NATIONAL BEVERAGE CORP 10-Q

ITEM 1. FINANCIAL STATEMENTS NATIONAL BEVERAGE CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In thousands, except share data) January 31, May 3, 2026 2025 Assets Current assets: Cash and cash equivalents $ 313,973 $ 193,835 Trade receivables, net 97,431 104,157 Inventories 96,104 85,109 Prepaid and other current assets 30,529 23,827 Total current assets 538,037 406,928 Property, plant and equipment, net 174,375 175,586 Operating lease right-of-use assets, net 60,524 70,286 Goodwill 13,145 13,145 Intangible assets 1,615 1,615 Other assets 4,775 5,300 Total assets $ 792,471 $ 672,860 Liabilities and Shareholders' Equity Current liabilities: Accounts payable $ 66,860 $ 82,448 Accrued liabilities 39,510 43,521 Operating lease liabilities 14,926 14,533 Income taxes payable 773 - Total current liabilities 122,069 140,502 Deferred income taxes, net 24,345 23,010 Operating lease liabilities 47,745 57,591 Other liabilities 7,250 7,758 Total liabilities 201,409 228,861 Commitments and contingencies Shareholders' equity: Preferred stock, $ 1 par value - 1,000,000 shares authorized Series C - 150,000 shares issued 150 150 Common stock, $ .01 par value - 200,000,000 shares authorized; 102,006,214 and 101,994,358 shares issued, respectively 1,020 1,020 Additional paid-in capital 44,302 43,708 Retained earnings 561,082 417,750 Accumulated other comprehensive income 9,414 5,604 Treasury stock - at cost: Series C preferred stock - 150,000 shares ( 5,100 ) ( 5,100 ) Common stock - 8,394,112 and 8,374,112 shares, respectively ( 19,806 ) ( 19,133 ) Total shareholders' equity 591,062 443,999 Total liabilities and shareholders' equity $ 792,471 $ 672,860 See accompanying Notes to Condensed Consolidated Financial Statements. 3 Table of Contents NATIONAL BEVERAGE CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (In thousands, except per share amounts) Three Fiscal Months Ended Nine Fiscal Months Ended January 31, January 25, January 31, January 25, 2026 2025 2026 2025 Net sales $ 264,586 $ 267,050 $ 883,432 $ 887,725 Cost of sales 164,982 168,100 549,179 556,992 Gross profit 99,604 98,950 334,253 330,733 Selling, general and administrative expenses 48,458 48,373 154,285 152,774 Operating income 51,146 50,577 179,968 177,959 Other income, net 2,793 1,398 7,685 7,474 Income before income taxes 53,939 51,975 187,653 185,433 Provision for income taxes 12,731 12,332 44,321 43,373 Net income $ 41,208 $ 39,643 $ 143,332 $ 142,060 Earnings per common share: Basic $ .44 $ .42 $ 1.53 $ 1.52 Diluted $ .44 $ .42 $ 1.53 $ 1.52 Weighted average common shares outstanding: Basic 93,612 93,617 93,619 93,603 Diluted 93,645 93,691 93,676 93,685 See accompanying Notes to Condensed Consolidated Financial Statements. 4 Table of Contents NATIONAL BEVERAGE CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (In thousands) Three Fiscal Months Ended Nine Fiscal Months Ended January 31, January 25, January 31, January 25, 2026 2025 2026 2025 Net income $ 41,208 $ 39,643 $ 143,332 $ 142,060 Other comprehensive income, net of tax: Cash flow hedges ( 1,501 ) 237 3,810 1,832 Comprehensive income $ 39,707 $ 39,880 $ 147,142 $ 143,892 See accompanying Notes to Condensed Consolidated Financial Statements. 5 Table of Contents NATIONAL BEVERAGE CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED) (In thousands) Three Fiscal Months Ended Nine Fiscal Months Ended January 31, 2026 January 25, 2025 January 31, 2026 January 25, 2025 Shares Amount Shares Amount Shares Amount Shares Amount Series C Preferred Stock Beginning and end of period 150 $ 150 150 $ 150 150 $ 150 150 $ 150 Common Stock Beginning of period 102,006 1,020 101,985 1,020 101,994 1,020 101,942 1,019 Stock options exercised - - 9 - 12 0 52 1 End of Period 102,006 1,020 101,994 1,020 102,006 1,020 101,994 1,020 Additional Paid-In Capital Beginning of period 44,206 43,355 43,708 42,588 Stock options exercised - 58 251 514 Stock-based compensation expense 96 154 343 465 End of period 44,302 43,567 44,302 43,567 Retained Earnings Beginning of period 519,874 333,346 417,750 535,077 Net income 41,208 39,643 143,332 142,060 Common stock cash dividend - - - ( 304,148 ) End of period 561,082 372,989 561,082 372,989 Accumulated Other Comprehensive Income (Loss) Beginning of period 10,915 6,506 5,604 4,911 Cash flow hedges, net of tax ( 1,501 ) 237 3,810 1,832 End of period 9,414 6,743 9,414 6,743 Treasury Stock - Series C Preferred Beginning and end of period 150 ( 5,100 ) 150 ( 5,100 ) 150 ( 5,100 ) 150 ( 5,100 ) Treasury Stock - Common Beginning of Period 8,394 ( 19,806 ) 8,374 ( 19,133 ) 8,374 ( 19,133 ) 8,374 ( 19,133 ) Repurchase of common stock - - - - 20 ( 673 ) - - End of period 8,394 ( 19,806 ) 8,374 ( 19,133 ) 8,394 ( 19,806 ) 8,374 ( 19,133 ) Total Shareholders' Equity $ 591,062 $ 400,236 $ 591,062 $ 400,236 See accompanying Notes to Condensed Consolidated Financial Statements. 6 Table of Contents NATIONAL BEVERAGE CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands) Nine Fiscal Months Ended January 31, January 25, 2026 2025 Operating Activities: Net income $ 143,332 $ 142,060 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 16,600 15,317 Non-cash operating lease expense 11,542 10,786 Deferred income taxes 158 20 Stock-based compensation expense 343 465 Other, net 913 632 Changes in assets and liabilities: Trade receivables 6,726 11,934 Inventories ( 10,995 ) ( 429 ) Prepaid and other assets ( 3,276 ) ( 5,501 ) Accounts payable ( 15,588 ) ( 15,646 ) Accrued and other liabilities ( 2,796 ) ( 2,457 ) Operating lease liabilities ( 11,233 ) ( 10,560 ) Net cash provided by operating activities 135,726 146,621 Investing Activities: Purchases of property, plant and equipment ( 15,198 ) ( 20,815 ) Proceeds from sale of property, plant and equipment 32 2 Net cash used in investing activities ( 15,166 ) ( 20,813 ) Financing Activities: Proceeds from stock options exercised 251 515 Repurchase of common stock ( 673 ) - Dividends paid on common stock - ( 304,148 ) Net cash used in financing activities ( 422 ) ( 303,633 ) Net Increase (Decrease) in Cash and Cash Equivalents 120,138 ( 177,825 ) Cash and Cash Equivalents - Beginning of Period 193,835 327,047 Cash and Cash Equivalents - End of Period $ 313,973 $ 149,222 Supplemental Cash Flow Information: Interest paid $ 178 $ 65 Income taxes paid $ 43,240 $ 46,501 Non-Cash Activities: Right-of-use assets obtained in exchange for lease liabilities $ 1,780 $ 11,125 See accompanying Notes to Condensed Consolidated Financial Statements. 7 Table of Contents NATIONAL BEVERAGE CORP. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) National Beverage Corp. develops, produces, markets and sells a distinctive portfolio of sparkling waters, juices, energy drinks and carbonated soft drinks primarily in the United States. Incorporated in Delaware in 1985, National Beverage Corp. is a holding company for various operating subsidiaries. When used in this report, the terms “we,” “us,” “our,” “Company” and “National Beverage” mean National Beverage Corp. and its subsidiaries. 1. SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The condensed consolidated financial statements include the accounts of National Beverage Corp. and its subsidiaries. All significant intercompany transactions and accounts have been eliminated. The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles and rules and regulations of the Securities and Exchange Commission for interim financial reporting. Accordingly, they do not include all information and notes presented in the annual consolidated financial statements. The condensed consolidated financial statements should be read in conjunction with the annual consolidated financial statements and accompanying notes included in our Annual Report on Form 10 -K for the fiscal year ended May 3, 2025. The accounting policies used in these interim unaudited condensed consolidated financial statements are consistent with those used in the annual consolidated financial statements. Segment Reporting The Company operates as a single operating segment for purposes of presenting financial information and evaluating performance. As such, the accompanying consolidated financial statements present financial information in a format that is consistent with the internal financial information used by management. See Note 7 - Segment Information. Use of Estimates The preparation of financial statements requires management to make estimates and assumptions that affect the amounts reported in the interim unaudited condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates. In our opinion, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Results for the interim periods presented are not necessarily indicative of results which might be expected for the entire fiscal year. Fair Value of Financial Instruments The carrying values of the Company’s financial instruments, including cash and cash equivalents, accounts receivable and accounts payable, approximate fair value due to the relatively short maturity of the respective instruments. As of January 31, 2026 and May 3, 2025, cash and cash equivalents included money-market instruments of $ 166.4 million and $ 109.1 million, respectively. These financial instruments are Level 1 as defined by the fair value hierarchy since they are based on quoted prices in active markets for identical assets and liabilities. Derivative financial instruments which are used to partially mitigate the Company’s exposure to changes in certain raw material costs are recorded at fair value. Derivative financial instruments are not used for trading or speculative purposes. Credit risk related to derivative financial instruments is managed by requiring high credit standards for counterparties and frequent cash settlements. The estimated fair values of derivative financial instruments are calculated based on market rates to settle the instruments. See Note 5 -Derivative Financial Instruments. 8 Table of Contents Trade Receivables, Net The Company’s estimated allowances for credit losses as of both January 31, 2026 and May 3, 2025 were $ 1.2 million. The Company’s trade receivable, net balances as of January 25, 2025 and April 27, 2024 were $ 90.9 million and $ 102.8 million, respectively. Inventories Inventories are stated at the lower of first -in, first -out cost or net realizable value. Adjustments, if required, to reduce the cost of the inventory to net realizable value are made for estimated excess, obsolete or impaired balances. Inventories at January 31, 2026 were comprised of finished goods of $ 58.5 million and raw materials of $ 37.6 million. Inventories at May 3, 2025 were comprised of finished goods of $ 44.0 million and raw materials of $ 41.1 million. Shipping and Handling Costs Shipping and handling costs are reported in selling, general and administrative expenses in the accompanying condensed consolidated statements of income. Such costs were $ 17.8 million and $ 17.5 million for the three fiscal months ended January 31, 2026 and January 25, 2025, respectively. Shipping and handling costs were $ 55.9 million and $ 55.5 million for the nine fiscal months ended January 31, 2026 and January 25, 2025, respectively. Although our classification is consistent with many beverage companies, our gross margin may not be comparable to companies that include shipping and handling costs in cost of sales. Marketing Costs The Company utilizes a variety of marketing programs, including cooperative advertising programs with customers, to advertise and promote its beverages to consumers. Marketing costs are expensed when incurred, except for prepaid advertising and production costs, which are expensed when the advertising takes place. Marketing costs, which are included in selling, general and administrative expenses, were $ 10.0 million and $ 10.1 million for the three fiscal months ended January 31, 2026 and January 25, 2025, respectively. Marketing costs were $ 34.6 million and $ 33.2 million for the nine fiscal months ended January 31, 2026 and January 25, 2025, respectively. Earnings Per Common Share Basic earnings per common share is computed by dividing earnings available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings per common share is calculated in a similar manner, but includes the dilutive effect of stock options that amounted to 33,000 and 74,000 shares for the three fiscal months ended January 31, 2026 and January 25, 2025, respectively. The dilutive effect of stock options amounted to 57,000 and 82,000 shares for the nine fiscal months ended January 31, 2026 and January 25, 2025, respectively. Recently Issued Accounting Pronouncements In December 2023, the FASB issued ASU 2023 - 09, “Income Taxes (Topic 740 ): Improvements to Income Tax Disclosures,” which requires disclosure of specific categories in the rate reconciliation, including additional information for reconciling items that meet a quantitative threshold and specific disaggregation of income taxes paid and tax expense. The amendment is effective for annual reporting periods beginning after December 15, 2024. The Company will adopt ASU 2023 - 09 on a prospective basis and anticipates the adoption will not have a material effect on its consolidated financial statements for its fiscal year ended May 2, 2026. 9 Table of Contents In November 2024, the FASB issued ASU 2024 - 03, “Income Statement–Reporting Comprehensive Income–Expense Disaggregation Disclosures (Subtopic 220 - 40 ): Disaggregation of Income Statement Expenses,” which requires entities to disaggregate operating expenses into specific categories such as employee compensation, depreciation and intangible asset amortization, by relevant expense caption on the statement of operations. The standard is effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted on either a prospective or retrospective basis. The Company is currently evaluating the impact of adopting ASU 2024 - 03 on its consolidated financial statements and related disclosures. In July 2025, the FASB issued ASU 2025 - 05, “Financial Instruments-Credit Losses (Topic 326 ): Measurement of Credit Losses for Accounts Receivable and Contract Assets,” which requires disclosure of the election of a practical expedient that assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset when estimating expected credit losses. The election of the practical expedient is permitted on a prospective basis. The amendment is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. The Company does not expect a material impact upon adoption. 2. PROPERTY, PLANT AND EQUIPMENT, NET Property, plant and equipment, net consist of the following: (In thousands) January 31, 2026 May 3, 2025 Land $ 9,835 $ 9,835 Buildings and improvements 82,791 81,764 Machinery and equipment 341,851 328,172 Total 434,477 419,771 Less: accumulated depreciation ( 260,102 ) ( 244,185 ) Property, plant and equipment, net $ 174,375 $ 175,586 Machinery and equipment included construction-in-progress in the amounts of $ 33.8 million and $ 37.7 million as of January 31, 2026 and May 3, 2025, respectively. Depreciation expense was $ 5.6 million and $ 4.9 million for the three fiscal months ended January 31, 2026 and January 25, 2025, respectively. Depreciation expense was $ 16.4 million and $ 15.0 million for the nine fiscal months ended January 31, 2026 and January 25, 2025, respectively. Depreciation expense is recorded in cost of sales and selling, general and administrative expenses. 10 Table of Contents 3. LEASES The Company has entered into various non-cancelable operating lease agreements for certain offices, buildings and machinery and equipment which expire at various dates through June 2037. The Company does not assume renewals in the determination of the lease term unless the renewals are deemed to be reasonably assured at lease commencement. Lease agreements generally do not contain material residual value guarantees or material restrictive covenants. Operating lease costs were $ 4.6 million and $ 4.2 million for the three fiscal months ended January 31, 2026 and January 25, 2025, respectively. Operating lease costs were $ 13.8 million and $ 12.5 million for the nine fiscal months ended January 31, 2026 and January 25, 2025, respectively. As of January 31, 2026, the weighted-average remaining lease term and weighted-average discount rate of operating leases was 5.48 years and 4.57 %, respectively. As of May 3, 2025, the weighted-average remaining lease term and weighted average discount rate of operating leases was 5.92 years and 4.52 %, respectively. Cash payments were $ 4.3 million and $ 3.9 million for operating leases for the three fiscal months ended January 31, 2026 and January 25, 2025, respectively. Cash payments were $ 13.5 million and $ 12.3 million for operating leases for the nine fiscal months ended January 31, 2026 and January 25, 2025, respectively. The following is a summary of future minimum lease payments and related liabilities for all non-cancelable operating leases as of January 31, 2026: (In thousands) Fiscal 2026 – Remaining quarter $ 4,447 Fiscal 2027 16,734 Fiscal 2028 11,935 Fiscal 2029 10,800 Fiscal 2030 10,218 Thereafter 17,134 Total minimum lease payments including interest 71,268 Less: amounts representing interest ( 8,597 ) Present value of minimum lease payments 62,671 Less: current portion of lease obligations ( 14,926 ) Non-current portion of lease obligations $ 47,745 4. DEBT At January 31, 2026, a subsidiary of the Company maintained unsecured revolving credit facilities with banks aggregating $ 100 million (the “Credit Facilities”). The Credit Facilities expire from September 10, 2027 to May 30, 2028 and any borrowings would currently bear interest at 1.15 % above the Secured Overnight Financing Rate (“ SOFR ”). There were no borrowings outstanding under the Credit Facilities at January 31, 2026 or May 3, 2025. At January 31, 2026, $ 2.7 million of the Credit Facilities was reserved for standby letters of credit and $ 97.3 million was available for borrowings. A subsidiary of the Company also maintains an unsecured revolving term loan facility with a national bank aggregating $ 50 million (the “Loan Facility”). There were no borrowings outstanding under the Loan Facility at January 31, 2026 or May 3, 2025. The Loan Facility expires December 31, 2027 and borrowings would bear interest at 1.15 % above the adjusted daily SOFR . The Credit Facilities and Loan Facility require the subsidiary to maintain certain financial ratios, including debt to net worth and debt to EBITDA (as defined in the credit agreements) and contain other restrictions, none of which are expected to have a material effect on the Company’s operations or financial position. At January 31, 2026, the subsidiary was in compliance with all loan covenants. 11 Table of Contents 5. DERIVATIVE FINANCIAL INSTRUMENTS From time to time, the Company enters into aluminum swap contracts to partially mitigate its exposure to changes in the cost of aluminum containers. Such financial instruments are designated and accounted for as cash flow hedges. Accordingly, gains or losses attributable to the effective portion of the cash flow hedge are reported in accumulated other comprehensive income (loss) (“AOCI”) and reclassified into cost of sales in the period in which the hedged transaction affects earnings. The ineffective portion of the change in fair value of our cash flow hedge was immaterial. The following summarizes the gains recognized in the Condensed Consolidated Statements of Income and AOCI: (In thousands) Three Fiscal Months Ended Nine Fiscal Months Ended January 31, 2026 January 25, 2025 January 31, 2026 January 25, 2025 Recognized in AOCI: Income before income taxes $ 6,531 $ 1,704 $ 25,458 $ 4,927 Less: income tax provision 1,541 402 6,008 1,157 Net 4,990 1,302 19,450 3,770 Reclassified from AOCI to cost of sales: Gain before income taxes 8,496 1,395 20,470 2,536 Less: income tax provision 2,005 330 4,830 598 Net 6,491 1,065 15,640 1,938 Net change to AOCI $ ( 1,501 ) $ 237 $ 3,810 $ 1,832 As of January 31, 2026, the notional amount of our outstanding aluminum swap contracts was $ 30.9 million and, assuming no change in commodity prices, $ 11.4 million of unrealized gain before tax will be reclassified from AOCI and recognized in earnings over the next 12 fiscal months. The Company’s policy for the maximum length of time for which it may hedge exposure to the variability of future cash flows is three years. The Company is not subject to any legally enforceable master netting arrangements and does not offset fair value amounts recognized for derivative instruments. As of January 31, 2026, the fair value of the derivative asset was $ 11.4 million, which was included in prepaid and other current assets. As of May 3, 2025, the fair value of the derivative asset was $ 7.4 million, which was included in prepaid and other current assets, and the fair value of the derivative liability was $ 1.0 million, which was included in accrued liabilities . Such valuation does not entail a significant amount of judgment and the inputs that are significant to the fair value measurement are Level 2 as defined by the fair value hierarchy as they are observable market based inputs or unobservable inputs that are corroborated by market data. 6. RELATED PARTIES The Company is a party to a management agreement with Corporate Management Advisors, Inc. (CMA), a corporation owned by our Chairman and Chief Executive Officer. The management agreement provides that the Company will pay CMA an annual base fee equal to one percent of the consolidated net sales of the Company. Management fees to CMA were $ 2.6 million and $ 2.7 million for the three fiscal months ended January 31, 2026 and January 25, 2025, respectively. Management fees to CMA were $ 8.8 million and $ 8.9 million for the nine fiscal months ended January 31, 2026 and January 25, 2025, respectively. At January 31, 2026 and May 3, 2025, accounts payable included amounts due to CMA of $ 1.7 million and $ 2.1 million, respectively. 12 Table of Contents 7. SEGMENT INFORMATION The Company operates as a single operating and reportable segment that encompasses the development, production, marketing and sale of beverages. The Company manages its business on a consolidated basis utilizing vertically integrated production facilities and a centralized supply chain infrastructure. The Chief Operating Decision Maker (“CODM”) makes operating decisions, allocates resources and assesses financial performance based primarily upon consolidated operating income and net income as reported in the consolidated statements of income. The CODM also regularly reviews cost of sales, shipping and handling costs, and marketing costs. These costs represent significant segment expenses and are reported elsewhere in the consolidated financial statements. Other segment items include other selling and general administrative costs (primarily consisting of compensation-related and other overhead costs), other income (expense), net which includes interest income and interest expense, and provision for income taxes. Depreciation and amortization expense is reported in the consolidated statements of cash flow. 8. COMMON STOCK The Board of Directors has authorized the Company to repurchase up to 3.2 million shares of its common stock. During the nine fiscal months ended January 31, 2026, the Company repurchased 20,000 shares of its common stock at an average price per share of $ 33.65 for a total cost of $ 0.7 million. As of January 31, 2026, 1,333,144 common shares were purchased under the program and 1,866,856 common shares were available for repurchase. ITEM 2. MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW National Beverage Corp. innovatively refreshes America with a distinctive portfolio of sparkling waters, juices, energy drinks (Power+ Brands) and, to a lesser extent, carbonated soft drinks. We believe our creative product designs, innovative packaging and imaginative flavors, along with our corporate culture and philosophy, make National Beverage unique as a stand-alone entity in the beverage industry. The majority of our brands are geared to the active and health-conscious consumer including sparkling waters, energy drinks and juices. Our portfolio of Power+ Brands includes LaCroix® sparkling waters; Clear Fruit® non-carbonated water beverages enhanced with fruit flavor; Rip It® energy drinks and shots; and Everfresh®, Everfresh Premier Varietals™ and Mr. Pure® 100% juice and juice-based products. Additionally, we produce and distribute carbonated soft drinks including Shasta® and Faygo®, iconic brands whose consumer loyalty spans more than 135 years. 13 Table of Contents Our strategy seeks the profitable growth of our products by (i) developing healthier beverages in response to the global shift in consumer buying habits and tailoring our beverage portfolio to the preferences of a diverse mix of ‘crossover consumers’ – a growing group desiring a healthier alternative to artificially sweetened and high-caloric beverages; (ii) emphasizing unique flavor development and variety throughout our brands that appeal to multiple demographic groups; (iii) maintaining points of difference through innovative marketing, packaging and consumer engagement and (iv) responding faster and more creatively to changing consumer trends than larger competitors who are burdened by legacy production and distribution complexity and costs. Presently, our primary market focus is the United States. Certain of our beverages are also distributed on a limited basis in other countries and options to expand distribution to other regions are being pursued. To service a diverse customer base that includes numerous national retailers, as well as thousands of smaller “up-and-down-the-street” accounts, we utilize a hybrid distribution system consisting of warehouse and direct-store delivery. The warehouse delivery system allows our retail partners to further maximize their assets by utilizing their ability to pick up beverages at our warehouses, further lowering their/our product costs. Our operating results are affected by numerous factors, including fluctuations in the costs of raw materials, supply chain disruptions, holiday and seasonal programming and weather conditions. Beverage sales are seasonal with higher sales volume realized during the summer months. RESULTS OF OPERATIONS Three Fiscal Months Ended January 31, 2026 (third quarter of fiscal 2026) compared to Three Fiscal Months Ended January 25, 2025 (third quarter of fiscal 2025) Net sales for the third quarter of fiscal 2026 decreased 0.9% to $264.6 million from $267.1 million for the third quarter of fiscal 2025. The decrease in sales resulted primarily from a 4.8% decrease in case volume, partially offset by a 4.4% increase in average selling price per case. The decrease in case volume impacted both Power + Brands and carbonated soft drink brands. Gross profit for the third quarter of fiscal 2026 increased to $99.6 million from $99.0 million for the third quarter of fiscal 2025 and gross margin increased to 37.6% from 37.1% The increase in gross margin was primarily due to the increase in average selling price per case, partially offset by increased packaging costs and the effects of reduced case volume. The average cost of sales per case increased 3.4%. Selling, general and administrative expenses for the third quarter of fiscal 2026 remained constant at $48.4 million for the third quarter of fiscal 2026 and fiscal 2025. As a percentage of net sales, selling, general and administrative expenses increased to 18.3% for the third quarter of fiscal 2026 compared to 18.1% for the third quarter of fiscal 2025. Other income, net includes interest income of $2.8 million for the third quarter of fiscal 2026 and $1.4 million for the third quarter of fiscal 2025. The increase in interest income is due primarily to increased average invested balances. The Company’s effective income tax rate, based upon estimated annual income tax rates, was 23.6% for the third quarter of fiscal 2026 and 23.7% for the third quarter of fiscal 2025. The difference between the effective rate and the federal statutory rate of 21% was primarily due to the effects of state income taxes. 14 Table of Contents Nine Fiscal Months Ended January 31, 2026 (first nine months of fiscal 2026) compared to Nine Fiscal Months Ended January 25, 2025 (first nine months of fiscal 2025) Net sales for the first nine months of fiscal 2026 decreased 0.5% to $883.4 million from $887.7 million for the first nine months of fiscal 2025. The decrease in sales resulted primarily from a 4.9% decrease in case volume, partially offset by a 4.7% increase in average selling price per case. The decrease in case volume impacted both Power + Brands and carbonated soft drink brands. Gross profit for the first nine months of fiscal 2026 increased to $334.3 million from $330.7 million for the first nine months of fiscal 2025 and gross margin increased to 37.8% from 37.3%. The increase in gross margin was primarily due to the increase in average selling price per case, partially offset by an increase in packaging and ingredient costs and the effects of reduced case volume. The average cost of sales per case increased 3.7% Selling, general and administrative expenses for the first nine months of fiscal 2026 increased $1.5 million to $154.3 million from $152.8 million for the first nine months of fiscal 2025. The increase was primarily due to an increase in marketing and selling costs. As a percentage of net sales, selling, general and administrative expenses increased to 17.5% for the first nine months of fiscal 2026 compared to 17.2% for the first nine months of fiscal 2025. Other income, net includes interest income of $7.7 million for the first nine months of fiscal 2026 and $7.4 million for the first nine months of fiscal 2025. The increase in interest income is due primarily to increased average invested balances. The Company’s effective income tax rate, based upon estimated annual income tax rates, was 23.6% for the first nine months of fiscal 2026 and 23.4% for the first nine months of fiscal 2025. The difference between the effective rate and the federal statutory rate of 21% was primarily due to the effects of state income taxes. LIQUIDITY AND FINANCIAL CONDITION Liquidity and Capital Resources The Company’s principal sources of liquidity are its existing cash and cash-equivalents, cash generated from operating activities and borrowing capacity. At January 31, 2026, we maintained unsecured revolving Credit Facilities and the Loan Facility totaling $150 million, under which no borrowings were outstanding and $2.7 million was reserved for standby letters of credit. We believe existing capital resources will be sufficient to meet our liquidity and capital requirements for the next twelve months. Cash Flows The Company’s cash position increased $120.1 million for the first nine months of fiscal 2026 compared to a decrease of $177.8 million for the first nine months of fiscal 2025 primarily due to the special cash dividend of $304.1 million paid on July 24, 2024. Net cash provided by operating activities for the first nine months of fiscal 2026 was $135.7 million compared to $146.6 million for the first nine months of fiscal 2025. For the first nine months of fiscal 2026, cash flow provided by operating activities decreased primarily due to a net increase in working capital, excluding cash. 15 Table of Contents Net cash used in investing activities for the first nine months of fiscal 2026 reflects capital expenditures of $15.2 million, compared to capital expenditures of $20.8 million for the first nine months of fiscal 2025. Certain production capacity and efficiency improvement projects are in progress and we anticipate fiscal 2026 capital expenditures will not exceed fiscal 2025 capital spending. Net cash used in financing activities for the first nine months of fiscal 2026 primarily reflects the repurchase of common shares for $0.7 million. Financial Position At January 31, 2026, working capital increased $149.6 million to $416.0 million from $266.4 million at May 3, 2025. The current ratio was 4.4 to 1 at January 31, 2026 compared to 2.9 to 1 at May 3, 2025. The increase in working capital and current ratio was due primarily to an increase in cash and cash equivalents of $120.1 million, a decrease in accounts payable and accrued liabilities of $19.6 million, and other net working capital increases of $9.8 million. Trade receivables decreased $6.7 million and days sales outstanding increased to 33.5 days from 32.5 days. Inventories increased $11.0 million and inventory turns decreased to 8.3 times from 8.7 times. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK There have been no material changes in market risks from those reported in our Annual Report on Form 10-K for the fiscal year ended May 3, 2025.