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

Our business and operations, and the operations of our suppliers, business partners and customers, were adversely affected by the Coronavirus (or COVID-19) pandemic which is impacted worldwide economic activity including in many countries or localities in which we operate, sell, or purchase goods and services. Any future pandemics or other global health crises could similarly have an adverse effect on our revenues, operating results, cash flow and financial condition. The ultimate extent to which any such circumstance impacts our business will depend on the severity, location and duration of the issue, the actions undertaken in response by local and world governments and health officials, and the success of medical efforts to address and mitigate the threat.

We are subject to inflationary impacts across the world which could materially increase our costs of materials, labor and transportation. We attempt to maintain our profit margins by anticipating such inflationary pressures and increasing our prices where possible in accordance with contractual requirements and competitive conditions. While we thus far have been largely successful in mitigating the impact of such inflationary conditions, we may be unable to continue to increase our own prices sufficiently to offset cost increases, and, to the extent that we are able to do so, we may not be able to maintain existing operating margins and profitability. Additionally, competitors operating in regions with less inflationary pressure may be able to compete more effectively which could further impact our ability to increasesincrease prices and/or result in lost sales.

Current and threatened tariffs on components and finished goods from ChinaChina, India and other countries could result in lower net sales, profits and cash flows and could impair the value of our investments in our Chinese operations.

As part of our low-cost country sourcing strategy, we (i) maintain manufacturing facilities in China and India and (ii) import certain components and finished goods from our own facilities and third-party suppliers in China.China and India. Many of the components and finished goods we import from China and India are or have been subject to tariffs enacted by the United States government. While we attempt to pass on these additional costs to our customers, competitive factors (including competitors who import from other countries subject to lower tariffs) may limit our ability to sustain price increases and, as a result, may adversely impact our net sales, profits and cash flows. The maintenance of such tariffs over the long-term also could impair the value of our investments in our Chinese and Indian operations. In addition, the imposition of tariffs may influence the sourcing habits of certain end users of our products and services which, in turn, could have a direct impact on the requirements of our direct customers for our products and services. Such an impact could adversely affect our net sales, profits and cash flows.

Natural disasters, such as hurricanes, tornadoes, floods, earthquakes, and other adverse weather and climate conditions; political crises, such as terrorist attacks, war, labor unrest, and other political instability; or other catastrophic events, such as disasters occurring at our suppliers' manufacturing facilities, whether occurring in the United States or internationally, could disrupt our operations or the operations of one or more of our suppliers. Certain of our key manufacturing facilities are located in geographic areas with a higher than nominal risk of earthquake and flood (such as Japan and Southern California) and hurricane (such as South Carolina). The effects of global warming have elevated the possibility of natural catastrophes which could impact these and other locations as well as the locations of certain of our customers and suppliers. Certain of our key facilities are in areas of higher than nominal political risk (such as China). The labor workforces in fourthree of our U.S. facilities belong to unions and a strike, slowdown or other concerted effort could adversely impact production at the affected facility. To the extent any of these events occur, our operations and financial results could be adversely affected.

We are a diversified industrial manufacturer with leading positions in a variety of products and services that are used in diverse commercial and industrial markets. We have sixfour operating segments that aggregate to fiveand reportable segments. Please refer to Item 1. Business, above, for additional information regarding our segment structure and management strategy.

Net sales increased for fiscal year 20252026 by $69.5$101.5 million, or 9.6%12.8% when compared to the prior year period. Acquisitions accounted for increased sales of $123.6$66.4 million, or 17.2%.8.4%. Divestitures reduced sales by $12.8 million, or 1.6%. Organic sales decreasedincreased by $53.8$43.6 million, or 7.5%,5.5%, primarily due to generalincreased economicsales softnessinto infast Europegrowth markets and North America in the Electronics segment, the impact of National Institutes of Health (NIH) funding cuts in the Scientific segment and continued softness in North Americacontributions from delays in new platform rollout in the Engraving segment.products. Sales included $184.2$263.8 million in the period attributed to fast growth markets. New products accounted for 2.5%5.3% of sales growth.

