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Item 2. Management’s Discussion and Analysis

2026-08-05 compared with 2026-05-07 · 110 added, 71 removed, 111 unchanged (62% of the section changed)

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This discussion contains forward-looking statements that are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Forward-looking statements include all statements that are not historical statements of fact and those regarding our intent, belief or expectations for our business, operations, financial performance or financial condition, in addition to statements regarding our expectations for the markets in which we operate, general business strategies, expected impacts from recently-announced organizational and leadership changes, the market potential of our brands, trends in the housing market, the potential impact of costs, including material and labor costs, the potential impact of inflation, expected capital spending, expected pension contributions, the expected effects of acquisitions, dispositions and other strategic transactions including the expected benefits and costs of the spin-off of MasterBrand, Inc.

and the tax-free nature of the spin-off transaction, the anticipated effects of recently issued accounting standards on our financial statements, and other matters that are not historical in nature.

Forward-looking statements include all statements that are not historical statements of fact and those regarding our intent, belief or expectations for our business, operations, financial performance or financial condition, in addition to statements regarding our strategies and investments to enhance execution and realign our business, our expectations for the markets in which we operate, expected impacts from recently-announced organizational and leadership changes, the market potential of our brands, trends in the housing market, the potential impact of costs, including material and labor costs, the potential impact of inflation, expected capital spending, expected pension contributions, the expected effects of acquisitions, dispositions and other strategic transactions including the expected benefits and costs of the spin-off of MasterBrand, Inc.

and the tax-free nature of the spin-off transaction, the anticipated effects of recently issued accounting standards on our financial statements, the anticipated impact of future tariff refunds and other matters that are not historical in nature.

Statements that include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” “plans,” “outlook,” “positioned”, “confident,” “opportunity”, “focus” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may”, and “could” are generally forward-looking in nature and not historical facts.

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Although we believe that these statements are based on reasonable assumptions, they are subject to numerous factors, risks and uncertainties that could cause actual outcomes and results to be materially different from those indicated in such statements, including but not limited to:

(i) our reliance on the North American and Chinese home improvement, repair and remodel and new home construction activity levels, (ii) the housing market, downward changes in the general economy, unfavorable interest rates or other business conditions, (iii) the competitive nature of consumer and trade brand businesses, (iv) our ability to execute on our strategic plans and the effectiveness of our strategies in the face of business competition, (v) our reliance on key customers and suppliers, including wholesale distributors and dealers and retailers, (vi) risks associated with our recent leadership changes and our search process to identify our next CEO and CFO, (vii) risks relating to rapidly evolving technological change, (viii) risks associated with our ability to improve organizational productivity and global supply chain efficiency and flexibility, (ix) risks associated with global commodity and energy availability and price volatility, as well as the possibility of sustained inflation, (x) delays or outages in our information technology systems or computer networks or breaches of our information technology systems or other cybersecurity incidents, (xi) risks associated with doing business globally, including changes in trade-related tariffs (including recent U.S.

(i) our reliance on the North American and Chinese home improvement, repair and remodel and new home construction activity levels, (ii) the housing market, downward changes in the general economy, unfavorable interest rates or other business conditions, (iii) the competitive nature of consumer and trade brand businesses, (iv) our ability to execute on our strategic plans and the effectiveness of our strategies in the face of business competition, (v) our reliance on key customers and suppliers, including wholesale distributors and dealers and retailers, (vi) risks associated with our recent leadership changes and our search processes to identify additional permanent members of senior management, (vii) risks relating to rapidly evolving technological change, (viii) risks associated with our ability to improve organizational productivity and global supply chain efficiency and flexibility, (ix) risks associated with global commodity and energy availability and price volatility, as well as the possibility of sustained inflation, (x) delays or outages in our information technology systems or computer networks or breaches of our information technology systems or other cybersecurity incidents, (xi) risks associated with doing business globally, including changes in trade-related tariffs (including recent U.S.

tariffs announced or imposed on China, Canada, Mexico and other countries and any reciprocal actions taken by such countries) and risks with uncertain trade environments, (xii) risks associated with the disruption of operations, including as a result of severe weather events, (xiii) our inability to obtain raw materials and finished goods in a timely and cost-effective manner, (xiv) risks associated with strategic acquisitions, divestitures and joint ventures, including difficulties integrating acquired companies and the inability to achieve the expected financial results and benefits of transactions, (xv) impairments in the carrying value of goodwill or other acquired intangible assets, (xvi) risks of increases in our defined benefit-related costs and funding requirements, (xvii) our ability to attract and retain qualified personnel and other labor constraints, (xviii) the effect of climate change and the impact of related changes in government regulations and consumer preferences, (xix) risks associated with environmental, social and governance matters, (xx) potential liabilities and costs from claims and litigation, (xxi) changes in government and industry regulatory standards, (xxii) future tax law changes or the interpretation of existing tax laws, and (xxiii) our ability to secure and protect our intellectual property rights, as well as those described in the section of our Annual Report on Form 10-K for the year ended December 27, 2025 entitled Item 1A.

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On February 20, 2026, the U.S.

Supreme court invalidated the U.S.

Supreme Court ruled that the U.S.

tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”) on goods imported into the U.S.

The ultimate availability, timing, and amount of any potential refunds remain highly uncertain and are subject to further legal, regulatory, and administrative developments.

In addition, the U.S.

Administration imposed new tariffs and may impose additional tariffs.

were unauthorized.

In March 2026, the Court of International Trade (“CIT”) issued refund orders and the administrative system the government created to process refunds began accepting refund claims on April 20, 2026.

During the second quarter of 2026, management determined that recovery of IEEPA tariff refund claims of $122.1 million were probable and estimable and recorded a refund receivable of $122.1 million and a related reduction to cost of products sold and inventory of $104.2 million and $17.9 million, respectively.

As of June 27, 2026, the Company received $8.9 million of the submitted refund claims.

The estimate reflects Company’s judgment regarding the portion of previously recognized IEEPA tariffs expected to be recoverable through the refund process, and it may be subject to change based on the ultimate resolution of refund claims.

The ultimate amount of recoveries may differ from the Company’s estimates, based on additional guidance, the resolution of specific entry-level claims or other administrative developments.

To the extent there are changes in amounts that become recoverable, including any associated interest, such amounts will be recognized in the period in which information about the probable and reasonably estimable amounts becomes known to the Company.

We will continue to monitor changes to import and export policies of the U.S.

and other countries that could impact our financial position, results of operations and cash flows.

As of March 28, 2026, the Company has not recognized any amounts associated with potential refunds related to these tariffs.

The Company continues to actively work to mitigate the anticipated impacts of tariffs through a combination of supply chain actions, cost-out activities and strategic pricing actions across all of our channels and brands.

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We are also unable, at this time, to determine any future negative impacts from reduced consumer spending as a result of inflationary or other macroeconomic pressures or uncertainty that may result from the imposition of current or future tariffs.

The Company announced on May 27, 2026 that, in collaboration with the Board of Directors, management initiated a formal strategic review of its Fiberon composite decking business.

The review explores a range of strategic alternatives while Fiberon continues to operate its business, serve customers, and execute its commercial priorities.

The Company recognized asset impairment charges of $228.7 million with respect to the Fiberon asset group as of June 27, 2026.

RESULTS OF OPERATIONS

Thirteen Weeks Ended March 28, 2026 Compared to Thirteen Weeks Ended March 29, 2025

Fortune Brands delivered net income of $24.2 million, or $0.20 per diluted common share for the thirteen weeks ended March 28, 2026 compared to net income of $51.4 million, or $0.42 per diluted common share in the prior year.

Net income for the thirteen weeks ended March 28, 2026 was negatively impacted by lower sales unit volume and $42.4 million due to costs associated with governance advisory services and leadership changes.

We delivered cash used in operating activities of $(119.2) million of the thirteen weeks ended March 28, 2026, compared to $(83.4) million in the same prior year period.

Twenty-Six Weeks Ended June 27, 2026 Compared To Twenty-Six Weeks Ended June 28, 2025

Fortune Brands delivered net income of $1.7 million, or $0.01 per diluted common share for the twenty-six weeks ended June 27, 2026 compared to net income of $151.6 million, or $1.24 per diluted common share in the prior year.

Net income for the twenty-six weeks ended June 27, 2026 was negatively impacted by asset impairment charges of $229.3 million and lower sales unit volume, partially offset by tariff refunds of $104.2 million.

We delivered cash provided by operating activities of $83.6 million of the twenty-six weeks ended June 27, 2026, compared to $66.0 million in the same prior year period.

(In millions)

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Operating income

The following discussion of consolidated results of operations and segment results refers to the thirteen weeks ended March 28, 2026 compared to the thirteen weeks ended March 29, 2025.

The following discussion of consolidated results of operations and segment results refers to the twenty-six weeks ended June 27, 2026 compared to the twenty-six weeks ended June 28, 2025.

Consolidated results of operations should be read in conjunction with segment results of operations.

Net sales decreased by $21.8 million, or 2.1%, primarily due to lower sales volume across all operating segments, primarily driven by demand softness.

Volume declines were offset by year over price increases, including tariff and commodity mitigating actions.

Net sales within our China business decreased by $9.1 million, or 25%, due to volume declines.

These declines were partially offset by the favorable impact of foreign exchange of $10.1 million.

Net sales decreased by $71.3 million, or 3.2%, primarily due to lower sales volume across all operating segments, primarily driven by market softness, service level challenges and discrete share losses in certain product categories.

Volume declines were offset by year over year price increases, including those intended to mitigate cost increases, and by the favorable impact of foreign exchange of $15.2 million.

Cost of products sold

Cost of products sold decreased by $2.8 million, or 0.5%, primarily due to lower sales volume, partially offset by material cost inflation and tariffs.

Cost of products sold was also impacted by lower restructuring-related charges of $8.4 million.

Cost of products sold decreased by $99.9 million, or 8.1%, primarily due to the recognition of the IEEPA tariff refunds in the current year and lower sales volumes, partially offset by higher landed product cost.

Selling, general and administrative expenses

Selling, general and administrative expenses increased by $37.8 million, or 12.0%, primarily due to costs associated with governance advisory services and leadership changes of $42.4 million.

Selling, general and administrative expenses increased by $42.8 million, or 6.5%, primarily due to costs associated with governance advisory services and leadership changes of $43.6 million and increased variable incentive compensation costs of $14.3 million, partially offset by lower restructuring-related charges of $14.2 million.

Asset impairment charges

Asset impairment charges increased by $229.3 million primarily due to the impairment of property, plant and equipment, net, customer and contractual relationships, and an indefinite-lived tradename within our Outdoors segment.

Restructuring charges

Restructuring charges of $4.3 million are primarily due to costs incurred in connection with the Company's headquarters consolidation and its related organizational changes.

Restructuring charges of $12.5 million were primarily due to costs incurred in connection with the Company's headquarters consolidation and organizational changes for cost optimization.

RESULTS OF OPERATIONS (Continued)

Operating income

Operating income decreased by $36.8 million, or 37.9%, primarily due to lower sales volume, costs associated with governance advisory services and leadership changes of $42.4 million, higher commodity and tariff costs, higher freight costs, partially offset by lower restructuring and restructuring-related charges of $32.8 million.

Interest expense

Interest expense decreased by $2.1 million, or 7.3% to $26.5 million primarily due to lower commercial paper borrowings net of repayments during the thirteen weeks ended March 28, 2026 of $168.3 million, as compared to the thirteen weeks ended March 29, 2025 of $280.0 million.

Other (income) expense, net

Other income, net, was $(0.1) million in the thirteen weeks ended March 28, 2026, compared to other income, net of $(1.0) million in the thirteen weeks ended March 29, 2025.

The decrease in other income, net is primarily due to a decrease in interest income, and increases in foreign currency transaction expense.

The effective income tax rates for the thirteen weeks ended March 28, 2026 and thirteen weeks ended March 29, 2025 were 28.4% and 25.9%, respectively.

The difference between the Company’s effective income tax rate for the thirteen weeks ended March 28, 2026 and the U.S.

statutory rate of 21% primarily relates to state income taxes and equity compensation.

The difference between the Company’s effective income tax rate for the thirteen weeks ended March 29, 2025 and the U.S.

statutory rate of 21% primarily relates to state income taxes and foreign income taxed at higher rates.

Net income was $24.2 million in the thirteen weeks ended March 28, 2026, compared to $51.4 million in the thirteen weeks ended March 29, 2025.

The decrease in net income was due to lower operating income of $36.8 million and lower other income of $0.9 million, partly offset by lower income tax expense and interest expense of $8.4 million and $2.1 million, respectively.

Interest expense decreased by $5.9 million, or 9.9%, to $53.9 million primarily due to lower commercial paper borrowings net of repayments and lower interest rates on commercial paper during the twenty-six weeks ended June 27, 2026 of $5.0 million, as compared to the twenty-six weeks ended June 28, 2025 of $640.0 million.

Other income, net

Other income, net, was $(0.5) million in the twenty-six weeks ended June 27, 2026, compared to $8.2 million in the twenty-six weeks ended June 28, 2025.

The decrease in other income, net was primarily due to a decrease in interest income of $2.5 million, and increases in foreign currency transaction expense of $5.9 million.

The effective income tax rates for the twenty-six weeks ended June 27, 2026 and twenty-six weeks ended June 28, 2025 were 153.1% and 30.1%, respectively.

The difference between the Company's effective income tax rate for the twenty-six weeks ended June 27, 2026 and the U.S.

statutory income tax rate of 21% primarily relates to discrete tax items recognized year-to-date.

Because these items were significant relative to the Company's pre-tax income, the resulting effective tax rate is not meaningful.

The difference between the Company’s effective income tax rate for the twenty-six weeks ended June 28, 2025, and the U.S.

statutory rate of 21% primarily relates to state income taxes, including the state income tax impacts of legal entity restructuring, foreign income taxed at higher rates, and dividend withholding tax, partially offset by decreases in uncertain tax positions.

Results By Segment

Net sales decreased by $1.7 million, or 0.3%, primarily due to lower sales unit volume due to market softness.

Volume declines were offset by year over price increases, including tariff-mitigating actions.

Net sales within our China business decreased by $9.1 million, or 25%, due to volume decline.

These declines were partially offset by the favorable impact of foreign exchange of $7.5 million.

Operating income increased by $0.5 million, or 0.5%, primarily due to lower restructuring and restructuring-related charges of $7.6 million, partially offset by the impact of lower sales volume, higher tariff costs net of price mitigating actions and higher freight costs of $6.3 million.

Net sales decreased by $10.3 million, or 3.4%, primarily due to lower sales unit volume due to market softness, channel inventory decreases, partially offset by strategic price actions primarily to mitigate commodity and tariff-related cost inflation.

Operating income decreased by $5.2 million, or 23.0%, primarily due to higher commodity and tariff costs, lower sales unit volume and $3.5 million net costs incurred related to the fire that occurred at a manufacturing facility, partially offset by lower restructuring and restructuring-related charges of $8.2 million and by the impact of price mitigating actions.

Net sales decreased by $9.8 million, or 6.0%, primarily due to lower sales unit volume, partially offset by pricing actions to mitigate commodity and tariff-related cost inflation and the favorable impact of foreign exchange of $2.6 million.

Operating income increased by $5.7 million, or 35.6%, primarily due to lower restructuring and restructuring-related charges of $7.2 million, partially offset by lower sales unit volume and higher tariff costs net of price mitigating actions.

Net sales decreased by $43.7 million, or 3.6%, primarily due to lower sales unit volume from the carryover of discrete share losses from the first half of 2025, service level challenges, and market softness among the production builders.

Volume declines were offset by price actions to mitigate cost inflation, continued growth in the eCommerce channel, and the favorable impact of foreign exchange of $12.0 million.

Operating income increased by $19.4 million, or 7.5%, primarily due to tariff refunds recognized of $73.9 million, lower restructuring and restructuring-related charges of $14.2 million, partially offset by the impact of lower net sales, higher landed product cost, and higher variable incentive compensation cost of $7.1 million.

Net sales decreased by $24.7 million, or 3.6%, primarily due to lower sales unit volume from softer new construction related demand in the wholesale channel, partially offset by price actions to mitigate cost inflation.

Operating income decreased by $224.7 million, or 347.3%, primarily due to asset impairment charges of $228.7 million, lower net sales and higher landed product cost, partially offset by lower restructuring and restructuring-related charges of $13.6 million, and tariff refunds recognized of $7.9 million.

Net sales decreased by $2.9 million, or 0.9%, primarily due to lower sales unit volume, partially offset by pricing actions to mitigate cost inflation and the favorable impact of foreign exchange of $3.2 million.

Operating income increased by $32.1 million, or 82.9%, primarily due to tariff refunds recognized of $22.4 million and lower restructuring and restructuring-related charges of $10.4 million, partially offset by lower net sales and higher landed product cost.

Corporate expenses increased by $44.2 million, or 47.0%, primarily due to costs associated with governance advisory services and leadership changes of $43.6 million, increased compensation costs of $9.5 million, partially offset by lower restructuring and restructuring-related charges of $10.9 million.

Thirteen Weeks Ended June 27, 2026 Compared To Thirteen Weeks Ended June 28, 2025

(In millions)

Operating Income (Loss)

Corporate expenses

Corporate expenses increased by $37.8 million, or 84.4% primarily due to costs associated with governance advisory services and leadership changes of $42.4 million, partially offset by lower restructuring and restructuring-related charges of $9.8 million.

Operating income (loss)

The following discussion of consolidated results of operations and segment results refers to the thirteen weeks ended June 27, 2026 compared to the thirteen weeks ended June 28, 2025.

Consolidated results of operations should be read in conjunction with segment results of operations.

Net sales decreased by $49.4 million, or 4.1%, primarily due to lower sales at our Water and Outdoors segments.

The decline was offset by year over year price increases, including those intended to mitigate cost increases, higher sales in the Security segment, and a favorable foreign exchange of $5.1 million.

Cost of products sold

Cost of products sold decreased by $96.9 million, or 14.7%, primarily due to recognition of the IEEPA tariff refunds in the current year and lower sales volume, partially offset by higher landed product cost.

Selling, general and administrative expenses

Selling, general and administrative expenses increased by $5.0 million, or 1.5%, primarily due to increased compensation costs of $16.2 million, partially offset by lower restructuring-related charges of $10.5 million.

Asset impairment charges

Restructuring charges

Restructuring charges of $8.1 million were primarily attributable to costs associated with the decision to consolidate our U.S.

regional offices into one campus headquarters and organizational changes for cost optimization.

Interest expense

Interest expense decreased by $3.8 million, or 12.2%, primarily due to lower commercial paper borrowings net of repayments during the thirteen weeks ended June 27, 2026 of ($163.3 million) and lower interest rates on commercial paper, as compared to the thirteen weeks ended June 28, 2025 of $358.0 million.

Other income, net

Other income, net, was $(0.6) million in the thirteen weeks ended June 27, 2026, compared to $7.3 million in the thirteen weeks ended June 28, 2025.

The decrease in other income, net was primarily due to a decrease in interest income of $2.0 million, and increases in foreign currency transaction expense of $5.7 million.

The effective income tax rates for the thirteen weeks ended June 27, 2026 and thirteen weeks ended June 28, 2025 were 39.2% and 32.1%, respectively.

The difference between the Company's effective income tax rate for the thirteen weeks ended June 27, 2026 and the U.S.

statutory income tax rate of 21% primarily relates to state income taxes, foreign income taxed at higher rates and decreases in uncertain tax positions.

Due to the Company's pre-tax loss for the quarter, these items had a disproportionate impact on the effective income tax rate.

The difference between the Company’s effective income tax rate for the thirteen weeks ended June 28, 2025, and the U.S.

Results By Segment

Net sales decreased by $41.9 million, or 6.5%, primarily due to lower sales unit volume from the carryover of discrete share losses from the first half of 2025, service level challenges, and market softness among the production builders.

Volume declines were offset by price actions to mitigate cost inflation, and continued growth in the eCommerce channel and the favorable impact of foreign exchange of $4.5 million.

Operating income increased by $19.0 million, or 12.2%, primarily due to tariff refunds recognized of $73.9 million, lower restructuring and restructuring-related charges of $6.6 million, partially offset by the impact of lower sales, higher landed product cost, and higher variable incentive compensation costs of $7.1 million.

Net sales decreased by $14.3 million, or 3.8%, primarily due to lower sales unit volume from softer new construction demand in the wholesale channel, partially offset by price actions to mitigate cost increases.

Operating income decreased by $219.5 million, or 521.4%, primarily due to asset impairment charges of $228.7 million, lower sales unit volume and higher landed product cost, partially offset by tariff refunds recognized of $7.9 million, and lower restructuring and restructuring-related charges of $5.3 million.

Net sales increased by $6.8 million, or 3.8%, primarily due to higher sales unit volume in the commercial, retail, and eCommerce channels, and pricing actions to mitigate cost inflation.

Operating income increased by $26.4 million, or 116.3%, primarily due to tariff refunds recognized of $22.4 million, higher net sales, and lower restructuring and restructuring-related charges of $3.2 million, partially offset by higher landed product cost.

Corporate expenses increased by $6.5 million, or 13.2%, primarily due to increased compensation costs of $8.4 million, partially offset by lower restructuring and restructuring-related charges of $1.3 million.

LIQUIDITY AND CAPITAL RESOURCES

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Our operating income is generated by our subsidiaries.

We believe our operating cash flows, including funds available under the credit facility and access to capital markets, provide sufficient liquidity to support the Company’s working capital requirements, capital expenditures and service of indebtedness, as well as to finance acquisitions, repurchase shares of our common stock and pay dividends to stockholders, as the Board of Directors deems appropriate both for the 12-month period following March 28, 2026 and in the long-term.

Our cash flows from operations, borrowing availability and overall liquidity are subject to certain risks and uncertainties, including those described in the section of our Annual Report on Form 10-K for the year ended December 27, 2025 entitled “Item 1A.

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Long-Term Debt

As of March 28, 2026, the Company had aggregate outstanding notes in the principal amount of $2.2 billion, with varying maturities (the “Notes”).

As of June 27, 2026, the Company had aggregate outstanding notes in the principal amount of $2.2 billion, with varying maturities (the “Notes”).

The Notes are unsecured senior obligations of the Company.

In addition, we believe that we have the ability to obtain alternative sources of financing if required.

The following table provides a summary of the Company’s outstanding Notes, including the net carrying value of the Notes, net of underwriting commissions, price discounts and debt issuance costs as of March 28, 2026 and December 27, 2025:

Net Carrying Value

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Maturity Date

March 28, 2026

June 27, 2026

December 27, 2025

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In addition, the Company's ratio of consolidated debt minus certain cash and cash equivalents to consolidated EBITDA generally may not exceed 3.5 to 1.0.

On March 28, 2026 and December 27, 2025, there were no outstanding borrowings under this facility.

As of March 28, 2026, we were in compliance with all covenants under this facility.

We currently have uncommitted bank lines of credit in China, which provide for unsecured borrowings for working capital of up to $30.5 million in aggregate as of March 28, 2026 and December 27, 2025, respectively.

There were no outstanding balances as of March 28, 2026 and December 27, 2025.

There were no outstanding borrowings under this facility as of June 27, 2026 and December 27, 2025.

As of June 27, 2026, we were in compliance with all covenants under this facility.

We currently have uncommitted bank lines of credit in China, which provide for unsecured borrowings for working capital of up to $30.5 million in aggregate as of June 27, 2026 and December 27, 2025.

There were no outstanding balances as of June 27, 2026 and December 27, 2025.

Commercial Paper

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The Company's Revolving Credit Agreement is the liquidity backstop for the repayment of any notes issued under the Commercial Paper Program, and as such borrowings under the Commercial Paper Program are included in Long-term debt in the Condensed Consolidated Balance Sheets.

Amounts available under the Commercial Paper Program may be borrowed, repaid and re-borrowed, with the aggregate principal amount outstanding at any time, including borrowings under the Revolving Credit Agreement, not to exceed $1.25 billion.

Amounts available under the Commercial Paper Program may be

borrowed, repaid and re-borrowed, with the aggregate principal amount outstanding at any time, including borrowings under the Revolving Credit Agreement, not to exceed $1.25 billion.

The Company expects to use any issuances under the Commercial Paper Program for general corporate purposes.

Outstanding borrowings under the Commercial Paper Program as of March 28, 2026 and December 27, 2025 were $537.0 million and $368.8 million, respectively.

Outstanding borrowings under the Commercial Paper Program as of June 27, 2026 and December 27, 2025 were $374.2 million and $368.8 million, respectively.

Cash and Seasonality

On March 28, 2026, we had non-restricted cash and cash equivalents of $223.1 million, of which $206.4 million was held at non-U.S.

On June 27, 2026, we had non-restricted cash and cash equivalents of $209.7 million, of which $190.3 million was held at non-U.S.

subsidiaries.

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Share Repurchases and Dividends

In the thirteen weeks ended March 28, 2026, we repurchased 0.9 million shares of our outstanding common stock under the Company’s share repurchase program for $43.5 million.

As of March 28, 2026, the Company’s total remaining share repurchase authorization under its share repurchase program was approximately $783.8 million.

In the twenty-six weeks ended June 27, 2026, we repurchased 1.0 million shares of our outstanding common stock under the Company’s share repurchase program for $45.2 million.

As of June 27, 2026, the Company’s total remaining share repurchase authorization under its share repurchase program was approximately $782.1 million.

The share repurchase program does not obligate the Company to repurchase any specific dollar amount or number of shares and may be suspended or discontinued at any time.

In the thirteen weeks ended March 28, 2026, we paid dividends in the amount of $31.2 million to the Company’s stockholders.

In the twenty-six weeks ended June 27, 2026, we paid dividends in the amount of $62.2 million to the Company’s stockholders.

Our Board of Directors will continue to evaluate dividend payment opportunities on a quarterly basis.

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Our subsidiaries are not limited by long-term debt or other agreements in their abilities to pay cash dividends or to make other distributions with respect to their capital stock or other payments to the Company.

On July 20, 2026, the Company's Board declared a cash dividend of $0.26 per common share payable on September 9, 2026 to stockholders of record at the close of business on August 21, 2026.

We periodically review our portfolio of brands and evaluate potential strategic transactions and other capital initiatives to increase stockholder value.

Below is a summary of cash flows for the thirteen weeks ended March 28, 2026 and the thirteen weeks ended March 29, 2025.

Below is a summary of cash flows for the twenty-six weeks ended June 27, 2026 and June 28, 2025.

(In millions)

Thirteen Weeks Period

March 28, 2026

Thirteen Weeks Ended March 29, 2025

Net cash used in operating activities

Twenty-Six Weeks Ended

June 27, 2026

Twenty-Six Weeks Ended June 28, 2025

Net cash provided by operating activities

Net cash used in investing activities

Net cash provided by financing activities

Net cash used in financing activities

Effect of foreign exchange rate changes on cash

Net decrease in cash and cash equivalents

Net cash used in operating activities was $119.2 million in the thirteen weeks ended March 28, 2026, compared to net cash used in operating activities of $83.4 million in the thirteen weeks ended March 29, 2025.

The increase in cash used of $35.8 million was primarily due to lower net income and changes in working capital items (primarily accounts receivable, inventories and accounts payable), as well as changes in accrued expenses and accrued taxes.

Net cash used in investing activities was $10.5 million in the thirteen weeks ended March 28, 2026, compared to net cash used in investing activities of $29.2 million in the thirteen weeks ended March 29, 2025.

The decrease in cash used of $18.7 million is primarily due to a decrease in capital expenditures, partially offset by proceeds from the disposition of assets.

Net cash provided by financing activities was $90.4 million in the thirteen weeks ended March 28, 2026, compared to net cash provided by financing activities of $68.0 million in the thirteen weeks ended March 29, 2025.

The increase in cash provided of $22.4 million was primarily due to lower treasury stock purchases offset by lower net borrowings under our commercial paper program.

Net cash provided by operating activities was $83.6 million in the twenty-six weeks ended June 27, 2026, compared to net cash provided by operating activities of $66.0 million in the twenty-six weeks ended June 28, 2025.

The increase in cash provided of $17.6 million was primarily due to changes in other assets, inventories, accrued expenses and accrued taxes.

Net cash used in investing activities was $34.0 million in the twenty-six weeks ended June 27, 2026, compared to net cash used in investing activities of $57.0 million in the twenty-six weeks ended June 28, 2025.

The decrease in cash used of $23 million was primarily due to a decrease in capital expenditures, as well as proceeds generated from the disposition of assets.

Net cash used in financing activities was $102.5 million in the twenty-six weeks ended June 27, 2026, compared to net cash used in financing activities of $165.3 million in the twenty-six weeks ended June 28, 2025.

The decrease in cash used of $62.8 million was primarily due to lower treasury stock purchases offset by lower net debt proceeds.

Pension Plans

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As of December 27, 2025, the fair value of our total pension plan assets was $188.3 million, representing funding of approximately 95% of the accumulated qualified benefit obligation liability.

During the thirteen weeks ended March 28, 2026, we made no pension contributions.

During the twenty-six weeks ended June 27, 2026, we made no pension contributions.

For the foreseeable future, we believe that we have sufficient liquidity to meet the minimum funding that may be required by the Pension Protection Act of 2006.

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-Q

Item 2. Management’s Discussion and Analysis