HELIOS TECHNOLOGIES, INC.

Previous wording

Our previously announced restructuring activities within our Hydraulics segment related to the creation of our two new Regional Operational Centers of Excellence ("CoE") are substantially complete. The Hydraulic Manifold Solutions CoE, located in Mishawaka, Indiana, is now doing the manifold machining and integrated package assembly for Sun Hydraulics, Faster Inc., and Daman. The Hydraulic Valve and Coupling Solutions CoE, located in Sarasota, Florida, is manufacturing and assembling cartridge valve technology and quick release couplings. There still remain some integration and optimization activities we expect to be completed in 2024. We also continue to add capabilities and activities to our recently expanded Tijuana, Mexico facility to support our Electronics segment. Initial efforts have focused on circuit board assembly and wire harness production.

Current wording

Our previously announced restructuring activities within our Hydraulics segment related to the creation of our two new Regional Operational Centers of Excellence ("CoE") are complete. The Hydraulic Manifold Solutions CoE, located in Mishawaka, Indiana, is now doing the manifold machining and integrated package assembly for Sun Hydraulics, Faster Inc., and Daman. The Hydraulic Valve and Coupling Solutions CoE, located in Sarasota, Florida, is manufacturing and assembling cartridge valve technology and quick release couplings. We also continue to add capabilities and activities to our recently expanded Tijuana, Mexico facility to support our Electronics segment. Initial efforts have focused on circuit board assembly and wire harness production. While activities are currently paused, we continue to evaluate plans to move additional production activities to Tijuana in 2025.

Previous wording

We have also initiated some restructuring activities to better optimize our European regional operations. We are transitioning some manufacturing of manifolds and integrated package assembly to our Roncolo, Italy location. To create capacity in Roncolo, we are moving some turning and lathing operations from Roncolo to our Rivolta, Italy location. These activities include transferring equipment and operations between facilities. The activities are proceeding as planned and we expect them to continue throughout 2024 and into 2025.

Current wording

The initial phase of the restructuring activities to better optimize our European regional operations are complete. This included transitioning some manufacturing of manifolds and integrated package assembly to our Roncolo, Italy location. To create capacity in Roncolo, we moved some turning and lathing operations from Roncolo to our Rivolta, Italy location. These activities included transferring equipment and operations between facilities. Additional phases of this project are currently paused, we continue to evaluate plans for restructuring activities to optimizing operations in the European Region.

Previous wording

We expect the challenging macroeconomic conditions to continue, characterized by economic uncertainty and market disruption driven by inflationary pressures, political uncertainty, the ongoing Russia-Ukraine war and the Israeli-Hamas war. We do not have operations in these conflict regions at this time and those conflicts have not and are not expected to have a material impact on our financial condition or results. In addition, we are continuously monitoring these economic and geopolitical conditions and remain focused on liquidity management, pricing discipline, cost savings initiatives and production efficiency as ways to mitigate the risks associated with the uncertainty.

Current wording

We expect the challenging macroeconomic conditions to continue, characterized by economic uncertainty and market disruption driven inflationary pressures, political uncertainty, potential changes to current global trade policies and modifications of existing trade agreements, the potential negotiation of new trade agreements and imposition of new (and retaliatory) tariffs, including the recently announced and potentially contemplated tariffs by the U.S. presidential administration, the ongoing Russia-Ukraine war and the Israel-Hamas war. We are continuously monitoring these economic and geopolitical conditions and remain focused on liquidity management, pricing discipline, cost savings initiatives and production efficiency as ways to mitigate the risks associated with the uncertainty.

Previous wording

According to the National Fluid Power Association (the fluid power industry’s trade association in the U.S.), the U.S. index of shipments of hydraulic products decreased 13% during the first nine months of 2024 compared to the first nine months of the prior year while the U.S. index of orders of hydraulic products declined 14% during the same period. Monthly shipments and orders continue to trend downward, declining about 18% and 19%, respectively, for the three months ended September 28, 2024 over the year ago period, and 8% and 3%, respectively, compared to the previous quarter. In Europe, the CEMA Business Barometer reported in September 2024 that the general business climate index for the European agricultural machinery industry has improved slightly but business continues to be at a very low level compared to prior years. The CEMA Barometer report also indicated that incoming orders both within and outside of Europe remain below prior year levels and there are no European markets with positive confidence levels. The CECE (Committee for European Construction Equipment) September report noted that the sales and order trends in Europe continue to be depressed and that a near term pessimistic outlook remains. The general economic climate was the number one reported factor limiting sales.

Current wording

According to the National Fluid Power Association (the fluid power industry’s trade association in the U.S.), the U.S. index of shipments of hydraulic products decreased 16% during the first three months of 2025 compared to the first three months of the prior year while the U.S. index of orders of hydraulic products declined 12% during the same period. In Europe, the CEMA Business Barometer reported in March 2025 that the general business climate index for the European agricultural machinery industry has improved with both the current business sentiment and expectations for turnover in the next six months trending upward in Q1. The CEMA Barometer report also indicated that the improvement was reflected for most European markets with Poland, Spain and Italy leading the European market ranking. The CECE (Committee for European Construction Equipment) March report noted that the business climate was flat for the month after reporting four consecutive months of improvement in February. The order intake remains in line with prior years for both European and international markets, signaling that sales may be nearing their trough. Concerns about the general economic climate was the number one reported limiting factor while the uncertain tariff situation in the U.S. was reported to have caused evaluations of the North American market to deteriorate.

Previous wording

The Federal Reserve’s Industrial Production Index, which measures the real output of all relevant establishments located in the U.S., reports third quarter 2024 output of semiconductors and other electronics components increased from the second quarter 2024, the second sequential quarterly increase, and remain higher than sales levels seen in recent years in comparable periods. The Institute of Printed Circuits Association (“IPC”) reported that total North American printed circuit board (“PCB”) shipments were down 24.1% in September, up 35% in August and down 21% in July compared with the same months last year. PCB bookings in 2024 have been flat to down compared to the prior year in seven of the nine months, with September being down 4%, August being up 44% and July being down 25%. The IPC also reported that North American electronics manufacturing services (“EMS”) shipments were up 10.3% in September, down 4% in August and up 2% in July compared to the prior year. EMS bookings were up 20% in September, up 16% in August and flat in July year over year. IPC also indicated that the electronics sector demand index fell 7.3% in September and sentiment among electronics manufacturers declined with cost concerns and demand weaknesses cited as primary reasons.

Current wording

The Federal Reserve’s Industrial Production Index, which measures the real output of all relevant establishments located in the U.S., reports first quarter 2025 output of semiconductors and other electronics components increased from the fourth quarter 2024, the fourth sequential quarterly increase. The Institute of Printed Circuits Association (“IPC”) reported that total North American printed circuit board (“PCB”) shipments were down 3.1% in March after being up 11.3% in February and up 19.9% in January compared with the same months last year. PCB bookings in 2025 were flat in March compared to the prior year but are higher 19.3% for the first three months of the year after strong bookings in January and February. The book to bill ratio, calculated as the value of orders booked over the past three months divided by the value of sales in the same period, was above 1.2 for each month, indicating a strong demand environment to start the year. The IPC also reported that North American electronics manufacturing services (“EMS”) shipments were relatively flat in the first three months compared to the prior year. EMS bookings were up 12.7% in March year over year after being down 3.6% in February and 1.2% in January, with the sentiment buyers were accelerating orders to get ahead of potential tariffs. IPC also indicated that the electronics industry demand index strengthened to its highest level in nearly a year in March, indicating an expansion in manufacturing activity. Electronics manufacturers did express concern about U.S. trade policies and the potential impacts to the overall economy and their business operations however.

Previous wording

2024 Third Quarter Results and Comparison of the Three Months Ended September 28, 2024, and September 30, 2023

Current wording

2025 First Quarter Results and Comparison of the Three Months Ended March 29, 2025, and March 30, 2024

Previous wording

The following is a discussion of our third quarter of 2024 results of operations and liquidity and capital resources. Comparisons are with the corresponding reporting period of 2023, unless otherwise noted.

Current wording

The following is a discussion of our first quarter of 2025 results of operations and liquidity and capital resources. Comparisons are with the corresponding reporting period of 2024, unless otherwise noted.

Previous wording

Third quarter consolidated net sales declined $6.9, 3.4%, below the prior-year third quarter. There was no impact from acquisitions in the third quarter. Sales declined in each segment due to lower demand in end markets, predominantly the agriculture end market, partially offset by growth in the health and wellness end market. Changes in foreign currency exchange rates had a favorable impact to our third quarter sales of $0.6, 0.3%.

Current wording

First quarter consolidated net sales declined $16.5, 7.8%, below the prior-year first quarter. There was no impact from acquisitions. Sales declined in the Hydraulics segment due to lower demand across most end markets, predominantly the agriculture, mobile and industrial end markets. Sales were relatively flat in the Electronics segment, with slight growth in health and wellness and recreational segments offsetting declines in other markets. Changes in foreign currency exchange rates had an unfavorable impact to our first quarter sales of $2.3, 1.1%.

Previous wording

Sales were negatively impacted by reduced demand for products in our agriculture, mobile, industrial and recreational end markets, offset partially by an increase to the health and wellness end market. Sales were up in the APAC region and down in the Americas and EMEA regions during the third quarter and year-to-date periods compared to the prior year.

Current wording

Compared to the prior year, sales in the first quarter were negatively impacted by reduced demand for products in our agriculture, mobile and industrial end markets, offset partially by an increase to the health and wellness end market. Sales in the recreational end market were relatively flat. Sales were down in all regions during the first quarter compared to the prior year.

Previous wording

Third quarter gross profit increased $0.8, 1.3%, above the prior year third quarter as the impact of lower volume was offset by lower material costs, reductions in variable overhead and favorable foreign currency impacts of $0.2. Gross margin increased by 150 basis points as the impact of lower fixed costs leverage on lower volume and a higher mix of revenue in lower margin products were offset by improvements in material costs and variable overhead.

Current wording

First quarter gross profit decreased $7.3, 10.9%, below the prior year first quarter primarily from the impact of lower volume and higher material costs as a percentage of sales, partially offset by lower labor and overhead costs. Changes in foreign currency had an unfavorable impact of $0.6. Gross margin decreased by 110 basis points as the impact of lower fixed costs leverage on lower volume and higher material costs more than offset reductions in labor and overhead.

Previous wording

Third quarter operating income as a percentage of sales increased 450 basis points to 11.4%. The increase is due to the gross margin level changes and lower SEA expenses as a percentage of revenue, primarily from lower payroll and benefit costs, compared with the prior year period, including a $5.5 reversal of unvested stock compensation in connection with the officer transition in July 2024.

Current wording

First quarter operating income as a percentage of sales decreased 90 basis points to 8.7%. The decrease is due to the gross margin level changes partially offset by lower operating expenses as a percentage of revenue, primarily from lower payroll and benefit costs, compared with the prior year period.

Previous wording

Net interest expense increased by $0.3 to $9.0 in the third quarter of 2024. The prior year period interest expense benefited $1.8 from a recognized gain on an interest rate swap agreement. Excluding the impact of the interest rate swap agreement, net interest expense was lower by $1.5M due to carrying a lower debt balance throughout the period and lower interest rates. Average net debt decreased to $447.2 during the third quarter of 2024 compared with $510.8 during the third quarter of 2023. The reduction in average net debt is due to the paying down of debt incurred from the prior year acquisitions. Year-to-date net interest expense totaled $25.7, an increase of $3.1 year over year, due to carrying higher debt throughout the period and the write-off of $0.5 unamortized debt issuance costs as part of our debt refinancing in Q2. Average net debt for the year-to-date period increased to $464.6 compared with $455.9 during the prior-year period. The increase in the year-to-date average net debt balance is due to carrying a higher debt balance throughout the period as a result of borrowings related to the Schultes and i3 acquisitions during the first half of 2023.

Current wording

Net interest expense decreased by $0.8 to $7.4 in the first quarter of 2025. The prior year period interest expense benefited $1.8 from a recognized gain on an interest rate swap agreement. Excluding the impact of the interest rate swap agreement, interest expense was lower by $2.6 due to carrying a lower debt balance throughout the period and lower average interest rates. Average net debt decreased to $402.6 during the first quarter of 2025 compared with $448.9 during the first quarter of 2024. The reduction in average net debt is due to the paying down of debt incurred from prior year acquisitions.

Previous wording

The provision for income taxes for the third quarter of 2024 was 14.2% of pretax income compared to 30.5% for the prior-year third quarter. The year-to-date provision was 20.3% and 23.8% of pretax income for 2024 and 2023, respectively. These effective rates fluctuate relative to the levels of income and different tax rates in effect among the countries in which we sell our products. The change in the comparable prior-year quarter and year-to-date is primarily due to an overall increase in discrete tax benefits driven by the officer transition in July 2024.

Current wording

The provision for income taxes for the first quarter of 2025 was 23.5% of pretax income compared to 23.2% for the prior-year first quarter. These effective rates fluctuate relative to the levels of income and different tax rates in effect among the countries in which we sell our products.

Previous wording

On December 20, 2022, the OECD published Pillar Two guidance on safe harbors and penalty relief (the “Safe Harbor Guidance”). The Safe Harbor Guidance includes a Transitional Country-by-Country Report (“CbCR”) Safe Harbor, which would deem a MNE’s top-up tax for a jurisdiction to be zero and would allow the MNE to avoid undertaking detailed GloBE calculations in respect of that jurisdiction during the Transition Period if it can demonstrate one of the three transitional tests.

Current wording

On December 20, 2022, the Organisation for Economic Co-operation and Development (“OECD”) published Pillar Two guidance on safe harbors and penalty relief (the “Safe Harbor Guidance”). The Safe Harbor Guidance includes a Transitional Country-by-Country Report (“CbCR”) Safe Harbor, which would deem a multinational enterprise’s (“MNE’s”) top-up tax for a jurisdiction to be zero and would allow the MNE to avoid undertaking detailed Global Anti-Base Erosion (“GloBE”) calculations in respect of that jurisdiction during the Transition Period if it can demonstrate one of the three transitional tests.

Previous wording

Third quarter net sales for the Hydraulics segment decreased by $2.6, 2.0%, compared with the prior year third quarter. The decline in sales in the third quarter was primarily driven by softness in the agriculture end market, while industrial and mobile end markets were up compared to the prior year-period. Changes in foreign currency exchange rates had a favorable impact of $0.6, 0.5%.

Current wording

First quarter net sales for the Hydraulics segment decreased by $16.0, 11.2%, compared with the prior year first quarter. The decline in sales in the first quarter was driven by softness across all end markets, most predominantly in the agriculture and mobile end markets. Changes in foreign currency exchange rates had an unfavorable impact of $2.2, 1.5%.

Previous wording

Regional sales performance in the third quarter compared to the prior year quarter was driven by:

Current wording

Regional sales performance in the first quarter compared to the prior year quarter was driven by:

Previous wording

Americas - sales declined $3.6, 6.5%, primarily from generally softer demand in the region.

Current wording

Americas - sales declined $5.9, 10.6%, primarily from generally softer demand in the region.

Previous wording

APAC - excluding favorable changes in foreign currency rates of $0.2, sales increased $2.9, 7.7%, with increased demand in China, Australia and India.

Current wording

APAC - excluding favorable changes in foreign currency rates of $1.0, sales increased $1.5, 3.6%, with decreased demand in China, Japan, Korea and India.

Previous wording

Operating income as a percentage of sales increased 480 basis points to 18.7% in the third quarter of 2024 due to the gross margin improvement and lower SEA expenses. SEA expenses went down by $6.0, mainly due to lower labor and benefit costs, including a $3.7 reversal of unvested stock compensation in connection with the officer transition in July 2024.

Current wording

Operating income as a percentage of sales decreased 150 basis points to 13.8% in the first quarter of 2025 due to the gross margin decline partially offset by lower operating expenses. SEA expenses went down by $2.7, mainly due to lower labor and benefit costs.

Previous wording

Third quarter net sales for the Electronics segment decreased $4.3, 6.2%, compared with the prior year third quarter. There was no impact from acquisitions in the third quarter. Compared to the prior year period, third quarter sales in the health and wellness end market increased, while sales to the recreational, industrial, and mobile end markets decreased. Changes in foreign currency exchange rates had no impact.

Current wording

First quarter net sales for the Electronics segment decreased $0.5, 0.7%, compared with the prior year first quarter. Compared to the prior year period, first quarter sales in the health and wellness and recreational end markets increased slightly, while sales to the industrial, and mobile end markets decreased. Changes in foreign currency exchange rates had minimal impact.

Previous wording

Operating income as a percentage of sales increased 430 basis points to 10.4% in the third quarter of 2024 compared to the prior year period due to the improvement in gross margin and lower SEA expenses. SEA expenses decreased $1.6 primarily due to lower labor and benefit costs, including a $1.8 reversal of unvested stock compensation in connection with the officer transition in July 2024.

Current wording

Operating income as a percentage of sales increased 140 basis points to 11.6% in the first quarter of 2025 compared to the prior year period due to lower SEA expenses. SEA expenses decreased $1.1 primarily due to lower labor and benefit costs.

Previous wording

Certain costs are excluded from business segment results as they are not used in evaluating the results of, or in allocating resources to, our operating segments. For the third quarter of 2024, these costs totaled $8.8 for: amortization of acquisition-related intangible assets of $7.9, $0.1 related to our acquisition and integration activities and $0.8 for officer transition costs. Compared to the third quarter of 2023, these costs remained primarily flat. Year-to-date, corporate and other costs totaled $25.6 for: amortization of acquisition related intangible assets of $23.6, $0.7 related to our acquisition and integration activities and $1.3 for officer transition costs. Compared to the 2023 year-to-date period that included amortization of acquisition related intangible assets of $24.7, $3.4 related to our acquisition and integration activities and $1.0 for officer transition costs.

Current wording

Certain costs are excluded from business segment results as they are not used in evaluating the results of, or in allocating resources to, our operating segments. For the first quarter of 2025, these costs totaled $8.4 for: amortization of acquisition-related intangible assets of $8.3 and $0.1 for officer transition costs. Compared to the first quarter of 2024, these costs remained primarily flat.

Previous wording

Historically, our primary source of capital has been cash generated from operations. We also use borrowings on our credit facilities to fund acquisitions. During the first nine months of 2024, cash provided by operating activities totaled $86.4. At the end of the third quarter, we had $46.7 of available cash and cash equivalents on hand and $325.8 of available credit on our revolving credit facilities. We also have a $400.0 accordion feature available on our credit Third Amended and Restated Credit Agreement, subject to certain pro forma compliance requirements, intended to support potential future acquisitions.

Current wording

Historically, our primary source of capital has been cash generated from operations. We also use borrowings on our credit facilities to fund acquisitions. During the first three months of 2025, cash provided by operating activities totaled $19.0. At the end of the first quarter, we had $45.9 of available cash and cash equivalents on hand and $352.6 of available credit on our revolving credit facilities. We also have a $400.0 accordion feature available under our Third Amended and Restated Credit Agreement, subject to certain pro forma compliance requirements, intended to support potential future acquisitions.

Previous wording

Cash on hand increased $14.3 in the first three quarters of 2024 to $46.7 as of September 28, 2024. Changes in exchange rates during the nine months ended September 28, 2024, positively impacted cash and cash equivalents $0.6. Cash balances on hand are a result of our cash management strategy, which focuses on maintaining sufficient cash to fund operations while reinvesting cash in the Company and paying down borrowings on our credit facilities.

Current wording

Cash on hand increased $1.8 in the first quarter of 2025 to $45.9 as of March 29, 2025. Changes in exchange rates during the three months ended March 29, 2025, positively impacted cash and cash equivalents $0.9. Cash balances on hand are a result of our cash management strategy, which focuses on maintaining sufficient cash to fund operations while reinvesting cash in the Company and paying down borrowings on our credit facilities.

Previous wording

Year-to-date cash from operations increased by $36.2 to $86.4. Cash earnings (calculated as net income plus adjustments to reconcile net income to net cash provided by operating activities, excluding changes in net operating assets and liabilities) decreased by $1.9 in the first three quarters of 2024 compared to the same period in 2023. Changes in net operating assets and liabilities improved cash flow by $38.1 in the first three quarters of the period, compared to the prior year period, primarily from favorable differences from the prior year in cash flows from inventories and other current assets, offset by an increase in accounts receivable and accrued expenses and other liabilities. Investments in inventory increased cash by $16.2 and reduced cash by and $14.4 in the first three quarters of 2024 and 2023, respectively. Days of inventory on hand increased to 139 days as of September 28, 2024, compared with 133 days as of September 30, 2023. Changes in accounts receivable reduced cash by $5.5 and $1.5 in the first three quarters of 2024 and 2023, respectively. Days sales outstanding decreased slightly to 57 days as of September 28, 2024, compared with 59 days as of September 30, 2023, as a result of initiatives to improve our collection patterns.

Current wording

Year-to-date cash from operations increased by $1.2 to $19.0. Cash earnings (calculated as net income plus adjustments to reconcile net income to net cash provided by operating activities, excluding changes in net operating assets and liabilities) decreased by $3.0 in the first quarter of 2025 compared to the same period in 2024. Changes in net operating assets and liabilities improved cash flow by $4.2 in the first quarter, compared to the prior year period, primarily from $4.8 of insurance proceeds received for losses the Company incurred due to a fire and a weather-related incident at one of its manufacturing facilities in Italy in the third quarter of 2023 and from days payable outstanding optimization, partially and offset by an increase in accounts receivable, accrued expenses and other liabilities. Changes in inventory increased cash by $1.1 in comparison to reduction of cash by $0.7 in the first quarter of 2025 and 2024, respectively. Days of inventory on hand decreased to 126 days as of March 29, 2025, compared with 135 days as of March 30, 2024. Changes in accounts receivable reduced cash by $15.3 and $13.1 in the first quarter of 2025 and 2024, respectively. Days sales outstanding increased slightly to 56 days as of March 29, 2025, compared with 54 days as of March 30, 2024. Changes in accounts payable increased cash by $4.8 in comparison to a reduction of cash of $1.8 in 2025 and 2024, respectively. Days payables outstanding for the 2025 year decreased to 41 days from 43 days during 2024.

Previous wording

Capital expenditures totaled $19.6, 3.1%, of sales for the first three quarters of 2024, a decrease of $5.9 over the prior year comparable period. Capital expenditures for 2024 are forecasted to be approximately 3%-4% of sales, for investments in machinery and equipment for capacity expansion projects, improvements to manufacturing technology and maintaining or replacing existing machine capabilities.

Current wording

Capital expenditures totaled $6.1, 3.1%, of sales for the first quarter of 2025, an increase of $0.6 over the prior year comparable period. Capital expenditures for 2025 are forecasted to be approximately 3%-4% of sales, for investments in machinery and equipment, improvements to manufacturing technology and maintaining or replacing existing machine capabilities.

Previous wording

Net cash used in financing activities totaled $49.4 during the first three quarters of 2024, compared with cash provided of $85.7 in the prior year period. In the first three quarters of 2024, repayments, net of borrowings, totaled $42.0. Cash paid for acquisitions in first quarter of 2023 was primarily financed with borrowings on our credit facility; borrowings, net of repayments, totaled $116.7.

Current wording

Net cash used in financing activities totaled $11.3 during the first quarter of 2025, compared to $5.4 in the same period of the prior year. In the first quarter of 2025, repayments, net of borrowings, totaled $7.8 compared to $0.7 in the first quarter of 2024.

Previous wording

On June 25, 2024, the Company amended and restated its credit agreement (the “Third Amended and Restated Credit Agreement”) with PNC Bank, National Association, as administrative agent, and the lenders party thereto. The amendment extended the debt maturity for five years and increased the Company’s revolving credit facility (the “Revolving Credit Facility) to $500.0, with the aggregate principle amount of the term loan credit facility (the “Term Loan Facility”) remaining at $300.0. The amendment also revised the accordion feature to permit an increase of up to an additional $400.0. Borrowings under the line of credit bear interest at defined rates plus an applicable margin based on the Company’s leverage ratio. Scheduled principal payments under the Term Loan Facility are payable in quarterly installments beginning on September 28, 2024 and continuing on the last day of each following fiscal quarter, beginning at $3.75 before increasing to $5.6 in June 2026 and $7.5 in June 2028. All remaining principal and unpaid accrued interest are due on the Term Loan Facility maturity date, which is June 25, 2029.

Current wording

On June 25, 2024, the Company amended and restated its credit agreement (the “Third Amended and Restated Credit Agreement”) with PNC Bank, National Association, as administrative agent, and the lenders party thereto. The amendment extended the debt maturity for five years and increased the Company’s revolving credit facility (the “Revolving Credit Facility) to $500.0, with the aggregate principal amount of the term loan credit facility (the “Term Loan Facility”) remaining at $300.0. The amendment also revised the accordion feature to permit an increase of up to an additional $400.0. Borrowings under the line of credit bear interest at defined rates plus an applicable margin based on the Company’s leverage ratio. Scheduled principal payments under the Term Loan Facility are payable in quarterly installments beginning on September 28, 2024 and continuing on the last day of each following fiscal quarter, beginning at $3.75 before increasing to $5.6 in June 2026 and $7.5 in June 2028. All remaining principal and unpaid accrued interest are due on the Term Loan Facility maturity date, which is June 25, 2029.

Previous wording

During the third quarter of 2024, we declared a quarterly cash dividend of $0.09 per share payable on October 21, 2024, to shareholders of record as of October 4, 2024. The declaration and payment of future dividends is subject to the sole discretion of the board of directors, and any determination as to the payment of future dividends will depend upon our profitability, financial condition, capital needs, future prospects and other factors deemed pertinent by the board of directors.

Current wording

During the first quarter of 2025, we declared a quarterly cash dividend of $0.09 per share payable on April 22, 2025, to shareholders of record as of April 4, 2025. The declaration and payment of future dividends is subject to the sole discretion of the Board, and any determination as to the payment of future dividends will depend upon our profitability, financial condition, capital needs, future prospects and other factors deemed pertinent by the Board.

Previous wording

We currently apply judgment and estimates that may have a material effect on the eventual outcome of assets, liabilities, revenues and expenses for impairment of long-lived assets, inventory, goodwill, accruals, income taxes and fair value measurements. Our critical accounting policies and estimates are included in our Form 10-K, and any changes made during the first nine months of 2024, are disclosed in Note 2 to the Consolidated, Unaudited Financial Statements.

Current wording

We currently apply judgment and estimates that may have a material effect on the eventual outcome of assets, liabilities, revenues and expenses for impairment of long-lived assets, inventory, goodwill, accruals, income taxes and fair value measurements. Our critical accounting policies and estimates are included in our Form 10-K, and any material changes made during the first three months of 2025, are disclosed in Note 2 of the Notes to the Consolidated Unaudited Financial Statements included in this Quarterly Report on Form 10-Q.