MEC 10-K & 10-Q changes, risk factors and insider trading

Macroeconomic conditions, including inflation, elevated interest rates, labor availability, material cost pressurespressures, trade policy uncertainty, and inconsistent customer demand, have had, and may continue to have, a negative impact on our business, financial condition, cash flows and results of operations. In 2025 and early 2026, actions taken by the U.S. government, including the implementation and expansion of tariffs on a broad range of imported goods and materials, contributed to increased input costs, supply chain disruption, pricing volatility, and heightened economic uncertainty. These changes in trade policy, along with the recent U.S. Supreme Court decision to strike down certain tariffs imposed under the International Emergency Economic Powers Act have created uncertainty as to the scale and short and long-term effects these tariffs may have on our business. These actions, along with retaliatory measures by U.S. trading partners, have placed additional pressure on manufacturers by increasing the cost of raw materials, components, and energy and by contributing to broader inflationary trends. For instance, we were negatively impacted in 20242025 by customers implementingcustomer channel inventory de-stockingdestocking activitiesand tomacroeconomic reduce their inventory from near historic high levels.uncertainty. In addition, in 2024,2025, continued inflationary pressures on wages, benefits, materials, manufacturing supplies, and manufacturinglogistics suppliescosts negatively impacted our results of operations and cash flows.

We expect material cost inflation and inflationary pressures on wages and benefits to continue in 20252026, and we may not be able to fully mitigate the impact of thethese inflationary cost pressures through price increases.increases or operational efficiencies. Further changes in trade policy, including the expansion, modification, or continuation of tariffs, as well as any related retaliatory actions, could further increase our costs or disrupt supply chains. Continuing or worsening inflation and/orinflation, labor challengeschallenges, trade policy uncertainty and elevated interest rates may have a material adverse impact on our business, financial condition, cash flows and/or results of operations.

Although we do not have any operations outside the United States, geopolitical events,events including the ongoing conflicts between Russia and UkraineUkraine, andtensions in the Middle East,East hasand causedU.S. greatertrade policy actions, have increased uncertainty in the global economy and hashave led to significant volatility in raw material costs, component costs, commodity pricesprices, and energy costs, exacerbating theinflationary inflation situation.pressures.

We derive our net sales from customers in the following industry sectors: heavy- and medium-duty commercial vehicles, construction & access equipment, powersports, data center & critical power, agriculture, military and other end markets. Factors affecting any of these industries in general, or any of our customers in particular, could adversely affect us because our net sales growth largely depends on the continued growth of our customers’ businesses in their respective industries. These factors include:

We depend on a limited number of major manufacturers for a majoritysubstantial portion of our net sales. For example, our largest customers in 20242025 included PACCAR Inc. and John Deere which accounted for 16.8%13.6% and 11.3%10.0% of our net sales, respectively. Our financial performance depends in large part on our ability to continue to arrange for the purchase of our processes and solutions with these customers, and we expect these customers to continue to make up a large portion of our net sales in the foreseeable future. The loss of all or a substantial portion of our sales to any of our large-volume customers could have a material adverse effect on our business, financial condition, results of operations and cash flows by reducing cash flows and by limiting our ability to spread our fixed costs over a larger net sales base. We may make fewer sales to these customers for a variety of reasons, including, but not limited to:

Our success depends to a large extent upon the continued services of our executive officers, senior management, managers and trade-skilled personnel and our ability to recruit and retain skilled personnel to maintain and expand our operations. We could be affected by the loss of any of our executive officers who are responsible for formulating and implementing our business plan and strategy, and who have beenare instrumental into our growth and development. In addition, we need to recruit and retain additional management personnel and other skilled employees at our facilities. However, competition for our trade-skilled labor is high, particularly in some of the geographic locations where our facilities are located. Although we intend to continue to devote significant resources to recruit, train and retain qualified employees, we may not be able to attract, effectively train and retain these employees. Any failure to do so could impair our ability to conduct design, engineering and manufacturing activities, efficiently perform our contractual obligations, develop marketable components, timely meet our customers’ needs and ultimately win new business, all of which could adversely affect our business, financial condition and results of operations. If we are not able to do so, our business and our ability to continue to grow could be negatively affected. In addition, salaries and related costs are a significant portion of the cost of providing our solutions and, accordingly, our ability to efficiently utilize our workforce impacts our profitability.

In addition, a number of government bodies have finalized, proposed or are contemplating legislative and regulatory changes in response to growing concerns about climate change. In recent years, federal, state and local governments have taken steps to reduce emissions of greenhouse gases (GHGs). The Environmental Protection Agency has finalized a series of GHG monitoring, reporting and emissions control rules for certain large sources of GHGs, and the U.S. Congress has, from time to time, considered adopting legislation to reduce GHG emissions. Numerous states have already taken measures to reduce GHG emissions, primarily through the development of GHG emission inventories and/or regional GHG cap-and-trade programs.

The ESOP, is a defined contribution retirement plan subject to the requirements of the Internal Revenue Code of 1986, as amended (the Code), and the Employee Retirement Income Security Act of 1974, as amended (ERISA). The ESOP has received a determination letter from the Internal Revenue Service (IRS) that it meets the requirements of a tax-qualified retirement plan in form and we endeavor to maintain and administer the ESOP in compliance with all requirements of the Code and ERISA. However, the rules regarding tax-qualified plans, and especially ESOPs, are complex and change frequently. Accordingly, it is possible that the ESOP may not have been and may not in the future be administered in full compliance with all applicable rules under the Code or ERISA.

If the IRS were to determine that the ESOP was not in material compliance with the Code or ERISA, then the ESOP could lose its tax-qualified status and we could be subject to substantial penalties under the Code and/or ERISA, which could have a material adverse effect on our business, financial condition or results of operations. Additionally, any retroactive loss of the ESOP’s tax-qualified status would adversely impact our prior treatment as an S Corporation. See “Prior to our initial public offering, we were treated as an S Corporation, and claims of taxing authorities related to our prior status as an S Corporation could have an adverse effect on our business, financial condition and results of operations.”

Our Amended and Restated Credit AgreementAgreement, as amended, restricts our ability and the ability of our subsidiaries to engage in some business and financial transactions.

On June 28, 2023, and as amended on June 26, 2025, we entered into an amended and restated credit agreement (the Credit Agreement) with certain lenders and Wells Fargo Bank, National Association, as administrative agent (the Agent.Agent). The Credit Agreement provides for a $250,000,000$350,000 revolving credit facility, with a letter of credit sub-facility, and a swingline facility in an aggregate amount of $25,000,000. The Credit Agreement also provides for the availability of incremental facilities to the greater of $100,000,000 and 125% of the Company’s twelve month trailing Consolidated EBITDA through an accordion feature.$25,000. All amounts borrowed under the creditCredit agreementAgreement mature on June 28, 2028.

Our Credit Agreement also requires us to maintain a minimum interest coverage ratio and a consolidated total leverage ratio, and contains certain customary representations and warranties, affirmative covenants and events of default (including, among others, payment default, covenant default, breach of representation or warranty, bankruptcy, cross-default, material ERISA events, material money judgements and failure to maintain subsidiary guarantees). If an event of default occurs under the Credit Agreement, the lenders under the Credit Agreement will be entitled to take various actions, including the acceleration of amounts due thereunder, the termination of such credit facility and all actions permitted to be taken by a secured creditor. Our failure to comply with our obligations under the Credit Agreement may result in an event of default under the Credit Agreement. A default, if not cured or waived, may permit acceleration of our indebtedness. If our indebtedness is accelerated, we cannot be certain that we will have sufficient funds available to pay the accelerated indebtedness or that we will have the ability to refinance the accelerated indebtedness on terms favorable to us or at all.

Since our initial public offering in May 2019, the market price of our common stock has been volatile and has been and could continue to be subject to wide fluctuations in response to various factors, some of which are beyond our control. These fluctuations could cause investors to lose all or part of their investment in our common stock. Factors that could cause fluctuations in the market price of our common stock include the following: general economic and geopolitical conditions, inflation, interest rates, tariffs, fuel prices, international currency fluctuations and acts of war or terrorism; price and volume fluctuations in the overall stock market from time to time; actual or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us; changes in the market’s expectations about our operating results; changes in our orders in a given period; success of competitors; our operating results failing to meet the expectation of securities analysts or investors in a particular period; changes in financial estimates and recommendations by securities analysts concerning us or the markets in general; operating and stock price performance of other companies that investors deem comparable to us; our ability to manufacture new and enhanced components for the products of our customers on a timely basis; changes in laws and regulations affecting our business; commencement of, or involvement in, litigation involving us; changes in our capital structure, such as future issuances of securities or the incurrence of additional debt; the volume of securities available for public sale; sales of substantial amounts of our securities by our directors, executive officers or significant shareholders (including our current and former employees via the ESOP and the 401(k) Plan) or the perception that such sales could occur; any major change in our Board of Directors or management; and changes in our investor base.

Determining the fair value of assets acquired and liabilities assumed requires significant judgment, including the selection of valuation methodologies. For our recent acquisition, fair value estimates of acquired property and equipment were based on independent appraisals that gave consideration to the highest and best use of the assets. The land, buildings, and improvements; and other property and equipment appraisals used one, or a combination, of the cost, market or sales comparison approaches. Significant estimates and assumptions, including recent sales prices of similar equipment, asset condition, and current and anticipated market trends, were used in determining the fair values of these assets. The assistance of an independent third-party valuation firm was used to determine the fair values and useful lives of the finite-lived intangible assets, including customer relationships and developednon-compete technology.agreements. Valuation methods used were based on management’s forecasted cash inflows and outflows and using a relief from royalty method for developed technologies and the multi-period excess earnings method for customer relationships. Assumptions used in the intangible valuations include forecasted revenue growth rates, discounted future cash flows and the weighted average cost of capital of a select peer group.

We have recorded goodwill and performperformed testing for potential goodwill impairment at athe reporting unit level. A reporting unit is an operating segment, or a business unit one level below an operating segment for which discrete financial information is available, and for which management regularly reviews the operating results. Additionally, components within an operating segment can be aggregated as a single reporting unit if they have similar economic characteristics. We have concluded we have one reporting unit.

For impairment testing of long-lived assets, we identify asset groups at the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset group to estimated undiscounted future cash flow expected to be generated by the assets. If the carrying amount of an asset group exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the estimated fair value of the asset group. For the year ended December 31, 20242025 and 2023,2024, there were no events or changes in circumstances that indicated a materialan impairment of our long-lived assets.

EBITDA represents net income (loss) before interest expense,expense (benefit), provision for income taxes, depreciation and amortization. EBITDA Margin represents EBITDA as a percentage of net sales for each period.

Adjusted EBITDA represents EBITDA before CEOstock-based transition costs,compensation, loss on extinguishment of debt, Mid-States Aluminum (MSA) acquisition related costs, stock-based compensation expense, field replacement claim, legal costs due to former fitness customer, costsCFO recognizedtransition on step-up of MSA acquired inventory, impairment of long-lived assets and gain on contracts specifically purchased to meet obligations under the agreement with our former fitness customer, Wautoma restructuring charges,costs, Chief Operating Officer (COO) restructuring costs, natural disaster costs, acquisition related costs, Wautoma and the restructuring plan (The Plan) restructuring charges, costs recognized on step-up of Mid-States Aluminum (MSA) and Accu-Fab acquired inventory and gain on lawsuit settlement. Adjusted EBITDA Margin represents Adjusted EBITDA as a percentage of net sales for each period.

Net Sales. Net sales were $546,487 for the twelve months ended December 31, 2025 as compared to $581,604 for the twelve months ended December 31, 2024 as compared to $588,425 for the twelve months ended December 31, 2023,2024, a decrease of $6,821,$35,117, or 1.2%.6.0%. This decrease was primarilydriven dueby toreduced softeningcustomer demand withinacross the second half of the current year innearly all our key end markets,markets and customer de-stocking channel inventoryinventory. andThis thedecline foreseen roll-off of certain military aftermarket programs at the end of 2023. These items werewas partially offset by incrementalincreased volumesafter-market fromdemand newin programour winsMilitary end market and the acquisition of MSAAccu-Fab indriving theData thirdCenter quarter& ofCritical thePower prior year.volumes.

Manufacturing margin percentages were 9.9% for the twelve months ended December 31, 2025 as compared to 12.2% for the twelve months ended December 31, 20242024, asa compared to 11.8% for the twelve months ended December 31, 2023, an increasedecrease of 0.4%.2.3%. The increasedecrease was attributable to the items discussed in the preceding paragraph.

Amortization of Intangible Assets. Amortization of intangible assets were $9,716 for the twelve months ended December 31, 2025 as compared to $6,933 for the twelve months ended December 31, 20242024, asan compared to $7,742 for the twelve months ended December 31, 2023, a decreaseincrease of $809,$2,783, or 10.4%.40.1%. The decreaseincrease was due to the full amortization of certain intangible assets in prior periods, slightly offset by the full year of amortization expense in 2024 associated with the identifiable intangible assets from the MSAAccu-Fab acquisition. Refer to Note 2 – Acquisition for additional information related to these identifiable intangible assets.

Profit Sharing, Bonuses and Deferred Compensation Expenses. Profit sharing, bonusesBonuses and deferred compensation expenses were $8,724 for the twelve months ended December 31, 2025 as compared to $13,593 for the twelve months ended December 31, 20242024, asa compared to $11,588 for the twelve months ended December 31, 2023, an increasedecrease of $2,005,$4,869, or 17.3%.35.8%. The increasedecrease was primarily driven by higherlower bonus accruals and stock-based compensation expense aligning with the Company’s attainment of certainCompany financial performance targets for the current year period and higher stock-based compensation expense due to higher forfeitures of unvested awards in the prior year period.performance.

Other Selling, General and Administrative Expenses. Other selling, general and administrative expenses were $39,413 for the twelve months ended December 31, 2025 as compared to $31,518 for the twelve months ended December 31, 2024 as compared to $30,182 for the twelve months ended December 31, 2023,2024, an increase of $1,336,$7,895, or 4.4%.25.0%. The increase was predominantly attributable to non-recurring costs and incremental SG&A expenses, each associated with Accu-Fab and higher costs related to compliance requirementsrequirements. andThis annual wage inflation,was partially offset by lower legallegacy feesMEC associated with the litigation against the former fitness customerwages and non-recurring professional fees related to the MSA acquisition during the prior year period.benefits.

Gain on Lawsuit Settlement. On October 28, 2024, the Company and a former fitness customer entered into a formal Settlement Agreement (the “Agreement”) resolving a previously disclosed lawsuit. Under the terms of the Agreement, the Company and the former fitness customer agreed to dismiss the lawsuit and exchange mutual releases, and MEC received a gross payment of $25,500 from the former fitness customer in the fourth quarter of the current year. See Note 9 within the Notes to Consolidated Financial Statements for additional information regarding the lawsuit.2024.

Interest Expense. Interest expense was $10,215 for the twelve months ended December 31, 2025 as compared to $10,989 for the twelve months ended December 31, 2024 as compared to $11,092 for the twelve months ended December 31, 2023,2024, a decrease of $103,$774, or 0.9%.7.0%. The decrease iswas due to lowerreduced averageinterest debtrates levels on our revolver as comparedrelative to the prior year period.period, partially offset by an increase in borrowings associated with the recent Accu-Fab acquisition.

Due to the factors described in the preceding paragraphs, net income (loss) and comprehensive income,income (loss), EBITDA, and EBITDA Margin increased whileMargin, Adjusted EBITDA and Adjusted EBITDA Margin decreased during 2024.2025.

Investing Activities. Cash used in investing activities was $151,530 for the twelve months ended December 31, 2025, as compared to $11,712 for the twelve months ended December 31, 2024, as compared to $104,132 for the twelve months ended December 31, 2023.2024. The $92,420$139,818 decreaseincrease in cash used in investing activities was mainly due to the acquisition of MSA that used cash of $88,593 and wasAccu-Fab completed on July 1, 2023,2025, alongpartially withoffset by a decrease in capital expenditures.

Financing Activities. Cash provided by financing activities was $114,264 for the twelve months ended December 31, 2025, as compared to cash used in financing activities wasof $78,561 for the twelve months ended December 31, 2024, as compared to cash provided by financing activities of $64,314 for the twelve months ended December 31, 2023.2024. The change was primarily due to the debt repaymentsborrowings in excess of borrowingsdebt repayments during the current year period andon the withdrawalCompany’s ofrevolving fundscredit used to purchase MSA in the prior year period.facility. Additionally, under the share repurchase plan, the Company purchased $5,896$4,607 of common stock induring 20242025 as compared to $2,661 of its common stock$5,896 in 2023.the prior-year period. The Company’s decision to repurchase additional shares in 20252026 will depend on business conditions, free cash flow generation, other cash requirements and stock price. See Part II, Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities for additional information regarding share repurchases.

On June 28, 2023, and as amended on June 26, 2025, we entered into an amended and restated credit agreement (the Credit Agreement) with certain lenders and Wells Fargo Bank, National Association, as administrative agent (the Agent.Agent). The Credit Agreement provides for a $250,000$350,000 revolving credit facility, with a letter of credit sub-facility, and a swingline facility in an aggregate amount of $25,000. The Credit Agreement also provides for the availability of incremental facilities to the greater of $100,000 and 125% of the Company’s twelve month trailing Consolidated EBITDA through an accordion feature. All amounts borrowed under the creditCredit agreementAgreement mature on June 28, 2028.

Borrowings under the Credit Agreement bear interest at a fluctuating secured overnight financing rate (SOFR) plus an applicable margin based on the current consolidated total leverage ratio (which may be adjusted for certain reserve requirements), plus 1.25% to 2.75% depending on the current Consolidated Total Leverage Ratio (as defined in the Credit Agreement). Under certain circumstances, we may not be able to pay interest based on SOFR. If that happens, we will be required to pay interest at the Base Rate, which is the sum of (a) the higher of (i) the Prime Rate (as publicly announced by the Agent from time to time), (ii) the Federal Funds Rate plus 0.50%, and (iii) Adjusted Term SOFR for a one-month tenor in effect on such day plus 1.00%. The Credit Agreement also includes provisions for determining a replacement rate when SOFR is no longer available.

At December 31, 2024,2025, the interest rate on outstanding borrowings under ourthe revolvingRevolving credit facilityLoan was 6.55%.5.98%. We had availability of $170,275$17,730 under the revolving credit facility at December 31, 2024.2025.

We must pay a commitment fee of 0.20% to 0.35% per annum on the average daily unused portion of the aggregate unused revolving commitments under the Credit Agreement. At December 31, 2025, this fee was 0.30%. We must also pay fees as specified in the Fee Letter (as defined in the Credit Agreement) and with respect to any letters of credit issued under the Credit Agreement.

The Credit Agreement contains usual and customary negative covenants for agreements of this type, including, but not limited to, restrictions on our ability to, subject to certain exceptions, create, incur or assume indebtedness; create, incur, assume or suffer to exist liens; make certain investments; allow our subsidiaries to merge or consolidate with another entity; make certain asset dispositions; pay certain dividends or other distributions to shareholders; enter into transactions with affiliates; enter into sale leaseback transactions; and exceed the limits on annual capital expenditures. The Credit Agreement also requires us to satisfy certain financial covenants, including a minimum interest coverage ratio of 3.00 to 1.00. At December 31, 2024,2025, our interest coverage ratio was 4.625.47 to 1.00. The Credit Agreement also requires us to maintain a consolidated total leverage ratio not to exceed 3.50 to 1.00. This ratio increases to 4.00 to 1.00 for the four quarters following an acquisition provided the acquisition meets certain agreed upon terms. The Accu-Fab acquisition on July 1, 2025 met these terms. As of December 31, 2024,2025, our consolidated total leverage ratio was 1.283.68 to 1.00.

During the twelve months ended December 31, 20242025 and 2023,2024, our capital expenditures were $12,098$11,648 and $16,598,$12,098 respectively. The decrease of $4,500$450 was driven by the CompanyCompany’s focus on leveraging recent investments and controlling its spend dueduring to the end market demand softening.2025. Capital expenditures for the full year 20252026 are expected to be between $13,000$15,000 and $17,000.$20,000.

We have historically relied upon cash available through credit facilities, in addition to cash from operations, to finance our working capital requirements and to support our growth. At December 31, 2024,2025, we had immediate availability of $170,275$17,730 through our revolving credit facility and the availability of incremental facilities to the greater of $100,000 and 125% of the Company’s twelve month trailing Consolidated EBITDA through an accordion feature under our Credit Agreement, subject to the covenants under the Credit Agreement.facility. We regularly monitor potential capital sources, including equity and debt financings, in an effort to meet our planned capital expenditures and liquidity requirements. Our future success will be highly dependent on our ability to access outside sources of capital. We will continue to have access to the availability currently provided under the Credit Agreement as long as we remain compliant with the financial covenants. Based on our estimates at this time, we expect to be in compliance with these financialfinancials covenants through 20252026 and the foreseeable future.

Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to assist in the understanding and assessing the trends and significant changes in our results of operations and financial condition. Historical results may not be indicative of future performance. This discussion includes forward-looking statements that reflect our plans, estimates and beliefs. Such statements involve risks and uncertainties. Our actual results may differ materially from those contemplated by these forward-looking statements as a result of various factors, including those set forth in “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025 and “Cautionary Statement Regarding Forward-Looking Statements” in this Quarterly Report on Form 10-Q. This discussion should be read in conjunction with our audited Consolidated Financial Statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2025 and our unaudited Condensed Consolidated Financial Statements and the notes thereto included in Part I, Item I1 of this Quarterly Report on Form 10-Q. In this discussion, we use certain non-GAAP financial measures. Explanation of these non-GAAP financial measures and reconciliation to the most directly comparable GAAP financial measures are included in this ManagementManagement’s Discussion and Analysis of Financial Condition and Results of Operations. Investors should not consider non-GAAP financial measures in isolation or as substitutes for financial information presented in compliance with GAAP.

MEC is a leading U.S.-based vertically-integrated, value-added manufacturing partner providing a full suite of manufacturing solutions from concept to production, including design, prototyping and tooling, fabrication, aluminum extrusion, coating, assembly and aftermarket components. Our customers operate in diverse end markets, including heavy- and medium-duty commercial vehicles, datacenter & critical power, construction & access equipment, powersports, datacenter & critical power, agriculture, military and other end markets. We have developed long-standing relationships with our blue-chip customers based upon our commitment to “Unmatched Excellence”.

Our one operating segment focuses on producing metal components that are used in a broad range of heavy- and medium-duty commercial vehicles, datacenter & critical power, construction & access equipment, powersports, datacenter & critical power, agricultural, military and other products.

Adjusted EBITDA represents EBITDA before stock-based compensation expense, loss on extinguishment of debtdebt, CFO transition costs, natural disaster costs, acquisition related costs and restructuring and impairment.impairment costs. Adjusted EBITDA Margin represents Adjusted EBITDA as a percentage of net sales for each period.

Free cash flow represents net cash provided by (used in) operating activities less cash flow used in the purchase of property, plant and equipment.

Free Cash Flow Analysis ThreeSix Months Ended MarchJune 31,30, 2026 Compared to ThreeSix Months Ended MarchJune 31,30, 2025

Free cash flow for the threesix months ended MarchJune 31,30, 2026 was ($6,940$13,588) as compared to $5,371$17,899 for the threesix months ended MarchJune 31,30, 2025, a decrease of $12,311$31,487 or 229.2%. The decrease in free cash flow was due to a decrease in cash provided by operating activities and higher capital expenditures.175.9%. Please see the “Liquidity and Capital Resources” section below for further information.

Three Months Ended MarchJune 31,30, 2026 Compared to Three Months Ended MarchJune 31,30, 2025

Net Sales. Net sales were $144,780$162,981 for the three months ended MarchJune 31,30, 2026 as compared to $135,579$132,328 for the three months ended MarchJune 31,30, 2025, an increase of $9,201,$30,653, or 6.8%.23.2%. This increase was driven by the recent acquisition of Accu-Fab and organic growth withinin the Datacenter & Critical Power, Commercial Vehicle, and Construction & Access end markets and Powersportsthe endimpact markets.of Thisthe wasAccu-Fab acquisition completed in the third quarter of 2025. These increases were partially offset by lower customer demand withinin the CommercialPowersports, VehicleAgriculture and Military end markets.

Amortization of IntangiblesIntangible Assets. Amortization of intangible assets werewas $3,130$3,140 for the three months ended MarchJune 31,30, 2026, as compared to $1,733 for the three months ended MarchJune 31,30, 2025, an increase of $1,397$1,407 or 80.6%.81.2%. The increase was due to amortization expense associated with identifiable intangible assets from the Accu-Fab acquisition. Refer to Note 2 – Acquisition, for additional information related to these identifiable intangible assets.

InterestBonuses Expense.and InterestDeferred expenseCompensation wasExpenses. $3,661Bonuses and deferred compensation expenses were $4,845 for the three months ended MarchJune 31,30, 2026 as compared to $1,567$1,525 for the three months ended MarchJune 31,30, 2025, an increase of $2,094,$3,320, or 133.6%. The increase was due to an increase in borrowings associated with the Accu-Fab acquisition.217.7%.

Provision (Benefit) for Income Taxes. Income tax expense (benefit) was ($3,308$992) for the three months ended MarchJune 31,30, 2026 as compared to ($10$225) for the three months ended MarchJune 31,30, 2025. The increase in benefit of $3,298$767 is primarily due to a greater pre-tax loss in the current year period compared to the pre-tax incomeloss in the prior year period. Refer to Note 8 – Income Taxes of the Condensed Consolidated Financial Statements for further details.

Due to the factors described in the preceding paragraphs, net income (loss) and comprehensive income (loss), EBITDA, EBITDA Margin, Adjusted EBITDA andEBITDA, Adjusted EBITDA Margin and EBITDA Margin decreased while EBITDA increased during the three months ended MarchJune 31,30, 2026 as compared to the three months ended MarchJune 31,30, 2025.

Operating Activities. Cash used in operating activities was $2,756$1,325 for the threesix months ended MarchJune 31,30, 2026, as compared to cash provided by operating activities of $8,333$23,307 for the threesix months ended MarchJune 31,30, 2025. The decrease of $11,089$24,632 in cash provided by (used in) operating activities was primarily due to lower net income (loss) adjusted for reconciling items and a higher use of cash driven by an increase in inventory and accounts receivable to supportsupporting higher sales volumes. This was partially offset by an increase in cash provided by higher in accounts payables and accrued liabilities.

Investing Activities. Cash used in investing activities was $4,179$12,257 for the threesix months ended MarchJune 31,30, 2026, as compared to $2,959$5,402 for the threesix months ended MarchJune 31,30, 2025. The $1,220$6,855 increase in cash used in investing activities was driven by an increase in capital investments needed to support rapidly accelerating demand in the Datacenter & Critical Power end market.

Financing Activities. Cash provided by financing activities was $7,499$14,283 for the threesix months ended MarchJune 31,30, 2026, as compared to cash used in financing activities of $5,397$17,905 for the threesix months ended MarchJune 31,30, 2025. The $12,896increase increaseof $32,188 in cash provided by financing activities was mainlyprimarily duedriven toby borrowingsproceeds inreceived excess of debt repayments duringfrom the currentCompany’s yearstock periodoffering, partially offset by payments on the Company’s revolving credit facility.facility Additionally,that underexceeded the share repurchase plan, the Company purchased $1,747 of common stock in the first three months of 2025 and did not purchase any common stockborrowings during the first three months of 2026.period.

At MarchJune 31,30, 2026, the interest rate on outstanding borrowings under the Revolving Loan was 6.42%.6.65%. After accounting for our debt covenants, we had availability of $42,191$108,505 under the revolving credit facility at MarchJune 31,30, 2026.

We must pay a commitment fee of 0.20% to 0.35% per annum on the average daily unused portion of the aggregate unused revolving commitments under the Credit Agreement. At MarchJune 31,30, 2026, this fee was 0.35%. We must also pay fees as specified in the Fee Letter (as defined in the Credit Agreement) and with respect to any letters of credit issued under the Credit Agreement.

The Credit Agreement contains usual and customary negative covenants for agreements of this type, including, but not limited to, restrictions on our ability to, subject to certain exceptions, create, incur or assume indebtedness; create, incur, assume or suffer to exist liens; make certain investments; allow our subsidiaries to merge or consolidate with another entity; make certain asset dispositions; pay certain dividends or other distributions to shareholders; enter into transactions with affiliates; enter into sale leaseback transactions; and exceed the limits on annual capital expenditures. The Credit Agreement also requires us to satisfy certain financial covenants, including a minimum consolidated interest coverage ratio of 2.75 to 1.00, as well as a consolidated total leverage ratio not to exceed 5.25 to 1.00. As of MarchJune 31,30, 2026, under the terms of the Credit Agreement, our interest coverage ratio was 4.273.27 to 1.00 and our consolidated total leverage ratio was 4.402.91 to 1.00.

Additionally, the Company has a Fond du Lac County and Fond du Lac Economic Development Corporation term note (Fond du Lac Term Note). The Fond du Lac Term Note is secured by a security agreement, payable in annual installments of $500 plus interest at 2.00% and is due in full in December 2028. The balance outstanding as of MarchJune 31,30, 2026 and December 31, 20262025 was $1,375. As of MarchJune 31,30, 2026, the short-term and long-term balance of $500 and $875, respectively. These balances are recorded in other current liabilities and other long-term liabilities in the Condensed Consolidated Balance Sheets.

During the threesix months ended MarchJune 31,30, 2026 and 2025, our capital expenditures were $4,184$11,755 and $2,962$5,408 respectively. The increase of $1,222$6,347 was driven by an increase in capital investments needed to support rapidly accelerating demand in the Datacenter & Critical Power end market. Capital expenditures for the full year 2026 are expected to be between $15,000$25,000 and $20,000.$35,000.

The following table presents our obligations and commitments to make future payments under contracts and contingent commitments at MarchJune 31,30, 2026: