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Item 8. Financial Statements and Supplementary Data

2026-02-26 compared with 2025-03-05 · 405 added, 316 removed, 987 unchanged (42% of the section changed)

3 unchanged sentences

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Astronics Corporation (the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive loss, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the “consolidated financial statements”).

We have audited the accompanying consolidated balance sheets of Astronics Corporation (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income (loss), shareholders' equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated March 5, 2025 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 26, 2026 expressed an unqualified opinion thereon.

Basis for Opinion

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Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Valuation of Goodwill of the Test Systems Reporting Unit

Description of the Matter As of December 31, 2024, the Company’s goodwill balance was $58.1 million, of which $21.6 million related to the Test Systems reporting unit.

As discussed in Notes 1 and 7 of the consolidated financial statements, the Company tests goodwill for impairment at the reporting unit level on an annual basis or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.

For each reporting unit, the Company performed a quantitative test using the discounted cash flow method to estimate fair value.

The discounted cash flow method incorporates various assumptions, the most significant being projected sales growth rates, operating margins and cash flows, EBITDA margins, the terminal growth rate, and the weighted average cost of capital.

If the carrying value of the reporting unit exceeds its fair value, goodwill impairment is measured as the amount by which the reporting unit’s carrying value exceeds its fair value, not to exceed the carrying value of goodwill.

Auditing management’s assumptions was challenging due to the estimation required in determining the fair value of the Company’s Test Systems reporting unit with goodwill.

The fair value estimate for the Test Systems reporting unit was sensitive to the significant assumptions of the projected sales growth rates and EBITDA margins.

These assumptions are affected by expectations about future market and economic conditions.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s goodwill impairment testing process.

This included the determination of the underlying significant assumptions described above, and the completeness and accuracy of the data used in the impairment analysis.

To test the estimated fair value of the Company’s Test Systems reporting unit, we performed audit procedures with the assistance of our valuation professionals that included, among others, assessing the methodology used, testing the significant assumptions discussed above and testing the underlying data used in the impairment analysis.

We compared the significant assumptions used by management to current industry and economic trends, historical trends of the Company, and other relevant factors.

We assessed the historical accuracy of management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the reporting unit that would result from changes in the assumptions.

In addition, we tested the reconciliation of the fair value of the Company’s reporting units to the market capitalization of the Company as of the annual impairment testing date.

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue Recognition

Description of the Matter For the year ended December 31, 2024, the Company’s sales totaled $795.4 million.

As discussed in Note 2 to the consolidated financial statements, the majority of the Company’s revenue from contracts with customers is recognized at a point in time when the customer obtains control of the product, which is generally upon delivery to the customer.

For contracts with customers in which the Company satisfies its promise to the customer to provide a service or a product that has no alternative use to the Company and the Company has enforceable rights to payment for progress completed to date inclusive of profit, the Company recognizes revenue over time as it satisfies the performance obligation.

Auditing management’s evaluation of contracts with customers was especially challenging due to the judgment required to analyze the terms and conditions of the Company’s various customer contracts given that such terms and conditions are nonstandard.

Description of the Matter As discussed in Note 2 to the consolidated financial statements, the majority of the Company’s revenue from contracts with customers is recognized at a point in time when the customer obtains control of the product, which is generally upon delivery to the customer.

For contracts with customers at certain components in which the Company satisfies its promise to the customer to provide a service or a product that has no alternative use to the Company and the Company has enforceable rights to payment for progress completed to date inclusive of profit, the Company recognizes revenue over time as it satisfies the performance obligation.

Auditing management’s evaluation of contracts with customers at certain components was especially challenging due to the judgment required to analyze the terms and conditions of the Company’s various customer contracts given that such terms and conditions are nonstandard.

This included the assessment of alternative use and enforceable right to payment for purposes of determining if revenue from the contract should be recognized over time or at a point in time.

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Buffalo, New York

March 5, 2025

February 26, 2026

Management’s Report on Internal Control Over Financial Reporting

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Based on that evaluation, our management concluded that our internal control over financial reporting is effective as of December 31, 2025.

We completed acquisitions in 2025, which were excluded from our management’s report on internal control over financial reporting as of December 31, 2025.

We acquired Envoy Aerospace, LLC on June 30, 2025 and Bühler Motor Aviation, on October 13, 2025.

These acquisitions were included in our 2025 consolidated financial statements and constituted $22.8 million and $18.7 million of total and net assets, respectively, as of December 31, 2025 and $6.9 million and $0.5 million of sales and net income, respectively, for the year then ended.

Ernst & Young LLP, independent registered public accounting firm, has audited our Consolidated Financial Statements included in this Annual Report on Form 10-K and, as part of their audit, has issued their report, included herein, on the effectiveness of our internal control over financial reporting.

Gundermann March 5, 2025

Gundermann February 26, 2026

President and Chief Executive Officer

(Principal Executive Officer)

Hedges March 5, 2025

Hedges February 26, 2026

Vice President and Chief Financial Officer

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In our opinion, Astronics Corporation (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive loss, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) and our report dated March 5, 2025 expressed an unqualified opinion thereon.

As indicated in the accompanying Management’s Report on Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Envoy Aerospace, LLC and Bühler Motor Aviation.

The Company acquired Envoy Aerospace, LLC on June 30, 2025 and Bühler Motor Aviation, on October 13, 2025.

These acquisitions were included in the 2025 consolidated financial statements of the Company and constituted $22.8 million and $18.7 million of total and net assets, respectively, as of December 31, 2025 and $6.9 million and $0.5 million of sales and net income, respectively, for the year then ended.

Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of Envoy Aerospace, LLC and Bühler Motor Aviation.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income (loss), shareholders' equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) and our report dated February 26, 2026 expressed an unqualified opinion thereon.

Basis for Opinion

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Buffalo, New York

March 5, 2025

February 26, 2026

ASTRONICS CORPORATION

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Gross Profit 258,158 220,428 174,532

Research and Development Expenses 43,475 52,086 53,736

Selling, General and Administrative Expenses 138,271 141,876 127,467

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Net Gain on Sale of Businesses — — 3,427

Loss on Extinguishment of Debt 10,148 — —

Other Expense (Income), Net 2,187 ( 261 ) 1,611

Loss on Settlement of Debt 32,644 10,148 —

Other (Income) Expense, Net ( 738 ) 2,187 ( 261 )

Interest Expense, Net of Interest Income 12,561 21,998 23,328

Loss Before Income Taxes ( 7,867 ) ( 26,311 ) ( 29,793 )

Income (Loss) Before Income Taxes 31,945 ( 7,867 ) ( 26,311 )

Provision for Income Taxes 2,586 8,348 110

Net Loss $ ( 16,215 ) $ ( 26,421 ) $ ( 35,747 )

Basic Loss Per Share $ ( 0.46 ) $ ( 0.80 ) $ ( 1.11 )

Diluted Loss Per Share $ ( 0.46 ) $ ( 0.80 ) $ ( 1.11 )

Net Income (Loss) $ 29,359 $ ( 16,215 ) $ ( 26,421 )

Basic Earnings (Loss) Per Share $ 0.83 $ ( 0.46 ) $ ( 0.80 )

Diluted Earnings (Loss) Per Share $ 0.81 $ ( 0.46 ) $ ( 0.80 )

See notes to Consolidated Financial Statements.

ASTRONICS CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Year Ended December 31,

(In thousands) 2025 2024 2023

Net Loss $ ( 16,215 ) $ ( 26,421 ) $ ( 35,747 )

Other Comprehensive Income:

Net Income (Loss) $ 29,359 $ ( 16,215 ) $ ( 26,421 )

Other Comprehensive (Loss) Income:

Foreign Currency Translation Adjustments 3,070 ( 1,871 ) 984

Retirement Liability Adjustment – Net of Tax ( 3,617 ) 7,434 ( 884 )

Total Other Comprehensive Income 5,563 100 4,969

Comprehensive Loss $ ( 10,652 ) $ ( 26,321 ) $ ( 30,778 )

Total Other Comprehensive (Loss) Income ( 547 ) 5,563 100

Comprehensive Income (Loss) $ 28,812 $ ( 10,652 ) $ ( 26,321 )

See notes to Consolidated Financial Statements.

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Current Liabilities:

Current Maturities of Long-term Debt $ — $ 8,996

Accounts Payable $ 41,080 $ 42,960

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Cash Flows from Operating Activities

Net Loss $ ( 16,215 ) $ ( 26,421 ) $ ( 35,747 )

Adjustments to Reconcile Net Loss to Cash from Operating Activities:

Net Income (Loss) $ 29,359 $ ( 16,215 ) $ ( 26,421 )

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

Non-cash Items:

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Equity-based Compensation Expense 6,799 8,571 7,198

Loss on Extinguishment of Debt 10,148 — —

Deferred Tax (Benefit) Expense ( 1,362 ) ( 20 ) 146

Loss on Settlement of Debt 32,644 10,148 —

Operating Lease Non-cash Expense 6,162 5,175 5,088

Simplification Initiative-related Non-cash Charges 6,229 — —

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

Non-cash 401K Contribution and Quarterly Bonus Accrual — 3,454 6,549

Non-cash Annual Stock Bonus Accrual — — 2,806

Net Gain on Sale of Business, Before Taxes — ( 3,427 ) ( 11,284 )

Non-cash Litigation Provision Adjustment — 4,468 ( 1,305 )

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Income Taxes ( 7,938 ) 4,498 ( 1,949 )

Customer Advanced Payments and Deferred Revenue 5,693 ( 4,835 ) 5,264

Operating Lease Liabilities ( 4,573 ) ( 5,125 ) ( 4,880 )

Tenant Improvement Allowance Refund 8,138 — —

Cloud Computing Implementation Costs ( 1,117 ) — —

Customer Advanced Payments and Deferred Revenue ( 4,189 ) 5,693 ( 4,835 )

Supplemental Retirement Plan Liabilities ( 716 ) ( 410 ) ( 408 )

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Cash Flows from Investing Activities

Proceeds from Sale of Businesses and Assets — 3,537 22,061

Capital Expenditures ( 31,673 ) ( 8,428 ) ( 7,643 )

Acquisitions of Businesses, Net of Cash Acquired ( 22,075 ) — —

Proceeds from Sale of Businesses and Assets — — 3,537

Net Cash from Investing Activities $ ( 53,748 ) $ ( 8,428 ) $ ( 4,106 )

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Principal Payments on Long-term Debt ( 111,143 ) ( 374,890 ) ( 131,233 )

Proceeds from Issuance of Convertible Debt 225,000 — —

Partial Repurchase of 2030 Convertible Notes ( 285,752 ) — —

Payments for Capped Call Transactions ( 26,888 ) — —

Financing-Related Costs ( 10,366 ) ( 12,150 ) ( 6,762 )

Financing Settlement Costs — ( 4,496 ) —

Stock Award and Employee Stock Purchase Plan (“ESPP”) activity 753 ( 241 ) 2,476

Proceeds from At-the-Market (“ATM”) Stock Sales — — 21,269

Financing-Related Costs ( 12,150 ) ( 6,762 ) ( 2,416 )

Financing Extinguishment Costs ( 4,496 ) — —

Other ( 141 ) ( 145 ) ( 47 )

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Effect of Exchange Rates on Cash 1,099 ( 493 ) 156

Increase (Decrease) in Cash and Cash Equivalents and Restricted Cash 7,115 ( 2,465 ) ( 15,979 )

(Decrease) Increase in Cash and Cash Equivalents and Restricted Cash ( 248 ) 7,115 ( 2,465 )

Cash and Cash Equivalents and Restricted Cash at Beginning of Year 18,428 11,313 13,778

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Income Taxes Paid, Net of Refunds $ 11,605 $ 3,537 $ 1,964

Non-Cash Investing Activities:

Capital Expenditures in Accounts Payable $ 2,025 $ — $ —

See notes to Consolidated Financial Statements.

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Beginning of Year $ 144,149 $ 129,544 $ 98,630

Partial Repurchase of 2030 Convertible Notes ( 120,632 ) — —

Purchase of Capped Call Transactions ( 26,888 ) — —

Issuance of Common Stock Through ATM Offering, Net of Offering Costs — — 21,246

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Beginning of Year $ 192,208 $ 209,753 $ 240,360

Net Loss ( 16,215 ) ( 26,421 ) ( 35,747 )

Partial Repurchase of 2030 Convertible Notes ( 4,868 ) — —

Net Income (Loss) 29,359 ( 16,215 ) ( 26,421 )

Reissuance of Treasury Shares for 401K Contribution — ( 1,330 ) ( 4,186 )

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Beginning of Year $ ( 76,777 ) $ ( 80,726 ) $ ( 89,898 )

Net Exercise of Stock Options ( 721 ) — —

Shares Issued to Fund 401K Obligation — 3,949 9,172

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Beginning of Year 2,694 2,833 3,155

Net Exercise of Stock Options 57 — —

Shares Issued to Fund 401K Obligation — ( 139 ) ( 322 )

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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 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.

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 Germany, as well as engineering offices in Ukraine and India.

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

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ASC Topic 805 provides guidance on how the acquirer recognizes and measures the consideration transferred, identifiable assets acquired, liabilities assumed, non-controlling interests, and goodwill acquired in a business combination.

ASC Topic 805 also expands required disclosures surrounding the nature and financial effects of business combinations.

There were no acquisitions in 2024, 2023 or 2022.

See Note 21, Acquisitions, for details of our recent acquisitions.

Cost of Products Sold, Research and Development and Selling, General and Administrative Expenses

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

Research and development expenses amounted to $ 52.1 million in 2024, $ 53.5 million in 2023 and $ 48.3 million in 2022.

These costs are included in Cost of Products Sold.

SG&A expenses include costs primarily related to our sales, marketing and administrative departments.

Research and development costs amounted to $ 43.5 million in 2025.

Beginning in 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 included in arriving at Gross Profit.

Research and development expenses, which amounted to $ 52.1 million in 2024 and $ 53.7 million in 2023 have been reclassified from Cost of Products Sold to a separate line item below Gross Profit in the accompanying Consolidated Statements of Operations.

All periods presented have been revised to reflect this presentation.

Selling, General and Administrative (“SG&A”) expenses include costs primarily related to our sales, marketing and administrative departments.

Interest expense is shown net of interest income.

Interest income was insignificant for the years ended December 31, 2025, 2024 and 2023.

Government Subsidies

In September 2021, the Company was awarded a grant of up to $ 14.7 million from the U.S.

Department of Transportation (“USDOT”) under the Aviation Manufacturing Jobs Protection Program (“AMJP”).

The Company received $ 7.3 million under the grant in 2022.

The grant benefit was recognized ratably over the six-month performance period as a reduction to Cost of Products Sold in proportion to the compensation expense that the award was intended to defray.

During the year ended December 31, 2022, the Company recognized $ 6.0 million of the award.

There was no additional expense reduction recognized in 2024 or 2023.

Simplification Initiatives

During 2025, the Company initiated simplification activities in the Aerospace segment, including costs related to footprint rationalization and portfolio shaping.

Restructuring charges, including a reduction of inventory and impairment of other long-lived assets, were recorded as a result of these simplification initiatives.

In the year ended December 31, 2025, the Company recorded $ 5.8 million and $ 0.4 million in simplification initiative charges to Cost of Products Sold and Selling, General and Administrative Expenses , respectively, in the accompanying Consolidated Statements of Operations.

Shipping and Handling

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ASC Topic 718 requires all equity-based payments to employees, including grants of employee stock options and RSUs, to be recognized in the statement of earnings based on the grant date fair value of the award.

For awards with graded vesting, the Company uses a straight-line method of attributing the value of stock-based compensation expense, subject to minimum levels of expense, based on vesting.

For awards with graded vesting,

the Company uses a straight-line method of attributing the value of stock-based compensation expense, subject to minimum levels of expense, based on vesting.

The Company accounts for forfeitures as they occur.

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Restricted Cash

Under the provisions of the ABL Revolving Credit Facility (as defined and discussed below in Note 8, Long-Term Debt), 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 Balance Sheets.

Under the provisions of the ABL Revolving Credit Facility (as defined and discussed below in Note 8, Long-Term Debt) which was terminated on October 22, 2025, the Company had a cash dominion arrangement with the banking institution for its accounts within the United States whereby daily cash receipts were contractually utilized to pay down outstanding balances on the ABL Revolving Credit Facility.

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

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

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

The associated assets existed prior to 2023.

Accounts Receivable and Allowance for Estimated Credit Losses

Accounts receivable are composed of trade and contract receivables recorded at either the invoiced amount or costs in excess of billings, are expected to be collected within one year, and do not bear interest.

Accounts receivable are composed of trade and contract receivables recorded at either the invoiced amount or costs in excess of billings.

These receivables are expected to be collected within one year and do not bear interest.

The Company records a valuation allowance to account for estimated credit losses.

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We determine the cost basis of our inventory on a first-in, first-out or weighted average basis using a standard cost methodology that approximates actual cost.

Inventory costs include direct materials, direct labor, and manufacturing overhead, including freight-in, custom duties, and import tariffs directly attributable to bringing the inventory to its existing location and condition.

The Company records reserves to provide for excess, slow moving or obsolete inventory.

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Amortization is calculated on a straight-line basis over the contractual term of the cloud computing arrangement.

Capitalized amounts related to such arrangements are recorded within Other Current Assets and other non-current assets in the Consolidated Balance Sheets and were insignificant as of December 31, 2024 and December 31, 2023.

Implementation costs associated with cloud computing arrangements are reflected in Cash from Operating Activities on the Consolidated Statements of Cash Flows in accordance with ASC Topic 350-40, Intangibles - Goodwill and Other - Internal-Use Software .

The Company capitalized $ 2.8 million related to such arrangements within other non-current assets in the Consolidated Balance Sheets as of December 31, 2025.

Costs capitalized were insignificant as of December 31, 2024.

Amortization expense was insignificant in 2025, 2024 and 2023.

Property, Plant and Equipment

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This amortization expense is included in interest expense in the Company’s Consolidated Statements of Operations.

Upon early termination or modification of a credit facility, all or a portion of unamortized fees related to such facility may be accelerated into interest expense or loss on debt extinguishment.

Upon early termination or modification of a credit facility, all or a portion of unamortized fees related to such facility may be accelerated into interest expense, loss on debt settlement or a reduction to equity based on the nature of the debt instrument.

See Note 8, Long-Term Debt, for details of our deferred financing costs.

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The discounted cash flow method incorporates various assumptions, the most significant being projected sales growth rates, operating margins and cash flows, the terminal growth rate and the weighted average cost of capital, which are Level 3 inputs in the fair value hierarchy.

If the carrying value of the

reporting unit exceeds its fair value, goodwill impairment is measured as the amount by which the reporting unit’s carrying value exceeds its fair value, not to exceed the carrying value of goodwill.

The 2025, 2024 and 2023 assessments indicated no impairment to the carrying value of goodwill in any of the Company’s reporting units and no impairment charges were recognized.

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Acquired identifiable intangible assets are recorded at fair value and are amortized over their estimated useful lives.

Acquired intangible assets with an indefinite life are not amortized, but are reviewed for impairment at least annually or more frequently whenever events or changes in circumstances indicate that the carrying amounts of those assets are

below their estimated fair values.

Impairment is tested under ASC Topic 350, Intangibles - Goodwill and Other, as amended by ASU 2012-2.

The 2024, 2023 and 2022 assessments indicated no impairment to the intangible assets in any of the Company’s reporting units and no impairment charges were recognized.

The 2025, 2024 and 2023 assessments indicated no impairment to the intangible assets of the Company and no impairment charges were recognized.

Financial Instruments

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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.

The fair value of the Convertible Senior Notes due 2030 (the “Convertibles Notes”) was approximately $ 176.9 million as of December 31, 2024 based on quoted prices for these instruments in active markets, and is classified as a Level 1 measurement within the fair value hierarchy.

The Company estimates the fair value of the convertible notes based on quoted prices for these instruments in active markets, classified as Level 1 measurements within the fair value hierarchy.

The fair value of the 2030 Convertible Notes was approximately $ 84.8 million and $ 176.9 million as of December 31, 2025 and 2024, respectively.

The fair value of the 2031 Convertible Notes was approximately $ 264.1 million as of December 31, 2025.

From time to time, the Company makes long-term, strategic equity investments in companies to promote business and strategic objectives.

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This amount is included in Other Expense, Net of Other Income in the Consolidated Statement of Operations in 2023.

Our ownership percentage in this company was diluted during 2023, thus our equity investment was converted to the cost method.

Deferred Tax Asset Valuation Allowance

3 unchanged sentences

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

As a result, the Company has valuation allowances against its deferred tax assets of approximately $ 78.7 million, $ 65.6 million, and $ 57.4 million during the years ended December 31, 2024, 2023 and 2022, respectively, for the portion of deferred tax asset not realizable by the Company’s existing deferred tax liabilities.

As a result, the Company has valuation allowances against its deferred tax assets of approximately $ 74.5 million, $ 78.7 million, and $ 65.6 million during the years ended December 31, 2025, 2024 and 2023, respectively, for the portion of deferred tax assets not realizable by the Company’s existing deferred tax liabilities.

Use of Estimates

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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 adoption resulted in additional disclosures in the notes to our Consolidated Financial Statements.

The standard does not change how the Company identifies its operating or reportable segments, and did not impact the Company’s consolidated financial condition, results of operations or cash flows.

2024-04 -Debt - Debt with Conversion and Other Options (Subtopic 470-20):

Induced Conversions of Convertible Debt Instruments The amendments in this update clarify the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion or an extinguishment.

We early adopted this standard during 2025 and applied it on a prospective basis.

Refer to Note 8.

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.

We adopted this standard beginning in 2025 and applied it on a prospective basis.

Refer to Note 11.

2025-06 -Intangibles, Goodwill

and Other - Internal-Use Software

(Subtopic 350-40):

Improvements to the Accounting for

Internal-Use Software The amendments in this update remove all references to project stages and clarify the threshold entities apply to begin capitalizing software costs.

The update further specifies required disclosures for all capitalized internal-use software costs.

This guidance is effective for fiscal years beginning after December 15, 2027 and interim periods within that period.

Early adoption is permitted.

We early adopted this standard for the fourth quarter of the fiscal year ending December 31, 2025 using a prospective transition approach.

The effect was immaterial to our Consolidated Financial Statements.

Recent Accounting Pronouncements Not Yet Adopted

Standard Description Financial Statement Effect or Other Significant Matters

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 fiscal periods beginning after December 15, 2024;

2025-05 -Financial Instruments,

Credit Losses (Topic 326):

of Credit Losses for Accounts

Receivable and Contract Assets The amendments in this update provide a practical expedient that allows entities to assume current conditions as of the balance sheet date remain unchanged over the life of current accounts receivable and contract assets when developing forecasts for estimated expected credit losses.

This guidance is effective for fiscal years beginning after December 15, 2025 and interim periods within that period.

Early adoption is permitted.

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The Company is currently reviewing the guidance and evaluating the impact on our Consolidated Financial Statements and related disclosures.

2024-04 -Debt - Debt with Conversion and Other Options (Subtopic 470-20):

The new standard is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods.

Early adoption is permitted.

The Company is currently reviewing the guidance and evaluating the impact on our Consolidated Financial Statements and related disclosures.

We consider the applicability and impact of all ASUs.

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Capitalized fulfillment costs are included in Inventories in the accompanying Consolidated Balance Sheets.

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

The Company has capitalized $ 8.3 million a nd $ 4.7 million of costs as of December 31, 2024 and 2023, respectively.

Amortization of fulfillment costs recognized within Cost of Products Sold was $ 3.1 million in 2024 .

No amortization of fulfillment costs was recorded in 2023 or 2022 .

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 has capitalized $ 6.0 million and $ 8.3 million of costs as of December 31, 2025 and 2024, respectively.

Amortization of fulfillment costs recognized within Cost of Products Sold was $ 3.5 million and $ 3.1 million in 2025 and 2024, respectively.

No amortization of fulfillment costs was recorded in 2023.

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account.

The majority of our contracts have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts which are, therefore, not distinct.

Thus, the contract’s transaction price is the revenue recognized when or as that performance obligation is satisfied.

Thus, the contract’s

transaction price is the revenue recognized when or as that performance obligation is satisfied.

Promised goods or services that are immaterial in the context of the contract are not separately assessed as performance obligations.

Some of our contracts have multiple performance obligations, most commonly due to the contract covering multiple phases of the product lifecycle (development, production, maintenance and support).

For contracts with multiple performance obligations, the contract’s transaction price is allocated to each performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract.

The primary method used to estimate standalone selling price is the expected cost plus margin approach, under which expected costs are forecast to satisfy a performance obligation and then an appropriate margin is added for that distinct good or service.

In contracts with multiple performance obligations, the contract’s transaction price is allocated to each performance obligation based on the estimated standalone selling price of each distinct good or service in the contract.

In these cases, the Company uses an expected cost plus margin approach to determine the standalone selling price for each performance obligation.

Shipping and handling activities that occur after the customer has obtained control of the good are considered fulfillment activities, not performance obligations.

Some of our contracts offer price discounts or free units after a specified volume has been purchased.

The Company evaluates these options to determine whether they provide a material right to the customer, representing a separate performance obligation.

If the option provides a material right to the customer, revenue is allocated to these rights and recognized when those future goods or services are transferred, or when the option expires.

Contract modifications are routine in the performance of our contracts.

Contracts are often modified to account for changes in contract specifications or requirements.

Contract modifications are routine in the performance of our contracts, and contracts may be modified to account for changes in contract specifications or requirements.

In most instances, contract modifications are for goods or services that are distinct, and, therefore, are accounted for as new contracts.

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In general, the customer has obtained control when they have legal title, significant risks and rewards of ownership of the asset, and the Company has a present right to payment for the product.

These contracts may provide credits or incentives, which may be accounted for as variable consideration.

Variable consideration is estimated at the most likely amount to predict the consideration to which the Company will be entitled, and only to the extent it is probable that a subsequent change in estimate will not result in a significant revenue reversal when estimating the amount of revenue to recognize.

Variable consideration is treated as a change to the sales transaction price and based on an assessment of all information (i.e., historical, current and forecasted) that is reasonably available to the Company, and estimated at contract inception and updated at the end of each reporting period as additional information becomes available.

From time to time, contracts may contain variable consideration, which could include incremental fees or penalty provisions related with performance.

In these situations, variable consideration is included in the estimated transaction price based on an assessment of all information (i.e., historical, current and forecasted) that is reasonably available to the Company and updated at the end of each reporting period as additional information becomes available.

Most of our contracts do not contain rights to return product;

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For contracts with customers in which the Company promises to provide a product to the customer that has no alternative use to the Company and the Company has enforceable rights to payment for progress completed to date inclusive of profit, the Company satisfies the performance obligation and recognizes revenue over time, using costs incurred to date relative to total estimated costs at completion to measure progress toward satisfying our performance obligations.

Incurred cost represents work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer.

Incurred costs represents work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer.

Contract costs include labor, material and overhead.

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Costs in excess of billings includes unbilled amounts resulting from revenues under contracts with customers that are satisfied over time and when the cost-to-cost measurement method of revenue recognition is utilized and revenue recognized exceeds the amount billed to the customer, and right to payment is not just subject to the passage of time.

Amounts may not exceed their net

realizable value.

Amounts may not exceed their net realizable value.

Costs in excess of billings are classified as current assets, within Accounts Receivable, Net of Allowance for Estimated Credit Losses on our Consolidated Balance Sheets.

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Billings in excess of cost are reported in our Consolidated Balance Sheets classified as current liabilities, within Customer Advance Payments and Deferred Revenue, and non-current liabilities, within Other Liabilities.

To determine the revenue recognized in the period from the beginning balance of billings in excess of cost, the contract liability as of the beginning of the period is recognized as revenue on a contract-by-contract basis when the Company satisfies the performance obligation related to the individual contract.

Once the beginning contract liability balance for an individual contract has been fully recognized as revenue, any additional payments received in the period are recognized as revenue once the related costs have been incurred.

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.

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$ 54,687 $ 26,962

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 2024 due to lower estimates of the percentage of work completed on the programs.

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

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 $ 8.3 million in revisions of estimated costs to complete certain long-term mass transit Test contracts which were recorded in 2025.

The revisions resulted in reduced revenue recognized during 2025 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 $ 20.8 million and $ 16.8 million during the year ended December 31, 2025 and 2024, respectively, in revenues that were included in the contract liability balance at the beginning of the period.

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As further described in Note 1, Summary of Significant Accounting Principles and Practices, the Company recorded a $ 1.0 million and $ 7.5 million reserve for outstanding receivables for customer bankruptcies within the Aerospace segment in 2024 and 2023, respectively.

The reserve associated with the customer bankruptcy in 2023 was subsequently written off in 2024.

The write-offs in the periods ended December 31, 2025 and 2024 relate primarily to accounts receivable reserved for in previous periods related to these customer bankruptcies.

NOTE 4 — INVENTORIES

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At December 31, 2024, the Company’s reserve for inventory valuation was $ 43.3 million, or 17.8 % of gross inventory.

As further described in Note 1, Summary of Significant Accounting Principles and Practices, the Company recorded a $ 1.7 million and $ 3.6 million reduction in inventory for customer bankruptcies within the Aerospace segment in 2024 and 2023, respectively.

As further described in Note 1, Summary of Significant Accounting Principles and Practices, the Company recorded a $ 5.8 million reduction in inventory in the year ended December 31, 2025 in connection with simplification initiatives.

NOTE 5 — PROPERTY, PLANT AND EQUIPMENT

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Completed and Unpatented Technology 9 years 47,980 45,207 47,818 42,617

Backlog 4 years 3,991 177 — —

Customer Relationships 15 years 145,773 104,531 142,065 95,818

Licensing Agreement 13 years 6,760 260 — —

Total Intangible Assets 13 years $ 229,297 $ 173,944 $ 214,491 $ 162,014

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36,421 21,635 58,056

Acquisitions 4,759 — 4,759

Foreign Currency Translations and Other 108 — 108

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Goodwill, Net $ 41,288 $ 21,635 $ 62,923

The Company’s four reporting units with goodwill as of the first day of our fourth quarters of 2024, 2023 and 2022 were subject to the annual goodwill impairment test.

Based on our quantitative assessments of our reporting units performed during our annual goodwill impairment tests, the Company concluded that no impairment to the carrying value of goodwill in any of the Company’s reporting units was indicated and no impairment charges were recognized in 2024, 2023 and 2022.

The Company’s five reporting units with goodwill as of the first day of our fourth quarters of 2025, 2024 and 2023 were subject to the annual goodwill impairment test.

Based on our assessments of our reporting units performed during our annual goodwill impairment tests, the Company concluded that no impairment to the carrying value of goodwill in any of the Company’s reporting units was indicated and no impairment charges were recognized in 2025, 2024 and 2023.

NOTE 8 — LONG-TERM DEBT

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.

The Company also entered into a $ 55.0 million Term Loan Facility on July 11, 2024.

The Company repaid in full all outstanding indebtedness under the previous term loan dated 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 % 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.

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 remains July 11, 2027.

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 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 ABL Revolving Credit Facility.

On December 31, 2024, there was $ 10.0 million outstanding on the ABL Revolving Credit Facility and there remained $ 209.7 million available for future borrowings, net of outstanding letters of credit, before our minimum excess availability requirement discussed below.

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

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.

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 amounts borrowed thereunder carrying an interest rate of SOFR plus between 2.50 % to 3.00 %.

Borrowings were subject to a borrowing base determined primarily by inventory, accounts receivable, machinery and equipment and real estate.

The Company also entered into a $ 55.0 million term loan facility (“Term Loan Facility”) on July 11, 2024 at an interest rate of SOFR plus between 5.50 % to 6.75 %.

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 could 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 was July 11, 2027.

The Company and the applicable lenders also agreed in a separate first amendment to increase the amount of unsecured indebtedness the Company was permitted to incur under the ABL Revolving Credit Facility, subject to completion of the 2030 Convertible Notes offering (discussed below).

Under the terms of the ABL Revolving Credit Facility, the Company paid 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 Company’s Excess Availability (as defined in the ABL Revolving Credit Facility).

The Company was 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 ABL Revolving Credit Facility.

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

The Company was 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.

On December 3, 2024, the Company repaid in full all outstanding indebtedness under the Term Loan Facility.

The Term Loan Facility payoff consisted of a repayment of a principal amount of approximately $ 54.9 million, plus accrued but unpaid interest, fees and expenses, including a call premium of 3.00 % which satisfied all of the Company’s indebtedness obligations thereunder.

The Company funded the repayment of its obligations under the Term Loan Facility with a portion of the proceeds received from the issuance and sale of the 2030 Convertible Notes (discussed below).

On October 22, 2025, the Company entered into a $ 300.0 million senior secured, cash flow-based revolving credit facility (the “Revolving Credit Facility”).

The Revolving Credit Facility replaced the Company’s ABL Revolving Credit Facility, which was terminated on October 22, 2025.

The scheduled maturity date for the Revolving Credit Facility is October 16, 2030.

Under the terms of the Revolving Credit Facility, the Company pays interest on the unpaid principal amount outstanding under the Revolving Credit Facility at a rate equal to Term SOFR (as defined in the Revolving Credit Facility) plus an applicable margin ranging from 1.25 % to 2.125 % determined based upon the Company’s Total Net Debt Leverage Ratio (as defined in the Revolving Credit Facility).

The Company pays a quarterly commitment fee under the Revolving Credit Facility on unused Revolving Commitments ranging from 0.20 % to 0.35 % determined based upon the Company’s Total Net Debt Leverage Ratio.

Pursuant to the Revolving Credit Facility, the Company is subject to a total leverage ratio covenant that requires that the Company’s Total Net Debt Leverage Ratio may not exceed 4.50 to 1.00, provided that the Company’s Total Net Debt Leverage Ratio for the fiscal quarter ending December 31, 2025, may not exceed 4.75 to 1.00.

The Company is also subject to a consolidated interest coverage ratio covenant that requires that the Company’s Consolidated Interest Coverage Ratio (as defined in the Revolving Credit Facility) may not be less than 3.50 to 1.00 and a secured net debt leverage ratio covenant that requires that the Company’s Secured Net Debt Leverage Ratio (as defined in the Revolving Credit Facility) may not exceed 3.00 to 1.00.

As of December 31, 2025, the Company was in compliance with these covenants.

On December 3, 2024, the Company issued $ 165.0 million aggregate principal amount of 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.

On December 31, 2025, there was $ 85.0 million outstanding on the Revolving Credit Facility and there remained $ 212.8 million available for future borrowings, net of outstanding letters of credit.

The Revolving Credit Facility has an accordion feature, which allows the Company to request incremental commitments of up to $ 100.0 million plus additional incremental amounts so long as maximum leverage requirements are met.

2030 Convertible Notes

On December 3, 2024, the Company issued $ 165.0 million aggregate principal amount of 5.500 % Convertible Senior Notes due 2030 (the “2030 Convertible Notes”).

The 2030 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 2030 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 2030 Convertible Notes, which represent the initial conversion price of $ 22.89

The 2030 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.

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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 2030 Convertible Notes may be called at the option of the holder.

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

On December 3, 2024, the Company repaid in full all outstanding indebtedness under the Term Loan Facility.

The Company funded the repayment of its obligations under the Term Loan Facility with a portion of the proceeds received from the issuance and sale of the Convertible Notes.

Scheduled principal payments of $ 9.0 million were payable under the Term Loan Facility and were classified as current in the accompanying Consolidated Balance Sheets as of December 31, 2023.

The interest rate on current maturities of long-term debt was 14.20 % at December 31, 2023.

The Company incurred $ 12.2 million in incremental debt issuance costs during 2024.

During the fiscal quarter ended December 31, 2025, our stock price met the price trigger defined above, and therefore, holders of our 2030 Convertible Notes have the ability to convert their notes at their option at any time during the fiscal quarter ended April 4, 2026.

2031 Convertible Notes

On September 15, 2025, the Company issued $ 225.0 million aggregate principal amount of Convertible Senior Notes due 2031 (the “2031 Convertible Notes”) for net proceeds of $ 216.7 million.

The Company used part of the net proceeds to repurchase a portion of the 2030 Convertible Notes and the remainder to enter into the capped call transactions, as further described below.

The 2031 Convertible Notes do not bear any interest and will mature on January 15, 2031, unless earlier converted, redeemed or repurchased.

The initial conversion rate is 18.2243 shares of common stock per $1,000 principal amount of 2031 Convertible Notes, which represents the initial conversion price of $ 54.87 per share.

The 2031 Convertible Notes are convertible at the option of the holders at any time on or after October 15, 2030, 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 cash up to the aggregate principal amount of the 2031 Convertible Notes to be converted and 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, in respect of the remainder, if any, of its conversion obligation in excess of the aggregate principal amount of the Notes being converted.

Beginning January 22, 2029, if the Company’s stock price has been at least 130 % of the conversion price for a specified period of time, the 2031 Convertible Notes may be called at the option of the issuer.

After the fourth quarter of 2025, if the Company’s stock price has been at least 130 % of the conversion price for 5 of the first 20 trading days of such fiscal quarter, the 2031 Convertible Notes may be redeemed at the option of the holder during the 30 -trading day period beginning on, and including, the 21st trading day of such quarter.

As of December 31, 2025, the 2031 Convertible Notes were not redeemable.

Partial Repurchase of 2030 Convertible Notes

The Company used approximately $ 189.8 million of the net proceeds from the issuance of the 2031 Convertible Notes, together with approximately $ 85.0 million of borrowings under its ABL Revolving Credit Facility and approximately $ 11.0 million of cash on hand, to repurchase approximately $ 132.0 million in aggregate principal amount of outstanding 2030 Convertible Notes pursuant to privately negotiated exchange agreements entered into with certain holders of the 2030 Convertible Notes.

The total cash paid in connection with this repurchase was approximately $ 285.8 million.

The repurchase was accounted for in accordance with ASU 2024-04, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and resulted in the recognition of an inducement charge of $ 32.6 million within Loss on Settlement of Debt in the Consolidated Statements of Operations.

The Company also recorded a reduction to equity of $ 125.5 million, inclusive of a reduction to unamortized debt issuance costs of $ 4.3 million.

Interest expense was $ 12.6 million, $ 22.0 million and $ 23.3 million for 2025, 2024 and 2023, respectively.

The Company recorded non-cash write-offs of deferred financing costs related to exiting ABL lenders of approximately $ 0.6 million and $ 0.5 million in years ending December 31, 2025 and 2024, respectively, in Interest Expense within the Consolidated Statements of Operations.

In 2024, the Company recorded a Loss on Settlement of Debt of approximately $ 10.1 million, which was comprised of $ 4.5 million of prepayment fees on the previous term loans and a write-off of $ 5.6 million of unamortized deferred financing costs.

Debt issuance cost amortization expense was $ 2.5 million, $ 2.6 million and $ 3.0 million for 2025, 2024 and 2023, respectively.

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

Debt issuance cost amortization expense was approximately $ 2.6 million, $ 3.0 million and $ 0.8 million in 2024, 2023 and 2022, respectively.

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

The unamortized balance of deferred debt issuance costs on our previous credit facilities of $ 2.0 million was recorded within Other Assets and $ 4.3 million was recorded as a reduction of the carrying value of the debt on the Consolidated Balance Sheets at December 31, 2023.

In 2024, the Company recorded a loss on extinguishment of the debt of approximately $ 10.1 million below Income from Operations, which was comprised of $ 4.5 million of prepayment fees on the previous term loans and a write-off of $ 5.6 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 Statements of Operations.

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.

Unamortized deferred debt issuance costs associated with the Revolving Credit Facility ($ 3.0 million as of December 31, 2025) and ABL Revolving Credit Facility ($ 3.0 million as of December 31, 2024) were recorded within Other Assets.

The following table presents the outstanding principal amount and carrying value of the Convertible Notes as of the dates indicated:

December 31, 2025 December 31, 2024

(In thousands) Principal Unamortized Debt Issuance Costs Carrying Value Principal Unamortized Debt Issuance Costs Carrying Value

2030 Convertible Notes

$ 33,000 $ ( 1,023 ) $ 31,977 $ 165,000 $ ( 6,331 ) $ 158,669

2031 Convertible Notes

225,000 ( 7,526 ) 217,474 — — —

$ 258,000 $ ( 8,549 ) $ 249,451 $ 165,000 $ ( 6,331 ) $ 158,669

The Company estimates the fair value of the convertible notes based on quoted prices for these instruments in active markets, classified as Level 1 measurements within the fair value hierarchy.

The fair value of the 2031 Convertible Notes was approximately $ 264.1 million as of December 31, 2025.

The fair value of the 2030 Convertible Notes was approximately $ 84.8 million and $ 176.9 million as of December 31, 2025 and December 31, 2024, respectively.

Capped Call Transactions

In connection with the issuance of the 2031 Convertible Notes, the Company entered into capped call transactions (the “Capped Calls”) with certain financial institutions.

The Capped Calls are generally expected to reduce the potential dilution to the Company’s common stock upon any conversion of the 2031 Convertible Notes and/or offset any potential cash payments the Company is required to make in excess of the principal amount of converted 2031 Convertible Notes, as the case may be, with such reduction and/or offset subject to a cap.

The cap price of the Capped Calls is initially approximately $ 83.41 per share of the Company’s common stock and is subject to certain adjustments under the terms of the capped call transactions.

The Capped Calls expire January 15, 2031.

We used approximately $ 26.9 million of the net proceeds from the 2031 Convertible Notes to purchase the Capped Calls.

These instruments are classified as equity and recorded as a reduction of additional paid-in capital in the Consolidated Statements of Changes in Stockholders’ Equity.

NOTE 9 — WARRANTY

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Balance at Beginning of the Year $ 18,081 $ 9,751 $ 8,009

Warranty Liabilities Acquired 995 — —

Warranties Issued 5,404 12,078 6,260

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Balance at End of the Year $ 20,740 $ 18,081 $ 9,751

Warranties issued in 2024 includes an atypical warranty reserve of $ 5.2 million related to a new product launch that requires field modification.

Warranties issued includes an atypical warranty reserve for a new product launch that requires field modification that resulted in $ 1.4 million and $ 5.2 million in expense during 2025 and 2024, respectively.

NOTE 10 — LEASES

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Some of our leases include options to extend or terminate the leases and these options have been included in the relevant lease term to the extent that they are reasonably certain to be exercised.

If the lease arrangement also contains non-lease components, the Company elected the practical expedient not to separate any combine d lease and non-lease components for all lease contracts.

The right-of-use (“ROU”) assets, ROU lease liabilities, and lease costs related to the Company’s finance leases were immaterial as of December 31, 2025 and December 31, 2024.

If the lease arrangement also contains non-lease components, the Company elected the practical expedient not to separate any combined lease and non-lease components for all lease contracts.

For our real estate leases, the payments used in the calculation of a new lease liability include fixed payments and variable payments (if the variable payments are based on an index) over the remaining lease term.

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Variable lease components for leases relate primarily to common area maintenance charges and other separately billed lessor services, sales and real estate taxes.

Any new additional operating and financing lease liabilities and corresponding right-of-use (“ROU”) assets are based on the present value of the remaining minimum rental payments.

Any new additional operating and financing lease liabilities and corresponding ROU assets are based on the present value of the remaining minimum rental payments.

The Company’s operating lease liability increased approximately $ 15.3 million as a result of acquiring ROU assets from new leases entered into during the year ended December 31, 2025.

In determining the incremental borrowing rate, we have considered borrowing data for secured debt obtained from our lending institution.

The following is a summary of the Company’s ROU assets and lease liabilities at December 31:

The following is a summary of the Company’s operating ROU assets and lease liabilities at December 31:

(In thousands) 2025 2024

Operating Leases:

Operating Right-of-Use Assets, Gross $ 43,626 $ 43,528

Less Accumulated Right-of-Use Asset Impairment — 53

Less Accumulated Amortization 20,017 15,566

Operating Right-of-Use Assets, Net $ 32,269 $ 23,609

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Operating Lease Liabilities $ 43,903 $ 25,205

Finance Leases:

Finance Right-of-Use Assets, Gross $ 329 $ 274

Less Accumulated Amortization 149 80

Finance Right-of-Use Assets, Net — Included in Other Assets $ 180 $ 194

Short-term Finance Lease Liabilities — Included in Other Accrued Expenses

Long-term Finance Lease Liabilities — Included in Other Liabilities 48 104

Finance Lease Liabilities $ 127 $ 201

The following is a summary of the Company’s total lease costs as of December 31:

The following is a summary of the Company’s operating lease costs as of December 31:

(In thousands) 2025 2024

Finance Lease Cost:

Amortization of ROU Assets $ 76 $ 54

Interest on Lease Liabilities 10 9

Total Finance Lease Cost 86 63

Operating Lease Cost 9,029 6,731

Impairment Charge of Operating Lease ROU Asset — 53

Variable Lease Cost 3,447 2,550

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Total Operating Lease Cost $ 11,461 $ 8,490

Total Net Lease Cost $ 8,576 $ 8,411

The following is a summary of cash paid for amounts included in the measurement of lease liabilities as of December 31:

The following is cash (received) paid for amounts included in the measurement of operating lease liabilities as of December 31:

(In thousands) 2025 2024

Operating Cash Flow for Finance Leases $ 10 $ 9

Operating Cash Flow for Operating Leases $ ( 966 ) $ 6,664

Financing Cash Flow for Finance Leases $ 135 $ 47

During the year ended December 31, 2025, the Company had positive operating cash flow for operating leases due to the receipt of $ 8.1 million tenant improvement allowances.

As permitted by ASC 842, leases with expected durations of less than 12 months from inception (i.e.

short-term leases) were excluded from the Company’s calculation of its lease liability and ROU asset.

The weighted-average remaining term for the Company’s operating and financing leases are approximately 7 years and 1 year, respectively.

The weighted-average discount rates for the Company’s operating and financing leases are approximately 5.8 % and 6.3 %, respectively.

The following is a summary of the Company’s maturity of lease liabilities:

(In thousands) Operating Leases Financing Leases

2025 $ 5,928 $ 84

2026 4,503 43

2027 3,802 13

The weighted-average remaining term for the Company’s operating leases is approximately 7 years.

The weighted-average discount rate for the Company’s operating leases is approximately 6.4 %.

The following is a summary of the Company’s maturity of operating lease liabilities:

(In thousands) Operating Leases

Thereafter 17,974

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Total Lease Liability $ 43,903

These amounts exclude annual operating lease payments of $ 3.3 million per year through 2033, which represents legal binding lease payments for leases signed, but not yet commenced.

NOTE 11 — INCOME TAXES

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Deferred tax assets are reduced, if deemed necessary, by a valuation allowance for the amount of tax benefits which are not more likely than not to be realized.

The components of income (loss) before provision for (benefit from) income taxes are as follows:

(In thousands) 2025 2024 2023

United States $ 22,956 $ ( 17,426 ) $ ( 32,809 )

Foreign 8,989 9,559 6,498

Income (Loss) Before Provision for (Benefit from) Income Taxes $ 31,945 $ ( 7,867 ) $ ( 26,311 )

The provision for (benefit from) income taxes at December 31 consists of the following:

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Total $ 2,586 $ 8,348 $ 110

The following table summarizes the Company’s income tax payments net of tax refunds by jurisdiction:

(In thousands) 2025 2024 2023

Federal $ 8,903

State and Local 742

Foreign 1,960

Total Cash Paid for Income Taxes, Net of Refunds $ 11,605

Total Cash Paid for Income Taxes, Net of Refunds (Prior to ASU 2023-09) $ 3,537 $ 1,964

1 Includes jurisdictions below the threshold for the period presented

The company adopted ASU 2023-09 prospectively in 2025.

The 2025 reconciliation between U.S.

Federal tax rate and the effective tax rate under ASU 2023-09 is below.

The reconciliation for 2024 and 2023 under the prior guidance follows.

The effective tax rates differ from the statutory federal income tax rate as follows:

2024 2023 2022

(in thousands) Percent

Statutory Federal Income Tax Rate $ 6,708 21.0 %

State and Local Income Taxes, Net of Federal Income Tax Effect 1

Foreign Tax Effects

Change in Valuation Allowance ( 1,243 ) ( 3.9 ) %

Other 37 0.1 %

Other Foreign Jurisdictions 267 0.8 %

Effect of Cross-Border Tax Laws

Global Intangible Low-taxed Income 2,307 7.2 %

Foreign-derived Intangible Income ( 513 ) ( 1.6 ) %

Research and Development Tax Credits ( 4,291 ) ( 13.4 ) %

Change in Valuation Allowance ( 8,711 ) ( 27.2 ) %

Nontaxable or Nondeductible Items

Stock Compensation Expense ( 822 ) ( 2.6 ) %

Nondeductible Premium on Bond Repurchase 4,491 14.1 %

162(m) Limitation 2

Other 539 1.7 %

IRS Audit Adjustments 361 1.1 %

Other 74 0.2 %

Effective Tax Rate $ 2,586 8.1 %

1 State taxes in California for 2025 make up the majority (greater than 50%) of the tax effect in this category

2 Approximately $ 0.7 million of the line item relates to current year 162(m) limitations and the remaining amount relates to anticipated limitations of the existing deferred tax asset upon reversal

The table below includes a reconciliation of the U.S.

federal statutory rate of 21% to the Company's effective tax rate for the years ended December 31, 2024 and 2023, prior the adoption of ASU 2023-09:

Statutory Federal Income Tax Rate 21.0 % 21.0 %

Permanent Items

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Net GILTI and FDII Tax Expense (Benefit) 16.4 % ( 1.0 ) %

Foreign Tax Credit for Dividend Withholding — % — % ( 1.5 ) %

Penalties ( 3.1 ) % — %

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Deferred Compensation 5,835 6,096

Financing Costs 5,699 —

Section 163(j) - Interest Expense Limitation 43 2,982

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Beginning January 1, 2022, the Tax Cuts and Jobs Act (TCJA) of 2017 eliminated the option to deduct research and development expenditures in the current year and now requires taxpayers to capitalize and amortize research and development costs pursuant to Internal Revenue Code (“IRC”) Section 174.

The capitalized expenses are amortized over a 5-year period for domestic expenses and a 15-year period for foreign expenses.

As a result of this provision of the TCJA, deferred tax assets related to capitalized research expenses increased by approximately $ 9.4 million and $ 5.8 million during the years ended December 31, 2024 and 2023, respectively.

During the year ended December 31, 2025, the company recorded a deferred tax asset of approximately $ 6.3 million as an increase to additional paid-in capital with an offsetting valuation allowance of approximately $ 6.3 million as a decrease to additional paid-in capital.

Any subsequently recognized tax benefits associated with this $ 6.3 million valuation allowance are expected to be credited directly to contributed capital.

During the year ended December 31, 2025, the Company reversed approximately $ 1.4 million of valuation allowances against certain foreign deferred tax assets as a result of no longer having cumulative pre-tax losses in the respective foreign jurisdictions during the three-year period ending with the current year.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law in the United States.

The OBBBA permanently extends and modifies significant provisions enacted in 2017 as part of the Tax Cuts and Jobs Act (“TCJA”) that were originally set to expire at the end of 2025.

In addition, the OBBBA makes changes to certain U.S.

corporate tax provisions, many of which are not in effect until 2026.

Key provisions of the Tax Act relevant to the Company’s operations include immediate expensing of certain domestic research and development expenses and domestic capital expenditures beginning in 2025 as well as changes to various U.S.

international tax provisions going forward.

The Company anticipates it will elect to deduct the remaining previously capitalized domestic research and development costs equally between 2025 and 2026 and expense domestic research and development costs as incurred for the 2025 tax year.

As a result of this provision of the OBBBA, deferred tax assets related to capitalized research expenses decreased by approximately $ 16.3 million during the year ended December 31, 2025.

The Company maintains a full valuation allowance against this deferred tax asset.

At December 31, 2024, gross federal net operating losses amounted to approximately $ 1.1 million, which are subject to annual limitations under Internal Revenue Code Section 382.

At December 31, 2025, gross federal net operating losses amounted to approximately $ 41.8 million, of which, $ 1.1 million are subject to annual limitations under Internal Revenue Code Section 382.

Of these net operating losses, $ 0.7 million expire in 2038 and the remaining $ 0.4 million will carryforward indefinitely.

The remaining $ 40.7 million of federal net operating losses, which are not subject to Internal Revenue Code Section 382 will carryforward indefinitely.

The Company maintains a full valuation allowance against this deferred tax asset.

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The Company maintains a full valuation allowance against this deferred tax asset.

At December 31, 2024, state income tax credit carryforwards amounted to approximately $ 1.1 million and begin to expire at various dates from 2024 to 2040.

At December 31, 2025, federal income tax credit carryforwards amounted to approximately $ 3.4 million and will expire in 2045.

State income tax credit carryforwards amounted to approximately $ 1.4 million and begin to expire at various dates from 2025 to 2044.

Additionally, the Company has approximately $ 0.2 million of foreign tax credits that it can carry forward through 2027.

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The Company has analyzed its filing positions in all of the federal and state jurisdictions where it is required to file income tax returns, as well as all open tax years in these jurisdictions.

Should the Company need to accrue a liability for uncertain tax benefits, any interest and penalties associated with that liability would be recorded as income tax expense.

Should the Company need to accrue a liability for uncertain tax

benefits, any interest and penalties associated with that liability would be recorded as income tax expense.

A reconciliation of the total amounts of unrecognized tax benefits, excluding interest and penalties, is as follows:

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There are no material penalties or interest liabilities accrued as of December 31, 2025, 2024, or 2023, nor are any material penalties or interest costs included in expense for each of the years ended December 31, 2025, 2024 and 2023.

The years under which we conducted our evaluation coincided with the tax years currently still subject to examination by major federal and state tax jurisdictions, those being 2019 through 2024 for federal purposes and 2017 through 2024 for state purposes.

The years under which we conducted our evaluation coincided with the tax years currently still subject to examination by major federal and state tax jurisdictions, those being 2019, 2020, and 2022 through 2024 for federal purposes and 2021 through 2024 for state purposes.

Pretax income from the Company’s foreign subsidiaries amounted to approximately $ 9.0 million, $ 9.6 million and $ 6.5 million for 2025, 2024 and 2023, respectively.

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Historically, we have asserted that the unremitted earnings of our foreign subsidiaries were indefinitely reinvested.

However, for the years ended December 31, 2024 and 2023, we determined that we could no longer assert indefinite reinvestment on approximately $ 3.0 million and $ 1.9 million of the unremitted earnings of Luminescent Systems Canada Inc., respectively.

As a result, we have recorded a deferred tax liability of approximately $ 0.2 million and $ 0.1 million at December 31, 2024 and 2023 respectively, related to local country withholding taxes that are expected to be incurred upon ultimate repatriation of such earnings.

However, for the years ended December 31, 2025, 2024 and 2023, we determined that we could no longer assert indefinite reinvestment on approximately $ 7.0 million, $ 3.0 million and $ 1.9 million of the unremitted earnings of Luminescent Systems Canada Inc., respectively.

As a result, we have recorded a deferred tax liability of approximately $ 0.3 million, $ 0.2 million, and $ 0.1 million at December 31, 2025, 2024 and 2023, respectively, related to local country withholding taxes that are expected to be incurred upon ultimate repatriation of such earnings.

All other foreign unremitted earnings, which total approximately $ 17.3 million, continue to be indefinitely reinvested.

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Total charges to income before income taxes for this plan was approximately $ 9.6 million, $ 8.9 million and $ 5.3 million in 2025, 2024 and 2023, respectively.

The Company had funded the contributions in 2022, 2023 and the first quarter of 2024 with treasury stock in lieu of cash and funded the remainder of the 2024 contributions with cash.

The Company had funded the contributions in 2023 and the first quarter of 2024 with treasury stock in lieu of cash and funded the remainder of the 2024 contribution and the 2025 contributions with cash.

NOTE 13 — RETIREMENT PLANS AND RELATED POST RETIREMENT BENEFITS

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Further, actuarial gains and losses that arise in subsequent periods and are not recognized as net periodic pension cost in the same periods will be recognized as a component of AOCI.

If actuarial gains and losses exceed ten percent of the projected benefit obligation, we amortize them over the average expected future lifetime of participants.

Unrecognized prior service costs of $ 0.3 million and unrecognized actuarial gains of $ 4.9 million are included in AOCI at December 31, 2024 and have not yet been recognized in net periodic pension cost.

If actuarial gains and losses exceed ten percent of the projected benefit obligation, we amortize them over the average expected future service of active participants.

Unrecognized prior service gains of $ 0.1 million and unrecognized actuarial gains of $ 0.9 million are included in AOCI at December 31, 2025 and have not yet been recognized in net periodic pension cost.

The reconciliation of the beginning and ending balances of the projected benefit obligation of the plans for the years ended December 31 is as follows:

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Interest Cost 1,306 1,371

Actuarial (Gain) Loss ( 6,134 ) 1,529

Actuarial Loss (Gain) 2,587 ( 6,134 )

Special Termination Benefits — 624

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End of the Year — December 31 $ 27,554 $ 24,311

In 2024, the net actuarial gain of $ 6.1 million is due to the increase of 69 basis points in the discount rate and change in the bonus scale used to measure the benefit obligation as of December 31, 2024 compared to the prior year.

In 2025, the net actuarial loss of $ 2.6 million is due to the decrease of 11 basis points in the discount rate and change in the bonus scale used to measure the benefit obligation as of December 31, 2025 compared to the prior year.

The Company incurred charges of $ 0.6 million in 2024 associated with a waiver of an early retirement penalty provided by the plan related to a retiring participant.

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Amortization of Prior Service Cost 386 386 386

Amortization of Losses 738 358 949

Amortization of (Gains) Losses ( 1,329 ) 738 358

Net Periodic Cost $ 363 $ 2,495 $ 2,151

4 unchanged sentences

2.00 % - 3.00 %

Benefit payments expected in each of the next five years are as follows:

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Benefits expected to be paid in the aggregate between 2031 and 2035 are $ 10.3 million.

Given that the plans are unfunded, these amounts are what the Company expects to contribute to the plans in each respective year.

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

The measurement date for determining the plan obligation and cost is December 31.

The accumulated postretirement benefit obligation is $ 0.8 million at December 31, 2024 and 2023.

The plan is recognized in the accompanying Consolidated Balance Sheets as a current accrued pension liability of $ 0.1 million and a long-term accrued pension liability of $ 0.7 million.

The net periodic cost for the years ended December 31, 2024, 2023 and 2022 was not material.

The Company is a participating employer in a trustee-managed multiemployer defined benefit pension plan for employees who participate in collective bargaining agreements.

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Aggregate net proceeds from the ATM Program were $ 21.3 million after deducting related expenses, including commissions to the Sales Agents and issuance costs.

No shares were sold under the ATM Program in 2024.

No shares were sold under the ATM Program in 2025 or 2024.

As of December 31, 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.

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Class B Stock is identical to Common Stock, except Class B Stock has ten votes per share, is automatically converted to Common Stock on a one -for-one basis when sold or transferred other than via gift, devise or bequest and cannot receive dividends unless an equal or greater amount of dividends is declared on Common Stock.

Comprehensive Loss and Accumulated Other Comprehensive Loss

Comprehensive Income (Loss) and Accumulated Other Comprehensive Loss

Comprehensive income or loss consists of net income or loss and the after-tax impact of retirement liability adjustments.

8 unchanged sentences

In 2025, 2024 and 2023, no tax benefit was recognized as the Company had recorded a full valuation allowance on the deferred tax asset associated with the retirement liability.

The components of other comprehensive income are as follows:

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

(In thousands) 2025 2024 2023

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Retirement Liability Adjustment ( 3,617 ) 7,434 ( 884 )

Other Comprehensive Income $ 5,563 $ 100 $ 4,969

NOTE 15 — LOSS PER SHARE

Loss per share computations are based upon the following table:

(In thousands, except per share data) 2024 2023 2022

Net Loss $ ( 16,215 ) $ ( 26,421 ) $ ( 35,747 )

Basic Earnings Weighted Average Shares 35,037 33,104 32,164

Net Effect of Dilutive Stock Options — — —

Diluted Earnings Weighted Average Shares 35,037 33,104 32,164

Basic Loss Per Share $ ( 0.46 ) $ ( 0.80 ) $ ( 1.11 )

Diluted Loss Per Share $ ( 0.46 ) $ ( 0.80 ) $ ( 1.11 )

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.

Other Comprehensive (Loss) Income $ ( 547 ) $ 5,563 $ 100

NOTE 15 — EARNINGS PER SHARE

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

(In thousands, except per share amounts) 2025 2024 2023

Basic Earnings per Common Share:

Net Income (Loss) - Basic $ 29,359 $ ( 16,215 ) $ ( 26,421 )

Weighted Average Shares - Basic 35,443 35,037 33,104

Basic Earnings per Common Share $ 0.83 $ ( 0.46 ) $ ( 0.80 )

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

(In thousands, except per share amounts) 2025 2024 2023

Diluted Earnings per Common Share:

Net Income (Loss) - Basic $ 29,359 $ ( 16,215 ) $ ( 26,421 )

Convertible Notes Interest Expense, Net of Tax — — —

Net Income (Loss) - Diluted $ 29,359 $ ( 16,215 ) $ ( 26,421 )

Weighted Average Shares - Basic 35,443 35,037 33,104

Net Effect of Dilutive Stock Awards 1,021 — —

Net Effect of Dilutive Convertible Notes — — —

Weighted Average Shares - Diluted 36,464 35,037 33,104

Diluted Earnings per Common Share $ 0.81 $ ( 0.46 ) $ ( 0.80 )

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 2030 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 years ended December 31, 2024, 2023, and 2022, therefore all outstanding stock options, unvested restricted stock units and the effect of the Convertible Notes are excluded from the computation of diluted loss per share because the effect of their inclusion would be antidilutive.

Antidilutive shares excluded from diluted loss per share computations were as follows:

The Company excluded all impacts of the 2030 Convertible Notes from the computation of diluted earnings per share as the effect would be anti-dilutive.

The Company will settle the principal amount of the 2031 Convertible Notes by paying cash and settle the premium in any combination of cash or shares.

The Company’s average stock price during the period outstanding was below the conversion price for the 2031 Convertible Notes, therefore no incremental shares were included in diluted earnings per share.

The Company incurred a net loss for the years ended December 31, 2024 and 2023, 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 antidilutive.

Antidilutive shares excluded from diluted earnings (loss) per share computations were as follows:

(In thousands) 2025 2024 2023

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In the fourth quarter of 2024, the Company entered into a Transition and Retirement Agreement with its former CFO, which granted certain benefits related to the retirement.

Equity-based Compensation Expense includes $ 0.6 million related with accelerated RSU vesting pursuant to that Agreement.

Equity-based Compensation Expense in 2024 includes $ 0.6 million related with accelerated RSU vesting pursuant to that Agreement.

Stock Options

5 unchanged sentences

4.20 % - 4.33 %

3.48 % - 3.62 %

Dividend Yield — %

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The closing stock price of the Company’s Common Stock was $ 54.24 , $ 15.96 and $ 17.42 as of December 31, 2025, 2024 and 2023, respectively.

As the stock price of $ 15.96 was below the weighted average exercise price, intrinsic value is zero .

The weighted average fair value of options vested during 2024, 2023 and 2022 was $ 7.30 , $ 11.53 and $ 12.89 , respectively.

Shares withheld by the Company upon the exercise of stock options to cover exercise price and satisfy tax withholding obligations represent an increase to treasury shares outstanding.

During the year ended December 31, 2025, 186,179 options vested, with a weighted average fair value of $ 7.52 .

The total fair value of options that vested during the year amounted to $ 1.4 million, $ 2.1 million and $ 3.0 million for the years ended December 31, 2025, 2024 and 2023, respectively.

At December 31, 2024, total compensation costs related to non-vested option awards not yet recognized amounts to $ 3.0 million and will be recognized over a weighted average period of approximately one year .

The total intrinsic value of options exercised during the year amounted to $ 3.6 million for the year ended December 31, 2025.

No options were exercised in the years ended December 31, 2024 or December 31, 2023.

During the year ended December 31, 2025, 39,575 options were forfeited with a weighted average fair

value of $ 10.47 .

At December 31, 2025, total compensation costs related to non-vested option awards not yet recognized amounts to $ 2.6 million and will be recognized over a weighted average period of approximately two years .

The following is a summary of weighted average exercise prices and contractual lives for outstanding and exercisable stock options as of December 31, 2025:

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Income Before Income Taxes $ 32,244 $ 576

Net (Loss) Income $ ( 2,832 ) $ 6,976

Basic (Loss) Earnings Per Share $ ( 0.08 ) $ 0.20

Diluted (Loss) Earnings Per Share $ ( 0.08 ) $ 0.20

Income before taxes in 2024 includes an increase in litigation-related legal expenses and legal reserve adjustments of $ 7.0 million compared to the prior-year period, and a loss on extinguishment of the debt of $ 3.2 million.

NOTE 19 — LEGAL PROCEEDINGS

Net Income (Loss) $ 29,615 $ ( 2,832 )

Basic Earnings (Loss) Per Share $ 0.83 $ ( 0.08 )

Diluted Earnings (Loss) Per Share $ 0.78 $ ( 0.08 )

R&D Expenses have been reclassified from Cost of Products Sold to a separate line item below Gross Profit.

All periods presented have been revised to reflect this presentation.

Income before taxes in 2025 includes a decrease in litigation-related legal expenses and legal reserve adjustments of $ 9.0 million compared to the prior-year period.

Income before taxes in 2024 includes a loss on settlement of debt of $ 3.2 million.

NOTE 19 — LEGAL PROCEEDINGS AND OTHER MATTERS

Legal Proceedings

On December 29, 2010, Lufthansa Technik AG (“Lufthansa”) filed a Statement of Claim in the Regional State Court of Mannheim, Germany.

Lufthansa’s claim asserted that a subsidiary of the Company, AES, sold, marketed, and brought into use in Germany a power supply system that infringes upon a German patent held by Lufthansa.

Lufthansa sought an order requiring AES to stop selling and marketing the allegedly infringing power supply system, a recall of allegedly infringing products sold to commercial customers in Germany since November 26, 2003, and compensation for damages related to direct sales of the allegedly infringing power supply system in Germany (referred to as “direct sales”).

AES modified the outlet units at the end of 2014 and the overwhelming majority of the modified outlet units sold from 2015 do not infringe the patent of Lufthansa.

In February 2015, the Regional State Court of Mannheim, Germany held that the patent was infringed.

The judgment did not require AES to recall products that are already installed in aircraft or had been sold to other end users.

The Company appealed to the Higher Regional Court of Karlsruhe.

On November 15, 2016, the Higher Regional Court of Karlsruhe upheld the lower court’s decision.

In November 2016, the Higher Regional Court of Karlsruhe upheld the lower court’s decision.

The Company sought permission to appeal to the German Federal Supreme Court.

By judgment of March 26, 2019, the German Federal Supreme Court dismissed AES's appeal.

With this decision, the above-mentioned proceedings are complete.

In July 2017, Lufthansa filed an action in the Regional State Court of Mannheim for payment of damages caused by AES’s direct sales of the product into Germany.

In March 2019, the German Federal Supreme Court dismissed AES's appeal.

With this decision, these proceedings are complete.

AES modified the outlet units at the end of 2014 and the overwhelming majority of the modified outlet units sold from 2015 on do not infringe the patent of Lufthansa.

In July 2017, Lufthansa filed an action in the Regional State Court of Mannheim for payment of damages caused by AES’s direct sales of the infringing power supply system into Germany (referred to as “direct sales”).

A first instance decision in this matter was handed down on December 6, 2019.

1 unchanged sentence

In 2020, AES made payment of $ 4.7 million, inclusive of interest, in satisfaction of the first instance judgment.

On July 12, 2023, the Higher Regional Court of Karlsruhe in Germany reduced the Company’s liability for direct damages on appeal from approximately $ 3.2 million plus interest to approximately $ 2.8 million plus interest.

In July 2023, the Higher Regional Court of Karlsruhe in Germany reduced the Company’s liability for direct damages on appeal from approximately $ 3.2 million plus interest to approximately $ 2.8 million plus interest.

Additionally, in its judgment, the Court reduced the interest rate on damages from 5 % (as held by the Regional Court of Mannheim) to 4 %.

Accordingly, the Company reclaimed overpaid damages and interest from LHT in the amount of approximately $ 1.2 million.

This was recorded as an offset to Selling, General and Administrative expenses in the third quarter of 2023, upon receipt of the refund.

This was recorded as an offset to Selling, General and Administrative expenses in the year ended December 31, 2023, upon receipt of the refund.

Both Lufthansa and AES have filed requests with the German Federal Supreme Court to be granted leave to file appeals against this decision.

On December 29, 2017, Lufthansa filed another infringement action against AES in the Regional State Court of Mannheim claiming that sales by AES to its international customers have infringed Lufthansa's patent if AES's customers later shipped the products to Germany (referred to as “indirect sales”).

This action, therefore, addresses sales other than those covered by the action filed on December 29, 2010, discussed above.

No amount of claimed damages has been specified by Lufthansa.

A first instance decision in this matter was issued on December 6, 2019.

The Court found that indirect sales (as defined above) by AES to international customers infringe the patent under the conditions specified in the judgment and that the sale of components of the EmPower system to Germany constitutes an indirect patent infringement.

The Court rejected Lufthansa's claim that AES is also liable for damages for the sale of modified products.

This means that AES is not liable for damages based on the sale of modified outlet units that removed the infringing feature.

This action, therefore, addresses sales other than the direct sales covered by the action discussed above.

A first instance decision in this matter was issued in December 2019.

While the Court found in favor of Lufthansa, they rejected Lufthansa's claim that AES is also liable for damages for the sale of modified products.

Thus, AES is not liable for damages based on the sale of modified outlet units that removed the infringing feature.

AES and Lufthansa both appealed this decision.

On July 12, 2023, the Higher Regional Court of Karlsruhe essentially upheld the first instance ruling.

According to the Higher Regional Court of Karlsruhe ruling, AES is responsible for payment of damages for indirect sales of patent-infringing EmPower in-seat power supply systems in the period from December 29, 2007 to May 22, 2018.

In July 2023, the Higher Regional Court of Karlsruhe essentially upheld the first instance ruling.

According to the Higher Regional Court of Karlsruhe ruling, AES is responsible for payment of damages for indirect sales of patent-infringing in-seat power supply systems in the period from December 29, 2007 to May 22, 2018.

However, because the outlet units were modified at the end of 2014, the period for which AES is liable for damages in connection with indirect sales into Germany substantially finished at the end of 2014.

Both Lufthansa and AES have filed requests with the German Federal Supreme Court to be granted leave to file appeals against this decision.

After the accounting, Lufthansa is expected to enforce its claim for damages in separate court proceedings.

Lufthansa is expected to enforce its claim for damages in separate court proceedings.

These proceedings would most likely be tried before the Mannheim Court again, which makes it probable that the Mannheim Court will determine the damages for the indirect sales based on the same principles as in the direct sales proceedings (unless the latter ruling of the Mannheim Court is reversed on appeal).

Based on the information available and the determination of the damages in the direct sales claim discussed above, we estimated that the Company’s total exposure related to these matters that was probable and that could be reasonably estimated at December 31, 2024, was approximately $ 11.6 million plus accrued interest.

Accrued interest on the indirect damages reserve was estimated using the same interest rate as the direct damages.

Based on the information available and the determination of the damages in the direct sales claim discussed above, we estimated that the Company’s total exposure related to these matters that was probable and that could be reasonably estimated at December 31, 2025 and 2024, was approximately $ 11.6 million plus accrued interest.

Accrued interest on the indirect damages reserve was estimated using the same interest rate as the direct damages, as were reduced on the direct damages appeal discussed above.

Approximately $ 0.5 million, $ 0.7 million, and $ 0.7 million was recorded within Selling, General and Administrative Expenses in the Company’s Consolidated Statements of Operations for each of 2025, 2024 and 2023, respectively, for additional interest accrued during such periods.

In connection with the indirect sales claims, we currently believe it is unlikely that the appeals process will be completed and any damages and related interest will be paid before December 31, 2025.

Therefore, the liability related to this matter (inclusive of accrued interest), totaling $ 17.1 million, is classified within other liabilities (non-current) in the Consolidated Balance Sheets at December 31, 2024 and 2023.

We believe it is unlikely that the appeals process will be completed and any indirect damages and related interest will be paid before December 31, 2026.

Therefore, the liability related to this matter (inclusive of accrued interest), totaling $ 17.6 million and $ 17.1 million, is classified within other liabilities (non-current) in the Consolidated Balance Sheets at December 31, 2025 and 2024, respectively.

This amount may be adjusted depending on the decision of the Court on the direct sales damages appeal referred to previously.

In December 2017, Lufthansa filed patent infringement cases in the United Kingdom (“UK”) and in France.

The Lufthansa patent expired in May 2018.

In those cases, Lufthansa accuses AES and certain of its customers of having manufactured, used, sold and offered for sale a power supply system, and offered and supplied parts for a power supply system that infringed upon a Lufthansa patent in those respective countries.

The subject patent expired in May 2018.

In the normal course of its supply arrangements, AES has indemnified its customers from liability arising from such matters, and as such will bear responsibility for any monetary damages arising from such claims.

On December 4, 2020, the 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.

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.

On December 4, 2020, the Court held the French patent invalid for all asserted claims, and consequently there could be no finding of infringement.

Lufthansa appealed this judgment.

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 written phase of the procedure was closed in January 2025 and a decision from this Court is currently expected in March 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 December 31, 2024 or December 31, 2023.

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 the French patent.

A second trial on nullity is scheduled on October 28, 2026;

a ruling on nullity is not expected before early first quarter 2027.

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 December 31, 2025 or 2024.

In the UK matter, the Court held the UK patent valid and 3 out of 4 asserted claims infringed in June 2020.

1 unchanged sentence

While AES appealed the ruling, the Court dismissed the appeal on all grounds.

Lufthansa sought an account of the profits that AES and certain of its customers had made from UK sales.

Lufthansa sought damages based on account of the profits that AES and certain of its customers had made from UK sales.

The trial of that issue took place 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.

The February 21, 2025 judgment quantified the amount payable in aggregate in respect of the profits derived from infringing Lufthansa’s UK patent by the defendants as $ 11.9 million.

Any additional amounts required to be paid by the Company related to certain other factors peripheral to the damages award, including potential reimbursement of legal fees related to the damages proceedings, will be determined at follow-up hearings

expected to occur in the first half of 2025.

The Company is unable to estimate a range of exposure, if any, related to such peripheral issues, and as such, has not recorded any additional liabilities at this time

It is expected that one or more of the parties may seek permission to appeal the February 21, 2025 judgment;

permission to appeal is not assured under English law.

The Company expects that payment of the ordered liability will be required in the second quarter of 2025, and that an appeal, if any, would likely be heard in early 2026.

Accordingly, the Company recorded additional expense of $ 4.8 million in the quarter ended December 31, 2024, within Selling, General and Administrative Expenses in the Company’s Consolidated Statements of Operations.

The $ 11.9 million liability related to this matter is classified within Accrued Expenses and Other Current Liabilities in the accompanying Consolidated Balance Sheets as of December 31, 2024.

The liability related to this matter was $ 7.4 million as of December 31, 2023, classified within Other Liabilities (non-current) in the Company’s Consolidated Balance Sheet at such date.

Separate from payment of profits from the February 2025 judgment discussed above, as a result of the first instance judgement in their favor, Lufthansa was entitled to reimbursement from AES of a proportion of its legal expenditures in the UK case.

An interim reimbursement was paid to Lufthansa in August 2020.

As a result of the appeal decision, Lufthansa will be entitled to reimbursement from AES of a larger proportion of its first instance legal expenditures, as well as a portion of its legal expenditures associated with the appeal.

A liability for reimbursement of Lufthansa’s legal expenses associated with the UK matter for the June 2022 trial and the appeal of that decision was approximately $ 1.0 million and $ 0.7 million on December 31, 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 December 31, 2024 and December 31, 2023.

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.

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

The $ 11.9 million liability related to this matter was classified within Accrued Expenses and Other Current Liabilities in the accompanying Consolidated Balance Sheets 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.

In a further consequential hearing on May 16, 2025 the Company was ordered to make payments of $ 5.7 million in relation to interest and $ 3.5 million for partial reimbursement of Lufthansa’s legal costs.

Both of these items are reflected within Selling, General and Administrative Expenses in the Company’s Consolidated Statement of Operations for the year ended December 31, 2025.

During the year ended December 31, 2025, the Company made payments totaling $ 21.6 million, in satisfaction of the liabilities for damages, interest and provisional legal fee reimbursement related to the damages proceedings.

Both the Company and Lufthansa have been granted permission to appeal the rulings by the UK High Court of Justice.

The appeals are scheduled to be heard by the UK Court of Appeal in March 2026.

A liability for partial reimbursement of Lufthansa’s legal expenses associated with the UK matter for the first instance trial and the later appeal was approximately $ 1.0 million as of December 31, 2025 and 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 December 31, 2025 and 2024.

Each of the German, France and UK claims are separate and distinct.

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Therefore, the Company has assessed each matter separately and cannot apply the same calculation methodology as in the German direct and indirect matters.

However, it is reasonably possible that additional damages and interest could be incurred if the appellate court in France was to rule in favor of Lufthansa, or if damages in the UK matter are calculated on a different basis than our estimate or using information not currently available.

However, it is reasonably possible that additional damages and interest could be incurred if the appellate court in France was to rule in favor of Lufthansa, or if damages in the UK matter upon conclusion of the appeal are calculated on a different basis than the initial judgment.

There were no other significant developments in any of these matters during the year ended December 31, 2025.

Other Proceedings

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.

In addition, on November 6, 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.

The PTAB issued its decision on July 20, 2022, in which it invalidated all of Teradyne’s patent claims.

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.

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

Teradyne may pursue an appeal by petitioning the United States Supreme Court for a writ of certiorari.

It is unknown at this time whether Teradyne will pursue either option, or, if it does, whether the United States Supreme Court will grant a writ of certiorari.

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

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.

This matter is concluded.

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.

Accrued legal fees were $ 2.1 million and $ 6.5 million as of December 31, 2025 and 2024, respectively.

Other Matters

On January 20, 2026, the United States Supreme Court ruled that the International Emergency Economic Powers Act (“IEEPA”) did not authorize the President to impose tariffs.

The IEEPA tariff case has been remanded back to the Court of International Trade to address whether the lower court can issue a nationwide injunction against tariffs imposed under IEEPA.

It is unknown at this time if or when refunds will be issued for IEEPA tariffs previously paid by the Company.

NOTE 20 — SEGMENTS

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Test Systems $ 17,563 $ 24,779 $ 30,358

(In thousands) 2025 2024 2023

Operating Income (Loss) and Margins:

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Net Gain on Sale of Businesses $ — $ — $ 3,427

Loss on Extinguishment of Debt ( 10,148 ) — —

Loss on Settlement of Debt ( 32,644 ) ( 10,148 ) —

Interest Expense, Net of Interest Income ( 12,561 ) ( 21,998 ) ( 23,328 )

Corporate and Other Expenses, Net ( 28,209 ) ( 29,650 ) ( 22,294 )

Loss before Income Taxes $ ( 7,867 ) $ ( 26,311 ) $ ( 29,793 )

Income (Loss) before Income Taxes $ 31,945 $ ( 7,867 ) $ ( 26,311 )

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 and sublease and rental income.

(In thousands) 2024 2023 2022

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

Depreciation and Amortization:

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During the year ended December 31, 2024 and 2023, reserves associated with customer bankruptcies of $ 3.2 million and $ 11.1 million, respectively, negatively impacted Aerospace Operating Income.

Aerospace Operating Income in the years ended December 31, 2024 and 2023 include compensation expense related to resumed incentive programs including bonuses, 401K and profit sharing contributions of $ 19.9 million and $ 6.7 million, respectively.

In the year ended December 31, 2022, $ 6.0 million of the AMJP grant was recognized as an offset to the cost of products sold in the Aerospace segment.

During the year ended December 31, 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 year.

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This amount is included in Other Income, Net.

The higher level of Aerospace capital expenditures in 2025 is related to ongoing facility expansion activities and growth and maintenance expenditures that had been previously deferred during the pandemic.

The following table summarizes the Company’s sales into the following geographic regions for the years ended December 31:

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France 6,507 5,625

Germany 2,155 —

India 255 357

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Sales recorded by the Company’s foreign operations were $ 90.1 million, $ 82.1 million and $ 69.3 million in 2025, 2024 and 2023, respectively.

Net income (loss) from foreign operations was $ 7.6 million, $ 5.3 million and $( 0.2 ) million in 2024, 2023

and 2022, respectively.

Net income from foreign operations was $ 8.2 million, $ 7.6 million and $ 5.3 million in 2025, 2024 and 2023, respectively.

Net assets held outside of the U.S.

total $ 67.8 million and $ 41.3 million at December 31, 2025 and 2024, respectively.

The exchange gain (loss) included in determining net income (loss) was insignificant in 2024, 2023 and 2022.

The exchange gain (loss) included in determining net income was insignificant in 2025, 2024 and 2023.

Cumulative translation adjustments amounted to $ 5.2 million and $ 8.2 million at December 31, 2025 and 2024, respectively.

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Boeing $ 19,679 $ 10,474

NOTE 21 — ACQUISITIONS

Envoy Aerospace, LLC

On June 30, 2025, the Company purchased the membership interests of Envoy Aerospace, LLC (“Envoy Aerospace”), located in Aurora, Illinois.

Envoy Aerospace is an FAA Organization Designation Authorization (“ODA”) services provider.

Envoy Aerospace is included in our Aerospace segment.

The total purchase price was approximately $ 8.3 million, net of cash acquired and the estimated closing adjustment.

Of the purchase price, $ 4.5 million was paid at the closing date.

Payments of $ 2.0 million and $ 1.8 million will become payable by the Company following the first and second anniversary of the closing date, respectively, based on the achievement of certain milestones.

The Company has finalized the purchase price allocation.

Purchased intangible assets and goodwill are expected to be deductible for tax purposes over 15 years.

This transaction was not considered material to the Company’s financial position or results of operations.

Bühler Motor Aviation

On October 13, 2025, the Company acquired all of the issued and outstanding capital stock of Bühler Motor Aviation (“BMA”), located in Uhldingen-Mühlhofen, Germany.

BMA is an established manufacturer of aircraft seat actuation systems with a broad product portfolio that includes actuators, electronics, control panels, pneumatic systems, and lighting.

BMA will be included in our Aerospace segment.

The total purchase price was approximately $ 18.0 million, net of cash acquired and the estimated

closing adjustment.

The purchase price was paid at the closing date.

The Company has not yet finalized the purchase price allocation.

NOTE 22 — DIVESTITURE ACTIVITIES

Semiconductor Test Business

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

The total proceeds of the divestiture included two elements of contingent earnouts.

The “First Earnout” was calculated based on a multiple of all future sales of existing and certain future derivative products to existing and future customers in each annual period from 2019 through 2022.

The First Earnout was capped at $ 35.0 million in total.

The “Second Earnout” was calculated based on a multiple of future sales related to an existing product and program with an existing customer exceeding an annual threshold for each annual period from 2019 through 2022.

The Second Earnout was not capped.

For the Second Earnout, if the applicable sales in an annual period did not exceed the annual threshold, no amounts would be paid relative to such annual period;

the sales in such annual period did not carry over to the next annual period.

Due to the degree of uncertainty associated with estimating the future sales levels of the divested business and its underlying programs, and the lack of reliable predictive market information, the Company elected an accounting policy to recognize such earnout proceeds, if received, as additional gain on sale when such proceeds are realized or realizable.

We consider the proceeds realizable when we have received communication from the purchaser of its calculation of the earnout and the parties reach agreement on the calculation.

No amounts were payable to the Company under either earnout for the calendar 2019 earnout.

The Company agreed to an earnout payment of $ 10.7 million for the calendar 2020 earnout, which was recorded in the fourth quarter of 2021 as Other Income and was paid to the Company in early January 2022.

In March 2022, the Company agreed with the earnout calculation for the calendar 2021 earnout in the amount of $ 11.3 million.

The Company recorded the gain and received the payment in the first quarter of 2022.

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

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

The total proceeds of the divestiture included contingent purchase consideration (“earnout”).

In March 2023, the Company agreed with a final earnout calculation in the amount of $ 3.4 million.

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

We are not eligible for any further earnout payments related to this divestiture.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data