What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-06 compared with 2024-11-01 · 89 added, 103 removed, 156 unchanged (55% of the section changed)

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Cautionary Statement Regarding Forward-Looking Statements

Certain statements in this document constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements related to net sales, diluted earnings per share, gross profit, gross margin, selling, general and administrative expenses, income tax expense, income before income taxes, net income, cash and cash equivalents, indebtedness, liquidity, the Company’s share repurchase program, the Company’s outlook, the Company’s growth opportunities and future business prospects, operational costs and productivity initiatives, inflation, customs duties and mitigation of tariffs, long-term value, acquisitions and acquisition opportunities, investments, cost offsets, quarterly fluctuations, new product development, customer concessions, and fluctuations in foreign currency.

Certain statements in this document constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements related to net sales, diluted earnings per share, gross profit, gross margin, selling, general, and administrative expenses, income tax expense, income before income taxes, net income, cash and cash equivalents, indebtedness, liquidity, the Company’s share repurchase program, the Company’s outlook, the Company’s growth opportunities and future business prospects, operational costs and productivity initiatives, inflation, tariffs, supplier diversification, price increases, long-term value, acquisitions and acquisition opportunities, investments, cost offsets, quarterly fluctuations, new product development, customer concessions, and fluctuations in foreign currency.

Words such as “may,” “believe,” “demonstrate,” “expect,” “estimate,” “forecast,” “project,” “plan,” “anticipate,” “intend,” “should,” “will” and “likely” and similar expressions identify forward-looking statements.

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Readers are cautioned not to place undue reliance on those forward-looking statements, which speak only as of the date the statements were made.

Such forward-looking statements are based on current expectations that involve known and unknown risks, uncertainties and other factors (many of which are outside of our control) which may cause actual events to be materially different from those expressed or implied by such forward-looking statements.

Such forward-looking statements are based on current expectations that involve known and unknown risks, uncertainties, and other factors (many of which are outside of our control) that may cause actual events to be materially different from those expressed or implied by such forward-looking statements.

Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated, or projected.

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and/or its affiliates.

Quarterly Report on Form 10-Q also may contain additional trade names, trademarks or service marks belonging to other companies.

This Quarterly Report on Form 10-Q also may contain additional trade names, trademarks, or service marks belonging to other companies.

We do not intend our use or display of other parties’ trademarks, trade names, or service marks to imply, and such use or display should not be construed to imply, a relationship with or endorsement or sponsorship of us by these parties.

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Our products are sold under our various brand names, under our customers’ private label brands, or in bulk.

We are one of the leading aftermarket suppliers of parts that were traditionally available to consumers only from original equipment, or OE, manufacturers or salvage yards.

These parts include, among other parts, leaf springs, intake manifolds, exhaust manifolds, window regulators, radiator fan assemblies, tire pressure monitor sensors, exhaust gas recirculation (EGR) coolers, UTV windshields, and complex electronics modules.

We are one of the leading aftermarket suppliers of parts that were traditionally available to professional installers and consumers only from original equipment, or OE, manufacturers, or salvage yards.

These parts include, among other parts, leaf springs, intake manifolds, exhaust manifolds, oil filters and coolers, window regulators, radiator fan assemblies, tire pressure monitor sensors, exhaust gas recirculation (EGR) coolers, driveshafts, UTV windshields, and complex electronics modules.

We generate most of our net sales from customers in North America, primarily in the United States.

Our products are sold primarily through aftermarket retailers;

through online platforms;

Our products are sold primarily through aftermarket retailers, including through their online platforms;

national, regional, and local warehouse distributors and specialty markets;

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We may experience significant fluctuations from quarter to quarter in our results of operations due to the timing of orders placed by our customers as well as our ability and the ability of our suppliers to deliver products ordered by our customers.

The introduction of new products and product lines to customers, as well as business acquisitions, may also cause significant fluctuations from quarter to quarter.

The introduction of new products and product lines to customers, as well as business acquisitions and changes in weather conditions, may also cause significant fluctuations from quarter to quarter.

Critical Accounting Policies

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The investments primarily have been in the form of increased product development resources, increased customer and end-user awareness programs, and customer service improvements.

These investments historically have enabled us to provide an expanding array of new product offerings and grow revenues at levels that generally have exceeded market growth rates.

