What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-05 compared with 2025-11-04 · 90 added, 115 removed, 115 unchanged (64% of the section changed)

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and its subsidiaries.

For an understanding of the significant factors that influenced our results, the following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q for the quarter ended September 30, 2025.

Management’s Discussion and Analysis should also be read in conjunction with the management’s discussion and analysis and consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the Securities and Exchange Commission (“SEC”).

Cautionary Statement Regarding Forward-Looking Information

Certain statements and information in this Quarterly Report on Form 10-Q for the quarter ended September 30, 2025 (as well as information included in other written or oral statements we make from time to time) may contain or constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Certain statements and information in this Quarterly Report on Form 10-Q for the quarter ended March 31, 2026 (as well as information included in other written or oral statements we make from time to time) may contain or constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

The words “believe,” “estimate,” “project,” “expect,” “anticipate,” “affirm,” “plan,” “intend,” “foresee,” “should,” “would,” “could,” “continue,” “committed,” “attempt,” “aim,” “target,” “objective,” “guides,” “seek,” “focus,” “provides guidance,” “provides outlook” or other similar expressions are intended to identify forward-looking statements, which are not historical in nature.

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the highly competitive, saturated and consolidated nature of our marketplace;

our inability to develop, introduce and commercialize new products and services, including due to our inability to undertake research and development activities;

new and developing technologies that make our existing technology solutions and products obsolete or less relevant or our failure to introduce new products and services in a timely manner or at all;

our inability to develop, introduce and commercialize new products and related services, including due to our inability to undertake research and development activities;

new and developing technologies that make our existing technology solutions and products obsolete or less relevant or our failure to introduce new products and related services in a timely manner or at all;

system security risks, data protection breaches and cyber-attacks;

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changes in U.S.

trade policy and the impact of tariffs on our business and results of operations;

and global trade policy and the impact of tariffs on our business and results of operations;

interruptions in our operations, including our information technology systems, or in the operations of the third parties that operate computing infrastructure on which we rely;

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our inability to make debt service payments or refinance such indebtedness;

our inability to successfully execute on, integrate, or achieve the anticipated benefits of acquisitions, including the acquisition of Arroweye, or execute on divestitures, strategic relationships, or investments;

our inability to successfully execute on, integrate, or achieve the anticipated benefits of acquisitions, including the acquisition of Arroweye Solutions, Inc.

(“Arroweye”), or execute on divestitures, strategic relationships, or investments;

our status as an accelerated filer and complying with the Sarbanes-Oxley Act of 2002 and the costs associated with such compliance and implementation of procedures thereunder;

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damage to our reputation or brand image;

the effects of climate change on our business;

our inability to adequately protect our trade secrets and intellectual property

rights from misappropriation, infringement claims brought against us and risks related to open source software;

our inability to adequately protect our trade secrets and

intellectual property rights from misappropriation, infringement claims brought against us and risks related to open source software;

our inability to renew licenses with key technology licensors;

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our failure to operate our business in accordance with the Payment Card Industry Security Standards Council security standards or other industry standards;

the effects of trade restrictions, delays or interruptions in our ability to source raw materials and components used in our products from foreign countries;

the effects of ongoing foreign conflicts on the global economy;

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the effect of legal and regulatory proceedings and the adequacy of our insurance policies;

and other risks that are described in Part I, Item 1A, Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on March 4, 2025, in Part II, Item 1A, Risk Factors of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2025 filed with the SEC on May 7, 2025 , and our other reports filed from time to time with the SEC.

and other risks that are described in Part I, Item 1A, Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on March 5, 2026, and our other reports filed from time to time with the SEC.

We caution and advise readers not to place undue reliance on forward-looking statements, which speak only as of the date hereof.

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Company Overview

CPI is a payments technology company providing a comprehensive range of payment cards and related digital solutions.

CPI is a payments technology company providing a comprehensive range of physical and digital payment solutions for U.S.

financial institutions, processors, fintechs, prepaid program managers, and more.

