Plexus(PLXS) - 2025 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS (Unaudited) This section presents the unaudited condensed consolidated financial statements of Plexus Corp. and its subsidiaries, including statements of comprehensive income, balance sheets, shareholders' equity, and cash flows, along with detailed notes explaining the basis of presentation, accounting policies, and specific financial line items for the three and nine months ended June 28, 2025, and June 29, 2024 Condensed Consolidated Statements of Comprehensive Income This statement provides a summary of the company's revenues, expenses, and net income over specific interim periods Condensed Consolidated Statements of Comprehensive Income (in thousands) | Metric | Three Months Ended June 28, 2025 | Three Months Ended June 29, 2024 | Nine Months Ended June 28, 2025 | Nine Months Ended June 29, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net sales | $1,018,308 | $960,751 | $2,974,600 | $2,910,258 | | Gross profit | $103,288 | $94,415 | $301,731 | $270,618 | | Operating income | $53,608 | $39,246 | $149,259 | $113,874 | | Net income | $45,116 | $25,140 | $121,456 | $70,594 | | Diluted Earnings per share | $1.64 | $0.91 | $4.39 | $2.53 | | Total comprehensive income | $78,729 | $18,106 | $130,701 | $79,192 | Condensed Consolidated Balance Sheets This statement presents the company's financial position, including assets, liabilities, and shareholders' equity, at specific interim dates Condensed Consolidated Balance Sheets (in thousands) | Metric | June 28, 2025 | September 28, 2024 | | :-------------------------- | :------------ | :----------------- | | Total assets | $3,105,633 | $3,153,821 | | Total liabilities | $1,686,548 | $1,828,996 | | Total shareholders' equity | $1,419,085 | $1,324,825 | | Cash and cash equivalents | $237,567 | $345,109 | | Inventories | $1,278,219 | $1,311,434 | Condensed Consolidated Statements of Shareholders' Equity This statement details changes in the company's equity accounts, such as retained earnings and treasury stock, over interim periods Condensed Consolidated Statements of Shareholders' Equity (in thousands) | Metric | June 28, 2025 | June 29, 2024 | | :-------------------------------- | :------------ | :------------ | | Total stockholders' equity, end of period | $1,419,085 | $1,266,360 | | Retained earnings, end of period | $1,944,599 | $1,781,922 | | Common stock held in treasury, end of period | $(1,233,922) | $(1,170,574) | Condensed Consolidated Statements of Cash Flows This statement summarizes the cash inflows and outflows from operating, investing, and financing activities for interim periods Condensed Consolidated Statements of Cash Flows (in thousands, Nine Months Ended) | Metric | June 28, 2025 | June 29, 2024 | | :-------------------------------------------------- | :------------ | :------------ | | Cash flows provided by operating activities | $117,213 | $216,371 | | Cash flows used in investing activities | $(60,853) | $(68,745) |\n| Cash flows used in financing activities | $(168,282) | $(134,305) | | Net (decrease) increase in cash and cash equivalents and restricted cash | $(109,845) | $13,236 | Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures for the condensed consolidated financial statements, covering accounting policies, significant estimates, and specific financial line items 1. Basis of Presentation This note outlines the accounting principles and methods used in preparing the interim financial statements - The financial statements are unaudited and prepared in accordance with SEC rules for interim financial statements, reflecting normal recurring adjustments[16] - In Q1 fiscal 2025, internal management reporting changed to focus on value-add sales and adjusted corporate cost allocation, but operating segments and reportable segments did not change, and there was no effect on consolidated net sales, operating income, or net income[20] - The Company is evaluating the impact of ASU 2024-03 Disaggregation of Income Statement Expense, effective Q4 fiscal 2028, and expects immaterial impacts from ASU 2023-07 Segment Reporting (adopting Q4 fiscal 2025) and ASU 2023-09 Income Taxes (adopting Q1 fiscal 2026)[21][22][24] 2. Inventories This note details the composition and valuation of the company's inventory balances Inventories (in thousands) | Category | June 28, 2025 | September 28, 2024 | | :--------------- | :------------ | :----------------- | | Raw materials | $1,117,282 | $1,184,222 | | Work-in-process | $56,529 | $49,513 | | Finished goods | $104,408 | $77,699 | | Total inventories| $1,278,219 | $1,311,434 | - Customer deposits related to inventory totaled $420.6 million as of June 28, 2025, down from $536.2 million as of September 28, 2024[26] 3. Debt, Finance Lease and Other Financing Obligations This note provides information on the company's various debt instruments, finance leases, and other financing commitments Debt and Finance Lease Obligations (in thousands) | Obligation | June 28, 2025 | September 28, 2024 | | :------------------------------------------------ | :------------ | :----------------- | | 4.05% Senior Notes, due June 15, 2025 | $— | $100,000 | | 4.22% Senior Notes, due June 15, 2028 | $50,000 | $50,000 | | Borrowings under the Credit Facility | $45,000 | $50,000 | | Finance lease and other financing obligations | $48,458 | $48,142 | | Total obligations | $142,893 | $247,318 | - The Company repaid $100.0 million of its 4.05% Senior Notes on maturity on June 15, 2025[28] - Average daily borrowings under the Credit Facility decreased significantly to $33.3 million for the nine months ended June 28, 2025, from $292.1 million in the prior year period[28] 4. Derivatives and Fair Value Measurements This note describes the company's use of derivative instruments and fair value measurement methodologies - The Company uses derivatives to manage foreign currency obligations and does not enter into them for speculative purposes[30] Derivative Instruments Notional Value (in millions) | Type | June 28, 2025 | September 28, 2024 | | :-------------------------------- | :------------ | :----------------- | | Cash flow hedges outstanding | $243.0 | $186.5 | | Non-designated forward contracts | $103.6 | $144.0 | - An estimated $10.4 million of unrealized gains (net of tax) related to cash flow hedges are expected to be reclassified into earnings within the next twelve months[31] 5. Income Taxes This note explains the components of income tax expense and the effective tax rates for the reporting periods Income Tax Expense (in thousands) | Period | June 28, 2025 | June 29, 2024 | | :-------------------------------- | :------------ | :------------ | | Three Months Ended | $4,720 | $5,164 | | Nine Months Ended | $16,897 | $13,524 | Effective Tax Rates | Period | June 28, 2025 | June 29, 2024 | | :-------------------------------- | :------------ | :------------ | | Three Months Ended | 9.5% | 17.0% | | Nine Months Ended | 12.2% | 16.1% | - The lower effective tax rates for the three and nine months ended June 28, 2025, were primarily due to increases in discrete tax benefits of $2.9 million and $4.4 million, respectively, including a $3.3 million state valuation allowance release[44] 6. Earnings Per Share This note presents the basic and diluted earnings per share calculations for the company's common stock Earnings Per Share | Period | June 28, 2025 | June 29, 2024 | | :-------------------------------- | :------------ | :------------ | | Basic EPS (3 months) | $1.67 | $0.92 | | Diluted EPS (3 months) | $1.64 | $0.91 | | Basic EPS (9 months) | $4.48 | $2.57 | | Diluted EPS (9 months) | $4.39 | $2.53 | 7. Leases This note provides details on the company's lease arrangements, including lease assets, liabilities, and related expenses Total Lease Expense (in thousands) | Period | June 28, 2025 | June 29, 2024 | | :-------------------------------- | :------------ | :------------ | | Three Months Ended | $6,892 | $7,317 | | Nine Months Ended | $19,946 | $21,535 | Lease Assets and Liabilities (in thousands) | Metric | June 28, 2025 | September 28, 2024 | | :-------------------- | :------------ | :----------------- | | Total lease assets | $111,552 | $110,213 | | Total lease liabilities | $84,827 | $90,445 | 8. Share-Based Compensation This note describes the company's share-based compensation plans and the associated expense recognized Share-Based Compensation Expense (in millions) | Period | June 28, 2025 | June 29, 2024 | | :-------------------------------- | :------------ | :------------ | | Three Months Ended | $7.7 | $7.2 | | Nine Months Ended | $21.8 | $19.6 | 9. Litigation This note discloses information regarding any legal proceedings or claims involving the company - The Company is involved in lawsuits in the ordinary course of business but management does not believe they will have a material positive or adverse effect on its financial position, results of