DCO 10-K & 10-Q changes, risk factors and insider trading

Our business, financial condition, results of operations and cash flows may be affected by known and unknown risks, uncertainties and other factors. We have summarized below the significant, known material risks to our business. Additional risk factors not currently known to us or that we currently believe are immaterial may also impair our business, financial condition, results of operations and cash flows. AnyThese disclosures reflect our beliefs and opinions as to factors that could materially and adversely affect us and our securities in the future. References to past events are provided by way of theseexample risks, uncertaintiesonly and othernot intended to be a complete listing or a representation as to whether or not such factors couldhave causeoccurred ourin futurethe financial results to differ materially from recent financial resultspast or fromtheir currentlylikelihood anticipatedof futureoccurring financialin results.the future. The risk factors below should be considered together with the information included elsewhere in this Form 10-K as well as other required filings by us with the SEC.

InOn JulyNovember 2022,24, 2025, we completed a refinancing of our then existing debt by entering into a new term loan (“20222025 Term Loan”) and a new revolving credit facility (“20222025 Revolving Credit Facility”). The 20222025 Term Loan is a $250.0$200.0 million senior secured loan that matures in JulyNovember 2027.2030. The 20222025 Revolving Credit Facility is a $200.0$450.0 million senior secured revolving credit facility that matures inon JulyNovember 2027.24, 2030. The 2025 Term Loan replaced the 2022 Term Loan (“2022 Term Loan”) which was a $250.0 million senior secured loan. The 2025 Revolving Credit Facility replaced the 2022 Revolving Credit Facility (“2022 Revolving Credit Facility”) which was a $200.0 million senior secured revolving credit facility. The 2025 Term Loan and 20222025 Revolving Credit Facility, collectively are the new credit facilities (“20222025 Credit Facilities”). The terms of the 20222025 Term Loan require us to make installment payments of 0.625% of the initial outstanding principal balance on a quarterly basis during years one and two, 1.250% during years three and four, and 1.875% during year five, on the last business day of each calendar quarter. InThe addition,terms of the 2025 Revolving Credit Facility do not require us to make installment payments. However, the undrawn portion of the commitment of the 20222025 Revolving Credit Facility is subject to a commitment fee ranging from 0.175% to 0.275%,0.250%, based upon the consolidated total net adjusted leverage ratio.

At December 31, 2024,2025, we had a total of $243.2$305.0 million of outstanding long-term debt under the 20222025 Credit Facilities. The total long-term debt was primarily the result of our acquisitions, including Lightning Diversion Systems, LLC (“LDS”) in September 2017, Certified Thermoplastics Co., LLC (“CTP”) in April 2018, and Nobles Worldwide, Inc. (“Nobles”) in October 2019, and BLRlitigation Aerospace,settlement L.L.C.and (“BLR”)related incosts, Aprilnet 2023.during the fourth quarter of 2025.

•expose us to the risk of increased borrowing costs and rising or high interest rates as a portion of our current borrowings under our 20222025 Credit Facilities bear interest at variable rates (however, we have interest rate swaps that becamewere effective on January 1, 2024, with an aggregate total notional amount of $150.0 million with a seven year tenor), which could further adversely impact our cash flows;

We are required to comply with a leverage covenant as defined in the 20222025 Credit Facilities. The leverage covenant is defined as Consolidated Funded Indebtedness less unrestricted cash and cash equivalents in excess of $5.0 million,equivalents, divided by consolidated earnings before interest, taxes and depreciation and amortization (“EBITDA”) and other adjustments. In addition, we are required to comply with a Consolidated Interest Coverage Ratio covenant. The Consolidated Interest Coverage Ratio is defined as consolidated EBITDA and other adjustments to consolidated interest charges paid in cash.

At December 31, 2024,2025, we were in compliance with theall leverage covenantcovenants under the 20222025 Credit Facilities. However, there is no assurance that we will continue to be in compliance with all the leverage covenantcovenants in future periods.

The 20222025 Credit Facilities’ agreements containscontain a number of significant restrictions and covenants that limit our ability, among other things, to incur additional indebtedness, to create liens, to make certain payments, to make certain investments, to engage in transactions with affiliates, to sell certain assets or enter into mergers.

The level of trading activity of our common stock may vary daily and typically represents only a small percentage of outstanding shares. As a result, a stockholder who sells a significant amount of shares in a short period of time could negatively affect our share price.

