What changed in this filing

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Item 1A. Risk Factors

2026-02-24 compared with 2025-02-18 · 74 added, 67 removed, 333 unchanged (30% of the section changed)

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Historically, residential repair and remodeling activity has decreased in slow economic periods.

General economic weakness, inflation, elevated unemployment levels, mortgage delinquency and foreclosure rates, limitations in the availability of mortgage and home improvement financing, home equity value declines and lower housing turnover all limit consumers’ spending, particularly on discretionary items, and affect their confidence level leading to reduced spending on home improvement projects.

General economic weakness, inflation, elevated unemployment levels, economic and financial market impacts from government shutdowns, high consumer debt levels, mortgage delinquency and foreclosure rates, mortgage interest rate levels, limitations in the availability of mortgage and home improvement financing, home equity value declines and lower housing turnover all limit consumers’ spending, particularly on discretionary items, and affect their confidence level leading to reduced spending on home improvement projects.

Depressed activity levels in consumer spending for home improvement construction would adversely affect our business, liquidity, results of operations, and financial position.

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Our business is also dependent on the new residential construction market and, in particular, single family home construction.

Factors impacting the level of activity in the residential new construction markets include increases in interest rates, inflation, unemployment rates, housing inventory, high foreclosure rates and unsold/foreclosure inventory, availability of financing and mortgages, labor costs and availability, vacancy rates, local, state and federal government regulation (including mortgage interest deductibility and other tax laws), weakening in the U.S.

economy or of any regional or local economy in which we operate, availability of supplies, consumer demand and preferences, and shifts in populations away from the markets that we serve, all of which are beyond our control.

Factors impacting the level of activity in the residential new construction markets include increases in and the relative level of mortgage interest rates, inflation and unemployment rates, decreases in and the relative level of job and wage growth, levels of housing inventory, availability of affordable housing, high foreclosure rates and unsold/foreclosure inventory, availability of financing and mortgages, labor costs and availability, vacancy rates, local, state and federal government regulation (including mortgage interest deductibility and other tax laws), weakening in the U.S.

economy or of any regional or local economy in which we operate, availability of supplies, consumer confidence, demand and preferences, tightened availability or affordability of homeowner insurance coverage, lowering population growth, lower levels of immigration to the U.S., household formation or other unfavorable demographic changes, lack of available land in certain markets, and shifts in populations away from the markets that we serve, all of which are beyond our control.

Weakness in new residential construction due to any or all of these factors would have a material adverse effect on our business, financial condition, and operating results, and these factors may also result in fluctuations in our operating results.

As a result, our results for any historical period may not be indicative of results for any future period.

In addition, we extend credit to numerous customers who are generally susceptible to the same economic business risks that we are.

In addition, we extend credit to numerous customers who are generally susceptible to the same economic business risks that we are susceptible to.

Unfavorable housing market conditions could result in financial failures of one or more of our significant customers.

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Our customers and suppliers also continue to consolidate, and this consolidation could result in the loss of existing customers and suppliers to our competitors.

Furthermore, continued consolidation among our suppliers may makes it more difficult for us to negotiate favorable pricing, consignment arrangements, and discount programs with our suppliers, thereby resulting in reduced margins and profits.

Furthermore, continued consolidation among our suppliers may make it more difficult for us to negotiate favorable pricing, consignment arrangements, and discount programs with our suppliers, thereby resulting in reduced margins and profits.

We are subject to disintermediation risk.

As customers continue to consolidate or otherwise increase their purchasing power, they are better able, and may choose, to purchase products directly from the same suppliers that use us for distribution.

In addition, our suppliers may elect to distribute some or all of their products directly to end-customers in one or more markets.

This process of disintermediation can put us at

risk of losing business from a customer, or of losing entire product lines or categories, or distribution territories, from suppliers.

Disintermediation also may also adversely impact our ability to obtain favorable pricing from suppliers and optimize margins and revenue with respect to our customers.

In addition, our suppliers may choose to distribute some or all of their products directly to end-customers in one or more markets.

This process of disintermediation can put us at risk of losing business from a customer, or of losing entire product lines or categories, or distribution territories, from suppliers.

Disintermediation may also adversely impact our ability to obtain favorable pricing from suppliers and optimize margins and revenue with respect to our customers.

As a result, continued disintermediation could have a negative impact on our financial condition and operating results.

Our dependence on international suppliers and manufacturers for certain products exposes us to risks of new or increased tariffs and other risks that could affect our financial condition and expose us to certain additional risks .

Our dependence on international suppliers and manufacturers for certain products exposes us to risks of tariffs, including new or increased tariffs, changes in trade policies of the United States and other countries, and other risks that could affect our financial condition and expose us to certain additional risks .

Many of our suppliers and manufacturers are located outside of the United States.

Thus, compliance with federal laws and regulations regarding the importation of products, import taxes or costs, including new or increased tariffs, anti-dumping duties, countervailing duties, or similar duties, some of which could be applied retroactively, and modification to or withdrawal from free trade agreements or trade relationships, could increase the cost of the products that we distribute.

For example, the U.S.

has recently signaled its intention to change U.S.

trade policy, including potentially renegotiating or terminating existing trade agreements and leveraging tariffs.

In February 2025, the U.S.

imposed additional tariffs on imports from China and announced and subsequently paused implementation of tariffs on imports from Canada and Mexico.

These additional tariffs, as well as a government’s adoption of “buy national” policies or retaliation by another government against such tariffs or policies may have introduced significant uncertainty into the market and may affect the prices of and supply of the products available to us.

Thus, compliance with federal laws and regulations regarding the importation of products, import taxes or costs, including new or increased tariffs, anti-dumping duties, countervailing duties, or similar import duties, some of which could be applied retroactively, and modification to or withdrawal from free trade agreements or trade relationships, could increase the cost of the products that we distribute.

For example, certain imported materials and products that we distribute and use in our business have become subject to new and increased tariffs imposed by the United States government and may in the future become subject to additional tariffs.

These new and increased tariffs, as well as countervailing measures instituted by other governments in response to, or in anticipation of, such tariffs or policies have introduced, and may continue to introduce, significant uncertainty into the market and to affect the prices of and supply of the products available to us.

In addition, quotas, embargoes, sanctions, safeguards, and customs restrictions, as well as foreign labor strikes, work stoppages, or boycotts, could reduce the supply of the products available to us.

Geopolitical events, including war and terrorism, could also cause a reduction in the supply or increase the costs of the products available to us.

Geopolitical events, including war, civil and political unrest and terrorism, could also cause a reduction in the supply or increase the costs of the products available to us.

If we become subject to a reduction in available supply of imported products and we are unable to mitigate that reduction through alternative sources, or if the costs of our imported products increase and we are not able to pass along those increased costs to our customers, then our business, financial condition, and results of operations could be adversely affected.

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As cyberattacks become more sophisticated, we may incur significant costs to strengthen our systems from outside intrusions, and/or obtain insurance coverage related to the threat of such attacks.

Additionally, our business is reliant upon information technology systems to, among other things, manage and route our sales calls, manage inventories and accounts receivable, make purchasing decisions, monitor our results of operations, place orders with our vendors and process orders from our customers.

These systems may be vulnerable to natural disasters, telecommunications or equipment failures, power outages and similar events, employee errors or to intentional acts of misconduct, such as security breaches or cyberattacks.

In addition, we are in the early stages of integrating artificial intelligence (“AI”) into our business to support our business operations.

Our development and adoption of AI and other new technologies may present new technological threats, vulnerabilities and uncertainties, which may expose us to legal, reputational and financial harm.

Our information technology systems may be vulnerable to natural disasters, telecommunications or equipment failures, power outages and similar events, employee errors or to intentional acts of misconduct, such as security breaches or cyberattacks.

The occurrence of any of these events or acts, or any other unanticipated problems, could result in damage to or the unavailability of these systems.

Such damage or unavailability could, despite any existing disaster recovery and business continuity arrangements, interrupt the availability of one or more of our information technology systems.

We have from time to time experienced such disruptions, and while such disruptions did not materially affect our business, they may occur in the future.

We have experienced from time to time such disruptions, and while such disruptions did not materially affect our business, they may occur in the future.

Future disruptions in these systems could materially impact our ability to buy and sell our products, as well as generally operate our business, which could reduce our revenue.

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Using temporary or contract labor typically requires higher cost, and temporary or contract labor may be less productive than full-time associates.

In addition, a shortage of qualified drivers could require us to increase driver

compensation, let trucks sit idle, utilize third-party freight more so than normal, utilize less experienced drivers, or face difficulty meeting customer demands, all of which could adversely affect our growth and profitability.

In addition, a shortage of qualified drivers could require us to increase driver compensation, let trucks sit idle, utilize third-party freight more so than normal, utilize less experienced drivers, or face difficulty meeting customer demands, all of which could adversely affect our growth and profitability.

Furthermore, our success is highly dependent on the continued services of our management team.

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We may be unsuccessful in making and integrating mergers, acquisitions and investments.

As part of our overall strategy, we may make acquisitions or investments in the future.

As part of our overall strategy, we have made acquisitions, and we may make acquisitions or investments in the future.

Acquisitions and investments involve significant risks and uncertainties, including uncertainties as to the future financial performance of the acquired business, the achievement of expected synergies, or exposure to unforeseen liabilities of acquired companies.

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Disruptions and deficiencies associated with integrating an acquired business could also lead to increased costs, order and delivery errors, inventory and billing errors, the loss of employees, or the loss of customers, suppliers, or products either overall or in certain markets, which could adversely affect our financial condition, operating results, and cash flows.

In addition, if in the future the performance of an acquired business varies from our projections or assumptions or estimates about future profitability of an acquired business change, the estimated fair value of an acquired business could change materially and could result in an impairment of goodwill or other intangible assets.

Any such impairment could adversely affect our financial condition and operating results in any given period.

We may incur business disruptions resulting from a variety of possible causes.

While we maintain insurance covering our facilities and equipment, including business interruption insurance, the operations at our distribution facilities may be interrupted or impaired by various operating risks, including, but not limited to, risks associated with catastrophic events, such as war, fires, floods, earthquakes, explosions, natural disasters, severe weather, including hurricanes, tornados and droughts, whether a result of climate change or otherwise, pandemics, or other similar occurrences, interruptions in the delivery of products via railroad or other inbound transportation means, adverse government regulations, civil unrest, condemnation, equipment breakdowns or failures, prolonged power failures, unscheduled maintenance outages, information system disruptions or failures due to any number of causes, violations of our permit requirements or revocation of permits, releases of pollutants and hazardous substances to air, soil, surface water or ground water;

While we maintain insurance covering our facilities and equipment, including business interruption insurance, the operations at our distribution facilities may be interrupted or impaired by various operating risks, including, but not limited to, risks associated with catastrophic events, such as war, fires, floods, earthquakes, explosions, natural disasters, severe weather, including hurricanes, tornados and droughts, whether a result of climate change or otherwise, pandemics, or other public health crises, or other similar occurrences, interruptions in the delivery of products via railroad or other inbound transportation means, adverse government regulations, civil or political unrest, terrorist acts, condemnation, equipment breakdowns or failures, prolonged power failures, unscheduled maintenance outages, information system disruptions or failures due to any number of causes, violations of our permit requirements or revocation of permits, releases of pollutants and hazardous substances to air, soil, surface water or ground water;

disruptions in transportation infrastructure, including roads, bridges, railroad tracks and tunnels, shortages of equipment or spare parts, and labor disputes and shortages.

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We could incur uninsured losses and liabilities arising from such events, including damage to our reputation, and/or suffer material losses in operational capacity, which could have a material adverse impact on our business, financial condition, and results of operations.

In addition, war, terrorism, geopolitical uncertainties, and public health issues could cause damage or disruption to the global economy, and thus could have a material adverse effect on our financial condition, operating results and cash flows, our suppliers and our customers.

In addition, war, terrorism, civil or political unrest, geopolitical uncertainties, and public health issues could cause damage or disruption to the economy, and thus could have a material adverse effect on our financial condition, operating results and cash flows, our suppliers and our customers.

We are exposed to product liability and other claims and legal proceedings related to our business and the products we distribute, which may exceed the coverage of our insurance .

The building products industry has been subject to personal injury and property damage claims arising from alleged exposure to raw materials contained in building products as well as claims for incidents of catastrophic loss, such as building fires.

As a distributor of building materials, we face an inherent risk of exposure to product liability claims in the event that the use of the products we have distributed in the past or may in the future distribute is alleged to have resulted in economic loss, personal injury or property damage, or violated environmental, health or safety, or other laws.

As a distributor of building materials, we face an inherent risk of exposure to product liability claims in the event that the use of the

products we have distributed in the past or may in the future distribute is alleged to have resulted in economic loss, personal injury or property damage, or violated environmental, health or safety, or other laws.

Such product liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product, negligence, strict liability, or a breach of warranties.

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Since we do not have direct control over the quality of products that are manufactured or supplied to us by third parties, we are particularly vulnerable to risks relating to the quality of such products.

We are also from time to time subject to casualty, contract, tort, and other claims relating to our business, the products we have distributed in the past or may in the future distribute, and the services we have provided in the past or may in the future provide,

either directly or through third parties.

We are also subject from time to time to casualty, contract, tort, and other claims relating to our business, the products we have distributed in the past or may in the future distribute, and the services we have provided in the past or may in the future provide, either directly or through third parties.

In addition, operating hazards, such as delivering and unloading products, operating large machinery and driving hazards, which are inherent in our business and some of which may be outside of our control, can cause personal injury and loss of life, damage to or destruction of property and equipment and environmental damage.

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Any significant uninsured liability may require us to pay substantial amounts.

There can be no assurance that any current or future claims will not adversely affect our financial position, cash flows, or results of operations.

There can be no assurance that any current or future claims will not adversely affect our financial position, cash flow, or results of operations.

Our business operations and financial results could suffer from the impacts of climate change .

Climate change, and its effects on weather patterns, the frequency and severity of weather-related events, and temperatures, could adversely impact our business.

Extreme weather and temperatures could affect the availability of raw materials for the products that we distribute, the ability of our suppliers to deliver products to our distribution facilities and our ability to deliver those products to our customers.

They could also result in lost production, supply chain disruption and increased transportation costs.

Extreme weather events and temperatures could affect the availability of raw materials for the products that we distribute, the ability of our suppliers to deliver products to our distribution facilities and our ability to deliver those products to our customers.

They could also result in lost production, supply chain disruption, increased transportation costs, and damage to or destruction of our distribution or warehouse facilities and inventory.

Severe weather events and climate change could also delay home construction and negatively impact the demand for new homes in affected areas.

Unpredictable weather and climate changes could also cause the price of the products we buy and sell to fluctuate significantly, including during and as a result of prolonged periods of heavy rain or drought, fires or other unpredictable weather events.

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Wage increases or work stoppages by our unionized employees may reduce our results of operations .

As of December 28, 2024, we employed approximately 2,000 associates and less than one percent of our associates are employed on a part-time basis.

As of January 3, 2026, we employed approximately 2,160 associates and less than one percent of our associates are employed on a part-time basis.

Approximately 21 percent of our associates are represented by various local labor unions with terms and conditions of employment governed by Collective Bargaining Agreements (“CBAs”).

Six CBAs covering approximately six percent of our associates are up for renewal in fiscal year 2025, of which one is currently in the renegotiation process.

Five CBAs covering approximately four percent of our associates are up for renewal in fiscal year 2026, of which one is currently in the renegotiation process.

We expect to renegotiate the remainder before their renewal dates.

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In addition, we may become subject to material wage increases, or additional work rules imposed by agreements with labor unions.

The foregoing could increase our selling, general, and administrative expenses in absolute terms and/or as a percentage of net sales.

The foregoing could increase our operating expenses in absolute terms and/or as a percentage of net sales.

In addition, work stoppages or other labor disturbances may occur in the future, which could adversely impact our net sales and/or selling, general, and administrative expenses.

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Department of Labor and Federal Trade Commission, regulations issued by the SEC, accounting standards issued by the Financial Accounting Standards Board (“FASB”) or similar entities, and state and local zoning restrictions, building codes and contractors’ licensing regulations.

More burdensome regulatory requirements in these or other areas may increase our general and administrative costs

and adversely affect our financial condition, operating results, and cash flows.

Moreover, failure to comply with the regulatory requirements applicable to our business could expose us to litigation and substantial fines and penalties that could adversely affect our financial condition, operating results, and cash flows.

More burdensome regulatory requirements in these or other areas may increase our general and administrative costs and adversely affect our financial condition, operating results, and cash flows.

Our transportation operations, upon which we depend to distribute products from our distribution centers, are subject to the regulatory jurisdiction of the DOT and the FMCSA, which have broad administrative powers with respect to our transportation operations.

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The effect of epidemics, global pandemics or other widespread public health crises and governmental rules and regulations could significantly disrupt our operations or those of our customers or suppliers.

If an epidemic, global pandemic, or other widespread public health crises disrupts the worldwide economy or if similar widespread disease outbreaks occur in the future, our business, financial condition and results of operations could be negatively affected to the extent such event harms the economy or regions in which we operate.

If an epidemic, global pandemic, or other widespread public health crisis disrupts the worldwide economy or if similar widespread disease outbreaks occur in the future, our business, financial condition and results of operations could be negatively affected to the extent such event harms the economy or regions in which we operate.

In particular, any governmental imposition of mandatory or voluntary closures in areas where our manufacturing facilities, suppliers or customers are located, in response to any such disease outbreak, epidemic, pandemic or health crisis, could severely disrupt our operations.

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If our quarterly financial results or our predictions of future financial results fail to meet the expectations of securities analysts and investors, our stock price could be negatively affected.

Any volatility in our quarterly financial results may make it more difficult for us to raise capital in the future or pursue

acquisitions that involve issuances of our stock.

Any volatility in our quarterly financial results may make it more difficult for us to raise capital in the future or pursue acquisitions that involve issuances of our stock.

In addition, because of this variability, our operating results for prior periods may not be effective predictors of future performance.

Factors associated with our industry, the operation of our business, and the markets for our products may cause our quarterly financial results to fluctuate, including:

• general economic conditions, including but not limited to housing starts, construction labor shortages, repair and remodel activity and commercial construction, foreclosure rates, interest rates, unemployment rates, and mortgage availability and pricing, as well as other consumer financing mechanisms, that ultimately affect demand for our products;

• supply chain disruptions, including those caused by the spread of contagious illness and geopolitical risks;

• general economic conditions, including but not limited to housing starts, construction labor shortages, repair and remodel activity and commercial construction, foreclosure rates, interest rates, unemployment rates and job and wage growth rates, consumer debt levels, tightened availability or affordability of homeowner insurance coverage, and mortgage availability and pricing, as well as other consumer financing mechanisms, that ultimately affect demand for our products;

• supply chain disruptions, including those caused by the spread of contagious illness and other public health crises and geopolitical risks, such as acts of war or terrorism or political or civil unrest;

• the highly competitive nature of our industry;

• the commodity nature of many of our products and their price movements, which are driven largely by capacity utilization rates and industry cycles that affect supply and demand;

• protectionist trade policies and new or increased import tariffs;

• the cessation or reduction of supplier incentive programs, such as supplier rebates and/or deviation programs, and/or our inability to collect supplier incentives due to us;

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• adverse customs and tariff rulings including those relating to anti-dumping, countervailing duty, or circumvention investigations;

• protectionist trade policies and new or increased import tariffs;

• labor disruptions, shortages of skilled and technical labor, or increased labor costs;

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• our ability to successfully complete potential acquisitions, achieve expected synergies from acquisitions, or efficiently integrate acquired operations;

• disruption in our information technology systems;

• security breaches or disruption in our information technology systems and the risks relating to our use of artificial intelligence;

• federal laws and regulations regarding the importation of products may cause us to incur significant costs to comply with such laws and regulations in the future;

• federal, state, local, and other laws and regulations regarding transportation, worker safety, employment regulations and other applicable laws and regulations to which we are subject;

• significant maintenance issues or failures with respect to our tractors, trailers, forklifts, and other major equipment;

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If we fail to meet or exceed such expectations for these or any other reasons, the market price of our shares could fall substantially and we could face costly lawsuits, including securities class action suits.

We establish insurance-related deductible/retention liabilities based on historical loss development factors, which could lead to adjustments in the future based on actual development experience.

We retain a significant portion of the accident risk under our vehicle liability and workers’ compensation insurance programs;

and we are self-insured for health insurance, the exposure of which is limited by stop-loss coverage.

Our self-insurance accruals are based on actuarial estimated, undiscounted cost of claims, which includes claims incurred but not reported.

While we believe our estimation processes are well designed, every estimation process is inherently subject to limitations.

Fluctuations in the frequency or amount of claims make it difficult to precisely predict the ultimate cost of claims.

The actual cost of claims can be different than the historical selected loss development factors because of safety performance, payment patterns, and settlement patterns.

Our level of indebtedness could limit our financial and operating activities and adversely affect our ability to incur additional debt to fund future needs.

As of December 28, 2024, we had no outstanding debt under our revolving credit facility, and approximately $300.0 million of debt outstanding under our senior secured notes.

Additionally, as of December 28, 2024, outstanding commitments under our finance leases were approximately $292.5 million.

As of January 3, 2026, we had no outstanding debt under our revolving credit facility, and approximately $300.0 million of debt outstanding under our senior secured notes.

Additionally, as of January 3, 2026, outstanding commitments under our finance leases were approximately $321.3 million.

Our level of indebtedness could still have considerable consequences to our financial condition and operating results.

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In addition, we may be unable to renew the leases at the end of their terms.

If we close a distribution center that is subject to a non-cancelable lease, we would remain committed to perform our obligations under the applicable lease, which would include, among other things, payment of the base rent, insurance, taxes, and

other expenses on the leased property for the balance of the lease term.

Management may explore offsets to remaining obligations, such as subleasing opportunities or negotiated lease terminations, but there can be no assurance that we can offset remaining obligations on commercially reasonable terms or at all.

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If the costs of fuel, third-party freight or other energy prices increase or availability of third-party freight providers is reduced, our results of operations could be adversely affected .

Petroleum and energy prices and availability of petroleum products are subject to political, geopolitical, economic, and market factors that are outside our control.

Political events in petroleum-producing regions as well as hurricanes and other weather-related events or natural disasters may cause the price of fuel to increase or the availability of fuel to decrease.

Petroleum and energy prices and availability of petroleum products are subject to political, geopolitical, economic, and market factors that are outside our control, including actions by the Organization of the Petroleum Exporting Countries, or OPEC, and other oil and gas producers.

Political events in petroleum-producing regions such as war and political and civil unrest as well as regional production patterns, limits on refining capacities, natural disasters, environmental concerns, including the impact of legislation and regulatory efforts to limit greenhouse gas emissions, public health emergencies, and hurricanes and other weather-related events or natural disasters may cause the price of fuel to increase or the availability of fuel to decrease.

Within our business units, we deliver products to our customers primarily via our fleet of trucks, which we fuel both onsite and through street fuel programs.

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If shortages occur in the supply of necessary petroleum products and we are not able to pass along the full impact of increased petroleum prices to our customers or otherwise protect ourselves by entering into forward purchase contracts, then our results of operations would be adversely affected.

We establish insurance-related deductible/retention liabilities based on historical loss development factors, which could lead to adjustments in the future based on actual development experience.

We retain a significant portion of the accident risk under our vehicle liability and workers’ compensation insurance programs;

and we are self-insured for health insurance, the exposure of which is limited by stop-loss coverage.

Our self-insurance accruals are based on actuarial estimated, undiscounted cost of claims, which includes claims incurred but not reported.

While we believe our estimation processes are well designed, every estimation process is inherently subject to limitations.

Fluctuations in the frequency or amount of claims make it difficult to precisely predict the ultimate cost of claims.

The actual cost of claims can be different than the historical selected loss development factors because of safety performance, payment patterns, and settlement patterns.

The value of our deferred tax assets could become impaired, which could materially and adversely affect our operating results.

As of December 28, 2024, we had $50.6 million in net deferred tax assets.

As of January 3, 2026, we had $50.6 million in net deferred tax assets.

These deferred tax assets include temporary differences arising from such items as property and equipment, accrued compensation, and accounting reserves related to inventory and other items in conjunction with net state operating loss carryovers that can be used to offset taxable income in future periods and reduce income taxes payable in those future periods.

Each quarter, we determine the probability of the realization of deferred tax assets, using significant judgments and estimates with respect to, among other things, historical operating results, expectations of future earnings, and tax planning strategies.

For example, we were required to evaluate and maintain reasonable valuation allowances against our remaining state net operating loss carryforwards against our U.S.

deferred tax assets as of December 28, 2024.

For example, we were required to evaluate and maintain reasonable valuation allowances against our remaining state net operating loss carryforwards included within our U.S.

deferred tax assets as of January 3, 2026.

These valuation allowances are calculated based on the probability that we will not realize taxable income in the states in which we carry net operating loss carryforwards in a time suitable to take advantage of them.

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Such a reduction could result in material non-cash expenses in the period in which the valuation allowance is adjusted and could have a material adverse effect on our results of operations .

Our expected annual effective tax rate could be volatile and materially change as a result of changes in the mix of earnings and other factors.

Our overall effective tax rate is equal to our total income tax expense, also referred to as provision for income taxes, as a percentage of our income or loss before provision for income taxes.

Our expected annual effective income tax rate could be volatile and materially change as a result of changes in the mix of earnings and other factors.

Our overall effective income tax rate is equal to our total income tax expense, also referred to as provision for income taxes, as a percentage of our income or loss before provision for income taxes.

However, tax expenses and benefits are determined separately for each tax paying entity or group of entities that is consolidated for tax purposes in each jurisdiction.

Losses in certain jurisdictions may provide no current financial statement tax benefit.

As a result, changes in the mix of profits and losses between jurisdictions, among other factors, could have a significant impact on our overall effective tax rate.

New and unforeseen changes in tax legislation may impact our effective tax rate in future periods, both on a federal and state level, which may have an impact on our net income and result in material non-cash expenses in the relevant period.

As a result, changes in the mix of profits and losses between jurisdictions, among other factors, could have a significant impact on our overall effective income tax rate.

New and unforeseen changes in tax legislation may impact our effective income tax rate in future periods, both on a federal and state level, which may have an impact on our net income and result in material non-cash expenses in the relevant period.

Costs and liabilities related to our participation in multi-employer pension plans could increase .

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Some of these plans are significantly underfunded and may require increased contributions in the future.

The amount of any increase or decrease in our required contributions to these multi-employer pension plans will depend upon the outcome of collective bargaining, actions taken by trustees who manage the plan, governmental regulations, the actual return on assets held in the plan, the continued viability and contributions of other employers which contribute to the plan, and the potential payment of a withdrawal liability, among other factors.

The amount of any increase or decrease in our required contributions to these multi-employer pension plans will depend upon the

outcome of collective bargaining, actions taken by trustees who manage the plan, governmental regulations, the actual return on assets held in the plan, the continued viability and contributions of other employers which contribute to the plan, and the potential payment of a withdrawal liability, among other factors.

Our cash flows and capital resources may be insufficient to make required payments on our indebtedness or future indebtedness .

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Although we may elect in the future to take certain actions to reduce interest rate volatility in connection with our variable rate borrowings, we cannot provide assurances that we will be able to do so or that those actions will be effective.

If we determine that our goodwill has become impaired, we may incur impairment charges, which would negatively impact our financial condition and operating results.

At January 3, 2026, we had approximately $67.2 million of goodwill on our consolidated balance sheet.

Goodwill represents the excess of cost over the fair value of net assets acquired in business combinations.

We assess potential impairment of our goodwill annually (as of the first day of our fiscal fourth quarter), or more frequently if an event or circumstance indicates an impairment loss may have been incurred.

Impairment may result from significant changes in the manner or use of the acquired assets, in connection with the sale, spin off or other divestiture of part or parts of our business, a change in reporting units in connection with a reorganization of our reporting structure, negative industry or economic trends and/or significant underperformance relative to historic or projected operating results.

Based on the results of our most recent annual assessment, which was quantitative, our goodwill was not impaired.

However, the results of this most recent annual assessment indicated that the estimated fair value of the enterprise exceeded its carrying value by approximately 10% as of the assessment date.

The estimation of the fair value of the enterprise was based in part on a discounted cash flows model that utilizes key inputs such as forecasted gross profit and our cost of capital.

Given that the estimated fair value of the enterprise exceeded its carrying value by only 10% as of the most recent assessment date, our goodwill could be impaired in future reporting periods if any one or more of the inputs into the discounted cash flows model, including the aforementioned key inputs, do not meet forecasted expectations .

Changes in, or interpretation of, accounting principles could result in unfavorable accounting changes .

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• actual or anticipated fluctuations in our operating results;

• announcements by us or our competitors of significant acquisitions, dispositions or expansion plans;

• announcements by our competitors, our suppliers, or our customers of significant acquisitions, dispositions or expansion plans;

• market conditions in our industry;

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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-K

Item 1A. Risk Factors