What changed in this filing

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Item 1A. Risk Factors

2026-02-17 compared with 2025-02-20 · 43 added, 32 removed, 226 unchanged (25% of the section changed)

20 unchanged sentences

These two customers have been key components of our growth and failure to maintain fulfillment and service levels or relationships with these customers could result in a material loss of business.

Our inability to penetrate new channels of distribution, including ecommerce, may also have a negative impact on our future sales and business.

(See Note 17 - Concentration of Credit Risks of the Notes to Consolidated Financial Statements for additional information).

Our inability to penetrate new channels of distribution, including ecommerce, may also have a negative impact on our future sales and business (see Note 17 - Concentration of Credit Risks of the Notes to Consolidated Financial Statements for additional information).

I f a large customer experiences a material decline in its business, that could have a negative impact on our ability to collect outstanding accounts receivable or continue future sales and business with that customer, which could have a material adverse effect on our financial condition, results of operations, and ability to generate future sales and cash flow from that customer.

17 unchanged sentences

Risks Related to our Operations:

Our results of operations could be negatively impacted by inflation or deflation in supply chain costs, including raw materials, sourcing, transportation and energy.

Many of our products are manufactured out of metals, including but not limited to steel, aluminum, zinc, and copper.

Additionally, we use other commodity-based materials in the manufacture of Letters, Numbers, and Signs (“LNS”) that are resin-based and subject to fluctuations in the price of oil.

We source the majority of our products from third parties and are subject to changes in their underlying manufacturing costs.

We also use third parties for transportation and are exposed to fluctuations in freight costs to transport goods from our suppliers to our distribution facilities and to our customers, as well as the price of diesel fuel in the form of freight surcharges on customer shipments and the cost of gasoline used by the field sales and service force.

Inflation in these costs could result in significant cost increases.

If we are unable to mitigate any cost increases from the foregoing factors through various customer pricing actions and cost reduction initiatives, our financial condition may be adversely affected.

Conversely, in the event that there is deflation, we may experience, and in fact have experienced, pressure from our customers to reduce prices.

There can be no assurance that we would be able to reduce our cost base (through negotiations with suppliers or other measures) to offset any such price concessions which could adversely impact our results of operations and cash flows.

Our business is subject to risks associated with sourcing product from overseas, including tariffs.

1 unchanged sentence

Substantially all of our import operations are subject to customs requirements, tariffs, and quotas set by governments through mutual agreements or unilateral actions.

tariffs on steel, aluminum, and other imported goods have materially increased the costs of many of our foreign sourced products, and any escalation in the tariffs will increase the impact, including without limitation recent tariffs against goods imported from China, Mexico, and Canada enacted on February 1, 2025 by the Trump Administration and any retaliatory tariffs issued in response thereto.

tariffs on steel, aluminum, and other imported goods have materially increased the costs of many of our foreign sourced products, and any escalation in the tariffs will increase the impact, including without limitation recent tariffs against goods imported from China, Mexico, and Canada enacted since February 1, 2025 by the Trump Administration and any retaliatory tariffs issued in response thereto.

In order to sustain current operating margins while the tariffs are in effect, we must be able to increase prices with our customers and find alternative, similarly priced sources that are not subject to the tariffs.

2 unchanged sentences

Adverse changes in these import costs and restrictions, or our suppliers' failure to comply with customs regulations or similar laws, could harm our business.

We estimate we source approximately 33% of our products from China, 33% from suppliers based in North America, and 33% from all other countries.

Based on the current facts and tariff environment as of the date of this filing, we expect the tariffs to continue to drive an increase in our net working capital and cost of sales.

We have raised prices to offset the tariff costs, although these price increases could impact future demand for our products.

We continue to analyze the impact of these actions and what, if any, steps, including pricing actions, we may take to mitigate the impact of the tariffs.

Consistent with our normal course of business, we will continue exploring alternative suppliers in other countries to source quality products that provide the best value for our customers.

If any of our existing vendors fail to meet our needs, we believe that sufficient capacity exists in the open market to supply any shortfall that may result.

6 unchanged sentences

Conflict between China and Taiwan could disrupt our supply chain, including limiting access to key ports, disrupting the operations of our suppliers, or resulting in potential international sanctions, all of which could adversely affect our results of operations or increase our costs.

Our results of operations could be negatively impacted by inflation or deflation in supply chain costs, including raw materials, sourcing, transportation and energy.

Many of our products are manufactured out of metals, including but not limited to steel, aluminum, zinc, and copper.

Additionally, we use other commodity-based materials in the manufacture of Letters, Numbers, and Signs (“LNS”) that are resin-based and subject to fluctuations in the price of oil.

We source the majority of our products from third parties and are subject to changes in their underlying manufacturing costs.

10 | December 27, 2025 Form 10-K

customer shipments and the cost of gasoline used by the field sales and service force.

Inflation in these costs could result in significant cost increases.

If we are unable to mitigate any cost increases from the foregoing factors through various customer pricing actions and cost reduction initiatives, our financial condition may be adversely affected.

Conversely, in the event that there is deflation, we may experience, and in fact have experienced, pressure from our customers to reduce prices.

We are subject to inventory management risks:

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We manage our inventories and accounts payable through our purchasing policies and our accounts receivable through our customer credit policies.

In recent years, our lead times extended due to disruptions in the global supply chain.

During 2022, we saw increased lead times for ocean freight from Asia, and we had to increase our inventory levels to maintain our high fill rates with our customers, which has increased our inventory costs and reduced our profitability.

During 2022, we saw increased lead times for ocean freight from Asia due to disruptions in the global supply chain, and we had to increase our inventory levels to maintain our high fill rates with our customers, which has increased our inventory costs and reduced our profitability.

Our lead times and inventory levels normalized in 2023.

However, there are no assurances that lead times will not increase in the future, and in such event our working capital and financial condition may be adversely affected.

If we fail to adequately manage our product purchasing or customer credit policies, our working capital and financial condition may be adversely affected.

However, there are no assurances that lead times will not increase in the future, and if we fail to adequately manage our product purchasing or customer credit policies, our working capital and financial condition may be adversely affected.

We are subject to the risks of doing business internationally.

5 unchanged sentences

• inadequate intellectual property protection in foreign countries;

• the imposition of duties and tariffs and other trade barriers, including without limitation recent tariffs against goods imported from China, Mexico, and Canada enacted on February 1, 2025 by the Trump Administration and any retaliatory tariffs issued in response thereto;

• the imposition of duties and tariffs and other trade barriers, including without limitation recent tariffs against goods imported from China, Mexico, and Canada since February 1, 2025 by the Trump Administration and any retaliatory tariffs issued in response thereto;

• trade-protection measures, import or export licensing requirements such as Export Administration Regulations promulgated by the U.S.

4 unchanged sentences

• difficulties associated with repatriating cash in a tax-efficient manner.

11 | December 27, 2025 Form 10-K

Any failure to adapt to these or other changing conditions in foreign countries in which we do business could have an adverse effect on our business and financial results.

Risks Related to our Workforce:

11 | December 28, 2024 Form 10-K

Successful sales and marketing efforts depend on our ability to recruit and retain qualified employees.

14 unchanged sentences

We reactivated and restored our operational systems over the course of the week following the Cybersecurity Incident.

In 2023, the Cybersecurity Incident related costs net of an expected insurance receivable totaled $1.0 million.

In the fourth quarter of 2024, we received proceeds from our insurance claim that exceeded the amount recorded as a receivable by $0.6 million.

These proceeds represented the cost associated with lost revenue and incremental expenses incurred.

While we have taken measures designed to protect the security of our information and technology systems, and any information handled by these systems, including personal, sensitive, confidential, and proprietary information, there can be no assurance that the measures which we have adopted to protect against certain events that could disrupt the operations of our information systems will prevent the occurrence of such a disruption.

Any such disruption could have a material adverse effect on our business and results of operations.

In addition, we plan to upgrade our existing information technology systems or choose to incorporate new technology systems from time to time in order for such systems to support our business, including a conversion to a new enterprise resource planning system currently scheduled to occur in over the next several years.

In addition, we plan to upgrade our existing information technology systems or choose to incorporate new technology systems from time to time in order for such systems to support our business.

Costs and potential problems and interruptions associated with the implementation of new or upgraded systems and technology or with maintenance or adequate support of existing systems could disrupt or reduce the efficiency of our operations.

Any such reduction in efficiency or disruption could have a material adverse effect on our business and results of operations.

Complications with the design or implementation of our new enterprise resource planning ("ERP") system could adversely impact our business and operations.

We rely on various information systems and technology to manage our business.

We are in the process of a multi-year implementation of a new ERP system.

We expect the first phase of this project to be operationalized in mid

12 | December 27, 2025 Form 10-K

2026, with future phases to follow.

This ERP system is designed to accurately maintain the Company’s financial records, enhance operational functionality, provide timely information to the Company’s management team related to the operation of the business, and streamline internal controls over financial reporting.

The ERP system implementation process has required, and will continue to require, the investment of significant personnel and financial resources.

We may not be able to successfully complete the implementation efforts without experiencing delays, increased costs, and other difficulties.

Any reduction in efficiency or disruption could have a material adverse effect on our business and results of operations.

If we are unable to successfully manage implementation efforts related to our new ERP system, our financial positions, results of operations and cash flows could be negatively impacted.

Further, if the ERP system does not operate as intended, the effectiveness of our internal control over financial reporting could be adversely impacted.

Unauthorized disclosure of personal, sensitive or confidential customer, employee, supplier, or Company information, whether through a breach of our computer systems, or those of our third party vendors and business partners, including cyber-attacks or otherwise, could severely harm our business.

As part of our business, we collect, process, and retain personal, sensitive and confidential personal information about our customers, employees, and suppliers.

Despite the security measures we have in place, our facilities and

12 | December 28, 2024 Form 10-K

systems, and those of the retailers and other third party distributors with which we do business, may be vulnerable to security breaches, cyber-attacks, acts of vandalism, computer viruses, misplaced or lost data, programming and/or human errors, or other similar events.

Despite the security measures we have in place, our facilities and systems, and those of the retailers and other third party distributors with which we do business, may be vulnerable to security breaches, cyber-attacks, acts of vandalism, computer viruses, misplaced or lost data, programming and/or human errors, or other similar events.

In fact, in late May 2023, we experienced a ransomware attack relating to certain systems on our network, as is more fully described on the preceding page, and some confidential personal information of our employees and selected dependents was accessed by the threat actor.

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In addition, we cannot be sure that any pending trademark or patent applications will be granted or will not be challenged or opposed by third parties or that we will be able to enforce our trademark rights against counterfeiters.

13 | December 27, 2025 Form 10-K

Failure to obtain or maintain adequate protection of our intellectual property rights for any reason could have a material adverse effect on our business, results of operations, and financial condition.

7 unchanged sentences

If we fail to obtain a required license or are unable to design around another company’s patent, we may be unable to make use of some of the affected products, which would reduce our revenue.

13 | December 28, 2024 Form 10-K

The defense costs and settlements for patent infringement lawsuits are not covered by insurance.

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If new debt is added to our current debt levels, the related risks that we now face could intensify.

14 | December 27, 2025 Form 10-K

We rely on available borrowings under the Asset-Based Revolving credit facility (“ABL Revolver”) for cash to operate our business, and the availability of credit under the ABL Revolver may be subject to significant fluctuation.

7 unchanged sentences

All of our indebtedness incurred under our senior secured credit facilities have variable interest rates.

Increases in borrowing rates will increase our cost of borrowing, which may adversely affect our results of operations and

14 | December 28, 2024 Form 10-K

financial condition.

Increases in borrowing rates will increase our cost of borrowing, which may adversely affect our results of operations and financial condition.

Our term loan and interest rate derivatives generally bear interest at a rate per annum equal to Daily Simple Secured Overnight Financing Rate (SOFR).

21 unchanged sentences

Exposure to foreign currency risk exists because we, through our global operations, enter into transactions and make investments denominated in multiple currencies.

Our predominant exposures are in Canadian, Mexican, and Asian currencies, including the Chinese Yuan (“CNY”).

Our predominant exposures are in Canadian, Mexican, and

15 | December 27, 2025 Form 10-K

Asian currencies, including the Chinese Yuan (“CNY”).

In preparing our Consolidated Financial Statements for foreign operations with functional currencies other than the U.S.

7 unchanged sentences

dollar declines relative to the CNY or other currencies, we may experience cost increases on such purchases.

dollar increased in value relative to the CNY by 2.8% in 2024, increased by 2.9% in 2023 and increased by 8.3% in 2022.

dollar decreased in value relative to the CNY by 4.0% in 2025, increased by 2.8% in 2024 and increased by 2.9% in 2023.

Significant appreciation of the CNY or other currencies in countries where we source our products could adversely impact our profitability.

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If we were required to write down all or part of our goodwill or indefinite-lived trade names, our financial condition and results of operations could be materially adversely affected.

15 | December 28, 2024 Form 10-K

We have $830.7 million of goodwill and $85.3 million of indefinite-lived trademarks recorded on our accompanying Consolidated Balance Sheets at December 27, 2025.

20 unchanged sentences

• tax effects of stock-based compensation;

16 | December 27, 2025 Form 10-K

• costs related to intercompany restructurings;

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors