What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-05 compared with 2025-03-05 · 74 added, 95 removed, 225 unchanged (43% of the section changed)

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● Revenue was $554,478 for 2025 compared with $529,968 in 2024.

Certain markets, primarily Industrial and Vehicle, experienced decreases in revenue and our Industrial market was impacted by elevated shipments in 2023 as supply chains normalized, combined with slowing demand at certain customers beginning in the second quarter of 2024.

The acquisitions completed in 2023 and 2024 contributed an incremental $40,856 of revenues in 2024.

Strong results in the Industrial market was driven by increased demand in power quality solutions supporting data center infrastructure.

This is partially offset by decreases in Vehicle due to reduced demand in power sports and truck applications.

Sales to U.S.

customers were 55% of total sales for 2024 and 59% for 2023, with the balance of sales to customers primarily in Europe, Canada and Asia-Pacific.

● Gross profit was $165,691 for 2024, a 10% decrease from $183,683 in 2023.

As a percentage of revenue, gross margin decreased 40 basis points to 31.3% in 2024 from 31.7% in 2023.

The gross margin decrease was largely driven by lower fixed cost absorption on lower sales volumes, as well as the gross margin impact of our most recent acquisition.

customers were 55% of total sales for each of 2025 and 2024, with the balance of sales to customers primarily in Europe, Canada and Asia-Pacific.

● Gross profit was $181,709 for 2025, a 10% increase from $165,691 in 2024.

As a percentage of revenue, gross margin increased 150 basis points to 32.8% in 2025 from 31.3% in 2024.

G ross profit and gross margin percentage were impacted favorably by higher sales volume, improved product mix, and operational improvements driven by our Simplify to Accelerate NOW strategy.

● Operating income was $43,985 for 2025 compared with $30,038 for 2024, or 7.9% and 5.7% of revenue in 2025 and 2024, respectively.

● Net income was $22,034 for 2025, or $1.32 per diluted share, compared with $13,166, or $0.79 per diluted share, for 2024.

Net income was 45% lower in 2024 compared to 2023, and earnings per diluted share decreased by 46% as compared to 2023.

● Bookings were $480,031 for 2024 compared with $520,275 for 2023, a decrease of 8%.

Decreases in bookings are primarily due to a slowing demand at certain customers beginning in the second quarter of 2024.

Backlog as of December 31, 2024 was $230,788, a decrease of 17% from $276,093 at year end 2023.

Included in backlog as of December 31, 2024 is $7,353 contributed by the 2024 business acquisition.

● Debt of $224,177, net of cash of $36,102, increased by $1,574 to $188,075 at December 31, 2024 from debt of $218,402, net of cash of $31,901 of $186,501 at December 31, 2023, primarily as a result of borrowings to fund acquisition activities and capital expenditures, offset in part by payments made on debt from cash flows generated by operations.

● We declared and paid a dividend of $0.03 in each quarter of 2024, as well as declaring and paying $0.025 in the first quarter of 2023 and $0.03 in each of the second, third, and fourth quarters of 2023 pursuant to

our quarterly dividend program.

Dividends to shareholders for 2024 and 2023 were $0.12 and $0.115 per share, respectively.

Net income was 70% higher in 2025 compared to 2024, and earnings per diluted share increased by 70% as compared to 2024.

● Bookings were $550,864 for 2025 compared with $480,031 for 2024, an increase of 15%.

Increases in bookings are primarily due to increasing demand at certain customers, primarily power quality solutions supporting data center infrastructure throughout 2025.

Backlog as of December 31, 2025 was $232,925, an increase of 1% from $230,788 at year end 2024.

● Debt of $180,389, net of cash of $40,705, decreased by $48,391 to $139,684 at December 31, 2025 from debt of $224,177, net of cash of $36,102 of $188,075 at December 31, 2024, primarily as a result of payments made on debt from cash flows generated by operations.

● We declared and paid a dividend of $0.03 in each quarter of 2025 and 2024, pursuant to our quarterly dividend program.

Dividends to shareholders for 2025 and 2024 were each $0.12 per share.

The dividend payout ratio was 9% and 15% for 2025 and 2024, respectively when compared with the diluted earnings per share of $1.32 and $0.79, respectively.

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The emphasis on new opportunities has evolved from being an individual component provider to becoming a solutions provider whereby the new opportunities utilize multiple Allient technologies in a system solution approach.

We believe this approach will allow us to provide increased value to our customers and improved margins for our Company and are demonstrated in our acquisitions completed in 2024 and 2023.

We believe this approach will allow us to provide increased value to our customers and improved margins for our Company and are demonstrated in our acquisitions completed in previous years.

Our strong financial condition, along with AST continuous improvement initiatives in quality, delivery, and cost allow us to have a positive outlook for the continued long-term growth of our Company.

Outlook for 2026

We experienced a significant demand shift starting in the late second quarter of 2024, with notable declines in our Industrial Automation sector prompted by extended capital expenditure cycles, delayed factory expansions and budget constraints on automation upgrades as well as market softness in the recreational vehicle marketplace driven by increased financing costs and tightening of household budgets.

These factors combined with intermittent uneven order flow in other served markets, spurred a slowdown in demand.

The declines were in large part due to significant inventory rebalancing at some of our larger customers surfacing as the supply chain returned to more normal conditions and macroeconomic pressures shifting customer priorities.

These market conditions substantially persisted through the second half of 2024.

Our Simplify to Accelerate NOW program continues to generate tangible results while enhancing our agility and competitiveness.

● Annualized Savings:

To date, Allient has implemented $10 million in total annualized cost savings.

● Operational Efficiencies:

The program’s focus on refining the organizational structure, eliminating redundancies, and optimizing production processes has led to initial margin improvements, bolstering overall profitability.

● Enhanced Agility:

By simplifying its operations, Allient aims to improve its speed to market, enhance customer service, and strengthen its competitive positioning across targeted industries.

● Future Cost Rationalization:

Beyond the current $10 million in savings, Allient is actively identifying further opportunities to rationalize its cost structure in 2025, ensuring continued alignment with evolving market conditions and customer demands.

Our goal is to drive $6 million to $7 million in annual savings.

In early February 2025, we announced plans to expand machining capabilities at our Dothan, Alabama facility, an initiative expected to help support our goal.

While this transition presents complexities and requires focused execution, we are confident in the long-term efficiencies it will create.

One-time implementation costs are expected to be equivalent to the annualized savings, resulting in a one-year pay back on the investment.

We anticipate realizing the initial benefits of this initiative toward the end of 2025.

Allient is an applied technology/know-how motion company, and to grow, we will continue to invest in the technical resources to ensure we can move forward with our mantra to “ create controlled motion solutions that change the game ” and to meet the emerging needs of our customers in our served market segments.

We anticipate that our investment in these key resources will continue to drive our growth now and in the future.

We expect to continue the shift from being a component supplier to a more complete solutions provider, along with the application of AST, to drive cost reduction.

Our global production footprint provides us with the opportunity to be a value added supplier for global companies who require support around the world.

We will continue to evaluate and find areas to leverage our current manufacturing and sales capabilities to drive sales and improve efficiencies.

While near-term order patterns remain fluid, the fundamental drivers of our business remain strong.

Overall, our strategic initiatives position Allient for stronger financial performance, greater operational flexibility, and enhanced earnings power in the years ahead.

In 2025, we successfully executed on our strategic initiatives, delivering improved margins, stronger cash flow, and enhanced balance sheet flexibility.

Strength in industrial automation and power quality solutions supporting data center infrastructure, combined with the disciplined execution of structural cost and margin improvements from our Simplify to Accelerate NOW program, have yielded durable margin expansion.

Allient is an applied technology/know-how company, and to grow, we will continue to invest in the technical resources to ensure we can execute on our mantra to “ create game changing solutions that adds tangible value for our customers ”.

