[Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) [Introduction](index=1&type=section&id=Introduction) Where Food Comes From, Inc. (WFCF) announced its financial results for the second quarter and six-month period ended June 30, 2025, highlighting revenue growth despite cattle herd size headwinds, driven by other verification services and hardware sales. The company also reported a subsequent event involving the sale of its interest in Progressive Beef - WFCF is a trusted resource for independent, third-party verification of food production practices in North America[1](index=1&type=chunk) - The company announced financial results for Q2 and six-month period ended June 30, 2025[1](index=1&type=chunk) - A subsequent event involved the sale of interest in Progressive Beef for **$1.8 million** cash and return of **12,585 shares**[1](index=1&type=chunk) [Second Quarter 2025 Highlights](index=1&type=section&id=Second%20Quarter%202025%20Highlights) In Q2 2025, WFCF reported a **3% year-over-year revenue increase to $6.6 million**, primarily due to demand for CARE Certified and UpCycled programs and hardware sales, offsetting reduced beef verification. **Net income rose 15% to $562,000**, or **$0.11 per diluted share**, boosted by a **$172,000 gain in digital asset fair market value**, despite gross margin pressure from increased compensation and hardware costs - **Q2 revenue increased 3%** year-over-year despite headwinds from smaller cattle herd sizes[2](index=2&type=chunk) - Revenue growth was driven by increasing demand for CARE Certified and UpCycled programs, and hardware sales[2](index=2&type=chunk) - Gross margins were negatively impacted by increased compensation expense and hardware costs[2](index=2&type=chunk) Second Quarter 2025 Financial Highlights (YoY) | Metric | 2025 (Q2) ($ thousands, except EPS) | 2024 (Q2) ($ thousands, except EPS) | Change (%) | | :-------------------------------- | :---------------------------------- | :---------------------------------- | :--------- | | Verification & Certification Revenue | 5330 | 5250 | 1.5% | | Product Sales | 964 | 819 | 17.7% | | Total Revenue | 6600 | 6400 | 3.1% | | Net Income | 562 | 489 | 14.9% | | Diluted EPS | $0.11 | $0.09 | 22.2% | - The company bought back **24,481 shares** of common stock in Q2 2025[3](index=3&type=chunk) [Six Month 2025 Highlights](index=1&type=section&id=Six%20Month%202025%20Highlights) For the first six months of 2025, **total revenue slightly decreased to $11.8 million from $12.0 million** year-over-year. **Net income also saw a decline to $593,000**, or **$0.11 per diluted share**, compared to **$667,000**, or **$0.12 per diluted share**, in the prior year, despite a **$96,000 net gain in digital asset fair market value**. **Cash generated from operations remained strong at $1.8 million**, and the company continued its share repurchase program Six Month 2025 Financial Highlights (YoY) | Metric | 2025 (6 Months) ($ thousands, except EPS) | 2024 (6 Months) ($ thousands, except EPS) | Change (%) | | :-------------------------------- | :---------------------------------------- | :---------------------------------------- | :--------- | | Verification & Certification Revenue | 9500 | 9700 | -2.1% | | Product Sales | 1700 | 1600 | 6.3% | | Total Revenue | 11800 | 12000 | -1.7% | | Net Income | 593 | 667 | -11.1% | | Diluted EPS | $0.11 | $0.12 | -8.3% | | Cash from Operations | 1800 | 1900 | -5.3% | | Cash & Cash Equivalents | 3200 | 2000 (2024 YE) | 60.0% | - Year-to-date stock buybacks totaled **55,826 shares**[3](index=3&type=chunk) - Total buybacks since plan inception plus private purchases reached **1,247,462 shares**, representing approximately **$13.6 million**[3](index=3&type=chunk) - **$14.6 million in total value returned to stockholders** via buybacks, private purchases, and a special dividend since 2019[3](index=3&type=chunk) [Strategic and Operational Developments](index=1&type=section&id=Strategic%20and%20Operational%20Developments) WFCF expanded its retail labeling program, adding two major retailers featuring CARE Certified beef products across the US, with plans to reach over **110 locations** by year-end 2025. The company is also investing in Artificial Intelligence tools and technical talent to enhance efficiency, customer experience, and scale operations for improved bottom-line results - Expanded retail labeling program with two new major retailers featuring CARE Certified beef products[4](index=4&type=chunk) - Rollout expected to include over **110 retail locations** by year-end 2025, with potential for more in 2026[4](index=4&type=chunk) - Continued buildout of Artificial Intelligence tools to improve efficiency and enhance customer experiences[4](index=4&type=chunk) - Investing in technical talent to transform business operations and customer solutions, aiming for efficient scaling and stronger bottom-line results[4](index=4&type=chunk) [Financial Performance Analysis](index=2&type=section&id=Financial%20Performance%20Analysis) [Second Quarter 2025 Results](index=2&type=section&id=Second%20Quarter%202025%20Results) For the second quarter of 2025, **total revenue increased to $6.6 million**, driven by growth in verification and certification services and product sales. Gross profit, however, **declined to $2.5 million** due to higher compensation and hardware costs. **Net income improved to $562,000**, or **$0.11 per diluted share**, primarily benefiting from a **$172,000 gain in digital asset fair market value**, while SG&A expenses slightly decreased Second Quarter 2025 Key Financials (YoY) | Metric | Q2 2025 ($ thousands) | Q2 2024 ($ thousands) | Change (%) | | :-------------------------------- | :-------------------- | :-------------------- | :--------- | | Total Revenue | 6,562 | 6,395 | 2.6% | | Gross Profit | 2,460 | 2,658 | -7.5% | | Selling, General & Admin Expense | 1,911 | 2,075 | -7.9% | | Net Income | 562 | 489 | 14.9% | | Diluted EPS | 0.11 | 0.09 | 22.2% | - Net income was positively impacted by a **$172,000 gain in fair market value of digital assets**[6](index=6&type=chunk) - The Company bought back **24,481 shares** of its common stock in the second quarter[7](index=7&type=chunk) [Revenue Breakdown (Q2)](index=2&type=section&id=Revenue%20Breakdown%20(Q2)) Second Quarter Revenue by Service Type (YoY) | Revenue Type | Q2 2025 ($ thousands) | Q2 2024 ($ thousands) | Change (%) | | :-------------------------------- | :-------------------- | :-------------------- | :--------- | | Verification & Certification Services | 5,332 | 5,252 | 1.5% | | Product Sales | 964 | 819 | 17.7% | | Professional Services | 266 | 324 | -17.9% | [Six Month 2025 Results](index=2&type=section&id=Six%20Month%202025%20Results) For the first six months of 2025, **total revenue decreased slightly to $11.8 million**, with a decline in verification and certification services partially offset by growth in product sales. **Gross profit also decreased to $4.7 million**. **Net income for the period was $593,000**, or **$0.11 per diluted share**, down from the prior year, despite a **$96,000 net gain from digital assets**. **Cash generated from operations was $1.8 million**, and the company continued its share repurchase activities Six Month 2025 Key Financials (YoY) | Metric | 6 Months 2025 ($ thousands) | 6 Months 2024 ($ thousands) | Change (%) | | :-------------------------------- | :-------------------------- | :-------------------------- | :--------- | | Total Revenue | 11,835 | 11,977 | -1.2% | | Gross Profit | 4,655 | 4,987 | -6.7% | | Selling, General & Admin Expense | 3,964 | 4,143 | -4.3% | | Net Income | 593 | 667 | -11.1% | | Diluted EPS | 0.11 | 0.12 | -8.3% | | Cash from Operations | 1,800 | 1,900 | -5.3% | | Cash & Cash Equivalents | 3,200 | 2,000 (2024 YE) | 60.0% | - Net income year-to-date included a **$96,000 net gain in fair market value of digital assets**[10](index=10&type=chunk) - **Cash generated from operations was $1.8 million**, slightly down from **$1.9 million** in the prior year[11](index=11&type=chunk) - Year-to-date stock buybacks totaled **55,826 shares**[12](index=12&type=chunk) [Revenue Breakdown (6 Months)](index=2&type=section&id=Revenue%20Breakdown%20(6%20Months)) Six Month Revenue by Service Type (YoY) | Revenue Type | 6 Months 2025 ($ thousands) | 6 Months 2024 ($ thousands) | Change (%) | | :-------------------------------- | :-------------------------- | :-------------------------- | :--------- | | Verification & Certification Services | 9,514 | 9,686 | -1.8% | | Product Sales | 1,666 | 1,552 | 7.4% | | Professional Services | 655 | 739 | -11.4% | [Subsequent Events](index=2&type=section&id=Subsequent%20Events) [Sale of Progressive Beef Interest](index=2&type=section&id=Sale%20of%20Progressive%20Beef%20Interest) On July 22, 2025, WFCF sold its **10% interest in Progressive Beef for $1.8 million** in cash and the return of **12,585 shares** of WFCF common stock. This transaction, which generated an **$0.8 million gain on sale**, strengthens WFCF's balance sheet, provides financial flexibility for growth initiatives, and supports its stock buyback program. Progressive Beef will continue to be a customer for WFCF's auditing services - On July 22, 2025, WFCF sold its **10% interest in Progressive Beef**[13](index=13&type=chunk) - Sale proceeds were **$1.8 million in cash** and the return of **12,585 shares** of WFCF common stock[13](index=13&type=chunk) - The sale resulted in an **$0.8 million gain on sale of investment** and strengthens WFCF's balance sheet, providing financial flexibility[13](index=13&type=chunk) - Progressive Beef, which paid WFCF **$1.6 million in dividends** since 2018, will remain a customer for auditing services[13](index=13&type=chunk) [Corporate Information](index=3&type=section&id=Corporate%20Information) [About Where Food Comes From, Inc.](index=3&type=section&id=About%20Where%20Food%20Comes%20From,%20Inc.) Where Food Comes From, Inc. is a leading third-party verification resource for food production practices in America, supporting over **17,500 clients** with value-added services and a retail labeling program that connects consumers to food sources - WFCF is America's trusted resource for third-party verification of food production practices[15](index=15&type=chunk) - Supports over **17,500 farmers, ranchers, processors, retailers, and other clients** with value-added services[15](index=15&type=chunk) - Solutions verify food claims, optimize production practices, and enable food supply chains with analytics and data-driven insights[15](index=15&type=chunk) - The 'Where Food Comes From®' labeling program connects consumers to food sources, increasing engagement[15](index=15&type=chunk) [Cautionary Statement](index=3&type=section&id=Cautionary%20Statement) This news release contains forward-looking statements subject to risks and uncertainties, and readers are cautioned not to place undue reliance on them, as actual events may differ materially from predictions - The news release contains forward-looking statements subject to inherent uncertainties and risks[16](index=16&type=chunk) - Important factors that could cause actual events to vary include capital availability, competition, governmental regulation, and market conditions[16](index=16&type=chunk) - Readers should not place undue reliance on these statements, and the Company assumes no obligation to update them[16](index=16&type=chunk) [Investor Contacts](index=3&type=section&id=Investor%20Contacts) Contact information for investor relations is provided, including John Saunders (Chief Executive Officer) and Jay Pfeiffer (Director Investor Relations) - Contact information for John Saunders, CEO, and Jay Pfeiffer, Director Investor Relations, is provided for inquiries[17](index=17&type=chunk) [Unaudited Financial Statements](index=4&type=section&id=Unaudited%20Financial%20Statements) [Statements of Operations](index=4&type=section&id=Statements%20of%20Operations) The unaudited Statements of Operations detail financial performance for the three and six months ended June 30, 2025, covering revenues, costs, gross profit, expenses, income, and EPS, with comparisons to 2024 Statements of Operations (Unaudited) - Three Months Ended June 30 | (Amounts in thousands, except per share amounts) | 2025 | 2024 | | :----------------------------------------------- | :--- | :--- | | **Revenues:** | | | | Verification and certification service revenue | 5,332 | 5,252 | | Product sales | 964 | 819 | | Professional services | 266 | 324 | | **Total revenues** | **6,562** | **6,395** | | **Costs of revenues:** | | | | Costs of verification and certification services | 3,282 | 3,028 | | Costs of products | 617 | 469 | | Costs of professional services | 203 | 240 | | **Total costs of revenues** | **4,102** | **3,737** | | **Gross profit** | **2,460** | **2,658** | | Selling, general and administrative expenses | 1,911 | 2,075 | | **Income from operations** | **549** | **583** | | **Other income/(expense):** | | | | Dividend income | 50 | 100 | | Interest income | 5 | 7 | | Fair market value gain on digital assets | 172 | - | | Loss on foreign currency exchange | (3) | (2) | | Interest expense | (1) | (1) | | **Income before income taxes** | **772** | **687** | | Income tax expense | 210 | 198 | | **Net income** | **562** | **489** | | **Per share - net income:** | | | | Basic | 0.11 | 0.09 | | Diluted | 0.11 | 0.09 | | Weighted average number of common shares outstanding: | | | | Basic | 5,272 | 5,371 | | Diluted | 5,283 | 5,388 | Statements of Operations (Unaudited) - Six Months Ended June 30 | (Amounts in thousands, except per share amounts) | 2025 | 2024 | | :----------------------------------------------- | :--- | :--- | | **Revenues:** | | | | Verification and certification service revenue | 9,514 | 9,686 | | Product sales | 1,666 | 1,552 | | Professional services | 655 | 739 | | **Total revenues** | **11,835** | **11,977** | | **Costs of revenues:** | | | | Costs of verification and certification services | 5,677 | 5,543 | | Costs of products | 1,045 | 903 | | Costs of professional services | 458 | 544 | | **Total costs of revenues** | **7,180** | **6,990** | | **Gross profit** | **4,655** | **4,987** | | Selling, general and administrative expenses | 3,964 | 4,143 | | **Income from operations** | **691** | **844** | | **Other income/(expense):** | | | | Dividend income | 50 | 100 | | Interest income | 9 | 14 | | Fair market value gain on digital assets | 96 | - | | Loss on foreign currency exchange | (3) | (4) | | Interest expense | (2) | (2) | | **Income before income taxes** | **841** | **952** | | Income tax expense | 248 | 285 | | **Net income** | **593** | **667** | | **Per share - net income:** | | | | Basic | 0.11 | 0.12 | | Diluted | 0.11 | 0.12 | | Weighted average number of common shares outstanding: | | | | Basic | 5,227 | 5,426 | | Diluted | 5,240 | 5,444 | [Balance Sheets](index=5&type=section&id=Balance%20Sheets) The unaudited Balance Sheets present WFCF's financial position as of June 30, 2025, detailing assets, liabilities, and equity, with **total assets increasing to $16.6 million from $15.3 million** Balance Sheets (Unaudited) | (Amounts in thousands, except per share amounts) | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | | :----------------------------------------------- | :------------------------ | :-------------------------- | | **Assets** | | | | Current assets: | | | | Cash and cash equivalents | 3,201 | 2,012 | | Accounts receivable, net of allowance | 2,060 | 1,826 | | Inventory | 1,112 | 1,002 | | Prepaid expenses and other current assets | 742 | 705 | | **Total current assets** | **7,115** | **5,545** | | Property and equipment, net | 681 | 737 | | Right-of-use assets, net | 2,017 | 2,067 | | Equity investments | 1,191 | 1,191 | | Intangible and other assets, net | 1,612 | 1,810 | | Digital assets | 750 | 654 | | Goodwill, net | 2,946 | 2,946 | | Deferred tax assets, net | 312 | 356 | | **Total assets** | **16,624** | **15,306** | | **Liabilities and Equity** | | | | Current liabilities: | | | | Accounts payable | 749 | 468 | | Accrued expenses and other current liabilities | 1,053 | 611 | | Deferred revenue | 2,371 | 1,748 | | Current portion of finance lease obligations | 14 | 15 | | Current portion of operating lease obligations | 360 | 337 | | **Total current liabilities** | **4,547** | **3,179** | | Finance lease obligations, net of current portion | 19 | 25 | | Operating lease obligation, net of current portion | 2,087 | 2,169 | | **Total liabilities** | **6,653** | **5,373** | | Commitments and contingencies | | | | **Equity:** | | | | Common stock | 5 | 7 | | Additional paid-in-capital | 60 | 11,381 | | Treasury stock | (251) | (13,462) | | Retained earnings | 10,157 | 12,007 | | **Total equity** | **9,971** | **9,933** | | **Total liabilities and stockholders' equity** | **16,624** | **15,306** | - **Total assets increased to $16.624 million** as of June 30, 2025, from **$15.306 million** at December 31, 2024[19](index=19&type=chunk) - **Cash and cash equivalents significantly increased to $3.201 million from $2.012 million**[19](index=19&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 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 For the transition period from ______________ to ______________ Commission file number: 0-23636 HAWTHORN BANCSHARES, INC. (Exact name of registrant as specified in its charter) incorporation or ...

[PART I – FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This section provides the unaudited consolidated financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures for the company [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents ConnectOne Bancorp's unaudited consolidated financial statements, reflecting significant asset and liability growth from the FLIC acquisition and a net loss driven by merger expenses and increased credit loss provisions [Consolidated Statements of Condition](index=3&type=section&id=Consolidated%20Statements%20of%20Condition) Total assets grew to **$13.92 billion** from **$9.88 billion** due to the FLIC acquisition, significantly increasing net loans, deposits, and stockholders' equity Consolidated Balance Sheet Highlights (Unaudited, in thousands) | (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$13,915,738** | **$9,879,600** | | Cash and cash equivalents | $596,533 | $356,488 | | Net loans receivable | $11,008,287 | $8,192,125 | | Goodwill | $215,611 | $208,372 | | **Total Liabilities** | **$12,419,307** | **$8,637,896** | | Total deposits | $11,278,487 | $7,820,114 | | Borrowings | $783,859 | $688,064 | | **Total Stockholders' Equity** | **$1,496,431** | **$1,241,704** | [Consolidated Statements of (Loss) Income](index=4&type=section&id=Consolidated%20Statements%20of%20%28Loss%29%20Income) The company reported a net loss of **($20.3) million** for Q2 2025, primarily due to **$30.7 million** in merger expenses and a **$35.7 million** provision for credit losses Key Income Statement Data (Unaudited, in thousands, except per share data) | (in thousands, except per share data) | 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 | $78,883 | $61,439 | $144,639 | $121,739 | | Provision for credit losses | $35,700 | $2,500 | $39,200 | $6,500 | | Noninterest Expenses | $73,649 | $37,594 | $112,954 | $74,659 | | *including Merger expenses* | *$30,745* | *$ -* | *$32,065* | *$ -* | | Net (Loss) Income | **($20,293)** | **$19,056** | **($51)** | **$36,261** | | Diluted EPS | **($0.52)** | **$0.46** | **($0.08)** | **$0.86** | [Consolidated Statements of Comprehensive (Loss) Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20%28Loss%29%20Income) For Q2 2025, the company reported a total comprehensive loss of **($19.6) million**, primarily due to the net loss, contrasting with prior-year comprehensive income Comprehensive (Loss) Income Summary (Unaudited, in thousands) | (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net (Loss) Income | ($20,293) | $19,056 | ($51) | $36,261 | | Total other comprehensive income (loss), net of tax | $685 | ($4,112) | $441 | ($7,135) | | **Total Comprehensive (Loss) Income** | **($19,608)** | **$14,944** | **$390** | **$29,126** | [Consolidated Statements of Changes in Stockholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) Stockholders' equity increased to **$1.50 billion** from **$1.24 billion** primarily due to **$270.8 million** in common stock issued for the FLIC merger, partially offset by net loss and dividends - The company issued **11,790,116 shares** of common stock valued at **$270.8 million** to complete the FLIC merger during the second quarter of 2025[13](index=13&type=chunk)[15](index=15&type=chunk) - Cash dividends paid on common stock totaled **$13.8 million** (**$0.36 per share**) for the six months ended June 30, 2025[15](index=15&type=chunk) [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash and cash equivalents increased by **$240.0 million** for the six months ended June 30, 2025, driven by operating, investing (including FLIC cash), and financing activities Six Months Ended June 30 Cash Flow Summary (Unaudited, in thousands) | (in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $21,348 | $42,819 | | Net cash provided by investing activities | $99,048 | $169,165 | | Net cash provided by (used in) financing activities | $119,649 | ($161,185) | | **Net change in cash and cash equivalents** | **$240,045** | **$50,799** | - The company acquired **$54.9 million** in cash, net of cash consideration paid, from the FLIC acquisition[17](index=17&type=chunk) - Financing activities included **$200 million** in proceeds from the issuance of subordinated debt and a net increase in deposits of **$207.0 million**, offset by net repayments of FHLB borrowings of **$264.6 million**[17](index=17&type=chunk) [Notes to Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies and financial components, highlighting the **$270.8 million** FLIC acquisition's impact on the balance sheet and income statement, along with specifics on loan portfolios, credit losses, and regulatory capital - On June 1, 2025, the Company completed its acquisition of The First of Long Island Corporation ("FLIC"), with former FLIC shareholders receiving **0.5175 shares** of the Company's common stock for each share of FLIC common stock[22](index=22&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk) FLIC Acquisition Purchase Price Consideration (June 1, 2025, in thousands) | (in thousands) | Value | | :--- | :--- | | Total fair value of stock consideration issued | $270,819 | | Cash consideration paid | $9 | | **Total purchase price consideration** | **$270,828** | | Fair Value of Net Assets Acquired | $263,589 | | **Goodwill recorded in acquisition** | **$7,239** | - For purchased credit deteriorated (PCD) loans from the FLIC merger, an initial allowance for credit losses of **$43.3 million** was established by grossing-up the amortized cost of the loans[51](index=51&type=chunk)[54](index=54&type=chunk) - The allowance for credit losses (ACL) for loans increased to **$156.2 million** at June 30, 2025, from **$82.7 million** at year-end 2024, including a **$43.3 million** nonaccretable credit mark on PCD loans and a **$27.3 million** initial provision related to the acquisition[115](index=115&type=chunk)[118](index=118&type=chunk) - On May 15, 2025, the Company issued **$200 million** in fixed-to-floating rate subordinated notes with an initial interest rate of **8.125%**[200](index=200&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=55&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the Q2 2025 net loss to merger expenses and increased credit loss provisions, while net interest income and margin improved, and the balance sheet expanded significantly due to the FLIC merger [Operating Results Overview](index=56&type=section&id=Operating%20Results%20Overview) The company reported a net loss of **($21.8) million** for Q2 2025, primarily due to **$30.7 million** in merger costs and a **$33.2 million** increase in credit loss provisions, partially offset by increased net interest income Q2 2025 vs Q2 2024 Performance (in millions, except per share data) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net (Loss) Income to Common Stockholders | ($21.8M) | $17.5M | ($39.3M) | | Diluted EPS | ($0.52) | $0.46 | ($0.98) | | Merger Expenses | $30.7M | $0 | +$30.7M | | Provision for Credit Losses | $35.7M | $2.5M | +$33.2M | [Net Interest Income and Margin](index=56&type=section&id=Net%20Interest%20Income%20and%20Margin) For Q2 2025, fully taxable equivalent net interest income increased by **28.2%** to **$79.8 million**, with the net interest margin expanding **34 basis points** to **3.06%** Net Interest Margin Analysis (in millions, except percentages) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net Interest Income (Tax-Equivalent) | $79.8M | $62.3M | | Net Interest Margin | 3.06% | 2.72% | | Average Yield on Earning Assets | 5.63% | 5.71% | | Average Cost of Interest-Bearing Liabilities | 3.36% | 3.84% | [Financial Condition](index=60&type=section&id=Financial%20Condition) As of June 30, 2025, the FLIC merger significantly altered the company's financial condition, increasing gross loans to **$11.2 billion** and deposits to **$11.3 billion**, while improving asset quality and maintaining strong capital ratios - Gross loans totaled **$11.2 billion** as of June 30, 2025, a **34.9% increase** from December 31, 2024, primarily due to the FLIC merger[229](index=229&type=chunk) - The allowance for credit losses (ACL) increased to **$156.2 million**, or **1.40% of loans receivable**, up from **$82.7 million** (**1.01%**) at year-end, driven by a **$43.3 million** mark for purchased credit-deteriorated (PCD) loans and a **$27.4 million** initial provision related to the FLIC merger[236](index=236&type=chunk)[242](index=242&type=chunk) - Nonperforming assets decreased to **$39.2 million** (**0.28% of total assets**) at June 30, 2025, from **$57.3 million** (**0.58% of total assets**) at December 31, 2024[246](index=246&type=chunk) - Total deposits increased by **$3.5 billion** (**44.2%**) to **$11.3 billion** compared to year-end 2024, also due to the FLIC merger[286](index=286&type=chunk) - The company and the bank both satisfy all capital adequacy requirements to be considered **well-capitalized** as of June 30, 2025[301](index=301&type=chunk)[302](index=302&type=chunk) [Qualitative and Quantitative Disclosures about Market Risks](index=75&type=section&id=Item%203.%20Qualitative%20and%20Quantitative%20Disclosures%20about%20Market%20Risks) The company manages interest rate risk using NII and EVE models, with a **+200 bps** rate shock estimated to decrease one-year NII by **4.94%** and EVE by **5.89%** Interest Rate Sensitivity Analysis (as of June 30, 2025, in percentages) | Rate Shock (bps) | Estimated Change in EVE (%) | Estimated Change in 1-Year NII (%) | | :--- | :--- | :--- | | +200 | -5.89% | -4.94% | | +100 | -1.22% | -1.91% | | -100 | -0.40% | +1.72% | [Controls and Procedures](index=75&type=section&id=Item%204.%20Controls%20and%20Procedures) The CEO and CFO concluded that disclosure controls and procedures are effective, with no material changes to internal controls over financial reporting during the quarter - The CEO and CFO concluded that the Company's disclosure controls and procedures are **effective**[304](index=304&type=chunk) - No material changes to internal controls over financial reporting occurred during the last fiscal quarter[305](index=305&type=chunk) [PART II – OTHER INFORMATION](index=76&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, unregistered sales of equity securities, and a list of exhibits filed with the report [Legal Proceedings](index=76&type=section&id=Item%201.%20Legal%20Proceedings) The company faces an **$11.1 million** lawsuit as FLIC's successor regarding unauthorized wire transfers, which it intends to vigorously defend - A customer filed a lawsuit against the company (as successor to FLIC) for approximately **$11.1 million** in damages related to unauthorized wire transfers[308](index=308&type=chunk) - The company states it will vigorously defend against the claims[308](index=308&type=chunk) [Risk Factors](index=76&type=section&id=Item%201a.%20Risk%20Factors) No material changes to the company's risk factors were reported since the Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to risk factors were reported since the last Annual Report on Form 10-K[309](index=309&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=76&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not repurchase shares in Q2 2025, with **641,118 shares** remaining available under the authorized repurchase program - No shares were repurchased in Q2 2025[310](index=310&type=chunk) - As of June 30, 2025, **641,118 shares** are remaining for repurchase under the authorized program[310](index=310&type=chunk) [Exhibits](index=77&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the 10-Q report, including the supplemental indenture for subordinated notes and required CEO/CFO certifications - Key exhibits include the Third Supplemental Indenture for the **8.125% Fixed-to-Floating Rate Subordinated Notes due 2035** and required CEO/CFO certifications[312](index=312&type=chunk) [Signatures](index=78&type=section&id=SIGNATURES) This section contains the official signatures of the company's Chairman, Chief Executive Officer, and Chief Financial Officer, certifying the report - The report was signed on **August 11, 2025**, by Frank Sorrentino III, Chairman and Chief Executive Officer, and William S. Burns, Senior Executive Vice President and Chief Financial Officer[316](index=316&type=chunk)

Table of Contents UNITED STATES OF AMERICA 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: 001-40751 CONNECTONE BANCORP, INC. (Exact Name of Registrant as Specified in Its Charter) (State or Oth ...

[PART I. Financial Information](index=4&type=section&id=PART%20I.%20Financial%20Information) [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements for the three and six-month periods ended June 30, 2025, and 2024, detailing the company's financial position and performance [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $5,690,599 | $5,431,338 | | Total assets | $15,548,638 | $14,935,233 | | Total current liabilities | $1,819,081 | $2,150,583 | | Long-term debt | $3,779,559 | $2,804,017 | | Total liabilities | $6,704,588 | $5,989,987 | | Total Steel Dynamics, Inc. equity | $8,864,052 | $8,934,287 | [Consolidated Statements of Income](index=6&type=section&id=Consolidated%20Statements%20of%20Income) Q2 2025 vs Q2 2024 Performance (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total net sales | $4,565,123 | $4,632,634 | | Gross profit | $618,468 | $774,837 | | Operating income | $382,855 | $559,123 | | Net income attributable to SDI | $298,726 | $427,998 | | Diluted EPS | $2.01 | $2.72 | H1 2025 vs H1 2024 Performance (in thousands, except per share data) | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Total net sales | $8,934,318 | $9,326,637 | | Gross profit | $1,105,012 | $1,755,635 | | Operating income | $657,999 | $1,310,098 | | Net income attributable to SDI | $515,877 | $1,012,039 | | Diluted EPS | $3.44 | $6.39 | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Six-Month Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $454,214 | $737,778 | | Net cash used in investing activities | ($484,455) | ($502,520) | | Net cash used in financing activities | ($101,488) | ($806,196) | | **Decrease in cash** | **($131,729)** | **($570,938)** | [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations of the company's accounting policies and financial results, covering business segments, debt, inventory, equity, and segment performance - The company operates through four reporting segments: steel operations, metals recycling operations, steel fabrication operations, and aluminum operations. The aluminum operations segment was recently reorganized to include an entity previously in the metals recycling segment[14](index=14&type=chunk) - In March 2025, the company issued **$600.0 million** of 5.250% notes due 2035 and **$400.0 million** of 5.750% notes due 2055. Proceeds were used for general corporate purposes, including the repayment of **$400.0 million** notes that matured in June 2025[36](index=36&type=chunk)[38](index=38&type=chunk) Segment Operating Income (in thousands) | Segment | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Steel Operations | $381,094 | $438,620 | | Metals Recycling Operations | $21,290 | $22,839 | | Steel Fabrication Operations | $93,114 | $180,740 | | Aluminum Operations | ($40,627) | ($13,862) | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes the company's financial performance for Q2 and H1 2025 versus 2024, covering consolidated and segment results, liquidity, capital resources, and debt management - Consolidated operating income for Q2 2025 decreased **32%** YoY to **$382.9 million**, primarily due to metal spread contraction in the steel and steel fabrication segments[65](index=65&type=chunk) - For the first half of 2025, consolidated operating income fell **50%** YoY to **$658.0 million**, with net income attributable to SDI decreasing by **49%** to **$515.9 million**[66](index=66&type=chunk) [Segment Operating Results](index=23&type=section&id=Segment%20Operating%20Results) This section details the performance of each of the company's four operating segments, noting lower income for steel and fabrication, a slight decrease for recycling, and increased start-up costs for aluminum - **Steel Operations:** Q2 2025 operating income decreased **13%** YoY to **$381.1 million**. This was caused by a **3%** decrease in metal spread, as rising scrap costs outpaced flat average selling prices, and a **$32.3 million** write-off of consumable assets[74](index=74&type=chunk) - **Metals Recycling Operations:** Q2 2025 operating income decreased **7%** YoY to **$21.3 million**. While ferrous shipments hit a record high, a **9%** decrease in ferrous metal spreads offset these gains[78](index=78&type=chunk) - **Steel Fabrication Operations:** Q2 2025 operating income dropped **48%** YoY to **$93.1 million**. The decline was driven by a **15%** decrease in volume and a **19%** contraction in metal spread as selling prices fell faster than steel input costs[84](index=84&type=chunk)[85](index=85&type=chunk) - **Aluminum Operations:** The segment produced and sold its first aluminum coils late in Q2 2025. Results primarily reflect increasing construction, start-up, and commissioning costs, leading to a higher operating loss compared to the prior year[87](index=87&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a strong liquidity position, with over $1.9 billion available as of June 30, 2025, and invested significantly in capital projects, dividends, and share repurchases during the first half of the year Liquidity Position as of June 30, 2025 (in thousands) | Component | Amount | | :--- | :--- | | Cash and equivalents | $458,048 | | Short-term and other investments | $285,455 | | Revolver availability | $1,190,673 | | **Total liquidity** | **$1,934,176** | - Total outstanding debt increased by **$550.0 million** from year-end 2024 to **$3.8 billion**, following the issuance of new senior notes in March 2025[99](index=99&type=chunk) - The company repurchased **$450.2 million** of its common stock in the first half of 2025. As of June 30, 2025, **$1.2 billion** remained available under the current share repurchase authorization[106](index=106&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company is exposed to market risk from commodity price fluctuations and uses fixed-price contracts and financial derivatives to manage this risk, particularly for nonferrous and ferrous metals - The company is exposed to price fluctuations in raw materials such as metallic scrap, electricity, natural gas, and zinc[108](index=108&type=chunk) - To mitigate risk, the company enters into base metal financial contracts to protect profit margins on certain fixed-price sales and purchase commitments. Most of these contracts settle within the next twelve months[110](index=110&type=chunk) [Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) As of June 30, 2025, the company's disclosure controls and procedures were deemed effective, with no material changes to internal control over financial reporting during the quarter - Management concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective at a reasonable assurance level[111](index=111&type=chunk) - No changes occurred during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[112](index=112&type=chunk) [PART II. Other Information](index=38&type=section&id=PART%20II.%20Other%20Information) [Legal Proceedings](index=38&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various litigation matters arising in the ordinary course of business, none of which are expected to materially impact its financial condition, results of operations, or liquidity - Ongoing litigation, administrative proceedings, and environmental matters are not expected to have a material impact on the company[113](index=113&type=chunk) [Risk Factors](index=38&type=section&id=Item%201A.%20Risk%20Factors) There have been 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 - No material changes to the company's risk factors have occurred since the filing of the 2024 Form 10-K[115](index=115&type=chunk) [Issuer Purchases of Equity Securities](index=38&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's repurchases of its own common stock during the second quarter of 2025, all made under the publicly announced share repurchase program authorized in February 2025 Share Repurchases for Q2 2025 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | 795,009 | $119.36 | | May 2025 | 515,824 | $132.19 | | June 2025 | 279,492 | $132.27 | | **Total Q2** | **1,590,325** | | - In February 2025, the board of directors authorized a new share repurchase program for up to **$1.5 billion** of the company's common stock[117](index=117&type=chunk) [Exhibits](index=40&type=section&id=Item%206.%20Exhibits) This section provides an index of all exhibits filed with the Form 10-Q, including corporate governance documents, officer certifications, and interactive data files (XBRL) - The exhibits filed with this report include CEO and CFO certifications under Sections 302 and 906 of the Sarbanes-Oxley Act, as well as XBRL financial data[124](index=124&type=chunk)[125](index=125&type=chunk)

PART I [Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements.) The company reported a **$0.078 million** net loss for the quarter ended March 31, 2025, with **$9.22 million** in assets and a **$2.24 million** capital deficiency, sustained by financing activities while pursuing a business combination [Unaudited Condensed Balance Sheets](index=7&type=section&id=Unaudited%20Condensed%20Balance%20Sheets) As of March 31, 2025, total assets were **$9.22 million**, with **$9.08 million** in trust, resulting in a **$2.24 million** capital deficiency Condensed Balance Sheet Data (in thousands USD) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $21 | $8 | | Cash held in trust account | $9,075 | $8,980 | | **Total Assets** | **$9,222** | **$9,184** | | **Liabilities & Capital** | | | | Total Current Liabilities | $2,389 | $2,273 | | Class A Ordinary Shares Subject to Possible Redemption | $9,075 | $8,980 | | Total Capital Deficiency | ($2,242) | ($2,069) | | **Total Liabilities, Shares Subject to Redemption and Capital Deficiency** | **$9,222** | **$9,184** | [Unaudited Condensed Statement of Operations](index=8&type=section&id=Unaudited%20Condensed%20Statement%20of%20Operations) The company reported a net loss of **$0.078 million** for the three months ended March 31, 2025, a decline from **$0.037 million** net earnings in the prior year, driven by increased expenses and reduced interest income Condensed Statement of Operations (in thousands USD) | Account | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Interest Earned on Trust Account | $95 | $277 | | Operating Expenses | ($143) | ($240) | | Financial Expenses | ($30) | $0 | | **Net Earnings (Loss)** | **($78)** | **$37** | [Unaudited Condensed Statement of Cash Flows](index=10&type=section&id=Unaudited%20Condensed%20Statement%20of%20Cash%20Flows) Net cash provided by operating activities was **$0.033 million**, a reversal from the prior year, with financing activities providing **$0.075 million**, increasing total cash to **$9.096 million** Condensed Statement of Cash Flows (in thousands USD) | Category | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $33 | ($614) | | Net cash provided by financing activities | $75 | $890 | | **Net Change in Cash** | **$108** | **$276** | | **Cash at end of period** | **$9,096** | **$21,515** | [Notes to Condensed Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Financial%20Statements%20(unaudited)) Notes detail the company's blank check status, Business Combination Agreement with Tembo e-LV B.V., extended liquidation date, Nasdaq delisting, and reliance on sponsor funding, raising going concern doubts - The company is a blank check company that has altered its search focus from Israeli healthcare technology to global emerging technology companies, particularly in the energy renewables sector, following a change in sponsorship[34](index=34&type=chunk) - On August 29, 2024, the Company signed a Business Combination Agreement (BCA) with Tembo e-LV B.V., with consideration of **$838 million** to be paid entirely in newly issued shares of the combined company valued at **$10.00 per share**[45](index=45&type=chunk) - The company's mandatory liquidation date has been extended to November 2, 2025, which, along with funding needs, raises substantial doubt about its ability to continue as a going concern[46](index=46&type=chunk)[47](index=47&type=chunk) - The company was delisted from Nasdaq on November 5, 2024, for not completing an initial business combination within the required timeframe, and its securities now trade on the OTC market under the symbol CCTSF[50](index=50&type=chunk)[51](index=51&type=chunk) - The company has undergone multiple sponsor changes, with the original sponsor, Cactus LP, transferring 80% of its securities to EVGI Limited in February 2024, and EVGI subsequently transferring 100% of its holdings to ARWM Pte Limited in May 2024[37](index=37&type=chunk)[38](index=38&type=chunk)[74](index=74&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) The company faces significant liquidity issues with a **$2.24 million** working capital deficit, relying on sponsor loans to fund operations while pursuing a business combination with Tembo e-LV B.V. after its Nasdaq delisting - The company has a definitive Business Combination Agreement with Tembo e-LV B.V., with consideration valued at **$838 million**, payable in shares of the new combined entity[93](index=93&type=chunk) - The company was delisted from Nasdaq on November 5, 2024, and now trades on the OTC market, with an intent to apply for relisting on Nasdaq upon completion of the business combination[100](index=100&type=chunk) - The deadline to consummate a business combination was extended to November 2, 2025, leading to the redemption of **1,148,799 Class A shares** and the distribution of **$13.4 million** from the trust account[101](index=101&type=chunk)[102](index=102&type=chunk) - The company has significant liquidity issues, with only **$0.021 million** in its operating account and a working capital deficit of **$2.24 million** as of March 31, 2025, relying on loans from sponsors and third parties to fund operations[91](index=91&type=chunk)[107](index=107&type=chunk) - VivoPower, Tembo's parent company, received a non-binding proposal from Energi Holdings for a strategic acquisition of **51% of Tembo**, based on a **$200 million** enterprise value, and Energi has also provided a **$0.6 million** promissory note to the company[97](index=97&type=chunk)[98](index=98&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=26&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) The company's market risk is minimal, primarily limited to interest rate risk on short-term trust account investments, which are not expected to have material exposure to fluctuations - Proceeds from the IPO held in the trust account are invested in U.S. government treasury bills with maturities of 185 days or less or in money market funds compliant with Rule 2a-7[118](index=118&type=chunk) - Due to the short-term nature of these investments, management believes there is no material exposure to interest rate risk[118](index=118&type=chunk) [Controls and Procedures](index=27&type=section&id=Item%204.%20Controls%20and%20Procedures.) Management identified a material weakness in internal controls due to insufficient qualified personnel and inadequate segregation of duties, rendering disclosure controls ineffective - Management concluded that disclosure controls and procedures were not effective as of December 31, 2024[120](index=120&type=chunk) - A material weakness was identified due to an insufficient number of qualified finance and accounting personnel, resulting in inadequate segregation of duties and increasing the risk of financial misstatements[123](index=123&type=chunk) - As of March 31, 2025, management has not remediated the material weakness, with planned corrective actions including enhanced review procedures and evaluating the need for additional personnel[121](index=121&type=chunk)[124](index=124&type=chunk) PART II [Legal Proceedings](index=29&type=section&id=Item%201.%20Legal%20Proceedings.) The company reports no legal proceedings - None[128](index=128&type=chunk) [Risk Factors](index=29&type=section&id=Item%201A.%20Risk%20Factors.) No material changes to previously disclosed risk factors have occurred - There have been no material changes with respect to the risk factors disclosed in our 2024 Annual Report[129](index=129&type=chunk) [Cybersecurity](index=29&type=section&id=Item%201C.%20Cybersecurity.) As a blank check company, it relies on third-party digital technologies and lacks internal cybersecurity resources, posing potential financial loss risks - The company has no operations of its own and relies on third-party digital technologies, making it vulnerable to security breaches in those systems[131](index=131&type=chunk) - The company lacks sufficient resources and dedicated personnel to adequately protect against, investigate, or remediate cybersecurity incidents[131](index=131&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=29&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No new information regarding unregistered sales of equity securities has been reported - Nothing that has not been previously reported[132](index=132&type=chunk) [Other Items](index=29&type=section&id=Other%20Items) The company reports no unresolved staff comments, defaults, or other material information for the period - Item 1B. Unresolved Staff Comments: None[130](index=130&type=chunk) - Item 3. Defaults Upon Senior Securities: None[133](index=133&type=chunk) - Item 4. Mine Safety Disclosures: Not applicable[134](index=134&type=chunk) - Item 5. Other Information: None[135](index=135&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal quarter ended March 31, 2025 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _______________ Commission File Number 001-40981 Cactus Acquisition Corp. 1 Ltd. (Exact name of registrant as specified in its charter) Cayman Islands 333- ...

[PART I - Financial Information](index=3&type=section&id=PART%20I%20-%20Financial%20Information) [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements for C&F Financial Corporation as of June 30, 2025, and for the three and six-month periods then ended, including balance sheets, statements of income, comprehensive income, equity, and cash flows, along with detailed notes [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets increased to $2.69 billion from $2.56 billion at year-end 2024, driven by growth in loans and securities, while total liabilities rose to $2.45 billion, primarily due to an increase in deposits and borrowings, and total equity grew to $240.9 million from $227.0 million Consolidated Balance Sheet Highlights (Unaudited) | (In thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$2,686,392** | **$2,563,374** | | Loans, net | $1,952,087 | $1,880,311 | | Securities—available for sale | $434,506 | $418,625 | | Total cash and cash equivalents | $80,195 | $65,586 | | **Total Liabilities** | **$2,445,476** | **$2,336,404** | | Total deposits | $2,256,314 | $2,170,860 | | Total borrowings (Short & Long-term) | $120,660 | $97,152 | | **Total Equity** | **$240,916** | **$226,970** | [Consolidated Statements of Income](index=5&type=section&id=Consolidated%20Statements%20of%20Income) For the second quarter of 2025, net income attributable to the Corporation was $7.7 million, or $2.37 per diluted share, a significant increase from $5.0 million, or $1.50 per diluted share, in Q2 2024, with six-month net income reaching $13.1 million, up from $8.4 million in the prior year period, driven by higher net interest income and noninterest income Financial Performance (Unaudited) | (In thousands, except per share) | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $26,508 | $23,828 | $51,518 | $46,986 | | Provision for Credit Losses | $2,100 | $2,550 | $5,100 | $6,050 | | Noninterest Income | $9,848 | $7,324 | $17,421 | $14,816 | | Noninterest Expenses | $24,630 | $22,373 | $47,689 | $45,523 | | **Net Income Attributable to C&F** | **$7,691** | **$5,007** | **$13,059** | **$8,408** | | **Net Income Per Share (diluted)** | **$2.37** | **$1.50** | **$4.03** | **$2.50** | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash used in operating activities was $1.2 million, a shift from $2.6 million provided in the same period of 2024, with net cash used in investing activities increasing to $89.6 million, and net cash provided by financing activities reaching $105.4 million, resulting in a net increase in cash and cash equivalents of $14.6 million Six Months Ended June 30, (In thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(1,177) | $2,590 | | Net cash used in investing activities | $(89,612) | $(72,222) | | Net cash provided by financing activities | $105,398 | $39,139 | | **Net increase (decrease) in cash** | **$14,609** | **$(30,493)** | [Notes to Consolidated Interim Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Interim%20Financial%20Statements) The notes provide detailed information on the Corporation's accounting policies and business operations, including the composition of its securities and loan portfolios, activity in the allowance for credit losses, goodwill stability, segment performance, and derivative instrument usage, notably the issuance of $40.0 million in new subordinated notes and repurchase of $20.0 million of existing notes on June 6, 2025 - The Corporation operates through three main segments: C&F Bank (commercial banking), C&F Mortgage (mortgage banking), and C&F Finance (consumer finance for automobile, marine, and RV loans)[25](index=25&type=chunk)[26](index=26&type=chunk) - On June 6, 2025, the Corporation issued **$40.0 million** of 7.50% subordinated notes due 2035 and concurrently repurchased its **$20.0 million** of 4.875% subordinated notes due 2030[29](index=29&type=chunk) Loan Portfolio Composition (in thousands) | Loan Class | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Commercial real estate | $763,624 | $734,182 | | Commercial business | $110,932 | $104,947 | | Construction - commercial real estate | $141,314 | $132,717 | | Residential mortgage | $313,273 | $308,809 | | Consumer finance - automobiles | $397,365 | $398,651 | | **Total Loans (Gross)** | **$1,991,665** | **$1,920,398** | Allowance for Credit Losses Activity - Six Months Ended June 30, 2025 (in thousands) | Category | Commercial | Consumer | Consumer Finance | Total | | :--- | :--- | :--- | :--- | :--- | | Balance at Dec 31, 2024 | $13,347 | $4,032 | $22,708 | $40,087 | | Provision | $(324) | $174 | $5,300 | $5,150 | | Net Charge-offs | $3 | $(39) | $(5,623) | $(5,659) | | **Balance at June 30, 2025** | **$13,026** | **$4,167** | **$22,385** | **$39,578** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=51&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the significant increase in consolidated net income for Q2 and H1 2025, driven by strong performance in the community and mortgage banking segments, with key factors including loan growth, increased mortgage origination volume, and a higher net interest margin, covering detailed segment performance, asset quality trends, liquidity management, and capital resources, including a new subordinated debt issuance and an ongoing share repurchase program Financial Performance Highlights | (In thousands, except per share) | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Consolidated net income | $7,767 | $5,034 | $13,162 | $8,469 | | Earnings per share - diluted | $2.37 | $1.50 | $4.03 | $2.50 | | Annualized return on average assets | 1.18% | 0.82% | 1.01% | 0.69% | | Annualized return on average equity | 13.06% | 9.31% | 11.23% | 7.82% | - Key operational highlights for H1 2025 include **10.6% annualized loan growth** in the community banking segment, a **$85.5 million increase in deposits**, and a rise in the consolidated annualized net interest margin to **4.27%** for Q2 2025[163](index=163&type=chunk) [Results of Operations](index=56&type=section&id=Results%20of%20Operations) Net interest income (tax-equivalent) increased to $26.8 million in Q2 2025 from $24.1 million in Q2 2024, with the net interest margin expanding to 4.27%, driven by higher earning asset yields and balances, while noninterest income grew 34.5% led by mortgage banking gains, and noninterest expense rose 10.1%, mainly from deferred compensation liabilities and marketing initiatives Change in Net Interest Income (Tax-Equivalent) - Q2 2025 vs Q2 2024 | (In thousands) | Increase (Decrease) Due to Rate | Increase (Decrease) Due to Volume | Total Increase (Decrease) | | :--- | :--- | :--- | :--- | | Total interest income | $1,056 | $2,055 | $3,111 | | Total interest expense | $(441) | $856 | $415 | | **Change in net interest income** | **$1,497** | **$1,199** | **$2,696** | - Total noninterest income increased by **$2.5 million (34.5%)** in Q2 2025 compared to Q2 2024, primarily due to higher mortgage loan production volume, which led to increased gains on sales of loans and mortgage banking fee income[190](index=190&type=chunk) - Total noninterest expenses rose by **$2.3 million (10.1%)** in Q2 2025, mainly due to fluctuations in deferred compensation liabilities (offset in noninterest income) and higher marketing expenses from a strategic initiative started in late 2024[193](index=193&type=chunk) [Business Segments](index=63&type=section&id=Business%20Segments) In Q2 2025, the Community Banking segment's net income rose to $7.1 million from $4.6 million year-over-year, driven by higher net interest income and lower credit provisions, while the Mortgage Banking segment's net income increased to $985,000 from $376,000, fueled by a 46.2% rise in loan originations, and the Consumer Finance segment's net income fell to $539,000 from $894,000, impacted by higher credit provisions and lower interest income Net Income by Segment - Q2 2025 vs Q2 2024 (in thousands) | Segment | Q2 2025 Net Income | Q2 2024 Net Income | | :--- | :--- | :--- | | Community Banking | $7,116 | $4,571 | | Mortgage Banking | $985 | $376 | | Consumer Finance | $539 | $894 | - Mortgage loan originations increased **46.2%** to **$213.5 million** in Q2 2025 from **$146.0 million** in Q2 2024, despite elevated mortgage interest rates[209](index=209&type=chunk)[212](index=212&type=chunk) - The Consumer Finance segment's net charge-offs increased, leading to a higher provision for credit losses of **$2.4 million** in Q2 2025 compared to **$2.1 million** in Q2 2024[219](index=219&type=chunk) [Asset Quality](index=71&type=section&id=Asset%20Quality) Overall asset quality remains sound, with the consolidated allowance for credit losses (ACL) to total loans at 1.99% at June 30, 2025, down from 2.09% at year-end 2024, while nonaccrual loans increased to $1.8 million (0.09% of total loans) from $0.9 million (0.05%), and the Community Banking segment saw a net reversal of credit provisions, while the Consumer Finance segment's provision increased due to higher net charge-offs (2.42% annualized for H1 2025) Consolidated Credit Ratios | Ratio | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Nonaccrual loans to total loans | 0.09% | 0.05% | | ACL to total loans | 1.99% | 2.09% | | ACL to nonaccrual loans | 2,233.52% | 4,233.05% | - The Community Banking segment's nonaccrual loans increased to **$1.1 million** from **$333,000** at year-end 2024, mainly due to the downgrade of one residential mortgage relationship[252](index=252&type=chunk) - The Consumer Finance segment's annualized net charge-off rate was **2.42%** for the first six months of 2025, up from **2.21%** for the same period in 2024, due to an increase in delinquent loans and repossessions[254](index=254&type=chunk) [Financial Condition](index=80&type=section&id=Financial%20Condition) Total assets grew by $123.0 million to $2.7 billion in the first half of 2025, funded by an $85.5 million increase in deposits and a $23.5 million increase in borrowings, with loans held for investment increasing by $71.8 million, and the Corporation enhancing its capital structure by issuing $40.0 million in new subordinated debt and repurchasing $20.0 million of older notes, maintaining strong liquidity with $950.1 million in liquid assets and available funding significantly exceeding uninsured deposits - Total assets increased by **$123.0 million** since December 31, 2024, reaching **$2.7 billion**, primarily due to loan and deposit growth[259](index=259&type=chunk) - Deposits increased by **$85.5 million** in the first six months of 2025, with growth across noninterest-bearing demand, savings, and time deposit categories[279](index=279&type=chunk) - On June 6, 2025, the Corporation issued **$40.0 million** in new 7.50% fixed-to-floating rate subordinated notes and repurchased **$20.0 million** of existing 4.875% notes, strengthening its Tier 2 capital[283](index=283&type=chunk) - As of June 30, 2025, uninsured deposits were approximately **$677.7 million (30.0% of total deposits)**. Excluding secured municipal and intercompany deposits, the uninsured amount was **$536.1 million**, which was covered **1.77 times** by available liquidity of **$950.1 million**[289](index=289&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=97&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The Corporation's primary market risk is interest rate volatility, monitored through simulation analysis and Economic Value of Equity (EVE) analysis, with a hypothetical 100 basis point rise in rates projected to increase net interest income by 2.05% over 12 months, while a 100 basis point drop would decrease it by 3.63%, and EVE analysis showing sensitivity to both rising and falling rates, with a greater negative impact from falling rates compared to the prior year-end One-Year Net Interest Income Simulation as of June 30, 2025 | Assumed Market Interest Rate Shift | Percentage Change | | :--- | :--- | | -300 BP shock | (11.94)% | | -200 BP shock | (7.90)% | | -100 BP shock | (3.63)% | | +100 BP shock | 2.05% | | +200 BP shock | 4.10% | | +300 BP shock | 6.14% | Static EVE Change as of June 30, 2025 | Assumed Market Interest Rate Shift | Percentage Change | | :--- | :--- | | -300 BP shock | (10.92)% | | -200 BP shock | (5.24)% | | -100 BP shock | (1.45)% | | +100 BP shock | (0.08)% | | +200 BP shock | (0.50)% | | +300 BP shock | (1.17)% | - The Corporation uses interest rate swaps to manage interest rate risk, including cash flow hedges to convert variable-rate trust preferred notes to fixed rates, and back-to-back swaps with commercial loan customers[325](index=325&type=chunk) [Controls and Procedures](index=101&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the Corporation's disclosure controls and procedures and concluded they were effective as of June 30, 2025, with no material changes in the Corporation's internal control over financial reporting during the second quarter of 2025 - The CEO and CFO concluded that the Corporation's disclosure controls and procedures were effective as of June 30, 2025[328](index=328&type=chunk) - No material changes to internal control over financial reporting occurred during the quarter ended June 30, 2025[329](index=329&type=chunk) [PART II - Other Information](index=102&type=section&id=PART%20II%20-%20Other%20Information) [Legal Proceedings](index=102&type=section&id=Item%201.%20Legal%20Proceedings) As of June 30, 2025, the Corporation is not involved in any material pending or threatened legal proceedings outside of those occurring in the ordinary course of business - The Corporation is not involved in any material pending or threatened legal proceedings other than those in the ordinary course of business[331](index=331&type=chunk) [Risk Factors](index=102&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors disclosed in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes in risk factors have occurred since the 2024 Annual Report on Form 10-K[332](index=332&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=102&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Corporation has a share repurchase program authorizing up to $5.0 million in repurchases for 2025, with no shares repurchased under this program during the second quarter of 2025, and a total of 145 shares withheld to satisfy employee tax obligations upon vesting of restricted stock - The Board authorized a **$5.0 million** share repurchase program for 2025. No shares were repurchased under this program in Q2 2025[333](index=333&type=chunk) - During Q2 2025, **145 shares** were withheld from employees to satisfy tax withholding obligations related to vested restricted shares[335](index=335&type=chunk) [Other Information](index=102&type=section&id=Item%205.%20Other%20Information) During the second quarter of 2025, no directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement - No directors or officers adopted, modified, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement in Q2 2025[336](index=336&type=chunk) [Exhibits](index=104&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the report, including the form of the new Subordinated Note, CEO/CFO certifications, and financial statements formatted in Inline XBRL - Key exhibits include the Form of Subordinated Note (4.1), CEO/CFO certifications (31.1, 31.2, 32), and Inline XBRL financial data (101)[338](index=338&type=chunk)

PART I Financial Information [Unaudited Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Unaudited%20Consolidated%20Financial%20Statements) This section presents Genpact Limited's unaudited consolidated financial statements, detailing financial position, performance, and cash flows [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) The balance sheet reflects an increase in total assets, liabilities, and equity as of June 30, 2025, primarily influenced by acquisitions and debt changes Consolidated Balance Sheet Highlights (in thousands) | Account | As of December 31, 2024 | As of June 30, 2025 | | :--- | :--- | :--- | | **Total Current Assets** | $2,080,104 | $2,135,029 | | **Goodwill** | $1,669,769 | $1,793,903 | | **Total Assets** | **$4,987,153** | **$5,307,680** | | **Total Current Liabilities** | $963,739 | $1,392,439 | | **Total Liabilities** | **$2,597,542** | **$2,721,069** | | **Total Equity** | **$2,389,611** | **$2,586,611** | [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) Net revenues and net income increased for both the second quarter and six months ended June 30, 2025, reflecting strong financial performance Q2 Financial Performance (in thousands, except EPS) | Metric | Q2 2024 | Q2 2025 | YoY Change | | :--- | :--- | :--- | :--- | | Net Revenues | $1,176,212 | $1,254,418 | +6.6% | | Gross Profit | $416,378 | $450,068 | +8.1% | | Income from Operations | $170,251 | $179,402 | +5.4% | | Net Income | $121,990 | $132,716 | +8.8% | | Diluted EPS | $0.67 | $0.75 | +11.9% | H1 Financial Performance (in thousands, except EPS) | Metric | H1 2024 | H1 2025 | YoY Change | | :--- | :--- | :--- | :--- | | Net Revenues | $2,307,449 | $2,469,344 | +7.0% | | Gross Profit | $812,856 | $879,062 | +8.1% | | Income from Operations | $330,237 | $363,104 | +10.0% | | Net Income | $238,937 | $263,569 | +10.3% | | Diluted EPS | $1.32 | $1.48 | +12.1% | [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow increased, while investing activities saw a significant increase in cash usage due to acquisitions, and financing activities shifted to a net cash outflow Cash Flow Summary for Six Months Ended June 30 (in thousands) | Activity | 2024 | 2025 | | :--- | :--- | :--- | | Net cash provided by operating activities | $183,713 | $217,801 | | Net cash used for investing activities | $(44,420) | $(104,420) | | Net cash (used for) provided by financing activities | $202,314 | $(106,673) | - The significant increase in cash used for investing activities was driven by an **$80.6 million** payment for business acquisitions, net of cash acquired[28](index=28&type=chunk) [Notes to the Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) These notes provide detailed disclosures on accounting policies, business acquisitions, segment performance, debt structure, capital management, and derivative instruments - On **June 5, 2025**, the company acquired XponentL Data, Inc. for a total purchase consideration of **$159.8 million**, including **$82.3 million** in cash and **$77.5 million** in contingent earn-out consideration, resulting in **$111.9 million** in goodwill recognition[87](index=87&type=chunk)[89](index=89&type=chunk)[91](index=91&type=chunk) - Beginning in **Q2 2025**, the company began disaggregating revenue into 'Advanced Technology Solutions' and 'Core Business Services' in addition to its existing 'Data-Tech-AI' and 'Digital Operations' breakdown[222](index=222&type=chunk) - The company's long-term debt as of **June 30, 2025**, totaled approximately **$1.21 billion**, comprising a credit facility and two series of Senior Notes due in 2026 and 2029[143](index=143&type=chunk) - During the first six months of **2025**, the company repurchased **1.9 million** common shares for **$93.0 million** and paid dividends totaling **$59.4 million**[192](index=192&type=chunk)[198](index=198&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=48&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance for Q2 and H1 2025, highlighting revenue growth, margin improvements, and details on liquidity, capital allocation, and financing arrangements [Results of Operations](index=52&type=section&id=Results%20of%20Operations) Net revenues grew for the six months ended June 30, 2025, driven by Data-Tech-AI, with improvements in both gross and Adjusted Income from Operations margins H1 2025 vs H1 2024 Performance Summary (in millions, except percentages) | Metric | H1 2024 | H1 2025 | Change | | :--- | :--- | :--- | :--- | | Net Revenues | $2,307.4M | $2,469.3M | +7.0% | | Gross Margin | 35.2% | 35.6% | +40 bps | | Income from Operations | $330.2M | $363.1M | +10.0% | | Net Income | $238.9M | $263.6M | +10.3% | | AOI Margin | 16.5% | 17.3% | +80 bps | H1 2025 Revenue by Service Type (in millions) | Service Type | H1 2024 | H1 2025 | Growth | | :--- | :--- | :--- | :--- | | Data-Tech-AI | $1,069.9 | $1,181.2 | +10.4% | | Digital Operations | $1,237.6 | $1,288.1 | +4.1% | H1 2025 Revenue by Segment (in millions) | Segment | H1 2024 | H1 2025 | Growth | | :--- | :--- | :--- | :--- | | Financial Services | $625.6 | $665.8 | +6.4% | | Consumer and Healthcare | $827.4 | $849.0 | +2.6% | | High Tech and Manufacturing | $854.5 | $954.5 | +11.7% | [Liquidity and Capital Resources](index=61&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity, supported by operating cash flow, and continues capital allocation through dividends, share repurchases, and credit facilities - Cash and cash equivalents stood at **$663.3 million** as of **June 30, 2025**[316](index=316&type=chunk) - In **Q1 2025**, the board authorized a **$500 million** increase to the share repurchase program, bringing the total to **$2.75 billion**, with **$554.0 million** remaining available as of **June 30, 2025**[320](index=320&type=chunk) - The quarterly cash dividend was increased by **11%** to **$0.17 per share** in **February 2025**[319](index=319&type=chunk) - The company utilizes a **$650 million** revolving credit facility and accounts receivable-based facilities to manage liquidity[330](index=330&type=chunk)[341](index=341&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=67&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company manages market risks, primarily interest rate fluctuations on floating-rate debt, through the use of interest rate swaps and treasury rate locks - The company is exposed to interest rate risk on its floating-rate term loan and revolving credit facility, which are based on Term SOFR[355](index=355&type=chunk) - To manage this risk, the company uses interest rate swaps, with fixed payment rates ranging from **4.25%** to **4.72%**[356](index=356&type=chunk) [Controls and Procedures](index=67&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures are effective[361](index=361&type=chunk) - No material changes were made to the internal control over financial reporting during the quarter ended **June 30, 2025**[363](index=363&type=chunk) PART II Other Information [Legal Proceedings](index=69&type=section&id=Item%201.%20Legal%20Proceedings) There are no pending legal proceedings expected to have a material adverse effect on the company's business or financial condition - There are no legal proceedings pending against the company that are believed to be likely to have a material adverse effect on the business[365](index=365&type=chunk) [Risk Factors](index=69&type=section&id=Item%201A.%20Risk%20Factors) This section refers to the detailed risk factors in the Annual Report on Form 10-K, with no material changes or new significant risks reported for the quarter - The company refers to the risk factors disclosed in its Annual Report on Form 10-K for the year ended **December 31, 2024**, implying no material updates for the current quarter[366](index=366&type=chunk) [Issuer Purchases of Equity Securities](index=69&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company repurchased common shares during Q2 2025 and increased its share repurchase program authorization Share Repurchase Activity (Q2 2025) | Period | Total Shares Purchased | Weighted Avg. Price Paid ($) | | :--- | :--- | :--- | | April 2025 | — | — | | May 2025 | 691,198 | 43.40 | | June 2025 | — | — | | **Total** | **691,198** | **43.40** | - In **February 2025**, the board increased the share repurchase program authorization by **$500 million** to a total of **$2.75 billion**[369](index=369&type=chunk) [Other Information](index=70&type=section&id=Item%205.%20Other%20Information) This section discloses the termination of a Rule 10b5-1 trading arrangement by the President and CEO on June 11, 2025 - On **June 11, 2025**, President and CEO Balkrishan Kalra terminated a Rule 10b5-1 trading arrangement that was intended for the sale of up to **54,400** common shares[370](index=370&type=chunk)

[Second-Quarter 2025 Performance Overview](index=1&type=section&id=Second-Quarter%202025%20Performance%20Overview) The company reported its second-quarter 2025 financial results, highlighting key performance metrics and management's strategic outlook [Key Financial Highlights](index=1&type=section&id=Key%20Financial%20Highlights) The company reported mixed Q2 2025 financial results, with increased orders and backlog but decreased net sales and adjusted EBITDA Key Financial Highlights (Q2 2025) | Metric | Q2 2025 (Millions) | YoY Change | | :-------------------------- | :----------------- | :--------- | | Net income | $1.5 | - | | Adjusted net income | $2.8 | - | | Diluted EPS | $0.04 | - | | Adjusted diluted EPS | $0.08 | - | | Orders | $453.9 | +6.0% | | Backlog | $729.3 | - | | Net sales | $539.5 | -4.0% | | Non-new machine sales | $161.6 | +9.7% | | Adjusted EBITDA | $26.3 | -26.9% | [Management Commentary & Business Outlook](index=1&type=section&id=Management%20Commentary%20%26%20Business%20Outlook) Management highlighted strong order growth and market 'green shoots' despite tariff headwinds, adjusting H2 2025 schedules and anticipating lower-end guidance - Achieved solid **6% year-over-year growth in orders**, driven by strong performance in the MGX distribution business and continued momentum in the European tower crane market, despite tariff headwinds[3](index=3&type=chunk) - Adjusted build schedules for the second half of 2025 and anticipate finishing the year at the lower end of guidance range, expecting six months for the U.S. crane market to find a new equilibrium due to trade deals[3](index=3&type=chunk) - Identified 'green shoots' in the market: improving general European economy, rebounding European tower crane business, active Middle East, improvements in Asia Pacific, and contracting U.S. crane rental house inventory, all signaling positive trends once the tariff environment stabilizes[4](index=4&type=chunk) [Company Information](index=1&type=section&id=Company%20Information) This section provides an overview of The Manitowoc Company, Inc., detailing its history, headquarters, and comprehensive product offerings [About The Manitowoc Company, Inc.](index=1&type=section&id=About%20The%20Manitowoc%20Company%2C%20Inc.) Founded in 1902, Manitowoc is a global provider of engineered lifting products and services, headquartered in Milwaukee, Wisconsin - Founded in 1902, with over a 120-year tradition of providing high-quality, customer-focused products and support services[6](index=6&type=chunk) - Headquartered in Milwaukee, Wisconsin, United States, and is one of the world's leading providers of engineered lifting products and services[6](index=6&type=chunk) - Designs, manufactures, markets, distributes, and supports comprehensive product lines including mobile hydraulic cranes, lattice-boom crawler cranes, boom trucks, and tower cranes under various brands[6](index=6&type=chunk) [Forward-looking Statements](index=2&type=section&id=Forward-looking%20Statements) This section outlines the company's forward-looking statements and the various risk factors that could impact future performance [Forward-looking Statements Disclaimer and Risk Factors](index=2&type=section&id=Forward-looking%20Statements%20Disclaimer%20and%20Risk%20Factors) This section contains forward-looking statements, subject to uncertainties and risks including macroeconomic conditions, geopolitical events, and trade policy changes - Statements are based on current management expectations and are subject to uncertainty and changes in circumstances, not guarantees of future performance[9](index=9&type=chunk) - Factors that could cause actual results to differ materially include macroeconomic conditions (inflation, interest rates, tariffs, supply chain, labor, logistics), actions of competitors, and changes in economic or industry conditions[9](index=9&type=chunk) - Other significant risks include geopolitical events (conflicts in Ukraine and Middle East), changes in customer demand, adverse changes to trade policy (export duties, tariffs), ability to convert backlog into sales, and uncertainties associated with new product introductions[9](index=9&type=chunk)[11](index=11&type=chunk) [Condensed Consolidated Financial Statements](index=4&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents the company's condensed consolidated financial statements, including statements of operations, balance sheets, and cash flows [Condensed Consolidated Statements of Operations](index=4&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) Q2 2025 net sales decreased to $539.5 million, with operating income falling to $9.8 million and net income at $1.5 million Three Months Ended June 30 | Metric | 2025 (Millions) | 2024 (Millions) | | :-------------------------------- | :----------------- | :----------------- | | Net sales | $539.5 | $562.1 | | Cost of sales | $440.5 | $462.4 | | Gross profit | $99.0 | $99.7 | | Operating income | $9.8 | $12.9 | | Income (loss) before income taxes | $1.3 | $3.2 | | Net income (loss) | $1.5 | $1.6 | | Diluted net income (loss) per common share | $0.04 | $0.04 | Six Months Ended June 30 | Metric | 2025 (Millions) | 2024 (Millions) | | :-------------------------------- | :------------------ | :------------------ | | Net sales | $1,010.4 | $1,057.2 | | Cost of sales | $821.6 | $865.0 | | Gross profit | $188.8 | $192.2 | | Operating income | $15.1 | $28.1 | | Income (loss) before income taxes | $(7.5) | $9.6 | | Net income (loss) | $(4.8) | $6.1 | | Diluted net income (loss) per common share | $(0.14) | $0.17 | [Condensed Consolidated Balance Sheets](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) Total assets increased to $1,883.8 million as of June 30, 2025, driven by higher inventories and accounts receivable, with liabilities and equity also rising As of June 30, 2025 vs. December 31, 2024 | Metric | June 30, 2025 (Millions) | Dec 31, 2024 (Millions) | | :------------------------------------ | :----------------------- | :---------------------- | | Total current assets | $1,162.7 | $958.9 | | Total assets | $1,883.8 | $1,660.0 | | Total current liabilities | $560.4 | $474.3 | | Total non-current liabilities | $642.1 | $545.6 | | Total liabilities | $1,202.5 | $1,019.9 | | Total stockholders' equity | $681.3 | $640.1 | - Inventories increased to **$782.5 million** as of June 30, 2025, from $609.4 million at December 31, 2024[15](index=15&type=chunk) - Long-term debt increased to **$459.8 million** as of June 30, 2025, from $377.1 million at December 31, 2024[15](index=15&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Q2 2025 saw net cash used for operating activities of $67.7 million, primarily due to inventory changes, resulting in an $8.5 million decrease in cash and equivalents Three Months Ended June 30 | Metric | 2025 (Millions) | 2024 (Millions) | | :------------------------------------------ | :----------------- | :----------------- | | Net cash provided by (used for) operating activities | $(67.7) | $11.0 | | Net cash used for investing activities | $(5.9) | $(9.6) | | Net cash provided by financing activities | $63.8 | $5.5 | | Net increase (decrease) in cash and cash equivalents | $(8.5) | $6.6 | | Cash and cash equivalents at end of period | $32.9 | $38.1 | Six Months Ended June 30 | Metric | 2025 (Millions) | 2024 (Millions) | | :------------------------------------------ | :------------------ | :------------------ | | Net cash provided by (used for) operating activities | $(54.8) | $(19.6) | | Net cash used for investing activities | $(29.5) | $(21.6) | | Net cash provided by financing activities | $67.0 | $45.7 | | Net increase (decrease) in cash and cash equivalents | $(15.1) | $3.7 | | Cash and cash equivalents at end of period | $32.9 | $38.1 | - Changes in inventories used **$49.5 million** in cash from operating activities for the three months ended June 30, 2025, compared to $15.1 million used in the prior year period[17](index=17&type=chunk) [Non-GAAP Financial Measures Reconciliation](index=7&type=section&id=Non-GAAP%20Financial%20Measures) This section provides reconciliations of non-GAAP financial measures, offering additional insights into the company's performance [Introduction and Rationale](index=7&type=section&id=Introduction%20and%20Rationale) The company utilizes non-GAAP measures like Adjusted EBITDA and Free Cash Flows to provide supplemental financial insights and enhance performance comparison - Non-GAAP financial measures include Adjusted net income (loss), Adjusted DEPS, EBITDA, adjusted EBITDA, adjusted operating income, Adjusted ROIC, and free cash flows[7](index=7&type=chunk)[19](index=19&type=chunk) - These measures provide important supplemental information to management and investors regarding financial and business trends[19](index=19&type=chunk) - Excluding specified items provides a more meaningful comparison, assists investors in analysis, and offers a more relevant measure of operating and management performance[19](index=19&type=chunk) [Adjusted Net Income (Loss) and Adjusted DEPS](index=7&type=section&id=Adjusted%20Net%20Income%20%28Loss%29%20and%20Adjusted%20DEPS) Adjusted net income for Q2 2025 was $2.8 million ($0.08 Adjusted DEPS), reflecting adjustments for restructuring and non-recurring items Three Months Ended June 30 | Metric | 2025 (Reported) | 2025 (Adjusted) | 2024 (Reported) | 2024 (Adjusted) | | :------------------------------------ | :----------------- | :----------------- | :----------------- | :----------------- | | Net income | $1.5 | $2.8 | $1.6 | $8.8 | | Diluted net income per share | $0.04 | $0.08 | $0.04 | $0.25 | Six Months Ended June 30 | Metric | 2025 (Reported) | 2025 (Adjusted) | 2024 (Reported) | 2024 (Adjusted) | | :------------------------------------ | :------------------ | :------------------ | :------------------ | :------------------ | | Net income (loss) | $(4.8) | $(2.9) | $6.1 | $13.9 | | Diluted net income (loss) per share | $(0.14) | $(0.08) | $0.17 | $0.39 | - Adjustments in 2024 included **$5.3 million** of costs associated with a legal matter with the U.S. Environmental Protection Agency (EPA) and $0.1 million of one-time costs for the three months ended June 30, 2024[21](index=21&type=chunk) [Adjusted Return on Invested Capital (ROIC)](index=9&type=section&id=Adjusted%20ROIC) Adjusted ROIC was 4.2% as of June 30, 2025, calculated from adjusted NOPAT and average invested capital - Adjusted ROIC as of June 30, 2025, was **4.2%**[25](index=25&type=chunk)[26](index=26&type=chunk) Adjusted NOPAT (Trailing Twelve Months Ended June 30, 2025) | Metric | Amount (Millions) | | :-------------------------- | :---------------- | | Operating income | $38.8 | | Amortization of intangible assets | $3.0 | | Restructuring expense | $3.5 | | Other non-recurring items - net | $3.6 | | Adjusted operating income | $48.9 | | Provision for income taxes | $(7.3) | | Adjusted NOPAT | $41.6 | Invested Capital (5-Quarter Average as of June 30, 2025) | Metric | Amount (Millions) | | :-------------------------- | :---------------- | | Invested capital | $985.1 | [Free Cash Flows](index=9&type=section&id=Free%20Cash%20Flows) Free cash flows for Q2 2025 were negative $73.7 million, a significant decrease from the prior year, reflecting operating activities and capital expenditures Three Months Ended June 30 | Metric | 2025 (Millions) | 2024 (Millions) | | :------------------------------------------ | :----------------- | :----------------- | | Net cash provided by (used for) operating activities | $(67.7) | $11.0 | | Capital expenditures | $(6.0) | $(12.9) | | Free cash flows | $(73.7) | $(1.9) | Six Months Ended June 30 | Metric | 2025 (Millions) | 2024 (Millions) | | :------------------------------------------ | :------------------ | :------------------ | | Net cash provided by (used for) operating activities | $(54.8) | $(19.6) | | Capital expenditures | $(16.8) | $(25.1) | | Free cash flows | $(71.6) | $(44.7) | [EBITDA and Adjusted EBITDA](index=10&type=section&id=EBITDA%20and%20Adjusted%20EBITDA) Q2 2025 Adjusted EBITDA was $26.3 million, with a 4.9% margin, down from $36.0 million and 6.4% in Q2 2024 Three Months Ended June 30 | Metric | 2025 (Millions) | 2024 (Millions) | | :-------------------------- | :----------------- | :----------------- | | Net income (loss) | $1.5 | $1.6 | | EBITDA | $26.3 | $28.6 | | Adjusted EBITDA | $26.3 | $36.0 | | Adjusted EBITDA margin percentage | 4.9% | 6.4% | Six Months Ended June 30 | Metric | 2025 (Millions) | 2024 (Millions) | | :-------------------------- | :------------------ | :------------------ | | Net income (loss) | $(4.8) | $6.1 | | EBITDA | $42.2 | $59.9 | | Adjusted EBITDA | $48.0 | $67.3 | | Adjusted EBITDA margin percentage | 4.8% | 6.4% | Trailing Twelve Months Ended June 30, 2025 | Metric | Amount (Millions) | | :-------------------------- | :---------------- | | Net income (loss) | $44.9 | | EBITDA | $96.6 | | Adjusted EBITDA | $109.1 | | Adjusted EBITDA margin percentage | 4.9% | [Additional Information](index=1&type=section&id=Additional%20Information) This section provides details regarding the upcoming investor conference call and investor relations contact information [Investor Conference Call](index=1&type=section&id=Investor%20Conference%20Call) An investor conference call to discuss Q2 2025 earnings will be held on August 8, 2025, with a live webcast available - Conference call for security analysts and institutional investors to discuss second-quarter 2025 earnings results on **Friday, August 8, 2025, at 10:00 a.m. ET (9:00 a.m. CT)**[5](index=5&type=chunk) - A live audio webcast of the call, along with the related presentation, will be available via webcast on the Manitowoc website at http://ir.manitowoc.com in the 'Events & Presentations' section[5](index=5&type=chunk) [Investor Relations Contact](index=11&type=section&id=Investor%20Relations%20Contact) Contact details for investor relations inquiries are provided - Contact: Ion Warner, SVP, Marketing and Investor Relations[31](index=31&type=chunk) - Phone: **+1 414-760-4805**[31](index=31&type=chunk)