What changed in this filing

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Item 1. Financial Statements

2024-11-07 compared with 2024-08-05 · 199 added, 180 removed, 424 unchanged (47% of the section changed)

2 unchanged sentences

Consolidated Condensed Balance Sheets

June 29, 2024 with Comparative Figures for December 31, 2023

September 28, 2024 with Comparative Figures for December 31, 2023

(In thousands)

June 29, 2024 December 31, 2023

September 28, 2024 December 31, 2023

Current Assets:

41 unchanged sentences

Consolidated Condensed Statements of Operations

Three and Six Months Ended June 29, 2024 With Comparative Figures for 2023

Three and Nine Months Ended September 28, 2024 With Comparative Figures for 2023

(In thousands, except per share data)

Six Months Ended Three Months Ended

June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Nine Months Ended Three Months Ended

September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023

Sales $ 586,886 $ 493,914 $ 203,698 $ 162,922

2 unchanged sentences

Selling, General and Administrative Expenses 100,698 95,276 34,369 35,097

Income from Operations 9,216 26 7,550 2,396

Income (Loss) from Operations 17,590 ( 14,453 ) 8,374 ( 14,479 )

Net Gain on Sale of Business — ( 3,427 ) — —

Loss on Extinguishment of Debt 6,987 — 6,987 —

Other Expense (Income), Net 1,214 ( 562 ) 343 348

Interest Expense, Net of Interest Income 17,832 17,381 6,217 5,991

(Loss) Income Before Income Taxes ( 3,270 ) ( 7,027 ) 1,259 ( 3,902 )

(Benefit from) Provision for Income Taxes ( 1,625 ) 9,387 ( 274 ) 8,097

Net (Loss) Income $ ( 1,645 ) $ ( 16,414 ) $ 1,533 $ ( 11,999 )

(Loss) Earnings Per Share:

Loss Before Income Taxes ( 8,443 ) ( 27,845 ) ( 5,173 ) ( 20,818 )

Provision for (Benefit from) Income Taxes 4,940 5,552 6,565 ( 3,835 )

Net Loss $ ( 13,383 ) $ ( 33,397 ) $ ( 11,738 ) $ ( 16,983 )

Loss Per Share:

$ ( 0.38 ) $ ( 1.02 ) $ ( 0.34 ) $ ( 0.51 )

2 unchanged sentences

ASTRONICS CORPORATION

Consolidated Condensed Statements of Comprehensive (Loss) Income

Three and Six Months Ended June 29, 2024 With Comparative Figures for 2023

Consolidated Condensed Statements of Comprehensive Loss

Three and Nine Months Ended September 28, 2024 With Comparative Figures for 2023

(In thousands)

Six Months Ended Three Months Ended

June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Net (Loss) Income $ ( 1,645 ) $ ( 16,414 ) $ 1,533 $ ( 11,999 )

Other Comprehensive (Loss) Income:

Nine Months Ended Three Months Ended

September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023

Net Loss $ ( 13,383 ) $ ( 33,397 ) $ ( 11,738 ) $ ( 16,983 )

Other Comprehensive Income (Loss):

Foreign Currency Translation Adjustments

2 unchanged sentences

843 557 281 185

Total Other Comprehensive (Loss) Income ( 362 ) 1,083 113 674

Comprehensive (Loss) Income $ ( 2,007 ) $ ( 15,331 ) $ 1,646 $ ( 11,325 )

Total Other Comprehensive Income (Loss) 970 440 1,332 ( 643 )

Comprehensive Loss $ ( 12,413 ) $ ( 32,957 ) $ ( 10,406 ) $ ( 17,626 )

See notes to consolidated condensed financial statements.

1 unchanged sentence

Consolidated Condensed Statements of Cash Flows

Six Months Ended June 29, 2024 With Comparative Figures for 2023

Six Months Ended

(Unaudited, In thousands)

June 29, 2024 July 1, 2023

Nine Months Ended September 28, 2024 With Comparative Figures for 2023

(In thousands)

Nine Months Ended

September 28, 2024 September 30, 2023

Cash Flows from Operating Activities:

8 unchanged sentences

Non-Cash Annual Stock Bonus Accrual 1,448 —

Loss on Extinguishment of Debt 6,987 —

Net Gain on Sale of Business, Before Taxes — ( 3,427 )

Non-Cash Litigation Provision Adjustment — ( 1,305 )

Non-Cash Deferred Liability Recovery — ( 5,824 )

20 unchanged sentences

Financing-related Costs ( 5,863 ) ( 6,447 )

Finance Lease Principal Payments ( 70 ) ( 24 )

Financing Extinguishment Costs ( 3,210 ) —

Proceeds from At-the-Market Stock Sales — 13,045

Other ( 96 ) ( 47 )

4 unchanged sentences

Cash and Cash Equivalents and Restricted Cash at End of Period $ 6,364 $ 7,651

Supplemental Disclosure of Cash Flow Information

Interest Paid $ 15,261 $ 14,136

Income Taxes Paid, Net of Refunds $ 3,975 $ 2,192

See notes to consolidated condensed financial statements.

1 unchanged sentence

Consolidated Condensed Statements of Shareholders’ Equity

Three and Six Months Ended June 29, 2024 With Comparative Figures for 2023

Three and Nine Months Ended September 28, 2024 With Comparative Figures for 2023

(In thousands)

Six Months Ended Three Months Ended

June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Nine Months Ended Three Months Ended

September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023

Beginning of Period $ 314 $ 291 $ 320 $ 295

Issuance of Common Stock Through At-the-Market (“ATM”) Offering — 8 — 8

Net Shares Issued to Fund Bonus Obligations 3 — — —

Net Exercise of Stock Options, including ESPP — 4 — 4

Net Issuance of Common Stock for Restricted Stock Units (“RSU’s”) 1 2 — 1

7 unchanged sentences

Beginning of Period 129,544 98,630 137,290 102,020

Equity-based Compensation Expense and Net Exercise of Stock Options 4,642 3,993 1,840 1,594

Issuance of Common Stock Through ATM Offering, Net of Offering Costs — 13,611 — 13,611

Equity-based Compensation Expense and Net Exercise of Stock Options, including ESPP 6,414 8,714 1,772 4,721

Gross Shares Issued to Fund Bonus Obligations 6,281 — — —

8 unchanged sentences

Beginning of Period 209,753 240,360 206,778 221,698

Net (Loss) Income ( 1,645 ) ( 16,414 ) 1,533 ( 11,999 )

Net Loss ( 13,383 ) ( 33,397 ) ( 11,738 ) ( 16,983 )

Reissuance of Treasury Shares for 401K Contribution ( 1,330 ) ( 3,142 ) — ( 894 )

8 unchanged sentences

Consolidated Condensed Statements of Shareholders’ Equity, Continued

Three and Six Months Ended June 29, 2024 With Comparative Figures for 2023

Three and Nine Months Ended September 28, 2024 With Comparative Figures for 2023

(In thousands)

Six Months Ended Three Months Ended

(Shares) June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Nine Months Ended Three Months Ended

(Shares) September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023

Beginning of Period 31,402 29,122 32,024 29,478

Issuance of Common Stock Through ATM Offering — 834 — 834

Net Shares Issued to Fund Bonus Obligations 218 — — —

Net Issuance from Exercise of Stock Options — 1 — —

Net Issuance from Exercise of Stock Options, including ESPP — 438 — 437

Net Issuance of Common Stock for RSU’s 165 145 51 55

12 unchanged sentences

Notes to Consolidated Condensed Financial Statements

June 29, 2024

September 28, 2024

1) Basis of Presentation

The accompanying unaudited statements have been prepared in accordance with U.S.

generally accepted accounting principles for interim financial information.

generally accepted accounting principles (“GAAP”) for interim financial information.

Accordingly, they do not include all of the information and footnotes required by U.S.

generally accepted accounting principles for complete financial statements.

GAAP for complete financial statements.

In the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation have been included.

2 unchanged sentences

In addition, the supply chain pressures and residual impacts of the COVID-19 pandemic have increased the volatility we experience in our financial results in recent periods and this could continue in future interim and annual periods.

Operating results for the six months ended June 29, 2024, are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

Operating results for the nine months ended September 28, 2024, are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

The balance sheet on December 31, 2023, has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by U.S.

generally accepted accounting principles (“GAAP”) for complete financial statements.

GAAP for complete financial statements.

For further information, refer to the financial statements and footnotes included in Astronics Corporation’s 2023 annual report on Form 10-K.

7 unchanged sentences

The Company recorded the gain and received the payment in the first quarter of 2023.

In October 2024, a customer reported within the Aerospace segment declared bankruptcy.

As a result, the Company recorded a full reserve of $ 0.8 million for outstanding receivables, a reserve of $ 0.9 million for inventory and $ 0.5 million for impairment of fixed assets.

The reserves are non-cash in the current quarter and year to date, as the associated assets existed prior to 2024.

In the third quarter of 2023, a customer reported within the Aerospace segment filed for bankruptcy under Chapter 11.

As a result, the Company recorded a full reserve of $ 7.5 million for outstanding accounts receivable and $ 3.6 million for inventory in the prior year periods.

Restricted Cash

2 unchanged sentences

The following table provides a reconciliation of cash and restricted cash included in Consolidated Condensed Balance Sheets to the amounts included in the Consolidated Condensed Statements of Cash Flows.

(In thousands) June 29, 2024 July 1, 2023

(In thousands) September 28, 2024 September 30, 2023

Cash and Cash Equivalents $ 5,177 $ 3,981

4 unchanged sentences

The Company regularly reviews the allowance by considering factors such as the age of the receivable balances, historical experience, credit quality, current economic conditions, and reasonable and supportable forecasts of future economic conditions that may affect a customer’s ability to pay.

The changes in allowances for estimated credit losses for the three and six months ended June 29, 2024 and July 1, 2023 consisted of the following:

Six Months Ended Three Months Ended

(In thousands) June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

The changes in allowances for estimated credit losses for the three and nine months ended September 28, 2024 and September 30, 2023 consisted of the following:

Nine Months Ended Three Months Ended

(In thousands) September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023

Balance at Beginning of the Period $ 9,193 $ 2,630 $ 1,495 $ 1,725

2 unchanged sentences

Balance at End of the Period $ 2,343 $ 9,186 $ 2,343 $ 9,186

In November 2023, a non-core contract manufacturing customer reported within the Aerospace segment filed for bankruptcy under Chapter 11.

As a result, the Company recorded a full reserve in the fourth quarter of 2023 of $ 7.5 million for outstanding accounts receivable, which was subsequently written off in the second quarter of 2024.

As previously discussed, the Company recorded a full reserve of $ 0.8 million in the third quarter of 2024 for outstanding receivables associated with a customer bankruptcy within the Aerospace segment.

Additionally, the Company recorded a full reserve in the third quarter of 2023 of $ 7.5 million for outstanding accounts receivable associated with a customer bankruptcy within the Aerospace segment, which was subsequently written off in the second quarter of 2024.

Research and Development Expenses

Research and development costs are expensed as incurred and include salaries, benefits, consulting, material costs, and depreciation.

Research and development expenses amounted to $ 14.2 million and $ 12.7 million for the three months ended and $ 27.5 million and $ 25.4 million for the six months ended June 29, 2024 and July 1, 2023, respectively.

Research and development expenses amounted to $ 12.4 million and $ 14.1 million for the three months ended and $ 39.9 million and $ 39.5 million for the nine months ended September 28, 2024 and September 30, 2023, respectively.

These costs are included in cost of products sold.

4 unchanged sentences

Should the carrying amount exceed undiscounted projected cash flows, an impairment loss would be recognized to the extent the carrying amount exceeds fair value.

As of June 29, 2024 and July 1, 2023, the Company concluded that no indicators of impairment relating to intangible assets or goodwill existed and an interim test was not performed in the six-month periods then ended.

As of September 28, 2024 and September 30, 2023, the Company concluded that no indicators of impairment relating to intangible assets or goodwill existed and an interim test was not performed in the nine-month periods then ended.

Foreign Currency Translation

The aggregate foreign currency transaction gain or loss included in operations was insignificant for the three and six months ended June 29, 2024 and July 1, 2023.

The aggregate foreign currency transaction gain or loss included in operations was insignificant for the three and nine months ended September 28, 2024 and September 30, 2023.

Newly Adopted Accounting Pronouncements

15 unchanged sentences

Recent ASUs were assessed and determined to be either not applicable or had or are expected to have minimal impact on our financial statements and related disclosures.

On June 29, 2024, we had $ 633.4 million of outstanding performance obligations, which we refer to as total backlog.

On September 28, 2024, we had $ 611.9 million of outstanding performance obligations, which we refer to as total backlog.

In conjunction with the customer bankruptcy discussed in Note 1, we have removed all outstanding backlog in the third quarter of 2024, approximately $ 9.3 million, related to such customer.

We expect to recognize approximately $ 519.8 million of our outstanding performance obligations as revenue over the next twelve months and the balance thereafter.

