What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-06 compared with 2026-05-07 · 87 added, 94 removed, 148 unchanged (55% of the section changed)

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

Ingles, a leading supermarket chain in the Southeast, operates 194 supermarkets in North Carolina (72), Georgia (64), South Carolina (35), Tennessee (21), Virginia (1) and Alabama (1), excluding three stores that remain temporarily closed due to damage sustained during Hurricane Helene.

Ingles, a leading supermarket chain in the Southeast, operates 195 supermarkets in North Carolina (73), Georgia (64), South Carolina (35), Tennessee (21), Virginia (1) and Alabama (1), excluding three stores that remain temporarily closed due to damage sustained in Hurricane Helene.

The Company opened one new store in North Carolina during the quarter ended June 27, 2026.

Ingles supermarkets offer customers a wide variety of nationally advertised food products, including grocery, meat and dairy products, produce, frozen foods and other perishables and non-food products.

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On September 27, 2024, Hurricane Helene severely impacted western North Carolina, including the area where the Company’s headquarters are located, resulting in catastrophic flooding and destruction, power and communication outages, water outages, major road closures, and loss of life.

For the year ended September 28, 2024, the Company recognized an impairment loss of $30.4 million

related to inventory damaged or destroyed by Hurricane Helene, for which insurance proceeds of $4.7 million were received during fiscal year 2025.

Additionally, the Company recognized a property and equipment impairment loss of $4.5 million for the year ended September 28, 2024 pertaining to the same storm, for which insurance proceeds of $1.5 million were received during fiscal year 2025.

For the year ended September 28, 2024, the Company recognized an impairment loss of $30.4 million related to inventory damaged or destroyed by Hurricane Helene, for which insurance proceeds of $5.8 million and $4.7 million were received during fiscal year 2026 and 2025, respectively.

Additionally, the Company recognized a property and equipment impairment

loss of $4.5 million for the year ended September 28, 2024, pertaining to the same storm, for which insurance proceeds of $1.5 million were received during fiscal year 2025.

These recorded losses did not include future repairs and rebuilds, nor did they account for revenue lost due to store closures or electronic payment disruptions.

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however, the Company maintains liability coverage.

At March 28, 2026, the Company’s self-insurance reserves totaled $36.0 million.

At June 27, 2026, the Company’s self-insurance reserves totaled $36.0 million.

This amount included $3.3 million of expected self-insurance recoveries from excess cost insurance or other sources that are recorded as a receivable.

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The Company monitors the carrying value of long-lived assets for potential impairment each quarter based on whether any indicators of impairment have occurred.

There were no asset impairments during the six-month period ended March 28, 2026.

There were no asset impairments during the nine-month period ended June 27, 2026.

Vendor Allowances

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In those instances, the allowances are applied as a reduction of merchandise costs using a rational and systematic methodology, which results in the recognition of these incentives when the inventory related to the vendor consideration received is sold.

Vendor allowances applied as a reduction of merchandise costs totaled $38.2 million and $36.4 million for the fiscal quarters ended March 28, 2026 and March 29, 2025, respectively.

For the six-month periods ended March 28, 2026 and March 29, 2025, vendor allowances applied as a reduction of merchandise costs totaled $76.6 million and $71.5 million,

respectively.

Vendor advertising allowances that represent a reimbursement of specific identifiable incremental costs of advertising the vendor’s specific products are recorded as a reduction to the related expense in the period in which the related expense is incurred.

Vendor advertising allowances recorded as a reduction of advertising expense totaled $2.4 million for both fiscal quarters ended March 28, 2026 and March 29, 2025.

For the six-month periods ended March 28, 2026 and March 29, 2025, vendor advertising allowances recorded as a reduction of advertising expense totaled $4.8 million and $3.7 million, respectively.

Vendor allowances applied as a reduction of merchandise costs totaled $41.7 million and $42.0 million for the fiscal quarters ended June 27, 2026 and June 28, 2025, respectively.

For the nine-month periods ended June 27, 2026 and June 28, 2025, vendor allowances applied as a reduction of merchandise costs totaled $118.3 million and $113.5 million, respectively.

Vendor advertising allowances that represent a reimbursement of specific identifiable incremental costs of advertising

the vendor’s specific products are recorded as a reduction to the related expense in the period in which the related expense is incurred.

Vendor advertising allowances recorded as a reduction of advertising expense totaled $2.2 million for fiscal quarters ended June 27, 2026 and June 28, 2025.

For the nine-month periods ended June 27, 2026 and June 28, 2025, vendor advertising allowances recorded as a reduction of advertising expense totaled $7.0 million and $5.9 million, respectively.

If vendor advertising allowances were substantially reduced or eliminated, the Company would likely consider other methods of advertising, as well as the volume and frequency of the Company’s product advertising, which could increase or decrease the Company’s expenditures.

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Ingles operates on a 52 or 53-week fiscal year ending on the last Saturday in September.

The Condensed Consolidated Statements of Income for the three and six-month periods ended March 28, 2026 and March 29, 2025 both include 13 and 26 weeks of operations, respectively.

The Condensed Consolidated Statements of Income for the three- and nine-month periods ended June 27, 2026 and June 28, 2025 each include 13 and 39 weeks of operations, respectively.

Comparable store sales are defined as sales by retail stores in operation for five full fiscal quarters.

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A major remodel entails substantial remodeling of an existing store and includes additional retail square footage.

For the three- and six-month periods ended March 28, 2026 and March 29, 2025, comparable store sales included 194 stores, which excludes the three stores that remained closed due to the impact of Hurricane Helene.

For the three- and nine-month periods ended June 27, 2026 and June 28, 2025, comparable store sales included 194 stores, which excludes the three stores that remained closed due to the impact of Hurricane Helene.

The following table sets forth, for the periods indicated, selected financial information as a percentage of net sales.

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Three Months Ended

Six Months Ended

Nine Months Ended

Operating and administrative expenses

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Income tax expense

Three Months Ended March 28, 2026 Compared to the Three Months Ended March 29, 2025

Net income for the second quarter of fiscal 2026 totaled $24.3 million, compared with net income of $15.1 million for the second quarter of fiscal 2025.

This increase related to decreased cost of goods sold and increased vendor income offset by increased expenses, as described below.

Net sales decreased by $23.4 million, or 1.8%, to $1.31 billion for the three months ended March 28, 2026 compared to $1.33 billion for the three months ended March 29, 2025.

The Medicare maximum fair price (MFP) change that became effective on January 1, 2026 reduced drug prices for 10 drugs.

The impact of the MFP change resulted in a decrease in sales.

Three Months Ended June 27, 2026 Compared to the Three Months Ended June 28, 2025

Net income for the third quarter of fiscal 2026 totaled $25.9 million, compared with net income of $26.2 million for the third quarter of fiscal 2025.

Net sales increased by $22.1 million, or 1.6%, to $1.37 billion for the three months ended June 27, 2026 compared with $1.35 billion for the three months ended June 28, 2025.

Excluding fuel sales, total grocery comparable store sales decreased 3.1% over the comparative fiscal quarter.

Ingles operated 194 stores at March 28, 2026 and March 29, 2025, excluding three stores damaged by Hurricane Helene that remained closed at March 28, 2026 and March 29, 2025.

Changes in retail grocery sales for the quarter ended March 28, 2026 are summarized as follows (in thousands):

Total retail sales for the three months ended March 29, 2025

Comparable store sales decrease (including fuel)

Total retail sales for the three months ended March 28, 2026

Ingles operated 195 stores at June 27, 2026, which included one new store that opened on June 17, 2026 and 194 stores at June 28, 2025, in each case excluding three stores damaged by Hurricane Helene that remained closed at both June 27, 2026 and June 28, 2025.

Changes in retail grocery sales for the quarter ended June 27, 2026 are summarized as follows (in thousands):

Total retail sales for the three months ended June 28, 2025

Comparable store sales increase (including fuel)

Sales growth store opened fiscal 2026

Total retail sales for the three months ended June 27, 2026

Gross Profit.

Gross profit for the three-month period ended March 28, 2026 totaled $325.3 million, an increase of $14.3 million, or 4.6%, compared with gross profit of $311.0 million for the three-month period ended March 29, 2025.

Gross profit as a percentage of sales was 24.9% and 23.4% for the three months ended March 28, 2026 and March 29, 2025, respectively.

Gross profit for the three-month period ended June 27, 2026 totaled $332.4 million, an increase of $5.1 million, or 1.6%, compared with gross profit of $327.3 million for the three-month period ended June 28, 2025.

Gross profit as a percentage of sales was 24.3% for both the three months ended June 27, 2026 and June 28, 2025.

Gross profit for the three-months ended June 27, 2026 included insurance proceeds of $5.8 million for inventory loss claims related to the impact of Hurricane Helene.

Operating and Administrative Expenses.

Operating and administrative expenses increased by $2.0 million, or 0.7%, to $291.2 million for the three months ended March 28, 2026, from $289.1 million for the three months ended March 29, 2025.

As a percentage of sales, operating and administrative expenses were 22.3% and 21.8% for the March 2026 and March 2025 quarters, respectively.

Operating and administrative expenses increased by $7.9 million, or 2.7%, to $298.0 million for the three months ended June 27, 2026, from $290.1 million for the three months ended June 28, 2025.

As a percentage of sales, operating and administrative expenses were 21.8% and 21.5% for the June 2026 and June 2025 quarters, respectively.

A breakdown of the major changes in operating and administrative expenses is as follows:

(Decrease) as a

Salaries and wages

Miscellaneous

Salaries and wages increased due to overall increased cost to attract and retain associates in the Company’s market area.

Insurance expense decreased due to lower claim volume for our self-insured employee benefit plans

Miscellaneous expense increased as compared to prior year expenses that were offset by $0.5 million of insurance proceeds and $0.7 million for straight line rent credits from the purchase of a ground lease.

Loss or Gain from Sale or Disposal of Assets.

Gain from the sale or disposal of assets totaled $0.4 million for the three months ended March 28, 2026.

Loss from the sale or disposal of assets totaled $0.2 million for the three months ended March 29, 2025.

Other Income.

Other income totaled $2.8 million for the three months ended March 28, 2026 and for the three months ended March 29, 2025.

Salaries and wages increased due to overall increased cost to attract and retain associates in the Company’s market area, which has experienced significant wage inflation over the last several years.

Miscellaneous expense increased as compared to prior year expenses, which had been offset by $0.5 million of insurance proceeds and $0.7 million for straight line rent credits from the purchase of a ground lease.

Bank charges increased due to higher credit card usage, which entails more card swipes and related fees.

Gain from Sale or Disposal of Assets.

Gain from the sale or disposal of assets totaled $44.1 thousand for the three months ended June 27, 2026.

During the quarter ended June 28, 2025, the gain from the sale or disposal of assets was $143.2 thousand.

Interest Expense.

Interest expense totaled $4.5 million for the three months ended March 28, 2026 compared with $4.9 million for the three months ended March 29, 2025.

The decrease related primarily to lower interest rates applicable to our variable rate indebtedness.

Total debt at March 28, 2026 was $503.8 million compared with $521.6 million at March 29, 2025.

Interest expense totaled $4.5 million for the three-month period ended June 27, 2026 and $4.9 million for the three-month period ended June 28, 2025.

Total debt at June 2026 was $500.5 million compared with $518.0 million at June 2025.

Income Taxes.

Income tax expense totaled $8.5 million for the three months ended March 28, 2026, reflecting an effective tax rate of 25.9% of pretax income.

Income tax expense totaled $4.5 million for the three months ended March 29, 2025, reflecting an effective tax rate of 22.9% of pretax income.

Net income totaled $24.3 million for the three months ended March 28, 2026 compared with $15.1 million for the three months ended March 29, 2025.

Basic and diluted earnings per share for Class A Common Stock were $1.31 and $1.28, respectively, for the March 2026 quarter, compared to $0.81 and $0.80, respectively, for the March 2025 quarter.

