DUCOMMUN INC /DE/

Previous wording

In its 2025 Annual Report on Form 10-K, The Boeing Company (“Boeing”) indicated that in 2025, global air traffic expanded to near historical trend rates on an annual basis. The growth occurred despite a lower than usual contribution from the North America market, which had stagnant demand, particularly in the low-cost space. International demand outpaced domestic demand on an annual basis as the international demand continue to build on the recovery momentum from 2024, including in China, lifting demand for wide-body airplanes. Based on these trends, both single-aisle and wide-body demand remain above current industry supply levels. Overall, Boeing is experiencing strong demand from their airplane customers globally.

Current wording

In its 2025 Annual Report on Form 10-K, The Boeing Company (“Boeing”) indicated that in 2025, global air traffic expanded to near historical trend rates on an annual basis. The growth occurred despite a lower than usual contribution from the North America market, which had stagnant demand, particularly in the low-cost space. International demand outpaced domestic demand on an annual basis as the international demand continues to build on the recovery momentum from 2024, including in China, lifting demand for wide-body airplanes. Based on these trends, both single-aisle and wide-body demand remain above current industry supply levels. Overall, Boeing is experiencing strong demand from their airplane customers globally.

Previous 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 42 airplanes to 47 airplanes per month. In addition, the FAA recently announced that Boeing can resume issuing airworthiness certificates for its 737 MAX aircraft.

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. More recently, Boeing announced that the FAA cleared Boeing’s plan to raise 737 MAX production from 42 airplanes to 47 airplanes per month. In addition, the FAA recently announced that Boeing can resume issuing airworthiness certificates for its 737 MAX aircraft.

Previous wording

Since February 2025, the U.S. government has issued several executive orders (“Executive Orders”), under various statutes, imposing tariffs on imports from most countries with whom the U.S. engages in trade. As such, during 2025, the United States reached bilateral trade agreements that recognize tariff-free trade of products within the scope of the World Trade Organization Agreement on Trade in Civil Aircraft with the United Kingdom, Japan, and the European Union. Moreover, the United States applies a diverse range of reciprocal tariffs to imports originating from countries that have not concluded bilateral trade agreements with the United States. In February 2026, the U.S. Supreme Court struck down the sweeping tariffs that the U.S. government had imposed through the Executive Orders issued pursuant to International Emergency Economic Powers Act (“IEEPA”) of 1977. However, the U.S. government subsequently imposed a global tariff of 10% (which could potentially increase to 15%) that went into effect on February 24, 2026, and which would be effective for 150 days unless they are extended by the U.S. Congress. Additionally, in late July 2026, an Executive Order implementing tariffs under Section 304(a) of the Trade Act of 1974, as amended, was issued imposing tariffs of 10% to 12.5% on non-exempt goods depending on the country of origin, and from which civil aircraft parts and components and goods qualifying under the United States-Mexico-Canada Agreement are exempt.

Current wording

Since February 2025, the U.S. government has issued several executive orders (“Executive Orders”), under various statutes, imposing tariffs on imports from most countries with whom the U.S. engages in trade. As such, during 2025, the United States reached bilateral trade agreements that recognize tariff-free trade of products within the scope of the World Trade Organization Agreement on Trade in Civil Aircraft with the United Kingdom, Japan, and the European Union. Moreover, the United States applies a diverse range of reciprocal tariffs to imports originating from countries that have not concluded bilateral trade agreements with the United States. In February 2026, the U.S. Supreme Court struck down the sweeping tariffs that the U.S. government had imposed through the Executive Orders issued pursuant to International Emergency Economic Powers Act (“IEEPA”) of 1977. However, the U.S. government subsequently imposed a global tariff of 10% (which could potentially increase to 15%) that went into effect on February 24, 2026, and which would be effective for 150 days unless they are extended by the U.S. Congress. Additionally, in late July 2026, an Executive Order implementing tariffs under Section 301(b) and Section 304(a) of the Trade Act of 1974, as amended, was issued imposing tariffs of 10% to 12.5% on non-exempt goods depending on the country of origin, and from which civil aircraft parts and components and goods qualifying under the United States-Mexico-Canada Agreement are exempt.

Previous wording

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

Current wording

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

Previous wording

•Net income of $20.4 million, or 9.1% of net revenues, or $1.31 per diluted share

Current wording

•Net income of $13.9 million, or 6.1% of net revenues, or $0.89 per diluted share

Previous wording

Second Quarter of 2026 Compared to Second Quarter of 2025 (As Restated)

Current wording

Third Quarter of 2026 Compared to Third Quarter of 2025 (As Restated)

Previous wording

The following table sets forth net revenues, selected financial data, the effective tax rate and diluted earnings per share:

Current wording

The following table sets forth net revenues, selected financial data, the effective tax (benefit) rate and diluted earnings (loss) per share:

Previous wording

Net revenues by end-use market and operating segment during the fiscal three and six months ended July 4, 2026 and June 28, 2025, respectively, were as follows:

Current wording

Net revenues by end-use market and operating segment during the fiscal three and nine months ended October 3, 2026 and September 27, 2025, respectively, were as follows:

Previous wording

Net revenues for the three months ended July 4, 2026 were $224.5 million, compared to $200.8 million for the three months ended June 28, 2025. 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 October 3, 2026 were $227.0 million, compared to $214.4 million for the three months ended September 27, 2025. The year-over-year increase in our key end-use markets were primarily due to the following:

Previous wording

Net revenues for the six months ended July 4, 2026 were $433.5 million, compared to $393.3 million for the six months ended June 28, 2025. The year-over-year increase in our key end-use markets were primarily due to the following:

Current wording

Net revenues for the nine months ended October 3, 2026 were $660.5 million, compared to $607.7 million for the nine months ended September 27, 2025. The year-over-year increase in our key end-use markets were primarily due to the following:

Previous wording

•$24.5 million higher revenues in our commercial aerospace end-use markets due to higher rates on large aircraft, selected other commercial aerospace and rotary-wing aircraft platforms, partially offset by lower rates on selected business jet platforms; and

Current wording

•$45.6 million higher revenues in our commercial aerospace end-use markets due to higher rates on selected large aircraft, other commercial aerospace, and rotary-wing aircraft platforms; and

Previous wording

•$13.3 million higher revenues in our military and space end-use markets due to higher rates on several missiles and fixed-wing aircraft platforms, partially offset by lower rates on selected radar and electronic warfare, naval, and ground vehicle weapons platforms, along with a classified program.

Current wording

•$4.1 million higher revenues in our military and space end-use markets due to higher rates on selected missiles and fixed-wing aircraft platforms, partially offset by lower rates on selected ground vehicle weapons, radar and electronic warfare, rotary-wing aircraft, naval, and other military and space platforms, along with a classified program.

Previous wording

(1)Includes The Boeing Company (“Boeing”), Lockheed Martin Corporation (“Lockheed”), Northrop Grumman Corporation (“Northrop”), RTX Corporation (“RTX”), and Viasat, Inc. (“Viasat”) for the three and six months ended July 4, 2026 and June 28, 2025.

Current wording

(1)Includes The Boeing Company (“Boeing”), Northrop Grumman Corporation (“Northrop”), and RTX Corporation (“RTX”) for the three and nine months ended October 3, 2026 and September 27, 2025.

Previous wording

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

Current wording

Boeing, 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 Viasat 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, 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 July 4, 2026 of 28.0%, compared to the three months ended June 28, 2025 of 26.4% primarily due to higher manufacturing volume and savings from the facility consolidation program, 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 October 3, 2026 of 28.9%, compared to the three months ended September 27, 2025 of 27.5% primarily due to higher manufacturing volume and savings from the facility consolidation program, partially offset by higher other manufacturing costs and unfavorable product mix.

Previous wording

Gross profit as a percentage of net revenues increased year-over-year with the six months ended July 4, 2026 of 27.5%, compared to the six months ended June 28, 2025 of 26.3% primarily due to higher manufacturing volume, lower other manufacturing costs, and savings from the facility consolidation program, partially offset by unfavorable product mix.

Current wording

Gross profit as a percentage of net revenues increased year-over-year with the nine months ended October 3, 2026 of 28.0%, compared to the nine months ended September 27, 2025 of 26.7% primarily due to higher manufacturing volume and savings from the facility consolidation program, partially offset by unfavorable product mix and higher other manufacturing costs.

Previous wording

Restructuring charges decreased $0.6 million and $1.0 million year-over-year in the three and six months ended July 4, 2026, respectively, compared to the three and six months ended June 28, 2025, primarily due to the completion as of the prior year ended 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.

Current wording

Restructuring charges decreased $0.6 million and $1.6 million year-over-year in the three and nine months ended October 3, 2026, respectively, compared to the three and nine months ended September 27, 2025, primarily due to the completion as of the prior year ended 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, net increased $0.5 million and $1.3 million year-over-year in the three and six months ended July 4, 2026, compared to the three and six months ended June 28, 2025, respectively, primarily due to a higher outstanding debt balance, partially offset by lower interest rates.

Current wording

Interest expense, net increased $0.2 million and $1.4 million year-over-year in the three and nine months ended October 3, 2026, compared to the three and nine months ended September 27, 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 $5.5 million and $5.0 million as of July 4, 2026 and December 31, 2025, respectively. If recognized, $3.4 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 July 4, 2026 and December 31, 2025 were not significant.

Current wording

Our total amount of unrecognized tax benefits was $5.6 million and $5.0 million as of October 3, 2026 and December 31, 2025, respectively. If recognized, $3.5 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 October 3, 2026 and December 31, 2025 were not significant.

Previous 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 and six months ended July 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.

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 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 and nine months ended October 3, 2026. However, we expect the OBBBA to decrease our cash tax liability for 2026. We will continue to evaluate the impact of the OBBBA corporate tax provision changes as additional guidance becomes available.

Previous wording

Net income, net income as a percentage of revenues, and earnings per share for the three months ended July 4, 2026 were $20.4 million, or 9.1% of revenues, or $1.31 per diluted share, respectively, compared to $12.8 million, or 6.4% of revenues, or $0.84 per diluted share, respectively, for the three months ended June 28, 2025. The increase in net income for the three months ended July 4, 2026 compared to the three months ended June 28, 2025 was primarily due to higher gross profit of $9.9 million. SG&A expenses for the three months ended July 4, 2026 compared to the three months ended June 28, 2025 was flat as the three months ended July 4, 2026 includes compensation clawback of $3.9 million, which is a reduction in SG&A expenses and discussed above, partially offset by higher compensation and benefits costs included in SG&A expenses of $2.0 million, and higher other SG&A expenses of $1.2 million.

Current wording

Net income, net income as a percentage of revenues, and earnings per diluted share for the three months ended October 3, 2026 were $13.9 million, or 6.1% of revenues, or $0.89 per diluted share, respectively, compared to a net loss, net loss as a percentage of revenues, and loss per share for the three months ended September 27, 2025 of $60.8 million, or 28.4% of revenues, or $4.06 per share, respectively. The increase in net income for the three months ended October 3, 2026 compared to the three months ended September 27, 2025 was primarily due to higher litigation settlement and related costs, net, of $99.7 million in the prior year period discussed above that did not reoccur in the current period and higher gross profit of $6.6 million, partially offset by higher income tax expense of $22.4 million, higher SG&A expenses of $5.8 million, and higher pension plan settlement loss of $3.9 million.

Previous wording

Net income, net income as a percentage of revenues, and earnings per share for the six months ended July 4, 2026 were $30.3 million, or 7.0% of revenues, or $1.95 per diluted share, respectively, compared to $14.2 million, or 3.6% of revenues, or $0.93 per diluted share, respectively, for the six months ended June 28, 2025. The increase in net income for the six months ended July 4, 2026 compared to the six months ended June 28, 2025 was primarily due to higher gross profit of $15.7 million, lower SG&A expenses of $4.6 million due to compensation clawback of $3.9 million, which is a reduction to SG&A expenses discussed above, partially offset by higher income tax expense of $2.2 million.

Current wording

Net income, net income as a percentage of revenues, and earnings per diluted share for the nine months ended October 3, 2026 were $44.2 million, or 6.7% of revenues, or $2.84 per diluted share, respectively, compared to a net loss, net loss as a percentage of revenues, and loss per share of $46.7 million, or 7.7% of revenues, or $3.13 per share, respectively, for the nine months ended September 27, 2025. The increase in net income for the nine months ended October 3, 2026 compared to the nine months ended September 27, 2025 was primarily due to higher litigation settlement and related costs, net, of $99.7 million in the prior year period discussed above that did not reoccur in the current period and higher gross profit of $22.3 million, partially offset by higher income tax expense of $24.6 million.

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 six months ended July 4, 2026 and June 28, 2025:

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 and nine months ended October 3, 2026 and September 27, 2025:

Previous wording

(2)The three and six months ended July 4, 2026 included $0.1 million and $0.2 million, respectively, of stock-based compensation expense recorded as cost of sales. The three and six months ended June 28, 2025 each included $0.1 million of stock-based compensation expense recorded as cost of sales.

Current wording

(2)The three and nine months ended October 3, 2026 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 27, 2025 each included $0.1 million of stock-based compensation expense recorded as cost of sales.

Previous wording

(3)The three and six months ended July 4, 2026 included less than $0.1 million and $0.1 million, respectively, of stock-based compensation expense recorded as cost of sales. The three and six months ended June 28, 2025 each included $0.1 million of stock-based compensation expense recorded as cost of sales.

Current wording

(3)The three and nine months ended October 3, 2026 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 27, 2025 included less than $0.1 million and $0.2 million, respectively, of stock-based compensation expense recorded as cost of sales.

Previous wording

(4)The three and six months ended July 4, 2026 included zero and $0.3 million, respectively, of stock-based compensation expense for awards with both performance and market conditions that will be settled in cash. The three and six months ended June 28, 2025 included $0.6 million and $1.2 million, respectively, of stock-based compensation expense for awards with both performance and market conditions that will be settled in cash.

Current wording

(4)The three and nine months ended October 3, 2026 included zero and $0.3 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 27, 2025 included $0.2 million and $1.4 million, respectively, of stock-based compensation expense for awards with both performance and market conditions that will be settled in cash.

Previous wording

Electronic Systems net revenues in the three months ended July 4, 2026 compared to the three months ended June 28, 2025 increased $21.7 million primarily due to the following in our key end-use markets:

Current wording

Electronic Systems net revenues in the three months ended October 3, 2026 compared to the three months ended September 27, 2025 increased $4.3 million primarily due to the following in our key end-use markets:

Previous wording

Electronic Systems net revenues in the six months ended July 4, 2026 compared to the six months ended June 28, 2025 increased $30.3 million primarily due to the following in our key end-use markets:

Current wording

Electronic Systems net revenues in the nine months ended October 3, 2026 compared to the nine months ended September 27, 2025 increased $34.6 million primarily due to the following in our key end-use markets:

Previous wording

•$15.4 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 radar and electronic warfare, and naval platforms, along with a classified program; and

Current wording

•$6.5 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 radar and electronic warfare, other military and space, and naval platforms, along with a classified program.

Previous wording

Electronic Systems segment operating income in the three months ended July 4, 2026 compared to the three months ended June 28, 2025 increased $5.0 million, primarily due to higher manufacturing volume, partially offset by unfavorable product mix.

Current wording

Electronic Systems segment operating income in the three months ended October 3, 2026 compared to the three months ended September 27, 2025 increased $5.5 million, primarily due to higher manufacturing volume, partially offset by higher other manufacturing costs.

Previous wording

Electronic Systems segment operating income in the six months ended July 4, 2026 compared to the six months ended June 28, 2025 increased $10.5 million, primarily due to higher manufacturing volume and lower other manufacturing costs, partially offset by unfavorable product mix.

Current wording

Electronic Systems segment operating income in the nine months ended October 3, 2026 compared to the nine months ended September 27, 2025 increased $16.0 million, primarily due to higher manufacturing volume and lower other manufacturing costs, partially offset by unfavorable product mix.

Previous wording

•$2.1 million lower revenues in our military and space end-use markets due to lower rates on selected rotary-wing aircraft and ground vehicle weapons platforms, partially offset by higher rates on several missiles platforms.

Current wording

•$0.4 million lower revenues in our military and space end-use markets due to lower rates on selected rotary-wing aircraft and ground vehicle weapons platforms, partially offset by higher rates on selected missiles and fixed-wing platforms.

Previous wording

•$12.0 million higher revenues in our commercial aerospace end-use markets due to higher rates on large aircraft and rotary-wing aircraft platforms, partially offset by lower rates on selected business jet platforms; partially offset by

Current wording

•$20.6 million higher revenues in our commercial aerospace end-use markets due to higher rates on selected large aircraft and rotary-wing aircraft platforms; partially offset by

Previous wording

•$2.1 million lower revenues in our military and space end-use markets due to lower rates on selected rotary-wing aircraft platforms, partially offset by higher rates on several missiles platforms.

Current wording

•$2.4 million lower revenues in our military and space end-use markets due to lower rates on selected rotary-wing aircraft and ground vehicle weapons platforms, partially offset by higher rates on selected missiles and fixed-wing aircraft platforms.

Previous wording

CG&A expenses decreased $2.1 million for the three months ended July 4, 2026 compared to the three months ended June 28, 2025, primarily due to compensation clawback of $3.9 million, which is a reduction to CG&A expenses, partially offset by higher compensation and benefits costs of $1.5 million and higher professional services fees of $0.5 million.

Current wording

CG&A expenses decreased $102.8 million for the nine months ended October 3, 2026 compared to the nine months ended September 27, 2025, primarily due to litigation settlement and related costs, net, of $99.7 million in the prior year discussed above that did not reoccur in the current period, compensation clawback of $3.9 million recorded in the second quarter of 2026, which is a reduction to CG&A expenses, and lower compensation and benefits costs of $1.3 million, partially offset by higher professional services fees of $1.8 million.

Previous wording

Adjusted earnings before interest, taxes, depreciation, amortization, stock-based compensation expense, and restructuring charges (“Adjusted EBITDA”) were $38.4 million and $31.6 million for the three months ended July 4, 2026 and June 28, 2025, respectively.

Current wording

Adjusted earnings before interest, taxes, depreciation, amortization, stock-based compensation expense, and restructuring charges (“Adjusted EBITDA”) were $39.7 million and $37.4 million for the three months ended October 3, 2026 and September 27, 2025, respectively.

Previous wording

•Gain on sale of property and other assets may be useful to our investors in evaluating our core operating performance; and

Current wording

•Gain on sale of property and other assets may be useful to our investors in evaluating our core operating performance;

Previous wording

(1) The three and six months ended July 4, 2026 included zero and $0.3 million, respectively, of stock-based compensation expense for awards with both performance and market conditions that will be settled in cash. The three and six months ended June 28, 2025 included $0.6 million and $1.2 million, respectively, of stock-based compensation expense for awards with both performance and market conditions that will be settled in cash. The three and six months ended July 4, 2026 included $0.1 million and $0.3 million, respectively, of stock-based compensation expense recorded as cost of sales. The three and six months ended June 28, 2025 each included $0.2 million of stock-based compensation expense recorded as cost of sales.

Current wording

(1) The three and nine months ended October 3, 2026 included zero and $0.3 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 27, 2025 included $0.2 million and $1.4 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 October 3, 2026 included $0.1 million and $0.4 million, respectively, of stock-based compensation expense recorded as cost of sales. The three and nine months ended September 27, 2025 included $0.1 million and $0.3 million, respectively, of stock-based compensation expense recorded as cost of sales.

Previous 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.

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 a PO is the remaining performance obligation (“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.