What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-08-06 compared with 2024-05-07 · 114 added, 83 removed, 71 unchanged (74% of the section changed)

1 unchanged sentence

Our discussions below in this Item 2 are based upon the more detailed discussions about our business, operations and financial condition included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, under Part II, Item 7 of that Form 10-K.

Our discussions here focus on our results during the quarter ended March 31, 2024, or as of, March 31, 2024, and the comparable periods of 2023, and to the extent applicable, any material changes from the information discussed in that Form 10-K or other important intervening developments or information since that time.

Our discussions here focus on our results during the quarter and six months ended June 30, 2024, or as of, June 30, 2024, and the comparable periods of 2023, and to the extent applicable, any material changes from the information discussed in that Form 10-K or other important intervening developments or information since that time.

These discussions should be read in conjunction with that Form 10-K for more detailed and background information.

The three-month periods ended March 31, 2024 and April 2, 2023 both include 13 weeks.

The six-month periods ended June 30, 2024 and July 2, 2023 both include 26 weeks.

The three-month periods ended June 30, 2024 and July 2, 2023 both include 13 weeks.

Forward-Looking Statements

3 unchanged sentences

Executive Overview

During the quarter ended March 31, 2024, we had consolidated net sales of $289.7 million, down 2.0% compared to $295.8 million in the first quarter last year, primarily due to decreased customer demand — particularly in the corporate office and retail market segments.

These decreases were partially offset by higher sales in the education market segment.

Consolidated operating income was $24.4 million for the first quarter of 2024, compared to $9.5 million in the first quarter last year, primarily due to higher gross profit margin as a result of lower raw material and freight costs.

Consolidated net income for the quarter ended March 31, 2024, was $14.2 million or $0.24 per share, compared to consolidated net loss of $0.7 million or $0.01 per share in the first quarter last year.

During the quarter ended June 30, 2024, we had consolidated net sales of $346.6 million, up 5.2% compared to $329.6 million in the second quarter last year, primarily due to higher customer demand — particularly in the education and corporate office market segments.

Consolidated operating income was $38.2 million for the second quarter of 2024 compared to $28.9 million in the second quarter last year, primarily due to higher sales and higher gross profit margin as a result of increased volume, higher selling prices, and lower raw material costs.

Consolidated net income for the quarter ended June 30, 2024, was $22.6 million or $0.38 per diluted share, compared to $15.8 million or $0.27 per diluted share in the second quarter last year.

During the first six months of 2024, we had consolidated net sales of $636.4 million, up 1.8% compared to $625.4 million in the first six months of last year, primarily due to higher customer demand — particularly in the education market segment partially offset by decreases in the retail and healthcare market segments.

Consolidated operating income was $62.6 million for the first six months of 2024, compared to $38.4 million in the same period last year, primarily due to higher sales and higher gross profit margin as discussed above.

During the first six months of 2023, inflationary pressures on raw materials and lower manufacturing fixed cost absorption adversely impacted our gross profit margin.

Consolidated net income for the six months ended June 30, 2024, was $36.7 million or $0.63 per diluted share, compared to $15.1 million or $0.26 per diluted share in the same period last year.

Cybersecurity Event

6 unchanged sentences

Impact of Macroeconomic Trends

Recent disruptions in economic markets due to persistent inflation, high interest rates, the Russia-Ukraine war and the Israel-Hamas war, a fairly stabilized but still challenging supply chain environment, slow market conditions in parts of Asia, and significant financial pressures in the commercial office market globally, all pose challenges which may adversely affect our future performance .

Recent disruptions in economic markets due to inflation, high interest rates, the Russia-Ukraine war and the Israel-Hamas war, a fairly stabilized but still challenging supply chain environment, slow market conditions in certain parts of the globe, and significant financial pressures in the commercial office market globally, all pose challenges which may adversely affect our future performance .

To mitigate these impacts, we plan to continue evaluating our cost structure and global manufacturing footprint to identify and activate opportunities to decrease costs and optimize our global cost structure.

1 unchanged sentence

Consolidated Results

The following table presents, as a percentage of net sales, certain items included in our consolidated condensed statements of operations for the three-month periods ended March 31, 2024 and April 2, 2023:

Three Months Ended

March 31, 2024 April 2, 2023

The following table presents, as a percentage of net sales, certain items included in our consolidated condensed statements of operations for the three-month and six-month periods ended June 30, 2024 and July 2, 2023:

Three Months Ended Six Months Ended

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

Net sales 100.0 % 100.0 % 100.0 % 100.0 %

2 unchanged sentences

Selling, general and administrative expenses 24.4 25.9 26.8 27.5

Restructuring, asset impairment and other charges — 0.0

Restructuring, asset impairment, and other gains, net

— (0.8) — (0.4)

Operating income 11.0 8.8 9.8 6.1

Interest/Other (income) expense, net

Income (loss) before income tax expense 6.5 (0.2)

Interest/Other expense (income), net

2.0 2.4 2.0 2.8

Income before income tax expense 9.0 6.4 7.8 3.3

Income tax expense 2.5 1.6 2.1 0.9

Net income (loss) 4.8 % (0.3) %

Net income 6.5 % 4.8 % 5.7 % 2.4 %

Consolidated Net Sales

Below is information regarding our consolidated net sales, and analysis of those results, for the three-month periods ended March 31, 2024, and April 2, 2023:

Below is information regarding our consolidated net sales, and analysis of those results, for the three-month and six-month periods ended June 30, 2024, and July 2, 2023:

Three Months Ended Percentage

March 31, 2024 April 2, 2023

(in thousands)

Change Six Months Ended Percentage

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

(in thousands) (in thousands)

Consolidated net sales $ 346,635 $ 329,582 5.2 % $ 636,378 $ 625,374 1.8 %

For the quarter ended March 31, 2024, consolidated net sales decreased $6.0 million (2.0%) versus the comparable period in 2023, primarily due to lower sales volumes (approximately 4%) partially offset by higher prices (approximately 2%).

Currency fluctuations had no material impact on consolidated net sales for the first quarter of 2024 compared to the same period last year.

On a market segment basis, the sales decrease was primarily in the corporate office, retail, healthcare and hospitality market segments, partially offset by higher sales in the education and residential living market segments.

For the quarter ended June 30, 2024, consolidated net sales increased $17.1 million (5.2%) versus the comparable period in 2023, primarily due to higher sales volume (approximately 4%) and higher prices (approximately 1%).

Currency fluctuations had a negative impact on consolidated net sales of approximately $2.0 million (0.6%) for the second quarter of 2024, due primarily to the weakening of the Euro, Chinese Renminbi, and Australian dollar against the U.S.

On a market segment basis, the sales increase was primarily in the education, corporate office, public buildings, and residential living market segments partially offset by decreases in the healthcare, retail, and hospitality market segments.

For the six months ended June 30, 2024, consolidated net sales increased $11.0 million (1.8%) versus the comparable period in 2023, primarily due to higher sales pricing (approximately 2%).

Currency fluctuations had a negative impact on consolidated net sales of approximately $2.1 million (0.3%) for the first six months of 2024, due to the weakening of the Chinese Renminbi and Australian dollar against the U.S.

On a market segment basis, the sales increase was primarily in the education, residential living, and public buildings market segments partially offset by decreases in the retail, healthcare, hospitality, and consumer residential market segments.

Consolidated Cost and Expenses

The following table presents our consolidated cost of sales and selling, general and administrative expenses for the three-month periods ended March 31, 2024, and April 2, 2023:

The following table presents our consolidated cost of sales and selling, general and administrative expenses for the three-month and six-month periods ended June 30, 2024, and July 2, 2023:

Three Months Ended Percentage

March 31, 2024 April 2, 2023

(in thousands)

Change Six Months Ended Percentage

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

(in thousands) (in thousands)

Consolidated cost of sales $ 224,022 $ 217,796 2.9 % $ 403,360 $ 417,715 (3.4) %

$ 179,338 $ 199,919 (10.3) %

Consolidated selling, general and administrative expenses 84,462 85,522 (1.2) % 170,421 171,776 (0.8) %

85,959 86,254 (0.3) %

Consolidated Cost of Sales

For the quarter ended March 31, 2024, consolidated cost of sales decreased $20.6 million (10.3%) compared to the first quarter of 2023, primarily due to lower raw material costs and lower sales.

Currency translation had no material impact to consolidated cost of sales compared to the same period last year.

As a percentage of net sales, our cost of sales decreased to 61.9% for the first quarter of 2024 versus 67.6% for the first quarter of 2023.

For the quarter ended June 30, 2024, consolidated cost of sales increased $6.2 million (2.9%) compared to the second quarter of 2023, primarily due to higher sales partially offset by lower raw material costs.

Currency translation had a positive impact on consolidated cost of sales in the second quarter of 2024 and partially reduced our costs by approximately $1.4 million (0.6%) compared to the same period last year.

As a percentage of net sales, our cost of sales decreased to 64.6% for the second quarter of 2024 versus 66.1% for the second quarter of 2023.

For the six months ended June 30, 2024, consolidated cost of sales decreased $14.4 million (3.4%) versus the comparable period in 2023, primarily due to lower raw material costs.

Currency translation had a positive impact on consolidated cost of sales for the first six months of 2024 and partially reduced our costs by approximately $1.5 million (0.4%) compared to the same period last year.

As a percentage of net sales, our cost of sales decreased to 63.4% for the first six months of 2024 versus 66.8% for the first six months of 2023.

Consolidated Gross Profit

For the quarter ended March 31, 2024, consolidated gross profit, as a percentage of net sales, was 38.1% compared with 32.4% in the same period last year.

The increase in gross profit percentage was primarily due to (i) lower raw material and freight costs (approximately 3%), (ii) favorable product mix and other (approximately 2%), and (iii) higher sales pricing (approximately 1%).

For the quarter ended June 30, 2024, gross profit, as a percentage of net sales, was 35.4% compared with 33.9% in the same period last year.

The increase in gross profit percentage was primarily due to (i) lower raw material costs (approximately 1%), (ii) higher sales pricing (approximately 1%), partially offset by (iii) unfavorable fixed cost absorption (approximately 1%).

For the six months ended June 30, 2024, gross profit, as a percentage of net sales, was 36.6% compared with 33.2% in the same period last year.

The increase in gross profit percentage was primarily due to (i) lower raw material costs (approximately 2%) and (ii) higher sales pricing (approximately 1%).

Consolidated Selling, General and Administrative (“SG&A”) Expenses

For the quarter ended March 31, 2024, consolidated SG&A expenses decreased $0.3 million (0.3%) versus the comparable period in 2023.

Currency translation had no material impact on consolidated SG&A expenses in the first quarter of 2024 compared to the same period last year.

SG&A expenses were lower for the first quarter of 2024 primarily due to (i) $2.0 million of lower severance costs driven by employee headcount reduction and cost saving initiatives in the prior year period, (ii) $1.0 million of lower selling expenses, and (iii) $0.9 million of lower Cyber Event costs due to completion of the investigation in the prior year as well as insurance recoveries in the current period.

These decreases were mostly offset by $2.2 million of higher labor and variable compensation costs and $1.4 million of higher software license fees.

As a percentage of net sales, SG&A expenses increased to 29.7% for the first quarter of 2024 versus 29.2% for the first quarter of 2023.

For the quarter ended June 30, 2024, consolidated SG&A expenses decreased $1.1 million (1.2%) versus the comparable period in 2023.

Currency fluctuations had no material impact on consolidated SG&A expenses in the second quarter of 2024 compared to the same period last year.

SG&A expenses were lower for the second quarter of 2024 primarily due to (i) lower professional fees of $2.2 million primarily due to lower legal fees and non-recurring consulting expenses compared to the prior year period and (ii) lower severance costs of $0.5 million driven by employee headcount reduction initiatives in the prior year.

These decreases were partially offset by $1.7 million of higher labor and variable compensation costs.

As a percentage of net sales, SG&A expenses decreased to 24.4% for the second quarter of 2024 versus 25.9% for the second quarter of 2023.

For the six months ended June 30, 2024, consolidated SG&A expenses decreased $1.4 million (0.8%) versus the comparable period in 2023.

Currency translation had no material impact on consolidated SG&A expenses in the first six months of 2024 compared to the same period last year.

SG&A expenses were lower for the first six months of 2024 primarily due to (i) lower severance costs of $2.5 million driven by employee headcount reduction and cost saving initiatives in the prior year period, (ii) lower professional fees of $2.3 million as discussed above, (iii) lower Cyber Event costs of $1.3 million due to completion of the investigation in the prior year, and (iv) lower marketing expenses of $1.1 million due to global restructuring initiatives.

These decreases were partially offset by (i) higher labor and variable compensation costs of $3.9 million and (ii) higher software license fees of $1.8 million.

As a percentage of net sales, SG&A expenses decreased to 26.8% for the first six months of 2024 versus 27.5% for the first six months of 2023.

Assets Disposed

During the second quarter of 2023, the Company completed the sale of its Thailand manufacturing facility and recognized a gain of $2.7 million.

See Note 14 entitled “Assets Disposed” of Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.

Interest Expense

During the quarter ended March 31, 2024, interest expense was $6.4 million, a decrease of $2.1 million from the comparable period in 2023, primarily due to lower outstanding term loan borrowings under the Facility.

During the quarter ended June 30, 2024, interest expense was $6.2 million, a decrease of $2.1 million from the comparable period in 2023, primarily due to lower outstanding term loan borrowings under the Facility.

For the six months ended June 30, 2024, interest expense was $12.6 million, a decrease of $4.2 million from the comparable period in 2023, primarily due to lower outstanding term loan borrowings as discussed above.

Segment Operating Results

During the first quarter of 2024, the Company implemented a cost center realignment initiative to centralize certain global/shared functions.

For the quarter ended March 31, 2024, SG&A expenses for these global support functions were allocated to AOI for each reportable segment consistent with the allocation methodology used to allocate corporate overhead in prior periods.

For the first six months of 2024, SG&A expenses for these global support functions were allocated to adjusted operating income (“AOI”) for each reportable segment consistent with the allocation methodology used to allocate corporate overhead in prior periods.

Prior year AOI amounts below were not recast as there was no material impact to the measure of segment profit for each reportable segment.

There were no changes to the composition of the Company’s operating or reportable segments.

AMS Segment – Net Sales and Adjusted Operating Income (“AOI”)

The following table presents AMS segment net sales and AOI for the three-month periods ended March 31, 2024, and April 2, 2023:

Three Months Ended Percentage Change

March 31, 2024 April 2, 2023

(in thousands)

AMS Segment – Net Sales and AOI

The following table presents AMS segment net sales and AOI for the three-month and six-month periods ended June 30, 2024, and July 2, 2023:

Three Months Ended Percentage Change Six Months Ended Percentage Change

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

(in thousands) (in thousands)

AMS segment net sales $ 215,012 $ 201,281 6.8 % $ 384,927 $ 370,522 3.9 %

2 unchanged sentences

(1) Includes allocation of corporate SG&A expenses and allocation of global support SG&A expenses as discussed above.

Excludes Cyber Event impact, property casualty loss, and restructuring, asset impairment, severance, and other, net.

Excludes Cyber Event impact, property casualty loss impact, and restructuring, asset impairment, severance, and other, net.

See Note 10 entitled “Segment Information” of Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.

During the first quarter of 2024, net sales in AMS increased 0.4% versus the comparable period in 2023 primarily due to higher sales prices partially offset by lower volume.

On a market segment basis, the AMS sales increase was primarily in the education, residential living, and public buildings market segments, partially offset by decreases in the corporate office, retail and healthcare market segments.

AOI in AMS increased 60.4% during the first quarter of 2024 compared to the prior year period primarily due to higher sales pricing and lower raw material and freight costs compared to the same period last year.

During the first quarter of 2023, AOI in AMS was adversely impacted by inflation and higher input costs.

As a percentage of net sales, AOI increased to 10.6% during the first quarter of 2024 compared to 6.7% in the same period last year.

During the second quarter of 2024, net sales in AMS increased 6.8% versus the comparable period in 2023, primarily due to higher sales volume and pricing.

On a market segment basis, the AMS sales increase was primarily in the education, public buildings, and residential living market segments partially offset by decreases in the healthcare market segment.

During the first six months of 2024, net sales in AMS increased 3.9% versus the comparable period in 2023, primarily due to higher sales pricing and volume.

On a market segment basis, the AMS sales increase was primarily in education, public buildings, and residential living market segments partially offset by decreases in the corporate office, retail and healthcare market segments.

AOI in AMS increased 12.1% during the second quarter of 2024 compared to the prior year period, primarily due to higher sales and lower raw material costs compared to the same period last year.

As a percentage of net sales, AOI increased to 12.5% during the second quarter of 2024 compared to 11.9% in the same period last year.

AOI in AMS increased 27.5% during the first six months of 2024 compared to the prior year period, primarily due to lower raw material costs and higher sales.

During the first six months of 2023, AOI in AMS was adversely impacted by inflation and higher input costs.

As a percentage of net sales, AOI increased to 11.7% during the first six months of 2024 compared to 9.5% in the same period last year.

EAAA Segment – Net Sales and AOI

The following table presents EAAA segment net sales and AOI for the three-month periods ended March 31, 2024, and April 2, 2023:

Three Months Ended Percentage Change

March 31, 2024 April 2, 2023

(in thousands)

The following table presents EAAA segment net sales and AOI for the three-month and six-month periods ended June 30, 2024, and July 2, 2023:

Three Months Ended Percentage Change Six Months Ended Percentage Change

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

(in thousands) (in thousands)

EAAA segment net sales $ 131,623 $ 128,301 2.6 % $ 251,451 $ 254,852 (1.3) %

4 unchanged sentences

See Note 10 entitled “Segment Information” of Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.

During the first quarter of 2024, net sales in EAAA decreased 5.3% versus the comparable period in 2023, primarily due to lower sales volume.

Currency fluctuations had no material impact on EAAA sales for the first quarter 2024 compared to the same period last year.

On a market segment basis, the EAAA sales decrease was most significant in the education, public buildings, and corporate office market segments.

AOI in EAAA increased 89.5% during the first quarter of 2024 versus the comparable period in 2023, primarily due to lower raw material costs compared to the same period last year.

During the first quarter of 2023, AOI in EAAA was adversely impacted by inflation and higher input costs.

Currency fluctuations had no material impact on AOI for the first quarter of 2024 compared to the first quarter last year.

As a percentage of net sales, AOI increased to 6.2% during the first quarter of 2024 compared to 3.1% in the same period last year.

During the second quarter of 2024, net sales in EAAA increased 2.6% versus the comparable period in 2023, primarily due to higher sales volume.

Currency fluctuations had a negative impact on EAAA sales of approximately $1.8 million (1.4%) for the second quarter of 2024 compared to the same period last year due to the weakening of the Euro, Chinese Renminbi and Australian dollar against the U.S.

On a market segment basis, the EAAA sales increase was primarily in the corporate office and education market segments partially offset by decreases in the public buildings and hospitality market segments.

During the first six months of 2024, net sales in EAAA decreased 1.3% versus the comparable period in 2023, primarily due to lower sales volume.

Currency fluctuations had a negative impact on EAAA sales of approximately $1.9 million (0.7%) for the first six months of 2024 compared to the same period last year due to the weakening of the Australian dollar and Chinese Renminbi against the U.S.

On a market segment basis, the EAAA sales decrease was primarily in the public buildings, healthcare, and hospitality market segments partially offset by increases in the corporate office market segment.

AOI in EAAA increased 230.8% during the second quarter of 2024 versus the comparable period in 2023, primarily due to the impact of lower raw material costs and higher sales.

During the second quarter of 2023, AOI in EAAA was adversely impacted by inflation and higher input costs.

Currency fluctuations had no material impact on EAAA AOI for the second quarter of 2024 compared to the same period last year.

As a percentage of net sales, AOI increased to 9.6% during the second quarter of 2024 compared to 3.0% in the same period last year.

AOI in EAAA increased 159.2% during the first six months of 2024 versus the comparable period in 2023, primarily due to the impact of lower raw material costs in the current year and the unfavorable impact of inflation in the prior year.

Currency fluctuations had no material impact on AOI for the first six months of 2024 compared to the same period in 2023.

As a percentage of net sales, AOI increased to 8.0% during the first six months of 2024 compared to 3.0% in the same period last year.

Financial Condition, Liquidity and Capital Resources

At March 31, 2024, the Company had $89.8 million in cash.

At that date, the Company had $96.0 million in term loan borrowings, no revolving loan borrowings, and $1.6 million in letters of credit outstanding under our Facility, and we had $300.0 million of Senior Notes outstanding.

As of March 31, 2024, we had additional borrowing capacity of $298.4 million under the Facility.

At June 30, 2024, the Company had $94.2 million in cash.

At that date, the Company had $83.9 million in term loan borrowings, $7.3 million in revolving loan borrowings, and $1.6 million in letters of credit outstanding under our Facility, and we had $300.0 million of Senior Notes outstanding.

As of June 30, 2024, we had additional borrowing capacity of $291.0 million under the Facility.

We anticipate that our liquidity is sufficient to meet our obligations for the next 12 months, and we expect to generate sufficient cash to meet our long-term obligations.

1 unchanged sentence

The Company’s foreign subsidiaries and certain non-material domestic subsidiaries are considered non-guarantors.

Net sales for the non-guarantor subsidiaries were approximately $133 million and $141 million for the three-month periods ended March 31, 2024 and April 2, 2023, respectively.

Total indebtedness of the non-guarantor subsidiaries was approximately $128 million and $133 million as of March 31, 2024 and December 31, 2023, respectively.

Net sales for the non-guarantor subsidiaries were approximately $145 million and $278 million for the three-month and six-month periods ended June 30, 2024, respectively, and net sales for the non-guarantor subsidiaries were approximately $142 million and $283 million for the three-month and six-month periods ended July 2, 2023, respectively.

Total indebtedness of the non-guarantor subsidiaries was approximately $128 million and $133 million as of June 30, 2024 and December 31, 2023, respectively.

Balance Sheet

Accounts receivable, net, were $147.2 million at March 31, 2024, compared to $163.4 million at December 31, 2023.

The decrease of $16.2 million was primarily due to customer collections and the impact of lower net sales as a result of decreased customer demand in the first quarter of 2024.

Inventories, net, were $296.3 million at March 31, 2024, compared to $279.1 million at December 31, 2023.

The increase of $17.2 million was primarily due to finished goods inventory build attributable to expected higher customer demand in the remainder of 2024, partially offset by lower raw material costs.

Accounts receivable, net, were $179.6 million at June 30, 2024, compared to $163.4 million at December 31, 2023.

The increase of $16.2 million was primarily due to the impact of higher net sales as a result of increased customer demand in the second quarter of 2024.

Inventories, net, were $281.1 million at June 30, 2024, compared to $279.1 million at December 31, 2023.

The increase of $2.0 million was primarily due to finished goods inventory build attributable to higher expected customer demand in the remainder of 2024, partially offset by lower raw material costs.

Analysis of Cash Flows

The following table presents a summary of cash flows for the three-month periods ended March 31, 2024 and April 2, 2023, respectively:

Three Months Ended

March 31, 2024 April 2, 2023

The following table presents a summary of cash flows for the six-month periods ended June 30, 2024 and July 2, 2023, respectively:

Six Months Ended

June 30, 2024 July 2, 2023

(in thousands)

7 unchanged sentences

Cash and cash equivalents at end of period $ 94,187 $ 92,935

Cash provided by operating activities was $12.6 million for the three months ended March 31, 2024, which represents a decrease of $17.0 million from the prior year comparable period.

The decrease was primarily due to changes in working capital during the first three months of 2024 compared with the first three months of 2023.

Specifically, the prior year comparable period includes a greater source of cash from accounts receivable collections compared with the first three months of 2024, primarily attributable to delays in customer billings from the Cyber Event, in which those delayed billings were collected in the first quarter of 2023.

Additionally, the increase in inventories during the first three months of 2024, as described above, resulted in a greater use of cash compared with the same period in the prior year.

Cash used in investing activities was $2.0 million for the three months ended March 31, 2024, which represents a decrease of $3.7 million from the prior year comparable period.

The decrease was primarily attributable to cash proceeds received from the sale of manufacturing equipment and insurance proceeds for property casualty losses, both of which partially offset cash used for capital expenditures during the three months ended March 31, 2024.

Cash used in financing activities was $29.8 million for the three months ended March 31, 2024, which represents an increase of $8.7 million from the prior year comparable period.

The year-over-year increase was primarily due to lower revolving loan borrowings combined with higher repayments of term loan borrowings during the three months ended March 31, 2024.

We anticipate revenue growth in the second quarter of fiscal year 2024 compared with the first quarter of 2024.

During the first half of fiscal year 2024, the Company also expects continued year-over-year decreases in the cost per unit of various raw material purchases which will benefit gross profit margins in 2024.

We also anticipate that the continued slow macro environment in China, high interest rates, and significant financial pressures in the commercial office market globally will continue to adversely impact our performance and demand for our products.

Cash provided by operating activities was $34.2 million for the six months ended June 30, 2024, which represents a decrease of $13.8 million from the prior year comparable period.

Higher sales during the first six months of 2024 contributed to higher accounts receivable balances resulting in a use of cash for the current period.

The prior year comparable period includes a source of cash from accounts receivable collections compared with the first six months of 2024, primarily attributable to delays in customer billings from the Cyber Event, in which those delayed billings were collected in the first quarter of 2023.

Additionally, the increase in inventories during the first six months of 2024, as described above, resulted in a greater use of cash compared with the same period in the prior year.

Cash used in investing activities was $11.6 million for the six months ended June 30, 2024, which represents an increase of $6.8 million from the prior year comparable period.

The increase was attributable to higher capital expenditures partially offset by cash proceeds received during the first six months of 2024 from the sale of manufacturing equipment and insurance proceeds for property casualty losses.

The first six months of 2023 include cash proceeds of approximately $6.6 million from the sale of the Company’s Thailand manufacturing facility.

Cash used in financing activities was $37.0 million for the six months ended June 30, 2024, which represents a decrease of $12.1 million from the prior year comparable period.

The decrease was primarily attributable to lower debt repayments on borrowings under the Facility during the first six months of 2024 compared to the prior year period.

Cash flows from operations, cash and cash equivalents, and other sources of liquidity are expected to be available and sufficient to meet foreseeable cash requirements.

However, the Company’s cash flows from operations can be affected by numerous factors including raw material availability and cost, and demand for our products.

As of April 21, 2024, the consolidated backlog of unshipped orders was approximately $224.3 million.

As of July 21, 2024, the consolidated backlog of unshipped orders was approximately $244.2 million.

As disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, backlog was approximately $195.5 million as of February 4, 2024.

1 unchanged sentence

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