What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-03 compared with 2026-05-04 · 127 added, 80 removed, 227 unchanged (48% of the section changed)

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Department of War (DoW), also known as the Department of Defense under 10 U.S.C.

For the three months ended April 3, 2026 and March 28, 2025, the Company had total revenue of $1.3 billion and $1.0 billion, respectively, the substantial majority of which was derived from U.S.

For the six months ended July 3, 2026 and June 27, 2025, the Company had total revenue of $2.5 billion and $2.1 billion, respectively, the substantial majority of which was derived from U.S.

government customers.

For the three months ended April 3, 2026 and March 28, 2025, we generated approximately 35% and 44%, respectively, of our total revenue from the U.S.

For the six months ended July 3, 2026 and June 27, 2025, we generated approximately 34% and 43%, respectively, of our total revenue from the U.S.

Executive Summary

Our revenue increased by $238.2 million, or 23%, for the three months ended April 3, 2026 as compared to the three months ended March 28, 2025.

Revenue increased primarily due to program ramp ups in global training and mission readiness.

Revenue from our programs in the U.S., Europe, and Asia increased by $233.1 million, $9.0 million, and $0.1 million, respectively, partially offset by a decrease in revenue from our programs in the Middle East of $4.0 million during the three months ended April 3, 2026 as compared to the three months ended March 28, 2025.

Operating income for the three months ended April 3, 2026 was $44.1 million, an increase of $9.8 million or 29%, compared to the three months ended March 28, 2025.

Operating income increased primarily due to the ramp up of several programs, partially offset by increased SG&A expenses.

Our revenue increased by $178.3 million, or 16.5%, for the three months ended July 3, 2026 as compared to the three months ended June 27, 2025.

Revenue increased primarily due to program ramp ups in global training and aerospace along with $101.6 million attributed to discrete activities to support a national security mission.

Revenue from our programs in the U.S., Asia, and the Middle East increased by $165.1 million, $9.8 million, and $4.2 million, respectively, partially offset by a decrease in revenue from our programs in Europe of $0.8 million during the three months ended July 3, 2026 as compared to the three months ended June 27, 2025.

Operating income for the three and six months ended July 3, 2026 was $53.8 million and $97.9 million, respectively, an increase of $0.9 million and $10.7 million, or 1.6% and 12.2% , respectively, compared to the three and six months ended June 27, 2025.

Operating income increased primarily due to the ramp up of several programs, partially offset by increased Selling, General and Administrative expenses (SG&A) and corporate expenses.

During the performance of long-term contracts, estimated final contract prices and costs are reviewed periodically, and revisions are made as required, which are recorded as changes in revenue and cost of revenue in the periods in which they are determined.

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These changes can increase or decrease operating income depending on the dynamics of each contract.

Further details related to consolidated financial results for the three months ended April 3, 2026, compared to the three months ended March 28, 2025, are contained in the " Discussion of Financial Results " section in this Quarterly Report on Form 10-Q.

Further details related to consolidated financial results for the three and six months ended July 3, 2026, compared to the three and six months ended June 27, 2025, are contained in the " Discussion of Financial Results " section in this Quarterly Report on Form 10-Q.

Significant Contracts

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% of Total Revenue

Three Months Ended

April 3, March 28,

Six Months Ended

July 3, June 27,

Contract Name 2026 2025

Logistics Civil Augmentation Program (LOGCAP) V - Kuwait Task Order 7.3% 10.9%

T-45 7.8% 10.1%

Revenue associated with a contract will fluctuate based on increases or decreases in the work being performed on the contract, award fee payment assumptions, and other contract modifications within the term of the contract resulting in changes to the total contract value.

The LOGCAP V - Kuwait Task Order is exercised through June 30, 2026 and provides services to support the Geographical Combatant Commands and Army Service Component Commands throughout the full range of military operations in the Kuwait region.

On April 14, 2026, the U.S.

Department of the Army notified the Company of its intent to modify the scope of work performed under this task order beyond the current performance period of June 30, 2026, which could result in a reduction in the work being performed under the task order.

The Company is in discussions with the U.S.

Department of the Army on the level of support that will be needed in the region for the remainder of the year and beyond.

We are not currently able to determine the impact that such modifications may have on our financial performance, if any.

Our total backlog related to this task order was $529.3 million as of April 3, 2026.

The LOGCAP V - Kuwait Task Order contributed $92.9 million and $116.9 million of revenue for the three months ended April 3, 2026 and March 28, 2025, respectively.

The T-45 Navy and Marine program is currently exercised through December 31, 2026, with two additional twelve-month options and one six-month option through June 30, 2029.

The program provides critical organizational, intermediate, and depot-level maintenance for the T-45 Goshawk trainer aircraft, ensuring readiness through complex repairs, upgrades, and sustainment, including managing the logistics for its 29 unique configurations and supporting its life extension services.

The T-45 contract contributed $98.2 million and $103.0 million of revenue for the three months ended April 3, 2026 and March 28, 2025, respectively.

The LOGCAP V - Kuwait Task Order was exercised through June 30, 2026 and provides services to support the Geographical Combatant Commands and Army Service Component Commands throughout the full range of military operations in the Kuwait region.

On May 12, 2026, the U.S.

Department of the Army notified the Company of its decision to reduce the scope of work being performed under this task order and to extend the contract with respect to the revised scope for an additional six months to December 31, 2026.

The LOGCAP V - Kuwait Task Order contributed $182.4 million and $229.1 million of revenue for the six months ended July 3, 2026 and June 27, 2025, respectively.

As a result of this modification, the Company reduced its backlog by $414.6 million.

The Company continues to work with the U.S.

Department of the Army to support them in the region, including through the current extension of the original task order for $22.6 million until the end of 2026, as well as through other contract vehicles.

Management does not currently expect the reduction in scope of the LOGCAP V - Kuwait Task Order to have a material adverse effect on the Company's financial condition or results of operations, including revenue due to other programs ramp up as reflected in " Discussion of Financial Results" section.

Backlog represents revenue we expect to recognize in the future as work is performed for remaining performance obligations for our contracts.

Backlog includes funded amounts (funding is contractually authorized and appropriated by the customer) and unfunded amounts (amounts not currently contractually obligated by the customer).

Backlog includes funded amounts (funding is contractually authorized and appropriated by the customer) and unfunded amounts (amounts not currently contractually obligated by the customer, including unexercised options when the exercise of those options is considered probable).

Total backlog excludes potential orders under IDIQ contracts and contracts awarded to us that are being protested by competitors with the GAO or in the COFC for which a stop work order has been received by the Company.

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The following is a summary of funded and unfunded backlog:

April 3, December 31,

July 3, December 31,

(In millions) 2026 2025

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Funded orders (different from funded backlog) represent orders for which funding was received during the period.

We received funded orders of $1.2 billion during the three months ended April 3, 2026, which was an increase of $256.9 million compared to the three months ended March 28, 2025.

We received funded orders of $2.7 billion during the six months ended July 3, 2026, which was an increase of $540.2 million compared to the six months ended June 27, 2025.

Economic Opportunities, Challenges and Risks

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V2X believes that its capabilities should help its clients increase efficiency, reduce costs, improve readiness, and strengthen national security and, as a result, continue to allow for long-term profitable growth in the business.

Further, the DoW budget remains the largest in the world and management believes the Company's addressable portion of the DoW budget offers substantial opportunity for growth.

Further, the DoW budget remains the largest defense budget in the world and management believes the Company's addressable portion of the DoW budget offers substantial opportunity for growth.

government's Fiscal Year (FY) begins on October 1 and ends on September 30.

The DoW FY 2026 base budget request is approximately $848 billion, which does not include the mandatory funding contained in the OBBBA.

The OBBBA was signed into law by the President on July 4th, 2025, and allocates approximately $150 billion in mandatory funds to support defense and national security priorities.

Of the $150 billion in OBBBA appropriations, approximately $113 billion was aligned to the FY 2026 DoW budget.

See Note 9, Income Taxes , in the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for further discussion relating to the OBBBA.

Annual appropriations for FY 2026 were not completed on time and, as such, on October 1, 2025, the U.S.

government entered a shutdown, which ended on November 12, 2025.

While we did not experience a material impact from the U.S.

government shutdown, if the shutdown had continued for an extended period of time, it could have resulted in significant consequences for our Company, employees, customers, suppliers and our industry.

It could have also resulted in material impacts to our financial position, results of operations, bookings, backlog, and/or collections and cash flows.

On February 3, 2026, the President signed into law, H.R.

7148, the "Consolidated Appropriations Act, 2026," to end a partial government shutdown and fund the DoW and other federal agencies through FY 2026.

The defense funding bill includes approximately $839 billion in appropriations, which is approximately $8 billion above the Pentagon’s budget request.

The defense funding bill includes approximately $839 billion in appropriations.

The OBBBA was signed into law by the President on July 4th, 2025, and allocates approximately $150 billion in mandatory funds to support defense and national security priorities that are available to be obligated through September 30, 2029.

See Note 9, Income Taxes , in the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for further discussion relating to the OBBBA.

On April 21, 2026, the DoW released the President's FY 2027 defense budget which requests $1.45 trillion in total budgetary resources.

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however, any such demand, and the timing and extent of any incremental contract activity resulting from that demand, remains uncertain.

Additionally, we continue to closely monitor impacts to our business and operations in the Middle East, and the region at large due to the conflict in Iran.

Further, given the current level of inflation and geopolitical factors, the Company is monitoring the impact of rising costs on its active and future contracts and its financial results, and actively evaluating opportunities for cost reductions and deleveraging.

Additionally, global hostilities could also impact our ability to deliver our products and services to customers.

Further, we continue to closely monitor impacts to our business and operations in the Middle East, and the region at large due to the conflict in Iran.

In addition, given the current level of inflation and geopolitical factors, the Company is monitoring the impact of rising costs on its active and future contracts and its financial results, and actively evaluating opportunities for cost reductions and deleveraging.

The Company’s earnings and profitability may vary materially depending on the total mix of contracts.

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Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2025, and updated, as necessary, on subsequent Quarterly Reports on Form 10-Q, and the matters identified under the caption “Forward-Looking Statement Information" herein.

Secondary Public Offerings

On May 7, 2026, we entered into an underwriting agreement (the May 2026 Underwriting Agreement), by and among the Company, Vertex Aerospace Holdco LLC (the Selling Shareholder), and Morgan Stanley & Co.

LLC, as the sole underwriter (the May 2026 Underwriter), relating to the public offering (the May 2026 Offering) of 2,004,569 shares of common stock by the Selling Shareholder.

The May 2026 Offering closed on May 11, 2026.

The Company did not sell any securities in the May 2026 Offering and did not receive any proceeds from the sale of the shares offered by the Selling Shareholder.

Following the May 2026 Offering, the Selling Shareholder no longer owns any shares of common stock.

An entity affiliated with the Selling Shareholder continued to beneficially own 375,420 shares, or approximately 1.2%, of the Company’s outstanding common stock immediately after giving effect to the May 2026 Offering.

On May 15, 2025, we entered into an underwriting agreement (the May 2025 Underwriting Agreement), by and among the Company, the Selling Shareholder and RBC Capital Markets, LLC, as underwriter (the Underwriter), relating to the public offering (the May 2025 Offering) of 2,000,000 shares of common stock by the Selling Shareholder and up to 300,000 additional shares of common stock at the Underwriter’s option at any time on or before the 30th day after the date of the prospectus supplement dated May 15, 2025 (the May 2025 Option).

The May 2025 Offering closed on May 19, 2025.

The Selling Shareholder elected not to exercise the May 2025 Option.

The Company did not sell any securities in the May 2025 Offering and did not receive any proceeds from the sale of the shares offered by the Selling Shareholder.

DISCUSSION OF FINANCIAL RESULTS

Three months ended April 3, 2026 compared to three months ended March 28, 2025

Three months ended July 3, 2026 compared to three months ended June 27, 2025

Selected financial highlights are presented in the following table:

Three Months Ended Change

April 3, March 28,

July 3, June 27,

(In thousands, except for percentages) 2026 2025 $ %

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Net income $ 25,540 $ 22,391 $ 3,149 14.1 %

Revenue increased by $238.2 million, or 23.4%, for the three months ended April 3, 2026 as compared to the three months ended March 28, 2025 primarily driven by program ramp ups in global training and mission readiness.

Revenue from our programs in the U.S., Europe, and Asia increased by $233.1 million, $9.0 million, and $0.1 million, respectively, partially offset by a decrease of $4.0 million in revenue from our programs in the Middle East.

Revenue increased by $178.3 million, or 16.5%, for the three months ended July 3, 2026 as compared to the three months ended June 27, 2025 primarily driven by program ramp ups in global training and aerospace along with $101.6 million attributed to discrete activities to support a national security mission.

Revenue from our programs in the U.S., Asia, and the Middle East increased by $165.1 million, $9.8 million, and $4.2 million, respectively, partially offset by a decrease of $0.8 million in revenue from our programs in Europe.

Cost of Revenue

Cost of revenue increased by $210.5 million, or 22.4%, for the three months ended April 3, 2026 as compared to the three months ended March 28, 2025, consistent with the increase in revenue.

Cost of revenue increased by $164.5 million, or 16.7%, for the three months ended July 3, 2026 as compared to the three months ended June 27, 2025, consistent with the increase in revenue.

Selling, General, & Administrative Expenses

SG&A expenses increased by $17.9 million, or 40.9%, for the three months ended April 3, 2026 as compared to the three months ended March 28, 2025, consistent with revenue growth, as well as reflecting certain non-recurring growth and integration initiatives.

SG&A expenses increased by $12.9 million, or 30.1%, for the three months ended July 3, 2026 as compared to the three months ended June 27, 2025, primarily driven by higher operating costs associated with revenue growth, non-recurring integration initiatives, and expenses incurred to evaluate potential merger and acquisition opportunities as part of the Company's capital allocation strategy.

Operating Income

Operating income increased $9.8 million, or 28.5%, for the three months ended April 3, 2026 as compared to the three months ended March 28, 2025.

Operating income as a percentage of revenue was 3.5% for the three months ended April 3, 2026, compared to 3.4% for the three months ended March 28, 2025.

The increase in operating income was primarily driven by the ramp up of several programs, partially offset by increased SG&A expenses.

Aggregate cumulative adjustments decreased operating income by $1.1 million for the three months ended April 3, 2026 and increased operating income by $4.2 million for the three months ended March 28, 2025.

The aggregate cumulative adjustments for the three months ended April 3, 2026 and March 28, 2025 related to changes in contract terms, program performance, customer changes in scope of work and changes to estimates in the reported period.

Operating income increased $0.9 million, or 1.6%, for the three months ended July 3, 2026 as compared to the three months ended June 27, 2025.

Operating income as a percentage of revenue was 4.3% for the three months ended July 3, 2026, compared to 4.9% for the three months ended June 27, 2025.

The increase in operating income was primarily driven by the ramp up of several programs, as described above, partially offset by increased SG&A and corporate expenses.

Aggregate cumulative adjustments increased operating income by $1.8 million for the three months ended July 3, 2026 and $1.4 million for the three months ended June 27, 2025.

The aggregate cumulative adjustments for the three months ended July 3, 2026 and June 27, 2025 related to changes in contract terms, program performance, customer changes in scope of work and changes to estimates in the reported period.

Loss on Extinguishment of Debt

The Company recorded a $2.2 million loss on extinguishment of debt for the three months ended March 28, 2025.

The Company recorded a $1.7 million loss on extinguishment of debt for the three months ended July 3, 2026 and a $0.3 million loss on extinguishment of debt for the three months ended June 27, 2025.

For further discussion see Note 5, Debt , in the Notes to Condensed Consolidated Financial Statements.

Six months ended July 3, 2026, compared to six months ended June 27, 2025

Selected financial highlights are presented in the following table:

Six Months Ended Change

July 3, June 27,

(In thousands, except for percentages) 2026 2025 $ %

Revenue $ 2,510,771 $ 2,094,253 $ 416,518 19.9 %

Cost of revenue 2,295,449 1,920,417 375,032 19.5 %

% of revenue 91.4 % 91.7 %

Selling, general, and administrative expenses 117,422 86,598 30,824 35.6 %

% of revenue 4.7 % 4.1 %

Operating income 97,900 87,238 10,662 12.2 %

Operating margin 3.9 % 4.2 %

Loss on extinguishment of debt (1,739) (2,527) 788 (31.2) %

Interest expense, net (34,830) (40,317) 5,487 (13.6) %

Interest expense, net for the three months ended April 3, 2026 and March 28, 2025 was as follows:

Three Months Ended Change

April 3, March 28,

Other expense, net (4,583) (4,874) 291 (6.0) %

Income from operations before income taxes 56,748 39,520 17,228 43.6 %

% of revenue 2.3 % 1.9 %

Income tax expense 12,283 9,022 3,261 36.1 %

Effective income tax rate 21.6 % 22.8 %

Net income $ 44,465 $ 30,498 $ 13,967 45.8 %

Revenue increased $416.5 million, or 19.9%, for the six months ended July 3, 2026 as compared to the six months ended June 27, 2025 primarily driven by program ramp ups in global training and aerospace along with $200.9 million attributed to discrete activities to support a national security mission.

Revenue from our programs located in the U.S., Asia, Europe, and the Middle East increased by $398.3 million, $9.9 million , $8.1 million, and $0.2 million , respectively .

Cost of Revenue

Cost of revenue increased $375.0 million, or 19.5%, for the six months ended July 3, 2026 as compared to the six months ended June 27, 2025, consistent with the increase in revenue.

Selling, General, & Administrative Expenses

SG&A expenses increased $30.8 million, or 35.6%, for the six months ended July 3, 2026 as compared to the six months ended June 27, 2025, primarily driven by higher operating costs associated with revenue growth, non-recurring integration initiatives, and expenses incurred to evaluate potential merger and acquisition opportunities as part of the Company's capital allocation strategy.

Operating Income

Operating income increased $10.7 million, or 12.2%, for the six months ended July 3, 2026 as compared to the six months ended June 27, 2025.

Operating income as a percentage of revenue was 3.9% for the six months ended July 3, 2026, compared to 4.2% for the six months ended June 27, 2025.

The increase in operating income was primarily driven by the ramp up of several programs, as described above, partially offset by increased SG&A and corporate expenses.

Aggregate cumulative adjustments increased operating income by $0.7 million and $5.6 million for the six months ended July 3, 2026 and June 27, 2025, respectively.

The aggregate cumulative adjustments for the six months ended July 3, 2026 and June 27, 2025 related to changes in contract terms, program performance, customer changes in scope of work and changes to estimates in the reported period.

Loss on Extinguishment of Debt

The Company recorded a $1.7 million loss on extinguishment of debt for the six months ended July 3, 2026 and a $2.5 million loss on extinguishment of debt for the six months ended June 27, 2025.

For further discussion see Note 5, Debt, in the Notes to Condensed Consolidated Financial Statements.

Interest Expense, Net

Interest expense, net for the three and six months ended July 3, 2026 and June 27, 2025 was as follows:

Three Months Ended Change Six Months Ended Change

July 3, June 27, July 3, June 27,

(In thousands, except for percentages) 2026 2025 $ % 2026 2025 $ %

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Interest expense is related to borrowings under our senior secured credit facilities, with the amortization of debt issuance costs, and derivative instruments used to hedge a portion of exposure to interest rate risk.

Interest expense, net decreased $1.6 million for the three months ended April 3, 2026 compared to the three months ended March 28, 2025 primarily due to a decrease in our debt balance.

Interest expense, net decreased $5.5 million for the six months ended July 3, 2026 compared to the six months ended June 27, 2025 primarily due to a decrease in our debt balance and increase in interest income.

For further discussion of these amendments see Note 5, Debt , in the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.

Other Expense, Net

During the three months ended April 3, 2026 and March 28, 2025, we incurred purchase discount fees, net of servicing fees, of $2.4 million and $2.5 million, respectively, related to the sale of accounts receivable through the MARPA Facility.

During the three and six months ended July 3, 2026, we incurred purchase discount fees, net of servicing fees, of $2.2 million and $4.6 million, respectively, related to the sale of accounts receivable through the MARPA Facility.

During the three and six months ended June 27, 2025, we incurred purchase discount fees, net of servicing fees, of $2.6 million and $5.1 million, respectively, related to the sale of accounts receivable through the MARPA Facility.

For a discussion of the MARPA Facility, see Note 12, Sale of Receivables , in the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.

Income Tax Expense

We recorded income tax expense of $4.6 million and $2.0 million for the three months ended April 3, 2026 and March 28, 2025, respectively.

Our effective income tax rate for both the three months ended April 3, 2026 and March 28, 2025, was 19.5%.

We recorded income tax expense of $7.7 million and $7.1 million for the three months ended July 3, 2026 and June 27, 2025, respectively, representing effective income tax rates of 23.1% and 24.0%, respectively.

For the six months ended July 3, 2026 and June 27, 2025, we recorded income tax expense of $12.3 million and $9.0 million, respectively, representing effective income tax rates of 21.6% and 22.8%, respectively .

The effective income tax rates vary from the federal statutory rate of 21.0% mainly due to state and foreign taxes, Net CFC Tested Income (NCTI), disallowed compensation deduction under Internal Revenue Code Section 162(m), offset by foreign derived intangible income deduction, available deductions not included in book income and income tax credits.

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See Note 5, Debt , in the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for further discussion.

As of April 3, 2026, the carrying value of the First Lien Credit Agreement was $868.5 million, excluding deferred discount and unamortized deferred financing costs of $22.6 million.

The estimated fair value of the First Lien Credit Agreement as of April 3, 2026 was $867.4 million.

On March 31, 2025, the 2023 Credit Agreement was amended to provide, among other things, a new tranche of term loans in an aggregate original principal amount of $237.5 million (the 2025 Term Loans), which replace or refinance in full all the existing term loans outstanding under the 2023 Credit Agreement in effect immediately prior to the amendment.

The 2023 Credit Agreement was further amended to provide a new tranche of revolving credit commitments in an aggregate original principal amount of $500.0 million (the 2025 Revolver), which replace or refinance in full all the existing revolving credit loans and commitments outstanding under the 2023 Credit Agreement in effect immediately prior to the amendment.

See Note 5, Debt , in the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for further discussion.

On May 29, 2026, the First Lien Credit Agreement was amended to provide, among other things, a new tranche of term loans in an aggregate original principal amount of $868.5 million (the New Term Loans), in which the New Term Loans replace or refinance in full all the existing term loans outstanding under the First Lien Term Tranche in effect immediately prior to the amendment (the Existing Term Loans).

The loans under the First Lien Credit Agreement, as amended (the First Lien Credit Agreement), amortize in an amount equal to approximately $2.2 million per quarter through September 30, 2030, with the balance of $829.4 million due on December 6, 2030.

The replacement of the Existing Term Loans with the New Term Loans resulted in a loss on extinguishment of debt of $1.7 million in the Condensed Consolidated Statement of Income for the six months ended July 3, 2026.

See Note 5, Debt , in the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for further discussion.

As of July 3, 2026, the carrying value of the First Lien Credit Agreement was $866.4 million, excluding deferred discount and unamortized deferred financing costs of $20.9 million.

The estimated fair value of the First Lien Credit Agreement as of July 3, 2026 was $864.2 million.

The fair value is based on observable inputs of interest rates that are currently available to us for debt with similar terms and maturities for non-public debt (Level 2).

As of April 3, 2026, there were no outstanding borrowings and $21.0 million of outstanding letters of credit under the 2025 Revolver.

Availability under the 2025 Revolver was $479.0 million as of April 3, 2026.

As of July 3, 2026, there were no outstanding borrowings and $14.9 million of outstanding letters of credit under the 2025 Revolver.

Availability under the 2025 Revolver was $485.1 million as of July 3, 2026.

Unamortized deferred financing costs related to the 2025 Revolver of $3.5 million are included in other non-current assets in the Condensed Consolidated Balance Sheets.

As of April 3, 2026, the fair value of the 2025 Revolver approximated the carrying value because the debt bears a floating interest rate.

As of April 3, 2026, the carrying value of the 2025 Term Loans was $231.6 million, excluding unamortized deferred financing costs of $1.6 million.

The estimated fair value of the 2025 Term Loans as of April 3, 2026 was $231.3 million.

As of July 3, 2026, the fair value of the 2025 Revolver approximated the carrying value because the debt bears a floating interest rate.

As of July 3, 2026, the carrying value of the 2025 Term Loans was $220.1 million, excluding unamortized deferred financing costs of $1.5 million.

The estimated fair value of the 2025 Term Loans as of July 3, 2026 was $220.2 million.

The fair value is based on observable inputs of interest rates that are currently available to us for debt with similar terms and maturities for non-public debt (Level 2).

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and international subsidiaries.

Approximately $53.0 million of our $208.7 million in cash, cash equivalents and restricted cash as of April 3, 2026 is held by foreign subsidiaries and is not available to fund U.S.

Approximately $57.1 million of our $214.3 million in cash, cash equivalents and restricted cash as of July 3, 2026 is held by foreign subsidiaries and is not available to fund U.S.

operations unless repatriated.

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Our receivables reflect amounts billed to customers, as well as the revenue that was recognized in the preceding month, which is normally billed the month following each balance sheet date.

On May 28, 2026, the Government of Greenland drew $4.3 million on a letter of credit held by the Company related to prior year tax claims, which the Company has appealed.

The Company has recorded this withdrawal by the Government of Greenland as receivables on the Company's Condensed Consolidated Balance Sheets as management currently believes that there is reasonable likelihood of this amount being recoverable.

Accounts receivable balances can vary significantly over time and are impacted by revenue levels and the timing of payments received from customers.

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We determine our DSO by calculating the number of days necessary to exhaust our ending accounts receivable balance based on our most recent historical revenue.

DSO was 57 days as of both April 3, 2026 and December 31, 2025.

The following table sets forth net cash (used in) provided by operating activities, investing activities and financing activities:

Three Months Ended

April 3, March 28,

DSO was 56 and 57 days as of July 3, 2026 and December 31, 2025, respectively.

The following table sets forth net cash used in operating activities, investing activities and financing activities:

Six Months Ended

July 3, June 27,

(in thousands) 2026 2025

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1 Impact on cash balances due to changes in foreign exchange rates.

Net cash used in operating activities for the three months ended April 3, 2026 consisted of net cash outflows from the sale of receivables through the MARPA Facility of $102.0 million, net cash outflows in working capital accounts of $74.5 million and net cash outflows in other long-term assets and liabilities of $7.3 million, partially offset by non-cash net income adjusting items (primarily consisting of depreciation and amortization) of $34.9 million and net income of $18.9 million.

Net cash used in operating activities for the three months ended March 28, 2025 consisted of net cash outflows in working capital accounts of $159.6 million and net cash outflows in other long-term assets and liabilities of $3.5 million, partially offset by cash inflows from non-cash net income adjusting items (primarily consisting of depreciation and amortization) of $31.4 million, cash inflows from the sale of receivables through the MARPA Facility of $28.2 million, and net income of $8.1 million.

Net cash used in investing activities for the three months ended April 3, 2026 consisted of $2.3 million of net capital expenditures for the purchase of software and hardware, vehicles and equipment related to ongoing operations.

Net cash used in investing activities for the three months ended March 28, 2025 consisted of $2.6 million of net capital expenditures for the purchase of software and hardware, vehicles and equipment related to ongoing operations.

Net cash used in financing activities for the three months ended April 3, 2026 primarily consisted of repayments of long-term debt of $23.7 million and payments for employee withholding taxes on stock-based compensation of 4.8 million.

Net cash used in financing activities for the three months ended March 28, 2025 consisted of revolver repayments of $141.0 million, payments for employee withholding taxes on stock-based compensation of $2.7 million, and payments for debt issuance costs of $1.2 million, partially offset by proceeds from the revolver of $141.0 million.

Net cash used in operating activities for the six months ended July 3, 2026 consisted of net cash outflows from the sale of receivables through the MARPA Facility of $142.9 million and net cash outflows in working capital accounts of $85.0 million, partially offset by non-cash net income adjusting items (primarily consisting of depreciation and amortization) of $74.4 million, net income of $44.5 million, and net cash inflows in other long-term assets and liabilities of $0.6 million.

Net cash used in operating activities for the six months ended June 27, 2025 consisted of net cash outflows in working capital accounts of $161.7 million and net cash outflows in other long-term assets and liabilities of $7.8 million, partially offset by non-cash net income adjusting items (primarily consisting of depreciation and amortization) of $63.0 million, net income of $30.5 million and cash inflows from the sale of receivables through the MARPA Facility of $9.0 million.

Net cash used in investing activities for the six months ended July 3, 2026 consisted of $3.4 million of net capital expenditures for the purchase of software and hardware, vehicles and equipment related to ongoing operations.

Net cash used in investing activities for the six months ended June 27, 2025 consisted of $5.1 million of net capital expenditures for the purchase of software and hardware, vehicles and equipment related to ongoing operations.

Net cash used in financing activities for the six months ended July 3, 2026 primarily consisted of repayments of long-term debt of $37.4 million, payments for employee withholding taxes on stock-based compensation of $5.3 million and payments for debt issuance costs of $1.2 million.

Net cash used in financing activities for the six months ended June 27, 2025 consisted of revolver repayments of $319.0 million, payments for debt issuance costs of $3.9 million, repayments of long-term debt of $3.8 million and payments for employee withholding taxes on stock-based compensation of $3.0 million, partially offset by proceeds from the revolver of $319.0 million.

Capital Resources

As of April 3, 2026, we held cash, cash equivalents and restricted cash of $208.7 million, which included approximately $53.0 million held by foreign subsidiaries, and had $479.0 million of available borrowing capacity under the 2025 Revolver.

We believe that our cash, cash equivalents and restricted cash as of April 3, 2026, as supplemented by operating cash flows, the 2025 Revolver, and the MARPA Facility will be sufficient to fund our anticipated operating costs, capital expenditures, and current debt repayment obligations for at least the next 12 months.

As of July 3, 2026, we held cash, cash equivalents and restricted cash of $214.3 million, which included approximately $57.1 million held by foreign subsidiaries, and had $485.1 million of available borrowing capacity under the 2025 Revolver.

We believe that our cash, cash equivalents and restricted cash as of July 3, 2026, as supplemented by operating cash flows, the 2025 Revolver, and the MARPA Facility will be sufficient to fund our anticipated operating costs, capital expenditures, and current debt repayment obligations for at least the next 12 months.

Contractual Obligations

As of April 3, 2026, commitments to make future payments under long-term contractual obligations were as follows:

As of July 3, 2026, commitments to make future payments under long-term contractual obligations were as follows:

Payments Due by Period

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Total $ 1,394,929 $ 86,097 $ 185,884 $ 1,118,584 $ 4,364

¹ Includes unused funds fee and is based on the April 3, 2026 interest rate and outstanding balance.

¹ Includes unused funds fee and is based on the July 3, 2026 interest rate and outstanding balance.

CRITICAL ACCOUNTING POLICIES, ESTIMATES AND JUDGMENTS

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volatility in our stock price;

changes in our tax provisions or exposure to additional income tax liabilities;

changes in our tax provisions;

our expectation with respect to the resolution of certain tax claims or exposure to additional income tax liabilities;

risks and uncertainties relating to integrating and refining internal control systems, including enterprise resource planning and business systems;

3 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