What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-11-06 compared with 2025-08-07 · 181 added, 179 removed, 266 unchanged (58% of the section changed)

25 unchanged sentences

and abroad, unrest and sanctions, war, conflict, including the ongoing conflicts between Russia and the Ukraine, conflicts in the Middle East, and increasing tensions between China and Taiwan;

• Legislative and regulatory risk, including those relating to the recent enactment of the OBBBA;

• Legislative and regulatory risk, including those relating to the recent enactment of the OBBBA and the impact of a continued shutdown of the U.S.

• Product liability claims;

5 unchanged sentences

Information contained on this website is not a part of or incorporated by reference into this Quarterly Report on Form 10-Q.

The Company makes available on its website the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to these reports as soon as reasonably practicable after these reports are filed with or furnished to the SEC.

Users can access these reports free of charge on the

Company’s website.

practicable after these reports are filed with or furnished to the SEC.

Users can access these reports free of charge on the Company’s website.

The SEC also maintains a website that contains reports, proxy and information statements, and other information regarding the Company’s electronic filings with the SEC at http://www.sec.gov.

14 unchanged sentences

RECENT DEVELOPMENTS

The Company purchases almost all of its product from third-party manufacturers outside the U.S., primarily in China.

This concentration in suppliers exposes the Company to risks associated with doing business globally, including risks relating to the tariffs recently implemented and that may be implemented in the future.

On April 9, 2025, the U.S.

imposed an aggregate 145% tariff on imports from China, which was subsequently reduced to 30% effective May 14, 2025 for a 90 day pause period.

Other recent tariff policy updates that went into effect in April 2025 include a 10% universal tariff for all countries and reciprocal tariffs for specific countries, which were originally paused until July 9, 2025 and subsequently extended to August 1, 2025.

As the Company sources almost all of its products from suppliers located outside the United States, primarily in China, any new or increased tariffs, quotas, embargoes, or other trade barriers could impact our supply chain and cost structure.

Additionally, retaliatory measures by affected countries, could further disrupt operations or reduce our competitiveness in international markets.

The Company continues to monitor these changing tariffs and trade restrictions.

To mitigate the impact of the increase price of goods imported by the Company into the U.S., the Company has negotiated price increase prices with its customers, negotiated product costs with its suppliers and continues to pursue diversification of its imports to countries that are expected to be subject to lower tariffs.

To the extent that tariffs return to higher rates and the Company cannot mitigate the impact of the increase on the price of goods imported by the Company into the U.S., it may result in lower gross margin that the Company realizes from the sale of its products.

The Company sources almost all of its product from third-party manufacturers outside the U.S., primarily in China.

This geographic concentration in suppliers exposes the Company to risks associated with doing business globally, including risks relating to changes in U.S.

tariff and trade policies.

New or increased tariffs, quotas, embargoes, or other trade barriers could adversely impact our supply chain and cost structure.

To mitigate the impact of these tariffs, the Company has negotiated price increases to its U.S.

customers, negotiated lower product costs with its foreign suppliers and pursues diversification of its foreign sourced products to countries that are expected to be subject to lower tariffs.

The Company's tariff mitigation strategy is intended to maintain the Company's gross margin dollars and therefore, may result in a decline in gross margin percentage.

If tariffs rates were to increase further and the Company is unable to mitigate the impact of the increase cost, it would result in lower gross margin from the sale of its products.

The broader macroeconomic impacts related to the changes in tariff policies including potential mitigation efforts by retailers may negatively impact consumer spending and buying patterns of the Company's products.

This could materially adversely affect the Company’s results of operations and financial condition.

In January 2025, the Company announced the relocation of the Company’s east coast distribution facility currently located in Robbinsville, NJ (the “Robbinsville Facility”) to a warehouse and distribution space in Hagerstown, Maryland (the “Hagerstown Facility”).

In connection with the relocation, the Company will exit the Robbinsville Facility.

The Company expects to incur one-time exit costs up to $7.0 million for employee severance, certain employee relocation costs, and remaining lease costs for the Robbinsville Facility, which costs are expected to be incurred in 2025 and 2026.

In January 2025, the Company announced the relocation of the Company’s east coast distribution operations currently located in Robbinsville, NJ (the “Robbinsville Facility”) to Hagerstown, Maryland (the “Hagerstown Facility”).

In connection with the relocation, the Company expects to incur exit costs of approximately $7.0 million for employee severance, certain employee relocation costs, and remaining lease costs for the Robbinsville Facility, which costs are expected to be incurred in 2025 and 2026.

The Hagerstown Facility will require capital expenditures for equipment and certain leasehold improvements of approximately $9.0 million.

One-time relocation costs are estimated to be up to $7.0 million, which includes recruitment, relocation of

inventory, set up costs and lease expenses prior to the Hagerstown Facility being fully operational.

Start-up costs are estimated to be approximately $7.0 million, which includes recruitment, relocation of inventory, set up costs and lease expenses prior to the Hagerstown Facility being fully operational.

These one-time costs are expected to be incurred in 2026.

The Company expects that the Hagerstown Facility will be operational by the second quarter of 2026.

The Company expects that the Hagerstown Facility will be operational in the second quarter of 2026.

Additionally, in connection with the relocation to the Hagerstown Facility, the Company will receive tax abatement and incentives over the term of the lease from the State of Maryland and Washington County, Maryland totaling approximately $13.1 million.

These incentives include real property tax abatement, employee state withholding tax credit, conditional grants and income tax credits.

In January 2025, the Company launched Project Concord, management's comprehensive plan to propel growth and streamline the cost structure of the International segment.

The Company expects this plan to improve future results in its International segment through sales growth and the identification costs efficiencies.

On July 8, 2025, the Company announced a reorganization of its international workforce in connection with Project Concord, management's comprehensive plan to propel growth and streamline the cost structure of the International segment.

The reorganization primarily affects the structure of the International segment's merchandising and sales workforce.

The estimated restructuring expenses related to severance associated with the reorganization is $0.3 million.

This charge will be recognized in the third quarter of 2025.

On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted in the U.S.

The OBBBA includes a broad range of tax reform provisions affecting businesses, including extending and modifying certain expiring provisions under the Tax Cuts and Job Acts (both domestic and international).

The Company is currently evaluating the impact of the OBBBA on its consolidated financial statements.

In January 2025, the Company launched Project Concord, management's comprehensive plan to propel growth and streamline the cost structure of its International operations.

The Company expects this plan to improve future results of its International segment through sales growth and the identified costs efficiencies.

On July 8, 2025, the Company announced a reorganization of its international workforce in connection with Project Concord.

The reorganization primarily affected the structure of the International segment's merchandising and sales workforce.

The restructuring expenses related to severance associated with the reorganization of $0.3 million was recorded in the third quarter of 2025.

BUSINESS SEGMENTS

13 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

5 unchanged sentences

Goodwill impairment — — 7.5 —

(Loss) income from operations

Restructuring expenses 0.2 — 0.1 —

Income (loss) from operations

3.9 4.7 (6.6) 2.5

3 unchanged sentences

Loss on equity securities

— (10.0) — (5.0)

Loss before income taxes and equity in losses

Income (loss) before income taxes and equity in losses

1.0 1.0 (10.2) (4.3)

Income tax benefit (provision)

Income tax (provision) benefit

(1.7) (0.8) — (0.4)

Equity in losses, net of taxes

Net (loss) income

(0.7) % 0.2 % (10.2) % (5.1) %

MANAGEMENT’S DISCUSSION AND ANALYSIS

THREE MONTHS ENDED JUNE 30, 2025 COMPARED TO THE THREE MONTHS ENDED

JUNE 30, 2024

Consolidated net sales for the three months ended June 30, 2025 were $131.9 million, representing a decrease of $9.8 million, or 6.9%, as compared to net sales of $141.7 million for the corresponding period in 2024.

THREE MONTHS ENDED SEPTEMBER 30, 2025 COMPARED TO THE THREE MONTHS ENDED

SEPTEMBER 30, 2024

Consolidated net sales for the three months ended September 30, 2025 were $171.9 million, representing a decrease of $11.9 million, or 6.5%, as compared to net sales of $183.8 million for the corresponding period in 2024.

In constant currency, a non-GAAP financial measure, which excludes the impact of foreign exchange fluctuations and was determined by applying 2025 average rates to 2024 local currency amounts, consolidated net sales decreased by $12.5 million, or 6.8%, as compared to consolidated net sales in the corresponding period in 2024.

Net sales for the U.S.

segment for the three months ended June 30, 2025 were $119.3 million, a decrease of $11.2 million, or 8.6%, as compared to net sales of $130.5 million for the corresponding period in 2024.

segment for the three months ended September 30, 2025 were $158.1 million, a decrease of $12.1 million, or 7.1%, as compared to net sales of $170.2 million for the corresponding period in 2024.

For the three months ended September 30, 2025, net sales were favorably impacted by higher selling prices, reflecting the implementation of price increases for the Company's U.S.

customers that became effective during the third quarter of 2025.

This impact was offset by lower sales volume, as price increases softened consumer demand and certain retailers shifted the timing of orders.

Net sales for the U.S.

segment’s Kitchenware product category were $82.5 million for the three months ended June 30, 2025, an increase of $1.7 million, or 2.1%, as compared to $80.8 million for the corresponding period in 2024.

segment’s Kitchenware product category were $98.6 million for the three months ended September 30, 2025, an increase of $1.3 million, or 1.3%, as compared to $97.3 million for the corresponding period in 2024.

The increase was driven by higher sales for cutlery and boards and kitchen measurement products.

These increases were offset by a reduction in sales for kitchen tools and bakeware.

These increases were offset by a reduction in sales for bakeware and barware products.

Net sales for the U.S.

segment’s Tableware product category were $21.3 million for the three months ended June 30, 2025, a decrease of $5.0 million, or 19.0%, as compared to $26.3 million for the corresponding period in 2024.

segment’s Tableware product category were $31.6 million for the three months ended September 30, 2025, a decrease of $9.3 million, or 22.7%, as compared to $40.9 million for the corresponding period in 2024.

The decrease was attributable to lower warehouse club programs for dinnerware and flatware.

Net sales for the U.S.

segment’s Home Solutions product category were $15.5 million for the three months ended June 30, 2025, a decrease of $7.9 million, or 33.8%, as compared to $23.4 million for the corresponding period in 2024.

The decrease was attributable to lower sales for hydration products, bath measurement products and home décor products.

Net sales for the International segment were $12.6 million for the three months ended June 30, 2025, an increase of $1.4 million, or 12.5%, as compared to net sales of $11.2 million for the corresponding period in 2024.

In constant currency, a non-GAAP financial measure, which excludes the impact of foreign exchange fluctuations, net sales increased by $0.8 million, or 6.6%, as compared to consolidated net sales in the corresponding period in 2024.

The increase was driven by improved sales in the U.K.

and continental Europe.

Gross margin for the three months ended June 30, 2025 was $50.8 million, or 38.6%, as compared to $54.6 million, or 38.5%, for the corresponding period in 2024.

segment’s Home Solutions product category were $27.9 million for the three months ended September 30, 2025, a decrease of $4.1 million, or 12.8%, as compared to $32.0 million for the corresponding period in 2024.

The decrease was attributable to lower sales for home décor and bath measurement products, which was partially offset by higher sales in the back-to-school lunch box category.

Net sales for the International segment were $13.8 million for the three months ended September 30, 2025, an increase of $0.2 million, or 1.5%, as compared to net sales of $13.6 million for the corresponding period in 2024.

In constant currency, a non-GAAP financial measure, which excludes the impact of foreign exchange fluctuations, net sales decreased by $0.4 million, or 2.7%, as compared to consolidated net sales in the corresponding period in 2024.

The decrease in constant currency net sales was driven by lower sales in the U.K., partially offset by higher sales in the Asia Pacific region.

Gross margin for the three months ended September 30, 2025 was $60.4 million, or 35.1%, as compared to $67.4 million, or 36.7%, for the corresponding period in 2024.

Gross margin for the U.S.

segment was $46.7 million, or 39.1%, for the three months ended June 30, 2025, as compared to $50.5 million, or 38.7%, for the corresponding period in 2024.

The improvement in the gross margin percentage was driven by customer mix.

Gross margin for the International segment was $4.1 million, or 32.5%, for the three months ended June 30, 2025, as compared to $4.1 million, or 36.6%, for the corresponding period in 2024.

The decline in gross margin percentage was driven by customer and product mix.

segment was $55.5 million, or 35.1%, for the three months ended September 30, 2025, as compared to $62.7 million, or 36.8%, for the corresponding period in 2024.

The decrease in the gross margin percentage was attributable to higher selling prices, offset by higher tariffs.

The decrease in gross margin dollars was driven by lower sales volume.

Gross margin for the International segment was $4.9 million, or 35.5%, for the three months ended September 30, 2025, as compared to $4.7 million, or 34.6%, for the corresponding period in 2024.

The increase in gross margin percentage was driven by customer and product mix.

Distribution expenses

Distribution expenses for the three months ended June 30, 2025 were $17.3 million, as compared to $15.1 million for the corresponding period in 2024.

Distribution expenses as a percentage of net sales were 13.1% for the three months ended June 30, 2025, as compared to 10.6% for the three months ended June 30, 2024.

