costs, High Performance Films maintains pass-through mechanisms with customers and has not experienced supply issues to date.

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Corporate Expenses

Corporate expenses, net in the first three months of 2026 decreased $2.9 million compared to the first three months of 2025 due to lower professional fees associated with business development activities ($2.9 million).

Corporate expenses, net in the first six months of 2026 decreased $2.7 million compared to the first six months of 2025 due to lower professional fees associated with business development activities ($4.1 million), partially offset by a gain on the sale of corporate-owned land in 2025 ($1.5 million).

The Company does not expect significant expenses from business development activities in 2026.

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Reconciliation of Net Sales and EBITDA from Ongoing Operations by Segment

A reconciliation of segment financial information to consolidated results for the Company for the three months ended March 31, 2026 and 2025.

Three Months Ended

A reconciliation of segment financial information to consolidated results for the Company for the three and six months ended June 30, 2026 and 2025.

Three Months Ended Six Months Ended

June 30, June 30,

2026 2025 2026 2025

Aluminum Extrusions $ 184,129 $ 148,367 $ 343,586 $ 281,999

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Add back freight 6,472 6,153 11,971 11,720

Sales as shown in the condensed consolidated statements of income $ 186,489 $ 164,738

Sales as shown in the condensed consolidated statements of income (loss) $ 216,236 $ 179,116 $ 402,725 $ 343,853

EBITDA from Ongoing Operations

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EBIT 4,583 5,481 8,454 11,753

Plant shutdowns, asset impairments, restructurings and other — 1 — 1

Total 14,528 10,615 25,814 20,651

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Measures such as days sales outstanding (“DSO”), days inventory outstanding (“DIO”) and days payables outstanding (“DPO”) are used to evaluate changes in working capital.

Changes in operating assets and liabilities from December 31, 2025 to March 31, 2026 are summarized below.

Changes in operating assets and liabilities from December 31, 2025 to June 30, 2026 are summarized below.

• Accounts and other receivables increased $15.6 million (19.1%).

◦ Accounts and other receivables in Aluminum Extrusions increased $13.8 million primarily due to the pass-through of higher metal costs.

DSO (represents trailing 12 months net sales divided by a rolling 12-month average of accounts and other receivables balances) was approximately 45.0 days for the 12 months ended March 31, 2026 and 44.8 days for the 12 months ended December 31, 2025.

◦ Accounts and other receivables in High Performance Films increased $1.1 million primarily due to higher sales volume in advanced packaging films.

DSO was approximately 25.9 days for the 12 months ended March 31, 2026 and 25.4 days for the 12 months ended December 31, 2025.

DSO (represents trailing 12 months net sales divided by a rolling 12-month average of accounts and other receivables balances) was approximately 44.9 days for the 12 months ended June 30, 2026 and 44.8 days for the 12 months ended December 31, 2025.

◦ Accounts and other receivables in High Performance Films increased $1.8 million primarily due to higher sales volume.

DSO was approximately 26.0 days for the 12 months ended June 30, 2026 and 25.4 days for the 12 months ended December 31, 2025.

• Inventories increased $23.1 million (35.6%).

◦ Inventories in Aluminum Extrusions increased $21.7 million primarily due to increased raw material levels from seasonally low levels at the end of last year, higher metal costs and raw material stocking as a result of the geopolitical uncertainty impacting aluminum-related supply chains.

DIO (represents trailing 12 months costs of goods sold calculated on a FIFO basis divided by a rolling 12-month average of inventory balances calculated on the FIFO basis) was approximately 50.7 days for the 12 months ended March 31, 2026 and 48.8 days for the 12 months ended December 31, 2025.

◦ Inventories in High Performance Films remain consistent with prior year.

DIO was approximately 55.7 days for the 12 months ended March 31, 2026 and 54.6 days for the 12 months ended December 31, 2025.

DIO (represents trailing 12 months costs of goods sold calculated on a FIFO basis divided by a rolling 12-month average of inventory balances calculated on the FIFO basis) was approximately 51.1 days for the 12 months ended June 30, 2026 and 48.8 days for the 12 months ended December 31, 2025.

◦ Inventories in High Performance Films increased $1.4 million primarily due to higher raw material levels and higher resin costs.

DIO was approximately 56.7 days for the 12 months ended June 30, 2026 and 54.6 days for the 12 months ended December 31, 2025.

• Net property, plant and equipment increased $2.1 million primarily due to capital expenditures of $11.8 million and favorable foreign exchange of $0.2 million, partially offset by depreciation expense of $9.9 million.

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• Accounts payable increased $18.7 million (24.7%).

◦ Accounts payable in Aluminum Extrusions increased $20.1 million primarily due to increased raw material levels from seasonally low levels at the end of last year, higher metal costs and raw material stocking as a result of the geopolitical uncertainty impacting aluminum‑related supply chains.

DPO (represents trailing 12 months costs of goods sold calculated on a FIFO basis divided by a rolling 12-month average of accounts payable balances) was approximately 47.7 days for the 12 months ended March 31, 2026 and 46.6 days for the 12 months ended December 31, 2025.

◦ Accounts payable in High Performance Films increased $1.1 million primarily due to effective working capital management and the timing of vendor payments.

DPO was approximately 39.3 days for the 12 months ended March 31, 2026 and 40.6 days for the 12 months ended December 31, 2025.

Net cash provided by operating activities was $2.0 million in the first three months of 2026 compared to net cash used in operating activities of $5.0 million in the first three months of 2025.

The change primarily reflects more favorable working capital movements in the first quarter of 2026 compared to the first quarter of 2025.

Net cash used in investing activities was $4.6 million in the first three months of 2026 compared to net cash provided by investing activities of $6.9 million the first three months of 2025.

The change is primarily due to $9.8 million post-closing settlement proceeds associated with the sale of Terphane received in the first three months of 2025, partially offset by higher capital expenditures ($2.2 million).

Net cash provided by financing activities of $11.3 million in the first three months of 2026 compared to net cash used in financing activities of $5.3 million in the first three months of 2025.

The change is primarily due to higher debt borrowings, net of principal payments ($16.5 million) under the ABL Facility (as defined below) in the first three months of 2026.

At March 31, 2026, the Company had cash and cash equivalents of $15.6 million, including cash and cash equivalents held in locations outside the U.S.

◦ Accounts payable in Aluminum Extrusions increased $15.5 million primarily due to increased raw material levels from seasonally low levels at the end of last year, higher metal costs and raw material levels.

DPO (represents trailing 12 months costs of goods sold calculated on a FIFO basis divided by a rolling 12-month average of accounts payable balances) was approximately 46.6 days for both the 12 months ended June 30, 2026 and the 12 months ended December 31, 2025.

◦ Accounts payable in High Performance Films increased $4.0 million primarily due to the timing of vendor payments and increased raw material purchases.

DPO was approximately 40.6 days for both the 12 months ended June 30, 2026 and the 12 months ended December 31, 2025.

Net cash provided by operating activities was $7.7 million in the first six months of 2026 compared to net cash used in operating activities of $2.9 million in the first six months of 2025.

The change primarily reflects more favorable working capital movements in the first six months of 2026 compared to the first six months of 2025.

Net cash used in investing activities was $8.7 million in the first six months of 2026 compared to net cash provided by investing activities of $6.1 million the first six months of 2025.

The change is primarily due to decreased post-closing settlement proceeds associated with the sale of Terphane ($9.3 million) and a gain on the sale corporate-owned land ($1.5 million), partially offset by higher capital expenditures ($3.6 million).

Net cash provided by financing activities of $10.9 million in the first six months of 2026 compared to net cash used in financing activities of $0.6 million in the first six months of 2025.

The change is primarily due to higher debt borrowings, net of principal payments ($10.2 million) under the ABL Facility (as defined below) in the first six months of 2026, partially offset by deferred financing fees paid associated with Amendment No.

5 (defined below) to the ABL Facility during the first six months of 2025.

At June 30, 2026, the Company had cash and cash equivalents of $17.2 million, including cash and cash equivalents held in locations outside the U.S.

of $3.4 million.

Debt and Credit Agreements

The Second Amended and Restated Credit Agreement (or amended, the "ABL Facility") provides the Company with a $125 million senior secured asset-based revolving credit facility.

The Second Amended and Restated Credit Agreement (as amended, the "ABL Facility") provides the Company with a $125 million senior secured asset-based revolving credit facility.

The ABL Facility is secured by substantially all assets of the Company and its domestic subsidiaries, including equity in certain material first-tier foreign subsidiaries.

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The maturity date of the ABL Facility is May 6, 2030.

As of March 31, 2026, funds available to borrow under the ABL Facility was $76 million, or 61.0% of the aggregate commitment of $125 million.

As of June 30, 2026, funds available to borrow under the ABL Facility was $76 million, or 60.8% of the aggregate commitment of $125 million.

During 2025, the Company's letters of credit were reduced from approximately $12 million to $3 million, which directly increased the Company's borrowing availability.

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Computations of Credit EBITDA (as defined in the ABL Facility) as of and for the

Twelve Months Ended March 31, 2026 *

Computations of Credit EBITDA for the twelve months ended March 31, 2026 (in thousands):

Twelve Months Ended June 30, 2026 *

Computations of Credit EBITDA for the twelve months ended June 30, 2026 (in thousands):

Net income (loss) $ 33,323

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In October 2025, High Performance Films' business location in Guangzhou, China, Guangzhou Tredegar Film Products Co., Ltd.

(“Guangzhou Tredegar”), entered into a 3.5 million Chinese Yuan, which is equivalent to $0.5 million as of March 31, 2026, unsecured revolving loan with the Industrial and Commercial Bank of China.

The loan matures on October 20, 2026.

The interest rate is the one-year loan prime rate published by the National Interbank Funding Center for the working day immediately preceding the drawdown date, minus 0.55%.

(“Guangzhou Tredegar”), entered into a 3.5 million Chinese Yuan, which is equivalent to $0.5 million as of December 31, 2025, unsecured revolving loan with the Industrial and Commercial Bank of China.

The loan was to mature on October 20, 2026.

The interest rate was the one-year loan prime rate published by the National Interbank Funding Center for the working day immediately preceding the drawdown date, minus 0.55%.

As of October 20, 2025, the National Interbank Funding Center rate was 3.00%.

The financial covenants require that the total amount of Guangzhou Tredegar’s current liabilities cannot exceed 50% of the total amount of current assets and the short-term financing amount cannot exceed 50% of Guangzhou Tredegar’s

total sales over the last 12 months.

As of March 31, 2026, this loan was presented as current debt on the consolidated balance sheets.

The financial covenants required that the total amount of Guangzhou Tredegar’s current liabilities could not exceed 50% of the total amount of current assets and the short-term financing amount could not exceed 50% of Guangzhou

Tredegar’s total sales over the last 12 months.

During the second quarter of 2026, Guangzhou Tredegar fully repaid all outstanding borrowings under the unsecured revolving loan.

As of December 31, 2025, this loan was presented as current debt on the consolidated balance sheets.

For more information on the ABL Facility and the High Performance Films Guangzhou Loan, see Note 7 in the Company's 2025 Form 10-K.

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

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

The Company believes that existing borrowing availability, current cash balances and cash flow from operations will be sufficient to satisfy short term material cash requirements related to working capital, capital expenditures, and debt repayments for at least the next 12 months.

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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-Q

Item 2. Management’s Discussion and Analysis