Management's Discussion and Analysis of Results of Operations and Financial Position
As used herein, the "Company," "Rogers," "we," "us," "our" and similar terms include Rogers Corporation and its subsidiaries, unless the context indicates otherwise.
Forward-Looking Statements
This Form 10-Q includes "forward-looking statements" within the meaning of Section 27A of the Securities Act, and Section 21E of the Exchange Act. Such statements are generally accompanied by words such as "anticipate," "assume," "believe," "could," "estimate," "expect," "foresee," "goal," "intend," "may," "might," "plan," "potential," "predict," "project," "should," "seek," "target" or similar expressions that convey uncertainty as to future events or outcomes. Forward-looking statements are based on assumptions and beliefs that we believe to be reasonable; however, assumed facts almost always vary from actual results, and the differences between assumed facts and actual results could be material depending upon the circumstances. Where we express an expectation or belief as to future results, that expectation or belief is expressed in good faith and based on assumptions believed to have a reasonable basis. We cannot assure you, however, that the stated expectation or belief will occur or be achieved or accomplished. Among the factors that could cause our results to differ materially from those indicated by forward-looking statements are risks and uncertainties inherent in our business including, without limitation:
•failure to capitalize on, volatility within, or other adverse changes with respect to growth opportunities, such as delays in adoption or implementation of new technologies;
•our ability to realize the anticipated benefits of our cost reduction, restructuring, manufacturing and site consolidation and operational excellence initiatives;
•uncertain business, economic and political conditions in the U.S. and abroad, particularly in China, Germany, England, Belgium, South Korea, and Hungary where we maintain significant manufacturing, sales or administrative operations;
•the global trade policy dynamics between nations reflected in trade agreement negotiations, the imposition of tariffs and other trade restrictions, as well as the potential for global supply chain decoupling;
•fluctuations in foreign currency exchange rates;
•our ability to develop innovative products and the extent to which they are incorporated into end-user products and systems that achieve commercial success;
•the ability and willingness of our sole or limited source suppliers to deliver certain key raw materials, including commodities, to us in a timely and cost-effective manner;
•business interruptions due to catastrophes, geopolitical events, or other similar events, such as natural disasters, war, terrorism, or public health crises;
•the impact of sanctions, export controls and other foreign asset or investment restriction;
•failure to realize, or delays in the realization of, anticipated benefits of acquisitions and divestitures due to, among other things, the existence of unknown liabilities or difficulty integrating acquired businesses;
•our ability to attract and retain management and skilled technical personnel;
•our ability to protect our proprietary technology from infringement by third parties and/or allegations that our technology infringes third-party rights;
•changes in effective tax rates or tax laws and regulations in the jurisdictions in which we operate;
•failure to comply with financial and restrictive covenants in our credit agreement or restrictions on our operational and financial flexibility due to such covenants;
•the outcome of ongoing and future litigation, including our asbestos-related product liability litigation;
•changes in environmental laws and regulations applicable to our business; and
•disruptions in, or breaches of, our information technology systems.
Our forward-looking statements are expressly qualified by these cautionary statements, which you should consider carefully, along with the risks discussed in this section and elsewhere in this report in addition to the section entitled "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2025 (the "Annual Report") and our other reports filed with the SEC, any of which could cause actual results to differ materially from historical results or anticipated results. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by law.
The following discussion and analysis of our financial condition and results of operations should be read together with our condensed consolidated financial statements and the related notes that appear elsewhere in this Form 10-Q along with our audited consolidated financial statements and the related notes thereto in our Annual Report.
Company Overview
We design, develop, manufacture, and sell high-performance, high-reliability engineered materials and components that help customers solve complex challenges in connectivity, thermal management, power electronics, system protection, and other areas. We operate in two reportable segments: AES and EMS. Our remaining non-core operations are reported in our Other operating segment. We are headquartered in Chandler, Arizona.
Our strategy is to build a high-growth, high-performing company by strengthening our positions in attractive core markets and extending proven technologies and manufacturing capabilities into compelling adjacent opportunities.
Our core end markets include industrial, automotive, aerospace and defense, electronics, and communications. Demand in these markets is supported by market trends including aerospace and defense investment, electrification, higher levels of vehicle safety, factory automation, supply chain regionalization, and increasing demand for premium electronic devices.
Our targeted high-growth adjacent opportunities include AI data centers, advanced battery systems, and electromagnetic interference shielding, where we are leveraging established products, applications expertise, manufacturing capabilities, and customer relationships to address evolving performance requirements.
Our sales, applications engineering and technical service teams work closely with customers throughout the development process to understand system-level challenges and develop customized solutions. This customer-focused model, together with our broad product portfolio, global manufacturing footprint, regional technical support, and reputation for mission-critical reliability, supports strong customer relationships and our growth plans.
We are operating with greater focus and accountability to make faster decisions, shorten development cycles, and respond more quickly to customer needs. Our operational improvement initiatives include improving quality, yields, and throughput; strengthening procurement and supplier strategies; advancing continuous improvement; and maintaining a scalable cost structure.
We intend to continue investing in innovation, technical capabilities, and manufacturing capacity in a disciplined manner, while preserving financial flexibility and allocating capital to opportunities that we believe offer attractive risk-adjusted returns and create long-term shareholder value.
If we successfully execute this strategy, we believe we can increase annual revenues through a combination of growth in our core markets and targeted high-growth adjacent opportunities. We expect organic growth to be the primary driver, with the potential to be supplemented by disciplined acquisitions that add capabilities, strengthen market positions, or accelerate our strategic priorities. Achieving this revenue growth is also expected to result in higher profitability and earnings.
Executive Summary
The following factors should be considered when reviewing our results of operations, financial position, and liquidity:
•In the third quarter of 2026 as compared to the third quarter of 2025, our net sales increased approximately 9.3% to $236.1 million, our gross margin increased approximately 70 basis points to 34.2% from 33.5%, and we had an operating margin of 12.7% compared to an operating margin of 7.3%.
•We repurchased 73.4 thousand shares of our capital stock for $9.3 million in the third quarter of 2026.
Results of Operations
The following table sets forth, for the periods indicated, selected operations data expressed as a percentage of net sales:
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 30, 2026 | September 30, 2025 | September 30, 2026 | September 30, 2025 | ||||||||||||||||||||
| Net sales | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||||||
| Gross margin | 34.2 | % | 33.5 | % | 33.0 | % | 31.7 | % | |||||||||||||||
| Selling, general and administrative expenses | 18.0 | % | 19.3 | % | 19.3 | % | 22.2 | % | |||||||||||||||
| Research and development expenses | 3.0 | % | 3.4 | % | 3.2 | % | 3.5 | % | |||||||||||||||
| Restructuring, asset impairment, and other charges | 0.4 | % | 3.3 | % | 1.2 | % | 14.6 | % | |||||||||||||||
| Other operating expense, net | - | % | 0.2 | % | - | % | - | % | |||||||||||||||
| Operating income (loss) | 12.7 | % | 7.3 | % | 9.3 | % | (8.6) | % | |||||||||||||||
| Other income (expense), net | 0.1 | % | 0.2 | % | 0.3 | % | (0.6) | % | |||||||||||||||
| Interest income, net | 0.3 | % | 0.1 | % | 0.2 | % | 0.1 | % | |||||||||||||||
| Income (loss) before income taxes | 13.1 | % | 7.5 | % | 9.7 | % | (9.0) | % | |||||||||||||||
| Income tax expense | 3.6 | % | 3.6 | % | 3.5 | % | 2.0 | % | |||||||||||||||
| Net income (loss) | 9.6 | % | 4.0 | % | 6.2 | % | (10.9) | % | |||||||||||||||
Net Sales and Gross Margin | |||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| (Dollars in millions) | September 30, 2026 | September 30, 2025 | September 30, 2026 | September 30, 2025 | |||||||||||||||||||
| Net sales | $ | 236.1 | $ | 216.0 | $ | 653.4 | $ | 609.3 | |||||||||||||||
| Gross margin | $ | 80.7 | $ | 72.3 | $ | 215.7 | $ | 193.3 | |||||||||||||||
| Percentage of net sales | 34.2 | % | 33.5 | % | 33.0 | % | 31.7 | % | |||||||||||||||
Net sales increased in the third quarter by 9.3%, or $20.1 million, of which $17.7 million was driven by higher demand and favorable pricing, including increases in average selling prices, and $2.4 million was attributable to favorable foreign currency exchange rates. Sales increased in all end markets, including the electronics and communications, automotive, and aerospace and defense markets, in the third quarter of 2026 compared to the third quarter of 2025.
Net sales increased in the first nine months by 7.2%, or $44.1 million, of which $28.6 million was driven by higher demand and favorable pricing, including increases in average selling prices, and $15.5 million was attributable to favorable foreign currency exchange rates. Sales increased in multiple end markets, including the electronics and communications and industrial markets, in the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025.
Gross margin as a percentage of net sales increased approximately 70 basis points to 34.2% in the third quarter of 2026 compared to 33.5% in the third quarter of 2025. Gross margin in the third quarter of 2026 increased due to higher sales volume, favorable mix, and operational efficiencies, partially offset by increased raw material costs.
Gross margin as a percentage of net sales increased approximately 130 basis points to 33.0% in the nine months ended September 30, 2026 compared to 31.7% in the nine months ended September 30, 2025. Gross margin in the nine months ended September 30, 2026 increased due to higher sales volume, favorable mix, and productivity improvements from cost savings following our manufacturing footprint consolidation in Belgium and Germany, partially offset by increased raw material costs.
Selling, General and Administrative Expenses | |||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| (Dollars in millions) | September 30, 2026 | September 30, 2025 | September 30, 2026 | September 30, 2025 | |||||||||||||||||||
| Selling, general and administrative expenses | $ | 42.6 | $ | 41.6 | $ | 126.0 | $ | 134.6 | |||||||||||||||
| Percentage of net sales | 18.0 | % | 19.3 | % | 19.3 | % | 22.2 | % | |||||||||||||||
SG&A expenses increased 2.4% in the third quarter of 2026 from the third quarter of 2025, primarily due to an increase in compensation and benefit expense.
SG&A expenses decreased 6.4% in the nine months ended September 30, 2026 from the nine months ended September 30, 2025, primarily due to a $4.4 million reduction in professional services costs, a $1.5 million reduction in software costs, and a $1.0 million reduction in depreciation.
Research and Development Expenses | |||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| (Dollars in millions) | September 30, 2026 | September 30, 2025 | September 30, 2026 | September 30, 2025 | |||||||||||||||||||
| Research and development expenses | $ | 7.0 | $ | 7.4 | $ | 21.0 | $ | 21.5 | |||||||||||||||
| Percentage of net sales | 3.0 | % | 3.4 | % | 3.2 | % | 3.5 | % | |||||||||||||||
R&D expenses decreased 5.4% in the third quarter of 2026 from the third quarter of 2025, primarily due to a $0.4 million reduction in R&D trials.
R&D expenses decreased 2.3% in the nine months ended September 30, 2026 from the nine months ended September 30, 2025, primarily due to a reduction in compensation and benefits expense.
Restructuring, Asset Impairment, and Other Charges | |||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| (Dollars in millions) | September 30, 2026 | September 30, 2025 | September 30, 2026 | September 30, 2025 | |||||||||||||||||||
| Restructuring, asset impairment, and other charges | $ | 1.0 | $ | 7.1 | $ | 7.6 | $ | 89.1 | |||||||||||||||
We incurred restructuring, asset impairment, and other charges of $1.0 million and $7.6 million in the three and nine months ended September 30, 2026, respectively, due to our footprint consolidation actions in our Eschenbach, Germany facility, the executive leadership transition, additional reductions in force, and the impairment of our Mexico facility lease. For additional information, refer to "Note 13 - Supplemental Financial Information" to the condensed consolidated financial statements in Part I, Item 1 of this Form 10-Q.
Other Income (Expense), Net | |||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| (Dollars in millions) | September 30, 2026 | September 30, 2025 | September 30, 2026 | September 30, 2025 | |||||||||||||||||||
| Other income (expense), net | $ | 0.3 | $ | 0.4 | $ | 1.7 | $ | (3.4) | |||||||||||||||
Other income (expense), net was income of $0.3 million in the third quarter of 2026 compared to income of $0.4 million in the third quarter of 2025. The decrease primarily reflected unfavorable foreign currency impacts, partially offset by favorable copper derivative performance.
Other income (expense), net was income of $1.7 million in the nine months ended September 30, 2026 compared to expense of $3.4 million in the nine months ended September 30, 2025. The increase was primarily due to $6.0 million of favorable year-over-year changes in impacts from foreign currency transactions combined with a $0.9 million increase related to our copper derivative, partially offset by $2.2 million in unfavorable performance on foreign exchange derivative contracts.
Interest Income, Net | |||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| (Dollars in millions) | September 30, 2026 | September 30, 2025 | September 30, 2026 | September 30, 2025 | |||||||||||||||||||
| Interest income, net | $ | 0.6 | $ | 0.2 | $ | 1.2 | $ | 0.9 | |||||||||||||||
Interest income, net was $0.6 million in the third quarter of 2026 compared to $0.2 million in the third quarter of 2025. The increase was primarily due to interest income earned related to our short-term investments.
Interest income, net was $1.2 million in the nine months ended September 30, 2026 compared to $0.9 million in the nine months ended September 30, 2025. The increase was primarily due to interest income earned related to our short-term investments.
Income Taxes | |||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| (Dollars in millions) | September 30, 2026 | September 30, 2025 | September 30, 2026 | September 30, 2025 | |||||||||||||||||||
| Income tax expense | $ | 8.4 | $ | 7.7 | $ | 23.0 | $ | 11.8 | |||||||||||||||
| Effective tax rate | 27.1 | % | 47.2 | % | 36.1 | % | (21.6) | % | |||||||||||||||
Compared to the 21% U.S. statutory federal corporate income tax rate, we had a tax rate of 27.1% in the third quarter of 2026. During the quarter, our effective tax rate was unfavorably impacted by an increase in the valuation allowance attributable to loss jurisdictions in which no tax benefit is anticipated to be realized.
We had a tax rate of 47.2% in the third quarter of 2025. During such quarter, our effective tax rate was unfavorably impacted by (i) an increase in the valuation allowance attributable to loss jurisdictions in which no tax benefit is anticipated to be realized and (ii) an increase in reserves for uncertain tax positions.
We had a tax rate of 36.1% for the nine months ended September 30, 2026. The effective rate for the first nine months of 2026 was unfavorably impacted by an increase in the valuation allowance attributable to loss jurisdictions in which no tax benefit is anticipated to be realized.
We had a negative tax rate of 21.6% for the nine months ended September 30, 2025 due to tax expense on a pre-tax book loss. Our income tax expense for the nine months ended September 30, 2025 was unfavorably impacted by the $67.3 million goodwill impairment in curamik® for which no tax benefit is available, an increase in the valuation allowance attributable to loss jurisdictions in which no tax benefit is anticipated to be realized, and an increase in reserves for uncertain tax positions.
Operating Segment Net Sales and Gross Margin
Advanced Electronics Solutions
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| (Dollars in millions) | September 30, 2026 | September 30, 2025 | September 30, 2026 | September 30, 2025 | |||||||||||||||||||
| Net sales | $ | 130.2 | $ | 114.7 | $ | 355.4 | $ | 327.9 | |||||||||||||||
| Gross margin | $ | 40.3 | $ | 36.1 | $ | 105.2 | $ | 96.1 | |||||||||||||||
| Percentage of net sales | 31.0 | % | 31.5 | % | 29.6 | % | 29.3 | % | |||||||||||||||
AES net sales increased in the third quarter by 13.5%, or $15.5 million, of which $14.2 million was driven by higher demand and favorable pricing, including increases in average selling prices, and $1.3 million was attributable to favorable foreign currency exchange rates. Sales increased in all end markets, including electronics and communications, automotive, and industrial, in the third quarter of 2026 compared to the third quarter of 2025.
AES net sales increased in the first nine months by 8.4%, or $27.5 million, of which $17.7 million was driven by higher demand and favorable pricing, including increases in average selling prices, and $9.8 million was attributable to favorable foreign currency exchange rates. By end market, sales increased for electronics and communications, automotive, and industrial, while sales in the aerospace and defense market were lower, in the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025.
Our AES operating and reportable segment gross margin as a percentage of net sales in the third quarter of 2026 was 31.0% compared to 31.5% in the third quarter of 2025. Gross margin declined primarily due to lower absorption from shift in production volumes between regions and increased raw material costs, partially offset by higher sales volumes and favorable mix.
Our AES operating and reportable segment gross margin as a percentage of net sales in the nine months ended September 30, 2026 was 29.6% compared to 29.3% in the nine months ended September 30, 2025. Gross margin improved primarily due to higher sales volume, favorable mix, and productivity improvements from cost savings following our manufacturing footprint consolidation in Belgium and Germany, partially offset by lower utilization from a new production line and increased raw material costs.
Elastomeric Material Solutions
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| (Dollars in millions) | September 30, 2026 | September 30, 2025 | September 30, 2026 | September 30, 2025 | |||||||||||||||||||
| Net sales | $ | 101.4 | $ | 97.2 | $ | 284.6 | $ | 269.2 | |||||||||||||||
| Gross margin | $ | 38.9 | $ | 34.7 | $ | 105.2 | $ | 92.9 | |||||||||||||||
| Percentage of net sales | 38.4 | % | 35.7 | % | 37.0 | % | 34.5 | % | |||||||||||||||
EMS net sales increased in the third quarter by 4.3%, or $4.2 million, of which $3.2 million was driven by higher demand and favorable pricing, including increases in average selling prices, and $1.0 million was attributable to favorable foreign currency exchange rates. By end market, sales increased in the automotive and aerospace and defense markets, partially offset by slightly lower sales in the electronics and communication and industrial market, in the third quarter of 2026 compared to the third quarter of 2025.
EMS net sales increased in the first nine months by 5.7%, or $15.4 million, of which $10.1 million was driven by higher demand and favorable pricing, including increases in average selling prices, and $5.3 million was attributable to favorable foreign currency exchange rates. By end market, sales increased in the industrial, electronics and communications, and aerospace and defense markets, partially offset by lower sales in the automotive market, in the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025.
Our EMS operating and reportable segment gross margin as a percentage of net sales in the third quarter of 2026 was 38.4% compared to 35.7% in the third quarter of 2025. Gross margin improved primarily due to increased sales volume, related utilization benefits, and operational efficiencies.
Our EMS operating and reportable segment gross margin as a percentage of net sales in the nine months ended September 30, 2026 was 37.0% compared to 34.5% in the nine months ended September 30, 2025. Gross margin improved primarily due to increased sales volume, related utilization benefits, and productivity improvements.
Other
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| (Dollars in millions) | September 30, 2026 | September 30, 2025 | September 30, 2026 | September 30, 2025 | |||||||||||||||||||
| Net sales | $ | 4.5 | $ | 4.1 | $ | 13.4 | $ | 12.2 | |||||||||||||||
| Gross margin | $ | 1.5 | $ | 1.5 | $ | 5.3 | $ | 4.3 | |||||||||||||||
| Percentage of net sales | 33.3 | % | 36.6 | % | 39.6 | % | 35.2 | % | |||||||||||||||
Liquidity, Capital Resources and Financial Position
We believe that our existing sources of liquidity and cash flows that we expect to generate from our operations, together with our available credit facilities, will be sufficient to fund our operations, currently planned capital expenditures, and R&D efforts, for at least the next 12 months. We regularly review and evaluate the adequacy of our cash flows, borrowing facilities and banking relationships in an effort to ensure that we have the appropriate access to cash to fund both our near-term operating needs and our long-term strategic initiatives.
The following table illustrates the location of our cash and cash equivalents by our three major geographic areas:
| (Dollars in millions) | September 30, 2026 | December 31, 2025 | |||||||||
| U.S. | $ | 69.4 | $ | 100.1 | |||||||
| Europe | 49.5 | 40.7 | |||||||||
| Asia | 87.2 | 56.2 | |||||||||
| Total cash and cash equivalents | $ | 206.1 | $ | 197.0 | |||||||
Approximately $136.7 million of our cash and cash equivalents were held by non-U.S. subsidiaries as of September 30, 2026. We did not make any changes in the nine months ended September 30, 2026 to our position on the permanent reinvestment of our earnings from foreign operations. With the exception of certain of our Chinese subsidiaries, where a substantial portion of our cash and cash equivalents located in Asia are held, we continue to assert that historical foreign earnings are indefinitely reinvested.
| (Dollars in millions) | September 30, 2026 | December 31, 2025 | |||||||||
| Key Financial Position Accounts: | |||||||||||
| Cash and cash equivalents | $ | 206.1 | $ | 197.0 | |||||||
| Short-term investments | $ | 30.3 | $ | - | |||||||
| Accounts receivable, net | $ | 155.4 | $ | 130.6 | |||||||
| Inventories, net | $ | 130.6 | $ | 125.0 | |||||||
Changes in key financial position accounts and other significant changes in our condensed consolidated statements of financial position from December 31, 2025 to September 30, 2026 were as follows:
•Cash and cash equivalents were $206.1 million as compared to $197.0 million as of December 31, 2025, an increase of $9.1 million, or 4.6%. This increase was primarily due to cash provided by operations, partially offset by cash used in investing and financing activities and an unfavorable impact of exchange rates on cash.
•Short-term investments were $30.3 million as compared to nil as of December 31, 2025. The addition of short-term investments was due to the purchase of time deposits with original maturities of more than three months and less than twelve months at the date of purchase, as of September 30, 2026.
•Accounts receivable, net increased 19.0% to $155.4 million as of September 30, 2026 from $130.6 million as of December 31, 2025. The increase was primarily due to higher net sales in the last month of the third quarter of 2026 compared to the last month of the fourth quarter of 2025.
•Inventories were $130.6 million as of September 30, 2026, compared to $125.0 million as of December 31, 2025. The change was due to higher levels of raw materials and finished goods inventory, offset by lower levels of work-in-process inventory.
| Nine Months Ended | |||||||||||
| (Dollars in millions) | September 30, 2026 | September 30, 2025 | |||||||||
| Key Cash Flow Measures: | |||||||||||
| Net cash provided by operating activities | $ | 71.6 | $ | 54.3 | |||||||
| Net cash used in investing activities | $ | (46.3) | $ | (11.2) | |||||||
| Net cash used in financing activities | $ | (15.6) | $ | (40.0) | |||||||
Changes in key cash flow measures and other significant changes in our condensed consolidated statements of cash flows from September 30, 2025 to September 30, 2026 were as follows:
•Net cash used in investing activities was $46.3 million as compared to $11.2 million for the nine months ended September 30, 2025, an increase in net cash used of $35.1 million. This increase in net cash used was primarily due to purchases of short-term investments, which consists of time deposits with original maturities of more than three months and less than twelve months at the date of purchase.
•Net cash used in financing activities was $15.6 million as compared to $40.0 million for the nine months ended September 30, 2025, a decrease in net cash used of $24.4 million. This decrease in net cash used was primarily due to a lower level of share repurchase activity.
In 2026, we expect capital spending to be in the range of approximately $30.0 million to $35.0 million. We plan to fund our capital spending in 2026 with cash from operations and cash on hand.
Restrictions on Payment of Dividends
The Fifth Amended Credit Agreement generally permits us to pay cash dividends to our shareholders, provided that (i) no default or event of default has occurred and is continuing or would result from the dividend payment and (ii) our total net leverage ratio does not exceed 2.75 to 1.00. If our total net leverage ratio exceeds 2.75 to 1.00, we may nonetheless make up to $20.0 million in restricted payments, including cash dividends, during the fiscal year, provided that no default or event of default has occurred and is continuing or would result from the payments. Our total net leverage ratio did not exceed 2.75 to 1.00 as of September 30, 2026.
Contingencies
During the third quarter of 2026, we did not become aware of any material developments related to environmental matters disclosed in our Annual Report, our asbestos litigation or other material contingencies previously disclosed or incur any material costs or capital expenditures related to such matters. Refer to "Note 9 - Commitments and Contingencies" to the condensed consolidated financial statements in Part I, Item 1 of this Form 10-Q for further discussion of these contingencies.
Critical Accounting Policies and Estimates
There have been no material changes in our critical accounting policies and estimates from those disclosed in our Annual Report.