TWIN DISC INC

Previous wording

Comparison of the Second Quarter of Fiscal 2026 with the Second Quarter of Fiscal 2025

Current wording

Comparison of the Third Quarter of Fiscal 2026 with the Third Quarter of Fiscal 2025

Previous wording

Net sales for the second quarter increased 0.3%, or $0.3 million, to $90.2 million from $89.9 million in the same quarter a year ago. The acquisition of Kobelt, completed in the third quarter of fiscal 2025, contributed $3.2 million of additional revenue in the quarter. The remaining decrease of $2.9 million primarily reflects temporary weakness in commercial marine demand, impacted by the existing tariff structure, along with continued soft demand for oil and gas transmissions into China. These decreases were partially offset by continued growth in demand for the Company’s Veth propulsion systems, along with improved shipments of the Company’s Katsa products acquired in fiscal 2024. Global sales of marine and propulsion products were flat with the prior year, as weakness in commercial marine demand was offset by strength in demand for the Veth product. Shipments of off-highway transmission products decreased by 8.1%, with weakness in demand for oil and gas transmissions into China and delayed airport rescue and firefighting transmissions (“ARFF”) shipments resulting from ongoing tariff concerns. Shipments of industrial products improved nearly 22% as demand for Katsa product continues to grow, along with the favorable impact from the Kobelt acquisition. The European region saw a significant increase in revenue ($3.1 million or 8.4%) thanks primarily to strong regional demand for Veth and Katsa products. Sales into North America increased 9.6%, or $2.2 million, driven by the addition of Kobelt. The Asia Pacific region decreased 24.5%, or $5.0 million, on weaker demand for commercial marine and oilfield transmissions in the region. Currency translation had a favorable impact on second quarter fiscal 2026 sales compared to the second quarter of the prior year totaling $4.1 million primarily due to the strengthening of the euro against the U.S. dollar.

Current wording

Net sales for the third quarter increased 19.0%, or $15.5 million, to $96.7 million from $81.2 million in the same quarter a year ago. Currency translation had a favorable impact on third quarter fiscal 2026 sales compared to the third quarter of the prior year totaling $7.5 million primarily due to the strengthening of the euro against the U.S. dollar. The remaining organic increase of $8.0 million (9.8%) reflects strength across most of the Company’s markets including commercial marine, global defense and land-based transmission. Global sales of marine and propulsion products were up 20.0% compared with the prior year, as improved commercial marine demand in Asia combined with continued strength in global demand for Veth propulsion products. Shipments of off-highway transmission products increased by 22.2%, with improved ARFF shipments in the quarter following some delays in the second fiscal quarter. Shipments of industrial products improved by 15.2% as demand for the Katsa product continues to grow, along with the favorable impact from the Kobelt acquisition. The European region saw a significant increase in revenue ($7.4 million or 21.3%) thanks primarily to strong regional demand for the Veth and Katsa products. Sales into North America increased 33.7%, or $7.3 million, driven by improved commercial marine and transmission shipments, along with the addition of Kobelt. The Asia Pacific region increased 9.0%, or $1.6 million, on improved demand for commercial marine transmissions in the region.

Previous wording

Sales at our manufacturing segment increased 3.3%, or $2.4 million, versus the same quarter last year. The Company’s new acquisition, Kobelt, in Canada contributed $3.2 million of incremental revenue. The U.S. manufacturing operations experienced a 10.6%, or $3.3 million, decrease in sales versus the second fiscal quarter of 2025, with shipment delays for ARFF products and weaker demand for oil and gas transmissions in China. The Company’s operation in the Netherlands saw increased revenue of $1.6 million (6.4%) compared to the second fiscal quarter of 2025, as this operation continues to experience record demand for its propulsion systems. The Company’s Belgian operation saw a decrease compared to the prior year second quarter (16.6% or $0.9 million), with weaker demand for its marine transmission products due in part to the domestic tariff structure. The Company’s Italian manufacturing operation was up $2.5 million (77.7%) compared to the second quarter of fiscal 2025, due primarily to stronger European demand for industrial and commercial marine products. The Company’s operation in Finland saw revenue increase 21.2% ($2.1 million), with strong demand for defense related products in the region. The Company’s Swiss manufacturing operation, which supplies customized propellers for the global mega yacht and patrol boat markets, was up $0.4 million (23.7%) compared to the prior year second quarter.

