What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-08-19 compared with 2025-08-22 · 89 added, 79 removed, 191 unchanged (47% of the section changed)

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Certain statements contained within this document are considered forward-looking under the Private Securities Litigation Reform Act of 1995.

The statements may be identified by the use of words such as “believes,” “anticipates,” “expects,” “intends,” “plans,” “projects,” “estimates,” “forecasts,” “seeks,” “likely,” “future,” “may,” “might,” “should,” “would,” “could,” “will,” “potentially,” “can,” “goal,” “predict,” and similar expressions.

These forward-looking statements are subject to risks and uncertainties including, but not limited to, global economic conditions, geopolitical environment and conflicts such as the war in Ukraine, global health emergencies, availability or cost of raw materials and components, tariffs and other trade barriers, foreign exchange fluctuations, and our ability to convert new business opportunities into customers and revenue.

The statements may be identified by the use of words such as “believes,” “anticipates,” “expects,” “intends,” “plans,” “projects,” “estimates,” “forecasts,” “likely,” “future,” “may,” “might,” “should,” “would,” “could,” “will,” “can,” “potentially,” “probable,” and similar expressions.

These forward-looking statements are subject to risks and uncertainties including, but not limited to, global economic conditions, geopolitical environment and conflicts such as war, global health emergencies, availability or cost of raw materials and components, tariffs and other trade barriers, foreign exchange fluctuations, and our ability to convert new business opportunities into customers and revenue.

Additional cautionary statements regarding other risk factors that could have an effect on the future performance of Kimball Electronics are located within Item 1A - Risk Factors .

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We provide electronics manufacturing services (“EMS”), including engineering and supply chain support, to customers in the automotive, medical, and industrial end markets.

We further produce higher level and final assemblies and offer contract manufacturing organization (“CMO”) solutions which include the production of medical disposables and drug delivery devices, from precision molded plastics and cold chain management to drug integration.

We further produce higher level and final assemblies and offer contract development and manufacturing organization (“CDMO”) solutions which include the production of medical disposables and drug delivery devices, from precision molded plastics and cold chain management to drug integration.

Our manufacturing services, including engineering and supply chain support, utilize common production and support capabilities globally.

We are well recognized by our customers and the industry for our excellent quality, reliability, and innovative service.

CIRCUITS ASSEMBLY, a leading brand and technical publication for electronics manufacturers worldwide, has recognized us for the past 13 consecutive years for rankings in Highest Overall Customer Rating in their Service Excellence Awards.

Most recently, we were recognized by our customers for highest ratings in service excellence in seven categories:

dependability/timely delivery, manufacturing quality, responsiveness, technology, value for the price, flexibility, and overall satisfaction.

We have participated in the CIRCUITS ASSEMBLY Service Excellence Awards for the past twelve consecutive years, winning awards for excellence each year of participation and recently receiving top honors in all seven award categories.

CIRCUITS ASSEMBLY is a leading brand and technical publication for electronics manufacturers worldwide.

The contract manufacturing services industry is very competitive.

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however, one significant challenge will be maintaining our profit margins.

Pricing is competitive in the market as production efficiencies and material pricing advantages for most projects drive costs and prices down over the life of the projects.

This characteristic of the contract electronics marketplace is expected to continue.

The Worldwide Manufacturing Services Market - 2025 Edition , a comprehensive study on the worldwide EMS market published by New Venture Research (“NVR”), provided worldwide forecast trends through 2029.

NVR projects the worldwide assembly market for electronics products to grow at a compound annual growth rate (“CAGR”) of 6.3% over the next five years.

We continue to monitor the current economic and industry conditions for uncertainties that may pose a threat to our future growth or cause disruption in business strategy, execution, and timing in the markets in which we compete.

Net sales in fiscal year 2025 decreased 13% from the prior fiscal year, with decreases in each of our end market verticals.

The decrease in sales to customers in the automotive markets were largely driven by the loss of a major automotive program that was unrelated to Kimball and other automotive programs going end of life.

The decrease in sales to customers in the medical markets was primarily driven by lower demand resulting from customer overstocking of inventory.

We expect moderate medical growth in fiscal year 2026.

The decrease in sales to customers in the industrial market were related to the sale of GES and declines in smart metering and public safety.

We expect consolidated net sales in fiscal year 2026 to decline marginally from fiscal year 2025, largely due to the continued impact of the loss of a major automotive program discussed above.

Pricing remains competitive in the market even as production efficiencies and material pricing advantages for most projects drive costs and prices down over the life of the projects, a characteristic of our business and the market that we expect to continue.

We monitor the current economic and industry conditions for uncertainties that may pose a threat to our future growth or cause disruption in business strategy, execution, and timing in the markets in which we compete.

Beginning in February 2025, the U.S.

implemented tariffs on a variety of countries and commodities under the International Emergency Economic Powers Act (“IEEPA”), and certain countries have imposed or are considering retaliatory tariffs on U.S.

The global tariff landscape is highly dynamic, including legal challenges and administrative processes related to tariffs and potential refunds.

Increased tariffs have and may continue to impact end customer demand.

We have recovered, and expect to continue recovering, a significant portion of our tariff-related costs from our customers, although recovery may lag the timing of cost occurrence.

In the fourth quarter of fiscal year 2026, following the Supreme Court ruling that the IEEPA tariffs must be vacated, we began receiving refunds on IEEPA tariffs, a significant portion of which will be returned to our customers.

While we may not be able to fully recover tariff costs, we expect any unrecovered amounts, after giving effect to our contractual pass-through and repricing mechanisms, to be immaterial to our results of operations and cash flows.

We are closely monitoring ongoing geopolitical tensions in the Middle East, including the recent conflict involving the U.S., Israel, and Iran, and the related regional instability.

We are specifically monitoring the impacts to global macroeconomic conditions, supply chain disruptions, freight and component cost increases, and the related impact to end customer demand.

Net sales in fiscal year 2026 decreased 4% compared to fiscal year 2025, driven primarily by decreases in the automotive and industrial vertical markets partially offset by an increase in the medical market.

We have a strong focus on cost control balanced with managing the future growth prospects of our business.

We expect to make investments that will strengthen or add new capabilities to our package of value as a multifaceted manufacturing solutions company, including through entering into a lease on a new facility for our Indianapolis operations, and our recently completed capacity expansions.

Managing working capital in conjunction with fluctuating demand levels is likewise key.

In addition, a long-standing component of our profit-sharing incentive bonus plan is its link to our financial performance, which results in varying amounts of compensation expense as profits change.

We completed the divestiture of our GES business on July 31, 2024 and undertook restructuring efforts beginning in fiscal year 2024 to align our cost structure with reduced end-market demand levels.

In addition, on November 4, 2024, the Company announced that its Board of Directors has approved a plan to cease operations at our Tampa facility, which concluded with the assets being held for sale at the end of the fiscal year.

In fiscal year 2025, the Company announced that its Board of Directors had approved a plan to cease operations at our Tampa facility, which was completed by the end of the fiscal year 2025, and the sale of the land and building was completed in fiscal year 2026.

The decision was another important step towards sharpening our strategic focus, while leveraging our global footprint and streamlining the operating structure.

Production activities on existing customer programs have been transferred out of Tampa as of June 30, 2025, with the majority of the work going to our plants in North America, primarily our newly expanded facility in Mexico and Jasper.

Production activities on existing customer programs were transferred out of Tampa, with the majority of the work going to our plants in North America, primarily our newly expanded facility in Mexico and Jasper.

As we continue to monitor the progression of tariffs and the geopolitical economic environment, additional restructuring efforts may be necessary.

In fiscal year 2027, we expect the following known trends and uncertainties to affect our results of operations:

(i) integration of Helvoet, including one-time integration costs, purchase-accounting adjustments, and expected revenue and cost synergies;

(ii) start-up costs and depreciation associated with our new Indianapolis, Indiana medical CDMO facility as it replaces our existing Indianapolis operations;

(iii) continued uncertainty regarding U.S.

and foreign tariff policy;

(iv) ongoing demand pressure in the automotive vertical, partially offset by expected growth in the medical vertical;

and (v) potential changes to our effective tax rate arising from the geographic mix of earnings and from the continued implementation of the One Big Beautiful Bill Act.

We continue to work with our customers to optimize our global footprint.

We continue to maintain a strong balance sheet as of the end of fiscal year 2026, which included a current ratio of 2.1, a debt-to-equity ratio of 0.2, and Share Owners’ equity of $585 million.

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# of Customers 50 58 65

Our total number of customers declined by seven from 2024 to 2025;

three of which were divested with our automation, test, and measurement business, and the remaining four customers accounted for less than 1% of our consolidated net sales in fiscal year 2024.

Our total number of customers declined by eight from 2025 to 2026.

Those customers accounted for approximately 1% of our consolidated net sales in fiscal year 2025.

A detailed discussion of risk factors and uncertainties that could have an effect on our performance are located within Item 1A - Risk Factors .

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Selling and Administrative Expenses 61.1 4.3 % 50.3 3.4 % 22 %

Other General Income — — % (0.9) (0.1) % 100 %

Restructuring Expense

5.0 0.3 % 11.0 0.7 % (55) %

Goodwill Impairment — — % 5.8 0.3 % (100) %

(Gain on Disposal) Asset Impairment

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Total Net Sales $ 1,431.4 $ 1,486.7 (4) %

Beginning in the first quarter 2026, sales to certain customers previously included in the automotive vertical, specifically those customers more aligned with commercial vehicle applications versus passenger vehicles, are now reflected in the industrial vertical to better reflect the nature of the programs.

Prior periods have been recast to conform to current period presentation.

For the year ended June 30, 2025, $29.4 million of the industrial net sales were previously categorized as automotive.

Net sales in fiscal year 2026 decreased by 4% compared to net sales in fiscal year 2025.

The impact from foreign currency fluctuations on net sales was less than 1% in fiscal year 2025 compared to fiscal year 2024.

Foreign currency fluctuations had a favorable 2% impact on net sales in fiscal year 2026 compared to fiscal year 2025.

By end market vertical, our market verticals fluctuated as follows:

• Sales to customers in the automotive market were down in the current fiscal year when compared to the prior fiscal year driven by the loss of a major automotive program that was unrelated to Kimball and other automotive programs going end of life.

• Sales to customers in the medical market decreased when compared to the prior fiscal year.

This decrease was primarily driven by lower demand resulting from customer overstocking of inventory.

• In the industrial end market vertical, the sale of GES accounts for approximately one third of the sales decrease compared to the prior fiscal year.

We also experienced declines in our smart metering programs, where our customers are experiencing continued market share declines from commoditization, and to a lesser degree, declines in public safety and climate control customers.

Sales to Nexteer Automotive and ZF accounted for the following portions of our net sales:

• Sales to customers in the automotive market were down in the current fiscal year when compared to the prior fiscal year resulting from the loss of a major automotive program that was unrelated to Kimball, the continued pressure on customer demand partially as a result of tariffs primarily impacting North America, partially offset by improvements in Europe.

• Sales to customers in the medical market increased when compared to the prior fiscal year.

Fiscal year 2025 was favorably impacted by $24 million in non-recurring consignment inventory sales to a customer for completed programs.

Offsetting the decreases from the non-recurring consignment inventory sales in the prior year were a step-up in sales with our largest medical customer in addition to some new program wins.

• In the industrial end market vertical, sales to customers decreased when compared to fiscal year 2025 primarily as a result of decline in residential HVAC partially offset by an increase in smart metering in Europe.

Sales to Nexteer Automotive, Philips, and ZF accounted for the following portions of our net sales:

Year Ended June 30

Nexteer Automotive 18% 19%

Gross profit as a percent of net sales declined in fiscal year 2025 when compared to fiscal year 2024 as we experienced lost absorption on lower revenue.

For fiscal year 2025, selling and administrative expenses declined as a percent of net sales and in absolute dollars when compared to fiscal year 2024, driven by cost reduction efforts, the divestiture of GES in July 2024, the classification of factoring fees, decreased profit-sharing bonus expense, and lower allowance from credit losses.

Other General Income in fiscal year 2024 consisted of $0.9 million resulting from payments received related to class action lawsuits in which Kimball Electronics was a class member.

These lawsuits alleged that certain suppliers to the EMS industry conspired over a number of years to raise and fix the prices of electronic components, resulting in overcharges to purchasers of those components.

There was no Other General Income reported in fiscal year 2025.

In fiscal year 2025, we recorded pre-tax restructuring expense of $11.0 million, primarily for employee-related costs as we undertook restructuring efforts to align our cost structure with reduced end market demand levels and incurred costs related to the Tampa closure.

In fiscal year 2024, we recorded pre-tax restructuring expense of $2.4 million, for employee-related costs as we undertook restructuring efforts to align our cost structure with reduced end market demand levels.

Philips 11% *

* amount is less than 10% of total

Gross profit as a percent of net sales improved in fiscal year 2026 when compared to fiscal year 2025 as we experienced volume leverage in Europe, cost efficiencies from global restructuring and the closure of our Tampa facility, and favorable foreign exchange rates.

For fiscal year 2026, selling and administrative expenses increased as a percent of net sales and in absolute dollars when compared to fiscal year 2025, driven by higher wages and benefits, increased profit-sharing bonus expense and stock compensation driven by improved performance, and increased professional fees relating to business transformation.

Fiscal year 2026 also included a $2.0 million recovery received during the first three months of fiscal year 2026 resulting from a customer terminating a program.

In fiscal year 2026 and 2025, we recorded pre-tax restructuring expense of $5.0 million and $11.0 million, primarily for employee-related costs as we undertook restructuring efforts to align our cost structure with reduced end market demand levels and incurred costs related to the Tampa closure.

At June 30, 2025, we ceased operations at our Tampa facility.

At that time, the related land, building, and equipment were classified as held for sale.

On April 22, 2026, the Company completed the sale of the Tampa land and buildings recording a gain on sale of $15.0 million.

See Note 4 - Restructuring Activities of Notes to Consolidated Financial Statements for more information.

We completed the divestiture of GES on July 31, 2024 and recorded a gain on disposal of $2.4 million during fiscal year 2025.

In fiscal year 2024, we recorded pre-tax impairment charges of $5.8 million and $17.0 million on goodwill and assets held for sale, respectively.

See Note 3 - Sale of GES of Notes to Consolidated Financial Statements for more information.

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Factoring fees / AR program discounts

(3,862) (2,415)

Credit facilities fees and bank charges

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Interest expense has decreased in the year ended June 30, 2026 compared to the year ended June 30, 2025 due to lower borrowings on credit facilities and lower interest rates.

Prior to fiscal year 2025, factoring fees were recorded in Selling and Administrative Expenses on our Consolidated Statements of Income.

The Foreign Currency/Derivative Gain (Loss) resulted from net foreign currency exchange rate movements during the periods.

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Total $ 53,221 47.5 % $ 26,229 35.2 %

The consolidated effective tax rate for fiscal year 2026 was driven higher primarily by the recognition of dividend withholding taxes from foreign subsidiaries as well as the inclusion of GILTI income which resulted in additional U.S.

tax on foreign earnings.

The consolidated effective tax rate for fiscal year 2025 was driven higher by the limitation on the deductibility of business interest expense under Section 163(j) and the inclusion of GILTI income which resulted in additional U.S.

tax on foreign earnings.

The consolidated effective tax rate for fiscal year 2024 was lower due to the impact of the GES impairment charges, partially offset by the valuation allowance.

The domestic unfavorable tax rate was also distorted by the impairment charges.

Our overall effective tax rate will fluctuate depending on the geographic distribution of our worldwide earnings.

See Note 12 - Income Taxes of Notes to Consolidated Financial Statements for more information.

We recorded net income of $17.0 million in fiscal year 2025, or $0.68 per diluted share, a decrease of 17.2% from fiscal year 2024 net income of $20.5 million, or $0.81 per diluted share.

Open orders were down 2% as of June 30, 2025 compared to June 30, 2024.

We recorded net income of $28.0 million in fiscal year 2026, or $1.13 per diluted share, an increase of 64.6% from fiscal year 2025 net income of $17.0 million, or $0.68 per diluted share.

Open orders were flat as of June 30, 2026 compared to June 30, 2025.

The total reported for June 30, 2025 has been revised to $642 million, from the $702 million originally reported, to more accurately reflect the calculation of open order activity impacting all three verticals.

Open orders are the aggregate sales price of production pursuant to unfulfilled customer orders, which may be delayed or canceled by the customer subject to contractual termination provisions.

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We define Days Sales Outstanding as the average of monthly trade accounts and notes receivable divided by an average day’s net sales, Contract Asset Days as the average monthly contract assets divided by an average day’s net sales, Production Days Supply on Hand as the average of monthly gross inventory divided by an average day’s cost of sales, Accounts Payable Days as the average of monthly accounts payable divided by an average day’s cost of sales, and Advances from Customers Days as the average of monthly customer deposits divided by an average day’s cost of sales.

Over the past two quarters, we have improved our CCD metrics by better aligning our working capital with the lower sales levels.

Over the past several quarters, we have improved our CCD metrics by better aligning our working capital with the lower sales levels.

The following table reflects the major categories of cash flows for the fiscal years ended June 30, 2026 and 2025.

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Net cash used for investing activities $ (25.9) $ (14.7)

Net cash (used for) provided by financing activities $ (160.9) $ 9.0

Net cash used for financing activities $ (47.1) $ (160.9)

Cash Flows from Operating Activities

Net cash provided by operating activities for the fiscal year ended June 30, 2026 was primarily driven by net income adjusted for non-cash items as well as changes in operating assets and liabilities.

Net income adjusted for non-cash items generated operating cash flow of $62.8 million in fiscal year 2026.

Changes in operating assets and liabilities generated cash flow of $9.5 million in fiscal year 2026 driven primarily by cash provided by accounts payable of $20.0 million, which was driven by the improvement of payment terms, and accrued expenses and taxes payable which provided cash of $13.3 million, driven by improved performance which resulted in increased accrued taxes and accrued compensation.

Partially offsetting cash provided by accounts payable and accrued expenses was an increase in inventory which used cash of $19.9 million, which was due to longer lead times on certain components as well as ramp up of new programs.

Net cash provided by operating activities for the fiscal year ended June 30, 2025 was primarily driven by change in receivables, which provided cash of $71.8 million due to lower sales levels and increased use of factoring programs, and inventories, which provided cash of $74.6 million due to working down previously inflated inventory levels from strategic inventory builds to mitigate part shortages.

Net income adjusted for non-cash items also generated operating cash flow of $56.5 million in fiscal year 2025.

Net cash provided for operating activities for the fiscal year ended June 30, 2024 was driven by net income adjusted for non-cash items, partially offset by changes in operating assets and liabilities.

Net income and non-cash adjustments generated operating cash flow of $82.6 million in fiscal year 2024.

Partially offsetting this was cash used of $9.4 million from changes in operating assets and liabilities in fiscal year 2024.

Cash Flows from Investing Activities

Net cash used for investing activities during fiscal year 2026 includes $51.7 million cash used for capital investments including for the new medical facility in Indianapolis as well as to support new business awards and facility improvements, partially offset by the $21.7 million of proceeds from the sale of the Tampa facility.

See Note 4 - Restructuring Activities of Notes to Consolidated Financial Statements for more information on the Tampa facility sale.

Net cash used for investing activities during fiscal year 2025 includes $33.7 million cash used for capital investments primarily to support new business awards and replacement of older machinery, partially offset by the $18.5 million of proceeds from the sale of GES.

See Note 3 - Sale of GES of Notes to Consolidated Financial Statements for more information on the divestiture of GES.

Net cash used for investing activities during fiscal year 2024 includes $47.0 million cash used for capital investments.

The capital investments were primarily to support new business awards, replacement of older machinery and equipment, and facility expansions.

Cash Flows from Financing Activities

Net cash used for financing activities for the fiscal year ended June 30, 2026 resulted largely from payments of $30.9 million on our credit facilities to reduce debt.

Net cash used for financing activities for the fiscal year ended June 30, 2025 resulted largely from net payments on our credit facilities of $147.3 million.

Net cash provided by financing activities for the fiscal year ended June 30, 2024 resulted largely from net borrowings on our credit facilities of $13.5 million primarily for working capital purposes and capital expenditures.

Credit Facilities

The Company maintains a U.S.

primary credit facility (the “primary credit facility”) scheduled to mature on May 4, 2027.

primary credit facility (the “primary credit facility”) which was scheduled to mature on May 4, 2027.

The primary credit facility provides for $300 million in revolving borrowings, with an option to increase the amount available for borrowing to $450 million at the Company’s request, subject to the consent of each lender participating in such increase.

On December 20, 2024, the Company entered into an amended and restated credit agreement which resulted in the addition of a term loan borrowing, allowing for term loan borrowings of $100 million repayable in scheduled quarterly installments, and is scheduled to mature on December 20, 2029.

On April 30, 2026, the Company entered into an amended and restated credit agreement (the “restated primary credit facility”).

The restated primary credit facility continues to provide for revolving borrowings of $300 million, with the option to increase the amount available for revolving borrowings by an additional $150 million at the Company’s request, subject to the consent of each lender participating in such increase.

The amended and restated credit agreement is scheduled to mature on April 30, 2031.

The terms for the term loan borrowings remain largely unchanged in the restated primary credit facility.

It is still scheduled to mature on December 20, 2029 for such term loan borrowings and the quarterly payment schedule for such term

loan borrowings.

This facility is maintained for working capital and general corporate purposes of the Company.

The Company terminated its 364-day multi-currency revolving credit facility (the “secondary credit facility”), which previously allowed for borrowings up to $100 million and had a maturity date of January 3, 2025.

We were in compliance with the financial covenants of the primary credit facility during the period ended June 30, 2026.

Through the amendment of the primary credit facility, including adding a $100 million term loan borrowing, we were able to maintain our same total borrowing capacity even with the termination of the secondary credit facility.

Additionally, we were able to secure our primary credit facility’s interest rate pricing for the $100 million term loan for five years, which is beyond the duration of our current primary credit facility.

We also maintain foreign credit facilities for working capital and general corporate purposes at specific foreign locations rather than utilizing funding from intercompany sources.

These foreign credit facilities can be canceled at any time by either the bank or us and generally include renewal clauses.

As of June 30, 2025, we maintained foreign credit facilities at our Thailand operation, our Netherlands subsidiary, and our Poland operation.

See Note 9 - Credit Facilities of Notes to Consolidated Financial Statements for more information on our credit facilities, including the terms of the credit facilities such as interest, commitment fees, and debt covenants.

As of June 30, 2026, we maintained foreign credit facilities at our Thailand operation, our China operation, our Netherlands subsidiary, and our Poland operation.

Factoring Arrangements

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Receivables are considered sold when they are transferred beyond the reach of Kimball Electronics and its creditors, the purchaser has the right to pledge or exchange the receivables, and we have surrendered control over the transferred receivables.

During the fiscal years ended June 30, 2025 and 2024, we sold $338.4 million and $410.0 million of accounts receivable, respectively.

During the fourth quarter of fiscal year 2025, we entered into an accounts receivable factoring program with a financial institution for certain domestic receivables.

During the fiscal years ended June 30, 2026 and 2025, we sold, without recourse, $315.8 million and $338.4 million of accounts receivable, respectively.

In addition to our customers’ supply chain financing arrangements, we have also entered into receivables purchase agreements (“RPA’s”) with third-party banking institutions for certain domestic receivables.

We sell our entire interest in certain receivables for 100% of face value, less a discount.

We are required to remit amounts collected as a servicer under the Receivables Purchase Agreement (the “RPA”) on a weekly basis to the financial institution that purchased the receivables.

Our risks with respect to receivables we service include commercial disputes regarding such receivables and no greater than 5.0% of sold and outstanding receivables in the event of customer insolvency.

In fiscal year 2025, under this program, we sold $19.4 million of receivables.

We are required to remit amounts collected as a servicer under the RPA’s timely to the financial institution that purchased the receivables.

Our risks with respect to receivables we service include commercial disputes regarding such receivables, and under one of the RPA’s, no greater than 5% of sold and outstanding receivables in the event of customer insolvency.

In the fiscal years ended June 30, 2026 and 2025, under these programs, we sold $171.3 million and $19.4 million of receivables, respectively.

See Note 1 - Business Description and Summary of Significant Accounting Policies of Notes to Consolidated Financial Statements for more information regarding our factoring arrangements.

Future Liquidity

As of June 30, 2025, following a year of strong cash generated from operating activities and debt reduction, we are in a much improved liquidity position with $88.8 million in cash and unused borrowings in USD equivalent under all of our credit facilities of $284.7 million.

Additionally, considering expected future sources of liquidity from cash generated from operations and proceeds from the sale of the Tampa facility, we are positioned to meet our working capital and other operating needs for at least the next twelve months.

We expect to continue to prudently make capital investments, including for capacity expansions and potential acquisitions, that would help us continue our growth as a multifaceted manufacturing solutions company.

In March 2025, we executed a lease for a facility in Indiana to expand our medical CMO footprint with the lease commencing in June 2025.

The initial lease term is ten years and annual base rent of $1.8 million, increasing 3% each year.

At June 30, 2025, our capital expenditure commitments were approximately $35 million, consisting primarily of leasehold improvements and capital related to new program wins.

As of June 30, 2026, following several quarters of strong cash generated from operating activities and debt reduction, we are in a much improved liquidity position with $88.9 million in cash and unused borrowings in USD equivalent under all of our credit facilities of $314.9 million.

Additionally, considering expected future sources of liquidity from cash generated from operations, we are positioned to meet our working capital and other operating needs for at least the next twelve months.

We expect to continue to prudently invest in capital expenditures that would help us continue our growth as a multifaceted manufacturing solutions company, including for capacity expansions and potential acquisitions such as the recent announcement of the Helvoet acquisition.

In July 2026, the Company paid a purchase price of approximately 90.0 million Euro, or approximately $103.0 million which was funded with a combination of the Company’s cash and existing lines of credit.

See Note 22 - Subsequent Event of Notes to Consolidated Financial Statements for more information regarding our recent acquisition.

At June 30, 2026, our capital expenditure commitments were approximately $7.7 million, consisting primarily of capital related to new program wins as well as for facility improvements.

We anticipate our available liquidity will be sufficient to fund these capital expenditures.

We expect to continue our restructuring efforts, including the closure of our Tampa facility.

We expect these restructuring efforts to be predominantly cash expenditures to be incurred over the first half of fiscal year 2026.

We estimate additional pre-tax restructuring charges between $0.5 million to $1.0 million.

Now that Tampa’s operations have ceased, we expect to sell the building and land, with the proceeds from the sale anticipated to exceed the combined amount of the total expected restructuring costs and the carrying value of the Assets Held for Sale.

We have purchase obligations that arise in the normal course of business for items such as raw materials, services, and software acquisitions/license commitments.

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Determination of the amount of any potential future unrecognized deferred tax liability on such unremitted earnings is not practicable and is recorded in the period when any foreign earnings are determined to be no longer permanently reinvested.

During fiscal year 2025, the Company changed its indefinite reinvestment assertion for our subsidiary in China, and has recorded a deferred tax liability on their earnings for the applicable withholding taxes.

The Company continues to assert permanent reinvestment of foreign earnings in all other foreign jurisdictions as well as for earnings prior to fiscal year 2025 for China.

The Company’s Repurchase Plan allows the repurchase of up to $140 million of our common stock.

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The Repurchase Plan has no expiration date but may be suspended or discontinued at any time.

The extent to which the Company repurchases its shares, and

the timing of such repurchases, will depend upon a variety of factors, including market conditions, regulatory requirements, and other corporate considerations, as determined by the Company’s management team.

The extent to which the Company repurchases its shares, and the timing of such repurchases, will depend upon a variety of factors, including market conditions, regulatory requirements, and other corporate considerations, as determined by the Company’s management team.

The Company expects to finance the purchases with existing liquidity.

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However, we believe we have made adequate provision for income and other taxes for all years that are subject to audit.

As tax positions are effectively settled, the tax provision will be adjusted accordingly.

As tax positions are effectively settled, the tax

provision will be adjusted accordingly.

The liability for uncertain income tax and other tax positions, including accrued interest and penalties on those positions, was $1.6 million and $1.5 million at June 30, 2026 and June 30, 2025, respectively.

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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-K

Item 7. Management’s Discussion and Analysis