Donnelley Financial Solutions, Inc.

Notes to the Unaudited Condensed Consolidated Financial Statements

Note 1. Overview, Basis of Presentation and Significant Accounting Policies

Description of Business

DFIN is a leading global provider of innovative software and technology-enabled financial regulatory and compliance solutions. The Company provides regulatory filing and deal solutions via its software, technology-enabled services and print and distribution solutions to public and private companies, mutual funds and other regulated investment firms, to serve its clients’ regulatory and compliance needs. DFIN helps its clients comply with applicable regulations where and how they want to work in a digital world, providing numerous solutions tailored to each client’s business needs. The prevailing trend is toward clients choosing to utilize the Company’s software solutions, in conjunction with its tech-enabled services, to meet their document and filing needs, while at the same time shifting away from physical print and distribution of documents, except for when it is still regulatorily required or requested by investors.

The Company serves its clients’ regulatory and compliance needs throughout their respective life cycles. For its capital markets clients, the Company offers solutions that allow companies to comply with U.S. Securities and Exchange Commission (“SEC”) regulations and support their corporate financial transactions and regulatory/financial reporting through the use of digital document creation and online content management tools; filing agent services, where applicable; solutions to facilitate clients’ communications with their investors; and virtual data rooms and other deal management solutions. For investment companies clients, the Company provides solutions that allow investment companies to comply with SEC regulations and support financial and regulatory reporting through the use of content management and technology-enabled solutions for creating, compiling and filing regulatory communications as well as digital-driven solutions for distributing content to investors.

Services and Products

The Company separately reports its net sales and related cost of sales for its software solutions, tech-enabled services and print and distribution offerings. The Company’s software solutions consist of ActiveDisclosure® (“ActiveDisclosure”), the Arc Suite® software platform (“Arc Suite”) and Venue® Virtual Data Room (“Venue”). The Company’s tech-enabled services offerings consist of document composition, compliance-related SEC Electronic Data Gathering, Analysis, and Retrieval (“EDGAR”) filing services and transactional solutions. The Company’s print and distribution offerings primarily consist of conventional and digital printed products and related shipping.

Basis of Presentation

The accompanying Unaudited Condensed Consolidated Financial Statements include the accounts of DFIN and all majority-owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and in accordance with the rules and regulations of the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The financial data presented herein should be read in conjunction with the audited Consolidated Financial Statements and accompanying notes included in the Company’s latest Annual Report. In the opinion of management, the financial data presented includes all adjustments necessary to present fairly the results of operations, financial position and cash flows for the interim periods presented. Results of interim periods should not be considered indicative of the results for the full year.

Significant Accounting Policies

Use of Estimates—The preparation of financial statements in conformity with GAAP requires the extensive use of management’s estimates and assumptions that affect the reported amounts of assets and liabilities as well as disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from these estimates. The Company’s significant accounting policies and critical accounting estimates are disclosed in the Annual Report.

Allowances for Expected Losses—Transactions affecting the current expected credit loss (“CECL”) reserve during the six months ended June 30, 2025 and 2024 were as follows:

The components of the CECL reserve balance at June 30, 2025 and December 31, 2024 were as follows:

Assets Held for Sale—On March 29, 2024, the Company sold land for net proceeds of $13.2 million, of which $12.4 million was received in the first quarter of 2024. The Company recognized a net pre-tax gain of $10.6 million related to the sale, of which $9.8 million was recorded during the six months ended June 30, 2024. The net pre-tax gain was recorded in other operating income, net on the Unaudited Condensed Consolidated Statements of Operations within the Capital Markets - Compliance and Communications Management operating segment.

Property, Plant and Equipment, net—The components of the Company’s property, plant and equipment, net at June 30, 2025 and December 31, 2024 were as follows:

Depreciation expense was$1.3 million and$1.5 million for the three months ended June 30, 2025 and 2024, respectively, and $2.5 million and $3.3 million for the six months ended June 30, 2025 and 2024, respectively.

Software, net—Capitalized software development costs are amortized over their estimated useful life using the straight-line method, up to a maximum ofthree years. Amortization expense related to internally-developed software was$13.8 million and$12.8 million for the three months ended June 30, 2025 and 2024, respectively, and $26.7 million and $24.9 million for the six months ended June 30, 2025 and 2024, respectively.

Investments—The carrying value of the Company’s investments in equity securities was$6.3 million and$5.8 million at June 30, 2025 and December 31, 2024, respectively. The Company measures its equity securities that do not have a readily determinable fair value at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The Company performs an assessment on a quarterly basis to determine whether triggering events for impairment exist and to identify any observable price changes.

Recently Issued Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which requires that an entity disclose consistent categories and greater disaggregation of information in the income tax rate reconciliation, income taxes paid disaggregated by jurisdiction, among other amendments that expand income tax disclosures. The standard is effective for fiscal years beginning after December 15, 2024. The Company is currently evaluating the impact of the adoption of this standard on its disclosures to the consolidated financial statements.

In November 2024 and January 2025, the FASB issued ASU No. 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses,” and ASU No. 2025-01, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date,” respectively, which require that an entity disclose disaggregated information about specific natural expense categories underlying certain statement of operations expense line items that are considered relevant in a tabular format within the notes to the consolidated financial statements, among other amendments that expand statement of operations expense disclosures. The standards are effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. The Company is currently evaluating the impact of the adoption of this standard on its disclosures to the consolidated financial statements.

Note 2. Revenue

Revenue Recognition

The Company manages highly-customized data and materials to enable filings with the SEC on behalf of its customers as well as performs tagging of documents using Inline eXtensible Business Reporting Language (“iXBRL”) and other services. Clients are provided with EDGAR filing services, iXBRL compliance services and translation, editing, interpreting, proof-reading and multilingual typesetting services, among other services. The Company provides software solutions to public and private companies, mutual funds and other regulated investment firms to serve their regulatory and compliance needs, including ActiveDisclosure, Arc Suite and Venue, and provides digital document creation, online content management and print and distribution solutions.

Revenue is recognized upon transfer of control of promised services or products to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those services or products. The Company’s services include software solutions and tech-enabled services whereas the Company’s products are comprised of print and distribution offerings. The Company’s arrangements with customers often include promises to transfer multiple services or products to a customer. Determining whether services and products are considered distinct performance obligations that should be accounted for separately requires significant judgment. Certain customer arrangements have multiple performance obligations as certain promises are both capable of being distinct and are distinct within the context of the contract. Other customer arrangements have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts, and therefore is not distinct. Revenue for the Company’s software solutions, tech-enabled services and print and distribution offerings is recognized either over time or at a point in time, as further disclosed in the Annual Report.

Disaggregation of Revenue

The following table disaggregates revenue between software solutions, tech-enabled services and print and distribution by reportable segment:

Unbilled Receivables and Contract Balances

The timing of revenue recognition may differ from the timing of invoicing to customers and these timing differences result in contract assets, unbilled receivables or contract liabilities. Contract assets represent revenue recognized for performance obligations completed before an unconditional right to payment exists and therefore invoicing has not yet occurred. The Company generally estimates contract assets based on the historical selling price adjusted for its current experience and expected resolution of the variable consideration of the completed performance obligation. When the Company’s contracts contain variable consideration, the variable consideration is recognized only to the extent that it is probable that a significant revenue reversal will not occur in a future period. As a result, the estimated revenue and contract assets may be constrained until the uncertainty associated with the variable consideration is resolved, which generally occurs in less than one year. Determining whether there will be a significant revenue reversal in the future and the determination of the amount of the constraint requires significant judgment.

Contract assets were $15.0 million and$13.8 million at June 30, 2025 and December 31, 2024, respectively. Generally, the contract assets balance is impacted by the recognition of additional revenue, amounts invoiced to customers and changes in the level of constraint applied to variable consideration. Amounts recognized as revenue exceeded the estimates for performance obligations satisfied in previous periods by approximately$8.8 million and$13.3 million for the three months ended June 30, 2025 and 2024, respectively, and$16.6 million and$15.8 million for the six months ended June 30, 2025 and 2024, respectively, primarily due to changes in the Company’s estimate of variable consideration and the application of the constraint.

Unbilled receivables are recorded when there is an unconditional right to payment and invoicing has not yet occurred. The Company estimates the value of unbilled receivables based on a combination of historical customer selling price and management’s assessment of realizable selling price. Unbilled receivables were $42.5 million and$24.1 million at June 30, 2025 and December 31, 2024, respectively. Unbilled receivables and contract assets are included in receivables, less allowances for expected losses on the Unaudited Condensed Consolidated Balance Sheets.

