Financial Analysis

"15. Acquisitions and Proposed Merger with Thermon Group Holdings, Inc. Merger Agreement with Thermon Group Holdings, Inc. On February 23, 2026, the Company entered into an Agreement and Plan of Merger (the Merger Agreement) with Longhorn Merger Sub, Inc. and Longhorn Merger Sub LLC, each a direct wholly owned subsidiary of the Company (together, the Merger Subs), and Thermon Group Holdings, Inc. (Thermon), pursuant to which the parties agreed to effect the merger transactions contemplated thereby (the Merger). Under the terms of the Merger Agreement and at the effective time of the Merger, each share of common stock, par value $ 0.001 per share, of Thermon (Thermon Common Stock), issued and outstanding immediately prior to the effective time (other than those shares of Thermon Common Stock excluded or constituting dissenting shares pursuant to the Merger Agreement), will be automatically converted into the right to receive from the Company, at the holders election and subject to proration, either (i) mixed consideration consisting of 0.6840 shares of the Companys common stock and $ 10.00 of cash per share, (ii) $ 63.89 of cash per share or (iii) 0.8110 shares of the Companys common stock per share (collectively, the ""Merger Consideration""). The Company is seeking stockholder approval for the issuance of shares of Company common stock in the transaction and Thermon is seeking Thermon stockholder approval of the Merger Agreement. The completion of the Merger is subject to cu …

BusinessCombinationDisclosureTextBlock · excerpt; the full note is in the filing

14. Commitments and Contingencies Legal Proceedings The Company is subject to routine legal claims, proceedings, and investigations associated with contract and employment-related litigation matters, warranty claims, asbestos matters, and audits of state and local tax returns arising in the ordinary course of its business. The final outcome and impact of open matters, and related claims and investigations that may be brought in the future, are subject to many variables, and cannot be predicted. The Company regularly assesses such matters to determine the degree of probability that it will incur a material loss as a result of such matters, as well as the range of possible loss. The Company records accruals for estimated losses relating to claims and lawsuits when available information indicates that a loss is probable and the amount of the loss, or range of loss, can be reasonably estimated. Based upon information presently available, and in light of legal and other factual defenses available to the Company, the Company does not believe that it is reasonably possible that such litigation will have a material adverse effect on the Companys financial condition, future operating results or liquidity. …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

"8. Senior Debt Debt as of March 31, 2026 and December 31, 2025 consisted of the following: (in thousands) March 31, 2026 December 31, 2025 Outstanding borrowings under Credit Facility (defined below) Revolving credit facility $ 251,800 $ 208,600 Total outstanding borrowings under the Credit Facility 251,800 208,600 Outstanding borrowings under the joint venture term debt 5,212 5,647 Unamortized debt discount ( 3,765 ) ( 1,809 ) Total outstanding borrowings 253,247 212,438 Less: current portion ( 5,340 ) ( 1,879 ) Total debt, less current portion $ 247,907 $ 210,559 Scheduled principal payments under the Credit Facility and joint venture term debt are $ 1.4 million for the remainder of 2026, and $ 3.8 million in 2027 . The remaining $ 251.8 million will be paid upon maturity in 2031. Credit Facility On October 7, 2024, the Company entered into the Third Amended and Restated Credit Agreement (the Legacy Credit Agreement), among the Company, its subsidiaries from time to time party thereto, the lenders from time to time party thereto and Bank of America, N.A., as administrative agent, which amended and restated in its entirety the Companys prior credit agreement. The Legacy Credit Agreement provided for a senior secured revolving credit facility in an initial aggregate principal amount of up to $ 400.0 million (the ""Legacy Credit Facility). On January 30, 2026, the Company entered into the Fourth Amended and Restated Credit Agreement (the 2026 Credit Agreement), among the Comp …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

10. Share-Based Compensation The Company recognized $ 0.4 million and $ 3.4 million of expense related to share-based compensation during the three months ended March 31, 2026 and 2025, respectively, which was measured based upon the fair value of the awards at the grant date. The Company granted approximately 226,000 and 388,000 restricted stock units during the three months ended March 31, 2026 and 2025, respectively. In addition, the Company granted 18,000 and 67,000 stock options during the three months ended March 31, 2026 and 2025, respectively. There were no options exercised during the three months ended March 31, 2026 and 2025 .

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"6. Goodwill and Intangible Assets Goodwill and indefinite life intangible asset activity for the three months ended March 31, 2026 and the year ended December 31, 2025 was as follows: (in thousands) Three months ended March 31, 2026 Year ended December 31, 2025 Goodwill / Tradename Goodwill Tradename Goodwill Tradename Balance at beginning of period $ 288,163 $ 9,705 $ 269,747 $ 9,466 Acquisitions 2,671 41,769 Divestiture ( 26,838 ) Foreign currency translation 294 ( 27 ) 3,485 238 Balance at end of period $ 291,128 $ 9,678 $ 288,163 $ 9,705 During the three months ended March 31, 2026, the Company, through its Pinnacle Processes Inc. (""PPI"") (formerly known as Effox-Flextor-Mader, Inc.) joint venture, completed the acquisition of Flexible Specialty Products (""FSP""), as discussed in Note 15. Finite life intangible assets as of March 31, 2026 and December 31, 2025 consisted of the following: March 31, 2026 December 31, 2025 (in thousands) Cost Accumulated Amortization Cost Accumulated Amortization Technology $ 22,314 $ 15,668 $ 22,314 $ 15,155 Customer lists 146,387 65,243 140,337 62,163 Tradenames 17,660 6,494 17,660 6,084 Foreign currency adjustments 117 ( 94 ) 87 31 Total intangible assets finite life $ 186,478 $ 87,311 $ 180,399 $ 83,433 Finite life intangible asset activity for the three months ended March 31, 2026 and 2025 was as follows: Three months ended March 31, (in thousands) 2026 2025 Intangible assets finite life, net at beginning of period $ 96,966 $ 74,050 …

GoodwillAndIntangibleAssetsDisclosureTextBlock · excerpt; the full note is in the filing

12. Income Taxes The Company files income tax returns in various federal, state and local jurisdictions. Tax years from 2022 forward remain open for examination by Federal authorities. Tax years from 2018 forward remain open for all significant state and foreign authorities. As of March 31, 2026 and December 31, 2025, the liability for uncertain tax positions totaled approximately $ 1.3 million and $ 1.3 million, respectively, which is included in Other liabilities on the Condensed Consolidated Balance Sheets. The Company recognizes accrued interest related to uncertain tax positions and penalties, if any, in income tax expense within the Condensed Consolidated Statements of Operations. Certain of the Companys undistributed earnings of our foreign subsidiaries are not permanently reinvested. Since foreign earnings have already been subject to United States income tax in 2017 as a result of the 2017 Tax Cuts and Jobs Act, the Company intends to repatriate foreign-held cash as needed. The Company records deferred income tax attributable to foreign withholding taxes that would become payable should it decide to repatriate cash held in our foreign operations. As of March 31, 2026 and December 31, 2025, the Company recorded deferred income taxes of approximately $ 1.7 million and $ 1.1 million, respectively, on the undistributed earnings of its foreign subsidiaries. Income tax benefit for the three months ended March 31, 2026 was $ 3.5 million, compared to income tax expense of $ …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

Accounting Standards Adopted in Fiscal 2026 Effective January 1, 2026, the Company adopted ASU 2025-05, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which introduces a practical expedient for estimating credit losses on current accounts receivable and contract assets. Adoption did not have a material impact on the Company's condensed consolidated financial statements.

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11. Pension and Employee Benefit Plans The Company sponsored a non-contributory defined benefit pension plan for certain union employees. The plan was funded in accordance with the funding requirements of the Employee Retirement Income Security Act of 1974. The Company presents the components of net periodic benefit cost within Other expense on the Condensed Consolidated Statements of Operations. Retirement plan expense was based on valuations performed by plan actuaries as of the beginning of each fiscal year. The components of the pension plan expense consisted of the following: Three months ended March 31, (in thousands) 2026 2025 Interest cost $ $ 318 Expected return on plan assets ( 335 ) Amortization of net actuarial loss 9 Net periodic benefit cost $ $ ( 8 ) The Company made no contributions to its defined benefit plan during the three months ended March 31, 2025 . On March 31, 2025, the pension plan was transferred to the purchaser of the Global Pump Solutions business, as discussed in Note 16. …

PensionAndOtherPostretirementBenefitsDisclosureTextBlock · excerpt; the full note is in the filing

"17. Business Segment Information The Companys operations are organized and reviewed by management along its product lines or end markets that the segment serves and are presented in two reportable segments. Segment profit is reviewed quarterly by the chief operating decision maker (""CODM""), which is the Company's Chief Executive Officer, for the purposes of allocating resources, including personnel, capital, and financial resources, and assessing performance, including the monitoring of budget versus actual results. During the fourth quarter of 2025, management updated the definition of the segment profit measure used by the CODM. The presentation of prior period segment information has been recast to conform to this updated measure. Asset information by segment is not reported internally or otherwise regularly reviewed by the CODM. The Companys reportable segments are organized as groups of similar products and services, as described as follows: Engineered Systems: The Company's Engineered Systems segment serves the power generation, hydrocarbon processing, water/wastewater treatment, oily water separation and treatment, marine and naval vessels, and midstream oil and gas sectors. The Company seeks to address the global demand for environmental and equipment protection solutions with its highly engineered platforms including emissions management, fluid bed cyclones, thermal acoustics, separation and filtration, and dampers and expansion joints. Industrial Process Solution …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing