What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-05 compared with 2025-11-03 · 95 added, 150 removed, 197 unchanged (55% of the section changed)

31 unchanged sentences

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated unaudited financial statements and related notes included elsewhere in this report.

We are a leader in the design, engineering, and manufacturing of critical fluid delivery subsystems and components for semiconductor capital equipment.

Our product offerings include gas and chemical delivery systems and subsystems, collectively known as fluid delivery systems and subsystems, which are key elements of the process tools used in the manufacturing of semiconductor devices.

We are a leader in the design, engineering and manufacturing of critical fluid delivery subsystems and components primarily for semiconductor capital equipment, as well as other industries such as defense/aerospace and medical.

Our primary product offerings include gas and chemical delivery subsystems, collectively known as fluid delivery subsystems, which are key elements of the process tools used in the manufacturing of semiconductor devices.

Our gas delivery subsystems deliver, monitor and control precise quantities of the specialized gases used in semiconductor manufacturing processes such as etch and deposition.

Our chemical delivery systems and subsystems precisely blend and dispense the reactive liquid chemistries used in semiconductor manufacturing processes such as chemical-mechanical planarization, electroplating, and cleaning.

We also provide precision-machined components, weldments, electron beam (“e‑beam”) and laser-welded components, precision vacuum and hydrogen brazing and surface treatment technologies, and other proprietary products for the commercial space, aerospace, defense, medical device, and general-industrial industries.

This vertically integrated portion of our business is primarily focused on metal and plastic parts that are used in gas and chemical systems, respectively.

Our chemical delivery subsystems precisely blend and dispense the reactive liquid chemistries used in semiconductor manufacturing processes such as chemical-mechanical planarization, electroplating, and cleaning.

We also provide precision-machined components, weldments, e-beam and laser welded components, precision vacuum and hydrogen brazing, surface treatment technologies, and other proprietary products.

Fluid delivery subsystems ensure accurate measurement and uniform delivery of specialty gases and chemicals at critical steps in the semiconductor manufacturing processes.

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Additionally, many OEMs are outsourcing the design, engineering, and manufacturing of their chemical delivery subsystems due to the increased fluid expertise required to manufacture these subsystems.

Outsourcing these subsystems allows OEMs to leverage suppliers’ highly specialized engineering, design, and production skills while focusing their internal resources on their own value-added processes.

Outsourcing these subsystems allows OEMs to leverage their suppliers’ highly specialized engineering, design, and production skills while focusing their internal resources on their own value-added processes.

Outsourcing enables OEMs to reduce their costs and development time, as well as provide growth opportunities for specialized subsystems suppliers like us.

We have a global footprint with production facilities in California, Minnesota, Oregon, Texas, Singapore, Malaysia, Mexico, and Korea.

We have a global footprint with production facilities in California, Minnesota, Oregon, Texas, Singapore, Malaysia, and Mexico.

The following table summarizes key financial information for the periods indicated.

1 unchanged sentence

For a description of our non-GAAP metrics and reconciliations to the most comparable GAAP metrics, please refer below to the section entitled Non-GAAP Financial Results within this report.

Three Months Ended Nine Months Ended

September 26,

2025 September 27,

2024 September 26,

2025 September 27,

Three Months Ended

2026 March 28,

(dollars in thousands, except per share amounts)

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The semiconductor capital equipment industry is inherently cyclical.

Overall semiconductor equipment spending in 2025 is anticipated to grow over 2024 levels, particularly in our primary markets of etch and deposition, where current demand remains healthy among our customers.

However, the global trade environment and the outcome of ongoing negotiations between the United States and other countries with respect to tariffs remains uncertain and could materially affect our costs for materials, prices for our products, and demand.

To date, although we have experienced modest increases in costs for certain of our materials, tariffs have not materially impacted demand for our products or costs for materials.

Currently, semiconductors are excluded from the "reciprocal tariffs" and our tariff exemption under the U.S.-Mexico-Canada Agreement remains applicable to imports from our operations in Mexico.

However, we cannot provide any assurance that these exclusions and exemptions will remain in place indefinitely, or that any new or expanded tariffs will not have a material adverse impact on our business in the future.

Additionally, recent and potential future expansions of U.S.

export controls and similar regulations aimed at restricting China's access to advanced semiconductor technology create market uncertainty and could adversely impact our sales.

These controls, which require specific export licenses, could reduce demand for our equipment, disrupt our supply chain, and negatively affect our financial results.

While challenging macroeconomic conditions may persist in the near and intermediate term, we remain confident in our belief that the long-term demand for semiconductors, semiconductor capital equipment, and our products will continue to grow, driven by an increasing need for expanded semiconductor productive capacity and advanced manufacturing process technologies.

Overall semiconductor equipment spending in 2025 increased compared to 2024 levels, and this momentum has continued into the first quarter of 2026, characterized by robust demand in our primary markets of etch and deposition.

During the three months ended March 27, 2026, our net sales increased to $256.1 million, compared to $244.5 million for the same period in the prior year.

This increase reflects sustained demand from our primary customers and served markets.

To better align our global operations with evolving customer demand and drive operational efficiencies, we initiated a geographic footprint rationalization and restructuring plan in 2025.

As part of this realignment, in 2025 we began transitioning certain manufacturing activities and relocating machining assets to our expanded high-volume facilities, which continued into the first quarter of 2026.

While we continue to benefit from the broader growth in the semiconductor equipment industry, our operations and financial results remain subject to significant risks and uncertainties within the global trade and regulatory landscape.

Specifically, the global trade environment remains complex and volatile.

The outcome of ongoing international trade negotiations and the imposition of new global tariffs create uncertainty that could materially affect our material costs, product pricing, and overall demand.

In addition, the U.S.

government continues to expand and refine export controls and licensing requirements aimed at restricting access to advanced semiconductor technology, particularly in China, which may reduce demand for certain equipment, disrupt our customers’ manufacturing plans, and adversely affect our global supply chain.

While macroeconomic, geopolitical, and regulatory challenges may persist in the near and intermediate term, we remain confident in our belief that long‑term demand for semiconductors, semiconductor capital equipment, and our products will continue to grow, driven by increasing requirements for expanded semiconductor manufacturing capacity and advanced process technologies.

Results of Operations

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The period‑to‑period comparison of results is not necessarily indicative of results for future periods.

Three Months Ended Nine Months Ended

September 26,

2025 September 27,

2024 September 26,

2025 September 27,

Three Months Ended

2026 March 28,

(in thousands)

7 unchanged sentences

Total operating expenses 30,173 29,694

Operating loss (19,425) (385) (25,437) (6,388)

Operating income (loss) 2,085 (1,172)

Interest expense, net 1,678 1,646

Other expense, net 323 81

Loss before income taxes (22,170) (2,610) (31,737) (14,856)

Income (loss) before income taxes 84 (2,899)

Income tax expense 2,553 1,660

1 unchanged sentence

The following table sets forth our unaudited results of operations as a percentage of our total sales for the periods presented.

Three Months Ended Nine Months Ended

September 26,

2025 September 27,

2024 September 26,

2025 September 27,

Three Months Ended

2026 March 28,

Net sales 100.0 100.0

6 unchanged sentences

Total operating expenses 11.8 12.1

Operating loss (8.1) (0.2) (3.5) (1.0)

Operating income (loss) 0.8 (0.5)

Interest expense, net 0.7 0.7

Other expense, net 0.1 0.0

Loss before income taxes (9.3) (1.2) (4.4) (2.4)

Income (loss) before income taxes 0.0 (1.2)

Income tax expense 1.0 0.7

Net loss (1.0) (1.9)

Comparison of the Three and Nine Months Ended September 26, 2025 and September 27, 2024

Three Months Ended Change Nine Months Ended Change

September 26,

2025 September 27,

2024 Amount % September 26,

2025 September 27,

Comparison of the Three Months Ended March 27, 2026 and March 28, 2025

Three Months Ended Change

2026 March 28,

2025 Amount %

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Net sales $ 256,068 $ 244,465 $ 11,603 4.7 %

The increase in net sales from the three and nine months ended September 27, 2024 to the three and nine months ended September 26, 2025 was primarily due to increased customer demand as a result of a stronger semiconductor capital equipment spending environment.

Three Months Ended Change Nine Months Ended Change

September 26,

2025 September 27,

2024 Amount % September 26,

2025 September 27,

The increase in net sales from the first quarter of 2025 to the first quarter of 2026 was primarily due to increased customer demand stemming from increased levels of spending within the semiconductor capital equipment industry in support of expanded semiconductor manufacturing capacity and advanced process technologies.

Three Months Ended Change

2026 March 28,

2025 Amount %

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Gross profit $ 32,258 $ 28,522 $ 3,736 13.1 %

Gross margin 4.6 % 13.2 % -860 bps 9.2 % 12.4 % -320 bps

The decrease in gross margin from the third quarter of 2024 to the third quarter of 2025 was primarily due to increased inventory write-off costs of $16.7 million associated with our ongoing Consolidation Restructuring Plan, partially offset by higher volume.

The decrease in gross margin from the nine months ended September 27, 2024 to the nine months ended September 26, 2025 was primarily due to inventory write-off costs of $18.3 million associated with our Consolidation Restructuring Plan and the planned exit from our Scotland operations, and additional employee expenses, partially offset by higher volume.

Gross margin 12.6 % 11.7 % +90 bps

The increase in gross margin from the first quarter of 2025 to the first quarter of 2026 was primarily due to severance charges of $1.1 million in the first quarter of 2025 that did not repeat in the first quarter of 2026 and increased factory utilization.

Research and development

Three Months Ended Change Nine Months Ended Change

September 26,

2025 September 27,

2024 Amount % September 26,

2025 September 27,

Three Months Ended Change

2026 March 28,

2025 Amount %

1 unchanged sentence

Research and development $ 5,530 $ 5,874 $ (344) (5.9) %

The increase in research and development expenses from the three and nine months ended September 27, 2024 to the three and nine months ended September 26, 2025, respectively, was primarily due to fluctuations in material and service costs from our new product development programs and in employee-related expenses, inclusive of share-based compensation expense, and professional legal expenses.

The decrease in research and development expenses from the first quarter of 2025 to the first quarter of 2026 was primarily due to a decrease in employee-related expenses, partially offset by an increase in material and service costs from our new product development programs.

Selling, general, and administrative

Three Months Ended Change Nine Months Ended Change

September 26,

2025 September 27,

2024 Amount % September 26,

2025 September 27,

Three Months Ended Change

2026 March 28,

2025 Amount %

1 unchanged sentence

Selling, general, and administrative $ 22,565 $ 21,742 $ 823 3.8 %

The increase in selling, general, and administrative expenses from the third quarter of 2024 to the third quarter of 2025 was primarily due to restructuring costs associated with the Consolidation Restructuring Plan of $0.9 million, increased employee salary cost of $0.7 million, increased legal and professional consulting costs of $0.4 million, increased employee health insurance claims of $0.2 million, and increased severance costs of $0.2 million, partially offset by reduced stock based compensation of $0.2 million.

The increase in selling, general, and administrative expenses from the nine months ended September 27, 2024 to the nine months ended September 26, 2025 was primarily due to increased exit disposal costs of $2.1 million associated with the planned exit from our Scotland operations, increased employee salary cost of $1.9 million, increased share based compensation expense of $1.8 million, increased employee health insurance claims of $1.6 million, restructuring costs associated with the Consolidation Restructuring Plan of $0.9 million, increased costs associated with software and IT services of $0.9 million, increased outside service provider costs of $0.7 million, and increased severance costs of $0.6 million, partially offset by reduced transaction-related costs associated with our acquisitions pipeline of $0.8 million.

The increase in selling, general, and administrative expenses from the first quarter of 2025 to the first quarter of 2026 was primarily due to increased employee-related expenses of $1.3 million and incremental restructuring and facility exit costs of $0.7 million, partially offset by decreased facility costs of $0.5 million, decreased severance costs of $0.4 million, and decreased outside service provider costs of $0.3 million.

Amortization of intangible assets

Three Months Ended Change Nine Months Ended Change

September 26,

2025 September 27,

2024 Amount % September 26,

2025 September 27,

Three Months Ended Change

2026 March 28,

2025 Amount %

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Amortization of intangible assets $ 2,078 $ 2,078 $ — — %

Amortization expense remained substantially unchanged from the three and nine months ended September 27, 2024 to the three and nine months ended September 26, 2025.

Amortization expense remained substantially unchanged from the first quarter of 2025 to the first quarter of 2026.

Interest expense, net

Three Months Ended Change Nine Months Ended Change

September 26,

2025 September 27,

2024 Amount % September 26,

2025 September 27,

Three Months Ended Change

2026 March 28,

2025 Amount %

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Weighted average borrowings outstanding $ 123,506 $ 127,562 $ (4,056) (3.2) %

Weighted average borrowing rate 6.08 % 7.23 % -115 bps 6.13 % 7.43 % -130 bps

Interest expense, net, remained substantially unchanged from the three months ended September 27, 2024 to the three months ended September 26, 2025 due to a decrease in our weighted average borrowings outstanding and a decrease in our weighted average borrowing rate, offset by lower interest income.

The decrease in interest expense, net from the nine months ended September 27, 2024 to the nine months ended September 26, 2025 was primarily due to a decrease in our weighted average borrowings outstanding and a decrease in our weighted average borrowing rate, partially offset by lower interest income.

The reduction in our weighted average borrowings outstanding was primarily due to paying off our revolving credit facility near the end of the first quarter of 2024.

The decrease in our weighted average borrowing rate was due to lower applicable margin as a result of a lower leverage ratio (-25 and -40 bps for the third quarter of 2025 and 2024, respectively) and lower Secured Overnight Financing Rate ("SOFR") rates, the variable portion of our borrowing rate (-90 bps for both the nine months ended September 26, 2025 and September 27, 2024).

Weighted average borrowing rate 5.95 % 6.24 % -29 bps

Interest expense, net, remained substantially unchanged from the first quarter of 2025 to the first quarter of 2026 due to a decrease in our weighted average borrowings outstanding and a decrease in our weighted average borrowing rate, offset by lower interest income.

The reduction in our weighted average borrowings outstanding is due to the payment of our scheduled principal payments.

The decrease in our weighted average borrowing rate was due to lower Secured Overnight Financing Rate ("SOFR") rates, the variable component of our borrowing rate (-74 bps), partially offset by higher applicable margin, the fixed component of our borrowing rate, under our third quarter 2025 credit agreement (+45 bps).

Other expense, net

Three Months Ended Change Nine Months Ended Change

September 26,

2025 September 27,

2024 Amount % September 26,

2025 September 27,

Three Months Ended Change

2026 March 28,

2025 Amount %

1 unchanged sentence

Other expense, net $ 323 $ 81 $ 242 298.8 %

The change in other expense, net from the three and nine months ended September 27, 2024 to the three and nine months ended September 26, 2025 was primarily due to $0.7 million in costs associated with executing an amended and restated credit agreement during the third quarter, offset by currency exchange rate fluctuations related to our local currency payables and cash holdings of our foreign operations.

The change in other expense, net from the first quarter of 2025 to the first quarter of 2026 was primarily due to currency exchange rate fluctuations during the quarter related to our local currency payables of our foreign operations.

Income tax expense

Three Months Ended Change Nine Months Ended Change

September 26,

2025 September 27,

2024 Amount % September 26,

2025 September 27,

Three Months Ended Change

2026 March 28,

2025 Amount %

1 unchanged sentence

Income tax expense $ 2,553 $ 1,660 $ 893 53.8 %

Loss before income taxes $ (22,170) $ (2,610) $ (19,560) 749.4 % $ (31,737) $ (14,856) $ (16,881) 113.6 %

Effective income tax rate -3.1 % -6.4 % +330 bps -16.0 % -13.6 % -240 bps

The increase in income tax expense from the three and nine months ended September 27, 2024 to the three and nine months ended September 26, 2025 was primarily due to additional tax expense provisioned in Singapore in connection with Pillar Two minimum tax rules and increased withholding taxes.

Income (loss) before income taxes $ 84 $ (2,899) $ 2,983 (102.9) %

Effective income tax rate 3039.3% -57.3% +309,660 bps

The increase in income tax expense from the first quarter of 2025 to the first quarter of 2026 was primarily due to taxes on foreign income that differs from the U.S.

tax rate, the ending of the Singapore tax holiday at the end of Q1 2026, and the impact of a valuation allowance against U.S.

deferred tax assets, respectively.

Non‑GAAP Financial Results

5 unchanged sentences

and (2) with respect to non-GAAP net income (loss), the tax impacts associated with these non-GAAP adjustments, as well as non-recurring discrete tax items, including deferred tax asset valuation allowance charges.

All non-GAAP adjustments are presented on a gross basis;

the related income tax effects, including current and deferred income tax expense, are included in the adjustment line under the heading "Tax adjustments related to non-GAAP adjustments".

1 unchanged sentence

Non-GAAP gross margin and non-GAAP operating margin are defined as non-GAAP gross profit and non-GAAP operating income, respectively, divided by net sales.

Non-GAAP results have limitations as analytical tools, and you should not consider them in isolation or as substitutes for our results reported under GAAP.

Other companies may calculate non-GAAP results differently or may use other measures to evaluate their performance, both of which could reduce the usefulness of our non-GAAP results as tools for comparison.

Non-GAAP results have limitations as an analytical tool, and you should not consider them in isolation or as a substitute for our results reported under GAAP.

Because of these limitations, you should consider non-GAAP results alongside other financial performance measures and results presented in accordance with GAAP.

In addition, in evaluating non-GAAP results, you should be aware that in the future we will incur expenses such as those that are the subject of adjustments in deriving non-GAAP results and you should not infer from our presentation of non-GAAP results that our future results will not be affected by these expenses or other discrete or infrequent charges and gains that are outside of normal business operations.

The following table presents our unaudited non‑GAAP gross profit and non-GAAP gross margin and a reconciliation from GAAP gross profit and GAAP gross margin, the most comparable GAAP measures, for the periods indicated:

Three Months Ended Nine Months Ended

September 26,

2025 September 27,

2024 September 26,

2025 September 27,

The following table presents our unaudited non‑GAAP gross profit and non-GAAP gross margin and a reconciliation from GAAP gross profit, the most comparable GAAP measures, for the periods indicated:

Three Months Ended

2026 March 28,

(dollars in thousands)

1 unchanged sentence

Non-GAAP adjustments:

Restructuring plan costs (1) 16,713 — 16,713 —

Share-based compensation 545 707

4 unchanged sentences

Non-GAAP gross margin 12.8 % 12.4 %

(1) Represents the costs associated with our Consolidation Restructuring Plan which was initiated and approved by the Board of Directors during the third quarter of 2025.

Included in this amount for the three and nine months ended September 26, 2025 is the impairment of inventories of $16.7 million.

(1) Represents costs associated with the exit from our Scotland and Korea operations.

Included in this amount for the three and nine months ended September 26, 2025 are inventory write-off charges of $1.6 million and severance costs associated with affected employees of $0.6 million.

Included in this amount for the first quarter of 2025 is severance costs associated with affected employees of $0.3 million.

(2) Represents severance costs associated with our global reduction-in-force programs (other than severance costs associated with the exit from our Scotland and Korea operations, as described above).

The following table presents our unaudited non‑GAAP operating income and non-GAAP operating margin and a reconciliation from GAAP operating loss and GAAP operating margin, the most comparable GAAP measures, for the periods indicated:

Three Months Ended Nine Months Ended

September 26,

2025 September 27,

2024 September 26,

2025 September 27,

The following table presents our unaudited non‑GAAP operating income and non-GAAP operating margin and a reconciliation from GAAP operating income (loss), the most comparable GAAP measures, for the periods indicated:

Three Months Ended

2026 March 28,

(dollars in thousands, except per share amounts)

GAAP operating loss $ (19,425) $ (385) $ (25,437) $ (6,388)

GAAP operating income (loss) $ 2,085 $ (1,172)

Non-GAAP adjustments:

3 unchanged sentences

Facility shutdown costs (2)

618 — 5,506 —

Other (3) — 954

Transaction-related costs (4) — — — 785

Non-GAAP operating income $ 8,659 $ 6,575

1 unchanged sentence

Non-GAAP operating margin 3.4 % 2.7 %

(1) Represents the costs associated with our Consolidation Restructuring Plan which was initiated and approved by the Board of Directors during the third quarter of 2025.

Included in this amount for the three and nine months ended September 26, 2025 are costs associated with impairment of inventories of $16.7 million, the write-off costs of construction in progress associated with North American facilities of $0.5 million, and the impairment of certain leases in North America of $0.4 million.

(1) Represents the costs associated with our Consolidation Restructuring Plan.

Included in this amount for the first quarter of 2026 are:

other direct and incremental restructuring related costs of $0.4 million and fixed asset charges of $0.1 million.

(2) Represents costs associated with the exit from our Scotland and Korea operations.

Included in this amount for the three and nine months ended September 26, 2025 are inventory write-off charges of $1.6 million, an impairment of the facility lease right-of-use asset of $1.3 million, severance costs associated with affected employees of $0.7 million, other direct and incremental facility exit-related costs of $0.7 million, and accelerated depreciation charges of $0.6 million.

Included in this amount for the first quarter of 2026 and for the first quarter of 2025 are other direct and incremental facility exit-related costs of $0.1 million and severance costs associated with affected employees of $0.6 million, respectively.

(3) Represents severance costs associated with our global reduction-in-force programs (other than severance costs associated with the exit from our Scotland and Korea operations, as described above).

(4) Represents transaction-related costs incurred in connection with our acquisitions pipeline.

The following table presents our unaudited non‑GAAP net income and non-GAAP diluted EPS and a reconciliation from GAAP net loss and GAAP diluted EPS, the most comparable GAAP measures, for the periods indicated.

The following table presents our unaudited non‑GAAP net income and non-GAAP diluted EPS and a reconciliation from net loss, the most comparable GAAP measure, for the periods indicated.

All non-GAAP adjustments are presented on a gross basis;

the related income tax effects, including current and deferred income tax expense, are included in the adjustment line under the heading "Tax adjustments related to non-GAAP adjustments."

Three Months Ended Nine Months Ended

September 26,

2025 September 27,

2024 September 26,

2025 September 27,

Three Months Ended

2026 March 28,

(dollars in thousands, except per share amounts)

1 unchanged sentence

Non-GAAP adjustments:

Restructuring plan costs (1) 17,586 — 17,586 —

Share-based compensation 3,833 4,123

Amortization of intangible assets 2,078 2,078

Restructuring plan costs (1) 549 —

Facility shutdown costs (2)

618 — 5,506 —

Other (3) — 954

Transaction-related costs (4) — — — 785

Loss on extinguishment of debt (5) 667 — 667 —

Tax adjustments related to non-GAAP adjustments (4) 1,182 711

Tax expense (benefit) from valuation allowance (7) (254) — 83 —

Tax expense from valuation allowance (5) — 337

Non-GAAP net income

3 unchanged sentences

Shares used to compute non-GAAP diluted EPS 35,297,664 34,206,989

(1) Represents the costs associated with our Consolidation Restructuring Plan which was initiated and approved by the Board of Directors during the third quarter of 2025.

Included in this amount for the three and nine months ended September 26, 2025 are costs associated with the write-off costs of inventories determined to be impaired of $16.7 million, the write-off costs of construction in progress associated with North American facilities of $0.5 million, and the impairment of certain leases in North America of $0.4 million.

(1) Represents the costs associated with our Consolidation Restructuring Plan.

Included in this amount for the first quarter of 2026 are other direct and incremental restructuring related costs of $0.4 million and fixed asset charges of $0.1 million.

(2) Represents costs associated with the exit from our Scotland and Korea operations.

Included in this amount for the three and nine months ended September 26, 2025 are write-off costs of inventories determined to be obsolete of $1.6 million, an impairment of the facility lease right-of-use asset of $1.3 million, severance costs associated with affected employees of $0.7 million, other direct and incremental facility exit-related costs of $0.7 million, and accelerated depreciation charges of $0.6 million.

(3) Represents severance costs associated with our global reduction-in-force programs (other than severance costs associated with the exit from our Scotland and Korea operations, as described above).

(4) Represents transaction-related costs incurred in connection with our acquisitions pipeline.

(5) In September 2025, we entered into an amended and restated credit agreement, which includes a group of financial institutions as direct lenders underlying the agreement.

Under the debt modification literature codified in ASC 470, a portion of the refinance was treated as an extinguishment.

Accordingly, $0.2 million of existing capitalized deferred issuance costs were written off as a loss on extinguishment of debt and $0.5 million of third-party and lender fees were expensed as incurred.

(4) Adjusts GAAP income tax expense for the impact of our non-GAAP adjustments, which are presented on a gross basis.

(5) During the first quarter of 2025, we recorded a valuation allowance against the deferred tax assets of our Scotland and Korea operations.

During the third quarter, we reversed the valuation allowance on our Scotland deferred tax assets due to a change in the facts and circumstances around our ability to utilize our deferred tax assets.

Liquidity and Capital Resources

11 unchanged sentences

Summary of Cash Flows

We ended the third quarter of 2025 with cash and cash equivalents of $92.5 million, a decrease of $16.2 million from the prior year ended December 27, 2024.

The decrease was primarily due to capital expenditures of $32.9 million, net payments on our credit facilities of $4.4 million, and payments for debt issuance and modification costs of $1.2 million, partially offset by cash provided by operating activities of $20.7 million and net cash receipts related to share-based compensation of $1.6 million.

We ended the first quarter of 2026 with cash and cash equivalents of $89.1 million, a decrease of $9.2 million from the prior year ended December 26, 2025.

The decrease of $9.2 million for the first quarter of 2026 was primarily due to capital expenditures of $7.1 million and cash used in operating activities of $2.9 million.

The following table sets forth a summary of operating, investing, and financing activities for the periods presented:

Nine Months Ended

September 26,

2025 September 27,

Three Months Ended

2026 March 28,

(in thousands)

Cash provided by operating activities $ 20,716 $ 30,368

Cash provided by (used in) operating activities $ (2,917) $ 18,977

Cash used in investing activities (7,065) (18,481)

Cash provided by (used in) financing activities (3,965) 19,362

Cash provided by financing activities 781 116

Net increase (decrease) in cash $ (9,201) $ 612

Our cash provided by operating activities of $20.7 million for the nine months ended September 26, 2025 consisted of net non-cash charges of $57.6 million, consisting primarily of depreciation and amortization of $23.5 million, inventory impairment of $16.7 million, and share-based compensation expense of $12.6 million, partially offset by a net loss of $36.8 million.

The increase in our net operating assets and liabilities of $0.1 million for the nine months ended September 26, 2025, was primarily due to an increase in inventory of $8.3 million and a decrease in other liabilities of $6.2 million, partially offset by a decrease in prepaid expense and other assets of $7.6 million, an increase in accrued liabilities of $2.8 million, a decrease in accounts receivable of $2.2 million, and an increase in accounts payable of $1.9 million.

The decrease in cash provided by operating activities from the nine months ended September 27, 2024 to the nine months ended September 26, 2025 was primarily due to an increase in net loss of $19.9 million and unfavorable changes in working capital of $13.4 million, partially offset by an increase in net non-cash charges of $23.7 million.

Cash used in investing activities during the nine months ended September 26, 2025 and September 27, 2024 consisted of capital expenditures.

Cash used in financing activities during the nine months ended September 26, 2025 consisted of net payments on our credit facilities of $4.4 million and payments for debt issuance and modification costs of $1.2 million, partially offset by net proceeds from share-based compensation activity of $1.6 million.

The decrease in cash provided by financing activities from the nine months ended September 27, 2024 to the nine months ended September 26, 2025 was primarily due to net proceeds of $136.7 million from our issuance of 3.8 million ordinary shares in the first quarter of 2024 in connection with an underwritten public offering, partially offset by the payoff of our revolving credit facility of $115.0 million in the first quarter of 2024.

Our cash used in operating activities of $2.9 million for the first quarter of 2026 consisted of an increase in our net operating assets and liabilities of $12.7 million and a net loss of $2.5 million, partially offset by non-cash charges of $12.2 million, consisting primarily of depreciation and amortization of $7.7 million and share-based compensation expense of $3.8 million.

The increase in our net operating assets and liabilities of $12.7 million during the first quarter of 2026 was primarily due to an increase in accounts receivable of $22.6 million and an increase in inventory of $20.5 million, partially offset by an increase in accounts payable of $27.4 million, and a decrease in prepaid expenses and other assets of $2.9 million.

The decrease in cash provided by operating activities from the three months ended March 28, 2025 to the three months ended March 27, 2026 was primarily due to unfavorable changes in working capital of $23.7 million and a decrease in net non-cash charges of $0.3 million, partially offset by a decrease in net loss of $2.1 million.

Cash used in investing activities during the three months ended March 27, 2026 and March 28, 2025 consisted of capital expenditures.

Cash provided by financing activities during the three months ended March 27, 2026 consisted of net proceeds from share-based compensation activity of $2.3 million, partially offset by net payments on our credit facilities of $1.6 million.

The increase in cash provided by financing activities from the three months ended March 28, 2025 to the three months ended March 27, 2026 was primarily due to an increase in the net proceeds from share-based compensation activity of $0.4 million.

Critical Accounting Estimates

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What changed 10-Q

Item 2. Management’s Discussion and Analysis