PART I. Financial Information [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated balance sheets, statements of operations, and cash flows for the period ended June 30, 2025 Consolidated Balance Sheet Highlights (Unaudited) | Account | June 30, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | | :--- | :--- | :--- | | **Total Assets** | **$4,185,869** | **$4,098,469** | | Loans, net | $3,110,669 | $3,041,561 | | Securities available-for-sale | $642,910 | $648,067 | | Goodwill | $125,520 | $125,520 | | **Total Liabilities** | **$3,781,732** | **$3,709,967** | | Total Deposits | $3,196,207 | $3,211,870 | | Short-term FHLB advances | $433,500 | $339,000 | | **Total Shareholders' Equity** | **$404,137** | **$388,502** | Consolidated Statements of Operations Highlights (Unaudited) | Metric ($ in thousands, except per share) | 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 Interest Income | $34,814 | $27,751 | $67,587 | $56,123 | | Provision for Credit Losses - Loans | $1,171 | $1,800 | $2,419 | $3,842 | | Noninterest Income | $6,589 | $10,377 | $14,449 | $18,634 | | Noninterest Expense | $27,482 | $28,389 | $54,608 | $55,831 | | **Net Income** | **$11,015** | **$7,064** | **$21,183** | **$13,424** | | **Earnings per share, diluted** | **$0.71** | **$0.45** | **$1.37** | **$0.85** | Condensed Consolidated Statements of Cash Flows (Unaudited) | Cash Flow Activity ($ in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $14,693 | $12,945 | | Net cash used for investing activities | ($76,078) | ($164,247) | | Net cash provided by financing activities | $72,088 | $146,656 | | **Increase (Decrease) in cash and cash equivalents** | **$10,703** | **($4,646)** | [Notes to Interim Consolidated Financial Statements (Unaudited)](index=10&type=section&id=Notes%20to%20Interim%20Consolidated%20Financial%20Statements%20(Unaudited)) Details accounting policies, securities, loans, credit loss allowances, and significant subsequent events like a planned merger - The Company operates primarily in one reportable segment, banking, providing financial services in Ohio, Indiana, and Kentucky[18](index=18&type=chunk)[19](index=19&type=chunk) - Total nonaccrual loans **decreased to $22.7 million** at June 30, 2025, from $31.0 million at December 31, 2024[61](index=61&type=chunk)[62](index=62&type=chunk) - On July 10, 2025, the Company announced an agreement to merge with The Farmers Savings Bank for an aggregate deal value of **approximately $70.4 million**[142](index=142&type=chunk)[143](index=143&type=chunk)[144](index=144&type=chunk) - On July 10, 2025, the Company announced an underwritten public offering of common shares, raising aggregate **net proceeds of approximately $76.0 million**[145](index=145&type=chunk) Loan Portfolio Composition ($ in thousands) | Loan Category | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Commercial & Agriculture | $338,598 | $328,488 | | Commercial Real Estate- Owner Occupied | $378,248 | $374,367 | | Commercial Real Estate- Non-Owner Occupied | $1,263,612 | $1,225,991 | | Residential Real Estate | $815,408 | $763,869 | | Real Estate Construction | $277,643 | $305,992 | | **Total Loans** | **$3,151,124** | **$3,081,230** | Allowance for Credit Losses (ACL) Roll-Forward - Six Months Ended June 30, 2025 ($ in thousands) | Category | Beginning Balance (Dec 31, 2024) | Charge-offs | Recoveries | Provision | Ending Balance (June 30, 2025) | | :--- | :--- | :--- | :--- | :--- | :--- | | **Total** | **$39,669** | **($2,068)** | **$435** | **$2,419** | **$40,455** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=50&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Discusses financial condition and operational results, highlighting asset growth, increased net income, and recent strategic actions [Financial Condition](index=54&type=section&id=Financial%20Condition) Total assets grew 2.1% to $4.19 billion, driven by loan growth funded by FHLB advances as deposits slightly decreased - Total assets **increased by $87.4 million (2.1%)** to $4.19 billion at June 30, 2025, from $4.10 billion at December 31, 2024[157](index=157&type=chunk) Loan Portfolio Change ($ in thousands) | Loan Category | Change from Dec 31, 2024 | % Change | | :--- | :--- | :--- | | Residential Real Estate | $51,539 | 6.7% | | Commercial Real Estate—Non Owner Occupied | $37,621 | 3.1% | | Real Estate Construction | ($28,349) | -9.3% | | **Total Loans** | **$69,894** | **2.3%** | Deposit Composition Change ($ in thousands) | Deposit Category | Change from Dec 31, 2024 | % Change | | :--- | :--- | :--- | | Time deposits | $90,748 | 19.3% | | Brokered deposits | ($46,118) | -9.2% | | Noninterest-bearing demand | ($47,485) | -6.8% | | **Total Deposits** | **($15,663)** | **-0.5%** | [Results of Operations](index=58&type=section&id=Results%20of%20Operations) Net income increased significantly for Q2 and YTD 2025, driven by higher net interest income and an expanded net interest margin - The fully tax equivalent net interest margin for the six months ended June 30, 2025, was **3.57%**, an increase from 3.16% for the same period in 2024[188](index=188&type=chunk) Q2 2025 vs Q2 2024 Performance ($ in thousands) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Income | $11,015 | $7,064 | $3,951 | | Net Interest Income | $34,814 | $27,751 | $7,063 | | Noninterest Income | $6,589 | $10,377 | ($3,788) | | Noninterest Expense | $27,482 | $28,389 | ($907) | YTD 2025 vs YTD 2024 Performance ($ in thousands) | Metric | YTD 2025 | YTD 2024 | Change | | :--- | :--- | :--- | :--- | | Net Income | $21,183 | $13,424 | $7,759 | | Net Interest Income | $67,587 | $56,123 | $11,464 | | Noninterest Income | $14,449 | $18,634 | ($4,185) | | Noninterest Expense | $54,608 | $55,831 | ($1,223) | [Capital Resources and Liquidity](index=67&type=section&id=Capital%20Resources%20and%20Liquidity) The Company maintains a strong capital position with all regulatory ratios exceeding 'well-capitalized' minimums and has significant liquidity - As of June 30, 2025, Civista had a remaining borrowing capacity of **approximately $331.8 million** with the FHLB, plus other credit lines[205](index=205&type=chunk) Regulatory Capital Ratios | Ratio | June 30, 2025 | December 31, 2024 | Well-Capitalized Minimum | | :--- | :--- | :--- | :--- | | CET1 Risk Based Capital | 10.3% | 9.5% | 6.5% | | Tier I Risk Based Capital | 11.2% | 10.4% | 8.0% | | Total Risk Based Capital | 14.7% | 13.9% | 10.0% | | Leverage Ratio | 8.8% | 8.6% | 5.0% | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=70&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The Company's primary market risk is interest-rate risk, with analysis showing a slightly asset-sensitive position - The company's primary technique for managing interest-rate risk is the measurement of its asset/liability gap[212](index=212&type=chunk) Net Portfolio Value Sensitivity Analysis (June 30, 2025) | Change in Rates (basis points) | Dollar Change ($ in thousands) | Percent Change | | :--- | :--- | :--- | | +400bp | $34,022 | 5.4% | | +200bp | $17,280 | 2.7% | | +100bp | $8,026 | 1.3% | | **Base** | **—** | **0.0%** | | -100bp | ($6,861) | (1.1%) | | -200bp | ($29,396) | (4.7%) | [Item 4. Controls and Procedures](index=72&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective with no material changes to internal controls during the quarter - Management, including the CEO and CFO, concluded that the Company's **disclosure controls and procedures were effective** as of June 30, 2025[218](index=218&type=chunk) - **No material changes** in internal control over financial reporting occurred during the quarter[219](index=219&type=chunk) PART II. Other Information [Item 1. Legal Proceedings](index=73&type=section&id=Item%201.%20Legal%20Proceedings) Management believes pending legal proceedings in the ordinary course of business will not have a material adverse effect - Management believes that any pending legal proceedings **will not have a material adverse effect** on the company's financial position or operations[221](index=221&type=chunk) [Item 1A. Risk Factors](index=73&type=section&id=Item%201A.%20Risk%20Factors) Updates risk factors, focusing on the pending merger with The Farmers Savings Bank and challenges in maintaining internal controls - The consummation of the FSB Merger is subject to customary closing conditions, and **there is no assurance it will be completed**[224](index=224&type=chunk) - The company may face challenges in integrating FSB's business, which could prevent the **realization of anticipated benefits and synergies**[227](index=227&type=chunk)[231](index=231&type=chunk) - A new risk factor highlights the importance of maintaining effective internal control over financial reporting due to recent staff turnover and acquisitions[233](index=233&type=chunk)[235](index=235&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=77&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) A new $13.5 million share repurchase program was authorized, though no shares were repurchased in the second quarter of 2025 - On April 15, 2025, the Company announced a new common share repurchase program authorizing up to **$13.5 million** in repurchases[238](index=238&type=chunk) - **No shares were repurchased** during the three months ended June 30, 2025[237](index=237&type=chunk)

Part I. Financial Information [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) The unaudited condensed consolidated financial statements detail the company's performance for the three and six months ended June 30, 2025 and 2024 [Condensed Consolidated Statements of Operations and Comprehensive Income](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) Significant year-over-year sales growth for the three and six-month periods drove substantial increases in gross profit and net income Q2 & H1 2025 vs 2024 Performance Highlights (in thousands, except per-share amounts) | 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 | | :--- | :--- | :--- | :--- | :--- | | **Sales** | $304,027 | $245,657 | $565,366 | $435,185 | | **Gross Profit** | $119,524 | $51,430 | $193,528 | $70,590 | | **Net Income** | $57,705 | $27,870 | $86,577 | $22,117 | | **Net Income to Common Stockholders** | $57,567 | $27,732 | $86,301 | $21,841 | | **Diluted EPS** | $0.09 | $0.04 | $0.14 | $0.04 | [Condensed Consolidated Statements of Cash Flows](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow more than doubled, and a significant inflow from financing activities substantially increased the company's cash position Cash Flow Summary - Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $197,534 | $95,798 | | **Net cash used in investing activities** | $(108,314) | $(96,808) | | **Net cash provided by (used in) financing activities** | $180,004 | $(79,593) | | **Net increase (decrease) in cash** | $269,703 | $(81,783) | | **Cash at end of period** | $297,748 | $25,756 | - Financing activities were primarily driven by **$174.1 million in net proceeds** from the sale of common stock and net debt borrowings of $16.0 million ($133M borrowed, $117M repaid)[13](index=13&type=chunk) [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The company's balance sheet strengthened significantly due to a large increase in cash, leading to higher total assets and stockholders' equity Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Cash and cash equivalents** | $296,565 | $26,868 | | **Total current assets** | $514,860 | $214,152 | | **Total assets** | $3,309,355 | $2,981,060 | | **Total current liabilities** | $192,962 | $197,838 | | **Long-term debt including finance leases** | $521,568 | $508,927 | | **Total liabilities** | $999,322 | $941,546 | | **Total stockholders' equity** | $2,310,033 | $2,039,514 | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail segment performance, debt, derivative use, and significant subsequent events like stock sales and debt repayments - The company is organized into four segments: Greens Creek, Lucky Friday, Keno Hill, and Casa Berardi, with performance evaluated based on segment gross profit or loss[23](index=23&type=chunk)[24](index=24&type=chunk) Sales by Metal - Six Months Ended June 30 (in thousands) | Metal | 2025 | 2024 | | :--- | :--- | :--- | | Silver | $240,814 | $198,925 | | Gold | $210,909 | $149,884 | | Lead | $43,582 | $43,411 | | Zinc | $64,263 | $57,460 | - During Q2 2025, the company sold 29,008,536 shares under its At-The-Market (ATM) equity program for **net proceeds of $174.1 million**[48](index=48&type=chunk) - Subsequent to the quarter end, the company sold an additional 6,949,792 shares for **net proceeds of $42.1 million**, fully repaid its IQ notes for $33.6 million, and issued a notice to redeem $212 million of its Senior Notes[102](index=102&type=chunk)[103](index=103&type=chunk)[105](index=105&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes financial performance, highlighting record sales, operational achievements, segment results, and a strengthened liquidity position [Overview](index=31&type=section&id=Overview) The company reports record sales, strong production, and a strengthened balance sheet for the second quarter of 2025 - Generated **record sales of $304 million** in Q2 2025, a 24% increase over the comparable period[111](index=111&type=chunk) - Produced **4.5 million ounces of silver** and **45,895 ounces of gold** in Q2 2025[113](index=113&type=chunk) - Strengthened the balance sheet by raising **net proceeds of $174.1 million** through the ATM program[113](index=113&type=chunk) - Keno Hill achieved its second consecutive quarter of gross profit, and Lucky Friday set a new quarterly milling record[111](index=111&type=chunk)[113](index=113&type=chunk) [Consolidated Results of Operations](index=32&type=section&id=Consolidated%20Results%20of%20Operations) Higher realized metal prices drove significant year-over-year increases in sales, gross profit, and net income for Q2 and H1 2025 Sales Variance Analysis - Q2 2025 vs Q2 2024 (in thousands) | Factor | Variance Impact | | :--- | :--- | | Price | $44,595 | | Volume | $3,023 | | Smelter terms | $7,510 | Average Realized Prices - Q2 2025 vs Q2 2024 | Metal | 2025 | 2024 | | :--- | :--- | :--- | | Silver ($/oz) | $34.82 | $29.77 | | Gold ($/oz) | $3,314 | $2,338 | | Lead ($/lb) | $0.92 | $1.06 | | Zinc ($/lb) | $1.31 | $1.51 | - The increase in net income for Q2 2025 was driven by a **$68.1 million increase in consolidated gross profit**, partially offset by a $16.7 million increase in other operating expense and a $23.5 million increase in income tax expense[131](index=131&type=chunk) [Segment Analysis](index=42&type=section&id=Segment%20Analysis) Performance varied by segment, with Greens Creek and Casa Berardi showing strong profit growth, while Keno Hill began contributing positively Segment Gross Profit (Loss) - Q2 2025 vs Q2 2024 (in thousands) | Segment | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Greens Creek | $63,081 | $38,873 | | Lucky Friday | $21,987 | $21,548 | | Keno Hill | $240 | $0 | | Casa Berardi | $34,245 | $(8,717) | - **Greens Creek:** Gross profit **increased by $24.2 million** in Q2 2025 due to higher realized prices for silver and gold and higher sales volumes[134](index=134&type=chunk) - **Lucky Friday:** Gross profit was stable as higher sales volumes and prices were offset by increased contractor, consumables, and maintenance costs[145](index=145&type=chunk) - **Keno Hill:** Generated a **gross profit of $0.2 million** in Q2 2025, though the ramp-up continues to face challenges related to permitting, power, and workforce availability[158](index=158&type=chunk)[163](index=163&type=chunk) - **Casa Berardi:** Gross profit **increased by $43.0 million** in Q2 2025, driven by higher realized prices, increased gold ounces sold, and lower depreciation expense[167](index=167&type=chunk)[169](index=169&type=chunk) [Reconciliation of Non-GAAP Measures](index=52&type=section&id=Reconciliation%20of%20Non-GAAP%20Measures) This section reconciles non-GAAP metrics like Cash Cost and AISC to their nearest GAAP equivalents to assess operational performance - The company provides reconciliations for non-GAAP measures like Cash Cost and All-In Sustaining Cost (AISC) to the nearest GAAP measure (Total Cost of Sales)[181](index=181&type=chunk)[182](index=182&type=chunk) Consolidated AISC, After By-product Credits, per Ounce - Q2 2025 vs Q2 2024 | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total Silver AISC ($/oz) | $5.19 | $12.54 | | Total Gold AISC ($/oz) | $1,669 | $1,825 | - Cost per ounce statistics are not disclosed for the Keno Hill operation as it is still in the production ramp-up phase[184](index=184&type=chunk) [Financial Liquidity and Capital Resources](index=52&type=section&id=Financial%20Liquidity%20and%20Capital%20Resources) The company's liquidity improved dramatically due to strong operating cash flow and proceeds from its equity program Liquidity Position (in millions) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $296.6 | $26.9 | | Marketable equity securities | $43.4 | $33.2 | | **Total liquid assets** | **$340.0** | **$60.1** | - As of June 30, 2025, the company had **$179.3 million available for borrowing** under its $225 million credit facility[202](index=202&type=chunk) - The company estimates total 2025 capital expenditures to be between **$222 million and $242 million**, with $112.1 million already incurred as of June 30, 2025[208](index=208&type=chunk) - Cash from operating activities **increased by $101.7 million to $197.5 million** for the first six months of 2025 compared to the same period in 2024[213](index=213&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=59&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is primarily exposed to market risks from fluctuations in metals prices and foreign currency exchange rates - The company's primary market risks are from changes in the prices of silver, gold, lead, zinc, and copper, and fluctuations in the USD/CAD foreign exchange rate[228](index=228&type=chunk)[229](index=229&type=chunk)[232](index=232&type=chunk) - A hypothetical **10% change in metal prices** would alter the value of provisionally priced concentrate sales by approximately **$7.3 million** as of June 30, 2025[230](index=230&type=chunk) - A **10% change in the USD/CAD exchange rate** would have resulted in a change of approximately **$7.2 million** in the company's net foreign exchange gain or loss[232](index=232&type=chunk) [Item 4. Controls and Procedures](index=60&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls during the quarter - The CEO and CFO concluded that the company's **disclosure controls and procedures were effective** as of June 30, 2025[234](index=234&type=chunk) - **No material changes** in internal control over financial reporting occurred during the quarter[234](index=234&type=chunk) Part II. Other Information [Item 1. Legal Proceedings](index=61&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 11 of the financial statements for details on legal matters and environmental contingencies - Information regarding legal proceedings is incorporated by reference from Note 11 of the Notes to Condensed Consolidated Financial Statements[238](index=238&type=chunk) [Item 1A. Risk Factors](index=61&type=section&id=Item%201A.%20Risk%20Factors) The company highlights risks related to tariffs and international trade disputes that could adversely affect its business - The company identifies risks related to tariffs and trade disputes, particularly with countries like **Japan and South Korea**, which are key markets for its products[240](index=240&type=chunk)[241](index=241&type=chunk) - Reciprocal tariffs could make it more expensive to export products, potentially leading customers to renegotiate or terminate agreements, which could **materially impact business and financial results**[241](index=241&type=chunk) [Item 4. Mine Safety Disclosures](index=61&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine safety violation information required by the Dodd-Frank Act is provided in Exhibit 95 of the report - Mine safety disclosures required by the Dodd-Frank Act are provided in Exhibit 95 to the Form 10-Q[243](index=243&type=chunk) [Item 5. Other Information](index=61&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted or terminated Rule 10b5-1 trading arrangements during the second quarter of 2025 - **No director or officer** adopted or terminated a Rule 10b5-1 trading plan during the second quarter of 2025[244](index=244&type=chunk) [Item 6. Exhibits](index=62&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the report, including officer certifications and mine safety data - Lists all exhibits filed with the report, such as officer certifications (Exhibits 31.1, 31.2, 32.1, 32.2) and mine safety information (Exhibit 95)[246](index=246&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 29, 2025 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 001-41545 MasterBrand, Inc. (Exact name of registrant as specified in its charter) Delaware 88-3479920 (State or other jurisdiction of incorporation or organiza ...

[Q2 2025 Financial and Operational Overview](index=1&type=section&id=Q2%202025%20Financial%20and%20Operational%20Overview) This section provides an overview of Beyond Meat's financial performance and strategic responses for the second quarter of 2025 [Second Quarter 2025 Financial Highlights](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Highlights) Beyond Meat reported a **19.6% decline in Q2 2025 net revenues to $75.0 million**, with gross margin contracting to 11.5% and operating loss widening to $38.8 million | Financial Metric | Q2 2025 | Q2 2024 | Change (YoY) | | :--- | :--- | :--- | :--- | | Net Revenues | $75.0 million | $93.2 million | -19.6% | | Gross Profit | $8.6 million | $13.7 million | -37.2% | | Gross Margin | 11.5% | 14.7% | -3.2 p.p. | | Loss from Operations | $(38.8) million | $(33.9) million | +14.5% | | Net Loss | $(33.2) million | $(34.5) million | -3.8% | | Net Loss per Share | $(0.43) | $(0.53) | +18.9% | | Adjusted EBITDA | $(26.0) million | $(23.0) million | +13.0% | - Financial results were negatively impacted by several one-off expenses, including **$1.7 million** related to the cessation of operations in China, **$4.5 million** in non-routine SG&A, and **$2.5 million** in legal expenses, totaling **$9.2 million** in aggregate charges affecting net loss[3](index=3&type=chunk)[4](index=4&type=chunk) [Management Commentary and Strategic Actions](index=2&type=section&id=Management%20Commentary%20and%20Strategic%20Actions) Management attributed disappointing Q2 results to category softness, accelerating transformation through cost reduction, core product focus, and margin expansion initiatives - CEO Ethan Brown cited "ongoing softness in the plant-based meat category, particularly in the U.S. retail channel and certain international foodservice markets" as the primary reason for the disappointing results[4](index=4&type=chunk) - The company is accelerating its transformation activities, including: - Aggressively reducing operating expenses - Prioritizing distribution of core product lines - Investing in margin expansion initiatives[4](index=4&type=chunk) [Reduction-in-Force](index=2&type=section&id=Reduction-in-Force) Beyond Meat initiated a Reduction-in-Force affecting approximately **44 North American employees (6% of global workforce)**, expecting $0.8M-$1.3M in one-time charges and $5.5M-$7.0M in annual savings - The company approved a plan to reduce its North American workforce by approximately **44 employees**, representing about **6% of its total global workforce**[5](index=5&type=chunk) | RIF Financial Impact | Estimated Amount | | :--- | :--- | | One-time Cash Charges | $0.8M - $1.3M | | Expected Annual Cash Savings | $5.0M - $6.0M | | Expected Annual Non-Cash Savings | $0.5M - $1.0M | [Appointment of interim Chief Transformation Officer](index=3&type=section&id=Appointment%20of%20interim%20Chief%20Transformation%20Officer) John Boken, a Partner at AlixPartners with over 35 years of restructuring experience, was appointed interim Chief Transformation Officer to lead turnaround efforts - John Boken, a Partner at AlixPartners with over **35 years of restructuring experience**, was appointed as the company's interim Chief Transformation Officer[9](index=9&type=chunk) [Detailed Financial Performance](index=3&type=section&id=Detailed%20Financial%20Performance) Revenue declined across most channels due to lower volumes, gross margin eroded from higher costs, operating loss widened, and the balance sheet shows **$117.3 million cash** against **$1.2 billion debt** [Net Revenues Analysis](index=3&type=section&id=Net%20Revenues%20Analysis) Q2 net revenues decreased **19.6% to $75.0 million** due to an **18.9% volume drop**, with significant declines in U.S. retail and international foodservice | Net Revenues by Channel (Q2 2025) | Amount (in thousands) | Change (YoY) | | :--- | :--- | :--- | | U.S. Retail | $32,909 | -26.7% | | U.S. Foodservice | $11,055 | +6.8% | | International Retail | $15,867 | -9.8% | | International Foodservice | $15,127 | -25.8% | | **Total Net Revenues** | **$74,958** | **-19.6%** | | Volume of Products Sold (Q2 2025) | Volume (in thousands of lbs) | Change (YoY) | | :--- | :--- | :--- | | U.S. Retail | 6,136 | -24.2% | | U.S. Foodservice | 1,809 | +2.3% | | International Retail | 3,410 | -13.1% | | International Foodservice | 4,635 | -21.6% | | **Total Volume** | **15,990** | **-18.9%** | [Profitability Analysis](index=6&type=section&id=Profitability%20Analysis) Gross profit declined to **$8.6 million (11.5% margin)** due to China operations cessation and lower volume, widening operating loss to **$38.8 million**, though net loss slightly narrowed - Gross margin decreased to **11.5%** from **14.7%** YoY, negatively impacted by **$1.7 million** in expenses related to the cessation of operations in China and increased cost of goods sold per pound[18](index=18&type=chunk) - Operating expenses were roughly flat at **$47.4 million**, but included **$7.5 million** in special charges for non-routine SG&A, legal fees, and lease termination costs[19](index=19&type=chunk)[20](index=20&type=chunk) - Net loss improved to **$33.2 million** from **$34.5 million** YoY, primarily due to a **$5.7 million** gain in 'Total other income, net', largely from foreign currency transactions[21](index=21&type=chunk)[22](index=22&type=chunk) [Balance Sheet and Cash Flow](index=7&type=section&id=Balance%20Sheet%20and%20Cash%20Flow) As of June 28, 2025, the company held **$117.3 million in cash** against **$1.2 billion in debt**, with net cash used in operating activities increasing to **$59.4 million** year-to-date | Key Metric (as of June 28, 2025) | Amount | | :--- | :--- | | Cash and Cash Equivalents (incl. restricted) | $117.3 million | | Total Outstanding Debt | $1.2 billion | | Net Cash Used in Operating Activities (YTD) | $(59.4) million | | Capital Expenditures (YTD) | $6.4 million | [2025 Outlook](index=7&type=section&id=2025%20Outlook) Citing high uncertainty, the company is not providing full-year 2025 guidance but expects Q3 net revenues between **$68 million and $73 million** - The company is not providing full-year guidance for 2025, citing an "elevated level of uncertainty within its operating environment"[25](index=25&type=chunk) - For the third quarter of 2025, net revenues are expected to be between **$68 million and $73 million**[25](index=25&type=chunk) [Consolidated Financial Statements (Unaudited)](index=16&type=section&id=Consolidated%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated statements of operations, balance sheets, and cash flows for the specified periods [Condensed Consolidated Statements of Operations](index=16&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For Q2 2025, net revenues were **$75.0 million**, gross profit **$8.6 million**, loss from operations **$38.8 million**, and net loss **$33.2 million**, with a **$0.43** net loss per share | (In thousands, except per share data) | Three Months Ended June 28, 2025 | Three Months Ended June 29, 2024 | | :--- | :--- | :--- | | Net revenues | $74,958 | $93,185 | | Gross profit | $8,591 | $13,717 | | Loss from operations | $(38,832) | $(33,931) | | Net loss | $(33,162) | $(34,479) | | Net loss per share | $(0.43) | $(0.53) | [Condensed Consolidated Balance Sheets](index=17&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 28, 2025, total assets were **$687.8 million** against **$1.37 billion in liabilities**, including **$1.14 billion in convertible senior notes**, resulting in a **$680.9 million** stockholders' deficit | (In thousands) | June 28, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $103,497 | $131,913 | | Inventory | $110,868 | $113,444 | | Total current assets | $293,215 | $286,456 | | Total assets | $687,821 | $678,146 | | **Liabilities and Stockholders' Deficit** | | | | Total current liabilities | $90,187 | $61,453 | | Convertible senior notes, net | $1,143,443 | $1,141,476 | | Total liabilities | $1,368,764 | $1,279,354 | | Total stockholders' deficit | $(680,943) | $(601,208) | [Condensed Consolidated Statements of Cash Flows](index=19&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the first six months of 2025, net cash used in operating activities increased to **$59.4 million**, while financing activities provided **$33.6 million**, leading to a **$31.8 million** decrease in cash | (In thousands) | Six Months Ended June 28, 2025 | Six Months Ended June 29, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(59,355) | $(47,814) | | Net cash (used in) provided by investing activities | $(6,075) | $1,169 | | Net cash provided by (used in) financing activities | $33,640 | $(1,048) | | **Net decrease in cash, cash equivalents and restricted cash** | **$(31,790)** | **$(47,693)** | [Non-GAAP Financial Measures Reconciliation](index=21&type=section&id=Non-GAAP%20Financial%20Measures%20Reconciliation) This section provides reconciliations of GAAP financial measures to non-GAAP measures, offering insights into the company's operational performance [Reconciliation of GAAP to Non-GAAP Measures](index=21&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Measures) The company reconciles GAAP to non-GAAP measures, reporting Q2 2025 Adjusted Loss from Operations of **$36.6 million** and an Adjusted EBITDA loss of **$26.0 million** after various adjustments Reconciliation of Loss from Operations to Adjusted Loss from Operations (Q2 2025) | (in thousands) | Amount | | :--- | :--- | | Loss from operations, as reported | $(38,832) | | Non-cash charges related to China operations | $1,739 | | Costs related to partial lease termination | $499 | | **Adjusted loss from operations** | **$(36,594)** | Reconciliation of Net Loss to Adjusted EBITDA (Q2 2025) | (in thousands) | Amount | | :--- | :--- | | Net loss, as reported | $(33,162) | | Interest expense | $2,002 | | Depreciation and amortization expense | $6,530 | | Share-based compensation expense | $4,304 | | Non-cash charges related to China operations | $1,739 | | Costs related to partial lease termination | $275 | | Other, net | $(7,731) | | **Adjusted EBITDA** | **$(26,043)** |

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark one) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 or ☐ 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: 001-08052 GLOBE LIFE INC. (Exact name of registrant as specified in its charter) 3700 South Stonebr ...

PART I - FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements for the three and six months ended June 27, 2025, including Balance Sheets, Statements of Operations, Comprehensive Income, Cash Flows, and Shareholders' Equity, along with detailed Notes to the Financial Statements Consolidated Balance Sheet Highlights (Unaudited) | Account | June 27, 2025 ($ millions) | December 27, 2024 ($ millions) | | :--- | :--- | :--- | | **Total Assets** | **200.516** | **191.877** | | Total Current Assets | 80.207 | 76.346 | | Goodwill | 91.135 | 89.782 | | **Total Liabilities** | **80.714** | **76.303** | | Total Current Liabilities | 46.996 | 53.128 | | Long term debt, net | 22.774 | 12.734 | | **Total Shareholders' Equity** | **119.802** | **115.574** | Consolidated Statements of Operations Highlights (Unaudited) | Metric | Q2 2025 ($ millions) | Q2 2024 ($ millions) | Six Months 2025 ($ millions) | Six Months 2024 ($ millions) | | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | **78.899** | **77.656** | **156.764** | **154.843** | | Income from Operations | 4.595 | 12.516 | 8.998 | 24.041 | | **Net Income** | **1.661** | **8.748** | **4.804** | **17.479** | | Diluted EPS | $0.06 | $0.31 | $0.17 | $0.63 | Consolidated Statements of Cash Flows Highlights (Unaudited) | Cash Flow Activity | Six Months Ended June 27, 2025 ($ millions) | Six Months Ended June 28, 2024 ($ millions) | | :--- | :--- | :--- | | Net cash provided by operating activities | 9.843 | 16.511 | | Net cash used in investing activities | (4.221) | (1.832) | | Net cash used in financing activities | (11.801) | (16.477) | | **Net decrease in cash** | **(6.224)** | **(1.811)** | [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail the basis of financial statement presentation, significant accounting policies, and key events, including acquisitions, segment structure, a new stock compensation program, and upcoming restructuring charges - The company acquired LeewayHertz, an AI technology consulting firm, for **$7.8 million**, resulting in **$5.9 million** of goodwill and **$2.5 million** in intangible assets. This is part of a strategy to lead in Gen AI solutions[26](index=26&type=chunk)[27](index=27&type=chunk) - In May 2025, the company acquired assets from Spend Matters, a procurement and supply chain intelligence provider, for **$0.766 million** in cash, recognizing **$2.0 million** in provisional intangible assets[30](index=30&type=chunk) Disaggregated Revenue by Segment (Six Months Ended) | Segment | June 27, 2025 ($ millions) | June 28, 2024 ($ millions) | YoY Change | | :--- | :--- | :--- | :--- | | Global S&BT | 87.562 | 83.154 | +5.3% | | Oracle Solutions | 41.887 | 44.774 | -6.4% | | SAP Solutions | 27.315 | 26.915 | +1.5% | | **Total Segment Revenue** | **156.764** | **154.843** | **+1.2%** | - A new stock price award program was introduced for executives with performance-based RSUs tied to stock price hurdles of $30, $40, and $50. This program resulted in significant non-cash stock compensation expense of **$10.3 million** for the first six months of 2025[71](index=71&type=chunk)[74](index=74&type=chunk) - The company anticipates restructuring charges of approximately **$1.5 million to $2.0 million** in Q3 2025, primarily for severance costs, as it pivots its business towards Gen AI and adjusts staffing levels[95](index=95&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's strategic pivot to a Gen AI-focused consulting firm, leveraging recent acquisitions and proprietary platforms, detailing financial results, revenue growth, increased operating costs, and liquidity strategy - The company is aggressively repositioning as a global IP platform-based Generative AI (Gen AI) strategic consulting firm, leveraging its AI XPLR platform and the newly acquired ZBrain platform from LeewayHertz[101](index=101&type=chunk)[103](index=103&type=chunk) - The effective tax rate for Q2 2025 was **60.7%**, a sharp increase from **27.1%** in Q2 2024. This was primarily due to the limitation of executive compensation deductions related to the new stock price award program[128](index=128&type=chunk) [Results of Operations](index=28&type=section&id=MD%26A%20-%20Results%20of%20Operations) Total revenue for Q2 2025 increased slightly to $78.9 million, with growth in Global S&BT and SAP Solutions offset by Oracle Solutions decline, while operating costs rose significantly due to stock compensation, leading to lower net income Segment Revenue Performance (Q2 2025 vs Q2 2024) | Segment | Q2 2025 ($ millions) | Q2 2024 ($ millions) | YoY Change | | :--- | :--- | :--- | :--- | | Global S&BT | 44.2 | 42.3 | +4.6% | | Oracle Solutions | 20.8 | 23.0 | -9.7% | | SAP Solutions | 13.9 | 12.3 | +12.5% | - Personnel costs increased to **63% of total revenue** in Q2 2025 from **58%** in Q2 2024, primarily due to the stock price award program and acquisition-related non-cash stock compensation[116](index=116&type=chunk) - SG&A costs rose to **$23.4 million** in Q2 2025 from **$18.0 million** in Q2 2024, also driven by increased non-cash stock compensation from the new award program[119](index=119&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=MD%26A%20-%20Liquidity%20and%20Capital%20Resources) As of June 27, 2025, the company had $10.1 million in cash, with net cash from operations decreasing to $9.8 million, primarily used for share repurchases and dividends, partially funded by a credit facility drawdown Cash Flow Summary (Six Months Ended) | Activity | June 27, 2025 ($ millions) | June 28, 2024 ($ millions) | | :--- | :--- | :--- | | Cash from Operating Activities | 9.843 | 16.511 | | Cash used in Investing Activities | (4.221) | (1.832) | | Cash used in Financing Activities | (11.801) | (16.477) | - Major uses of cash in the first six months of 2025 included **$10.5 million** for common stock repurchases and **$6.3 million** for dividend payments[83](index=83&type=chunk)[86](index=86&type=chunk)[133](index=133&type=chunk) - The company drew down **$10.0 million** from its credit facility, ending the period with **$23.0 million** in outstanding debt and approximately **$77.0 million** in remaining borrowing capacity[133](index=133&type=chunk)[134](index=134&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company identifies interest rate risk from its variable-rate credit facility and foreign currency exchange rate risk from international operations as primary market exposures, noting minimal material impact from interest rate changes - The primary market risk exposure relates to variable interest rates on the company's Credit Facility[137](index=137&type=chunk) - The company is exposed to foreign currency fluctuations as a portion of its revenue and expenses are denominated in British Pounds, Euros, and Australian Dollars[138](index=138&type=chunk) [Controls and Procedures](index=33&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 27, 2025, with no material changes to internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 27, 2025[139](index=139&type=chunk) - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[140](index=140&type=chunk) PART II - OTHER INFORMATION [Legal Proceedings](index=34&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings arising in the ordinary course of business, with management expecting no material adverse effect on financial position, cash flows, or results of operations - The company states that ongoing legal proceedings arising from the ordinary course of business are not expected to have a material adverse effect on its financial results[142](index=142&type=chunk) [Risk Factors](index=34&type=section&id=Item%201A.%20Risk%20Factors) The report indicates that there have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended December 27, 2024 - There have been no material changes to the risk factors disclosed in the Company's Annual Report on Form 10-K for the year ended December 27, 2024[143](index=143&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=34&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q2 2025, the company repurchased 177,000 shares for $4.3 million, with $17.0 million remaining under authorization, and an additional $13.0 million approved by the Board post-quarter Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share | Total Cost ($ millions) | | :--- | :--- | :--- | :--- | | Q2 2025 | 177,000 | $24.47 | 4.3 | - As of June 27, 2025, **$17.0 million** remained available for future purchases under the repurchase plan[144](index=144&type=chunk) - Subsequent to the quarter's end, the Board of Directors increased the share repurchase authorization by an additional **$13.0 million**[144](index=144&type=chunk) [Exhibits](index=35&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q report, including CEO and CFO certifications required by Sarbanes-Oxley Act and interactive data files - The filing includes required certifications by the CEO (Exhibit 31.1) and CFO (Exhibit 31.2) pursuant to the Sarbanes-Oxley Act of 2002[147](index=147&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to WESTERN MIDSTREAM PARTNERS, LP WESTERN MIDSTREAM OPERATING, LP (Exact name of registrant as specified in its charter) | | | State or other jurisdiction of | ...

