What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-01 compared with 2024-10-31 · 93 added, 117 removed, 78 unchanged (73% 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 Securities Exchange Act of 1934, as amended.

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, 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.

These forward-looking statements, which include statements regarding business and market trends, future financial performance and financial targets, the impact of tariffs, customer demand and order rates and timing of related revenue, future product or revenue mix, research and development activities, sales and marketing activities, 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, 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;

(1) the technological obsolescence of current products and the inability to develop new products;

(2) the impact of competitive pressures;

(3) the inability to attract and retain skilled employees, effectively plan for succession including managing the change of our Chief Executive Officer, all while maintaining 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 involving Ukraine and Israel;

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

(7) information security breaches and other cybersecurity risks;

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

(6) the challenges in integrating and achieving expected results from acquired businesses;

(7) uncertainty surrounding our future capital needs;

(8) information security breaches and other cybersecurity threats;

(9) the failure to comply with laws or regulations relating to data privacy or data protection;

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(12) the inability to obtain, or the delay in obtaining, components for our products at reasonable prices;

(12) the failure to effectively manage product transitions or accurately forecast customer demand;

(13) the inability to manage disruptions to our distribution centers or to our key suppliers;

(13) the inability to design and manufacture high-quality products;

(15) the loss of, or curtailment of or delays in purchases by, large customers in the logistics, consumer electronics, or automotive industries;

(14) the loss of, or curtailment of purchases by, large customers in the logistics, consumer electronics, or automotive industries;

(15) challenges in accurately forecasting our financial results due to seasonal and cyclical variations in customer purchasing patterns and economic and market volatility;

(16) potential impairment charges with respect to our investments or acquired intangible assets;

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(18) fluctuations in foreign currency exchange rates and the use of derivative instruments;

(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, 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;

(19) unfavorable global economic conditions, including increases in interest rates, elevated inflation rates, and recession risks;

(20) business disruptions from natural or man-made disasters, public health crises, or other events outside our control;

(21) stock price volatility;

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Virtually every manufacturer or distributor can achieve better quality and efficiency by using machine vision.

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 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.

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

Revenue for the first quarter of 2025 totaled $216,036,000, representing an increase of 2% over the first quarter of 2024.

The increase was due primarily to higher revenue from customers in the logistics and semiconductor industries, partially offset by continued weakness in the automotive industry and the unfavorable impact of foreign currency exchange rate changes on revenue.

Gross margin as a percentage of revenue was 67% for the first quarters of both 2025 and 2024.

Operating expenses for the first quarter of 2025 decreased 7% from the first quarter of 2024.

The decrease was principally due to disciplined cost management, lower stock-based compensation expense, and the favorable impact of foreign currency exchange rate changes on expenses.

Operating income increased to 12% of revenue for the first quarter of 2025 as compared to 7% of revenue for the first quarter of 2024 due to revenue growth and lower operating expenses.

Net income increased to 11% of revenue, or $0.14 per diluted share, for the first quarter of 2025, as compared to 6% of revenue, or $0.07 per diluted share, for the first quarter of 2024.

Results of Operations

As foreign currency exchange rates are a factor in understanding period-to-period comparisons, we believe the presentation of results on a constant-currency basis in addition to reported results helps improve investors’ ability to understand our operating results and evaluate our performance in comparison to prior periods.

As foreign currency exchange rates are a factor in understanding period-to-period comparisons, we believe the presentation of our results on a constant-currency basis in addition to reported results helps improve investors’ ability to understand our operating results and evaluate our performance in comparison to prior periods.

We also use results on a constant-currency basis as one measure to evaluate our performance.

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We generally refer to such amounts calculated on a constant-currency basis as excluding the impact of foreign currency exchange rate changes.

Results on a constant-currency basis are not in accordance with accounting principles generally accepted in the United States of America (U.S.

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

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)

Results on a constant-currency basis are not in accordance with accounting principles generally accepted in the United States ("U.S.

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

Revenue increased by $5,239,000, or 2%, for the three-month period in 2025 as compared to the same period in 2024.

Changes in foreign currency exchange rates resulted in a lower level of reported revenue in 2025 as compared to 2024.

Excluding the impact of foreign currency exchange rate changes, revenue increased by 5% over the prior year.

Higher revenue from the logistics and semiconductor industries was partially offset by continued weakness in the automotive industry, while broader factory automation revenue remained stable.

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 periods ended March 30, 2025 and March 31, 2024.

Three-months Ended

March 30, 2025 March 31, 2024 $ Change % Change

Americas $ 99,374 $ 83,135 $ 16,239 20 %

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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 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 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)

Gross margin $ 159,399 $ 142,774 $ 16,625 12 % $ 467,935 $ 466,197 $ 1,738 — %

• Revenue from customers based in the Americas increased by 20% for the three-month period in 2025 as compared to the same period in 2024.

Strong growth in logistics was partially offset by continued weakness in the automotive industry.

• Revenue from customers based in Europe decreased by 11% for the three-month period in 2025 as compared to the same period in 2024.

Changes in foreign currency exchange rates resulted in a lower level of reported revenue in the first quarter of 2025 as compared to the same period in 2024, as the U.S.

was stronger on average versus the Euro and sales denominated in Euros were translated into U.S.

Dollars at a lower rate.

Excluding the impact of foreign currency exchange rate changes, revenue from customers based in Europe decreased by 7% for the three-month period due primarily to continued weakness in the automotive industry.

• Revenue from customers based in Greater China decreased by 10% for the three-month period in 2025 as compared to the same period in 2024.

Changes in foreign currency exchange rates did not have a material impact on the three-month period.

The decrease was primarily due to the timing of revenue from large electronics orders.

Broader Greater China revenue increased in most other industries over the same period in the prior year.

• Revenue from customers based in other countries in Asia decreased by 5% for the three-month period in 2025 as compared to the same period in 2024.

Changes in foreign currency exchange rates resulted in a lower level of reported revenue in 2025, primarily driven by a stronger U.S.

Dollar versus the Japanese Yen and Korean Won as compared to the prior year.

Excluding the impact of foreign currency exchange rate changes, revenue from customers based in other countries in Asia was relatively flat with the prior year, as higher semiconductor revenue was offset by lower automotive revenue.

The following table sets forth our gross profit (in thousands) for the three-month periods ended March 30, 2025 and March 31, 2024.

Three-months Ended

March 30, 2025 March 31, 2024 $ Change % Change

Gross profit $ 144,323 $ 141,937 $ 2,386 2 %

Percentage of total revenue 67 % 67 %

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.

Gross margin was 67% for the three-month periods in both 2025 and 2024.

The gross margin in 2024 included the final sell-through of acquired Moritex Corporation inventories that were written up to fair value.

This favorable year-over-year impact was offset by less favorable industry mix, as well as the unfavorable impact of changes in foreign currency exchange rates.

The impact of pricing pressure was offset by productivity measures, including material cost reductions.

Operating Expenses

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)

The following table sets forth our operating expenses (in thousands) for the three-month periods ended March 30, 2025 and March 31, 2024.

Three-months Ended

March 30, 2025 March 31, 2024 $ Change % Change

Research, development, and engineering expenses $ 34,727 $ 37,105 $ (2,378) (6) %

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Percentage of total revenue 39 % 43 %

Loss (recovery) from fire $ — $ (2,750) $ 2,750 (100) % $ — $ (5,250) $ 5,250 (100) %

Percentage of total revenue — % (1) % — % (1) %

Total operating expenses $ 118,231 $ 127,733 $ (9,502) (7) %

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Research, Development, and Engineering Expenses

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.

Research, development, and engineering (RD&E) expenses decreased by $2,378,000, or 6%, for the three-month period in 2025 as compared to the same period in 2024.

The decrease was due to disciplined cost management, including a reduction in RD&E headcount.

Foreign currency exchange rate changes also contributed to the lower RD&E expenses, as costs denominated in foreign currencies were translated into U.S.

Dollars at a lower rate.

RD&E expenses as a percentage of revenue were 16% and 18% for the three-month period in 2025 and 2024, respectively.

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 $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.

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.

Selling, general, and administrative (SG&A) expenses decreased by $7,124,000, or 8%, for the three-month period in 2025 as compared to the same period in 2024.

The decrease was due to disciplined cost management, including a reduction in SG&A headcount.

Lower stock-based compensation expense due to higher credits resulting from the annual true-up of forfeiture rate assumptions, as well as the favorable impact of foreign currency exchange rate changes, also contributed to the decrease in SG&A expenses.

Non-operating Income (Expense)

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)

The following table sets forth our non-operating income (expense) (in thousands) for the three-month periods ended March 30, 2025 and March 31, 2024.

Three-months Ended

March 30, 2025 March 31, 2024 $ Change % Change

Foreign currency gain (loss) $ (2,453) $ 46 $ (2,499) (5433) %

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Total non-operating income (expense) $ 1,706 $ 3,362 $ (1,656) (49) %

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.

The Company recorded foreign currency losses of $2,453,000 for the three-month period in 2025 and foreign currency gains of $46,000 for the three-month period in 2024.

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 $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 $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.

Investment income increased by $870,000, or 28%, for the three-month period due primarily to higher yields on the Company's portfolio of debt securities.

Income Tax Expense

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)

The following table sets forth income tax information (in thousands) for the three-month periods ended March 30, 2025 and March 31, 2024.

Three-months Ended

March 30, 2025 March 31, 2024 $ Change % Change

Income before income tax expense $ 27,798 $ 17,566 $ 10,232 58 %

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Effective income tax rate 15 % 32 %

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.

The Company’s effective tax rate was 15% for the three-month period in 2025 and 32% for the three-month period in 2024.

The Company recorded a net discrete tax benefit of $307,000 in 2025 and a net discrete tax expense of $3,085,000 in 2024.

Excluding the impact of discrete tax items, the Company's effective tax rate was 16% in 2025 compared to 14% in 2024.

The increase was due to more of the Company's profits taxed in relatively higher tax rate jurisdictions.

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 $607,165,000 as of September 29, 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 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.

The Company has historically been able to generate positive cash flow from operations, which has funded its operating activities and other cash requirements and resulted in an accumulated cash and investment balance of $512,757,000 as of March 30, 2025.

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

Operating Activities

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.

Net cash provided by operating activities totaled $40,502,000 in the first quarter of 2025 compared to $13,643,000 in the same period of 2024.

Disciplined cost management and a reduction in inventories primarily drove the increase in operating cash flow from the prior year.

In the second quarter of 2025, the Company will make the final payment totaling $15,503,000 related to a one-time transition tax on unrepatriated foreign earnings.

Investing Activities

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.

Net cash provided by investing activities totaled $33,087,000 for the three-month period in 2025.

Investing activities included capital expenditures that totaled $2,501,000 and consisted primarily of continued investments in business systems, manufacturing equipment related to new product introductions, and building and leasehold improvements.

Financing Activities

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

Net cash used in financing activities totaled $118,370,000 for the three-month period in 2025.

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 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.

Under this March 2022 program, in addition to repurchases made in prior periods, the Company repurchased 3,047,000 shares at a total cost of $103,413,000 during the three-month period in 2025.

This cost included $1,180,000 of buyback excise tax in accordance with the Inflation Reduction Act of 2022.

As of March 30, 2025, the remaining balance of the 2022 program was $164,020,000.

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, second and third quarters of 2024, totaling $38,619,000.

The Company’s Board of Directors declared and paid cash dividends of $0.080 per share in the first quarter of 2025, totaling $13,550,000.

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.

Future Cash Requirements

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

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:

• We expect to continue to make significant cash outlays related to our "Emerging Customer" sales initiative as we continue to grow our sales force to serve a broader customer base and deepen penetration of less served markets.

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

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

As of March 30, 2025, the Company had inventory purchase commitments of $53,401,000, with the majority payable within twelve months, and lease payment obligations of $119,196,000, with $15,238,000 payable within twelve months.

As of March 30, 2025, the Company had a remaining balance of $18,338,000 payable related to a one-time transition tax on unrepatriated foreign earnings arising from the Tax Cuts and Jobs Act of 2017, of which $15,503,000 will be paid in the second quarter of 2025 and the remainder was satisfied through the application of prior-year federal tax overpayments.

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.

In addition, the Company has no long-term debt.

We believe that our balance sheet condition currently gives us a strong position with respect to anticipated longer-term liquidity needs.

We believe that our strong cash position has put us in a relatively good position with respect to anticipated longer-term liquidity needs.

New Pronouncements

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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