What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2020-07-31 compared with 2020-02-06 · 74 added, 106 removed, 79 unchanged (69% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following is a discussion and analysis of our financial condition and results of operations for the three and nine months ended December 29, 2019 as compared to the similar periods ended December 30, 2018.

This discussion should be read in conjunction with the condensed consolidated financial statements and notes to condensed consolidated financial statements included in this quarterly report on Form 10-Q and Item 8 of our Annual Report on Form 10-K for the fiscal year ended March 31, 2019 (“fiscal 2019”).

References to “fiscal 2020” refer to the fiscal year ending March 29, 2020.

The following is a discussion and analysis of our financial condition and results of operations for the three months ended June 28, 2020 as compared to the similar period ended June 30, 2019.

We derive substantially all of our revenues from the sale of chemicals and specialty ingredients to our customers in a wide variety of industries.

1 unchanged sentence

Over the years, we have maintained the strong customer focus and have expanded our business by increasing our sales of value-added chemicals and specialty ingredients, including manufacturing, blending, and repackaging certain products.

Statement on COVID-19

The pandemic caused by COVID-19 has resulted in federal, state and local governments around the world implementing stringent measures to help control the spread of the virus, including quarantines, “shelter in place” and “stay at home” orders, travel restrictions or bans, business curtailments, school closures, and other protective measures.

While some areas of the country have begun to open up and ease these restrictions, many still have these restrictions in place or are implementing or contemplating new restrictions.

Restrictions will likely remain in place for some time.

Financial markets have been volatile in 2020, primarily due to uncertainty with respect to the severity and duration of the pandemic .

All of our manufacturing facilities qualify as essential operations (or the equivalent) under applicable federal and state orders.

As a result, all of our manufacturing sites and facilities have continued to operate and are doing so safely, with no significant impact to output levels.

We are enforcing social distancing and enhanced health, safety and sanitization measures in accordance with guidelines from the Center for Disease Control.

We have also implemented necessary procedures and support to enable a significant portion of our office personnel to work remotely.

During this public health crisis, we remain focused on the health and safety of our employees, customers and suppliers and maintaining safe and reliable operations of our manufacturing sites.

As our operations and products are essential to critical national infrastructure, it is imperative that we continue to supply materials including the products needed to maintain safe drinking water, ingredients essential for large-scale food, pharmaceutical and other health product manufacturing and nutrition products needed to support our critical infrastructure.

Our manufacturing sites have continued to operate during the COVID-19 pandemic, with no significant impact to manufacturing.

We ended the first quarter of fiscal 2021 with a leverage ratio below 1.0x, net debt of $61.5 million and significant amounts available for borrowing under our Revolving Loan Facility.

The COVID-19 pandemic has created tremendous uncertainty in the economy.

The financial impact to our company has been mixed, as sales to certain end-markets such as food, bottled bleach and health and nutrition have benefited our reporting segments, while decreased sales to other end-markets such as ethanol, pools and resorts have negatively impacted them.

As uncertainty continues with this pandemic, we expect mixed results to continue for the foreseeable future.

We will continue to be cautious in our capital expenditures and investments, and delay investments where deemed appropriate, while still investing for the future by opening new Water Treatment branches and making capital investments to drive higher margin business.

With our current debt levels and available borrowings, we believe we are well-positioned to weather a continued economic downturn.

Financial Results

4 unchanged sentences

The LIFO inventory valuation method and the resulting cost of sales are consistent with our business practices of pricing to current chemical raw material prices.

Inventories in the Health and Nutrition segment are valued using FIFO method.

Our Industrial and Water Treatment segments sell bulk commodity products.

We disclose the sales of our bulk commodity products as a percentage of total sales dollars within each of those segments.

Inventories in the Health and Nutrition segment are valued using the FIFO method.

We disclose the sales of our bulk commodity products as a percentage of total sales dollars for our Industrial and Water Treatment segments.

Our definition of bulk commodity products includes products that we do not modify in any way, but receive, store, and ship from our facilities, or direct ship to our customers in large quantities.

We review our sales reporting on a periodic basis to ensure we are including all products that meet this definition.

Results of Operations

The following table sets forth the percentage relationship of certain items to sales for the period indicated:

Three Months Ended Nine Months Ended

December 29, 2019 December 30, 2018 December 29, 2019 December 30, 2018

Three Months Ended

June 28, 2020 June 30, 2019

Sales 100.0 % 100.0 %

4 unchanged sentences

Interest expense, net (0.3) % (0.5) %

Other income (expense) 0.1 % (0.2) % 0.1 % (0.1) %

Other income 0.3 % 0.1 %

Income before income taxes 11.1 % 9.0 %

1 unchanged sentence

Net income 8.1 % 6.6 %

Three Months Ended December 29, 2019 Compared to Three Months Ended December 30, 2018

Sales decreased $7.8 million, or 6.0%, to $120.4 million for the three months ended December 29, 2019, as compared to $128.2 million for the same period of the prior year.

Three Months Ended June 28, 2020 Compared to Three Months Ended June 30, 2019

Sales were $143.2 million for the current quarter, a decrease of $4.1 million, or 2.8%, from sales of $147.3 million for the same period a year ago.

Industrial Segment.

Industrial segment sales decreased $6.0 million, or 8.7%, to $63.0 million for the three months ended December 29, 2019, as compared to $69.0 million for the same period of the prior year.

Sales of bulk commodity products in the Industrial segment were approximately 18% of sales dollars for the current quarter and 23% for the same period in the prior year.

Sales dollars decreased from the prior year due to lower overall sales volumes, particularly of lower-priced bulk commodities driven by a weak ethanol industry, as well as lower pricing due to lower costs of one of our major commodities.

Industrial segment sales decreased $3.8 million, or 5.1%, to $71.5 million for the current quarter, as compared to $75.3 million for the same period of the prior year.

Sales of bulk commodity products in the Industrial segment were approximately 12% of sales dollars in the current quarter and 20% in the same period of the prior year.

The decrease in sales dollars from the prior year was driven primarily by a temporary increase in sales in the first quarter last year attributable to heavy rains and flooding along the Mississippi River, which increased demand from certain customers in that quarter.

Sales also decreased in the current quarter as a result of weak economic conditions in the ethanol industry, which decreased sales of products into that industry.

The decrease was somewhat offset by increased sales of certain of our manufactured, blended and re-packaged products, largely our bottled bleach products as a result of increased demand due to COVID-19, as well as increased sales of certain pharmaceutical, food ingredients and agricultural products.

Water Treatment Segment.

Water Treatment segment sales increased $2.2 million, or 6.6%, to $34.9 million for the three months ended December 29, 2019, as compared to $32.7 million for the same period of the prior year.

Sales of bulk commodity products in the Water Treatment segment were approximately 12% of sales dollars for the current quarter and 16% of sales dollars for the same period in the prior year.

The increase in sales dollars was driven by increased volumes sold of certain manufactured, blended and re-packaged products that carry higher per-unit selling prices, offset somewhat by lower pricing due to lower costs of one of our major commodities.

Water Treatment segment sales decreased $3.6 million, or 8.2%, to $39.7 million for the current quarter, as compared to $43.3 million for the same period of the prior year.

Sales of bulk commodity products in the Water Treatment segment were approximately 10% of sales dollars for the current quarter and 11% a year ago.

The decrease in sales dollars was driven by decreased volumes sold in the current quarter due, in part, to customers filling up their tanks in March as a result of supply concerns resulting from COVID-19, which decreased their needs in the current quarter, as well as reduced sales to certain end-markets as a result of COVID-19.

Health & Nutrition Segment.

Health and Nutrition segment sales decreased $3.9 million, or 14.7%, to $22.5 million for the three months ended December 29, 2019, as compared to $26.4 million the same period of the prior year.

The decrease in sales was driven by decreased sales of our distributed specialty products.

Gross profit was $21.5 million, or 17.8% of sales, for the three months ended December 29, 2019, an increase of $0.5 million from $21.0 million, or 16.4% of sales, for the same period of the prior year.

During the three months ended December 29, 2019, the LIFO reserve decreased, and gross profit increased, by $0.3 million.

In the same period of the prior year, the LIFO reserve decreased, and gross profit increased, by $0.5 million.

Sales for our Health and Nutrition segment increased $3.2 million, or 11.1%, to $32.0 million for the current quarter, as compared to $28.8 million for the same period of the prior year.

The increase in sales was driven by increased sales of both our manufactured and specialty distributed products, partially as a result of increased demand resulting from COVID-19.

Gross profit increased $2.2 million to $31.0 million, or 21.6% of sales, for the current quarter, from $28.8 million, or 19.5% of sales, for the same period of the prior year.

During the current and prior year quarters, the LIFO reserve had a nominal impact on gross profit.

Industrial Segment.

Gross profit for the Industrial segment increased $0.1 million to $8.4 million, or 13.4% of sales, for the three months ended December 29, 2019, as compared to $8.3 million, or 12.0% of sales, for the same period of the prior year.

During the current quarter, the LIFO reserve decreased, and gross profit increased, by $0.2 million.

In the same period a year ago, the LIFO reserve decreased, and gross profit increased, by $0.4 million.

Total gross profit increased from a year ago despite lower sales dollars due to a favorable product mix shift with increased sales of certain of our higher margin manufactured, blended and re-packaged products.

Gross profit for the Industrial segment increased $1.6 million to $12.5 million, or 17.4% of sales, for the current quarter, from $10.9 million, or 14.5% of sales, for the same period of the prior year.

During the current and prior year

quarters, the LIFO reserve had a nominal impact on gross profit.

Industrial segment gross profit increased due to a favorable product mix shift to more sales of our manufactured, blended and re-packaged products.

Water Treatment Segment.

Gross profit for the Water Treatment segment increased $0.8 million to $8.4 million, or 24.0% of sales, for the three months ended December 29, 2019, as compared to $7.6 million, or 23.3% of sales, for the same period of the prior year.

During the current quarter and the same quarter of the prior year, the LIFO reserve changed nominally and therefore had a minimal impact on gross profit.

Gross profit increased as a result of higher sales of our manufactured, blended and repackaged products compared to a year ago, offset somewhat by higher variable operating costs.

Gross profit for the Water Treatment segment decreased $0.8 million to $11.3 million, or 28.6% of sales, for the current quarter, from $12.1 million, or 28.0% of sales, for the same period of the prior year.

During the current and prior year quarters, the LIFO reserve had a nominal impact on gross profit.

Gross profit decreased as a result of decreased sales.

Health and Nutrition Segment .

Gross profit for our Health and Nutrition segment decreased $0.4 million to $4.7 million, or 20.9% of sales, for the three months ended December 29, 2019, as compared to $5.1 million, or 19.3% of sales, for the same period of the prior year.

Gross profit decreased as a result of lower sales, while gross profit as a percentage of sales was up slightly year over year.

Gross profit for our Health and Nutrition segment increased $1.4 million to $7.2 million, or 22.5% of sales, for the current quarter, from $5.8 million, or 20.1% of sales, for the same period of the prior year.

The increase in gross profit was a result of higher sales compared to the prior year.

Selling, General and Administrative Expenses

Selling, general and administrative (“SG&A”) expenses increased $0.4 million to $14.7 million, or 12.2% of sales, for the three months ended December 29, 2019, from $14.3 million, or 11.2% of sales, for the same period of the prior year.

The increase was primarily due to a year-over-year unfavorable change in recorded compensation expense of $0.4 million due to higher compensation expense relating to the non-qualified deferred compensation plan liability.

This expense was offset by the amount recorded in other income (expense) which represented gains or losses on investments held for our non-qualified deferred compensation plan.

Selling, general and administrative (“SG&A”) expenses increased $0.2 million to $15.0 million, or 10.5% of sales, for the current quarter, compared to $14.8 million, or 10.1% of sales, for the same period of the prior year.

The increase includes a year-over-year increase in compensation expense of $0.4 million related to our non-qualified deferred compensation plan, which is offset by other income.

Operating Income

Operating income increased $0.1 million to $6.8 million, or 5.6% of sales, for the three months ended December 29, 2019, from $6.7 million, or 5.2% of sales, for the same period of the prior year due to the combined impact of the factors discussed above.

Operating income increased $1.9 million to $15.9 million, or 11.1% of sales, for the current quarter, from $14.0 million, or 9.4% of sales, for the same period of the prior year due to the combined impact of the factors discussed above.

Interest Expense, Net

Interest expense decreased $0.2 million to $0.6 million for the three months ended December 29, 2019 compared to $0.8 million for the same period of the prior year.

Interest expense decreased $0.4 million to $0.4 million for the current quarter, from $0.8 million for the same period of the prior year.

Interest expense decreased due to lower outstanding borrowings and lower borrowing rates compared to the prior year.

Other Income (Expense)

Other income (expense) improved by $0.4 million for the three months ended December 29, 2019 compared to the same period a year ago, with $0.1 million of income recorded in the current quarter compared to expense of $0.3 million in the same quarter a year ago.

This represents gains or losses recorded on investments held for our non-qualified deferred compensation plan.

The amount recorded as a gain or loss was offset by a similar amount recorded as a reduction or increase to compensation expense within SG&A expenses.

Income Tax Provision

Our effective income tax rate was 28.1% for the three months ended December 29, 2019.

Our effective tax rate for the three months ended December 30, 2018 was 26.2%.

The effective tax rate increased from the prior year due to an increase to the section 162(m) deduction limitation and unfavorable tax provision adjustments recorded in the third quarter of fiscal 2020, whereas tax provision adjustments recorded in the third quarter of fiscal 2019 were favorable.

The effective tax rate is impacted by projected levels of annual taxable income, permanent items, and state taxes.

Nine Months Ended December 29, 2019 Compared to Nine Months Ended December 30, 2018

Sales decreased $15.5 million, or 3.7%, to $407.8 million for the nine months ended December 29, 2019, as compared to $423.3 million for the same period of the prior year.

Industrial Segment.

Industrial segment sales were $206.4 million for the nine months ended December 29, 2019, a decrease of $6.0 million, or 2.8%, from sales of $212.4 million for the same period of the prior year.

Sales of bulk commodity products in the Industrial segment were approximately 19% of sales dollars for the current period and 22% of sales dollars for the same period in the prior year.

The decrease in sales dollars from the prior year was driven by lower pricing due to lower costs of one of our major commodities as well as an overall decrease of volumes sold of our bulk commodity products, particularly of lower-priced bulk commodities driven by a weak ethanol industry, offset somewhat by an increase in volumes sold of our manufactured, blended and re-packaged products that typically carry higher per-unit selling prices.

Water Treatment Segment.

Water Treatment segment sales increased $7.7 million, or 6.6%, to $124.0 million for the nine months ended December 29, 2019, as compared to $116.3 million for the same period of the prior year.

Sales of bulk commodity products in the Water Treatment segment were approximately 11% of sales dollars for the current period and 15% for the same period in the prior year.

The increase in sales dollars was driven by increased volumes sold of certain manufactured, blended and re-packaged products that carry higher per-unit selling prices, offset somewhat by lower volumes sold of our bulk commodity products as well as lower pricing due to lower costs of one of our major commodities.

Health & Nutrition Segment.

Health and Nutrition segment sales decreased $17.2 million, or 18.2%, to $77.3 million for the nine months ended December 29, 2019, as compared to $94.5 million the same period of the prior year.

The decline in sales was driven by decreased sales of our distributed specialty products, some of which was due to a previously anticipated worldwide supply shortage of a significant product that we experienced in the first two quarters of this fiscal year, and the ramp-up of sales with new partners replacing previous product lines.

Gross profit increased $3.0 million to $78.3 million, or 19.2% of sales, for the nine months ended December 29, 2019, from $75.3 million, or 17.8% of sales, for the same period of the prior year.

During the nine months ended December 29, 2019, the LIFO reserve decreased and gross profit increased by $0.6 million.

In the same period of the prior year, the LIFO reserve changed nominally and therefore had a minimal impact on gross profit.

Industrial Segment.

Gross profit for the Industrial segment increased $2.9 million to $30.0 million, or 14.5% of sales, for the nine months ended December 29, 2019, as compared to $27.1 million, or 12.7% of sales, for the same period of the prior year.

During the nine months ended December 29, 2019, the LIFO reserve decreased and gross profit increased by $0.5 million, while the LIFO reserve decreased and gross profit increased by $0.1 million during the same period in the prior year.

Despite lower sales dollars, total gross profit also increased from a year ago due to a favorable product mix shift to more sales of higher margin manufactured, blended and re-packaged products.

Water Treatment Segment.

Gross profit for the Water Treatment segment increased $2.4 million to $33.2 million, or 26.8% of sales, for the nine months ended December 29, 2019, as compared to $30.8 million, or 26.5% of sales, for the same period of the prior year.

During the nine months ended December 29, 2019 the LIFO reserve decreased and gross profit increased by $0.1 million, while the LIFO reserve increased and gross profit decreased by $0.1 million in the same period a year ago.

Gross profit increased as a result of higher sales of certain of our manufactured, blended and repackaged products compared to a year ago, offset somewhat by higher variable operating costs.

Health and Nutrition Segment.

Gross profit for our Health and Nutrition segment decreased $2.3 million to $15.1 million, or 19.5% of sales, for the nine months ended December 29, 2019, as compared to $17.4 million, or 18.4% of sales, for the same period of the prior year.

Gross profit decreased as a result of lower sales, while gross profit as a percent of sales improved year over year due to increased profitability on certain products as well as lower operational costs.

Selling, General and Administrative Expenses

SG&A expenses increased slightly to $44.4 million, or 10.9% of sales, for the nine months ended December 29, 2019, as compared to $44.2 million, or 10.4% of sales, for the same period of the prior year.

The increase was due to a year-over-year unfavorable change in compensation expense recorded of $0.5 million due to higher compensation expense relating to the non-qualified deferred compensation plan liability.

This expense was offset by the amount recorded in other income (expense) which represented gains or losses on investments held for our non-qualified deferred compensation plan.

Operating Income

Operating income was $33.9 million, or 8.3% of sales, for the nine months ended December 29, 2019, as compared to $31.0 million, or 7.4% of sales, for the same period of the prior year due to the combined impact of the factors discussed above.

Interest Expense, Net

Interest expense was $2.0 million for the nine months ended December 29, 2019, compared to $2.6 million for the same period of the prior year.

Interest expense decreased due to lower outstanding borrowings compared to the prior year, with our total outstanding debt balance at December 29, 2019 being $23.0 million lower than a year ago.

Other Income (Expense)

Other income (expense) improved by $0.5 million for the nine months ended December 29, 2019, with $0.3 million of income recorded in the current year compared to expense of $0.2 million in the same period a year ago.

This represents gains or losses recorded on investments held for our non-qualified deferred compensation plan.

The amount recorded as a gain or loss was offset by a similar amount recorded as a reduction or increase to compensation expense within SG&A expenses.

Other income increased $0.4 million to $0.5 million recorded for the current quarter, compared to $0.1 million in the same period of the prior year.

This represents gains recorded on investments held for our non-qualified deferred compensation plan.

The amount recorded as a gain was offset by the same amount recorded as an increase to compensation expense within SG&A expenses.

Income Tax Provision

Our effective tax rate for the nine months ended December 29, 2019 was 26.6% and was 26.8% for the nine months ended December 30, 2018.

Our effective income tax rate was 26.5% for the current quarter, compared to 26.3% in the same period of the prior year.

The effective tax rate is impacted by projected levels of annual taxable income, permanent items, and state taxes.

Liquidity and Capital Resources

Cash was $7.3 million at December 29, 2019, a decrease of $1.9 million as compared with the $9.2 million available as of March 31, 2019.

Cash provided by operating activities was $45.0 million for the nine months ended December 29, 2019, compared to cash provided by operating activities of $31.0 million for the same period of the prior year.

The year-over-year increase in cash provided by operating activities was primarily driven by a reduction in receivables and inventory, along with improvement in net income for the first nine months of fiscal 2020 compared to the same period a year ago.

Cash was $4.5 million at June 28, 2020, an increase of $0.2 million as compared with the $4.3 million available as of March 29, 2020.

Cash provided by operating activities was $1.6 million for the three months ended June 28, 2020, compared to cash provided by operating activities of $10.1 million for the same period of the prior year.

The year-over-year decrease in cash provided by operating activities was primarily driven by an increase in inventory and decreased payables, partially offset by an increase in customer receivables and improvement in net income for the first three months of fiscal 2020 compared to the same period a year ago.

Due to the nature of our operations, which includes purchases of large quantities of bulk chemicals, timing of purchases can result in significant changes in working capital investment and the resulting operating cash flow.

Due to flooding in the first quarter of the prior year, we were not able to receive any barges of bulk chemicals into inventory and as a result our inventory levels were unusually low at that time.

Typically, our cash requirements increase during the period from April through November as caustic soda inventory levels increase because we receive the majority of barges during this period.

Cash used in investing activities was $19.1 million for the nine months ended December 29, 2019, compared to $7.0 million for the same period of the prior year.

Capital expenditures were $19.4 million for the nine months ended December 29, 2019, compared to $7.2 million in the same period of the prior year.

Included in the capital expenditures for the first nine months of fiscal 2020 was $8.2 million in the aggregate for the purchase of our previously leased corporate headquarters and a previously leased Water Treatment branch facility, as well as the purchase of a facility for a Water Treatment branch expansion.

In addition, the increase in capital expenditures primarily related to facility improvements and new and replacement equipment.

Cash used in financing activities was $27.8 million for the nine months ended December 29, 2019, compared to $21.7 million in the same period of the prior year.

Included in financing activities in the current year were net debt payments of $17.0 million, dividend payments of $7.4 million and share repurchases of $3.8 million.

In the first nine months of the prior year, we made net debt payments of $10.0 million and dividend payments of $9.5 million.

The year-over-year change in dividend payments resulted from our change from semi-annual to quarterly dividend payments.

Cash used in investing activities was $4.8 million for the three months ended June 28, 2020, compared to $9.1 million for the same period of the prior year.

Capital expenditures were $4.8 million for the three months ended June 28, 2020, compared to $9.2 million in the same period of the prior year.

In the first three months of the prior year, we purchased our previously leased corporate headquarters facility for $6.4 million, which was partially offset by increased investments in facility improvements and new and replacement equipment during the first three months of the current year.

Cash provided by financing activities was $3.5 million for the three months ended June 28, 2020, compared to $4.6 million of cash used in financing activities in the same period of the prior year.

Included in financing activities in the first three months of the current year were net debt proceeds of $6.0 million, compared to no borrowings in the first three months of the prior year, as our working capital needs were lower at that time because we did not receive any barges of bulk chemicals into inventory in that quarter.

In addition, we repurchased no shares of our common stock in the first quarter of the current fiscal year, compared to $1.8 million in the same quarter in the prior year.

We expect our cash balances and funds available under our credit facility, discussed below, along with cash flows generated from operations, will be sufficient to fund the cash requirements of our ongoing operations for the foreseeable future.

Our Board has authorized the repurchase of up to 800,000 shares of our outstanding common stock, including an increase of 500,000 shares in February 2019.

Our Board has authorized the repurchase of up to 800,000 shares of our outstanding common stock.

The shares may be purchased on the open market or in privately negotiated transactions subject to applicable securities laws and regulations.

The primary objective of the share repurchase program is to offset the impact of dilution from issuances relating to employee and director equity grants and our employee stock purchase program.

During the first nine months of fiscal 2020, we repurchased 91,395 shares of common stock with an aggregate purchase price of $3.8 million.

In the first nine months of the prior year, we repurchased 59,788 shares of common stock with an aggregate purchase price of $2.4 million.

As of December 29, 2019, 412,985 shares remained available for purchase under the program

During the first three months of fiscal 2021, we did not repurchase any shares of common stock.

In the first three months of the prior fiscal year, we repurchased 47,136 shares of common stock with an aggregate purchase price of $1.8 million.

As of June 28, 2020, 358,797 shares remained available for purchase under the program

We are party to an amended and restated credit agreement (the “Credit Agreement”) with U.S.

16 unchanged sentences

Bank, the Revolving Credit Loan Facility would be amended to use such successor rate without any further action or consent of any other lender, so long as the administrative agent does not receive any objection from any other lender.

At December 29, 2019, the effective interest rate on our borrowing was 2.4% .

At June 28, 2020, the effective interest rate on our borrowing was 1.5% .

In addition to paying interest on the outstanding principal under the Revolving Loan Facility, we are required to pay a commitment fee on the unutilized commitments thereunder.

1 unchanged sentence

Debt issuance costs paid to the Lenders are being amortized as interest expense over the term of the Credit Agreement.

As of December 29, 2019, the unamortized balance of these costs was $0.4 million, and is reflected as a reduction of debt on our balance sheet.

As of June 28, 2020, the unamortized balance of these costs was $0.3 million, and is reflected as a reduction of debt on our balance sheet.

The Credit Agreement requires us to maintain (a) a minimum fixed charge coverage ratio of 1.15 to 1.00 and (b) a maximum total cash flow leverage ratio of 3.0 to 1.0.

1 unchanged sentence

We are permitted to make distributions, pay dividends and repurchase shares so long as no default or event of default exists or would exist as a result thereof.

We were in compliance with all covenants of the Credit Agreement as of December 29, 2019.

We were in compliance with all covenants of the Credit Agreement as of June 28, 2020.

The Credit Agreement contains customary events of default, including failure to comply with covenants in the Credit Agreement and other loan documents, cross default to other material indebtedness, failure by us to pay or discharge material judgments, bankruptcy, and change of control.

8 unchanged sentences

These statements are not historical facts, but rather are based on our current expectations, estimates and projections, and our beliefs and assumptions.

Words such as “anticipate,” “expect,” “intend,” “plan,” “believe,” “estimate,” “will” and similar expressions to identify forward-looking statements.

Words such as “anticipate,” “believe,” “estimate,”, “expect,” “intend,” “plan,” “will” and similar expressions to identify forward-looking statements.

These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, some of which are beyond our control and are difficult to predict.

4 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