What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-10-31 compared with 2024-08-01 · 85 added, 79 removed, 110 unchanged (60% of the section changed)

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Forward-Looking Statements

Certain statements made in this report, as well as oral statements made by the Company from time to time, constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act.

Readers can identify these forward-looking statements by our use of the words “expects,” “anticipates,” “estimates,” "potential," “believes,” “projects,” “intends,” “plans,” “will,” “may,” “shall,” “could,” “should,” "opportunity," "goal" and similar words and other statements of a similar sense.

These statements are based on our current estimates and expectations as to prospective events and circumstances, which may or may not be in our control and as to which there can be no firm assurances given.

These forward-looking statements, which include statements regarding business and market trends, future financial performance and financial targets, customer demand and order rates and timing of related revenue, managing supply challenges, delivery lead times, future product or revenue mix, research and development activities, sales and marketing activities (including our 'Emerging Customer' sales initiative), new product offerings and product development activities, customer acceptance of our products, capital expenditures, cost management activities, investments, liquidity, dividends and stock repurchases, strategic and growth plans and opportunities, acquisitions, and estimated tax benefits and expenses and other tax matters, involve known and unknown risks and uncertainties that could cause actual results to differ materially from those projected.

These forward-looking statements, which include statements regarding business and market trends, future financial performance and financial targets, customer demand and order rates and timing of related revenue, future product or revenue mix, research and development activities, sales and marketing activities (including our "Emerging Customer" sales initiative), new product offerings, innovation and product development activities, customer acceptance of our products, capital expenditures, cost and working capital management activities, investments, liquidity, dividends and stock repurchases, strategic and growth plans and opportunities, acquisitions, and estimated tax benefits and expenses and other tax matters, involve known and unknown risks and uncertainties that could cause actual results to differ materially from those projected.

Such risks and uncertainties include:

(1) the technological obsolescence of current products and the inability to develop new products, particularly in connection with emerging artificial intelligence technologies;

(2) the impact of competitive pressures;

(2) the impact of competitive pressures, including the potential decrease in demand or prices for our products;

(3) the inability to attract and retain skilled employees and maintain our unique corporate culture;

(4) the failure to properly manage the distribution of products and services;

(5) economic, political, and other risks associated with international sales and operations, including the impact of trade disputes, the economic climate in China, and the wars in Ukraine and Israel;

(5) economic, political, and other risks associated with international sales and operations, including the impact of trade disputes, the economic climate in China, and the wars involving Ukraine and Israel;

(6) the challenges in integrating and achieving expected results from acquired businesses, including our acquisition of Moritex Corporation;

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(19) unfavorable global economic conditions, including high interest rates and fluctuating inflation rates;

(20) business disruptions from natural or man-made disasters, such as fire, or public health issues;

(20) business disruptions from natural or man-made disasters, such as fire, floods, or public health issues;

(21) exposure to potential liabilities, increased costs (including regulatory compliance costs), reputational harm, and other potential impacts associated with expectations relating to environmental, social, and governance considerations;

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This results in a broad base of potential customers across a variety of industries, including automotive, logistics, consumer electronics, medical-related, semiconductor, consumer products, and food and beverage.

Revenue for the second quarter of 2024 totaled $239,292,000 and was relatively flat compared to the second quarter of 2023.

Incremental revenue arising from the acquisition of Moritex Corporation ("Moritex") that closed in the fourth quarter of 2023 and higher revenue from customers in the logistics and semiconductor industries, was partially offset by lower spending trends across our factory automation business.

Gross margin as a percentage of revenue was 70% for the second quarter of 2024 as compared to 74% for the second quarter of 2023 due primarily to the impact of a less favorable revenue mix and the amortization of Moritex acquired technologies.

Operating expenses for the second quarter of 2024 increased 12% from the second quarter of 2023.

Investments in our “Emerging Customer” sales initiative focused on broadening our customer base and incremental costs related to the acquisition of Moritex were partially offset by the impact of cost management activities.

Operating income decreased to 16% of revenue for the second quarter of 2024 as compared to 27% of revenue for the second quarter of 2023 driven by the lower gross margin percentage and continued investment in our "Emerging Customer" sales initiative.

This lower level of operating income resulted in net income of 15% of revenue, or $0.21 per diluted share, for the second quarter of 2024, as compared to 24% of revenue, or $0.33 per diluted share, for the second quarter of 2023.

Revenue for the third quarter of 2024 totaled $234,742,000, representing an increase of 19% over the third quarter of 2023.

The increase was due to incremental revenue arising from the acquisition of Moritex Corporation ("Moritex") that closed in the fourth quarter of 2023, higher revenue from customers in the logistics and semiconductor industries, and the timing of certain large consumer electronics deployments that were completed late in the second quarter in 2023 compared to early in the third quarter in 2024.

These increases were partially offset by continued softness across our broader factory automation business, particularly in the automotive industry.

Gross margin as a percentage of revenue was 68% for the third quarter of 2024 as compared to 72% for the third quarter of 2023.

The decrease was primarily due to the contribution of Moritex products with relatively lower gross margins, the amortization of Moritex acquired technologies, and the impact of competitive pricing pressures.

Operating expenses for the third quarter of 2024 increased 14% from the third quarter of 2023.

Investments in our “Emerging Customer” sales initiative, incremental costs related to the acquisition of Moritex, and higher incentive compensation expenses, were partially offset by the impact of disciplined cost management.

Cost recoveries recorded in 2023 related to the June 2022 fire at the Company’s contract manufacturer also contributed to the increase.

Operating income decreased to 13% of revenue for the third quarter of 2024 as compared to 16% of revenue for the third quarter of 2023 driven by the lower gross margin percentage and continued investment in our "Emerging Customer" sales initiative.

Net income increased to 13% of revenue, or $0.17 per diluted share, for the third quarter of 2024, as compared to 10% of revenue, or $0.11 per diluted share, for the third quarter of 2023 due, in part, to foreign currency losses and a higher level of discrete tax expenses in the third quarter of 2023.

Results of Operations

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GAAP) and should be considered in addition to, and not as a substitute for, results prepared in accordance with U.S.

Revenue decreased by $3,220,000, or 1%, for the three-month period and increased by $6,453,000, or 1%, for the six-month period as compared to the same periods in 2023.

Revenue from the acquisition of Moritex that closed in the fourth quarter of 2023 represented approximately 7% of total revenue for both periods in 2024.

In addition to the contribution of Moritex, revenue from customers in the logistics and semiconductor industries increased for both the three-month and six-month periods in 2024 from the prior year.

These increases were offset by lower spending trends across our factory automation business, most notably in the automotive and consumer electronics industries.

The decrease in automotive revenue was due to continued softness across the automotive business, as well as delayed spending from electric vehicle battery manufacturers.

The decrease in consumer electronics revenue was also impacted by the timing of large customer deployments that were completed late in the second quarter of 2023.

The following table sets forth our disaggregated revenue information by geographic area based upon the customer's country of domicile (in thousands) for the three-month and six-month periods ended June 30, 2024 and July 2, 2023.

Three-months Ended Six-months Ended

June 30, 2024 July 2, 2023 $ Change % Change June 30, 2024 July 2, 2023 $ Change % Change

Revenue increased by $37,501,000, or 19%, for the three-month period and increased by $43,954,000, or 7%, for the nine-month period as compared to the same periods in 2023.

Revenue from the acquisition of Moritex that closed in the fourth quarter of 2023 represented approximately 10% of total revenue for the three-month period and 8% of total revenue for the nine-month period in 2024.

The third quarter of 2024 included an additional month of Moritex operations to eliminate the one-month lag in consolidating Moritex financial results that had been in place since the acquisition closed.

Excluding the contribution of Moritex, revenue increased by 7% for the three-month period and decreased by 2% for the nine-month period as compared to the same periods in 2023.

Revenue from customers in the logistics and semiconductor industries increased for both the three-month and nine-month periods in 2024 from the prior year.

Higher revenue in the consumer electronics industry also contributed to the increase for the three-month period due to the timing of certain large deployments that were completed late in the second quarter in 2023 compared to early in the third quarter in 2024;

however, revenue from customers in the consumer electronics industry decreased for the nine-month period.

In addition, revenue from customers in the automotive industry decreased for both the three-month and nine-month periods in 2024 as compared to the prior year, and we continued to experience softness across our broader factory automation business during these periods.

The following table sets forth our disaggregated revenue information by geographic area based upon the customer's country of domicile (in thousands) for the three-month and nine-month periods ended September 29, 2024 and October 1, 2023.

Three-months Ended Nine-months Ended

September 29, 2024 October 1, 2023 $ Change % Change September 29, 2024 October 1, 2023 $ Change % Change

(unaudited) (unaudited)

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Changes in revenue from a geographic perspective were as follows:

• Revenue from customers based in the Americas increased by 3% for both the three-month and six-month periods.

The increase was primarily driven by higher revenue from customers in the logistics industry, partially offset by continued softness across our factory automation business.

The increase in logistics revenue for the six-month period in 2024 included a strategic logistics project completed in the first quarter.

• Revenue from customers based in Europe increased by 1% for the three-month period and decreased by 6% for the six-month period.

Similar to the Americas, the Europe region continued to experience softness across our factory automation business.

Although logistics revenue was higher for both periods in 2024, this increase was not enough to offset declines in factory automation revenue for the six-month period.

• Revenue from customers based in Greater China decreased by 25% for the three-month period and decreased by 20% for the six-month period.

The Greater China region continued to experience a challenging business environment.

The impact of lower spending trends, as well as the timing of certain deployments related to a large consumer electronics customer that were completed late in the second quarter of 2023, was partially offset by the revenue contribution from the Moritex acquisition.

• Revenue from customers based in other countries in Asia increased by 37% for the three-month period and increased by 50% for the six-month period.

• Revenue from customers based in the Americas increased by 3% for both the three-month and nine-month periods.

The increase was primarily driven by higher revenue from customers in the logistics industry, partially offset by continued softness across our factory automation business, particularly in the automotive industry.

• Revenue from customers based in Europe increased by 10% for the three-month period and decreased by 1% for the nine-month period.

Although logistics revenue was higher for both periods in 2024, this increase was not enough to offset declines in factory automation revenue for the nine-month period.

• Revenue from customers based in Greater China increased by 31% for the three-month period and decreased by 7% for the nine-month period.

The increase for the three-month period was due primarily to higher revenue in the consumer electronics industry due to the timing of certain large deployments that were completed late in the second quarter in 2023 compared to early in the third quarter in 2024.

The revenue contribution from the Moritex acquisition that benefited both periods was not enough to offset declines in factory automation revenue for the nine-month period.

• Revenue from customers based in other countries in Asia increased by 62% for the three-month period and increased by 54% for the nine-month period.

The increase was primarily driven by incremental revenue related to the acquisition of Moritex, for which the majority of revenue currently comes from customers based in Japan, as well as higher revenue from customers in the semiconductor and logistics industries.

The following table sets forth our gross margin (in thousands) for the three-month and six-month periods ended June 30, 2024 and July 2, 2023.

Three-months Ended Six-months Ended

June 30, 2024 July 2, 2023 $ Change % Change June 30, 2024 July 2, 2023 $ Change % Change

The following table sets forth our gross margin (in thousands) for the three-month and nine-month periods ended September 29, 2024 and October 1, 2023.

Three-months Ended Nine-months Ended

September 29, 2024 October 1, 2023 $ Change % Change September 29, 2024 October 1, 2023 $ Change % Change

(unaudited) (unaudited)

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Percentage of total revenue 68 % 72 % 68 % 73 %

Gross margin as a percentage of revenue was 70% and 69% for the three-month and six-month periods in 2024, respectively, as compared to 74% and 73% for the same periods in 2023.

The decrease was due to a less favorable revenue mix in 2024 that included products with relatively low gross margins from the Moritex acquisition that closed in the fourth quarter of 2023, as well as the amortization of Moritex acquired technologies.

The decrease for the six-month period was also due to a strategic logistics project completed in the first quarter that had lower-than-average gross margins, as well as charges related to the final sell-through of Moritex acquired inventories in the first quarter that were written up to fair value.

These decreases were partially offset by lower inventory costs driven by a reduction in premiums paid to brokers for the purchase of components as supply chain constraints eased.

Gross margin as a percentage of revenue was 68% for both the three-month and nine-month periods in 2024, respectively, as compared to 72% and 73% for the same periods in 2023.

The decrease was due to a less favorable revenue mix in 2024 that included products with relatively lower gross margins from the Moritex acquisition that closed in the fourth quarter of 2023, as well as the amortization of Moritex acquired technologies.

The third quarter of 2024 included an additional month of Moritex operations to eliminate the one-month lag in consolidating Moritex financial results.

Lower average selling prices due to competitive pricing pressures also contributed to the lower gross margin percentage in 2024, and we expect this trend to continue in the fourth quarter of 2024.

Operating Expenses

The following table sets forth our operating expenses (in thousands) for the three-month and six-month periods ended June 30, 2024 and July 2, 2023.

Three-months Ended Six-months Ended

June 30, 2024 July 2, 2023 $ Change % Change June 30, 2024 July 2, 2023 $ Change % Change

The following table sets forth our operating expenses (in thousands) for the three-month and nine-month periods ended September 29, 2024 and October 1, 2023.

Three-months Ended Nine-months Ended

September 29, 2024 October 1, 2023 $ Change % Change September 29, 2024 October 1, 2023 $ Change % Change

(unaudited) (unaudited)

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Research, Development, and Engineering Expenses

Research, development, and engineering (RD&E) expenses increased by $1,377,000, or 4%, for the three-month period and remained relatively flat for the six-month period as compared to the same periods in 2023.

Higher incentive compensation expenses were offset by lower stock-based compensation expenses for the six-month period due to the impact of forfeiture adjustments in the first quarter.

Personnel-related costs remained relatively flat, as the additional costs associated with a new team of optical engineers that joined Cognex with the acquisition of Moritex in the fourth quarter of 2023 were offset by lower deferred compensation costs related to the 2019 acquisition of Sualab Co, Ltd.

that were fully paid in October 2023 and cost management activities that included the realignment of headcount to business levels.

RD&E expenses as a percentage of revenue were 15% and 16% for the three-month and six-month periods in 2024, respectively, as compared to 14% and 16% for the same periods in 2023.

Research, development, and engineering (RD&E) expenses increased by $2,630,000, or 8%, for the three-month period and increased by $2,570,000, or 2%, for the nine-month period.

The increase for both periods was due primarily to higher incentive compensation expenses in 2024.

Disciplined cost management helped to offset the increase in RD&E expenses, including a reduction in headcount excluding the addition of Moritex engineers.

The additional costs associated with a new team of optical engineers that joined Cognex with the acquisition of Moritex in the fourth quarter of 2023 were offset by lower deferred compensation costs related to the 2019 acquisition of Sualab Co, Ltd.

that were fully paid in October 2023.

The third quarter of 2024 included an additional month of Moritex operations to eliminate the one-month lag in consolidating Moritex financial results.

RD&E expenses as a percentage of revenue were 15% and 16% for the three-month and nine-month periods in 2024, respectively, as compared to 17% and 16% for the same periods in 2023.

