What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-04 compared with 2026-05-05 · 165 added, 94 removed, 215 unchanged (55% of the section changed)

3 unchanged sentences

The forward-looking statements include statements concerning, among other things, our business strategy (including the influence of anticipated trends and developments in our business and the markets in which we operate), financial and operating results, revenues, gross margins, liquidity, operating expenses, effective tax rate and deferred tax assets, products, projected costs and capital expenditure requirements, research and development programs, sales and marketing initiatives, competition and impact of accounting standards.

In some cases, you can identify these statements by forward-looking words, such as “may,” “likely,” “will,” “could,” “forecast,” “should,” “expect,” “estimate,” “plan,” “intend,” “anticipate,” “target,” “believe,” “continue,” the negative or plural of these words and other comparable terminology.

In some cases, you can identify these statements by forward-looking words, such as “may,” “likely,” “will,” “could,” “forecast,” “should,” “expect,” “estimate,” “plan,” “intend,” “anticipate,” “target,” “believe,” “potential,” “continue,” the negative or plural of these words and other comparable terminology.

The forward-looking statements are only predictions based on our current expectations and our projections about future events.

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We have no obligation to update any of these statements.

These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from those expressed or implied by these statements, including risks related to general market trends, the benefits of acquisitions and investments, our credit facilities, our supply chain, our tax burden, uncertainties related to public health-related crises, the interpretation and impacts of changes in export controls, tariffs and other trade barriers, military conflicts, political volatility, legislative changes and similar factors, our ability to execute our business strategy including any plans of expansion, and other risks discussed in the section titled “Risk Factors” and elsewhere in our Annual Report on Form 10-K for the year ended December 27, 2025 and in this Quarterly Report on Form 10-Q.

These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from those expressed or implied by these statements, including risks related to general market trends, the benefits of acquisitions and investments, including our capital expenditures, our restructuring plans, our credit facilities, our supply chain, our tax burden, uncertainties related to public health-related crises, the interpretation and impacts of changes in export controls, tariffs and other trade barriers, military conflicts, political volatility, legislative changes and similar factors, our ability to execute our business strategy including any plans of expansion, and other risks discussed in the section titled “Risk Factors” and elsewhere in our Annual Report on Form 10-K for the year ended December 27, 2025 and in this Quarterly Report on Form 10-Q.

You should carefully consider the numerous risks and uncertainties described under these sections.

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Sales of our probe cards and analytical probes are included in the Probe Cards segment, while sales of our probe stations, thermal systems and cryogenic systems are included in the Systems segment.

We generated net income of $20.4 million in the first three months of fiscal 2026, compared to $6.4 million in the first three months of fiscal 2025.

The increase in net income was primarily attributable to higher revenues, which reached record quarterly levels, and improved gross margins, partially offset by higher restructuring charges from plans adopted to better align our cost structure and support gross margin improvement to our target financial model.

We generated net income of $76.6 million in the first six months of fiscal 2026, compared to $15.5 million in the first six months of fiscal 2025.

The increase in net income was primarily attributable to higher revenues, including record quarterly revenue in both the first and second quarters of fiscal 2026, and improved gross margins.

These favorable factors were partially offset by higher restructuring charges associated with initiatives to better align our cost structure and support gross margin improvement.

Recent Developments

Tariff refunds — Beginning in 2025, the United States imposed additional tariffs on a wide range of imported products under various legal authorities, including the International Emergency Economic Powers Act (“IEEPA”).

These tariffs were subsequently modified through incremental increases, decreases, pauses, and limited exemptions.

On February 20, 2026, the U.S.

Supreme Court ruled that tariffs imposed under IEEPA were not authorized by the statute.

While the ruling did not establish a refund process, the U.S.

Court of International Trade subsequently ordered U.S.

and Border Protection (“CBP”) to implement a process to administer refunds, which CBP began executing with the April 20, 2026 deployment of the Consolidated Administration and Processing of Entries (“CAPE”) system for certain IEEPA refund claims.

We paid tariffs under IEEPA, and are following the established refund filing and validation process through the CAPE system, along with other importers seeking IEEPA refunds.

As of June 27, 2026, we received approximately $0.8 million in IEEPA refunds.

We anticipate refunds of approximately $7.0 million to $9.0 million in the third quarter of fiscal 2026.

2026 Restructuring Plans — In January 2026, we adopted restructuring plans that are intended to better align cost structure and support gross margin improvement to our target financial model, while also aligning manufacturing capabilities with current and anticipated business needs and our strategic priorities.

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Actual results in these areas could differ from management’s estimates.

During the three months ended March 28, 2026, there were no significant changes in our significant accounting policies or estimates from those reported in our Annual Report on Form 10-K for the year ended December 27, 2025.

During the six months ended June 27, 2026, there were no significant changes in our significant accounting policies or estimates from those reported in our Annual Report on Form 10-K for the year ended December 27, 2025.

Results of Operations

The following table sets forth our operating results as a percentage of revenues for the periods indicated:

Three Months Ended

2026 March 29,

Three Months Ended Six Months Ended

2026 June 28,

2025 June 27,

2026 June 28,

Revenues 100.0 % 100.0 % 100.0 % 100.0 %

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Interest income, net 1.0 1.3 1.0 1.6

Other income, net 0.2 0.5

Other income (expense), net 0.1 — 0.1 0.2

Income before income taxes and equity investment 23.5 7.6 16.5 6.0

Provision for income taxes 2.6 1.2 1.5 0.9

Income from equity investment 0.7 —

Income (loss) from equity investment 0.9 (1.8) 0.8 (0.9)

Net income 21.8 % 4.6 % 15.8 % 4.2 %

Revenues by Segment and Market

Three Months Ended

2026 March 29,

Three Months Ended Six Months Ended

2026 June 28,

2025 June 27,

2026 June 28,

(In thousands)

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Three Months Ended

2026 % of Revenues March 29,

2026 % of Revenues June 28,

2025 % of Revenues $ Change % Change

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Total revenues $ 258,242 100.0 % $ 195,798 100.0 % $ 62,444 31.9 %

Foundry & Logic — The increase in Foundry & Logic product revenues for the three months ended March 28, 2026, compared to the three months ended March 29, 2025, was driven by stronger probe-card demand for networking and high-performance compute microprocessor designs.

DRAM — The increase in DRAM product revenues for the three months ended March 28, 2026, compared to the three months ended March 29, 2025, was primarily driven by increased demand for high-bandwidth memory (“HBM”) designs utilized in generative artificial intelligence applications, with additional contributions from higher demand for other non-HBM DRAM designs.

Flash — The increase in Flash product revenues for the three months ended March 28, 2026, compared to the three months ended March 29, 2025, was driven by increased customer production activity and demand for our products.

Six Months Ended

2026 % of Revenues June 28,

2025 % of Revenues $ Change % Change

(Dollars in thousands)

Probe Cards Markets:

Foundry & Logic $ 233,027 48.1 % $ 184,785 50.3 % $ 48,242 26.1 %

DRAM 167,932 34.7 105,915 28.8 62,017 58.6

Flash 6,993 1.4 7,928 2.2 (935) (11.8)

Systems Market:

76,434 15.8 68,526 18.7 7,908 11.5

Total revenues $ 484,386 100.0 % $ 367,154 100.0 % $ 117,232 31.9 %

Foundry & Logic — The increase in Foundry & Logic product revenues for the three and six months ended June 27, 2026, compared to the three and six months ended June 28, 2025, was driven by stronger probe-card demand for networking and high-performance compute microprocessor designs.

DRAM — The increase in DRAM product revenues for the three and six months ended June 27, 2026, compared to the three and six months ended June 28, 2025, was primarily driven by increased demand for high-bandwidth memory (“HBM”) designs utilized in generative artificial intelligence applications, with additional contributions from higher demand for other non-HBM DRAM designs.

Revenue growth from HBM products accounted for approximately 75% and 69% of the year-over-year increase in DRAM product revenues for the three- and six-month periods, respectively.

Flash — The decrease in Flash product revenues for the three and six months ended June 27, 2026, compared to the three and six months ended June 28, 2025, was driven by decreased customer production activity and demand for our products.

A portion of Flash product revenues during the period was associated with manufacturing activity at our Baldwin Park manufacturing facility, which was closed in connection with our 2026 Restructuring Plans.

As a result of this closure, we expect Flash revenues to comprise a lower percentage of our portfolio going forward.

Systems — The decrease in Systems market revenues for the three months ended March 28, 2026, compared to the three months ended March 29, 2025, was driven by decreased sales of probe stations and cryogenic systems, partially offset by an increase in sales of thermal systems.

The decline in probe station sales primarily reflects reduced demand for legacy product offerings as we transition toward production of Triton, our high‑volume co‑packaged optics (“CPO”) testing platform.

As a result of the facility closure and the expected growth of our other end markets, we expect Flash revenues to represent a smaller percentage of our overall revenue mix in future periods.

Systems — The increase in Systems market revenues for the three months ended June 27, 2026, compared to the three months ended June 28, 2025, was primarily driven by sales of Triton, our recently introduced high-volume co-packaged optics (“CPO”) testing solution.

The increase in Systems market revenues for the six months ended June 27, 2026, compared to the six months ended June 28, 2025, was also primarily driven by sales of Triton, partially offset by lower revenue from legacy product offerings as manufacturing capacity and customer demand increasingly shifted toward the Triton platform.

Revenues by Geographic Region

Three Months Ended

2026 % of Revenues March 29,

2025 % of Revenues

Three Months Ended Six Months Ended

2026 % of Revenues June 28,

2025 % of Revenues June 27,

Revenue June 28,

(Dollars in thousands)

South Korea $ 80,562 35.6 % $ 43,171 25.2 %

Taiwan $ 94,421 36.6 % $ 52,879 27.0 % $ 165,261 34.1 % $ 98,241 26.8 %

South Korea 73,424 28.4 57,129 29.2 153,986 31.8 100,300 27.3

United States 38,218 14.8 40,924 20.9 67,628 14.0 81,249 22.1

China 16,891 6.5 9,400 4.8 28,253 5.8 23,015 6.3

Singapore 10,275 4.5 6,249 3.6

Japan 8,282 3.7 10,319 6.0

Europe 9,465 3.7 7,248 3.7 17,239 3.6 15,029 4.1

Malaysia 9,071 3.5 5,155 2.6 12,785 2.6 7,755 2.1

Singapore 6,737 2.6 6,679 3.4 17,012 3.5 12,928 3.5

Japan 4,805 1.9 14,666 7.5 13,087 2.7 24,985 6.8

Rest of the world 5,210 2.0 1,718 0.9 9,135 1.9 3,652 1.0

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Geographic revenue information is based on the location to which we ship the product.

For example, if a certain South Korean customer purchases through its U.S.

subsidiary and requests the products to be shipped to an address in South Korea, this sale will be reflected in the revenue for South Korea rather than the U.S.

Changes in revenues by geographic region for the three months ended March 28, 2026, compared to the three months ended March 29, 2025, were primarily attributable to changes in customer demand, product sales mix, and the timing of customer

shipments and revenue recognition.

For example, if a certain Taiwan customer purchases through its U.S.

subsidiary and requests the products to be shipped to an address in Taiwan, this sale will be reflected in the revenue for Taiwan rather than the U.S.

Changes in revenues by geographic region for the three and six months ended June 27, 2026, compared to the three and six months ended June 28, 2025, were primarily attributable to changes in customer demand, product sales mix, and the timing of customer shipments and revenue recognition.

Specifically, the changes in revenues by geographic region were attributable to the following:

• Taiwan — Increased demand for our Foundry & Logic probe card products and increased demand for Triton, our recently introduced high-volume CPO testing platform within Systems, contributed to the increase in revenues.

• South Korea — Increased demand for our DRAM probe card products, including those supporting HBM designs, contributed to the increase in revenues.

• Taiwan — Increased demand for our Foundry & Logic probe card products contributed to the increase in revenues.

• United States — Decreased demand for certain Foundry & Logic and Systems customers contributed to the decrease in revenue.

• Japan — Decreased demand for legacy Systems products.

Cost of Revenues and Gross Margins

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• Deploying our workforce and existing manufacturing footprint more effectively, which included the execution of our 2026 Restructuring Plans.

In first quarter of 2026, costs of revenues include $21.5 million of restructuring costs in connection with the 2026 Restructuring Plans.

During the three and six months ended June 27, 2026, cost of revenues included $4.3 million and $25.8 million of restructuring costs, respectively, in connection with the 2026 Restructuring Plans.

• Driving improvement in manufacturing yields in key process areas, innovating to reduce manufacturing spending, and reducing cycle times in key manufacturing operations.

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Three Months Ended

2026 March 29,

2026 June 28,

2025 $ Change % Change

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Gross margin 50.7 % 37.3 %

Six Months Ended

2026 June 28,

2025 $ Change % Change

Gross profit $ 217,716 $ 137,461 $ 80,255 58.4 %

Gross margin 44.9 % 37.4 %

Our gross profit and gross margin by segment were as follows (dollars in thousands):

Three Months Ended

March 28, 2026 March 29, 2025

June 27, 2026 June 28, 2025

Probe Cards Systems Corporate and Other Total Probe Cards Systems Corporate and Other Total

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Gross margin 54.4 % 48.5 % 50.7 % 38.3 % 39.4 % 37.3 %

Probe Cards — For the three months ended March 28, 2026, gross profit and gross margins increased compared to the three months ended March 29, 2025, primarily due to increased revenue from a favorable product mix, higher factory utilization, and increased volumes, which includes the impact of our gross margin initiatives described earlier, partially offset by increased costs for tariffs.

Systems — For the three months ended March 28, 2026, gross profit and gross margins decreased compared to the three months ended March 29, 2025, primarily as a result of lower factory utilization and decreased volumes.

Six Months Ended

June 27, 2026 June 28, 2025

Probe Cards Systems Corporate and Other Total Probe Cards Systems Corporate and Other Total

Gross profit $ 214,187 $ 34,165 $ (30,636) $ 217,716 $ 113,683 $ 28,786 $ (5,008) $ 137,461

Gross margin 52.5 % 44.7 % 44.9 % 38.1 % 42.0 % 37.4 %

Probe Cards — For the three and six months ended June 27, 2026, gross profit and gross margins increased compared to the three and six months ended June 28, 2025, primarily due to increased revenue from a favorable product mix and higher factory utilization, which includes the impact of our gross margin initiatives described earlier.

Systems — For the three and six months ended June 27, 2026, gross profit and gross margins increased compared to the three and six months ended June 28, 2025, primarily due to increased revenue from a favorable product mix on increased volumes, partially offset by an increase in manufacturing spending.

Corporate and Other — Corporate and Other includes unallocated expenses relating to restructuring charges, net, stock-based compensation expense, and amortization of intangible assets and fixed asset fair value adjustments due to acquisitions, which are not used in evaluating the results of, or in allocating resources to, our reportable segments.

For the three months ended March 28, 2026, corporate and other costs increased compared to the three months ended March 29, 2025, primarily due to the $21.5 million of restructuring charges incurred in connection with the 2026 Restructuring Plans.

The increase in Corporate and Other costs for the three and six months ended June 27, 2026, compared to the three and six months ended June 28, 2025, was primarily attributable to restructuring charges of $4.3 million and $25.8 million, respectively, incurred in connection with the 2026 Restructuring Plans.

Overall — Gross profit and gross margins fluctuate with revenue levels, product mix, selling prices, factory loading, and material costs.

For the three months ended March 28, 2026, compared to the three months ended March 29, 2025, gross profit and gross margins increased due to increased revenue from a favorable product mix, higher factory utilization, and increased

volumes, which includes the impact of our gross margin initiatives described earlier, partially offset by $21.5 million of restructuring charges incurred in connection with the 2026 Restructuring Plans and increased costs for tariffs which impacted gross margins by 1.4%.

For the three and six months ended June 27, 2026, compared to the three and six months ended June 28, 2025, gross profit and gross margins increased due to increased revenue from a favorable product mix and higher factory utilization, which includes the impact of our gross margin initiatives described earlier, partially offset by the restructuring charges incurred in connection with the 2026 Restructuring Plans.

Cost of revenues included stock-based compensation expense as follows (in thousands):

Three Months Ended

2026 March 29,

Three Months Ended Six Months Ended

2026 June 28,

2025 June 27,

2026 June 28,

Stock-based compensation $ 1,726 $ 1,690 $ 3,567 $ 3,695

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Three Months Ended

2026 March 29,

2026 June 28,

2025 $ Change % Change

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% of revenues 12.0 % 14.7 %

Research and development expenses in the three months ended March 28, 2026 increased compared to the corresponding period in the prior year primarily due to higher performance-based compensation and higher restructuring charges, partially offset by lower project material costs, lower general operational costs, and lower stock-based compensation.

In first quarter of 2026, research and development includes $1.4 million of restructuring costs incurred in connection with the 2026 Restructuring Plans.

Six Months Ended

2026 June 28,

2025 $ Change % Change

(Dollars in thousands)

Research and development $ 61,879 $ 56,593 $ 5,286 9.3 %

% of revenues 12.8 % 15.4 %

Research and development expenses increased for the three months ended June 27, 2026, compared to the corresponding period in the prior year, primarily due to higher performance-based compensation, partially offset by lower project material costs, lower stock-based compensation expense, and lower general operating costs.

For the six months ended June 27, 2026, research and development expenses increased compared to the corresponding prior-year period, primarily due to higher performance-based compensation and $1.3 million of restructuring charges incurred in connection with the 2026 Restructuring Plans.

These increases were partially offset by lower project material costs, lower general operating costs, and lower stock-based compensation expense.

A detail of the changes is as follows (in thousands):

Three Months Ended March 28, 2026 compared to Three Months Ended March 29, 2025

Three Months Ended June 27, 2026 compared to Three Months Ended June 28, 2025 Six Months Ended June 27, 2026 compared to Six Months Ended June 28, 2025

Employee compensation costs $ 3,953 7,133

Restructuring charges 1,252

Project material costs (809) (1,561)

General operational costs (458)

Stock-based compensation expense (570) (812)

General operational costs (213) $ (671)

Restructuring charges (55) 1,197

$ 2,306 $ 5,286

Research and development included stock-based compensation expense as follows (in thousands):

Three Months Ended

2026 March 29,

Three Months Ended Six Months Ended

2026 June 28,

2025 June 27,

2026 June 28,

Stock-based compensation expense

2 unchanged sentences

Three Months Ended

2026 March 29,

2026 June 28,

2025 $ Change % Change

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% of revenues 14.4 % 16.1 %

Selling, general and administrative expenses decreased for the three months ended March 28, 2026 compared to the corresponding period in the prior year primarily due to decreased restructuring charges and lower stock-based compensation expense, partially offset by employee compensation costs from higher performance-based compensation.

Six Months Ended

2026 June 28,

2025 $ Change % Change

(Dollars in thousands)

Selling, general and administrative $ 69,457 $ 64,936 $ 4,521 7.0 %

% of revenues 14.3 % 17.7 %

Selling, general and administrative expenses increased for the three months ended June 27, 2026, compared to the corresponding period in the prior year, primarily due to higher employee compensation costs resulting from increased performance-based compensation, higher commission expense driven by increased revenue levels, and higher general operating costs.

For the six months ended June 27, 2026, selling, general and administrative expenses increased compared to the corresponding prior-year period, primarily due to higher employee compensation costs resulting from increased performance-based compensation and higher commission expense driven by increased revenue levels, partially offset by lower restructuring charges and lower stock-based compensation expense.

A detail of the changes is as follows (in thousands):

Three Months Ended March 28, 2026 compared to Three Months Ended March 29, 2025

Three Months Ended June 27, 2026 compared to Three Months Ended June 28, 2025 Six Months Ended June 27, 2026 compared to Six Months Ended June 28, 2025

Employee compensation costs $ 4,702 $ 7,917

Restructuring charges (2,228)

Stock-based compensation expense (1,327)

General operating expenses (450)

Amortization of intangibles (191)

Commission expenses 616 435

General operating expenses 485 (155)

Stock-based compensation expense (199) (1,526)

Restructuring charges 79 (2,150)

$ 5,683 $ 4,521

Selling, general and administrative included stock-based compensation expense as follows (in thousands):

Three Months Ended

2026 March 29,

Three Months Ended Six Months Ended

2026 June 28,

2025 June 27,

2026 June 28,

Stock-based compensation expense $ 4,966 $ 5,165 $ 8,784 $ 10,310

Stock-based compensation expense was lower as of March 28, 2026, primarily due to the elimination of previously recognized equity compensation expense related to our former Chief Financial Officer.

Stock-based compensation expense was lower for the six months ended June 27, 2026, primarily due to the reversal of previously recognized equity compensation expense resulting from the departure of our former Chief Financial Officer in the first quarter of fiscal 2026.

Factory Start-Up Costs

Three Months Ended

2026 March 29,

2026 June 28,

2025 $ Change % Change

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% of revenues 1.9 % 0.2 %

Factory start-up costs are current year costs associated with our newly purchased manufacturing site in Farmers Branch, Texas.

Six Months Ended

2026 June 28,

2025 $ Change % Change

(Dollars in thousands)

Factory start-up costs $ 11,933 $ 357 $ 11,576 3,242.6 %

% of revenues 2.4 % 0.1 %

Factory start-up costs are costs associated with our newly purchased manufacturing site in Farmers Branch, Texas.

The start-up costs consist of consulting costs, employee compensation costs, utilities, taxes and licenses, facility maintenance, and other expenses being incurred while the site is being brought to its intended use.

These costs are expected to continue throughout the build-out, with production expected to begin at this site late in the fourth quarter of fiscal 2026.

These costs are expected to continue throughout the build-out, and will move to cost of revenues as the production ramps begin.

Production ramps are expected to begin at this site late in the fourth quarter of fiscal 2026.

Interest Income, Net

Three Months Ended

2026 March 29,

Three Months Ended Six Months Ended

2026 June 28,

2025 June 27,

2026 June 28,

(Dollars in thousands)

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Interest income is earned on our cash, cash equivalents, restricted cash, and marketable securities.

The decrease in interest income for the three months ended March 28, 2026, compared with the corresponding period in the prior year, was attributable to lower invested balances and lower yields.

Interest expense primarily includes interest on our term loan, interest rate swap derivative contracts, commitment fee on our revolving credit facility, term loan issuance costs amortization charges, and our revolving credit facility issuance costs

amortization charges.

The interest expense for the three months ended March 28, 2026 increased compared with the corresponding period in the prior year due to entering into the revolving credit facility in the third quarter of fiscal 2025.

Other Income, Net

Other income, net, primarily includes the effects of foreign currency and various other gains and losses.

Interest income increased for the three months ended June 27, 2026, compared to the corresponding period in the prior year, primarily due to higher average invested balances and interest income recognized on tariff refunds, partially offset by lower yields.

Interest income decreased for the six months ended June 27, 2026, compared to the corresponding period in the prior year, primarily due to lower yields on invested balances.

The interest expense for the three and six months ended June 27, 2026 increased compared with the corresponding period in the prior year due to our entry into the revolving credit facility in the third quarter of fiscal 2025.

Other Income (Expense), Net

Other income (expense), net, primarily includes the effects of foreign currency and various other gains and losses.

We partially mitigate our risks from currency movements by hedging certain balance sheet exposures, which minimizes the impacts during periods of foreign exchange volatility.

Provision for Income Taxes

Three Months Ended

2026 March 29,

Three Months Ended Six Months Ended

2026 June 28,

2025 June 27,

2026 June 28,

(In thousands, except percentages)

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Provision for income taxes reflects the tax provision on our operations in foreign and U.S.

jurisdictions, offset by tax benefits from tax credits and the foreign-derived intangible income deduction.

jurisdictions, offset by tax benefits from tax credits and the foreign-derived deduction eligible income (“FDDEI”) deduction.

Our effective tax rate may vary from period to period based on changes in estimated taxable income or loss by jurisdiction, changes to the valuation allowance, changes to U.S.

federal, state or foreign tax laws, changes in the benefit or expense related to stock-based compensation expense, future expansion into areas with varying country, state, and local income tax rates, and deductibility of certain costs and expenses by jurisdiction.

The decrease in our effective tax rate for the three months ended March 28, 2026 compared to the corresponding period in the prior year was primarily driven by increased stock-based compensation discrete benefits that arose due to the increase in stock price between the grant date and the vesting date of the awards.

The decrease in our effective tax rate for the three and six months ended June 27, 2026 compared to the corresponding period in the prior year was primarily driven by increased tax benefits associated with higher U.S.

taxable income, including a larger FDDEI deduction, together with increased discrete tax benefits from stock-based compensation.

Liquidity and Capital Resources

Capital Resources

Our working capital increased to $468.7 million at March 28, 2026, compared to $433.2 million at December 27, 2025.

Our working capital increased to $505.3 million at June 27, 2026, compared to $433.2 million at December 27, 2025.

Cash and cash equivalents primarily consist of deposits held at banks and money market funds.

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Our investment policy requires investments to be rated single A or better, and limits the types of acceptable investments, issuer concentration and duration of the investment.

Our cash, cash equivalents and marketable securities totaled approximately $303.3 million at March 28, 2026, compared to $275.2 million at December 27, 2025.

We have the full amount available under our $150 million revolving credit facility as of March 28, 2026.

Our cash, cash equivalents and marketable securities totaled approximately $345.6 million at June 27, 2026, compared to $275.2 million at December 27, 2025.

We have the full amount available under our $150 million revolving credit facility as of June 27, 2026.

Based on our historical results of operations, we expect that our cash, cash equivalents, and marketable securities on hand, the cash we expect to generate from operations, and the available capacity under our revolving credit facility, will be sufficient to fund our short-term and long-term liquidity requirements primarily arising from:

research and development, capital expenditures, working capital, outstanding commitments, and other liquidity requirements associated with existing operations.

research and development, capital expenditures, including the Farmers Branch expansion, working capital, outstanding commitments, and other liquidity requirements associated with existing operations.

However, we cannot be certain that our cash, cash equivalents, and marketable securities on hand, and cash generated from operations, will be available in the future to fund all of our capital and operating requirements.

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The following table sets forth our net cash flows from operating, investing and financing activities:

Three Months Ended

2026 March 29,

Six Months Ended

2026 June 28,

(In thousands)

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Net cash provided by operating activities consists of net income for the period, adjusted for certain non-cash items and changes in certain operating assets and liabilities.

Net cash provided by operating activities for the three months ended March 28, 2026 was attributable to net income of $20.4 million and net non-cash expenses of $37.0 million, partially offset by the increase in net working capital of $12.4 million.

The cash used in net working capital was primarily driven by increased inventories of $7.4 million, increased accounts receivable, net, of $7.0 million, increased prepaid and other current assets of $5.7 million, and decreased accrued liabilities of $5.3 million, partially offset by increased accounts payable of $7.5 million and increased deferred revenue of $6.0 million.

The non-cash expenses mainly consisted of non-cash restructuring, depreciation, amortization, stock-based compensation, and the provision for excess and obsolete inventories.

Net cash provided by operating activities for the six months ended June 27, 2026 was attributable to net income of $76.6 million and net non-cash expenses of $56.1 million, partially offset by the increase in net working capital of $25.9 million.

The cash used in net working capital was primarily driven by increased accounts receivable, net, of $30.7 million and increased inventories of $19.6 million, partially offset by increased accounts payable of $14.5 million, increased accrued liabilities of $5.2 million, and increased deferred revenue of $3.4 million.

The non-cash expenses mainly consisted of depreciation and amortization, stock-based compensation, non-cash restructuring, and the provision for excess and obsolete inventories.

Investing Activities

Net cash used in investing activities for the three months ended March 28, 2026 primarily related to $15.2 million of property, plant and equipment purchases and $8.3 million in net purchases of marketable securities.

Net cash used in investing activities for the six months ended June 27, 2026 primarily related to $64.5 million in net purchases of marketable securities and $24.8 million of property, plant and equipment purchases.

Financing Activities

Net cash used in financing activities for the three months ended March 28, 2026 primarily related to $6.8 million used to pay tax withholdings for net share settlements of employee stock awards, partially offset by $5.8 million received from issuances of common stock under our employee stock purchase plan.

Net cash used in financing activities for the six months ended June 27, 2026 primarily related to $16.0 million used to pay tax withholdings for net share settlements of employee stock awards, partially offset by $5.8 million received from issuances of common stock under our employee stock purchase plan.

Revolving Credit Agreement

2 unchanged sentences

The Facility may be used for working capital and other general corporate purposes, subject to the terms and conditions set forth in the Credit Agreement.

No amounts were outstanding under the Facility as of March 28, 2026.

No amounts were outstanding under the Facility as of June 27, 2026.

Borrowings under the Facility will bear interest at a fluctuating rate per annum equal to, at our option, (i) the forward-looking secured overnight financing rate (“SOFR”) term, (ii) a base rate set forth in the Credit Agreement, or (iii) a combination thereof, plus, in each case, an applicable margin calculated based on our leverage ratio.

1 unchanged sentence

The Facility also bears a quarterly commitment fee ranging from 0.15% to 0.25% on the daily amount by which the commitments under the Facility exceed the outstanding amount.

The commitment fee as of March 28, 2026 was 0.15%.

The commitment fee as of June 27, 2026 was 0.15%.

The Credit Agreement contains customary representations and warranties, and affirmative and negative covenants and events of default, including limitations on subsidiary indebtedness and liens, and the requirement to maintain specified financial ratios including the requirement to maintain a consolidated total net leverage ratio not exceeding 3.50 to 1.00 as of the last day of each fiscal quarter with an increase to 4.00 to 1.00 for four quarters following a permitted acquisition.

We were in compliance with the Facility's covenants as of March 28, 2026.

We were in compliance with the Facility's covenants as of June 27, 2026.

Building Term Loan and Interest Rate Swap

4 unchanged sentences

Interest payments are payable in monthly installments over a fifteen-year period.

The interest rate at March 28, 2026, before consideration of interest rate swap discussed in the next paragraph, was 5.53%.

As of March 28, 2026, the balance outstanding pursuant to the Building Term Loan was $12.0 million.

The interest rate at June 27, 2026, before consideration of interest rate swap discussed in the next paragraph, was 5.48%.

As of June 27, 2026, the balance outstanding pursuant to the Building Term Loan was $11.7 million.

On March 17, 2020, we entered into an interest rate swap agreement to hedge the interest payment on the Building Term Loan for the notional amount of $18.0 million, and an amortization period that matches the debt.

2 unchanged sentences

After the amendment, the interest rate swap continues to convert our floating-rate interest into a fixed-rate at 2.75%.

As of March 28, 2026, the notional amount of the loan that is subject to this interest rate swap is $12.0 million.

As of June 27, 2026, the notional amount of the loan that is subject to this interest rate swap is $11.7 million.

Stock Repurchase Programs

5 unchanged sentences

During fiscal 2025, we repurchased and retired 135,000 shares of common stock for $4.1 million.

During the three months ended March 28, 2026, we did not repurchase and retire shares of common stock under this plan, and as of March 28, 2026, $70.9 million remained available for future repurchases.

During the six months ended June 27, 2026, we did not repurchase shares of common stock under this program as we prioritized capital investments associated with the ramp of our Farmers Branch manufacturing facility.

As of June 27, 2026, $70.9 million remained available for future repurchases.

Contractual Obligations and Commitments

The following table summarizes our significant contractual commitments to make future payments in cash under contractual obligations as of March 28, 2026:

The following table summarizes our significant contractual commitments to make future payments in cash under contractual obligations as of June 27, 2026:

Payments Due In Fiscal Year

11 unchanged sentences

The table above excludes our gross liability for unrecognized tax benefits and our deferred grant.

The gross liability for unrecognized tax benefits was $55.5 million as of March 28, 2026.

The gross liability for unrecognized tax benefits was $55.5 million as of June 27, 2026.

The timing of any payments which could result from these unrecognized tax benefits will depend upon a number of factors and, accordingly, the timing of payment cannot be estimated.

The deferred grant was $18.0 million as of March 28, 2026, and consists of cash received from a California Competes Grant awarded from the California Governor's Office of Business and Economic Development.

The deferred grant was $18.0 million as of June 27, 2026, and consists of cash received from a California Competes Grant awarded from the California Governor's Office of Business and Economic Development.

The timing of any potential repayments is dependent upon a number of factors, including the number of employees and capital investments within California over the 5-year term.

2 unchanged sentences

Historically, we have not participated in transactions that have generated relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

As of March 28, 2026, we were not involved in any such off-balance sheet arrangements.

As of June 27, 2026, we were not involved in any such off-balance sheet arrangements.

Recent Accounting Standards

1 unchanged sentence

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