Crimson Wine Group, Ltd: Form 10-Q for the period ended Sep 30, 2025

Statements included in this Quarterly Report on Form 10-Q (this “Report”) may contain forward-looking statements. See “Cautionary Statement for Forward-Looking Information” below. The following should be read in conjunction with the Management’s Discussion and Analysis of Financial Condition and Results of Operations and the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 as filed with the SEC (the “2024 Report”) on March 18, 2025.

Quantities or results referred to as “current quarter” and “current three and nine-month period” refer to the three and nine months ended September 30, 2025.

Cautionary Statement for Forward-Looking Information

This Management’s Discussion and Analysis of Financial Condition and Results of Operations and other parts of this Report contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The unaudited interim condensed consolidated financial statements, which include results of Crimson Wine Group, Ltd. and all of its subsidiaries, collectively known as “we”, “Crimson”, “our”, “us”, or “the Company”, have been prepared in accordance with accounting principles generally accepted in the U.S. for interim financial information and with the general instruction for quarterly reports filed on Form 10-Q and Article 8 of Regulation S-X. All statements, other than statements of historical fact, regarding the Company’s strategy, future operations, financial position, prospects, plans, opportunities, and objectives constitute “forward-looking statements.” The words “may,” “will,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “potential,” or “continue” and similar types of expressions identify such statements, although not all forward-looking statements contain these identifying words. Forward-looking statements include those relating to the Company’s financial condition, results of operations, plans, objectives, future performance, and business. These statements are based upon information that is currently available to the Company and its management’s current expectations speak only as of the date hereof and are subject to risks and uncertainties. The Company expressly disclaims any obligation, except as required by federal securities laws, or undertaking to update or revise any forward-looking statements contained herein to reflect any change or expectations with regard thereto or to reflect any change in events, conditions, or circumstances on which any such forward-looking statements are based, in whole or in part. The Company’s actual results may differ materially from the results discussed in or implied by such forward-looking statements.

Risks that could cause actual results to differ materially from any results projected, forecasted, estimated, or budgeted or that may materially and adversely affect the Company’s actual results include, but are not limited to, those discussed in Part I, “Item 1A. Risk Factors” of the 2024 Report and in Part II, “Item 1A. Risk Factors” of this Report. Readers should carefully review the risk factors described in the 2024 Report and this Report, and in other documents that the Company files from time to time with the SEC.

Overview of Business

The Company generates revenues from sales of wine to wholesalers and direct to consumers, sales of bulk wine and grapes, custom winemaking services, special event fees, tasting fees and other non-wine retail sales such as merchandise.

The Company’s wines are primarily sold to wholesale distributors, who then sell to retailers and restaurants. The Company sells wine (through distributors and directly) to restaurants, bars, and other hospitality locations (“On-Premise”). The Company also sells wine (through distributors and directly) to supermarkets, grocery stores, liquor stores, and other chains, third-party Ecommerce and independent stores (“Off-Premise”). As permitted under federal, state and local regulations, the Company has increased its emphasis on generating revenue from direct sales to consumers, which occur through wine clubs, at the wineries’ tasting rooms, and through the Ecommerce channel. Direct sales to consumers are more profitable for the Company as it is able to sell its products at a price closer to retail prices rather than the wholesale price sold to distributors. From time to time, the Company may sell grapes or bulk wine because the grapes or wine do not meet the quality standards for its products, market conditions have changed resulting in reduced demand for certain products, or because the Company may have produced more of a particular varietal than it can use. When these sales occur, they may result in a loss.

Cost of sales includes grape and bulk wine costs, whether purchased or produced from the Company’s controlled vineyards, crush costs, winemaking and processing costs, bottling, packaging, warehousing, and shipping and handling costs. For the Company’s produced grapes, grape costs include annual farming costs, harvest costs, and depreciation of vineyard assets. For wines that age longer than one year, winemaking and processing costs continue to be incurred and capitalized to the cost of wine, which can range from three to 36 months. Reductions to the carrying value of inventories are also included in cost of sales.

As of September 30, 2025, wine inventory included approximately 0.9 million cases of bottled wine and bulk wine, both in various stages of the aging process. Cased wine is expected to be sold over the next 12 to 36 months and generally before the release date of the next vintage.

Seasonality

As discussed in Part I, “Item 1. Business” of the 2024 Report, the wine industry in general historically experiences seasonal fluctuations in revenues and net income. The Company typically has lower sales and net income during the first quarter and higher sales and net income during the fourth quarter due to seasonal holiday buying as well as wine club shipment timing. The Company anticipates similar trends in the future.

Shipments versus Depletions

Within the wholesale business, shipments refer to the quantity of wine moved from the producer to the distribution channel (such as wholesale distributors and retailers), while depletions represent the sales of wine to end consumers at the retail level. Essentially, shipments are the initial transfer of wine, and depletions measure how much of that wine is actually purchased by end consumers. The Company sells its wine to wholesale distributors under purchase orders. The Company transfers control and recognizes revenue for these orders upon shipment of the wine from the Company’s third-party warehouse facilities. Therefore, shipment demand from the wholesale distributors may not necessarily align with consumer demand due to a timing element and inventory management ambitions at the distributor and retail levels. See Note 2, “Revenue,” of this Report for additional information on the Company’s revenue recognition policy.

Climate Conditions and Extreme Weather Events

Winemaking and grape growing are subject to a variety of agricultural risks. Various diseases, pests, natural disasters, and certain climate conditions can materially and adversely affect the quality and quantity of grapes available to Crimson thereby materially and adversely affecting the supply of Crimson’s products and its profitability. Given the risks presented by climate conditions and extreme weather, Crimson regularly evaluates impacts of climate conditions and weather on its business to disclose any material impacts on the business. Along with various insurance policies currently in place, Crimson has made investments to improve its climate resilience and strives to effectively manage grape sourcing to help mitigate the impact of climate change and unforeseen natural disasters. Crimson continues to complete upgrades to its facilities to improve water and energy resiliency and fire mitigation measures with plans to advance these initiatives over the next several years. However, we cannot guarantee that such efforts will successfully mitigate any damage from a catastrophic event. See “We may not be fully insured against risk of catastrophic loss to wineries, production facilities or distribution systems as a result of earthquakes, fires, floods or other events, some of which may be exacerbated by climate change, which may cause us to experience a material financial loss” under Part I, “Item 1A. Risk Factors” of the 2024 Report.

Inflation, Tariffs and Market Conditions

The Company expects profit margins to remain steady or increase if it is able to effectively manage cost of sales and operating expenses, subject to any volatility in the bulk wine markets, increased labor costs, increased commodity costs, including dry goods and packaging materials, and increased transportation costs. The Company continues to monitor the impact of inflation and tariffs in an attempt to minimize its effects through pricing strategies and cost reductions. If, however, the Company’s operations are impacted by significant inflationary pressures and/or tariffs, it may not be able to completely offset increased costs through price increases on its products, negotiations with suppliers, cost reductions, or production improvements.

Any new trade agreements, economic sanctions, or new, expanded or retaliatory tariffs or other measures could result in an increase in the price of our products, could result in boycotts of our products into certain countries, could increase the costs of finished goods and raw materials, could prompt consumers to seek alternative products, and could potentially impact our business, financial condition, or results of operations. Due to trade tensions and retaliatory actions taken by foreign government agencies against the U.S., shipments of the Company’s wines were suspended to Canada near the end of the first quarter of 2025 and throughout the second quarter of 2025. While export wine sales are slowly resuming in certain Canadian markets during the current quarter, the Company cannot predict when trade barriers and negative sentiments towards U.S. products will be sufficiently reduced for sales and demand to revert to levels observed prior to 2025. The extent and duration of the tariffs and the resulting impact of general economic conditions on our business are uncertain and depend on various factors, including negotiations between the U.S. and affected countries, the responses of other countries or regions, exemptions or exclusions that may be granted, availability and cost of alternative sources of supply, and demand for our products in affected markets. The export business represented less than 5% of the Company’s total net sales for each of the nine month periods ended September 30, 2025 and 2024.

Results of Operations

Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024

Net Sales

(in thousands, except percentages)

Wholesale net sales decreased $3.2 million, or 34%, in the current quarter as compared to the same quarter in 2024, reflecting a decrease in domestic wine sales of $2.9 million and a decrease in export wine sales of $0.3 million. The decrease in domestic wine sales was primarily driven by decreased shipments and increased discounts to wholesale distributors in the current quarter compared to the same quarter in 2024 due to softer market conditions and timing of distributor orders expected to be fulfilled in the fourth quarter of 2025. Export wine sales are slowly resuming in certain Canadian markets during the current quarter. The partial recovery of sales into Canadian markets along with negative consumer sentiments against U.S. alcoholic products resulted in a decrease in export wine sales during the current quarter as compared to the same quarter in 2024. Although there are continuing uncertainties surrounding international trade policy, there were no other significant impacts on the Company’s results to report in the current quarter.

In June 2025, the Company announced and commenced a distribution change in the state of California, which was substantially completed during the current quarter. Although net sales for the current quarter were not materially impacted by this transition, the Company cannot estimate the amount or likelihood of potential sales pressure in future periods due to differences in distributor networks, retail accounts, or changes in regional consumer demand due to this change in a key wholesale market. See “Shipments versus Depletions” above for additional discussion of timing differences between shipments to wholesale distributors and demand-driven depletions from retail accounts.

Direct to Consumer net sales decreased $0.3 million, or 4%, in the current quarter as compared to the same quarter in 2024. The overall decrease was primarily driven by a decrease in sales from tasting rooms due to lower visitations as compared to the same quarter in 2024.

Other net sales, which include bulk wine and grape sales, custom winemaking services, event fees, tasting fees and non-wine retail sales, decreased $0.1 million, or 12%, in the current quarter as compared to the same quarter in 2024. The decrease was primarily driven by lower revenue generated from custom winemaking services in the current quarter as compared to the same quarter in 2024.

Gross Profit

(in thousands, except percentages)

Wholesale gross profit decreased $1.3 million, or 35%, in the current quarter as compared to the same quarter in 2024 driven by a decrease in overall shipments. Wholesale gross margin percentage, which is defined as wholesale gross profit as a percentage of wholesale net sales, increased 40 basis points primarily driven by sales of lower cost vintages mostly offset by higher discounts in the current quarter as compared to the same quarter in 2024.

Direct to Consumer gross profit decreased $0.1 million, or 3%, in the current quarter as compared to the same quarter in 2024 driven by a decrease in overall case volume. Direct to Consumer gross margin percentage increased 56 basis points which is mostly in line with the same quarter in 2024.

“Other” includes gross profit (loss) on bulk wine and grape sales, custom winemaking services, event fees, tasting fees, non-wine retail sales, and inventory write-downs. Profitability decreased $0.3 million, or 1,443%, in the current quarter as compared to the same quarter in 2024 and was primarily driven by higher inventory write-downs related to inventory expected to be sold at a loss due to current market conditions.

Operating Expenses

(in thousands, except percentages)

Sales and marketing expenses decreased $0.7 million, or 15%, in the current quarter as compared to the same quarter in 2024 primarily driven by decreased spend on selling and promotional expenses in line with lower overall sales, combined with a decrease in accrued bonuses and other professional services.

General and administrative expenses decreased $0.3 million, or 7%, in the current quarter as compared to the same quarter in 2024 due primarily to settlements related to sales taxes incurred in the prior year quarter.

Other Income (Expense)

(in thousands, except percentages)

Interest expense, net in the current quarter decreased slightly in comparison to the same quarter in 2024 due to lower interest expense on declining principal balances on the 2015 Term Loan and 2017 Term Loan (each term as defined below).

Other income, net, increased $2.2 million, or 370%, in the current quarter compared to the same quarter in 2024 primarily driven by a $2.5 million insurance settlement with the Company’s underwriters in the current quarter related to the 2017 wildfires that impacted the Company’s operations and damaged its inventory.

Income Tax Expense

The Company’s effective tax rates for the three months ended September 30, 2025 and 2024 were 31.1% and 24.3%, respectively. The difference between the effective income tax rates was primarily attributable to state income taxes and other permanent items.

Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024

Net Sales

(in thousands, except percentages)

Wholesale net sales decreased $4.0 million, or 14%, in the current nine month period as compared to the same period in 2024, primarily driven by a decrease in domestic wine sales of $2.9 million and a decrease in export wine sales of $1.1 million. The decrease in domestic wine sales was primarily driven by decreased shipments and increased discounts to wholesale distributors in the current nine month period compared to the same period in 2024 due to softer market conditions and timing of distributor orders expected to be fulfilled in the fourth quarter of 2025. The decrease in export wine sales was primarily driven by decreased shipments to Canada and Europe. Although there are continuing uncertainties surrounding international trade policy, there were no other significant impacts on the Company’s results in the current nine month period.

Direct to Consumer net sales decreased $0.7 million, or 4%, in the current nine month period as compared to the same period in 2024. The overall decrease was primarily driven by a decrease in sales from wine clubs and tasting rooms, partially offset by an increase in sales from Ecommerce as compared to the same period in 2024. The Company experienced a decrease in wine club memberships and tasting room visitations for the current nine month period compared to the same period in 2024. For Ecommerce, a sales mix of higher priced wines drove an increase in sales as compared to the same period in 2024.

Other net sales, which include bulk wine and grape sales, custom winemaking services, event fees, tasting fees and non-wine retail sales, decreased $0.6 million, or 20%, in the current nine month period as compared to the same period in 2024. The decrease was primarily driven by lower revenue generated from custom winemaking services, lower tasting fees revenue, and lower bulk wine sales in the current nine month period as compared to the same period in 2024.

Gross Profit

(in thousands, except percentages)

Wholesale gross profit decreased $1.8 million, or 16%, in the current nine month period as compared to the same period in 2024 driven by a decrease in overall shipments. Wholesale gross margin percentage, which is defined as wholesale gross profit as a percentage of wholesale net sales, decreased 62 basis points primarily driven by higher discounts mostly offset by sales of lower cost vintages in the current nine month period as compared to the same period in 2024.

Direct to Consumer gross profit decreased $0.2 million, or 1%, in the current nine month period as compared to the same period in 2024 driven by a decrease in overall case volume. Direct to Consumer gross margin percentage increased 164 basis points primarily driven by sales mix of higher margin wines sold through wine clubs and Ecommerce channels as compared to the same period in 2024.

“Other” includes a gross profit (loss) on bulk wine and grape sales, custom winemaking services, event fees, tasting fees, non-wine retail sales, and inventory write-downs. Profitability decreased $2.0 million, or 227%, in the current nine month period as compared to the same period in 2024 and is primarily driven by higher inventory write-downs related to inventory expected to be sold at a loss due to current market conditions.

Operating Expenses

(in thousands, except percentages)

Sales and marketing expenses decreased $1.7 million, or 12%, in the current nine month period as compared to the same period in 2024 primarily driven by decreased spend on selling and promotional expenses in line with lower overall sales, combined with a decrease in accrued bonuses, design, events, travel expenses, and other professional services.

General and administrative expenses decreased $0.1 million, or 1%, in the current nine month period as compared to the same period in 2024 due primarily to settlements related to sales taxes incurred in the prior year period.

Other Income (Expense)

(in thousands, except percentages)

Interest expense, net in the current nine month period decreased slightly in comparison to the same period in 2024 due to lower interest expense on declining principal balances on the 2015 Term Loan and 2017 Term Loan.

Other income, net, increased $2.1 million, or 159%, in the current nine month period compared to the same period in 2024 primarily driven by a $2.5 million insurance settlement with the Company’s underwriters in the current period related to the 2017 wildfires that impacted the Company’s operations and damaged its inventory.

Income Tax Benefit

The Company’s effective tax rates for the nine months ended September 30, 2025 and 2024 were 23.4% and 27.8%, respectively. The difference between the effective income tax rates was primarily attributable to state income taxes and other permanent items.

Liquidity and Capital Resources

General

The Company’s principal sources of liquidity are its available cash and cash equivalents, investments in available for sale securities, funds generated from operations and bank borrowings. The Company’s primary cash needs are to fund working capital requirements and capital expenditures.

The Company believes that cash flows generated from operations and its cash, cash equivalents, and marketable securities balances, as well as its borrowing arrangements, will be sufficient to meet its presently anticipated cash requirements for capital expenditures, working capital, debt obligations and other commitments during the next twelve months.

Revolving Credit Facility

In March 2013, Crimson and its subsidiaries entered into a $60.0 million revolving credit facility (the “Revolving Credit Facility”) with American AgCredit, FLCA (“American AgCredit”), as agent for the lenders. The Revolving Credit Facility is comprised of a revolving loan facility (the “Revolving Loan”) and a term revolving loan facility (the “Term Revolving Loan”), which together are secured by substantially all of Crimson’s assets. On June 15, 2023, the Company executed a fifth amendment to the Revolving Credit Facility with American AgCredit, which extended the termination date of the Revolving Loan and the Term Revolving Loan to May 31, 2028 along with updates to other terms of the Revolving Credit Facility. The Revolving Loan is for up to $10.0 million of availability in the aggregate for a five year term, and the Term Revolving Loan is for up to $50.0 million in the aggregate for a fifteen year term. In addition to unused line fees ranging from 0.125% to 0.225%, rates for the borrowings are priced based on a performance grid tied to certain financial ratios and the Term Secured Overnight Financing Rate. The Revolving Credit Facility can be used to fund acquisitions, capital projects, and other general corporate purposes. Covenants include the maintenance of specified debt and equity ratios, limitations on the incurrence of additional indebtedness, limitations on dividends and other distributions to stockholders and restrictions on certain mergers, consolidations, and sales of assets. No amounts have been borrowed under the Revolving Credit Facility to date.

Term Loans

The Company’s term loans consist of the following:

(i) On November 10, 2015, Pine Ridge Winery, LLC (“PRW Borrower”), a wholly-owned subsidiary of Crimson, entered into a senior secured term loan agreement (the “2015 Term Loan”) with American AgCredit for an aggregate principal amount of $16.0 million. Amounts outstanding under the 2015 Term Loan bear a fixed interest rate of 5.24% per annum. The 2015 Term Loan will mature on October 1, 2040. The 2015 Term Loan can be used to fund acquisitions, capital projects, and other general corporate purposes. As of September 30, 2025, $9.8 million in principal was outstanding on the 2015 Term Loan, and unamortized loan fees were less than $0.1 million.

(ii) On June 29, 2017, Double Canyon Vineyards, LLC (collectively with the PRW Borrower, “Borrower”), a wholly-owned subsidiary of Crimson, entered into a senior secured term loan agreement (the “2017 Term Loan”) with American AgCredit for an aggregate principal amount of $10.0 million. Amounts outstanding under the 2017 Term Loan bear a fixed interest rate of 5.39% per annum. The 2017 Term Loan will mature on July 1, 2037. The 2017 Term Loan can be used to fund acquisitions, capital projects, and other general corporate purposes. As of September 30, 2025, $6.0 million in principal was outstanding on the 2017 Term Loan, and unamortized loan fees were less than $0.1 million.

Borrower’s obligations under the 2015 Term Loan and 2017 Term Loan are guaranteed by the Company. All obligations of Borrower under the 2015 Term Loan and 2017 Term Loan are collateralized by certain real property of the Company. Borrower’s covenants include the maintenance of a specified fixed charge coverage ratio and certain customary affirmative and negative covenants, including limitations on the incurrence of additional indebtedness, limitations on distributions to stockholders, and restrictions on certain investments, the sale of assets, and merging or consolidating with other entities. The Company was in compliance with all debt covenants as of September 30, 2025.

Consolidated Statements of Cash Flows

The following table summarizes the Company’s cash flow activities for the nine months ended September 30, 2025 and 2024 (in thousands):

Cash provided by operating activities

Net cash provided by operating activities was $3.1 million for the nine months ended September 30, 2025, consisting primarily of $0.1 million of net loss adjusted for $8.2 million of non-cash items and $4.9 million net cash outflow related to changes in operating assets and liabilities. Adjustments for non-cash items primarily consist of depreciation, amortization, loss on the write-down of inventory, and other offsetting items. The change in operating assets and liabilities was primarily due to an increase in inventory and other current assets, partially offset by a decrease in accounts receivable and increases in accrued liabilities and customer deposits and accounts payable.

Net cash provided by operating activities was $2.4 million for the nine months ended September 30, 2024, consisting primarily of $0.5 million of net loss adjusted for $6.5 million of non-cash items and $3.6 million net cash outflow related to changes in operating assets and liabilities. Adjustments for non-cash items primarily consist of depreciation, amortization, loss on the write-down of inventory, net loss on disposal of property and equipment, along with other offsetting items. The change in operating assets and liabilities was primarily due to an increase in inventory, partially offset by increases in accounts payable and accrued liabilities and customer deposits and a decrease in accounts receivable.

Cash provided by investing activities

Net cash provided by investing activities was $0.6 million for the nine months ended September 30, 2025, consisting primarily of the net redemptions of available for sale investments of $3.5 million, partially offset by and capital expenditures of $3.0 million.

Net cash provided by investing activities was $1.9 million for the nine months ended September 30, 2024, consisting primarily of the net redemptions of available for sale investments of $6.1 million and proceeds from disposals of property and equipment and principal payments received on notes receivable totaling $0.1 million, partially offset by capital expenditures of $4.3 million.

Cash used in financing activities

Net cash used in financing activities was $1.2 million for the nine months ended September 30, 2025, consisting of the principal payments on the Company’s 2015 and 2017 Term Loans of $0.9 million and the repurchase of shares of the Company’s common stock at an aggregate purchase price of $0.4 million.

Net cash used in financing activities was $2.8 million for the nine months ended September 30, 2024, consisting of the repurchase of shares of the Company’s common stock at an aggregate purchase price of $1.9 million and the principal payments on the Company’s 2015 and 2017 Term Loans of $0.9 million.

Share Repurchases

In March 2023, the Company commenced a share repurchase program (the “2023 Repurchase Program”) that provided for the repurchase of up to 2,000,000 shares of outstanding common stock. Under the 2023 Repurchase Program, any repurchased shares are constructively retired. Effective March 21, 2025, upon approval of the Board of Directors, the Company suspended the 2023 Repurchase Program. During the nine months ended September 30, 2025 and prior to the suspension of the 2023 Repurchase Program, the Company repurchased 58,252 shares of its common stock at an average purchase price of $5.92 per share for an aggregate purchase price of $0.3 million. In 2024, the Company repurchased a total of 389,299 shares of its common stock at an average purchase price of $6.02 per share for an aggregate purchase price of $2.4 million. The Company’s repurchase was funded through cash on hand, and the shares were retired.

Off-Balance Sheet Financing Arrangements

None.

Critical Accounting Policies and Estimates

There have been no material changes to the critical accounting policies and estimates previously disclosed in the 2024 Report.

The Company’s management evaluated, with the participation of the Company’s principal executive and principal financial officers, the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of September 30, 2025. Based on their evaluation, the Company’s principal executive and principal financial officers concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2025.

There has been no change in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the Company’s fiscal quarter ended September 30, 2025 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

In addition to the other information set forth in this Report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” of the 2024 Report, which could materially affect the Company’s business, results of operations or financial condition. The risks described in the 2024 Report are not the only risks it faces. Additional risks and uncertainties not currently known to the Company or that it currently deems to be immaterial also may eventually prove to materially adversely affect its business, results of operations or financial condition. The information presented below updates, and should be read in conjunction with, the risk factors disclosed in the 2024 Report.

We are subject to risks from changes to the trade policies, regulations, and tariffs of the U.S. and foreign governments.

Changes in the import and export policies, new or increased tariffs or quotas, trade restrictions by the U.S. and foreign governments, could have a material adverse effect on our business performance, financial condition, results of operations, and our relationships with customers and suppliers. Any new trade agreements, economic sanctions, or new, expanded or retaliatory tariffs or other measures could result in an increase in the price of our products, could result in boycotts of our products into certain countries, could increase the costs of finished goods and raw materials, could prompt consumers to seek alternative products, and could potentially impact our business, financial condition, or results of operations. The extent and duration of the tariffs and the resulting impact on general economic conditions on our business are uncertain and depend on various factors, including negotiations between the U.S. and affected countries, the responses of other countries or regions, exemptions or exclusions that may be granted, availability and cost of alternative sources of supply, and demand for our products in affected markets. The export business represented less than 5% of the Company’s total net sales for each of the years ended December 31, 2024 and 2023.