As we look into 2026, while we remain mindful of macroeconomics variability in certain end markets, our diversified portfolio, improved cost structure and enhanced financial flexibility support disciplined growth and long-term value creation.

Critical Accounting Policies and Estimates

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In the normal course of business, the Company does not accept product returns unless the item is defective as manufactured.

Company establishes provisions for estimated returns and warranties.

The Company establishes provisions for estimated returns and warranties.

All contracts include a standard warranty clause to guarantee that the product complies with agreed specifications.

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If the carrying amount of the reporting unit exceeds its fair value, an impairment loss is recognized equal to the excess, limited to the amount of goodwill allocated to that reporting unit.

We elected to bypass the qualitative assessment and performed a quantitative assessment of our single reporting unit as of October 31, 2024.

Fair value of the reporting unit is estimating using a weighted methodology that utilizes the income and market approaches.

The income approach incorporates significant assumptions and estimates, including discounted cash flow modeling to forecast cash flows, revenue growth, operating income margin, and discount rate.

As the fair value of our reporting unit exceeds its carrying value, Allient does not believe that our reporting unit is at risk for impairment.

Fair value is calculated based on estimated discounted future cash flows and comparable publicly traded companies.

Changes to the factors considered above could affect the estimated fair value of our reporting unit and could result in a goodwill impairment charge in a future period.

We performed a qualitative assessment of our single reporting unit as of October 31, 2025.

As part of this analysis, we evaluated factors including, but not limited to, our market capitalization and stock price performance, macro-economic conditions, market and industry conditions, cost factors, the competitive environment, and the operational stability and

overall financial performance of our reporting unit.

The assessment indicated that it was more-likely-than-not that the fair value of our reporting unit exceeded its carrying amount, and as such, a quantitative assessment was not performed.

We do not believe that our reporting unit is at risk for impairment.

However, changes to the factors considered above could affect the estimated fair value of our reporting unit and could result in a goodwill impairment charge in a future period.

As of December 31, 2025, we have $134,332 of goodwill recorded on our consolidated balance sheet, representing approximately 23% of total assets.

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Engineering and development

Business development

Acquisition and integration-related costs

Restructuring and business realignment costs

Amortization of intangible assets

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Interest expense

Other (income) expense, net

Other expense (income), net

Total other expense, net

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Diluted earnings per share

The decrease in revenues for 2024 reflects decreases within each of the target markets, most significantly in Vehicle.

Decreases in revenues compared to the prior year period are largely impacted by elevated shipments during the prior year period as supply chains normalized, combined with elevated inventory levels and slowing demand at our customers in the current period, partially offset by revenue contributed from the 2023 and 2024 acquisitions .

The increase in revenues for 2025 reflects increases within certain target markets, most significantly in Industrial and Aerospace and Defense.

Increases in revenues compared to the prior year period are largely impacted by increased demand in power quality solutions supporting data center infrastructure .

Our sales for 2025 were comprised of 55% to U.S.

customers and 45% to customers primarily in Europe, Canada and Asia-Pacific.

The overall decrease in revenue was primarily due to an 8% volume decrease and a minimal foreign currency impact.

The acquisitions completed in 2023 and 2024 contributed an incremental $40,856 of revenues in 2024.

The overall increase in revenue was primarily due to a 3.5% volume increase and a favorable 1.2% foreign currency impact.

See information included in “Non – GAAP Measures” below for a discussion of the non-GAAP measure and reconciliation of revenue to revenue excluding foreign currency impacts.

ORDER BOOKINGS AND BACKLOG:

The 8% decrease in orders in 2024 compared to 2023 is due to an 8% decrease in volume with minimal foreign currency impact.

Decreases in bookings are primarily due to a slowing demand at certain customers beginning in the second quarter of 2024.

The acquisitions completed in 2023 and 2024 contributed an incremental $39,993 of orders in 2024.

The decrease in backlog as of December 31, 2024, compared to December 31, 2023 includes an incremental backlog of $7,353 from the acquisition that was completed during 2024.

The 15% increase in orders in 2025 compared to 2024 is due to an 13.4% increase in volume and a favorable 1.3% foreign currency impact.