PART I - FINANCIAL INFORMATION [Item 1. Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) This section presents the unaudited consolidated financial statements, including balance sheets, statements of operations, changes in shareholders' equity, and cash flows, along with detailed explanatory notes [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets%20as%20of%20June%2030%2C%202025%20(Unaudited)%20and%20December%2031%2C%202024) Total assets increased to **$14,728.3 million** by June 30, 2025, with corresponding increases in liabilities and shareholders' equity, driven by growth in investments and separate account variable annuity assets | Metric | June 30, 2025 ($ millions) | December 31, 2024 ($ millions) | | :----- | :------------------------- | :----------------------------- | | Total Assets | 14,728.3 | 14,487.8 | | Total Liabilities | 13,368.0 | 13,200.3 | | Total Shareholders' Equity | 1,360.3 | 1,287.5 | | Total Investments | 7,040.6 | 6,916.4 | | Separate Account variable annuity assets | 3,863.3 | 3,708.8 | [Consolidated Statements of Operations and Comprehensive Income (Loss)](index=5&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024%20(Unaudited)) Net income significantly increased for both the three and six months ended June 30, 2025, driven by higher total revenues and a decrease in total benefits, losses, and expenses | Metric | 3 Months Ended June 30, 2025 ($ millions) | 3 Months Ended June 30, 2024 ($ millions) | % Change (3 Months) | 6 Months Ended June 30, 2025 ($ millions) | 6 Months Ended June 30, 2024 ($ millions) | % Change (6 Months) | | :----- | :---------------------------------------- | :---------------------------------------- | :------------------ | :---------------------------------------- | :---------------------------------------- | :------------------ | | Total Revenues | 411.7 | 388.1 | 6.1% | 828.1 | 774.1 | 7.0% | | Net Income | 29.4 | 3.8 | 673.7% | 67.6 | 30.3 | 123.1% | | Basic EPS | 0.71 | 0.09 | 688.9% | 1.64 | 0.74 | 121.6% | | Diluted EPS | 0.71 | 0.09 | 688.9% | 1.63 | 0.73 | 123.3% | | Total Benefits, Losses and Expenses | 375.2 | 383.5 | -2.2% | 744.1 | 736.5 | 1.0% | | Metric | 3 Months Ended June 30, 2025 ($ millions) | 3 Months Ended June 30, 2024 ($ millions) | 6 Months Ended June 30, 2025 ($ millions) | 6 Months Ended June 30, 2024 ($ millions) | | :----- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | | Net Income | 29.4 | 3.8 | 67.6 | 30.3 | | Other Comprehensive Income (Loss), net of tax | 5.3 | 9.6 | 36.4 | 31.3 | | Comprehensive Income | 34.7 | 13.4 | 104.0 | 61.6 | [Consolidated Statements of Changes in Shareholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024%20(Unaudited)) Shareholders' equity increased to **$1,360.3 million** by June 30, 2025, primarily due to net income and positive changes in accumulated other comprehensive income, despite increased dividends paid | Metric | 3 Months Ended June 30, 2025 ($ millions) | 3 Months Ended June 30, 2024 ($ millions) | 6 Months Ended June 30, 2025 ($ millions) | 6 Months Ended June 30, 2024 ($ millions) | | :----- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | | Shareholders' Equity at End of Period | 1,360.3 | 1,208.8 | 1,360.3 | 1,208.8 | | Net Income | 29.4 | 3.8 | 67.6 | 30.3 | | Dividends Paid | (14.6) | (14.2) | (29.3) | (28.5) | | Change in Accumulated Other Comprehensive Income (Loss) | (217.1) | (282.7) | (217.1) | (282.7) | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024%20(Unaudited)) Operating cash flow significantly increased to **$272.1 million** for the six months ended June 30, 2025, while financing activities saw a substantial increase in cash usage | Metric | 6 Months Ended June 30, 2025 ($ millions) | 6 Months Ended June 30, 2024 ($ millions) | % Change | | :----- | :---------------------------------------- | :---------------------------------------- | :------- | | Net Cash Provided by Operating Activities | 272.1 | 114.7 | 137.2% | | Net Cash Used in Investing Activities | (72.0) | (87.2) | -17.4% | | Net Cash Used in Financing Activities | (197.3) | (42.6) | 363.1% | | Net Decrease in Cash | 2.8 | (15.1) | -118.5% | | Cash at End of Period | 40.9 | 14.6 | 180.1% | [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20(Unaudited)) This section provides detailed notes on accounting policies, investments, fair value, insurance contracts, reinsurance, segment information, AOCI, cash flow, and contingencies [Note 1 - Basis of Presentation and Significant Accounting Policies](index=9&type=section&id=Note%201%20-%20Basis%20of%20Presentation%20and%20Significant%20Accounting%20Policies) Horace Mann, a holding company for insurance subsidiaries, serves K-12 educators across four segments, with financial statements prepared under GAAP and an immaterial out-of-period correction noted - Horace Mann Educators Corporation is a holding company for insurance subsidiaries, primarily serving K-12 teachers, administrators, and public school employees and their families[17](index=17&type=chunk) - The Company operates in four reporting segments: Property & Casualty, Life & Retirement, Supplemental & Group Benefits, and Corporate & Other[18](index=18&type=chunk) - An immaterial out-of-period correction of an error related to private debt securities decreased net investment income by **$10.2 million** pre-tax (**$8.1 million** after-tax) for the quarter ended June 30, 2025, impacting Life & Retirement (**$5.3 million**) and Supplemental & Group Benefits (**$2.8 million**)[21](index=21&type=chunk) - Significant critical accounting estimates include valuation of hard-to-value fixed maturity securities, credit loss impairments, future policy benefit reserves, and property and casualty unpaid claims and claim expense reserves[26](index=26&type=chunk) - New accounting standards, ASU 2023-09 (Income Tax Disclosures) and ASU 2024-04 (Expense Disaggregation Disclosures), will be effective for the Company in future periods but are not expected to impact consolidated financial position, results of operations, or cash flows[27](index=27&type=chunk)[28](index=28&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk) [Note 2 - Investments](index=10&type=section&id=Note%202%20-%20Investments) Net investment income increased for the three months ended June 30, 2025, driven by limited partnership returns, while fixed maturity securities showed **$454.5 million** in gross unrealized losses due to interest rate changes | ($ in millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Fixed maturity securities | 59.4 | 72.0 | 131.0 | 142.4 | | Equity securities | 1.0 | 1.4 | 2.0 | 2.6 | | Limited partnership interests | 23.2 | 8.2 | 39.5 | 14.4 | | Short-term and other investments | 5.2 | 4.3 | 10.6 | 9.0 | | Investment expenses | (3.1) | (3.2) | (5.9) | (5.8) | | Net investment income - investment portfolio | 85.7 | 82.7 | 177.2 | 162.6 | | Investment income - deposit asset on reinsurance | 25.1 | 25.7 | 49.5 | 51.2 | | Total net investment income | 110.8 | 108.4 | 226.7 | 213.8 | | ($ in millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Fixed maturity securities | (4.1) | (2.3) | (3.9) | (3.3) | | Equity securities | (0.7) | (2.1) | (2.0) | 0.5 | | Short-term investments and other | (1.1) | (1.5) | (3.3) | (0.9) | | Net investment gains (losses) | (5.9) | (5.9) | (9.2) | (3.7) | - The Company's fixed maturity securities portfolio had **$454.5 million** in gross unrealized losses as of June 30, 2025, primarily due to interest rate changes, not credit losses. The Company expects to recover the entire amortized cost basis of these securities[36](index=36&type=chunk)[37](index=37&type=chunk) - As of June 30, 2025, **97.1%** of fixed maturity securities with gross unrealized losses for more than 12 months were investment grade[38](index=38&type=chunk) | Estimated Expected Maturity | Amortized Cost, net ($ millions) | Fair Value ($ millions) | Percent of Total Fair Value | | :------------------------ | :------------------------------- | :---------------------- | :-------------------------- | | Due in 1 year or less | 2,251.8 | 2,189.5 | 40.2% | | Due after 1 year through 5 years | 925.6 | 898.5 | 16.5% | | Due after 5 years through 10 years | 925.0 | 893.4 | 16.4% | | Due after 10 years through 20 years | 981.5 | 859.8 | 15.8% | | Due after 20 years | 763.5 | 612.1 | 11.2% | | Total | 5,847.4 | 5,453.3 | 100.0% | | Average option-adjusted duration, in years | 5.7 | | | - Fixed maturity securities with a fair value of **$1,127.7 million** were on deposit with the Federal Home Loan Bank of Chicago (FHLB) as collateral for funding agreements, advances, and borrowings as of June 30, 2025[47](index=47&type=chunk) [Note 3 - Fair Value of Financial Instruments](index=16&type=section&id=Note%203%20-%20Fair%20Value%20of%20Financial%20Instruments) Level 3 invested assets constituted **9.1%** of the total investment portfolio at fair value, with total financial assets measured at fair value reaching **$5,716.8 million** as of June 30, 2025 - As of June 30, 2025, Level 3 invested assets comprised **9.1%** of the Company's total investment portfolio at fair value[51](index=51&type=chunk) | Financial Assets | Carrying Amount ($ millions) | Fair Value ($ millions) | Level 1 ($ millions) | Level 2 ($ millions) | Level 3 ($ millions) | | :--------------- | :--------------------------- | :---------------------- | :------------------- | :------------------- | :------------------- | | Total fixed maturity securities | 5,453.3 | 5,453.3 | 29.8 | 4,942.4 | 481.1 | | Equity securities | 58.3 | 58.3 | 1.3 | 52.7 | 4.3 | | Limited partnership interests | 33.7 | 33.7 | — | — | 33.7 | | Short-term investments | 155.6 | 155.6 | 155.6 | — | — | | Other investments | 15.9 | 15.9 | — | 15.9 | — | | Totals (Financial Assets) | 5,716.8 | 5,716.8 | 186.7 | 5,011.0 | 519.1 | | Separate Account variable annuity assets | 3,863.3 | 3,863.3 | 3,863.3 | — | — | | Financial Liabilities | 78.1 | 78.1 | — | 4.1 | 74.0 | - For the six months ended June 30, 2025, the Company had net gains of **$4.9 million** with respect to Level 3 financial assets and net losses of **$5.6 million** attributable to changes in the fair value of Level 3 financial liabilities[54](index=54&type=chunk)[55](index=55&type=chunk) | Financial Instruments Not Carried at Fair Value | Carrying Amount ($ millions) | Fair Value ($ millions) | Level 1 ($ millions) | Level 2 ($ millions) | Level 3 ($ millions) | | :-------------------------------------------- | :--------------------------- | :---------------------- | :------------------- | :------------------- | :------------------- | | Other investments | 219.7 | 222.9 | — | 37.5 | 185.4 | | Deposit asset on reinsurance | 2,412.6 | 2,145.2 | — | — | 2,145.2 | | Policyholders' account balances | 5,090.9 | 4,726.0 | — | — | 4,726.0 | | Other policyholder funds | 1,005.8 | 1,005.8 | — | 1,002.9 | 2.9 | | Long-term debt | 547.5 | 577.1 | — | 577.1 | — | [Note 4 - Short-Duration Insurance Contracts](index=23&type=section&id=Note%204%20-%20Short-Duration%20Insurance%20Contracts) Property & Casualty and Group Benefits segments reported net favorable prior years' reserve development for the six months ended June 30, 2025, with total unpaid claims increasing to **$576.6 million** | ($ in millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net reserves, beginning of period | 318.4 | 314.6 | 319.8 | 312.8 | | Total claims and claim expenses incurred | 136.4 | 152.8 | 254.9 | 277.5 | | Total claims and claim expense payments | 133.7 | 136.2 | 253.6 | 259.1 | | Net reserves, end of period | 321.0 | 331.2 | 321.0 | 331.2 | - The Company recognized **$5.5 million** and **$10.8 million** of net favorable prior years' reserve development for Property & Casualty for the three and six months ended June 30, 2025, respectively, due to favorable loss trends in auto and property for accident years 2024 and prior[65](index=65&type=chunk) | ($ in millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net reserves, beginning of period | 83.1 | 86.7 | 79.7 | 88.9 | | Total claims and claim expenses incurred | 15.6 | 16.1 | 34.4 | 30.2 | | Total claims and claim expense payments | 11.3 | 14.7 | 26.7 | 31.0 | | Net reserves, end of period | 87.4 | 88.1 | 87.4 | 88.1 | - Net favorable prior years' reserve development for Group Benefits was **$2.6 million** for the six months ended June 30, 2025, primarily from favorable loss trends in group life and disability for loss years 2024 and prior[68](index=68&type=chunk) | ($ in millions) | As of June 30, 2025 | As of December 31, 2024 | | :-------------- | :------------------ | :---------------------- | | Property & Casualty | 419.8 | 420.6 | | Group Benefits | 113.2 | 104.9 | | Other than short-duration | 43.6 | 43.7 | | Total unpaid claims and claims expenses | 576.6 | 569.2 | [Note 5 - Long-Duration Insurance Contracts](index=24&type=section&id=Note%205%20-%20Long-Duration%20Insurance%20Contracts) Net liability for future policy benefits slightly increased to **$1,624.4 million**, while policyholders' account balances decreased and Separate Account variable annuity liabilities rose as of June 30, 2025 | ($ in millions) | June 30, 2025 | December 31, 2024 | | :-------------- | :------------ | :---------------- | | Whole life | 279.5 | 275.2 | | Term life | 141.0 | 131.8 | | Experience life | 743.1 | 746.6 | | Limited-pay whole life | 54.6 | 52.1 | | Supplemental health | 198.5 | 203.5 | | SPIA (life contingent) | 97.1 | 97.3 | | Limited-pay whole life DPL | 5.5 | 5.2 | | SPIA (life contingent) DPL | 1.5 | 1.5 | | Reconciling items | 103.7 | 109.6 | | Total LFPB | 1,624.4 | 1,622.8 | | ($ in millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Whole life | 7.4 | 6.9 | 14.4 | 13.8 | | Term life | 11.1 | 11.0 | 22.8 | 22.2 | | Experience life | 7.3 | 7.7 | 14.7 | 15.4 | | Limited-pay whole life | 1.6 | 1.6 | 3.4 | 3.4 | | Supplemental health | 31.2 | 30.0 | 62.1 | 60.4 | | SPIA (life contingent) | 0.7 | 0.5 | 1.3 | 1.7 | | Total | 59.3 | 57.7 | 118.7 | 116.9 | | ($ in millions) | June 30, 2025 | December 31, 2024 | | :-------------- | :------------ | :---------------- | | Indexed universal life | 82.3 | 72.9 | | Experience Life | 56.5 | 58.0 | | Fixed account annuities | 4,495.1 | 4,508.4 | | Fixed indexed account annuities | 388.6 | 409.5 | | SPIA (non-life contingent) | 27.9 | 28.6 | | Reconciling items | 26.0 | 22.9 | | Total | 5,076.4 | 5,100.3 | | ($ in millions) | June 30, 2025 | December 31, 2024 | | :-------------- | :------------ | :---------------- | | Balance, end of period | 3,863.3 | 3,708.8 | | ($ in millions) | June 30, 2025 | December 31, 2024 | | :-------------- | :------------ | :---------------- | | Whole life | 24.6 | 23.8 | | Term life | 34.8 | 34.2 | | Experience life | 5.4 | 5.5 | | Limited pay whole life | 8.1 | 8.0 | | Indexed universal life | 20.3 | 19.2 | | Supplemental health | 12.1 | 10.6 | | Total annuities | 209.4 | 211.4 | | Reconciling item | 36.7 | 34.5 | | Total | 351.4 | 347.2 | - The Company reviewed significant assumptions for mortality and lapses in Q2 2025 and Q2 2024 and found actual experience materially consistent with underlying assumptions, thus no changes to future assumptions were made[89](index=89&type=chunk) [Note 6 - Reinsurance](index=41&type=section&id=Note%206%20-%20Reinsurance) The Company recognizes reinsurance costs over contract periods and estimates recoverable amounts from reinsurers consistent with insurance liabilities. For the six months ended June 30, 2025, net premiums written and contract deposits were **$812.0 million**, net premiums and contract charges earned were **$600.9 million**, and benefits, claims, and settlement expenses were **$366.7 million**, reflecting the impact of reinsurance activities | ($ in millions) | Direct Amount | Ceded to Other Companies | Assumed from Other Companies | Net Amount | | :-------------- | :------------ | :----------------------- | :--------------------------- | :--------- | | Net premiums written and contract deposits | 830.3 | 30.5 | 12.2 | 812.0 | | Net premiums and contract charges earned | 618.6 | 29.7 | 12.0 | 600.9 | | Benefits, claims and settlement expenses | 381.7 | 22.0 | 7.0 | 366.7 | [Note 7 - Segment Information](index=42&type=section&id=Note%207%20-%20Segment%20Information) The Company manages its business through four segments, with Property & Casualty, Life & Retirement, and Supplemental & Group Benefits reporting positive core earnings for the six months ended June 30, 2025 - The Company's Chief Operating Officer (CODM) reviews financial performance and allocates resources based on core earnings, which excludes after-tax impacts of net investment gains/losses, discontinued operations, impairments, and non-recurring items[93](index=93&type=chunk) | ($ in millions) | Property & Casualty | Life & Retirement | Supplemental & Group Benefits | Corporate & Other | Totals | | :-------------- | :------------------ | :---------------- | :---------------------------- | :---------------- | :----- | | Net premiums and contract charges earned | 197.3 | 39.6 | 65.7 | — | 302.6 | | Net investment income | 14.9 | 97.2 | 10.6 | (1.6) | 121.1 | | Total segment revenues | 212.9 | 141.7 | 74.4 | (1.1) | 427.9 | | Total segment expenses | 191.6 | 111.5 | 57.3 | 12.4 | 372.8 | | Pretax profit (loss) | 21.3 | 30.2 | 17.1 | (13.5) | 55.1 | | Segment profit (loss) (Core earnings) | 16.5 | 24.6 | 13.4 | (10.3) | 44.2 | | Net income | 16.5 | 20.0 | 7.9 | (15.0) | 29.4 | | ($ in millions) | Property & Casualty | Life & Retirement | Supplemental & Group Benefits | Corporate & Other | Totals | | :-------------- | :------------------ | :---------------- | :---------------------------- | :---------------- | :----- | | Net premiums and contract charges earned | 390.0 | 78.1 | 132.8 | — | 600.9 | | Net investment income | 26.6 | 186.2 | 20.0 | 4.1 | 236.9 | | Total segment revenues | 418.6 | 274.0 | 149.8 | 5.1 | 847.5 | | Total segment expenses | 363.9 | 234.1 | 114.8 | 23.8 | 736.6 | | Pretax profit (loss) | 54.7 | 39.9 | 35.0 | (18.7) | 110.9 | | Segment profit (loss) (Core earnings) | 43.3 | 32.5 | 27.4 | (14.3) | 89.0 | | Net income | 43.3 | 26.8 | 19.1 | (21.6) | 67.6 | | ($ in millions) | June 30, 2025 | December 31, 2024 | | :-------------- | :------------ | :---------------- | | Property & Casualty | 1,335.2 | 1,272.3 | | Life & Retirement | 11,865.7 | 11,670.7 | | Supplemental & Group Benefits | 1,370.2 | 1,377.6 | | Corporate & Other | 193.5 | 191.0 | | Intersegment eliminations | (36.3) | (23.8) | | Total | 14,728.3 | 14,487.8 | [Note 8 - Accumulated Other Comprehensive Income (Loss)](index=49&type=section&id=Note%208%20-%20Accumulated%20Other%20Comprehensive%20Income%20(Loss)) AOCI improved to **$(217.1) million** as of June 30, 2025, primarily due to a positive change in net unrealized investment gains on fixed maturity securities | ($ in millions) | Net Unrealized Investment Gains (Losses) on Fixed Maturity Securities | Net Reserve Remeasurements Attributable to Discount Rates | Net Funded Status of Benefit Plans | Total | | :-------------- | :------------------------------------------------------------------ | :-------------------------------------------------------- | :--------------------------------- | :---- | | Beginning balance, January 1, 2025 | (357.4) | 110.9 | (7.0) | (253.5) | | Net current period other comprehensive income (loss) | 47.5 | (11.1) | — | 36.4 | | Ending balance, June 30, 2025 | (309.9) | 99.8 | (7.0) | (217.1) | [Note 9 - Supplemental Consolidated Cash and Cash Flow Information](index=50&type=section&id=Note%209%20-%20Supplemental%20Consolidated%20Cash%20and%20Cash%20Flow%20Information) Total cash and restricted cash increased to **$40.9 million** as of June 30, 2025, with cash paid for interest at **$16.9 million** and income taxes at **$21.5 million** for the six months | ($ in millions) | June 30, 2025 | December 31, 2024 | | :-------------- | :------------ | :---------------- | | Cash | 38.7 | 33.1 | | Restricted cash | 2.2 | 5.0 | | Total cash and restricted cash | 40.9 | 38.1 | | ($ in millions) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------- | :----------------------------- | :----------------------------- | | Interest | 16.9 | 16.8 | | Income taxes | 21.5 | 13.3 | [Note 10 - Contingencies and Commitments](index=50&type=section&id=Note%2010%20-%20Contingencies%20and%20Commitments) The Company faces legal proceedings related to legacy commercial lines policies, recording **$15.7 million** in Q4 2024 for these liabilities, and has **$423.0 million** in unfunded investment commitments - Horace Mann Insurance Company (HMIC) is defending against litigation and investigating claims related to legacy, long-tail commercial lines policies (asbestos, environmental, sexual molestation) from the late 1960s and early 1970s, following the liquidation of R&Q Reinsurance Company[106](index=106&type=chunk)[107](index=107&type=chunk) - In Q4 2024, the Company recorded **$15.7 million** (after-tax) in costs related to these non-core legacy commercial liability policies[108](index=108&type=chunk) - Unfunded commitments to fund investments, primarily in limited partnership interests, were **$423.0 million** as of June 30, 2025, down from $449.9 million at December 31, 2024[109](index=109&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=51&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This MD&A analyzes the Company's financial condition, operational results, corporate strategy, and future outlook, including critical accounting estimates and liquidity [Introduction](index=51&type=section&id=Introduction) This introduction provides context for the MD&A, clarifying non-GAAP measures and forward-looking statements, and directs readers to other financial reports for additional information [Corporate Strategy](index=51&type=section&id=Corporate%20Strategy) Horace Mann aims to be the preferred provider of insurance and financial solutions for educators, operating through four distinct reporting segments - Horace Mann's vision is to be the company of choice for insurance and financial solutions for educators and those who serve their communities, providing tailored solutions for lifelong financial success[116](index=116&type=chunk)[117](index=117&type=chunk) - The Company manages its business through four reporting segments: Property & Casualty, Life & Retirement, Supplemental & Group Benefits, and Corporate & Other[118](index=118&type=chunk) [Consolidated Financial Highlights](index=52&type=section&id=Consolidated%20Financial%20Highlights) Total revenues increased by **6.1%** for the three months ended June 30, 2025, with net income surging by **673.7%**, driven by improved Property & Casualty results and lower catastrophe losses | Metric | 3 Months Ended June 30, 2025 ($ millions) | 3 Months Ended June 30, 2024 ($ millions) | % Change (3 Months) | 6 Months Ended June 30, 2025 ($ millions) | 6 Months Ended June 30, 2024 ($ millions) | % Change (6 Months) | | :----- | :---------------------------------------- | :---------------------------------------- | :------------------ | :---------------------------------------- | :---------------------------------------- | :------------------ | | Total revenues | 411.7 | 388.1 | 6.1% | 828.1 | 774.1 | 7.0% | | Net income | 29.4 | 3.8 | 673.7% | 67.6 | 30.3 | 123.1% | | Net Investment gains (losses), after tax | (4.7) | (4.6) | -2.2% | (7.3) | (2.9) | 151.7% | | Per diluted share: Net income | 0.71 | 0.09 | 688.9% | 1.63 | 0.73 | 123.3% | | Book value per share (as of June 30, 2025 / Dec 31, 2024) | | | | 33.31 | 29.60 | 12.5% | | Net income return on equity - annualized | 8.7% | 1.3% | 7.4 pts | 10.2% | 5.1% | 5.1 pts | - Net income increased primarily due to improved Property & Casualty segment results, reflecting the effect of rate and non-rate underwriting actions, and lower catastrophe losses[119](index=119&type=chunk) [Consolidated Results of Operations](index=53&type=section&id=Consolidated%20Results%20of%20Operations) Total revenues increased by **6.1%** for the three months and **7.0%** for the six months ended June 30, 2025, with net income growing substantially due to lower expenses and improved investment performance | ($ in millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | % Change (3 Months) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | % Change (6 Months) | | :-------------- | :--------------------------- | :--------------------------- | :------------------ | :--------------------------- | :--------------------------- | :------------------ | | Net premiums and contract charges earned | 302.6 | 280.9 | 7.7% | 600.9 | 556.1 | 8.1% | | Net investment income | 110.8 | 108.4 | 2.2% | 226.7 | 213.8 | 6.0% | | Net investment gains (losses) | (5.9) | (5.9) | —% | (9.2) | (3.7) | N.M. | | Total revenues | 411.7 | 388.1 | 6.1% | 828.1 | 774.1 | 7.0% | | Benefits, claims and settlement expenses | 183.5 | 207.3 | -11.5% | 366.7 | 383.6 | -4.4% | | Operating expenses | 96.9 | 83.0 | 16.7% | 187.7 | 167.5 | 12.1% | | Net income | 29.4 | 3.8 | 673.7% | 67.6 | 30.3 | 123.1% | - Net premiums and contract charges earned increased by **7.7%** for the three months and **8.1%** for the six months ended June 30, 2025, primarily due to rate and inflation adjustments in the Property & Casualty segment[122](index=122&type=chunk) - Total net investment income increased by **$2.4 million** for the three months and **$12.9 million** for the six months ended June 30, 2025, driven by strong returns from the fixed income portfolio and higher returns from commercial mortgage loan and limited partnership funds[123](index=123&type=chunk) - Benefits, claims and settlement expenses decreased by **$23.8 million** for the three months and **$16.9 million** for the six months ended June 30, 2025, due to lower catastrophe losses and underlying losses in the Property & Casualty segment, as well as lower life mortality[128](index=128&type=chunk) - Operating expenses increased by **16.7%** for the three months and **12.1%** for the six months, reflecting inflation, investments in growth initiatives and infrastructure, and increased compensation accruals[130](index=130&type=chunk) - The effective income tax rate was **19.5%** for the six months ended June 30, 2025, with tax-advantaged securities decreasing the rate by **2.4 percentage points**[134](index=134&type=chunk) [Outlook for 2025](index=55&type=section&id=Outlook%20for%202025) The Company projects 2025 full-year core earnings between **$4.15 and $4.45** per diluted share, targeting a core return on equity of **10%+**, with specific segment profitability and catastrophe loss estimates - Estimated 2025 full-year core earnings* are projected to be **$4.15 to $4.45 per diluted share**, aiming for a core return on equity* of **10%+**[139](index=139&type=chunk) - Property & Casualty segment targets include an Auto Combined Ratio in the **mid-90s** and Property at **90 or below**, with approximately **$90 million** in catastrophe losses[140](index=140&type=chunk) - Life & Retirement segment targets a long-term net interest spread between **220 and 230 bps** and mortality in line with actuarial assumptions[140](index=140&type=chunk) - Supplemental & Group Benefits segment targets a blended benefit ratio of **39%**[140](index=140&type=chunk) - Net investment income is projected to be between **$470 million and $480 million** pre-tax[140](index=140&type=chunk) [Application of Critical Accounting Estimates](index=56&type=section&id=Application%20of%20Critical%20Accounting%20Estimates) Significant estimates for financial statements include valuation of fixed maturity securities, credit loss impairments, future policy benefit reserves, and property and casualty unpaid claims - Critical accounting estimates include valuation of hard-to-value fixed maturity securities, evaluation of credit loss impairments for fixed maturity securities, valuation of future policy benefit reserves, and valuation of liabilities for property and casualty unpaid claims and claim expense reserves[143](index=143&type=chunk) - As of June 30, 2025, there were no material changes to accounting policies for areas most subject to significant management judgments compared to December 31, 2024[142](index=142&type=chunk) [Results of Operations by Segment](index=57&type=section&id=Results%20of%20Operations%20by%20Segment) This section details the financial performance of the Company's four reporting segments, analyzing key revenue, expense, and profitability drivers for the current and prior periods [Property & Casualty](index=57&type=section&id=Property%20%26%20Casualty) The Property & Casualty segment reported improved net income for the three and six months ended June 30, 2025, driven by increased premiums, lower underlying loss ratios, and reduced catastrophe losses - Property & Casualty segment net income for the three and six months ended June 30, 2025, was **$16.5 million** and **$43.3 million**, respectively, reflecting positive effects of rate and non-rate actions and lower catastrophe losses[151](index=151&type=chunk) - Net premiums written increased by **6.1%** for the quarter, with average written premiums rising for both property and auto. Sales were up **5.5%** from the prior year[152](index=152&type=chunk) - Catastrophe losses for the quarter were **$29.7 million** (pretax), contributing **15.0 points** to the combined ratio, down from $40.9 million (**22.8 points**) in Q2 2024, due to lower frequency and severity of claims[153](index=153&type=chunk) - The second-quarter auto underlying loss ratio improved by **5.5 points** to **68.7%**, benefiting from higher average earned premium. Average written premiums for auto policies increased by **8.8%**[154](index=154&type=chunk) - The second-quarter property underlying loss ratio decreased by **14.1 points** to **36.8%**, reflecting increased average earned premium and lower frequency and severity. Average written premiums for property policies increased by **11.6%**[155](index=155&type=chunk) | Metric | 3 Months Ended June 30, 2025 ($ millions) | 3 Months Ended June 30, 2024 ($ millions) | % Change (3 Months) | 6 Months Ended June 30, 2025 ($ millions) | 6 Months Ended June 30, 2024 ($ millions) | % Change (6 Months) | | :----- | :---------------------------------------- | :---------------------------------------- | :------------------ | :---------------------------------------- | :---------------------------------------- | :------------------ | | Net premiums written* | 211.4 | 199.2 | 6.1% | 396.7 | 371.3 | 6.8% | | Net premiums earned | 197.3 | 179.2 | 10.1% | 390.0 | 352.4 | 10.7% | | Total losses and loss adjustment expenses | 136.5 | 152.8 | -10.7% | 254.8 | 277.5 | -8.2% | | Underwriting gain (loss) | 5.7 | (20.6) | 127.7% | 26.1 | (20.5) | N.M. | | Net income (loss) | 16.5 | (8.6) | 291.9% | 43.3 | 2.0 | 2,065.0% | | Auto Combined ratio | 98.5% | 97.2% | 1.3 pts | 96.8% | 99.0% | -2.2 pts | | Property Combined ratio | 94.6% | 136.3% | -41.7 pts | 87.3% | 117.5% | -30.2 pts | [Life & Retirement](index=60&type=section&id=Life%20%26%20Retirement) The Life & Retirement segment's net income increased by **62.6%** for the three months ended June 30, 2025, primarily due to lower life mortality costs and higher net investment income - Life & Retirement segment net income increased by **62.6%** for the three months and **11.7%** for the six months ended June 30, 2025, primarily due to favorable benefits from lower life mortality costs and higher net investment income[163](index=163&type=chunk) - Net annuity contract deposits increased by **7.8%** for the quarter to **$110.2 million**[164](index=164&type=chunk) - The Company manages interest rate risk by coordinating asset and liability cash flows and durations. A **100 basis point** decline in the average reinvestment rate is estimated to reduce net investment income by **$2.4 million** in year one and **$4.7 million** in year two[166](index=166&type=chunk)[167](index=167&type=chunk)[168](index=168&type=chunk) | Metric | 3 Months Ended June 30, 2025 ($ millions) | 3 Months Ended June 30, 2024 ($ millions) | % Change (3 Months) | 6 Months Ended June 30, 2025 ($ millions) | 6 Months Ended June 30, 2024 ($ millions) | % Change (6 Months) | | :----- | :---------------------------------------- | :---------------------------------------- | :------------------ | :---------------------------------------- | :---------------------------------------- | :------------------ | | Net premiums written and contract deposits* | 141.7 | 133.6 | 6.1% | 282.0 | 265.2 | 6.3% | | Total revenues | 134.9 | 131.5 | 2.6% | 267.3 | 259.9 | 2.8% | | Benefits and change in reserves | 24.2 | 31.0 | -21.9% | 62.2 | 60.9 | 2.1% | | Net income | 20.0 | 12.3 | 62.6% | 26.8 | 24.0 | 11.7% | | Core earnings* | 24.6 | 12.3 | 100.0% | 32.5 | 22.2 | 46.4% | | Life insurance in force ($ billions) | | | | 21.2 | 20.8 | 2.2% | | Annuity contracts in force (thousands) | | | | 215 | 220 | -2.3% | [Supplemental & Group Benefits](index=63&type=section&id=Supplemental%20%26%20Group%20Benefits) The Supplemental & Group Benefits segment's net income decreased for the three and six months ended June 30, 2025, due to lower net investment income and higher operating expenses, despite increased individual product sales - Supplemental & Group Benefits segment net income decreased for the three and six months ended June 30, 2025, due to lower net investment income and higher operating expenses from growth investments[173](index=173&type=chunk) - Individual supplemental product sales increased by **42.5%** for the quarter, contributing to a total sales increase of **$0.4 million** for the three months ended June 30, 2025[175](index=175&type=chunk) | Metric | 3 Months Ended June 30, 2025 ($ millions) | 3 Months Ended June 30, 2024 ($ millions) | % Change (3 Months) | 6 Months Ended June 30, 2025 ($ millions) | 6 Months Ended June 30, 2024 ($ millions) | % Change (6 Months) | | :----- | :---------------------------------------- | :---------------------------------------- | :------------------ | :---------------------------------------- | :---------------------------------------- | :------------------ | | Net premiums and contract charges earned | 65.7 | 63.7 | 3.1% | 132.8 | 127.9 | 3.8% | | Net investment income | 7.1 | 10.5 | -32.4% | 16.5 | 18.3 | -9.8% | | Total revenues | 70.9 | 73.0 | -2.9% | 146.3 | 142.0 | 3.0% | | Benefits, settlement expenses and change in reserves | 24.0 | 24.7 | -2.8% | 52.1 | 47.5 | 9.7% | | Net income | 7.9 | 14.1 | -44.0% | 19.1 | 25.1 | -23.9% | | Core earnings* | 13.4 | 17.0 | -21.2% | 27.4 | 30.8 | -11.0% | | Benefits ratio | 36.7% | 38.8% | -2.1 pts | 39.3% | 37.2% | 2.1 pts | | Operating expense ratio | 46.7% | 36.6% | 10.1 pts | 42.8% | 39.0% | 3.8 pts | [Corporate & Other](index=65&type=section&id=Corporate%20%26%20Other) The Corporate & Other segment reported net losses for both the three and six months ended June 30, 2025, primarily due to lower net investment income and higher operating expenses - The Corporate & Other segment's net loss for the three and six months ended June 30, 2025, was **$15.0 million** and **$21.6 million**, respectively, primarily due to lower net investment income and higher net investment losses and operating expenses[177](index=177&type=chunk) | Metric | 3 Months Ended June 30, 2025 ($ millions) | 3 Months Ended June 30, 2024 ($ millions) | % Change (3 Months) | 6 Months Ended June 30, 2025 ($ millions) | 6 Months Ended June 30, 2024 ($ millions) | % Change (6 Months) | | :----- | :---------------------------------------- | :---------------------------------------- | :------------------ | :---------------------------------------- | :---------------------------------------- | :------------------ | | Total revenues | (1.1) | 0.2 | -650.0% | 5.1 | 0.4 | N.M. | | Total expenses | 12.4 | 12.1 | 2.5% | 23.8 | 23.0 | 3.5% | | Loss before income taxes | (13.5) | (11.9) | -13.4% | (18.7) | (22.6) | 17.3% | | Core loss* after tax | (10.3) | (9.4) | -9.6% | (14.3) | (17.9) | 20.1% | | Net investment gains (losses), after tax | (4.7) | (4.6) | -2.2% | (7.3) | (2.9) | N.M. | | Net loss | (15.0) | (14.0) | -7.1% | (21.6) | (20.8) | -3.8% | [Investment Results](index=65&type=section&id=Investment%20Results) Net investment income from the managed portfolio increased for the three and six months ended June 30, 2025, while pretax net unrealized investment losses on fixed maturity securities decreased to **$394.1 million** - Net investment income from the managed investment portfolio increased by **$3.0 million** for the three months and **$14.6 million** for the six months ended June 30, 2025, primarily due to higher returns in limited partnerships[179](index=179&type=chunk) - Pretax net unrealized investment losses on fixed maturity securities decreased by **$77.0 million (30.6%)** to **$394.1 million** as of June 30, 2025, compared to December 31, 2024, mainly due to a decrease in US Treasury rates[181](index=181&type=chunk)[188](index=188&type=chunk) - As of June 30, 2025, the diversified fixed maturity securities portfolio totaled approximately **$5.5 billion** in fair value, with **97.2%** being investment grade and an average quality rating of **AA-**[184](index=184&type=chunk) | ($ in millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | % Change (3 Months) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | % Change (6 Months) | | :-------------- | :--------------------------- | :--------------------------- | :------------------ | :--------------------------- | :--------------------------- | :------------------ | | Net investment income - managed investment portfolio | 85.7 | 82.7 | 3.6% | 177.2 | 162.6 | 9.0% | | Investment income - deposit asset on reinsurance | 25.1 | 25.7 | -2.3% | 49.5 | 51.2 | -3.3% | | Total net investment income | 110.8 | 108.4 | 2.2% | 226.7 | 213.8 | 6.0% | | Pretax net investment gains (losses) | (5.9) | (5.9) | —% | (9.2) | (3.7) | 148.6% | | Rating Category | Fair Value ($ millions) | Percent of Portfolio Fair Value | | :-------------- | :---------------------- | :------------------------------ | | AAA | 631.8 | 11.6% | | AA | 2,377.1 | 43.6% | | A | 1,094.4 | 20.1% | | BBB | 1,071.1 | 19.6% | | BB | 80.4 | 1.5% | | B | 32.9 | 0.6% | | CCC or lower | 2.0 | —% | | Not rated | 163.6 | 3.0% | | Total fixed maturity securities | 5,453.3 | 100.0% | | Total equity securities | 58.3 | | | Total combined portfolios | 5,511.6 | | [Liquidity and Capital Resources](index=69&type=section&id=Liquidity%20and%20Capital%20Resources) Net cash provided by operating activities significantly increased to **$272.1 million** for the six months ended June 30, 2025, with total capital at **$1,907.8 million** and a debt-to-total capital ratio of **28.7%** - The Company's liquidity and access to capital were not materially impacted by inflation or changes in interest rates during the three and six months ended June 30, 2025[189](index=189&type=chunk) - Net cash provided by operating activities increased by **$157.4 million** to **$272.1 million** for the six months ended June 30, 2025[194](index=194&type=chunk) - Net cash used in financing activities increased by **$154.7 million** for the six months ended June 30, 2025, primarily due to increased net cash outflow from reverse repurchase agreements, deposit asset on reinsurance, benefits/withdrawals from variable annuities, and FHLB funding agreements[199](index=199&type=chunk) - Total capital was **$1,907.8 million** as of June 30, 2025, including **$547.5 million** of long-term debt. The debt-to-total capital ratio was **28.7%** (**25.9%** excluding net unrealized investment losses and reserve remeasurements), slightly above the long-term target of **25.0%**[208](index=208&type=chunk) - Shareholders' equity was **$1,360.3 million** as of June 30, 2025. Book value per share was **$33.31**, and adjusted book value per share was **$38.46**[209](index=209&type=chunk) - The Company has a **$325.0 million** Revolving Credit Facility available, expiring May 19, 2030, and a universal shelf registration statement filed in March 2024 for capital management flexibility[213](index=213&type=chunk)[216](index=216&type=chunk) | ($ in millions) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | % Change | | :-------------- | :----------------------------- | :----------------------------- | :------- | | Net cash provided by operating activities | 272.1 | 114.7 | 137.2% | | Net cash used in Investing Activities | (72.0) | (87.2) | -17.4% | | Net cash used in Financing Activities | (197.3) | (42.6) | 363.1% | | Net decrease in cash | 2.8 | (15.1) | -118.5% | | Cash at end of period | 40.9 | 14.6 | 180.1% | | Debt Type | Interest Rates | Final Maturity | June 30, 2025 ($ millions) | December 31, 2024 ($ millions) | | :-------- | :------------- | :------------- | :------------------------- | :----------------------------- | | Revolving Credit Facility | Variable | 2026 | — | — | | 7.25% 2023 Senior Notes | 7.25% | 2028 | 297.6 | 297.3 | | 4.50% 2015 Senior Notes | 4.50% | 2025 | 249.9 | 249.7 | | Total Long-term debt | | | 547.5 | 547.0 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=75&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The Company's primary market risk exposure is market value risk, influenced by changes in investment yields and interest rates, managed through asset-liability coordination and diversification - The primary market risk exposure is market value risk, which can arise from changes in investment yields, liquidity, issuer financial prospects, or credit rating downgrades[221](index=221&type=chunk) - Significant changes in interest rates expose the Company to the risk of losses or reduced income due to differences between interest rates earned on investments and credited rates on insurance and investment contract liabilities[222](index=222&type=chunk) - The Company manages market value risk by coordinating projected cash inflows of assets with projected cash outflows of liabilities, maintaining reasonable durations, and ensuring investment quality, liquidity, and diversification[223](index=223&type=chunk) [Item 4. Controls and Procedures](index=76&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material weaknesses or significant changes in internal control - As of June 30, 2025, the CEO and CFO concluded that the Company's disclosure controls and procedures were effective[225](index=225&type=chunk) - No material weaknesses in disclosure controls and procedures were identified, and no significant changes in internal control over financial reporting occurred during the period[225](index=225&type=chunk)[226](index=226&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings](index=77&type=section&id=Item%201.%20Legal%20Proceedings) Details regarding noteworthy litigation are referenced in Note 10 of the Consolidated Financial Statements within Part I - Item 1 of this report - Noteworthy litigation details are provided in Note 10 of the Consolidated Financial Statements[229](index=229&type=chunk) [Item 1A. Risk Factors](index=77&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, have occurred - No material changes to risk factors have occurred since the Annual Report on Form 10-K for the year ended December 31, 2024[230](index=230&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=77&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Board authorized a new **$50 million** share repurchase program on May 13, 2025, following the existing program, under which **175,492 shares** were repurchased during the quarter - The Board authorized a new **$50 million** share repurchase program (2025 Program) on May 13, 2025, to follow the completion of the existing 2022 Program[231](index=231&type=chunk) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Approximate Dollar Value of Shares that may yet be Purchased under the Program ($ millions) | | :----- | :------------------------------- | :--------------------------- | :---------------------------------------------------------------------------------------- | | April 1 - 30 | 175,192 | 40.14 | 19.2 | | May 1 - 31 | 300 | 40.02 | 69.2 | | June 1 - 30 | — | — | 69.2 | | Total | 175,492 | 40.14 | 69.2 | [Item 5. Other Information](index=77&type=section&id=Item%205.%20Other%20Information) No executive officers or directors adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2025 - No executive officers or directors adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2025[233](index=233&type=chunk) [Item 6. Exhibits](index=78&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including the Fourth Amendment to Credit Agreement and various certifications | Exhibit No. | Description | | :---------- | :---------- | | 10.1 | Fourth Amendment to Credit Agreement dated as of May 19, 2025 | | 31.1 | Certification by Marita Zuraitis, Chief Executive Officer of HMEC | | 31.2 | Certification by Ryan E. Greenier, Chief Financial Officer of HMEC | | 32.1 | Certification by Marita Zuraitis, Chief Executive Officer of HMEC | | 32.2 | Certification by Ryan E. Greenier, Chief Financial Officer of HMEC | | 99.1 | Glossary of Selected Terms | | 101.INS | XBRL Instance Document | | 101.SCH | XBRL Taxonomy Extension Schema | | 101.CAL | XBRL Taxonomy Extension Calculation Linkbase | | 101.DEF | XBRL Taxonomy Extension Definition Linkbase | | 101.LAB | XBRL Taxonomy Extension Label Linkbase | | 101.PRE | XBRL Taxonomy Extension Presentation Linkbase | SIGNATURES [SIGNATURES](index=79&type=section&id=SIGNATURES) This section contains the signatures of the authorized representatives of Horace Mann Educators Corporation, certifying the filing of the report on August 6, 2025 - The report was signed by Marita Zuraitis (President and CEO), Ryan E. Greenier (EVP and CFO), and Maureen Temchuk (VP, Controller and CAO) on August 6, 2025[237](index=237&type=chunk)

Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION For the quarterly period ended June 30, 2025 OR ☐ 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: 0-11487 LAKELAND FINANCIAL CORPORATION (Exact name of registrant as specified in its charter) (Sta ...

PART I—FINANCIAL INFORMATION [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents Verra Mobility's unaudited condensed consolidated financial statements for the period ended June 30, 2025, including balance sheets, statements of operations, stockholders' equity, and cash flows, with detailed notes on accounting policies and financial positions [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets increased to $1.695 billion from $1.614 billion at year-end 2024, driven by a significant rise in cash and cash equivalents, while total liabilities remained stable and total stockholders' equity grew due to net income Key Balance Sheet Items (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $147,651 | $77,560 | | Accounts receivable, net | $217,359 | $206,503 | | Goodwill | $742,390 | $735,615 | | Total assets | $1,695,432 | $1,614,489 | | **Liabilities & Equity** | | | | Long-term debt, net | $1,031,430 | $1,034,211 | | Total liabilities | $1,343,330 | $1,349,364 | | Total stockholders' equity | $352,102 | $265,125 | [Condensed Consolidated Statements of Operations and Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) For the three months ended June 30, 2025, total revenue increased 6.1% year-over-year to $236.0 million, and net income grew 12.7% to $38.6 million, with diluted EPS rising to $0.24 Q2 Financial Performance (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenue | $236,025 | $222,426 | +6.1% | | Income from Operations | $63,194 | $61,169 | +3.3% | | Net Income | $38,575 | $34,223 | +12.7% | | Diluted EPS | $0.24 | $0.20 | +20.0% | Six-Month Financial Performance (in thousands, except per share data) | Metric | H1 2025 | H1 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenue | $459,279 | $432,156 | +6.3% | | Income from Operations | $120,579 | $115,522 | +4.4% | | Net Income | $70,914 | $63,372 | +11.9% | | Diluted EPS | $0.44 | $0.38 | +15.8% | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash provided by operating activities significantly increased to $138.1 million, while net cash used in investing activities rose due to higher equipment purchases, and cash used in financing activities decreased due to lower share repurchase activity Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $138,113 | $74,368 | | Net cash used in investing activities | ($56,019) | ($27,677) | | Net cash used in financing activities | ($10,920) | ($60,917) | | **Net increase (decrease) in cash** | **$72,771** | **($14,324)** | [Notes to the Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) The notes provide details on the company's business segments, significant accounting policies, and financial statement line items, including customer concentrations, goodwill, intangible assets, long-term debt, and segment-level financial performance - The company operates through three segments: Commercial Services (toll/violations management), Government Solutions (photo enforcement), and Parking Solutions (software/hardware)[28](index=28&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk) - Significant customer concentration exists: for the six months ended June 30, 2025, NYCDOT represented **15.0%** of total revenue, and three Commercial Services customers represented **15.2%**, **11.5%**, and **10.6%** of total revenue, respectively[36](index=36&type=chunk)[37](index=37&type=chunk) - As of June 30, 2025, the Government Solutions segment had remaining performance obligations of **$169.5 million**, with **$75.9 million** expected to be recognized as revenue in the next twelve months[43](index=43&type=chunk) Segment Revenue and Profit (Six Months Ended June 30, 2025, in thousands) | Segment | Total Revenue | Segment Profit | | :--- | :--- | :--- | | Commercial Services | $210,439 | $135,139 | | Government Solutions | $208,922 | $59,500 | | Parking Solutions | $39,918 | $6,122 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the financial results for the three and six months ended June 30, 2025, highlighting a 6.3% year-over-year revenue increase for the six-month period to $459.3 million, driven by increased travel volume and enforcement program expansion, alongside recent events, liquidity, capital resources, and debt obligations - Total revenue for the six months ended June 30, 2025, increased by **6.3%** to **$459.3 million**, driven by growth in the Commercial Services and Government Solutions segments[103](index=103&type=chunk) - The company is in contract negotiations with NYCDOT for a new five-year contract expected to commence after the current one expires in December 2025, where a material change in terms could adversely affect financial results[104](index=104&type=chunk)[12](index=12&type=chunk) - A new **$100.0 million** share repurchase program was authorized on May 17, 2025, valid until November 2026, following the conclusion of the previous ASR program in March 2025[107](index=107&type=chunk) - The company's Revolving Credit Agreement commitment was increased from **$75.0 million** to **$125.0 million** in May 2025, with no outstanding borrowings as of June 30, 2025[105](index=105&type=chunk)[159](index=159&type=chunk) [Results of Operations](index=29&type=section&id=Results%20of%20Operations) For Q2 2025, revenue grew 6.1% year-over-year, driven by increases in Commercial Services and Government Solutions service revenue, while operating expenses rose 8.6% due to higher subcontractor costs, and net income increased 12.7% to $38.6 million, aided by reduced net interest expense Q2 2025 vs Q2 2024 Revenue by Segment (in thousands) | Segment | Q2 2025 Revenue | Q2 2024 Revenue | YoY Change | | :--- | :--- | :--- | :--- | | Commercial Services | $109,050 | $103,985 | +4.9% | | Government Solutions | $107,100 | $97,715 | +9.6% | | Parking Solutions | $19,875 | $20,726 | -4.1% | - The increase in Government Solutions service revenue was primarily driven by the expansion of bus lane and school bus stop arm enforcement programs, contributing **$4.6 million** in Q2 2025[127](index=127&type=chunk) - Net interest expense for Q2 2025 decreased by **$2.2 million** year-over-year to **$16.6 million**, attributed to voluntary debt prepayments and a lower interest rate from the October 2024 refinancing[133](index=133&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) The company's primary liquidity sources are cash from operations and its Revolver, with $147.7 million cash on hand and $123.9 million available under the upsized $125.0 million Revolver as of June 30, 2025, alongside early debt repayments and a new $100 million share repurchase program - Cash and cash equivalents stood at **$147.7 million** as of June 30, 2025[159](index=159&type=chunk) - The company increased its Revolver commitment to **$125.0 million** in May 2025 and had **$123.9 million** available for borrowing as of June 30, 2025[159](index=159&type=chunk) - The final settlement of the December 2024 Accelerated Share Repurchase (ASR) agreement occurred on March 3, 2025, with the company receiving an additional **685,934 shares**[162](index=162&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate risk associated with its variable-rate 2021 Term Loan, which had an outstanding balance of $691.1 million at a 6.6% interest rate as of June 30, 2025, with a 1% interest rate change estimated to impact annual interest expense by approximately $6.9 million, following the cancellation of its interest rate swap agreement in Q3 2024 - The company is exposed to interest rate risk from its variable-rate 2021 Term Loan, with a balance of **$691.1 million** at June 30, 2025[183](index=183&type=chunk)[184](index=184&type=chunk) - A **1%** movement in interest rates is estimated to change annual interest expense by approximately **$6.9 million**[185](index=185&type=chunk) - The company's interest rate swap agreement was canceled in Q3 2024, leaving it unhedged against interest rate fluctuations on its term loan[185](index=185&type=chunk) [Item 4. Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, despite changes to certain processes and internal controls over financial reporting resulting from the first phase implementation of a new global ERP system - The CEO and CFO concluded that disclosure controls and procedures were effective as of June 30, 2025[186](index=186&type=chunk) - A significant change in internal control over financial reporting occurred during the quarter with the first phase implementation of a new global ERP system[187](index=187&type=chunk) PART II—OTHER INFORMATION [Item 1. Legal Proceedings](index=40&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal actions in the ordinary course of business, notably the Brantley v. City of Gretna class action lawsuit concerning a safety camera program, for which a settlement agreement received preliminary court approval in April 2025, with the final amount yet to be determined - The company is a defendant in the Brantley v. City of Gretna class action lawsuit concerning a safety camera program[191](index=191&type=chunk) - A settlement agreement for the Brantley case received preliminary court approval in April 2025, but the final amount is pending final court approval[191](index=191&type=chunk) [Item 1A. Risk Factors](index=40&type=section&id=Item%201A.%20Risk%20Factors) This section updates the company's risk factors, highlighting that share repurchase programs may not enhance long-term shareholder value, could increase stock price volatility, and will diminish cash reserves, further noting the 1% excise tax on net share repurchases that increases program costs - A new risk factor was added concerning share repurchase programs, stating they may not enhance shareholder value and could increase stock price volatility[194](index=194&type=chunk) - The company highlights the **1%** excise tax on net share repurchases, introduced by the Inflation Reduction Act, which increases the cost of buying back stock[194](index=194&type=chunk)[199](index=199&type=chunk) [Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities](index=42&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities,%20Use%20of%20Proceeds,%20and%20Issuer%20Purchases%20of%20Equity%20Securities) During the three months ended June 30, 2025, Verra Mobility did not purchase any of its Class A Common Stock and did not have any sales of unregistered equity securities - There were no purchases of the company's Class A Common Stock during the three months ended June 30, 2025[200](index=200&type=chunk) - There were no sales of unregistered equity securities during the three months ended June 30, 2025[201](index=201&type=chunk)