AdvanSix Inc.

Previous wording

The following discussion and analysis of the Company’s financial condition and results of operations, which we refer to as our “MD&A,” should be read in conjunction with the Condensed Consolidated Financial Statements and the notes thereto contained in this Quarterly Report on Form 10-Q (this "Form 10-Q"), as well as the MD&A section included in our Annual Report on Form 10-K for the year ended December 31, 2024 ("2024 Form 10-K"). Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors that can affect our performance in both the near- and long-term, including those incorporated by reference in Item 1A of Part II of this Form 10-Q as such factors may be revised or supplemented in subsequent filings with the SEC, as well as those discussed in the section entitled “Note Regarding Forward-Looking Statements” below.

Current wording

The following discussion and analysis of the financial condition and results of operations, of AdvanSix Inc. (“AdvanSix,” the “Company,” “we” or “our”), which we refer to as our “MD&A,” should be read in conjunction with the Condensed Consolidated Financial Statements and the notes thereto contained in this Quarterly Report on Form 10-Q (this "Form 10-Q"), as well as the MD&A section included in our Annual Report on Form 10-K for the year ended December 31, 2024 ("2024 Form 10-K"). Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors that can affect our performance in both the near- and long-term, including those incorporated by reference in Item 1A of Part II of this Form 10-Q as such factors may be revised or supplemented in subsequent filings with the SEC, as well as those discussed in the section entitled “Note Regarding Forward-Looking Statements” below.

Previous wording

All statements other than statements of historical fact included in this Form 10-Q including, without limitation, statements in this MD&A regarding our financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements within the meaning of Section 21E of the Exchange Act. When used in this Form 10-Q, words such as "expect," “anticipate,” "estimate," "outlook," "project," "strategy," "intend," "plan," "target," "goal," "may," "will," "should," and “believe,” and other variations or similar terminology and expressions identify forward-looking statements. Although we believe forward-looking statements are based upon reasonable assumptions, such statements involve known and unknown risks, uncertainties and other factors, many of which are beyond our control and difficult to predict, which may cause the actual results or performance of the Company to be materially different from any future results or performance expressed or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to: general economic and financial conditions in the U.S. and globally; the potential effects of inflationary pressures, tariffs or the imposition of new tariffs, trade wars, barriers or restrictions, or threats of such actions, changes in interest rates, labor market shortages and supply chain issues; instability or volatility in financial markets or other unfavorable economic or business conditions caused by geopolitical concerns, including as a result of new or proposed legislation or regulatory, trade or other policies in or impacting the U.S., the conflict between Russia and Ukraine, the conflicts in Israel, Gaza and Iran, related uncertainty in the surrounding region, and the possible expansion of such conflicts; the effect of any of the foregoing on our customers’ demand for our products and our suppliers’ ability to manufacture and deliver our raw materials, including implications of reduced refinery utilization in the U.S.; our ability to sell and provide our goods and services; the ability of our customers to pay for our products; any closures of our and our customers’ offices and facilities; risks associated with increased phishing, compromised business emails and other cybersecurity attacks, data privacy incidents and disruptions to our technology infrastructure; risks associated with operating with a reduced workforce; risks associated with our indebtedness including compliance with financial and restrictive covenants, and our ability to access capital on reasonable terms, at a reasonable cost, or at all, due to economic conditions or otherwise; the impact of scheduled turnarounds and significant unplanned downtime and interruptions of production or logistics operations as a result of mechanical issues or other unanticipated events such as fires, severe weather conditions, natural disasters, pandemics and geopolitical conflicts and related events; pr…

Excerpt shortened here; the source contains the full paragraph.

Current wording

All statements other than statements of historical fact included in this Form 10-Q including, without limitation, statements in this MD&A regarding our financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements within the meaning of Section 21E of the Exchange Act. When used in this Form 10-Q, words such as "expect," “anticipate,” "estimate," "outlook," "project," "strategy," "intend," "plan," "target," "goal," "may," "will," "should," and “believe,” and other variations or similar terminology and expressions identify forward-looking statements. Although we believe forward-looking statements are based upon reasonable assumptions, such statements involve known and unknown risks, uncertainties and other factors, many of which are beyond our control and difficult to predict, which may cause the actual results or performance of the Company to be materially different from any future results or performance expressed or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to: general economic and financial conditions in the U.S. and globally; the potential effects of inflationary pressures, tariffs or the imposition of new tariffs, trade wars, barriers or restrictions, or threats of such actions, changes in interest rates, labor market shortages and supply chain issues; instability or volatility in financial markets or other unfavorable economic or business conditions caused by geopolitical concerns, including as a result of new or proposed legislation or regulatory, trade or other policies in or impacting the U.S., the U.S. government shutdown, the conflict between Russia and Ukraine, the conflicts in Israel, Gaza and Iran, and related instability in the surrounding region, and the uncertain outcomes of such conflicts; the effect of any of the foregoing on our customers’ demand for our products and our suppliers’ ability to manufacture and deliver our raw materials, including implications of reduced refinery utilization in the U.S.; our ability to sell and provide our goods and services; the ability of our customers to pay for our products; any closures of our and our customers’ offices and facilities; risks associated with increased phishing, compromised business emails and other cybersecurity attacks, data privacy incidents and disruptions to our technology infrastructure; risks associated with operating with a reduced workforce; risks associated with our indebtedness including compliance with financial and restrictive covenants, and our ability to access capital on reasonable terms, at a reasonable cost, or at all, due to economic conditions or otherwise; the impact of scheduled turnarounds and significant unplanned downtime and interruptions of production or logistics operations as a result of mechanical issues or other unanticipated events such as fires, severe weather conditions, natural disasters, pandemics, geopolitical c…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

Our ammonium sulfate fertilizer experiences quarterly sales seasonality reflecting both geographical and product sales mix considerations based on the timing and length of the growing seasons in North and South America. The North American fertilizer season typically runs from July, when the value chain begins restocking fertilizer, through June of the following year, when most application for the year’s planting is completed. The new season fill begins in the third quarter and proceeds sequentially into the following spring, which is the peak period for crop fertilizer application. As a result of this pattern, North American ammonium sulfate demand and pricing, particularly for our higher-value granular product, are typically strongest in the first half of the year through application for the spring crop and then decline in the second half of the year. Ammonium sulfate industry prices in the corn belt have declined approximately 10% from the second quarter to the third quarter, on average, since 2016. Due to the ammonium sulfate fertilizer sales cycle, we occasionally build up higher inventory balances because our production is continuous throughout the year and not tied to seasonal demand for fertilizers. Sales of most of our other products have generally been subject to minimal, or no, seasonality.

Current wording

Our ammonium sulfate fertilizer experiences quarterly sales seasonality reflecting both geographical and product sales mix considerations based on the timing and length of the growing seasons in North and South America. The North American fertilizer season typically runs from July, when the value chain begins restocking fertilizer, through June of the following year, when most application for the year’s planting is completed. The new season fill begins in the third quarter and proceeds sequentially into the following spring, which is the peak period for crop fertilizer application. As a result of this pattern, North American ammonium sulfate demand and pricing, particularly for our higher-value granular product, are typically strongest in the first half of the year through application for the spring crop and then decline in the second half of the year. Ammonium sulfate industry prices in the corn belt have declined approximately 12% from the second quarter to the third quarter, on average, since 2016. Due to the ammonium sulfate fertilizer sales cycle, we occasionally build up higher inventory balances because our production is continuous throughout the year and not tied to seasonal demand for fertilizers. Sales of most of our other products have generally been subject to minimal, or no, seasonality.

Previous wording

Sales decreased in the three months ended June 30, 2025 compared to the prior year period by $43.5 million (approximately 10%) due to (i) decreased volume (approximately 8%) primarily driven by softer demand in key nylon end markets and (ii) lower raw material pass through pricing (approximately 5%) following a net cost decrease in benzene and propylene (inputs to cumene which is a key feedstock to our products), partially offset by favorable market-based pricing (approximately 3%) driven by continued strength in Plant Nutrients reflecting favorable North American ammonium sulfate supply and demand conditions.

