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

We are susceptible to trends and factors affecting the automotive, commercial vehiclevehicle, data center and construction industries.

We derive a substantial portion of our revenues from customers in the automotive, commercial vehiclevehicle, data center and construction industries. Factors negatively affecting these industries also negatively affect our business, financial condition and results of operations. Automotive sales and production are highly cyclical and, in addition to general economic conditions, also depend on other factors, such as consumer confidence and consumer preferences. Demand from data centers depends on many factors including the pace of investment in cloud computing, artificial intelligence (“AI”) and other digital infrastructure. Any adverse occurrence, including industry slowdowns, recession, rising interest rates, rising fuel costs, political instability, changes in trade policy, costly or constraining regulations, armed hostilities, terrorism, excessive inflation, prolonged disruptions in one or more of our customers’ production schedules or labor disturbances or work stoppages, that results in a significant decline in sales volumes and mix in these industries, or in an overall downturn in the business and operations of our customers in these industries, could materially adversely affect our business, financial condition and results of operations.

Changes in EV demand have affected and could continue to affect our business.

CertainOur business was affected when certain OEMs have recentlysignificantly deferred or cancelled planned EV programs or reduced production volumes below previously quoted levels oftento citingalign softenedwith consumerreduced customer demand. Should these developments continue, they could adversely affect our profitability and operational planning. We arehave pursuingpursued thesecustomers and continue to pursue other customers for price adjustments and other commercial recoveries in view of the pre-production, tooling, engineering, and other upfront costs incurred in anticipation of those programs. If we aredo unablenot accurately predict, prepare for, and respond to secure timelysimilar or fullnew compensationkinds fromof thesemarket customers, we may experience production inefficiencies, including underutilized capacitydevelopments and workforcechanging disruptions.customer Theseneeds, developmentsour business could adverselybe affect our profitabilitymaterially and operationaladversely planning.affected.

We manage our business based on projected future sales volume, which is highly dependent on information received from customers and generalthird-party market data, and any inaccuracies or changes in such information could adversely affect our business, results of operations and financial condition.

We manage our business based upon projected future sales volumes, which are based upon many factors, including awarded business and assumptions of conversion rates thereof, customers’ forecastsforecasts, and general macroeconomic and industry market data. Where possible, we utilize third-party forecast data to support our projected future sales volumes. Our product revenues generally are based upon purchase orders issued by our customers, with updated production schedules for volume adjustments, and our customers generally do not guarantee sales volumes. In addition, awarded business may include business under arrangements that our customers have the right to terminate without penalty at any time. Further, our customers’ forecasts are subject to numerous assumptions, and such forecasts often are changed rapidly with limited notice. Therefore, our actual sales volumes, and thus the ultimate amount of revenue that we derive from such sales, are not committed. We also must incur costs and make commitments well in advance of the receipt of orders and resulting revenues from customers. If actual production orders from our customers are not consistent with our projected future sales volumes, we could realize substantially less revenue and incur greater expenses over the life of vehiclea programs.program. The receipt of orders and resulting revenues from customers is significantly affected by global automotiveautomotive, commercial vehicle, data center, and construction equipment production levels.

We generally receive volume estimates, but not firm volume commitments from our customers, and may experience reduced or extended lead times in customer orders. Customers may cancel orders, change production quantities (take rates), and delay production for a number of reasons. Cancellations, reductions or delays by a significant customer or by a number of customers may harm our results of operations by reducing the volumes of products we manufacture and sell, as well as by causing a delay in the recovery of our expenditures for inventory in preparation for customer orders, or by reducing our asset utilization, resulting in lower profitability.

In addition, we make key decisions based on our estimates of customer requirements, including determining the levels of orders that we will seek and accept, production schedules, component procurement commitments, personnel needsneeds, and other resource requirements. Changes in demand for our customers’ products may reduce our ability to estimate future customer requirements accurately. This may make it difficult to schedule production and maximize utilization of our manufacturing capacity. Anticipated orders may not materialize leading to lowered take rates for our products and delivery schedules may be deferred as a result of changes in demand for our products or our customers’ products. We often increase staffing and capacity and incur other expenses to meet the anticipated demand of our customers. On occasion, customers may require rapid increases in production, which may stress our resources. Any significant cancellation, decrease or delay in customer orders or take rates could have a material adverse effect on our business, financial condition and results of operations.

