RBC Bearings INC

Previous wording

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

Current wording

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

Previous wording

The words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements that we make. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those in the forward-looking statements, including, without limitation: (a) the bearing and engineered products industries are highly competitive, and this competition could reduce our profitability or limit our ability to grow; (b) the loss of a major customer, or a material adverse change in a major customer’s business, could result in a material reduction in our revenues, cash flows and profitability; (c) weakness in any of the industries in which our customers operate, as well as the cyclical nature of our customers’ businesses generally, could materially reduce our revenues, cash flows and profitability; (d) future reductions or changes in U.S. government spending could negatively affect our business; (e) fluctuating supply and costs of subcomponents, raw materials and energy resources, could materially reduce our revenues, cash flows and profitability; (f) our results could be impacted by U.S. governmental trade policies and tariffs relating to the components and supplies we import from foreign vendors and foreign governmental trade policies and tariffs relating to our finished goods exported to other countries; (g) some of our products are subject to certain approvals and government regulations and the loss of such approvals, or our failure to comply with such regulations, could materially reduce our revenues, cash flows and profitability; (h) the retirement of commercial aircraft could reduce our revenues, cash flows and profitability; (i) work stoppages and other labor problems could materially reduce our ability to operate our business; (j) unexpected equipment failures, catastrophic events or capacity constraints could increase our costs and reduce our sales due to production curtailments or shutdowns; (k) we may not be able to continue to make the acquisitions necessary for us to realize our growth strategy; (l) businesses that we have acquired (such as Dodge or VACCO) or that we may acquire in the future may have liabilities that are not known to us; (m) goodwill and indefinite-lived intangibles comprise a significant portion of our total assets, and if we determine that goodwill and indefinite-lived intangibles have become impaired in the future, our results of operations and financial condition in such years may …

Excerpt shortened here; the source contains the full paragraph.

Current wording

The words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements that we make. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those in the forward-looking statements, including, without limitation: (a) the bearing and engineered products industries are highly competitive, and this competition could reduce our profitability or limit our ability to grow; (b) the loss of a major customer, or a material adverse change in a major customer’s business, could result in a material reduction in our revenues, cash flows and profitability; (c) weakness in any of the industries in which our customers operate, as well as the cyclical nature of our customers’ businesses generally, could materially reduce our revenues, cash flows and profitability; (d) future reductions or changes in U.S. government spending could negatively affect our business; (e) fluctuating supply and costs of subcomponents, raw materials and energy resources, could materially reduce our revenues, cash flows and profitability; (f) our results could be impacted by U.S. governmental trade policies and tariffs relating to the components and supplies we import from foreign vendors and foreign governmental trade policies and tariffs relating to our finished goods exported to other countries; (g) some of our products are subject to certain approvals and government regulations and the loss of such approvals, or our failure to comply with such regulations, could materially reduce our revenues, cash flows and profitability; (h) the retirement of commercial aircraft could reduce our revenues, cash flows and profitability; (i) work stoppages and other labor problems could materially reduce our ability to operate our business; (j) unexpected equipment failures, catastrophic events or capacity constraints could increase our costs and reduce our sales due to production curtailments or shutdowns; (k) we may not be able to continue to make the acquisitions necessary for us to realize our growth strategy; (l) businesses that we have acquired (such as Dodge or VACCO) or that we may acquire in the future may have liabilities that are not known to us; (m) goodwill and indefinite-lived intangibles comprise a significant portion of our total assets, and if we determine that goodwill and indefinite-lived intangibles have become impaired in the future, our results of operations and financial condition in such years may …

Excerpt shortened here; the source contains the full paragraph.

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 62 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 third quarter of fiscal 2026 and the third 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 66 facilities in 11 countries, of which 44 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 2027 will have 53 weeks and fiscal 2026 had 52 weeks. Both the first quarter of fiscal 2027 and the first quarter of fiscal 2026 had 13 weeks.

Previous wording

Our net sales for the three-month period ended December 27, 2025 increased 17.0% compared to the same period last fiscal year. The increase in net sales was a result of a 41.5% increase in our Aerospace/Defense segment and a 3.1% increase in our Industrial segment. $29.2 of sales included within this quarter came from VACCO. Our backlog as of December 27, 2025 was $2.1 billion, which included $0.5 billion of VACCO backlog, compared to $0.9 billion of total backlog 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. As of December 27, 2025, approximately $1.1 billion of our backlog is related to the marine business.

Current wording

Our net sales for the three-month period ended June 27, 2026 increased 19.2% compared to the same period last fiscal year. The increase in net sales was a result of a 36.9% increase in our Aerospace & Defense segment and a 8.4% increase in our Industrial segment. Backlog as of June 27, 2026, was $2.3 billion compared to $2.3 billion as of March 28, 2026 and $1.0 billion as of June 28, 2025.

Previous wording

We continue to see the expansion of our commercial aerospace business, which experienced a 21.5% increase in net sales for the three-month period ended December 27, 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 40.6% of segment sales during the quarter, were up 86.2% year over year. We expect this growth to continue throughout the current fiscal year and beyond as we are adding capacity 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 food & beverage, warehousing, and aggregate & cement.

Current wording

We are continuing to see the expansion of the commercial aerospace business, which experienced a 21.8% increase in net sales for the three-month period ended June 27, 2026, which included $1.6 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 since this time last year. Defense sales, which represented approximately 42.4% of segment sales during the quarter, were up 64.6% quarter over quarter, which included $31.7 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, notably including semicon, grain, and food and beverage.

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 December 27, 2025, we had cash of $107.6, of which approximately $32.6 was cash held by our foreign operations.

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 June 27, 2026, we had cash of $124.5, of which approximately $47.4 was cash held by our foreign operations. Since June 27, 2026, we used $50.0 of our domestic cash to pay down the Term Loan.

Previous wording

Our net sales for the nine-month period ended December 27, 2025 increased 12.9% 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 the aggregate & cement, food & beverage, forest products, and warehousing markets increased during the period while power generation and semicon showed weakness compared to the prior year. Net sales in our Aerospace/Defense segment increased 30.0% year over year. The increase in sales was led by Defense sales, which were up 55.1% compared to the same period in the prior fiscal year, driven by marine and the acquisition of VACCO. Commercial OEM and aftermarket sales increased 17.6% 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

Net sales for the three-month period ended June 27, 2026 increased $83.5, or 19.2%, compared to the same period last fiscal year. Net sales in our Industrial segment increased 8.4% quarter over quarter against a strong quarter in the prior fiscal year. Growth was driven from semicon, grain, and food and beverage compared to the prior year. Net sales in our Aerospace & Defense segment increased 36.9% quarter over quarter, led by defense sales, which were up 64.6% compared to the same period in the prior fiscal year, driven by missiles and the acquisition of VACCO, which contributed $31.7 of net sales to these end markets. Commercial OEM and aftermarket sales increased 21.8% 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 and the acquisition of VACCO, which contributed $1.6 of net sales to these end markets. Space sales increased to $25.1 in the first quarter of fiscal 2027 compared to $7.5 for the same period in the prior year.

Previous wording

SG&A for the nine months ended December 27, 2025 was $229.2, or 16.9% of net sales, as compared to $207.2, or 17.3% of net sales, for the same period of fiscal 2025. The increase in SG&A was primarily driven by increased personnel costs and $7.0 from the inclusion of VACCO.

Current wording

SG&A for the first quarter of fiscal 2027 was $85.8, or 16.5% of net sales, as compared to $73.9, or 16.9% of net sales, for the same period of fiscal 2026. The increase in SG&A was primarily driven by the inclusion of VACCO and increased personnel costs.

Previous wording

Other operating expenses for the third quarter of fiscal 2026 totaled $23.5 compared to $19.2 for the same period last fiscal year. For the third quarter of fiscal 2026, other operating expenses included $21.0 million of amortization of intangible assets, $0.4 million of acquisition costs, $0.2 of restructuring costs and $1.9 million of other items. $3.7 of the amortization expense was related to acquired intangible assets from the VACCO deal. For the third quarter of fiscal 2025, other operating expenses included $17.9 of amortization of intangible assets, $0.1 of restructuring costs and $1.2 of other items.

Current wording

Other operating expenses for the first quarter of fiscal 2027 totaled $21.2 compared to $20.2 for the same period last fiscal year. For the first quarter of fiscal 2027, other operating expenses consisted of $21.0 of amortization of intangible assets and $0.4 of restructuring costs offset by $0.2 of other items. 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.

Previous wording

Interest expense, net, was $13.0 for the third quarter of fiscal 2026 compared to $14.2 for the same period last fiscal year. The decrease in interest expense between the periods was due to the reduction of the Term Loan, partially offset by the impact of a $200.0 draw on the Revolving Credit Facility during the second quarter of fiscal 2026 to fund part of the VACCO acquisition. In addition, the Cross Currency Swap has enabled us to better manage interest costs.

Current 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 $10.1 for the first quarter of fiscal 2027 compared to $12.2 for the same period last fiscal year. The decrease in interest expense between the periods was due to the reduction of the principal balance on the Term Loan and lower interest rates, partially offset by the impact of a $200.0 draw on the Revolving Credit Facility during the second quarter of fiscal 2026 to pay a portion of the VACCO acquisition purchase price. In addition, the Cross Currency Swap has enabled us to better manage interest costs. See “Liquidity and Capital Resources – Liquidity” for more information about the Term Loan, the Revolving Credit Facility, and the Cross Currency Swap.

Previous wording

Other non-operating expenses were $0.7 for the third quarter of fiscal 2026 compared to $3.3 of other non-operating income 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 $0.5 for the first quarter of fiscal 2027 compared to $1.2 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 December 27, 2025 was $21.9 compared to $16.8 for the three-month period ended December 28, 2024. Our effective income tax rate for the three-month period ended December 27, 2025 was 24.6% compared to 22.5% for the three-month period ended December 28, 2024. The effective income tax rate for the three-month period ended December 27, 2025 of 24.6% included $0.5 of discrete tax benefits associated with stock-based compensation offset by $2.0 of other items, including a $0.7 change to deferred taxes associated with new state tax filings and $1.1 from estimated liabilities and interest in those states for prior years. The effective income tax rate without discrete items for the three-month period ended December 27, 2025 would have been 22.9%. The effective income tax rate for the three-month period ended December 28, 2024 of 22.5% included $0.8 of discrete tax benefits associated with stock-based compensation. The effective income tax rate without discrete items for the three-month period ended December 28, 2024 would have been 23.5%.

Current wording

Income tax expense for the three-month period ended June 27, 2026 was $28.7 compared to $19.2 for the three-month period ended June 28, 2025. Our effective income tax rate for the three-month period ended June 27, 2026 was 22.1% compared to 21.9% for the three-month period ended June 28, 2025. The effective income tax rate for the three-month period ended June 27, 2026 of 22.1% included $1.4 of tax benefits associated with stock-based compensation and $0.1 of other items. The effective income tax rate without discrete items for the three-month period ended June 27, 2026 would have been 23.2%. The effective income tax rate for the three-month period ended June 28, 2025 of 21.9% included $2.3 of discrete 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%.

Previous wording

We report our financial results under two operating segments: Aerospace/Defense and Industrial. The CODM uses gross margin as the primary measurement of profitability 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.

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 $59.3, or 41.5%, for the three months ended December 27, 2025 compared to the same period last fiscal year. Our commercial aerospace markets, which consisted of $100.7 of OEM net sales and $19.4 of distribution and aftermarket net sales, increased by 21.5% compared to fiscal 2025 when OEM net sales were $78.0 and distribution and aftermarket net sales were $20.9. The OEM markets have continued to improve as build rates have steadily increased over the last several months. Our defense markets, which consisted of $60.0 of OEM net sales and $22.4 of distribution and aftermarket net sales, increased by 86.2% compared to fiscal 2025 when OEM net sales were $32.5 and distribution and aftermarket net sales were $11.8. The increase in defense sales was driven by marine and missiles and reflects continued growth in demand which is evident by our growing backlog. The acquisition of VACCO also contributed to the sales growth.

Current wording

Net sales increased $60.8, or 36.9% for the three months ended June 27, 2026 compared to the same period last fiscal year. Our commercial aerospace markets, which consisted of $108.7 of OEM sales and $21.2 of distribution and aftermarket sales, increased by 21.8% compared to fiscal 2026 when OEM net sales were $83.6 and distribution and aftermarket net sales were $23.0. The OEM markets have continued to improve as build rates have steadily increased over the last several months. Our defense markets, which consisted of $70.3 of OEM and $25.2 of distribution and aftermarket, increased by 64.6% compared to fiscal 2026 when OEM net sales were $40.6 and distribution and aftermarket net sales were $17.4. The increase in defense sales was driven by military aircraft and reflects continued growth in demand which is evident by our growing backlog. The acquisition of VACCO also contributed to the sales growth.

Previous wording

Gross margin as a percentage of segment net sales was 40.3% for the third quarter of fiscal 2026 compared to 40.8% for the same period last fiscal year. Gross margin for the first nine months of fiscal 2026 was unfavorably impacted by a $7.5 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 $9.1 of gross margin in the first nine months of fiscal 2026.

Current wording

Gross margin as a percentage of segment net sales was 44.5% for the first quarter of fiscal 2026 compared to 42.6% 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. The better volumes allowed us to better absorb our overhead costs.

Previous wording

Net sales increased $7.9, or 3.1%, for the three months ended December 27, 2025 compared to the same period last fiscal year. We saw improvements in many of our end markets, including aggregate & cement, food & beverage, and warehousing, partially offset by softness in mining and grain. Industrial OEM sales were $77.9 and $72.7 for the three month periods ended December 27, 2025 and December 28, 2024, respectively. Industrial sales to distribution and the aftermarket were $181.2 and $178.5 for the three month periods ended December 27, 2025 and December 28, 2024, respectively.

Current wording

Net sales increased $22.7, or 8.4%, for the three months ended June 27, 2026 compared to the same period last fiscal year. We saw improvements in nearly all of our end markets, including semicon, grain, and food and beverage and warehousing. Industrial OEM sales were $95.3 and $78.5 for the three month periods ended June 27, 2026 and June 28, 2025, respectively. Industrial sales to distribution and the aftermarket were $198.8 and $192.9 for the three month periods ended June 27, 2026 and June 28, 2025, respectively.

Previous wording

Gross margin for the three months ended December 27, 2025 was 47.5% of net sales, compared to 46.5% in the comparable period in fiscal 2025. The improved gross margin is primarily driven by product mix.

Current wording

Gross margin for the three months ended June 27, 2026 was 50.2% of net sales, compared to 46.1% in the comparable period in fiscal 2026. The increase in gross margin as a percentage of net sales was primarily driven by sales volumes which have allowed us to better absorb our manufacturing overhead costs.

Previous wording

Corporate SG&A was $26.5, or 3.9% of net sales, for the third quarter of fiscal 2026 compared to $25.5, 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 stock compensation costs, partially offset by a reduction in personnel costs.

Current wording

Corporate SG&A was $32.8, or 6.3% of net sales, for the first quarter of fiscal 2027 compared to $27.3, or 6.3% of net sales, for the same period last fiscal year. The quarter over quarter increase was primarily due to an increase in personnel costs.

Previous wording

As of December 27, 2025, we had cash of $107.6, of which approximately $32.6 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.

Current wording

As of June 27, 2026, we had cash of $124.5, of which approximately $47.4 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 discussed in further detail below, we also have the ability to borrow money from our existing credit facilities.

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 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 December 27, 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%.

Current wording

Amounts outstanding under the Facilities generally bear interest, at the Company’s option, at either (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 June 27, 2026, 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%.

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 $288.0 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.

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 $96.0 for fiscal 2027. Since June 27, 2026, the Company has paid down $50.0 on the Term Loan, reducing the outstanding balance to $46.0.

Previous 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 to 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)).

Current wording

The Credit Agreement requires the Company to comply with various covenants, including a maximum Total Net Leverage Ratio (as defined within the Credit Agreement) of 4.50:1.00 (provided that such maximum ratio may be increased by the Company to 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)). As of June 27, 2026 the Company was in compliance with all debt covenants.

Previous wording

As of December 27, 2025, $288.0 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 December 27, 2025.

Current wording

As of June 27, 2026, $96.0 was outstanding under the Term Loan, $200.0 was outstanding under the Revolving Credit Facility (used to fund a portion of the purchase price for VACCO), 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 $296.3 under the Revolving Credit Facility as of June 27, 2026.

Previous wording

The Senior Notes were issued pursuant to an indenture with Wilmington Trust, National Association, as trustee. This indenture contains covenants limiting the ability of the Company to (i) incur additional indebtedness or guarantee indebtedness, (ii) declare or pay dividends, redeem stock or make other distributions to stockholders, (iii) make investments, (iv) create liens or use assets as security in other transactions, (v) merge or consolidate, or sell, transfer, lease or dispose of substantially all of its assets, (vi) enter into transactions with affiliates, and (vii) sell or transfer certain assets. These covenants contain various exceptions, limitations and qualifications. At any time that the Senior Notes are rated investment grade, certain of these covenants will be suspended.

Current wording

The Senior Notes were issued pursuant to an indenture with Wilmington Trust, National Association, as trustee. This indenture contains covenants limiting the ability of the Company to (i) incur additional indebtedness or guarantee indebtedness, (ii) declare or pay dividends, redeem stock or make other distributions to stockholders, (iii) make investments, (iv) create liens or use assets as security in other transactions, (v) merge or consolidate, or sell, transfer, lease or dispose of substantially all of its assets, (vi) enter into transactions with affiliates, and (vii) sell or transfer certain assets. These covenants contain various exceptions, limitations and qualifications. If the Senior Notes are ever rated investment grade, certain of these covenants will be suspended.

Previous wording

The Senior Notes will mature on October 15, 2029. The Company may redeem some or all of the Senior Notes at any time at the redemption prices set forth in the Indenture, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. If the Company sells certain of its assets or experiences specific kinds of changes in control, the Company must offer to repurchase the Senior Notes.

Current wording

The Senior Notes will mature on October 15, 2029. The Company may redeem some or all of the Senior Notes at any time at the redemption prices set forth in the Indenture, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. If the Company sells certain of its assets or experiences specific kinds of changes in control, the Company must offer to purchase the Senior Notes.

Previous wording

The Foreign Credit Line provides Schaublin SA with a CHF 5.0 (approximately $6.2 USD) credit line to provide future working capital, if necessary. As of December 27, 2025, $0.1 was being utilized to provide a bank guarantee. Fees associated with the Foreign Credit Line are nominal.

Current wording

One of our foreign subsidiaries, Schaublin SA, has a CHF 5.0 (approximately $6.0 USD) credit line with Credit Suisse (Switzerland) Ltd. to provide future working capital, if necessary. As of June 27, 2026, $0.1 was being utilized to provide a bank guarantee. Fees associated with this credit line are nominal.

Previous wording

During the first nine months of fiscal 2026, we generated cash of $330.5 from operating activities compared to $224.4 during the same period of fiscal 2025. The increase of $106.1 was the result of an increase in net income of $22.4, a favorable change in operating assets and liabilities of $43.1 and a favorable impact of non-cash activity of $40.6. The favorable change in operating assets and liabilities is detailed in the table below. The change in non-cash activity was driven by $3.0 more of stock-based compensation, $0.7 more of amortization of deferred financing costs, $4.0 more of restructuring costs, $5.5 more of depreciation and amortization, $0.7 more of amortization of operating leases, $0.5 of additional losses on the disposition of assets and a $26.2 increase in deferred taxes.

Current wording

During the first three months of fiscal 2027, we generated cash of $171.8 from operating activities compared to $120.0 during the same period of fiscal 2026. The increase of $51.8 was the result of an increase in net income of $33.0, a favorable change in operating assets and liabilities of $14.8 and a favorable impact of non-cash activity of $4.0. 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, $3.7 more depreciation and amortization, $0.2 more noncash operating lease expense, $3.2 increase of deferred taxes, and $0.6 gain on asset dispositions, offset by $3.8 less restructuring costs.

Previous wording

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

Current wording

The following table summarizes the impact on cash flow from operating assets and liabilities for the first quarter of fiscal 2027 versus the first quarter of fiscal 2026.

Previous wording

During the first nine months of fiscal 2026, we used $330.4 for investing activities as compared to $35.6 used in the first nine months of fiscal 2025. This increase in cash used was attributable to a $19.8 increase in capital expenditures and the VACCO acquisition of $275.0.

Current wording

During the first three months of fiscal 2027, we used cash of $24.9 for investing activities as compared to $15.7 used in the first three months of fiscal 2026. This increase in cash used was attributable to a $9.2 increase in capital expenditures.

Previous wording

During the first nine months of fiscal 2026, cash provided by financing activity was $71.8 compared to $191.3 of cash used in financing activity in the first nine months of fiscal 2025. This increase in cash provided was primarily attributable to $160.0 of additional proceeds received from the Revolving Credit Facility. Additionally, we had $50.0 less of payments made on the Term Loan, $17.2 less of preferred stock dividends paid and $55.4 less of revolving credit facilities payments, partially offset by $1.8 more of financing fees paid, $8.3 less of exercises of stock-based awards, $4.6 more of repurchases of common stock, $0.2 more payments of finance lease obligations, $0.1 more repayments of notes payable and $4.5 less of proceeds received from mortgage.

Current wording

During the first three months of fiscal 2027, we used cash of $79.4 for financing activities compared to $7.9 in the first three months of fiscal 2026. This increase in cash used was primarily attributable to $77.0 more in payments made on the Term Loan, $0.1 more in repayments of notes payable, and $9.1 less in exercises of stock-based awards partially offset by $5.0 less of repayments of revolving credit facilities, $1.4 less repurchases of common stock and $8.3 more in proceeds received from revolving credit facilities.

Previous wording

Our capital expenditures were $55.4 for the nine-month period ended December 27, 2025 compared to $35.6 for the nine-month period ended December 28, 2024. We expect capital expenditures for fiscal 2026 will be approximately 4.0% 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 $24.9 for the three-month period ended June 27, 2026 compared to $15.7 for the three-month period ended June 28, 2025. We expect that capital expenditures for fiscal 2027 will be between 4.0% to 4.5% 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

The Company’s fixed contractual obligations and commitments are primarily comprised of the Credit Agreement and the Senior Notes. We also have lease obligations that are materially consistent with what we disclosed in our Annual Report.

Current wording

The Company’s fixed contractual obligations and commitments are primarily comprised of the Credit Agreement and the Senior Notes. We also have lease obligations which are materially consistent with what we disclosed in our Annual Report.

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 third 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 first quarter of fiscal 2027.