operations, or cash flows[54][55] 10. Reportable Segments This note provides financial information disaggregated by the company's operating segments Net Sales by Reportable Segment (in thousands) | Segment | Three Months Ended June 28, 2025 | Three Months Ended June 29, 2024 | Nine Months Ended June 28, 2025 | Nine Months Ended June 29, 2024 | | :------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | AMER | $311,770 | $306,522 | $880,836 | $912,452 | | APAC | $593,509 | $520,928 | $1,787,666 | $1,595,427 | | EMEA | $117,125 | $136,670 | $320,975 | $410,239 | Operating Income by Reportable Segment (in thousands) | Segment | Three Months Ended June 28, 2025 | Three Months Ended June 29, 2024 | Nine Months Ended June 28, 2025 | Nine Months Ended June 29, 2024 | | :------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | AMER | $28,671 | $23,964 | $70,955 | $58,394 | | APAC | $83,820 | $75,285 | $253,807 | $225,295 | | EMEA | $5,887 | $9,287 | $14,183 | $22,213 | 11. Guarantees This note details the company's various guarantee obligations, including product warranties and indemnifications - The Company provides indemnifications under customer manufacturing agreements and offers a limited warranty (12-24 months) covering workmanship and materials, generally limited to repair or replacement[60][61] Limited Warranty Liability (in thousands, Nine Months Ended) | Metric | June 28, 2025 | June 29, 2024 | | :-------------------------------- | :------------ | :------------ | | Reserve balance, beginning of period | $6,752 | $5,821 | | Accruals for warranties issued | $2,169 | $1,885 | | Settlements | $(1,078) | $(1,186) | | Reserve balance, end of period | $7,843 | $6,520 | 12. Shareholders' Equity This note provides information on changes in the company's shareholders' equity, including share repurchase programs - The 2025 Share Repurchase Program, authorized for $50.0 million, saw 314,344 shares repurchased for $43.4 million (average price $138.19/share) during the nine months ended June 28, 2025. The remaining $6.6 million authority has since been fully expended[66] - A new 2026 Share Repurchase Program was approved on May 14, 2025, authorizing up to $100.0 million of common stock repurchases, effective upon completion of the 2025 Program with no expiration[67] 13. Trade Accounts Receivable Sale Programs This note describes the company's programs for selling trade accounts receivable to third parties - The Company utilizes uncommitted Master Accounts Receivable Purchase Agreements (e.g., MUFG RPA, HSBC RPA) to sell receivables at a discount, with maximum facility amounts of $340.0 million and $70.0 million, respectively[69] Trade Accounts Receivable Sold (in millions) | Period | June 28, 2025 | June 29, 2024 | | :-------------------------------- | :------------ | :------------ | | Three Months Ended | $179.6 | $201.4 | | Nine Months Ended | $502.6 | $638.8 | - As of June 28, 2025, $191.8 million of accounts receivables sold remained outstanding and subject to servicing by the Company, down from $220.2 million on September 28, 2024[73] 14. Revenue from Contracts with Customers This note provides disaggregated revenue information and details on contract assets and deferred revenue - Approximately 85% of the Company's revenue for both the three and nine months ended June 28, 2025, was recognized over time, compared to 83% in the prior year periods[83] Net Sales by Market Sector (in thousands) | Market Sector | Three Months Ended June 28, 2025 | Three Months Ended June 29, 2024 | Nine Months Ended June 28, 2025 | Nine Months Ended June 29, 2024 | | :---------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Aerospace/Defense | $183,217 | $177,629 | $515,463 | $514,949 | | Healthcare/Life Sciences| $420,422 | $380,009 | $1,205,153 | $1,139,353 | | Industrial | $414,669 | $403,113 | $1,253,984 | $1,255,956 | - Contract assets increased to $145.1 million as of June 28, 2025, from $120.6 million at the beginning of the nine-month period, while deferred revenue from advanced payments was $159.5 million[85] 15. Restructuring and Non-recurring Charges This note details costs associated with restructuring activities and other non-recurring items - No restructuring and other charges were incurred for the three months ended June 28, 2025. For the nine months ended June 28, 2025, restructuring costs were $4.7 million, primarily severance in EMEA and AMER regions[87] - For the nine months ended June 29, 2024, restructuring and other charges totaled $20.3 million, including severance and site closure costs in AMER and EMEA, partially offset by insurance proceeds[88] Restructuring Accrual Balance (in thousands) | Period | June 28, 2025 | June 29, 2024 | | :-------------------------------- | :------------ | :------------ | | Accrual balance, end of period | $311 | $6,200 | 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 performance, condition, and future outlook, analyzing short-term results and prospects "Safe Harbor" Cautionary Statement Under the Private Securities Litigation Reform Act of 1995 This statement warns readers about forward-looking statements and the inherent risks and uncertainties that could cause actual results to differ materially - The report contains forward-looking statements that involve risks and uncertainties, including those related to tariffs, inflation, component shortages, customer delays, and global economic conditions, which could cause actual results to differ materially[90] Overview This section provides a high-level summary of the company's business, operations, and strategic focus - Plexus designs, manufactures, and services highly complex products for the Aerospace/Defense, Healthcare/Life Sciences, and Industrial sectors, supported by over 20,000 team members across 26 facilities globally[91] Results of Operations This section details the consolidated financial performance, including net sales, cost of sales, gross profit, operating income, other expenses, income taxes, net income, and diluted earnings per share Consolidated Performance Summary This summary provides key financial metrics and ratios reflecting the company's overall performance Consolidated Performance Summary (dollars in millions, except per share data) | Metric | Three Months Ended June 28, 2025 | Three Months Ended June 29, 2024 | Nine Months Ended June 28, 2025 | Nine Months Ended June 29, 2024 | | :----------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net sales | $1,018.3 | $960.8 | $2,974.6 | $2,910.3 | | Gross margin | 10.1% | 9.8% | 10.1% | 9.3% | | Operating margin | 5.3% | 4.1% | 5.0% | 3.9% | | Net income | $45.1 | $25.1 | $121.5 | $70.6 | | Diluted earnings per share | $1.64 | $0.91 | $4.39 | $2.53 | Net sales This section analyzes the company's revenue performance, including changes by segment and market sector - Net sales increased by $57.5 million (6.0%) for the three months ended June 28, 2025, and by $64.3 million (2.2%) for the nine months ended June 28, 2025, compared to the prior year periods[95] Net Sales by Reportable Segment (in millions) | Segment | Three Months Ended June 28, 2025 | Three Months Ended June 29, 2024 | Nine Months Ended June 28, 2025 | Nine Months Ended June 29, 2024 | | :------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | AMER | $311.7 (↑ 1.7%) | $306.5 | $880.8 (↓ 3.5%) | $912.5 | | APAC | $593.5 (↑ 13.9%) | $521.0 | $1,787.7 (↑ 12.0%) | $1,595.5 | | EMEA | $117.1 (↓ 14.3%) | $136.7 | $321.0 (↓ 21.7%) | $410.2 | Net Sales by Market Sector (in millions) | Market Sector | Three Months Ended June 28, 2025 | Three Months Ended June 29, 2024 | Nine Months Ended June 28, 2025 | Nine Months Ended June 29, 2024 | | :----------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Aerospace/Defense | $183.2 (↑ 3.2%) | $177.6 | $515.4 (↑ 0.1%) | $515.0 | | Healthcare/Life Sciences | $420.4 (↑ 10.6%) | $380.1 | $1,205.2 (↑ 5.8%) | $1,139.4 | | Industrial | $414.7 (↑ 2.9%) | $403.1 | $1,254.0 (↓ 0.2%) | $1,255.9 | Cost of sales This section discusses the factors influencing the cost of goods sold and its impact on profitability - Cost of sales increased by $48.7 million (5.6%) for the three months and $33.3 million (1.3%) for the nine months ended June 28, 2025, primarily driven by increased net sales[110] - For the nine months, the increase was partially offset by a positive shift in customer mix and a decrease in fixed costs due to operational efficiency initiatives[111] - Approximately 88% of total cost of sales was variable, with 87% related to material and component costs[110] Gross profit This section examines the company's gross profit and gross margin trends, highlighting drivers of change - Gross profit increased by $8.9 million (9.4%) for the three months and $31.1 million (11.5%) for the nine months ended June 28, 2025[112][113] - Gross margin improved by 30 basis points to 10.1% for the three months and by 80 basis points to 10.1% for the nine months, primarily due to lower costs from operational efficiencies and prior restructuring activities[112][113] Operating income This section analyzes the company's operating income and margin, including segment-specific performance - Operating income increased by $14.4 million (36.7%) for the three months and $35.4 million (31.1%) for the nine months ended June 28, 2025[114][115] - Operating margin improved by 120 basis points to 5.3% for the three months and by 110 basis points to 5.0% for the nine months, driven by decreased restructuring charges and increased gross profit, partially offset by higher selling and administrative expenses[114][115] - AMER segment operating income increased by $4.8 million (3 months) and $12.6 million (9 months) due to increased sales, decreased fixed costs, and positive customer mix[116][117] - APAC segment operating income increased by $8.5 million (3 months) and $28.5 million (9 months) due to increased sales, partially offset by negative customer mix and increased fixed costs/S&A[118][119] - EMEA segment operating income decreased by $3.4 million (3 months) and $8.0 million (9 months) due to decreased sales, partially offset by decreased fixed costs and positive customer mix (9 months)[120][121] Other expense This section details non-operating expenses, such as interest expense and factoring fees - Other expense decreased by $5.1 million for the three months and $18.9 million for the nine months ended June 28, 2025[122][123] - This decrease was primarily driven by lower interest expense ($4.9 million for 3 months, $14.1 million for 9 months) due to reduced credit facility borrowings, and decreased factoring fees[122][123] Income taxes This section discusses income tax expense, effective tax rates, and significant tax-related items - Income tax expense decreased for the three months ended June 28, 2025, to $4.7 million (from $5.2 million), but increased for the nine months to $16.9 million (from $13.5 million)[124] - The decrease for three months was due to a $2.9 million increase in discrete tax benefits; the increase for nine months was due to higher pre-tax income, partially offset by a $4.4 million increase in discrete tax benefits[124] - The expected annual effective tax rate for fiscal 2025 is 10.0% to 12.0%. The Company is evaluating the impact of the recently enacted "One Big Beautiful Bill Act" on its financial statements[126][127] Net income This section analyzes the company's net income and the factors contributing to its changes - Net income increased by $20.0 million (79.7%) to $45.1 million for the three months and by $50.9 million (72.1%) to $121.5 million for the nine months ended June 28, 2025[128][129] - This growth was primarily driven by increased operating income and decreased other expenses, with tax expense also decreasing for the three-month period[128][129] Diluted earnings per share This section discusses the diluted earnings per share and its drivers, reflecting profitability per share - Diluted EPS increased to $1.64 for the three months and $4.39 for the nine months ended June 28, 2025, up from $0.91 and $2.53, respectively, in the prior year periods, primarily due to increased net income[130] Return on Invested Capital ("ROIC") and economic return This section evaluates the company's efficiency in generating returns from its capital investments ROIC and Economic Return (Nine Months Ended) | Metric | June 28, 2025 | June 29, 2024 | | :-------------------- | :------------ | :------------ | | After-tax ROIC | 14.1% | 10.4% | | WACC | 8.9% | 8.2% | | Economic return | 5.2% | 2.2% | - The Company aims for an ROIC goal of 15%, exceeding its Weighted Average Cost of Capital (WACC) by over 500 basis points to create shareholder value[131] Liquidity and Capital Resources This section discusses the company's cash position, sources of liquidity, and capital allocation strategies, including cash flow analysis from operating, investing, and financing activities, cash cycle days, and free cash flow Cash Flows This section provides an overview of the company's cash and cash equivalents and their changes - Cash and cash equivalents and restricted cash decreased to $237.6 million as of June 28, 2025, from $347.5 million as of September 28, 2024[136] - 92% of the Company's cash and cash equivalents balance was held outside of the U.S. by foreign subsidiaries as of June 28, 2025[137] - Projected cash flows from operations, available cash, potential borrowings under the Credit Facility, and leasing capabilities are expected to be sufficient to meet working capital and fixed capital requirements for the next twelve months[137][157] Operating Activities This section details the cash generated or used by the company's primary business operations - Cash flows provided by operating activities decreased to $117.2 million for the nine months ended June 28, 2025, from $216.4 million in the prior year[139] - The decrease was primarily due to lower cash flows from inventory (down $94.0 million), advanced payments from customers (down $93.0 million), accounts receivable (down $56.3 million), and contract assets (down $50.1 million)[139] - This was partially offset by a $50.9 million increase in net income and a $128.1 million improvement in accounts payables cash flows[139] Cash Cycle Days This section analyzes the efficiency of the company's working capital management over time Cash Cycle Days (Three Months Ended) | Metric | June 28, 2025 | June 29, 2024 | | :---------------------- | :------------ | :------------ | | Days in accounts receivable | 59 | 61 | | Days in contract assets | 13 | 11 | | Days in inventory | 128 | 151 | | Days in accounts payable | (72) | (62) | | Days in advanced payments | (59) | (78) | | Annualized cash cycle | 69 | 83 | - Annualized cash cycle days decreased by 14 days to 69 days as of June 28, 2025, compared to June 29, 2024[141] - This improvement was primarily driven by a 23-day decrease in days in inventory due to reduction efforts and lower working capital investments, and a 19-day decrease in days in advanced payments[143][144] Free Cash Flow This section presents the cash available to the company after accounting for capital expenditures Free Cash Flow (in millions, Nine Months Ended) | Metric | June 28, 2025 | June 29, 2024 | | :-------------------------------- | :------------ | :------------ | | Cash flows provided by operating activities | $117.2 | $216.4 | | Payments for property, plant and equipment | $(60.4) | $(68.9) | | Free cash flow | $56.8 | $147.5 | - Free Cash Flow (FCF) decreased by $90.7 million to $56.8 million for the nine months ended June 28, 2025, compared to $147.5 million in the prior year[145] Investing Activities This section details the cash flows related to the acquisition and disposal of long-term assets - Cash flows used in investing activities decreased to $60.8 million for the nine months ended June 28, 2025, from $68.8 million in the prior year, primarily due to an $8.4 million decrease in capital expenditures[148] - Estimated capital expenditures for fiscal 2025 are projected to be between $80.0 million and $100.0 million[148] Financing Activities This section describes the cash flows associated with debt, equity, and dividend transactions - Cash flows used in financing activities increased to $168.3 million for the nine months ended June 28, 2025, from $134.3 million in the prior year[149] - This increase was primarily due to higher net debt repayments, including the $100.0 million repayment of 4.05% Senior Notes and $5.0 million net repayments on the credit facility (compared to $83.0 million in 2024), along with a $7.7 million increase in common stock repurchases[149][153] - The Company repurchased 314,344 shares for $43.4 million under the 2025 Program during the nine months ended June 28, 2025, and approved a new $100.0 million 2026 Program[152][153] Disclosure About Critical Accounting Estimates This section highlights the accounting estimates that require significant judgment and could materially impact financial results - There were no material changes to the Company's critical accounting policies during the third quarter of fiscal 2025[158] New Accounting Pronouncements This section discusses recently issued accounting standards and their potential impact on the company's financial statements - Refer to Note 1, "Recently Issued Accounting Pronouncements Not Yet Adopted," for details on new accounting pronouncements[159] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK This section discusses the company's exposure to market risks, specifically foreign currency risk and interest rate risk, and how these risks are managed Foreign Currency Risk This section assesses the company's exposure to fluctuations in foreign exchange rates and its hedging strategies - The Company selectively hedges foreign currency denominated transactions to offset exchange rate changes, primarily using foreign currency contracts for non-functional currency assets and liabilities[161] Percentages of Transactions Denominated in Non-U.S. Dollar Currencies (Three Months Ended) | Metric | June 28, 2025 | June 29, 2024 | | :---------- | :------------ | :------------ | | Net Sales | 9% | 12% | | Total Costs | 18% | 18% | - A 10.0% change in the U.S. dollar's value relative to other transactional currencies would not have a material effect on the Company's financial position, results of operations, or cash flows as of June 28, 2025[162] Interest Rate Risk This section evaluates the company's exposure to changes in interest rates, particularly on its variable-rate debt - The Company's primary objective for investment activities is to preserve principal while maximizing yields without significantly increasing market risk[163] - The material interest rate risk is associated with the Credit Facility, which bears variable interest rates (e.g., SOFR plus 1.00% as of June 28, 2025)[164] - A 10.0% change in interest rates would not have a material effect on the Company's financial position, results of operations, or cash flows as of June 28, 2025[164] ITEM 4. CONTROLS AND PROCEDURES This section details the company's disclosure controls and procedures and reports on any changes in internal control over financial reporting Disclosure Controls and Procedures This section describes the effectiveness of the company's controls designed to ensure timely and accurate financial disclosures - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective at a reasonable assurance level as of June 28, 2025[165] Changes in Internal Control Over Financial Reporting This section reports on any material changes to the company's internal control over financial reporting during the period - There were no changes in the Company's internal control over financial reporting during the third quarter of fiscal 2025 that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[166] PART II. OTHER INFORMATION ITEM 1A. Risk Factors This section refers to the risk factors previously disclosed in the company's Annual Report on Form 10-K for fiscal year ended September 28, 2024, noting no material changes during the current period - No material changes to the risk factors set forth in Part I, Item 1A of the Company's Annual Report on Form 10-K for the fiscal year ended September 28, 2024[167] ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's share repurchase activities during the three months ended June 28, 2025, under its publicly announced programs Share Repurchases (Three Months Ended June 28, 2025) | Period | Total shares purchased | Average price paid per share | | :------------------------ | :--------------------- | :--------------------------- | | March 30, 2025-April 26, 2025 | 32,397 | $120.59 | | April 27, 2025 - May 24, 2025 | 48,345 | $129.71 | | May 25, 2025-June 28, 2025 | 62,540 | $132.13 | | Total | 143,282 | $128.70 | - As of June 28, 2025, $6.6 million of authority remained under the 2025 Program, which has since been fully expended[168] - The Board of Directors approved a new $100.0 million 2026 Share Repurchase Program on May 14, 2025, effective upon completion of the 2025 Program with no expiration[169] ITEM 5. Other Information This section states that there were no directors or Section 16 officers who adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended June 28, 2025 - No directors or Section 16 officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended June 28, 2025[170] ITEM 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including certifications, reconciliation of non-GAAP financial measures, and XBRL-formatted financial statements - Exhibits include certifications from the President and CEO (31.1, 32.1) and Chief Financial Officer (31.2, 32.2) pursuant to the Sarbanes-Oxley Act of 2002[172] - Exhibit 99.1 provides a reconciliation of ROIC to GAAP and Economic Return Financial Statements[172] - Exhibit 101 contains the Condensed Consolidated Financial Statements and Notes formatted in Inline Extensible Business Reporting Language (XBRL)[172] SIGNATURES This section contains the official signatures of the registrant's authorized officers, including the President and Chief Executive Officer, and the Executive Vice President and Chief Financial Officer, certifying the report - The report was signed by Todd P. Kelsey, President and Chief Executive Officer, and Patrick J. Jermain, Executive Vice President and Chief Financial Officer, on August 1, 2025[175]