Current wording

Sales at our manufacturing segment increased 15.5%, or $11.0 million, versus the same quarter last year. The Company’s new acquisition, Kobelt, in Canada contributed $2.2 million of incremental revenue. The U.S. manufacturing operations experienced an 8.0%, or $2.3 million, increase in sales versus the third fiscal quarter of 2025, with a recovery in shipments of ARFF products impacted by tariff driven delays in the second quarter. The Company’s operation in the Netherlands saw a slight decrease in revenue of $1.1 million (4.7%) compared to the third fiscal quarter of 2025, primarily due to timing of shipments of projects. The Company’s Belgian operation saw a decrease compared to the prior year third quarter (10.7% or $0.6 million), with weaker demand for its marine transmission products due in part to the domestic tariff structure. The Company’s Italian manufacturing operation was up $0.7 million (16.0%) compared to the third quarter of fiscal 2025, due primarily to stronger European demand for industrial and commercial marine products. The Company’s operation in Finland saw revenue increase 86.2% ($6.1 million), with strong demand for defense related products in the region. The Company’s Swiss manufacturing operation, which supplies customized propellers for the global mega yacht and patrol boat markets, was up $1.3 million (94.0%) compared to the prior year third quarter.

Previous wording

Our distribution segment experienced a decrease in sales of $10.4 million (29.0%) in the second quarter of fiscal 2026 compared to the second quarter of fiscal 2025. The Company’s Asian distribution operations in Singapore, China and Japan were down 37.2%, or $6.0 million, from the prior year on reduced demand for commercial marine transmissions and oil and gas transmissions for China. The Company’s North America distribution operation saw a decrease ($1.9 million or 32.7%) impacted by the existing tariff structure and related impact on goods coming from European manufacturing operations. Similarly, the Company’s European distribution operation saw a decline ($1.9 million or 30.9%) on weaker shipments of commercial marine projects. The Company’s distribution operation in Australia and New Zealand, which provides boat accessories, propulsion and marine transmission systems for the pleasure craft market, saw a decrease in revenue of 6.9% from the prior year second fiscal quarter, primarily due to weaker pleasure craft demand.

Current wording

Our distribution segment experienced an increase in sales of $2.5 million (8.3%) in the third quarter of fiscal 2026 compared to the third quarter of fiscal 2025. The Company’s Asian distribution operations in Singapore, China and Japan were up 22.2% or $2.7 million from the prior year on improved demand for commercial marine transmissions and oil and gas transmissions for China. The Company’s North America distribution operation saw a decrease ($0.3 million or 6.0%), negatively impacted by the existing tariff structure and related impact on goods coming from European manufacturing operations. The Company’s European distribution operation saw a decline ($1.0 million or 16.4%) on weaker shipments of commercial marine projects. The Company’s distribution operation in Australia and New Zealand, which provides boat accessories, propulsion and marine transmission systems for the pleasure craft market, saw an increase in revenue of 16.7% from the prior year third fiscal quarter, primarily due to improved pleasure craft demand.

Previous wording

Gross profit as a percentage of sales for the second quarter of fiscal 2026 improved to 24.8%, compared to 24.1% for the same period last year. The prior year quarter includes the impact of a non-cash inventory write-down of $1.6 million. This write-down reflected the results of a product rationalization exercise of the Company’s industrial product line following the acquisition of Katsa. The current quarter was impacted by a less favorable product mix, dilution of margin due to invoicing of tariffs and isolated operational/quality issues within the quarter.

Current wording

Gross profit as a percentage of sales for the third quarter of fiscal 2026 improved to 28.1%, compared to 26.7% for the same period last year. The current quarter was impacted by a positive volume impact and the positive impact of cost initiatives, offsetting a less favorable product mix and the impact of margin dilution resulting from the invoicing of tariffs..

Previous wording

For the fiscal 2026 second quarter, marketing, engineering and administrative (“ME&A”) expenses, as a percentage of sales, were 22.9%, compared to 21.0% for the fiscal 2025 second quarter. ME&A expenses increased $1.7 million (9.2%) over the same period last fiscal year. The increase in ME&A spending for the quarter was comprised of the addition of Kobelt ($0.5 million), a foreign currency impact ($0.5 million), increased commission expense ($0.5 million) and a small net inflationary impact of $0.3 million.

Current wording

For the fiscal 2026 third quarter, marketing, engineering and administrative (“ME&A”) expenses, as a percentage of sales, were 21.7%, compared to 24.0% for the fiscal 2025 third quarter. ME&A expenses increased $1.5 million (7.6%) over the same period last fiscal year. The increase in ME&A spending for the quarter was comprised of the addition of Kobelt ($0.3 million) and a foreign currency impact ($1.0 million), along with a general inflationary impact offset by cost savings initiatives.

Previous wording

Interest expense was up $0.3 million to $0.8 million in the second quarter of fiscal 2026, with a higher average outstanding revolver balance following the Katsa and Kobelt acquisitions.

Current wording

Interest expense was up $0.1 million to $0.8 million in the third quarter of fiscal 2026, with a higher average outstanding revolver balance following the Katsa and Kobelt acquisitions.

Previous wording

Other income (expense) of $0.6 million for the second fiscal quarter was primarily attributable to a currency gain ($0.1 million), partially offset by pension amortization expense ($0.7 million).

Current wording

Other expense (benefit) of $(0.3) million for the third fiscal quarter was primarily attributable to a currency gain ($1.0 million), partially offset by pension amortization expense ($0.7 million).

Previous wording

Comparison of the First Six Months of Fiscal 2026 with the First Six Months of Fiscal 2025

Current wording

Comparison of the First Nine Months of Fiscal 2026 with the First Nine Months of Fiscal 2025

Previous wording

Net sales for the first six months increased 4.5%, or $7.4 million, to $170.2 million from $162.8 million in the same period a year ago. The acquisition of Kobelt, completed in the third quarter of fiscal 2025, contributed $6.3 million of additional revenue in the first half. The remaining increase of $1.1 million reflects continued growth in demand for the Company’s Veth propulsion systems, along with improved shipments of the Company’s Katsa products acquired in fiscal 2024. These increases were partially offset by temporary weakness in commercial marine demand, impacted by the existing tariff structure, along with continued soft demand for oil and gas transmissions into China. Global sales of marine and propulsion products improved 5.9% from the prior year, driven by strong demand for Veth product offset by some weakness in commercial marine demand. Shipments of industrial products improved by 17.7%, driven by the addition of Katsa and Kobelt. Shipments of off-highway transmission products declined by 3.5%, with delayed ARFF shipments. The European region saw a significant increase in revenue ($5.1 million or 7.7%) thanks primarily to growing demand for Veth and Katsa products in the region. Sales into North America increased 26.7%, or $10.9 million, on improved industrial and commercial marine shipments in the second quarter. The Asia Pacific region decreased 20.0%, or $7.4 million, on weaker demand for commercial marine and oil and gas transmissions in the region. Currency translation had a favorable impact on first half fiscal 2026 sales compared to the first half of the prior year totaling $4.1 million primarily due to the strengthening of the euro against the U.S. dollar.

Current wording

Net sales for the first nine months increased 9.3%, or $22.8 million, to $266.9 million from $244.1 million in the same period a year ago. The acquisition of Kobelt, completed in the third quarter of fiscal 2025, contributed $8.7 million of additional revenue in the first nine months. Currency translation had a favorable impact of $14.9 million on revenue for the first nine months of fiscal 2026 sales compared to the same period of the prior year due to the strengthening of the euro against the U.S. dollar. The remaining decrease of $0.8 million reflects continued growth in demand for the company’s Veth propulsion systems, offset by weakness in global demand for commercial marine products through the first half of the fiscal year. Global sales of marine and propulsion products improved 10.8% from the prior year, driven by strong demand for the Veth product and a third quarter recovery in commercial marine demand. Shipments of industrial products improved by 16.8%, driven by the addition of Katsa and Kobelt. Shipments of off-highway transmission products improved by 4.9%, with recovery in ARFF shipments that were delayed in the previous quarter. The European region saw a significant increase in revenue ($12.5 million or 12.4%) thanks primarily to growing demand for the Veth and Katsa products in the region. Sales into North America increased 29.1%, or $18.2 million, on improved industrial and commercial marine shipments in the second and third quarters. The Asia Pacific region decreased 10.70%, or $5.8 million, on weaker demand for commercial marine and oil and gas transmissions in the region during the first half of the fiscal year.

Previous wording

Sales at our manufacturing segment increased 11.7%, versus the same period last year. The Company’s new acquisition, Kobelt, in Canada contributed $6.3 million of incremental revenue. The U.S. manufacturing operations experienced a 6.2%, or $3.7 million, decline in sales versus the first half of fiscal 2025, with tariff concerns creating a drag on shipments. The Company’s operation in the Netherlands saw increased revenue of $8.4 million (20.7%) compared to the first half of fiscal 2025, as this operation continues to experience record demand for its propulsion systems and has begun to increase capacity to satisfy the growing demand. The Company’s Belgian operation saw a decrease compared to the prior year first half (16.4% or $1.7 million), with weaker US demand for its marine transmission products, impacted by tariffs. The Company’s Italian manufacturing operation was up $3.1 million (45.4%) compared to the first half of fiscal 2025, due primarily to stronger European demand for industrial and commercial marine products. The Company’s operation in Finland saw revenue increase 14.7% ($2.8 million), with improving demand for defense related products in the region. The Company’s Swiss manufacturing operation, which supplies customized propellers for the global mega yacht and patrol boat markets, was up $1.1 million (33.7%) compared to the prior year first half.

Current wording

Sales at our manufacturing segment increased 12.9%, versus the same period last year. The Company’s new acquisition, Kobelt, in Canada contributed $8.5 million of incremental revenue. The U.S. manufacturing operations experienced a 1.5%, or $1.3 million, decline in sales versus the first nine months of fiscal 2025, with tariff concerns creating a drag on shipments. The Company’s operation in the Netherlands saw increased revenue of $7.4 million (11.5%) compared to the first nine months of fiscal 2025, which includes a favorable currency impact, as this operation continues to experience record demand for its propulsion systems and has begun to increase capacity to satisfy the growing demand. The Company’s Belgian operation saw a decrease compared to the prior year first nine months (14.4% or $2.3 million), with weaker US demand for its marine transmission products, impacted by tariffs. The Company’s Italian manufacturing operation was up $3.9 million (33.6%) compared to the first nine months of fiscal 2025, due primarily to stronger European demand for industrial and commercial marine products. The Company’s operation in Finland saw revenue increase 34.1% ($9.0 million), with improving demand for defense related products in the region. The Company’s Swiss manufacturing operation, which supplies customized propellers for the global mega yacht and patrol boat markets, was up $2.3 million (51.9%) compared to the prior year first nine months.

Previous wording

Our distribution segment experienced a decrease in sales of $18.2 million (27.8%) in the first half of fiscal 2026 compared to the first half of fiscal 2025. The Company’s Asian distribution operations in Singapore, China and Japan were down 31.9% or $9.0 million from the prior year on weaker commercial marine activity in the region, along with reduced demand for oilfield transmissions into China. The Company’s North America distribution operation saw a decrease ($4.0 million or 36.9%) on softening North American demand for European manufactured product, impacted by the current tariff structure. The Company’s European distribution operation saw a decrease ($4.4 million or 37.8%) on soft demand for commercial marine projects in the region. The Company’s distribution operation in Australia and New Zealand, which provides boat accessories, propulsion and marine transmission systems for the pleasure craft market, saw a decrease in revenue of 5.0% from the prior year first fiscal half, primarily due to weaker pleasure craft demand partially offset by a favorable currency impact.

Current wording

Our distribution segment experienced a decrease in sales of $15.7 million (16.4%) in the first nine months of fiscal 2026 compared to the first nine months of fiscal 2025. The Company’s Asian distribution operations in Singapore, China and Japan were down 15.6% or $6.3 million from the prior year on weaker commercial marine activity in the region, along with reduced demand for oilfield transmissions into China. The Company’s North America distribution operation saw a decrease ($4.4 million or 27.1%) on softening in North American demand for European manufactured product, impacted by the current tariff structure. The Company’s European distribution operation saw a decrease ($5.4 million or 30.4%) on soft demand for commercial marine projects in the region. The Company’s distribution operation in Australia and New Zealand, which provides boat accessories, propulsion and marine transmission systems for the pleasure craft market, saw an increase in revenue of 1.9% from the prior year first nine months, primarily due to improving pleasure craft demand along with a favorable currency impact.

Previous wording

Gross profit as a percentage of sales for the first half of fiscal 2026 improved to 26.6%, compared to 25.2% for the same period last year. The prior year includes the impact of a non-cash inventory write-down of $1.6 million. This write-down reflected the results of a product rationalization exercise of the Company’s industrial product line following the acquisition of Katsa. Excluding this adjustment, the fiscal 2025 first half gross profit percentage was 26.2%. The improvement in gross profit percentage versus the prior year first half is attributed to improved operational execution at our Veth operation and successful margin improvement initiatives, partially offset by isolated quality and facility charges.

Current wording

Gross profit as a percentage of sales for the first nine months of fiscal 2026 improved to 27.1%, compared to 25.7% for the same period last year. The prior year includes the impact of a non-cash inventory write-down of $1.6 million. This write-down reflected the results of a product rationalization exercise of the Company’s industrial product line following the acquisition of Katsa. Excluding this adjustment, the fiscal 2025 gross profit percentage was 26.3%. The improvement in gross profit percentage versus the prior year first nine months is attributed to the increased volume, operational execution at our Veth operation and successful margin improvement initiatives, partially offset by margin dilution resulting from the invoicing of tariff charges.

Previous wording

For the fiscal 2026 first half, ME&Aexpenses, as a percentage of sales, were 24.3%, compared to 23.6% for the first half of fiscal 2025. ME&A expenses increased $3.0 million (7.7%) over the same period last fiscal year. The increase in ME&A spending for the first half was comprised of the addition of Kobelt ($1.1 million), a foreign currency translation impact ($1.0 million), an increase in professional fees ($0.7 million) and the net of savings initiatives offset by inflation related increases ($0.2 million).

Current wording

For the fiscal 2026 first nine months, marketing, engineering and administrative (“ME&A”) expenses, as a percentage of sales, were 23.3%, compared to 23.7% for the same period of fiscal 2025. ME&A expenses increased $4.5 million (7.8%) over the same period last fiscal year. The increase in ME&A spending for the first nine months was comprised of the addition of Kobelt ($1.4 million), a foreign currency translation impact ($2.0 million), and general inflationary increases partially offset by the favorable impact of savings initiatives.

Previous wording

Interest expense was up $0.4 million to $1.6 million in the first half of fiscal 2026, with a higher average outstanding revolver balance following the Katsa and Kobelt acquisitions.

Current wording

Interest expense was up $0.6 million to $2.4 million in the first nine months of fiscal 2026, with a higher average outstanding revolver balance following the Katsa and Kobelt acquisitions.

Previous wording

Other expense of $1.5 million for the first half was primarily attributable to pension amortization expense ($1.4 million), along with a small currency loss ($0.1 million).

Current wording

Other expense of $1.2 million for the first nine months was primarily attributable to pension amortization expense ($2.1 million), partially offset by a currency gain ($0.9 million).

Previous wording

The fiscal 2026 first half effective tax rate was -1,638.9% compared to 430.6% in the prior fiscal year first half. The change in the effective tax rate for the first half resulted from a full reversal of the domestic valuation allowance.

Current wording

The fiscal 2026 first nine-month effective tax rate was (284.5%) compared to 1,469.0% in the prior fiscal year first nine months. The reversal of the full domestic valuation allowance in the current year explains the significant fluctuation in the effective tax rate.

Previous wording

As of December 26, 2025, the Company had net working capital of $133.3 million, which represents an increase of $12.2 million, or 10.1%, from the net working capital of $121.1 million as of June 30, 2025.

Current wording

As of March 27, 2026, the Company had net working capital of $136.1 million, which represents an increase of $14.3 million, or 11.7%, from the net working capital of $121.8 million as of June 30, 2025.

Previous wording

Cash decreased by $1.2 million to $14.9 million as of December 26, 2025, versus $16.1 million as of June 30, 2025. As of December 26, 2025, the majority of the cash is at the Company’s overseas operations in Europe ($5.8 million) and Asia-Pacific ($8.1 million).

Current wording

Cash of $16.1 million as of March 27, 2026 was unchanged from June 30, 2025. As of March 27, 2026, the majority of the cash was at the Company’s overseas operations in Europe ($4.6 million) and Asia-Pacific ($10.6 million).

Previous wording

Trade receivables of $53.6 million were down $5.3 million, or 9.0%, when compared to last fiscal year-end. The impact of foreign currency translation was essentially neutral versus June 30, 2025. As a percent of sales, trade receivables finished at 59.5% in the second quarter of fiscal 2026 compared to 59.7% for the comparable period in fiscal 2025 and 61.0% for the fourth quarter of fiscal 2025.

Current wording

Trade receivables of $64.1 million were up $5.1 million, or 8.7%, when compared to last fiscal year-end. The impact of foreign currency translation was a reduction of $1.0 million versus June 30, 2025. As a percent of sales, trade receivables finished at 66.3% in the third quarter of fiscal 2026 compared to 70.5% for the comparable period in fiscal 2025 and 61.0% for the fourth quarter of fiscal 2025.

Previous wording

Inventories increased by $11.2 million, or 7.4%, versus June 30, 2025 to $163.2 million. The impact of foreign currency translation was essentially neutral versus June 30, 2025. The largest increase came at our operations in the United States ($6.0 million), unfavorably impacted by tariff related shipment delays. Our operation in the Netherlands saw an increase ($2.9 million) in support of growing backlog for the Veth product. The Singapore distribution entity experienced a $2.3 million increase primarily related to customer delays of deliveries on oilfield transmissions into China. Our operation in Finland also experienced an increase ($1.2 million or 8.4%) on strong demand for industrial products include defense applications. The global operations team is focused on driving inventory improvements in the second half and beyond. On a consolidated basis, as of December 26, 2025, the Company’s backlog of orders to be shipped over the next six months grew to $175.3 million, compared to $150.5 million at June 30, 2025 and $124.0 million at December 27, 2024. The increase in backlog since June 30, 2025 ($24.8 million) is largely reflective of strong market conditions for the Veth product and increasing global defense spending. As a percentage of six-month backlog, inventory has decreased from 99% at June 30, 2025 to 93% at December 26, 2025.

Current wording

Inventories increased by $8.4 million, or 5.5%, versus June 30, 2025 to $160.3 million. The impact of foreign currency translation was to reduce inventory by $1.9 million versus June 30, 2025. The largest increase came at our operations in the Netherlands ($5.4 million) in support of growing backlog for the Veth product. The Singapore distribution entity experienced a $1.4 million increase primarily related to customer delays of deliveries on oilfield transmissions into China. Our operation in Finland also experienced an increase ($1.8 million or 12.8%) on strong demand for industrial products including defense applications. The global operations team is focused on driving inventory improvements as we close out the fiscal year. On a consolidated basis, as of March 27, 2026, the Company’s backlog of orders to be shipped over the next six months grew to $179.5 million, compared to $150.5 million at June 30, 2025 and $133.7 million at March 28, 2025. The increase in backlog since June 30, 2025 ($29.0 million) is largely reflective of strong market conditions for the Veth product and increasing global defense spending. As a percentage of six-month backlog, inventory has decreased from 99% at June 30, 2025 to 89% at March 28, 2025.

Previous wording

Net property, plant and equipment increased $1.8 million (2.6%) to $71.4 million versus $69.6 million at June 30, 2025. The Company had capital spending of $6.8 million in the first half, and a relatively neutral exchange impact. This increase was offset by depreciation of $4.5 million. Capital spending occurring in the first half was primarily related to replacement capital, along with capital to drive growth and operating efficiencies. In total, the Company expects to invest between $12 and $15 million in capital assets in fiscal 2026. The Company continues to review its capital plans based on overall market conditions and availability of capital and may make changes to its capital plans accordingly. The Company’s capital program is focused on modernizing key core manufacturing, assembly and testing processes and improving efficiencies at its facilities around the world.

Current wording

Net property, plant and equipment increased $0.4 million (1.4%) to $70.0 million versus $69.6 million at June 30, 2025. The Company had capital spending of $10.2 million in the first nine months. This increase was partially offset by depreciation of $8.5 million and a currency driven decrease of $0.7 million. Capital spending occurring in the first nine months was primarily related to replacement capital, along with capital to drive growth and operating efficiencies. In total, the Company expects to invest between $13 and $16 million in capital assets in fiscal 2026. The Company continues to review its capital plans based on overall market conditions and availability of capital and may make changes to its capital plans accordingly. The Company’s capital program is focused on modernizing key core manufacturing, assembly and testing processes and improving efficiencies at its facilities around the world.

Previous wording

Accounts payable as of December 26, 2025 of $36.7 million was down $2.1 million, or 5.4%, from June 30, 2025. The impact of foreign currency translation was to decrease accounts payable by $0.2 million versus June 30, 2025. The remaining decrease is related to the normal timing of purchasing activity and related payments.

Current wording

Accounts payable as of March 27, 2026 of $36.5 million was down $2.2 million, or 5.7%, from June 30, 2025. The impact of foreign currency translation was to decrease accounts payable by $0.7 million versus June 30, 2025. The remaining decrease is related to the normal timing of purchasing activity and related payments.

Previous wording

Total borrowings and long-term debt as of December 26, 2025 increased $13.1 million to $44.5 million versus $31.4 million at June 30, 2025. During the first half, the Company reported negative free cash flow of $9.6 million (defined as operating cash flow less acquisitions of fixed assets), driven by an increase to inventory and capital spending. The Company ended the quarter with total debt, net of cash, of $29.7 million, compared to $15.3 million at June 30, 2025, for a net degradation of $14.3 million.

Current wording

Total borrowings and long-term debt as of March 27, 2026 increased $13.6 million to $45.0 million versus $31.4 million at June 30, 2025. During the first nine months, the Company reported negative free cash flow of $8.0 million (defined as operating cash flow less acquisitions of fixed assets), driven by an increase to inventory and capital spending. The Company ended the quarter with total debt, net of cash, of $29.0 million, compared to $15.3 million at June 30, 2025, for a net degradation of $13.7 million.

Previous wording

Total equity increased $20.8 million, or 12.6%, to $185.2 million as of December 26, 2025. The net earnings during the first half increased equity by $21.9 million, while other decreases related to a favorable foreign currency translation of $1.4 million and dividends paid to shareholders of $1.1 million. The net change in common stock and treasury stock resulting from the accounting for stock-based compensation increased equity by $0.6 million. The net remaining increase in equity of $1.4 million primarily represents the amortization of benefit plan adjustments on the Company’s defined benefit pension plans, along with the unrealized loss on cash flow hedges.

Current wording

Total equity increased $22.1 million, or 13.5%, to $186.5 million as of March 27, 2026. The net earnings during the first nine months increased equity by $25.2 million, while other decreases related to a favorable foreign currency translation of $4.6 million and dividends paid to shareholders of $1.7 million. The net change in common stock and treasury stock resulting from the accounting for stock-based compensation increased equity by $0.8 million. The net remaining increase in equity of $2.4 million primarily represents the amortization of benefit plan adjustments on the Company’s defined benefit pension plans, an unrealized loss on cash flow hedges and an increase to a noncontrolling interest.

Previous wording

Pursuant to the Credit Agreement, the Bank made a Term Loan to the Company in the principal amount of $15.0 million, consisting of an assignment of a term loan under the Prior Credit Agreement from BMO to the Bank with a remaining principal of $8.5 million and an additional advance of $6.5 million. The maturity date of the Term Loan is April 1, 2027, and the Company is required to make principal installments on the Term Loan of at least $0.75 million per quarter. Under the Credit Agreement, the Company is restricted in making dividend payments beyond $5 million in any fiscal year.

Current wording

Pursuant to the Credit Agreement, the Bank made a Term Loan to the Company in the principal amount of $15.0 million, consisting of an assignment of a term loan under the Prior Credit Agreement from BMO to the Bank with a remaining principal of $8.5 million and an additional advance of $6.5 million. The maturity date of the Term Loan is April 1, 2027, and the Company is required to make principal installments on the Term Loan of at least $0.75 million per quarter.