We currently generate the majority of our revenues from customers in the aerospace and defense industry. Our business depends, in part, on the level of new military and commercial aircraft orders. As a result, we have significant sales to certain customers. Sales to The Boeing Company (“Boeing”), which now includes Spirit AeroSystems Holdings, Inc. (“Spirit”), andbased Viasat,on Inc.Boeing’s (“Viasat”)December 8, 2025 announcement confirming the closing of its acquisition of all of Spirit’s Boeing-related commercial operations, comprise a significant portion of our commercial aerospace end-use market in 2024.2025. A significant portion of our net sales in our military and space end-use markets are made under subcontracts with original equipment manufacturers (“OEMs”), underpursuant to their prime contracts with the U. S. Government. We had significant sales in 2025 to Lockheed Martin Corporation (“Lockheed”), Northrop Grumman Corporation (“Northrop”), and RTX Corporation (f/k/a Raytheon Technologies Corporation) (“RTX”), inand 2024TransDigm Group Inc. (“TransDigm”), which completed its acquisition of the Simmonds Precision Products, Inc. business of Goodrich Corporation from RTX Corporation based on TransDigm’s announcement on October 6, 2025, in our defense technologies end-use market.

Boeing was one of our largest customers in 2024,2025, and the 737 MAX was one of our highest commercial end use market revenue platforms. In early January 2024, the Federal Aviation Administration (“FAA”) initiated an investigation into Boeing’s quality control system.system, Thiswhich was followed by the FAAagency announcing actions to increase its oversight of Boeing as well as not approving production rate increases or additional production lines for the 737 MAX until it iswas satisfied that Boeing is inattained full compliance with required quality control procedures. In addition,Subsequently, in July 2024, Boeing also pleaded guilty to conspiracy fraud charges, which may result in additional external oversight on its manufacturing and quality control process.processes. Further,More inrecently, SeptemberBoeing 2024,announced the InternationalFAA Associationhas ofcleared MachinistsBoeing’s and Aerospace Workers District 751 votedplan to initiateraise a737 laborMAX strikeproduction affectingfrom more38 than 30,000 Boeing manufacturing employees primarily located in Washington state, and the manufacturing employees, after rejecting the contract offer in October, votedairplanes to approve42 theairplanes revisedper contract offer in November 2024.month. Revenue growth with our other commercial customers, including Airbus SE (“Airbus”), and continued solid demand from defense OEMs (also known as prime contractors) have helped to mitigate a significant portion of this risk for the time being. However, the industry remains vulnerable to various developments including fuel spikes, inflationary forces, supply chain issues, and elevated high interest rates.

We derive a significant portion of our business from customers whose principal sales are to the U.S. Government. Accordingly, the success of our business depends upon government spending generally or for specific departments or agencies in particular.agencies. Such spending, among other factors, is subject to the uncertainties of governmental appropriations and national defense policies and priorities, constraints of the budgetary process, timing and potential changes in these policies and priorities, and the adoption of new laws or regulations or changes to existing laws or regulations.

Further, the levels of U.S. Department of DefenseWar (“U.S. DoDDoW”) spending in future periods are difficult to predict and are impacted by numerous factors such as the political environment, U.S. foreign policy, macroeconomic conditions and the ability of the U.S. Government to enact relevant legislation such as the authorization and appropriations bills. For instance, on December 21, 2024,during the U.S. governmentGovernment shutdown between October 1, 2025 and November 12, 2025, the U.S. Government enacted a continuing resolution (“CR”) to keep the government funded through MarchJanuary 14,30, 20252026 at FY25 levels while the Congress works to enact full year fiscal year 20252026 (“FY25FY26”) legislation for the remaining appropriation bills orto anavoid additionalanother CRgovernment shutdown. Subsequently, on February 3, 2026, President Trump signed into law, a funding package to fundend the brief U.S. Government shutdown. The legislation will ensure full year funding for the federal government departmentsthrough andthe agenciesend afterof MarchSeptember 14,2026, 2025.with the lone exception of funding for the Department of Homeland Security. We, and a number of our customers rely on the U.S. governmentGovernment in various aspects of our defense and commercial businesses. In the event of a future shutdown, requirements to furlough employees in the U.S. DoDDoW or other government agencies could result in payment delays, the inability to obtain export licenses, impair our ability to perform work on existing contracts or otherwise impact our operations, negatively impact future orders, and/or cause other disruptions or delays.

The U.S. governmentGovernment could experience a disruption to its operations and/or payments in 20252026 as a result of the U.S. Treasury exhausting extraordinary measures after reaching its debt limit. InFor addition,instance, the U.S. governmentGovernment discretionary spending in FY24 and FY25, including defense spending, was capped by the Fiscal Responsibility Act of 2023 (“FRA23”). If a CR for FY25 is in place on April 30, 2025, it would trigger a sequester under the FRA23. These potential disruptions, and any other broader macroeconomic impacts, could affect our current programs and contracts and have a material effect on our financial position, results of operations and/or cash flows.

We must comply with numerous laws and regulations relating to the export of some of our products before we are permitted to sell or manufacture those products outside the United States. Compliance often entails the submission and timely receipt of the necessary export approvals, licenses, or authorizations from the U.S. Government. Over the last several years, the U.S. export licensing environment for munitions has been adversely affected by a number of factors, including, but not limited to, the changing geopolitical environment and heightened tensions with other countries (which shift and evolve over time). Moreover, in the event Congress is unable to enact legislation to fund appropriations bills and avoid another government shutdown in the future, our ability to obtain required export licenses could be negatively impacted. Accordingly, we can give no assurance that we will be successful in obtaining, in a timely manner or at all, the approvals, licenses or authorizations we need to sell or manufacture our products outside the United States, which may result in the cancellation of orders and significant penalties to our customers if we do not make deliveries and fulfill our contractual commitments. Any significant delay in, or impairment of, our ability to sell products outside of the United States could have a material adverse effect on our business, financial condition and results of operations.

If the U.S. Government terminates a contract for convenience, the counterparty with whom we have contracted on a subcontract may terminate its contractsubcontract with us. As a result of any such termination, whether on a direct government contract or subcontract, we may recover only our incurred or committed costs, settlement expenses and profit on work completed prior to the termination. If the U.S. Government terminates a direct contract with us for default, we may not even recover those amounts and instead may be liable for excess costs incurred by the U.S. Government in procuring undelivered items and services from another source.

In addition, the U.S. Government is typically required to open all programs to competitive bidding and, therefore, may not automatically renew any of its prime contracts. If one or more of our customers’ government prime or subcontracts is terminated or canceled, our failure to replace sales generated from such contracts would result in lower salesrevenues and could have an adverse effect on our business, results of operations and financial condition.

The aerospace and defense industry has and continues to experience significant consolidation, including with respect to our customers, competitors and suppliers. ConsolidationSpecifically, consolidation among our customers may result in delays in the awarding of new contracts and losses of existing business.business; Consolidationconsolidation among our competitors may result in larger competitors with greater resources and market share, which could adversely affect our ability to negotiate reasonable contractual terms and compete successfully.successfully; Consolidationand consolidation among our suppliers may result in fewer sources of supply and increased cost to us.

•the failure to achieve anticipated synergies and/or future revenue growth;

We may not be successful in achieving expected operating efficiencies and sustaining or improving operating expense reductions, and may experience business disruptions associated with restructuring, performance centerfootprint consolidations, realignment, cost reduction, and other strategic initiatives.

In recent years, we have implemented a number of restructuring, realignment, and cost reduction initiatives, including performance centerfootprint consolidations, organizational realignments, and reductions in our workforce. While we have realized some efficiencies from these actions, we may not realize the benefits of these initiatives to the extent we anticipated. Further, such benefits may be realized later than expected, and the ongoing difficulties in implementing these measures may be greater than anticipated, which could cause us to incur additional costs or result in business disruptions. In addition, if these measures are not successful or sustainable, we may have to undertake additional realignment and cost reduction efforts, which could result in significant additional charges. Moreover, if our restructuring and realignment efforts prove ineffective, our ability to achieve our other strategic and business plan goalsgoals, such as our VISION 2027 game plan for investors, may be adversely impacted.

We may encounter difficulties as we execute our growth strategy to move up the value chain to become a more value added supplier of more complex assemblies. Difficulties we may encounter include, but are not limited to, the need for enhanced and expanded product design skills, enhanced ability to control and influence our suppliers, enhanced quality control systems and infrastructure, enhanced large-scale project management skills, and expanded industry certifications. Assuming incremental project design responsibilities would require us to assumebear additional risk in developing cost estimates and could expose us to increased risk of losses. ThereMoreover, there can be no assurance that we will be successful in obtaining the enhanced skills required to move up the value chain or that our customers will outsource such functions to us.

•potential for new and/or increase in tariffs imposed on imports by the U.S. administration that may affect our ability to import raw materials into the U.S. and finished goods from our leased manufacturing facility in Mexico and increase the cost of such imports.

The markets we serve are highly competitive and price sensitive. We compete worldwide with a number of domestic and international companies that have substantially greater manufacturing, purchasing, marketing and financial resources than we do.do, Manywhich could exert downward pressure on the prices we are able to charge for our products. Additionally, many of our customers have the in-house capability to fulfill their manufacturing requirements.requirements, which could reduce the demand for our products. Our larger competitors may be able to compete more effectively for very large-scale contracts than we can by providing different or greater capabilities or benefits such as technical qualifications, past performance on large-scale contracts, geographic presence, price and availability of key professional personnel. If we are unable to successfully compete for new business, our net revenues growth and operating margins may decline.

The future success of our business depends in large part upon our and our customers’ ability to maintain and enhance technological capabilities, develop and market manufacturing services that meet changing customer needs and successfully anticipate or respond to technological advances in manufacturing processes such as the incorporation of artificial intelligence and other disruptive technologies on a cost-effective and timely basis, while meeting evolving industry and regulatory standards. To address these risks, we invest in product design and development,development and incur related capital expenditures. There can be no guarantee that our product design and development efforts will be successful, or that funds required to be invested in product design and development or incurred as capital expenditures will not increase materially in the future.future, or that our products and processes will satisfy evolving regulatory standards.

Certain of our manufacturing facilities and offices are leased and have lease terms that expire between 20252026 and 2034.2038. The majority of these leases provide renewalinclude options to extend at the fair market rental rate atupon the timeexpiration of renewal,their original terms, which, if renewed, could be significantly higher than our current rental rates. We may be unable to offset these cost increases by charging more for our products and services. Furthermore, continued economic conditions may continue to negatively impact and create greater pressure in the commercial real estate market, causing higher incidences of landlord default and/or lender foreclosure of properties, including properties occupied by us. While we maintain certain non-disturbance rights in most cases, it is not certain that such rights will in all cases be upheld and our continued right of occupancy in such instances could be potentially jeopardized. An occurrence of any of these events could have a material adverse effect on our financial results.

Additionally, if we choose to move any of our operations, those operations may be subject to additional relocation and recertification costs and associated risks of business interruption.

The accuracy and appropriateness of certain costs and expenses used to substantiate our direct and indirect costs for the U.S. Government contracts are subject to extensive regulation and audit by the Defense Contract Audit Agency, an arm of the U.S. DoD.DoW. Such audits and reviews could result in adjustments to our contract costs and profitability. However, we cannot ensure the outcome of any future audits and adjustments may be required to reduce net sales or profits upon the completion and final negotiation of such audits. If any audit or review were to uncover inaccurate costs or improper activities, we could be subject to penalties and sanctions, including termination of contracts, forfeiture of profits, suspension of payments, fines and suspension or prohibition from conducting future business with the U.S. Government. Any such outcome could have a material adverse effect on our financial results.

We must comply with and are affected by laws and regulations relating to the award, administration and performance of U.S. Government contracts. Government contract laws and regulations affect how we do business with our customers and impose certain risks and costs on our business. A violation of specific laws and regulations,regulations by us, our employees, or others working on our behalf, such as a supplier or a venture partner, could harm our reputation and result in the imposition of fines and penalties, the termination of our contracts, suspension or debarment from bidding on or being awarded contracts, loss of our ability to export products or services and civil or criminal investigations or proceedings.

Goodwill is tested for impairment on an annual basis as of the first day of our fiscal fourth quarter or more frequently if events or circumstances occur which could indicate potential impairment. In assessing the recoverability of goodwill, management is required to make certain critical estimates and assumptions. These estimates and assumptions include projected salesrevenue levels, including the addition of new customers, programs or platforms and increased content on existing programs or platforms, improvements in manufacturing efficiency, and reductions in operating costs. Due to many variables inherent in the estimation of a business’s fair value and the relative size of our recorded goodwill, changes in estimates and assumptions may have a material effect on the results of our impairment analysis. If any of these or other estimates and assumptions are not realized in the future, or if market multiples decline, we may be required to record an impairment charge for goodwill.

Ducommun Incorporated (“Ducommun,” “the Company,” “we,” “us” or “our”) is a leading globaldesigner and manufacturer of and provider of engineering and manufacturing servicessolutions for high-performance products andoften used in high-cost-of failure applications used primarily in the aerospace and defense (“A&D”), industrial, medical, and other industries (collectively, “Industrial”). WeDucommun differentiatedifferentiates ourselvesitself as a full-service solution-based provider, offering a wide range ofinnovative, value-added proprietary products and servicesmanufacturing solutions to our customers in our primary businesses of electronics, structures and integrated solutions. We operate through two primary business segments: Electronic Systems and Structural Systems, each of which is a reportable segment.

•Net incomeloss of $31.5$33.9 million, or 4.0%4.1% of net revenues, or $2.10$2.27 per diluted share

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

•$16.1$60.0 million higher revenues in our military and space end-use markets due to higher rates on selected missile, electronicclassified warfare,program, radar,rotary-wing aircraft, fixed-wing aircraft, and navalradar and submarine platforms,platforms; partially offset by lower rates on selected fixed-wing aircraft platforms.

In addition, revenues for our industrial end-use markets for 20242025 decreasedincreased $10.4$3.0 million compared to 20232024 mainly due to ourrestocking selectivelyand pruninglast non-coretime business.buys.

(13) Includes The Boeing Company (“Boeing”),Boeing, Lockheed Martin Corporation (“Lockheed”), Northrop Grumman Corporation (“Northrop”), RTX Corporation (f/k/a Raytheon Technologies Corporation) (“RTX”), Spirit AeroSystems Holdings, Inc. (“Spirit”), and Viasat, Inc. (“Viasat”).RTX.

The revenues from Boeing, Lockheed, Northrop, RTX, Spirit, and ViasatRTX are diversified over a number of commercial, military and space programs and some of which were generated by both operating segments.

Gross profit consists of net revenues less cost of sales. Cost of sales includes the cost of production of finished products and other expenses related to inventory management, manufacturing quality, and order fulfillment. Gross profit margin increased to 25.1%26.9% in 20242025 compared to 21.6%25.1% in 2023.2024. The increase in gross margin percentage year-over-year was primarily due to alower higherother mixmanufacturing of engineered products, strategic value pricing actionscosts and therestructuring benefitscharges as a result of the restructuringcompletion plan.of the wind down of our Monrovia performance center, and higher manufacturing volume.

Restructuring charges decreased $7.2$5.4 million (including the portion recorded in cost of salessales, which increaseddecreased $0.9$1.2 million) in 20242025 compared to 20232024 primarily due to the winding downcompletion of the restructuring plan that was approved and commenced in April 2022 that is expected to better position us for stronger performance.2022. See Note 32 to our consolidated financial statements included in Part IV, Item 15(a) of this Form 10-K for further information.

Income Tax (Benefit) Expense

Our unrecognized tax benefits were each$5.0 million and $4.5 million in 20242025 and 2023.2024, respectively. We record interest and penalty charges, if any, related to uncertain tax positions as a component of tax expense and unrecognized tax benefits. The amounts accrued for interest and penalty charges as of December 31, 20242025 and 20232024 were not significant. If recognized, $2.5$2.8 million would affect the effective income tax rate. As a result of statute of limitations set to expire in 2025, we expect decreases to our unrecognized tax benefits of $0.5 million in the next twelve months.

Net (Loss) Income and (Loss) Earnings per Diluted Share

Net incomeloss and earningsloss per diluted share for 20242025 were $31.5$33.9 million, or $2.10$2.27 per dilutedshare, share,respectively, compared to net income and earnings per diluted share for 20232024 of $15.9$31.5 million, or $1.14$2.10 per diluted share.share, respectively. The increasedecrease in net income in 20242025 compared to 20232024 was primarily due to higher litigation settlement and related costs, net of $107.3 million and higher SG&A expenses of $5.8 million, partially offset by higher gross profit of $34.1$24.4 million, lower income tax expense of $15.3 million, and lower restructuring charges of $7.2$5.4 million (including the portion recorded in cost of salessales, which increaseddecreased $0.9$1.2 million), and lower interest expense of $5.5 million, partially offset by higher SG&A expenses of $18.9 million, lower other income, net of $8.2 million, and higher income tax expense of $5.0 million..

Electronic Systems’ net revenues in 20242025 compared to 20232024 increased $1.2$31.3 millionmillion, primarily due to the following:

•$14.0$43.7 million higher revenues in our military and space end-use markets due to higher rates on selected missile, electronicclassified warfare,program, radar,fixed-wing aircraft, and naval and submarineradar platforms, partially offset by lower rates on selected fixed-wingelectronic aircraftwarfare platforms; partially offset by

•$26.2$15.3 million higherlower revenues in our commercial aerospace end-use markets due to growth in Airbus, higherlower rates on rotary-winglarge aircraft,aircraft platforms and businesslower jetrevenues platforms;from andin-flight entertainment.

See Part I, Item 1A of our Amendment No. 1 to our Annual Report on Form 10-K for the year ended December 31, 2025 (“2025 Form 10-K/A”) for a discussion of our risk factors. There have been no material changes during the three months ended AprilJuly 4, 2026 to the risk factors disclosed in our 2025 Form 10-K/A for the year ended December 31, 2025.

As disclosed in our Amendment No. 1 to Annual Report on Form 10-K for the year ended December 31, 2025 (“2025 Form 10-K/A”), we restated our audited consolidated financial statements for the year ended December 31, 2025, and our unaudited quarterly financial information for each quarter in the year ended December 31, 2025 (collectively, the “Affected Periods”), among other periods, and corrected certain other immaterial items that were previously identified and concluded as immaterial, individually and in the aggregate, to its consolidated financial statements during the Affected Periods as further described below.

Boeing was one of our largest customers in 2025, and the 737 MAX was one of our highest commercial end use market revenue platforms. In early January 2024, the Federal Aviation Administration (“FAA”) initiated an investigation into Boeing’s quality control system, which was followed by the agency announcing actions to increase its oversight of Boeing as well as not approving production rate increases or additional production lines for the 737 MAX until it was satisfied that Boeing attained full compliance with required quality control procedures. Subsequently, in July 2024, Boeing pleaded guilty to conspiracy fraud charges, which may result in additional external oversight on its manufacturing and quality control processes. More recently, Boeing announced that the FAA cleared Boeing’s plan to raise 737 MAX production from 3842 airplanes to 4247 airplanes per month. In addition, the FAA recently announced that Boeing can resume issuing airworthiness certificates for its 737 MAX aircraft.

Airbus AESE

Since February 2025, the U.S. government has issued several executive orders (“Executive Orders”), under various statutes, imposing tariffs on imports from most countries with whom the U.S. engages in trade. As such, during 2025, the United States reached bilateral trade agreements that recognize tariff-free trade of products within the scope of the World Trade Organization Agreement on Trade in Civil Aircraft with the United Kingdom, Japan, and the European Union. Moreover, the United States applies a diverse range of reciprocal tariffs to imports originating from countries that have not concluded bilateral trade agreements with the United States. OnIn February 20, 2026, the U.S. Supreme Court struck down the sweeping tariffs that the U.S. government had imposed through the Executive Orders issued pursuant to International Emergency Economic Powers Act (“IEEPA”) of 1977. However, the U.S. government subsequently imposed a global tariff of 10% (which could potentially increase to 15%) that went into effect on February 24, 2026, and which would be effective for 150 days unless they are extended by the U.SU.S. Congress. Additionally, in late July 2026, an Executive Order implementing tariffs under Section 304(a) of the Trade Act of 1974, as amended, was issued imposing tariffs of 10% to 12.5% on non-exempt goods depending on the country of origin, and from which civil aircraft parts and components and goods qualifying under the United States-Mexico-Canada Agreement are exempt.

In November 2025, the U.S. Government enacted a continuing resolution (“CR”) to keep the government funded through January 30, 2026 while Congress works to enact full year fiscal year 2026 (“FY26”) remaining appropriation bills or an additional CR to fund government departments and agencies after January 30, 2026. In addition, onin January 7, 2026, President Trump called for increasing the FY27 U.S. military budget to $1.5 trillion, significantly higher than the $901 billion approved by Congress for FY26. However, such increase in the military budget would require congressional authorization.

OnIn February 3, 2026, President Trump signed into law a funding package to end the brief U.S. Government shutdown. The legislation will ensure full year funding for the federal government through the end of September 2026, with the lone exception of funding for the Department of Homeland Security. On June 10, 2026, President Trump signed into law a funding package that included funding for the Department of Homeland Security.

Subsequent to December 31, 2025, onin January 7, 2026, we entered into a binding confidential agreement (“Confidential Agreement”) to resolve an additional subrogation claim (“Additional Subrogation Claim”) against us related to the Guaymas fire. The Confidential Agreement provides for, among other things, the final dismissal of the Additional Subrogation Claim and a release of all claims against us, with prejudice, in exchange for us issuing a payment of $4.0 million. We do not believe there are any remaining subrogation or other claims relating to the Guaymas fire at this time other than by an insurer of the plaintiff in the Guaymas Fire Litigation based in Mexico for payments issued to its insured for damages allegedly incurred in the Guaymas fire, which we believe to be time barred. See Note 11 to our unaudited condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q for further information.

FirstSecond quarter 2026 recap:

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

Net revenues by end-use market and operating segment during the fiscal three and six months ended AprilJuly 4, 2026 and MarchJune 29,28, 2025, respectively, were as follows:

Net revenues for the three months ended AprilJuly 4, 2026 were $209.0$224.5 million, compared to $192.5$200.8 million for the three months ended MarchJune 29,28, 2025. The year-over-year increase in our key end-use markets were primarily due to the following:

•$12.5$12.0 million higher revenues in our commercial aerospace end-use markets due to higher rates on large aircraft and rotary-wing aircraft platforms; and

•$5.4$7.9 million higher revenues in our military and space end-use markets due to higher rates on selectedseveral missiles and fixed-wing aircraft and missiles platforms, partially offset by lower rates on electronica warfare,classified groundprogram, vehicleselected weapons,radar, rotary-wing aircraft, and radarnaval platforms.

In addition, revenues for our industrial end-use markets for the three months ended AprilJuly 4, 2026 decreasedincreased $1.4$3.8 million compared to the three months ended MarchJune 29,28, 2025, mainly due to timing of orders.

(1)Includes The Boeing Company (“Boeing”), Lockheed Martin Corporation (“Lockheed”), Northrop Grumman Corporation (“Northrop”), and RTX Corporation (“RTX”), and Viasat, Inc. (“Viasat”) for the three and six months ended AprilJuly 4, 2026 and MarchJune 29,28, 2025.

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

The net revenues and accounts receivable from Boeing, Lockheed, Northrop, RTX, and RTXViasat were diversified over a number of commercial, military and space programs and were generated by both operating segments.

Gross profit consists of net revenues less cost of sales. Cost of sales includes the cost of production of finished products and other expenses related to inventory management, manufacturing quality, and order fulfillment. Gross profit as a percentage of net revenues increased year-over-year with the three months ended AprilJuly 4, 2026 of 26.9%,28.0%, compared to the three months ended MarchJune 29,28, 2025 of 26.2%26.4% primarily due to lower other manufacturing costs, favorable product mix, and higher manufacturing volume.volume and savings from the facility consolidation program, partially offset by unfavorable product mix.

SG&A expenses decreased $4.5$0.1 million year-over-year in the three months ended AprilJuly 4, 2026 compared to the three months ended MarchJune 29,28, 2025, primarily due to lowercompensation stock-basedclawback of $3.9 million, which is a reduction to SG&A expenses, partially offset by higher compensation expenseand benefits costs of $4.4$2.0 million, higher other SG&A expenses of $1.2 million, and higher professional services fees of $0.6 million.

Restructuring charges decreased $0.4$0.6 million and $1.0 million year-over-year in the three and six months ended AprilJuly 4, 2026, respectively, compared to the three and six months ended MarchJune 29,28, 2025, primarily due to the completion as of the prior year ended December 31, 2025, the previously disclosed restructuring plan that was approved and commenced in April 2022. See Note 3 to our unaudited condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q for further information.

Interest ExpenseExpense, Net

Interest expenseexpense, net increased $0.7$0.5 million and $1.3 million year-over-year in the three and six months ended AprilJuly 4, 2026, compared to the three and six months ended MarchJune 29,28, 2025, respectively, primarily due to a higher outstanding debt balancebalance, partially offset by lower interest rates.

We recorded income tax expense of $1.8$4.4 million for the three months ended AprilJuly 4, 2026 compared to income tax expense of $0.3$3.7 million for the three months ended MarchJune 29,28, 2025. The increase in income tax expense for the firstsecond quarter of 2026 compared to the firstsecond quarter of 2025 was primarily due to higher pre-tax income in the firstsecond quarter of 2026 compared to the firstsecond quarter of 2025. The increase in income tax expense was partially offset by higher income tax benefits recognized for net tax windfalls related to stock-based compensation in the firstsecond quarter of 2026 compared to the firstsecond quarter of 2025.

Our total amount of unrecognized tax benefits was $5.3$5.5 million and $5.0 million as of AprilJuly 4, 2026 and December 31, 2025, respectively. If recognized, $3.2$3.4 million would affect the effective tax rate. We record interest and penalty charges, if any, related to uncertain tax positions as a component of tax expense and unrecognized tax benefits. The amounts accrued for interest and penalty charges as of AprilJuly 4, 2026 and December 31, 2025 were not significant.

In July 2025, the U.S. enacted the OBBBA. Amongst other things, the OBBBA provides for several corporate tax provision changes including restoring the full expensing of qualified property placed in service after January 19, 2025, reinstating the immediate expensing of U.S. research and development expenditures paid or incurred for tax years beginning after December 31, 2024, and changes in the computations of U.S. taxation on international earnings for tax years beginning after December 31, 2025. We completed the initial assessment of the OBBBA corporate tax provisions as they relate to our financial statements. The enactment of the OBBBA did not have a material impact to our effective tax rate for the three and six months ended AprilJuly 4, 2026. However, we expect the OBBBA to decrease our cash tax liability for 2026. We will continue to evaluate the full impact of the OBBBA corporate tax provision changes as additional guidance becomes available.

Net income, net income as a percentage of revenues, and earnings per share for the three months ended AprilJuly 4, 2026 were $9.9$20.4 million, or 4.7%9.1% of revenues, or $0.64$1.31 per diluted share, respectively, compared to $1.4$12.8 million, or 0.7%6.4% of revenues, or $0.09$0.84 per diluted share, respectively, for the three months ended MarchJune 29,28, 2025. The increase in net income for the three months ended AprilJuly 4, 2026 compared to the three months ended MarchJune 29,28, 2025 was primarily due to higher gross profit of $5.8$9.9 millionmillion. andSG&A lowerexpenses stock-basedfor the three months ended July 4, 2026 compared to the three months ended June 28, 2025 was flat as the three months ended July 4, 2026 includes compensation expenseclawback of $4.3$3.9 millionmillion, which is a reduction in SG&A expenses and discussed above, partially offset by higher incomecompensation taxand expensebenefits costs included in SG&A expenses of $1.5$2.0 millionmillion, discussedand above.higher other SG&A expenses of $1.2 million.

We report our financial performance based upon our two reportable operating segments: Electronic Systems and Structural Systems. The results of operations differ between our reportable operating segments due to differences in competitors, customers, extent of proprietary deliverables and performance. The following table summarizes our business segment performance for the three and six months ended AprilJuly 4, 2026 and MarchJune 29,28, 2025:

(2)The three and six months ended AprilJuly 4, 2026 included $0.1 million and March$0.2 29,million, respectively, of stock-based compensation expense recorded as cost of sales. The three and six months ended June 28, 2025 each included less than $0.1 million of stock-based compensation expense recorded as cost of sales.

(3)The three and six months ended AprilJuly 4, 2026 and March 29, 2025 included less than $0.1 million and $0.2$0.1 million, respectively, of stock-based compensation expense recorded as cost of sales. The three and six months ended June 28, 2025 each included $0.1 million of stock-based compensation expense recorded as cost of sales.

(4)The three and six months ended AprilJuly 4, 2026 and March 29, 2025 included $0.3 millionzero and $0.6$0.3 million, respectively, of stock-based compensation expense for awards with both performance and market conditions that will be settled in cash. The three and six months ended June 28, 2025 included $0.6 million and $1.2 million, respectively, of stock-based compensation expense for awards with both performance and market conditions that will be settled in cash.

Electronic Systems net revenues in the three months ended AprilJuly 4, 2026 compared to the three months ended MarchJune 29,28, 2025 increased $8.5$21.7 million primarily due to the following in our key end-use markets:

•$5.3$10.0 million higher revenues in our military and space end-use markets due to higher rates on selectedseveral missiles and fixed-wing aircraft and missile platforms, partially offset by lower rates on electronica warfareclassified program, radar, and radarnaval platforms; and

•$4.6$7.9 million higher revenues in our commercial aerospace end-use markets due to higher rates on large aircraft and other commercial aerospace and large aircraft platforms.

In addition, revenues for our industrial end-use markets for the three months ended AprilJuly 4, 2026 decreasedincreased $1.4$3.8 million compared to the three months ended MarchJune 29,28, 2025 mainly due to timing of orders.

StructuralElectronic Systems net revenues in the threesix months ended AprilJuly 4, 2026 compared to the threesix months ended MarchJune 29,28, 2025 increased $8.0$30.3 million primarily due to the following in our key end-use markets:

•$0.1$15.4 million higher revenues in our military and space end-use markets due to higher rates on selected missilefixed-wing aircraft and missiles platforms, partially offset by lower rates on selectedradar rotary-wingand aircraftelectronic platforms.warfare, and naval platforms, along with a classified program; and

The StructuralElectronic Systems segment operating income in the three months ended AprilJuly 4, 2026 compared to the three months ended MarchJune 29,28, 2025 increased $0.5$5.0 millionmillion, primarily due to lower otherhigher manufacturing costs,volume, partially offset by unfavorable product mix.

A neighboring, non-related manufacturing facility, also suffered fire damage during the same time as the fire that severely damaged our Guaymas performance center and, in November 2023, the occupant of the neighboring facility filed suit against us in U.S. District Court for the Central District of California seeking unspecified amounts for damages relating to the fire. Subsequent to our quarter ended September 27, 2025, on October 3, 2025, we entered into a binding settlement term sheet (the “Term Sheet”) to resolve the Guaymas fire litigation against us. The Term Sheet provides for, among other things, the final dismissal of the Guaymas fire litigation against us with prejudice and a release of claims against us in exchange for us issuing a payment of $150.0 million, $56.0 million of which isat that time was expected to be funded by our insurance carriers. Also subsequent to our quarter ended September 27, 2025, on October 9, 2025, we settled an ancillary subrogation claim related to the fire for $1.4 million. Further, subsequent to the fiscal year ended December 31, 2025, on January 7, 2026, we settled another ancillary subrogation claim related to the fire for $4.0 million. See Note 11 to our unaudited condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q for further information.

CG&A expenses decreased $4.8$2.1 million for the three months ended AprilJuly 4, 2026 compared to the three months ended MarchJune 29,28, 2025, primarily due to lowercompensation stock-basedclawback of $3.9 million, which is a reduction to CG&A expenses, partially offset by higher compensation expenseand benefits costs of $4.2$1.5 million and higher professional services fees of $0.5 million.