What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-10-29 compared with 2024-07-30 · 107 added, 90 removed, 200 unchanged (50% of the section changed)

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The Company further seeks to maintain a disciplined capital structure while at the same time investing in its business to modernize its distribution facilities, as well as its tractor and trailer fleet, and to improve operational performance.

During the first half of 2024, we engaged in the following transactions:

During the nine months ended September 28, 2024, we engaged in the following transactions:

• Used cash of $19.8 million and entered into $16.7 million of finance leases to enhance our facilities and fleet.

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Results of Operations

Our results of operations for the three months ended June 29, 2024 (“second quarter of fiscal 2024”) and for the three months ended July 1, 2023 (“second quarter of fiscal 2023”) were as follows:

Three Months Ended June 29, 2024 % of

Sales Three Months Ended July 1, 2023 % of

Our results of operations for the three months ended September 28, 2024 (“third quarter of fiscal 2024”) and for the three months ended September 30, 2023 (“third quarter of fiscal 2023”) were as follows:

Three Months Ended September 28, 2024 % of

Sales Three Months Ended September 30, 2023 % of

($ amounts in thousands)

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Amortization of deferred gains on real estate (984) (0.1)% (984) (0.1)%

Other operating expenses 8 0.0% 993 0.1%

Other operating expenses, net 888 0.1% 1,131 0.1%

Operating income 24,025 3.2% 39,656 4.9%

Interest expense, net 4,619 0.6% 5,577 0.7%

Settlement of defined benefit pension plan (2,226) (0.3)% — —%

Other expense, net — —% 594 0.1%

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Net income $ 16,016 2.1% $ 24,382 3.0%

Our results of operations for the six months ended June 29, 2024 (“first six months of fiscal 2024”) and for the six months ended July 1, 2023 (“first six months of fiscal 2023”) were as follows:

Six Months Ended June 29, 2024 % of

Sales Six Months Ended July 1, 2023 % of

Our results of operations for the nine months ended September 28, 2024 (“first nine months of fiscal 2024”) and for the nine months ended September 30, 2023 (“first nine months of fiscal 2023”) were as follows:

Nine Months Ended September 28, 2024 % of

Sales Nine Months Ended September 30, 2023 % of

($ amounts in thousands)

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Amortization of deferred gains on real estate (2,952) (0.1)% (2,952) (0.1)%

Other operating expenses 322 0.0% 4,109 0.3%

Other operating expenses, net 1,210 0.1% 5,240 0.2%

Operating income 75,540 3.4% 111,264 4.6%

Interest expense, net 14,044 0.6% 19,575 0.8%

Settlement of defined benefit pension plan (2,226) (0.1)% — —%

Other expense, net — —% 1,782 0.1%

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The following table sets forth net sales by product category:

Three Months Ended Six Months Ended

June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Three Months Ended Nine Months Ended

September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023

Net sales by product category ($ amounts in thousands)

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The following table sets forth gross profit and gross margin percentages by product category:

Three Months Ended Six Months Ended

June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023

Three Months Ended Nine Months Ended

September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023

Gross profit by product category:

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Company gross margin % 16.8 % 17.2 % 16.8 % 16.9 %

Second Quarter of Fiscal 2024 Compared to Second Quarter of Fiscal 2023

For the second quarter of fiscal 2024, the Company generated consolidated net sales of $768.4 million, a decrease of $47.6 million, or 5.8 percent, compared to the second quarter of fiscal 2023.

The decrease in net sales in the current quarter was attributable to both specialty products and structural products as sales were negatively impacted by demand challenges in the housing and building product sectors, by specialty products price deflation, and by declining lumber and panel prices.

The Company’s gross profit for the second quarter of fiscal 2024 decreased by $13.4 million to $122.4 million from $135.8 million in the prior year period and this decrease was attributable to both specialty products and structural products.

Gross margin percentage for the Company decreased from 16.6 percent to 15.9 percent in the current quarter, mainly attributable to structural products.

