EnerSys

Previous wording

On July 22, 2025, we announced a reduction in force plan (the "Plan") as part of our strategic restructuring plan under our new leadership to better align resources with current business priorities and long-term objectives. The Plan is expected to reduce non-production global workforce by approximately 11%, or approximately 575 employees, and is focused primarily on corporate and management positions. We estimate one-time cash charges related to the Plan to be in the range of $15.0 million to $20.0 million consisting of severance payments, notice period payments in applicable jurisdictions, employee benefits and related costs. The Company expects to incur these expenses primarily in the second and third quarter of fiscal 2026. Combined with other non-headcount related actions, these changes are expected to result in approximately $80 million in annualized savings beginning in fiscal 2026. This estimate is comprised of approximately $70 million in savings, representing a reduction of over 10% of our fiscal 2025 operating expenses as well as an estimated $10 million in reduction in cost of goods sold. We expect to realize approximately $30 million to $35 million in savings in fiscal 2026, with material benefits beginning in the third quarter of fiscal 2026. Estimated savings exclude the previously discussed one-time cash charges.

Current wording

On July 22, 2025, we announced a reduction in force plan (the "Plan") as part of our strategic restructuring plan under our new leadership to better align resources with current business priorities and long-term objectives. The Plan is expected to reduce non-production global workforce by approximately 11%, or approximately 575 employees, and is focused primarily on corporate and management positions. We estimate one-time cash charges related to the Plan to be approximately $21.2 million consisting of severance payments, notice period payments in applicable jurisdictions, employee benefits and related costs. The Company expects to incur these expenses primarily in the second and third quarter of fiscal 2026. Combined with other non-headcount related actions, these changes are expected to result in approximately $80 million in annualized savings beginning in fiscal 2026. This estimate is comprised of approximately $70 million in savings, representing a reduction of over 10% of our fiscal 2025 operating expenses as well as an estimated $10 million in reduction in cost of goods sold. We expect to realize approximately $30 million to $35 million in savings in fiscal 2026, with material benefits beginning in the third quarter of fiscal 2026. Estimated savings exclude the previously discussed one-time cash charges.

Previous wording

Inflation in North America, China and EMEA, while somewhat more controlled compared to the sharp increases in 2023, remains a challenge with some signs of cooling in the U.S. and Europe. Both the Federal Reserve and the European Central Bank (ECB) cut their main interest rates by 25 basis points in December, marking the third consecutive reduction in calendar year 2024 in both regions. While these are incrementally positive actions toward deflation, both economies continue to face uncertainties such as potential tariffs and policy changes from a new presidential administration in the U.S. and potential global trade frictions, macroeconomic fragmentation and geopolitical tensions the euro area. Recent policy actions in China signal a shift towards more proactive fiscal measures to stabilize consumption and support economic growth. While increasing travel and consumer spending due to relaxed COVID policies have provided some bright spots in 2024, China's economy continues to face challenges from a weakened real estate market and declining exports.

Current wording

Inflation in North America, China and EMEA, while more controlled compared to the sharp increases in 2023, remains a challenge despite some cooling in the U.S. and Europe through 2024 and 2025. After reducing rates three consecutive times in 2025, the Fed held the policy rate steady at 3.50%–3.75% on January 2026, citing improving economic activity and stabilizing unemployment. After several rate cuts the European Central Bank (ECB) has held their main interest rates stable since June 2025. While these are incrementally positive actions toward deflation, both economies continue to face uncertainties such as potential tariffs and policy changes from a new presidential administration in the U.S. and potential global trade frictions, macroeconomic fragmentation and geopolitical tensions the euro area. Policy actions in China signal a shift towards more proactive fiscal measures to stabilize consumption and support economic growth. While increasing travel and consumer spending due to relaxed COVID policies have provided some bright spots in 2024 and 2025, China's economy continues to face challenges from a weakened real estate market and declining exports.

Previous wording

Our most significant commodity and foreign currency exposures are related to lead and the Euro, respectively. Historically, volatility of commodity costs and foreign currency exchange rates have caused large swings in our production costs. In the fiscal year 2025, we have experienced a range in lead prices from approximately $1.00 per pound to $0.90 per pound. Costs in some of our other raw materials such as steel, acid, separator paper and electronics have moderated since the middle of fiscal year 2024, but we have seen some price increases in other raw materials such as copper since the beginning of fiscal year 2025.

Current wording

Our most significant commodity and foreign currency exposures are related to lead and the Euro, respectively. Historically, volatility of commodity costs and foreign currency exchange rates have caused large swings in our production costs. In the fiscal year 2026, we have experienced a range in lead prices from approximately $0.85 per pound to $0.95 per pound. Costs in some of our other raw materials such as steel, acid, separator paper and electronics have moderated since the middle of fiscal year 2024, but we have seen some price increases in other raw materials such as copper and antimony since the beginning of fiscal year 2026.

Previous wording

Our selling prices fluctuated during the last several years to offset the volatile cost of commodities. Approximately 25% of our revenue is now subject to agreements that adjust pricing to a market-based index for lead. Customer pricing changes generally lag movements in lead prices and other costs by approximately six to nine months. In fiscal 2024 and 2025, customer pricing has increased due to certain commodity prices and other costs having increased throughout the year.

Current wording

Our selling prices fluctuated during the last several years to offset the volatile cost of commodities. Approximately 25% of our revenue is now subject to agreements that adjust pricing to a market-based index for lead. Customer pricing changes generally lag movements in lead prices and other costs by approximately six to nine months. In fiscal 2025 and 2026, customer pricing increased due to certain commodity prices and other costs having increased throughout the year.

Previous wording

As part of managing the performance of our business, we monitor the level of primary operating capital, and its ratio to net sales. We define primary operating capital as accounts receivable, plus inventories, minus accounts payable. The resulting net amount is divided by the trailing three-month net sales (annualized) to derive a primary operating capital percentage. We believe these three elements included in primary operating capital are most operationally driven, and this performance measure provides us with information about the asset intensity and operating efficiency of the business on a company-wide basis that management can monitor and analyze trends over time. Primary operating capital was $1,007.3 million (yielding a primary operating capital percentage of 26.5%) at September 28, 2025, $932.2 million (yielding a primary operating capital percentage of 23.9%) at March 31, 2025 and $978.8 million at September 29, 2024 (yielding a primary operating capital percentage of 27.7%). The primary operating capital percentage of 26.5% at September 28, 2025 increased by 260 basis points compared to March 31, 2025 and decreased 120 basis points compared to September 29, 2024. The increase in primary operating capital percentage at September 28, 2025 compared to March 31, 2025 was primarily due to increases to inventory for strategic build up and decreases to accounts payable levels due to timing of payments. The decrease in primary operating capital percentage at September 28, 2025 compared to September 29, 2024 was due to improved collections and increases to accounts payable due to timing of payments.

Current wording

As part of managing the performance of our business, we monitor the level of primary operating capital, and its ratio to net sales. We define primary operating capital as accounts receivable, plus inventories, minus accounts payable. The resulting net amount is divided by the trailing three-month net sales (annualized) to derive a primary operating capital percentage. We believe these three elements included in primary operating capital are most operationally driven, and this performance measure provides us with information about the asset intensity and operating efficiency of the business on a company-wide basis that management can monitor and analyze trends over time. Primary operating capital was $933.6 million (yielding a primary operating capital percentage of 25.4%) at December 28, 2025, $932.2 million (yielding a primary operating capital percentage of 23.9%) at March 31, 2025 and $947.4 million at December 29, 2024 (yielding a primary operating capital percentage of 26.1%). The primary operating capital percentage of 25.4% at December 28, 2025 increased by 150 basis points compared to

Previous wording

We believe that our financial position is strong, and we have substantial liquidity to cover short-term liquidity requirements and anticipated growth in the foreseeable future, with $388.6 million of available cash and cash equivalents and available and undrawn committed credit lines of approximately $489.3 million at September 28, 2025, availability subject to credit agreement financial covenants.

Current wording

We believe that our financial position is strong, and we have substantial liquidity to cover short-term liquidity requirements and anticipated growth in the foreseeable future, with $450.1 million of available cash and cash equivalents and available and undrawn committed credit lines of approximately $436.7 million at December 28, 2025, availability subject to credit agreement financial covenants.

Previous wording

30, 2026, consists of a $130.0 million senior secured term loan (the “Second Amended Term Loan”), a CAD 106.4 million ($84.2 million) term loan and an $850.0 million senior secured revolving credit facility (the “Second Amended Revolver”). This amendment resulted in a decrease of the Amended Term Loan by $150.0 million and an increase of the Amended Revolver by $150.0 million.

Current wording

During the second quarter of fiscal 2022, we entered into a second amendment to the Amended Credit Facility (as amended, the “Second Amended Credit Facility”). As a result, the Second Amended Credit Facility, which was scheduled to mature on September 30, 2026, consists of a $130.0 million senior secured term loan and a CAD 106.4 million ($84.2 million) term loan (the “Second Amended Term Loan”) and an $850.0 million senior secured revolving credit facility (the “Second Amended Revolver”). This amendment resulted in a decrease of the Amended Term Loan by $150.0 million and an increase of the Amended Revolver by $150.0 million.

Previous wording

Net sales increased $67.6 million or 7.7% in the second quarter of fiscal 2026 as compared to the second quarter of fiscal 2025. This increase was the result of a 3% increase in organic volume, a 3% increase in pricing, a 1% increase in acquisitions, and a 1% increase from foreign currency translation.

Current wording

Net sales increased $12.9 million or 1.4% in the third quarter of fiscal 2026 as compared to the third quarter of fiscal 2025. This increase was the result of a 3% increase in pricing and a 2% increase from foreign currency translation, partially offset by a 4% decrease in organic volume.

Previous wording

Net sales increased $107.7 million or 6.2% in the six months of fiscal 2026 as compared to the six months of fiscal 2025. This increase was due to a 2% increase in acquisitions, a 2% increase in pricing, 1% increase in organic volume, and a 1% increase from foreign currency translation.

Current wording

Net sales increased $120.6 million or 4.6% in the nine months of fiscal 2026 as compared to the nine months of fiscal 2025. This increase was due to a 2% increase in acquisitions, a 2% increase in pricing, and a 2% increase from foreign currency translation, partially offset by a 1% decrease in organic volume.

Previous wording

Net sales of our Energy Systems segment in the second quarter of fiscal 2026 increased $52.6 million or 13.8% compared to the second quarter of fiscal 2025. This increase was due to an 10% increase in organic volume, a 3% increase in pricing, and a 1% increase from foreign currency translation. Net sales of our Energy Systems segment in the six months of fiscal 2026 increased $83.0 million or 11.2% compared to the six months of fiscal 2025. This increase was due to a 8% increase in organic volume, a 2% increase in pricing, and a 1% increase from foreign currency translation. This increase in sales for the quarter and six months is primarily a result of continuing robust demand from data center and industrial customers and recovering demand in communications.

Current wording

Net sales of our Energy Systems segment in the third quarter of fiscal 2026 increased $10.3 million or 2.6% compared to the third quarter of fiscal 2025. This increase was due to a 4% increase in price/mix and a 2% increase from foreign currency translation, partially offset by a 3% decrease in organic volume. Net sales of our Energy Systems segment in the nine months of fiscal 2026 increased $93.3 million or 8.2% compared to the nine months of fiscal 2025. This increase was due to a 4% increase in organic volume, a 3% increase in price/mix, and a 1% increase from foreign currency translation. This increase in sales for the quarter and nine months is primarily a result of continuing robust demand from data center and industrial customers and recovering demand with a stronger product mix in communications.

Previous wording

Net sales of our Motive Power segment in the second quarter of fiscal 2026 decreased by $7.0 million or 1.9% compared to the second quarter of fiscal 2025. This decrease was primarily due to a 6% decrease in organic volume, partially offset by a 2% increase in pricing and a 2% increase from foreign currency translation. Net sales of our Motive Power segment in the six months of fiscal 2026 decreased by $24.1 million or 3.3% compared to the six months of fiscal 2025. This decrease was primarily due to a 6% decrease in organic volume, partially offset by a 2% increase in pricing and a 1% increase from foreign currency translation. This decrease in sales for the quarter and six months is primarily a result of lower volumes due to macro uncertainty.

Current wording

Net sales of our Motive Power segment in the third quarter of fiscal 2026 decreased by $6.8 million or 1.9% compared to the third quarter of fiscal 2025. This decrease was primarily due to a 7% decrease in organic volume, partially offset by a 3% increase in foreign currency translation and a 2% increase in price/mix. Net sales of our Motive Power segment in the nine months of fiscal 2026 decreased by $30.9 million or 2.8% compared to the nine months of fiscal 2025. This decrease was primarily due to a 7% decrease in organic volume, partially offset by a 2% increase in price/mix and a 2% increase from foreign currency translation. This decrease in sales for the quarter and nine months is primarily a result of lower volumes in the Americas due to ongoing macro and geopolitical uncertainties impacting customer buying behaviors market-wide and lingering weakness in the EMEA automotive market.

Previous wording

Net sales of our Specialty segment in the second quarter of fiscal 2026 increased by $22.0 million or 16.3% compared to the second quarter of fiscal 2025. The increase was primarily due to a 7% increase from acquisitions, a 7% increase in organic volume, a 1% increase in pricing, and a 1% increase from foreign currency translation. Net sales of our Specialty segment in the six months of fiscal 2026 increased by $44.8 million or 17.2% compared to the six months of fiscal 2025. The increase was primarily due to a 15% increase from acquisitions, a 1% increase in organic volume, and a 1% increase from foreign currency translation. This increase in sales for the quarter and six months was primarily driven by increased volumes in Aerospace and Defense including impacts from the Bren-Tronics acquisition.

Current wording

Net sales of our Specialty segment in the third quarter of fiscal 2026 increased by $12.3 million or 8.0% compared to the third quarter of fiscal 2025. The increase was primarily due to a 4% increase in price/mix, a 2% increase in organic volume, a 1% increase in acquisitions, and a 1% increase from foreign currency translation. Net sales of our Specialty segment in the nine months of fiscal 2026 increased by $57.1 million or 13.8% compared to the nine months of fiscal 2025. The increase was primarily due to a 10% increase from acquisitions, a 2% increase in price/mix, a 1% increase from foreign currency translation, and a 1% increase in organic volume. This increase in sales for the quarter and nine months was primarily driven by increased volumes in transportation for the quarter and nine months along with strong results from Aerospace and Defense including impacts from the Bren-Tronics acquisition to the nine months.

Previous wording

Gross profit increased $25.1 million or 9.9% in the second quarter and increased $39.9 million or 8.1% in the six months of fiscal 2026 compared to the comparable periods of fiscal 2025. Gross profit, as a percentage of net sales, increased 60 basis points in the second quarter and six months of fiscal 2026, compared to the second quarter and six months of fiscal 2025. The increase in the gross profit margin in the current quarter and six months reflects greater impact of 45x benefits and favorable price/mix offset by higher freight and materials costs compared to the same periods in fiscal year 2025.

Current wording

Gross profit decreased $21.9 million or 7.3% in the third quarter and increased $18.0 million or 2.3% in the nine months of fiscal 2026 compared to the comparable periods of fiscal 2025. Gross profit, as a percentage of net sales, decreased 280 basis points in the third quarter and decreased 60 basis points in nine months of fiscal 2026, compared to the third quarter and nine months of fiscal 2025. The decrease to the gross profit margin for the quarter and nine months is primarily related to greater impact of 45x benefits in the same period in fiscal 2025 as prior year included a change in estimate impacting prior amounts to IRC 45X tax credits.

Previous wording

Operating expenses, as a percentage of sales, increased 20 basis points in the second quarter and 90 basis points six months of fiscal 2026, compared to the comparable periods of fiscal 2025. While our operating expenses for the second quarter remained flat, we experienced higher operating expenses as a percentage of sales year to date is primarily due to additional accelerated stock compensation expense of $10.2 million in the six months of fiscal 2026.

Current wording

Operating expenses, as a percentage of sales, decreased 90 basis points in the third quarter and increased 20 basis points in nine months of fiscal 2026, compared to the comparable periods of fiscal 2025. Our operating expenses for the third quarter decreased as a percentage of sales due to our cost saving and restructuring initiates. Year to date, we experienced higher operating expenses as a percentage of sales primarily due to additional accelerated stock compensation expense of $10.2 million in the nine months of fiscal 2026.

Previous wording

Selling expenses, a main component of operating expenses, increased $2.6 million or 4.6% in the second quarter of fiscal 2026 compared to the second quarter of fiscal 2025, and decreased 18 basis points as a percentage of net sales. In the six months of fiscal 2026, selling expenses increased by $6.1 million or 5.6% compared to the six months of fiscal 2025 and decreased 3 basis points as a percentage of net sales.

Current wording

Selling expenses, a main component of operating expenses, decreased $0.6 million or 1.1% in the third quarter of fiscal 2026 compared to the third quarter of fiscal 2025, and decreased 10 basis points as a percentage of sales. In the nine months of fiscal 2026, selling expenses increased by $5.5 million or 3.4% compared to the nine months of fiscal 2025 and decreased 10 basis points as a percentage of net sales related to inflation.

Previous wording

Included in our second quarter and six months of fiscal 2025 operating results of Energy Systems were restructuring charges of $0.9 million and $3.8 million, respectively. Included in our second quarter and six months of fiscal 2025 operating results of Motive Power were restructuring charges of $0.0 million and $0.8 million, respectively. Included in our second quarter and six months of fiscal 2025 operating results of Specialty were restructuring charges of $0.1 million and $0.4 million, respectively.

Current wording

Included in our third quarter and nine months of fiscal 2025 operating results of Energy Systems were restructuring charges of $0.9 million and $3.8 million, respectively. Included in our third quarter and nine months of fiscal 2025 operating results of Motive Power were restructuring charges of $0.0 million and $0.8 million, respectively. Included in our third quarter and nine months of fiscal 2025 operating results of Specialty were restructuring charges of $0.1 million and $0.4 million, respectively.

Previous wording

On July 22, 2025, the Company announced a reduction in force plan (the "Plan") as part of the Company's strategic restructuring plan under its new leadership to better align resources with current business priorities and long-term objectives. The Plan is expected to reduce non-production global workforce by approximately 11%, or approximately 575 employees, and is focused primarily on corporate and management positions. The Company estimates one-time cash charges related to the Plan to be $20.0 million consisting of severance payments, notice period payments in applicable jurisdictions, employee benefits and related costs. The Company expects to incur these expenses primarily in the second and third quarter of fiscal 2026. During the six months of fiscal 2026, the Company recorded a $19.6 million in severance costs relating to the plan.

Current wording

On July 22, 2025, the Company announced a reduction in force plan (the "Plan") as part of the Company's strategic restructuring plan under its new leadership to better align resources with current business priorities and long-term objectives. The Plan is expected to reduce non-production global workforce by approximately 11%, or approximately 575 employees, and is focused primarily on corporate and management positions. The Company estimates one-time cash charges related to the Plan to be $21.2 million consisting of severance payments, notice period payments in applicable jurisdictions, employee benefits and related costs. The Company expects to incur these expenses primarily in the second and third quarter of fiscal 2026. During the nine months of fiscal 2026, the Company recorded a $21.2 million in severance costs relating to the plan.

Previous wording

During the six months of fiscal 2026, the Company recorded a $3.9 million in severance costs.

Current wording

During the nine months of fiscal 2026, the Company recorded a $3.9 million in severance costs and unusual manufacturing variances of $1.2 million.

Previous wording

During the six months of fiscal 2026, the Company recorded a $1.1 gain of the sale of the building.

Current wording

During the nine months of fiscal 2026, the Company recorded a $1.1 million gain of the sale of the building.

Previous wording

(2) Corporate and other includes amounts managed on a company-wide basis and not directly allocated to any reportable segments, primarily relating to IRA production tax credits. Also, included are start-up costs for exploration and construction of a new lithium plant as well as sales and expenses from the New Ventures operating segment.

Current wording

(2) Corporate and other includes amounts managed on a company-wide basis and not directly allocated to any reportable segments, primarily relating to IRC 45X production tax credits. Also, included are start-up costs for exploration of a new lithium plant as well as start-up operating expenses from the New Ventures operating segment.

Previous wording

The Energy Systems operating earnings, as a percentage of sales, increased 130 basis points and 160 basis points in the second quarter and six months of fiscal 2026, respectfully, compared to the second quarter and six months of fiscal 2025. This increase was driven by improved price/mix combined with higher volumes of data center and industrial customers. We also continue to benefit from lower operating costs from tight cost controls and restructuring initiatives.

Current wording

The Energy Systems operating earnings, as a percentage of sales, increased 400 basis points and 230 basis points in the third quarter and nine months of fiscal 2026, respectfully, compared to the third quarter and nine months of fiscal 2025. These increases were driven by improved price/mix combined with higher volumes of data center and industrial customers. We also continue to benefit from lower operating costs from tight cost controls and restructuring initiatives.

Previous wording

The Motive Power operating earnings, as a percentage of sales, decreased 240 basis points and 220 basis points in the second quarter and six months of fiscal 2026, respectively, compared to the second quarter and six months of fiscal 2025. This decrease was driven primarily by higher costs passed through to customers and lost leverage on lower volumes

Current wording

The Motive Power operating earnings, as a percentage of sales, increased 20 basis points and decreased 130 basis points in the third quarter and nine months of fiscal 2026, respectively, compared to the third quarter and nine months of fiscal 2025. The slight increase in the third quarter and decrease in the nine months were driven primarily by higher costs passed through to customers and lost leverage on lower volumes.

Previous wording

Interest expense of $12.2 million in the second quarter of fiscal 2026 (net of interest income of 3.3 million) was $0.3 million lower than the interest expense of $12.5 million in the second quarter of fiscal 2025 (net of interest income of $0.7 million).

Current wording

Interest expense of $14.1 million in the third quarter of fiscal 2026 (net of interest income of 1.2 million) was $0.8 million lower than the interest expense of $14.9 million in the third quarter of fiscal 2025 (net of interest income of $1.4 million).

Previous wording

Interest expense of $23.5 million in the six months of fiscal 2026 (net of interest income of $6.4 million) was flat compared to interest expense of $23.5 million in the six months of fiscal 2025 (net of interest income of $1.8 million).

Current wording

Interest expense of $37.6 million in the nine months of fiscal 2026 (net of interest income of $7.6 million) was $0.8 million lower than the interest expense of $38.4 million in the nine months of fiscal 2025 (net of interest income of $3.1 million).

Previous wording

The decrease in interest expense in the second quarter of fiscal 2026 and the consistent interest expense in the six months of fiscal 2026 is primarily due to higher interest income from interest rate swaps offsetting higher interest expense costs in fiscal 2026. Our average debt outstanding was $1,314.0 million and $1,234.7 million in the second quarter and six months of fiscal 2026, compared to $1,126.9 million and $1,009.2 million in the second quarter and six months of fiscal 2025.

Current wording

The decrease in interest expense in the third quarter of fiscal 2026 and the consistent interest expense in the nine months of fiscal 2026 is primarily due to higher interest income from interest rate swaps offsetting higher interest expense costs in fiscal 2026. Our average debt outstanding was $1,232.4 million and $1,235.0 million in the third quarter and nine months of fiscal 2026, compared to $1,284.7 million and $1,096.3 million in the third quarter and nine months of fiscal 2025.

Previous wording

Included in interest expense are non-cash charges for deferred financing fees of $0.5 million and $1.0 million for the second quarter and six months of fiscal 2026 and $0.5 million and $1.0 million in the second quarter and six months of fiscal 2025.

Current wording

Included in interest expense are non-cash charges for deferred financing fees of $0.6 million and $1.6 million for the third quarter and nine months of fiscal 2026 and $0.5 million and $1.5 million in the third quarter and nine months of fiscal 2025.

Previous wording

Other (income) expense, net in the second quarter of fiscal 2026 was expense of $3.4 million compared to expense of $2.7 million in the second quarter of fiscal 2025. Other (income) expense, net in the six months of fiscal 2026 was expense of $12.9 million compared to expense of $3.7 million in the six months of fiscal 2025. Foreign currency impact resulted in a loss of $1.0 million and a loss of $7.2 million in the second quarter and six months of fiscal 2026, respectively, compared to a foreign currency of $0.8 million and a gain of $2.1 million in the second quarter and six months of fiscal 2025, respectively.

Current wording

Other (income) expense, net in the third quarter of fiscal 2026 was expense of $3.9 million compared to expense of $1.1 million in the third quarter of fiscal 2025. Other (income) expense, net in the nine months of fiscal 2026 was expense of $16.8 million compared to expense of $4.8 million in the nine months of fiscal 2025. Foreign currency impact resulted in a loss of $0.5 million and a loss of $7.8 million in the third quarter and nine months of fiscal 2026, respectively, compared to a foreign currency gain of $2.2 million and a gain of $4.2 million in the third quarter and nine months of fiscal 2025, respectively.

Previous wording

As a result of the above, earnings before income taxes in the second quarter of fiscal 2026 decreased $7.8 million, or 9.2%, compared to the second quarter of fiscal 2025 and decreased $21.4 million, or 13.1% in the six months of fiscal 2026 compared to the six months of fiscal 2025.

Current wording

As a result of the above, earnings before income taxes in the third quarter of fiscal 2026 decreased $20.5 million, or 16.2%, compared to the third quarter of fiscal 2025 and decreased $41.9 million, or 14.4% in the nine months of fiscal 2026 compared to the nine months of fiscal 2025.

Previous wording

The consolidated effective income tax rates for the second quarter of fiscal 2026 and 2025 were 10.5% and 2.3% and for the six months of fiscal 2026 and 2025 were 11.4% and 6.8%. The rate increase in the second quarter and six months of fiscal 2026 compared to the prior year periods are primarily due to a discrete tax benefit for Varian in fiscal 2025, impact of Pillar 2 and mix of earnings among tax jurisdictions.

Current wording

The consolidated effective income tax rates for the third quarter of fiscal 2026 and 2025 were 14.9% and 9.4% and for the nine months of fiscal 2026 and 2025 were 12.9% and 7.9%. The rate increase in the third quarter compared to the prior period are primarily due to the impact of Pillar 2 and mix of earnings among tax jurisdictions. The rate increase in the nine months of fiscal 2026 compared to the prior year periods are primarily due to a discrete tax benefit for Varian in fiscal 2025, impact of Pillar 2 and mix of earnings among tax jurisdictions.

Previous wording

Foreign income as a percentage of worldwide income is estimated to be 53% for fiscal 2026 and for fiscal 2025. The foreign effective tax rates for the six months of fiscal 2026 and 2025 were 17% and 15%, respectively. The foreign effective tax rate increase is primarily due to the impact of Pillar 2. Income from the Company's Swiss subsidiary comprised a substantial portion of the Company's overall foreign mix of income for both fiscal 2026 and fiscal 2025 and were taxed at an effective income tax rate of approximately 14% and 11%, respectively.

Current wording

Foreign income as a percentage of worldwide income is estimated to be 53% for fiscal 2026 compared to 48% for fiscal 2025. The foreign effective tax rates for the nine months of fiscal 2026 and 2025 were 17% and 15%, respectively. The foreign effective tax rate increase is primarily due to the impact of Pillar 2. Income from the Company's Swiss subsidiary comprised a substantial portion of the Company's overall foreign mix of income for both fiscal 2026 and fiscal 2025 and were taxed at an effective income tax rate of approximately 14% and 11%, respectively.

Previous wording

Operating activities provided cash of $219.0 million in the six months of fiscal 2026 compared to $44.0 million of cash provided in the six months of fiscal 2025, Inventory increased or used cash of $48.7 million, and accounts receivable decreased or provided cash of $43.7 million. Additionally, accounts payable decreased or used cash of $34.7 million. In the six months of fiscal 2026, net earnings were $125.9 million, depreciation and amortization $54.9 million, stock-based compensation $22.0 million, and $2.1 million in cash proceeds from derivatives not designated in hedging relationships. Prepaid and other current assets provided funds of $69.5 million, primarily from a decreases of $81.4 million in prepaid taxes included $137.0 million payment from the IRS relating to prior year tax return refund, and $16.4 million in contract assets, partially offset by a decrease of $3.1 million in other prepaid expenses and $3.0 million in non trade receivables. Accrued expenses were a use of funds of $21.4 million primarily from an decrease in tax accruals of $34.7 million and sales related accruals of $5.3 million, partially offset by increases of $12.6 million to restructuring accruals, $5.6 million to miscellaneous other accruals, and $3.9 million in freight.

Current wording

Operating activities provided cash of $403.6 million in the nine months of fiscal 2026 compared to $125.1 million of cash provided in the nine months of fiscal 2025, Inventory increased or used cash of $38.1 million, and accounts receivable decreased or provided cash of $140.7 million. Additionally, accounts payable decreased or used cash of $71.7 million. In the nine months of fiscal 2026, net earnings were $216.3 million, depreciation and amortization $84.6 million, stock-based compensation $29.5 million, and $1.7 million in cash disbursements from derivatives not designated in hedging relationships. Prepaid and other current assets provided funds of $29.5 million, primarily from a decrease of $33.0 million in prepaid taxes included $137.0 million payment from the IRS relating to prior year tax return refund and $3.5 million in non trade receivables, partially offset by increases of $9.0 million in contract assets. Accrued expenses were a use of funds of $9.2 million primarily from an decrease in tax accruals of $14.7 million, deferred revenue of $4.2 million and sales related accruals of $3.6 million, partially offset by increases of $9.6 million to restructuring accruals, $6.4 million to warranty, and $9.8 million in miscellaneous other accruals, including freight and professional accruals.

Previous wording

In the six of fiscal 2025, operating activities provided cash of $44.0 million. Inventory increased or used cash of $12.4 million, and accounts receivable increased or used cash of $9.3 million. Additionally, accounts payable decreased or used cash of $40.1 million. In the six months of fiscal 2025, net earnings were $152.4 million, depreciation and amortization $48.8 million, stock-based compensation $12.2 million, allowance for doubtful debts of $1.1 million, non-cash interest of $1.0 million and, non-cash charges relating to exit charges $0.2 million. Prepaid and other current assets were a use of funds of $26.2 million, primarily from an increase of $19.4 million in contract assets, $7.6 million in other prepaid expenses, and $1.6 million in prepaid insurance, partially offset by a decrease of $2.4 million in prepaid taxes. Accrued expenses were a use of funds of $83.9 million primarily from decrease in tax accruals of $81.8 million, interest payments net of accruals of $31.6 million, other miscellaneous accruals of $3.9 million, sales related accruals of $5.0 million, and payroll related payments of $0.5 million net of accruals, partially offset by $36.4 million in accrued interest, warranty accruals of $1.6 million, and $0.9 million in contract liabilities.

Current wording

In the nine months of fiscal 2025, operating activities provided cash of $125.1 million. Inventory increased or used cash of $19.6 million, and accounts receivable increased or used cash of $24.2 million. Additionally, accounts payable decreased or used cash of $17.7 million. In the nine months of fiscal 2025, net earnings were $267.2 million, depreciation and amortization $74.4 million, stock-based compensation $20.3 million, allowance for doubtful debts of $1.9 million, non-cash interest of $1.4 million and, non-cash charges relating to exit charges $0.3 million. Prepaid and other current assets were a use of funds of $145.5 million, primarily from an increase of $119.7 million in income tax receivable, $15.5 million in contract assets, and $11.7 million in other prepaid expenses, partially offset by a decrease of $0.9 million in prepaid insurance . Accrued expenses were a use of funds of $34.8 million primarily from decrease in tax accruals of $32.5 million, payroll related payments of $13.6 million net of accruals, other miscellaneous accruals of $3.0 million, and sales related accruals of $1.0 million, partially offset by $8.1 million in accrued interest net of interest payments, $5.2 million in contract liabilities and deferred income, and warranty accruals of $1.9 million.

Previous wording

Investing activities used cash of $62.4 million in the six months of fiscal 2026, which primarily consisted of acquisitions of $12.7 million and capital expenditures of $53.9 million relating to plant improvements, partially offset by $4.2 million in proceeds from disposal of property, plants, and equipment.

Current wording

Investing activities used cash of $75.7 million in the nine months of fiscal 2026, which primarily consisted of acquisitions of $12.7 million and capital expenditures of $67.2 million relating to plant improvements, partially offset by $4.2 million in proceeds from disposal of property, plants, and equipment.

Previous wording

Investing activities used cash of $282.5 million in the six months of fiscal 2025, which primarily consisted of the Bren-Tronics acquisition of $205.3 million, capital expenditures of $66.5 million relating to plant improvements and $10.9 million relating to investment in equity securities.

Current wording

Investing activities used cash of $307.5 million in the nine months of fiscal 2025, which primarily consisted of the Bren-Tronics acquisition of $206 million, capital expenditures of $90.8 million relating to plant improvements and $10.9 million relating to investment in equity securities.

Previous wording

Financing activities used cash of $128.2 million in the six months of fiscal 2026. During the six months of fiscal 2026, we borrowed $467.6 million under the Second and Third Amended Revolver and repaid $155.0 million of the Second Amended Revolver and $210.0 million of Term Loans. Net repayments on short-term debt were $0.1 million. We purchased treasury stock totaling $217.8 million and paid cash dividends to our stockholders totaling $18.9 million. Additionally in the six months, we received options proceeds of $16.9 million and paid $8.2 million relating to taxes for net share settlement of equity awards. We paid $3.3 million in debt issuance costs as well relating to our sixth amendment to the Credit Facility.

Current wording

Financing activities used cash of $241.4 million in the nine months of fiscal 2026. During the nine months of fiscal 2026, we borrowed $542.6 million under the Second and Third Amended Revolver and repaid $265.0 million of the Second Amended Revolver and $210.0 million of Term Loans. We purchased treasury stock totaling $301.4 million and paid cash dividends to our stockholders totaling $28.6 million. Additionally in the nine months, we received options proceeds of $32.0 million and paid $8.3 million relating to taxes for net share settlement of equity awards. We paid $3.4 million in debt issuance costs as well relating to our sixth amendment to the Credit Facility.

Previous wording

Financing activities provided cash of $305.3 million in the six months of fiscal 2025. During the six months of fiscal 2025, we borrowed $476.6 million under the Second Amended Revolver and repaid $76.7 million of the Second Amended Revolver. Net repayments on short-term debt were $0.4 million. We purchased treasury stock totaling $75.2 million, paid cash dividends to our stockholders totaling $18.6 million, and received proceeds from stock options of $7.4 million. Payments for financing costs for debt modification were $0.4 million. We paid $8.0 million for taxes related to net share settlement of equity awards.

Current wording

Financing activities provided cash of $328.9 million in the nine months of fiscal 2025. During the nine months of fiscal 2025, we borrowed $650.0 million under the Second Amended Revolver and repaid $180.0 million of the Second Amended Revolver. Net repayments on short-term debt were $1.0 million. We purchased treasury stock totaling $113.9 million, paid cash dividends to our stockholders totaling $28.0 million, and received proceeds from stock options of $7.6 million. Payments for financing costs for debt modification were $0.4 million. We paid $8.0 million for taxes related to net share settlement of equity awards.

Previous wording

Currency translation had a positive impact of $17.1 million on our cash balance in the six months of fiscal 2026 compared to the positive impact of $7.8 million on our cash balance in the six months of fiscal 2025. In the six months of fiscal 2026, principal currencies in which we do business such as the Euro, Polish zloty, Swiss Franc and British pound strengthened versus the U.S. dollar.

Current wording

Currency translation had a positive impact of $20.5 million on our cash balance in the nine months of fiscal 2026 compared to the negative impact of $16.6 million on our cash balance in the nine months of fiscal 2025. In the nine months of fiscal 2026, principal currencies in which we do business such as the Euro, Polish zloty, Swiss Franc and British pound strengthened versus the U.S. dollar.

Previous wording

As a result of the above, total cash and cash equivalents increased by $45.5 million to $388.6 million, in the six months of fiscal 2026 compared to an increase of $74.6 million to $407.9 million, in the six months of fiscal 2025.

Current wording

As a result of the above, total cash and cash equivalents increased by $107.0 million to $450.1 million, in the nine months of fiscal 2026 compared to an increase of $129.8 million to $463.2 million, in the nine months of fiscal 2025.

Previous wording

During the second quarter of fiscal 2022, we entered into a second amendment to the Amended Credit Facility (as amended, the “Second Amended Credit Facility”). As a result, the Second Amended Credit Facility, now scheduled to mature on September 30, 2026, consists of a $130.0 million senior secured term loan and a CAD 106.4 million ($84.2 million) term loan (the “Second Amended Term Loan”) and an $850.0 million senior secured revolving credit facility (the “Second Amended Revolver”). This amendment resulted in a decrease of the Amended Term Loan by $150.0 million and an increase of the Amended Revolver by $150.0 million.

Current wording

During the second quarter of fiscal 2022, we entered into a second amendment to the Amended Credit Facility (as amended, the “Second Amended Credit Facility”). As a result, the Second Amended Credit Facility, now scheduled to mature on September 30, 2026, consists of a $130.0 million senior secured term loan (the “Second Amended Term Loan”), a CAD 106.4 million ($84.2 million) term loan and an $850.0 million senior secured revolving credit facility (the “Second Amended Revolver”). This amendment resulted in a decrease of the Amended Term Loan by $150.0 million and an increase of the Amended Revolver by $150.0 million.