Disaggregation of Revenue

We disaggregate our net sales by geographical location and revenue streams as we believe it best depicts how the nature, timing and uncertainty of our net sales and cash flows are affected by economic factors. The following table summarizes our net sales by geographical location, which are classified based on the customer’s location, and revenue streams:

Contract Estimates

Accounting for long-term contracts involves the use of various techniques to estimate total contract revenue and costs. For the Company’s long-term contracts that qualify for over time revenue recognition, estimated profit for the equipment performance obligations is recognized as the equipment is manufactured and assembled. Profit on the equipment performance obligations is estimated as the difference between the total estimated revenue and expected costs to complete a contract. Contract cost estimates are based on anticipated labor and materials, and the performance of subcontractors. The Company does not disclose information about remaining performance obligations that have original expected durations of one year or less. The Company has not recognized material favorable or unfavorable changes in estimates related to long-term contracts with customers in the six months ended July 4, 2026 or June 28, 2025.

Contract Balances

Payments on equipment contracts are typically due based on contractually stated milestones. Contract assets primarily relate to the Company’s right to consideration for work completed but not billed at the reporting date and are recorded in prepaid expenses and other in the Condensed Combined Balance Sheets. Contract assets are transferred to receivables when the right to consideration becomes unconditional. Changes in contract assets and contract liabilities associated with the timing of payments and status of over time revenue contracts are recorded in prepaid expenses and other assets and accrued expenses and other liabilities, respectively, within operating activities in the Condensed Combined Statements of Cash Flows.

Contract liabilities relate to advance consideration received from customers for which revenue has not been recognized. Current contract liabilities are recorded in accrued expenses in the Condensed Combined Balance Sheets. Non-current contract liabilities are recorded in other non-current liabilities in the Condensed Combined Balance Sheets. Contract liabilities are reduced when the associated revenue from the contract is recognized.

During the six months ended July 4, 2026, the Company reclassified $25.3 million to accounts receivable, which was included in the contract asset balance at the beginning of the period. During the six months ended July 4, 2026, the Company recognized revenue of $62.0 million, which was included in the contract liability balance at the beginning of the period. Additions to contract liabilities representing amounts billed to clients in excess of revenue recognized were $80.6 million during the six months ended July 4, 2026. Substantially all of the Company’s outstanding performance obligations will be satisfied within 12 to 36 months. There were no contract asset impairments during the periods presented.