[Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) Kodiak Gas Services presents a comprehensive overview of its Q2 2025 performance and revised full-year outlook, emphasizing strong financial results and strategic initiatives [Second Quarter 2025 Performance Highlights](index=1&type=section&id=Second%20Quarter%202025%20Performance%20Highlights) Kodiak Gas Services reported strong financial and operational results for Q2 2025, achieving record earnings per share, adjusted EBITDA, and free cash flow, alongside significant improvements in contract services adjusted gross margin and fleet utilization | Metric | Q2 2025 Value | Change vs. Q2 2024 | | :----------------------------------- | :------------ | :------------------- | | **Net income attributable to common shareholders** | **$39.5 million** | **+537%** (from $6.2M) | | **Earnings per share** (diluted) | **$0.43** | - | | **Adjusted EBITDA** | **$178.2 million** | **+15.5%** | | **Contract Services adjusted gross margin percentage** | **68.3%** | **+430 basis points** | | **Free cash flow** | **$70.3 million** | - | | **Capital Returned to Stockholders** (Dividends & Repurchases) | Over **$50 million** | - | | **New Large Horsepower Compression Units Deployed** | **31,800 horsepower** | - | | **Fleet utilization** | **97.2%** | **+290 basis points** | - Kodiak was added to the **S&P SmallCap 600 index** effective August 6, 2025, signifying **financial strength** and **commitment** to **profitable growth**[6](index=6&type=chunk)[11](index=11&type=chunk) [Revised Full-Year 2025 Outlook Highlights](index=1&type=section&id=Revised%20Full-Year%202025%20Outlook%20Highlights) The company increased its full-year 2025 guidance for adjusted EBITDA and discretionary cash flow, reflecting continued confidence in its operational performance and market position | Metric | Revised Full-Year 2025 Guidance Range | | :----------------------------------- | :------------------------------------ | | **Adjusted EBITDA** | **$700 million** to **$725 million** | | **Discretionary cash flow** | **$445 million** to **$465 million** | [CEO Commentary](index=1&type=section&id=CEO%20Commentary) CEO Mickey McKee highlighted the company's commitment to operational excellence, strategic focus on large horsepower compression, fleet optimization, and investments in technology and personnel as drivers for record adjusted EBITDA and improved margins. He expressed confidence in long-term growth prospects due to Permian Basin natural gas production growth and strong demand from data centers and LNG projects, reinforcing the decision to increase the share repurchase program - The company's **strategic focus** on large horsepower compression, **fleet optimization**, and **significant investments** in technology and personnel contributed to a fourth consecutive quarterly **increase** in **Contract Services adjusted gross margin percentage** and **record** quarterly **Adjusted EBITDA**[4](index=4&type=chunk) - **Confidence** in **long-term growth** is driven by highly visible **Permian Basin natural gas production growth** and **strong demand outlook from power demand for data centers and domestic LNG projects**[7](index=7&type=chunk) - The **increase** in the **share repurchase program** reflects **confidence** in the business and **commitment** to returning capital to shareholders, while maintaining focus on **superior service** and a **reliable** compression fleet[8](index=8&type=chunk) [Operational and Financial Updates](index=2&type=section&id=Operational%20and%20Financial%20Updates) This section details Kodiak's segment performance, debt management, S&P index inclusion, and share repurchase activities [Segment Performance](index=2&type=section&id=Segment%20Performance) Kodiak's Contract Services segment demonstrated robust growth in revenue and gross margin, while Other Services experienced a revenue decrease but a significant increase in gross margin [Contract Services](index=2&type=section&id=Contract%20Services) The Contract Services segment demonstrates robust revenue and gross margin growth, reflecting strong operational performance | Metric | Q2 2025 Value | Q2 2024 Value | YoY Change | | :-------------------------- | :------------ | :------------ | :--------- | | **Revenue** | **$293.5 million** | **$276.3 million** | **+6.3%** | | **Gross Margin** | **$134.3 million** | **$107.5 million** | **+24.9%** | | **Adjusted Gross Margin** | **$200.4 million** | **$176.9 million** | **+13.3%** | [Other Services](index=2&type=section&id=Other%20Services) The Other Services segment experienced a revenue decrease but a significant increase in gross margin, indicating improved profitability | Metric | Q2 2025 Value | Q2 2024 Value | YoY Change | | :-------------------------- | :------------ | :------------ | :--------- | | **Revenue** | **$29.3 million** | **$33.4 million** | **-12.3%** | | **Gross Margin & Adjusted Gross Margin** | **$7.2 million** | **$5.5 million** | **+31.6%** | [Long-Term Debt and Liquidity](index=2&type=section&id=Long-Term%20Debt%20and%20Liquidity) The company reduced its debt outstanding by approximately $48 million during Q2 2025, maintaining a healthy liquidity position with significant availability on its ABL Facility | Metric | As of June 30, 2025 | | :-------------------------------- | :------------------ | | **Debt Reduction** (Q2 2025) | ~**$48 million** | | **Total Debt Outstanding** | **$2.6 billion** | | **ABL Facility Availability** | **$366.4 million** | | **Credit Agreement Leverage Ratio** | **3.6x** | [S&P SmallCap 600 Index Inclusion](index=2&type=section&id=S%26P%20SmallCap%20600%20Index%20Inclusion) Kodiak Gas Services was announced to join the S&P SmallCap 600 index, effective August 6, 2025, marking a significant milestone that affirms its financial strength and commitment to profitable growth - Kodiak will join the **S&P SmallCap 600 index** effective August 6, 2025, which is a **significant milestone** affirming the company's **financial strength** and **commitment** to **profitable growth**[6](index=6&type=chunk)[11](index=11&type=chunk) [Share Repurchase Program](index=2&type=section&id=Share%20Repurchase%20Program) The Board of Directors approved a $100 million increase to the share repurchase program, extending its expiration to December 31, 2026, bringing the total available for repurchases to $115.0 million. To date, the company has repurchased approximately 2.0 million shares for $60.0 million | Metric | Details | | :-------------------------------- | :------------------------------------------------ | | **Program Increase** | **$100 million** | | New Expiration Date | December 31, 2026 | | **Total Available for Repurchases** | **$115.0 million** | | **Shares Repurchased to Date** | ~**2.0 million shares** | | **Aggregate Amount Repurchased to Date** | **$60.0 million** (at a weighted average price of **$30.24**) | [Summary Financial and Operating Data](index=3&type=section&id=Summary%20Financial%20and%20Operating%20Data) This section provides a detailed overview of Kodiak's financial and operating performance for Q2 2025 and comparative periods [Summary Financial Data](index=3&type=section&id=Summary%20Financial%20Data) The summary financial data for Q2 2025 shows significant improvements across key profitability and cash flow metrics compared to both the previous quarter and the prior year, driven by strong performance in Contract Services | Metric (in thousands) | June 30, 2025 | March 31, 2025 | June 30, 2024 | QoQ Change (vs. Mar 2025) | YoY Change (vs. Jun 2024) | | :----------------------------------- | :------------ | :------------- | :------------ | :------------------------ | :------------------------ | | **Total revenues** | **$322,843** | **$329,642** | **$309,653** | **-2.1%** | **+4.2%** | | **Net income attributable to common shareholders** | **$39,496** | **$30,411** | **$6,228** | **+29.9%** | **+534.2%** | | **Adjusted EBITDA** | **$178,216** | **$177,664** | **$154,342** | **+0.3%** | **+15.5%** | | **Adjusted EBITDA percentage** | **55.2%** | **53.9%** | **49.8%** | **+1.3 pp** | **+5.4 pp** | | **Contract Services revenue** | **$293,534** | **$288,956** | **$276,250** | **+1.6%** | **+6.3%** | | **Contract Services adjusted gross margin** | **$200,397** | **$195,721** | **$176,917** | **+2.4%** | **+13.3%** | | **Contract Services adjusted gross margin percentage** | **68.3%** | **67.7%** | **64.0%** | **+0.6 pp** | **+4.3 pp** | | **Other Services revenue** | **$29,309** | **$40,686** | **$33,403** | **-27.9%** | **-12.3%** | | **Other Services adjusted gross margin** | **$7,195** | **$5,460** | **$5,467** | **+31.8%** | **+31.6%** | | **Other Services adjusted gross margin percentage** | **24.5%** | **13.4%** | **16.4%** | **+11.1 pp** | **+8.1 pp** | | **Maintenance capital expenditures** | **$17,565** | **$16,407** | **$19,147** | **+7.1%** | **-8.2%** | | **Growth capital expenditures** | **$37,966** | **$55,983** | **$77,257** | **-32.2%** | **-50.9%** | | **Other capital expenditures** | **$16,398** | **$22,258** | **$13,133** | **-26.3%** | **+24.9%** | | **Discretionary cash flow** | **$116,424** | **$116,084** | **$90,617** | **+0.3%** | **+28.5%** | | **Free cash flow** | **$70,290** | **$47,219** | **$638** | **+48.8%** | **+10917.2%** | [Summary Operating Data](index=4&type=section&id=Summary%20Operating%20Data) Operating data as of June 30, 2025, indicates a slight decrease in total fleet horsepower but an increase in revenue-generating horsepower, leading to improved fleet utilization and higher horsepower per revenue-generating unit | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | QoQ Change (vs. Mar 2025) | YoY Change (vs. Jun 2024) | | :------------------------------------------ | :------------ | :------------- | :------------ | :------------------------ | :------------------------ | | **Fleet horsepower** | **4,419,884** | **4,422,914** | **4,481,900** | **-0.1%** | **-1.4%** | | **Revenue-generating horsepower** | **4,296,978** | **4,284,103** | **4,224,839** | **+0.3%** | **+1.7%** | | **Fleet compression units** | **4,881** | **4,941** | **7,317** | **-1.2%** | **-33.3%** | | **Revenue-generating compression units** | **4,514** | **4,545** | **5,753** | **-0.7%** | **-21.5%** | | **Revenue-generating horsepower per revenue-generating compression unit** | **952** | **943** | **734** | **+1.0%** | **+29.7%** | | **Fleet utilization** | **97.2%** | **96.9%** | **94.3%** | **+0.3 pp** | **+2.9 pp** | [Full-Year 2025 Guidance](index=4&type=section&id=Full-Year%202025%20Guidance) Kodiak Gas Services provides its updated full-year 2025 financial and operational guidance, reflecting confidence in future performance [Full-Year 2025 Guidance](index=4&type=section&id=Full-Year%202025%20Guidance) Kodiak Gas Services has provided revised full-year 2025 guidance, increasing the low end of the Adjusted EBITDA range and raising the Discretionary Cash Flow guidance, while also providing specific revenue and margin targets for its Contract and Other Services segments, and capital expenditure forecasts | Metric (in thousands, excluding percentages) | Low | High | | :----------------------------------- | :---------- | :---------- | | **Adjusted EBITDA** | **$700,000** | **$725,000** | | **Discretionary cash flow** | **$445,000** | **$465,000** | | **Contract Services revenues** | **$1,160,000** | **$1,200,000** | | **Contract Services adjusted gross margin percentage** | **67.0%** | **69.0%** | | **Other Services revenues** | **$120,000** | **$140,000** | | **Other Services adjusted gross margin percentage** | **14.0%** | **17.0%** | | **Maintenance capital expenditures** | **$75,000** | **$85,000** | | **Growth capital expenditures** | **$180,000** | **$205,000** | | **Other capital expenditures** | **$60,000** | **$65,000** | | **Total Growth and Other capital expenditures** | **$240,000** | **$270,000** | [Company Information & Disclosures](index=5&type=section&id=Company%20Information%20%26%20Disclosures) This section provides essential company information, including conference call details, company overview, non-GAAP definitions, and forward-looking statements [Conference Call Details](index=5&type=section&id=Conference%20Call%20Details) Kodiak will host a conference call on Thursday, August 7, 2025, to discuss its Q2 2025 financial and operating results, with details provided for phone and webcast access - A conference call to discuss Q2 2025 results will be held on Thursday, August 7, 2025, at 10:00 a.m. Eastern Time (9:00 a.m. Central Time)[22](index=22&type=chunk) [About Kodiak Gas Services](index=5&type=section&id=About%20Kodiak%20Gas%20Services) Kodiak Gas Services is a leading contract compression services provider in the United States, offering critical energy infrastructure and services to oil and gas producers and midstream customers, headquartered in The Woodlands, Texas - Kodiak is a **leading contract compression services provider** in the U.S., providing **critical energy infrastructure** for natural gas and oil production and transportation[23](index=23&type=chunk) - The company serves oil and gas producers and midstream customers in high-volume gas gathering systems, processing facilities, multi-well gas lift applications, and natural gas transmission systems[23](index=23&type=chunk) [Non-GAAP Financial Measures Definitions](index=5&type=section&id=Non-GAAP%20Financial%20Measures%20Definitions) This section provides definitions and rationale for the non-GAAP financial measures used by Kodiak, including Adjusted EBITDA, Adjusted Gross Margin, Discretionary Cash Flow, and Free Cash Flow, explaining their utility for management and investors in assessing performance and liquidity - **Adjusted EBITDA** is defined as **net income (loss)** before interest, taxes, **depreciation and amortization**, plus specific non-recurring items, used to assess **financial performance** without financing methods or **capital structure impact**[24](index=24&type=chunk) - **Adjusted gross margin** is revenue less cost of operations (excluding **depreciation and amortization**), serving as a **supplemental measure** of **operating profitability**[25](index=25&type=chunk) - **Discretionary cash flow** is **net cash provided by operating activities** less **maintenance capital expenditures** and certain **changes in operating assets and liabilities**, plus specific non-recurring items, used to assess **ability to pay dividends** and make **growth capital expenditures**[26](index=26&type=chunk) - **Free cash flow** is **net cash provided by operating activities** less **maintenance**, **growth**, and **other capital expenditures**, plus specific non-recurring items and **proceeds from asset sales**, used to assess **ability to pursue business opportunities** and **service debt**[27](index=27&type=chunk) [Cautionary Note Regarding Forward-Looking Statements](index=5&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) The report includes a cautionary note regarding forward-looking statements, emphasizing that these are based on current beliefs and assumptions, subject to inherent uncertainties and risks that could cause actual results to differ materially. The company disclaims any obligation to publicly update these statements - Forward-looking statements are based on **current beliefs**, **expectations**, and **assumptions**, and are subject to **inherent uncertainties**, **risks**, and **changes in circumstances** that are difficult to predict and outside of the company's control[28](index=28&type=chunk)[31](index=31&type=chunk) - **Actual results** and **financial condition** may differ materially from those indicated in forward-looking statements due to various factors, including **demand for natural gas/oil**, **customer financial condition**, **competitive pressures**, **integration of acquisitions**, and **economic conditions**[31](index=31&type=chunk) - The company undertakes no obligation to **publicly update** any forward-looking statement, except as required by **applicable law**[32](index=32&type=chunk) [Condensed Consolidated Financial Statements (Unaudited)](index=8&type=section&id=Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents Kodiak's unaudited condensed consolidated financial statements, including statements of operations, balance sheets, and cash flows [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The unaudited condensed consolidated statements of operations provide a detailed breakdown of revenues, operating expenses, and net income for the three months ended June 30, 2025, March 31, 2025, and June 30, 2024 - The table presents **detailed revenues**, **operating expenses**, **income from operations**, other income/expenses, **income before income taxes**, **income tax expense**, **net income**, and **earnings per share** for the specified periods[34](index=34&type=chunk) [Condensed Consolidated Balance Sheets](index=9&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The unaudited condensed consolidated balance sheets present the company's assets, liabilities, and stockholders' equity as of June 30, 2025, and December 31, 2024, showing changes in financial position over the period - The table provides a snapshot of **current assets**, **non-current assets** (including **property, plant and equipment**, **goodwill**, and **intangibles**), **current liabilities**, **long-term debt**, and **stockholders' equity** at the end of the reporting periods[36](index=36&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The unaudited condensed consolidated statements of cash flows detail the cash generated from or used in operating, investing, and financing activities for the six months ended June 30, 2025, and June 30, 2024 - The table outlines **net cash provided by operating activities**, **net cash used for investing activities** (including **purchase of property, plant and equipment**), and **net cash used for financing activities** (including **debt payments**, **dividends**, and **share repurchases**)[38](index=38&type=chunk) [Non-GAAP Reconciliations (Unaudited)](index=11&type=section&id=Non-GAAP%20Reconciliations%20(Unaudited)) This section provides detailed reconciliations of non-GAAP financial measures to their most directly comparable GAAP measures [Reconciliation of Net Income (Loss) to Adjusted EBITDA](index=11&type=section&id=Reconciliation%20of%20Net%20Income%20(Loss)%20to%20Adjusted%20EBITDA) This section provides a reconciliation of net income (loss) to Adjusted EBITDA, a non-GAAP measure, for the three months ended June 30, 2025, March 31, 2025, and June 30, 2024, detailing adjustments for interest, taxes, depreciation, amortization, and other non-recurring items - The reconciliation shows the **adjustments made to GAAP net income** to arrive at **Adjusted EBITDA**, including adding back **interest expense**, **income tax expense**, **depreciation and amortization**, and other specific non-cash or non-recurring items[39](index=39&type=chunk) [Reconciliation of Adjusted Gross Margin to Gross Margin](index=12&type=section&id=Reconciliation%20of%20Adjusted%20Gross%20Margin%20to%20Gross%20Margin) This section reconciles Adjusted Gross Margin to Gross Margin for both Contract Services and Other Services segments for the three months ended June 30, 2025, March 31, 2025, and June 30, 2024, primarily by adding back depreciation and amortization - The reconciliation for Contract Services shows **Adjusted Gross Margin** is derived by adding back **depreciation and amortization** to **Gross Margin**[41](index=41&type=chunk) - For Other Services, **Gross Margin** and **Adjusted Gross Margin** are identical as there is no **depreciation and amortization** allocated to this segment in the calculation[42](index=42&type=chunk) [Reconciliation of Net Cash Provided by Operating Activities to Discretionary Cash Flow and Free Cash Flow](index=13&type=section&id=Reconciliation%20of%20Net%20Cash%20Provided%20by%20Operating%20Activities%20to%20Discretionary%20Cash%20Flow%20and%20Free%20Cash%20Flow) This section provides a reconciliation of net cash provided by operating activities to Discretionary Cash Flow and Free Cash Flow for the three months ended June 30, 2025, March 31, 2025, and June 30, 2024, detailing adjustments for capital expenditures, changes in operating assets and liabilities, and other items - **Discretionary cash flow** is calculated by adjusting **net cash provided by operating activities** for **maintenance capital expenditures**, **severance**, **transaction expenses**, **changes in operating assets and liabilities**, and other items[43](index=43&type=chunk) - **Free cash flow** is further derived from **discretionary cash flow** by subtracting **growth** and **other capital expenditures** and adding **proceeds from asset sales**[43](index=43&type=chunk)

[PART I – FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This section provides the company's unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including the balance sheets, statements of operations, comprehensive income (loss), cash flows, and shareholders' equity, along with detailed notes explaining the basis of presentation, accounting standards, revenue recognition, inventories, financial instruments, debt, share-based compensation, and segment reporting [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This statement provides a snapshot of the company's financial position, detailing assets, liabilities, and shareholders' equity at specific points in time Condensed Consolidated Balance Sheets (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :-------------- | :------------------ | | Cash and cash equivalents | $49,772 | $71,832 | | Total current assets | $393,427 | $387,514 | | Total long-term assets | $245,981 | $234,042 | | **Total assets** | **$639,408** | **$621,556** | | Total current liabilities | $184,150 | $149,972 | | Revolving credit facility | $164,377 | $201,577 | | Total long-term liabilities | $194,742 | $226,324 | | **Total liabilities and shareholders' equity** | **$639,408** | **$621,556** | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This statement reports the company's revenues, expenses, and net income or loss over specific periods, reflecting operational performance Condensed Consolidated Statements of Operations (in thousands, except per share data) | Item | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net sales | $227,952 | $237,059 | $445,842 | $476,216 | | Operating (loss) income | $(2,601) | $3,407 | $(5,826) | $3,738 | | (Loss) income before income taxes | $(9,115) | $1,850 | $(14,747) | $(3,766) | | Net (loss) income | $(9,359) | $2,786 | $(16,555) | $(3,340) | | Basic (Loss) income per share | $(0.34) | $0.10 | $(0.60) | $(0.12) | | Diluted (Loss) income per share | $(0.34) | $0.10 | $(0.60) | $(0.12) | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) This statement presents net income or loss alongside other comprehensive income or loss items, such as foreign currency translation adjustments and derivative gains/losses Condensed Consolidated Statements of Comprehensive Income (Loss) (in thousands) | Item | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net (loss) income | $(9,359) | $2,786 | $(16,555) | $(3,340) | | Foreign currency translation | $13,666 | $(8,454) | $26,449 | $(13,333) | | Unrealized gain (loss) on derivatives | $1,766 | $(2,200) | $3,109 | $(2,130) | | Other comprehensive income (loss), net of tax | $15,432 | $(10,654) | $29,558 | $(15,463) | | **Comprehensive income (loss)** | **$6,073** | **$(7,868)** | **$13,003** | **$(18,803)** | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement details the cash inflows and outflows from operating, investing, and financing activities over specific periods Condensed Consolidated Statements of Cash Flows (in thousands) | Item | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $21,588 | $17,762 | | Net cash used for investing activities | $(9,219) | $(12,958) | | Net cash used for financing activities | $(41,363) | $(1,679) | | Effect of exchange rate changes on cash and cash equivalents | $6,934 | $(1,854) | | **Net change in cash and cash equivalents** | **$(22,060)** | **$1,271** | | Cash and cash equivalents at end of period | $49,772 | $42,112 | [Condensed Consolidated Statements of Shareholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders%27%20Equity) This statement outlines changes in the company's equity accounts, including net income, currency translation adjustments, and share transactions Condensed Consolidated Statements of Shareholders' Equity (in thousands) | Item | Balance at December 31, 2024 | Net loss (6 months ended June 30, 2025) | Currency translation adjustments (6 months ended June 30, 2025) | Balance at June 30, 2025 | | :--------------------------------- | :--------------------------- | :-------------------------------------- | :------------------------------------------------------------ | :----------------------- | | Total shareholders' equity | $245,260 | $(16,555) | $26,449 | $260,516 | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information supporting the condensed consolidated financial statements [(1) Basis of Presentation](index=9&type=section&id=%281%29%20Basis%20of%20Presentation) The condensed consolidated financial statements are unaudited, prepared according to SEC rules, and include normal recurring adjustments. Certain information is condensed or omitted per SEC regulations, and prior period amounts have been reclassified for consistent presentation - Unaudited condensed consolidated financial statements prepared by Stoneridge, Inc. (the "Company") per SEC rules[18](index=18&type=chunk) - Certain information and footnote disclosures condensed or omitted per SEC rules[18](index=18&type=chunk) - Prior period amounts reclassified to conform to 2025 presentation[19](index=19&type=chunk) [(2) Recently Issued Accounting Standards](index=9&type=section&id=%282%29%20Recently%20Issued%20Accounting%20Standards) The company is evaluating the impact of recently issued FASB ASUs, including ASU No. 2023-09 on Income Tax Disclosures (effective after Dec 15, 2024) and ASU No. 2024-03 on Expense Disaggregation Disclosures (effective after Dec 15, 2026), which are expected to modify disclosures but not significantly impact consolidated financial statements - ASU No. 2023-09, "Income Taxes (Topic 740) – Improvements to Income Tax Disclosures," effective for fiscal years beginning after **December 15, 2024**, will modify financial statement disclosures but not significantly impact consolidated financial statements[20](index=20&type=chunk) - ASU No. 2024-03, "Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures," effective for fiscal years beginning after **December 15, 2026**, is currently being evaluated for its impact on annual consolidated financial statement disclosures[21](index=21&type=chunk) [(3) Revenue](index=9&type=section&id=%283%29%20Revenue) Revenue is recognized upon transfer of control of products or services, typically at shipment or delivery. The company disaggregates revenue by its Control Devices, Electronics, and Stoneridge Brazil segments, as well as by geographical location, showing overall net sales decreases for both the three and six months ended June 30, 2025, compared to 2024 - Revenue is recognized when obligations under the terms of a contract with customers are satisfied, generally with the transfer of control of products and services, usually when parts are shipped or delivered[22](index=22&type=chunk) Net Sales by Reportable Segment (in thousands) | Segment | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :---------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Control Devices | $70,411 | $79,899 | $139,244 | $157,057 | | Electronics | $142,681 | $145,511 | $277,464 | $295,294 | | Stoneridge Brazil | $14,860 | $11,649 | $29,134 | $23,865 | | **Total net sales** | **$227,952** | **$237,059** | **$445,842** | **$476,216** | Net Sales by Geographical Location (in thousands) | Region | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | North America | $104,551 | $121,515 | $205,640 | $239,630 | | South America | $14,860 | $11,649 | $29,134 | $23,865 | | Europe and Other | $108,541 | $103,895 | $211,068 | $212,721 | | **Total net sales** | **$227,952** | **$237,059** | **$445,842** | **$476,216** | [(4) Inventories](index=11&type=section&id=%284%29%20Inventories) Inventories are valued at the lower of cost (FIFO or average cost) or net realizable value, with a quarterly evaluation of excess and obsolescence reserves. Total net inventories decreased slightly from $151.3 million at December 31, 2024, to $144.5 million at June 30, 2025 - Inventories are valued at the lower of cost (using either FIFO or average cost methods) or net realizable value[33](index=33&type=chunk) Inventories, net (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :--------------- | :-------------- | :---------------- | | Raw materials | $100,826 | $108,283 | | Work-in-progress | $8,741 | $7,627 | | Finished goods | $34,884 | $35,427 | | **Total inventories, net** | **$144,451** | **$151,337** | - Inventory valued using the FIFO method was **$130,250** at June 30, 2025, and **$138,420** at December 31, 2024[34](index=34&type=chunk) [(5) Financial Instruments and Fair Value Measurements](index=12&type=section&id=%285%29%20Financial%20Instruments%20and%20Fair%20Value%20Measurements) The company uses derivative financial instruments, specifically Mexican peso-denominated foreign currency forward contracts, as cash flow hedges to manage foreign currency exchange rate risk. These hedges were highly effective, with a notional amount of $15.9 million at June 30, 2025, and fair values measured using Level 2 inputs - The Company uses Mexican peso-denominated foreign currency forward contracts solely for hedging and not for speculative purposes[36](index=36&type=chunk) - Notional amount of Mexican peso-denominated foreign currency forward contracts was **$15,916** at June 30, 2025, and **$32,339** at December 31, 2024[41](index=41&type=chunk)[43](index=43&type=chunk) Fair Values of Financial Instruments (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :-------------- | :------------------ | | Financial assets carried at fair value: Forward currency contracts | $1,507 | $0 | | Financial liabilities carried at fair value: Forward currency contracts | $0 | $2,429 | [(6) Share-Based Compensation](index=14&type=section&id=%286%29%20Share-Based%20Compensation) Share-based compensation expense recognized in SG&A increased for both the three and six months ended June 30, 2025, compared to the prior year periods Share-Based Compensation Expense (in thousands) | Period | 2025 | 2024 | | :--------------------------------- | :----- | :----- | | Three months ended June 30 | $1,424 | $1,115 | | Six months ended June 30 | $2,560 | $2,207 | [(7) Debt](index=15&type=section&id=%287%29%20Debt) The company's primary debt is a $275 million revolving credit facility, with an outstanding balance of $164.4 million at June 30, 2025. An amendment in February 2025 provided covenant relief, and the company remained in compliance with all covenants. Foreign subsidiaries also maintain smaller credit lines Debt Overview (in thousands) | Item | June 30, 2025 | December 31, 2024 | Interest rate at June 30, 2025 | Maturity | | :---------------------- | :-------------- | :------------------ | :----------------------------- | :------------- | | Revolving Credit Facility | $164,377 | $201,577 | 6.35% | November 2026 | - On February 26, 2025, Amendment No. 1 to the Credit Facility provided covenant relief, including increased maximum leverage ratio and reduced minimum interest coverage ratio, during the "Covenant Relief Period" (ending **December 31, 2025**)[55](index=55&type=chunk)[57](index=57&type=chunk) - The Company was in compliance with all Credit Facility covenants at **June 30, 2025**, and **December 31, 2024**[59](index=59&type=chunk) [(8) Loss Per Share](index=16&type=section&id=%288%29%20Loss%20Per%20Share) Basic and diluted loss per share calculations are presented, with potential dilutive securities excluded for periods where their inclusion would be anti-dilutive due to net losses Loss Per Share Data | Item | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic (Loss) income per share | $(0.34) | $0.10 | $(0.60) | $(0.12) | | Diluted (Loss) income per share | $(0.34) | $0.10 | $(0.60) | $(0.12) | - Potential dilutive shares were excluded from diluted loss per share for all periods in which the Company recognized a net loss, as their inclusion would be anti-dilutive[63](index=63&type=chunk) [(9) Accumulated Other Comprehensive Loss](index=17&type=section&id=%289%29%20Accumulated%20Other%20Comprehensive%20Loss) The accumulated other comprehensive loss decreased from $(122.0) million at January 1, 2025, to $(92.5) million at June 30, 2025, primarily due to significant foreign currency translation gains and unrealized gains on derivatives Changes in Accumulated Other Comprehensive Loss (in thousands) | Item | Balance at January 1, 2025 | Net other comprehensive income (loss), net of tax (6 months) | Balance at June 30, 2025 | | :--------------------------------- | :--------------------------- | :--------------------------------------------------------- | :----------------------- | | Foreign currency translation | $(120,095) | $26,449 | $(93,646) | | Unrealized gain (loss) on derivatives | $(1,918) | $3,109 | $1,191 | | **Total** | **$(122,013)** | **$29,558** | **$(92,455)** | [(10) Commitments and Contingencies](index=17&type=section&id=%2810%29%20Commitments%20and%20Contingencies) The company is subject to various legal actions, environmental remediation liabilities, long-term supply commitments, and product warranty/recall claims. Accruals are made for probable losses, and the company is vigorously defending a significant arbitration demand related to PM sensor products - Accrued liabilities for environmental remediation costs were **$215** at June 30, 2025, and **$244** at December 31, 2024, related to a former Sarasota, Florida facility[67](index=67&type=chunk)[68](index=68&type=chunk) - Stoneridge Brazil subsidiary has civil, labor, environmental, and other tax contingencies totaling **R$47,490 ($8,703)** at June 30, 2025, deemed reasonably possible but not probable, including a **R$7,995 ($1,465)** fine from CADE being challenged[69](index=69&type=chunk)[70](index=70&type=chunk) - Long-term supply agreement for semiconductor components requires minimum annual purchases, with **$5,571** expected in 2025[71](index=71&type=chunk) Product Warranty and Recall Reserve Liability (in thousands) | Item | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------------------- | :----------------------------- | :----------------------------- | | Product warranty and recall reserve at beginning of period | $27,523 | $21,610 | | Accruals for warranties established during period | $7,614 | $10,030 | | Settlements made during the period | $(8,302) | $(6,899) | | **Product warranty and recall reserve at end of period** | **$31,876** | **$24,448** | - The Company is vigorously defending a **$34,579** arbitration demand from a customer for warranty claims related to past sales of PM sensor products, believing the claims lack substantive merit[73](index=73&type=chunk)[74](index=74&type=chunk) [(11) Business Realignment](index=19&type=section&id=%2811%29%20Business%20Realignment) Business realignment charges, primarily severance-related, totaled $1.7 million for the three months and $4.5 million for the six months ended June 30, 2025. These costs are mainly for operational efficiency initiatives at the Juarez facility and executive separation Total Business Realignment Charges (in thousands) | Period | 2025 | 2024 | | :--------------------------------- | :----- | :----- | | Three months ended June 30 | $1,676 | $1,949 | | Six months ended June 30 | $4,503 | $1,949 | - The majority of business realignment costs relate to operational efficiency initiatives at the Juarez facility and executive separation costs[76](index=76&type=chunk)[77](index=77&type=chunk)[78](index=78&type=chunk) [(12) Income Taxes](index=20&type=section&id=%2812%29%20Income%20Taxes) Income tax expense for the three and six months ended June 30, 2025, was $0.2 million and $1.8 million, respectively, with effective tax rates of (2.7)% and (12.3)%. These rates vary from statutory rates due to the mix of earnings, foreign withholding taxes, tax credits, and U.S. taxes on foreign earnings. The company is assessing the impact of the recently enacted One Big Beautiful Bill Act (OBBBA) Income Tax Expense (Benefit) and Effective Tax Rate | Item | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Provision (benefit) for income taxes | $244 | $(936) | $1,808 | $(426) | | Effective tax rate | (2.7)% | (50.6)% | (12.3)% | 11.3% | - The effective tax rate varies primarily due to the mix of earnings among tax jurisdictions, foreign withholding taxes, tax credits and incentives, and U.S. taxes on foreign earnings[83](index=83&type=chunk)[85](index=85&type=chunk) - The company is currently assessing the impact of the recently enacted One Big Beautiful Bill Act (OBBBA) on its consolidated financial statements[87](index=87&type=chunk) [(13) Segment Reporting](index=21&type=section&id=%2813%29%20Segment%20Reporting) The company operates through three reportable segments: Control Devices, Electronics, and Stoneridge Brazil. Detailed financial information, including net sales, operating income, and capital expenditures, is provided for each segment and unallocated corporate costs, along with geographical breakdowns of net sales and long-term assets - The Company has three reportable segments: Control Devices, Electronics, and Stoneridge Brazil, with performance evaluated based on revenues, operating income, and capital expenditures[90](index=90&type=chunk)[91](index=91&type=chunk) Net Sales by Reportable Segment (in thousands) | Segment | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :---------------- | :----------------------------- | :----------------------------- | | Control Devices | $139,244 | $157,057 | | Electronics | $277,464 | $295,294 | | Stoneridge Brazil | $29,134 | $23,865 | | **Total net sales** | **$445,842** | **$476,216** | Operating (Loss) Income by Reportable Segment (in thousands) | Segment | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | | Control Devices | $3,731 | $5,889 | | Electronics | $8,244 | $16,920 | | Stoneridge Brazil | $1,554 | $163 | | Unallocated Corporate | $(19,355) | $(19,234) | | **Total operating (loss) income** | **$(5,826)** | **$3,738** | Capital Expenditures by Reportable Segment (in thousands) | Segment | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :---------------- | :----------------------------- | :----------------------------- | | Control Devices | $2,159 | $3,104 | | Electronics | $4,920 | $4,354 | | Stoneridge Brazil | $695 | $1,739 | | Corporate | $281 | $760 | | **Total capital expenditures** | **$8,055** | **$9,957** | [(14) Investments](index=24&type=section&id=%2814%29%20Investments) The company holds an equity method investment in Autotech Fund II, a venture capital firm. As of June 30, 2025, cumulative contributions totaled $9.05 million, with recognized equity losses of $(0.34) million for the six months ended June 30, 2025 - The Company has a **$10,000** investment in Autotech Fund II, a venture capital firm focused on ground transportation technology, accounted for under the equity method[99](index=99&type=chunk) - Cumulative investment in Autotech Fund II was **$9,050** as of June 30, 2025[99](index=99&type=chunk) Equity in (Earnings) Loss of Investee (in thousands) | Period | 2025 | 2024 | | :--------------------------------- | :----- | :----- | | Three months ended June 30 | $(50) | $52 | | Six months ended June 30 | $(344) | $329 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations, covering segment performance, a detailed comparison of financial results for the three and six months ended June 30, 2025 and 2024, liquidity, capital resources, and the company's outlook amidst market challenges and strategic initiatives [Company Overview and Segments](index=25&type=section&id=Company%20Overview%20and%20Segments) Stoneridge, Inc. is a global supplier of electronics systems and technologies for commercial, automotive, off-highway, and agricultural vehicle markets, organized into three segments: Control Devices, Electronics, and Stoneridge Brazil - Stoneridge, Inc. is a global supplier of safe and efficient electronics systems and technologies for commercial, automotive, off-highway, and agricultural vehicle markets[101](index=101&type=chunk) - The company's operations are reported under three segments: Control Devices, Electronics, and Stoneridge Brazil[103](index=103&type=chunk)[104](index=104&type=chunk) [Second Quarter Overview](index=25&type=section&id=Second%20Quarter%20Overview) For Q2 2025, the company reported a net loss of $9.4 million, a significant increase from net income in Q2 2024. Net sales decreased by 3.8% due to lower volumes in North American automotive and Electronics segments, partially offset by growth in Stoneridge Brazil and favorable foreign exchange. Gross margin declined, and non-operating foreign currency losses unfavorably impacted results - Net loss for the three months ended June 30, 2025, was **$9.4 million**, or **$(0.34)** per diluted share, an increase of **$12.1 million** from net income of **$2.8 million** in the prior year[105](index=105&type=chunk)[106](index=106&type=chunk) - Net sales decreased by **$9.1 million (3.8%)** compared to Q2 2024, driven by lower volumes in North American automotive (Control Devices) and North American commercial/European off-highway (Electronics), partially offset by higher OEM sales at Stoneridge Brazil and favorable foreign exchange in Electronics[106](index=106&type=chunk)[107](index=107&type=chunk)[108](index=108&type=chunk)[109](index=109&type=chunk) - Gross margin as a percent of sales decreased to **21.5%** in Q2 2025 from **22.7%** in Q2 2024 due to sales mix and lower contribution from sales[106](index=106&type=chunk) - Cash and cash equivalents decreased to **$49.8 million** at June 30, 2025, from **$71.8 million** at December 31, 2024, primarily due to repayments of Credit Facility borrowings from foreign cash repatriation[112](index=112&type=chunk) [Outlook](index=26&type=section&id=Outlook) The company's long-term strategy focuses on products addressing industry megatrends, such as safety, vehicle intelligence, and connectivity, including OEM MirrorEye® programs and next-generation tachographs. Despite expected market volatility, including tariffs and declining North American automotive production, the company anticipates continued growth in MirrorEye and Stoneridge Brazil OEM sales, alongside efforts in operational excellence and cost reduction - The company's long-term strategy focuses on expanding its product portfolio with advanced capabilities, applications, and data services, particularly in safety, vehicle intelligence, and connectivity (e.g., OEM MirrorEye® programs and next-generation tachograph)[113](index=113&type=chunk)[117](index=117&type=chunk) - The North American automotive market is expected to decrease from **15.5 million units** in 2024 to **14.9 million units** in 2025, impacting Control Devices sales[116](index=116&type=chunk) - Electronics segment sales are expected to outperform forecasted production volumes due to strong demand for the next-generation tachograph and ongoing MirrorEye® launches[117](index=117&type=chunk) - Stoneridge Brazil's OEM channel sales are expected to grow significantly based on existing programs and new awards, with an expansion of its engineering center[119](index=119&type=chunk) - The company continues to monitor and evaluate the direct and indirect impacts of new or additional tariffs and heightened global trade disputes, taking actions to mitigate costs[114](index=114&type=chunk)[115](index=115&type=chunk) [Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024](index=27&type=section&id=Three%20Months%20Ended%20June%2030%2C%202025%20Compared%20to%20Three%20Months%20Ended%20June%2030%2C%202024) Net sales decreased by 3.8% to $227.9 million, primarily due to lower volumes in North American automotive and Electronics, partially offset by Stoneridge Brazil's growth. Operating income shifted to a loss of $(2.6) million, a 176.3% decrease, driven by lower sales, higher material costs, and increased D&D expenses in Electronics, while Stoneridge Brazil's operating income significantly increased Key Financial Highlights (Three months ended June 30, in thousands) | Item | 2025 | 2024 | Dollar Change | Percent Change | | :--------------------------------- | :----- | :----- | :------------ | :------------- | | Net sales | $227,952 | $237,059 | $(9,107) | (3.8)% | | Cost of goods sold | $179,014 | $183,319 | $(4,305) | (2.3)% | | Selling, general and administrative | $32,835 | $31,876 | $959 | 3.0% | | Design and development | $18,704 | $18,457 | $247 | 1.3% | | Operating (loss) income | $(2,601) | $3,407 | $(6,008) | (176.3)% | | Interest expense, net | $3,134 | $3,801 | $(667) | (17.5)% | | Other expense (income), net | $3,430 | $(2,296) | $5,726 | 249.4% | | Net (loss) income | $(9,359) | $2,786 | $(12,145) | (435.9)% | - Control Devices net sales decreased **$9.5 million (-11.9%)** due to North American automotive (end-of-life actuator) and China commercial vehicle, while Electronics net sales decreased **$2.8 million (-1.9%)** due to lower North American commercial and European/North American off-highway volumes, partially offset by European commercial vehicle growth and favorable FX[125](index=125&type=chunk)[126](index=126&type=chunk) - Stoneridge Brazil net sales increased **$3.2 million (+27.6%)** from higher OEM product sales, despite unfavorable foreign currency translation[127](index=127&type=chunk) - Gross margin decreased to **21.5%** from **22.7%**, with material cost as a percentage of net sales increasing to **57.1%** due to higher material costs and unfavorable foreign exchange related variances[131](index=131&type=chunk) [Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024](index=30&type=section&id=Six%20Months%20Ended%20June%2030%2C%202025%20Compared%20to%20Six%20Months%20Ended%20June%2030%2C%202024) Net sales for the six months decreased by 6.4% to $445.8 million, primarily from declines in Control Devices and Electronics, partially offset by Stoneridge Brazil. The company reported a net loss of $(16.6) million, an increase from $(3.3) million in the prior year, with operating income shifting to a loss of $(5.8) million, a 255.9% decrease, mainly due to lower sales, higher business realignment costs, and D&D expenses in Electronics Key Financial Highlights (Six months ended June 30, in thousands) | Item | 2025 | 2024 | Dollar Change | Percent Change | | :--------------------------------- | :----- | :----- | :------------ | :------------- | | Net sales | $445,842 | $476,216 | $(30,374) | (6.4)% | | Cost of goods sold | $350,607 | $374,119 | $(23,512) | (6.3)% | | Selling, general and administrative | $64,531 | $62,299 | $2,232 | 3.6% | | Design and development | $36,530 | $36,060 | $470 | 1.3% | | Operating (loss) income | $(5,826) | $3,738 | $(9,564) | (255.9)% | | Interest expense, net | $6,301 | $7,435 | $(1,134) | (15.2)% | | Other expense (income), net | $2,964 | $(260) | $3,224 | 1240.0% | | Net loss | $(16,555) | $(3,340) | $(13,215) | (395.6)% | - Control Devices net sales decreased **$17.8 million (-11.3%)** due to North American automotive (end-of-life actuator) and China commercial/off-highway markets. Electronics net sales decreased **$17.8 million (-6.0%)** due to lower North American/European commercial and North American off-highway volumes, partially offset by MirrorEye® sales and favorable FX[142](index=142&type=chunk)[143](index=143&type=chunk) - Stoneridge Brazil net sales increased **$5.3 million (+22.1%)** from higher OEM product sales, despite unfavorable foreign currency translation[144](index=144&type=chunk) - Gross margin remained consistent at **21.4%**, with material cost as a percentage of net sales decreasing to **56.7%** due to favorable foreign exchange related variances[148](index=148&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) Cash provided by operating activities increased to $21.6 million for the six months ended June 30, 2025, but net cash used for financing activities significantly increased to $(41.4) million due to Credit Facility repayments from foreign cash repatriation. The company maintains $160.4 million in total liquidity (cash and undrawn credit), expects to meet future cash requirements, and remains in compliance with its credit facility covenants Summary of Cash Flows (Six months ended June 30, in thousands) | Activity | 2025 | 2024 | | :--------------------------------- | :----- | :----- | | Net cash provided by operating activities | $21,588 | $17,762 | | Net cash used for investing activities | $(9,219) | $(12,958) | | Net cash used for financing activities | $(41,363) | $(1,679) | | **Net change in cash and cash equivalents** | **$(22,060)** | **$1,271** | - Net cash used for financing activities increased significantly due to **$43.8 million** in Credit Facility repayments from the repatriation of cash held at foreign locations[160](index=160&type=chunk) - The Credit Facility had an outstanding balance of **$164.4 million** at June 30, 2025, and the company was in compliance with all covenants[161](index=161&type=chunk)[163](index=163&type=chunk) - Total undrawn commitments under the Credit Facility and cash balances amount to more than **$160.4 million**, which is expected to be sufficient to meet anticipated cash requirements for the next twelve months[169](index=169&type=chunk)[170](index=170&type=chunk) [Other Matters](index=27&type=section&id=Other%20Matters) The company's international operations expose it to foreign currency exchange rate fluctuations, which unfavorably impacted Q2 2025 results. Business realignment costs continue to be incurred for operational efficiency. The company manages customer pricing pressures and notes the moderate seasonality of its Control Devices and Electronics segments, with no material changes to critical accounting policies or market risk disclosures - Movements in foreign currency exchange rates can significantly affect results, with the weakening U.S. Dollar against the Swedish krona unfavorably impacting **Q2 2025** reported results[121](index=121&type=chunk) - Business realignment charges of **$1.7 million (Q2 2025)** and **$4.5 million (YTD Q2 2025)** were incurred for operational efficiency initiatives at the Juarez facility and executive separation costs, with additional costs expected[122](index=122&type=chunk) - The Control Devices and Electronics segments are moderately seasonal, impacted by mid-year and year-end shutdowns, while Stoneridge Brazil consumer products see higher demand in the second half of the year[172](index=172&type=chunk) - There have been no material changes in critical accounting policies and estimates or quantitative and qualitative disclosures about market risk during the second quarter of 2025[173](index=173&type=chunk)[176](index=176&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) There have been no material changes to the company's quantitative and qualitative disclosures regarding market risk since its 2024 Form 10-K - No material changes to the quantitative and qualitative information about the Company's market risk from those previously presented within Part II, Item 7A of the Company's 2024 Form 10-K[176](index=176&type=chunk) [Item 4. Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) The company's management, including the PEO and PFO, concluded that disclosure controls and procedures were effective as of June 30, 2025. No material changes in internal control over financial reporting occurred during the six months ended June 30, 2025 - The Company's disclosure controls and procedures were effective as of June 30, 2025[177](index=177&type=chunk) - There were no material changes in the Company's internal control over financial reporting during the six months ended June 30, 2025[178](index=178&type=chunk) [PART II – OTHER INFORMATION](index=36&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity security sales, defaults, mine safety, other information, and a list of exhibits [Item 1. Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal actions and claims in the ordinary course of business, including product liability, warranty, and regulatory matters. Accruals are established for probable losses, and while certain contingencies exist in Stoneridge Brazil, the company does not believe current litigation will materially adversely affect its financial position - The Company is involved in various legal actions and claims, including those arising out of breach of contracts, product warranties, product liability, patent infringement, regulatory matters, and employment-related matters[179](index=179&type=chunk) - Accruals are established for matters where losses are probable and can be reasonably estimated[179](index=179&type=chunk) - The Company does not believe that any of the litigation in which it is currently engaged will have a material adverse effect on its business, consolidated financial position, or results of operations[179](index=179&type=chunk) [Item 1A. Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's 2024 Form 10-K - No material changes with respect to risk factors previously disclosed in the Company's 2024 Form 10-K[180](index=180&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=36&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the three months ended June 30, 2025, the company repurchased 10,983 Common Shares, primarily to satisfy employee tax withholding obligations upon the vesting of share-based awards Common Shares Repurchased (Three months ended June 30, 2025) | Period | Total number of shares purchased | Average price paid per share | | :--------------- | :------------------------------- | :--------------------------- | | 4/1/25-4/30/25 | 488 | $4.50 | | 5/1/25-5/31/25 | — | — | | 6/1/25-6/30/25 | 10,495 | $7.04 | | **Total** | **10,983** | | - Common Shares were delivered by employees as payment for withholding taxes due upon vesting of performance share awards and share unit awards[181](index=181&type=chunk) [Item 3. Defaults Upon Senior Securities](index=36&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities during the reporting period - None[183](index=183&type=chunk) [Item 4. Mine Safety Disclosures](index=36&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) There were no mine safety disclosures during the reporting period - None[184](index=184&type=chunk) [Item 5. Other Information](index=36&type=section&id=Item%205.%20Other%20Information) No director or officer adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during the six months ended June 30, 2025 - No director or officer of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during the six months ended June 30, 2025[185](index=185&type=chunk) [Item 6. Exhibits](index=37&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including the 2025 Long-Term Incentive Plan, CEO and CFO certifications, and various XBRL exhibits - Includes The Stoneridge, Inc. **2025 Long-Term Incentive Plan** (Exhibit 10.1)[186](index=186&type=chunk) - Contains Chief Executive Officer and Chief Financial Officer certifications pursuant to Sections **302** and **906** of the Sarbanes-Oxley Act of 2002 (Exhibits 31.1, 31.2, 32.1, 32.2)[186](index=186&type=chunk) - Includes various XBRL Exhibits (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 104)[186](index=186&type=chunk)

VIEMED HEALTHCARE ANNOUNCES SECOND QUARTER 2025 FINANCIAL RESULTS Lafayette, Louisiana (August 6, 2025) Viemed Healthcare, Inc. (the "Company" or "Viemed") (NASDAQ:VMD), an in-home clinical care provider of post-acute respiratory healthcare equipment and services in the United States, announced today that it has reported its financial results for the three and six months ended June 30, 2025. Operational highlights (all dollar amounts are USD; comparisons are to the period ended June 30, 2024 unless otherwis ...

Management's Discussion and Analysis Such statements include, but may not be limited to: statements regarding 2025 guidance, outlook and expectations, including, but not limited to, production, costs, capital expenditures, grade profiles, cash flow, care and maintenance, PP&E and reclamation costs, recoveries, processing, inflation, depreciation, depletion and amortization, taxes and annual royalty payments; the ability of the Company to finance the majority of 2025 expenditures from the cash flows provided ...

Executive Summary Bowman reported record Q2 and H1 2025 results, with strong revenue, net service billing, and Adjusted EBITDA growth, reversing net losses [Q2 and H1 2025 Performance Highlights](index=1&type=section&id=Q2%20and%20H1%202025%20Performance%20Highlights) Bowman reported record Q2 and H1 2025 results, with strong revenue, net service billing, and Adjusted EBITDA growth, reversing net losses Second Quarter 2025 vs. Second Quarter 2024 Financial Highlights (in millions) | Metric | Q2 2025 | Q2 2024 | Change | % Change | | :-------------------------- | :------ | :------ | :----- | :------- | | Gross contract revenue | $122.1M | $104.5M | $17.6M | 17% | | Net service billing | $108.0M | $94.0M | $14.0M | 15% | | Organic net service billing growth | 8.4% | 5.8% | 2.6% | - | | Net income (loss) | $6.0M | $(2.1)M | $8.1M | N/A | | Adjusted EBITDA | $20.2M | $13.4M | $6.8M | 50.7% | | Adjusted EBITDA margin, net | 18.7% | 14.3% | 4.4% | 440-bps | | Cash flows from operations | $4.3M | $3.1M | $1.2M | 38.7% | First Six Months 2025 vs. First Six Months 2024 Financial Highlights (in millions) | Metric | H1 2025 | H1 2024 | Change | % Change | | :-------------------------- | :------ | :------ | :----- | :------- | | Gross contract revenue | $235.0M | $199.4M | $35.6M | 18% | | Net service billing | $208.1M | $179.7M | $28.4M | 16% | | Organic net service billing growth | 9.8% | 9.6% | 0.2% | - | | Net income (loss) | $4.3M | $(3.6)M | $7.9M | N/A | | Adjusted EBITDA | $34.7M | $25.5M | $9.2M | 36.1% | | Adjusted EBITDA margin, net | 16.7% | 14.2% | 2.5% | 250-bps | | Cash flows from operations | $16.3M | $5.6M | $10.7M | 191.1% | | Gross backlog | $438.2M | $351.4M | $86.8M | 24.7% | [Strategic Commentary and Business Outlook](index=1&type=section&id=Strategic%20Commentary%20and%20Business%20Outlook) Strong demand in core verticals drives momentum, with focus on efficient scaling, talent investment, and a new 'BIG Fund' for innovation - Strong demand observed across core verticals, with new orders particularly robust in transportation, renewables, and energy transmission[2](index=2&type=chunk) - Focus remains on scaling efficiently, investing in talent, and reinforcing leadership as a lifecycle infrastructure solutions provider[2](index=2&type=chunk) - Introduced the 'BIG Fund' to aggressively invest free cash flow into innovation, aiming to expand revenue sources, accelerate processes, and improve margins[6](index=6&type=chunk) - Reclassified data center revenue into the Power and Utilities category, including prior periods, to better reflect the current profile of work with data center customers[6](index=6&type=chunk) Financial Results This section details Bowman's Q2 and H1 2025 financial performance, covering income, balance sheet, cash flow, and non-GAAP metrics [Second Quarter 2025 Financial Results](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Results) Bowman reported a 17% increase in gross contract revenue and 15% in net service billing for Q2 2025, achieving **$6.0 million** net income and **50.7%** Adjusted EBITDA growth Second Quarter 2025 vs. Second Quarter 2024 Financial Results | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | % Increase | | :-------------------------- | :--------------------- | :--------------------- | :--------- | | Gross contract revenue | $122,090 | $104,501 | 17% | | Net service billing | $107,997 | $93,981 | 15% | | Net income (loss) | $6,009 | $(2,082) | N/A | | Adjusted EBITDA | $20,203 | $13,412 | 50.7% | | Adjusted EBITDA margin, net | 18.7% | 14.3% | 440-bps | | Cash flows from operations | $4,300 | $3,100 | 38.7% | [First Six Months 2025 Financial Results](index=1&type=section&id=First%20Six%20Months%202025%20Financial%20Results) For H1 2025, Bowman's gross contract revenue grew by 18% and net service billing by 16%, achieving **$4.3 million** net income and **36.1%** Adjusted EBITDA growth First Six Months 2025 vs. First Six Months 2024 Financial Results | Metric | H1 2025 (in thousands) | H1 2024 (in thousands) | % Increase | | :-------------------------- | :--------------------- | :--------------------- | :--------- | | Gross contract revenue | $235,021 | $199,409 | 18% | | Net service billing | $208,050 | $179,671 | 16% | | Net income (loss) | $4,265 | $(3,640) | N/A | | Adjusted EBITDA | $34,708 | $25,541 | 36.1% | | Adjusted EBITDA margin, net | 16.7% | 14.2% | 250-bps | | Cash flows from operations | $16,293 | $5,588 | 191.1% | | Gross backlog | $438,200 | $351,400 | 24.7% | [Non-GAAP Financial Metrics](index=3&type=section&id=Non-GAAP%20Financial%20Metrics) Bowman provides non-GAAP metrics, including Adjusted EBITDA and Adjusted EPS, showing significant year-over-year improvements for Q2 and H1 2025 [Adjusted EBITDA and Margin](index=14&type=section&id=Adjusted%20EBITDA%20and%20Margin) Adjusted EBITDA and its margin demonstrated strong growth for both Q2 and H1 2025, reflecting improved operational efficiency Adjusted EBITDA and Margin | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | H1 2025 (in thousands) | H1 2024 (in thousands) | | :---------------------- | :------ | :------ | :------ | :------ | | Adjusted EBITDA | $20,203 | $13,412 | $34,708 | $25,541 | | Adjusted EBITDA margin, net | 18.7% | 14.3% | 16.7% | 14.2% | [Adjusted Earnings per Share](index=3&type=section&id=Adjusted%20Earnings%20per%20Share) Adjusted Earnings per Share, both basic and diluted, showed significant improvement, moving from negative to positive for Q2 and H1 2025 Adjusted Earnings Per Share (Non-GAAP) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :------ | :------ | :------ | :------ | :------ | | Basic | $0.56 | $(0.03) | $0.63 | $0.17 | | Diluted | $0.55 | $(0.03) | $0.62 | $0.16 | Consolidated Financial Statements This section presents Bowman's condensed consolidated balance sheets, income statements, and cash flow statements for the reported periods [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets increased to **$538.2 million**, with a rise in liabilities and a modest increase in total shareholders' equity Condensed Consolidated Balance Sheet Highlights | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :---------------------- | :------------ | :---------------- | | Total Assets | $538,245 | $505,881 | | Total Liabilities | $288,602 | $259,766 | | Total Shareholders' Equity | $249,643 | $246,115 | [Condensed Consolidated Income Statements](index=8&type=section&id=Condensed%20Consolidated%20Income%20Statements) Income statements show a strong turnaround, with net income of **$6.0 million** for Q2 and **$4.3 million** for H1 2025, reversing prior-year losses and significant revenue growth Condensed Consolidated Income Statement Highlights | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | H1 2025 (in thousands) | H1 2024 (in thousands) | | :-------------------------- | :------ | :------ | :------ | :------ | | Gross Contract Revenue | $122,090 | $104,501 | $235,021 | $199,409 | | Total Contract Costs | $56,518 | $49,616 | $111,361 | $96,514 | | Total Operating Expenses | $56,528 | $56,120 | $113,480 | $106,740 | | Income (loss) from operations | $9,044 | $(1,235) | $10,180 | $(3,845) | | Net income (loss) | $6,009 | $(2,082) | $4,265 | $(3,640) | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities significantly increased to **$16.3 million** for H1 2025, with decreased cash used in investing and a net cash outflow from financing Condensed Consolidated Statements of Cash Flows Highlights | Metric | H1 2025 (in thousands) | H1 2024 (in thousands) | | :-------------------------------------- | :------ | :------ | | Net cash provided by operating activities | $16,293 | $5,588 | | Net cash used in investing activities | $(1,837) | $(20,582) | | Net cash (used in) provided by financing activities | $(5,614) | $17,450 | | Net increase in cash and cash equivalents | $8,842 | $2,456 | | Cash and cash equivalents, end of period | $15,540 | $23,143 | Revenue Composition and Growth This section analyzes Bowman's gross contract revenue composition by category, organic growth trends, and the gross backlog breakdown [Gross Contract Revenue Composition by Category](index=16&type=section&id=Gross%20Contract%20Revenue%20Composition%20by%20Category) Gross contract revenue is diversified, with Building Infrastructure as the largest segment, and Transportation and Natural Resources & Imaging showing strong growth in Q2 and H1 2025 Gross Contract Revenue Composition | Category | Q2 2025 (in thousands) | % | Q2 2024 (in thousands) | % | Change (in thousands) | % Change | | :-------------------------- | :------ | :---- | :------ | :---- | :----- | :------- | | Building Infrastructure | $56,561 | 46.3% | $52,442 | 50.2% | $4,119 | 7.9% | | Transportation | $24,611 | 20.2% | $19,233 | 18.4% | $5,378 | 28.0% | | Power and Utilities | $26,843 | 22.0% | $22,917 | 21.9% | $3,926 | 17.1% | | Natural Resources & Imaging | $14,075 | 11.5% | $9,909 | 9.5% | $4,166 | 42.0% | | Total | $122,090 | 100.0% | $104,501 | 100.0% | $17,589 | 16.8% | | Category | H1 2025 (in thousands) | % | H1 2024 (in thousands) | % | Change (in thousands) | % Change | | :-------------------------- | :------ | :---- | :------ | :---- | :----- | :------- | | Building Infrastructure | $108,593 | 46.2% | $101,844 | 51.1% | $6,749 | 6.6% | | Transportation | $48,340 | 20.6% | $37,361 | 18.7% | $10,979 | 29.4% | | Power and Utilities | $52,153 | 22.2% | $44,768 | 22.5% | $7,385 | 16.5% | | Natural Resources & Imaging | $25,935 | 11.0% | $15,436 | 7.7% | $10,499 | 68.0% | | Total | $235,021 | 100.0% | $199,409 | 100.0% | $35,612 | 17.9% | [Organic Growth Analysis](index=18&type=section&id=Organic%20Growth%20Analysis) Organic gross revenue increased by **10.7%** in Q2 and **12.1%** in H1, with organic net revenue growing **8.4%** and **9.8%** respectively, driven by Transportation and Natural Resources & Imaging Organic Gross Revenue | Category | Q2 2025 (in thousands) | % | Q2 2024 (in thousands) | % | Change (in thousands) | Organic +/- | | :-------------------------- | :------ | :---- | :------ | :---- | :----- | :---------- | | Gross Revenue, Organic | $115,631 | 100.0% | $104,501 | 100.0% | $11,130 | 10.7% | | Building Infrastructure | $55,525 | 48.0% | $52,442 | 50.2% | $3,083 | 5.9% | | Transportation | $22,876 | 19.8% | $19,233 | 18.4% | $3,643 | 18.9% | | Power and Utilities | $24,495 | 21.2% | $22,917 | 21.9% | $1,578 | 6.9% | | Natural Resources & Imaging | $12,735 | 11.0% | $9,909 | 9.5% | $2,826 | 28.5% | | Category | H1 2025 (in thousands) | % | H1 2024 (in thousands) | % | Change (in thousands) | Organic +/- | | :-------------------------- | :------ | :---- | :------ | :---- | :----- | :---------- | | Gross Revenue, Organic | $223,545 | 100.0% | $199,409 | 100.0% | $24,136 | 12.1% | | Building Infrastructure | $107,155 | 48.0% | $101,844 | 51.1% | $5,311 | 5.2% | | Transportation | $44,123 | 19.7% | $37,361 | 18.7% | $6,762 | 18.1% | | Power and Utilities | $48,041 | 21.5% | $44,768 | 22.5% | $3,273 | 7.3% | | Natural Resources & Imaging | $24,226 | 10.8% | $15,436 | 7.7% | $8,790 | 56.9% | Organic Net Revenue | Category | Q2 2025 (in thousands) | % | Q2 2024 (in thousands) | % | Change (in thousands) | Organic +/- | | :-------------------------- | :------ | :---- | :------ | :---- | :----- | :---------- | | Net Revenue, Organic | $101,890 | 100.0% | $93,981 | 100.0% | $7,909 | 8.4% | | Building Infrastructure | $50,398 | 49.4% | $48,533 | 51.6% | $1,865 | 3.8% | | Transportation | $18,724 | 18.4% | $15,507 | 16.5% | $3,217 | 20.7% | | Power and Utilities | $22,184 | 21.8% | $21,050 | 22.4% | $1,134 | 5.4% | | Natural Resources & Imaging | $10,584 | 10.4% | $8,891 | 9.5% | $1,693 | 19.0% | | Category | H1 2025 (in thousands) | % | H1 2024 (in thousands) | % | Change (in thousands) | Organic +/- | | :-------------------------- | :------ | :---- | :------ | :---- | :----- | :---------- | | Net Revenue, Organic | $197,252 | 100.0% | $179,671 | 100.0% | $17,581 | 9.8% | | Building Infrastructure | $98,104 | 49.8% | $94,620 | 52.6% | $3,484 | 3.7% | | Transportation | $35,994 | 18.2% | $30,341 | 16.9% | $5,653 | 18.6% | | Power and Utilities | $43,540 | 22.1% | $40,704 | 22.7% | $2,836 | 7.0% | | Natural Resources & Imaging | $19,614 | 9.9% | $14,006 | 7.8% | $5,608 | 40.0% | [Gross Backlog by Category](index=20&type=section&id=Gross%20Backlog%20by%20Category) Gross backlog increased by **24.7%** to **$438.2 million** as of June 30, 2025, with Building Infrastructure and Transportation forming the largest segments - Gross backlog increased by **24.7%** to **$438.2 million** compared to **$351.4 million** year-over-year[5](index=5&type=chunk) Gross Backlog by Category at June 30, 2025 | Category | Percentage | | :-------------------------- | :--------- | | Building Infrastructure | 40% | | Transportation | 31% | | Power and Utilities | 21% | | Natural Resources & Imaging | 8% | | TOTAL | 100% | Corporate Actions and Outlook This section covers Bowman's stock repurchase activities and updated fiscal year 2025 guidance for net revenue and Adjusted EBITDA [Stock Repurchase Activities](index=3&type=section&id=Stock%20Repurchase%20Activities) Bowman repurchased **$6.7 million** of common stock in Q2 2025 and authorized a new **$25 million** share repurchase program - Repurchased **$6.7 million** of common stock during the three months ended June 30, 2025, at an average price of approximately **$22.19** per share[7](index=7&type=chunk) - The board of directors authorized a new share program on June 6, 2025, to repurchase up to **$25 million** of common stock over a 12-month period, replacing the prior authorization[8](index=8&type=chunk) [Fiscal Year 2025 Guidance](index=3&type=section&id=Fiscal%20Year%202025%20Guidance) Bowman raised its fiscal year 2025 guidance for net revenue and Adjusted EBITDA, reflecting increased confidence in performance Fiscal Year 2025 Guidance (August 2025, in millions) | Metric | Range | | :-------------- | :------------ | | Net Revenue | $430 - $442 MM | | Adjusted EBITDA | $71 - $77 MM | Additional Information This section provides an overview of Bowman Consulting Group, details on forward-looking statements, and investor relations contact information [About Bowman Consulting Group Ltd.](index=5&type=section&id=About%20Bowman%20Consulting%20Group%20Ltd.) Bowman Consulting Group Ltd. is a national engineering services firm providing infrastructure engineering, technical services, and project management solutions - Bowman is a national engineering services firm offering infrastructure engineering, technical services, and project management solutions[12](index=12&type=chunk) - Operates with over **2,300** employees in more than **100** locations throughout the United States[12](index=12&type=chunk) [Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) This section contains forward-looking statements subject to various risks and uncertainties that could cause actual results to differ materially from projections - The press release contains forward-looking statements subject to risks and uncertainties, including changes in demand, general economic conditions, competitive pressures, and changes in laws or regulations[14](index=14&type=chunk) [Investor Relations](index=5&type=section&id=Investor%20Relations) This section provides details on the upcoming conference call to discuss financial results and investor relations contact information - A conference call to discuss financial results is scheduled for August 7, 2025, at 9:00 a.m. ET[11](index=11&type=chunk) - Investor Relations contact: Betsy Patterson at ir@bowman.com[15](index=15&type=chunk)

[Note About Forward-Looking Statements](index=3&type=section&id=Note%20About%20Forward-Looking%20Statements) This section outlines that the Quarterly Report contains forward-looking statements subject to risks and uncertainties that may cause actual results to differ materially - The report contains forward-looking statements regarding future financial performance, product scaling, growth management, and operational expansion, subject to substantial risks and uncertainties[9](index=9&type=chunk)[10](index=10&type=chunk)[11](index=11&type=chunk) [Part I - Financial Information](index=5&type=section&id=Part%20I%20-%20Financial%20Information) [Item 1. Condensed Consolidated Financial Statements](index=5&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) This section presents Marqeta's unaudited condensed consolidated financial statements and detailed notes for periods ended June 30, 2025, and December 31, 2024 [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Balance Sheet Data | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Total Assets | $1,214,590 | $1,463,204 | | Total Liabilities | $371,157 | $378,186 | | Total Stockholders' Equity | $843,433 | $1,085,018 | - Total assets decreased by **$248.6 million** from December 31, 2024, to June 30, 2025, primarily due to a significant reduction in cash and cash equivalents and short-term investments[15](index=15&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)) Income Statement Data | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net revenue | $150,392 | $125,270 | $289,465 | $243,237 | | Gross profit | $104,061 | $79,353 | $202,740 | $163,512 | | Net (loss) income | $(647) | $119,108 | $(8,907) | $83,048 | | Basic EPS | $(0.00) | $0.23 | $(0.02) | $0.16 | | Diluted EPS | $(0.00) | $0.23 | $(0.02) | $0.16 | - The company reported a net loss for both the three and six months ended June 30, 2025, a significant decline from net income in the prior year periods, primarily due to the absence of the Executive Chairman long-term performance award benefit and increased operating expenses[18](index=18&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' Equity Data | Metric (in thousands) | Balance as of Dec 31, 2024 | Balance as of Jun 30, 2025 | | :-------------------- | :------------------------- | :------------------------- | | Total Stockholder's Equity | $1,085,018 | $843,433 | | Common Stock Shares | 504,296 | 449,459 | | Additional Paid-in Capital | $1,883,190 | $1,650,305 | | Accumulated Deficit | $(797,908) | $(806,815) | - Total stockholders' equity decreased by **$241.6 million** from December 31, 2024, to June 30, 2025, primarily driven by significant common stock repurchases totaling **$275.2 million** and a net loss of **$8.9 million** for the six months ended June 30, 2025[21](index=21&type=chunk)[24](index=24&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Data | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $22,534 | $26,134 | | Net cash provided by investing activities | $75,719 | $27,336 | | Net cash used in financing activities | $(288,546) | $(109,712) | | Net decrease in cash, cash equivalents, and restricted cash | $(190,293) | $(56,242) | | Cash, cash equivalents, and restricted cash - End of period | $741,223 | $933,230 | - Net cash used in financing activities significantly increased to **$288.5 million** for the six months ended June 30, 2025, primarily due to substantial common stock repurchases, leading to a larger net decrease in cash, cash equivalents, and restricted cash compared to the prior year[24](index=24&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [1. Business Overview and Basis of Presentation](index=11&type=section&id=1.%20Business%20Overview%20and%20Basis%20of%20Presentation) This note describes Marqeta's business as a digital payment technology provider and its financial position, including an accumulated deficit - Marqeta, Inc. provides digital payment technology, offering a modern card issuing platform that enables customers to create customized payment card programs and primarily earns revenue from processing card transactions[29](index=29&type=chunk)[30](index=30&type=chunk) - The company has an accumulated deficit of **$806.8 million** as of June 30, 2025, and expects to incur net losses for the foreseeable future due to investments in new products, customer acquisition, and international expansion[34](index=34&type=chunk) [2. Summary of Significant Accounting Policies](index=12&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) This note details Marqeta's significant accounting policies, including a revised approach for network incentives and evaluation of new FASB ASUs - Effective in Q2 2025, Marqeta revised its accounting policy for network incentives, now estimating and recognizing incentives based on expected cumulative rates, resulting in **$6.8 million** higher Card Network incentives for the three months ended June 30, 2025[37](index=37&type=chunk) - The company is evaluating the operational and financial reporting implications of new FASB ASUs 2023-09 (Income Tax Disclosures, effective 2025) and 2024-03 (Expense Disaggregation Disclosures, effective 2027)[39](index=39&type=chunk)[41](index=41&type=chunk) [3. Revenue](index=13&type=section&id=3.%20Revenue) This note disaggregates Marqeta's net revenue into platform services and other services, highlighting growth drivers Revenue Disaggregation | Revenue Type (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Platform services revenue, net | $143,135 | $119,271 | $275,004 | $233,205 | | Other services revenue | $7,257 | $5,999 | $14,461 | $10,032 | | Total net revenue | $150,392 | $125,270 | $289,465 | $243,237 | - Total net revenue increased by **20%** for the three months and by **19%** for the six months ended June 30, 2025, compared to the respective prior year periods, primarily driven by growth in platform services[42](index=42&type=chunk) [4. Business Combinations](index=14&type=section&id=4.%20Business%20Combinations) This note details Marqeta's acquisition of TransactPay, expanding its services in the UK and Europe - On July 31, 2025, Marqeta completed the acquisition of TransactPay for **€46.0 million** in cash, with up to **€5.0 million** in contingent consideration, to provide BIN Sponsorship and E-Money Licensing services[46](index=46&type=chunk) [5. Intangible Assets, net](index=14&type=section&id=5.%20Intangible%20Assets%2C%20net) This note provides a summary of Marqeta's intangible assets, primarily developed technology, and their net value Intangible Assets Summary | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Developed technology | $41,000 | $41,000 | | Accumulated amortization | $(14,155) | $(11,226) | | Intangible assets, net | $26,845 | $29,774 | - Net intangible assets decreased to **$26.8 million** as of June 30, 2025, from **$29.8 million** at December 31, 2024, due to ongoing amortization of developed technology[47](index=47&type=chunk) [6. Short-term Investments](index=14&type=section&id=6.%20Short-term%20Investments) This note details Marqeta's short-term investments, primarily U.S. treasury securities, and their fair value Short-term Investments Summary | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Total short-term investments (Fair Value) | $88,865 | $179,409 | | U.S. treasury securities | $79,993 | $168,900 | | Asset-backed securities | $8,872 | $10,509 | - Short-term investments, classified as available-for-sale, significantly decreased from **$179.4 million** at December 31, 2024, to **$88.9 million** at June 30, 2025, with U.S. treasury securities comprising the majority[49](index=49&type=chunk)[50](index=50&type=chunk) [7. Fair Value Measurements](index=15&type=section&id=7.%20Fair%20Value%20Measurements) This note presents Marqeta's assets measured at fair value, including cash equivalents and short-term investments Fair Value Assets Summary | Asset Type (in thousands) | June 30, 2025 Total Fair Value | December 31, 2024 Total Fair Value | | :------------------------ | :----------------------------- | :--------------------------------- | | Cash equivalents | $491,051 | $751,429 | | Short-term investments | $88,865 | $179,409 | | Total assets measured at fair value | $589,733 | $938,838 | - The company's total assets measured at fair value decreased from **$938.8 million** at December 31, 2024, to **$589.7 million** at June 30, 2025, primarily due to reductions in money market funds and U.S. treasury securities[53](index=53&type=chunk)[54](index=54&type=chunk) [8. Certain Balance Sheet Components](index=16&type=section&id=8.%20Certain%20Balance%20Sheet%20Components) This note provides details on specific balance sheet components, including property and equipment and accrued liabilities Balance Sheet Components Detail | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Property and equipment, net | $50,238 | $37,523 | | Internally developed and purchased software | $67,029 | $47,300 | | Accrued expenses and other current liabilities | $158,216 | $177,059 | - Net property and equipment increased to **$50.2 million** as of June 30, 2025, from **$37.5 million** at December 31, 2024, driven by significant capitalization of internal-use software development costs[56](index=56&type=chunk)[57](index=57&type=chunk) [9. Leases](index=17&type=section&id=9.%20Leases) This note outlines Marqeta's lease obligations, including an amendment to its Oakland lease - Marqeta amended its Oakland lease in Q2 2025, extending the term for certain floors by 24 months, resulting in an increase of approximately **$3.5 million** in operating lease right-of-use assets and liabilities[60](index=60&type=chunk) Lease Metrics | Lease Metric | June 30, 2025 | December 31, 2024 | | :------------- | :------------ | :---------------- | | Weighted average remaining operating lease term (in years) | 2.2 | 1.1 | | Weighted average discount rate | 4.6% | 7.6% | [10. Commitments and Contingencies](index=18&type=section&id=10.%20Commitments%20and%20Contingencies) This note details Marqeta's restricted cash, legal proceedings, and other contingent liabilities - The company has **$8.5 million** in restricted cash, including a **$7.0 million** deposit at an Issuing Bank for transaction settlement collateral and **$1.5 million** for a letter of credit related to its Oakland lease[63](index=63&type=chunk)[64](index=64&type=chunk) - Marqeta is a defendant in consolidated securities class action lawsuits and shareholder derivative lawsuits alleging false or misleading statements, with potential losses currently unestimable[66](index=66&type=chunk)[67](index=67&type=chunk)[68](index=68&type=chunk) [11. Stock Incentive Plans](index=20&type=section&id=11.%20Stock%20Incentive%20Plans) This note details Marqeta's share-based compensation expense, including restricted stock units and stock options Share-based Compensation Expense | Share-based Compensation (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Restricted stock units | $24,375 | $28,656 | $47,909 | $52,819 | | Stock options | $1,349 | $5,974 | $3,623 | $12,585 | | Total share-based compensation expense (benefit) | $30,257 | $(119,529) | $58,694 | $(73,015) | - Total share-based compensation expense increased significantly to **$30.3 million** for the three months and **$58.7 million** for the six months ended June 30, 2025, compared to a benefit in prior year periods, due to the forfeiture of the Executive Chairman long-term performance award in 2024[74](index=74&type=chunk) [12. Stockholders' Equity Transactions](index=21&type=section&id=12.%20Stockholders'%20Equity%20Transactions) This note details Marqeta's share repurchase programs and their impact on stockholders' equity - Marqeta completed its **$200 million** 2024 Share Repurchase Program by March 31, 2025, repurchasing **19.2 million shares** for **$80.5 million** during the first six months of 2025[78](index=78&type=chunk)[80](index=80&type=chunk) - A new **$300 million** 2025 Share Repurchase Program was authorized on February 25, 2025, with **$106.9 million** remaining available after repurchasing **42.3 million shares** for **$193.1 million** during the six months ended June 30, 2025[79](index=79&type=chunk)[81](index=81&type=chunk) [13. Net (Loss) Income Per Share Attributable to Common Stockholders](index=22&type=section&id=13.%20Net%20(Loss)%20Income%20Per%20Share%20Attributable%20to%20Common%20Stockholders) This note presents Marqeta's basic and diluted net loss per share for the reported periods Earnings Per Share Data | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic Net (Loss) Income Per Share | $(0.00) | $0.23 | $(0.02) | $0.16 | | Diluted Net (Loss) Income Per Share | $(0.00) | $0.23 | $(0.02) | $0.16 | | Weighted-average shares (Basic) | 461,517 | 515,959 | 481,260 | 516,973 | - The company reported a basic and diluted net loss per share of **$(0.00)** for Q2 2025 and **$(0.02)** for the six months ended June 30, 2025, reflecting the overall net loss compared to positive EPS in prior year periods[18](index=18&type=chunk)[86](index=86&type=chunk) [14. Income Tax](index=24&type=section&id=14.%20Income%20Tax) This note details Marqeta's income tax expense and the impact of recent tax legislation Income Tax Expense | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Income tax expense | $206 | $150 | $441 | $284 | - Income tax expense remained relatively flat year-over-year, primarily attributable to profitable foreign jurisdictions, as the company maintains a full valuation allowance against its U.S. federal and state net deferred tax assets[88](index=88&type=chunk)[133](index=133&type=chunk) - The company is evaluating the impact of the 'One Big Beautiful Bill Act' (Tax Act) signed in July 2025, which reinstates 100% bonus depreciation and Section 174 expensing, but expects no material impact on its 2025 tax expense[90](index=90&type=chunk)[134](index=134&type=chunk) [15. Concentration Risks and Significant Customers](index=24&type=section&id=15.%20Concentration%20Risks%20and%20Significant%20Customers) This note highlights Marqeta's significant customer concentration and reliance on a single Issuing Bank for transaction settlement - Marqeta has significant customer concentration, with its largest customer, Block, accounting for **46%** and **45%** of net revenue for the three and six months ended June 30, 2025, respectively[94](index=94&type=chunk)[151](index=151&type=chunk)[170](index=170&type=chunk) - A significant portion of payment transactions (**65%** for Q2 2025, **66%** for H1 2025) are settled through one Issuing Bank, Sutton Bank, posing a concentration risk[93](index=93&type=chunk) [16. Segment Information](index=24&type=section&id=16.%20Segment%20Information) This note confirms Marqeta operates as a single operating segment, providing a global, cloud-based payment platform - Marqeta operates as a single operating segment and reporting unit, providing a global, cloud-based, open API platform for modern card issuing and transaction processing[95](index=95&type=chunk) Segment Financials | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net revenue | $150,392 | $125,270 | $289,465 | $243,237 | | Gross profit | $104,061 | $79,353 | $202,740 | $163,512 | | (Loss) income from operations | $(9,228) | $105,042 | $(27,766) | $55,189 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Marqeta's financial condition and results of operations, highlighting key metrics, non-GAAP measures, revenue, expenses, liquidity, and critical accounting policies [Overview](index=26&type=section&id=Overview) This section provides an overview of Marqeta's mission to modernize financial services through its payment platform and service models - Marqeta's mission is to modernize financial services by providing a platform for customized payment card programs through open APIs, enabling customers to launch and manage card programs and transactions[102](index=102&type=chunk) - The company offers 'Managed By Marqeta' (MxM) for full program management and 'Powered By Marqeta' (PxM) for platform access and processing, catering to diverse customer needs[103](index=103&type=chunk)[107](index=107&type=chunk) [Impact of Macroeconomic Factors](index=26&type=section&id=Impact%20of%20Macroeconomic%20Factors) This section discusses the unpredictable impact of macroeconomic factors on Marqeta's processing volumes and financial results - Marqeta acknowledges the unpredictable impact of macroeconomic factors, including geopolitical conflicts, inflation, and interest rates, on its processing volumes and future financial results, potentially leading to lower consumer spending and foreign currency fluctuations[106](index=106&type=chunk)[108](index=108&type=chunk) [Key Operating Metric and Non-GAAP Financial Measures](index=27&type=section&id=Key%20Operating%20Metric%20and%20Non-GAAP%20Financial%20Measures) This section presents Marqeta's key operating metrics, including Total Processing Volume (TPV), and non-GAAP financial measures like Adjusted EBITDA Key Operating Metrics and Non-GAAP Measures | Metric (in thousands, except TPV in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total Processing Volume (TPV) | $91,386 | $70,627 | $175,857 | $137,294 | | Net revenue | $150,392 | $125,270 | $289,465 | $243,237 | | Gross profit | $104,061 | $79,353 | $202,740 | $163,512 | | Gross margin | 69% | 63% | 70% | 67% | | Adjusted EBITDA | $28,509 | $(1,817) | $48,590 | $7,409 | | Adjusted EBITDA margin | 19% | (1)% | 17% | 3% | - Total Processing Volume (TPV) increased by **29%** for Q2 2025 and **28%** for H1 2025 year-over-year, indicating strong market adoption and customer business growth[111](index=111&type=chunk) - Adjusted EBITDA significantly improved, reaching **$28.5 million** (**19% margin**) for Q2 2025 and **$48.6 million** (**17% margin**) for H1 2025, compared to negative or low positive figures in prior year periods[111](index=111&type=chunk) [Components of Results of Operations](index=28&type=section&id=Components%20of%20Results%20of%20Operations) This section details the components of Marqeta's revenue and expenses, including platform services, other services, and operating costs - Net revenue comprises platform services revenue (Interchange Fees, processing fees) recognized upon transaction authorization and posting, and other services revenue (card fulfillment) recognized upon card shipment[117](index=117&type=chunk)[118](index=118&type=chunk)[121](index=121&type=chunk)[122](index=122&type=chunk) - Costs of revenue include Card Network fees, Issuing Bank fees, and card fulfillment costs, with Card Network incentives now estimated based on expected cumulative rates over the annual measurement period[123](index=123&type=chunk)[124](index=124&type=chunk)[127](index=127&type=chunk) - Operating expenses consist of compensation and benefits, technology, professional services, and other costs, noting the prior year's Executive Chairman Long-Term Performance Award forfeiture[128](index=128&type=chunk)[129](index=129&type=chunk)[130](index=130&type=chunk)[131](index=131&type=chunk) [Results of Operations](index=31&type=section&id=Results%20of%20Operations) [Comparison of the Three Months Ended June 30, 2025 and 2024](index=32&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20June%2030%2C%202025%20and%202024) This section compares Marqeta's financial performance for the three months ended June 30, 2025, versus the prior year, detailing revenue, expenses, and net income changes Quarterly Performance Comparison | Metric (in thousands) | Q2 2025 | Q2 2024 | $ Change | % Change | | :-------------------- | :------ | :------ | :------- | :------- | | Net revenue | $150,392 | $125,270 | $25,122 | 20% | | TPV (in millions) | $91,386 | $70,627 | $20,759 | 29% | | Gross profit | $104,061 | $79,353 | $24,708 | 31% | | Gross margin | 69% | 63% | | 6 pp | | Total operating expenses (benefit) | $113,289 | $(25,689) | $138,978 | 541% | | Net (loss) income | $(647) | $119,108 | $(119,755)| (101)% | - Net revenue increased by **20%** driven by a **29%** increase in TPV, primarily from financial services, lending, and expense management use cases, with non-top-five customers growing **70%**[138](index=138&type=chunk)[140](index=140&type=chunk) - Gross profit increased by **31%** and gross margin improved by **6 percentage points**, as **$6.8 million** higher network incentives (due to revised accounting policy) largely offset increased Card Network and Issuing Bank fees[141](index=141&type=chunk)[142](index=142&type=chunk) - Total operating expenses surged by **541%** due to the absence of the prior year's Executive Chairman long-term performance award benefit and lower compensation and share-based compensation expenses, partially offset by higher depreciation and amortization[143](index=143&type=chunk)[146](index=146&type=chunk)[148](index=148&type=chunk) - Other income, net, decreased by **38%** due to lower interest income from reduced short-term investment and cash balances, following **$162.9 million** in share repurchases[149](index=149&type=chunk) [Comparison of the Six Months Ended June 30, 2025 and 2024](index=35&type=section&id=Comparison%20of%20the%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) This section compares Marqeta's financial performance for the six months ended June 30, 2025, versus the prior year, detailing revenue, expenses, and net income changes Half-Year Performance Comparison | Metric (in thousands) | H1 2025 | H1 2024 | $ Change | % Change | | :-------------------- | :------ | :------ | :------- | :------- | | Net revenue | $289,465 | $243,237 | $46,228 | 19% | | TPV (in millions) | $175,857 | $137,294 | $38,563 | 28% | | Gross profit | $202,740 | $163,512 | $39,228 | 24% | | Gross margin | 70% | 67% | | 3 pp |\ | Total operating expenses (benefit) | $230,506 | $108,323 | $122,183 | 113% | | Net (loss) income | $(8,907) | $83,048 | $(91,955)| (111)% | - Net revenue grew by **19%** for the six months ended June 30, 2025, driven by a **28%** increase in TPV, with strong growth across financial services, lending, and expense management, and a **67%** increase from non-top-five customers[154](index=154&type=chunk)[156](index=156&type=chunk) - Gross profit increased by **24%** and gross margin improved by **3 percentage points**, despite higher costs of revenue, due to the revised accounting policy for network incentives[159](index=159&type=chunk)[160](index=160&type=chunk) - Total operating expenses increased by **113%**, primarily due to the absence of the Executive Chairman long-term performance award benefit from the prior year, partially offset by lower compensation expenses from post-combination compensation and stock award forfeitures[161](index=161&type=chunk)[162](index=162&type=chunk)[167](index=167&type=chunk) - Other income, net, decreased by **31%** due to lower interest income from reduced cash and short-term investment balances, following **$193.1 million** in share repurchases[168](index=168&type=chunk) [Use of Non-GAAP Financial Measures](index=38&type=section&id=Use%20of%20Non-GAAP%20Financial%20Measures) This section explains Marqeta's use of non-GAAP measures like Adjusted EBITDA to evaluate core operating results and efficiencies - Marqeta uses non-GAAP measures like Adjusted EBITDA and Adjusted operating expenses to evaluate core operating results and efficiencies, acknowledging their limitations and encouraging review alongside GAAP measures[172](index=172&type=chunk)[173](index=173&type=chunk) Non-GAAP Reconciliation | Non-GAAP Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Adjusted EBITDA | $28,509 | $(1,817) | $48,590 | $7,409 | | Adjusted EBITDA Margin | 19% | (1)% | 17% | 3% | | Adjusted operating expenses | $75,552 | $81,170 | $154,150 | $156,103 | [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses Marqeta's liquidity position, capital resources, and share repurchase programs - As of June 30, 2025, Marqeta's liquidity consisted of **$821.6 million** in cash, cash equivalents, and short-term investments, deemed sufficient to fund operations for at least the next 12 months[178](index=178&type=chunk)[183](index=183&type=chunk) - The company completed its **$200 million** 2024 Share Repurchase Program and initiated a new **$300 million** 2025 Share Repurchase Program, with **$106.9 million** remaining available as of June 30, 2025[180](index=180&type=chunk)[181](index=181&type=chunk) - The acquisition of TransactPay was completed on July 31, 2025, for **€46.0 million** in cash, impacting future liquidity[179](index=179&type=chunk) [Cash Flows](index=40&type=section&id=Cash%20Flows) This section analyzes Marqeta's cash flow activities from operations, investing, and financing for the reported periods Cash Flow Summary | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $22,534 | $26,134 | | Net cash provided by investing activities | $75,719 | $27,336 | | Net cash used in financing activities | $(288,546) | $(109,712) | - Net cash provided by operating activities decreased to **$22.5 million** for H1 2025, primarily due to unfavorable timing of settlements for network incentive receivables and accrued expenses[187](index=187&type=chunk) - Net cash provided by investing activities increased to **$75.7 million** for H1 2025, driven by higher proceeds from maturities of short-term investments[189](index=189&type=chunk) - Net cash used in financing activities significantly increased to **$288.5 million** for H1 2025, mainly due to substantial common stock repurchases under the 2024 and 2025 Share Repurchase Programs[191](index=191&type=chunk) [Obligations and Other Commitments](index=41&type=section&id=Obligations%20and%20Other%20Commitments) This section confirms no material changes to Marqeta's obligations and other commitments since the 2024 Annual Report, except for a lease extension - There have been no material changes to obligations and other commitments since the 2024 Annual Report, except for the lease extension disclosed in Note 9[193](index=193&type=chunk) [Critical Accounting Policies and Estimates](index=41&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section highlights the revised accounting policy for Card Network incentives as the only material change to critical accounting policies - The only change to critical accounting policies is the revised method for estimating Card Network incentives, as detailed in Note 2, with no other material changes reported compared to the 2024 Annual Report[196](index=196&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=42&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section outlines Marqeta's exposure to market risks, specifically interest rate risk and foreign currency exchange risk, noting minimal impact due to short maturities and U.S. dollar denominated operations - Marqeta's cash, cash equivalents, and short-term investments totaled **$821.6 million** as of June 30, 2025, with fair value not significantly impacted by interest rate fluctuations due to short-term maturities[198](index=198&type=chunk) - The company's operations are not subject to significant foreign currency risk, as most sales and operating expenses are denominated in U.S. dollars, with a hypothetical 10% change having no material impact[199](index=199&type=chunk) [Item 4. Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of Marqeta's disclosure controls and procedures as of June 30, 2025, with no material changes to internal control over financial reporting during Q2 2025 - Marqeta's disclosure controls and procedures were evaluated and deemed effective at a reasonable assurance level as of June 30, 2025[202](index=202&type=chunk) - There have been no material changes in the company's internal control over financial reporting during the second quarter of fiscal 2025[203](index=203&type=chunk) [Part II - Other Information](index=44&type=section&id=Part%20II%20-%20Other%20Information) [Item 1. Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) This section details ongoing consolidated securities class action and shareholder derivative lawsuits against Marqeta, alleging false or misleading statements, with potential losses currently unestimable - Marqeta is facing consolidated securities class action lawsuits (Wai v. Marqeta, Inc., et al. and Ford v. Marqeta, Inc., et al.) alleging violations of federal securities laws due to false or misleading statements regarding company performance and revenue/gross profit expectations[206](index=206&type=chunk)[207](index=207&type=chunk) - Additionally, the company is a nominal defendant in consolidated shareholder derivative lawsuits (Smith v. Khalaf, et al., Ojserkis v. Khalaf, et al., and Preciado v. Khalaf, et al.) asserting claims for breach of fiduciary duties and federal securities law violations[208](index=208&type=chunk) [Item 1A. Risk Factors](index=44&type=section&id=Item%201A.%20Risk%20Factors) This section states no material changes to the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K, which could adversely affect its business and financial condition - There have been no material changes to the risk factors since the 2024 Annual Report on Form 10-K, which are incorporated by reference[210](index=210&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=45&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports no recent unregistered sales of equity securities and details Class A common stock repurchases under the 2025 Share Repurchase Program - No unregistered sales of equity securities occurred during the period[211](index=211&type=chunk) Share Repurchase Activity | Period | Total Number of Shares Purchased (in thousands) | Average Price Paid per Share | | :----------------- | :-------------------------------------------- | :--------------------------- | | April 1 - 30, 2025 | 12,744 | $3.89 | | May 1 - 31, 2025 | 15,899 | $4.85 | | June 1 - 30, 2025 | 6,599 | $5.47 | | Total | 35,242 | | - As of June 30, 2025, **$106.9 million** remained available for future share repurchases under the **$300 million** 2025 Share Repurchase Program[212](index=212&type=chunk) [Item 3. Defaults Upon Senior Securities](index=45&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is marked as not applicable, indicating no defaults upon senior securities - This item is not applicable[213](index=213&type=chunk) [Item 4. Mine Safety Disclosures](index=45&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is marked as not applicable, indicating no mine safety disclosures - This item is not applicable[214](index=214&type=chunk) [Item 5. Other Information](index=45&type=section&id=Item%205.%20Other%20Information) This section discloses that Todd Pollak and Crystal Sumner adopted Rule 10b5-1 trading arrangements for the sale of Class A Common Stock - Todd Pollak, Chief Revenue Officer, adopted a Rule 10b5-1 trading arrangement on May 16, 2025, for the sale of up to **202,135 shares** of Class A Common Stock, effective until June 30, 2026[215](index=215&type=chunk) - Crystal Sumner, Chief Administrative Officer, adopted a Rule 10b5-1 trading arrangement on June 10, 2025, for the sale of up to **91,000 shares** of Class A Common Stock, effective until June 19, 2026[216](index=216&type=chunk) [Item 6. Exhibits](index=46&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including lease amendments and officer certifications - Key exhibits include the Fourth Amendment to Lease (Exhibit 10.1) and certifications from the Principal Executive and Financial Officer (Exhibits 31.1 and 32.1)[218](index=218&type=chunk) [Signatures](index=47&type=section&id=Signatures) This section contains the signature of Michael (Mike) Milotich, Interim CEO & CFO, confirming the due authorization and filing of the report on August 6, 2025 - The report is signed by Michael (Mike) Milotich, Interim Chief Executive Officer & Chief Financial Officer, on August 6, 2025[222](index=222&type=chunk)

[Executive Summary & Highlights](index=1&type=section&id=1.%20Executive%20Summary%20%26%20Highlights) Stoneridge reported Q2 2025 sales of **$228.0 million** and an operating loss of **$(2.6) million**, secured **$775 million** in new lifetime revenue awards, and updated full-year EBITDA guidance [Q2 2025 Financial Highlights](index=1&type=section&id=1.1.%20Q2%202025%20Financial%20Highlights) Stoneridge reported Q2 2025 sales of **$228.0 million**, a gross profit of **$48.9 million** (**21.5%** of sales), and an operating loss of **$(2.6) million**; adjusted operating income was **$0.4 million**, with a net loss of **$(9.4) million** and adjusted EBITDA at **$4.6 million** Q2 2025 Key Financials | Metric | Value (USD millions) | % of Sales | | :----------------------- | :------------------- | :--------- | | Sales | 228.0 | | | Gross Profit | 48.9 | 21.5% | | Operating Loss | (2.6) | (1.1)% | | Adjusted Operating Income | 0.4 | 0.2% | | Net Loss | (9.4) | (4.1)% | | Adjusted Net Loss | (7.0) | (3.1)% | | Adjusted EBITDA | 4.6 | 2.0% | | Adjusted EBITDA (excl. FX) | 8.1 | 3.5% | - Total debt reduced by **$38.8 million** relative to Q1, driven by a **$43.8 million** global cash repatriation program and a **$7.3 million** inventory reduction[4](index=4&type=chunk)[18](index=18&type=chunk) [Strategic Business Developments](index=1&type=section&id=1.2.%20Strategic%20Business%20Developments) MirrorEye achieved another quarterly sales record with **21%** growth QoQ, driven by OEM program ramp-ups, and the company secured approximately **$775 million** in new lifetime revenue awards, including its largest-ever global MirrorEye program extension - MirrorEye sales set a new quarterly record, growing **21%** relative to Q1 2025, driven by continued ramp-up of OEM programs[1](index=1&type=chunk)[6](index=6&type=chunk) Significant New Business Awards | Program | Estimated Lifetime Revenue (USD millions) | Peak Annual Revenue (USD millions) | | :------------------------------------------------ | :-------------------------------------- | :--------------------------------- | | Global MirrorEye Program Extension | 535 | 140 | | Smart 2 Tachograph, Secondary Displays, ECUs | 155 | N/A | | Stoneridge Brazil OEM ECU (Infotainment) | 85 | 20 | | **Total New Awards** | **~775** | N/A | - Stoneridge announced a review of strategic alternatives for its Control Devices business, with a primary focus on a potential sale to maximize shareholder value[1](index=1&type=chunk)[8](index=8&type=chunk)[9](index=9&type=chunk) [2025 Full-Year Guidance Update](index=1&type=section&id=1.3.%202025%20Full-Year%20Guidance%20Update) The company maintained its full-year 2025 sales guidance but narrowed its adjusted gross margin guidance and updated its adjusted EBITDA guidance to reflect non-operating foreign currency headwinds and tariff-related expenses 2025 Full-Year Guidance Update | Metric | Previous Guidance | Updated Guidance | Change | | :-------------------- | :-------------------- | :-------------------- | :----- | | Sales | $860M - $890M | $860M - $890M | Maintained | | Adjusted Gross Margin | N/A | 22.0% - 22.25% | Narrowed | | Adjusted Operating Margin | 0.75% - 1.25% | 0.75% - 1.25% | Maintained | | Adjusted EBITDA | N/A | $34M - $38M | Updated | | Adjusted EBITDA Margin | N/A | 4.0% - 4.3% | Updated | | Free Cash Flow | $25M - $30M | $25M - $30M | Maintained | - The update to adjusted EBITDA guidance reflects **$3.0 million** in non-operating foreign currency headwinds and approximately **$1.0 million** in estimated tariff-related expenses, which were not in initial guidance[4](index=4&type=chunk)[22](index=22&type=chunk) [Second Quarter 2025 Performance Review](index=1&type=section&id=2.%20Second%20Quarter%202025%20Performance%20Review) Stoneridge experienced a decline in net sales and a shift to operating loss YoY, primarily due to lower North American commercial vehicle production, with mixed segment performance [Overall Financial Performance](index=1&type=section&id=2.1.%20Overall%20Financial%20Performance) Stoneridge experienced a decline in net sales and a shift from operating income to loss compared to Q2 2024, primarily due to lower production volumes in the North American commercial vehicle market Q2 2025 vs Q2 2024 Financial Performance | Metric | Q2 2025 (USD thousands) | Q2 2024 (USD thousands) | YoY Change | | :----------------------- | :--------------------- | :--------------------- | :--------- | | Net Sales | 227,952 | 237,059 | (3.8%) | | Operating (Loss) Income | (2,601) | 3,407 | Shift to Loss | | Net (Loss) Income | (9,359) | 2,786 | Shift to Loss | | Basic EPS | (0.34) | 0.10 | Shift to Loss | - The operating loss was primarily due to challenging and volatile market conditions, particularly production volume reductions in the North American commercial vehicle end market, partially offset by MirrorEye sales growth and foreign currency benefits[3](index=3&type=chunk)[6](index=6&type=chunk)[14](index=14&type=chunk) [Segment Performance](index=3&type=section&id=2.2.%20Segment%20Performance) The company's segments showed mixed performance in Q2 2025, with Electronics sales increasing QoQ but decreasing YoY, Control Devices seeing QoQ sales growth and margin improvement but a YoY decline, and Stoneridge Brazil demonstrating strong growth [Electronics Segment](index=3&type=section&id=2.2.1.%20Electronics%20Segment) Electronics segment sales increased QoQ by **6.4%** to **$149.6 million** but decreased YoY by **2.6%**, with adjusted operating margin declining to **2.8%** Electronics Segment Performance | Metric | Q2 2025 (USD millions) | Q1 2025 (USD millions) | QoQ Change | Q2 2024 (USD millions) | YoY Change | | :-------------------------- | :--------------------- | :--------------------- | :--------- | :--------------------- | :--------- | | Sales | 149.6 | 140.6 (implied) | +6.4% | 153.6 (implied) | (2.6%) | | Adjusted Operating Margin | 2.8% | 4.9% (implied) | (210 bps) | 7.7% (implied) | (490 bps) | - QoQ sales growth was primarily due to **$8.1 million** favorable foreign currency translation and higher MirrorEye sales; YoY sales decrease was due to lower North American commercial vehicle production volumes[11](index=11&type=chunk)[14](index=14&type=chunk) [Control Devices Segment](index=3&type=section&id=2.2.2.%20Control%20Devices%20Segment) Control Devices segment sales grew QoQ by **1.9%** to **$71.2 million**, but declined YoY by **12.0%**, with adjusted operating margin at **4.0%** Control Devices Segment Performance | Metric | Q2 2025 (USD millions) | Q1 2025 (USD millions) | QoQ Change | Q2 2024 (USD millions) | YoY Change | | :-------------------------- | :--------------------- | :--------------------- | :--------- | :--------------------- | :--------- | | Sales | 71.2 | 69.9 (implied) | +1.9% | 80.9 (implied) | (12.0%) | | Adjusted Operating Margin | 4.0% | 2.2% (implied) | +180 bps | 4.6% (implied) | (60 bps) | - QoQ sales growth was driven by higher production volumes in the North American passenger vehicle end market; YoY sales decrease was due to lower customer production volumes and the wind-down of an end-of-life program[12](index=12&type=chunk)[15](index=15&type=chunk) [Stoneridge Brazil Segment](index=3&type=section&id=2.2.3.%20Stoneridge%20Brazil%20Segment) Stoneridge Brazil segment sales increased QoQ by **6.0%** to **$15.3 million** and YoY by **28.9%**, with operating income reaching **$1.0 million** Stoneridge Brazil Segment Performance | Metric | Q2 2025 (USD millions) | Q1 2025 (USD millions) | QoQ Change | Q2 2024 (USD millions) | YoY Change | | :-------------------- | :--------------------- | :--------------------- | :--------- | :--------------------- | :--------- | | Sales | 15.3 | 14.4 (implied) | +6.0% | 11.9 (implied) | +28.9% | | Operating Income | 1.0 | 0.6 (implied) | +$0.4M | 0.0 (implied) | +$1.0M | - YoY sales increase was primarily driven by higher OEM product sales, partially offset by unfavorable foreign currency translation of **$0.9 million**[16](index=16&type=chunk) [Strategic Initiatives](index=2&type=section&id=3.%20Strategic%20Initiatives) Stoneridge secured **$775 million** in new lifetime revenue awards, including a major MirrorEye extension, and initiated a strategic review for its Control Devices business, focusing on a potential sale [Significant New Business Awards](index=2&type=section&id=3.1.%20Significant%20New%20Business%20Awards) Stoneridge secured approximately **$775 million** in new lifetime revenue awards, including its largest-ever global MirrorEye program extension (**$535 million** lifetime revenue) and the largest OEM program in Stoneridge Brazil's history (**$85 million** lifetime revenue for an electronic control unit) - The largest business award in company history is a global MirrorEye program extension, estimated at **$535 million** in lifetime revenue and **$140 million** in peak annual revenue[1](index=1&type=chunk)[6](index=6&type=chunk)[7](index=7&type=chunk) - Stoneridge Brazil received its largest OEM program award for an electronic control unit for an infotainment program, estimated at **$85 million** lifetime revenue and **$20 million** peak annual revenue[1](index=1&type=chunk)[6](index=6&type=chunk)[7](index=7&type=chunk) - Additional awards include a new OEM program for the Smart 2 next-generation tachograph and several programs for secondary displays and electronic control units, totaling an estimated **$155 million** in lifetime revenue[6](index=6&type=chunk) [Review of Strategic Alternatives for Control Devices Business](index=2&type=section&id=3.2.%20Review%20of%20Strategic%20Alternatives%20for%20Control%20Devices%20Business) Stoneridge announced a review of strategic alternatives for its Control Devices business, primarily focusing on a potential sale to maximize shareholder value and reallocate resources to core growth platforms - The review's primary focus is a potential sale of the Control Devices segment to maximize value for shareholders[8](index=8&type=chunk)[9](index=9&type=chunk) - This strategic move is intended to support and accelerate growth platforms in Electronics and Stoneridge Brazil by reallocating capital, engineering resources, and leadership focus[9](index=9&type=chunk) - The company has engaged external advisors but has not set a definitive timetable and will not comment further until a specific course of action is approved by the Board[10](index=10&type=chunk)[28](index=28&type=chunk) [Financial Position and Outlook](index=3&type=section&id=4.%20Financial%20Position%20and%20Outlook) Stoneridge reduced total debt by **$38.8 million** in Q2 2025, maintained full-year sales guidance, and updated adjusted EBITDA guidance to reflect foreign currency and tariff impacts [Cash and Debt Balances](index=3&type=section&id=4.1.%20Cash%20and%20Debt%20Balances) As of June 30, 2025, Stoneridge had **$49.8 million** in cash and **$164.4 million** in total debt, with total debt and net debt reduced by **$38.8 million** and **$9.5 million** respectively from Q1, largely due to a **$43.8 million** cash repatriation program and inventory reduction Cash and Debt Balances (as of June 30, 2025) | Metric | Value (USD millions) | | :-------------------------------- | :------------------- | | Cash and Cash Equivalents | 49.8 | | Total Debt | 164.4 | | Net Debt | 114.6 | | Adjusted Net Debt (Compliance) | 129.5 | Q2 2025 Cash Flow Performance | Metric | Q2 2025 (USD millions) | Q2 2024 (USD millions) | Change | | :-------------------------------- | :--------------------- | :--------------------- | :----- | | Net Cash Provided by Operating Activities | 10.7 | 8.7 | +$2.0M | | Free Cash Flow | 7.6 | 1.7 | +$5.9M | - Total debt and net debt were reduced by **$38.8 million** and **$9.5 million** respectively from Q1, primarily due to a **$43.8 million** global cash repatriation program and a **$7.3 million** inventory reduction[4](index=4&type=chunk)[18](index=18&type=chunk) - The adjusted net debt to trailing twelve-month EBITDA compliance leverage ratio was **4.17x**, below the required **5.50x**; the company targets a ratio of approximately **2.5x** by year-end, against a **3.5x** requirement[19](index=19&type=chunk)[20](index=20&type=chunk)[47](index=47&type=chunk) [2025 Full-Year Outlook](index=4&type=section&id=4.2.%202025%20Full-Year%20Outlook) Stoneridge maintained its full-year 2025 sales guidance of **$860 million** to **$890 million**, narrowed adjusted gross margin guidance to **22.0%-22.25%**, and updated adjusted EBITDA guidance to **$34 million** to **$38 million** to account for non-operating FX and tariff expenses 2025 Full-Year Guidance | Metric | Guidance Range (USD millions) | Margin | | :-------------------- | :---------------------------- | :------- | | Sales | $860 - $890 | | | Adjusted Gross Margin | N/A | 22.0% - 22.25% | | Adjusted Operating Margin | N/A | 0.75% - 1.25% | | Adjusted EBITDA | $34 - $38 | 4.0% - 4.3% | | Free Cash Flow | $25 - $30 | | - Sales guidance is maintained as production volume headwinds (especially North American commercial vehicles) are expected to be offset by favorable foreign currency benefits[4](index=4&type=chunk)[22](index=22&type=chunk) - Adjusted EBITDA guidance was updated to reflect **$3.0 million** in non-operating foreign currency headwinds and approximately **$1.0 million** in tariff-related expenses, which were not included in initial guidance[4](index=4&type=chunk)[22](index=22&type=chunk) [Corporate Information](index=4&type=section&id=5.%20Corporate%20Information) The report provides Q2 2025 conference call details, company overview, forward-looking statement disclaimers, non-GAAP financial measure explanations, and investor contact information [Conference Call Details](index=4&type=section&id=5.1.%20Conference%20Call%20Details) A live Internet broadcast of Stoneridge's Q2 2025 results conference call was scheduled for 9:00 a.m. Eastern Time on Thursday, August 7, 2025, accessible via www.stoneridge.com, where a webcast replay would also be available - Conference call for Q2 2025 results was held on August 7, 2025, at 9:00 a.m. ET, with webcast available at www.stoneridge.com[23](index=23&type=chunk) [About Stoneridge, Inc.](index=4&type=section&id=5.2.%20About%20Stoneridge,%20Inc.) Stoneridge, Inc., headquartered in Novi, Michigan, is a global supplier of electronic systems and technologies focused on vehicle intelligence, safety, and security for on- and off-highway transportation sectors worldwide - Stoneridge, Inc. is a global supplier of safe and efficient electronic systems and technologies, headquartered in Novi, Michigan[24](index=24&type=chunk) - The company's systems and products power vehicle intelligence and enable safety and security for on- and off-highway transportation sectors globally[24](index=24&type=chunk)[25](index=25&type=chunk) [Forward-Looking Statements](index=5&type=section&id=5.3.%20Forward-Looking%20Statements) The press release contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially, with the company disclaiming any obligation to update these statements - Statements in the press release are forward-looking and subject to risks and uncertainties, including supplier issues, material costs, global economic trends, tariffs, and customer production volumes[26](index=26&type=chunk) - The company explicitly disclaims any obligation to update these forward-looking statements[27](index=27&type=chunk) - There can be no assurance that the strategic review of the Control Devices business will result in a transaction[28](index=28&type=chunk) [Use of Non-GAAP Financial Information](index=6&type=section&id=5.4.%20Use%20of%20Non-GAAP%20Financial%20Information) The press release includes non-GAAP financial measures, such as adjusted gross profit, operating income, net income, EPS, EBITDA, and free cash flow, which are reconciled to GAAP measures and used by management as supplemental measures to assess liquidity and operating performance - Non-GAAP financial measures are used as supplemental measures for liquidity (free cash flow, net debt) and operating performance (adjusted gross profit, operating income, net income, EPS, EBITDA)[29](index=29&type=chunk)[30](index=30&type=chunk) - Management believes these measures are useful for analysis by excluding items not indicative of core operating performance or that may obscure trends[30](index=30&type=chunk) - Non-GAAP measures should not be considered in isolation or as a substitute for GAAP financial statements[31](index=31&type=chunk) [Investor Relations Contact](index=6&type=section&id=5.5.%20Investor%20Relations%20Contact) For more information, investors can contact Kelly K. Harvey, Director of Investor Relations, via email - Contact Kelly K. Harvey, Director Investor Relations (Kelly.Harvey@Stoneridge.com) for more information[32](index=32&type=chunk) [Condensed Consolidated Financial Statements](index=7&type=section&id=6.%20Condensed%20Consolidated%20Financial%20Statements) The financial statements detail Q2 2025 balance sheet changes, a net sales decline to **$228.0 million** with a net loss of **$(9.4) million**, and increased operating cash flow [Condensed Consolidated Balance Sheets](index=7&type=section&id=6.1.%20Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows total assets of **$639.4 million** as of June 30, 2025, an increase from **$621.6 million** at December 31, 2024, with current assets increasing while cash and cash equivalents decreased Condensed Consolidated Balance Sheet Highlights | Metric | June 30, 2025 (USD thousands) | December 31, 2024 (USD thousands) | Change | | :-------------------------------- | :------------------------------ | :-------------------------------- | :------- | | Total Assets | 639,408 | 621,556 | +17,852 | | Cash and Cash Equivalents | 49,772 | 71,832 | (22,060) | | Accounts Receivable, net | 163,105 | 137,766 | +25,339 | | Inventories, net | 144,451 | 151,337 | (6,886) | | Total Current Assets | 393,427 | 387,514 | +5,913 | | Total Liabilities | 378,892 | 376,296 | +2,596 | | Revolving Credit Facility | 164,377 | 201,577 | (37,200) | | Total Shareholders' Equity | 260,516 | 245,260 | +15,256 | [Condensed Consolidated Statements of Operations](index=8&type=section&id=6.2.%20Condensed%20Consolidated%20Statements%20of%20Operations) For the three months ended June 30, 2025, net sales were **$228.0 million**, down from **$237.1 million** in Q2 2024, resulting in an operating loss of **$(2.6) million** and a net loss of **$(9.4) million** Condensed Consolidated Statements of Operations (Three Months Ended June 30) | Metric | 2025 (USD thousands) | 2024 (USD thousands) | | :-------------------------- | :------------------- | :------------------- | | Net Sales | 227,952 | 237,059 | | Cost of Goods Sold | 179,014 | 183,319 | | Operating (Loss) Income | (2,601) | 3,407 | | (Loss) Income Before Income Taxes | (9,115) | 1,850 | | Net (Loss) Income | (9,359) | 2,786 | | Basic (Loss) Income Per Share | (0.34) | 0.10 | [Consolidated Statements of Cash Flows](index=9&type=section&id=6.3.%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash provided by operating activities was **$21.6 million**, an increase from **$17.8 million** in the prior year, while net cash used for financing activities significantly increased to **$(41.4) million** Consolidated Statements of Cash Flows (Six Months Ended June 30) | Metric | 2025 (USD thousands) | 2024 (USD thousands) | | :---------------------------------------- | :------------------- | :------------------- | | Net Cash Provided by Operating Activities | 21,588 | 17,762 | | Net Cash Used for Investing Activities | (9,219) | (12,958) | | Net Cash Used for Financing Activities | (41,363) | (1,679) | | Net Change in Cash and Cash Equivalents | (22,060) | 1,271 | | Cash and Cash Equivalents at End of Period | 49,772 | 42,112 | [Regulation G Non-GAAP Financial Measure Reconciliations](index=10&type=section&id=7.%20Regulation%20G%20Non-GAAP%20Financial%20Measure%20Reconciliations) This section provides detailed reconciliations for adjusted operating income, tax rate, net loss, EPS, EBITDA, segment operating income, free cash flow, net debt, and compliance leverage ratio [Reconciliation of Adjusted Operating Income (Loss)](index=10&type=section&id=7.1.%20Reconciliation%20of%20Adjusted%20Operating%20Income%20(Loss)) For Q2 2025, operating loss was **$(2.6) million**, which, after adding back pre-tax business realignment costs, strategic review costs, and share-based compensation accelerated vesting, resulted in an adjusted operating income of **$0.4 million** Reconciliation of Adjusted Operating Income (Loss) | Metric | Q2 2025 (USD millions) | Q2 2024 (USD millions) | | :-------------------------------------- | :--------------------- | :--------------------- | | Operating Income (Loss) | (2.6) | 3.4 | | Add: Pre-Tax Business Realignment Costs | 1.7 | 1.9 | | Add: Pre-Tax Strategic Review Costs | 1.0 | — | | Add: Pre-Tax Share-Based Compensation Accelerated Vesting | 0.3 | — | | **Adjusted Operating Income (Loss)** | **0.4** | **5.4** | [Reconciliation of Adjusted Tax Rate](index=11&type=section&id=7.2.%20Reconciliation%20of%20Adjusted%20Tax%20Rate) For Q2 2025, the reported loss before tax was **$(9.1) million**; after adjustments, the adjusted loss before tax was **$(6.1) million**, resulting in an adjusted income tax expense of **$1.0 million** and an adjusted tax rate of **(15.7)%** Reconciliation of Q2 2025 Adjusted Tax Rate | Metric | Q2 2025 (USD millions) | Tax Rate | | :------------------------------------------ | :--------------------- | :--------- | | Loss Before Tax | (9.1) | | | Add: Pre-Tax Business Realignment Costs | 1.7 | | | Add: Pre-Tax Strategic Review Costs | 1.0 | | | Add: Pre-Tax Share-Based Compensation Accelerated Vesting | 0.3 | | | **Adjusted Loss Before Tax** | **(6.1)** | | | Income Tax Expense | 0.2 | (2.7)% | | Add: Tax Impact from Pre-Tax Adjustments | 0.7 | | | **Adjusted Income Tax Expense on Adjusted Loss Before Tax** | **1.0** | **(15.7)%** | [Reconciliation of Adjusted Net Loss and EPS](index=11&type=section&id=7.3.%20Reconciliation%20of%20Adjusted%20Net%20Loss%20and%20EPS) For Q2 2025, the net loss was **$(9.4) million**, or **$(0.34)** per share; after adjustments, the adjusted net loss was **$(7.0) million**, or **$(0.25)** per share Reconciliation of Adjusted Net Loss and EPS | Metric | Q2 2025 (USD millions) | Q2 2025 EPS | | :------------------------------------------ | :--------------------- | :---------- | | Net Loss | (9.4) | (0.34) | | Add: After-Tax Business Realignment Costs | 1.3 | 0.05 | | Add: After-Tax Strategic Review Costs | 0.8 | 0.03 | | Add: After-Tax Share-Based Compensation Accelerated Vesting | 0.2 | 0.01 | | **Adjusted Net Loss** | **(7.0)** | **(0.25)** | [Reconciliation of Adjusted EBITDA](index=11&type=section&id=7.4.%20Reconciliation%20of%20Adjusted%20EBITDA) For Q2 2025, EBITDA was **$1.6 million**; after adding back pre-tax business realignment costs, strategic review costs, and accelerated share-based compensation, adjusted EBITDA was **$4.6 million** Reconciliation of Adjusted EBITDA | Metric | Q2 2025 (USD millions) | Q1 2025 (USD millions) | Q4 2024 (USD millions) | Q3 2024 (USD millions) | Q2 2024 (USD millions) | | :-------------------------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Income (Loss) Before Tax | (9.1) | (5.6) | (6.2) | (3.7) | 1.9 | | Interest expense, net | 3.1 | 3.2 | 3.4 | 3.6 | 3.8 | | Depreciation and amortization | 7.6 | 7.3 | 8.3 | 8.8 | 8.5 | | **EBITDA** | **1.6** | **4.8** | **5.5** | **8.8** | **14.2** | | Add: Pre-Tax Business Realignment Costs | 1.7 | 2.8 | 0.4 | 0.3 | 1.9 | | Add: Pre-Tax Strategic Review Costs | 1.0 | — | — | — | — | | Add: Pre-Tax Share-Based Compensation Accelerated Vesting | 0.3 | — | — | — | — | | **Adjusted EBITDA** | **4.6** | **7.6** | **6.0** | **9.2** | **16.1** | [Segment Adjusted Operating Income (Loss) Reconciliation](index=12&type=section&id=7.5.%20Segment%20Adjusted%20Operating%20Income%20(Loss)%20Reconciliation) For Q2 2025, Control Devices' operating income was **$2.6 million**, leading to an adjusted operating income of **$2.8 million** after adding back business realignment costs, while Electronics' operating income was **$2.7 million**, resulting in an adjusted operating income of **$4.2 million** after similar adjustments Control Devices Adjusted Operating Income | Metric | Q2 2025 (USD millions) | Q1 2025 (USD millions) | Q2 2024 (USD millions) | | :-------------------------------- | :--------------------- | :--------------------- | :--------------------- | | Control Devices Operating Income | 2.6 | 1.2 | 3.7 | | Add: Pre-Tax Business Realignment Costs | 0.3 | 0.4 | — | | **Control Devices Adjusted Operating Income** | **2.8** | **1.5** | **3.7** | Electronics Adjusted Operating Income | Metric | Q2 2025 (USD millions) | Q1 2025 (USD millions) | Q2 2024 (USD millions) | | :-------------------------------- | :--------------------- | :--------------------- | :--------------------- | | Electronics Operating Income | 2.7 | 5.5 | 9.8 | | Add: Pre-Tax Business Realignment Costs | 1.4 | 1.4 | 1.9 | | **Electronics Adjusted Operating Income** | **4.2** | **6.9** | **11.7** | [Reconciliation of Free Cash Flow](index=12&type=section&id=7.6.%20Reconciliation%20of%20Free%20Cash%20Flow) For Q2 2025, cash flow from operating activities was **$10.7 million**; after deducting capital expenditures and adding proceeds from the sale of fixed assets, free cash flow was **$7.6 million**, a significant increase from **$1.7 million** in Q2 2024 Reconciliation of Free Cash Flow | Metric | Q2 2025 (USD millions) | Q2 2024 (USD millions) | | :-------------------------------- | :--------------------- | :--------------------- | | Cash Flow from Operating Activities | 10.7 | 8.7 | | Capital Expenditures, including Intangibles | (3.3) | (7.1) | | Proceeds from Sale of Fixed Assets | 0.1 | 0.1 | | **Free Cash Flow** | **7.6** | **1.7** | [Reconciliation of Net Debt](index=12&type=section&id=7.7.%20Reconciliation%20of%20Net%20Debt) As of Q2 2025, total debt was **$164.4 million**; after subtracting cash and cash equivalents of **$49.8 million**, net debt was **$114.6 million**, a reduction from **$124.1 million** in Q1 2025 Reconciliation of Net Debt | Metric | Q2 2025 (USD millions) | Q1 2025 (USD millions) | | :-------------------------- | :--------------------- | :--------------------- | | Total Debt | 164.4 | 203.2 | | Less: Cash and Cash Equivalents | 49.8 | 79.1 | | **Net Debt** | **114.6** | **124.1** | [Reconciliation of Compliance Leverage Ratio](index=13&type=section&id=7.8.%20Reconciliation%20of%20Compliance%20Leverage%20Ratio) For Q2 2025, the adjusted TTM EBITDA for compliance calculation was **$31.1 million**; with adjusted net debt (compliance) of **$129.5 million**, the compliance leverage ratio was **4.17x**, which is below the maximum required ratio of **5.50x** Reconciliation of Compliance Leverage Ratio | Metric | Q2 2025 (USD millions) | Q1 2025 (USD millions) | | :------------------------------------------ | :--------------------- | :--------------------- | | Adjusted TTM EBITDA (Compliance) | 31.1 | 39.1 | | Total Adjusted Cash (Compliance) | 36.4 | 55.8 | | Total Adjusted Debt (Compliance) | 165.9 | 204.7 | | **Adjusted Net Debt (Compliance)** | **129.5** | **148.9** | | **Compliance Leverage Ratio (Net Debt / TTM EBITDA)** | **4.17x** | **3.81x** | | Compliance Leverage Ratio Maximum Requirement | 5.50x | 6.00x |

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 1-06620 GRIFFON CORPORATION (Exact name of registrant as specified in its charter) 712 Fifth Ave, 18th Floor New York New York 10019 (Address of pri ...

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section provides the unaudited consolidated financial statements for Westlake Chemical Partners LP, detailing financial position, operational results, and cash flows for the period ended June 30, 2025 [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements, including balance sheets, statements of operations, and cash flows, for the period ended June 30, 2025 [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Highlights (Unaudited) | Account | June 30, 2025 ($ thousands) | December 31, 2024 ($ thousands) | | :--- | :--- | :--- | | **Total current assets** | 156,524 | 240,926 | | **Total assets** | **1,307,187** | **1,287,956** | | **Total current liabilities** | 72,906 | 55,372 | | **Long-term debt payable to Westlake** | 399,674 | 399,674 | | **Total liabilities** | 476,022 | 458,642 | | **Total equity** | 831,165 | 829,314 | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) Consolidated Statements of Operations Highlights (Unaudited) | Metric | Three Months Ended June 30, 2025 ($ thousands) | Three Months Ended June 30, 2024 ($ thousands) | Six Months Ended June 30, 2025 ($ thousands) | Six Months Ended June 30, 2024 ($ thousands) | | :--- | :--- | :--- | :--- | :--- | | **Total net sales** | 297,119 | 284,168 | 534,748 | 568,841 | | **Gross profit** | 97,532 | 101,232 | 151,613 | 203,412 | | **Income from operations** | 91,232 | 93,627 | 137,839 | 188,730 | | **Net income** | 85,795 | 88,026 | 128,104 | 177,672 | | **Net income attributable to Westlake Chemical Partners LP** | 14,558 | 14,427 | 19,506 | 29,260 | | **Net income per limited partner unit (basic and diluted)** | $0.41 | $0.41 | $0.55 | $0.83 | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statements of Cash Flows Highlights (Unaudited) | Cash Flow Activity | Six Months Ended June 30, 2025 ($ thousands) | Six Months Ended June 30, 2024 ($ thousands) | | :--- | :--- | :--- | | **Net cash provided by operating activities** | 54,852 | 226,461 | | **Net cash provided by (used for) investing activities** | 49,664 | (19,951) | | **Net cash used for financing activities** | (126,253) | (199,130) | | **Net increase (decrease) in cash and cash equivalents** | (21,737) | 7,380 | | **Cash and cash equivalents at end of period** | 36,579 | 65,999 | [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) - The Partnership was formed to operate ethylene production facilities, holding a **22.8% limited partner interest** in Westlake Chemical OpCo LP ("OpCo") and consolidating OpCo's financial results as the primary beneficiary, with Westlake Corporation owning the remaining **77.2% interest**[23](index=23&type=chunk)[24](index=24&type=chunk)[27](index=27&type=chunk) - A quarterly cash distribution of **$0.4714 per common unit** for Q2 2025 was declared on July 30, 2025, payable on August 27, 2025[39](index=39&type=chunk) - The Partnership has significant related-party transactions with Westlake, its major customer, with sales to Westlake accounting for approximately **86.0% of the Partnership's net sales** for the six months ended June 30, 2025[50](index=50&type=chunk)[70](index=70&type=chunk) - As of June 30, 2025, the Partnership had **$399.7 million in long-term debt** payable to Westlake, comprising borrowings under the OpCo Revolver and the MLP Revolver[71](index=71&type=chunk) - The Partnership operates as a **single reportable segment, OpCo**, encompassing its ethylene production operations[85](index=85&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the financial performance and condition of the Partnership, highlighting decreased net income and operating cash flow due to a planned maintenance turnaround [Partnership Overview and Revenue Generation](index=20&type=section&id=Partnership%20Overview%20and%20Revenue%20Generation) - The Partnership's primary asset is its **22.8% limited partner interest in OpCo**, which owns and operates three ethylene production facilities and a pipeline[90](index=90&type=chunk)[91](index=91&type=chunk) - Revenue is primarily generated through a long-term, fee-based Ethylene Sales Agreement with Westlake, including a minimum purchase commitment of **95% of budgeted production** and a fixed margin of **$0.10 per pound**, ensuring stable cash flows[93](index=93&type=chunk) [Results of Operations](index=23&type=section&id=Results%20of%20Operations) - **Q2 2025 vs Q2 2024:** Net income decreased by **$2.2 million to $85.8 million**, driven by higher feedstock and natural gas costs, partially offset by higher ethylene sales prices and a **$13.6 million buyer deficiency fee** from the Petro 1 turnaround[109](index=109&type=chunk)[111](index=111&type=chunk)[112](index=112&type=chunk) - **H1 2025 vs H1 2024:** Net income decreased by **$49.6 million to $128.1 million**, primarily due to lower sales volumes from the Petro 1 turnaround and higher feedstock and natural gas costs[110](index=110&type=chunk)[118](index=118&type=chunk)[119](index=119&type=chunk) Non-GAAP Financial Measures Reconciliation | Metric ($ thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Net Income** | 85,795 | 88,026 | 128,104 | 177,672 | | **MLP distributable cash flow** | 15,007 | 17,135 | 19,721 | 34,027 | | **EBITDA** | 124,391 | 123,199 | 199,412 | 247,630 | [Cash Flow and Liquidity](index=27&type=section&id=Cash%20Flow%20and%20Liquidity) - Cash from operating activities decreased by **$171.6 million in H1 2025** compared to H1 2024, falling to **$54.9 million**, mainly due to Petro 1 turnaround costs and lower income from operations[125](index=125&type=chunk) - Sources of liquidity include cash from operations, a **$600 million OpCo Revolver**, a **$600 million MLP Revolver**, and an Investment Management Agreement with Westlake; cash and cash equivalents were **$36.6 million**, with an additional **$43.9 million invested with Westlake** as of June 30, 2025[130](index=130&type=chunk)[136](index=136&type=chunk)[137](index=137&type=chunk) - Total debt outstanding as of June 30, 2025, was **$399.7 million**, entirely owed to Westlake through the OpCo and MLP revolvers[138](index=138&type=chunk)[139](index=139&type=chunk)[148](index=148&type=chunk) - Capital expenditures for H1 2025 were **$40.3 million**, an increase from **$20.0 million in H1 2024**, primarily due to the Petro 1 turnaround[126](index=126&type=chunk)[135](index=135&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=29&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The Partnership's primary market risk is interest rate exposure on variable-rate debt, while commodity price risk is mitigated by a fee-based sales agreement - Direct exposure to commodity price risk is limited as the Ethylene Sales Agreement with Westlake provides for cost-plus based pricing and a minimum purchase commitment[147](index=147&type=chunk) - The main market risk is interest rate risk on **$399.7 million of variable-rate debt**, where a **1% (100 basis points) increase** in the average interest rate would increase annual interest expense by approximately **$4.0 million**[148](index=148&type=chunk) [Item 4. Controls and Procedures](index=29&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - Management concluded that the company's disclosure controls and procedures are effective as of the end of the period covered by the report[149](index=149&type=chunk) - There were no changes in internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[150](index=150&type=chunk) [PART II. OTHER INFORMATION](index=30&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, other information, and a list of exhibits filed with the report [Item 1. Legal Proceedings](index=30&type=section&id=Item%201.%20Legal%20Proceedings) The Partnership is involved in various legal proceedings but does not anticipate any material adverse effects, with Westlake Corporation providing indemnification for certain liabilities - The Partnership does not believe that any ongoing legal proceedings will have a material adverse effect on its financial condition, results of operations, or cash flows[154](index=154&type=chunk) - Westlake has agreed to indemnify the Partnership for certain environmental liabilities existing before August 4, 2014, and for liabilities related to services performed under the Services and Secondment Agreement[153](index=153&type=chunk) [Item 1A. Risk Factors](index=30&type=section&id=Item%201A.%20Risk%20Factors) No material changes have occurred from the risk factors previously disclosed in the Partnership's Annual Report on Form 10-K for the fiscal year ended December 31, 2024 - There have been no material changes from the risk factors disclosed in the 2024 Form 10-K[155](index=155&type=chunk) [Item 5. Other Information](index=30&type=section&id=Item%205.%20Other%20Information) No director or officer of the Partnership's general partner adopted or terminated a Rule 10b5-1 trading arrangement during the second quarter of 2025 - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the second quarter of 2025[156](index=156&type=chunk) [Item 6. Exhibits](index=31&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including corporate governance documents and officer certifications - The report lists various exhibits filed, including the CEO and CFO certifications under Rule 13a-14(a) and Section 1350[158](index=158&type=chunk)

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The company reported a **net loss of $131 million in Q2 2025**, a significant downturn from **$323 million net income in Q2 2024**, driven by lower sales and restructuring costs [Notes to Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail financial statement preparation, accounting pronouncements, and key line items, including **$123 million in Pernis facility closure costs** and ongoing antitrust lawsuits - In June 2025, the company approved a plan to close all remaining operations at its Pernis, Netherlands facility, recognizing **$123 million** in related costs during the quarter, with additional charges of approximately **$78 million** expected in future periods[71](index=71&type=chunk)[72](index=72&type=chunk) - The company is a defendant in multiple antitrust lawsuits concerning caustic soda, ethylene, and PVC pipe, alleging price-fixing and conspiracy, with the potential financial impact currently indeterminable[80](index=80&type=chunk)[81](index=81&type=chunk)[84](index=84&type=chunk) - The company may be subject to reasonably possible loss contingencies related to environmental matters in the range of **$100 million to $170 million**, in addition to amounts already reserved[96](index=96&type=chunk) Segment Income (Loss) from Operations (in millions) | Segment | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Performance and Essential Materials | $(318) | $157 | $(481) | $179 | | Housing and Infrastructure Products | $222 | $266 | $370 | $476 | Consolidated Statement of Operations Highlights (3 & 6 Months Ended June 30) | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | 6 Months 2025 (in millions) | 6 Months 2024 (in millions) | | :--- | :--- | :--- | :--- | :--- | | **Net Sales** | $2,953 | $3,207 | $5,799 | $6,182 | | **Gross Profit** | $258 | $664 | $490 | $1,130 | | **Income (Loss) from Operations** | $(109) | $406 | $(141) | $629 | | **Net Income (Loss)** | $(131) | $323 | $(166) | $508 | | **Diluted EPS** | $(1.11) | $2.40 | $(1.42) | $3.75 | Consolidated Balance Sheet Highlights | Metric | June 30, 2025 (in millions) | Dec 31, 2024 (in millions) | | :--- | :--- | :--- | | **Total Current Assets** | $5,946 | $6,214 | | **Total Assets** | $20,806 | $20,750 | | **Total Current Liabilities** | $2,403 | $2,219 | | **Long-Term Debt, net** | $4,654 | $4,556 | | **Total Liabilities** | $10,015 | $9,707 | | **Total Equity** | $10,791 | $11,043 | Consolidated Cash Flow Highlights (6 Months Ended June 30) | Metric | 2025 (in millions) | 2024 (in millions) | | :--- | :--- | :--- | | **Net Cash from Operating Activities** | $58 | $406 | | **Net Cash used for Investing Activities** | $(726) | $(495) | | **Net Cash used for Financing Activities** | $(197) | $(146) | | **Net Decrease in Cash** | $(835) | $(261) | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the **Q2 2025 net loss of $142 million** to lower sales, higher costs, and **$115 million in restructuring charges**, impacting segment operating incomes - The company's European and North American businesses have been negatively impacted by reduced demand and lower prices due to macroeconomic conditions, including the war in Ukraine, volatile energy prices, slower GDP growth, inflation, and higher interest rates since 2022[110](index=110&type=chunk) - In Q2 2025, the company recognized restructuring charges of **$115 million** related to the closure of its Pernis, Netherlands facility and the temporary cessation of operations of a PVC resin unit in Suzhou, China[135](index=135&type=chunk)[140](index=140&type=chunk) Key Financial Results Summary (Q2 2025 vs Q2 2024) | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | Change (in millions) | | :--- | :--- | :--- | :--- | | **Net Sales** | $2,953 | $3,207 | $(254) | | **Income (Loss) from Operations** | $(109) | $406 | $(515) | | **Net Income (Loss) Attributable to Westlake** | $(142) | $313 | $(455) | | **Diluted EPS** | $(1.11) | $2.40 | $(3.51) | - Cash flow from operations decreased by **$348 million to $58 million** for the first six months of 2025, compared to **$406 million** in the same period of 2024, primarily due to lower earnings and cash used for a major plant turnaround[161](index=161&type=chunk) [Results of Operations](index=32&type=section&id=Results%20of%20Operations) Q2 2025 net sales decreased **8% to $2.95 billion**, with gross profit margin compressing to **9%** due to lower prices, volumes, and higher costs, impacting segment operating incomes Net Sales Percentage Change from Prior-Year Period (Q2 2025) | Segment | Average Sales Price | Volume | | :--- | :--- | :--- | | Performance and Essential Materials | -2% | -9% | | Housing and Infrastructure Products | -1% | -2% | | **Company Average** | **-1%** | **-7%** | - The Performance and Essential Materials segment's operating income decreased by **$475 million YoY** to a loss of **$318 million** in Q2 2025, driven by lower PVC and polyethylene sales prices, higher costs, plant outages, and **$115 million** in restructuring charges[145](index=145&type=chunk) - The Housing and Infrastructure Products segment's operating income decreased by **$44 million YoY to $222 million** in Q2 2025, primarily due to lower sales prices for pipe and fittings and lower sales volumes for building products[147](index=147&type=chunk) [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, liquidity included **$2.085 billion cash** and **$192 million securities**, with **$4.657 billion long-term debt** and a fully available **$1.5 billion credit facility** - As of June 30, 2025, the company had cash and cash equivalents of **$2,085 million** and available-for-sale securities of **$192 million**[168](index=168&type=chunk) - Total long-term debt carrying value was **$4,657 million** as of June 30, 2025, with the company in compliance with all debt covenants[169](index=169&type=chunk)[177](index=177&type=chunk) - The company has a **$1.5 billion** revolving credit facility, which had no borrowings and full availability as of June 30, 2025[49](index=49&type=chunk)[178](index=178&type=chunk) - Under its stock repurchase program, the company repurchased **$30 million** of common stock in the first six months of 2025, with approximately **$386 million** remaining available for future repurchases as of June 30, 2025[163](index=163&type=chunk)[202](index=202&type=chunk)[204](index=204&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=44&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company manages commodity price, interest rate, and foreign currency risks through feedstock flexibility, derivatives, and hedging for its **$4.7 billion fixed-rate debt** and **€700 million senior notes** - The company faces commodity price risk as many of its products and raw materials are commodities, mitigating this risk through strategies like feedstock flexibility and derivative instruments[191](index=191&type=chunk) - As of June 30, 2025, the company had **$4.72 billion** in fixed-rate debt and **$16 million** in variable-rate debt, exposing it to interest rate risk upon refinancing or rate changes[192](index=192&type=chunk) - To mitigate foreign currency risk, the company uses foreign exchange hedging contracts with a notional value of **€150 million** and has designated its **€700 million** senior notes as a net investment hedge for its euro-denominated subsidiaries[194](index=194&type=chunk)[195](index=195&type=chunk) [Controls and Procedures](index=45&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded disclosure controls were effective as of June 30, 2025, with no material changes to internal controls - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures are effective as of the end of the period covered by the report[196](index=196&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[197](index=197&type=chunk) [PART II. OTHER INFORMATION](index=45&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=45&type=section&id=Item%201.%20Legal%20Proceedings) The company updates legal proceedings, including enforcement negotiations with the West Virginia DEP for its Natrium facility, with a potential penalty exceeding **$1 million** - The company is in enforcement negotiations with the West Virginia Department of Environmental Protection regarding alleged violations at its Natrium facility, with a potential penalty exceeding **$1 million**[199](index=199&type=chunk) - For a comprehensive update on legal matters, including various antitrust and environmental cases, the report refers to Note 13 of the consolidated financial statements[198](index=198&type=chunk) [Risk Factors](index=45&type=section&id=Item%201A.%20Risk%20Factors) No new risk factors are disclosed in this report; investors are referred to the 2024 Form 10-K for a comprehensive discussion - The report directs investors to Item 1A, "Risk Factors" in the 2024 Form 10-K for a discussion of potential risks[200](index=200&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=46&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No shares were repurchased under the stock program in Q2 2025; **780 shares** were acquired for tax obligations, with **$386 million** remaining for future repurchases Common Stock Purchases (Q2 2025) | Period | Total Shares Purchased | Average Price Paid Per Share | Shares Purchased as Part of Program | Max. Value Remaining for Purchase | | :--- | :--- | :--- | :--- | :--- | | April 2025 | 400 | $92.64 | 0 | $386,178,956 | | May 2025 | 0 | N/A | 0 | $386,178,956 | | June 2025 | 380 | $75.78 | 0 | $386,178,956 | | **Total** | **780** | **$84.42** | **0** | | - No shares were repurchased under the company's **$500 million** stock repurchase program expansion during the three months ended June 30, 2025[204](index=204&type=chunk) [Other Information](index=46&type=section&id=Item%205.%20Other%20Information) No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the second quarter of 2025 - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the second quarter of 2025[203](index=203&type=chunk) [Exhibits](index=47&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data - The report includes required certifications from the CEO and CFO as exhibits[205](index=205&type=chunk)