What changed in this filing

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Item 1A. Risk Factors

2026-02-23 compared with 2025-02-25 · 87 added, 77 removed, 350 unchanged (32% of the section changed)

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Our revenues in periods of increasing demand depends, in part, upon our ability to:

(i) timely mobilize our supply chain to maintain component and raw material supply;

(ii) optimize our design, as well as mobilize our engineering and manufacturing capacity in a timely manner;

(i) timely mobilize our supply chain to maintain component and raw material supply at scale;

(ii) optimize our design, as well as mobilize our engineering and

manufacturing capacity in a timely manner;

(iii) expand, as necessary, our manufacturing, cleaning, coating and analytical services capacity;

and (iv) maintain our product and service quality as we increase production.

We are currently anticipating a period of historically elevated demand, driven by growth in artificial intelligence.

During periods of strong demand such as those currently anticipated, competition for critical components, raw materials, and skilled labor intensifies, which may constrain our ability to meet customer requirements.

If we fail to timely respond to rapid increases in demand for our products and services, or to effectively manage the corresponding expansion of our manufacturing and service capacity, our customers may divert their purchases of products and services from us to our competitors.

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and (iii) continue to motivate our employees while reducing our fixed and variable costs through various initiatives, which may include reducing our workforce.

A sharper-than-expected correction following a demand peak could exacerbate these challenges, particularly if we have meaningfully expanded our cost structure or inventory commitments in response to elevated near-term demand.

The limited visibility we have on the future needs of our customers, combined with the cyclical and volatile nature of the industries we serve, makes future revenues, results of operations and net cash flows difficult to estimate.

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These conditions may also similarly affect, and have affected in the past, key suppliers, impairing their ability to timely deliver components or raw materials.

We will then be forced to procure components or raw materials from higher-cost suppliers or reconfigure the design and manufacture of our products or services, which may eventually lead, and have led in the past, to our failure to fill customer orders.

We will then be forced to procure components or raw materials from higher-

cost suppliers or reconfigure the design and manufacture of our products or services, which may eventually lead, and have led in the past, to our failure to fill customer orders.

Recent inflationary trends have had, and could continue to have, a negative impact on many aspects of our cost structure.

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New capital equipment typically has a lifespan of several years, and OEMs frequently specify which systems, subsystems, components and instruments are to be incorporated in their equipment.

Once incorporated, the OEM will likely maintain

that same composition of products for at least several months.

Once incorporated, the OEM will likely maintain that same composition of products for at least several months.

IDMs typically establish cleaning, coating, and analytical services as they develop and qualify new chip designs for production.

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Through the course of the manufacturing process, our customers may modify design and system configurations in response to changes in their own customers’ requirements.

In order to respond to these modifications and deliver our products in a timely manner, we must effectively manage our manufacturing and procurement processes, the failure of which can lead to a loss

of business and reputational damage.

In order to respond to these modifications and deliver our products in a timely manner, we must effectively manage our manufacturing and procurement processes, the failure of which can lead to a loss of business and reputational damage.

We may also be liable for certain damages under our agreements with our customers, if we or our suppliers fail to effectively or timely re-configure manufacturing processes or components in response to these modifications.

Our inability to successfully manage the implementation of a company-wide enterprise resource planning (“ERP”) system could adversely affect our operating results.

We are continuing the implementation of a company-wide ERP system.

Incomplete or unsuccessful implementation and integration of a company-wide enterprise resource planning (“ERP”) system could adversely affect our operating results.

We are continuing to implement and integrate a company-wide ERP system.

This process has been and continues to be complex and time-consuming and we expect to incur additional capital outlays and expenses.

This ERP system will replace or interface with our existing operating and financial systems, which has been and is a major undertaking from a financial management and personnel perspective.

Should the ERP system not be implemented successfully throughout all our business units on time and within budget, or if the system does not perform in a satisfactory manner, it could be disruptive and adversely affect our operations, including our ability to:

Should the ERP system not be implemented or integrated successfully throughout all our business units on time and within budget, or if the system does not perform in a satisfactory manner, it could be disruptive and adversely affect our operations, including our ability to:

(i) report accurate, timely and consistent financial results;

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and (iii) deliver products and services to customers on a timely basis and to collect our receivables from them.

We have teams leading the implementation of the ERP system at most of our locations.

We have teams leading the implementation of the ERP system at most of our locations, and the integration of acquired entities onto our ERP platform.

To the extent these teams or key individuals are not retained through the implementation process, the success of our implementation could be compromised and the expected benefits of the ERP system may not be realized.

We have identified material weaknesses in our internal control over financial reporting and may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls which, if not remediated, could adversely affect the accuracy, reliability, and timeliness of our financial reports, our reputation, business operations, and stock price.

Based on our evaluation under the COSO framework as further described under “Item 9A – Controls and Procedures,” our management concluded that we did not maintain effective internal control over financial reporting as of December 27, 2024 due to material weaknesses.

Effective internal controls over financial reporting are necessary for us to provide reliable and timely financial reports and, together with adequate disclosure controls and procedures, are designed to reasonably detect and prevent fraud.

In addition, Section 404 of the Sarbanes-Oxley Act of 2002 requires us and our independent registered public accounting firm to evaluate and report on our internal control over financial reporting.

The process of designing, implementing, maintaining, and updating our internal controls and complying with Section 404 is expensive and time consuming, and requires significant attention from management and company resources.

We may identify material weaknesses in our internal control over financial reporting or otherwise fail to maintain effective internal controls, which could adversely affect our financial reporting, our reputation, operations, and stock price.

Maintaining effective internal controls over financial reporting is essential to providing reliable and timely financial reports and, together with adequate disclosure controls and procedures, detecting and preventing fraud.

Section 404 of the Sarbanes-Oxley Act of 2002 requires both management and our independent registered public accounting firm to evaluate and report on our internal control over financial reporting.

Designing, implementing, maintaining, and continuously improving our internal controls requires significant management attention and company resources.

Failure to maintain existing or implement new or improved controls, or difficulties encountered in their implementation, could harm our results of operations or cause us to fail to meet our reporting obligations.

We have begun the process of evaluating the material weaknesses and have taken steps toward executing a full remediation plan.

Until the remediation plan is implemented, tested, and deemed effective, we cannot be certain that our actions will adequately remediate the material weaknesses or that no additional material weaknesses in our internal controls will be identified in the future.

If we are unable to remediate the material weaknesses, our ability to record, process and report financial information accurately, and to prepare financial statements within the time periods specified by the rules and forms of the SEC, could be adversely affected and could reduce the market’s confidence in our financial statements and harm our stock price.

Although we have successfully remediated the material weaknesses identified in our Annual Report on Form 10-K for the year ended December 27, 2024, there can be no assurance that additional material weaknesses will not be identified in the future.

As our business grows and evolves, our control environment must adapt to changes in our operations, systems, transaction complexity, and regulatory requirements.

Failure to identify risks, implement necessary control changes, or maintain existing controls could result in new control deficiencies.

If we identify material weaknesses in the future, and are unable to remediate those material weaknesses, our ability to record, process and report financial information accurately, and to prepare financial statements within the time periods specified by the rules and forms of the SEC, could be adversely affected and could reduce the market’s confidence in our financial statements and harm our stock price.

We are subject to order and shipment uncertainties and any significant reductions, cancellations or delays in customer orders could cause our revenue to decline and our operating results to suffer.

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If we do not obtain orders as we anticipate, we could have excess component inventory for a customized product that we would not be able to sell to another customer, likely resulting in inventory write-offs.

In addition, because many of our costs are fixed in the short term, we

could experience, and have experienced in the past, deterioration in our gross profit and operating margins when our sales volume declines.

We hold our customers’ parts on our premises and any significant damage or loss to these parts could cause our operating results to suffer.

In connection with our Services business, we face a number of risks associated with customer parts being held on our premises, including the risk of mishandling or damaging, customer parts, any of which could be materially harmful for our business.

In addition, because many of our costs are fixed in the short term, we could experience, and have experienced in the past, deterioration in our gross profit and operating margins when our sales volume declines.

Any significant damage or loss of customer and supplier property held at our facilities could cause our operating results to suffer.

In connection with both our Products and Services businesses, we hold meaningful amounts of property owned by our customers and suppliers at our facilities.

This includes customer components and assemblies across our product lines, as well as supplier-owned inventory and materials consigned to us for manufacturing or service operations.

We face a number of risks related to safeguarding this third-party property, including the risk of mishandling or damaging customer parts, any of which could be materially harmful for our business.

The results of our operations, financial position and cash flows may suffer if we do not effectively manage our inventory.

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We have had to qualify as a supplier, and maintain that status, for each of our customers.

This is often a lengthy process that normally involves customer inspection and approval of our engineering, documentation, manufacturing and quality control procedures before the customer will place volume orders.

This is often a lengthy process that normally involves customer inspection and approval of our engineering, documentation, manufacturing and quality

control procedures before the customer will place volume orders.

Such qualification requirements limit our ability to quickly add new customers to offset any loss of, or reduction in sales to, existing customers.

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The manufacture and delivery of our products, the provision of our services and our financial reporting depend on the continuing operation of our technology infrastructure and systems, particularly our data center located in California.

We face evolving and increasing cybersecurity threats, including ransomware attacks, malware, denial-of-service attacks, social engineering (including phishing), supply chain attacks, and other attempts to gain unauthorized access to our systems and data.

Any damage to or failure of our systems could result in interruptions in our ability to manufacture or deliver products or services, or adversely impact our ability to accurately and timely report our financial results.

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The loss of any of our key employees and officers, including our Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, any of our Executive or Senior Vice Presidents or any of our key senior managers, or the failure to attract, promote and retain qualified employees, could adversely affect our business.

Also, uncertainty and disruption to our organization as a

result of executive management transition could divert the executive management’s attention away from key areas of our business and have a material adverse effect on our business.

Our business is subject to the risks of earthquakes, fire, power outages, floods, and other catastrophic events, and to interruption by man-made disruptions, such as armed conflicts or terrorism.

Our facilities may experience catastrophic losses caused by natural disasters or other causalities, such as earthquakes, storms, floods, fires, public health epidemic, labor disruptions, power outages, terrorist attacks or political unrest, the occurrence of any one of which could disrupt our operations, delay production and shipments, and result in large repair expenses.

We have facilities in areas with above average seismic activity, such as our facilities in Hayward, California, and our Taiwan facilities in Hsinchu and Tainan.

We also have experienced fires and extended power outages at our facilities, such as the fire that occurred at a Korean plant operated by our joint venture, Cinos Korea, in 2018.

This risk is further exacerbated by the fact that our insurance policies do not fully cover the losses caused by earthquakes or other natural disasters or power loss.

Our Fluid Solutions business operations are concentrated in Israel, where many key employees, offices and some of its production facilities are located.

The political, economic and security situation in Israel has a direct impact on our operations there, and a state of war in Israel, such as the Gaza war between Israel and Hamas-led groups that started in 2023, may harm, and have harmed, our ability to supply our products to customers.

In addition, our suppliers experiencing natural disasters may not be able to provide sufficient components or raw materials in a timely manner, which can cause disruptions in our operations.

Also, uncertainty and disruption to our organization as a result of executive management transition could divert the executive management’s attention away from key areas of our business and have a material adverse effect on our business.

Our business is subject to risks from natural disasters, infrastructure failures, and geopolitical conflicts, such as armed conflicts or terrorism.

Our facilities may experience catastrophic losses from natural disasters or other causalities, such as earthquakes, storms, floods, fires, public health epidemics, labor disruptions, power outages, terrorist attacks or political unrest, any of which could disrupt operations, delay production and shipments, and result in significant repair expenses.

We have facilities in areas with elevated seismic activity, including Hayward, California, and our Taiwan facilities in Hsinchu and Tainan.

We have also experienced fires and extended power outages at our facilities.

Our insurance policies do not fully cover losses from earthquakes, other natural disasters, or power loss, leaving us exposed to substantial uninsured costs.

Our Fluid Solutions business operations are concentrated in Israel, where key employees, offices and production facilities are located.

The region faces ongoing armed conflict and security threats that directly impact our operations.

While a phased ceasefire agreement between Israel and Hamas took effect in October 2025, the situation remains fragile with continued violence, miliary activity, and restrictions on movement and commerce.

This instability has disrupted and may continue to disrupt our workforce availability, our ability to ship products to customers, and our ability to receive materials from suppliers.

In addition, our suppliers experiencing natural disasters or geopolitical disruptions may not be able to provide sufficient components or raw materials in a timely manner, which can cause disruptions to our operations.

Legal and Regulatory Risks

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The extent of the impact of the ongoing trade tension between the United States and China on our sales and operations is difficult to predict.

In December 2024, the U.S.

Department of Commerce imposed additional license requirements on certain semiconductor goods and technologies sold to certain entities in China.

This expansion of export license requirements in China has adversely impacted some of our customers with business presence in China, which in turn had an adverse impact on our business.

These new regulations created uncertainty for our operations in China, as the full scope and extent of the new license requirements remain uncertain, and may change over time.

Obtaining these export licenses is likely difficult for us and/or our customers, and any delays (or denial) in the approval process could disrupt our supply chains and negatively impact production schedules.

Since December 2024, the U.S.

Department of Commerce has significantly expanded export license requirements on certain semiconductor goods and technologies sold to China, and has added over 140 Chinese entities to its Entity List.

Although the U.S.

and China agreed to temporarily suspend certain export control measures in October 2025, this limited relief does not resolve the underlying regulatory restrictions or uncertainty.

These evolving regulations have created ongoing uncertainty for our operations in China, as the full scope and extent of current and future license requirements remain uncertain, and may change over time.

Obtaining these export licenses remains difficult for us and/or our customers, and any delays (or denial) in the approval process could disrupt our supply chains and negatively impact production schedules.

For example, the utilization rate of our manufacturing subsidiary in China may be negatively impacted if we would not be able to support our customers with goods and services originating out of that location.

Additionally, tariffs and retaliatory tariffs levied by the United States and China on certain raw materials have in the past increased the cost of materials for our products.

If the current trade relationship between U.S.

and China continues on the same tense trajectory, we may experience additional taxes and tariffs on raw materials sourced from China, which could render our products less competitive and/or profitable.

- China tensions escalate, we may experience additional taxes and tariffs on raw materials sourced from China, which could render our products less competitive and/or profitable.

Third parties may claim we are infringing their intellectual property, which could subject us to litigations or licensing expenses, and we may be prevented from selling our products if any such claims prove successful.

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In addition, such proceedings are often expensive, time-consuming and disruptive to normal business operations and require significant attention from our management.

For example, we have been incurring costs responding to a subpoena received from the SEC related to the material weaknesses identified in our 2022 and 2023 annual reports and the change of our independent auditors.

For example, we incurred costs responding to a subpoena received from the SEC related to the material weaknesses identified in our 2022 and 2023 annual reports and the change of our independent auditors.

Any environmental contamination at any of our production facilities could result in substantial liabilities.

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if we are forced to pay our indebtedness prior to its maturity, our financial position could be materially and adversely affected.

As of December 27, 2024, we have gross debt of $499.7 million.

Such debt is composed of a $493.8 million term loan outstanding under our credit agreement with Barclays Bank and $5.9 million under credit facilities at Fluid Solutions less unamortized debt costs of $7.2 million.

As of December 26, 2025, we have gross debt of $481.4 million less unamortized debt costs of $4.5 million.

Our indebtedness could have adverse consequences, including:

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Failure to comply with these covenants could result in the acceleration of all of our indebtedness, which could materially and adversely affect our financial health.

As long as our indebtedness remains outstanding, the restrictive

covenants and mandatory prepayment provisions could impair our ability to expand or pursue our business strategies or obtain additional funding.

We may not be able to fund our future capital requirements or strategic acquisitions from our operations, and financing from other sources may not be available on favorable terms or at all.

We made capital expenditures of approximately $63.5 million and $75.8 million for fiscal years 2024 and 2023, respectively, which are primarily related to investments in our manufacturing facilities in the United States, Ireland and Malaysia and to our ERP system implementation.

The amount of our future capital requirements will depend on many factors, including:

the cost associated with the expansion of our manufacturing capacity into Malaysia as part of our strategic growth plan;

the cost to maintain appropriate IT systems;

the cost to maintain adequate manufacturing capacity;

the timing and extent of spending to support product development efforts;

the timing of new product introductions and enhancements to existing products;

the timing, size and availability of strategic transactions;

the cost to integrate our acquisitions into our business environment;

changing manufacturing capabilities to meet new or increased customer requirements;

market acceptance of our products;

and our ability to generate sufficient cash flow from our operating activities.

In order to finance our capital expenditures or any future strategic acquisitions, we may need to raise additional funds through public or private equity or debt financing, but such financing may not be available on terms satisfactory to us, or at all.

In addition, equity financings could be dilutive to holders of our common stock, and debt financings would likely involve additional covenants that restrict our business operations.

Any potential strategic acquisition or significant capital expenditure may also require the consent of our existing lenders.

If we cannot raise funds on acceptable terms when needed, we may not be able to develop or enhance our products, take advantage of future opportunities, grow our business or respond to competitive pressures or unanticipated requirements.

As long as our indebtedness remains outstanding, the restrictive covenants and mandatory prepayment provisions could impair our ability to expand or pursue our business strategies or obtain additional funding.

Insufficient cash flow from operations could limit our ability to fund capital expenditures, strategic acquisitions, or growth initiatives.

We made capital expenditures of approximately $50.3 million and $63.5 million in fiscal years 2025 and 2024, respectively, primarily for manufacturing facility investments in the United States, Ireland and Malaysia, and for information technology infrastructure improvements, including ERP system upgrades and integration of acquired entities onto our platforms.

Our future cash requirements will depend on many factors, including the following capital expenditures:

expansion of manufacturing in Malaysia and other locations as part of our strategic growth plan;

enhancement of IT systems and cybersecurity infrastructure;

manufacturing process changes and facility modifications required to meeting evolving customer requirements;

and timing of new product introductions.

Our cash requirements will also depend on the following operating and strategic expenditures:

integration costs for acquisitions, including IT systems consolidation;

product development and engineering investments;

and ongoing IT maintenance and cybersecurity operations.

If cash generated from operations is insufficient to fund these requirements, we may need to raise additional capital through public or private equity or debt financing.

Such financing may not be available on acceptable terms, or at all.

Equity financing would dilute existing stockholders, while debt financing would likely impose restrictive covenants that limit our operational flexibility.

Additionally, strategic acquisitions or significant capital expenditures may require consent from our existing lenders under our credit facilities.

If we cannot secure adequate financing when needed, we may not be able to develop or enhance products, pursue strategic opportunities, maintain competitive manufacturing capacity, or respond effectively to competitive pressures or changing market conditions.

Our quarterly revenue and operating results could fluctuate significantly from period to period, and this may cause volatility in our common stock price.

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As a result of the foregoing, we believe that quarter-to-quarter comparisons of our revenue and operating results may not be meaningful and that these comparisons may not be an accurate indicator of our future performance.

Changes in the timing or terms of a small number of transactions could disproportionately affect our operating results in any particular

Changes in the timing or terms of a small number of transactions could disproportionately affect our operating results in any particular quarter.

Moreover, our operating results in one or more future quarters may fail to meet our guidance or the expectations of securities analysts or investors.

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If we were required to impair all or a significant part of our goodwill and/or our acquired intangible assets, our financial results could be materially adversely affected.

During the second quarter of 2025, the Company experienced a sustained decline in the market price of its common stock.

As a result, the Company’s market capitalization became much closer to, and at times fell below, the carrying value of its net assets.

The decline in market capitalization, combined with other factors specific to each reporting unit, such as changes in market conditions and financial performance, was identified as a triggering event under ASC 350, Intangibles—Goodwill and Other, requiring the Company to perform an interim goodwill impairment test.

The Company performed a quantitative goodwill impairment test for each of its four reporting units by comparing the estimated fair value of each reporting unit to its respective carrying value.

Based on the results of this assessment, goodwill impairments were identified in the Fluid Solutions and Services reporting units.

As a result, the Company recorded a total goodwill impairment charge of $151.1 million during the second quarter of 2025, of which $77.6 million was attributable to the Products segment and $73.5 million was attributable to the Services segment.

Fluctuations in foreign currency exchange rates may adversely affect our financial condition and results of operations.

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The use of such hedging activities may not fully offset the adverse financial effects of unfavorable movements in foreign currency exchange rates over the time the hedges are in place.

Changes in tax rates or tax assets and liabilities could affect results of operations.

As a global company, we are subject to taxation in the United States and various other countries.

Significant judgment is required to determine and estimate worldwide tax liabilities.

Our annual and quarterly tax rates could be affected by numerous factors, including changes in applicable tax laws, the amount and composition of pre-tax income in countries with different tax rates, and valuation of our deferred tax assets and liabilities.

Due to economic and political conditions, tax laws and tax rates for income taxes in various jurisdictions may be subject to significant changes.

The Organization for Economic Co-operation and Development and the G20 Inclusive Framework on Base Erosion and Profit Shifting have developed Pillar Two proposals that establish a global minimum corporate tax rate of fifteen percent.

Several countries in which we operate have adopted legislation implementing these rules, including Singapore and Malaysia where this legislation became effective January 1, 2025.

We currently benefit from certain tax incentives in Singapore and Malaysia that result in effective tax rates below fifteen percent in those jurisdictions.

The Pillar Two rules may result in additional top-up taxes in these and other jurisdictions, which could increase our overall effective tax rate and adversely affect our financial results.

We are subject to examinations of our income tax returns by domestic and foreign tax authorities.

We regularly assess the likelihood of favorable or unfavorable outcomes resulting from these examinations to determine the adequacy of our provision for income taxes and have reserved for potential adjustments that may result from these examinations.

There can be no assurance that any final determination will not be materially different from the treatment reflected in our historical income tax provisions and accruals, which could materially and adversely affect our financial condition and results of operations.

General Risk Factors

The market for our stock is subject to significant fluctuation.

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These broad market fluctuations may adversely affect the trading price of our common stock.

Changes in tax rates or tax assets and liabilities could affect results of operations.

As a global company, we are subject to taxation in the United States and various other countries.

Significant judgment is required to determine and estimate worldwide tax liabilities.

Our annual and quarterly tax rates could be affected by numerous factors, including changes in the applicable tax laws, amount and composition of pre-tax income in countries with different tax rates, and valuation of our deferred tax assets and liabilities.

In addition, due to economic and political conditions, tax laws and tax rates for income taxes in various jurisdictions may be subject to significant changes.

For example, the Organization for Economic Co-Operation and Development (the “OECD”) continues to advance proposals for modernizing international tax rules, including the introduction of a framework to implement a global minimum corporate tax of 15%, referred to as Pillar Two.

While it is uncertain whether the U.S.

will enact legislation to adopt Pillar Two, certain countries in which we operate have adopted certain provisions of Pillar Two including Czechia and Korea though the impact to our fiscal year 2025 effective tax rate and cash flow is not expected to be material.

Other countries have also enacted certain provision of Pillar Two that will apply to our fiscal year 2026, including Singapore and Malaysia.

We continue to evaluate the impact of Pillar Two in years beyond fiscal 2025.

We are subject to examinations of our income tax returns by domestic and foreign tax authorities.

If securities or industry analysts do not publish research or reports about our business, or if they issue an adverse opinion regarding our stock, our stock price and trading volume could decline.

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

What changed 10-K

Item 1A. Risk Factors