What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-12-05 compared with 2023-09-08 · 145 added, 57 removed, 149 unchanged (58% of the section changed)

2 unchanged sentences

This section entitled "Management’s Discussion and Analysis of Financial Condition and Results of Operations" (“MD&A”) is intended to provide a reader of our financial statements with a narrative from the perspective of management on our financial condition, results of operations, liquidity, and certain other factors that may affect our future results.

The MD&A provides a narrative analysis explaining the reasons for material changes in the Company’s (i) financial condition during the period from the most recent fiscal year-end, April 29, 2023, to and including July 29, 2023 and (ii) results of operations during the current fiscal period(s) as compared to the corresponding period(s) of the preceding fiscal year.

The MD&A provides a narrative analysis explaining the reasons for material changes in the Company’s (i) financial condition during the period from the most recent fiscal year-end, April 29, 2023, to and including October 28, 2023 and (ii) results of operations during the current fiscal period(s) as compared to the corresponding period(s) of the preceding fiscal year.

This Quarterly Report on Form 10-Q, including the MD&A, contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.

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the Company’s potential need to seek additional strategic alternatives, including seeking additional debt or equity capital or other strategic transactions and/or measures;

the Company’s ability to finalize or fully execute actions and steps that would be probable of mitigating the existence of “substantial doubt” regarding the Company’s ability to continue as a going concern;

the Company’s ability to finalize or fully execute actions and steps that would be probable of mitigating the existence of any “substantial doubt” regarding the Company’s ability to continue as a going concern;

the Company’s ability to increase cash flow to support the Company’s operating activities and fund its obligations and working capital needs;

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RESULTS OF OPERATIONS

COMPARISON OF THE THREE MONTHS ENDED JULY 29, 2023 AND JULY 30, 2022

COMPARISON OF THE THREE MONTHS ENDED OCTOBER 28, 2023 AND OCTOBER 29, 2022

Product Order Backlog

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Orders and backlog are not measures defined by accounting principles generally accepted in the United States of America ("GAAP"), and our methodology for determining orders and backlog may vary from the methodology used by other companies in determining their orders and backlog amounts.

Order and backlog levels provide management and investors additional details surrounding the results of our business activities in the marketplace and highlight fluctuations caused by seasonality and multimillion dollar projects.

Management uses orders to evaluate market share and performance in the competitive environment.

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We believe order information is useful to investors because it provides an indication of our market share and future revenues.

Our product order backlog as of July 29, 2023 was $323.7 million as compared to $469.1 million as of July 30, 2022 and $400.7 million at April 29, 2023.

The decrease in backlog is driven by fulfilling orders at a greater pace as supply chain conditions stabilized, we utilized our increased capacity, and the order pace returned to more normalized rates.

We expect to fulfill the backlog as of July 29, 2023 within the next 24 months.

Our product order backlog as of October 28, 2023 was $306.9 million as compared to $463.1 million as of October 29, 2022 and $400.7 million at April 29, 2023.

The decrease in backlog is trending down to more historical levels as a result of fulfilling orders at a greater pace as supply chain conditions stabilized and production lead times improved, utilizing our increased capacity, and order pace returning to more normalized rates.

We expect to fulfill the backlog as of October 28, 2023 within the next 24 months.

The timing of backlog fulfillment may be impacted by project delays resulting from parts availability and other constraints stemming from the supply chain disruptions or by customer site conditions which are outside our control.

The following table shows information regarding net sales for the three months ended July 29, 2023 and July 30, 2022:

The following table shows information regarding net sales for the three months ended October 28, 2023 and October 29, 2022:

Three Months Ended

(in thousands) July 29, 2023 July 30, 2022 Dollar Change Percent Change

(in thousands) October 28, 2023 October 29, 2022 Dollar Change Percent Change

Commercial $ 42,453 $ 37,047 $ 5,406 14.6 %

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(1) Orders are not measures defined by GAAP, and our methodology for determining orders may vary from the methodology used by other companies in determining their orders and amounts.

For the fiscal 2024 first quarter, net sales were $232.5 million, an increase of $60.6 million from net sales in the prior year's first quarter and a quarterly record.

This increase was primarily due to higher throughput from our past investments in capacity and the more stable operating environment.

Last year during the first quarter, we faced material supply shortages which extended lead times and delayed the conversion of orders into sales.

Order volume decreased in the first quarter of fiscal 2024 from the prior year's first quarter.

The change is primarily related to a decrease in the Commercial business unit caused by volatility in bookings of larger sized Spectacular LED video displays projects.

For the fiscal 2024 second quarter, net sales were $199.4 million, an increase of $11.9 million from net sales in the prior year's second quarter.

Sales growth was driven by fulfilling orders in backlog, especially in the High School Park and Recreation, Commercial and Transportation business units.

The increase is attributable to a stable operating environment, increased manufacturing capacity and realization of price increases.

Last year during the second quarter, we faced material supply and labor shortages which extended lead times and delayed the conversion of orders into sales.

International net sales are down in the second quarter of fiscal 2024 compared to last year's second quarter due to shipments to Out-of-Home customers in our Asia Pacific Region.

Orders for the second quarter of fiscal 2024 were similar to the second quarter of fiscal 2023 although the order volume from our business units differed.

Higher orders to customers in the International and Transportation business units offset decreases in the Spectacular and Out-of-Home markets in our Commercial business unit.

Orders in the International business unit in the second quarter of fiscal 2023 were lower due to weakening economic outlook relating to inflationary pressures, geopolitical events, and currency headwinds.

Gross Profit and Contribution Margin

Three Months Ended

July 29, 2023 July 30, 2022

October 28, 2023 October 29, 2022

(in thousands) Amount As a Percent of Net Sales Amount As a Percent of Net Sales

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$ 54,199 27.2 % $ 31,704 16.9 %

The increase in gross profit percentage for the first quarter of fiscal 2024 is attributable to the record sales volume over our fixed manufacturing cost structure, past strategic pricing actions, stabilization of input costs, and fewer supply chain and operational disruptions during the first quarter of fiscal 2024 as compared to a year earlier.

Total warranty costs as a percent of sales for the three months ended July 29, 2023 compared to the same period one year ago increased to 2.1 percent from 1.6 percent.

The gross profit improvement is due to strategic pricing, our ability to efficiently generate more sales volume over our cost structure, and fewer supply chain and operational disruptions during the second quarter of fiscal 2024 as compared to a year earlier.

During the second quarter of fiscal 2024 , employee benefit programs reduced gross profit by $2.7 million, of which $1.9 million was attributed to the programs activation.

Total warranty costs as a percent of sales for the three months ended October 28, 2023 compared to the same period one year ago decreased to 2.2 percent from 2.7 percent.

Three Months Ended

July 29, 2023 July 30, 2022

October 28, 2023 October 29, 2022

(in thousands) Amount As a Percent of Net Sales Dollar Change Percent Change Amount As a Percent of Net Sales

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Selling expenses consist primarily of personnel-related costs, travel and entertainment expenses, marketing related expenses (show rooms, product demonstration, depreciation and maintenance, conventions and trade show expenses), the cost of customer relationship management/marketing systems, bad debt expenses, third-party commissions, and other expenses.

Contribution margin for the fiscal quarter ended July 29, 2023 was positively impacted by the previously discussed sales levels and impacts on gross profit.

Contribution margin for the fiscal quarter ended October 28, 2023 was positively impacted by the previously discussed sales levels and impacts on gross profit.

During the second quarter of fiscal 2024 , employee benefit programs reduced contribution margin by $1.1 million, with $0.8 million attributed to the programs activation.

Reconciliation from non-GAAP contribution margin to the operating income GAAP measure is as follows:

Three Months Ended

July 29, 2023 July 30, 2022

October 28, 2023 October 29, 2022

(in thousands) Amount As a Percent of Net Sales Dollar Change Percent Change Amount As a Percent of Net Sales

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Product design and development 9,221 4.6 2,255 32.4 6,966 3.7

Operating income (loss) $ 40,216 17.3 % $ 45,735 828.7 % $ (5,519) (3.2) %

General and administrative expenses in the first quarter of fiscal 2024 remained relatively flat as compared to the same period one year ago.

Product design and development expenses in the first quarter of fiscal 2024 increased as compared to the first quarter of fiscal 2023 primarily due to an increase in personnel-related expenses.

Operating income $ 19,436 9.7 % $ 17,910 1173.7 % $ 1,526 0.8 %

General and administrative expenses in the second quarter of fiscal 2024 increased as compared to the second quarter of fiscal 2023 primarily due to increase in personnel-related expenses and professional fees.

During the second quarter of fiscal 2024 , employee benefit programs expenses increased general and administrative expenses by $0.5 million, with $0.3 million attributed to the programs activation.

Product design and development expenses in the second quarter of fiscal 2024 increased as compared to the second quarter of fiscal 2023 primarily due to an increase in personnel-related expenses.

During the second quarter of fiscal 2024 , employee benefit programs increased product design and development expenses by $0.6 million, with $0.4 million attributed to the programs activation.

Other Income and Expenses

Three Months Ended

July 29, 2023 July 30, 2022

October 28, 2023 October 29, 2022

(in thousands) Amount As a Percent of Net Sales Dollar Change Percent Change Amount As a Percent of Net Sales

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Interest (expense) income, net:

The increase in interest income and expense, net for the first quarter of fiscal 2024 compared to the same period one year ago was primarily due to closing in May 2023 on the convertible debt, asset-based and mortgage financings at higher values and interest rates than the utilization of our previous line of credit during the 2023 first quarter.

The increase in interest income and expense, net for the second quarter of fiscal 2024 compared to the same period one year ago was primarily due to closing in May 2023 on the convertible note (the "Convertible Note") and asset-based and mortgage financings at higher values and interest rates than the utilization of our previous line of credit during the 2023 second quarter.

Change in fair value of Convertible Note:

For the three months ended July 29, 2023, we recorded an expense of $7.3 million related to the change in fair value of the convertible note payable which is accounted for under the fair value option.

The fair value change was primarily caused by the increase in our stock price over the conversion price and decline in market interest rates making the value of potentially converted shares higher than at the debt issuance.

For the three months ended October 28, 2023, we recorded an expense of $10.7 million related to the change in fair value of the Convertible Note payable which is accounted for under the fair value option.

The fair value change was primarily caused by the increase in our stock price over the conversion price and decline in market interest rates, making the value of potentially converted shares higher than at debt issuance.

Other expense, net:

The change in other expense, net for the first quarter of fiscal 2024 as compared to the same period one year ago was primarily due to losses recorded for equity method affiliates and foreign currency volatility and write-off of $3.4 million debt issuance costs related to convertible debt carried at fair value.

Our effective tax rate for the first quarter of fiscal 2024 was 31.7 percent as compared to an effective tax rate of 15.8 percent for the first quarter of fiscal 2023.

The higher tax rate is caused by the fair value adjustment to income that is not taxable.

Absent any major tax changes, we expect our full year effective tax rate to be in the mid-twenties, before the impacts of fair value accounting for the convertible debt.

The change in other expense, net for the second quarter of fiscal 2024 as compared to the same period one year ago was primarily due to losses recorded for equity method affiliates and foreign currency volatility.

Our effective tax rate for the second quarter of fiscal 2024 was 64.8 percent as compared to an effective tax rate of 1330.7 percent for the second quarter of fiscal 2023.

The lower tax rate for the second quarter of fiscal 2024 is caused by the fair value adjustment to income that is not deductible for tax purposes, whereas, the effective tax rate for the second quarter of fiscal 2023 was skewed due to a full valuation allowance placed on deferred taxes.

RESULTS OF OPERATIONS

COMPARISON OF THE SIX MONTHS ENDED OCTOBER 28, 2023 AND OCTOBER 29, 2022

The following table shows information regarding net sales for the six months ended October 28, 2023 and October 29, 2022:

Six Months Ended

(in thousands) October 28, 2023 October 29, 2022 Dollar Change Percent Change

Commercial $ 89,336 $ 77,165 $ 12,171 15.8 %

Live Events 160,209 125,622 34,587 27.5

High School Park and Recreation 105,176 77,815 27,361 35.2

Transportation 41,612 36,219 5,393 14.9

International 35,567 42,538 (6,971) (16.4)

$ 431,900 $ 359,359 $ 72,541 20.2 %

Commercial $ 66,643 $ 90,389 $ (23,746) (26.3) %

Live Events 131,219 132,752 (1,533) (1.2)

High School Park and Recreation 68,539 69,477 (938) (1.4)

Transportation 40,485 32,287 8,198 25.4

International 35,437 28,125 7,312 26.0

$ 342,323 $ 353,030 $ (10,707) (3.0) %

(1) Orders are not measures defined by GAAP, and our methodology for determining orders may vary from the methodology used by other companies in determining their orders and amounts.

For the first six months of fiscal 2024, net sales were $431.9 million, an increase of $72.5 million from the prior year's first six-month period.

This increase was primarily due to higher throughput from our past investments in capacity and the more stable operating environment.

During the six-month period ended October 29, 2022, we faced material supply and labor shortages which extended lead times and delayed the conversion of orders into sales.

Order volume decreased in the first six months of fiscal 2024 from the prior year's six-month period.

Higher orders from customers in the International and Transportation business units offset decreases in the Spectacular and Out-of-Home markets in our Commercial business unit.

The change in the Commercial business unit was caused by volatility in bookings of larger sized Spectacular LED video displays projects and contraction in advertising spend.

Orders in the International business unit in the first six months of fiscal 2023 were lower due to weakening economic outlook relating to inflationary pressures, geopolitical events, and currency headwinds.

Gross Profit and Contribution Margin

Six Months Ended

October 28, 2023 October 29, 2022

(in thousands) Amount As a Percent of Net Sales Amount As a Percent of Net Sales

Gross Profit:

Commercial $ 20,000 22.4 % $ 11,018 14.3 %

Live Events 47,174 29.4 11,769 9.4

High School Park and Recreation 37,245 35.4 21,788 28.0

Transportation 13,869 33.3 9,922 27.4

International 7,058 19.8 3,001 7.1

$ 125,346 29.0 % $ 57,498 16.0 %

The increase in gross profit percentage in the six months ended October 28, 2023 is attributable to the record sales volume over our fixed manufacturing cost structure, past strategic pricing actions, stabilization of input costs, and fewer supply chain and operational disruptions during the first six months of fiscal 2024 as compared to a year earlier.

The effect of employee benefit programs reduced gross profit by $2.7 million.

Total warranty costs as a percent of sales for the six months ended October 28, 2023 compared to the same period one year ago remained the same at 2.2 percent.

Six Months Ended

October 28, 2023 October 29, 2022

(in thousands) Amount As a Percent of Net Sales Dollar Change Percent Change Amount As a Percent of Net Sales

Contribution Margin:

Commercial $ 11,124 12.5 % $ 9,005 425.0 % $ 2,119 2.7 %

Live Events 41,987 26.2 35,799 578.5 6,188 4.9

High School Park and Recreation 30,209 28.7 15,190 101.1 15,019 19.3

Transportation 11,942 28.7 3,973 49.9 7,969 22.0

International 2,502 7.0 5,257 (190.8) (2,755) (6.5)

$ 97,764 22.6 % $ 69,224 242.6 % $ 28,540 7.9 %

Contribution margin is a non-GAAP measure and consists of gross profit less selling expenses.

Contribution margin for the first six months of fiscal 2024 was positively impacted by the previously discussed sales levels and impacts on gross profit.

E mployee benefit programs activation reduced contribution margin by $1.1 million.

Reconciliation from non-GAAP contribution margin to the operating income GAAP measure is as follows:

Six Months Ended

October 28, 2023 October 29, 2022

(in thousands) Amount As a Percent of Net Sales Dollar Change Percent Change Amount As a Percent of Net Sales

Contribution margin $ 97,764 22.6 % $ 69,224 242.6 % $ 28,540 7.9 %

General and administrative 20,488 4.7 2,360 13.0 18,128 5.0

Product design and development 17,624 4.1 3,219 22.3 14,405 4.0

Operating income (loss) $ 59,652 13.8 % $ 63,645 1593.9 % $ (3,993) (1.1) %

General and administrative expenses in the first six months of fiscal 2024 increased primarily due to an increase in personnel-related expenses.

E mployee benefit programs activation increased general and administrative expenses by $0.5 million.

Product design and development expenses in the first six months of fiscal 2024 increased as compared to the first six months of fiscal 2023 primarily due to an increase in personnel-related expenses.

E mployee benefit programs activation increased product design and development expenses by $0.6 million.

Other Income and Expenses

Six Months Ended

October 28, 2023 October 29, 2022

(in thousands) Amount As a Percent of Net Sales Dollar Change Percent Change Amount As a Percent of Net Sales

Interest (expense) income, net $ (2,207) (0.5) % $ (1,884) 583.3 % $ (323) (0.1) %

Change in fair value of convertible note $ (17,910) (4.1) % $ (17,910) — % $ — — %

Other expense, net $ (5,282) (1.2) % $ (4,327) 453.1 % $ (955) (0.3) %

Interest (expense) income, net:

The increase in interest income and expense, net in the first six months of fiscal 2024 compared to the same period one year ago was primarily due to closing in May 2023 on the Convertible Note and asset-based and mortgage financings at higher values and interest rates than the utilization of our previous line of credit during the first six months of fiscal 2023.

Change in fair value of Convertible Note:

For the six months ended October 28, 2023, we recorded an expense of $17.9 million related to the change in fair value of the Convertible Note payable which is accounted for under the fair value option.

The fair value change was primarily caused by the increase in our stock price over the conversion price and the decline in market interest rates making the value of potentially converted shares higher than at the debt issuance.

Other expense, net:

The change in other expense, net for the first six months of fiscal 2024 as compared to the same period one year ago was primarily due to losses recorded for equity method affiliates and foreign currency volatility and expensing of $3.4 million debt issuance costs related to the Convertible Note carried at fair value.

We have recorded an effective tax rate of 37.6 percent for the six months ended October 28, 2023 as compared to (247.4) percent for the six months ended October 29, 2022.

The tax rate for the first six months of fiscal 2024 is caused by the fair value adjustment to income that is not deductible for tax purposes;

whereas, the effective tax rate for the first six months of fiscal 2023 was skewed due a full valuation allowance placed on deferred taxes.

Absent any major tax changes, we expect our full year effective tax rate to be in the mid-twenties, before the impacts of fair value accounting for the convertible note.

LIQUIDITY AND CAPITAL RESOURCES

Three Months Ended

(in thousands) July 29,

2023 July 30,

Six Months Ended

(in thousands) October 28,

2023 October 29,

2022 Dollar Change

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Net cash provided by (used in) operating activities:

Net cash provided by operating activities was $19.3 million for the first three months of fiscal 2024 compared to net cash used in operating activities of $22.8 million in the first three months of fiscal 2023.

The $42.1 million change in cash provided by (used in) operating activities was primarily the result of an

increase in net income of $24.5 million over the year time frame as strategic pricing actions and operating conditions improved.

The was also a $7.3 million of non-cash fair value change of our convertible debt.

We also had strategically invested in inventory through the first quarter of fiscal 2023 as a reaction to supply chain constraints and historic backlog which consumed cash.

Since last year at the end of July, we have reduced inventory and related payables for inventory as we reduced backlog and generated cash from inventory reduction.

Increases in accounts receivable and contract assets levels have used some cash for working capital because of business increases.

Net cash provided by operating activities was $44.3 million for the first six months of fiscal 2024 compared to net cash used in operating activities of $21.9 million in the first six months of fiscal 2023.

The $66.2 million change in cash provided by (used in) operating activities was primarily the result of an increase in net income of $39.7 million in the first six months of fiscal 2024 compared to the same period in fiscal 2023 as strategic pricing actions and operating conditions improved, the $17.9 million of non-cash fair value change of our Convertible Note impacting net income, and improved working capital positions.

We also had strategically invested in inventory through the first six months of fiscal 2023 as a reaction to supply chain constraints and historic backlog, which consumed cash.

Since October 29, 2022, we have reduced inventory and related payables for inventory as we reduced backlog and generated cash from inventory reduction.

Increases in accounts receivable and contract asset levels have used some cash for working capital because of business increases.

The changes in net operating assets and liabilities consisted of the following:

Three Months Ended

2023 July 30,

Six Months Ended

2023 October 29,

(Increase) decrease:

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Net cash used in investing activities:

Net cash used in investing activities totaled $5.7 million in the first three months of fiscal 2024 compared to net cash used in investing activities of $10.4 million in the first three months of fiscal 2023.

Purchases of property and equipment totaled $4.5 million in the first three months of fiscal 2024 compared to $10.7 million in the first three months of fiscal 2023.

Fiscal 2023 purchases were higher because of initiatives to upgrade or increase manufacturing equipment for capacity and automation.

Purchases of equity and loans to affiliates accounted for by the equity investment method totaled $1.2 million in the first three months of fiscal 2024 as compared to $1.1 m illion in the first three months of fiscal 2023.

Net cash used in investing activities totaled $12.1 million in the first six months of fiscal 2024 compared to net cash used in investing activities of $15.2 million in the first six months of fiscal 2023.

Purchases of property and equipment totaled $9.2 million in the first six months of fiscal 2024 compared to $16.2 million

in the first six months of fiscal 2023.

Fiscal 2023 purchases were higher because of initiatives to upgrade existing or purchase new manufacturing equipment for capacity and automation.

Net cash provided by financing activities:

Net cash provided by financing activities was $16.4 million for the three months ended July 29, 2023 due to cash provided by the closing of a $25.0 million convertible note financing and a $15.0 million mortgage financing offset by the payoff of our previous credit line of $17.8 million and $5.8 million of debt issuance costs as compared to $24.1 million of cash provided from financing due to draws on our line of credit in the first three months of fiscal 2023.

Net cash provided by financing activities was $15.9 million for the six months ended October 28, 2023 due to cash provided by the closing of a $25.0 million Convertible Note financing and a $15.0 million mortgage financing offset by the payoff of our previous credit line of $17.8 million, expending $6.5 million of debt issuance costs, and principal payments on the mortgage, as compared to $26.3 million of cash provided by financing due to draws on our line of credit in the first six months of fiscal 2023.

Debt and cash

We maintain a $60.0 million asset-based revolving credit facility ("ABL") with a maturity date of May 11, 2027 subject to customary covenants and conditions.

As of July 29, 2023, we had no borrowings against the ABL and $1.5 million used to secure letters of credit outstanding.

We also have a delayed draw loan of $15.0 million secured by a first priority mortgage on our Brookings, South Dakota real estate and $25.0 million of convertible debt secured by a second priority lien on assets securing the ABL facility and a first priority lien on substantially all the other assets of the Company, excluding all real property.

As of July 29, 2023, we had $45.8 million in cash and cash equivalents and $47.6 million in borrowing capacity under our ABL.

As of October 28, 2023, we had no borrowings against the ABL and $5.9 million used to secure letters of credit outstanding.

We also have a mortgage of $15.0 million secured by a first priority lien on our Brookings, South Dakota real estate and $25.0 million evidenced by the Convertible Note secured by a second priority lien on assets securing the ABL facility and a first priority lien on substantially all the other assets of the Company, excluding all real property.

As of October 28, 2023, we had $64.7 million in cash and cash equivalents and $50.6 million in borrowing capacity under our ABL.

We believe cash flow from operations, existing lines of credit, and access to debt and capital markets will be sufficient to meet our current liquidity needs, and we have committed liquidity and cash reserves in excess of our anticipated funding requirements.

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Working Capital

Working capital was $182.2 million and $132.5 million as of July 29, 2023 and April 29, 2023, respectively.

We had $12.5 million of retainage on long-term contracts included in receivables and contract assets as of July 29, 2023, which has an impact on our liquidity.

We expect to collect these amounts within one year.

Working capital was $196.4 million and $132.5 million as of October 28, 2023 and April 29, 2023, respectively.

We had $10.7 million of retainage on long-term contracts included in receivables and contract assets as of October 28, 2023 which we expect to collect these amounts within one year.

Other Liquidity and Capital Uses

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If we are unable to complete the installation work, our customer would draw on the banking arrangement, and the bank would subrogate its loss to Daktronics' restricted cash accounts.

As of July 29, 2023, we had $0.6 million of such instruments outstanding.

As of October 28, 2023, we had $0.2 million of such instruments outstanding.

We are sometimes required to obtain performance bonds for display installations;

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If we were unable to complete the installation work, and our customer would call upon the bond for payment, the surety company would subrogate its loss to Daktronics.

As of July 29, 2023, we had $40.4 million of bonded work outstanding.

As of October 28, 2023, we had $40.6 million of bonded work outstanding.

Our business growth and profitability improvement strategies depend on investments in capital expenditures and strategic investments.

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We are committed to invest an additional $0.8 million for the remainder of fiscal 2024 in our current affiliates.

We may make additional investments beyond our commitments.

Contractual Obligations and Commercial Commitments

During the quarter, we entered into a new credit facility, mortgage, and convertible debt as disclosed within this report, there have been no other material changes in our contractual obligations since the end of fiscal 2023.

During the first six months of fiscal 2024, we entered into a new credit facility, mortgage, and the Convertible Note as disclosed within this Report.

There have been no other material changes in our contractual obligations since the end of

See our Annual Report on Form 10-K for the fiscal year ended April 28, 2023 for additional information regarding our contractual obligations and commercial commitments.

8 unchanged sentences

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