Resolute Holdings Management, Inc.: Form 10-Q for the period ended Mar 31, 2026

The following discussion and analysis of our consolidated financial condition and results of operations should be read in conjunction with the Company’s audited consolidated financial statements and related notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on March 12, 2026 (“2025 Annual Report”). The following discussion contains forward-looking statements that reflect the Company’s plans, estimates and beliefs. The Company’s actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere particularly in the sections titled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” included in this Quarterly Report on Form 10-Q.

Overview

Resolute Holdings Management, Inc. (“Resolute Holdings”) provides operating management services to generate recurring, long-duration management fees from GPGI Holdings L.L.C. (formerly CompoSecure Holdings, L.L.C) (together with its subsidiaries, “GPGI Holdings”) and Husky Holdings LLC (together with its subsidiaries, “Husky Holdings”) and other companies it may manage in the future both in the United States and internationally, to generate recurring, long-duration management fees. Resolute Holdings applies a differentiated approach of value creation through the systematic deployment of the Resolute Operating System to drive performance at businesses it manages with the intention of creating value at both the underlying managed businesses and at Resolute Holdings. Resolute Holdings also applies its M&A and capital markets expertise to drive inorganic growth of its managed businesses.

In accordance with ASC 810 and due to the terms of the CompoSecure Management Agreement, as defined below, Resolute Holdings (together with GPGI Holdings and its subsidiary, Husky Holdings, the “Company”) is required to consolidate GPGI Holdings because it is a variable interest entity (“VIE”) of which Resolute Holdings is deemed to be the primary beneficiary. Resolute Holdings does not own any equity interests or common stock in GPGI Holdings, Husky Holdings, or GPGI, Inc. (formerly CompoSecure, Inc.) (“GPGI”).

GPGI, through its wholly owned subsidiaries, GPGI Holdings and Husky Holdings, is a permanent capital platform designed to acquire, own, and scale high-quality businesses that hold “great positions in good industries.” The Resolute Holdings and GPGI structure is designed to eliminate the constraints found in traditional corporate structures to attract great operators to lead and manage each business within GPGI. The leaders of each operating business benefit from the support and experience of Resolute Holdings, allowing them to focus on operating their respective businesses without the external responsibilities associated with managing a public company. GPGI has evolved from a single operating business into a diversified permanent capital platform that is comprised of two market leading businesses, CompoSecure and Husky, each wholly owned by GPGI Holdings and operating under the CompoSecure, L.L.C. (together with its subsidiaries, “CompoSecure LLC”) and Husky Holdings legal entities, respectively.

CompoSecure, founded in 2000, and headquartered in Somerset, New Jersey, is the global leader in the design and manufacturing of premium metal payment cards and secure authentication solutions. The company pioneered the use of metal in payment cards dating back to 2003 and combines industry-leading innovation, advanced materials science, and proprietary manufacturing processes to deliver highly differentiated products to its customers. CompoSecure’s metal payment cards integrate a metal core with EMV® (acronym representing Europay, Mastercard, and Visa) chips, magnetic stripes, and contactless payment technology, while meeting stringent certification requirements from global payment networks. CompoSecure’s metal cards deliver a distinctive weight, a premium aesthetic, and enhanced durability for consumers, while its issuer customers benefit from the ability to attract higher-value consumers, reduce cardholder churn, and unlock higher customer spend relative to traditional plastic cards.

Husky, founded in 1953, and headquartered in Bolton, Ontario, is the leading global manufacturer of highly engineered injection molding equipment and aftermarket tooling and services. Husky has focused on developing highly technical precision technologies instrumental in the delivery of food, beverages, medical devices, and other applications including general packaging and closures, thinwall packaging, and consumer products. Husky delivers its integrated capabilities through a combination of systems, tooling, and aftermarket parts and services to create value for customers throughout the entire lifecycle of its solutions.

Recent Developments

On February 28, 2025, GPGI distributed all shares of common stock of its then-wholly owned subsidiary, Resolute Holdings, on a pro rata basis to the holders of GPGI’s Class A Common Stock as of the February 20, 2025 record date (“Spin-Off”). Each stockholder of record who held shares of GPGI Class A Common Stock as of the close of business on February 20, 2025, received one share of Resolute Holdings common stock for every twelve shares of GPGI Class A Common Stock then held. On February 28, 2025, Resolute Holdings started trading regular-way on The Nasdaq Stock Market LLC under the ticker symbol “RHLD”. On September 23, 2025, Resolute Holdings transferred the listing of its common stock to the New York Stock Exchange where it continues to trade under the ticker symbol “RHLD”. On March 2, 2026, Resolute Holdings redomiciled its state of incorporation from the State of Delaware to the State of Nevada.

In connection with the completion of the Spin-Off, Resolute Holdings entered into a management agreement with GPGI Holdings (the “CompoSecure Management Agreement”), pursuant to which Resolute Holdings is responsible for managing the day-to-day business and operations and overseeing the strategy of GPGI Holdings and its controlled affiliates. Due to the execution of and the terms of the CompoSecure Management Agreement, Resolute Holdings is required to consolidate GPGI Holdings for financial reporting purposes.

Pursuant to the CompoSecure Management Agreement, GPGI Holdings pays Resolute Holdings a quarterly management fee (the “CompoSecure Management Fee”), payable in arrears, in a cash amount equal to 2.5% of GPGI Holdings’ last 12 months’ Adjusted EBITDA, as defined in the Management Agreement, measured for the period ending on the fiscal quarter then ended (“CompoSecure Management Agreement Adjusted EBITDA”). CompoSecure Management Agreement Adjusted EBITDA reflects a) GPGI Holdings’ earnings before interest, taxes, depreciation, depletion and amortization, extraordinary losses and expenses, one-time and non-recurring expenses, and the CompoSecure Management Fee, less b) Parent Allocated Expense, as defined in the CompoSecure Management Agreement. CompoSecure Management Agreement Adjusted EBITDA is calculated without duplication of Husky Holdings’ Adjusted EBITDA and its share of Parent Allocated Expense (“Husky Management Agreement Adjusted EBITDA”). GPGI Holdings is also required to reimburse Resolute Holdings and its affiliates for Resolute Holdings’ documented costs and expenses incurred on behalf of GPGI Holdings other than those expenses related to Resolute Holdings’ or its affiliates’ personnel who provide services to GPGI Holdings under the CompoSecure Management Agreement. Resolute Holdings will determine, in its sole and absolute discretion, whether a cost or expense will be borne by Resolute Holdings or by GPGI Holdings.

The CompoSecure Management Agreement has an initial term of 10 years and shall automatically renew for successive ten-year terms unless terminated in accordance with its terms. Resolute Holdings and GPGI Holdings may each terminate the CompoSecure Management Agreement upon the occurrence of certain other limited events, and in connection with certain of these limited events, Resolute Holdings has the right to require GPGI Holdings to pay a termination fee, which may be paid in cash, shares of common stock of GPGI or a combination of cash and stock. The CompoSecure Management Agreement also provides for certain indemnification rights in Resolute Holdings’ favor, as well as certain additional covenants, representations and warranties.

On November 2, 2025, GPGI entered into a Share Purchase Agreement with entities affiliated with Platinum Equity LLC (“Platinum Equity”) pursuant to which GPGI would combine with Husky Technologies Limited for an enterprise value of approximately $4,976.0, financed with debt, cash, and shares of GPGI’s Class A Common Stock (“Husky Transaction”). The Husky Transaction was completed on January 12, 2026. In conjunction with the closing of the Husky Transaction, Husky Holdings and Resolute Holdings entered into a management agreement (the “Husky Management Agreement”) on substantially identical terms as the CompoSecure Management Agreement, pursuant to which Resolute Holdings is responsible for managing the day-to-day business and operations and overseeing the strategy of Husky Holdings and its controlled affiliates in exchange for payment of a quarterly management fee (“Husky Management Fee”), which is calculated without duplication of CompoSecure Management Agreement Adjusted EBITDA.

Economic Conditions

As a result of the consolidation of GPGI Holdings, the Company’s business, financial condition and results of operations are subject to impacts from trends and developments impacting the business of GPGI Holdings, including but not limited to, economic tensions, geopolitical conflicts and changes in international trade policies, including new tariffs introduced by the U.S. last year that could impact the market for our products and services. In particular, a portion of the raw materials used by us to manufacture our products are obtained, directly or indirectly, from companies located outside of the United States. Ongoing geopolitical tensions and hostilities in the Middle East have contributed to higher global oil prices and disruptions in international shipping, which have increased our shipping and logistics costs as well as the costs of certain raw materials. These conditions have increased costs for our customers and caused existing customers to pause or delay orders and prospective customers to defer new projects. These factors have impacted our financial condition and results of operations, and if these circumstances create an environment in which it is challenging for us to predict future operating results. If these uncertain business, macroeconomic or political conditions continue or further decline, our business, financial condition and results of operations could be further materially adversely affected.

Key Components of Results of Operations

Management’s discussion and analysis of the Company’s financial condition and results of operations for the three months ended March 31, 2026 and March 31, 2025 only includes the results of Husky Holdings from the completion of the Husky Transaction on January 12, 2026.

Net Sales

Net sales reflect the Company’s revenue generated from the sale of products and services by GPGI Holdings’ businesses, CompoSecure and Husky, as management fee revenue at Resolute Holdings is eliminated in consolidation. Net sales at CompoSecure primarily include the design and manufacturing of metal cards, including contact and dual interface cards and cards containing Arculus authentication capability, and direct-to-consumer sales of Arculus key cards through third-party e-commerce platforms. Net sales at Husky include the sale of injection molding machines, molds, hot runners, temperature controllers, auxiliary equipment, and related aftermarket products; the design and manufacture of medical molds; service offerings including startup, testing, installation, training, ongoing monitoring of machines, and extended protection plans. Net sales include the effect of discounts and allowances which consist primarily of volume-based rebates.

Cost of Sales

The Company’s cost of sales comprises GPGI Holdings’ direct and indirect costs related to manufacturing products and providing related services. Product costs include the cost of raw materials and supplies, including various metals; the cost of labor; equipment and facilities; operational overhead; depreciation and amortization; leases and rental charges; shipping and handling; and freight and insurance costs. Cost of sales can be impacted by many factors, including volume, operational efficiencies, procurement costs, and promotional activity.

Gross Profit and Gross Margin

The Company’s gross profit comprises GPGI Holdings’ net sales less cost of sales, and its gross margin represents gross profit as a percentage of its net sales.

Operating Expenses

The Company’s operating expenses are primarily comprised of selling, general, and administrative expenses at Resolute Holdings and GPGI Holdings, which generally consist of personnel-related expenses for each company’s corporate, executive, finance, information technology, and other administrative functions, and expenses for outside professional services, including legal, audit and accounting services, as well as expenses for facilities, depreciation, amortization, travel, sales and marketing. Operating expenses also include foreign currency gains and losses.

Income from Operations and Operating Margin

Income from operations consists of the Company’s gross profit less its operating expenses. Operating margin is income from the Company’s operations as a percentage of its net sales.

Other Income (Expense)

Other income (expense) primarily consist of interest expense net of any interest income and deferred financing costs and loss from extinguishment of debt.

Net Income (Loss)

Net income (loss) consists of the Company’s income from operations, less other expenses and income tax provision or benefit.

Results of Operations

Three months ended March 31, 2026 vs. three months ended March 31, 2025

The following table presents the Company’s results of operations for the periods indicated:

(in thousands)

Net Sales

(in thousands)

The Company’s net sales for the quarter ended March 31, 2026 increased $303.9 million to $407.8 million compared to $103.9 million for the quarter ended March 31, 2025. The increase was driven by the acquisition of Husky, along with an increase in sales at CompoSecure, which were up 26%. Resolute Holdings’ net sales increased due to the execution of the Husky Management Agreement, higher organic Adjusted EBITDA at CompoSecure, and a full quarter of fees from the CompoSecure Management Agreement versus the prior year.

Gross Profit and Gross Margin

The Company’s gross profit for the quarter ended March 31, 2026 increased $101.0 million to $155.6 million compared to $54.5 million for the quarter ended March 31, 2025 primarily due to the acquisition of Husky. The gross profit margin decreased to 38%, compared to 53% in the prior year due to Husky having lower gross margins than CompoSecure, partially offset by higher margins at CompoSecure driven by higher volumes and improved operational execution from the implementation of the Resolute Operating System.

Operating Expenses

The Company’s selling, general and administrative expenses increased $133.7 million to $162.6 million for the quarter ended March 31, 2026 compared to $28.9 million for the quarter ended March 31, 2025 due primarily to the acquisition of Husky. The Company recognized a $1.2 million foreign currency gain.

Income (Loss) from Operations and Operating Margin

Income (loss) from operations for the quarter ended March 31, 2026 decreased $31.4 million to $(5.8) million compared to $25.6 million for the quarter ended March 31, 2025. The decrease was primarily attributable to intangible amortization and higher expenses associated with the acquisition of Husky, partially offset by improved operating performance at CompoSecure. Operating margin for the quarter ended March 31, 2026 decreased by 26%, to (1)%, compared to 25% for the quarter ended March 31, 2025 due to the acquisition of Husky, partially offset by higher margins at CompoSecure.

Other Income (Expense)

Other expense for the quarter ended March 31, 2026 increased $134.2 million, to $136.6 million, compared to $2.4 million for the quarter ended March 31, 2025. The increase in other expense was primarily due to debt refinancing costs and an increase in interest expense due to an increase in debt from the acquisition of Husky.

Income Tax Expense

The Company’s income tax benefit for the quarter ended March 31, 2026 was $49.8 million compared to an expense of $0.6 million for the quarter ended March 31, 2025 due to the loss before income taxes primarily from transaction debt related expenses associated with the acquisition of Husky.

Segments

The following table presents the Company’s results of operations by reportable segment for the three months ended March 31, 2026 and March 31, 2025:

($ in millions)

($ in millions)

The following tables present the balance sheets of Resolute Holdings, GPGI Holdings, and the Company as of March 31, 2026 and December 31, 2025:

($ in millions)

($ in millions)

Use of Non-GAAP Financial Measures

This Quarterly Report on Form 10-Q includes certain non-GAAP financial measures that are not prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and that may be different from non-GAAP financial measures used by other companies. The Company believes Fee-Related Earnings and Fee-Related Earnings per share are useful to investors in evaluating the Company’s financial performance. Fee-Related Earnings is calculated based on net income (loss) attributable to common stockholders of Resolute Holdings, and adding back (a) equity-based compensation under GPGI’s equity plan, the CompoSecure, Inc. 2021 Incentive Equity Plan, as amended, (the “GPGI Equity Plan”) and (b) the tax impact of consolidating GPGI Holdings, less the pre-tax impact of such adjustments at Resolute Holdings’ estimated effective tax rate of 32.5%. We believe that these non-GAAP financial measures represent the most useful presentation to investors of the Company that is attributable to Resolute Holdings common stockholders. Fee-Related Earnings and Fee-Related Earnings per share should not be considered as measures of financial performance under U.S. GAAP, and the items excluded from Fee-Related Earnings and Fee-Related Earnings per share are significant components in understanding and assessing the Company’s financial performance. Accordingly, these key business metrics have limitations as an analytical tool. They should not be considered as an alternative to net income or any other performance measures derived in accordance with U.S. GAAP or as an alternative to cash flows from operating activities as a measure of the Company’s performance, and may be different from similarly titled non-GAAP measures used by other companies.

The following unaudited table presents the reconciliation of U.S. GAAP net income attributable to common stockholders to non-GAAP Fee-Related Earnings and Fee-Related Earnings per share for the three months ended March 31, 2026:

($ in millions except per share figures)

(1) Equity-based compensation required to be reported by the Company related to awards issued under the GPGI Equity Plan. Equity granted under the GPGI Equity Plan relates to GPGI Class A common stock and has no impact on Resolute Holdings’ common stock outstanding.

(2) The tax impact of treating Resolute Holdings and GPGI Holdings, including Husky Holdings, as a consolidated entity under ASC 740, to arrive at the Resolute Holdings income tax expense if presented on a non-consolidated basis.

(3) Tax-effect of pre-tax adjustments at a 32.5% estimated effective tax rate for 2026. Only applied to those adjustments that would impact Resolute Holdings’ taxes. Equity-based compensation expense under the GPGI Equity Plan is expensed for tax purposes at GPGI and not Resolute Holdings.

Critical Accounting Policies and Estimates

Critical accounting policies are detailed in the 2025 Annual Report and reference is made to Note 2 of the unaudited condensed consolidated financial statements in this Quarterly Report on Form 10-Q for critical accounting policies adopted since the 2025 Annual Report, including under the headings “Reclassifications”, “Foreign Currency Translation and Transactions”, “Restricted Cash”, “Derivatives and Hedging Activities”, “Business Combinations”, and “Revenue Recognition”.

New Accounting Pronouncements

Reference is made to Note 2 of the unaudited condensed consolidated financial statements in this Quarterly Report on Form 10-Q for information concerning recent accounting pronouncements since the filing of the 2025 Annual Report.

Liquidity and Capital Resources

Resolute Holdings’ primary sources of liquidity are revenue derived from the management agreements with its managed companies, its existing cash and cash equivalents balances, short-term investments, and borrowings on Resolute Holdings’ revolving credit facility. GPGI Holdings’ primary sources of liquidity are its existing cash and cash equivalents, short-term investments, cash flows from operations, and borrowings on the GPGI Holdings term loan, revolving credit facility, and senior secured notes as detailed in Note 11 of the unaudited condensed consolidated financial statements in this Quarterly Report on Form 10-Q. The Company’s primary cash requirements at Resolute Holdings and GPGI Holdings include operating expenses, debt service payments (principal and interest), and capital expenditures (including property and equipment and software).

As of March 31, 2026, the Company had cash and cash equivalents and restricted cash of $120.1 million, consisting of $5.0 million at Resolute Holdings and $115.1 million at GPGI Holdings. The Company had debt principal outstanding of $40.0 million at Resolute Holdings and $2,175.0 million at GPGI Holdings. As of December 31, 2025, the Company had cash and cash equivalents of $161.4 million, consisting of $4.4 million at Resolute Holdings and $157.0 million at GPGI Holdings. As of December 31, 2025, the Company had short-term investments comprised of US treasury bills of $44.1 million, consisting of $3.1 million at Resolute Holdings and $41.1 million at GPGI Holdings. As of December 31, 2025, the Company had debt principal outstanding of $186.3 million at GPGI Holdings.

On January 12, 2026, following the closing of the Husky Transaction, GPGI Holdings repaid in full all outstanding obligations under its credit agreement then in place and assumed approximately $2.8 billion of debt from Husky and entered into a $350 million delayed draw term loan. On January 14, 2026, GPGI Holdings refinanced the assumed $3.1 billion of debt and entered into a new credit facility (the “GPGI Holdings Credit Facility”) consisting of a $1.2 billion term loan maturing in 2033 and a $400.0 million revolving credit facility maturing in 2031, and also issued $900.0 million in 5.625% Senior Secured Notes due 2033 (“GPGI Holdings Senior Notes”). On February 20, 2026, Resolute Holdings refinanced its existing $5.0 million revolving credit facility with a new $30.0 million revolving credit facility maturing in February 2031 (as amended, the “Resolute Credit Facility”). The Resolute Credit Facility was subsequently increased to $40.0 million during March 2026. On May 7, 2026, Resolute Holdings entered into a second amendment to the Resolute Credit Facility that provides for new term loan commitments in an aggregate principal amount of $60.0 million and increases the rate of interest for revolving and term loan borrowings. See Note 21 of the unaudited condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

Resolute Holdings and GPGI Holdings are distinct legal entities and operating businesses that must separately maintain sufficient liquidity independent of each other. Debt at each entity is non-recourse to the other. Resolute Holdings is dependent on payment of the management fees from its managed companies to maintain sufficient liquidity. The Company believes that the cash flows from operations and available cash and cash equivalents and short-term investments, as well as the availability of a $40.0 million revolving credit facility at Resolute Holdings, are sufficient to meet the liquidity needs of Resolute Holdings for at least the next 12 months from the date of filing of this Form 10-Q. The Company believes that the cash flows from operations and available cash and cash equivalents and short-term investments, as well as the availability of a $400.0 million revolving credit facility at GPGI Holdings, are sufficient to meet the liquidity needs of GPGI Holdings, including the repayment of its outstanding debt, for at least the next 12 months from the date of filing of this Form 10-Q.

The Company anticipates that to the extent Resolute Holdings requires additional liquidity, it shall do so through borrowings on the Resolute Credit Facility, the incurrence of other indebtedness, or a combination thereof and offering of its securities in capital markets. The Company anticipates that to the extent GPGI Holdings requires additional liquidity, it shall do so through borrowings on its revolving credit facility, the incurrence of other indebtedness, or a combination thereof and offering of securities in capital markets. The Company cannot be assured that each of Resolute Holdings and GPGI Holdings will be able to obtain this additional liquidity on reasonable terms, or at all. Additionally, the liquidity of Resolute Holdings and GPGI Holdings and their ability to meet their respective obligations and fund their capital requirements are also dependent on their respective future financial performance, which is subject to general economic, financial and other factors that are beyond its control. Accordingly, the Company cannot be assured that its business will generate sufficient cash flows from operations or that future borrowings will be available from additional indebtedness or otherwise to meet its liquidity needs. Although the Company has no specific current plans to do so, if the Company decides to pursue one or more significant acquisitions, the Company may incur additional debt to finance such acquisitions.

Additional information regarding the Company’s debt is included in Note 11 of the unaudited condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

Net Cash Provided by (Used in) Operations

Cash used in the Company’s operating activities for the three months ended March 31, 2026 was $(116.8) million compared to cash provided by operating activities of $18.4 million during the three months ended March 31, 2025. The decrease in cash provided by operating activities of $135.2 million was primarily attributable to seasonally lower earnings at Husky and the payment of transaction costs, including debt breakage fees, associated with the acquisition of Husky.

Net Cash Used in Investing Activities

Cash used in the Company’s investing activities for the three months ended March 31, 2026 was $632.6 million primarily due to the acquisition of Husky, capital expenditures of $7.4 million, and capitalized software expenditures of $4.3 million partially offset the maturities and sales of short-term investments of $44.1 million.

Net Cash Provided by ( Used in) Financing Activities

Cash provided by the Company’s financing activities for the three months ended March 31, 2026 was $711.0 million compared to cash used in the Company’s financing activities for the three months ended March 31, 2025 of $17.8 million. Cash provided by financing activities for the three months ended March 31, 2026 primarily related to cash contributions by GPGI of $2,016.8 million and proceeds from the issuance of debt net of discounts of $2,563.5, partially offset by debt repayment of $3,309.1, share repurchases of Resolute Holdings common stock of $38.0 million, debt issuance costs of $38.2 million, and $26.6 million of payments for taxes related to net share settlement of GPGI equity awards. Cash used in financing activities for the three months ended March 31, 2025 primarily related to payments for taxes related to net share settlement of GPGI equity awards of $15.3 million and repayment of scheduled principal payments of debt of $2.5 million.

Contractual Obligations

A summary of our minimum contractual obligations related to our material outstanding contractual commitments is included in the 2025 Annual Report. Our long-term contractual obligations include commitments and estimated purchase obligations entered into in the normal course of business. As of March 31, 2026, the Company has purchase commitments with suppliers of approximately $43.3, including $30.9 in 2026.

Financing

Resolute Holdings is a party to the Resolute Credit Facility and GPGI Holdings is a party to the GPGI Holdings Credit Facility and the GPGI Holdings Senior Notes. For a more complete description of the Company’s debt obligations, see Note 11 of the unaudited condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

Interest Rate Risk

In addition to existing cash balances, short-term investments, and cash provided by operating activities, the Company uses variable rate debt to finance its operations. The Company is exposed to interest rate risk on these debt obligations. As of March 31, 2026, the Company had $1,275.0 million in debt outstanding under the GPGI Holdings Credit Facility, all of which was variable rate debt.

The Company performed a sensitivity analysis based on the principal amount of debt outstanding as of March 31, 2026. In this sensitivity analysis, the change in interest rates is assumed to be applicable for an entire year. An increase or decrease of 100 basis points in the applicable interest rate would cause an increase or decrease in interest expense on debt outstanding of approximately $12.1 million on an annual basis.

Foreign Exchange Risk

The Company uses foreign currency forward contracts as cash flow hedges of forecasted Canadian-dollar-denominated expenditures. As of March 31, 2026, the notional amount of foreign currency forward contracts related to Canadian dollar hedges for the years 2026, 2027, and 2028 were $180.4 million, $128.8 million, and $16.4 million, respectively, which were hedged at an average rate of 1.365, 1.355, and 1.342 Canadian dollar per U.S. dollar, respectively. A 1% change in the value of the Canadian dollar against the U.S. dollar would increase or decrease other comprehensive income (loss) by $2.2.

Evaluation of Disclosure Controls and Procedures

We designed our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) to provide reasonable assurance that information required to be disclosed by us in reports we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures.

Under the supervision of and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures as of March 31, 2026. Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures as of March 31, 2026 were functioning effectively to provide reasonable assurance that the information required to be disclosed by us in reports filed under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding disclosures.

A control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. We do not expect that our disclosure controls and procedures or our internal control over financial reporting are able to prevent with certainty all errors and all fraud.

Changes in Internal Control Over Financial Reporting

During the three months ended March 31, 2026, the Company continued the implementation of corporate and governance functions in order to meet the regulatory requirements of a standalone public company, such as external reporting, treasury, stock administration, and internal audit subsequent to the completion of the Spin-Off on February 28, 2025. As a result of the Husky Transaction, the Company has begun integrating the Husky business into the Company’s financial reporting and internal control environment. Other than those discussed in the preceding sentences, there have been no changes in our internal control over financial reporting during the quarter ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Summary of Risk Factors

Other than as described herein, there have been no material changes to the Risk Factors described in Part I Item 1A. “Risk Factors” in our 2025 Annual Report.

Global economic conditions, including geopolitical conflict and instability, give rise to operating and market risk exposure.

Economic conditions around the world, and in certain industries and geographic regions in which the Company does business, impact sales price and volume and the efficacy of the Company's supply chain. For example, long-term market uncertainty, economic impacts driven by trade policies and inflationary pressures, and higher input costs have reduced demand for the Company's products and led to shipping and payment delays. Adverse economic conditions have also caused supply chain constraints. These factors have had and are continuing to have a negative impact on the Company's results of operations. Additionally, political conditions or tensions; war, invasion or conflict, including new and ongoing conflicts in the Middle East, such as the recent conflict between the United States, Israel and Iran, which began in February 2026 and has resulted in volatility and disruption of the global energy market and increased prices for raw materials, and the ongoing conflict between Russia and Ukraine; terrorism; epidemics; pandemics; or political instability in the geographic regions or industries in which the Company operates or sells its products, have created and could continue to create volatility in global demand and the timing of orders for the Company's products, and have disrupted and could continue to disrupt the supply chains, assets or operations of the Company and/or its joint ventures. The situation remains fluid and the ongoing conflict may result in additional economic sanctions or other measures. These factors have had, and may continue to have, negative impacts on the Company’s financial condition, results of operations and cash flows. These impacts have included and may continue to include decreased sales; supply chain and logistics disruptions; volatility in foreign exchange rates and interest rates; inflationary pressures on and availability of raw materials and energy; and heightened cybersecurity threats. The intensity and duration of conflicts in the Middle East, including the recent conflict between the United States, Israel and Iran, and the potential for the expansion of hostilities in the region, are difficult to predict and could further disrupt the Company's supply chains and operations, which could have a negative impact on the Company's results of operations. In addition, volatility and disruption of financial markets have limited and could continue to limit the ability of the Company’s customers and suppliers to obtain adequate financing to maintain operations, which could result in a decrease in sales volume and have a negative impact on the Company’s results of operations. If the Company fails to effectively manage such risks, it could have a negative impact on its results of operations.