What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-13 compared with 2025-11-05 · 337 added, 465 removed, 355 unchanged (69% of the section changed)

9 unchanged sentences

("Vishay," "we," "us," or "our") manufactures one of the world’s largest portfolios of discrete semiconductors and passive

electronic components that are essential to innovative designs in the automotive, industrial, computing, consumer, telecommunications, military, aerospace, and medical markets.

electronic components that are essential to innovative designs in the automotive, industrial, computing, consumer, telecommunications, military, aerospace, and healthcare markets.

We operate in six segments based on product functionality:

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We plan to continue to grow our business through intensified internal growth supplemented by opportunistic acquisitions, while maintaining a prudent capital structure.

developed go-to-market strategies and are investing in and expanding the key product lines for growth that we have identified.

In addition, we are strategically expanding our outsourced production of commodity products to subcontractors.

same time, we are enhancing our channel management while investing in internal resources by adding customer-facing engineers and filling gaps in technology and market coverage.

Taken together, each of these initiatives supports our Think Customer

First organizational culture.

advance our Think Customer First organizational culture in 2026, we are focused on maintaining capacity readiness to fulfill rising demand, growing existing customer relationships, attracting new customer relationships, driving innovation,

delivering new products and solutions, and expanding production in low cost countries to support our regional competitiveness.

We are focused on realizing the full value of our broad product portfolio, becoming a customer-first company, and capitalizing on the mega trends of

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We are using eight strategic levers to achieve these goals.

Despite the industry recovery being slower than expected, we

remain committed to our long-term plan of increasing our capacity to assure our customers of reliable volume as they scale.

While we plan to advance our capacity expansion projects, we have and will continue to modulate spending in response to

order flow and the timing of customer demand and qualification.

The decreased lead time for equipment and the increased subcontractor capacity are also variables that allow us to adjust our capacity spending.

For 2025, we plan to spend between

$300 million to $350 million for capital expenditures, at least 70% of which will be invested in capacity expansion projects for high growth products lines, including our wafer fab expansions.

In addition to enhancing stockholder value through growing our business, in 2022, our Board of Directors adopted a Stockholder

Return Policy, which calls for us to return at least 70% of free cash flow, net of scheduled principal payments of long-term debt, on an annual basis.

Our elevated capital expenditure levels over the past three years

has positioned us with increased capacity to assure our customers of reliable supply as they scale production and to supply more part numbers to them.

We are committed to completing our capacity expansion projects, but have modulated and will

continue to modulate spending in response to order flow, timing of customer demand and qualification, changes in lead times for equipment, and increases in subcontractor capacity.

For 2026, we plan to spend between $400 million to $440 million for

capital expenditures, approximately half of which will be invested in our 12-inch wafer fab we are building in Itzehoe, Germany.

In addition to enhancing stockholder value through growing our business, we continue to follow our Stockholder Return Policy, which

calls for us to return at least 70% of free cash flow, net of scheduled principal payments of long-term debt, on an annual basis.

See further discussion in “Stockholder Return Policy” below.

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We believe we can react quickly and professionally to changes in demand to minimize manufacturing inefficiencies and excess inventory build in periods of decline and maximize opportunities in periods of growth.

implemented restructuring programs in the third fiscal quarter of 2024 designed to optimize the Company's manufacturing footprint and streamline business decision making.

We believe we have significant liquidity to withstand temporary

disruptions in the economic environment.

We utilize several financial metrics, including net revenues, gross profit margin, operating margin, segment operating margin, end-of-period backlog,

book-to-bill ratio, inventory turnover, change in average selling prices, net cash and short-term investments (debt), and free cash generation to evaluate the performance and assess the future direction of our business.

See further discussion in

“Financial Metrics” and “Financial Condition, Liquidity, and Capital Resources” below.

The key financial metrics were mixed versus the prior fiscal quarter and the prior year period.

Net revenues increased versus the prior fiscal quarter and the

prior year period, but margins were flat versus the prior fiscal quarter and lower versus the prior year period.

Margins were negatively impacted by lower average selling prices, higher metals and other input costs, and tariffs.

Net revenues for the fiscal quarter ended September 27, 2025 were $790.6 million, compared to $762.3 million and $735.4 million for the fiscal quarters ended June 28, 2025 and September 28, 2024,

respectively.

The net loss attributable to Vishay stockholders for the fiscal quarter ended September 27, 2025 was $(7.9) million, or $(0.06) per share,

compared to net earnings of $2.0 million, or $0.01 per diluted share for the fiscal quarter ended June 28, 2025, and a net

loss of $(19.3) million, or $(0.14)

per share for the fiscal quarter ended September 28, 2024.

Net revenues for the nine fiscal months

ended September 27, 2025 were $2,268.1

million, compared to $2,222.9 million for the nine fiscal months ended September 28, 2024.

The net loss attributable to Vishay stockholders for

the nine fiscal months ended September 27, 2025 was $(10.0) million, or $(0.07) per share, compared to net earnings of $35.2 million, or $0.25 per diluted share for the nine

fiscal months ended September 28, 2024.

We define adjusted net earnings as net earnings (loss) determined in accordance with GAAP adjusted for various items that

management believes are not indicative of the intrinsic operating performance of our business.

We define free cash as the cash flows generated from continuing operations less capital expenditures plus net proceeds from the sale of property and

The reconciliations below include certain financial measures which are not recognized in accordance with GAAP, including adjusted net earnings, adjusted earnings per share, and free cash.

These non-GAAP measures should not be viewed as

alternatives to GAAP measures of performance or liquidity.

Non-GAAP measures such as adjusted net earnings, adjusted earnings per share, and free cash do not have uniform definitions.

These measures, as calculated by Vishay, may not be comparable

to similarly titled measures used by other companies.

Management believes that adjusted net earnings and adjusted earnings per share are meaningful because they provide insight with respect to our intrinsic operating results.

Management believes

that free cash is a meaningful measure of our ability to fund acquisitions, repay debt, and otherwise enhance stockholder value through stock repurchases or dividends.

We believe we have

sufficient liquidity to withstand temporary disruptions in the economic environment.

We utilize several financial metrics, including net revenues, gross profit margin, operating margin, segment operating income, segment operating margin,

end-of-period backlog, book-to-bill ratio, inventory turnover, change in average selling prices, net cash and short-term investments (debt), and free cash generation to evaluate the performance and assess the future direction of our business.

further discussion in “Financial Metrics” and “Financial Condition, Liquidity, and Capital Resources” below.

Nearly all key financial metrics increased versus the prior fiscal quarter and the prior year quarter.

Net revenues increased versus the

prior fiscal quarter and the prior year quarter primarily due to higher sales volume.

Margins were positively impacted by higher sales volume and associated manufacturing efficiencies, which offset higher metals and materials costs.

book-to-bill increased due to higher order volume.

Net revenues for the fiscal quarter ended April 4, 2026

were $839.2 million, compared to $800.9

million and $715.2 million for the fiscal quarters ended December 31, 2025 and March 29, 2025, respectively.

Net earnings for the fiscal quarter ended April 4, 2026 were $7.2 million, or $0.05 per diluted share, compared to net earnings of $1.0

million, or $0.01 per diluted share for the fiscal quarter ended December 31, 2025, and a net loss of $(4.1) million, or $(0.03) per share for the fiscal quarter ended March 29, 2025.

Measures such as free cash and segment operating income are considered non-GAAP measures.

We define free cash as the cash flows generated from continuing operations less capital

expenditures plus net proceeds from the sale of property and equipment.

We define segment operating income as operating income excluding selling, general, and administrative costs of our global operations, sales and marketing, information systems,

finance, and administrative groups, as well as restructuring and severance costs, goodwill impairments, and other items affecting comparability.

The reconciliation of free cash is below.

Note 10 to our consolidated condensed financial statements

includes the reconciliation for segment operating income.

These non-GAAP measures should not be viewed as alternatives to GAAP measures of performance or liquidity.

Non-GAAP measures such as free cash and segment operating income do not have

uniform definitions.

These measures, as calculated by Vishay, may not be comparable to similarly titled measures used by other companies.

Management believes that free cash is a meaningful measure of our ability to fund acquisitions, repay debt,

and otherwise enhance stockholder value through stock repurchases or dividends.

We utilize the free cash metric in defining our Stockholder Return Policy.

Net earnings (loss) attributable to Vishay stockholders include items affecting comparability.

The items affecting comparability are ( in thousands, except per share amounts ):

Fiscal quarters ended

Nine fiscal months ended

September 27, 2025

June 28, 2025

September 28, 2024

September 27, 2025

September 28, 2024

GAAP net earnings (loss) attributable to Vishay stockholders

Reconciling items affecting operating income (loss):

Favorable resolution of contingency

Restructuring and severance costs

Reconciling items affecting tax expense (benefit):

Changes in tax laws and regulations

Tax effect of pre-tax items above

Adjusted net earnings (loss)

Adjusted weighted average diluted shares outstanding

Adjusted earnings (loss) per diluted share

The following table

reconciles gross profit by segment to consolidated gross profit ( in thousands ) .

Fiscal quarters ended

Nine fiscal months ended

September 27, 2025

June 28, 2025

September 28, 2024

September 27, 2025

September 28, 2024

Optoelectronic Components

Management uses segment operating income, along with segment gross profit, to make

decisions, allocate resources, and assess performance of its operating segments.

Although the term "free cash" is not defined in GAAP, each of the elements used to calculate free cash for the year-to-date period is presented as a line

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Fiscal quarters ended

Nine fiscal months ended

September 27, 2025

June 28, 2025

September 28, 2024

September 27, 2025

September 28, 2024

Net cash provided by (used in) continuing operating activities

April 4, 2026

December 31, 2025

March 29, 2025

Net cash provided by continuing operating activities

Proceeds from sale of property and equipment

Capital expenditures

Our accelerated investments to expand capacity have positioned us to be able to better serve our customers and capture the early stages of upturns in end market demand.

The long-term

outlook of our business remains strong, although our results are weaker than our prior year results.

Our accelerated investments to expand capacity have positioned us to be able to better serve our customers and capture the early stages of upturns in end

market demand.

The long-term outlook for our business remains strong.

Recent Developments

On February 20, 2026, the United States Supreme Court issued a ruling striking down certain tariffs previously imposed under the International Emergency Economic Powers Act (“IEEPA ”) .

The ultimate availability, timing, and amount of any

potential refunds of such tariffs remain highly uncertain and are subject to further legal, regulatory, and administrative developments.

Following the Supreme Court’s decision, the U.S.

presidential administration announced its intention to

invoke other laws to collect tariffs and announced new tariffs on imports from all countries, in addition to any existing non-IEEPA tariffs .

There remains substantial uncertainty regarding the duration of existing and newly announced tariffs, potential changes or pauses to such tariffs, tariff levels, and whether further additional tariffs or other retaliatory actions may be imposed,

modified, or suspended, and the impacts of such actions on our business.

We continue to monitor and evaluate these developments and assess their potential impact on our business, financial condition, and results of operations.

Stockholder Return Policy

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We intend to return such amounts to stockholders directly, in the form of dividends, or indirectly, in the form of stock repurchases.

The policy sets forth our intention, but does not obligate us to acquire any shares of common stock or declare any dividends, and the policy may be terminated or suspended at any time at our discretion, in accordance with

applicable laws and regulations.

We expect negative free cash flow for the fiscal year ending December 31, 2025 due to our capacity expansion plans.

As a result, we expect to maintain our dividend and opportunistically repurchase shares based

The policy sets forth our intention, but does not

obligate us to acquire any shares of common stock or declare any dividends, and the policy may be terminated or suspended at any time at our discretion, in accordance with applicable laws and regulations.

For 2026, we expect to maintain our

dividend and opportunistically repurchase shares based on U.S.

available liquidity in line with this policy.

We did not repurchase any shares of common stock in the third fiscal quarter.

We expect to be in compliance with our Stockholder Return Policy without repurchasing any additional

shares in 2025.

Tariff Impact

Tariffs have impacted our current period results and will impact our future results.

The tariff rates and application are currently unsettled and any

potential demand distraction is not able to be estimated at this time.

Historically, we have charged tariff adders to customers to offset increased costs.

The gross profit impact of the tariffs and tariff adders is approximately zero, but

they negatively impact gross profit margin.

The net impact of tariffs on gross profit margin in the third fiscal quarter was (50) basis points.

Recent Developments

The announcement of the U.S.

tariffs and recent geopolitical events resulted in significant stock market volatility and uncertainty in the markets for our products.

A sustained decrease in share price or prolonged deterioration in the

general economy could represent indicators of impairment of our goodwill or other long-lived assets.

The following table summarizes activity pursuant to this policy (in thousands):

Fiscal quarters ended

April 4, 2026

March 29, 2025

Dividends paid to stockholders

Stock repurchases

The structure of our Stockholder Return Policy enables us to allocate capital responsibly among our business, our lenders, and our stockholders.

will continue to invest in growth initiatives including key product line expansions, targeted R&D, and synergistic acquisitions.

We have paid dividends each quarter since the first quarter of 2014, and t he

Stockholder Return Policy will remain in effect until such time as the Board votes to amend or rescind the policy.

Implementation of the Stockholder Return Policy is

subject to future declarations of dividends by the Board of Directors, market and business conditions, legal requirements, and other factors.

The policy sets forth our intention, but does not obligate us to acquire any shares of common stock

or declare any dividends, and the policy may be terminated or suspended at any time at our discretion, in accordance with applicable laws and regulations.

Financial Metrics

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at the regional or corporate global level to our segments.

Accordingly, segment operating income excludes these SG&A expenses that are not directly traceable to the segments.

Segment operating income would also exclude costs not routinely used

in the management of the segments in periods when those items are present, such as restructuring and severance costs, goodwill impairment charges, and other items affecting comparability.

Segment operating income is clearly a function of net

revenues, but also reflects our cost management programs and our ability to contain fixed costs.

Accordingly, segment operating income does not include these SG&A expenses that are not directly traceable to the segments.

Segment operating income also would not include costs not

routinely used in the management of the segments in periods when those items are present, such as restructuring and severance costs, goodwill impairment charges, and other items affecting comparability.

Segment operating income is clearly a function

of net revenues, but also reflects our cost management programs and our ability to contain fixed costs.

Segment operating margin is segment operating income expressed as a percentage of net revenues.

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The following table

shows net revenues, gross profit margin, operating margin, end-of-period backlog, book-to-bill ratio, inventory turnover, and changes in ASP for our business as a whole during the five fiscal quarters beginning with the third fiscal quarter of 2024 through

the third fiscal quarter of 2025 (dollars in thousands) :

3rd Quarter 2024

4th Quarter 2024

fiscal quarter of 2026 (dollars in thousands) :

1st Quarter 2025

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3rd Quarter 2025

4th Quarter 2025

1st Quarter 2026

Gross profit margin

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_________________________________________

(1) Operating margin for the second fiscal quarter of 2025 includes an $11.3 million gain recognized upon the favorable resolution of a contingency (see Note 1 to our consolidated condensed financial statements).

Operating margin for the fourth fiscal quarter of 2024 includes $66.5 million of goodwill impairment charges.

Operating margin for the third fiscal quarter of 2024 includes $40.6 million of restructuring and severance expenses (see Note 2 to our

consolidated condensed financial statements).

(1) Operating margin for the second fiscal quarter of 2025 includes an $11.3 million gain recognized upon the favorable resolution of a contingency.

See “Financial Metrics by Segment” below for net revenues, book-to-bill ratio, and gross profit margin broken out by segment.

1 unchanged sentence

and prior year quarter.

The increases versus the prior fiscal quarter and prior year quarter are primarily due to higher sales volume and favorable foreign currency impacts.

The book-to-bill ratio decreased slightly versus the prior fiscal

Backlog was relatively flat versus the prior fiscal quarter and increased versus the prior year quarter.

The increases versus the prior fiscal quarter and prior year quarter are primarily due to higher sales volume.

The book-to-bill ratio and backlog increased versus the prior fiscal quarter and prior year quarter due to

higher order levels.

We continue to increase capacity for critical product lines.

Average selling prices, including tariff adders, decreased versus

the prior fiscal quarter and prior year quarter.

Gross profit margin in the third fiscal quarter was negatively impacted by higher tariffs and metals prices and unfavorable foreign currency

fluctuations.

Gross profit margin was flat versus the prior fiscal quarter, but decreased versus the prior year quarter.

The decrease versus the prior year quarter is primarily due to lower average selling prices, impact of tariffs, and higher

metals prices.

Average selling prices, including tariff adders, decreased versus the prior fiscal quarter and prior year quarter.

Gross profit margin increased versus the prior fiscal quarter and prior year quarter.

The increases are primarily due to higher sales volume and

associated manufacturing efficiencies, which offset higher metals and materials costs.

Financial Metrics by Segment

The following table shows net revenues, book-to-bill ratio, gross profit margin, and segment operating margin broken out by segment for the five fiscal

quarters beginning with the third fiscal quarter of 2024 through the third fiscal quarter of 2025 (dollars in thousands) :

3rd Quarter 2024

4th Quarter 2024

quarters beginning with the first fiscal quarter of 2025 through the first fiscal quarter of 2026 (dollars in thousands) :

1st Quarter 2025

1 unchanged sentence

3rd Quarter 2025

4th Quarter 2025

1st Quarter 2026

Book-to-bill ratio

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Fiscal quarters ended

Nine fiscal months ended

September 27, 2025

June 28, 2025

September 28, 2024

September 27, 2025

September 28, 2024

April 4, 2026

December 31, 2025

March 29, 2025

Cost of products sold

Selling, general & administrative expenses

Operating income (loss)

Income (loss) before taxes and noncontrolling interest

Net earnings (loss) attributable to Vishay stockholders

Operating income

Income (loss) before taxes

Net earnings (loss)

Effective tax rate

1 unchanged sentence

Fiscal quarters ended

Nine fiscal months ended

September 27, 2025

June 28, 2025

September 28, 2024

September 27, 2025

September 28, 2024

April 4, 2026

December 31, 2025

March 29, 2025

The change in net revenues versus the comparable prior periods was as follows (dollars in thousands) :

Fiscal quarter ended

September 27, 2025

Nine fiscal months ended

September 27, 2025

Change in net revenues

April 4, 2026

Change in net revenues

June 28, 2025

September 28, 2024

December 31, 2025

March 29, 2025

Changes in net revenues were attributable to the following:

Prior Quarter

Prior Year Quarter

Change attributable to:

2 unchanged sentences

Foreign currency effects

There are indications that the channel inventory that has overhung the market is normalizing

and the prolonged period of excess inventory digestion is ending.

The long-term prospects for our business remain favorable, and we continue to increase manufacturing capacities for critical product lines.

The increase in net revenues versus

the prior fiscal quarter and prior year periods are primarily due to sales volume and favorable foreign currency impacts.

We continued to see improving market conditions in the first fiscal quarter of 2026, resulting in revenue growth driven primarily by higher sales volume.

This represents an improvement

from most of 2025 when we experienced distribution customers digesting high channel inventories.

The long-term prospects of our business remain favorable.

We continue to increase manufacturing capacities for critical product lines.

Gross Profit Margins

Gross profit margins for the fiscal quarter ended September 27, 2025 were 19.5%, versus 19.5% and 20.5%, for the comparable prior quarter and prior year quarter,

respectively.

Gross profit margins for the nine fiscal months ended September 27, 2025 were 19.3%, versus 21.8% for the comparable prior year period.

Gross profit margin in the third fiscal quarter was negatively impacted by higher tariffs and metals prices

and unfavorable foreign currency fluctuations.

Gross profit margin was flat versus the prior fiscal quarter, but decreased versus the prior year quarter.

The decrease versus the prior year quarter is primarily due to lower average selling prices,

impact of tariffs, and higher metals prices.

Gross profit margins for the fiscal quarter ended April 4, 2026 were 21.0%, versus 19.6% and 19.0% for the comparable prior fiscal quarter and prior year period, respectively.

profit margin increased versus the prior fiscal quarter and prior year quarter primarily due to higher sales volume and associated manufacturing efficiencies, which offset higher metals and materials costs.

Analysis of revenues and margins for our segments is provided below.

1 unchanged sentence

Fiscal quarters ended

Nine fiscal months ended

September 27, 2025

June 28, 2025

September 28, 2024

September 27, 2025

September 28, 2024

April 4, 2026

December 31, 2025

March 29, 2025

Gross profit margin

2 unchanged sentences

Fiscal quarter ended

September 27, 2025

Nine fiscal months ended

September 27, 2025

Change in net revenues

April 4, 2026

Change in net revenues

June 28, 2025

September 28, 2024

December 31, 2025

March 29, 2025

Changes in MOSFETs segment net revenues were attributable to the following:

Prior Quarter

Prior Year Quarter

Change attributable to:

2 unchanged sentences

Foreign currency effects

Net revenues of the MOSFETs segment increased versus the prior fiscal quarter and prior year periods.

The increase versus the prior fiscal

quarter is primarily due to increased sales to distribution and OEM customers, automotive and computing end market customers, and customers in the Asia region.

The increases versus the prior year periods are primarily due to increased

sales to distribution customers, computing end market customers, and customers in the Asia region.

Gross profit margin increased versus the prior fiscal quarter, but decreased versus the prior year periods.

The increase versus the prior fiscal quarter is primarily due to increased sales volume and lower variable costs, partially

offset by lower average selling prices.

The decreases versus the prior year periods are primarily due to lower average selling prices.

Costs associated with the Newport wafer fab also contributed to the decrease versus the prior

year-to-date period.

Segment operating margin increased versus the prior fiscal quarter, but decreased versus the prior year periods.

The changes are primarily due

to changes in gross profit.

Average selling prices decreased versus the prior fiscal quarter and the prior year periods.

Net revenues of the MOSFETs segment increased versus the prior fiscal quarter and prior year quarter.

The increase versus the prior fiscal quarter is

primarily due to increased sales to OEM customers, customers in the industrial and telecommunications end markets, and customers in the Europe region, partially offset by decreased sales to distribution customers, customers in the computing end

market, and customers in the Asia region due to Lunar New Year.

The increase versus the prior year quarter is due to increased sales to customers in all sales channels, end markets, and regions, most significantly OEM and distribution customers,

customers in the automotive and industrial end markets, and customers in the Asia and Europe regions.

Gross profit margin decreased versus the prior fiscal quarter, but increased versus the prior year quarter.

The decrease versus the prior fiscal quarter is primarily

due to lower average selling prices.

The increase versus the prior year quarter is primarily due to higher sales volume, partially offset by lower average selling prices and higher metals costs.

Segment operating margin increased versus the prior fiscal quarter and prior year quarter.

The increases are primarily due to changes

in gross profit and decreased segment SG&A expenses associated with the Newport wafer fab.

Average selling prices, including tariff adders, decreased versus the prior fiscal quarter and prior year quarter.

We continue to invest to expand mid- and long-term manufacturing capacity for strategic product lines.

We plan to use the Newport wafer fab, acquired in 2024, to further develop and

scale our SiC MOSFETs and diodes capabilities.

We are also committed to building a 12-inch wafer fab in Itzehoe, Germany.

These are long-term investments which were not expected to generate significant income or cash flows in the near-term, but

should greatly enhance the long-term position of our MOSFETs business.

Net revenues, gross profit margins, and segment operating margins of the Diodes segment were as follows (dollars in thousands):

Fiscal quarters ended

Nine fiscal months ended

September 27, 2025

June 28, 2025

September 28, 2024

September 27, 2025

September 28, 2024

April 4, 2026

December 31, 2025

March 29, 2025

Gross profit margin

Segment operating margin

The change in net revenues versus the comparable prior periods was as follows (dollars in thousands) :

The change in net revenues versus the comparable prior periods was as follows (dollars

in thousands) :

Fiscal quarter ended

September 27, 2025

Nine fiscal months ended

September 27, 2025

Change in net revenues

April 4, 2026

Change in net revenues

June 28, 2025

September 28, 2024

December 31, 2025

March 29, 2025

Changes in Diodes segment net revenues were attributable to the following:

Prior Quarter

Prior Year Quarter

Change attributable to:

Increase in volume

Change in average selling prices

Decrease in average selling prices

Foreign currency effects

Net revenues of the Diodes segment increased versus the prior fiscal quarter and prior year quarter, but decreased versus the prior year-to-date

The increase versus the prior fiscal quarter is primarily due to increased sales to OEM customers, automotive end market customers, and customers in the Europe and Americas regions.

The increase versus the prior year quarter is

primarily due to increased sales to distribution and OEM customers, industrial and telecommunications end market customers, and customers in the Europe region.

The decrease versus the prior year-to-date period is primarily due to decreased

sales to OEM customers, automotive end market customers, and customers in the Americas region, partially offset by increased sales to distribution customers, industrial end market customers, and customers in the Europe region.

Gross profit margin increased slightly versus the prior fiscal quarter and prior year quarter, but decreased versus the prior year-to-date period.

The increases versus the prior fiscal quarter and prior year quarter are primarily due to higher sales volume and lower variable costs.

The decrease versus the prior year-to-date period is primarily due to lower average selling prices,

partially offset by higher sales volume and lower variable costs.

Segment operating margin increased slightly versus the prior fiscal quarter, but decreased versus the prior year periods.

The changes are primarily

due to changes in gross profit.

Average selling prices increased versus the prior fiscal quarter, but decreased versus prior year periods.

Optoelectronic Components

Net revenues of the Diodes segment increased versus the prior fiscal quarter and prior year quarter.

The increase versus the prior fiscal quarter is

primarily due to increased sales to OEM customers, automotive end market customers, and customers in the Europe region.

The increase versus the prior year quarter is primarily to due to increased sales to customers in nearly all sales channels,

end markets, and regions, most significantly OEM customers, customers in the industrial and automotive end markets, and customers in the Europe region.

Gross profit margin increased versus the prior fiscal quarter and prior year quarter.

The increases versus the prior fiscal quarter and prior year quarter were primarily due to higher sales volume, partially offset by lower average selling

Segment operating margin increased versus the prior fiscal quarter and prior year quarter.

The increases are primarily due

to changes in gross profit.

Average selling prices, including tariff adders, decreased versus the prior fiscal quarter and prior year quarter.

O ptoelectronic Components

Net revenues, gross profit margins, and segment operating margins of the Optoelectronic Components segment were as follows (dollars in thousands):

Fiscal quarters ended

Nine fiscal months ended

September 27, 2025

June 28, 2025

September 28, 2024

September 27, 2025

September 28, 2024

April 4, 2026

December 31, 2025

March 29, 2025

Gross profit margin

Segment operating margin

The change in net revenues versus the comparable prior periods was as follows (dollars in thousands) :

The change in net revenues versus the comparable prior periods was as follows (dollars

in thousands) :

Fiscal quarter ended

September 27, 2025

Nine fiscal months ended

September 27, 2025

Change in net revenues

April 4, 2026

Change in net revenues

June 28, 2025

September 28, 2024

December 31, 2025

March 29, 2025

Changes in Optoelectronic Components segment net revenues were attributable to the following:

Prior Quarter

Prior Year Quarter

Change attributable to:

Change in volume

Increase in volume

Decrease in average selling prices

Foreign currency effects

Net revenues of the Optoelectronic Components segment increased versus the prior fiscal quarter, but decreased versus the prior year periods.

increase versus the prior fiscal quarter is primarily due to increased sales to distribution customers and automotive and industrial end market customers.

The decrease versus the prior year quarter is primarily due to decreased sales to

distribution and OEM customers, medical, industrial, and telecommunications end market customers, and customers in the Asia region.

The decrease versus the prior year-to-date period is primarily due to decreased sales to OEM and distribution

customers, medical end market customers, and customers in all regions, slightly offset by increased sales to industrial end market customers.

Gross margin decreased versus the prior fiscal quarter, but increased versus the prior year periods.

The decrease versus the prior fiscal quarter is

primarily due to lower average selling prices and higher fixed costs.

The increase versus the prior year quarter is primarily due to lower fixed and variable costs, partially offset by lower sales volume.

Net revenues of the Optoelectronic Components segment increased versus the prior fiscal quarter and prior year quarter.

The increase versus the prior

year-to-date period is primarily due to lower fixed and variable costs and less inventory obsolescence.

Segment operating margin increased versus the prior fiscal quarter and prior year periods.

The increases are primarily due to changes in gross

Average selling prices decreased versus the prior fiscal quarter and prior year periods.

fiscal quarter is primarily due to increased sales to distribution customers, industrial end market customers, and customers in the Europe region.

The increase versus the prior year quarter is primarily to due to increased sales to customers in

nearly all sales channels, end markets, and regions, most significantly distribution customers, customers in the industrial end market, and customers in the Europe region.

Gross margin increased versus the prior fiscal quarter, but decreased versus the prior year quarter.

The increase versus the prior fiscal quarter is

primarily due to higher sales volume and the positive impact of increased inventory.

The decrease versus the prior year quarter is primarily due to lower average selling prices and unfavorable product mix, partially offset by higher sales

Segment operating margin increased versus the prior fiscal quarter, but decreased versus the prior year quarter.

The changes are primarily due to changes in gross profit.

Average selling prices, including tariff adders, decreased versus the prior fiscal quarter and prior year quarter.

Net revenues, gross profit margins, and segment operating margins of the Resistors segment were as follows (dollars in thousands):

Fiscal quarters ended

Nine fiscal months ended

September 27, 2025

June 28, 2025

September 28, 2024

September 27, 2025

September 28, 2024

April 4, 2026

December 31, 2025

March 29, 2025

Gross profit margin

2 unchanged sentences

Fiscal quarter ended

September 27, 2025

Nine fiscal months ended

September 27, 2025

Change in net revenues

April 4, 2026

Change in net revenues

June 28, 2025

September 28, 2024

December 31, 2025

March 29, 2025

Changes in Resistors segment net revenues were attributable to the following:

Prior Quarter

Prior Year Quarter

Change attributable to:

Change in volume

Increase in volume

Change in average selling prices

Foreign currency effects

Net revenues of the Resistors segment increased versus the prior fiscal quarter and prior year periods.

The increase versus the prior fiscal

quarter is primarily due to increased sales to OEM customers, automotive and computing end market customers, and customers in the Europe region, partially offset by decreased sales to distribution customers.

The increase versus the prior year

quarter is primarily due to increased sales to distribution and OEM customers, industrial and automotive end market customers, and customers in all regions.

The increase versus the prior year-to-date period is primarily due to increased sales

to distribution customers, industrial, military and aerospace, and automotive end market customers, and customers in the Asia and Americas regions.

Gross profit margin decreased versus the prior fiscal quarter and prior year periods.

The decrease versus the prior fiscal quarter is primarily

due to lower sales volume and higher materials costs.

The decreases versus the prior year periods are primarily due to lower average selling prices and higher materials costs, partially offset by higher sales volume.

Segment operating margin decreased versus the prior fiscal quarter and prior year periods.

The decreases are primarily due to changes in gross

Average selling prices, including tariff adders, increased versus the prior fiscal quarter and decreased versus the prior year periods.

Net revenues of the Resistors segment increased versus the prior fiscal quarter and prior year quarter.

The increase versus the prior fiscal quarter is

primarily to due to increased sales to distribution customers, customers in the industrial, automotive, and military and aerospace end markets, and customers in the Europe region.

The increase versus the prior year quarter is primarily due to

increased sales to customers in nearly all sales channels, end markets, and regions, most significantly distribution customers and industrial end market customers.

Gross profit margin increased versus the prior fiscal quarter, but decreased versus the prior year quarter.

The increase versus the prior fiscal quarter is primarily

due to higher sales volume, partially offset by higher metals costs.

The decrease versus the prior year quarter is primarily due to higher labor, materials, and metals costs and unfavorable product mix, partially offset by higher sales volume.

Segment operating margin increased versus the prior fiscal quarter, but decreased versus the prior year quarter.

The changes are primarily due to changes in gross profit.

Average selling prices, including tariff adders, decreased versus the prior fiscal quarter, but increased versus the prior year quarter.

We are increasing critical manufacturing capacities for certain product lines.

3 unchanged sentences

Fiscal quarters ended

Nine fiscal months ended

September 27, 2025

June 28, 2025

September 28, 2024

September 27, 2025

September 28, 2024

April 4, 2026

December 31, 2025

March 29, 2025

Gross profit margin

2 unchanged sentences

Fiscal quarter ended

September 27, 2025

Nine fiscal months ended

September 27, 2025

Change in net revenues

April 4, 2026

Change in net revenues

June 28, 2025

September 28, 2024

December 31, 2025

March 29, 2025

Changes in Inductors segment net revenues were attributable to the following:

2 unchanged sentences

Change attributable to:

Decrease in volume

Change in average selling prices

Increase in volume

Decrease in average selling prices

Foreign currency effects

Net revenues of the Inductors segment decreased versus the prior fiscal quarter and prior year-to-date period, but increased versus the prior year quarter.

The decrease versus the prior fiscal quarter is

primarily due to decreased sales to distribution customers, industrial and automotive end market customers, and customers in the Europe and Asia regions.

The increase versus the prior year quarter is primarily due to increased sales to

distribution customers, medical and industrial end market customers, and customers in the Asia region.

The decrease versus the prior year-to-date period is primarily due to decreased sales to OEM customers, automotive and military and aerospace

end market customers, and customers in the Americas and Europe regions, partially offset by increased sales to distribution customers, industrial and medical end market customers, and customers in the Asia region.

Gross profit margin increased versus the prior fiscal quarter and prior year quarter, but decreased versus the prior year-to-date period.

The increase versus the prior fiscal quarter is primarily due to lower materials prices.

versus the prior year quarter is primarily due to higher average selling prices.

The decrease versus the prior year-to-date period is primarily due to lower sales volume and higher variable and fixed costs.

Segment operating margin increased versus the prior fiscal quarter and prior year quarter, but decreased versus the prior year-to-date period.

The changes are primarily due to changes in gross profit.

Average selling prices, including tariff adders, decreased versus the prior fiscal quarter, but increased versus the prior year periods.

We expect long-term growth in this segment, and are continuously expanding manufacturing capacity for certain product lines and evaluating

acquisition opportunities, particularly of specialty businesses.

Net revenues of the Inductors segment were flat versus the prior fiscal quarter, but increased versus the prior year quarter.

The increase versus the

prior year quarter is primarily due to increased sales to distribution customers, customers in the healthcare and military and aerospace end markets, and customers in the Asia and Americas regions.

Gross profit margin increased versus the prior fiscal quarter and prior year quarter.

The increases are primarily due to higher sales volume, lower

logistics costs, and higher yield.

Segment operating margin increased versus the prior fiscal quarter and prior year quarter.

The increases are primarily due to changes in gross profit.

Average selling prices, including tariff adders, decreased versus the prior fiscal quarter and prior year quarter.

We expect long-term growth in this segment, and are continuously expanding manufacturing capacity for certain product lines and evaluating acquisition

opportunities, particularly of specialty businesses.

Net revenues, gross profit margins, and segment operating margins of the Capacitors segment were as follows (dollars in thousands):

Fiscal quarters ended

Nine fiscal months ended

September 27, 2025

June 28, 2025

September 28, 2024

September 27, 2025

September 28, 2024

April 4, 2026

December 31, 2025

March 29, 2025

Gross profit margin

2 unchanged sentences

Fiscal quarter ended

September 27, 2025

Nine fiscal months ended

September 27, 2025

Change in net revenues

April 4, 2026

Change in net revenues

June 28, 2025

September 28, 2024

December 31, 2025

March 29, 2025

Changes in Capacitors segment net revenues were attributable to the following:

Prior Year Quarter

Change attributable to:

2 unchanged sentences

Foreign currency effects

Net revenues of the Capacitors segment increased versus the prior fiscal quarter and prior year periods.

The increases versus the prior fiscal

quarter and prior year periods are primarily due to increased sales to distribution customers, industrial end market customers, and customers in the Asia and Europe regions.

Gross profit margin decreased versus the prior fiscal quarter and prior year periods.

The decrease versus the prior fiscal quarter is primarily due

to lower average selling prices, higher material costs, and negative foreign currency impacts.

The decreases versus the prior year periods are primarily due to higher material and fixed costs and negative foreign currency impacts.

Segment operating margin decreased versus the prior fiscal quarter and prior year periods.

The changes are primarily due to gross profit decreases.

Average selling prices, including tariff adders, decreased versus the prior fiscal quarter, but increased versus the prior year periods.

Net revenues of the Capacitors segment increased versus the prior fiscal quarter and prior year quarter.

The increase versus the prior fiscal quarter is

primarily due to increased sales to distribution and OEM customers, customers in the military and aerospace end market, and customers in the Europe and Americas regions, partially offset by decreased sales to customers in the Asia region due to Lunar

The increase versus the prior year quarter is primarily due to increased sales to customers in nearly all sales channels, end markets, and regions, most significantly distribution customers, industrial end market customers, and customers

in the Asia and Americas regions.

Gross profit margin increased versus the prior fiscal quarter and prior year quarter.

The increase versus the prior fiscal quarter is primarily due to higher sales

volume, partially offset by unfavorable product mix.

The increase versus the prior year quarter is primarily due to higher sales volume and higher average selling prices.

Segment operating margin increased versus the prior fiscal quarter and prior year quarter.

The increases are primarily due to changes in gross profit.

Average selling prices, including tariff adders, decreased versus the prior fiscal quarter, but increased versus the prior year quarter.

A large portion of expected growth of our Capacitors segment is in high voltage high power film capacitors used for smart-grid infrastructure projects.

Selling, General, and Administrative Expenses

Selling, general, and administrative (“SG&A”) expenses are summarized as follows (dollars in thousands):

Selling, general, and administrative expenses are summarized as follows (dollars in thousands):

Fiscal quarters ended

Nine fiscal months ended

September 27, 2025

June 28, 2025

September 28, 2024

September 27, 2025

September 28, 2024

April 4, 2026

December 31, 2025

March 29, 2025

Total SG&A expenses

as a percentage of revenues

The sequential increase in SG&A expenses is primarily attributable to the $11.3 million gain recognized upon the favorable resolution of a contingency in the second fiscal quarter of 2025.

Excluding the one-time benefit, the sequential

decrease is primarily attributable to general cost containment activities.

SG&A expenses increased versus the prior year periods due to higher stock-based compensation expense and general cost inflation.

We are incurring additional SG&A costs associated with our strategic initiatives.

The sequential increase in SG&A expenses is primarily due to

uneven attribution of stock-based compensation expense and higher bonus compensation accruals.

SG&A expenses increased versus the prior year quarter due to higher stock-based compensation expense and general cost inflation.

Other Income (Expense)

Interest expense for the fiscal quarter ended September 27, 2025 decreased $1.1 million versus the fiscal quarter ended June 28, 2025 and increased $2.9 million versus the fiscal

quarter ended September 28, 2024.

Interest expense for the nine fiscal months ended September 27, 2025 increased by $9.2 million versus the nine fiscal

months ended September 28, 2024.

The changes versus the prior fiscal quarter and the prior year periods are due to changes in the

average outstanding balances on our revolving credit facility and interest expense on the convertible senior notes due 2025 that matured in June 2025.

We enter into forward contracts with highly-rated financial institutions to mitigate the foreign currency risk associated with intercompany loans

denominated in a currency other than the legal entity's functional currency.

The notional amount of the forward contract was $25 million as of September 27, 2025.

We have not designated the forward contract as a hedge for accounting purposes, and

as such the change in the fair value of the contract is recognized in the consolidated condensed statements of operations as a component of other income (expense).

Due to the timing of the forward contract, the value of the forward contract was

immaterial as of September 27, 2025.

Interest expense for the fiscal quarter ended April 4, 2026

increased by $0.2 million versus the fiscal quarter ended December 31, 2025 and $1.2 million versus the fiscal quarter ended March 29, 2025.

The increases are due to higher outstanding balances on our revolving credit facility.

The following tables analyze the components of the line “Other” on the consolidated condensed statements of operations (in thousands):

Fiscal quarters ended

September 27, 2025

September 28, 2024

Foreign exchange gain (loss)

April 4, 2026

December 31, 2025

Foreign exchange loss

Interest income

2 unchanged sentences

Fiscal quarters ended

September 27, 2025

June 28, 2025

Foreign exchange gain (loss)

Interest income

Other components of net periodic pension expense

Investment income (expense)

Nine fiscal months ended

September 27, 2025

September 28, 2024

April 4, 2026

March 29, 2025

Foreign exchange gain (loss)

Interest income

Other components of net periodic pension expense

Investment income (expense)

For the fiscal quarter ended September 27, 2025, our effective tax rate was 166.3%, as

compared to 83.7% and 21.1%

for the fiscal quarters ended June 28, 2025 and September 28, 2024, respectively.

For the nine fiscal months ended September 27, 2025, our effective tax rate was 150.0%,

as compared to 35.7% for the nine

fiscal months ended September 28, 2024.

current effective tax rate is not indicative of expected future tax rates due to relatively small items having a disproportionate impact on the current effective tax rate.

When pre-tax earnings increase, we expect that our effective tax rate

will be higher than the U.S.

statutory rate, excluding unusual transactions.

During the nine fiscal months ended September 27, 2025, the liabilities for unrecognized tax benefits decreased $0.7 million on a net basis, primarily due to statute expirations, settlements, and payments, partially offset by accruals and foreign currency adjustments for the current period.

On July 4, 2025, H.R.

1 (“the Act”), a tax reconciliation act, was enacted into law in the United States.

not change the U.S.

federal tax rate and most of the provisions of the Act are effective for tax years beginning after December 31, 2025.

We have recorded no change to the deferred U.S.

taxes directly related to the Act.

The Act allows the

deduction in tax year 2025, or in tax years 2025 and 2026, of previously capitalized research and development costs.

We anticipate that these additional tax deductions will preclude the utilization of a U.S.

foreign tax credit ("FTC") that is

due to expire in 2028.

As an indirect result of this change in tax law, we have recorded a valuation allowance of $9.4 million on the deferred tax asset related to this FTC.

The Act made significant change of foreign GILTI income, now called

net CFC tested income.

We anticipate that these changes will negatively impact our effective tax rate in the future.

In the third fiscal quarter of 2025, the Federal Republic of Germany enacted tax legislation decreasing the federal tax rate beginning in 2028 by 1%

per year for five years.

We have recorded deferred tax expense of $4.2 million to reduce the carrying amount of deferred tax assets in Germany based on these new rates.

Other components of net period pension expense

Investment income

For the fiscal quarter ended April 4, 2026,

our effective tax rate was 44.3%, as compared to 82.3% and 3.2% for the fiscal quarters ended December 31, 2025 and March 29, 2025, respectively.

that our effective tax rate will be higher than the U.S.

statutory rate, excluding unusual transactions, even at higher levels of pre-tax income.

We continue to evaluate the applicability of Pillar Two to our group, the timing of enactment and effective dates by jurisdiction, and the potential impacts on our effective tax rate, cash taxes, and related income tax disclosures.

We operate in a global environment with significant operations in various locations outside the United States.

Accordingly, the consolidated income tax

rate is a composite rate reflecting our earnings and the applicable tax rates in the various locations where we operate.

Part of our historical strategy has been to achieve cost savings through the transfer and expansion of manufacturing operations

to countries where we can take advantage of lower labor costs and available tax and other government-sponsored incentives.

Accordingly, the consolidated income tax rate is a composite rate reflecting our earnings and the applicable tax rates in the various

locations where we operate.

Part of our historical strategy has been to achieve cost savings through the transfer and expansion of manufacturing operations to countries where we can take advantage of lower labor costs and available tax and other

government-sponsored incentives.

Additional information about income taxes is included in Note 3 to our consolidated condensed financial statements.

Financial Condition, Liquidity, and Capital Resources

Our financial condition as of September 27, 2025 continued to be strong.

We have historically been a

strong generator of operating cash flows.

The cash generated from operations is used to fund our capital expenditure plans, and cash in excess of our capital expenditure needs is available to fund our acquisition strategy, fund our Stockholder

Return Policy, and to reduce debt levels.

Our financial condition as of April 4, 2026 is adequate to meet our capital expenditure and other growth

We have historically been a strong generator of operating cash flows.

The cash generated from operations is used to fund our capital expenditure plans, and cash in excess of our capital expenditure needs is available to fund our acquisition

strategy, fund our Stockholder Return Policy, and to reduce debt levels.

Management uses a non-GAAP measure, "free cash," to evaluate our ability to fund acquisitions, repay debt, and otherwise enhance stockholder value through stock repurchases or

1 unchanged sentence

Cash flows provided by operating activities were $63.7 million

for the nine fiscal months ended September 27, 2025, as compared to cash flows provided by operations of $106.0 million for the nine fiscal months ended September 28, 2024.

for the three fiscal months ended April 4, 2026, as compared to cash flows provided by operations of $16.1 million for the three fiscal months ended March 29, 2025.

In order to manage our working capital and operating cash needs, we monitor our cash conversion cycle.

The following table presents the components of our

cash conversion cycle during the five fiscal quarters beginning with the third fiscal quarter of 2024 through the third fiscal quarter of 2025:

cash conversion cycle during the five fiscal quarters beginning with the first fiscal quarter of 2025 through the first fiscal quarter of 2026:

Fiscal quarters ended

3rd Quarter 2024

4th Quarter 2024

1st Quarter 2025

1 unchanged sentence

3rd Quarter 2025

4th Quarter 2025

1st Quarter 2026

Days sales outstanding ("DSO") (a)

11 unchanged sentences

by dividing the average accounts payable by the average cost of goods sold per day for the respective fiscal quarter.

Cash paid for property and equipment for the nine

fiscal months ended September 27, 2025 was $178.5 million, as compared to $175.2 million for the nine fiscal months ended September 28, 2024.

positioned to service our customers and to fully participate in growing markets, we have increased and expect to maintain a relatively high level of capital expenditures for expansion in the mid-term.

We remain committed to our long-term plan of

increasing Vishay's capacity, to assure our customers of reliable volume as they scale.

While we plan to advance our capacity expansion projects, we have and will continue to modulate spending in response to order flow and the timing of customer

demand and qualifications.

The decreased lead time for equipment and the increased subcontractor capacity are also variables that allow us to adjust our capacity spending.

The cash conversion cycle improved to 116 days in the first fiscal quarter of 2026, reflecting our sale of an additional $63.1 million trade receivables

and disciplined working capital management.

Cash paid for property and equipment for the three

fiscal months ended April 4, 2026 was $110.7

million, as compared to $61.6 million for the three fiscal months ended March 29, 2025.

To be well positioned to service

our customers and to fully participate in growing markets, we have increased and expect to maintain a relatively high level of capital expenditures for expansion in the mid-term.

Our elevated capital expenditure levels over the past three years

have positioned us with increased capacity to assure our customers of reliable supply as they scale production and to supply more part numbers to them.

We are committed to completing our capacity expansion projects, but have modulated and will

continue to modulate spending in response to order flow, timing of customer demand and qualification, changes in lead times for equipment, and increases in subcontractor capacity.

For 2026, we plan to spend between $400 million to $440 million for

capital expenditures, at least 70% of which will be invested in capacity expansion projects for high growth product lines, including our wafer fab expansions.

Free cash flow for the nine fiscal months ended September 27, 2025 decreased versus the nine

fiscal months ended September 28, 2024 primarily due to decreased net earnings.

We expect that free cash flow will be negatively

impacted by the expected high level of capital expenditures for expansion after which we expect to generate increasingly higher levels of free cash.

There is no assurance, however, that we will be able to continue to generate cash flows from

operations and free cash at our historical levels, or at all, going forward if the economic environment worsens.

capital expenditures, approximately half of which will be invested in our 12-inch wafer fab we are building in Itzehoe, Germany.

Free cash flow for the three fiscal months ended April 4, 2026 decreased slightly versus the three

fiscal months ended March 29, 2025.

Free cash flow for the three fiscal months ended April 4, 2026 was negatively impacted by a high

level of capital expenditures.

We expect that free cash flow will be negatively impacted by the expected high level of capital expenditures for expansion after which we expect to generate increasingly higher levels of free cash.

assurance, however, that we will be able to continue to generate cash flows from operations and free cash at our historical levels, or at all, going forward if the economic environment worsens.

In 2022, our Board of Directors adopted a Stockholder Return Policy that will remain in effect until such time as the Board votes to amend or rescind the policy.

“Stockholder Return Policy” above for additional information.

The following table summarizes the components of net cash and short-term investments (debt) at September 27, 2025 and December 31, 2024 (in thousands) :

September 27, 2025

The following table summarizes the components of net cash and short-term investments (debt) at April 4, 2026 and December 31, 2025 (in thousands) :

April 4, 2026

December 31, 2025

1 unchanged sentence

Convertible senior notes, due 2030

Deferred financing costs

20 unchanged sentences

The capital allocated to our business is further allocated between our subsidiaries to meet local operating cash needs, to fund capital expenditures as part of our growth plan, and to meet corporate funding needs while also aiming to minimize our

We repatriated $75 million of accumulated earnings to the United States in the second fiscal quarter of 2025 and paid withholding taxes, in Israel, of $9.4 million.

of September 27, 2025, $21.1 million of our cash and cash equivalents and short-term investments were held by our U.S.

As of April 4, 2026, $13.6 million of our cash and cash

equivalents and short-term investments were held by our U.S.

subsidiaries.

As of September 27, 2025, we are in a net borrowing position in the U.S.

and we expect to continue to be at least

throughout 2025, primarily due to Newport expansion funding requirements.

As of September 27, 2025, we have approximately $491.1

million of German and Israeli earnings that are deemed not indefinitely reinvested.

Based on the expected timing of future repatriations, we estimate that the tax liability to repatriate these unremitted earnings will be approximately $75.3

million, which has been accrued, but will only be paid upon repatriation of the unremitted earnings.

Repatriating these unremitted earnings earlier than currently planned may not be possible and would incur additional tax expense.

amounts of unremitted foreign earnings held by subsidiaries in countries other than Israel and Germany, which continue to be reinvested indefinitely, that we have not accrued for the incremental foreign income taxes and withholding taxes payable

to foreign jurisdictions that would be incurred to repatriate these amounts.

Certain of these subsidiaries are located in countries with restrictive regulations and high tax rates for repatriating cash.

Due to the uncertainties associated with

the ability, timing, and method to repatriate these unremitted earnings and other complexities associated with its hypothetical calculation, determination of the amount of tax expense that would be incurred to repatriate the unremitted earnings

is not practicable, but could be significant.

As of April 4, 2026, we are in a net borrowing position

and we expect to continue to be at least throughout 2026 based on expected cash payments pursuant to our Stockholder Return Policy and funding of our growth plan.

As of April 4, 2026, we have approximately $561 million of earnings that are deemed not indefinitely reinvested, primarily in Germany and Israel.

Based on the expected timing of

future repatriations, we estimate that the tax liability to repatriate these unremitted earnings will be approximately $81 million, which has been accrued, but will only be paid upon repatriation of the unremitted earnings.

Repatriating these

unremitted earnings earlier than currently planned may not be possible and would incur additional tax expense.

We also have amounts of unremitted foreign earnings, which continue to be reinvested indefinitely, that we have not accrued for the

incremental foreign income taxes and withholding taxes payable to foreign jurisdictions that would be incurred to repatriate these amounts.

Certain of these subsidiaries are located in countries with restrictive regulations and high tax rates

for repatriating cash.

Due to the uncertainties associated with the ability, timing, and method to repatriate these unremitted earnings and other complexities associated with its hypothetical calculation, determination of the amount of tax

expense that would be incurred to repatriate the unremitted earnings is not practicable, but could be significant.

Our undrawn credit facility provides us with adequate operating liquidity in the United States.

Upon successful completion of our growth plan, we expect to generate increasingly higher levels of free cash that will be sufficient to meet our

long-term financing needs related to normal operating requirements, regular dividend payments, share repurchases pursuant to our Stockholder Return Policy, while allowing us to manage our repatriation and financing activities to minimize tax and

interest expense.

During the current period of intensified capital expenditures to achieve our growth plans, we are considering a combination of additional and alternative sources of financing and our cash on hand to fund a portion of the capital

expenditures that would conserve cash for future acquisitions while enabling us to minimize tax expense.

long-term financing needs related to normal operating requirements, regular dividend payments, and share repurchases pursuant to our Stockholder Return Policy, while allowing us to manage our repatriation and financing activities to minimize tax

and interest expense.

approximately $150 million of accounts receivable on a revolving basis that we initiated in 2025, and our cash on hand to fund a portion of the capital expenditures that would conserve cash for future acquisitions while enabling us to minimize tax

We maintain a $750 million revolving credit agreement with a consortium of banks led by JPMorgan Chase Bank, N.A., that matures on May 8, 2028.

8 unchanged sentences

and acquisitions (assuming our pro forma net leverage ratio is greater than 2.75 to 1.00), making asset sales, and paying cash dividends and making other restricted payments (assuming our pro forma net leverage ratio is greater than 2.50 to 1.00).

We were in compliance with all financial covenants under the credit facility at September 27, 2025.

We were in compliance with all financial covenants under the credit facility at April 4, 2026.

Our interest coverage ratio and net leverage ratio were 9.70 to 1 and 2.34 to 1, respectively.

We expect to continue to be in compliance with these covenants based on

current projections.

Based on our current EBITDA and outstanding revolver balance, the usable capacity on the credit facility is approximately $280 million.

We expect to continue to be in compliance with these covenants

based on current projections.

The usable capacity on the credit facility is approximately $307 million as of April 4, 2026.

If we are not in compliance with all of the required financial covenants, the credit facility could be terminated by the lenders, and any amounts then

16 unchanged sentences

and are guaranteed by certain significant subsidiaries.

We had $136 million outstanding on our revolving credit facility at December 31, 2024 and $189 million outstanding at September 27, 2025.

We borrowed $601 million and repaid $548 million on the revolving credit facility during the nine fiscal months ended September 27, 2025.

The average outstanding balance on our revolving credit facility calculated at fiscal month-ends was $218 million and the highest amount outstanding at a fiscal month end was $309 million during the nine fiscal months ended September 27, 2025.

at least initially, to fund certain future obligations required to be paid by the U.S.

We had $219 million outstanding on our revolving credit facility at December 31, 2025 and $250 million outstanding at April 4, 2026.

We borrowed $203 million and repaid $172 million on the revolving credit facility during the three fiscal months ended April 4, 2026.

The average outstanding balance on our revolving credit facility calculated at fiscal month-ends was $259 million and the highest amount outstanding at a fiscal month end was $271 million during the three fiscal months ended April 4, 2026.

We expect, at

least initially, to fund certain future obligations required to be paid by the U.S.

parent company by borrowing under our credit facility.

8 unchanged sentences

conversions have occurred to date.

The convertible senior notes due 2025 matured on June 15, 2025.

Pursuant to the indenture governing the convertible senior notes due 2025 and the

amendments thereto incorporated in the Supplemental Indenture dated December 23, 2020, we cash-settled the $41.9 million aggregate principal amount outstanding as of June 15, 2025.

The settlement was funded using borrowings under our credit

No shares were issued to settle the convertible senior notes due 2025.

Safe Harbor Statement

24 unchanged sentences

and foreign trade regulations and tariffs and uncertainty regarding

changes in applicable accounting standards and other factors affecting our operations, markets, capacity to meet demand, products, services, and prices that are set forth in our filings with the SEC, including our annual reports on Form

10-K and our quarterly reports on Form 10-Q.

volatility in prices for metals and materials;

changes in applicable accounting standards and other factors affecting our operations, markets, capacity to meet demand, products, services, and prices that are set forth in our filings with

the SEC, including our annual reports on Form 10-K and our quarterly reports on Form 10-Q.

We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

5 unchanged sentences

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