What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2026-04-03 compared with 2025-03-13 · 268 added, 246 removed, 288 unchanged (64% of the section changed)

MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER

MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Shares of the Company’s common stock are traded on The NASDAQ Global Market under the symbol “RCMT.”

As of February 20, 2025, the approximate number of holders of record of the Company’s Common Stock was 223.

As of March 26, 2026, the approximate number of holders of record of the Company’s Common Stock was 201.

Since certain of our shares are held by brokers and other institutions on behalf of shareholders, the foregoing number is not representative of the number of beneficial owners.

No dividends were declared in fiscal 2024 or fiscal 2025.

All restricted share awards contain a dividend equivalent provision entitling holders to dividends paid between the restricted stock award grant date and ultimate share distribution date.

As of December 28, 2024, there were no accrued dividends.

All restricted stock and stock unit awards contain a dividend equivalent provision entitling holders to dividends paid between the award grant date and the ultimate share distribution date.

As of January 3, 2026, there were no accrued dividends.

While the Company, at this time, has no plans to issue any future dividends, any future payment of dividends will depend upon, among other things, the Company’s earnings, financial condition, capital requirements, level of indebtedness, contractual restrictions, and other factors that the Board of Directors deems relevant.

The Revolving Credit Facility (as discussed in Item 7 hereof) prohibits the payment of any dividends or distributions on account of the Company’s capital stock without the prior consent of the majority of the Company’s lenders.

The Revolving Credit Facility (as discussed in Item 7 hereof) restricts the payment of any dividends or distributions on account of the Company’s capital stock without meeting certain covenants on a pro forma basis.

Stock Repurchase by Issuer

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Such a plan would enable the Company to repurchase its shares during periods outside of its normal trading windows when the Company typically would not be active in the market.

There were no repurchased shares from September 29, 2024 through December 28, 2024.

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS (CONTINUED)

The following table provides information relating to the shares we purchased during the fourth quarter of the fiscal year ended January 3, 2026:

Weighted Average

Total Number of

Shares Purchased as

Part of Publicly

Announced Program

Approximate Dollar

Value of Shares that

Purchased Under

September 28, 2025 – October 31, 2025

November 1, 2025 – November 30, 2025

December 1, 2025 – January 3, 2026

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

The following discussion and analysis contains forward-looking statements, including, without limitation, statements relating to our plans, strategies, objectives, expectations, intentions and resources.

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Risk Factors ” of this Form 10-K.

This section of the Form 10-K generally discusses matters relating to the fiscal years ended December 28, 2024 and December 30, 2023 and year-to-year comparisons between such fiscal years.

This section of the Form 10-K generally discusses matters relating to the fiscal years ended January 3, 2026 and December 28, 2024 and year-to-year comparisons between such fiscal years.

Discussions of matters relating to the fiscal year ended December 30, 2023 and year-to-year comparison between that year and the year ended December 28, 2024 that are not included in this Form 10-K can be found in “ Management ’ s Discussion and Analysis of Financial Condition and Results of Operations ” in Part II, Item 7 of the Company ’ s Annual Report on Form 10-K for the fiscal year ended December 28, 2024.

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This has had an adverse impact on spending by current and prospective clients for many emerging new solutions.

Nonetheless, the Company continues to believe that businesses must implement more advanced life sciences, information technology and engineering solutions to upgrade their systems, applications and processes so that they can maximize their productivity and optimize their performance in order to maintain a competitive advantage.

Although working under budgetary, personnel and expertise constraints, companies are driven to support increasingly complex systems, applications and processes of significant strategic value.

This has given rise to a demand for outsourcing.

The Company believes that its current and prospective clients are continuing to evaluate the potential for outsourcing business critical systems, applications and processes.

Nonetheless, the Company continues to believe that businesses must implement more advanced life sciences, information technology, and engineering solutions—including AI and specifically Agentic AI, Quality by Design (QbD), and process automation—to upgrade their systems, applications, and processes.

By leveraging AI, organizations can enhance data-driven decision-making and predictive analytics, while QbD principles ensure that quality is built into every stage of development and operations.

Process automation further streamlines workflows, reduces manual intervention, and increases operational efficiency.

These integrated approaches enable companies to maximize productivity and optimize performance, maintaining a competitive advantage even when operating under budgetary, personnel, and expertise constraints.

As companies are driven to support increasingly complex systems, applications, and processes of significant strategic value, the demand for outsourcing—especially in areas involving AI, QbD, and automation—continues to rise.

The Company believes that its current and prospective clients are actively evaluating the potential for outsourcing business-critical systems, applications, and processes that incorporate these advanced methodologies.

The Company provides project management and consulting services, which are billed based on either agreed-upon fixed fees or hourly rates, or a combination of both.

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These services are primarily provided to the client at hourly rates that are established for each of the Company’s consultants based upon their skill level, experience and the type of work performed.

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS (CONTINUED)

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Overview (Continued)

The majority of the Company’s services are provided under purchase orders.

Contracts are utilized on certain of the more complex assignments where the engagements are for longer terms or where precise documentation on the nature and scope of the assignment is necessary.

Although contracts normally relate to longer-term and more complex engagements, they do not obligate the customer to purchase a minimum level of services and are generally terminable by the customer on 60 to 90 days’ notice.

The Company, from time to time, enters into contracts requiring the completion of specific deliverables.

Contracts are used for certain more complex assignments, where engagements are for longer terms or precise documentation of the nature and scope of the assignment is necessary.

Although contracts normally relate to longer-term, more complex engagements, they do not oblige the customer to purchase a minimum level of services and are generally terminable by the customer with 60 to 90 days’ notice.

The Company, from time to time, enters contracts requiring the completion of specific deliverables.

Typically, these contracts are for less than one year.

The Company recognizes revenue on these deliverables at the time the client accepts and approves the deliverables.

The Company recognizes revenue from these deliverables when the client accepts and approves them.

Costs of services consist primarily of salaries and compensation-related expenses for billable consultants and employees, including payroll taxes, employee benefits, and insurance.

Selling, general and administrative expenses consist primarily of salaries and benefits of personnel responsible for business development, recruiting, operating activities, and training, and include corporate overhead expenses.

Corporate overhead expenses relate to salaries and benefits of personnel responsible for corporate activities, including the Company’s corporate marketing, administrative and financial reporting responsibilities and acquisition program.

Selling, general, and administrative expenses consist primarily of personnel salaries and benefits for business development, recruiting, operating activities, and training, as well as corporate overhead expenses.

Corporate overhead expenses relate to the salaries and benefits of personnel responsible for corporate activities, including the Company’s corporate marketing, administrative, and financial reporting responsibilities, as well as its acquisition program.

The Company records these expenses when incurred.

Corporate overhead expenses are allocated to the segments based on revenue for the purpose of segment financial reporting.

Critical Accounting Policies and Use of Estimates

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GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenue and expenses during the reporting period.

In our consolidated financial statements, estimates are used for, but not limited to, accounts receivable and provision for credit losses, goodwill, long-lived intangible assets, accounting for stock options and restricted stock awards, insurance liabilities, accounting for income taxes and accrued bonuses.

In our consolidated financial statements, estimates are used for, but not limited to, accounts receivable, contract assets, provision for credit losses, goodwill, long-lived intangible assets, accounting for stock options and restricted stock and stock unit awards, litigation or other contingent accruals, accounting for income taxes, and accrued bonuses.

The various estimates and assumptions taken into account include, but are not limited to:

The Company enters into contracts or purchase orders that require the completion of specific deliverables or other fixed-fee elements.

For fixed-price arrangements, revenue is recognized over time as performance obligations are satisfied.

The Company measures progress toward completion using either an input method or an output method, depending on which method best depicts the transfer of control of services to the customer.

The Company primarily applies an input method based on costs incurred relative to total estimated costs (cost-to-cost method).

In certain arrangements, an output method, such as achieving contractual milestones or delivering specified units, is used when it more directly reflects the Company’s performance.

