TELEDYNE TECHNOLOGIES INC

Previous wording

In early 2025, the U.S. Presidential administration implemented significant new tariffs on foreign imports impacting multiple countries, commodities and industries, and these new tariffs and export restrictions also prompted retaliatory tariffs and export restrictions from certain countries. As of July 2025, certain tariffs and retaliatory tariffs have been delayed, but a number of the new tariffs remain in effect, including significant tariffs and trade sanctions between the United States and China. China has also restricted the export of certain rare earth minerals which are used in our products. Tariffs, trade restrictions and retaliatory measures could result in revenue reductions, cost increases on material used in our products or significant production delays, which could adversely affect our business, financial condition, operational results and cash flows. Consistent with our strategy, we are optimizing operations and facilities and taking measures to contain costs to reduce the impact from tariffs. We may also implement additional pricing actions to mitigate the impact of these tariffs. To date, our strategies have helped minimize our exposure to these conditions.

Current wording

The global trade environment continues to be highly dynamic, including new potential tariffs and retaliatory tariffs, and a number of the tariffs remain in effect. There have been continuing significant tariffs and trade sanctions between the United States and China, including in each country designation of persons with trading restrictions. China has also restricted the export of certain rare earth minerals which are used in our products, which could disrupt the supply chain for these minerals and components made from these materials. Tariffs, trade restrictions and retaliatory measures could result in revenue reductions, cost increases on material used in our products or significant production delays, which could adversely affect our business, financial condition, operational results and cash flows. Consistent with our strategy, we are optimizing operations and facilities and taking measures to contain costs to reduce the impact from tariffs. We may also implement additional pricing actions to mitigate the impact of these tariffs. To date, our strategies have helped minimize our exposure to these conditions.

Previous wording

(a) Net sales exclude inter-segment sales of $7.2 million and $11.0 million for the second quarter and six months of 2025, respectively, and $8.5 million and $13.3 million for the second quarter and six months of 2024, respectively.

Current wording

(a) Net sales exclude inter-segment sales of $6.6 million and $17.5 million for the third quarter and nine months of 2025, respectively, and $5.9 million and $19.2 million for the third quarter and nine months of 2024, respectively.

Previous wording

The following is a discussion of our 2025 second quarter results compared with the second quarter results of 2024. Comparisons are with the corresponding reporting period of 2024 unless noted otherwise.

Current wording

The following is a discussion of our 2025 third quarter results compared with the third quarter results of 2024. Comparisons are with the corresponding reporting period of 2024 unless noted otherwise.

Previous wording

Our second quarter of 2025 net sales increased 10.2%. Net income attributable to Teledyne for the second quarter of 2025 increased 16.5%, driven primarily by higher net sales. Net income per diluted share was $4.43 for the second quarter of 2025, compared with net income per diluted share of $3.77.

Current wording

Our third quarter of 2025 net sales increased 6.7%, primarily due to sales from recent acquisitions in the Aerospace and Defense Electronics segment. Net income attributable to Teledyne for the third quarter of 2025 decreased 15.8%, primarily driven by the favorable resolution of an uncertain tax position reached by the Company with foreign tax authorities around transfer pricing between certain FLIR subsidiaries in the third quarter of 2024. Net income per diluted share was $4.65 for the third quarter of 2025, compared with net income per diluted share of $5.54.

Previous wording

The second quarter of 2025 net sales compared with the second quarter of 2024 reflected higher net sales in each segment. The second quarter of 2025 included $70.1 million in incremental sales from recent acquisitions, which are primarily included within the Aerospace and Defense Electronics segment.

Current wording

The third quarter of 2025 net sales compared with the third quarter of 2024 reflected higher net sales in the Digital Imaging, Instrumentation and Aerospace and Defense Electronics segments, partially offset by lower net sales in the Engineered Systems segment. The third quarter of 2025 included $69.0 million in incremental sales from recent acquisitions, which are included within the Aerospace and Defense Electronics segment.

Previous wording

Cost of sales increased $87.6 million in the second quarter of 2025, primarily driven by higher net sales. Cost of sales as a percentage of net sales increased for the second quarter of 2025 to 57.4% from 56.9% primarily due to unfavorable product mix.

Current wording

Cost of sales increased $56.1 million in the third quarter of 2025, primarily driven by higher net sales. Cost of sales as a percentage of net sales increased slightly for the third quarter of 2025, to 57.2% from 57.1%.

Previous wording

Selling, general and administrative (“SG&A”) expense increased $4.6 million in the second quarter of 2025 primarily due to higher net sales. SG&A expense as a percentage of net sales decreased to 15.2% for the second quarter of 2025 compared with 16.4%, with lower SG&A expense percentages primarily at the Digital Imaging and Instrumentation segments. Corporate expense, which is included in SG&A expense, was $21.7 million for the second quarter of 2025 compared with $18.3 million, with the increase primarily related to higher transaction costs in the second quarter of 2025 for current year acquisitions. Stock-based compensation expense was $11.3 million for the second quarter of 2025 compared with $9.3 million.

Current wording

Selling, general and administrative (“SG&A”) expense increased $12.1 million in the third quarter of 2025 primarily due to higher net sales, including net sales related to 2025 acquisitions. SG&A expense as a percentage of net sales decreased slightly, to 15.5% for the third quarter of 2025 compared with 15.7%. Corporate expense, which is included in SG&A expense, was $22.0 million for the third quarter of 2025 compared with $18.7 million, with the increase primarily related to higher employee compensation costs, including severance costs. Stock-based compensation expense was $10.5 million for the third quarter of 2025 compared with $8.7 million.

Previous wording

Acquired intangible asset amortization for the second quarter of 2025 was $54.6 million compared with $49.1 million, with the increase primarily related to 2025 acquisitions within the Aerospace and Defense Electronics segment.

Current wording

Acquired intangible asset amortization for the third quarter of 2025 was $55.1 million compared with $49.8 million, with the increase primarily related to 2025 acquisitions within the Aerospace and Defense Electronics segment.

Previous wording

Pension service expense is included in both cost of sales and SG&A expense. For the second quarter of 2025 and 2024, pension service expense was $1.5 million. For 2025, the weighted-average discount rate used to determine the benefit obligation for the domestic qualified pension plans is 7.05% compared with 6.86% in 2024.

Current wording

Pension service expense is included in both cost of sales and SG&A expense. For the third quarter of 2025 and 2024, pension service expense was $1.5 million.

Previous wording

Operating income for the second quarter of 2025 increased 12.6%. The second quarter of 2025, compared with the second quarter of 2024, reflected higher operating income in each segment.

Current wording

Operating income for the third quarter of 2025 increased 4.5%. The third quarter of 2025, compared with the third quarter of 2024, reflected higher operating income in the Instrumentation and Aerospace and Defense Electronics segments, including incremental operating income related to 2025 acquisitions.

Previous wording

Interest and debt expense, net of interest income, was $17.6 million for the second quarter of 2025 compared with $15.8 million. Non-service retirement benefit income was $2.7 million for both the second quarter of 2025 and 2024. Other income and expense, net, was expense of $2.7 million for the second quarter of 2025 compared with expense of $2.2 million for the second quarter of 2024. The Company also recorded a gain on debt extinguishment of $3.3 million for the second quarter of 2025 which is included in other income and expense, net, with no comparable amount recorded in the second quarter of 2024.

Current wording

Interest and debt expense, net of interest income, was $12.6 million for the third quarter of 2025 compared with $15.7 million. Non-service retirement benefit income was $2.7 million for the third quarter of 2025 compared with $2.8 million. Other income (expense), net, was income of $0.9 million for the third quarter of 2025 compared with expense of $2.7 million for the third quarter of 2024. Other income (expense), net, primarily consisted of a $7.2 million gain on debt extinguishment, partially offset by foreign currency exchange losses in the third quarter of 2025. Other income (expense), net, primarily consisted of foreign currency exchange losses in the third quarter of 2024.

Previous wording

The second quarter of both the 2025 and 2024 income tax provision considers income, permanent items, tax credits and various statutory tax rates.

Current wording

The third quarter of both the 2025 and 2024 income tax provision considers income, permanent items, tax credits and various statutory tax rates.

Previous wording

(a) The second quarter of 2025 includes net discrete income tax benefits of $8.4 million and the second quarter of 2024 includes net discrete income tax benefits of $0.7 million.

Current wording

(a) The third quarter of 2025 includes net discrete income tax benefits of $4.9 million and the third quarter of 2024 includes net discrete income tax benefits of $62.3 million.

Previous wording

In July 2025, the “One Big Beautiful Bill Act” (the “Act”) was enacted into law. The Act includes changes to U.S. tax law, including provisions to accelerate tax deductions for qualified property and research expenditures. We are in the process of evaluating the impact of the Act to our consolidated financial statements.

Current wording

In July 2025, the “One Big Beautiful Bill Act” (the “Act”) was enacted into law. The Act includes changes to U.S. tax law, including provisions to accelerate tax deductions for qualified property and research expense. The Company has estimated the 2025 impact in current results which includes a cash tax reduction of approximately $30.0 million. The Company will continue to model the elective decisions before the 2025 tax return is filed in 2026. The 2026 impact is estimated to include a cash tax reduction of between $60.0 million and $70.0 million.

Previous wording

The first six months of 2025 net sales increased 8.8%. Net income for the first six months of 2025 increased 11.1%, driven primarily by higher net sales. Net income per diluted share was $8.41 for the first six months of 2025, compared with net income per diluted share of $7.49.

Current wording

The first nine months of 2025 net sales increased 8.0%. Net income for the first nine months of 2025 decreased 0.2%, primarily driven by the favorable resolution of an uncertain tax position reached by the Company with foreign tax authorities around transfer pricing between certain FLIR subsidiaries in the third quarter of 2024. Net income per diluted share was $13.06 for the first nine months of 2025, compared with net income per diluted share of $13.01.

Previous wording

The first six months of 2025 net sales, compared with the first six months of 2024, reflected higher net sales in each segment. The first six months of 2025 included $125.7 million in incremental sales from recent acquisitions, which are primarily included within the Aerospace and Defense Electronics segment.

Current wording

The first nine months of 2025 net sales, compared with the first nine months of 2024, reflected higher net sales in each segment. The first nine months of 2025 included $196.3 million in incremental sales from recent acquisitions, which are primarily included within the Aerospace and Defense Electronics segment.

Previous wording

Cost of sales increased $147.8 million in the first six months of 2025, primarily driven by higher net sales. Cost of sales as a percentage of net sales increased for the first six months of 2025 to 57.3% from 57.0%.

Current wording

Cost of sales increased $203.9 million in the first nine months of 2025, primarily driven by higher net sales. Cost of sales as a percentage of net sales increased for the first nine months of 2025 to 57.3% from 57.0%.

Previous wording

SG&A expense increased $18.8 million in the first six months of 2025 primarily due to higher net sales. SG&A expense as a percentage of net sales for the first six months of 2025 was 15.6% compared with 16.3%. Corporate expense, which is included in SG&A expense, was $43.9 million for the first six months of 2025 compared with $38.4 million, with the increase primarily related to higher transaction costs in the first six months of 2025 for current year acquisitions. Stock-based compensation expense was $20.2 million for the first six months of 2025 compared with $21.3 million.

Current wording

SG&A expense increased $30.9 million in the first nine months of 2025 primarily due to higher net sales, including net sales related to 2025 acquisitions. SG&A expense as a percentage of net sales for the first nine months of 2025 was 15.6% compared with 16.1%. Corporate expense, which is included in SG&A expense, was $65.9 million for the first nine months of 2025 compared with $57.1 million, with the increase primarily related to higher employee compensation costs, including severance costs and higher transaction costs in the first nine months of 2025 for current year acquisitions. Stock-based compensation expense was $30.7 million for the first nine months of 2025 compared with $30.0 million.

Previous wording

R&D expense increased $8.5 million in the first six months of 2025 primarily due to higher R&D expense within the Instrumentation and Aerospace and Defense Electronics segments.

Current wording

R&D expense increased $18.9 million in the first nine months of 2025 due to higher R&D expense within the Digital Imaging, Instrumentation and Aerospace and Defense Electronics segments.

Previous wording

Acquired intangible asset amortization for the first six months of 2025 was $106.6 million compared with $98.5 million, with the increase primarily related to 2025 acquisitions within the Aerospace and Defense Electronics segment.

Current wording

Acquired intangible asset amortization for the first nine months of 2025 was $161.7 million compared with $148.3 million, with the increase primarily related to 2025 acquisitions within the Aerospace and Defense Electronics segment.

Previous wording

Pension service expense is included in both cost of sales and SG&A expense. For both the first six months of 2025 and 2024, pension service expense was $3.0 million. For 2025, the weighted-average discount rate used to determine the benefit obligation for the domestic qualified pension plans is 7.05% compared with 6.86% in 2024.

Current wording

Pension service expense is included in both cost of sales and SG&A expense. For both the first nine months of 2025 and 2024, pension service expense was $4.5 million.

Previous wording

Operating income for the first six months of 2025 increased 11.7%. The first six months of 2025, compared with the first six months of 2024, reflected higher operating income in each segment.

Current wording

Operating income for the first nine months of 2025 increased 9.1%. The first nine months of 2025, compared with the first nine months of 2024, reflected higher operating income in each segment, including incremental operating income related to 2025 acquisitions

Previous wording

Interest and debt expense, net of interest income, was $34.9 million for the first six months of 2025, compared with $28.5 million, with the increase related to higher outstanding borrowings on our line of credit during the period as compared to the first six months of 2024. Non-service retirement benefit income was $5.5 million for the first six months of 2025 compared with $5.4 million for the first six months of 2024. Other income and expense, net was expense of $8.6 million for the first six months of 2025 compared with expense of $1.0 million for the first six months of 2024, with the amounts primarily related to foreign currency exchange losses in both periods. The Company also recorded a gain on debt extinguishment of $3.3 million for the first six months of 2025 which is included in other income and expense, net, with no comparable amount recorded in the first six months of 2024.

Current wording

Interest and debt expense, net of interest income, was $47.5 million for the first nine months of 2025, compared with $44.2 million, with the increase related to higher outstanding borrowings on our line of credit during the period as compared to the first nine months of 2024. Non-service retirement benefit income was $8.2 million for the first nine months of 2025 and 2024. Other income and expense, net was expense of $7.7 million for the first nine months of 2025 compared with expense of $3.7 million for the first nine months of 2024. The Other income and expense, net expense of $7.7 million for the first nine months of 2025 included a $10.5 million gain on debt extinguishment, partially offset by foreign currency exchange losses. Other income and expense, net expense of $3.7 million for the first nine months of 2024 primarily related to foreign currency exchange losses.

Previous wording

The first six months of both the 2025 and 2024 income tax provision considers income, permanent items, tax credits and various statutory tax rates. In both 2025 and 2024, the first six months discrete impact is primarily related to tax on stock-based compensation.

Current wording

The first nine months of both the 2025 and 2024 income tax provision considers income, permanent items, tax credits and various statutory tax rates. In both 2025 and 2024, the first nine months discrete impact is primarily related to tax on stock-based compensation.

Previous wording

(a) The first six months of 2025 includes net discrete income tax benefits of $12.1 million and the first six months of 2024 includes net discrete income tax benefits of $5.1 million, respectively.

Current wording

(a) The first nine months of 2025 includes net discrete income tax benefits of $17.0 million and the first nine months of 2024 includes net discrete income tax benefits of $67.4 million, respectively.

Previous wording

Net sales increased primarily due to higher sales of unmanned air systems and commercial infrared imaging components, partially offset by lower sales of X-ray and geospatial products. Sales of unmanned air systems increased $20.6 million, sales of commercial infrared imaging components increased $16.1 million, sales of X-ray products decreased $4.0 million and sales of geospatial products decreased $3.7 million. The second quarter of 2025 included $5.8 million in incremental sales from a recent acquisition.

Current wording

Net sales increased primarily due to higher sales of commercial infrared imaging components and subsystems, unmanned air systems, and industrial automation imaging systems, partially offset by lower sales of unmanned ground systems. Sales of commercial infrared imaging components and subsystems increased $11.7 million, sales of unmanned air systems increased $7.5 million, sales of industrial automation imaging systems increased $5.0 million, and sales of unmanned ground systems decreased $7.2 million.

Previous wording

Cost of sales increased primarily due to unfavorable product mix. As a result of unfavorable product mix, the cost of sales percentage increased during the period. The SG&A expense decrease included the reduction of a contingent liability resulting from a change in estimate, partially offset by higher severance and facility consolidation costs. As a result, SG&A expense as a percentage of net sales decreased during the first six months of 2025. R&D expense and R&D expense as a percentage of net sales were reasonably consistent between the two periods. Acquired intangible asset amortization and acquired intangible asset amortization as a percentage of net sales remained reasonably consistent between the two periods.

Current wording

Cost of sales increased primarily due to higher net sales. The cost of sales percentage decreased slightly during the period. SG&A expense increased slightly, and SG&A expense as a percentage of net sales decreased slightly. R&D expense and R&D expense as a percentage of net sales increased primarily due to the timing of FLIR product development activities, including higher R&D expense for unmanned air systems. Acquired intangible asset amortization and acquired intangible asset amortization as a percentage of net sales remained reasonably consistent between the two periods.

Previous wording

Net sales increased primarily due to higher sales of commercial infrared imaging components, unmanned air systems and surveillance systems, partially offset by lower sales of X-ray products, industrial automation imaging systems and commercial infrared imaging systems. Sales of commercial infrared imaging components increased by $30.0 million, sales of unmanned air systems increased by $23.1 million, sales of surveillance systems increased by $16.2 million, sales of X-ray products decreased by $10.9 million, sales of industrial automation imaging systems decreased by $9.4 million and sales of commercial infrared imaging systems decreased by $8.7 million. The first six months of 2025 also included $14.7 million in incremental sales from recent acquisitions.

Current wording

Net sales increased primarily due to higher sales of commercial infrared imaging components, unmanned air systems and surveillance systems, partially offset by lower sales of commercial infrared imaging systems, X-ray products, geospatial products and industrial automation imaging systems. Sales of commercial infrared imaging components and subsystems increased by $41.7 million, sales of unmanned air systems increased by $29.7 million, sales of surveillance systems increased by $19.7 million, sales of commercial infrared imaging systems decreased by $17.6 million, sales of X-ray products decreased by $11.8 million, sales of geospatial products decreased by $5.4 million, and sales of industrial automation imaging systems decreased by $4.4 million. The first nine months of 2025 also included $15.1 million in incremental sales from recent acquisitions.

Previous wording

Cost of sales increased primarily due to product mix. As a result of unfavorable product mix, the cost of sales percentage increased during the period. The SG&A expense decrease included the reduction of a contingent liability resulting from a change in estimate, partially offset by higher severance and facility consolidation costs. As a result, SG&A expense as a percentage of net sales decreased during the quarter. R&D expense and R&D expense as a percentage of net sales increased primarily due to the timing of FLIR product development activities. Acquired intangible asset amortization and acquired intangible asset amortization as a percentage of net sales remained reasonably consistent between the two periods.

Current wording

Cost of sales increased primarily due to unfavorable product mix, and the cost of sales percentage increased during the period. The SG&A expense decrease included the reduction of a contingent liability resulting from a change in estimate, partially offset by higher severance and facility consolidation costs. As a result, SG&A expense as a percentage of net sales decreased during the first nine months of 2025. R&D expense and R&D expense as a percentage of net sales increased primarily due to the timing of FLIR product development activities. Acquired intangible asset amortization increased slightly while acquired intangible asset amortization as a percentage of net sales remained reasonably consistent between the two periods.

Previous wording

Operating income increased primarily due to higher net sales and lower SG&A, partially offset by unfavorable product mix during the period. As a result, operating income as a percentage of net sales increased during the period.

Current wording

Operating income increased primarily due to higher net sales and lower SG&A, partially offset by unfavorable product mix during the period. As a result, operating income as a percentage of net sales increased slightly during the period.

Previous wording

Net sales increased due to higher sales in each product line. Sales of Marine Instrumentation increased $23.7 million due to stronger offshore energy and defense markets. Sales of Environmental Instrumentation increased $6.4 million and sales of Test and Measurement Instrumentation increased $4.0 million.

Current wording

Net sales increased due to higher sales in each product line. Sales of Environmental Instrumentation increased $8.1 million primarily due to stronger sales of gas detection products. Sales of Marine Instrumentation increased $5.3 million due to stronger offshore energy and defense markets and sales of Test and Measurement Instrumentation increased $0.4 million.

Previous wording

Cost of sales increased primarily due to higher net sales. The cost of sales percentage decreased slightly. SG&A expense was consistent between the two periods, and SG&A expense as a percentage of net sales decreased primarily due to maintaining cost control measures year-over-year. R&D expense increased due to higher Marine Instrumentation product development, and the R&D expense as a percentage of net sales increased slightly.

Current wording

Cost of sales increased primarily due to higher net sales. The cost of sales percentage increased slightly. SG&A expense increased slightly, and SG&A expense as a percentage of net sales increased slightly. R&D expense increased due to higher Marine Instrumentation product development, and R&D expense as a percentage of net sales was consistent between the two periods.

Previous wording

Net sales increased due to higher sales in each product line. Sales of Marine Instrumentation increased $37.7 million due to stronger offshore energy and defense markets. Sales of Test and Measurement Instrumentation increased $5.1 million, and sales of Environmental Instrumentation increased $4.2 million. The first six months of 2025 included $4.3 million in incremental sales from recent acquisitions.

Current wording

Net sales increased due to higher sales in each product line. Sales of Marine Instrumentation increased $43.0 million due to stronger offshore energy and defense markets. Sales of Environmental Instrumentation increased $12.3 million primarily due to stronger sales of gas detection products and sales of Test and Measurement Instrumentation increased $5.5 million. The first nine months of 2025 included $5.5 million in incremental sales from recent acquisitions.

Previous wording

Cost of sales increased primarily due to higher net sales, partially offset by favorable product mix. The cost of sales percentage decreased due to favorable product mix. SG&A expense increased primarily due to higher net sales, and SG&A expense as a percentage of net sales decreased primarily due to maintaining cost control measures year-over-year. R&D expense increased due to higher Marine Instrumentation product development, and the R&D expense as a percentage of net sales increased slightly.

Current wording

Cost of sales increased primarily due to higher net sales, partially offset by favorable product mix. The cost of sales percentage decreased due to favorable product mix. SG&A expense increased primarily due to higher net sales, and SG&A expense as a percentage of net sales decreased primarily due to maintaining cost control measures year-over-year. R&D expense increased due to higher Marine Instrumentation product development, and R&D expense as a percentage of net sales increased slightly.

Previous wording

Net sales increased due to a $72.6 million increase in defense electronics, partially offset by a $2.2 million decrease in aerospace electronics. The second quarter of 2025 included $64.3 million in incremental sales from recent acquisitions.

Current wording

Net sales increased due to a $75.6 million increase in defense electronics, partially offset by a $0.3 million decrease in aerospace electronics. The third quarter of 2025 included $69.0 million in incremental sales from recent acquisitions.

Previous wording

Cost of sales increased due to higher net sales, inventory step-up expense related to the 2025 acquisitions and unfavorable product mix, including recent acquisitions which carry a higher cost of sales percentage, and as a result the cost of sales percentage increased. SG&A expense increased due to higher net sales and higher transaction and integration costs as a result of 2025 acquisitions. R&D expense increased primarily due to the 2025 acquisitions, and the R&D expense as a percentage of net sales was similar in both periods. Acquired intangible asset amortization increased primarily due to the 2025 acquisitions.

Current wording

Cost of sales increased due to higher net sales, inventory step-up expense related to the 2025 acquisitions and unfavorable product mix, including recent acquisitions, which carry a higher cost of sales percentage, and as a result, the cost of sales percentage increased. SG&A expense increased due to higher net sales and higher transaction and integration costs as a result of 2025 acquisitions. R&D expense increased primarily due to the 2025 acquisitions, and R&D expense as a percentage of net sales decreased. Acquired intangible asset amortization increased primarily due to the 2025 acquisitions.

Previous wording

Operating income increased primarily due to increased net sales, and operating income as a percent of net sales decreased primarily due to unfavorable product mix including lower gross margins on sales from 2025 acquisitions as well as higher acquired intangible asset amortization.

Current wording

Operating income increased primarily due to increased net sales, and operating income as a percentage of net sales decreased primarily due to unfavorable product mix, including lower gross margins on sales from 2025 acquisitions as well as higher acquired intangible asset amortization.

Previous wording

Net sales increased due to a $129.7 million increase for defense electronics, partially offset by a $2.5 million decrease for aerospace electronics. The first six months of 2025 included $106.7 million in incremental sales from recent acquisitions.

Current wording

Net sales increased due to a $205.3 million increase for defense electronics, partially offset by a $2.8 million decrease for aerospace electronics. The first nine months of 2025 included $175.7 million in incremental sales from recent acquisitions.

Previous wording

Operating income increased primarily due to increased net sales, and operating income as a percent of net sales decreased primarily due to higher transaction and integration costs, higher acquired intangible asset amortization and unfavorable product mix including lower gross margins on sales from 2025 acquisitions.

Current wording

Operating income increased primarily due to increased net sales, and operating income as a percentage of net sales decreased primarily due to higher transaction and integration costs, higher acquired intangible asset amortization and unfavorable product mix including lower gross margins on sales from 2025 acquisitions.

Previous wording

Cost of sales and cost of sales as a percentage decreased primarily due to favorable program mix. SG&A expense and SG&A expense as a percentage of net sales decreased slightly.

Current wording

Cost of sales and cost of sales as a percentage decreased primarily due to favorable program mix. SG&A expense and SG&A expense as a percentage of net sales increased due to higher employee compensation costs.