What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-05-05 compared with 2026-02-03 · 141 added, 139 removed, 258 unchanged (52% of the section changed)

6 unchanged sentences

federal government shutdown or extended continuing resolution, effects of increasingly volatile geopolitical events and regional conflicts, competition, changes in technology and methods of marketing, delays in or cost increases related to completing development, engineering and manufacturing programs, changes in customer order patterns, changes in product mix, continued success in technological advances and delivering technological innovations, changes in, or in the U.S.

government’s interpretation of, federal export control or procurement rules and regulations, including tariffs, changes in, or in the interpretation or enforcement of, environmental rules and regulations, market acceptance of our products, shortages in or delays in receiving components, supply chain delays or volatility for critical components, production delays or unanticipated expenses including due to quality issues or manufacturing execution issues, failure to meet contractual performance specifications, adherence to required manufacturing standards, capacity underutilization, increases in scrap or inventory write-offs, failure to achieve or maintain manufacturing quality certifications, such as AS9100, failure to achieve or maintain qualified business systems, such as those required by the DFARS, adverse findings in government audits or investigations, the impact of supply chain disruption, inflation and labor shortages, among other things, on program execution and the resulting effect on customer satisfaction, inability to fully realize the expected benefits from acquisitions, restructurings, and operational efficiency initiatives or delays in realizing such benefits, challenges in integrating acquired businesses and achieving anticipated synergies, effects of shareholder activism, increases in interest rates, changes to industrial security and cyber-security regulations and requirements and impacts from any cyber or insider threat events, changes in tax rates or tax regulations, changes to interest rate swaps or other cash flow hedging arrangements, changes to generally accepted accounting principles, difficulties in retaining key employees and customers, litigation, unanticipated costs under fixed-price service and system integration engagements, and various other factors beyond our control.

government’s interpretation of, federal export control or procurement rules and regulations, including tariffs, changes in, or in the interpretation or enforcement of, environmental rules and regulations, market acceptance of our products, shortages in or delays in receiving components, supply chain delays or volatility for critical components, production delays or unanticipated expenses including due to quality issues or manufacturing execution issues, failure to meet contractual performance specifications, adherence to required manufacturing standards, capacity underutilization, increases in scrap or inventory write-offs, failure to achieve or maintain manufacturing quality certifications, such as AS9100, failure to achieve or maintain qualified business systems, such as those required by the DFARS, adverse findings in government audits or investigations, the impact of supply chain disruption, inflation and labor shortages, among other things, on program execution and the resulting effect on customer satisfaction, inability to fully realize the expected benefits from acquisitions, restructurings, and operational efficiency initiatives or delays in realizing such benefits, challenges in integrating acquired businesses and achieving anticipated synergies, effects of shareholder activism, increases in interest rates, changes to industrial security and cyber-security regulations and requirements and impacts from any cyber or insider threat events, including the risks from heightened, persistent, and increasingly sophisticated nation-state level cyberattacks and emerging threats associated with agentic AI-enabled cyber tools, changes in tax rates or tax regulations, changes to interest rate swaps or other cash flow hedging arrangements, changes to generally accepted accounting principles, difficulties in retaining key employees and customers, litigation, including the federal securities class action lawsuit and related claims, unanticipated costs under fixed-price service and system integration engagements, and various other factors beyond our control.

These risks and uncertainties also include such additional risk factors as are discussed in our filings with the U.S.

20 unchanged sentences

We maintain our technological edge by investing in critical capabilities and intellectual property (“IP” or “building blocks”) in processing, leveraging open standards and open architectures to adapt quickly those building blocks into solutions for highly data-intensive applications, including emerging needs in areas such as artificial intelligence (“AI”).

As of December 26, 2025, we had 2,135 employees.

As of March 27, 2026, we had 2,117 employees.

We employ hardware and software architects and design engineers, primarily engaged in engineering and research and product development activities to achieve our objectives to fully capitalize upon and maintain our technological leads in the high-performance, real-time sensor processing industry and in mission computing, platform management and other safety-critical applications.

6 unchanged sentences

By adhering to these values, it will help our employees to realize their full potential at work to provide Innovation That Matters®.

Our consolidated revenues, net loss, diluted net loss per share, adjusted earnings per share (“adjusted EPS”), and adjusted EBITDA for the second quarter ended December 26, 2025 were $232.9 million, $15.1 million, $0.26, $0.16, and $30.0 million, respectively.

Our consolidated revenues, net loss, diluted net loss per share, adjusted earnings per share (“adjusted EPS”), and adjusted EBITDA for the six months ended December 26, 2025 were $458.1 million, $27.6 million, $0.47, $0.41, and $65.6 million, respectively.

Our consolidated revenues, net loss, diluted net loss per share, adjusted earnings per share (“adjusted EPS”), and adjusted EBITDA for the third quarter ended March 27, 2026 were $235.8 million, $2.9 million, $0.04, $0.27, and $36.1 million, respectively.

Our consolidated revenues, net loss, diluted net loss per share, adjusted earnings per share (“adjusted EPS”), and adjusted EBITDA for the nine months ended March 27, 2026 were $693.8 million, $30.5 million, $0.51, $0.68, and $101.7 million, respectively.

See the Non-GAAP Financial Measures section for a reconciliation to our most directly comparable GAAP financial measures.

RESULTS OF OPERATIONS:

There were 13 weeks included in the results of operations for the second quarters ended December 26, 2025 and December 27, 2024, respectively.

There were 26 weeks during the six months ended December 26, 2025 and December 27, 2024, respectively.

The results for the second quarter and six months ended December 26, 2025 are not necessarily indicative of the results to be expected for the full fiscal year.

The second quarter ended December 26, 2025 compared to the second quarter ended December 27, 2024

The following table sets forth, for the second quarter ended indicated, financial data from the Consolidated Statements of Operations and Comprehensive Loss:

(In thousands) December 26, 2025 As a % of

Revenue December 27, 2024 As a % of

There were 13 weeks included in the results of operations for the third quarters ended March 27, 2026 and March 28, 2025, respectively.

There were 39 weeks during the nine months ended March 27, 2026 and March 28, 2025, respectively.

The results for the third quarter and nine months ended March 27, 2026 are not necessarily indicative of the results to be expected for the full fiscal year.

