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Item 2. Management’s Discussion and Analysis

2025-11-05 compared with 2025-08-06 · 197 added, 173 removed, 189 unchanged (66% of the section changed)

16 unchanged sentences

Producing more while consuming less is a core aspect of Sustainable Industrial Processing and a major element of the strategic focus of our business.

Our financial results are reported in three reportable segments consisting of our Flow Control segment, Industrial Processing segment, and Material Handling segment.

Our financial results are presented in three reportable segments consisting of our Flow Control segment, Industrial Processing segment, and Material Handling segment.

We have aggregated our operating segments into reportable segments where they contained similar products and economic characteristics, and shared similar types of customers, and production and distribution methods.

3 unchanged sentences

Our primary products include rotary sealing devices, steam systems, expansion joints, doctor systems, roll and fabric cleaning devices, and filtration and fiber recovery systems.

• Industrial Processing – Equipment, machinery, and technologies used to recycle paper and paperboard and process timber for use in the packaging, tissue, wood products, and alternative fuel industries, among others.

Our primary products include fiber processing systems and recycling equipment, chemical pulping equipment, debarkers, stranders, chippers and custom engineered knife systems.

• Industrial Processing – Equipment, machinery, and technologies used to recycle paper and paperboard, process timber, and optimize industrial steam boiler efficiency for use in the packaging, paper, tissue, wood products, and food processing industries, among others.

Our primary products include fiber processing systems and recycling equipment, chemical pulping equipment, debarkers, stranders, chippers, custom engineered knife systems, industrial boiler cleaning technologies, and continuous dewatering equipment.

In addition, we provide industrial automation and digitization solutions to process industries.

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Industry and Business Overview

Our consolidated bookings increased 7% to $269.4 million in the second quarter of 2025 compared to the second quarter of 2024, driven by a 25% increase in demand for our capital equipment products.

Notably, this strong bookings performance led to an increase in our quarter-end backlog to $299.1 million, representing a 16% increase from year-end 2024.

Part of the increased demand in the second quarter of 2025 resulted from orders delayed from the first quarter as customers awaited more clarity on the impact of tariffs.

While there has been some clarification on certain country-specific tariffs, newly announced tariffs, such as the recent steel import tariff increase, continue to create unease and uncertainty in the market.

This environment of evolving trade policies has impacted our customers' decision-making process and resulted in a lengthening in quote-to-order times for capital orders, with some customers delaying capital projects into 2026.

While investments in maintenance and mission-critical equipment continue, customers with flexibility in project timing are deferring capital expenditures until there is greater clarity regarding the tariff situation and the economy.

This impact is more pronounced in our Industrial Processing segment, where average capital order values are significantly higher compared to our other segments.

In response, our operations teams have been assessing our exposure to both existing and proposed tariffs and continue to develop and implement mitigation measures.

From a geographic perspective, tariff-related developments in North America have created market uncertainty, which may lead to inflationary pressures.

In Europe, uncertainty surrounding trade tensions and geopolitical risks continue to impact the market.

In China, government-led initiatives seek to stimulate domestic demand and manufacturing activity, but escalating trade tensions with the United States are generally expected to have a negative impact.

Overall, we anticipate stronger bookings in 2025 compared to 2024, especially in our Industrial Processing segment.

However, the timing for securing capital orders remains uncertain and may shift between quarters or extend into 2026, depending in part by the outcome of ongoing tariff negotiations and the implementation of any tariff changes.

Despite this near-term variability, we see long-term strength in our end markets as customers continue to depend on our products to enhance productivity through more efficient production processes.

Additionally, we see growth opportunities from both proposed and enacted legislation in the U.S.

and internationally aimed at fueling investment.

Our consolidated bookings increased 3% to $763.9 million in the first nine months of 2025 compared to the first nine months of 2024, driven by increased demand for our parts and consumables products.

Demand for our capital equipment products was flat compared to the first nine months of 2024 as market uncertainty has impacted our customers' capital investment decisions.

This uncertainty was driven by escalating tariff rates on U.S.

imports and exports impacting manufacturers’ input costs.

Although certain country-specific tariffs have since been clarified, ongoing trade negotiations continue to impact the market.

This evolving trade environment has resulted in longer quote-to-order conversion times for capital orders, with some customers delaying projects into 2026.

While customers continue to invest in maintenance and mission-critical equipment, those with discretion over project timing are deferring capital expenditures pending greater clarity regarding input costs and broader economic conditions.

This impact is more pronounced in our Industrial Processing segment, where average capital order values are significantly higher than in our other segments.

In response, our operations teams continue to evaluate our exposure to both existing and proposed tariffs and develop and implement mitigation measures.

From a geographic perspective, the volatility in tariff rates have contributed to market uncertainty in North America, leading to cautious spending by manufacturers.

In Europe, cost pressures and ongoing economic uncertainty related to trade tensions and geopolitical risks continue to impact market activity.

In China, although government-led initiatives seek to stimulate domestic demand and manufacturing activity, escalating trade tensions with the United States are generally expected to have a negative impact.

Overall, we anticipate sequentially stronger bookings in the fourth quarter of 2025 and comparatively higher bookings for the full year 2025 compared to 2024, especially in our Industrial Processing segment.

We see long-term strength in our end markets as customers continue to rely on our products to enhance productivity through more efficient production processes.

In addition, we anticipate growth opportunities resulting from both proposed and enacted legislation in the United States and internationally that is designed to stimulate investment.

An overview of our business by reportable segment is as follows:

• Flow Control – Our Flow Control segment bookings were essentially flat compared to the second quarter of 2024, with strong demand for our parts and consumables products in North America, offset by weaker bookings in Europe where constrained market conditions and geopolitical tensions have dampened spending.

In certain European markets, excess production capacity and declining demand for graphic paper have led to the closure of several mills, which negatively impacted demand for our capital equipment products.

In North America, while quote activity related to capital projects remains strong, there have been delays in the timing for securing orders.

We expect overall demand in this segment to improve as the year progresses, especially with increased clarity related to trade discussions and tariffs.

• Industrial Processing – Our Industrial Processing segment bookings increased 9% compared to the second quarter of 2024 driven by strong demand for our capital equipment products at our wood processing product line.

This growth was primarily fueled by the engineered wood industry in North America where customers selected our products for their ability to maximize wood fiber utilization.

• Flow Control – Our Flow Control segment bookings increased 3% in the first nine months of 2025 compared to the first nine months of 2024.

This increase was primarily driven by strong demand for our parts and consumables products, especially in North America, partially offset by weaker demand for our capital equipment products in most regions.

While quote activity related to capital projects remains strong, there have been delays in the timing for securing orders as customers remain cautious regarding their capital spending decisions.

In certain European markets, excess production capacity and declining demand have resulted in the closure of several mills, which has adversely affected demand for our capital equipment products.

We expect demand in this segment to remain stable for the remainder of the year.

• Industrial Processing – Our Industrial Processing segment bookings increased 3% in the first nine months of 2025 compared to the first nine months of 2024, with strong performance at our wood processing product line, largely offset by weaker results in our fiber processing product line.

Within our wood processing product line, capital equipment bookings increased 88% compared to the first nine months of 2024, primarily driven by demand from the engineered wood industry in North America, where customers select our products for their ability to maximize wood fiber utilization.

Despite these positive results, overall demand for our capital equipment in the wood processing product line was constrained by uncertain market conditions.

Although there is ongoing quote activity for large capital projects, tariff-related uncertainty has led to a lengthening in quote-to-order times as customers await improved market conditions, with some customers in Europe already delaying capital orders into early 2026.

Bookings at our fiber processing product line decreased 19% compared to the second quarter of 2024 due to constrained capital spending related to macroeconomic conditions, especially in China.

These conditions resulted in several pending capital orders delayed into the third quarter of 2025.

Tariff-related uncertainty has had a larger impact on this segment due to the higher average capital order value and our customers’ ability to delay the timing of large capital projects.

Despite this, demand for our aftermarket parts in this segment has remained strong, and we expect steady demand to continue for the remainder of 2025.

Additionally, we expect demand for our capital equipment in this segment to strengthen in the second half of 2025, with the anticipated receipt of a number of orders in the pipeline.

• Material Handling – Our Material Handling segment bookings increased 16% compared to the second quarter of 2024, due to increased demand for our capital equipment products at our conveying and vibratory business.

This increase was driven by underground mineral mining projects where customers placed substantial equipment orders to meet their operational needs.

Our baling business also experienced increased demand for our capital equipment products, especially in the European market.

Despite the overall increase in demand at our baling businesses, market conditions remain constrained, driven by a decline in used paper prices, market uncertainty related to tariffs and concerns over borrowing costs, all of which impact the timing of capital orders.

From a tariff perspective, we anticipate some

competitive advantage at our North American baling business as customers evaluate the incremental tariff costs on foreign-made balers.

However, ongoing tariff-related market uncertainty has tempered demand for our capital equipment products, and we anticipate customers shifting their capital expenditures from larger capital projects to smaller aftermarket products in the short-term.

Demand for our parts and consumables products in this segment was consistent with the first quarter of 2025, and we expect stable demand to continue for the remainder of the year.

While quote activity for large capital projects remains active, tariff-related uncertainty has led to a lengthening in quote-to-order times as customers await improved market conditions, with some customers in Europe delaying capital orders into early 2026.

Capital bookings at our fiber processing product line decreased 40% compared to the first nine months of 2024 due to constrained capital spending related to macroeconomic conditions.

These conditions have led to the deferral of capital orders to the fourth quarter of 2025 and into 2026.

Tariff-related uncertainty has had a greater impact in this segment due to the higher average capital order value and our customers’ ability to delay the timing of large capital projects.

Despite this, demand for our aftermarket parts in our Industrial Processing segment has remained strong as customers prioritize maintenance spending.

We expect steady demand for our aftermarket parts to continue for the remainder of 2025.

In addition, we anticipate a strengthening in demand for our capital equipment in this segment in the fourth quarter of 2025, supported by the expected receipt of several orders currently in the pipeline.

• Material Handling – Our Material Handling segment bookings increased 4% in the first nine months of 2025 compared to the first nine months of 2024, due to increased demand for our capital equipment products at our conveying and vibratory business.

This increase was driven by underground mineral mining projects where customers placed substantial equipment orders to meet their operational requirements.

Our baling business experienced weaker demand for our capital equipment products in Europe where market conditions remain constrained, driven by a decline in used paper prices, uncertainty related to tariffs, and concerns over borrowing costs, all of which impact the timing of

capital orders.

However, the baling business has seen steady demand for its aftermarket parts as customers shift their near-term spending from larger capital projects to smaller aftermarket maintenance and replacement purchases.

We expect demand in the Material Handling segment to remain stable for the remainder of 2025.

Our global operations have been and continue to be impacted by complex market conditions fueled by tariff-related uncertainty, inflationary pressures, and geopolitical tensions.

17 unchanged sentences

On July 9, 2025, we acquired Babbini S.p.A and G.P.S.

Engineering S.r.l (collectively, Babbini), two Italy-based companies specializing in industrial dewatering and engineered power transmission solutions, for approximately $18.7 million, net of cash acquired, and subject to certain adjustments.

Babbini is part of our Industrial Processing segment.

On October 7, 2025, we acquired Clyde Industries Holdings, Inc.

and its subsidiaries (Clyde Industries), a manufacturer of highly engineered boiler efficiency and cleaning system technologies, pursuant to a securities purchase agreement for $175.0 million in cash, subject to customary adjustments.

Babbini and Clyde Industries are part of our Industrial Processing segment.

See Note 2 , Acquisition, and Note 11 , Subsequent Events, in the accompanying condensed consolidated financial statements for further details.

Results of Operations

Second Quarter 2025 Compared With Second Quarter 2024

The following table presents the change in revenue by segment between the second quarters of 2025 and 2024, and those changes excluding the effect of acquisitions and foreign currency translation which we refer to as change in organic revenue.

Third Quarter 2025 Compared With Third Quarter 2024

The following table presents the change in revenue by segment between the third quarters of 2025 and 2024, and those changes excluding the effect of acquisitions and foreign currency translation which we refer to as change in organic revenue.

Organic revenue excludes the effect of acquisitions for the four quarterly reporting periods following the date of the acquisition.

The presentation of the change in organic revenue is a non-GAAP measure.

We believe this non-GAAP measure helps investors gain an understanding of our underlying operations consistent with how management measures and forecasts its performance, especially when comparing such results to prior periods.

We believe this non-GAAP measure helps investors gain an understanding of our underlying operations consistent with how management measures and forecasts its

performance, especially when comparing such results to prior periods.

This non-GAAP measure should not be considered superior to or a substitute for the corresponding U.S.

generally accepted accounting principles (GAAP) measure.

Revenue by reportable segment in the second quarters of 2025 and 2024 is as follows:

Revenue by reportable segment in the third quarters of 2025 and 2024 is as follows:

Three Months Ended Increase (Decrease)

1 unchanged sentence

Change in Organic Revenue

(In thousands, except percentages) June 28,

2025 June 29,

(In thousands, except percentages) September 27,

2025 September 28,

2024 % Change Increase (Decrease)

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Consolidated $ 271,567 $ 271,614 $ (47) — % $ 5,930 $ 4,176 $ (10,153) (4) %

Consolidated revenue decreased to $255.3 million, or 7%, in the second quarter of 2025 compared to record revenue achieved in the second quarter of 2024, which was driven by record revenue at our Industrial Processing segment.

Significant economic uncertainty impacted our customers’ decision-making process leading to a slowdown in capital orders in the second half of 2024 and the first quarter of 2025.

As a result, capital revenue decreased 28% in the second quarter of 2025 compared to the prior year period.

However, we experienced a sequential increase in our consolidated revenue across all segments compared to the first quarter of 2025.

Demand for our parts and consumables products has remained steady and notably, we had record parts and consumables revenue of $181.8 million, or 71% of consolidated revenue, in the second quarter of 2025.

Revenue at our Flow Control segment increased 4%, while organic revenue increased 2% in the second quarter of 2025, driven by higher demand for our parts and consumables products with strength in North America more than offsetting weakness in Europe.

Revenue at our Industrial Processing segment decreased 16% in the second quarter of 2025 compared to record revenue achieved in the 2024 period, primarily driven by comparatively weaker demand for our capital equipment products at our wood processing business in the 2025 period.

Ongoing market uncertainty in both North America and Europe has resulted in a lengthening of the quote-to-order times as customers await improved market conditions, causing some capital equipment orders to be delayed.

Despite this, demand for our aftermarket products has remained steady as customers focus their spending on critical parts, resulting in a 7% increase in parts and consumables revenue in the second quarter of 2025 compared to 2024.

Revenue at our Material Handling segment decreased 6% in the second quarter of 2025 due to lower capital equipment revenue at our conveying and vibratory business driven by tariff-related market uncertainty.

Consolidated revenue was $271.6 million in both the third quarters of 2025 and 2024.

Organic revenue decreased 4% primarily due to weak demand for our capital equipment products, especially at our Industrial Processing segment, as market uncertainty continued to impact our customers’ decision-making process.

This market uncertainty was fueled by escalating tariff rates on U.S.

imports and exports impacting manufacturers' input costs.

While quote activity remains high, customers are more cautious regarding the timing of their capital expenditures, leading to a delay in securing orders.

Demand for our parts and consumables products has remained strong, and notably, we had record parts and consumables revenue of $188.4 million in the third quarter of 2025.

Revenue at our Flow Control segment decreased 3% in the third quarter of 2025 driven by weaker demand for our capital equipment products in most regions.

Ongoing mill closures and production curtailments along with merger activity have contributed to weak market conditions in the pulp and paper industry.

Demand for our parts and consumables products has been stable with aftermarket parts revenue increasing 3% compared to the third quarter of 2024.

Revenue at our Industrial Processing segment decreased 4% in the third quarter of 2025.

Organic revenue decreased 10% in the third quarter of 2025 compared to the 2024 period, primarily driven by comparatively weaker demand for our capital equipment products at our fiber processing and wood processing businesses in the 2025 period.

Ongoing market uncertainty in both North America and Europe has resulted in a lengthening of quote-to-order times as customers await improved market conditions, causing some capital equipment orders to be delayed.

Despite this, demand for our aftermarket parts has remained steady as customers focus their spending on critical parts and maintenance, resulting in a 4% increase in parts and consumables revenue in the third quarter of 2025 compared to 2024.

Revenue at our Material Handling segment increased 11% to a record $70.3 million in the third quarter of 2025 primarily due to strong performance at our baling businesses.

Our European baling business had a 31% increase in revenue in the third quarter of 2025 driven by market demand for waste reduction and recycling products.

Gross Profit Margin

Gross profit margin by reportable segment in the second quarters of 2025 and 2024 is as follows:

Gross profit margin by reportable segment in the third quarters of 2025 and 2024 is as follows:

Three Months Ended Basis Point Change

2025 June 29,

September 27,

2025 September 28,

Flow Control 51.9% 51.8% 10 bps

2 unchanged sentences

Consolidated 45.2% 44.7% 50 bps

Consolidated gross profit margin increased to 45.9% in the second quarter of 2025 from 44.4% in the second quarter of 2024 due to an increase in the proportion of higher-margin parts and consumables revenue, which increased to 71% of consolidated revenue in the second quarter of 2025 compared to 63% in in the second quarter of 2024.

Consolidated gross profit margin increased to 45.2% in the third quarter of 2025 from 44.7% in the third quarter of 2024 due to an increase in the proportion of higher-margin parts and consumables revenue, which increased to 69% of consolidated revenue in the third quarter of 2025 compared to 65% in the prior year period.

Gross profit margin included amortization expense related to acquired profit in inventory of $0.5 million in the third quarter of 2025, which lowered gross profit margin by 0.1 percentage points compared to expense of $1.2 million, which lowered gross profit margin by 0.5 percentage points in the 2024 period.

Within our reportable segments, gross profit margin:

• Increased to 53.8% at our Flow Control segment from 53.0% in the 2024 period primarily due to an increase in the proportion of higher-margin parts and consumables revenue in 2025 and, to a lesser extent, the inclusion of $0.2 million of amortization expense related to acquired profit in inventory, which lowered gross profit margin in 2024 by 0.3 percentage points.

• Increased to 51.9% at our Flow Control segment from 51.8% in the 2024 period primarily due to an increase in the proportion of higher-margin parts and consumables revenue in 2025 and the inclusion of $0.7 million of amortization expense related to acquired profit in inventory, which lowered gross profit margin in 2024 by 0.8 percentage points.

These increases were partially offset by lower margins achieved on our capital equipment products.

• Increased to 42.6% at our Industrial Processing segment from 41.3% in the 2024 period due to an increase in the proportion of higher-margin parts and consumables revenue in 2025, partially offset by lower margins achieved on our capital equipment products.

• Decreased to 43.6% at our Industrial Processing segment from 44.0% in the 2024 period due to lower margins achieved on our capital equipment products, partially offset by an increase in the proportion of higher-margin parts and consumables revenue in 2025.

• Increased to 38.5% at our Material Handling segment from 35.0% in the 2024 period due to higher margins achieved on our parts and consumables products.

Selling, General, and Administrative Expenses

Selling, general, and administrative (SG&A) expenses by reportable segment and corporate in the second quarters of 2025 and 2024 are as follows:

Selling, general, and administrative (SG&A) expenses by reportable segm ent and Corp orate in the third quarters of 2025 and 2024 are as follows:

Three Months Ended

(In thousands, except percentages) June 28,

2025 June 29,

(In thousands, except percentages) September 27,

2025 September 28,

2024 Increase

5 unchanged sentences

Consolidated as a Percentage of Revenue 27.9% 25.4%

Consolidated SG&A expenses as a percentage of revenue increased to 29.0% in 2025 compared to 25.5% in 2024 largely due to the comparatively lower revenue in 2025.

Consolidated SG&A expenses increased $3.9 million, or 6%, compared to 2024.

The weakening of the U.S.

dollar resulted in a $1.9 million increase in SG&A expenses, including a $1.2 million shift from foreign currency gains in the 2024 period to losses in the 2025 period, and a $0.7 million unfavorable effect of foreign currency translation.

In addition, the increase in SG&A expenses includes $2.3 million of SG&A expenses from acquisitions, partially offset by a decrease of $0.5 million of acquisition-related costs.

Acquisition-related costs consist of amortization expense associated with acquired backlog and acquisition costs.

Consolidated SG&A expenses increased $6.8 million, or 10%, in the third quarter of 2025 compared to the third quarter of 2024 primarily due to higher compensation-related costs, an increase of $1.3 million in acquisition-related costs, and the inclusion of $0.7 million of SG&A expenses from an acquisition.

In addition, the weakening of the U.S.

dollar resulted in a $1.4 million increase in SG&A expenses, including a $1.2 million unfavorable effect of foreign currency translation and a $0.2 million shift from foreign currency gains in the 2024 period to losses in the 2025 period.

Within our reportable segments and Corporate, SG&A expenses:

• Increased $1.9 million at our Flow Control segment principally due to the inclusion of $1.9 million of SG&A expenses from acquisitions, partially offset by a decrease of $0.6 million of acquisition-related costs.

In addition, SG&A expenses increased $0.7 million as foreign currency gains of $0.3 million in the prior quarter shifted to $0.4 million of foreign currency losses in the 2025 period.

• Increased $1.7 million at our Industrial Processing segment principally due to increases of $0.8 million in acquisition-related costs, $0.6 million in foreign currency transaction and translation expense, and $0.3 million in legal expenses.

• Increased $0.2 million at our Material Handling segment principally due to $0.4 million of SG&A expenses from acquisitions, $0.2 million unfavorable foreign currency translation effect and a $0.2 million increase in external commission expense.

• Increased $0.6 million at our Flow Control segment principally due to the impact of the weakening of the U.S.

dollar, which resulted in a $1.0 million increase in SG&A expenses, including $0.7 million from the unfavorable effect of foreign currency translation and $0.3 million from a shift from foreign currency gains in the 2024 period to losses in the 2025 period.

These increases were partially offset by a decrease of $0.5 million in acquisition-related costs.

• Increased $0.1 million at Corporate due to a $0.7 million increase in compensation expense and $0.5 million increase in insurance expense, largely offset by a decrease in legal costs primarily due to an intellectual property settlement.

• Increased $4.1 million at our Industrial Processing segment principally due to increases of $2.1 million in acquisition costs, $0.7 million of SG&A expenses from an acquisition, and $0.5 million in bad debt expense.

• Increased $1.0 million at our Material Handling segment principally due to higher compensation expense, partially offset by a decrease of $0.3 million in acquisition-related costs.

• Increased $1.0 million at Corporate primarily due to a $1.2 million increase in compensation-related costs.

Interest Expense

Interest expense decreased to $3.3 million in the second quarter of 2025 from $5.2 million in the second quarter of 2024 due to decreased borrowings under our revolving credit facility and a lower weighted-average interest rate.

Interest expense decreased to $3.1 million in the third quarter of 2025 from $5.5 million in the third quarter of 2024 due to decreased borrowings under our revolving credit facility and a lower weighted-average interest rate.

We expect interest expense will increase significantly during the fourth quarter of 2025 as a result of the $170.0 million borrowed in October 2025 to fund our Clyde Industries acquisition.

Provision for Income Taxes

Provision for income taxes decreased to $9.8 million in the second quarter of 2025 from $12.0 million in the second quarter of 2024.

The effective tax rate of 27% in the second quarter of 2025 and 28% in the second quarter of 2024 was higher than our statutory rate of 21% primarily due to the distribution of our worldwide earnings, state taxes, nondeductible expenses, and the cost of repatriating the earnings of certain foreign subsidiaries.

Provision for income taxes decreased to $11.8 million in the third quarter of 2025 from $12.0 million in the third quarter of 2024.

The effective tax rate of 30% in the third quarter of 2025 was higher than our statutory rate of 21% primarily due to an increase in unrecognized tax benefits, the distribution of our worldwide earnings, nondeductible expenses, state taxes, and the cost of repatriating the earnings of certain foreign subsidiaries.

These items were offset in part by a net tax benefit from the re-measurement of certain deferred income tax assets and liabilities due to the decrease to Germany's future statutory tax rate enacted in July 2025 and foreign tax credits.

The effective tax rate of 27% in the third quarter of 2024 was higher than our statutory rate of 21% primarily due to the distribution of our worldwide earnings, state taxes, nondeductible expenses, the cost of repatriating the earnings of certain foreign subsidiaries, and tax expenses associated with Global Intangible Low-Taxed Income provisions.

These items were offset in part by foreign tax credits.

Net income decreased to $26.6 million in the second quarter of 2025 from $31.6 million in the second quarter of 2024 primarily due to a $9.0 million decrease in operating income, offset in part by a $1.9 million decrease in interest expense and a $2.2 million decrease in provision for income taxes (see discussions above for further details).

First Six Months 2025 Compared With First Six Months 2024

The following table presents changes in revenue and organic revenue by segment between the first six months of 2025 and 2024.

Organic revenue is a non-GAAP measure as defined above in the results of operations for the second quarter of 2025 compared with the second quarter of 2024.

Revenue by segment in the first six months of 2025 and 2024 is as follows:

Six Months Ended Acquisitions Currency Translation (Non-GAAP)

Net income decreased to $28.1 million in the third quarter of 2025 from $31.9 million in the third quarter of 2024 primarily due to a $6.4 million decrease in operating income, offset in part by a $2.4 million decrease in interest expense and a $0.2 million decrease in provision for income taxes (see discussions above for further details).

First Nine Months 2025 Compared With First Nine Months 2024

The following table presents changes in revenue and organic revenue by segment between the first nine months of 2025 and 2024.

Organic revenue is a non-GAAP measure as defined above in the results of operations for the third quarter of 2025 compared with the third quarter of 2024.

Revenue by segment in the first nine months of 2025 and 2024 is as follows:

Nine Months Ended Acquisitions Currency Translation (Non-GAAP)

Change in Organic Revenue

(In thousands, except percentages) June 28,

2025 June 29,

(In thousands, except percentages) September 27,

2025 September 28,

2024 Increase

4 unchanged sentences

Consolidated $ 766,044 $ 795,354 $ (29,310) (4)% $ 14,757 $ 521 $ (44,588) (6)%

Consolidated revenue in the first six months of 2025 decreased to $494.5 million, or 6%, while organic revenue decreased 7% primarily due to weaker demand for our capital equipment products.

Significant economic uncertainty impacted our customers’ decision-making process leading to a slowdown in capital orders in the second half of 2024 and the first quarter of 2025.

As a result, capital revenue was comparatively lower in 2025.

From a geographic perspective, organic revenue was impacted by softening demand across all regions due to weak macroeconomic conditions fueled by trade tensions.

While customers delayed large capital expenditures, the demand for our parts and consumables was steady, resulting in a 5% increase in parts and consumables revenue compared to the first six months of 2024.

Revenue at our Flow Control segment increased 5%, including a 4% increase from acquisitions and a 1% decrease from the unfavorable effect of foreign currency translation.

Organic revenue increased 2% in the first six months of 2025 driven by higher demand for parts and consumable products with strength in North America offsetting weaker market conditions in Europe.

This increase was partially offset by lower demand for our capital equipment products in North America due to challenging market conditions.

Revenue at our Industrial Processing segment decreased 16% in the first six months of 2025 due to reduced demand for our capital equipment products, especially at our wood processing businesses in the latter half of 2024 and the first quarter of 2025.

While there is active quote activity for large capital projects, tariff-related uncertainty has increased the time for securing orders with certain orders being delayed to later in 2025 or into 2026.

Capital revenue also decreased at our fiber processing businesses in the first six months of 2025, especially in China, where trade tensions were further compounded by sluggish economic conditions resulting in more cautious capital spending.

Given the delay in committing to major capital expenditures, many customers focused their spending on critical parts.

As a result, there was solid demand for our parts and consumables products in this segment with a 3% increase in aftermarket revenue in the first six months of 2025 compared to the first six months of 2024.

Revenue at our Material Handling segment decreased 3%, led by weaker demand for our capital equipment products at our conveying and vibratory business in North America.

This decline was partly driven by the tariff-related market uncertainty, which tempered demand and delayed the execution of capital projects.

However, this decrease was partially offset by stronger demand at our baling business in North America.

Consolidated revenue decreased 4% to $766.0 million in the first nine months of 2025, while organic revenue decreased 6% primarily due to weaker demand for our capital equipment products, especially at our Industrial Processing segment.

The volatility of the tariff rates on imports to the United States originally proposed in early 2025 and then subsequently modified, led to a significant slowdown in the timing of securing large capital orders.

As a result, capital revenue decreased 23% in the first nine months of 2025 compared to 2024.

From a geographic perspective, organic revenue was impacted by softening demand across all regions due to weak macroeconomic conditions fueled by trade tensions and geopolitical issues.

While customers delayed large capital expenditures, the demand for our parts and consumables was steady, resulting in a 3% increase in parts and consumables revenue compared to the first nine months of 2024.

Revenue at our Flow Control segment increased 2% in the first nine months of 2025.

Organic revenue decreased 1% in the first nine months of 2025 due to lower demand for our capital equipment products, especially in North America, as a result of challenging market conditions.

This decrease was partially offset by higher demand for parts and consumables products with strength in North America offsetting weaker market conditions in Europe.

Revenue at our Industrial Processing segment decreased 12% in the first nine months of 2025.

Organic revenue decreased 13% in the first nine months of 2025 largely due to reduced demand for our capital equipment products at our wood processing businesses.

While there is active quote activity for large capital projects, tariff-related uncertainty has increased the time for securing orders with certain orders being delayed to the fourth quarter of 2025 or into 2026.

Capital revenue also decreased at our fiber processing businesses in the first nine months of 2025 across all regions, especially in China where trade tensions were further compounded by sluggish economic conditions resulting in more cautious capital spending.

delay in committing to major capital expenditures, many customers focused their spending on critical parts and maintenance.

As a result, there was solid demand for our parts and consumables products in this segment, with a 4% increase in aftermarket parts revenue in the first nine months of 2025 compared to the first nine months of 2024.

Revenue at our Material Handling segment increased 2%, led by higher demand at our baling businesses for both capital equipment and parts and consumables products.

This increase was partially offset by weaker demand for our capital equipment products at our conveying and vibratory business in North America driven by the tariff-related market uncertainty, which tempered demand and delayed the execution of capital projects.

Gross Profit Margin

Gross profit margin by segment in the first six months of 2025 and 2024 is as follows:

Six Months Ended Basis Point Change

2025 June 29,

Gross profit margin by segment in the first nine months of 2025 and 2024 is as follows:

Nine Months Ended Basis Point Change

September 27,

2025 September 28,

Flow Control 53.0%

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Consolidated 45.7%

Consolidated gross profit margin increased to 46.0% in the first six months of 2025 from 44.5% in the first six months of 2024 due to an increase in the proportion of higher-margin parts and consumables revenue, which increased to 73% of consolidated revenue in the first six months of 2025 compared to 66% in in the first six months of 2024, and the inclusion of $2.9 million of amortization expense related to acquired profit in inventory in the first six months of 2024, which decreased consolidated gross profit margin in the first six months of 2024 by 0.5 percentage points.

Consolidated gross profit margin increased to 45.7% in the first nine months of 2025 from 44.5% in the first nine months of 2024 due to an increase in the proportion of higher-margin parts and consumables revenue, which increased to 72% of consolidated revenue in the first nine months of 2025 compared to 65% in in the first nine months of 2024.

Gross profit margin included amortization expense related to acquired profit in inventory of $0.5 million, which lowered gross profit margin by 0.1 percentage points in the first nine months of 2025 compared to expense of $4.1 million, which lowered gross profit margin by 0.6 percentage points in the 2024 period.

Within our reportable segments, gross profit margin:

• Increased to 53.6% at our Flow Control segment from 53.4% in the 2024 period primarily due to an increase in the proportion of higher-margin parts and consumables revenue in 2025.

• Increased to 43.3% at our Industrial Processing segment from 41.5% in the 2024 period due to an increase in the proportion of higher-margin parts and consumables revenue in 2025 and the inclusion of $1.6 million of amortization expense related to acquired profit in inventory in the 2024 period, which decreased gross profit margin in 2024 by 0.7 percentage points.

• Increased to 53.0% at our Flow Control segment from 52.9% in the 2024 period primarily due to an increase in the proportion of higher-margin parts and consumables revenue in 2025 and the inclusion of $1.0 million of amortization expense related to acquired profit in inventory in the 2024 period, which decreased gross profit margin in 2024 by 0.3 percentage points.

• Increased to 43.4% at our Industrial Processing segment from 42.3% in the 2024 period due to an increase in the proportion of higher-margin parts and consumables revenue in 2025 and a decrease in amortization expense related to acquired profit in inventory in the first nine months of 2025 compared to the 2024 period.

These increases were partially offset by lower margins achieved on our capital equipment products.

• Increased to 38.2% at our Material Handling segment from 36.8% in the 2024 period due to the inclusion of $1.0 million of amortization expense related to acquired profit in inventory in the 2024 period, which decreased gross profit margin in 2024 by 0.8 percentage points and, to a lesser extent, higher margins achieved on our capital equipment products in 2025.

• Increased to 38.3% at our Material Handling segment from 36.2% in the 2024 period due to higher margins achieved on our capital equipment products in 2025 and, to a lesser extent, the inclusion of $1.0 million of amortization expense related to acquired profit in inventory in the 2024 period, which decreased gross profit margin in 2024 by 0.6 percentage points.

Selling, General, and Administrative Expenses

SG&A expenses by reportable segment and corporate in the first six months of 2025 and 2024 are as follows:

Six Months Ended

(In thousands, except percentages) June 28,

2025 June 29,

2024 Increase (Decrease)

SG&A expenses by reportable segment and Corporate in the first nine months of 2025 and 2024 are as follows:

Nine Months Ended

(In thousands, except percentages) September 27,

2025 September 28,

2024 Increase

Flow Control $ 76,435 $ 72,186 $ 4,249 6%

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Consolidated as a Percentage of Revenue 28.8% 26.3%

Consolidated SG&A expenses as a percentage of revenue increased to 29.4% in the first six months of 2025 compared with 26.8% in the first six months of 20 24 due in large part to the comparatively lower revenue in 2025.

Consolidated SG&A expenses increased $4.9 million, or 3%, primarily due to the inclusion of $5.5 million of SG&A expenses from acquisitions made during the second and third quarters of 2024 and higher compensation-related costs.

These increases were partially offset by a decrease of $1.7 million of acquisition-related costs.

Consolidated SG&A expenses as a percentage of revenue increased to 28.8% in the first nine months of 2025 compared with 26.3% in the first nine months of 20 24 due in part to the comparatively lower revenue in 2025.

SG&A expenses increased $11.6 million, or 6%, primarily due to the inclusion of $6.2 million of SG&A expenses from acquisitions and higher compensation-related costs.

In addition, the weakening of the U.S.

dollar resulted in a $1.9 million increase in SG&A expenses, including a $1.4 million shift from foreign currency gains in the 2024 period to losses in the 2025 period, and $0.5 million from the unfavorable effect of foreign currency translation.

Within our reportable segments and Corporate, SG&A expenses:

• Increased $3.7 million at our Flow Control segment principally due to the inclusion of $4.5 million of SG&A expenses from acquisitions, partially offset by a decrease of $0.3 million in acquisition-related costs.

• Increased $0.2 million at our Industrial Processing segment due to an increase of $0.5 million of acquisition costs, partially offset by a decrease of $0.2 million in bad debt expense.

• Decreased $0.3 million at our Material Handling segment principally due to a decrease of $1.9 million of acquisition-related costs, partially offset by an increase of $1.0 million of SG&A expenses from acquisitions and an increase in compensation-related costs.

• Increased $1.3 million at Corporate due to a $1.4 million increase in compensation expense and a $0.6 million increase in insurance expense, largely offset by a decrease in legal costs primarily due to an intellectual property settlement.

• Increased $4.2 million at our Flow Control segment principally due to the inclusion of $4.5 million of SG&A expenses from acquisitions and a $1.3 million increase in SG&A expense due to the unfavorable impact of foreign currency, including a $1.0 million shift from foreign currency gains in the 2024 period to losses in the 2025 period.

These increases were partially offset by a decrease of $0.9 million in acquisition-related costs.

• Increased $4.3 million at our Industrial Processing segment due to an increase of $2.6 million of acquisition costs, $0.7 million of SG&A expenses from an acquisition, and a $0.3 million increase in SG&A expense due to the unfavorable impact of foreign currency.

• Increased $0.8 million at our Material Handling segment principally due to an increase of $1.0 million of SG&A expenses from acquisitions, higher compensation-related costs, and a $0.3 million unfavorable effect of foreign currency.

These increases were partially offset by a decrease of $2.2 million in acquisition-related costs.

• Increased $2.3 million at Corporate due to a $1.9 million increase in compensation expense and a $1.1 million increase in insurance expense, offset by a decrease in legal costs primarily due to an intellectual property settlement.

Interest Expense

Interest expense decreased to $7.2 million in the first six months of 2025 from $9.9 million in the first six months of 2024 due t o decreased borrowings under our revolving credit facility and a lower weighted-average interest rate.

Interest expense decreased to $10.2 million in the first nine months of 2025 from $15.4 million in the first nine months of 2024 due t o a lower weighted-average interest rate and, to a lesser extent, decreased borrowings under our revolving credit facility.

Provision for Income Taxes

Provision for income taxes decreased to $17.7 million in the first six months of 2025 from $19.8 million in the first six months of 2024.

The effective tax rate of 26% in the first six months of 2025 was higher than our statutory rate of 21% primarily due to nondeductible expenses, the distribution of our worldwide earnings, and state taxes.

These items were offset in part by net excess income tax benefits from stock-based compensation arrangements.

The effective tax rate of 26% in the first six months of 2024 was higher than our statutory rate of 21% primarily due to the distribution of our worldwide earnings, nondeductible expenses, state taxes, and the cost of repatriating the earnings of certain foreign subsidiaries.

These items were offset in part by foreign tax credits and net excess income tax benefits from stock-based compensation arrangements.

Net income decreased to $51.1 million in the first six months of 2025 from $56.6 million in the first six months of 2024 primarily due to a $10.4 million decrease in operating income, offset in part by a $2.7 million decrease in interest expense and a $2.2 million decrease in provision for income taxes (see discussions above for further details).

Provision for income taxes decreased to $29.4 million in the first nine months of 2025 from $31.8 million in the first nine months of 2024.

The effective tax rate of 27% in the first nine months of 2025 was higher than our statutory rate of 21% primarily due to nondeductible expenses, the distribution of our worldwide earnings, state taxes, and the cost of repatriating the earnings of certain foreign subsidiaries.

The effective tax rate of 26% in the first nine months of 2024 was higher than our statutory rate of 21% primarily due to the distribution of our worldwide earnings, nondeductible expenses, state taxes, and the cost of repatriating the earnings of certain foreign subsidiaries.

These items were offset in part by foreign tax credits.

Net income decreased to $79.2 million in the first nine months of 2025 from $88.5 million in the first nine months of 2024 primarily due to a $16.7 million decrease in operating income, offset in part by a $5.1 million decrease in interest expense and a $2.4 million decrease in provision for income taxes (see discussions above for further details).

Non-GAAP Key Performance Indicators

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We use organic revenue to understand our trends and to forecast and evaluate our financial performance and compare revenue to prior periods (see discussion in Revenue above).

Adjusted operating income, adjusted EBITDA, and adjusted EBITDA margin exclude amortization expense related to acquired profit in inventory and backlog, acquisition costs, and other income or expense, as indicated.

Adjusted operating income, adjusted EBITDA, and adjusted EBITDA margin exclude acquisition costs, amortization expense related to acquired profit in inventory and backlog, and other income or expense, as indicated.

These items are excluded as they are not indicative of our core operating results and are not comparable to other periods, which have differing levels of incremental costs, expenditures or income, or none at all.

Additionally, we use free cash flow in order to provide insight on our ability to generate cash for acquisitions and debt repayments, as well as for other investing and financing activities.

Additionally, we use free cash flow in order to provide insight on our ability to generate cash for acquisitions and debt

repayments, as well as for other investing and financing activities.

We believe these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provide meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our core business, operating results, or future outlook.

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A reconciliation of adjusted operating income, adjusted EBITDA, and adjusted EBITDA margin from net income attributable to Kadant is as follows:

Three Months Ended Six Months Ended

(In thousands, except percentages) June 28,

2025 June 29,

2024 June 28,

2025 June 29,

Three Months Ended Nine Months Ended

(In thousands, except percentages) September 27,

2025 September 28,

2024 September 27,

2025 September 28,

Net Income Attributable to Kadant $ 27,722 $ 31,586 $ 77,944 $ 87,566

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Operating Income 42,616 48,987 117,579 134,315

Acquisition Costs 2,253 469 3,498 2,533

Acquired Profit in Inventory Amortization (a)

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165 687 746 2,181

Acquisition Costs 908 940 1,245 2,064

Indemnification Asset (Provision) Reversal (c)

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A reconciliation of free cash flow from cash flow provided by operating activities is as follows:

Three Months Ended Six Months Ended

(In thousands) June 28,

2025 June 29,

2024 June 28,

2025 June 29,

Three Months Ended Nine Months Ended

(In thousands) September 27,

2025 September 28,

2024 September 27,

2025 September 28,

Cash Provided by Operating Activities $ 47,252 $ 52,478 $ 110,569 $ 103,375

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Liquidity and Capital Resources

Consolidated working capital was $274.9 million at June 28, 2025, compared with $250.8 million at December 28, 2024.

Cash and cash equivalents were $95.3 million at June 28, 2025, compared with $94.7 million at December 28, 2024, which included cash and cash equivalents held by our foreign subsidiaries o f $75.3 million at June 28, 2025 and $73.8 million at December 28, 2024.

Cash flow information in the first six months of 2025 and 2024 is as follows:

Six Months Ended

(In thousands) June 28,

2025 June 29,

Consolidated working capital was $307.4 million at September 27, 2025, compared with $250.8 million at December 28, 2024.

Cash and cash equivalents were $124.5 million at September 27, 2025, compared with $94.7 million at December 28, 2024, which included cash and cash equivalents held by our foreign subsidiaries o f $86.3 million at September 27, 2025 and $73.8 million at December 28, 2024.

Cash flow information in the first nine months of 2025 and 2024 is as follows:

Nine Months Ended

(In thousands) September 27,

2025 September 28,

Net Cash Provided by Operating Activities $ 110,569 $ 103,375

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Operating Activities

Cash provided by operating activities increased to $63.3 million in the first six months of 2025 from $50.9 million in the first six months of 2024 due in large part to the increase in cash received from customer deposits.

Cash provided by operating activities increased to $110.6 million in the first nine months of 2025 from $103.4 million in the first nine months of 2024 due in large part to the increase in cash received from customer deposits.

Our operating cash flows are primarily generated from cash received from customers, offset by cash payments for items such as inventory, employee compensation, operating leases, income taxes, and interest payments on outstanding debt obligations.

Significant operating cash outflows associated with working capital in the six months of 2025 related to inventory and other current liabilities.

Purchases of inventory used cash of $14.8 million and other current liabilities used cash of $13.4 million primarily related to incentive compensation payments.

These uses of cash were offset in part by cash received from customer deposits of $9.4 million associated with an increase in capital equipment orders and cash received from contract assets of $7.7 million related to contracts accounted for on an over time basis.

Significant cash outflows associated with working capital in the first six months of 2024 related to accounts receivable, customer deposits and other current liabilities.

Significant operating cash outflows associated with working capital in the nine months of 2025 related to inventory, other liabilities, and accounts receivable.

Purchases of inventory used cash of $12.9 million and other liabilities used cash of $10.4 million, primarily related to incentive compensation payments.

In addition, an increase in accounts receivable used cash of $7.7 million due to timing of shipments.

These uses of cash were offset in part by cash received from customer deposits of $7.2 million due to the timing of capital equipment orders and cash received from contract assets of $8.9 million related to contracts accounted for on an over time basis.

Significant cash outflows associated with working capital in the first nine months of 2024 related to accounts receivable, customer deposits and other liabilities.

An increase in accounts receivable used cash of $10.4 million primarily due to our revenue growth, and a decrease in customer deposits used cash of $21.6 million due to a reduction in capital equipment orders.

Other current liabilities used cash of $15.2 million primarily related to incentive compensation payments.

These uses of cash were offset in part by cash provided by an increase in accounts payable of $14.0 million related to inventory purchases and the timing of payments.

Other liabilities used cash of $15.5 million primarily related to incentive compensation payments.

These uses of cash were offset in part by cash provided from the shipment of inventory of $10.2 million and increases in accounts payable of $8.7 million related to inventory purchases and the timing of payments.

Investing Activities

Cash used in investing activities was $6.9 million in the first six months of 2025, compared with $301.5 million in the first six months of 2024.

Cash used in investing activities in the first six months of 2025 consisted of capital expenditures of $7.8 million.

Cash used in investing activities in the first six months of 2024 included consideration paid for acquisitions, net of cash acquired, of $291.6 million and capital expenditures of $11.2 million.

Cash used in investing activities was $26.2 million in the first nine months of 2025, compared with $315.9 million in the first nine months of 2024.

Cash used in investing activities in the first nine months of 2025 included consideration paid for an acquisition, net of cash acquired, of $16.5 million and capital expenditures of $11.0 million.

Cash used in investing activities in the first nine months of 2024 included consideration paid for acquisitions, net of cash acquired, of $302.0 million and capital expenditures of $15.4 million.

Financing Activities

Cash used in financing activities was $61.5 million in the six months of 2025, compared with cash provided by financing activities of $222.8 million in the first six months of 2024.

Borrowings under our revolving credit facility were $8.0 million in 2025 compared to $295.2 million in 2024, which was primarily used to fund our 2024 acquisitions.

Cash used in financing activities was $59.3 million in the nine months of 2025, compared with cash provided by financing activities of $196.8 million in the first nine months of 2024.

Borrowings under our revolving credit facility, which were primarily used to fund our 2025 and 2024 acquisitions, were $29.0 million in 2025 compared to $305.2 million in 2024.

Repayments of short- and long-term obligations were $69.4 million in 2025 and $91.4 million in 2024.

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The exchange rate effect on cash, cash equivalents, and restricted cash represents the impact of translation of cash balances at our foreign subsidiaries.

The $6.3 million increase in cash, cash equivalents, and restricted cash in the first six months of 2025 related to exchange rates was primarily attributable to the weakening of the U.S.

The $5.9 million increase in cash, cash equivalents, and restricted cash in the first nine months of 2025 related to exchange rates was primarily attributable to the weakening of the U.S.

dollar against the euro and, to a lesser extent, the Swedish krona, and the Canadian dollar.

The $3.5 million decrease in cash, cash equivalents, and restricted cash in the first six months of 2024 was primarily attributable to the strengthening of the U.S.

dollar against the euro and, to a lesser extent, the Canadian dollar, the Chinese renminbi and Brazilian real.

The $1.0 million decrease in cash, cash equivalents, and restricted cash in the first nine months of 2024 was primarily attributable to the strengthening of the U.S.

dollar against the Mexican peso and, to a lesser extent, the Brazilian real and the Canadian dollar.

Borrowing Capacity and Debt Obligations

Our unsecured multi-currency revolving credit facility originally entered into on March 1, 2017 (as amended and restated to date, the Credit Agreement) matures on November 30, 2027 and has a total borrowing capacity of $400.0 million.

As of June 28, 2025, our outstanding balance under the Credit Agreement was $239.2 million, which included $80.2 million of euro-denominated borrowings, and we had $161.6 million of available borrowing capacity, in addition to a $200.0 million uncommitted, unsecured incremental borrowing facility.

On September 26, 2025, we entered into an eighth amendment and joinder (the Eighth Amendment) to our unsecured multi-currency revolving credit facility originally entered into on March 1, 2017 (as amended and restated to date, the Credit Agreement).

The Eighth Amendment, among other things, increased our aggregate borrowing capacity from $400.0 million to $750.0 million and extended the maturity date from November 30, 2027 to September 26, 2030.

In addition to the increased committed borrowing capacity, an uncommitted, unsecured incremental borrowing facility of $200.0 million continues to be available under the Credit Agreement.

In the first nine months of 2025, we borrowed $29.0 million under our revolving credit facility, the majority of which was used to fund our acquisition of Babbini.

As of September 27, 2025, our outstanding balance under the Credit Agreement was $248.1 million, which included $101.1 million of euro-denominated borrowings, and we had $502.0 million of available committed borrowing capacity, in addition to a $200.0 million uncommitted, unsecured incremental borrowing facility.

Under our debt agreements, our leverage ratio must be less than 3.75 or, if we elect, for the quarter during which a material acquisition occurs and for the three fiscal quarters thereafter, must be less than 4.25.

As of June 28, 2025, our leverage ratio was 0.86 and we were in compliance with our debt covenants.

See Note 4 , Long-Term Obligations, in the accompanying condensed consolidated financial statements for additional information regarding our debt obligations.

In July 2025, we borrowed $21.1 million of euro-denominated funds under our revolving credit facility to finance our acquisition of Babbini.

As of September 27, 2025, our leverage ratio was 0.94 and we were in compliance with our debt covenants.

In October 2025, we borrowed $170.0 million under our revolving credit facility to fund the acquisition of Clyde Industries.

Borrowings under our revolving credit facility bear variable rates of interest and adjust frequently based on prevailing market rates and the terms of our Credit Agreement.

The interest rate related to this debt was approximately 5.4% at the time of the borrowing.

Following this acquisition, we had available committed borrowing capacity of $332.0 million under the revolving credit facility, in addition to the uncommitted, unsecured incremental borrowing facility of $200.0 million.

See Note 5 , Long-Term Obligations and Note 11 , Subsequent Events, in the accompanying condensed consolidated financial statements for additional information regarding our debt obligations.

Additional Liquidity and Capital Resources

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We did not repurchase any shares of our common stock under this authorization or our previous $50.0 million authorization that expired on May 16, 2025.

We paid cash dividends of $7.8 million in the first six months of 2025.

On May 15, 2025, we declared a quarterly cash dividend of $0.34 per share totaling $4.0 million that will be paid on August 7, 2025.

We paid cash dividends of $11.8 million in the first nine months of 2025.

On September 4, 2025, we declared a quarterly cash dividend of $0.34 per share totaling $4.0 million that will be paid on November 6, 2025.

Future declarations of dividends are subject to our board of directors' approval and may be adjusted as business needs or market conditions change.

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We plan to make expenditures of approximately $10.0 to $12.0 million during the remainder of 2025 for property, plant, and equipment.

As of June 28, 2025, we had approximately $130.0 million of total unremitted foreign earnings.

As of September 27, 2025, we had approximately $137.7 million of total unremitted foreign earnings.

It is our intent to indefinitely reinvest $74.3 million of these earnings to support the current and future capital needs of our foreign operations, including debt repayments, if any.

In the first six months of 2025, we recorded withholding taxes on the earnings in certain foreign subsidiaries that we plan to repatriate in the foreseeable future.

In the first nine months of 2025, we recorded withholding taxes on the earnings in certain foreign subsidiaries that we plan to repatriate in the foreseeable future.

The foreign withholding taxes that would be required if we were to remit the indefinitely-reinvested foreign earnings to the United States would be approximately $2.0 million.

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Management evaluates its estimates on an ongoing basis based on historical experience, current economic and market conditions, and other assumptions management believes are reasonable.

We believe that our most critical accounting policies which are significant to our consolidated financial statements, and which involve the most complex or subjective decisions or assessments, are those described in Management's Discussion and Analysis of Financial Condition and Results of Operations under the heading Application of Critical Accounting Estimates in Part II, Item 7, of our Annual Report.

Estimates in Part II, Item 7, of our Annual Report.

There have been no material changes to these critical accounting policies since the end of fiscal 2024 that warrant disclosure.

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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