Quarterly Report for Quarter Ending July 4, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion is intended to highlight significant changes in the financial position and results of operations of The Eastern Company (together with its consolidated subsidiaries, the "Company," "we," "us" or "our") for the three and six months ended July 4, 2026. This Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Consolidated Financial Statements and Notes thereto for the fiscal year ended January 3, 2026 and the related Management's Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in the Company's Annual Report on Form 10-K for the fiscal year ended January 3, 2026, as amended on March 19, 2026 (the "2025 Form 10-K").

The Company's fiscal year is a 52- or 53-week fiscal year ending on the Saturday nearest to December 31. References in this Quarterly Report on Form 10-Q for the quarterly period ended July 4, 2026 (this "Form 10-Q") to 2025, fiscal year 2025 or fiscal 2025 mean the 53-week period ended on January 3, 2026, and references to 2026, fiscal year 2026 or fiscal 2026 mean the 52-week period ending on January 2, 2027. In a 53-week fiscal year, the first three quarters each have 13 weeks, and the fourth quarter has 14 weeks. In a 52-week fiscal year, each quarter has 13 weeks. References to the second quarter of 2025, the second fiscal quarter of 2025, the second three months of fiscal 2025 or the three months ended June 28, 2025 mean the 13-week period from March 30, 2025 to June 28, 2025. References to the second quarter of 2026, the second fiscal quarter of 2026, the second three months of fiscal 2026 or the three months ended July 4, 2026, mean the 13-week period from April 5, 2026 to July 4, 2026. References to the first six months of 2025 or the six months ended June 28, 2025 mean the period from December 29, 2024 to June 28, 2025. References to the first six months of 2026 or the six months ended July 4, 2026 mean the period from January 4, 2026 to July 4, 2026.

Safe Harbor for Forward-Looking Statements

Statements contained in this Form 10-Q that are not based on historical facts are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of forward-looking terminology such as "would," "should," "could," "may," "will," "expect," "believe," "estimate," "anticipate," "intend," "continue," "plan," "potential," "opportunities," or similar terms or variations of those terms or the negative of those terms. There are many factors that affect the Company's business and the results of its operations and that may cause the actual results of operations in future periods to differ materially from those currently expected or anticipated. These factors include:

	·	risks associated with doing business overseas, including fluctuations in exchange rates and the inability to repatriate foreign cash, the impact on cost structure and on economic conditions as a result of actual and threatened increases in trade tariffs and the impact of political, economic, and social instability;
	·	the impact of tariffs, trade sanctions or political instability on the availability or cost of raw materials;
	·	the impact of higher raw material and component costs and cost inflation, supply chain disruptions and shortages, particularly with respect to steel, plastics, scrap iron, zinc, copper, and electronic components;
	·	delays in delivery of our products to our customers;
	·	the impact of global economic conditions and interest rates, and more specifically conditions in the automotive, construction, aerospace, defense energy, oil and gas, transportation, electronic, and general industrial markets, including the impact, length and degree of economic downturns on the customers and markets we serve and demand for our products, reductions in production levels, the availability, terms and cost of financing, including borrowings under credit arrangements or agreements, and the impact of market conditions on pension plan funded status;
	·	restrictions on operating flexibility imposed by the agreement governing our credit facility;
	·	the inability to achieve the savings expected from global sourcing of materials;
	·	lower cost competition;
	·	our ability to design, introduce and sell new or updated products and related components;
	·	market acceptance of our products;
	·	the inability to attain expected benefits from acquisitions or dispositions or the inability to effectively integrate acquired businesses and achieve expected synergies;
	·	The success of the Sinecera and Sungear transaction will depend on a number of uncertain factors, including our decisions regarding the fair value of the assets acquired and the bargain purchase gain recorded on the transaction, which could materially and adversely affect our financial condition, results of operations and future prospects.
	·	costs and liabilities associated with environmental compliance;

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	·	the impact of climate change, natural disasters, geopolitical events, and public health crises, including pandemics and epidemics, and any related Company or government policies or actions, including any potential adverse economic impacts resulting from the U.S. federal government shutdown;
	·	military conflict (including the Russia/Ukraine conflict, the conflict in the Middle East, the possible expansion of such conflicts and geopolitical consequences) or terrorist threats and the possible responses by the U.S. and foreign governments;
	·	failure to protect our intellectual property;
	·	cyberattacks, data breaches or interruptions or failures of our information technology systems; and
	·	materially adverse or unanticipated legal judgments, fines, penalties, or settlements.

The Company is also subject to other risks identified and discussed in this Management's Discussion and Analysis of Financial Condition and Results of Operations, in Part I, Item 1A, Risk Factors, and in Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, of the 2025 Form 10-K, and that may be identified from time to time in our quarterly reports on Form 10-Q, current reports on Form 8-K and other filings we make with the SEC.

Although the Company believes it has an appropriate business strategy and the resources necessary for its operations, future revenue and margin trends cannot be reliably predicted, and the Company may alter its business strategies to address changing conditions. Also, the Company makes estimates and assumptions that may materially affect reported amounts and disclosures. These relate to valuation allowances for accounts receivable and excess and obsolete inventories, accruals for pensions and other postretirement benefits (including forecasted future cost increases and returns on plan assets), provisions for depreciation (estimating useful lives), uncertain tax positions, and, on occasion, accruals for contingent losses. The Company undertakes no obligation to update, alter, or otherwise revise any forward-looking statements, whether written or oral, that may be made from time to time, whether as a result of new information, future events, or otherwise, except as required by law.

Recent Developments

On June 1, 2026, we completed the acquisition of Sinecera LLC (doing business as Crown Precision) and Sungear LLC, both of which manufacture and supply aerospace and defense components within the United States. The transaction establishes a fourth operating platform for Eastern, complementing its existing portfolio of Eberhard Manufacturing, Velvac, and Big 3 Precision. These acquisitions align with the Company's strategic priorities to expand its portfolio of operating platforms, add engineered products with attractive end-market exposure, and deploy capital into businesses that benefit from Eastern's decentralized, holding-company model.

On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") became law. Among other provisions, the OBBBA extends permanently, with modifications, tax provisions enacted as part of the 2017 Tax Cuts and Jobs Act and restores and makes permanent many business provisions, such as full expensing for research and development and capital investments. In addition, the OBBBA contains other new tax relief measures and various revenue raising measures. We are currently assessing the potential impact of the OBBBA on our business and financial results.

For the three months ended July 4, 2026, we incurred approximately $1.9 million in tariff and tariff-related expenses, $1.8 million of which have been mitigated through price increases. On February 20, 2026, the U.S. Supreme Court ruled in Learning Resources, Inc. v. Trump that the International Emergency Economic Powers Act ("IEEPA") does not authorize the executive branch to impose certain tariffs. The U.S. Customs and Border Protection ("CBP") is developing an administrative process for seeking refunds of tariffs paid pursuant to the IEEPA, and on April 20, 2026, launched the first phase of that administrative process. The Company is in the process of submitting refund claims to the CBP. The amount and timing of any potential refund remain uncertain, and, as of July 4, 2026, we have not recorded a material benefit for potential refunds of IEEPA tariffs paid. In response to the U.S. Supreme Court's decision, the presidential administration implemented a tariff surcharge pursuant to Section 122 of the Trade Act of 1974, establishing a minimum 10% duty on imports, subject to certain exemptions, for 150 days. The tariff environment remains dynamic, and it is likely that additional developments will occur over the next several months, particularly as the U.S. continues to negotiate with trade partners and the CBP further develops and executes on the administrative process for refunds. While the long-term effects remain uncertain, we continue to closely monitor the evolving tariff environment which presents a mix of impacts, such as higher pricing, including higher product and operating costs, and the potential for refunds. See Part I, Item 1A, Risk Factors in the 2025 Form 10-K for a discussion regarding tariff-related risks.

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On February 14, 2025, the Company acquired certain assets under asset and real estate purchase agreements from Centralia Industrial Painting, Inc. and Ronald R. Rainwater, respectively. These assets are held in our Big 3 Precision Products, Inc. ("Big 3") subsidiary. We expect the acquisitions will enable the Company to become more competitive with respect to cost and quality of the products sold by Big 3.

In the third quarter of 2024, we determined that the business of Big 3 Precision Mold Services, Inc. ("Big 3 Mold") met the criteria to be held for sale and that the assets held for sale qualified for discontinued operations. As such, the financial results of the Big 3 Mold business are reflected in our unaudited condensed consolidated statements of operations as discontinued operations for all periods presented. Additionally, current and non-current assets and liabilities of discontinued operations are reflected in the unaudited condensed consolidated balance sheets for both periods presented. On April 30, 2025, the Company sold the equipment, workforce and customer list of the ISBM division of Big 3 Mold. The other divisions of Big 3 Mold have been reclassified to continuing operations.

The following analysis excludes discontinued operations.

Net sales for the second quarter of 2026 decreased 12% to $61.8 million from $70.2 million for the corresponding period in 2025. The decrease in sales was due to lower shipments of truck mirror assemblies, returnable transport packaging and latch and handle assemblies of $5.7 million, $3.4 million, $0.9 million, respectively, partially offset by $1.7 million in aerospace and defense sales from the acquisition of Sungear and Crown Precision. Net sales for the first six months of 2026 decreased 11% to $121.5 million from $136.1 million for the corresponding period in 2025. Sales decreased in the first six months of 2026 due to lower shipments of returnable transport packaging, truck mirror assemblies and latch and handle assemblies of $10.9 million, $4.5 million, $0.8 million, respectively, partially offset by $1.7 million in aerospace and defense sales from the acquisition of Sungear and Crown Precision.

Our backlog as of July 4, 2026 increased $39.0 million, or 45%, to $126.2 million from $87.1 million as of June 28, 2025, driven by acquired aerospace and defense orders of $19.0 million, increased orders for truck mirror assemblies of $11.7 million, returnable transport packaging products of $4.7 million, latch and handle assemblies of $3.6 million.

Net sales of existing products decreased 16.0% for the second quarter of 2026 and 12.0% for the first six months of 2026 compared to the corresponding periods in 2025. New products increased net sales by 1.8% in the second quarter of 2026 and 2.7% in the first six months of 2026 compared to the corresponding periods in 2025. New product sales included various latch and handle assemblies.

Cost of products sold decreased $4.7 million for the second quarter of 2026 and $7.8 million for the first six months of 2026 compared to the corresponding period in 2025. These decreases were due to lower shipment volume, partially offset by increased cost of sales on acquired aerospace and defense shipments. Additionally, the Company paid tariff costs on China-sourced products of approximately $1.9 million in the second quarter of 2026 and $5.0 million in the first six months of 2026, compared to $2.4 million in the second quarter of 2025 and $3.0 million in the first six months of 2025. Most tariffs on China-sourced products have been recovered through price increases.

Gross margin as a percentage of sales was 20.6% for the second quarter of 2026 and 20.3% for the first six months of 2026 compared to 23.3% and 23.1%, respectively, for the corresponding periods in 2025.

Product development expenses remained consistent with the second quarter of 2025 and decreased less than $0.1 million for the first six months of 2026 compared to the corresponding periods in 2025. As a percentage of net sales, product development costs were 1.7% and 1.6% in the first six months of 2026 and 2025, respectively, as we continue to invest in new products at our businesses.

Selling and administrative expenses decreased $2.1 million, or 17.5%, for the second quarter of 2026 compared to the corresponding period in 2025 due to $1.9 million of lower restructuring charges, lower personnel costs of $0.1 million, lower amortization of $0.1 million and other expenses of $0.4 million, partially offset by higher computer expenses of $0.4 million. Selling, general and administrative expenses decreased $2.9 million, or 12.9% for the first six months of 2026 due to $1.9 million of lower restructuring charges, lower personnel costs of $0.5 million, lower amortization of $0.2 million, lower commission expenses of $0.4 million and other expenses of $0.6 million, partially offset by higher legal expenses of $0.3 million and higher computer expenses of $0.4 million.

Interest expense decreased $0.1 million for the second quarter of 2026 and $0.2 million for the first six months of 2026 compared to the corresponding periods in 2025 due to lower principal balances, offset by higher interest rates.

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Other income increased $6.4 million for the second quarter of 2026 and $6.6 million for the first six months of 2026 compared to the corresponding periods in 2025. The increase for the second quarter and for the first six months of 2026 are the result of $6.5 million of bargain purchase gain recorded on a recent acquisition, offset by $0.2 million of transaction costs incurred to complete that acquisition.

Net income for the second quarter of fiscal 2026 was $5.6 million, or $0.94 per diluted share, compared to net income of $2.0 million, or $0.33 per diluted share, for the comparable period in 2025. For the first six months of 2026, net income was $6.3 million, or $1.04 per diluted share, compared to $4.2 million, or $0.69 per diluted share, for the comparable period in 2025.

A more detailed analysis of the Company's results of operations and financial condition follows.

Results of Operations

The following table shows, for the periods indicated, selected line items from the condensed consolidated statements of operations as a percentage of net sales:

		Three Months Ended								Six Months Ended
		July 4, 2026				June 28, 2025				July 4, 2026				June 28, 2025
Net sales			100.0	%			100.0	%			100.0	%			100.0	%
Cost of products sold			79.4	%			76.7	%			79.7	%			76.9	%
Gross margin			20.6	%			23.3	%			20.3	%			23.1	%
Product development expense			1.7	%			1.5	%			1.7	%			1.6	%
Selling and administrative expense			16.2	%			17.3	%			16.1	%			16.5	%
Operating Profit			2.7	%			4.5	%			2.5	%			5.0	%

The following table shows the change in sales and operating profit for the second quarter and first six months of 2026 compared to the second quarter and first six months of 2025 (dollars in thousands):

		Three Months				Six Months
		Ended				Ended
		July 4, 2026				July 4, 2026
Net Sales		$	(8,342	)		$	(14,603	)
Volume			-13.6	%			-13.9	%
Price			-0.1	%			0.5	%
New products			1.8	%			2.7	%
			-11.9	%			-10.7	%
Operating Profit		$	(1,485	)		$	(3,801	)

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Liquidity and Sources of Capital

The Company generated $12.0 million of cash from operations during the first six months of fiscal 2026 compared to generating $1.9 million during the first six months of fiscal 2025. Cash flow from operations in the first six months of 2026 increased due to timing of vendor payments partially offset by timing of customer receivable collections and the exclusion of the non-cash bargain purchase gain.

Purchases of capital equipment were $1.5 million and $1.6 million for the first six months of 2026 and 2025, respectively. As of July 4, 2026, there were approximately $0.1 million of outstanding commitments for capital expenditures.

The following table shows key financial ratios at the end of each specified period:

		July 4, 2026				June 28, 2025				Fiscal Year 2025
Current Ratio			2.8				2.7				3.7
Average days' sales in accounts receivable			54				54				59
Inventory Turnover			3.5				3.9				3.4
Total debt to shareholders' equity			32.1	%			29.3	%			27.2	%

The following table shows important liquidity measures as of the balance sheet date for each specified period or for the period, as applicable (in millions):

		July 4, 2026				June 28, 2025				Fiscal Year 2025
Cash and cash equivalents
- Held in the United States			13.0				7.7				5.2
- Held by a foreign subsidiary			2.1				1.4				2.2
			15.1				9.1				7.4
Working capital			80.2				67.5				71.7
Net cash (used) provided by operating activities			12.0				1.9				8.9
Change in working capital impact on net cash provided by (used in) operating activities			8.8				(6.9	)			(5.4	)
Net cash (used in) provided by investing activities			(9.5	)			1.8				(0.5	)
Net cash provided by (used in) financing activities			5.2				(9.8	)			(16.3	)

Inventories of $66.0 million at July 4, 2026 increased by $9.6 million, or 17.1%, when compared to $56.3 million at January 3, 2026 and increased $11.8 million, or 21.9%, when compared to $54.1 million at June 28, 2025. Accounts receivable, less allowances, were $36.8 million at July 4, 2026, as compared to $30.1 million at January 3, 2026 and $40.2 million at June 28, 2025.

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On October 28, 2025, the Company entered into a credit agreement with the lenders from time to time party thereto, Citizens Bank, N.A., as the administrative agent, as an LC issuer, and as the swing line lender (the "Credit Agreement"). The Credit Agreement replaces the Company's prior credit facility with TD Bank, N.A., which was repaid using borrowings under the Credit Agreement and terminated on October 28, 2025.. The Credit Agreement established a $100 million five-year senior secured revolving credit facility and provides for the extension of credit to the Company in the form of revolving loans, swing line loans and letters of credit, at any time and from time to time during the term of the Credit Agreement. See Note I, Debt, for additional information regarding the terms of the Credit Agreement, including repayment terms, interest rates, and applicable loan covenants. Under the terms of the Credit Agreement, the Company is subject to restrictive covenants that limit our ability to, among other things, incur additional indebtedness, pay dividends, or make other distributions, and consolidate, merge, sell or otherwise dispose of assets, as well as financial covenants that require us to maintain a maximum senior net leverage ratio and a minimum interest coverage ratio. These covenants may limit how we conduct our business, and in the event of certain defaults, our repayment obligations may be accelerated.

The Company was in compliance with all its covenants under the Credit Agreement as of July 4, 2026 and through the date of filing this Form 10-Q. The Company has $59 million available on its line of credit under the Credit Agreement as of the date of filing this Form 10-Q.

Cash, cash flow from operating activities and funds available under the revolving credit portion of the Credit Agreement are expected to be sufficient to cover future foreseeable working capital requirements in the short-term (i.e., the next 12 months from July 4, 2026) and separately in the long-term (i.e., beyond the next 12 months). However, the Company cannot provide any assurances of the availability of future financing or the terms on which it might be available. In addition, the interest rate on borrowings under the Credit Agreement varies based on our senior net leverage ratio, and the Credit Agreement requires us to maintain a senior net leverage ratio not to exceed 3.50 to 1 and an interest coverage ratio to be not less than 3.00 to 1. A decrease in earnings due to the impact of economic conditions and inflationary pressures or the resulting harm to the financial condition of our customers, or an increase in indebtedness incurred to offset such a decrease in earnings, would have a negative impact on our senior net leverage ratio and our interest coverage ratio, which in turn would increase the cost of borrowing under the Credit Agreement and could cause us to fail to comply with the covenants under the Credit Agreement.

In addition to funding capital requirements, we may use available cash to pay down our indebtedness, to make investments, which may include investments in publicly traded securities, or to make acquisitions that we believe will complement or expand our existing businesses.

As of the end of the second quarter of 2026, the Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on the Company's financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Critical Accounting Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States ("GAAP") requires management to make judgments, estimates and assumptions regarding uncertainties that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses. For a full description of our critical accounting estimates, refer to Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations of the 2025 Form 10-K. While there have been no material changes to our critical accounting estimates since the filing of the 2025 Form 10-K, we continue to monitor the methodologies and assumptions underlying such critical accounting estimates.

Non-GAAP Financial Measures

The non-GAAP financial measures we provide in this report should be viewed in addition to, and not as an alternative for, results prepared in accordance with GAAP.

To supplement the condensed consolidated financial statements prepared in accordance with GAAP, we have presented Adjusted Net Income from Continuing Operations, Adjusted Earnings Per Share from Continuing Operations, and Adjusted EBITDA from Continuing Operations, which are considered non-GAAP financial measures. The non-GAAP financial measures presented may differ from similarly titled non-GAAP financial measures presented by other companies, and other companies may not define these non-GAAP financial measures in the same way. These measures are not substitutes for their comparable GAAP financial measures, such as net income from continuing operations, diluted earnings per share from continuing operations, net (loss) income from discontinued operations, net income (loss) or other measures prescribed by GAAP, and there are limitations to using non-GAAP financial measures.

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Adjusted Net Income from Continuing Operations is defined as net income from continuing operations excluding, when incurred, gains or losses that we do not believe reflect our ongoing operations, including, for example, the impacts of impairment losses, gains/losses on the sale of subsidiaries, property and facilities, transaction expenses primarily relating to acquisitions and divestitures, factory start-up costs, factory relocation expenses, executive severance, and restructuring costs. This measure also excludes credit agreement refinancing expenses, when applicable, because we do not believe these expenses are reflective of our ongoing operations. Adjusted Net Income from Continuing Operations is a tool that can assist management and investors in comparing our performance on a consistent basis across periods by removing the impact of certain items that management believes do not directly reflect our underlying operating performance.

Adjusted Earnings Per Share from Continuing Operations is defined as earnings per share from continuing operations excluding, when incurred, certain per share gains or losses that we do not believe reflect our ongoing operations, including, for example, the impacts of impairment losses, gains/losses on the sale of subsidiaries, property and facilities, transaction expenses primarily relating to acquisitions and divestitures, factory start-up costs, factory relocation expenses, executive severance, and restructuring costs. This measure also excludes credit agreement refinancing expenses, when applicable, because we do not believe these expenses are reflective of our ongoing operations. We believe that Adjusted Earnings Per Share from Continuing Operations provides important comparability of underlying operational results, allowing investors and management to assess operating performance on a consistent basis from period to period.

Adjusted EBITDA from Continuing Operations is defined as net income from continuing operations before interest expense, provision for income taxes, and depreciation and amortization and excluding, when incurred, the impacts of certain losses or gains that we do not believe reflect our ongoing operations, including, for example, impairment losses, gains/losses on sale of subsidiaries, property and facilities, transaction expenses primarily relating to acquisitions and divestitures, factory start-up costs, factory relocation expenses, executive severance, and restructuring expenses. This measure also excludes credit agreement refinancing expenses, when applicable, because we do not believe these expenses are reflective of our ongoing operations. Adjusted EBITDA from Continuing Operations is a tool that can assist management and investors in comparing our performance on a consistent basis by removing the impact of certain items that management believe do not directly reflect our underlying operations.

Management uses such measures to evaluate performance period over period, to analyze the underlying trends in our business, to assess our performance relative to our competitors, and to establish operational goals and forecasts that are used in allocating resources. These financial measures should not be considered in isolation from, or as a replacement for, GAAP financial measures.

We believe that presenting non-GAAP financial measures in addition to GAAP financial measures provides investors greater transparency to the information used by our management for its financial and operational decision-making. We further believe that providing this information enables our investors to better understand our operating performance and to evaluate the methodology used by management to evaluate and measure such performance.

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Reconciliation of Non-GAAP Measures
Adjusted Net Income from Continuing Operations and Adjusted Earnings per Share from Continuing Operations Calculation
For the Three and Six Months ended July 4, 2026 and June 28, 2025
($000's, except for per share data)
		Three Months Ended								Six Months Ended
		July 4, 2026				June 28, 2025				July 4, 2026				June 28, 2025
Net income from continuing operations as reported per generally accepted accounting principles (GAAP)		$	5,649			$	2,035			$	6,289			$	4,203
Earnings per share from continuing operations as reported under generally accepted accounting principles (GAAP):
Basic		$	0.94			$	0.33			$	1.04			$	0.69
Diluted		$	0.94			$	0.33			$	1.04			$	0.69
Adjustments:
Restructuring (a)			-				1,822				-				1,887
Bargain purchase gain			(6,529	)			-				(6,529	)			-
Acquisition related transaction costs			192				-				192				-
Acquired Inventory Step up adjustment			92				-				92				-
Non-GAAP tax impact of adjustments (1)			1,521				(385	)			1,521				(398	)
Total adjustments (Non-GAAP)			(4,724	)			1,437				(4,724	)			1,489
Adjusted net income from continuing operations (Non-GAAP)		$	925			$	3,472			$	1,565			$	5,692
Adjusted earnings per share from continuing operations (Non-GAAP):
Basic		$	0.15			$	0.57			$	0.26			$	0.93
Diluted		$	0.15			$	0.57			$	0.26			$	0.93

(1) We estimate the tax effect of the items identified to determine a non-GAAP annual effective tax rate applied to the pre-tax amount in order to calculate the non-GAAP provision for income taxes

(a) consists of personnel related and facility costs

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Reconciliation of Non-GAAP Measures

Adjusted EBITDA Calculation

For the Three and Six Months ended July 4, 2026 and June 28, 2025

($000's)

		Three Months Ended								Six Months Ended
		July 4, 2026				June 28, 2025				July 4, 2026				June 28, 2025
Net income from continuing operations as reported per generally accepted accounting principles (GAAP)		$	5,649			$	2,035			$	6,289			$	4,203
Interest expense			581				637				1,109				1,331
Provision for income taxes			1,855				546				2,026				1,125
Depreciation and amortization			1,589				1,695				3,209				3,178
Restructuring (a)			-				1,822				-				1,887
Bargain purchase gain			(6,529	)			-				(6,529	)			-
Acquisition related transaction costs			192				-				192				-
Acquired Inventory Step up Adjustment			92				-				92				-
Adjusted EBITDA from continuing operations (non-GAAP)		$	3,429			$	6,735			$	6,388			$	11,724

(a) consists of personnel related and facility costs

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