InWe manufacture and sell our products globally and rely on a global supply chain to deliver the pastrequired fewraw months,materials, components, and parts, as well as the final products to our customers. Starting 2025, the U.S. administration has proposed and imposed extensive new tariffs on many countries where we do businessbusiness, including both broad and product-specific tariffs, prompting retaliatory measures from a number of broad,other productnations. specificEven as the long-term direction of U.S. trade policy remains unsettled, global tariff levels have risen substantially above recent historical norms. Further changes in laws or policies governing the terms of foreign trade, and in particular increased trade restrictions, export licenses, tariffs mostor notablytaxes withon respectimports tofrom thecountries automotiveor geographic regions where we manufacture products, such as Canada, China, Egypt, Europe and commercialMexico, vehicle industries. While some tariffscould have beena reducedmaterial fromadverse theireffect peakon numbers,our tradebusiness, tensionsfinancial continue to be high. We expect that new tariffs may continue to be imposed by the U.S.condition and retaliatoryresults measuresof taken by other nations in turn.operations. Depending upon the continued durationcontinuation and potential expansion of these tariffs,tariffs and other trade barriers, as well as our ability to mitigate their impact,effects, these tariffs and other regulatory actions could materially affect our business, including in the form of an increase in cost of goods sold, decreased margins, increased pricing for customers, disruptions in our supply chain, impaired ability to compete effectively, and reduced sales. If such changes in trade policy cause increased prices for vehicles, data center equipment, consumer demand may decline, prompting a reduction in global vehicle production volumes, which is a material driver of our operations, sales and profitability.

Our success depends upon the continued contributions of our executive officers and other key employees, many of whom have many years of industry experience and could be difficult to replace. If we are unable to retain these executive officers and key employees, our ability to implement our strategic initiatives may be impaired. We must also attract and retain experienced and highly skilled engineering, sales and marketingmarketing, and managerial personnel. Competition for qualified personnel is intense in our industries, and we may not be successful in hiring and retaining these people. If we lose the services of our executive officers or our other highly qualified and experienced employees and cannot attract and retain other qualified personnel, our business could suffer due to less effective management or less successful products due to a reduced ability to design, manufacturemanufacture, and market our products.

Our business, financial condition and results of operations may be adversely impactedaffected by theinflationary effects of inflation.pressures.

Inflation has the potential to adversely affect our business, financial condition and results of operations by increasing our overall cost structure. There have been ongoing significant inflationary trends in the cost of components, materials, labor, freight costscosts, and other expenses.expenses, These inflationary pressureswhich have affected wages, the cost and availability of components and materials, and our ability to meet customer demand. Inflation may further exacerbate other risk factors discussed in this Annual Report, including customer demand, supply chain disruptions, availability of financing sources, the impacteffects of tariffs, risks of international operationsoperations, and the recruitment and retention of talent. Although we have taken actions to mitigate the impacteffects of inflation, including commercial negotiations with our customers and suppliers, these actions have not historically and may not in the future fully offset our cost increases.

We require substantial amounts of materials, including application-specific integrated circuits, coil and bar stock, ferrous and copper alloy sheets, extrusions, glass, LED displays, plastic molding resins, precious metals, silicon die castingscastings, and wire. The availability and prices of materials may be subject to curtailment or change due to, among other things, inflation, new laws or regulations, suppliers’ allocations to other purchasers, supply chain disruptions, changes in exchange ratesrates, and worldwide price levels. Any change in the availability of, lead times for, or price of, these materials could materially adversely affect our business, financial conditioncondition, and results of operations.

Our five largest customers accounted for approximately 36%41% of our consolidated net sales in fiscal 2025.2026. In certain cases, the sales to these customers are concentrated in a single product. The arrangements with our major customers generally provide for supplying their requirements for particular models, rather than for manufacturing a specific quantity of products. Such supply arrangements cover a period from one year to the life of the model, which is generally three to seven years. The loss of our major customers, or a decline in the production levels of these customers or particular models, could reduce our sales and thereby adversely affect our business, financial condition, and operating results and cash flows.results. We also compete to supply products for successor models for our major customers and are subject to the risk that the customer will not select us to produce products on any such successor model, which could have a material adverse impacteffect on our business, financial condition, and operating results and cash flows. For example, a significant program for a major EV customer rolled-off in fiscal 2024 and a major automotive center console program rolled-off in fiscal 2025.results.

Our products contain a significant number of components that we source globally. If our supply chain fails to deliver products to us, or to our customers, in sufficient quality and quantity on a timely basis, we will be challenged to meet our production schedules or could incur significant additional expenses for expedited freight and other related costs. Similarly, many of our customers are dependent on an ever-greater number of global suppliers to manufacture their products. These global supply chains have been, and may continue to be, adversely impactedaffected by events outside of our control, including macroeconomic events, tariffs and trade restrictions, economic recessions, energy prices and availability, political crises, labor relations issues, liquidity constraints, or natural occurrences. Any significant disruptions to such supply chains could materially adversely affect our business, financial condition and results of operations.

Many of the industries we supply, including the automotive, commercial vehicle, data center and construction industries, are reliant on competitive and supply constrained components. We have worked and will continue to work closely with our suppliers and customers to minimize any potential adverse impactseffects of supply shortages and monitor the availability of component parts and raw materials, customer production schedulesschedules, and any other supply chain inefficiencies that may arise. However, if we are not able to mitigatemitigate, any direct or indirect supply chain disruptions may have a material adverse impacteffect on our business, financial condition and results of operations.

Sales to customers outside of the U.S. represented a substantial portion of our fiscal 20252026 net sales. We expect our net sales in international markets to continue to represent a significant portion of our consolidated net sales. In addition, we have significant personnel, property, equipmentequipment, and operations in a number of countries outside of the U.S., including Belgium, Canada, China, Egypt, Finland, India, Malta, MexicoMexico, and the United Kingdom. As of May 3,2, 2025,2026, approximately 95%93.9% of our employeesworkforce werewas located outside of the U.S. Our international operations subject us to a variety of political, economic, socialsocial, and other risks, including:

changes in government policies, regulatory requirements and laws, including taxes, impactingaffecting our ability to manufacture, purchase or sell our products;

differing requirements under the various anti-bribery and anti-corruption regulations, including to the U.S. Foreign Corrupt Practices Act, the United Kingdom Bribery ActAct, and the China Anti-Unfair Competition Law;

War, terrorism, geopolitical uncertainties (including the current military conflicts between Russia and Ukraine, tensionsand in the Middle EastEast, andalong with rising international trade disputes), public health emergencies, and other business interruptions have caused and could cause damage or disruption to international commerce and the global economy, and thus could have a strong negative effect on us, our suppliers, logistics providers, and customers. Our business operations could be subject to interruption by power shortages, terrorist attacks and other hostile acts, labor disputes, population lockdownslockdowns, and other events beyond our control. Such events could decrease demand for our products or make it difficult or impossible for us to produce and deliver products to our customers, or to receive components from our suppliers. Should major public health issues, including pandemics, arise or worsen, we could be negatively affected by shutdowns, shelter in place orders, more stringent travel restrictions, additional limitations in freight services, governmental actions limiting the movement of products between regions, and disruptions in the operations of our manufacturing partners and component suppliers. Any such business interruptions could materially affect our business, financial condition and results of operations.

Certain of our customers have exerted and continue to exert considerable pressure on us to reduce prices and costs, improve quality, provide additional supplemental information, and provide additional design and engineering capabilities. We may be unable to generate sufficient production cost savings in the future to offset required price reductions and increased requirements and administrative burden. Future price reductions, increased quality and other requirementsrequirements, and the cost of adding additional engineering capabilities may reduce our profitability and have a material adverse effect on our business, financial condition and results of operations. These factors also create challenges in developing accurate internal forecasts or financial models that we use as a basis for making strategic, operational and capital allocation decisions, and our inability to accurately forecast future financial results may create inefficiencies and have an adverse effect on our business.

The markets in which we operate are highly competitive. We compete with a large number of other manufacturers in each of our product areas and many of these competitors have greater resources and sales. Price, serviceservice, and product performance are significant elements of competition in the sale of our products. Competition may intensify further if more companies enter the markets in which we operate. Failure to innovate and to develop or acquire new and compelling products that capitalize upon new technologies in response to these evolving consumer preferences and demands could adversely affect our business, financial condition, and operating results and cash flows.results.

The sales cycles for our automotive and commercial vehicle products are lengthy because the manufacturers must develop high degrees of assurance that the products they buy will meet their needs, interface correctly with the other parts of a vehicle and with the manufacturer’s production and assembly process, and have minimal warranty, safetysafety, and service problems. While we currently have active development programs with various OEMs for a variety of our products, no assurance can be given that our products will be implemented in any particular vehicles. If our products are not selected after a lengthy development process, our business, financial condition and results of operations could be adversely affected.

Our supply agreements with our OEM customers aredo generallynot requirementscontain contracts,guaranteed volumes, and a decline in the production requirements of any of our customers, and in particular our largest customers, could adversely impactaffect our revenues and profitability.

We receive OEM purchase orders for specific components supplied for particular vehicles. In most instances, our OEM customers agree to purchase their requirements for specific products but are not required to purchase any minimum amount of products from us. The arrangements we have entered into with most of our customers have terms ranging from one year to the life of the model (usually three to seven years), although customers often reserve the right to terminate for convenience. Therefore, a significant decrease in demand for certain key models or group of related models sold by any of our major customers or the ability of a manufacturer to re-source and discontinue purchasing from us, for a particular model or group of models, could have a material adverse effect on us. For example, a significant program for a major EV customer rolled-off in fiscal 2024 and a major automotive center console program rolled-off in fiscal 2025. To the extent that we do not maintain our existing level of business with our largest customers because of a decline in their production requirements or because the contracts expire or are terminated for convenience, we will need to attract new customers or win new business with existing customers, or our results of operations and financial condition will be adversely affected.

A portion of our workforce is unionized, primarily in Mexico, MaltaMalta, and Finland. A prolonged work stoppage or strike at any facility with unionized employees could increase costs and prevent us from supplying customers. In addition, upon the expiration of existing collective bargaining agreements, we may not reach new agreements without union or works council action in certain jurisdictions, and any such new agreements may not be on terms satisfactory to us. If we are unable to negotiate acceptable collective bargaining agreements, we may become subject to union-initiated work stoppages, including strikes. Moreover, additional groups of currently non-unionized employees may seek union or works council representation in the future.

Our primary sources of liquidity are cash generated from operations and availability under our $400 million revolving credit facility.facility Asthat ofmatures Mayon 3,October 2025,31, $319.4 million was outstanding under the revolving credit facility.2027. Our senior secured credit agreement provides for variable rates of interest based on, among other things, the currency of the borrowing and our consolidated leverage ratio and contains customary representations and warranties, financial covenants, restrictive covenantscovenants, and events of default. The obligations under our senior secured credit agreement are secured by a lien on substantially all of our personal property and our U.S. subsidiaries that are guarantors, including 100% of the equity interests of their respective U.S. subsidiaries and 65% of the equity interests of their respective foreign subsidiaries (or such greater amount to the extent such pledge could not reasonably cause adverse tax consequences).

Any breach or violation of any of the covenants or other restrictions in our senior secured credit agreement, or any other debt arrangement, could result in an event of default and give the lenders thereunder the right to accelerate the indebtedness thereunder or exercise other remedies that could have a material adverse effect on our liquidity and our business, financial condition and results of operations.

Borrowings under our senior secured credit agreement are at variable rates of interest and expose us to interest rate risk. If interest rates continue to increase, our debt service obligations on any variable rate indebtedness could increase even if the amount borrowed remained the same, which could adversely impactaffect our results of operations. In order to manage our exposure to interest rate risk, we have at times entered into, and may continue to enter into, derivative financial instruments, typically interest rate swaps, involving the exchange of floating for fixed rate interest payments. If we are unable to enter into interest rate swaps, it may adversely impactaffect our results of operations, and, even if we use these instruments to selectively manage risks, there can be no assurance that we will be fully protected against material interest rate fluctuations.

We have recognizedrecorded a significant impairmentamount chargesof forlong-lived ourassets, goodwill and may be required to recognize additional impairment charges in the future for goodwillgoodwill, and other intangible assets.assets, which may become impaired in the future. Future impairment of these assets could have a material adverse impacteffect on our financial condition and results of operations.

A significant portion of our long-term assets consists of goodwilllong-lived assets, goodwill, and other intangible assets recorded as a result of past acquisitions. WeUnder dogenerally notaccepted amortizeaccounting pricings in the U.S. (“GAAP”), long-lived assets, excluding goodwill and indefinite-lived intangible assets, butare ratherrequired reviewto thembe evaluated for impairment onwhenever an annual basis or more frequently wheneveradverse events or changes in circumstances indicate thata theirpossible carryingimpairment. valueIf business conditions or other factors cause profitability and cash flows to decline, we may not be recoverable.required Theto processrecord a non-cash impairment charge to earnings that could adversely affect our financial condition and results of evaluating the potential impairment of goodwill and other intangible assets requires significant judgment. In fiscal 2024, we recorded a $105.9 million non-cash goodwill impairment charge.operations.

Goodwill and indefinite-lived intangible assets must be evaluated for impairment annually or more frequently if events indicate it is warranted. The process of evaluating the potential impairment of goodwill and other intangible assets requires significant judgment. Negative industry or economic trends, including reduced estimates of future cash flows, disruptions to our business, slower growth rates, or lack of growth in our relevant business units, could lead to further impairment charges against our goodwill and other intangible assets. In the event that we determine that our goodwill or other intangible assets are impaired, we may be required to record a significant charge to earnings that could adversely affect our financial condition and results of operations.

Our business requires us to manage inventory effectively. We depend on non-binding customer forecasts of demand to make purchasing decisions and to manage our inventory. Customer commitments are often significantly shorter than lead times necessary to procure the raw materials, components, and consumables needed to manufacture our products. Demand for products, however, can change significantly between the time inventory or components are ordered and consumed. If we fail to manage our inventory effectively, we may be subject to a heightened risk of inventory obsolescence, a decline in inventory values, and significant inventory write-downs or write-offs, which could have a material impactaffect on our business, financial condition and results of operations. In fiscal 2025, we recorded inventory obsolescence charges of $20.4 million.

A significant fluctuation between the U.S. dollar and other currencies could adversely impactaffect our business, results of operations and financial condition.

Changes in our effective tax rate may adversely impactaffect our results of operations.

Our future effective tax rates could be adversely affected by changes in tax laws, both domestically and internationally, or the interpretation or application thereof. From time to time, the U.S. federal, state, and foreign governments enact legislation that could increase our effective tax rate or the effective tax rates of our consolidated affiliates. We cannot determine whether, or in what form, future tax legislation will ultimately be enacted or what impacteffect any such legislation could have on our profitability, and we will continue to monitor any such legislation.

Further, the Organization for Economic Co-operation and Development (“OECD”) has a framework to implement a global minimum corporate tax of 15% for companies with global revenues and profits above certain thresholds (commonly referred to as “Pillar 2”),. withA certain aspectsnumber of Pillar 2 that were effective for us in fiscal 2025 and other aspects which will be effective in fiscal 2026. While it is uncertain whether the U.S. will enact legislation to adopt Pillar 2, certain countriesjurisdictions in which we operate have adoptedenacted legislation,Pillar and2 otherlegislation countrieseffective arebeginning in thefiscal process2025, ofwith introducingadditional legislationjurisdictions implementing or expected to implement Pillarsuch 2.rules Althoughin wefiscal do2026 notand expectbeyond. PillarThese 2rules are complex and continue to haveevolve, aincluding materialthrough impactongoing onadministrative our effective tax rate or our consolidated results of operations, financial position,guidance and cashinterpretive flowsframeworks. at this time, certainCertain implementation details have yet to be developed, and the enactment of certain of these changes has not yet taken effect in all jurisdictions in which we operate. As a result, these changes may have adverse consequences for us, may increase our compliance costs, and may increase the amount of tax we are required to pay in certain jurisdictions.

Executive Overview

We are a leading global supplier of custom engineered solutions with sales, engineeringengineering, and manufacturing locations in North America, Europe, the Middle EastEast, and Asia. We design, engineerengineer, and producemanufacture mechatronic products for Original Equipment Manufacturers (“OEMs”) utilizingand ourtiered broadsuppliers rangeacross ofmobility, technologiesindustrial, forand commercial markets. Our capabilities include power distribution, including busbars, smart connect systems, battery disconnect units, and integrated circuit boards; as well as user interface,interface components, specialized light-emitting diode (“LED”) lighting system, power distributionsolutions, and sensor applications.

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

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

Although we saw improvements in our supply chain in fiscal 2025,2026, including easing of the worldwide semiconductor supply shortage, new supply chain disruptions may occur in the future. In addition, we have experienced, and may continue to experience, business interruptions, including customer shutdowns and increased material and logistics costs and labor shortages. Changes in government regulations in areas including, but not limited to, trade and tariff regulations as noted above, could also increase our costs. We continue to work closely with suppliers and customers to minimize the potential adverse impact from global supply chain disruptions. However, if we are not able to mitigate any direct or indirect supply chain disruptions, this may have a material adverse impact on our financial condition, results of operations and cash flows.

Our fiscal year ends on the Saturday closest to April 30 of the following year, typically resulting in a 52-week year, but occasionally giving rise to an additional week, resulting in a 53-week year. The fiscal year ended May 2, 2026 was a 52-week fiscal year. The fiscal year ended May 3, 2025 was a 53-week fiscal year. The fiscal year ended April 27, 2024 was a 52-week fiscal year. A detailed comparison of our results of operations between fiscal 20242025 and fiscal 20232024 can be found in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our fiscal 20242025 Annual Report on Form 10-K filed with the SEC on July 11,9, 2024 The table below compares our results of operations between fiscal 2025 and fiscal 2024:2025.

Cost of products sold decreased $51.0$67.7 million, or 5.5%,7.7%, to $817.0 million (80.2% of net sales) in fiscal 2026, compared to $884.7 million (84.4% of net sales) in fiscal 2025, compared to $935.7 million (84.0% of net sales) in fiscal 2024.2025. Foreign currency translation decreasedincreased cost of products sold by $0.3$26.3 million. Excluding foreign currency translation, cost of products sold decreased $51.3$94.0 million. The decrease was primarily due to lower materialsales volume and freightproduct costsmix, asimproved aoperational resultefficiencies, ofincluding amaterial, decreasescrap, inand sales volumes, lower premium freightfreight, and lower restructuring costs, partially offset by higher inventory obsolescence expense of $10.0 million.adjustments. Restructuring and impairment charges included within cost of products sold were $0.8 million in fiscal 2026, compared to $1.1 million in fiscal 2025, compared to $1.7 million in fiscal 2024.2025.

