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

The following discussion and analysis addresses the results of our operations for the three months ended March 31, 2026, as compared to our results of operations for the same period in 2025. Please read the following discussion of our financial condition and results of operations in conjunction with the financial statements and notes thereto included elsewhere in this report.

Overview

We are an integrated midstream energy company in the Permian Basin providing comprehensive gathering, transportation, compression, processing and treating services. Our core capabilities include a variety of service offerings including natural gas gathering, transportation, compression, treating and processing; NGLs stabilization and transportation; produced water gathering and disposal; and crude oil gathering, stabilization, storage and transportation. Our operations are strategically located in the heart of the Delaware Basin.

Our Operations and Segments

We have two reportable segments with revenue streams from various products and services. The Midstream Logistics segment operates under three revenue streams, 1) gas gathering and processing, 2) crude oil gathering, stabilization and storage services and 3) produced water gathering and disposal. The Pipeline Transportation segment consists of two EMI pipelines originating in the Permian Basin with various access points to the U.S. Gulf Coast and Mexico markets, as well as Kinetik NGL and Delaware Link Pipelines. The pipelines transport natural gas and NGLs within the Permian Basin and to the U.S. Gulf Coast.

Midstream Logistics

Gas Gathering and Processing. The Midstream Logistics segment provides gas gathering and processing services with over 4,200 miles of low and high-pressure steel pipeline located throughout the Delaware Basin and over 825,000 horsepower of compression capacity. Gas processing assets are centralized at eight processing complexes with total cryogenic processing capacity totaling over 2.4 Bcf/d. In addition, the Midstream Logistics segment provides system-wide amine treating and 6.5 MMcf/d of acid gas injection capacity.

Crude Oil Gathering, Stabilization and Storage Services. Crude gathering assets are centralized at the Caprock Stampede Terminal and the Pinnacle Sierra Grande Terminal. The system includes approximately 290 miles of gathering pipeline and 90,000 barrels of crude storage. The crude facilities have connections for takeaway transportation into certain facilities operated by Plains All American Pipeline, L.P. Over 50 miles of gathering pipeline was added to our crude gathering assets through the Barilla Draw Acquisition which closed in January 2025.

Water Gathering and Disposal. The system includes approximately 370 miles of gathering pipeline and approximately 580,000 barrels per day of permitted disposal capacity.

Pipeline Transportation

EMI pipelines. The Company owns the following equity interests in two EMI pipelines in the Permian Basin with access to various points along the U.S. Gulf Coast: 1) an approximate 55.5% equity interest in PHP, which is operated by Kinder Morgan; and 2) 33.0% equity interest in Breviloba, the owner of Shin Oak, which is operated by Enterprise Products Operating LLC.

Kinetik NGL Pipeline System. The Kinetik NGL Pipeline System consists of approximately 96 miles of NGL pipelines connecting our East Toyah and Pecos complexes to Waha, including our 20-inch Dewpoint pipeline that spans over 40 miles, and our 28 mile, 20-inch Brandywine Pipeline connecting to our Diamond Cryogenic complex. The Kinetik NGL Pipeline System has a capacity of approximately 580 MBbl/d.

Delaware Link Pipeline. The Delaware Link Pipeline consists of approximately 40 miles of 30-inch diameter pipeline with an initial capacity of approximately 1.0 Bcf/d that provides additional transportation capacity to Waha.

ECCC Pipeline. The ECCC Pipeline is under construction and will provide connection from Eddy County, New Mexico to Culberson County, Texas, and approximately 150 MMcfp/d of initial rich gas throughput capacity. The ECCC Pipeline is estimated to be in service during the second quarter of 2026.

Recent Developments

Amendment to A/R Facility

On March 31, 2026, the Partnership executed Amendment No. 2 to its accounts receivable securitization facility, with PNC Bank. Pursuant to this amendment, the facility limit was reduced to $225.0 million, and the scheduled termination date was extended to March 30, 2027. Furthermore, Amendment No. 2 introduced an option permitting Kinetik Receivables to request an increase in commitments of up to $50.0 million in aggregate, subject to the Purchaser’s approval. Amendment No. 2 also removed all sustainability-linked pricing provisions from the A/R Facility, including the sustainability rate adjustment, sustainability fee adjustment and related reporting obligations.

Factors Affecting Our Business

Commodity Price Volatility

There has been, and we believe there will continue to be, volatility in commodity prices and in the relationships among NGLs, crude oil and natural gas prices. Recent geopolitical developments in the Middle East, including the ongoing military conflict involving Iran, the closure of the Strait of Hormuz and related disruptions to global energy markets, each have contributed to heightened volatility in crude oil, natural gas, and NGL pricing and increased uncertainty in global supply chains. While the Company’s midstream assets and operations are primarily located in the Permian Basin and our service revenue is supported by fee‑based contracts, our product sales revenue is exposed to commodity price fluctuations. In addition, sustained volatility in global energy markets could indirectly impact producer activity levels, customer credit profiles, and overall demand for our services. Furthermore, prolonged geopolitical instability may contribute to broader macroeconomic effects, including inflationary pressures, higher interest rates, and constrained capital availability. The Company continues to monitor commodity prices closely and may enter into commodity price hedges to mitigate the volatility risk. In addition, the Company, when economically appropriate, enters into fee-based and NGL arbitrage arrangements that insulate the Company from commodity price volatility.

Inflation and Interest Rates

The annual rate of inflation in the United States was 3.3% in March 2026 as measured by the Consumer Price Index. In light of the recent economic activity and labor market conditions, the FOMC decided to maintain the target range for the federal funds rate at 3.50% - 3.75% during its meeting in April 2026. During the meeting, the FOMC suggested that the economic activity has been expanding at a solid pace; job gains have remained low, the unemployment rate has changed minimally in the recent months and inflation remains somewhat elevated, in part reflecting the recent increase in global energy prices. The FOMC also noted that uncertainty about the economic outlook remained elevated, including because of the implications of developments in the Middle East. The FOMC remains attentive to the risks to both sides of its dual mandate and seeks to achieve maximum employment and inflation at the rate of 2.00% over the long run. The Company will continue to monitor the FOMC’s monetary policy and interest rate movement. Refer to Note 12—Derivatives and Hedging Activities in the Notes to Condensed Consolidated Financial Statements in this Quarterly Report for additional discussion regarding our hedging strategies and objectives for interest rate risk.

Results of Operations

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

(In thousands, except percentages)

(1) Cost of sales (excluding depreciation and amortization) is net of gas service fees totaling $102.3 million and $62.2 million for the three months ended March 31, 2026 and 2025, respectively, for certain volumes, where we function as principal.

Three Months Ended March 31, 2026 Compared to Three Months Ended March 31, 2025

Revenues

For the three months ended March 31, 2026, revenue decreased by $33.3 million, or 8%, to $410.0 million, compared to $443.3 million for the same period in 2025. The decrease was primarily driven by lower gas service revenues on gathered gas volumes where we function as an agent versus principal.

Service revenue

Service revenue for the three months ended March 31, 2026 decreased by $34.2 million, or 27%, to $93.8 million, compared to $127.9 million for the same period in 2025. The period-over-period gathered and processed gas volumes increased by 105.9 MMcf per day, or 5% and 14.1 MMcf per day, or 1%, respectively. However, the total gathered and processed gas volumes where we function as the agent decreased period-over-period, resulting in a decrease of $33.5 million to gas service fees presented as revenues, or 31%. Over 97% of service revenues are included in the Midstream Logistics segment for the three months ended March 31, 2026.

Product revenue

Product revenue for the three months ended March 31, 2026 was flat compared to the same period in 2025, due to the confluence of offsetting variables. Period-over-period NGL prices and natural gas residue prices decreased by $5.59 per barrel, or 23% and $1.43 per MMBtu, or 53%, respectively. These pricing decreases were partially offset by period-over-period increases in NGL and condensate volumes sold of 3.2 million barrels, or 26%. Period-over-period increases in natural gas residue sales volumes of 0.9 million MMBtu, or 9%, and condensate prices of $1.08 per barrel, or 2%, also helped partially offset the pricing headwinds. Product revenue was also impacted by our commodity hedging activities. Realized and unrealized losses increased $25.0 million for the three months ended March 31, 2026 compared to the same period in 2025. Product revenues are included entirely in the Midstream Logistics segment.

Operating Costs and Expenses

Costs of sales (excluding depreciation and amortization)

Cost of sales (excluding depreciation and amortization) primarily consists of purchases of NGLs and natural gas from our producers at contracted market prices to support product sales to other third parties. For the three months ended March 31, 2026, cost of sales decreased by $34.6 million, or 16%, to $188.7 million, compared to $223.4 million for the same period in 2025. The decrease was primarily driven by the aforementioned period-over-period decreases in NGL and natural gas prices, partially offset by an increase in NGL, condensate and natural gas residue volumes sold. Over 99% of costs of sales (excluding depreciation and amortization) are included in the Midstream Logistics segment.

Operating expenses

Operating expenses increased by $6.7 million, or 11%, to $70.3 million for the three months ended March 31, 2026, compared to $63.6 million for the same period in 2025. The increase was mainly driven by increases in utility costs of $4.6 million associated with increasing volumes on the system, and higher labor costs of $2.2 million, primarily related to the Kings Landing processing complex going into service during September 2025. Over 99% of operating expenses are included in the Midstream Logistics segment.

General and administrative expenses

General and administrative expenses increased by $6.6 million, or 18%, to $44.2 million for the three months ended March 31, 2026, compared to $37.6 million for the same period in 2025. The increase was mainly driven by an increase in legal fees of $9.0 million, partially offset by a decrease in labor and professional fees of $2.2 million.

Depreciation and amortization expense

Depreciation and amortization expense increased by $9.2 million, or 10%, to $101.8 million for the three months ended March 31, 2026, compared to $92.7 million for the same period in 2025. Of the total increase, $6.3 million relates to Durango and Kings Landing being placed into service in September 2025, and the balance is associated with new assets being placed in service over the course of 2025.

Other Income (Expenses)

Equity in earnings of unconsolidated affiliates

Equity in earnings of unconsolidated affiliates decreased by $6.3 million, or 11%, to $51.2 million for the three months ended March 31, 2026, compared to $57.5 million for the same period in 2025. The decrease was primarily driven by decreases in equity in earnings from Breviloba of $5.6 million due to normal operations, and EPIC of $3.4 million due to the divestiture of the Company’s equity interest in EPIC in October 2025. The decrease was partially offset by an increase in equity in earnings from PHP of $2.7 million.

Key Performance Metrics

Adjusted EBITDA

Adjusted EBITDA is defined as net income or loss including noncontrolling interest adjusted for interest, taxes, depreciation and amortization, gain or loss on disposal of assets, the proportionate EBITDA from our EMI pipelines, equity income recorded using the equity method, share-based compensation expense, noncash increases and decreases related to commodity hedging activities, integration and transaction costs and extraordinary losses and unusual or non-recurring charges. Adjusted EBITDA provides a basis for comparison of our business operations between current, past and future periods by excluding items that we do not believe are indicative of our core operating performance.

We believe that Adjusted EBITDA provides a meaningful understanding of certain aspects of earnings before the impact of investing and financing charges and income taxes. Adjusted EBITDA is useful to an investor in evaluating our performance because this measure:

• is widely used by analysts, investors and competitors to measure a company’s operating performance;
• is a financial measurement that is used by rating agencies and other parties to evaluate our creditworthiness; and
• is used by our management for various purposes, including as a basis for strategic planning and forecasting.

Adjusted EBITDA is not defined in GAAP

The GAAP measure used by the Company that is most directly comparable to Adjusted EBITDA is net income or loss including noncontrolling interest. Adjusted EBITDA should not be considered as an alternative to the GAAP measure of net income or loss including noncontrolling interest or any other measure of financial performance presented in accordance with GAAP. Adjusted EBITDA has important limitations as an analytical tool because it excludes some, but not all, items that affect net income including noncontrolling interest. Adjusted EBITDA should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under GAAP. The Company’s definition of Adjusted EBITDA may not be comparable to similarly titled measures of other companies in the industry, thereby diminishing its utility.

Reconciliation of non-GAAP financial measure

Company management compensates for the limitations of Adjusted EBITDA as an analytical tool by reviewing the comparable GAAP measure, understanding the differences between Adjusted EBITDA as compared to net income or loss including noncontrolling interest, and incorporating this knowledge into its decision-making processes. Management believes that investors benefit from having access to the same financial measure that the Company uses in evaluating operating results.

The following table presents a reconciliation of the GAAP financial measure of net (loss) income including noncontrolling interest to the non-GAAP financial measure of Adjusted EBITDA.

(In thousands, except percentages)

NM - not meaningful

For the three months ended March 31, 2026, Adjusted EBITDA increased by $1.2 million, or 0.5%, to $251.2 million, compared to $250.0 million for the same period in 2025. As discussed in Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations to this Quarterly Report, the change reflected lower operating revenues of $33.3 million, which was primarily driven by an increase in unrealized loss on commodity hedging activities of $28.9 million, thus mostly EBITDA neutral, and lower proportionate EMI EBITDA of $17.5 million, partially offset by lower cost of sales (excluding depreciation and amortization), operating expenses, ad valorem taxes and general and administrative expenses, totaling $19.4 million. The remaining decrease was fully offset by higher net one-time costs related primarily to integration and litigation totaling $3.5 million.

Segment Adjusted EBITDA

Segment Adjusted EBITDA is defined as segment net income or loss including noncontrolling interest adjusted for interest, taxes, depreciation and amortization, gain or loss on disposal of assets and debt extinguishment, the proportionate EBITDA from our EMI pipelines, equity income recorded using the equity method, share-based compensation expense, noncash increases and decreases related to commodity hedging activities, integration and transaction costs and extraordinary losses and unusual or non-recurring charges. The following table presents Segment Adjusted EBITDA for the three months ended March 31, 2026 and 2025. Also refer to Note 17—Segments in the Notes to Condensed Consolidated Financial Statements in this Quarterly Report for a reconciliation of Segment Adjusted EBITDA to net income before income taxes.

(In thousands, except percentages)

(1) Corporate and Other represents those results that: (i) are not specifically attributable to a reportable segment; (ii) are not individually reportable or (iii) have not been allocated to a reportable segment for the purpose of evaluating their performance, including certain general and administrative expense items.

Midstream Logistics Segment Adjusted EBITDA increased by $18.7 million, or 12%, to $178.9 million for the three months ended March 31, 2026, compared to $160.2 million for the same period in 2025. The change reflected lower cost of sales (excluding depreciation and amortization), operating expenses, ad valorem taxes and general and administrative expenses totaling $26.0 million, partially offset by a lower operating revenues of $33.2 million, which was primarily driven by an increase in unrealized loss on commodity hedging activities of $28.9 million, which is EBITDA neutral. The reasons for the fluctuations are discussed in Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations to this Quarterly Report on Form 10-Q.

Pipeline Transportation Segment Adjusted EBITDA decreased by $15.9 million, or 17%, to $78.0 million for the three months ended March 31, 2026, compared to $93.9 million for the same period in 2025. The decrease was mainly due to lower proportionate EMI EBITDA of $17.5 million, primarily related to the divestiture of the Company’s equity interest in EPIC during October 2025.

Contractual Obligations

We have contractual obligations for principal and interest payments on our 2028 Notes, 2030 Notes, and under the Term Loan Credit Agreement, the Revolving Credit Agreement and the Amended A/R Facility. See Note 7—Debt and Financing Costs in the Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

Under certain clauses of our transportation services agreements with third party pipelines to transport natural gas and NGLs, if we fail to ship a minimum throughput volume, then we will pay certain deficiency payments for transportation based on the volume shortfall up to the MVC amount.

Liquidity and Capital Resources

The Company’s primary use of capital since inception has been for the initial construction of gathering and processing assets, as well as the acquisition of businesses and EMI pipelines and associated subsequent construction costs. For 2026, the Company’s primary spending requirements are related to budgeted capital expenditures for the construction and maintenance of gathering and processing assets, the Company’s contractual debt obligations, quarterly cash dividends and repurchases of its Class A Common Stock pursuant to the Repurchase Program from time to time.

During the three months ended March 31, 2026, the Company’s primary sources of cash were distributions from the EMI pipelines, borrowings under the revolving credit facility and Amended A/R Facility, and cash generated from operations. Based on the Company’s current financial plan, the Company believes that cash from operations, distributions from the EMI pipelines and remaining borrowing capacity on our credit facilities will generate cash flows in excess of capital expenditures and the amount required to fund the Company’s planned quarterly dividend over the next 12 months. The following table presents a summary of the Company’s key liquidity indicators at the dates presented:

Liquidity

(In thousands)

(In thousands)

Long-term Financing

From time to time, we issue long-term debt. Our senior unsecured notes are fixed rate borrowings; however, we have some exposure to the risk of changes in interest rates, primarily as a result of the variable rate borrowings under the term loan, revolving credit facilities and the Amended A/R Facility. We use interest rate swaps to mitigate the impact of changes in interest rates on cash flows. See Note 12—Derivatives and Hedging Activities in the Notes to the Condensed Consolidated Financial Statements in this Quarterly Report for detailed discussion.

As of March 31, 2026, we had $1.05 billion of our 6.625% senior unsecured notes due 2028 and $1.00 billion of our 5.875% senior unsecured notes due 2030 outstanding.

On May 30, 2025, the Partnership entered into the Term Loan Credit Agreement. The proceeds were used to repay and terminate the 2022 Term Loan Credit Agreement. As of March 31, 2026, we had an outstanding borrowing of $1.15 billion under the Term Loan Credit Agreement.

Revolving Credit Agreement

On May 30, 2025, the Partnership entered into the Revolving Credit Agreement. The Revolving Credit Agreement provides for a $1.60 billion senior unsecured revolving credit facility, which includes a $200.0 million sublimit for the issuance of letters of credit, and a $300.0 million sublimit for swingline loans.

All borrowings under the Revolving Credit Agreement mature on May 30, 2030, unless such maturity date is adjusted in accordance with the Revolving Credit Agreement. As of March 31, 2026, we had an outstanding borrowing of $468.0 million and remaining borrowing capacity of $1.12 billion.

A/R Facility

On March 31, 2026, the Partnership executed Amendment No. 2 to its Amended A/R Facility, with PNC Bank. Pursuant to this amendment, the facility limit was reduced to $225.0 million, and the scheduled termination date was extended to March 30, 2027. Furthermore, Amendment No. 2 introduced an option permitting Kinetik Receivables to request an increase in commitments of up to $50.0 million in aggregate, subject to the Purchaser’s approval. Amendment No. 2 also removed all sustainability-linked pricing provisions previously applicable under the A/R Facility. As of March 31, 2026, eligible accounts receivable of $187.1 million were pledged to the Amended A/R Facility as collateral and $37.9 million was available to be invested by the purchasers.

Capital Requirements and Expenditures

Our operations can be capital intensive, requiring investments to expand, upgrade, maintain or enhance existing operations and to meet environmental and operational regulations. During the three months ended March 31, 2026 and 2025, capital spending mainly consisted of spending on property, plant and equipment totaling $83.0 million and $74.5 million, respectively, and intangible asset purchases totaling $6.1 million and $6.9 million, respectively. Management believes its existing gathering, processing and transmission infrastructure capacity and future planned projects are capable of fulfilling its midstream contracts to service its customers.

The Company anticipates its existing capital resources will be sufficient to fund future capital expenditures for EMI pipelines and the Company’s existing infrastructure assets over the next 12 months. For further information on EMIs, refer to Note 6—Equity Method Investments in the Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

Cash Flow

The following tables present cash flows from operating, investing and financing activities during the periods presented:

(In thousands)

Operating activities. Net cash provided by operating activities increased by $3.6 million for the three months ended March 31, 2026 to $180.4 million, compared to $176.8 million for the same period in 2025. The change in the operating cash flows reflected (i) a decrease in net income including noncontrolling interest of $24.4 million; (ii) an increase in adjustments related to non-cash items of $43.7 million, which was mainly driven by an increase in non-cash derivative fair value adjustments and lower derivative cash settlements, together totaling $26.2 million, an increase in depreciation and amortization expense of $9.2 million, and a decrease in equity in earnings of unconsolidated affiliates of $6.3 million; and (iii) a decrease in working capital of $15.7 million.

Investing activities. Net cash used in investing activities decreased by $171.0 million for the three months ended March 31, 2026 to $89.1 million, compared to $260.1 million used in the same period in 2025. The decrease was primarily driven by a decrease in cash used in business acquisitions of $178.4 million related to the Barilla Draw Acquisition completed in January 2025. The decrease was partially offset by higher capital spending for property, plant and equipment of $8.5 million.

Financing activities. Net cash used in financing activities was $94.5 million for the three months ended March 31, 2026, which was primarily comprised of net proceeds from revolving credit facility and Amended A/R Facility of $36.8 million, fully offset by cash dividends of $131.3 million paid to the holders of Class A Common Stock and Common Units, compared with net cash provided by financing activities of $88.5 million for the three months ended March 31, 2025, which was primarily comprised of net proceeds from the Company’s long-term debt, revolving credit facility and Amended A/R Facility of $211.7 million, partially offset by cash dividends of $123.2 million paid to the holders of Class A Common Stock and Common Units.

Dividend

During the three months ended March 31, 2026, the Company made cash dividend payments of $131.3 million to holders of Class A Common Stock and Common Units and $0.5 million was reinvested in shares of Class A Common Stock by holders of Class A Common Stock and Common Units.

On April 16, 2026, the Board declared a cash dividend of $0.81 per share on the Company’s Class A Common Stock which was paid on May 1, 2026. The Company, through its ownership of the general partner of the Partnership, declared a distribution of $0.81 per Common Unit from the Partnership to the holders of Common Units, which was paid on May 1, 2026. As described in these Condensed Consolidated Financial Statements, as the context requires, dividends paid to holders of Class A Common Stock and distributions paid to holders of Common Units may be referred to collectively as “dividends.”

Share Repurchase Program

In February 2023, the Board approved the Repurchase Program, authorizing discretionary purchases of the Company’s Class A Common Stock up to $100.0 million in aggregate. In May 2025, the Board approved a $400.0 million increase to the previously announced Repurchase Program, pursuant to which we are authorized to repurchase the Company’s Class A Common Stock for an aggregate purchase price of up to $500.0 million. Repurchases may be made at management’s discretion from time to time, in accordance with applicable securities laws, on the open market or through privately negotiated transactions and may be made pursuant to a trading plan meeting the requirements of Rule 10b5-1 under the Exchange Act. Privately negotiated repurchases from affiliates are also authorized under the Repurchase Program, subject to such affiliates’ interest and other limitations. The repurchases will depend on market conditions and may be discontinued at any time without prior notice.

During the three months ended March 31, 2026, the Company did not repurchase any of its Class A Common Stock under the Repurchase Program.

Off-Balance Sheet Arrangements

As of March 31, 2026, there were no off-balance sheet arrangements.

Critical Accounting Policies and Estimates

There have been no significant changes to our critical accounting policies and estimates from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025. Please refer to information regarding our critical accounting policies and estimates included in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the Commission on February 26, 2026.

Quantitative and Qualitative Disclosure About Market Risk

The Company is exposed to various market risks, including the effects of adverse changes in commodity prices and credit risk as described below. The Company continually monitors its market risk exposure, including the impact of regional and international political instability, foreign and domestic trade policies under the Trump Administration and monetary policy addressing the interest rate and inflation trend, which continued to have significant impact on volatility and uncertainties in the financial markets during 2025.

Commodity Price Risk

The results of the Company’s operations may be affected by the market prices of oil, natural gas and NGLs. A portion of the Company’s revenue is directly tied to local crude, natural gas, NGLs and condensate prices in the Permian Basin and the U.S. Gulf Coast. Fluctuations in commodity prices also impact operating cost elements both directly and indirectly. For example, commodity prices directly impact costs such as power and fuel, which are expenses that increase or decrease in line with changes in commodity prices. Commodity prices also affect industry activity and demand, thus indirectly impacting the cost of items such as labor and equipment rentals. Management regularly reviews the Company’s potential exposure to commodity price risk and uses financial or physical arrangements to mitigate potential volatility. Refer to Note 12—Derivatives and Hedging Activities in the Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for additional discussion regarding our hedging strategies and objectives.

Interest Rate Risk

As of March 31, 2026, the Company had $1.81 billion of floating rate debt outstanding. A hypothetical 1.0% change in interest rates would result in a maximum potential change to annual interest expense of approximately $18.1 million for the Revolving Credit Agreement, the Term Loan Credit Agreement and the Amended A/R Facility. Refer to Note 12—Derivatives and Hedging Activities in the Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for additional discussion regarding our related hedging strategies and objectives.

Credit Risk

There have been no material changes in the Company’s credit risk exposure that would affect the quantitative or qualitative disclosures presented as of December 31, 2025, in Part II, Item 7A in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Commission on February 26, 2026.

Disclosure Controls and Procedures

As of March 31, 2026, pursuant to Rule 13a-15(b) of the Exchange Act, the Company conducted an evaluation, under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Accounting and Administrative Officer, who serves as the principal accounting officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the Exchange Act). Based upon that evaluation, the Company’s Chief Executive Officer and Chief Accounting and Administrative Officer concluded that the design and operation of the Company’s disclosure controls and procedures were effective as of March 31, 2026.

The Company’s disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time period specified in the applicable rules and forms of the SEC. The Company’s disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including the Chief Executive Officer and Chief Accounting and Administrative Officer, as appropriate, to allow timely decisions regarding required disclosure.

Change in Internal Control over Financial Reporting

Except as described above, there were no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) during the quarter ended March 31, 2026, that have materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Please refer to Part I, Item 1A — “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 filed on February 26, 2026.