Overview of the Company’s Financial Performance

The report provides an overview of the financial performance of the company for the three months ended March 31, 2025 compared to the same period in 2024. Some key highlights:

• Sales decreased by 1.4% compared to the prior year period, driven by negative foreign exchange impact partially offset by favorable volume and mix.
• Gross profit increased by $15.5 million, driven by manufacturing and purchasing savings through lean initiatives and savings from prior year restructuring, partially offset by higher inflation and tariff expenses.
• Selling, administration and engineering expenses decreased as a percentage of sales, primarily due to lower compensation-related costs from prior year restructuring.
• Restructuring charges increased by $1.0 million, primarily related to employee severance and other costs in the Sealing Systems segment.
• Other income increased by $12.5 million, driven by income from royalty settlements and favorable foreign currency impact.
• Income tax expense decreased compared to the prior year period, primarily due to the geographic mix of pre-tax earnings and the inability to record tax benefits for losses in certain jurisdictions.

The report also provides segment-level results, showing that both the Sealing Systems and Fluid Handling Systems segments saw improvements in adjusted EBITDA, driven by favorable volume/mix, foreign exchange, and cost savings.

Liquidity and Capital Resources

The report discusses the company’s liquidity position and sources of funding, including cash flows from operations, cash on hand, the ABL Facility, and receivables factoring. It notes that the company is actively preserving cash and enhancing liquidity, including managing capital expenditures.

The report outlines the company’s cash flow activities:

• Operating cash flow was negative $14.9 million, an improvement from negative $14.2 million in the prior year period.
• Investing cash flow was negative $15.2 million, an improvement from negative $16.7 million in the prior year period, due to proceeds from a 2024 divestiture.
• Financing cash flow was negative $2.5 million, compared to negative $1.2 million in the prior year period, primarily due to tax withholding payments related to share-based compensation.

The report also discusses the company’s share repurchase program, with $98.7 million of authorization remaining as of March 31, 2025.

Outlook and Risks

The report notes that the company’s outlook is subject to various risks and uncertainties, including:

• Volatility in the Brazilian currency and softening global demand
• Ongoing changes in U.S. trade policy and tariffs
• Inflationary pressures on raw materials
• General economic and industry conditions

Despite these challenges, the company believes its cash flows, liquidity sources, and cost optimization initiatives will enable it to meet its funding requirements in the foreseeable future.