7. ASSETS AND LIABILITIES HELD FOR SALE

In the second quarter of 2025, the Company committed to a plan to sell all of the outstanding equity interest in Guwing Holdings Pty. Ltd. ("Guwing"), and Guwing's 100% ownership of the share capital of Custom Fluidpower Pty. Ltd. ("CFP"). On August 4, 2025, the Company executed a definitive agreement to sell CFP to Questas Group (“Questas”) and entered into an exclusive agreement with Questas for the Company to continue its relationship with CFP as a customer of its Sun Hydraulics’ business for cartridge valve and manifold products. The commitment was made as a result of the Company's assessment of its go-to-market approach and operations footprint in the APAC region. We expect to close the sale within 60 to 90 days, subject to regulatory approvals and other customary closing conditions.

CFP was acquired in August 2018 and expanded the Company's hydraulics operations and footprint in APAC. Since acquiring CFP, we have further invested in the APAC region as part of our "in the region for the region" strategy and have expanded manufacturing and design engineering capabilities. In evaluating our current portfolio and footprint, we believe CFP is better suited within our value-adding distribution customer base.

The assets and liabilities of Guwing and CFP met the criteria for classification as held for sale as of June 28, 2025. In connection with the classification of these assets and liabilities as held for sale, the Company evaluated the fair value of the disposal group, including goodwill, less estimated costs to sell. The fair value was determined using significant unobservable inputs (Level 3) based on expected proceeds to be received upon the sale of the business. As a result of this evaluation, it was determined that the fair value of the disposal group, less costs to sell, was higher than its carrying value.

This disposition is not accounted for as discontinued operations as it does not represent a strategic shift in the Company's operations. The net income of the disposal group is included in the Company's Consolidated Statements of Operations and is reflected in the Hydraulics segment results as disclosed in Note 13 - Segment Reporting. The pre-tax income of the disposal group for the three months ended June 28, 2025 and June 29, 2024 was $0.8 and $0.9 respectively. For the six months ended June 28, 2025 and June 29, 2024, pre-tax profit of the disposal group was $1.6 and $1.4 respectively.