UNITED STATES SECURITIES AND EXCHANGE COMMISSION (Mark One) Washington, D.C. 20549 FORM 10-Q ☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 2025 or ☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Maryland 13-3926714 (I.R.S. Employer Identification Number) For the transition period from ____________________ to ____________________ Commission File Number: 001-12681 GLOBAL SELF STO ...

Financial Performance - Revenues for the third quarter of 2025 were $2,067.0 million, a decrease of 4% compared to $2,160.0 million in the third quarter of 2024, with a decline of $106.9 million in same-store sales [87]. - Gross profit margin increased to 27.5% in the third quarter of 2025 from 26.2% in the same quarter of 2024, while operating income was 11.4% compared to 11.6% in the prior year [83]. - The company reported net income attributable to Watsco, Inc. of 7.8% for Q3 2025, slightly down from 7.9% in Q3 2024 [83]. - Net income attributable to Watsco, Inc. decreased by $9.5 million or 6% in Q3 2025 compared to Q3 2024, primarily due to higher expenses and lower interest income [96]. - Revenues for the nine months ended September 30, 2025, were $5,660.5 million, a decrease of $203.9 million or 3% from $5,864.4 million in the same period of 2024 [97]. - Gross profit for the nine months ended September 30, 2025, was $1,602.0 million, an increase of $25.4 million or 2% compared to $1,576.6 million in 2024, with a gross margin of 28.3% [99]. - Selling, general and administrative expenses for the nine months ended September 30, 2025, were $1,005.2 million, a 5% increase from $955.0 million in 2024, representing 17.8% of revenues [101]. Expenses and Costs - Selling, general and administrative expenses as a percentage of revenues increased to 16.6% in Q3 2025 from 15.1% in Q3 2024 [83]. - Selling, general and administrative expenses rose to $343.7 million in Q3 2025, a 5% increase from $326.4 million in Q3 2024, representing 16.6% of revenues [91]. - Cash flows provided by operating activities decreased by $224.4 million to $169.8 million for the nine months ended September 30, 2025, compared to $394.2 million in 2024 [113]. - Interest income, net for Q3 2025 decreased by $3.0 million or 45% compared to the same period in 2024, primarily due to lower cash balances [93]. Operational Metrics - The company operated 698 locations as of September 30, 2025, an increase from 689 locations a year earlier, with 10 locations acquired and 9 closed during the year [86]. - HVAC equipment sales accounted for 67% of total sales in Q3 2025, down from 70% in Q3 2024, reflecting a 7% decrease [89]. - Gross profit for Q3 2025 was $568.9 million, a slight increase of $2.7 million or 0% compared to Q3 2024, with a gross margin improvement of 130 basis points to 27.5% [90]. Strategic Initiatives - The company continues to monitor macroeconomic conditions and trade policies that may impact its supply chain and pricing strategies [71]. - The company has taken pricing actions to mitigate the effects of tariffs and inflationary pressures on its product costs [71]. - The company expects regulatory mandates to periodically increase the required minimum Seasonal Energy Efficiency Ratio (SEER) rating, which could drive sales of higher-efficiency systems [74]. - The U.S. Inflation Reduction Act of 2022 aimed to promote high-efficiency heat pump systems, but tax credits for HVAC systems will be unavailable after December 31, 2025 [78]. Shareholder Actions - The company paid cash dividends of $8.70 per share for the nine months ended September 30, 2025, compared to $7.85 per share for the same period in 2024 [132]. - The Dividend Reinvestment Plan (DRIP) was implemented on March 29, 2024, allowing shareholders to acquire up to 300,000 shares through reinvested dividends [133]. - A total of 47,751 shares were issued under the DRIP during the nine months ended September 30, 2025 [134]. - The company has repurchased 6,370,913 shares at a cost of $114.4 million since the inception of the share repurchase program, with 1,129,087 shares remaining authorized for repurchase [135]. Financing Activities - The company maintains a $600.0 million unsecured revolving credit agreement, which can be reduced to $500.0 million seasonally from October 1 to March 31 [117]. - As of September 30, 2025, there was no outstanding balance under the revolving credit agreement, and the company was in compliance with all covenants [119]. - During Q1 2024, the company issued 712,000 shares under the 2021 ATM Program for net proceeds of $281.8 million, totaling $298.5 million issued under the program [121]. - The company entered into a new ATM Program on May 3, 2024, allowing for an additional $400.0 million in common stock sales [122]. Acquisitions - The company acquired Southern Ice Equipment Distributors, Inc. for $14.3 million in cash and 7,400 shares of common stock, recognizing $7.8 million in goodwill [127]. - The acquisition of Hawkins HVAC Distributors, Inc. was completed for $2.5 million in cash, resulting in $0.3 million in goodwill [128].

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended September 30, 2025 or ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Transition Period From to . Commission file number 1-5581 WATSCO, INC. (Exact name of registrant as specified in its charter) Florida 59-0778222 (State or other jurisdict ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 For the quarterly period ended September 30, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to ______ Commission File No. 001-41384 HANOVER BANCORP, INC. (Exact Name of Registrant as Specified in Its Charter) (State or Other Jurisdiction of Incorporation or Organization) FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) ...

Financial Performance - Total revenue for Q3 2025 was $246.2 million, a decrease of 10.1% from $273.6 million in Q3 2024[161] - Bumble App revenue was $198.8 million, down 9.7% from $220.2 million in the same period last year[161] - Net earnings for Q3 2025 were $51.6 million, representing 21.0% of revenue, compared to a net loss of $849.3 million in Q3 2024[161] - Adjusted EBITDA for Q3 2025 was $83.1 million, with an Adjusted EBITDA margin of 33.7%, compared to $82.6 million and 30.2% in Q3 2024[161] - Total Revenue for the three months ended September 30, 2025, was $246.2 million, a decrease of 10.1% from $273.6 million in the same period in 2024, primarily due to a decline in Total Paying Users[202] - Total Revenue for the nine months ended September 30, 2025, was $741.5 million, a decrease of 8.5% from $810.0 million in the same period in 2024, primarily driven by a decline in Total Paying Users[205] User Metrics - Total paying users decreased to 3.57 million in Q3 2025 from 4.26 million in Q3 2024, a decline of 16.0%[164] - Average revenue per paying user for Bumble App increased to $28.27 in Q3 2025 from $25.58 in Q3 2024, a rise of 6.6%[164] - Bumble App Revenue decreased to $198.8 million for the three months ended September 30, 2025, down 9.7% from $220.2 million in the same period in 2024, driven by an 18.3% decline in Paying Users to 2.3 million[203] - Badoo App and Other Revenue was $47.4 million for the three months ended September 30, 2025, a decrease of 11.2% from $53.4 million in the same period in 2024, attributed to a 11.2% decline in Paying Users to 1.2 million[204] Cost Management - The total operating costs and expenses for the three months ended September 30, 2025, were $182.5 million, compared to $1.1 billion in the same period of 2024, indicating a significant reduction in costs[200] - Cost of revenue for the three months ended September 30, 2025, was $69.2 million, a decrease of 13.0% from $79.6 million in the same period in 2024, resulting in a cost of revenue percentage of 28.1%[208] - Selling and marketing expenses for the three months ended September 30, 2025, were $32.8 million, representing 13.3% of total revenue, down from 23.2% in the same period of 2024[200] - Selling and marketing expense for the three months ended September 30, 2025, was $32.8 million, a significant decrease of 48.4% from $63.5 million in the same period in 2024, primarily due to reduced marketing costs[210] - General and administrative expense increased to $46.3 million for the three months ended September 30, 2025, up 39.2% from $33.3 million in the same period in 2024, mainly due to $12.6 million of indirect taxes recorded[213] - Product development expense for the three months ended September 30, 2025, was $29.6 million, an increase of 19.0% from $24.9 million in the same period in 2024, driven by higher stock-based compensation[216] - Depreciation and amortization expense decreased to $4.6 million for the three months ended September 30, 2025, down 74.7% from $18.3 million in the same period in 2024, primarily due to the full amortization of developed technology[218] Restructuring and Workforce Changes - The company announced a restructuring plan in June 2025, reducing its global workforce by approximately 240 roles, which is about 30% of its employees, with expected non-recurring charges of $13.0 million to $18.0 million[183] - The company incurred approximately $20.4 million in total non-recurring charges related to the 2024 restructuring plan, which involved reducing the workforce by approximately 350 roles[185] - The company incurred approximately $13.0 million to $18.0 million in non-recurring charges due to a workforce reduction of about 240 roles, or 30% of its employees[239] Cash Flow and Capital Management - Free cash flow for the nine months ended September 30, 2025, was $182.4 million, a significant increase from $122.7 million in the same period of 2024, representing a conversion rate of 75.3% compared to 53.0%[235][241] - Net cash provided by operating activities increased to $191.3 million for the nine months ended September 30, 2025, up from $128.8 million in the prior year, despite a net loss of $(295.5) million[242] - The company had $307.9 million in cash and cash equivalents as of September 30, 2025, an increase of $103.6 million from December 31, 2024[236] - The company repurchased 4.7 million shares of Class A common stock for $28.7 million during the nine months ended September 30, 2025, with $50.1 million remaining available under the share repurchase program[237] - A voluntary principal payment of $25.0 million was made on the Incremental Term Loan in August 2025[238] - The company plans to make a one-time settlement payment of approximately $186.0 million to terminate its obligations under the Tax Receivable Agreement[240] - Total capital expenditures for the nine months ended September 30, 2025, were $8.9 million, compared to $6.2 million in the same period in 2024[243] - Net cash used in financing activities was $79.9 million for the nine months ended September 30, 2025, a decrease from $207.7 million in the prior year[244] Debt and Obligations - The company has a credit agreement with total borrowings of $850.0 million, consisting of a $575.0 million Original Term Loan and a $275.0 million Incremental Term Loan[245] - As of September 30, 2025, the outstanding balance under the Term Loans was $592.0 million, with amounts available under the Revolving Credit Facility at $50.0 million[248] - Total contractual obligations as of September 30, 2025, amounted to $622.6 million, with $22.7 million due within one year[249] - Estimated total future payments under the tax receivable agreement related to the Offering Transactions is $692.4 million as of September 30, 2025[249] Tax and Regulatory Matters - Income tax provision for the three months ended September 30, 2025 was $9.5 million, up from $4.2 million in 2024, and for the nine months it was $22.0 million compared to $16.3 million in 2024, mainly due to higher foreign taxes and stock-based award effects[224] - The enactment of the One Big Beautiful Bill Act on July 4, 2025 did not have a material impact on operating results for the three and nine months ended September 30, 2025[225] - The Pillar Two Minimum Tax, effective January 1, 2024, is being monitored for its potential impact on the company's financial position, with expectations to qualify for transitional safe harbor relief in most jurisdictions[226] Foreign Exchange and Interest Rate Exposure - Revenue outside of the United States accounted for 56.8% of consolidated revenue for the three months ended September 30, 2025, compared to 52.9% for the same period in 2024[252] - A hypothetical 10% change in the British Pound and Euro relative to the U.S. Dollar would have changed revenue by $18.8 million for the nine months ended September 30, 2025[253] - The notional value of foreign exchange forward contracts as of September 30, 2025, was $57.7 million[254] - A hypothetical interest rate increase of 1% would have increased interest expense by $0.7 million for the three months ended September 30, 2025[256] - The company entered into new interest rate swaps for a total notional amount of $350.0 million, fixing the variable interest rate at 3.18%[257] - The average Euro versus the U.S. Dollar exchange rate was 7.9% higher for the three months ended September 30, 2025, compared to the same period in 2024[252] Non-GAAP Financial Measures - Adjusted EBITDA is reported to provide visibility into underlying operating performance by excluding certain expenses, including income tax provision and stock-based compensation[228] - Free cash flow and free cash flow conversion are used to evaluate liquidity and debt-service capabilities, providing insights into cash generated from operating activities compared to capital expenditures[229] - Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by revenue, offering a measure of operational efficiency[229] - Limitations of non-GAAP financial measures include not reflecting cash requirements for servicing debt and not being a liquidity measure[230]

Financial Performance - Rental income for the three months ended September 30, 2025, was $23.49 million, a 17.3% increase from $20.02 million in the same period of 2024[17] - Net loss for the three months ended September 30, 2025, was $(521,828), compared to a net income of $3.91 million for the same period in 2024, indicating a significant decline[20] - Comprehensive loss for the three months ended September 30, 2025, was $(548,139), compared to a comprehensive income of $3.64 million in the same period of 2024[20] - The company reported a net income of $7.42 million for the nine months ended September 30, 2025, down from $11.45 million in the same period of 2024, reflecting a decrease of approximately 35.5%[20] - For the nine months ended September 30, 2025, net income per Depositary Receipt was $2.12, down from $3.26 in 2024[86] - The net loss for the same period was $2,341,432, with a net loss attributable to NERA 50% amounting to $58,315[124] - The net loss for the nine months ended September 30, 2024, was $(2,053,567), while the net income for the same period, adjusted for NERA 40%, was $470,313[131] - The net loss for the three months ended September 30, 2024, was $(325,406), with a net income adjusted for NERA 40% of $64,227[132] Assets and Liabilities - Total assets increased to $492.85 million as of September 30, 2025, up from $393.51 million at December 31, 2024, representing a growth of approximately 25.3%[14] - Total liabilities rose to $563.89 million as of September 30, 2025, compared to $455.94 million at December 31, 2024, marking an increase of approximately 23.7%[14] - Cash and cash equivalents decreased to $13.37 million as of September 30, 2025, down from $17.62 million at December 31, 2024, a decline of about 24.5%[14] - The carrying value of the investment in Hamilton on Main LLC fell below zero in 2018, but the Partnership continues to use the equity method of accounting[120] - Total liabilities as of September 30, 2025, amounted to $685,480,895, with a fair value of $641,017,456, compared to $578,493,606 carrying value and $512,921,887 fair value as of December 31, 2024[102] - The Partnership's cash equivalents were valued at $13,374,205 as of September 30, 2025, down from $17,615,940 as of December 31, 2024[102] Cash Flow and Investments - Total cash provided by operating activities increased to $20,355,501 from $19,965,878, reflecting a growth of 1.95%[26] - Cash used in investing activities was $44,941,261, significantly higher than $9,570,177 in the previous year, indicating increased investment activity[26] - Principal payments of mortgage notes payable rose sharply to $21,274,632 from $2,098,252, showing a substantial increase in debt repayment[26] - The Partnership's investment in U.S. Treasury bills for the nine months ended September 30, 2025, was $(31,060,131), compared to $(138,877,950) in 2024[26] - The Partnership has a contractual commitment of approximately $30.9 million related to ongoing construction at the Mill Street Development[91] Expenses - Depreciation and amortization expenses for the nine months ended September 30, 2025, were $15.75 million, an increase of 23.8% from $12.73 million in the same period of 2024[17] - Advertising expenses for the nine months ended September 30, 2025, were approximately $243,000, down from $280,000 in 2024, reflecting a decrease of about 13.2%[51] - Cash paid for interest during the nine months ended September 30, 2025, was approximately $12,403,000, compared to $11,387,000 in 2024[96] - Total expenses for the nine months ended September 30, 2024, amounted to $12,753,069, with significant costs in depreciation and amortization totaling $4,450,735[131] - Interest expense for the nine months ended September 30, 2024, was $(5,517,281), highlighting the impact of financing costs on overall profitability[131] Debt and Financing - The Partnership's mortgage debt had a weighted average interest rate of 4.22% as of September 30, 2025, with interest rates ranging from 2.97% to 5.99%[73] - The Partnership borrowed $18,664,000 at a fixed interest rate of 5.84% and an additional $40,000,000 at 5.99% for refinancing and acquisition purposes[76] - An interim loan of $67,500,000 was secured at a floating interest rate of SOFR plus 150 basis points, due December 17, 2025, for the purchase of Hill Estates[77] - As of September 30, 2025, approximate annual maturities total $514,177,000, with current maturities of $74,120,000 due in 2026[79] - The Partnership has variable rate debt totaling $67,500,000, with interest rates ranging from SOFR plus 150 to 250 basis points[219] Property and Operations - The company owns 34 properties, including 3,339 apartment units and approximately 159,000 square feet of commercial space[29] - The partnership has a 40-50% interest in 7 additional residential and mixed-use properties, consisting of 688 apartment units[29] - The Partnership's properties are primarily located in New England, with no single tenant accounting for more than 5% of revenues in 2025 or 2024[50] - The total number of apartments across all properties is 687, with 409 being in the Hamilton on Main LLC[123] - Total revenues for the three months ended September 30, 2025, amounted to $7,063,982, with rental income contributing $7,009,225, representing a significant portion of total revenues[125] Management and Governance - The Partnership operates as a single business segment focused on multifamily and commercial real estate, with performance evaluated on a consolidated basis[138] - The Partnership approved a quarterly distribution of $12.00 per Unit on November 6, 2025, indicating ongoing financial stability and commitment to returning value to investors[141] - The Partnership is currently evaluating the impact of new accounting standards and SEC rules on its disclosures, which may affect future reporting[135][136] - The Partnership's management has concluded that its disclosure controls and procedures were effective as of the end of the reporting period[220] - No changes in internal control over financial reporting were identified that materially affected the Management Company's controls during the quarter ended September 30, 2025[221] - There are no material legal proceedings involving the Partnership, aside from ordinary routine litigation[222]

Financial Performance - TrustCo recorded net income of $16.3 million, or $0.86 of diluted earnings per share, for Q3 2025, compared to $12.9 million, or $0.68 per share, in Q3 2024, representing a 26.3% increase in net income [145]. - For the nine months ended September 30, 2025, net income was $45.6 million, or $2.41 per diluted share, compared to $37.6 million, or $1.97 per share, in the same period in 2024, reflecting a 21.3% increase [146]. - The effective tax rate for Q3 2025 was 23.7%, slightly down from 23.8% in Q3 2024, with income tax expense recognized at $5.1 million compared to $4.0 million [209]. - Total shareholders' equity increased to $692.0 million as of September 30, 2025, from $669.0 million a year earlier [211]. - Shareholders' equity increased to $688,977, up from $653,026, indicating a strengthening of the company's capital base [228]. Interest Income and Margin - Net interest income increased by $12.2 million, or 10.8%, for the first nine months of 2025 compared to the same period in 2024, driven by higher interest income on loans and short-term investments [147]. - For Q3 2025, the net interest margin was 2.79%, an increase of 18 basis points compared to Q3 2024 [159]. - Net interest income rose by $4.4 million to $43.1 million in Q3 2025, with a net interest spread increase of 18 basis points to 2.35% [181]. - The net interest spread increased to 2.28%, up from 2.08%, suggesting improved profitability on interest-earning assets [228]. - Total interest-bearing deposits increased to $4,679,213, with a net interest income of $125,238, reflecting a year-over-year increase of $12,201 [228]. Asset Quality and Credit Losses - TrustCo experienced a decrease of $250 thousand in provision for credit losses in Q3 2025 compared to Q3 2024, indicating improved asset quality [148]. - The Company recorded a provision for credit losses of $250 thousand in Q3 2025, down from $500 thousand in Q3 2024, primarily due to loan growth [194]. - Nonperforming loans totaled $18.5 million as of September 30, 2025, a slight decrease from $18.8 million at December 31, 2024 [183]. - The net charge-off ratio for commercial loans was 0.00% for Q3 2025, compared to 0.02% in Q3 2024 [199]. - The Company has no subprime mortgages or loans acquired with deteriorated credit quality as of September 30, 2025 [191]. Loan and Deposit Growth - The average loan portfolio grew by $125.9 million to $5.18 billion in Q3 2025, with an average yield increase of 20 basis points to 4.32% [160]. - The average balance of home equity credit lines increased by 15.7% to $440.3 million in Q3 2025 compared to the prior year [169]. - The average balance of interest-bearing deposit accounts increased by $200.6 million to $4.70 billion in Q3 2025 [177]. - The average balance of Federal Funds sold and other short-term investments was $662.7 million for Q3 2025, up from $465.9 million in Q3 2024 [174]. - Commercial loans increased to $306,091 with an interest income of $12,851, indicating a strong demand for lending products [227]. Capital Ratios and Dividends - As of September 30, 2025, the Tier 1 leverage ratio for the Bank was 10.576%, exceeding the minimum requirement of 5.000% [213]. - The Common Equity Tier 1 (CET1) capital ratio was 18.669%, significantly above the minimum requirement of 6.500% [213]. - The Company’s dividend payout ratio was 43.68% of net income for Q3 2025, compared to 53.16% for Q3 2024, with a per-share dividend of $0.38 in Q3 2025 versus $0.36 in Q3 2024 [215]. - During the three months ended September 30, 2025, the Company repurchased 298,177 shares at an average price of $38.69, totaling $11.5 million [217]. - The consolidated equity to total assets ratio was 10.90% as of September 30, 2025, compared to 10.84% at December 31, 2024 [213]. Noninterest Income and Expenses - Noninterest income decreased by $242 thousand in Q3 2025 compared to Q3 2024, primarily due to a lack of significant gains from securities transactions [148]. - Total noninterest income for Q3 2025 was $4.7 million, a decrease from $4.9 million in Q3 2024, with financial services income down $77 thousand to $2.0 million [205]. - Total noninterest expenses for Q3 2025 were $26.2 million, unchanged from Q3 2024, with significant increases in salaries and employee benefits by $593 thousand [207]. Market Conditions and Strategy - The Federal Funds rate was lowered to a range of 4.00% to 4.25% in September 2025 and further to 3.75% to 4.00% in October 2025, impacting TrustCo's interest income dynamics [141]. - The average yield on the 10-year Treasury bond decreased by 10 basis points to 4.26% in Q3 2025 compared to Q2 2025, which is favorable for mortgage lenders like TrustCo [141]. - The company maintains a conservative approach to banking, focusing on traditional underwriting processes to mitigate credit risk [157]. - TrustCo's strategy includes growing customer relationships and expanding deposits and loans, with management evaluating conditions to optimize balance sheet growth [158]. - The company does not engage in derivatives, focusing instead on traditional banking activities to manage interest rate risk [230].

Fundraising and Assets Under Management - As of September 30, 2025, the Company has raised a total of $24.2 billion in assets under management (AUM) for Private Equity Solutions, with $17.2 billion classified as Fee-Paying Assets Under Management (FPAUM) [258] - Venture Capital Solutions has raised a total of $10.8 billion in AUM, with $6.6 billion in FPAUM as of September 30, 2025 [258] - Private Credit Solutions has raised a total of $7.5 billion in AUM, with $5.3 billion in FPAUM, and impact assets represent $4.5 billion supporting over 1,000 projects across 40 states, Washington DC, and Puerto Rico [259] - Primary Investment Funds comprise approximately $15.5 billion of FPAUM, while Direct and Co-Investment Funds account for approximately $10.7 billion, and Secondary Investment Funds represent approximately $2.9 billion of FPAUM as of September 30, 2025 [263] - The Company has a network of over 4,500 investors, 310+ fund managers, and 690+ private market funds, enhancing its investment opportunities and data sourcing capabilities [258] Company Operations and Market Position - The Company operates a single operating segment, focusing on private market solutions across various investment strategies [262] - The investment team consists of 72 professionals in Private Equity Solutions, 16 in Venture Capital Solutions, and 52 in Private Credit Solutions, with an average experience of over 25 years [258][259] - The Company is experiencing accelerating demand for private market solutions, driven by a shift in public market dynamics and increasing allocations towards private market asset classes [266] - The Company has a leading presence in North America and has expanded into Europe through the acquisition of Qualitas, positioning itself for significant growth in international markets [266] Financial Performance - Total revenues for the three months ended September 30, 2025, were $75.9 million, reflecting a $1.7 million increase or 2% compared to the same period in 2024 [282] - For the nine months ended September 30, 2025, total revenues increased by $4.9 million, or 2%, to $216.3 million compared to the same period in 2024 [282] - Net income for the three months ended September 30, 2025, was $3.0 million, a significant increase of $1.7 million, or 128%, compared to the same period in 2024 [282] - Net income for the nine months ended September 30, 2025, was $11.929 million, down from $13.966 million in 2024 [317] Expenses and Profitability - Management and advisory fees increased by $1.7 million, or 2%, to $74.3 million for the three months ended September 30, 2025, driven by successful fundraising and the Qualitas acquisition [284] - Compensation and benefits expenses were $42.3 million for the three months ended September 30, 2025, showing a slight decrease of $0.2 million compared to the previous year [282] - Professional fees decreased by $2.7 million, or 29%, to $6.5 million for the three months ended September 30, 2025, reflecting reduced strategic development costs [282] - Total operating expenses decreased by $0.2 million, or 0%, to $65.2 million for the three months ended September 30, 2025 compared to the same period in 2024 [289] Cash Flow and Debt - Cash and cash equivalents decreased by $27.292 million to $40.823 million as of September 30, 2025, representing a 40% decline compared to December 31, 2024 [319] - Cash provided by operating activities dropped significantly by $73.204 million to $0.054 million for the nine months ended September 30, 2025, compared to the same period in 2024 [325] - As of September 30, 2025, the company had a total debt obligation of $393.394 million, an increase of 23% from $319.783 million as of December 31, 2024 [319] - The company has incurred $19.1 million in interest expense for the nine months ended September 30, 2025 [324] Acquisitions and Related Expenses - The Company has recognized a liability for contingent payments to customers associated with revenue-sharing agreements, which will be amortized against revenue [346] - The Company estimates that the acquisition-related earnout for WTI could reach up to $70.0 million, contingent on achieving specific EBITDA milestones of $20.0 million, $22.5 million, and $25.0 million [345] - Goodwill and other intangibles increased by $68.631 million to $672.258 million due to the Qualitas acquisition [319] Regulatory and Market Risks - Political uncertainty and regulatory changes may impact the Company's profitability and operational capabilities, necessitating careful navigation of the complex regulatory environment [267] - The Company manages exposure to exchange rate risks through regular operating activities, estimating that a hypothetical 10% decline in the Euro against the U.S. dollar would not materially impact management fees or investments [356]

Financial Performance - Net income for the nine months ended September 30, 2025, was $68.1 million, an increase of 14.1% from $59.7 million in the same period of 2024[132] - Diluted net income per common share rose to $2.84 for the nine months ended September 30, 2025, compared to $2.49 for the same period in 2024[132] - Total non-interest income increased by $1.4 million or 2.1% to $71.4 million for the nine months ended September 30, 2025[134] - Net interest income increased by $19.9 million, or 11.5%, to $191.9 million for the nine months ended September 30, 2025, compared to $172.1 million for the same period in 2024[149] - The effective tax rate decreased to 21.8% for the nine months ended September 30, 2025, down from 24.4% in the same period of 2024[157] Asset and Loan Growth - Total assets increased to $7.8 billion as of September 30, 2025, up from $7.5 billion at December 31, 2024, with net loan balances rising to $5.7 billion[132] - Average loans increased by $170.0 million, or 3.1%, compared to the same period in 2024[150] - As of September 30, 2025, total loans outstanding amounted to $5.824 billion, with $1.220 billion maturing in one year or less, $2.749 billion maturing over one to five years, and $1.855 billion maturing over five years[165] - The loan portfolio increased by $151.6 million, or 2.7%, driven by growth in construction and land development loans[162] Credit Quality and Losses - The provision for credit losses was $7.6 million for the nine months ended September 30, 2025, compared to $2.0 million for the same period in 2024[137] - Total nonperforming loans increased to $22.2 million at September 30, 2025, from $18.2 million at September 30, 2024[136] - Nonperforming loans increased to $22.2 million as of September 30, 2025, from $18.2 million in 2024[151] - The net charge-offs for the first nine months of 2025 were $4.8 million, significantly higher than $1.9 million in the same period of 2024, indicating a 152.63% increase[180] - The allowance for credit losses is based on management's estimate of probable losses, with a focus on a disciplined credit review process and economic factors affecting borrowers[173][174] Expenses and Income - Total non-interest expense rose by $7.7 million or 4.8% to $166.4 million for the nine months ended September 30, 2025, primarily due to salary increases and incentive compensation[135] - Total other income for the nine months ended September 30, 2025, was $71.366 million, a 2.1% increase from $69.923 million in 2024[152] - Salaries and employee benefits increased by $2.0 million, or 6.4%, primarily due to annual raises and increased incentive compensation accruals[159] Capital and Equity - The Company's Tier 1 capital to risk-weighted assets ratio was 13.53% at September 30, 2025, compared to 12.70% at September 30, 2024[138] - As of September 30, 2025, the Company's stockholders' equity increased by $85.8 million or 10.1%, reaching $932.2 million from $846.4 million as of December 31, 2024[199] - The Company believes it met all capital adequacy requirements as of September 30, 2025, according to regulatory standards[200] Deposits and Borrowings - The total average deposits for the nine months ended September 30, 2025, were $6,183.6 million, a slight increase of $40.4 million compared to the average balance for the year ended December 31, 2024[181] - The high month-end balance of total deposits reached $6,289.5 million for the nine months ended September 30, 2025, compared to $6,242.9 million in 2024[182] - The average interest rate on total borrowings at the end of the period was 3.09% as of September 30, 2025, down from 3.30% at the end of 2024[183] Risk Management - The Company aims to maximize its net interest margin while managing interest rate risk, monitored by its asset liability management committee (ALCO)[197] - The static GAP analysis indicated that the Company was liability sensitive through the twelve-month time horizon, suggesting potential adverse effects on net interest income from future interest rate increases[198] - The Company’s interest rate sensitivity position is monitored to maintain a balance between rate-sensitive assets and liabilities, limiting adverse effects from interest rate changes[197] Commitments and Obligations - The Company had a total of $1,702.3 million in significant contractual obligations and other commitments as of September 30, 2025[207] - The Company maintained compliance with existing covenants as of September 30, 2025, and had no balance on its revolving credit agreement of $15.0 million[184] Stock and Shareholder Programs - The Company has a maximum of 1,000,000 shares of common stock that may be issued under the Stock Incentive Plan, with 79,635 restricted stock awards granted in 2025[202] - The Employee Stock Purchase Plan allows eligible employees to purchase shares at a 15% discount, with 149,156 shares issued as of September 30, 2025[203] - The 2025 Repurchase Program authorizes the Company to repurchase up to 1.2 million shares, with approximately $45.5 million remaining capacity as of September 30, 2025[204]

Financial Performance - Key Tronic reported net sales of $98.8 million for Q1 fiscal 2026, a decrease of 24.9% from $131.6 million in Q1 fiscal 2025[104]. - The decline in net sales was primarily due to a reduction in demand of approximately $23 million from two longstanding customers and $7 million from delays in new program launches[118]. - Gross margin improved to 8.4% in Q1 fiscal 2026 from 6.2% in the previous quarter, but decreased from 10.1% in the same period of fiscal 2025[105]. - The company experienced a net loss of $2.3 million or $(0.21) per diluted share in Q1 fiscal 2026, compared to net income of $1.1 million or $0.10 per diluted share in Q1 fiscal 2025[108]. - For the three months ended September 27, 2025, the GAAP net loss was $2.255 million compared to a net income of $1.124 million for the same period in 2024[127]. - Adjusted net loss for the same period was $1.109 million, with an adjusted net loss per share of $0.10, down from an adjusted net income of $2.799 million and $0.26 per share in the prior year[127]. Cash Flow and Capital Expenditures - Total cash provided by operating activities was $7.6 million for the three months ended September 27, 2025[110]. - Net cash provided by operating activities was $7.6 million for the three months ended September 27, 2025, compared to $9.9 million for the same period in 2024[129]. - Cash used in investing activities increased to $3.2 million in the latest quarter from $0.4 million in the prior year, primarily for purchasing equipment[133]. - Cash used in financing activities was $4.7 million for the three months ended September 27, 2025, a decrease from $7.8 million in the same period of the previous year[135]. - The company expects capital expenditures to be approximately $8-$10 million for the fiscal year, with funding from internal resources and credit facilities[134]. - The company anticipates that projected cash from operations and available funds will be sufficient to meet working and fixed capital requirements for at least the next 12 months[137]. Customer and Market Dynamics - The concentration of net sales from the top three customers decreased to 30.4% in Q1 fiscal 2026 from 37.5% in the same period of the prior fiscal year[106]. - The order backlog decreased to approximately $139.9 million as of September 27, 2025, down from $210.8 million a year earlier, attributed to softening demand[128]. - Key Tronic anticipates that a new consigned materials program could grow to potentially exceed $20 million in annual revenue during fiscal 2026[118]. Operational Challenges - The company is restructuring its Juarez facility to focus on higher volume manufacturing, with significant headcount reductions already implemented[109]. - The company experienced financial impacts in Q1 of fiscal 2026 due to inventory and receivable write-offs linked to a customer bankruptcy[155]. - The company relies on a limited number of suppliers for critical components, and supply shortages have been observed in certain electronic components, potentially affecting operations[157]. - Changes in customer production timing and demand schedules complicate production scheduling and resource allocation, potentially leading to excess inventory[166]. Regulatory and Compliance Issues - The effective income tax rate increased to 32.9% for Q1 fiscal 2026 from 4.8% in Q1 fiscal 2025, primarily due to federal research and development tax credits[124]. - The company is subject to various environmental regulations, and non-compliance could lead to significant expenses and operational disruptions[168]. - The company has restrictive covenants with financial institutions, including minimum earnings requirements, which have not always been met, potentially leading to unfavorable amendments to credit arrangements[180]. - The company is subject to increased legal, financial, and accounting costs due to compliance with the Sarbanes-Oxley Act and the Dodd-Frank Act, which may impact its results of operations[199]. Financial Risks - The company is exposed to interest rate risk, particularly under its revolving line of credit and term loans, which could adversely affect its financial condition if significant changes occur[184]. - Fluctuations in foreign currency exchange rates, particularly involving the Mexican Peso, Chinese RMB, and Vietnamese Dong, could significantly impact operating costs and financial results[160]. - Increased energy prices, particularly petroleum-based components, could raise raw material and transportation costs, impacting profitability[173]. - The company has identified material weaknesses in its internal controls over financial reporting, which could impact its ability to report financial results accurately and timely[188]. - The company completed a remediation plan to address identified material weaknesses, but there is no assurance that similar issues will not arise in the future[189]. Cybersecurity and Legal Matters - The company has faced cybersecurity incidents, including unauthorized access to IT systems, which materially affected financial condition and operations in Q4 of fiscal year 2024[175]. - The company incurred significant expenses related to legal, accounting, and other professional services due to an internal investigation into accounting irregularities, which could continue to affect its financial condition[193]. Debt and Financing - The company has outstanding borrowings of $64.5 million under its asset-based senior secured revolving credit facility, $3.33 million under its asset-based secured line of credit facility, and $9.6 million on its equipment financing facilities as of September 27, 2025[204]. - The company has entered into a Credit Facility of up to $115 million, maturing on December 3, 2029, to support its financing needs[136]. - The company may face complications with acquisitions that could require additional equity or debt financing, potentially affecting its credit ratings[202]. Stock Performance - The company's stock price has been volatile, subject to fluctuations due to various factors, including its thinly traded nature and variations in quarterly operating results[186].