The third quarter ended March 27, 2026 compared to the third quarter ended March 28, 2025

The following table sets forth, for the third quarter ended indicated, financial data from the Consolidated Statements of Operations and Comprehensive Income (Loss):

(In thousands) March 27, 2026 As a % of

Revenue March 28, 2025 As a % of

Net revenues $ 235,759 100.0 % $ 211,358 100.0 %

8 unchanged sentences

Total operating expenses 63,820 27.1 74,454 35.2

Loss from operations (10,818) (4.6) (12,415) (5.6)

Income (loss) from operations 5,230 2.2 (17,344) (8.2)

Interest income 2,507 1.1 1,290 0.6

Interest expense (7,331) (3.1) (8,068) (3.8)

Other expense, net (440) (0.2) (3,865) (1.7)

Loss before income tax benefit (17,459) (7.5) (24,304) (10.9)

Income tax benefit (2,364) (1.0) (6,725) (3.0)

Other (expense) income, net (3,093) (1.3) 2,304 1.1

Loss before income tax provision (benefit) (2,687) (1.1) (21,818) (10.3)

Income tax provision (benefit) 174 0.1 (2,648) (1.2)

Net Loss $ (2,861) (1.2) % $ (19,170) (9.1) %

Total revenues increased $9.7 million, or 4.4%, to $232.9 million during the second quarter ended December 26, 2025, as compared to $223.1 million during the second quarter ended December 27, 2024.

Revenues increased year over year as we continued to execute on our program base, and continued toward full rate production of our common processing architecture programs.

Point in time revenue and over time revenue represented 55% and 45%, respectively, of total revenues during the second quarter ended December 26, 2025, an increase of $6.6 million and $3.3 million, respectively.

Point in time revenue and over time revenue represented 55% and 45% respectively, of total revenues during the second quarter ended December 27, 2024.

Revenue increases were driven by the modules and sub-assemblies as well as the components product grouping which increased $14.4 million and $3.6 million, respectively, partially offset by the integrated solutions product grouping which decreased $8.3 million during the second quarter ended December 26, 2025, when compared to the prior period.

The increase in total revenue was primarily driven by the radar, electronic warfare, C4I, and other sensor and effector end applications with increases of $6.5 million, $3.6 million, $2.5 million, and $1.8 million respectively, partially offset by other end applications which decreased $4.7 million.

The increase in total revenue was also driven by the Land, Other, and Naval platforms with increases of $14.3 million, $5.7 million, and $1.7 million, respectively, partially offset by a decrease to the Airborne platform of $12.0 million.

The largest program increases were related to two secure processing programs and SEWIP, partially offset by decreases in Aegis and an electronic warfare program when compared to the prior period.

There were no programs comprising 10% or more of our revenues for the second quarters ended December 26, 2025 or December 27, 2024.

Total revenues increased $24.4 million, or 11.5%, to $235.8 million during the third quarter ended March 27, 2026, as compared to $211.4 million during the third quarter ended March 28, 2025.

Revenues increased year over year as we continued to execute on our program base.

Point in time revenue and over time revenue represented 52% and 48%, respectively, of total revenues during the third quarter ended March 27, 2026, an increase of $9.8 million and $14.6 million, respectively.

Point in time revenue and over time revenue represented 53% and 47% respectively, of total revenues during the third quarter ended March 28, 2025.

Revenue increases were driven by the modules and sub-assemblies as well as the integrated solutions product grouping which increased $17.5 million and $11.0 million, respectively, partially offset by the components product grouping which decreased $4.1 million during the third quarter ended March 27, 2026, when compared to the prior period.

The increase in total revenue was primarily driven by the other sensor and effector, radar, and electronic warfare end applications with increases of $17.3 million, $8.9 million, and $8.6 million, respectively, partially offset by C4I and other end applications which decreased $7.0 million and $3.4 million, respectively.

The increase in total revenue was also driven by the Land, Space, and Naval platforms with increases of $19.0 million, $13.9 million, and $12.0 million, respectively, partially offset by decreases to the Airborne and Other platforms of $17.7 million and $2.8 million, respectively.

The largest program increases were related to LTAMDS, PWSA, and SEWIP, partially offset by a decrease in F/A-18 when compared to the prior period.

There were no programs comprising 10% or more of our revenues for the third quarters ended March 27, 2026 or March 28, 2025.

G ROSS M ARGIN

Gross margin was 26.0% for the second quarter ended December 26, 2025, a decrease of 130 basis points from the 27.3% gross margin realized during the second quarter ended December 27, 2024.

The lower gross margin was driven primarily by execution on lower margin programs, higher scrap of $3.1 million, higher inventory reserves of $2.4 million, partially offset by lower manufacturing variances of $5.3 million and net estimate at completion ("EAC") change impact on our programs recognized over time of approximately $3.5 million recorded in the quarter, an incremental improvement of approximately $0.9 million, or 50 basis points, when compared to the prior period.

We may experience increases in our manufacturing costs related to the imposition of tariffs on the import of components from other countries.

We have not seen material increases to these costs in the second quarter of fiscal 2026, but they could impact our gross margins in the future.

Gross margin was 29.3% for the third quarter ended March 27, 2026, an increase of 230 basis points from the 27.0% gross margin realized during the third quarter ended March 28, 2025.

The higher gross margin was driven by net estimate at completion ("EAC") change impact on our programs recognized over time of approximately $2.1 million recorded in the quarter, an incremental improvement of approximately $1.6 million, or 80 basis points, when compared to the prior period.

increase was also driven by lower net manufacturing variances $4.1 million, partially offset by higher inventory reserves of $3.3 million.

We had the following aggregate effects of favorable and unfavorable margin impacts as a result of changes in estimates across our portfolio for the period presented:

Second Quarters Ended

(in thousands) December 26, 2025 December 27, 2024

Third Quarters Ended

(in thousands) March 27, 2026 March 28, 2025

Gross favorable $ 7,437 $ 5,448

4 unchanged sentences

S ELLING , G ENERAL AND A DMINISTRATIVE

Selling, general and administrative expenses increased $1.6 million, or 4.0%, to $42.1 million during the second quarter ended December 26, 2025, as compared to $40.5 million in the second quarter ended December 27, 2024.

The increase was primarily driven by higher litigation and settlement expense and software licensing fees of $1.2 million and $1.1 million, respectively.

These increases were partially offset by lower consulting expense of $0.8 million.

The litigation and settlement expense incurred during the second quarter ended December 26, 2025 was primarily comprised of $2.0 million related to the dispute with our former CEO, which was settled during the current quarter, as compared to $1.4 million during the second quarter ended December 27, 2024.

Litigation and settlement expense also included $1.0 million related to contract matters as compared to $0.2 million during the second quarter ended December 27, 2024.

Selling, general and administrative expenses decreased $3.9 million, or 9.1%, to $39.1 million during the third quarter ended March 27, 2026, as compared to $43.0 million in the third quarter ended March 28, 2025.

The decrease was primarily driven by lower litigation and settlement, depreciation, and consulting expense of $2.6 million, $1.9 million, and $0.8 million, respectively.

These decreases were partially offset by higher compensation expense and software licensing fees of $1.6 million and $1.0 million, respectively.

R ESEARCH AND D EVELOPMENT

Research and development expenses decreased $6.0 million, or 28.0%, to $15.4 million during the second quarter ended December 26, 2025, as compared to $21.4 million during the second quarter ended December 27, 2024.

The decrease was primarily driven by efficiency improvements and the savings from headcount reductions of approximately 225 employees, initiated in fiscal 2025, resulting in lower expense of $4.1 million.

We also saw decreased expense on supply, depreciation, and software licensing fees of $1.0 million, $0.6 million, and $0.4 million, respectively.

Research and development expenses decreased $1.0 million, or 6.1%, to $15.0 million during the third quarter ended March 27, 2026, as compared to $16.0 million during the third quarter ended March 28, 2025.

The decrease was primarily driven by efficiency improvements and the savings from headcount reductions of approximately 120 employees, initiated across fiscal 2025 and 2026, resulting in lower expense of $5.9 million.

There was also decreased depreciation expense of $0.4 million and outside service expense of $0.4 million.

These decreases were partially offset by higher engineering utilization of $4.4 million and supplies expense of $1.3 million.

A MORTIZATION OF I NTANGIBLE A SSETS

We recognized $9.7 million of amortization of intangible assets during the second quarter ended December 26, 2025, as compared to $11.2 million during the second quarter ended December 27, 2024, primarily due to various customer relationship intangibles being fully amortized in fiscal 2025.

We recognized $9.6 million of amortization of intangible assets during the third quarter ended March 27, 2026, as compared to $10.2 million during the third quarter ended March 28, 2025, primarily due to various customer relationship intangibles being fully amortized in fiscal 2025.

R ESTRUCTURING AND O THER C HARGES

We incurred $4.1 million of restructuring and other charges during the second quarter ended December 26, 2025, as compared to an immaterial amount during the second quarter ended December 27, 2024.

Restructuring and other charges during the second quarter ended December 26, 2025 were primarily severance related charges associated with workforce reductions initiated during the quarter that eliminated approximately 60 positions.

There was an immaterial amount of restructuring and other charges during the second quarters ended December 27, 2024.

We incurred an immaterial amount of restructuring and other charges during the third quarter ended March 27, 2026, as compared to $4.9 million during the third quarter ended March 28, 2025.

Restructuring and other charges during the third quarter ended March 28, 2025 included $4.9 million for separation costs related to the reduction in workforce initiated January 29, 2025 impacting approximately 145 positions.

A CQUISITION C OSTS AND O THER R ELATED E XPENSES

There was an immaterial amount of acquisition costs and other related expenses during the second quarters ended December 26, 2025 and December 27, 2024.

There was an immaterial amount of acquisition costs and other related expenses, including costs incurred in the asset acquisition of a provider of specialized manufacturing processes, during the third quarters ended March 27, 2026 and March 28, 2025.

We could incur acquisition costs and other related expenses periodically in the future as we continue to seek acquisition opportunities to expand our technological capabilities and especially within the sensor and effector and C4I markets.

1 unchanged sentence

I NTEREST I NCOME

We recognized $1.6 million of interest income during the second quarter ended December 26, 2025, as compared to $0.4 million during the second quarter ended December 27, 2024.

We recognized $2.5 million of interest income during the third quarter ended March 27, 2026, as compared to $1.3 million during the third quarter ended March 28, 2025.

The increase was driven by higher average cash and cash equivalents during the period.

I NTEREST E XPENSE

We incurred $7.8 million of interest expense during the second quarter ended December 26, 2025, as compared to $8.4 million during the second quarter ended December 27, 2024.

We incurred $7.3 million of interest expense during the third quarter ended March 27, 2026, as compared to $8.1 million during the third quarter ended March 28, 2025.

The decrease was driven by lower interest rates during the period on our existing credit facility (the "Revolver").

O THER E XPENSE, N ET

Other expense, net was $0.4 million during the second quarter ended December 26, 2025, as compared to $3.9 million during the second quarter ended December 27, 2024.

The second quarter ended December 26, 2025 includes $1.5 million of financing costs, partially offset by $0.2 million net foreign currency translation gains.

The second quarter ended December 27, 2024 includes $2.4 million net foreign currency translation losses, $1.1 million of financing costs, $0.1 million of consulting costs, and $0.1 million of securities class action expense.

O THER (E XPENSE ) I NCOME, N ET

Other expense, net was $3.1 million during the third quarter ended March 27, 2026, as compared to other income, net of $2.3 million during the third quarter ended March 28, 2025.

The third quarter ended March 27, 2026 includes a $1.9 million adjustment related to the disposal of our former manufacturing operations in Switzerland, $0.6 million of financing costs, and $0.5 million of net foreign currency translation losses.

The third quarter ended March 28, 2025 includes other income of $2.7 million, related to the sale of the mc.com domain name, $1.2 million net of foreign currency translation gains, $0.9 million of financing costs, $0.5 million of securities class action expense, and $0.2 million of consulting costs.

I NCOME T AXES

We recorded an income tax benefit of $2.4 million and $6.7 million on a loss before income taxes of $17.5 million and $24.3 million for the second quarters ended December 26, 2025 and December 27, 2024, respectively.

During the second quarter ended December 26, 2025 and December 27, 2024, we recognized a tax benefit of $1.0 million related to stock compensation windfalls and a tax provision of $0.1 million related to stock compensation shortfalls, respectively.

