Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion in conjunction with our condensed consolidated financial statements including the related notes thereto, included elsewhere in this Quarterly Report on Form 10-Q.

This Quarterly Report on Form 10-Q contains both historical information and "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), and 27A of the Securities Act of 1933, as amended. All statements other than statements of historical fact included that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward-looking statements, including, in particular, the statements about our plans, objectives, strategies and prospects regarding, among other things, our financial condition, results of operations and business. We have identified some of these forward-looking statements with words like "believe," "may," "will," "should," "expect," "intend," "plan," "predict," "anticipate," "estimate" or "continue" and other words and terms of similar meaning. These forward-looking statements may be contained throughout this Quarterly Report on Form 10-Q. These forward-looking statements are based on current expectations about future events affecting us and are subject to uncertainties and factors relating to, among other things, our operations and business environment, all of which are difficult to predict and many of which are beyond our control. Many factors mentioned in our discussion in this Quarterly Report on Form 10-Q, including the risks outlined under "Risk Factors," will be important in determining future results. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we do not know whether our expectations will prove correct. They can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties, including those described under "Risk Factors" in Part II, Item 1A of this Quarterly Report on Form 10-Q and in Part I, Item 1A, "Risk Factors," of the Annual Report on Form 10-K. Since our actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements, we cannot give any assurance that any of the events anticipated by these forward-looking statements will occur or, if any of them does occur, what impact they will have on our business, results of operations and financial condition. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. We do not undertake any obligation to update these forward-looking statements, or the risk factors contained in this Quarterly Report on Form 10-Q, to reflect new information, future events or otherwise, except as may be required under federal securities laws.

Important factors that could cause actual results to differ materially from the forward-looking statements made in this Quarterly Report on Form 10-Q include but are not limited to: the almost exclusive focus of our business on the aerospace and defense industry; our heavy reliance on certain customers for a significant portion of our sales; the fact that we have in the past consummated acquisitions and our intention to continue to pursue acquisitions, and that our business may be adversely affected if we cannot consummate acquisitions on satisfactory terms, or if we cannot effectively integrate acquired operations; and other factors. Refer to Part II, Item 1A included in this Quarterly Report on Form 10-Q and to Part I, Item 1A of the Annual Report on Form 10-K for additional information regarding the foregoing factors that may affect our business.

Overview

We specialize in the design, manufacture, and sale of niche aerospace and defense components that are essential for today's aircraft and aerospace and defense systems. We focus on mission-critical, highly engineered solutions with high intellectual property content. Furthermore, our products have significant aftermarket exposure, which has historically generated predictable and recurring revenue.

The products we manufacture cover a diverse range of applications supporting nearly every major aircraft platform in use today and include auto throttles, lap-belt airbags, two- and three-point seat belts, water purification systems, fire barriers, polyimide washers and bushings, latches, interior securing devices, hold-open and tie rods, temperature and fluid sensors and switches, carbon and metallic brake discs, fluid and pneumatic-based ice protection, RAM air components, sealing solutions and motion and actuation devices, customized edge-lighted panels and knobs and annunciators for incandescent and LED illuminated pushbutton switches, high-performance fans and cooling devices, lighting, Human-Machine Interface products, and bespoke lighting systems, among others.

We primarily serve three core end markets: commercial, business jet and general aviation, and defense, which have long historical track records of consistent growth. We also serve a diversified customer base within these end markets where we maintain long-standing customer relationships. We believe that the demanding, extensive and costly qualification process for new entrants, coupled with our history of consistently delivering exceptional solutions for our customers, has provided us with leading market positions and

created significant barriers to entry for potential competitors. By utilizing differentiated design, engineering, and manufacturing capabilities, along with a highly targeted acquisition strategy, we have sought to create long-term, sustainable value with a consistent, global business model.

As a specialized supplier in the aerospace and defense component industry, we believe we are well positioned to deliver innovative, mission-critical solutions to a wide array of aerospace and defense customers. Our key competitive strengths support our ability to offer differentiated solutions to our customers. We have a portfolio of mission-critical, niche aerospace and defense components that we believe hold leading market positions. We have intellectual property-driven proprietary products and expertise in an industry with high barriers to entry. We are strategically focused on higher-margin aftermarket content. We have highly diversified revenue streams, and our diversification stretches across end-markets, customers, platforms, and product category or application. We have an established business model with a lean, entrepreneurial structure. We have a disciplined and strategic approach to acquisitions with a history of successful integration. We have a track record of strong growth, margins and cash flow generation.

Recent Developments

On January 21, 2026, the Company acquired Harper Engineering for $249.9 million in cash. Founded in 1968, Harper Engineering is a
leading manufacturer of mechanically engineered devices for aircraft interiors and holds a proprietary portfolio of latching and securing mechanisms used across multiple leading commercial aerospace platforms.

The acquisition was financed through the drawdown of $240 million of Delayed Draw Term Loans available under the Company's
existing Credit Agreement and cash on hand. The Delayed Draw Term Loans will mature on the same date, will amortize, and will bear the same interest rate as the existing term loans outstanding under the Credit Agreement.

Outlook

As we look to the rest of 2026, we anticipate net sales growth to be driven by organic growth, in particular the conversion of high levels of backlog of our existing products, and the impact from strategic acquisitions. Backlog primarily consists of firm orders for products that have not yet shipped. Continued inflationary pressures and supply chain disruptions may lead to higher material and labor costs although these pressures and disruptions have not had a material effect on our year-to-date results of operations or capital resources, and we do not expect them to materially affect our outlook or business goals. So far in 2026, we have continued and plan to continue our commitment to develop new products and services, penetrate markets further, and pursue an aggressive acquisition strategy while seeking to maintain our financial strength and flexibility.

Results of Operations

The following table sets forth, for the three months ended March 31, 2026 and 2025, certain operating data of the Company, including presentation of the amounts as a percentage of net sales (in thousands unless otherwise indicated):

Financial and Operational Highlights

Three months ended March 31, 2026 compared with three months ended March 31, 2025

Net Sales

Net sales for the three months ended March 31, 2026 increased $41.4 million, or 36.1%, to $156.1 million as compared to $114.7 million for the three months ended March 31, 2025.

Net organic sales represent net sales from our existing businesses for comparable periods and exclude net sales from acquisitions. We include net sales from new acquisitions in net organic sales from the 13th-month after the acquisition on a comparative basis with the prior period. Net acquisition sales for the three months ended March 31, 2026 represent net sales from acquisitions that were completed in 2025 and 2026 for which there are no comparable net sales during the prior year. We believe this measure provides an understanding of underlying sales trends as it provides net sales comparisons on a consistent basis. We do not believe our net sales are subject to significant seasonal variations. See Note 2, Acquisitions, of the Notes to Condensed Consolidated Financial Statements for further information on the Company's acquisition activities.

Net Organic Sales

Net organic sales for the three months ended March 31, 2026 increased $13.0 million or 11.4%, to $127.7 million as compared to $114.7 million for the three months ended March 31, 2025. The increase in net organic sales was primarily related to increases in OEM total commercial sales ($7.8 million, an increase of 22.0%), aftermarket total commercial sales ($6.2 million, an increase of 14.1%), and sales of non-aerospace products ($3.0 million, an increase of 46.4%), partially offset by a decline in defense sales ($4.0 million, a decrease of 13.9%). The increase in OEM commercial sales is driven by the increased production rates and deliveries for both narrow-body and wide-body aircraft. The increase in aftermarket total commercial sales was attributable to increases in commercial air travel demand. The increase in sales of non-aerospace products was primarily driven by higher sales of components for industrial gas-turbines. The decrease in defense sales was primarily attributable to the variability of revenue distribution for defense-related products, which can vary significantly from period to period.

Net Acquisition Sales

Net acquisition sales of $28.4 million for the three months ended March 31, 2026 are made up of LMB which was acquired on December 23, 2025 and Harper Engineering which was acquired on January 21, 2026. This represents 24.7% of the increase in total net sales for the three months ended March 31, 2026 compared to the three months ended March 31, 2025.

Gross Profit and Cost of Sales

Cost of sales for the three months ended March 31, 2026 increased $21.9 million, or 39.8%, to $76.8 million compared to $54.9 million for the three months ended March 31, 2025. Cost of sales and the related percentage of net sales for the three months ended March 31, 2026 and 2025 were as follows (in thousands except for percentages):

(1) NM - not meaningful.

Cost of sales for the three months ended March 31, 2026 increased 1.3% as a percentage of net sales to 49.2% from 47.9% in the comparable period last year. This increase in cost of sales is primarily attributable to the recognition of inventory step-up related to the LMB and Harper Engineering acquisitions, and higher amortization expense for intangible and other long-term assets, partially offset by our operating leverage and execution of our strategic value drivers.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased by $11.4 million to $44.5 million, or 28.5% as a percentage of net sales, for the three months ended March 31, 2026 from $33.1 million, or 28.9% as a percentage of net sales, for the three months ended March 31, 2025. Selling, general and administrative expenses and the related percentage of net sales for the three months ended March 31, 2026 and 2025 were as follows (amounts in thousands except for percentages):

(1) NM - not meaningful.

Selling, general and administrative expenses decreased by 0.4% as a percentage of net sales for the three months ended March 31, 2026 when compared to the same period in 2025. This was primarily driven by the leveraging of fixed costs partially offset by increased amortization of intangible assets as a result of the LMB and Harper Engineering acquisitions.

Transaction Expenses

Transaction expenses for the three months ended March 31, 2026 and 2025 were $1.2 million and $0.5 million, respectively. This increase is primarily related to the acquisition of Harper Engineering that was consummated in January 2026. Transaction costs can fluctuate depending on the size and number of acquisitions in each year.

Operating Income

Operating income for the three months ended March 31, 2026, was $33.5 million, or 21.5% as a percentage of net sales, compared to $26.1 million, or 22.8% as a percentage of net sales for the three months ended March 31, 2025. The increase in operating income is due to the factors discussed above.

Interest Expense

Interest expense for the three months ended March 31, 2026 increased $12.2 million, to $18.7 million compared to $6.5 million for the three months ended March 31, 2025. This increase was attributable to interest on borrowings associated with the acquisitions of LMB in December 2025 and Harper Engineering in January 2026.

Income Tax Provision

The income tax provision for the three months ended March 31, 2026 was $3.7 million compared to $4.4 million for the three months ended March 31, 2025. This decrease was primarily driven by lower income before income taxes for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025.

Net Income

Net income for the three months ended March 31, 2026 was $11.1 million, or 7.1% as a percentage of net sales, compared to net income for the three months ended March 31, 2025 of $15.3 million, or 13.4% as a percentage of net sales. The results for the three months ended March 31, 2026 were negatively impacted by the increases in interest expense, amortization of intangible and other long-term assets, and recognition of inventory step-up attributable to the acquisitions of LMB and Harper Engineering.

Liquidity and Capital Resources

The following table summarizes our capitalization as of March 31, 2026 and December 31, 2025 (in thousands, unless otherwise indicated):

Our principal historical liquidity requirements have been for acquisitions, capital expenditures, servicing indebtedness and working capital needs. We fund our investing activities primarily from cash provided by our operating and financing activities. As of March 31, 2026, we had availability of $35 million of a delayed draw term loan commitment and a $50 million revolving line of credit. Based on our current outlook, we believe that net cash provided by operating activities and available borrowings under our Credit Agreement will be sufficient to fund our cash requirements for at least the next twelve months. As we continue to expand our business, including by any acquisitions we may make, we may in the future require additional working capital for increased costs. See "Credit Agreement" (below) for additional detail regarding our financing activities.

Operating Activities

Net cash provided by operating activities in the three months ended March 31, 2026 and 2025 was $30.9 million and $28.4 million, respectively. The $2.5 million increase was primarily driven by higher noncash items included in net income partially offset by an increase in working capital.

Investing Activities

Net cash used in investing activities in the three months ended March 31, 2026 of $254.0 million was principally attributable to the acquisition of Harper Engineering. Net cash used in investing activities in the three months ended March 31, 2025 of $1.8 million related to capital expenditures.

Financing Activities

Net cash provided by financing activities in the three months ended March 31, 2026 of $233.5 million principally related to borrowings under our Credit Agreement in connection with the acquisition of Harper Engineering. Net cash used in financing activities in the three months ended March 31, 2025 of $0.1 million was related to financing leases.

Credit Agreement

The Company's long-term debt consists primarily of borrowings under its Credit Agreement.

On August 1, 2025, the Credit Agreement was amended to reduce the applicable margin by 0.5%. At the Company's election, interest on loans will accrue at the SOFR rate plus the applicable margin of 4.25% or at the base rate plus the applicable margin of 3.25% as long as the Company maintains a leverage ratio of less than 5.5 to 1.

On November 25, 2025, the Credit Agreement was amended to increase the Delayed Draw Term Loans commitment by an aggregate principal amount of $175 million for a total Delayed Draw Term Loans commitment in an aggregate principal amount equal to $275 million. In addition, the availability period of the Delayed Draw Term Loans commitment was extended to September 30, 2026.

On December 23, 2025, the Credit Agreement was amended to make available to the Company an incremental term loan in an aggregate principal amount equal to $445 million for purposes of (i) paying a portion of the consideration for the LMB acquisition, (ii) financing the payment of LMB debt, (iii) paying fees and expenses incurred in connection with the foregoing, and (iv) otherwise to fund working capital and general corporate purposes.

On January 21, 2026, the Company drew down $240 million of the available Delayed Draw Term Loans commitment in connection with the Harper Engineering acquisition.

At March 31, 2026, there was $964.7 million outstanding under the Credit Agreement, and there remained availability of $35 million in delayed draw term loan commitments and $50 million in revolving line of credit.

Other Obligations and Commitments

We have future obligations under various contracts relating to debt and interest payments, finance and operating leases and our post-retirement benefit plan. During the three months ended March 31, 2026, there were no material changes to these obligations, other than the contingent purchase consideration that may be paid to the sellers of Harper Engineering if certain financial targets for the years 2026 to 2031 are achieved, as discussed in Note 2, Acquisitions, of the Notes to Condensed Consolidated Financial Statements. For a description of our other obligations and commitments, see our consolidated financial statements reported in the Company's Annual Report on Form 10-K for the year ended December 31, 2025.

Off-Balance Sheet Arrangements

As of March 31, 2026, we did not have any off-balance sheet arrangements, as defined in Regulation S-K, that have or are reasonably likely to have a current or future effect on our financial condition, results of operations, or cash flows.

Critical Accounting Estimates

Our condensed consolidated unaudited financial statements have been prepared in conformity with U.S. GAAP for interim financial statements and include the accounts of the Company and its subsidiaries. Often, management's judgment is needed in the selection and application of certain accounting policies and methods. However, investors are cautioned that the sensitivity of financial statements to these methods, assumptions and estimates could create materially different results under different conditions or using different assumptions.

A complete and comprehensive discussion of our most critical accounting policies that require management to make judgments about matters that are inherently uncertain was included in Management's Discussion and Analysis of Financial Condition and Results of Operations- Critical Accounting Estimates disclosed in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2025 which was filed on March 2, 2026. Refer to Note 1, Basis of Presentation, of the Notes to Condensed Consolidated Financial Statements included herein for updates to disclosures of accounting standards recently adopted or required to be adopted in the future.

Non-GAAP Financial Measures

We present below certain financial information based on our EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin. References to "EBITDA" mean earnings before interest, taxes, depreciation and amortization, references to "Adjusted EBITDA" mean EBITDA plus, as applicable for each relevant period, certain adjustments as set forth in the reconciliations of net income to EBITDA and Adjusted EBITDA, and references to "Adjusted EBITDA Margin" refer to Adjusted EBITDA divided by net sales. EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin are not measurements of financial performance under U.S. GAAP. We present EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin because we believe they are useful indicators for evaluating operating performance. In addition, our management uses Adjusted EBITDA to review and assess the performance of the management team in connection with employee incentive programs and to prepare its annual budget and financial projections. Moreover, our management uses Adjusted EBITDA of target companies to evaluate acquisitions.

Although we use EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin as measures to assess the performance of our business and for the other purposes set forth above, the use of non-GAAP financial measures as analytical tools has limitations, and you should not consider any of them in isolation, or as a substitute for analysis of our results of operations as reported in accordance with U.S. GAAP. Some of these limitations are:

Because of these limitations, EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin should not be considered as measures of cash available to us to invest in the growth of our business. Management compensates for these limitations by not viewing EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin in isolation and specifically by using other U.S. GAAP measures, such as net sales and operating profit, to measure our operating performance. EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin are not measurements of financial performance under U.S. GAAP, and they should not be considered as alternatives to net income or cash flow from operations determined in accordance with U.S. GAAP. Our calculations of EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin may not be comparable to the calculations of similarly titled measures reported by other companies.

The following table sets forth a reconciliation of net income to EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin for the three months ended March 31, 2026 and 2025 (in thousands unless otherwise indicated):

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company's market risks are described more fully within Quantitative and Qualitative Disclosures About Market Risk in Part II, Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2025. These market risks have not materially changed for the three months ended March 31, 2026.

Item 4. Controls and Procedures

As of March 31, 2026, the Company carried out an evaluation, under the supervision and with the participation of its management, including its President, Chief Executive Officer, and Executive Co-Chairman (Principal Executive Officer) and Treasurer and Chief Financial Officer (Principal Financial Officer), of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based upon that evaluation, the President, Chief Executive Officer, and Executive Co-Chairman and the Treasurer and Chief Financial Officer concluded that the disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified by the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to management, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, the Company's management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in designing and evaluating the controls and procedures.

As permitted by the Securities and Exchange Commission, companies are allowed to exclude acquisitions from their assessment of internal control over financial reporting during the first year of an acquisition and management elected to exclude LMB and Harper Engineering from its evaluation of internal control over financial reporting as of March 31, 2026. See Note 2, Acquisitions, of the Notes to Condensed Consolidated Financial Statements for additional information.

Changes in Internal Control over Financial Reporting

There have been no changes in the Company's internal control over financial reporting that occurred during the three months ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II-OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the risk factors disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Securities Trading Plans of Directors or Executive Officers

(c) During the three months ended March 31, 2026, none of our directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934, as amended) adopted, terminated or modified a Rule 10b5-1 trading arrangement or any "non-Rule 10b5-1 trading agreement" (as defined in Item 408(c) of Regulation S-K).