Freshpet, Inc.

Previous wording

Freshpet's mission is to help dogs and cats live longer, happier, healthier lives with the people who love them. We were inspired by the rapidly growing view among pet owners that their dogs and cats are a part of their family, leading them to demand healthier pet food choices. Since Freshpet's inception in 2006, we have created a comprehensive business model to deliver wholesome pet food that pet parents can trust, and in the process, we believe we have become one of the fastest growing pet food companies in North America. Our business model is difficult for others to replicate and we see significant opportunity for future growth by leveraging the unique elements of our business, including our brand, our production technology, our manufacturing network, our refrigerated distribution, our Freshpet Fridges and our culture.

Current wording

Freshpet's mission is to help dogs and cats live longer, happier, healthier lives with the people who love them. We were inspired by the rapidly growing view among pet owners that their dogs and cats are a part of their family, leading them to demand healthier pet food choices. Since Freshpet's inception in 2006, we have created a comprehensive business model to deliver wholesome pet food that pet parents can trust, and in the process, we believe we have become one of the fastest growing pet food companies in North America. Our business model is difficult for others to replicate and we see significant opportunities for future growth by leveraging the unique elements of our business, including our brand, our production technology, our manufacturing network, our refrigerated distribution, our Freshpet Fridges and our culture.

Previous wording

Our net sales are derived from the sale of fresh pet food products to retailers, through direct sales and distributor arrangements. Our products are primarily sold to consumers through a fast-growing network of company-owned branded refrigerators, known as Freshpet Fridges, located in our customers’ stores. We continue to roll out Freshpet Fridges at leading retailers across North America and parts of Europe and have installed Freshpet Fridges in approximately 30,721 retail stores as of June 30, 2026. Our products are sold under the Freshpet brand name with ingredients, packaging and labeling customized by class of retail. Sales are recorded net of discounts, returns and promotional allowances.

Current wording

Our net sales are derived from the sale of fresh pet food products to retailers, through direct sales and distributor arrangements. Our products are primarily sold to consumers through a fast-growing network of company-owned branded refrigerators, known as Freshpet Fridges, located in our customers’ stores. We continue to roll out Freshpet Fridges at leading retailers across North America and parts of Europe and have installed Freshpet Fridges in approximately 31,164 retail stores as of September 30, 2026. Our products are sold under the Freshpet brand name with ingredients, packaging and labeling customized by class of retail. Sales are recorded net of discounts, returns and promotional allowances.

Previous wording

Research & development. Research and development costs consist of expenses to develop and test new products. The costs are expensed as incurred.

Current wording

Research & development. Research and development costs consist of expenses to develop and test new products and technologies. The costs are expensed as incurred.

Previous wording

Net sales increased $75.3 million, or 14.3%, to $603.2 million for the six months ended June 30, 2026 as compared to $527.9 million in the same period in the prior year. The $75.3 million increase in net sales was driven by growth in the Grocery, Mass, International, and Digital channel of $39.3 million, with the remaining growth in the Pet Specialty and Club channel. The net sales increase was primarily driven by volume gains of 15.1%, partially offset by unfavorable price/mix of 0.8%.

Current wording

Net sales increased $29.0 million, or 10.0%, to $317.8 million for the three months ended September 30, 2026 as compared to $288.8 million in the same period in the prior year. The $29.0 million increase in net sales was driven by growth in the Grocery, Mass, International, and Digital channel of $13.1 million, with the remaining growth in the Pet Specialty and Club channel. The net sales increase was primarily driven by volume gains of 10.0%.

Previous wording

Gross profit was $128.7 million, or 42.1% as a percentage of net sales, for the three months ended June 30, 2026, compared to $108.2 million, or 40.9% as a percentage of net sales, in the prior year period. The 1.2% increase in gross profit as a percentage of net sales was primarily due to lower input costs and improved leverage on plant expenses, partially offset by higher quality costs related to the startup of new technology lines.

Current wording

Gross profit was $141.3 million, or 44.5% as a percentage of net sales, for the three months ended September 30, 2026, compared to $114.2 million, or 39.5% as a percentage of net sales, in the prior year period. The increase in gross profit as a percentage of net sales was primarily due to improved leverage on plant expenses, reduced quality costs and lower input costs.