Total estimated costs are developed at contract inception and updated throughout the contract.

This approach requires significant judgment, particularly with respect to estimated total costs, project margins, and progress toward completion, all of which may change over the life of a contract and affect the timing and amount of revenue recognized.When determining whether an impairment of goodwill or of an intangible asset is indicated, we consider the financial condition of our three segments to which the acquired business relates.

The market price of the Company’s stock at each grant date is used to determine the expense associated with the Company’s equity awards.

The market price can fluctuate on different grant dates, and the disclosures are updated to reflect changes in the expense associated with equity awards.

The Company issues performance-based restricted stock and stock unit awards to its employees, which typically vest based on certain performance metrics.

The Company assesses at each reporting date whether the achievement of any performance condition has become probable and recognizes the expense when that achievement becomes probable.

If the Company later determines that achieving such a performance metric is unlikely, the expense recognized will be reversed.

The Company is exposed to various asserted claims for which it believes a loss is probable.

Additionally, the Company is exposed to other asserted claims for which a loss amount has not been declared, and the Company cannot determine the potential loss.

Any of these various claims could result in an unfavorable outcome or settlement that exceeds the accrued amounts.

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Critical Accounting Policies and Use of Estimates (Continued)

The Company maintains a self-funded health and welfare plan.

Claims history is reviewed to estimate claims incurred but not yet paid to determine the adequacy of the health and welfare accrual.

The Company maintains a self-funded workers’ compensation plan.

Claims history is reviewed to estimate claims incurred but not yet paid to determine the adequacy of the workers’ compensation accrual.

Bonus accruals are reviewed and adjusted on a regular basis depending on the profitability of the Company and individual bonus agreements.

Revenue Recognition

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The Company’s Engineering Services and Life Sciences, Data and Solutions segments perform consulting and project solution services.

The Healthcare segment specializes in long-term and short-term staffing and placement services to hospitals, schools and long-term care facilities amongst others.

The Healthcare segment specializes in long- and short-term staffing and placement services for hospitals, schools, and long-term care facilities, among others.

All of the Company’s segments perform staff augmentation services and derive revenue from permanent placement fees.

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS (CONTINUED)

Revenue Recognition (Continued)

The following table presents our revenue disaggregated by revenue source for the fiscal years ended December 28, 2024 and December 30, 2023:

The following table presents our revenue disaggregated by revenue source for the fiscal years ended January 3, 2026 and December 28, 2024:

Specialty Health Care:

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Total Life Sciences, Data and Solutions

Time and Material

The Company’s Health Care segment predominantly recognizes revenue through time and material work while its Engineering and Life Sciences, Data and Solutions segments recognize revenue through both time and material and fixed fee work.

The Company’s time and material contracts are typically based on the number of hours worked at contractually agreed upon rates, therefore revenue associated with these time and materials contracts are recognized based on hours worked at contracted rates.

From time to time and predominantly in our Engineering segment, the Company enters into contracts requiring the completion of specific deliverables.

The Company has master services agreements with many of its customers that broadly define terms and conditions.

Actual services performed under fixed fee arrangements are typically delivered under purchase orders that more specifically define terms and conditions related to that fixed fee project.

While these master services agreements can often span several years, the Company’s fixed fee purchase orders are typically performed over six to nine month periods.

In instances where project services are provided on a fixed-price basis, revenue is recorded in accordance with the terms of each contract.

For engineering contracts estimated costs are budgeted by project, the Company then recognizes revenue by applying the costs incurred to date against the total budgeted costs and applying the percentage of completed cost against the total contract value to recognize revenue for each period.

In certain instances, revenue is invoiced at the time certain milestones are reached, as defined in the contract.

Revenue under these arrangements are recognized as the costs on these contracts are incurred.

From time-to-time, amounts paid in excess of revenue earned and recognized are recorded as deferred revenue.

Some contracts also limit revenue and billings to specified maximum amounts.

Provisions for contract losses, if any, are made in the period such losses are determined.

For contracts where there is a specific deliverable and the work is not complete and the revenue is not recognized, the costs incurred are deferred as a prepaid asset.

The associated costs are expensed when the related revenue is recognized.

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS (CONTINUED)

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Revenue Recognition (Continued)

Time and Material

The Company’s Health Care segment predominantly generates revenue from time-and-materials arrangements.

In contrast, its Engineering and Life Sciences, Data and Solutions segments generate revenue from both time-and-materials and fixed-fee arrangements.

Revenue from time and materials contracts is recognized over time as performance obligations are satisfied, as the customer simultaneously receives and consumes the benefits of the services performed.

These contracts are typically based on the number of hours worked at contractually agreed-upon rates.

Accordingly, revenue is recognized based on hours worked at contracted rates, which represents an output method that directly reflects the value of services transferred to the customer.

From time to time, primarily within the Engineering segment, the Company enters into fixed-fee contracts requiring the delivery of specified services or project-based deliverables.

The Company operates under master services agreements that establish general terms and conditions, with project-specific purchase orders defining the scope, pricing, and duration of individual engagements, which are typically performed over 6 to 9 months.

Revenue from fixed-fee arrangements is recognized over time as performance obligations are satisfied, as the customer simultaneously receives and consumes the benefits of the services performed.

The Company measures progress toward completion using either an input method (e.g., costs incurred relative to total estimated costs) or an output method (e.g., achievement of contractual milestones or delivery of specified units), depending on which method best depicts the transfer of control of services to the customer.

The Company primarily applies an input method based on costs incurred relative to total estimated costs (cost-to-cost method).

In contrast, output methods are used in arrangements in which milestones or deliverables correspond directly to the transfer of control to the customer.

Billings in excess of revenue recognized are recorded as contract liabilities (deferred revenue), while revenue recognized in excess of billings is recorded as contract assets.

Certain contracts may include provisions that limit total billings or the timing of revenue recognition.

The Company evaluates contracts for potential losses and records provisions for estimated losses in the period such losses become probable and can be reasonably estimated.

Costs incurred in fulfilling contracts are expensed as incurred unless they qualify for capitalization under applicable accounting guidance.

Permanent Placement Services

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Deferred Revenue

Deferred revenue was $4.2 million as of December 28, 2024 and $1.9 million as of December 30, 2023.

Deferred revenue was $14.8 million as of January 3, 2026, and $4.2 million as of December 28, 2024.

Revenue is recognized when the service has been performed.

Deferred revenue may be recognized over a period exceeding one year from the time it was recorded on the balance sheet, although this is an infrequent occurrence.

In the fiscal years ended December 28, 2024 and December 30, 2023, the Company recognized revenue of $1.9 million and $1.1 million, respectively, that was included in deferred revenue at the beginning of the reporting period.

In the fiscal years ended January 3, 2026, and December 28, 2024, the Company recognized revenue of $4.2 million and $1.9 million, respectively, that was included in deferred revenue at the beginning of the reporting period.

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Accounts Receivable and Provision for Credit Losses

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Under this update, an entity should perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount.

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS (CONTINUED)

Goodwill (Continued)

There was no goodwill impairment in fiscal 2025 or 2024.

The Company reviewed industry and market conditions, reporting unit specific events as well as overall financial performance and determined that no indicators of impairment of goodwill existed in its Engineering and Specialty Health Care segments during the fiscal year ended December 28, 2024 and for all segments during the year ended December 30, 2023.

With respect to the fiscal year ended December 28, 2024, since the Company remeasured contingent consideration associated with its Life Sciences, Data and Solutions segment, the Company determined that further testing was necessary.

After comparing the fair value of the Life Sciences, Data and Solutions segment to its carrying amount, the Company determined that no impairment loss occurred for the Company’s goodwill related to that segment during the fiscal years ended December 28, 2024 or December 30, 2023.

Except for the aforementioned remeasurement of contingent consideration, the Company determined that the existing qualitative factors did not suggest that an impairment of goodwill exists.

The Company tests goodwill for impairment on an annual basis as of the last day of the Company's fiscal year, or more frequently if events or circumstances indicate that the fair value of goodwill may be below its carrying amount.

The Company reviewed industry and market conditions, reported unit-specific events, and overall financial performance, and determined that no indicators of impairment of goodwill existed during the fiscal year ended January 3, 2026.

As a result of such review, no impairment loss was recorded for the Company’s intangible assets during the fiscal year ended January 3, 2026.

With respect to the fiscal year ended December 28, 2024, since the Company remeasured contingent consideration associated with its Life Sciences, Data, and Solutions segment in fiscal 2024, the Company determined that further testing was necessary.

There can be no assurance that future indicators of impairment and tests of goodwill impairment will not result in impairment charges for both its Engineering and Specialty Healthcare segments.

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Assets to be disposed of by sale, if any, are reported at the lower of the carrying amount or fair value less cost to sell.

Accounting for Restricted Stock Awards

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Accounting for Stock Awards and Stock Compensation

The Company uses restricted stock awards to attract, retain and reward employees for long-term service.

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The Company measures stock-based compensation cost using the Black-Scholes option pricing model for stock options and the fair value of the underlying common stock at the date of grant for restricted stock awards.

The Company issues performance-based restricted stock awards to its employees, which typically vest based on certain performance metrics.

The Company assesses at each reporting date whether the achievement of any performance condition has become probable and recognizes the expense when that achievement becomes probable.

If the Company later determines that achieving such a performance metric is unlikely, the expense recognized will be reversed.

Performance-Based Restricted Stock and Stock Unit Awards

From time to time the Company issues performance-based restricted stock and stock unit awards to its executives.

Performance-based restricted stock and stock unit awards are typically vested based on certain multi-year performance metrics as determined by the Board of Directors Compensation Committee.

The Company will reassess at each reporting date whether achievement of any performance condition is probable and recognizes additional compensation cost if the achievement of the performance condition becomes probable.

The Company will then recognize the appropriate expense cumulatively in the year performance becomes probable and recognize the remaining compensation cost over the remaining requisite service period.

If at a later measurement date, the Company determines that performance-based restricted stock or stock unit awards deemed as likely to vest are deemed as unlikely to vest, the expense recognized will be reversed.

These performance-based restricted stock and stock unit awards typically include dividend accrual equivalents, which means that any dividends paid by the Company during the vesting period become due and payable after the vesting period on any stock and stock unit awards that actually vest, if any.

Dividends for these grants are accrued on the dividend payment dates and included in accounts payable and accrued expenses on the accompanying consolidated balance sheet.

Dividends for performance-based restricted stock and stock unit awards that ultimately do not vest are forfeited.

Insurance Liabilities

The Company has risk participation arrangements with respect to workers compensation and healthcare insurance.

The Company establishes loss provisions based on historical experience and in the case of expected losses from workers compensation, considers input from third parties.

The Company has risk participation arrangements for workers' compensation and healthcare insurance.

The Company establishes loss provisions based on historical experience and, for expected losses from workers' compensation, considers input from third parties.

The amounts included in the Company’s costs related to this risk participation are estimated and can vary based on changes in assumptions, the Company’s claims experience or the providers included in the associated insurance programs.

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS (CONTINUED)

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Accounting for Income Taxes

In establishing the provision for income taxes and deferred income tax assets and liabilities and valuation allowances against deferred tax assets, the Company makes judgments and interpretations based on enacted tax laws, published tax guidance and estimates of future earnings.

As of December 28, 2024, the Company had both domestic and foreign net deferred tax liabilities of $4.4 million.

As of January 3, 2026, the Company had domestic net deferred tax liabilities of $5.7 million.

The domestic long term net deferred tax liability of $5.7 million includes $8.2 million in deferred liabilities offset by $2.5 million in deferred tax assets.

The deferred tax liabilities consist of acquisition amortization of $4.6 million, prepaid expenses of $1.3 million, advance depreciation deductions of $1.2 million and right of use assets of $1.1 million.

The domestic deferred tax assets consist of lease liabilities of $1.3 million, reserves and accruals of $0.5 million, compensation of $0.8 million and provision for credit losses of $0.4 million.

The domestic deferred tax assets consist of lease liabilities of $1.2 million, compensation of $1.0 million, and provision for credit losses of $0.3 million.

The realization of deferred tax assets is dependent upon the likelihood that future taxable income will be sufficient to realize these benefits over time, and the effectiveness of tax planning strategies in the relevant tax jurisdictions.

If actual results differ from these estimates and assessments, valuation allowances may be required.

As of December 28, 2024, the Company had no foreign deferred tax balances associated with its Canadian operations and a deferred tax asset of $0.1 million associated with its German operations.

As of January 3, 2026, the Company had a negligible deferred tax asset, net balance associated with its Canadian operations.

The Company conducts its operations in multiple tax jurisdictions in the United States, Canada, Germany, Philippines, Puerto Rico and Serbia.

The Company and its subsidiaries file a consolidated United States Federal income tax return and file in various states.

The Company has no open Federal audits as of December 28, 2024.

The Company had no open Federal audits as of January 3, 2026.

Except for limited exceptions, the Company is no longer subject to audits by state and local tax authorities for tax years prior to 2021.

The Company is no longer subject to audit in Canada for the tax years prior to tax year 2021.

The Company is under audit in Canada for tax years 2021 and 2022.

The Company is no longer subject to audit in Puerto Rico for the tax years prior to tax year 2020.

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The Company regularly assesses the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of its provision for income taxes.

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS (CONTINUED)

Accrued Bonuses

The Company pays bonuses to certain executive management, field management and corporate employees based on, or after giving consideration to, a variety of financial performance measures.

The Company pays bonuses to certain executive management, field management and corporate employees based on, or after considering, a variety of financial performance measures.

Bonuses for executive management, field management and certain corporate employees are accrued throughout the year for payment during the first quarter of the following year, based in part upon anticipated annual results compared to annual budgets.

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Variances in actual results versus budgeted amounts can have a significant impact on the calculations and therefore on the estimates of the required accruals.

Accordingly, the actual earned bonuses may be materially different from the estimates used to determine the quarterly accruals.

Performance-Based Restricted Stock and Stock Unit Awards

From time-to-time the Company issues performance-based restricted stock and stock unit awards to its executives.

Performance-based restricted stock and stock unit awards are typically vested based on certain multi-year performance metrics as determined by the Board of Directors Compensation Committee.

The Company will reassess at each reporting date whether achievement of any performance condition is probable and would begin recognizing additional compensation cost if and when achievement of the performance condition becomes probable.

If at a later measurement date the Company determines that performance-based restricted stock or stock unit awards deemed as likely to vest are deemed as unlikely to vest, the expense recognized will be reversed.

Dividends for these grants are accrued on the dividend payment dates and included in accounts payable and accrued expenses on the accompanying consolidated balance sheet.

Dividends for performance-based restricted stock and stock unit awards that ultimately do not vest are forfeited.

Accordingly, the actual bonuses earned may be materially different from the estimates used to determine the quarterly accruals.

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Forward-looking Information

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Additionally, changes in government regulations could result in prohibition or restriction of certain types of employment services or the imposition of new or additional employee benefits, licensing or tax requirements with respect to the provision of employment services that may reduce the Company’s future earnings.

There can be no assurance that the Company will be able to increase the fees charged to its clients in a timely manner and in a sufficient amount to cover increased costs as a result of any of the foregoing.

There can be no assurance that the Company will be able to increase the fees charged to its clients in a timely manner and in a sufficient amount to cover increased costs because of any of the foregoing.

The consulting and employment services market is highly competitive with limited barriers to entry.

The Company competes in global, national, regional and local markets with numerous competitors in all of the Company’s service lines.

The Company competes in global, national, regional and local markets with numerous competitors in all the Company’s service lines.

Price competition in the industries the Company serves is significant, and pricing pressures from competitors and customers are increasing.

The Company expects that the level of competition will remain high in the future, which could limit the Company’s ability to maintain or increase its market share or profitability.

