Quarterly Report for Quarter Ending SEPTEMBER 30, 2026 (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; military activity and other geopolitical activity; fuel and freight cost increases arising from geopolitical turmoil; the imposition and removal of tariffs; 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; 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. Securities 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, 2026 and 2025:

Overview of the Company's Performance

Even with modest increases in row crop commodity prices, farm income was down due to significant increases in diesel fuel and fertilizer expenses. Further, U.S. government payments to growers as a percentage of income rose from about 25% to over 40%. With increasing cost of capital and uncertainty on international demand (e.g., from China), U.S. growers and the distribution channel have continued to follow conservative procurement practices, buying goods closer to time-of-need and minimizing carrying costs The non-crop, Specialty products markets (e.g., big box stores, professional applicators) have followed a similar procurement pattern. Meanwhile, the Company's international markets have softened due to weather conditions occasioned by El Niño. As a consequence, on a consolidated basis, the Company's financial performance declined with respect to both net sales and profitability in the period. The fourth quarter has historically been an important period for the Company's annual results. Based upon the magnitude of customer prepayments received in the aggregate in 2026 and recent sales-planning discussions with certain key customers, the Company anticipates that fourth quarter results may represent a meaningful portion of full-year performance. However, the timing and volume of customer purchases, pricing, weather conditions, and freight and raw material costs remain uncertain.

Overall net sales during the quarter declined by 9% over the comparable period last year. This performance included decreases in net sales of both U.S. Crop and U.S. Specialty (both down 2%) and International business (down 17%). With lower sales, gross profit decreased 23% quarter-over-quarter. Further, with increased freight costs, due primarily to an 80% increase in diesel cost, and higher raw material prices also driven by oil prices, partially offset by strong manufacturing performance, gross margin percentages ended at 24% for the third quarter of 2026, as compared to 29% in the same quarter of the prior year.

The Company reduced its operating expenses by 16% compared to the same quarter of the prior year, operating expenses as a percentage of net sales improved to 32% from 34% compared to the same quarter of the prior year. Research, product development and regulatory expenses declined by 6%, and general and administrative expenses declined by 12%, which was partially offset by an increase in selling expenses by 8%.

Interest expense, net, increased by $4,226 due to increased borrowing under the new debt structure and the comparatively higher effective interest rate (consisting of the First Lien Term Loan and Second Lien Term Loan), that was put into place on March 13, 2026.

Results of Operations

Our domestic Crop business recorded net sales during the third quarter of 2026 that were 2% lower than those of the third quarter of 2025. Performance across the portfolio was mixed. The decrease was driven largely by reduced demand for soil fumigants, the nematicide, Aztec® and the cotton insecticide, Bidrin®. These decreases were partially offset by stronger sales of our granular soil insecticide, Thimet®, our cotton defoliant, Folex®, and direct business-to-business sales from the U.S. Crop business to certain foreign customers (as part of our organization restructuring)

Our domestic Specialty business experienced a 2% decline in net sales over the third quarter. Overall, lower sales were driven primarily by a shift in inventory stocking dynamics affecting our turf and ornamental portfolio as well as reduced demand for insect growth regulators. These decreases were partially offset by stronger sales of our turf fungicide product and our mosquito adulticide, Naled®.

Net sales of our international businesses decreased by 17% during the period. This decline arose primarily from poor weather conditions in Mexico and Central American due to El Niño effect. In addition, certain direct business-to-business sales are now managed by the US crop business as part of our drive for improved operational efficiency. These decreases were partially offset by increased sales of soil fumigants and expansion of our business in Ecuador, where commercial operations are expanding.

On a consolidated basis, gross profit for the third quarter of 2026 decreased by 23% as compared to the third quarter of 2025, due largely to decreased sales volume, increased freight costs and raw material costs, partially offset by better manufacturing performance.

While operating expenses decreased on both an absolute level, $34,217 for the third quarter of 2026, compared to $40,719 for the third quarter of 2025; and as a percentage of net sales, 32% for the third quarter of 2026, compared to 34% for the third quarter of 2025, with lower gross profit, the Company recorded an operating loss of $7,965 for the third quarter of 2026, compared to $6,505 for the third quarter of 2025. Significantly higher net interest expense of $9,146 for the third quarter of 2026, compared to $4,920 for the third quarter of 2025, resulted in a net loss of $17,668 for the third quarter of 2026, compared to $12,358 for the third quarter of 2025.

The change in operating expenses by department is as follows:

Transformation costs related to the Company's digital and structural transformation project and manufacturing footprint optimization increased for the three months ended September 30, 2026, as compared to the same period of the prior year.

Average Indebtedness and Interest expense

Interest costs are summarized in the following table:

The Company's borrowings in the three months ended September 30, 2026, were higher compared to the same period of the prior year, mainly as a result of the new debt structure put into place on March 13, 2026. The Company refinanced its revolving credit line with a term loan structure that resulted in an increase in the effective interest rate.

Income tax expense was $536 for the three months ended September 30, 2026, as compared to $422 for the three months ended September 30, 2025. The effective income tax rate for the three months ended September 30, 2026, was computed based on the estimated effective tax rate for the full year which is approximately 17%, excluding discrete items and entities subject to full valuation allowances against related 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, 2026. During the three months ended September 30, 2026, several of the Company's international businesses outside of Brazil were profitable, resulting in an income tax expense.

Our overall net loss for the three months ended September 30, 2026 was $17,668 or ($0.61) per basic and diluted share, as compared to net loss of $12,358 or ($0.43) per basic and diluted share in the same quarter of 2025.

Nine Months Ended September 30, 2026 and 2025:

Overview of the Company's Performance

The domestic crop protection market for the nine months ended September 30, 2026, was stable; channel inventories were low, and demand was generally consistent with seasonal need. First half performance of the Company's Crop business was more resilient than that of the third quarter, as the farm economy continued to endure the more prolonged effects of higher fuel and fertilizer cost, cost of capital and market uncertainty. Similarly, the domestic Specialty market was strong through the first half of 2026 and declined slightly during the third quarter. By contrast, in the face of adverse weather and increased raw materials prices, the International markets were not as strong. On a consolidated basis, the Company's net sales performance for the nine months ended September 30, 2026 was down modestly as compared to the same period during the prior year. The fourth quarter has historically been an important period for the Company's annual results. Based upon the magnitude of customer prepayments received in the aggregate in 2026 and recent sales-planning discussions with certain key customers, the Company anticipates that fourth quarter results may represent a meaningful portion of full-year performance. However, the timing and volume of customer purchases, pricing, weather conditions, and freight and raw material costs remain uncertain.

The Company's consolidated net sales for the nine months ended September 30, 2026 declined by 4%, as compared to the same period of the prior year. This performance included U.S. Crop sales that were up 3%, U.S. Specialty net sales up 6%, and International net sales down 14%. Gross profit declined by 5% and the gross margin percentage ended at 29% for both the nine months ended September 30, 2026 and the same period of the prior year.

The Company reduced its operating expenses by approximately 5% and, when expressed as a percentage of net sales, improved to 30% compared to 31% during the same period a year ago. Within operating expenses, selling expenses increased by 1%, general and administrative expenses decreased by approximately 4%, and research, product development and regulatory expenses were flat.

Interest expense, net, increased $10,931 due to increased borrowing and the comparatively higher effective interest rate under the new debt structure (consisting of the First Lien Term Loan and Second Lien Term Loan), that was put into place on March 13, 2026.

Results of Operations

Our domestic crop business recorded net sales during the nine months ended September 30, 2026 that were 3% higher than those of the comparable period of 2025, due to improved industry demand for the Company's Impact herbicide, soil insecticides Thimet and Mocap and, to a lesser extent, the Company's biologicals portfolio. These increases were partially offset by declines in sales of our Bidrin cotton insecticide, Counter nematicide, Aztec corn soil insecticide, and soil fumigants and as the result of certain direct business-to-business sales that are now managed by the U.S. Crop business as part of our drive for improved operational efficiency.

Our domestic Specialty business posted a 6% increase in net sales in the nine months ended September 30, 2026, as compared to the same period of 2025, driven by continued strong demand for our Naled mosquito adulticide and other Specialty products.

Net sales of our international businesses decreased by 14% during the nine months ended September 30, 2026, as compared to the same period of 2025. Poor weather conditions in Central America slowed sales in the nine-month period. In addition, certain direct business-to-business sales are now managed by the U.S. crop business as part of our drive for improved operational efficiency. These decreases were partially offset by improved sales in Ecuador, arising from the Company's launch of Mocap for use on bananas, as well as in Australia, with the registration of our fungicide on cereals. In addition, certain direct business-to-business sales are now managed by the US crop business as part of our drive for improved operational efficiency.

On a consolidated basis, gross profit for the nine months ended September 30, 2026 declined by 5%, as compared to the same period of the prior year. Gross margin for the nine months ended September 30, 2026 was flat at 29%, as compared to the same period of the prior year.

The change in operating expenses by department is as follows:

Transformation costs related to the Company's digital and structural transformation project and manufacturing footprint optimization increased during the nine months ended September 30, 2026, as compared to the same period of the prior year. The Company expects that these costs will decrease over time.

Average Indebtedness and Interest expense

Interest costs are summarized in the following table:

The Company's borrowings during the nine months ended September 30, 2026 were higher when compared to the same period of the prior year, mainly as a result of the new debt structure put into place on March 13, 2026. The Company refinanced its revolving credit line with a term loan structure that resulted in an increase in the effective interest rate.

Income tax expense was $1,043 for the nine months ended September 30, 2026, as compared to $1,574 for the nine months ended September 30, 2025. The effective income tax rate for the nine months ended September 30, 2026 was computed based on the estimated effective tax rate for the full year which is approximately 17%, excluding discrete items and entities subject to full valuation allowances against related 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, 2026. During the nine months ended September 30, 2026, several of the Company's international businesses outside of Brazil were profitable, resulting in an income tax expense.

Our overall net loss for the nine months ended September 30, 2026 was $31,682 or ($1.10) per basic and diluted share, as compared to net loss of $21,669 or ($0.76) per basic and diluted share in the nine months ended September 30, 2025.

Liquidity and Capital Resources

The following table presents selected data from our condensed consolidated statements of cash flows for the periods presented:

The Company used cash of $12,346 in operating activities during the nine months ended September 30, 2026, as compared to $27,144 during the nine months ended September 30, 2025. Included in the $12,346 are net loss of $31,682, plus non-cash depreciation, amortization of intangibles and other assets in the amount of $13,447, provision for bad debts in the amount of $2,469, stock compensation in the amount of $901 and amortization of deferred loan fees in the amount of $2,899. Also included are a net change in deferred income taxes of $1,073, and change in liabilities for uncertain tax positions or unrecognized tax benefits of $127 and changes in lease obligations and non-cash lease expense in the amount of $120. These together resulted in a cash outflow of $10,571, as compared to an outflow of $4,031 for the same period of 2025.

During the nine months ended September 30, 2026, the Company increased net working capital by $60,093, as compared to an increase of $29,758 during the same period of the prior year. The biggest driver of the increase was the restructuring of the Company's debt which resulted in a cash inflow of $68,419 which is included in the change in working capital. In addition, accounts receivable decreased by $14,812, as compared to a decrease by $935 in the same period of 2025. This change was mainly driven by lower sales and a shift to net pricing in 2026 compared to 2025. Inventories increased by $16,007, as compared to an increase of $16,513 during

the same period of 2025. Customer prepayments increased by $11,527, as compared to a decrease of $21,453 in the same period of 2025, driven by customers' decisions regarding the amount of prepayments they made in 2026 compared to the same period of 2025. Accrued program costs decreased by $5,454, as compared to an increase of $12,285 in the prior year, as a result of timing of customers purchases, program simplification, and the mix of sales. Our accounts payable balances decreased by $960, as compared to an increase of $11,859 in the same period of 2025. Prepaid expenses and other assets increased by $1,039, as compared to an increase of $965 in the same period of 2025. Income tax receivable and payable, net changed by $3,526 as compared to $1,083 in the prior year. Finally, other payables and accrued expenses decreased by $8,180, as compared to a decrease of $8,178 in the prior year.

With regard to our program accrual, the increase primarily reflects our initiatives to simplify customer programs, and as a result of the level and mix of sales and customers in the nine months ended September 30, 2026, as compared to the prior year. The Company accrues programs 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 nine months ended September 30, 2026, the Company made accruals for programs in the amount of $27,742 and made payments in the amount of $32,644. During the comparable period of the prior year, the Company made accruals in the amount of $52,852 and payments in the amount of $40,567.

Cash used for investing activities was $9,815 for the nine months ended September 30, 2026, as compared to $2,042 for the nine months ended September 30, 2025. The Company spent $4,676 on fixed assets purchases primarily focused on its manufacturing infrastructure.

During the nine months ended September 30, 2026, financing activities provided $93,669, as compared to $32,062 during the same period of the prior year. Net borrowings under the Company's debt structure amounted to $109,875 during the nine months ended September 30, 2026, as compared to $34,919 during the same period of the prior year. As previously noted, this was driven by the retirement of the pre-existing revolving line of credit and replacement by two term loans. The Company made payments in the amount of $16,581 relating to loan fees. Lastly, in exchange for shares of common stock returned by employees, we paid $99 and $147 for tax withholdings on stock-based compensation awards during the nine months ended September 30, 2026 and 2025, respectively.

As of September 30, 2026 our debt structure includes two term loans. As of December 31, 2025, our debt structure included a senior credit facility. The debt structure is summarized in the following table:

As of September 30, 2026, the Company was in compliance with its financial covenants.

We believe that anticipated cash flow from operations and existing cash balances will be sufficient to provide us with liquidity necessary to fund our working capital and cash requirements for the next twelve months. The Company's ability to remain in compliance with the leverage covenant under its First Lien Term Loan depends on generating significant adjusted EBITDA during the fourth quarter of 2026.

Recently Issued Accounting Guidance

Please refer to Note 1 in the accompanying Notes to the Condensed Consolidated Financial Statements for recently issued and adopted 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, 2025, 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, 2025.