Gross profit in fiscal year 20242026 decreasedincreased to $282.0$372.0 million, or a gross margin of 39.1%,41.7%, as compared to $285.1$315.2 million, or a gross margin of 38.5%,39.9%, for the prior yearyear. period.The Thismargin decreaseincrease was a result of organichigher salesvolume decreases of $37.6 million, approximately $2.8 million of net inflationary impacts inand the areascontinued offocus labor and raw material and by the divestiture of the Procon business. The decreases were partially offset by contributions from the Minntronix acquisition,on pricing actionsdisciplines and productivity initiatives.actions.

During fiscal year 2025,2026, we incurred restructuring expenses of $6.9$12.2 million, primarily related to facility rationalization activities,activities and globalannounced headcountclosure reductionsof mostlyfour sites within our Engraving & Hydraulics segment as well as restructuring activities within our Electronics segment. We expect to continue seeing realization of the benefit of these restructuring actions into fiscal year 2027.

During fiscal year 2024,2025, we incurred restructuring expenses of $8.2$6.9 million, primarily related to facility rationalization activities, and global headcount reductions primarilymostly within our Electronics, Engineering Technologies and Engraving segments& andHydraulics as well as the Corporate headquarters.segment.

AcquisitionDeal Related Costs

We incurred acquisitiondeal related expenses of $21.4$4.1 million and $2.6$21.4 million in fiscal year 20252026 and 2024,2025, respectively. AcquisitionDeal related costs typically consist of due diligence, advisory, legal, integration, and valuation expensesactivities incurred in connectionassociated with recent or pending acquisitions or divestitures transactions. Deal related costs were lower in fiscal year 2026 as compared to 2025 mainly due to 2025 acquisitions.

Interest expense for fiscal year 20252026 was $23.9$30.7 million, an increase of $19.3$6.8 million as compared to the prior year. The increase in interest expense in fiscal 2025was2026 was primarily due to increasedlonger period over which the debt towas fund fiscal 2025 acquisitions. Our effective interest rateoutstanding in fiscal 2025 was 6.38%. Interest expense for fiscal year 2024 was $4.5 million, a decrease of $0.9 million as compared to the prior year.2026.

On July 4, 2025, the U.S. government enacted The One Big Beautiful Bill Act of 2025 (“OBBBA”) which includes, among other provisions, changes to the U.S. corporate income tax system including the allowance of immediate expensing of qualifying research and development expenses and permanent extensions of certain provisions within the Tax Cuts and Jobs Act. Certain provisions are effective beginning fiscal 2026. We are evaluating the future impact of these tax law changes on our financial statements The Organization for Economic Co-operation and Development (OECD) and the G20 Inclusive Framework on Base Erosion and Profit Shifting (the "Inclusive Framework") have put forth Pillar Two proposals that ensure a minimal level of taxation. Several countries in which the Company operates, including several European Union member states, have adopted domestic legislation to implement the Inclusive Framework's global corporate minimum tax rate of fifteen percent. This legislation became effective for the Company beginning July 1, 2024. Based on the Company's analysis of Pillar Two provisions, these tax law changesOBBBA did not have a material impact on the Company'sCompany’s financial statements for fiscal 2025.year 2026.

Backlog includes all active or open orders for goods and services. Backlog also includes any future deliveries based on executed customer contracts, so long as such deliveries are based on agreed upon delivery schedules. Backlog orders are not necessarily an indicator of future sales levels because of variations in lead times and customer production demand pull systems, with the exception of Engineering Technologies.A&D. Customers may delay delivery of products or cancel orders prior to shipment, subject to possible cancellation penalties. Due to the nature of long-term agreements in the Engineering TechnologiesA&D segment, the timing of orders and delivery dates can vary considerably resulting in significant backlog changes from one period to another.

