Ultra Clean (UCTT) - 2025 Q2 - Quarterly Report

Report Information This section provides key administrative details of the quarterly report, including filing type, registrant, filer status, and common stock outstanding - Filing Type: Quarterly Report on Form 10-Q for the period ended June 27, 2025[2] - Registrant: Ultra Clean Holdings, Inc., a Delaware corporation[2] - Filer Status: Large accelerated filer[4] - Common Stock Outstanding (July 25, 2025): 45,343,968 shares[4] PART I—FINANCIAL INFORMATION This part presents the unaudited condensed consolidated financial statements and management's discussion and analysis of the company's financial condition and results of operations Item 1. Unaudited Condensed Consolidated Financial Statements For the six months ended June 27, 2025, Ultra Clean Holdings, Inc. reported a net loss of $162.9 million, a significant decline from net income in the prior year, primarily due to a $151.1 million goodwill impairment. Total assets decreased to $1,745.6 million, largely due to this impairment, while total equity also declined. Operating cash flow, however, improved to $57.4 million, driven by favorable working capital changes. The company adopted new income tax disclosure standards and is evaluating expense disaggregation standards. Detailed notes cover fair value measurements, borrowing arrangements, retirement plans, and segment performance, highlighting a shift in tax assertion for a China subsidiary and ongoing employee stock plans Condensed Consolidated Balance Sheets This section details the company's financial position, including assets, liabilities, and equity, as of specific reporting dates Condensed Consolidated Balance Sheet Highlights (In millions) | Metric | June 27, 2025 | December 27, 2024 | Change | | :--------------------------------- | :-------------- | :---------------- | :----- | | Total Assets | $1,745.6 | $1,919.9 | $(174.3) | | Current Assets | $955.8 | $970.1 | $(14.3) | | Goodwill | $114.2 | $265.3 | $(151.1) | | Total Liabilities | $955.8 | $984.1 | $(28.3) | | Total Equity | $789.8 | $935.8 | $(146.0) | - Goodwill decreased significantly from $265.3 million to $114.2 million, indicating a substantial impairment[9] - Retained earnings decreased from $370.4 million to $203.4 million[9] Condensed Consolidated Statements of Operations This section presents the company's revenues, expenses, and net income or loss over specific reporting periods Condensed Consolidated Statements of Operations Highlights (Six Months Ended, In millions, except per share) | Metric | June 27, 2025 | June 28, 2024 | YoY Change | | :--------------------------------- | :-------------- | :-------------- | :--------- | | Total Revenues | $1,037.4 | $993.9 | 4.4% | | Total Cost of Revenues | $873.9 | $822.8 | 6.2% | | Gross Margin | $163.5 | $171.1 | (4.4)% | | Impairment of Goodwill | $151.1 | $— | N/A | | Income (loss) from Operations | $(128.9) | $40.2 | (420.6)% | | Net Income (Loss) | $(162.9) | $14.2 | (1247.2)% | | Net Income (Loss) attributable to UCT | $(167.0) | $9.7 | (1821.6)% | | Diluted EPS attributable to UCT | $(3.70) | $0.21 | (1857.1)% | - A goodwill impairment charge of $151.1 million was recorded for the six months ended June 27, 2025, significantly impacting operating and net income[12] - Total revenues increased by 4.4% for the six months ended June 27, 2025, driven by growth in both Products and Services segments[12] Condensed Consolidated Statements of Comprehensive Income (Loss) This section reports the company's net income or loss and other comprehensive income or loss components for the period Condensed Consolidated Statements of Comprehensive Income (Loss) Highlights (Six Months Ended, In millions) | Metric | June 27, 2025 | June 28, 2024 | | :--------------------------------- | :-------------- | :-------------- | | Net Income (Loss) | $(162.9) | $14.2 | | Change in cumulative translation adjustment, net of tax | $10.0 | $(6.3) | | Total other comprehensive income (loss) | $10.0 | $(6.3) | | Comprehensive income (loss) | $(152.9) | $7.9 | | Comprehensive income (loss) attributable to UCT | $(161.2) | $6.7 | - The significant comprehensive loss is primarily due to the net loss reported for the period[13] - A positive change in cumulative translation adjustment of $10.0 million (vs. -$6.3 million prior year) provided a partial offset[13] Condensed Consolidated Statements of Cash Flows This section outlines the company's cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows Highlights (Six Months Ended, In millions) | Cash Flow Activity | June 27, 2025 | June 28, 2024 | YoY Change | | :--------------------------------- | :-------------- | :-------------- | :--------- | | Net cash provided by operating activities | $57.4 | $33.0 | $24.4 | | Net cash used in investing activities | $(29.1) | $(30.9) | $1.8 | | Net cash provided by (used in) financing activities | $(18.8) | $12.5 | $(31.3) | | Net increase in cash and cash equivalents | $13.5 | $12.5 | $1.0 | | Cash and cash equivalents at end of period | $327.4 | $319.5 | $7.9 | - Operating cash flow increased by $24.4 million, driven by a $25.9 million favorable change in net working capital, including a $34.3 million decrease in accounts receivable[141][17] - Financing activities shifted from providing $12.5 million in cash to using $18.8 million, primarily due to $31.5 million net cash proceeds from bank borrowings in the prior period[141][17] Condensed Consolidated Statements of Stockholders' Equity This section details changes in the company's equity accounts, including net income, share repurchases, and other comprehensive income Condensed Consolidated Statements of Stockholders' Equity Highlights (Six Months Ended, In millions) | Metric | December 27, 2024 | June 27, 2025 | Change | | :--------------------------------- | :---------------- | :-------------- | :----- | | Total Equity | $935.8 | $789.8 | $(146.0) | | Net income (loss) attributable to UCT | N/A | $(167.0) | N/A | | Repurchase of shares | N/A | $(3.4) | N/A | | Accumulated Other Comprehensive Income (Loss) | $(10.3) | $(4.5) | $5.8 | - Net loss attributable to UCT of $167.0 million was a primary driver of the equity reduction[18] - The company repurchased $3.4 million of shares during the six months ended June 27, 2025[18] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements Note 1. Organization and Significant Accounting Policies UCT is a leading developer and supplier of critical subsystems, components, parts, and ultra-high purity cleaning and analytical services, primarily for the semiconductor industry - UCT is a leading developer and supplier of critical subsystems, components, parts, and ultra-high purity cleaning and analytical services, primarily for the semiconductor industry[25] - The Products business designs and manufactures production tools, components, and modules, while the Services business provides ultra-high purity parts cleaning, recoating, and micro-contamination analysis[25] - Adopted ASU No. 2023-09 (Income Taxes) in Q1 2025, which did not materially impact interim financial statements but will expand annual income tax disclosures[29][30] - Currently evaluating ASU No. 2024-03 and ASU No. 2025-01 (Expense Disaggregation Disclosures), effective for annual periods beginning after December 15, 2026[31][32][33] Note 2. Balance Sheet Information This note provides detailed information on specific balance sheet accounts, including receivables factoring, inventories, and property, plant, and equipment - The Company has two active non-recourse receivables factoring arrangements, allowing for factoring up to $25.0 million (U.S.) and $12.0 million (EMEA/Asia Pacific)[35] Accounts Receivable Factoring (In millions) | Period | Cash Proceeds from Sales of Accounts Receivables | Uncollected Receivables Sold (as of June 27, 2025) | | :--------------------------------- | :--------------------------------------------- | :------------------------------------------------- | | Three Months Ended June 27, 2025 | $23.0 | N/A | | Six Months Ended June 27, 2025 | $29.4 | $25.4 | Inventories (In millions) | Category | June 27, 2025 | December 27, 2024 | | :-------------- | :------------ | :---------------- | | Raw materials | $202.0 | $195.4 | | Work in process | $122.1 | $130.8 | | Finished goods | $51.5 | $54.8 | | Total | $375.6 | $381.0 | Property, Plant and Equipment, Net (In millions) | Category | June 27, 2025 | December 27, 2024 | | :------------------------- | :------------ | :---------------- | | Total (net of depreciation) | $336.7 | $325.9 | Note 3. Fair Value This note details the fair value measurements of the company's financial instruments, particularly liabilities, using various input levels - Pension obligation is measured using Level 3 unobservable inputs, based on expected years of service, average compensation, mortality, inflation, and interest rate risks[38] Fair Value Measurement of Liabilities (In millions) | Description | June 27, 2025 (Level 3) | December 27, 2024 (Level 3) | | :---------------- | :---------------------- | :-------------------------- | | Pension obligation | $2.5 | $1.7 | | Contingent earn-out | $— | $0.1 | - The contingent earn-out liability for the HIS acquisition was reduced from $0.1 million to zero in Q1 2025 due to lower-than-expected financial performance, resulting in a $0.1 million increase in Other income (expense), net[40] - For the three and six months ended June 28, 2024, the Company recognized gains of $24.1 million and $22.8 million, respectively, related to the change in the fair value of contingent earn-out liability[41] Note 4. Goodwill and Intangible Assets This note provides a breakdown of goodwill by segment and details the carrying value and amortization of intangible assets Goodwill Carrying Amount by Segment (In millions) | Segment | December 27, 2024 | Impairment of Goodwill | June 27, 2025 | | :------- | :---------------- | :--------------------- | :------------ | | Products | $191.8 | $(77.6) | $114.2 | | Services | $73.5 | $(73.5) | $— | | Total | $265.3 | $(151.1) | $114.2 | - A goodwill impairment charge of $151.1 million was recorded in Q2 2025, with $77.6 million attributable to Products (Fluid Solutions) and $73.5 million to Services, due to a sustained decline in market capitalization and other factors[44][45] - Fair value estimates for impairment tests were derived from an income approach using Level 3 unobservable inputs[46] Intangible Assets, Net (In millions) | Category | June 27, 2025 (Carrying Value) | December 27, 2024 (Carrying Value) | | :------------------------ | :----------------------------- | :--------------------------------- | | Customer relationships | $80.4 | $89.8 | | Recipes | $48.2 | $50.0 | | Intellectual property/know-how | $23.9 | $26.1 | | Tradename | $9.3 | $9.6 | | Standard operating procedures | $5.7 | $5.9 | | Developed technology | $3.1 | $3.5 | | Total | $170.6 | $184.9 | - Amortization expense for intangible assets was $14.3 million for the six months ended June 27, 2025[53] Note 5. Borrowing Arrangements This note details the company's debt obligations, including term loans and revolving credit facilities, and compliance with financial covenants - Total bank debt as of June 27, 2025, was $478.4 million, net of unamortized debt issuance costs[62] - The U.S. Term Loan outstanding amount was $484.5 million with an interest rate of 7.6% as of June 27, 2025[59] - The company has a $150.0 million revolving credit facility with $146.4 million available as of June 27, 2025, and was in compliance with all financial covenants[56][60][62] - The fair value of long-term debt is based on Level 2 inputs and approximates its carrying value[63] Note 6. Income Tax This note provides information on the company's effective tax rate, provision for income taxes, and the impact of specific tax-related events and regulations Effective Tax Rate and Provision for Income Taxes (Six Months Ended, In millions) | Metric | June 27, 2025 | June 28, 2024 | | :---------------------- | :------------ | :------------ | | Effective Tax Rate | (9.8)% | 56.4% | | Provision for Income Taxes | $14.6 | $18.4 | - The negative effective tax rate is primarily due to pre-tax losses in the current period and the goodwill impairment charge[65][137] - A discrete tax expense of $3.4 million was recorded in Q2 2025 due to a change in the permanent reinvestment assertion for a China subsidiary's earnings[139] - The company maintains a full valuation allowance on its U.S. federal, state, and certain foreign deferred tax assets[66][140] - Pillar Two global minimum tax provisions are not expected to have a significant impact on fiscal year 2025 financial statements[68] - The company is evaluating the impact of the newly enacted One Big Beautiful Bill Act (OBBBA) on U.S. tax laws, but does not anticipate a material change to its effective tax rate due to existing valuation allowances[69] Note 7. Retirement Plans This note outlines the company's defined benefit pension plans and 401(k) plan, including benefit obligations, plan assets, and employer contributions - Defined benefit pension plans (Cinos Korea, Israel entities) had a benefit obligation of $14.0 million and plan assets of $11.5 million as of June 27, 2025, resulting in an underfunded balance of $2.5 million[71] Future Estimated Pension Payment Obligations (In millions) | Year | Payment Obligation | | :---------- | :----------------- | | 2025 (rem.) | $1.6 | | 2026 | $1.8 | | 2027 | $2.8 | | 2028 | $1.4 | | 2029 | $1.3 | | Thereafter | $12.3 | | Total | $21.2 | - The company made discretionary employer contributions of $1.9 million to its 401(k) Plan for the six months ended June 27, 2025[74] Note 8. Commitments and Contingencies This note details the company's purchase commitments and potential liabilities from legal proceedings and indemnification agreements - The company has commitments to purchase inventories totaling approximately $407.9 million as of June 27, 2025[154] - The company is subject to various legal proceedings and claims, but does not believe they will have a material adverse effect on its financial condition, results of operations, or cash flows[76] - Standard indemnification is provided to customers against certain liabilities, including intellectual property infringement claims, with potential liability generally uncapped[155] Note 9. Stockholders' Equity and Noncontrolling Interests This note provides information on share repurchase activities and the nature of noncontrolling interests within the company - The company repurchased approximately 0.2 million shares for an aggregate cost of $3.4 million during the six months ended June 27, 2025, under its $150 million share repurchase program[78] - As of June 27, 2025, 1.5 million shares had been repurchased and are held in treasury stock[79] - Noncontrolling interests relate to minority ownership in Cinos Korea and Cinos China, which provide outsourced cleaning and recycling services for the semiconductor industry[80][81] Note 10. Employee Stock Plans This note details the company's stock-based compensation expense, RSU and PSU grants, unrecognized compensation costs, and Employee Stock Purchase Plan activities Stock-Based Compensation Expense (Six Months Ended, In millions) | Category | June 27, 2025 | June 28, 2024 | | :------------------------ | :------------ | :------------ | | Cost of revenues | $0.7 | $0.8 | | Research and development | $0.2 | $0.1 | | Sales and marketing | $0.9 | $1.0 | | General and administrative | $8.2 | $6.1 | | Total | $10.0 | $8.0 | - For the six months ended June 27, 2025, 0.8 million RSUs were granted with a weighted average fair value of $22.35 per share, and 98 thousand PSUs were granted with a fair value of $2.2 million[84][85] - As of June 27, 2025, $36.0 million of unrecognized stock-based compensation cost remains, to be amortized over a weighted average period of 2.1 years[86] - The Employee Stock Purchase Plan (ESPP) issued 72 thousand shares during the six months ended June 27, 2025, resulting in $0.4 million of expense[91] Note 11. Revenue Recognition This note provides a breakdown of revenues by segment and geography, and identifies significant customers Revenues by Segment (Six Months Ended, In millions) | Segment | June 27, 2025 | June 28, 2024 | Percent Change | | :------- | :------------ | :------------ | :------------- | | Products | $911.9 | $871.2 | 4.7% | | Services | $125.5 | $122.7 | 2.3% | | Total | $1,037.4 | $993.9 | 4.4% | Revenues by Geography (Six Months Ended, In millions) | Geography | June 27, 2025 | June 28, 2024 | Percent Change | | :---------- | :------------ | :------------ | :------------- | | United States | $257.6 | $287.1 | (10.3)% | | International | $779.8 | $706.8 | 10.3% | | Total | $1,037.4 | $993.9 | 4.4% | - Lam Research Corporation and Applied Materials, Inc. accounted for 57.4% of total revenues for the six months ended June 27, 2025[97] - Gross accounts receivable from Lam Research Corporation exceeded 10% of total gross accounts receivable as of June 27, 2025 (13.9%)[97] Note 12. Leases This note describes the company's operating lease arrangements for real estate and equipment across various regions - The company leases real estate and equipment under various non-cancelable operating leases in the United States, Asia Pacific, and EMEA[99] Note 13. Net Loss Per Share This note presents the calculation of basic and diluted net loss per share attributable to UCT, including the treatment of potential common shares Net Income (Loss) Per Share Attributable to UCT (Six Months Ended, In millions, except per share) | Metric | June 27, 2025 | June 28, 2024 | | :---------------------------------------- | :------------ | :------------ | | Net income (loss) attributable to UCT | $(167.0) | $9.7 | | Basic weighted average common shares outstanding | 45.2 | 44.7 | | Diluted weighted average common shares outstanding | 45.2 | 45.3 | | Basic EPS | $(3.70) | $0.22 | | Diluted EPS | $(3.70) | $0.21 | - Potential common shares from employee stock plans (1.3 million for six months ended June 27, 2025) were excluded from diluted loss per share calculation as their effect would have been antidilutive[100] Note 14. Reportable Segments This note provides financial information for the company's two reportable segments: Products and Services, including operating profit and assets - The company has two reportable segments: Products (design, engineering, manufacturing of production tools, components, modules) and Services (ultra-high purity parts cleaning, recoating, micro-contamination analysis)[103] Segment Operating Profit (Loss) (Six Months Ended, In millions) | Segment | June 27, 2025 | June 28, 2024 | Percent Change | | :------- | :------------ | :------------ | :------------- | | Products | $(60.7) | $33.5 | (281.2)% | | Services | $(68.2) | $6.7 | (1117.9)% | | Total | $(128.9) | $40.2 | (420.6)% | - Both segments experienced significant operating losses primarily due to the goodwill impairment recorded in Q2 2025[126] Segment Assets (In millions) | Segment | June 27, 2025 | December 27, 2024 | | :------- | :------------ | :---------------- | | Products | $1,468.6 | $1,657.0 | | Services | $277.0 | $262.9 | | Total | $1,745.6 | $1,919.9 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management's discussion highlights UCT's role as a critical supplier to the semiconductor industry, anticipating long-term growth from AI/ML and OEM outsourcing. The company reported a net loss for the six months ended June 27, 2025, primarily due to a $151.1 million goodwill impairment. Revenues increased overall, but U.S. revenues declined while international revenues grew. Gross profit decreased due to higher costs, and operating profit was significantly impacted by the impairment and restructuring. Despite these challenges, operating cash flow improved, and the company maintains sufficient liquidity, utilizing receivables factoring and adhering to debt covenants Overview This section provides an overview of UCT's business, its segments, and the long-term growth drivers in the semiconductor market - UCT is a leading developer and supplier of critical subsystems, components, parts, and ultra-high purity cleaning and analytical services, primarily for the semiconductor industry[107] - The company's Products segment manufactures production tools and subassemblies, while the Services segment provides parts cleaning, recoating, and micro-contamination analysis[107] - Long-term growth in the semiconductor market is expected due to demand from new process architecture, memory devices for cloud, AI, and ML applications, and increased OEM outsourcing[109] Critical Accounting Estimates This section discusses the key accounting policies that require significant judgment and estimation, particularly regarding goodwill impairment - Critical accounting policies include revenue recognition, inventory valuation, income taxes, business combinations, and valuation of goodwill, intangible assets, and long-lived assets[110] - A quantitative goodwill impairment assessment as of June 27, 2025, resulted in $151.1 million charges for the Fluid Solutions and Services reporting units[112] - Fair value estimates for goodwill impairment were derived from an income approach using present value of estimated future cash flows, with significant assumptions including revenue growth rates, operating margins, and discount rates[112][113] Results of Operations This section analyzes the company's financial performance, including revenues, costs, gross profit, operating profit, and tax rates, for the reported periods Key Financial Performance (Six Months Ended, In millions, except percentages) | Metric | June 27, 2025 | June 28, 2024 | Percent Change | | :------------------------- | :------------ | :------------ | :------------- | | Total Revenues | $1,037.4 | $993.9 | 4.4% | | Total Cost of Revenues | $873.9 | $822.8 | 6.2% | | Gross Profit | $163.5 | $171.1 | (4.4)% | | Operating Profit (Loss) | $(128.9) | $40.2 | (420.6)% | | Impairment of Goodwill | $151.1 | $— | N/A | | General and Administrative | $95.4 | $88.3 | 8.0% | | Effective Tax Rate | (9.8)% | 56.4% | N/A | - Products revenues increased by 4.7% and Services revenues by 2.3% for the six-month period, driven by increased customer demand and market improvement[116][117] - Gross margin decreased for both Products and Services due to higher employee, restructuring, labor, and compensation-related costs[124][125] - General and administrative expenses increased by 8.0% due to higher stock-based compensation, a CEO separation payment, and increased restructuring activities[129][131] - Interest income decreased due to lower interest-earning balances, while interest expense decreased due to lower interest rates and reduced debt issuance cost amortization[133][134] - Other income (expense), net, for the six-month period was primarily comprised of unrealized foreign exchange losses of $3.4 million offset by government grants received of $2.2 million, contrasting with a $22.8 million gain from contingent earn-out fair value adjustment in the prior year[136] Liquidity and Capital Resources This section discusses the company's cash position, cash flow activities, debt arrangements, capital expenditures, and the management of foreign cash balances Cash and Cash Equivalents (In millions) | Metric | June 27, 2025 | December 27, 2024 | Increase | | :---------------------- | :------------ | :---------------- | :------- | | Total cash and cash equivalents | $327.4 | $313.9 | $13.5 | - Net cash provided by operating activities increased by $24.4 million to $57.4 million for the six months ended June 27, 2025, driven by a $25.9 million favorable change in net working capital[141][147] - Net cash used in financing activities was $18.8 million, a $31.3 million increase in cash usage compared to the prior year, primarily due to prior period debt modification proceeds[141][147] - The company sold $23.0 million and $29.4 million in accounts receivable under factoring arrangements for the three and six months ended June 27, 2025, respectively[35][143][144] - Total bank debt was $478.4 million as of June 27, 2025, with $146.4 million available under the U.S. revolving credit facility[152] - Capital expenditures were $29.2 million for the six months ended June 27, 2025, primarily for manufacturing facilities worldwide[153] - The company has approximately $227.9 million cash in foreign subsidiaries, with an intention to reinvest earnings, except for certain Singapore and China subsidiaries. Taxes have been accrued for undistributed earnings of the China subsidiary[147][148] Item 3. Quantitative and Qualitative Disclosures about Market Risk There were no significant changes to the company's quantitative and qualitative disclosures about market risk during the period covered by this report, referring to the Annual Report on Form 10-K for a comprehensive discussion - No significant changes to quantitative and qualitative disclosures about market risk were reported during the period[156] - For a complete discussion of market risks, refer to Part II, Item 7A of the Annual Report on Form 10-K for the fiscal year ended December 27, 2024[156] Item 4. Controls and Procedures The company's disclosure controls and procedures were deemed ineffective as of June 27, 2025, due to continuing material weaknesses in internal control over financial reporting. These weaknesses include insufficient processes for risk identification and analysis, lack of competent personnel for control activities, and inadequate monitoring. Specific issues include ineffective IT general controls for certain Fluid Solutions subsidiaries and insufficient segregation of duties in other international operating subsidiaries. Management is actively implementing a remediation plan, including external advisors, new hires, formalized roles, risk assessments, and training, and has made progress, but full remediation is ongoing - Disclosure controls and procedures were not effective as of June 27, 2025, due to material weaknesses in internal control over financial reporting[157] - Material weaknesses include insufficient processes for identifying and analyzing risks, lack of competent personnel for control activities, and inadequate monitoring of control activities[159] - Specific material weaknesses: (a) ineffective IT general controls (program change management, user access) for certain Fluid Solutions operating subsidiaries not yet migrated to the primary ERP system; (b) ineffective segregation of duties controls across various business processes, including journal entries, for certain other international operating subsidiaries[160][161] - Management's remediation plan includes engaging external advisors, hiring additional IT, accounting, and finance personnel, formalizing roles, performing entity-wide risk assessments, and developing training programs[163][164] - The Fluid Solutions operating subsidiaries were migrated to the primary ERP system in Q3 2025, and controls over segregation of duties were designed and implemented for other international subsidiaries in Q2 2025[164] - While progress has been made, the material weaknesses are not yet fully remediated, and management cannot assure the exact timing of completion[164] PART II—OTHER INFORMATION This part covers legal proceedings, risk factors, equity security sales, defaults, mine safety, and other relevant information Item 1. Legal Proceedings The company is involved in various legal proceedings, none of which are currently believed to have a material adverse effect on its financial condition. The SEC investigation related to material weaknesses concluded with no enforcement action. However, a putative securities class action was filed on March 24, 2025, alleging misleading statements about Chinese market demand, which the company believes is meritless and intends to vigorously defend - The SEC investigation regarding material weaknesses and auditor change concluded on March 20, 2025, with no enforcement action recommendation[168] - A putative securities class action was filed on March 24, 2025, alleging misleading statements about Chinese market demand and artificial inflation of stock price[169] - The company believes the class action claims are meritless and intends to vigorously defend against them, but cannot reasonably estimate any loss or range of loss[169] Item 1A. Risk Factors There were no material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 27, 2024, during the period covered by this report - No material changes to risk factors were reported during the period[170] - Refer to Part I, Item 1A of the Annual Report on Form 10-K for the fiscal year ended December 27, 2024, for previously disclosed risk factors[170] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company did not have any unregistered sales of equity securities or use of proceeds from securities during the period. Under its $150.0 million share repurchase program, 181,776 shares were repurchased for $18.64 per share during March 29, 2025 – April 25, 2025, leaving $105.1 million remaining under the program - No unregistered sales of equity securities or use of proceeds from securities were reported[171][172] Equity Securities Repurchases (Six Months Ended June 27, 2025) | Period | Total Number of Shares Purchased | Average Price Per Share | Maximum Dollar Value Remaining Under Program (In millions) | | :------------------------------ | :------------------------------- | :---------------------- | :--------------------------------------------------------- | | March 29, 2025 — April 25, 2025 | 181,776 | $18.64 | $105.1 | - The share repurchase program, approved on October 20, 2022, authorizes up to $150.0 million of common stock purchases over three years[173] Item 3. Defaults Upon Senior Securities There were no defaults upon senior securities reported during the period - No defaults upon senior securities were reported[176] Item 4. Mine Safety Disclosures This item is not applicable to the company - Mine Safety Disclosures are not applicable to the company[177] Item 5. Other Information No other information was reported under this item - No other information was reported[178] Item 6. Exhibits This section lists the exhibits filed with the quarterly report, including certifications (302 and 906), Inline XBRL documents (Instance, Schema, Calculation, Definition, Label, Presentation Linkbase), and the Cover Page Interactive Data File - Exhibits include certifications of the Interim CEO and CFO (31.1, 31.2, 32.1) as per Sarbanes-Oxley Act[179] - Inline XBRL documents (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE) and the Cover Page Interactive Data File (104) are filed[179] SIGNATURES This section contains the official signatures of the company's interim CEO and CFO, certifying the report's accuracy - The report was signed by Clarence L. Granger, Interim Chief Executive Officer, and Sheri Savage, Chief Financial Officer, on July 29, 2025[182]