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Item 8. Financial Statements and Supplementary Data

2025-02-27 compared with 2024-02-28 · 203 added, 251 removed, 638 unchanged (42% of the section changed)

45 unchanged sentences

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

For the Year Ended

(in thousands, except per share data) December 31, 2023 December 31, 2022 December 25, 2021

For the Year Ended December 31,

(in thousands, except per share data) 2024 2023 2022

Net sales $ 2,009,197 $ 1,929,788 $ 1,733,749

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CONSOLIDATED BALANCE SHEETS

(in thousands, except share data) December 31, 2023 December 31, 2022

(in thousands, except share data) 2024 2023

Current assets:

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Intangible assets, net 278,213 301,556

Deferred tax assets 5,786 —

Other assets 44,878 49,664

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Long-term operating lease liabilities 105,142 91,262

Deferred tax liabilities 3,700 8,925

Other long-term liabilities 18,894 9,627

Deferred tax liabilities, net 8,925 11,826

Commitments and contingencies (Note 11)

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CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Year Ended

(in thousands) December 31, 2023 December 31, 2022 December 25, 2021

For the Year Ended December 31,

(in thousands) 2024 2023 2022

Cash Flows from Operating Activities:

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Cash Flows from Investing Activities:

Acquisitions, net of cash acquired 67 ( 488,956 ) ( 345,483 )

Acquisitions, net of divestitures 100 67 ( 488,956 )

Property, plant and equipment additions ( 39,421 ) ( 43,968 ) ( 37,883 )

5 unchanged sentences

Payments of long-term debt ( 15,625 ) ( 12,500 ) ( 3,125 )

Payment of deferred acquisition consideration ( 200 ) — —

Payment of contingent consideration — — ( 1,705 )

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Effect of exchange rate changes on Cash and Cash Equivalents ( 424 ) 32 ( 93 )

Net (Decrease) Increase in Cash and Cash Equivalents ( 9,220 ) ( 12,748 ) ( 96,794 )

Net Increase (Decrease) in Cash and Cash Equivalents 20,323 ( 9,220 ) ( 12,748 )

Cash and Cash Equivalents, Beginning of Period 36,814 46,034 58,782

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For more information on our segments, refer to Note 8, "Segment Information," to the Consolidated Financial Statements.

Effective October 4, 2022, the Company's Board approved a change in Dorman’s fiscal year end from the last Saturday in December of each year to December 31 of each year, to commence with the fiscal year ending on December 31, 2022.

Principles of Consolidation .

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Transactions under these programs were accounted for as sales of accounts receivable and were removed from our Consolidated Balance Sheet at the time of the sales transactions.

Sales of accounts receivable under these agreements, and related factoring costs, which were including in selling, general and administrative expenses, were as follows:

(in thousands) December 31, 2023 December 31, 2022 December 25, 2021

Sales of accounts receivable under these agreements, and related factoring costs, which were included in selling, general and administrative expenses, were as follows:

For the Year Ended December 31,

(in thousands) 2024 2023 2022

Sales of accounts receivable $ 1,106,400 $ 949,517 $ 1,048,671

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Long-Lived Assets Including Goodwill and Other Acquired Intangible Assets .

Long-lived assets, including property, plant, and equipment and amortizable identifiable intangibles, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable.

Long-lived assets, including property, plant, and equipment and amortizable identifiable intangibles, are reviewed for impairment

whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable.

The impairment review is a two-step process.

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If through the Step 0 test we determine it is more likely than not that the fair value of a reporting unit is less than its carrying amount (or if the Company elects to not perform Step 0), then we would perform a quantitative test (“Step 1”) to determine whether an impairment charge was necessary.

During fiscal 2023, we elected to perform a Step 1 test of our goodwill for the dual purpose of assessing goodwill for impairment and reallocating goodwill to reporting units, using a representative fair value allocation, as part of reorganizing our reporting structure.

See Note 8, "Segment Information" for additional information on the reorganization of our reporting structure.

During fiscal 2022, we assessed the qualitative factors which could affect the fair values of our reporting units.

For both fiscal 2023 and fiscal 2022, we determined that it was not more likely than not that the fair value of our reporting units were less than their carrying amounts.

During 2023 and 2024, we elected to perform a Step 1 test of our goodwill for the purpose of assessing goodwill for impairment.

For both the years ended December 31, 2024 and 2023, we determined that goodwill was not impaired.

Purchase Accounting .

The purchase price of an acquired business is allocated to the underlying tangible and intangible assets acquired and liabilities assumed based upon their respective fair market values, with the excess recorded as goodwill.

The purchase price of an acquired business is allocated to the underlying tangible and intangible assets acquired and liabilities assumed based on their respective fair market values, with the excess recorded as goodwill.

Such fair market value assessments require judgments and estimates which may change over time and may cause the final amounts to differ materially from their original estimates.

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Other Assets .

Other assets include primarily long-term core inventory, deposits, and equity method investments.

Other assets include primarily core inventory, deposits, and equity method investments.

Certain products we sell contain parts that can be recycled, or as more commonly referred to in our industry, remanufactured.

We refer to these parts as cores.

A used core is remanufactured and sold to the customer as a replacement for a unit inside a vehicle.

Customers and end-users that purchase remanufactured products will generally return the used core to us, which we then use in the remanufacturing process to make another finished good.

Our core inventory consists of used cores purchased and held in our facilities, used cores that are in the process of being returned from our customers and end-users, and remanufactured cores held in finished goods inventory at our facilities.

Our products that utilize a core primarily include instrument clusters, hybrid batteries, radios, and climate control modules.

Long-term core inventory was $ 20.0 million and $ 19.8 million as of December 31, 2023 and December 31, 2022, respectively.

Long-term core inventory is recorded at the lower of cost or net realizable value.

Cost is determined based on actual purchases of core inventory.

We believe that the most appropriate classification of core inventory is a long-term asset.

According to guidance provided under the Financial Accounting Standards Board ("FASB") Accounting Standards Codification, current assets are defined as “assets or resources commonly identified as those which are reasonably expected to be realized in cash or sold or consumed during the normal operating cycle of the business.” The determination of the long-term classification is based on our view that the value of the cores is not expected to be consumed or realized in cash during our normal annual operating cycle.

A used core is remanufactured and sold to a customer.

Customers and end-users will generally return used cores to us, which we then use in the remanufacturing process to make another finished good.

Core inventory was $ 15.4 million and $ 20.0 million as of December 31, 2024 and 2023, respectively, and is classified as long-term based on our view that the value of the cores is not expected to be consumed or realized in cash during our normal annual operating cycle.

We have investments that we account for according to the equity method of accounting.

The total book value of these investments was $ 10.8 million and $ 9.4 million at December 31, 2023 and December 31, 2022,

respectively.

These investments provided $ 5.7 million, $ 5.5 million and $ 4.6 million of income during fiscal 2023, fiscal 2022, and fiscal 2021, respectively, and were included in the Light Duty segment income from operations.

The total book value of these investments was $ 11.2 million and $ 10.8 million at December 31, 2024 and 2023, respectively.

These investments provided $ 5.3 million, $ 5.7 million, and $ 5.5 million of income during the year ended December 31, 2024, 2023, and 2022, respectively.

Additionally, we have an investment that we account for according to the cost method of accounting.

The carrying book value of this investment was $ 5.0 million as of both December 31, 2023 and December 31, 2022.

The carrying book value of this investment was $ 5.0 million as of both December 31, 2024 and 2023.

Other Accrued Liabilities.

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Revenue Recognition and Accrued Customer Rebates and Returns .

Revenue is recognized from product sales when goods are shipped, title and risk of loss and control have been transferred to the customer and collection is reasonably assured.

Revenue is recognized when performance obligations under the terms of a contract with a customer are satisfied, in an amount representing the consideration the Company expects to receive in exchange for selling products to its customers.

We record estimates for cash discounts, defective and slow-moving product returns, promotional rebates, core return deposits, and other discounts in the period of the sale ("Customer Credits").

The provision for Customer Credits is recorded as a reduction from gross sales and reserves for Customer Credits are shown as an increase of accrued customer rebates and returns, which is included in current liabilities.

Customer Credits are estimated based on contractual provisions, historical experience, and our assessment of current market conditions.

The provision for Customer Credits is estimated based on contractual provisions, historical experience, and our assessment of current market conditions and includes various assumptions including, but not limited to, the length of time between when a sale occurs and a credit is issued.

Actual Customer Credits have not differed materially from estimated amounts.

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Research and development costs are expensed as incurred.

Research and development costs totaling $ 32.3 million, $ 24.8 million and $ 23.1 million have been recorded in selling, general and administrative expenses in the Consolidated Statements of Operations for fiscal 2023, fiscal 2022, and fiscal 2021, respectively.

Research and development costs totaling $ 32.1 million, $ 32.3 million, and $ 24.8 million have been recorded in selling, general and administrative expenses in the Consolidated Statements of Operations for the years ended December 31, 2024, 2023, and 2022, respectively.

Stock-Based Compensation .

At December 31, 2024, we had awards outstanding under a stock-based employee compensation plan, which is described more fully in Note 13, "Capital Stock." We record compensation expense for all awards granted.

The value of restricted stock awards (“RSAs”) and restricted stock units (“RSUs”) issued was based on the fair value of our common stock on the grant date.

The fair value of performance-based RSUs, for which the performance measure is total shareholder return, is determined using a Monte Carlo simulation model.

The value of time-based restricted stock awards (“RSAs”) and restricted stock units (“RSUs”) issued was based on the fair value of our common stock on the grant date.

The fair value of performance-based RSUs, for which the performance measure is total shareholder return relative to a defined peer group, is determined using a Monte Carlo simulation model.

The fair value of performance-based RSUs for which the performance measure is return on invested capital over the performance period was based on the fair value of our common stock on the grant date.

The fair value of stock options granted is determined using the Black-Scholes option valuation model on the grant date.

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Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash equivalents and accounts receivable.

All cash equivalents are managed within

established guidelines that limit the amount that may be invested with one issuer.

All cash equivalents are managed within established guidelines that limit the amount that may be invested with one issuer.

A significant percentage of our accounts receivable have been, and will continue to be, concentrated among a relatively small number of automotive retailers and warehouse distributors in the United States.

Our 4 largest customers accounted for 74 % and 69 % of net accounts receivable as of December 31, 2023 and December 31, 2022, respectively.

Our 4 largest customers accounted for 78 % and 74 % of net accounts receivable as of December 31, 2024 and 2023, respectively.

We continually monitor the credit terms and credit limits for these and other customers.

In fiscal 2023 and fiscal 2022, approximately 70 % and 64 %, respectively, of our products were purchased from suppliers in a variety of non-U.S.

For the years ended December 31, 2024 and 2023, approximately 72 % and 70 %, respectively, of our products were purchased from suppliers in a variety of non-U.S.

countries, with the largest portion of our overseas purchases being made in China.

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Additionally, the fair value of assets acquired and liabilities assumed are determined at the date of acquisition.

Contingent consideration associated with an acquisition is recorded at fair value at the acquisition date and is adjusted to fair value at each reporting period.

Contingent consideration

associated with an acquisition is recorded at fair value at the acquisition date and is adjusted to fair value at each reporting period.

Recent Accounting Pronouncements.

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The ASU requires additional disclosures about reportable segments’ significant expenses on an interim and annual basis.

The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024 on a retrospective basis.

The ASU was effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024 on a retrospective basis.

We adopted this guidance for our annual report on Form 10-K for the year ended December 31, 2024 and applied the amendments retrospectively to all prior periods presented.

The disclosures for interim periods will be adopted in our fiscal year beginning on January 1, 2025.

The adoption of this standard did not have a material impact on our results of operations or financial condition.

See Note 8, "Segment Information," for further details on segment information.

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures.

The ASU expands disclosures in the income tax rate reconciliations table and cash taxes paid and is effective for annual periods beginning after December 15, 2024.

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses.

The ASU requires additional disclosures about categories of expenses, including, among other things, quantitative disclosures for employee compensation, depreciation, intangible asset amortization, selling expenses, and purchases of inventory.

The updated guidance is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods within annual reporting periods beginning after December 15, 2027.

We expect to implement these new standards by their effective dates, and do not expect their adoption to have an impact on our results of operations, financial condition or cash flows.

26 unchanged sentences

Net cash consideration 509,778

The valuation of the intangible assets acquired, and related amortization periods are as follows:

(in thousands) Fair Value Amortization Period (in years)

Product portfolio 82,500 15

Trade names 48,400 20

Customer relationships 26,600 15

Total $ 157,500

The fair values assigned to the product portfolio and customer relationships were estimated by discounting expected cash flows based on the multi-period excess earnings valuation methodology, and the trade names were estimated by discounting expected cash flows based on the relief from royalty methodology.

The product portfolio valuation method relies on various management judgments, including expected future cash flows resulting from the product portfolio, technology obsolescence rates, contributory effects of other assets utilized in the business, discount rates and other factors.

The trade names valuation method relies on various management judgments, including royalty rates, discount rates and other factors.

The customer relationship valuation method relies on various management judgments, including expected future cash flows resulting from existing customer relationships, customer attrition rates, contributory effects of other assets utilized in the business, discount rates, and other factors.

As of December 31, 2023, the total amount of goodwill resulting from the SuperATV acquisition that is expected to be deductible for tax purposes is estimated at $ 400.5 million.

The financial results of the Transaction have been included in the consolidated financial statements from the date of acquisition.

The net sales and net income of SuperATV included in the consolidated financial statements for the fiscal year ended December 31, 2022 were $ 49.6 million and $ 2.3 million, respectively.

The net sales and net income of SuperATV included in the consolidated financial statements for the year ended December 31, 2022 were $ 49.6 million and $ 2.3 million, respectively.

The unaudited pro forma information for the periods set forth below gives effect to the Transaction as if it had occurred as of December 26, 2021 the beginning of the fiscal 2022 period.

1 unchanged sentence

For the Year Ended

(in thousands, except per share data, unaudited) December 31, 2022 December 25, 2021

Net sales $ 1,888,379 $ 1,556,360

Net income $ 130,375 $ 143,419

Diluted earnings per share $ 4.13 $ 4.49

The fiscal 2022 unaudited pro forma net income set forth above was adjusted to exclude the impact of acquisition date fair value adjustments to inventory, and to also remove acquisition-related transaction costs.

The 2021 unaudited pro forma net income was adjusted to include the impact of these items.

DPL Holding Corporation (“Dayton Parts”)

On August 10, 2021, we acquired 100 % of the equity interests of Dayton Parts, a manufacturer of chassis and other parts designed to serve the heavy-duty vehicle sector of the aftermarket for a purchase price of $ 344.9 million in cash (net of $ 8.8 million of acquired cash), after certain customary post-acquisition purchase price adjustments.

The acquisition was funded by cash on hand as well as through the refinancing of our revolving credit facility discussed further in Note 7, "Long-Term Debt."

The transaction was accounted for as a business combination under the acquisition method of accounting.

We have allocated the purchase price to tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values.

During the year ended December 25, 2021, we recorded measurement and period adjustments of approximately $ 2.1 million to decrease goodwill, $ 0.6 million to decrease the purchase price due to customary net working capital adjustments, $ 0.1 million to increase other current liabilities, and $ 1.6 million to decrease deferred tax liabilities.

Our measurement period adjustments for Dayton Parts were complete as of December 25, 2021.

The table below details the fair values of the assets acquired and the liabilities assumed at the acquisition date, including applicable measurement period adjustments:

(in thousands)

Accounts receivable $ 23,216

Inventories 79,625

Prepaids and other current assets 2,302

Property, plant and equipment 29,900

Goodwill 106,816

Identifiable intangible assets 160,400

Operating lease right-of-use assets 21,248

Other assets 848

Accounts payable ( 11,970 )

Accrued compensation ( 2,784 )

Other current liabilities ( 7,604 )

Long-term operating lease liabilities ( 18,444 )

Deferred tax liabilities ( 38,665 )

Net cash consideration $ 344,888

The estimated valuation of the intangible assets acquired, and related amortization periods are as follows:

(in thousands) Fair Value Amortization Period (in years)

Customer relationships $ 124,100 20

Product portfolio 25,300 20

Trade names 11,000 10

Total $ 160,400

The fair values assigned to intangible assets were estimated by discounting expected cash flows based on the relief from royalty and multi-period excess earnings valuation methodologies.

These valuation methods rely on management judgment, including expected future cash flows resulting from existing customer relationships, customer attrition rates, contributory effects of other assets utilized in the business, royalty rates and other factors.

The goodwill recognized is attributable primarily to strategic and synergistic opportunities related to the Company’s and Dayton Parts’ existing automotive aftermarket businesses, the assembled workforce of Dayton Parts and other factors.

The goodwill is not expected to be deductible for tax purposes.

The financial results of the acquisition have been included in the consolidated financial statements from the date of acquisition.

The net sales and net income of Dayton Parts included in the consolidated financial statements for the fiscal year ended December 25, 2021 were $ 78.0 million and $ 0.0 million, respectively.

The unaudited pro forma information for the periods set forth below gives effect to the Dayton Parts acquisition as if it had occurred as of December 28, 2019, the beginning of the fiscal 2020 period.

The pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved had the acquisition been consummated as of that time.

For the Year Ended

(in thousands, except per share data, unaudited) December 31, 2022

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Diluted earnings per share $ 4.13

The fiscal 2021 unaudited pro forma net income set forth above was adjusted to exclude the impact of acquisition date fair value adjustments to inventory, and to also remove acquisition-related transaction costs.

The fiscal 2022 unaudited pro forma net income set forth above was adjusted to exclude the impact of acquisition date fair value adjustments to inventory and to remove acquisition-related transaction costs.

Inventories were as follows :

(in thousands) December 31, 2023 December 31, 2022

(in thousands) 2024 2023

Raw materials $ 29,233 $ 29,750

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Property, plant and equipment include the following:

(in thousands) December 31, 2023 December 31, 2022

(in thousands) 2024 2023

Buildings $ 67,040 $ 62,434

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Property, plant and equipment, net $ 164,499 $ 160,113

Depreciation and amortization expenses associated with property, plant, and equipment were $ 31.9 million, $ 28.6 million, and $ 26.3 million in fiscal 2023, fiscal 2022, and fiscal 2021, respectively.

Depreciation and amortization expenses associated with property, plant, and equipment were $ 34.0 million, $ 31.9 million, and $ 28.6 million in the years ended December 31, 2024, 2023, and 2022, respectively.

Net property, plant and equipment outside the United States was $ 4.6 million and $ 4.3 million as of December 31, 2024 and 2023, respectively.

We determine whether an arrangement is a lease at inception.

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Operating lease payments are recognized on a straight-line basis over the lease term.

We had no material finance leases as of December 31, 2023 or December 31, 2022.

We had no material finance leases as of December 31, 2024 or 2023.

Practical Expedients and Accounting Policy Elections

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• Account for leases with terms of one year or less as short-term leases and, as such, are not included in the right-of-use assets or lease liabilities.

As of December 31, 2023 and December 31, 2022 there were no material variable lease costs or sublease income.

Cash paid for operating leases was $ 21.2 million, $ 16.8 million and $ 9.2 million during fiscal

2023, fiscal 2022 and fiscal 2021, respectively, which are classified in operating activities on the Consolidated Statements of Cash Flows.

As of December 31, 2024 and 2023, there were no material variable lease costs or sublease income.

Cash paid for operating leases was $ 22.8 million, $ 21.2 million, and $ 16.8 million during the years ended December 31, 2024, 2023, and 2022, respectively, which is classified in operating activities on the Consolidated Statements of Cash Flows.

The following table summarizes the lease expense:

For the Year Ended

(in thousands) December 31, 2023 December 31, 2022 December 25, 2021

For the Year Ended December 31,

(in thousands) 2024 2023 2022

Operating lease expense $ 23,926 $ 21,747 $ 17,340

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Supplemental balance sheet information related to our operating leases is as follows:

(in thousands) December 31, 2023 December 31, 2022

(in thousands) 2024 2023

Operating lease right-of-use assets $ 118,499 $ 103,476

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The following table summarizes the maturities of our lease liabilities for all operating leases as of December 31, 2024:

(in thousands) December 31, 2023

(in thousands)

2025 $ 25,090

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Balance at December 31, 2022 $ — $ — $ — $ 443,035

Goodwill acquired — — — 247,247

Measurement period adjustments — — — 233

Foreign currency translation — — — 621

Reporting unit reorganization 313,704 57,876 72,309 —

Balance at December 31, 2023 313,704 57,876 72,309 443,889

Measurement period adjustments — — — 233

Reporting structure reorganization (see Note 8) 313,704 56,637 72,309 —

Goodwill acquired — — 1,167 1,167

Foreign currency translation — ( 2,170 ) — ( 2,170 )

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Intangible assets, subject to amortization, included the following:

December 31, 2023 December 31, 2022

Intangible assets subject to amortization Weighted Average Amortization Period (years) Gross Carrying Value Accumulated Amortization Net Carrying Value Gross Carrying Value Accumulated Amortization Net Carrying Value

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Total $ 353,437 $ 75,224 $ 278,213 $ 355,317 $ 53,761 $ 301,556

Amortization expense associated with intangible assets was $ 22.1 million, $ 14.2 million and $ 6.5 million in fiscal 2023, fiscal 2022 and fiscal 2021, respectively.

Amortization expense associated with intangible assets was $ 22.8 million, $ 22.1 million, and $ 14.2 million in the years ended December 31, 2024, 2023, and 2022, respectively.

The estimated future amortization expense for intangible assets as of December 31, 2024 is summarized as follows:

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Long-Term Debt

On August 10, 2021, in connection with the acquisition of Dayton Parts, we entered into a new credit agreement that provided for a $ 600 million revolving credit facility, including a letter of credit sub-facility of up to $ 60 million (the “2021 Facility”).

The 2021 Facility replaced our previous $ 100 million revolving credit facility.

The 2021 Facility was scheduled to mature on August 10, 2026 and was guaranteed by the Company’s material domestic subsidiaries (together with the Company, the “Credit Parties”) and was supported by a security interest in substantially all of the Credit Parties’ personal property and assets, subject to certain exceptions.

In connection with the acquisition of SuperATV, we amended and restated the 2021 Facility (as amended and restated, the “New Facility”) by and among us, the lenders from time to time party thereto, and the administrative agent.

In addition to including the existing $ 600.0 million revolving facility, the New Facility includes a $ 500.0 million term loan, which was used to fund the SuperATV acquisition.

The New Facility (including the revolving portion of the New Facility) matures on October 4, 2027, is guaranteed by the Credit Parties and is supported by a security interest in substantially all of the Credit Parties’ personal property and assets, subject to certain exceptions .

Borrowings under the New Facility bear interest at a rate per annum equal to, at our option, either a term Secured Overnight Financing Rate (“Term SOFR”) (subject to a 0.00 % floor) or a base rate (as defined in the New Facility), in each case plus an applicable margin of, initially (i) in the case of Term SOFR loans, 1.50 % or (ii) in the case of base rate loans, 0.50 %.

The applicable margin for (i) base rate loans ranges from 0.000 % to 1.000 % per annum and (ii) for Term SOFR loans ranges from 1.000 % to 2.000 % per annum, in each case, based on the Total Net Leverage Ratio (as defined in the New Facility).

The commitment fee under the New Facility is initially equal to 0.20 % and thereafter ranges from 0.125 % to 0.250 % based on the Total Net Leverage Ratio (as defined in the New Facility).

As of December 31, 2023, the interest rate on the outstanding borrowings under the New Facility was 6.96 % and the commitment fee was 0.15 %.

The term loan portion of the New Facility contains mandatory repayment provisions that require quarterly principal amortization payments on the term loan equal to a defined percentage of the initial borrowing amount of $ 500.0 million as follows, with the balance payable upon maturity in October 2027:

Fiscal Quarter Ending Principal Amortization Payment Percentage

December 31, 2022 through September 24, 2024 0.625

December 31, 2024 through September 30, 2025 1.25

December 31, 2025 through September 30, 2027 1.875

The New Facility contains affirmative and negative covenants, including, but not limited to, covenants regarding capital expenditures, share repurchases, and financial covenants related to the ratio of consolidated interest expense to consolidated EBITDA and the ratio of total net indebtedness to consolidated EBITDA, each as defined by the New Facility.

As of December 31, 2023, we were not in default of the covenants contained in the New Facility.

We have a credit agreement which consists of a $ 600.0 million revolving credit facility and a $ 500.0 million term loan.

The credit agreement matures on October 4, 2027, is guaranteed by the Company’s material domestic subsidiaries , and is supported by a security interest in substantially all of the Company’s material domestic subsidiaries’ personal property and assets, subject to certain exceptions .

Borrowings under the credit agreement bear interest at a rate per annum equal to, at our option, either a term Secured Overnight Financing Rate (“Term SOFR”) or a base rate (as defined in the credit agreement), in each case plus an applicable margin, based on the Total Net Leverage Ratio (as defined in the credit agreement).

Unutilized revolving credit facility capacity incurs a commitment fee based on the Total Net Leverage Ratio (as defined in the credit agreement).

As of December 31, 2024, the interest rate on the outstanding borrowings under the credit agreement was 5.71 % and the commitment fee was 0.15 %.

The term loan portion of the credit agreement contains mandatory repayment provisions that require quarterly principal amortization payments.

The following table presents the principal amortization payments and maturities on the term loan for each of the years noted, as of December 31, 2024:

(in thousands) December 31, 2024

2025 $ 28,125

Total $ 468,750

Long-term debt on the consolidated balance sheets is presented net of unamortized debt issuance costs, which totaled $ 1.1 million and $ 1.5 million as of December 31, 2024 and 2023, respectively.

The credit agreement contains affirmative and negative covenants, including, but not limited to, covenants regarding capital expenditures, share repurchases, and financial covenants related to the ratio of consolidated interest expense to consolidated EBITDA and the ratio of total net indebtedness to consolidated EBITDA, each as defined by the credit agreement.

As of December 31, 2024, we were not in default of the covenants contained in the credit agreement.

Segment Information

Effective beginning the fourth quarter of 2023, the Company reorganized its management and reporting into three segments:

Light Duty, Heavy Duty and Specialty Vehicle.

These segments realign our business along the three sectors of the motor vehicle aftermarket in which we operate and help support the continued growth of the Company following several acquisitions.

The Light Duty segment designs and markets replacement parts and fasteners primarily for passenger cars and light-duty trucks with sales to retailers and wholesale distributors who primarily serve passenger car and light-duty truck customers.

The Heavy Duty segment designs and markets replacement parts primarily for medium- and heavy-duty vehicles with sales to independent distributors, independent component specialists and rebuilders, and auto parts stores who focus on the heavy-duty market.

We operate and report our results in three business segments, Light Duty, Heavy Duty, and Specialty Vehicle, consistent with the three sectors of the motor vehicle aftermarket industry in which we participate.

The Light Duty segment designs and markets replacement parts and fasteners primarily for passenger cars and light trucks with sales to retailers and wholesale distributors who primarily serve passenger car and light truck customers.

The Heavy Duty segment designs and markets replacement parts primarily for medium and heavy trucks with sales to independent distributors, independent component specialists and rebuilders, and auto parts stores that focus on the heavy-duty market.

The Specialty Vehicle segment designs, markets, and manufactures aftermarket parts and accessories for the powersports market with sales through direct-to-consumer, dealers, and installers.

We measure segment profit based on income from operations excluding acquisition-related intangible assets amortization, acquisition-related transaction and other costs, and other special charges.

The Company's chief operating decision maker ("CODM") is the chief executive officer.

The CODM uses income from operations to assess segment performance.

The CODM utilizes this measure for each segment in the annual budget and forecasting cycles and considers performance against established targets for purposes of allocating Company resources to each segment and in the determination of compensation for certain Contributors.

We measure segment income from operations based on income from operations excluding acquisition-related intangible assets amortization, acquisition-related transaction and other costs, and other special charges.

Corporate expenses are allocated to the segments based on segment net sales as a percentage of consolidated net sales.

Segment assets consist of inventories, accounts receivable, and property, plant and equipment, net.

1 unchanged sentence

Segment results are as follows:

For the Year Ended

(in thousands) December 31, 2023 December 31, 2022 December 25, 2021

Light Duty $ 1,462,474 $ 1,425,892 $ 1,247,465

Heavy Duty 256,913 258,215 97,784

Specialty Vehicle 210,401 49,642 —

Total $ 1,929,788 $ 1,733,749 $ 1,345,249

Income from operations:

Light Duty 187,159 169,579 182,020

Heavy Duty 14,505 29,738 10,942

Specialty Vehicle 31,618 8,537 —

Total $ 233,282 $ 207,854 $ 192,962

For the Year Ended December 31, 2024

(in thousands) Light Duty Heavy Duty Specialty Vehicle Total

Net sales $ 1,565,601 $ 231,515 $ 212,081 $ 2,009,197

Cost of goods sold 925,319 171,732 104,994 1,202,045

Factoring expense 51,252 — — 51,252

Other segment expenses 304,866 53,303 74,752 432,921

Segment income from operations $ 284,164 $ 6,480 $ 32,335 $ 322,979

Segment assets $ 1,203,165 $ 157,493 $ 85,606 $ 1,446,264

Depreciation $ 26,485 $ 3,725 $ 3,750 $ 33,960

Light Duty $ 25,239 $ 25,062 $ 25,296

Heavy Duty 3,239 2,772 1,034

Specialty Vehicle 3,420 798 —

Total $ 31,898 $ 28,632 $ 26,330

Capital expenditures $ 34,164 $ 2,421 $ 2,836 $ 39,421

Light Duty $ 33,445 $ 31,682 $ 19,016

Heavy Duty 3,581 4,769 824

Specialty Vehicle 6,942 1,432 —

Total $ 43,968 $ 37,883 $ 19,840

For the Year Ended December 31, 2023

(in thousands) Light Duty Heavy Duty Specialty Vehicle Total

Net sales $ 1,462,474 $ 256,913 $ 210,401 $ 1,929,788

Cost of goods sold 928,983 192,729 110,840 1,232,552

Factoring expense 50,231 — — 50,231

Other segment expenses 296,101 49,679 67,943 413,723

Segment income from operations $ 187,159 $ 14,505 $ 31,618 $ 233,282

Segment assets $ 1,083,347 $ 162,583 $ 78,424 $ 1,324,354

Light Duty $ 1,083,347 $ 1,047,987 $ 988,371

Heavy Duty 162,583 177,557 131,245

Specialty Vehicle 78,424 106,219 —

Total $ 1,324,354 $ 1,331,763 $ 1,119,616

A reconciliation of segment adjusted operating income to consolidated income before taxes is as follows:

For the Year Ended

(in thousands) December 31, 2023 December 31, 2022 December 25, 2021

Depreciation $ 25,239 $ 3,239 $ 3,420 $ 31,898

Capital expenditures $ 33,445 $ 3,581 $ 6,942 $ 43,968

For the Year Ended December 31, 2022

(in thousands) Light Duty Heavy Duty Specialty Vehicle Total

Net sales $ 1,425,892 $ 258,215 $ 49,642 $ 1,733,749

Cost of goods sold 949,918 183,233 25,078 1,158,229

Factoring expense 37,188 — — 37,188

Other segment expenses 269,207 45,244 16,027 330,478

Segment income from operations $ 169,579 $ 29,738 $ 8,537 $ 207,854

Segment assets $ 1,047,987 $ 177,557 $ 106,219 $ 1,331,763

Depreciation $ 25,062 $ 2,772 $ 798 $ 28,632

Capital expenditures $ 31,682 $ 4,769 $ 1,432 $ 37,883

In the preceding segment tables, Other segment expenses consist of selling, general and administrative expenses including salaries and benefits for product development, research, sales, marketing and administrative functions, facility costs, information technology costs, and other general expenses.

A reconciliation of segment income from operations to consolidated income before income taxes is as follows:

For the Year Ended December 31,

(in thousands) 2024 2023 2022

Segment income from operations $ 322,979 $ 233,282 $ 207,854

Acquisition-related intangible assets amortization ( 22,476 ) ( 21,817 ) ( 14,070 )

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Executive transition services expenses — ( 1,801 ) —

Pretax reduction in workforce costs ( 4,973 ) — —

Interest expense, net ( 39,727 ) ( 48,061 ) ( 15,582 )

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A reconciliation of segment assets to consolidated assets is as follows:

For the Year Ended

(in thousands) December 31, 2023 December 31, 2022 December 25, 2021

(in thousands) 2024 2023 2022

Segment assets $ 1,446,264 $ 1,324,354 $ 1,331,763

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Related Party Transactions

Prior to December 1, 2023, we leased our Colmar, PA facility from an entity in which Steven L.

Berman, our Non-Executive Chairman, and certain of his family members are owners.

Prior to December 1, 2023, we leased our Colmar, PA facility from an entity in which Steven Berman, our Non-Executive Chairman, and certain of his family members are owners.

On December 1, 2023, the Colmar facility was sold to a third party, subject to our lease.

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Berman and certain of his family members are owners.

Each lease is a non-cancelable operating lease and expires December 31, 2027.

Total rental payments to those entities under these lease arrangements were $ 2.9 million, $ 2.5 million, and $ 2.3 million in fiscal 2023, fiscal 2022 and fiscal 2021, respectively.

During fiscal 2023 and for the period subsequent to our acquisition of Super ATV in fiscal 2022, we leased our facilities in Madison, IN and Shreveport, LA, from entities in which Lindsay Hunt, our President and Chief Executive Officer, Specialty Vehicles, and certain of her family members are owners.

Each lease is a non-cancelable operating lease.

Total rental payments to those entities under these lease arrangements were $ 2.6 million in fiscal 2023 and $ 0.5 million in fiscal 2022.

The leases for our operating facilities in Madison, IN and Shreveport, LA were renewed in October 2022 in connection with the acquisition of SuperATV and will expire on October 31, 2027.

During fiscal 2023 and for the period subsequent to our acquisition of SuperATV in fiscal 2022, we had a warehouse storage and services agreement with a counterparty that is majority-owned by a family member of Ms.

Lindsay Hunt, our President and Chief Executive Officer, Specialty Vehicle.

The agreement provides for indoor storage space and material handling services at agreed-upon rates.

Total payments under the arrangement were $ 0.2 million in fiscal 2023 and less than $ 0.1 million in fiscal 2022.

The agreement was signed in October 2020 and expired in October 2023, but was extended on a month-to-month basis.

The Colmar lease was, and the Lewisberry lease is, a non-cancelable operating lease.

The Lewisberry lease expires December 31, 2027.

We also lease our facilities in Madison, IN, and Shreveport, LA, from entities in which Lindsay Hunt, our President, Specialty Vehicle, and certain of her family members are owners.

Each lease is a non-cancelable operating lease, was renewed in October 2022 in connection with the acquisition of Super ATV, LLC, a leading supplier to the powersports aftermarket ("SuperATV"), and will expire on October 31, 2027.

We have service agreements with counterparties that are majority-owned by a family member of Ms.

These agreements provide for various warehouse and facility-related services at agreed-upon rates.

The following table represents the total payments for the years ended December 31, 2024, 2023, and 2022, under the related party agreements described above:

For the Year Ended December 31,

(in thousands) 2024 2023 2022

Facility leases with Steven Berman-related entities $ 715 $ 2,918 $ 2,458

Facility leases with Lindsay Hunt-related entities $ 2,757 $ 2,603 $ 519

Service agreements with Lindsay Hunt-related entities $ 54 $ 200 $ 67

We are a partner in a joint venture with one of our suppliers and own a minority interest in two other suppliers.

Purchases from these companies were $ 22.7 million, $ 24.9 million and $ 18.9 million in fiscal 2023, fiscal 2022 and fiscal 2021, respectively.

The components of the income tax provision (benefit) are as follows:

For the Year Ended

(in thousands) December 31, 2023 December 31, 2022 December 25, 2021

Aggregate purchases from both of these companies were $ 18.4 million, $ 22.7 million, and $ 24.9 million in the years ended December 31, 2024, 2023, and 2022, respectively.

The components of the provision for income taxes are as follows:

For the Year Ended December 31,

(in thousands) 2024 2023 2022

Federal $ 56,879 $ 34,600 $ 31,683

6 unchanged sentences

( 10,838 ) ( 2,960 ) ( 5,880 )

Total $ 39,244 $ 34,652 $ 38,234

Provision for income taxes $ 66,248 $ 39,244 $ 34,652

The following is a reconciliation of income taxes at the statutory tax rate to the Company's effective tax rate:

For the Year Ended

December 31, 2023 December 31, 2022 December 25, 2021

For the Year Ended December 31,

2024 2023 2022

Federal taxes at statutory rate 21.0 % 21.0 % 21.0 %

State taxes, net of federal tax benefit 2.4 2.1 2.5

Uncertain tax positions 2.9 0.2 0.3

Research and development tax credit ( 0.5 ) ( 0.7 ) ( 0.7 )

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The following table summarizes the change in unrecognized tax benefits for the three years ended December 31:

For the Year Ended

(in thousands) December 31, 2023 December 31, 2022 December 25, 2021

For the Year Ended December 31,

(in thousands) 2024 2023 2022

Balance at beginning of year $ 4,539 $ 3,856 $ 1,204

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We recognize interest and penalties related to unrecognized tax benefits in income tax expense.

As of December 31, 2023, accrued interest and penalties related to unrecognized tax benefits were immaterial.

The total amount of interest and penalties related to unrecognized tax benefits recorded within tax expense was $ 3.1 million for the year ended December 31, 2024, and was immaterial for the year ended December 31, 2023.

As of December 31, 2024, accrued interest and penalties related to unrecognized tax benefits were $ 3.5 million.

The Company does not anticipate material changes in the amount of unrecognized income tax benefits over the next year.

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The sources of temporary differences are as follows:

(in thousands) December 31, 2023 December 31, 2022

(in thousands) 2024 2023

Inventories $ 15,111 $ 17,829

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Accrued expenses 10,932 7,002

Capitalized research and development expenses 16,840 12,263

Net operating losses 295 289

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Gross deferred tax liabilities 97,606 93,013

Net deferred tax (liabilities) assets $ ( 8,925 ) $ ( 11,826 )

Net deferred tax assets (liabilities) $ 2,086 $ ( 8,925 )

A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized.

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Based on our history of taxable income and our projection of future earnings, we believe that it is more likely than not that sufficient taxable income will be generated in the foreseeable future to realize the remaining net deferred tax assets.

During 2023, we reduced the valuation allowance against the deferred tax assets noted above by an immaterial amount.

During 2024, we increased the valuation allowance against the deferred tax assets noted above by an immaterial amount.

As of December 31, 2024, the Company has tax-effected net operating loss carryforwards of $ 0.2 million and $ 0.1 million for U.S.

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A shareholders’ agreement was entered into in September 1990 and amended and restated on July 1, 2006.

Under the agreement, each of the late Richard Berman, Steven Berman,

Jordan Berman, Marc Berman, Fred Berman, Deanna Berman and additional shareholders named in the agreement has, among other things, granted the others of them rights of first refusal, exercisable on a pro-rata basis or in such other proportions as the exercising shareholders may agree, to purchase shares of our common stock which any of them, or upon their deaths their respective estates, proposes to sell to third parties.

Under the agreement, each of the late Richard Berman, Steven Berman, Jordan Berman, Marc Berman, Fred Berman, Deanna Berman, and additional shareholders named in the agreement has, among other things, granted the others of them rights of first refusal, exercisable on a pro-rata basis or in such other proportions as the exercising shareholders may agree, to purchase shares of our common stock which any of them, or upon their deaths their respective estates, proposes to sell to third parties.

We have agreed with these shareholders that, upon their deaths, to the extent that any of their shares are not purchased by any of these surviving shareholders and may not be sold without registration under the Securities Act of 1933, as amended (the "1933 Act"), we will use our best efforts to cause those shares to be registered under the 1933 Act.

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Acquisitions.

We have contingent consideration related to an acquisition due to the uncertainty of the ultimate amount of any payments that will become due as earnout payments if performance targets are achieved.

If the remaining performance targets for the acquisition are fully achieved, the maximum additional contingent payments to be made under the transaction documents would be $ 102.0 million in the aggregate.

As of December 31, 2023 and December 31, 2022, we accrued $ 0.0 million and $ 20.0 million, respectively, representing the fair value of the estimated payments that we expect could become due in connection with the transaction.

For the year ended December 31, 2023, we recorded a net decrease of $ 20.0 million to the contingent consideration liability, comprising a $ 20.5 million decrease in fair value based on the modeling of a range of performance outcomes relative to the achievement of targets established in the purchase agreement, partially offset by $ 0.5 million of accretion on the liability resulting from the passage of time.

We have contingent consideration related to prior acquisitions due to the uncertainty of the ultimate amount of any payments that will become due as earnout payments if performance targets are achieved.

If the remaining performance targets for the acquisitions are fully achieved, the maximum additional contingent payments to be made under the transaction documents would be $ 102.0 million in the aggregate.

As of December 31, 2024 and December 31, 2023, we estimated that zero payments are expected to become due in connection with the acquisitions, and therefore accrued no liability.

For the year ended December 31, 2023, we recorded a net decrease of $ 20.0 million to the contingent consideration liability for a prior acquisition, comprising a $ 20.5 million decrease in fair value based on the modeling of a range of performance outcomes relative to the achievement of targets established in the purchase agreement, partially offset by $ 0.5 million of accretion on the liability resulting from the passage of time.

The net benefit was included in selling, general and administrative expenses in the Condensed Consolidated Statements of Operations.

For the year ended December 31, 2022, we recorded a charge of $ 1.8 million in connection with earnout provisions under a prior acquisition, with the charge included in Selling, General and Administration expenses.

For the year ended December 31, 2022, we recorded a charge of $ 1.8 million in connection with earnout provisions under a prior acquisition, with the charge included in selling, general and administrative expenses in the Condensed Consolidated Statements of Operations.

During the year ended December 31, 2022, we paid $ 1.8 million to fully settle this earnout provision associated with the prior acquisition.

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At this point, we believe it is probable that we will collect the consideration to which we will be entitled in exchange for the goods transferred to the customer.

For certain customers, we may also enter into a sales agreement that outlines pricing considerations as well as the framework of terms and conditions which apply to future purchase orders for that customer.

In these situations, our contract with the customer is both the sales agreement as well as the specific customer purchase order.

For certain customers, we may also enter into a sales agreement that outlines pricing considerations as well as the framework of terms and conditions that apply to future purchase orders for that customer.

In these situations, our contract with the customer is both the sales agreement as well as the specific customer purchase

As our contract with a customer is typically for a single transaction or customer purchase order, the duration of the contract is typically one year or less.

As a result, we have elected to apply certain practical expedients and omit certain disclosures of remaining performance obligations for contracts that have an initial term of one year or less as permitted by GAAP.

Revenue is recognized from product sales when goods are shipped, title and risk of loss and control have been transferred to the customer, and collection is reasonably assured.

We estimate the transaction price at the inception of a contract or upon fulfilling a purchase order, including any variable consideration, and will update the estimate for changes in circumstances.

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We have concluded that our estimates of variable consideration are not constrained according to the definition in the standard.

All of our revenue was recognized under the point of time approach during fiscal 2023, fiscal 2022 and fiscal 2021.

All of our revenue was recognized under the point-of-time approach during the years ended December 31, 2024, 2023, and 2022.

Also, we do not have significant financing arrangements with our customers.

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The following table presents our disaggregated net sales by geography.

For the Year Ended

(in thousands) December 31, 2023 December 31, 2022 December 25, 2021

For the Year Ended December 31,

(in thousands) 2024 2023 2022

Net Sales to U.S.

3 unchanged sentences

Net Sales $ 2,009,197 $ 1,929,788 $ 1,733,749

During fiscal 2023, fiscal 2022, and fiscal 2021, three customers each accounted for more than 10% of net sales and in the aggregate accounted for 44 %, 49 % and 54 % of net sales in fiscal 2023, fiscal 2022, and fiscal 2021, respectively.

Sales to these three customers are included in the Light Duty segment operating income.

During the year ended December 31, 2024, two customers each accounted for more than 10% of net sales, and for the years ended December 31, 2023 and 2022, three customers each accounted for more than 10% of net sales.

In the aggregate, these customers accounted for 39 %, 44 %, and 49 % of net sales in the years ended December 31, 2024, 2023, and 2022, respectively.

Sales to these customers are included in the Light Duty segment.

Capital Stock

Controlling Interest by Officers, Directors and Family Members .

As of December 31, 2023 and December 31, 2022, Steven Berman, the Non-Executive Chairman of the Company, and members of his family beneficially owned approximately 16 % of the outstanding shares of our common stock, and could influence matters requiring approval of shareholders, including the election of the Board of Directors and the approval of significant transactions.

As of December 31, 2024 and 2023, Steven Berman, the Non-Executive Chairman of the Company, and members of his family beneficially owned approximately 15 % and 16 %, respectively, of the outstanding shares of our common stock, and could influence matters requiring approval of shareholders, including the election of the Board of Directors and the approval of significant transactions.

Undesignated Stock .

6 unchanged sentences

Under the terms of the Plan, our Board of Directors may grant up to 1,200,000 shares of common stock in the form of shares of restricted stock, restricted stock units, stock appreciation rights, and stock options, or combinations thereof, to officers, directors, employees, consultants, and advisors.

Grants under the Plan must be made within ten years of the date the Plan was approved.

Grants under the Plan must be made on or before the tenth anniversary of the date the Plan was approved.

Stock options are exercisable upon the terms set forth in each grant agreement approved by the Board of Directors, but in no event more than ten years from the date of grant.

6 unchanged sentences

For time-based RSAs, compensation cost is recognized on a straight-line basis over the vesting period and is calculated using the closing price per share of our common stock on the grant date.

Compensation cost related to those awards was recognized over the performance period and was calculated using the closing price per share of our common stock on the grant date and an estimate of the probable outcome of the performance conditions as of the reporting date.

In 2019, we introduced performance-based RSAs that vest based on our total shareholder return ranking relative to the S&P Mid-Cap 400 Growth Index over a three-year performance period.

For those awards, compensation cost is recognized on a straight-line basis over the performance period and is calculated using the simulated fair value per share of our common stock based on the application of a Monte Carlo simulation model.

Compensation cost related to those performance-based RSAs was recognized over the performance period and was calculated using the closing price per share of our common stock on the grant date and an estimate of the probable outcome of the performance conditions as of the reporting date.

In 2019, we introduced performance-based RSAs that vest based on our total shareholder return ranking relative to the S&P Mid-Cap 400 Growth Index over a three-year performance period (market condition).

For those awards containing a market condition, compensation cost is recognized on a straight-line basis over the performance period and is calculated using the simulated fair value per share of our common stock based on the application of a Monte Carlo simulation model.

This valuation technique includes estimating the movement of stock prices and the effects of volatility, interest rates, and dividends.

1 unchanged sentence

For time-based RSUs, compensation cost is recognized on a straight-line basis over the vesting period and is calculated using the closing price per share of our common stock on the grant date.

For performance-based RSUs tied to total shareholder return, compensation cost is recognized on a straight-line basis over the performance period and is calculated using the simulated fair value per share of our common stock based on the application of a Monte Carlo simulation model as discussed in the paragraph above.

The following table summarizes the weighted average valuation assumptions used to calculate the fair value of total shareholder return performance-based RSUs granted:

For the Year Ended

December 31, 2023 December 31, 2022 December 25, 2021

Performance-based RSUs granted starting in the year ended December 31, 2024 included certain grants that vest based on our total shareholder return ranking relative to the Nasdaq US Benchmark Auto Parts Index over a three-year performance period (market condition), and other grants that vest based upon achievement of return on invested capital targets over a three-year performance period (performance condition).

For performance-based RSUs with a market condition, compensation cost is recognized on a straight-line basis over the performance period and is calculated using the simulated fair value per share of our common

stock based on the application of a Monte Carlo simulation model as discussed in the paragraph above.

For performance-based RSUs with a performance condition, compensation cost is recognized over the performance period and is calculated using the closing price per share of our common stock on the grant date and an estimate of the probable outcome of the performance conditions as of the reporting date.

The following table summarizes the weighted average valuation assumptions used to calculate the fair value of total shareholder return performance-based RSUs containing a market condition granted:

For the Year Ended December 31,

2024 2023 2022

Share price $ 90.47 $ 91.28 $ 96.36

6 unchanged sentences

Treasury security with terms equal to the expected time of vesting as of the grant date.

The weighted-average grant-date fair value of total shareholder return RSUs granted during fiscal 2023, fiscal 2022, and fiscal 2021 were $ 113.15 , $ 111.31 , and $ 131.02 , respectively.

Compensation cost related to performance-based and time-based RSAs and RSUs was $ 9.1 million, $ 7.2 million and $ 6.1 million in fiscal 2023, fiscal 2022 and fiscal 2021, respectively, and was included in selling, general and administrative expenses in the Consolidated Statements of Operations.

No cost was capitalized during fiscal 2023, fiscal 2022 or fiscal 2021.

The weighted-average grant-date fair value of the RSUs containing a market condition granted during the years ended December 31, 2024, 2023, and 2022, were $ 138.58 , $ 113.15 , and $ 111.31 , respectively.

Compensation cost related to performance-based and time-based RSAs and RSUs was $ 12.3 million, $ 9.1 million, and $ 7.2 million in the years ended December 31, 2024, 2023, and 2022, respectively, and was included in selling, general and administrative expenses in the Consolidated Statements of Operations.

No cost was capitalized during the years ended December 31, 2024, 2023, and 2022.

The following table summarizes our RSA and RSU activity for the three years ended December 31, 2024:

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Balance at December 31, 2024 340,578 $ 97.84

As of December 31, 2023, there was approximately $ 13.5 million of unrecognized compensation cost related to unvested RSAs and RSUs, which is expected to be recognized over a weighted-average period of approximately 2.0 years.

As of December 31, 2024, there was approximately $ 18.4 million of unrecognized compensation cost related to unvested RSUs, which is expected to be recognized over a weighted-average period of approximately 1.9 years.

Cash flows resulting from tax deductions in excess of the tax effect of compensation cost recognized in the financial statements are classified as operating cash flows.

3 unchanged sentences

We expense the grant-date fair value of stock options as compensation cost over the vesting or performance period.

Compensation cost charged against income for stock options was $ 2.0 million, $ 1.7 million and $ 1.3 million in fiscal 2023, fiscal 2022 and fiscal 2021, respectively,

and was included in selling, general and administrative expense in the Consolidated Statements of Operations.

No cost was capitalized during fiscal 2023, fiscal 2022 or fiscal 2021.

Compensation cost charged against income for stock options was $ 1.6 million, $ 2.0 million, and $ 1.7 million in the years ended December 31, 2024, 2023, and 2022, respectively, and was included in selling, general and administrative expense in the Consolidated Statements of Operations.

No cost was capitalized during the years ended December 31, 2024, 2023, and 2022.

We used the Black-Scholes option valuation model to estimate the fair value of stock options granted.

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Treasury security with terms equal to the expected time of exercise as of the grant date.

There were no stock options granted in 2024.

The following table summarizes the weighted-average valuation assumptions used to calculate the fair value of options granted and the associated weighted-average grant-date fair values:

For the Year Ended

December 31, 2023 December 31, 2022 December 25, 2021

For the Year Ended December 31,

Expected dividend yield 0 % 0 %

1 unchanged sentence

Risk-free interest rate 4.3 % 1.8 %

Expected life of options 5.3 years 5.3 years 5.3 years

Expected life of options 5.3 years 5.3 years

Weighted-average grant-date fair value $ 35.93 $ 32.55

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Balance at December 31, 2023 311,217 $ 61.68 – $ 111.53

Granted 79,404 $ 86.63 – $ 91.28

Exercised ( 65,180 ) $ 61.68 – $ 111.53

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As of December 31, 2024, there was approximately $ 2.1 million of unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted-average period of approximately 1.9 years.

Cash received from option exercises was $ 1.2 million, $ 1.0 million, and $ 2.5 million in fiscal 2023, fiscal 2022 and fiscal 2021, respectively.

Cash received from option exercises was $ 4.7 million, $ 1.2 million, and $ 1.0 million in the years ended December 31, 2024, 2023, and 2022, respectively.

The tax benefit generated from option exercises was immaterial for all periods presented.

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Employee Stock Purchase Plan (the “ESPP”), which makes available 1,000,000 shares of our common stock for sale to eligible employees.

The purpose of the ESPP, which is qualified under Section 423 of the Internal Revenue

Service Code of 1986, as amended, is to encourage stock ownership through payroll deductions and limited cash contributions by our employees.

The purpose of the ESPP, which is qualified under Section 423 of the Internal Revenue Service Code of 1986, as amended, is to encourage stock ownership through payroll deductions and limited cash contributions by our employees.

These contributions are used to purchase shares of the Company’s common stock at a 15 % discount from the lower of the market price at the beginning or end of the purchase window.

Prior to 2021, share purchases under the plan were made twice annually, with the purchase windows being April to September and October to March.

In 2021, the decision was made to modify the timing of those two purchase windows to align them with the calendar year.

In order to effectuate that alignment, the purchase window beginning in October 2021 was shortened from six months to three months and ended December 2021.

Beginning January 2022, the two purchase windows are January to June and July to December.

There were 29,650 shares, 25,600 shares and 40,303 shares purchased under this plan during fiscal 2023, fiscal 2022 and fiscal 2021, respectively.

Compensation cost under the ESPP plan was $ 0.4 million, $ 0.4 million and $ 0.9 million in fiscal 2023, fiscal 2022 and fiscal 2021, respectively.

The tax benefit generated from ESPP purchases was immaterial in fiscal 2023, fiscal 2022, and fiscal 2021, respectively.

The two purchase windows are January to June and July to December.

There were 28,674 shares, 29,650 shares, and 25,600 shares purchased under this plan during the years ended December 31, 2024, 2023, and 2022, respectively.

Compensation cost under the ESPP plan was $ 1.1 million, $ 0.4 million, and $ 0.4 million in the years ended December 31, 2024, 2023, and 2022, respectively.

The tax benefit generated from ESPP purchases was immaterial in the years ended December 31, 2024, 2023, and 2022, respectively.

Common Stock Repurchases.

4 unchanged sentences

The following table summarizes the repurchase and cancellation of common stock:

For the Year Ended

December 31, 2023 December 31, 2022 December 25, 2021

For the Year Ended December 31,

2024 2023 2022

Shares repurchased and canceled 18,457 13,778 23,015

3 unchanged sentences

Share Repurchase Program .

Our Board of Directors has authorized a share repurchase program.

Through several actions, including expansions and extensions, the Board has authorized the repurchase of up to $ 600 million of our outstanding common stock through December 31, 2024.

Under this program, share repurchases may be made from time to time depending on market conditions, share price, share availability and other factors at our discretion.

Our Board of Directors previously authorized a share repurchase program.

Under that program, and subsequent authorizations (the “Existing Program”), the Board authorized the repurchase of up to $ 600 million of our outstanding common stock through December 31, 2024.

At December 31, 2024, $ 134.6 million was available for repurchase under this program.

The Existing Program expired on December 31, 2024, along with all amounts that remained available for use under the Existing Program as of that date.

In October 2024, the Company’s Board of Directors authorized the purchase of up to $ 500 million of our common stock under a new share repurchase program effective as of January 1, 2025 through December 31, 2027 (the “New Program”).

The New Program will operate just as the Existing Program had operated in that share repurchases may be made from time to time depending on market conditions, share price, share availability, and other factors at the Company’s discretion.

The New Program, similar to the Existing Program, will not obligate the Company to acquire any specific number of shares.

The following table summarizes the repurchase and cancellation of common stock :

For the Years Ended

December 31, 2023 December 31, 2022 December 25, 2021

For the Year Ended December 31,

2024 2023 2022

Shares repurchased and canceled 855,971 201,632 180,750

2 unchanged sentences

401(k) Retirement Plans .

We have various 401(k) plans that cover substantially all of our employees as of December 31, 2023.

Annual company contributions are discretionary in nature, in accordance with the respective plan documents.

Total expense related to the plans were $ 9.1 million, $ 8.2 million and $ 6.3 million in fiscal 2023, fiscal 2022 and fiscal 2021, respectively.

We have a 401(k) plan that cover substantially all of our employees as of December 31, 2024.

Annual company contributions are discretionary in nature, in accordance with the

respective plan documents.

Total expense related to the plans was $ 13.1 million, $ 9.1 million, and $ 8.2 million in the years ended December 31, 2024, 2023, and 2022, respectively.

Earnings Per Share

2 unchanged sentences

Common share equivalents are calculated using the treasury stock method and are computed based on outstanding stock-based awards.

Stock-based awards of approximately 297,500 shares, 63,500 shares and 14,250 shares were excluded from the calculation of diluted

earnings per share for fiscal 2023, fiscal 2022 and fiscal 2021, respectively, as their effect would have been anti-dilutive.

Stock-based awards of approximately 190,000 shares, 297,500 shares, and 63,500 shares were excluded from the calculation of diluted earnings per share for the years ended December 31, 2024, 2023, and 2022, respectively, as their effect would have been anti-dilutive.

The following table sets forth the computation of basic earnings per share and diluted earnings per share:

For the Year Ended

(in thousands, except per share data) December 31, 2023 December 31, 2022 December 25, 2021

For the Year Ended December 31,

(in thousands, except per share data) 2024 2023 2022

Net income $ 190,004 $ 129,259 $ 121,549

7 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-K

Item 8. Financial Statements and Supplementary Data