We believe that a continued commitment to RD&E activities is essential to maintain or achieve product leadership with our existing products and to provide innovative new product offerings, as well as to provide engineering support for large customers.

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Selling, General, and Administrative Expenses

Selling, general, and administrative (SG&A) expenses increased by $9,757,000, or 12%, for the three-month period and increased by $17,348,000, or 10%, for the six-month period as compared to the same periods in 2023.

The increase was primarily due to increased costs related to our “Emerging Customer” sales initiative, including additional headcount, travel expenses, and marketing costs.

We launched this initiative in 2023 to serve a broader customer base and deepen penetration of less served markets, and are continuing to increase our investment in 2024.

Costs related to the acquisition of Moritex that closed in the fourth quarter of 2023 also contributed to the higher SG&A expenses.

These costs included additional sales and support personnel-related costs, the amortization of acquired customer relationships and trademarks, and integration costs.

Lower stock-based compensation expense and cost management activities helped to offset the increase in SG&A expenses, including the realignment of headcount to support the Emerging Customer sales initiative.

Selling, general, and administrative (SG&A) expenses increased by $10,318,000, or 13%, for the three-month period and increased by $27,666,000, or 11%, for the nine-month period as compared to the same periods in 2023.

The increase was primarily due to additional sales and marketing resources dedicated to our “Emerging Customer” sales initiative that was launched in 2023 with the goal to serve a broader customer base and deepen penetration of less served markets.

Costs related to the acquisition of Moritex that closed in the fourth quarter of 2023 also contributed to the higher SG&A expenses, including additional sales and support personnel-related costs, the amortization of acquired customer relationships and trademarks, and integration costs.

The third quarter of 2024 included an additional month of Moritex operations to eliminate the one-month lag in consolidating Moritex financial results.

In addition, incentive compensation expenses were higher in 2024.

Disciplined cost management helped to offset the increase in SG&A expenses, including the realignment of headcount to support the "Emerging Customer" sales initiative.

Loss (Recovery) from Fire

On June 7, 2022, the Company’s primary contract manufacturer experienced a fire at its plant in Indonesia, destroying a significant amount of Cognex inventories.

In the second quarter of 2023, the Company recorded a recovery related to the fire of $2,500,000 for proceeds received from the Company’s insurance carrier in relation to a business interruption claim.

On June 7, 2022, the Company’s primary contract manufacturer experienced a fire at its plant in Indonesia,

destroying a significant amount of Cognex inventories.

During the nine-month period in 2023, the Company recorded recoveries related to the fire including $2,750,000 for proceeds received from a financial settlement in the third quarter of 2023 and $2,500,000 for proceeds received from business interruption insurance in the second quarter of 2023.

Non-operating Income (Expense)

The following table sets forth our non-operating income (expense) (in thousands) for the three-month and six-month periods ended June 30, 2024 and July 2, 2023.

Three-months Ended Six-months Ended

June 30, 2024 July 2, 2023 $ Change % Change June 30, 2024 July 2, 2023 $ Change % Change

The following table sets forth our non-operating income (expense) (in thousands) for the three-month and nine-month periods ended September 29, 2024 and October 1, 2023.

Three-months Ended Nine-months Ended

September 29, 2024 October 1, 2023 $ Change % Change September 29, 2024 October 1, 2023 $ Change % Change

(unaudited) (unaudited)

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Total non-operating income (expense) $ 4,991 $ (3,635) $ 8,626 (237) % $ 11,464 $ 3,021 $ 8,443 279 %

The Company recorded foreign currency losses of $181,000 and $135,000 for the three-month and six-month periods in 2024, respectively, and $1,605,000 and $1,211,000 for the corresponding periods in 2023, primarily resulting from the revaluation and settlement of assets and liabilities that are denominated in currencies other than the functional currency of the Company, which is the U.S.

The Company recorded foreign currency gains of $1,221,000 and $1,086,000 for the three-month and nine-month periods in 2024, respectively, and foreign currency losses of $8,699,000 and $9,910,000 for the corresponding periods in 2023.

In the third quarter of 2023, the Company recorded a foreign currency loss of $8,456,000 on the settlement of a foreign currency forward contract entered into to the hedge the purchase price for Moritex, which was paid in Japanese Yen.

Remaining foreign currency gains and losses in each period resulted primarily from the revaluation and settlement of assets and liabilities that are denominated in currencies other than the functional currency of the Company, which is the U.S.

Dollar, or its subsidiaries.

Investment income decreased by $979,000, or 24%, for the three-month period and decreased by $1,446,000, or 19%, for the six-month period in 2024 as compared to the corresponding periods in 2023.

Investment income decreased by $1,330,000, or 27%, for the three-month period and decreased by $2,776,000, or 22%, for the nine-month period in 2024 as compared to the corresponding periods in 2023.

The decrease was primarily due to lower average investment balances, partially offset by higher yields on the Company's portfolio of debt securities.

During the fourth quarter of 2023, net cash payments related to the acquisition of Moritex reduced cash available to invest by approximately $257 million, which resulted in lower investment income for 2024.

The Company recorded other income of $176,000 and $372,000 for the three-month and six-month periods in 2024, respectively, and $112,000 and $185,000 for the corresponding periods in 2023.

The Company recorded other income of $209,000 and $581,000 for the three-month and nine-month periods in 2024, respectively, and $173,000 and $358,000 for the corresponding periods in 2023.

Income Tax Expense

The following table sets forth income tax information (in thousands) for the three-month and six-month periods ended June 30, 2024 and July 2, 2023.

Three-months Ended Six-months Ended

June 30, 2024 July 2, 2023 $ Change % Change June 30, 2024 July 2, 2023 $ Change % Change

The following table sets forth income tax information (in thousands) for the three-month and nine-month periods ended September 29, 2024 and October 1, 2023.

Three-months Ended Nine-months Ended

September 29, 2024 October 1, 2023 $ Change % Change September 29, 2024 October 1, 2023 $ Change % Change

(unaudited) (unaudited)

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Effective income tax rate 19 % 30 % 19 % 16 %

The Company’s effective tax rate was 13% and 18% for the three-month and six-month periods in 2024, respectively, and 15% and 12% for the same periods in 2023.

The Company recorded a net discrete tax benefit of $463,000 for the three-month period in 2024 and a net discrete tax expense of $2,622,000 for the six-month period in 2024, as compared to a net discrete tax expense of $399,000 in the three-month period in 2023 and a net discrete tax benefit of $3,195,000 for the six-month period in 2023.

The higher level of discrete tax expense for the six-month period in 2024 was driven by unfavorable adjustments to certain tax assets and reserves, while the higher level of discrete tax benefits for the six-month period in 2023 was driven by the release of tax reserves on state tax credits and favorable adjustments to certain deferred tax assets.

Excluding the impact of all discrete tax items, the Company's effective tax rate was 14% for both the three-month and six-month periods in 2024, as compared to 15% for the corresponding periods in 2023.

The decrease was primarily due to more of the Company's profits being taxed in relatively lower tax rate jurisdictions.

The Company’s effective tax rate was 19% for each of the three-month and nine-month periods in 2024, and 30% and 16%, respectively, for the same periods in 2023.

The Company recorded a net discrete tax expense of $889,000 and $3,511,000 for the three-month and nine-month periods in 2024, respectively, and $4,036,000 and $840,000 for the corresponding periods in 2023.

Excluding the impact of discrete tax items, the Company’s effective tax rate was 15% for both nine-month periods in 2024 and 2023.

Liquidity and Capital Resources

The Company has historically been able to generate positive cash flow from operations, which has funded its operating activities and other cash requirements and has resulted in an accumulated cash and investment balance of $555,289,000 as of June 30, 2024.

The Company has established guidelines relative to credit ratings, diversification, and maturities of its investments to maintain the liquidity and safety of the investment portfolio.

As of June 30, 2024, the Company's portfolio of debt securities was in a net unrealized loss position of $8,127,000.

As of September 29, 2024, the Company's portfolio of debt securities was in a net unrealized gain position of $164,000.

Although the Company typically holds investments in an unrealized loss position until full value recovery at maturity, if the Company is required to sell debt securities to meet liquidity needs, it may sell these investments at a loss.

Operating activities

Net cash provided by operating activities totaled $41,406,000 for the six-month period in 2024.

Significant uses of cash consisted of an increase in accounts receivable primarily related to the seasonality of large consumer electronics orders.

Net cash provided by operating activities totaled $97,677,000 for the nine-month period in 2024.

Significant uses of cash consisted of an increase in accounts receivable to support sales initiatives.

Investing activities

Net cash used in investing activities totaled $13,785,000 for the six-month period in 2024.

Investing activities included capital expenditures that totaled $8,571,000 and consisted primarily of continued investments in business systems, manufacturing test equipment related to new product introductions, as well as building and leasehold improvements.

Net cash used in investing activities totaled $41,194,000 for the nine-month period in 2024.

Investing activities included capital expenditures that totaled $12,970,000 and consisted primarily of continued investments in business systems, manufacturing equipment related to new product introductions and building improvements.

Financing activities

Net cash used in financing activities totaled $47,506,000 for the six-month period in 2024.

Net cash used in financing activities totaled $62,665,000 for the nine-month period in 2024.

In March 2022, the Company's Board of Directors authorized the repurchase of $500,000,000 of the Company's common stock.

Under this March 2022 program, the Company repurchased 473,000 shares at a total cost of $19,879,000 during the six-month period in 2024, leaving a remaining balance of $313,013,000 as of June 30, 2024.

Under this March 2022 program, the Company repurchased 555,000 shares at a total cost of $23,841,000 during the nine-month period in 2024, leaving a remaining balance of $309,051,000 as of September 29, 2024.

The Company may repurchase shares under this program in future periods depending on a variety of factors, including, among other things, the impact of dilution from employee stock awards, stock price, share availability, and cash requirements.

The Company is authorized to make repurchases of its common stock through open market purchases, pursuant to Rule 10b5-1 trading plans, or in privately negotiated transactions.

The Company’s Board of Directors declared and paid cash dividends of $0.075 per share for the first and second quarters of 2024, totaling $25,756,000.

The Company’s Board of Directors declared and paid cash dividends of $0.075 per share for the first, second and third quarters of 2024, totaling $38,619,000.

Future dividends will be declared at the discretion of the Company's Board of Directors and will depend on such factors as the Board deems relevant, including, among other things, the Company's ability to generate positive cash flow from operations.

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The Company's future material cash requirements include contractual obligations related to inventory purchase commitments and leases.

As of June 30, 2024, the Company had inventory purchase commitments of $43,078,000, with the majority payable in the next twelve months, and lease payment obligations of $112,234,000, with $13,364,000 payable in the next twelve months.

As of September 29, 2024, the Company had inventory purchase commitments of $38,153,000, with the majority payable in the next twelve months, and lease payment obligations of $116,702,000, with $13,558,000 payable in the next twelve months.

Other significant and/or expected cash outlays for 2024 are as follows:

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• The Tax Cuts and Jobs Act of 2017 subjected unrepatriated foreign earnings to a one-time transition tax.

As of June 30, 2024, the Company had a remaining balance payable of $18,338,000 through 2025.

As of September 29, 2024, the Company had a remaining balance payable of $18,338,000 through 2025.

We believe that the Company's existing cash and investment balances, together with cash flow from operations, will be sufficient to meet its operating, investing, and financing activities for the next twelve months.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis