What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-06-05 compared with 2025-03-06 · 128 added, 91 removed, 214 unchanged (51% of the section changed)

1 unchanged sentence

Cracker Barrel Old Country Store, Inc., and its subsidiaries (collectively, the “Company,” “our” or “we”) are principally engaged in the operation and development in the United States of the Cracker Barrel Old Country Store Ò (“Cracker Barrel”) concept.

As of January 31, 2025, we operated 657 Cracker Barrel stores in 43 states and 69 Maple Street Biscuit Company (“MSBC”) locations in ten states.

As of May 02, 2025, we operated 658 Cracker Barrel stores in 43 states and 70 Maple Street Biscuit Company (“MSBC”) locations in ten states.

All dollar amounts reported or discussed in this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) are shown in thousands, except per share amounts and certain statistical information (e.g., number of stores).

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disruptions to our restaurant or retail supply chain;

effects of changes in international, national, regional and local economic and market conditions (such as the imposition of trade barriers or other changes in trade policy) on our business;

our ability to manage retail inventory and merchandise mix;

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driving relevancy, delivering food and experiences guests love, and growing profitability.

We believe there are significant challenges in the macroeconomic outlook for the coming quarters, including continued volatility of inflation and interest rates, high consumer debt levels and lower savings rates, as well as the potential uncertainty associated with the geopolitical environment, among other factors.

However, despite these challenges, we remain focused on delivering long-term growth and returns for shareholders.

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upgrading training and development programs and tools and simplifying job roles and utilizing technology to improve the employee experience.

Trade Policy and Tariffs

We have incurred additional costs on imported retail items as a result of recently imposed tariffs and changes in trade policy.

Approximately one-third of our retail products are sourced directly from vendors in China, and we also have indirect exposure related to our domestically sourced retail products originating from China.

Although trade policies and tariff rates continue to fluctuate, we currently project a net impact of approximately $5,000 to our retail margins in the fourth quarter of 2025.

However, any further changes in tariff levels or trade policy could materially affect our results of operations and financial condition, and the ongoing uncertainty introduces additional volatility and risk to our operations and financial condition and may affect consumer demand in ways that are difficult to predict.

We are taking certain measures to offset the adverse impact of tariffs, which include negotiations with vendors, alternative sourcing and pricing.

Additionally, we have been in the process of updating our retail strategy and we are accelerating initiatives from this update such as rationalizing stock keeping units (“SKUs”).

reducing seasonal themes and adjusting our seasonal promotional strategy to mitigate the impact of tariffs.

However, these measures may not be sufficient to fully offset the impact of tariffs and changing trade policy.

Key Performance Indicators

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Quarter Ended

Six Months Ended

Nine Months Ended

Total revenue

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Impairment and store closing costs

Operating income

Goodwill impairment

Operating income (loss)

Interest expense, net

Income before income taxes

Provision for income taxes (income tax benefit)

Income (loss) before income taxes

Income tax benefit

Net income (loss)

The following table sets forth the change in the number of units in operation for the specified periods:

Quarter Ended

Six Months Ended

Nine Months Ended

Net change in units:

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Total Revenue

Total revenue for the second quarter and first six months of 2025 increased 1.5% and 2.0%, respectively, as compared to the same periods in the prior year.

Total revenue for the third quarter and first nine months of 2025 increased 0.5% and 1.5%, respectively, as compared to the same periods in the prior year.

The following table highlights the key components of revenue for the specified periods:

Quarter Ended

Six Months Ended

Nine Months Ended

Revenue in dollars:

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Comparable restaurant guest traffic decrease (2) :

(1) Average unit volumes include sales of all stores except for MSBC.

(1) Average store volumes include sales of all stores except for MSBC.

(2) Comparable store sales and traffic consist of sales of stores open at least six full quarters at the beginning of the period and are measured on comparable calendar weeks.

Comparable store sales and traffic exclude MSBC.

For the second quarter and first six months of 2025, our comparable store restaurant sales increases resulted primarily from the average check increases partially offset by the guest traffic decreases.