Basic and diluted earnings per share for Class B Common Stock were each $1.19 for the March 2026 quarter compared with $0.74 for the March 2025 quarter.

Six Months Ended March 28, 2026 Compared to the Six Months Ended March 29, 2025

Net income for the first half of fiscal 2026 totaled $52.4 million, compared with net income of $31.7 million for the first half of fiscal 2025.

The increase related primarily to increased sales offset by increased expenses, as described below.

Net sales increased by $61.5 million, or 2.4%, to $2.68 billion for the six months ended March 28, 2026 compared with $2.62 billion for the six months ended March 29, 2025.

For the six months ended March 29, 2025, t he Company estimated that approximately $55 to $65 million of revenue was lost during the three-week period immediately following Hurricane Helene due to road and power outages which prevented some stores from opening or maintaining normal store hours, as well as due to electronic payment disruptions as a result of the storm.

Excluding fuel sales, total grocery comparable store sales decreased 2.2% for the six months ended March 28, 2026 as compared to the same period in 2025.

Changes in retail grocery sales for the quarter ended March 28, 2026 are summarized as follows (in thousands):

Total retail sales for the six months ended March 29, 2025

Income tax expense totaled $7.1 million for the three months ended June 27, 2026 and $9.1 million for the three months ended June 28, 2025, reflecting effective tax rates of 21.6% and 25.7%, respectively.

During the three months ended June 28, 2025 the Company’s annual estimated pre-tax book income was upwardly adjusted, which increased the related federal and state income tax expense for the quarter.

Net income totaled $25.9 million for the three-month period ended June 27, 2026 compared with $26.2 million for the three-month period ended June 28, 2025.

Basic and diluted earnings per share for Class A Common Stock were $1.39 and $1.36, respectively, for the June 2026 quarter, compared to $1.41 and $1.38, respectively, for the June 2025 quarter.

Basic and diluted earnings per share for Class B Common Stock were each $1.27 for the June 2026 quarter compared with $1.28 for the June 2025 quarter.

Nine Months Ended June 27, 2026 Compared to the Nine Months Ended June 28, 2025

Net income for the nine months ended June 27, 2026 totaled $78.3 million, compared with net income of $57.9 million for the nine months ended June 28, 2025.

Net sales increased by $83.6 million, or 2.1%, to $4.05 billion for the nine months ended June 27, 2026 compared with $3.97 billion for the nine months ended June 28, 2025 .

Hurricane Helene severely impacted western North Carolina at the end of September 2024, and the Company estimates that approximately $55 to $65 million of revenue was lost during the three-week period immediately following the storm due to road and power outages, which prevented some stores from opening or maintaining normal store hours, as well as due to electronic payment disruptions as a result of Hurricane Helene.

Excluding fuel sales, total grocery comparable store sales increased 0.4% over the comparative nine-month period.

Changes in retail grocery sales for the nine months ended June 27, 2026 are summarized as follows (in thousands):

Total retail sales for the nine months ended June 28, 2025

Comparable store sales increase (including fuel)

Sales growth store opened fiscal 2026

Impact of stores closed in fiscal 2025

Total retail sales for the six months ended March 28, 2026

Total retail sales for the nine months ended June 27, 2026

Gross Profit.

Gross profit for the six months ended March 28, 2026 totaled $659.8 million, an increase of $47.7 million, or 7.8%, compared with gross profit of $612.1 million for the six months ended March 29, 2025.

Gross profit as a percentage of sales was 24.6% and 23.4% for the six months ended March 28, 2026 and March 29, 2025, respectively.

Gross profit for the nine-month period ended June 27, 2026 totaled $992.3 million, an increase of $52.8 million, or 5.6%, compared with gross profit of $939.4 million for the nine-month period ended June 28, 2025.

Gross profit as a percentage of sales was 24.5% and 23.7% for the nine months ended June 27, 2026 and June 28, 2025, respectively.

Gross profit for the nine-months ended June 27, 2026 included insurance proceeds of $5.8 million for inventory loss claims related to the impact of Hurricane Helene.

Operating and Administrative Expenses.

Operating and administrative expenses increased by $16.7 million, or 2.9%, to $586.6 million for the six months ended March 28, 2026, from $569.9 million for the six months ended March 29, 2025.

As a percentage of sales, operating and administrative expenses were 21.9% and 21.8% for the March 2026 and March 2025 six-month periods, respectively.

Operating and administrative expenses increased by $24.6 million, or 2.9%, to $884.6 million for the nine months ended June 27, 2026, from $860.0 million for the nine months ended June 28, 2025.

As a percentage of sales, operating and administrative expenses were 21.9% and 21.7% for the June 2026 and June 2025 nine-month periods, respectively.

A breakdown of the major changes in operating and administrative expenses is as follows:

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Miscellaneous

Professional fees

Salaries and wages normalized as compared to prior year which saw decreases in salaries and wages due to storm-related disruptions, power losses and difficulties for associates to get to work due to the damages caused by Hurricane Helene .

Miscellaneous expenses included costs associated with closed projects and additional fees associated with annual shareholder meeting.

Salaries and wages normalized as compared to the prior year period, which saw decreases in salaries and wages due to storm-related disruptions, power losses and difficulties for associates to get to work due to the damage caused by Hurricane Helene .

Miscellaneous expenses included costs associated with closed projects and additional fees associated with the Company’s annual shareholder meeting.

Prior year expenses were offset by $1.5 million of insurance proceeds from property loss due to Hurricane Helene and $0.7 million for straight line rent credits from the purchase of a ground lease.

Bank charges increased due to merchant processing fees associated with increased volume of credit card transactions

Professional fees decreased due to reduced fees associated with technology transformation projects ongoing services.

Gain from Sale or Disposal of Assets.

Gain from the sale or disposal of assets totaled $0.4 million for the six months ended March 28, 2026, as compared to $3.0 million for the six months ended March 29, 2025.

During the nine months ended June 27, 2026, the gain from the sale or disposal of assets totaled $401.7 thousand, compared to $3.1 million during the nine months ended June 28, 2025.

The gain from the sale or disposal of assets during the nine months ended June 28, 2025 included the sale of real property and trade in value for rolling stock.

Interest Expense.

Interest expense totaled $9.1 million for the six months ended March 28, 2026 compared with $9.9 million for the six months ended March 29, 2025.

The decrease related primarily to lower interest rates applicable to our variable rate indebtedness.

Total debt at March 28, 2026 was $503.8 million compared with $521.6 million at March 29, 2025.

Interest expense totaled $13.6 million for the nine-month period ended June 27, 2026 compared with $14.7 million for the nine-month period ended June 28, 2025.

Income Taxes.

Income tax expense totaled $17.8 million for the six months ended March 28, 2026, reflecting an effective tax rate of 25.3% of pretax income.

Income tax expense totaled $9.8 million for the six months ended March 29, 2025, reflecting an effective tax rate of 23.6% of pretax income.

Net income totaled $52.4 million for the six months ended March 28, 2026 compared with $31.7 million for the six months ended March 29, 2025.

Basic and diluted earnings per share for Class A Common Stock were $2.82 and $2.76, respectively, for the six months ended March 28, 2026, compared to $1.70 and $1.67, respectively, for the six months ended March 29, 2025.

Basic and diluted earnings per share for Class B Common Stock were each $2.56 for the six months ended March 28, 2026 compared with $1.55 for the six months ended March 29, 2025.

Income tax expense totaled $24.9 million for the nine months ended June 27, 2026, and $18.8 million for the nine months ended June 28, 2025, reflecting effective tax rates of 24.1% and 24.5%, respectively.

Net income totaled $78.3 million for the nine-month period ended June 27, 2026 compared with $57.9 million for the nine-month period ended June 28, 2025.

Basic and diluted earnings per share for Class A Common Stock were $4.21 and $4.12, respectively, for the nine months ended June 27, 2026, compared to $3.11 and $3.05, respectively, for the nine months ended June 28, 2025.

Basic and diluted earnings per share for Class B Common Stock were each $3.83 for the nine months ended June 27, 2026 compared with $2.83 for the nine months ended June 28, 2025.

Liquidity and Capital Resources

Capital Expenditures

Capital expenditures totaled $53.0 million for the six months ended March 28, 2026.

The Company’s capital expenditures included the continued construction of a new store expected to open in fiscal 2026, restoration work on the three stores that remain temporarily closed stores due to Hurricane Helene, the expansion and remodeling of existing stores, the acquisition of sites, new technology, and upgrades of the Company’s transportation fleet and facilities .

Capital expenditures totaled $76.4 million for the nine-month period ended June 27, 2026.

The Company’s capital expenditures included the continued construction of a new store, which opened in June 2026, restoration repairs to reopen one store, and restoration work on the three remaining stores temporarily closed due to Hurricane Helene, the expansion and remodeling of existing stores, the acquisition of sites, new technology, and upgrades of the Company’s transportation fleet and facilities.

The Company’s capital expenditure plans for fiscal 2026 currently include investments of approximately $120 to $130 million.

The Company currently plans to dedicate the majority of its fiscal 2026 capital expenditures to continued improvement of its store base, including the re-opening of the three stores temporarily closed due to Hurricane Helene, remodeling and continued investment in one store expected to open in fiscal 2026, as well as technology improvements, upgrading and replacing existing store, warehouse and transportation equipment and improvements to the Company’s milk processing plant.

The Company currently expects that its annual capital expenditures will be in the range of approximately $120 to $140 million going forward to maintain a modern store base.

The Company currently plans to dedicate the remainder of its fiscal 2026 capital expenditures to continued improvement of its store base, including the reopening of the stores temporarily closed due to Hurricane Helene, as well as technology improvements, upgrading and replacing existing store, warehouse and transportation equipment, and improvements to the Company’s milk processing plant.

The Company currently expects that its annual capital expenditures will be in the range of approximately $120 to $130 million going forward in order to maintain a modern store base and to reopen the remaining temporarily closed stores .

Among other things, planned expenditures for any given future fiscal year will be affected by the availability of financing, which can affect both the number of projects pursued at any given time and the cost of those projects.

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Liquidity and Cash Flows

The Company generated $122.2 million net cash from operations for the six months ended March 28, 2026 compared with $19.4 million for the six months ended March 29, 2025.

Cash from operations increased by $102.8 million due to higher net income for the six months ended March 28, 2026 compared with the six months ended March 29, 2025 and decreases in working capital needs primarily related to replenishment of inventory in the prior year due to Hurricane Helene.

Cash used by investing activities for the six-month periods ended March 28, 2026 and March 29, 2025 totaled $52.6 million and $57.9 million, respectively, consisting primarily of capital expenditures.

Cash used by financing activities totaled $17.9 million for both the six-month periods ended March 28, 2026 and March 29, 2025, which primarily consisted of payments on our long-term borrowings and dividends paid on our common stock.

The Company generated $189.2 million of net cash from operations for the nine-month period ended June 27, 2026 compared with $94.2 million for the nine-month period ended June 28, 2025.

Net cash from operations increased due to higher net income and decreases in working capital needs during the June 2026 nine-month period compared with the June 2025 nine-month period.

For the nine -month period ended June 28, 2025, the Company experienced increased working capital needs to replenish inventory following the impact of Hurricane Helene.

Cash used by investing activities for the nine-month periods ended June 27, 2026 and June 28, 2025 totaled $75.7 million and $86.9 million, respectively, consisting primarily of capital expenditures.

Cash used by financing activities totaled $24.6 million for the nine-month period ended June 27, 2026 compared with $24.9 million for the nine-month period ended June 28, 2025.

Cash used by financing activities primarily comprises our debt service obligations and dividends paid on our common stock.

In June 2021, the Company issued $350.0 million aggregate principal amount of senior notes due 2031 (the “Notes”).

The Notes bear an interest rate of 4.00% per annum and were issued at par.

The Company has a $150.0 million line of credit (the “Line”), as amended in June 2025, matures in June 2030 .

The Company has a $150.0 million line of credit (the “Line”) that, as amended in June 2025, matures in June 2030.

The Line provides the Company with various interest rate options based on the prime rate, the Federal Funds Rate, or SOFR.

The Line allows the Company to issue up to $10.0 million in letters of credit, of which a single letter of credit in the amount of $900,000 was issued at March 28, 2026.

The Line allows the Company to issue up to $10.0 million in letters of credit, of which a single letter of credit in the amount of $900,000 was issued at June 27, 2026.

The Company is not required to maintain compensating balances in connection with the Line.

At March 28, 2026, the Company had no other borrowings outstanding under the Line.

In December 2010, the Company completed the funding of $99.7 million of bonds (the “Bonds”) for the construction of new warehouse and distribution space in Buncombe County, North Carolina (the “Project”).

At June 27, 2026, the Company had no other borrowings outstanding under the Line.

In December 2010, the Company completed the funding of $99.7 million of bonds (the “Bonds”) for the construction of new warehouse and distribution space adjacent to its existing space in Buncombe County, North Carolina (the “Project”).

The Project was completed in 2012, and the final maturity date of the Bonds is January 1, 2036.

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Mandatory redemption of the Bonds by the Company in the annual amount of $4.5 million began on January 1, 2014.

The outstanding balance of the Bonds was $40.9 million as of March 28, 2026.

The outstanding balance of the Bonds was $40.9 million as of June 27, 2026.

The Company may redeem the Bonds without penalty or premium at any time prior to December 17, 2029.

In September 2017, the Company refinanced approximately $60 million secured borrowing obligations with a SOFR-based amortizing floating rate loan secured by real estate maturing in October 2027.

As of March 28, 2026, the Company has an interest rate swap agreement for a notional amount of $9.5 million at a fixed rate of 3.962%.

As of June 27, 2026, the Company has an interest rate swap agreement for a notional amount of $8.0 million at a fixed rate of 3.962%.

Under this agreement, the Company pays monthly the fixed rate of 3.962% and receives the one-month SOFR plus 1.75%.

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In December 2019, the Company entered into a $155 million SOFR-based amortizing floating rate loan secured by real estate maturing in January 2030.

As of March 28, 2026, the Company has an interest rate swap agreement for a notional amount of $105.3 million at a fixed rate of 2.998%.

As of June 27, 2026, the Company has an interest rate swap agreement for a notional amount of $103.3 million at a fixed rate of 2.998%.

Under this agreement, the Company pays monthly the fixed rate of 2.998% and receives the one-month SOFR plus 1.60%.

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Included among the triggering factors permitting the termination or withdrawal of the Line are certain events of default, including both monetary and non-monetary defaults, the initiation of bankruptcy or insolvency proceedings, or the failure of the Company to meet certain financial covenants designated in its loan documents.

As of March 28, 2026, the Company was in compliance with these covenants.

As of June 27, 2026, the Company was in compliance with these covenants.

The Company’s principal sources of liquidity are expected to be cash flow from operations, borrowings under the Line and long-term debt financing.

planned capital expenditures and working capital requirements for the foreseeable future, including any debt service requirements of additional borrowings.

The Company believes, based on its current results of operations and financial condition, that its financial resources, including the Line, short- and long-term financing expected to be available to it and operating cash flow, will be sufficient to meet planned capital expenditures and working capital requirements for the foreseeable future, including any debt service requirements of additional borrowings.

However, there is no assurance that any such sources of financing will be available to the Company when needed on acceptable terms, or at all.

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increases in labor and utility costs;

success or failure in the ownership and development of real estate;

failure in the ownership and development of real estate;

changes in the laws and government regulations applicable to the Company;

disruptions in the efficient distribution of food products;

changes in accounting policies, standards, guidelines or principles as may be

adopted by regulatory agencies as well as the Financial Accounting Standards Board;

changes in accounting policies, standards, guidelines or principles as may be adopted by regulatory agencies as well as the Financial Accounting Standards Board;

and those factors contained under the heading “Risk Factors” in Item 1A of Part I of our most recent Annual Report on Form 10-K for the year ended September 27, 2025, filed by the Company under the Exchange Act, on November 26, 2025, as amended January 22, 2026 .

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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