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Item 2. Management’s Discussion and Analysis

2025-01-29 compared with 2024-10-30 · 96 added, 109 removed, 115 unchanged (64% 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 six months ended September 29, 2024 as compared to the similar period ended October 1, 2023.

The following is a discussion and analysis of our financial condition and results of operations for the nine months ended December 29, 2024 as compared to the similar period ended December 31, 2023.

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, 2024 .

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Business Acquisitions

On June 28, 2024, we acquired substantially all the assets of Wofford Water Service, Inc.

("Wofford") for $3.4 million.

We completed the following acquisitions in fiscal 2024 and fiscal 2025.The results of operations since the date of each acquisition and the assets, including goodwill associated with these acquisitions, are included in our Water Treatment segment.

• On October 30, 2024, we acquired substantially all the assets of Water Guard for $18.0 million.

Water Guard distributes water treatment chemicals and equipment to its customers primarily throughout North Carolina.

• On June 28, 2024, we acquired substantially all the assets of Wofford for $3.4 million.

Wofford distributed water treatment chemicals and equipment to customers mainly in Mississippi.

The results of operations since the acquisition date and the assets are included in our Water Treatment segment.

On June 3, 2024, we acquired substantially all the assets of Intercoastal Trading, Inc.

and certain related entities ("Intercoastal") for $22.0 million.

• On June 3, 2024, we acquired substantially all the assets of Intercoastal for $22.0 million.

Intercoastal distributes water treatment chemicals and equipment to its customers in Maryland, Delaware and Virginia.

The results of operations since the acquisition date and the assets are included in our Water Treatment segment.

In the fourth quarter of fiscal 2024, we acquired substantially all the assets of Industrial Research Corporation ("Industrial Research") for $4.6 million.

• In the fourth quarter of fiscal 2024, we acquired substantially all the assets of Industrial Research for $4.6 million.

Industrial Research was a distributor of water treatment chemicals and equipment for its customers in central to northern Louisiana, eastern Texas and southern Arkansas.

The results of operations since the acquisition and the assets are included in our Water Treatment segment.

In the third quarter of fiscal 2024, we acquired substantially all the assets of Miami Products & Chemical Company ("Miami Products") for $15.5 million.

• In the third quarter of fiscal 2024, we acquired substantially all the assets of Miami Products for $15.5 million.

Miami Products is a bleach manufacturer and distributor serving customers primarily throughout Ohio and the surrounding region.

The results of operations and the assets, including goodwill associated with this acquisition, are included as part of our Water Treatment segment from the date of acquisition forward.

In the third quarter of fiscal 2024, we acquired substantially all the assets of Water Solutions Unlimited, Inc.

("Water Solutions") for $60 million and an additional amount to be paid after three years based on achieving certain targets.

• In the third quarter of fiscal 2024, we acquired substantially all the assets of Water Solutions for $60 million and an additional amount to be paid after three years based on achieving certain targets.

The total purchase price was estimated to be $70.7 million, including the estimated potential earnout to be paid of $10.7 million.

Water Solutions is a manufacturer and distributor of water treatment chemicals serving customers primarily throughout Indiana, Illinois and Michigan.

The results of operations and the assets, including goodwill associated with this acquisition, are included as part of our Water Treatment segment from the date of acquisition forward.

In the second quarter of fiscal 2024, we acquired substantially all the assets of EcoTech Enterprises, Inc.

("EcoTech") for $3.4 million.

• In the second quarter of fiscal 2024, we acquired substantially all the assets of EcoTech for $3.4 million.

EcoTech was a manufacturer and distributor of water treatment chemicals serving customers throughout Arkansas and surrounding states.

The results of operations and the assets are included as part of our Water Treatment segment from the date of acquisition forward.

The aggregate annual revenue of these six businesses acquired in fiscal 2024 and fiscal 2025 totaled approximately $85 million, as determined using the applicable twelve-month period preceding each respective acquisition date.

The aggregate annual revenue of these seven businesses acquired in fiscal 2024 and fiscal 2025 totaled approximately $105 million, as determined using the applicable twelve-month period preceding each respective acquisition date.

Share Repurchase Program

We have in place a share repurchase program for up to 2.6 million shares of our common shares.

As of September 29, 2024, 831,946 shares remain available to be repurchased under this program.

As of December 29, 2024, 831,946 shares remained available to be repurchased under this program.

Financial Results

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

Three Months Ended Six Months Ended

September 29, 2024 October 1, 2023 September 29, 2024 October 1, 2023

Three Months Ended Nine Months Ended

December 29, 2024 December 31, 2023 December 29, 2024 December 31, 2023

Sales 100.0 % 100.0 % 100.0 % 100.0 %

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Net income 6.7 % 7.1 % 9.4 % 8.9 %

Three Months Ended September 29, 2024 Compared to Three Months Ended October 1, 2023

Sales were $247.0 million for the three months ended September 29, 2024, an increase of $10.5 million, or 4%, from sales of $236.5 million in the same period a year ago.

Increased sales in our Water Treatment segment more than offset sales softness in our Industrial and Health and Nutrition segments.

Three Months Ended December 29, 2024 Compared to Three Months Ended December 31, 2023

Sales were $226.2 million for the three months ended December 29, 2024, an increase of $17.7 million, or 8%, from sales of $208.5 million in the same period a year ago.

Sales in our Water Treatment segment increased 22%, sales in our Health and Nutrition segment increased 3%, while sales in our Industrial segment decreased slightly.

Water Treatment Segment.

Water Treatment segment sales increased $23.6 million, or 23%, to $124.5 million for the three months ended September 29, 2024, from sales of $100.9 million in the same period a year ago.

Sales of bulk commodity products in the Water Treatment segment were approximately 8% of sales dollars for both the three months ended September 29, 2024 and in the same period a year ago.

Sales increased as a result of added sales from acquired businesses.

Water Treatment segment sales increased $17.8 million, or 22%, to $99.8 million for the three months ended December 29, 2024, from sales of $82.0 million in the same period a year ago.

Sales of bulk commodity products in the Water Treatment segment were approximately 9% of sales dollars for both the current quarter and in the same period a year ago.

Sales increased as a result of $12 million of added sales from acquired businesses as well as increased sales volumes in our legacy business.

Industrial Segment.

Industrial segment sales decreased $8.6 million or 9%, to $89.9 million for the three months ended September 29, 2024, from sales of $98.5 million in the same period a year ago.

Sales of bulk commodity products in the Industrial segment were approximately 15% of sales dollars in the three months ended September 29, 2024 and 13% in the same period a year ago.

Although overall volumes increased slightly year over year, sales decreased as a result of lower selling prices on certain products, driven by lower raw material costs and competitive pricing actions.

Industrial segment sales decreased $1.0 million, or 1%, to $92.0 million for the three months ended December 29, 2024, from sales of $93.0 million in the same period a year ago.

Sales of bulk commodity products in the Industrial segment were approximately 15% of sales dollars in the current quarter and 14% in the same period a year ago.

Sales decreased as a result of lower selling prices on certain products, driven by lower raw material costs, product mix changes and competitive pricing pressures.

Health & Nutrition Segment.

Health and Nutrition segment sales decreased $4.5 million, or 12%, to $32.6 million for the three months ended September 29, 2024, from sales of $37.1 million in the same period a year ago.

Sales decreased due to lower sales of our manufactured products driven by reduced volumes and selling prices due to decreased demand for certain of our products.

Gross profit increased $6.3 million, or 12%, to $60.2 million, or 24% of sales, for the three months ended September 29, 2024, from $53.9 million, or 23% of sales, in the same period a year ago.

During the three months ended September 29, 2024, the

LIFO reserve was unchanged, having no impact on gross profit.

In the same quarter a year ago, the LIFO reserve decreased, and gross profit increased, by $3.2 million.

Health and Nutrition segment sales increased $1.0 million, or 3%, to $34.5 million for the three months ended December 29, 2024, from sales of $33.5 million in the same period a year ago.

Sales increased due to increased sales volumes of our manufactured products.

Gross profit increased $6.2 million, or 15%, to $48.4 million, or 21% of sales, for the three months ended December 29, 2024, from $42.2 million, or 20% of sales, in the same period a year ago.

During the current quarter, the LIFO reserve decreased,

and gross profit increased, by $0.8 million, primarily due to lower anticipated fiscal year-end prices on certain products.

In the same period a year ago, the LIFO reserve decreased, and gross profit increased, by $2.5 million.

Water Treatment Segment.

Gross profit for the Water Treatment segment increased $6.3 million, or 22%, to $35.6 million, or 29% of sales, for the three months ended September 29, 2024, from $29.3 million, or 29% of sales, in the same period a year ago.

During the three months ended September 29, 2024, the LIFO reserve was unchanged, having no impact on gross profit.

In the same quarter a year ago, the LIFO reserve decreased, and gross profit increased, by $0.6 million.

Gross profit increased as a result of increased sales from our acquired businesses.

Gross profit for the Water Treatment segment increased $5.8 million, or 29%, to $26.0 million, or 26% of sales, for the three months ended December 29, 2024, from $20.2 million, or 25% of sales, in the same period a year ago.

During the current quarter, the LIFO reserve decreased, and gross profit increased, by $0.1 million.

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

Gross profit increased as a result of increased sales, including the increased sales from our acquired businesses.

Industrial Segment.

Gross profit for the Industrial segment increased $0.5 million, or 3%, to $18.3 million, or 20% of sales, for the three months ended September 29, 2024, from $17.8 million, or 18% of sales, in the same period a year ago.

During the three months ended September 29, 2024, the LIFO reserve was unchanged, having no impact on gross profit.

In the same quarter a year ago, the LIFO reserve decreased, and gross profit increased, by $2.6 million.

Gross profit increased as a result of increased volumes of certain products and product mix changes.

Gross profit for the Industrial segment decreased $1.3 million, or 8%, to $15.2 million, or 17% of sales, for the three months ended December 29, 2024, from $16.5 million, or 18% of sales, in the same period a year ago.

During the current quarter, the LIFO reserve decreased, and gross profit increased, by $0.6 million.

In the same period a year ago, the LIFO reserve decreased, and gross profit increased, by $2.1 million.

Gross profit decreased primarily as a result of product mix changes and the change in the LIFO reserve.

Health and Nutrition Segment .

Gross profit for our Health and Nutrition segment decreased $0.3 million, or 4%, to $6.4 million, or 20% of sales, for the three months ended September 29, 2024, from $6.7 million, or 18% of sales, in the same period a year ago.

Gross profit decreased as a result of the decrease in sales.

Gross profit for our Health and Nutrition segment increased $1.7 million, or 31%, to $7.2 million, or 21% of sales, for the three months ended December 29, 2024, from $5.5 million, or 16% of sales, in the same period a year ago.

Gross profit increased as a result of the increased sales.

Selling, General and Administrative Expenses

Selling, general and administrative (“SG&A”) expenses increased $5.6 million, or 27%, to $26.5 million, or 11% of sales, for the three months ended September 29, 2024, from $20.9 million, or 9% of sales, in the same period a year ago.

Expenses increased primarily due to $3.8 million in added costs from the acquired businesses in our Water Treatment segment, including amortization of intangibles of $1.5 million.

In addition, a year-over-year increase of $1.0 million in compensation expense related to our non-qualified deferred compensation plan increased SG&A expenses, with the offset in other income.

Selling, general and administrative (“SG&A”) expenses increased $3.6 million, or 15%, to $27.4 million, or 12% of sales, for the three months ended December 29, 2024, from $23.8 million, or 11% of sales, in the same period a year ago.

Expenses increased largely due to $1.9 million in added costs from the acquired businesses in our Water Treatment segment, including amortization of intangibles of $0.8 million, as well as other increased variable costs.

Operating Income

Operating income increased $0.7 million, or 2%, to $33.7 million, or 14% of sales, for the three months ended September 29, 2024, from $33.0 million, or 14% of sales, in the same period a year ago due to the combined impact of the factors discussed above.

Operating income increased $2.6 million, or 14%, to $21.1 million, or 9% of sales, for the three months ended December 29, 2024, from $18.5 million, or 9% of sales, in the same period a year ago due to the combined impact of the factors discussed above.

Interest Expense, Net

Interest expense was $1.4 million for the three months ended September 29, 2024 and $0.7 million the same period a year ago.

Interest expense increased due to an increase in outstanding borrowings in the current year as compared to a year ago as well as a slightly higher interest rate.

Other Income (Expense)

Other income was $0.7 million for the three months ended September 29, 2024 compared to expense of $0.3 million in the same period a year ago.

The current year income represents gains recorded on investments held for our non-qualified deferred compensation plan, while the prior year expense represented losses recorded on those investments.

The amounts recorded as a gain were offset by similar amounts recorded as an increase or decrease to compensation expense within SG&A expenses.

Interest expense was $1.2 million for both the three months ended December 29, 2024 and the same period a year ago.

Interest expense was flat year over year as an increase in outstanding borrowings in the current quarter, as compared to the same period a year ago, was offset by slightly lower interest rates.

Other income was $0.4 million for the three months ended December 29, 2024 compared to $0.9 million in the same period a year ago.

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

The amounts recorded as a gain were offset by similar amounts recorded as an increase to compensation expense within SG&A expenses.

Income Tax Provision

Our effective income tax rate was 27% for both the three months ended September 29, 2024 and the three months ended October 1, 2023.

Our effective income tax rate was 26% for the three months ended December 29, 2024 and 18% for the same period a year ago.

The effective tax rate in the third quarter of both years was impacted by favorable tax provision adjustments recorded.

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

Our effective tax rate for the full year is expected to be approximately 26-27%.

Six Months Ended September 29, 2024 Compared to Six Months Ended October 1, 2023

Sales were $502.9 million for the six months ended September 29, 2024, an increase of $15.3 million, or 3%, from sales of $487.6 million in the same period a year ago.

Increased sales in our Water Treatment segment more than offset sales softness in our Industrial and Health and Nutrition segments.

Our effective tax rate for the full year is expected to be approximately 26 to 27%.

Nine Months Ended December 29, 2024 Compared to Nine Months Ended December 31, 2023

Sales were $729.1 million for the nine months ended December 29, 2024, an increase of $33.0 million, or 5%, from sales of $696.1 million in the same period a year ago.

Increased sales in our Water Treatment segment more than offset decreased sales in our Industrial and Health and Nutrition segments.

Water Treatment Segment.

Water Treatment segment sales increased $47.1 million, or 24%, to $241.7 million for the six months ended September 29, 2024, from sales of $194.6 million in the same period a year ago.

Sales of bulk commodity products in the Water Treatment segment were approximately 9% of sales dollars in the six months ended September 29, 2024 and 8% in the same period a year ago.

Sales increased as a result of added sales from acquired businesses.

Water Treatment segment sales increased $64.9 million, or 23%, to $341.5 million for the nine months ended December 29, 2024, from sales of $276.6 million in the same period a year ago.

Sales of bulk commodity products in the Water Treatment segment were approximately 9% of sales dollars in the current period and in the same period a year ago.

Sales increased as a result of added sales from acquired businesses as well as increased sales volumes in our legacy business.

Industrial Segment.

Industrial segment sales decreased $26.3 million or 12%, to $193.1 million for the six months ended September 29, 2024, from sales of $219.4 million in the same period a year ago.

Sales of bulk commodity products in the Industrial segment were approximately 14% of sales dollars in the six months ended September 29, 2024 and 13% in the same period of the prior year.

Although overall volumes increased slightly year over year, sales decreased as a result of lower selling prices on certain of our products, driven by lower raw material costs and competitive pricing pressures.

Industrial segment sales decreased $27.3 million or 9%, to $285.1 million for the nine months ended December 29, 2024, from sales of $312.4 million in the same period a year ago.

Sales of bulk commodity products in the Industrial segment were approximately 14% of sales dollars in the current period and 13% in the same period of the prior year.

Although overall volumes increased slightly year over year, sales decreased as a result of lower selling prices on certain of our products, driven by lower raw material costs, product mix changes and competitive pricing pressures.

Health & Nutrition Segment.

Health and Nutrition segment sales decreased $5.6 million, or 8%, to $68.1 million for the six months ended September 29, 2024, from sales of $73.7 million in the same period a year ago.

Sales decreased due to lower sales of our manufactured products, driven by reduced volumes and selling prices due to decreased demand for certain of our products, offset somewhat by increased sales of our distributed products.

Gross profit increased $19.0 million, or 18%, to $124.9 million, or 25% of sales, for the six months ended September 29, 2024, from $105.9 million, or 22% of sales, in the same period a year ago.

During the six months ended September 29, 2024, the LIFO reserve increased, and gross profit decreased, by $0.4 million due primarily to an increase in our forecasted year-end quantities.

Health and Nutrition segment sales decreased $4.6 million, or 4%, to $102.5 million for the nine months ended December 29, 2024, from sales of $107.1 million in the same period a year ago.

Sales decreased due to lower sales of our manufactured products, driven by reduced volumes and selling prices due to decreased demand for certain of our products in the first two quarters of the year, offset somewhat by increased sales of our distributed products.

Gross profit increased $25.2 million, or 17%, to $173.3 million, or 24% of sales, for the nine months ended December 29, 2024, from $148.1 million, or 21% of sales, in the same period a year ago.

During the current period, the LIFO reserve decreased, and gross profit increased, by $0.3 million due primarily to lower anticipated fiscal year-end prices on certain products.

In the same quarter a year ago, the LIFO reserve decreased, and gross profit increased, by $6.0 million.

Water Treatment Segment.

Gross profit for the Water Treatment segment increased $14.8 million, or 27%, to $70.5 million, or 29% of sales, for the six months ended September 29, 2024, from $55.7 million, or 29% of sales, in the same period a year ago.

During the six months ended September 29, 2024, the LIFO reserve increased, and gross profit decreased, by $0.2 million.

Gross profit for the Water Treatment segment increased $20.6 million, or 27%, to $96.6 million, or 28% of sales, for the nine months ended December 29, 2024, from $76.0 million, or 27% of sales, in the same period a year ago.

During the current period, the LIFO reserve increased, and gross profit decreased, slightly.

In the same quarter a year ago, the LIFO reserve decreased, and gross profit increased, by $0.9 million.

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Industrial Segment.

Gross profit for the Industrial segment increased $2.9 million, or 8% to $40.1 million, or 21% of sales, for the six months ended September 29, 2024, and $37.2 million, or 17% of sales, in the same period a year ago.

During the six months ended September 29, 2024, the LIFO reserve increased, and gross profit decreased, by $0.2 million.

Gross profit for the Industrial segment increased $1.7 million, or 3% to $55.3 million, or 19% of sales, for the nine months ended December 29, 2024, from $53.6 million, or 17% of sales, in the same period a year ago.

During the current period, the LIFO reserve decreased, and gross profit increased, by $0.4 million.

In the same quarter a year ago, the LIFO reserve decreased, and gross profit increased, by $5.0 million.

Gross profit increased as a result of increased volumes of certain products and product mix changes.

Gross profit increased as a result of net favorable product mix changes.

Health and Nutrition Segment .

Gross profit for our Health and Nutrition segment increased $1.2 million, or 9%, to $14.2 million, or 21% of sales, for the six months ended September 29, 2024, from $13.0 million, or 18% of sales, in the same period a year ago.

Gross profit for our Health and Nutrition segment increased $2.9 million, or 16%, to $21.4 million, or 21% of sales, for the nine months ended December 29, 2024, from $18.5 million, or 17% of sales, in the same period a year ago.

Gross profit increased as a result of product mix changes.

Selling, General and Administrative Expenses

Selling, general and administrative (“SG&A”) expenses increased $10.9 million, or 27%, to $51.3 million, or 10% of sales, for the six months ended September 29, 2024, from $40.4 million, or 8% of sales, in the same period a year ago.

Expenses increased primarily due to the $7.2 million in added costs from the acquired businesses in our Water treatment segment, including amortization of intangibles of $2.7 million.

In addition, a year-over-year increase of $0.8 million in compensation expense related to our non-qualified deferred compensation plan increased SG&A expenses, with the offset in Other Income.

Variable pay increased $0.7 million driven by our increased stock price.

Wages and other variable expenses increased primarily as a result of business growth.

SG&A expenses increased $14.5 million, or 23%, to $78.7 million, or 11% of sales, for the nine months ended December 29, 2024, from $64.2 million, or 9% of sales, in the same period a year ago.

Expenses increased primarily due to $9.0 million in added costs from the acquired businesses in our Water Treatment segment, including amortization of intangibles of $3.4 million as well as other increased variable costs.

Operating Income

Operating income increased $8.0 million, or 12%, to $73.5 million, or 15% of sales, for the six months ended September 29, 2024, from $65.5 million, or 13% of sales, in the same period a year ago due to the combined impact of the factors discussed above.

Operating income increased $10.6 million, or 13%, to $94.6 million, or 13% of sales, for the nine months ended December 29, 2024, from $84.0 million, or 12% of sales, in the same period a year ago due to the combined impact of the factors discussed above.

Interest Expense, Net

Interest expense was $2.7 million for the six months ended September 29, 2024 and $1.9 million the same period a year ago.

Interest expense increased due to an increase in outstanding borrowings in the current year as compared to a year ago as well as a higher interest rate.

Other Income (Expense)

Other income was $0.7 million for the six months ended September 29, 2024 compared to a nominal amount in the same period a year ago.

The current year income represents gains recorded on investments held for our non-qualified deferred compensation plan.

Interest expense was $3.9 million for the nine months ended December 29, 2024 and $3.0 million the same period a year ago.

Interest expense increased due to an increase in outstanding borrowings in the current year as compared to a year ago as well as slightly higher interest rates.

Other income was $1.3 million for the nine months ended December 29, 2024 compared to $0.9 million in the same period a year ago.

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

The amounts recorded as a gain were offset by similar amounts recorded as an increase to compensation expense within SG&A expenses.

Income Tax Provision

Our effective income tax rate was 26% for the six months ended September 29, 2024 and 27% the six months ended October 1, 2023.

The effective tax rate in the first six months of the current year was impacted by favorable tax provision adjustments recorded.

Our effective income tax rate was 26% for the nine months ended December 29, 2024 and 25% in the same period a year ago.

The effective tax rate in the first nine months of the current year and the same period a year was impacted by favorable tax provision adjustments recorded.

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

Our effective tax rate for the full year is currently expected to be approximately 26-27%.

Our effective tax rate for the full year is currently expected to be approximately 26 to 27%.

Liquidity and Capital Resources

Cash was $7.5 million at September 29, 2024, an increase of $0.3 million as compared with the $7.2 million available as of March 31, 2024.

Cash provided by operating activities was $59.2 million for the six months ended September 29, 2024, compared to cash provided by operating activities of $92.6 million in the same period a year ago.

The year-over-year decrease in cash provided by operating activities in the first six months of the current year was primarily driven by unfavorable year-over-year changes in inventory and accounts payable, slightly offset by increased net income compared to the same period a year ago.

Cash was $8.3 million at December 29, 2024, an increase of $1.1 million as compared with the $7.2 million available as of March 31, 2024.

Cash provided by operating activities was $80.3 million for the nine months ended December 29, 2024, compared to cash provided by operating activities of $117.6 million in the same period a year ago.

The year-over-year decrease in cash provided by operating activities in the current period was primarily driven by unfavorable year-over-year changes in inventory and receivables, slightly offset by increased net income compared to the same period a year ago.

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

Cash u sed in investing activities was $46.3 million for the six months ended September 29, 2024, compared to $19.9 million in the sam e period a year ago.

In the first six months of the current year, we incurred acquisition spending of $25.4 million, with the acquisitions of Intercoastal for $22.0 million and Wofford for $3.4 million.

Capital expenditures were $21.3 million for the six months ended September 29, 2024, compared to $16.9 million in the same period a year ago.

In the first six months of fiscal 2025, we purchased a building in Texas for $2.5 million and had more investments in equipment and containers, resulting in an increase in overall capital expenditures compared to the prior year.

Cash u sed in investing activities was $72.8 million for the nine months ended December 29, 2024, compared to $106.4 million in the sam e period a year ago.

In the current period, we incurred acquisition spending of $43.4 million , with the acquisitions of Water Guard for $18.0 million, Intercoastal for $22.0 million and Wofford for $3.4 million.

Capital expenditures were $30.0 million for the current period, compared to $28.2 million in the same period a year ago.

In the current period, we purchased a building in Texas for $2.5 million and had more investments in equipment and containers, resulting in an increase in overall capital expenditures compared to the prior year.

In the prior year, we invested $5.1 million to complete an expansion of one of our Minnesota manufacturing facilities.

Cash used in by financing activities was $12.5 million for the six months ended September 29, 2024, compared to $69.3 million of cash used in financing activities in the same period a year ago.

Included in financing activities in the first six months of the current year were net debt proceeds of $5.0 million, compared to net debt payments of $52.0 million in the first six months of the prior year.

In addition, we repurchased $9.1 million of our common stock in the first six months of the current year, compared to $9.8 million in the same period of the prior year.

Cash used in financing activities was $6.3 million for the nine months ended December 29, 2024, compared to $13.1 million of cash used in financing activities in the same period a year ago.

Included in financing activities in the current period were net debt borrowing of $15.0 million, compared to net debt borrowing of $8.0 million in the same period a year ago.

In addition, we repurchased $9.1 million of our common stock in the current period, compared to $11.3 million in the same period of 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.

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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 six months ended September 29, 2024, we repurchased 105,541 shares of common stock with an aggregate purchase price of $9.1 million.

During the six months ended October 1, 2023,we repurchased 167,796 shares of common stock with an aggregate purchase price of $9.8 million.

As of September 29, 2024, 831,946 shares remained available to be repurchased under the share repurchase program.

During the nine months ended December 29, 2024, we repurchased 105,541 shares of common stock with an aggregate purchase price of $9.1 million.

In the same period a year ago, we repurchased 191,861 shares of common stock with an aggregate purchase price of $11.3 million.

As of December 29, 2024, 831,946 shares remained available to be repurchased under the share repurchase program.

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

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The Revolving Loan Facility is secured by substantially all of our personal property assets and those of our subsidiaries.

We may use the amount available under the Revolving Loan Facility for working capital, capital expenditures,

share repurchases, restricted payments and acquisitions permitted under the Credit Agreement, and other general corporate purposes.

We may use the amount available under the Revolving Loan Facility for working capital, capital expenditures, share repurchases, restricted payments and acquisitions permitted under the Credit Agreement, and other general corporate purposes.

Borrowings under the Revolving Loan Facility bear interest at a rate per annum equal to one of the following, plus, in both cases, an applicable margin based upon our leverage ratio:

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The base rate margin is between 0.00% and 0.35%, depending on our leverage ratio.

At September 29, 2024, the effective interest rate on our borrowings was 4.5%.

At December 29, 2024, the effective interest rate on our borrowings was 4.2%.

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 September 29, 2024, the unamortized balance of these costs was $0.2 million, and is reflected as a reduction of debt on our balance sheet.

As of December 29, 2024, the unamortized balance of these costs was $0.2 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 September 29, 2024 and expect to remain in compliance with all covenants for the next 12 months.

We were in compliance with all covenants of the Credit Agreement as of December 29, 2024 and expect to remain in compliance with all covenants for the next 12 months.

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.

19 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