What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-07 compared with 2025-10-30 · 93 added, 96 removed, 78 unchanged (71% of the section changed)

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Forward-Looking Statements

Certain statements made in this report, as well as oral statements made by Cognex Corporation ("Cognex", "we", "us", "our", or 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 (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.

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 (the "Exchange Act").

We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

Readers can identify these forward-looking statements by our use of the words "expects," "anticipates," "estimates," "potential," "believes," "projects," "intends," "plans," "aims," "will," "may," "shall," "could," "should," "opportunity," "goal," "objective," "target," "milestone" 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, 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, commercial partnerships, capital expenditures, cost management activities, investments, liquidity, dividends and stock repurchases, strategic and growth plans and opportunities, acquisitions, and estimated tax benefits and expenses, changes in tax legislation, 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, financial targets, milestones and related timing expectations, the impacts of our strategic portfolio review, 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 including our salesforce transformation, new product offerings, innovation and product development activities, customer acceptance of our products, commercial partnerships, capital expenditures, cost management activities including expected annualized operating expense reductions, investments, liquidity, dividends and stock repurchases, strategic and growth plans and opportunities, acquisitions, and estimated tax benefits and expenses, changes in tax legislation, 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:

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(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;

(3) the inability to attract and retain skilled employees and effectively plan for succession, 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 imposition of tariffs, the economic climate in China, and the wars and conflicts involving Iran, Ukraine, and Israel and those that may arise in the future in the geographies where we conduct business;

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

(7) uncertainty surrounding our future capital needs;

(8) the inability to effectively scale our operations and salesforce to support a significantly expanded customer base;

(9) information security breaches and other cybersecurity threats;

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

(10) the failure to comply with laws or regulations relating to data privacy, data protection, AI, or other automated technologies;

(11) the inability to protect our proprietary technology and intellectual property;

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(13) the failure to manufacture and deliver products in a timely manner;

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

(14) the inability to obtain, or the delay in obtaining, components for our products at reasonable prices, including memory chips;

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

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

(16) the loss of, or curtailment of purchases by, large customers in the logistics, consumer electronics, or automotive end markets;

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

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(23) stock price volatility;

and (23) our involvement in time-consuming and costly litigation or activist shareholder activities.

The foregoing list should not be construed as exhaustive and we encourage readers to refer to the detailed discussion of risk factors included in Part I - Item 1A of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024, as updated by Part II - Item 1A of this Quarterly Report on Form 10-Q.

(24) our involvement in time-consuming and costly litigation or activist shareholder activities;

and (25) the failure to effectively transform our operating model, manage our expenses, and achieve expected cost reductions.

The foregoing list should not be construed as exhaustive and we encourage readers to refer to the detailed discussion of risk factors included in Part I - Item 1A of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (the "Annual Report"), as updated by Part II - Item 1A of this Quarterly Report on Form 10-Q (this "Quarterly Report").

The Company cautions readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made.

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Executive Overview

Cognex invents and commercializes technologies that address some of the most critical manufacturing and distribution challenges.

We are a leading global provider of machine vision products and solutions that seek to improve efficiency and quality in a wide range of businesses across attractive industrial end markets.

In addition to product revenue derived from the sale of machine vision products, the Company also generates revenue by providing maintenance and support, consulting, and training services to its customers;

however, service revenue accounted for less than 10% of total revenue for all periods presented.

Machine vision is used in a variety of industries where technology is widely recognized as an important component of automated production, distribution, and quality assurance.

Cognex makes advanced machine vision easy, paving the way for manufacturing and distribution companies to become faster, smarter, and more efficient through automation.

We are a global technology leader in industrial machine vision systems that seek to improve efficiency and help solve critical manufacturing and distribution challenges, providing support across a diverse set of industrial end markets.

In addition to revenue derived from the sale of machine vision products, the Company also generates revenue by providing maintenance and support, consulting, and training services to its customers;

however, service revenue accounted for less than 10% of total

revenue for all periods presented.

Machine vision is used in a variety of end markets where technology is widely recognized as an important component of automated production, distribution, and quality assurance.

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 logistics, automotive, consumer electronics, semiconductor, and packaging.

Revenue for the third quarter of 2025 totaled $276,892,000, representing an increase of 18% over the third quarter of 2024 primarily due to higher revenue in the logistics and consumer electronics industries, as well as one-time revenue related to a strategic channel partnership in the medical lab automation industry.

Gross margin as a percentage of revenue was 68% for the third quarters of both 2025 and 2024.

Operating expenses for the third quarter of 2025 increased 1% from the third quarter of 2024, as higher incentive compensation accruals due to stronger business performance, the unfavorable impact of foreign exchange rates, and reorganization charges incurred to further drive efficiencies across the organization were partially offset by savings from cost management.

Operating income increased to 21% of revenue for the third quarter of 2025 as compared to 13% of revenue for the third quarter of 2024 due to the leverage achieved from revenue growth on relatively flat operating expenses.

Net income decreased to 6% of revenue, or $0.10 per diluted share, for the third quarter of 2025, as compared to 13% of revenue, or $0.17 per diluted share, for the third quarter of 2024, primarily due to a $33 million discrete tax expense accrued in connection with the enactment of United States tax legislation known as the One Big Beautiful Bill Act ("OBBBA") in the third quarter of 2025 (refer to Note 11 to the Consolidated Financial Statements).

This results in a broad base of potential customers across a variety of end markets, including logistics, consumer electronics, automotive, packaging, and semiconductor.

Revenue for the first quarter of 2026 totaled $268,437,000, representing an increase of 24% over the first quarter of 2025 due to broad-based strength across our major end markets, as well as the favorable impact of foreign currency exchange rate changes on revenue.

Gross margin as a percentage of revenue was 71% for the first quarter of 2026 as compared to 67% for the first quarter of 2025 due to a more favorable end-market mix and increased cost efficiencies from higher sales volume.

Operating expenses for the first quarter of 2026 increased 11% from the first quarter of 2025.

The impact of higher incentive compensation accruals due to stronger business performance, the unfavorable impact of foreign exchange rates on expenses, and higher reorganization charges incurred to further drive efficiencies across the organization were partially offset by savings from continued cost management activities.

Operating income increased to 22% of revenue for the first quarter of 2026 as compared to 12% of revenue for the first quarter of 2025 due to operating leverage achieved from revenue growth.

Net income increased to 19% of revenue, or $0.31 per diluted share, for the first quarter of 2026, as compared to 11% of revenue, or $0.14 per diluted share, for the first quarter of 2025.

Results of Operations

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.

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

Revenue increased by $42,150,000, or 18%, for the three-month period and increased $57,190,000, or 8%, for the nine-month period as compared to the same periods in 2024.

The increase was primarily due to higher revenue in the logistics and consumer electronics industries.

Additionally, in the third quarter of 2025, the Company recognized $13 million of one-time revenue related to a strategic channel partnership in the medical lab automation industry upon the transfer of software access and inventories to this partner.

In the third quarter of 2024, the Company recorded an additional month of Moritex revenue of approximately $5 million to eliminate the one-month lag in consolidating Moritex financial results that had been in place during the integration of this acquisition.

The Company acquired Moritex Corporation, a Japanese provider of optics components, in October 2023.

This effect did not repeat in the third quarter of 2025, but was offset by the favorable impact of foreign currency exchange rate changes.

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 28, 2025 and September 29, 2024.

Three-months Ended Nine-months Ended

September 28, 2025 September 29, 2024 $ Change % Change September 28, 2025 September 29, 2024 $ Change % Change

(unaudited) (unaudited)

Revenue increased by $52,401,000, or 24%, for the three-month period in 2026 as compared to the same period in 2025.

Changes in foreign currency exchange rates resulted in a higher level of reported revenue in 2026 as compared to 2025.

Excluding the impact of foreign currency exchange rate changes, revenue increased by 21% over the prior year.

The increase was due to broad-based demand across our major end markets, including revenue growth across our consumer electronics customer base, higher revenue from semiconductor and packaging customers, and continued growth with large logistics customers.

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 April 5, 2026 and March 30, 2025.

Three-months Ended

April 5, 2026 March 30, 2025 $ Change % Change

Americas $ 121,301 $ 99,374 $ 21,927 22 %

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Changes in revenue from a geographic perspective were as follows:

• Revenue from customers based in the Americas increased by 27% for the three-month period and increased by 18% for the nine-month period as compared to the same periods in 2024.

The increase was primarily due to strong growth in logistics and one-time revenue from our new strategic channel partnership mentioned above, which primarily impacted the Americas region.

• Revenue from customers based in Europe increased by 30% for the three-month period and increased by 14% for the nine-month period as compared to the same periods in 2024.

The increase was primarily due to procurement changes made by consumer electronics customers to shift their purchases from entities based in China to Europe.

Improved trends in the packaging industry, the favorable impact of foreign currency exchange rates, and one-time revenue from our new strategic channel partnership also contributed to the increase in revenue for both the three-month and nine-month periods.

These increases were partially offset by weakness in the automotive industry.

• Revenue from customers based in Greater China increased by 10% for the three-month period and decreased by 6% for the nine-month period as compared to the same periods in 2024.

The procurement change in Europe mentioned above, as well as shifts in business from consumer electronics customers from China to the Other Asia region, negatively impacted results for both the three-month and nine-month periods.

However, for the three-month period, these negative impacts were offset by both increased demand within the consumer electronics industry, as well as a timing shift in large customer deployments from the second quarter into the third quarter of 2025.

For these reasons, outside of the procurement change, revenue from Greater China increased year-over-year for both periods.

• Revenue from customers based in other countries in Asia decreased by 4% for the three-month period and decreased by 3% for the nine-month period as compared to the same periods in 2024.

Although Other Asia regions benefited from the shift in consumer electronics business out of China noted above, this benefit was offset by the impact of recording an additional month of Moritex revenue in 2024 mentioned previously.

The following table sets forth our gross profit (in thousands) for the three-month and nine-month periods ended September 28, 2025 and September 29, 2024.

Three-months Ended Nine-months Ended

September 28, 2025 September 29, 2024 $ Change % Change September 28, 2025 September 29, 2024 $ Change % Change

(unaudited) (unaudited)

• Revenue from customers based in the Americas increased by 22% for the three-month period in 2026 as compared to the same period in 2025 due to stronger performance across our major end markets.

• Revenue from customers based in Europe increased by 36% for the three-month period in 2026 as compared to the same period in 2025.

Changes in foreign currency exchange rates resulted in a higher level of reported revenue in the first quarter of 2026 as compared to the same period in 2025, as the U.S.

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

Dollars at a higher rate.

Excluding the impact of foreign currency exchange rate changes, revenue from customers based in Europe increased by 23% for the three-month period in 2026 due to stronger performance across our major end markets, with the exception of ongoing softness in the automotive end market.

• Revenue from customers based in Greater China increased by 40% for the three-month period in 2026 as compared to the same period in 2025.

Changes in foreign currency exchange rates resulted in a higher level of reported revenue in 2026, driven by a weaker U.S.

Dollar versus the Chinese Renminbi as compared to the prior year.

Excluding the impact of foreign currency exchange rate changes, revenue from customers based in Greater China increased by 36% for the three-month period in 2026 primarily due to higher revenue from customers in the consumer electronics and semiconductor end markets.

• Revenue from customers based in other countries in Asia increased by 6% for the three-month period in 2026 as compared to the same period in 2025.

Changes in foreign currency exchange rates did not have a material impact on revenue for the three-month period in 2026.

The increase was primarily due to higher revenue from customers in the consumer electronics and semiconductor end markets.

The following table sets forth our gross profit (in thousands) for the three-month periods ended April 5, 2026 and March 30, 2025.

Three-months Ended

April 5, 2026 March 30, 2025 $ Change % Change

Gross profit $ 190,939 $ 144,323 $ 46,616 32 %

Percentage of total revenue 71 % 67 %

Gross margin was 68% and 67% for the three-month and nine-month periods in 2025, respectively, as compared to 68% for both periods in 2024.

The decrease for the nine-month period was primarily due to less favorable industry mix, and to a lesser extent, the impact from tariffs, partially offset by a relatively higher margin from the one-time revenue from our new strategic channel partnership mentioned above.

Gross margin was 71% for the three-month period in 2026 as compared to 67% for the same period in 2025.

The increase was primarily due to more favorable end-market mix and increased cost efficiencies from higher sales volume, slightly offset by the impact of tariffs.

Operating Expenses

The following table sets forth our operating expenses (in thousands) for the three-month and nine-month periods ended September 28, 2025 and September 29, 2024.

Three-months Ended Nine-months Ended

September 28, 2025 September 29, 2024 $ Change % Change September 28, 2025 September 29, 2024 $ Change % Change

(unaudited) (unaudited)

The following table sets forth our operating expenses (in thousands) for the three-month periods ended April 5, 2026 and March 30, 2025.

Three-months Ended

April 5, 2026 March 30, 2025 $ Change % Change

Research, development, and engineering expenses $ 37,025 $ 34,727 $ 2,298 7 %

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Research, Development, and Engineering Expenses

Research, development, and engineering (RD&E) expenses remained relatively flat for the three-month period and decreased by $4,367,000, or 4%, for the nine-month period as compared to the same periods in 2024.

The decrease was primarily due to cost management, including a reduction in RD&E headcount, and the impact of recording an additional month of Moritex expenses in 2024 mentioned previously, partially offset by higher incentive compensation accruals and the unfavorable impact of foreign currency exchange rates.

RD&E expenses as a percentage of revenue were 13% and 14% for the three-month and nine-month periods in 2025, respectively, as compared to 15% and 16% for the same periods in 2024, respectively.

Research, development, and engineering (RD&E) expenses increased by $2,298,000, or 7%, for the three-month period in 2026 as compared to the same period in 2025.

The impact of higher incentive compensation accruals due to stronger business performance and the unfavorable impact of foreign exchange rates were partially offset by savings from continued cost management activities.

RD&E expenses as a percentage of revenue was 14% for the three-month period in 2026 as compared to 16% for the same period in 2025.

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.

Having moved towards unified software architecture across various products lines over the last years, however, enabled us to deliver innovation with less RD&E expenses as a percentage of revenue.

These percentages are additionally impacted by revenue levels and investment cycles.

These percentages are impacted by revenue levels and investment cycles.

Selling, General, and Administrative Expenses

Selling, general, and administrative (SG&A) expenses increased by $1,819,000, or 2%, and decreased by $7,144,000, or 3%, respectively, for the three-month and nine-month periods in 2025 as compared to the same periods in 2024.

Savings from cost management, including a reduction in SG&A headcount, lower stock-based compensation expenses, and the impact of recording an additional month of Moritex expenses in 2024 mentioned previously were offset by higher incentive compensation accruals, the unfavorable impact of foreign currency exchange rates, and reorganization charges.

For the three-month period, the higher incentive compensation accruals, foreign currency impact, and reorganization charges offset the savings.

Selling, general, and administrative (SG&A) expenses increased by $10,537,000, or 13%, for the three-month period in 2026 as compared to the same period in 2025.

The impact of higher incentive compensation accruals due to stronger business performance, the unfavorable impact of foreign exchange rates, higher stock-based compensation, and higher reorganization charges incurred to further drive efficiencies across the organization were partially offset by savings from continued cost management activities.

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 28, 2025 and September 29, 2024.

Three-months Ended Nine-months Ended

September 28, 2025 September 29, 2024 $ Change % Change September 28, 2025 September 29, 2024 $ Change % Change

(unaudited) (unaudited)

The following table sets forth our non-operating income (expense) (in thousands) for the three-month periods ended April 5, 2026 and March 30, 2025.

Three-months Ended

April 5, 2026 March 30, 2025 $ Change % Change

Foreign currency gain (loss) $ (1,345) $ (2,453) $ 1,108 (45) %

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Total non-operating income (expense) $ 1,884 $ 1,706 $ 178 10 %

The Company recorded foreign currency gains of $840,000 and losses of $3,116,000 for the three-month and nine-month periods in 2025, respectively, and gains of $1,221,000 and $1,086,000 for the same periods in 2024, respectively.

The Company recorded foreign currency losses of $1,345,000 and $2,453,000 for the three-month periods in 2026 and 2025, respectively.

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 increased by $636,000, or 18%, for the three-month period and increased by $2,430,000, or 25%, for the nine-month period as compared to the same periods in 2024 due primarily to higher yields on the Company's portfolio of debt securities.

Other income for the nine-month period included a one-time Employee Retention Credit from the U.S.

Internal Revenue Service to refund payroll taxes paid during the COVID-19 pandemic.

Investment income increased by $846,000, or 21%, for the three-month period in 2026 as compared to the same period in 2025 primarily due to a higher invested balance.

The Company recorded other expense of $1,607,000 for the three-month period in 2026 and other income of $169,000 for the three-month period in 2025.

Other expense for the three-month period in 2026 included a pre-tax loss of $1,539,000 related to the divestiture of the Company's Japan-focused trading business (refer to Note 13 of the Consolidated Financial Statements).

Income Tax Expense

The following table sets forth income tax information (in thousands) for the three-month and nine-month periods ended September 28, 2025 and September 29, 2024.

Three-months Ended Nine-months Ended

September 28, 2025 September 29, 2024 $ Change % Change September 28, 2025 September 29, 2024 $ Change % Change

(unaudited) (unaudited)

The following table sets forth income tax information (in thousands) for the three-month periods ended April 5, 2026 and March 30, 2025.

Three-months Ended

April 5, 2026 March 30, 2025 $ Change % Change

Income before income tax expense $ 61,757 $ 27,798 $ 33,959 122 %

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Effective income tax rate 16 % 15 %

The Company’s effective tax rate was 72% and 41% for the three-month and nine-month periods in 2025, respectively, and 19% for the same periods in 2024, respectively.

The Company recorded a net discrete tax expense of $33,650,000 and $33,132,000 for the three-month and nine-month periods in 2025, respectively, compared to a net discrete tax expense of $889,000 and $3,511,000 for the three-month and nine-month periods in 2024.

On July 4, 2025, tax legislation known as the One Big Beautiful Bill Act ("OBBBA") was enacted in the United States.

OBBBA modifies certain international tax provisions such as the tax on Global Intangible Low Taxed Income ("GILTI") and renames GILTI as Net CFC Tested Income ("NCTI").

The Company records NCTI taxes on a deferred basis, and as a result of OBBBA's enactment, accrued a discrete tax expense of approximately $33,265,000 to increase its deferred tax liability during the third quarter of 2025, increasing the Company's effective tax rate significantly.

The legislation is expected to result in a full-year cash tax benefit estimated between $12 million and $15 million, primarily driven by the Company's ability to immediately expense research and development costs.

However, this benefit does not directly impact the Company's effective tax rate.

Excluding the impact of discrete tax items, the Company's effective tax rate was 18% and 17% for the three-month and nine-month periods in 2025, respectively, compared to 17% and 15% for the same periods in 2024, respectively.

The year-over-year increases were due to more of the Company's profits taxed in relatively higher tax rate jurisdictions.

The Company’s effective tax rate was 16% for the three-month period in 2026 and 15% for the same period in 2025.

The Company recorded net discrete tax benefits of $1,179,000 and $307,000 for the three-month periods in 2026 and 2025, respectively.

Excluding the impact of discrete tax items, the Company's effective tax rate was 18% for the three-month period in 2026 and 16% for the same period in 2025.

The increase was primarily due to a greater portion of Company's pre-tax income being earned in 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 resulted in an accumulated cash and investment balance of $600,344,000 as of September 28, 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 $170,612,000 for the nine-month period in 2025 as compared to $97,677,000 in the same period of 2024.

The increase in operating cash flow from the prior year was primarily driven by stronger business performance.

Net cash provided by operating activities totaled $45,093,000 for the three-month period in 2026 as compared to $40,502,000 for the same period in 2025.

The increase in operating cash inflow from the prior year was primarily driven by stronger business performance, partially offset by higher Company bonus payments that are made in the first quarter of each year.

Investing Activities

Net cash provided by investing activities totaled $47,624,000 for the nine-month period in 2025.

Investing activities included capital expenditures that totaled $6,147,000 and consisted primarily of continued investments in business systems, test equipment related to new product introductions, and building and leasehold improvements.

Net cash provided by investing activities totaled $791,000 for the three-month period in 2026 as compared to $33,087,000 for the same period in 2025.

The decrease in investing cash inflow from the prior year was due to a higher level of investment maturities during the three-month period in 2025 to provide liquidity for our stock repurchase program.

Investing activities for the three-month period in 2026 included net proceeds of $11,519,000 from the divestiture of the Company's Japan-focused trading business (refer to Note 13 of the Consolidated Financial Statements).

Investing activities also included capital expenditures that totaled $2,757,000 for the three-month period in 2026 as compared to $2,501,000 for the same period in 2025.

Capital expenditures in each period consisted primarily of investments in business systems, manufacturing test equipment related to new product introductions, and building and leasehold improvements.

Financing Activities

Net cash used in financing activities totaled $169,197,000 for the nine-month period in 2025.

Net cash used in financing activities totaled $68,901,000 for the three-month period in 2026 and $118,370,000 for the same period in 2025.

The decrease in financing cash outflow from the prior year was due to higher proceeds from stock option exercises during the three-month period in 2026 that partially offset the impact of the Company's stock repurchase and dividend programs.

In March 2022, the Company's Board of Directors (the "Board") authorized a program providing for the repurchase of $500,000,000 of the Company's common stock (the "Program").

Under the Program, in addition to repurchases made in other periods, the Company repurchased 3,594,000 shares at a total cost of $126,233,000 during the nine-month period in 2025.

As of September 28, 2025, the remaining balance of the Program was $140,020,000.

The Company may repurchase shares under the 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.

Under the Program, in addition to repurchases made in other periods, the Company repurchased 2,375,000 shares at a total cost of $98,995,000 during the three-month period in 2026, leaving a remaining balance of $16,025,000 as of April 5, 2026.

On February 11, 2026, the Board authorized the repurchase of an additional $500,000,000 of the Company's common stock upon completion of the Program.

The Company may repurchase shares under these programs 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 Board declared and paid cash dividends of $0.08 per share for the first, second, and third quarters of 2025, totaling $40,424,000.

The Board declared and paid cash dividends of $0.085 per share in the three-month period ended April 5, 2026, totaling $14,196,000.

Future dividends will be declared at the discretion of the Board 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

As of September 28, 2025, the Company had inventory purchase commitments of $42,597,000, with the majority payable within twelve months, and lease payment obligations of $112,656,000, with $16,024,000 payable within twelve months.

As of April 5, 2026, the Company had inventory purchase commitments of $50,616,000, with the majority payable within twelve months, and lease payment obligations of $90,537,000, with $16,482,000 payable within twelve months.

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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New Pronouncements

Refer to Part I - Note 2 within this Form 10-Q, for a full description of recently issued accounting pronouncements including the expected dates of adoption and the expected impact on the financial position and results of operations of the Company.

Refer to Part I - Note 2 within this Quarterly Report, for a full description of recently issued accounting pronouncements including the expected dates of adoption and the expected impact on the financial position and results of operations of the Company.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes to the Company’s exposures to market risk since December 31, 2024.

There have been no material changes to the Company’s exposures to market risk since December 31, 2025 as disclosed in Part II, Item 7A.

"Quantitative and Qualitative Disclosures About Market Risk" in the Annual Report.

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