The effective tax rate for the second quarter ended December 26, 2025 differed from the federal statutory rate primarily due to federal and state research and development credits, non-deductible compensation, stock compensation windfalls, and state taxes.

The effective tax rate for the second quarter ended December 27, 2024 differed from the federal statutory rate primarily due to federal and state research and development credits, non-deductible compensation, and state taxes.

We recorded an income tax provision of $0.2 million and an income tax benefit of $2.6 million on a loss before income taxes of $2.7 million and $21.8 million for the third quarters ended March 27, 2026 and March 28, 2025, respectively.

During the third quarters ended March 27, 2026 and March 28, 2025, we recognized a tax benefit of $0.3 million related to stock compensation windfalls and a tax provision of less than $0.1 million related to stock compensation shortfalls, respectively.

The effective tax rate for the third quarter ended March 27, 2026 differed from the federal statutory rate primarily due to federal and state research and development credits, non-deductible compensation, stock compensation windfalls, and state taxes.

The effective tax rate for the third quarter ended March 28, 2025 differed from the federal statutory rate primarily due to federal and state research and development credits, return to provision adjustments, non-deductible compensation, and state taxes.

We continue to maintain a valuation allowance on all of our foreign net operating loss carryforwards and the majority of our state research and developmental tax credit carryforwards.

1 unchanged sentence

We expect to amortize previously capitalized research and development expenditures.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted, which includes a broad range of tax provisions and extended and modified certain provisions of the Tax Cuts and Jobs Act ("TCJA"), including, but not limited to, restoration of 100% bonus depreciation, EBITDA-based interest expense limitation and immediate expensing of domestic research and development expenditures.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted, which includes a broad range of tax provisions and extended and modified certain provisions of the Tax Cuts and Jobs Act ("TCJA"), including, but not limited to, restoration of 100% bonus depreciation, EBITDA-based interest provision limitation and immediate expensing of domestic research and development expenditures.

We have evaluated the potential impact of this legislation and expect it to result primarily in a timing difference, with no material impact on our effective tax rate.

Six months ended December 26, 2025 compared to the six months ended December 27, 2024

The following table sets forth, for the six month periods indicated, financial data from the Consolidated Statements of Operations and Comprehensive Loss:

(In thousands) December 26, 2025 As a % of

Revenue December 27, 2024 As a % of

Nine months ended March 27, 2026 compared to the nine months ended March 28, 2025

The following table sets forth, for the nine month periods indicated, financial data from the Consolidated Statements of Operations and Comprehensive Income (Loss):

(In thousands) March 27, 2026 As a % of

Revenue March 28, 2025 As a % of

Net revenues $ 693,840 100.0 % $ 638,914 100.0 %

15 unchanged sentences

Net Loss $ (30,471) (4.4) % $ (54,274) (8.5) %

Total revenues increased $30.5 million, or 7.1%, to $458.1 million during the six months ended December 26, 2025, as compared to $427.6 million during the six months ended December 27, 2024.

Revenues increased year over year as we continued to execute on our program base, and continued toward full rate production of our common processing architecture programs.

Point in time revenue and over time revenue represented 54% and 46%, respectively, of total revenues during the six months ended December 26, 2025, an increase of $31.7 million and decrease of $1.2 million, respectively.

Point in time revenue and over time revenue each represented 50% of total revenue during the six months ended December 27, 2024.

Revenue increases by were driven by the modules and sub-assemblies, as well as the components product grouping which increased $34.7 million and $4.3 million, respectively, partially offset by the integrated solutions product grouping which decreased $8.5 million, when compared to the prior period.

The increase in total revenue was primarily driven by the C4I, other sensor and effector, and radar end applications with increases of $28.6 million, $5.2 million, and $3.1 million, respectively, partially offset by decreases to other end applications and electronic warfare of $4.6 million and $1.8 million, respectively.

The increase in total revenue was also driven by the Land, Other, Space, and Naval platforms with increases of $22.8 million, $11.6 million, $3.2 million, and $0.7 million, respectively, partially offset by a decrease to the Airborne platform of $7.8 million.

The largest program increases were related to two secure processing programs, KC-46, F/A-18, and an electronic warfare program, partially offset by Aegis.

There were no programs comprising 10% or more of our revenues for the six months ended December 26, 2025 or December 27, 2024.

Total revenues increased $54.9 million, or 8.6%, to $693.8 million during the nine months ended March 27, 2026, as compared to $638.9 million during the nine months ended March 28, 2025.

Revenues increased year over year as we continued to execute on our program base.

Point in time revenue and over time revenue represented 53% and 47%, respectively, of total revenues during the nine months ended March 27, 2026, an increase of $41.5 million and $13.4 million, respectively.

Point in time revenue and over time revenue represented 51% and 49%, respectively, of total revenue during the nine months ended March 28, 2025.

Revenue increases by were driven by the modules and sub-assemblies and integrated solutions product groupings which increased $52.2 million and $2.5 million, respectively, when compared to the prior period.

The increase in total revenue was primarily driven by the other sensor and effector, C4I, radar, and electronic warfare end applications with increases of $22.4 million, $21.7 million, $12.0 million, and $6.8 million, respectively, partially offset by a decrease to other end applications of $8.0 million.

The increase in total revenue was also driven by the Land, Space, Naval, and Other platforms with increases of $41.9 million, $17.1 million, $12.7 million, and $8.8 million, respectively, partially offset by a decrease to the Airborne platform of $25.6 million.

The largest program increases were related to a secure processing program, an integrated space program, SEWIP, PWSA, and KC-46, partially offset by T-45 and a secure processing program.

There were no programs comprising 10% or more of our revenues for the nine months ended March 27, 2026 or March 28, 2025.

G ROSS M ARGIN

Gross margin was 27.0% for the six months ended December 26, 2025, an increase of 70 basis points from the 26.3% gross margin realized during the six months ended December 27, 2024.

The higher gross margin was driven primarily by lower manufacturing variances of $12.7 million and net estimate at completion ("EAC") change impact on our programs recognized over time of $7.5 million recorded in the period, an incremental improvement of approximately $5.2 million, or 100 basis points, when compared to the prior period, partially offset by higher scrap and inventory reserves of $3.5 million and $1.5 million, respectively.

We may experience increases in our manufacturing costs related to the imposition of tariffs on the import of components from other countries.

We have not seen material increases to these costs in fiscal 2026, but they could impact our gross margins in the future.

Gross margin was 27.8% for the nine months ended March 27, 2026, an increase of 120 basis points from the 26.6% gross margin realized during the nine months ended March 28, 2025.

The higher gross margin was driven primarily by net EAC change impact on our programs recognized over time of $9.6 million recorded in the period, an incremental improvement of approximately $6.7 million, or 120 basis points, when compared to the prior period.

The increase was also driven by lower manufacturing variances of $12.8 million, partially offset by higher inventory reserves of $4.8 million and scrap of $3.4 million.

We had the following aggregate effects of favorable and unfavorable margin impacts as a result of changes in estimates across our portfolio for the period presented:

Six Months Ended

(in thousands) December 26, 2025 December 27, 2024

Nine Months Ended

(in thousands) March 27, 2026 March 28, 2025

Gross favorable $ 23,443 $ 20,262

4 unchanged sentences

S ELLING , G ENERAL AND A DMINISTRATIVE

Selling, general and administrative expenses increased $14.4 million, or 19.5%, to $88.0 million during the six months ended December 26, 2025, as compared to $73.7 million during the six months ended December 27, 2024.

The increase was primarily driven by higher litigation and settlement expense, compensation costs, and software licensing fees of $7.2 million, $7.0 million, and $1.5 million, respectively.

These increases were partially offset by lower consulting and depreciation expense of $1.3 million and $1.2 million, respectively.

The litigation and settlement expense incurred during the six months ended December 26, 2025 was primarily comprised of $7.1 million related to the dispute with our former CEO, which was settled during the current quarter, as compared to $1.4 million during the six months ended December 27, 2024.

Litigation and settlement expense also included $2.0 million related to contract matters as compared to $0.2 million during the six months ended December 27, 2024.

Selling, general and administrative expenses increased $10.5 million, or 9.0%, to $127.2 million during the nine months ended March 27, 2026, as compared to $116.7 million during the nine months ended March 28, 2025.

The increase was primarily driven by higher compensation, litigation and settlement, and software licensing fees expense of $8.4 million, $4.5 million, and $2.5 million, respectively.

These increases were partially offset by lower depreciation and consulting expense of $3.1 million and $2.2 million, respectively.

R ESEARCH A ND D EVELOPMENT

Research and development expenses decreased $11.2 million, or 28.1%, to $28.6 million during the six months ended December 26, 2025, as compared to $39.8 million during the six months ended December 27, 2024.

The decrease was primarily driven by efficiency improvements and the savings from headcount reductions of 225 employees, initiated in fiscal 2025, resulting in lower expense of $9.5 million, as well as decreased expense on depreciation, software license fees, and outside services of $1.1 million, $0.8 million, and $0.6 million, respectively.

These decreases were partially offset by higher supply expense of $1.2 million.

Research and development expenses decreased $12.1 million, or 21.8%, to $43.6 million during the nine months ended March 27, 2026, as compared to $55.7 million during the nine months ended March 28, 2025.

There was also decreased expense on depreciation, software licensing fees, outside services, and consulting of $1.6 million, $1.2 million, $1.0 million, $0.4 million, respectively.

These decreases were partially offset by higher engineering utilization of $5.8 million and supplies expense of $2.5 million.

A MORTIZATION OF I NTANGIBLE A SSETS

We recognized $9.7 million of amortization of intangible assets during the six months ended December 26, 2025, as compared to $11.2 million during the six months ended December 27, 2024, primarily due to various customer relationship intangibles being fully amortized in fiscal 2025.

We recognized $29.5 million of amortization of intangible assets during the nine months ended March 27, 2026, as compared to $32.6 million during the nine months ended March 28, 2025, primarily due to various customer relationship intangibles being fully amortized in fiscal 2025.

R ESTRUCTURING A ND O THER C HARGES

Restructuring and other charges were $5.6 million during the six months ended December 26, 2025, as compared to $2.3 million during the six months ended December 27, 2024.

Restructuring and other charges during the six months ended December 26, 2025 were primarily severance related charges associated with workforce reductions initiated during the six months ended that eliminated approximately 100 positions.

Restructuring and other charges during the six months ended December 27, 2024 are primarily related to severance related charges.

Restructuring and other charges were $5.6 million during the nine months ended March 27, 2026, as compared to $7.2 million during the nine months ended March 28, 2025.

Restructuring and other charges during the nine months ended March 27, 2026 were primarily severance related charges associated with workforce reductions initiated during the period that eliminated approximately 100 positions.

Restructuring and other charges during the nine months ended March 28, 2025 related to severance related charges primarily related to the reduction in workforce initiated January 29, 2025.

A CQUISITION C OSTS AND O THER R ELATED E XPENSES

Acquisition costs and other related expenses were $0.7 million during the six months ended December 26, 2025, as compared to $0.4 million during the six months ended December 27, 2024.

Acquisition costs and other related expenses during the six months ended December 27, 2024 includes $0.4 million related to run-rate amortization of fair value adjustments from purchase accounting.

Acquisition costs and other related expenses were $0.9 million during the nine months ended March 27, 2026, as compared to $0.7 million during the nine months ended March 28, 2025.

The acquisition costs and other related expenses we incurred during the nine months ended March 27, 2026 primarily relate to $0.4 million related to run-rate amortization of fair value adjustments from purchase accounting as well as an immaterial amount of costs incurred in the asset acquisition of a provider of specialized manufacturing processes.

The acquisition costs and other related expenses we incurred during the nine months ended March 28, 2025 includes $0.5 million related to run-rate amortization of fair value adjustments from purchase accounting and $0.2 million related to the acquisition of Star Lab and disposal of our manufacturing operations in Plan-Les-Ouates, Switzerland.

1 unchanged sentence

I NTEREST I NCOME

We recognized $3.7 million of interest income during the six months ended December 26, 2025, as compared to $1.0 million during the six months ended December 27, 2024.

We recognized $6.2 million of interest income during the nine months ended March 27, 2026, as compared to $2.2 million during the nine months ended March 28, 2025.

The increase was driven by higher average cash and cash equivalents during the period.

I NTEREST E XPENSE

We incurred $15.7 million of interest expense during the six months ended December 26, 2025, as compared to $17.3 million during the six months ended December 27, 2024.

We incurred $23.1 million of interest expense during the nine months ended March 27, 2026, as compared to $25.4 million during the nine months ended March 28, 2025.

The decrease was driven by lower interest rates during the period on the Revolver.

O THER E XPENSE , N ET

Other expense, net decreased $2.7 million to $2.5 million during the six months ended December 26, 2025, as compared to $5.2 million during the six months ended December 27, 2024.

There was $2.3 million of financing costs and $0.6 million of net foreign currency translation losses during the six months ended December 26, 2025.

During the six months ended December 27, 2024, there were $3.4 million of financing costs, $0.9 million of net foreign currency translation losses, $0.7 million of consulting costs, and $0.3 million of securities class action expense, partially offset by other income of $0.2 million.

Other expense, net increased $2.7 million to $5.6 million during the nine months ended March 27, 2026, as compared to $2.9 million during the nine months ended March 28, 2025.

There was $2.9 million of financing costs, a $1.9 million adjustment related to the disposal of our former manufacturing operations in Switzerland, and $1.1 million of net foreign currency translation losses during the nine months ended March 27, 2026.

During the nine months ended March 28, 2025, there was $4.3 million of financing costs, $0.9 million of consulting costs, and $0.8 million of securities class action expense, partially offset by other income of $2.9 million, primarily related to the sale of the mc.com domain name, and $0.3 million of net foreign currency translation gains.

I NCOME T AXES

We recorded an income tax benefit of $6.4 million and $12.3 million on a loss before income taxes of $34.0 million and $47.4 million for the six months ended December 26, 2025 and December 27, 2024, respectively.

During the six months ended December 26, 2025 and December 27, 2024, we recognized a tax benefit of $2.1 million related to stock compensation windfalls and a tax provision of $0.4 million related to stock compensation shortfalls, respectively.

The effective tax rate for the six months ended December 26, 2025 differed from the federal statutory rate primarily due to federal and state research and development credits, non-deductible compensation, stock compensation windfalls, and state taxes.

The effective tax rate for the six months ended December 27, 2024 differed from the federal statutory rate primarily due to federal and state research and development credits, non-deductible compensation, and state taxes.

We recorded an income tax benefit of $6.2 million and $15.0 million on a loss before income taxes of $36.7 million and $69.2 million for the nine months ended March 27, 2026 and March 28, 2025, respectively.

During the nine months ended March 27, 2026 and March 28, 2025, we recognized a tax benefit of $2.4 million related to stock compensation windfalls and a tax provision of $0.4 million related to stock compensation shortfalls, respectively.

The effective tax rate for the nine months ended March 27, 2026 differed from the federal statutory rate primarily due to federal and state research and development credits, non-deductible compensation, stock compensation windfalls, and state taxes.

The effective tax rate for the nine months ended March 28, 2025 differed from the federal statutory rate primarily due to federal and state research and development credits, return to provision adjustments, non-deductible compensation, and state taxes.

We continue to maintain a valuation allowance on all of our foreign net operating loss carryforwards and the majority of our state research and developmental tax credit carryforwards.

1 unchanged sentence

We expect to amortize previously capitalized research and development expenditures.

On July 4, 2025, the OBBBA was enacted, which includes a broad range of tax provisions and extended and modified certain provisions of the TCJA, including, but not limited to, restoration of 100% bonus depreciation, EBITDA-based interest expense limitation and immediate expensing of domestic research and development expenditures.

On July 4, 2025, the OBBBA was enacted, which includes a broad range of tax provisions and extended and modified certain provisions of the TCJA, including, but not limited to, restoration of 100% bonus depreciation, EBITDA-based interest provision limitation and immediate expensing of domestic research and development expenditures.

We have evaluated the potential impact of this legislation and expect it to result primarily in a timing difference, with no material impact on our effective tax rate.

2 unchanged sentences

Our near-term fixed commitments for cash expenditures consist primarily of payments under operating leases and inventory purchase commitments.

As of the six months ended December 26, 2025, our working capital balance decreased $34.6 million, or 8%, as compared to the balance as of June 27, 2025.

As of March 27, 2026, our working capital balance decreased $14.3 million, or 3%, as compared to the balance as of June 27, 2025.

Based on our current plans and business conditions, we believe that existing cash and cash equivalents, our available Revolver, cash generated from operations and our financing capabilities will be sufficient to satisfy our anticipated cash requirements for at least the next twelve months.

12 unchanged sentences

We have a 5-year Revolver with a maturity extended to November 4, 2030.

The borrowing capacity as defined under the Revolver as of December 26, 2025 is the total availability of $850.0 million less outstanding borrowings of $591.5 million and outstanding letters of credit of $5.9 million.

During the six months ended December 26, 2025, we made no borrowings or repayments.

As of December 26, 2025, we were in compliance with all covenants and conditions under the Revolver.

The borrowing capacity as defined under the Revolver as of March 27, 2026 is the total availability of $850.0 million less outstanding borrowings of $591.5 million and outstanding letters of credit of $4.2 million.

During the nine months ended March 27, 2026, we made no borrowings or repayments.

As of March 27, 2026, we were in compliance with all covenants and conditions under the Revolver.

On November 4, 2025, we executed Amendment No.

1 unchanged sentence

This amendment extended the maturity date of the credit facility by five years to November 4, 2030 with a facility size of $850.0 million.

On April 30, 2026, we repaid $150.0 million of the Revolver, leaving $441.5 million drawn on the Revolver as of that date.

Because this partial repayment occurred after the end of the fiscal quarter, it is not reflected in the accompanying balance sheet as of the end of the third quarter.

The repayment was funded with available cash on hand and does not affect our assessment of liquidity or capital resources as of March 27, 2026.

We remained in compliance with all applicable financial covenants both before and after the partial repayment.

We continue to evaluate opportunities to further reduce outstanding borrowings under the facility depending on market conditions, operational requirements and cash flows.

See Note I in the accompanying consolidated financial statements for further discussion of the Revolver.

4 unchanged sentences

On December 10, 2025, the Company amended the RPSA to increase the facility from $60.0 million to $75.0 million.

We had $75.0 million of factored accounts receivable, of which $42.7 million was included as a contra account within Accounts receivable, net of allowance for credit losses on our Consolidated Balance Sheet and $32.3 million was recorded in Due to factoring facility on our Consolidated Balance Sheet as of December 26, 2025.

We incurred factoring fees of approximately $1.0 million during the six months ended December 26, 2025.

We had $60.0 million of factored accounts receivable, of which $58.1 million was included as a contra account within Accounts receivable, net of allowance for credit losses on our Consolidated Balance Sheet and $1.9 million was recorded in Due to factoring facility on our Consolidated Balance Sheet as of December 27, 2024.

We incurred factoring fees of approximately $0.8 million during the six months ended December 27, 2024.

We had $75.0 million of factored accounts receivable, of which $60.9 million was included as a contra account within Accounts receivable, net of allowance for credit losses on our Consolidated Balance Sheet and $14.1 million was recorded in Due to factoring facility on our Consolidated Balance Sheet as of March 27, 2026.

We incurred factoring fees of approximately $1.4 million during the nine months ended March 27, 2026.

We had $60.0 million of factored accounts receivable, of which $55.1 million was included as a contra account within Accounts receivable, net of allowance for credit losses on our Consolidated Balance Sheet and $4.9 million was recorded in Due to factoring facility on our Consolidated Balance Sheet as of March 28, 2025.

We incurred factoring fees of approximately $1.3 million during the nine months ended March 28, 2025.

Share Repurchase Agreement

4 unchanged sentences

All share repurchases are made in accordance with Rule 10b-18.

During the second quarter and six months ended December 26, 2025, 221,510 shares of our common stock were repurchased under the share repurchase program at an average cost of $67.70 per share.

As of December 26, 2025, there was $185.0 million available for future share repurchases under this share repurchase program.

As of and For the Six Months Ended,

(In thousands) December 26, 2025 December 27, 2024

During the third quarter ended March 27, 2026, no shares of the Company's common stock were repurchased under the share repurchase program.

During the nine months ended March 27, 2026, 221,510 shares of the Company's common stock were repurchased and immediately retired under the share repurchase program at an average cost of $67.70 per share.

As of March 27, 2026, there was $185.0 million available for future share repurchases under this share repurchase program.

As of and For the Nine Months Ended,

(In thousands) March 27, 2026 March 28, 2025

Net cash provided by operating activities $ 60,235 $ 100,776

3 unchanged sentences

Cash and cash equivalents at end of period $ 331,800 $ 269,822

Our cash and cash equivalents increased by $25.9 million from June 27, 2025 to December 26, 2025, as the result of $53.8 million of cash provided by operating activities, partially offset by $15.0 million of cash paid in the purchase and retirement of common stock and $12.5 million invested in purchases of property and equipment.

Our cash and cash equivalents increased by $22.7 million from June 27, 2025 to March 27, 2026, as the result of $60.2 million of cash provided by operating activities, partially offset by $20.7 million invested in purchases of property and equipment, $15.0 million of cash paid in the purchase and retirement of common stock, and $1.4 million of cash paid in the asset acquisition of a provider of specialized manufacturing processes.

Operating Activities

During the six months ended December 26, 2025, we had an inflow of $53.8 million in cash from operating activities compared to a $70.8 million inflow during the six months ended December 27, 2024.

The reduced inflow during the six months ended December 26, 2025 was primarily due to a $59.4 million lower inflow from deferred revenues and customer advances, an outflow of $29.8 million due to prepaid expenses and other current assets, as compared to an inflow of $2.2 million in the prior period, and a $23.4 million lower inflow from accounts receivable, unbilled receivables, and costs in excess of billings.

This activity was partially offset by an increase of $67.0 million from accounts payable, accrued expenses, accrued compensation, and due to factoring, as compared to a decrease in the prior period of $19.8 million.

During the nine months ended March 27, 2026, we had an inflow of $60.2 million in cash from operating activities compared to a $100.8 million inflow during the nine months ended March 28, 2025.

The reduced inflow during the nine months ended March 27, 2026 was primarily due to an outflow of $6.5 million from deferred revenues and customer advances, as compared to an inflow of $67.9 million in the prior period, an outflow of $20.5 million due to prepaid expenses and other current assets, as compared to an inflow of $4.0 million in the prior period, and a $18.2 million lower inflow from accounts receivable, unbilled receivables, and costs in excess of billings.

This activity was partially offset by an inflow of $47.4 million from accounts payable, accrued expenses, accrued compensation, and due to factoring, as compared to an outflow in the prior period of $5.3 million.

Under the terms of the RPSA for some customers, we will collect customer payments related to factored receivables, which are then remitted to the counterparty after receipt.

As of December 26, 2025 , we had collected $32.3 million on behalf of the RPSA.

As of March 27, 2026, we had collected $14.1 million on behalf of the RPSA.

These collected balances are reflected as Cash and cash equivalents and the related obligation to remit the cash to the counterparty is recorded in Due to factoring facility on our Consolidated Balance Sheet.

The lower inflow of cash from operating activities was also offset by a lower net loss of $7.5 million, and higher stock-based compensation expense of $6.1 million.

The settlement in principle of the federal securities class action lawsuit, which is expected to be covered by our insurance, reached during the six months ended September 26, 2025, increased the cash provided by accrued expenses and was offset by a $32.5 million outflow in other current assets, respectively.

The lower inflow of cash from operating activities was partially offset by a lower net loss of $23.8 million.

The settlement in principle of the federal securities class action lawsuit, which is expected to be covered by our insurance, reached during the nine months ended September 26, 2025, increased the cash provided by accrued expenses and was offset by a $32.5 million outflow in other current assets, respectively.

Investing Activities

During the six months ended December 26, 2025, we had higher purchases of property and equipment of $12.5 million, an increase of $2.7 million, as compared to $9.8 million during the six months ended December 27, 2024.

The six months ended December 27, 2024 also included an inflow of $1.9 million due to other investing activities.

During the nine months ended March 27, 2026, we invested $22.1 million, an increase of $11.0 million, as compared to $11.1 million during the nine months ended March 28, 2025 primarily due to higher purchases of property and equipment of $5.0 million and $1.4 million of cash paid in the asset acquisition of a provider of specialized manufacturing processes.

The nine months ended March 28, 2025 also included an inflow of $4.6 million due to other investing activities.

Financing Activities

During the six months ended December 26, 2025, we had $15.0 million of cash paid related to the purchase and retirement of common stock as well as $3.2 million of cash paid in financing costs in conjunction with the amendment to our Revolver during the second quarter of fiscal 2026, partially offset by $2.7 million proceeds from employee stock plans.

The six months ended December 27, 2024, included $2.2 million of cash paid in financing costs in conjunction with the amendment to our Revolver during the first quarter of fiscal 2025, partially offset by $1.5 million proceeds from employee stock plans.

During the nine months ended March 27, 2026, we had $15.0 million of cash outflow related to the purchase and retirement of common stock, as well as $3.2 million of cash paid in financing costs in conjunction with the amendment to our Revolver during the second quarter of fiscal 2026, partially offset by $2.7 million proceeds from employee stock plans.

The nine months ended March 28, 2025, included $2.2 million of cash paid in financing costs in conjunction with the amendment to our Revolver during the first quarter of fiscal 2025, partially offset by $1.5 million proceeds from employee stock plans.

C OMMITMENTS, C ONTRACTUAL O BLIGATIONS AND C ONTINGENCIES

The following is a schedule of our commitments and contractual obligations outstanding at December 26, 2025:

The following is a schedule of our commitments and contractual obligations outstanding at March 27, 2026:

(In thousands) Total Less Than

3 unchanged sentences

$ 295,168 $ 212,401 $ 51,562 $ 22,775 $ 8,430

Purchase obligations represent open non-cancelable purchase commitments for certain inventory components and services used in no rmal operations.

The purchase commitments covered by these agreements aggregated approximately $203.7 million at December 26, 2025.

We have a liability at December 26, 2025 of $4.0 million for uncertain tax positions that have been taken or are expected to be taken in various income tax returns.

Purchase obligations repre sent open non-cancelable purchase commitments for certain inventory components and services used in normal operations.

The purchase commitments covered by these agreements aggregated approximately $224.2 million at March 27, 2026.

We have a liability at March 27, 2026 of $4.0 million for uncertain tax positions that have been taken or are expected to be taken in various income tax returns.

We do not know the ultimate resolution on these uncertain tax positions and as such, do not know the ultimate timing of payments or amount, if any, related to this liability.

24 unchanged sentences

The following table reconciles our net loss, the most directly comparable GAAP financial measure, to our adjusted EBITDA:

Second Quarters Ended Six Months Ended

(In thousands) December 26, 2025 December 27, 2024 December 26, 2025 December 27, 2024

Third Quarters Ended Nine Months Ended

(In thousands) March 27, 2026 March 28, 2025 March 27, 2026 March 28, 2025

Net loss $ (2,861) $ (19,170) $ (30,471) $ (54,274)

1 unchanged sentence

Interest expense, net 4,824 6,778 16,884 23,164

Income tax benefit (2,364) (6,725) (6,385) (12,319)

Income tax provision (benefit) 174 (2,648) (6,211) (14,967)

Depreciation 8,395 9,731 25,655 29,484

17 unchanged sentences

The following tables reconcile net loss and diluted loss per share, the most directly comparable GAAP measures, to adjusted income and adjusted EPS:

Second Quarters Ended

(In thousands, except per share data) December 26, 2025 December 27, 2024

Third Quarters Ended

(In thousands, except per share data) March 27, 2026 March 28, 2025

Net loss and loss per share $ (2,861) $ (0.04) $ (19,170) $ (0.33)

13 unchanged sentences

(1) Impact to income taxes is calculated by recasting income before income taxes to include the items involved in determining adjusted income and recalculating the income tax provision using this adjusted income from operations before income taxes.

The recalculation also adjusts for any discrete tax expense or benefit related to the items.

(2) Adjusted earnings per share is calculated using diluted shares whereas Net loss per share or Adjusted loss per share is calculated using basic shares.

There was a $0.01 impact and no impact to the calculation of adjusted earnings per share as a result of this for the second quarters ended December 26, 2025 and December 27, 2024, respectively.

Six Months Ended

(In thousands, except per share data) December 26, 2025 December 27, 2024

The recalculation also adjusts for any discrete tax provision or benefit related to the items.

(2) Adjusted earnings per share is calculated using diluted shares whereas Net loss per share is calculated using basic shares.

There was a $0.01 impact and no impact to the calculation of adjusted earnings per share as a result of this for the third quarters ended March 27, 2026 and March 28, 2025, respectively.

Nine Months Ended

(In thousands, except per share data) March 27, 2026 March 28, 2025

Net loss and loss per share $ (30,471) $ (0.51) $ (54,274) $ (0.93)

13 unchanged sentences

The recalculation also adjusts for any discrete tax expense or benefit related to the items.

The recalculation also adjusts for any discrete tax provision or benefit related to the items.

(2) Adjusted earnings per share is calculated using diluted shares whereas Net loss per share is calculated using basic shares.

There was a $0.01 impact and no impact to the calculation of adjusted earnings per share as a result of this for the six months ended December 26, 2025 and December 27, 2024, respectively.

There was no impact and a $0.01 impact to the calculation of adjusted earnings per share as a result of this for the nine months ended March 27, 2026 and March 28, 2025, respectively.

Free cash flow, a non-GAAP measure for reporting cash flow, is defined as cash provided by operating activities less capital expenditures for property and equipment, which includes capitalized software development costs.

5 unchanged sentences

The following table reconciles cash provided by operating activities, the most directly comparable GAAP financial measure, to free cash flow:

Second Quarters Ended Six Months Ended

(In thousands) December 26, 2025 December 27, 2024 December 26, 2025 December 27, 2024

Third Quarters Ended Nine Months Ended

(In thousands) March 27, 2026 March 28, 2025 March 27, 2026 March 28, 2025

Net cash provided by operating activities $ 6,442 $ 29,974 $ 60,235 $ 100,776

6 unchanged sentences

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There were no material changes in our exposure to market risk from June 27, 2025 to December 26, 2025.

There were no material changes in our exposure to market risk from June 27, 2025 to March 27, 2026.

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