ALLEGRO MICROSYSTEMS, INC.

Previous wording

We operate on a 52- or 53-week fiscal year ending on the last Friday of March. Each fiscal quarter has 13 weeks, except in a 53-week year, when the fourth fiscal quarter has 14 weeks. All references to the three-month periods ended June 26, 2026 and June 27, 2025 relate to the 13-week periods ended June 26, 2026 and June 27, 2025, respectively. All references to “2027,” “fiscal year 2027” or similar references relate to the 52-week period ending March 26, 2027. All references to “2026,” “fiscal year 2026” or similar references relate to the 52-week period ended March 27, 2026.

Current wording

September 25, 2026 and September 26, 2025 relate to the 13- and 26-week periods ended September 25, 2026 and September 26, 2025, respectively. All references to “2027,” “fiscal year 2027” or similar references relate to the 52-week period ending March 26, 2027. All references to “2026,” “fiscal year 2026” or similar references relate to the 52-week period ended March 27, 2026.

Previous wording

We are a global leader in the design, development, and marketing of sensor integrated circuits (“ICs”) and application-specific power ICs, that enable the sensing, motion control, and power management functions of complex electromechanical or power conversion systems. We primarily serve automotive and industrial markets, including advanced industrial markets such as Artificial Intelligence (“AI”) data centers, robotics, and energy infrastructure, where our solutions enable customers to sense, move, and manage power with efficiency, precision, and reliability.

Current wording

We are a global leader in the design, development, and marketing of sensor integrated circuits (“ICs”) and application-specific power ICs that enable the sensing, motion control, power management and isolation functions of complex electromechanical or power conversion systems. We primarily serve automotive and industrial markets, including advanced industrial markets such as Artificial Intelligence (“AI”) data centers, robotics, and energy infrastructure, where our solutions enable customers to sense, move, manage and isolate power with efficiency, precision, and reliability.

Previous wording

Our sensor ICs provide critical feedback for motion, position, speed, and electrical current sensing, while our power ICs control motors and manage power conversion and regulation across a wide range of applications. By embedding system-level intelligence directly into our products, we reduce the number of components required in a customer’s design while improving performance, energy efficiency, safety, and reliability. We believe our deep application knowledge, differentiated technology, and strong customer relationships enable us to deliver solutions that are more integrated, intelligent and efficient than typical ICs.

Current wording

Our sensor ICs provide critical feedback for motion, position, speed, and electrical current sensing, while our power ICs control motors, manage power conversion and regulation, and provide high-voltage isolation across a wide range of applications. By embedding system-level intelligence directly into our products, we reduce the number of components required in a customer’s design while improving performance, energy efficiency, safety, and reliability. We believe our deep application knowledge, differentiated technology, and strong customer relationships enable us to deliver solutions that are more integrated, intelligent and efficient than typical ICs.

Previous wording

We are headquartered in Manchester, New Hampshire and have a global footprint across multiple continents. Our portfolio includes more than 1,500 products, and we ship approximately 2.1 billion units annually to more than 15,000 customers worldwide. During the three-month periods ended June 26, 2026 and June 27, 2025, we generated $259.2 million and $203.4 million in total net sales, respectively, with $15.9 million and $(13.2) million in net income (loss), respectively.

Current wording

We are headquartered in Manchester, New Hampshire and have a global footprint across multiple continents. Our portfolio includes more than 1,500 products, and we ship over 2 billion units annually to more than 15,000 customers worldwide. During the three- and six-month periods ended September 25, 2026, we generated $276.9 million and $536.1 million in total net sales, respectively, with $23.3 million and $39.2 million in net income, respectively. During the three- and six-month periods ended September 26, 2025, we generated $214.3 million and $417.7 million in total net sales, respectively, with $6.6 million in net income and $6.6 million in net loss, respectively.

Previous wording

Inflation rates in the markets in which we operate have remained elevated and may continue to rise as a result of cost increases attributable to a rise in global energy and commodity prices and global tariff policies. Inflation in recent quarters has led us to experience higher costs, including higher labor costs, wafer and other costs for materials from suppliers, and transportation and energy costs. Our suppliers have raised their prices and may continue to raise prices, and in the competitive markets in which we operate, we may not be able to make corresponding price increases to preserve our gross margins and profitability. If inflation rates continue to rise or remain elevated for a sustained period of time, they could have a material adverse effect on our business, financial condition, results of operations and liquidity. While we have attempted to offset increases in these costs through various productivity and cost reduction initiatives, as well as adjusting our selling prices and releasing new products with improved gross margins, our ability to increase our average selling prices depends on market conditions and competitive dynamics. Given the timing of our actions compared to the timing of these inflationary pressures, there may be periods during which we are unable to fully recover the increases in our costs.

Current wording

While global inflation rates have remained persistent, the markets in which we operate have remained elevated and may continue to rise as a result of cost increases attributable to a rise in global energy and commodity prices and global tariff policies. Inflation in recent quarters has led us to experience higher costs, including higher labor costs, wafer and other costs for materials from suppliers, and transportation and energy costs. Our suppliers have raised their prices in recent years and may continue to raise prices, and in the competitive markets in which we operate, we may not be able to make corresponding price increases to preserve our gross margins and profitability. If inflation rates continue to rise or remain elevated for a sustained period of time, they could have a material adverse effect on our business, financial condition, results of operations and liquidity. While we have attempted to offset increases in these costs through various productivity and cost reduction initiatives, as well as adjusting our selling prices and releasing new products with improved gross margins, our ability to increase our average selling prices (“ASPs”) depends on market conditions and competitive dynamics. Given the timing of our actions compared to the timing of these inflationary pressures, there may be periods during which we are unable to fully recover the increases in our costs.

Previous wording

Our end customers continually develop new products in existing and new application areas, and we work closely with most of our significant original equipment manufacturer (“OEMs”) customers in our target markets to understand their product roadmaps and strategies. For new products, the time from design initiation and manufacturing until we generate sales can be lengthy, typically between two and four years. As a result, our future sales are highly dependent on our continued success at winning design mandates from our customers. Further, despite current inflationary and pricing conditions, we expect the average sales prices (“ASPs”) of our products to decline over time, and we consider design wins to be critical to our future success as they help mitigate declines in ASPs. We anticipate being increasingly dependent on revenue from newer design wins for our newer products. The selection process is typically lengthy and may require us to incur significant design and development expenditures in pursuit of a design win, with no assurance that our solutions will be selected. As a result, the loss of any key design win or any significant delay in the ramp-up of volume production of a customer’s products into which our product is designed could adversely affect our business. In addition, volume production is contingent upon the successful introduction and market acceptance of our customers’ end products, which may be affected by several factors beyond our control.

Current wording

Our end customers continually develop new products in existing and new application areas, and we work closely with most of our significant original equipment manufacturer (“OEM”) customers in our target markets to understand their product roadmaps and strategies. For new products, the time from design initiation and manufacturing until we generate sales can be lengthy, typically between two and four years. As a result, our future sales are highly dependent on our continued success at winning designs from our customers. Further, despite current inflationary and pricing conditions, unless we take actions to increase the prices of our products, we expect the ASPs of our products to decline over time, and we consider design wins to be critical to our future success as they help mitigate declines in ASPs. We anticipate being increasingly dependent on revenue from newer design wins for our newer products. The selection process is typically lengthy and may require us to incur significant design and development expenditures in pursuit of a design win, with no assurance that our solutions will be selected. As a result, the loss of any key design win or any significant delay in the ramp-up of volume production of a customer’s products into which our product is designed could adversely affect our business. In addition, volume production is contingent upon the successful introduction and market acceptance of our customers’ end products, which may be affected by several factors beyond our control.

Previous wording

Gross margin has been, and will continue to be, affected by a variety of factors, including the ASPs of our products, product mix in a given period, material costs, yields, manufacturing costs and efficiencies. We believe the primary driver of gross margin is the ASP negotiated between us and our customers relative to material costs and yields. Our pricing and margins depend on the volumes and the features of the products we produce and sell to our customers. As our products mature and unit volumes increase, we expect their ASPs to decline in the long-term. We continually monitor and work to reduce the cost of our products and improve the potential value our solutions provide to our customers, as we target new design win opportunities and manage the product life cycles of our existing customer designs. We also maintain a close relationship with our suppliers and subcontractors to improve quality, increase yields and lower manufacturing costs. As a result, these declines often coincide with improvements in manufacturing yields and lower wafer, assembly, and testing costs, which offset some or all of the margin reduction that results from declining ASPs. However, we expect our gross margin to fluctuate on a quarterly basis as a result of changes in ASPs due to product mix, new product introductions, transitions into volume manufacturing and manufacturing costs. Gross margin generally decreases if production volumes are lower as a result of decreased demand, which leads to a reduced absorption of our fixed manufacturing costs. Gross margin generally increases when the opposite occurs.

Current wording

Gross margin has been, and will continue to be, affected by a variety of factors, including the ASPs of our products, product mix in a given period, material costs, yields, manufacturing costs and efficiencies. We believe the primary driver of gross margin is the ASP negotiated between us and our customers relative to material costs and yields. Our pricing and margins depend on the volumes and the features of the products we produce and sell to our customers. As our products mature and unit volumes increase, we expect their ASPs to decline in the long-term. We continually monitor and work to reduce the cost of our products and improve the potential value our solutions provide to our customers, as we target new design win opportunities and manage the product life cycles of our existing customer designs. We also maintain a close relationship with our suppliers and subcontractors to improve quality, increase yields and lower manufacturing costs. As a result, these ASP declines often coincide with improvements in manufacturing yields and lower wafer, assembly, and testing costs, as well as selective price increases, which offset some or all of the margin reduction that results from declining ASPs. However, we expect our gross margin to fluctuate on a quarterly basis as a result of changes in ASPs due to product mix, new product introductions, transitions into volume manufacturing and manufacturing costs. Gross margin generally decreases if production volumes are lower as a result of decreased demand, which leads to a reduced absorption of our fixed manufacturing costs. Gross margin generally increases when the opposite occurs.

Previous wording

The semiconductor industry has historically been highly cyclical and is characterized by increasingly rapid technological change, product obsolescence, competitive pricing pressures, evolving standards, short product life cycles in consumer and other rapidly changing markets and fluctuations in product supply and demand. New technology may result in sudden changes in system designs or platform changes that may render some of our products obsolete and require us to devote significant research and development resources to compete effectively. Periods of rapid growth and capacity expansion are occasionally followed by significant market corrections in which sales decline, inventories accumulate, and facilities go underutilized. Furthermore, emerging secular growth drivers and concentrated infrastructure investments, such as those supporting advanced computing, AI and data centers, and electrification, may alter the historical amplitude or duration of these industry cycles. During periods of expansion, our margins generally improve as fixed costs are spread over higher manufacturing volumes and unit sales. In addition, we may build inventory to meet increasing market demand for our products during these times, which serves to absorb fixed costs further and increase our gross margins. During an expansion cycle, we may increase capital spending and hiring to add to our production capacity. During periods of slower growth or industry contractions, our sales, production and productivity and margins generally decline.

Current wording

The semiconductor industry has historically been highly cyclical and is characterized by increasingly rapid technological change, product obsolescence, competitive pricing pressures, evolving standards, short product life cycles in consumer and other rapidly changing markets and fluctuations in product supply and demand. New technology may result in sudden changes in system designs or platform changes that may render some of our products obsolete and require us to devote significant research and development resources to compete effectively. Periods of rapid growth and capacity expansion are occasionally followed by significant market corrections in which sales decline, inventories accumulate, and facilities go underutilized. Furthermore, emerging secular growth drivers and concentrated infrastructure investments, such as those supporting advanced computing, AI and data centers, and electrification, may alter the historical amplitude or duration of these industry cycles. During periods of expansion, our margins generally improve as fixed costs are spread over higher manufacturing volumes and unit sales. In addition, we may build inventory to meet increasing market demand for our products during these times, which serves to absorb fixed costs further and increase our gross margins. During an expansion cycle, we may increase capital spending and hiring to add to our production capacity. During periods of slower growth or industry contractions, our sales, production, productivity and margins generally decline.

Previous wording

June 27, 2025. The increase by market, product and geographic location are as follows:

Current wording

September 26, 2025. The increases by market, product and geographic location are as follows:

Previous wording

June 27, 2025, primarily due to growth in safety, comfort and convenience applications and advanced driver assistance systems (“ADAS”) and components for electrified and hybrid vehicles (“xEV”), (collectively, “Focus Auto”).

Current wording

September 26, 2025, primarily due to increases in demand for advanced driver assistance systems (“ADAS”), components for electrified and hybrid vehicles (“xEVs”), (collectively, “Focus Auto”), safety, comfort and convenience applications, and internal combustion engine products.

Previous wording

Industrial and Other net sales increased in the three-month period ended June 26, 2026 compared to the three-month period ended June 27, 2025, primarily due to increases in demand for data center applications and personal and industrial transport products.

Current wording

Industrial and Other net sales increased in the three-month period ended September 25, 2026 compared to the three-month period ended September 26, 2025, primarily due to increases in demand for data center applications, consumer products, personal and industrial transport products and broad-based industrial products.

Previous wording

The increase in PIC sales was primarily driven by an increase in demand for our motor and high performance power products. The increase in MS sales was primarily due to an increase in demand for our current sensor products, as well as our magnetic position sensors both of which includes our tunneling magnetoresistance (“TMR”) sensor solutions.

Current wording

The increase in PIC sales was primarily driven by an increase in demand for our motor and high-performance power products. The increase in MS sales was primarily due to an increase in demand for our current sensor products and magnetic position sensors, both of which include our tunneling magnetoresistance (“TMR”) sensor solutions, as well as our magnetic speed sensor products.

Previous wording

June 27, 2025, primarily driven by an increase in demand of our data center applications. Japan net sales increased primarily driven by safety, comfort and convenience applications, xEV components, and internal combustion engine products. Greater China net sales increased primarily driven by an increase in ADAS components, and safety, comfort and convenience applications, partially offset by a decrease in broad-based industrial products. EMEA net sales increased primarily in consumer products. Other Asia net sales increased primarily in personal and industrial transport products.

Current wording

Taiwan net sales increased in the three-month period ended September 25, 2026 compared to the three-month period ended September 26, 2025, primarily driven by an increase in demand for our data center applications, partially offset by decline in safety, comfort and convenience applications. Other Asia net sales increased primarily driven by sales of personal and industrial transport products. Japan net sales increased primarily driven by demand for safety, comfort and convenience applications, and data center applications. EMEA net sales increased primarily due to increased sales of consumer products. Greater China net sales increased primarily driven by an increase in internal combustion engine products and consumer products. South Korea net sales increased primarily driven by demand for ADAS components. United States net sales increased primarily driven by an increase in broad-based industrial products.

Previous wording

Cost of goods sold increased in the three-month period ended June 26, 2026 compared to the three-month period ended

Current wording

Cost of goods sold increased in the three-month period ended September 25, 2026 compared to the three-month period ended September 26, 2025, primarily due to higher production volume in support of higher product sales.

Previous wording

Cost of goods sold as a percentage of our total net sales was 51.5% and 55.1% for the three-month periods ended June 26, 2026 and June 27, 2025, respectively. The decrease was primarily due to the increase in net sales.

Current wording

Cost of goods sold as a percentage of our total net sales was 50.8% and 53.7% for the three-month periods ended

Previous wording

Gross profit increased in the three-month period ended June 26, 2026 compared to the three-month period ended June 27, 2025, primarily due to the increase in net sales, operating leverage and pricing actions.

Current wording

Gross profit increased in the three-month period ended September 25, 2026 compared to the three-month period ended September 26, 2025, primarily due to the increase in net sales and favorable product mix.

Previous wording

Gross margin was 48.5% and 44.9% for the three-month periods ended June 26, 2026 and June 27, 2025, respectively. The increase was primarily due to the increase in net sales and a change in product mix.

Current wording

Gross margin was 49.2% and 46.3% for the three-month periods ended September 25, 2026 and September 26, 2025, respectively. The increase was primarily due to the increase in net sales and a change in product mix and favorable manufacturing absorption.

Previous wording

Research and development (“R&D”) expenses increased in the three-month period ended June 26, 2026 compared to the three-month period ended June 27, 2025, primarily due to the increase in R&D personnel costs.

Current wording

Research and development (“R&D”) expenses increased in the three-month period ended September 25, 2026 compared to the three-month period ended September 26, 2025, primarily due to the increase in personnel costs and general operating expenses.

Previous wording

Interest expense decreased in the three-month period ended June 26, 2026 compared to the three-month period ended

Current wording

Interest expense decreased in the three-month period ended September 25, 2026 compared to the three-month period ended September 26, 2025. The decrease was due to the voluntary payments applied to the outstanding balance of our term loans under our revolving credit facility (as described in Note 9, “Debt and Other Borrowings” to the unaudited condensed consolidated financial statements included in this Quarterly Report), in addition to the impact from refinancing the Company’s outstanding term loans under the Company’s revolving credit facility in January 2026.

Previous wording

Interest income increased in the three-month period ended June 26, 2026 compared to the three-month period ended

Current wording

Interest income increased in the three-month period ended September 25, 2026 compared to the three-month period ended September 26, 2025, primarily due to higher cash and cash equivalents balances in interest-bearing accounts.

Previous wording

The foreign currency loss recorded in the three-month periods ended June 26, 2026 and June 27, 2025 was primarily due to U.S. Dollar weakening against the Philippine Peso.

Current wording

The foreign currency loss recorded in the three-month period ended September 25, 2026 was primarily due to U.S. Dollar weakening against the Philippine Peso. The foreign currency loss recorded in the three-month period ended September 26, 2025 was primarily due to the U.S. Dollar weakening against various currencies, including the Euro and the Philippine Peso.

Previous wording

We recorded a net loss of $3.6 million and $0.8 million for the three-month periods ended June 26, 2026 and June 27, 2025, respectively, related to our equity investment in Polar Semiconductor, LLC.

Current wording

We recorded a net loss of $3.0 million and $2.4 million for the three-month periods ended September 25, 2026 and

Previous wording

June 27, 2025, primarily due to higher production volume in support of higher product sales.

Current wording

Cost of goods sold increased in the six-month period ended September 25, 2026 compared to the six-month period ended September 26, 2025, primarily due to higher production volume in support of higher product sales.

Previous wording

Selling, general and administrative (“SG&A”) expenses decreased in the three-month period ended June 26, 2026 compared to the three-month period ended June 27, 2025, primarily due to a decrease in outside services, partially offset by an increase in personnel costs.

Current wording

SG&A expenses increased in the six-month period ended September 25, 2026 compared to the six-month period ended September 26, 2025, primarily due to an increase in personnel costs, partially offset by a decrease in outside services.

Previous wording

SG&A expenses as a percentage of our total net sales was 17.3% and 23.4% in the three-month periods ended June 26, 2026 and June 27, 2025, respectively. The decrease as a percentage of total net sales was primarily due to the increase in net sales, in addition to a decrease in outside services.

Current wording

September 25, 2026 and September 26, 2025, respectively. The decrease as a percentage of total net sales was primarily due to the increase in net sales, in addition to a decrease in outside services, partially offset by an increase in personnel costs.

Previous wording

June 27, 2025. The decrease was due to the voluntary payments applied to the outstanding balance of our Term Loan Facility, in addition to the impact from refinancing in January 2026.

Current wording

Interest expense decreased in the six-month period ended September 25, 2026 compared to the six-month period ended September 26, 2025. The decrease was due to the voluntary payments applied to the outstanding balance of our term loans under our revolving credit facility, in addition to the impact from refinancing the Company’s outstanding term loans under the Company’s revolving credit facility in January 2026.

Previous wording

June 27, 2025, primarily due to higher cash and cash equivalents balances in interest-bearing accounts.

Current wording

Interest income increased in the six-month period ended September 25, 2026 compared to the six-month period ended September 26, 2025, primarily due to higher cash and cash equivalents balances in interest-bearing accounts.

Previous wording

Income tax provision and the effective income tax rate were approximately $1.5 million and 8.6%, respectively, in the three-month period ended June 26, 2026, compared to income tax provision and effective income tax rate of approximately $3.2 million and (31.7)%, respectively, in the three-month period ended June 27, 2025. The change in the effective tax rates for the three-month periods primarily resulted from the significant increase in GAAP income before taxes, partially offset by an FDDEI deduction, stock-based compensation windfalls, and R&D credit benefits.

Current wording

Income tax provision and the effective income tax rate were approximately $6.0 million and 13.3%, respectively, in the six-month period ended September 25, 2026, compared to income tax benefit and effective income tax rate of approximately $6.1 million and 48.2%, respectively, in the six-month period ended September 26, 2025. The change in the effective tax rates for the six-month periods primarily resulted from the significant increase in GAAP income before taxes, partially offset by the FDDEI deduction, stock-based compensation windfalls, and R&D credit benefits.

Previous wording

As of June 26, 2026, we had $162.0 million of cash and cash equivalents and $370.8 million of working capital, compared to $168.8 million of cash and cash equivalents and $357.7 million of working capital as of March 27, 2026. Working capital is impacted by the timing and extent of our business needs.

Current wording

As of September 25, 2026, we had $193.0 million of cash and cash equivalents and $425.1 million of working capital, compared to $168.8 million of cash and cash equivalents and $357.7 million of working capital as of March 27, 2026. Working capital is impacted by the timing and extent of our business needs.

Previous wording

Our primary requirements for liquidity and capital resources besides our growth initiatives are working capital, capital expenditures, principal and interest payments on our outstanding debt, and other general corporate needs. Historically, these cash requirements have been met through cash provided by operating activities and cash and cash equivalents. Our current capital deployment strategy for fiscal year 2027 is to utilize cash on hand and capacity under our revolving credit facility to support our continued growth initiatives into select markets and planned capital expenditures, as well as consider potential acquisitions. As of June 26, 2026, the Company was not party to any off-balance sheet arrangements that have had or are reasonably likely to have a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures, or capital resources. The cash requirements for the current fiscal year relate to our operating leases, operating and capital purchase commitments, and expected contributions to our defined benefit and contribution plans. Additionally, we expect to continue to strategically invest in expanding our operations in China, Europe, Japan and India in order to directly manage and service our customers in these markets, which could result in increases in our total net sales, cost of goods sold and operating expenses. For information regarding the Company’s expected cash requirements and timing of payments related to leases, noncancellable purchase commitments and pension and defined contribution plans, see Note 12, “Leases,” Note 15, “Retirement Plans,” and Note 16, “Commitments and Contingencies” to the audited consolidated financial statements in the Company’s 2026 Annual Report.

Current wording

Our primary requirements for liquidity and capital resources besides our growth initiatives are working capital, capital expenditures, principal and interest payments on our outstanding debt, and other general corporate needs. Historically, these cash requirements have been met through cash provided by operating activities and cash and cash equivalents. Our current capital deployment strategy for fiscal year 2027 is to utilize cash on hand and capacity under our revolving credit facility to support our continued growth initiatives into select markets and planned capital expenditures, as well as consider potential acquisitions. As of September 25, 2026, the Company was not party to any off-balance sheet arrangements that have had or are reasonably likely to have a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures, or capital resources. The cash requirements for the current fiscal year relate to our operating leases, operating and capital purchase commitments, and expected contributions to our defined benefit and contribution plans. Additionally, we expect to continue to strategically invest in expanding our operations in China, Europe, Japan and India in order to directly manage and service our customers in these markets, which could result in increases in our total net sales, cost of goods sold and operating expenses. For information regarding the Company’s expected cash requirements and timing of payments related to leases, noncancellable purchase commitments and pension and defined contribution plans, see Note 12, “Leases,” Note 15, “Retirement Plans,” and Note 16, “Commitments and Contingencies” to the audited consolidated financial statements in the 2026 Annual Report.

Previous wording

The following table summarizes our cash flows for the three-month periods ended June 26, 2026 and June 27, 2025:

Current wording

The following table summarizes our cash flows for the six-month periods ended September 25, 2026 and September 26, 2025:

Previous wording

Net cash provided by operating activities was $22.0 million in the three-month period ended June 26, 2026, resulting primarily from a net income of $15.9 million and noncash charges of $31.1 million, further adjusted by a net decrease in cash from an increase in net operating assets and liabilities of $25.1 million. Noncash charges primarily included increases of $16.9 million for depreciation and amortization, $14.1 million of stock-based compensation, and $1.6 million for provisions for inventory and expected credit losses, partially offset by $1.7 million of deferred income taxes. The net increase in operating assets and liabilities consisted of a $25.9 million decrease in other changes in operating assets and liabilities, net, a $15.0 million increase in payment to related party, a $7.9 million increase in inventories, a $5.4 million increase in trade accounts receivable, net, and a $0.2 million decrease in net amounts due to related party, partially offset by a $13.8 million increase in trade accounts payable, and a $15.5 million decrease in prepaid expenses and other assets. The decrease in other changes in operating assets and liabilities, net was primarily the result of a reduction in accrued personnel costs due to the timing of the payments pursuant to our annual incentive compensation plan. The increase in payment to related party was primarily the result of advance payment on products. The increase in inventories was primarily the result of the increase in supplies to support future sales. The increase in trade accounts receivable, net was primarily a result of increased sales year-over-year and timing of collections. The decrease in net amounts due to related party was primarily due to variations in the timing of such payments in the ordinary course of business. Trade accounts payable increased, primarily due to the timing of payments to suppliers and vendors, including unpaid capital expenditures of $1.6 million. The decrease in prepaid expenses and other assets was primarily due to the receipt of a tax refund and the additional planning related to the OBBB.

Current wording

Net cash provided by operating activities was $58.8 million in the six-month period ended September 25, 2026, resulting primarily from net income of $39.2 million and noncash charges of $67.5 million, further adjusted by a net decrease in cash from an increase in net operating assets and liabilities of $47.9 million. Noncash charges primarily included increases of $34.1 million for depreciation and amortization, $28.3 million of stock-based compensation, $6.6 million of loss in earnings of equity investment, and $2.3 million for provisions for inventory and expected credit losses, partially offset by $4.5 million of deferred income taxes. The net increase in operating assets and liabilities consisted of a $27.3 million decrease in other changes in operating assets and liabilities, net, a $20.0 million increase in payment to related party, a $2.2 million increase in inventories, a $15.2 million increase in trade accounts receivable, net, and a $1.2 million increase in net amounts due to and from related party, partially offset by a $12.3 million increase in trade accounts payable, and a $5.7 million decrease in prepaid expenses and other assets. The decrease in other changes in operating assets and liabilities, net was primarily the result of a reduction in accrued personnel costs due to the timing of the payments pursuant to our annual incentive compensation plan. The increase in payment to related party was primarily the result of advance payment on products. The increase in inventories was primarily the result of the increase in supplies to support future sales. The increase in trade accounts receivable, net was primarily a result of increased sales year-over-year and timing of collections. The increase in net amounts due to related party was primarily due to variations in the timing of such payments in the ordinary course of business. Trade accounts payable increased, primarily due to the timing of payments to suppliers and vendors, including unpaid capital expenditures of $2.0 million. The decrease in prepaid expenses and other assets was primarily due to the timing of tax payments.

Previous wording

Net cash provided by operating activities was $61.6 million in the three-month period ended June 27, 2025, resulting primarily from a net loss of $13.2 million and noncash charges of $26.2 million, further adjusted by a net increase in cash from a decrease in net operating assets and liabilities of $48.5 million. Noncash charges primarily included increases of $16.2 million for depreciation and amortization, $10.8 million of stock-based compensation, and $3.5 million for provisions for inventory and expected credit losses, partially offset by $5.1 million of deferred income taxes. The net decrease in operating assets and liabilities consisted of a $36.0 million decrease in prepaid expenses and other assets, a $7.2 million decrease in inventories, an $8.0 million increase in other changes in operating assets and liabilities, net and a $6.3 million increase in trade accounts payable, partially offset by a $5.3 million increase in trade accounts receivable, net and a $3.6 million decrease in net amounts due to related party. The increase in trade accounts receivable, net, was primarily a result of increased sales year-over-year. Trade accounts payable increased primarily due to the timing of payments to suppliers and vendors, including unpaid capital expenditures of $2.8 million. The decrease in prepaid expenses and other assets was mostly due to the timing of tax payments. The decrease in inventories was primarily the result of the increase in net sales. The decrease in net amounts due to related party was primarily due to variations in the timing of such payments in the ordinary course of business. The increase in other changes in operating assets and liabilities, net was primarily the result of higher accrued income taxes and accrued personnel costs.

Current wording

Net cash provided by operating activities was $82.0 million in the six-month period ended September 26, 2025, resulting primarily from a net loss of $6.6 million and noncash charges of $62.6 million, further adjusted by a net increase in cash from a decrease in net operating assets and liabilities of $26.0 million. Noncash charges primarily included increases of $32.8 million for depreciation and amortization, $24.4 million of stock-based compensation, $4.5 million for provisions for inventory and expected credit losses and $3.2 million in loss in earnings of equity investment, partially offset by $4.2 million of deferred income taxes. The net decrease in operating assets and liabilities consisted of a $23.5 million decrease in prepaid expenses and other assets, a $9.3 million decrease in inventories, a $14.0 million increase in other changes in operating assets and liabilities, net, and a $4.2 million increase in trade accounts payable, partially offset by a $21.7 million increase in trade accounts receivable, net and a $3.3 million increase in net amounts due to and from related party. The increase in trade accounts receivable, net, was primarily a result of increased sales year-over-year and timing of collections. Trade accounts payable increased primarily due to the timing of payments to suppliers and vendors, including unpaid capital expenditures of $1.1 million. The decrease in prepaid expenses and other assets was mostly due to the timing of tax payments. The decrease in inventories was primarily the result of the increase in net sales. The decrease in net amounts due to related party was primarily due to variations in the timing of such payments in the ordinary course of business. The increase in other changes in operating assets and liabilities, net was primarily the result of higher accrued income taxes and accrued personnel costs.

Previous wording

Net cash used in investing activities was $10.6 million in the three-month period ended June 27, 2025, consisting of purchases of property, plant and equipment.

Current wording

Net cash used in investing activities was $15.4 million in the six-month period ended September 25, 2026, consisting of $14.4 million for purchases of property, plant and equipment and $1.0 million for investment in equity security.

Previous wording

Net cash used in investing activities was $8.0 million in the three-month period ended June 26, 2026, consisting of purchases of property, plant and equipment.

Current wording

Net cash used in investing activities was $17.0 million in the six-month period ended September 26, 2025, consisting of purchases of property, plant and equipment.

Previous wording

Net cash used in financing activities was $18.0 million in the three-month period ended June 26, 2026, primarily consisting of $17.8 million of payments for taxes related to the net settlement of equity awards.

Current wording

Net cash used in financing activities was $16.9 million in the six-month period ended September 25, 2026, primarily consisting of $18.2 million of payments for taxes related to the net settlement of equity awards.

Previous wording

Net cash used in financing activities was $44.2 million in the three-month period ended June 27, 2025, primarily consisting of $35.0 million of payments on our term loans and $9.0 million of payments for taxes related to the net settlement of equity awards.

Current wording

Net cash used in financing activities was $70.7 million in the six-month period ended September 26, 2025, primarily consisting of $60.0 million of payments on our term loans and $9.3 million of payments for taxes related to the net settlement of equity awards.