DUCOMMUN INC /DE/

Previous wording

Ducommun Incorporated (“Ducommun,” “the Company,” “we,” “us” or “our”) is a leading global provider of engineering and manufacturing services for high-performance products and high-cost-of failure applications used primarily in the aerospace and defense (“A&D”), industrial, medical and other industries (collectively, “Industrial”). We differentiate ourselves as a full-service solution-based provider, offering a wide range of value-added products and services in our primary businesses of electronics, structures and integrated solutions. We operate through two primary business segments: Electronic Systems and Structural Systems, each of which is a reportable segment.

Current wording

Ducommun Incorporated (“Ducommun,” “the Company,” “we,” “us” or “our”) is a leading designer and manufacturer of and provider of manufacturing solutions for high-performance products often used in high-cost-of failure applications primarily in the aerospace and defense (“A&D”), industrial, medical, and other industries (collectively, “Industrial”). We differentiate ourselves as a full-service solution-based provider, offering a wide range of value-added products and services in our primary businesses of electronics, structures and integrated solutions. We operate through two primary business segments: Electronic Systems and Structural Systems, each of which is a reportable segment.

Previous wording

The Boeing Company (“Boeing”) is one of our largest customers and was notified by the Federal Aviation Administration (“FAA”) in early January 2024 that the FAA had initiated an investigation into Boeing’s quality control system. This notification was followed by the FAA announcing actions to increase its oversight of Boeing as well as not approving production rate increases or additional production lines for the 737 MAX until it is satisfied that Boeing is in full compliance with required quality control procedures. In addition, in July 2024, Boeing also pleaded guilty to conspiracy fraud charges, which may result in additional external oversight on its manufacturing and quality control process. As discussed further below under “U.S. Government Tariffs,” during the second quarter of 2025, the United States adjusted various tariff rates, including on aluminum and steel imports, and announced broad reciprocal tariffs on imports from all countries. The United States has asserted that reciprocal tariff rates for many trade partners could increase from the 10% baseline tariff on August 1, 2025, unless agreements are reached. In Boeing’s Q2 2025 Quarterly Report on Form 10-Q, it stated that collectively, these tariffs and any retaliatory actions taken by countries in response to the United States tariffs could have a material impact on Boeing’s financial position, results of operations and/or cash flows. Recently, Boeing announced the FAA has cleared Boeing’s plan to raise 737 MAX production from 38 airplanes to 42 airplanes per month. Since Boeing is one of our largest customers, if Boeing is unable to meet the full compliance of the Federal Aviation Administration’s required quality control procedures, along with the tariffs (already imposed or will be imposed), it could have a material adverse impact on our business, results of operations and financial condition.

Current wording

Boeing was one of our largest customers in 2025, and the 737 MAX was one of our highest commercial end use market revenue platforms. In early January 2024, the Federal Aviation Administration (“FAA”) initiated an investigation into Boeing’s quality control system, which was followed by the agency announcing actions to increase its oversight of Boeing as well as not approving production rate increases or additional production lines for the 737 MAX until it was satisfied that Boeing attained full compliance with required quality control procedures. Subsequently, in July 2024, Boeing pleaded guilty to conspiracy fraud charges, which may result in additional external oversight on its manufacturing and quality control processes. More recently, Boeing announced that the FAA cleared Boeing’s plan to raise 737 MAX production from 38 airplanes to 42 airplanes per month.

Previous wording

Since February 2025, the U.S. government has issued several executive orders imposing tariffs on imports from most countries with whom the U.S. engages in trade (“Tariff EOs”). In response to the Tariff EOs, China, the European Union and Canada have announced, and in some cases imposed, counter tariffs on goods that are imported from the U.S. Our business imports various goods that may be subject to tariffs from certain countries covered by the Tariff EOs and we also supply goods to customers who may import those goods into a country which may consider counter tariffs and other actions. If the imposition of current tariff levels is sustained, our profitability, cash flows and the estimates inherent in our financial statements could be negatively affected to the extent we are either unable to claim duty exemptions or are unable to pass on such incremental tariffs to our customers. The actual financial impacts of tariffs are dependent upon various factors, most notably, the scope of goods covered by tariffs, the value of our imports subject to tariffs, the rate of tariffs applied, the timing and duration of tariffs, the implementation of tariff and non-tariff countermeasures by countries subject to U.S. tariffs, and our ability to mitigate the impacts of tariffs by availing ourselves of applicable exemptions. Changes in any of these factors and actual tariff costs incurred could significantly affect the estimates inherent in our financial statements, including those used in our estimates-at-completion (“EACs”), and estimates supporting the recoverability of our inventories, contract assets, intangible assets, and goodwill, and could have a material effect on our results of operations and cash flows in the periods recognized and paid.

Current wording

If the imposition of current tariff levels is sustained, our profitability, cash flows and the estimates inherent in our financial statements could be negatively affected to the extent we are either unable to claim duty exemptions or are unable to pass on such incremental tariffs to our customers. The actual financial impacts of tariffs are dependent upon various factors, most notably, the scope of goods covered by tariffs, the value of our imports subject to tariffs, the rate of tariffs applied, the timing and duration of tariffs, the implementation of tariff and non-tariff countermeasures by countries subject to U.S. tariffs, and our ability to mitigate the impacts of tariffs by availing ourselves of applicable exemptions. Changes in any of these factors and actual tariff costs incurred could significantly affect the estimates inherent in our financial statements, including those used in our estimates-at-completion (“EACs”), and estimates supporting the recoverability of our inventories, contract assets, intangible assets, and goodwill, and could have a material effect on our results of operations and cash flows in the periods recognized and paid.

Previous wording

On October 1, 2025, Congress failed to reach an agreement on funding the federal government, resulting in a shutdown until an agreement is reached. This has resulted in the disruption of non-essential government services, with over hundreds of thousands of federal employees being furloughed or working without pay. While the impact of the shutdown on Ducommun will ultimately depend on the duration of the shutdown and outcome of the finalized agreement, Ducommun currently does not expect that the shutdown will materially impact our business or results of operations. However, should the shutdown continue for an extended period of time, it could materially impact our business or results of operations.

Current wording

In October 2025, Congress failed to reach an agreement on funding the federal government, resulting in a shutdown until an agreement is reached. This resulted in the disruption of non-essential government services, with over hundreds of thousands of federal employees being furloughed or working without pay.

Previous wording

On July 4, 2025, the U.S. enacted the One Big Beautiful Bill Act (“OBBBA”), which, among other things, provides a corporate tax provision change in reinstating the immediate expensing of U.S. research and development expenditures paid or incurred for tax years beginning after December 31, 2024. See Note 1 and Note 9 to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q for further information.

Current wording

In July 2025, the U.S. enacted the One Big Beautiful Bill Act (“OBBBA”), which, among other things, provides a corporate tax provision change in reinstating the immediate expensing of U.S. research and development expenditures paid or incurred for tax years beginning after December 31, 2024. See Note 10 to our unaudited condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q for further information.

Previous wording

The OBBBA also provides a supplementary $156 billion to the DoD for obligations through 2029. Congress has also begun deliberations on the U.S. President’s budget request for fiscal year 2026.

Current wording

The OBBBA also provides a supplementary $156 billion to the U.S. Department of War (“DoW”) for obligations through 2029.

Previous wording

On April 9, 2025, the U.S. government issued an executive order requiring, among other things, a DoD review of its Major Defense Acquisition Programs to identify those programs that are 15% behind schedule, 15% over budget, unable to meet key performance parameters, or unaligned with the Secretary of Defense’s mission priorities for potential cancellation. Although Ducommun does not, at this time, believe the Executive Order will have a material impact on our business or results of operations, the longer-term ramifications, if any, to Ducommun will depend on a variety of factors including the formulation and implementation of the review criteria in the order, the review timeline, the Secretary of Defense’s mission priorities, and future budget determinations based on the results of such review.

Current wording

In April 2025, the U.S. government issued an executive order requiring, among other things, a DoW review of its Major Defense Acquisition Programs to identify those programs that are 15% behind schedule, 15% over budget, unable to meet key performance parameters, or unaligned with the Secretary of Defense’s mission priorities for potential cancellation. Although Ducommun does not, at this time, believe the Executive Order will have a material impact on our business or results of operations, the longer-term ramifications, if any, to Ducommun will depend on a variety of factors including the formulation and implementation of the review criteria in the order, the review timeline, the Secretary of Defense’s mission priorities, and future budget determinations based on the results of such review.