Contract liabilities consist of deferred revenue and progress billings, the majority of which is included in accrued liabilities on the Unaudited Condensed Consolidated Balance Sheets. Contract liabilities were$61.9 million and$52.9 million at June 30, 2025 and December 31, 2024, respectively. Contract liabilities increased during the period due to amounts invoiced for performance obligations before the revenue recognition criteria were met, which were offset by decreases due to revenue recognized in the period. The Company recognized$16.5 million and$9.2 million for the three months ended June 30, 2025 and 2024, respectively, and$37.5 million and$28.3 million of revenue during the six months ended June 30, 2025 and 2024, respectively, that was included in the deferred revenue balances at the beginning of the respective annual periods.

Most of the Company’s contracts with significant remaining performance obligations have an initial expected duration of one year or less. As of June 30, 2025, the future estimated revenue related to unsatisfied or partially satisfied performance obligations under contracts with an original contractual term in excess of one year was approximately $165 million, of which approximately 50% is expected to be recognized as revenue over the succeeding twelve months, and the remainder recognized thereafter.

Note 3. Goodwill

Goodwill balances by reportable segment were as follows:

Note 4. Leases

The Company has operating leases for certain service centers, office space and equipment as well as finance leases, substantially all related to information technology equipment. The Company’s payments related to its operating and finance lease liabilities for the three and six months ended June 30, 2025 and 2024 were as follows:

The components of lease expense for the three and six months ended June 30, 2025 and 2024 were as follows:

The Company’s finance leases as of June 30, 2025 and December 31, 2024 are presented on the Company’s Unaudited Condensed Consolidated Balance Sheets as follows:

Note 5. Restructuring, Impairment and Other Charges, net

Restructuring, Impairment and Other Charges, net recognized in Results of Operations

The Company records restructuring charges associated with management-approved restructuring plans, which could include the elimination of job functions, closure or relocation of facilities, reorganization of operations, changes in management structure, workforce reductions or other actions. Restructuring charges may include ongoing and enhanced termination benefits related to employee separations, contract termination costs and other related costs associated with exit or disposal activities. Restructuring charges for employee terminations include management’s estimate as to the timing and amount of severance and actual results could differ from estimates.

For thethree months ended June 30, 2025 and 2024, the Company recorded the following restructuring, impairment and other charges, net by reportable segment:

For the six months ended June 30, 2025 and 2024, the Company recorded the following restructuring, impairment and other charges, net by reportable segment:

For the three months ended June 30, 2025, the Company recorded net restructuring charges of$0.9 million related to employee termination costs for approximately 10 employees, substantially all of whom are expected to be terminated by December 31, 2025. For the six months ended June 30, 2025, the Company recorded net restructuring charges of $3.7 million related to employee termination costs for approximately 50 employees, substantially all of whom are expected to be terminated by December 31, 2025. The restructuring actions were primarily related to the reorganization of certain capital markets and investment companies operations.

For the three months ended June 30, 2024, the Company recorded restructuring charges of$1.2 million related to employee termination costs for approximately 20 employees, all of whom were terminated as of December 31, 2024. For the six months ended June 30, 2024, the Company recorded restructuring charges of$2.9 million related to employee termination costs for approximately 30 employees, all of whom were terminated as of December 31, 2024. The restructuring actions were primarily related to the reorganization of certain capital markets operations.

Restructuring Reserve – Employee Terminations

The Company’s employee terminations liability is included in accrued liabilities on the Company’s Unaudited Condensed Consolidated Balance Sheets. Changes in the accrual for employee terminations during thesix months ended June 30, 2025 were as follows:

Note 6. Retirement Plans

The components of estimated net pension plan expense (income) for thethree and six months ended June 30, 2025 and 2024 were as follows:

Pension Plan Termination

In August 2024, the Company executed an amendment to commence the process of terminating the Company’s primary defined benefit plan (the “Plan”). The Plan’s benefit obligation is expected to be settled by offering lump sum distributions to participants, followed by the purchase of annuity contracts to transfer the Plan’s remaining obligation to a third party. The window for participants to elect lump sum distributions closed on July 1, 2025. As settlement of the obligation will be funded with Plan assets, the Company expects to make a cash contribution to fully fund the Plan in 2025. The cash contribution amount will depend upon the nature and timing of the participant lump sum settlements and prevailing market conditions. As termination of the Plan is considered probable, the Plan’s actuarial assumptions as of December 31, 2024 reflected the expected Plan termination. Pension settlement charges related to the Plan termination, which include the recognition of Plan losses recorded within accumulated other comprehensive loss on the Company’s Unaudited Condensed Consolidated Balance Sheets, are currently expected to occur in the second half of 2025. Finalization of the Plan termination is subject to certain conditions, including regulatory review, and the Company has the ability to change the effective date of the termination or revoke the decision to terminate the Plan.

Note 7. Commitments and Contingencies

Litigation

From time to time, the Company’s customers and other counterparties file voluntary petitions for reorganization under United States bankruptcy laws. In such cases, certain pre-petition payments received by the Company from these parties could be considered preference items and subject to return. In addition, the Company may be party to certain litigation or other dispute resolution proceedings arising in the ordinary course of business. Management believes that the final resolution of these preference items and litigation or other proceedings will not have a material effect on the Company’s consolidated results of operations, financial position or cash flows.

Note 8. Debt

The Company’s debt as of June 30, 2025 and December 31, 2024 consisted of the following:

Credit Agreement—On March 13, 2025, the Company amended and restated its credit agreement dated as of September 30, 2016 (as in effect prior to such amendment and restatement, the “Credit Agreement,” and the Credit Agreement, as so amended and restated, the “Amended and Restated Credit Agreement”), by and among the Company, the lenders party thereto from time to time and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, to provide for a $115.0 million term loan A facility (the “Term Loan A Facility”), establish a $300.0 million revolving facility (the “Revolving Facility”) with a maturity date of March 13, 2030 to replace the entire amount of the revolving facility and modify the financial maintenance and negative covenants in the Amended and Restated Credit Agreement, among other things. The Amended and Restated Credit Agreement contains a number of covenants, including a minimum Interest Coverage Ratio and the Consolidated Net Leverage Ratio, as defined in and calculated pursuant to the Amended and Restated Credit Agreement, that, in part, restrict the Company’s ability to incur additional indebtedness, create liens, engage in mergers and consolidations, make restricted payments and dispose of certain assets. The Amended and Restated Credit Agreement generally allows annual dividend payments of up to $20.0 million in the aggregate.

Term Loan A Facility—The Company used the proceeds of the Term Loan A Facility and the Revolving Facility to retire the full $125.0 million of the Company’s then-outstanding Delayed Draw Term Loan A Facility. Under the Amended and Restated Credit Agreement, the Term Loan A Facility bears interest at a rate equal to the sum of the Secured Overnight Financing Rate (“SOFR”) plus a margin ranging from 2.00% to 2.50% based on the Company’s Consolidated Net Leverage Ratio. The principal amount of loans under the Term Loan A Facility are due and payable in equal quarterly installments of 1.25% of the original principal amount of the loans during the first three years after funding, beginning on June 30, 2025, and 2.50% of the original principal amount of the loans thereafter. Voluntary prepayments of the Term Loan A Facility are permitted at any time without premium or penalty. The entire unpaid principal amount of the loans will be due and payable in full on March 13, 2030. The fair value of the Term Loan A Facility and Delayed Draw Term Loan A Facility was $113.3 million and$125.0 million as of June 30, 2025 and December 31, 2024, respectively, and was determined to be Level 2 under the fair value hierarchy. The weighted-average interest rate on borrowings under the Term Loan A Facility and Delayed Draw Term Loan A Facility was 6.5% and 7.4% for the six months ended June 30, 2025 and 2024, respectively.

Revolving Facility—As of June 30, 2025, there were $77.0 million of borrowings outstanding under the Revolving Facility and there wereno borrowings outstanding under the Revolving Facility as of December 31, 2024. The weighted-average interest rate on borrowings under the Revolving Facility was 6.7% and 7.7% for the six months ended June 30, 2025 and 2024, respectively. The fair value of the Company’s borrowing under the Revolving Facility is classified as Level 2 under the fair value hierarchy and approximated its carrying value as of June 30, 2025, as the Revolving Facility carries a variable rate of interest reflecting current market rates.

The following table summarizes interest expense, net included on the Unaudited Condensed Consolidated Statements of Operations:

Note 9. Earnings per Share

Net earnings per basic share is calculated by dividing net earnings by the weighted-average number of common shares outstanding for the period. Net earnings per diluted share is computed using the weighted-average number of common and potentially dilutive shares outstanding during the period, including stock options, restricted stock units (“RSUs”), performance share units (“PSUs”) and restricted stock, using the treasury stock method.

The reconciliation of the numerator and denominator of the net earnings per basic and diluted share calculations and the anti-dilutive share based awards for thethree and six months ended June 30, 2025 and 2024 were as follows:

Note 10. Capital Stock

The Company has authorized for issuance 65 million shares of $0.01 par value common stock andone million shares of $0.01 par value preferred stock. The Board may divide the preferred stock into one or more series and fix the redemption, dividend, voting, conversion, sinking fund, liquidation and other rights. The Company has no present plans to issue any preferred stock.

Common Stock Repurchases

On November 14, 2023, the Board authorized the repurchase of up to $150 million of the Company’s outstanding common stock commencing on January 1, 2024, with an expiration date of December 31, 2025. On May 15, 2025, the Board authorized the repurchase of up to $150 million of the Company’s outstanding common stock commencing on May 16, 2025, with an expiration date of December 31, 2026. This new share repurchase program replaces the previous $150 million program. As of June 30, 2025, the remaining authorized amount was $150.0 million.

The stock repurchase program may be suspended or discontinued at any time. The timing and amount of any shares repurchased are determined by the Company based on its evaluation of market conditions and other factors and may be completed from time to time in one or more transactions on the open market or in privately negotiated purchases in accordance with all applicable securities laws and regulations and all repurchases in the open market will be made in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Repurchases may also be made under a Rule 10b5-1 plan, which would permit shares to be repurchased when the Company might otherwise be precluded from doing so.

The Company’s stock repurchases, excluding associated excise taxes, for thethree and six months ended June 30, 2025 and 2024 were as follows:

Note 11. Comprehensive Income

The components of other comprehensive income (loss) and income tax expense allocated to each component for thethree and six months ended June 30, 2025 and 2024 were as follows:

The following tables summarize changes in accumulated other comprehensive loss by component for thethree months ended June 30, 2025 and 2024:

(a)

These accumulated other comprehensive loss components are included in the calculation of net periodic pension and other postretirement benefits plans expense (income) recognized in investment and other loss (income), net on the Unaudited Condensed Consolidated Statements of Operations (see Note 6, Retirement Plans).

The following tables summarize changes in accumulated other comprehensive loss by component for the six months ended June 30, 2025 and 2024:

(a)

These accumulated other comprehensive loss components are included in the calculation of net periodic pension and other postretirement benefits plans expense (income) recognized in investment and other loss (income), net on the Unaudited Condensed Consolidated Statements of Operations (see Note 6, Retirement Plans).

Note 12. Segment Information

The Company operates its business through four operating and reportable segments: Capital Markets – Software Solutions, Capital Markets – Compliance and Communications Management, Investment Companies – Software Solutions and Investment Companies – Compliance and Communications Management. Corporate is not an operating segment and consists primarily of unallocated selling, general and administrative (“SG&A”) activities and associated expenses including, in part, executive, legal, finance and certain facility costs. In addition, certain costs and earnings of employee benefits plans, such as pension and other postretirement benefits plans expense (income) as well as share-based compensation expense, are included in Corporate and not allocated to the operating segments.

Capital Markets

The Company provides software solutions, tech-enabled services and print and distribution solutions to public and private companies for deal solutions and compliance to companies that are, or are preparing to become, subject to the filing and reporting requirements of the Securities Act of 1933, as amended (the “Securities Act”), and the Exchange Act. Capital markets clients leverage the Company’s software offerings, proprietary technology, deep industry expertise and experience to successfully navigate the SEC’s specified file formats when submitting compliance documents through the SEC’s EDGAR system for their transactional and ongoing compliance needs. The Company assists its capital markets clients throughout the course of initial public offerings, secondary offerings, mergers and acquisitions, public and private debt offerings, leveraged buyouts, spinouts, special purpose acquisition company (“SPAC”) and de-SPAC transactions and other similar transactions. In addition, the Company provides clients with compliance solutions to prepare their ongoing required Exchange Act filings that are compatible with the SEC’s EDGAR system, most notably Form 10-K, Form 10-Q, Form 8-K and proxy filings. The Company’s operating segments associated with its capital markets services and product offerings are as follows:

Capital Markets – Software Solutions—The CM-SS segment provides Venue and ActiveDisclosure subscriptions and related services (including service packages and services the Company performs on behalf of its clients with customer-facing software) to public and private companies to help manage public and private transactional and compliance processes; collaborate; and tag, validate and file SEC documents.

Capital Markets – Compliance & Communications Management—The CM-CCM segment provides tech-enabled services and print and distribution solutions to public and private companies for deal solutions and SEC compliance requirements. The Company offers around-the-clock services to support the transaction process, production platform and service delivery model. The Company has seen clients utilizing the range of options available to them, including a hybrid approach with working group members participating both virtually and in-person during drafting sessions for their transactions or a fully-virtual experience.

Investment Companies

The Company provides software solutions, tech-enabled services and print, distribution and fulfillment solutions to its investment companies clients, which are primarily mutual fund companies, alternative investment companies, insurance companies and third-party fund administrators, that are subject to the filing and reporting requirements of the Investment Company Act of 1940, as amended (the “Investment Company Act”) as well as European and Canadian regulations. The Company’s suite of solutions enables its investment companies clients to comply with applicable ongoing SEC regulations, as well as to create, manage and deliver accurate and timely financial communications to investors and regulators. Investment companies clients leverage the Company’s proprietary technology, deep industry expertise and experience to successfully navigate the SEC’s specified file formats when submitting compliance documents through the SEC’s EDGAR system. The Company’s operating segments associated with its investment companies services and products offerings are as follows:

Investment Companies – Software Solutions—The IC-SS segment provides clients with the Arc Suite platform that contains a comprehensive suite of cloud-based solutions, including subscriptions to ArcDigital, ArcPro, ArcRegulatory and ArcReporting as well as related services that enable storage and management of compliance and regulatory information in a self-service, central repository so that documents can be easily accessed, assembled, edited, tagged, translated, rendered and submitted to regulators and investors.

Investment Companies – Compliance & Communications Management—The IC-CCM segment provides clients with tech-enabled services and print and distribution solutions for creating, filing and distributing regulatory communications and solutions for investor communications, as well as iXBRL-formatted filings pursuant to the Investment Company Act, through the SEC’s EDGAR system. The IC-CCM segment also provides turnkey proxy services, including discovery, planning and implementation, print and mail management, solicitation, tabulation services, stockholder meeting review and expert support.

Information by Segment

The chief operating decision maker (“CODM”) regularly reviews segment net sales and Segment Adjusted EBITDA to assess segment performance and to decide how to allocate resources. Segment Adjusted EBITDA is reviewed to monitor budget versus actual results, analyze historical trends in assessing performance and identify actions required to improve profitability. Segment Adjusted EBITDA is defined as earnings before interest expense, net, income tax expense, depreciation and amortization and adjusted to exclude the impact of certain costs, expenses, gains, losses and other items, as reflected in the Reconciliation of total Segment Adjusted EBITDA sections below, which management believes are not indicative of ongoing operations and segment performance. As the CODM does not review segment assets to evaluate segment performance, segment assets are not disclosed.

The following tables include selected financial data for the Company’s reportable segments for the three and six months ended June 30, 2025 and 2024:

(a)

The significant expense categories align with the segment-level information that is regularly provided to the CODM. Segment Cost of sales, segment SG&A expenses and other segment items were adjusted to exclude certain items, as reflected in the Reconciliation of total Segment Adjusted EBITDA sections above, that are not included in the Segment Adjusted EBITDA profitability metric utilized by the CODM.

(b)

Corporate is not an operating segment and consists primarily of unallocated SG&A expenses.

(a)

The significant expense categories align with the segment-level information that is regularly provided to the CODM. Segment Cost of sales and segment SG&A expenses were adjusted to exclude certain items, as reflected in the Reconciliation of total Segment Adjusted EBITDA sections above, that are not included in the Segment Adjusted EBITDA profitability metric utilized by the CODM.

(b)

Corporate is not an operating segment and consists primarily of unallocated SG&A expenses.