We are a leader in several areas of the U.S.

payment card solutions market, including debit and credit card production, personalization, and Software-as-a-Service-based (“SaaS-based”) instant issuance services.

payment card solutions market, including debit and credit card production, personalization, and Software-as-a-Service-based (“SaaS-based”) instant issuance solutions.

We are also a market leader in the production of “Prepaid Debit Cards,” defined as debit cards issued on the networks of the “Payment Card Brands” (Visa, Mastercard ® , American Express ® and Discover ® ) but not linked to a traditional bank account, and related secure packaging solutions.

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Our revenues are primarily generated from the production of and services related to secure debit and credit cards that are issued on the networks of the Payment Card Brands, including Prepaid Debit Cards.

On May 6, 2025, we acquired Arroweye for a purchase price of $45.8 million.

Segment Overview

In connection with our increased strategic focus on expanding and developing additional proprietary integrated technological solutions for its customer base and to reflect the manner in which the Company’s Chief Operating Decision Maker (“CODM”), the Chief Executive Officer (“CEO”) manages our business, we implemented a revised segment structure to assess performance and allocate resources, beginning in the first quarter of 2026.

The changes in our segment structure primarily relate to the separation of the results of our proprietary integrated technological related operations into a separate segment from the former Debit and Credit segment.

Our business consists of the following reportable segments:

Debit and Credit, Prepaid Debit, and Other.

Debit and Credit Segment

Our Debit and Credit segment primarily produces secure debit and credit cards and provides card services, including digital services, for U.S.

card-issuing financial institutions.

Products produced by this segment primarily include payment cards, including contact, contactless, eco-focused, metal and magnetic stripe cards.

Services include personalization;

instant issuance, which provides customers the ability to issue an instant personalized debit or credit card on-demand within a customer location;

and other payment solutions such as digital push provisioning for mobile wallets.

Prepaid Debit Segment

Our Prepaid Debit segment primarily provides integrated prepaid card services to prepaid program managers primarily in the U.S., including payment cards issued on the networks of the Payment Card Brands and related tamper-evident secure packaging.

Our Other segment includes corporate expenses.

Trends and Uncertainties That May Affect our Financial Performance

Macroeconomic Trends and Uncertainty

We continue to monitor macroeconomic trends and uncertainties such as the effects of recently implemented tariffs, and the potential imposition of modified or additional tariffs, which have had and may have adverse effects on net sales and profitability.

As a result of the tariffs announced by the U.S.

presidential administration in the first nine months of 2025, and potential tariff modifications or the imposition of tariffs or export controls by other countries, we have experienced and may experience further increased supply chain challenges and fluctuations in the costs of raw materials and components used in our products.

In addition, tariffs or other trade restrictions caused and may lead to continuing economic uncertainty, which has increased costs and may reduce demand for our products and services, and negatively affect our net sales and profitability.

We are continuing to evaluate these factors and their possible effects as well as our ability to potentially offset all or a portion of the impacts through pricing actions and cost savings efforts for the rest of fiscal year 2025 and in the future.

● Secure Card Solutions:

primarily produces secure debit and credit cards and provides card personalization services for U.S.

card-issuing financial institutions, including highly customizable, on-demand payment card solutions acquired through the purchase of Arroweye in the second quarter of 2025;

● Prepaid Solutions:

primarily provides prepaid debit cards and secure packaging solutions and other integrated prepaid card services to prepaid program managers in the U.S.;

● Integrated Paytech:

primarily provides a SaaS-based instant issuance solution, which gives customers the ability to issue an instant personalized debit or credit card within a customer location;

and other digital payment solutions such as push provisioning for mobile wallets.

Operating results for prior periods have been recast to conform to the current period presentation.

information reflects only reclassification of prior period segment data and does not represent a restatement of previously

issued financial statements.

