CELESTICA INC

1. REPORTING ENTITY

Celestica Inc. (referred to herein as Celestica, the Company, we, us, or our) is incorporated in Ontario with its corporate headquarters located in Toronto, Ontario, Canada. Celestica’s common shares (Common Shares) are listed on the New York Stock Exchange (NYSE) and Toronto Stock Exchange (TSX). Our operating and reportable segments consist of the Connectivity & Cloud Solutions (CCS) segment and the Advanced Technology Solutions (ATS) segment. See note 3 for further detail regarding segment information.

2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES

Basis of preparation:

These unaudited interim condensed consolidated financial statements for the period ended March 31, 2026 (Q1 2026 Interim Financial Statements) have been prepared in accordance with generally accepted accounting principles in the United States (GAAP) for interim financial reporting, and the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information or footnote disclosures, normally included in annual financial statements prepared in accordance with GAAP, have been condensed or omitted pursuant to the rules and regulations of the U.S. Securities and Exchange Commission for interim financial reporting. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The Q1 2026 Interim Financial Statements, in the opinion of management, reflect all normal and recurring adjustments necessary to present fairly our financial position, operating results and cash flows for the periods presented. Results for interim periods are not necessarily an indication of results to be expected for the year. The three months ended March 31, 2026 are referred to herein as Q1 2026. The Q1 2026 Interim Financial Statements should be read in conjunction with our 2025 annual consolidated financial statements and related notes (2025 AFS) which are included in our Annual Report on Form 10-K for the year ended December 31, 2025. The Q1 2026 Interim Financial Statements are presented in United States (U.S.) dollars, which is also Celestica's functional currency. Unless otherwise noted, all financial information is presented in millions of U.S. dollars (except percentages and per share/per unit amounts).

Basis of consolidation:

These consolidated financial statements include our subsidiaries, all of which are wholly owned. Any subsidiaries that are formed or acquired during the year are consolidated from their respective dates of formation or acquisition. Inter-company transactions and balances are eliminated on consolidation.

Use of estimates and judgments:

The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies, the reported amounts of assets, liabilities, revenue and expenses, and related disclosures with respect to contingent assets and liabilities. We base our judgments, estimates and assumptions on current facts, historical experience and various other factors that we believe are reasonable under the circumstances. The economic environment also impacts certain estimates and discount rates necessary to prepare our consolidated financial statements, including significant estimates and discount rates applicable to the determination of the fair values used in the impairment testing of our non-financial assets. Our assessment of these factors forms the basis for our judgments on the carrying values of our assets and liabilities, and the accrual of our costs and expenses. Actual results could differ materially from our estimates and assumptions. We review our estimates and underlying assumptions on an ongoing basis and make revisions as determined necessary by management. Revisions are recognized in the period in which the estimates are revised and may also impact future periods.

Our review of the estimates, judgments and assumptions used in the preparation of the Q1 2026 Interim Financial Statements included those relating to, among others: our determination of the timing of revenue recognition, the determination of whether indicators of impairment existed for our assets and reporting units, our measurement of deferred tax assets and liabilities, our estimated inventory write-downs and expected credit losses, and customer creditworthiness. Any revisions to estimates, judgments or assumptions may result in, among other things, write-downs, accelerated depreciation or amortization, or impairments of our assets or our reporting units, any of which could have a material impact on our financial performance and financial condition.

Due to global economic conditions, including the impact of ongoing trade conflicts, tariffs, and geopolitical conflicts, there has been and we expect there will continue to be uncertainty in the global economy. Management has made estimates and assumptions based on information available as of the date of issuance of the Q12026 Interim Financial Statements taking into consideration certain possible impacts due to the foregoing factors. These estimates may change, as new events occur, and additional information is obtained.

Significant accounting policies:

The Q12026 Interim Financial Statements have been prepared on a basis consistent with the accounting policies as described in note 2 to our 2025 AFS.

Recently issued accounting pronouncements not yet adopted:

In November 2024, the FASB issued ASU 2024-03 Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires public business entities to provide more detailed disclosures of certain costs and expenses in the notes to the financial statements. Specifically, the guidance mandates a tabular disaggregation of relevant expense captions into categories including inventory purchases, employee compensation, depreciation, and intangible asset amortization. The accounting standard update is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted.

In November 2025, the FASB issued ASU 2025-09 Derivatives and Hedging (Topic 815): Hedge Accounting Improvements, which expands the hedged risks permitted to be aggregated in a group of individual forecasted transactions in a cash flow hedge, provides a model to facilitate the application of cash flow hedge accounting to forecasted interest payments on variable-rate debt instruments and expands hedge accounting for forecasted purchases and sales of non-financial assets. ASU 2025-09 is effective for annual reporting periods beginning after December 15, 2026, with early adoption permitted.

In December 2025, the FASB issued ASU 2025-12 Codification Improvements, which provides narrow-scope amendments to clarify, correct errors, and improve the consistency of various topics within the Accounting Standards Codification. The update addresses several technical issues, including refining diluted earnings per share calculations during loss periods, clarifying lease receivable disclosures, and removing obsolete Master Glossary terms to enhance the overall usability of the guidance. ASU 2025-12 is effective for annual periods beginning after December 15, 2026, with early adoption permitted.

In December 2025, the FASB issued ASU 2025-11 Interim Reporting (Topic 270): Narrow-Scope Improvements, which clarifies interim disclosure requirements. ASU 2025-11 is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted.

We are currently evaluating the impact that the updated standards will have on our consolidated financial statements and related disclosures. We believe that other recently issued accounting standards will either not have a material impact on the consolidated financial statements or will not apply to our operations.

3. SEGMENT AND CUSTOMER REPORTING

Segments:

Celestica serves customers intwo operating and reportable segments. Our CCS segment consists of our Communications and Enterprise (servers and storage) end markets. Our ATS segment consists of our ATS end market, and is comprised of our Aerospace and Defense, Industrial, HealthTech, and Capital Equipment businesses. Segment performance is evaluated based on segment revenue, segment income and segment margin (segment income as a percentage of segment revenue). Segment income is defined as a segment's revenue less its cost of sales and its allocatable portion of selling, general and administrative expenses (SG&A) and research and development expenses (collectively, Segment Costs). See note 21 to our 2025 AFS for a description of the businesses that comprise our segments, how segment revenue is attributed, how costs are allocated to our segments, and how segment income and segment margin are determined.

Information regarding each reportable segment for the periods indicated is set forth below:

Customers:

Three customers (all in our CCS segment) individually represented 10% or more of total revenue in Q1 2026 (35%,15% and 15%). Three customers (all in our CCS segment) individually represented 10% or more of total revenue in Q1 2025 (28%,13% and 10%).

4. ACCOUNTS RECEIVABLE (A/R), NET

Allowance for credit losses:

A/R is recorded net of allowance of $34.5 at March 31, 2026 (December 31, 2025 — $30.5).

Contract assets:

At March 31, 2026, our A/R balance included $382.5 (December 31, 2025 — $296.3) of contract assets recognized as revenue in accordance with our revenue recognition accounting policy.

5. INVENTORIES

The components of inventories, net of applicable net realizable value write-downs, were as follows:

We recorded inventory write-downs of $23.4 for Q1 2026 (Q1 2025 — $16.5) in cost of sales.

We receive deposits from certain of our customers primarily to reduce risks related to excess and/or obsolete inventory. At March 31, 2026, our accrued and other current liabilities and provisions included $388.7 (December 31, 2025 —$407.1)of customer deposits.

6. LEASES

The components of lease expense for the periods indicated are as follows:

(i)Recorded within either cost of sales or SG&A on the consolidated statements of operations based on the nature of the leased assets.

(ii)Recorded within finance costs on the consolidated statements of operations.

Other information related to leases:

7. CREDIT FACILITIES

We are party to a credit agreement (Credit Facility) with Bank of America, N.A., as Administrative Agent, and the lenders party thereto, which, prior to the April 2026 Amendment referred to below, included a term loan in the original principal amount of $250.0 (Term A Loan), a term loan in the original principal amount of $500.0 (Term B Loan), and a $750.0 revolving credit facility (Revolver).

On April 27, 2026, we amended our Credit Facility (April 2026 Amendment) to increase the commitments available under the Revolver to $1,750.0 and refinance our existing Term A Loan ($228.1 outstanding borrowings at March 31, 2026) into a new $250.0 term A loan facility (New Term A Loan). The New Term A Loan was fully drawn at closingof the April 2026 Amendment, with the proceeds primarily used to repay the refinanced Term A Loan. Term A Loan (or its successor term loan, the New Term A Loan) and the Term B Loan are referred to as the "Term Loans."

Prior to the April 2026 Amendment, the Term A Loan and the Revolver each were scheduled to mature in June 2029. Subsequent to the April 2026 Amendment, the New Term A Loan and the Revolver each mature in April 2031. The Term B Loan matures in June 2031.

The Term A Loan, as refinanced by the New Term A Loan, requires quarterly principal repayments of $3.125 (commencing in September 2026 under the New Term A Loan). The Term B Loan requires quarterly principal repayments of $1.250. Both Term Loans require a lump sum repayment of the remainder outstanding at maturity.

Prior to the April 2026 Amendment, (a) borrowings under the Revolver bear interest, depending on the currency of the borrowing and our election for such currency, at: (i) term Secured Overnight Financing Rate (Term SOFR) plus 0.1% (Adjusted Term SOFR), (ii) Base Rate, (iii) Canadian Prime, (iv) an Alternative Currency Daily Rate, or (v) an Alternative Currency Term Rate plus a specified margin (each as defined in the Credit Facility); (b) the margin for borrowings under the Revolver ranges from 1.50% to 2.25%, or from 0.50% to 1.25%, in each case depending on the rate we select and a defined net leverage ratio; (c) commitment fees range from 0.30% to 0.45%, depending on our defined net leverage ratio; and (d) outstanding amounts under the Term A Loan bear interest at Adjusted Term SOFR or Base Rate, plus a margin ranging from 1.50% —2.25% for Adjusted Term SOFR borrowings and from 0.50% —1.25% for Base Rate borrowings, in each case depending on the rate we select and our defined net leverage ratio. At March 31, 2026, outstanding amounts under the Term A Loan and Revolver bore interest at Adjusted Term SOFR plus 1.50%.

Subsequent to the April 2026 Amendment, (a)borrowings under the Revolver bear interest at varying rates (as specified therein), plus a margin ranging from 1.00% to 1.75%, or from 0.05% to 0.75%, in each case depending on the currencies of the borrowings we select and the corporate rating of the Company (as defined in the amended Credit Facility); (b) commitment fees range from 0.100% to 0.275%, depending on the corporate rating of the Company (as defined in the amended Credit Facility); (c) outstanding amounts under the New Term A Loan bear interest at varying rates (as specified therein), plus a margin ranging from 1.00% —1.75%, or from 0.05% —0.75%, in each case depending on the rate we select and the corporate rating of the Company (as defined in the amended Credit Facility).

Outstanding amounts under the Term B Loan bear interest at Term SOFR plus 1.75% or the Base Rate plus 0.75%, depending on the rate we select. At March 31, 2026, outstanding amounts under the Term B Loan bore interest at Term SOFR plus 1.75%.

Prior to the April 2026 Amendment, the Credit Facility had an accordion feature that allows us to increase the Term Loans and/or commitments under the Revolver by $200.0, plus an unlimited amount to the extent that a defined leverage ratio on a pro forma basis does not exceed specified limits, in each case on an uncommitted basis and subject to the satisfaction of certain terms and conditions. Subsequent to the April 2026 Amendment, the Credit Facility has an accordion feature that allows us to increase the Term Loans and/or commitments under the Revolver by an amount equal to the sum of (i) the greater of $700.0 and 10% of our consolidated total assets as of the date of the incurrence of such incremental borrowings, (ii) voluntary repayments and certain other retirements of the New Term A Loan, and (iii) an unlimited amount to the extent that certain defined leverage ratios do not exceed specified limits, in each case subject to the satisfaction of certain terms and conditions.

The Revolver also includes a sub-limit for swing line loans for short-term borrowings ($50.0 prior to the April 2026 Amendment and $100.0 subsequent to the April 2026 Amendment), as well as a sub-limit for letters of credit (L/Cs) ($150.0 prior to the April 2026 Amendment and $300.0 subsequent to the April 2026 Amendment), in each case subject to the overall Revolver credit limit.

We are also required to make annual prepayments of outstanding obligations under the Credit Facility (applied first to the Term Loans, then to the Revolver, in the manner set forth in the Credit Facility) ranging from 0% to 50% (based on a defined leverage ratio) of specified excess cash flow for the prior fiscal year. No prepayments based on excess cash flow were required in 2025, or will be required in 2026. In addition, prepayments of outstanding obligations under the Credit Facility (applied as described above) may also be required in the amount of specified net cash proceeds received above a specified annual threshold (including proceeds from the disposal of certain assets). No prepayments based on net cash proceeds were required in 2025, or will be required in 2026. Any outstanding amounts under the Revolver are due at maturity.

Our obligations under the Credit Facility and the obligations of the guarantees provided by our subsidiaries are secured by substantially all of our assets of the Company and of the subsidiary guarantors. The April 2026 Amendment adds a collateral fallaway provision under which the liens securing (x) our obligations under the Credit Facility and (y) the guarantees provided by certain subsidiaries will be automatically released upon the satisfaction of specified conditions. These conditions include (a) the Company obtaining and maintaining investment grade credit ratings from at least two nationally recognized statistical rating organizations, (b) the repayment in full of all outstanding principal of, accrued interest on, and prepayment premiums and all other amounts in respect of the Term B Loan and any incremental Term B Loan and (c) the absence of any default or event of default under the Credit Facility as of the date of such collateral fallaway.

We are required to comply with certain restrictive covenants under the Credit Facility, including those relating to the incurrence of certain indebtedness, the existence of certain liens, the sale of certain assets, specified investments and payments, sale and leaseback transactions, and certain financial covenants relating to a defined interest coverage ratio and leverage ratio that are tested on a quarterly basis. Our Credit Facility also limits share repurchases for cancellation if our consolidated secured leverage ratio (as defined in such facility) exceeds a specified amount (Repurchase Restriction). At March 31, 2026 and December 31, 2025, we were in compliance with all restrictive and financial covenants under the Credit Facility, and the Repurchase Restriction was not exceeded.

We have entered into interest rate swap agreements to hedge against our exposures to the interest rate variability on a portion of the Term Loans. See note 14 for further detail.

The following table sets forth, at the dates shown, outstanding borrowings under the Credit Facility, excluding ordinary course L/Cs; notional amounts under our interest rate swap agreements; and outstanding finance lease obligations:

The following table sets forth, at the dates shown, information regarding outstanding L/Cs, guarantees, surety bonds and overdraft facilities:

8. CAPITAL STOCK

Capital transactions:

Activities with respect to our capital stock for the periods indicated are set forth below:

Common Share Repurchase Plans:

We have repurchased Common Shares in the open market, or as otherwise permitted, for cancellation through NCIBs, which allow us to repurchase a limited number of Common Shares during a specified period. The maximum number of Common Shares we are permitted to repurchase for cancellation under each NCIB is reduced by the number of Common Shares we arrange to be purchased by any non-independent broker in the open market during the term of such NCIB to satisfy delivery obligations under our SBC plans. We from time-to-time enter into automatic share purchase plans (ASPPs) with a broker, instructing the broker to purchase our Common Shares in the open market on our behalf, either for cancellation under an NCIBor for delivery obligations under our SBC plans (SBC ASPPs), including during any applicable trading blackout periods, up to specified maximums (and subject to certain pricing and other conditions) through the term of each ASPP.

On October 30, 2024, the TSX accepted our notice to launch an NCIB (2024 NCIB), which allowed us to repurchase, at our discretion, from November 1, 2024 until the earlier of October 31, 2025 or the completion of purchases thereunder, up to approximately 8.6 million of our Common Shares in the open market, or as otherwise permitted, subject to the normal terms and limitations of such bids. One SBC ASPP was in effect during Q1 2025.

On October 29, 2025, the TSX accepted our notice to launch another NCIB (2025 NCIB), which allows us to repurchase, at our discretion, from November 3, 2025 until the earlier of November 2, 2026 or the completion of purchases thereunder, up to approximately 5.7 million of our Common Shares in the open market, or as otherwise permitted, subject to the normal terms and limitations of such bids. At March 31, 2026, approximately 5.5 million Common Shares remained available for repurchase under the 2025 NCIB either for cancellation or SBC delivery purposes.

Information regarding Common Shares purchases in Q1 2026 and Q1 2025, for cancellation and for SBC plan delivery obligations (including under ASPPs) is set forth below:

(1)Consists entirely of SBC ASPP purchases through an independent broker.

SBC:

From time to time, we pay cash to a broker to purchase Common Shares in the open market to satisfy delivery requirements under our SBC plans (see table above). In Q1 2026, we used 1.6 million Common Shares (Q1 2025 —2.0 million Common Shares) to settle SBC awards. At March 31, 2026, the broker held 0.2 million Common Shares with a value of $20.9 (December 31, 2025 —1.8 million Common Shares with a value of $153.8) for this purpose, which we report as treasury stock on our consolidated statements of changes in equity.

We grant restricted share units (RSUs) and performance share units (PSUs), and occasionally, stock options, to employees under our SBC plans. The majority of RSUs vest one-third per year over athree-year period. Stock options generally vest 25% per year over afour-year period. The number of outstanding PSUs that will actually vest varies from 0% to 200% of a target amount granted. The number of PSUs that will vest are based on the level of achievement of a pre-determined non-market performance measurement, subject to modification by our relative total shareholder return (TSR) compared to a pre-defined group of companies, in each case over the relevant three-year performance period. Wealso granted deferred share units and director share units (collectively, DSUs) and RSUs (under specified circumstances) to directors. See note 2(l) to the 2025 AFS for further detail.

Information regarding RSU, PSU and DSU grants to employees and directors, as applicable, for the periods indicated is set forth below (no stock options were granted in the periods below):

In Q1 2026, we made a cash payment of $325.5 for withholding taxes in connection with the SBC awards that vested during such period (Q1 2025 — $156.0).

We use the TRS agreement (TRS Agreement) to manage cash flow requirements and our exposure to fluctuations in the share price of our Common Shares in connection with the settlement of certain outstanding equity awards under our SBC plans. See note 14 for further detail.

Information regarding employee and director SBC expense and TRS FVAs (which represent changes in fair value of the TRS) for the periods indicated is set forth below:

(1)Expense consists of director compensation to be settled with Common Shares, or Common Shares and cash.

9. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX

(i)Amounts were net of immaterial tax.

10. RESTRUCTURING AND OTHER CHARGES (RECOVERIES)

(a) Restructuring charges:

Our restructuring activities consisted primarily of actions to adjust our cost base to address reduced levels of demand in certain of our businesses and geographies. In Q1 2026 and Q1 2025, our restructuring charges consisted primarily of cash charges related to employee terminations. At March 31, 2026, our restructuring provision was $3.6 (December 31, 2025 — $4.4), which we recorded in accrued and other current liabilities and provisions on our consolidated balance sheets.

(b) Transition Recoveries:

See note 14 to the 2025 AFS for a description of Transition Costs and Transition Recoveries. In Q1 2026, we recorded Transition Recoveries of $3.4, reflecting the gain on the disposal of certain real properties.

(c) Acquisition costs:

Acquisition costs consisted of consulting, transaction and integration costs related to potential and completed acquisitions. In Q1 2026, we recorded acquisition costs of $3.4 (Q1 2025 — $0.6).

(d) Other charges (recoveries):

In April 2024, we completed the acquisition of 100% of the interests of NCS Global Services LLC (NCS). The NCS acquisition agreement includes a potential earn-out of up to $20 if certain adjusted earnings before interest, taxes, depreciation and amortization targets are achieved during the period from May 2024 to April 2025. The fair value of such potential earn-out was estimated to be $6.6 at the acquisition date. During Q1 2026, the liability was re-measured tonil as the required targets were not met, resulting in a $6.6 gain.

In Q12025, we recorded other charges of $1.1 related to our transition to a U.S. domestic filer.

11. MISCELLANEOUS EXPENSE (INCOME)

The components of miscellaneous expense (income) for the periods indicated are as follows:

12. PENSION AND NON-PENSION POST-EMPLOYMENT BENEFIT PLANS

The components of net periodic benefit cost for the periods indicated are as follows:

The components of net periodic benefit cost, other than the service cost component, are included in miscellaneous expense in our consolidated statements of operations. See note 11. We generally record the service cost component in cost of sales and SG&A, depending on the nature of the expenses.

13. INCOME TAXES

Interim period income tax expense or recovery is determined by multiplying the year-to-date earnings or losses before tax by management’s best estimate of the overall annual effective income tax rate, taking into account the tax effect of certain items recognized in the interim period. As a result, the effective income tax rates used in our interim financial statements may differ from management’s estimate of the annual effective tax rate for the annual financial statements. Our estimated annual effective income tax rate varies as the quarters progress, for various reasons, including as a result of the mix and volume of business in various tax jurisdictions within the Americas, Europe and Asia, in jurisdictions with tax holidays and tax incentives, and in jurisdictions for which a valuation allowance has been recognized to reduce net deferred tax assets to nil because management believes that it is more likely than not that the benefit will not be realized (i.e., based on our review of financial projections, no estimated future taxable profit will be available against which tax losses and deductible temporary differences could be utilized). Our annual effective income tax rate can also vary due to the impact of restructuring charges, foreign exchange fluctuations, operating losses, cash repatriations, and changes in our provisions related to tax uncertainties.

Our Q1 2026 net income tax expense of $44.0 included $7.2 tax expense related to Pillar Two global minimum tax legislation (GMT).

Our Q1 2025 net income tax expense of$27.5 included$6.8 withholding tax expense incurred to minimize the impact of GMT and $3.0 tax expense for tax uncertainties relating to one of our subsidiaries, offset in part by$1.9 of reversals of tax uncertainties relating to another of our subsidiaries.

14. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

Our financial assets are comprised primarily of cash and cash equivalents, A/R, and derivatives used for hedging purposes. Our financial liabilities are comprised primarily of accounts payable, certain accrued and other liabilities, the Term Loans, borrowings under the Revolver, lease obligations, and derivatives used for hedging purposes.

Currency risk:

The majority of our currency risk is driven by operational costs, including income tax expense, incurred in local currencies by our subsidiaries. We cannot predict changes in currency exchange rates, the impact of exchange rate changes on our operating results, nor the degree to which we will be able to manage the impact of currency exchange rate changes. Such changes could have a material effect on our business, financial performance and financial condition. We enter into foreign currency forward contracts and swaps to hedge our foreign currency risk related to anticipated future cash flows, monetary assets and monetary liabilities denominated in foreign currencies.

Equity price risk:

We are party to the TRS Agreement with a third-party bank to manage our cash flow requirements and exposure to fluctuations in the price of our Common Shares in connection with the settlement of certain outstanding equity awards under our SBC plans. The TRS Agreement provides for automatic annualone-year extensions (subject to specified conditions), and may be terminated (in whole or in part) by either party at any time. The value of the TRS Agreement is determined by comparing the market price of our Common Shares to the fixed price paid by the counterparty for such shares (Strike Price). The counterparty under the TRS Agreement is obligated to make a payment to us upon its termination (in whole or in part) or expiration (Settlement) based on the increase (if any) in the value of the TRS Agreement over its term, in exchange for periodic payments made by us based on SOFR plus a specified margin applied to the Equity Notional Amount (defined in the TRS Agreement, as an amount equal to the product of (i) the number of Common Shares then subject to the TRS Agreement (notional quantity) multiplied by (ii) the Strike Price in effect). Similarly, if the value of the TRS Agreement decreases over its term, we are obligated to pay the counterparty the amount of such decrease upon Settlement. The TRS Agreement does not qualify for hedge accounting.

At March 31, 2026, our TRS Agreement had a notional quantity of 1.25 million Common Shares (December 31, 2025 —1.25 million Common Shares).

In each of December 2025 and March 2025, we re-struck our TRS Agreement at a Strike Price of $288.87 per share and $91.58 per share, respectively, and received $246.6 and $98.6 from the counterparty, respectively, each of which was recorded in cash provided by financing activities in our consolidated statements of cash flows.

Interest rate risk:

Borrowings under the Credit Facility expose us to interest rate risk due to the potential variability of market interest rates (see note 7). In order to partially hedge against our exposure to interest rate variability on our Term Loans, we are party to various agreements with third-party banks to swap the variable interest rate with a fixed rate of interest for a portion of the borrowings thereunder. At March 31, 2026, associated with the Term A Loan, we had: (i) interest rate swaps with $80.0 notional amount expiring in June 2027; (ii) interest rate swaps with $40.0 notional amount expiring in June 2029; and (iii) interest rate swaps with $80.0 notional amount commencing June 2027 and expiring in June 2029. At March 31, 2026, associated with the Term B Loan, we had: (i) interest rate swaps with $230.0 notional amount expiring in June 2027; and (ii) interest rate swaps with $230.0 notional amount commencing in June 2027 and expiring in June 2029.

At March 31, 2026, the interest rate risk related to $369.3 of borrowings under the Credit Facility was unhedged, consisting of unhedged amounts outstanding under the Term Loans ($108.1 under the Term A Loan and $261.2 under the Term B Loan). See note 7.

Interest rate swaps are designated as cash flow hedges when the hedge relationship is effective and meets the hedge accounting criteria.

Our TRS Agreement exposes us to interest rate risk as interest payments on our TRS Agreement are based on a variable interest rate (see above).

Credit risk:

Credit risk refers to the risk that a counterparty may default on its contractual obligations resulting in a financial loss to us. We believe our credit risk of counterparty non-performance continues to be relatively low. We are in regular contact with our customers, suppliers and logistics providers to assess counterparty credit-related non-performance. If a key supplier (or any company within such supplier's supply chain) or customer fails to comply with their contractual obligations, this could result in a significant financial loss to us. We would also suffer a significant financial loss if an institution from which we purchased foreign currency exchange contracts and swaps, interest rate swaps, or annuities for our pension plans, or the counterparty to our TRS Agreement, defaults on their contractual obligations. With respect to our financial market activities, we have adopted a policy of dealing only with counterparties we deem to be creditworthy to help mitigate the risk of financial loss from defaults. Adjustments are made to our allowance for credit losses each period in connection with our ongoing credit risk assessments. See note 4.

Liquidity risk:

Liquidity risk is the risk that we may not have cash available to satisfy our financial obligations as they come due. We manage liquidity risk through maintenance of cash on hand and access to the various financing arrangements described in note 4 to our 2025 AFS and note 7 herein.

Hedging activities:

The tables below present information regarding the fair values of derivative instruments and the effects of derivative instruments on our consolidated financial statements:

Derivatives not designated as hedging instruments (economic hedges):

Derivatives designated as cash flow hedges:

(i) In the next twelve months, we estimate that $6.2 of existing losses, net of tax, will be reclassified from AOCI into our consolidated statements of operations. The maximum length of time we hedge our exposure to the variability in future cash flows for forecasted foreign currency transactions is 12 months.

(ii) In the next twelve months, we estimate that $0.5 of existing gains, net of tax, will be reclassified from AOCI into our consolidated statements of operations. The maximum length of time that we hedge our exposure to the variability in future cash flows for forecasted interest payments is 3.2 years.

15. EARNINGS PER SHARE

Basic and diluted earnings per share are calculated by dividing net earnings by the following weighted average number of shares:

16. CONTINGENCIES

Litigation:

In the normal course of our operations, we may be subject to litigation, investigations and other claims, including legal, regulatory and tax proceedings. Management believes that adequate provisions have been recorded where required. Although it is not always possible to estimate the extent of potential costs, if any, management believes that the ultimate resolution of all such pending matters will not have a material adverse impact on our financial performance, financial position or liquidity.

Taxes Matters:

In 2021, the Romanian tax authorities issued a final assessment in the aggregate amount of approximately 31 million Romanian leu (approximately $7 at Q1 2026 period-end exchange rates), for additional income and value-added taxes for our Romanian subsidiary for the 2014 to 2018 tax years. In order to advance our case to the appeals phase and reduce or eliminate potential interest and penalties, we paid the Romanian tax authorities the full amount assessed in 2021 (without agreement to all or any portion of such assessment). We believe that our originally-filed tax return positions are in compliance with applicable Romanian tax laws and regulations, and continue to vigorously defend our position through all necessary appeals or other judicial processes.

We are under examination by the Thailand tax authorities for the tax year 2019. The examination may lead to adjustments to our taxes with respect to the year under examination as well as other subsequent periods.

In 2024, the Thailand tax authorities issued an assessment letter seeking to impose additional value-added taxes and surcharges in the aggregate amount of approximately 403 million Thai baht (approximately $12 at Q1 2026 period-end exchange rates) for our Thailand subsidiary for the 2019 tax year. We believe that our original positions with respect to the value-added taxes are in compliance with applicable Thailand tax laws and regulations, and continue to vigorously defend our position through all necessary appeals or other judicial processes. A bank guarantee has been issued for the maximum potential liability.

In our major tax jurisdictions, we may be subject to income tax examinations for tax years from 2018 to present.