What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-07-29 compared with 2026-01-28 · 70 added, 119 removed, 102 unchanged (65% 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 28, 2025 as compared to the similar period ended December 29, 2024.

The following is a discussion and analysis of our financial condition and results of operations for the three months ended June 28, 2026 as compared to the similar period ended June 29, 2025.

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 29, 2026 .

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.

We began our operations primarily as a distributor of bulk chemicals with a strong customer focus.

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

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

We believe that we create value for our customers through superb service and support, quality products, personalized applications and trustworthy, and creative employees.

Business Acquisitions

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

We completed the following acquisitions in the first quarter of fiscal 2027 and 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 included in our Food & Health Sciences segment.

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 April 30, 2026, we acquired substantially all the assets and assumed certain liabilities of Aqua-Chem, Inc.

("Aqua-Chem") for approximately $3.6 million.

Aqua-Chem provides water treatment products to commercial pools, including chemistry, equipment, and service, mainly to Nebraska and Iowa customers.

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

14 unchanged sentences

WaterSurplus is located in Rockford, IL and delivers sustainable water treatment solutions to customers throughout the United States.

• In the fourth quarter of fiscal 2025, we acquired substantially all the assets and assumed certain liabilities of Amerochem for $44.0 million.

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

• In the third quarter of fiscal 2025, we acquired substantially all the assets and assumed certain liabilities of Water Guard for $18.0 million.

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 Water Service, Inc.

for $3.4 million.

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

• In the first quarter of fiscal 2025, we acquired substantially all the assets and assumed certain liabilities of Intercoastal for $22.0 million.

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

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 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.

We now organize and manage our business by the following three segments, each of which meets the definition of reportable segments under ASC 280-10, Segment Reporting :

Water Treatment, Food & Health Sciences, and Industrial Solutions.

These segments are defined primarily by product and type of customer.

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 to our Condensed Consolidated Financial Statements.

The aggregate annual revenue of the seven businesses acquired during fiscal 2026 and the first quarter of fiscal 2027 totaled approximately $52.3 million, as determined using the applicable twelve-month period preceding each respective acquisition date.

Financial Results

We focus on operating income when evaluating our financial results as opposed to profitability as a percentage of sales, as sales dollars tend to fluctuate as raw material prices rise and fall.

We focus on total operating income when evaluating our financial results as opposed to profitability as a percentage of sales, as sales dollars tend to fluctuate as raw material prices rise and fall, particularly in our Water Treatment and Industrial Solutions segments.

The costs for certain of our raw materials can rise or fall rapidly, causing fluctuations in gross profit as a percentage of sales.

8 unchanged sentences

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

Three months ended Nine months ended

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

Three months ended

June 28, 2026 June 29, 2025

Sales 100.0 % 100.0 %

8 unchanged sentences

Net income 8.9 % 9.9 %

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%.

Three Months Ended June 28, 2026 Compared to Three Months Ended June 29, 2025

Sales were $315.7 million for the three months ended June 28, 2026, an increase of $22.4 million, or 8%, from sales of $293.3 million in the same period a year ago.

All of our segments grew by more than 5% as compared to the prior year.

Water Treatment Segment.

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.

Water Treatment segment sales increased $8.7 million, or 6%, to $158.3 million for the three months ended June 28, 2026, from sales of $149.6 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 8% in the same period a year ago.

Sales increased primarily due to improved pricing on certain of our products in our legacy business on higher volumes, along with approximately $6.9 million in additional sales from acquired businesses.

Food & Health Sciences Segment.

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.

Food & Health Sciences segment sales increased $8.1 million, or 9%, to $97.3 million for the three months ended June 28, 2026, from sales of $89.2 million in the same period a year ago.

Sales dollars increased as a result of increased volumes of our agricultural, nutrition, and pharmaceutical products, partially offset by decreased sales volumes of our food ingredients products.

Industrial Solutions Segment.

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.

Industrial Solutions segment sales increased $5.6 million, or 10%, to $60.1 million for the three months ended June 28, 2026, from sales of $54.5 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 22% 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 $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.

Gross profit increased $1.6 million, or 2%, to $74.0 million, or 23% of sales, for the three months ended June 28, 2026, from $72.4 million, or 25% of sales, in the same period a year ago.

During the current quarter, the LIFO reserve increased, and gross profit decreased, by $1.9 million.

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

In addition to the $1.3 million impact of the LIFO reserve, gross margin was pressured by higher freight costs that were not fully recovered through freight charges billed to customers.

Water Treatment Segment.

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.

Gross profit for the Water Treatment segment increased $1.7 million, or 4%, to $45.5 million, or 29% of sales, for the three months ended June 28, 2026, from $43.7 million, or 29% of sales, in the same period a year ago.

During the current quarter, the LIFO reserve increased, and gross profit decreased, by $0.5 million.

In the same period a year ago, the LIFO reserve increased, and gross profit decreased, by $0.2 million.

The increase in gross profit was primarily driven by higher sales from our acquired and legacy businesses, partially offset by higher LIFO and freight costs.

Food & Health Sciences Segment.

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.

Gross profit for the Food & Health Sciences segment was $19.3 million for the three months ended June 28, 2026, unchanged from the same period in the prior year.

As a percentage of sales, gross profit decreased to 20% from 22% in the same period a year ago.

During the current quarter, the LIFO reserve increased, and gross profit decreased, by $0.8 million.

In the same period a year ago, the LIFO reserve increased, and gross profit decreased, by $0.2 million.

The benefit of higher sales volumes was offset by higher LIFO and freight costs.

Industrial Solutions Segment.

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.

Gross profit for the Industrial Solutions segment of $9.2 million, or 15% of sales, for the three months ended June 28, 2026, was relatively flat compared to $9.3 million, or 17% of sales, in the same period a year ago.

During the current quarter, the LIFO reserve increased, and gross profit decreased, by $0.7 million.

In the same period a year ago, the LIFO reserve increased, and gross profit decreased, by $0.2 million.

The benefit of higher sales volumes was more than offset by higher LIFO and freight costs.

Selling, General and Administrative Expenses

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.

Selling, general and administrative (“SG&A”) expenses increased $4.3 million, or 14%, to $35.3 million, or 11% of sales, for the three months ended June 28, 2026, from $31.0 million, or 11% of sales, in the same period a year ago.

This included $2.1 million due to added costs from the acquired businesses in our Water Treatment segment.

In addition, the prior-year period included a $1.9 million favorable fair value adjustment that reduced SG&A, reflecting a downward revision to the estimated Water Solutions earnout liability based on a change in projected estimates related to the earnout target.

This benefit did not recur in the current period, resulting in a $1.9 million year-over-year increase in SG&A.

SG&A also included a $0.5 million increase in non-qualified deferred compensation expense, which was offset by a corresponding gain within other income.

These increases were partially offset by lower acquisition-related costs and other changes across our operating expenses.

Operating Income

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.

Operating income decreased $2.7 million, or 6%, to $38.7 million, or 12% of sales, for the three months ended June 28, 2026, from $41.3 million, or 14% 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 $2.2 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.

Interest expense decreased $0.5 million to $2.8 million for the three months ended June 28, 2026 compared to $3.3 million in the same period a year ago.

Interest expense decreased as a result of $55.0 million in net debt repayments since the first quarter of fiscal 2026.

Other income was $1.4 million for the three months ended June 28, 2026 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.

1 unchanged sentence

Income Tax Provision

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.

Our effective income tax rate was approximately 24% for the three months ended June 28, 2026 and 25% for the same period a year ago.

The effective tax rate in 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 25% to 27%.

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 $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 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 $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 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 decreased, and gross profit increased, by $0.3 million.

Water Treatment Segment.

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 $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 $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 $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.

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

Operating Income

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 $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.

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 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.

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

Liquidity and Capital Resources

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.

Cash was $8.0 million at June 28, 2026, an increase of $4.1 million as compared with the $3.9 million available as of March 29, 2026.

Cash provided by operating activities was $35.2 million for the three months ended June 28, 2026, compared to cash provided by operating activities of $31.5 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 inventories and accounts payable compared to the same period a year ago, which was mostly offset by unfavorable changes in accounts receivable.

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 $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.

Cash u sed in investing activities was $14.9 million for the three months ended June 28, 2026, compared to $164.5 million in the sam e period a year ago.

In the current period, we incurred acquisition spending of $3.6 million compared to $151.3 million in the same period a year ago, including the acquisition of WaterSurplus for approximately $149.9 million paid at closing.

Capital expenditures were $11.6 million for the current period, compared to $13.5 million 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.

We drew approximately $150 million of the proceeds from the Revolving Loan Facility for the acquisition of WaterSurplus.

In addition, we repurchased no common stock in the current period, compared to $9.1 million in the same period of the prior year.

In the current period, we expended less on real estate and building expansions, contributing to the overall decrease in capital expenditures compared to the prior year.

Cash used in financing activities was $16.1 million for the three months ended June 28, 2026, compared to $142.5 million of cash provided by financing activities in the same period a year ago.

Included in financing activities in the current period were no net debt borrowings, compared to net debt borrowings of $150.0 million in the same period a year ago when we drew approximately $150 million of the proceeds from the Revolving Loan Facility for the acquisition of WaterSurplus.

In addition, we repurchased $7.0 million of our common stock in the current period, compared to no repurchases 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.

2 unchanged sentences

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 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.

During the three months ended June 28, 2026, we repurchased 45,196 shares of common stock at an aggregate purchase price of $7.0 million.

During the three months ended June 29, 2025, we repurchased no shares of common stock.

As of June 28, 2026, 686,348 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.

6 unchanged sentences

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

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.

At June 28, 2026, we had $244.0 million outstanding under the Revolving Loan Facility.

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:

4 unchanged sentences

The base rate margin is between 0.00% and 0.85%, depending on our leverage ratio.

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

At June 28, 2026, the effective interest rate on our borrowings was 4.3%.

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

As of June 28, 2026, the unamortized balance of these costs was $0.7 million, and is included within other long-term assets on our condensed consolidated 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.

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 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.

The occurrence of an event of default would permit the lenders to terminate their commitments and accelerate loans under the Credit Facility.

We were in compliance with all covenants of the Credit Agreement as of June 28, 2026 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 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.

The occurrence of an event of default would permit the lenders to terminate their commitments and accelerate loans under the Revolving Loan Facility.

We have in place an interest rate swap agreement to manage the risk associated with a portion of our variable-rate long-term debt.

4 unchanged sentences

We believe we could borrow additional funds under our current or new credit facilities or sell equity for strategic reasons or to further strengthen our financial position.

We believe that our existing cash and cash equivalents, together with cash generated from operations and available borrowings under our existing Credit Agreement, will be sufficient to meet our working capital expenditure requirements for at least the next 12 months.

Critical Accounting Estimates

8 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 2026 .

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