What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-19 compared with 2024-08-20 · 91 added, 77 removed, 147 unchanged (53% of the section changed)

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In addition, we import, distribute and retail accessories and casegoods (wood) furniture products under the Kincaid ® , American Drew ® , Hammary ® , and Joybird ® tradenames.

As of July 27, 2024, our supply chain operations included the following:

As of October 26, 2024, our supply chain operations included the following:

• Five major manufacturing locations and 16 distribution centers in the United States and three facilities in Mexico to support our speed-to-market and customization strategy

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• A global trading company in Hong Kong which helps us manage our Asian supply chain by establishing and maintaining relationships with our Asian suppliers, as well as identifying efficiencies and savings opportunities

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During the second quarter of fiscal 2024, we announced actions intended to drive efficiencies and optimize our manufacturing capacity in our global supply chain operations.

As part of this initiative, we made the decision to shift upholstery production from our Ramos, Mexico operations to our other upholstery plants and relocate our cut and sew operations back to Ramos, Mexico, resulting in the permanent closure of our leased cut and sew facility in Parras, Mexico.

As a result of these actions, charges were recorded within the Wholesale segment in the second quarter of fiscal 2024, totaling $3.6 million in cost of sales for severance-related expenses, and $3.0 million in SG&A expense for the accelerated depreciation of fixed assets.

We also participate in two consolidated joint ventures in Thailand that support our international businesses:

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All 537 La-Z-Boy Comfort Studio ® locations are independently owned and operated.

◦ In total, we have approximately 7.6 million square feet of proprietary floor space dedicated to selling La-Z-Boy branded products in North America.

◦ In total, we have approximately 7.6 million square feet of proprietary floor space dedicated to selling La-Z-Boy branded products in the United States and Canada.

◦ We also have approximately 2.8 million square feet of floor space outside of the United States and Canada dedicated to selling La-Z-Boy branded products.

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We expect this new messaging will enhance the appeal of our brand with a broader consumer base.

Further, our goal is to connect with consumers along their purchase journey through multiple means, whether online or in person.

Further, our goal is to connect with consumers along their purchase

journey through multiple means, whether online or in person.

We are driving change throughout our digital platforms to improve the user experience, with a specific focus on the ease with which customers browse through our broad product assortment, customize products to their liking, find stores to make a purchase, or purchase at www.la-z-boy.com.

• Growing our La-Z-Boy Furniture Galleries ® store network .

We expect our strategic initiatives in this area to generate growth in our Retail segment through an increased company-owned store count and in our Wholesale segment as our

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proprietary distribution network expands.

We expect our strategic initiatives in this area to generate growth in our Retail segment through an increased company-owned store count and in our Wholesale segment as our proprietary distribution network expands.

We are not only focused on growing the number of locations, but also on upgrading existing store locations to our new concept designs.

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• Corporate and Other .

Corporate and Other includes the shared costs for corporate functions, including human resources, information technology, finance and legal, in addition to revenue generated through royalty agreements with companies licensed to use the La-Z-Boy ® brand name on various products.

companies licensed to use the La-Z-Boy ® brand name on various products.

We consider our corporate functions to be other business activities and have aggregated them with our other insignificant operating segments, including our global trading company in Hong Kong and Joybird, an e-commerce retailer that manufactures upholstered furniture, such as sofas, loveseats, chairs, ottomans, sleeper sofas and beds, and also imports casegoods (wood) furniture, such as occasional tables and other accessories.

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None of the operating segments included in Corporate and Other meet the requirements of reportable segments.

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Results of Operations

Fiscal 2025 First Quarter Compared with Fiscal 2024 First Quarter

Fiscal 2025 Second Quarter Compared with Fiscal 2024 Second Quarter

La-Z-Boy Incorporated

Quarter Ended

(Unaudited, amounts in thousands, except percentages) 7/27/2024 7/29/2023 % Change

Quarter Ended Six Months Ended

(Unaudited, amounts in thousands, except percentages) 10/26/2024 10/28/2023 % Change 10/26/2024 10/28/2023 % Change

Sales $ 521,027 $ 511,435 1.9% $ 1,016,559 $ 993,086 2.4 %

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Operating margin 7.4% 6.6% 7.0% 6.9%

Consolidated sales increased $13.9 million, or 3%, in the first quarter of 2025, compared with the same period a year ago.

The increase in sales was primarily driven by higher delivered volume to external customers within our Wholesale segment along with incremental sales resulting from our Retail acquisitions.

These increases were partially offset as the first quarter of fiscal 2024 included residual backlog deliveries within our Retail segment from prior periods.

Consolidated sales increased $9.6 million, or 2%, and $23.5 million, or 2%, in the second quarter and first six months of fiscal 2025, respectively, compared with the same periods a year ago.

The increase during the second quarter was primarily driven by incremental sales resulting from our Retail acquisitions and higher delivered volume in our Joybird business.

The first six months of fiscal 2025 further benefited from higher delivered volume to external customers, including the addition of new major wholesale dealers, within our Wholesale segment.

Operating Margin

Operating margin, which is calculated as operating income as a percentage of sales, decreased 70 basis points in the first quarter fiscal 2025, compared with the same period a year ago.

• Gross margin, which is calculated as gross profit as a percentage of sales, increased 40 basis points in the first quarter of fiscal 2025 compared with the same period a year ago.

◦ The improvement in gross margin during the first quarter of fiscal 2025 compared with the same period a year ago was primarily due to lower input costs, led by reduced commodity prices, improved sourcing, and favorable duty expense.

◦ Partially offsetting the item above, changes in our consolidated mix led to a 100 basis point decrease in gross margin in the first quarter of fiscal 2025 compared with the same period a year ago, driven by a higher percentage of sales in our Wholesale segment, which has a lower gross margin than our Retail segment.

• SG&A expenses as a percentage of sales increased 110 basis points in the first quarter of fiscal 2025 compared with the same period a year ago.

◦ The increase in SG&A expense as a percentage of sales during the first quarter of fiscal 2025 compared with the same period a year ago was primarily due to reduced fixed cost leverage within our Retail segment, resulting from lower delivered sales relative to selling expenses and fixed cost increases supporting our long-term strategy of investing in store expansion and growth of our Retail segment.

◦ Partially offsetting the item above, changes in our consolidated mix led to a 110 basis point decrease in SG&A expenses as a percentage of sales in the first quarter of fiscal 2025 compared with the same period a year ago, driven by a higher percentage of sales in our Wholesale segment, which has a lower SG&A expense as a percentage of sales than our Retail segment.

Operating margin, which is calculated as operating income as a percentage of sales, increased 80 basis points and 10 basis points in the second quarter and first six months of fiscal 2025, respectively, compared with the same periods a year ago.

• Gross margin, which is calculated as gross profit as a percentage of sales, increased 70 basis points and 60 basis points in the second quarter and first six months of fiscal 2025, respectively, compared with the same periods a year ago.

◦ Changes in our consolidated mix led to a 60 basis point increase in gross margin in the second quarter of fiscal 2025 compared with the same period a year ago, driven by growth of our Retail segment, which has a higher gross margin than our Wholesale segment.

◦ During the second quarter of fiscal 2024, we recognized $3.6 million of severance-related charges as part of our global supply chain optimization initiative, resulting in a comparative gross margin increase of 70 basis points and 40 basis points in second quarter and first six months of fiscal 2025, respectively.

◦ Demand and macroeconomic challenges in our casegoods import business negatively impacted gross margin during the second quarter and first six months of fiscal 2025, compared with the same periods a year ago.

◦ Lower input costs, led by reduced commodity prices and improved sourcing, drove an increase in gross margin during the first six months of fiscal 2025, compared with the same period a year ago.

The second quarter of fiscal 2024 experienced favorable duty expense, more than offsetting the benefit of lower commodity costs in the second quarter of fiscal 2025, resulting in a comparative decrease in gross margin.

• SG&A expenses as a percentage of sales decreased 10 basis points and increased 50 basis points in the second quarter and first six months of fiscal 2025, respectively, compared with the same periods a year ago.

◦ Changes in our consolidated mix led to a 60 basis point increase in SG&A expense as a percentage of sales in the second quarter of fiscal 2025 compared with the same period a year ago, driven by growth of our Retail segment, which has a higher SG&A expense as a percentage of sales than our Wholesale segment.

◦ As part of our global supply chain optimization initiative, during the first quarter of fiscal 2024 we recognized a $1.2 million gain related to the settlement of our Torreón, Mexico lease obligation on previously impaired long-lived assets and during the second quarter of fiscal 2024, we recognized $3.0 million in accelerated

deprecation related to long-lived assets at our Ramos, Mexico facility.

Together, these items resulted in a comparative 60 basis point and 20 basis point decrease in SG&A expense as a percentage of sales in the second quarter and first six months of fiscal 2025, respectively.

◦ Reduced marketing expense relative to the prior year, in which we launched our Long Live the Lazy campaign, drove a decrease in SG&A expense as a percentage of sales in the second quarter and first six months of fiscal 2025.

◦ SG&A expense as a percentage of sales increased in the second quarter of fiscal 2025 compared with the same period a year ago, due to fixed cost deleverage on lower sales in our international wholesale business due to a significant temporary customer disruption.

◦ The remaining increase in SG&A expense as a percentage of sales in the first six months of fiscal 2025 was primarily due to increased selling expenses and fixed costs resulting from acquisitions of independently owned La-Z-Boy Furniture Galleries ® and retail store expansion, both to support our long-term strategy of growing our Retail segment.

We discuss each segment’s results in the following section.

Retail Segment

Quarter Ended

(Unaudited, amounts in thousands, except percentages) 7/27/2024 7/29/2023 % Change

Quarter Ended Six Months Ended

(Unaudited, amounts in thousands, except percentages) 10/26/2024 10/28/2023 % Change 10/26/2024 10/28/2023 % Change

Sales $ 221,564 $ 214,309 3.4% $ 423,934 $ 422,552 0.3 %

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Operating margin 12.6% 13.0% 11.5% 13.5%

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The Retail segment’s sales decreased $5.9 million, or 3%, in the first quarter of fiscal 2025 compared with the same period a year ago, primarily due to a decline in delivered same-store sales, as the prior year benefited from the delivery of residual backlog from prior periods.

The decrease in delivered same-store sales was partially offset by a $10.5 million increase in sales during the first quarter of fiscal 2025 from our retail store acquisitions that occurred in fiscal 2024 and fiscal 2025.

Written same-store sales were down 3% in the first quarter of fiscal 2025 compared with the same period a year ago, primarily due to softer industry-wide demand as a result of a challenging macroeconomic environment.

Same-store sales include the sales of all currently active stores which have been open and company-owned for each comparable period.

The Retail segment’s sales increased $7.3 million, or 3%, and $1.4 million, or 0.3%, in the second quarter and first six months of fiscal 2025, respectively, compared with the same periods a year ago.

The increase in sales was primarily due to $12.0 million and $22.5 million of incremental sales during the second quarter and first six months of fiscal 2025, respectively, from our retail store acquisitions that occurred in fiscal 2024 and fiscal 2025, partially offset by a decline in delivered same-store sales.

Written same-store sales were down 1% and 2% in the second quarter and first six months of fiscal 2025, respectively, compared with the same periods a year ago, primarily due to softer industry-wide demand as a result of a challenging macroeconomic environment.

Same-store sales include the sales of all currently active stores that have been open and company-owned for each comparable period.

Operating Margin

The Retail segment's operating margin decreased 390 basis points in the first quarter of fiscal 2025 compared with the same period a year ago.

• Gross margin increased 10 basis points in the first quarter of fiscal 2025 compared with the same period a year ago, as promotional activity was more than offset by a favorable shift in product mix towards higher priced products.

• SG&A expenses as a percentage of sales increased 400 basis points in the first quarter of fiscal 2025 compared with the same period a year ago, primarily due to lower delivered sales relative to selling expenses and fixed cost increases supporting our long-term strategy of investing in store expansion and growth of our Retail segment.

The Retail segment's operating margin decreased 40 basis points and 200 basis points in the second quarter and first six months of fiscal 2025, respectively, compared with the same periods a year ago.

• Gross margin increased 60 basis points and 40 basis points in the second quarter and first six months of 2025, respectively, compared with the same periods a year ago, primarily due to a favorable shift in product mix towards higher priced products.

• SG&A expenses as a percentage of sales increased 100 basis points and 240 basis points in the second quarter and first six months of fiscal 2025, respectively, compared with the same periods a year ago, primarily due to increased selling expenses and fixed costs resulting from our acquisitions of independently owned La-Z-Boy Furniture Galleries ® and retail store expansion, both to support our long-term strategy of growing our Retail segment.

Wholesale Segment

Quarter Ended

(Unaudited, amounts in thousands, except percentages) 7/27/2024 7/29/2023 % Change

Quarter Ended Six Months Ended

(Unaudited, amounts in thousands, except percentages) 10/26/2024 10/28/2023 % Change 10/26/2024 10/28/2023 % Change

Sales to external customers $ 258,983 $ 263,738 $ 515,003 $ 499,989

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Operating margin 6.7% 5.9% 6.8% 6.4%

The Wholesale segment’s sales increased $17.4 million, or 5%, in the first quarter of fiscal 2025 compared with the same period a year ago.

Over the same period, intercompany sales from our Wholesale segment to our Retail segment decreased 2%.

The increase in sales primarily reflects higher delivered volume to external customers including the addition of new major wholesale dealers, partially offset by lower delivered volume in our casegoods businesses.

The Wholesale segment’s sales decreased $1.1 million, or 0.3%, and increased $16.4 million, or 2%, in the second quarter and first six months of fiscal 2025, respectively, compared with the same periods a year ago.

Over the same periods, intercompany sales from our Wholesale segment to our Retail segment increased 4% and 1%, respectively.

Compared with the same periods a year ago, sales volume increased during the first six months of fiscal 2025, reflecting higher delivered volume to external customers, but declined during the second quarter of fiscal 2025, mainly due to a significant temporary customer disruption in our international wholesale business.

Additionally, both the second quarter and first six months of fiscal 2025 benefited from a favorable shift in product mix toward higher price products.

Operating Margin

The Wholesale segment's operating margin decreased 20 basis points in the first quarter of fiscal 2025 compared with the same period a year ago.

• Gross margin increased 30 basis points in the first quarter of fiscal 2025 compared with the same period a year ago.

◦ Lower input costs, led by reduced commodity prices, improved sourcing, and favorable duty expense drove a 160 basis point increase in gross margin during the first quarter of fiscal 2025 compared with the same period a year ago.

◦ Partially offsetting the item above, an unfavorable shift in channel mix towards external customers, which generally carry products with a lower gross margin than products sold to Furniture Galleries, led to a 120 basis point decrease in gross margin during the first quarter of fiscal 2025 compared with the same period a year ago.

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• SG&A expense as a percentage of sales increased 50 basis points in the first quarter of fiscal 2025 compared with the same period a year ago.

During the first quarter of fiscal 2024 we terminated our lease on the Torreón, Mexico facility and recognized a $1.2 million gain related to the settlement of our lease obligation on previously impaired long-lived assets, resulting in a comparative 40 basis point increase in SG&A expense as a percentage of sales.

The Wholesale segment's operating margin increased 80 basis points and 40 basis points in the second quarter and first six months of fiscal 2025, respectively, compared with the same periods a year ago

• Gross margin decreased 20 basis points and was flat in the second quarter and first six months of fiscal 2025, respectively, compared with the same periods a year ago.

◦ Demand and macroeconomic challenges in our casegoods import business, drove a 70 basis point and 50 basis point decrease in gross margin during the second quarter and first six months of fiscal 2025, respectively, compared with the same periods a year ago.

◦ Lower input costs, led by reduced commodity prices and improved sourcing drove a 60 basis point increase in gross margin during the first six months of fiscal 2025, compared with the same period a year ago.

◦ An unfavorable shift in channel mix towards external customers, which generally carry products with a lower gross margin than products sold to La-Z-Boy Furniture Galleries ® , led to a 60 basis point decrease in gross margin during the first six months of fiscal 2025 compared with the same period a year ago.

◦ During the second quarter of fiscal 2024, we recognized $3.6 million in severance-related charges as part of our global supply chain optimization initiative, resulting in comparative gross margin increase of 100 basis points and 50 basis points in second quarter and first six months of fiscal 2025, respectively.

• SG&A expense as a percentage of sales decreased 100 basis points and 40 basis points in the second quarter and first six months of fiscal 2025, respectively, compared with the same periods a year ago.

Together, these items resulted in a comparative 80 basis point and 30 basis point decrease in SG&A expense as a percentage of sales in the second quarter and first six months of fiscal 2025, respectively.

◦ Reduced marketing expense relative to the prior year, in which we launched our Long Live the Lazy campaign, drove a 70 basis point and 60 basis point decrease in SG&A expense as a percentage of sales in the second quarter and first six months of fiscal 2025, respectively.

◦ Partially offsetting the items above, SG&A expense as a percentage of sales increased 40 basis points and 30 basis points in the second quarter and first six months of fiscal 2025, respectively, from fixed cost deleverage on lower sales in our international wholesale business due to a significant temporary customer disruption.

Corporate and Other

Quarter Ended

(Unaudited, amounts in thousands, except percentages) 7/27/2024 7/29/2023 % Change

Quarter Ended Six Months Ended

(Unaudited, amounts in thousands, except percentages) 10/26/2024 10/28/2023 % Change 10/26/2024 10/28/2023 % Change

Sales $ 42,087 $ 36,232 16.2% $ 80,795 $ 76,293 5.9 %

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Operating loss (13,654) (15,773) 13.4% (25,932) (34,014) 23.8 %

Corporate and Other sales decreased $1.4 million in the first quarter of fiscal 2025 compared with the same period a year ago, primarily led by Joybird sales.

Joybird sales decreased $1.0 million to $34.6 million in the first quarter of fiscal 2025, as higher delivered volume was more than offset by promotional activity.

Written sales for Joybird increased 9% in the first quarter of fiscal 2025, compared with the same period a year ago.

Intercompany eliminations decreased in the first quarter of fiscal 2025 compared with the same period a year ago due to lower sales from our Wholesale segment to our Retail segment.

Corporate and Other sales increased $5.9 million and $4.5 million in the second quarter and first six months of fiscal 2025, respectively, compared with the same periods a year ago.

The change in sales was primarily led by Joybird sales which increased $6.3 million to $38.7 million and $5.4 million to $73.2 million in the second quarter and first six months of fiscal 2025, respectively, compared with the same periods a year ago, as higher delivered volume more than offset promotional activity.

Written sales for Joybird increased 1% and 5% in the second quarter and first six months of fiscal 2025, respectively, compared with the same periods a year ago.

Intercompany eliminations increased in the second quarter of fiscal 2025 compared with the same period a year ago due to higher sales from our Wholesale segment to our Retail segment, while intercompany eliminations decreased during the first six months of fiscal 2025 compared with the same period a year ago due to lower sales from our Wholesale segment to our Retail segment.

Operating Loss

Our Corporate and Other operating loss decreased $6.0 million in the first quarter of fiscal 2025 primarily from favorable intercompany inventory profit elimination adjustments and improved Joybird operating performance, partially offset by lower intercompany operating profit from our global trading company in Hong Kong.

Our Corporate and Other operating loss decreased $2.1 million and $8.1 million in the second quarter and first six months of fiscal 2025, respectively, compared with the same periods a year ago, primarily due to improved Joybird operating margin resulting in breakeven profit, partially offset by lower intercompany operating profit from our global trading company in Hong Kong.

The first six months of fiscal 2025 also benefited from favorable intercompany inventory profit elimination adjustments relative to the same period a year ago.

Non-Operating Income (Expense)

Interest Income

Interest income was $1.4 million higher in the first quarter of fiscal 2025, compared with the same period a year ago, primarily driven by higher interest rates.

Our effective tax rate was 25.5% for the first quarter of fiscal 2025 compared with 26.5% for the first quarter of fiscal 2024.

The reduced effective tax rate in the first quarter of fiscal 2025 was partially the result of tax benefits from the vesting of stock-based compensation.

Interest income was $1.1 million higher in the first six months of 2025, compared with the same period a year ago, primarily driven by higher interest rates.

Other Income, (Expense), Net

Other income (expense), net was $1.9 million and $2.5 million of expense in the second quarter and first six months of 2025, respectively, primarily due to exchange rate losses related to our Thailand manufacturing and wholesale businesses.

Our effective tax rate was 26.3% and 25.9% for the second quarter and first six months of 2025, respectively, compared with 26.5% for both the second quarter and first six months of fiscal 2024.

Our effective tax rate varies from the 21% federal statutory rate primarily due to state taxes.

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We believe these sources remain adequate to meet our short-term and long-term liquidity requirements, finance our long-term growth plans, and fulfill other cash requirements for day-to-day operations and capital expenditures, including fiscal 2025 contractual obligations.

We had cash, cash equivalents and restricted cash of $342.3 million at July 27, 2024, compared with $341.1 million at April 27, 2024.

In addition, we had investments to enhance our returns on cash of $4.5 million at July 27, 2024, compared with $6.8 million at April 27, 2024.

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We had cash, cash equivalents and restricted cash of $303.1 million at October 26, 2024, compared with $341.1 million at April 27, 2024.

In addition, we had investments to enhance our returns on cash of $2.4 million at October 26, 2024, compared with $6.8 million at April 27, 2024.

The following table illustrates the main components of our cash flows:

Quarter Ended

Six Months Ended

(Unaudited, amounts in thousands) 10/26/2024 10/28/2023

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Operating Activities

During the first quarter of fiscal 2025, net cash provided by operating activities was $52.3 million, an increase of $26.4 million compared with the same period a year ago, mainly due to an increase in customer deposits in fiscal 2025 resulting from higher written sales compared with a decrease in customer deposits in fiscal 2024 due to the normalization of backlog.

Additionally, the first quarter of fiscal 2025 included the payout of our fiscal 2024 incentive compensation awards which were lower than the payout from the prior year.

Our cash provided by operating activities in fiscal 2025 was primarily attributable to net income, adjusted for non-cash items, a decrease in receivables, and an increase in customer deposits, partially offset by an increase in inventory.

During the first six months of fiscal 2025, net cash provided by operating activities was $68.3 million, an increase of $11.4 million compared with the same period a year ago.

The year over year increase was primarily due to a smaller reduction in customer deposits along with a lower incentive compensation payout in fiscal 2025 relative to the prior year.

Our cash provided by operating activities in fiscal 2025 was primarily attributable to net income, adjusted for non-cash items, partially offset by an increase in inventory balances.

Investing Activities

During the first quarter of fiscal 2025, net cash used for investing activities was $17.2 million, an increase of $4.5 million compared with the same period a year ago, primarily due to lower proceeds from asset sales.

During the first six months of fiscal 2025, net cash used for investing activities was $45.5 million, an increase of $20.2 million compared with the same period a year ago, primarily due to cash used for acquisitions and increased capital expenditures.

Cash used for investing activities in fiscal 2025 included the following:

• Cash used for capital expenditures in the period was $15.6 million compared with $13.5 million during the first quarter of fiscal 2024, which is primarily related to La-Z-Boy Furniture Galleries ® (new stores and remodels) and upgrades at our manufacturing facilities and market showrooms.

• Cash used for capital expenditures in the period was $32.8 million compared with $26.5 million during the first six months of fiscal 2024, which was primarily related to La-Z-Boy Furniture Galleries ® (new stores and remodels), manufacturing-related investments, and market showroom upgrades.

We anticipate that spending on these items will continue in fiscal 2025 with full year fiscal 2025 capital expenditures expected to be in the range of $70 to $80 million.

We have no material contractual commitments outstanding for future capital expenditures.

• Cash used for acquisitions was $6.8 million, primarily related to the acquisition of the Davenport, Iowa retail business.

• Proceeds from the sale of investments, net of investment purchases, was $5.1 million.

• Cash used for acquisitions was $17.8 million, primarily related to the acquisition of the Melbourne and Cocoa, Florida and Davenport, Iowa retail businesses.

• Proceeds from the sale of investments, net of investment purchases, were $4.9 million.

Financing Activities

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The Credit Facility will mature on October 15, 2026 and provides us the ability to extend the maturity date for two additional one-year periods, subject to the satisfaction of customary conditions.

As of July 27, 2024, we have no borrowings outstanding under the Credit Facility.

As of October 26, 2024, we have no borrowings outstanding under the Credit Facility.

The Credit Facility contains certain restrictive loan covenants, including, among others, financial covenants requiring a maximum consolidated net lease adjusted leverage ratio and a minimum consolidated fixed charge coverage ratio, as well as customary covenants limiting our ability to incur indebtedness, grant liens, make acquisitions, merge or consolidate, and dispose of certain assets.

As of July 27, 2024, we were in compliance with our financial covenants under the Credit Facility.

As of October 26, 2024, we were in compliance with our financial covenants under the Credit Facility.

We believe our cash and cash equivalents, short-term investments, and cash from operations, in addition to our available Credit Facility, will provide adequate liquidity for our business operations over the next 12 months.

During the first quarter of fiscal 2025, net cash used for financing activities was $34.3 million, an increase of $14.4 million compared with the same period a year ago, primarily due to higher share repurchases, partially offset by proceeds from exercised stock options.

During the first six months of fiscal 2025, net cash used for financing activities was $61.7 million, an increase of $17.8 million compared with the same period a year ago, primarily due to higher share repurchases, partially offset by proceeds from exercised stock options.

In addition, our cash used for financing activities in fiscal 2024 included holdback payments of $5.0 million for a prior period acquisition.

Cash used for financing activities in fiscal 2025 included the following:

• Our board of directors has authorized the repurchase of company stock and we spent $33.7 million in the first quarter of fiscal 2025 to repurchase 0.9 million shares.

As of July 27, 2024, 4.7 million shares remained available for repurchase pursuant to this authorization.

• Our board of directors has authorized the repurchase of company stock and we spent $53.1 million in the first six months of fiscal 2025 to repurchase 1.4 million shares.

As of October 26, 2024, 4.3 million shares remained available for repurchase pursuant to this authorization.

With the operating cash flows we anticipate generating in fiscal 2025, we

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expect to continue repurchasing Company stock subject to market conditions and other factors as deemed relevant by our board of directors.

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We expect the board to continue declaring regular quarterly cash dividends for the foreseeable future, but it may discontinue doing so at any time at the board's discretion.

• Proceeds from exercised stock options, net of stock issued and taxes withheld as part of our employee benefit plans, was $7.9 million.

• Proceeds from exercised stock options, net of stock issued and taxes withheld as part of our employee benefit plans, were $9.9 million.

Exchange Rate Changes

Due to changes in exchange rates, our cash, cash equivalents, and restricted cash increased by $0.4 million for the quarter ended July 27, 2024.

Due to changes in exchange rates, our cash, cash equivalents, and restricted cash increased by $0.9 million for the six months ended October 26, 2024.

These changes impacted our cash balances held in Canada, Thailand, and the United Kingdom.

During the first quarter of fiscal 2025, there were no material changes to the information about our contractual obligations and commitments disclosed in our Annual Report on Form 10-K for the fiscal year ended April 27, 2024.

During the second quarter of fiscal 2025, there were no material changes to the information about our contractual obligations and commitments disclosed in our Annual Report on Form 10-K for the fiscal year ended April 27, 2024.

We do not expect our continuing compliance with existing federal, state and local statutes dealing with protection of the environment to have a material effect on our capital expenditures, earnings, competitive position or liquidity.

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We disclosed our critical accounting policies in our Annual Report on Form 10-K for the fiscal year ended April 27, 2024.

There were no material changes to our critical accounting policies or estimates during the quarter ended July 27, 2024.

There were no material changes to our critical accounting policies or estimates during the six months ended October 26, 2024.

Recent Accounting Pronouncements

See Note 1, Basis of Presentation, to the consolidated financial statements included in this Quarterly Report on Form 10-Q for a discussion of recently adopted accounting standards and other new accounting standards.

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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

During the first quarter of fiscal 2025, there were no material changes from the information contained in Item 7A of our Annual Report on Form 10-K for the fiscal year ended April 27, 2024.

During the first six months of fiscal 2025, there were no material changes from the information contained in Item 7A of our Annual Report on Form 10-K for the fiscal year ended April 27, 2024.

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