We recognized $ 9.0 million and $ 10.6 million during the three months ended and $ 15.2 million and $ 19.5 million during the six months ended June 29, 2024 and July 1, 2023, respectively, in revenues that were included in the contract liability balance at the beginning of the period.

The Company's contract assets and contract liabilities consist primarily of costs and profits in excess of billings and billings in excess of cost and profits, respectively.

The following table presents the beginning and ending balances of contract assets and contract liabilities during the six months ended June 29, 2024:

The following table presents the beginning and ending balances of contract assets and contract liabilities during the nine months ended September 28, 2024:

(In thousands) Contract Assets Contract Liabilities

1 unchanged sentence

$ 46,321 $ 22,888

Ending Balance, June 29, 2024

Ending Balance, September 28, 2024

$ 57,489 $ 20,210

The increase in contract assets reflects the net impact of new revenue recognized in excess of billings exceeding billing of previously unbilled revenue during the period, partially offset by a $ 3.5 million revision of estimated costs to complete certain long-term mass transit Test contracts.

The revision resulted in reduced revenue recognized during the three and six months ended June 29, 2024 due to lower estimates of the percentage of work completed on the programs.

The revision resulted in reduced revenue recognized during the nine months ended September 28, 2024 due to lower estimates of the percentage of work completed on the programs.

The decrease in contract liabilities reflects the net impact of revenue recognized in excess of new customer advances or deferred revenues recorded.

We recognized $ 6.3 million and $ 9.3 million during the three months ended and $ 16.4 million and $ 22.1 million during the nine months ended September 28, 2024 and September 30, 2023, respectively, in revenues that were included in the contract liability balance at the beginning of the period.

The Company recognizes an asset for certain, material costs to fulfill a contract if it is determined that the costs relate directly to a contract or an anticipated contract that can be specifically identified, generate or enhance resources that will be used in satisfying performance obligations in the future, and are expected to be recovered.

2 unchanged sentences

Capitalized fulfillment costs are included in Work in Progress within Inventories in the accompanying Consolidated Condensed Balance Sheets.

Should future orders not materialize or it is determined the costs are no longer probable of recovery, the capitalized costs are written off.

Capitalized fulfillment costs were $ 3.0 million and $ 4.7 million on June 29, 2024 and December 31, 2023, respectively.

Amortization of fulfillment costs recognized within Cost of Products Sold was

approximately $ 2.7 million and $ 3.0 million for the three and six months ended June 29, 2024.

Should future orders not materialize or it is determined the costs are no longer probable of

recovery, the capitalized costs are written off.

Capitalized fulfillment costs were $ 4.2 million and $ 4.7 million on September 28, 2024 and December 31, 2023, respectively.

Amortization of fulfillment costs recognized within Cost of Products Sold was approximately $ 0.1 million and $ 3.1 million for the three and nine months ended September 28, 2024.

No amortization of fulfillment costs was recorded in 2023.

The following table presents our revenue disaggregated by Market Segments as follows:

Six Months Ended Three Months Ended

(In thousands) June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Nine Months Ended Three Months Ended

(In thousands) September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023

Aerospace Segment

13 unchanged sentences

The following table presents our revenue disaggregated by Product Lines as follows:

Six Months Ended Three Months Ended

(In thousands) June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Nine Months Ended Three Months Ended

(In thousands) September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023

Aerospace Segment

14 unchanged sentences

( In thousands )

June 29, 2024 December 31, 2023

September 28, 2024 December 31, 2023

Finished Goods

4 unchanged sentences

$ 204,952 $ 191,801

As further described in Note 1, the Company recorded a $ 0.9 million and $ 3.6 million reduction in inventory for customer bankruptcies within the Aerospace segment in the three and nine months ended September 28, 2024 and September 30, 2023, respectively.

4) Property, Plant and Equipment

1 unchanged sentence

(In thousands)

June 29, 2024 December 31, 2023

September 28, 2024 December 31, 2023

$ 8,617 $ 8,606

10 unchanged sentences

The following table summarizes acquired intangible assets as follows:

June 29, 2024 December 31, 2023

September 28, 2024 December 31, 2023

(In thousands) Weighted

9 unchanged sentences

Amortization expense for acquired intangibles is summarized as follows:

Six Months Ended Three Months Ended

Nine Months Ended Three Months Ended

(In thousands)

June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023

Amortization Expense

4 unchanged sentences

2025 $ 10,935

The following table summarizes the changes in the carrying amount of goodwill for the six months ended June 29, 2024:

The following table summarizes the changes in the carrying amount of goodwill for the nine months ended September 28, 2024:

(In thousands) December 31, 2023 Foreign

June 29, 2024

September 28, 2024

Aerospace $ 36,575 $ ( 41 ) $ 36,534

2 unchanged sentences

7) Long-term Debt and Notes Payable

The Company's long-term debt at June 29, 2024 and December 31, 2023 consisted of borrowings under its Sixth Amended and Restated Credit Agreement (the “ABL Revolving Credit Facility”) which was entered into on January 19, 2023.

The ABL Revolving Credit Facility set the maximum aggregate amount that the Company can borrow under the revolving credit line at $ 115 million, with borrowings subject to a borrowing base determined primarily by certain domestic inventory and accounts receivable.

The maturity date of borrowings under the ABL Revolving Credit Facility was January 19, 2026.

Under the terms of the ABL Revolving Credit Facility, the Company paid interest on the unpaid principal amount of the facility at a rate equal to SOFR (which was required to be at least 1.00 %) plus 2.25 % to 2.75 %.

The Company was required to pay a quarterly commitment fee under the ABL Revolving Credit Facility in an amount equal to 0.25 % or 0.375 % based on the Company’s average excess availability.

Under the provisions of the ABL Revolving Credit Facility, the Company has a cash dominion arrangement with the lead banking institution whereby eligible daily cash receipts are contractually utilized to pay down outstanding borrowings and any cash balances subject to the dominion arrangement collateralize the outstanding borrowings under the ABL Revolving Credit Facility.

Eligible cash balances that have not yet been applied to outstanding debt balances are classified as restricted cash in the accompanying Consolidated Condensed Balance Sheets.

The Company was also required to maintain minimum excess availability of $ 10 million for the quarter ended June 29, 2024.

On June 29, 2024, there was $ 97.4 million outstanding on the ABL Revolving Credit Facility and there remained $ 17.3 million available, net of outstanding letters of credit (though subject to the minimum liquidity requirement).

The Company also entered into a $ 90 million asset-based Term Loan Facility on January 19, 2023.

The Term Loan Facility was secured primarily by fixed assets, real estate and intellectual property.

The maturity date of the Term Loan Facility was the earlier of the stated maturity date of the ABL Revolving Credit Facility or January 19, 2027, if the ABL Revolving Credit Facility was extended beyond that date.

The Company paid interest under the Term Loan Facility at a rate equal to SOFR (which was required to be at least 2.50 %) plus 8.75 %.

The Company was required to pay a commitment fee under the Term Loan Facility of 5 % of the total aggregate commitment, or $ 4.5 million, $ 1.8 million which was paid on the closing date, $ 1.8 million which was paid in June 2023 and $ 0.9 million which was paid in June 2024.

Amortization of the principal under the Term Loan Facility began with a monthly amortization rate of 0.292 % of the outstanding term loan principal balance for the period April 1, 2023 through June 1, 2023, 0.542 % per month for the period July 1, 2023 through September 1, 2023 and 0.833 % monthly thereafter.

Pursuant to the ABL Revolving Credit Facility and the Term Loan Facility, the Company was required to comply with a minimum trailing four quarter Adjusted EBITDA, as defined in the ABL Revolving Credit Facility and Term Loan Facility Agreements, of $ 48.0 million in the second quarter of 2024, increasing thereafter.

Mandatory prepayment of a portion of excess cash flow, as defined by the Term Loan Facility, was payable towards the principal amount outstanding on an annual basis.

No such amounts were payable for the year ended December 31, 2023.

Any voluntary prepayments made are subject to a prepayment fee, as defined by the Term Loan Facility.

The Company was subject to a minimum fixed charge coverage ratio of 1.10 to 1.00.

Further, the Company was subject to excess cash flow repayment provisions, restrictions on additional indebtedness, share repurchases and dividend payments, and a limitation on capital expenditures.

The Company was in compliance with debt covenants under the ABL Revolving Credit Facility and Term Loan Facility as of and for the quarter ended June 29, 2024.

The Company amended its existing ABL Revolving Credit Facility on July 11, 2024 by entering into the Seventh Amended and Restated Credit Agreement (the “Restated ABL Agreement”).

The Restated ABL Agreement increased the maximum aggregate amount that the Company can borrow pursuant to the revolving credit line thereunder to $ 200 million from $ 115 million, with borrowings subject to a borrowing base determined primarily by inventory, accounts receivable, machinery and equipment and real estate.

The Restated ABL Agreement extended the scheduled maturity date for the credit facility from January 19, 2026 to July 11, 2027.

Under the terms of the Restated ABL Agreement, the Company will now pay interest on the unpaid principal amount of the credit facility at a rate equal to SOFR plus a term SOFR adjustment in the amount of 0.10 % per annum (which collectively shall be at least 1.00 %) plus an applicable margin ranging from 2.50 % to 3.00 % determined based upon the Company’s excess availability (as defined in the Restated ABL Agreement).

The Company will pay a quarterly commitment fee under the Restated ABL Agreement on undrawn revolving credit commitments in an amount equal to 0.25 % or 0.375 % based on the Company’s average excess availability under the credit facility.

The Company also entered into a $ 55 million Term Loan Facility (the “Revised Term Loan Facility”) on July 11, 2024.

The Revised Term Loan Facility is secured primarily by the Company’s intellectual property and equity interests of the Company’s subsidiaries.

The maturity date of the Revised Term Loan Facility is July 11, 2027.

The Company will pay interest under the Revised Term Loan Facility at a rate equal to SOFR plus a term SOFR adjustment in the amount of 0.10 % per annum (which collectively shall be at least 1.00 %) plus an applicable margin ranging from 5.50 % to 6.75 % determined based upon the Company’s consolidated leverage ratio (as defined in the Revised Term Loan Facility).

The Company will pay a commitment

fee to the lenders under the Revised Term Loan Facility in the amount of 2.0 % of the total aggregate commitment.

The Company is required to repay the principal amount of the term loans under the Revised Term Loan Facility in quarterly installments on the last day of each fiscal quarter in an amount equal to $ 137,500 .

The principal amount of the Revised Term Loan Facility will amortize at a rate of 1.00 % (or approximately $ 550,000 ) per year.

The Company is required to pay a call premium of $ 3.2 million in conjunction with the repayment of the original Term Loan Facility.

Total payments of $ 1.3 million are payable over the next twelve months, including the annual amortization of the Revised Term Loan Facility and the final monthly $ 0.8 million payment due under the Term Loan Facility prior to its termination, and as such, have been classified as current in the accompanying Consolidated Condensed Balance Sheet as of June 29, 2024.

The interest rate on current maturities of long-debt is variable at SOFR plus 8.75 % and was 14.2 % at June 29, 2024 and December 31, 2023.

The remaining balance of $ 79.7 million under the Term Loan Facility as of June 29, 2024, is recorded as long-term in the accompanying Consolidated Condensed Balance Sheet.

The Company incurred $ 1.7 million in incremental debt issuance costs during the six months ended June 29, 2024, allocated between the original and Restated ABL Revolving Credit Facilities and the original and Revised Term Loan Facilities.

The Company amended the existing revolving credit facility on July 11, 2024 by entering into the Seventh Amended and Restated Credit Agreement (the “ABL Revolving Credit Facility”).

The ABL Revolving Credit Facility set the maximum aggregate amount that the Company can borrow pursuant to the revolving credit line at $ 200 million, with borrowings subject to a borrowing base determined primarily by inventory, accounts receivable, machinery and equipment and real estate.

The maturity date of borrowings under the ABL Revolving Credit Facility is July 11, 2027.

Under the terms of the ABL Revolving Credit Facility, the Company pays interest on the unpaid principal amount of the credit facility at a rate equal to SOFR plus a term SOFR adjustment in the amount of 0.10 % per annum (which collectively shall be at least 1.00 %) plus an applicable margin ranging from 2.50 % to 3.00 % determined based upon the Company’s excess availability (as defined in the ABL Revolving Credit Facility).

The Company is required to pay a quarterly commitment fee under the ABL Revolving Credit Facility on undrawn revolving credit commitments in an amount equal to 0.25 % or 0.375 % based on the Company’s average excess availability under the credit facility.

On September 28, 2024, there was $ 126.0 million outstanding on the ABL Revolving Credit Facility and there remained $ 70.9 million available, net of outstanding letters of credit.

The Company also entered into a $ 55 million Term Loan Facility on July 11, 2024.

The Term Loan Facility is secured primarily by the Company’s intellectual property and equity interests of the Company’s subsidiaries.

The maturity date of the Term Loan Facility is July 11, 2027.

The Company pays interest under the Term Loan Facility at a rate equal to SOFR plus a term SOFR adjustment in the amount of 0.10 % per annum (which collectively shall be at least 1.00 %) plus an applicable margin ranging from 5.50 % to 6.75 % determined based upon the Company’s consolidated leverage ratio (as defined in the Term Loan Facility).

The Company paid a commitment fee to the lenders under the Term Loan Facility in the amount of 2.0 % of the total aggregate commitment.

The Company is required to repay the principal amount of the term loans under the Term Loan Facility in quarterly installments on the last day of each fiscal quarter in an amount equal to $ 0.1 million.

The principal amount of the Term Loan Facility amortizes at a rate of 1.00 % (or approximately $ 0.6 million) per year.

The Term Loan Facility is subject to a call premium of 3.00 % if called prior to January 12, 2026, and 0.00 % thereafter until the maturity date on July 11, 2027.

The Company has the option to prepay the outstanding amounts under the Term Loan Facility up to $ 12.0 million without penalty.

Total payments of $ 0.6 million are payable over the next twelve months, including the annual amortization of the Term Loan Facility, and as such, have been classified as current in the accompanying Consolidated Condensed Balance Sheet as of September 28, 2024.

The interest rate on current maturities of long-debt was 8.2 % at September 28, 2024 and 14.2 % at December 31, 2023.

The remaining balance of $ 54.5 million under the Term Loan Facility as of September 28, 2024, is recorded as long-term in the accompanying Consolidated Condensed Balance Sheet.

The Company repaid in full all outstanding indebtedness under the original term loan facility dated as of January 19, 2023.

The payoff amount of approximately $ 84.5 million consisted of a repayment of the principal amount of approximately $ 80.3 million, plus accrued but unpaid interest, fees and expenses, including a call premium of 4.00 % (or approximately $ 3.2 million) which satisfied all of the Company’s indebtedness obligations thereunder.

The Company funded the repayment of its obligations under the previous agreement with borrowings under the ABL Revolving Credit Facility and the Term Loan Facility.

The Company incurred $ 5.9 million in incremental debt issuance costs during the nine months ended September 28, 2024, allocated between the original and revised ABL Revolving Credit Facilities and the original and revised Term Loan Facilities.

All costs are amortized to interest expense over the term of the respective agreement.

Unamortized deferred debt issuance costs associated with the ABL Revolving Credit Facility ($ 1.8 million as of June 29, 2024) are recorded within Other Assets and those associated with the Term Loan Facility ($ 4.5 million as of June 29, 2024) are recorded as a reduction of the carrying value of the debt on the Consolidated Condensed Balance Sheet.

Certain of the Company’s subsidiaries are borrowers under the Restated ABL Agreement and the Revised Term Loan Facility and the assets of such subsidiaries also secure the obligations under the Restated Agreement and the Term Loan Facility.

Pursuant to the Restated ABL Agreement and the Revised Term Loan Facility, the Company is subject to a minimum fixed charge coverage ratio of 1.10 to 1.00.

The Company is also required to maintain minimum excess availability of the greater of 10% of the borrowing base under the Restated Agreement, or $ 15.0 million.

Unamortized deferred debt issuance costs associated with the ABL Revolving Credit Facility ($ 2.8 million as of September 28, 2024) are recorded within Other Assets and those associated with the Term Loan Facility ($ 2.0 million as of September 28, 2024) are recorded as a reduction of the carrying value of the debt on the Consolidated Condensed Balance Sheet.

In the three and nine months ended September 28, 2024, the Company recorded a loss on extinguishment of the debt of approximately $ 7.0 million below Income from Operations, which was comprised of the $ 3.2 million prepayment fee on the previous term loan and a write-off of $ 3.8 million of unamortized deferred financing costs.

The Company also had a write-off of deferred financing costs of approximately $ 0.5 million related to the exiting ABL lender in Interest Expense within the Consolidated Condensed Statements of Operations.

Certain of the Company’s subsidiaries are borrowers under the ABL Revolving Credit Facility and the Term Loan Facility and the assets of such subsidiaries also secure the obligations under the Restated Agreement and the Term Loan Facility.

Pursuant to the ABL Revolving Credit Facility and the Term Loan Facility, the Company is subject to a minimum fixed charge coverage ratio of 1.10 to 1.00.

The Company is also required to maintain minimum excess availability of the greater of 10% of the borrowing base under the ABL Revolving Credit Facility, or $ 15.0 million.

Under the provisions of the ABL Revolving

Credit Facility, the Company has a cash dominion arrangement with the lead banking institution whereby eligible daily cash receipts are contractually utilized to pay down outstanding borrowings and any cash balances subject to the dominion arrangement collateralize the outstanding borrowings under the ABL Revolving Credit Facility.

Eligible cash balances that have not yet been applied to outstanding debt balances are classified as restricted cash in the accompanying Consolidated Condensed Balance Sheets.

In the event of voluntary or involuntary bankruptcy of the Company or any subsidiary, all unpaid principal and other amounts owing under the credit facilities automatically become due and payable.

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Activity in the warranty accrual is summarized as follows:

Six Months Ended Three Months Ended

(In thousands) June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Nine Months Ended Three Months Ended

(In thousands) September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023

Balance at Beginning of Period $ 9,751 $ 8,009 $ 11,303 $ 7,705

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9) Income Taxes

The effective tax rates were approximately ( 21.8 )% and ( 207.5 )% for the three months ended and 49.7 % and ( 133.6 )% for the six months ended June 29, 2024 and July 1, 2023, respectively.

The effective tax rates were approximately ( 126.9 )% and 18.4 % for the three months ended and ( 58.5 )% and ( 19.9 )% for the nine months ended September 28, 2024 and September 30, 2023, respectively.

Beginning with the 2022 tax year, certain research and development costs are required to be capitalized and amortized over sixty months for income tax purposes.

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Losses in recent periods and cumulative pre-tax losses in the three-year period ending with the current year, combined with the significant uncertainty brought about by the COVID-19 pandemic, are collectively considered significant negative evidence under ASC 740 when assessing whether an entity can use projected income as a basis for concluding that deferred tax assets are realizable on a more-likely than not basis.

For purposes of assessing the recoverability of deferred tax assets, the Company determined that it could not include future projected earnings in the analysis due to its recent history of losses and therefore had insufficient objective positive evidence that the Company will generate sufficient future taxable income to overcome the negative evidence of cumulative losses.

Accordingly, during the years ended December 31, 2023 and 2022, the Company determined that a portion of its deferred tax assets were not expected to be realizable in the future and the Company continues to maintain the valuation allowance against its deferred tax assets as of June 29, 2024.

negative evidence of cumulative losses.

10) Earnings Per Share

Basic and diluted weighted-average shares outstanding are as follows:

Six Months Ended Three Months Ended

Nine Months Ended Three Months Ended

(In thousands)

June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023

Weighted Average Shares - Basic 34,961 32,707 35,011 33,000

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Stock options with exercise prices greater than the average market price of the underlying common shares are excluded from the computation of diluted earnings per share because they are out-of-the-money and the effect of their inclusion would be anti-dilutive.

The Company incurred a net loss for the six months ended June 29, 2024 and the three and six months ended July 1, 2023, therefore all outstanding stock options and unvested restricted stock units are excluded from the computation of diluted loss per share because the effect of their inclusion would be anti-dilutive.

The number of common shares excluded from the computation was approximately 1,072,000 shares as of June 29, 2024 and 1,114,000 shares as of July 1, 2023.

The Company incurred a net loss for the three and nine months ended September 28, 2024 and the three and nine months ended September 30, 2023, therefore all outstanding stock options and unvested restricted stock units are excluded from the computation of diluted loss per share because the effect of their inclusion would be anti-dilutive.

The number of common shares excluded from the computation was approximately 1,218,000 shares as of September 28, 2024 and 1,315,000 shares as of September 30, 2023.

11) Shareholders' Equity

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The difference between the average cost of the treasury shares and the reissuance price is included in Retained earnings.

During the six month periods ended June 29, 2024 and July 1, 2023, the Company reissued 139,000 and 164,000 treasury shares, respectively, associated with the funding of employer 401K contributions and recorded the difference between the average cost and the reissuance price, $ 1.3 million and $ 2.2 million, respectively, as a reduction to Retained earnings.

During the nine month periods ended September 28, 2024 and September 30, 2023, the Company reissued 139,000 and 242,000 treasury shares, respectively, associated with the funding of employer 401K contributions and recorded the difference between the average cost and the reissuance price, $ 1.3 million and $ 3.1 million, respectively, as a reduction to Retained Earnings.

At-the-Market Equity Offering

On August 8, 2023, the Company initiated an at-the-market equity offering program (the “ATM Program”) for the sale from time to time of shares of the Company’s common stock, par value $ 0.01 per share (“Common Stock”) having an aggregate offering price of up to $ 30.0 million.

During the three and six months ended June 29, 2024, the Company did not sell any shares

of our common stock under the ATM Program.

As of June 29, 2024, the Company had remaining capacity under the ATM Program to sell shares of Common Stock having an aggregate offering price up to approximately $ 8.2 million.

Comprehensive (Loss) Income and Accumulated Other Comprehensive Loss

On August 8, 2023, the Company initiated an at-the-market equity offering program (the “ATM Program”) for the sale from time to time of shares of the Company’s common stock, par value $ 0.01 per share, having an aggregate offering price of up to $ 30.0 million.

During the three and nine months ended September 28, 2024, the Company did not sell any shares of our common stock under the ATM Program.

During the three and nine months ended September 30, 2023, the Company sold 834,228 shares of our common stock under the ATM Program.

The Company generated $ 13.9 million in aggregate gross proceeds from sales under the ATM Program at an average sale price of $ 16.70 per share.

Aggregate net proceeds from the ATM Program were $ 13.6 million after deducting related expenses, including commissions to the Sales Agents and issuance costs.

Of this amount, $ 13.1 million in net cash proceeds were received in the three and nine months ended September 30, 2023, with the remainder received in October 2023.

As of September 28, 2024, the Company had remaining capacity under the ATM Program to sell shares of Common Stock having an aggregate offering price up to approximately $ 8.2 million.

Comprehensive Income (Loss) and Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss are as follows:

(In thousands) June 29, 2024 December 31, 2023

(In thousands) September 28, 2024 December 31, 2023

Foreign Currency Translation Adjustments $ ( 6,224 ) $ ( 6,351 )

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Accumulated Other Comprehensive Loss $ ( 8,456 ) $ ( 9,426 )

The components of other comprehensive (loss) income are as follows:

Six Months Ended Three Months Ended

(In thousands) June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

The components of other comprehensive income (loss) are as follows:

Nine Months Ended Three Months Ended

(In thousands) September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023

Foreign Currency Translation Adjustments $ 127 $ ( 117 ) $ 1,051 $ ( 828 )

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Retirement Liability Adjustment 843 557 281 185

Other Comprehensive (Loss) Income $ ( 362 ) $ 1,083 $ 113 $ 674

Other Comprehensive Income (Loss) $ 970 $ 440 $ 1,332 $ ( 643 )

12) Supplemental Retirement Plan and Related Post Retirement Benefits

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The following table sets forth information regarding the net periodic pension cost for the plans.

Six Months Ended Three Months Ended

(In thousands) June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Nine Months Ended Three Months Ended

(In thousands) September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023

Service Cost $ — $ 79 $ — $ 26

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The Company also has a defined benefit plan related to its subsidiary in France.

The net periodic cost for both plans for the three and six months ended June 29, 2024 and July 1, 2023, is immaterial.

The net periodic cost for both plans for the three and nine months ended September 28, 2024 and September 30, 2023, is immaterial.

The service cost component of net periodic benefit costs above is recorded in Selling, General and Administrative Expenses within the Consolidated Condensed Statements of Operations, while the remaining components are recorded in Other Expense (Income), Net.

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The loss of major customers or a significant reduction in business with a major customer would significantly, and negatively impact our sales and earnings.

In the three and six months ended June 29, 2024 and July 1, 2023, the Company had one customer over 10% of consolidated sales.

Sales to The Boeing Company (“Boeing”) accounted for 11.7 % and 11.2 % of sales in the three and six months ended June 29, 2024 and 11.5 % and 10.9 % in the three and six months ended July 1, 2023, respectively.

Accounts receivable from Boeing on June 29, 2024 were approximately $ 23.2 million.

In the three and nine months ended September 28, 2024 and September 30, 2023, the Company had one customer over 10% of consolidated sales.

Sales to The Boeing Company (“Boeing”) accounted for 10.5 % and 11.0 % of sales in the three and nine months ended September 28, 2024 and 11.6 % and 11.1 % in the three and nine months ended September 30, 2023, respectively.

Accounts receivable from Boeing on September 28, 2024 were approximately $ 19.7 million.

14) Legal Proceedings

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Additional information about these legal proceedings can be found in Note 19 “Legal Proceedings” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

The reserve for the German indirect claim and interest was approximately $ 17.3 million on June 29, 2024 and $ 17.1 million on December 31, 2023.

The Company currently believes it is unlikely that the damages in the indirect proceedings and related interest will be paid within the next twelve months.

Therefore, the liability related to this matter is classified within Other Liabilities (non-current) in the Consolidated Condensed Balance Sheets on June 29, 2024 and December 31, 2023.

In the matter before the UK High Court of Justice, as previously disclosed, Lufthansa has pleaded its case for monetary compensation, which will be determined at a separate trial.

Lufthansa has elected to pursue a claim in relation to the defendants’ profits from their infringing activities.

We have estimated damages and accrued interest for AES and its indemnified customers of approximately $ 7.3 million and $ 7.4 million as of June 29, 2024 and December 31, 2023, respectively.

This variance is due to currency fluctuation and interest accrued.

Interest will accrue until the final payment to Lufthansa.

This amount is subject to change as additional data is received and evaluated, and as additional information regarding the nature of its claim is put forward by Lufthansa in advance of the damages trial.

The damages trial is scheduled to be heard starting in October 2024, with payment likely due in early 2025.

Therefore, the liability related to these matters is classified within Accrued Expenses and Other Current Liabilities in the Consolidated Condensed Balance Sheets on June 29, 2024.

The liability related to these matters was classified within Other Liabilities (non-current) on December 31, 2023.

As previously disclosed, on December 4, 2020, the Court held the French patent invalid for all asserted claims.

The reserve for the German indirect claim and interest was approximately $ 17.0 million on September 28, 2024 and $ 17.1 million on December 31, 2023.

The Company currently believes it is unlikely that the damages in the German indirect proceedings and related interest will be paid within the next twelve months.

Therefore, the liability related to this matter is classified within Other Liabilities (non-current) in the Consolidated Condensed Balance Sheets on September 28, 2024 and December 31, 2023.

In the matter before the UK High Court of Justice, Lufthansa has pleaded its case for monetary compensation at a separate trial which was conducted in October 2024.

At this proceeding, Lufthansa elected to pursue a monetary claim based upon the defendants’ profits from their infringing activities.

As of December 31, 2023, the Company had recorded a liability for the UK claim of $ 7.4 million, inclusive of interest, based on information available at the time.

This amount was subject to change as additional data was received and evaluated, and as additional information regarding the nature of its claim was put forward by Lufthansa in advance of the damages trial.

During the quarter ended September 28, 2024, both the Company and Lufthansa submitted to the UK High Court of Justice calculations of the estimated damages derived from the reports of the parties’ respective financial experts.

The Company’s experts have calculated a range of loss of $ 7.4 million to $ 15.7 million (inclusive of interest), while Lufthansa has calculated a range of loss as up to approximately $ 107 million, excluding interest.

The damages trial judgment is expected to be issued in late 2024 or early 2025.

While the Company believes they have valid defenses such that the judgment should be at the low end of the range of exposure noted above, the outcome and the amount of any damages that come due and owing cannot be predicted.

As of September 28, 2024, we have recognized a liability of $ 7.4 million associated with this claim, which represents the low end of the range of exposure described above.

Additional interest will continue to accrue on damages that come due and owing until the final payment to Lufthansa.

The Company is performing scenario planning to accommodate the range of potential outcomes.

It is expected that the UK High Court of Justice will grant permission to appeal, though this is not assured under UK law.

If an appeal is allowed, it is unclear whether payment of any imposed judgment would be due shortly after the ruling or deferred, in whole or in part, until the appeal is heard and adjudicated.

The liability related to this matter is classified within Accrued Expenses and Other Current Liabilities in the accompanying Consolidated Condensed Balance Sheets as of September 28, 2024.

The liability related to this matter was classified within Other Liabilities (non-current) in the Company’s Consolidated Balance Sheets as of December 31, 2023.

A liability for reimbursement of Lufthansa’s legal expenses associated with the UK matter was approximately $ 1.0 million and $ 0.7 million on September 28, 2024 and December 31, 2023, respectively, which is expected to be paid within the next twelve months and, as such, is classified in Accrued Expenses and Other Current Liabilities in the accompanying Consolidated Condensed Balance Sheet as of September 28, 2024 and December 31, 2023.

The Company expects additional amounts to be payable associated with Lufthansa’s legal fees incurred related to the damages proceedings, but is unable to estimate a range of exposure and as such has not recorded any additional liabilities at this time.

With respect to the proceeding in France, as previously disclosed, on December 4, 2020, the French Court held the French patent invalid for all asserted claims.

There can consequently be no finding of infringement on first instance.

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the French Supreme Court will review the Court of Appeal of Paris’ reasoning around the nullification of one of the claims of the patent.

AES filed a brief with the French Supreme Court on January 22, 2024 in response to Lufthansa’s appeal and awaits guidance on further briefing or a decision from the Court.

As loss exposure is not probable and estimable at this time, the Company has not recorded any liability with respect to the French matter as of June 29, 2024 or December 31, 2023.

There were no other significant developments in any of these matters during the six months ended June 29, 2024.

A liability for reimbursement of Lufthansa’s legal expenses associated with the UK matter was approximately $ 0.7 million on June 29, 2024 and December 31, 2023, which is expected to be paid within the next twelve months and, as such, is classified in Accrued Expenses and Other Current Liabilities in the accompanying Consolidated Condensed Balance Sheet as of June 29, 2024 and December 31, 2023.

AES filed briefs with the French Supreme Court on January 22, 2024 and on September 11, 2024 in response to Lufthansa’s appeal.

The closure of the written phase of the procedure is scheduled for December 3, 2024 and a decision from this Court is expected in late December 2024 or January 2025.

As loss exposure is not probable and estimable at this time, the Company has not recorded any liability with respect to the French matter as of September 28, 2024 or December 31, 2023.

There were no other significant developments in any of these matters during the nine months ended September 28, 2024.

On March 23, 2020, Teradyne, Inc.

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ATS’s answering brief was filed on June 10, 2024.

Teradyne’s reply brief is due August 7, 2024.

No amounts have been accrued for this matter in the June 29, 2024, or December 31, 2023 financial statements, as loss exposure was neither probable nor estimable at such times.

Teradyne’s reply brief was filed on August 7, 2024.

Oral argument on the appeal has not yet been scheduled.

amounts have been accrued for this matter in the September 28, 2024, or December 31, 2023 financial statements, as loss exposure was neither probable nor estimable at such times.

Other than these proceedings, we are not party to any significant pending legal proceedings that management believes will result in a material adverse effect on our financial condition or results of operations.

15) Segment Information

Below are the sales and operating profit by segment for the three and six months ended June 29, 2024 and July 1, 2023, and a reconciliation of segment operating profit to (loss) income before income taxes.

Operating profit is net sales less cost of products sold and other operating expenses excluding interest and corporate expenses.

Below are the sales and operating profit (loss) by segment for the three and nine months ended September 28, 2024 and September 30, 2023, and a reconciliation of segment operating profit (loss) to loss before income taxes.

Operating profit (loss) is net sales less cost of products sold and other operating expenses excluding interest and corporate expenses.

Cost of products sold and other operating expenses are directly identifiable to the respective segment.

Six Months Ended Three Months Ended

(In thousands) June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Nine Months Ended Three Months Ended

(In thousands) September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023

Aerospace $ 518,187 $ 436,217 $ 177,564 $ 142,116

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Total Consolidated Sales $ 586,886 $ 493,914 $ 203,698 $ 162,922

Segment Measure of Operating Profit and Margins

Segment Measure of Operating Profit (Loss) and Margins

$ 45,628 $ 10,342 $ 14,251 $ ( 7,464 )

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( 12.3 ) % ( 14.7 ) % — % ( 8.6 ) %

Total Segment Measure of Operating Profit 22,962 11,066 13,944 7,576

Total Segment Measure of Operating Profit (Loss) 37,200 1,821 14,238 ( 9,245 )

6.3 % 0.4 % 7.0 % ( 5.7 ) %

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Net Gain on Sale of Business — ( 3,427 ) — —

Loss on Extinguishment of Debt 6,987 — 6,987 —

Interest Expense, Net of Interest Income

2 unchanged sentences

20,824 15,712 6,207 5,582

(Loss) Income Before Income Taxes $ ( 3,270 ) $ ( 7,027 ) $ 1,259 $ ( 3,902 )

During the six months ended July 1, 2023, $ 5.8 million was recognized in sales related to the reversal of a deferred revenue liability assumed with an acquisition and associated with a customer program within our Test Systems Segment which is no longer expected to occur, which also benefits Test Systems’ operating loss for the period.

Corporate expenses and other for the six months ended July 1, 2023, includes income of $ 1.8 million associated with the reversal of a liability related to an equity investment, as we will no longer be required to make the associated payment.

Loss Before Income Taxes $ ( 8,443 ) $ ( 27,845 ) $ ( 5,173 ) $ ( 20,818 )

During the three and nine months ended September 28, 2024 and September 30, 2023, reserves associated with customer bankruptcies of $ 2.2 million and $ 11.1 million, respectively, were recorded in Aerospace Operating Profit (Loss).

See Note 1 for further discussion.

Aerospace Operating Profit included $ 3.2 million and $ 8.5 million in compensation expense related to the resumption of the Company’s incentive programs in the three and nine months ended September 28, 2024, respectively.

Aerospace Operating Profit in the three and nine months ended September 28, 2024 was negatively impacted by a $ 3.5 million atypical warranty reserve related to a new product launch that requires a field modification.

During the nine months ended September 30, 2023, $ 5.8 million was recognized in sales related to the reversal of a deferred revenue liability assumed with an acquisition and associated with a customer program within our Test Systems Segment which is no longer expected to occur, which also benefits Test Systems’ operating loss for the period.

Test Systems Operating Loss included $ 0.7 million and $ 1.8 million in compensation expense related to the resumption of the Company’s incentive programs in the three and nine months ended September 28, 2024, respectively.

Corporate expenses and other for the nine months ended September 30, 2023, includes income of $ 1.8 million associated with the reversal of a liability related to an equity investment, as we will no longer be required to make the associated payment.

This amount is included in Other Expense (Income), Net in the Consolidated Condensed Statement of Operations.

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(In thousands)

June 29, 2024 December 31, 2023

September 28, 2024 December 31, 2023

$ 508,514 $ 493,660

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16) Fair Value

There were no financial assets or liabilities carried at fair value measured on a recurring basis on June 29, 2024 or December 31, 2023.

There were no non-recurring fair value measurements performed in the six months ended June 29, 2024 and July 1, 2023.

There were no financial assets or liabilities carried at fair value measured on a recurring basis on September 28, 2024 or December 31, 2023.

There were no non-recurring fair value measurements performed in the nine months ended September 28, 2024 and September 30, 2023.

Due to their short-term nature, the carrying value of cash and equivalents, accounts receivable, and accounts payable approximate fair value.

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17) Subsequent Events

The Company amended its existing ABL Revolving Credit Facility on July 11, 2024 by entering into the Seventh Amended and Restated Credit Agreement.

The Restated Agreement increased the maximum aggregate amount that the Company can borrow pursuant to the revolving credit line thereunder to $ 200 million from $ 115 million.

The Restated Agreement extended the scheduled maturity date for the credit facility from January 19, 2026 to July 11, 2027.

The Company also entered into a $ 55 million Term Loan Facility on July 11, 2024.

The Revised Term Loan Facility has a maturity date of July 11, 2027.

The Company repaid in full all outstanding indebtedness under the Term Loan Credit Agreement dated as of January 19, 2023.

The Company funded the repayment of its obligations under the previous agreement with borrowings under the Restated Agreement and the Revised Term Loan Facility.

In the third quarter of 2024, the Company expects to record a loss on extinguishment of the debt of approximately $ 7.0 million below Income from Operations and a write-off of deferred financing costs of approximately $ 0.5 million related to the exiting ABL lender in Interest Expense within the Consolidated Condensed Statements of Operations.

The Company incurred approximately $ 3.9 million in incremental debt issuance costs related to the new facilities, allocated between the Restated Agreement and the Revised Term Loan Facility.

All costs will amortize to interest expense over the term of the respective agreement.

Additional information regarding the Revised ABL and Term Loan credit facilities can be found in Note 7.

On October 15, 2024, the Company announced that David C.

Burney, the Company’s current CFO, will retire on January 3, 2025.

The Company entered into a Transition and Retirement Agreement which granted certain benefits related to the retirement.

Accordingly, in the fourth quarter of 2024, the Company expects to record non-cash charges of approximately $ 0.5 million in accelerated RSU expense within SG&A and approximately $ 0.7 million in non-cash charge within Other Expense for the waiver of the early retirement penalty in the SERP II.

In October 2024, the Company offered a voluntary separation program to certain workers in our Test Systems segment to align the workforce and management structure with near-term revenue expectations and operational needs.

We expect to record severance and related benefits expense of approximately $ 1 million in the fourth quarter.

These initiatives are expected to provide annualized savings of approximately $ 2 million, beginning with the first quarter of 2025.

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-Q

Item 1. Financial Statements