Increases in bookings are primarily due to increasing demand at certain customers, primarily power quality solutions supporting data center infrastructure throughout 2025.

GROSS PROFIT AND GROSS MARGIN:

Gross margins decreased to 31.3% for 2024, compared to 31.7% for 2023.

The gross margin decrease was largely driven by lower fixed cost absorption on lower sales volumes, as well as the gross margin impact of our most recent acquisition.

Gross margins increased to 32.8% for 2025, compared to 31.3% for 2024.

Gross profit and gross margin percentage were impacted favorably by higher sales volume, improved product mix, and operational improvements driven by our Simplify to Accelerate NOW strategy.

SELLING EXPENSES:

Selling expenses increased 2% during 2024 compared to 2023 primarily due to increased costs in connection with our acquisitions and the mix of sales with commissions.

Selling expenses decreased 3% during 2025 compared to 2024 primarily due to the mix of sales with commissions.

Selling expenses as a percentage of revenues were 4% and 5% during 2025 and 2024, respectively.

GENERAL AND ADMINISTRATIVE EXPENSES:

General and administrative expenses decreased by 5% during 2024 compared to 2023 due to l ower incentive compensation as well as cost reduction actions taken reflecting our Simplify to Accelerate NOW strategy .

General and administrative expenses increased by 4% during 2025 compared to 2024 due to high er incentive compensation, offset partially by cost reduction actions taken reflecting our Simplify to Accelerate NOW strategy .

As a percentage of revenues, general and administrative expenses were 10% and 11% in 2025 and 2024, respectively.

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The decrease reflects the cost reduction actions taken as part of our Simplify to Accelerate NOW strategy .

As a percentage of revenues, engineering and development expenses were 7% for each of the years ended December 31, 2024 and 2023.

BUSINESS DEVELOPMENT COSTS:

The decrease in business development costs in 2024 compared to 2023 is largely due to the fair value changes of contingent consideration of $1.9 million related to acquisitions incurred in 2023, compared to the $300 contra expense recognized in 2024, offset in part by restructuring expenses recognized in 2024.

As a percentage of revenues, engineering and development expenses were 7% and 8% for the years ended December 31, 2025 and 2024, respectively.

ACQUISITION AND INTEGRATION-RELATED COSTS:

Acquisition and integration-related costs were not significant in the current and prior year period.

RESTRUCTURING AND BUSINESS REALIGNMENT COSTS:

Restructuring and business realignment costs increased in the year ended December 31, 2025 compared to 2024 reflecting costs primarily associated with the transfer of assembly operations from our Dothan, Alabama facility in 2025 and timing of other Simplify to Accelerate NOW actions as compared with the prior year.

AMORTIZATION OF INTANGIBLE ASSETS:

Amortization of intangible assets increased 1% in 2024 compared to 2023, due to the inclusion of the full year of intangible asset amortization of the 2023 acquisition and the intangible asset amortization from the 2024 acquisition.

Amortization of intangible assets remained flat in 2025 compared to 2024.

INTEREST EXPENSE:

Interest expense increased by 7% in 2024 compared to 2023 primarily due to higher average debt balances and higher interest rates, offset in part by the impact of interest rate swaps.

Interest expense decreased by 1% in 2025 compared to 2024 primarily due to lower average debt balances, offset partially by higher interest rates, which are mitigated in part by the impact of interest rate swaps.

INCOME TAXES:

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The effective rate differs from the statutory rate primarily due to state income taxes, the impact of foreign tax provisions in the U.S., foreign tax rate differences, section 162(m) compensation limits, the benefit of Research and Development tax credits and incentives and withholding taxes on foreign distributions.

The effective tax rate for 2024 was higher than the effective tax rate for 2023 primarily due to increases due to impacts of section 162(m) compensation and withholding taxes on foreign distributions, partially offset by increases in certain credits and incentives, the realization of certain deferred income tax assets that had been reserved in prior years, as well as the impact of the mix of foreign and domestic income.

The effective tax rate for 2025 was higher than the effective tax rate for 2024 primarily due to increases due to impacts of section 162(m) compensation limits, withholding taxes on foreign distributions, and the impact of the mix of foreign and domestic income, partially offset by increases in certain credits and incentives and the realization of certain deferred income tax assets that had been reserved in prior years.

NET INCOME AND ADJUSTED NET INCOME:

Net income decreased during 2024 compared to 2023, primarily due to operating income decreases, reflecting decreased revenues and lower gross margin, partially offset by a decrease in operating expenses.

Net income increased during 2025 compared to 2024, primarily due to operating income increases, reflecting increased revenues and higher gross margin, offset partially by increases in operating expenses.

Adjusted net income for the years ended December 31, 2025 and 2024 was $36,274 and $24,679, respectively.

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Non-GAAP Measures

Revenue excluding foreign currency exchange, Organic growth, EBITDA, Adjusted EBITDA, Adjusted net income and Adjusted diluted earnings per share are provided for information purposes only and are not measures of financial performance under GAAP.

Organic growth, EBITDA, Adjusted EBITDA, Adjusted net income and Adjusted diluted earnings per share are provided for information purposes only and are not measures of financial performance under GAAP.

Management believes the presentation of these financial measures reflecting non-GAAP adjustments provides important supplemental information to investors and other users of our financial statements in evaluating the operating results of the Company as distinct from results that include items that are not indicative of ongoing operating results.

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These non-GAAP disclosures have limitations as analytical tools, should not be viewed as a substitute for revenue and net income determined in accordance with GAAP, and should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies.

In addition, supplemental presentation should not be construed as an inference that the Company’s future results will be unaffected by similar adjustments to net income determined in accordance with GAAP.

In addition, the supplemental presentation should not be construed as an inference that the Company’s future results will be unaffected by similar adjustments to net income determined in accordance with GAAP.

Organic revenue is reported revenues adjusted for the impact of foreign currency and the revenue contribution from acquisitions.

The Company believes that revenue excluding foreign currency exchange impacts is a useful measure in analyzing sales results.

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The Company also believes that Adjusted EBITDA provides helpful information about the operating performance of its business.

Adjusted EBITDA excludes stock-based compensation expense, as well as business development costs, foreign currency gains/losses on short-term assets and liabilities, and other items that are not indicative of the Company’s core operating performance.

Adjusted EBITDA excludes stock-based compensation expense, as well as acquisition and integration-related costs, restructuring and business realignment costs, foreign currency gains/losses on short-term assets and liabilities, and other items that are not indicative of the Company’s core operating performance.

EBITDA and Adjusted EBITDA do not represent and should not be considered as an alternative to net income, operating income, net cash provided by operating activities or any other measure for determining operating performance or liquidity that is calculated in accordance with GAAP.

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Organic growth is reported revenues adjusted for the impact of foreign currency and the revenue contribution from acquisitions.

The Company’s calculation of Revenue excluding foreign currency exchange impacts for the years ending December 31, 2024 and 2023 is as follows:

For the year ended December 31,

The Company’s calculation of revenue excluding foreign currency exchange impacts for the year ended December 31, 2025 is as follows:

December 31, 2025

Revenue as reported

Currency impact unfavorable

Foreign currency impact - (favorable) / unfavorable

Revenue excluding foreign currency exchange impacts

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Restructuring and business realignment costs

Foreign currency (gain)/loss

Foreign currency loss (gain)

Adjusted EBITDA

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Amortization of intangible assets – net

Foreign currency (gain) / loss – net

Foreign currency loss (gain) – net

Acquisition and integration-related costs – net

1 unchanged sentence

Non-GAAP adjusted net income and adjusted diluted earnings per share

(1) Applies a blended federal, state, and foreign tax rate of approximately 23% in 2024 and 21% in 2023 applicable to the non-GAAP adjustments.

(1) Applies a blended federal, state, and foreign tax rate of approximately 23% in 2025 and 2024 applicable to the non-GAAP adjustments.

Liquidity and Capital Resources

The Company’s liquidity position as measured by cash and cash equivalents increased by $4,603 to a balance of $40,705 at December 31, 2025 from 2024.

Year Ended December 31,

(in thousands):

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Of the $40,705 cash and cash equivalents on hand at December 31, 2025, $36,662 was located at our foreign subsidiaries and may be subject to withholding tax if repatriated to the U.S.

During 2024, the cash provided by operating activities decreased from 2023 primarily due to decreases in cash due to changes in accounts payable and accrued liabilities, as well as a decrease in net income, offset partially by increases in cash due to changes in accounts receivable and inventory.

The cash used in investing activities in 2024 increased as compared with 2023 due to $20,000 in cash paid for the acquisition of SNC, offset by $5,129 of cash paid in 2023 for the acquisition of Sierramotion, as well as by a decrease in capital expenditures of $1,920.

During 2025, the cash provided by operating activities increased from 2024 primarily due to increases in cash due to an increase in net income, as well as changes in accounts payable, and accrued liabilities, offset partially by decreases in cash due to changes in accounts receivable and inventory.

The cash used in investing activities in 2025 decreased as compared with 2024 due to $20,000 in cash paid for the acquisition of SNC in 2024, as well as a decrease in capital expenditures of $2,496.

The Company expects 2026 capital expenditures to be approximately $10,000 to $12,000.

Cash used in financing activities in 2024 as compared to cash used in financing activities in 2023 reflects the borrowings of $20,000 from the Amended Revolving Facility to fund the SNC acquisition and the $50,000 of fixed-rate Notes issued in March 2024 that were used to pay down the Revolving Facility, as compared to the $11,000 borrowed in 2023, primarily to fund the business acquisition activity in the third quarter of 2023 and, to a lesser extent, inventory requirements during uncertain supply chain environments in 2023.

Cash used in financing activities in 2025 as compared to cash used in financing activities in 2024 reflects the borrowings of $20,000 from the Amended Revolving Facility to fund the SNC acquisition and the $50,000 of fixed-rate Notes issued in March 2024 that were used to pay down the Revolving Facility.

Debt repayments, excluding the pay down on the Revolving Facility of $50,000 from the Notes issuance, of $44,448 and $18,433 were made during 2025 and 2024, respectively.

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As of December 31, 2025, the unused Amended Revolving Facility was $155,038.

The amount available to borrow may be lower and may vary from period to period based upon our debt and EBITDA levels, which impacts our covenant

calculations.

Additionally, the Company has a $150,000 fixed-rate private shelf facility, under which $50,000 of borrowings are outstanding at December 31, 2025.

The amount available to borrow may be lower and may vary from period to period based upon our debt and EBITDA levels, which impacts our covenant calculations.

The Amended Credit Agreement matures in March 2029.

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These amendments include provisions to increase the maximum Leverage Ratio to 4.5:1.0 for the quarters ending March 31, 2025 and June 30, 2025, 4.0:1.0 for the quarter ending September 30, 2025, and returning to 3.75:1.0 for the quarter ending December 31, 2025 and thereafter.

From January 1, 2025 through September 30, 2025, borrowings under the Revolving Facility will bear interest at Term SOFR plus a margin of 2.50% and a commitment fee of 0.325% on the unused portion of the Revolving Facility.

Also, from October 1, 2024 through September 30, 2025, the Series A Notes will bear interest at 6.46%.

The Company declared dividends, in total, of $0.12 and $0.115 per share during 2024 and 2023, respectively.

From January 1, 2025 through September 30, 2025, borrowings under the Revolving Facility bore interest at Term SOFR plus a margin of 2.50% and a commitment fee of 0.325% on the unused portion of the Revolving Facility.

Also, from October 1, 2024 through September 30, 2025, the Series A Notes bore interest at 6.46%.

The Company declared dividends, in total, of $0.12 per share during 2025 and 2024.

The Company’s working capital, capital expenditure and dividend requirements are expected to be funded from cash provided by operations and amounts available under the Amended Credit Agreement (refer to Note 7, Debt Obligations , of the notes to consolidated financial statements for definition and terms).

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This amount is not indicative of the hypothetical net earnings impact due to partially offsetting impacts on cost of sales and operating expenses in those currencies.

We estimate that foreign currency exchange rate fluctuations decreased sales in 2024 compared to 2023 by approximately $139.

We estimate that foreign currency exchange rate fluctuations increased sales in 2025 compared to 2024 by approximately $6,481.

We translate all assets and liabilities of our foreign operations, where the U.S.

dollar is not the functional currency, at the period-end exchange rate and translate sales and expenses at the average exchange rates in effect during the period.

The net effect of these translation adjustments is recorded in the consolidated financial statements as comprehensive (loss) income.

The translation adjustment was a loss of $12,033 and a gain of $3,669 for the years ended December 31, 2024 and 2023, respectively.

The net effect of these translation adjustments is recorded in the consolidated financial statements as comprehensive income (loss).

The translation adjustment was a gain of $14,759 and a loss of $12,033 for the years ended December 31, 2025 and 2024, respectively.

Translation adjustments are not adjusted for income taxes as they relate to permanent investments in our foreign subsidiaries.

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We have contracts to hedge our short-term balance sheet exposure, primarily intercompany, that are denominated in currencies (Euro, Mexican Peso, Canadian Dollar, New Zealand Dollar, Chinese Renminbi, Swedish Krona) other than the subsidiary’s functional currency and are adjusted to current values using period-end exchange rates.

The resulting gains or losses are recorded in other (income) expense, net in the consolidated statements of income and comprehensive income.

The resulting gains or losses are recorded in other expense (income), net in the consolidated statements of income and comprehensive income.

To minimize foreign currency exposure, the Company had foreign currency contracts with notional amounts of $26,033 and $30,945 at December 31, 2025 and 2024, respectively.

The foreign currency contracts are recorded in the consolidated balance sheets at fair value and resulting gains or losses are recorded in other expense (income), net in the consolidated statements of income and comprehensive income.

During the years ended December 31, 2024 and 2023, we recorded losses of $1,749 and $115, respectively, which is included in other (income) expense, net and generally offset

the gains or losses from the foreign currency adjustments on the intercompany balances that are also included in other (income) expense, net.

Net foreign currency transaction gains and losses included in total other (income) expense, net amounted to a gain of $85 and a loss of $281 in 2024 and 2023, respectively.

During the years ended December 31, 2025 and 2024, we recorded a gain of $481 and a loss of $1,749, respectively, which is included in other expense (income), net and generally offset the gains or losses from the foreign currency adjustments on the intercompany balances that are also

included in other expense (income), net.

Net foreign currency transaction gains and losses included in total other expense (income), net amounted to a loss of $2,078 and a gain of $85 in 2025 and 2024, respectively.

Interest Rates

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Interest on the Notes will be payable quarterly on the 21st day of March, June, September and December in each year, commencing on June 21, 2024.

As amended on October 22, 2024, the Series A Notes will bear interest at 6.46% from October 1, 2024 through September 30, 2025.

As amended on October 22, 2024, the Series A Notes bore interest at 6.46% from October 1, 2024 through September 30, 2025.

Interest will be computed on the basis of a 360-day year composed of twelve 30-day months.

Interest rates on our Credit Facility are based on Term SOFR plus a margin of 1.25% to 2.50% (1.75% at December 31, 2025), depending on the Company’s ratio of total funded indebtedness to consolidated EBITDA.

As amended on October 22, 2024, borrowings under the Credit Facility will bear interest at Term SOFR plus a margin of 2.50% from January 1, 2025 through September 30, 2025.

As amended on October 22, 2024, borrowings under the Credit Facility bore interest at Term SOFR plus a margin of 2.50% from January 1, 2025 through September 30, 2025.

We use interest rate derivatives to add stability to interest expense and to manage our exposure to interest rate movements.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis