What changed in this filing

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Item 1. Financial Statements

2025-05-07 compared with 2024-11-07 · 239 added, 284 removed, 339 unchanged (61% of the section changed)

2 unchanged sentences

Consolidated Condensed Balance Sheets

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

March 29, 2025 with Comparative Figures for December 31, 2024

(In thousands)

September 28, 2024 December 31, 2023

March 29, 2025 December 31, 2024

Current Assets:

16 unchanged sentences

Current Liabilities:

Current Maturities of Long-term Debt

$ 550 $ 8,996

Accounts Payable

19 unchanged sentences

See notes to Consolidated Condensed Financial Statements.

Table of Content

ASTRONICS CORPORATION

Consolidated Condensed Statements of Operations

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

Three Months Ended March 29, 2025 with Comparative Figures for 2024

(In thousands, except per share data)

Nine Months Ended Three Months Ended

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

Three Months Ended

March 29, 2025 March 30, 2024

Sales $ 205,936 $ 185,074

1 unchanged sentence

Gross Profit 60,849 47,514

Research and Development Expenses 11,067 13,323

Selling, General and Administrative Expenses 36,645 32,525

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

Income from Operations 13,137 1,666

Other (Income) Expense, Net ( 187 ) 436

Interest Expense, Net of Interest Income 3,150 5,759

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

Income (Loss) Before Income Taxes 10,174 ( 4,529 )

Provision for (Benefit from) Income Taxes 646 ( 1,351 )

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

Loss Per Share:

Net Income (Loss) $ 9,528 $ ( 3,178 )

Earnings (Loss) Per Share:

$ 0.27 $ ( 0.09 )

1 unchanged sentence

See notes to Consolidated Condensed Financial Statements.

Table of Content

ASTRONICS CORPORATION

Consolidated Condensed Statements of Comprehensive Loss

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

Consolidated Condensed Statements of Comprehensive Income (Loss)

Three Months Ended March 29, 2025 with Comparative Figures for 2024

(In thousands)

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 )

Three Months Ended

March 29, 2025 March 30, 2024

Net Income (Loss) $ 9,528 $ ( 3,178 )

Other Comprehensive Income (Loss):

Foreign Currency Translation Adjustments

127 ( 117 ) 1,051 ( 828 )

Retirement Liability Adjustment – Net of Tax

843 557 281 185

Total Other Comprehensive Income (Loss) 516 ( 475 )

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

Comprehensive Income (Loss) $ 10,044 $ ( 3,653 )

See notes to Consolidated Condensed Financial Statements.

Table of Content

ASTRONICS CORPORATION

Consolidated Condensed Statements of Cash Flows

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

Three Months Ended March 29, 2025 with Comparative Figures for 2024

(In thousands)

Nine Months Ended

September 28, 2024 September 30, 2023

Three Months Ended

March 29, 2025 March 30, 2024

Cash Flows from Operating Activities:

Net Loss $ ( 13,383 ) $ ( 33,397 )

Adjustments to Reconcile Net Loss to Cash Flows from Operating Activities:

Net Income (Loss) $ 9,528 $ ( 3,178 )

Adjustments to Reconcile Net Income (Loss) to Cash Flows from Operating Activities:

Non-cash items:

Depreciation and Amortization 5,588 6,328

2 unchanged sentences

Equity-based Compensation Expense 2,345 2,802

Deferred Tax Benefit ( 1,125 ) —

Operating Lease Non-Cash Expense 1,550 1,280

1 unchanged sentence

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 6,228 —

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

Other ( 214 ) 968

11 unchanged sentences

Cash Flows from Investing Activities:

Proceeds from Sale of Business and Assets — 3,427

Capital Expenditures ( 2,105 ) ( 1,598 )

5 unchanged sentences

Financing-related Costs ( 740 ) ( 809 )

Financing Extinguishment Costs ( 3,210 ) —

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

Other ( 44 ) ( 53 )

1 unchanged sentence

Effect of Exchange Rates on Cash 354 ( 100 )

Decrease in Cash and Cash Equivalents and Restricted Cash ( 4,949 ) ( 6,127 )

Increase (Decrease) in Cash and Cash Equivalents and Restricted Cash 7,520 ( 4,703 )

Cash and Cash Equivalents and Restricted Cash at Beginning of Period 18,428 11,313

4 unchanged sentences

See notes to Consolidated Condensed Financial Statements.

Table of Content

ASTRONICS CORPORATION

Consolidated Condensed Statements of Shareholders’ Equity

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

Three Months Ended March 29, 2025 with Comparative Figures for 2024

(In thousands)

Nine Months Ended Three Months Ended

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

Three Months Ended

March 29, 2025 March 30, 2024

Beginning of Period $ 329 $ 314

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

Net Shares Issued to Fund Bonus Obligations — 2

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

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

Net Issuance of Common Stock for Restricted Stock Units (“RSUs”) 1 1

Class B Stock Converted to Common Stock 3 1

6 unchanged sentences

Beginning of Period 144,149 129,544

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 2,345 2,802

Gross Shares Issued to Fund Bonus Obligations — 2,747

Tax Withholding Related to Issuance of RSU’s and Shares for Bonus Obligations ( 3,219 ) ( 636 ) ( 42 ) ( 33 )

Tax Withholding Related to Issuance of RSUs and Shares for Bonus Obligations ( 1,730 ) ( 1,027 )

End of Period 144,764 134,066

6 unchanged sentences

Beginning of Period 192,208 209,753

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

Net Income (Loss) 9,528 ( 3,178 )

Reissuance of Treasury Shares for 401K Contribution — ( 676 )

2 unchanged sentences

Beginning of Period ( 76,777 ) ( 80,726 )

Shares Issued to Fund 401K Obligation 3,949 6,883 — 2,214

Net Issuance to Fund 401K Obligation — 2,009

End of Period ( 76,777 ) ( 78,717 )

1 unchanged sentence

See notes to Consolidated Condensed Financial Statements.

Table of Content

ASTRONICS CORPORATION

Consolidated Condensed Statements of Shareholders’ Equity, Continued

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

Three Months Ended March 29, 2025 with Comparative Figures for 2024

(In thousands)

Nine Months Ended Three Months Ended

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

Three Months Ended

(Shares) March 29, 2025 March 30, 2024

Beginning of Period 32,871 31,402

Issuance of Common Stock Through ATM Offering — 834 — 834

Net Shares Issued to Fund Bonus Obligations — 144

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

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

Net Issuance of Common Stock for RSUs 143 107

Class B Stock Converted to Common Stock 287 179

6 unchanged sentences

Beginning of Period 2,694 2,833

Shares Issued to Fund 401K Obligation ( 139 ) ( 242 ) — ( 78 )

Net Shares Issued to Fund 401K Obligation — ( 71 )

End of Period 2,694 2,762

See notes to Consolidated Condensed Financial Statements.

Table of Content

ASTRONICS CORPORATION

Notes to Consolidated Condensed Financial Statements

September 28, 2024

March 29, 2025

1) Basis of Presentation

6 unchanged sentences

The results of operations for any interim period are not necessarily indicative of results for the full year.

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

Operating results for the three months ended March 29, 2025, are not necessarily indicative of the results that may be expected for the year ending December 31, 2025.

The balance sheet on December 31, 2024, 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.

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.

For further information, refer to the Consolidated Financial Statements and the notes thereto included in Astronics Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the Securities and Exchange Commission (“SEC”) on March 5, 2025 (the “2024 10-K”).

Description of the Business

Astronics Corporation (“Astronics” or the “Company”) is a leading provider of advanced technologies to the global aerospace, defense, and electronics industries.

Our products and services include advanced, high-performance electrical power generation, distribution and seat motion systems, lighting and safety systems, avionics products, systems certification, aircraft structures and automated test systems.

We have principal operations in the United States (“U.S.”), Canada, France, and England, as well as engineering offices in Ukraine and India.

On February 13, 2019, the Company completed a divestiture of its semiconductor test business within the Test Systems segment.

The transaction included two elements of contingent earnouts.

In March 2023, the Company agreed with the final earnout calculation for the calendar 2022 earnout for $ 3.4 million.

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.

Our products and services include advanced, high-performance electrical power generation, distribution and seat motion systems, lighting and safety systems, avionics products, systems and certification, aircraft structures and automated test systems.

We have principal operations in the United States (“U.S.”), Canada and France, as well as engineering offices in Ukraine and India.

The Company has two reportable segments, Aerospace and Test Systems.

The Aerospace segment designs and manufactures products for the global aerospace and defense industry.

Our Test Systems segment designs, develops, manufactures and maintains automated test systems that support the aerospace and defense, communications and mass transit industries as well as training and simulation devices for both commercial and military applications.

Restricted Cash

Under the provisions of the ABL Revolving Credit Facility (as defined and discussed below in Note 7), the Company has a cash dominion arrangement with the banking institution for its accounts within the United States whereby daily cash receipts are contractually utilized to pay down outstanding balances on the ABL Revolving Credit Facility.

Under the provisions of the ABL Revolving Credit Facility (as defined and discussed below in Note 7, Long-term Debt and Notes Payable), the Company has a cash dominion arrangement with the banking institution for its accounts within the United States whereby daily cash receipts are contractually utilized to pay down outstanding balances on the ABL Revolving Credit Facility.

Account balances that have not yet been applied to the ABL Revolving Credit Facility are classified as restricted cash in the accompanying Consolidated Condensed Balance Sheets.

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) September 28, 2024 September 30, 2023

(In thousands) March 29, 2025 March 30, 2024

Cash and Cash Equivalents $ 24,805 $ 5,308

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 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

Table of Content

The changes in allowances for estimated credit losses for the three months ended March 29, 2025 and March 30, 2024 consisted of the following:

Three Months Ended

(In thousands) March 29, 2025 March 30, 2024

Balance at Beginning of the Period $ 2,377 $ 9,193

2 unchanged sentences

Balance at End of the Period $ 2,291 $ 8,596

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.

On February 4, 2025, the Company entered into a factoring agreement with Citibank, N.A.

under which we can sell certain receivables resulting from sales to a certain customer.

The arrangement is designed to provide the Company with an immediate cash advance on eligible receivables, up to a limit of $ 45.0 million per year, as restricted by the terms of our ABL Revolving Credit Facility.

The Company did not utilize the factoring agreement during the three months ended March 29, 2025.

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 $ 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.

During the first quarter of 2025, the Company changed its financial statement presentation of research and development costs.

These costs were previously included within Cost of Products Sold and were a factor in arriving at Gross Profit.

Research and development expenses, which amounted to $ 11.1 million and $ 13.3 million for the three months ended March 29, 2025 and March 30, 2024, respectively, have been reclassified from Cost of Products Sold to a separate line item below Gross Profit in the accompanying Consolidated Condensed Statements of Operations.

All periods presented have been revised to reflect this presentation.

Valuation of Goodwill and Long-Lived Assets

3 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 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.

As of March 29, 2025 and March 30, 2024, the Company concluded that no indicators of impairment relating to intangible assets or goodwill existed and an interim test was not performed in the three-month periods then ended.

Foreign Currency Translation

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

Recent Accounting Pronouncements Not Yet Adopted

Standard Description Financial Statement Effect or Other Significant Matters

Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosure

The standard includes updates to the disclosure requirements for a public entity’s reportable segments and provides more detailed information about a reportable segment’s expenses.

The new standard is effective for fiscal years beginning after December 15, 2023 and interim periods beginning after December 15, 2024, with retrospective application required.

The Company is currently evaluating the impact of adopting this guidance.

We expect adoption to result in additional disclosures in the notes to our Consolidated Financial Statements.

Income Taxes (Topic 740), Improvements to Income Tax Disclosures

The amendments in this update require enhanced disclosures within the annual rate reconciliation, including new requirements to present reconciling items on a gross basis in specified categories, disclosure of both percentages and dollar amounts, and disaggregation of the reconciling items by nature when they meet a quantitative threshold.

The update also includes enhanced disclosure requirements for income taxes paid.

The new standard is effective for annual periods beginning after December 15, 2024;

early adoption is permitted.

The Company is currently evaluating the impact of adopting this guidance.

We expect adoption to result in additional disclosures in the notes to our Consolidated Financial Statements.

The aggregate foreign currency transaction gain or loss included in operations was immaterial for the three months ended March 29, 2025 and March 30, 2024.

New or Recent Accounting Pronouncements

We consider the applicability and impact of all ASUs.

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 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.

There have been no new applicable accounting pronouncements or changes in accounting pronouncements during the three months ended March 29, 2025 as compared with the recent accounting pronouncements described in the 2024 10-K.

ASUs not disclosed 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 March 29, 2025, we had $ 673.0 million of remaining performance obligations, which we refer to as total backlog.

We expect to recognize approximately $ 508.3 million of our outstanding performance obligations as revenue over the next twelve months and the balance thereafter.

Table of Content

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 nine months ended September 28, 2024:

The following table presents the beginning and ending balances of contract assets and contract liabilities:

(In thousands) Contract Assets Contract Liabilities

1 unchanged sentence

$ 54,171 $ 28,171

Ending Balance, September 28, 2024

Ending Balance, March 29, 2025

$ 56,040 $ 31,099

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 which was recorded in the second quarter of 2024.

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 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 $ 1.9 million revision of estimated costs to complete a certain long-term mass transit Test contract, which was recorded in the first quarter of 2025.

The revision resulted in reduced revenue recognized during the three months ended March 29, 2025 due to lower estimates of the percentage of work completed on the program.

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

We recognized $ 11.6 million and $ 9.2 million during the three months ended March 29, 2025 and March 30, 2024, 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.

1 unchanged sentence

Start-up costs are expensed as incurred.

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 $ 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.

Capitalized fulfillment costs are included in 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.

The Company capitalized fulfillment costs of $ 5.3 million and $ 8.3 million on March 29, 2025 and December 31, 2024, respectively.

Amortization of fulfillment costs recognized within Cost of Products Sold was $ 3.3 million and $ 0.3 million for the three months ended March 29, 2025 and March 30, 2024, respectively.

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

Nine Months Ended Three Months Ended

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

Three Months Ended

(In thousands) March 29, 2025 March 30, 2024

Aerospace Segment

5 unchanged sentences

15,243 19,551

14,268 23,076 3,942 7,500

Aerospace Total 191,375 163,638

4 unchanged sentences

Total $ 205,936 $ 185,074

Table of Content

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

Nine Months Ended Three Months Ended

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

Three Months Ended

(In thousands) March 29, 2025 March 30, 2024

Aerospace Segment

5 unchanged sentences

Systems Certification

12,272 19,832 4,460 6,535

8,798 7,485 2,613 2,914

14,268 23,076 3,942 7,500

Aerospace Total 191,375 163,638

4 unchanged sentences

( In thousands )

September 28, 2024 December 31, 2023

March 29, 2025 December 31, 2024

Finished Goods

4 unchanged sentences

$ 197,936 $ 199,741

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)

September 28, 2024 December 31, 2023

March 29, 2025 December 31, 2024

$ 8,589 $ 8,551

4 unchanged sentences

Construction in Progress

214,560 211,030

Total Property, Plant and Equipment, Gross 213,183 210,572

Less Accumulated Depreciation 132,737 129,885

133,251 125,594

$ 81,309 $ 85,436

Total Property, Plant and Equipment, Net $ 80,446 $ 80,687

Table of Content

5) Intangible Assets

The following table summarizes acquired intangible assets as follows:

September 28, 2024 December 31, 2023

March 29, 2025 December 31, 2024

(In thousands) Weighted

9 unchanged sentences

Amortization expense for acquired intangibles is summarized as follows:

Nine Months Ended Three Months Ended

Three Months Ended

(In thousands)

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

March 29, 2025 March 30, 2024

Amortization Expense

3 unchanged sentences

2025 $ 10,938

2025 $ 10,935

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

The following table summarizes the changes in the carrying amount of goodwill for the three months ended March 29, 2025:

(In thousands) December 31, 2024 Foreign

September 28, 2024

March 29, 2025

Aerospace $ 36,421 $ 12 $ 36,433

2 unchanged sentences

7) Long-term Debt and Notes Payable

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 Company amended its asset-based revolving credit facility (the “ABL Revolving Credit Facility”) on July 11, 2024, by entering into the Seventh Amended and Restated Credit Agreement, which set the maximum aggregate amount that the Company can borrow pursuant to the revolving credit line at $ 200.0 million, with borrowings subject to a borrowing base determined primarily by inventory, accounts receivable, machinery and equipment and real estate.

On November 25, 2024, the Company entered into a second amendment to the ABL Revolving Credit Facility which increased the maximum aggregate amount that the Company can borrow pursuant to the ABL Revolving Credit Facility to $ 220.0 million from $ 200.0 million.

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 ($ 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.

The Company and the applicable lenders also agreed in a separate first amendment to increase the amount of unsecured indebtedness the Company is permitted to incur under the ABL Revolving Credit Facility, subject to completion of the Convertible Notes offering (discussed below).

Under the terms of the ABL Revolving Credit Facility, the Company pays interest on the unpaid principal amount of the ABL Revolving 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 2.75 % to 3.25 % determined based upon the

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Company’s Excess Availability (as defined in the ABL Revolving Credit Facility).

On March 29, 2025, there was $ 1.1 million outstanding on the ABL Revolving Credit Facility and there remained $ 187.1 million available for future borrowings, before our minimum excess availability requirement discussed below.

The amount available for future borrowings as of March 29, 2025, is net of a $ 18.1 million reserve for the damage award relating to the patent infringement dispute in the United Kingdom discussed in Note 13, Legal Proceedings, and $ 2.3 million in outstanding letters of credit.

Pursuant to the ABL Revolving Credit 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 a minimum excess availability of the greater of 10 % of the borrowing base under the ABL Revolving Credit Facility, or $ 15.0 million.

As of March 29, 2025, the Company was in compliance with these covenants.

On December 3, 2024, the Company issued $ 165.0 million aggregate principal amount of 5.500 % Convertible Senior Notes due 2030 (the “Convertible Notes”), which amount includes the additional Convertible Notes issued pursuant to the initial purchasers’ full exercise of their option to purchase additional Convertible Notes.

The Convertible Notes bear interest at a rate of 5.500 % per annum, payable semi-annually in arrears on March 15 and September 15 of each year, beginning on March 15, 2025.

The Convertible Notes will mature on March 15, 2030, unless earlier converted, redeemed or repurchased.

The initial conversion rate is 43.6814 shares of common stock per $1,000 principal amount of Convertible Notes, which represent the initial conversion price of $ 22.89 per share.

The Convertible Notes are convertible at the option of the holders at any time on or after December 15, 2029, until the close of business on the second scheduled trading day immediately preceding the maturity date.

Upon conversion, the Company will satisfy its conversion obligations by paying and/or delivering, as the case may be, cash, shares of its common stock or a combination of cash and shares of its common stock, at its election.

Beginning March 20, 2028, if the Company’s stock price has been at least 130 % of the conversion price for a specified period of time, the Convertible Notes may be called at the option of the issuer.

Under the same conditions, the Company can elect to redeem the Convertible Notes for cash.

After the first quarter of 2025, if the Company’s stock price has been at least 130 % of the conversion price for 20 of 30 trading days ending on and including the last trading day of the immediately preceding quarter, the Convertible Notes may be called at the option of the holder.

The fair value of the Convertible Notes was approximately $ 228.4 million and $ 176.9 million as of March 29, 2025 and December 31, 2024, respectively, based on quoted prices for these instruments in active markets, and is classified as a Level 1 measurement within the fair value hierarchy.

Interest expense was approximately $ 3.2 million and $ 5.8 million during the three months ended March 29, 2025 and March 30, 2024, respectively.

The Company entered into a $ 90.0 million Term Loan Facility on January 19, 2023, and paid interest at a rate equal to SOFR (which was required to be at least 2.50 %) plus 8.75 %.

The Company refinanced its credit facilities on July 11, 2024, and repaid in full all outstanding indebtedness under the previous term loan dated January 19, 2023.

Debt issuance cost amortization expense was approximately $ 0.6 million and $ 0.8 million during the three months ended March 29, 2025 and March 30, 2024, respectively.

Unamortized deferred debt issuance costs associated with the ABL Revolving Credit Facility ($ 2.7 million and $ 3.0 million as of March 29, 2025 and December 31, 2024, respectively) are recorded within Other Assets and those associated with the Convertible Notes ($ 6.0 million and $ 6.3 million as of March 29, 2025 and December 31, 2024, respectively) are recorded as a reduction of the carrying value of the debt on the Consolidated Condensed Balance Sheets.

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

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.

Other events of default, such as failure to make payments as they become due and breach of financial and other covenants, change of control, cross default under other material debt agreements, and a going concern qualification for any reason other than loan maturity date give the agent the option to declare all such amounts immediately due and payable.

The Company expects its sales growth and reductions in working capital will provide sufficient cash flows to fund operations.

However, the Company may also evaluate various actions and alternatives to enhance its profitability and cash generation from operating activities, which could include manufacturing efficiency initiatives, cost-reduction measures, working with vendors and suppliers to reduce lead times and expedite shipment of critical components, and working with customers to expedite receivable collections.

Our ability to maintain sufficient liquidity and comply with financial debt covenants is highly dependent upon achieving expected operating results.

Failure to achieve expected operating results could have a material adverse effect on our liquidity, our ability to obtain financing or access our existing financing, and our operations in the future and could allow our debt holders to demand payment of all outstanding amounts.

8) Product Warranties

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The Company determines warranty reserves needed by product line based on experience and current facts and circumstances.

Activity in the warranty accrual is summarized as follows:

Nine Months Ended Three Months Ended

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

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Activity in the warranty accrual, which is included in Accrued Expenses and Other Current Liabilities on the Consolidated Condensed Balance Sheets, is summarized as follows:

Three Months Ended

(In thousands) March 29, 2025 March 30, 2024

Balance at Beginning of Period $ 18,081 $ 9,751

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9) Income Taxes

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.

The effective tax rates were approximately 6.3 % and 29.8 % for the three months ended March 29, 2025 and March 30, 2024, 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.

The tax rate in the 2025 period was impacted by a valuation allowance applied against the deferred tax asset associated with the research and development costs that are expected to be capitalized and was partially offset by the removal of valuation allowances related to net operating losses and certain timing differences that are expected to reverse during 2025.

In addition, the tax rate in the 2024 period was also impacted by state income taxes and the federal research and development credit expected for 2024.

In addition, the tax rate in the 2025 period was also impacted by state income taxes and the federal research and development credit expected for 2025 and a discrete adjustment to reverse certain federal and state deferred tax liabilities.

The Company records a valuation allowance against the deferred tax assets if and to the extent it is more likely than not that the Company will not recover the deferred tax assets.

In evaluating the need for a valuation allowance, the Company weighs all relevant positive and negative evidence, and considers among other factors, historical financial performance, projected future taxable income, scheduled reversals of deferred tax liabilities, the overall business environment, and tax planning strategies.

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 September 28, 2024.

After considering the losses in recent periods and cumulative pre-tax losses in the three-year period ending with the current year, the Company determined that projections of future taxable income could not be relied upon as a source of income to realize its deferred tax assets.

However, the Company is relying on a significant portion of its existing deferred tax liabilities for the realizability of deferred tax assets.

Accordingly, during the years ended December 31, 2024 and 2023, 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 March 29, 2025.

10) Earnings Per Share

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

Nine Months Ended Three Months Ended

(In thousands)

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

The following table sets forth the computation of basic earnings per share:

Three months ended

(In thousands, except per share amounts) March 29, 2025 March 30, 2024

Basic Earnings per Common Share:

Net Income (Loss) - Basic $ 9,528 $ ( 3,178 )

Weighted Average Shares - Basic 35,285 34,863

Basic Earnings per Common Share $ 0.27 $ ( 0.09 )

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The following table sets forth the computation of diluted net income (loss) per share:

Three months ended

(In thousands, except per share amounts) March 29, 2025 March 30, 2024

Diluted earnings per common share:

Net Income (Loss) - Basic $ 9,528 $ ( 3,178 )

Convertible Notes Interest Expense, Net of Tax 1,792 —

Net Income (Loss) - Diluted $ 11,320 $ ( 3,178 )

Weighted Average Shares - Basic 35,285 34,863

Net Effect of Dilutive Stock Awards 464 —

Net Effect of Dilutive Convertible Notes 7,208 —

Weighted Average Shares - Diluted 42,957 34,863

Diluted Net Income (Loss) Per Share $ 0.26 $ ( 0.09 )

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 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.

The Company includes the dilutive effect of shares issuable upon conversion of its Convertible Notes in the calculation of diluted income per share using the if-converted method.

The Company has the option for the Convertible Notes to settle the conversion value in any combination of cash or shares, and as such, the maximum number of shares issuable are included in the dilutive share count if the effect would be dilutive.

The Company incurred a net loss for the three months ended March 30, 2024, therefore all outstanding stock options and unvested restricted stock units were 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 471,000 shares as of March 29, 2025 and 1,043,000 shares as of March 30, 2024.

11) Shareholders’ Equity

Share Buyback and Reissuance

Share Buyback Program

The Company’s Board of Directors from time to time authorizes the repurchase of common stock, which allows the Company to purchase shares of its common stock in accordance with applicable securities laws on the open market or through privately negotiated transactions.

Common shares repurchased by the Company are recorded at cost as treasury shares and result in a reduction of equity.

Under its current credit agreements, the Company is currently restricted from further stock repurchases.

When treasury shares are reissued, the Company determines the cost using an average cost method.

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

The Company has the capacity under the currently authorized program to repurchase additional shares of its common stock with a maximum dollar value of $ 41.5 million.

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, 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.

During the three months ended March 29, 2025 and March 30, 2024, the Company did not sell any shares of our common stock under the ATM Program.

As of March 29, 2025, 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) September 28, 2024 December 31, 2023

(In thousands) March 29, 2025 December 31, 2024

Foreign Currency Translation Adjustments $ ( 7,470 ) $ ( 8,222 )

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Accumulated Other Comprehensive Loss $ ( 3,347 ) $ ( 3,863 )

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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

Three Months Ended

(In thousands) March 29, 2025 March 30, 2024

Foreign Currency Translation Adjustments $ 752 $ ( 756 )

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Amortization of Prior Service Cost

290 288 97 95

Amortization of Net Actuarial Losses

553 269 184 90

Amortization of Net Actuarial (Gains) Losses

Retirement Liability Adjustment ( 236 ) 281

Other Comprehensive Income (Loss) $ 516 $ ( 475 )

12) Supplemental Retirement Plan and Related Post Retirement Benefits

The Company has two non-qualified supplemental retirement defined benefit plans (“SERP” and “SERP II”) for certain current and retired executive officers.

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

Nine Months Ended Three Months Ended

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

Service Cost $ — $ 79 $ — $ 26

Interest Cost 1,028 976 343 324

Amortization of Prior Service Cost 290 288 97 95

Amortization of Net Actuarial Losses 553 269 184 90

Net Periodic Cost $ 1,871 $ 1,612 $ 624 $ 535

Participants in the SERP are entitled to paid medical, dental, and long-term care insurance benefits upon retirement under the plan.

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 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.

12) Sales to Major Customers

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 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.

In the three months ended March 29, 2025, the Company had one major customer over 10% of consolidated sales within the Aerospace segment.

Sales to the Safran Group (“Safran”) accounted for 10.3 % of consolidated sales during the three months ended March 29, 2025.

Accounts receivable from Safran on March 29, 2025 were approximately $ 8.1 million.

In the three months ended March 30, 2024, the Company had one major customer over 10% of consolidated sales primarily in the Aerospace segment.

Sales to the Boeing Company (“Boeing”) accounted for 10.7 % of consolidated sales in the three months ended March 30, 2024.

13) Legal Proceedings

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The Company is vigorously defending all such litigation and proceedings.

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 $ 17.0 million on September 28, 2024 and $ 17.1 million on December 31, 2023.

Additional information about these legal proceedings can be found in Note 19, Legal Proceedings, to the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, in the 2024 10-K.

The reserve for the German indirect claim and interest was approximately $ 17.2 million at March 29, 2025 and $ 17.1 million on December 31, 2024.

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.

Lufthansa has appealed this judgment.

Therefore, the liability related to this matter is classified within Other Liabilities (non-current) in the Consolidated Condensed Balance Sheets at March 29, 2025 and December 31, 2024.

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

Both the Company and Lufthansa submitted to the UK High Court of Justice calculations of the estimated profits derived from the reports of the parties’ respective financial experts.

The account of profits trial judgment was published on February 21, 2025 by the court in the amount of $ 11.9 million.

Such amount was recorded as a liability in the Company’s Consolidated Financial Statements as of December 31, 2024.

Following a consequential hearing on March 20, 2025, the amount was adjusted upwards by $ 0.5 million related to the resolution of a provisional item.

Additionally, on April 30, 2025, the UK High Court of Justice issued a draft order related to interest associated with damages, which obligated the Company to accrue a reserve estimate of $ 5.7 million relating to such interest associated with the damages.

Both of these amounts were recorded in the three months ended March 29, 2025 within Selling, General and Administrative Expenses in the Company’s Consolidated Condensed Statement of Operations.

Accordingly, as of March 29, 2025, we have recognized a liability within Accrued Expenses and Other Current Liabilities in the accompanying Consolidated Condensed Balance Sheet of $ 18.1 million associated with this claim, inclusive of interest.

The Company paid $ 12.4 million of this liability for damages in the second quarter of 2025, and expects to pay an additional $ 5.7 million in interest liability related thereto in the second quarter of 2025.

There is a further consequential hearing on May 16, 2025 which will address applications for permission to appeal the court’s findings in these matters, as well as the issue of reimbursement of legal fees in the damages phase of the litigation.

In the normal course, a defendant in the Company’s position would be ordered to make a partial reimbursement of Lufthansa’s legal costs.

Whether that is the case and the amount depends on a number of variables including the size of the order for payment of profits.

On May 1, 2025, Lufthansa estimated their legal fees at approximately $ 7.2 million.

The Company believes they have valid defenses against this claim and as such, no amounts have been reserved for legal fee reimbursement as of March 29, 2025.

The Company expects any appeal will likely be heard in the first half of 2026.

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A liability for reimbursement of Lufthansa’s legal expenses associated with the UK matter, exclusive of the damages phase, was approximately $ 1.0 million at March 29, 2025 and December 31, 2024, 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 Sheets as of March 29, 2025 and December 31, 2024.

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

Lufthansa appealed this judgment.

The appeal hearing took place on December 8, 2022, and on February 24, 2023, the Court upheld the first instance judgment in favor of AES.

Lufthansa lodged an appeal before the French Supreme Court.

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 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.

A decision from this Court was rendered on March 19, 2025, remanding the case to the Court of Appeal of Paris for reconsideration of the invalidity of Lufthansa’s French patent.

It is now upon Lufthansa to initiate the remanded proceedings before the court of appeal by filing a specific declaration.

A second ruling by the Court of Appeal of Paris is not expected before at least 2026.

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 March 29, 2025 or December 31, 2024.

There were no other significant developments in any of these matters during the three months ended March 29, 2025.

On March 23, 2020, Teradyne, Inc.

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On November 6, 2020, the Court dismissed the Company from the case, and also dismissed a number of claims, though the patent and copyright infringement claims remained.

The case proceeded to discovery.

In addition, on December 21, 2020, ATS filed a petition for inter partes review (“IPR”) with the US Patent Trial and Appeal Board (“PTAB”), seeking to invalidate the subject patent, and on July 21, 2021, the PTAB instituted IPR.

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Teradyne did not appeal the decision.

On June 5, 2023, the parties attended a court-ordered mediation but did not reach a settlement.

After the mediation, Teradyne agreed to drop its remaining state law claims in exchange for ATS dropping one of its defenses, leaving only its copyright claim.

On December 7, 2023, the District Court granted ATS’s motion for summary judgment on its affirmative defense of fair use.

The Court subsequently entered final judgment in favor of ATS on December 14, 2023.

Teradyne filed a Notice of Appeal to the Ninth Circuit Court of Appeals on January 12, 2024.

Teradyne’s opening brief on its appeal was filed on April 9, 2024.

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

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.

Teradyne appealed to the United States Court of Appeals for the Ninth Circuit.

On January 30, 2025, the Ninth Circuit affirmed the District Court’s grant of summary judgment.

Teradyne has elected not to pursue an appeal.

As such, the summary judgment ruling stands and final judgment in favor of ATS has been entered.

No amounts have been accrued for this matter in the Consolidated Condensed Financial Statements as of March 29, 2025, or the Consolidated Financial Statements as of December 31, 2024, 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.

14) Segment Information

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.

Nine Months Ended Three Months Ended

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

The Company reports segment information based on the management approach, which designates the internal reporting used by the Chief Operating Decision Maker (“CODM”) for making decisions and assessing performance as the source of the Company’s reportable segments.

The CODM, which is the Company’s Chief Executive Officer, allocates resources and assesses the performance of each operating segment based on historical and potential future product sales, gross margin associated with those sales, and operating income (loss) before interest, taxes, and corporate expenses.

The Company has determined its reportable segments to be Aerospace and Test Systems based on the information used by the CODM.

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Segment information and reconciliations to consolidated amounts are as follows:

Three Months Ended

(In thousands) March 29, 2025 March 30, 2024

Aerospace $ 191,388 $ 163,675

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Total Consolidated Sales 205,936 185,074

Segment Measure of Operating Profit (Loss) and Margins

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

8.8 % 2.4 % 8.0 % ( 5.3 ) %

Cost of Products Sold:

Aerospace 132,892 119,257

69.4 % 72.9 %

Test Systems 12,195 18,303

83.8 % 85.4 %

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

Other Segment Items 2

Aerospace 36,219 32,284

Test Systems 4,589 6,212

Operating Income (Loss) and Margins:

Aerospace 22,264 12,097

Test Systems ( 2,223 ) ( 3,079 )

( 15.3 ) % ( 14.4 ) %

(Additions to) Deductions from Segment Measure of Operating Profit:

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

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

Total Operating Income 20,041 9,018

Deductions from Segment Measure of Operating Profit:

Interest Expense, Net of Interest Income

17,832 17,381 6,217 5,991

Corporate Expenses and Other

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

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.

Total Assets:

Income (Loss) Before Income Taxes $ 10,174 $ ( 4,529 )

1 The significant expenses and amounts presented align with the segment-level information that is regularly provided to the CODM.

Inter-segment expenses are included within the amounts shown.

2 Other segment items include Selling, General and Administrative Expenses, Research and Development Expenses, and sublease and rental income.

(In thousands)

September 28, 2024 December 31, 2023

March 29, 2025 December 31, 2024

Total Assets:

$ 512,912 $ 498,528

2 unchanged sentences

$ 662,242 $ 648,764

Table of Content

Three Months Ended

(In thousands)

March 29, 2025 March 30, 2024

Depreciation and Amortization:

$ 4,498 $ 5,021

Total Depreciation and Amortization $ 5,588 $ 6,328

Capital Expenditures:

$ 2,082 $ 1,470

Total Capital Expenditures $ 2,105 $ 1,598

15) Fair Value

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.

There were no financial assets or liabilities carried at fair value measured on a recurring basis on March 29, 2025 or December 31, 2024.

There were no non-recurring fair value measurements performed in the three months ended March 29, 2025 and March 30, 2024.

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

The carrying value of the Company’s variable rate long-term debt instruments also approximates fair value due to the variable rate feature of these instruments.

17) Subsequent Events

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.

Refer to Note 7, Long-term Debt and Notes Payable, for additional information relating to the fair value of the Company’s outstanding fixed-rate Convertible Notes.

Table of Content

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