[PART I – FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) [Cautionary Note Regarding Forward-Looking Statements](index=4&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This section advises readers that the report contains forward-looking statements, which are subject to risks, uncertainties, and assumptions that could cause actual results to differ materially - Forward-looking statements are based on current management information and are subject to known and unknown risks, uncertainties, and assumptions that could cause actual results to differ materially[9](index=9&type=chunk) [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements for Werner Enterprises, Inc., including statements of income, comprehensive income, balance sheets, cash flows, and stockholders' equity, prepared in accordance with SEC instructions and GAAP [Consolidated Statements of Income](index=5&type=section&id=Consolidated%20Statements%20of%20Income) | Metric (in thousands, except per share) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | % Change (YoY) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | % Change (YoY) | | :------------------------------------ | :--------------------------- | :--------------------------- | :-------------- | :--------------------------- | :--------------------------- | :-------------- | | Operating revenues | $753,148 | $760,798 | (1.0)% | $1,465,262 | $1,529,878 | (4.2)% | | Total operating expenses | $686,827 | $741,187 | (7.3)% | $1,404,773 | $1,494,679 | (6.0)% | | Operating income | $66,321 | $19,611 | 238.2% | $60,489 | $35,199 | 71.8% | | Income before income taxes | $59,090 | $12,131 | 387.1% | $45,702 | $21,446 | 113.1% | | Net income attributable to Werner | $44,062 | $9,465 | 365.5% | $33,964 | $15,777 | 115.3% | | Basic EPS | $0.72 | $0.15 | 380.0% | $0.55 | $0.25 | 120.0% | | Diluted EPS | $0.72 | $0.15 | 380.0% | $0.55 | $0.25 | 120.0% | [Consolidated Statements of Comprehensive Income](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income | $43,622 | $9,200 | $33,401 | $15,448 | | Other comprehensive income (loss) | $2,164 | $(5,339) | $668 | $(4,721) | | Comprehensive income | $45,786 | $3,861 | $34,069 | $10,727 | | Comprehensive income attributable to Werner | $46,226 | $4,126 | $34,632 | $11,056 | [Consolidated Condensed Balance Sheets](index=7&type=section&id=Consolidated%20Condensed%20Balance%20Sheets) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Total current assets | $559,482 | $541,773 | | Property and equipment, net | $1,878,106 | $1,934,236 | | Goodwill | $129,104 | $129,104 | | Intangible assets, net | $71,372 | $76,407 | | Total assets | $2,946,375 | $3,052,237 | | Total current liabilities | $334,333 | $355,749 | | Long-term debt, net of current portion | $725,000 | $630,000 | | Total liabilities | $1,488,586 | $1,558,361 | | Total stockholders' equity | $1,420,924 | $1,455,932 | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | | Net cash provided by operating activities | $75,395 | $197,657 | | Net cash used in investing activities | $(63,921) | $(119,409) | | Net cash used in financing activities | $(1,846) | $(67,768) | | Net increase in cash and cash equivalents | $10,668 | $8,725 | | Cash and cash equivalents, end of period | $51,420 | $70,448 | [Consolidated Statements of Stockholders' Equity and Temporary Equity - Redeemable Noncontrolling Interest](index=9&type=section&id=Consolidated%20Statements%20of%20Stockholders%27%20Equity%20and%20Temporary%20Equity%20-%20Redeemable%20Noncontrolling%20Interest) - Stockholders' equity decreased from **$1,455.9 million** at December 31, 2024, to **$1,420.9 million** at June 30, 2025, primarily due to common stock repurchases and dividends, partially offset by net income[17](index=17&type=chunk)[21](index=21&type=chunk) Key Changes in Stockholders' Equity (Six Months Ended June 30, 2025) | Item (in thousands) | Amount | | :------------------ | :----- | | Net income attributable to Werner | $33,964 | | Repurchases of common stock | $(55,562) | | Dividends on common stock | $(17,046) | | Non-cash equity compensation expense | $4,907 | [Notes to Consolidated Financial Statements (Unaudited)](index=12&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20(Unaudited)) This section provides unaudited consolidated financial statements, prepared under SEC and GAAP guidelines, with results not indicative of the full year - The financial statements are unaudited and prepared in accordance with SEC instructions to Form 10-Q and U.S. GAAP, reflecting all normal recurring adjustments[24](index=24&type=chunk) - Operating results for the three and six months ended June 30, 2025, are not necessarily indicative of the full year's expected results[25](index=25&type=chunk) [(1) Basis of Presentation and Recent Accounting Pronouncements](index=12&type=section&id=(1)%20Basis%20of%20Presentation%20and%20Recent%20Accounting%20Pronouncements) The interim consolidated financial statements are unaudited and prepared in accordance with SEC instructions to Form 10-Q and U.S. GAAP, reflecting normal recurring adjustments - The interim consolidated financial statements are unaudited and prepared in accordance with SEC instructions to Form 10-Q and U.S. GAAP, reflecting normal recurring adjustments[24](index=24&type=chunk) - Operating results for the three and six months ended June 30, 2025, are not necessarily indicative of the full year's expected results[25](index=25&type=chunk) - The company is evaluating ASU 2023-09 (Income Taxes) and ASU 2024-03 (Expense Disaggregation Disclosures), expecting them to impact disclosures but not results of operations, cash flows, or financial condition[27](index=27&type=chunk)[28](index=28&type=chunk) [(2) Revenue](index=13&type=section&id=(2)%20Revenue) - Revenues are recognized over time as control of promised services is transferred to customers[29](index=29&type=chunk) Revenues Disaggregated by Source (in thousands) | Revenue Source | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Truckload Transportation Services | $517,647 | $537,069 | $1,019,522 | $1,088,195 | | Werner Logistics | $221,177 | $208,912 | $416,735 | $411,394 | | Total revenues | $753,148 | $760,798 | $1,465,262 | $1,529,878 | Revenues Disaggregated by Geographic Area (in thousands) | Geographic Area | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | United States | $715,677 | $716,559 | $1,390,919 | $1,438,419 | | Mexico | $33,557 | $36,165 | $67,168 | $75,285 | | Canada | $3,914 | $8,074 | $7,175 | $16,174 | | Total revenues | $753,148 | $760,798 | $1,465,262 | $1,529,878 | [(3) Goodwill and Intangible Assets](index=14&type=section&id=(3)%20Goodwill%20and%20Intangible%20Assets) - No changes in the carrying amount of goodwill by segment for the six months ended June 30, 2025[34](index=34&type=chunk) Acquired Intangible Assets (in thousands) | Intangible Asset | June 30, 2025 Net Carrying Amount | December 31, 2024 Net Carrying Amount | | :--------------- | :-------------------------------- | :------------------------------------ | | Customer relationships | $54,180 | $58,191 | | Trade names | $17,192 | $18,216 | | Total intangible assets | $71,372 | $76,407 | - Amortization expense on intangible assets was **$2.5 million** for Q2 2025 and **$5.0 million** for 6M 2025; estimated future amortization is **$5.0 million** for the remainder of 2025 and **$10.1 million** for each of the next five fiscal years[36](index=36&type=chunk) [(4) Leases](index=14&type=section&id=(4)%20Leases) - The company primarily uses operating leases for real estate, with terms ranging from 2 to 18 years, some including renewal options[37](index=37&type=chunk) Operating Lease Information (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :----- | :------------ | :---------------- | | Right-of-use assets | $44,176 | $49,599 | | Total operating lease liabilities | $46,545 | $51,758 | | Weighted-average remaining lease term | 4.58 years | 4.75 years | | Weighted-average discount rate | 4.9 % | 5.0 % | - Operating lease expense was **$6.6 million** for Q2 2025 (vs **$4.9 million** in Q2 2024) and **$13.3 million** for 6M 2025 (vs **$9.4 million** in 6M 2024)[42](index=42&type=chunk) - As a lessor, the company leases tractors and trailers, generating revenues of **$2.9 million** for Q2 2025 (vs **$2.3 million** in Q2 2024) and **$5.5 million** for 6M 2025 (vs **$4.8 million** in 6M 2024)[43](index=43&type=chunk) [(5) Fair Value](index=15&type=section&id=(5)%20Fair%20Value) - The company uses a fair value hierarchy (Level 1, 2, 3) to measure assets and liabilities, prioritizing observable inputs[48](index=48&type=chunk)[49](index=49&type=chunk)[50](index=50&type=chunk)[51](index=51&type=chunk) Fair Value Hierarchy for Assets and Liabilities (in thousands) | Item | Level | June 30, 2025 | December 31, 2024 | | :--- | :---- | :------------ | :---------------- | | **Assets:** | | | | | Pay-fixed interest rate swaps | 2 | $— | $1,162 | | Equity securities | 1 | $106 | $141 | | **Liabilities:** | | | | | Pay-fixed interest rate swaps (current) | 2 | $11 | $134 | | Pay-fixed interest rate swaps (long-term) | 2 | $3,961 | $2,420 | | Contingent consideration associated with acquisition | 3 | $— | $9,315 | - The contingent earnout liability related to the Baylor Trucking, Inc. acquisition was finalized and paid in April 2025, resulting in a net favorable change of **$7.9 million** for Q2 2025 and **$7.8 million** for 6M 2025[53](index=53&type=chunk) [(6) Investments](index=17&type=section&id=(6)%20Investments) - Strategic equity investments without readily determinable fair values, primarily in MLSI, totaled **$109.9 million** at June 30, 2025 (vs **$103.9 million** at Dec 31, 2024); cumulative upward adjustments on these equity securities totaled **$64.9 million**[56](index=56&type=chunk)[57](index=57&type=chunk) - The company holds a strategic minority equity investment in an autonomous technology company, valued at **$0.1 million** at June 30, 2025[58](index=58&type=chunk) - Investment in Autotech Fund (equity method) was **$9.3 million** at June 30, 2025 (vs **$6.7 million** at Dec 31, 2024); capital contributions for 6M 2025 were **$1.76 million**, and loss from equity method investment was **$(842) thousand** for 6M 2025[60](index=60&type=chunk)[61](index=61&type=chunk) [(7) Debt and Credit Facilities](index=18&type=section&id=(7)%20Debt%20and%20Credit%20Facilities) - The company has a **$1.075 billion** unsecured credit facility maturing in December 2027, with compliance with financial covenants as of June 30, 2025[62](index=62&type=chunk)[64](index=64&type=chunk) - A new Loan Security Agreement (LSA) was entered into on March 27, 2025, providing up to **$300.0 million** (potentially **$350.0 million**) in secured borrowing collateralized by eligible receivables[67](index=67&type=chunk)[68](index=68&type=chunk) Total Debt (in thousands) | Debt Type | June 30, 2025 | December 31, 2024 | | :-------- | :------------ | :---------------- | | 2022 Credit Agreement | $430,000 | $650,000 | | LSA | $295,000 | $— | | Total debt | $725,000 | $650,000 | - Total available borrowing capacity was **$644.1 million** as of June 30, 2025, including **$639.1 million** under the 2022 Credit Agreement and **$5.0 million** under the LSA[70](index=70&type=chunk) - The company uses variable-for-fixed interest rate swap agreements to limit exposure to interest rate increases, with **$355.0 million** of variable debt effectively fixed at **5.97%** at June 30, 2025[65](index=65&type=chunk)[163](index=163&type=chunk) [(8) Commitments and Contingencies](index=20&type=section&id=(8)%20Commitments%20and%20Contingencies) - The company has committed to property and equipment purchases of approximately **$116.4 million** at June 30, 2025[73](index=73&type=chunk) - On June 27, 2025, the Texas Supreme Court reversed an adverse **$92.0 million** jury verdict from a 2014 accident, effectively ending the case in Werner's favor, resulting in a **$45.7 million** liability reversal through insurance and claims expense in Q2 2025[75](index=75&type=chunk)[76](index=76&type=chunk) - The company is involved in class action litigation regarding meal/rest breaks, unpaid wages, and unauthorized deductions, with an inability to reasonably estimate liability at this time for certain claims[77](index=77&type=chunk) [(9) Earnings Per Share](index=20&type=section&id=(9)%20Earnings%20Per%20Share) - Basic EPS is computed by dividing net income attributable to Werner by weighted average common shares outstanding; diluted EPS includes the effect of dilutive potential common shares[78](index=78&type=chunk) Earnings Per Share Calculation (in thousands, except per share amounts) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income attributable to Werner | $44,062 | $9,465 | $33,964 | $15,777 | | Weighted average common shares outstanding | 60,888 | 62,706 | 61,386 | 63,089 | | Diluted EPS | $0.72 | $0.15 | $0.55 | $0.25 | [(10) Segment Information](index=21&type=section&id=(10)%20Segment%20Information) - The company operates two reportable segments: Truckload Transportation Services (TTS) and Werner Logistics[80](index=80&type=chunk) - TTS includes Dedicated and One-Way Truckload operating segments, focusing on consumer nondurable products and specialized services; Werner Logistics provides non-asset-based transportation and logistics services through Truckload Logistics, Intermodal, and Final Mile divisions[81](index=81&type=chunk)[82](index=82&type=chunk) Segment Revenues and Operating Income (Three Months Ended June 30, 2025 vs 2024, in thousands) | Segment | 2025 Revenues | 2024 Revenues | % Change | 2025 Operating Income | 2024 Operating Income | % Change | | :------ | :------------ | :------------ | :------- | :-------------------- | :-------------------- | :------- | | TTS | $517,647 | $537,069 | (3.6)% | $64,089 | $20,998 | 205.2% | | Werner Logistics | $221,177 | $208,912 | 5.9% | $4,328 | $550 | 686.9% | Segment Revenues and Operating Income (Six Months Ended June 30, 2025 vs 2024, in thousands) | Segment | 2025 Revenues | 2024 Revenues | % Change | 2025 Operating Income | 2024 Operating Income | % Change | | :------ | :------------ | :------------ | :------- | :-------------------- | :-------------------- | :------- | | TTS | $1,019,522 | $1,088,195 | (6.3)% | $63,173 | $41,838 | 51.0% | | Werner Logistics | $416,735 | $411,394 | 1.3% | $3,853 | $(1,779) | N/A | [(11) Subsequent Events](index=25&type=section&id=(11)%20Subsequent%20Events) - In July 2025, two variable-for-fixed interest rate swap agreements with an aggregate notional amount of **$40.0 million** matured, and two new agreements with an aggregate notional amount of **$60.0 million**, maturing in July 2028, were entered into[91](index=91&type=chunk) - The One Big Beautiful Bill Act (OBBBA) was enacted on July 4, 2025, which will impact deferred tax balances in Q3 2025; the company expects a favorable impact on cash flows due to the reinstatement of **100%** bonus depreciation for qualified property[93](index=93&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition, results of operations, liquidity, and other factors, and should be read in conjunction with the 2024 Form 10-K - The MD&A summarizes financial statements from management's perspective, covering financial condition, results of operations, liquidity, and other factors[94](index=94&type=chunk) [Overview](index=26&type=section&id=Overview) - The company operates in the truckload and logistics sectors, focusing on consumer nondurable products in truckload and providing non-asset-based logistics services[95](index=95&type=chunk) - Success depends on efficient resource management, adaptability to customer demand, and capital investments in equipment or securing third-party capacity[95](index=95&type=chunk) - Key resource requirements include company drivers, independent contractors, tractors, trailers for TTS, and qualified third-party capacity for Werner Logistics; the company is self-insured for a significant portion of claims[97](index=97&type=chunk) - The operating ratio is a key industry measure for profitability, with significant variable expenses including driver salaries, fuel, and purchased transportation[99](index=99&type=chunk) [Results of Operations](index=28&type=section&id=Results%20of%20Operations) [Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024](index=30&type=section&id=Three%20Months%20Ended%20June%2030%2C%202025%20Compared%20to%20Three%20Months%20Ended%20June%2030%2C%202024) - Operating revenues decreased by **1.0%** to **$753.1 million**, while operating income significantly increased by **238.2%** to **$66.3 million**, with the operating margin rising to **8.8%** from **2.6%**[102](index=102&type=chunk)[107](index=107&type=chunk) - Consolidated and TTS segment operating results were positively impacted by a **$45.7 million** liability reversal from a favorable lawsuit decision and a **$7.9 million** net favorable change to the contingent earnout liability[107](index=107&type=chunk) - TTS segment revenues decreased **3.6%**, while Werner Logistics revenues increased **5.9%**; TTS operating income increased to **$64.1 million** (**12.4%** margin) from **$21.0 million** (**3.9%** margin); Werner Logistics operating income increased to **$4.3 million** (**2.0%** margin) from **$0.6 million** (**0.3%** margin)[107](index=107&type=chunk)[109](index=109&type=chunk)[113](index=113&type=chunk) - Trucking revenues, net of fuel surcharge, decreased **1.6%** due to a **1.8%** decrease in average tractors in service; TTS average revenues per tractor per week, net of fuel surcharge, increased **0.3%**[109](index=109&type=chunk) - Fuel expense decreased **16.1%** due to lower average diesel fuel prices and fewer company tractor miles; insurance and claims expense decreased **121.4%** primarily due to the **$45.7 million** liability reversal[118](index=118&type=chunk)[124](index=124&type=chunk) - Rent and purchased transportation expense increased **8.5%**, driven by higher logistics revenues and more independent contractor miles in TTS, shifting costs from other categories[129](index=129&type=chunk)[130](index=130&type=chunk) - Other operating expenses decreased **288.0%** primarily due to the **$7.9 million** favorable change in contingent earnout liability and higher gains on sales of property and equipment[102](index=102&type=chunk)[132](index=132&type=chunk) [Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024](index=34&type=section&id=Six%20Months%20Ended%20June%2030%2C%202025%20Compared%20to%20Six%20Months%20Ended%20June%2030%2C%202024) - Operating revenues decreased by **4.2%** to **$1,465.3 million**, while operating income increased by **71.8%** to **$60.5 million**, with the operating margin rising to **4.1%** from **2.3%**[102](index=102&type=chunk)[136](index=136&type=chunk) - TTS segment revenues decreased **6.3%**, primarily due to a **4.3%** decrease in average tractors in service and a **0.5%** decrease in average revenues per tractor per week; Werner Logistics revenues increased **1.3%** due to higher volumes in Truckload Logistics[136](index=136&type=chunk) - Salaries, wages and benefits decreased **6.0%** due to fewer company tractor miles, decreased non-driver pay, and lower benefit costs; fuel expense decreased **17.5%** due to lower average diesel fuel prices and fewer company tractor miles[138](index=138&type=chunk)[139](index=139&type=chunk) - Insurance and claims decreased **45.8%** primarily due to the **$45.7 million** liability reversal from the favorable lawsuit decision[141](index=141&type=chunk) - Rent and purchased transportation expense increased due to higher logistics revenues and more independent contractor miles in TTS; other operating expenses decreased due to the favorable contingent earnout liability change and higher gains on equipment sales[143](index=143&type=chunk)[144](index=144&type=chunk) - Net interest expense increased **$1.0 million** due to replacing lower-cost debt with higher-cost debt and an increase in average debt outstanding[145](index=145&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) - The company's financial position is strong with **$51.4 million** in cash and cash equivalents and **$1.4 billion** in stockholders' equity as of June 30, 2025[149](index=149&type=chunk) - Total available borrowing capacity was **$644.1 million** under existing credit facilities[149](index=149&type=chunk) - Net cash provided by operating activities decreased by **$122.3 million** to **$75.4 million** for the six months ended June 30, 2025, primarily due to working capital changes[151](index=151&type=chunk) - Net capital expenditures guidance for full-year 2025 was adjusted down to a range of **$145 million** to **$185 million** (from **$185 million**-**$235 million**), driven by a higher inventory of new tractors and a shift to a more asset-light operational mix[152](index=152&type=chunk) - Financing activities for 6M 2025 included **$75.0 million** in net debt borrowings, **$17.3 million** in dividends, and **$55.6 million** in stock repurchases (**2,113,007** shares)[153](index=153&type=chunk)[154](index=154&type=chunk) [Regulations](index=37&type=section&id=Regulations) - California voluntarily withdrew the Advanced Clean Fleets (ACF) waiver request, and Congress rescinded previously granted waivers for Advanced Clean Trucks (ACT), creating uncertainty for these regulations[156](index=156&type=chunk) - The rescission of these waivers could potentially impact tractor prices, availability, performance, and efficiency[156](index=156&type=chunk) [Critical Accounting Estimates](index=38&type=section&id=Critical%20Accounting%20Estimates) - Estimates of accrued liabilities for insurance and claims for bodily injury and property damage are a critical accounting estimate[159](index=159&type=chunk) - There have been no material changes to critical accounting estimates from those discussed in the 2024 Form 10-K[159](index=159&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses the company's exposure to market risks from changes in commodity prices (diesel fuel), foreign currency exchange rates (primarily Mexican Peso), and interest rates - The company is exposed to commodity price risk from diesel fuel fluctuations, recovering a majority but not all increases through fuel surcharges; no derivative financial instruments were used for fuel price hedging as of June 30, 2025[161](index=161&type=chunk) - Foreign currency exchange rate risk primarily relates to changes in the value of revenue equipment owned by a Mexican subsidiary, with most foreign revenues denominated in U.S. Dollars[162](index=162&type=chunk) - Interest rate risk is managed through a mix of variable interest rate debt and interest rate swap agreements; a hypothetical one-percentage point increase in SOFR and commercial paper rate would increase interest expense by approximately **$3.5 million** for the next 12 months[163](index=163&type=chunk) [Item 4. Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures, concluding they are effective at a reasonable assurance level - Disclosure controls and procedures were evaluated and deemed effective at a reasonable assurance level as of June 30, 2025[164](index=164&type=chunk) - No changes in internal control over financial reporting materially affected, or are reasonably likely to materially affect, internal control over financial reporting during the most recent fiscal quarter[166](index=166&type=chunk) [PART II – OTHER INFORMATION](index=39&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=39&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 8 in the Notes to Consolidated Financial Statements for information regarding legal proceedings - Information regarding legal proceedings is detailed in Note 8 of the Consolidated Financial Statements[169](index=169&type=chunk) [Item 1A. Risk Factors](index=39&type=page&id=Item%201A.%20Risk%20Factors) This section advises readers to consider the risk factors discussed in the 2024 Form 10-K, noting no material changes from those previously disclosed - Readers should carefully consider risk factors from the 2024 Form 10-K, with no material changes reported in this period[170](index=170&type=chunk)[171](index=171&type=chunk) [Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities](index=39&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) This section details the company's stock repurchase program, including shares purchased during the second quarter of 2025 - The company has a stock repurchase program authorized for up to **5,000,000** shares, with **1,783,342** shares remaining available as of June 30, 2025[172](index=172&type=chunk) Issuer Purchases of Equity Securities (Second Quarter 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs | | :----- | :------------------------------- | :--------------------------- | :----------------------------------------------------------------------------- | :----------------------------------------------------------------------------- | | April 1-30, 2025 | — | $— | — | 3,896,349 | | May 1-31, 2025 | 1,729,868 | $25.83 | 1,729,868 | 2,166,481 | | June 1-30, 2025 | 383,139 | $27.02 | 383,139 | 1,783,342 | | Total | 2,113,007 | $26.05 | 2,113,007 | | [Item 5. Other Information](index=40&type=section&id=Item%205.%20Other%20Information) This section states that no Company director or officer adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during the second quarter of 2025 - No Company director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during Q2 2025[176](index=176&type=chunk) [Item 6. Exhibits](index=40&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including certifications, financial statements in iXBRL, and the cover page - The report includes various exhibits, such as Restated Articles of Incorporation, Revised and Restated By-Laws, CEO/CFO certifications (302 and 906), and unaudited financial information in iXBRL format[177](index=177&type=chunk)

[PART I - FINANCIAL INFORMATION](index=2&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=2&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents ESCO Technologies Inc.'s unaudited condensed consolidated financial statements for the third quarter and first nine months ended June 30, 2025, along with detailed notes on significant accounting policies, acquisitions, and segment performance [Condensed Consolidated Statements of Operations](index=2&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the third quarter ended June 30, 2025, net sales increased to $296.3 million from $233.6 million year-over-year, but net earnings decreased to $26.1 million from $29.2 million; for the nine months ended June 30, 2025, net sales grew to $742.7 million from $645.6 million, and net earnings increased to $80.6 million from $67.6 million compared to the prior year period Q3 Statement of Operations Highlights (in thousands, except per share amounts) | Metric | Q3 2025 | Q3 2024 | Change | | :--- | :--- | :--- | :--- | | **Net Sales** | $296,344 | $233,568 | +26.8% | | Earnings from Continuing Operations | $24,755 | $28,312 | -12.6% | | **Net Earnings** | $26,065 | $29,230 | -10.8% | | **Diluted EPS (Net Earnings)** | $1.01 | $1.13 | -10.6% | Nine Months Statement of Operations Highlights (in thousands, except per share amounts) | Metric | Nine Months 2025 | Nine Months 2024 | Change | | :--- | :--- | :--- | :--- | | **Net Sales** | $742,714 | $645,621 | +15.0% | | Earnings from Continuing Operations | $71,445 | $63,330 | +12.8% | | **Net Earnings** | $80,571 | $67,618 | +19.2% | | **Diluted EPS (Net Earnings)** | $3.11 | $2.62 | +18.7% | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets increased significantly to $2.53 billion from $1.84 billion at September 30, 2024, primarily driven by increases in Goodwill and Intangible assets from a recent acquisition; total liabilities also rose to $1.20 billion from $601.3 million, largely due to a substantial increase in long-term debt to fund the acquisition, while total shareholders' equity grew to $1.33 billion Balance Sheet Summary (in thousands) | Account | June 30, 2025 | Sept 30, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $754,723 | $668,649 | | **Goodwill** | $760,555 | $529,935 | | **Intangible Assets, net** | $745,079 | $403,524 | | **Total Assets** | **$2,526,385** | **$1,838,620** | | **Total Current Liabilities** | $496,840 | $349,854 | | **Long-term Debt** | $505,000 | $102,000 | | **Total Liabilities** | **$1,199,771** | **$601,270** | | **Total Shareholders' Equity** | $1,326,614 | $1,237,350 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended June 30, 2025, net cash provided by operating activities was $132.0 million, a significant increase from $55.5 million in the prior year period; net cash used in investing activities was $510.2 million, primarily for the acquisition of a business ($472.0 million), and net cash provided by financing activities was $390.6 million, driven by proceeds from long-term debt to fund the acquisition Cash Flow Summary (Nine Months Ended June 30, in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | **Net Cash from Operating Activities** | $132,002 | $55,454 | | **Net Cash used by Investing Activities** | ($510,200) | ($89,888) | | *Acquisition of business, net* | *($472,006)* | *($56,383)* | | **Net Cash from Financing Activities** | $390,599 | $55,301 | | *Proceeds from long-term debt* | *$645,000* | *$193,000* | | **Net Increase in Cash** | $12,853 | $21,176 | | **Cash at End of Period** | $78,816 | $63,042 | [Note 3. Acquisition](index=7&type=section&id=Note%203.%20ACQUISITION) On April 25, 2025, the company acquired the Signature Management & Power (SM&P) business from Ultra Maritime for approximately $472 million, now known as ESCO Maritime Solutions and part of the A&D segment, which added $37.1 million in revenue since the closing date and is expected to enhance the company's naval product offerings, with the preliminary purchase price allocation resulting in $222.7 million of goodwill - Completed the acquisition of Signature Management & Power (SM&P) for **~$472 million**, which will be integrated into the Aerospace & Defense (A&D) segment[17](index=17&type=chunk) - The acquired business, now ESCO Maritime Solutions, contributed **$37.1 million** in revenue in the quarter since the acquisition date[17](index=17&type=chunk) - The preliminary purchase price allocation includes **$290.5 million** for customer relationships, **$61.3 million** for backlog, and **$222.7 million** in goodwill[18](index=18&type=chunk) [Note 4. Assets Held for Sale / Discontinued Operations](index=9&type=section&id=Note%204.%20ASSETS%20HELD%20FOR%20SALE%20%2F%20DISCONTINUED%20OPERATIONS) The company entered into a definitive agreement to sell its VACCO Industries (VACCO) business to RBC Bearings Incorporated, with the divestiture completed on July 18, 2025, for net proceeds of approximately $275 million, representing a strategic exit from the Space business, with VACCO's results now reported as discontinued operations - Agreed to sell VACCO Industries to RBC Bearings, completing the transaction on July 18, 2025, for net proceeds of approximately **$275 million**[19](index=19&type=chunk) - The sale of VACCO represents a strategic shift to exit the Space business; its financial results are now classified as discontinued operations[19](index=19&type=chunk) VACCO Net Sales (Discontinued Operations, in millions) | Period | 2025 | 2024 | | :--- | :--- | :--- | | **Three Months** | $30.3 | $27.2 | | **Nine Months** | $96.4 | $82.6 | [Note 8. Business Segment Information](index=11&type=section&id=Note%208.%20BUSINESS%20SEGMENT%20INFORMATION) The company operates in three segments: Aerospace & Defense (A&D), Utility Solutions Group (USG), and RF Test and Measurement (Test); for the nine months ended June 30, 2025, A&D was the largest segment by sales ($307.8M) and EBIT ($78.2M), followed by USG (Sales $269.8M, EBIT $62.8M) and Test (Sales $165.1M, EBIT $21.5M) Segment Net Sales (in thousands) | Segment | Q3 2025 | Q3 2024 | Nine Months 2025 | Nine Months 2024 | | :--- | :--- | :--- | :--- | :--- | | **Aerospace & Defense** | $136,324 | $87,235 | $307,819 | $241,279 | | **USG** | $92,357 | $90,277 | $269,784 | $260,570 | | **Test** | $67,663 | $56,056 | $165,111 | $143,772 | | **Consolidated** | **$296,344** | **$233,568** | **$742,714** | **$645,621** | Segment EBIT (in thousands) | Segment | Q3 2025 | Q3 2024 | Nine Months 2025 | Nine Months 2024 | | :--- | :--- | :--- | :--- | :--- | | **Aerospace & Defense** | $36,577 | $20,150 | $78,246 | $55,919 | | **USG** | $21,540 | $22,155 | $62,808 | $57,355 | | **Test** | $10,732 | $9,292 | $21,523 | $16,613 | | **Corporate (loss)** | ($27,859) | ($12,296) | ($56,918) | ($40,289) | | **Consolidated EBIT** | **$40,990** | **$39,301** | **$105,659** | **$89,598** | [Note 13. Revenues](index=16&type=section&id=Note%2013.%20REVENUES) For the nine months ended June 30, 2025, total revenue was $742.7 million, with commercial customers accounting for $538.2 million and government customers for $204.5 million, and geographically, the United States contributed $496.7 million; the company's remaining performance obligations (backlog) stood at $1.165 billion, with approximately 66% expected to be recognized as revenue in the next twelve months Revenue Disaggregation (Nine Months Ended June 30, 2025, in thousands) | Category | A&D | USG | Test | Total | | :--- | :--- | :--- | :--- | :--- | | **By Customer Type** | | | | | | Commercial | $151,756 | $261,581 | $124,831 | $538,168 | | Government | $156,063 | $8,203 | $40,280 | $204,546 | | **By Geographic Location** | | | | | | United States | $226,444 | $173,121 | $97,086 | $496,651 | | International | $81,375 | $96,663 | $68,025 | $246,063 | - Remaining performance obligations (backlog) totaled **$1,165.4 million** as of June 30, 2025[56](index=56&type=chunk) - The company expects to recognize approximately **66%** of its backlog as revenue within the next twelve months[56](index=56&type=chunk) [Item 2. 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 discusses the financial results, highlighting a 26.8% increase in Q3 net sales, driven primarily by the A&D segment and the Maritime acquisition; despite higher sales, Q3 net earnings from continuing operations declined due to increased costs associated with the acquisition, and the company's backlog significantly increased to $1.165 billion, with the discussion also covering segment-level performance, liquidity, and the strategic impacts of the recent acquisition and divestiture [Net Sales Analysis](index=21&type=section&id=Net%20Sales%20Analysis) Q3 2025 net sales rose 26.8% YoY to $296.3 million, and nine-month sales grew 15.0% to $742.7 million; the A&D segment was the primary driver, with Q3 sales up 56.3% ($49.1 million), including $37.1 million from the new Maritime business, while the Test segment grew 20.7%, and the USG segment grew 2.3% in the quarter - Q3 2025 net sales increased by **26.8%** year-over-year, driven by a **$49.0 million** increase in the A&D segment, an **$11.6 million** increase in Test, and a **$2.1 million** increase in USG[70](index=70&type=chunk) - A&D segment's Q3 sales growth of **56.3%** was mainly due to the Maritime acquisition (contributing **$37.1 million**) and increased commercial and defense aerospace shipments[71](index=71&type=chunk) [Orders and Backlog](index=23&type=section&id=Orders%20and%20Backlog) The company's backlog from continuing operations surged to $1.165 billion at June 30, 2025, up from $664 million at September 30, 2024; new orders in Q3 2025 were $749.1 million, a substantial increase from $254.9 million in Q3 2024, with this growth dominated by the A&D segment, which received $582.4 million in new orders, including $364.2 million of acquired backlog from the Maritime acquisition - Backlog from continuing operations increased to **$1,165 million** at June 30, 2025, from **$664 million** at September 30, 2024[74](index=74&type=chunk) - Q3 2025 new orders totaled **$749.1 million**, with the A&D segment contributing **$582.4 million**, which includes **$364.2 million** of backlog acquired with the Maritime business[74](index=74&type=chunk) [EBIT Analysis](index=23&type=section&id=EBIT%20Analysis) Consolidated EBIT from continuing operations was $41.0 million (13.8% of sales) in Q3 2025, compared to $39.3 million (16.8% of sales) in Q3 2024; the A&D segment's EBIT grew significantly due to higher sales volume from the Maritime acquisition, despite being negatively impacted by $2.7 million in acquisition-related charges, while corporate costs increased substantially, mainly due to amortization and transaction costs from the acquisition Consolidated EBIT from Continuing Operations (in thousands) | Period | Q3 2025 | Q3 2024 | Nine Months 2025 | Nine Months 2024 | | :--- | :--- | :--- | :--- | :--- | | **EBIT** | $40,990 | $39,301 | $105,659 | $89,598 | | **EBIT Margin** | 13.8% | 16.8% | 14.2% | 13.9% | - A&D segment EBIT increased in Q3 and the first nine months of 2025, driven by higher sales volumes including the Maritime acquisition, though Q3 was negatively impacted by **$2.7 million** in inventory step-up and stamp duty charges[82](index=82&type=chunk) - Corporate costs increased in Q3 2025 to **$27.9 million** from **$12.3 million** YoY, primarily due to an **$8.4 million** increase in acquisition-related amortization and **$5.2 million** in acquisition costs from the Maritime deal[85](index=85&type=chunk) [Capital Resources and Liquidity](index=26&type=section&id=Capital%20Resources%20and%20Liquidity) The company's financial position remains strong, with $338 million available under its credit facility and $78.7 million in cash as of June 30, 2025; net cash from continuing operations increased to $88.3 million for the first nine months of 2025, and the company completed the $472 million acquisition of SM&P (Maritime) and the $275 million divestiture of VACCO, strategically reshaping its portfolio, while regular quarterly dividends of $0.08 per share were maintained - Working capital from continuing operations decreased to **$255.8 million** at June 30, 2025, from **$283.9 million** at September 30, 2024, mainly due to a **$124.7 million** increase in contract liabilities from the Maritime acquisition[88](index=88&type=chunk) - As of June 30, 2025, the company had approximately **$338 million** available to borrow under its credit facility, plus a **$250 million** increase option, and **$78.7 million** cash on hand[91](index=91&type=chunk) - Key strategic activities included the acquisition of SM&P (Maritime) for **~$472 million** and the divestiture of VACCO for **~$275 million**[92](index=92&type=chunk)[93](index=93&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=29&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company's primary market risks stem from changes in interest rates and foreign currency exchange rates, which ESCO selectively manages using derivative financial instruments such as forward contracts and swaps, with no material changes to the company's market risks reported since the fiscal year ended September 30, 2024 - Primary market risks are related to interest rate changes and foreign currency exchange rate fluctuations[99](index=99&type=chunk) - The company uses derivative instruments like forward contracts and swaps to manage these risks; no material changes in market risk exposure were reported since September 30, 2024[99](index=99&type=chunk) [Item 4. Controls and Procedures](index=29&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with the assessment of internal control over financial reporting excluding the recently acquired Signature Management & Power (Maritime) business, as the integration is still in process, which is permissible under SEC guidance - The CEO and CFO concluded that disclosure controls and procedures were effective as of the end of the reporting period[100](index=100&type=chunk) - The assessment of internal controls over financial reporting excludes the newly acquired Maritime business, which is currently being integrated[100](index=100&type=chunk) [PART II - OTHER INFORMATION](index=30&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=30&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) The company reported that it did not repurchase any of its shares during the third quarter of fiscal year 2025 - No shares were repurchased by the company during the third quarter of 2025[102](index=102&type=chunk) [Item 6. Exhibits](index=31&type=section&id=ITEM%206.%20EXHIBITS) This section lists the exhibits filed with the Form 10-Q, including corporate governance documents, credit agreements, CEO and CFO certifications, and XBRL interactive data files - Exhibits filed include certifications from the CEO (31.1) and CFO (31.2), as well as XBRL data files (101 series)[105](index=105&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 6-K REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934 For the month of August, 2025 (Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.) Form 20-F X Form 40-F (Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the ...

[Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) Lincoln Educational Services achieved significant financial and operational growth in Q2 2025, with revenue up 13.2% (15.1% excluding transitional business), adjusted EBITDA surging 68.4%, and a shift from net loss to net income, leading to an upgraded full-year 2025 outlook [Second Quarter 2025 Financial and Operational Highlights](index=1&type=section&id=Second%20Quarter%202025%20Financial%20and%20Operational%20Highlights) Lincoln Educational Services achieved significant financial and operational growth in Q2 2025, with revenue up 13.2% (15.1% excluding transitional business), adjusted EBITDA surging 68.4%, and a shift from net loss to net income, leading to an upgraded full-year 2025 outlook Second Quarter 2025 Financial Highlights (YoY) | Metric | Q2 2025 (Million USD) | Q2 2024 (Million USD) | Change (Million USD) | Change Rate | Notes | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | $116.5 | $102.9 | +$13.6 | +13.2% | 15.1% growth excluding transitional business | | Adjusted EBITDA | $10.5 | $6.2 | +$4.3 | +68.4% | | | Net Income | $1.6 | ($0.7) | +$2.3 | N/A | Shifted from net loss to net income | | Full Year 2025 Guidance | Upgraded | - | - | - | Based on strong first-half performance and favorable operating trends | Second Quarter 2025 Operational Highlights (YoY) | Metric | Q2 2025 | Q2 2024 | Change Rate | Notes | | :--- | :--- | :--- | :--- | :--- | | Student Enrollments | 5,921* | 4,953 | +19.5% | 21.8% growth excluding transitional business | | Organic Student Enrollments | - | - | +18.6% | Excludes new programs in 2024/2025, discontinued programs, Paramus nursing program, East Point campus, and transitional business | | Ending Student Population | 17,120* | 14,481 | +18.2% | 20.6% growth excluding transitional business | [Campus Development Activity](index=1&type=section&id=Campus%20Development%20Activity) The company made significant progress in campus development, with the Nashville campus relocation completed and exceeding expectations, the Houston campus receiving regulatory approval and commencing enrollment, and the Levittown campus relocation completed with new programs planned, all key drivers of the company's growth strategy - Nashville, TN campus relocation completed in March, with student enrollments and revenue exceeding expectations, and two new programs planned for October[5](index=5&type=chunk) - Houston, TX campus received regulatory approval in June, with student enrollments underway and classes expected to begin in early Q4[5](index=5&type=chunk) - Levittown, PA campus relocation completed, with existing automotive students transferred to the new site in August, and HVAC, electrical, and welding programs launching in September[5](index=5&type=chunk) [CEO Commentary and Strategic Outlook](index=2&type=section&id=CEO%20Commentary%20and%20Strategic%20Outlook) CEO Scott Shaw emphasized the company's sustained operational and financial growth momentum in Q2, with significant increases in student enrollments and revenue, leading to an upgraded full-year outlook, driven by demand for high-value vocational training, effective strategy execution, successful Lincoln 10.0 hybrid learning, and improved marketing efficiency - The company achieved nearly **22% student enrollment growth** and over **15% campus operations revenue growth** in Q2, with consolidated adjusted EBITDA increasing by **68%**[6](index=6&type=chunk) - Growth drivers include sustained demand for high-value vocational training, effective execution of growth strategies, successful implementation of the Lincoln 10.0 hybrid learning model, and continuous improvement in marketing efficiency[7](index=7&type=chunk) - Campus development is a key growth driver, with the newly opened East Point campus and relocated Nashville campus exceeding expectations; the Houston campus has begun enrollments, the Hicksville, New York campus is expected to open in Q4 2026, and more new campus development projects are planned[8](index=8&type=chunk) - The company believes it is well-positioned to meet unmet demand in up to a dozen additional markets and expects to surpass its long-term 2027 targets of approximately **$550 million in revenue** and **$90 million in adjusted EBITDA** set last year[9](index=9&type=chunk) [Financial Performance Analysis](index=2&type=section&id=Financial%20Performance%20Analysis) This section provides a detailed analysis of the company's financial results for Q2 and the first six months of 2025, covering consolidated performance and segment-specific outcomes [Second Quarter 2025 Financial Results (Consolidated)](index=2&type=section&id=Second%20Quarter%202025%20Financial%20Results%20(Consolidated)) In Q2 2025, the company's consolidated revenue grew 13.2% to $116.5 million, primarily due to an increase in average student population, while educational services and facilities expenses as a percentage of revenue decreased, indicating improved operational efficiency Second Quarter 2025 Consolidated Financial Data (YoY) | Metric | Q2 2025 (Million USD) | Q2 2024 (Million USD) | Change (Million USD) | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Revenue | $116.5 | $102.9 | +$13.6 | +13.2% | | Educational Services and Facilities Expenses | $46.8 | $45.6 | +$1.2 | +2.7% | | Educational Services and Facilities Expenses as % of Revenue | 40.2% | 44.3% | -4.1% | - | | Selling, General and Administrative Expenses | $67.1 | $57.9 | +$9.2 | +15.9% | | Cost per Student Enrollment | - | - | - | -14.0% | - Revenue growth is primarily attributed to a **16.0% increase in average student population**, driven by higher beginning student population and strong student enrollment growth in Q1 and Q2 2025[10](index=10&type=chunk) - The increase in selling, general and administrative expenses was mainly driven by a **$7.6 million (36.5%) increase in administrative expenses**, due to higher medical claims, costs associated with expanding student population, and performance incentive compensation tied to improved financial results[11](index=11&type=chunk) [Second Quarter 2025 Segment Results](index=3&type=section&id=Second%20Quarter%202025%20Segment%20Results) In Q2 2025, the Campus Operations segment achieved significant growth in both revenue and adjusted EBITDA, while the Transitional segment no longer generated revenue or expenses due to campus sale, and Corporate and Other expenses increased to support student population growth and strategic initiatives [Campus Operations Segment](index=3&type=section&id=Campus%20Operations%20Segment) The Campus Operations segment demonstrated strong performance in Q2 2025, with revenue increasing by 15.1% to $116.5 million and adjusted EBITDA surging by 56.4% to $25.4 million Campus Operations Segment Q2 2025 Performance (YoY) | Metric | Q2 2025 (Million USD) | Q2 2024 (Million USD) | Change (Million USD) | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Revenue | $116.5 | $101.2 | +$15.2 | +15.1% | | Adjusted EBITDA | $25.4 | $16.3 | +$9.1 | +56.4% | [Transitional Segment](index=3&type=section&id=Transitional%20Segment) The Transitional segment had no business activity in Q2 2025, as its sole Summerlin, Las Vegas campus was sold on January 1, 2025, which had contributed $1.7 million in revenue and incurred $2.2 million in operating expenses in the prior year - The Summerlin, Las Vegas campus was sold on January 1, 2025, resulting in no campus classification for the Transitional segment in Q2 2025[13](index=13&type=chunk) Transitional Segment Q2 2024 Performance | Metric | Q2 2024 (Million USD) | | :--- | :--- | | Revenue | $1.7 | | Operating Expenses | $2.2 | [Corporate and Other](index=3&type=section&id=Corporate%20and%20Other) Corporate and Other expenses increased to $16.4 million in Q2 2025 from $10.7 million in the prior year, primarily due to staff expansion supporting the growing student population and growth initiatives, along with higher medical claims and performance incentive compensation Corporate and Other Expenses (YoY) | Metric | Q2 2025 (Million USD) | Q2 2024 (Million USD) | Change (Million USD) | | :--- | :--- | :--- | :--- | | Corporate and Other Expenses | $16.4 | $10.7 | +$5.7 | - The increase in expenses was primarily driven by higher salaries and benefits due to staff expansion, increased medical claims, and performance incentive compensation tied to improved financial results[14](index=14&type=chunk) [Six Months Ended June 30, 2025 Financial Results (Consolidated)](index=3&type=section&id=Six%20Months%20Ended%20June%2030%2C%202025%20Financial%20Results%20(Consolidated)) For the six months ended June 30, 2025, total revenue increased by 13.4% to $234.0 million, with double-digit growth in both student enrollments and ending student population, adjusted EBITDA surging 65.4%, and a shift from net loss to net income, demonstrating strong overall financial performance in the first half Six Months Ended June 30, 2025 Consolidated Financial Data (YoY) | Metric | H1 2025 (Million USD) | H1 2024 (Million USD) | Change Rate | | :--- | :--- | :--- | :--- | | Total Revenue | $234.0 | $206.3 | +13.4% | | Student Enrollments | 10,531* | 8,920 | +18.1% | | Ending Student Population | 17,120* | 14,481 | +18.2% | | Adjusted EBITDA | $21.1 | $12.8 | +65.4% | | Net Income | $3.5 | ($0.9) | N/A | - Student enrollments (excluding transitional business) increased by **21.4%**, and ending student population (excluding transitional business) increased by **20.6%**[16](index=16&type=chunk) [Full Year 2025 Outlook](index=3&type=section&id=Full%20Year%202025%20Outlook) The company provides its updated financial guidance for the full year 2025, reflecting confidence in future growth based on strong first-half performance and a positive outlook for the remainder of the year [Updated Financial Guidance](index=3&type=section&id=Updated%20Financial%20Guidance) Based on strong first-half 2025 performance and the outlook for the second half, the company has upgraded its full-year 2025 financial guidance for revenue, adjusted EBITDA, net income, capital expenditures, and student enrollment growth, reflecting confidence in future growth Full Year 2025 Financial Guidance Update | Metric | Original Guidance (Million USD) | Updated Guidance (Million USD) | Change | | :--- | :--- | :--- | :--- | | Revenue | $485 - $495 | $490 - $500 | Upgraded | | Adjusted EBITDA | $58 - $63 | $60 - $65 | Upgraded | | Net Income | $10 - $15 | $13 - $18 | Upgraded | | Capital Expenditures | $70 - $75 | $75 - $80 | Upgraded | | Student Enrollment Growth | 10% - 14% | 12% - 15% | Upgraded | [Guidance Exclusions and Adjustments](index=4&type=section&id=Guidance%20Exclusions%20and%20Adjustments) To provide a clearer view of performance, the company's guidance excludes non-cash stock-based compensation, one-time non-recurring items, pre-opening costs for new campuses, and net operating losses for up to four quarters post-opening or until profitability - Guidance excludes non-cash stock-based compensation and one-time non-recurring items[18](index=18&type=chunk) - New campus guidance excludes pre-opening costs and net operating losses for up to four quarters post-opening or until profitability[18](index=18&type=chunk) - Adjustments for relocated campuses (e.g., Nashville and Levittown) include pre-opening and relocation costs until the end of the quarter in which the relocation is completed[18](index=18&type=chunk) - Adjustments for program replication and expansion include net operating losses prior to program launch[18](index=18&type=chunk) [Operational Metrics and Student Data](index=11&type=section&id=Operational%20Metrics%20and%20Student%20Data) This section presents key operational metrics and student data, segmented by department and program, highlighting enrollment and population trends for Q2 and the first half of 2025 [Selected Operating Metrics by Segment](index=11&type=section&id=Selected%20Operating%20Metrics%20by%20Segment) In Q2 and the first half of 2025, the Campus Operations segment achieved significant growth in revenue, operating income, student enrollments, and total student population, while the Transitional segment had no operational activity due to its sale, and overall adjusted student enrollments and ending student population showed strong growth Q2 2025 Operating Metrics by Segment (YoY) | Metric | Q2 2025 (Thousand USD) | Q2 2024 (Thousand USD) | Change Rate | Adjusted Change Rate* | | :--- | :--- | :--- | :--- | :--- | | **Revenue:** | | | | | | Campus Operations | $116,474 | $101,233 | +15.1% | - | | Transitional | $0 | $1,681 | -100.0% | - | | **Operating Income (Loss):** | | | | | | Campus Operations | $19,310 | $10,141 | +90.4% | - | | Transitional | $0 | ($509) | +100.0% | - | | Corporate | ($16,432) | ($10,748) | -52.9% | - | | **Enrollments:** | | | | | | Campus Operations | 3,157 | 4,863 | -35.1% | +21.8% | | Transitional | 0 | 90 | -100.0% | -100.0% | | **Ending Student Population:** | | | | | | Campus Operations | 14,356 | 14,198 | +1.1% | +20.6% | | Transitional | 0 | 283 | -100.0% | -100.0% | H1 2025 Operating Metrics by Segment (YoY) | Metric | H1 2025 (Thousand USD) | H1 2024 (Thousand USD) | Change Rate | Adjusted Change Rate* | | :--- | :--- | :--- | :--- | :--- | | **Revenue:** | | | | | | Campus Operations | $233,980 | $202,555 | +15.5% | - | | Transitional | $0 | $3,726 | -100.0% | - | | **Operating Income (Loss):** | | | | | | Campus Operations | $40,982 | $22,750 | +80.1% | - | | Transitional | $0 | ($796) | +100.0% | - | | Corporate | ($34,690) | ($23,529) | -47.4% | - | | **Enrollments:** | | | | | | Campus Operations | 7,767 | 8,675 | -10.5% | +21.4% | | Transitional | 0 | 245 | -100.0% | -100.0% | | **Ending Student Population:** | | | | | | Campus Operations | 14,356 | 14,198 | +1.1% | +20.6% | | Transitional | 0 | 283 | -100.0% | -100.0% | [Student Population by Program (Campus Operations Segment)](index=13&type=section&id=Population%20by%20Program%20(Campus%20Operations%20Segment)) Within the Campus Operations segment, Transportation and Skilled Trades programs showed strong student enrollment and total student population growth in both Q2 and the first half of 2025, especially in adjusted data, while Healthcare and Other Professional programs experienced declines Q2 2025 Student Data by Program (YoY) | Metric | Q2 2025 | Q2 2024 | Change Rate | Adjusted Change Rate* | | :--- | :--- | :--- | :--- | :--- | | **Enrollments:** | | | | | | Transportation and Skilled Trades | 2,350 | 3,648 | -35.6% | +31.6% | | Healthcare and Other Professional | 807 | 1,215 | -33.6% | -7.9% | | **Average Student Population:** | | | | | | Transportation and Skilled Trades | 11,920 | 9,741 | +22.4% | +26.6% | | Healthcare and Other Professional | 3,634 | 3,751 | -3.1% | -1.8% | | **Ending Student Population:** | | | | | | Transportation and Skilled Trades | 11,050 | 10,482 | +5.4% | +28.8% | | Healthcare and Other Professional | 3,306 | 3,716 | -11.0% | -2.6% | H1 2025 Student Data by Program (YoY) | Metric | H1 2025 | H1 2024 | Change Rate | Adjusted Change Rate* | | :--- | :--- | :--- | :--- | :--- | | **Enrollments:** | | | | | | Transportation and Skilled Trades | 5,901 | 6,330 | -6.8% | +32.0% | | Healthcare and Other Professional | 1,866 | 2,345 | -20.4% | -7.1% | | **Average Student Population:** | | | | | | Transportation and Skilled Trades | 11,807 | 9,642 | +22.5% | +24.6% | | Healthcare and Other Professional | 3,704 | 3,759 | -1.5% | -0.8% | | **Ending Student Population:** | | | | | | Transportation and Skilled Trades | 11,050 | 10,482 | +5.4% | +28.8% | | Healthcare and Other Professional | 3,306 | 3,716 | -11.0% | -2.6% | [Non-GAAP Financial Measures](index=8&type=section&id=Non-GAAP%20Financial%20Measures) This section defines and reconciles the company's non-GAAP financial measures, including EBITDA, Adjusted EBITDA, Adjusted Net Income, and Total Liquidity, providing supplementary insights into business performance and financial health [Definitions of Non-GAAP Measures](index=8&type=section&id=Definitions%20of%20Non-GAAP%20Measures) The company utilizes non-GAAP financial measures such as EBITDA, Adjusted EBITDA, Adjusted Net Income, and Total Liquidity to assess business performance, strategic investment capacity, and ability to meet capital expenditure and debt service needs, complementing but not replacing GAAP financial statements - EBITDA is defined as income (loss) before net interest expense (interest income), provision (benefit) for income taxes, depreciation, and amortization[32](index=32&type=chunk) - Adjusted EBITDA is defined as EBITDA adjusted for stock-based compensation expense and adjustments for items not considered part of the company's normal recurring operations[32](index=32&type=chunk) - Adjusted Net Income is defined as net income adjusted for items not considered part of the company's normal recurring operations[32](index=32&type=chunk) - Total Liquidity is defined as the company's cash and cash equivalents and available borrowings under its credit facility[32](index=32&type=chunk) [Reconciliation of Net Income to EBITDA and Adjusted EBITDA](index=10&type=section&id=Reconciliation%20of%20Net%20Income%20to%20EBITDA%20and%20Adjusted%20EBITDA) The company provides a reconciliation of net income to EBITDA and Adjusted EBITDA for Q2 and the first half of 2025, demonstrating significant Adjusted EBITDA growth by excluding non-recurring items such as interest, taxes, depreciation, amortization, stock-based compensation, new campus/relocation costs, program expansion, and loss on asset sales Q2 2025 Net Income to Adjusted EBITDA Reconciliation (Thousand USD) | Metric | Q2 2025 (Thousand USD) | Q2 2024 (Thousand USD) | | :--- | :--- | :--- | | Net Income (Loss) | $1,554 | ($682) | | EBITDA | $7,588 | $2,207 | | Stock-based compensation expense | $1,343 | $1,045 | | New Campus and Campus Relocation Costs | $1,342 | $2,029 | | Program Expansion | $238 | $365 | | Loss on Asset Sale | $0 | $594 | | **Adjusted EBITDA** | **$10,511** | **$6,240** | H1 2025 Net Income to Adjusted EBITDA Reconciliation (Thousand USD) | Metric | H1 2025 (Thousand USD) | H1 2024 (Thousand USD) | | :--- | :--- | :--- | | Net Income (Loss) | $3,499 | ($896) | | EBITDA | $14,764 | $4,713 | | Stock-based compensation expense | $2,548 | $2,103 | | New Campus and Campus Relocation Costs | $3,226 | $4,831 | | Program Expansion | $610 | $454 | | Loss on Asset Sale | $0 | $594 | | Severance and Other One-time Costs | $0 | $89 | | **Adjusted EBITDA** | **$21,148** | **$12,784** | [Reconciliation of Adjusted Net Income and Total Liquidity](index=11&type=section&id=Reconciliation%20of%20Adjusted%20Net%20Income%20and%20Total%20Liquidity) The company provides a reconciliation of Adjusted Net Income for Q2 and the first half of 2025, presenting a more comparable view of profitability by excluding non-recurring adjustments like new campus/relocation costs and program expansion, along with their income tax effects, and reports total liquidity of $63.7 million as of June 30, 2025 Q2 2025 Adjusted Net Income Reconciliation (Thousand USD) | Metric | Q2 2025 (Thousand USD) | Q2 2024 (Thousand USD) | | :--- | :--- | :--- | | Net Income (Loss) | $1,554 | ($682) | | New Campus and Campus Relocation Costs | $1,342 | $2,623 | | East Point, Georgia Depreciation | $0 | $371 | | Program Expansion | $238 | $365 | | Income Tax Impact | ($474) | ($1,008) | | **Adjusted Net Income (Loss)** | **$2,660** | **$1,669** | H1 2025 Adjusted Net Income Reconciliation (Thousand USD) | Metric | H1 2025 (Thousand USD) | H1 2024 (Thousand USD) | | :--- | :--- | :--- | | Net Income (Loss) | $3,499 | ($896) | | New Campus and Campus Relocation Costs | $3,226 | $5,425 | | Program Expansion | $610 | $454 | | East Point, Georgia Depreciation | $0 | $511 | | Severance and Other One-time Costs | $0 | $89 | | Income Tax Impact | ($1,152) | ($1,944) | | **Adjusted Net Income (Loss)** | **$6,183** | **$3,639** | Total Liquidity (As of June 30, 2025) | Metric | Amount (Thousand USD) | | :--- | :--- | | Cash and Cash Equivalents | $16,701 | | Credit Facility | $47,000 | | **Total Liquidity** | **$63,701** | [Reconciliation of 2025 Guidance](index=14&type=section&id=Reconciliation%20of%202025%20Guidance) The company provides a midpoint reconciliation of its 2025 guidance for net income to Adjusted EBITDA and Adjusted Net Income, with adjustments including interest, taxes, depreciation, amortization, new campus/relocation costs, program expansion, other one-time items, and stock-based compensation expenses, along with their tax impacts 2025 Guidance Midpoint Reconciliation (Thousand USD) | Metric | Adjusted EBITDA (Thousand USD) | Net Income (Thousand USD) | | :--- | :--- | :--- | | Net Income | $15,500 | $15,500 | | Interest Expense, Net | $3,200 | - | | Provision for Income Taxes | $6,500 | - | | Depreciation and Amortization | $20,800 | $400 | | EBITDA | $46,000 | - | | New Campus and Campus Relocation Costs | $7,500 | $7,500 | | Program Expansion | $2,100 | $2,100 | | Other One-time Items | $1,500 | $1,500 | | Stock-based compensation expense | $5,400 | - | | Tax Impact | - | ($3,500) | | **Total** | **$62,500** | **$23,500** | - New campus and campus relocation costs involve locations such as Nashville, Tennessee; Levittown, Pennsylvania; Houston, Texas; and Hicksville, New York[41](index=41&type=chunk) - New campus adjustments include pre-opening costs and net operating losses for up to four quarters post-opening or until profitability[41](index=41&type=chunk) [Consolidated Financial Statements](index=6&type=section&id=Consolidated%20Financial%20Statements) This section presents the company's condensed consolidated financial statements, including the balance sheets, statements of operations and comprehensive income (loss), and cash flows, for Q2 and the first half of 2025 [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, the company's total assets increased to $447.3 million from December 31, 2024, with a decrease in cash and cash equivalents offset by increases in accounts receivable, inventory, and net property, plant, and equipment, while total liabilities and stockholders' equity also rose Condensed Consolidated Balance Sheets Key Data (Thousand USD) | Metric | June 30, 2025 (Thousand USD) | December 31, 2024 (Thousand USD) | | :--- | :--- | :--- | | **Assets:** | | | | Cash and Cash Equivalents | $16,701 | $59,273 | | Accounts Receivable, Net | $47,256 | $42,983 | | Inventory | $4,504 | $3,053 | | Property, Equipment and Facilities, Net | $149,142 | $103,533 | | Total Assets | $447,321 | $436,556 | | **Liabilities and Stockholders' Equity:** | | | | Unearned Tuition | $28,083 | $30,631 | | Long-term Debt | $13,000 | $0 | | Total Liabilities | $266,643 | $258,292 | | Total Stockholders' Equity | $180,678 | $178,264 | [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)) In Q2 and the first half of 2025, the company reported increased revenue and a shift from net loss to net income compared to the prior year, with significant improvement in operating income, despite an increase in interest expense Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) Key Data (Thousand USD) | Metric | Q2 2025 (Thousand USD) | Q2 2024 (Thousand USD) | H1 2025 (Thousand USD) | H1 2024 (Thousand USD) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $116,474 | $102,914 | $233,980 | $206,281 | | Operating Income (Loss) | $2,878 | ($1,116) | $6,292 | ($1,575) | | Interest Income | $11 | $638 | $125 | $1,336 | | Interest Expense | ($813) | ($667) | ($1,514) | ($1,234) | | Net Income (Loss) | $1,554 | ($682) | $3,499 | ($896) | | Basic Net Income (Loss) Per Share | $0.05 | ($0.02) | $0.11 | ($0.03) | | Diluted Net Income (Loss) Per Share | $0.05 | ($0.02) | $0.11 | ($0.03) | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, the company experienced increased net cash used in operating activities and a significant rise in net cash used in investing activities, primarily due to higher capital expenditures, while net cash provided by financing activities turned positive, mainly from borrowings Condensed Consolidated Statements of Cash Flows Key Data (Thousand USD) | Metric | H1 2025 (Thousand USD) | H1 2024 (Thousand USD) | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | ($8,079) | ($6,599) | | Net Cash Used in Investing Activities | ($45,772) | ($3,007) | | Net Cash Provided by (Used in) Financing Activities | $11,279 | ($3,676) | | Net Decrease in Cash and Cash Equivalents | ($42,572) | ($13,282) | | Cash and Cash Equivalents at End of Period | $16,701 | $66,987 | - Capital expenditures significantly increased from **$12.725 million** in H1 2024 to **$46.276 million** in H1 2025[29](index=29&type=chunk) - Net cash provided by financing activities turned positive, primarily due to **$25.0 million in proceeds from borrowings**[29](index=29&type=chunk) [Additional Information](index=4&type=section&id=Additional%20Information) This section provides background on Lincoln Educational Services, outlines forward-looking statements, and details conference call and contact information [About Lincoln Educational Services Corporation](index=4&type=section&id=About%20Lincoln%20Educational%20Services%20Corporation) Lincoln Educational Services Corporation is a leading provider of career-oriented post-secondary education, dedicated to addressing America's skills gap by offering vocational programs in skilled trades, automotive, health sciences, and information technology across 21 campuses in 12 states since its founding in 1946 - The company is a provider of career-oriented post-secondary education, aiming to address America's skills gap[21](index=21&type=chunk) - It offers programs in four main areas of study: skilled trades, automotive, health sciences, and information technology[21](index=21&type=chunk) - Founded in 1946, it currently operates 21 campuses in 12 states under brands including Lincoln Technical Institute, Lincoln College of Technology, and Nashville Auto Diesel College[21](index=21&type=chunk) [Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) This press release contains forward-looking statements based on current information and management's good faith beliefs about future events, which are subject to various risks and uncertainties that could cause actual results to differ materially from expectations, and the company explicitly disclaims any obligation to publicly revise or update these statements - Forward-looking statements are based on current information and management's good faith beliefs about future events but are subject to various risks and uncertainties[23](index=23&type=chunk) - Risk factors include, but are not limited to: impact of epidemics, failure to comply with regulatory frameworks, success of updating and expanding curricula, cybersecurity risks, changes in laws and regulations, 90/10 rule compliance, risks of new campus openings, industry competition, and macroeconomic conditions[23](index=23&type=chunk) - The company disclaims any obligation to publicly revise or update any forward-looking statements[23](index=23&type=chunk) [Conference Call Information](index=4&type=section&id=Conference%20Call%20Information) Lincoln Educational Services held a conference call on August 11, 2025, at 10:00 AM ET to discuss Q2 results, with investors able to access the webcast via the investor overview section of the company's website or register for dial-in numbers and a personalized PIN - The conference call was held on **August 11, 2025, at 10:00 AM ET**[19](index=19&type=chunk) - The webcast is accessible via the investor overview section of the company's website at http://www.lincolntech.edu[19](index=19&type=chunk) - Participants need to register 15 minutes in advance to receive dial-in numbers and a personalized PIN[19](index=19&type=chunk) [Contact Information](index=14&type=section&id=Contact%20Information) Investors and media can contact Brian Meyers, CFO of Lincoln Educational Services, or investor relations and media representatives from EVC Group LLC for further information - CFO: Brian Meyers, 973-736-9340[42](index=42&type=chunk) - Investor Relations: Michael Polyviou (EVC Group LLC), mpolyviou@evcgroup.com, 732-933-2755[42](index=42&type=chunk) - Media Relations: Tom Gibson (EVC Group LLC), 201-476-0322[42](index=42&type=chunk)

[Cautionary Note Regarding Forward-Looking Statements](index=4&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This section outlines forward-looking statements, their inherent risks, uncertainties, and underlying material assumptions [Cautionary Note Regarding Forward-Looking Statements](index=4&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements_Content) This section outlines forward-looking statements and information, identifying common terminology and specifying that these statements are not historical facts but reflect current views subject to known and unknown risks, uncertainties, assumptions, and other factors, also listing key material assumptions and potential risks that could cause actual results to differ materially - Forward-looking statements are not historical facts and are made as of the date of this Quarterly Report, reflecting the Company's current views with respect to future events[12](index=12&type=chunk)[13](index=13&type=chunk)[17](index=17&type=chunk) - Material assumptions include the Company's future financial and operational performance, sufficiency of working capital, timing of work programs, future exchange rates, estimated capital costs, plans for property/exploration/development, regulatory approvals, uranium market prices, and potential impacts of litigation[13](index=13&type=chunk)[14](index=14&type=chunk) - Key risks and uncertainties that could cause actual results to differ materially include budget assumptions, ability to raise additional capital, regulatory approvals, demand/supply of uranium, market prices, tax rates, decommissioning obligations, mineral resource estimates, compliance with environmental/safety regulations, political instability, negative operating cash flows, and material weaknesses in internal controls[15](index=15&type=chunk)[16](index=16&type=chunk) [PART I - FINANCIAL INFORMATION](index=8&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This part presents the company's unaudited consolidated financial statements and management's discussion and analysis [Item 1. Financial Statements](index=8&type=section&id=Item%201.%20Financial%20Statements) This section presents enCore Energy Corp.'s unaudited consolidated financial statements, including balance sheets, statements of operations, comprehensive loss, cash flows, and stockholders' equity, with detailed notes [Consolidated Balance Sheets](index=8&type=section&id=Consolidated%20Balance%20Sheets) This section presents the company's financial position, detailing assets, liabilities, and equity at specific reporting dates | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Cash and cash equivalents | $26,897 | $39,701 | | Inventory, net | $9,678 | $20,967 | | Total current assets | $49,918 | $87,414 | | Mineral rights and properties, net | $267,350 | $271,922 | | Total assets | $359,379 | $392,722 | | Total current liabilities | $19,721 | $30,080 | | Total liabilities | $64,460 | $74,180 | | Total equity | $294,919 | $318,542 | [Consolidated Statements of Operations](index=9&type=section&id=Consolidated%20Statements%20of%20Operations) This section details the company's revenues, cost of sales, gross profit or loss, operating loss, and net loss over specific reporting periods | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $3,664 | $5,320 | $21,904 | $35,714 | | Cost of sales | $2,534 | $10,428 | $20,796 | $41,291 | | Gross profit (loss) | $1,130 | $(5,108) | $1,108 | $(5,577) | | Operating loss | $(19,277) | $(22,972) | $(34,903) | $(35,249) | | Net loss | $(8,835) | $(23,621) | $(34,222) | $(31,363) | | Net loss attributable to enCore Energy Corp. | $(6,326) | $(22,019) | $(30,569) | $(29,301) | | Net loss per share (basic and diluted) | $(0.03) | $(0.12) | $(0.16) | $(0.16) | [Consolidated Statements of Comprehensive Loss](index=10&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Loss) This section presents the company's net loss and other comprehensive income or loss components for specific reporting periods | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(8,835) | $(23,621) | $(34,222) | $(31,363) | | Foreign currency translation adjustment | $1,264 | $(1,117) | $1,329 | $(915) | | Comprehensive loss | $(7,571) | $(24,738) | $(32,893) | $(32,278) | | Comprehensive loss attributable to enCore Energy Corp. | $(5,062) | $(23,136) | $(29,240) | $(30,216) | [Consolidated Statements of Cash Flow](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flow) This section reports the cash inflows and outflows from operating, investing, and financing activities for the reporting periods | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(17,629) | $(40,117) | | Net cash provided by (used in) investing activities | $(2,115) | $(10,914) | | Net cash provided by financing activities | $6,551 | $99,327 | | Cash, cash equivalents and restricted cash, end of period | $34,922 | $63,455 | [Consolidated Statements of Stockholders' Equity](index=14&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) This section details changes in the company's equity accounts, including common stock, additional paid-in capital, and accumulated deficit | Metric (in thousands) | Balance at January 1, 2025 | Balance at June 30, 2025 | | :-------------------------------- | :------------------------- | :----------------------- | | Common Stock Shares | **186,115** | **187,058** | | Common Stock Amount | **$380,325** | **$381,861** | | Additional Paid-in-Capital | **$59,856** | **$66,500** | | Accumulated Deficit | **$(150,848)** | **$(181,417)** | | Total Equity | **$318,542** | **$294,919** | [Notes to Consolidated Financial Statements](index=18&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations and breakdowns of figures in the consolidated financial statements, covering accounting policies and specific account balances [Note 1. Nature of Operations](index=18&type=section&id=Note%201.%20Nature%20of%20Operations) This note describes the company's primary business activities, focusing on uranium acquisition, exploration, development, and extraction - enCore Energy Corp. is primarily engaged in the acquisition, exploration, development, and extraction of uranium resource properties in the United States[39](index=39&type=chunk) - The Company utilizes In-Situ Recovery (ISR) technology for domestic uranium extraction to fuel clean, reliable, and carbon-free nuclear energy[40](index=40&type=chunk) - As of **June 30, 2025**, the Company is classified as an 'Exploration Stage Issuer' as it has not established proven or probable mineral reserves[41](index=41&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=18&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the key accounting principles and methods used in preparing the consolidated financial statements - Effective **January 1, 2025**, the Company became a U.S. Domestic Issuer and prepares its consolidated financial statements in accordance with U.S. GAAP[43](index=43&type=chunk) - The Company consolidates entities it controls, including the Alta Mesa Project (**70% interest**) which is considered a Variable Interest Entity (VIE) where enCore is the primary beneficiary[46](index=46&type=chunk)[47](index=47&type=chunk) - As an Exploration Stage company, expenditures for mineral rights acquisition are capitalized, while exploration and pre-extraction expenditures are expensed until proven or probable reserves are established[52](index=52&type=chunk)[53](index=53&type=chunk) - Inventories are measured at the lower of cost and net realizable value, and marketable equity securities are classified as available-for-sale, with changes in fair value recognized in other income (loss)[62](index=62&type=chunk)[63](index=63&type=chunk) - The Company adopted ASU **2023-07** (Segment Reporting) effective **January 1, 2

```markdown [PART I – FINANCIAL INFORMATION](index=3&type=section&id=Part%20I.%20Financial%20Information) This section details the company's unaudited financial statements, management's analysis, market risk, and internal controls [ITEM 1. FINANCIAL STATEMENTS](index=3&type=section&id=ITEM%201.%20Financial%20Statements) This section presents Bank First Corporation's unaudited consolidated financial statements, detailing balance sheets, income, and cash flows [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets%20%E2%80%93%20June%2030%2C%202025%20(unaudited)%20and%20December%2031%2C%202024) This section provides a comparative overview of the company's financial position at June 30, 2025, and December 31, 2024 Total Assets (in thousands) | Date | Amount | | :--- | :--- | | June 30, 2025 | $4,365,082 | | December 31, 2024 | $4,495,060 | | **Change** | **($129,978)** | | **% Change** | **-2.9%** | Cash and Cash Equivalents (in thousands) | Date | Amount | | :--- | :--- | | June 30, 2025 | $120,328 | | December 31, 2024 | $261,332 | | **Change** | **($141,004)** | | **% Change** | **-53.9%** | Loans, net (in thousands) | Date | Amount | | :--- | :--- | | June 30, 2025 | $3,536,065 | | December 31, 2024 | $3,473,017 | | **Change** | **$63,048** | | **% Change** | **1.8%** | Total Deposits (in thousands) | Date | Amount | | :--- | :--- | | June 30, 2025 | $3,595,424 | | December 31, 2024 | $3,661,073 | | **Change** | **($65,649)** | | **% Change** | **-1.8%** | Total Stockholders' Equity (in thousands) | Date | Amount | | :--- | :--- | | June 30, 2025 | $612,333 | | December 31, 2024 | $639,683 | | **Change** | **($27,350)** | | **% Change** | **-4.3%** | [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income%20%E2%80%93%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) This section presents the company's consolidated income statements for the three and six months ended June 30, 2025 and 2024 Net Income (Three Months Ended June 30) (in thousands) | Year | Amount | | :--- | :--- | | 2025 | $16,875 | | 2024 | $16,059 | | **Change** | **$816** | | **% Change** | **5.1%** | Net Income (Six Months Ended June 30) (in thousands) | Year | Amount | | :--- | :--- | | 2025 | $35,116 | | 2024 | $31,471 | | **Change** | **$3,645** | | **% Change** | **11.6%** | Net Interest Income (Three Months Ended June 30) (in thousands) | Year | Amount | | :--- | :--- | | 2025 | $36,702 | | 2024 | $33,007 | | **Change** | **$3,695** | | **% Change** | **11.2%** | Net Interest Income (Six Months Ended June 30) (in thousands) | Year | Amount | | :--- | :--- | | 2025 | $73,239 | | 2024 | $66,356 | | **Change** | **$6,883** | | **% Change** | **10.4%** | Earnings per share - basic (Six Months Ended June 30) | Year | EPS | | :--- | :--- | | 2025 | $3.53 | | 2024 | $3.10 | | **Change** | **$0.43** | | **% Change** | **13.9%** | [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20%E2%80%93%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) This section presents the company's consolidated comprehensive income statements for the three and six months ended June 30, 2025 and 2024 Comprehensive Income (Three Months Ended June 30) (in thousands) | Year | Amount | | :--- | :--- | | 2025 | $17,718 | | 2024 | $16,099 | | **Change** | **$1,619** | | **% Change** | **10.1%** | Comprehensive Income (Six Months Ended June 30) (in thousands) | Year | Amount | | :--- | :--- | | 2025 | $36,706 | | 2024 | $30,846 | | **Change** | **$5,860** | | **% Change** | **19.0%** | Unrealized holding gains (losses) arising during period (Six Months Ended June 30) (in thousands) | Year | Amount | | :--- | :--- | | 2025 | $2,010 | | 2024 | ($781) | | **Change** | **$2,791** | [Consolidated Statements of Changes in Stockholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity%20%E2%80%93%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) This section details changes in stockholders' equity for the periods presented, including net income, dividends, and stock repurchases Total Stockholders' Equity (in thousands) | Date | Amount | | :--- | :--- | | June 30, 2025 | $612,333 | | January 1, 2025 | $639,683 | | **Change** | **($27,350)** | | **% Change** | **-4.3%** | - Cash dividends for the six months ended June 30, 2025, totaled **$43,639 thousand**, including **$39,148 thousand** in Q2 2025 and **$4,491 thousand** in Q1 2025[17](index=17&type=chunk) - Purchase of treasury stock for the six months ended June 30, 2025, totaled **$22,043 thousand**, including **$15,662 thousand** in Q2 2025 and **$6,381 thousand** in Q1 2025[17](index=17&type=chunk) - Net income for the six months ended June 30, 2025, totaled **$35,116 thousand**, including **$16,875 thousand** in Q2 2025 and **$18,241 thousand** in Q1 2025[17](index=17&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20%E2%80%93%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) This section presents the company's consolidated cash flow statements for the six months ended June 30, 2025 and 2024 Net cash provided by operating activities (Six Months Ended June 30) (in thousands) | Year | Amount | | :--- | :--- | | 2025 | $18,022 | | 2024 | $16,263 | | **Change** | **$1,759** | | **% Change** | **10.8%** | Net cash used in investing activities (Six Months Ended June 30) (in thousands) | Year | Amount | | :--- | :--- | | 2025 | ($2,769) | | 2024 | ($69,819) | | **Change** | **$67,050** | Net cash used in financing activities (Six Months Ended June 30) (in thousands) | Year | Amount | | :--- | :--- | | 2025 | ($156,257) | | 2024 | ($94,962) | | **Change** | **($61,295)** | | **% Change** | **64.5%** | Cash and cash equivalents at end of period (Six Months Ended June 30) (in thousands) | Year | Amount | | :--- | :--- | | 2025 | $120,328 | | 2024 | $98,950 | | **Change** | **$21,378** | | **% Change** | **21.6%** | [Notes to Unaudited Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) This section provides detailed notes to the unaudited consolidated financial statements, explaining accounting policies and estimates - Bank First Corporation operates through its wholly-owned subsidiary, Bank First, N.A., a full-service financial institution with **27 locations** in Wisconsin[24](index=24&type=chunk) - No material changes to critical accounting policies or estimates (business combinations, core deposit intangibles, acquired loans, ACL-Loans) since the 2024 Annual Report[27](index=27&type=chunk)[28](index=28&type=chunk) - Recently issued accounting standards include ASU 2023-06 (Disclosure Improvements), ASU 2023-09 (Income Taxes), and ASU 2024-03 (Expense Disaggregation Disclosures), with varying effective dates and anticipated impacts on disclosures[30](index=30&type=chunk)[31](index=31&type=chunk)[32](index=32&type=chunk) [NOTE 1 – BASIS OF PRESENTATION](index=9&type=section&id=NOTE%201%20%E2%80%93%20BASIS%20OF%20PRESENTATION) This note outlines the basis of presentation for the interim unaudited consolidated financial statements, adhering to GAAP and SEC requirements - Interim unaudited consolidated financial statements are prepared in accordance with GAAP for interim financial information and SEC instructions, with certain information and footnote disclosures omitted or abbreviated[25](index=25&type=chunk) - No material changes or developments with respect to critical accounting policies and estimates (business combinations, core deposit intangibles, acquired loans, and ACL-Loans) as previously disclosed in the Company's Annual Report[27](index=27&type=chunk)[28](index=28&type=chunk) - ASU 2023-09 (Income Taxes) is effective for annual periods beginning after December 15, 2024, and will require expanded disclosure related to income tax exposure[31](index=31&type=chunk) [NOTE 2 – EARNINGS PER SHARE](index=10&type=section&id=NOTE%202%20%E2%80%93%20EARNINGS%20PER%20SHARE) This note provides details on basic and diluted earnings per common share for the periods presented Basic Earnings Per Common Share (Three Months Ended June 30) | Year | EPS | | :--- | :--- | | 2025 | $1.71 | | 2024 | $1.59 | | **Change** | **$0.12** | | **% Change** | **7.5%** | Basic Earnings Per Common Share (Six Months Ended June 30) | Year | EPS | | :--- | :--- | | 2025 | $3.53 | | 2024 | $3.10 | | **Change** | **$0.43** | | **% Change** | **13.9%** | Diluted Earnings Per Common Share (Six Months Ended June 30) | Year | EPS | | :--- | :--- | | 2025 | $3.53 | | 2024 | $3.10 | | **Change** | **$0.43** | | **% Change** | **13.9%** | [NOTE 3 – SECURITIES](index=11&type=section&id=NOTE%203%20%E2%80%93%20SECURITIES) This note details the company's available-for-sale and held-to-maturity securities, including amortized cost and fair value Available for Sale Securities (June 30, 2025) (in thousands) | Metric | Amount | | :--- | :--- | | Amortized Cost | $178,047 | | Gross Unrealized Gains | $190 | | Gross Unrealized Losses | ($11,028) | | Estimated Fair Value | $167,209 | Held to Maturity Securities (June 30, 2025) (in thousands) | Metric | Amount | | :--- | :--- | | Amortized Cost | $109,854 | | Gross Unrealized Gains | $1,046 | | Gross Unrealized Losses | ($478) | | Estimated Fair Value | $110,422 | - Unrealized losses on securities are attributed to changes in interest rates, market spreads, and market conditions, not credit deterioration. The Company does not intend to sell these securities and expects to recover amortized cost[37](index=37&type=chunk) - Carrying values of securities pledged to secure public deposits and for other purposes were approximately **$196.5 million** at June 30, 2025, down from **$273.4 million** at December 31, 2024[41](index=41&type=chunk) [NOTE 4 – LOANS, ALLOWANCE FOR CREDIT LOSSES, AND CREDIT QUALITY](index=13&type=section&id=NOTE%204%20%E2%80%93%20LOANS%2C%20ALLOWANCE%20FOR%20CREDIT%20LOSSES%2C%20AND%20CREDIT%20QUALITY) This note provides detailed information on the loan portfolio, allowance for credit losses, and credit quality metrics Loans, net of ACL-Loans (in thousands) | Date | Amount | | :--- | :--- | | June 30, 2025 | $3,537,463 | | December 31, 2024 | $3,474,774 | | **Change** | **$62,689** | | **% Change** | **1.8%** | Allowance for Credit Losses - Loans (ACL-Loans) (in thousands) | Date | Amount | | :--- | :--- | | June 30, 2025 | $44,292 | | December 31, 2024 | $44,151 | | **Change** | **$141** | | **% Change** | **0.3%** | Provision for Credit Losses (Six Months Ended June 30) (in thousands) | Year | Amount | | :--- | :--- | | 2025 | $600 | | 2024 | $200 | | **Change** | **$400** | | **% Change** | **200.0%** | Non-Accrual Loans (in thousands) | Date | Amount | | :--- | :--- | | June 30, 2025 | $13,034 | | December 31, 2024 | $6,826 | | **Change** | **$6,208** | | **% Change** | **90.9%** | - The Allowance for Credit Losses on Unfunded Commitments (ACL-Unfunded Commitments) remained stable at **$2.6 million** at June 30, 2025, and December 31, 2024[46](index=46&type=chunk) [NOTE 5 – MORTGAGE SERVICING RIGHTS](index=20&type=section&id=NOTE%205%20%E2%80%93%20MORTGAGE%20SERVICING%20RIGHTS) This note details the fair value and unpaid principal balance of mortgage servicing rights, along with key economic assumptions Fair Value of MSR (Six Months Ended June 30) (in thousands) | Date | Amount | | :--- | :--- | | June 30, 2025 | $13,445 | | December 31, 2024 | $13,369 | | **Change** | **$76** | | **% Change** | **0.6%** | Unpaid principal balance of loans serviced for others (Six Months Ended June 30) (in thousands) | Date | Amount | | :--- | :--- | | June 30, 2025 | $1,173,121 | | December 31, 2024 | $1,172,311 | | **Change** | **$810** | | **% Change** | **0.1%** | - Primary economic assumptions for MSR valuation include constant prepayment speeds of **8.0%** (June 30, 2025) and **8.2%** (Dec 31, 2024), and discount rates of **10.18%** for both periods[60](index=60&type=chunk) [NOTE 6 – NOTES PAYABLE](index=21&type=section&id=NOTE%206%20%E2%80%93%20NOTES%20PAYABLE) This note provides information on the company's notes payable, primarily FHLB advances, and available borrowing capacity Notes Payable (FHLB advances) (in thousands) | Date | Amount | | :--- | :--- | | June 30, 2025 | $109,915 | | December 31, 2024 | $135,372 | | **Change** | **($25,457)** | | **% Change** | **-18.8%** | - The Company had borrowing availability at the FHLB totaling **$501.6 million** as of June 30, 2025, in addition to existing borrowings[62](index=62&type=chunk) [NOTE 7 – SUBORDINATED NOTES AND JUNIOR SUBORDINATED DEBENTURES](index=21&type=section&id=NOTE%207%20%E2%80%93%20SUBORDINATED%20NOTES%20AND%20JUNIOR%20SUBORDINATED%20DEBENTURES) This note details the company's outstanding subordinated notes and junior subordinated debentures, including their terms - Outstanding subordinated notes totaled **$12,000 thousand** at both June 30, 2025, and December 31, 2024[63](index=63&type=chunk)[64](index=64&type=chunk) - These notes have 10-year maturities, carry fixed interest rates (**5.0%** and **5.25%** respectively) for initial periods, then variable rates, and qualify for Tier 2 capital for regulatory purposes[63](index=63&type=chunk)[64](index=64&type=chunk) [NOTE 8 – REGULATORY MATTERS](index=22&type=section&id=NOTE%208%20%E2%80%93%20REGULATORY%20MATTERS) This note confirms the company's and its subsidiary's compliance with all capital adequacy requirements - Both Bank First Corporation and Bank First, N.A. met all capital adequacy requirements, including the **2.5% conservation buffer**, as of June 30, 2025, and December 31, 2024[66](index=66&type=chunk) Bank First, N.A. Capital Ratios (June 30, 2025) | Ratio | Actual | Minimum for Capital Adequacy | Minimum for Well Capitalized | | :--- | :--- | :--- | :--- | | Total Capital | 12.19% | 8.00% | 10.00% | | Tier 1 Capital | 11.03% | 6.00% | 8.00% | | Common Equity Tier 1 | 11.03% | 4.50% | 6.50% | | Tier 1 Leverage | 9.66% | 4.00% | 5.00% | - The Bank does not intend to opt into the Community Bank Leverage Ratio Framework[208](index=208&type=chunk) [NOTE 9 – SEGMENT INFORMATION](index=24&type=section&id=NOTE%209%20%E2%80%93%20SEGMENT%20INFORMATION) This note identifies the company's single reportable segment as banking operations, with performance evaluated on consolidated metrics - The Company's single reportable segment is banking operations, as determined by the Chief Executive Officer[68](index=68&type=chunk) - Performance is evaluated based on consolidated net income, return on assets, and benchmarking against competitors, with revenue streams and significant expenses assessed for product pricing and resource allocation[68](index=68&type=chunk) [NOTE 10 – COMMITMENTS AND CONTINGENCIES](index=24&type=section&id=NOTE%2010%20%E2%80%93%20COMMITMENTS%20AND%20CONTINGENCIES) This note outlines the company's off-balance-sheet commitments and contingencies, including rate-lock commitments Rate-Lock Commitments (Notional Amount) (in thousands) | Date | Amount | | :--- | :--- | | June 30, 2025 | $15,900 | | December 31, 2024 | $8,200 | | **Change** | **$7,700** | | **% Change** | **93.9%** | Total Commitments Outstanding (June 30, 2025) (in thousands) | Commitment Type | Amount | | :--- | :--- | | Unused lines of credit | $733,426 | | Standby and direct pay letters of credit | $9,384 | | Credit card arrangements | $24,985 | | **Total** | **$767,795** | - The Company follows the same credit policies in making commitments as it does for on-balance-sheet instruments[71](index=71&type=chunk)[214](index=214&type=chunk) [NOTE 11 – FAIR VALUE MEASUREMENTS](index=25&type=section&id=NOTE%2011%20%E2%80%93%20FAIR%20VALUE%20MEASUREMENTS) This note details fair value measurements for financial instruments, categorizing them by valuation input levels Recurring Fair Value Measurements (June 30, 2025) (in thousands) | Asset Type | Fair Value | Level | | :--- | :--- | :--- | | Securities available for sale | $167,209 | Level 2 | | Mortgage servicing rights | $13,445 | Level 2 | Non-Recurring Fair Value Measurements (June 30, 2025) (in thousands) | Asset Type | Fair Value | Level | | :--- | :--- | :--- | | Loans individually evaluated, net of reserve | $10,896 | Level 3 | - Significant unobservable inputs for Level 3 assets (loans individually evaluated) include collateral discounts and discount rates, with a weighted average discount of **21%** as of June 30, 2025[78](index=78&type=chunk) Financial Instruments Not Measured at Fair Value (June 30, 2025) (in thousands) | Instrument | Carrying Amount | Total Fair Value | | :--- | :--- | :--- | | Cash and cash equivalents | $120,328 | $120,328 | | Securities held to maturity | $109,854 | $110,422 | | Loans, net | $3,536,065 | $3,393,648 | | Deposits | $3,595,424 | $3,304,035 | [NOTE 12 – STOCK BASED COMPENSATION](index=28&type=section&id=NOTE%2012%20%E2%80%93%20STOCK%20BASED%20COMPENSATION) This note provides information on stock-based compensation expense, unrecognized costs, and outstanding restricted stock awards - Compensation expense for restricted stock was **$0.5 million** for the three months ended June 30, 2025, and **$1.0 million** for the six months ended June 30, 2025[82](index=82&type=chunk) - As of June 30, 2025, there was **$3.3 million** of unrecognized compensation cost related to non-vested restricted stock awards, expected to be recognized over a weighted average period of **1.75 years**[83](index=83&type=chunk) - Restricted stock awards outstanding at June 30, 2025, totaled **46,727 shares** with a weighted average grant-date fair value of **$94.77**[84](index=84&type=chunk) [NOTE 13 – SUBSEQUENT EVENT](index=28&type=section&id=NOTE%2013%20%E2%80%93%20SUBSEQUENT%20EVENT) This note discloses a significant subsequent event: a merger agreement with Centre 1 Bancorp, Inc., expected to close in January 2026 - On July 18, 2025, the Company entered into a merger agreement with Centre 1 Bancorp, Inc., parent company of First National Bank and Trust Company (FNBT)[85](index=85&type=chunk) - The transaction is expected to close on January 1, 2026, subject to customary closing conditions including regulatory approvals[85](index=85&type=chunk) - Based on combined results as of June 30, 2025, the merged entity would have total assets of approximately **$5.9 billion**, loans of approximately **$4.6 billion**, and deposits of approximately **$4.9 billion**[85](index=85&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=29&type=section&id=ITEM%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes Bank First Corporation's financial condition and results of operations, highlighting net income, balance sheet, and capital - Net income increased by **$0.8 million (5.1%)** for Q2 2025 and **$3.6 million (11.6%)** for H1 2025, primarily driven by higher net interest income[102](index=102&type=chunk)[115](index=115&type=chunk) - Total loans increased by **$63.2 million (1.8%)** to **$3.58 billion** as of June 30, 2025, driven by demand for new credit[142](index=142&type=chunk) - A continued shift from noninterest-bearing to interest-bearing deposits was observed due to rising interest rates[172](index=172&type=chunk) - The company entered into a merger agreement with Centre 1 Bancorp, Inc., expected to close January 1, 2026, which will significantly increase total assets, loans, and deposits[85](index=85&type=chunk) [FORWARD-LOOKING STATEMENTS](index=29&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section clarifies that forward-looking statements are based on current expectations and are subject to risks and uncertainties - Forward-looking statements are based on current expectations, estimates, and projections about the Company's future plans, results, strategies, and expectations[88](index=88&type=chunk) - These statements are subject to risks, assumptions, and uncertainties that are difficult to predict and beyond the Company's control, which could cause actual results to differ materially[88](index=88&type=chunk) - The Company does not undertake any obligation to publicly update or review any forward-looking statement, except as required by law[88](index=88&type=chunk) [OVERVIEW](index=29&type=section&id=OVERVIEW) This section provides an overview of Bank First Corporation, its subsidiary Bank First, N.A., and its banking operations - Bank First Corporation serves as the holding company for Bank First, N.A., a nationally-chartered bank headquartered in Manitowoc, Wisconsin[90](index=90&type=chunk) - The Bank operates **twenty-seven banking locations** across various counties in Wisconsin, offering loan, deposit, and treasury management products[90](index=90&type=chunk) - A significant portion of the Bank's income is derived from interest received on loans and investments, with deposits being the primary source of funding[91](index=91&type=chunk) [SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA](index=31&type=section&id=SELECTED%20HISTORICAL%20CONSOLIDATED%20FINANCIAL%20DATA) This section presents selected historical consolidated financial data, including net income, EPS, total assets, and key ratios Net Income (Six Months Ended June 30) (in thousands) | Year | Amount | | :--- | :--- | | 2025 | $35,116 | | 2024 | $31,471 | | **Change** | **$3,645** | | **% Change** | **11.6%** | Basic EPS (Six Months Ended June 30) | Year | EPS | | :--- | :--- | | 2025 | $3.53 | | 2024 | $3.10 | | **Change** | **$0.43** | | **% Change** | **13.9%** | Total Assets (June 30) (in thousands) | Year | Amount | | :--- | :--- | | 2025 | $4,365,082 | | 2024 | $4,145,820 | | **Change** | **$219,262** | | **% Change** | **5.3%** | Return on Average Assets (Annualized, Six Months Ended June 30) | Year | Ratio | | :--- | :--- | | 2025 | 1.59% | | 2024 | 1.54% | | **Change** | **0.05 pp** | Net Interest Margin, taxable equivalent (Annualized, Six Months Ended June 30) | Year | Ratio | | :--- | :--- | | 2025 | 3.69% | | 2024 | 3.62% | | **Change** | **0.07 pp** | [GAAP RECONCILIATION AND MANAGEMENT EXPLANATION OF NON-GAAP FINANCIAL MEASURES](index=32&type=section&id=GAAP%20RECONCILIATION%20AND%20MANAGEMENT%20EXPLANATION%20OF%20NON-GAAP%20FINANCIAL%20MEASURES) This section reconciles non-GAAP financial measures like tangible book value and tangible equity to GAAP equivalents, explaining their utility - The non-GAAP financial measures presented are tangible book value per common share and tangible equity to tangible assets[96](index=96&type=chunk) - These non-GAAP measures exclude the impact of goodwill and other intangibles to allow for easier comparison of the Company's capital position to other companies[100](index=100&type=chunk) Reconciliation of Tangible Assets and Equity (June 30, 2025) (in thousands) | Metric | GAAP | Adjustment | Non-GAAP | | :--- | :--- | :--- | :--- | | Total Assets | $4,365,082 | ($193,738) | $4,171,344 | | Total Stockholders' Equity | $612,333 | ($193,738) | $418,595 | - Tangible book value per common share was **$42.57** and tangible common equity to tangible assets was **10.04%** as of June 30, 2025[101](index=101&type=chunk) [RESULTS OF OPERATIONS](index=33&type=section&id=RESULTS%20OF%20OPERATIONS) This section analyzes the company's financial performance for the three and six months ended June 30, 2025 and 2024 - Net income increased by **$0.8 million (5.1%)** for the three months ended June 30, 2025, and by **$3.6 million (11.6%)** for the six months ended June 30, 2025[102](index=102&type=chunk)[115](index=115&type=chunk) - The increase in net income was primarily driven by new and renewed loans pricing at higher yields, while deposit costs began to reprice lower[102](index=102&type=chunk)[115](index=115&type=chunk) - Noninterest expense increased due to elevated occupancy costs from multiple branch remodels and a new branch opening, as well as increased data processing expenditures for digital banking platform upgrades[113](index=113&type=chunk)[124](index=124&type=chunk) [Results of Operations for the Three Months Ended June 30, 2025 and June 30, 2024](index=33&type=section&id=Results%20of%20Operations%20for%20the%20Three%20Months%20Ended%20June%2030%2C%202025%20and%20June%2030%2C%202024) This section details the company's financial results for the three months ended June 30, 2025 and 2024 Net Income (Three Months Ended June 30) (in thousands) | Year | Amount | | :--- | :--- | | 2025 | $16,875 | | 2024 | $16,059 | | **Change** | **$816** | | **% Change** | **5.1%** | Net Interest Income (Three Months Ended June 30) (in thousands) | Year | Amount | | :--- | :--- | | 2025 | $36,702 | | 2024 | $33,007 | | **Change** | **$3,695** | | **% Change** | **11.2%** | Total Interest Income (Three Months Ended June 30) (in thousands) | Year | Amount | | :--- | :--- | | 2025 | $54,575 | | 2024 | $49,347 | | **Change** | **$5,228** | | **% Change** | **10.6%** | Total Noninterest Income (Three Months Ended June 30) (in thousands) | Year | Amount | | :--- | :--- | | 2025 | $4,921 | | 2024 | $5,877 | | **Change** | **($956)** | | **% Change** | **-16%** | Total Noninterest Expense (Three Months Ended June 30) (in thousands) | Year | Amount | | :--- | :--- | | 2025 | $20,756 | | 2024 | $19,057 | | **Change** | **$1,699** | | **% Change** | **9%** | [Results of Operations for the Six Months Ended June 30, 2025 and June 30, 2024](index=36&type=section&id=Results%20of%20Operations%20for%20the%20Six%20Months%20Ended%20June%2030%2C%202025%20and%20June%2030%2C%202024) This section details the company's financial results for the six months ended June 30, 2025 and 2024 Net Income (Six Months Ended June 30) (in thousands) | Year | Amount | | :--- | :--- | | 2025 | $35,116 | | 2024 | $31,471 | | **Change** | **$3,645** | | **% Change** | **11.6%** | Net Interest Income (Six Months Ended June 30) (in thousands) | Year | Amount | | :--- | :--- | | 2025 | $73,239 | | 2024 | $66,356 | | **Change** | **$6,883** | | **% Change** | **10.4%** | Total Interest Income (Six Months Ended June 30) (in thousands) | Year | Amount | | :--- | :--- | | 2025 | $109,623 | | 2024 | $98,619 | | **Change** | **$11,004** | | **% Change** | **11.2%** | Total Noninterest Income (Six Months Ended June 30) (in thousands) | Year | Amount | | :--- | :--- | | 2025 | $11,509 | | 2024 | $10,274 | | **Change** | **$1,235** | | **% Change** | **12%** | Total Noninterest Expense (Six Months Ended June 30) (in thousands) | Year | Amount | | :--- | :--- | | 2025 | $41,360 | | 2024 | $39,381 | | **Change** | **$1,979** | | **% Change** | **5%** | - The effective tax rate for the six months ended June 30, 2025, was **17.9%**, compared to **15.1%** in 2024. The lower rate in 2024 was due to a **$1.3 million** reduction in estimated tax liability from new state tax legislation[126](index=126&type=chunk) [NET INTEREST MARGIN](index=40&type=section&id=NET%20INTEREST%20MARGIN) This section analyzes the company's net interest margin, earning asset yields, and cost of funds for the periods presented Net Interest Margin (Taxable Equivalent, Three Months Ended June 30) | Year | NIM | | :--- | :--- | | 2025 | 3.72% | | 2024 | 3.63% | | **Change** | **0.09 pp** | Net Interest Margin (Taxable Equivalent, Six Months Ended June 30) | Year | NIM | | :--- | :--- | | 2025 | 3.69% | | 2024 | 3.62% | | **Change** | **0.07 pp** | Earning Asset Yield (Six Months Ended June 30) | Year | Yield | | :--- | :--- | | 2025 | 5.50% | | 2024 | 5.37% | | **Change** | **0.13 pp** | Cost of Funds (Six Months Ended June 30) | Year | Cost | | :--- | :--- | | 2025 | 2.62% | | 2024 | 2.61% | | **Change** | **0.01 pp** | [Rate/Volume Analysis](index=42&type=section&id=Rate%2FVolume%20Analysis) This section provides a rate/volume analysis of changes in net interest income and interest income from loans Change in Net Interest Income (Three Months Ended June 30, 2025 vs 2024) (in thousands) | Factor | Increase/(Decrease) | | :--- | :--- | | Volume | $5,802 | | Rate | $9,055 | | **Total** | **$14,857** | Change in Net Interest Income (Six Months Ended June 30, 2025 vs 2024) (in thousands) | Factor | Increase/(Decrease) | | :--- | :--- | | Volume | $6,572 | | Rate | $8,089 | | **Total** | **$14,661** | Interest Income - Loans (Six Months Ended June 30, 2025 vs 2024) (in thousands) | Factor | Increase/(Decrease) | | :--- | :--- | | Volume | $8,479 | | Rate | $6,461 | | **Total** | **$14,940** | [CHANGES IN FINANCIAL CONDITION](index=42&type=section&id=CHANGES%20IN%20FINANCIAL%20CONDITION) This section discusses significant changes in the company's financial condition, including assets, cash, investments, loans, deposits, and equity Total Assets (in thousands) | Date | Amount | | :--- | :--- | | June 30, 2025 | $4,365,082 | | December 31, 2024 | $4,495,060 | | **Change** | **($129,978)** | | **% Change** | **-2.9%** | - Cash and cash equivalents decreased by **$141.0 million** to **$120.3 million** at June 30, 2025, from **$261.3 million** at December 31, 2024, due to reduced seasonal customer deposits and loan portfolio growth[135](index=135&type=chunk) - Investment securities decreased by **$56.7 million** to **$277.1 million** at June 30, 2025, from **$333.8 million** at December 31, 2024, primarily due to the maturity of short-duration securities[136](index=136&type=chunk) - Net loans increased by **$63.0 million** to **$3.54 billion** at June 30, 2025, from **$3.47 billion** at December 31, 2024[137](index=137&type=chunk) - Deposits decreased by **$65.6 million (1.8%)** to **$3.60 billion** at June 30, 2025, from **$3.66 billion** at December 31, 2024[138](index=138&type=chunk) - Stockholders' equity decreased by **$27.4 million (4.3%)** to **$612.3 million** at June 30, 2025, from **$639.7 million** at December 31, 2024, due to share repurchases and dividends[139](index=139&type=chunk) [LOANS](index=44&type=section&id=LOANS) This section provides a detailed analysis of the company's loan portfolio, including its composition, growth drivers, and maturity profiles Total Loans (in thousands) | Date | Amount | | :--- | :--- | | June 30, 2025 | $3,580,357 | | December 31, 2024 | $3,517,168 | | **Change** | **$63,189** | | **% Change** | **1.8%** | Loan Portfolio Composition (June 30, 2025) (in thousands) | Loan Type | Amount | % of Total | | :--- | :--- | :--- | | Commercial & industrial | $628,527 | 18% | | Commercial real estate (Owner occupied) | $841,749 | 23% | | Commercial real estate (Non-owner occupied) | $518,636 | 14% | | Multi-family | $377,218 | 11% | | Construction & development | $249,857 | 7% | | Residential 1-4 family | $891,685 | 25% | | Consumer | $57,855 | 2% | | Other loans | $14,830 | 0% | - Loan growth was primarily driven by solid demand for new credit from existing customer relationships[142](index=142&type=chunk) [Loan categories](index=46&type=section&id=Loan%20categories) This section breaks down the loan portfolio by categories such as Commercial & Industrial, Commercial Real Estate, Residential, and Consumer loans - Commercial and Industrial (C&I) loans totaled **$628.5 million (18% of total loans)** at June 30, 2025, primarily to small and middle-market businesses, secured by corporate assets and personal guarantees[144](index=144&type=chunk)[145](index=145&type=chunk) - Commercial Real Estate (CRE) loans totaled **$1.74 billion (48% of total loans)** at June 30, 2025, with growth primarily in multi-family real estate due to housing shortages[146](index=146&type=chunk) - Construction and Development (C&D) loans totaled **$249.9 million (7% of total loans)** at June 30, 2025, are short-term and require borrower equity injection prior to disbursement[148](index=148&type=chunk)[149](index=149&type=chunk) - Residential 1-4 family loans amounted to **$891.7 million (25% of total loans)** at June 30, 2025, including conforming and 'jumbo' loans, with servicing rights retained on all loans sold to the secondary market[150](index=150&type=chunk)[151](index=151&type=chunk)[153](index=153&type=chunk) - Consumer loans totaled **$57.9 million (2% of total loans)** at June 30, 2025, and generally carry greater risk due to rapidly depreciable assets and dependence on borrower's financial stability[155](index=155&type=chunk)[156](index=156&type=chunk) [Loan Portfolio Maturities](index=48&type=section&id=Loan%20Portfolio%20Maturities) This section presents the maturity distribution of the loan portfolio and the breakdown between fixed and floating rate loans Total Loans by Maturity (June 30, 2025) (in thousands) | Maturity Period | Amount | | :--- | :--- | | One Year or Less | $533,227 | | One to Five Years | $1,368,058 | | Five to Fifteen Years | $934,476 | | Over Fifteen Years | $744,596 | | **Total** | **$3,580,357** | Fixed vs. Floating Rate Loans (June 30, 2025) (in thousands) | Rate Type | Amount | | :--- | :--- | | Fixed Rate Loans | $2,162,499 | | Floating Rate Loans | $1,417,858 | | **Total** | **$3,580,357** | [NONPERFORMING ASSETS](index=48&type=section&id=NONPERFORMING%20ASSETS) This section details the company's nonperforming assets, including nonaccrual loans and other real estate owned Total Nonperforming Assets (NPAs) (in thousands) | Date | Amount | | :--- | :--- | | June 30, 2025 | $13,597 | | December 31, 2024 | $9,237 | | **Change** | **$4,360** | | **% Change** | **47.2%** | Total Nonaccrual Loans (in thousands) | Date | Amount | | :--- | :--- | | June 30, 2025 | $13,034 | | December 31, 2024 | $6,826 | | **Change** | **$6,208** | | **% Change** | **90.9%** | Nonaccrual Loans to Total Loans Ratio | Date | Ratio | | :--- | :--- | | June 30, 2025 | 0.36% | | December 31, 2024 | 0.19% | | **Change** | **0.17 pp** | - Other Real Estate Owned (OREO) decreased to **$0** at June 30, 2025, from **$741 thousand** at December 31, 2024[162](index=162&type=chunk) [Nonaccrual Loans](index=50&type=section&id=Nonaccrual%20Loans) This section provides a detailed breakdown of nonaccrual loans by type and discusses the factors contributing to their increase - Loans are typically placed on nonaccrual status when payments are **90 days or more past due**, or when management believes principal or interest will not be collectible[163](index=163&type=chunk) - The increase in nonaccrual loans through the first six months of 2025 was primarily due to the deterioration of one customer relationship[163](index=163&type=chunk) Nonaccrual Loans by Type (June 30, 2025) (in thousands) | Loan Type | Amount | | :--- | :--- | | Commercial & industrial | $6,732 | | Commercial real estate - owner occupied | $4,828 | | Residential 1-4 family | $1,306 | | **Total** | **$13,034** | [ALLOWANCE FOR CREDIT LOSSES - LOANS](index=51&type=section&id=ALLOWANCE%20FOR%20CREDIT%20LOSSES%20-%20LOANS) This section discusses the allowance for credit losses on loans, including provision, net charge-offs, and coverage ratios - The Allowance for Credit Losses - Loans (ACL-Loans) was **$44.3 million (1.24% of total loans)** at June 30, 2025, remaining consistent due to stable economic conditions and strong asset quality[166](index=166&type=chunk) Provision for Credit Losses (Six Months Ended June 30) (in thousands) | Year | Amount | | :--- | :--- | | 2025 | $600 | | 2024 | $200 | | **Change** | **$400** | | **% Change** | **200.0%** | Net Charge-offs (Recoveries) (Six Months Ended June 30) (in thousands) | Year | Amount | | :--- | :--- | | 2025 | $809 (net charge-offs) | | 2024 | ($809) (net recoveries) | | **Change** | **$1,618** | - The ratio of ACL-Loans to nonaccrual loans was **340%** at June 30, 2025, a decrease from **647%** at December 31, 2024, reflecting the increase in nonaccrual loans[162](index=162&type=chunk) [SOURCES OF FUNDS](index=52&type=section&id=SOURCES%20OF%20FUNDS) This section details the company's primary sources of funds, including deposits and borrowings, and their composition - Deposits are the primary source of funds, accounting for approximately **82.4%** of total liabilities and equity at June 30, 2025[170](index=170&type=chunk)[171](index=171&type=chunk) Total Deposits (in thousands) | Date | Amount | | :--- | :--- | | June 30, 2025 | $3,595,424 | | December 31, 2024 | $3,661,073 | | **Change** | **($65,649)** | | **% Change** | **-1.8%** | - A continued shift from noninterest-bearing deposits to interest-bearing deposits has been observed due to prevailing interest rates[172](index=172&type=chunk) FHLB Borrowings (in thousands) | Date | Amount | | :--- | :--- | | June 30, 2025 | $109,915 | | December 31, 2024 | $135,372 | | **Change** | **($25,457)** | | **% Change** | **-18.8%** | - The Company has **$1.54 billion** in availability between borrowings and brokered deposits for future funding needs[197](index=197&type=chunk) [Deposits](index=52&type=section&id=Deposits) This section analyzes the company's deposit base, including total deposits, noninterest-bearing, and interest-bearing deposits Total Deposits (in thousands) | Date | Amount | | :--- | :--- | | June 30, 2025 | $3,595,424 | | December 31, 2024 | $3,661,073 | | **Change** | **($65,649)** | | **% Change** | **-1.8%** | Noninterest-bearing deposits (in thousands) | Date | Amount | | :--- | :--- | | June 30, 2025 | $990,027 | | December 31, 2024 | $1,024,881 | | **Change** | **($34,854)** | | **% Change** | **-3.4%** | Interest-bearing deposits (in thousands) | Date | Amount | | :--- | :--- | | June 30, 2025 | $2,605,397 | | December 31, 2024 | $2,636,192 | | **Change** | **($30,795)** | | **% Change** | **-1.2%** | - Certificates of deposit totaled **$656.7 million** at June 30, 2025, including **$20.1 million** of brokered deposits[173](index=173&type=chunk) - The long-term strategy is to minimize reliance on certificates of deposit by increasing relationship deposits in lower earning savings and demand deposit accounts[173](index=173&type=chunk) [Borrowings](index=53&type=section&id=Borrowings) This section details the company's borrowings, primarily FHLB advances and subordinated debt, including outstanding amounts FHLB Advances Outstanding (in thousands) | Date | Amount | | :--- | :--- | | June 30, 2025 | $109,915 | | December 31, 2024 | $135,372 | | **Change** | **($25,457)** | | **% Change** | **-18.8%** | - Subordinated debt remained stable at **$12.0 million** outstanding at June 30, 2025, and December 31, 2024[180](index=180&type=chunk)[181](index=181&type=chunk) Average Daily FHLB Borrowings (Six Months Ended June 30) (in thousands) | Year | Amount | | :--- | :--- | | 2025 | $134,795 | | 2024 | $37,035 | | **Change** | **$97,760** | | **% Change** | **264.0%** | Weighted Average Interest Rate on Average Daily FHLB Borrowing (Six Months Ended June 30) | Year | Rate | | :--- | :--- | | 2025 | 4.53% | | 2024 | 4.01% | | **Change** | **0.52 pp** | [INVESTMENT SECURITIES](index=54&type=section&id=INVESTMENT%20SECURITIES) This section provides an overview of the company's investment securities portfolio, including available-for-sale and held-to-maturity Total Investment Securities (in thousands) | Date | Amount | | :--- | :--- | | June 30, 2025 | $277,063 | | December 31, 2024 | $333,817 | | **Change** | **($56,754)** | | **% Change** | **-17.0%** | Available for Sale Securities (Fair Value) (in thousands) | Date | Amount | | :--- | :--- | | June 30, 2025 | $167,209 | | December 31, 2024 | $223,061 | | **Change** | **($55,852)** | | **% Change** | **-25.0%** | Held to Maturity Securities (Amortized Cost) (in thousands) | Date | Amount | | :--- | :--- | | June 30, 2025 | $109,854 | | December 31, 2024 | $110,756 | | **Change** | **($902)** | | **% Change** | **-0.8%** | - Gross unrealized losses on available-for-sale securities were **$11.0 million** at June 30, 2025, primarily due to changes in interest rates, not credit deterioration[183](index=183&type=chunk)[190](index=190&type=chunk) - No allowance for credit losses on available-for-sale or held-to-maturity securities was recognized, as no credit impairment is believed to exist[190](index=190&type=chunk)[191](index=191&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=57&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section assesses the company's liquidity position and capital adequacy, including regulatory capital ratios and funding sources - The Company maintains adequate liquidity through its investment portfolio, deposits, FHLB borrowings, and lines available from correspondent banks, with **$1.54 billion** in total availability[197](index=197&type=chunk) Total Stockholders' Equity (in thousands) | Date | Amount | | :--- | :--- | | June 30, 2025 | $612,333 | | December 31, 2024 | $639,683 | | **Change** | **($27,350)** | | **% Change** | **-4.3%** | - The Bank was classified as 'well capitalized' at June 30, 2025, exceeding all applicable regulatory capital requirements and the capital conservation buffer[204](index=204&type=chunk)[207](index=207&type=chunk) [Liquidity](index=57&type=section&id=Liquidity) This section defines liquidity and discusses the company's strategies for maintaining adequate cash to meet operational and commitment needs - Liquidity is defined as the Company's ability to generate adequate cash to meet its day-to-day operations and material long and short-term commitments[195](index=195&type=chunk) - The Company's highest priority is placed on growing noninterest-bearing deposits through strong community involvement[197](index=197&type=chunk) - The Company believes its present liquidity position is adequate to meet current and future needs, with no material adverse trends or events identified[197](index=197&type=chunk) [Capital Adequacy](index=57&type=section&id=Capital%20Adequacy) This section details the company's compliance with regulatory capital requirements and its 'well capitalized' status - The Bank is subject to various regulatory capital requirements administered by federal banking agencies (Federal Reserve and OCC) and was 'well capitalized' at June 30, 2025[199](index=199&type=chunk)[204](index=204&type=chunk) Bank First, N.A. Capital Ratios (June 30, 2025) | Ratio | Actual | Minimum for Well Capitalized | | :--- | :--- | :--- | | CET1 to Risk-Weighted Assets | 11.0% | 6.5% | | Tier 1 to Risk-Weighted Assets | 11.0% | 8.0% | | Total Capital to Risk-Weighted Assets | 12.2% | 10.0% | | Tier 1 to Average Assets (Leverage) | 9.7% | 5.0% | - The Bank met the then-applicable capital conservation buffer of **2.5%** as of June 30, 2025[66](index=66&type=chunk)[207](index=207&type=chunk) - The Company carried **$12.0 million** of subordinated debt as of June 30, 2025, which qualifies as Tier II capital[211](index=211&type=chunk) [FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK](index=61&type=section&id=FINANCIAL%20INSTRUMENTS%20WITH%20OFF-BALANCE-SHEET%20RISK) This section describes the company's financial instruments with off-balance-sheet risk, including loan commitments - The Company is party to financial instruments with off-balance-sheet risk, including loan commitments, standby and direct pay letters of credit, unused lines of credit, and credit card arrangements[213](index=213&type=chunk) - These instruments involve elements of credit and interest rate risk, and the Company uses the same credit policies for these as for on-balance-sheet instruments[213](index=213&type=chunk)[214](index=214&type=chunk) Total Commitments (June 30, 2025) (in thousands) | Commitment Type | Amount | | :--- | :--- | | Unused lines of credit | $733,426 | | Standby and direct pay letters of credit | $9,384 | | Credit card arrangements | $24,985 | | **Total** | **$767,795** | [Off-Balance Sheet Arrangements](index=61&type=section&id=Off-Balance%20Sheet%20Arrangements) This section details the company's off-balance sheet arrangements, such as unused lines of credit and letters of credit Off-Balance Sheet Commitments (June 30, 2025) (in thousands) | Commitment Type | Amount | | :--- | :--- | | Unused lines of credit | $733,426 | | Standby and direct pay letters of credit | $9,384 | | Credit card arrangements | $24,985 | | **Total** | **$767,795** | - These commitments do not necessarily represent future cash requirements as they often expire without being drawn upon[217](index=217&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=62&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section details the company's exposure to market risk, primarily interest rate risk, and its management strategies - The Company's primary market risk is interest rate risk, arising from its lending, investment, and deposit-taking activities[219](index=219&type=chunk) - The objective of interest rate risk management is to minimize the adverse impact of interest rate changes on net interest income and capital, while maximizing the yield-cost spread[221](index=221&type=chunk) - The Company uses various tools to manage interest rate risk, including interest rate sensitivity analysis (gap analysis), market value of portfolio equity analysis, and interest rate simulations[225](index=225&type=chunk) [Interest Rate Sensitivity](index=62&type=section&id=Interest%20Rate%20Sensitivity) This section analyzes the company's interest rate sensitivity, including estimated impacts of rate changes on net interest income - Interest rate risk is the risk to earnings and value arising from changes in market interest rates, encompassing repricing, option, yield curve, and basis risk[222](index=222&type=chunk) Estimated Percentage Change in Net Interest Income (June 30, 2025, next 12 months) | Change in Interest Rates (in Basis Points) | Percentage Change in Net Interest Income | | :--- | :--- | | +300 | (5.4)% | | +200 | (3.5)% | | +100 | (1.7)% | | -100 | (0.8)% | | -200 | (1.5)% | | -300 | (0.9)% | - The simulation assumes no growth in interest-earning assets or interest-bearing liabilities over the next 12 months[229](index=229&type=chunk) [Economic Value of Equity Analysis](index=63&type=section&id=Economic%20Value%20of%20Equity%20Analysis) This section presents the economic value of equity (EVE) analysis, measuring the sensitivity of the company's financial condition to interest rate changes - The economic value of equity (EVE) analysis measures the sensitivity of the Company's financial condition to changes in interest rates by comparing estimated changes in the present value of assets and liabilities[230](index=230&type=chunk) - As of June 30, 2025, an instantaneous **200 basis point increase** in interest rates was estimated to result in a **2.38% increase** in EVE[230](index=230&type=chunk) - An instantaneous **100 basis point decrease** in interest rates was estimated to result in a **1.45% decrease** in EVE[230](index=230&type=chunk) - These estimates are based on inherently uncertain assumptions (e.g., loan prepayment speeds, deposit maturities) and may not precisely forecast actual effects[230](index=230&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=64&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025 - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025[232](index=232&type=chunk) - No changes were made to the Company's internal control over financial reporting during the quarter ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, its internal control over financial reporting[233](index=233&type=chunk) [Evaluation of Disclosure Controls and Procedures](index=64&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section details the CEO and CFO's conclusion on the effectiveness of the company's disclosure controls and procedures - The CEO and CFO evaluated the effectiveness of the Company's disclosure controls and procedures as of June 30, 2025[232](index=232&type=chunk) - They concluded that these controls were effective in timely recording, processing, summarizing, and reporting information required under the Exchange Act[232](index=232&type=chunk) [Changes in Internal Control Over Financial Reporting](index=64&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) This section confirms no material changes to the company's internal control over financial reporting during the quarter - No changes were made to the Company's internal control over financial reporting during the quarter ended June 30, 2025, that materially affected or are reasonably likely to materially affect it[233](index=233&type=chunk) - Internal control over financial reporting has inherent limitations and may not prevent or detect misstatements[233](index=233&type=chunk) [PART II. OTHER INFORMATION](index=64&type=section&id=Part%20II.%20Other%20Information) This section covers legal proceedings, risk factors, equity security sales, defaults, and other miscellaneous disclosures [ITEM 1. LEGAL PROCEEDINGS](index=64&type=section&id=ITEM%201.%20Legal%20Proceedings) The company is involved in various litigation as part of its normal business operations, with no material adverse effect anticipated - The Company is a party to various litigation in the normal course of business[235](index=235&type=chunk) - Management believes that any liability resulting from litigation will not have a material effect on the Company's financial position, results of operations, or liquidity[235](index=235&type=chunk) [ITEM 1A. RISK FACTORS](index=64&type=section&id=ITEM%201A.%20Risk%20Factors) No material changes occurred to the risk factors previously disclosed in the company's Annual Report on Form 10-K - No material changes occurred during the quarterly period ended June 30, 2025, to the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2024[236](index=236&type=chunk) - Additional information regarding risk factors can be found in "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - Forward-Looking Statements" of this Form 10-Q and in "Item 1A. Risk Factors" in the Annual Report on Form 10-K[236](index=236&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=65&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company renewed its share repurchase program, authorizing up to $50 million in common stock repurchases, with 143,720 shares repurchased in Q2 2025 - The Company renewed its share repurchase program on February 18, 2025, authorizing repurchases of up to **$50 million** of its common stock for a period of one year[238](index=238&type=chunk) Common Stock Repurchases (Q2 2025) | Month | Total Number of Shares Repurchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | 48,577 | $99.42 | | May 2025 | 42,472 | $115.03 | | June 2025 | 52,671 | $112.89 | | **Total** | **143,720** | **$109.11** | - As of June 30, 2025, **308,127 shares** remained available for repurchase under the program[239](index=239&type=chunk) - The Company is subject to a new nondeductible **1% excise tax** on repurchases of corporate stock under the Inflation Reduction Act of 2022, effective after December 31, 2022[239](index=239&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=65&type=section&id=ITEM%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities during the period - No defaults upon senior securities were reported[240](index=240&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=65&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) The company reported no mine safety disclosures - No mine safety disclosures were reported[241](index=241&type=chunk) [ITEM 5. OTHER INFORMATION](index=65&type=section&id=ITEM%205.%20Other%20Information) No changes to Rule 10b5-1 or non-Rule 10b5-1 trading arrangements by directors and officers occurred during the quarter - For the quarter ended June 30, 2025, there were no trading arrangements for the sale or purchases of Company securities adopted, terminated, or modified by directors and officers that were either Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements[242](index=242&type=chunk) [ITEM 6. EXHIBITS](index=66&type=section&id=ITEM%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including various certifications and XBRL taxonomy documents - Exhibits include Rule 13a-14(a) Certifications of the Chief Executive Officer and Chief Financial Officer, and Section 1350 Certifications of the Chief Executive Officer and Chief Financial Officer[245](index=245&type=chunk) - Various Inline XBRL Taxonomy Extension documents (Schema, Calculation, Definition, Label, Presentation Linkbase Documents) and the Cover Page Interactive Data File are also filed[245](index=245&type=chunk) [SIGNATURES](index=67&type=section&id=Signatures) This section contains the official signatures for the report, confirming its submission by authorized financial officers - The report was signed on August 11, 2025, by Kevin M. LeMahieu, Chief Financial Officer (Principal Financial and Accounting Officer) of Bank First Corporation[250](index=250&type=chunk) ```

FORWARD-LOOKING STATEMENTS [Forward-Looking Statements Overview](index=3&type=section&id=Forward-Looking%20Statements%20Overview) This section outlines forward-looking statements, based on current expectations and subject to inherent risks that may cause actual results to differ materially - Forward-looking statements are identified by terms such as 'anticipate,' 'believe,' 'estimate,' 'expect,' 'intend,' 'may,' 'plan,' 'potential,' 'predict,' 'project,' 'should,' 'target,' 'will,' or 'would'[8](index=8&type=chunk) - Key risks and uncertainties include the ability to realize anticipated benefits of the Acquisition, unplanned issues (delays, expenses, shortages), competitive market for LNG regasification, changes in LNG supply/demand/price, need for substantial capital expenditures, and risks associated with international business operations[9](index=9&type=chunk) - The company operates in a competitive and rapidly changing environment, with new risks emerging, such as global economic uncertainty, geopolitical conflicts, and health events, which could amplify existing risks[10](index=10&type=chunk) PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) This section presents Excelerate Energy's unaudited consolidated financial statements for periods ended June 30, 2025, and December 31, 2024 [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Highlights (In thousands) | Item | June 30, 2025 | December 31, 2024 | Change | % Change | | :-------------------------------- | :------------ | :---------------- | :----- | :------- | | Cash and cash equivalents | $425,998 | $537,522 | $(111,524) | -20.7% | | Total current assets | $609,339 | $754,279 | $(144,940) | -19.2% | | Property and equipment, net | $2,098,767 | $1,622,896 | $475,871 | 29.3% | | Intangible assets, net | $365,378 | — | $365,378 | N/A | | Goodwill | $249,240 | — | $249,240 | N/A | | Total assets | $4,010,080 | $2,883,215 | $1,126,865 | 39.1% | | Total current liabilities | $233,975 | $216,104 | $17,871 | 8.3% | | Long-term debt, net | $926,141 | $286,760 | $639,381 | 222.9% | | Total liabilities | $1,860,677 | $994,714 | $865,963 | 87.1% | | Total equity | $2,149,403 | $1,888,501 | $260,902 | 13.8% | [Consolidated Statements of Income](index=8&type=section&id=Consolidated%20Statements%20of%20Income) Consolidated Statements of Income Highlights (In thousands, except per share amounts) | Item | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Change (YoY) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | Change (YoY) | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------- | :----------------------------- | :----------------------------- | :----------- | | Total revenues | $204,556 | $183,333 | $21,223 | $519,646 | $383,446 | $136,200 | | Operating income | $43,386 | $49,881 | $(6,495) | $109,102 | $95,040 | $14,062 | | Income before income taxes | $26,339 | $40,704 | $(14,365) | $84,489 | $75,745 | $8,744 | | Net income | $20,765 | $33,277 | $(12,512) | $72,888 | $61,417 | $11,471 | | Net income attributable to shareholders | $4,729 | $6,672 | $(1,943) | $16,116 | $12,996 | $3,120 | | Net income per common share – basic | $0.15 | $0.27 | $(0.12) | $0.58 | $0.51 | $0.07 | | Net income per common share – diluted | $0.15 | $0.26 | $(0.11) | $0.57 | $0.50 | $0.07 | [Consolidated Statements of Comprehensive Income](index=9&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Consolidated Statements of Comprehensive Income Highlights (In thousands) | Item | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Change (YoY) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | Change (YoY) | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------- | :----------------------------- | :----------------------------- | :----------- | | Net income | $20,765 | $33,277 | $(12,512) | $72,888 | $61,417 | $11,471 | | Other comprehensive income (loss) | $293 | $175 | $118 | $(1,142) | $3,163 | $(4,305) | | Comprehensive income | $20,788 | $33,310 | $(12,522) | $72,499 | $61,997 | $10,502 | | Comprehensive income attributable to shareholders | $4,752 | $6,705 | $(1,953) | $15,727 | $13,576 | $2,151 | [Consolidated Statements of Changes in Equity](index=10&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Equity) Consolidated Statements of Changes in Equity Highlights (In thousands, except shares) | Item | Balance at January 1, 2025 | Balance at June 30, 2025 | Change | | :----------------------------------- | :------------------------- | :----------------------- | :----- | | Class A Common Stock (Amount) | $26 | $35 | $9 | | Class B Common Stock (Amount) | $82 | $82 | $0 | | Additional paid-in capital | $467,429 | $633,700 | $166,271 | | Retained earnings | $72,322 | $84,898 | $12,576 | | Accumulated other comprehensive income | $502 | $113 | $(389) | | Treasury stock (Amount) | $(52,375) | $(54,688) | $(2,313) | | Non-controlling interests | $1,400,515 | $1,485,263 | $84,748 | | Total equity | $1,888,501 | $2,149,403 | $260,902 | [Consolidated Statements of Cash Flows](index=12&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statements of Cash Flows Highlights (Six months ended June 30, in thousands) | Item | 2025 | 2024 | Change (YoY) | | :------------------------------------------ | :--------- | :--------- | :----------- | | Net cash provided by operating activities | $241,949 | $155,040 | $86,909 | | Net cash used in investing activities | $(1,125,499) | $(38,268) | $(1,087,231) | | Net cash provided by (used in) financing activities | $773,048 | $(63,082) | $836,130 | | Net increase (decrease) in cash, cash equivalents and restricted cash | $(110,414) | $53,684 | $(164,098) | | Cash, cash equivalents and restricted cash, End of period | $444,081 | $626,142 | $(182,061) | [Notes to Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) [Note 1 – General business information](index=13&type=section&id=Note%201%20%E2%80%93%20General%20business%20information) Excelerate Energy, Inc. operates LNG and natural gas infrastructure, with George B. Kaiser holding a significant EELP interest - Excelerate Energy, Inc. owns and operates liquefied natural gas (LNG) and natural gas infrastructure assets[25](index=25&type=chunk) - George B. Kaiser (and affiliates) owned approximately **71.9% of EELP ownership interests** as of June 30, 2025, down from 77.5% as of December 31, 2024[26](index=26&type=chunk) [Note 2 – Summary of significant accounting policies](index=13&type=section&id=Note%202%20%E2%80%93%20Summary%20of%20significant%20accounting%20policies) This note outlines significant accounting policies for property, intangible assets, goodwill, and new accounting pronouncements Useful Lives for Depreciation | Asset Type | Useful Life | | :--------------------------------- | :---------- | | Floating terminals and related equipment | 5-40 years | | Power generation | 25-35 years | | Fixed terminals and gas pipeline | 20-40 years | | Finance lease right-of-use assets | Lesser of useful life or lease term | | Other equipment | 3-12 years | - Intangible assets, primarily customer relationships from the Acquisition, are amortized on a straight-line basis over approximately **20 years**, with **$16.0 million** expected amortization expense annually for the next five years[31](index=31&type=chunk) - Goodwill, arising from the Acquisition, is considered to have an indefinite life and is tested for impairment at least annually or when impairment indicators are present[32](index=32&type=chunk)[33](index=33&type=chunk) - The company is evaluating the impact of new FASB ASUs: ASU 2023-09 (Income Tax Disclosures, effective after Dec 15, 2024) and ASU 2024-03 (Expense Disaggregation Disclosures, effective after Dec 15, 2026)[35](index=35&type=chunk)[36](index=36&type=chunk) [Note 3 – Acquisition](index=15&type=section&id=Note%203%20%E2%80%93%20Acquisition) In May 2025, Excelerate acquired New Fortress Energy Inc.'s Jamaica Business for approximately **$1.055 billion**, funded by debt, equity, and cash, to enhance contract revenue and diversify markets - Excelerate acquired **100%** of New Fortress Energy Inc.'s Jamaica Business in May 2025 for approximately **$1.055 billion** in cash[37](index=37&type=chunk) - The acquisition included the Montego Bay LNG Terminal, Old Harbour LNG Terminal, and Clarendon combined heat and power plant, funded by a Debt Offering, Equity Offering, and cash on hand[37](index=37&type=chunk) Fair Value of Assets Acquired and Liabilities Assumed (May 14, 2025, in thousands) | Item | Amount | | :----------------------------- | :--------- | | **Assets Acquired:** | | | Property and equipment, net | $436,543 | | Intangible assets, net | $367,500 | | Goodwill | $249,240 | | Right-of-use assets | $178,913 | | Total assets acquired | $1,320,256 | | **Liabilities Assumed:** | | | Operating lease liabilities | $153,208 | | Total liabilities assumed | $265,081 | | **Net assets acquired** | **$1,055,175** | - The Acquisition generated **$55.3 million** in revenue and **$12.7 million** in net income for the period from May 14, 2025, through June 30, 2025, with transition and transaction expenses totaling **$31.3 million** for the six months ended June 30, 2025[39](index=39&type=chunk) [Note 4 – Fair value of financial instruments](index=17&type=section&id=Note%204%20%E2%80%93%20Fair%20value%20of%20financial%20instruments) This note details fair value measurements of financial instruments, primarily derivatives and 2030 Notes, classified as Level 2 Fair Value of Financial Instruments (In thousands) | Item | June 30, 2025 (Carrying Value) | June 30, 2025 (Fair Value) | December 31, 2024 (Carrying Value) | December 31, 2024 (Fair Value) | | :----------------------------- | :----------------------------- | :------------------------- | :----------------------------- | :------------------------- | | Derivative financial instruments (Assets) | $27,046 | $27,046 | $13,605 | $13,605 | | Derivative financial instruments (Liabilities) | $(25,851) | $(25,851) | $(11,268) | $(11,268) | | 2030 Notes | $(800,000) | $(843,464) | — | — | - All derivatives and the 2030 Notes are classified as **Level 2 fair value instruments**, with values determined using observable market inputs like SOFR yield curves and Euro/U.S. dollar forward curves[43](index=43&type=chunk)[44](index=44&type=chunk) [Note 5 – Accounts receivable, net](index=17&type=section&id=Note%205%20%E2%80%93%20Accounts%20receivable%2C%20net) This note provides a breakdown of the company's net accounts receivable as of June 30, 2025, and December 31, 2024 Accounts Receivable, Net (In thousands) | Item | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Trade receivables | $72,274 | $114,381 | | Accrued revenue | $6,767 | $5,566 | | Amounts receivable – related party | $518 | $217 | | Allowance for doubtful accounts | $(728) | $(204) | | **Accounts receivable, net** | **$78,831** | **$119,960** | [Note 6 – Derivative financial instruments](index=19&type=section&id=Note%206%20%E2%80%93%20Derivative%20financial%20instruments) This note details derivative financial instruments, including interest rate swaps and foreign currency hedges, used to manage rate exposures Notional Values of Derivative Instruments (June 30, 2025, in thousands) | Instrument | Notional Value | | :------------------ | :------------- | | Interest rate swaps | $46,275 | | Foreign currency hedges | €11,374 | Fair Value of Derivative Instruments (In thousands) | Item | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Total designated as hedging instruments | $1,195 | $2,337 | | Total not designated as hedging instruments | $0 | $0 | | **Total derivatives** | **$1,195** | **$2,337** | - Cash flow hedges include interest rate swaps hedging SOFR-based borrowings (expiring 2030) and euro to U.S. dollar hedges for operational and salary expenses (expiring December 2025)[49](index=49&type=chunk) Gains and Losses from Cash Flow Hedges (In thousands) | Item | Three months ended June 30, 2025 (OCI) | Three months ended June 30, 2024 (OCI) | Six months ended June 30, 2025 (OCI) | Six months ended June 30, 2024 (OCI) | | :------------------- | :------------------------------------- | :------------------------------------- | :----------------------------------- | :----------------------------------- | | Interest rate swaps | $510 | $1,102 | $(530) | $5,253 | | Reclassified to income | $217 | $927 | $612 | $2,090 | [Note 7 – Other current assets](index=20&type=section&id=Note%207%20%E2%80%93%20Other%20current%20assets) This note provides a breakdown of the company's other current assets as of June 30, 2025, and December 31, 2024 Other Current Assets (In thousands) | Item | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Prepaid expenses | $15,114 | $8,201 | | Prepaid expenses – related party | $2,311 | $2,250 | | Tax receivables | $6,221 | $5,978 | | Inventories | $19,304 | $23,930 | | Other receivables | $12,948 | $10,355 | | **Other current assets** | **$55,898** | **$50,714** | [Note 8 – Property and equipment, net](index=20&type=section&id=Note%208%20%E2%80%93%20Property%20and%20equipment%2C%20net) This note details net property and equipment, including Jamaica Acquisition additions and new floating regasification terminal construction Property and Equipment, Net (In thousands) | Item | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :------------ | :---------------- | | Floating terminals and related equipment | $2,542,527 | $2,535,748 | | Power generation | $185,911 | — | | Fixed terminals and gas pipeline | $250,334 | — | | Assets in progress | $190,198 | $112,429 | | Less accumulated depreciation | $(1,133,129) | $(1,090,647) | | **Property and equipment, net** | **$2,098,767** | **$1,622,896** | - Depreciation expense was **$25.5 million** for Q2 2025 (down from $30.4 million in Q2 2024) and **$47.2 million** for YTD 2025 (down from $53.3 million in YTD 2024)[52](index=52&type=chunk) - The company is constructing a new **170,000 m3** floating regasification terminal, with delivery expected in **2026**, and made milestone payments of **$20 million** in Q2 2025[53](index=53&type=chunk) - The Montego Bay LNG Terminal, Old Harbour LNG Terminal, and Clarendon combined heat and power co-generation plant in Jamaica were acquired in May 2025 as part of the Acquisition[54](index=54&type=chunk) [Note 9 – Accrued liabilities](index=21&type=section&id=Note%209%20%E2%80%93%20Accrued%20liabilities) This note provides a breakdown of the company's accrued liabilities as of June 30, 2025, and December 31, 2024 Accrued Liabilities (In thousands) | Item | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Accrued terminal and cargo expenses | $37,629 | $27,128 | | Payroll and related liabilities | $14,498 | $18,615 | | Current portion of TRA liability | $3,116 | $3,116 | | Other accrued liabilities | $46,659 | $21,163 | | **Accrued liabilities** | **$101,902** | **$70,022** | [Note 10 – Long-term debt, net](index=21&type=section&id=Note%2010%20%E2%80%93%20Long-term%20debt%2C%20net) This note details the company's long-term debt, including **$800 million** in 2030 Notes, Term Loan Facility repayment, and EE Revolver extension, altering the debt structure Long-term Debt, Net (In thousands) | Item | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | 2030 Notes | $800,000 | — | | Term Loan Facility | — | $163,555 | | Experience Financing | $105,187 | $111,375 | | 2017 Bank Loans | $58,266 | $63,695 | | **Total debt** | **$963,453** | **$338,625** | | Less unamortized debt issuance costs | $(17,215) | $(5,072) | | Total debt, net | $946,238 | $333,553 | | Less current portion, net | $(20,097) | $(46,793) | | **Total long-term debt, net** | **$926,141** | **$286,760** | - In May 2025, EELP issued **$800 million** in **8.000% senior unsecured notes** due **2030** (2030 Notes) to fund the Jamaica Acquisition and repay the Term Loan Facility[68](index=68&type=chunk) - The Term Loan Facility was repaid in full in April 2025 using proceeds from the 2030 Notes, and associated interest rate swaps were unwound[66](index=66&type=chunk) - The EE Revolver's maturity was extended to **March 17, 2029**, and aggregate commitments increased to **$500.0 million** in April 2025; **$500.0 million** of undrawn capacity was available as of June 30, 2025[66](index=66&type=chunk)[67](index=67&type=chunk) [Note 11 – Long-term debt – related party](index=23&type=section&id=Note%2011%20%E2%80%93%20Long-term%20debt%20%E2%80%93%20related%20party) This note details the company's long-term debt with related parties, specifically the Exquisite Financing Long-term Debt – Related Party (In thousands) | Item | June 30, 2025 | December 31, 2024 | | :----------------------------- | :------------ | :---------------- | | Exquisite Financing | $166,127 | $170,895 | | Less current portion | $(9,291) | $(8,943) | | **Total long-term related party debt** | **$156,836** | **$161,952** | - The Exquisite Financing, a **$220.0 million** sale leaseback agreement with Nakilat Excelerate LLC (an equity method investment), is treated as financing due to its terms[71](index=71&type=chunk) [Note 12 – Equity](index=25&type=section&id=Note%2012%20%E2%80%93%20Equity) This note details Class A and B Common Stock, ownership changes, dividend declarations, and the Equity Offering's impact - Excelerate Energy Holdings, LLC (controlled by Kaiser) holds all Class B Common Stock, representing **71.9% of combined voting power** as of June 30, 2025 (down from 77.5% at Dec 31, 2024)[73](index=73&type=chunk)[74](index=74&type=chunk) Changes in Class A and Class B Common Stock Ownership | Item | Balance at January 1, 2025 | Balance at June 30, 2025 | | :------------------------------------ | :------------------------- | :----------------------- | | Class A Common Stock Outstanding | 23,868,073 | 32,001,057 | | Class B Common Stock | 82,021,389 | 82,021,389 | | Total | 105,889,462 | 114,022,446 | | Class A Ownership Percentage | 22.5% | 28.1% | - In March 2025, Excelerate completed an Equity Offering of **8,000,000 shares** of Class A Common Stock (including underwriter option) for net proceeds of approximately **$201.8 million**, used to fund the Acquisition[81](index=81&type=chunk) Dividends and Distributions Declared (In thousands, except per share amounts) | Quarter Ended | Date Paid or To Be Paid | Class B Interests (Distributions Paid or To Be Paid) | Class A Common Stock (Total Dividends Declared) | Dividend Declared per Share | | :-------------------- | :---------------------- | :--------------------------------------------------- | :-------------------------------------------- | :-------------------------- | | June 30, 2025 | September 4, 2025 | $6,562 | $2,679 | $0.08 | | March 31, 2025 | June 5, 2025 | $4,921 | $2,005 | $0.06 | | December 31, 2024 | March 27, 2025 | $4,921 | $1,535 | $0.06 | [Note 13 – Earnings per share](index=28&type=section&id=Note%2013%20%E2%80%93%20Earnings%20per%20share) This note presents the computation of basic and diluted earnings per share, including weighted average shares outstanding and dilutive effects of unvested stock Earnings Per Share Computation (In thousands, except share and per share amounts) | Item | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income attributable to shareholders – basic | $4,729 | $6,672 | $16,116 | $12,996 | | Weighted average shares outstanding – basic | 31,489,508 | 25,175,057 | 27,715,777 | 25,668,374 | | Weighted average shares outstanding – diluted | 32,162,826 | 25,338,067 | 28,470,434 | 25,747,145 | | Basic EPS | $0.15 | $0.27 | $0.58 | $0.51 | | Diluted EPS | $0.15 | $0.26 | $0.57 | $0.50 | [Note 14 – Leases](index=28&type=section&id=Note%2014%20%E2%80%93%20Leases) This note analyzes finance and operating lease liabilities, including maturity profiles, weighted average terms, discount rates, and total lease costs Maturity Analysis of Lease Liabilities (June 30, 2025, in thousands) | Year | Operating Lease Payments | Finance Lease Payments | | :---------------- | :----------------------- | :--------------------- | | Remainder of 2025 | $17,620 | $16,617 | | 2026 | $33,516 | $33,235 | | 2027 | $33,514 | $33,235 | | 2028 | $33,878 | $27,584 | | 2029 | $33,778 | $27,571 | | Thereafter | $75,606 | $85,581 | | **Total lease payments** | **$227,912** | **$223,823** | | Carrying value of lease liabilities | $172,315 | $180,669 | - As of June 30, 2025, weighted average remaining lease terms were **8.6 years** for operating leases and **7.6 years** for finance leases, with weighted average discount rates of **7.0%** and **6.3%**, respectively[88](index=88&type=chunk) Total Lease Costs (In thousands) | Item | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Amortization of finance lease ROU assets | $653 | $653 | $1,305 | $1,305 | | Interest on finance lease liabilities | $2,877 | $3,204 | $5,838 | $6,486 | | Operating lease expense | $4,954 | $441 | $5,435 | $890 | | Short-term lease expense | $93 | $281 | $250 | $534 | | **Total lease costs** | **$8,577** | **$4,579** | **$12,828** | **$9,215** | [Note 15 – Revenue](index=30&type=section&id=Note%2015%20%E2%80%93%20Revenue) This note disaggregates revenue by type and geographic region, providing insights into future minimum revenues and long-term contract expectations Total Revenue by Type (In thousands) | Item | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue from leases | $136,481 | $138,114 | $269,258 | $270,265 | | Regasification and other services | $12,352 | $12,873 | $27,940 | $37,716 | | LNG, gas and power | $55,723 | $32,346 | $222,448 | $75,465 | | **Total revenue** | **$204,556** | **$183,333** | **$519,646** | **$383,446** | Revenue from Leases (In thousands) | Item | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :---------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Operating lease income | $119,806 | $120,465 | $235,732 | $243,341 | | Sales-type lease income | $16,675 | $17,649 | $33,526 | $26,924 | | **Total revenue from leases** | **$136,481** | **$138,114** | **$269,258** | **$270,265** | Disaggregated Revenue by Region (Six months ended June 30, 2025, in thousands) | Region | Revenue from leases | Regas and other services | LNG, gas and power | Total revenue | | :------------- | :------------------ | :----------------------- | :----------------- | :------------ | | Asia Pacific | $33,526 | $21,455 | $95,741 | $150,722 | | Latin America | $101,672 | — | — | $101,672 | | Middle East | $76,585 | — | — | $76,585 | | Europe | $57,475 | $259 | $43,990 | $101,724 | | North America | — | $6,027 | $82,717 | $88,744 | | Other | — | $199 | — | $199 | | **Total revenue** | **$269,258** | **$27,940** | **$222,448** | **$519,646** | - The estimated fixed transaction price allocated to long-term performance obligations is **$12.9 billion**, with significant revenue expected from **2026** onwards, including a **15-year LNG sale and purchase agreement** with Bangladesh Oil, Gas & Mineral Corporation starting in **2026**[99](index=99&type=chunk) [Note 16 – Long-term incentive compensation](index=33&type=section&id=Note%2016%20%E2%80%93%20Long-term%20incentive%20compensation) This note describes the Long-Term Incentive Plan (LTI Plan), including stock options, restricted stock units, performance units, and compensation expenses - The LTI Plan allows for grants of up to **10.8 million shares**, increasing annually by **4%** of outstanding Class A Common Stock, to align employee and stockholder interests[100](index=100&type=chunk) Stock-based Compensation Expense (In thousands) | Period | 2025 | 2024 | | :------------------------------- | :--------- | :--------- | | Three months ended June 30, | $3,207 | $1,920 | | Six months ended June 30, | $5,342 | $3,297 | - As of June 30, 2025, the company had **$1.4 million** in unrecognized compensation costs for stock options (over **1.8 years**), **$11.8 million** for restricted stock units (over **2.0 years**), and **$8.0 million** for performance units (over **2.0 years**)[104](index=104&type=chunk)[105](index=105&type=chunk)[110](index=110&type=chunk) [Note 17 – Income taxes](index=37&type=section&id=Note%2017%20%E2%80%93%20Income%20taxes) This note details income tax provision and effective tax rates, highlighting geographical income distribution, varying tax regimes, and Pillar Two Framework evaluation Provision for Income Taxes (In thousands) | Period | 2025 | 2024 | Change (YoY) | | :------------------------------- | :--------- | :--------- | :----------- | | Three months ended June 30, | $5,574 | $7,427 | $(1,853) | | Six months ended June 30, | $11,601 | $14,328 | $(2,727) | Effective Tax Rates | Period | 2025 | 2024 | | :------------------------------- | :----- | :----- | | Three months ended June 30, | 21.2% | 18.2% | | Six months ended June 30, | 13.7% | 18.9% | - The decrease in tax provision and effective tax rate was primarily due to the year-over-year change in the geographical distribution of income and varying tax regimes[112](index=112&type=chunk)[113](index=113&type=chunk) - The company is evaluating the potential impact of the **Pillar Two Framework** (minimum effective tax rate of **15%**), effective January 1, 2024, and January 1, 2025, on future income taxes and its Tax Receivable Agreement liability[117](index=117&type=chunk) [Note 18 – Related party transactions](index=39&type=section&id=Note%2018%20%E2%80%93%20Related%20party%20transactions) This note summarizes the company's balances and transactions with related parties, primarily concerning the Exquisite Financing and other receivables/payables Related Party Balances (In thousands) | Item | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Amounts due from related parties | $518 | $217 | | Amounts due to related parties | $260 | $412 | | Prepaid expenses – related party | $2,311 | $2,250 | - The Exquisite Financing is the primary debt instrument with related parties[118](index=118&type=chunk) [Note 19 – Concentration risk](index=39&type=section&id=Note%2019%20%E2%80%93%20Concentration%20risk) This note discusses exposure to concentrations of credit risk from cash, derivatives, and accounts receivable, as well as customer and asset concentrations - The company manages credit risk by placing cash with highly rated financial institutions and evaluating counterparty creditworthiness for customers and derivative contracts[119](index=119&type=chunk)[120](index=120&type=chunk) Customer Revenue Concentration (Percentage of Total Revenues) | Customer | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------- | :----------------------------- | :----------------------------- | | Customer A | 26% | 29% | | Customer B | 14% | 19% | - Approximately **21%** of the company's fixed assets are located in Jamaica, with substantially all long-lived assets located outside the United States[122](index=122&type=chunk) [Note 20 – Commitments and contingencies](index=39&type=section&id=Note%2020%20%E2%80%93%20Commitments%20and%20contingencies) This note outlines the company's legal commitments and contingencies, including future LNG purchase and capacity obligations Future LNG Purchase and Capacity Obligations (June 30, 2025, in thousands) | Year | Amount | | :---------------- | :--------- | | Remainder of 2025 | $188,532 | | 2026 | $667,825 | | 2027 | $737,614 | | 2028 | $956,533 | | 2029 | $949,354 | | Thereafter | $9,297,992 | | **Total commitments** | **$12,797,850** | - Total costs incurred under take-or-pay or throughput obligations for the six months ended June 30, 2025, were **$26.8 million**, compared to no costs in the prior year[125](index=125&type=chunk) [Note 21 – Supplemental noncash disclosures for consolidated statement of cash flows](index=41&type=section&id=Note%2021%20%E2%80%93%20Supplemental%20noncash%20disclosures%20for%20consolidated%20statement%20of%20cash%20flows) This note provides supplemental cash flow information, including cash paid for taxes and interest, and a reconciliation of cash, cash equivalents, and restricted cash Supplemental Cash Flow Information (Six months ended June 30, in thousands) | Item | 2025 | 2024 | | :------------------------------------------ | :--------- | :--------- | | Cash paid for taxes | $10,264 | $13,070 | | Cash paid for interest | $25,598 | $29,855 | | Increase in capital expenditures included in accounts payable | $5,304 | $18,177 | Reconciliation of Cash, Cash Equivalents, and Restricted Cash (In thousands) | Item | June 30, 2025 | December 31, 2024 | | :------------------------------------------ | :------------ | :---------------- | | Cash and cash equivalents | $425,998 | $537,522 | | Restricted cash – current | $3,245 | $2,612 | | Restricted cash – non-current | $14,838 | $14,361 | | **Cash, cash equivalents, and restricted cash** | **$444,081** | **$554,495** | [Note 22 – Accumulated other comprehensive income](index=42&type=section&id=Note%2022%20%E2%80%93%20Accumulated%20other%20comprehensive%20income) This note details changes in accumulated other comprehensive income (AOCI) components, including translation adjustments, cash flow hedges, and equity method investee OCI share Changes in Accumulated Other Comprehensive Income (In thousands) | Item | At January 1, 2025 | At June 30, 2025 | Change | | :------------------------------------ | :----------------- | :--------------- | :----- | | Cumulative translation adjustment | $(581) | $(561) | $20 | | Qualifying cash flow hedges | $828 | $586 | $(242) | | Share of OCI in equity method investee | $255 | $88 | $(167) | | **Total AOCI** | **$502** | **$113** | **$(389)** | [Note 23 – Subsequent events](index=42&type=section&id=Note%2023%20%E2%80%93%20Subsequent%20events) This note discloses significant events after the reporting period, including a dividend declaration and the signing of the One Big Beautiful Bill Act (OBBBA) - On July 31, 2025, the board approved a cash dividend of **$0.08 per share** of Class A Common Stock for the quarter ended June 30, 2025, payable September 4, 2025[128](index=128&type=chunk) - The One Big Beautiful Bill Act (OBBBA) was signed into law on July 4, 2025, modifying and making permanent certain business tax provisions, with the company currently assessing its impact[129](index=129&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=43&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results, highlighting key performance drivers, the Jamaica Acquisition's impact, market trends, and liquidity - Excelerate owns and operates LNG and natural gas infrastructure assets globally, providing regasification services and integrated LNG solutions, with a business substantially supported by long-term, take-or-pay agreements[132](index=132&type=chunk)[133](index=133&type=chunk) - The May 2025 acquisition of New Fortress Energy Inc.'s Jamaica Business for approximately **$1.055 billion** aligns with strategies to enhance long-term contract revenue, diversify geographic mix, and establish 'last-mile' LNG infrastructure[136](index=136&type=chunk)[137](index=137&type=chunk)[138](index=138&type=chunk) - Global LNG trade volumes slightly decreased in Q2 2025 (**101 MTPA**) from Q1 2025 (**108 MTPA**), driven by a slowdown in global economic growth and reduced imports in regions like Japan[140](index=140&type=chunk) Consolidated Financial Performance Highlights (In thousands) | Item | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Change (YoY) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | Change (YoY) | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------- | :----------------------------- | :----------------------------- | :----------- | | Revenues | $204,556 | $183,333 | $21,223 | $519,646 | $383,446 | $136,200 | | Net income | $20,765 | $33,277 | $(12,512) | $72,888 | $61,417 | $11,471 | | Adjusted EBITDA | $107,137 | $88,963 | $18,174 | $207,557 | $164,352 | $43,205 | - Net income decreased by **$12.5 million** for Q2 2025 primarily due to **$27.7 million** in transition and transaction costs for the Acquisition and a **$9.7 million** increase in interest expense, partially offset by **$10.4 million** from Jamaica operations and **$8.6 million** from extended commissioning time in Albania[165](index=165&type=chunk) - Net income increased by **$11.5 million** for YTD 2025, driven by **$17.1 million** from drydocking of Summit LNG and Excellence in Q1 2024, **$10.4 million** from Jamaica operations, and **$9.7 million** from Albania power barge commissioning, partially offset by **$31.3 million** in Acquisition-related costs and **$9.7 million** in increased interest expense[166](index=166&type=chunk) Cash Flow Statement Highlights (Six months ended June 30, in thousands) | Item | 2025 | 2024 | Change | | :------------------------------------------ | :--------- | :--------- | :------- | | Net cash provided by operating activities | $241,949 | $155,040 | $86,909 | | Net cash used in investing activities | $(1,125,499) | $(38,268) | $(1,087,231) | | Net cash provided by (used in) financing activities | $773,048 | $(63,082) | $836,130 | - Investing activities saw a significant increase in cash usage (**$1.087 billion** increase) primarily due to the Jamaica Acquisition and milestone payments for a newbuild FSRU[199](index=199&type=chunk) - Financing activities increased by **$836.1 million**, driven by **$800.0 million** from the Debt Offering and **$201.9 million** from the Equity Offering, partially offset by debt repayments and issuance costs[200](index=200&type=chunk) Future Contractual Obligations (June 30, 2025, in thousands) | Obligation Type | Next Twelve Months | Beyond | | :------------------------------ | :----------------- | :------------- | | LNG purchase and capacity obligations | $487,492 | $12,310,358 | | Long-term debt obligations | $33,128 | $1,096,452 | | Lease obligations | $67,666 | $384,069 | | Other purchase obligations | $284,285 | $725 | | **Total commitments** | **$872,571** | **$13,791,604** | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=58&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses the company's exposure to market risks, including interest rate, commodity price, and foreign currency exchange risks, and the use of derivative instruments to manage these exposures - The company is exposed to interest rate risk on variable-rate debt, partially hedged by long-term interest rate swap agreements. A hypothetical **100 basis point** change in SOFR would impact the fair value of swaps by **$1.1 million**[226](index=226&type=chunk)[227](index=227&type=chunk) - Commodity price risk arises from LNG purchase commitments, with no financial commodity derivative instruments outstanding as of June 30, 2025[228](index=228&type=chunk) - Foreign currency exchange risk primarily affects expenses incurred in euros, Argentine pesos, Brazilian reals, and Bangladesh taka, with the fair value of currency hedges being immaterial as of June 30, 2025[229](index=229&type=chunk) [Item 4. Controls and Procedures](index=58&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures as of June 30, 2025, with no material changes in internal control over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[232](index=232&type=chunk) - There have been no changes in internal control over financial reporting during the three months ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting[233](index=233&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=61&type=section&id=Item%201.%20Legal%20Proceedings) This section incorporates by reference the disclosure concerning legal proceedings from Note 20 – Commitments and contingencies in Part I, Item 1 - Disclosure concerning legal proceedings is incorporated by reference to Note 20 – Commitments and contingencies[235](index=235&type=chunk) [Item 1A. Risk Factors](index=61&type=section&id=Item%201A.%20Risk%20Factors) This section states no material changes to risk factors previously disclosed in the company's 2024 Annual Report and the Form 10-Q for the quarterly period ended March 31, 2025 - There have been no material changes from the risk factors previously disclosed in the 2024 Annual Report and the Form 10-Q for the quarterly period ended March 31, 2025[236](index=236&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=61&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item is not applicable for this reporting period - This item is not applicable[237](index=237&type=chunk) [Item 3. Defaults Upon Senior Securities](index=61&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable for this reporting period - This item is not applicable[238](index=238&type=chunk) [Item 4. Mine Safety Disclosures](index=61&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable for this reporting period - This item is not applicable[239](index=239&type=chunk) [Item 5. Other Information](index=61&type=section&id=Item%205.%20Other%20Information) This section provides information regarding trading plans of the company's directors and executive officers - During the three months ended June 30, 2025, none of the company's directors or executive officers adopted, modified, or terminated any Rule 10b5-1(c) trading plans or non-Rule 10b5-1 trading arrangements[240](index=240&type=chunk) [Item 6. Exhibits](index=62&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed as part of this Quarterly Report on Form 10-Q, including amendments to credit agreements, indenture for senior notes, and certifications - Key exhibits include the Fifth Amendment to Amended and Restated Senior Secured Credit Agreement (April 21, 2025), Indenture for 8.000% Senior Notes due 2030 (May 5, 2025), and Certifications of Principal Executive and Financial Officers (Sections 302 and 906 of Sarbanes-Oxley Act)[242](index=242&type=chunk) SIGNATURES [Signatures](index=63&type=section&id=Signatures) This section contains the official signatures for the Quarterly Report on Form 10-Q, certifying its submission - The report was signed on August 11, 2025, by Dana Armstrong, Executive Vice President and Chief Financial Officer (Principal Financial Officer) of Excelerate Energy, Inc[249](index=249&type=chunk)

Page 1 of 43 CAUTION REGARDING FORWARD-LOOKING STATEMENTS This document contains forward-looking statements about expected events and the financial and operating performance of Ballard Power Systems Inc. ("Ballard", "the Company", "we", "us" or "our"). Forward-looking statements include any statements that do not refer to historical facts. Forward-looking statements are based on the beliefs of management and reflect our current expectations as contemplated under the safe harbor provisions of Section 21E of ...

[Executive Summary](index=1&type=section&id=Executive%20Summary) Next Technology Holding Inc. achieved strong H1 2025 growth, driven by significant fair value gains from digital assets and strategic Bitcoin acquisitions [H1 2025 Performance Overview](index=1&type=section&id=H1%202025%20Performance%20Overview) Next Technology Holding Inc. announced strong financial results for H1 2025, driven by its diversified AI-enabled software development and strategic Bitcoin acquisition strategies. The CEO highlighted significant value creation from Bitcoin holdings due to favorable market conditions and disciplined accumulation - Next Technology Holding Inc. (NXTT) reported strong H1 2025 financial results, attributing success to its diversified business model encompassing **AI-enabled software development** and **strategic Bitcoin acquisition**[1](index=1&type=chunk)[3](index=3&type=chunk) - CEO Weihong Liu emphasized significant value creation for shareholders from Bitcoin holdings, driven by favorable market conditions and a disciplined accumulation strategy[3](index=3&type=chunk) [H1 2025 Financial Highlights](index=1&type=section&id=H1%202025%20Financial%20Highlights) The first half of 2025 saw significant financial growth, primarily driven by fair value gains from digital assets. Net income surged by 2,373% to $312.0 million, and other income increased by 2,437% to $395.7 million, largely due to Bitcoin's price appreciation. The combined balance of cash and digital assets also grew substantially | Metric | H1 2025 (US$ million) | H1 2024 (US$ million) | Change (%) | Primary Driver | | :----- | :------------ | :------------ | :--------- | :------------- | | Net Income | 312.0 | 12.6 | 2,373% | Fair value gain from digital assets | | Other Income | 395.7 | 15.6 | 2,437% | $449.0 million gain from Bitcoin price increase | | Cash & Digital Assets (as of June 30, 2025) | 632.7 | 79.0 (Dec 31, 2024) | 701% | | [H1 2025 Operational Highlights](index=1&type=section&id=H1%202025%20Operational%20Highlights) Operationally, NXTT significantly increased its Bitcoin holdings in H1 2025, acquiring 5,000 Bitcoin through a combination of common stock issuance, warrants, and cash. This accumulation, coupled with a 15.3% surge in Bitcoin's price, contributed to substantial value creation | Metric | As of June 30, 2025 | As of Dec 31, 2024 | Change | | :----- | :------------------ | :----------------- | :----- | | Total Bitcoin Holdings | 5,833 Bitcoin | 833 Bitcoin | +5,000 Bitcoin | - Company acquired **5,000 Bitcoin** in exchange for **135,171,078 shares** of common stock, warrants to purchase **294,117,647 shares**, and **$12,125,500** in cash[6](index=6&type=chunk) - Bitcoin's price surged **15.3%** in the first six months of 2025[6](index=6&type=chunk) [Company Overview and Strategy](index=2&type=section&id=Company%20Overview%20and%20Strategy) The company employs an 'AI plus digital assets' dual-engine strategy, offering AI-enabled software services and strategically holding Bitcoin for long-term value [About Next Technology Holding Inc.](index=2&type=section&id=About%20Next%20Technology%20Holding%20Inc.) Next Technology Holding Inc. is a Wyoming-incorporated technology company operating on a 'AI plus digital assets' dual-engine strategy. It provides AI-enabled SaaS software development services globally and strategically acquires and holds Bitcoin, viewing it as a long-term appreciating asset and inflation hedge - Next Technology Holding Inc. (NXTT) is a technology company founded on a **'AI plus digital assets' dual-engine strategy**[10](index=10&type=chunk) - The company delivers AI-enabled SaaS software design, development, and implementation services to industrial clients, primarily in the Asia-Pacific region[10](index=10&type=chunk) - NXTT believes Bitcoin's finite supply positions it for **long-term appreciation** and as a potential **hedge against inflation** with increasing global adoption[10](index=10&type=chunk) [Half Year 2025 Financial Review](index=2&type=section&id=Half%20year%202025%20Financial%20Review) H1 2025 financial review shows a slight increase in operating expenses, a dramatic surge in other income from digital asset gains, and a significant rise in net income [Operating Expenses Analysis](index=2&type=section&id=Operating%20Expenses) General and administrative expenses for the six months ended June 30, 2025, increased slightly to $705,820 from $675,144 in the comparable 2024 period, primarily due to higher litigation-related legal fees | Expense Category | H1 2025 (US$) | H1 2024 (US$) | Change (US$) | Primary Driver | | :--------------- | :------------ | :------------ | :----- | :------------- | | General and administrative expense | 705,820 | 675,144 | +30,676 | Higher litigation-related legal fees | [Other Income Analysis](index=2&type=section&id=Other%20income) Other income for H1 2025 dramatically increased to $395,661,456 from $15,595,778 in H1 2024, predominantly driven by fair value gains from digital assets | Metric | H1 2025 (US$) | H1 2024 (US$) | Change (US$) | Primary Driver | | :----- | :------------ | :------------ | :----- | :------------- | | Other Income | 395,661,456 | 15,595,778 | +380,065,678 | Fair value gain from digital assets | [Net Income Analysis](index=2&type=section&id=Net%20Income) Net income for the six months ended June 30, 2025, significantly rose to $312,014,952 compared to $12,619,286 in the prior year, primarily attributable to the substantial fair value gains from digital assets | Metric | H1 2025 (US$) | H1 2024 (US$) | Change (US$) | Primary Driver | | :----- | :------------ | :------------ | :----- | :------------- | | Net Income | 312,014,952 | 12,619,286 | +299,395,666 | Fair value gain from digital assets | [Condensed Consolidated Financial Statements](index=3&type=section&id=Condensed%20Consolidated%20Financial%20Statements) Condensed consolidated financial statements for H1 2025 show substantial increases in net income and total assets, primarily from digital asset fair value gains [Statements of Operations and Comprehensive Income (Loss)](index=3&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS%20AND%20COMPREHENSIVE%20INCOME(LOSS)) The condensed consolidated statements of operations show a significant increase in net income for both the three and six months ended June 30, 2025, primarily due to a substantial rise in other income, largely from digital asset fair value gains, despite an increase in general and administrative expenses | Metric | 3 Months Ended June 30, 2025 (US$) | 3 Months Ended June 30, 2024 (US$) | 6 Months Ended June 30, 2025 (US$) | 6 Months Ended June 30, 2024 (US$) | | :---------------------------------- | :--------------------------------- | :--------------------------------- | :--------------------------------- | :--------------------------------- | | General and administrative expense | (255,962) | (344,999) | (705,820) | (675,144) | | Other income (loss) | 150,350,300 | (8,423,621) | 395,661,456 | 15,595,778 | | Income (loss) before income taxes | 150,094,338 | (8,768,620) | 394,955,636 | 14,920,634 | | Income tax (expenses) benefits | (31,519,811) | 1,841,411 | (82,940,684) | (2,301,348) | | Net income (loss) from continuing operation | 118,574,527 | (6,927,209) | 312,014,952 | 12,619,286 | | Net comprehensive income (loss) per share, basic and diluted (from continuing operation) | 0.27 | (0.99) | 1.16 | 2.74 | | Weighted-average shares outstanding, basic and diluted | 436,265,135 | 6,976,410 | 267,870,110 | 4,609,505 | [Balance Sheets](index=4&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) As of June 30, 2025, the balance sheet shows a substantial increase in total assets, primarily driven by a significant rise in digital assets. Total liabilities also increased, mainly due to deferred tax liabilities, while stockholders' equity saw a considerable boost from common stock and retained earnings | Asset/Liability/Equity | As of June 30, 2025 (US$) | As of Dec 31, 2024 (US$) | Change (US$) | | :--------------------- | :------------------------- | :------------------------- | :----- | | Cash and cash equivalents | 668,387 | 668,387 | 0 | | Digital assets | 632,067,553 | 78,322,430 | +553,745,123 | | Total current assets | 633,275,940 | 92,916,317 | +540,359,623 | | Total assets | 633,275,940 | 92,916,317 | +540,359,623 | | Total current liabilities | 2,499,572 | 3,053,752 | -554,180 | | Deferred tax liabilities | 91,175,187 | 8,234,503 | +82,940,684 | | Total liabilities | 93,674,759 | 11,288,255 | +82,386,504 | | Common stock | 217,676,957 | 71,718,790 | +145,958,167 | | Retained earnings | 321,924,224 | 9,909,272 | +312,014,952 | | Total Stockholders' Equity | 539,601,181 | 81,628,062 | +457,973,119 | | Total Liabilities and Stockholders' Equity | 633,275,940 | 92,916,317 | +540,359,623 | [Additional Information](index=2&type=section&id=Additional%20Information) This section outlines forward-looking statements, detailing key risks and uncertainties, and provides contact information for investor and general inquiries [Forward-Looking Statements](index=2&type=section&id=Forward-Looking%20Statements) This section contains standard forward-looking statements, highlighting inherent risks and uncertainties that could cause actual results to differ materially. Key risk factors include fluctuations in Bitcoin market price, accounting treatment changes, regulatory shifts, liquidity issues, security breaches, and general economic conditions - Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from projections[11](index=11&type=chunk) - Factors contributing to differences include fluctuations in **Bitcoin market price**, changes in accounting treatment for Bitcoin holdings, regulatory changes, liquidity in Bitcoin markets, security breaches, and general economic conditions[11](index=11&type=chunk) [Investor and General Inquiries](index=2&type=section&id=Investor%20and%20General%20Inquiries) Provides contact details for investor inquiries and general inquiries - For investor inquiries, contact **ir@nxtttech.com**[12](index=12&type=chunk) - For general inquiries, contact **contact@nxtttech.com**[12](index=12&type=chunk)

[H1 2025 Financial & Operational Highlights](index=1&type=section&id=H1%202025%20Financial%20%26%20Operational%20Highlights) The company achieved substantial net income growth and significantly expanded its Bitcoin holdings in H1 2025, driven by fair value gains from digital assets and strategic acquisitions H1 2025 Key Financial Metrics vs H1 2024 | Metric | H1 2025 (US$ million) | H1 2024 (US$ million) | Change | | :--- | :--- | :--- | :--- | | Net Income | 312.0 | 12.6 | +2,373% | | Other Income | 395.7 | 15.6 | +2,437% | Asset Growth (as of June 30, 2025) | Metric | June 30, 2025 | Dec 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Bitcoin Holdings | 5,833 BTC | 833 BTC | +5,000 BTC | | Cash & Digital Assets | US$632.7 million | US$79.0 million | +701% | - The company successfully acquired **5,000 Bitcoin** in H1 2025 in exchange for a combination of **135.2 million common shares**, warrants to purchase **294.1 million shares**, and **$12.1 million in cash**[6](index=6&type=chunk) - The significant increase in net income and other income was primarily driven by a **$449.0 million gain** from the increase in Bitcoin's price[5](index=5&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) Management attributed strong H1 2025 performance to a dual strategy of AI software development and strategic Bitcoin acquisition, planning continued disciplined accumulation - Management highlighted the strength of its diversified business model, combining AI-enabled software development services with a strategic Bitcoin acquisition and holding strategy[3](index=3&type=chunk) - The company's forward-looking strategy involves continuing to deliver innovative software solutions while prudently managing and expanding its Bitcoin holdings[3](index=3&type=chunk) - NXTT views Bitcoin as a long-term store of value and a potential hedge against inflation, believing in its potential for long-term appreciation with increasing global adoption[3](index=3&type=chunk) [Half year 2025 Financial Review](index=2&type=section&id=Half%20year%202025%20Financial%20Review) H1 2025 financial performance was significantly boosted by a substantial increase in other income, primarily from digital asset fair value gains, leading to a dramatic rise in net income - General and administrative expenses for H1 2025 were **$705,820**, a slight increase from **$675,144** in H1 2024, primarily due to higher litigation-related legal fees[7](index=7&type=chunk) - Other income for H1 2025 was **$395.7 million**, compared to **$15.6 million** in H1 2024, with the increase mainly attributed to fair value gains from digital assets[8](index=8&type=chunk) - Net income for H1 2025 reached **$312.0 million**, a significant increase from **$12.6 million** in H1 2024, also driven by the fair value gain from digital assets[9](index=9&type=chunk) [Financial Statements](index=3&type=section&id=Financial%20Statements) The condensed consolidated financial statements reflect a substantial increase in net income and total assets, primarily driven by the significant appreciation of digital assets [Condensed Consolidated Statements of Operations](index=3&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS%20AND%20COMPREHENSIVE%20INCOME(LOSS)) The statements of operations highlight a dramatic increase in other income and net income for both the six and three months ended June 30, 2025 Statement of Operations (Six Months Ended June 30) | Metric | 2025 (USD) | 2024 (USD) | | :--- | :--- | :--- | | Other income | 395,661,456 | 15,595,778 | | Net income | 312,014,952 | 12,619,286 | | Net income per share, basic and diluted | 1.16 | 2.74 | Statement of Operations (Three Months Ended June 30) | Metric | 2025 (USD) | 2024 (USD) | | :--- | :--- | :--- | | Other income (loss) | 150,350,300 | (8,423,621) | | Net income (loss) | 118,574,527 | (6,927,209) | | Net income (loss) per share, basic and diluted | 0.27 | (0.99) | [Condensed Consolidated Balance Sheets](index=4&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) The balance sheets show a significant expansion in digital assets, total assets, and stockholders' equity as of June 30, 2025 Balance Sheet Highlights (in USD) | Metric | June 30, 2025 (USD) | December 31, 2024 (USD) | | :--- | :--- | :--- | | Digital assets | 632,067,553 | 78,322,430 | | Total assets | 633,275,940 | 92,916,317 | | Total liabilities | 93,674,759 | 11,288,255 | | Total Stockholders' Equity | 539,601,181 | 81,628,062 | [Company Overview & Forward-Looking Statements](index=2&type=section&id=Company%20Overview%20%26%20Forward-Looking%20Statements) Next Technology Holding Inc. operates with a dual strategy of AI-enabled SaaS and strategic Bitcoin holdings, while acknowledging risks related to digital asset volatility and regulatory changes - The company's business model is built on a dual-engine strategy of "AI plus digital assets," providing AI-enabled SaaS software while also holding Bitcoin for long-term appreciation and as a potential inflation hedge[10](index=10&type=chunk) - Key risks identified in forward-looking statements include fluctuations in the market price of Bitcoin, changes in accounting or securities laws, the impact of new investment vehicles for digital assets, and cybersecurity threats like hacks or loss of private keys[11](index=11&type=chunk)