Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Numbers in thousands)

FORWARD-LOOKING STATEMENTS/RISK FACTORS:

The Company, from time-to-time, may discuss forward-looking statements including assumptions concerning the Company's operations, future results and prospects. Generally, "may," "could," "will," "would," "expect," "believe," "estimate," "anticipate," "intend," "continue" and similar words identify forward-looking statements. Forward-looking statements appearing in this report are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on our current expectations and are subject to risks and uncertainties that can cause actual results and events to differ materially from those set forth in or implied by the forward-looking statements and related assumptions contained in the entire report. Such factors include, but are not limited to: product demand and market acceptance risks; the effect of economic conditions; weather conditions; changes in regulatory policy; the impact of competitive products and pricing; changes in foreign exchange rates; product development and commercialization difficulties; capacity and supply constraints or difficulties; availability of capital resources given that interest rate and inflation affect the debt market; the impact of, and our ability to, remediate the identified material weaknesses in our internal controls over financial reporting; exposure relating to claims or potential claims relating to product liability; and general business regulations, including taxes and other risks as detailed from time-to-time in the Company's reports and filings filed with the U.S. Security and Exchange Commission ("SEC"). It is not possible to foresee or identify all such factors. We urge you to consider these factors carefully in evaluating the forward-looking statements contained in this report. You should evaluate all forward-looking statements made in this Form 10-Q in the context of the risks and uncertainties disclosed in Part II, Item 1A of this Form 10-Q under the heading "Risk Factors," in Part I, Item 2 "Management's Discussion and Analysis of Financial Condition and Results of Operations," and in Item 3 "Quantitative and Qualitative Disclosures About Market Risk."



The forward-looking statements included in this Form 10-Q are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law. If we do update one or more forward-looking statements, no inference should be made that we will make additional updates with respect to those or other forward-looking statements.

Three Months Ended September 30, 2025 and 2024:

Overview of the Company's Performance

The agricultural economy is caught in the middle of countervailing influences. On the one hand, a strong harvest (adding to already elevated inventories of soybeans), lower commodity prices, trade tension, the government shutdown and a weak labor environment are creating an uncertain near-term outlook for the sector. On the other hand, lower channel inventories for the Company's products, the likelihood of decreasing interest rates, and the possibility of additional government support for growers, provide bases for optimism in the medium-term.

Against this backdrop, overall sales for the third quarter of 2025 increased by 1% compared to the third quarter of 2024. From a regional perspective, our domestic sales increased by 8%, while our international sales decreased by 6%. Demand for our soil fumigant products were impacted by a slow potato market and were down 31%. We expect some of those sales to come through in the final quarter of 2025 or possibly into the first quarter of 2026. Within our Specialty/non-crop business, our OHP business, that sells to ornamental and greenhouse markets, was down 36% in part as a result of the product liability claims and is expected to rebound in the final quarter. Our herbicide business was an area of strength and increased by 82% (driven by both crop and Specialty/non-crop products). The balance of our portfolio saw positive and negative movements that broadly offset, as compared to the same period in the prior year.

Efforts by management to transform the business into a more efficient operation led to lower cost of goods sold, which were down 15%, as compared to the same quarter of 2024. In 2024, the Company recorded expenses associated with the Dacthal recall in the amount of $16,191 that did not recur in 2025. This, coupled with lower transportation costs and improved factory performance, led to an improvement in average gross margins to 28% of net sales, up from 15% in the same period of 2024.

Operating expenses declined by 11%, as the Company continued to manage expenses closely. Our performance included the anticipated strong reduction in transformation costs that was offset by the charge pertaining to product liability claims. Operating expenses as a percent of net sales decreased to 34% for the quarter, down from 39% in the comparable period of 2024. Operating loss decreased to $6,505 for the third quarter of 2025, as compared to a loss of $28,388 for the same period of 2024.

Interest expense slightly increased, as compared to the same quarter of the prior year, yielding a net loss before taxes of $11,936, as compared to a net loss of $32,766 in the third quarter of 2024.

The Company recorded an income tax expense of $422, as compared to an income tax benefit of $7,024 in the same period of last year.

These factors yielded a net loss of $12,358, or $(0.43) per share, as compared to a net loss of $25,742, or $(0.91) per share, in the prior year quarter.

RESULTS OF OPERATIONS

Beginning January 1, 2025, the Company implemented a new organization structure, as part of its business transformation actions, and began servicing Canadian customers as part of its U.S. Crop business. The associated sales are now reported as U.S. Crop net sales. In 2024, Canadian sales were reported within international net sales and, for the three months ended September 30, 2024, amounted to $351.

Our domestic crop businessrecorded net sales during the third quarter of 2025 that were 22% higher than those of the third quarter of 2024 ($43,310, as compared to $35,533). During the three months ended September 30, 2024, the Company voluntarily recalled the Dacthal product line and recorded sales credits in the amount of $11,783 as a consequence. There was no similar material adjustment to sales in 2025. During the three months ended September 30, 2025, the Company saw reduced sales of our soil fumigant products arising from weakness in the potato market. Offsetting that sales shortfall, the Company had strong sales in the cotton market on higher acres, and strong sales of our at plant granular soil insecticide (Aztec) and post emergent herbicides, (Impact), driven by planned corn acres for the 2025-2026 growing season.

Our domestic non-crop business posted a 14% decrease in net sales in the third quarter of 2025, as compared to the same period in the prior year ($19,233 in 2025 v. $22,454 in 2024). The decline was sales of our mosquito adulticide which occurred earlier in 2025, as compared to timing in the prior year. Going forward, the company will be renaming the U.S. non-crop business as the "Specialty" business in future periods. This business has proven to be resilient in many economic environments and is backed by a portfolio of patents, allowing it to develop novel technologies for a wide range of applications.

Net sales of our international businesseswere 6% lower ($56,770 in 2025, as compared to $60,320 in 2024). Sales were negatively impacted by ongoing droughts in Mexico and Australia, a strategic change in Brazil to drop lower margin third-party distributions sales and focus on higher margin proprietary product resulting in lower sales but flat to slightly higher profitability, and some shipments in the Middle East having occurred earlier in the year than normal. Other regions of the world remain relatively stable.

On a consolidated basis, gross profit for the third quarter of 2025 increased by 98% ($34,214 in 2025, as compared to $17,293 in 2024). The prior year was impacted by one-time adjustments related to the Company's voluntary recall of Dacthal from the market that did not recur in 2025. The overall gross margin percentage ended at 28% in the second quarter of 2025, as compared to 15% in the second quarter of the prior year.

Operating expenses decreased by $4,962 to $40,719 for the three-month period ended September 30, 2025, as compared to the same period in 2024. The changes in operating expenses by department are as follows:

Operating expenses amounted to $40,719, or 34.1% of net sales, during the three months ended September 30, 2025 as compared to $45,618, or 38.6% of net sales, during the same period of the prior year. Excluding the expenses associated with Transformation and product liability claims, operating expenses would have ended at $32,245 or 27.0% of net sales. In comparison, operating expenses for the same period of the prior year would have been $38,322 or 32.4% of net sales. The quarter-over-quarter change was driven by tight cost controls and the reduction in activities associated with the development of the packaging technologies.

Interest costs net of capitalized interest were $4,920 and $4,378 during the three-month period ended September 30, 2025 and 2024, respectively. Interest costs are summarized in the following table:

Average Indebtedness and Interest expense

The Company's average overall debt for the three-month period ended September 30, 2025 was $209,575, which was essentially flat in comparison to the prior year. Our borrowings were impacted by two countervailing dynamics. On the one hand, borrowing was increased by the transformation costs since this time last year. On the other hand, our control of working capital has improved and resulted in fully offsetting the increases. As can be seen from the table, the effective bank interest rate on our revolving line of credit was 8.2% and 8.1% for the three-month periods ended September 30, 2025 and 2024, respectively.

Income tax expense was $422 for the three months ended September 30, 2025, as compared to an income tax benefit of $7,024 for the three months ended September 30, 2024. During the fourth quarter ended December 31, 2024, the Company established a valuation allowance against the U.S. entities net deferred tax assets. The company continues to maintain valuation allowances established against the net deferred tax assets of the U.S. and certain international entities, primarily in Brazil, for the three months ended September 30, 2025. During the three months ended September 30, 2025, several of the Company's international business outside of Brazil were profitable resulting in an income tax expense.

We generated losses before provision for income taxes of $11,937 and $32,766 for the three months ended September 30, 2025 and 2024, respectively. Our net loss, after income taxes, for the three months ended September 30, 2025, was $12,358 or ($0.43) per basic and diluted share, as compared to $25,742 or ($0.91) per basic and diluted share in the same quarter of 2024.

Nine Months Ended September 30, 2025 and 2024:

Overview of the Company's Performance

Distributor destocking continued to suppress demand in the first nine months of 2025. While this trend has softened over the course of the calendar year, customers preferred to draw down from on-hand inventory in every month of 2025, rather than building inventory in advance of seasonal need. Some optimism emerged with the passing of legislation that is expected to help growers, but the majority of these tax incentives and subsidies will not be distributed until 2026, thus limiting the positive impact during the reporting period. Corn prices remained at a fairly low level during this period, but inventories are reasonably constrained and any uptick in demand or weather-related event could drive pricing higher. Soybean inventories continue to accumulate with the disappearance of the Chinese market as an effect of the tariffs.

On a consolidated basis, overall net sales decreased by 5% ($364,426 in 2025, as compared to $381,659 in 2024) largely driven by continued channel destocking, with domestic sales down 3% and international sales down 6%, as compared to the same period of last year. Cost of goods sold decreased by 9% on an absolute basis due to management efforts to streamline operations. Gross profit improved by 7%, as compared to the same period of 2024 ($104,952, as compared to $97,474), and the gross margin percentage improved to 29% from 26% in the first three quarters of 2024.

During this nine-month period, operating expenses declined by 14%, as compared to the same period of 2024, and operating expenses as a percent of sales decreased to 31%, as compared to 34% for the same period in the prior year. During 2025 the Company recorded a material charge related to product liability claims related to our Specialty or non-crop business. On the other hand, transformation costs and research, product development and regulatory expenses dropped significantly during the period.

Overall, the business recorded an operating loss of $6,449 for the first nine months of the year, as compared to an operating loss of $31,529 during the first nine months of 2024.

The Company recorded a loss on an equity investment of $511 and interest expense of $13,135 during the nine months ended September 30, 2025, as compared to a gain of $513 on the equity investment and interest expense of $11,988 for the same period of 2024.

The Company incurred an income tax expense of $1,574 during the nine-month period, as compared to an income tax benefit of $7,093 during the nine months ended September 30, 2024, yielding a net loss for the period of $21,669, as compared to a net loss of $35,911 for the same period of the prior year, and a loss per share of ($0.76), as compared to ($1.28), as compared to the first nine months of last year.

RESULTS OF OPERATIONS

Beginning January 1, 2025, the Company implemented a new organization structure, as part of its business transformation actions, and began servicing Canadian customers as part of its U.S. Crop business. The associated sales are now reported as U.S. Crop net sales. In 2024, Canadian sales were reported within international net sales and, for the nine months ended September 30, 2024, amounted to $4,672.

Our domestic crop business recorded net sales that were 1% lower than those of the first nine months of 2025 ($153,511 as compared to $155,075 in 2024). During the nine months ended September 30, 2024, the Company voluntarily recalled the Dacthal product line and recorded sales credits in the amount of $11,783, as a consequence. That did not recur in 2025. During the nine months ended September 30, 2025, the decline in net sales was due primarily to two factors; first, soil fumigant sales decreased in the face of a soft market conditions for potato crops. Second, the Company's herbicide sales were lower than the prior year period due to the loss of Dacthal from our portfolio.

Our domestic non-crop business recorded a 9% decrease in net sales for the first nine months of the year (to $54,067 from $59,241). As noted previously, the company intends to change the name of this business to Specialty. The decrease in sales was due primarily to lower sales of our pest strip products which was largely timing related. In addition, we saw reduced sales of our pharmaceutical products as a result of some generic pricing pressure.

Net sales of our international businesseswere down 6% as compared to the first nine months of 2025 ($156,848 versus $167,343 in 2024). On going droughts in Australia and Mexico were significant contributors to the weakness in the first nine months of 2025, as compared to the year ago period. The company's decision to focus on margins, instead of revenue in Brazil also contributed to lower sales during the period.

On a consolidated basis, gross profit for the first nine months of 2025 increased to $104,952, as compared to $97,474 last year. Gross margin performance increased to 29% as compared to 26% during the first nine months of 2024.

Operating expenses decreased by $17,602 to $111,401 for the nine-month period ended September 30, 2025, as compared to the same period in 2024. The changes in operating expenses by department are as follows:

Operating expenses amounted to $111,401, or 30.6% of net sales, during the nine months ended September 30, 2025 as compared to $129,003, or 33.8% of net sales, during the same period of the prior year. Excluding the expenses associated with Transformation and product liability claims, operating expenses would have ended at $99,118 or 27.2% of net sales. In comparison, operating expenses for the same period of the prior year would have been $111,182 or 29.1% of net sales. The period-over-period change was driven by the impact of the implementation of a new organization structure at the end of 2024 that primarily focused on our global commercial team, by tight controls over costs such as travel, advertising and promotions and in activities associated with the development of the packaging technologies.

Interest costs net of capitalized interest were $13,135 in the first nine-month period of 2025, as compared to $11,988 in the same period of 2024. Interest costs are summarized in the following table:

Average Indebtedness and Interest expense

The Company's average overall debt for the nine-month period ended September 30, 2025, was $197,097, as compared to $200,187 for the same period of the prior year. Our borrowings decreased as a result of working capital controls particularly related to inventory management. As can be seen from the table above, our effective bank interest rate on our revolving line of credit was 8.1% for the nine months ended September 30, 2025, as compared to 8.0% in 2024.

Income tax expense was $1,574 for the nine months ended September 30, 2025, as compared to an income tax benefit of $7,093 for the nine months ended September 30, 2024. During the fourth quarter ended December 31, 2024, the Company established a valuation allowance against the U.S. entities net deferred tax assets. The company continues to maintain valuation allowances established against the net deferred tax assets of the U.S. and certain international entities, primarily in Brazil, for the nine months ended September 30, 2025. During the nine months ended September 30, 2025, several of the Company's international business outside of Brazil were profitable resulting in an income tax expense.

We incurred a loss before provision before income taxes of $20,095 for the nine months ended September 30, 2025, as compared to a loss before taxes of $43,004 for the nine months ended September 30, 2024. Our net loss, after income taxes, for the nine-month period ended September 30, 2025 was $21,669 or ($0.76) per basic and diluted share, as compared to $35,911 or ($1.28) per basic and per diluted share in the same period of 2024.

LIQUIDITY AND CAPITAL RESOURCES

The Company's operating activities utilized net cash of $27,144 during the nine-month period ended September 30, 2025, as compared to $21,478 during the nine months ended September 30, 2024. Included in the $27,144 are net loss of $21,669, plus non-cash depreciation, amortization of intangibles and other assets and discounted future liabilities, in the amount of $15,190, and provision for bad debts in the amount of $1,944, change in deferred income taxes of $353 and changes in liabilities for uncertain tax positions or unrecognized tax benefits of $522. Also included are stock-based compensation of $1,741, gain on disposal of property, plant and equipment of $246, asset impairment of $227, and net foreign currency adjustments of $704.

During the nine-month period of 2025, the Company increased net working capital by $29,758, as compared to a decrease of $1,725 during the same period of the prior year. The year-over-year change is mainly driven by the Dacthal matter. In the third quarter of 2024, the Company accrued liabilities related to the Company's decision to voluntarily withdraw Dacthal product from the global market. Recording this liability reduced the Company's net working capital in 2024. Much of those accruals remained on the condensed consolidated balance sheet at the end of 2024 and were then paid out during 2025. During the first nine months of 2025; inventories increased by $16,513, as compared to $29,429 for the same period of 2024. While increases in inventories are normal for the Company's annual cycle, the Company has seen distinct changes in buying patterns across its global markets as customers are

pushing back purchase close to time of use as they manage working capital and interest expense. In response, the Company has focused on managing inventory levels down including reducing manufacturing output.

Customer prepayments decreased by $21,453, as compared to $38,375 in the same period of 2024, driven by customer decisions regarding the amount of prepayments they made during the final quarter of 2024 and during the third quarter of 2025. The utilization of prepayments is impacted by customer decisions regarding timing and specifics of purchase orders, product mix and payment terms on those orders received from those customers during the first two quarters. Our accounts payable balances increased by $11,859, as compared to $14,512 in the same period of 2024, reflecting both the timing and terms of the related purchase orders. Accounts receivables decreased by $935, as compared to $33,475 in the same period of 2024. Prepaid expenses increased by $754, as compared to $4,107 in the same period of 2024. Income tax receivable changed by $1,083 as compared to $6,216 in the prior year. Accrued programs increased by $12,285, as compared to $17,721 in the prior year, driven by changes in mix of sales (products attract different program arrangements) and lower sales in our US Crop business (which is the main driver from programs). Finally, other payables and accrued expenses decreased by $8,178, as compared to an increase of $13,878 in the prior year. The prior year was driven by Dacthal related liabilities which were subsequently paid out predominantly in the final quarter of 2024 and the first quarter of 2025.

Accrued program costs are recorded in line with the growing season upon which specific products are targeted. Typically crop products have a growing season that ends on September 30th of each year. During the first nine months of 2025, the Company made accruals for programs in the amount of $52,852 and payments in the amount of $40,567, resulting in a net increase in accrued program costs of $12,285. During the first nine months of the prior year, the Company made accruals in the amount of $54,455 and made payments in the amount of $32,469, resulting in a net increase of accrued program costs of $29,779.

Cash used for investing activities for the nine-month period ended September 30, 2025, and 2024 was $2,042 and $6,381, respectively. In 2025, the Company spent $2,398 on purchases of fixed assets primarily focused on continuing to invest in manufacturing infrastructure, as compared to $6,106 for the same period of prior year.

During the nine months ended September 30, 2025, financing activities provided $32,659, as compared to $28,453 during the same period of the prior year. Net borrowings under the Credit Agreement amounted to $34,919 during the nine-month period ended September 30, 2025, as compared to $31,478 in the same period of the prior year. The Company paid $3,339 in deferred loan fees for the nine months of 2025. The Company did not declare and pay dividends for the first nine months of 2025, as compared to paying $2,510 during the nine months ended September 30, 2024. The Company received $629 for the issuance of shares under our Employee Stock Purchase Program ("ESPP") and exercise of stock options for the nine months ended September 30, 2025, as compared to $901 for the same period in prior year. Lastly, in exchange for shares of common stock returned by employees, the Company paid $147 and $1,416 for tax withholding on stock-based compensation awards during the nine months ended September 30, 2025 and 2024, respectively.

The Company has a revolving line of credit that is shown as long-term debt in the condensed consolidated balance sheets at September 30, 2025 and December 31, 2024. These are summarized in the following table:

As of September 30, 2025, the Company is deemed to be in compliance with its financial covenants.

At September 30, 2025, according to the terms of the Credit Agreement, as amended, and based on our performance against the most restrictive covenant listed above, the Company had the capacity to increase its borrowings by up to $46,862, compared to $28,623 as of December 31, 2024. The term of the Credit Agreement expires on December 31, 2026 and the Company is in discussion with lenders to restructure its debt.

We believe that anticipated cash flow from operations, existing cash balances and available borrowings under our amended senior credit facility will be sufficient to provide us with liquidity necessary to fund our working capital and cash requirements for the next twelve months.

RECENTLY ISSUED ACCOUNTING GUIDANCE

Please refer to Note 1 in the accompanying notes to the condensed consolidated financial statements for recently issued accounting standards.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The Company continually re-assesses the critical accounting policies used in preparing its financial statements. In the Company's Form 10-K filed with the SEC for the year ended December 31, 2024, the Company provided a comprehensive statement of critical accounting policies. These policies have been reviewed in detail as part of the preparation work for this Form 10-Q. After our review of these matters, we have determined that, during the subject reporting period there has been no material change to the critical accounting policies that are listed in the Company's Form 10-K for the year ended December 31, 2024.