ICHOR HOLDINGS, LTD. 10-Q

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) ICHOR HOLDINGS, LTD. Consolidated Balance Sheets (in thousands, except share and per share amounts) (unaudited) March 27, 2026 December 26, 2025 Assets Current assets: Cash and cash equivalents $ 89,089 $ 98,290 Accounts receivable, net 93,067 70,514 Inventories 252,299 231,794 Prepaid expenses and other current assets 7,639 9,531 Total current assets 442,094 410,129 Property and equipment, net 103,551 103,922 Operating lease right-of-use assets 35,126 35,046 Other noncurrent assets 13,664 13,638 Deferred tax assets, net 4,338 4,337 Intangible assets, net 38,327 40,405 Goodwill 335,402 335,402 Total assets $ 972,502 $ 942,879 Liabilities and Shareholders’ Equity Current liabilities: Accounts payable $ 108,175 $ 84,007 Accrued liabilities 16,528 17,479 Other current liabilities 13,516 10,602 Current portion of long-term debt 6,250 6,250 Current portion of lease liabilities 12,203 11,250 Total current liabilities 156,672 129,588 Long-term debt, less current portion, net 115,793 117,278 Lease liabilities, less current portion 24,419 25,413 Deferred tax liabilities, net 2,627 1,961 Other non-current liabilities 4,977 4,753 Total liabilities 304,488 278,993 Shareholders’ equity: Preferred shares ($ 0.0001 par value; 20,000,000 shares authorized; 0 shares issued and outstanding) — — Ordinary shares ($ 0.0001 par value; 200,000,000 shares authorized; 34,744,772 and 34,433,776 shares outstanding, respectively; 39,182,211 and 38,871,215 shares issued, respectively) 3 3 Additional paid in capital 630,988 624,391 Treasury shares at cost ( 4,437,439 shares) ( 91,578 ) ( 91,578 ) Retained earnings 128,601 131,070 Total shareholders’ equity 668,014 663,886 Total liabilities and shareholders’ equity $ 972,502 $ 942,879 The accompanying notes are an integral part of these consolidated financial statements. 1 ICHOR HOLDINGS, LTD. Consolidated Statements of Operations (in thousands, except share and per share amounts) (unaudited) Three Months Ended March 27, 2026 March 28, 2025 Net sales $ 256,068 $ 244,465 Cost of sales 223,810 215,943 Gross profit 32,258 28,522 Operating expenses: Research and development 5,530 5,874 Selling, general, and administrative 22,565 21,742 Amortization of intangible assets 2,078 2,078 Total operating expenses 30,173 29,694 Operating income (loss) 2,085 ( 1,172 ) Interest expense, net 1,678 1,646 Other expense, net 323 81 Income (loss) before income taxes 84 ( 2,899 ) Income tax expense 2,553 1,660 Net loss $ ( 2,469 ) $ ( 4,559 ) Net loss per share Basic $ ( 0.07 ) $ ( 0.13 ) Diluted $ ( 0.07 ) $ ( 0.13 ) Shares used to compute Net loss per share: Basic 34,607,033 33,998,364 Diluted 34,607,033 33,998,364 The accompanying notes are an integral part of these consolidated financial statements. 2 ICHOR HOLDINGS, LTD. Consolidated Statements of Shareholders’ Equity (in thousands, except share amounts) (unaudited) For the three months ended March 27, 2026 Ordinary Shares Additional Paid-In Capital Treasury Shares Retained Earnings Total Shareholders’ Equity Shares Amount Shares Amount Balance at December 26, 2025 34,433,776 $ 3 $ 624,391 4,437,439 $ ( 91,578 ) $ 131,070 $ 663,886 Ordinary shares issued from exercise of stock options 181,496 — 4,287 — — — 4,287 Ordinary shares issued from vesting of restricted share units 72,130 — ( 2,422 ) — — — ( 2,422 ) Ordinary shares issued from employee share purchase plan 57,370 — 899 — — — 899 Share-based compensation expense — — 3,833 — — — 3,833 Net loss — — — — — ( 2,469 ) ( 2,469 ) Balance at March 27, 2026 34,744,772 $ 3 $ 630,988 4,437,439 $ ( 91,578 ) $ 128,601 $ 668,014 For the three months ended March 28, 2025 Ordinary Shares Additional Paid-In Capital Treasury Shares Retained Earnings Total Shareholders’ Equity Shares Amount Shares Amount Balance at December 27, 2024 33,859,542 $ 3 $ 606,060 4,437,439 $ ( 91,578 ) $ 183,851 $ 698,336 Ordinary shares issued from exercise of stock options 137,080 — 3,404 — — — 3,404 Ordinary shares issued from vesting of restricted share units 77,518 — ( 2,013 ) — — — ( 2,013 ) Ordinary shares issued from employee share purchase plan 39,064 — 1,070 — — — 1,070 Share-based compensation expense — — 4,123 — — — 4,123 Net loss — — — — — ( 4,559 ) ( 4,559 ) Balance at March 28, 2025 34,113,204 $ 3 $ 612,644 4,437,439 $ ( 91,578 ) $ 179,292 $ 700,361 The accompanying notes are an integral part of these consolidated financial statements. 3 ICHOR HOLDINGS, LTD. Consolidated Statements of Cash Flows (in thousands) (unaudited) Three Months Ended March 27, 2026 March 28, 2025 Cash flows from operating activities: Net loss $ ( 2,469 ) $ ( 4,559 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 7,654 8,058 Share-based compensation 3,833 4,123 Deferred income taxes 665 247 Amortization of debt issuance costs 78 116 Changes in operating assets and liabilities, net of acquisitions: Accounts receivable, net ( 22,553 ) 6,760 Inventories ( 20,505 ) ( 13,352 ) Prepaid expenses and other assets 2,856 2,837 Accounts payable 27,382 14,307 Accrued liabilities ( 531 ) 1,804 Other liabilities 673 ( 1,364 ) Net cash provided by (used in) operating activities ( 2,917 ) 18,977 Cash flows from investing activities: Capital expenditures ( 7,065 ) ( 18,481 ) Net cash used in investing activities ( 7,065 ) ( 18,481 ) Cash flows from financing activities: Issuance of ordinary shares under share-based compensation plans 4,766 4,004 Employees' taxes paid upon vesting of restricted share units ( 2,422 ) ( 2,013 ) Repayments on term loan ( 1,563 ) ( 1,875 ) Net cash provided by financing activities 781 116 Net increase (decrease) in cash ( 9,201 ) 612 Cash at beginning of period 98,290 108,669 Cash at end of period $ 89,089 $ 109,281 Supplemental disclosures of cash flow information: Cash paid during the period for interest $ 1,959 $ 2,251 Cash paid during the period for taxes, net of refunds $ ( 686 ) $ 560 Supplemental disclosures of non-cash activities: Capital expenditures included in accounts payable $ 412 $ 1,467 Right-of-use assets obtained in exchange for new operating lease liabilities $ 2,424 $ — The accompanying notes are an integral part of these consolidated financial statements. 4 ICHOR HOLDINGS, LTD. Notes to Consolidated Financial Statements (dollar figures in tables in thousands, except per share amounts) (unaudited) Note 1 – Basis of Presentation and Selected Significant Accounting Policies Basis of Presentation These consolidated unaudited financial statements have been prepared in accordance with generally accepted accounting principles in the U.S. (“GAAP”). All intercompany balances and transactions have been eliminated upon consolidation. All dollar figures presented in tables in the notes to the consolidated financial statements are in thousands, except per share amounts. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted as permitted by the U.S. Securities and Exchange Commission's rules and regulations for interim reporting. These consolidated financial statements should be read in conjunction with our audited financial statements and notes thereto included in our Annual Report on Form 10‑K for the year ended December 26, 2025. Year End We use a 52- or 53-week fiscal year ending on the last Friday in December. Our fiscal years ending December 25, 2026 and December 26, 2025 are each 52 weeks. References to 2026 and 2025 relate to the fiscal years then ended, respectively. The three-month periods ended March 27, 2026 and March 28, 2025 are each 13 weeks. References to the first quarter of 2026 and 2025 relate to the three-month periods then ended, respectively . Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods presented. We base our estimates and judgments on historical experience and on various other assumptions that we believe are reasonable under the circumstances. Actual results could differ from the estimates made by management. Significant estimates include inventory valuation, uncertain tax positions, valuation allowance on deferred tax assets, and impairment analysis for both definite‑lived intangible assets and goodwill. Cash and Cash Equivalents Cash and cash equivalents consist of deposits and financial instruments which are readily convertible into cash and have original maturities of 90 days or less at the time of acquisition. Fair Value of Financial Instruments The carrying values of our financial instruments, including cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, accounts payable, accrued liabilities, and long-term debt, net of unamortized debt issuance costs, approximate fair value. 5 Revenue Recognition We recognize revenue when control of promised goods or services is transferred to our customers in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. This amount is recorded as net sales in our consolidated statements of operations. Transaction price – In most of our contracts, prices are generally determined by a customer-issued purchase order and generally remain fixed over the duration of the contract. Certain contracts contain variable consideration, including early-payment discounts and rebates. When a contract includes variable consideration, we evaluate the estimate of the variable consideration to determine whether the estimate needs to be constrained; therefore, we include the variable consideration in the transaction price only to the extent that it is probable that a significant reversal will not occur. Variable consideration estimates are updated at each reporting date. Historically, we have not incurred significant costs to obtain a contract. All amounts billed to a customer relating to shipping and handling are classified as net sales, while all costs incurred by us for shipping and handling are classified as cost of sales. Performance obligations – Substantially all of our performance obligations pertain to promised goods (“products”), which are primarily comprised of fluid delivery subsystems, weldments, and other components. Most of our contracts contain a single performance obligation and are generally completed within 12 months. Product sales are recognized at a point-in-time, upon "delivery," as such term is defined within the contract, which is generally at the time of shipment, as that is when control of the product has transferred. Products are covered by a standard assurance warranty, generally extended for a period of one to two years depending on the customer, which promises that delivered products conform to contract specifications. As such, we account for such warranties under Accounting Standards Codification ("ASC") Topic 460, Guarantees , and not as a separate performance obligation . Contract balances – Accounts receivable represents our unconditional right to receive consideration from our customers. Accounts receivable are carried at invoice price less an estimate for doubtful accounts and estimated payment discounts. Payment terms vary by customer, but payment is generally due within 15 to 60 days of purchase. Historically, we have not experienced significant payment issues with our customers. We had no significant contract assets or liabilities on our consolidated balance sheets in any of the periods presented herein . Accounting Pronouncements Recently Issued In November 2024, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2024-03, Disaggregation of Income Statement Expenses (Subtopic 220-40) . The ASU requires disaggregation of certain expense captions into specified natural expense categories in the disclosures within the notes to the financial statements. In addition, it requires disclosure of selling expenses and its definition. The ASU is effective for fiscal years beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. The guidance can be applied either prospectively or retrospectively. We are currently evaluating the effect that the adoption of this ASU may have on our consolidated financial statements. Note 2 – Inventories Inventories consist of the following: March 27, 2026 December 26, 2025 Raw materials $ 195,204 $ 204,166 Work in process 55,208 39,595 Finished goods 39,398 45,393 Excess and obsolete adjustment ( 29,227 ) ( 37,549 ) Impairment of inventory ( 8,284 ) ( 19,811 ) Total inventories $ 252,299 $ 231,794 6 Note 3 – Property and Equipment and Other Noncurrent Assets Property and equipment consist of the following: March 27, 2026 December 26, 2025 Machinery $ 140,599 $ 141,095 Leasehold improvements 64,920 48,955 Computer software, hardware, and equipment 9,594 9,548 Office furniture, fixtures, and equipment 1,607 1,529 Vehicles 365 365 Construction-in-process 10,307 21,955 227,392 223,447 Less accumulated depreciation ( 123,841 ) ( 119,525 ) Total property and equipment, net $ 103,551 $ 103,922 Depreciation expense was $ 5.1 million and $ 5.6 million for the first quarter of 2026 and 2025, respectively. Cloud Computing Implementation Costs We capitalize implementation costs associated with hosting arrangements that are service contracts. These costs are recorded to prepaid expenses or other noncurrent assets. To date, these costs have been those incurred to implement a new company-wide enterprise resource planning system. The balance of capitalized cloud computing implementation costs, net of accumulated amortization, was $ 12.0 million and $ 12.4 million as of March 27, 2026 and December 26, 2025, respectively, and is included in other noncurrent assets on our consolidated balance sheets. The related amortization expense, which is included in selling, general, and administrative expenses on our consolidated statements of operations, was $ 0.4 million and $ 0.4 million for the first quarter of 2026 and 2025, respectively . Note 4 – Intangible Assets Definite‑lived intangible assets consist of the following: March 27, 2026 Gross value Accumulated amortization Accumulated impairment charges Carrying amount Weighted average useful life Customer relationships $ 71,583 $ ( 36,267 ) $ — $ 35,316 9.9 years Developed technology 11,047 ( 8,036 ) — 3,011 10.0 years Total intangible assets $ 82,630 $ ( 44,303 ) $ — $ 38,327 December 26, 2025 Gross value Accumulated amortization Accumulated impairment charges Carrying amount Weighted average useful life Customer relationships $ 71,583 $ ( 34,457 ) $ — $ 37,125 9.9 years Developed technology 11,047 ( 7,767 ) — 3,280 10.0 years Total intangible assets $ 82,630 $ ( 42,224 ) $ — $ 40,405 7 Note 5 – Leases Operating lease right-of-use (“ROU”) assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. For purposes of calculating operating lease ROU assets and liabilities, we use the non-cancelable lease term plus options to extend that we are reasonably certain to take. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. Our leases generally do not provide an implicit rate. As such, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. We lease facilities under non-cancelable operating leases that expire at various dates from 2026 through 2037. In addition to base rental payments, we are generally responsible for our proportionate share of operating expenses, including facility maintenance, insurance, and property taxes. As these amounts are variable, they are not included in lease liabilities. For the first quarter of 2026 and 2025, no impairment charges were recognized in connection with our ROU lease assets. The components of lease expense are as follows: Three Months Ended March 27, 2026 March 28, 2025 Operating lease cost $ 2,837 $ 2,745 Supplemental cash flow information related to leases is as follows: Three Months Ended March 27, 2026 March 28, 2025 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 2,936 $ 2,795 Supplemental balance sheet information related to leases is as follows: March 27, 2026 December 26, 2025 Weighted-average remaining lease term of operating leases 5.5 years 5.7 years Weighted-average discount rate of operating leases 5.0 % 4.9 % Future minimum lease payments under non-cancelable leases are as follows as of March 27, 2026: 2026, remaining $ 9,150 2027 11,551 2028 6,104 2029 3,143 2030 2,828 Thereafter 10,023 Total future minimum lease payments 42,799 Less imputed interest ( 6,177 ) Total lease liabilities 36,622 Less current portion ( 12,203 ) Total lease liabilities, less current portion $ 24,419 8 Note 6 – Income Taxes Income tax information for the periods reported is as follows: Three Months Ended March 27, 2026 March 28, 2025 Income tax expense $ 2,553 $ 1,660 Income (loss) before income taxes $ 84 $ ( 2,899 ) Effective income tax rate 3039.3 % ( 57.3 ) % 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 our tax holiday in Singapore on March 31, 2026, and the impact of a valuation allowance against U.S. deferred tax assets. The ending balance of unrecognized tax benefits for uncertain tax positions was approximately $ 4.1 million as of March 27, 2026. The related interest was insignificant, and the related penalties were $ 0.7 million. As of March 27, 2026, we were under examination by California tax authorities for fiscal years 2020-2022. Note 7 – Employee Benefit Programs 401(k) Plan We sponsor a 401(k) plan available to employees of our U.S.‑based subsidiaries. Participants may make salary deferral contributions not to exceed 50 % of a participant’s annual compensation or the maximum amount otherwise allowed by law. Eligible employees receive a discretionary matching contribution equal to 50 % of a participant’s deferral, up to an annual matching maximum of 4 % of a participant’s annual compensation. Matching contributions were $ 0.8 million and $ 0.8 million for the first quarter of 2026 and 2025, respectively . Note 8 – Long-Term Debt Long‑term debt consists of the following: March 27, 2026 December 26, 2025 Term loan $ 123,437 $ 125,000 Revolving credit facility — — Total principal amount of long-term debt 123,437 125,000 Less unamortized debt issuance costs ( 1,394 ) ( 1,472 ) Total long-term debt, net 122,043 123,528 Less current portion ( 6,250 ) ( 6,250 ) Total long-term debt, less current portion, net $ 115,793 $ 117,278 On September 26, 2025, we entered into an amended and restated credit agreement, which includes a group of financial institutions as direct lenders under the agreement (the "credit agreement"). The credit agreement includes a $ 125.0 million term loan facility and a $ 100.0 million revolving credit facility (together, “credit facilities”). The revolving credit facility also contains a $ 20.0 million letter of credit sub-facility and a $ 10.0 million swingline sub-facility. Quarterly term loan principal payments of $ 1.6 million commenced on December 31, 2025, and the amount of such quarterly term loan payments will increase to $ 2.3 million on September 30, 2028, and $ 3.1 million on September 30, 2029. The credit agreement matures on September 26, 2030. The credit agreement includes debt covenants, which contain certain financial thresholds, and place certain restrictions on the incurrence of debt, investments, and issuance of dividends. We were in compliance as of March 27, 2026 . 9 As of March 27, 2026, i nterest is charged at either the Base Rate or SOFR (as such terms are defined in the credit agreement) at our option, plus an applicable margin. The Base Rate is equal to the higher of i) the Prime Rate, ii) the Federal Funds Rate plus 0.50 %, or iii) SOFR plus 1.00 %. The applicable margin on Base Rate and SOFR loans is 0.750 % to 1.750 % and 1.750 % to 2.750 % per annum, respectively, depending on our leverage ratio, which is based on trailing 12-month consolidated EBITDA, as defined in our credit agreement. We are also charged a commitment fee of 0.175 % to 0.350 %, depending on our leverage ratio, on the unused portion of our revolving credit facility. Base Rate interest payments and commitment fees are due quarterly. SOFR interest payments are due on the last day of the applicable interest period, or quarterly for applicable interest periods longer than three months. As of March 27, 2026, our credit facilities bore interest under the SOFR option at 5.92 %. Note 9 – Share‑Based Compensation On March 26, 2025, the Human Capital Committee of our Board of Directors approved the Ichor Holdings, Ltd. 2025 Omnibus Incentive Plan (the "2025 Plan"). The 2025 Plan was approved by our stockholders on May 14, 2025, and allows for the issuance of 2,963,471 sh ares to be used for awards under the Plan, subject to the applicable adjustment and share recycling provisions set forth in the 2025 plan. The 2025 Plan replaces the Ichor Holdings, Ltd. 2016 Omnibus Incentive Plan (the "2016 Plan") in its entirety, except with respect to awards granted under the 2016 Plan prior to the effective date of the 2025 Plan. The 2025 Omnibus Incentive Plan provides for grants of share‑based awards to employees, directors, and consultants. Awards may be in the form of stock options (“options”), tandem and non‑tandem stock appreciation rights, restricted share awards or restricted share units (“RSUs”), performance awards, and other share‑based awards. Forfeited or expired awards are returned to the incentive plan pool for future grants. Awards generally vest over four years , 25 % on the first anniversary of the date of grant and quarterly thereafter over the remaining three years . Upon vesting of RSUs, shares are withheld to cover statutory minimum withholding taxes. Shares withheld are not reflected as an issuance of ordinary shares within our consolidated statements of shareholders’ equity, as the shares are never issued, and the associated tax payments are reflected as financing activities within our consolidated statements of cash flows. Share‑based compensation expense across all plans for options, RSUs, and employee share purchase rights was $ 3.8 million and $ 4.1 million for the first quarter of 2026 and 2025, respectively. Stock Options The following table summarizes option activity: Number of Stock Options Service condition Weighted average exercise price per share Weighted average remaining contractual term Aggregate intrinsic value Outstanding, December 26, 2025 213,125 $ 24.07 Granted — $ — Exercised ( 181,496 ) $ 23.62 Forfeited or expired — $ — Outstanding, March 27, 2026 31,629 $ 26.64 1.0 years $ 588 Exercisable, March 27, 2026 31,629 $ 26.64 1.0 years $ 588 10 Restricted Share Units The following table summarizes RSU activity: Number of RSUs Service condition Performance condition Market condition Weighted average grant-date fair value per share Unvested, December 26, 2025 1,270,111 250,988 254,142 $ 25.57 Granted 9,743 — — $ 28.54 Vested ( 76,686 ) — ( 49,020 ) $ 30.84 Forfeited ( 59,680 ) ( 55,827 ) ( 43,210 ) $ 30.35 Unvested, March 27, 2026 1,143,488 195,161 161,912 $ 24.65 Employee Share Purchase Plan The 2017 Employee Stock Purchase Plan (the “2017 ESPP”) grants employees the ability to designate a portion of their base-pay to purchase ordinary shares at a price equal to 85 % of the fair market value of our ordinary shares on the first or last day of each six-month purchase period. Purchase periods begin on January 1 or July 1 and end on June 30 or December 31 (or the next business day if such date is not a business day). Shares are purchased on the last day of the purchase period. As of March 27, 2026, approximately 1.9 million ordinary shares remain available for purchase under the 2017 ESPP. Note 10 – Segment Information We operate as a single business operating segment, which includes all activities related to the design, engineering, and manufacturing of critical fluid delivery subsystems and components for semiconductor capital equipment. Accordingly, we report as one operating segment. The determination of a single business operating segment is consistent with the consolidated financial information regularly provided to our CODM. The consolidated financial information provided to our CODM does not contain significant disaggregated expenses outside of what is already disclosed in our statements of operations and notes thereto included in these consolidated financial statements. Our CODM is our Chief Executive Officer, and the CODM reviews and evaluates consolidated net income for purposes of assessing performance, making operating decisions, allocating resources, and planning and forecasting for future periods. Foreign operations are conducted primarily through our wholly owned subsidiaries in Singapore, Malaysia, and Mexico. Our principal markets include North America, Asia, and, to a lesser degree, Europe. The following table sets forth sales by geographic area, which represents sales to unaffiliated customers based upon the location to which the products were shipped: Three Months Ended March 27, 2026 March 28, 2025 Singapore $ 128,838 $ 109,088 United States of America 69,017 75,810 Europe 18,489 25,133 Other 39,724 34,434 Total net sales $ 256,068 $ 244,465 Foreign long-lived assets, exclusive of deferred tax assets, were $ 75.1 million and $ 71.3 million as of March 27, 2026 and December 26, 2025, respectively . 11 Note 11 – Earnings per Share The following table sets forth the computation of basic and diluted earnings per share and a reconciliation of the numerator and denominator used in the calculation: Three Months Ended March 27, 2026 March 28, 2025 Numerator: Net loss $ ( 2,469 ) $ ( 4,559 ) Denominator: Basic weighted average ordinary shares outstanding 34,607,033 33,998,364 Dilutive effect of options — — Dilutive effect of RSUs — — Dilutive effect of ESPP — — Diluted weighted average ordinary shares outstanding 34,607,033 33,998,364 Securities excluded from the calculation of diluted weighted average ordinary shares outstanding (1) 1,998,000 1,783,000 Net loss per share: Basic $ ( 0.07 ) $ ( 0.13 ) Diluted $ ( 0.07 ) $ ( 0.13 ) (1) Represents potentially dilutive options and RSUs excluded from the calculation of diluted weighted average ordinary shares outstanding, because including them would have been antidilutive under the treasury stock method. Note 12 - Restructuring In the third quarter of 2025, our Board of Directors approved the Consolidation Restructuring Plan (the "Plan"), which was subsequently amended in the fourth quarter of 2025. The Plan includes activities and plans to align our geographic footprint with our long-term strategic plan. The amended restructuring plan expanded the scope of our initial plan to consolidate our footprint at additional sites. Key components of the Plan as of March 27, 2026 are as follows: Impairment of inventory As of March 27, 2026, total expected inventory impairment costs under the Plan are $ 19.8 million, all of which were recognized during 2025. These costs were recognized within cost of sales on our consolidated statement of operations. During the first quarter of 2026, we disposed of $ 11.5 million of impaired inventory. The remaining inventory impairment costs of $ 8.3 million are accrued as a contra-asset valuation account within inventories on our consolidated balance sheet as of March 27, 2026. Fixed asset charges As of March 27, 2026, total expected fixed asset charges under the Plan are approximately $ 5.4 million, of which $ 0.1 million were recognized during the first quarter of 2026 and $ 3.1 million were recognized during 2025. These costs were recognized within selling, general, and administrative expenses on our consolidated statement of operations. We expect to incur approximately an additional $ 2.2 million of fixed asset charges under the plan. 12 Impairment of operating right-of-use assets As of March 27, 2026, total expected operating lease ROU asset impairment charges under the Plan are approximately $ 1.8 million, of which $ 0.9 million were recognized during 2025. These charges were recognized within selling, general, and administrative expenses on our consolidated statement of operations. We expect to incur approximately an additional $ 0.9 million of operating lease ROU asset impairment charges under the Plan. Severance charges As of March 27, 2026, total expected severance charges under the Plan are approximately $ 1.7 million, all of which were recognized during 2025. Of this amount recognized, $ 0.9 million and $ 0.8 million were recognized within cost of sales and selling, general, and administrative expenses, respectively, in 2025 on our consolidated statement of operations. During the first quarter of 2026, we made severance payments of $ 0.9 million. The remaining severance charges of $ 0.1 million are accrued within accrued liabilities on our consolidated balance sheet as of March 27, 2026. Other Costs Other costs include other direct and incremental costs incurred as result of the Plan, which primarily includes legal expenses, facility exit costs, and fixed asset transportation costs. As of March 27, 2026, total expected other costs under the Plan are approximately $ 3.2 million, of which $ 0.4 million were recognized during the first quarter of 2026 and $ 1.3 million were recognized during 2025. These costs were recognized within selling, general, and administrative expenses on our consolidated statement of operations. We expect to incur approximately an additional $ 1.5 million of other costs under the Plan. We expect the Plan to be substantially complete by the end of 2026. We may incur additional expenses due to unanticipated events or changes in plan scope. 13