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Item 2. Management’s Discussion and Analysis

2026-01-28 compared with 2025-10-29 · 87 added, 81 removed, 134 unchanged (56% 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 six months ended September 28, 2025 as compared to the similar period ended September 29, 2024.

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 30, 2025 .

The following is a discussion and analysis of our financial condition and results of operations for the three and nine months ended December 28, 2025 as compared to the similar period ended December 29, 2024.

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 Part II, Item 8 of our Annual Report on Form 10-K for the fiscal year ended March 30, 2025 .

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

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Business Acquisitions

We completed the following acquisitions in fiscal 2025 and the first half of fiscal 2026.

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 with the exception of the MakWood lactate business which is shown in our Food & Health Sciences segment.

We completed the following acquisitions in fiscal 2025 and the first nine months of fiscal 2026.

Certain acquisitions discussed below are not included in Note 2 to our Condensed Consolidated Financial Statements as they were not deemed to be material enough to warrant disclosure.

• On December 3, 2025, we acquired substantially all the assets and assumed certain liabilities of Redbird Chemical, Inc.

(“Redbird”) for $4.6 million.

Redbird distributed chemicals to its customers in eastern Texas within both the water treatment and industrial markets.

• On August 29, 2025, we acquired substantially all the assets and assumed certain liabilities of StillWaters Technology, Inc.

("StillWaters") for $4.3 million.

StillWaters distributes water treatment chemicals and equipment for its customers in Alabama.

StillWaters distributed water treatment chemicals and equipment for its customers in Alabama.

• On July 2, 2025, we acquired the lactate business of MakWood, Inc.

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• On July 1, 2025, we acquired substantially all the assets and assumed certain liabilities of PhillTech, LLC ("PhillTech") for $5.0 million.

PhillTech is located in Courtland, AL, and manufactures and distributes coagulants and corrosion control products for its water treatment customers.

• On June 13, 2025, we acquired substantially all the assets and assumed certain liabilities of Hendrickson and Polymer Tech (collectively, "Hendrickson") for approximately $1.5 million.

Located in Courtland, AL, PhillTech manufactured and distributed coagulants and corrosion control products for its water treatment customers.

• On June 13, 2025, we acquired substantially all the assets and assumed certain liabilities of Hendrickson Enterprises, LLC and Polymer Technologies, LLC (collectively, "Hendrickson") for approximately $1.5 million.

Hendrickson distributed water treatment chemicals and equipment to its customers via direct shipments from suppliers.

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

• In the first quarter of fiscal 2025, we acquired substantially all the assets and assumed certain liabilities of Wofford for $3.4 million.

• In the first quarter of fiscal 2025, we acquired substantially all the assets and assumed certain liabilities of Wofford Water Service, Inc.

for $3.4 million.

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

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

The aggregate annual revenue of these nine businesses acquired in fiscal 2025 and fiscal 2026 totaled approximately $106 million, as determined using the applicable twelve-month period preceding each respective acquisition date.

The aggregate annual revenue of these ten businesses acquired in fiscal 2025 and fiscal 2026 totaled approximately $116 million, as determined using the applicable twelve-month period preceding each respective acquisition date.

Change in Reporting Segments

Effective beginning with the first quarter of fiscal 2026, we realigned our reporting segments to reflect organizational changes made and to reflect the way we manage our operations and allocate resources.

Effective beginning with the first quarter of fiscal 2026, we realigned our reporting segments to better reflect how we manage our operations and allocate resources.

We believe this realignment better reflects the value our company provides to our customers and our evolution from a bulk commodity distributor into a specialty ingredients company.

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Information presented in this quarterly report has been recast to align with the new segments.

Additional information regarding these new segments is set forth in Note 13 - Segment Information.

Additional information regarding these new segments is set forth in Note 13 to our Condensed Consolidated Financial Statements.

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 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024

Three months ended Nine months ended

December 28, 2025 December 29, 2024 December 28, 2025 December 29, 2024

Sales 100.0 % 100.0 % 100.0 % 100.0 %

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Net income 5.8 % 6.7 % 8.0 % 9.4 %

Three Months Ended September 28, 2025 Compared to Three Months Ended September 29, 2024

Sales were $280.4 million for the three months ended September 28, 2025, an increase of $33.4 million, or 14%, from sales of $247.0 million in the same period a year ago.

All of our segments contributed to the year-over-year growth, with both our Water Treatment and Industrial Solutions segments reporting double-digit growth.

Three Months Ended December 28, 2025 Compared to Three Months Ended December 29, 2024

Sales were $244.1 million for the three months ended December 28, 2025, an increase of $17.9 million, or 8%, from sales of $226.2 million in the same period a year ago.

Sales in our Water Treatment and Industrial Solutions segments both grew by more than 10%, while sales in our Food & Health Sciences segment decreased 10%.

Water Treatment Segment.

Water Treatment segment sales increased $26.4 million, or 21%, to $150.9 million for the three months ended September 28, 2025, from sales of $124.5 million in the same period a year ago.

Sales of bulk commodity products in the Water Treatment segment were approximately 8% of sales dollars in both the current quarter and in the same period a year ago.

Sales increased as a result of $23 million of added sales from acquired businesses as well as increased organic sales volumes and improved pricing on certain products.

Water Treatment segment sales increased $20.7 million, or 21%, to $120.5 million for the three months ended December 28, 2025, from sales of $99.8 million in the same period a year ago.

Sales of bulk commodity products in the Water Treatment segment were approximately 10% of sales dollars in the current quarter and 9% in the same

period a year ago.

Sales increased as a result of approximately $19 million of added sales from acquired businesses as well as improved pricing on certain of our products in our legacy businesses on slightly increased sales volumes.

Food & Health Sciences Segment.

Food & Health Sciences segment sales increased $1.5 million, or 2%, to $72.9 million for the three months ended September 28, 2025, from sales of $71.4 million in the same period a year ago.

Sales increased primarily

as result of increased sales volumes of our agricultural products as well as increased sales of our health and nutrition products.

Food & Health Sciences segment sales decreased $7.7 million, or 10%, to $70.0 million for the three months ended December 28, 2025, from sales of $77.7 million in the same period a year ago.

Sales dollars decreased primarily as a result of decreased volumes of our food, health & nutrition, and agricultural products.

Industrial Solutions Segment.

Industrial Solutions segment sales increased $5.5 million, or 11%, to $56.6 million for the three months ended September 28, 2025, from sales of $51.1 million in the same period a year ago.

Industrial Solutions segment sales increased $4.9 million, or 10%, to $53.6 million for the three months ended December 28, 2025, from sales of $48.7 million in the same period a year ago.

Sales of bulk commodity products in the Industrial Solutions segment were approximately 21% of sales dollars in the current quarter and 25% in the same period a year ago.

Sales increased primarily as a result of increased sales volumes of certain of our manufactured, blended and repackaged products.

Gross profit increased $7.4 million, or 12%, to $67.6 million, or 24% of sales, for the three months ended September 28, 2025, from $60.2 million, or 24% of sales, in the same period a year ago.

During the current quarter, the LIFO reserve increased, and gross profit decreased, by $0.3 million, primarily due to a projected increase in certain commodity volumes and costs at year-end.

In the same period a year ago, the LIFO reserve was unchanged and therefore had no impact on gross profit.

Gross profit increased $2.4 million, or 5%, to $50.8 million, or 21% of sales, for the three months ended December 28, 2025, from $48.4 million, or 21% of sales, in the same period a year ago.

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 $0.8 million.

Water Treatment Segment.

Gross profit for the Water Treatment segment increased $7.4 million, or 20%, to $43.3 million, or 29% of sales, for the three months ended September 28, 2025, from $35.9 million, or 29% of sales, in the same period a year ago.

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

Gross profit for the Water Treatment segment increased $3.7 million, or 14%, to $29.6 million, or 25% of sales, for the three months ended December 28, 2025, from $25.9 million, or 26% of sales, in the same period a year ago.

Gross profit increased primarily as a result of increased sales from our acquired businesses as well as increased sales in our legacy business.

Food & Health Sciences Segment.

Gross profit for the Food & Health Sciences segment decreased $0.6 million, or 4%, to $15.5 million, or 21% of sales, for the three months ended September 28, 2025, from $16.1 million, or 22% of sales, in the same period a year ago.

Gross profit decreased primarily as a result of lower selling prices as a result of competitive pricing pressures.

Gross profit for the Food & Health Sciences segment decreased $2.5 million, or 15%, to $13.8 million, or 20% of sales, for the three months ended December 28, 2025, from $16.3 million, or 21% of sales, in the same period a year ago.

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

Industrial Solutions Segment.

Gross profit for the Industrial Solutions segment increased $0.7 million, or 9%, to $8.9 million, or 16% of sales, for the three months ended September 28, 2025, from $8.2 million, or 16% of sales, in the same period a year ago.

Gross profit for the Industrial Solutions segment increased $1.1 million, or 18%, to $7.4 million, or 14% of sales, for the three months ended December 28, 2025, from $6.3 million, or 13% of sales, in the same period a year ago.

Gross profit increased as a result of the increase in sales.

Selling, General and Administrative Expenses

Selling, general and administrative (“SG&A”) expenses increased $7.2 million, or 27%, to $33.7 million, or 12% of sales, for the three months ended September 28, 2025, from $26.5 million, or 11% of sales, in the same period a year ago.

Expenses increased largely due to $5.6 million in added costs from the acquired businesses in our Water Treatment segment, including amortization of intangibles of $2.5 million and $0.5 million of fair value accretion on earnout liabilities.

SG&A expenses also increased due to increases in other variable costs, including variable pay and other personnel costs.

Selling, general and administrative (“SG&A”) expenses increased $0.9 million, or 3%, to $28.3 million, or 12% of sales, for the three months ended December 28, 2025, from $27.4 million, or 12% of sales, in the same period a year ago.

This included $5.4 million due to added costs from the acquired businesses in our Water Treatment segment, largely offset by a year-over-year reduction of $4.6 million due to a fair value adjustment recorded to the Water Solutions earnout liability as a result of a change in projected estimates related to the earnout target.

The primary components of the $5.4 million of costs related to the acquired businesses were personnel and operating costs, $2.3 million of intangible amortization and $0.5 million of fair value accretion on the WaterSurplus earnout liability.

Operating Income

Operating income increased $0.2 million, or 1%, to $33.9 million, or 12% of sales, for the three months ended September 28, 2025, from $33.7 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 $1.5 million, or 7%, to $22.6 million, or 9% of sales, for the three months ended December 28, 2025, from $21.1 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 increased $2.4 million to $3.8 million for the three months ended September 28, 2025 compared to $1.4 million in the same period a year ago.

Interest expense increased due to increased borrowings in the current quarter, primarily to fund the acquisition of WaterSurplus.

Other income was $0.7 million for the three months ended September 28, 2025 and the same period a year ago.

Interest expense increased $2.2 million to $3.4 million for the three months ended December 28, 2025 compared to $1.2 million in the same period a year ago.

Interest expense increased due to increased borrowings in the current year, primarily to fund the acquisition of WaterSurplus.

Other income was $0.5 million for the three months ended December 28, 2025 and the same period a year ago.

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

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Income Tax Provision

Our effective income tax rate was approximately 27% the three months ended September 28, 2025 and for the same period a year ago.

Our effective income tax rate was approximately 27% the three months ended December 28, 2025 and 26% for the same period a year ago.

The effective tax rate in the prior year period 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% to 27%.

Six Months Ended September 28, 2025 Compared to Six Months Ended September 29, 2024

Sales were $573.7 million for the six months ended September 28, 2025, an increase of $70.8 million, or 14%, from sales of $502.9 million in the same period a year ago.

Each of our segments contributed to the year-over-year growth, with our Water Treatment segment showing 24% growth.

Nine Months Ended December 28, 2025 Compared to Nine months ended December 29, 2024

Sales were $817.8 million for the nine months ended December 28, 2025, an increase of $88.7 million, or 12%, from sales of $729.1 million in the same period a year ago.

Sales from our Water Treatment and Industrial Solutions segments grew 7% and 23%, respectively, while our Food and Health Sciences segment declined by 1%.

Water Treatment Segment.

Water Treatment segment sales increased $58.8 million, or 24%, to $300.5 million for the six months ended September 28, 2025, from sales of $241.7 million in the same period a year ago.

Sales of bulk commodity products in the Water Treatment segment were approximately 8% of sales dollars in the current period and 9% in the same period a year ago.

Sales increased as a result of $52 million of added sales from acquired businesses as well as increased organic sales volumes and improved pricing on certain of our products.

Water Treatment segment sales increased $79.5 million, or 23%, to $421.0 million for the nine months ended December 28, 2025, from sales of $341.5 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 both the current period and in the same period a year ago.

Sales increased as a result of approximately $70 million of added sales from acquired businesses as well as improved pricing and increased sales volumes on certain of our products in our legacy business.

Food & Health Sciences.

Food & Health Sciences sales increased $5.6 million or 4%, to $162.1 million for the six months ended September 28, 2025, from sales of $156.5 million in the same period a year ago.

Food & Health Sciences sales decreased $2.1 million or 1%, to $232.1 million for the nine months ended December 28, 2025, from sales of $234.2 million in the same period a year ago.

Sales of our agricultural products increased $4.4 million due to increased volumes, partially offset by declines in some of our other product lines as a result of lower selling prices driven by competitive pricing pressures.

Industrial Solutions Segment.

Industrial Solutions segment sales increased $6.4 million, or 6%, to $111.1 million for the six months ended September 28, 2025, from sales of $104.7 million in the same period a year ago.

Industrial Solutions segment sales increased $11.3 million, or 7%, to $164.7 million for the nine months ended December 28, 2025, from sales of $153.4 million in the same period a year ago.

Sales of bulk commodity products in the Industrial Solutions segment were approximately 21% of sales dollars in the current period and 23% in the same period a year ago.

Sales increased primarily as a result of increased sales of certain of our manufactures, blended and repackaged products.

Gross profit increased $15.1 million, or 12%, to $140.0 million, or 24% of sales, for the six months ended September 28, 2025, from $124.9 million, or 25% of sales, in the same period a year ago.

Sales increased primarily as a result of increased sales volumes of certain of our manufactured, blended and repackaged products.

Gross profit increased $17.5 million, or 10%, to $190.8 million, or 23% of sales, for the nine months ended December 28, 2025, from $173.3 million, or 24% of sales, in the same period a year ago.

During the current period, the LIFO reserve increased, and gross profit decreased, by $0.8 million due primarily to a projected increase in certain commodity volumes and costs at year end.

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

In the same period a year ago, the LIFO reserve decreased, and gross profit increased, by $0.3 million.

Water Treatment Segment.

Gross profit for the Water Treatment segment increased $15.9 million, or 22%, to $87.0 million, or 29% of sales, for the six months ended September 28, 2025, from $71.1 million, or 29% of sales, in the same period a year ago.

Gross profit increased primarily as a result of increased sales from our acquired businesses, as well as increased organic sales.

Gross profit for the Water Treatment segment increased $19.6 million, or 20%, to $116.6 million, or 28% of sales, for the nine months ended December 28, 2025, from $97.0 million, or 28% of sales, in the same period a year ago.

Gross profit increased primarily as a result of increased sales from our acquired businesses, as well as increased sales in our legacy business.

Food & Health Sciences.

Gross profit for the Food & Health Sciences segment decreased $1.1 million, or 3% to $34.8 million, or 21% of sales, for the six months ended September 28, 2025, from $36.0 million, or 23% of sales, in the same period a year ago.

Gross profit decreased primarily as a result of lower selling prices resulting from competitive pricing pressures.

Gross profit for the Food & Health Sciences segment decreased $3.6 million, or 7% to $48.7 million, or 21% of sales, for the nine months ended December 28, 2025, from $52.3 million, or 22% of sales, in the same period a year ago.

Gross profit decreased primarily as a result of the reduction in sales as well as lower selling prices resulting from competitive pricing pressures.

Industrial Solutions Segment .

Gross profit for our Industrial Solutions segment increased $0.4 million, or 2%, to $18.2 million, or 16% of sales, for the six months ended September 28, 2025, from $17.8 million, or 17% of sales, in the same period a year ago.

Gross profit for our Industrial Solutions segment increased $1.5 million, or 6%, to $25.6 million, or 16% of sales, for the nine months ended December 28, 2025, from $24.1 million, or 16% of sales, in the same period a year ago.

Gross profit increased as a result of the increase in sales.

Selling, General and Administrative Expenses

SG&A expenses increased $13.4 million, or 26%, to $64.7 million, or 11% of sales, for the six months ended September 28, 2025, from $51.3 million, or 10% of sales, in the same period a year ago.

Expenses increased largely due to $10.4 million in added costs from the acquired businesses in our Water Treatment segment, including amortization of intangibles of $4.5 million, fair value accretion on earnout liability of $0.9 million, and $0.7 million of acquisition costs.

SG&A expenses increased $14.3 million, or 18%, to $93.0 million, or 11% of sales, for the nine months ended December 28, 2025, from $78.7 million, or 11% of sales, in the same period a year ago.

This included $16.0 million in added costs from the acquired businesses in our Water Treatment segment, partially offset by a year-over-year reduction of $7.2 million due to a fair value adjustment recorded to the Water Solutions earnout liability due to a change in projected estimates related to the earnout target.

The primary components of the $16.0 million in costs related to acquired businesses were personnel and operating costs, $6.8 million of amortization of intangibles, $1.4 million of fair value accretion on the WaterSurplus earnout liability and $1.2 million of acquisition costs.

In addition, a year-over-year increase of $0.9 million in compensation expense related to our non-qualified deferred compensation plan increased SG&A expenses, with the offset in Other Income.

In the current year, we recorded a reduction to SG&A expense of $1.9 million related to fair value accretion previously recorded on the Water Solutions earnout due to a change in projections.

SG&A expenses also increased due to increases in other variable costs, including variable pay and personnel costs.

Operating Income

Operating income increased $1.8 million, or 2%, to $75.3 million, or 13% of sales, for the six months ended September 28, 2025, from $73.5 million, or 15% of sales, in the same period a year ago due to the combined impact of the factors discussed above.

Operating income increased $3.2 million, or 3%, to $97.8 million, or 12% of sales, for the nine months ended December 28, 2025, from $94.6 million, or 13% of sales, in the same period a year ago due to the combined impact of the factors discussed above.

Interest Expense, Net

Interest expense increased $4.4 million to $7.1 million for the six months ended September 28, 2025, from $2.7 million in the same period a year ago.

Interest expense increased due to an increase in outstanding borrowings in the current year, primarily to fund the acquisition of WaterSurplus.

Other income was $1.7 million for the six months ended September 28, 2025 compared to $0.8 million in the same period a year ago.

Interest expense increased $6.6 million to $10.5 million for the nine months ended December 28, 2025, from $3.9 million in the same period a year ago.

Interest expense increased due to increased borrowings in the current year, primarily to fund the acquisition of WaterSurplus.

Other income was $2.1 million for the nine months ended December 28, 2025 compared to $1.3 million in the same period a year ago.

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

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Income Tax Provision

Our effective income tax rate was 26% for both the six months ended September 28, 2025 and the same period a year ago.

The effective tax rate for both the six months ended September 28, 2025 and the same period a year ago were impacted by favorable tax provision adjustments recorded.

Our effective income tax rate was 26% for both the nine months ended December 28, 2025 and the same period a year ago.

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

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Liquidity and Capital Resources

Cash was $10.4 million at September 28, 2025, an increase of $5.3 million as compared with the $5.1 million available as of March 30, 2025.

Cash provided by operating activities was $71.0 million for the six months ended September 28, 2025, compared to cash provided by operating activities of $59.2 million in the same period a year ago.

The year-over-year increase in cash provided by operating activities in the current period was primarily driven by favorable year-over-year changes in trade receivables compared to the same period a year ago.

Cash was $8.2 million at December 28, 2025, an increase of $3.1 million as compared with the $5.1 million available as of March 30, 2025.

Cash provided by operating activities was $106.6 million for the nine months ended December 28, 2025, compared to cash provided by operating activities of $80.3 million in the same period a year ago.

The year-over-year increase in cash provided by operating activities in the current period was primarily driven by favorable year-over-year changes in trade receivables and inventories 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 $185.8 million for the six months ended September 28, 2025, compared to $46.3 million in the sam e period a year ago.

Cash u sed in investing activities was $204.6 million for the nine months ended December 28, 2025, compared to $72.8 million in the sam e period a year ago.

In the current period, we incurred acquisition spending of $167.1 million , including the acquisition of WaterSurplus for approximately $149.9 million paid at closing.

Capital expenditures were $38.7 million for the current period, compared to $30.0 million in the same period a year ago.

In the current period, we had more investments in transportation equipment, resulting in an increase in overall capital expenditures compared to the prior year.

Cash provided by financing activities was $120.1 million for the six months ended September 28, 2025, compared to $12.5 million of cash used in financing activities in the same period a year ago.

In the current period, we expended $4.2 million more for real estate and building expansions, contributing to the overall increase in capital expenditures compared to the prior year.

Cash provided by financing activities was $101.1 million for the nine months ended December 28, 2025, compared to $6.3 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 borrowings of $115.0 million, compared to net debt borrowings of $15.0 million in the same period a year ago.

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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 three and six months ended September 28, 2025, we repurchased no shares of common stock.

During the three months ended September 29, 2024, we repurchased no shares of common stock and 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.

As of September 28, 2025, 731,544 shares remained available to be repurchased under the share repurchase program.

During the three and nine months ended December 28, 2025, we repurchased no shares of common stock.

During the three months ended December 29, 2024, we repurchased no shares of common stock and 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.

As of December 28, 2025, 731,544 shares remained available to be repurchased under the share repurchase program.

We are party to a second amended and restated credit agreement with U.S.

Bank National Association (“U.S.

Bank”) as Administrative Agent, Sole Lead Arranger and Sole Book Runner, and the other lenders from time to time party thereto (collectively, the “Lenders”), dated as of March 31, 2022 (the “Existing Credit Agreement” and as amended, restated or modified from time to time, and as modified by the Amendment, the “Credit Agreement”).

The Joinder, Consent and Second Amendment to Second Amended and Restated Credit Agreement, dated April 25, 2025 increased the revolving commitment under the Existing Credit Agreement to provide us with senior secured revolving credit facilities (the “Revolving Loan Facility”) totaling $400.0 million.

Bank”) as administrative agent, sole lead arranger and sole book runner, and the other lenders from time to time party thereto (collectively, the “Lenders”), dated as of March 31, 2022 (as amended, restated or modified from time to time, the “Credit Agreement”).

A Joinder, Consent and Second Amendment, dated April 25, 2025 increased the revolving commitment under the Credit Agreement to provide us with senior secured revolving credit facilities (the “Revolving Loan Facility”) totaling $400.0 million.

A Third Amendment, dated October 15, 2025, modified terms related to qualified receivables transactions, as defined in the Credit Agreement.

The Revolving Loan Facility includes a $10.0 million letter of credit subfacility and $25.0 million swingline subfacility.

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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.

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 0.85%, depending on our leverage ratio.

At September 28, 2025, the effective interest rate on our borrowings was 5.1%.

At December 28, 2025, the effective interest rate on our borrowings was 4.8%.

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.

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

As of September 28, 2025, the unamortized balance of these costs was $0.9 million, and is reflected as a reduction of debt on our balance sheet.

The Credit Agreement will require 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 3.5 to 1.0, subject to an election by us to increase the maximum total cash flow leverage ratio to 4.0 to 1.0 after certain Permitted Acquisitions subject to limitations set forth in the Credit Agreement.

As of December 28, 2025, the unamortized balance of these costs was $0.8 million, and is reflected as a reduction of debt on our balance sheet.

The Credit Agreement requires that we maintain (a) a minimum fixed charge coverage ratio of 1.15 to 1.00 and (b) a maximum total cash flow leverage ratio of 3.5 to 1.0, subject to an election by us to increase the maximum total cash flow leverage ratio to 4.0 to 1.0 after certain Permitted Acquisitions subject to limitations set forth in the Credit Agreement.

The Credit Agreement also contains other customary affirmative and negative covenants, including covenants that restrict our ability to incur additional indebtedness, dispose of significant assets, make certain investments, including any acquisitions other than permitted acquisitions, make certain payments, enter into sale and leaseback transactions, grant liens on its assets or rate management transactions, subject to certain limitations.

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 28, 2025 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 28, 2025 and expect to remain in compliance with all covenants for the next 12 months.

The Credit Agreement contains customary events of default, the occurrence of which would permit the lenders to terminate their commitments and accelerate loans under the Revolving Loan Facility, including failure to make payments under the Revolving Loan Facility, failure to comply with covenants in the Credit Agreement and other loan documents, cross default to other material indebtedness, our failure to pay or discharge material judgments, bankruptcy, and change of control of the Company.

16 unchanged sentences

Additional information concerning potential factors that could affect future financial results is included in our Annual Report on Form 10-K for fiscal 2025 .

We caution you not to place undue reliance on these forward-looking statements, which reflect our management’s view only as of the date of this Quarterly Report on Form 10-Q.

We caution you not to place undue reliance on these forward-looking statements, which reflect our

management’s view only as of the date of this Quarterly Report on Form 10-Q.

We are not obligated to update these statements or publicly release the result of any revisions to them to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect the occurrence of unanticipated events.

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