Gross profit margin was 19.8% of net sales in fiscal 2026, compared to 15.6% of net sales in fiscal 2025, compared to 16.0% of net sales in fiscal 2024.2025. The decreaseincrease in gross profit margin was primarily a result of highercustomer inventoryrecoveries obsolescenceand expense,improved partiallyoperational offset by favorable product mix from higher salesefficiencies in thefiscal Industrial segment.2026.

Amortization of intangibles decreased $0.6$0.3 million, or 2.5%,1.3%, to $23.1 million in fiscal 2026, compared to $23.4 million in fiscal 2025, compared to $24.0 million in fiscal 2024.2025. The decrease was a result of fully amortizing a portion ofcertain intangible assets.assets being fully amortized in fiscal 2026.

Interest expense, net was $23.3 million in fiscal 2026, compared to $22.0 million in fiscal 2025, compared to $16.7 million in fiscal 2024.2025. The increase was primarily due to higherthe borrowingunfavorable rates.effects of foreign exchange rates on the euro denominated interest.

Income tax expense was $25.0 million in fiscal 2026, compared to an income tax expense of $12.5 million in fiscal 2025,2025. comparedThe to incomeeffective tax benefit of $4.8 millionrate in fiscal 2024.2026 differs from the U.S. federal statutory tax rate of 21% primarily due to an increase in a valuation allowance for deferred tax assets, an unfavorable effect from global intangible low-tax income, and Pillar 2 top-up tax. The effective tax rate in fiscal 2025 differs from the U.S. federal statutory tax rate of 21% primarily due to an increase in a valuation allowance for deferred tax assets and an unfavorable impact from global intangible low-tax income, partially offset by a decrease in tax reserves. The effective tax rate in fiscal 2024 differs from the U.S. federal statutory tax rate of 21% primarily due to income derived from foreign operations with lower statutory tax rates and research deductions claimed in foreign jurisdictions, partially offset by non-deductible goodwill impairment, withholding taxes and global intangible low-tax income.

Net loss was $35.7 million in fiscal 2026, compared to $62.6 million in fiscal 2025, compared to $123.3 million in fiscal 2024.2025. The net loss was aattributable result ofto the reasonsaforementioned described above.items.

Automotive segment net sales decreased $89.3$41.2 million, or 14.9%,8.1%, to $467.7 million in fiscal 2026, compared to $508.9 million in fiscal 2025, compared to $598.2 million in fiscal 2024.2025. Excluding foreign currency translation, net sales decreased $88.9$59.3 million,million. orThere 14.8%.was one less week within fiscal 2026 as compared to fiscal 2025.

Net sales in North America decreased $28.5$49.0 million,million orto 10.7%,$188.1 million in fiscal 2026, compared to $237.1 million in fiscal 2025, compared to $265.6 million in fiscal 2024.2025. The decrease was due to theprogram roll-off of legacy programs,roll-offs, partially offset by customer recoveries of $22.5 million and new program launches. Net sales in EMEA increased $23.3$7.0 million,million orto 10.8%,$246.5 million in fiscal 2026, compared to $239.5 million in fiscal 2025, compared to $216.2 million in fiscal 2024.2025. Excluding foreign currency translation, net sales in EMEA increaseddecreased $23.5$10.4 million primarily due to new program launches, partially offset by lower sales volumes of sensor products. Net sales in Asia decreasedincreased $84.1$0.8 million, or 72.3%,2.5%, to $33.1 million in fiscal 2026, compared to $32.3 million in fiscal 2025, compared to $116.4 million in fiscal 2024.2025. Excluding foreign currency translation, net sales in Asia decreasedincreased $83.9$0.1 million primarily due to a program roll-off and lower sales volumes of lead frame products.million.

Automotive segment gross profit decreasedincreased $25.7$23.1 million,million orto 84.5%,$27.8 million in fiscal 2026, compared to $4.7 million in fiscal 2025,2025. comparedGross profit margins increased to $30.4 million5.9% in fiscal 2024.2026, from 0.9% in fiscal 2025. Excluding the impacteffects of foreign currency translation, gross profit decreasedincreased $25.0$18.9 million. Gross profit margins decreased to 0.9% in fiscal 2025, from 5.1% in fiscal 2024. The decreaseincrease in gross profit was due to customer recoveries of $22.5 million, lower salesadjustments volumesto in North Americainventory, and Asia,improved higheroperational inventoryefficiencies, obsolescencewhich expense, higher salary expense and higher warranty expense, partiallywas offset by lowerprogram freight costs.roll-offs.

InterfaceAutomotive segment incomeloss from operations increasedwas $3.4 million, or 49.3%, to $10.3$30.1 million in fiscal 2025,2026, compared to $6.9$47.7 million in fiscal 2024.2025. Excluding the effects of foreign currency translation, loss from operations decreased $15.3 million. The increase was primarily due to higher gross profit and lower selling and administrative expenses, primarily salary expense.expenses.

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

Our business, financial condition, results of operations and cash flows are subject to various ‎risks which could cause actual results to vary from recent results or from anticipated future results. ‎Please refer to Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended May 3, 2025 and Part II, Other Information, Item 1A “Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended August 2, 2025,2026 for a description of certain material risks and uncertainties to which our business, financial condition and results of operations are subject. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially ‎and adversely affect our business, financial condition and/or operating results.‎

• Dependence on the automotive, commercial vehicle, data center and construction industries;

• Timing, quality and cost of new program launches;

• Changes in electric vehicle (“EV”) demand;

• Investment in programs prior to the recognition of revenue;

•Effects Productionfrom production delays or cancelled orders;

• Changes in global trade policies, including tariffstariffs, and other costs of our global business;

• Failure to attract and retain qualified personnel;

•Effects Inflationfrom inflation;

• Dependence on the availability and price of materials;

• Dependence on a small number of large customers;

• Dependence on our supply chain;

• Risks related to conducting global operations;

• Risks relatingrelated to ourgeopolitical use of requirements contractsconflicts;

•Our Abilityability to managecompete our debt levelseffectively;

•Our Abilityability to complysuccessfully withbenefit restrictionsfrom acquisitions and covenants under our credit agreementdivestitures;

• Interest rate changes and variable rate instruments;

• Timing and magnitude of costs associated with restructuring activities;

• Recognition of goodwill andgoodwill, other intangible asset, and long-lived asset impairment charges;

• Risks associated with inventory;

• Currency fluctuations;

• Income tax rate fluctuations;

• Judgments related to accounting for tax positions;

• Risks associated with litigation and government inquiries;

• Risks associated with warrantygovernment claimsinquiries;

•Effects Changingof changing government regulations;

• Changing requirements by stakeholders on environmental or social matters;

• Effects of information technology (“IT”) disruptions or cybersecurity incidents;

•Our Abilityability to innovate and keep pace with technological changes; and Our ability to protect our intellectual property.

Additional details and factors are discussed under the caption “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended May 3,2, 2025 and in Part II, Item 1A of this Quarterly Report.2026. New risks and uncertainties arise from time to time, and it is impossible for us to predict these events or how they may affect us. Any forward-looking statements made by us speak only as of the date on which they are made. We are under no obligation to, and expressly disclaim any obligation to, update or alter our forward-looking statements, whether as a result of new information, subsequent events or otherwise.

We are a leading global supplier of custom engineered solutions with sales, engineeringengineering, and manufacturing locations in North America, Europe, the Middle East, and Asia. We design, engineer, and producemanufacture mechatronic products for Original Equipment Manufacturers (“OEMs”) utilizingand ourtiered broadsuppliers rangeacross ofmobility, technologiesindustrial, forand commercial markets. Our capabilities include power distribution, including busbars, smart connect systems, battery disconnect units, and integrated circuit boards; as well as user interface,interface components, specialized light-emitting diode (“LED”) lighting system, power distribution,solutions, and sensor applications. Our business is managed on a segment basis, with those segments being Automotive, Industrial and Interface.

MacroeconomicRecent Trends and Market Conditions

Geopolitical Conflicts and Global Supply Chain Disruptions