CTS(CTS) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the company's unaudited financial statements, management's discussion and analysis, market risk disclosures, and internal controls Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements, including statements of earnings, comprehensive earnings, balance sheets, cash flows, and shareholders' equity, along with detailed notes explaining accounting policies, revenue recognition, asset and liability components, debt, derivatives, equity, and income taxes Condensed Consolidated Statements of Earnings (Unaudited) This section provides a summary of the company's net sales, gross margin, operating earnings, net earnings, and diluted EPS for the reported periods Key Financial Highlights (Three Months Ended June 30) | Metric (Three Months Ended June 30) | 2025 (in thousands) | 2024 (in thousands) | Change (%) | | :---------------------------------- | :------------------ | :------------------ | :--------- | | Net sales | $135,309 | $130,162 | 4.0% | | Gross margin | $52,431 | $46,372 | 13.1% | | Operating earnings | $22,731 | $17,764 | 28.0% | | Net earnings | $18,527 | $14,707 | 26.0% | | Diluted EPS | $0.62 | $0.48 | 29.2% | Key Financial Highlights (Six Months Ended June 30) | Metric (Six Months Ended June 30) | 2025 (in thousands) | 2024 (in thousands) | Change (%) | | :-------------------------------- | :------------------ | :------------------ | :--------- | | Net sales | $261,078 | $255,912 | 2.0% | | Gross margin | $98,979 | $91,462 | 8.2% | | Operating earnings | $39,015 | $32,300 | 20.8% | | Net earnings | $31,891 | $25,826 | 23.5% | | Diluted EPS | $1.06 | $0.84 | 26.2% | Condensed Consolidated Statements of Comprehensive Earnings (Unaudited) This section details the company's net earnings and other comprehensive earnings, leading to total comprehensive earnings for the reported periods Comprehensive Earnings (Three Months Ended June 30) | Metric (Three Months Ended June 30) | 2025 (in thousands) | 2024 (in thousands) | | :---------------------------------- | :------------------ | :------------------ | | Net earnings | $18,527 | $14,707 | | Other comprehensive earnings (loss) | $10,748 | $(2,163) | | Comprehensive earnings | $29,275 | $12,544 | Comprehensive Earnings (Six Months Ended June 30) | Metric (Six Months Ended June 30) | 2025 (in thousands) | 2024 (in thousands) | | :-------------------------------- | :------------------ | :------------------ | | Net earnings | $31,891 | $25,826 | | Other comprehensive earnings (loss) | $16,286 | $(3,489) | | Comprehensive earnings | $48,177 | $22,337 | Condensed Consolidated Balance Sheets This section presents the company's financial position, including assets, liabilities, and shareholders' equity at specific reporting dates Consolidated Balance Sheet Highlights (As of) | Metric (As of) | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------- | :--------------------------- | :------------------------------- | | Total Assets | $784,729 | $765,427 | | Total Liabilities | $234,572 | $237,219 | | Total Shareholders' Equity | $550,157 | $528,208 | - Cash and cash equivalents increased to $99,440 thousand at June 30, 2025, from $94,334 thousand at December 31, 2024[13] - Goodwill increased to $207,547 thousand at June 30, 2025, from $201,304 thousand at December 31, 2024, primarily due to foreign exchange impact[13][47] Condensed Consolidated Statements of Cash Flows (Unaudited) This section outlines the company's cash flows from operating, investing, and financing activities for the reported periods Cash Flow Activities (Six Months Ended June 30) | Cash Flow Activity (Six Months Ended June 30) | 2025 (in thousands) | 2024 (in thousands) | | :-------------------------------------------- | :------------------ | :------------------ | | Net cash provided by operating activities | $43,870 | $37,940 | | Net cash used in investing activities | $(7,745) | $(8,672) | | Net cash used in financing activities | $(32,351) | $(32,059) | | Net increase (decrease) in cash and cash equivalents | $5,106 | $(2,630) | - Operating cash flow increased by $5,930 thousand, driven by higher net earnings and depreciation/amortization[15][122][123] - Financing activities included significant payments and borrowings of long-term debt, as well as treasury stock purchases and dividends paid[15][125][126] Condensed Consolidated Statements of Shareholders' Equity (Unaudited) This section details changes in the company's common stock, additional contributed capital, retained earnings, accumulated other comprehensive income, and treasury stock Shareholder's Equity Components (As of June 30, 2025, in thousands) | Shareholder's Equity Component (As of June 30, 2025, in thousands) | Amount | | :----------------------------------------------------------------- | :----- | | Common Stock | $324,682 | | Additional Contributed Capital | $41,236 | | Retained Earnings | $682,360 | | Accumulated Other Comprehensive Income (Loss) | $12,020 | | Treasury Stock | $(510,141) | | Total Shareholders' Equity | $550,157 | - Total shareholders' equity increased from $528,208 thousand at December 31, 2024, to $550,157 thousand at June 30, 2025, primarily due to net earnings and positive changes in accumulated other comprehensive income[17][13] - The company repurchased 555,191 shares of common stock for $23,345 thousand during the six months ended June 30, 2025[83][84] Notes to Condensed Consolidated Financial Statements ‑ (Unaudited) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements NOTE 1 - Basis of Presentation This note describes the basis of financial statement preparation, adherence to SEC rules, and correction of prior period errors - The financial statements are unaudited and prepared in accordance with SEC rules, relying on management estimates and assumptions[21][22] - Immaterial prior period errors related to the acquisition of SyQwest, LLC and foreign currency impact on certain long-term debt payments were identified and corrected, affecting 2024 financial statements[24][25] Corrected Consolidated Statement of Earnings for the Year Ended December 31, 2024 (in thousands) | Metric | Previously Reported | Corrections | As Corrected | | :----- | :------------------ | :---------- | :----------- | | Net sales | $515,771 | $(1,015) | $514,756 | | Cost of goods sold | $326,621 | $580 | $327,201 | | Net earnings | $58,114 | $(2,642) | $55,472 | | Diluted EPS | $1.89 | | $1.81 | NOTE 2 – Revenue Recognition This note details the company's policies for recognizing revenue, including point-in-time and over-time recognition, and disaggregated revenue by market - Revenue is primarily recognized at a point in time upon delivery for commercial products, while certain contracts with termination clauses recognize revenue over time[38][39] Disaggregated Revenue by Major Markets (Three Months Ended June 30) | Market | 2025 (in thousands) | 2024 (in thousands) | Change (%) | | :------------------ | :------------------ | :------------------ | :--------- | | Transportation | $60,674 | $64,221 | (5.5%) | | Industrial | $34,110 | $32,175 | 6.0% | | Medical | $19,177 | $17,832 | 7.5% | | Aerospace & Defense | $21,348 | $15,934 | 34.0% | | Total | $135,309 | $130,162 | 4.0% | Disaggregated Revenue by Major Markets (Six Months Ended June 30) | Market | 2025 (in thousands) | 2024 (in thousands) | Change (%) | | :------------------ | :------------------ | :------------------ | :--------- | | Transportation | $119,163 | $130,738 | (8.9%) | | Industrial | $66,558 | $63,238 | 5.2% | | Medical | $38,308 | $34,733 | 10.3% | | Aerospace & Defense | $37,049 | $27,203 | 36.2% | | Total | $261,078 | $255,912 | 2.0% | NOTE 3 – Accounts Receivable, net This note provides a breakdown of accounts receivable, net, including gross amounts and allowance for credit losses Accounts Receivable, Net (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Accounts receivable, gross | $86,558 | $78,379 | | Less: Allowance for credit losses | $(980) | $(730) | | Accounts receivable, net | $85,578 | $77,649 | - Accounts receivable, net, increased by $7,929 thousand from December 31, 2024, to June 30, 2025[43] NOTE 4 – Inventories, net This note details the composition of inventories, net, including finished goods, work-in-process, raw materials, and inventory reserves Inventories, Net (in thousands) | Component | June 30, 2025 | December 31, 2024 | | :---------------- | :------------ | :---------------- | | Finished goods | $12,504 | $12,126 | | Work-in-process | $27,521 | $22,331 | | Raw materials | $30,928 | $31,818 | | Inventory reserves | $(13,850) | $(13,963) | | Inventories, net | $57,103 | $52,312 | - Net inventories increased by $4,791 thousand from December 31, 2024, to June 30, 2025, primarily due to an increase in work-in-process[45] NOTE 5 – Property, Plant and Equipment, net This note presents the components of property, plant and equipment, net, and related depreciation expense Property, Plant and Equipment, Net (in thousands) | Component | June 30, 2025 | December 31, 2024 | | :------------------------------ | :------------ | :---------------- | | Land and land improvements | $399 | $399 | | Buildings and improvements | $73,423 | $73,011 | | Machinery and equipment | $272,284 | $265,950 | | Less: Accumulated depreciation | $(252,576) | $(245,003) | | Property, plant and equipment, net | $93,530 | $94,357 | - Depreciation expense for the three months ended June 30, 2025, was $4,508 thousand, slightly down from $4,518 thousand in the prior year; for the six months, it was $8,970 thousand in 2025 vs $9,018 thousand in 2024[46] NOTE 6 – Goodwill and Other Intangible Assets This note details the company's goodwill and other intangible assets, including amortization expense and foreign exchange impact Goodwill (in thousands) | Metric | Amount | | :-------------------------- | :------------ | | Goodwill as of Dec 31, 2024 | $201,304 | | Foreign exchange impact | $6,243 | | Goodwill as of Jun 30, 2025 | $207,547 | Other Intangible Assets, Net (as of June 30, 2025, in thousands) | Component | Gross Carrying Amount | Accumulated Amortization | Net Amount | | :-------------------------- | :-------------------- | :----------------------- | :--------- | | Customer lists/relationships | $217,035 | $(80,182) | $136,853 | | Technology and other intangibles | $62,197 | $(37,265) | $24,932 | | Total | $279,232 | $(117,447) | $161,785 | - Amortization expense for other intangible assets increased to $4,044 thousand for the three months ended June 30, 2025, from $2,807 thousand in the prior year, and to $8,075 thousand for the six months ended June 30, 2025, from $5,633 thousand in the prior year[49] NOTE 7 – Costs Associated with Exit and Restructuring Activities This note outlines the company's restructuring charges and the activity in its restructuring liability Restructuring Charges (in thousands) | Period | 2025 | 2024 | | :-------------------------- | :--- | :--- | | Three Months Ended June 30 | $297 | $1,190 | | Six Months Ended June 30 | $749 | $2,884 | - Restructuring charges for the six months ended June 30, 2025, were primarily due to workforce reductions ($687 thousand) and building/equipment relocation ($25 thousand)[51] Restructuring Liability Activity (Six Months Ended June 30, 2025, in thousands) | Activity | Amount | | :------------------------------------- | :----- | | Restructuring liability at Dec 31, 2024 | $798 | | Restructuring charges | $749 | | Costs paid | $(813) | | Restructuring liability at Jun 30, 2025 | $734 | NOTE 8 – Accrued Expenses and Other Liabilities This note provides a breakdown of accrued expenses and other liabilities, detailing various components Accrued Expenses and Other Liabilities (in thousands) | Component | June 30, 2025 | December 31, 2024 | | :------------------------------ | :------------ | :---------------- | | Accrued product-related costs | $1,939 | $1,866 | | Accrued income taxes | $5,422 | $5,418 | | Remediation reserves | $11,891 | $12,192 | | Derivative liabilities | $1,092 | $334 | | Other accrued liabilities | $4,991 | $9,094 | | Total | $31,200 | $35,361 | - Total accrued expenses and other liabilities decreased by $4,161 thousand from December 31, 2024, to June 30, 2025, primarily due to a decrease in other accrued liabilities[53] NOTE 9 – Commitments and Contingencies This note describes the company's commitments and contingencies, including remediation reserves and legal claims - The company accrues for probable remediation activities and legal claims, with two sites designated as National Priorities List sites under the EPA's Superfund program[54] Remediation Reserves Roll-Forward (in thousands) | Activity | June 30, 2025 | December 31, 2024 | | :------------------------------------- | :------------ | :---------------- | | Balance at beginning of period | $12,192 | $12,044 | | Remediation expense | $438 | $1,701 | | Net remediation payments | $(745) | $(1,554) | | Balance at end of the period | $11,891 | $12,192 | - For the Asheville Site, the company has recorded a loss estimate of $1,900 thousand, with potential exposure ranging from $1,900 thousand to $9,955 thousand[55] NOTE 10 - Debt This note details the company's long-term debt, including its revolving credit facility and compliance with debt covenants Long-term Debt (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :---------------------------------------- | :------------ | :---------------- | | Total credit facility | $400,000 | $400,000 | | Balance outstanding | $88,000 | $92,300 | | Amount available, subject to covenant restrictions | $310,360 | $306,060 | | Weighted-average interest rate | 5.64% | 6.41% | - The Revolving Credit Facility, totaling $400,000 thousand, matures on December 15, 2026, and uses SOFR as the primary reference rate[59][60] - The company was in compliance with all debt covenants at June 30, 2025[62] Note 11 - Derivative Financial Instruments This note explains the company's use of derivative instruments to hedge currency and interest rate risks and their financial impact - The company uses foreign currency forward contracts, interest rate swaps, and a cross-currency swap to hedge currency and interest rate risks[64] - As of June 30, 2025, the company had a net unrealized gain of $2,311 thousand from foreign currency hedges and a net unrealized loss of $1,752 thousand from a cross-currency swap in accumulated other comprehensive income (loss)[69][73] Effect of Derivative Instruments on Condensed Consolidated Statements of Earnings (Six Months Ended June 30, in thousands) | Derivative Type | 2025 | 2024 | | :------------------------ | :----- | :----- | | Foreign Exchange Contracts | $(1,218) | $1,237 | | Interest Rate Swaps | $471 | $776 | | Cross-Currency Swap | $78 | $189 | | Total net (loss) gain | $(669) | $2,202 | NOTE 12 – Accumulated Other Comprehensive Income (Loss) This note details the components of accumulated other comprehensive income (loss), including derivative gains/losses and cumulative translation adjustments - Accumulated other comprehensive income (loss) includes unrealized gains/losses from derivatives (interest rate swaps, foreign currency forward contracts, cross-currency swap), unrealized pension costs, and cumulative translation adjustments[78] Total Accumulated Other Comprehensive Income (Loss) (Six Months Ended June 30, in thousands) | Metric | Dec 31, 2024 | Gain (Loss) Recognized in OCI | Reclassified from AOCI to Earnings | Jun 30, 2025 | | :---------------------------------------- | :----------- | :---------------------------- | :--------------------------------- | :----------- | | Changes in fair market value of derivatives, net | $(1,333) | $3,150 | $573 | $2,390 | | Changes in unrealized pension cost, net | $(109) | $0 | $(109) | $(218) | | Cumulative translation adjustment, net | $(2,824) | $12,672 | $0 | $9,848 | | Total AOCI | $(4,266) | $15,822 | $464 | $12,020 | - The cumulative translation adjustment significantly increased accumulated other comprehensive income (loss) by $12,672 thousand during the six months ended June 30, 2025[80] NOTE 13 – Shareholders' Equity This note provides details on common stock, treasury stock, and the company's share repurchase program Common Stock and Treasury Stock (As of) | Metric | June 30, 2025 | December 31, 2024 | | :---------------------- | :------------ | :---------------- | | Common Shares authorized | 75,000,000 | 75,000,000 | | Common Shares issued | 57,621,847 | 57,543,964 | | Common Shares outstanding | 29,548,737 | 30,026,045 | | Treasury Shares held | 28,073,110 | 27,517,919 | - A new share repurchase program was approved on February 2, 2024, authorizing up to $100,000 thousand in common stock repurchases, superseding the prior program[82] - During the six months ended June 30, 2025, 555,191 shares were repurchased for $23,345 thousand; approximately $38,078 thousand remains available under the program[83] NOTE 14 - Stock-Based Compensation This note describes the company's stock-based compensation plans, related expenses, and unrecognized compensation - The company has five active stock-based compensation plans, with future grants only under the 2018 Plan, which allows for various equity awards[85][86] Stock-Based Compensation Expense (Six Months Ended June 30, in thousands) | Component | 2025 | 2024 | | :---------------------------- | :---- | :---- | | Service-based RSUs | $1,591 | $1,875 | | Performance and Market-based RSUs | $341 | $370 | | Cash-settled RSUs | $331 | $299 | | Total | $2,263 | $2,544 | - Unrecognized compensation expense related to unvested RSUs totaled $7,448 thousand as of June 30, 2025, with a weighted-average recognition period of 1.79 years[86] NOTE 15 - Fair Value Measurements This note details financial assets and liabilities measured at fair value, categorized by Level 1, 2, and 3 inputs Financial Assets and Liabilities Measured at Fair Value (As of June 30, 2025, in thousands) | Instrument | Carrying Value | Level 1 | Level 2 | Level 3 | | :-------------------------- | :------------- | :------ | :------ | :------ | | Interest rate swaps | $826 | $0 | $826 | $0 | | Foreign currency hedges | $2,201 | $0 | $2,201 | $0 | | Cross-currency swap | $(1,092) | $0 | $(1,092)| $0 | | Qualified replacement plan assets | $10,172 | $10,172 | $0 | $0 | | Contingent consideration | $(5,505) | $0 | $0 | $(5,505)| - Interest rate swaps, foreign currency hedges, and cross-currency swaps are classified as Level 2 fair value measurements, using market-based observable inputs[92] - Contingent consideration is a Level 3 fair value measurement, requiring significant management judgment and assumptions about future revenues and timing of events[93] NOTE 16 - Income Taxes This note presents the company's effective income tax rates and factors influencing changes, including new legislation Effective Income Tax Rates | Period | 2025 | 2024 | | :-------------------------- | :---- | :---- | | Three Months Ended June 30 | 19.4% | 17.2% | | Six Months Ended June 30 | 18.4% | 17.8% | - The increase in the effective income tax rate for both periods is primarily due to a change in the mix of earnings taxed at higher rates[97][98] - The company is evaluating the impact of the newly enacted One Big Beautiful Bill Act (signed July 4, 2025) on its financial position and results of operations[99] NOTE 17 - Segment Information This note clarifies that the company operates as a single reportable segment and how the CODM evaluates performance - CTS Corporation operates as a single reportable segment[100] - The Chief Operating Decision Maker (CODM) evaluates operating results and performance through Net earnings and reviews consolidated expense information (Cost of goods sold, SG&A, R&D)[100] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and results of operations, analyzing performance for the second quarter and first six months of 2025 compared to 2024, discussing liquidity, capital resources, critical accounting policies, significant customers, and forward-looking statements Overview This section provides an overview of the company's business, vision, and key challenges in the current market environment - CTS is a global manufacturer of sensors, connectivity components, and actuators for OEMs, tier one suppliers in aerospace & defense, industrial, medical, and transportation markets, and the U.S. Government[104] - The company's vision is to be a leading provider of sensing and motion devices and connectivity components, supported by investments in product development, technologies, and talent[104] - Key challenges include market softness, competition, technological changes, economic conditions (inflation/recession), tariffs, and the ability to acquire new customers and launch products[106] Results of Operations: Second Quarter 2025 versus Second Quarter 2024 This section analyzes the company's financial performance for the second quarter of 2025 compared to the same period in 2024, highlighting key revenue and profitability drivers Key Financial Highlights (Three Months Ended June 30) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (%) | | :-------------------------- | :------------------ | :------------------ | :--------- | | Net sales | $135,309 | $130,162 | 4.0% | | Gross margin | $52,431 | $46,372 | 13.1% | | Operating earnings | $22,731 | $17,764 | 28.0% | | Net earnings | $18,527 | $14,707 | 26.0% | | Diluted net earnings per share | $0.62 | $0.48 | 29.2% | - Net sales increased by 4.0% to $135,309 thousand, driven by a 13.2% increase in diversified end markets (including $4,468 thousand from SyQwest acquisition) and recovery in medical and industrial markets, partially offset by a 5.5% decrease in transportation end market sales[107] - Gross margin percentage improved from 35.6% to 38.7% due to improved sales mix and operational improvements, with a net benefit of approximately $959 thousand from foreign exchange rates[108] - Restructuring charges decreased significantly by 75.0% to $297 thousand, primarily related to headcount reductions in response to softening demand in the transportation market[111] Results of Operations: Six Months ended June 30, 2025 versus Six Months Ended June 30, 2024 This section analyzes the company's financial performance for the first six months of 2025 compared to the same period in 2024, detailing revenue and profitability trends Key Financial Highlights (Six Months Ended June 30) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (%) | | :-------------------------- | :------------------ | :------------------ | :--------- | | Net sales | $261,078 | $255,912 | 2.0% | | Gross margin | $98,979 | $91,462 | 8.2% | | Operating earnings | $39,015 | $32,300 | 20.8% | | Net earnings | $31,891 | $25,826 | 23.5% | | Diluted net earnings per share | $1.06 | $0.84 | 26.2% | - Net sales increased by 2.0% to $261,078 thousand, driven by a 13.4% increase in diversified end markets (including $7,878 thousand from SyQwest acquisition), with strong growth in medical and industrial, offset by an 8.9% decrease in transportation sales[114] - Gross margin percentage increased from 35.7% to 37.9% due to improved sales mix and operational efficiencies, with a foreign exchange benefit of approximately $2,026 thousand[115] - Restructuring charges decreased by 74.0% to $749 thousand, primarily due to headcount reductions in response to softening demand in the transportation market[117] Liquidity and Capital Resources This section discusses the company's sources of funding, cash flow activities, and debt position, highlighting its financial flexibility - The company primarily funds its operations through cash flows from operating activities and its $400,000 thousand Revolving Credit Facility, which has $310,360 thousand available as of June 30, 2025[120][127] Cash and Long-term Debt (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :---------------------- | :------------ | :---------------- | | Cash and cash equivalents | $99,440 | $94,334 | | Long-term debt | $88,000 | $92,300 | - Net cash provided by operating activities increased to $43,870 thousand for the six months ended June 30, 2025, from $37,940 thousand in the prior year[122][123] - Net cash used in financing activities was $32,351 thousand, primarily due to treasury stock purchases ($22,995 thousand) and net payments of long-term debt ($4,300 thousand)[125] Critical Accounting Policies and Estimates This section confirms the consistency of critical accounting policies and estimates with previous reports and notes no significant changes - Critical accounting policies and estimates remain consistent with the prior Annual Report on Form 10-K[131] - No significant changes in the application of critical accounting policies or estimates occurred during the three and six months ended June 30, 2025[131] Significant Customers This section identifies key customers and their contribution to net sales, emphasizing the company's strategy for customer base diversification Significant Customers (Percentage of Total Net Sales) | Customer | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :---------------------- | :------ | :------ | :------- | :------- | | Toyota Motor Corporation | 12.0% | 11.9% | 12.0% | 12.6% | | Cummins Inc. | 9.5% | 13.1% | 9.9% | 13.4% | - The company continues to focus on broadening its customer base to diversify non-transportation end market exposure[132] Forward‑Looking Statements This section provides a cautionary note regarding forward-looking statements, highlighting inherent risks and uncertainties - The document contains forward-looking statements subject to risks and uncertainties, including supply chain disruptions, economic changes, acquisition integration issues, technological change, and geopolitical risks[134] - Readers are cautioned not to place undue reliance on these statements, which speak only as of their date, and the company undertakes no obligation to update them[134] Item 3. Quantitative and Qualitative Disclosures about Market Risk This section refers to the company's Annual Report on Form 10-K for detailed market risk disclosures and confirms no material changes in market risk exposure during the current reporting period - No material changes in market risk exposure occurred during the six months ended June 30, 2025[135] - Detailed disclosures about market risk are available in the Annual Report on Form 10-K for the year ended December 31, 2024[135] Item 4. Controls and Procedures This section confirms that management, including the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures as of June 30, 2025, and concluded they were effective; it also states that there were no material changes in internal control over financial reporting during the quarter - Management concluded that disclosure controls and procedures were effective as of June 30, 2025[137] - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2025[139] PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity security sales, other information, and exhibits Item 1. Legal Proceedings This section states that the company is involved in ordinary course legal proceedings and has established adequate accruals for expected future liabilities where estimable, while cautioning that final resolutions could materially impact financial results - The company is involved in legal proceedings arising from ordinary business conduct and has accrued for expected liabilities[140] - There is no assurance that the final resolution of legal claims will not materially adversely affect the company's financial position, results of operations, or cash flows[140] Item 1A. Risk Factors This section highlights uncertainty over global tariffs and trade policies as a new or updated risk factor, noting significant changes in tariffs in the first half of 2025 and the company's efforts to mitigate impacts; it also states that no other risk factors have changed from the prior Annual Report on Form 10-K - Uncertainty over global tariffs and trade policies is a significant risk factor, with changes in tariffs by the U.S. and other countries in H1 2025[142][143] - The company is attempting to mitigate tariff-related impacts but cannot assure success, and further changes could negatively affect results[143] - No other changes to risk factors from the Annual Report on Form 10-K for the year ended December 31, 2024[144] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's share repurchase program, approved in February 2024 for up to $100 million, and reports the number of shares repurchased and the average price paid per share during the second quarter of 2025 - A share repurchase program approved in February 2024 authorizes up to $100 million in common stock repurchases, with no set expiration date[145] Share Repurchase Activity (April 1, 2025 - June 30, 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Maximum Dollar Value Remaining (in thousands) | | :--------------------------- | :------------------------------- | :--------------------------- | :-------------------------------------------- | | April 1, 2025 - April 30, 2025 | 153,000 | $38.48 | $48,884 | | May 1, 2025 - May 31, 2025 | 138,650 | $41.11 | $43,185 | | June 1, 2025 - June 30, 2025 | 120,000 | $42.56 | $38,078 | | Total | 411,650 | | | Item 5. Other Information This section states that no director or officer adopted, modified, or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the quarter ended June 30, 2025 - No directors or officers adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q2 2025[148] Item 6. Exhibits This section lists the exhibits filed as part of the Form 10-Q, including certifications under the Sarbanes-Oxley Act and Inline XBRL formatted financial information - Exhibits include certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[151] - Financial statements and notes are provided in Inline XBRL format[151] SIGNATURES This section contains the official signatures certifying the accuracy and completeness of the financial report - The report is signed by Ashish Agrawal, Vice President and Chief Financial Officer, on July 24, 2025[154]