Net sales of specialty products, which includes products such as engineered wood, siding, millwork, outdoor living, specialty lumber and panels, and industrial products, decreased by $31.5 million, or 5.5 percent, to $539.5 million in the second quarter of fiscal 2024.

This decrease in net sales was due to price deflation across all specialty product categories, partially offset by volume gains for millwork, engineered wood, and siding.

Specialty products gross profit decreased by $4.5 million to $104.4 million due primarily to lower sales volume, but specialty products gross margin percentage increased by 20 basis points to 19.3 percent compared to 19.1 percent in the second quarter of fiscal 2023.

Gross margin percentage and gross profit for specialty products benefited in the current quarter from a $2.7 million change in an estimate for an accrual initially made and disclosed in the first quarter of 2024 related to amounts the Company believes it may owe for discrepancies in duties paid in prior years for certain imported goods.

Not including this benefit, specialty products gross margin percentage would have been 18.9 percent in the current quarter.

Net sales of structural products, which includes products such as lumber, plywood, oriented strand board, rebar, and remesh, decreased by $16.1 million, or 6.6 percent, to $228.9 million in the second quarter of fiscal 2024 compared to the second quarter of 2023.

This decrease was primarily due to lower volumes and a decline in our lumber selling prices which generally correlated with a year-over-year decline in the average composite price of framing lumber.

Structural products gross profit decreased by $8.9 million to $18.1 million from $27.0 million in the prior year period.

Structural products gross margin percentage for the second quarter of fiscal 2024 was 7.9 percent compared to 11.0 percent in the prior-year period.

Gross profit and gross margin percentage for the second quarter of fiscal 2024 were negatively impacted by lower sales and by a $2.4 million provision to adjust the carrying values of certain lumber and panel inventory items to their net realizable values as of June 29, 2024.

During the second quarter of fiscal 2023, there was no such provision.

Our selling, general, and administrative (“SG&A”) expenses increased by $0.7 million, or 0.8 percent, compared to the second quarter of fiscal 2023.

In the current quarter, lower logistics expenses and share-based compensation expense were offset by higher technology expenses and by legal expenses associated with duty-related matters.

Depreciation and amortization expense increased 27.3 percent compared to the second quarter of fiscal 2023 due to a higher base of depreciable assets in the second quarter of fiscal 2024, resulting from our continued focused capital investment.

Interest expense, net, decreased by 23.9 percent, or $1.5 million, compared to the second quarter of fiscal 2023.

Third Quarter of Fiscal 2024 Compared to Third Quarter of Fiscal 2023

For the third quarter of fiscal 2024, the Company generated consolidated net sales of $747.3 million, a decrease of $62.7 million, or 7.7 percent, compared to the third quarter of fiscal 2023.

The decrease in net sales in the current quarter was attributable to continuing pricing pressures in both specialty products and structural products, with commodity prices in U.S.

markets for lumber and panels being down 12 percent and 19 percent, respectively, compared to the prior year period.

However, pricing declines were partially offset by volume growth for both specialty and structural products.

The Company’s gross profit for the third quarter of fiscal 2024 decreased by $13.6 million to $125.7 million from $139.2 million in the prior year period and this decrease was attributable to both specialty and structural products.

Gross margin percentage for the Company decreased from 17.2 percent to 16.8 percent in the current quarter, also attributable to both structural products and specialty products.

The import-duty and LCNRV matters discussed in the sections below for specialty products and structural products contributed $5.9 million to the current quarter’s gross profit.

Excluding these items, gross margin percentage was 16.0 percent for the current quarter.

Net sales of specialty products, which includes products such as engineered wood, siding, millwork, outdoor living, specialty lumber and panels, and industrial products, decreased by $39.9 million, or 7.1 percent, to $519.0 million in the third quarter of fiscal 2024.

This decrease in net sales was due to price deflation across all specialty product categories, partially offset by volume gains for millwork, engineered wood, and specialty lumber and panels.

Specialty products gross profit decreased by $10.4 million to $100.5 million due primarily to the decrease in sales.

Specialty products gross margin percentage decreased by 40 basis points to 19.4 percent compared to 19.8 percent in the third quarter of fiscal 2023 due primarily to decreases in pricing.

The current period included a net benefit of $3.5 million for import duty-related items from prior periods.

Excluding this benefit, specialty products gross margin percentage was 18.7 percent.

The duty items were related to changes in retroactive rates for anti-dumping duties and to classification adjustments for certain goods imported by the Company.

Net sales of structural products, which includes products such as lumber, plywood, oriented strand board, rebar, and remesh, decreased by $22.8 million, or 9.1 percent, to $228.3 million in the third quarter of fiscal 2024 compared to the third quarter of

This decrease was primarily due to price deflation across all structural product types, partially offset by volume gains for all structural product types.

Structural products gross profit decreased by $3.2 million to $25.2 million from $28.3 million in the prior year period due primarily to decreases in pricing.

Structural products gross margin percentage for the third quarter of fiscal 2024 was 11.0 percent compared to 11.3 percent in the prior-year period.

Gross profit and gross margin percentage for the third quarter of fiscal 2024 were positively impacted by a $2.4 million LCNRV inventory write-down for certain structural products at the end of the second quarter of fiscal 2024 that resulted in lower Costs of products sold in the third quarter of fiscal 2024 since substantially all of the inventory associated with the LCNRV write-down was sold during third quarter of fiscal 2024.

This adjustment increased the current quarter’s gross margin percentage for structural products by 1.0 percent.

The third quarter of fiscal 2023 was negatively impacted by a $0.6 million interim period LCNRV write-down for certain inventory related to our structural products.

Our selling, general, and administrative (“SG&A”) expenses increased by $0.9 million, or 0.9 percent, compared to the third quarter of fiscal 2023.

In the current quarter, higher technology expenses associated with our digital transformation were partially offset by lower fleet-related logistics costs.

Depreciation and amortization expense increased 17.8 percent compared to the third quarter of fiscal 2023 due to a higher base of depreciable assets in the third quarter of fiscal 2024, resulting from our continued focus on strategic capital investment.

Interest expense, net, decreased by 17.2 percent, or $1.0 million, compared to the third quarter of fiscal 2023.

The decrease was due to the generation of additional interest income from larger balances of cash and cash equivalents and from higher interest rates on those balances in the current quarter compared to the prior year period.

Our effective income tax rates were 24.7 percent and 24.0 percent for the second quarters of fiscal 2024 and 2023, respectively.

Additionally, interest income for the third quarter of fiscal 2024 includes $0.7 million related to antidumping import duty refunds recognized in the quarter.

(see Note 2, Inventories ).

Our effective income tax rates were 26.0 percent and 27.2 percent for the third quarters of fiscal 2024 and 2023, respectively.

Our effective income tax rates for both periods were impacted by state taxes as well as the permanent addback of certain nondeductible expenses, including meals and entertainment and executive compensation, slightly offset by a benefit from the vesting of restricted stock units.

For fiscal 2024, we expect our annual effective income tax rate will be approximately 26 percent.

Our net income for the second quarter of fiscal 2024 was $14.3 million, or $1.65 per diluted share, versus $24.5 million, or $2.70 per diluted share, in the prior-year period.

Our net income for the third quarter of fiscal 2024 was $16.0 million, or $1.87 per diluted share, versus $24.4 million, or $2.71 per diluted share, in the prior-year period.

Decreases in our net income and earnings per diluted share were due primarily to the factors discussed above.

First Six Months of Fiscal 2024 Compared to First Six Months of Fiscal 2023

For the first six months of fiscal 2024, the Company generated consolidated net sales of $1.5 billion, a decrease of $119 million, or 7.4 percent, compared to the first six months of fiscal 2023.

The decrease in net sales in the current period was attributable to both specialty products and structural products as sales were negatively impacted by challenges in the housing and building products sectors and by declining lumber and panel prices.

The Company’s gross profit for the first six months of fiscal 2024 decreased by $19.2 million to $250.1 million from $269.3 million in the prior year period and this decline was attributable to both specialty products and structural products.

The Company’s gross margin percentage was 16.7 percent for both periods.

Gross margin percentage and gross profit benefited in the current period by a net benefit in specialty products of $9.1 million for import duty items.

The import duty items were related to changes in retroactive rates for anti-dumping duties resulting in a credit to cost of products sold of $16.9 million, partially offset by classification adjustments for certain goods imported by the Company that resulted in an increase in Cost of products sold of $7.7 million.

The 2024 period also reflects a pre-tax benefit of $2.2 million related to an adjustment of the settlement charge recorded in the fourth quarter of 2023 to settle our defined benefit pension plan.

This benefit was partially offset by $1.2 million of estimated net losses related to Hurricane Helene in September 2024, which is reported within Other operating expenses, net on our unaudited condensed consolidated statements of operations.

First Nine Months of Fiscal 2024 Compared to First Nine Months of Fiscal 2023

For the first nine months of fiscal 2024, the Company generated consolidated net sales of $2.24 billion, a decrease of $182 million, or 7.5 percent, compared to the first nine months of fiscal 2023.

The decrease in net sales in the current period was attributable to both specialty products and structural products and reflected continuing pricing pressures, partially offset by volume gains .

The Company’s gross profit for the first nine months of fiscal 2024 decreased by $32.8 million to $375.8 million from $408.6 million in the prior year period.

This decline in net sales was attributable to both specialty products and structural products.

The Company’s gross margin percentage was 16.8 percent for the 2024 period, a decrease from the 16.9 percent for the 2023 period.

Gross profit and gross margin percentage benefited in the current period by a net benefit in specialty products of $12.7 million for import duty items.

The import duty items were related to changes in retroactive rates for anti-dumping duties resulting in a credit to cost of products sold of $20.7 million, partially offset by classification adjustments for certain goods imported by the Company that resulted in a net increase in Cost of products sold of $8.0 million for the current period.

Not including this net benefit, the Company’s gross margin percentage would have been 16.2 percent in the current period.

Net sales of specialty products, which includes products such as engineered wood, siding, millwork, outdoor living, specialty lumber and panels, and industrial products, decreased by $95.5 million, or 8 percent, to $1.0 billion in the first six months of fiscal 2024.

The decline in net sales was due to price deflation across all specialty product categories, partially offset by volume gains for millwork, engineered wood, and siding.

Specialty products gross profit decreased $7.1 million to $208.4 million due to lower net sales, while specialty products gross margin percentage increased 110 basis points to 20.0 percent for the first six months of fiscal 2024 compared to 18.9 percent in the first six months of fiscal 2023.

Net sales of specialty products, which includes products such as engineered wood, siding, millwork, outdoor living, specialty lumber and panels, and industrial products, decreased by $135.4 million, or 8 percent, to $1.56 billion in the first nine months of fiscal 2024.

The decline in net sales was due to price deflation across all specialty product types, partially offset by volume gains for millwork, engineered wood, siding, and specialty lumber and panels.

Specialty products gross profit decreased $17.5 million to $308.9 million due to lower net sales, while specialty products gross margin percentage decreased 60 basis points to 19.8 percent for the first nine months of fiscal 2024 compared to 19.2 percent in the first nine months of fiscal 2023.

The net impact of the import duty items described above increased specialty products gross profit for the current period by $12.7 million and specialty products gross margin percentage by 0.8 percent.

Net sales of structural products, which includes products such as lumber, plywood, oriented strand board, rebar, and remesh, decreased $23.7 million to $451.3 million in the first six months of fiscal 2024 primarily due to volume and price declines for the lumber category, partially offset by price increases in the panels category.

Gross profit for structural products decreased by $12.1 million to $41.7 million from $53.9 million in the prior year period.

Structural products gross margin percentage for the first six months of fiscal 2024 was 9.2 percent, a decline from 11.3 percent in the prior-year period.

The declines in gross profit and gross margin percentage were attributable to the lower sales and by a $2.4 million provision to adjust the carrying values of certain lumber and panel inventory items to their net realizable values as of June 29, 2024.

We determined that a provision for lower of cost and net realizable value was not required for any inventory at the end of the first six months of fiscal 2023.

Our SG&A expenses in the first six months of fiscal 2024 increased $0.8 million compared to the first six months of fiscal 2023.

In the current period, lower logistics expenses and share-based compensation expenses were offset by higher technology expenses and by legal expenses associated with duty-related matters.

Depreciation and amortization expense increased 24.8 percent compared to the first six months of fiscal 2023 due to a higher base of depreciable assets throughout the first six months of fiscal 2024 when compared the prior-year period, resulting from our continued focus on capital investment.

Other operating expenses decreased $3.8 million compared to the first six months of fiscal 2023 primarily due to restructuring related expenses, including severance expenses, incurred in the 2023 period due to our leadership transition.

Interest expense, net, decreased by 32.7 percent, or $4.6 million, compared to the first six months of fiscal 2023.

The decrease is primarily due to the generation of higher interest income, given our year-over-year increase in cash that is generating interest at higher rates than last year.

Our effective income tax rates were 24.4 percent and 25.1 percent for the first six months of fiscal 2024 and 2023, respectively.

Our effective income tax rate for both periods was impacted by state taxes as well as the permanent addback of certain nondeductible expenses, including meals and entertainment and executive compensation, offset by a benefit from the vesting of restricted stock units.

Net sales of structural products, which includes products such as lumber, plywood, oriented strand board, rebar, and remesh, decreased $46.6 million to $679.6 million in the first nine months of fiscal 2024 primarily due to volume and price declines for the lumber category, partially offset by price and volume increases in the panels category.

Gross profit for structural products decreased by $15.3 million to $66.9 million from $82.2 million in the prior year period due to lower sales in the current period.

Structural products gross margin percentage for the first nine months of fiscal 2024 was 9.8 percent, a decline from 11.3 percent in the prior-year period due primarily to price deflation for the lumber category.

Gross profit and gross margin percentage for structural products benefited in the prior year period by lower cost of products sold attributable to a $2.6 million LCNRV write-down of certain inventory at the end of fiscal 2022, partially offset by an interim $0.6 million LCNRV write-down of certain inventory during the 2023 period.

During the first nine months of fiscal 2024, such interim period LCNRV inventory write-downs and reversals netted to zero.

Our SG&A expenses in the first nine months of fiscal 2024 increased $1.6 million compared to the first nine months of fiscal 2023.

In the current period, higher technology expenses associated with our digital transformation and legal expenses associated with duty-related matters were partially offset by lower sales-based incentive expenses and lower share-based compensation expense.

Depreciation and amortization expense increased 22.4 percent compared to the first nine months of fiscal 2023 due to a higher base of depreciable assets throughout the first nine months of fiscal 2024 when compared the prior-year period, resulting from our continued focus on strategic capital investment.

Other operating expenses, net decreased $4.0 million compared to the first nine months of fiscal 2023 primarily due to restructuring related expenses, including severance expenses, incurred in the 2023 period due to our leadership transition.

Interest expense, net, decreased by 28.3 percent, or $5.5 million, compared to the first nine months of fiscal 2023.

The decrease was primarily due to the generation of higher interest income, given our year-over-year increase in cash that is generating interest at higher rates than last year.

Included in interest income for the nine months ended September 28, 2024 is $2.7 million of interest income related to the antidumping import duty refunds (see Note 2, Inventories ).

Interest expense, net for the nine months ended September 28, 2024 also includes $1.2 million of estimated accrued interest expense related to estimated import duties owed by the Company (see Note 9, Commitments and Contingencies ).

Our effective income tax rates were 24.9 percent and 25.9 percent for the first nine months of fiscal 2024 and 2023, respectively.

Our effective income tax rate for both periods was impacted by state taxes as well as the permanent addback of certain nondeductible expenses, including meals and entertainment and executive compensation, partially offset by a benefit from the vesting of restricted stock units, and in the 2024 period, a partial release of a valuation allowance for deferred income tax assets.

For fiscal 2024, we expect our annual effective income tax rate will be approximately 26 percent.

Our net income for the first six months of fiscal 2024 was $31.8 million, or $3.66 per diluted share, versus $42.3 million, or $4.67 per diluted share, in the prior-year period.

Our net income for the first six months of fiscal 2024 decreased due primarily to the factors discussed above.

Our net income for the first nine months of fiscal 2024 was $47.8 million, or $5.53 per diluted share, versus $66.7 million, or $7.38 per diluted share, in the prior-year period.

Our net income for the first nine months of fiscal 2024 decreased due primarily to the factors discussed above.

The 2024 period also reflects a pre-tax benefit of $2.2 million related to an adjustment of the settlement charge recorded in the fourth quarter of 2023 to settle our defined benefit pension plan.

Liquidity and Capital Resources

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We expect that these sources will be sufficient to fund our ongoing cash requirements for at least the next 12 months and into the foreseeable future.

As of June 29, 2024, we had $491 million of cash and cash equivalents plus $346.5 million of availability on our revolving credit facility.

As of September 28, 2024, we had $526 million of cash and cash equivalents plus $346.5 million of availability on our revolving credit facility.

Senior Secured Notes

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Our 2029 Notes are scheduled to mature on November 15, 2029, and no principal is due until that time as long as we remain in compliance with the related covenants.

As of June 29, 2024, we were in compliance with these covenants.

As of September 28, 2024, we were in compliance with these covenants.

Revolving Credit Facility

Our existing revolving credit facility (“Revolving Credit Facility”) with Wells Fargo, National Association, as administrative agent (“Agent”), and certain other financial institutions, matures on August 2, 2026, provided we remain in compliance with the related covenants.

As of June 29, 2024, we were in compliance with such covenants.

Our existing revolving credit facility (“Revolving Credit Facility”) with Wells Fargo Bank, National Association, as administrative agent (“Agent”), and certain other financial institutions, matures on August 2, 2026, provided we remain in compliance with the related covenants.

As of September 28, 2024, we were in compliance with such covenants.

Any outstanding borrowings under our Revolving Credit Facility bear interest at a rate per annum equal to (i) Adjusted Term Secured Overnight Financing Rate (“SOFR”) (calculated as SOFR plus 0.1 percent) plus a margin ranging from 1.25 percent to 1.75 percent, with the margin determined based upon average excess availability for the immediately preceding fiscal quarter for loans based on SOFR, or (ii) the Agent’s base rate (as that term is defined in the agreement for the Revolving Credit Facility) plus a margin ranging from 0.25 percent to 0.75 percent, with the margin based upon average excess availability for the immediately preceding fiscal quarter for loans based on the base rate.

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Our Revolving Credit Facility may be prepaid in whole or in part from time to time without penalty or premium but including all breakage costs incurred by any lender thereunder.

As of June 29, 2024, we had zero outstanding borrowings under our Revolving Credit Facility and available borrowing capacity was $346.5 million, net of undrawn letters of credit.

Excess availability, which includes availability under our Revolving Credit Facility plus cash and cash equivalents in qualified accounts, was $837.9 million.

As of September 28, 2024 and December 30, 2023, we had zero outstanding borrowings under our Revolving Credit Facility and available borrowing capacity was $346.5 million, net of undrawn letters of credit.

Excess availability, which includes availability under our Revolving Credit Facility plus cash and cash equivalents in qualified accounts, was $872.8 million as of September 28, 2024.

Finance Lease Obligations

Our finance lease obligations consist of leases for real estate, equipment, and vehicles totaling $291.3 million and $285.4 million as of June 29, 2024 and December 30, 2023, respectively.

Of the $291.3 million as of June 29, 2024, $243.4 million related to real estate and $48.0 million related to equipment.

Our finance lease obligations consist of leases for real estate, equipment, and vehicles totaling $293.8 million and $285.4 million as of September 28, 2024 and December 30, 2023, respectively.

Of the $293.8 million as of September 28, 2024, $243.1 million related to real estate and $50.8 million related to equipment.

Of the $285.4 million as of December 30, 2023, $243.2 million related to real estate and $42.3 million related to equipment.

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Operating Activities

Net cash provided by operating activities for the first six months of fiscal 2024 was $4.7 million compared to net cash provided of $153.1 million in the first six months of fiscal 2023.

The decrease in cash provided by operating activities during the first six months of fiscal 2024 was primarily a result of a decrease in net income for the current year period plus higher cash generated in the prior year period from changes in working capital, primarily inventory.

Net cash provided by operating activities for the first nine months of fiscal 2024 was $66.4 million compared to net cash provided of $230.7 million in the first nine months of fiscal 2023.

The decrease in cash provided by operating activities during the first nine months of fiscal 2024 was primarily a result of a $18.8 million decrease in net income for the current year period and a $146.9 million net decrease in operating assets and liabilities in the current year period, primarily inventory.

Investing Activities

Net cash used in investing activities for the first six months of fiscal 2024 was $11.6 million compared to net cash used of $13.9 million in the first six months of fiscal 2023.

The change was primarily due to amounts invested in property and equipment.

During the first six months of fiscal 2024, we also acquired $11.2 million of property and equipment through finance leases, compared to $3.4 million for the first six months of fiscal 2023.

Net cash used in investing activities for the first nine months of fiscal 2024 was $19.0 million compared to net cash used of $18.7 million in the first nine months of fiscal 2023.

In the current period, higher spending for property and equipment was

partially offset by proceeds from sales of assets.

During the first nine months of fiscal 2024, we also acquired $16.7 million of property and equipment through finance leases, compared to $11.3 million for the first nine months of fiscal 2023.

Financing Activities

Net cash used in financing activities totaled $23.4 million for the first six months of fiscal 2024 compared to net cash used of $19.8 million for the first six months of fiscal 2023.

The change in net cash used in financing activities was primarily due to an increase in cash used for repurchases of our common stock under our announced share repurchase programs.

During the first six months of fiscal 2024, we repurchased $14.5 million of our common stock compared to $11.6 million during the first six months of fiscal 2023.

Principal payments for finance leases were also higher in the current period.

Net cash used in financing activities totaled $42.9 million for the first nine months of fiscal 2024 compared to net cash used of $41.1 million for the first nine months of fiscal 2023.

The change in net cash used in financing activities was primarily due to an increase in cash used for payments for finance lease liabilities, offset by a decrease in cash used to repurchase shares to satisfy employee tax withholdings for vestings of restricted stock units.

During the first nine months of fiscal 2024, we repurchased $30.0 million of our common stock compared to $29.3 million during the first nine months of fiscal 2023.

Stock Repurchase Programs

During the first six months of fiscal 2024, we repurchased 152,403 shares of our common stock under our 2023 share repurchase program at an average price of $98.28, including broker commissions but excluding any excise tax that may be due on the repurchases, for a total of $15.0 million.

All of the share repurchase in fiscal 2024 occurred in the second quarter.

As of June 29, 2024, there remained $76.5 million repurchase capacity under this authorization.

Between June 29, 2024 and July 26, 2024, we purchased an additional 58,715 shares of our common stock for $6.0 million at an average price of $102.75 per share, including broker commissions but excluding any excise tax that may be due on the repurchases.

During the first nine months of fiscal 2024, we repurchased 297,951 shares of our common stock under our 2023 share repurchase program at an average price of $100.63, including broker commissions but excluding federal excise tax due on the repurchases, for a total of $30.0 million.

All of the share repurchase in fiscal 2024 occurred in the second and third fiscal quarters.

As of September 28, 2024, there remained $61.5 million repurchase capacity under this authorization.

Between September 28, 2024 and October 25, 2024, we purchased an additional 43,240 shares of our common stock for $4.6 million at an average price of $106.34 per share, including broker commissions but excluding federal excise tax due on the repurchases.

Under the 2023 share repurchase program, we may repurchase our common stock at any time or from time to time, without prior notice, subject to prevailing market conditions and other considerations.

Our repurchases may be made through a variety of methods, which may include open market purchases, privately negotiated transactions, accelerated share repurchase programs, tender offers or pursuant to a trading plan that may be adopted in accordance with the Securities and Exchange Commission Rule 10b5-1.

During the second quarter of fiscal 2023, we repurchased 141,705 shares of our common stock under the former 2021/2022 share repurchase program at an average price of $81.36 per share, including broker commissions but excluding any excise tax due on the repurchases.

No shares were repurchased during the first quarter of fiscal 2023.

During the first nine months of fiscal 2023, we repurchased 358,212 shares of our common stock under the former 2021/2022 share repurchase program at an average price of $83.52 per share, including broker commissions but excluding federal excise tax due on the repurchases.

The 2021/2022 share repurchase program was concluded during the fourth quarter of fiscal 2023.

The repurchase dollar amounts noted above are based on trade date activity, while the amounts reported on our consolidated statements of cash flows for share repurchases are based on settlement date activity.

Net Working Capital

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This metric differs from traditional working capital in that it excludes certain current assets and current liabilities that are reported in our consolidated balance sheets.

Net working capital of $451.7 million as of June 29, 2024, compared to $414.1 million as of December 30, 2023, increased on a net basis by approximately $37.6 million, as shown below:

June 29, 2024 December 30, 2023 July 1, 2023

Net working capital of $432.3 million as of September 28, 2024, compared to $414.1 million as of December 30, 2023, increased on a net basis by approximately $18.2 million, as shown below:

September 28, 2024 December 30, 2023 September 30, 2023

(In thousands)

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Accounts payable 186,319 157,931 202,256

$ 179,375 $ 157,931 $ 190,130

Net working capital $ 432,271 $ 414,117 $ 459,474

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The gross value of these assets is included in property and equipment, at cost on our unaudited condensed consolidated balance sheets.

For the first six months of fiscal 2024, we invested $11.9 million in long-lived assets primarily related to investments in our distribution facilities and to a lesser extent, upgrading our fleet.

We also added $11.2 million in new finance leases during the first six months of fiscal 2024 for new tractors and forklifts to enhance our logistical network.

For the first six months of fiscal 2023, we invested $14.0 million in cash investments in long-lived assets primarily related to investments in our distribution facilities and to a lesser extent, upgrading our fleet.

We also added $3.4 million in new finance leases during the second fiscal quarter of 2023 for new forklifts to enhance our logistical network.

For the first nine months of fiscal 2024, we invested $19.8 million in long-lived assets primarily related to investments in our distribution facilities and to a lesser extent, upgrading our fleet.

We also added $16.7 million in new finance leases during the first nine months of fiscal 2024 for new tractors and forklifts to enhance our logistics network.

For the first nine months of fiscal 2023, we invested $18.9 million in cash investments in long-lived assets primarily related to investments in our distribution facilities and to a lesser extent, upgrading our fleet.

We also added $11.3 million in new finance leases during the 2023 period for new forklifts to enhance our logistics network.

Critical Accounting Policies

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis