Real-time Form 4 intelligence. Smarter insider tracking.
YoY shift: Lean +
Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is 0.41pp more bullish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
-
Not scored
Net-tone change vs last year's 10-K.
MD&A
+0.41pp
Lean +
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
No section text extracted for this filing. The 10-K may use a non-standard template that the parser doesn't recognize - the original doc is still linked in the Stats tab.
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
obsolescence+3
limitations+2
default+2
unfavorable+2
exposed+1
Positive rising
gains+1
improved+1
improvement+1
adequately+1
MD&A (Item 7)
9,495 words
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon our consolidated financial statements, which have been prepared in accordance with GAAP. You should read the following discussion and analysis in conjunction with our consolidated financial statements and related notes included in this Annual Report. This discussion and analysis of our financial condition and results of operations also contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements because of a variety of factors, including those set forth under Item 1A, “ Risk Factors” of this Annual Report. We undertake no duty to update any such forward-looking statements to conform to actual results or changes in our expectations.
Overview
Our Business
We are a leading global supplier of custom engineered solutions with sales, engineering and manufacturing locations in North America, Europe, Middle East and Asia. We design, engineer and produce mechatronic products for OEMs utilizing our broad range of technologies for user interface, LED lighting system, power distribution and sensor applications.
Our solutions are found in the end markets of transportation (including automotive, commercial vehicle, e-bike, aerospace, bus and rail), cloud computing infrastructure, construction equipment and consumer appliance. Our business is managed on a segment basis, with those segments being Automotive, Industrial and Interface. 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 significantly have and may continue to impact 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.
Trade Policy/Tariffs
We are exposed to market risk with respect to duties currently assessed on raw materials, component parts and finished goods we import into the U.S. Since February 1, 2025 and up to the date of this Annual Report, the U.S. has announced and implemented various tariffs, including:
25% tariff on imports of automobiles and certain automobile parts into the U.S. from all countries. Automobile parts that meet specific rules of origin under the United States-Mexico-Canada Agreement (“USMCA”) are currently exempt, however it is possible that this exemption may be modified to only include the portion of U.S. content in the automobile part.
50% tariff on imports of steel and certain steel derivatives into the U.S.
25% tariff on imports of aluminum and certain aluminum derivatives into the U.S.
Reciprocal tariffs on most imports (currently 10% for most countries).
Incremental 20% tariff on all imports from China into the U.S.
Although the U.S. tariffs did not have a material impact on our operating performance in fiscal 2025, the current situation is dynamic and we are continuing to assess the full implications of the changing international trade environment. Given our sizable manufacturing operations in Mexico, China, Europe and Canada, should these tariffs persist or expand, raw materials and finished goods that we import will face higher prices, which could lead to reduced margins or increased prices that could, in turn, cause decreased customer demand. We continue to monitor similar actions by other countries with which we do business. Other countries have and may continue to impose retaliatory tariffs on goods imported into their countries from the U.S. We will seek price increases from our customers to offset these incremental costs. To the extent that we are unable to obtain price increases, the impact of new or higher tariffs could have a material impact on our results of operations.
Macroeconomic Conditions
The global economy continues to experience volatiledisruptions including to the commodity, labor and transportation markets, arising from a combination of geopolitical events and various economic and financial factors. These disruptions have affected our operations and may continue to affect our business, financial condition and results of operations. As a result of continued inflation, we have implemented measures to mitigate certain adverse effects of higher costs. However, we have been unable to fully mitigate or pass through the increases in our costs to our customers, which will likely continue in the future.
Our business in the future will be impacted by the broad trend of electrification. The adoption of EVs has been slower than anticipated, which may impact our financial condition and results of operations. In addition, there are various government policies, subsidies, and economic incentives designed to increase EV adoption. There is no guarantee these incentive programs will be available in the future.
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Global Supply Chain Disruptions
Although we saw improvements in our supply chain in fiscal 2025, 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.
Consolidated Results of Operations
A detailed comparison of our results of operations between fiscal 2024 and fiscal 2023 can be found in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our fiscal 2024 Annual Report on Form 10-K filed with the SEC on July 11, 2024
The table below compares our results of operations between fiscal 2025 and fiscal 2024:
Fiscal Year Ended
May 3, 2025
April 27, 2024
(in millions)
(53 Weeks)
(52 Weeks)
Net sales
Cost of products sold
Gross profit
Selling and administrative expenses
Goodwill impairment
Amortization of intangibles
Interest expense, net
Other expense (income), net
Income tax expense (benefit)
Net loss
Net sales
Net sales decreased $66.4 million, or 6.0%, to $1,048.1 million in fiscal 2025, compared to $1,114.5 million in fiscal 2024. The decrease was primarily due to lower sales in the Automotive segment and unfavorable foreign currency translation of $0.7 million, partially offset by higher sales in the Industrial segment. Excluding the impact of foreign currency translation, net sales decreased $65.7 million, or 5.9%.
Cost of products sold
Cost of products sold decreased $51.0 million, or 5.5%, 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. Foreign currency translation decreased cost of products sold by $0.3 million. Excluding foreign currency translation, cost of products sold decreased $51.3 million. The decrease was primarily due to lower material and freight costs as a result of a decrease in sales volumes, lower premium freight and lower restructuring costs, partially offset by higher inventory obsolescence expense of $10.0 million. Restructuring and impairment charges included within cost of products sold were $1.1 million in fiscal 2025, compared to $1.7 million in fiscal 2024.
Gross profit margin
Gross profit margin was 15.6% of net sales in fiscal 2025, compared to 16.0% of net sales in fiscal 2024. The decrease in gross profit margin was primarily a result of higher inventory obsolescence expense, partially offset by favorable product mix from higher sales in the Industrial segment.
Selling and administrative expenses
Selling and administrative expenses increased $3.0 million, or 1.9%, to $163.9 million (15.6% of net sales) in fiscal 2025, compared to $160.9 million (14.4% of net sales) in fiscal 2024. Excluding foreign currency translation, selling and administrative expenses increased $3.1 million. The increase was primarily due to higher professional fees and stock-based compensation expense, partially offset by lower cash incentive compensation and salary expense and lower restructuring costs. Professional fees in fiscal 2025 include $9.8 million for consulting and interim executive services provided by AlixPartners. Stock-based compensation expense was higher due to a $3.6 million reversal of expense due to forfeitures in fiscal 2024 as well as new awards in fiscal 2025. Restructuring and impairment charges included within selling and administrative expenses were $1.6 million in fiscal 2025, compared to $2.0 million in fiscal 2024.
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Goodwill impairment
In fiscal 2024, we recognized goodwill impairment of $105.9 million in the Automotive segment. For further information, see Note 6, “Goodwill and Other Intangible Assets” to the consolidated financial statements included in this Annual Report.
Amortization of intangibles
Amortization of intangibles decreased $0.6 million, or 2.5%, to $23.4 million in fiscal 2025, compared to $24.0 million in fiscal 2024. The decrease was a result of fully amortizing a portion of intangible assets.
Interest expense, net
Interest expense, net was $22.0 million in fiscal 2025, compared to $16.7 million in fiscal 2024. The increase was due to higher borrowing rates.
Other expense (income), net
Other expense, net was $4.2 million in fiscal 2025, compared to other income, net of $0.6 million in fiscal 2024. The decrease was due to higher foreign exchange losses and lower net gains on sale of assets, partially offset by higher international government assistance.
Net foreign exchange loss was $5.5 million in fiscal 2025, compared to $2.2 million in fiscal 2024. Net foreign exchange losses were higher in fiscal 2025 due to lower efficiency in our foreign currency balance sheet remeasurement hedging program. Net gains on sale of assets was $0.5 million in fiscal 2025, compared to $2.6 million in fiscal 2024. The net gain on sale of assets in fiscal 2024 included a $2.4 million gain on the sale of the company aircraft.
In fiscal 2025, we received $2.2 million of international government assistance, compared to $0.5 million in fiscal 2024. In addition, other expense, net in fiscal 2025 includes a non-cash write-off of $1.2 million of unamortized debt issuance costs.
Income tax expense (benefit)
Income tax expense was $12.5 million in fiscal 2025, compared to income tax benefit of $4.8 million in fiscal 2024. 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
Net loss was $62.6 million in fiscal 2025, compared to $123.3 million in fiscal 2024. The net loss was a result of the reasons described above.
Operating Segments
Automotive
Fiscal Year Ended
May 3, 2025
April 27, 2024
(in millions)
(53 Weeks)
(52 Weeks)
Net sales
North America
Europe, the Middle East & Africa (“EMEA”)
Asia
Net sales
Gross profit
As a percent of net sales
Loss from operations
As a percent of net sales
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Net sales
Automotive segment net sales decreased $89.3 million, or 14.9%, to $508.9 million in fiscal 2025, compared to $598.2 million in fiscal 2024. Excluding foreign currency translation, net sales decreased $88.9 million, or 14.8%.
Net sales in North America decreased $28.5 million, or 10.7%, to $237.1 million in fiscal 2025, compared to $265.6 million in fiscal 2024. The decrease was due to the roll-off of legacy programs, partially offset by new program launches. Net sales in EMEA increased $23.3 million, or 10.8%, to $239.5 million in fiscal 2025, compared to $216.2 million in fiscal 2024. Excluding foreign currency translation, net sales in EMEA increased $23.5 million primarily due to new program launches, partially offset by lower sales volumes of sensor products. Net sales in Asia decreased $84.1 million, or 72.3%, to $32.3 million in fiscal 2025, compared to $116.4 million in fiscal 2024. Excluding foreign currency translation, net sales in Asia decreased $83.9 million primarily due to a program roll-off and lower sales volumes of lead frame products.
Gross profit
Automotive segment gross profit decreased $25.7 million, or 84.5%, to $4.7 million in fiscal 2025, compared to $30.4 million in fiscal 2024. Excluding the impact of foreign currency translation, gross profit decreased $25.0 million. Gross profit margins decreased to 0.9% in fiscal 2025, from 5.1% in fiscal 2024. The decrease in gross profit was due to lower sales volumes in North America and Asia, higher inventory obsolescence expense, higher salary expense and higher warranty expense, partially offset by lower freight costs.
Loss from operations
Automotive segment loss from operations was $47.7 million in fiscal 2025, compared to $140.2 million in fiscal 2024. Loss from operations in fiscal 2024 included goodwill impairment of $105.9 million. Excluding goodwill impairment and the impact of foreign currency translation, loss from operations increased $12.7 million. The increase was primarily due to lower gross profit, partially offset by lower selling and administrative expenses. Selling and administrative expenses decreased due to lower compensation expense, outbound freight and travel and entertainment expense.
Industrial
Fiscal Year Ended
May 3, 2025
April 27, 2024
(in millions)
(53 Weeks)
(52 Weeks)
Net sales
Gross profit
As a percent of net sales
Income from operations
As a percent of net sales
Net sales
Industrial segment net sales increased $27.3 million, or 5.9%, to $487.4 million in fiscal 2025, compared to $460.1 million in fiscal 2024. Excluding foreign currency translation, net sales increased $27.6 million, or 6.0%. The increase was due to higher sales volumes of power distribution products for data centers, partially offset by lower sales volumes for lighting products in the commercial vehicle and off-road equipment markets.
Gross profit
Industrial segment gross profit increased $6.5 million, or 4.7%, to $144.2 million in fiscal 2025, compared to $137.7 million in fiscal 2024. Excluding foreign currency translation, gross profit increased $6.8 million. Gross profit improved due to higher sales volumes and lower salary and freight expense. Gross profit margins slightly decreased to 29.6% in fiscal 2025, compared to 29.9% in fiscal 2024 due to product mix.
Income from operations
Industrial segment income from operations increased $1.2 million, or 1.4%, to $90.0 million in fiscal 2025, compared to $88.8 million in fiscal 2024. The increase was primarily due to higher gross profit, partially offset by higher selling and administrative expenses. The increase in selling and administrative expenses was primarily due to higher legal fees and compensation expense.
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Interface
Fiscal Year Ended
May 3, 2025
April 27, 2024
(in millions)
(53 Weeks)
(52 Weeks)
Net sales
Gross profit
As a percent of net sales
Income from operations
As a percent of net sales
Net sales
Interface segment net sales decreased $2.0 million, or 3.7%, to $51.8 million in fiscal 2025, compared to $53.8 million in fiscal 2024. The decrease was primarily due to lower sales volumes of transceivers for servers.
Gross profit
Interface segment gross profit increased $2.4 million, or 23.3%, to $12.7 million in fiscal 2025, compared to $10.3 million in fiscal 2024. Gross profit margin increased to 24.5% in fiscal 2025, from 19.1% in fiscal 2024. The improvement was primarily due to higher gross margins from touch panels for appliances.
Income from operations
Interface segment income from operations increased $3.4 million, or 49.3%, to $10.3 million in fiscal 2025, compared to $6.9 million in fiscal 2024. The increase was due to higher gross profit and lower selling and administrative expenses, primarily salary expense.
Medical
Fiscal Year Ended
May 3, 2025
April 27, 2024
(in millions)
(53 Weeks)
(52 Weeks)
Net sales
Gross profit
Loss from operations
In the first quarter of fiscal 2024, we made the decision to initiate the discontinuation of the Dabir Surfaces business (which accounts for all of the Medical segment’s financial results). Towards the end of the second quarter of fiscal 2024, we sold certain assets of the Dabir Surfaces business and have now exited this business, which accounts for the variances in the table above.
Financial Condition, Liquidity and Capital Resources
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, dividends and stock repurchases. 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, if economic conditions remain impacted 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.
At May 3, 2025, we had $103.6 million of cash and cash equivalents, of which $78.2 million was held in subsidiaries outside the U.S. Cash held by these subsidiaries is used to fund operational activities and can be repatriated, primarily through the payment of dividends and the repayment of intercompany loans, without creating material additional income tax expense.
Repurchases of Common Stock
On March 31, 2021, as subsequently amended on June 16, 2022, the Board of Directors authorized the purchase of up to $200.0 million of our outstanding common stock through June 14, 2024 (the “2021 Buyback Authorization”). On June 13, 2024, the Board of Directors authorized a new share buyback authorization, commencing on June 17, 2024, for the purchase of up to $200.0 million (the “2024 Buyback Authorization”) of our outstanding common stock through June 17, 2026. Purchases may be made on the open market, in private transactions or pursuant to purchase plans designed to comply with Rule 10b5-1 of the Securities Exchange Act of 1934. As of May 3, 2025, a total of 3,553,961 shares had been purchased under the 2021 Buyback Authorization at a total cost of $134.6 million since the commencement of that authorization. As of May 3, 2025, $200.0 million remained available under the 2024 Buyback Authorization to repurchase shares. Upon adoption of the 2024 Buyback Authorization, no further repurchases can be made under the 2021 Buyback Authorization.
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Amended Credit Agreement
On October 31, 2022, we entered into a Second Amended and Restated Credit Agreement (the “Credit Agreement”) with Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, and the Lenders and other parties named therein. On March 6, 2024, we entered into a First Amendment to Second Amended and Restated Credit Agreement (the “First Amendment”) and on July 9, 2024, we entered into a Second Amendment to Second Amended and Restated Credit Agreement and First Amendment to Second Amended and Restated Guaranty (the “Second Amendment”) with Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, the other Lenders party thereto and other parties thereto.
Among other things, the Second Amendment (i) reduced the revolving credit commitments from $750 million to $500 million (which commitments were subsequently further reduced, as discussed below), (ii) granted a security interest in substantially all of the personal property of the Company and its 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), (iii) amended the consolidated interest coverage ratio covenant for each quarter in fiscal 2025 to relax that covenant to some extent for each of those quarters, (iv) amended the consolidated leverage ratio covenant for the quarter ending July 27, 2024 and each subsequent fiscal quarter to relax that covenant to some extent for each of those quarters, (v) amended certain interest rate provisions, (vi) added a requirement to provide monthly financial statements to the lenders through the period ending August 2, 2025, (vii) decreased the general basket exceptions to certain covenants restricting certain investments by, liens on and indebtedness of the Company and its subsidiaries for specified periods of time, (viii) increased, for fiscal 2025, the general basket exception to a covenant restricting certain dispositions of property by the Company and its subsidiaries, (ix) added an “anti-cash hoarding” requirement, applicable during the period from the effective date of the Second Amendment until the earlier to occur of (a) the delivery of financial statements and a compliance certificate for the fiscal quarter ending August 2, 2025 and (b) the delivery of compliance certificates for two consecutive fiscal quarters demonstrating that the our consolidated leverage ratio as of the last day of such fiscal quarters was less than 3.00:1.00, that if we have cash on hand in the U.S. (subject to certain exceptions) of more than $65 million for 10 consecutive business days, we shall prepay the indebtedness under the credit facility by the amount of such excess and (x) made certain other changes to the investment, restricted payment and indebtedness baskets.
As of May 3, 2025, we were not in compliance with the consolidated leverage ratio and interest coverage ratio covenants contained in the Credit Agreement (as amended by the First Amendment and Second Amendment) for the quarter ended May 3, 2025. On July 7, 2025, we entered into a Third Amendment to Second Amended and Restated Credit Agreement (the “Third Amendment”) with Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, the other Lenders party thereto and other parties thereto. Among other things, the Third Amendment (i) reduced the revolving credit commitments from $500 million to $400 million, (ii) eliminated our option to increase the revolving credit commitments and/or add one or more tranches of term loans under the credit facility from time to time subject to certain limitations and conditions including approval of certain lenders, (iii) amended the consolidated interest coverage ratio covenant for the quarters ending August 2, 2025, November 1, 2025, January 31, 2026 and May 2, 2026 to relax that covenant to some extent for each of those quarters, (iv) amended the consolidated leverage ratio covenant for the quarters ending August 2, 2025, November 1, 2025, January 31, 2026, May 2, 2026 and August 1, 2026 to relax that covenant to some extent for each of those quarters, (v) amended the definition of “Consolidated EBITDA,” to include an add back for a portion of the inventory write-down taken in the fourth quarter of fiscal 2025, (vi) increased the interest rate during the period from July 7, 2025 to the date that financial statements and a compliance certificate are delivered for the fiscal quarter ending October 31, 2026 (such period, the “Third Amendment Period”), (vii) changed the commitment fee payment during the Third Amendment Period, (viii) extended, through the maturity date, the requirement to provide monthly financial statements to the lenders, (ix) restricted or decreased, during the Third Amendment Period, the amount of certain exceptions to covenants restricting liens on, investments by and indebtedness of the Company and its subsidiaries, (x) limited to $2.5 million, in any fiscal quarter during the Third Amendment Period, the general basket exception to a covenant restricting certain restricted payments (including dividends) by the Company and its subsidiaries, while allowing under that general basket exceptions up to an aggregate of $25 million of restricted payments during any other period, (xi) extended, through the maturity date, the “anti-cash hoarding” requirement (described above), (xii) eliminated, during the Third Amendment Period, the investment, restricted payment and indebtedness baskets that had allowed for unlimited investments, restricted payments and indebtedness, as applicable, so long as (among other requirements) we met certain pro forma consolidated leverage ratio tests and (xiii) waived any default or event of default that may have occurred due to non-compliance with the consolidated interest coverage ratio covenant and the consolidated leverage ratio covenant for the quarter ended May 3, 2025 as calculated using the definition of “Consolidated EBITDA” that was in effect before giving effect to the Third Amendment. Following the effectiveness of the Third Amendment, we were in compliance with our consolidated interest coverage ratio covenant and our consolidated leverage ratio covenant for the quarter ended May 3, 2025.
The Credit Agreement, as amended by the First Amendment, the Second Amendment and the Third Amendment is referred to herein as the “Amended Credit Agreement.” The Amended Credit Agreement provides for a secured multicurrency revolving credit facility of $400 million. The Amended Credit Agreement matures on October 31, 2027.
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As of May 3, 2025, the outstanding balance under the revolving credit facility was $319.4 million, which included $226.4 million (€200.3 million) of euro-denominated borrowings and $93.0 million of U.S. dollar denominated borrowings. The Amended Credit Agreement contains various representations and warranties, financial covenants (including covenants requiring us to maintain compliance with a minimum consolidated interest coverage ratio and a maximum consolidated leverage ratio, in each case as of the end of each fiscal quarter of the Company), restrictive and other covenants, and events of default. The covenants in the Amended Credit Agreement include an “anti-cash hoarding” requirement, as discussed above.
For further information about the Amended Credit Agreement, see Note 10, “Debt” to the consolidated financial statements included in this Annual Report. As of May 3, 2025, after giving effect to the Third Amendment, we were in compliance with all the covenants in the Amended Credit Agreement.
Although we currently anticipate, based on our current projections and analyses, that we will be in compliance with the amended financial covenants contained in the Amended Credit Agreement, no assurance can be given that we will be and remain in compliance with such covenants in the future. Factors that could increase our risk of future non-compliance include those identified in Item 1A, “Risk Factors” of this Annual Report.
Cash Flows
Fiscal Year Ended
May 3, 2025
April 27, 2024
(in millions)
(53 Weeks)
(52 Weeks)
Operating activities:
Net loss
Non-cash items
Changes in operating assets and liabilities
Net cash provided by operating activities
Net cash used in investing activities
Net cash used in financing activities
Effect of foreign currency exchange rate changes on cash and cash equivalents
(Decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of the period
Cash and cash equivalents at end of the period
Operating activities
Net cash provided by operating activities decreased $21.1 million to $26.4 million in fiscal 2025, compared to $47.5 million in fiscal 2024. The decrease was due to lower cash inflows related to changes in operating assets and liabilities and lower net income adjusted for non-cash items. The $3.7 million of cash inflows for operating assets and liabilities in fiscal 2025 was primarily due to lower accounts receivable, partially offset by higher inventory.
Investing activities
Net cash used in investing activities was $32.9 million in fiscal 2025, compared to $17.5 million in fiscal 2024. Capital expenditures in fiscal 2025 were $41.6 million, compared to $50.2 million in fiscal 2024. We received $5.6 million of cash from the sale of assets in fiscal 2025 compared to $21.3 million in fiscal 2024. In fiscal 2025, we received proceeds of $3.1 million from the settlement of a net investment hedge, compared to $0.6 million fiscal 2024. In fiscal 2024, we redeemed life insurance policies and received cash proceeds of $10.8 million.
Financing activities
Net cash used in financing activities was $58.9 million in fiscal 2025, compared to $18.9 million in fiscal 2024. We paid cash dividends of $20.4 million in fiscal 2025, compared to $19.9 million in fiscal 2024. In fiscal 2025, we had net repayments of borrowings of $30.6 million, compared to net proceeds from borrowings of $30.7 million in fiscal 2024. In fiscal 2025, we paid $1.8 million of debt issuance costs, compared to $1.1 million in fiscal 2024. In fiscal 2024, we paid $10.9 million to redeem a noncontrolling interest. In fiscal 2025, we paid $1.6 million of cash for share repurchases, compared to $13.7 million in fiscal 2024.
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Contractual Obligations
The following table summarizes our significant known contractual cash obligations and commercial commitments as of May 3, 2025:
Payments Due By Period
(in millions)
Total
Less than
1 year
1-3 years
3-5 years
More than
5 years
Finance leases
Operating leases
Debt (1)
Estimated interest on debt (2)
Deferred compensation
Total
(1) Assumes the outstanding borrowings under the revolving credit facility will be repaid upon maturity of the credit agreement in October 2027.
(2) Based on interest rates in effect as of May 3, 2025 (including the impact of interest rate swaps).
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements as defined under SEC rules.
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with GAAP requires that we make estimates and assumptions that can affect amounts reported in the consolidated financial statements. In preparing our consolidated financial statements, we have made our best estimates and judgments of certain amounts included in the consolidated financial statements. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable. To the extent that there are differences between these estimates and actual results, our consolidated financial statements may be materially affected. We believe that of the significant accounting policies described in Note 1, “Description of Business and Summary of Significant Accounting Policies” to the consolidated financial statements in this Annual Report, the following involve a significant level of estimation uncertainty.
Goodwill. As described in Note 1 to the consolidated financial statements in this Annual Report, goodwill is tested for impairment on at least an annual basis, or more frequently if a triggering event indicates that an impairment may exist. The assessment of impairment may first consider qualitative factors including, but not limited to, the results of prior quantitative tests performed, changes in the carrying amount of the reporting unit, recent and projected financial performance, and macroeconomic and industry conditions. We consider the qualitative factors and weight of the evidence obtained to determine if it is more likely than not that a reporting unit’s fair value is less than the carrying amount.
For the quantitative assessment, we utilize either, or a combination of, the income approach and market approach to estimate the fair value of the reporting unit. The income approach uses a discounted cash flow method and the market approach uses valuation multiples observed for the reporting unit’s guideline public companies. The determination of discounted cash flows is based on management’s estimates of revenue growth rates and earnings before interest, taxes, depreciation and amortization (“EBITDA”) margin, taking into consideration business and market conditions for the countries and markets in which the reporting unit operates. We calculate the discount rate based on a market-participant, risk-adjusted weighted average cost of capital, which considers industry specific rates of return on debt and equity capital for a target industry capital structure, adjusted for risks associated with business size, geography and other factors specific to the reporting unit. Revenue growth rates and EBITDA margin, especially in the outer years of a forecast, involve a greater degree of uncertainty. Further, a future change in the discount rate, as a result of a change in economic conditions or otherwise, could result in the carrying values of the reporting units exceeding their respective fair values.
At the beginning of the fourth quarter of fiscal 2025, we performed a quantitative goodwill impairment analysis for our Grakon Industrial and Nordic Lights reporting units. Based on this analysis, we determined that the fair value of both of these reporting units was in excess of its carrying value. However, as noted in Note 7 to the consolidated financial statements in this Annual Report, the fair value of the Nordic Lights reporting unit exceeded its carrying value by less than 10%. We performed a sensitivity analysis for the significant assumptions used in the goodwill impairment testing analysis for the Nordic Lights reporting unit as follows:
A hypothetical increase in the discount rate of 100 basis points would result in goodwill impairment of approximately $7.3 million;
A hypothetical decrease in revenues of approximately 6% from fiscal 2026 to fiscal 2028 would result in goodwill impairment of approximately $5.3 million; and
A hypothetical decrease of forecasted EBITDA margins of 100 basis points over the entire forecast period would result in goodwill impairment of approximately $3.3 million.
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The sensitivities above were calculated in isolation using the income approach and keeping all other assumptions constant. The cash flow sensitivities do not consider the offsetting impact of a lower discount rate assumption to reflect the reduced risk in estimated future cash flow growth used under the income approach or the related impacts on pricing multiples used under the market approach.
Impairment of long-lived assets. We evaluate whether events and circumstances have occurred which indicate that the remaining estimated useful lives of our intangible assets, excluding goodwill, and other long-lived assets, may warrant revision or that the remaining balance of such assets may not be recoverable. Determination of recoverability of long-lived assets is based on the lowest level of identifiable estimated future undiscounted cash flows resulting from the use of the asset and its eventual disposition. Measurement of any impairmentloss is based on the excess of the carrying value of the asset group over its fair value. Assumptions and estimates about future values and the remaining useful lives are complex and subjective. They can be affected by a variety of factors, including external factors such as industry and economic trends, and internal factors such as changes in our business strategy and our internal forecasts.
Income taxes. We are subject to income taxes in the U.S. and numerous foreign jurisdictions. In calculating our effective income tax rate, we make judgments regarding certain tax positions, including the timing and amount of deductions and allocations of income among various tax jurisdictions. When determining whether we will be able to realize deferred tax assets, judgment is used to evaluate the positive and negative evidence, including forecasting taxable income using historical and future operating results.
The amount of income taxes we pay is subject to ongoing audits by federal, state and foreign tax authorities. Our estimate of the potential outcome of any uncertain tax issue is subject to management’s assessment of relevant risks, facts, and circumstances existing at that time. We use a more-likely-than-not threshold for financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. We record a liability for the difference between the benefit recognized and measured and tax position taken or expected to be taken on our tax return. To the extent that our assessment of such tax positions changes, the change in estimate is recorded in the period in which the determination is made.
We record a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized. We evaluate our ability to realize the tax benefits associated with deferred tax assets by assessing the adequacy of future expected taxable income, including the reversal of existing temporary differences, historical and projected operating results, and the availability of prudent and feasible tax planning strategies. As of May 3, 2025, we had a valuation allowance of $20.7 million. In the event our operating performance improves or deteriorates in a filing jurisdiction or entity, future assessments could conclude a smaller or larger valuation allowance will be needed. Due to the complexity of some of these uncertainties, the ultimate resolution may be materially different from the current estimate.
Some or all of management’s judgments are subject to review by the taxing authorities. If one or more of the taxing authorities were to successfullychallenge our right to realize some or all of the tax benefit we have recorded, and we were unable to realize this benefit, it could have a material adverse effect on our financial results and cash flows. Further, if we are unable to generate sufficient future taxable income, there is a material change in the actual effective tax rates, a change to the time period within which the underlying temporary differences become taxable or deductible, or if the tax laws change unfavorably, then we could be required to increase the valuation allowance against deferred tax assets, resulting in an increase in income tax expense and the effective tax rate.
New Accounting Pronouncements
For more information regarding new applicable accounting pronouncements, see Note 1, “Description of Business and Summary of Significant Accounting Policies” to the consolidated financial statements included in this Annual Report.
Item 7A. Quantitative and Qualita tive Disclosures About Market Risk
We are exposed to market risks from foreign currency exchange, interest rates, and commodity prices, which could affect our operating results, financial position and cash flows. We manage a portion of these risks through use of derivative financial instruments in accordance with our policies. We do not enter into derivative financial instruments for speculative or trading purposes.
Foreign currency risk
We are exposed to foreign currency risk on sales, costs and assets and liabilities denominated in currencies other than the U.S. dollar. We seek to manage our foreign exchange risk largely through operational means, including matching revenue with same-currency costs and assets with same-currency liabilities. We currently transact business in eight primary currencies worldwide, of which the most significant are the U.S. dollar, the euro, the Chinese renminbi and the Mexican peso.
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A portion of our balance sheet is exposed to foreign currency exchange rate fluctuations, which may result in non-operating foreign currency exchange gains or losses upon remeasurement. We use foreign currency forward contracts to provide an economic hedge against balance sheet exposure to certain monetary assets and liabilities denominated in currencies other than the functional currency of the subsidiary. The forward contracts have a maturity of less than three months and are not designated as hedging instruments. As of May 3, 2025, the notional value of these outstanding contracts was $107.2 million. These hedges are intended to reduce, but may not entirely eliminate, foreign currency exchange risk. The impact of a change in the foreign currency exchange rates on our foreign currency forward contracts will generally be offset against the gain or loss from the re-measurement of the underlying balance sheet exposure.
The translation of the assets and liabilities of our international subsidiaries is made using the foreign currency exchange rates as of the end of the reporting period. Translation adjustments are not included in determining net (loss) income but are included in accumulated other comprehensive loss within shareholders’ equity on the consolidated balance sheets until a sale or substantially complete liquidation of the net investment in the international subsidiary takes place. As of May 3, 2025, the cumulative net currency translation adjustments decreased shareholders’ equity by $28.2 million. As described in Note 8, “Derivative Financial Instruments and Hedging Activities” to our consolidated financial statements included in this Annual Report, in order to manage certain translational exposure to the euro, in the past we entered into cross-currency swaps or designated euro-denominated borrowings as a net investment hedge in our euro-denominated subsidiaries. The effective portion of the gains or losses designated as net investment hedges are recognized within the cumulative translation adjustment component in the consolidated statements of comprehensive income (loss) to offset changes in the value of the net investment in these foreign currency-denominated operations.
Interest rate risk
We are exposed to interest rate risk on borrowings under our Credit Agreement which are based on variable rates. As of May 3, 2025, we had $319.4 million of borrowings under our Credit Agreement. We manage our interest rate exposures through the use of interest rate swaps to effectively convert a portion of our variable-rate debt to a fixed rate. The notional amount of our interest rate swaps was $141.3 million as of May 3, 2025. Based on borrowings outstanding under our Credit Agreement at May 3, 2025, net of the interest rate swaps, we estimate that a 1% increase in interest rates would result in increased annual interest expense of $1.7 million.
Commodity price risk
We are exposed to commodity price risk primarily on our raw material purchases. These raw materials are not rare or unique to our industry. The cost of copper, resins, and other commodities, such as fuel and energy, has fluctuated in recent years due to changes in global supply and demand. Our gross margins could be affected if these types of costs continue to fluctuate. We actively manage these raw material costs through global sourcing initiatives and price increases on our products where possible. However, in the short-term, further increases in raw material costs can be very difficult to fully offset with price increases because of contractual agreements with our customers, which would unfavorably impact our gross margins.
Item 8. Financial Stateme nts and Supplementary Data
The consolidated financial statements and supplementary data are filed within this Annual Report under Item 15, “Exhibits, Financial Statement Schedules.”
Item 9. Changes in and Disagreem ents with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls an d Procedures
Evaluation of Disclosure Controls and Procedures
Our management, under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer, performed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of May 3, 2025. As defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, disclosure controls and procedures are controls and procedures designed to provide reasonable assurance that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s applicable rules and forms. Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of May 3, 2025.
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Management’s Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision of our Chief Executive Officer and Chief Financial Officer, management conducted an evaluation of the effectiveness of our internal control over financial reporting as of May 3, 2025, based on the guidelines established in Internal Control — Integrated Framework (2013 Framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Our internal control over financial reporting includes policies and procedures that provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with GAAP. Based on that evaluation, management concluded that our internal control over financial reporting was effective as of May 3, 2025.
Our independent registered public accounting firm, Ernst & Young LLP, has audited the Consolidated Financial Statements of the Company and the Company’s internal control over financial reporting and has included their reports herein.
Remediation of Previously Reported Material Weaknesses
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.
As previously disclosed in our Annual Report on Form 10-K for the year ended April 27, 2024, management identified three material weaknesses in its internal control over financial reporting related to (i) ineffective information technology general controls (ITGCs) over one of its information technology (IT) systems, (ii) ineffective controls over its impairment analyses for goodwill, specifically related to not retaining sufficient contemporaneous documentation to demonstrate the operation of sufficiently precise review controls over certain significant assumptions used in the determination of fair value of its reporting units, and (iii) ineffective controls related to the application of GAAP to non-routine events and conditions, specifically related to our going concern evaluation.
Our management, under the oversight of the Audit Committee, implemented several measures as part of our remediation efforts that included, among other items, (1) enhancing the design and operating effectiveness of internal controls over IT change management, review of significant assumptions used in goodwill impairment analyses, and the application of GAAP to non-routine events and conditions; and (2) developing and deploying additional training programs around the operation and importance of these controls.
We completed the testing of the design and operating effectiveness of the enhanced procedures and controls and, based on the results of this testing, as of May 3, 2025, we concluded that the controls are adequately designed, implemented and have operated effectively for a sufficient period of time to remediate the previously reported material weaknesses.
Changes in Internal Control over Financial Reporting
Except for the remediation efforts implemented in connection with the previously reported material weaknesses described above, there were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that was conducted during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls
Our management, including our Chief Executive Officer and Chief Financial Officer, do not expect that our disclosure controls or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by a management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
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Item 9B. Other I nformation
Third Amendment to Second Amended and Restated Credit Agreement
Because we are filing this Annual Report within four business days after the triggering event, we are making the following disclosure under this Item 9B, “Other Information” instead of filing a Current Report on Form 8-K under Item 1.01, Entry into a Material Definitive Agreement, and Item 2.03, Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
On July 7, 2025, the Company entered into a Third Amendment to Second Amended and Restated Credit Agreement (the “Third Amendment”) among the Company, Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, the other Lenders party thereto and other parties thereto.
The Third Amendment amended the Company’s Second Amended and Restated Credit Agreement, dated as of October 31, 2022, and as previously amended pursuant to that certain First Amendment to Second Amended and Restated Credit Agreement, dated as of March 6, 2024, and that certain Second Amendment to Second Amended and Restated Credit Agreement and First Amendment to Second Amended and Restated Guaranty, dated as of July 9, 2024 (which credit agreement, as previously amended by such first amendment and second amendment, is referred to solely in this Item 9B, “Other Information” section of this Annual Report as the “Credit Agreement”), among the Company, Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, the other Lenders party thereto and the other parties thereto. The Third Amendment, among other things:
(i) reduced the revolving credit commitments from $500 million to $400 million;
(ii) eliminated the Company’s option to increase the revolving credit commitments and/or add one or more tranches of term loans under the Credit Agreement from time to time subject to certain limitations and conditions including approval of certain lenders;
(iii) amended the financial covenant that had required that the Company’s consolidated interest coverage ratio not be less than 3.50:1.00 as of the end of the fiscal quarter ending August 2, 2025 and any fiscal quarter ending thereafter to instead require that the Company’s consolidated interest coverage ratio not be less than (a) 2.65:1.00 as of the end of the fiscal quarters ending August 2, 2025, November 1, 2025 and January 31, 2026, (b) 3.00:1.00 as of the end of the fiscal quarter ending May 2, 2026 and (c) 3.50:1.00 as of the end of any fiscal quarter ending thereafter;
(iv) amended the financial covenant that had required (subject to certain exceptions) that the Company’s consolidated leverage ratio be no more than 3.75:1.00 as of the end of the fiscal quarter ending August 2, 2025 and any fiscal quarter ending thereafter to instead require (subject to certain exceptions) that the Company’s consolidated leverage ratio be no more than (a) 4.25:1.00 as of the end of the fiscal quarter ending August 2, 2025, (b) 5.00:1.00 as of the end of the fiscal quarter ending November 1, 2025, (c) 5.25:1.00 as of the end of the fiscal quarter ending January 31, 2026, (d) 4.50:1.00 as of the end of the fiscal quarter ending May 2, 2026, (e) 4.25:1.00 as of the end of the fiscal quarter ending August 1, 2026 and (f) 3.75:1.00 as of the end of any fiscal quarter ending thereafter;
(v) amended the definition of “Consolidated EBITDA,” to include an add back for a portion of the inventory write-down taken in the fourth quarter of fiscal 2025;
(vi) increased the interest rate for the period from July 7, 2025 to the date that financial statements and a compliance certificate are delivered for the fiscal quarter ending October 31, 2026 (such period, the “Third Amendment Period”), so that during such period (a) loans denominated in U.S. dollars will bear interest at either (x) an adjusted base rate plus 2.50% or (y) an adjusted term SOFR rate or term SOFR daily floating rate (in each case, as determined in accordance with the provisions of the Credit Agreement, as amended by the Third Amendment), in each case plus 3.50% and (b) loans denominated (I) in euros will bear interest at the Euro Interbank Offered Rate, (II) in pounds sterling will bear interest at the Sterling Overnight Index Average Reference Rate, (III) in Singapore dollars will bear interest at the Singapore Interbank Offered Rate, (IV) in Canadian dollars will bear interest at the forward-looking term rate based on the Canadian Overnight Repo Rate Average and (V) in Hong Kong dollars will bear interest at the Hong Kong Interbank Offered Rate (in each case, as determined in accordance with the provisions of the Credit Agreement, as amended by the Third Amendment), in each case plus 3.50%;
(vii) changed the commitment fee payment during the Third Amendment Period so that, instead of being based on the Company’s consolidated leverage ratio, the commitment on the undrawn amounts under the revolving credit facility during such period will be 0.40% per annum;
(viii) extended the requirement to provide monthly financial statements to the lenders through the maturity date (instead of only with respect to any fiscal month ending on or prior to August 2, 2025);
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(ix) decreased, during the Third Amendment Period, (a) the general basket exception to a covenant restricting certain liens on the Company and its subsidiaries so that, during such period, such basket exception would not allow the existence of new liens pursuant to the basket in excess of $10 million, (b) the general basket exception to a covenant restricting certain investments by the Company and its subsidiaries so that, during such period, such basket exception would not allow them to make new investments pursuant to the basket in excess of $10 million in the aggregate and (c) the general basket exception to a covenant restricting certain indebtedness of the Company and its subsidiaries so that, during such period, such basket exception would not allow the Company and its subsidiaries to incur new indebtedness pursuant to the basket in excess of $10 million;
(x) limited to $2.5 million, in any fiscal quarter during the Third Amendment Period, the general basket exception to a covenant restricting certain restricted payments (including dividends) by the Company and its subsidiaries, while allowing under that general basket exception up to an aggregate of $25 million of restricted payments during any other period;
(xi) extended the “anti-cash hoarding” requirement (which provides that if the Company has cash on hand in the U.S. (subject to certain exceptions) of more than $65 million for 10 consecutive business days, the Company shall prepay the indebtedness under the credit facility by the amount of such excess) so that such “anti-cash hoarding” requirement now applies through the maturity date;
(xii) eliminated, during the Third Amendment Period, the investment, restricted payment and indebtedness baskets that had allowed for unlimited investments, restricted payments and indebtedness, as applicable, so long as (among other requirements) the Company met certain pro forma consolidated leverage ratio tests; and
(xiii) waived any default or event of default that may have occurred under the Credit Agreement due to non-compliance with the consolidated interest coverage ratio covenant and the consolidated leverage ratio covenant for the quarter ended May 3, 2025 as calculated using the definition of “Consolidated EBITDA” that was in effect before giving effect to the Third Amendment.
The foregoing description of the Third Amendment does not purport to be complete and is qualified in its entirety by reference to the complete text of the Third Amendment, which is filed as Exhibit 10.45 to this Annual Report and is incorporated herein by reference.
Trading Arrangements
During our last fiscal quarter, no directors or officers of the Company, as defined in Rule 16a-1(f) of the Exchange Act, adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” each as defined in Item 408 of Regulation S-K.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
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PART III
Item 10. Directors, Executive Of ficers and Corporate Governance
The information required by this item regarding our directors and corporate governance matters, including without limitation information regarding our code of conduct and insider trading policies, is incorporated by reference herein to the definitive proxy statement for our 2025 annual meeting under the captions “Proposal One Election of Directors” and “Corporate Governance.” The information required by this item regarding our executive officers appears as a supplementary item following Item 4 under Part I of this Annual Report. The information required by this item regarding compliance with Section 16(a) of the Exchange Act and information regarding our Audit Committee is incorporated by reference herein to the definitive proxy statement for our 2025 annual meeting under the captions “Other Information - Delinquent Section 16(a) Reports” and “Audit Committee Matters,” respectively.
Item 11. Executi ve Compensation
The information required by this item is incorporated by reference herein to the definitive proxy statement for our 2025 annual meeting under the captions “Compensation Discussion and Analysis”, “Compensation Committee Report”, “Executive Compensation Tables”, “CEO Pay Ratio”, “Pay for Performance” and “Director Compensation.”
