AdvanSix ASIX Form 10-Q filing Q2 FY2026

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

See accompanying notes to Condensed Consolidated Financial Statements.

See accompanying notes to Condensed Consolidated Financial Statements.

See accompanying notes to Condensed Consolidated Financial Statements.

See accompanying notes to Condensed Consolidated Financial Statements.

See accompanying notes to Condensed Consolidated Financial Statements.

ADVANSIX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts and as otherwise noted)

1. Organization, Operations and Basis of Presentation

Description of Business

AdvanSix Inc. ("AdvanSix," the "Company," "we" or "our") is a vertically integrated chemistry company that produces essential materials for diverse end markets. Our value chain of our five U.S.-based manufacturing facilities plays a critical role in global supply chains and enables us to innovate and deliver essential products for our customers across building and construction, fertilizers, agrochemicals, plastics, solvents, packaging, paints, coatings, adhesives, electronics and other end markets. Guided by our core values of Safety, Integrity, Accountability and Respect, AdvanSix strives to deliver best-in-class customer experiences and differentiated products in the industries of nylon solutions, plant nutrients and chemical intermediates.

Basis of Presentation

The Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of the Company's financial position as of June 30, 2026, and its results of operations for the three and six months ended June 30, 2026 and 2025 and cash flows for the six months ended June 30, 2026 and 2025. The year-end Condensed Consolidated Balance Sheet data was derived from audited financial statements but does not include all disclosures required by U.S. GAAP. The results of operations of any interim period are not necessarily indicative of the results of operations to be expected for the full fiscal year. These financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. All intercompany transactions have been eliminated.

Certain prior period amounts have been reclassified for consistency with the current period presentation.

It is our practice to establish actual quarterly closing dates using a predetermined fiscal calendar, which requires our businesses to close their books on a Saturday in order to minimize the potentially disruptive effects of quarterly closing on our business processes. Historically, the effects of this practice have generally not been significant to reported results for any quarter and only existed within a reporting year. In the event that differences in actual closing dates are material to year-over-year comparisons of quarterly or year-to-date results, we will provide the appropriate disclosures. Our actual closing dates for the three and six months ended June 30, 2026 and 2025 were July 4, 2026 and June 28, 2025, respectively, which resulted in six additional reporting days in the six month period from our normal quarterly closing procedures.

Liabilities to creditors to whom we have issued checks that remained outstanding at June 30, 2026 and December 31, 2025 aggregated to $3.4 million and $4.9 million, respectively. These were included in Cash and cash equivalents and Accounts payable in the Condensed Consolidated Balance Sheets.

As of June 30, 2026, the Company has repurchased a total of 6,391,880 shares of common stock, including 1,146,424 shares withheld to cover tax withholding obligations in connection with the vesting of awards, for an aggregate of $195.5 million at a weighted average market price of $30.58 per share. As of June 30, 2026, approximately $62.0 million remained available for share repurchases under the current authorization approved by the Company's Board of Directors (the "Board") on February 17, 2023. The Company has not repurchased any shares under the currently authorized repurchase program since June 2024. During the period July 1, 2026 through July 31, 2026, no additional shares were repurchased for tax withholding obligations or under the repurchase program.

Repurchases may be made from time to time on the open market in accordance with Rule 10b-18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), including through the use of trading plans intended to qualify under Rule 10b5-1 of the Exchange Act. The size and timing of these repurchases will depend on pricing, market and economic conditions, legal and contractual requirements and other factors. The share repurchase program has no expiration date and may be modified, suspended or discontinued at any time. The par value of the shares repurchased is applied to Treasury stock and the excess of the purchase price over par value is applied to Additional paid-in capital.

2. Recent Accounting Pronouncements

ADVANSIX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts and as otherwise noted)

Recent Accounting Pronouncements – The Company considers the applicability and impact of all Accounting Standards Updates (“ASUs”) issued by the Financial Accounting Standards Board (“FASB”). ASUs not discussed below were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial position or results of operations.

On December 8, 2025, the FASB issued ASU No. 2025-11: Interim Reporting (Topic 270), Narrow Scope Improvements. The amendments in this ASU provide a comprehensive list of interim disclosures that are required by GAAP. The amendments also clarify the applicability of Topic 270, the types of interim reporting, and the form and content of interim financial statements in accordance with GAAP to enhance consistency in interim reporting for all entities. The update is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027 for public business entities. Early adoption is permitted. The amendments in this update can be applied either prospectively or retrospectively to any or all prior periods presented in the financial statements. The Company is evaluating the pronouncement and does not expect adoption to have a material impact on its consolidated financial position or results of operations.

On December 4, 2025, the FASB issued ASU No. 2025-10: Accounting for Government Grants Received by Business Entities. The amendments in this ASU establish the accounting for a government grant received. The amendments require that a grant received should not be recognized until (1) it is probable that (a) an entity will comply with conditions attached to the grant and (b) the grant will be received and (2) an entity meets the recognition guidance for a grant related to an asset or to income. The amendments require that a grant related to an asset be recognized on the balance sheet as the entity incurs the related costs for which the grant is intended to compensate, either as (1) deferred income (the deferred income approach) or (2) an adjustment to the cost basis in determining the carrying amount of the asset (the cost accumulation approach). A grant related to income and a grant related to an asset for which the deferred income approach is elected should be recognized in earnings on a systematic and rational basis over the periods in which an entity recognizes as expenses the costs for which the grant is intended to compensate. The amendments require that an entity present a grant related to income and a grant related to an asset for which the deferred income is elected as part of earnings either (1) separately under a general heading such as other income or (2) deducted from the related expense. In addition, the amendments require that an entity provide disclosures, including the nature of the government grant received, the accounting policies used to account for the grant, and significant terms and conditions of the grant. For public business entities, this update is effective for annual reporting periods beginning after December 15, 2028, and interim reporting periods within those annual reporting periods. Early adoption is permitted in both interim and annual reporting periods in which financial statements have not yet been issued or made available for issuance. The amendments in this ASU require that a business entity apply the guidance using a modified prospective approach, a modified retrospective approach or a retrospective approach to all government grants through a cumulative effect adjustment to the opening balance of retained earnings as of the beginning of the earliest period presented. The Company is evaluating the pronouncement and does not expect adoption to have a material impact on its consolidated financial position or results of operations.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The amendments in this ASU require disclosure, in the notes to the financial statements, of specified information about certain costs and expenses. The amendments require that at each interim and annual reporting period an entity will: (1) disclose the amounts of (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and (e) depreciation, depletion, and amortization recognized as part of oil-and gas-producing activities (or other amounts of depletion expense) included in each relevant expense caption. A relevant expense caption is an expense caption presented on the face of the income statement within continuing operations that contains any of the expense categories listed in (a)-(e); (2) include certain amounts that are already required to be disclosed under current generally accepted accounting principles (GAAP) in the same disclosure as other disaggregation requirements; (3) disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively; and (4) disclose the total amount of selling expense and, in annual reporting periods, an entity's definition of selling expense. The guidance is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments in this ASU should be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of this ASU or (2) retrospectively to any or all prior periods presented in the financial statements. The Company is evaluating the pronouncement and does not expect adoption to have a material impact on the Company's consolidated financial position or results of operations.

3. Revenues

Revenue Recognition

ADVANSIX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts and as otherwise noted)

AdvanSix serves approximately 375 customers annually, primarily in the United States, spanning a wide variety of industries worldwide. For the three months ended June 30, 2026 and 2025, the Company's ten largest customers accounted for approximately 36% and 43% of total sales, respectively. For the six months ended June 30, 2026 and 2025, the Company's ten largest customers accounted for approximately 36% and 39% of total sales, respectively.

We typically sell to customers under master service agreements, with primarily one-year terms, or by purchase orders. We have historically experienced low customer turnover and have long-standing customer relationships, which span decades. Our largest customer is Shaw Industries Group, Inc. (“Shaw”), a significant consumer of caprolactam and Nylon 6 resin, to whom we sell under a long-term agreement. For the three months ended June 30, 2026 and 2025, the Company's sales to Shaw were 8% and 9% of our total sales, respectively. For each of the six months ended June 30, 2026 and 2025, the Company's sales to Shaw were 9% of our total sales.

The Company's revenue by product line, and related approximate percentage of total sales, for the three and six months ended June 30, 2026 and 2025 were as follows:

The Company's revenues by geographic area, and related approximate percentage of total sales, for the three and six months ended June 30, 2026 and 2025 were as follows:

• Predominantly Latin America, Europe, Middle East and Africa (EMEA) and Canada.

Deferred Income and Customer Advances

The Company defers revenues when cash payments are received in advance of our performance. Below is a roll-forward of Deferred income and customer advances for the six months ended June 30, 2026:

The Company expects to recognize as revenue the June 30, 2026 ending balance of Deferred income and customer advances which are predominantly driven by our ammonium sulfate pre-buy program, within one year or less.

4. Earnings Per Share

The computation of basic and diluted earnings per share ("EPS") is based on Net income (loss) divided by the basic weighted average number of common shares outstanding and, where appropriate, diluted weighted average number of common shares outstanding, respectively. The details of the basic and diluted EPS calculations for the three and six months ended June 30, 2026 and 2025 were as follows:

ADVANSIX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts and as otherwise noted)

Where appropriate, diluted EPS is computed based upon the weighted average number of common shares outstanding for the period plus the dilutive effect of common stock equivalents using the treasury stock method and the average market price of our common stock for the period.

Where appropriate, the diluted EPS calculations exclude the effect of stock options when the options’ assumed proceeds exceed the average market price of the common shares during the period. The anti-dilutive common stock equivalents outstanding at the three and six months ended June 30, 2026 and 2025 were as follows:

Dividend activity for the three and six months ended June 30, 2026 and 2025 was as follows:

5. Accounts and Other Receivables – Net

6. Inventories

ADVANSIX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts and as otherwise noted)

Substantially all of the Company’s inventories at June 30, 2026 and December 31, 2025 are valued at the lower of cost or market using the last-in, first-out (“LIFO”) method. However, approximately 6% was valued at average cost using the first-in, first-out (“FIFO”) method at June 30, 2026.

The excess of replacement cost over the carrying value of total inventories subject to LIFO was $79.4 million and $61.3 million at June 30, 2026 and December 31, 2025, respectively.

7. Leases

The Company determines if an arrangement is a lease at inception. Operating leases are included in Operating lease right-of-use assets ("ROU"), Operating lease liabilities – short-term, and Operating lease liabilities – long-term in our Condensed Consolidated Balance Sheets. Finance leases are included in Property, plant and equipment – net, Accounts payable, and Other liabilities in our Condensed Consolidated Balance Sheets.

The components of lease expense were as follows:

As of June 30, 2026, we have no additional operating or finance leases that have not yet commenced.

8. Goodwill and Intangible Assets

Intangible assets with finite lives acquired through a business combination are recorded at fair value, less accumulated amortization. Customer relationships and trade-names are amortized on a straight-line basis over their expected useful lives of 15 to 20 years and 5 years, respectively.

Goodwill

There was no change in the carrying amount of goodwill for the three or six months ended June 30, 2026.

To determine if goodwill is potentially impaired, we may perform either a qualitative or quantitative assessment to determine whether it is more likely than not that the fair value is less than the carrying value. The Company most recently performed a qualitative assessment in the fourth quarter of 2025 whereby we considered the enterprise value from the previous 2023 quantitative test (including the underlying excess fair value over carrying value), macroeconomic conditions (including changes in interest and discount rates), industry and market considerations, recent and projected financial performance, as well as other factors. The Company concluded that it was not more likely than not that an impairment of the goodwill balances existed.

ADVANSIX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts and as otherwise noted)

In the quarter ended June 30, 2026, the Company identified certain events and circumstances, specifically a sustained decline in market capitalization, that required an interim evaluation of whether it was more likely than not that its fair value was less than its carrying value. Accordingly, the Company performed a quantitative goodwill impairment assessment during the quarter ended June 30, 2026.

The fair value of the reporting unit was determined using a combination of an income approach, based on discounted cash flows, and a market approach, utilizing comparable public company multiples. Under the income approach, the fair value of the reporting unit is estimated based on the present value of the projected future cash flows. Management's cash flow projections for the reporting unit included significant judgments and assumptions, including revenue growth rate, EBITDA margin, future capital expenditures, market participants cost synergies and discount rate. Under the market approach, management uses selected financial information of publicly-traded companies that compare to the reporting unit to derive a market-based multiple. The Company considered the difference between net book value and market capitalization in assessing the reasonableness of the estimated fair value of its reporting unit.

Based on the results of the quantitative assessment completed during the second quarter, the Company concluded that the estimated fair value of the reporting unit was in excess of its carrying value, resulting in no impairment.

Our qualitative and quantitative assessment reflects our best estimates of the impacts of the cyclical nature of the industries in which we operate, as well as the cycles of fluctuating supply and demand for each of our products resulting in changes in selling prices and margins. It is possible that in the future there may be changes in industry trends, estimates and assumptions, including the timing and amount of future cash flows, margins, growth rates, market participant assumptions, comparable benchmark companies and related multiples and discount rates, which could impact estimates of fair value. Significant and adverse changes to any one or more of the above-noted estimates and assumptions could result in an impairment.

Finite-Lived Intangible Assets

Intangible assets subject to amortization were as follows:

For each of the three months ended June 30, 2026 and June 30, 2025, the Company recorded amortization expense on intangible assets of $0.8 million. For each of the six months ended June 30, 2026 and June 30, 2025, the Company recorded amortization expense on intangible assets of $1.5 million.

9. Commitments and Contingencies

The Company is subject to a number of lawsuits, investigations and disputes, some of which may involve substantial amounts claimed, arising out of the conduct of the Company or other third-parties in the normal and ordinary course of business. A liability is recognized for any contingency that is probable of occurrence and reasonably estimable. The Company continually assesses the likelihood of adverse judgments or outcomes in these matters, as well as potential ranges of possible losses, based on an analysis of each matter with the assistance of legal counsel and, if applicable, other experts.

Given the uncertainty inherent in such lawsuits, investigations and disputes, the Company does not believe it is possible to develop estimates of reasonably possible loss in excess of current accruals for these matters. Considering the Company’s past experience and existing accruals, the Company does not expect the outcome of these matters, either individually or in the aggregate, to have a material adverse effect on the Company’s consolidated financial position or results of operations. Potential liabilities are subject to change due to new developments, changes in settlement strategy or the impact of evidentiary requirements, which could cause the Company to pay damage awards or settlements (or become subject to equitable remedies)

ADVANSIX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts and as otherwise noted)

that could have a material adverse effect on the Company’s consolidated results of operations, balance sheet and/or operating cash flows in the periods recognized or paid.

We assumed from Honeywell International Inc. ("Honeywell") all health, safety and environmental (“HSE”) liabilities and compliance obligations related to the past and future operations of our current business, as well as all HSE liabilities associated with the three manufacturing locations assumed from Honeywell that are used in our current operations, including any cleanup or other liabilities related to any contamination that may have occurred at such locations in the past. Honeywell retained all HSE liabilities related to former business locations or the operation of our former businesses. Although we have ongoing environmental remedial obligations at certain of our facilities, in the past three years, the associated remediation costs have not been material, and we do not expect our known remediation costs to have a material adverse effect on the Company's consolidated financial position or results of operations.

10. Income Taxes

The provision for income taxes was $3.4 million and $0.3 million for the three months ended June 30, 2026 and 2025, respectively, resulting in an effective tax rate of 51.2% and 0.9%, respectively. The provision (benefit) for income taxes was ($1.7 million) and $5.9 million for the six months ended June 30, 2026 and 2025, respectively, resulting in an effective tax rate of 12.3% and 9.7%, respectively.

The Company’s provision (benefit) for income taxes in interim periods is computed by applying an estimated annual effective tax rate against Income (loss) before taxes for the period in addition to recording any tax effects of discrete items for the quarter. The Company’s effective tax rates for the three and six months ended June 30, 2026 and 2025 differed from the U.S. federal statutory rate primarily due to state taxes and executive compensation deduction limitations which generally increase the rate, offset by research tax credits that generally decrease the rate. These adjustments have the inverse impact on the effective tax rate in periods with a loss before taxes. Changes in our forecasted earnings and taxable income between the first and second quarter have impacted our effective tax rate for the three and six months ended June 30, 2026. Additionally, discrete tax adjustments recorded in the first and second quarter of 2025 related to Internal Revenue Code (IRC) Section 45Q tax credits of $1.8 million and $7.9 million, respectively, offset slightly by state tax legislation changes, resulted in a net 24.7% and 15.7% decrease in the rate for the three and six months ended June 30, 2025, respectively.

On July 4, 2025, the One Big Beautiful Bill Act (the "Act") was enacted into law which includes numerous tax provisions affecting businesses, including the reinstatement of full expensing of domestic research and experimental expenditures, modification of the limitation on business interest and making permanent full expensing for certain business property. Several of the major business provisions in the Act became effective in 2025 while other business tax changes are effective for the 2026 tax year. The major business provisions in the Act reduced our cash taxes in 2025 and are expected to reduce our cash taxes in future periods.

11. Supplier Finance Programs

The Company has entered into a supply chain finance program with a financial intermediary providing participating suppliers the option to be paid by the intermediary earlier than the original invoice due date. AdvanSix’s responsibility is limited to making payments to the intermediary based upon payment terms negotiated with the suppliers, regardless of whether the intermediary pays the supplier in advance of the original due date. The Company’s payment terms with suppliers are consistent, regardless of whether a vendor participates in the supply chain finance program or not. All related agreements are terminable by either party upon at least 30 days’ notice.

The total amount due to the financial intermediary to settle supplier invoices under the Company's supply chain finance program was approximately $12.2 million as of June 30, 2026 and approximately $9.0 million as of December 31, 2025. These amounts outstanding are included in Accounts payable.

12. Segment Related Information

The Company has concluded that it is a single operating segment and a single reportable segment: chemical manufacturing. Its larger manufacturing sites are vertically integrated and leverage cross-plant resources, including centralized supply chain and procurement functions. This production process uses one key raw material, cumene, as the input to products produced for sale through the sales channels and end markets the Company serves. Production rates and output volumes are managed across locations to align with the Company’s overall operating plan. Additionally, the Company’s operating results, which are evaluated regularly to make decisions about resource allocation and performance assessment by the chief operating decision maker ("CODM"), our CEO and President, are on a consolidated basis.

ADVANSIX INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts and as otherwise noted)

The chemical manufacturing segment derives its revenues by innovating and delivering essential products in the industries of nylon solutions, plant nutrients, and chemical intermediates to its customers in a wide variety of end markets and applications, such as building and construction, fertilizers, agrochemicals, plastics, solvents, packaging, paints, coatings, adhesives and electronics.

The CODM’s performance assessment and resource allocation for the chemical manufacturing segment is based on net income which is also reported on the income statement as net income, the measure of segment assets which is also reported on the balance sheet as total assets, and capital expenditures which is also reported in management’s discussion and analysis.

The CODM uses net income generated from segment assets in deciding whether to reinvest profits into the segment or into other parts of the entity, such as for acquisitions or to pay dividends. The CODM also uses net income to monitor budget versus actual results. Monitoring budgeted versus actual results is used in assessing performance of the segment and in establishing management’s compensation. Lastly, the CODM uses capital expenditures to estimate the cash-generating potential and cash requirements of the segment.

Significant expense information reviewed by the CODM was as follows (in thousands):

*Variable costs of goods sold includes the raw material costs associated with volumes sold during the period as well as insurance settlement proceeds, when applicable.

**Other segment items include research and development expense, interest income and expense, capitalized interest, other non-operating expense, and income tax expense.

13. Subsequent Events

Dividends

As announced on August 7, 2026, the Board declared a quarterly cash dividend of $0.16 per share on the Company's common stock, payable on September 1, 2026 to stockholders of record as of the close of business on August 18, 2026.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of the financial condition and results of operations, of AdvanSix Inc. (“AdvanSix,” the “Company,” “we” or “our”), which we refer to as our “MD&A,” should be read in conjunction with the Condensed Consolidated Financial Statements and the notes thereto contained in this Quarterly Report on Form 10-Q (this "Form 10-Q"), as well as the MD&A section included in our Annual Report on Form 10-K for the year ended December 31, 2025 ("2025 Form 10-K"). Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors that can affect our performance in both the near- and long-term, including those incorporated by reference in Item 1A of Part II of this Form 10-Q as such factors may be revised or supplemented in subsequent filings with the SEC, as well as those discussed in the section entitled “Note Regarding Forward-Looking Statements” below.

Results of Operations

(Dollars in thousands, unless otherwise noted)

Sales

The change in sales compared to the prior year period is attributable to the following:

Sales increased in the three months ended June 30, 2026 compared to the prior year period by $11.3 million (approximately 3%) due primarily to (i) favorable raw material pass through pricing following a net cost increase in benzene and propylene (inputs to cumene which is a key feedstock to our products) (approximately 13%) and (ii) favorable market-based pricing (approximately 5%) primarily driven by an increase in Plant Nutrients reflecting higher nitrogen pricing amid increased sulfur input costs, partially offset by lower volume (approximately 15%) driven primarily by lower in-season Plant Nutrients sales as a result of reduced grower application of nutrients.

Sales increased in the six months ended June 30, 2026 compared to the prior year period by $37.7 million (approximately 5%) due primarily to (i) favorable raw material pass through pricing following a net cost increase in benzene and propylene (inputs to cumene which is a key feedstock to our products) (approximately 6%) and (ii) favorable market-based pricing (approximately 4%) primarily driven by an increase in Plant Nutrients reflecting higher nitrogen pricing amid increased sulfur input costs, partially offset by lower volume (approximately 5%) driven primarily by lower in-season Plant Nutrients sales as a result of reduced grower application of nutrients.

See Note 1. Organization, Operations and Basis of Presentation of Notes to the Condensed Consolidated Financial Statements for discussion of the additional reporting days in the current year period resulting from our normal quarterly closing procedures.

Costs of Goods Sold

Costs of goods sold increased in the three months ended June 30, 2026 compared to the prior year period by $38.9 million (approximately 11%) due primarily to (i) increased raw material costs (approximately 20%) driven by an increase in the prices of benzene (11%), sulfur (8%), and propylene (3%) and (ii) lower production rates and timing of plant turnaround spend (approximately 3%), partially offset by decreased sales volume (approximately 12%).

Costs of goods sold increased in the six months ended June 30, 2026 compared to the prior year period by $114.9 million (approximately 17%) due to (i) increased raw material costs (approximately 14%) driven by an increase in the prices of sulfur (8%), benzene (5%), and propylene (1%), (ii) increased plant costs (approximately 3%) driven primarily by utility costs and winter storm related expenses and (iii) $26 million of insurance proceeds (approximately 4% in the prior year period which did not recur in the current year period), partially offset by decreased sales volume (approximately 4%).

Gross margin percentage decreased in the three months ended June 30, 2026 compared to the prior year period (approximately 7%) due primarily to (i) lower production rates and timing of plant turnaround spend (approximately 3%) and (ii) the impact of pricing, which largely offset raw material cost increases (approximately 2%).

Gross margin percentage decreased in the six months ended June 30, 2026 compared to the prior year (approximately 10.0%) period due to (i) the impact of pricing, net of raw material costs (approximately 4%), (ii) increased plant costs (approximately 3%) and (iii) absence of insurance proceeds (approximately 3%).

Selling, General and Administrative Expenses

Selling, general and administrative expenses decreased by $3.4 million and $4.3 million in the three and six months ended June 30, 2026 respectively, compared to the prior year periods due primarily to the completion of the investment to upgrade our enterprise resource planning system in 2025 and the execution of enterprise cost savings initiatives.

Income Tax Expense (Benefit)

The Company’s provision (benefit) for income taxes in interim periods is computed by applying an estimated annual effective tax rate against Income (loss) before taxes for the period in addition to recording any tax effects of discrete items for the quarter. The Company’s effective tax rate for the three and six months ended June 30, 2026 and 2025 differed from the U.S. federal statutory rate primarily due to state taxes and executive compensation deduction limitations which generally increase the rate, offset by research tax credits that generally decrease the rate. These adjustments have the inverse impact on the effective tax rate in periods with a loss before taxes. Changes in our forecasted earnings and taxable income between the first and second quarter have impacted our effective tax rate for the three and six months ended June 30, 2026. Additionally, discrete tax adjustments recorded in the first and second quarter of 2025 related to Internal Revenue Code (IRC) Section 45Q tax credits of $1.8 million and $7.9 million, respectively, offset slightly by state tax legislation changes, resulted in a net 24.7% and 15.7% decrease in the rate for the three and six months ended June 30, 2025, respectively.

The Company’s effective tax rate for the three and six months ended June 30, 2026 was higher than the prior year periods due primarily to discrete tax adjustments related to IRC Section 45Q tax credits recorded in the prior year periods that decreased the effective tax rate and also from the impact of changes to the Company's forecasted earnings and taxable income in the current year periods as described above.

On July 4, 2025, the One Big Beautiful Bill Act (the "Act") was enacted into law which includes numerous tax provisions affecting businesses, including the reinstatement of full expensing of domestic research and experimental expenditures, modification of the limitation on business interest and making permanent full expensing for certain business property. Several of the major business provisions in the Act became effective in 2025 while other business tax changes are effective for the 2026 tax year. The major business provisions in the Act reduced our cash taxes in 2025 and are expected to reduce our cash taxes in future periods.

Net Income (Loss)

As a result of the factors described above, Net income (loss) was $3.2 million and ($12.3) million for the three and six months ended June 30, 2026, respectively, as compared to $31.4 million and $54.7 million in the corresponding prior year period.

Non-GAAP Measures

(Dollars in thousands, unless otherwise noted)

The following tables set forth the non-GAAP financial measures of Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net income and Adjusted EPS. Adjusted EBITDA is defined as Net income before Interest, Income taxes, Depreciation and amortization, Non-cash stock-based compensation, Non-recurring, unusual or extraordinary expenses, Non-cash amortization from acquisitions and Strategic advisory and professional fees that are not reflective of ongoing operations. Adjusted EBITDA Margin is equal to Adjusted EBITDA divided by Sales. The following tables may also present each of these measures as further adjusted. The Company believes these non-GAAP financial measures provide meaningful supplemental information as they are used by the Company’s management to evaluate the Company’s operating performance, enhance a reader’s understanding of the financial performance of the Company, and facilitate a better comparison among fiscal periods and performance relative to the Company's competitors, as the non-GAAP measures exclude items that management believes do not reflect the Company’s ongoing operations.

These non-GAAP results are presented for supplemental informational purposes only and should not be considered a substitute for the financial information presented in accordance with U.S. GAAP. Non-GAAP financial measures should be read only in conjunction with the comparable U.S. GAAP financial measures. The Company's non-GAAP measures may not be comparable to other companies' non-GAAP measures.

The following is a reconciliation between the non-GAAP financial measures of Adjusted Net income, Adjusted EBITDA and Adjusted EBITDA Margin to their most directly comparable U.S. GAAP financial measure:

• Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by Sales.

The following is a reconciliation between the non-GAAP financial measures of Adjusted EPS to its most directly comparable U.S. GAAP financial measure:

Liquidity and Capital Resources

(Dollars in thousands, unless otherwise noted)

Liquidity

We believe that cash balances and operating cash flows, together with available capacity under our credit agreement, as utilized in the second quarter of 2026, will provide adequate funds to support our current short-term operating objectives as well as our longer-term strategic plans, subject to the risks and uncertainties outlined below, in our "Note Regarding Forward-Looking Statements" above, and in the risk factors previously disclosed in Item 1A of Part I of our 2025 Form 10-K. Our principal source of liquidity is our cash flow generated from operating activities, which is expected to provide us with the ability to meet the majority of our short-term funding requirements for the next twelve months and beyond. Our cash flows are affected by capital requirements and production volume, which may be materially impacted by unanticipated events such as material disruptions at our production facilities, the prices of our raw materials, general economic and industry trends and customer demand. The Company applies a proactive and disciplined approach to working capital management to optimize cash flow and to enable capital allocation options in support of the Company’s strategy. We utilize supply chain financing and trade receivables discount arrangements with third-party financial institutions which optimize terms and conditions related to accounts receivable and accounts payable in order to enhance liquidity and enable us to efficiently manage our working capital needs. Although we continue to optimize supply chain financing and trade receivable programs in the ordinary course, our utilization of these arrangements has not had a material impact on our liquidity. In addition, we monitor the third-party depository institutions that hold our cash and cash equivalents. Our emphasis is primarily on the safety of principal and secondarily on maximizing yield on those funds. We diversify our cash and cash equivalents among counterparties to minimize exposure to any one of these entities.

On a recurring basis, our primary future cash needs will be centered on operating activities, working capital, capital expenditures, dividends and liquidity reflecting disciplined capital deployment. Capital expenditures are deployed for various ongoing investments and initiatives to improve reliability, yield and quality, expand production capacity and comply with health, safety and environmental ("HSE") regulations. We believe that our future cash from operations, cash on hand and available capacity under our credit agreement, as well as our access to credit and capital markets, will provide adequate resources to fund our expected operating and financing needs and obligations. Our ability to fund our capital needs, however, will depend on our ongoing ability to generate cash from operations and access to credit and capital markets, both of which are subject to the risk factors previously disclosed in Item 1A of Part I of our 2025 Form 10-K, as well as general economic, financial, competitive, regulatory and other factors that are beyond our control.

As of the end of the second quarter of 2026, the Company had approximately $7.2 million of cash on hand with approximately $224 million of additional capacity available under the revolving credit facility. The Company’s Consolidated Leverage Ratio financial covenant of its credit facility allows it to net up to $75 million of cash with debt. Capital expenditures are expected to

be approximately $75 million to $95 million in 2026 compared to $116 million in 2025, reflecting a risk-based prioritization of base investments and enterprise programs with continued progression of growth programs including our SUSTAIN program.

We assumed from Honeywell International Inc. ("Honeywell") all HSE liabilities and compliance obligations related to the past and future operations of our current business as of the spin-off, as well as all HSE liabilities associated with the three manufacturing locations assumed from Honeywell that are used in our current operations, including any cleanup or other liabilities related to any contamination that may have occurred at such locations in the past. Honeywell retained all HSE liabilities related to former business locations or the operation of our former businesses. Although we have ongoing environmental remedial obligations at certain of our facilities, in the past three years, the associated remediation costs have not been material, and we do not expect our known remediation costs to have a material adverse effect on the Company's consolidated financial position or results of operations.

We expect that our primary cash requirements for 2026 will be to fund costs associated with ongoing operations, capital expenditures, dividends, and amounts related to other contractual obligations.

The Company made no cash contributions to the defined benefit pension plan during the six months ended June 30, 2026 as there were no funding requirements for the period. Subsequent to June 30, 2026, the Company made a $1.1 million cash contribution to the defined benefit pension plan. Additional contributions may be made in future periods sufficient to satisfy pension funding requirements in those periods or on a discretionary basis.

As of June 30, 2026, the Company has repurchased a total of 6,391,880 shares of common stock life-to-date, including 1,146,424 shares withheld to cover tax withholding obligations in connection with the vesting of awards, for an aggregate of $195.5 million at a weighted average market price of $30.58 per share. As of June 30, 2026, approximately $62.0 million remained available for share repurchases under the current authorization approved by the Board on February 17, 2023. The Company has not repurchased any shares under the currently authorized repurchase program since June 2024. During the period July 1, 2026 through July 31, 2026, no additional shares were repurchased for tax withholding obligations or under the repurchase program.

Repurchases may be made from time to time on the open market in accordance with Rule 10b-18 of the Exchange Act, including through the use of trading plans intended to qualify under Rule 10b5-1 of the Exchange Act. The size and timing of these repurchases will depend on pricing, market and economic conditions, legal and contractual requirements and other factors. The share repurchase program has no expiration date and may be modified, suspended or discontinued at any time. The par value of the shares repurchased is applied to Treasury stock and the excess of the purchase price over par value is applied to Additional paid-in capital.

As of June 30, 2026, the Company did not have any off-balance sheet arrangements as described in Instruction 8 to Item 303(b) of Regulation S-K and did not have any material changes in the commitments or contractual obligations detailed in the 2025 Form 10-K (see Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" under "Liquidity and Capital Resources - Liquidity"). The Company has not guaranteed any debt or commitments of other entities or entered into any options on non-financial assets.

Dividends

The Company commenced the declaration of dividends on September 28, 2021.

Dividends paid during 2026 and the dividend announced on the date of this filing are as follows:

The timing, declaration, amount and payment of future dividends to stockholders, if any, will fall within the discretion of our Board. Holders of shares of our common stock will be entitled to receive dividends when, and if, declared by our Board at its discretion out of funds legally available for that purpose, subject to the terms of our indebtedness, the preferential rights of any preferred stock that may be outstanding, legal requirements, regulatory constraints, industry practice and other factors that our Board deems relevant.

Credit Agreement

On October 27, 2021, the Company entered into a Credit Agreement, as amended on June 27, 2023 (the “Credit Agreement”), among the Company, the lenders party thereto, the swing line lenders party thereto, the letter of credit issuers party thereto and Truist Bank, as administrative agent, which provides for a senior secured revolving credit facility in an aggregate principal amount of $500 million (the “Revolving Credit Facility”).

Borrowings under the Revolving Credit Facility are subject to customary borrowing conditions.

The Revolving Credit Facility provided for a scheduled maturity date of October 27, 2026 (which was extended to such date pursuant to an October 2025 amendment, as described in more detail below). The Credit Agreement permits the Company to utilize up to $40 million of the Revolving Credit Facility for the issuance of letters of credit and up to $40 million for swing line loans. The Company has the option to establish a new class of term loans and/or increase the amount of the Revolving Credit Facility in an aggregate principal amount for all such incremental term loans and increases of the Revolving Credit Facility of up to the sum of (x) $175 million plus (y) an amount such that the Company’s Consolidated First Lien Secured Leverage Ratio (as defined in the Credit Agreement) would not be greater than 2.75 to 1.00, in each case, to the extent that any one or more lenders, whether or not currently party to the Credit Agreement, commits to be a lender for such amount or any portion thereof.

Borrowings under the Credit Agreement bear interest at a rate equal to either the sum of a base rate plus a margin ranging from 0.25% to 1.25% or the sum of an Adjusted Term SOFR rate plus a margin ranging from 1.25% to 2.25%, with either such margin varying according to the Company’s Consolidated Leverage Ratio (as defined in the Credit Agreement). The Company is also required to pay a commitment fee in respect of unused commitments under the Revolving Credit Facility, if any, at a rate ranging from 0.15% to 0.35% per annum depending on the Company’s Consolidated Leverage Ratio.

Substantially all tangible and intangible assets of the Company and its domestic subsidiaries are pledged as collateral to secure the Company's obligations under the Credit Agreement.

The Credit Agreement contains customary covenants limiting the ability of the Company and its subsidiaries to, among other things, pay cash dividends, incur debt or liens, redeem or repurchase stock of the Company, enter into transactions with affiliates, make investments, make capital expenditures, merge or consolidate with others or dispose of assets. The Credit Agreement also contains financial covenants that require the Company to maintain a Consolidated Interest Coverage Ratio (as defined in the Credit Agreement) of not less than 3.00 to 1.00 and to maintain a Consolidated Leverage Ratio of (ii) 3.75 to 1.00 or less (subject to the Company’s option to elect a consolidated leverage ratio increase in connection with certain acquisitions). If the Company does not comply with the covenants in the Credit Agreement, the lenders may, subject to customary cure rights, require the immediate payment of all amounts outstanding under the Revolving Credit Facility. We were in compliance with all of our covenants at June 30, 2026 and through the date of the filing of this Form 10-Q.

On October 23, 2025, the Company entered into Amendment No. 2 (the “Amendment”) to the Credit Agreement, (as further amended by the Amendment, the “Amended Credit Agreement”), among the Company, the guarantors, the lenders party thereto and Truist Bank, as administrative agent.

Pursuant to the Amendment, the Credit Agreement was amended to, among other things: (i) extend the maturity date of the Revolving Credit Facility for participating Revolving Credit Lenders, as defined in the Amended Credit Agreement, in an aggregate principal amount of $452 million to the earlier of (x) October 27, 2027 and (y) the date of the termination in whole of the Revolving Credit Facility, pursuant to the terms of the Amended Credit Agreement, and (ii) effect certain other conforming changes and modifications consistent with the foregoing. The remaining $48 million under the Revolving Credit Facility that was not extended will continue to mature on the earlier of (x) October 27, 2026 and (y) the date of the termination in whole of the Revolving Credit Facility pursuant to the terms of the Amended Credit Agreement. The Company expects to refinance the Revolving Credit Facility before such maturity date.

We had a borrowed balance of $215 million under the Revolving Credit Facility at December 31, 2025. We borrowed an incremental net amount of $60 million during the six months ended June 30, 2026, bringing the balance under the Revolving Credit Facility to $275 million, and available credit for use of approximately $224 million as of June 30, 2026. We expect that Cash provided by operating activities will fund future interest payments on the Company's outstanding indebtedness.

Cash Flow Summary

Cash provided by operating activities decreased by $37.8 million for the six months ended June 30, 2026 versus the prior year period due primarily to a $67.0 million decrease in Net income partially offset by a $20.1 million favorable cash impact from disciplined working capital performance (comprised of Accounts and other receivables, Inventories, Accounts payable and Deferred income and customer advances) and the favorable cash impact of $15.8 million from Taxes receivable and Income taxes payable combined, driven by the timing of tax payments.

Cash used for investing activities decreased by $11.3 million for the six months ended June 30, 2026 versus the prior year period due primarily to disciplined spending on replacement maintenance while maintaining progress on growth and other enterprise programs.

Cash provided by financing activities increased by $15.1 million for the six months ended June 30, 2026 versus the prior year period due primarily to net borrowings of $60.0 million during the six months ended June 30, 2026 compared to net borrowings of $45.0 million during the prior year period.

Capital Expenditures

(Dollars in thousands, unless otherwise noted)

Our operations are capital intensive, requiring ongoing investments that have consisted, and are expected to continue to consist, primarily of capital expenditures required to maintain and improve equipment reliability, expand production output, further improve mix, yield and cost position, and comply with environmental and safety regulations.

The following table summarizes ongoing and expansion capital expenditures:

For 2026, we expect our total capital expenditures to be approximately $75 million to $95 million as discussed in the Liquidity section above.

Critical Accounting Policies and Estimates

The preparation of our Condensed Consolidated Financial Statements in accordance with U.S. GAAP is based on the selection and application of accounting policies that require us to make significant estimates and assumptions about the effects of matters that are inherently uncertain. We consider these accounting policies to be critical to the understanding of our Condensed Consolidated Financial Statements. For a full description of our critical accounting policies, refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our 2025 Form 10-K. While there have been no material changes to our critical accounting policies, or the methodologies or assumptions we apply under them since the filing of the 2025 Form 10-K, we continue to monitor such methodologies and assumptions.

Recent Accounting Pronouncements

See “Note 2. Recent Accounting Pronouncements” to the Condensed Consolidated Financial Statements included in Part I. Item 1 of this Form 10-Q.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

Our exposure to risk based on changes in interest rates during the six-month period ended June 30, 2026 relates primarily to the Revolving Credit Facility. The Revolving Credit Facility bears interest at floating rates. For variable rate debt, interest rate changes generally do not affect the fair market value of such debt assuming all other factors remain constant but do impact future earnings and cash flows. Accordingly, we may be exposed to interest rate risk on borrowings under the Credit Agreement.

Based on current borrowing levels at June 30, 2026, a 25-basis point fluctuation in interest rates for the six months ended June 30, 2026 would have resulted in an increase or decrease to our interest expense of approximately $0.7 million.

See “Note 2. Summary of Significant Accounting Policies” to the Consolidated Financial Statements included in Item 8 of our 2025 Form 10-K for a discussion relating to credit and market, commodity price and interest rate risk management.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

Management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives. Because there are inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud have been, or will be, detected.

Our Chief Executive Officer and Chief Financial Officer, with the assistance of other members of our management, conducted an evaluation of the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this quarterly report. Based upon such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective at a reasonable assurance level as of June 30, 2026, the end of the period covered by this quarterly report.

Changes in Internal Control over Financial Reporting

Management has not identified any change in the Company's internal control over financial reporting that occurred during the quarter ended June 30, 2026 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we are involved in litigation relating to claims arising outside of the ordinary course of our business operations. We are not a party to, and, to our knowledge, there are no pending claims or actions against us, the ultimate disposition of which could be expected to have a material adverse effect on our consolidated financial position, results of operations or operating cash flows.

ITEM 1A. RISK FACTORS

There have been no material changes to our risk factors as previously disclosed in Item 1A of Part I of the 2025 Form 10-K, which are hereby incorporated by reference.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On May 4, 2018, the Company announced that the Board authorized a share repurchase program of up to $75 million of the Company’s common stock. On February 22, 2019, the Company announced that the Board authorized a share repurchase program of up to an additional $75 million of the Company's common stock, which was in addition to the remaining capacity authorized under the May 2018 share repurchase program. On February 17, 2023, the Company announced that the Board authorized a share repurchase program of up to an additional $75 million of the Company's common stock, which was in addition to the remaining capacity available under the previously approved share repurchase program. Repurchases may be made from time to time on the open market in accordance with Rule 10b-18 of the Exchange Act, including through the use of trading plans intended to qualify under Rule 10b5-1 of the Exchange Act. The size and timing of these repurchases will depend on pricing, market and economic conditions, legal and contractual requirements and other factors. The repurchase program has no expiration date and may be modified, suspended or discontinued at any time.

The below table sets forth the repurchases of Company common stock, by month, for the quarter ended June 30, 2026. During the quarter ended June 30, 2026, no additional shares were purchased under our share repurchase program and 5,591 shares were withheld to cover tax withholding obligations in connection with the vesting of equity awards.

ISSUER PURCHASES OF EQUITY SECURITIES

(1) Total number of shares purchased includes 5,591 shares covering tax withholding obligations in connection with the vesting of equity awards

During the period July 1, 2026 through July 31, 2026, no additional shares were repurchased for tax withholding obligations or under the currently authorized repurchase program.

ITEM 5. OTHER INFORMATION

Insider Rule 10b5-1 Trading Plans

On June 9, 2026, Rachael Ryan, the Company’s Vice President, Controller and Chief Accounting Officer, entered into a trading plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act. The plan provides for the sale of 3,880 shares of common stock. Ms. Ryan’s plan will expire on December 31, 2027.

ITEM 6. EXHIBITS