Results of Operations

The following table presents the components of our condensed consolidated statements of operations and comprehensive income for each of the periods presented:

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(dollars in thousands)

Total net sales

Cost of sales (1)

Operating expenses

Cost of goods sold (1)

Selling, general and administrative expenses

Income from operations

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Interest, net

Loss on debt extinguishment

Other expense, net

Income before taxes

Income tax (expense) benefit

Other income, net

Income before taxes and equity in losses of unconsolidated affiliates

Income tax expense

Equity in losses of unconsolidated affiliates

Gross profit margin

* Calculation not meaningful.

(1) For the three months ended September 30, 2025 and 2024, net sales and cost of sales each include $0.6 million and $0.2 million of intersegment eliminations, respectively.

For the nine months ended September 30, 2025 and 2024, net sales and cost of sales each include $1.3 million and $1.0 million of intersegment eliminations, respectively.

The following discussion of our consolidated results of operations and segment results refers to the three and nine months ended September 30, 2025, compared to the corresponding prior year period.

(1) For the three months ended March 31, 2026 and 2025, revenue and cost of goods sold each include $4.2 million and $4.8 million of intersegment eliminations, respectively.

The following discussion of our condensed consolidated results of operations and segment results refers to the three months ended March 31, 2026, compared to the corresponding prior year period.

The results of operations should be read in conjunction with the discussion of our segment results of operations, which provide more detailed discussions concerning certain components of the condensed consolidated statements of operations and comprehensive income.

Net sales increased for the three months ended September 30, 2025, primarily due to contributions of Products net sales from the acquisition of Arroweye, partially offset by lower Services net sales in our Prepaid Debit segment.

Net sales increased for the nine months ended September 30, 2025, primarily due to higher Products net sales, including increased volumes of contactless cards and contributions from the acquisition of Arroweye, partially offset by decreased Services net sales in our Debit and Credit and Prepaid Debit segments.

The decrease in Services net sales in the Prepaid Debit segment for the nine months ended September 30, 2025 was attributable to a change in accounting in the second quarter of 2025 resulting in reduced revenue recognition related to work-in-process orders as discussed in Note 1, “Business Overview and Summary of Significant Accounting Policies,” of the condensed consolidated financial statements in this report.

Revenue increased for the three months ended March 31, 2026, primarily due to increased revenue in our Secure Card Solutions segment, driven by contributions of $16.1 million from the acquisition of Arroweye, increased volumes of contactless cards, including metal cards, and higher personalization services;

partially offset by lower revenue in our Prepaid Solutions segment.

Gross Profit and Gross Profit Margin:

Gross profit and gross profit margin decreased for the three and nine months ended September 30, 2025, primarily due to negative sales mix and increased production costs, including increased tariff and depreciation expenses;

partially offset by increases in net sales.

Operating Expenses:

Operating expenses increased for the three and nine months ended September 30, 2025, primarily due to increased professional service fees and other costs associated with the acquisition and integration of Arroweye.

These increases were partially offset by decreased compensation-related expenses, including decreased employee performance-based incentive compensation.

The three months ended September 30, 2025 was also impacted by decreased executive severance, while the nine months ended September 30, 2025 was also impacted by costs that were incurred in the prior year period in accordance with the former Chief-Executive Officer’s (“CEO”) retention agreement.

Gross profit increased for the three months ended March 31, 2026, primarily due to increased revenue, partially offset by negative sales mix and increased production costs, including increased depreciation expenses and tariffs totaling $3.0 million.

Additional changes in tariff rates could further impact our results of operations during 2026.

Gross profit margin decreased for the three months ended March 31, 2026, primarily due to negative sales mix and increased production costs, including increased depreciation expenses and tariffs, partially offset by operating leverage from increased revenue.

Selling, General and Administrative Expenses:

Selling, general and administrative expenses increased for the three months ended March 31, 2026, primarily due to increased costs of $2.4 million associated with the integration of Arroweye and increased compensation-related expenses resulting from increased headcount, including increased executive severance and employee performance-based incentive compensation.

