What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-04 compared with 2026-04-29 · 111 added, 87 removed, 152 unchanged (57% of the section changed)

42 unchanged sentences

Fiscal year 2026 is a 53-week period ending January 1, 2027, and fiscal year 2025 was a 52-week period ended December 26, 2025.

The fiscal quarters ended March 27, 2026 and March 28, 2025 were both 13-week periods.

Discussion of Results of Operations for the Three months ended March 27, 2026 compared to the Three months ended March 28, 2025

Three Months Ended

The fiscal quarters ended June 26, 2026 and June 27, 2025 were both 13-week periods.

Discussion of Results of Operations for the Three and Six months ended June 26, 2026 compared to the Three and Six months ended June 27, 2025

Three Months Ended Six Months Ended

Revenues by Segment

(Dollars in millions)

2026 March 28,

2026 June 27,

Change June 26,

2026 June 27,

Products $ 572.7 $ 454.9 25.9% $ 1,038.4 $ 911.9 13.9%

3 unchanged sentences

Services as a percentage of total revenues 11.2% 12.3% 11.9% 12.1%

For the three-month period ended March 27, 2026, Products revenues increased compared to the same period in the prior year.

The increase in Products revenues was primarily due to an increase in customer demand, along with an overall market improvement in the semiconductor industry.

Services revenues increased for the three-month period ended March 27, 2026 compared to the same period in the prior year primarily due to an increase in demand across its customer base.

Three Months Ended

For the three and six month periods ended June 26, 2026, Products revenues increased compared to the same periods in the prior year, primarily due to an increase in customer demand, driven by an overall market improvement in the semiconductor industry.

Services revenues increased for the three and six month periods ended June 26, 2026 compared to the same periods in the prior year, primarily due to an increase in demand across its customer base.

Three Months Ended Six Months Ended

Revenues by Geography

(Dollars in millions)

2026 March 28,

2026 June 27,

Change June 26,

2026 June 27,

United States $ 141.9 $ 134.6 5.4% $ 271.3 $ 257.6 5.3%

3 unchanged sentences

International as a percentage of total revenues 78.0% 74.1% 77.0% 75.2%

Revenues by geographic area are categorized based on the customer’s location to which the products were shipped or services were performed.

For the three months ended March 27, 2026, U.S.

and international revenues increased compared to the same period in the prior year, primarily reflecting improved conditions in the semiconductor capital equipment market, which drove higher customer demand across multiple regions.

Revenues by geographic area are categorized based on the location to which the products were shipped or the location where services were performed.

For the three and six months ended June 26, 2026, U.S.

and international revenues increased compared to the same periods in the prior year, primarily reflecting improved conditions in the semiconductor capital equipment market, which drove higher customer demand across multiple regions.

International revenue grew faster than U.S.

revenue in both periods, shifting the geographic mix further toward international.

Cost of Revenues

Three Months Ended

Three Months Ended Six Months Ended

Cost of revenues by Segment

(Dollars in millions)

2026 March 28,

2026 June 27,

Change June 26,

2026 June 27,

Products $ 488.8 $ 393.3 24.3% $ 889.5 $ 783.5 13.5%

3 unchanged sentences

Services cost as a percentage of total Services revenues 72.6% 72.0% 72.0% 72.0%

Cost of Products revenues consists of purchased materials, direct labor and manufacturing overhead.

For the three-month period ended March 27, 2026, Cost of Products revenues increased by $10.4 million compared to the same period in the prior year.

The increase was primarily driven by higher labor and manufacturing overhead costs of $9.4 million and $2.2 million, respectively, associated with increased production activity, partially offset by a decrease in material costs of $1.2 million.

Products cost of revenue consists of purchased materials, direct labor and manufacturing overhead.

For the three-month period ended June 26, 2026, Products cost of revenue increased by $95.5 million compared to the same period in the prior year.

The increase was primarily driven by higher material and labor costs of $81.8 million and $18.4 million, respectively, associated with increased production activity, partially offset by a decrease in manufacturing overhead costs of $4.7 million.

For the six-month period ended June 26, 2026, Products cost of revenue increased by $106.0 million compared to the same period in the prior year.

The increase was primarily driven by higher material and labor costs of $80.6 million and $27.8 million, respectively, associated with increased production activity, partially offset by a decrease in manufacturing overhead costs of $2.4 million.

Services Cost of revenues consists of direct labor, overhead, and materials such as chemicals, gases and consumables.

For the three-month period ended March 27, 2026, Services Cost of revenues increased by $4.3 million compared to the same period in the prior year.

The increase was primarily driven by a higher service volumes, which resulted in increased labor, overhead, and material costs of $2.4 million, $1.3 million and $0.6 million, respectively.

Three Months Ended

For the three and six month periods ended June 26, 2026, Services Cost of revenues increased by $6.4 million and $10.6 million, respectively, compared to the same periods in the prior year.

The increase for the three-month period was primarily driven by higher service volume, which resulted in increased labor, overhead, and material costs of $3.7 million, $1.7 million and $1.0 million, respectively.

The increase for the six-month period was primarily driven by higher service volume, which resulted in increased labor, overhead, and material costs of $5.9 million, $3.0 million and $1.7 million, respectively.

Three Months Ended Six Months Ended

Gross Profit by Segment

(Dollars in millions)

2026 March 28,

2026 June 27,

Change June 26,

2026 June 27,

Products $ 83.9 $ 61.6 36.2 % $ 148.9 $ 128.4 16.0 %

6 unchanged sentences

Gross profit and gross margins fluctuate with revenue levels, product mix, material costs, and labor costs.

Products gross profit and margin decreased for the three-month period ended March 27, 2026 compared to the same period in the prior year due to an unfavorable product mix and a shift in sales volumes across different geographic regions.

Services gross profit and gross margin increased for the three-month period ended March 27, 2026 compared to the same period in the prior year, primarily due to higher revenue levels and improved absorption of fixed costs.

Products gross profit and margin increased for the three and six month periods ended June 26, 2026 compared to the same periods in the prior year, due to higher revenue levels, favorable absorption of fixed costs, a favorable product mix, and a shift in sales volumes across different geographic regions.

Services gross profit increased for the three and six month periods ended June 26, 2026 compared to the same periods in the prior year, primarily due to higher revenue levels.

Gross margin remained flat for the six-month period, as cost of revenue grew in line with revenue and offset improved absorption of fixed costs.

For the three-month period, gross margin decreased slightly, as cost of revenue growth outpaced revenue growth.

Operating Margin

Three Months Ended

Three Months Ended Six Months Ended

Operating Profit by Segment

(Dollars in millions)

2026 March 28,

2026 June 27,

Change June 26,

2026 June 27,

Products $ 24.8 $ (70.9) (135.0) % $ 31.8 $ (60.7) (152.4) %

5 unchanged sentences

Total Company 4.6% (27.3%) 3.5% (12.4%)

Products operating income and operating margin decreased for the three-month period ended March 27, 2026 compared to the same period in the prior year, primarily reflecting lower gross profit.

Although product revenue increased modestly, cost of revenues increased at a higher rate, resulting in a decline in gross margin, primarily due to an unfavorable product mix and a shift in sales volumes across different geographic regions.

Increases in operating expenses were not a significant driver but contributed to the overall decrease.

Services operating income and operating margin increased for the three-month period ended March 27, 2026 compared to the same period in the prior year, primarily reflecting higher gross profit driven by increased revenue and improved fixed cost absorption while changes in operating expenses were not material.

Products operating income and operating margin increased for the three and six month periods ended June 26, 2026 compared to the same periods in the prior year, primarily reflecting higher gross profit and the absence of the $77.6 million goodwill impairment charge recorded in the prior period.

Services operating income and operating margin increased for the three and six month periods ended June 26, 2026 compared to the same periods in the prior year, primarily reflecting higher gross profit driven by increased revenue, with operating expenses not materially different, and the absence of the $73.5 million goodwill impairment charge recorded in the prior period.

Research and Development

Three Months Ended

(Dollars in millions) March 27,

2026 March 28,

Three Months Ended Six Months Ended

(Dollars in millions) June 26,

2026 June 27,

Change June 26,

2026 June 27,

Research and development $ 8.8 $ 7.8 12.8 % $ 17.4 $ 15.4 13.0 %

1 unchanged sentence

Research and development expenses consist primarily of activities related to new component testing and evaluation, test equipment and fixture development, product design, the advancement of cleaning and coating and analytical processes, and other product-development activities.

Research and development expenses increased for the three-month period ended March 27, 2026 compared to the same period in the prior year, primarily due to higher employee-related costs driven by increased headcount and, to a lesser extent, annual merit increases.

Research and development expenses increased for the three and six month periods ended June 26, 2026 compared to the same periods in the prior year, primarily due to higher employee-related compensation costs.

Sales and Marketing

Three Months Ended

(Dollars in millions) March 27,

2026 March 28,

Three Months Ended Six Months Ended

(Dollars in millions) June 26,

2026 June 27,

Change June 26,

2026 June 27,

Sales and marketing $ 16.4 $ 15.5 5.8 % $ 31.9 $ 30.5 4.6 %

1 unchanged sentence

Sales and marketing expenses consist primarily of salaries and commissions paid to our sales employees, salaries paid to our engineers who partner with sales and service employees to help determine the components and configuration requirements for new products and other costs related to the sales of our products.

Sales and marketing expenses increased for the three-month period ended March 27, 2026 compared to the same period in the prior year, primarily due to increases across various expense categories, none of which were individually significant.

Sales and marketing expenses increased for the three and six month periods ended June 26, 2026 compared to the same periods in the prior year, primarily due to higher employee-related costs.

General and Administrative

Three Months Ended

(Dollars in millions) March 27,

2026 March 28,

Three Months Ended Six Months Ended

(Dollars in millions) June 26,

2026 June 27,

Change June 26,

2026 June 27,

General and administrative $ 49.0 $ 46.9 4.5 % $ 98.0 $ 95.4 2.7 %

1 unchanged sentence

General and administrative expenses primarily consist of personnel expenses for executive, finance, legal, and human resources employees, professional fees for external accounting, legal and consulting services, and other corporate overhead costs, including compliance and reporting costs associated with operating as a public company.

General and administrative expenses were relatively consistent for the three-month period ended March 27, 2026 compared to the same period in the prior year.

General and administrative expenses increased for the three and six month periods ended June 26, 2026 compared to the same periods in the prior year, primarily due to higher employee-related costs.

Interest and Other Expense, net

Three Months Ended

(Dollars in millions) March 27,

2026 March 28,

Three Months Ended Six Months Ended

(Dollars in millions) June 26,

2026 June 27,

Change June 26,

2026 June 27,

Interest income $ 1.0 $ 0.8 25.0 % $ 2.4 $ 1.9 26.3 %

1 unchanged sentence

Other income (expense), net $ 0.6 $ (2.2) (127.3) % $ (0.7) $ (1.3) (46.2) %

Interest income increased for the three-month period ended March 27, 2026 compared to the same period in the prior year, primarily due to higher interest-earning balances.

Interest expense decreased for the three-month period ended March 27, 2026 compared to the same period in the prior year, primarily due to lower interest rates and a reduced principal balance.

Other income (expense), net decreased for the three-month period ended March 27, 2026 compared to the same period in the prior year.

The prior year period primarily reflected foreign exchange gains, while the current period reflects a loss on extinguishment of debt, partially offset by favorable foreign exchange transaction and remeasurement gains and higher other miscellaneous income.

Interest income was relatively consistent for the three and six month periods ended June 26, 2026 compared to the same periods in the prior year.

Interest expense decreased for the three and six month periods ended June 26, 2026 compared to the same periods in the prior year, primarily due to lower interest expense following the term loan prepayment, partially offset by higher amortization of debt issuance costs related to the convertible notes.

Other income (expense), net improved for the three and six month periods ended June 26, 2026 compared to the same periods in the prior year, primarily due to favorable foreign exchange gains, partially offset by a loss on extinguishment of debt in the current-year six-month period.

Provision for Income Taxes

Three Months Ended

(Dollars in millions) March 27,

2026 March 28,

Three Months Ended Six Months Ended

(Dollars in millions) June 26,

2026 June 27,

Change June 26,

2026 June 27,

Provision for income taxes $ 18.1 $ 7.2 151.4 % $ 37.2 $ 14.6 154.8 %

Effective tax rate 60.3% -4.7% 108.8% -9.8%

The increase in the provision for income taxes for the three-month period ended March 27, 2026 compared to the same period in the prior year is primarily attributable to the impact of a planned distribution of earnings from one of the Company’s foreign subsidiaries in the current year, changes in the geographic mix of worldwide earnings and financial results in jurisdictions which are taxed at different rates, and the impact of losses in jurisdictions with full valuation allowances on deferred tax assets.

The Company recorded a discrete tax expense of $14.8 million in the quarter ended March 27, 2026 due to the Company's determination that certain earnings of one of our subsidiaries in China can no longer be permanently reinvested.

Company management continuously evaluates the need for a valuation allowance on its deferred tax assets and, as of March 27, 2026, concluded that a full valuation allowance on its U.S.

The increase in the provision for income taxes for the three and six month periods ended June 26, 2026 compared to the same periods in the prior year is primarily attributable to the impact of a distribution of earnings from, and change in ownership of, one of the Company’s foreign subsidiaries in the current year, changes in the geographic mix of worldwide earnings and financial results in jurisdictions which are taxed at different rates, and the impact of losses in jurisdictions with full valuation allowances on deferred tax assets.

The Company recorded a discrete tax expense of $15.1 million in the six months ended June 26, 2026, due to the distribution of earnings from China.

The Company recorded a discrete tax expense of $9.6 million in the quarter ended June 26, 2026, due to a change in ownership of one of the Company’s foreign subsidiaries.

Management continuously evaluates the need for a valuation allowance on its deferred tax assets and, as of June 26, 2026, concluded that a full valuation allowance on its U.S.

federal, state and certain of its foreign deferred tax assets remained appropriate.

2 unchanged sentences

The following table summarizes our cash and cash equivalents:

(In millions) March 27,

(In millions) June 26,

2026 December 26,

2 unchanged sentences

The following table summarizes the Condensed Consolidated Statements of Cash Flow information:

Three Months Ended

(In millions) March 27,

2026 March 28,

Six Months Ended

(In millions) June 26,

2026 June 27,

Operating activities $ (74.4) $ 57.4

2 unchanged sentences

Effects of exchange rate changes on cash and cash equivalents (4.3) 4.0

Net increase in cash and cash equivalents $ 11.7 $ 3.7

Net increase (decrease) in cash and cash equivalents $ (55.9) $ 13.5

Our primary cash inflows and outflows were as follows:

• For the three-month period ended March 27, 2026, cash used in operating activities was $33.3 million, compared to cash provided by operating activities of $28.2 million for the same period in the prior year.

The $61.5 million decrease in net cash provided by operating activities was primarily driven by an unfavorable change in net working capital of $68.6 million and a higher net loss of $12.5 million, partially offset by a $19.6 million increase in non-cash items included in net loss.

• The major contributors to net changes in operating assets and liabilities for the three-month period ended March 27, 2026 were as follows:

◦ Accounts receivable increased by $24.0 million, primarily due to the timing of shipments and collections, inventories increased by $91.0 million due to higher production levels, and prepaid and other current assets increased by $7.3 million, primarily due to higher prepaid expenses and deposits.

◦ Accounts payable increased by $68.0 million, while accrued compensation and related benefits decreased by $4.0 million and income taxes payable decreased by $2.8 million, primarily reflecting increased production activities and the timing of payments.

• Net cash used in investing activities during the three-month period ended March 27, 2026 and March 28, 2025 consisted primarily of $9.6 million and $12.4 million purchases of property, plant and equipment, respectively.

• Net cash provided by financing activities was $57.6 million for the three-month period ended March 27, 2026, compared to cash used in financing activities of $12.2 million for the same period in the prior year.

The increase was primarily driven by $600.0 million of proceeds from the issuance of convertible notes.

• For the six-month period ended June 26, 2026, cash used in operating activities was $74.4 million, compared to cash provided by operating activities of $57.4 million for the same period in the prior year.

The $131.8 million decrease in net cash provided by operating activities was primarily driven by an unfavorable change in net working capital of $145.0 million and an unfavorable change in non-cash items included in net loss of $146.7 million, partially offset by a $159.9 million improvement in net loss.

• The major contributors to net changes in operating assets and liabilities for the six-month period ended June 26, 2026 were as follows:

◦ Accounts payable increased by $104.4 million, accrued compensation and related benefits increased by $11.3 million, and other liabilities increased by $13.8 million, primarily reflecting increased production activities and the timing of payments.

◦ Accounts receivable decreased by $0.8 million, primarily due to the timing of shipments and collections.

Inventories increased by $238.9 million due to higher production levels.

Prepaid and other current assets increased by $13.8 million, primarily due to higher prepaid expenses and deposits.

• Net cash used in investing activities during the six-month period ended June 26, 2026 and June 27, 2025 consisted primarily of $25.8 million and $29.2 million purchases of property, plant and equipment, respectively.

• Net cash provided by financing activities was $48.5 million for the six-month period ended June 26, 2026, compared to cash used in financing activities of $18.8 million for the same period in the prior year.

The increase was primarily driven by $600.0 million of proceeds from the issuance of convertible notes and a $15.0 million drawdown on the revolving credit facility.

This was partially offset by principal payments on bank borrowings of $481.5 million, repurchases of common stock of $40.0 million, payments for capped call transactions of $25.1 million, and payments of debt issuance costs of $17.4 million.

In the prior year, financing activities primarily reflected lower levels of debt repayments and minimal issuance costs, with no comparable convertible note issuance or share repurchase activity.

We believe we have sufficient capital to fund our working capital needs, satisfy our debt obligations, maintain our existing capital equipment, purchase new capital equipment and make strategic acquisitions from time to time.

As of March 27, 2026, we had cash and cash equivalents of $323.5 million compared to $311.8 million as of December 26, 2025.

Our cash and cash equivalents, cash generated from operations, and amounts available under our revolving line of credit described below were our principal sources of liquidity as of March 27, 2026.

As of June 26, 2026, we had cash and cash equivalents of $255.9 million compared to $311.8 million as of December 26, 2025.

Our cash and cash equivalents, cash generated from operations, and amounts available under our revolving line of credit described below were our principal sources of liquidity as of June 26, 2026.

The Company has entered into a factoring agreement with a financial institution to sell certain accounts receivable on a non-recourse basis.

4 unchanged sentences

The Company utilizes this arrangement as part of its working capital management.

During the three months ended March 27, 2026, the Company sold accounts receivable totaling $19.0 million under this arrangement.

During the six months ended June 26, 2026, the Company sold accounts receivable totaling $49.0 million under this arrangement.

We anticipate that our existing cash and cash equivalents balance and operating cash flow will be sufficient to service our indebtedness and meet our working capital requirements and technology development projects for at least the next twelve months.

5 unchanged sentences

No assurance can be given that additional financing will be available or that, if available, such financing can be obtained on terms favorable to our stockholders and us.

As of March 27, 2026, we have cash of approximately $231.1 million in our foreign subsidiaries.

As of June 26, 2026, we have cash of approximately $219.6 million in our foreign subsidiaries.

It is not practicable to determine the tax liability that might be incurred if the undistributed earnings of these foreign subsidiaries were to be distributed.

It is the Company’s practice and intention to reinvest the earnings of its non-U.S.

subsidiaries in those

operations, except for certain of its subsidiaries based in Singapore and China.

subsidiaries in those operations, except for certain of its subsidiaries based in Singapore and China.

There is no expected Singapore or U.S.

tax liability on a distribution of the Singapore earnings.

However, the Company has accrued taxes on a portion of the undistributed earnings of the China subsidiary in its financial statements as of March 27, 2026.

However, the Company has accrued taxes on a portion of the undistributed earnings of the China subsidiary in its financial statements as of June 26, 2026.

Borrowing Arrangements

2 unchanged sentences

Interest Rate

Term Loan $ 19.4 6.4 %

Revolver $ 15.0 5.4 %

Convertible Notes 600.0 0.0 %

Debt issuance costs (17.5)

The Company’s total debt increased to $601.9 million as of March 27, 2026, primarily due to the issuance of $600.0 million aggregate principal amount of 0.00% Convertible Notes due 2031 during the quarter, partially offset by the repayment of $462.0 million of the Company’s term loan facility.

At March 27, 2026, the Company had $19.4 million outstanding under the Term Loan, with an interest rate of 6.4%.

The term loan facility matures on February 25, 2028.

As of March 27, 2026, total unamortized debt issuance costs related to the Term Loan and the revolving credit facility were $1.0 million.

The Company’s total gross debt as of June 26, 2026 reflects $600.0 million aggregate principal amount of 0.00% Convertible Notes due 2031 issued in fiscal year 2026 and a $15.0 million revolver drawdown.

The Company's term loan facility was retired in full during fiscal year 2026 and carried no outstanding balance as of June 26, 2026.

On April 23, 2026, the Company entered into the Tenth Amendment to its Credit Agreement, which increased the aggregate revolving credit commitment from $150.0 million to $250.0 million and extended the maturity date to April 23, 2031.

As of March 27, 2026, there were no borrowings outstanding under the revolving credit facility, and available borrowing capacity was $145.9 million, net of $4.1 million of outstanding letters of credit.

The Company was in compliance with all financial covenants under the Amended Credit Agreement as of March 27, 2026.

As of June 26, 2026, the Company had $15.0 million of borrowings outstanding under the revolving credit facility, and available borrowing capacity was $230.9 million, net of outstanding letters of credit and borrowings.

The Company was in compliance with all financial covenants under the Amended Credit Agreement as of June 26, 2026.

The Company also maintains credit facilities in Czechia and Israel, which provide for revolving credit capacity of up to 7.0 million euros (approximately $8.0 million) and $5.0 million, respectively.

As of March 27, 2026, there were no borrowings outstanding under these facilities, and the full amounts remained available.

As of March 27, 2026, the Company had $145.9 million, $6.4 million and $5.0 million available to draw from its credit facilities in the U.S., Czechia, and Israel, respectively.

As of June 26, 2026, there were no borrowings outstanding under either facility;

however, $2.1 million of the Czechia facility was utilized for outstanding bank guarantees.

As of June 26, 2026, the Company had $230.9 million, $5.9 million and $5.0 million available to draw from its credit facilities in the U.S., Czechia, and Israel, respectively.

See Note 5 - Long-Term Debt, of our Condensed Consolidated Financial Statements, included in Part 1 of this Form-10Q for additional information.

Capital Expenditures

Capital expenditures were $9.6 million during the three months ended March 27, 2026 and were primarily attributable to the capital invested in our manufacturing and service facilities worldwide.

Capital expenditures were $25.8 million during the six months ended June 26, 2026 and were primarily attributable to the capital invested in our manufacturing and service facilities worldwide.

Our anticipated capital expenditures for the remainder of 2026 are expected to be financed primarily from our cash flow generated from operations and cash on hand.

Contractual Obligations

The Company had commitments to various third parties to purchase inventories totaling approximately $721.3 million as of March 27, 2026.

The Company had commitments to various third parties to purchase inventories totaling approximately $971.1 million as of June 26, 2026.

In conjunction with the sale of our products in the ordinary course of business, we provide standard indemnification against certain liabilities to our customers, which may include claims of losses by their own customers resulting out of property damages, bodily injuries or deaths, or infringement of intellectual property rights by our products.

Our potential liability arising out of intellectual property infringement claims by any third party is generally uncapped.

As of March 27, 2026, we have not incurred any significant costs to defend lawsuits or settle claims related to these indemnification arrangements.

As of June 26, 2026, we have not incurred any significant costs to defend lawsuits or settle claims related to these indemnification arrangements.

As a result, we believe the estimated fair value of these arrangements is minimal.

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