What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-08-06 compared with 2026-05-07 · 235 added, 130 removed, 263 unchanged (58% of the section changed)

15 unchanged sentences

• Increase in supply chain costs, including raw materials, sourcing, transportation and energy;

• The impact of tariffs and trade policies, particularly with respect to China;

• The impact of tariffs and trade policies, particularly with respect to China, including the risk of frequent changes, legal challenges, or reinstatement in modified form;

• Indebtedness, compliance with credit agreements, and access to credit markets;

35 unchanged sentences

Tariff and Supply Chain Considerations

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

The Company sources almost all of its products 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.

17 unchanged sentences

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.

While guidance and processes relating to refunds continue to develop, it remains challenging to predict if, and when, any refunds will, in fact, be obtained and whether refunds would be paid in cash or credits against future duties or tariffs.

As of April 20, 2026, the CBP has launched Phase One of the Consolidated Administration and Processing of Entries ("CAPE") program to process refunds.

The Company is actively engaging with its custom brokers and outside legal counsel to assess and pursue potential refund claims related to the the IEEPA tariffs paid.

The Company estimates that the total tariff payments made related to the IEEPA tariffs totaled $41.7 million.

While the Company plans to pursue the recovery of the IEEPA tariffs paid, these amounts represent a gain contingency and have not been recognized in the consolidated financial statements as of March 31, 2026.

Net sales for the first quarter of 2026 U.S.

sales were favorably impacted by higher selling prices, however volume was impacted in certain channels due to softening consumer discretionary demand.

For the first quarter of 2026, U.S.

gross margin percentage improved by 170 basis points compared to the first quarter of 2025.

This improvement was in part driven by favorable product mix, which offset the combined impact of tariffs and our mitigation strategy.

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

administration also initiated additional trade remedy investigations pursuant to Section 301 of the Trade Act of 1974, one affecting 60 trading partners with respect to the prohibition of forced labor and another affecting 16 trading partners with respect to excess manufacturing capacity.

The administration further announced that it would be initiating additional investigations with respect to certain unidentified product sectors pursuant to Section 232 of the Trade Expansion Act of 1962.

In April 2026, the CBP launched Phase One of the Consolidated Administration and Processing of Entries ("CAPE") program to process refunds and begin making refund payments to importers of record in May 2026.

As of June 29, 2026, the CBP has launched Phase Two of the IEEPA refund claims process.

The Company has submitted all refunds claims under Phase One and continues to actively engage with its custom brokers and outside legal counsel for refunds that fall under Phase 2.

The total refund claims related to the IEEPA tariff totaled $41.7 million.

During the three months ended June 30, 2026, the Company concluded that $40.1 million of tariff refunds were probable of being recovered and recognized the refund as a reduction to cost of goods sold of $40.1 million in the condensed consolidated financial statements.

As of June 30, 2026, the Company received $3.5 million and recorded $36.6 million of outstanding IEEPA tariffs receivables within prepaid and other current assets in the condensed consolidated balance sheet.

Subsequent to the balance sheet date, the Company received an additional $32.9 million in tariff refunds.

Net sales for the second quarter of 2026 U.S.

sales were favorably impacted by higher selling prices and improved sales volume driven by club warehouse programs.

For the second quarter of 2026, U.S.

gross margin improved due to the benefit of the tariff refund, higher selling prices, partially offset by product mix.

The temporary Section 122 tariffs expired on July 24, 2026, and are the subject of ongoing legal challenges after being initially invalidated at the Court of International Trade, adding further uncertainty to the tariff outlook.

As the Section 122 tariffs were expiring, the U.S.

administration announced completion of a Section 301 investigation into the prohibition and elimination of merchandise produced with forced labor, imposing additional tariffs of 10% or 12.5% on sixty trading partners, affecting the majority of U.S.

The tariffs became effective July 24, 2026, and litigation challenging those tariffs was filed later that same day.

The Company 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.

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 it predict the effects that any such changes would have on the Company's business, capital expenditures, and results of operations.

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

2 unchanged sentences

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

Escalating geopolitical conflicts in the Middle East, including shipping disruptions in the Strait of Hormuz, have lead to increased volatility on global energy prices.

Escalating geopolitical conflicts in the Middle East, including shipping disruptions in the Strait of Hormuz, have led to increased volatility on global energy prices.

Sustained increases in energy costs could materially increase the Company’s product and transportation costs, including through higher input costs and increased fuel prices, which typically lead to fuel surcharges and higher freight rates from third-party logistics providers.

1 unchanged sentence

T he duration of the conflict and the potential for further escalation, including military actions, sanctions, or disruptions to key trade routes, could adversely affect the global macroeconomic environment, and in turn, negatively impact consumer spending and demand for the Company’s products.

The Company continues to monitor these developments, however the extent and duration of their impact remain uncertain.

The Company continues to monitor these developments;

however the extent and duration of their impact remain uncertain.

If energy prices remain elevated or if macroeconomic conditions deteriorate, the Company’s results of operations and financial condition could be materially adversely affected.

1 unchanged sentence

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 $6.0 million for employee severance, certain employee relocation costs, and remaining lease costs for the Robbinsville Facility.

For the three months ended March 31, 2026, the Company has incurred $1.2 million, primarily related to employee severance costs.

The remaining costs are expected to be incurred in 2026.

The Hagerstown Facility will require capital expenditures for equipment and certain leasehold improvements that are estimated to be approximately $9.6 million, of which $3.9 million remains to be purchased as of March 31, 2026.

The Company incurred capital expenditures related to this relocation of $3.4 million during the three months ended March 31, 2026 and $2.3 million during the year-ended December 31, 2025.

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 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.

The Company commenced operations at the Hagerstown Facility in the second quarter of 2026.

The initial ramp-up resulted in unplanned expenses and shipping delays.

Management has taken corrective actions and beginning in August, shipments are back to normal.

While the Company believes the disruption has been completely ameliorated, if shipping delays re-occur or other transition challenges arise, the Company's results of operations and financial condition could be materially adversely affected.

The new Hagerstown Facility requires capital expenditures for equipment and certain leasehold improvements that are estimated to be approximately $9.8 million, of which $3.2 million remains to be purchased as of June 30, 2026.

The Company incurred capital expenditures related to this relocation of $4.3 million during the six months ended June 30, 2026 and $2.3 million during the year ended December 31, 2025.

The Company has incurred the following expenses related to the closure of the Robbinsville Facility and the start-up of the Hagerstown Facility:

• $1.2 million and $2.4 million for the three and six months ended June 30, 2026, respectively, related to employee severance.

This expense has been recorded within restructuring expense in the condensed consolidated statement of operations.

• $2.2 million and $2.4 million for the three and six months ended June 30, 2026, respectively, related to exit and start-up costs which include relocation of inventory, recruiting and training expenses, set up costs and lease expenses for the nonoperational portion of the old and new facilities.

These expenses have been recorded within distribution expense in the condensed consolidated statement of operations.

• For the remainder of 2026, the Company expects to incur remaining costs of approximately $0.6 million, in employee severance, $2.7 million in exit costs and $4.6 million in start-up costs.

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

This included a conditional grant of $1.4 million toward project and equipment costs.

The Company's total capital expenditures estimated above are net of this amount.

The remaining incentives primarily relate to real property tax credits that will applied against real estate taxes payable over the lease term.

Project Concord

6 unchanged sentences

• On March 26, 2026, the Company announced a second reorganization of its international workforce in connection with Project Concord.

The restructuring expenses related to severance associated with the reorganization of $0.2 million was recorded in the three months ended March 31, 2026.

As of March 31, 2026, the Company expects to record additional approximately $0.2 million of restructuring charges in connection with Project Concord for severance and related costs.

The restructuring expenses related to severance associated with the reorganization of $0.2 million was recorded in the six months ended June 30, 2026.

As of June 30, 2026, the Company expects that restructuring activities related to this project to be completed by the end of the fourth quarter of 2026 and expects to incur additional costs of $0.3 million related to employee severance.

BUSINESS SEGMENTS

13 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2026 2025 2026 2025

Net sales 100.0 % 100.0 % 100.0 % 100.0 %

3 unchanged sentences

Selling, general and administrative expenses 28.0 28.5 26.8 25.4

Goodwill impairment — 25.2 — 12.2

Restructuring expenses 1.4 — 1.4 —

(Loss) income from operations

Income (loss) from operations

22.3 (28.2) 10.3 (13.3)

Interest expense (2.8) (3.8) (3.0) (3.6)

Mark to market gain (loss) on interest rate derivatives

Loss before income taxes

Income tax benefit

0.1 (0.2) 0.2 (0.3)

Income (loss) before income taxes

19.6 (32.2) 7.5 (17.2)

Income tax (provision) benefit

(5.7) 2.1 (2.3) 1.1

Net income (loss)

13.9 % (30.1) % 5.2 % (16.1) %

MANAGEMENT’S DISCUSSION AND ANALYSIS

THREE MONTHS ENDED MARCH 31, 2026 COMPARED TO THE THREE MONTHS ENDED

MARCH 31, 2025

Consolidated net sales for the three months ended March 31, 2026 were $143.5 million, representing an increase of $3.4 million, or 2.4%, as compared to net sales of $140.1 million for the corresponding period in 2025.

THREE MONTHS ENDED JUNE 30, 2026 COMPARED TO THE THREE MONTHS ENDED

JUNE 30, 2025

Consolidated net sales for the three months ended June 30, 2026 were $141.6 million, representing an increase of $9.7 million, or 7.4%, as compared to net sales of $131.9 million for the corresponding period in 2025.

In constant currency, a non-GAAP financial measure, which excludes the impact of foreign exchange fluctuations and was determined by applying 2026 average rates to 2025 local currency amounts, consolidated net sales increased by $9.5 million, or 7.2%, as compared to consolidated net sales in the corresponding period in 2025.

Net sales for the U.S.

segment for the three months ended March 31, 2026 were $130.7 million, an increase of $2.2 million, or 1.7%, as compared to net sales of $128.5 million for the corresponding period in 2025.

For the three months ended March 31, 2026, net sales were favorably impacted by higher selling prices, reflecting the implementation of price increases for the Company’s U.S.

segment for the three months ended June 30, 2026 were $128.2 million, an increase of $8.9 million, or 7.5%, as compared to net sales of $119.3 million for the corresponding period in 2025.

For the three months ended June 30, 2026, net sales were favorably impacted by higher selling prices, reflecting the implementation of price increases for the Company’s U.S.

customers that went into effect during the third quarter of 2025.

Net sales for the U.S.

segment’s Kitchenware product category were $78.5 million for the three months ended March 31, 2026, a decrease of $1.0 million, or 1.3%, as compared to $79.5 million for the corresponding period in 2025.

The decrease was driven by a decrease in sales for cutlery and boards and kitchen measurement products.

These decreases were partially offset by an increase in sales for kitchen tools.

segment’s Kitchenware product category were $85.4 million for the three months ended June 30, 2026, an increase of $2.9 million, or 3.5%, as compared to $82.5 million for the corresponding period in 2025.

The increase was driven by an increase in sales for kitchen tools and kitchen measurement products.

These increases were partially offset by a decrease in sales for cutlery and boards and bakeware products.

Net sales for the U.S.

segment’s Tableware product category were $25.9 million for the three months ended March 31, 2026, a decrease of $1.7 million, or 6.2%, as compared to $27.6 million for the corresponding period in 2025.

The decrease was primarily attributable to lower sales in the dollar channel for dinnerware.

segment’s Tableware product category were $23.6 million for the three months ended June 30, 2026, an increase of $2.3 million, or 10.8%, as compared to $21.3 million for the corresponding period in 2025.

The increase was primarily attributable to higher sales in the warehouse club channel for dinnerware.

Net sales for the U.S.

segment’s Home Solutions product category were $26.3 million for the three months ended March 31, 2026, an increase of $4.9 million, or 22.9%, as compared to $21.4 million for the corresponding period in 2025.

The increase was primarily attributable to higher sales for home décor products in the dollar channel and warehouse club programs.

Net sales for the International segment were $12.8 million for the three months ended March 31, 2026, an increase of $1.2 million, or 10.3%, as compared to net sales of $11.6 million for the corresponding period in 2025.

segment’s Home Solutions product category were $19.2 million for the three months ended June 30, 2026, an increase of $3.7 million, or 23.9%, as compared to $15.5 million for the corresponding period in 2025.

The increase was primarily attributable to higher sales for home décor products in the warehouse club and dollar channel.

Net sales for the International segment were $13.4 million for the three months ended June 30, 2026, an increase of $0.8 million, or 6.3%, as compared to net sales of $12.6 million for the corresponding period in 2025.

In constant currency, a non-GAAP financial measure, which excludes the impact of foreign exchange fluctuations, net sales increased by $0.7 million, or 5.3%, as compared to consolidated net sales in the corresponding period in 2025.

The increase in net sales was driven by higher sales in the Asia Pacific region.

Gross margin for the three months ended March 31, 2026 was $54.2 million, or 37.7%, as compared to $50.6 million, or 36.1%, for the corresponding period in 2025.

The increase was driven by higher selling prices in Asia-Pacific region, higher sales for retail customers in Australia and New Zealand, as well as higher sales in continental Europe.

These increases were partially offset by lower sales in the U.K.

Gross margin for the three months ended June 30, 2026 was $93.2 million, or 65.9%, as compared to $50.8 million, or 38.6%, for the corresponding period in 2025.

Gross margin for the U.S.

segment was $49.5 million, or 37.9%, for the three months ended March 31, 2026, as compared to $46.5 million, or 36.2%, for the corresponding period in 2025.

The improvement in the gross margin percentage was attributable to favorable product mix, higher selling prices, offset by higher tariffs.

Gross margin for the International segment was $4.7 million, or 36.7%, for the three months ended March 31, 2026, as compared to $4.1 million, or 35.3%, for the corresponding period in 2025.

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

segment was $87.5 million, or 68.3%, for the three months ended June 30, 2026, as compared to $46.7 million, or 39.1%, for the corresponding period in 2025.

The increase was driven by a benefit in the current period from tariff refunds of $40.1 million related to prior periods, higher selling prices, partially offset by product mix.

Gross margin for the International segment was $5.7 million, or 42.5%, for the three months ended June 30, 2026, as compared to $4.1 million, or 32.5%, for the corresponding period in 2025.

The increase in gross margin percentage was driven by customer mix and higher selling prices for products sold in the Asia-Pacific region.

Distribution expenses

Distribution expenses for the three months ended March 31, 2026 were $17.6 million, as compared to $18.1 million for the corresponding period in 2025.

Distribution expenses as a percentage of net sales were 12.3% for the three months ended March 31, 2026, as compared to 12.9% for the three months ended March 31, 2025.

Distribution expenses for the three months ended June 30, 2026 were $20.1 million, as compared to $17.3 million for the corresponding period in 2025.

Distribution expenses as a percentage of net sales were 14.2% for the three months ended June 30, 2026, as compared to 13.1% for the three months ended June 30, 2025.

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

segment were 10.9% and 11.5% for the three months ended March 31, 2026 and 2025, respectively.

Distribution expense during the three months ended March 31, 2026 included $0.2 million for relocation and redesign costs related to the Company’s warehouses.

segment were 12.8% and 11.4% for the three months ended June 30, 2026 and 2025, respectively.

Distribution expense during the three months ended June 30, 2026 and 2025 included $2.2 million and $0.1 million for relocation and 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 10.9% and 11.9% for the three months ended March 31, 2026 and 2025, respectively.

The decrease in expenses as a percentage of sales was attributable to

higher sales resulting in a favorable impact of fixed expenses, lower volume due to sales mix resulting in a decrease of employee expenses, and lower facility supply expenses.

The decrease was partially offset by higher freight rates.

Distribution expenses as a percentage of net sales for the International segment were 26.4% for the three months ended March 31, 2026, compared to 28.3% for the corresponding period in 2025.

As a percentage of sales shipped from the Company’s international warehouses distribution expenses were 23.2% and 25.0% for the three months ended March 31, 2026 and 2025, respectively.

The decrease in expenses as a percentage of sales was attributable to higher sales resulting in a favorable impact of fixed expenses and a decrease in variable warehouse expenses at third-party operated distribution facilities.

warehouses, excluding non-recurring expenses, distribution expenses were 11.9% and 11.0%

for the three months ended June 30, 2026 and 2025, respectively.

The increase in expenses as a percentage of sales was attributable to an increase in employee expenses as a result of reduced labor management efficiencies, higher insurance expenses and facility supply expenses.

The increase was partially offset by higher sales resulting in a favorable impact on fixed expenses, and lower freight-out expenses due to customer mix.

Distribution expenses as a percentage of net sales for the International segment were 27.3% for the three months ended June 30, 2026, compared to 29.8% for the corresponding period in 2025.

As a percentage of sales shipped from the Company’s international warehouses distribution expenses were 24.2% and 26.8% for the three months ended June 30, 2026 and 2025, respectively.

The decrease in expenses as a percentage of sales was attributable to higher sales resulting in a favorable impact of fixed expenses.

Selling, general and administrative expenses

Selling, general and administrative expenses for the three months ended March 31, 2026 were $36.8 million, an increase of $5.3 million, or 16.8%, as compared to $31.5 million for the corresponding period in 2025.

Selling, general and administrative expenses for the three months ended June 30, 2026 were $39.5 million, an increase of $2.0 million, or 5.3%, as compared to $37.5 million for the corresponding period in 2025.

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

segment were $28.2 million for the three months ended March 31, 2026, as compared to $30.0 million for the corresponding period in 2025.

As a percentage of net sales, selling, general and administrative expenses were 21.6% and 23.3% for the three months ended March 31, 2026 and 2025, respectively.

The decrease in selling, general and administrative expenses was attributable to lower employee expenses, a decrease in the provision for doubtful accounts in the current period, and lower advertising expenses.

This was partially offset by an increase in insurance expenses.

segment were $31.2 million for the three months ended June 30, 2026, as compared to $29.5 million for the corresponding period in 2025.

As a percentage of net sales, selling, general and administrative expenses were 24.3% and 24.7% for the three months ended June 30, 2026 and 2025, respectively.

The increase in selling, general and administrative expenses was attributable to higher incentive compensation, partially offset by a decrease in the provision for doubtful accounts in the current period.

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

Selling, general and administrative expenses for the International segment were $3.7 million for both the three months ended March 31, 2026 and 2025.

As a percentage of net sales, selling, general and administrative expenses were 28.9% and 31.9% for the three months ended March 31, 2026 and 2025, respectively.

Selling, general and administrative expenses remained flat year-over-year, as decreases in employee expenses and commission expenses were fully offset by unfavorable foreign currency exchange impacts.

Selling, general and administrative expenses for the International segment were $3.3 million for the three months ended June 30, 2026, as compared to $3.7 million for the corresponding period in 2025.

As a percentage of net sales, selling, general and administrative expenses were 24.6% and 29.4% for the three months ended June 30, 2026 and 2025, respectively.

The decrease in selling, general and administrative expenses was attributable to lower employee expenses and sales commissions.

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

Unallocated corporate expense for the three months ended March 31, 2026 was $4.9 million, as compared to unallocated corporate income of $2.2 million for the corresponding period in 2025.

The decrease compared to the prior period was due to the recognition of a net legal settlement gain of $6.4 million in the prior period, partially offset by an increase in professional fees and legal expenses in the current period.

Unallocated corporate expenses for the three months ended June 30, 2026 was $5.1 million, as compared to expenses of $4.3 million for the corresponding period in 2025.

The increase compared to the prior period was attributable to an increase in professional fees and legal expenses, and higher incentive compensation in the current period.

Restructuring expense

Restructuring expenses for the three months ended March 31, 2026 were $2.0 million, which consist of employee severance expenses related to the east coast distribution facility relocation of $1.2 million, sterling flatware manufacturing operations restructuring expense of $0.7 million, and Project Concord severance expense of $0.1 million.

Restructuring expenses for the three months ended June 30, 2026 were $2.0 million, which consist of employee severance expenses related to the east coast distribution facility relocation of $1.2 million, and restructuring expenses with the closure of certain manufacturing operations of $0.8 million.

See NOTE 1 — BASIS OF PRESENTATION AND SUMMARY OF ACCOUNTING POLICIES to the unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information.

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.

Interest expense

Interest expense was $4.5 million and $4.9 million for the three months ended March 31, 2026 and 2025, respectively.

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

Interest expense was $4.1 million and $5.1 million for the three months ended June 30, 2026 and 2025, 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 gain (loss) on interest rate derivatives

Mark to market gain on interest rate derivatives was $0.3 million for the three months ended March 31, 2026, as compared to mark to market loss of $0.5 million for the three months ended March 31, 2025.

The gain (loss) recognized for the three months ended March 31, 2026 and 2025, respectively, was attributable to the change in the fair value due to the change in the projected interest rate environment.

Mark to market gain on interest rate derivatives was $0.2 million for the three months ended June 30, 2026, as compared to mark to market loss of $0.2 million for the three months ended June 30, 2025.

The gain (loss) recognized for the three months ended June 30, 2026 and 2025, 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, 2026, the intent of the Company is to hold these derivative contracts until their maturity.

Income tax provision of $8.1 million and income tax benefit of $2.8 million for the three months ended June 30, 2026 and 2025, respectively, represent taxes on both U.S.

and foreign earnings at a combined effective income tax rate of 29.2% and benefit rate of 6.5%, respectively.

The effective tax rate for the three months ended June 30, 2026 differs from the federal statutory income tax rate of 21.0% primarily due to the impact of non-deductible expenses.

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 second quarter.

MANAGEMENT’S DISCUSSION AND ANALYSIS

SIX MONTHS ENDED JUNE 30, 2026 COMPARED TO THE SIX MONTHS ENDED

JUNE 30, 2025

Consolidated net sales for the six months ended June 30, 2026 were $285.1 million, an increase of $13.2 million, or 4.9%, as compared to net sales of $271.9 million for the corresponding period in 2025.

In constant currency, a non-GAAP financial measure, which excludes the impact of foreign exchange fluctuations and was determined by applying 2026 average rates to 2025 local currency amounts, consolidated net sales increased by $12.0 million, or 4.4%, as compared to consolidated net sales in the corresponding period in 2025.

Net sales for the U.S.

segment for the six months ended June 30, 2026 were $258.9 million, an increase of $11.1 million, or 4.5%, as compared to net sales of $247.8 million for the corresponding period in 2025.

For the six months ended June 30, 2026, 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.

Net sales for the U.S.

segment’s Kitchenware product category were $163.9 million for the six months ended June 30, 2026, an increase of $1.9 million, or 1.2%, as compared to $162.0 million for the corresponding period in 2025.

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

Net sales for the U.S.

segment’s Tableware product category were $49.5 million for the six months ended June 30, 2026, an increase of $0.6 million, or 1.2%, as compared to $48.9 million for the corresponding period in 2025.

The increase was driven by warehouse club programs for flatware and dinnerware, partially offset by lower sales for dinnerware in the dollar channel.

Net sales for the U.S.

segment’s Home Solutions product category were $45.5 million for the six months ended June 30, 2026, an increase of $8.6 million, or 23.3%, as compared to $36.9 million for the corresponding period in 2025.

The increase was primarily attributable to higher sales for home décor products in the warehouse club and dollar channel.

Net sales for the International segment were $26.2 million for the six months ended June 30, 2026, an increase of $2.1 million, or 8.7%, as compared to net sales of $24.1 million for the corresponding period in 2025.

In constant currency, a non-GAAP financial measure, which excludes the impact of foreign exchange fluctuations, net sales increased by $1.0 million, or 3.9%, as compared to consolidated net sales in the corresponding period in 2025.

The increase was driven by higher selling prices in Asia-Pacific region, higher sales for retail customers in Australia and New Zealand, as well as higher sales in continental Europe.

These increases were partially offset by lower sales in the U.K.

Gross margin for the six months ended June 30, 2026 was $147.4 million, or 51.7%, as compared to $101.5 million, or 37.3%, for the corresponding period in 2025.

Gross margin for the U.S.

segment was $136.9 million, or 52.9%, for the six months ended June 30, 2026, as compared to $93.4 million, or 37.7%, for the corresponding period in 2025.

The increase was driven by a benefit in the current period from tariff refunds of $40.1 million related to prior periods, higher selling prices, partially offset by product mix.

Gross margin for the International segment was $10.5 million, or 40.1%, for the six months ended June 30, 2026, as compared to $8.1 million, or 33.6%, for the corresponding period in 2025.

The increase in gross margin percentage was driven by customer mix and higher selling prices for products sold in the Asia-Pacific region.

Distribution expenses

Distribution expenses for the six months ended June 30, 2026 were $37.7 million, as compared to $35.4 million for the corresponding period in 2025.

Distribution expenses as a percentage of net sales were 13.2% for the six months ended June 30, 2026, as compared to 13.0% for the six months ended June 30, 2025.

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

segment were 11.8% and 11.4% for the six months ended June 30, 2026 and 2025, respectively.

Distribution expenses during the six months ended June 30, 2026 and 2025 included $2.4 million and $0.1 million, respectively, for relocation and 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 11.4% and 11.5% for the six months ended June 30, 2026 and 2025, respectively.

The decrease in expenses as a percentage of sales was attributable to lower volume due to sales mix resulting in a decrease of employee expenses, partially offset by higher insurance expenses.

Distribution expenses as a percentage of net sales for the International segment were 26.9% for the six months ended June 30, 2026, compared to 29.1% for the corresponding period in 2025.

As a percentage of sales shipped from the Company’s international warehouses, distribution expenses were 23.7% and 25.9% for the six months ended June 30, 2026 and 2025, respectively.

The decrease in expenses as a percentage of sales was primarily attributed to lower warehouse expenses, higher sales resulting in a favorable impact of fixed expenses, partially offset by an increase in freight-out expenses due to volume increase and customer mix.

Selling, general and administrative expenses

Selling, general and administrative expenses for the six months ended June 30, 2026 were $76.3 million, an increase of $7.3 million, or 10.6%, as compared to $69.0 million for the corresponding period in 2025.

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

segment were $59.4 million for the six months ended June 30, 2026, as compared to $59.5 million for the corresponding period in 2025.

As a percentage of net sales, selling, general and administrative expenses were 22.9% and 24.0% for the six months ended June 30, 2026 and 2025, respectively.

Selling, general and administrative expenses remained flat year-over-year, as decreases in employee expenses and provision for doubtful accounts in the current period were fully offset by higher incentive compensation.

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

Selling, general and administrative expenses for the International segment were $6.9 million for the six months ended June 30, 2026, as compared to $7.4 million for the corresponding period in 2025.

As a percentage of net sales, selling, general and administrative expenses were 26.3% and 30.7% for the six months ended June 30, 2026 and 2025, respectively.

The decrease was primarily attributable to lower employee expenses, sales commissions and advertising expenses, partially offset by unfavorable foreign currency exchange impacts.

Unallocated corporate expenses for the six months ended June 30, 2026 were $10.0 million, as compared to expenses of $2.1 million for the corresponding period in 2025.

The increase in expenses was driven by the recognition of a net legal settlement gain of $6.4 million in the prior period, an increase in professional fees and legal expenses, and higher incentive compensation in the current period.

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 expense

Restructuring expenses were $4.0 million for the six months ended June 30, 2026, which consist of restructuring expenses related to the east coast distribution facility relocation of $2.4 million, restructuring expenses with the closure of certain manufacturing operations of $1.4 million, and Project Concord severance expense of $0.2 million.

Interest expense

Interest expense was $8.6 million and $10.0 million for the six months ended June 30, 2026 and 2025, respectively.

The decrease in expense was a result of lower average outstanding borrowings in the current period.

Mark to market gain (loss) on interest rate derivatives

Mark to market gain on interest rate derivatives was $0.5 million for the six months ended June 30, 2026, as compared to mark to market loss of $0.7 million for the six months ended June 30, 2025.

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 March 31, 2026, the intent of the Company is to hold these derivative contracts until their maturity.

Income tax benefit of $1.7 million and $0.1 million for the three months ended March 31, 2026 and 2025, respectively, represent taxes on both U.S.

and foreign earnings at a combined effective income tax rate of 26.0% and 3.3%, respectively.

The effective tax rate for the three months ended March 31, 2026 differs from the federal statutory income tax rate of 21.0% primarily due to state and local tax expense, 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, partially offset by a benefit for federal credits.

The effective tax rate for the three months ended March 31, 2025 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.

As of June 30, 2026, the intent of the Company is to hold these derivative contracts until their maturity.

Income tax provision of $6.4 million and income tax benefit of $2.9 million for the six months ended June 30, 2026 and 2025, respectively, represent taxes on both U.S.

and foreign earnings at a combined effective income tax provision rate of 30.2% and benefit rate of 6.2%, respectively.

The effective tax rate for the six months ended June 30, 2026 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.

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 second quarter.

LIQUIDITY AND CAPITAL RESOURCES

2 unchanged sentences

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 March 31, 2026, the Company had cash and cash equivalents of $13.9 million, compared to $4.3 million at December 31, 2025.

Working capital was $220.1 million at March 31, 2026, compared to $242.6 million at December 31, 2025.

Liquidity as of March 31, 2026 was $110.2 million, consisting of $13.9 million of cash and cash equivalents, $80.0 million of availability under the ABL Agreement, limited by the Term Loan financial covenant, and $16.3 million of available funding under the Receivables Purchase Agreement.

At June 30, 2026, the Company had cash and cash equivalents of $5.5 million, compared to $4.3 million at December 31, 2025.

Working capital was $195.9 million at June 30, 2026, compared to $242.6 million at December 31, 2025.

Liquidity as of June 30, 2026 was $150.6 million, consisting of $5.5 million of cash and cash equivalents, $128.3 million of availability under the ABL Agreement, and $16.8 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.

2 unchanged sentences

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

For the three months ended March 31, 2026, inventory turnover was 1.9 times, or 194 days, as compared to 1.8 times, or 208 days, for the three months ended March 31, 2025.

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.

For the three months ended June 30, 2026, inventory turnover was 1.0 times, or 365 days, as compared to 1.5 times, or 241 days, for the three months ended June 30, 2025.

Inventory turns improved primarily due to the recognition of tariff refunds related to prior periods.

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

However, if circumstances were to adversely change, the Company may seek alternative sources of liquidity including debt and/or equity financing.

However, there can be no assurance that any such alternative sources would be available or sufficient.

The Company is in active negotiations with potential lenders to refinance its current revolving credit facility and Term Loan.

The Company cannot provide assurance that it will successfully complete a refinancing on favorable terms, or at all.

The Company closely monitors the creditworthiness of its customers.

2 unchanged sentences

On August 26, 2022, the Company entered into Amendment No.

2 (the “Amendment”) to the Company’s credit agreement, dated as of March 2, 2018 (as amended, the “ABL Agreement”) among the Company, as a Borrower, certain subsidiaries of the Company, as Borrowers and/or Loan Parties, JPMorgan Chase Bank, N.A., as Administrative Agent and a Lender.

2 (the “Amendment”) to the Company’s credit agreement, dated as of March 2, 2018 (as amended, the “ABL Agreement”) among the Company, as a Borrower, certain subsidiaries of the

Company, as Borrowers and/or Loan Parties, JPMorgan Chase Bank, N.A., as Administrative Agent and a Lender.

The ABL Agreement provides for a senior secured asset-based revolving credit facility in the maximum aggregate principal amount of $200.0 million, which facility will mature on August 26, 2027.

2 unchanged sentences

2 to amend the Loan Agreement, dated as of March 2, 2018, among the Company, as Borrower, the other loan parties from time to time party thereto, the lenders from time to time party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent (as amended, the “Term Loan” and together with the ABL Agreement, the “Debt Agreements”).

The Term Loan has a principal amount of $150.0 million, and matures on August 26, 2027.

The Term Loan had an initial principal amount of $150.0 million, and matures on August 26, 2027.

The Term Loan requires the Company to make quarterly payments of principal each equal to 1.25% of the aggregate principal amount of the Term Loan, which commenced on March 31, 2024, with the remaining balance payable on the maturity date.

Term Loan requires the Company to make an annual prepayment of principal, beginning with the fiscal year ending December 31, 2024, based upon a percentage of the Company’s excess cash flow, (“Excess Cash Flow”), if any.

The Term Loan requires the Company to make an annual prepayment of principal, beginning with the fiscal year ending December 31, 2024, based upon a percentage of the Company’s excess cash flow, (“Excess Cash Flow”), if any.

The percentage applied to the Company’s Excess Cash Flow is based on the Company’s Total Net Leverage Ratio (as defined in the Debt Agreements).

4 unchanged sentences

The Incremental Term 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 March 31, 2026 and December 31, 2025, the total availability under the ABL Agreement were as follows (in thousands):

March 31, 2026

As of June 30, 2026 and December 31, 2025, the total availability under the ABL Agreement were as follows (in thousands):

June 30, 2026

December 31, 2025

3 unchanged sentences

Total availability under the ABL Agreement $ 128,264 $ 119,919

(1) At June 30, 2026, the outstanding principal under the ABL Agreement is classified as current in the condensed consolidated balance sheet as the springing maturity of the ABL Agreement falls due in the next 12 months.

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.

3 unchanged sentences

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 March 31, 2026, the availability under the ABL Agreement, as limited by the Term Loan financial covenant, was $80.0 million.

As of June 30, 2026, the availability under the ABL Agreement was $128.3 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):

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

Current portion of Term Loan:

6 unchanged sentences

Total Non-current portion of Term Loan $ 110,332 $ 125,927

As of March 31, 2026 the Company estimates that no excess cash flow payment will be due for 2026.

During the three months ended June 30, 2026, the Company made a voluntary prepayment under the Term Loan of $20.0 million.

The prepayment was applied to reduce the outstanding principal and satisfied remaining quarterly payments due under the loan.

Subsequent to June 30, 2026, the Company made a second voluntary prepayment of $20.0 million.

As of June 30, 2026, the Company estimates that no Excess Cash Flow payment will be due for 2026.

For the year ended December 31, 2025, there was no Excess Cash Flow payment due for 2025.

3 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.

5 unchanged sentences

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 March 31, 2026 was between 3.33% and 7.13%.

The Company paid a commitment fee of 0.25% on the unused portion of the ABL Agreement during the three months ended March 31, 2026.

The interest rate on outstanding borrowings under the ABL Agreement at June 30, 2026 was between 5.10% and 7.13%.

The Company paid a commitment fee of 0.25% on the unused portion of the ABL Agreement during the six months ended June 30, 2026.

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 March 31, 2026 was 9.29%.

The interest rate on outstanding borrowings under the Term Loan at June 30, 2026 was 9.27%.

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

2 unchanged sentences

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 March 31, 2026.

The Company was in compliance with the covenants of the Debt Agreements at June 30, 2026.

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.

1 unchanged sentence

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 March 31, 2026 was $52.7 million.

Capital expenditures for the three months ended March 31, 2026 were $3.8 million.

The Company’s adjusted EBITDA (including pro forma adjustments), for the trailing twelve months ended June 30, 2026 was $92.0 million.

Capital expenditures for the six months ended June 30, 2026 were $5.2 million.

Non-GAAP financial measure

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, and management believes that exclusion of certain items allows for more accurate period-to-period comparison of the Company’s operating performance by investors and analysts.

This measure is provided because management of the Company uses this financial measure in evaluating the Company’s on-going financial results and trends, and management believes that exclusion of certain items allows for more accurate period-to-period comparison of the Company’s operating performance by investors and analysts.

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

2 unchanged sentences

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 (loss) income, as reported, to Adjusted EBITDA, for each of the last four quarters and the 12 months ended March 31, 2026:

Quarter Ended Twelve Months Ended March 31, 2026

June 30, 2025 September 30,

2025 December 31,

The following is a reconciliation of the net (loss) income, as reported, to Adjusted EBITDA, for each of the last four quarters and the 12 months ended June 30, 2026:

Quarter Ended Twelve Months Ended June 30, 2026

September 30, 2025 December 31,

2025 March 31,

2026 June 30,

(in thousands)

1 unchanged sentence

$ (1,189) $ 18,152 $ (4,772) $ 19,609 $ 31,800

Income tax (benefit) provision

Income tax provision (benefit)

2,861 (3,220) (1,676) 8,104 6,069

4 unchanged sentences

8 (1) (294) (210) (497)

Goodwill impairment 33,237 — — — 33,237

Stock compensation expense 994 201 1,043 949 3,187

8 unchanged sentences

$ 13,420 $ 27,607 $ 7,388 $ 43,130 $ 92,045

(1) For the twelve months ended March 31, 2026, warehouse relocation and redesign expenses were related to the U.S.

(2) Pro forma adjustments represent operating expense reductions projected by the Company as a result of actions taken through March 31, 2026 or expected to be taken within 18 months of March 31, 2026, net of the benefits realized during the twelve months ended March 31, 2026.

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

segment related to reductions in employee expenses and cost savings for the International segment related to Project Concord.

(1) For the twelve months ended June 30, 2026, warehouse relocation and redesign expenses were related to the U.S.

(2) Pro forma adjustments represent operating expense reductions projected by the Company as a result of actions taken through June 30, 2026 or expected to be taken within 18 months of June 30, 2026, net of the benefits realized during the twelve months ended June 30, 2026.

These actions include cost savings for the International segment related to Project Concord.

(3) 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 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, and other items detailed in the table above that are consistent with exclusions permitted by the Company’s debt agreements.

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

Accounts Receivable Purchase Agreement

6 unchanged sentences

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 months ended March 31, 2026 and March 31, 2025.

At March 31, 2026, $16.3 million of accounts receivable were available for sale to HSBC, net of applicable charges.

The Company did not sell receivables to HSBC during the three and six months ended June 30, 2026 and June 30, 2025.

At June 30, 2026, $16.8 million of accounts receivable were available for sale to HSBC, net of applicable charges.

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.

3 unchanged sentences

The Company has limited its credit risk by entering into derivative transactions exclusively with investment-grade rated financial institutions and monitors the creditworthiness of these financial institutions on an ongoing basis.

The Company utilizes standard counterparty master netting agreements that net certain foreign currency and interest rate swap transactions in the event of the insolvency of one of the parties to the transaction.

The Company utilizes standard counterparty master netting agreements that net certain foreign currency and interest rate swap transactions in the event of the insolvency of

one of the parties to the transaction.

These master netting arrangements permit the Company to net amounts due from the Company to counterparty with amounts due to the Company from the same counterparty.

6 unchanged sentences

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 March 31, 2026.

The Company’s total outstanding notional value of interest rate swaps was $50.0 million at June 30, 2026.

Foreign Exchange Contracts

2 unchanged sentences

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

The aggregate gross notional value of foreign exchange contracts at March 31, 2026 was zero.

The aggregate gross notional value of foreign exchange contracts at June 30, 2026 was zero.

Operating activities

Net cash provided by operating activities was $33.8 million for the three months ended March 31, 2026, as compared to net cash provided by operating activities of $16.7 million for the three months ended March 31, 2025.

The increase from 2026 compared to 2025 was attributable to lower investment in inventory, timing of collections related to the Company's accounts receivables, and timing of payments for accounts payable and accrued expenses, partially offset by lower operating results in the current period.

Net cash provided by operating activities was $46.0 million for the six months ended June 30, 2026, as compared to net cash provided by operating activities of $26.1 million for the six months ended June 30, 2025.

The increase from 2026 compared to 2025 was attributable to higher operating results, the timing of payments for accounts payable and accrued expenses, and a lower investment in inventory.

This was partially offset by the timing of accounts receivable collections and the changes in the Company's prepaid expenses and other current assets in the current period.

Investing activities

Net cash used in investing activities was $3.8 million and $1.6 million for the three months ended March 31, 2026 and 2025, respectively.

Net cash used in investing activities was $5.2 million and $2.7 million for the six months ended June 30, 2026 and 2025, 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 $20.3 million for the three months ended March 31, 2026, as compared to net cash used in financing activities of $7.8 million for the three months ended March 31, 2025.

The change was attributable to higher net repayments of revolving credit facility in the 2026 period.

Net cash used in financing activities was $39.6 million for the six months ended June 30, 2026, as compared to net cash used in financing activities of $14.4 million for the six months ended June 30, 2025.

The change was attributable to higher repayments of the term loan and higher net repayments of the revolving credit facility in the 2026 period.

Stock repurchase program

1 unchanged sentence

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 three months ended March 31, 2026.

As of March 31, 2026, the remaining dollar amount available for repurchases under the Board of Directors’ authorized plan was $11.1 million.

No shares were repurchased during the six months ended June 30, 2026.

As of June 30, 2026, 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

1 unchanged sentence

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