Current wording

Sales decreased in the three months ended September 30, 2025 compared to the prior year period by $23.7 million (approximately 6%) due to (i) lower raw material pass through pricing (approximately 5%) following a net cost decrease in benzene and propylene (inputs to cumene which is a key feedstock to our products) and (ii) decreased volume (approximately 3%) primarily driven by softer demand in chemical intermediate and nylon end markets, partially offset by favorable market-based pricing (approximately 2%) driven by continued strength in Plant Nutrients reflecting favorable North American ammonium sulfate supply and demand conditions.

Previous wording

Sales were approximately flat in the six months ended June 30, 2025 compared to the prior year period due to decreased volume (approximately 1%) driven by softer demand in key nylon end markets partially offset by higher granular ammonium sulfate sales supported by our SUSTAIN (Sustainable U.S. Sulfate to Accelerate Increased Nutrition) program. This was offset by higher pricing (approximately 1%), primarily reflecting favorable market-based pricing across our Plant Nutrients and Nylon Solutions product lines partially offset by lower raw material pass through pricing following a net cost decrease in benzene and propylene.

Current wording

Sales decreased in the nine months ended September 30, 2025 compared to the prior year period by $26.2 million (approximately 2%) due to decreased volume (approximately 2%) driven by softer demand in nylon end markets partially offset by higher granular ammonium sulfate sales supported by our SUSTAIN (Sustainable U.S. Sulfate to Accelerate Increased Nutrition) program. Pricing was flat, primarily reflecting favorable market-based pricing across our Plant Nutrients and Nylon Solutions product lines offset by lower raw material pass through pricing following a net cost decrease in benzene and propylene.

Previous wording

Costs of goods sold decreased in the three months ended June 30, 2025 compared to the prior year period by $20.8 million (approximately 6%) due to decreased volume (approximately 9%) driven by lower nylon sales as a result of soft end market demand, partially offset by (i) increased operational costs (approximately 2%) driven by utility spend and (ii) increased raw material costs (approximately 1%) driven by natural gas and sulfur.

Current wording

Costs of goods sold increased in the three months ended September 30, 2025 compared to the prior year period by $8.2 million (approximately 2%) due to (i) increased plant costs (approximately 2%) driven primarily by utility costs and (ii) increased raw material costs (approximately 1%) driven by sulfur and natural gas.

Previous wording

Costs of goods sold decreased in the six months ended June 30, 2025 compared to the prior year period by $30.3 million (approximately 4%) due to (i) insurance proceeds collected as a result of the PES supplier shutdown (approximately 4%), (ii) decreased operational costs (approximately 2%) primarily driven by improved operational performance, and (iii) decreased sales volume (approximately 2%), partially offset by increased raw material costs (approximately 3%) driven by natural gas and sulfur.

Current wording

Costs of goods sold decreased in the nine months ended September 30, 2025 compared to the prior year period by $22.1 million (approximately 2%) due to (i) insurance proceeds collected as a result of the PES supplier shutdown (approximately 3%),and (ii) decreased sales volume (approximately 3%), partially offset by (i) increased raw material costs (approximately 2%) driven by sulfur and natural gas and (ii) increased plant costs driven primarily by utility costs (approximately 1%).

Previous wording

Gross margin percentage decreased in the three months ended June 30, 2025 compared to the prior year period (approximately 4%) due primarily to (i) increased plant costs (approximately 2%) driven by utility spend and (ii) the impact of market-based pricing, net of raw material costs (approximately 2%).

Current wording

Gross margin percentage decreased in the three months ended September 30, 2025 compared to the prior year period (approximately 8%) due primarily to (i) the impact of pricing, net of raw material costs (approximately 3%), (ii) increased plant costs driven primarily by utility costs (approximately 2%), and (iii) lower sales volumes as discussed above (approximately 2%).

Previous wording

Gross margin percentage increased by approximately 4% in the six months ended June 30, 2025 compared to the prior year period due to (i) insurance proceeds collected as a result of the PES supplier shutdown (approximately 3%), (ii) decreased plant costs (approximately 1%) primarily driven by improved operational performance, and (iii) the net impact of lower sales volume and change in sales mix (approximately 1%), partially offset by the impact of market-based pricing, net of raw material costs (approximately 2%).

Current wording

Gross margin percentage was approximately flat in the nine months ended September 30, 2025 compared to the prior year period due to insurance proceeds collected as a result of the PES supplier shutdown (approximately 2%), offset by the impact of pricing, net of raw material costs (approximately 2%).

Previous wording

Selling, general and administrative expenses increased by $1.0 million in the three months ended June 30, 2025 compared to the prior year period due primarily to the planned investment to upgrade our enterprise resource planning system.

Current wording

Selling, general and administrative expenses increased by $3.2 million in the three months ended September 30, 2025 compared to the prior year period due primarily to legal and professional fees associated with strategic regulatory matters and potential inorganic growth options, and the planned investment to upgrade our enterprise resource planning system.

Previous wording

Selling, general and administrative expenses increased by $0.8 million in the six months ended June 30, 2025 compared to the prior period due primarily to the planned investment to upgrade our enterprise resource planning system.

Current wording

Selling, general and administrative expenses increased by $4.0 million in the nine months ended September 30, 2025 compared to the prior period due primarily to legal and professional fees associated with strategic regulatory matters and potential inorganic growth options, and the planned investment to upgrade our enterprise resource planning system.

Previous wording

The Company’s provision for income taxes in interim periods is computed by applying an estimated annual effective tax rate against Income before taxes for the period in addition to recording any tax effects of discrete items for the quarter. The Company’s effective tax rate for the three and six months ended June 30, 2025 differed from the U.S. federal statutory rate due to state taxes and executive compensation deduction limitations which generally increase the rate, offset by research tax credits that generally decrease the rate. Additionally, discrete tax adjustments recorded in the first and second quarter of the year related to Internal Revenue Code (IRC) Section 45Q tax credits of $1.8 million and $7.9 million, respectively, offset slightly by state tax legislation resulted in a net 24.7% and 15.7% decrease in the rate for the three and six months ended June 30, 2025, respectively. The Company’s effective tax rate for the three and six months ended June 30, 2024 was higher than the U.S. federal statutory rate, due to the impacts of state taxes and executive compensation deduction limitations which generally increase the tax rate, partially offset by tax credits which generally decrease the tax rate.

Current wording

The Company’s provision (benefit) for income taxes in interim periods is computed by applying an estimated annual effective tax rate against Income (loss) before taxes for the period in addition to recording any tax effects of discrete items for the quarter. The Company’s effective tax rate for the three and nine months ended September 30, 2025 and 2024 differed from the U.S. federal statutory rate due to state taxes and executive compensation deduction limitations which generally increase the rate, offset by research tax credits and the foreign-derived intangible income deduction that generally decrease the rate. During the nine months ended September 30, 2025, discrete tax adjustments recorded relating to Internal Revenue Code (IRC) Section 45Q tax credits of $9.7 million and return to provision adjustments related to the filing of the Company's 2024 U.S. federal income tax return of $0.2 million, offset slightly by state tax legislation changes and the vesting of equity compensation, resulted in a net 5% increase and 17% decrease in the estimated annual effective tax rate for the three and nine months ended September 30, 2025, respectively. In 2024, the Company recorded discrete tax adjustments related to the vesting of equity compensation, changes to state tax legislation, and return to provision adjustments related to the filing of the Company's 2023 U.S. federal income tax return which resulted in a net 3.3% and 1.5% increase to the estimated annual effective tax rate for the three and nine months ended September 30, 2024, respectively.

Previous wording

The Company’s effective tax rate for the three and six months ended June 30, 2025 was lower than the prior year period due primarily to the impact of the IRC Section 45Q tax credits recorded in the first half of the current year compared to the first half of the prior year.

Current wording

The Company’s effective tax rate for the nine months ended September 30, 2025 was lower than the prior year period due primarily to the impact of the IRC Section 45Q tax credits recorded in the current year-to-date period compared to the prior year-to-date period.

Previous wording

On July 4, 2025, President Trump signed into law legislation commonly referred to as the One Big Beautiful Bill Act (the "Act"), which includes numerous tax reform provisions affecting businesses, including extending and modifying certain provisions of the Tax Cuts and Jobs Act (both domestic and international), while also introducing major changes to federal energy policy by rolling back many clean energy provisions enacted as part of the Inflation Reduction Act. The Act includes a broad array of business-related provisions, including the full expensing of domestic research and experimental expenditures (i.e., R&D costs), modification of the limitation on business interest and making permanent full expensing for certain business property (i.e., 100 percent bonus depreciation). While we do not currently anticipate that the clean energy provisions will have a material impact on our financial results, we continue to evaluate these provisions. However, we do anticipate that the changes to R&D costs and the 100 percent bonus deprecation provisions will result in lower cash taxes in future periods. Due to the elective applicability of these provisions, we are still in the process of modeling and performing a full evaluation before determining the full impact and timing that these provisions will have on our financial results. Since the Act was enacted after the June 30 period-end date, no provisions are accounted for in our current financial statements. Due to the variety of effective dates for key provisions, we anticipate only certain provisions will impact our third and fourth quarter financial statements but the Company is unable to reasonably estimate the full impact of the Act on its financial statements at this time.

Current wording

On July 4, 2025, President Trump signed into law legislation commonly referred to as the One Big Beautiful Bill Act (the "Act"), which includes numerous tax provisions affecting businesses, including the reinstatement of full expensing of domestic research and experimental expenditures, modification of the limitation on business interest and making permanent full expensing for certain business property. These provisions resulted in an approximate $10 million reduction in cash taxes in our financial results for the three and nine months ended September 30, 2025 and we anticipate that it will also reduce our cash taxes in future periods. However, due to the elective applicability of these provisions, we are still evaluating the full impact and timing that these provisions will have on our financial results. We do not currently anticipate that the Act will have a material impact on our effective tax rate.

Previous wording

As a result of the factors described above, Net income was $31.4 million and $54.7 million for the three and six months ended June 30, 2025, respectively, as compared to $38.9 million and $21.5 million in the corresponding prior year period.

Current wording

As a result of the factors described above, Net income (loss) was ($2.6) million and $52.1 million for the three and nine months ended September 30, 2025, respectively, as compared to $22.3 million and $43.8 million in the corresponding prior year period.

Previous wording

We believe that cash balances and operating cash flows, together with available capacity under our credit agreement, as utilized in the second quarter of 2025, will provide adequate funds to support our current short-term operating objectives as well as our longer-term strategic plans, subject to the risks and uncertainties outlined below, in our "Note Regarding Forward-Looking Statements" above, and in the risk factors previously disclosed in Item 1A of Part I of our 2024 Form 10-K. Our principal source of liquidity is our cash flow generated from operating activities, which is expected to provide us with the ability to meet the majority of our short-term funding requirements for the next twelve months and beyond. Our cash flows are affected by capital requirements and production volume, which may be materially impacted by unanticipated events such as unplanned downtime, material disruptions at our production facilities, the prices of our raw materials, general economic and industry trends and customer demand. The Company applies a proactive and disciplined approach to working capital management to optimize cash flow and to enable capital allocation options in support of the Company’s strategy. We utilize supply chain financing and trade receivables discount arrangements with third-party financial institutions which optimize terms and conditions related to accounts receivable and accounts payable in order to enhance liquidity and enable us to efficiently manage our working capital needs. Although we continue to optimize supply chain financing and trade receivable programs in the ordinary course, our utilization of these arrangements has not had a material impact on our liquidity. In addition, we monitor the third-party depository institutions that hold our cash and cash equivalents. Our emphasis is primarily on the safety of principal and secondarily on maximizing yield on those funds. We diversify our cash and cash equivalents among counterparties to minimize exposure to any one of these entities.

Current wording

We believe that cash balances and operating cash flows, together with available capacity under our credit agreement, as utilized in the third quarter of 2025, will provide adequate funds to support our current short-term operating objectives as well as our longer-term strategic plans, subject to the risks and uncertainties outlined below, in our "Note Regarding Forward-Looking Statements" above, and in the risk factors previously disclosed in Item 1A of Part I of our 2024 Form 10-K. Our principal source of liquidity is our cash flow generated from operating activities, which is expected to provide us with the ability to meet the majority of our short-term funding requirements for the next twelve months and beyond. Our cash flows are affected by capital requirements and production volume, which may be materially impacted by unanticipated events such as unplanned downtime, material disruptions at our production facilities, the prices of our raw materials, general economic and industry trends and customer demand. The Company applies a proactive and disciplined approach to working capital management to optimize cash flow and to enable capital allocation options in support of the Company’s strategy. We utilize supply chain financing and trade receivables discount arrangements with third-party financial institutions which optimize terms and conditions related to accounts receivable and accounts payable in order to enhance liquidity and enable us to efficiently manage our working capital needs. Although we continue to optimize supply chain financing and trade receivable programs in the ordinary course, our utilization of these arrangements has not had a material impact on our liquidity. In addition, we monitor the third-party depository institutions that hold our cash and cash equivalents. Our emphasis is primarily on the safety of principal and secondarily on maximizing yield on those funds. We diversify our cash and cash equivalents among counterparties to minimize exposure to any one of these entities.

Previous wording

As of the end of the second quarter of 2025, the Company had approximately $18.4 million of cash on hand with approximately $259 million of additional capacity available under the revolving credit facility. The Company’s Consolidated Leverage Ratio financial covenant of its credit facility allows it to net up to $75 million of cash with debt. Capital expenditures are expected to be approximately $135 million to $145 million in 2025 compared to $134 million in 2024, reflecting the planned progression of our SUSTAIN growth program, and refined execution timing to address critical enterprise risk mitigation.

Current wording

As of the end of the third quarter of 2025, the Company had approximately $23.7 million of cash on hand with approximately $249 million of additional capacity available under the revolving credit facility. The Company’s Consolidated Leverage Ratio financial covenant of its credit facility allows it to net up to $75 million of cash with debt. Capital expenditures are expected to be approximately $120 million to $125 million in 2025 compared to $134 million in 2024, reflecting the planned progression of our SUSTAIN growth program, and refined execution timing to address critical enterprise risk mitigation.

Previous wording

The Company made no cash contributions to the defined benefit pension plan during the six months ended June 30, 2025 as there were no funding requirements for the period. Additional contributions may be made in future periods sufficient to satisfy pension funding requirements in those periods or on a discretionary basis.

Current wording

The Company made no cash contributions to the defined benefit pension plan during the nine months ended September 30, 2025 as there were no funding requirements for the period. Additional contributions may be made in future periods sufficient to satisfy pension funding requirements in those periods or on a discretionary basis.

Previous wording

On February 17, 2023, the Board authorized a share repurchase program to repurchase shares of the Company's common stock. As of June 30, 2025, the Company has repurchased a total of 6,308,099 shares of common stock life-to-date, including 1,062,643 shares withheld to cover tax withholding obligations in connection with the vesting of awards, for an aggregate of $194.0 million at a weighted average market price of $30.75 per share. As of June 30, 2025, approximately $62.0 million remained available for share repurchases under the currently authorized repurchase program. During the period July 1, 2025 through July 25, 2025, no additional shares were repurchased for tax withholding obligations or under the currently authorized repurchase program.

Current wording

As of September 30, 2025, the Company has repurchased a total of 6,313,789 shares of common stock life-to-date, including 1,068,333 shares withheld to cover tax withholding obligations in connection with the vesting of awards, for an aggregate of $194.1 million at a weighted average market price of $30.74 per share. As of September 30, 2025, approximately $62.0 million remained available for share repurchases under the current authorization approved by the Board on February 17, 2023. During the period October 1, 2025 through October 31, 2025, no additional shares were repurchased for tax withholding obligations or under the currently authorized repurchase program.

Previous wording

On October 27, 2021, the Company entered into a Credit Agreement (the “Credit Agreement”), among the Company, the lenders party thereto, the swing line lenders party thereto, the letter of credit issuers party thereto and Truist Bank, as administrative agent, which provides for a senior secured revolving credit facility in an aggregate principal amount of $500 million (the “Revolving Credit Facility”).

Current wording

On October 27, 2021, the Company entered into a Credit Agreement, as amended on June 27, 2023 (the “Credit Agreement”), among the Company, the lenders party thereto, the swing line lenders party thereto, the letter of credit issuers party thereto and Truist Bank, as administrative agent, which provides for a senior secured revolving credit facility in an aggregate principal amount of $500 million (the “Revolving Credit Facility”).

Previous wording

The Revolving Credit Facility has a scheduled maturity date of October 27, 2026, which the Company expects to refinance before such date. The Credit Agreement permits the Company to utilize up to $40 million of the Revolving Credit Facility for the issuance of letters of credit and up to $40 million for swing line loans. The Company has the option to establish a new class of term loans and/or increase the amount of the Revolving Credit Facility in an aggregate principal amount for all such incremental term loans and increases of the Revolving Credit Facility of up to the sum of (x) $175 million plus (y) an amount such that the Company’s Consolidated First Lien Secured Leverage Ratio (as defined in the Credit Agreement) would not be greater than 2.75 to 1.00, in each case, to the extent that any one or more lenders, whether or not currently party to the Credit Agreement, commits to be a lender for such amount or any portion thereof.

Current wording

The Revolving Credit Facility provided for a scheduled maturity date of October 27, 2026. The Credit Agreement permits the Company to utilize up to $40 million of the Revolving Credit Facility for the issuance of letters of credit and up to $40 million for swing line loans. The Company has the option to establish a new class of term loans and/or increase the amount of the Revolving Credit Facility in an aggregate principal amount for all such incremental term loans and increases of the Revolving Credit Facility of up to the sum of (x) $175 million plus (y) an amount such that the Company’s Consolidated First Lien Secured Leverage Ratio (as defined in the Credit Agreement) would not be greater than 2.75 to 1.00, in each case, to the extent that any one or more lenders, whether or not currently party to the Credit Agreement, commits to be a lender for such amount or any portion thereof.

Previous wording

The Credit Agreement contains customary covenants limiting the ability of the Company and its subsidiaries to, among other things, pay cash dividends, incur debt or liens, redeem or repurchase stock of the Company, enter into transactions with affiliates, make investments, make capital expenditures, merge or consolidate with others or dispose of assets. The Credit Agreement also contains financial covenants that require the Company to maintain a Consolidated Interest Coverage Ratio (as defined in the Credit Agreement) of not less than 3.00 to 1.00 and to maintain a Consolidated Leverage Ratio of 3.75 to 1.00 or less (subject to the Company’s option to elect a consolidated leverage ratio increase in connection with certain acquisitions). If the Company does not comply with the covenants in the Credit Agreement, the lenders may, subject to customary cure rights, require the immediate payment of all amounts outstanding under the Revolving Credit Facility. We were in compliance with all of our covenants at June 30, 2025 and through the date of the filing of this Form 10-Q.

Current wording

The Credit Agreement contains customary covenants limiting the ability of the Company and its subsidiaries to, among other things, pay cash dividends, incur debt or liens, redeem or repurchase stock of the Company, enter into transactions with affiliates, make investments, make capital expenditures, merge or consolidate with others or dispose of assets. The Credit Agreement also contains financial covenants that require the Company to maintain a Consolidated Interest Coverage Ratio (as defined in the Credit Agreement) of not less than 3.00 to 1.00 and to maintain a Consolidated Leverage Ratio of (ii) 3.75 to 1.00 or less (subject to the Company’s option to elect a consolidated leverage ratio increase in connection with certain acquisitions). If the Company does not comply with the covenants in the Credit Agreement, the lenders may, subject to customary cure rights, require the immediate payment of all amounts outstanding under the Revolving Credit Facility. We were in compliance with all of our covenants at September 30, 2025 and through the date of the filing of this Form 10-Q.

Previous wording

We had a borrowed balance of $195 million under the Revolving Credit Facility at December 31, 2024. We borrowed an incremental net amount of $45 million during the six months ended June 30, 2025, bringing the balance under the Revolving Credit Facility to $240 million, and available credit for use of approximately $259 million as of June 30, 2025. We expect that Cash provided by operating activities will fund future interest payments on the Company's outstanding indebtedness.

Current wording

We had a borrowed balance of $195 million under the Revolving Credit Facility at December 31, 2024. We borrowed an incremental net amount of $55 million during the nine months ended September 30, 2025, bringing the balance under the Revolving Credit Facility to $250 million, and available credit for use of approximately $249 million as of September 30, 2025. We expect that Cash provided by operating activities will fund future interest payments on the Company's outstanding indebtedness.

Previous wording

Cash provided by operating activities increased by $18.6 million for the six months ended June 30, 2025 versus the prior year period due primarily to a $33.2 million increase in net income, partially offset by (i) the unfavorable cash impact of $9.6 million from Taxes receivable and Income taxes payable combined, driven by the timing of tax payments and (ii) a $5.6 million unfavorable cash impact from Accrued liabilities due primarily to the timing of payments and accruals during the six months ended June 30, 2025 compared to the prior year period.

Current wording

Cash provided by operating activities decreased by $12.1 million for the nine months ended September 30, 2025 versus the prior year period due primarily to (i) the unfavorable cash impact of $17.7 million from Taxes receivable and Income taxes payable combined, driven by the timing of tax receipts and (ii) a $11.6 million unfavorable cash impact from working capital (comprised of Accounts and other receivables, Inventories, Accounts payable and Deferred income and customer advances) with $56.0 million unfavorable cash impact from working capital for the nine months ended September 30, 2025 compared to a $44.4 million unfavorable cash impact in the prior year period. These net unfavorable impacts were partially offset by (i) a favorable impact of $10.8 million from Deferred income taxes and (ii) an $8.3 million increase in Net income.

Previous wording

Cash used for investing activities decreased by $4.4 million for the six months ended June 30, 2025 versus the prior year period due primarily to the timing of cash payments for capital expenditures and other enterprise programs.

Current wording

Cash used for investing activities decreased by $10.4 million for the nine months ended September 30, 2025 versus the prior year period due primarily to the timing of cash payments for capital expenditures and other enterprise programs.

Previous wording

Cash provided by financing activities decreased by $6.4 million for the six months ended June 30, 2025 versus the prior year period due primarily to net borrowings of $45.0 million during the six months ended June 30, 2025 compared to net borrowings of $60.0 million during the prior year period, partially offset by payments for share repurchases of $1.5 million during the six months ended June 30, 2025 compared to $10.4 million during the prior year period.

Current wording

Cash provided by financing activities increased by $18.3 million for the nine months ended September 30, 2025 versus the prior year period due primarily to (i) net borrowings of $55.0 million during the nine months ended September 30, 2025 compared to net borrowings of $45.0 million during the prior year period and (ii) payments for share repurchases of $1.7 million during the nine months ended September 30, 2025 compared to $10.4 million during the prior year period.

Previous wording

For 2025, we expect our total capital expenditures to be approximately $135 million to $145 million as discussed above.

Current wording

For 2025, we expect our total capital expenditures to be approximately $120 million to $125 million as discussed above.