Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

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

The information in this Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") should be read in conjunction with the Company's condensed consolidated financial statements and the related notes set forth in Item 1 of Part I of this Quarterly Report on Form 10-Q, our MD&A set forth in Item 7 of Part II of our 2025 Annual Report on Form 10-K and our consolidated financial statements and related notes set forth in Item 8 of Part II of our 2025 Annual Report on Form 10-K. See Part II, Item 1A, "Risk Factors," below and "Cautionary Notice Regarding Forward-Looking Information," above, and the information referenced therein, for a description of risks that we face and important factors that we believe could cause actual results to differ materially from those in our Forward-Looking Statements. All amounts and percentages are approximate due to rounding and all dollars in the text are in millions, except per share amounts or where otherwise noted. When we cross-reference to a "Note," we are referring to our "Notes to Condensed Consolidated Financial Statements" included in Part I, Item 1, of this Quarterly Report on Form 10-Q, unless the context indicates otherwise. All amounts noted within the tables are in thousands and amounts and percentages are approximate due to rounding.

Overview

Our Company

We design, manufacture, and market critical electronic components, systems and solutions for customers in aerospace, defense, industrial, and data-driven markets. Understanding that our customers face increasingly complex technical challenges, Bel delivers a comprehensive portfolio of solutions including power systems, high-reliability connectors and cable assemblies, circuit protection, and networking products that enable Original Equipment Manufacturers (OEMs) to bring their innovations to market. Bel partners closely with customers to deliver both customized and standard solutions tailored to their specific applications and performance requirements. With manufacturing facilities and technical support teams worldwide, Bel serves as a strategic partner to customers who require proven reliability in demanding end markets.

Effective March 31, 2026, we realigned our organizational and reporting structure and changed the reportable segment views used by the Chief Operating Decision Maker to evaluate operating performance and allocate resources. As a result, we now operate and report results through the following two reportable segments:

	●	Aerospace, Defense & Rugged Solutions, which serves customers in aerospace, defense, space, and other ruggedized applications; and

●

Industrial Technology & Data Solutions, which serves customers in industrial, networking, and data infrastructure markets.

Our product portfolio includes power solutions, connectors and cable assemblies, circuit protection devices, and networking products. We sell standard products and provide customized solutions to meet customer specifications. We maintain manufacturing operations and engineering support capabilities in multiple geographic regions and sell our products globally. We did not incur material restructuring charges as a result of this realignment.

For comparability, prior-period segment information has been recast to conform to the current period presentation.

In the nine months ended September 30, 2026, 52% of our revenues were derived from Aerospace, Defense & Rugged Solutions and 48% from Industrial Technology & Data Solutions.

Our operating expenses are driven principally by the cost of labor where the factories that we use are located, the cost of the materials that we use and our ability to effectively and efficiently manage overhead costs. As labor and material costs vary by product line and region, any significant shift in product mix can have an associated impact on our costs of sales. Costs are recorded as incurred for all products manufactured. Such amounts are determined based upon the estimated stage of production and include materials, labor cost and fringes and related allocations of factory overhead. Our products are manufactured at various facilities in the United States, Mexico, Dominican Republic, United Kingdom, Slovakia, Israel, India and the People's Republic of China.

We have little visibility into the ordering habits of our customers and we can be subjected to large and unpredictable variations in demand for our products. Accordingly, we must continually recruit and train new workers to replace those lost to attrition and be able to address peaks in demand that may occur from time to time. These recruiting and training efforts and related inefficiencies, and overtime required in order to meet any increase in demand, can add volatility to the labor costs incurred by us.

Website Information

We routinely post important information for investors on our website, www.belfuse.com, in the "Investor Relations" section. We may use our website as a means of disclosing material, otherwise non-public information and for complying with our disclosure obligations under Regulation FD. Accordingly, investors should monitor the Investor Relations section of our website, in addition to following our press releases, SEC filings, public conference calls, presentations and webcasts. The information contained on, or that may be accessed through, our website is not incorporated by reference into, and is not a part of, this document.

Key Factors Affecting our Business

We believe that in addition to recent global tariffs and inflationary pressures on the costs of goods and services in general, as well as ongoing conflicts/political unrest including in or near the countries in which Bel operates, the key factors affecting and/or potentially affecting our results for the nine months ended September 30, 2026 and/or future results include the following:

•

Acquisition of dataMate - In March 2026, we acquired dataMate, as further disclosed in Note 2, "Acquisitions." As a result, our Industrial Technology & Data Solutions segment includes dataMate's net sales and results of operations from the date of acquisition. dataMate provides Ethernet and broadband connectivity solutions, and its results of operations may vary based on factors such as demand in industrial networking and data infrastructure markets, customer purchasing patterns, and general market conditions. During the nine months ended September 30, 2026, the Company recorded $10.7 million in sales related to the dataMate acquisition.

•

Backlog - Order backlog increased to $680.3 million at September 30, 2026, up $241.2 million, or 54.9%, from December 31, 2025, driven by growth across both operating segments including a 92.8% increase in Industrial Technology & Data Solutions and a 30.7% increase in the Aerospace, Defense & Rugged Solutions segment. The increase reflects higher levels of order activity during the period. Following our September 30, 2026 quarter-end, our order backlog increased further, amounting to $742.4 million as of October 31, 2026, reflecting continued strength in orders from our Data Solutions customers within the Industrial Technology & Data Solutions segment for requested ship dates in 2027. Backlog represents the estimated value of unfulfilled customer orders and contractual commitments; however, the timing and amount ultimately recognized as revenue are subject to various factors, including customer demand and delivery requirements, production capacity and scheduling, availability of components and other materials, supply chain conditions, program timing, product or design changes, and order or contract modifications, deferrals, rescheduling, or cancellations. Accordingly, backlog at any point in time may not be indicative of the timing or amount of future revenue.

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Product Mix - Gross margin is influenced by the mix of products sold, as material, labor, and other production costs vary across our product lines. Changes in sales volume among products, end markets, and reportable segments may result in corresponding fluctuations in gross margin. Products within our Aerospace, Defense & Rugged Solutions segment have historically generated higher margins than certain products within our Industrial Technology & Data Solutions segment, reflecting differences in product characteristics, end markets, customer requirements, and cost structures. Certain products within our Industrial Technology & Data Solutions segment may be more sensitive to changes in labor costs and foreign currency exchange rates, including fluctuations between the U.S. dollar and the Chinese renminbi. Accordingly, shifts in product, customer, end-market, or segment mix may have a favorable or unfavorable impact on our operating results and profit margins from period to period. See "Results of Operations - Summary by Operating Segment - Revenue and Gross Margin."

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Pricing and Availability of Materials - The cost and availability of raw materials, electronic components, and other inputs can affect our operating results. Prices for certain key commodities, including gold, silver, copper, and tin have generally remained elevated compared to the prior year. Prices, lead times and availability for certain semiconductors, printed circuit boards, ceramic capacitors, and other components continue to be influenced by supply chain, industry demand, geopolitical, and regulatory factors. In addition, tariffs, trade restrictions, and other trade-related measures may increase costs, disrupt supply chains, or require sourcing changes. These factors may result in higher costs, extended lead times, supply constraints, and variability in operating results. See "Global Tariffs" below.

•

Global Tariffs - On April 5, 2025, the U.S. government announced the implementation of reciprocal tariffs on imports into the United States from certain countries in which our manufacturing facilities and/or suppliers are located. On February 20, 2026, the Supreme Court of the United States issued its decision in Learning Resources, Inc. v. Trump, holding that the International Emergency Economic Powers Act ("IEEPA") does not authorize the imposition of tariffs. While this decision invalidated certain tariffs previously imposed under IEEPA, the broader implications of the ruling remain uncertain. We continue to monitor developments in U.S. trade policy, including potential legislative or executive actions that could result in the imposition of tariffs under alternative statutory authorities. Imports into the United States from Mexico are currently exempt from tariffs under the United States-Mexico-Canada Agreement ("USMCA"), as currently in force. During the nine months ended September 30, 2026, tariffs did not have a material impact on our results of operations. We continue to monitor potential impacts from changes in trade policy and may implement mitigation actions, including supply chain adjustments and pricing actions, as appropriate. We will also monitor, and may in the future consider to the extent appropriate, possible tariff refund claims, whether via the process administered by U.S. Customs and Border Protection ("CBP") or in other fora. The imposition or reinstatement of tariffs on imports into the United States could increase costs, disrupt supply chains, and/or reduce demand for our products, all or any of which could adversely affect future results of operations, including net sales and gross margins.

•

Labor Costs - Direct labor costs included in cost of sales were 7.3% of revenue for the first nine months of 2026, compared with 7.8% for the corresponding period of 2025. The decrease primarily reflected operating leverage from higher sales volumes, automation-related productivity improvements, and the transition of certain manufacturing activities from our Pingguo, PRC facility to an external subcontractor in late 2025, which shifted a portion of related costs from direct labor to materials. Minimum wage increases implemented in China during 2026 are estimated to increase annual labor costs by approximately $0.9 million. The impact during the first nine months of 2026 was largely offset by higher revenue levels. Future changes in wage rates, labor availability, productivity, subcontracting arrangements, and other workforce-related costs could increase operating expenses and affect our operating results.

•

Inflationary Pressures - Inflation and other cost pressures may affect our operating results through higher costs for raw materials, labor, freight, utilities, healthcare, and other operating expenses. We seek to mitigate these pressures through pricing actions, productivity initiatives, sourcing strategies, and other cost-management measures. Demand related to AI-enabled data center infrastructure has contributed to higher prices and longer lead times for certain components, including printed circuit boards, semiconductors, and capacitors. Geopolitical tensions and related security concerns have also contributed to volatility in energy, freight, insurance, and logistics costs. Continued or worsening inflation, component constraints, transportation or energy-market disruptions, or other supply chain disruptions could increase our costs, impair our ability to obtain materials or deliver products, and affect our operating results.

•

Impact of Foreign Currency - During the nine months ended September 30, 2026, fluctuations in foreign currency exchange rates adversely affected our results. The strengthening of the Israeli shekel, Chinese renminbi, Mexican peso and euro relative to the U.S. dollar increased labor and overhead costs by approximately $7.5 million compared to the prior-year period, including approximately $3.2 million, $3.6 million, $0.5 million and $0.4 million, respectively. We also recognized a net foreign currency transaction loss of approximately $0.9 million, primarily related to the remeasurement of foreign currency-denominated monetary assets and liabilities and the settlement of foreign currency-denominated transactions. Because a significant portion of our operations is conducted outside the United States, changes in foreign currency exchange rates can affect reported revenues, expenses, operating margins and cash flows. We utilize foreign currency forward contracts as part of our risk management strategy to mitigate certain foreign currency exposures associated with forecasted operating expenses and other foreign currency-denominated transactions; however, these activities do not fully offset the effects of exchange rate movements. As a result, unfavorable foreign currency movements partially offset the benefits of higher sales volume and other operational improvements during the period.

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Effective Tax Rate - Our effective tax rate will fluctuate based on the geographic regions in which our pretax profits are earned. Of the geographic regions in which we operate, the U.S. and Europe's tax rates are generally comparable while Asia has the lowest tax rates of our three geographical regions. See Note 12, "Income Taxes."

Results of Operations - Summary by Operating Segment

Revenue and Gross Margin

Our revenue and gross margin by operating segment for the three and nine months ended September 30, 2026 and 2025 were as follows:

		Three Months Ended																Nine Months Ended
		September 30,																September 30,
		Revenue								Gross Margin								Revenue								Gross Margin
		2026				2025				2026				2025				2026				2025				2026				2025
Aerospace, Defense & Rugged Solutions		$	106,596			$	96,298				39.6	%			41.1	%		$	316,874			$	271,252				40.7	%			40.9	%
Industrial Technology & Data Solutions			113,914				82,682				42.7	%			38.0	%			292,812				228,265				39.7	%			37.3	%
		$	220,510			$	178,980				40.9	%			39.7	%		$	609,686			$	499,517				40.0	%			39.0	%

Aerospace, Defense & Rugged Solutions:

Net sales increased by $10.3 million, or 10.7%, for the three months ended September 30, 2026, compared with the three months ended September 30, 2025. The increase was driven by higher sales volumes in rugged industrial applications. Industrial sales increased by $8.5 million, or 47.3%, and defense sales increased by $3.5 million, or 6.2%. These increases were partially offset by a decrease in commercial air sales of $1.6 million, or 7.3%, which resulted from timing of shipments.

Net sales increased by $45.6 million, or 16.8%, for the nine months ended September 30, 2026, compared with the nine months ended September 30, 2025. The increase reflected higher sales in industrial and defense applications. Industrial sales increased by $20.1 million, or 39.8%, and defense sales increased by $27.6 million, or 17.5%. These increases were partially offset by a decrease in commercial air sales of $2.0 million, or 3.2%.

Gross margin was adversely affected by unfavorable foreign currency fluctuations, including the weakening of the U.S. dollar against the Israeli shekel and Mexican peso, as well as an unfavorable product mix resulting from a higher proportion of industrial and distribution channel sales. These impacts were partially offset by improved operational efficiencies. The effect of unfavorable foreign currency fluctuations was more significant during the three-month period than during the year-to-date period.

Industrial Technology & Data Solutions

Net sales increased by $31.2 million, or 37.8%, for the three months ended September 30, 2026, compared with the three months ended September 30, 2025. The increase was driven by higher sales volumes in Data Solutions and Industrial, partially offset by lower sales in Transportation. Data Solutions sales increased by $27.4 million, or 61.5%, and Industrial sales increased by $5.1 million, or 18.1%, compared with the prior-year period. Transportation sales decreased by $1.3 million, or 12.8%, compared with the prior-year period.

Net sales increased by $64.5 million, or 28.3%, for the nine months ended September 30, 2026, compared with the nine months ended September 30, 2025. The increase reflected higher sales in Data Solutions and Industrial, partially offset by lower sales in Transportation. Data Solutions sales increased by $57.7 million, or 50.4%, and Industrial sales increased by $12.7 million, or 15.5%, compared with the prior-year period. Transportation sales decreased by $5.9 million, or 18.2%, compared with the prior-year period.

Gross margin in the 2026 periods benefited primarily from pricing actions implemented earlier in 2026, a more favorable product mix, higher sales volumes, and improved operational efficiencies, including improved absorption of direct labor and manufacturing overhead resulting from increased production levels and improved factory utilization. These favorable impacts were partially offset by unfavorable foreign currency fluctuations, reflecting the weakening of the U.S. dollar against the Chinese renminbi and the euro, which increased costs at certain manufacturing locations. The year-to-date period also included results from earlier periods with comparatively lower gross margins.

Cost of Sales

Cost of sales as a percentage of revenue for the three and nine months ended September 30, 2026 and 2025 consisted of the following:

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2026				2025				2026				2025
Material costs			32.1	%			32.2	%			31.9	%			31.2	%
Labor costs			7.0	%			7.2	%			7.3	%			7.8	%
Other expenses			20.0	%			20.8	%			20.8	%			21.9	%
Total cost of sales			59.1	%			60.3	%			60.0	%			61.0	%

Material Costs

Material costs as a percentage of net sales were generally consistent with the prior-year quarter and increased modestly on a year-to-date basis. The year-to-date increase principally reflected sales growth in products with relatively higher bill-of-material ("BOM") content, including certain power products within the Aerospace, Defense & Rugged Solutions and Industrial Technology & Data Solutions segments. These products generally contain a higher proportion of purchased components and raw materials relative to labor and overhead costs.

Material costs were also affected by higher costs for certain commodities and electronic components, and select supplier price increases. In addition, changes in the Company's manufacturing footprint, including the increased use of third-party manufacturing for certain products previously produced internally, shifted a portion of production costs from labor and overhead to purchased materials. Ongoing sourcing and cost-reduction initiatives partially offset these impacts.

Labor Costs

Labor costs as a percentage of net sales decreased in both the three- and nine-month periods ended September 30, 2026. The decrease reflected improved leverage from higher sales volumes, increased manufacturing efficiencies, and changes in the Company's production and sourcing mix, including the increased use of third-party manufacturing for certain products previously produced internally. As a result, certain costs previously reflected in direct labor are now included within material costs.

These favorable impacts were partially offset by foreign currency movements, including the strengthening of the Israeli shekel and Chinese renminbi relative to the U.S. dollar, which increased labor-related costs at certain manufacturing locations.

Other Expenses

Other expenses were $44.1 million for the three months ended September 30, 2026, compared with $37.3 million for the three months ended September 30, 2025, an increase of $6.8 million. For the nine months ended September 30, 2026, other expenses were $127.0 million, compared with $109.6 million for the corresponding 2025 period, an increase of $17.4 million.

As a percentage of net sales, other expenses decreased for both the three- and nine-month periods, reflecting the benefit of higher sales volumes and improved absorption of fixed and semi-fixed manufacturing overhead. The increase in absolute other expenses primarily reflected higher indirect labor and related benefits, repairs and maintenance, and other manufacturing support costs associated with increased production activity. These increases were partially offset by lower insurance and facility-related costs. Depreciation and amortization expense and utility costs were generally consistent with the prior-year periods.

Research and Development Expense

Research and development expenses totaled $8.8 million for the three months ended September 30, 2026, an increase of $1.3 million from $7.5 million for the three months ended September 30, 2025. The increase reflected higher personnel-related costs, including labor, fringe benefits and incentive compensation, across both the Aerospace, Defense & Rugged Solutions and Industrial Technology & Data Solutions segments.

For the nine months ended September 30, 2026, research and development expenses totaled $26.3 million, an increase of $3.4 million from $22.9 million for the nine months ended September 30, 2025. The increase similarly reflected higher personnel-related costs across both operating segments.

Selling, General and Administrative Expense

For the three months ended September 30, 2026, selling, general and administrative ("SG&A") expenses were $39.4 million, compared with $32.8 million for the three months ended September 30, 2025, an increase of $6.6 million. SG&A expenses were 17.9% of net sales in the third quarter of 2026, compared with 18.3% of net sales in the third quarter of 2025.

The increase in SG&A expenses during the third quarter period reflected higher salaries and employee-related costs of $2.3 million, resulting from increased compensation and certain onboarding-related costs. Legal and professional fees increased by $1.6 million. Recruiting and relocation costs increased by $0.6 million, and travel and entertainment expense increased by $0.5 million. SG&A expenses also increased due to higher information technology and administrative support costs.

For the nine months ended September 30, 2026, SG&A expenses were $112.5 million, compared with $93.2 million for the nine months ended September 30, 2025, an increase of $19.3 million. SG&A expenses were 18.4% of net sales in 2026, compared with 18.7% of net sales in 2025.

The increase in SG&A expenses during the nine month period reflected higher salaries and employee-related costs of $7.5 million, including annual compensation adjustments, increased headcount and certain onboarding-related costs. Legal and professional fees increased by $5.3 million, reflecting costs associated with the dataMate acquisition, higher external professional services, and overlapping audit-related costs. SG&A expenses also increased due to higher incentive compensation, travel and entertainment, recruiting and relocation, information technology, and administrative support costs.

The year-over-year increase in incentive compensation expense included approximately $1.3 million attributable to a bonus reversal recorded during the first quarter of 2025. The reversal reduced incentive compensation expense in the 2025 period and did not recur in 2026.

The decrease in SG&A expenses as a percentage of net sales reflected net sales growth that exceeded the increase in SG&A expenses, resulting in improved operating leverage during both the three- and nine-month periods.

Interest Expense

Interest expense was less than $0.1 million for the three months ended September 30, 2026, compared with $3.6 million for the three months ended September 30, 2025, a decrease of $3.6 million. The decrease primarily reflected lower average borrowings under the Company's Credit and Security Agreement during the 2026 period, including the repayment of outstanding borrowings under the Revolver. The Company had no outstanding borrowings under the Revolver at September 30, 2026. Interest expense for both periods also included the effects of the Company's 2021 interest rate swap agreements and the amortization of deferred financing costs.

For the nine months ended September 30, 2026, interest expense was $4.4 million, compared with $11.8 million for the nine months ended September 30, 2025, a decrease of $7.4 million. The decrease reflected lower average borrowings under the Company's Credit and Security Agreement during 2026 as the Company reduced and ultimately repaid amounts outstanding under the Revolver, which totaled $197.5 million at December 31, 2025. Interest expense for both periods also included the effects of the Company's 2021 interest rate swap agreements and the amortization of deferred financing costs.

For further information on the Company's outstanding debt, see "Liquidity and Capital Resources" below and Note 10, "Debt."

Interest Income

Interest income was $2.7 million for the three months ended September 30, 2026, compared with $0.2 million for the three months ended September 30, 2025, an increase of $2.5 million. The increase primarily reflected higher average cash and cash equivalent balances during the 2026 period.

For the nine months ended September 30, 2026, interest income was $4.2 million, compared with $0.8 million for the nine months ended September 30, 2025, an increase of $3.4 million. The increase similarly reflected higher average cash and cash equivalent balances during the 2026 period.

Other Income, Net

Other income, net was $4.4 million for the three months ended September 30, 2026, compared to $1.1 million for the corresponding period in 2025. The increase was driven principally by foreign currency transaction gains of $3.6 million in 2026, compared to foreign currency transaction losses of $0.3 million in 2025, reflecting period-to-period fluctuations in foreign currency exchange rates and transaction exposures. The Company also recognized a gain on the sale of a property in Hong Kong of approximately $1.0 million during the third quarter of 2026. These favorable impacts were partially offset by less favorable results from investments associated with the Company's SERP, which generated a loss of $0.1 million in 2026 compared to a gain of $0.7 million in 2025. In addition, the Company recognized $0.3 million of losses related to its investment in innolectric AG ("innolectric") during the third quarter of 2025.

For the nine months ended September 30, 2026, other income, net was $0.8 million, compared to other income, net of $11.3 million for the corresponding period in 2025. The year-over-year change was driven by foreign currency transaction losses of $0.9 million in 2026, compared to foreign currency transaction gains of $11.6 million in 2025, reflecting changes in foreign currency exchange rates and transaction exposures between periods. Gains on SERP investments were $1.1 million in both periods. The Company also recognized a gain on the sale of a property in Hong Kong of approximately $1.0 million during 2026. Additionally, the Company recognized $0.4 million of losses related to its investment in innolectric during the nine months ended September 30, 2025.

Other income, net for the three and nine months ended September 30, 2026 included an approximately $3.7 million out-of-period benefit related to previously recorded foreign currency gains and losses, as discussed in Note 9, "Derivative Instruments and Hedging Activities."

Provision for Income Taxes

The Company's effective tax rate may fluctuate based on the geographic mix of pretax earnings. Tax rates in the U.S. and Europe are generally comparable, while Asia generally has lower statutory tax rates. See Note 12, "Income Taxes."

For the three months ended September 30, 2026, the provision for income taxes was $8.3 million, compared to $5.4 million for the same period in 2025. Earnings before income taxes for the three months ended September 30, 2026, increased by $18.6 million compared to the same period in 2025, primarily due to higher income from the North America and Asia regions, partially offset by a decrease in income from the Europe region. The Company's effective tax rate for the three months ended September 30, 2026, was 17.7%, compared to 19.5% for the same period in 2025. The decrease in the effective tax rate was primarily driven by a decrease in taxes related to income from foreign subsidiaries taxed in the U.S. as part of the Tax Cuts and Jobs Act. See Note 12, "Income Taxes."

For the nine months ended September 30, 2026, the provision for income taxes was $14.8 million, compared to $17.8 million for the same period in 2025. Earnings before income taxes for the nine months ended September 30, 2026, increased by $16.7 million compared to the same period in 2025, primarily due to higher income from the North America and Asia regions, partially offset by a decrease in income from the Europe region. The Company's effective tax rate for the nine months ended September 30, 2026, was 14.5% compared to 20.8% for the same period in 2025. The decrease in the effective tax rate was attributable to a tax benefit from restricted stock vesting and the reversal of uncertain tax positions resulting from the expiration of applicable statutes of limitations, and a deferred tax benefit arising from a foreign tax rate increase that resulted in the remeasurement of certain deferred tax assets. See Note 12, "Income Taxes."

Liquidity and Capital Resources

Our principal sources of liquidity include $333.1 million of cash and cash equivalents at September 30, 2026, cash provided by operating activities, proceeds from securities offerings and borrowings available under our credit facility. We expect to use this liquidity for operating expenses, investments in working capital, capital expenditures, interest, taxes, lease and purchase obligations, pension benefit obligations, dividends, and debt obligations and other long-term liabilities. Our liquidity may also be utilized for purchases of common stock under our Repurchase Program, to fund potential acquisitions in future periods, as well as probable future cash requirements associated with the Enercon acquisition, including amounts that may become payable under contingent consideration arrangements and contractual settlement obligations related to the remaining 20% ownership interest in Enercon, as amended by the Letter Agreement. See the discussion "Liquidity and Capital Resources" appearing in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. We believe that our current liquidity position and future cash flows from operations will enable us to fund our operations, both in the next twelve months and in the longer term.

Cash Flow Summary

During the nine months ended September 30, 2026, our cash and cash equivalents increased by $275.3 million. This increase was primarily attributable to the following:

	•	net cash provided by operating activities of $66.0 million;
	•	proceeds from our underwritten offering of common stock of $441.6 million, $197.5 million of which was used to repay outstanding borrowings under the Company's Credit and Security Agreement;
	•	a payment for the acquisition of dataMate of $16.2 million;
	•	purchases of property, plant and equipment of $11.0 million;
	•	dividend payment to noncontrolling interest of $3.3 million;
	•	dividend payments to Bel shareholders of $2.7 million; and
	•	payment of contingent consideration of $3.5 million.

Future Cash Requirements

We expect foreseeable liquidity and capital resource requirements in the ordinary course to be met through existing cash and cash equivalents and anticipated cash flows from operations, as well as borrowings available under our revolving credit facility, if needed. Our material cash requirements arising in the normal course of business are outlined in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. There were no material changes to our future cash requirements during the nine months ended September 30, 2026.

In addition, the Company expects to settle the obligation associated with the remaining 20% ownership interest in Enercon by the first quarter of 2027 in accordance with the contractual settlement provisions described in Note 2, "Acquisitions." The related liability was $114.0 million as of September 30, 2026.

Credit Facility

As of September 30, 2026, the Company had no outstanding borrowings under its Revolver and had $400 million of unused borrowing capacity. See Note 10, "Debt." The Revolver matures on September 1, 2028. As of September 30, 2026, the Company was in compliance with all financial covenants, including the most restrictive covenant, the Fixed Charge Coverage Ratio.

Interest expense and related cash payments under the Revolver will vary based on amounts borrowed and applicable interest rates. Because there were no outstanding borrowings as of September 30, 2026, the Company does not currently expect material interest payments related to revolving borrowings for the remainder of 2026.

Critical Accounting Policies and Estimates

Our condensed consolidated financial statements include certain amounts that are based on management's best estimates and judgments. We base our estimates on historical experience and on various other assumptions, including in some cases future projections, that are believed to be reasonable under the circumstances. The results of these estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Different assumptions and judgments could change the estimates used in the preparation of the condensed consolidated financial statements, which, in turn, could change the results from those reported. Management evaluates its estimates, assumptions and judgments on an ongoing basis.

Based on the above, we have determined that our most critical accounting estimates are those related to business combinations, inventory valuation, goodwill and other indefinite-lived intangible assets, and those related to our pension benefit obligations. For a detailed discussion of our critical accounting estimates, refer to "Critical Accounting Estimates" in Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. There have been no material changes in our critical accounting policies, judgments and estimates, including assumptions or estimation techniques utilized, as compared to those disclosed in our 2025 Annual Report on Form 10-K.

Recent Accounting Pronouncements

The discussion of new financial accounting standards applicable to our Company is incorporated herein by reference to Note 1, "Basis of Presentation and Accounting Policies".