Interest, net :

Interest expense decreased for the three and nine months ended September 30, 2025, primarily due to payment in the prior year period of an early redemption premium of $5.8 million related to the redemption in full of the $267.9 million 8.625% Senior Secured Notes due 2026 (the “2026 Senior Notes”), as compared to payment in the current period of a $0.6 million premium related to the redemption of $20.0 million 10.000% Senior Secured Notes due 2029.

Loss on Debt Extinguishment:

During the three and nine months ended September 30, 2024, we recorded a $3.0 million loss on debt extinguishment relating to the unamortized deferred financing costs in connection with the redemption of the 2026 Senior Notes and the refinancing of our ABL Revolver Credit Agreement in July 2024 .

Other Expense, net:

Other expense, net, was relatively consistent for the three and nine months ended September 30, 2025.

Income Tax (Expense) Benefit:

Our effective tax rates on pre-tax income were 38.3 % and (57.9)% for the three months ended September 30, 2025 and 2024, respectively, and 34.0% and 24.0% for the nine months ended September 30, 2025 and 2024, respectively.

The increase in the Company’s effective tax rate for the three months and nine months ended September 30, 2025, compared to the prior year related to limitations on deductibility of executive compensation and non-deductible acquisition-related costs, deductibility of stock-based compensation realized upon certain stock option exercises and restricted stock unit vesting and increased state tax expenses related to the acquisition of Arroweye.

Interest expense was relatively consistent for the three months ended March 31, 2026.

Other Income, net:

Other income, net, was relatively consistent for the three months ended March 31, 2026.

Income Tax Expense:

Our effective tax rates on pre-tax income were 34.4% and 25.8% for the three months ended March 31, 2026 and 2025, respectively.

The increase in the Company’s effective tax rate for the three months ended March 31, 2026, compared to the prior year related to deductibility of stock-based compensation realized upon certain stock option exercises and restricted stock unit vesting and an increase in the valuation allowance related to states decoupling from recent favorable tax legislation changes.

Segment Discussion

Debit and Credit:

Three Months Ended September 30,

Nine Months Ended September 30,

Secure Card Solutions:

Three Months Ended March 31,

(dollars in thousands)

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Gross profit margin

Net sales for Debit and Credit increased for the three months ended September 30, 2025, primarily due to increased Products net sales, including contributions from the Arroweye acquisition and increased Card@Once printer sales;

partially offset by lower volumes of contact-only EMV cards.

Net sales for Debit and Credit increased for the nine months ended September 30, 2025, primarily due to increased Products net sales, including contributions from the Arroweye acquisition, higher volumes of contactless cards, including metal cards, and increased Card@Once printer sales, partially offset by decreased sales of other cards and personalization services.

Revenue for Secure Card Solutions increased for the three months ended March 31, 2026, primarily due to contributions from the acquisition of Arroweye, increased volumes of contactless cards, including metal cards, and higher personalization services.

Gross Profit and Gross Profit Margin:

Gross profit for Debit and Credit decreased for the three and nine months ended September 30, 2025, primarily due to negative sales mix and increased production costs, including increased tariff and depreciation expenses, partially offset by increases in net sales.

Gross profit for Secure Card Solutions increased for the three months ended March 31, 2026, primarily due to increased revenue, partially offset by increased production costs, including increased depreciation expenses and tariffs.

Gross profit margin was relatively consistent for Secure Card Solutions for the three months ended March 31, 2026 .

Income from Operations:

Income from operations for Debit and Credit decreased for the three and nine months ended September 30, 2025, primarily due to decreased gross profit and increased operating expenses driven by increased compensation-related expenses resulting from increased headcount, including from the Arroweye acquisition.

Prepaid Debit:

Three Months Ended September 30,

Nine Months Ended September 30,

Income from operations for Secure Card Solutions increased for the three months ended March 31, 2026, primarily due to increased gross profit, partially offset by increased selling, general and administrative expenses driven by increased compensation-related expenses resulting from increased headcount and other costs due to the Arroweye acquisition.

Prepaid Solutions:

Three Months Ended March 31,

(dollars in thousands)

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Gross profit margin

Net sales for Prepaid Debit decreased for the three months ended September 30, 2025, primarily due to decreased sales from existing customers.

Net sales for Prepaid Debit decreased for the nine months ended September 30, 2025, primarily due to a change in accounting resulting in reduced revenue recognition for work-in-process orders;

partially offset by increased sales of higher-priced packaging solutions and healthcare payment solutions.

Revenue for Prepaid Solutions decreased for the three months ended March 31, 2026, primarily due to comparisons with strong sales of higher-value packaging solutions in the prior year period, partially offset by sales of closed loop payment cards.

Gross Profit and Gross Profit Margin:

Gross profit and gross profit margin for Prepaid Debit decreased for the three months ended September 30, 2025, primarily due to decreased net sales.

Gross profit and gross profit margin for Prepaid Debit decreased for the nine months ended September 30, 2025, primarily due to a change in accounting that was implemented in the second quarter resulting in reduced revenue recognition for work-in-process orders;

partially offset by increased net sales to existing customers.

Gross profit and gross profit margin for Prepaid Solutions decreased for the three months ended March 31, 2026, primarily due to lower operating leverage from decreased revenue and unfavorable sales mix.

Income from Operations:

Income from operations for Prepaid Debit decreased for the three and nine months ended September 30, 2025, primarily due to the factors discussed in “Gross Profit and Gross Profit Margin” above.

As the Other segment is comprised entirely of corporate expenses, income from operations for Other consists of operating expenses shown below.

Three Months Ended September 30,

Nine Months Ended September 30,

Income from operations for Prepaid Solutions decreased for the three months ended March 31, 2026, primarily due to the factors discussed in “Gross Profit and Gross Profit Margin” above.

Integrated Paytech:

Three Months Ended March 31,

(dollars in thousands)

Operating expenses

Operating Expenses:

Other operating expenses decreased for the three and nine months ended September 30, 2025, primarily due to decreased compensation-related expenses, including employee performance-based incentive compensation and executive severance;

partially offset by increased professional service fees related to acquisition and integration costs associated with the acquisition of Arroweye.

Other operating expenses for the nine months ended September 30, 2025, also decreased due to the impact of costs that were incurred in the prior year period in accordance with the former CEO’s retention agreement.

Income from operations

Gross profit margin

Revenue for Integrated Paytech was relatively consistent for the three months ended March 31, 2026.

Gross Profit and Gross Profit Margin:

Gross profit and gross profit margin for Integrated Paytech were relatively consistent for the three months ended March 31, 2026.

Income from Operations:

Income from operations for Integrated Paytech decreased for the three months ended March 31, 2026, primarily due to increased selling, general and administrative expenses driven by increased compensation-related expenses resulting from increased headcount.

Liquidity and Capital Resources

At September 30, 2025, we had $16.0 million of cash and cash equivalents.

At March 31, 2026, we had $19.3 million of cash and cash equivalents.

Our primary source of liquidity has been cash generated from our operating activities, which has been driven by net income and fluctuations in working capital.

Our working capital fluctuates primarily due to the timing and size of tax payments, collections from customers, inventory purchases, payments of employee incentive programs, and interest payments on our outstanding Senior Notes, with the interest payments being due in the first and third quarters of the year.

Our working capital fluctuates primarily due to timing and size of tax payments, collections from customers, inventory purchases, payments of employee incentive programs, and interest payments on our outstanding Senior Notes, with the interest payments being due in the first and third quarters of the year.

Our ability to make investments in and grow our business, service our debt, and improve our debt leverage ratios, while maintaining strong liquidity, depends on our ability to generate excess operating cash flows.

Although we can provide no assurances, we believe that our cash flows from operations, combined with our current cash levels and our senior secured revolving credit facility (the “ABL Revolver”) with available borrowing capacity of $50.2 million as of September 30, 2025, will be adequate to fund debt service requirements and provide cash, as required, to support our ongoing operations, capital expenditures, lease obligations and working capital needs.

Although we can provide no assurances, we believe that our cash flows from operations, combined with our current cash levels and our senior secured revolving credit facility (the “ABL Revolver”) with available borrowing capacity of $81.8 million as of March 31, 2026, will be adequate to fund debt service requirements and provide cash, as required, to support our ongoing operations, capital expenditures, lease obligations and working capital needs.

Our future cash flows could be impacted by a variety of factors, some of which are beyond our control.

Factors include, but are not limited to, demand from some of our customers for certain products and services;

Factors include, but are not limited to, demand from some of our customers for certain products and related services;

changes in economic conditions, especially those impacting our customers;

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Cash Flows from Operating Activities

Cash provided by operating activities for the nine months ended September 30, 2025, increased to $19.9 million from $16.7 million for the nine months ended September 30, 2024, primarily due to reduced working capital usage.

Working capital benefited from increased collections on accounts receivable, lower inventory purchases, and lower payments related to the prior-CEO retention agreement, partially offset by incentive payments related to a customer contract originally entered into in the first quarter of 2024, higher employee performance-based incentive compensation payments in 2025, and higher cash paid for interest on our Senior Notes.

Investing Activities

Arroweye Acquisition

On May 6, 2025, we acquired Arroweye for initial cash consideration of $42.4 million.

In October 2025, we made a final payment of $1.8 million resulting in a final purchase price of $45.8 million, which includes a final net working capital adjustment.

The final cash consideration paid was $44.2 million, which is net of cash acquired of $1.6 million.

The acquisition was funded through a combination of cash on hand and our available capacity under the ABL Revolver.

Refer to Note 4, “Acquisition” of the condensed consolidated financial statements in this report for information regarding the acquisition.

Cash provided by operating activities for the three months ended March 31, 2026, increased to $13.6 million from $5.6 million for the three months ended March 31, 2025, primarily due to reduced working capital usage.

Working capital benefited from decreased incentive payments related to a customer contract originally entered into in the first quarter of 2024, decreased employee performance-based incentive compensation and severance payments in 2026, and lower inventory purchases.

These benefits were partially offset by timing of collections in accounts receivable and payments on accounts payable and prepaid expense balances.

Cash Flows from Investing Activities

Capital Expenditures

During the nine months ended September 30, 2025, capital expenditures, including investments to support the business, such as machinery and information technology equipment, totaled $13.8 million, primarily related to our new production facility in Indiana.

As of September 30, 2025, and December 31, 2024, we had the following outstanding borrowings:

September 30,

During the three months ended March 31, 2026, capital expenditures, including investments to support the business, such as machinery and information technology equipment, totaled $3.5 million.

Cash Flows from Financing Activities

As of March 31, 2026, and December 31, 2025, we had the following outstanding borrowings:

(dollars in thousands)

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Total long-term debt

On the Closing Date, we completed a private offering of the Senior Notes and related guarantees at an issue price of 100%.

On July 11, 2024 (the “Closing Date”), we completed a private offering by our wholly-owned subsidiary, CPI CG Inc.

(the “Borrower”), of $285.0 million aggregate principal amount of 10.000% Senior Secured Notes due 2029 (the “Senior Notes”) and related guarantees at an issue price of 100%.

The Senior Notes mature on July 15, 2029 and interest is payable on January 15 and July 15 of each year.

On July 15, 2025, the Company redeemed $20.0 million of its outstanding $285.0 million aggregate principal amount Senior Notes.

The redemption was made pursuant to the terms of the indenture governing the Senior Notes, at a redemption price of 103.000% of par plus accrued and unpaid interest to the date of redemption.

The Company has obligations to make an offer to repay the Senior Notes, requiring prepayment in advance of the maturity date, upon the occurrence of certain events including a change of control and certain asset sales.

On the Closing Date, the Company, the Borrower, and JPMorgan entered into the ABL Revolver.

On the Closing Date, the Company and the Borrower entered into a credit agreement with JPMorgan, (the “ABL Revolver”) providing for up to $75.0 million.

The ABL Revolver matures on the earliest to occur of July 11, 2029, and the date that is 91 days prior to the maturity of the Senior Notes.

We primarily utilize our ABL Revolver to provide general liquidity and to support shorter term financing requirements.

On July 2, 2025, the Company, the Borrower, and JPMorgan entered into the Amendment, which amends the ABL Revolver to, among other things, increase the available borrowing capacity to $100.0 million from $75.0 million.

The Amendment did not modify the maturity date of the ABL Revolver nor the interest rate.

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The unused portion of the ABL Revolver commitment accrues a commitment fee, which ranges from 0.375% to 0.50% per annum, based on the average daily excess availability under the ABL Revolver over the immediately preceding month.

As of September 30, 2025, we had $47.0 million of outstanding borrowings on the ABL Revolver.

Amounts borrowed and outstanding under the ABL Revolver and Senior Notes are required to be repaid in full, together with any accrued and unpaid interest, no later than July 15, 2029 and may be subject to earlier mandatory prepayment upon certain events.

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Debt Service Requirements

As of September 30, 2025, the total projected principal and interest payments on our borrowings were $422.3 million, primarily related to the Senior Notes, of which $29.1 million of interest is expected to be paid in the next 12 months.

As of March 31, 2026, the total projected principal and interest payments on our borrowings are $368.4 million, primarily related to the Senior Notes, of which $26.8 million of interest is expected to be paid in the next 12 months.

T he remaining interest payments are expected to be paid over the remaining term of the Senior Notes, which mature in 2029, and the principal is due upon maturity.

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Refer to Part II, Item 8, Financial Statements and Supplementary Data , Note 9, “Financing and Operating Leases,” in our Annual Report on Form 10-K for the year ended December 31, 2025, for details on our leasing arrangements, including future maturities of our operating lease liabilities.

In February 2024, we entered into a build-to-suit lease agreement to relocate and modernize our operations at our Fort Wayne, Indiana production facility, which was made available for our use in the first quarter of 2025, and payments beginning in the fourth quarter of 2025.

In February 2024, we entered into a build-to-suit lease agreement to relocate and modernize our operations at our Fort Wayne, Indiana production facility, which commenced in the first quarter of 2025, and payments beginning in 2026.

Under this lease agreement, we will pay an annual base rent of $0.9 million, subject to an annual rent increase of 2.0%.

The lease commenced on August 1, 2025, for an initial term of 10 years and includes two consecutive options to extend the term of the lease by five years for each such option.

The lease is for 10 years and includes two consecutive options to extend the term of the lease by five years for each such option.

Purchase Obligations

A purchase obligation is an agreement to purchase goods or services that is enforceable, legally binding, and specifies all significant terms.

As of September 30, 2025, there have not been any material changes to the purchase obligations disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

As of March 31, 2026, there have not been any material changes to the purchase obligations disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

Critical Accounting Policies and Estimates

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Actual results could differ from those estimates.

Our Critical Accounting Policies and Estimates disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024, for which there were no material changes as of September 30, 2025, included:

● Revenue recognition, including estimates of work performed but not completed , and

Our Critical Accounting Policies and Estimates disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025, for which there were no material changes as of March 31, 2026, included:

● Revenue recognition, including estimates of work performed but not completed ,

● Income taxes, including estimates regarding future compensation for covered individuals, valuation allowances and uncertain tax positions,

● Business combinations.

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