Previous wording

Adjusted Gross Profit for the three months ended June 30, 2026 was $148.4 million, or 48.6% as a percentage of net sales, compared to $124.0 million, or 46.9% as a percentage of net sales, in the prior year period. See “—Non-GAAP Financial Measures” below.

Current wording

Adjusted Gross Profit for the three months ended September 30, 2026 was $158.8 million, or 50.0% as a percentage of net sales, compared to $132.8 million, or 46.0% as a percentage of net sales, in the prior year period. See “—Non-GAAP Financial Measures” below.

Previous wording

Selling, general and administrative expenses ("SG&A") were $107.0 million, or 35.0% as a percentage of net sales, for the three months ended June 30, 2026, compared to $90.4 million, or 34.1% as a percentage of net sales, in the prior year period. The increase in SG&A as a percentage of net sales was primarily due to increased logistics costs and variable compensation accrual, partially offset by decreased media spend as a percentage of net sales.

Current wording

Selling, general and administrative expenses ("SG&A") were $106.2 million, or 33.4% as a percentage of net sales, for the three months ended September 30, 2026, compared to $89.3 million, or 30.9% as a percentage of net sales, in the prior year period. The increase in SG&A as a percentage of net sales was primarily due to increased logistics costs and variable compensation accrual, partially offset by decreased media spend as a percentage of net sales.

Previous wording

Adjusted SG&A for the three months ended June 30, 2026 was $96.1 million, or 31.4% as a percentage of net sales, compared to $79.6 million, or 30.1% as a percentage of net sales, in the prior year period. See “—Non-GAAP Financial Measures” below.

Current wording

Adjusted SG&A for the three months ended September 30, 2026 was $94.2 million, or 29.6% as a percentage of net sales, compared to $78.2 million, or 27.1% as a percentage of net sales, in the prior year period. See “—Non-GAAP Financial Measures” below.

Previous wording

As a result of the factors discussed above, income from operations increased by $3.9 million to income from operations of $21.7 million for the three months ended June 30, 2026 as compared to $17.8 million in the prior year period.

Current wording

As a result of the factors discussed above, income from operations increased by $10.2 million to income from operations of $35.1 million for the three months ended September 30, 2026 as compared to $24.9 million in the prior year period.

Previous wording

The Company recorded interest and other income, net of $2.8 million for the three months ended June 30, 2026 as a result of interest income generated from cash and cash equivalents as compared to $2.2 million in the prior year period.

Current wording

The Company recorded interest and other income, net of $2.7 million for the three months ended September 30, 2026 as a result of interest income generated from cash and cash equivalents as compared to $2.4 million in the prior year period.

Previous wording

Interest expense decreased $0.2 million to $3.5 million for the three months ended June 30, 2026 as compared to $3.7 million in the prior year period. The decrease was primarily driven by higher capitalized interest in the period.

Current wording

Interest expense decreased $0.2 million to $3.4 million for the three months ended September 30, 2026 as compared to $3.6 million in the prior year period. The decrease was primarily driven by higher capitalized interest in the period.

Previous wording

Income tax expense increased $6.2 million to $6.1 million for the three months ended June 30, 2026 as compared to an income tax benefit of $0.1 million in the prior year period, primarily attributable to an increase in taxable income.

Current wording

Income tax expense increased $82.7 million to $4.7 million for the three months ended September 30, 2026 as compared to an income tax benefit of $78.0 million in the prior year period, primarily attributable to the release of the valuation allowance in the prior year period, which resulted in a deferred income tax benefit, compared to income tax expense in the current year period.

Previous wording

Net income increased $3.1 million to net income of $19.5 million for the three months ended June 30, 2026 as compared to $16.4 million in the prior year period, primarily due to the additional gain on equity investment and contributions from higher sales, partially offset by the increases in SG&A and income tax expense.

Current wording

Net income decreased $72.0 million to net income of $29.7 million for the three months ended September 30, 2026 as compared to $101.7 million in the prior year period, primarily due to the $77.9 million deferred income tax benefit recognized in the prior year period, compared to income tax expense in the current year period, and increases in SG&A, partially offset by contributions from higher sales.

Previous wording

Adjusted EBITDA was $52.2 million for the three months ended June 30, 2026 as compared to $44.4 million in the prior year period. The increase in Adjusted EBITDA was a result of increased Adjusted Gross Profit, partially offset by higher Adjusted SG&A expenses. See “—Non-GAAP Financial Measures” below.

Current wording

Adjusted EBITDA was $64.5 million for the three months ended September 30, 2026 as compared to $54.6 million in the prior year period. The increase in Adjusted EBITDA was a result of increased Adjusted Gross Profit, partially offset by higher Adjusted SG&A expenses. See “—Non-GAAP Financial Measures” below.

Previous wording

Net sales increased $40.9 million, or 15.5%, to $305.6 million for the three months ended June 30, 2026 as compared to $264.7 million in the same period in the prior year. The $40.9 million increase in net sales was driven by growth in the Grocery, Mass, International, and Digital channel of $22.1 million, with the remaining growth in the Pet Specialty and Club channel. The net sales increase was primarily driven by volume gains of 15.7%, partially offset by unfavorable price/mix of 0.2%.

Current wording

Net sales increased $104.3 million, or 12.8%, to $921.1 million for the nine months ended September 30, 2026 as compared to $816.8 million in the same period in the prior year. The $104.3 million increase in net sales was driven by growth in the Grocery, Mass, International, and Digital channel of $52.4 million, with the remaining growth in the Pet Specialty and Club channel. The net sales increase was primarily driven by volume gains of 13.3%, partially offset by unfavorable price/mix of 0.5%.

Previous wording

Gross profit was $249.4 million, or 41.3% as a percentage of net sales, for the six months ended June 30, 2026, compared to $212.0 million, or 40.2% as a percentage of net sales, in the prior year period. The 1.1% increase in gross profit as a percentage of net sales was primarily due to lower input costs and improved leverage on plant expenses, partially offset by higher quality costs related to the startup of new technology lines.

Current wording

Gross profit was $390.7 million, or 42.4% as a percentage of net sales, for the nine months ended September 30, 2026, compared to $326.2 million, or 39.9% as a percentage of net sales, in the prior year period. The increase in gross profit as a percentage of net sales was primarily due to improved leverage on plant expenses and lower input costs.

Previous wording

Adjusted Gross Profit for the six months ended June 30, 2026 was $288.0 million, or 47.7% as a percentage of net sales, compared to $244.3 million, or 46.3% as a percentage of net sales, in the prior year period. See “—Non-GAAP Financial Measures” below.

Current wording

Adjusted Gross Profit for the nine months ended September 30, 2026 was $446.8 million, or 48.5% as a percentage of net sales, compared to $377.1 million, or 46.2% as a percentage of net sales, in the prior year period. See “—Non-GAAP Financial Measures” below.

Previous wording

Selling, general and administrative expenses ("SG&A") were $223.3 million, or 37.0% as a percentage of net sales, for the six months ended June 30, 2026, compared to $205.7 million, or 39.0% as a percentage of net sales, in the prior year period. The decrease in SG&A as a percentage of net sales was primarily due to a decrease in non-recurring charges that occurred in the first half of 2025, partially offset by increased logistics costs and variable compensation accrual.

Current wording

Selling, general and administrative expenses ("SG&A") were $329.5 million, or 35.8% as a percentage of net sales, for the nine months ended September 30, 2026, compared to $295.0 million, or 36.1% as a percentage of net sales, in the prior year period. The decrease in SG&A as a percentage of net sales was primarily due to a decrease in non-recurring charges compared to 2025, partially offset by increased logistics costs and variable compensation accrual.

Previous wording

Adjusted SG&A for the six months ended June 30, 2026 was $197.8 million, or 32.8% as a percentage of net sales, compared to $164.3 million, or 31.1% as a percentage of net sales, in the prior year period. See “—Non-GAAP Financial Measures” below.

Current wording

Adjusted SG&A for the nine months ended September 30, 2026 was $291.9 million, or 31.7% as a percentage of net sales, compared to $242.5 million, or 29.7% as a percentage of net sales, in the prior year period. See “—Non-GAAP Financial Measures” below.

Previous wording

As a result of the factors discussed above, income from operations increased by $19.7 million to income from operations of $26.0 million for the six months ended June 30, 2026 as compared to $6.3 million in the prior year period.

Current wording

As a result of the factors discussed above, income from operations increased by $30.0 million to income from operations of $61.2 million for the nine months ended September 30, 2026 as compared to $31.2 million in the prior year period.

Previous wording

The Company recorded interest and other income, net of $5.7 million for the six months ended June 30, 2026, as a result of interest income generated from cash and cash equivalents as compared to $4.6 million in the prior year period.

Current wording

The Company recorded interest and other income, net of $8.4 million for the nine months ended September 30, 2026, as a result of interest income generated from cash and cash equivalents as compared to $6.9 million in the prior year period.

Previous wording

Interest expense decreased $0.1 million to $7.1 million for the six months ended June 30, 2026 as compared to $7.2 million in the prior year period. The decrease was primarily driven by higher capitalized interest in the period, partially offset by an increase in interest expense related to a finance lease liability.

Current wording

Interest expense decreased $0.3 million to $10.5 million for the nine months ended September 30, 2026 as compared to $10.8 million in the prior year period. The decrease was primarily driven by higher capitalized interest in the period.

Previous wording

The $66.6 million gain on equity investment for the six months ended June 30, 2026, resulted from the sale of the Company's non-controlling interest in a privately held company following the equity investment's acquisition by a third party, as discussed in Note 1 of our (unaudited) condensed consolidated financial statements.

Current wording

The $66.6 million gain on equity investment for the nine months ended September 30, 2026, resulted from the sale of the Company's non-controlling interest in a privately held company following the equity investment's acquisition by a third party, as discussed in Note 1 of our (unaudited) condensed consolidated financial statements.

Previous wording

Income tax expense increased $23.2 million to $23.2 million for the six months ended June 30, 2026 as compared to the nominal income tax expense in the prior year period, primarily attributable to an increase in taxable income due to the gain on equity investment.

Current wording

Income tax expense increased $105.9 million to $28.0 million for the nine months ended September 30, 2026 as compared to an income tax benefit of $77.9 million in the prior year period, primarily attributable to the release of the valuation allowance in the prior year period, which resulted in a deferred income tax benefit, compared to income tax expense in the current year period, which was primarilydue to the gain on equity investment and increased income from operations.

Previous wording

Net income increased $64.3 million to net income of $68.0 million for the six months ended June 30, 2026 as compared to $3.7 million in the prior year period, primarily due to the gain on equity investment, contributions from higher sales, and decreased non-recurring SG&A charges, partially offset by increases in logistics costs, variable compensation accrual and income tax expense.

Current wording

Net income decreased $7.6 million to net income of $97.7 million for the nine months ended September 30, 2026 as compared to $105.3 million in the prior year period, primarily due to the $77.9 million deferred income tax benefit recognized in the prior year period, compared to income tax expense in the current year period, and increased logistics costs and variable compensation accrual, partially offset by the $66.6 million gain on equity investment, contributions from higher sales, and decreased non-recurring SG&A charges.

Previous wording

Adjusted EBITDA was $90.1 million for the six months ended June 30, 2026 as compared to $79.9 million in the prior year period. The increase in Adjusted EBITDA was a result of increased Adjusted Gross Profit, partially offset by higher Adjusted SG&A expenses. See “—Non-GAAP Financial Measures” below.

Current wording

Adjusted EBITDA was $154.6 million for the nine months ended September 30, 2026 as compared to $134.5 million in the prior year period. The increase in Adjusted EBITDA was a result of increased Adjusted Gross Profit, partially offset by higher Adjusted SG&A expenses. See “—Non-GAAP Financial Measures” below.

Previous wording

We define Adjusted Gross Profit as gross profit before depreciation expense, non-cash share-based compensation, and loss on disposal of manufacturing equipment. We define Adjusted SG&A as SG&A expenses before depreciation and amortization expense, non-cash share-based compensation, loss on disposal of equipment, distributor transition costs, legal obligation and international business charges. EBITDA represents net income (loss) plus depreciation and amortization expense, interest expense net of interest income and, income tax expense. Adjusted EBITDA represents EBITDA less gain on equity investment, plus non-cash share-based compensation expense, loss on disposal of property, plant and equipment, distributor transition costs, legal obligation, and international business charges.

Current wording

We define Adjusted Gross Profit as gross profit before depreciation expense, non-cash share-based compensation, and loss on disposal of manufacturing equipment. We define Adjusted SG&A as SG&A expenses before depreciation and amortization expense, non-cash share-based compensation, loss on disposal of equipment, distributor transition costs, legal obligation and international business charges. EBITDA represents net income plus depreciation and amortization expense, interest expense net of interest income and, income tax expense (benefit). Adjusted EBITDA represents EBITDA less gain on equity investment, plus non-cash share-based compensation expense, loss on disposal of property, plant and equipment, distributor transition costs, legal obligation, and international business charges.

Previous wording

We expect to rely on our current and future cash flow from operations to fund our growth going forward. However, we may issue additional debt, refinance our existing debt, and/or raise capital through our access to capital markets, if appropriate. Our ability to obtain additional funding will be subject to various factors, including general economic and market conditions, our operating performance, the market’s perception of our growth potential, lender sentiment and our ability to incur additional debt in compliance with other contractual restrictions.

Current wording

We expect to rely on our current and future cash flow from operations to fund our growth going forward. However, we may opportunistically issue additional debt, refinance our existing debt, and/or raise capital through our access to capital markets. Our ability to obtain additional funding will be subject to various factors, including general economic and market conditions, our operating performance, the market’s perception of our growth potential, lender sentiment and our ability to incur additional debt in compliance with other contractual restrictions.

Previous wording

We expect to make future capital expenditures in connection with the completion of our planned development of Freshpet Kitchens Ennis Phase 2 and 3. During the six months ended June 30, 2026, we spent approximately $57.3 million of capital to meet our capacity needs as well as recurring capital expenditures. We expect capital expenditures to total approximately $150 million in fiscal year 2026.

Current wording

Our current manufacturing footprint can support sales in excess of $1.5 billion dollars and when all three Kitchens are fully built out, we believe it can support more than $3.0 billion in sales, pushing our need for an additional site past 2030. Capital expenditures per year can vary based on the capital cycle of the investment, with sites and buildings requiring more upfront dollars and longer lead-times. We reduced our capital expenditures related to manufacturing expansion in 2025 and 2026 due to a moderation in year-over-year growth and significant operational efficiencies and improvement. During the nine months ended September 30, 2026, we spent approximately $80.3 million of capital to meet our capacity needs as well as recurring capital expenditures. We expect capital expenditures to total between approximately $125 to $150 million in fiscal year 2026.

Previous wording

Our ability to make future minimum interest payments on the Convertible Notes, to refinance any indebtedness and to fund any necessary expenditures for our growth will depend on our ability to generate cash in the future. If our business does not achieve the levels of profitability or generate the amount of cash that we anticipate or if we expand faster than anticipated, we may need to seek additional debt or equity financing to operate and expand our business. Future third-party financing may not be available on favorable terms or at all.

Current wording

In March 2023, we issued approximately $402.5 million in convertible notes (the "Convertible Notes") and used $66.2 million of the proceeds to enter into Capped Call Transactions, and $11.0 million of the proceeds on debt issuance related costs. Our ability to make future minimum interest payments on the Convertible Notes, to refinance any indebtedness and to fund any necessary expenditures for our growth will depend on our ability to generate cash in the future. If our business does not achieve the levels of profitability or generate the amount of cash that we anticipate or if we expand faster than anticipated, we may need to seek additional debt or equity financing to operate and expand our business. Future third-party financing may not be available on favorable terms or at all.

Previous wording

On May 21, 2026, the Company's Board of Directors approved a share repurchase program, which authorizes the Company to repurchase up to an aggregate of $150 million of its outstanding common stock. The share repurchase authorization does not have a fixed expiration date, does not obligate Freshpet to repurchase any specific number of shares and may be suspended or discontinued at any time. The timing and number of shares repurchased will depend on a variety of factors, including price, general business, economic and market conditions, alternative investment opportunities, and funding considerations. The Company intends to fund the repurchases with existing cash, future cash flow from operations, future borrowings or other sources of cash at the Company’s discretion. During the quarter ended June 30, 2026, the Company repurchased $54,370 of shares of its common stock pursuant to the program, and had $95,630 remaining available for repurchase under the program as of such date.

Current wording

On May 21, 2026, the Company's Board of Directors approved a share repurchase program, which authorizes the Company to repurchase up to an aggregate of $150 million of its outstanding common stock. The share repurchase authorization does not have a fixed expiration date, does not obligate Freshpet to repurchase any specific number of shares and may be suspended or discontinued at any time. The timing and number of shares repurchased will depend on a variety of factors, including price, general business, economic and market conditions, alternative investment opportunities, and funding considerations. The Company intends to fund the repurchases with existing cash, future cash flow from operations, future borrowings or other sources of cash at the Company’s discretion. As of September 30, 2026, the Company had repurchased $102.3 million of shares of its common stock pursuant to the program (excluding broker fees and excise taxes), and had $47.7 million remaining available for repurchase under the program as of such date.

Previous wording

Our cash flow generation ability is subject to general economic factors at the international, national and regional levels, including but not limited to increased interest rates and inflation, tariffs, trade wars, geopolitical conflict, war, recession, financial, competitive, legislative and regulatory factors and other factors that are beyond our control, including government or regulatory shutdowns or defunding, or disruptions with or increased costs imposed by our key suppliers or others within our supply chain. Further, such macroeconomic factors could negatively impact consumer sentiment, resulting in reduced demand and changes in purchasing behaviors for some or all of our products and other relevant factors, such as consumer hesitancy to trade up in pet food, deferral of pet-related expenses, and reduced pet adoption rates. While these factors are expected to persist in the near term, the Company has implemented strategic initiatives, including targeted marketing, value-focused product innovation, and expanded distribution in club and mass channels, to mitigate their impact. Management believes these actions will support continued growth and margin expansion, even if the current economic environment remains unchanged. We cannot assure you that our business will generate cash flow from operations in an amount sufficient to enable us to fund our liquidity needs.

Current wording

Our cash flow generation ability is subject to general economic factors at the international, national and regional levels, including but not limited to increased interest rates and inflation, tariffs, trade wars, geopolitical conflict, war, recession, financial, competitive, legislative and regulatory factors and other factors that are beyond our control, including government or regulatory shutdowns or defunding, or disruptions with or increased costs imposed by our key suppliers or others within our supply chain. Further, such macroeconomic factors could negatively impact consumer sentiment, resulting in reduced demand and changes in purchasing behaviors for some or all of our products and other relevant factors, such as consumer hesitancy to trade up in pet food, deferral of pet-related expenses, and reduced pet adoption rates. While these factors are expected to persist in the near term, the Company has implemented strategic initiatives, including targeted marketing to high value consumers, product innovation with new bag technology, and an omnichannel focus, to mitigate their impact. Management believes these actions will support continued growth and margin expansion, even if the current economic environment remains unchanged. We cannot assure you that our business will generate cash flow from operations in an amount sufficient to enable us to fund our liquidity needs.

Previous wording

Expanding certain of our Freshpet Kitchens primarily comprises our material future cash requirement. The Company reduced its capital expenditures for manufacturing expansion during 2025, with the 2026 capital expenditures forecast similarly reflecting both a moderation in demand and significant operational efficiencies. These changes are expected to materially improve near-term cash flow and reduce the capital intensity of the business, while maintaining flexibility to scale as market conditions evolve. However, our capital requirements, including our cash requirements, may vary materially from those currently planned if, for example, our revenues do not reach expected levels, or we have to incur unforeseen capital expenditures and make investments to maintain our competitive position. If this is the case, we may seek alternative financing, such as issuing additional debt or equity securities, and we cannot assure you that we will be able to do so on favorable terms, if at all. Moreover, if we issue new debt securities, the debt holders would have rights senior to common stockholders to make claims on our assets, and the terms of any debt could restrict our operations, including our ability to pay dividends on our common stock. If we issue additional equity or if the Convertible Notes are converted to common shares, existing stockholders may experience dilution, and such new securities could have rights senior to those of our common stock. These factors may make the timing, amount, terms and conditions of additional financing unattractive. Our inability to raise capital could impede our growth or otherwise require us to forego growth opportunities and could materially adversely affect our business, financial condition and results of operations.

Current wording

Our capital requirements, including our cash requirements, may vary materially from those currently planned if, for example, our revenues do not reach expected levels, or we have to incur unforeseen capital expenditures and make investments to maintain our competitive position. If this is the case, we may seek alternative financing, such as issuing additional debt or equity securities, and we cannot assure you that we will be able to do so on favorable terms, if at all. Moreover, if we issue new debt securities, the debt holders would have rights senior to common stockholders to make claims on our assets, and the terms of any debt could restrict our operations, including our ability to pay dividends on our common stock. If we issue additional equity or if the Convertible Notes are converted to common shares, existing stockholders may experience dilution, and such new securities could have rights senior to those of our common stock. These factors may make the timing, amount, terms and conditions of additional financing unattractive. Our inability to raise capital could impede our growth or otherwise require us to forego growth opportunities and could materially adversely affect our business, financial condition and results of operations.

Previous wording

Working capital consists of current assets net of current liabilities. Working capital increased $74.4 million to $431.5 million as of June 30, 2026 compared to working capital of $357.1 million as of December 31, 2025. The increase was primarily a result of an increase of $72.8 million in cash and cash equivalents, primarily as a result of the proceeds from the sale of our equity investment, an increase of $10.0 million in inventories, net, an increase of $1.6 million in accounts receivable, and a decrease of $5.6 million in accounts payable. The increase was partially offset by a decrease of $2.1 million in prepaid expenses, a decrease of $1.0 million in other current assets, and an increase of $12.5 million in accrued expenses as a result of timing.

Current wording

Working capital consists of current assets net of current liabilities. Working capital increased $77.0 million to $434.1 million as of September 30, 2026 compared to working capital of $357.1 million as of December 31, 2025. The increase was primarily a result of an increase of $67.9 million in cash and cash equivalents, an increase of $18.4 million in inventories, net, an increase of $4.8 million in accounts receivable and a decrease of $5.1 million in accounts payable. The increase was partially offset by an increase of $19.4 million in accrued expenses as a result of timing.

Previous wording

As of June 30, 2026, our capital resources consisted primarily of $350.8 million of cash and cash equivalents on hand.

Current wording

As of September 30, 2026, our capital resources consisted primarily of $345.9 million of cash and cash equivalents on hand.

Previous wording

•$91.4 million of net income, adjusted for reconciling non-cash items, which excludes $23.4 million of non-cash items related to $21.5 million of deferred income tax expense, $50.0 million of depreciation and amortization, $15.5 million of share-based compensation, $1.1 million of amortization of deferred financing costs, $0.2 million of loss on disposal of property, plant and equipment, and $1.6 million of change in operating lease right of use asset, partially offset by $66.6 million of gain on equity investment.

Current wording

•$157.0 million of net income, adjusted for reconciling non-cash items, which excludes $59.3 million of non-cash items related to $25.9 million of deferred income tax expense, $73.7 million of depreciation and amortization, $21.4 million of share-based compensation, $1.7 million of amortization of deferred financing costs, $0.7 million of loss on disposal of property, plant and equipment, and $2.5 million of change in operating lease right of use asset, partially offset by $66.6 million of gain on equity investment.

Previous wording

•a $6.6 million decrease due to changes in operating assets and liabilities. The decrease was primarily due to the change in accounts receivable, inventories, other assets, accounts payable, and operating lease liability, partially offset by the changes in accrued expenses and prepaid expenses and other current assets.

Current wording

•an $11.5 million decrease due to changes in operating assets and liabilities. The decrease was primarily due to the change in accounts receivable, inventories, prepaid expenses and other current assets, other assets, accounts payable, and operating lease liability, partially offset by the changes in accrued expenses.

Previous wording

•$75.6 million of net income, adjusted for reconciling non-cash items, which excludes $72.0 million of non-cash items related to $42.4 million of depreciation and amortization, $11.5 million of provision for loss on accounts receivable, $15.0 million of share-based compensation, $1.1 million of amortization of deferred financing costs, $1.2 million of loss on disposal of property, plant and equipment, and $0.7 million of change in operating lease right of use asset.

Current wording

•$131.1 million of net income, adjusted for reconciling non-cash items, which excludes $25.8 million of non-cash items related to $77.9 million of deferred income tax benefit, $66.8 million of depreciation and amortization, $12.1 million of provision for loss on accounts receivable, $20.3 million of share-based compensation, $1.6 million of amortization of deferred financing costs, $1.4 million of loss on disposal of property, plant and equipment, and $1.5 million of change in operating lease right of use asset.

Previous wording

•a $36.9 million decrease due to changes in operating assets and liabilities. The decrease was primarily due to the changes in accrued expenses, inventories, accounts receivable, prepaid expenses and other current assets, and other assets, partially offset by the change in accounts payable.

Current wording

•a $25.6 million decrease due to changes in operating assets and liabilities. The decrease was primarily due to the changes in accounts receivable, prepaid expenses and other current assets, accounts payable, accrued expenses, and operating lease liability, partially offset by the change in inventories.

Previous wording

Net cash provided by investing activities of $42.7 million for the six months ended June 30, 2026 was primarily attributed to:

Current wording

Net cash provided by investing activities of $19.7 million for the nine months ended September 30, 2026 was primarily attributed to: