Quarterly Report for Quarter Ending September 26, 2025 (Form 10-Q)

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

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes and other information included elsewhere in this Quarterly Report, as well as the audited financial statements and the related notes thereto, and the discussion under "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business" included in our Annual Report on Form 10-K for the fiscal year ended March 28, 2025, filed with the SEC on May 22, 2025 (the "2025 Annual Report").

In addition to historical data, this discussion contains forward-looking statements about our business, results of operations, cash flows, financial condition and prospects based on current expectations that involve risks, uncertainties and assumptions. Our actual results could differ materially from such forward-looking statements. Factors that could cause or contribute to those differences include, but are not limited to, those identified below and those discussed in the section titled "Forward-Looking Statements" and in Part I, Item 1A. "Risk Factors" of our 2025 Annual Report, and Part II, Item 1A. "Risk Factors" of this Quarterly Report. Additionally, our historical results are not necessarily indicative of the results that may be expected for any period in the future.

We operate on a 52- or 53-week fiscal year ending on the last Friday of March. Each fiscal quarter has 13 weeks, except in a 53-week year, when the fourth fiscal quarter has 14 weeks. All references to the three- and six-month periods ended September 26, 2025 and September 27, 2024 relate to the 13- and 26-week periods ended September 26, 2025 and September 27, 2024, respectively. All references to "2026," "fiscal year 2026" or similar references relate to the 52-week period ending March 27, 2026. All references to "2025," "fiscal year 2025" or similar references relate to the 52-week period ended March 28, 2025.

Overview

We are a leading global designer, developer, fabless manufacturer and marketer of sensor integrated circuits ("ICs") and application-specific power ICs enabling the most important emerging technologies in the automotive and industrial markets. With the broadest portfolio of magnetic sensor IC solutions available, underpinned by our strong position in the automotive market, we are the leading magnetic sensor supplier worldwide based on market share. Our products are foundational to automotive and industrial electronic systems. Our sensor ICs enable our customers to precisely measure motion, speed, position and current, while our power ICs include high-temperature and high-voltage capable motor drivers, power management ICs, light emitting diode driver ICs and isolated gate drivers. We believe that our technology expertise, combined with our deep applications knowledge and strong customer relationships, enable us to develop solutions that provide more value to customers than typical ICs. Compared to a typical IC, our solutions are more integrated, intelligent and sophisticated for complex applications and easier for customers to use.

We are headquartered in Manchester, New Hampshire and have a global footprint across multiple continents. Our portfolio includes more than 1,500 products, and we ship over 1.5 billion units annually to more than 10,000 customers worldwide. During the three- and six-month periods ended September 26, 2025, we generated $214.3 million and $417.7 million in total net sales, respectively, with $6.6 million in net income and $6.6 million in net loss, respectively. During the three- and six-month periods ended
September 27, 2024, we generated $187.4 million and $354.3 million in total net sales, respectively, with $33.6 million and $51.2 million in net losses, respectively.

Other Key Factors and Trends Affecting Our Operating Results

Our financial condition and results of operations have been, and will continue to be, affected by numerous other factors and trends, including the following:

Inflation

Although inflation has moderated in recent periods, inflation rates in the markets in which we operate have increased and may continue to rise as a result of cost increases attributable to global tariff policies. Inflation in recent quarters has led us to experience higher costs, including higher labor costs, wafer and other costs for materials from suppliers, and transportation and energy costs. Our suppliers have raised their prices and may continue to raise prices, and in the competitive markets in which we operate, we may not be able to make corresponding price increases to preserve our gross margins and profitability. If inflation rates continue to rise or remain elevated for a sustained period of time, they could have a material adverse effect on our business, financial condition, results of operations and liquidity. While we have attempted to offset increases in these costs through various productivity and cost reduction initiatives, as well as adjusting our selling prices and releasing new products with improved gross margins, our ability to increase our average selling prices depends on market conditions and competitive dynamics. Given the timing of our actions compared to the timing of these inflationary pressures, there may be periods during which we are unable to fully recover the increases in our costs.

Design Wins with New and Existing Customers

Our end customers continually develop new products in existing and new application areas, and we work closely with our significant original equipment manufacturer customers in most of our target markets to understand their product roadmaps and strategies. For new products, the time from design initiation and manufacturing until we generate sales can be lengthy, typically between two and four years. As a result, our future sales are highly dependent on our continued success at winning design mandates from our customers. Further, because we expect the average sales prices ("ASPs") of our products to decline over time, we consider design wins to be critical to our future success as they help mitigate declines in ASPs. We anticipate being increasingly dependent on revenue from newer design wins for our newer products. The selection process is typically lengthy and may require us to incur significant design and development expenditures in pursuit of a design win, with no assurance that our solutions will be selected. As a result, the loss of any key design win or any significant delay in the ramp-up of volume production of a customer's products into which our product is designed could adversely affect our business. In addition, volume production is contingent upon the successful introduction and market acceptance of our customers' end products, which may be affected by several factors beyond our control.

Customer Demand, Orders and Forecasts

Demand for our products is highly dependent on market conditions in the end markets in which our customers operate, which are generally subject to seasonality, cyclicality, tariffs and other pricing increases and competitive conditions. In addition, a substantial portion of our total net sales is derived from sales to customers that purchase large volumes of our products. These customers generally provide periodic forecasts of their requirements. However, these forecasts do not commit such customers to minimum purchases, and customers can revise these forecasts without penalty. In addition, as is customary in the semiconductor industry, customers are generally permitted to cancel orders for our products within a specified period. Cancellations of orders could result in the loss of anticipated sales without allowing us sufficient time to reduce our inventory and operating expenses. In addition, changes in forecasts or the timing of orders from customers expose us to the risks of inventory shortages or excess inventory. We are currently operating in an inflationary environment for our products as a result of global tariff policies, which also have the potential to reduce end market demand in certain markets. We believe that we are emerging from an extended period in which we and other semiconductor companies experienced a downturn in market demand, primarily driven by reduced demand from customers across various markets and digestion of excess accumulated inventory. In addition, factors that cause a reduction in demand from the end users of our OEMs' or other customers' products, including as a result of increased prices resulting from global trade policies, tariffs or a recessionary environment in the markets in which we operate, may in the future continue to cause our direct customers to significantly reduce the number of products ordered from us.

Manufacturing Costs and Product Mix

Gross margin has been, and will continue to be, affected by a variety of factors, including the ASPs of our products, product mix in a given period, material costs, yields, manufacturing costs and efficiencies. We believe the primary driver of gross margin is the ASP negotiated between us and our customers relative to material costs and yields. Our pricing and margins depend on the volumes and the features of the products we produce and sell to our customers. As our products mature and unit volumes increase, we expect their ASPs to decline in the long term. We continually monitor and work to reduce the cost of our products and improve the potential value our solutions provide to our customers, as we target new design win opportunities and manage the product life cycles of our existing customer designs. We also maintain a close relationship with our suppliers and subcontractors to improve quality, increase yields and lower manufacturing costs. As a result, these declines often coincide with improvements in manufacturing yields and lower wafer, assembly, and testing costs, which offset some or all of the margin reduction that results from declining ASPs. However, we expect our gross margin to fluctuate on a quarterly basis as a result of changes in ASPs due to product mix, new product introductions, transitions into volume manufacturing and manufacturing costs. Gross margin generally decreases if production volumes are lower as a result of decreased demand as it did throughout fiscal year 2025, which leads to a reduced absorption of our fixed manufacturing costs. Gross margin generally increases when the opposite occurs.

Cyclical Nature of the Semiconductor Industry

The semiconductor industry has historically been highly cyclical and is characterized by increasingly rapid technological change, product obsolescence, competitive pricing pressures, evolving standards, short product life cycles in consumer and other rapidly changing markets and fluctuations in product supply and demand. New technology may result in sudden changes in system designs or platform changes that may render some of our products obsolete and require us to devote significant research and development resources to compete effectively. Periods of rapid growth and capacity expansion are occasionally followed by significant market corrections in which sales decline, inventories accumulate, and facilities go underutilized. During periods of expansion, our margins generally improve as fixed costs are spread over higher manufacturing volumes and unit sales. In addition, we may build inventory to meet increasing market demand for our products during these times, which serves to absorb fixed costs further and increase our gross margins. During an expansion cycle, we may increase capital spending and hiring to add to our production capacity. During periods of slower growth or industry contractions, our sales, production and productivity and margins generally decline.

Results of Operations

Three-Month Period Ended September 26, 2025 Compared to Three-Month Period Ended September 27, 2024

The following table summarizes our results of operations and our results of operations as a percentage of total net sales for the three-month periods ended September 26, 2025 and September 27, 2024.

Total net sales

Total net sales increased in the three-month period ended September 26, 2025 compared to the three-month period ended September 27, 2024. The increase was primarily driven by data center applications, medical applications, industrial automation and robotics, and e-Mobility products, which includes our advanced driver assistance systems ("ADAS"), offset by a decrease in consumer products.

Sales Trends by Market

In the fourth quarter of fiscal year 2025 during the preparation of the consolidated financial statements, the Company identified an immaterial misclassification of net sales by market, whereby customer returns and sales allowances were incorrectly classified by market between Automotive and Industrial and Other in prior periods. There was no impact to previously reported total net sales or net loss in any of the periods.

The Company assessed the materiality of the revision qualitatively and quantitatively and determined the revisions to be immaterial to the prior period interim fiscal year 2025 condensed consolidated financial statements. All prior period amounts have been revised in the table below.

The following table summarizes total net sales by market. The categorization of net sales by market is based on the characteristics of the end product and application into which our product will be designed.

Automotive net sales increased in the three-month period ended September 26, 2025 compared to the three-month period
ended September 27, 2024, primarily due to growth in e-Mobility products, which includes ADAS.

Industrial and Other net sales increased in the three-month period ended September 26, 2025 compared to the three-month period ended September 27, 2024, primarily due to increases in demand for data center applications, medical applications, and industrial automation and robotics, offset by a decrease in consumer products.

Sales Trends by Product

The following table summarizes net sales by product.

The increase in MS sales was primarily due to an increase in demand for our tunneling magnetoresistance ("TMR") sensor solutions, offset by a decrease in magnetic position products. The increase in PIC sales was primarily driven by an increase in demand for our motor products.

Sales Trends by Geographic Location

The following table summarizes net sales by geographic location based on ship-to location.

Other Asia net sales increased in the three-month period ended September 26, 2025 compared to the three-month period ended September 27, 2024, in both Automotive and Industrial and Other, primarily in data center applications, safety, comfort and convenience applications and medical applications, offset by a decrease in consumer products. Greater China net sales increased primarily driven by an increase in ADAS and components for electrified vehicles ("EV"), offset by a decrease in consumer products. Other Americas net sales increased in both Automotive and Industrial and Other applications, primarily in ADAS and clean energy. Japan net sales decreased in the Automotive, primarily in safety, comfort and convenience applications and EV, offset with an increase in data center applications. United States net sales declined in both Automotive and Industrial and Other, primarily in ADAS and broad-based industrial, offset by an increase in medical applications.

Cost of goods sold

Cost of goods sold increased in the three-month period ended September 26, 2025 compared to the three-month period ended September 27, 2024, primarily due to higher production volume in support of higher product sales and foreign currency impacts.

Cost of goods sold as a percentage of our total net sales was 53.7% and 54.3% for the three-month periods ended
September 26, 2025 and September 27, 2024, respectively. The decrease was primarily due to the increase in net sales.

Gross profit and gross margin

Gross profit increased in the three-month period ended September 26, 2025 compared to the three-month period ended September 27, 2024, primarily due to the increase in net sales and a change in product mix.

Gross margin was 46.3% and 45.7% for the three-month periods ended September 26, 2025 and September 27, 2024, respectively. The increase was primarily due to the increase in net sales and a change in product mix.

Research and development expenses

Research and development ("R&D") expenses increased in the three-month period ended September 26, 2025 compared to the comparable period in fiscal year 2025, primarily due to the increase in personnel costs, including the projected funding of the annual incentive program.

R&D expenses as a percentage of our total net sales was 23.7% and 23.2% for the three-month periods ended
September 26, 2025 and September 27, 2024, respectively. The increase was primarily due to the increase in personnel costs, including the projected funding of the annual incentive program.

Selling, general and administrative expenses

Selling, general and administrative ("SG&A") expenses increased in the three-month period ended September 26, 2025 compared to the three-month period ended September 27, 2024, primarily due to an increase in personnel costs, including the projected funding of the annual incentive program.

SG&A expenses as a percentage of our total net sales was 19.7% and 20.3% in the three-month periods ended
September 26, 2025 and September 27, 2024, respectively. The decrease as a percentage of total net sales was primarily due to the increase in net sales, partially offset by an increase in the projected funding of the annual incentive program.

Interest expense

Interest expense decreased in the three-month period ended September 26, 2025 compared to the three-month period ended September 27, 2024. The decrease is due to the voluntary payments applied to the outstanding balance of the 2025 Refinanced Loans.

Interest income

Interest income decreased in the three-month period ended September 26, 2025 compared to the three-month period ended September 27, 2024, primarily due to lower cash and cash equivalents balances.

Loss on change in fair value of forward repurchase contract

We recorded a loss on change in fair value of a forward repurchase contract in the three-month period ended
September 27, 2024, due to the various settlement dates under the Share Repurchase Agreement.

Other expense, net

The foreign currency loss recorded in the three-month period ended September 26, 2025 was primarily due to the U.S. Dollar weakening against various currencies, including the Euro and the Philippine Peso. The foreign currency gain recorded in the three-month period ended September 27, 2024 was primarily due to the U.S. Dollar strengthening against the Philippine Peso.

We recorded a net loss of $2.4 million related to our equity investment in Polar Semiconductor, LLC ("PSL") in the three-month period ended September 26, 2025. In the three-month period ended September 27, 2024, we recorded a net loss of $2.8 million as a result of the PSL Closing related to the difference between the selling price per share and its carrying amount per share and after a gain from the conversion of outstanding promissory notes that we had previously issued to PSL (the "PSL Promissory Notes") in the connection with the PSL Closing.

Income tax benefit

Income tax benefit and the effective income tax rate were approximately $9.3 million and 342.5%, respectively, in the three-month period ended September 26, 2025, compared to income tax benefit and effective income tax rate of approximately $9.5 million and 22.0%, respectively, in the three-month period ended September 27, 2024. The change in the effective tax rate for the three-month period ended September 26, 2025, compared to the three-month period ended September 27, 2024 primarily resulted from a decrease in GAAP loss before taxes and the One Big Beautiful Bill Act ("OBBB") impacts described in Note 13, "Income Taxes" to the unaudited condensed consolidated financial statements included in this Quarterly Report.

Six-Month Period Ended September 26, 2025 Compared to Six-Month Period Ended September 27, 2024

The following table summarizes our results of operations and our results of operations as a percentage of total net sales for the six-month periods ended September 26, 2025 and September 27, 2024.

Total net sales

Total net sales increased in the six-month period ended September 26, 2025 compared to the six-month period ended
September 27, 2024. The increase was primarily driven by data center applications, medical applications, industrial automation and robotics, and e-Mobility products, which includes ADAS and components for EVs, offset by a decrease in consumer products.

Sales Trends by Market

The following table summarizes total net sales by market. The categorization of net sales by market is based on the characteristics of the end product and application into which our product will be designed.

Automotive net sales increased in the six-month period ended September 26, 2025 compared to the six-month period
ended September 27, 2024, primarily due to an increase in demand for e-Mobility products, which includes ADAS and EV, partially offset by a decrease in safety, comfort and convenience applications.

Industrial and Other net sales increased in the six-month period ended September 26, 2025 compared to the six-month period ended September 27, 2024, primarily due to an increase in demand for data center applications, medical applications, and industrial automation and robotics, offset by decrease in consumer products.

Sales Trends by Product

The following table summarizes net sales by product.

The increase in MS sales was primarily due to an increase in demand for our TMR sensor solutions and magnetic speed, offset by a reduction in magnetic position products. The increase in PIC sales was primarily driven by an increase in demand for our motor products and high performance power products.

Sales Trends by Geographic Location

The following table summarizes net sales by geographic location based on ship-to location.

Other Asia net sales increased in the six-month period ended September 26, 2025 compared to the six-month period ended September 27, 2024, primarily driven by an increase in net sales of data center applications, safety, comfort and convenience applications, and medical applications, offset by a decrease in consumer products. Greater China net sales increased in Automotive, primarily in ADAS and EV, and also in industrial automation and robotics and broad-based industrial applications, offset by a decrease in consumer products. Other Americas net sales increased in both Automotive and Industrial and Other applications, primarily in ADAS and clean energy. Europe net sales increased primarily in Automotive markets, driven by ADAS and internal combustion engine, as well as growth in industrial automation and robotics, offset by decreases in consumer products, clean energy and safety, comfort and convenience applications. Japan net sales declined in Automotive, primarily in safety, comfort and convenience applications and EV, offset with an increase in data center applications. United States net sales primarily driven by a decrease in net sales of broad-based industrial and ADAS, offset by an increase in medical applications.

Cost of goods sold

Cost of goods sold increased in the six-month period ended September 26, 2025 compared to the six-month period ended September 27, 2024, primarily due to higher production volume in support of higher product sales and foreign currency impact.

Cost of goods sold as a percentage of our total net sales was 54.4% and 54.7% for the six-month periods ended
September 26, 2025 and September 27, 2024, respectively. The decrease was primarily due to the increase in net sales.

Gross profit and gross margin

Gross profit increased in the six-month period ended September 26, 2025 compared to the six-month period ended
September 27, 2024, primarily due to the increase in net sales and a change in product mix.

Gross margin was 45.6% and 45.3% for the six-month periods ended September 26, 2025 and September 27, 2024, respectively. The increase was primarily due to the increase in net sales and a change in product mix.

Research and development expenses

R&D expenses increased in the six-month period ended September 26, 2025 compared to the six-month period ended September 27, 2024, primarily due to an increase in personnel costs and an increase of the projected funding of the annual incentive program.

R&D expenses as a percentage of our total net sales was 23.3% and 25.0% for the six-month periods ended September 26, 2025 and September 27, 2024, respectively. The decrease was primarily due to the increase in net sales.

Selling, general and administrative expenses

SG&A expenses increased in the six-month period ended September 26, 2025 compared to the six-month period ended September 27, 2024, primarily due to an increase in the projected funding of the annual incentive program and outside service and personnel costs.

SG&A expenses as a percentage of our total net sales was 21.5% and 22.1% in the six-month periods ended September 26, 2025 and September 27, 2024, respectively. The decrease as a percentage of total net sales was primarily due to the increase in net sales, partially offset by an increase in the projected funding of the annual incentive program and outside service and personnel costs.

Interest expense

Interest expense decreased in the six-month period ended September 26, 2025 compared to the six-month period ended September 27, 2024, The decrease is due to the voluntary payments applied to the outstanding balance of the 2025 Refinanced Loans.

Interest income

Interest income decreased in the six-month period ended September 26, 2025 compared to the six-month period ended September 27, 2024, primarily due to lower cash and cash equivalents balances.

Loss on change in fair value of forward repurchase contract

We recorded a loss on change in fair value of a forward repurchase contract in the six-month period ended September 27, 2024, due to the various settlement dates under the Share Repurchase Agreement.

Other expense, net

The foreign currency loss recorded in the six-month period ended September 26, 2025 was primarily due to the U.S. Dollar weakening against various currencies, including the Euro and the Philippine Peso. The foreign currency loss recorded in the six-month period ended September 27, 2024 was primarily due to the U.S. Dollar strengthening against the Philippine Peso.

We recorded a net loss of $3.2 million related to our equity investment in PSL in the six-month period ended September 26, 2025. In the six-month period ended September 27, 2024, we recorded a net loss of $2.8 million related to the difference between the selling price per share and its carrying amount per share and after a gain from the conversion of the PSL Promissory Notes in connection with the PSL Closing, partially offset by $0.8 million of gains related to earnings in our money market fund deposits.

Income tax benefit

Income tax benefit and the effective income tax rate were approximately $6.1 million and 48.2%, respectively, in the six-month period ended September 26, 2025, compared to income tax benefit and effective income tax rate of approximately $8.4 million and 14.1%, respectively, in the six-month period ended September 27, 2024. The change in the effective tax rate for the six-month period ended September 26, 2025, compared to the six-month period ended September 27, 2024 was due to a decrease in GAAP loss before taxes and the OBBB impacts described in Note 13, "Income Taxes" to the unaudited condensed consolidated financial statements included in this Quarterly Report.

Liquidity and Capital Resources

As of September 26, 2025, we had $117.5 million of cash and cash equivalents and $348.8 million of working capital, compared to $121.3 million of cash and cash equivalents and $370.8 million of working capital as of March 28, 2025. Working capital is impacted by the timing and extent of our business needs.

Our primary requirements for liquidity and capital resources besides our growth initiatives are working capital, capital expenditures, principal and interest payments on our outstanding debt, and other general corporate needs. Historically, these cash requirements have been met through cash provided by operating activities and cash and cash equivalents. Our current capital deployment strategy for fiscal year 2026 is to utilize cash on hand and capacity under our revolving credit facility to support our continued growth initiatives into select markets and planned capital expenditures, as well as consider potential acquisitions. As of September 26, 2025, the Company was not party to any off-balance sheet arrangements that have had or are reasonably likely to have a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures, or capital resources. The cash requirements for the current fiscal year relate to our operating leases, operating and capital purchase commitments, and expected contributions to our defined benefit and contribution plans. Additionally, we expect to continue to strategically invest in expanding our operations in China, Japan, India and Philippines expansion in order to directly manage and service our customers in these markets, which could result in increases in our total net sales, cost of goods sold and operating expenses. For information regarding the Company's expected cash requirements and timing of payments related to leases, noncancellable purchase commitments and pension and defined contribution plans, see Note 12, "Leases," Note 15, "Retirement Plans," and Note 16, "Commitments and Contingencies" to the audited consolidated financial statements in the Company's 2025 Annual Report.

We believe that our existing cash will be sufficient to finance our continued operations, growth strategy, planned capital expenditures and the additional expenses that we expect to incur during the next 12 months. In order to support and achieve our future growth plans, we may need or advantageously seek to obtain additional funding through equity or debt financing. We believe that our current operating structure will facilitate sufficient cash flows from operations to satisfy our expected long-term liquidity requirements beyond the next 12 months. If these resources are not sufficient to satisfy our liquidity requirements due to changes in circumstances, we may be required to borrow under our revolving credit facility or seek additional financing. If we raise additional funds by issuing equity securities that are not used to repurchase existing shares outstanding, our stockholders will experience dilution. Debt financing, if available, may contain covenants that significantly restrict our operations or our ability to obtain additional debt financing in the future. Any additional financing that we raise may contain terms that are not favorable to us or our stockholders. We cannot assure you that we would be able to obtain additional financing on terms favorable to us or our existing stockholders, or at all.

Cash Flows from Operating, Investing and Financing Activities

The following table summarizes our cash flows for the six-month periods ended September 26, 2025 and September 27, 2024:

Operating Activities

Net cash provided by operating activities was $82.0 million in the six-month period ended September 26, 2025, resulting primarily from a net loss of $6.6 million and noncash charges of $59.5 million, further adjusted by a net increase in cash from a decrease in net operating assets and liabilities of $29.1 million. Noncash charges primarily included increases of $32.8 million for depreciation and amortization, $24.4 million of stock-based compensation, and $4.5 million for provisions for inventory and expected credit losses, partially offset by $4.2 million of deferred income taxes. The net decrease in operating assets and liabilities consisted of a $26.6 million decrease in prepaid expenses and other assets, a $9.3 million decrease in inventories, a $14.0 million increase in other changes in operating assets and liabilities, net, and a $4.2 million increase in trade accounts payable, partially offset by a $21.7 million increase in trade accounts receivable, net and a $3.3 million decrease in net amounts due to related party. The increase in trade accounts receivable, net was primarily a result of increased sales year-over-year and timing of collections. Trade accounts payable increased, primarily due to the timing of payments to suppliers and vendors, including unpaid capital expenditures of $1.1 million. The decrease in prepaid expenses and other assets was mostly due to the timing of tax payments. The decrease in inventories was primarily the result of the increase in net sales. The decrease in net amounts due to related party was primarily due to variations in the timing of such payments in the ordinary course of business. The increase in other changes in operating assets and liabilities, net was primarily the result of higher accrued income taxes and accrued personnel costs.

Net cash provided by operating activities was $49.7 million in the six-month period ended September 27, 2024, resulting primarily from a net loss of $51.2 million and noncash charges of $93.2 million, further adjusted by a net increase in cash from a decrease in net operating assets and liabilities of $7.7 million. Noncash charges include increases for $34.8 million for loss on change in fair value of forward repurchase contract, $32.5 million of depreciation and amortization, $21.7 million of stock-based compensation and $6.6 million of other non-cash reconciling items, partially offset by $7.8 million of deferred income taxes. The net decrease in operating assets and liabilities consisted of a $41.4 million decrease in trade accounts receivable, net, a $13.7 million increase in trade accounts payable and a $4.1 million increase in net amounts due to related party, partially offset by an $18.8 million increase in inventories, a $15.8 million increase in prepaid expenses and other assets, and a $16.8 million decrease in other changes in operating assets and liabilities, net. The decrease in trade accounts receivable, net, was primarily a result of decreased sales year-over-year. Trade accounts payable increased primarily due to the timing of payments to suppliers and vendors, including unpaid capital expenditures of $4.1 million. The increase in net amounts due to related party was primarily due to variations in the timing of such payments in the ordinary course of business. The increase in inventories was primarily the result of inventory builds of standard products to support anticipated sales growth. The increase in prepaid expenses and other assets was mostly due to higher long-term deposits and the timing of tax payments. The decrease in other changes in operating assets and liabilities, net was primarily the result of a reduction in accrued personnel costs due to the timing of payments pursuant to our annual incentive compensation plan.

Investing Activities

Net cash used in investing activities was $17.0 million in the six-month period ended September 26, 2025, consisting of purchases of property, plant and equipment.

Net cash used in investing activities was $20.9 million in the six-month period ended September 27, 2024, consisting of purchases of property, plant and equipment.

Financing Activities

Net cash used in financing activities was $70.7 million in the six-month period ended September 26, 2025, primarily consisting of $60.0 million of payments on our 2025 Refinanced Loans and $9.3 million of taxes related to the net settlement of equity awards.

Net cash used in financing activities was $53.3 million in the six-month period ended September 27, 2024, consisting of $853.8 million of repurchases of our common stock, $50.0 million of payment on our Refinanced 2023 Term Loan Facility and $12.3 million of taxes related to the net settlement of equity awards, partially offset by the issuance of common stock of $665.9 million, net proceeds of $193.5 million from the Refinanced 2023 Term Loan Facility, proceeds received in connection with the issuance of common stock under our employee stock purchase plan and proceeds received related to the quarterly payment from PSL on our related party loan.

Debt Obligations

See Note 9, "Debt and Other Borrowings" to the unaudited condensed consolidated financial statements included in this Quarterly Report for information regarding our debt obligations.

Recent Accounting Pronouncements

See Note 2, "Summary of Significant Accounting Policies" to the unaudited condensed consolidated financial statements included in this Quarterly Report for a full description of recent accounting pronouncements, including the respective dates of adoption or expected adoption and effects on our condensed consolidated financial statements contained in Item 1 of this Quarterly Report.

Critical Accounting Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and disclosures of contingencies at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Our significant accounting policies are described in Note 2, "Summary of Significant Accounting Policies" to our consolidated financial statements included in our 2025 Annual Report. There have been no material changes in our critical accounting policies and estimates since March 28, 2025.