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Item 1. Financial Statements

2026-05-12 compared with 2025-11-04 · 197 added, 294 removed, 324 unchanged (60% of the section changed)

ITEM 1 – FINANCIAL STATEMENTS

THE EASTERN COMPANY AND SUBSIDIARIES

THE EASTERN COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

Three Months Ended

Nine Months Ended

September 27,

September 28,

September 27,

September 28,

$ 191,437,750

$ 206,068,490

April 4, 2026

March 29, 2025

Cost of products sold

1 unchanged sentence

( 49,125,302 )

( 147,613,222 )

( 154,161,980 )

Product development expense

1 unchanged sentence

( 1,109,186 )

( 3,739,214 )

Selling and administrative expenses

1 unchanged sentence

( 9,847,121 )

( 32,181,886 )

( 31,014,022 )

Operating profit

Interest expense

( 2,019,365 )

( 2,049,655 )

Other expenses, net

Income from continuing operations before income taxes

Other income (expense)

Income before income taxes from continuing operations

Income tax expense

( 1,333,771 )

( 1,422,414 )

( 3,335,489 )

Net income from continuing operations

Discontinued Operations (see note B)

Loss from operations of discontinued unit

$ ( 766,990 )

$ ( 520,006 )

$ ( 2,750,844 )

(Loss) gain on classification as held for sale

( 23,087,775 )

Income tax benefit (expense)

Net (Loss) income on discontinued operations

$ ( 19,966,243 )

$ ( 21,517,715 )

Net income (loss)

$ ( 15,297,445 )

$ ( 9,842,000 )

Income from operations of discontinued unit

Income tax expense

Income from discontinued operations

Earnings per share from continuing operations:

(Loss) earnings per share from discontinued operations:

Total earnings (loss) per share:

Earnings per share from discontinued operations:

Total earnings per share:

Cash dividends per share:

See accompanying notes.

THE EASTERN COMPANY AND SUBSIDIARIES

THE EASTERN COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

Three Months Ended

Nine Months Ended

September 27,

September 28,

September 27,

September 28,

Net income (loss)

$ ( 15,297,445 )

$ ( 9,842,000 )

Other comprehensive income (loss):

April 4, 2026

March 29, 2025

Other comprehensive income:

Change in foreign currency translation

Change in fair value of foreign currency swap

Change in pension and postretirement benefit costs, net of taxes of:

2025 - $60,963 and $182,888 respectively;

2024 - $71,355 and $214,065 respectively

Total other comprehensive income (loss)

Comprehensive income (loss)

Change in pension and postretirement benefit costs, net of taxes:

2026 - $62,136 ;

2025 - $60,963

Total other comprehensive income

Comprehensive income

See accompanying notes.

THE EASTERN COMPANY AND SUBSIDIARIES

THE EASTERN COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

September 27,

April 4, 2026

January 3, 2026

Current Assets

Cash and cash equivalents

Marketable securities

Accounts receivable, less allowances:

2 unchanged sentences

Current portion of notes receivable

Prepaid expenses and other assets

Current assets held for sale

Prepaid expenses and other current assets

Total Current Assets

5 unchanged sentences

Patents and other intangibles, net of accumulated amortization

Long term notes receivable, less current portion

Deferred income taxes

5 unchanged sentences

See accompanying notes.

THE EASTERN COMPANY AND SUBSIDIARIES

THE EASTERN COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)

September 27,

April 4, 2026

January 3, 2026

LIABILITIES AND SHAREHOLDERS’ EQUITY

5 unchanged sentences

Current portion of finance lease liability

Current portion of long-term debt

Other current liabilities

Current liabilities held for sale

Total Current Liabilities

Other long-term liabilities

Operating lease liability, less current portion

3 unchanged sentences

Accrued pension cost

Other long-term liabilities

Total Liabilities

8 unchanged sentences

50,000,000 shares

9,170,470 shares as of 2025 and 9,146,996 shares as of 2024

6,068,650 shares as of 2025 and 6,163,138 shares as of 2024

9,189,555 shares as of April 4, 2026 and 9,179,288 shares as of January 3, 2026

6,030,914 shares as of April 4, 2026 and 6,041,767 shares as of January 3, 2026

Treasury Stock:

3,101,820 shares as of 2025 and 2,983,858 shares as of 2024

3,158,641 shares as of April 4, 2026 and 3,137,521 shares as of January 3, 2026

( 30,490,132 )

5 unchanged sentences

( 1,437,363 )

Unrealized gain (loss) on foreign currency swap, net of tax

Unrealized gain on foreign currency swap, net of tax

Unrecognized net pension and postretirement benefit costs, net of tax

9 unchanged sentences

See accompanying notes.

THE EASTERN COMPANY AND SUBSIDIARIES

THE EASTERN COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Nine Months Ended

September 27,

September 28,

Three Months Ended

April 4, 2026

March 29, 2025

Operating Activities

Net income (loss)

$ ( 9,842,000 )

Gain (Loss) from discontinued operations

( 21,517,715 )

Income from discontinued operations

Income from continuing operations

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Adjustments to reconcile net income to net cash provided

by (used in) operating activities:

Depreciation and amortization

Acquisition related expenses

Reduction in carrying amount of ROU assets

Unrecognized pension and postretirement benefits

Unrecognized pension and postretirement benefit

Loss on sale of equipment and other assets

Provision for doubtful accounts

Stock compensation expense

Stock compensation benefit

Changes in operating assets and liabilities:

3 unchanged sentences

Accounts payable

( 3,274,997 )

Accrued compensation

Change in operating lease liability

( 1,256,224 )

( 2,418,801 )

Change in operating lease liability

Other accrued expenses

( 5,921,413 )

Net cash provided by operating activities

Net cash provided by (used in) operating activities

( 1,848,184 )

Investing Activities

Marketable securities

Business Acquisition

Payments received from notes receivable

Proceeds from sale of discontinued operations

Proceeds from sale of equipment

Purchases of property, plant, and equipment

( 1,643,885 )

( 7,634,265 )

Net cash provided by (used in) investing activities

Net cash used in investing activities

( 1,565,275 )

Financing Activities

Payments on short term borrowings (revolver)

Principal payments on long-term debt

( 1,015,894 )

( 2,365,500 )

Proceeds(payments) on short term borrowings (revolver)

Financing leases, net

1 unchanged sentence

( 1,400,804 )

( 1,916,130 )

Dividends paid

( 2,016,239 )

( 2,050,933 )

Net cash used in financing activities

( 2,339,281 )

( 2,952,847 )

Discontinued Operations

Cash provided by operating activities

Cash used in investing activities

Cash used in financing activities

Cash provided by discontinued operations

8 unchanged sentences

Lease liability

See accompanying notes

1 Includes cash from assets held for sale of $1.2 million as of March 29, 2025

THE EASTERN COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)

Comprehensive

Shareholder's

Income (Loss)

Balances at December 28, 2024

( 2,983,858 )

($ 26,338,309 )

$ 133,545,670

($ 21,958,971 )

$ 120,691,399

Cash dividends declared, $0.44 per share

Currency translation adjustment

Change in fair value of foreign currency swap

Change in pension and other postretirement benefit costs, net of tax

Treasury Stock Purchase

( 1,400,804 )

Issuance of stock awards, net

Issuance of Common Stock for directors' fees

Balances at March 29, 2025

( 3,034,445 )

($ 27,739,113 )

$ 134,814,306

($ 21,495,479 )

$ 120,999,645

Balances at January 3, 2026

( 3,137,521 )

($ 30,067,777 )

$ 137,997,382

($ 19,621,376 )

$ 124,645,329

Cash dividends declared, $0.44 per share

Currency translation adjustment

Change in fair value of foreign currency swap

Change in pension and other postretirement benefit costs, net of tax

Treasury Stock Purchase

Issuance of stock awards, net

Issuance of Common Stock for directors' fees

Balances at April 4, 2026

( 3,158,641 )

($ 30,490,132 )

$ 137,972,757

($ 19,149,738 )

$ 124,528,129

See accompanying notes.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

September 27, 2025

April 4, 2026

Note A – Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X and do not include all the information and footnotes required by generally accepted accounting principles in the United States (“GAAP”) for complete financial statements.

Refer to the consolidated financial statements of The Eastern Company (together with its consolidated subsidiaries, the “Company,” “we,” “us” or “our”) and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 28, 2024, filed with the Securities and Exchange Commission on March 11, 2025 (the “2024 Form 10-K”), for additional information.

Refer to the consolidated financial statements of The Eastern Company (together with its consolidated subsidiaries, the “Company,” “we,” “us” or “our”) and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended January 3, 2026, as amended on March 19, 2026 (the “2025 Form 10-K”), for additional information.

The accompanying condensed consolidated financial statements are unaudited.

2 unchanged sentences

All intercompany accounts and transactions are eliminated.

The condensed consolidated balance sheet as of December 28, 2024 has been derived from the audited consolidated balance sheet at that date.

The Company’s fiscal year is a 52-53-week fiscal year ending on the Saturday nearest to December 31.

References in this Quarterly Report on Form 10-Q for the quarterly period ended September 27, 2025 (this “Form 10-Q”) to 2024, the fiscal year 2024 or fiscal 2024 mean the 52-week period ended on December 28, 2024, and references to 2025, fiscal year 2025 or fiscal 2025 mean the 53-week period ending on January 3, 2026.

In a 52-week fiscal year, each quarter has 13 weeks.

The condensed consolidated balance sheet as of January 3, 2026 has been derived from the audited consolidated balance sheet at that date.

The Company’s fiscal year is a 52- or 53-week fiscal year ending on the Saturday nearest to December 31.

References in this Quarterly Report on Form 10-Q for the quarterly period ended April 4, 2026 (this “Form 10-Q”) to 2025, the fiscal year 2025 or fiscal 2025 mean the 53-week period ended on January 3, 2026, and references to 2026, fiscal year 2026 or fiscal 2026 mean the 52-week period ending on January 2, 2027.

In a 53-week fiscal year, the first three quarters each have 13 weeks, and the fourth quarter has 14 weeks.

References to the third quarter of 2024, the third fiscal quarter of 2024 or the three months ended September 28, 2024 mean the 13-week period from June 30, 2024 to September 28, 2024.

References to the third quarter of 2025, the third fiscal quarter of 2025 or the three months ended September 27, 2025, mean the 13-week period from June 29, 2025 to September 27.

References to the first nine months of 2024 or the nine months ended September 28, 2024 mean the period from December 31, 2023 to September 28, 2024.

References to the first nine months of 2025 or the nine months ended September 27, 2025 mean the period from December 29, 2024 to September 27, 2025.

In a 52-week fiscal year, each quarter has 13 weeks.

References to the first quarter of 2025, the first fiscal quarter of 2025, the first three months of fiscal 2025 or the three months ended March 29, 2025 mean the 13-week period from December 29, 2024 to March 29, 2025.

References to the first quarter of 2026, the first fiscal quarter of 2026, the first three months of fiscal 2026 or the three months ended April 4, 2026, mean the 13-week period from January 4, 2026 to April 4, 2026.

Certain amounts in the 2025 financial statements have been reclassified to conform with the 2026 presentation with no impact or change to previously reported net income or shareholders’ equity.

See Note B, Discontinued Operations , for additional information.

Note B – Discontinued Operations

6 unchanged sentences

Summarized Financial Information of Discontinued Operations

The following table represents (loss) income from discontinued operations, net of tax, for the periods presented:

The following table represents income from discontinued operations, net of tax, for the periods presented:

Three Months Ended

Nine Months Ended

September 27,

September 28,

September 27,

September 28,

April 4, 2026

March 29, 2025

Cost of products sold

( 2,947,478 )

( 1,653,484 )

( 8,402,175 )

Selling and administrative expenses

( 1,145,232 )

( 3,483,904 )

(Loss) income from disposal of discontinued operations

( 23,087,775 )

Operating (loss) income

( 23,677,345 )

( 25,326,205 )

Operating Income

Interest expense

(Loss) income from discontinued operations before income taxes

( 23,854,765 )

( 25,838,619 )

Income tax benefit (expense)

(Loss) income from discontinued operations, net of tax

$ ( 19,966,243 )

$ ( 21,517,715 )

The following table represents the assets and liabilities of discontinued operations as of the dates presented:

September 27,

Accounts receivable

Prepaid expenses

Right of use assets

Total assets of discontinued operations

Current assets of discontinued operations¹

Total assets of discontinued operations

Accounts payable

Accrued compensation and other accrued expenses

Current portion of lease liability

Other long-term liabilities

Total liabilities of discontinued operations

Current liabilities of discontinued operations¹

Total liabilities of discontinued operations

¹ The total assets and liabilities of discontinued operations are presented as current in the December 28, 2024 balance sheet as we sold the discontinued operations and collect proceeds within one year.

Income from discontinued operations before income taxes

Income tax expense

Income from discontinued operations, net of tax

Note C – Earnings Per Share

1 unchanged sentence

Three Months Ended

Nine Months Ended

September 27,

September 28,

September 27,

September 28,

April 4, 2026

March 29, 2025

Weighted average shares outstanding

3 unchanged sentences

Note D – Fair Value of Instruments

The following table presents the effect of the Company’s derivative instruments designated as cash flow hedges under Accounting Standards Codification (“ASC”) Topic 815, “Hedge Accounting Improvements,” in its unaudited Condensed Consolidated Statements of Operations for the nine months ended September 27, 2025:

The Company incurs certain manufacturing, marketing, and selling costs in international markets in local currency.

Accordingly, earnings and cash flows are exposed to market risk from changes in foreign currency exchange rates relative to the U.S.

dollar, the Company’s reporting currency.

The Company has a program in place that is designed to mitigate the exposure to changes in foreign currency exchange rates.

The program includes the use of derivative financial instruments to minimize, for a period of time, the impact on its financial results from changes in foreign exchange rates.

The Company utilizes foreign currency forward contracts to hedge the anticipated cash flows from transactions denominated in foreign currencies, namely Mexican pesos.

This does not eliminate the impact of the volatility of foreign exchange rates.

However, because the Company generally enters into forward contracts twelve to eighteen months out, rates are fixed for a twelve-to-eighteen-month period, thereby facilitating financial planning and resource allocation.

Designated Foreign Currency Hedge Contracts

All of the Company’s designated foreign currency hedge contracts as of April 4, 2026 were cash flow hedges under ASC Topic 815, “Derivatives and Hedging” (“ASC 815”).

The Company records the effective portion of any change in the fair value of designated foreign currency hedge contracts in other comprehensive income until the related third-party transaction occurs.

Once the related third-party transaction occurs, the Company reclassifies the effective portion of any related gain or loss on the designated foreign currency hedge contracts to earnings.

In the event the hedged forecasted transaction does not occur, or it becomes probable that it will not occur, the Company will reclassify the amount of any gain or loss on the related cash flow hedge to earnings at that time.

The Company had designated foreign currency hedge contracts outstanding in the contract amount of $12.6 million as of April 4, 2026 and $8.4 million as of January 3, 2026.

As of April 4, 2026 a gain of $0.5 million is expected to be reclassified to earnings within the next nine months.

Derivative Instruments

Amount of Gain Recognized in Accumulated Other Comprehensive Income

Amount of Loss Reclassified from Accumulated Other Comprehensive Income into Earnings

Amount of Gain Reclassified from Accumulated Other Comprehensive Income into Earnings

Location in Condensed Consolidated Statement of Income

Designated foreign currency hedge contracts

$ ( 284,130 )

Cost of products sold

5 unchanged sentences

and inputs derived principally from, or corroborated by, observable market data by correlation or other means.

As of September 27, 2025, the Company classified its derivative assets and liabilities within Level 2 of the fair value hierarchy prescribed by ASC 815, as discussed below, because these observable inputs are available for substantially the full term of its derivative instruments.

As of April 4, 2026, the Company classified its derivative assets and liabilities within Level 2 of the fair value hierarchy prescribed by ASC 815, as discussed below, because these observable inputs are available for substantially the full term of its derivative instruments.

Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

1 unchanged sentence

or other inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability.

Prices or valuation techniques that require inputs that are both significant to the fair value measurement and

unobservable.

The following tables present the fair value of the Company’s derivative instruments as they appear in its Condensed Consolidated Balance Sheets as of September 27, 2025, and December 28, 2024:

Location in Condensed

Consolidated Balance Sheets

September 27,

Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable.

The following tables present the fair value of the Company’s derivative instruments as they appear in its Condensed Consolidated Balance Sheets as of April 4, 2026, and January 3, 2026:

Location in Condensed Consolidated Balance Sheets

As of April 4, 2026

As of January 3, 2026

Derivative Assets:

3 unchanged sentences

Other Long-term assets

Derivative Liabilities:

Designated foreign currency hedge contracts

Other current liabilities

Note E – Inventories

Inventories consist of the following components:

September 27,

April 4, 2026

January 3, 2026

Raw material and component parts

3 unchanged sentences

Note F – Goodwill

The aggregate carrying amount of goodwill is approximately $ 58.6 million as of September 27, 2025.

No impairment was recognized in the third quarter of 2025.

The aggregate carrying amount of goodwill is approximately $ 58.6 million as of April 4, 2026.

No impairment was recognized in the first quarter of 2026.

The Company evaluates its reporting units for impairment annually in December, or more frequently if events or circumstances indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

5 unchanged sentences

Note G – Leases

The Company presents right-of-use (ROU) assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months, in accordance with the Financial Accounting Staoard (“FASB”) Accounting Standards Update (“ASU”) 2016-02, “Leases”.

The Company presents right-of-use (“ROU”) assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months, in accordance with the Financial Accounting Standard (“FASB”) Accounting Standards Update (“ASU”) 2016-02, “Leases”.

The Company accounts for non-lease components as part of the lease component to which they relate.

9 unchanged sentences

All options to extend, when it is reasonably certain the option will be exercised, have been included in the calculation of the ROU asset and lease liability.

Currently, the Company has 17 operating leases with lease liabilities of $ 16.7 million and 6 finance leases with lease liabilities of $ 3.4 million as of September 27, 2025.

Currently, the Company has 18 operating leases with lease liabilities of $ 16.7 million and 8 finance leases with lease liabilities of $ 3.8 million as of April 4, 2026.

The terms and conditions of the leases are determined by the individual agreements.

2 unchanged sentences

There are no leases that have not yet commenced that could create significant rights and obligations for the Company.

The future payments (in millions) due under non-cancelable operating and finance leases as of September 27, 2025 are as follows:

The future payments (in millions) due under non-cancelable operating and finance leases as of April 4, 2026 are as follows:

Less effects of discounting

Lease liabilities recognized

As of September 27, 2025 the weighted average lease term for all operating and finance leases is 5.6 and 5.6 years, respectively.

As of April 4, 2026, the weighted average lease term for all operating and finance leases is 5.4 and 5.0 years, respectively.

The weighted average discount rate associated with operating and finance leases was 7.0 % and 7.2 %, respectively.

Note H – Debt

On June 16, 2023, the Company entered into a credit agreement with the lending institutions named therein, TD Bank, N.A., as an LC issuer, the swing line lender and as the administrative agent, TD Securities (USA) LLC, as sole arranger and sole bookrunner, and Bank of America, N.A.

and Wells Fargo Bank, National Association, as co-syndication agents (the “TD Bank Credit Agreement”), that included a $ 60 million term portion and a $ 30 million revolving commitment portion.

In April 2025, the Company entered into an amendment to the Credit Agreement that increased the revolving commitment portion to $ 50 million.

The term loan portion of the credit facility required quarterly principal payments of (i) $ 750,000 beginning on September 30, 2023 through June 30, 2025, (ii) $ 1,125,000 beginning on September 30, 2025 through June 30, 2027, and (iii) $ 1,500,000 beginning on September 30, 2027 through March 31, 2028, with the balance of the term loan payable on the maturity date of June 16, 2028 .

Amounts outstanding under the revolving portion of the credit facility were generally due and payable on the expiration date of the TD Bank Credit Agreement (June 16, 2028).

The Company could elect to prepay some or all of the outstanding balance from time to time without penalty.

A commitment fee was payable on the unused portion of the revolving credit facility based on the Company’s consolidated ratio of net debt to adjusted EBITDA from time to time.

The commitment fee was 0.25 % as of September 27, 2025.

The Company had no borrowings outstanding under the revolving commitment portion of the credit facility as of September 27, 2025.

The term loan bears interest at a variable rate based on the Term Secured Overnight Financing Rate (“SOFR”), plus an adjustment of ten basis points, plus an applicable margin of 1.87 5% to 2.62 5%, depending on the Company’s senior net leverage ratio.

Borrowings under the revolving portion bore interest at a variable rate based on, at the Company’s election, a base rate plus an applicable margin of 0.87 5% to 1.62 5% or SOFR, plus an adjustment of ten basis points, plus an applicable margin of 1.875% to 2.625%, with such margins determined based on the Company’s senior net leverage ratio.

The Company’s obligations under the TD Bank Credit Agreement were secured by a lien on certain of the Company’s and its subsidiaries’ assets pursuant to a Pledge and Security Agreement, dated as of June 16, 2023, with TD Bank N.A., as administrative agent.

The Company’s loan covenants under the TD Bank Credit Agreement required the Company to maintain a senior net leverage ratio not to exceed 3.5 to 1.

In addition, the Company was required to maintain a fixed charge coverage ratio to be not less than 1.25 to 1 .

Following the end of the third quarter of 2025, the Company terminated the TD Bank Credit Agreement and entered into a new credit agreement, as discussed further below.

The Company was in compliance with all its covenants under the TD Bank Credit Agreement on September 27, 2025 and through the date of such termination.

New Credit Agreement

On October 28, 2025, the Company entered into a credit agreement with the lenders from time to time party thereto, and Citizens Bank, N.A., as the administrative agent, as an LC issuer, and as the swing line lender (the “Citizens Credit Agreement”).

The Citizens Credit Agreement provides for the extension of credit to the Company in the form of revolving loans, swing line loans and letters of credit, at any time and from time to time during the term of the Citizens Credit Agreement.

The Citizens Credit Agreement provides the Company with a $ 100 million five-year senior secured revolving credit facility.

Revolving loans under the Citizens Credit Agreement bear interest, at the election of the Company, at (a) term SOFR for a tenor equivalent to the applicable interest period, subject to a 0% floor, plus an applicable margin varying from 1.375% to 2.125% based on the Company’s Senior Net Leverage Ratio (as defined in the Citizens Credit Agreement) from time to time (such loans being referred to as “SOFR Loans”), (b) an alternate base rate equal to the greatest of (i) the prime rate, (ii) the federal funds rate plus 0.50% per annum, and (iii) the daily term SOFR for a one-month interest period (“Daily SOFR”) plus 1.00%, in each case subject to a 0% floor, plus an applicable margin varying from 0.37 5% to 1.12 5% based on the Company’s Senior Net Leverage Ratio (such loans being referred to as “ABR Loans”), or (C) Daily SOFR, subject to a 0% floor, plus an applicable margin varying from 1.37 5% to 2.12 5% based on the Company’s Senior Net Leverage Ratio (such loans being referred to as “Daily SOFR Loans”).

Swing line loans under the Citizens Credit Agreement bear interest at the alternate base rate plus the margin applicable to ABR Loans, as described above.

Currently, the Company’s margin is 1.375% for SOFR Loans.

Interest on SOFR Loans is payable on the last day of each interest period, and if the interest period is longer than three months, on each successive three-month anniversary of the commencement of the interest period.

Interest on ABR Loans and Daily SOFR Loans is payable quarterly in arrears on the last business day of each of March, June, September and December.

Amounts outstanding under the Citizens Credit Agreement are generally due and payable on the expiration date of the Citizens Credit Agreement ( October 28, 2030 ) or the earlier termination of the revolving commitments thereunder.

On October 28, 2025, the Company entered into a Credit Agreement with Citizens Bank, N.A.

that provides for the extension of credit to the Company in the form of revolving loans, swing line loans and letters of credit (the “Credit Agreement”).

The Credit Agreement provides the Company with a $ 100 million five-year senior secured revolving credit facility.

Under the revolving credit facility, up to $ 5 million is available for letters of credit and up to $ 5 million is available for swing line loans.

The Company can elect to increase the revolving commitment under the Credit Agreement by up to $ 75 million, provided that one or more lending institutions (whether or not existing lenders under the Credit Agreement) voluntarily agree to provide the additional commitment.

Revolving loans under the Credit Agreement bear interest at a variable rate based on the term secured overnight financing rate (“SOFR”) plus an applicable margin of 1.375 % to 2.125 % depending on the Company’s senior net leverage ratio.

The Company’s obligations under the Credit Agreement are secured by a lien on substantially all of the Company’s assets pursuant to a Pledge and Security Agreement dated as of October 28, 2025.

The Company has $ 67 million available on its line of credit under the Credit Agreement as of the date of filing this Form 10-Q.

Amounts outstanding under the Credit Agreement are generally due and payable on the expiration date of the Credit Agreement (October 28, 2030) or the earlier termination of the revolving commitments thereunder.

The Company can elect to prepay some or all of the outstanding balance from time to time without penalty.

The Citizens Credit Agreement requires the Company to comply with various covenants, including among other things, financial covenants to maintain a senior net leverage ratio not to exceed 3.50 to 1.00, subject to a temporary step-up to 4.00 to 1 upon consummation of a material acquisition, and an interest coverage ratio not less than 3.00 to 1.00 .

The Company was in compliance with all its covenants under the Citizens Credit Agreement at all times from entry into the Citizens Credit Agreement through the date of filing this Form 10-Q.

The Company’s obligations under the Citizens Credit Agreement are guaranteed by certain of the Company’s subsidiaries and are secured by a lien on substantially all assets of the Company and its subsidiaries.

The Company has $ 64 million available on its line of credit under the Citizens Credit Agreement as of the date of filing this Form 10-Q.

The Company’s loan covenants under the Credit Agreement require the Company to maintain a senior net leverage ratio not to exceed 3.50 to 1.00, which is to be tested quarterly on a trailing twelve-month basis.

In addition, the Company is required to maintain an interest coverage ratio not less than 3.00 to 1.00 .

The Company was in compliance with all its covenants under the Credit Agreement as of April 4, 2026 and through the date of filing this Form 10-Q.

Note I – Stock Options and Awards

3 unchanged sentences

Restricted stock unit awards may be granted to participants under the 2020 Plan with restrictions determined by the Compensation Committee of the Board.

During the first nine months of fiscal 2025 and 2024, the Company granted stock awards with respect to 37,728 and 38,448 shares of Company common stock, respectively, that were subject to the meeting of performance measurements or time- based.

For the first nine months of fiscal years 2025 and 2024, the Company used fair market value to determine the associated expense with stock awards.

During the first three months of fiscal 2026 and 2025, the Company granted stock awards with respect to 52,992 and 35,856 shares of Company common stock, respectively, that were subject to the satisfaction of performance measurements or time-based requirements.

For the first three months of fiscal years 2026 and 2025, the Company used fair market value to determine the associated expense with stock awards.

Incentive stock options granted under the 2020 Plan must have exercise prices that are not less than 100% of the fair market value of the Company’s common stock on the dates the stock options are granted.

Under the 2020 Plan, non-qualified stock options granted to participants will have exercise prices determined by the Compensation Committee of the Board.

The Company issued 50,688 and 53,568 options during the first nine months of fiscal 2025 and 2024, respectively.

For the first nine months of fiscal 2025, the Company used several assumptions which included an expected term of three years, volatility deviation of 42.54 % and 40.34 % and a risk-free rate of 3.73 % and 4.34 % to determine the expense associated with options.

For the first nine months of fiscal 2024, the Company used several assumptions which included an expected term of three years, volatility deviation of 38.30 % and a risk-free rate of 4.51 % to determine the expense associated with options.

Stock-based compensation expense, including forfeitures, in connection with stock options and stock awards previously granted to employees was approximately $ 138,000 and $ 168,000 in the third quarter of 2025 and the third quarter of 2024, respectively, and was approximately $ 132,000 and $ 582,000 in the first nine months of fiscal years 2025 and 2024, respectively.

As of September 27, 2025, there were 783,232 shares of Company common stock reserved and available for future grant under the 2020 Plan.

The Company issued 69,264 and 48,240 options during the first three months of fiscal 2026 and 2025, respectively.

For the first three months of fiscal 2026, the Company used several assumptions which included an expected term of three years, volatility deviation of 43.08 %, and a risk-free rate of 3.63 % to determine the expense associated with options.

For the first three months of fiscal 2025, the Company used several assumptions which included an expected term of three years, volatility deviation of 40.34 % and a risk-free rate of 4.34 % to determine the expense associated with options.

Stock-based compensation income, including forfeitures, in connection with stock options and stock awards previously granted to employees was approximately $( 307,000 ) and $( 153,000 ) in the first quarter of 2026 and the first quarter of 2025, respectively.

As of April 4, 2026, there were 691,997 shares of Company common stock reserved and available for future grant under the 2020 Plan.

The following tables set forth the outstanding stock options for the period specified:

Nine Months Ended

September 27,

Weighted Average

Exercise Price

Weighted Average

Exercise Price

Three Months Ended

April 4, 2026

January 3, 2026

Weighted Average Exercise Price

Outstanding at beginning of period

3 unchanged sentences

Outstanding as of

September 27, 2025

April 4, 2026

Weighted Average Remaining Contractual Life

Weighted Average Exercise Price

September 27, 2025

April 4, 2026

Weighted Average Remaining Contractual Life

2 unchanged sentences

The following table sets forth the outstanding stock awards for the period specified:

Nine Months Ended

September 27,

Three Months Ended

April 4, 2026

January 3, 2026

Outstanding at beginning of period

Outstanding at end of period

As of September 27, 2025, outstanding stock options and stock awards had an intrinsic value of $ 1,283,000 .

As of April 4, 2026, outstanding stock options and stock awards had an intrinsic value of $ 1,794,000 .

Note J – Share Repurchase Program

2 unchanged sentences

Under this program, shares may be repurchased in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended.

Below is a summary of the Company’s share repurchases during the third quarter of 2025 under the share repurchase program.

Below is a summary of the Company’s share repurchases during the first quarter of 2026 under the share repurchase program.

Total Number of Shares Purchased

2 unchanged sentences

Maximum Number of Shares that may yet be Purchased Under the Plans or Programs

June 29, 2025 – August 2, 2025

August 3, 2025 – August 30, 2025

August 31, 2025 – September 27, 2025

January 4, 2026 - February 1, 2026

February 2, 2026 - February 28, 2026

March 1, 2026 - April 4, 2026

Note K – Revenue Recognition

The Company’s revenues result from the sale of goods and services and reflect the consideration to which the Company expects to be entitled.

The Company records revenues in accordance with FASB Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers.” The Company has defined purchase orders as contracts in accordance with ASC Topic 606.

The Company records revenues in accordance with ASC Topic 606, “Revenue from Contracts with Customers.” The Company has defined purchase orders as contracts in accordance with ASC Topic 606.

For its customer contracts, the Company identifies its performance obligations, which are delivering goods or services, determines the transaction price, allocates the contract transaction price to the performance obligations (when applicable), and recognizes the revenue when (or as) the performance obligation is transferred to the customer.

11 unchanged sentences

income tax examinations by foreign tax authorities for years prior to 2019.

The total amount of unrecognized tax benefits could increase or decrease within the next 12 months for several reasons, including the closure of federal, state, and foreign tax years by expiration of the statute of limitations and the recognition and measurement considerations under FASB ASC Topic 740, “Income Taxes.” There have been no significant changes to the value of unrecognized tax benefits during the nine months ended September 27, 2025.

On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (“OBBBA”), which resulted in many tax extensions and other rule changes, including the following which we believe will have an effect on our tax provision in 2025 or 2026:

Full expensing of U.S.

research and development costs under Section 174A of the Internal Revenue Code;

Retroactive expensing of unamortized U.S.

research and development costs capitalized between 2022 and 2024;

either all in 2025, or over two years in 2025 and 2026;

Return of the Section 163(j) taxable income base excluding the deductions for depreciation and amortization in 2025 (change from “Tax EBIT” to “Tax EBITDA”);

Decrease in the Section 250 deduction for Net CFC Tested Income (formerly GILTI) to 40% (from 50%) in 2026, instead of the scheduled decrease to 37.5% prior to the OBBBA;

Decrease in the Section 250 deduction for foreign-derived income to 33.34% (from 37.5%) in 2026, instead of the scheduled decrease to 21.875% prior to the OBBBA;

Increase in the foreign tax credit rate on Net CFC Tested Income (formerly GILTI) to 90% (from 80%), and a 10% disallowance on repatriation, in 2026.

The Company is currently evaluating the effect of the OBBBA on its future interim and annual financial statements.

The Company’s deferred tax asset for U.S.

research and development costs may reverse in subsequent financial statements, decreasing tax payable for a similar amount or increasing other tax attributes;

and this research deduction may have an effect on the Section 163(j) limitation.

The Company is unable at this time to estimate the full impact of the OBBBA on its future interim and annual financial statements due to the complexity of the changes in the OBBBA, the elective nature of certain OBBBA tax benefits, and potential future guidance from the U.S.

Department of the Treasury.

There have been no significant changes to the value of unrecognized tax benefits during the three months ended April 4, 2026.

Return of the Section 163(j) taxable income base excluding the deductions for depreciation and amortization in 2025 and 2026 (change from “Tax EBIT” to “Tax EBITDA”);

Decrease in the Section 250 deduction for Net CFC Tested Income (formerly GILTI) to 40% (from 50%), instead of the scheduled decrease to 37.5% prior to the OBBBA;

Decrease in the Section 250 deduction for foreign-derived income to 33.34% (from 37.5%), instead of the scheduled decrease to 21.875% prior to the OBBBA;

Increase in the foreign tax credit rate on Net CFC Tested Income (formerly GILTI) to 90% (from 80%), and a 10% disallowance on repatriation.

The Company has elected to change its method of accounting for domestic research or experimental expenditures to the deduction method on a cut-off basis under §174A(a) of the Internal Revenue Code (“IRC”), pursuant to Section 7.02(3)(a) of Rev Proc 2025-28 and will continue to amortize research and development costs capitalized between 2022 and 2024 over a 5 or 15 year period for U.S and foreign §174 costs, respectively.

Note M – Retirement Benefit Plans

4 unchanged sentences

The Company also provides health care and life insurance for retired salaried employees in the United States who meet specific eligibility requirements.

Significant disclosures relating to these benefit plans for the third quarter and first nine months of fiscal years 2025 and 2024 are as follows:

Significant disclosures relating to these benefit plans for the first quarter of fiscal years 2026 and 2025 are as follows:

Pension Benefits

Three Months Ended

Nine Months Ended

September 27,

September 28,

September 27,

September 28,

April 4, 2026

March 29, 2025

Interest cost

2 unchanged sentences

( 1,059,936 )

( 3,240,957 )

( 3,297,103 )

Amortization of the net loss

2 unchanged sentences

Three Months Ended

Nine Months Ended

September 27,

September 28,

September 27,

September 28,

April 4, 2026

March 29, 2025

Interest cost

2 unchanged sentences

Amortization of the net loss

Net periodic (benefit) cost

Net periodic benefit gain

The Company’s funding policy with respect to its qualified plans is to contribute at least the minimum amount required by applicable laws and regulations.

In fiscal year 2026, the Company expects to make cash contributions to its qualified pension plans of approximately $ 2,800,000 and approximately $ 40,000 into its other postretirement plan.

As of September 27, 2025, the Company has contributed $ 2,200,000 to its pension plans and $ 17,000 to its postretirement plan in fiscal year 2025 and expects to make the remaining contributions as required during the remainder of the fiscal year.

The Company has a contributory savings plan under Section 401(k) of the Internal Revenue Code (the “401(k) Plan”) covering substantially all U.S.

As of April 4, 2026, the Company has contributed $ 578,000 to its pension plans and $ 7,000 to its postretirement plan in fiscal year 2026 and expects to make the remaining contributions as required during the remainder of the fiscal year.

The Company has a contributory savings plan under Section 401(k) of the IRC (the “401(k) Plan”) covering substantially all U.S.

non-union employees.

3 unchanged sentences

Three Months Ended

Nine Months Ended

September 27,

September 28,

September 27,

April 4, 2026

March 29, 2025

Regular matching contribution

3 unchanged sentences

Note N – Recent Accounting Pronouncements

In November 2023, the FASB issued ASU No.

2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures,” which amends the reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

This standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

The adoption of this new accounting guidance did not have a material effect on the Company’s disclosures within the consolidated financial statements.

The adoption of ASU 2023-07 expanded certain disclosures but did not have a material impact on our consolidated financial statements.

In December 2023, the FASB issued ASU No.

2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures,” which modifies the rules on income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation, (2) the income or loss from continuing operations before income tax expense or benefit disaggregated between domestic and foreign and (3) income tax expense or benefit from continuing operations disaggregated by federal, state, and foreign.

The update also requires entities to disclose their income tax payments to various jurisdictions.

This standard is effective for fiscal years beginning after December 15, 2024.

We do not expect this new standard to have a significant impact on our disclosures.

The Company has implemented all new accounting pronouncements that are in effect and that could impact its consolidated financial statements and does not believe that there are any other new accounting pronouncements that have been issued, but are not yet effective, that might have a material impact on the consolidated financial statements of the Company.

3 unchanged sentences

The Company has established credit limits for customers and monitors their balances to mitigate the risk of loss.

As of September 27, 2025, there was no significant concentration of credit risk with a customer that had receivables representing greater than 10 % of our net accounts receivable.

As of December 28, 2024, there was one customer representing 14 % of the Company’s net accounts receivable.

As of April 4, 2026, there were significant concentrations of credit risk with 2 customers that had receivables representing greater than 10 % of our net accounts receivable.

As of January 3, 2026, there was one customer representing 13 % of the Company’s net accounts receivable.

The maximum exposure to credit risk is primarily represented by the carrying amount of the Company’s accounts receivable.

3 unchanged sentences

Note P – Segment Information

The Company has one reportable segment, and the Chief Executive Officer is the Company’s chief operating decision maker (CODM).

The Company has one reportable segment, its Engineering Solutions Segment, and the Chief Executive Officer is the Company’s chief operating decision maker (CODM).

The CODM uses the following reported measures to assess performance and make decisions on resource allocation throughout the Company.

Engineered Solutions Segment

Three Months Ended

Nine Months Ended

September 27,

September 28,

September 27,

September 28,

$ 191,437,750

$ 206,068,490

April 4, 2026

March 29, 2025

Material cost

3 unchanged sentences

( 3,125,986 )

( 3,507,415 )

( 4,405,029 )

( 9,973,340 )

( 12,681,196 )

Other variable and fixed overhead¹

1 unchanged sentence

( 12,581,070 )

( 37,930,631 )

( 33,937,153 )

Product development expense

1 unchanged sentence

( 1,109,186 )

( 3,739,214 )

Selling and administrative expenses

1 unchanged sentence

( 9,847,121 )

( 32,181,886 )

( 31,014,022 )

Operating Profit

¹ Other variable and fixed overhead items included in segment operating profit include manufacturing salaries, indirect labor, insurance, lease expense, depreciation, and other overhead expenses

Note Q – Subsequent Event

In October 2025 the Company entered into a new credit agreement.

See Note H, Debt, for additional information.

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

What changed 10-Q

Item 1. Financial Statements