In the nine months ended September 28, 2024, we introduced 4,498 new distinct parts to our customers and end-users, including 1,374 “New-to-the-Aftermarket” parts.

These investments have enabled us to

provide an expanding array of new product offerings and grow revenues at levels that generally have exceeded market growth rates.

In the three months ended March 29, 2025, we introduced 1,185 new distinct parts to our customers and end-users, including 492 “New-to-the-Aftermarket” parts.

We introduced 5,335 new distinct parts to our customers and end-users in the fiscal year ended December 31, 2024, including 1,659 “New-to-the-Aftermarket” parts.

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New vehicles contain an average of approximately 100 electronic modules, with some high-end luxury vehicles exceeding that.

Our complex electronics products are designed and developed in-house and tested to help ensure consistent performance, and our product portfolio is focused on further developing our leadership position in the category.

Another area of focus has been on products we market for the heavy-duty sector.

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Within the specialty vehicle sector, we focus on providing performance parts and accessories and nondiscretionary repair parts for UTVs and ATVs.

We develop products designed to be compatible across a wide variety of makes and models to enhance both the performance and appearance of customers’ vehicles.

A key component of our strategy is growth through acquisitions, including the October 2022 acquisition of SuperATV and the August 2021 acquisition of Dayton Parts.

SuperATV is a leading independent supplier to the powersports aftermarket with a family of highly respected brands spanning functional accessories and upgrades, as well as replacement parts for specialty vehicles.

Dayton Parts is a manufacturer of chassis and other parts designed to serve the heavy-duty vehicle sector of the aftermarket.

We are dedicated to developing better and more innovative materials that will be compatible across a wide variety of makes and models to enhance both the performance and appearance of customers’ vehicles.

A key component of our strategy is growth through acquisitions.

We may acquire businesses in the future to supplement our financial growth, increase our customer base, add to our distribution capabilities, or enhance our product development resources, among other reasons.

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In addition, we believe that vehicle owners generally are operating their current vehicles longer than they did several years ago, performing necessary repairs and maintenance to keep those vehicles well-maintained.

We believe this trend has supported an increase in VIO, which increased to 295.9 million in 2023, a 1% increase over 2022.

We believe this trend has supported an increase in VIO, which increased to 298.5

million, a 1% increase in 2024 over 2023.

According to data published by Polk, a division of IHS Automotive, the average age of VIO increased to 12.8 years as of October 2024 from 12.6 years as of October 2023.

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Department of Transportation, the number of miles driven through October 2024 increased 1.0% year over year in the light-duty sector.

However, global gasoline prices remained high during fiscal 2023 and, if they continue, they may negatively impact miles driven as consumers reduce travel or seek alternative methods of transportation.

However, global gasoline prices remained high during 2024 and, if they continue, they may negatively impact miles driven as consumers reduce travel or seek alternative methods of transportation.

Brand Protection

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These incentives can be in the form of “off-invoice” discounts that are immediately deducted from sales at the time of sale.

For those customers that choose to receive their incentives on a quarterly or annual basis instead of “off-invoice,” we provide rebates and accrue for such incentives as the related sales are made and reduce sales accordingly.

Finally, rebates and discounts are provided to customers to support promotional activities such as advertising and sales force allowances.

For those customers who choose to receive their incentives on a quarterly or annual basis instead of “off-invoice,” we provide rebates and accrue for such incentives as the related sales are made and reduce sales accordingly.

Additionally, rebates and discounts are provided to customers to support promotional activities such as advertising and sales force allowances.

Our customers, particularly our larger retail customers, regularly seek more favorable pricing and product return provisions, and extended payment terms when negotiating with us.

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We expect our customers to continue to exert pressure on our margins.

We may incur change-over costs to induce a customer to switch from a competitor’s brand.

These costs are recorded as a reduction to revenue when incurred.

Customer Acquisition Costs

We may incur customer acquisition costs where we incur change-over costs to induce a customer to switch from a competitor’s brand, including expanding new product lines into our existing customers.

Change-over costs include the costs related to removing the customer’s inventory of competitor products and replacing it with our products, which is commonly referred to as a stock lift.

Customer acquisition costs are recorded as a reduction to revenue when incurred.

Product Warranty and Overstock Returns

We warrant our products against certain defects in material and workmanship when used as designed on the vehicle on which it was originally installed.

We offer a limited lifetime warranty on

most of our products in the light-duty parts categories, with more limited warranties for our heavy-duty and specialty vehicle products.

We offer a limited lifetime warranty on most of our products in the light-duty parts categories, with more limited warranties for our heavy-duty and specialty vehicle products.

In addition to warranty returns, we may permit our customers to return new, undamaged products to us within customer-specific limits if they have overstocked their inventories.

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Significant judgments and estimates must be made and used in connection with establishing the sales returns and other allowances in any accounting period.

Revisions to these estimates are made when necessary, based upon changes in these factors.

Revisions to these estimates are made when necessary, based on changes in these factors.

We regularly study trends of such claims.

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Impact of Labor Market and Inflationary Costs

We experienced broad-based inflationary impacts during the year ended December 31, 2023, notably in the first six months of the year, due primarily to global transportation and logistics constraints, which resulted in significantly higher transportation costs;

material costs;

and wage inflation from an increasingly competitive labor market.

Uncertain global supply chain and logistics stability driven by geopolitical events, higher labor costs and material inflation costs may negatively impact our results in the future.

We experienced broad-based inflationary impacts during the year ended December 31, 2023, due primarily to global transportation and logistics constraints, which resulted in significantly higher transportation costs, tariffs, material costs, and wage inflation from an increasingly competitive labor market.

Certain of these increased costs in the second half of 2023 impacted our results of operations in the first half of 2024.

Higher labor costs and material inflation resulting from geopolitical events, rising interest rates, disruptions to supply chain and logistics networks, and the trade policies of the U.S.

or the countries where we source or sell our products may negatively impact our results in the future.

We attempt to offset inflationary pressures with cost-saving initiatives, price increases to customers, and the use of alternative suppliers.

There can be no assurance that we will be successful in implementing pricing increases in the future to recover increased inflationary costs.

There can be no assurance that we will be successful in implementing such cost-saving initiatives, pricing increases, or supplier diversification in the future to offset increased inflationary costs.

Impact of Interest Rates

Our business is subject to interest rate risk under the terms of our customer accounts receivable sales programs, as a change in the Term Secured Overnight Financing Rate (“Term SOFR”) or alternative discount rate affects the cost incurred to factor eligible accounts receivable.

Our business is subject to interest rate risk under the terms of our customer accounts receivable sales programs, as a change in the Term Secured Overnight Financing Rate (“Term SOFR”) or

alternative discount rate affects the cost incurred to factor eligible accounts receivable.

Additionally, our outstanding borrowings under our credit facility bear interest at variable rates tied to Term SOFR or the applicable base rate.

Under the terms of the credit facility, a change in interest rates affects the rate at which we can borrow funds thereunder and also impacts the interest cost on existing borrowings.

Interest rates may hold steady at their current rates for prolonged periods or may increase

in the future, resulting in increased costs associated with our accounts receivable sales programs and outstanding borrowings.

During the year ended December 31, 2023, we saw significant increases in Term SOFR and other reference rates.

Interest rates remained elevated throughout the first nine months of 2024 but have shown recent signs of beginning to decline.

Under the terms of the credit facility, a change in interest rates affects the rate at which we can borrow funds thereunder and impacts the interest cost on existing borrowings.

Interest rates may hold steady at their current rates for prolonged periods or may increase in the future, resulting in increased costs associated with our accounts receivable sales programs and outstanding borrowings.

Interest rates remained elevated throughout much of 2024, but began to decline starting in the second half of 2024, and remained relatively stable throughout the first quarter of 2025.

Impact of Tariffs

In the third quarter of 2018, the Office of the United States Trade Representative (USTR) began imposing additional tariffs on products imported from China, including many of our products, ranging from 7.5% to 25%.

The tariffs enacted to date increase the cost of many of the products that are manufactured for us in China.

We have taken several actions to mitigate the impact of the tariffs including, but not limited to, price increases to our customers and cost concessions from our suppliers.

We expect to continue mitigating the impact of tariffs primarily through, among other things, diversification of suppliers across geographies and selling price increases to offset the higher tariffs incurred.

In March 2022, the USTR reinstated tariff relief for certain categories of products imported from China that had expired.

Absent further action by the USTR, the reinstated tariff relief will expire on May 31, 2025.

The reinstated tariff relief applies to a limited number of our products and is not expected to materially impact our operating results.

We source the majority of our raw materials and parts from suppliers in a variety of non-U.S.

In 2024, approximately 72% of our products were purchased from suppliers in a variety of non-U.S.

countries, with approximately 45% of our products being purchased from third-party suppliers in China.

The current U.S.

administration recently implemented tariffs and announced the possibility of increasing current tariffs or implementing additional ones.

We expect these actions and reactionary tariff adjustments by other countries to impact our business and contribute to inflationary cost increases.

As a result, we are taking actions designed to mitigate the potential impacts of these tariffs, including, but not limited to, passing along price increases to our customers and negotiating cost concessions from our suppliers where possible.

Absent any changes in trade regulations, we anticipate inflationary cost increases due to these tariffs and any resulting impact on macroeconomic conditions and our business to continue throughout the remainder of 2025.

There can be no assurance that the recently announced tariffs or future imposition of any tariffs, changes thereto, or actions taken by countries in response to the tariffs will not have a material adverse effect on our business, results of operations, financial condition, or liquidity in any period or that any actions we take to mitigate the impact of the tariffs will be effective.

Results of Operations

The following table sets forth, for the periods indicated, the percentage of net sales represented by certain items in our Condensed Consolidated Statements of Operations:

Three Months Ended* Nine Months Ended*

(in thousands, except percentage data) September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023

Three Months Ended*

(in thousands, except percentage data) March 29, 2025 March 30, 2024

Net sales $ 507,692 100.0 % $ 468,701 100.0 %

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Interest expense, net 7,358 1.4 % 10,605 2.3 %

Other income, net 1,615 0.3 % 605 0.1 % 1,711 0.1 % 1,358 0.1 %

Other (income) expense, net (1,361) (0.3) % 40 — %

Income before income taxes 74,077 14.6 % 43,793 9.3 %

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* Percentage of sales information may not add due to rounding

Three Months Ended September 28, 2024 Compared to Three Months Ended September 30, 2023

Net sales increased $15.6 million, or 3.2%, for the three months ended September 28, 2024 compared to the prior year period, driven primarily by increased customer demand and sales of new products launched in our Light Duty segment, partially offset by soft market conditions in the heavy duty and specialty vehicle sectors.

Gross profit as a percentage of net sales increased 300 basis points compared to the prior year period primarily due to the easing of inflationary pressures across the businesses and favorable mix from higher sales of new products, as well as operational efficiency initiatives delivering cost-savings.

Selling, general and administrative expenses (“SG&A”) increased $5.5 million, or 30 basis points as a percentage of net sales, for the three months ended September 28, 2024, compared to the prior year period due to higher compensation and benefits costs.

In the prior year period, SG&A benefited from a $1.0 million fair value adjustment to the estimated contingent consideration related to a prior acquisition.

Our effective tax rate decreased to 22.3% for the three months ended September 28, 2024 from 23.0% for the three months ended September 30, 2023 due to favorable discrete items in the three months ended September 28, 2024.

Nine Months Ended September 28, 2024 Compared to Nine Months Ended September 30, 2023

Net sales increased $39.9 million, or 2.8%, for the nine months ended September 28, 2024 compared to the prior year period, driven primarily by volume, including from new product introductions.

Gross profit as a percentage of net sales increased 540 basis points compared to the prior year period primarily due to sales of lower-cost inventory and cost savings initiatives.

Selling, general and administrative expenses (“SG&A”) increased $24.8 million, or 110 basis points as a percentage of net sales, for the nine months ended September 28, 2024, compared to the prior year period, primarily due to $13.4 million of favorable fair value adjustments in the prior year period to the estimated contingent consideration obligation for an acquisition and higher compensation and benefits costs in the current year period.

Our effective tax rate increased to 23.6% for the nine months ended September 28, 2024 from 22.7% for the nine months ended September 30, 2023 primarily due to favorable discrete items applied to a lower income before income taxes in the nine months ended September 30, 2023.

Three Months Ended March 29, 2025, Compared to Three Months Ended March 30, 2024

Net sales increased $39.0 million, or 8.3%, for the three months ended March 29, 2025, compared to the prior year period, driven by increased customer demand and sales of new products in our Light Duty segment, partially offset by soft market conditions in the heavy duty and specialty vehicle sectors.

Gross profit as a percentage of net sales increased 220 basis points compared to the prior year period, primarily due to the sales growth noted above and favorable mix from higher sales of new products, as well as productivity, automation, and supplier diversification initiatives, which delivered cost savings.

Selling, general, and administrative expenses (“SG&A”) increased $0.6 million, but decreased 200 basis points as a percentage of net sales, for the three months ended March 29, 2025, compared to the prior year period, due to favorable leverage on higher net sales in the current year period.

SG&A for the three months ended March 30, 2024, included costs incurred in connection with a reduction in workforce action that was enacted in February 2024, net of realized savings as a result of that action.

Interest expense, net, decreased $3.2 million for the three months ended March 29, 2025, compared to the prior year period.

The decrease was driven by lower outstanding principal on our revolving credit facility and term loan as a result of repayments over the last several quarters, as well as lower average Term SOFR rates in the current year period.

Our effective tax rate decreased to 22.4% for the three months ended March 29, 2025, from 25.0% for the three months ended March 30, 2024, due to tax deductions related to the vesting of restricted stock units in the current year period.

Segment Operating Results

Segment operating results were as follows:

For the Three Months Ended For the Nine Months Ended

(in thousands) September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023

For the Three Months Ended

(in thousands) March 29, 2025 March 30, 2024

Light Duty $ 408,856 $ 359,293

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Total $ 507,692 $ 468,701

Segment profit:

Segment income (loss) from operations

Light Duty $ 81,493 $ 57,795

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Total $ 86,151 $ 64,973

Three Months Ended September 28, 2024 Compared to Three Months Ended September 30, 2023

Light Duty net sales increased $18.9 million, or 5.0%, for the three months ended September 28, 2024 compared to the prior year period, primarily due to increased customer demand and sales of new products launched.

Light Duty segment profit as a percentage of net sales increased to 19.0% for the three months ended September 28, 2024, from 16.1% for the three months ended September 30, 2023.

This increase was primarily driven by the easing of inflationary pressures, favorable mix driven by higher new product sales, and operational excellence initiatives delivering cost-savings, partially offset by higher compensation and benefits costs.

Heavy Duty net sales decreased $3.2 million, or 5.1%, for the three months ended September 28, 2024 compared to the prior year period.

The decrease in net sales primarily reflects reduced customer demand from lower freight industry shipping volumes, partially offset by sales of new products in the three months ended September 28, 2024.

Heavy Duty segment profit as a percentage of net sales increased 150 basis points for the three months ended September 28, 2024, compared to the prior year period.

This increase was primarily driven by sales of lower-cost inventory, and the impact of investments we made as part of initiatives to grow sales and improve margins on a long-term basis.

Specialty Vehicle

Specialty Vehicle net sales remained flat for the three months ended September 28, 2024, compared to the prior year period.

Specialty Vehicle segment profit as a percentage of net sales increased to 17.0% from 13.5% for the three months ended September 28, 2024 and September 30, 2023, respectively.

This increase was primarily driven by sales of lower-cost inventory and cost savings initiatives.

Nine Months Ended September 28, 2024 Compared to Nine Months Ended September 30, 2023

Light Duty net sales increased $61.6 million, or 5.7%, for the nine months ended September 28, 2024 compared to the prior year period, primarily due to volume increases, including sales of new products launched.

Light Duty segment profit as a percentage of net sales increased to 17.4% for the nine months ended September 28, 2024, from 11.4% for the nine months ended September 30, 2023.

This increase was primarily driven by the sell-through of lower-cost inventory and operational excellence initiatives delivering cost-savings, partially offset by higher compensation and benefits costs.

Heavy Duty net sales decreased $20.9 million, or 10.5%, for the nine months ended September 28, 2024 compared to the prior year period.

The decrease in net sales primarily reflects reduced customer demand from lower freight industry shipping volumes in the nine months ended September 28, 2024, as well as sales performance in the nine months ended September 30, 2023 driven by customers’ inventory restocking at the end of the global pandemic.

Heavy Duty segment profit as a percentage of net sales decreased by 230 basis points for the nine months ended September 28, 2024, compared to the prior year period.

This decrease was primarily driven by the deleveraging of fixed costs on lower net sales and the impact of investments we made as part of initiatives to grow sales and improve margins on a long-term basis.

Light Duty net sales increased $49.6 million, or 13.8%, for the three months ended March 29, 2025, compared to the prior year period, primarily due to increased customer demand and sales of new products.

Light Duty segment income from operations as a percentage of net sales increased to 19.9% for the three months ended March 29, 2025, from 16.1% for the three months ended March 30, 2024.

This increase was primarily driven by favorable mix driven by higher new product sales, operational excellence initiatives delivering cost-savings, and favorable leverage on higher net sales.

Heavy Duty net sales decreased $6.1 million, or 10.6%, for the three months ended March 29, 2025, compared to the prior year period.

The decrease in net sales primarily reflects reduced customer demand from continued market pressures in freight transportation and the trucking aftermarket.

Heavy Duty segment income as a percentage of net sales decreased 30 basis points for the three months ended March 29, 2025, compared to the prior year period.

This decrease was primarily driven by the deleverage of fixed costs on lower net sales volumes.

Specialty Vehicle

Specialty Vehicle net sales remained relatively flat for the nine months ended September 28, 2024, compared to the prior year period.

Specialty Vehicle segment profit as a percentage of net sales increased to 16.3% for the nine months ended September 28, 2024, from 14.8% for the nine months ended September 30, 2023.

This increase was primarily driven by the sell-through of lower-cost inventory and cost savings initiatives compared to the nine months ended September 30, 2023.

Specialty Vehicle net sales decreased $4.4 million, or 8.6%, for the three months ended March 29, 2025, compared to the prior year period, primarily due to reduced customer demand.

Specialty Vehicle segment income as a percentage of net sales decreased to 10.2% from 13.9% for the three months ended March 29, 2025, and March 30, 2024, respectively.

This decrease was primarily driven by the deleverage of fixed costs on lower net sales volumes.

Liquidity and Capital Resources

Historically, our primary sources of liquidity have been our invested cash and the cash flow we generate from our operations, including accounts receivable sales programs facilitated through certain customers.

Historically, our primary source of liquidity has been the cash flow we generate from our operations, including accounts receivable sales programs facilitated through certain customers.

Key components of our liquidity and capital resources were as follows:

(in thousands) September 28, 2024 December 31, 2023

(in thousands) March 29, 2025 December 31, 2024

Cash and cash equivalents $ 60,612 $ 57,137

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Based on our current operating plan, we believe that our sources of available capital are adequate to meet our ongoing cash needs for at least the next twelve months.

However, our liquidity could be negatively affected by extending payment terms to customers, a decrease in demand for our products, higher interest rates, the outcome of contingencies or other factors.

However, our liquidity could be negatively affected by tariffs, extending payment terms to customers, a decrease in demand for our products, higher interest rates, the outcome of contingencies, or other factors.

See Note 7, “Commitments and Contingencies”, in the accompanying condensed consolidated financial statements for additional information regarding commitments and contingencies that may affect our liquidity.

Tariffs increase our use of cash since we pay for the tariffs upon the arrival of our goods in the United States, but we collect the cash on any pass-through price increases from our customers on a delayed basis according to the payment terms negotiated with our customers.

We currently anticipate that additional liquidity needs to pay for increased tariffs on products we import can be managed through increased use of our accounts receivable sales programs with certain customers, as well as our existing revolving credit facility.

Payment Terms and Accounts Receivable Sales Programs

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Where available and when we deem appropriate, we participate in accounts receivable sales programs with several customers that allow us to sell our accounts receivable to financial institutions to offset the negative cash flow impact of these payment term extensions.

However, any sales of accounts receivable through these programs ultimately result in us receiving a lesser amount of cash upfront than if we collected those accounts receivable ourselves in due course, resulting in accounts receivable factoring costs.

However, any sales of accounts receivable through these programs ultimately result in us receiving a lesser amount of cash upfront than if we collected those accounts

receivable ourselves in due course, resulting in accounts receivable factoring costs.

Moreover, since these accounts receivable sales programs bear interest at rates tied to the Term SOFR or other reference rates, increases in these applicable rates increase our cost to sell our receivables and reduce the amount of cash we receive.

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Sales of accounts receivable under these programs, and related factoring costs, were as follows:

Three Months Ended Nine Months Ended

(in thousands) September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023

Three Months Ended

(in thousands) March 29, 2025 March 30, 2024

Sales of accounts receivable $ 334,170 $ 285,218

Factoring costs 14,588 13,610

If receivables had not been sold over the previous twelve months, approximately $557.7 million and $526.4 million of additional accounts receivable would have been outstanding at September 28, 2024 and December 31, 2023, respectively, based on our standard payment terms.

We had capacity to sell more accounts receivable under these programs if the needs of the business warranted.

If receivables had not been sold, $918.3 million and $853.6 million of additional receivables would have been outstanding at March 29, 2025, and December 31, 2024, respectively, based on standard payment terms.

Further extensions of customer payment terms would result in additional uses of cash or increased costs associated with the sales of accounts receivable.

Credit Agreement

The Company has a credit agreement that provides a $600.0 million revolving credit facility and also includes a $500.0 million term loan with quarterly amortization payment requirements.

The credit agreement matures on October 4, 2027.

As of September 28, 2024, there was $61.8 million in outstanding borrowings under the revolving credit facility and $475.0 million in outstanding borrowings under the term loan.

We have a credit agreement that 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.

As of March 29, 2025, there was $462.5 million in outstanding borrowings under the term loan.

Also on that date, we had outstanding letters of credit for $1.2 million in aggregate.

Net of outstanding borrowings and letters of credit, we had $537.0 million available under the credit facility at September 28, 2024.

Net of outstanding borrowings and letters of credit, we had $598.8 million available under the credit facility at March 29, 2025.

Our credit agreement contains affirmative and negative covenants.

As of September 28, 2024, we were not in default with respect to our credit agreement.

As of March 29, 2025, we were not in default with respect to our credit agreement.

Refer to Note 7, “Long-Term Debt” to the Notes to Consolidated Financial Statements contained in PART II, ITEM 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, for additional information.

The following summarizes the activities included in the Condensed Consolidated Statements of Cash Flows:

Nine Months Ended

(in thousands) September 28, 2024 September 30, 2023

Three Months Ended

(in thousands) March 29, 2025 March 30, 2024

Cash provided by operating activities $ 51,237 $ 51,980

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Net increase (decrease) in cash and cash equivalents $ 3,475 $ (2,381)

For the nine months ended September 28, 2024, cash provided by operating activities increased $10.5 million over the prior year period, primarily driven by higher net income, partially offset by favorable working capital in the prior year period from significant inventory reductions.

Investing activities used cash of $31.2 million and $32.9 million during the nine months ended September 28, 2024 and September 30, 2023, respectively.

The decrease in cash used in investing activities during the nine months ended September 28, 2024 compared to the prior year period is primarily due to higher additions for property, plant and equipment in the prior year period.

Financing activities during the nine months ended September 28, 2024 included $78.1 million paid to repurchase 855,971 shares of common stock under our share repurchase plan, and the repayments of $31.0 million of outstanding borrowings under our revolving credit facility and $9.4 million of our term loan balance under our credit agreement.

During the nine months ended September 30, 2023, we repaid $119.7 million of outstanding borrowings under our revolving credit facility and $9.4 million of our term loan balance under our credit agreement.

The remaining uses of cash from financing activities in each period resulted primarily from the repurchase of our common stock from our 401(k) Plan and income tax withholding in connection with the vesting of restricted stock awards (“RSAs”) and restricted stock units (“RSUs”).

For the three months ended March 29, 2025, cash provided by operating activities decreased $0.7 million over the prior year period.

Investing activities used cash of $11.0 million and $10.8 million during the three months ended March 29, 2025, and March 30, 2024, respectively.

Financing activities during the three months ended March 29, 2025, included $11.8 million paid to repurchase 93,800 shares of common stock under our new share repurchase plan, and the repayments of $14.0 million of outstanding borrowings under our revolving credit facility and $6.3 million of our term loan balance under our credit agreement.

During the three months ended March 30, 2024, we paid $26.9 million to repurchase 316,285 shares of common stock under our prior share repurchase plan, and the repayment of $11.6 million of outstanding borrowings under our revolving credit facility and $3.1 million of our term loan balance under our credit agreement

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