Looking forward to fiscal year 2026, barring any unforeseen economic, global trade, or tariff related disruptions, we expect revenue to grow by over $100 million, primarily driven by mid-to-high-single-digit organic growth in Electronics, double-digit organic growth in Engineering Technologies, and the contribution from recent acquisitions. We plan to release over fifteen20 new products which are projected to contribute approximately 300 bps of incremental growth. Sales from fast growth markets are expected to grow approximately 45%20% year-on-year andto exceedgreater $265than $310 million. In fiscal year 2026,2027, the Company is on track to further reduce its net debt to EBITDA ratio, positioning the Company well to fund future organic and inorganic opportunities.

Net sales in fiscal year 20252026 increased $78.2by $74.9 million, or 24.3%,18.7%, when compared to the prior year. AcquisitionsThe full year benefit of fiscal year 2025 acquisitions added $104.4$44.0 million, or 32.4%11.0% to net sales in 2025.2026. Organic sales decreasedincreased by $26.8$31.1 million, or 8.3%,7.8%, due to generalincreased marketsales softnessinto infast Europegrowth markets and Northincreased America.new Declinesproduct occurred across most markets, particularly industrial applications, transportation and utilities.sales. The foreign currency impact increaseddecreased sales by $0.6$0.3 million, or 0.2%.0.1% Theas Amrancompared Narayan acquisition took place in 2025 whileto the 2024prior acquisitions included Minntronix, Sanyu and SEPL.year.

Income from operations in the fiscal year 20252026 increased $23.9by $33.4 million, or 37.3%,38.0%, when compared to the prior year. AcquisitionsThe contributed $25.8 millionoperating income fromincrease operations.was Pricing,the result of higher volume, pricing initiatives and productivity initiatives, and favorable product mix weremix, partially offset by lowergrowth core volume.investments.

Net sales in fiscal year 20252026 increased $19.1by $32.4 million, or 22.9%,31.6%, when compared to the prior year. SalesThe sales increase was attributable to the full year benefit of the acquisition of McStarlite which added $11.6$17.5 million or 17.1% to revenue and an organic sales increase of $5.8$14.5 million,million or 8.6%14.1% driven by growthincreased project activity in the space and aviationdefense end markets. Foreign currency impact increased net sales by $0.4 million or 0.4% as compared to the prior year.

Income from operations in fiscal year 20242026 increased $4.2by $0.6 million, or 37.7%,3.2%, when compared to the prior year. The increase was primarilyyear due to contribution from the impact of pricing and productivity initiatives,acquisition partially offset by researchorganic and development.decline.

Income from operations in fiscal year 2025 decreased by $1.5 million,million or 8.1%, when compared to the prior year due to organic decline partially offset by contribution from the acquisition and price and productivity initiatives.

Net sales in fiscal year 20252026 decreasedincreased by $22.3$3.0 million, or 14.8%,1.7%, compared to the prior year. Organic sales decreased by $20.9$1.1 million, or 13.9%,0.6%, primarily as a result of delaysgeneral inmarket new platform rollouts in North America.softness. Foreign exchange impacts reducedincreased sales by $1.4$4.1 million, or 0.9%.2.3% as compared to prior year.

Income from operations in fiscal year 20242026 increased by $1.2$2.2 million, or 4.9%,8.9%, when compared to the prior year. OperatingThe operating income increasedincrease duringwas supported by higher sales and the periodrealization reflectingof previously announced productivity actions,initiatives offsettingand slowerrestructuring demand in North America sales.actions.

Net sales forin fiscal year 2025 decreased $8.9by million,$26.7 million or 9.4% when13.0% compared to the prior yearyear. reflectingOrganic generalsales marketdecreased softnessby $25.3 million, primarily as a result of delays in thenew Displayplatform Merchandising business androllouts in theNorth HydraulicsAmerica. business.Foreign exchange impacts reduced sales by $1.4 million, or 0.9%.

Income from operations forin fiscal year 2025 decreased $4.8by $11.9 million, or 24.4%,32.0%, when compared to the prior year dueprimarily toas a result of lower volumes.demand in North America, partially offset by productivity actions.

CorporateNet expensessales in fiscal year 20252026 decreased $0.8by $12.2 million, or 2.3%,34.3%, when compared to the prior year,year quarter primarily due to reductiondivestiture in incentive compensation.timing.

CorporateIncome expensesfrom operations in fiscal year 20242026 decreased $3.0by $3.3 million, or 8.6%,44.7%, when compared to the prior year. Corporate expenses in fiscal year 2024quarter, reflectdue reductionsto indivestiture incentivetiming compensation.and higher tariff costs which have been partly offset by increased pricing.

We are a diversified industrial manufacturer with leading positions in a variety of products and services that are used in diverse commercial and industrial markets. We are headquartered in Salem, New Hampshire, and have six operating segments aggregated into five reportable segments: Electronics, Engineering Technologies, Scientific, Engraving, and Specialty Solutions. Two operating segments are aggregated into Specialty Solutions.Hampshire. Our businesses work in close partnership with our customers to deliver custom solutions or engineered components that solve their unique and specific needs, an approach we call "Customer Intimacy".

It is our objective to grow larger and more profitable business units through a commitment to both organic and inorganic initiatives. We have a particular focus on identifying and investing in businesses, new products and new applications that complement our existing products and will increase our overall scale, global presence and capabilities. We continue to execute onpursue acquisitions that are strategically aligned with our businesses and where the opportunity meets our investment metrics. We have divested, and likely will continue to divest, businesses that are not strategic or do not meet our growth and return expectations.

We believe the discussion of these items provides enhanced information to investors by disclosing their impact on the overall trend which provides a clearer comparative view of the KPI, as applicable. For discussion of the impact of foreign exchange rates on KPIs, we calculate the impact as the difference between the current period KPI calculated at the current period exchange rate as compared to the KPI calculated at the historical exchange rate for the prior period. For discussion of the impact of acquisitions,acquisitions or divestitures, we isolate the effect on the KPI amount that would have existed regardless of such acquisition.acquisition or divestiture. Sales resulting from synergies between the acquisition and existing operations of the Company are considered organic growth for the purposes of our discussion.

Net sales increased in the secondthird quarter of fiscal year 2026 by $31.5$16.8 million or 16.6%,8.1%, when compared to the prior year quarter. Acquisitions accounted for increased sales of $17.8$3.3 million or 9.4%.1.6%. Divestitures reduced sales by $2.9 million, or 1.4%. Foreign currency positively impacted sales by $1.6$2.9 million, or 0.8%.1.4%. Organic sales increased $12.2$13.5 million, or 6.4%,6.5%, primarily due to increased sales into fast growth markets and contributions from new products.

Net sales increased in the sixnine months ended DecemberMarch 31, 20252026 by $78.5$95.3 million or 21.8%,16.8%, when compared to the prior year period. Acquisitions accounted for increased sales of $63.5$66.9 million or 17.6%.11.8%, while divestitures reduced sales by $3.0 million or 0.5%. Foreign currency positively impacted sales by $2.2$5.1 million, or 0.6%.0.9%. Organic sales increased $12.7$26.3 million, or 3.5%,4.6%, primarily due to increased sales into fast growth markets and contributions from new products.

Gross profit in the secondthird quarter of fiscal year 2026 increased to $92.2$91.9 million, or a gross margin of 41.7%40.9%, as compared to $71.4$82.4 million, or a gross margin of 37.6%,39.7%, in the secondthird quarter of fiscal year 2025. The margin increase was a result of the continued focus on pricing disciplines and productivity actions.

Gross profit in the sixnine months ended DecemberMarch 31, 20252026 increased to $182.7$274.6 million, or a gross margin of 41.6%41.4% as compared to $141.5$224.0 million, or a gross margin of 39.3%,39.4%, in the prior year period. The margin increase was a result of the continued focus on pricing disciplines and productivity actions.

Selling, General, and Administrative (“SG&A”) expenses for the secondthird quarter of fiscal year 2026 increased to $55.6$52.4 million, or 25.1%23.3% of sales as compared to $45.7$52.0 million, or 24.1%25.1% of sales during the prior year quarter. SG&A expenses during the secondthird quarter of fiscal year 2026 were primarily impacted by increased expenses due to the recent acquisitions, research and development initiatives, andhigher U.S. medical costs as compared to the prior year quarter.

Selling, General, and Administrative (“SG&A”) expenses for the sixnine months ended DecemberMarch 31, 20252026 increased to $110.0$162.4 million, or 25.1%24.5% of sales as compared to $88.7$140.8 million, or 24.6%24.8% of sales during the prior year period. SG&A expenses during the sixnine months ended DecemberMarch 31, 20252026 were primarily impacted by increased expenses due to the recent acquisitions, research and development initiatives,development, and higher U.S. medical costs as compared to the prior year period.

We incurred restructuring expenses of $0.4$3.0 million in the secondthird quarter of fiscal year 2026, and $6.4$9.4 million in the first sixnine months of fiscal year 2026 primarily related to facility rationalization activities and announced closure of four sites in our Engraving & Hydraulics segment. We haveexpect substantiallyto completedcontinue ourseeing realization of these restructuring activitiesactions induring Engravingthe last quarter of fiscal year 2026 and areinto wellfiscal positionedyear to better serve our customers.2027.

AcquisitionDeal Related Costs

We incurred acquisitiondeal related expenses of $0.6$2.5 million in the secondthird quarter of fiscal year 2026 and $1.0$3.6 million in the first sixnine months of fiscal year 2026. AcquisitionDeal related expenses typicallyprimarily consist of costs related to due diligence, advisory, legal, integration, and valuation expensesactivities incurred in connectionassociated with recent or pending acquisitions.acquisitions or divestitures transactions.

Income from operations for the secondthird quarter of fiscal year 2026 was $35.6$90.8 million, compared to $8.5$26.3 million during the prior year quarter. The increase of $27.1$64.6 million, or 320.3%,246.0%, is primarily due to the gain on the divestiture of Federal Industries, contributions from recent acquisitions, productivity improvement initiatives, and lower purchase accounting and acquisition related costs, partially offset by increase in administrative and research and development expenses.

Income from operations for the sixnine months ended DecemberMarch 31, 20252026 was $65.2$156.0 million, compared to $32.6$58.8 million during the prior year period. The increase of $32.6$97.2 million, or 100.3%,165.3%, is primarily due to the contributionsgain fromon the divestiture of Federal Industries, effects of recent acquisitions, productivity improvement initiatives, and lower purchase accounting and acquisitiondeal related costs, partially offset by increase in administrative and research and development expenses.

Interest expense for the secondthird quarter of fiscal year 2026 was $7.9$7.3 million, ana increasedecline of $2.3$1.0 million from the prior year quarter.quarter, Interestdue expenseprimarily forto thelower sixaverage monthsdebt endedbalance, Decembermore 31,favorable 2025interest wasrates $16.8and million,a an increase of $10.3 million from the prior year period. Our effectivefavorable interest rate for the six months ended December 31, 2025 was 6.03%.swap.

The Company's effective tax rate from continuing operations for the secondthird quarter of fiscal year 2026 and for the sixnine months ended DecemberMarch 31, 20252026 was 24.1%17.0% and 24.3%,19.7%, respectively, compared with 35.5%-29.6% and 22.6%1.1% for the prior year quarter and prior year period, respectively.

The tax rate was impacted in the three and sixnine months ended DecemberMarch 31, 20242026 by the following items: (i) the recognition of a discrete tax benefit relatedof toapproximately equity$6 compensation, (ii) a discrete tax expensemillion related to the write-offrelease of foreigna valuation allowance previously recorded against the capital loss carryforward deferred tax assets,asset, (iii)due to the jurisdictionalutilization of such carryforward in connection with the divestiture of Federal Industries; (ii) changes in the geographic mix of earnings,earnings; (iviii) foreign withholding taxes; and (viv) federal tax credits related to research and development tax credits.activities.

Backlog includes all active or open orders for goods and services. Backlog also includes any future deliveries based on executed customer contracts, so long as such deliveries are based on agreed upon delivery schedules. Backlog orders are not necessarily an indicator of future sales levels because of variations in lead times and customer production demand pull systems, with the exception of EngineeringAerospace Technologies.& Defense. Customers may delay delivery of products or cancel orders prior to shipment, subject to possible cancellation penalties. Due to the nature of long-term agreements in the EngineeringAerospace Technologies& Defense segment, the timing of orders and delivery dates can vary considerably resulting in significant backlog changes from one period to another.

Total backlog realizable under one year increased $43.2$55.2 million, or 18.1%,22.1%, to $282.1$305.1 million at DecemberMarch 31, 2025,2026, from $238.9$249.9 million at DecemberMarch 31, 2024.2025. The year over year increase is primarily driven by $31.2fast milliongrowth inend backlog from the recent acquisition in the Engineering Technologies segment.markets.

Net sales in the secondthird quarter of fiscal year 2026 increased $19.7$8.4 million, or 20.6%,7.6%, when compared to the prior year quarter. The recent acquisitions added $8.7 million, or 9.1%, in sales for the second quarter of fiscal year 2026. Organic sales increased by $10.6$7.5 million, or 11.1%,6.8%, due to sales into fast growth markets and increased new product sales. The foreignForeign currency impact increased net sales by 0.4%0.8% as compared to the prior year quarter.

Income from operations in the secondthird quarter of fiscal year 2026 increased by $12.4$6.2 million, or 70.9%,24.3%, when compared to the prior year quarter. The operating income increase was the result of higher volume, pricing initiatives and product mix.mix, partially offset by growth investments.

Net sales in the sixnine months ended DecemberMarch 31, 20252026 increased $52.6$61.0 million, or 30.3%,21.4%, when compared to the prior year quarter.period. The recent acquisitions added $44.5 million, or 25.6%,15.6%, in sales for the sixnine months ended DecemberMarch 31, 2025.2026. Organic sales increased by $7.8$15.3 million, or 4.5%,5.4%, due to sales into fast growth markets and increased new product sales. The foreignForeign currency impact increased net sales by 0.2%0.4% as compared to the prior year quarter.period.

Income from operations in the sixnine months ended DecemberMarch 31, 20252026 increased by $23.6$29.8 million, or 68.5%,49.7%, when compared to the prior year quarter.period. The operating income increase was the result of higher volume, pricing initiatives and product mix.mix, partially offset by growth investments.

In the thirdfourth quarter of fiscal year 2026, on a sequential basis, we expect slightly to moderately higher revenue,revenue reflecting higher sales into fast growth end markets and fromincreased new products.product sales. The Company expects similarslightly higher operating margin,margin primarilydue drivento higher revenue, partially offset by product mix and continued strategic growth investments.

Net sales in the secondthird quarter of fiscal year 2026 increased by $8.0$9.2 million, or 35.3%,33.7%, when compared to the prior year quarter. Sales increase was attributable to the acquisition of McStarlite which added $7.6$3.3 million to revenue and an organic sales increase of $0.3$5.7 million or 1.2%20.8% wasprimarily suppresseddriven by delaysincreased projects activity in customercommercialization projectof timing.space end market. Foreign currency impact increased net sales by 0.7% as compared to the prior year quarter.

Income from operations in the secondthird quarter of fiscal year 2026 increased by $0.7$2.4 million, or 18.6%,70.9%, when compared to the prior year quarter. The increase in operating income was a result of higher volume.

Net sales in the sixnine months ended DecemberMarch 31, 20252026 increased by $17.4$26.6 million, or 40.2%,37.7%, when compared to the prior year quarter.period. Sales increase was attributable to the acquisition of McStarlite which added $14.2$17.5 million or 24.9% to revenue and an organic sales increase of $2.9$8.6 million or 6.7%12.2% driven by growth in the space and aviation end markets. Foreign currency impact increased net sales by 0.6% as compared to the prior year period.

Income from operations in the sixnine months ended DecemberMarch 31, 20252026 increased by $0.3$2.7 million, or 3.8%,24.4%, when compared to the prior year quarter.period. The increase in operating income was a result of higher volume.

In the thirdfourth quarter of fiscal year 2026, on a sequential basis, we expect significantlyslightly to moderately higher revenue, due to growth in new product sales and more favorable project timing, and slightly to moderately higher operating margin due to higher volume.volume and realization of productivity initiatives.

Net sales in the secondthird quarter of fiscal year 2026 increaseddecreased by $1.0$0.3 million, or 5.5%,1.7%, when compared to the prior year quarter due primarily to an 8.1% benefit from the Custom Biogenic Systems acquisition, partially offset by an organic decline of 2.6% from lower demand at academic and research institutions that were impacted by NIH funding cuts.

Income from operations in the secondthird quarter of fiscal year 2026 decreased by $0.2 million, or 4.9%,4.8%, when compared to the prior year quarter due to organiclower decline partially offset by contribution from the acquisition.sales.

Net sales in the sixnine months ended DecemberMarch 31, 20252026 increased by $2.8$2.5 million, or 7.7%,4.5%, when compared to the prior year quarterperiod due primarily to an 13.3%$4.8 million benefit from the Custom Biogenic Systems acquisition, partially offset by an organic decline of 5.6%$2.3 million from lower demand at academic and research institutions that were impacted by NIH funding cuts.

Income from operations in the sixnine months ended DecemberMarch 31, 20252026 decreased $0.3$0.5 million, or 3.2%,3.7%, when compared to the prior year quarterperiod due to organic decline partially offset by contribution from the acquisition.

In the thirdfourth quarter of fiscal year 2026, on a sequential basis, we expect similarslightly higher revenue and slightly lowersimilar operating margin due to project and regionalproduct mix.

Net sales in the secondthird quarter of fiscal year 2026 decreasedincreased by $1.5$1.0 million, or 7.2%,2.2%, when compared to the prior year quarterquarter. primarilyOrganic duesales decreased by $0.8 million, reflecting weakness for hydraulics cylinders, partially offset by slightly improved demand for engraving services in North America and Asia. Foreign currency positively impacted net sales by 4.0% as compared to lowerthe demandprior inyear food service equipment and refuse and dump end markets.quarter.

Income from operations in the secondthird quarter of fiscal year 2026 decreasedincreased $1.5by $1.2 million, or 40.7%,23.4%, when compared to the prior year quarter,quarter. dueThe tooperating lowerincome volumeincrease was a result of realization of previously announced productivity initiatives and higherrestructuring tariff costs which have been partly offset by increased pricing.actions.

Net sales in the sixnine months ended DecemberMarch 31, 20252026 decreasedincreased by $1.0$7.6 million, or 2.3%,5.7%, when compared to the prior year quarterperiod. primarilyOrganic sales increased by $4.2 million, or 3.2%, due to lowerimproved demand in foodEurope, serviceNorth equipmentAmerica and refuseAsia. andForeign dumpcurrency endpositively markets.impacted net sales by 2.6% as compared to the prior year period.

Income from operations in the sixnine months ended DecemberMarch 31, 20252026 decreasedincreased $2.1by $2.8 million, or 29.7%,15.3%, when compared to the prior year quarter,period. dueThe tooperating income increase was driven by higher sales and the lowerrealization volumeof previously announced productivity initiatives and higherrestructuring tariff costs which have been partly offset by increased pricing.actions.

In the thirdfourth quarter of fiscal year 2026, on a sequential basis, we expect moderatelyslightly to significantly higherlower revenue and similar to slightly higher operating margin.margin from realization of productivity initiatives.

CorporateNet expensessales in the secondthird quarter and first six months of fiscal year 2026 increaseddecreased asby $1.5 million, or 21.1%, when compared to the prior year periodsquarter primarily due to increasedivestiture in variable compensation and employee medical costs.timing.