For the second quarter and first six months of 2025, the average check increases included average menu price increases of 6.0% and 5.4%, respectively.

For the third quarter and first nine months of 2025, our comparable store restaurant sales increases resulted primarily from the average check increases partially offset by the guest traffic decreases.

For the third quarter and first nine months of 2025, the average check increases included average menu price increases of 4.9% and 5.2%, respectively.

Our retail sales are made substantially to our restaurant guests.

For the second quarter of 2025, our comparable store retail sales increase resulted primarily from strong performance in the apparel merchandise category partially offset by the guest traffic decrease.

For the first six months of 2025, our comparable store retail sales decrease resulted primarily from the guest traffic decrease.

For the third quarter and first nine months of 2025, our comparable store retail sales decreases resulted primarily from the guest traffic decreases.

The decreases in guest traffic are primarily the result of lower consumer demand arising from multiple macroeconomic factors, including inflationary pressures, higher consumer debt levels and lower savings rates as well as the potential uncertainty associated with the geopolitical environment and global trade.

Cost of Goods Sold (Exclusive of Depreciation and Rent)

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Quarter Ended

Six Months Ended

Nine Months Ended

Cost of Goods Sold in dollars:

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Cost of Goods Sold by percentage of revenue:

The decreases in restaurant cost of goods sold as a percentage of restaurant revenue for the second quarter and first six months of 2025 as compared to the same periods in the prior year were primarily the result of our menu price increases and a shift to lower cost menu items.

Commodity inflation was 1.3% and 1.6%, respectively, in the second quarter and first six months of 2025.

We presently expect the rate of commodity inflation to be approximately 2% to 3% in 2025.

The increase in retail cost of goods sold as a percentage of retail revenue in the second quarter of 2025 as compared to the same period in the prior year resulted primarily from higher markdowns partially offset by higher vendor allowances and higher initial margin.

Second Quarter

Increase (Decrease)

The increase in restaurant cost of goods sold as a percentage of restaurant revenue for the third quarter as compared to the same period in the prior year was primarily driven by menu mix and commodity inflation partially offset by menu pricing.

The decrease in restaurant cost of goods sold as a percentage of restaurant revenue for the first nine months of 2025 as compared to the same period in the prior year was primarily the result of our menu pricing and lower food waste.

Lower food waste accounted for a decrease of 0.1% in restaurant cost of goods sold as a percentage of restaurant revenue for the first nine months of 2025 as compared to the same period in the prior year.

Commodity inflation was 2.9% and 2.0%, respectively, in the third quarter and first nine months of 2025.

We presently expect the rate of commodity inflation to be in the mid 2% range in 2025.

The decrease in retail cost of goods sold as a percentage of retail revenue in the third quarter of 2025 as compared to the same period in the prior year resulted primarily from higher vendor allowances partially offset by higher markdowns and discounts.

Third Quarter

(Decrease) Increase

as a Percentage of

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Vendor allowances

Higher initial margin

The decrease in retail cost of goods sold as a percentage of retail revenue in the first six months of 2025 as compared to the same period in the prior year resulted primarily from higher vendor allowances and higher initial margin partially offset by higher markdowns.

First Six Months

Markdowns and discounts

The decrease in retail cost of goods sold as a percentage of retail revenue in the first nine months of 2025 as compared to the same period in the prior year resulted primarily from higher vendor allowances partially offset by higher markdowns.

First Nine Months

(Decrease) Increase

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Vendor allowances

Higher initial margin

Labor and Related Expenses

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Quarter Ended

Six Months Ended

Nine Months Ended

Labor and related expenses

This percentage change for the second quarter of 2025 as compared to the same period in the prior year resulted primarily from the following:

Second Quarter

First Six Months

(Decrease) Increase

This percentage change for the third quarter of 2025 as compared to the same period in the prior year resulted primarily from the following:

Third Quarter

(Decrease) Increase

as a Percentage of

Total Revenue

Store hourly labor

Store management compensation

Employee health care expense

First Nine Months

(Decrease) Increase

as a Percentage of

Total Revenue

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Store bonus expense

The decreases in store hourly labor and store management compensation as a percentage of total revenue for the second quarter and first six months of 2025 as compared to the same periods in the prior year resulted primarily from menu price increases being higher than wage inflation.

Additionally, store hourly labor benefited from improved productivity.

We presently expect the rate of wage inflation to be approximately 3% in 2025.

The increases in other wages as a percentage of total revenue for the second quarter and first six months of 2025 as compared to the same periods in the prior year resulted primarily from revisions in our employee benefits policy that resulted in a reduction in other wages expense in the second quarter and first six months of 2024.

The increases in store bonus expense as a percentage of total revenue for the second quarter and first six months of 2025 as compared to the same periods in the prior year resulted from better performance against financial objectives in 2025 as compared to the prior year.

The decreases in store hourly labor and store management compensation as a percentage of total revenue for the third quarter and first nine months of 2025 as compared to the same periods in the prior year resulted primarily from menu price increases exceeding wage inflation.

Additionally, store hourly labor benefited from improved productivity, driven by our back-of-the-house optimization initiatives.

We presently expect the rate of wage inflation to be in the mid 2% range in 2025.

The increase in employee health care expense as a percentage of total revenue for the third quarter of 2025 as compared to the same period in the prior year resulted primarily from unfavorable claim experience as well as an increase in medical claim reserves driven by higher enrollment.

The increase in other wages as a percentage of total revenue for the first nine months of 2025 as compared to the same period in the prior year resulted primarily from revisions in our employee benefits policy that resulted in a reduction in other wages expense in the first nine months of 2024.

The increase in store bonus expense as a percentage of total revenue for the first nine months of 2025 as compared to the same period in the prior year resulted from better performance against financial objectives in 2025 as compared to the prior year.

Other Store Operating Expenses

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Quarter Ended

Six Months Ended

Nine Months Ended

Other store operating expenses

This percentage change for the second quarter of 2025 as compared to the same period in the prior year resulted primarily from higher store occupancy costs.

The increase in store occupancy costs as a percentage of total revenue for the second quarter of 2025 as compared to the same period in the prior year resulted primarily from higher depreciation expense and higher maintenance expense.

The increase in depreciation expense resulted primarily from higher capital expenditures.

The increase in maintenance expense resulted primarily from increased spending related to strategic initiatives and preventative maintenance services.

This percentage change for the first six months of 2025 as compared to the same period in the prior year resulted primarily from the following:

First Six Months

This percentage change for the third quarter of 2025 as compared to the same period in the prior year resulted primarily from the following:

Third Quarter

Increase as a Percentage

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Store occupancy costs

The increase in store occupancy costs as a percentage of total revenue for the third quarter of 2025 as compared to the same period in the prior year resulted primarily from higher depreciation expense due to higher capital expenditures.

The increase in advertising expense as a percentage of total revenue for the third quarter of 2025 as compared to the same period in the prior year period resulted primarily from higher media spending and costs associated with our customer loyalty program, Cracker Barrel Rewards

This percentage change for the first nine months of 2025 as compared to the same period in the prior year resulted primarily from the following:

First Nine Months

Increase as a Percentage

of Total Revenue

Store occupancy costs

Other store expenses

The increase in store occupancy costs as a percentage of total revenue for the first six months of 2025 as compared to the same period in the prior year period resulted primarily from higher depreciation expense and higher maintenance expense partially offset by lower utilities expense.

The increase in depreciation expense resulted primarily from higher capital expenditures.

The increase in maintenance expenses resulted primarily from increased spending related to strategic initiatives and preventative maintenance services.

The decrease in utilities expense resulted primarily from lower electricity usage.

The increase in other store operating expense as a percentage of total revenue for the first six months of 2025 as compared to the same period in the prior year resulted primarily from higher conference expense due to a biennial district manager conference held in the first quarter of 2025, costs associated with our off-premise business and hurricane-related expenses incurred in the first quarter of 2025.

The increase in store occupancy costs as a percentage of total revenue for the first nine months of 2025 as compared to the same period in the prior year period resulted primarily from higher depreciation expense due to higher capital expenditures.

The increase in other store operating expense as a percentage of total revenue for the first nine months of 2025 as compared to the same period in the prior year resulted primarily from higher conference expense due to a biennial district manager conference held in the first quarter of 2025, costs associated with our off-premise business and hurricane-related expenses incurred in the first quarter of 2025.

General and Administrative Expenses

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Quarter Ended

Six Months Ended

Nine Months Ended

General and administrative expenses

This percentage change for the second quarter and first six months of 2025 as compared to the same periods in the prior year resulted primarily from higher professional fees related to legal fees and proxy contest expenses.

Additionally, the Company incurred higher costs of approximately $2,300 associated with the Company’s strategic transformation plan for the first six months of 2025 as compared to the same period in the prior year.

Higher legal fees for the first six months of 2025 included an approximate $3,300 charge in connection with our settlement of a series of wage and hour arbitrations.

The Company incurred proxy contest expenses of $5,263 and $8,220, respectively, in the second quarter and first six months of 2025 related to a proxy contest in connection with the Company’s 2024 annual shareholders meeting held on November 21, 2024.

This percentage change for the third quarter of 2025 as compared to the same period in the prior year resulted primarily from the following:

Third Quarter

Decrease as a Percentage

of Total Revenue

Professional fees

Incentive compensation expense

The decrease in professional fees as a percentage of total revenue in the third quarter of 2025 as compared to the same period in the prior year resulted primarily from lower costs related to the Company’s strategic transformation plan.

The decrease in incentive compensation expense as a percentage of total revenue in the third quarter of 2025 as compared to the same period in the prior year resulted primarily from Chief Executive Officer transition costs incurred in 2024.

The percentage change in general and administrative expenses as a percentage of total revenue in the first nine months of 2025 as compared to the same period in the prior year was attributable to professional fees.

The Company incurred proxy contest expenses of $8,220 in the first nine months of 2025 related to a proxy contest in connection with the Company’s 2024 annual shareholders meeting held on November 21, 2024.

Higher legal fees for the first nine months of 2025 included an approximate $3,300 charge in connection with our settlement of a series of wage and hour arbitrations.

These fees were partially offset by lower costs associated with the Company’s strategic transformation plan for the first nine months of 2025 as compared to the same period in the prior year.

Impairment and Store Closing Costs

During the second quarter and first six months of 2025, we recorded impairment charges of $2,163 and $2,863, respectively, as a result of the deterioration in operating performance in three MSBC locations and two Cracker Barrel locations.

No impairment was recorded in the second quarter and first six months of 2024.

One Cracker Barrel store was closed in the second quarter and first six months of 2025 resulting in closing costs of $288.

No stores were closed in the second quarter or first six months of 2024.

During the third quarter of 2025, we recorded impairment charges of $718 as a result of the deterioration in operating performance in two MSBC locations.

During the first nine months of 2025, we recorded impairment charges of $3,581 as a result of the deterioration in operating performance in five MSBC locations and two Cracker Barrel locations.

One Cracker Barrel store was closed in the first nine months of 2025 resulting in closing costs of $288.

During the third quarter and first nine months of 2024, we recorded impairment charges of $17,448 as a result of the deterioration in operating performance of six Cracker Barrel and thirteen MSBC locations.

Additionally, during the third quarter and first nine months of 2024, we incurred costs of $5,494 in connection with the closure of four Cracker Barrel and two MSBC locations because of poor operating performance.

Goodwill Impairment

In the third quarter of 2024, we recorded a goodwill impairment charge of $4,690 related to MSBC because of declining financial trends and changes in the macroeconomic environment, including interest rate and inflationary pressures.

The amount is recorded in the goodwill impairment line on the Condensed Consolidated Statement of Income (Loss).

Interest Expense, Net

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Quarter Ended

Six Months Ended

Nine Months Ended

Interest expense, net

Interest expense for the second quarter of 2025 as compared to the same period in the prior year remained relatively constant.

The increase in interest expense for the first six months of 2025 as compared to the same period in the prior year resulted primarily from higher weighted average debt levels under our 2022 Revolving Credit Facility (as defined below).

Provision for Income Taxes (Income Tax Benefit)

The following table highlights the provision for income taxes as a percentage of income before income taxes (“effective tax rate”) for the specified periods:

Interest expense for the third quarter of 2025 as compared to the same period in the prior year resulted primarily from lower average interest rates partially offset by higher weighted average debt levels under our 2022 Revolving Credit Facility (as defined below).

The increase in interest expense for the first nine months of 2025 as compared to the same period in the prior year resulted primarily from higher weighted average debt levels under our 2022 Revolving Credit Facility partially offset by lower average interest rates.

Income Tax Benefit

The following table highlights the income tax benefit as a percentage of income (loss) before income taxes (“effective tax rate”) for the specified periods:

Quarter Ended

Six Months Ended

Nine Months Ended

Effective tax rate

The increase in the effective tax rate in the second quarter of 2025 as compared to the prior year period is primarily due to favorable state audit settlements obtained in the second quarter of 2024.

The decrease in the effective tax rate in the first six months of 2025 as compared to the prior year period is primarily due to an increase in the impact of employment credits from the use of the discrete-period computation method.

The Company’s quarterly provision (benefit) for income taxes has historically been calculated using the annualized effective tax rate method (“AETR method”) which applies an estimated annual effective tax rate to pre-tax income or loss.

Beginning in the third quarter of 2024, the Company records its interim income tax provision (benefit) using the discrete-period computation method, as allowed under Accounting Standards Codification 740-240, Accounting for Income Taxes – Interim Reporting.

The Company recorded its interim income tax provision (benefit) using the discrete-period computation method as of January 31, 2025.

Use of the AETR method would have resulted in an unreliable tax rate as small changes in the projected ordinary annual income would have resulted in significant changes in the annualized effective tax rate.

The decrease in the effective tax rate in the third quarter of 2025 as compared to the same period in the prior year and the increase in the effective tax rate in the first nine months of 2025 as compared to the same period in the prior year are primarily due to the higher proportion of employment credits in relation to income (loss) before taxes in the prior year periods.

The Company records its interim income tax benefit using the discrete-period computation method, as of May 02, 2025 and April 26, 2024, as allowed under Accounting Standards Codification 740-240, Accounting for Income Taxes – Interim Reporting.

Use of the annualized effective tax rate method would have resulted in an unreliable tax rate as small changes in the projected ordinary annual income would have resulted in significant changes in the annualized effective tax rate.

We presently expect our effective tax rate for 2025 to be approximately (11%) to (17%).

Liquidity and Capital Resources

Our primary sources of liquidity are cash generated from our operations and our borrowing capacity under our 2022 Revolving Credit Facility.

Cash generated from operations, together with our borrowing capacity under the 2022 Revolving Credit Facility, were sufficient to finance all of our growth, dividend payments, working capital needs, interest payments on long-term debt obligations and other cash payment obligations in the first six months of 2025.

We believe that cash on hand at January 31, 2025, along with cash expected to be generated from our operating activities and the borrowing capacity under our revolving credit facility, will be sufficient to finance our continuing operations, our strategic transformation plan and continuing expansion plans, debt service, dividend payments, capital expenditures and working capital needs for the next twelve months and thereafter.

Our ability to draw on our 2022 Revolving Credit Facility is subject to the satisfaction of the provisions of the credit facility, as amended, and we believe we will be able to refinance our 2022 Revolving Credit Facility and other debt instruments prior to maturity.

Our primary sources of liquidity are cash generated from our operations and our borrowing capacity under our credit facility.

On May 16, 2025, we entered into a five-year $800,000 credit facility (the “2025 Credit Facility”).

The 2025 Credit Facility consists of a $550,000 revolving credit facility (the “2025 Revolving Credit Facility”), which includes a $25,000 swingline subfacility and a $75,000 letter of credit subfacility, and a $250,000 delayed draw term loan facility.

The 2025 Credit Facility also contains an option for the Company to increase the credit facility by $200,000.

We believe that cash on hand at May 02, 2025, along with cash expected to be generated from our operating activities and the borrowing capacity under our 2025 Credit Facility, will be sufficient to finance our continuing operations, our strategic transformation plan and continuing expansion plans, debt service, dividend payments, capital expenditures and working capital needs for the next twelve months and thereafter.

Our ability to draw on our 2025 Credit Facility is subject to the satisfaction of the provisions of the credit facility, as amended, and we believe we will be able to refinance our 2025 Credit Facility and other debt instruments prior to maturity.

See Note 11 to our Condensed Consolidated Financial Statements for further information on our 2025 Credit Facility.

Cash Generated From Operations

Our operating activities provided net cash of $93,693 for the first six months of 2025 as compared to $61,879 net cash provided during the first six months of 2024.

This increase resulted primarily from the timing of cash receipts for accounts receivable and timing of payments for accounts payable and payroll.

Capital Expenditures and Proceeds from Sale of Property and Equipment

Capital expenditures (purchase of property and equipment) net of proceeds from insurance recoveries were $76,986 for the first six months of 2025 as compared to $51,080 for the same period in the prior year.

Our operating activities provided net cash of $116,677 for the first nine months of 2025 as compared to $99,456 net cash provided during the first nine months of 2024.

This increase resulted primarily from the timing of cash receipts for accounts receivable and timing of payments for accounts payable and certain taxes.

Capital Expenditures

Capital expenditures (purchase of property and equipment) net of proceeds from insurance recoveries were $113,214 for the first nine months of 2025 as compared to $80,081 for the same period in the prior year.

Our capital expenditures consisted primarily of capital investments for existing stores, new store locations and capital expenditures for strategic initiatives.

The increase in capital expenditures in the first six months of 2025 as compared to the first six months of 2024 resulted primarily from our maintenance and remodel initiatives, including as part of our strategic transformation plan.

The increase in capital expenditures in the first nine months of 2025 as compared to the first nine months of 2024 resulted primarily from our maintenance and remodel initiatives as part of our strategic transformation plan.

As part of our strategic transformation plan, we have modified our capital allocation policy and currently expect to increase our capital expenditures over the three-year period from 2025 to 2027 to approximately $600,000 to $700,000, of which we expect to expend $160,000 to $170,000 in 2025.

This increase includes expansion of our maintenance and remodel initiatives as well as additional technology improvements.

This increase in capital expenditures includes expansion of our maintenance and remodel initiatives as well as additional technology improvements.

This increase also includes the acquisition of sites and construction costs of new Cracker Barrel and MSBC locations that have opened or that we expect to open during 2025.

We intend to fund our capital expenditures with cash generated by operations and borrowings under our 2022 Revolving Credit Facility, as necessary.

We intend to fund our capital expenditures with cash generated by operations and borrowings under our 2025 Credit Facility, as necessary.

Borrowing Capacity, Debt Covenants and Notes

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The 2022 Revolving Credit Facility contains an option for the Company to increase the revolving credit facility by $200,000.

At January 31, 2025, we had $174,000 of outstanding borrowings under the 2022 Revolving Credit Facility and $34,004 of standby letters of credit related to securing reserved claims under our workers’ compensation insurance and certain sale and leaseback transactions, which reduce our borrowing availability under the 2022 Revolving Credit Facility.

At January 31, 2025, we had $491,996 in borrowing availability under our 2022 Revolving Credit Facility.

During the first six months of 2025, we borrowed $199,500 and repaid $205,500 under the 2022 Revolving Credit Facility.

On May 16, 2025, the Company entered into a five-year $800,000 credit facility (the “2025 Credit Facility”).

The 2025 Credit Facility consists of a $550,000 revolving credit facility, which includes a $25,000 swingline subfacility and a $75,000 letter of credit subfacility, and a $250,000 delayed draw term loan facility.

The 2025 Credit Facility also contains an option for the Company to increase the credit facility by $200,000.

At May 02, 2025, we had $191,500 of outstanding borrowings under the 2022 Revolving Credit Facility and $34,004 of standby letters of credit related to securing reserved claims under our workers’ compensation insurance and certain sale and leaseback transactions, which reduce our borrowing availability under the 2022 Revolving Credit Facility.

At May 02, 2025, we had $474,496 in borrowing availability under our 2022 Revolving Credit Facility.

During the first nine months of 2025, we borrowed $308,500 and repaid $297,000 under the 2022 Revolving Credit Facility.

Our 2022 Revolving Credit Facility contains customary financial covenants, which include maintenance of a maximum consolidated total senior secured leverage ratio and a minimum consolidated interest coverage ratio.

We were in compliance with the 2022 Revolving Credit Facility’s financial covenants at January 31, 2025, and we expect to be in compliance with the 2022 Revolving Credit Facility’s financial covenants for the remaining term of the facility.

We were in compliance with the 2022 Revolving Credit Facility’s financial covenants at May 02, 2025.

Our 2025 Credit Facility also contains customary financial covenants, which include maintenance of a maximum consolidated total leverage ratio and a minimum consolidated interest coverage ratio.

We expect to be in compliance with the 2025 Credit Facility’s financial covenants for the term of the facility.

See Note 11 to our Condensed Consolidated Financial Statements for further information on our 2025 Credit Facility.

Our $300,000 aggregate principal amount of 0.625% Convertible Senior Notes (the “Notes”) mature on June 15, 2026, unless earlier converted, repurchased or redeemed.

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notwithstanding (1) and (2), so long as immediately after giving effect to the payment of any such dividends, Cash Availability is at least $100,000, we may declare and pay cash dividends on shares of our common stock in an aggregate amount not to exceed in any fiscal year the product of the aggregate amount of dividends declared in the fourth quarter of the immediately preceding fiscal year multiplied by four.

During the first six months of 2025, we paid a regular dividend of $0.50 per share and declared a dividend of $0.25 per share that was subsequently paid on February 12, 2025, to shareholders of record on January 17, 2025.

In addition, in the third quarter of 2025, our Board of Directors approved a regular dividend payable on May 14, 2025 to shareholders of record as of April 11, 2025 of $0.25 per share.

During the first six months of 2025, we issued 60,438 shares of our common stock resulting from the vesting of share-based compensation awards.

See Note 11 to our Condensed Consolidated Financial Statements for information on restrictions on the amount of dividends we are permitted to pay and the amount of shares we are permitted to repurchase under the 2025 Credit Facility.

During the first nine months of 2025, we paid a regular dividend of $0.75 per share and declared a dividend of $0.25 per share that was subsequently paid on May 14, 2025, to shareholders of record on April 11, 2025.

In addition, in the fourth quarter of 2025, our Board of Directors approved a regular dividend payable on August 13, 2025 to shareholders of record as of July 18, 2025 of $0.25 per share.

During the first nine months of 2025, we issued 63,908 shares of our common stock resulting from the vesting of share-based compensation awards.

Related tax withholding payments on these share-based compensation awards resulted in a net use of cash of $1,428.

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Like many other restaurant companies, we are able to, and often do, operate with negative working capital.

We had negative working capital of $173,982 at January 31, 2025 as compared to negative working capital of $175,993 at August 02, 2024.

The change in working capital at January 31, 2025 as compared to August 02, 2024 primarily resulted from the timing of certain payments partially offset by the decrease in retail inventory levels and an increase in sales of our gift cards during the holiday shopping season.

We had negative working capital of $146,208 at May 02, 2025 as compared to negative working capital of $175,993 at August 02, 2024.

The change in working capital at May 02, 2025 as compared to August 02, 2024 primarily resulted from the timing of certain payments partially offset by the decrease in retail inventory levels.

Off-Balance Sheet Arrangements

1 unchanged sentence

Material Commitments

There have been no material changes in our material commitments other than in the ordinary course of business since the end of 2024.

Except for entry into the 2025 Credit Facility, there have been no material changes in our material commitments other than in the ordinary course of business since the end of 2024.

See Note 11 to our Condensed Consolidated Financial Statements for information on the 2025 Credit Facility.

Refer to the section entitled “Liquidity and Capital Resources” presented in the MD&A of our 2024 Form 10-K for additional information regarding our material commitments.

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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