What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2026-03-12 compared with 2025-03-13 · 174 added, 170 removed, 317 unchanged (52% of the section changed)

4 unchanged sentences

The Company’s actual results and timing of various events could differ materially from those anticipated in such forward-looking statements as a result of a variety of factors, as more fully described in this section and elsewhere in this Annual Report including those discussed under “Disclosures Regarding Forward-Looking Statements,” “Risk Factors Summary” under Item 1A “Risk Factors” and under Item 7A “Quantitative and Qualitative Disclosures Regarding Market Risk.” The Company undertakes no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future, other than as required by law.

The discussion focuses on the results of the year ended December 31, 2025 compared to the year ended December 31, 2024.

For a discussion of the year ended December 31, 2024 compared to December 31, 2023, please refer to “Management's Discussion and Analysis of Financial Condition and Results of Operations”, in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

ABOUT THE COMPANY

The Company designs, sources and sells branded kitchenware, tableware and other products used in the home.

The Company designs, sources and sells branded kitchenware, tableware and other home solution products used in the home.

The Company’s product categories include two categories of products used to prepare, serve and consume foods, Kitchenware (kitchen tools, cutlery, kitchen scales, thermometers, cutting boards, shears, cookware, pantryware, spice racks and bakeware) and Tableware (dinnerware, stemware, flatware and giftware);

2 unchanged sentences

The Company believes it possesses certain competitive advantages based on its brands, its emphasis on innovation and new product development, and its sourcing capabilities.

The Company owns or licenses a number of leading brands in its industry, including Farberware®, KitchenAid®, Mikasa®, Taylor®, Pfaltzgraff® , BUILT NY®, S'well®, Fred® & Friends, KitchenCraft® , Rabbit®, and Kamenstein®.

The Company owns or licenses a number of leading brands in its industry, including Farberware®, KitchenAid®, Mikasa®, Taylor®, Pfaltzgraff®, Dolly Parton®, S'well®, Sabatier®, Kamenstein®, and Fred® & Friends.

Historically, the Company’s sales growth has come from expanding product offerings within its product categories, by developing existing brands, acquiring new brands (including complementary brands in markets outside the United States), and establishing new product categories.

9 unchanged sentences

In 2025, 2024 and 2023, net sales for the third and fourth quarters accounted for 58%, 58% and 57% of total annual net sales, respectively.

In anticipation of the pre-holiday shipping season, inventory levels increase primarily in the June through October time period.

In anticipation of the pre-holiday shipping season, inventory levels typically increase primarily in the June through October time period.

Consistent with the seasonality of the Company’s net sales and inventory levels, the Company also experiences seasonality in its inventory turnover and turnover days from one quarter to the next.

RESTRUCTURING

During the year ended December 31, 2023, the Company incurred $0.8 million of restructuring expense in connection with the termination of the Company’s Executive Chairman as described below.

In 2022, the Company’s international segment incurred $0.4 million of restructuring expenses related to severance associated with the reorganization of the International segment’s workforce.

The reorganization was the result of the Company’s efforts to realign the management and operating structure of the European business in response to changing market conditions.

In 2022, the Company’s U.S.

segment incurred $0.4 million of restructuring expense in connection with the reorganization of the U.S.

segment’s sales management structure.

The payment was made in 2023.

In 2022, the Company incurred $0.6 million of unallocated expense related to the termination payment with its Executive Chairman, Jeffrey Siegel.

On November 1, 2022, the Company entered into a transition agreement with Jeffrey Siegel, which terminated his employment with the Company, effective March 31, 2023.

The transition agreement amended Mr.

Siegel’s employment agreement which was to expire on December 31, 2022.

The employment agreement provided for a one-time payment, which was paid on April 7, 2023.

The one-time payment of $1.4 million, was recognized over the remaining employment period with $0.6 million recognized in the fourth quarter of 2023 and the remaining $0.8 million recognized in 2023.

During 2025, the Company’s International segment incurred $0.3 million of restructuring expense related to severance associated with the reorganization of the International segment's workforce.

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

RECENT DEVELOPMENTS

In early 2025, the U.S.

government announced and, in some cases, implemented additional tariffs on certain foreign goods, including certain finished products and raw materials such as steel and aluminum.

These tariffs are likely to result in increased prices for these imported goods and materials and may limit the amount of these goods and materials that may be imported into the U.S.

The Company purchases a high concentration of products from unaffiliated manufacturers located in China and other counties outside the U.S.

This concentration exposes the Company to risks associated with doing business globally, including risks relating to tariffs.

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.

The Hagerstown Facility will require capital expenditures for equipment and certain leasehold improvements of approximately $10.0 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.

Tariff and Supply Chain Considerations

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 the tariffs imposed by the U.S.

administration during 2025, 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.

Net sales for fiscal 2025 were negatively impacted by softening consumer discretionary demand, as tariff-related uncertainty and price increases reduced retail ordering volume.

For the full fiscal year 2025, U.S.

gross margin percentage declined 100 basis points compared to 2024.

This decline was at least in part a result of the combined impact of tariffs offset by our mitigation strategy.

We expect continued margin pressure through the first half of 2026 as higher-cost inventory is sold through, reflecting the full impact of these tariffs.

On February 20, 2026, the U.S.

Supreme Court held that the U.S.

administration’s imposition of tariffs unlawful pursuant to the International Emergency Economic Powers Act (“IEEPA”) was unlawful, striking down the 10% global baseline tariff, as well as the higher tariffs imposed on certain U.S.

trading partners.

Supreme Court’s ruling did not affect all of the recently imposed tariffs, including those imposed following trade remedy investigations by the Department of Commerce or the U.S.

Trade Representative.

Nor does it prohibit the imposition of future tariffs through alternative trade authorities available to the U.S.

administration.

On February 20, 2026, shortly after the announced U.S.

Supreme Court decision, the U.S.

administration announced that it would be imposing a new 10% global tariff for a period of 150 days pursuant to a balance-of-payments provision in Section 122 of the Trade Act of 1974, to become effective February 24, 2026.

administration further announced that it would begin additional trade remedy investigations into unidentified trading partners pursuant to Section 301 of the Trade Act of 1974 and with respect to certain unidentified product sectors pursuant to Section 232 of the Trade Expansion Act of 1962.

Government has stated publicly that companies will need to litigate to obtain refunds, which could take years and neither the U.S.

Customs and Border Protection (“CBP”) nor the Court of International Trade has to date issued any guidance on refunds, making it challenging to predict if, and when, any refunds will, in fact, be obtained and whether refunds may be paid in cash or credits against future duties or tariffs.

We cannot predict what additional changes to trade policy will be made by the U.S.

administration or Congress, including whether existing tariff policies will be maintained or modified, what products may be subject to such policies, or whether the entry into new bilateral or multilateral trade agreements will occur, nor can we predict the effects that any such changes would have on our business, capital expenditures, and results of operations.

We are actively monitoring the rapidly evolving tariff and global trade policies that become effective, as well as potential retaliatory actions by other countries.

If tariffs rates were to increase further and the Company is unable to mitigate the impact of the increase in 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.

Hagerstown Facility

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 2026.

The Hagerstown Facility will require capital expenditures for equipment and certain leasehold improvements of approximately $9.3 million, of which $7.0 million remains to be purchased in 2026.

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 fully operational by the third 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.

Project Concord

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.

During 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 2025.

The Company expects to record approximately $0.7 million, of restructuring charges in connection with the Project Concord, for severance and related costs in 2026.

EFFECT OF ADOPTION OF ACCOUNTING PRINCIPLES

Adopted accounting pronouncements

In December 2024, the Company adopted Accounting Standards Update No.

(“ASU”) 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures:

which enhances the disclosures required for operating segments in the Company’s annual and interim consolidated financial statements.

The Company adopted this guidance on a retrospective basis and the adoption did not have a material impact on the Company’s consolidated financial statements.

Refer to NOTE 12 — BUSINESS SEGMENTS

New accounting pronouncements

Updates not listed below were assessed and either determined to not be applicable or are expected to have a minimal effect on the Company’s financial position, results of operations, and disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Updated No.

(“ASU”) 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.

This guidance is intended to enhance the transparency and decision usefulness of income tax disclosures.

The amendments in ASU 2023-09 address investor requests for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information.

Early adoption is permitted.

The new guidance is effective for public business entities for annual periods beginning after December 15, 2024 on a prospective basis.

Retrospective application is permitted.

Management is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.

The Company adopted this ASU on a retrospective basis effective January 1, 2025.

Refer to NOTE 11 — INCOME TAXES for the inclusion of new disclosures required.

New accounting pronouncements

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

6 unchanged sentences

RESULTS OF OPERATIONS

The results of operations below focuses on the results of the year ended December 31, 2024 compared to the year ended December 31, 2023.

For a discussion of 2023 compared to 2022 refer to “Management's Discussion and Analysis of Financial Condition and Results of Operations”, in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

YEAR ENDED DECEMBER 31, 2025 COMPARED TO YEAR ENDED DECEMBER 31, 2024.

The following table sets forth statement of operations data of the Company as a percentage of net sales for the periods indicated below.

Year Ended December 31,

2024 2023 2022

Net sales 100.0 % 100.0 %

3 unchanged sentences

Selling, general and administrative expenses 22.0 23.4

Goodwill impairment 5.1 —

Restructuring expenses 0.1 —

Wallace facility remediation expense

Income from operations

(Loss) income from operations

Interest expense (3.1) (3.3)

Mark to market (loss) gain on interest rate derivatives

(0.1) (0.1) 0.3

Mark to market loss on interest rate derivatives

Gain on extinguishments of debt, net

1 unchanged sentence

(Loss) income before income taxes and equity in losses

(1.4) 1.5 1.2

Income tax provision

(0.5) (0.9) (0.8)

Income tax benefit (provision)

Equity in losses, net of taxes

(4.2) % (2.2) %

(2.2) % (1.2) % (0.8) %

MANAGEMENT’S DISCUSSION AND ANALYSIS

4 unchanged sentences

segment in 2025 were $591.2 million, a decrease of $36.0 million, or 5.7%, compared to net sales of $627.2 million in 2024.

For the year ended December 31, 2025, net sales were unfavorably impacted by lower sales volume as price increases softened consumer demand, partially offset by higher selling prices, reflecting the price increases for the Company’s U.S.

customers that became effective during the third quarter of 2025.

Net sales for the U.S.

1 unchanged sentence

The net sales decrease in the U.S.

segment’s Kitchenware product category was driven by lower sales for kitchen tools and barware products.

The decrease was partially offset by higher sales for cutlery and board, and bakeware products driven by new warehouse programs in 2024 and the launch of new product lines.

segment’s Kitchenware product category was driven by lower sales for cutlery and board, bakeware products, barware products and kitchen tools.

The decrease was partially offset by higher sales for kitchen measurement products driven by a new warehouse program in 2025.

Net sales for the U.S.

segment’s Tableware product category in 2025 were $122.2 million, a decrease of $10.6 million, or 8.0%, compared to net sales of $132.8 million for 2024.

The decrease was attributable to lower warehouse club programs in 2024 as well as other brick-and-mortar customers.

This decline was partially offset by sales e-commerce customers.

The decrease was attributable primarily to lower warehouse club programs in 2025 for dinnerware and flatware programs not repeated.

This decline was partially offset by higher sales for dinnerware in the dollar channel.

Net sales for the U.S.

segment’s Home Solutions products category in 2024 were $110.1 million, an increase of $2.0 million, or 1.9%, compared to net sales of $108.1 million in 2023.

The increase was driven by higher sales for Home Décor products driven by a new warehouse club program in 2024 and sales of a new licensed product brand, partially offset by lower hydration product sales and Taylor branded bath measurement products.

segment’s Home Solutions products category in 2025 were $94.1 million, a decrease of $16.0 million, or 14.5%, compared to net sales of $110.1 million in 2024.

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

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

Net sales for the International segment in 2025 were $56.7 million, an increase of $0.9 million, or 1.6%, compared to net sales of $55.8 million for 2024.

In constant currency, a non-GAAP financial measure, which excludes the impact of foreign exchange fluctuations and was determined by applying 2024 average exchange rates to 2023 local currency amounts, net sales increased approximately 1.6%.

The increase was driven by higher sales with global trading business in Asia.

In constant currency, a non-GAAP financial measure, which excludes the impact of foreign exchange fluctuations and was determined by applying 2025 average exchange rates to 2024 local currency amounts, net sales decreased approximately 1.7%.

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

Gross margin for 2025 was $240.7 million, or 37.1%, compared to $260.7 million, or 38.2%, for the corresponding period in 2024.

1 unchanged sentence

segment was $220.8 million, or 37.3%, for 2025, compared to $240.3 million, or 38.3%, for 2024.

The increase in gross margin percentage was due to lower inbound freight costs and favorable product mix.

The decrease in gross margin percentage was primarily attributable to higher tariffs and product costs, which more than offset the benefit of higher selling prices.

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

Gross margin for the International segment was $19.9 million, or 35.1%, for 2025, compared to $20.4 million, or 36.6%, for 2024.

The increase in gross margin percentage was driven by lower inventory reserves in the current period.

The decrease in gross margin percentage was primarily due to a higher mix of sales incentives and customer allowances during the period.

Distribution expenses

5 unchanged sentences

As a percentage of sales shipped from the Company’s warehouses, excluding warehouse redesign expenses, distribution expenses were 9.6% and 9.7% f or 2025 and 2024.

The increase in the expenses as a percentage of sales was a result of higher depreciation expense due to changes in asset retirement obligation estimates and less labor management efficiencies resulting in an increase of employee expenses, partially offset by lower storage expenses.

The decrease in distribution expenses as a percentage of sales was primarily attributable to lower depreciation expense due to changes in asset retirement obligation estimates in the prior year, improved labor management efficiencies and decreased employee expenses, net of higher software costs, 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 approximately 26.3% in 2025 and 24.7% in 2024, respectively.

As a percentage of sales shipped from the Company’s international warehouses, distribution expenses were 23.1% and 22.1% f or 2025 and 2024, re spectively.

The decrease in the expense as a percentage of sales was primarily attributed to favorable freight rates, partially offset by lower shipment volume in U.K.

resulting in an unfavorable impact of fixed warehouse expenses.

The increase in distribution expenses as a percentage of sales was primarily attributable to higher warehouse expenses related to the expanded distribution of the Company’s products within the Asia Pacific region, partially offset by a decrease in freight-out expenses due to customer mix.

Selling, general and administrative expenses

Selling, general and administrative (“SG&A”) expenses for 2024 w ere $159.8 million, an increase of $7.2 million, or 4.7%, as compared to $152.6 million for 2023.

Selling, general and administrative (“SG&A”) expenses for 2025 w ere $142.4 million, a decrease of $17.4 million, or 10.9%, as compared to $159.8 million for 2024.

SG&A expenses for 2025 for the U.S.

segment we re $123.0 million, an increase of $5.6 million, or 4.8%, compared to $117.4 million for 2023.

segment we re $117.5 million, a decrease of $5.5 million, or 4.5%, compared to $123.0 million for 2024.

As a percentage of net sales, SG&A expenses were 19.9% for 2025, compared to 19.6% for 2024.

The increase in the expenses was attributable to higher employee expenses, amortization expense related to an indefinite trade name, which was reclassified to a definite lived trade name in 2024, expenses related to the start-up of the Company’s manufacturing operations in Mexico, legal expenses, and inflationary increases across several expense categories.

This was partially offset by a decrease in the provision for doubtful accounts in the current period.

SG&A expenses for 2024 for the International segment were $17.2 million, an increase of $1.5 million, or 9.6%, compared to $15.7 million for 2023.

The decrease in the expenses was attributable to lower employee expenses, including incentive compensation, partially offset by an increase in amortization expense related to an indefinite trade name, which was reclassified to a definite 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 net sales.

SG&A expenses for 2025 for the International segment were $13.9 million, a decrease of $3.3 million, or 19.2%, compared to $17.2 million for 2024.

As a percentage of net sales, SG&A expense s were 24.5% for 2025, compared to 30.8% for 2024.

The increase in the expenses was primarily attributable to higher employee expenses, penalties related to tax filings incurred in the current period, and higher foreign currency exchange losses.

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

Unallocated corporate expenses for 2025 were $11.0 million, compared to $19.6 million for 2024.

The increase was driven by lower insurance expenses.

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, partially offset by higher professional fees 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 as of June 30, 2025, that resulted in a $33.2 million non-cash goodwill impairment charge.

Restructuring expenses

During the year ended December 31, 2023, the Company incurred $0.8 million of unallocated corporate expenses related to the termination payment with its Executive Chairman.

During 2025, the Company’s International segment incurred $0.3 million of restructuring expense related to severance associated with the reorganization of the International segment's workforce.

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

Interest expense

Interest expense for 2025 was $20.0 million, compared to $22.2 million for 2024 .

The increase was a result of higher interest rates on outstanding borrowings in the current period, partially offset by lower average outstanding borrowings.

Mark to market (loss) gain on interest rate derivatives

Mark to market loss on interest rate derivatives was $0.5 million for both the year ended December 31, 2024, and December 31, 2023 .

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

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 $0.8 million and $0.5 million, respectively, for the year ended December 31, 2025, and 2024.

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

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

As of December 31, 2025, the intent of the Company is to hold these derivative contracts until their maturity.

Gain on extinguishments of debt, net

Gain on extinguishments of debt, net was $0.8 million for the year ended December 31, 2023, consisting of a $1.5 million gain in connection with the repurchase of $47.2 million in principal amount of the Term Loan, and $0.7 million of loss recorded on the prepayment of Term Loan principal in connection with Amendment No.

2 to the Term Loan.

Refer to NOTE 7 — DEBT for further details of these transactions.

Loss on equity securities

3 unchanged sentences

NOTE 5 — EQUITY INVESTMENTS for additional information.

Income tax provision

The income tax provision was $3.3 million in 2024 and $6.2 million in 2023.

The Company’s effective tax rate for 2024 was (34.2)%, compared to 59.4% for 2023.

Income tax benefit (provision)

The income tax benefit was $3.3 million in 2025 and the income tax provision was $3.3 million in 2024.

The Company’s effective tax rate for 2025 was 10.9%, compared to its effective tax rate of (34.2)% for 2024.

The negative rate for 2024 reflects tax expense on pretax financial reporting loss.

The effective tax rate in 2025 differs from the federal statutory rate primarily due to UK foreign losses for which no tax benefit is recognized as such amounts are fully offset with a valuation allowance, and the provision of valuation allowances against current and cumulative losses in Asia, Australia, and New Zealand.

The effective tax rate in 2024 differs from the federal statutory rate primarily due to state and local tax expense, nondeductible expenses and losses, and UK foreign losses for which no tax benefit is recognized as such amounts are fully offset with a valuation allowance, offset by a reduction in the Company’s accrual for uncertain tax positions and the release of the valuation allowance on foreign losses in the Netherlands.

The effective tax rate in 2023 differs from the federal statutory rate primarily due to state and local tax expense, nondeductible 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 year ended December 31, 2024, as compared to $12.7 million for the year ended December 31, 2023.

During the year ended December 31, 2023, equity in losses included a non-cash impairment charge of $6.8 million, to reduce the carrying value of the Company’s investment in Vasconia to its fair value.

Equity in losses of Vasconia, net of taxes, was $2.1 million for the year ended December 31, 2024.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

1 unchanged sentence

The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

On an on-going basis, management evaluates its estimates and judgments based on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

On an ongoing basis, management evaluates its estimates and judgments based on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

The Company evaluates these estimates including those related to revenue recognition, allowances for doubtful accounts, reserves for sales returns and allowances and customer chargebacks, inventory mark-down provisions, estimates for unpaid healthcare claims, impairment of goodwill, tangible and intangible assets, stock compensation expense, accruals related to the Company’s tax positions and tax valuation allowances.

3 unchanged sentences

Goodwill, intangible assets and long-lived assets

Goodwill and intangible assets deemed to have indefinite lives are not amortized but, instead, are subject to an annual impairment assessment on October 1.

Goodwill is not amortized but, instead, is subject to an annual impairment assessment on October 1.

Additionally, if events or conditions were to indicate the carrying value of a reporting unit may not be recoverable, the Company would evaluate goodwill and other intangible assets for impairment at that time.

As it relates to the goodwill assessment, the Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the quantitative goodwill impairment testing described in the FASB’s ASC Topic 350, Intangibles – Goodwill and Other.

If, after assessing qualitative factors, the Company determines that it is more likely than not that the fair value of a reporting unit exceed its carrying amount, then no further testing is performed for that reporting unit.

If, after assessing qualitative factors, the Company determines that it is more likely than not that the fair value of a reporting unit exceeds its carrying amount, then no further testing is performed for that reporting unit.

However, if based on the Company’s qualitative assessment it concludes that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, or if the Company elects to bypass the qualitative assessment, the Company will proceed with performing the quantitative impairment test.

The Company reviews goodwill and other intangibles that have indefinite lives for impairment annually as of October 1st or when events or changes in circumstances indicate the carrying value of these assets might exceed their current fair values.

The Company reviews goodwill impairment annually as of October 1st or when events or changes in circumstances indicate the carrying value of these assets might exceed their current fair values.

For goodwill, impairment testing is based upon the best information available using a combination of the discounted cash flow method, a form of the income approach, and the guideline public company method, a form of the market approach.

5 unchanged sentences

Although the Company believes the assumptions and estimates made are reasonable and appropriate, different assumptions and estimates could materially impact its reported financial results.

non-cash impairment charges that could be material to the Company’s consolidated balance sheet or results of operations.

In addition, sustained declines in the Company’s stock price and related market capitalization could impact key assumptions in the overall estimated fair values of its reporting units and could result in non-cash impairment charges that could be material to the Company’s consolidated balance sheet or results of operations.

Should the carrying value of a reporting unit be in excess of the estimated fair value of that reporting unit, an impairment charge will be recorded to reduce the reporting unit to fair value.

The Company also evaluates qualitative factors to determine whether or not its indefinite-lived intangible have been impaired and then performs quantitative tests if required.

These tests can include the relief from royalty model or other valuation models.

The significant assumptions used in the relief from royalty model are future net sales for the related brand, royalty rate and the cost of capital to determine the fair value of the indefinite lived intangible.

Projected net sales for the related brand and royalty rate were determined to be significant assumptions because they are the primary drivers of the projected cash flows in the relief from royalty model.

Cost of capital was also determined to be a significant assumption as it is the discount rate used to calculate the current fair value of those projected cash flows.

The Company performed its annual impairment assessment of its U.S.

reporting unit as of October 1, 2024 by comparing the fair value of the reporting unit with its carrying value.

The Company performed the analysis using a discounted cash flow and market multiple method.

As of October 1, 2024, the fair value of the U.S.

reporting unit exceeded the carrying value of goodwill by 5.4%.

As of December 31, 2024, the Company assessed the carrying value of goodwill and determined, based on qualitative factors, that no impairment indicators existed for goodwill.

The carrying value of the goodwill for the U.S reporting unit was $33.2 million as of December 31, 2024.

Indefinite-lived trade name

The Company bypassed the optional qualitative impairment analysis for its indefinite-lived trade name asset annual October 1, 2024 impairment test.

The Company completed the quantitative impairment analysis by comparing the fair value of the indefinite-lived trade name to its carrying value using a relief from royalty approach, which assumes the value of the trade name is the discounted cash flows of the amount that would be paid by a hypothetical market participant had they not owned the trade name and instead licensed the trade name from another company.

The Company determined that the fair value exceeded its carrying value as of October 1, 2024, and therefore the indefinite-lived intangible asset was not impaired.

As of October 1, 2024, the fair value of the Company’s indefinite-lived trade name exceeded its carrying value by 2.4%.

In connection with the annual impairment analysis, the Company determined that the trade name, previously estimated to contribute to cash flows indefinitely, has a definite life.

Accordingly, the trade name was reclassified from indefinite-lived to finite-lived or amortizable intangible asset as of October 1, 2024.

The trade name will be amortized over an estimated useful life of 15 years.

The carrying value of the goodwill for the U.S.

reporting unit was zero as of December 31, 2025.

In the second quarter of 2025, the Company observed a sustained decline in the market valuation of the Company's common stock.

Additionally, the Company's near term forecasts for the U.S.

reporting unit were revised downward due to changes in retailer and consumer buying patterns, which were impacted by the recent changes in the U.S.

tariff policies.

Based on these factors the Company concluded that impairment indicators for the U.S.

reporting unit were present as of June 30, 2025.

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

reporting unit as of June 30, 2025 by comparing the fair value with its carrying value.

The analysis was performed by using a discounted cash flow and market multiple method.

Accordingly, this fair value measurement is classified as Level 3 since it is based primarily on unobservable inputs.

Based upon the analysis performed, the Company's U.S.

reporting unit goodwill was fully impaired and a $33.2 million non-cash goodwill impairment charge was recognized.

The goodwill impairment charge was the result of the decline in the Company's near term forecasts that were revised downward due to the changes in retailer and consumer buying patterns and an increase to the company-specific risk premium, which is an input to the cost of capital assumption, to address the potential risks in the long-term forecast which remain uncertain at this time.

Long-lived assets

13 unchanged sentences

These incentives and promotions typically include arrangements such as cooperative advertising, buydowns, volume rebates and discounts.

These sales incentives and promotions represent variable consideration and are reflected as reductions

in net sales in the Company’s consolidated statements of operations.

These sales incentives and promotions represent variable consideration and are reflected as reductions in net sales in the Company’s consolidated statements of operations.

While many of the sales incentives and promotions are contractually agreed upon with the Company’s customers, certain of the sales incentives and promotions are non-contractual and require the Company to estimate the amount of variable consideration based on historical experience and other known factors or as the most likely amount in a range of possible outcomes.

9 unchanged sentences

At December 31, 2025 and 2024, the Company had cash and cash equivalents of $4.3 million and $2.9 million, respectively, and working capital of $242.6 million at December 31, 2025, compared to $221.8 million at December 31, 2024.

The current ratio (current assets to current liabilities) was 2.5 to 1.0 at December 31, 2024, and December 31, 2023.

The current ratio (current assets to current liabilities) was 2.8 to 1.0 at December 31, 2025, compared to 2.5 to 1.0 at December 31, 2024.

The current ratio has remained relatively consistent.

8 unchanged sentences

Inventory turns have remained relatively consistent.

The increase in inventory levels at December 31, 2024 compared to December 31, 2023 was due to a proactive measure to mitigate impact of the tariffs expected in 2025.

On January 19, 2025, in connection with the lease agreement for the Hagerstown Facility, the Company provided financial assurance of $2.7 million in the form of a letter of credit.

This reduced the availability under the revolving credit facility by the same amount.

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 12 months.

14 unchanged sentences

When an Excess Cash Flow payment is required, each lender has the option to decline a portion or all of the prepayment amount payable to it.

Per the Term Loan, when the Company makes an Excess Cash Flow prepayment, the payment is first applied to satisfy the next eight (8) scheduled future

quarterly required payments of the Term Loan in order of maturity and then to the remaining scheduled installments on a pro rata basis.

Per the Term Loan, when the Company makes an Excess Cash Flow prepayment, the payment is first applied to satisfy the next eight (8) scheduled future quarterly required payments of the Term Loan in order of maturity and then to the remaining scheduled installments on a pro rata basis.

The maximum borrowing amount under the ABL Agreement may be increased to up to $250.0 million if certain conditions are met.

8 unchanged sentences

Total availability under the ABL agreement $ 119,919 $ 124,808

Availability under the ABL Agreement is limited to the lesser of the $200.0 million commitment thereunder and the borrowing base and therefore depends on the valuation of certain current assets comprising the borrowing base.

Availability under the ABL Agreement is limited to the lesser of the $200.0 million commitment and the borrowing base and therefore depends on the valuation of certain current assets comprising the borrowing base.

The borrowing capacity under the ABL Agreement will depend, in part, on eligible levels of accounts receivable and inventory that fluctuate regularly.

Due to the seasonality of the Company’s business, the Company may have greater borrowing availability during the third and fourth quarters of each year.

Consequently, the $200.0 million commitment thereunder may not represent actual borrowing capacity.

Consequently, the $200.0 million commitment may not represent actual borrowing capacity.

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.

10 unchanged sentences

Total Non-current portion of Term Loan $ 125,927 $ 130,949

The estimated 2024 excess cash flow payment of $1.3 million will be applied to the 2025 scheduled quarterly payments of the Term Loan, per the terms of the debt agreement.

As of December 31, 2025, the Company estimates no excess cash flow payment will be due for 2025.

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 December 31, 2025, the future principal payments of the Term Loan are as follows (in thousands):

4 unchanged sentences

The obligations of the foreign subsidiary borrowers under the ABL Agreement are secured by security interests in substantially all of the assets of, and stock in, such foreign subsidiary borrowers, subject to certain limitations.

The obligations of the Company under the Debt Agreements and any hedging arrangements

and cash management services and the guarantees by its domestic subsidiaries in respect of those obligations are secured by security interests in substantially all of the assets and stock (but in the case of foreign subsidiaries, limited to 65% of the capital stock in first-tier foreign subsidiaries and not including the stock of subsidiaries of such first-tier foreign subsidiaries) owned by the Company and the U.S.

The obligations of the Company under the Debt Agreements and any hedging arrangements and cash management services and the guarantees by its domestic subsidiaries in respect of those obligations are secured by security interests in substantially all of the assets and stock (but in the case of foreign subsidiaries, limited to 65% of the capital stock in first-tier foreign subsidiaries and not including the stock of subsidiaries of such first-tier foreign subsidiaries) owned by the Company and the U.S.

subsidiary guarantors, subject to certain exceptions.

Such security interests consist of (1) a first-priority lien, subject to certain permitted liens, with respect to certain assets of the Company and certain of its subsidiaries (the “ABL Collateral”) pledged as collateral in favor of lenders under the ABL Agreement and a second-priority lien in the ABL Collateral in favor of the lenders under the Term Loan and (2) a first-priority lien, subject to certain permitted liens, with respect to certain assets of the Company and certain of its subsidiaries (the “Term Loan Collateral”) pledged as collateral in favor of lenders under the Term Loan and a second-priority lien in the Term Loan Collateral in favor of the lenders under the ABL Agreement.

Such security interests consist of (1) a first-priority lien, subject to certain

permitted liens, with respect to certain assets of the Company and certain of its subsidiaries (the “ABL Collateral”) pledged as collateral in favor of lenders under the ABL Agreement and a second-priority lien in the ABL Collateral in favor of the lenders under the Term Loan and (2) a first-priority lien, subject to certain permitted liens, with respect to certain assets of the Company and certain of its subsidiaries (the “Term Loan Collateral”) pledged as collateral in favor of lenders under the Term Loan and a second-priority lien in the Term Loan Collateral in favor of the lenders under the ABL Agreement.

Borrowings under the revolving credit facility bear interest, at the Company’s option, at one of the following rates:

13 unchanged sentences

The Company was in compliance with the covenants of the Debt Agreements at December 31, 2025.

On June 8, 2023, the Company completed the repurchase of $47.2 million in principal amount of the Term Loan, for $95 per $100 of principal.

The repurchase was executed by way of a reverse Dutch auction, pursuant to and in accordance with the terms and conditions provided for in the Term Loan.

In connection therewith, debt issuance costs of $0.5 million were written off and fees of $0.4 million were incurred.

The gain on the early retirement of the Term Loan was $1.5 million, net of fees and expenses.

In connection with the Term Loan Amendment, the Company reduced its outstanding principal by a net amount of $48.7 million through a voluntary prepayment of principal (in accordance with the terms of the original Term Loan Agreement), net of the issuance of new proceeds and an extension of a portion of existing Term Loan.

In connection with the Term Loan Amendment that Company incurred fees of $9.1 million, which will be amortized over the life of the debt using the effective interest method.

The Company recognized a loss of $0.7 million of unamortized debt issuance costs on the partial extinguishment for the portion of the Term Loan that was repaid.

Covenant Calculations

2 unchanged sentences

Adjusted EBITDA is a non-GAAP financial measure within the meaning of Regulation G and Item 10(e) of Regulation S-K, each promulgated by the SEC.

This measure is provided because management of the Company uses this financial measure in evaluating the

Company’s on-going financial results and trends.

This measure is provided because management of the Company uses this financial measure in evaluating the Company’s ongoing financial results and trends.

Management also uses this non-GAAP information as an indicator of business performance.

12 unchanged sentences

$ (4,201) $ (39,699) $ (1,189) $ 18,152 $ (26,937)

Loss on equity securities — 14,152 — — 14,152

Equity in losses, net of taxes

2,092 — — — 2,092

Income tax provision (benefit)

Income tax (benefit) provision

(142) (2,782) 2,861 (3,220) (3,283)

1 unchanged sentence

Depreciation and amortization 5,698 5,437 5,398 5,315 21,848

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

Mark to market loss (gain) on interest rate derivatives

527 220 8 (1) 754

Goodwill impairment — 33,237 — — 33,237

Stock compensation expense 1,062 1,044 994 201 3,301

Legal settlement gain, net (1)

(4,578) — — — (4,578)

Severance expense — 270 — 241 511

Acquisition related expenses — 123 49 1,799 1,971

Restructuring expenses — — 304 24 328

Warehouse redesign expenses (2)

— 139 76 48 263

Pro forma adjustments (3)

Adjusted EBITDA (4)

$ 3,281 $ 3,043 $ 13,420 $ 27,607 $ 50,751

(1) For the year ended December 31, 2025, legal settlement gain, net included a net settlement of $6.4 million discussed in NOTE 13 — COMMITMENTS AND CONTINGENCIES, and adjusted for legal fees incurred from March 2, 2018 through March 31, 2025 of $1.8 million.

(2) For the year ended December 31, 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 December 31, 2025 or expected to be taken within 18 months of December 31, 2025, net of the benefits realized during the twelve months ended December 31, 2025.

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

segment related to reductions in employee expenses (i.e., including terminated employees) and costs saving for the International segment related to Project Concord.

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

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

Adjusted EBITDA is defined as net (loss) income, adjusted to exclude income tax (benefit) provision, interest expense, depreciation and amortization, gain on disposition of fixed assets, 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 .

Three Months Ended Year Ended

7 unchanged sentences

$ (6,260) $ (18,167) $ 344 $ 8,918 $ (15,165)

Loss on equity securities — 14,152 — — 14,152

Equity in losses, net of taxes

2,092 — — — 2,092

Income tax (benefit) provision

Income tax provision (benefit)

210 (57) 1,507 1,671 3,331

4 unchanged sentences

Stock compensation expense 807 1,037 1,042 1,034 3,920

Contingent consideration fair value adjustment — (50) — (600) (650)

(Gain) loss on extinguishments of debt, net — (1,520) — 759 (761)

Acquisition related expenses 95 641 210 143 1,089

Restructuring expenses 856 — — — 856

Warehouse redesign expenses (1)

4 unchanged sentences

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

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

Capital expenditures

Capital expenditures for the year ended December 31, 2025 were $4.4 million.

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’s risk management strategy includes the use of 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.

9 unchanged sentences

These interest rate swaps involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

In June 2019 the Company entered into interest rate swap agreements, with an aggregate notional value of $25.0 million and expire in February 2025.

In March 2024 and October 2024, the Company entered into new interest rate swap agreements, each with an aggregate notion value of $25.0 million and expire in August 2027.

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.

These interest rate swaps have not been designated as accounting hedges and are intended to serve as cash flow hedges to economically hedge the Company’s exposure to the variability in interest payments on a portion of its Term Loan borrowings.

Accordingly, changes in fair value are recognized in earnings in the period incurred.

The Company’s total outstanding notional value of interest rate swaps was $50.0 million at December 31, 2025.

The Company’s interest rate swaps that were designated 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 expired in March 2023.

The Company has no designated interest rate swaps at December 31, 2024.

Foreign Exchange Contracts

To reduce the impact of changes in foreign currency exchange rates on its results, from time to time the Company is a party to certain foreign exchange contracts, primarily to offset the earnings impact related to fluctuations in foreign currency exchange rates associated with inventory purchases.

with inventory purchases.

The Company designates these contracts for accounting purposes as cash flow hedges.

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

The aggregate gross notional values of foreign exchange contracts at December 31, 2024 and 2023 was $8.0 million and $9.8 million, respectively.

The aggregate gross notional value of foreign exchange contracts at December 31, 2025 and 2024 were zero and $8.0 million, respectively.

Dividends were declared in 2025 and 2024 as follows:

3 unchanged sentences

$0.0425 August 6, 2024 November 1, 2024 November 15, 2024

$0.0425 November 7, 2023 February 1, 2024 February 15, 2024

$0.0425 November 5, 2024 January 31, 2025 February 14, 2025

$0.0425 March 11, 2025 May 1, 2025 May 15, 2025

$0.0425 June 18, 2025 August 1, 2025 August 15, 2025

$0.0425 August 6, 2024 November 1, 2024 November 15, 2024

$0.0425 August 5, 2025 October 31, 2025 November 14, 2025

$0.0425 November 4, 2025 January 30, 2026 February 13, 2026

2 unchanged sentences

Net cash provided by operating activities was $7.6 million in 2025, compared to $18.6 million in 2024.

The decrease from 2024 compared to 2023 was attributable to increased use of cash related to inventory purchases, and timing of payments for accounts payable and accrued expenses, partially offset by timing of collections related to the Company’s accounts receivable.

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

Cash used in investing activities

Net cash used in investing activities was $4.3 million in 2025, compared to $2.2 million in 2024.

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

Cash used in financing activities

Net cash used in financing activities was $2.2 million in 2025 compared to $29.5 million in 2024.

The change from 2024 compared to 2023 was attributable to higher repayments of the Term Loan in the 2023 period and financing costs incurred in connection with the Amendment No.

2 to the Term Loan.

This was partially offset by higher proceeds from the revolving credit facility in the 2023 and no stock repurchases activities in the 2024 period.

The change from 2025 compared to 2024 was attributable to higher net proceeds from the revolving credit facility in the 2025 period, compared to net repayments of revolving credit facility in the 2024 period.

MATERIAL CASH REQUIREMENTS

1 unchanged sentence

As of December 31, 2025, the Company had an outstanding Term Loan facility, which matures on August 26, 2027, for an aggregate principal amount of $135 million, with $7.5 million amounts due within 12 months.

Future interest obligations associated with debt and interest rate swaps total $40.9 million, with $17.1 million payable within 12 months.

Estimated future interest obligations associated with debt and interest rate swaps total $25.9 million, with $15.5 million payable within 12 months.

The future interest obligations are estimated by assuming the amounts outstanding under the Company’s debt agreements and the interest rates as of December 31, 2025 remain consistent to the end of the debt agreements.

3 unchanged sentences

The Company has license agreements that require the payment of minimum royalties on sales of licensed products.

As of December 31, 2024, the estimated minimum royalties payable under the noncancellable term of these agreements amounted to $8.2 million payable within 12 months.

As of December 31, 2025, the estimated minimum royalties payable under the noncancellable terms of these agreements amounted to $8.6 million payable within 12 months.

Post-retirement benefit

3 unchanged sentences

As of December 31, 2025, in connection with the Wallace EPA Matter, the Company’s estimated remediation liability amounted to $5.3 million, with $0.8 million is expected to be paid within 12 months.

On February 7, 2024, the Company provided financial assurance of $5.6 million in the form of a letter of credit.

The Company has provided financial assurance of $5.6 million in the form of a letter of credit.

Hagerstown Facility Relocation

In connection with the relocation of the Company’s east coast distribution center to Hagerstown Facility the Company expects to incur the following:

i) Fixed lease payment obligations of $123.4 million, with $5.0 million payable in within the first 12 months of the lease which is expected to commence in March 2026.

ii) Capital expenditures of approximately $10.0 million related to equipment and certain leasehold improvements, of which $6.0 million is expected to be purchased in 2025.

iii) The Company expects to incur one-time exit costs to close its operations in Robbinsville of up to $7.0 million.

In connection with the relocation of the Company’s East Coast distribution center to the Hagerstown Facility the Company expects to incur the following:

i) Fixed lease payment obligations of $123.4 million, with $3.7 million payable in 2026.

The lease is expected to commence in April 2026.

ii) Capital expenditures of approximately $9.3 million related to equipment and certain leasehold improvements, with $7.0 million remaining to be purchased in the next 12 months.

iii) Estimated exit costs of $7.0 million, which are expected to be paid in the next 12 months.

This includes employee severance, certain employee relocation costs and remaining lease costs for the Robbinsville Facility through the end of the term.

These costs are expected to be incurred in 2025.

iv) The asset retirement obligations related to the Robbinsville fixed assets of $1.3 million is expected to be paid 2026.

iv) The Company expects to one-time relocation costs 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.

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

iv) The asset retirement obligations related to the Robbinsville warehouse of $1.4 million to be settled in the next 12 months.

iv) Estimated start-up costs of $7.0 million, which are expected to be paid in the next 12 months.

This includes recruitment, relocation of inventory, set up costs and lease expenses prior to the Hagerstown Facility being fully operational.

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-K

Item 7. Management’s Discussion and Analysis