Distribution expenses for the three months ended September 30, 2025 were $17.9 million, as compared to $20.0 million for the corresponding period in 2024.

Distribution expenses as a percentage of net sales were 10.4% for the three months ended September 30, 2025, as compared to 10.9% for the three months ended September 30, 2024.

Distribution expenses as a percentage of net sales for the U.S.

segment were 11.4% and 9.1% for the three months ended June 30, 2025 and 2024, respectively.

Distribution expense during the three months ended June 30, 2025 included $0.1 million for redesign costs related to the Company's warehouses.

As a percentage of sales shipped from the Company’s U.S.

warehouses, excluding non-recurring expenses, distribution expenses were 11.0% and 9.5% for the three months ended June 30, 2025 and 2024, respectively.

The increase in expenses as a percentage of sales was attributable to lower shipment volume resulting in an unfavorable impact of fixed expenses, higher software expenses due to the launch of a new warehouse management system at the Company's west coast distribution center in September 2024 and an increase in freight-out expenses.

Distribution expenses as a percentage of net sales for the International segment were 29.8% for the three months ended June 30, 2025, compared to 28.5% for the corresponding period in 2024.

As a percentage of sales shipped from the Company’s international warehouses distribution expenses were 26.8% and 25.1% for the three months ended June 30, 2025 and 2024, respectively.

The increase in expenses as a percentage of sales was primarily attributed to higher warehouse expenses related to the expanded distribution of the Company's products within the Asia Pacific region.

segment were 9.0% and 9.7% for the three months ended September 30, 2025 and 2024, respectively.

Distribution expense during the three months ended September 30, 2025 and 2024 included $0.1 million and $0.6 million, respectively, for redesign costs related to the Company's warehouses.

As a percentage

of sales shipped from the Company’s U.S.

warehouses, excluding non-recurring expenses, distribution expenses were 8.5% and 10.1% for the three months ended September 30, 2025 and 2024, respectively.

The decrease in expenses as a percentage of sales was attributable to lower depreciation expense due to changes in asset retirement obligation estimates in the prior year, improved labor management efficiencies resulting in a decrease of employee expenses and higher sales volume due to sales mix resulting in a favorable impact of fixed expenses.

The decrease was partially offset by higher software expenses due to the launch of a new warehouse management system at the Company's west coast distribution center in September 2024.

Distribution expenses as a percentage of net sales for the International segment were 27.1% for the three months ended September 30, 2025, compared to 25.4% for the corresponding period in 2024.

As a percentage of sales shipped from the Company’s international warehouses distribution expenses were 22.6% and 24.2% for the three months ended September 30, 2025 and 2024, respectively.

The decrease in expenses as a percentage of sales was due to lower freight-out expenses and higher shipment volume due to sales mix resulting in favorable impact of fixed expenses, partially offset by an increase in expense due to expanded distribution of the Company's products within the Asia Pacific region.

Selling, general and administrative expenses

Selling, general and administrative expenses for the three months ended June 30, 2025 were $37.5 million, a decrease of $0.8 million, or 2.1%, as compared to $38.3 million for the corresponding period in 2024.

Selling, general and administrative expenses for the three months ended September 30, 2025 were $35.5 million, a decrease of $3.3 million, or 8.5%, as compared to $38.8 million for the corresponding period in 2024.

Selling, general and administrative expenses for the U.S.

segment were $29.5 million for the three months ended June 30, 2025, as compared to $29.4 million for the corresponding period in 2024.

As a percentage of net sales, selling, general and administrative expenses were 24.7% and 22.5% for the three months ended June 30, 2025 and 2024, respectively.

The increase in selling, general and administrative expenses as a percentage of net sales, was attributable to the impact of fixed costs on lower sales volume, an increase in the provision for doubtful accounts in the current period and an increase in amortization expense related to an indefinite-lived trade name, which was reclassified to a finite-lived trade name in the fourth quarter 2024.

This was partially offset by lower employee expenses, including incentive compensation.

Selling, general and administrative expenses for the International segment were $3.7 million for the three months ended June 30, 2025, as compared to $3.8 million for the corresponding period in 2024.

As a percentage of net sales, selling, general and administrative expenses were 29.4% and 33.9% for the three months ended June 30, 2025 and 2024, respectively.

The decrease in expenses as a percentage of net sales was attributable to higher sales and foreign currency exchange gains.

Unallocated corporate expense for the three months ended June 30, 2025 was $4.3 million, as compared to $5.1 million for the corresponding period in 2024.

segment were $28.4 million for the three months ended September 30, 2025, as compared to $29.9 million for the corresponding period in 2024.

As a percentage of net sales, selling, general and administrative expenses were 18.0% and 17.6% for the three months ended September 30, 2025 and 2024, respectively.

The decrease in selling, general and administrative expenses was attributable to lower employee expenses, including incentive compensation, partially offset by an increase in amortization expense related to an indefinite-lived trade name, which was reclassified to a finite-lived trade name in the fourth quarter 2024.

The increase in selling, general and administrative expenses as a percentage of net sales, was attributable to the impact of fixed costs on lower sales volume.

Selling, general and administrative expenses for the International segment were $3.4 million for the three months ended September 30, 2025, as compared to $4.5 million for the corresponding period in 2024.

As a percentage of net sales, selling, general and administrative expenses were 24.6% and 33.1% for the three months ended September 30, 2025 and 2024, respectively.

The decrease in expenses was due to lower employee expenses, lower advertising and commission expenses, and the prior year expense included penalties related to tax filings.

Unallocated corporate expense for the three months ended September 30, 2025 was $3.7 million, as compared to $4.3 million for the corresponding period in 2024.

The decrease compared to the prior period was due to lower incentive compensation and legal expenses.

Goodwill impairment

During the second quarter of 2025, the Company’s qualitative assessment of goodwill indicated triggering events had occurred in its U.S.

reporting unit.

The Company performed an interim impairment test of the goodwill in the U.S.

reporting unit, that resulted in a $33.2 million non-cash goodwill impairment charge.

Restructuring expense

Restructuring expenses for the International segment were $0.3 million for the three months ended September 30, 2025, which was related to severance associated with the reorganization of the International segment's workforce.

The reorganization is in connection with Project Concord and primarily affects the structure of the International segment's merchandising and sales workforce.

Interest expense

Interest expense was $5.1 million and $5.2 million for the three months ended June 30, 2025 and 2024, respectively.

Interest expense was $5.0 million and $5.8 million for the three months ended September 30, 2025 and 2024, respectively.

The decrease in expense was a result of lower average outstanding borrowings in the current period, and lower interest rates on outstanding borrowings.

Mark to market loss on interest rate derivatives

Mark to market loss on interest rate derivatives was $0.2 million for the three months ended June 30, 2025, as compared to $0.1 million for the three months ended June 30, 2024.

The loss recognized for the three months ended June 30, 2025 and 2024, respectively, was attributable to the change in the fair value due to the change in the projected interest rate environment.

Mark to market loss on interest rate derivatives was $0.01 million for the three months ended September 30, 2025, as compared to $0.9 million for the three months ended September 30, 2024.

The loss recognized for the three months ended September 30, 2025 and 2024, respectively, was attributable to the change in the fair value due to the change in the projected interest rate environment.

The mark to market amount represents the change in fair value on the Company’s interest rate derivatives that have not been designated as hedging instruments.

These derivatives were entered into for purposes of locking-in a fixed interest rate on a portion of the Company’s variable interest rate debt.

As of June 30, 2025, the intent of the Company is to hold these derivative contracts until their maturity.

Loss on equity securities

Loss on equity securities was $14.2 million for the three months ended June 30, 2024.

In the second quarter of 2024, the Company lost significant influence over its investment in Vasconia and discontinued the equity method of accounting.

This change resulted in the reclassification of previously recognized accumulated other comprehensive losses to the investment balance and subsequently resulted in a non-cash loss of $14.2 million, to reduce the investment to its fair value.

NOTE 4 —INVESTMENT for additional information.

Income tax benefit of $2.8 million and benefit of $0.1 million for the three months ended June 30, 2025 and 2024, respectively, represent taxes on both U.S.

and foreign earnings at a combined effective income tax benefit rate of 6.5% and benefit rate of 0.3%, respectively.

The effective tax rate for the three months ended June 30, 2025 differs from the federal statutory income tax rate of 21.0% primarily due to a partial valuation allowance on U.S.

deferred tax assets that are not more likely than not to be realized as a result of the goodwill impairment in the current quarter.

The effective tax rate for the three months ended June 30, 2024 differs from the federal statutory income tax rate of 21.0% primarily due to the expiration of non-qualified stock options and the vesting of equity-based awards, where the book expense exceeded the tax deduction upon vesting, and foreign losses for which no tax benefit is recognized as such amounts are fully offset with a valuation allowance.

As of September 30, 2025, the intent of the Company is to hold these derivative contracts until their maturity.

Income tax provision of $2.9 million and $1.5 million for the three months ended September 30, 2025 and 2024, respectively, represent taxes on both U.S.

and foreign earnings at a combined effective income tax provision rate of 171.1% and 81.4%, respectively.

The effective tax rate for the three months ended September 30, 2025 differs from the federal statutory income tax rate of 21.0% primarily due to the impact of non-deductible expenses, foreign losses for which no tax benefit is recognized as such amounts are fully offset with a valuation allowance and a partial valuation allowance on U.S.

deferred tax assets that are not more likely than not to be realized as a result of the goodwill impairment in the second quarter.

The effective tax rate for the three months ended September 30, 2024 differs from the federal statutory income tax rate of 21.0% primarily due to foreign losses for which no tax benefit is recognized as such amounts are fully offset with a valuation allowance.

MANAGEMENT’S DISCUSSION AND ANALYSIS

SIX MONTHS ENDED JUNE 30, 2025 COMPARED TO THE SIX MONTHS ENDED

JUNE 30, 2024

Consolidated net sales for the six months ended June 30, 2025 were $271.9 million, a decrease of $12.0 million, or 4.2%, as compared to net sales of $283.9 million for the corresponding period in 2024.

NINE MONTHS ENDED SEPTEMBER 30, 2025 COMPARED TO THE NINE MONTHS ENDED

SEPTEMBER 30, 2024

Consolidated net sales for the nine months ended September 30, 2025 were $443.9 million, a decrease of $23.8 million, or 5.1%, as compared to net sales of $467.7 million for the corresponding period in 2024.

In constant currency, a non-GAAP financial measure, which excludes the impact of foreign exchange fluctuations and was determined by applying 2025 average rates to 2024 local currency amounts, consolidated net sales decreased by $24.9 million, or 5.3%, as compared to consolidated net sales in the corresponding period in 2024.

Net sales for the U.S.

segment for the six months ended June 30, 2025 were $247.8 million, a decrease of $13.2 million, or 5.1%, as compared to net sales of $261.0 million for the corresponding period in 2024.

segment for the nine months ended September 30, 2025 were $406.0 million, a decrease of $25.2 million, or 5.8%, as compared to net sales of $431.2 million for the corresponding period in 2024.

For the nine months ended September 30, 2025, net sales were favorably impacted by higher selling prices, reflecting the implementation of price increases for the Company's U.S.

customers that became effective during the third quarter of 2025.

This impact was offset by lower sales volume, as price increases softened consumer demand and certain retailers shifted the timing of orders.

Net sales for the U.S.

segment’s Kitchenware product category were $162.0 million for the six months ended June 30, 2025, a decrease of $2.3 million, or 1.4%, as compared to $164.3 million for the corresponding period in 2024.

The decrease was driven by lower sales for kitchen tools, partially offset by higher sales for cutlery and boards and kitchen measurement products.

segment’s Kitchenware product category were $260.7 million for the nine months ended September 30, 2025, a decrease of $1.0 million, or 0.4%, as compared to $261.7 million for the corresponding period in 2024.

The decrease was driven by lower sales for kitchen tools, bakeware and barware, partially offset by higher sales for cutlery and boards and kitchen measurement products.

Net sales for the U.S.

segment’s Tableware product category were $48.9 million for the six months ended June 30, 2025, a decrease of $3.2 million, or 6.1%, as compared to $52.1 million for the corresponding period in 2024.

segment’s Tableware product category were $80.5 million for the nine months ended September 30, 2025, a decrease of $12.5 million, or 13.4%, as compared to $93.0 million for the corresponding period in 2024.

The decrease was driven by lower flatware sales due to a warehouse club program not repeated, partially offset by higher sales in dinnerware in the dollar channel.

Net sales for the U.S.

segment’s Home Solutions product category were $36.9 million for the six months ended June 30, 2025, a decrease of $7.7 million, or 17.3%, as compared to $44.6 million for the corresponding period in 2024.

segment’s Home Solutions product category were $64.8 million for the nine months ended September 30, 2025, a decrease of $11.7 million, or 15.3%, as compared to $76.5 million for the corresponding period in 2024.

The decrease was attributable to lower sales of hydration products and bath measurement products.

The decrease was partially offset by higher sales for home décor products driven by a new warehouse club program and sales in the dollar channel.

Net sales for the International segment were $24.1 million for the six months ended June 30, 2025, an increase of $1.2 million, or 5.2%, as compared to net sales of $22.9 million for the corresponding period in 2024.

The decrease was partially offset by higher sales in the back-to-school lunch box category.

Net sales for the International segment were $37.9 million for the nine months ended September 30, 2025, an increase of $1.4 million, or 3.8%, as compared to net sales of $36.5 million for the corresponding period in 2024.

In constant currency, a non-GAAP financial measure, which excludes the impact of foreign exchange fluctuations, net sales increased by $0.3 million, or 0.9%, as compared to consolidated net sales in the corresponding period in 2024.

The increase was attributable to higher sales in continental Europe and Australia.

Gross margin for the six months ended June 30, 2025 was $101.5 million, or 37.3%, as compared to $112.1 million, or 39.5%, for the corresponding period in 2024.

The increase was attributable to higher sales in the Asia Pacific region, partially offset by lower sales in the U.K.

Gross margin for the nine months ended September 30, 2025 was $161.9 million, or 36.5%, as compared to $179.5 million, or 38.4%, for the corresponding period in 2024.

Gross margin for the U.S.

segment was $93.4 million, or 37.7%, for the six months ended June 30, 2025, as compared to $103.8 million, or 39.8%, for the corresponding period in 2024.

The decrease in gross margin percentage was due to customer and product mix.

Gross margin for the International segment was $8.1 million, or 33.6%, for the six months ended June 30, 2025, as compared to $8.3 million, or 36.2%, for the corresponding period in 2024.

segment was $148.9 million, or 36.7%, for the nine months ended September 30, 2025, as compared to $166.5 million, or 38.6%, for the corresponding period in 2024.

The decrease in the gross margin percentage was attributable to higher selling prices, offset by higher tariffs.

The decrease in gross margin dollars was driven by lower sales volume.

Gross margin for the International segment was $13.0 million, or 34.3%, for the nine months ended September 30, 2025, as compared to $13.0 million, or 35.6%, for the corresponding period in 2024.

The decrease in gross margin percentage was driven by customer and product mix.

Distribution expenses

Distribution expenses for the six months ended June 30, 2025 were $35.4 million, as compared to $31.2 million for the corresponding period in 2024.

Distribution expenses as a percentage of net sales were 13.0% for the six months ended June 30, 2025, as compared to 11.0% for the six months ended June 30, 2024.

Distribution expenses for the nine months ended September 30, 2025 were $53.3 million, as compared to $51.3 million for the corresponding period in 2024.

Distribution expenses as a percentage of net sales were 12.0% for the nine months ended September 30, 2025, as compared to 11.0% for the nine months ended September 30, 2024.

Distribution expenses as a percentage of net sales for the U.S.

segment were 11.4% and 9.5% for the six months ended June 30, 2025 and 2024, respectively.

Distribution expenses during the six months ended June 30, 2025 and 2024 included $0.1 million for redesign costs related to the Company's warehouses.

segment were 10.5% and 9.6% for the nine months ended September 30, 2025 and 2024, respectively.

Distribution expenses during the nine months ended September 30, 2025 and 2024 included $0.2 million and $0.7 million, respectively, for redesign costs related to the Company's warehouses.

As a percentage of sales shipped from the Company’s U.S.

warehouses, excluding non-recurring expenses, distribution expenses were 11.5% and 10.0% for the six months ended June 30, 2025 and 2024, respectively.

The increase in expenses as a percentage of net sales was attributable to lower shipment volume resulting in an unfavorable impact of fixed expenses, an increase in employee expenses as a result of less labor management efficiencies due to higher inventory levels, higher software expenses due to the launch of a new warehouse management system at the Company's west coast distribution center in September 2024 and an increase in freight-out expenses.

Distribution expenses as a percentage of net sales for the International segment were 29.1% for the six months ended June 30, 2025, compared to 27.7% for the corresponding period in 2024.

As a percentage of sales shipped from the Company’s international warehouses, distribution expenses were 25.9% and 24.3% for the six months ended June 30, 2025 and 2024, respectively.

The increase in expenses as a percentage of sales was primarily attributed to higher warehouse expenses related to the expanded distribution of the Company's products within the Asia Pacific region and an increase in freight-out expenses.

warehouses, excluding non-recurring expenses, distribution expenses were 10.3% and 10.0% for the nine months ended September 30, 2025 and 2024, respectively.

The increase in expenses as a percentage of sales was attributable to an increase in freight-out expenses, higher software expenses due to the launch of a new warehouse management system at the Company's west coast distribution center in September 2024, partially offset by lower depreciation expense due to changes in asset retirement obligation estimates in the prior year.

Distribution expenses as a percentage of net sales for the International segment were 28.4% for the nine months ended September 30, 2025, compared to 26.9% for the corresponding period in 2024.

As a percentage of sales shipped from the Company’s international warehouses, distribution expenses were 24.6% and 24.3% for the nine months ended September 30, 2025 and 2024, respectively.

Selling, general and administrative expenses

Selling, general and administrative expenses for the six months ended June 30, 2025 were $69.0 million, a decrease of $8.9 million, or 11.4%, as compared to $77.9 million for the corresponding period in 2024.

Selling, general and administrative expenses for the nine months ended September 30, 2025 were $104.5 million, a decrease of $12.1 million, or 10.4%, as compared to $116.6 million for the corresponding period in 2024.

Selling, general and administrative expenses for the U.S.

segment were $59.5 million for the six months ended June 30, 2025, as compared to $60.3 million for the corresponding period in 2024.

As a percentage of net sales, selling, general and administrative expenses were 24.0% and 23.1% for the six months ended June 30, 2025 and 2024, respectively.

The increase in selling, general and administrative expenses as a percentage of net sales, was attributable to the impact of fixed costs on lower sales volume, an increase in provision for doubtful accounts in the current period, and an increase in amortization expense related to an indefinite-lived trade name, which was reclassified to a finite-lived trade name in the fourth quarter 2024.

This was partially offset by lower employee expenses, including incentive compensation.

Selling, general and administrative expenses for the International segment were $7.4 million for the six months ended June 30, 2025, as compared to $8.0 million for the corresponding period in 2024.

As a percentage of net sales, selling, general and administrative expenses were 30.7% and 34.9% for the six months ended June 30, 2025 and 2024, respectively.

The decrease was primarily attributable to foreign currency exchange gains, and lower advertising expenses.

Unallocated corporate expenses for the six months ended June 30, 2025 were $2.1 million, as compared to expenses of $9.6 million for the corresponding period in 2024.

The decrease in expenses was driven by the recognition of a net legal settlement gain of $6.4 million in the current period, lower incentive compensation and legal expenses, partially offset by an increase in stock compensation expense.

segment were $87.9 million for the nine months ended September 30, 2025, as compared to $90.2 million for the corresponding period in 2024.

As a percentage of net sales, selling, general and administrative expenses were 21.7% and 20.9% for the nine months ended September 30, 2025 and 2024, respectively.

The decrease in selling, general and administrative expenses was attributable to lower employee expenses, including incentive compensation, partially offset by an increase in provision for doubtful accounts in the current period, and an increase in amortization expense related to an indefinite-lived trade name, which was reclassified to a finite-lived trade name in the fourth quarter 2024.

The increase in selling, general and administrative expenses as a percentage of net sales, was attributable to the impact of fixed costs on lower sales volume.

Selling, general and administrative expenses for the International segment were $10.8 million for the nine months ended September 30, 2025, as compared to $12.5 million for the corresponding period in 2024.

As a percentage of net sales, selling, general and administrative expenses were 28.5% and 34.2% for the nine months ended September 30, 2025 and 2024, respectively.

The decrease was primarily attributable to foreign currency exchange gains, lower advertising expenses and commissions, and the prior year expense included penalties related to tax filings.

Unallocated corporate expenses for the nine months ended September 30, 2025 were $5.8 million, as compared to expenses of $13.9 million for the corresponding period in 2024.

The decrease in expenses was driven by the recognition of a net legal settlement gain of $6.4 million in the current period, lower incentive compensation, legal expenses and professional fees, partially offset by an increase in stock compensation expense.

Goodwill impairment

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The Company performed an interim impairment test of the goodwill in the U.S.

reporting unit, that resulted in a $33.2 million non-cash goodwill impairment charge.

reporting unit as of June 30, 2025, that resulted in a $33.2 million non-cash goodwill impairment charge.

Restructuring expense

Restructuring expenses for the International segment were $0.3 million for the nine months ended September 30, 2025, which was related to severance associated with the reorganization of the International segment's workforce.

The reorganization is in

connection with Project Concord and primarily affects the structure of the International segment's merchandising and sales workforce.

Interest expense

Interest expense was $10.0 million and $10.8 million for the six months ended June 30, 2025 and 2024, respectively.

Interest expense was $15.0 million and $16.6 million for the nine months ended September 30, 2025 and 2024, respectively.

The decrease in expense was a result of lower average outstanding borrowings in the current period, and lower interest rates on outstanding borrowings.

Mark to market loss on interest rate derivatives

Mark to market loss on interest rate derivatives was $0.7 million for the six months ended June 30, 2025, as compared to $0.3 million for the six months ended June 30, 2024.

The increase was attributable to the change in the fair value based on the increase in interest rates.

The mark to market amount represents the change in fair value on the Company’s interest rate

derivatives that have not been designated as hedging instruments.

Mark to market loss on interest rate derivatives was $0.8 million for the nine months ended September 30, 2025, as compared to $1.2 million for the nine months ended September 30, 2024.

The decrease was attributable to the change in the fair value based on the increase in interest rates.

The mark to market amount represents the change in fair value on the Company’s interest rate derivatives that have not been designated as hedging instruments.

These derivatives were entered into for purposes of locking-in a fixed interest rate on a portion of the Company’s variable interest rate debt.

As of June 30, 2025, the intent of the Company is to hold these derivative contracts until their maturity.

As of September 30, 2025, the intent of the Company is to hold these derivative contracts until their maturity.

Loss on equity securities

Loss on equity securities was $14.2 million for the six months ended June 30, 2024.

Loss on equity securities was $14.2 million for the nine months ended September 30, 2024.

In the second quarter of 2024, the Company lost significant influence over its investment in Vasconia and discontinued the equity method of accounting.

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NOTE 4 —INVESTMENT for additional information.

Income tax benefit of $2.9 million and income tax provision of $0.2 million for the six months ended June 30, 2025 and 2024, respectively, represent taxes on both U.S.

and foreign earnings at a combined effective income tax benefit rate of 6.2% and income tax provision rate of (0.7)%, respectively.

The negative rate for the six months ended June 30, 2024 reflects tax expense on a pretax financial reporting loss.

The effective tax rate for the six months ended June 30, 2025 differs from the federal statutory income tax rate of 21.0% primarily due to a partial valuation allowance on U.S.

deferred tax assets that are not more likely than not to be realized as a result of the goodwill impairment in the current quarter.

The effective tax rate for the six months ended June 30, 2024 differs from the federal statutory income tax rate of 21.0% primarily due to foreign losses for which no tax benefit is recognized as such amounts are fully offset with a valuation allowance.

Income tax benefit of $(0.1) million and income tax provision of $1.7 million for the nine months ended September 30, 2025 and 2024, respectively, represent taxes on both U.S.

and foreign earnings at a combined effective income tax benefit rate of 0.14% and provision rate of (8.2)%, respectively.

The effective tax rate for the nine months ended September 30, 2025 differs from the federal statutory income tax rate of 21.0% primarily due to a partial valuation allowance on U.S.

deferred tax assets that are not more likely than not to be realized as a result of the goodwill impairment in the second quarter.

The negative rate for the nine months ended September 30, 2024 reflects tax expense on a pretax financial reporting loss.

The effective tax rate for the nine months ended September 30, 2024 differs from the federal statutory income tax rate of 21.0% primarily due to the impact of non-deductible expenses and foreign losses for which no tax benefit is recognized as such amounts are fully offset with a valuation allowance.

Equity in losses, net of taxes

Equity in losses of Vasconia, net of taxes , was $2.1 million for the six months ended June 30, 2024.

Equity in losses of Vasconia, net of taxes , was $2.1 million for the nine months ended September 30, 2024.

LIQUIDITY AND CAPITAL RESOURCES

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The Company’s primary uses of funds consist of working capital requirements, capital expenditures, acquisitions and investments, payments of dividends, and payments of principal and interest on its debt.

At June 30, 2025, the Company had cash and cash equivalents of $12.0 million, compared to $2.9 million at December 31, 2024.

Working capital was $210.1 million at June 30, 2025, compared to $221.8 million at December 31, 2024.

Liquidity as of June 30, 2025 was $96.9 million, consisting of $12.0 million of cash and cash equivalents, $65.7 million of availability under the ABL Agreement, limited by the Term Loan financial covenant, and $19.2 million of available funding under the Receivables Purchase Agreement.

At September 30, 2025, the Company had cash and cash equivalents of $12.1 million, compared to $2.9 million at December 31, 2024.

Working capital was $236.4 million at September 30, 2025, compared to $221.8 million at December 31, 2024.

Liquidity as of September 30, 2025 was $50.9 million, consisting of $12.1 million of cash and cash equivalents, $25.2 million of availability under the ABL Agreement, limited by the Term Loan financial covenant, and $13.6 million of available funding under the Receivables Purchase Agreement.

Inventory, a large component of the Company’s working capital, is expected to fluctuate from period to period, with inventory levels higher primarily in the June through October time period.

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Certain other product categories experience higher inventory turns due to lower minimum order quantities or trending sale demands.

For the three months ended June 30, 2025, inventory turnover was 1.5 times, or 241 days, as compared to 1.8 times, or 208 days, for the three months ended June 30, 2024.

Inventory turns have slowed compared to the prior year due to lower sales and higher inventory levels because of higher inventory purchases in the first quarter of 2025 intended to mitigate the impact of the tariffs.

For the three months ended September 30, 2025, inventory turnover was 2.0 times, or 181 days, as compared to 2.1 times, or 175 days, for the three months ended September 30, 2024.

Inventory turns have remained relatively consistent.

The Company believes that availability under the revolving credit facility under its ABL Agreement, cash on hand and cash flows from operations are sufficient to fund the Company’s operations for the next twelve months.

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One or more tranches of additional term loans (the “Incremental Term Facilities”) may be added under the Term Loan if certain conditions are met.

The Incremental Facilities may not exceed the sum of (i) $50.0 million plus (ii) an unlimited amount so long as, in the case of (ii) only, the Company’s secured net leverage ratio, as defined in and computed on a pro forma basis pursuant to the Term Loan, after giving effect to such increase, is no greater than 3.25 to 1.00, subject to certain limitations and for the period defined pursuant to the Term Loan but not to mature earlier than the maturity date of the then existing term loans.

As of June 30, 2025 and December 31, 2024, the total availability under the ABL Agreement were as follows (in thousands):

June 30, 2025

pursuant to the Term Loan, after giving effect to such increase, is no greater than 3.25 to 1.00, subject to certain limitations and for the period defined pursuant to the Term Loan but not to mature earlier than the maturity date of the then existing term loans.

As of September 30, 2025 and December 31, 2024, the total availability under the ABL Agreement were as follows (in thousands):

September 30, 2025

December 31, 2024

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The Company’s borrowing capacity may be further limited by the Term Loan financial covenant of 5.00 to 1.00 maximum Total Net Leverage Ratio.

As of June 30, 2025, the availability under the ABL Agreement, limited by the Term Loan financial covenant, was $65.7 million.

As of September 30, 2025, the availability under the ABL Agreement, limited by the Term Loan financial covenant, was $25.2 million.

The current and non-current portions of the Company’s Term Loan included in the condensed consolidated balance sheets were as follows (in thousands):

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Current portion of Term Loan:

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The 2024 excess cash flow payment of $1.2 million was paid on April 4, 2025 and reduced the scheduled quarterly payment due on June 30, 2025.

As of June 30, 2025, the Company estimates no excess cash flow payment will be due for 2025.

As of September 30, 2025, the Company estimates no excess cash flow payment will be due for 2025.

The Company’s payment obligations under its Debt Agreements are unconditionally guaranteed by its existing and future U.S.

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In addition, the Company pays a commitment fee of 0.20% to 0.25% per annum based on the average daily unused portion of the aggregate commitment under the ABL Agreement.

The interest rate on outstanding borrowings under the ABL Agreement at June 30, 2025 was between 3.30% and 5.79%.

The Company paid a commitment fee of 0.25% on the unused portion of the ABL Agreement during the six months ended June 30, 2025.

The interest rate on outstanding borrowings under the ABL Agreement at September 30, 2025 was between 3.27% and 5.76%.

The Company paid a commitment fee of 0.25% on the unused portion of the ABL Agreement during the nine months ended September 30, 2025.

The Term Loan bears interest, at the Company’s option, at one of the following rates:

(i) alternate base rate, defined, for any day, as the greater of (x) the prime rate, (y) a federal funds and overnight bank funding based rate plus 0.5% or (z) one-month Adjusted Term SOFR, but not less than 1.0%, plus 1.0%, plus a margin of 4.5% or (ii) Adjusted Term SOFR (Term SOFR plus the Term SOFR Adjustment) for the applicable interest period, but not less than 1.0%, plus a margin of 5.5%.

The interest rate on outstanding borrowings under the Term Loan at June 30, 2025 was 9.93%.

The interest rate on outstanding borrowings under the Term Loan at September 30, 2025 was 9.75%.

The Debt Agreements provide for customary restrictions and events of default.

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Under the Term Loan, the Total Net Leverage Ratio is not permitted to be greater than 5.00 to 1.00 determined as of the end of each fiscal quarters.

Further, the ABL Agreement provides that during any period (a) commencing on the last day of the most recently ended four consecutive

fiscal quarters on or prior to the date availability under the ABL Agreement is less than the greater of $20.0 million and 10% of the aggregate commitment under the ABL Agreement at any time and (b) ending on the day after such availability has exceeded the greater of $20.0 million and 10% of the aggregate commitment under the ABL Agreement for 45 consecutive days, the Company is required to maintain a minimum fixed charge coverage ratio of 1.10 to 1.00 as of the last day of any period of four consecutive fiscal quarters.

The Company was in compliance with the covenants of the Debt Agreements at June 30, 2025.

Further, the ABL Agreement provides that during any period (a) commencing on the last day of the most recently ended four consecutive fiscal quarters on or prior to the date availability under the ABL Agreement is less than the greater of $20.0 million and 10% of the aggregate commitment under the ABL Agreement at any time and (b) ending on the day after such availability has exceeded the greater of $20.0 million and 10% of the aggregate commitment under the ABL Agreement for 45 consecutive days, the Company is required to maintain a minimum fixed charge coverage ratio of 1.10 to 1.00 as of the last day of any period of four consecutive fiscal quarters.

The Company was in compliance with the covenants of the Debt Agreements at September 30, 2025.

The Company expects that it will continue to borrow, subject to availability, and repay funds under the ABL Agreement based on working capital and other corporate needs.

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Adjusted EBITDA (a non-GAAP financial measure), which is defined in the Company’s Debt Agreements, is used in the calculation of the Fixed Charge Coverage Ratio, Secured Net Leverage Ratio, Total Leverage Ratio and Total Net Leverage Ratio, which are required to be provided to the Company’s lenders pursuant to its Debt Agreements.

The Company’s adjusted EBITDA (including pro forma adjustments), for the trailing twelve months ended June 30, 2025 was $50.7 million.

Capital expenditures for the six months ended June 30, 2025 were $2.7 million.

The Company’s adjusted EBITDA (including pro forma adjustments), for the trailing twelve months ended September 30, 2025 was $47.2 million.

Capital expenditures for the nine months ended September 30, 2025 were $3.2 million.

Non-GAAP financial measure

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Further, the Company’s non-GAAP information may be different from the non-GAAP information provided by other companies including other companies within the home retail industry.

The following is a reconciliation of the net income (loss), as reported, to Adjusted EBITDA, for each of the last four quarters and the 12 months ended June 30, 2025:

Quarter Ended Twelve Months Ended June 30, 2025

September 30, 2024 December 31,

2024 March 31,

The following is a reconciliation of the net income (loss), as reported, to Adjusted EBITDA, for each of the last four quarters and the 12 months ended September 30, 2025:

Quarter Ended Twelve Months Ended September 30, 2025

December 31, 2024 March 31,

2025 June 30,

2025 September 30,

(in thousands)

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Depreciation and amortization 6,073 5,698 5,437 5,398 22,606

Mark to market loss (gain) on interest rate derivatives

Gain on disposition of fixed assets — — — (94) (94)

Mark to market (gain) loss on interest rate derivatives

(718) 527 220 8 37

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143 — 123 49 315

Restructuring expenses — — — 304 304

Warehouse redesign expenses (2)

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$ 22,973 $ 3,281 $ 3,043 $ 13,420 $ 47,217

(1) For the twelve months ended June 30, 2025, legal settlement gain, net included a net settlement of $6.4 million discussed in NOTE 12 — CONTINGENCIES, and adjusted for legal fees incurred from March 2, 2018 through March 31, 2025 of $1.8 million.

(2) For the twelve months ended June 30, 2025, the warehouse redesign expenses were related to the U.S.

(3) Pro forma adjustments represent the amount of operating expense reductions projected by the Company as a result of actions taken through June 30, 2025 or expected to be taken within 18 months of June 30, 2025, net of the benefits realized during the twelve months ended June 30, 2025.

(1) For the twelve months ended September 30, 2025, legal settlement gain, net included a net settlement of $6.4 million discussed in NOTE 12 — CONTINGENCIES, and adjusted for legal fees incurred from March 2, 2018 through March 31, 2025 of $1.8 million.

(2) For the twelve months ended September 30, 2025, the warehouse redesign expenses were related to the U.S.

(3) Pro forma adjustments represent the amount of operating expense reductions projected by the Company as a result of actions taken through September 30, 2025 or expected to be taken within 18 months of September 30, 2025, net of the benefits realized during the twelve months ended September 30, 2025.

These actions include cost savings initiatives for the U.S.

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(4) Adjusted EBITDA is a non-GAAP financial measure that is defined in the Company’s debt agreements.

Adjusted EBITDA is defined as net income (loss), adjusted to exclude income tax provision (benefit), interest expense, depreciation and amortization, mark to market loss (gain) on interest rate derivatives, goodwill impairment, stock compensation expense, legal settlement gain, net and other items detailed in the table above that are consistent with exclusions permitted by our debt agreements.

Adjusted EBITDA is defined as net income (loss), adjusted to exclude income tax provision (benefit), interest expense, depreciation and amortization, gain on disposition of fixed assets, mark to market (gain) loss on interest rate derivatives, goodwill impairment, stock compensation expense, legal settlement gain, net and other items detailed in the table above that are consistent with exclusions permitted by our debt agreements.

Accounts Receivable Purchase Agreement

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Either party may terminate the agreement at any time upon sixty days’ prior written notice to the other party.

The Company did not sell receivables to HSBC during the three and six months ended June 30, 2025 and June 30, 2024.

At June 30, 2025, $19.2 million of accounts receivables were available for sale to HSBC, net of applicable charges.

The Company did not sell receivables to HSBC during the three and nine months ended September 30, 2025 and September 30, 2024.

At September 30, 2025, $13.6 million of accounts receivables were available for sale to HSBC, net of applicable charges.

The Company’s risk management strategy includes the use derivative financial instruments to manage its exposure to interest rate movements and to reduce the volatility of earnings and cash flows associated with changes in foreign currency exchange rates primarily to offset the earnings impact related to inventory purchases.

The Company does not enter into derivative transactions for trading purposes.

The Company does not enter into derivative

transactions for trading purposes.

The Company classifies cash flows from its derivative transactions as cash flows from operating activities in the consolidated statements of cash flows.

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These non-designated interest rate swaps serve as cash flow hedges of the Company’s exposure to the variability of the payment of interest on a portion of its Term Loan borrowings.

The Company’s total outstanding notional value of interest rate swaps was $50.0 million at June 30, 2025.

The Company’s total outstanding notional value of interest rate swaps was $50.0 million at September 30, 2025.

Foreign Exchange Contracts

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The Company purchases foreign currency forward contracts with terms less than 18 months.

The aggregate gross notional value of foreign exchange contracts at June 30, 2025 was $6.1 million.

The aggregate gross notional value of foreign exchange contracts at September 30, 2025 was $3.4 million.

Operating activities

Net cash provided by operating activities was $26.1 million for the six months ended June 30, 2025, as compared to net cash provided by operating activities of $20.9 million for the six months ended June 30, 2024.

The increase from 2025 compared to 2024 was attributable to a net legal settlement gain received in the current period, timing of collections related to the Company's accounts receivables, and lower investment in inventory, partially offset by timing of payments for accounts payable and accrued expenses.

Net cash provided by operating activities was $3.9 million for the nine months ended September 30, 2025, as compared to net cash used in operating activities of $1.7 million for the nine months ended September 30, 2024.

The increase from 2025 compared to 2024 was attributable to a net legal settlement gain received in the current period, lower investment in inventory, and timing of collections related to the Company's accounts receivables, partially offset by timing of payments for accounts payable and accrued expenses.

Investing activities

Net cash used in investing activities was $2.7 million and $1.1 million for the six months ended June 30, 2025 and 2024, respectively.

Net cash used in investing activities was $3.1 million and $1.6 million for the nine months ended September 30, 2025 and 2024, respectively.

The increase in investment activities was driven by purchases of equipment for the Hagerstown Facility.

Financing activities

Net cash used in financing activities was $14.4 million for the six months ended June 30, 2025, as compared to net cash used in financing activities of $32.5 million for the six months ended June 30, 2024.

The change was attributable to lower net repayments of revolving credit facility in the 2025 period, partially offset by the principal repayment of term loan due to timing.

Net cash provided by financing activities was $8.3 million for the nine months ended September 30, 2025, as compared to net cash used in financing activities of $6.9 million for the nine months ended September 30, 2024.

The change was attributable to higher net proceeds from revolving credit facility in the 2025 period, compare to net repayments of revolving credit facility in the 2025 period.

Stock repurchase program

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The repurchase authorization permits the Company to effect repurchases from time to time through open market purchases and privately negotiated transactions.

No shares were repurchased during the six months ended June 30, 2025.

As of June 30, 2025, the remaining dollar amount available for repurchases under the Board of Directors’ authorized plan was $11.1 million.

No shares were repurchased during the nine months ended September 30, 2025.

As of September 30, 2025, the remaining dollar amount available for repurchases under the Board of Directors’ authorized plan was $11.1 million.

Quantitative and Qualitative Disclosures About Market Risk

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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