Annual Report for Fiscal Year Ending May 2, 2026 (Form 10-K)

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations is based upon our consolidated financial statements, which have been prepared in accordance with GAAP. You should read the following discussion and analysis in conjunction with our consolidated financial statements and related notes included in this Annual Report. This discussion and analysis of our financial condition and results of operations also contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements because of a variety of factors, including those set forth under Item 1A, "Risk Factors" of this Annual Report. We undertake no duty to update any such forward-looking statements to conform to actual results or changes in our expectations.

Executive Overview

Our Business

We are a leading global supplier of custom engineered solutions with sales, engineering, and manufacturing locations in North America, Europe, the Middle East, and Asia. We design, engineer, and manufacture mechatronic products for Original Equipment Manufacturers ("OEMs") and tiered suppliers across mobility, industrial, and commercial markets. Our capabilities include power distribution, including busbars, smart connect systems, battery disconnect units, and integrated circuit boards; as well as user interface components, specialized light-emitting diode ("LED") lighting solutions, and sensor applications.

Our products are found in the end markets of transportation (including automotive, commercial vehicle, e-bike, aerospace, bus and rail), cloud computing and data center infrastructure, and construction equipment. Our business is managed on a segment basis, with those segments being Automotive, Industrial and Interface. In the fourth quarter of fiscal 2026, we divested our dataMate business and the consumer appliance business is winding down as programs roll-off, both of which are included in our Interface segment. We reported a fourth segment, Medical, through fiscal 2024. For more information regarding the business and products of these segments, see Item 1, "Business" of this Annual Report.

Trends Affecting Our Business

The following trends have significantly affected and may continue to affect our business, financial condition and results of operations. See the risk factors identified under Item 1A, "Risk Factors" of this Annual Report for more information.

Trade Policy/Tariffs

We are exposed to market risk from duties assessed on raw materials, component parts, and finished goods imported into the U.S. Beginning in 2025, the U.S. implemented new tariffs across multiple jurisdictions in which we operate, including broad country-level measures and product-specific tariffs affecting light and commercial vehicles, component parts, steel and aluminum, and other key inputs we source to manufacture our parts. These actions prompted retaliatory measures by certain trading partners and the long-term state of global trade policy remains unsettled.

Given our manufacturing operations across multiple jurisdictions, including Canada, China, Egypt, Europe, and Mexico, the continuation or expansion of tariffs and other trade barriers could increase input costs, pressure margins or affect customer demand. During fiscal 2026, we mitigated these effects through a variety of strategies, including negotiated price adjustments and ongoing cost recovery arrangements with our customers, as well as supply chain optimization initiatives. To the extent similar mitigation efforts are insufficient, new or expanded tariffs could have a material adverse effect on our results of operations, financial position, and cash flows.

Macroeconomic Conditions

The global economy continues to experience volatile disruptions including to the commodity, labor and transportation markets, arising from a combination of geopolitical events and various economic and financial factors. These disruptions have affected our operations and may continue to affect our business, financial condition and results of operations. As a result of continued inflation, we have implemented measures to mitigate certain adverse effects of higher costs. However, we have been unable to fully mitigate or pass through the increases in our costs to our customers, which will likely continue in the future.

Electrification

Our business in the future will be affected by the broad trend of electrification. The adoption of EVs has been slower than anticipated, in light of recent U.S. government policy changes, including the termination of certain consumer tax incentives for EV purchases and certain of our customers have announced shifts to their EV strategies. As a result of these changes in EV consumer demand, we may experience production inefficiencies, including underutilized capacity and workforce disruptions, particularly if we are unable to redeploy excess capacity, which could affect our financial condition, results of operations, and cash flows in the future.

Global Supply Chain Disruptions

Although we saw improvements in our supply chain in fiscal 2026, including easing of the worldwide semiconductor supply shortage, new supply chain disruptions may occur in the future. In addition, we have experienced, and may continue to experience, business interruptions, including customer shutdowns and increased material and logistics costs and labor shortages. Changes in government regulations in areas including, but not limited to, trade and tariff regulations as noted above, could also increase our costs.

The US-Israeli strikes in Iran and the Iranian retaliatory strikes in the Middle East have also affected the global economy and given rise to potential global security issues that may adversely affect international business and economic conditions. This conflict in the Middle East may cause additional disruption in the supply chains, including logistics issues and inflationary challenges, which may adversely affect our business and results of operations. Additionally, certain of our customers and suppliers may be negatively affected by these events, which in turn may negatively affect the markets where we do business.

We continue to work closely with suppliers and customers to minimize the potential adverse effects from global supply chain disruptions. However, if we are not able to mitigate any direct or indirect supply chain disruptions, this may have a material adverse effect on our financial condition, results of operations and cash flows.

Consolidated Results of Operations

Our fiscal year ends on the Saturday closest to April 30 of the following year, typically resulting in a 52-week year, but occasionally giving rise to an additional week, resulting in a 53-week year. The fiscal year ended May 2, 2026 was a 52-week fiscal year. The fiscal year ended May 3, 2025 was a 53-week fiscal year. The fiscal year ended April 27, 2024 was a 52-week fiscal year. A detailed comparison of our results of operations between fiscal 2025 and fiscal 2024 can be found in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our fiscal 2025 Annual Report on Form 10-K filed with the SEC on July 9, 2025.

The table below compares our results of operations between fiscal 2026 and fiscal 2025:

Net sales

Net sales decreased $28.9 million, or 2.8%, to $1,019.2 million in fiscal 2026, compared to $1,048.1 million in fiscal 2025. Foreign currency translation increased sales by $36.3 million. Excluding the effects of foreign currency translation, net sales decreased $65.2 million. The decrease was driven by program roll-offs in the Automotive and Interface segments, partially offset by customer recoveries of $22.5 million in the Automotive segment and higher sales volume in the Industrial segment. Additionally, there was one less week within fiscal 2026 as compared to fiscal 2025.

Cost of products sold

Cost of products sold decreased $67.7 million, or 7.7%, to $817.0 million (80.2% of net sales) in fiscal 2026, compared to $884.7 million (84.4% of net sales) in fiscal 2025. Foreign currency translation increased cost of products sold by $26.3 million. Excluding foreign currency translation, cost of products sold decreased $94.0 million. The decrease was primarily due to lower sales volume and product mix, improved operational efficiencies, including material, scrap, and freight, and lower inventory adjustments. Restructuring and impairment charges included within cost of products sold were $0.8 million in fiscal 2026, compared to $1.1 million in fiscal 2025.

Gross profit margin

Gross profit margin was 19.8% of net sales in fiscal 2026, compared to 15.6% of net sales in fiscal 2025. The increase in gross profit margin was primarily a result of customer recoveries and improved operational efficiencies in fiscal 2026.

Selling and administrative expenses

Selling and administrative expenses increased $6.4 million, or 3.9%, to $170.3 million (16.7% of net sales) in fiscal 2026, compared to $163.9 million (15.6% of net sales) in fiscal 2025. Foreign currency translation increased selling and administrative expenses by $3.1 million. Excluding foreign currency translation, selling and administrative expenses increased $3.3 million. The increase was primarily the result of higher employee compensation costs and restructuring charges, partially offset by lower professional fees.

Restructuring and impairment charges included within selling and administrative expenses were $4.2 million in fiscal 2026, compared to $1.6 million in fiscal 2025. For fiscal 2026, restructuring and asset impairment charges included $1.1 million in asset impairments associated with the relocation of our corporate headquarters. Additionally, there was $2.8 million of expenses incurred for transaction costs and other strategic initiatives.

Professional fees in fiscal 2025 included $9.8 million for consulting and interim executive services provided by AlixPartners.

Amortization of intangibles

Amortization of intangibles decreased $0.3 million, or 1.3%, to $23.1 million in fiscal 2026, compared to $23.4 million in fiscal 2025. The decrease was a result of certain intangible assets being fully amortized in fiscal 2026.

Interest expense, net

Interest expense, net was $23.3 million in fiscal 2026, compared to $22.0 million in fiscal 2025. The increase was primarily due to the unfavorable effects of foreign exchange rates on the euro denominated interest.

Other expense (income), net

Other income, net was $3.8 million in fiscal 2026, compared to other expense, net of $4.2 million in fiscal 2025. In the fourth quarter of fiscal 2026, we divested our dataMate business and recognized a gain on the sale of $11.2 million. Net foreign exchange loss was $7.7 million in fiscal 2026, compared to $5.5 million in fiscal 2025. In addition, other income, net includes non-cash charges for unamortized debt issuance costs which were $0.6 million for fiscal 2026 compared to $1.2 million for fiscal 2025.

Income tax expense (benefit)

Income tax expense was $25.0 million in fiscal 2026, compared to an income tax expense of $12.5 million in fiscal 2025. The effective tax rate in fiscal 2026 differs from the U.S. federal statutory tax rate of 21% primarily due to an increase in a valuation allowance for deferred tax assets, an unfavorable effect from global intangible low-tax income, and Pillar 2 top-up tax. The effective tax rate in fiscal 2025 differs from the U.S. federal statutory tax rate of 21% primarily due to an increase in a valuation allowance for deferred tax assets and an unfavorable impact from global intangible low-tax income, partially offset by a decrease in tax reserves.

Net loss

Net loss was $35.7 million in fiscal 2026, compared to $62.6 million in fiscal 2025. The net loss was attributable to the aforementioned items.

Operating Segments

Automotive

Net sales

Automotive segment net sales decreased $41.2 million, or 8.1%, to $467.7 million in fiscal 2026, compared to $508.9 million in fiscal 2025. Excluding foreign currency translation, net sales decreased $59.3 million. There was one less week within fiscal 2026 as compared to fiscal 2025.

Net sales in North America decreased $49.0 million to $188.1 million in fiscal 2026, compared to $237.1 million in fiscal 2025. The decrease was due to program roll-offs, partially offset by customer recoveries of $22.5 million and new program launches. Net sales in EMEA increased $7.0 million to $246.5 million in fiscal 2026, compared to $239.5 million in fiscal 2025. Excluding foreign currency translation, net sales in EMEA decreased $10.4 million primarily due to lower sales volumes of sensor products. Net sales in Asia increased $0.8 million, or 2.5%, to $33.1 million in fiscal 2026, compared to $32.3 million in fiscal 2025. Excluding foreign currency translation, net sales in Asia increased $0.1 million.

Gross profit

Automotive segment gross profit increased $23.1 million to $27.8 million in fiscal 2026, compared to $4.7 million in fiscal 2025. Gross profit margins increased to 5.9% in fiscal 2026, from 0.9% in fiscal 2025. Excluding the effects of foreign currency translation, gross profit increased $18.9 million. The increase in gross profit was due to customer recoveries of $22.5 million, lower adjustments to inventory, and improved operational efficiencies, which was offset by program roll-offs.

Loss from operations

Automotive segment loss from operations was $30.1 million in fiscal 2026, compared to $47.7 million in fiscal 2025. Excluding the effects of foreign currency translation, loss from operations decreased $15.3 million. The increase was primarily due to higher gross profit and lower selling and administrative expenses.

Industrial

Net sales

Industrial segment net sales increased $36.9 million, or 7.6%, to $524.3 million in fiscal 2026, compared to $487.4 million in fiscal 2025. Excluding foreign currency translation, net sales increased $18.7 million. The increase was due to higher sales volumes for power distribution products and higher volumes for lighting products in the off-highway market, partially offset by lower sales volumes for lighting products in the commercial vehicle market.

Gross profit

Industrial segment gross profit increased $23.2 million to $167.4 million in fiscal 2026, compared to $144.2 million in fiscal 2025. Gross profit margins increased to 31.9% in fiscal 2026, compared to 29.6% in fiscal 2025. Excluding foreign currency translation, gross profit increased $17.3 million. Gross profit improved due to higher sales volumes and improved operational efficiencies, including material, scrap, and freight.

Income from operations

Industrial segment income from operations increased $24.6 million to $114.6 million in fiscal 2026, compared to $90.0 million in fiscal 2025. The increase was primarily due to higher gross profit and lower selling and administrative expenses.

Interface

Net sales

Interface segment net sales decreased $24.6 million, or 47.5%, to $27.2 million in fiscal 2026, compared to $51.8 million in fiscal 2025. The decrease in net sales was primarily due to lower sales volumes due from program roll-off as the consumer appliance business winds down. In the fourth quarter of fiscal 2026, we divested our dataMate business.

Gross profit

Interface segment gross profit decreased $6.2 million to $6.5 million in fiscal 2026, compared to $12.7 million in fiscal 2025. Gross profit margin decreased to 23.9% in fiscal 2026, from 24.5% in fiscal 2025. The decrease in gross profit margins was primarily due to lower sales volumes and product mix.

Income from operations

Interface segment income from operations decreased $5.3 million, or 51.5%, to $5.0 million in fiscal 2026, compared to $10.3 million in fiscal 2025. The decrease was primarily due to lower gross profit.

Financial Condition, Liquidity and Capital Resources

Our liquidity requirements are primarily to fund our business operations, including capital expenditures and working capital requirements, as well as to fund debt service requirements and dividends approved by our board. We continue to evaluate opportunities to refine our portfolio and/or geographic footprint. Our primary sources of liquidity are cash flows from operations, existing cash balances and borrowings under our senior secured credit agreement. We believe our liquidity position will be sufficient to fund our existing operations and current commitments for at least the next twelve months. However, our ability to do so depends upon a number of operational and economic factors, many of which are beyond our control. If economic conditions remain affected for longer than we expect due to supply chain disruptions, inflationary pressure or other geopolitical risks, or if we are unable to maintain compliance with our debt covenants, our liquidity position could be severely affected.

Our revolving credit facility matures on October 31, 2027. While we currently intend to refinance or extend our obligations under this revolving credit agreement, there can be no assurance that we will be able to do so on favorable terms. Any refinancing or extension may result in higher interest expense, more restrictive covenants or the requirement to pledge additional collateral. If we are unable to refinance or extend these maturities, or if refinancing is only available on unfavorable terms, our liquidity position could be materially weakened, which could limit our ability to fund operations, execute our business strategy, or meet other obligations as they come due.

At May 2, 2026, we had $139.6 million of cash and cash equivalents, of which $56.6 million was held in subsidiaries outside the U.S. Cash held by these subsidiaries is used to fund operational activities and can be repatriated, primarily through the payment of dividends and the repayment of intercompany loans, without creating material additional income tax expense. Subsequent to May 2, 2026, we elected to make a non-mandatory prepayment of $20.0 million on our outstanding borrowings under the Amended Credit Agreement using cash on hand.

Repurchases of Common Stock

On March 31, 2021, as subsequently amended on June 16, 2022, the Board of Directors authorized the purchase of up to $200.0 million of our outstanding common stock through June 14, 2024 (the "2021 Buyback Authorization"). On June 13, 2024, the Board of Directors authorized a new share buyback authorization, commencing on June 17, 2024, for the purchase of up to $200.0 million (the "2024 Buyback Authorization") of our outstanding common stock through June 17, 2026. Purchases could have been made on the open market, in private transactions or pursuant to purchase plans designed to comply with Rule 10b5-1 of the Securities Exchange Act of 1934. As of May 2, 2026, a total of 3,553,961 shares had been purchased under the 2021 Buyback Authorization at a total cost of $134.6 million since the commencement of that authorization. As of May 2, 2026, $200.0 million remained available under the 2024 Buyback Authorization to repurchase shares. The 2024 Buyback Authorization expired on June 17, 2026.

Amended Credit Agreement

On October 31, 2022, the Company entered into a Second Amended and Restated Credit Agreement (the "Credit Agreement") among the Company, Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, and the Lenders and other parties named therein. On March 6, 2024, the Company entered into a First Amendment to Second Amended and Restated Credit Agreement (the "First Amendment") and on July 9, 2024, the Company entered into a Second Amendment to Second Amended and Restated Credit Agreement and First Amendment to Second Amended and Restated Guaranty (the "Second Amendment") among the Company, Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, the other Lenders party thereto and other parties thereto.

Among other things, the Second Amendment (i) reduced the revolving credit commitments from $750 million to $500 million (which commitments were subsequently further reduced, as discussed below), (ii) granted a security interest in substantially all of the personal property of the Company and its U.S. subsidiaries that are guarantors, including 100% of the equity interests of their respective U.S. subsidiaries and 65% of the equity interests of their respective foreign subsidiaries (or such greater amount to the extent such pledge could not reasonably cause adverse tax consequences), (iii) amended the consolidated interest coverage ratio covenant for each quarter in fiscal 2025 to relax that covenant to some extent for each of those quarters, (iv) amended the consolidated leverage ratio covenant for the quarter ending July 27, 2024 and each subsequent fiscal quarter to relax that covenant to some extent for each of those quarters, (v) amended certain interest rate provisions, (vi) added a requirement to provide monthly financial statements to the lenders through the period ending August 2, 2025, (vii) decreased the general basket exceptions to certain covenants

restricting certain investments by, liens on and indebtedness of the Company and its subsidiaries for specified periods of time, (viii) increased, for fiscal 2025, the general basket exception to a covenant restricting certain dispositions of property by the Company and its subsidiaries, (ix) added an "anti-cash hoarding" requirement, applicable during the period from the effective date of the Second Amendment until the earlier to occur of (a) the delivery of financial statements and a compliance certificate for the fiscal quarter ending August 2, 2025 and (b) the delivery of compliance certificates for two consecutive fiscal quarters demonstrating that our consolidated leverage ratio as of the last day of such fiscal quarters was less than 3.00:1.00, that if we have cash on hand in the U.S. (subject to certain exceptions) of more than $65 million for 10 consecutive business days, we shall prepay the indebtedness under the credit facility by the amount of such excess and (x) made certain other changes to the investment, restricted payment and indebtedness baskets.

On July 7, 2025, the Company entered into a Third Amendment to Second Amended and Restated Credit Agreement (the "Third Amendment") among the Company, Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, the other Lenders party thereto and other parties thereto. Among other things, the Third Amendment (i) reduced the revolving credit commitments from $500 million to $400 million, (ii) eliminated the Company's option to increase the revolving credit commitments and/or add one or more tranches of term loans under the credit facility from time to time subject to certain limitations and conditions including approval of certain lenders, (iii) amended the consolidated interest coverage ratio covenant for the quarters ending August 2, 2025, November 1, 2025, January 31, 2026 and May 2, 2026 to relax that covenant to some extent for each of those quarters, (iv) amended the consolidated leverage ratio covenant for the quarters ending August 2, 2025, November 1, 2025, January 31, 2026, May 2, 2026 and August 1, 2026 to relax that covenant to some extent for each of those quarters, (v) amended the definition of "Consolidated EBITDA," to include an add back for a portion of the inventory write-down taken in the fourth quarter of fiscal 2025, (vi) increased the interest rate during the period from July 7, 2025 to the date that financial statements and a compliance certificate are delivered for the fiscal quarter ending October 31, 2026 (such period, the "Third Amendment Period"), (vii) changed the commitment fee payment during the Third Amendment Period, (viii) extended, through the maturity date, the requirement to provide monthly financial statements to the lenders, (ix) restricted or decreased, during the Third Amendment Period, the amount of certain exceptions to covenants restricting liens on, investments by and indebtedness of the Company and its subsidiaries, (x) limited to $2.5 million, in any fiscal quarter during the Third Amendment Period, the general basket exception to a covenant restricting certain restricted payments (including dividends) by the Company and its subsidiaries, while allowing under that general basket exceptions up to an aggregate of $25 million of restricted payments during any other period, (xi) extended, through the maturity date, an "anti-cash hoarding" requirement contained in the Second Amendment such that if we have cash on hand in the U.S. (subject to certain exceptions) of more than $65 million for 10 consecutive business days, we will be required to prepay the indebtedness under the credit facility by the amount of such excess, (xii) eliminated, during the Third Amendment Period, the investment, restricted payment and indebtedness baskets that had allowed for unlimited investments, restricted payments and indebtedness, as applicable, so long as (among other requirements) the Company met certain pro forma consolidated leverage ratio tests and (xiii) waived any default or event of default that may have occurred due to non-compliance with the consolidated interest coverage ratio covenant and the consolidated leverage ratio covenant for the fiscal year ended May 3, 2025 as calculated using the definition of "Consolidated EBITDA" that was in effect before giving effect to the Third Amendment.

As of August 2, 2025, the Company was not in compliance with a covenant restricting certain restricted payments (including dividends) by the Company and its subsidiaries contained in the Credit Agreement (as amended by the First Amendment, the Second Amendment and the Third Amendment) for the quarter ended August 2, 2025. On September 8, 2025, the Company entered into a Waiver Letter (the "Waiver Letter") among the Company, Bank of America, N.A., as Administrative Agent, and the other Lenders party thereto. Among other things, the Waiver Letter (i) acknowledged that an event of default under the Credit Agreement (as amended by the First Amendment, the Second Amendment and the Third Amendment) occurred as the result of the Company making approximately $2.8 million of restricted payments during the quarter ended August 2, 2025, which was in excess of the $2.5 million general basket exception to a covenant restricting certain restricted payments (including dividends) by the Company and its subsidiaries during the quarter ended August 2, 2025, (ii) reduced, for the quarter ending November 1, 2025, the general basket exception to a covenant restricting certain restricted payments (including dividends) by the Company and its subsidiaries by the amount of excess restricted payments made during the quarter ended August 2, 2025 (which change reduced such basket exception from $2.5 million to approximately $2.2 million for the quarter ending November 1, 2025), and (iii) waived the acknowledged event of default.

The Credit Agreement, as amended by the First Amendment, the Second Amendment, the Third Amendment and the Waiver Letter is referred to herein as the "Amended Credit Agreement."

The Amended Credit Agreement provides for a secured multicurrency revolving credit facility of $400 million and matures on October 31, 2027.

The Second Amendment was accounted for as a debt modification, which resulted in a non-cash loss of $1.2 million in fiscal 2025 related to the partial write-off of unamortized debt issuance costs as a result of the reduction in the credit facility size from $750 million to $500 million in the Second Amendment (subsequently reduced further in the Third Amendment). The non-cash loss was recognized in other expense, net in the Company's consolidated statement of operations. Additionally, the Company incurred debt issuance costs of $1.8 million associated with the Second Amendment which were capitalized and, along with the current unamortized debt issuance costs, are being amortized to interest expense on a straight-line basis over remaining term of the Amended Credit Agreement.

The Third Amendment was accounted for as a debt modification, which resulted in a non-cash loss of $0.6 million in fiscal 2026 related to the partial write-off of unamortized debt issuance costs as a result of the reduction in the credit facility size. The non-cash loss was recognized in other expense, net in the Company's consolidated statement of operations. Additionally, the Company incurred debt issuance costs of $1.6 million associated with the Third Amendment which were capitalized and, along with the current unamortized debt issuance costs, are being amortized to interest expense on a straight-line basis over remaining term of the Amended Credit Agreement.

Loans denominated in U.S. dollars under the Amended Credit Agreement bear interest at either (a) an adjusted base rate or (b) an adjusted term Secured Overnight Financing Rate ("SOFR") rate or term SOFR daily floating rate (in each case, as determined in accordance with the provisions of the Amended Credit Agreement) in each case plus an additional applicable rate (the "Applicable Rate") ranging (subject to the last sentence of this paragraph) between 0.375% and 2.00%, in the case of adjusted base rate loans, and between 1.375% and 3.00%, in the case of adjusted term SOFR rate loans and term SOFR daily floating rate loans. Loans denominated (a) in euros will bear interest at the Euro Interbank Offered Rate, (b) in pounds sterling will bear interest at the Sterling Overnight Index Average Reference Rate, (c) in Singapore dollars will bear interest at the Singapore Interbank Offered Rate, (d) in Canadian dollars will bear interest at the forward-looking term rate based on the Canadian Overnight Repo Rate Average and (e) in Hong Kong dollars will bear interest at the Hong Kong Interbank Offered Rate (in each case, as determined in accordance with the provisions of the Amended Credit Agreement), in each case plus an Applicable Rate ranging (subject to the last sentence of this paragraph) between 1.375% and 3.00%. The Applicable Rate is set based on the Company's consolidated leverage ratio, except that during the Third Amendment Period, the Applicable Rate shall be (x) 3.50% in the case of adjusted term SOFR rate loans, term SOFR daily floating rate loans and any loans denominated in a foreign currency and (y) 2.50% in the case of adjusted base rate loans, in each case regardless of the Company's consolidated leverage ratio.

As of May 2, 2026, the outstanding balance under the revolving credit facility was $326.4 million, which included $299.4 million (€255.3 million) of euro-denominated borrowings and $27 million of U.S. dollar denominated borrowings. The Amended Credit Agreement contains various representations and warranties, financial covenants (including covenants requiring us to maintain compliance with a minimum consolidated interest coverage ratio and a maximum consolidated leverage ratio, in each case as of the end of each fiscal quarter of the Company), restrictive and other covenants, and events of default. The covenants in the Amended Credit Agreement include an "anti-cash hoarding" requirement, as discussed above.

For further information about the Amended Credit Agreement, see Note 10, "Debt" to the consolidated financial statements included in this Annual Report. As of May 2, 2026, we were in compliance with all the covenants in the Amended Credit Agreement.

Although we currently anticipate, based on our current projections and analyses, that we will be in compliance with the amended financial covenants contained in the Amended Credit Agreement, no assurance can be given that we will be and remain in compliance with such covenants in the future. Factors that could increase our risk of future non-compliance include those identified in Item 1A, "Risk Factors" of this Annual Report.

Cash Flows

Operating activities

Net cash provided by operating activities increased $11.6 million to $38.0 million in fiscal 2026, compared to $26.4 million in fiscal 2025. The increase was due to higher cash inflows related to changes in operating assets and liabilities and lower net loss adjusted for non-cash items.

Investing activities

Net cash provided by investing activities was $1.3 million in fiscal 2026, compared to net cash used by investing activities of $32.9 million in fiscal 2025. Capital expenditures in fiscal 2026 were $22.4 million, compared to $41.6 million in fiscal 2025. In the fourth quarter of fiscal 2026, we divested the dataMate business and received cash proceeds of $15.2 million. Additionally, we received $5.3 million of cash proceeds from the sale of non-core assets in fiscal 2026 compared to $5.6 million in fiscal 2025.

In fiscal 2025, we received proceeds of $3.1 million from the settlement of a net investment hedge.

Financing activities

Net cash used by financing activities was $14.2 million in fiscal 2026, compared to $58.9 million in fiscal 2025. Cash dividends of $8.3 million were paid in fiscal 2026, compared to $20.4 million in fiscal 2025. In fiscal 2026, there were net repayments of borrowings of $2.7 million, compared to net repayments of borrowings of $30.6 million in fiscal 2025. In fiscal 2026, taxes paid related to net share settlement of equity awards was $1.4 million, compared to $4.3 million in fiscal 2025. In fiscal 2026, debt issuance costs paid were $1.6 million, compared to $1.8 million in fiscal 2025.

In fiscal 2025, cash paid for share repurchases was $1.6 million.

Contractual Obligations

The following table summarizes our significant known contractual cash obligations and commercial commitments as of May 2, 2026:

(1) Assumes the outstanding borrowings under the revolving credit facility will be repaid upon maturity of the credit agreement in October 2027.

(2) Based on interest rates in effect as of May 2, 2026 (including the interest rate swap).

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements as defined under SEC rules.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with GAAP requires that we make estimates and assumptions that can affect reported amounts and disclosures in the consolidated financial statements. In preparing our consolidated financial statements, we have made our best estimates and judgments of certain amounts included in the consolidated financial statements. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable. Due to the inherent uncertainty involved in developing estimates, actual results in future periods could differ from the original estimates. We believe that of the significant accounting policies described in Note 1, "Description of Business and Summary of Significant Accounting Policies" to the consolidated financial statements in this Annual Report, the following involve a significant level of estimation uncertainty.

Goodwill. Goodwill is tested for impairment during the fourth quarter of each year, or more frequently if events and circumstances indicate goodwill might be impaired. The assessment of impairment may first consider qualitative factors including, but not limited to, the results of prior quantitative tests performed, changes in the carrying amount of the reporting unit, recent and projected financial performance, and macroeconomic and industry conditions. We consider the qualitative factors and weight of the evidence obtained to determine if it is more likely than not that a reporting unit's fair value is less than the carrying amount.

For the quantitative assessment, we utilize either, or a combination of, the income approach and market approach to estimate the fair value of the reporting unit. The income approach uses a discounted cash flow method, and the market approach uses valuation multiples observed for the reporting unit's guideline public companies. The most significant inputs in estimating the fair value of a reporting unit under the income approach are (i) earnings before interest, taxes, depreciation and amortization ("EBITDA") margin, (ii) revenue growth rates, and (iii) the discount rate. Management's estimates of EBITDA margins and revenue growth rates take into consideration business and market conditions for the countries and markets in which the reporting unit operates. The discount rate is based on a market-participant, risk-adjusted weighted average cost of capital, which considers industry specific rates of return on debt and equity capital for a target industry capital structure, adjusted for risks associated with business size, geography and other factors specific to the reporting unit. Projected EBITDA margins and revenue growth rates, especially in the outer years of a forecast, involve a greater degree of uncertainty. Further, a future change in the discount rate, as a result of a change in economic conditions or otherwise, could result in the carrying values of the reporting units exceeding their respective fair values.

While we believe the assumptions and estimates used to determine the estimated fair values are reasonable, due to the many variables inherent in estimating fair value and the relative size of the goodwill, differences in assumptions could have a material effect on the results of our analysis.

At the beginning of the fourth quarter of fiscal 2026, we performed a quantitative goodwill impairment analysis for our Grakon Industrial and Nordic Lights reporting units. Based on this analysis, we determined that the fair value of both of these reporting units was in excess of their carrying values. The fair value of the Nordic Lights reporting unit exceeded its carrying value by more than 10%, whereas the Grakon Industrial reporting unit exceeded its carrying value by less than 10%. Refer to Note 7, "Goodwill and Intangible Assets", in our consolidated financial statements for additional information regarding our goodwill and other intangible assets.

Impairment of long-lived assets. We monitor our long-lived and definite-lived intangible assets for impairment indicators on an on-going basis. If an impairment indicator exists, we test the long-lived asset group for recoverability by comparing the undiscounted cash flows expected to be generated from the long-lived asset group to its net carrying value. If the net carrying value of the asset group exceeds the undiscounted cash flows, the asset group is written down to its fair value and an impairment loss is recognized. Even if an impairment charge is not recognized, a reassessment of the useful lives over which depreciation or amortization is being recognized may be appropriate based on our assessment of the recoverability of these assets.

The basis of a recoverability test is our annual budget and long-range plan. This includes a projection of future cash flows based on new products, awarded business, customer commitments, and independent market data, which requires us to make significant assumptions and estimates about the extent and timing of future cash flows and revenue growth rates. The key factors that affect our estimates are (i) future production estimates; (ii) customer preferences and decisions; (iii) product pricing; (iv) manufacturing and material cost estimates; and (v) product life / business retention. These estimates and assumptions are subject to a high degree of uncertainty affected by a variety of factors, including external factors such as industry and economic trends, and internal factors such as changes in our business strategy and our internal forecasts.

While we believe the projections of anticipated future cash flows and related assumptions are reasonable, differences in assumptions could have a material effect on the results of our analysis.

Income taxes. We are subject to income taxes in the U.S. and numerous foreign jurisdictions. In calculating our effective income tax rate, we make judgments regarding certain tax positions, including the timing and amount of deductions and allocations of income among various tax jurisdictions. When determining whether we will be able to realize deferred tax assets, judgment is used to evaluate the positive and negative evidence, including forecasting taxable income using historical and future operating results.

The amount of income taxes we pay is subject to ongoing audits by federal, state and foreign tax authorities. Our estimate of the potential outcome of any uncertain tax issue is subject to management's assessment of relevant risks, facts, and circumstances existing at that time. We use a more-likely-than-not threshold for financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. We record a liability for the difference between the benefit recognized and measured and tax position taken or expected to be taken on our tax return. To the extent that our assessment of such tax positions changes, the change in estimate is recorded in the period in which the determination is made.

We record a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized. We evaluate our ability to realize the tax benefits associated with deferred tax assets by assessing the adequacy of future expected taxable income, including the reversal of existing temporary differences, historical and projected operating results, and the availability of prudent and feasible tax planning strategies. As of May 2, 2026, we had a valuation allowance of $21.1 million. In the event our operating performance improves or deteriorates in a filing jurisdiction or entity, future assessments could conclude a smaller or larger valuation allowance will be needed. Due to the complexity of some of these uncertainties, the ultimate resolution may be materially different from the current estimate.

Some or all of management's judgments are subject to review by the taxing authorities. If one or more of the taxing authorities were to successfully challenge our right to realize some or all of the tax benefit we have recorded, and we were unable to realize this benefit, it could have a material adverse effect on our financial results and cash flows. Further, if we are unable to generate sufficient future taxable income, there is a material change in the actual effective tax rates, a change to the time period within which the underlying temporary differences become taxable or deductible, or if the tax laws change unfavorably, then we could be required to increase the valuation allowance against deferred tax assets, resulting in an increase in income tax expense and the effective tax rate.

New Accounting Pronouncements

For more information regarding new applicable accounting pronouncements, see Note 1, "Description of Business and Summary of Significant Accounting Policies" to the consolidated financial statements included in this Annual Report.