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS (CONTINUED)

Fiscal Year Ended December 28, 2024 Compared to Fiscal Year Ended December 30, 2023

A summary of operating results for the fiscal years ended December 28, 2024 and December 30, 2023 is as follows (in thousands):

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Fiscal Year Ended January 3, 2026, Compared to Fiscal Year Ended December 28, 2024

A summary of operating results for the fiscal years ended January 3, 2026, and December 28, 2024, is as follows (in thousands):

Fiscal Years Ended

December 28, 2024

January 3, 2026

December 28, 2024

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Selling, general and administrative

Depreciation and amortization of property and

Depreciation and amortization of property and equipment

Amortization of acquired intangible assets

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Remeasurement of contingent consideration

Gain on sale of assets

Operating costs and expenses

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The Company follows a 52/53 week fiscal reporting calendar ending on the Saturday closest to December 31.

The fiscal years ended December 28, 2024 (fiscal 2024) and December 30, 2023 (fiscal 2023) consisted of fifty-two weeks each.

Revenue increased 5.8%, or $15.1 million, for the fiscal year ended December 28, 2024 as compared to December 30, 2023 (the “comparable prior year period”).

The fiscal years ended January 3, 2026 (fiscal 2025) and December 28, 2024 (fiscal 2024) consisted of fifty-three and fifty-two weeks, respectively.

Revenue increased 14.7%, or $41.0 million, for the fiscal year ended January 3, 2026, as compared to December 28, 2024 (the “comparable prior-year period”).

Revenue increased $21.4 million in the Specialty Health Care segment, increased $24.0 million in the Engineering segment, and decreased $4.4 million in the Life Sciences, Data and Solutions segment.

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Cost of Services and Gross Profit.

Cost of services increased 6.5%, or $12.1 million, for the fiscal year ended December 28, 2024 as compared to the comparable prior year period, primarily due to the increase in revenue.

Cost of services as a percentage of revenue was 71.3% for the fiscal year ended December 28, 2024 and 70.9% for the comparable prior year period.

Cost of services increased 16.5%, or $32.9 million, for the fiscal year ended January 3, 2026, as compared to the comparable prior-year period, primarily due to the increase in revenue.

Cost of services as a percentage of revenue was 72.5% for the fiscal year ended January 3, 2026, and 71.3% for the comparable prior-year period.

See Segment Discussion for further information regarding changes in cost of services and gross profit.

Selling, General and Administrative.

Selling, general and administrative (“SGA”) expenses were $56.8 million for the fiscal year ended December 28, 2024 as compared to $52.2 million for the comparable prior year period.

As a percentage of revenue, SGA expenses were 20.4% for the fiscal year ended December 28, 2024 and 19.8% for the comparable prior year period.

Selling, general and administrative (“SGA”) expenses were $60.9 million for the fiscal year ended January 3, 2026, as compared to $56.8 million for the comparable prior-year period.

As a percentage of revenue, SGA expenses were 19.1% for the fiscal year ended January 3, 2026, and 20.4% for the comparable prior-year period.

See Segment Discussion for further information on SGA expense changes.

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS (CONTINUED)

Fiscal Year Ended December 28, 2024 Compared to Fiscal Year Ended December 30, 2023 (Continued)

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Fiscal Year Ended January 3, 2026, Compared to Fiscal Year Ended December 28, 2024 (Continued)

Costs Associated with Potential Stock Issuance and Financing Transactions.

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The Company incurred total expenses of $0.3 million related to these transactions.

Gain on sale of assets.

On July 30, 2021, the Company sold the principal assets and certain liabilities of its Pickering and Kincardine offices, located in Ontario, Canada.

These two offices were often referred to as Canada Power Systems and principally provided engineering services to two major nuclear power providers in Canada.

The two Canada Power Systems offices were part of a reporting unit within the Company’s Engineering segment.

For the fiscal year ended December 30, 2023, the Company recorded a discrete gain on the sale of these assets and liabilities of $0.4 million due to the final collection of escrow funds from the transaction.

No such costs were incurred for the fiscal year ended January 3, 2026.

Other Expense, Net.

Other expense, net consists of interest expense, unused line fees, and amortized loan costs on the Company’s line of credit, net of interest income and gains and losses on foreign currency transactions.

Other expense, net increased by $0.6 million for the fiscal year ended December 28, 2024 as compared to the comparable prior year period, primarily due to an increase in interest expense, net.

Interest expense increased due to increased borrowing and increased interest rates.

Other expense, net, increased by $0.9 million for the fiscal year ended January 3, 2026, as compared to the comparable prior-year period, primarily due to an increase in interest expense, net.

Interest expense increased due to increased average borrowing.

Income Tax Expense .

The Company recognized $6.9 million of income tax expense for the fiscal year ended December 28, 2024, as compared to $5.4 million for the comparable prior-year period.

The Company recognized $5.7 million of income tax expense for the fiscal year ended January 3, 2026, as compared to $6.9 million for the comparable prior-year period.

The consolidated effective income tax rate for the current period was 26.0% as compared to 34.0% for the comparable prior-year period.

The effective fiscal 2023 income tax rates as of December 28, 2024, were approximately 29.4%, 21.1% and 10.8% in the United States, Canada, and Europe, respectively.

The relative income or loss generated in each jurisdiction can materially impact the overall effective income tax rate of the Company, particularly the ratio of Canadian and Serbian pretax income versus U.S.

The effective fiscal 2025 income tax rates were 25.8%, 26.0%, 28.2% and 25.2% in the United States, Canada, Europe, and the Philippines, respectively.

The relative income or loss generated in each jurisdiction can materially impact the overall effective income tax rate of the Company, particularly the ratio of Canadian and European pretax income versus U.S.

pretax income.

The effective income tax rate can also be impacted by discrete permanent differences affecting any period presented.

The primary reason for the increase in the consolidated effective rate in the current period was due to permanent tax differences in the United States during the fiscal year ended December 28, 2024.

The primary reason for the decrease in the consolidated effective rate in the current period was due to a change in unrecognized tax benefit in the United States during the fiscal year ended January 3, 2026.

Differences between the effective tax rate and the applicable U.S.

federal statutory rate may arise, primarily from the effect of state and local income taxes, share-based compensation, and potential tax credits available to the Company.

The actual 2024 effective tax rate may vary from the estimate depending on the actual operating income earned in various jurisdictions, the potential availability of tax credits, and the exercise of stock options and vesting of share-based awards.

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS (CONTINUED)

Fiscal Year Ended December 28, 2024 Compared to Fiscal Year Ended December 30, 2023 (Continued)

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Fiscal Year Ended January 3, 2026, Compared to Fiscal Year Ended December 28, 2024 (Continued)

Segment Discussion

Specialty Health Care

Specialty Health Care revenue of $142.7 million for the fiscal year ended December 28, 2024, increased 4.7%, or $6.4 million, compared to the comparable prior-year period.

The increase in revenue was driven by the Company’s school clients, offset by a decrease in revenue from the Company’s non-school clients.

Revenue from school clients for the fiscal year ended December 28, 2024, was $117.7 million as compared to $103.0 million for the comparable prior-year period.

Revenue from non-school clients for the fiscal year ended December 28, 2024, was $25.0 million as compared to $33.2 million for the comparable prior-year period.

The decrease in non-school revenue was primarily driven by the reduction in revenue from a large long-term care group where the Company deliberately reduced services, which generated $3.2 million in the current period as compared to $9.8 million in the comparable prior-year period.

Gross profit increased by 6.5%, or $2.6 million, to $42.5 million for the fiscal year ended December 28, 2024 as compared to $39.9 million in the comparable prior-year period.

Gross profit increased due to an increase in revenue and gross profit margin.

Gross profit margin for the fiscal year ended December 28, 2024, increased to 29.8% compared to 29.3% for the comparable prior-year period.

The increase in gross profit margin was primarily attributed to a greater mix shift to school services as opposed to non-school services, offset by increased unemployment tax rates in New York.

Specialty Health Care experienced operating income of $11.7 million for the fiscal year ended December 28, 2024, as compared to $13.5 million for the comparable prior-year period.

The primary reason for the decrease in operating income was an increase in SGA expense to $30.3 million for the fiscal year ended December 28, 2024 compared to $26.0 million for the comparable prior-year period.

SGA expense increased primarily due to sales and recruiting infrastructure investments expected to generate higher growth rates for the 2024/2025 and 2025/2026 school years and a higher allocation of corporate SGA expense.

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS (CONTINUED)

Fiscal Year Ended December 28, 2024 Compared to Fiscal Year Ended December 30, 2023 (Continued)

Specialty Health Care revenue of $164.1 million for the fiscal year ended January 3, 2026, increased 15.0%, or $21.4 million, compared to the comparable prior-year period.

The increase in revenue was driven by the Company’s school clients, while a decrease in revenue from the Company’s non-school clients offset it.

Revenue from school clients for the fiscal year ended January 3, 2026, was $141.4 million as compared to $117.7 million for the comparable prior-year period.

Revenue from non-school clients for the fiscal year ended January 3, 2026, was $22.7 million as compared to $25.0 million for the comparable prior-year period.

The decrease in non-school revenue was primarily driven by the reduction in revenue of $1.6 million from a lost contract with a corrections facility and from a large long-term care group where the Company deliberately reduced services, which generated $1.8 million in the current period as compared to $3.2 million in the comparable prior-year period, offset by miscellaneous increases to other non-school clients.

Gross profit increased by 11.4%, or $4.9 million, to $47.4 million for the fiscal year ended January 3, 2026, as compared to $42.5 million in the comparable prior-year period.

Gross profit increased due to an increase in revenue, offset by a decrease to gross profit margin.

Gross profit margin for the fiscal year ended January 3, 2026, decreased to 28.9% compared to 29.8% for the comparable prior-year period.

The decrease in gross profit margin was primarily attributed to normal fluctuations.

Specialty Health Care experienced operating income of $22.8 million for the fiscal year ended January 3, 2026, as compared to $19.9 million for the comparable prior-year period.

The primary reason for the increase in operating income was the increase in gross profit, offset by an increase in SGA expense to $24.2 million for the fiscal year ended January 3, 2026, compared to $22.2 million for the comparable prior-year period.

SGA expense increased primarily due to investments in sales and recruiting infrastructure to support revenue growth.

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Fiscal Year Ended January 3, 2026, Compared to Fiscal Year Ended December 28, 2024 (Continued)

Segment Discussion (Continued)

Engineering revenue of $96.5 million for the fiscal year ended December 28, 2024, increased 13.9%, or $11.8 million, compared to the comparable prior-year period.

The increase in revenue comprised the following:

an increase in Energy Services revenue of $15.1 million, offset by decreases in Aerospace revenue of $0.2 million and Industrial Processing revenue of $3.1 million.

Aerospace revenue decreased primarily due to a contract reduction for the Company’s major outsourcing client.

Engineering revenue of $120.5 million for the fiscal year ended January 3, 2026, increased 24.9%, or $24.0 million, compared to the comparable prior-year period.

The increase in revenue included increases in Energy Services revenue of $12.3 million, and Aerospace revenue of $11.9 million, offset by a decrease in Industrial Processing revenue of $0.2 million.

Energy Services revenue increased primarily because of increased activity from EPC projects.

Aerospace revenue increased primarily due to expansion with new clients.

The Company believes the decrease in Industrial Processing revenue was mainly due to the irregular timing of large contracts with its Industrial Processing clients.

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The gross profit margin of 22.7% for the current period decreased from 23.4% for the comparable prior-year period.

The decrease in gross profit margin was primarily due to lower utilization and mix-shift associated with fixed-price project revenue from the Energy Services group.

The Engineering segment experienced operating income of $4.5 million for the fiscal year ended December 28, 2024, compared to $3.5 million for the comparable prior-year period.

The decrease in gross profit margin was primarily due to a change in mix associated with EPC project revenue from the Energy Services group and Aerospace revenue.

The Engineering segment experienced operating income of $14.6 million in the current period as compared to $10.1 million for the comparable prior-year period.

Operating income increased due to the increase in gross profit, offset by an increase in SGA expense.

The Engineering segment’s SGA expense of $17.4 million increased from $17.0 million, primarily due to a higher allocation of corporate SGA expense.

The Engineering segment’s SGA expense of $12.0 million increased from $11.9 million, primarily due to expenses associated with efforts to grow revenue and gross profit.

Life Sciences, Data and Solutions

Life Sciences, Data and Solutions revenue of $39.2 million for the fiscal year ended December 28, 2024, decreased 7.3%, or $3.1 million, compared to the comparable prior-year period.

The Company primarily attributes the decrease in revenue to the timing of large projects and a deemphasis of the Company’s legacy staffing business.

Gross profit of $14.7 million for the fiscal year ended December 28, 2024, decreased 9.0%, or $1.5 million, compared to $16.2 million for the comparable prior-year period.

Gross profit decreased due to the decrease in revenue and a decrease in gross margin.

Gross profit margin for the fiscal year ended December 28, 2024, was 37.5% as compared to 38.2% for the comparable prior-year period.

The Company attributes the gross profit margin decrease to normal fluctuations in high margin project work.

The Life Sciences, Data and Solutions segment experienced operating income of $6.5 million for the fiscal year ended December 28, 2024 compared to $6.6 million for the comparable prior-year period.

The decrease in operating income was primarily due to the decrease in gross profit and a small increase in SGA expense of $0.1 million, offset by a remeasurement of contingent consideration of $1.8 million for the fiscal year ended December 28, 2024.

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS (CONTINUED)

Life Sciences, Data and Solutions revenue of $34.8 million for the fiscal year ended January 3, 2026, decreased 11.3%, or $4.4 million, compared to the comparable prior-year period.

The Company primarily attributes the decrease in revenue to the timing of large projects and a deemphasis on the Company’s legacy staffing business.

Gross profit of $13.2 million for the fiscal year ended January 3, 2026, decreased 10.5%, or $1.5 million, compared to $14.7 million for the comparable prior-year period.

Gross profit decreased due to the decrease in revenue.

Gross profit margin for the fiscal year ended January 3, 2026, was 37.8% as compared to 37.5% for the comparable prior-year period.

The Company attributes the gross profit margin increase to normal fluctuations in high margin project work.

The Life Sciences, Data and Solutions segment experienced operating income of $6.3 million for the fiscal year ended January 3, 2026, compared to $8.8 million for the comparable prior-year period.

The decrease in operating income was primarily due to the decrease in gross profit of $1.5 million and a discrete benefit of $1.8 from the remeasurement of contingent consideration in the comparable prior-year period, offset by a small decrease in SGA expense of $0.2 million and amortization of intangible assets on $0.7 million in the comparable prior-year period.

The Company’s corporate SGA expense includes but is not limited to the following costs:

public company-related, executive compensation, board compensation, directors and officers insurance, SAP ERP infrastructure, numerous centralized functions including accounting and financial management, information technology and cyber security infrastructure, payroll, billing, accounts receivable, and marketing.

The corporate segment team primarily operates out of the United States, with limited operations in Serbia and the Philippines.

Corporate SGA expense was $18.0 million for the fiscal year ended January 3, 2026, as compared to $15.8 million for the comparable prior-year period.

The increase was primarily driven by increases of $0.7 million in executive equity compensation, $0.4 million in software technology, $0.4 million in cash compensation, $0.2 million in increased medical costs, and other general inflationary pressures.

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Supplemental Operating Results on a Non-GAAP Basis

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These non-GAAP financial measures should not be considered as an alternative to net income or operating income as indicators of performance.

In addition, neither EBITDA nor Adjusted EBITDA takes into account changes in certain assets and liabilities as well as interest and income taxes that can affect cash flows.

In addition, neither EBITDA nor Adjusted EBITDA accounts for changes in certain assets and liabilities, as well as interest and income taxes, which can affect cash flows.

We do not intend the presentation of these non-GAAP measures to be considered in isolation or as a substitute for results prepared in accordance with GAAP.

These non-GAAP measures should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP.

The following unaudited tables present the Company's GAAP net income and GAAP operating income and the corresponding adjustments used to calculate Adjusted operating income, EBITDA, Adjusted EBITDA, Adjusted net income and Adjusted diluted net earnings per share for the fiscal years ended December 28, 2024 and December 30, 2023.

The following unaudited tables present the Company's GAAP net income and GAAP operating income and the corresponding adjustments used to calculate Adjusted operating income, EBITDA, Adjusted EBITDA, Adjusted net income, and Adjusted diluted net earnings per share for the fiscal years ended January 3, 2026, and December 28, 2024.

Fiscal Years Ended

GAAP operating income

Gain on sale of assets

Remeasurement of contingent consideration

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EBITDA (non-GAAP)

Gain on sale of assets

Remeasurement of contingent consideration

(Gain) loss on foreign currency transactions

Loss (gain) on foreign currency transactions

Equity compensation

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Adjusted EBITDA (non-GAAP)

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS (CONTINUED)

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Supplemental Operating Results on a Non-GAAP Basis (Continued)

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GAAP net income

Gain on sale of assets

Remeasurement of contingent consideration

(Gain) loss on foreign currency transactions

Loss (gain) on foreign currency transactions

Equity compensation

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GAAP diluted net earnings per share

Gain on sale of assets

Remeasurement of contingent consideration

(Gain) loss on foreign currency transactions

Loss (gain) on foreign currency transactions

Equity compensation

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The Company used an estimated effective income tax rate of 27.0% for both periods presented, approximating the Company’s federal USA income tax rate plus the tax-affected rate for states and Puerto Rico.

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS (CONTINUED)

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Liquidity and Capital Resources

The following table summarizes the major captions from the Company’s Consolidated Statements of Cash Flows

($ in thousands):

The following table summarizes the major captions from the Company’s Consolidated Statements of Cash Flows ($ in thousands):

Fiscal Years Ended

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Operating Activities

Operating activities provided $6.2 million of cash for the fiscal year ended December 28, 2024 as compared to providing $12.5 million in the comparable prior year period.

The major components of cash provided by operating activities in the fiscal year ended December 28, 2024 and the comparable prior year period are as follows:

net income and changes in accounts receivable, the net of transit accounts payable and transit accounts receivable, prepaid expenses and other current assets, accounts payable, accrued expenses and accrued payroll and related costs, and deferred revenue.

For the fiscal year ended December 28, 2024, the Company experienced net income of $15.0 million as compared to $16.8 million for the comparable prior year period.

An increase in accounts receivables in the fiscal year ended December 28, 2024, used $7.3 million of cash as compared to using $20.6 million in the comparable prior year period.

The Company primarily attributes this increase in accounts receivables for the fiscal year that ended December 28, 2024, to these factors:

A large school client stopped payments early in the fourth quarter due to administrative issues unrelated to the Company.

The Company estimates that this school client's December 28, 2024 accounts receivable balance exceeded normalized levels by approximately $6.0 million.

The Company expects this balance to approximate normalized levels by the end of the first quarter of fiscal 2025.

A Life Sciences, Data and Solutions client stopped making payments while negotiating change orders and a two-year contract extension.

The Company estimates that this school client's December 28, 2024 accounts receivable balance exceeded normalized levels by approximately $3.8 million.

The Company expects this balance to approximate normalized levels by the end of the first quarter of fiscal 2025.

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS (CONTINUED)

Operating activities provided $19.0 million of cash for the fiscal year ended January 3, 2026, as compared to providing $6.2 million in the comparable prior-year period.

The major components of cash provided by operating activities in the fiscal year ended January 3, 2026 and the comparable prior-year period are as follows:

net income, and changes in accounts receivable and contract assets, net of provision for credit losses, the net of transit accounts payable and transit accounts receivable, prepaid expenses and other current assets, accounts payable, accrued expenses and accrued payroll and related costs, and deferred revenue.

For the fiscal year ended January 3, 2026, the Company reported net income of $16.3 million, compared with $13.3 million in the comparable prior-year period.

An increase in accounts receivable and contract assets, net of provision for credit losses in the fiscal year ended January 3, 2026, used $4.2 million of cash as compared to using $7.3 million in the comparable prior-year period.

The Company primarily attributes the increase in accounts receivable and contract assets, net of provision for credit losses, to an increase in revenue of $86.5 million for the Company’s fiscal fourth quarter of 2025 as compared to revenue of $76.9 million in the fourth quarter of fiscal 2024, offset by more efficient collection results in the current period.

While highly variable, the Company’s transit accounts payable typically exceed the Company’s transit accounts receivable, but absolute amounts and differences fluctuate significantly from quarter to quarter in the normal course of business.

The net of transit accounts payable and transit accounts receivable was a net payable of $8.2 million as of January 3, 2026, compared with a net payable of $16.6 million as of December 28, 2024, with $8.3 million of cash used during the fiscal year ended January 3, 2026.

The decrease in net transit payable as of January 3, 2026, was due to normal fluctuations associated with several large, multiyear EPC projects.

Under a typical EPC contract or its subsequent amendments, the Company receives significant upfront cash to fund equipment procurement and construction subcontractors throughout the project.

Prepaid expenses and other current assets used cash of $0.7 million for the fiscal year ended January 3, 2026 as compared to using $2.4 million for the comparable prior-year period.

The Company typically attributes changes to prepaid expenses and other current assets, if any, to the general timing of payments in the normal course of business.

Since certain expenses are paid before a fiscal year ends and are amortized over the following fiscal year, prepaid expenses and other current assets generally increase at the end of a fiscal year and decrease during the first three quarters of the following fiscal year.

A decrease in accounts payable and accrued expenses used cash of $3.5 million for the fiscal year ended January 3, 2026, as compared to providing $1.1 million for the comparable prior-year period.

The Company attributes these changes to typical fluctuations in the normal course of business.

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Liquidity and Capital Resources (Continued)

Operating Activities (Continued)

While highly variable, the Company’s transit accounts payable typically exceeds the Company’s transit accounts receivable, but absolute amounts and differences fluctuate significantly from quarter to quarter in the normal course of business.

The net of transit accounts payable and transit accounts receivable was a net payable of $16.6 million as of December 28, 2024 as compared to a net payable of $22.2 million as of December 30, 2023, using $5.6 million of cash during the fiscal year ended December 28, 2024.

The decrease to net transit payable as of December 28, 2024 was due to normal fluctuations associated with several large, multiyear EPC projects.

In a typical EPC contract, the Company receives significant cash upfront to fund equipment procurement and construction subcontractors throughout the project.

Prepaid expenses and other current assets used cash of $3.7 million for the fiscal year ended December 28, 2024 as compared to providing negligible cash for the comparable prior year period.

The Company typically attributes changes to prepaid expenses and other current assets, if any, to general timing of payments in the normal course of business.

Since certain expenses are paid before a fiscal year concludes and are amortized over the next fiscal year, prepaid expenses and other current assets generally tend to increase at the end of a fiscal year and decrease during the first three quarters of the following fiscal year.

The December 28, 2024 prepaid expense balance of $8.3 million included $3.1 million for domestic tax payments, as compared to $0.6 million as of December 30, 2023.

An increase in accounts payable and accrued expenses provided cash of $1.1 million for the fiscal year ended December 28, 2024 as compared to using $1.5 million for the comparable prior year period.

The Company attributes these changes to typical fluctuations in the normal course of business.

Changes in accrued payroll and related costs used $1.3 million for the fiscal year ended December 28, 2024 as compared to using cash of $1.8 million for the fiscal year ended December 30, 2023.

Changes in accrued payroll and related costs provided $0.8 million for the fiscal year ended January 3, 2026, as compared to using cash of $1.3 million for the fiscal year ended December 28, 2024.

There are four primary factors that generally impact accrued payroll and related costs:

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A significant portion of these incentive plan accruals are typically paid at the beginning of one fiscal year, pertaining to the prior fiscal year.

The Company’s last major payroll for the fiscal year ended December 28, 2024 was paid on December 27, 2024.

The Company’s deferred revenue balance as of December 28, 2024 was $4.2 million, compared to $1.9 million as of December 30, 2023, providing cash from operations of $2.3 million for the fiscal year ended December 28, 2024.

The increase was associated with upfront payments for future labor associated with the Company’s EPC contracts.

The Company’s last major payroll for the fiscal year ended January 3, 2026, was paid on December 26, 2025.

The Company’s deferred revenue balance as of January 3, 2026, was $14.8 million, compared to $4.2 million as of December 28, 2024, providing cash from operations of $10.6 million for the fiscal year ended January 3, 2026.

The increase was primarily associated with upfront payments for future labor and associated with the Company’s EPC contracts.

Investing Activities

Investing activities used $2.6 million of cash for the fiscal year ended December 28, 2024 as compared to using $2.5 million in the comparable prior year period.

Investing activities used $2.6 million for the purchase of property and equipment in the current period as compared to using $2.9 million in the prior year comparable period.

The fiscal year ended December 30, 2023 included a discrete gain associated with the Company’s sale of its Canada Power Systems business unit.

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS (CONTINUED)

Liquidity and Capital Resources (Continued)

Investing activities used $1.6 million of cash for the fiscal year ended January 3, 2026 as compared to using $2.6 million in the comparable prior-year period.

Investing activities used $1.6 million for the purchase of property and equipment in the current period, as compared to using $2.6 million in the prior-year's comparable period.

Financing Activities

Financing activities used $4.8 million of cash for the fiscal year ended December 28, 2024 as compared to using $3.9 million in the comparable prior year period.

The Company made net borrowings under its line of credit of $4.2 million during the fiscal year ended December 28, 2024 as compared to net borrowings of $22.0 million in the comparable prior year period.

During the fiscal year ended December 28, 2024, the Company used $1.3 million to pay withholding taxes upon the vesting of equity grants, in connection with which a commensurate number of vesting shares was retired.

The Company used $7.8 million to repurchase and retire shares of its common stock during the fiscal year ended December 28, 2024 as compared to using $25.8 million in the comparable prior year period.

The Company generated cash of $0.7 million from sales of shares from its equity plans for both periods presented.

The Company did not pay contingent consideration in the current period as compared to paying $0.3 million in the comparable prior year period.

Financing activities used $19.0 million of cash for the fiscal year ended January 3, 2026 as compared to using $4.8 million in the comparable prior-year period.

The Company made net payments under its line of credit of $10.3 million during the fiscal year ended January 3, 2026 as compared to net borrowings of $4.2 million in the comparable prior-year period.

The Company used $7.4 million to repurchase and retire shares of its common stock during the fiscal year ended January 3, 2026 as compared to using $7.8 million in the comparable prior-year period.

During the fiscal year ended January 3, 2026, the Company used $0.9 million to pay withholding taxes upon the vesting of equity grants, in connection with which a commensurate number of vesting shares were retired.

During the fiscal year ended December 28, 2024 , the Company used $1.3 million to pay withholding taxes upon the vesting of equity grants.

From the sale of shares from its employee stock purchase plan, the Company generated cash of $0.6 million and $0.7 million for the current year and comparable prior-year period, respectively.

The Company paid $0.2 million in contingent consideration in the current period as compared to no payments in the comparable prior-year period.

Borrowings under the Revolving Credit Facility bear interest at one of two alternative rates, as selected by the Company at each incremental borrowing.

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Unused line fees are recorded as interest expense.

The effective weighted average

interest rate, including unused line fees, for the fiscal years ended December 28, 2024 and December 30, 2023 was 6.6% and 6.5%, respectively.

The effective weighted average interest rate, including unused line fees, for the fiscal years ended January 3, 2026 and December 28, 2024 was 6.3% and 6.6%, respectively.

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Liquidity and Capital Resources (Continued)

Financing Activities (Continued)

On February 20, 2026, the Company amended (Amendment 1) the Fifth Amended and Restated Loan Agreement, dated as of December 3, 2024, with Citizens Bank.

Under Amendment 1, the total commitment is increased from a maximum limit of $65.0 million to a maximum limit of $75.0 million.

The increased limit shall apply from February 20, 2026 through August 31, 2026.

From and after September 1, 2026 through the Maturity Date of the Fifth Amended and Restated Loan Agreement, the total commitment shall revert to $65.0 million.

All other material terms remain unchanged.

The Company increased its credit limit capacity to obtain more flexibility to issue letters of credit in Germany required for potential contracts in its pipeline.

All borrowings under the Fifth Amended and Restated Loan Agreement remain collateralized with substantially all of the Company’s assets, as well as the capital stock of its subsidiaries.

The Revolving Credit Facility also contains various financial and non-financial covenants, such as a covenant that restricts the Company’s ability to borrow in order to pay dividends.

As of December 28, 2024, the Company was in compliance with all covenants contained in the Revolving Credit Facility.

As of January 3, 2026 , the Company was in compliance with all covenants contained in the Revolving Credit Facility.

The Company believes that it will maintain compliance with its financial covenants for the foreseeable future.

Borrowings under the line of credit as of December 28, 2024 and December 30, 2023 were $35.0 million and $30.9 million, respectively.

At December 28, 2024 and December 30, 2023, there were letters of credit outstanding for $7.4 and $2.0 million, respectively.

At December 28, 2024 and December 30, 2023, the Company had availability for additional borrowings under the Revolving Credit Facility of $22.6 million and $12.1 million, respectively.

Borrowings under the line of credit as of January 3, 2026 and December 28, 2024 were $24.7 million and $35.0 million, respectively.

At January 3, 2026 and December 28, 2024, there were letters of credit outstanding for $13.2 and $7.4 million, respectively.

At January 3, 2026 and December 28, 2024, the Company had availability for additional borrowings under the Revolving Credit Facility of $27.1 million and $22.6 million, respectively.

In addition to borrowings and sales of shares from its equity plans, the Company may raise capital through sales of shares of common stock under its at the market issuance program (the “ATM Program”) established under its March 2024 At Market Issuance Sales Agreement with B.

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The Company believes that it can satisfy its liquidity needs for at least the next twelve months.

The Company’s liquidity and capital resources as of December 28, 2024, included accounts receivable and total current asset balances of $78.0 million and $97.0 million, respectively.

Current liabilities were $53.6 million as of December 28, 2024 and were exceeded by total current assets by $43.4 million.

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS (CONTINUED)

Liquidity and Capital Resources (Continued)

Current Liquidity and Revolving Credit Facility (Continued)

The Company’s liquidity and capital resources as of January 3, 2026, included accounts receivable and contract assets, net of provision for credit losses and total current asset balances of $81.2 million and $99.9 million, respectively.

Current liabilities were $53.9 million as of January 3, 2026 and were exceeded by total current assets by $46.0 million.

The Company experiences volatility in its daily cash flow and, at times, relies on the revolving line of credit to provide daily liquidity for the Company’s financial operations.

As of December 28, 2024, the Company was in compliance with all financial covenants contained in the Revolving Credit Facility.

As of January 3, 2026, the Company was in compliance with all financial covenants contained in the Revolving Credit Facility.

The Company believes that it will maintain compliance with its financial covenants for the foreseeable future.

All restricted share awards contain a dividend equivalent provision entitling holders to dividends paid between the restricted stock award grant date and ultimate share distribution date.

As of December 28, 2024, there were no accrued dividends.

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Liquidity and Capital Resources (Continued)

All restricted stock and stock unit awards contain a dividend equivalent provision entitling holders to dividends paid between the restricted stock award grant date and the ultimate share distribution date.

As of January 3, 2026, there were no accrued dividends.

4 unchanged sentences

The Company is subject to legal proceedings and claims that arise from time to time in the ordinary course of its business, which may or may not be covered by insurance.

Were an unfavorable final outcome to occur, there exists the possibility of a material adverse impact on our financial position, liquidity, and the results of operations.

Were an unfavorable final outcome to occur, there exists the possibility of a material adverse impact on the Company's financial position, liquidity, and results of operations.

The Company’s business strategy is to achieve growth both internally through operations and externally through strategic acquisitions.

4 unchanged sentences

No assurance can be given as to the Company’s future acquisition and expansion opportunities or how such opportunities will be financed.

The Company is exposed to various asserted claims as of December 28, 2024, where the Company believes it has a probability of loss.

The Company is exposed to various asserted claims as of January 3, 2026, where the Company believes it has a probability of loss.

Additionally, the Company is exposed to other asserted claims whereby an amount of loss has not been declared, and the Company cannot determine the potential loss.

1 unchanged sentence

However, the Company believes that such matters will not, either individually or in the aggregate, have a material adverse effect on its business, consolidated financial position, results of operations, or cash flows.

As of December 28, 2024, the Company has accrued $2.8 million for asserted claims.

As of January 3, 2026, the Company has accrued $0.3 million for asserted claims.

The Company is also subject to other pending legal proceedings and claims that arise from time to time in the ordinary course of its business, which may not be covered by insurance.

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

1 unchanged sentence

Commitments and Contingencies (Continued)

In April 2022, a client of the Company’s Engineering segment alleged that a system partially designed by the Company is not operating as intended and that the Company is responsible.

The Company has not determined if it has any liability.

In the event of liability, the Company believes its damages are contractually limited to an amount no higher than $3.3 million.

Furthermore, the Company believes that if it were found liable, any damages would be covered by insurance, subject to a deductible of $0.5 million and maximum coverage of $5.0 million.

While the clients estimated damages are not known, the client has either inferred or asserted during settlement discussions that it’s damages significantly exceed the Company’s insurance coverage of $5 million.

While the Company attempts to find a mutually agreeable solution, the Company has reserved $0.5 million for this project.

The Company can give no assurance that its liability is limited to $3.3 million or that liability over $0.5 million, if any, will be covered by insurance.

The Company is also subject to other pending legal proceedings and claims that arise from time to time in the ordinary course of its business, which may not be covered by insurance.

The Company utilizes SAP software for its financial reporting and accounting system which was initially implemented in 1999 and was upgraded during fiscal years 2023 and 2024.

The Company went live with its new SAP system in April 2024.

The Company’s current commitments consist primarily of lease obligations for office space.

The Company believes that its capital resources are sufficient to meet its present obligations and those to be incurred in the normal course of business for at least the next 12 months.

The Company leases office facilities and various equipment under non-cancelable leases expiring at various dates through October 2029.

The Company leases office facilities and various equipment under non-cancelable leases expiring at various dates through September 2030.

Certain leases are subject to escalation clauses based upon changes in various factors.

2 unchanged sentences

imputed interest

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS (CONTINUED)

Liquidity and Capital Resources (Continued)

Future Contingent Payments

As of December 28, 2024, the Company had one acquisition agreement whereby additional contingent consideration may be earned by the sellers:

effective September 30, 2018, the Company acquired certain assets of Thermal Kinetics Engineering, PLLC and Thermal Kinetics Systems, LLC.

The Company estimates future contingent payments at December 28, 2024 as follows:

Payable in fiscal 2025

Estimates of future contingent payments are subject to significant judgment and actual payments may materially differ from estimates.

The Company estimates future contingent consideration payments based on forecasted performance and recorded the fair value of those expected payments as of December 28, 2024.

Contingent consideration related to acquisitions is recorded at fair value (level 3) with changes in fair value recorded in other (expense) income, net.

As of January 3, 2026, the Company had no acquisition agreement whereby additional contingent consideration may be earned by the sellers.

Off-Balance Sheet Arrangements

7 unchanged sentences

Otherwise, inflation has not been a meaningful factor in the Company’s operations.

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS (CONTINUED)

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

New Accounting Standards

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , which is intended to improve reportable segment disclosure requirements through enhanced disclosures about significant segment expenses.

The amendments require disclosure of significant segment expenses regularly provided to the chief operating decision maker (CODM) as well as other segment items, extend certain annual disclosures to interim periods, clarify the applicability to single reportable segment entities, permit more than one measure of profit or loss to be reported under certain conditions, and require disclosure of the title and position of the CODM.

We adopted this ASU for the fiscal year ended December 28, 2024.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, which requires the annual financial statements to include consistent categories and greater disaggregation of information in the rate reconciliation, and income taxes paid disaggregated by jurisdiction.

ASU 2023-09 is effective for the Company’s annual reporting periods beginning after December 15, 2024, with early adoption permitted, and should be applied on a prospective basis, with a retrospective option.

We are currently evaluating the effect that adoption of this ASU will have on our disclosures.

ASU 2023-09 was effective for the Company’s annual reporting periods beginning after December 15, 2024, with early adoption permitted, and should be applied on a prospective basis, with a retrospective option.

The Company adopted ASU 2023-09, on a prospective basis, for the fifty-three weeks ended January 3, 2026.

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (Subtopic 220-40).

The ASU requires the disaggregated disclosure of specific expense categories, including purchases of inventory, employee compensation, depreciation, and amortization, within relevant income statement captions.

This ASU also requires disclosure of the total amount of selling expenses along with the definition of selling expenses.

The ASU is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.

Adoption of this ASU can either be applied prospectively to consolidated financial statements issued for reporting periods after the effective date of this ASU or retrospectively to any or all periods presented in the consolidated financial statements.

Early adoption is also permitted.

This ASU will likely result in the required additional disclosures being included in our consolidated financial statements, once adopted.

We are currently evaluating the provisions of this ASU.

In July 2025, the FASB issued ASU 2025-05, Measurement of Credit Losses for Accounts Receivable and Contract Assets (Financial Instruments – Credit Losses (Topic 326) This amendment allows entities to elect a practical expedient that all entities can use when estimating receivable and contract assets arising from transactions accounted for under ASC 606, revenue from contracts with customers.

The amendment adds a practical expedient and an accounting policy election.

The ASU is effective for annual reporting periods beginning after December 15, 2025.

We are currently evaluating the provisions of this ASU.

In August 2025, the FASB issued ASU 2025-06, Intangibles -Goodwill and Other – Internal-Use Software (Subtopic 350-40).

The narrowly drawn changes primarily focus on how companies decide when to count software development costs as an asset (capitalize them).

Under the new guidance, a company can capitalize software costs once two conditions are met:

the company’s leadership has approved and committed to funding the project and, and it is likely the project will be finished, and the software will work as intended.

The ASU is effective for annual reporting periods beginning after December 15, 2027.

We are currently evaluating the provisions of this ASU.

In December 2025, the FASB issued ASU No.

2025-11, Interim Reporting (Topic 270):

Narrow-Scope Improvements.

The ASU clarifies interim disclosure requirements and the applicability of Topic 270.

The objective of the amendments is to provide further clarity about the current interim disclosure requirements.

The ASU is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027.

Adoption of this ASU can be applied on either a prospective or a retrospective approach.

Early adoption is permitted.

We are currently evaluating the provisions of this ASU.

In December 2025, the FASB issued ASU No.

2025-12, Codification Improvements.

The ASU addresses thirty-three items, representing the changes to the Codification that (1) clarify, (2) correct errors, or (3) make minor improvements.

Generally, the amendments in this Update are not intended to result in significant changes for most entities.

The ASU is effective for interim reporting periods within annual reporting periods beginning after December 15, 2026.

The adoption method of this ASU may vary, on an issue-by-issue basis.

Early adoption is permitted.

We are currently evaluating the provisions of this ASU.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity