RBC Bearings INC

Previous wording

All dollar amounts in this MD&A presentation are stated in millions except for per share amounts.

Current wording

All dollar amounts in this MD&A presentation are stated in millions except for per share amounts and backlog.

Previous wording

We are a leading international manufacturer of highly engineered precision bearings, components and essential systems for the aerospace, defense and industrial industries. Our precision solutions are integral to the manufacture and operation of most machines and mechanical systems, reduce wear to moving parts, facilitate proper power transmission, and reduce damage and energy loss caused by friction. While we manufacture products in all major bearing categories, we focus primarily on the higher end of the bearing market where we believe our value-added manufacturing and engineering capabilities enable us to differentiate ourselves from our competitors and enhance profitability. We believe our unique expertise has enabled us to garner leading positions in many of the product markets in which we primarily compete. With 60 facilities in 11 countries, of which 42 are manufacturing facilities, we have been able to significantly broaden our end markets, products, customer base and geographic reach. We have a fiscal year consisting of 52 or 53 weeks, ending on the Saturday closest to March 31. Based on this policy, fiscal 2026 will have 52 weeks and fiscal 2025 had 52 weeks. Both the first quarter of fiscal 2026 and the first quarter of fiscal 2025 had 13 weeks.

Current wording

We are a leading international manufacturer of highly engineered precision bearings, components and essential systems for the aerospace, defense and industrial industries. Our precision solutions are integral to the manufacture and operation of most machines and mechanical systems, reduce wear to moving parts, facilitate proper power transmission, and reduce damage and energy loss caused by friction. While we manufacture products in all major bearing categories, we focus primarily on the higher end of the bearing market where we believe our value-added manufacturing and engineering capabilities enable us to differentiate ourselves from our competitors and enhance profitability. We believe our unique expertise has enabled us to garner leading positions in many of the product markets in which we primarily compete. With 60 facilities in 11 countries, of which 43 are manufacturing facilities, we have been able to significantly broaden our end markets, products, customer base and geographic reach. We have a fiscal year consisting of 52 or 53 weeks, ending on the Saturday closest to March 31. Based on this policy, fiscal 2026 will have 52 weeks and fiscal 2025 had 52 weeks. Both the second quarter of fiscal 2026 and the second quarter of fiscal 2025 had 13 weeks.

Previous wording

Our net sales for the three-month period ended June 28, 2025 increased 7.3% compared to the same period last fiscal year. The increase in net sales was a result of a 10.4% increase in our Aerospace/Defense segment and a 5.5% increase in our Industrial segment. Our backlog, as of June 28, 2025 was $1,017.3 compared to $940.7 as of March 29, 2025.

Current wording

Our net sales for the three-month period ended September 27, 2025 increased 14.4% compared to the same period last fiscal year. The increase in net sales was a result of a 38.8% increase in our Aerospace/Defense segment and a 0.7% increase in our Industrial segment. $24.7 of sales included this quarter came from VACCO, all of which were included in the Aerospace/Defense segment. Our backlog, as of September 27, 2025 was $1.6 billion, which included $0.5 billion of VACCO backlog, compared to $0.9 billion as of March 29, 2025. Our backlog includes orders with specific conditions (such as the timing of delivery or the requirement to obtain funding approvals prior to commencing work) and/or that are cancellable at the customer’s discretion.

Previous wording

We are continuing to see the expansion of the commercial aerospace business, which experienced a 9.6% increase in net sales for the three-month period ended June 28, 2025 versus the same period last fiscal year. We anticipate this growth to continue through the rest of the current fiscal year and beyond. Orders have continued to grow as evidenced by the increase in our backlog. Defense sales, which represented approximately 35.2% of segment sales during the quarter, were up 11.9% quarter over quarter. We expect this growth to continue throughout the current fiscal year and beyond as we are gearing up to fulfill the substantial number of defense orders in our backlog. Our industrial business continued to demonstrate strength in distribution across several major end markets, notably including mining and metals, warehousing, and aggregates.

Current wording

We continue to see the expansion of our commercial aerospace business, which experienced a 21.6% increase in net sales for the three-month period ended September 27, 2025, which included $0.4 of sales from VACCO, versus the same period last fiscal year. We anticipate this growth to continue through the rest of the current fiscal year and beyond. Orders have continued to grow as evidenced by the increase in our backlog. Defense sales, which represented approximately 41.6% of segment sales during the quarter, were up 73.3% year over year, which included $24.3 of net sales from VACCO. We expect this growth to continue throughout the current fiscal year and beyond as we are gearing up to fulfill the substantial number of defense orders in our backlog. Our industrial business continued to demonstrate strength in distribution across several major end markets, including mining and metals, warehousing, and aggregate & cement.

Previous wording

We believe that operating cash flows and available credit under the Revolving Credit Facility will provide adequate resources to fund internal growth initiatives for the foreseeable future, including at least the next 12 months. As of June 28, 2025, we had cash of $132.9, of which approximately $28.0 was cash held by our foreign operations, although in July 2025 we used $75.0 of our domestic cash to fund a portion of the purchase price for VACCO.

Current wording

We believe that operating cash flows and available credit under the Revolving Credit Facility will provide adequate resources to fund internal growth initiatives for the foreseeable future, including at least the next 12 months. As of September 27, 2025, we had cash of $91.2, of which approximately $29.6 was cash held by our foreign operations. Following the end of the quarter we used $40.0 of our domestic cash to make a prepayment on the Term Loan.

Previous wording

Net income attributable to common stockholders for the first quarter of fiscal 2026 was $68.5 compared to $55.7 for the same period last fiscal year.

Current wording

Net income attributable to common stockholders for the second quarter of fiscal 2026 was $60.0 compared to $48.5 for the same period last fiscal year.

Previous wording

Our net sales for the three-month period ended June 28, 2025 increased 7.3% compared to the same period last fiscal year. Net sales in our Industrial segment increased 5.5% quarter over quarter against a strong quarter in the prior fiscal year. Aggregate and cement, and warehousing, parcel & baggage were very strong while semicon sales showed weakness compared to the prior year. Net sales in our Aerospace/Defense segment increased 10.4% quarter over quarter, led by Defense sales, which were up 11.9% compared to the same period in the prior fiscal year, driven by marine. Commercial OEM and the aftermarket sales increased 9.6% compared to the same period in the prior fiscal year. The increase in commercial aerospace sales reflected growth in orders from large OEMs as build rates escalated, as well as expansion in the aftermarket.

Current wording

Our net sales for the six-month period ended September 27, 2025 increased 10.8% compared to the same period last fiscal year. Net sales in our Industrial segment increased 3.1% compared to the prior fiscal year. Net sales to aggregate and cement, and warehousing, parcel & baggage markets increased during the period. Net sales in our Aerospace/Defense segment increased 24.3% year over year, including $24.7 of net sales from VACCO. The increase in sales was led by Defense sales, which were up 41.3% compared to the same period in the prior fiscal year, driven by marine and the acquisition of VACCO, which contributed $24.3 of net sales to these end markets. Commercial OEM and the aftermarket sales increased 15.6% compared to the same period in the prior fiscal year, including $0.4 of net sales from VACCO. The increase in commercial aerospace sales reflected growth in orders from large OEMs as build rates escalated, as well as expansion in the aftermarket.

Previous wording

Gross margin remained strong at 44.8% of net sales for the first quarter of fiscal 2026 compared to 45.3% for the first quarter of fiscal 2025. Gross margin in fiscal 2026 was impacted by $2.9 in restructuring costs related to inventory rationalization efforts at one of our manufacturing plants.

Current wording

Gross margin remained strong at 44.4% of net sales for the six months ended September 27, 2025 compared to 44.5% for the same period last fiscal year. Gross margin in fiscal 2026 was impacted by $3.3 in restructuring costs related to inventory rationalization efforts at one of our manufacturing plants and $3.3 of unfavorable purchase accounting adjustments associated with the VACCO acquisition.

Previous wording

SG&A for the first quarter of fiscal 2026 was $73.9, or 16.9% of net sales, as compared to $67.6, or 16.6% of net sales, for the same period of fiscal 2025. The increase in SG&A was primarily driven by increased personnel costs and IT costs.

Current wording

SG&A for the six months ended September 27, 2025 was $151.3, or 17.0% of net sales, as compared to $137.1, or 17.0% of net sales, for the same period of fiscal 2025. The increase in SG&A was primarily driven by increased personnel costs and $2.9 from the inclusion of VACCO.

Previous wording

Other operating expenses for the first quarter of fiscal 2026 totaled $20.2 compared to $18.9 for the same period last fiscal year. For the first quarter of fiscal 2026, other operating expenses included $17.9 of amortization of intangible assets, $1.2 of restructuring costs, $0.1 of acquisition costs and $1.0 of other expense items. For the first quarter of fiscal 2025, other operating expenses included $17.8 of amortization of intangible assets and $1.1 of other items.

Current wording

Other operating expenses for the first six months of fiscal 2026 totaled $45.6 compared to $37.1 for the same period last fiscal year. For the first six months of fiscal 2026, other operating expenses were comprised primarily of $38.6 of amortization of intangible assets, $3.8 of restructuring costs, $1.0 of acquisition costs and $2.2 of other items. For the first six months of fiscal 2025, other operating expenses were comprised primarily of $35.7 of amortization of intangible assets, $0.5 of restructuring costs, and $0.9 of other items.

Previous wording

Interest expense, net, consists of interest charged on the Company’s debt agreements and amortization of deferred financing fees, offset by interest income (see “Liquidity and Capital Resources” below). Interest expense, net, was $12.2 for the first quarter of fiscal 2026 compared to $17.2 for the same period last fiscal year. The decrease in interest expense between the periods was due to the debt reduction efforts, as well as the Cross Currency Swap, which has enabled us to better manage interest costs.

Current wording

Interest expense, net, was $13.4 for the second quarter of fiscal 2026 compared to $15.6 for the same period last fiscal year. The decrease in interest expense between the periods was due to the debt reduction efforts, partially offset by the impact of a $200.0 draw on the Revolving Credit Facility to fund part of the VACCO acquisition. In addition, the Cross Currency Swap has enabled us to better manage interest costs.

Previous wording

Other non-operating expenses were $1.2 for the first quarter of fiscal 2026 compared to $0.4 for the same period in the prior fiscal year and consisted primarily of post-retirement benefit costs and foreign exchange gains and losses.

Current wording

Other non-operating expenses were $1.0 for the second quarter of fiscal 2026 compared to $1.1 for the same period in the prior fiscal year and consisted primarily of post-retirement benefit costs and foreign exchange gains and losses.

Previous wording

Income tax expense for the three-month period ended June 28, 2025 was $19.2 compared to $18.5 for the three-month period ended June 29, 2024. Our effective income tax rate for the three-month period ended June 28, 2025 was 21.9% compared to 23.1% for the three-month period ended June 29, 2024. The effective income tax rate for the three-month period ended June 28, 2025 of 21.9% included $2.3 of tax benefits associated with stock-based compensation partially offset by $1.3 of other items. The effective income tax rate without discrete items for the three-month period ended June 28, 2025 would have been 23.1%. The effective income tax rate for the three-month period ended June 29, 2024 of 23.1% included $0.6 of discrete tax benefits associated with stock-based compensation. The effective income tax rate without discrete items for the three-month period ended June 29, 2024 would have been 23.8%.

Current wording

Income tax expense for the three-month period ended September 27, 2025 was $23.4 compared to $15.2 for the three-month period ended September 28, 2024. Our effective income tax rate for the three-month period ended September 27, 2025 was 28.0% compared to 21.9% for the three-month period ended September 28, 2024. The effective income tax rate for the three-month period ended September 27, 2025 of 28.0% included $0.3 of tax benefits associated with stock-based compensation offset by $2.4 of other items, including a $2.3 change to deferred taxes related to the acquisition of VACCO. The effective income tax rate without discrete items for the three-month period ended September 27, 2025 would have been 25.6%. The effective income tax rate for the three-month period ended September 28, 2024 of 21.9% included $1.1 of discrete tax benefits associated with stock-based compensation which was slightly offset by $0.1 of other tax expenses. The effective income tax rate without discrete items for the three-month period ended September 28, 2024 would have been 23.4%.

Previous wording

We report our financial results under two operating segments: Aerospace/Defense and Industrial. The CODM uses gross margin as the primary measurement to assess the financial performance of each reportable segment. End market and channel sales within our segments are based on internal definitions and metrics considered by management and are periodically reviewed and updated prospectively. For the first quarter of fiscal year 2025, we estimate approximately $2.0 of sales classified as Industrial would now be classified as Aerospace/Defense. The first quarter of fiscal year 2025 was not recast to reflect this change.

Current wording

We report our financial results under two operating segments: Aerospace/Defense and Industrial. The CODM uses gross margin as the primary measurement to assess the financial performance of each reportable segment. End market and channel sales within our segments are based on internal definitions and metrics considered by management and are periodically reviewed and updated prospectively.

Previous wording

Net sales increased $15.5, or 10.4%, for the three months ended June 28, 2025 compared to the same period last fiscal year. Our commercial aerospace markets, which consisted of $83.6 of OEM sales and $23.0 of distribution and aftermarket sales, increased by 9.6% compared to fiscal 2025 when OEM net sales were $78.5 and distribution and aftermarket net sales were $18.8. The OEM markets have continued to improve as build rates have steadily increased over the last several months. We have also been expanding our footprint in the aftermarket as air travel has continued to increase year over year. Our defense markets, which consisted of $40.6 of OEM and $17.4 of distribution and aftermarket, increased by 11.9% compared to fiscal 2025 when OEM net sales were $40.2 and distribution and aftermarket net sales were $11.6. The increase in defense sales was driven by marine and missiles and reflects continued growth in demand which is evident by our growing backlog.

Current wording

Net sales increased $55.6, or 38.8%, for the three months ended September 27, 2025 compared to the same period last fiscal year. Our commercial aerospace markets, which consisted of $96.5 of OEM sales and $19.7 of distribution and aftermarket sales, increased by 21.6% compared to fiscal 2025 when OEM net sales were $75.4 and distribution and aftermarket net sales were $20.1. The OEM markets have continued to improve as build rates have steadily increased over the last several months. Our defense markets, which consisted of $62.5 of OEM and $20.1 of distribution and aftermarket, increased by 73.3% compared to fiscal 2025 when OEM net sales were $35.5 and distribution and aftermarket net sales were $12.2. The increase in defense sales was driven by marine and missiles and reflects continued growth in demand which is evident by our growing backlog. Net sales for the three months ended September 27, 2025 included $24.7 of net sales from VACCO, of which $0.4 were to commercial OEM markets, $18.7 were to defense OEM markets, and $5.6 were to defense distribution and aftermarket.

Previous wording

Gross margin as a percentage of segment net sales was 42.6% for the first quarter of fiscal 2026 compared to 42.3% for the same period last fiscal year. The increase in gross margin as a percentage of net sales was primarily driven by efficiencies achieved at the plants in part due to increased sales volumes and favorable product mix. This margin profile is expected to continue as the commercial aerospace industry continues to expand and we continue to enhance our manufacturing processes.

Current wording

Gross margin as a percentage of segment net sales was 40.5% for the second quarter of fiscal 2026 compared to 41.0% for the same period last fiscal year. Gross margin for the second quarter of fiscal 2026 was unfavorably impacted by a $3.3 purchase accounting adjustment related to the VACCO acquisition partially offset by increased efficiencies achieved at the plants due to increased sales volumes and favorable product mix. VACCO contributed $3.2 of gross margin in the second quarter of fiscal 2026.

Previous wording

Net sales increased $14.2, or 5.5%, for the three months ended June 28, 2025 compared to the same period last fiscal year. We saw improvements in nearly all of our end markets, including mining and metals, warehousing and food and beverage, partially offset by softness in semicon. Industrial OEM sales were $78.5 and $81.8 for the three month periods ended June 28, 2025 and June 29, 2024, respectively. Industrial sales to distribution and the aftermarket were $192.9 and $175.4 for the three month periods ended June 28, 2025 and June 29, 2024, respectively.

Current wording

Net sales increased $1.8, or 0.7%, for the three months ended September 27, 2025 compared to the same period last fiscal year. We saw improvements in many of our end markets, including aggregate & cement, food & beverage, grain, warehousing, and parcel & baggage markets, partially offset by softness in machine tools and OEM oil producers. Industrial OEM sales were $78.7 and $82.7 for the three month periods ended September 27, 2025 and September 28, 2024, respectively. Industrial sales to distribution and the aftermarket were $177.8 and $172.0 for the three month periods ended September 27, 2025 and September 28, 2024, respectively.

Previous wording

Gross margin for the three months ended June 28, 2025 was 46.1% of net sales, compared to 47.0% in the comparable period in fiscal 2025. Gross margin in fiscal 2026 was impacted by $2.9 in restructuring costs related to inventory rationalization efforts at one of our manufacturing plants.

Current wording

Gross margin for the three months ended September 27, 2025 was 48.2% of net sales, compared to 46.0% in the comparable period in fiscal 2025. Gross margin for the three months ended September 27, 2025 was impacted by $0.4 in restructuring costs related to inventory rationalization efforts at one of our manufacturing plants.

Previous wording

Corporate SG&A was $27.3, or 6.3% of net sales, for the first quarter of fiscal 2026 compared to $23.2, or 5.7% of net sales, for the same period last fiscal year. The quarter over quarter increase was primarily due to an increase in personnel costs.

Current wording

Corporate SG&A was $28.9, or 6.3% of net sales, for the second quarter of fiscal 2026 compared to $26.0, or 6.5% of net sales, for the same period last fiscal year. The quarter over quarter increase was primarily due to an increase in personnel costs, partially offset by a reduction in professional fees.

Previous wording

As of June 28, 2025, we had cash of $132.9, of which approximately $28.0 was cash held by our foreign operations, although in July we used $75.0 of our domestic cash to fund a portion of the purchase price of VACCO. We expect that our undistributed foreign earnings will be re-invested indefinitely for working capital, internal growth, and acquisitions for and by our foreign subsidiaries, with the exception of our Canadian operations as there are no current plans to expand the sales operations within that jurisdiction. As discussed in further detail below, we also have the ability to borrow money from our existing credit facilities.

Current wording

As of September 27, 2025, we had cash of $91.2, of which approximately $29.6 was cash held by our foreign operations. We expect that our undistributed foreign earnings will be re-invested indefinitely for working capital, internal growth, and acquisitions for and by our foreign subsidiaries, with the exception of our Canadian operations as there are no current plans to expand the sales operations within that jurisdiction. As discussed in further detail below, we also have the ability to borrow money from our existing credit facilities.

Previous wording

The Credit Agreement, which was entered into in fiscal 2022, provides the Company with (a) the $1,300.0 Term Loan, which was used to fund a portion of the purchase price for the acquisition of Dodge and to pay related fees and expenses, and (b) the $500.0 Revolving Credit Facility. Debt issuance costs associated with the Credit Agreement totaled $14.9 and are being amortized over the life of the Credit Agreement.

Current wording

The Credit Agreement, which was entered into in fiscal 2022 and amended in fiscal 2023 and again on October 28, 2025, provides the Company with (a) the $1,300.0 Term Loan, which was used to fund a portion of the purchase price for the acquisition of Dodge and to pay related fees and expenses, and (b) the $500.0 Revolving Credit Facility.

Previous wording

Amounts outstanding under the Facilities generally bear interest at either, at the Company’s option, (a) a base rate determined by reference to the higher of (i) Wells Fargo’s prime lending rate, (ii) the federal funds effective rate plus 0.50% and (iii) Term SOFR plus 1.00% or (b) Term SOFR plus a credit spread adjustment of 0.10% plus a margin ranging from 0.75% to 2.00% depending on the Company’s consolidated ratio of total net debt to consolidated EBITDA. The Facilities are subject to a SOFR floor of 0.00%. As of June 28, 2025, the Company’s margin was 1.00% for SOFR loans, the commitment fee rate was 0.175%, and the letter of credit fee rate was 1.00%. A portion of the Term Loan is subject to a fixed-rate interest swap.

Current wording

Amounts outstanding under the Facilities generally bear interest at either, at the Company’s option, (a) a base rate determined by reference to the higher of (i) Wells Fargo’s prime lending rate, (ii) the federal funds effective rate plus 0.50% and (iii) Term SOFR plus 1.00% or (b) Term SOFR plus a credit spread adjustment of 0.10% plus a margin ranging from 0.75% to a cap of 1.75% in the case of loans under the Revolving Credit Facility and 2.00% in the case of the Term Loan, depending on the Company’s consolidated ratio of total net debt to consolidated EBITDA. The Facilities are subject to a SOFR floor of 0.00%. As of September 27, 2025, the Company’s margin was 0.75% for SOFR loans, the commitment fee rate was 0.175%, and the letter of credit fee rate was 0.75%. A portion of the Term Loan is subject to a fixed-rate interest swap.

Previous wording

The Term Loan matures in November 2026 and amortizes in quarterly installments with the balance payable on the maturity date. The Company can elect to prepay some or all of the outstanding balance from time to time without penalty, which will offset future quarterly amortization installments. Due to prepayments previously made, the required future principal payments on the Term Loan are $0 for fiscal 2026, and $413.0 for fiscal 2027. The Revolving Credit Facility expires in November 2026, at which time all amounts outstanding under the Revolving Credit Facility will be payable.

Current wording

The Term Loan matures in November 2026 and amortizes in quarterly installments with the balance payable on the maturity date. The Company can elect to prepay some or all of the outstanding balance from time to time without penalty, which will offset future quarterly amortization installments. Due to prepayments previously made, the required future principal payments on the Term Loan are $0 for fiscal 2026, and $368.0 for fiscal 2027. The Revolving Credit Facility expires in October 2030, at which time all amounts outstanding under the Revolving Credit Facility will be payable.

Previous wording

The Credit Agreement requires the Company to comply with various covenants, including the following financial covenants: (a) a maximum Total Net Leverage Ratio (as defined within the Credit Agreement) of 5.00:1.00, which maximum Total Net Leverage Ratio shall decrease during certain subsequent test periods as set forth in the Credit Agreement (provided that, no more than once during the term of the Facilities, such maximum ratio applicable at such time may be increased by the Company by 0.50:1.00 for a period of twelve (12) months after the consummation of a material acquisition); and (b) a minimum Interest Coverage Ratio of 2.00:1.00. As of June 28, 2025, the Company was in compliance with all debt covenants.

Current wording

The Credit Agreement requires the Company to comply with various covenants, including a maximum Total Net Leverage Ratio (as defined in the Credit Agreement) of 4.50:1.00 (provided that, such maximum ratio may be increased by the Company by 0.50:1.00 for a period of 12 months after the consummation of a material acquisition (provided that there may be only one such increase in effect at any one time)).

Previous wording

As of June 28, 2025, $413.0 was outstanding under the Term Loan and $3.7 of the Revolving Credit Facility was being utilized to provide letters of credit to secure the Company’s obligations relating to certain insurance programs. The Company had the ability to borrow an additional $496.3 under the Revolving Credit Facility as of June 28, 2025. Following the $200.0 draw on the Revolving Credit Facility on July 18, 2025 to fund a portion of the purchase price for VACCO, there was $296.3 of undrawn capacity under the Revolving Credit Facility.

Current wording

As of September 27, 2025, $368.0 was outstanding under the Term Loan, $3.7 of the Revolving Credit Facility was being utilized to provide letters of credit to secure the Company’s obligations relating to certain insurance programs, and $200.0 of the Revolving Credit Facility had been used to fund the purchase of VACCO. The Company had the ability to borrow an additional $296.3 under the Revolving Credit Facility as of September 27, 2025. On September 30, 2025, the Company paid $40.0 on the Term Loan.

Previous wording

During the first three months of fiscal 2026, we generated cash of $120.0 from operating activities compared to $97.4 during the same period of fiscal 2025. The increase of $22.6 was the result of an increase in net income of $7.1, a favorable change in operating assets and liabilities of $12.9 and a favorable impact of non-cash activity of $2.6. The favorable change in operating assets and liabilities is detailed in the table below. The change in non-cash activity was driven by $0.1 more stock-based compensation, $0.2 more amortization of deferred financing costs and $3.8 more restructuring costs, offset by $0.4 less in depreciation and amortization, $0.5 less deferred taxes and a $0.6 gain on asset dispositions.

Current wording

During the first six months of fiscal 2026, we generated cash of $208.4 from operating activities compared to $140.4 during the same period of fiscal 2025. The increase of $68.0 was the result of an increase in net income of $12.9, a favorable change in operating assets and liabilities of $28.0 and a favorable impact of non-cash activity of $27.1. The favorable change in operating assets and liabilities is detailed in the table below. The change in non-cash activity was driven by $0.9 more stock-based compensation, $0.5 more amortization of deferred financing costs, $4.0 more restructuring costs, $2.3 more in depreciation and amortization, $0.3 more amortization of operating leases and $19.1 more of deferred taxes.

Previous wording

The following table summarizes the impact on cash flow from operating assets and liabilities for the first quarter of fiscal 2026 versus the first quarter of fiscal 2025.

Current wording

The following table summarizes the impact on cash flow from operating assets and liabilities for the second quarter of fiscal 2026 versus the second quarter of fiscal 2025.

Previous wording

During the first three months of fiscal 2026, we used $15.7 for investing activities as compared to $9.0 used in the first three months of fiscal 2025. This increase in cash used was attributable to a $6.7 increase in capital expenditures.

Current wording

During the first six months of fiscal 2026, we used $307.4 for investing activities as compared to $25.2 used in the first six months of fiscal 2025. This increase in cash used was attributable to a $7.2 increase in capital expenditures and the VACCO acquisition of $275.0.

Previous wording

During the first three months of fiscal 2026, we used cash of $7.9 for financing activities compared to $74.7 in the first three months of fiscal 2025. This decrease in cash used was primarily attributable to $60.0 less payments made on the Term Loan, $5.7 less in preferred stock dividends paid and $10.3 more in exercises of stock-based awards partially offset by $5.0 more repayments of revolving credit facilities, $4.1 more repurchases of common stock and $0.1 more payments on finance lease obligations.

Current wording

During the first six months of fiscal 2026, cash provided by financing activity was $154.0 compared to $89.0 of cash used in financing activity in the first six months of fiscal 2025. This increase in cash provided was primarily attributable to $200.0 in proceeds received from the Revolving Credit Facility in connection with the VACCO acquisition. Additionally, we had $30.0 less payments made on the Term Loan, $11.5 less in preferred stock dividends paid and $15.4 less in revolving credit facilities payments, partially offset by $4.9 less in exercises of stock-based awards, $4.3 more repurchases of common stock, $0.2 more payments on finance lease obligations and $4.5 less in proceeds received from mortgage.

Previous wording

Our capital expenditures were $15.7 for the three-month period ended June 28, 2025 compared to $9.0 for the three-month period ended June 29, 2024. We expect capital expenditures for fiscal 2026 will be between 3.0% to 3.5% of our net sales for the fiscal year. We expect to fund these capital expenditures principally through existing cash and internally generated funds. We may also make substantial additional capital expenditures in connection with acquisitions.

Current wording

Our capital expenditures were $32.4 for the six-month period ended September 27, 2025 compared to $25.2 for the six-month period ended September 28, 2024. We expect capital expenditures for fiscal 2026 will be between 3.0% to 3.5% of our net sales for the fiscal year. We expect to fund these capital expenditures principally through existing cash and internally generated funds. We may also make substantial additional capital expenditures in connection with acquisitions.

Previous wording

Preparation of our financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. We believe the most complex and sensitive judgments, because of their significance to the consolidated financial statements, result primarily from the need to make estimates about the effects of matters that are inherently uncertain. Management’s Discussion and Analysis of Financial Condition and Results of Operations and the Notes to the Consolidated Financial Statements in our Annual Report describe the significant accounting estimates and policies used in preparation of our consolidated financial statements. Actual results in these areas could differ from management’s estimates. There were no significant changes in our critical accounting estimates during the first quarter of fiscal 2026.

Current wording

Preparation of our financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. We believe the most complex and sensitive judgments, because of their significance to the consolidated financial statements, result primarily from the need to make estimates about the effects of matters that are inherently uncertain. Management’s Discussion and Analysis of Financial Condition and Results of Operations and the Notes to the Consolidated Financial Statements in our Annual Report describe the significant accounting estimates and policies used in preparation of our consolidated financial statements. Actual results in these areas could differ from management’s estimates. There were no significant changes in our critical accounting estimates during the second quarter of fiscal 2026.