Integer Holdings Corp
For the period ended Jul 3, 2026. Filed Aug 4, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jul 3, 2026 · Filed Aug 4, 2026
ITGR$126.56-0.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-04-03; filed 2026-04-30.
0001114483-26-000015
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-07-03; filed 2026-08-04.
0001114483-26-000027
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 127 previous paragraphs and 137 current paragraphs.
85 unchanged; 35 reworded; 16 added; 7 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 11 previous and 13 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (16)
Current report
•the proposed Merger (as defined herein), its timing and its consummation;
Current report
•our anticipated financial performance related to the Merger, including the benefits of and synergies related to the proposed Merger;
Current report
•potential strategic implications as a result of the proposed Merger;
Current report
•risks related to the Merger, including the expected timing and likelihood of completion of the Merger, the timing, receipt and terms and conditions of any required governmental and regulatory approvals; the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement; the possibility that our stockholders may not approve the Merger; the risk that the parties may not be able to satisfy the conditions to the Merger in a timely manner or at all; risks related to disruption of management time from ongoing business operations due to the Merger; the risk that any announcements relating to the Merger could have adverse effects on the market price of our common stock; the risk that the Merger and its announcement could have an adverse effect on the parties’ business relationships and business generally, including our ability to retain customers and retain and hire key personnel and maintain relationships with their suppliers and customers, and on their operating results and businesses generally; the risk of unforeseen or unknown liabilities; customer, stockholder, regulatory and other stakeholder approvals and support; the risk of unexpected future capital expenditures; the risk of potential litigation relating to the Merger that could be instituted against us or our directors and/or officers; the risk associated with third party contracts containing material consent, anti-assignment, transfer or other provisions that may be related to the Merger which are not waived or otherwise satisfactorily resolved;
Current report
The Merger
Current report
On August 2, 2026, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement,” and the transactions contemplated thereby, the “Transaction”), by and among the Company, Armstrong Parent, Inc., a Delaware corporation (“Parent”), and Armstrong Bidco, Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”). Parent and Merger Sub are each affiliates of investment funds managed by Kohlberg Kravis Roberts & Co. L.P., a leading global investment firm. Pursuant to the Merger Agreement, and upon the terms and subject to the conditions therein, Merger Sub will merge with and into the Company (the “Merger”), with the Company surviving the Merger as a wholly owned subsidiary of Parent. If the Merger is consummated, the Company’s securities will be delisted from NYSE as soon as practicable following the Effective Time (defined below), and the Company will become a privately held company.
Current report
Subject to the terms and conditions of the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share of common stock of the Company, par value $0.001 per share (the “Company Common Shares”) issued and outstanding immediately prior to the Effective Time (other than Company Common Shares (i) held by the Company as a treasury share or owned by Parent, Merger Sub or any other Subsidiary of Parent immediately prior to the Effective Time, (ii) held by any subsidiary of the Company immediately prior to the Effective Time and (iii) held by any person who is entitled to demand, and has properly demanded, appraisal in respect of such Company Common Shares pursuant to applicable law), will automatically be converted into the right to receive $127 in cash, without interest (the “Merger Consideration”).
Current report
Outstanding equity awards will generally be treated as follows: (i) vested restricted stock unit (“RSU”) awards and 50% of unvested RSU awards will be canceled in exchange for a cash amount based on the Merger Consideration, and 50% of unvested RSUs will be converted into a deferred cash award based on the Merger Consideration that vests based on the original RSU award’s vesting conditions (with certain termination vesting protections); (ii) performance stock unit (“PSU”) awards for which the performance period is completed but that has not yet been settled will be canceled in exchange for a cash amount equal to the Merger Consideration based on actual performance, and PSU awards with open performance periods will be converted into a cash amount based on the Merger Consideration assuming the greater of target and actual performance, with 50% of such amount being paid as soon as practicable (assessed on a tranche-by-tranche basis) and the remaining 50% of such amount being paid subject to satisfaction of the original PSU award’s service vesting conditions (with certain termination vesting protections and without regard to any performance conditions); and (iii) stock options will be vested and canceled in exchange for a cash amount equal to the excess (if any) of the Merger Consideration over the applicable exercise price.
Current report
The consummation of the Merger is subject to certain customary closing conditions set forth in the Merger Agreement, including: (i) the approval and adoption of the Merger Agreement by the holders of a majority of the outstanding Company Common Shares (the “Company Stockholder Approval”); (ii) the absence of any order issued by any governmental authority (whether temporary, preliminary or permanent) of competent jurisdiction, or applicable law prohibiting, rendering illegal or enjoining the consummation of the Merger; (iii) the expiration or termination of any waiting periods applicable to the consummation of the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and certain other applicable antitrust and foreign direct investment laws of certain jurisdictions; (iv) each party’s performance of and compliance with its covenants, obligations and agreements contained in the Merger Agreement in all material respects; (v) no Company Material Adverse Effect (as defined in the Merger Agreement) having occurred since the date of the Merger Agreement and (vi) the accuracy of the representations and warranties of the parties in the Merger Agreement (subject to customary materiality qualifiers). The Merger is not subject to any financing condition, and Parent and Merger Sub have obtained equity and debt financing commitments for the Transaction.
Current report
Subject to certain exceptions, the Company has agreed not to solicit alternative acquisition proposals, engage in discussions with any third party regarding alternative acquisition proposals or change its recommendation to its stockholders in favor of the Merger.
Current report
The Merger Agreement contains certain customary termination rights for each of the Company and Parent, including, (i) by mutual written agreement of the Company and Parent, (ii) if the Merger has not been consummated on or before May 2, 2027 (the “Outside Date”), (iii) any applicable order, writ, injunction, judgment or decree of any governmental authority (an “Order”) issued by any governmental authority of competent jurisdiction rendering illegal, or restraining, enjoining or otherwise prohibiting the consummation of the Merger and such Order has become final and nonappealable, (iv) the Company Stockholder Approval shall not have been obtained at a meeting of holders of the Company Common Shares (the “Company Stockholders Meeting”) or (v) the other party is in breach of any representation or warranty or failure to perform any covenant or agreement on the part of the respective parties in a manner that would result in a failure of an applicable closing condition and such breach cannot be cured or, if curable, has not been cured within 20 business days after notice to the other party of such breach (or, if earlier, five business days prior to the Outside Date).
Current report
In addition, prior to receipt of the Company Stockholder Approval, (i) the Company may also terminate the Merger Agreement to (A) accept a Superior Proposal, subject to Parent’s right to match such Superior Proposal and payment to Parent of the Company Termination Fee (as described below), or (B) in circumstances relating to Parent’s breach of the Merger Agreement or failure to consummate the Merger when it is required to do so under the Merger Agreement, subject to payment to the Company of the Parent Termination Fee (as defined below) and (ii) Parent may terminate the Merger Agreement if the Board of Directors changes its recommendation to the Company’s stockholders regarding the Merger Agreement (an “Adverse Recommendation Change”).
Current report
The Merger Agreement provides for the payment of termination fees upon termination of the Merger Agreement under certain specified circumstances. The Company will be obligated to pay Parent a termination fee of $154 million (the “Company Termination Fee”) if the Merger Agreement is terminated (i) by the Company to accept a Superior Proposal, (ii) by Parent following an Adverse Recommendation Change, or (iii) in certain circumstances by either Parent or the Company and prior to such termination a bona fide acquisition proposal is publicly announced or publicly disclosed and not publicly withdrawn or otherwise abandoned at least five business days prior to such termination of the Merger Agreement or the date of the Company Stockholders Meeting and the Company enters into a definitive agreement for, or consummates, a transaction involving a Superior Proposal within twelve months of such termination.
Current report
Parent will be obligated to pay the Company a termination fee of $307 million (the “Parent Termination Fee”) if the Merger Agreement is terminated by the Company in certain circumstances relating to Parent’s breach of the Merger Agreement or failure to consummate the Merger when it is required to do so under the Merger Agreement.
Current report
The second quarter and first six months of 2026 ended on July 3 and consisted of 91 days and 184 days, respectively. The second quarter and first six months of 2025 ended on June 27 and consisted of 91 days and 178 days, respectively.
Current report
(a)Professional fees for the second quarter and first six months of 2026 were impacted by legal and advisory fees related to a stockholder activist matter and defense of a securities class action lawsuit. The activist related costs amounted to $0.6 and $3.8 million for the second quarter and first six months of 2026. In addition, we recorded $1.8 million during the second quarter of 2026 in connection with our defense of a securities class action lawsuit. For additional information regarding legal proceedings pending against us, refer to Note 10, “Commitments and Contingencies,” of the Notes to Condensed Consolidated Financial Statements contained in Item 1 of this report.
Removed paragraphs (7)
Previous report
•the outcome of a strategic review process;
Previous report
The first quarters of 2026 and 2025 ended on April 3, 2026 and March 28, 2025, respectively, and consisted of 93 days and 87 days, respectively.
Previous report
Strategic Review
Previous report
In April 2026, we announced that the Board had initiated a strategic review to maximize stockholder value. We are considering a full range of potential opportunities including, but not limited to, a sale, merger, or strategic business combination as compared to the value creation opportunities from continued execution of the Company’s standalone strategy. There is no deadline or definitive timeline set for the completion of the strategic review, and there can be no assurance that the review will result in any transaction or other outcome.
Previous report
(a)Compensation and benefits increased primarily due to annual merit increases, acquisitions, leadership transitions, and the execution of our enterprise resource planning system implementation.
Previous report
(b)Depreciation and amortization expense increased due to amortization of customer list intangible assets related to recent acquisitions.
Previous report
(c)Professional fees were impacted by advisory fees related to a stockholder activist matter. These activist related costs amounted to $3.2 million for the first quarter of 2026. As a result of the previously disclosed cooperation agreement reached with the activist investor in March 2026, we do not anticipate we will incur any further costs related to this matter.
Reworded paragraphs (35)
Previous wording
•market, financial and indebtedness risks, such as our ability to accurately forecast future performance based on operating results that often fluctuate; the volatility of our stock price; our failure to meet our publicly announced outlook; the ability of our stock purchase program to enhance stockholder value; stockholder activism; our significant amount of outstanding indebtedness and our ability to remain in compliance with financial and other covenants under the credit agreement governing our senior secured credit facilities (“Senior Secured Credit Facilities”); economic and credit market uncertainties that could interrupt our access to capital markets, borrowings or financial transactions; the conditional conversion feature of the 2028 Notes (as defined below) and the 2030 Notes (as defined below) adversely impacting our liquidity; the conversion of our 2028 Notes and 2030 Notes; diluting ownership interests of existing holders of our common stock; the counterparty risk associated with our capped call transaction; the counter financial and market risks related to our international operations and sales; our complex international tax profile; and our ability to realize the full value of our intangible assets;
Current wording
•market, financial and indebtedness risks, such as our ability to accurately forecast future performance based on operating results that often fluctuate; the volatility of our stock price; our failure to meet our publicly announced outlook; the ability of our stock purchase program to enhance stockholder value; stockholder activism; our significant amount of outstanding indebtedness and our ability to remain in compliance with financial and other covenants under the credit agreement governing our senior secured credit facilities (“Senior Secured Credit Facilities”); economic and credit market uncertainties that could interrupt our access to capital markets, borrowings or financial transactions; the conditional conversion feature of the 2028 Notes (as defined below) and the 2030 Notes (as defined below) adversely impacting our liquidity; the conversion of our 2028 Notes and 2030 Notes; diluting ownership interests of existing holders of our common stock; the counterparty risk associated with our capped call transaction; the financial and market risks related to our international operations and sales; our complex international tax profile; and our ability to realize the full value of our intangible assets;
Previous wording
Our future results of operations and liquidity could be materially adversely affected by uncertainty surrounding macroeconomic and geopolitical factors in the U.S. and globally characterized by the supply chain environment, inflationary pressure, changes in interest rates, disruptions in the commodities’ markets or in supply chain as a result of wars in Ukraine and the Middle East, and the tensions in Asia relating to China and Taiwan, and the introduction of or changes in tariffs or trade barriers. The impact of these issues on our business will vary by geographic market and product line, but specific impacts to our business may include increased borrowing costs, labor shortages, disruptions in the supply chain, delayed or reduced customer orders and sales, delays in shipments to and from certain countries and potential increased expenses resulting from tariffs or other trade barriers.
Current wording
Our future results of operations and liquidity could be materially adversely affected by uncertainty surrounding macroeconomic and geopolitical factors in the U.S. and globally characterized by the supply chain environment, inflationary pressure, changes in interest rates, disruptions in the commodities’ markets or in supply chain as a result of wars in Ukraine and the Middle East, the tensions in Asia relating to China and Taiwan, and the introduction of or changes in tariffs or trade barriers. The impact of these issues on our business will vary by geographic market and product line, but specific impacts to our business may include increased borrowing costs, labor shortages, disruptions in the supply chain, delayed or reduced customer orders and sales, delays in shipments to and from certain countries and potential increased expenses resulting from tariffs or other trade barriers.
Previous wording
Income (loss) from continuing operations for the first quarter of 2026 was income of $16.5 million, or $0.48 per diluted share, compared to a loss of $22.5 million, or $0.66 per diluted share, for the first quarter of 2025. These variances are primarily the result of the following:
Current wording
Income from continuing operations for the second quarter and first six months of 2026 was $23.6 million, or $0.69 per diluted share, and $40.1 million, or $1.17 per diluted share, respectively, compared to $37.0 million, or $1.04 per diluted share, and $14.5 million, or $0.41 per diluted share for the second quarter and first six months of 2025, respectively. These variances are primarily the result of the following:
Previous wording
•Sales for the first quarter of 2026 increased $2.2 million when compared to the same period in 2025, driven by higher Cardio & Vascular and Cardiac Rhythm Management & Neuromodulation sales, partially offset by lower Other Markets.
Current wording
•Sales for the second quarter and first six months of 2026 decreased $12.4 million and $10.2 million, respectively, when compared to the same periods in 2025, driven by lower Cardio & Vascular and Other Markets sales, partially offset by higher Cardiac Rhythm Management & Neuromodulation sales. Sales for the second quarter and first six months of 2026 were impacted by lower sales related to lower than anticipated market adoption of three new products.
Previous wording
•Gross profit for the first quarter of 2026 decreased $10.7 million, primarily by driven by lower fixed cost absorption due to lower production volumes.
Current wording
•Gross profit for the second quarter and first six months of 2026 decreased $16.2 million and $26.9 million, respectively, primarily driven by lower fixed cost absorption due to lower production volumes.
Previous wording
•Operating expenses for the first quarter of 2026 increased $7.0 million when compared to the same period in 2025, primarily due to higher SG&A and RD&E costs, partially offset by and Restructuring and other charges. Operating expenses as a percentage of sales improved to 17.7% for the first quarter of 2026 compared to 16.2% or the first quarter of 2025.
Current wording
•Operating expenses for the second quarter and first six months of 2026 increased $8.6 million and $15.6 million, respectively, when compared to the same periods in 2025, primarily due to higher SG&A expenses and Restructuring and other charges. Operating expenses as a percentage of sales were 16.9% and 14.7% for the second quarters of 2026 and 2025, respectively, and 17.3% and 15.4% for the first six months of 2026 and 2025, respectively.
Previous wording
•Interest expense for the first quarter of 2026 decreased $5.1 million compared to the same period in 2025, primarily due to lower interest rates on our outstanding borrowings.
Current wording
•Interest expense for the second quarter of 2026 increased $0.4 million compared to the same period in 2025 due to higher average debt balance outstanding, partially offset by lower losses from extinguishment of debt. Interest expense for the first six months of 2026 decreased $4.7 million compared to the same period in 2025, due to lower interest rates on our outstanding borrowings and lower losses from extinguishment of debt, partially offset by higher average debt balance outstanding.
Previous wording
•During the first quarters of 2026 and 2025, we recognized losses on equity investments of $1.5 million compared to gains of $0.2 million, respectively. Gains and losses on equity investments are generally unpredictable in nature.
Current wording
•During the first six months of 2026 we recognized net losses from our equity investments of $1.4 million, compared to net gains of $0.2 million for the first six months of 2025. (Gain) loss on equity investments for the second quarter of 2026 and 2025 were not material. Gains and losses on equity investments are generally unpredictable in nature.
Previous wording
•Other loss, net for the first quarter of 2026 was $0.3 million compared to $47.9 million for the first quarter of 2025. The first quarter of 2025 includes $46.7 million of debt conversion inducement expense related to the partial exchange of our outstanding 2028 Notes that was completed during the first quarter of 2025.
Current wording
•Other loss, net for the second quarter and first six months of 2026 were net losses of $1.1 million and $1.5 million, respectively, compared to net losses of $4.0 million and $51.9 million, respectively, for the second quarter and first six months of 2025. Other loss, net for 2025 includes $46.7 million of debt conversion inducement expense, which was recognized in the first quarter of 2025, related to the partial exchange of our outstanding 2028 Notes.
Previous wording
•We recorded provisions for income taxes for the first quarters of 2026 and 2025 of $3.8 million and $9.5 million, respectively. The change in income tax expense was primarily due to relative changes in pre-tax income and the impact of discrete tax items.
Current wording
•We recorded an income tax benefit for the second quarter and provision for income taxes for the first six months of 2026 of $0.3 million and $3.5 million, respectively, compared with provisions for income taxes of $8.6 million and $18.1 million, respectively, for the second quarter and first six months of 2025. The changes in income tax expense were primarily due to relative changes in pre-tax income and the impact of discrete tax items.
Previous wording
For the first quarter of 2026, Cardio & Vascular (“C&V”) sales increased $2.9 million, or 1%, versus the comparable 2025 period. C&V sales for the first quarter of 2026 included $2.7 million in incremental sales from our 2025 acquisitions. Foreign currency exchange rate fluctuations increased C&V sales for the first quarter of 2026 by $1.2 million in comparison to the 2025 period, primarily due to U.S. dollar fluctuations relative to the Euro.
Current wording
For the second quarter and first six months of 2026, Cardio & Vascular (“C&V”) sales decreased $6.5 million, or (2)%, and $3.7 million, or (1)%, respectively, versus the comparable 2025 periods. Our 2025 acquisitions increased C&V sales for the second quarter and first six months of 2026 by $0.2 million and $2.9 million, in comparison to the corresponding periods in 2025. C&V sales for the second quarter and first six months of 2026 were also impacted by lower sales of two new Electrophysiology products due to lower than anticipated market adoption. Foreign currency exchange rate fluctuations increased C&V sales for the second quarter and first six months of 2026 by $0.3 million and $1.6 million, in comparison to the corresponding periods in 2025, primarily due to U.S. dollar fluctuations relative to the Euro.
Previous wording
For the first quarter of 2026, Cardiac Rhythm Management & Neuromodulation (“CRM&N”) sales increased $7.9 million, or 5%, versus the comparable 2025 period, driven by Cardiac Rhythm Management growth, partially offset by lower sales due to a Neuromodulation customer. Foreign currency exchange rate fluctuations did not have a material impact on CRM&N sales during the first quarter of 2026 in comparison to 2025.
Current wording
For the second quarter and first six months of 2026, Cardiac Rhythm Management & Neuromodulation (“CRM&N”) sales increased $1.7 million, or 1%, and $9.6 million, or 3%, respectively, versus the comparable 2025 periods. Growth was partially offset by lower sales of a Neuromodulation product due to lower than anticipated market adoption. Foreign currency exchange rate fluctuations did not have a material impact on CRM&N sales during the second quarter of 2026 in comparison to the corresponding period in 2025.
Previous wording
Other Markets sales for the first quarter of 2026 decreased $8.6 million, or 47%, versus the comparable 2025 period, driven by execution of the Portable Medical Exit. Foreign currency exchange rate fluctuations did not have a material impact on Other Markets sales during the first quarter of 2026 in comparison to 2025.
Current wording
Other Markets sales for the second quarter and first six months of 2026 decreased $7.6 million, or 43%, and $16.1 million or 45%, respectively, versus the comparable 2025 periods, primarily due to the Portable Medical Exit. Foreign currency exchange rate fluctuations did not have a material impact on Other Markets sales during the second quarter and first six months of 2026 in comparison to the corresponding periods in 2025.
Previous wording
Gross margin declined in the first quarter of 2026, compared to the same prior year period due to the negative impact of lower fixed cost absorption, partly offset by on-going cost reduction initiatives. Gross margin, or gross profit as a percentage of sales, has been and will continue to be affected by a variety of factors, including the average sales price of our products and services and transaction volume growth. We expect our gross margin to fluctuate over time.
Current wording
Gross margin declined in the second quarter and first six months of 2026 compared to the same prior year period due to the negative impact of lower fixed cost absorption, partly offset by on-going cost reduction initiatives. Gross margin, or gross profit as a percentage of sales, has been and will continue to be affected by a variety of factors, including the average sales price of our products and services and transaction volume growth. We expect our gross margin to fluctuate over time.
Previous wording
(d)Contract services expense increased primarily due to higher software costs from information technology enhancements.
Current wording
(b)Contract services expense increased primarily due to higher software costs from information technology enhancements.
Previous wording
RD&E expense for the first quarter of 2026 was $16.2 million, compared to $14.2 million for the first quarter 2025. The increase in RD&E expense during 2026 compared to 2025 is primarily due to the timing of program milestone achievements for customer funded programs. RD&E expenses are influenced by the number and timing of in-process projects and labor hours and other costs associated with these projects. Our research and development initiatives continue to emphasize new product development, product improvements, and the development of new technological platform innovations.
Current wording
RD&E expense for the second quarter and first six months of 2026 was $11.3 million and $27.5 million, respectively, compared to $14.2 million and $28.4 million, respectively, for the second quarter and first six months of 2025. The decreases in RD&E expense during the second quarter and first six months of 2026 compared to the same period in 2025, was primarily due to the timing of program milestone achievements for customer funded programs. RD&E expenses are influenced by the number and timing of in-process projects and labor hours and other costs associated with these projects. Our research and development initiatives continue to emphasize new product development, product improvements, and the development of new technological platform innovations.
Previous wording
(a)Restructuring charges for the first three months of 2026 and 2025 primarily consist of costs associated with our strategic reorganization and alignment and manufacturing alignment to support growth initiatives.
Current wording
(a)Restructuring charges for the second quarter and first six months of 2026 and 2025 primarily consist of costs associated with our strategic reorganization and alignment and manufacturing alignment to support growth initiatives.
Previous wording
(b)Amount for the first three months of 2026 primarily includes $0.7 million of costs related to our investment in a convertible debt instrument during the quarter and integration expenses related to our recent acquisitions. Amount for the first three months of 2025 primarily include acquisition expenses related to the Precision and VSi acquisitions.
Current wording
(b)Amounts for the second quarter and first six months of 2026 primarily include integration expenses related to our recent acquisitions and $0.7 million of costs recorded during the first quarter of 2026 related to our investment in a convertible debt instrument. These expenses were partially offset by a benefit of $1.2 million recorded during the second quarter of 2026 to adjust the fair value of acquisition-related contingent consideration liabilities. Amounts for the second quarter and first six months of 2025 primarily include acquisition expenses related to the Precision and VSi acquisitions.
Previous wording
(c)Amounts include gains and losses in connection with the disposal of property, plant and equipment.
Current wording
(c)Amounts include gains and losses in connection with the disposal of property, plant and equipment. Amount for the second quarter and first six months of 2026 include fixed asset impairment charges of $5.9 million. The impairment charges were primarily due to revised expectations regarding the future use of certain fixed assets.
Previous wording
During 2026, contractual interest expense has decreased due to a lower weighted average interest rate, partially offset by a higher average debt balance outstanding. The favorable weighted average interest rate is due to the replacement of some of our higher variable rate debt with lower fixed rate debt through issuance of the 2030 Notes at the end of the first quarter of 2025. The higher average debt balance outstanding is primarily the result of borrowings to fund the 2025 acquisitions and to repurchase common stock.
Current wording
Contractual interest expense for the second quarter of 2026 has leveled off, with a slight increase in the quarter compared to the same period in 2025. During the first six months of 2026, contractual interest expense decreased due to a lower weighted average interest rate, partially offset by a higher average debt balance outstanding. The favorable weighted average interest rate is due to the replacement of some of our higher variable rate debt with lower fixed rate debt through issuance of the 2030 Notes at the end of the first quarter of 2025. The higher average debt balance outstanding is primarily the result of borrowings to fund the 2025 acquisitions and to repurchase common stock.
Previous wording
Other components of interest expense on borrowings include non-cash amortization and write-off (losses from extinguishment of debt) of deferred debt issuance costs and original issue discount. Amortization of deferred debt issuance costs and original issue discount increased during the first quarter of 2026 compared to the same period in 2025 as a result of higher unamortized balances related to new debt. The losses from extinguishment of debt during the first quarter of 2025 were related to prepayments of portions of the TLA Facility, primarily in connection with issuance of our 2030 Notes.
Current wording
Other components of interest expense on borrowings include non-cash amortization and write-off (losses from extinguishment of debt) of deferred debt issuance costs and original issue discount. Amortization of deferred debt issuance costs and original issue discount increased during the second quarter and first six months of 2026 compared to the same periods in 2025 as a result of higher unamortized balances related to new debt. The losses from extinguishment of debt during the first quarter of 2025 were related to prepayments of portions of the TLA Facility, primarily in connection with issuance of our 2030 Notes.
Previous wording
As of April 3, 2026 and December 31, 2025, approximately 88% and 92%, respectively, of our principal amount of debt are fixed rate borrowings.
Current wording
As of July 3, 2026 and December 31, 2025, approximately 89% and 92%, respectively, of our principal amount of debt are fixed rate borrowings.
Previous wording
The decrease in the tax provision was primarily due to an increase in R&D tax credits, an increase in tax benefits associated with realized foreign tax credits, and the impact of the non-recurring 2025 expense associated with the net nondeductible induced conversion expenditures incurred as a result of the induced conversion from the exchange of the 2028 Convertible Notes, partially offset by an increase in global minimum tax (Pillar 2).
Current wording
The decrease in the tax provision was primarily due to an increase in R&D tax credits, a favorable provision to return adjustment, and the impact of the non-recurring 2025 expense associated with the net nondeductible induced conversion expenditures incurred as a result of the induced conversion from the exchange of the 2028 Convertible Notes, partially offset by shortfalls recognized upon the vesting of RSUs.
Previous wording
In addition, our rate is impacted by earnings realized in foreign jurisdictions with statutory rates that are different than the U.S. federal statutory rate. The primary foreign jurisdictions in which we operate and the statutory tax rate for each respective jurisdiction include Switzerland (22%), Mexico (30%), Uruguay (25%), Ireland (12.5%) and Malaysia (24%). Our manufacturing operations in Costa Rica and the Dominican Republic operate under a free trade zone agreement through April 2031 and March 2034, respectively.
Current wording
In addition, our rate is impacted by earnings realized in foreign jurisdictions with statutory rates that are different than the U.S. federal statutory rate. The primary foreign jurisdictions in which we operate and the statutory tax rate for each respective jurisdiction include Ireland (12.5%), Malaysia (24%), Mexico (30%), Switzerland (22%) and Uruguay (25%). Our manufacturing operations in Costa Rica and the Dominican Republic operate under a free trade zone agreement through April 2031 and March 2034, respectively.
Previous wording
Cash and cash equivalents at April 3, 2026 decreased by $9.0 million from December 31, 2025. Cash generated by operating activities of $24.7 million and proceeds from net borrowings on our revolving credit facility of $65.0 million were primarily offset by purchases of property, plant and equipment of $24.0 million, $50.0 million of repurchases of common stock, a $14.0 million investment in a convertible debt instrument, and tax withholding payments related to net share settlements of restricted stock unit awards of $9.0 million.
Current wording
Cash and cash equivalents at July 3, 2026 increased by $4.2 million from December 31, 2025. Cash generated by operating activities of $84.4 million and proceeds from net borrowings on our revolving credit facility of $50.0 million were primarily offset by purchases of property, plant and equipment of $46.7 million, $50.0 million of repurchases of common stock, a $14.0 million investment in a convertible debt instrument, and tax withholding payments related to net share settlements of restricted stock unit awards of $10.3 million.
Previous wording
Working capital increased by $30.4 million from December 31, 2025, or $39.4 million excluding the decrease in cash and cash equivalents. The increase in working capital, exclusive of cash and cash equivalents, primarily relates to positive fluctuations in inventory and accrued expenses and other liabilities, which were partially offset by a decrease in accounts receivable from the favorable timing of customer payments.
Current wording
Working capital increased by $55.4 million from December 31, 2025, or $51.2 million excluding the increase in cash and cash equivalents. The increase in working capital, exclusive of cash and cash equivalents, primarily relates to positive fluctuations in inventory, contract assets and accrued expenses and other liabilities, which were partially offset by a decrease in accounts receivable from the favorable timing of customer payments.
Previous wording
At April 3, 2026, $5.6 million of our cash and cash equivalents were held by foreign subsidiaries. We intend to limit our distributions from foreign subsidiaries to previously taxed income or current period earnings. If distributions are made utilizing current period earnings, we will record foreign withholding taxes in the period of the distribution.
Current wording
At July 3, 2026, $7.8 million of our cash and cash equivalents were held by foreign subsidiaries. We intend to limit our distributions from foreign subsidiaries to previously taxed income or current period earnings. If distributions are made utilizing current period earnings, we will record foreign withholding taxes in the period of the distribution.
Previous wording
As of April 3, 2026, our capital structure consisted of $1,251.5 million of debt, net of deferred debt issuance costs and unamortized discounts and 34 million shares of common stock outstanding. As of April 3, 2026, we had access to $729.7 million of borrowing capacity under our Revolving Credit Facility, available for normal course of business and letters of credit, and are authorized to issue up to 100 million shares of common stock and 100 million shares of preferred stock. As of April 3, 2026, our contractual debt service obligations for the remainder of 2026, consisting of interest on our outstanding debt and commitment fees on the unused portion of the Revolving Credit Facility are estimated to be approximately $17 million. Actual principal and interest payments may be higher if, for instance, the applicable interest rates on our Senior Secured Credit Facilities increase, we borrow additional amounts on our Revolving Credit Facility, or we pay principal amounts in excess of the required minimums reflected in the contractual debt service obligations above.
Current wording
As of July 3, 2026, our capital structure consisted of $1,237.9 million of debt, net of deferred debt issuance costs and unamortized discounts and 34 million shares of common stock outstanding. As of July 3, 2026, we had access to $744.7 million of borrowing capacity under our Revolving Credit Facility, available for normal course of business and letters of credit, and are authorized to issue up to 100 million shares of common stock and 100 million shares of preferred stock. As of July 3, 2026, our contractual debt service obligations for the remainder of 2026, consisting of interest on our outstanding debt and commitment fees on the unused portion of the Revolving Credit Facility are estimated to be approximately $15 million. Actual principal and interest payments may be higher if, for instance, the applicable interest rates on our Senior Secured Credit Facilities increase, we borrow additional amounts on our Revolving Credit Facility, or we pay principal amounts in excess of the required minimums reflected in the contractual debt service obligations above.
Previous wording
Based on current expectations, we believe that our projected cash flows provided by operations, available cash and cash equivalents and borrowings under our Revolving Credit Facility are sufficient to meet our working capital, debt service and capital expenditure requirements for the next twelve months. If our future financing needs increase, we may need to arrange additional debt or equity financing. We continually evaluate and consider various financing alternatives to enhance or supplement our existing financial resources. However, we cannot be assured that we will be able to enter into any such arrangements on acceptable terms or at all.
Current wording
Based on current expectations, we believe that our projected cash flows provided by operations, available cash and cash equivalents and borrowings under our Revolving Credit Facility are sufficient to meet our working capital, debt service and capital expenditure requirements for the next twelve months. If our future financing needs increase, we may need to arrange additional debt or equity financing. We continually evaluate and consider various financing alternatives to enhance or supplement our existing financial resources. However, we cannot be assured that we will be able to enter into any such arrangements on acceptable terms or at all. On August 2, 2026, we entered into the Merger Agreement. Subject to the terms and conditions of the Merger Agreement, at the Effective Time, each share of Company Common Shares outstanding immediately prior to the Effective Time, subject to certain limitations, will automatically be converted into the right to receive $127 in cash, without interest and thereafter the Company will be delisted from the NYSE. See The Merger above and Item 1A. Risk Factors, Risks Related to the Merger.
Previous wording
As of April 3, 2026, we had Senior Secured Credit Facilities that consist of an $800 million Revolving Credit Facility, with $65 million outstanding principal balance, and a TLA Facility with an outstanding principal balance of $91 million. The Revolving Credit Facility and TLA Facility mature on February 15, 2028. The Senior Secured Credit Facilities include a mandatory prepayment provision customary for similar credit facilities.
Current wording
As of July 3, 2026, we had Senior Secured Credit Facilities that consist of an $800 million Revolving Credit Facility, with $50 million outstanding principal balance, and a TLA Facility with an outstanding principal balance of $91 million. The Revolving Credit Facility and TLA Facility mature on February 15, 2028. The Senior Secured Credit Facilities include a mandatory prepayment provision customary for similar credit facilities.
Previous wording
The Revolving Credit Facility and TLA Facility contain covenants requiring that we maintain (i) a Total Net Leverage Ratio not to exceed 5.00:1.00, subject to increase in certain circumstances following certain qualified acquisitions and (ii) an interest coverage ratio of at least 2.50:1.00. As of April 3, 2026, we were in compliance with these financial covenants. As of April 3, 2026, our Total Net Leverage Ratio, calculated in accordance with our Senior Secured Credit Facilities agreement, was approximately 3.0:1.0. For the twelve month period ended April 3, 2026, our interest coverage ratio, calculated in accordance with our Senior Secured Credit Facilities agreement, was approximately 14.4:1.0.
Current wording
The Revolving Credit Facility and TLA Facility contain covenants requiring that we maintain (i) a Total Net Leverage Ratio not to exceed 5.00:1.00, subject to increase in certain circumstances following certain qualified acquisitions and (ii) an interest coverage ratio of at least 2.50:1.00. As of July 3, 2026, we were in compliance with these financial covenants. As of July 3, 2026, our Total Net Leverage Ratio, calculated in accordance with our Senior Secured Credit Facilities agreement, was approximately 2.9:1.0. For the twelve month period ended July 3, 2026, our interest coverage ratio, calculated in accordance with our Senior Secured Credit Facilities agreement, was approximately 14.0:1.0.
Previous wording
We utilize accounts receivable factoring arrangements with financial institutions to accelerate the timing of cash receipts and enhance our cash position. These arrangements, in all cases, do not contain recourse provisions, which would obligate us in the event of our customers’ failure to pay. During the first three months of 2026 and 2025, we sold, without recourse, $10.1 million and $58.1 million of accounts receivable, respectively. See Note 3, “Supplemental Financial Statement Disclosures” of the Notes to the Condensed Consolidated Financial Statements contained in Item 1 of this report for further information regarding our factoring arrangements.
Current wording
We utilize accounts receivable factoring arrangements with financial institutions to accelerate the timing of cash receipts and enhance our cash position. These arrangements, in all cases, do not contain recourse provisions, which would obligate us in the event of our customers’ failure to pay. During the first six months of 2026 and 2025, we sold, without recourse, $25.1 million and $131.1 million of accounts receivable, respectively. See Note 3, “Supplemental Financial Statement Disclosures” of the Notes to the Condensed Consolidated Financial Statements contained in Item 1 of this report for further information regarding our factoring arrangements.
Previous wording
Operating Activities– During the first three months of 2026, we generated cash from operations of $24.7 million, compared to $31.3 million for the first three months of 2025, as a $7.2 million decrease in net income adjusted for non-cash items such as depreciation and amortization was partially offset by a decrease in cash flow provided by changes in operating assets and liabilities.
Current wording
Operating Activities– During the first six months of 2026, we generated cash from operations of $84.4 million, compared to $75.1 million for the first six months of 2025, as an increase in cash flow provided by changes in operating assets and liabilities was partially offset by a $13.0 million decrease in net income adjusted for non-cash items such as depreciation and amortization.
Previous wording
Investing Activities – The $159.3 million decrease in net cash used in investing activities was primarily attributable to lower cash paid for acquisitions offset by the purchase of a long-term investment. Investing activities for the first three months of 2025 included net cash paid of $171.8 million for the Precision and VSi acquisitions.
Current wording
Investing Activities – The $154.4 million decrease in net cash used in investing activities was primarily attributable to lower cash paid for acquisitions offset by the purchase of a long-term investment. Investing activities for the first six months of 2025 included net cash paid of $171.8 million for the Precision and VSi acquisitions.
Previous wording
Financing Activities – Net cash provided by financing activities for the first three months of 2026 was $3.8 million compared to $151.6 million provided by financing activities for the first three months of 2025. In the first three months of 2026, net proceeds of $65.0 million were received from net borrowings under our revolving credit facility and were primarily offset by cash payments of $50.0 million for repurchases of common stock and $9.0 million related to stock-based compensation activity. In the first three months of 2025, the Company received net proceeds from the issuance of our 2030 Notes of $977.5 million, which was partially offset by a $71.0 million purchase of capped call options associated with the 2030 Notes, $383.7 million in aggregate principal amount of exchanged 2028 Notes, $230.0 million of principal payments on our TLA Facility, $126.0 million net payments on our Revolving Credit Facility, and $14.1 million related to stock-based compensation activity.
Current wording
Financing Activities – Net cash used in financing activities for the first six months of 2026 was $19.8 million compared to $116.0 million provided by financing activities for the first six months of 2025. In the first six months of 2026, cash payments of $50.0 million for repurchases of common stock and $10.3 million related to stock-based compensation activity were primarily offset by net proceeds of $50.0 million received from net borrowings under our revolving credit facility. Cash provided by financing activities for the first six months of 2025 was primarily the net proceeds from the issuance of our 2030 Convertible Notes of $977.5 million, which was partially offset by a $71.0 million purchase of capped call options associated with the 2030 Convertible Notes, $383.7 million in aggregate principal amount of exchanged 2028 Convertible Notes, $274.0 million of principal payments on our TLA Facility, $116.0 million net payments on our Revolving Credit Facility, and $13.1 million related to stock-based compensation activity.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Sales by product lines were as follows (in thousands):