Previous wording

Net revenues by end-use market and operating segment during the fiscal three and nine months ended September 27, 2025 and September 28, 2024, respectively, were as follows:

Current wording

Net revenues by end-use market and operating segment during the fiscal three months ended April 4, 2026 and March 29, 2025, respectively, were as follows:

Previous wording

Net revenues for the three months ended September 27, 2025 were $212.6 million, compared to $201.4 million for the three months ended September 28, 2024. The year-over-year increase in our key end-use markets were primarily due to the following:

Current wording

Net revenues for the three months ended April 4, 2026 were $209.0 million, compared to $192.5 million for the three months ended March 29, 2025. The year-over-year increase in our key end-use markets were primarily due to the following:

Previous wording

•$11.0 million higher revenues in our military and space end-use markets due to higher rates on selected rotary-wing aircraft and ground vehicle weapons platforms, partially offset by lower rates on selected fixed-wing aircraft platforms; partially offset by

Current wording

•$5.4 million higher revenues in our military and space end-use markets due to higher rates on selected fixed-wing aircraft and missiles platforms, partially offset by lower rates on electronic warfare, ground vehicle weapons, and radar platforms.

Previous wording

(1)Includes The Boeing Company (“Boeing”), Lockheed Martin Corporation (“Lockheed”), Northrop Grumman Corporation (“Northrop”), RTX Corporation (“RTX”), and Spirit AeroSystems Holdings, Inc. (“Spirit”) for the three and nine months ended September 27, 2025 and September 28, 2024.

Current wording

(1)Includes The Boeing Company (“Boeing”), Lockheed Martin Corporation (“Lockheed”), Northrop Grumman Corporation (“Northrop”), and RTX Corporation (“RTX”) for the three months ended April 4, 2026 and March 29, 2025.

Previous wording

Boeing, Lockheed, Northrop, RTX, and Spirit represented the following percentages of total accounts receivable:

Current wording

Boeing, Lockheed, Northrop, and RTX, represented the following percentages of total accounts receivable:

Previous wording

The net revenues and accounts receivable from Boeing, Lockheed, Northrop, RTX, and Spirit were diversified over a number of commercial, military and space programs and were generated by both operating segments.

Current wording

The net revenues and accounts receivable from Boeing, Lockheed, Northrop, and RTX were diversified over a number of commercial, military and space programs and were generated by both operating segments.

Previous wording

Gross profit consists of net revenues less cost of sales. Cost of sales includes the cost of production of finished products and other expenses related to inventory management, manufacturing quality, and order fulfillment. Gross profit as a percentage of net revenues increased year-over-year with the three months ended September 27, 2025 of 26.6%, compared to the three months ended September 28, 2024 of 26.2% primarily due to lower other manufacturing costs and lower restructuring charges as a result of nearing the completion of the wind down of our Monrovia performance center, partially offset by unfavorable product mix.

Current wording

Gross profit consists of net revenues less cost of sales. Cost of sales includes the cost of production of finished products and other expenses related to inventory management, manufacturing quality, and order fulfillment. Gross profit as a percentage of net revenues increased year-over-year with the three months ended April 4, 2026 of 26.9%, compared to the three months ended March 29, 2025 of 26.2% primarily due to lower other manufacturing costs, favorable product mix, and higher manufacturing volume.

Previous wording

Restructuring charges decreased $1.3 million and $3.8 million (including $0.9 million recorded as cost of sales during the nine months ended September 28, 2024) year-over-year in the three and nine months ended September 27, 2025, compared to the three and nine months ended September 28, 2024, respectively, primarily due to the winding down of the previously disclosed restructuring plan that was approved and commenced in April 2022. See Note 2 to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q for further information.

Current wording

Restructuring charges decreased $0.4 million year-over-year in the three months ended April 4, 2026, compared to the three months ended March 29, 2025, primarily due to the completion as of December 31, 2025, the previously disclosed restructuring plan that was approved and commenced in April 2022. See Note 3 to our unaudited condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q for further information.

Previous wording

Interest expense decreased $0.9 million and $2.5 million year-over-year in the three and nine months ended September 27, 2025, compared to the three and nine months ended September 28, 2024, respectively, primarily due to lower interest rates along with a lower debt balance.

Current wording

Interest expense increased $0.7 million year-over-year in the three months ended April 4, 2026, compared to the three months ended March 29, 2025, respectively, primarily due to a higher outstanding debt balance partially offset by lower interest rates.

Previous wording

Our total amount of unrecognized tax benefits was $5.0 million and $4.5 million as of September 27, 2025 and December 31, 2024, respectively. If recognized, $3.1 million would affect the effective tax rate. We record interest and penalty charges, if any, related to uncertain tax positions as a component of tax expense and unrecognized tax benefits. The amounts accrued for interest and penalty charges as of September 27, 2025 and December 31, 2024 were not significant. As a result of statute of limitations set to expire in the fourth quarter of 2025, we expect decreases to our unrecognized tax benefits of approximately $0.5 million in the next twelve months.

Current wording

Our total amount of unrecognized tax benefits was $5.3 million and $5.0 million as of April 4, 2026 and December 31, 2025, respectively. If recognized, $3.2 million would affect the effective tax rate. We record interest and penalty charges, if any, related to uncertain tax positions as a component of tax expense and unrecognized tax benefits. The amounts accrued for interest and penalty charges as of April 4, 2026 and December 31, 2025 were not significant.

Previous wording

On July 4, 2025, the U.S. enacted the OBBBA. Amongst other things, the OBBBA provides for several corporate tax provision changes including restoring the full expensing of qualified property placed in service after January 19, 2025, reinstating the immediate expensing of U.S. research and development expenditures paid or incurred for tax years beginning after December 31, 2024, and changes in the computations of U.S. taxation on international earnings for tax years beginning after December 31, 2025. We completed the initial assessment of the OBBBA corporate tax provisions as they relate to our financial statements in the third quarter of 2025. The enactment of the OBBBA did not have a material impact to our effective tax rate for the three and nine months ended September 27, 2025. However, we expect the OBBBA to decrease our cash tax liability for 2025.

Current wording

In July 2025, the U.S. enacted the OBBBA. Amongst other things, the OBBBA provides for several corporate tax provision changes including restoring the full expensing of qualified property placed in service after January 19, 2025, reinstating the immediate expensing of U.S. research and development expenditures paid or incurred for tax years beginning after December 31, 2024, and changes in the computations of U.S. taxation on international earnings for tax years beginning after December 31, 2025. We completed the initial assessment of the OBBBA corporate tax provisions as they relate to our financial statements. The enactment of the OBBBA did not have a material impact to our effective tax rate for the three months ended April 4, 2026. However, we expect the OBBBA to decrease our cash tax liability for 2026. We will continue to evaluate the full impact of the OBBBA corporate tax provision changes as additional guidance becomes available.

Previous wording

Net (loss) income, net (loss) income as a percentage of revenues, and (loss) earnings per share for the three months ended September 27, 2025 were a net loss of $(64.4) million, or (30.3)% of revenues, or $(4.30) per share, respectively, compared to net income of $10.1 million, or 5.0% of revenues, or $0.67 per diluted share, respectively, for the three months ended September 28, 2024. The decrease in net income for the three months ended September 27, 2025 compared to the three months ended September 28, 2024 was primarily due to higher litigation settlement and related costs, net, of $99.7 million discussed above, partially offset by lower income tax expense of $19.8 million discussed above and higher gross profit of $3.8 million.

Current wording

Net income, net income as a percentage of revenues, and earnings per share for the three months ended April 4, 2026 were $9.9 million, or 4.7% of revenues, or $0.64 per diluted share, respectively, compared to $1.4 million, or 0.7% of revenues, or $0.09 per diluted share, respectively, for the three months ended March 29, 2025. The increase in net income for the three months ended April 4, 2026 compared to the three months ended March 29, 2025 was primarily due to higher gross profit of $5.8 million and lower stock-based compensation expense of $4.3 million discussed above, partially offset by higher income tax expense of $1.5 million discussed above.

Previous wording

We report our financial performance based upon our two reportable operating segments: Electronic Systems and Structural Systems. The results of operations differ between our reportable operating segments due to differences in competitors, customers, extent of proprietary deliverables and performance. The following table summarizes our business segment performance for the three and nine months ended September 27, 2025 and September 28, 2024:

Current wording

We report our financial performance based upon our two reportable operating segments: Electronic Systems and Structural Systems. The results of operations differ between our reportable operating segments due to differences in competitors, customers, extent of proprietary deliverables and performance. The following table summarizes our business segment performance for the three months ended April 4, 2026 and March 29, 2025:

Previous wording

(2)The three and nine months ended September 27, 2025 each included $0.1 million of stock-based compensation expense recorded as cost of sales. The three and nine months ended September 28, 2024 each included $0.1 million of stock-based compensation expense recorded as cost of sales.

Current wording

(2)The three months ended April 4, 2026 and March 29, 2025 each included less than $0.1 million of stock-based compensation expense recorded as cost of sales.

Previous wording

(3)The three and nine months ended September 27, 2025 included $0.1 million and $0.2 million, respectively, of stock-based compensation expense recorded as cost of sales. The three and nine months ended September 28, 2024 included $0.1 million and $0.2 million, respectively, of stock-based compensation expense recorded as cost of sales.

Current wording

(3)The three months ended April 4, 2026 and March 29, 2025 included less than $0.1 million and $0.2 million, respectively, of stock-based compensation expense recorded as cost of sales.

Previous wording

Electronic Systems net revenues in the three months ended September 27, 2025 compared to the three months ended September 28, 2024 increased $7.7 million primarily due to the following in our key end-use markets:

Current wording

Electronic Systems net revenues in the three months ended April 4, 2026 compared to the three months ended March 29, 2025 increased $8.5 million primarily due to the following in our key end-use markets:

Previous wording

•$8.2 million higher revenues in our military and space end-use markets due to higher rates on selected missile and fixed-wing aircraft platforms, partially offset by lower rates on electronic warfare platforms; partially offset by

Current wording

•$5.3 million higher revenues in our military and space end-use markets due to higher rates on selected fixed-wing aircraft and missile platforms, partially offset by lower rates on electronic warfare and radar platforms; and

Previous wording

Electronic Systems segment operating income in the nine months ended September 27, 2025 compared to the nine months ended September 28, 2024 increased $5.5 million primarily due to higher manufacturing volume, favorable product mix, and lower other manufacturing costs.

Current wording

Electronic Systems segment operating income in the three months ended April 4, 2026 compared to the three months ended March 29, 2025 increased $5.5 million primarily due to favorable product mix, higher manufacturing volume, and lower other manufacturing costs.

Previous wording

The Structural Systems segment operating income in the nine months ended September 27, 2025 compared to the nine months ended September 28, 2024 increased $10.1 million primarily due to lower other manufacturing costs and lower restructuring charges as a result of nearing the completion of the wind down of our Monrovia performance center, partially offset by unfavorable product mix and lower manufacturing volume.

Current wording

The Structural Systems segment operating income in the three months ended April 4, 2026 compared to the three months ended March 29, 2025 increased $0.5 million primarily due to lower other manufacturing costs, partially offset by unfavorable product mix.

Previous wording

A neighboring, non-related manufacturing facility, also suffered fire damage during the same time as the fire that severely damaged our Guaymas performance center and, in November 2023, the occupant of the neighboring facility filed suit against us in U.S. District Court for the Central District of California seeking unspecified amounts for damages relating to the fire. Subsequent to our quarter ended September 27, 2025, on October 3, 2025, we entered into a binding settlement term sheet (the “Term Sheet”) to resolve the Guaymas fire litigation against us. The Term Sheet provides for, among other things, the final dismissal of the Guaymas fire litigation against us with prejudice and a release of claims against us in exchange for us issuing a payment of $150.0 million, $56.0 million of which is expected to be funded by our insurance carriers. Also subsequent to our quarter ended September 27, 2025, on October 9, 2025, we settled an ancillary subrogation claim related to the fire for $1.4 million. See Note 10 to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q for further information.

Current wording

A neighboring, non-related manufacturing facility, also suffered fire damage during the same time as the fire that severely damaged our Guaymas performance center and, in November 2023, the occupant of the neighboring facility filed suit against us in U.S. District Court for the Central District of California seeking unspecified amounts for damages relating to the fire. Subsequent to our quarter ended September 27, 2025, on October 3, 2025, we entered into a binding settlement term sheet (the “Term Sheet”) to resolve the Guaymas fire litigation against us. The Term Sheet provides for, among other things, the final dismissal of the Guaymas fire litigation against us with prejudice and a release of claims against us in exchange for us issuing a payment of $150.0 million, $56.0 million of which is expected to be funded by our insurance carriers. Also subsequent to our quarter ended September 27, 2025, on October 9, 2025, we settled an ancillary subrogation claim related to the fire for $1.4 million. Further, subsequent to the fiscal year ended December 31, 2025, on January 7, 2026, we settled another ancillary subrogation claim related to the fire for $4.0 million. See Note 11 to our unaudited condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q for further information.

Previous wording

Adjusted earnings before interest, taxes, depreciation, amortization, stock-based compensation expense, restructuring charges, and inventory purchase accounting adjustments (“Adjusted EBITDA”) were $34.4 million and $31.9 million for the three months ended September 27, 2025 and September 28, 2024, respectively.

Current wording

Adjusted earnings before interest, taxes, depreciation, amortization, stock-based compensation expense, and restructuring charges (“Adjusted EBITDA”) were $35.4 million and $29.7 million for the three months ended April 4, 2026 and March 29, 2025, respectively.

Previous wording

As a result of these limitations, Adjusted EBITDA and the related financial ratios should not be considered as measures of discretionary cash available to us to invest in the growth of our business or as a measure of cash that will be available to us to meet our obligations. You should compensate for these limitations by relying primarily on our GAAP results and using Adjusted EBITDA only as supplemental information. See our condensed consolidated financial statements contained in this Form 10-Q.

Current wording

As a result of these limitations, Adjusted EBITDA and the related financial ratios should not be considered as measures of discretionary cash available to us to invest in the growth of our business or as a measure of cash that will be available to us to meet our obligations. You should compensate for these limitations by relying primarily on our GAAP results and using Adjusted EBITDA only as supplemental information. See our unaudited condensed consolidated financial statements contained in this Form 10-Q.

Previous wording

•Income tax (benefit) expense may be useful to investors because it represents the taxes which may be (receivable) payable for the period and the change in deferred taxes during the period, and may (increase) reduce cash flow available for use in our business;

Current wording

•Income tax expense may be useful to investors because it represents the taxes which may be (receivable) payable for the period and the change in deferred taxes during the period, and may (increase) reduce cash flow available for use in our business;

Previous wording

•Stock-based compensation may be useful to our investors for determining current cash flow;

Current wording

•Stock-based compensation may be useful to our investors for determining current cash flow; and

Previous wording

(4)The three and nine months ended September 27, 2025 included $0.6 million and $2.0 million, respectively, of stock-based compensation expense for awards with both performance and market conditions that will be settled in cash. The three and nine months ended September 28, 2024 included $0.9 million and $2.8 million, respectively, of stock-based compensation expense for awards with both performance and market conditions that will be settled in cash.

Current wording

(1) The three months ended April 4, 2026 and March 29, 2025 included $0.3 million and $0.6 million, respectively, of stock-based compensation expense for awards with both performance and market conditions that will be settled in cash. The three months ended April 4, 2026 and March 29, 2025 included $0.1 million and less than $0.1 million, respectively, of stock-based compensation expense recorded as cost of sales.

Previous wording

We define backlog as customer placed purchase orders (“POs”) and long-term agreements (“LTAs”) with firm fixed price and expected delivery dates of 24 months or less. The majority of the LTAs do not meet the definition of a contract under ASC 606, and thus, the backlog amount disclosed below may or may not be greater than the remaining performance obligations amount disclosed in Note 1 to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q. Backlog is subject to delivery delays or program cancellations, which are beyond our control. Backlog is affected by timing differences in the placement of customer orders and tends to be concentrated in several programs to a greater extent than our net revenues.

Current wording

Under generally accepted accounting principles (“GAAP”) of the United States, Accounting Standards Codification 606 (“ASC 606”), we define performance obligations as customer placed purchase orders (“PO”) with firm fixed price and firm delivery dates. The unrecognized revenue on POs are the remaining performance obligations (“RPO”). POs are subject to delivery delays or program cancellations, which are beyond our control. As such, RPO is affected by timing differences in the placement of customer orders and tends to be concentrated in several programs to a greater extent than our net revenues.

Previous wording

In July 2022, we completed a refinancing of all our existing debt by entering into a new term loan (“2022 Term Loan”) and a new revolving credit facility (“2022 Revolving Credit Facility”). The 2022 Term Loan is a $250.0 million senior secured loan that matures on July 14, 2027. The 2022 Revolving Credit Facility is a $200.0 million senior secured revolving credit facility that matures on July 14, 2027. The 2022 Term Loan and 2022 Revolving Credit Facility, collectively, represent our new credit facilities (“2022 Credit Facilities”). In conjunction with the closing of the 2022 Credit Facilities, we utilized the entire $250.0 million of proceeds from the 2022 Term Loan plus our existing cash on hand to pay off our entire debt balance outstanding of $254.2 million under our prior credit facilities. At the same leverage ratio, the interest rate spread in the 2022 Credit Facilities is lower than the interest rate spread under our prior credit facilities. Interest payments are typically paid either on a monthly or quarterly basis, depending on the interest rate selected, on the last business day each month or quarter. In addition, the 2022 Term Loan requires quarterly amortization payments of 0.625% during year one and year two, 1.250% during year three and year four, and 1.875% during year five of the original outstanding principal balance of the 2022 Term Loan amount, on the last business day each quarter. Further, the undrawn portion of the commitment of the 2022 Revolving Credit Facility is subject to a commitment fee ranging from 0.175% to 0.275%, based upon the consolidated total net adjusted leverage ratio, typically paid on a quarterly basis, on the last business day each quarter. However, the 2022 Revolving Credit Facility does not require any principal installment payments. As of September 27, 2025, we were in compliance with all covenants required under the 2022 Credit Facilities. See Note 7 to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q for further information.

Current wording

On November 24, 2025, we completed a refinancing of our existing debt by entering into a new senior secured term loan (“2025 Term Loan”) and a new revolving credit facility (“2025 Revolving Credit Facility”). The 2025 Term Loan is a $200.0 million senior secured loan that matures in November 2030. The 2025 Revolving Credit Facility is a $450.0 million senior secured revolving credit facility that matures on November 24, 2030. The 2025 Term Loan replaced the 2022 Term Loan (“2022 Term Loan”) which was a $250.0 million senior secured loan. The 2025 Revolving Credit Facility replaced the 2022 Revolving Credit Facility (“2022 Revolving Credit Facility”) which was a $200.0 million senior secured revolving credit facility. The 2025 Term Loan and 2025 Revolving Credit Facility, collectively are the new credit facilities (“2025 Credit Facilities”). The 2022 Term Loan and 2022 Revolving Credit Facility, collectively were the 2022 credit facilities that were entered into in July 2022 and would have matured in July 2027 (“2022 Credit Facilities”). The terms of the 2025 Term Loan require us to make installment payments of 0.625% of the initial outstanding principal balance on a quarterly basis during years one and two, 1.250% during years three and four, and 1.875% during year five, on the last business day of each calendar quarter. The terms of the 2025 Revolving Credit Facility do not require us to make installment payments. However, the undrawn portion of the commitment of the 2025 Revolving Credit Facility is subject to a commitment fee ranging from 0.175% to 0.250%, based upon the consolidated total net adjusted leverage ratio. As of April 4, 2026, we were in compliance with all covenants required under the 2025 Credit Facilities. See Note 8 to our unaudited condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q for further information.

Previous wording

For the three months ended September 27, 2025 and September 28, 2024, we made the required quarterly amortization payments on the 2022 Term Loan of $3.1 million that was due on June 30, 2025 and zero, respectively. The required quarterly amortization payments due on September 30, 2025 and September 30, 2024, respectively, are both in the fiscal fourth quarter. For the nine months ended September 27, 2025 and September 28, 2024, we made the required quarterly amortization payments on the 2022 Term Loan of $6.3 million and $3.1 million, respectively. We made no voluntary prepayments on our term loans during each of the three and nine months ended September 27, 2025 and September 28, 2024.

Current wording

For the three months ended April 4, 2026 and March 29, 2025, we made the required quarterly amortization payments of $1.3 million and zero, respectively. The required quarterly amortization due on March 31, 2025 was in our second fiscal quarter of 2025. We made no voluntary prepayments on our term loans during each of the three months ended April 4, 2026 and March 29, 2025.

Previous wording

In November 2021, we entered into derivative contracts, U.S. dollar-one month LIBOR forward interest rate swaps designated as cash flow hedges, all with an effective date of January 1, 2024, for an aggregate total notional amount of $150.0 million, weighted average fixed rate of 1.8%, and all terminating on January 1, 2031 (“Forward Interest Rate Swaps”). The Forward Interest Rate Swaps mature on a monthly basis, with fixed amount payer payment dates on the first day of each calendar month, commencing on February 1, 2024 through January 1, 2031. See Note 1, Note 3, and Note 7 to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q for further information.

Current wording

In November 2021, we entered into U.S. dollar-one month London Interbank Offered Rate (“LIBOR”) forward interest rate swaps designated as cash flow hedges, all with an effective date of January 1, 2024, for an aggregate total notional amount of $150.0 million, weighted average fixed rate of 1.8%, and all terminating on January 1, 2031 (“Forward Interest Rate Swaps”). The Forward Interest Rate Swaps mature on a monthly basis, with fixed amount payer payment dates on the first day of each calendar month, commencing on February 1, 2024 through January 1, 2031. Thus, the interest rate is fixed on $150 million of our debt. See Note 1, Note 4, and Note 8 to our unaudited condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q for further information.

Previous wording

In July 2022, as a result of completing a refinancing of our existing debt, we were required to complete an amendment of the Forward Interest Rate Swaps (“Amended Forward Interest Rate Swaps”). The Forward Interest Rate Swaps were based on U.S. dollar-one month LIBOR and were amended to be based on one month Term SOFR as borrowings using LIBOR are no longer available under the 2022 Credit Facilities. The Amended Forward Interest Rate Swaps weighted average fixed rate is 1.7%, as a result of the difference between U.S. dollar-one month LIBOR and one month Term SOFR. See Note 1, Note 3, and Note 7 to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q for further information.

Current wording

In July 2022, as a result of completing a refinancing of our existing debt, we were required to complete an amendment of the Forward Interest Rate Swaps (“Amended Forward Interest Rate Swaps”). The Forward Interest Rate Swaps were based on U.S. dollar-one month LIBOR and were amended to be based on one month Term Secured Overnight Financing Rate (“SOFR”) as borrowings using LIBOR were no longer available under the 2022 Credit Facilities. The Amended Forward Interest Rate Swaps weighted average fixed rate is 1.7%, as a result of the difference between U.S. dollar-one month LIBOR and one month Term

Previous wording

We expect to spend a total of $18.0 million to $20.0 million for capital expenditures in 2025 financed by cash generated from operations, principally to support new contract awards in Electronic Systems and Structural Systems. As part of our strategic plan to become a supplier of higher-level assemblies and win new contract awards, additional up-front investment in tooling will be required for newer programs which have higher engineering content and higher levels of complexity in assemblies.

Current wording

We expect to spend a total of $20.0 million to $24.0 million for capital expenditures in 2026 financed by cash generated from operations, principally to support new contract awards in Electronic Systems and Structural Systems. As part of our strategic plan to become a supplier of higher-level assemblies and win new contract awards, additional up-front investment in tooling will be required for newer programs which have higher engineering content and higher levels of complexity in assemblies.

Previous wording

Net cash provided by operating activities for the nine months ended September 27, 2025 was $41.3 million compared to $15.8 million for the nine months ended September 28, 2024. The higher net cash provided by operating activities during the first nine months of 2025 was mainly due to the litigation settlement and related costs, net, which impacted net loss but has not yet been paid and higher accounts payable, partially offset by higher contract assets.

Current wording

Net cash provided by operating activities for the three months ended April 4, 2026 was $11.2 million compared to $0.8 million for the three months ended March 29, 2025. The higher net cash provided by operating activities during the first three months of 2026 was mainly due to higher net income and higher contract liabilities as a result of higher progress payments, partially offset by lower accrued and other liabilities and higher accounts receivable.

Previous wording

Net cash used in investing activities was $9.1 million for the nine months ended September 27, 2025, compared to $10.3 million in the nine months ended September 28, 2024. The lower net cash used in investing activities during the first nine months of 2025 was mainly due to proceeds from the sale of our Berryville, Arkansas facility. See Note 1 to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q for further information.

Current wording

Net cash used in investing activities was $2.9 million for the three months ended April 4, 2026, compared to $4.8 million in the three months ended March 29, 2025. The lower net cash used in investing activities during the first three months of 2026 was mainly due to lower purchases of property and equipment.