v3.26.3
Segment Reporting
 9 Months Ended
Oct. 03, 2026
Segment Reporting [Abstract]  
SEGMENT REPORTING

13. SEGMENT REPORTING

The Company has two reportable segments: Hydraulics and Electronics. These reportable segments are based on three operating segments identified by management: Motion Control Technology (“MCT”), Fluid Conveyance Technology (“FCT”), and Electronics. MCT and FCT are aggregated into the Hydraulics reportable segment because they have similar economic characteristics. The Hydraulics segment designs, manufactures and markets hydraulic components, systems and engineered solutions used to control force, speed and motion in a broad range of mobile and industrial applications. The Electronics segment designs, manufactures and markets electronic controls, displays, instrumentation and related engineered solutions for a broad range of recreational, industrial and mobile equipment applications.

 

The Company's Chief Executive Officer serves as the CODM. The CODM evaluates segment performance and allocates resources primarily based on segment operating income, together with net sales, gross profit and certain operating expenses. These measures are used to assess operating performance and to make decisions regarding capital allocation and operating investments.

The accounting policies of the Company’s reporting segments are the same as those used to prepare the accompanying condensed consolidated unaudited financial statements.

Net sales and operating profit of our reporting segments exclude intersegment sales and the related cost of sales and profit as these activities are eliminated in consolidation and thus are not included in management’s evaluation of performance of each segment.

The following table sets forth our segment information of sales, gross profit, significant segment expenses, and operating income from operations for the three months ended October 3, 2026 and September 27, 2025:

 

 

 

Three Months Ended October 3, 2026

 

 

Three Months Ended September 27, 2025

 

 

 

Hydraulics

 

 

Electronics

 

 

Total

 

 

Hydraulics

 

 

Electronics

 

 

Total

 

Net sales

 

$

142.9

 

 

$

86.8

 

 

$

229.7

 

 

$

141.3

 

 

$

79.0

 

 

$

220.3

 

Cost of sales

 

 

(96.8

)

 

 

(56.7

)

 

 

 

 

 

(95.4

)

 

 

(51.9

)

 

 

 

Gross profit

 

 

46.1

 

 

 

30.1

 

 

 

76.2

 

 

 

45.9

 

 

 

27.1

 

 

 

73.0

 

Segment SEA expenses less R&D (a)

 

 

(14.5

)

 

 

(11.6

)

 

 

 

 

 

(16.1

)

 

 

(10.9

)

 

 

 

R&D expenses (b)

 

 

(2.2

)

 

 

(3.6

)

 

 

 

 

 

(2.1

)

 

 

(2.2

)

 

 

 

Goodwill impairment

 

 

—

 

 

 

—

 

 

 

 

 

 

—

 

 

 

(25.9

)

 

 

 

Indirect SEA expenses (c)

 

 

(4.7

)

 

 

(2.5

)

 

 

 

 

 

(3.5

)

 

 

(1.8

)

 

 

 

Segment operating income

 

 

24.7

 

 

 

12.4

 

 

 

37.1

 

 

 

24.2

 

 

 

(13.7

)

 

 

10.5

 

Reconciliation of segment operating income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unallocated corporate SEA expenses (d)

 

 

 

 

 

 

 

 

(1.5

)

 

 

 

 

 

 

 

 

(1.6

)

Amortization of intangibles assets (e)

 

 

 

 

 

 

 

 

(7.5

)

 

 

 

 

 

 

 

 

(7.6

)

Operating income

 

 

 

 

 

 

 

 

28.1

 

 

 

 

 

 

 

 

 

1.3

 

Interest expense, net

 

 

 

 

 

 

 

 

(4.7

)

 

 

 

 

 

 

 

 

(6.9

)

Foreign currency transaction gain (loss), net

 

 

 

 

 

 

 

 

0.4

 

 

 

 

 

 

 

 

 

(0.6

)

Other non-operating (expense) income, net

 

 

 

 

 

 

 

 

(0.3

)

 

 

 

 

 

 

 

 

19.0

 

Income before income taxes

 

 

 

 

 

 

 

$

23.5

 

 

 

 

 

 

 

 

$

12.8

 

Reconciliation of gross profit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

 

 

 

 

 

$

76.2

 

 

 

 

 

 

 

 

$

73.0

 

Segment operating expenses (f)

 

 

 

 

 

 

 

 

(39.1

)

 

 

 

 

 

 

 

 

(36.6

)

Unallocated corporate SEA expenses (d)

 

 

 

 

 

 

 

 

(1.5

)

 

 

 

 

 

 

 

 

(1.6

)

Goodwill impairment

 

 

 

 

 

 

 

 

—

 

 

 

 

 

 

 

 

 

(25.9

)

Amortization of intangibles assets (e)

 

 

 

 

 

 

 

 

(7.5

)

 

 

 

 

 

 

 

 

(7.6

)

Interest expense, net

 

 

 

 

 

 

 

 

(4.7

)

 

 

 

 

 

 

 

 

(6.9

)

Foreign currency transaction gain (loss), net

 

 

 

 

 

 

 

 

0.4

 

 

 

 

 

 

 

 

 

(0.6

)

Other non-operating (expense) income, net

 

 

 

 

 

 

 

 

(0.3

)

 

 

 

 

 

 

 

 

19.0

 

Income before income taxes

 

 

 

 

 

 

 

$

23.5

 

 

 

 

 

 

 

 

$

12.8

 

 

 

(a) Segment selling, engineering and administrative (SEA) expenses less research and development (R&D) primarily include information technology, professional services, facility-related expenses, payroll and benefits expenses directly incurred by the segments which are recorded in "Selling, engineering and administrative expenses" on the Condensed Consolidated Unaudited Statements of Operations.

(b) Research and development (R&D) expenses primarily include engineering-related costs to create new products and to make improvements to products currently in use. They are recorded in "Selling, engineering and administrative expenses" on the Condensed Consolidated Unaudited Statements of Operations.

(c) Indirect selling, engineering and administrative (SEA) expenses represent corporate costs and shared expenses allocated to businesses. They are recorded in "Selling, engineering and administrative expenses" on the Condensed Consolidated Unaudited Statement of Operations.

(d) Unallocated corporate expenses consist of corporate costs that are not allocated to the reportable segments because they are not included in the measure of segment operating income used by the chief operating decision maker to evaluate segment performance and allocate resources. They are recorded in "Selling, engineering and administrative expenses" on the Condensed Consolidated Unaudited Statement of Operations. During the three months ended October 3, 2026, unallocated corporate expenses were $1.5, primarily related to mergers and acquisitions planning activities. During the three months ended September 27, 2025, unallocated corporate expenses were $1.6, primarily related to the Divestiture and officer transition costs.

(e) Amortization of intangible assets includes those intangible assets resulting from the acquisition of new businesses.

(f) Segment operating expenses represent the aggregation of segment SEA expenses less R&D (a), R&D expenses (b), and indirect SEA expenses (c).

 

Segment SEA expenses, R&D expenses, and indirect SEA expenses, together with unallocated corporate SEA expenses, reconcile to "Selling, engineering and administrative expenses" in the Condensed Consolidated Statements of Operations, which totaled $40.6 and $38.2 for the three months ended October 3, 2026 and September 27, 2025, respectively.

The following table sets forth our segment information of sales, gross profit, significant segment expenses, and operating income from operations for the nine months ended October 3, 2026 and September 27, 2025:

 

 

 

Nine Months Ended October 3, 2026

 

 

Nine Months Ended September 27, 2025

 

 

 

Hydraulics

 

 

Electronics

 

 

Total

 

 

Hydraulics

 

 

Electronics

 

 

Total

 

Net sales

 

$

428.5

 

 

$

261.5

 

 

$

690.0

 

 

$

408.6

 

 

$

219.6

 

 

$

628.2

 

Cost of sales

 

 

(287.5

)

 

 

(171.2

)

 

 

 

 

 

(278.8

)

 

 

(149.1

)

 

 

 

Gross profit

 

 

141.0

 

 

 

90.3

 

 

 

231.3

 

 

 

129.8

 

 

 

70.5

 

 

 

200.3

 

Segment SEA expenses less R&D (a)

 

 

(43.8

)

 

 

(35.7

)

 

 

 

 

 

(46.8

)

 

 

(31.7

)

 

 

 

R&D expenses (b)

 

 

(7.2

)

 

 

(9.9

)

 

 

 

 

 

(6.5

)

 

 

(7.6

)

 

 

 

Goodwill impairment

 

 

—

 

 

 

—

 

 

 

 

 

 

—

 

 

 

(25.9

)

 

 

 

Indirect SEA expenses (c)

 

 

(13.1

)

 

 

(6.9

)

 

 

 

 

 

(9.8

)

 

 

(5.1

)

 

 

 

Segment operating income

 

 

76.9

 

 

 

37.8

 

 

 

114.7

 

 

 

66.7

 

 

 

0.2

 

 

 

66.9

 

Reconciliation of segment operating income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unallocated corporate SEA expenses (d)

 

 

 

 

 

 

 

 

(1.6

)

 

 

 

 

 

 

 

 

(2.5

)

Amortization of intangibles assets (e)

 

 

 

 

 

 

 

 

(22.6

)

 

 

 

 

 

 

 

 

(24.1

)

Operating income

 

 

 

 

 

 

 

 

90.5

 

 

 

 

 

 

 

 

 

40.3

 

Interest expense, net

 

 

 

 

 

 

 

 

(14.5

)

 

 

 

 

 

 

 

 

(21.3

)

Foreign currency transaction gain (loss), net

 

 

 

 

 

 

 

 

0.9

 

 

 

 

 

 

 

 

 

(1.2

)

Other non-operating (expense) income, net

 

 

 

 

 

 

 

 

0.3

 

 

 

 

 

 

 

 

 

19.4

 

Income before income taxes

 

 

 

 

 

 

 

$

77.2

 

 

 

 

 

 

 

 

$

37.2

 

Reconciliation of gross profit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

 

 

 

 

 

$

231.3

 

 

 

 

 

 

 

 

$

200.3

 

Segment operating expenses (f)

 

 

 

 

 

 

 

 

(116.6

)

 

 

 

 

 

 

 

 

(107.5

)

Unallocated corporate SEA expenses (d)

 

 

 

 

 

 

 

 

(1.6

)

 

 

 

 

 

 

 

 

(2.5

)

Goodwill impairment

 

 

 

 

 

 

 

 

—

 

 

 

 

 

 

 

 

 

(25.9

)

Amortization of intangibles assets (e)

 

 

 

 

 

 

 

 

(22.6

)

 

 

 

 

 

 

 

 

(24.1

)

Interest expense, net

 

 

 

 

 

 

 

 

(14.5

)

 

 

 

 

 

 

 

 

(21.3

)

Foreign currency transaction gain (loss), net

 

 

 

 

 

 

 

 

0.9

 

 

 

 

 

 

 

 

 

(1.2

)

Other non-operating (expense) income, net

 

 

 

 

 

 

 

 

0.3

 

 

 

 

 

 

 

 

 

19.4

 

Income before income taxes

 

 

 

 

 

 

 

$

77.2

 

 

 

 

 

 

 

 

$

37.2

 

 

(a) Segment selling, engineering and administrative (SEA) expenses less research and development (R&D) primarily include information technology, professional services, facility-related expenses, payroll and benefits expenses directly incurred by the segments which are recorded in "Selling, engineering and administrative expenses" on the Condensed Consolidated Unaudited Statements of Operations.

(b) Research and development (R&D) expenses primarily include engineering-related costs to create new products and to make improvements to products currently in use. They are recorded in "Selling, engineering and administrative expenses" on the Condensed Consolidated Unaudited Statements of Operations.

(c) Indirect selling, engineering and administrative (SEA) expenses represent corporate costs and shared expenses allocated to businesses. They are recorded in "Selling, engineering and administrative expenses" on the Condensed Consolidated Unaudited Statement of Operations.

(d) Unallocated corporate expenses consist of corporate costs that are not allocated to the reportable segments because they are not included in the measure of segment operating income used by the chief operating decision maker to evaluate segment performance and allocate resources. They are recorded in "Selling, engineering and administrative expenses" on the Condensed Consolidated Unaudited Statement of Operations. During the nine months ended October 3, 2026, unallocated corporate expenses were $1.6, primarily related to mergers and acquisitions planning activities. During the nine months ended September 27, 2025, unallocated corporate expenses were $2.5, primarily related to the Divestiture and officer transition costs.

(e) Amortization of intangible assets includes those intangible assets resulting from the acquisition of new businesses.

(f) Segment operating expenses represent the aggregation of segment SEA expenses less R&D (a), R&D expenses (b), and indirect SEA expenses (c).

Segment SEA expenses, R&D expenses, and indirect SEA expenses, together with unallocated corporate SEA expenses, reconcile to "Selling, engineering and administrative expenses" in the Condensed Consolidated Statements of Operations, which totaled $118.2 and $110.0 for the nine months ended October 3, 2026 and September 27, 2025, respectively.

 

The following table presents capital expenditures and depreciation and amortization by reportable segment for the three and nine months ended October 3, 2026 and September 27, 2025:

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

October 3, 2026

 

 

September 27, 2025

 

 

October 3, 2026

 

 

September 27, 2025

 

Capital expenditures

 

 

 

 

 

 

 

 

 

 

 

 

Hydraulics

 

$

6.1

 

 

$

5.3

 

 

$

22.8

 

 

$

14.7

 

Electronics

 

 

1.4

 

 

 

1.4

 

 

 

2.7

 

 

 

3.5

 

Total

 

$

7.5

 

 

$

6.7

 

 

$

25.5

 

 

$

18.2

 

Depreciation and amortization

 

 

 

 

 

 

 

 

 

 

 

 

Hydraulics

 

$

5.6

 

 

$

5.7

 

 

$

16.3

 

 

$

16.4

 

Electronics

 

 

2.2

 

 

 

2.5

 

 

 

6.6

 

 

 

7.1

 

Corporate and other

 

 

7.6

 

 

 

7.7

 

 

 

22.7

 

 

 

24.3

 

Total

 

$

15.4

 

 

$

15.9

 

 

$

45.6

 

 

$

47.8

 

The following table presents total assets by reportable segment as of October 3, 2026 and January 3, 2026:

 

 

 

October 3, 2026

 

 

January 3, 2026

 

Total assets

 

 

 

 

 

 

Hydraulics

 

$

958.2

 

 

$

965.8

 

Electronics

 

 

547.0

 

 

 

538.2

 

Corporate and other

 

 

9.0

 

 

 

10.5

 

Total

 

$

1,514.2

 

 

$

1,514.5

 

Geographic Region Information

Net sales are measured based on the geographic destination of sales. For the nine months ended October 3, 2026, sales to customers in the United States represented approximately 42% of consolidated net sales during the nine months ended October 3, 2026. Other countries with net sales concentration included China, with 14%. No other individual country represented more than 10% of consolidated net sales. Tangible long-lived assets are shown based on the physical location of the assets and primarily include net property, plant and equipment and exclude right of use assets. The following table presents financial information by region:

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

October 3, 2026

 

 

September 27, 2025

 

 

October 3, 2026

 

 

September 27, 2025

 

Net sales

 

 

 

 

 

 

 

 

 

 

 

 

Americas

 

$

125.9

 

 

$

114.2

 

 

$

374.9

 

 

$

328.8

 

EMEA

 

 

54.1

 

 

 

51.0

 

 

 

172.8

 

 

 

149.5

 

APAC

 

 

49.7

 

 

 

55.1

 

 

 

142.3

 

 

 

149.9

 

Total

 

$

229.7

 

 

$

220.3

 

 

$

690.0

 

 

$

628.2

 

 

 

 

 

October 3, 2026

 

 

January 3, 2026

 

Tangible long-lived assets

 

 

 

 

 

 

Americas

 

$

127.5

 

 

$

133.1

 

EMEA

 

 

49.3

 

 

 

42.4

 

APAC

 

 

14.4

 

 

 

13.5

 

Total

 

$

191.2

 

 

$

189.0