What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-07-30 compared with 2025-04-29 · 137 added, 95 removed, 214 unchanged (52% of the section changed)

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Financial Results

First quarter ended March 31, 2025 compared to the first quarter ended March 31, 2024

Net sales decreased 4% in the first quarter of 2025.

On a same-selling day basis, sales declined 2% in the first quarter of 2025, consistent with the 2% decrease we saw in the fourth quarter of 2024, which was an improved sequential trend from earlier in 2024.

Maintenance-related product sales supported overall sales, as chemical volumes grew 1% with double-digit growth in our private-label chemical products.

While discretionary projects remained pressured, we saw an improvement in overall sales in March following challenging weather patterns in January and February.

Gross profit decreased 8% in the first quarter of 2025 from the same period of 2024.

Gross margin decreased 100 basis points to 29.2% compared to 30.2%.

In the first quarter of 2024, our gross profit benefited by 4% and our gross margin by 110 basis points from the non-recurring reversal of $12.6 million for estimated import taxes.

Without the 110 basis points included in our prior quarter gross margin, our first quarter of 2025 gross margin was 10 basis points higher than last year.

Selling and administrative expenses (operating expenses) in the first quarter of 2025 were held to a 2% increase compared to the first quarter of 2024.

Operating expenses increased from inflationary impacts and sales center network expansion but were partially offset by our management of variable costs.

A s a percentage of net sales, operating expenses increased to 21.9% in the first quarter of 2025 compared to 20.5% in the same period of 2024.

Operating income in the first quarter of 2025 decreased 29%.

Operating margin was 7.2% in the first quarter of 2025 compared to 9.7% in the first quarter of 2024, including the 110 basis points attributable to the import tax reversal discussed above.

We recorded a $3.8 million tax benefit from Accounting Standards Update (ASU) 2016-09, Improvements to Employee Share-Based Payment Accounting , in the quarter ended March 31, 2025, compared to a tax benefit of $7.4 million realized in the same period of 2024.

This resulted in a $0.10 per diluted share tax benefit in the first quarter of 2025, a $0.02 increase from the $0.08 we estimated in our 2024 Annual Report on Form 10-K, compared to the $0.19 per diluted share tax benefit realized in the same period of 2024.

Net income decreased to $53.5 million in the first quarter of 2025 compared to $78.9 million in the first quarter of 2024.

Earnings per diluted share decreased 30% to $1.42 in the first quarter of 2025 compared to $2.04 in the same period of 2024, which included a $0.24 benefit from the import tax reversal discussed above.

Without the impact from ASU 2016-09 in both periods, earnings per diluted share decreased 29% to $1.32 compared to $1.85 in the first quarter of 2024.

Further, without the impact from ASU 2016-09 and the import tax reversal, earnings per diluted share decreased 18%, or $0.29, from the first quarter of 2024 to the same period in 2025.

Second quarter ended June 30, 2025 compared to the second quarter ended June 30, 2024

Net sales increased 1% in the second quarter of 2025.

Our second quarter sales benefited from continued strength in maintenance products, including sales of our private-label chemical products.

We also saw some improvement in trends across our discretionary categories.

Gross profit increased $5.0 million while gross margin was sustained at 30.0% compared to the same period of 2024.

Our strong value proposition and supply chain efforts supported our current year gross margin during the quarter, which also reflects impacts from unfavorable customer and product mix.

Selling and administrative expenses (operating expenses) were held to a 1% increase compared to the second quarter of 2024, reflecting our disciplined approach to cost management.

While inflationary pressures on wages and ongoing investments in our sales center network contributed to the increase, they were largely offset by our proactive control of variable expenses.

As a percentage of net sales, expenses remained well-managed and demonstrated our continued focus on operational efficiency.

Operating income increased $1.2 million compared to the second quarter of 2024.

Operating margin was 15.3% in both periods.

Net income increased to $194.3 million compared to $192.4 million in the second quarter of 2024.

Earnings per diluted share increased 4% to $5.17 in the second quarter of 2025 compared to $4.99 in the same period of 2024.

See RESULTS OF OPERATIONS below for definitions of our non-GAAP measures and reconciliations of our non-GAAP measures to GAAP measures.

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Financial Position and Liquidity

Total net receivables, including pledged receivables, decreased 6% at March 31, 2025 compared to March 31, 2024, reflecting year-over-year sales trends, which were partially offset by positive credit and collections activities.

Our days sales outstanding (DSO), as calculated on a trailing four quarters basis, was 25.9 days at March 31, 2025 and 26.9 days at March 31, 2024.

Our allowance for doubtful accounts balance was $8.5 million at March 31, 2025 and $9.3 million at March 31, 2024.

In light of current market conditions, we thoughtfully executed early buy ordering to ensure the appropriate inventory was available when needed.

Our inventory levels decreased from March 31, 2024 by $36.3 million, or 2%, to $1.46 billion as a result of the stocking improvements we have implemented.

Our inventory reserve was $27.1 million at March 31, 2025 and $24.2 million at March 31, 2024.

Our inventory turns, as calculated on a trailing four quarters basis, were 2.8 times at March 31, 2025 and 2.7 times at March 31, 2024.

Total debt outstanding was $1.0 billion at March 31, 2025, up $45.9 million from March 31, 2024, due to increased share repurchases in 2025.

Our days sales outstanding (DSO), as calculated on a trailing four quarters basis, was 25.8 days at June 30, 2025 and 26.8 days at June 30, 2024.

Our allowance for doubtful accounts balance was $8.3 million at June 30, 2025 and $9.4 million at June 30, 2024.

Our inventory levels increased from June 30, 2024 by $34.6 million, or 3%, to $1.3 billion as our team has focused on expanding our product offerings and ensuring that our customers have access to the products they need during their busiest time of the year.

Our inventory reserve was $27.7 million at June 30, 2025 and $25.0 million at June 30, 2024.

Our inventory turns, as calculated on a trailing four quarters basis, were 2.8 times at June 30, 2025 and 2.7 times at June 30, 2024.

Total debt outstanding increased $113.4 million to $1.2 billion at June 30, 2025, primarily to fund open market share repurchases of $156.4 million in the first six months of 2025.

For additional information, see “Liquidity and Capital Resources” below.

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For a detailed discussion of trends impacting us through 2024, see the Current Trends and Outlook section of Management’s Discussion and Analysis included in Part II, Item 7 of our 2024 Annual Report on Form 10-K.

We expect sales for the full year of 2025 to be flat to slightly positive compared to 2024.

We primarily source our products domestically and expect that currently announced tariffs will positively impact net sales by approximately 1% based on vendor price increases to-date.

We expect sales for the full year of 2025 to be relatively flat compared to 2024.

We primarily source our products domestically and expect that tariffs announced so far in 2025 and their resulting price increases will positively impact net sales by approximately 1%, resulting in an estimated price contribution for the full year of approximately 2%.

We expect gross margin for the full year of 2025 to be in line with our 2024 gross margin of 29.7%, with our highest margin in the second quarter of the year.

Our efforts in pricing optimization and supply chain initiatives are expected to mitigate discretionary headwinds from product and customer mix that are currently pressuring our long-term gross margin outlook of 30.0%.

Our efforts in pricing optimization and supply chain initiatives are expected to mitigate headwinds from product and customer mix that are currently pressuring our long-term gross margin outlook of 30.0%.

We expect to leverage our existing infrastructure and strategically manage discretionary spending while continuing to invest in our sales center network.

We project that our operating expenses in 2025 will increase around 3% compared to 2024.

We project that our operating expenses for 2025 will increase around 2% to 3% compared to 2024.

In 2025, we expect our effective tax rate will be arou nd 25.0% without the impact of ASU 2016-09.

Due to ASU 2016-09 requirements, w e expect our effective tax rate will fluctuate from quarter to quarter, particularly in periods when employees elect to exercise their vested stock options or when restrictions on share-based awards lapse.

We recorded a $3.8 million, or $0.10 per diluted share, tax benefit from ASU 2016-09 for the three months ended March 31, 2025.

We recorded a $3.9 million, or $0.10 per diluted share, tax benefit from ASU 2016-09 for the six months ended June 30, 2025.

We may recognize additional tax benefits related to stock option exercises in 2025 from grants that expire in future years.

We have not included any expected tax benefits in our full year guidance beyond what we have recognized as of March 31, 2025.

We have not included any expected tax benefits in our full year guidance beyond what we have recognized as of June 30, 2025.

We expect 2025 diluted EPS in the range of $10.80 to $11.30, including the impact of year-to-date tax benefits of $0.10.

We expect to continue to use cash for the payment of cash dividends as and when declared by our Board of Directors (Board) and to

fund opportunistic share repurchases under our Board-authorized share repurchase program.

We expect to continue to use cash for the payment of cash dividends as and when declared by our Board of Directors (Board) and to fund opportunistic share repurchases under our Board-authorized share repurchase program.

The forward-looking statements in the foregoing section and elsewhere in this report are based on current market conditions, speak only as of the filing date of this report, are based on several assumptions and are subject to significant risks and uncertainties, including the risks detailed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024.

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RESULTS OF OPERATIONS

As of March 31, 2025, we conducted operations through 449 sales centers in North America, Europe and Australia.

For the three months ended March 31, 2025, approximately 95% of our net sales were from our operations in North America.

As of June 30, 2025, we conducted operations through 451 sales centers in North America, Europe and Australia.

For the six months ended June 30, 2025, approximately 95% of our net sales were from our operations in North America.

The following table presents information derived from the Consolidated Statements of Income expressed as a percentage of net sales:

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2025 2024 2025 2024

Net sales 100.0 % 100.0 % 100.0 % 100.0 %

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Due to rounding, percentages presented in the table above may not add to Operating income or Income before income taxes and equity in earnings.

We have included the results of operations from acquisitions in 2025 and 2024 in our consolidated results since the acquisition dates.

Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024

We have included the results of operations from acquisitions in 2024 in our consolidated results since the acquisition dates.

Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024

Base Business

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After 15 months, we include acquired, consolidated and new market sales centers in the base business calculation including the comparative prior year period.

We have not provided separate base business income statements within this Form 10-Q as our base business results for the three months ending March 31, 2025 closely approximated consolidated results for the same period.

Acquired and new market sales centers excluded from base business contributed less than 1% to the change in net sales.

The table below summarizes the changes in our sales center count during the first three months of 2025:

We have not provided separate base business income statements within this Form 10-Q as our base business results for the three and six-month periods ended June 30, 2025 closely approximated consolidated results for the same period.

Acquired and new market sales centers excluded from base business contributed less than 1% to the change in our reported net sales.

The table below summarizes the changes in our sales center count during the first six months of 2025:

December 31, 2024 448

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Closed location (1)

March 31, 2025 449

June 30, 2025 451

Three Months Ended

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Net sales $ 1,784.5 $ 1,769.8 $ 14.7 1%

Net sales of $1.07 billion in the first quarter of 2025 decreased 4% compared to $1.12 billion in the first quarter of 2024 anchored by consistent sales of non-discretionary products while sales of discretionary products continued to feel downward pressure from current market conditions and unfavorable weather in January and February.

Net sales of $1.78 billion in the second quarter of 2025 increased 1% compared to $1.77 billion in the second quarter of 2024, benefiting from growth of maintenance-related products, including continued momentum in sales for our private-label chemical offerings.

We also saw some improvement in trends across our discretionary categories.

The following factors impacted our sales during the quarter and are listed in order of estimated magnitude:

• stability from maintenance-related activities evidenced by volume growth in chemicals, which had flat sales growth for the quarter and represented 13% of total sales;

• lower sales volumes of products used in pool construction and discretionary activities (see discussion below);

• one less selling day, which lowered sales by approximately 2% compared to first quarter 2024;

• a benefit of approximately 1% from inflationary product cost increases, which is net of price deflation for some products.

In the first quarter of 2025, sales of equipment for maintenance, renovation and new construction activities, including swimming pool heaters, pumps, lights, filters and automation devices, declined 4% versus the same period last year, and collectively represented approximately 34% of net sales for the period.

Sales of building materials, which are primarily used in new construction and remodeling, decreased 5% compared to the first quarter of 2024 and represented approximately 13% of net sales in the first quarter of 2025.

• stability from maintenance-related activities evidenced by volume growth in chemicals, which had 1% sales growth for the quarter and represented 15% of total sales;

• improved demand for products used in pool construction and discretionary activities (see discussion below);

• a benefit of approximately 2% to 3% from inflationary product cost increases, net of price deflation on some items, compared to a 1% benefit in the second quarter of 2024.

In the second quarter of 2025, sales of equipment for maintenance, renovation and new construction activities, including swimming pool heaters, pumps, lights, filters and automation devices, increased 1% versus the same period last year, and collectively represented approximately 29% of net sales for the period.

Sales of building materials, which are primarily used in new pool construction and remodeling, decreased 1% compared to the same period in 2024 and represented approximately 11% of net sales in the second quarter of 2025.

Comparatively, sales of building materials decreased 10% in the second quarter of 2024 compared to the same period in 2023 and represented approximately 12% of net sales for the period.

Three Months Ended

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Gross margin 30.0 % 30.0 %

Gross profit decreased 8% in the first quarter of 2025 from the same period of 2024.

Gross margin decreased 100 basis points to 29.2% compared to 30.2%.

In the first quarter of 2024, our gross profit benefited by 4% and our gross margin by 110 basis points from the non-recurring reversal of $12.6 million for estimated import taxes.

Without the 110 basis points included in our prior quarter gross margin, our first quarter of 2025 gross margin was 10 basis points higher than last year, reflecting benefits from our strategic pricing and supply chain initiatives, which were partially offset by a less advantageous customer mix and a slight drag from product mix due to lower building material sales.

Gross margin remained consistent in the second quarter of 2025 compared to the second quarter of 2024, while gross profit increased 1% over the same period.

Our strategic efforts to improve our supply chain, grow our private-label sales and promote value-added pricing supported our gross margin in the second quarter of 2025, which was also impacted by a less favorable customer and product mix compared to the prior year.

Operating Expenses

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Operating expenses as a % of net sales 14.7 % 14.6 %

Selling and administrative expenses in the first quarter of 2025 were held to a 2% increase compared to the first quarter of 2024.

Operating expenses increased from inflationary impacts and sales center network expansion but were partially offset by our management of variable costs.

As a percentage of net sales, operating expenses increased to 21.9% in the first quarter of 2025 compared to 20.5% in the same period of 2024.

Selling and administrative expenses in the second quarter of 2025 were held to a 1% increase compared to the second quarter of 2024, reflecting our disciplined approach to cost management.

While inflationary pressures on wages and ongoing investments in our sales center network contributed to the increase, these were largely offset by our proactive control of variable expenses.

As a percentage of net sales, operating expenses were well-managed at 14.7% in the second quarter of 2025 compared to 14.6% in the same period of 2024, demonstrating our continued focus on operational efficiency.

Interest and Other Non-Operating Expenses, Net

Interest and other non-operating expenses, net for the first quarter of 2025 decreased $2.3 million compared to the first quarter of 2024, primarily due to lower average interest rates on debt borrowings between periods.

Our weighted average effective interest rate decreased to 4.5% in the first quarter of 2025 compared to 5.3% in the first quarter of 2024 on average outstanding debt of $962.4 million and $999.1 million for the respective periods.

Our effective income tax rate was 19.4% for the three months ended March 31, 2025, compared to 17.3% for the three months ended March 31, 2024.

We recorded a $3.8 million tax benefit from ASU 2016-09 in the quarter ended March 31, 2025, compared to a tax benefit of $7.4 million realized in the same period last year.

Without the benefit from ASU 2016-09 in both periods, our effective tax rate was 25.2% for the first quarter of 2025 and 25.1% for the first quarter of 2024.

Interest and other non-operating expenses, net for the second quarter of 2025 decreased $1.8 million compared to the second quarter of 2024.

Our weighted average effective interest rate decreased to 4.6% in the second quarter of 2025 compared to 5.3% in the second quarter of 2024 on average outstanding debt of $1.1 billion and $1.0 billion for the respective periods.

Our effective income tax rate was 25.4% for the three months ended June 30, 2025, compared to 25.3% for the three months ended June 30, 2024.

There were no tax benefits realized from ASU 2016-09 in the quarter ended June 30, 2025, and we realized a benefit of $0.4 million in the same period last year.

Without the benefit from ASU 2016-09 in both periods, our effective tax rate was 25.4% for the second quarter of 2025 and the second quarter of 2024.

Net Income and Earnings Per Share

N et income decreased to $53.5 million in the first quarter of 2025 compared to $78.9 million in the first quarter of 2024.

Without the impact from ASU 2016-09 in both periods, earnings per diluted share decreased 29% to $1.32 compared to $1.85 in the first quarter of 2024.

N et income increased to $194.3 million in the second quarter of 2025 compared to $192.4 million in the second quarter of 2024.

Earnings per diluted share increased 4% to $5.17 in the second quarter of 2025 compared to $4.99 in the same period of 2024.

See the reconciliation of GAAP to non-GAAP measures below.

Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024

Six Months Ended

(in millions) 2025 2024 Change

Net sales $ 2,856.1 $ 2,890.6 $ (34.5) (1)%

Net sales for the first six months of 2025 decreased 1% compared to the same period last year.

During the first half of 2025, our sales benefited from consistent maintenance-related activities, which were supported by stable demand for essential, non-discretionary products.

In the first quarter of the year, discretionary projects were pressured from market conditions and unfavorable weather at the beginning of the year.

Although the market environment remained constrained in the second quarter of 2025, we saw overall sales expansion and discretionary activities were less of a drag on overall sales.

The following factors impacted our sales and are listed in order of estimated magnitude:

• stability from maintenance-related activities evidenced by volume growth in chemicals and 1% sales growth compared to the first six months of 2024, representing 14% of our net sales;

• lower sales volumes of products used in pool construction and discretionary activities (see discussion below);

• a benefit of approximately 2% from inflationary product cost increases, net of price deflation on some items, compared to a 1% to 2% benefit in the first six months of 2024;

• one less selling day in the first half of 2025 compared to the same period in 2024 lowered net sales by 1%.

In the first six months of 2025, sales of equipment for maintenance, renovation and new construction activities, including swimming pool heaters, pumps, lights, filters and automation devices, decreased approximately 1% compared to the same period last year and collectively represented 31% of net sales in the first six months of 2025.

Sales of building materials, which are primarily used in new pool construction and remodeling, decreased 3% compared to the first six months of 2024 and represented approximately 12% of net sales in the first six months of 2025.

Six Months Ended

(in millions) 2025 2024 Change

Gross profit $ 847.5 $ 868.7 $ (21.2) (2)%

Gross margin 29.7 % 30.1 %

Gross margin declined 40 basis points to 29.7% in the six months ended June 30, 2025, compared to 30.1% in the first six months of 2024.

Our gross margin in the first six months of 2024 benefited 40 basis points from the non-recurring reversal of $12.6 million for estimated import taxes.

Without the 40 basis points included in our prior year gross margin, gross margin was flat year-over-year.

Our gross margin in the first six months of 2025 reflects benefits from our strategic pricing and supply chain initiatives, which were offset by a less advantageous customer mix and product mix.

Operating Expenses

Six Months Ended

(in millions) 2025 2024 Change

Selling and administrative expenses $ 497.3 $ 488.5 $ 8.8 2%

Operating expenses as a % of net sales 17.4 % 16.9 %

Operating expenses for the six months ended June 30, 2025 were up 2% compared to the prior year period.

Expense growth was primarily driven by inflationary impacts, particularly on base wages and facility costs, and continued investments in our technology initiatives and sales center network expansion.

Increases in expenses were partially offset by disciplined control of variable costs.

As a percentage of net sales, operating expenses increased to 17.4% in the first six months of 2025 compared to 16.9% in the same period of 2024.

Interest and Other Non-Operating Expenses, Net

Interest and other non-operating expenses, net for the first six months of 2025 decreased $4.1 million compared to the same period last year.

Our weighted average effective interest rate decreased to 4.5% from 5.3% for the respective periods on average outstanding debt of $1.0 billion for both periods.

Our effective income tax rate was 24.2% for the six months ended June 30, 2025, compared to 23.1% for the six months ended June 30, 2024.

We recorded a $3.9 million, or $0.10 per diluted share, tax benefit from ASU 2016-09 in the six months ended June 30, 2025, compared to a $7.8 million, or $0.20 per diluted share, tax benefit in the same period of 2024.

Without the benefits from ASU 2016-09, our effective tax rate was 25.4% for the six months ended June 30, 2025, and 25.3% for the six months ended June 30, 2024.

Net Income and Earnings Per Share

Net income decreased 9% to $247.8 million for the six months ended June 30, 2025, compared to $271.3 million for the six months ended June 30, 2024.

Earnings per diluted share decreased 7% to $6.57 for the six months ended June 30, 2025, versus $7.03 per diluted share for the six months ended June 30, 2024.

Without the impact from ASU 2016-09 in both periods, earnings per diluted share decreased 5% to $6.47 for the six months ended June 30, 2025, compared to $6.83 for the six months ended June 30, 2024.

See the reconciliation of GAAP to non-GAAP measures below.

Reconciliation of Non-GAAP Financial Measures

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The table below presents a reconciliation of diluted EPS to adjusted diluted EPS.

(Unaudited) Three Months Ended

(Unaudited) Three Months Ended Six Months Ended

June 30, June 30,

2025 2024 2025 2024

Diluted EPS $ 5.17 $ 4.99 $ 6.57 $ 7.03

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(in thousands) 2025 2024 2023

First Fourth Third Second First Fourth Third Second

Second First Fourth Third Second First Fourth Third

Statement of Income Data

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Weather Impacts on 2025 and 2024 Results

Weather conditions in the second quarter of 2025 were marked by above-average temperatures and higher-than-normal precipitation.

Warm conditions generally supported seasonal trends, though localized disruptions occurred due to severe storms, flash flooding and tornado outbreaks, particularly in April and May.

Around mid-June, we observed intense heat across many regions, further supporting demand in key markets.

Overall, while weather patterns were variable, we believe that the net impact on our results was broadly neutral.

In the second quarter of 2024, weather across the U.S.

was mixed, with wetter conditions in the central regions and Texas, drier conditions in the West, and warmer-than-average temperatures, especially in June, supporting maintenance activities and leading to varied impacts across our markets.

Weather conditions in the first quarter of 2025 were mixed across our key markets.

Early January snowstorms and overall cooler temperatures through much of February negatively impacted early season sales activity.

While March brought warmer and drier weather, these improvements provided only partial relief to our sales trends and were not enough to offset the slower start to the quarter.

While March brought warmer and drier weather, these improvements provided only partial relief to our sales trends and were insufficient to offset the slower start to the quarter.

During the first quarter of 2024, above-average temperatures in some regions, including California, contributed positively to economic activities.

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The following table summarizes our cash flows (in thousands):

Three Months Ended

Provided by operating activities $ 27,224 $ 145,442

Six Months Ended

(Used in) provided by operating activities $ (1,544) $ 172,102

Used in investing activities (28,463) (38,345)

Used in financing activities (20,611) (124,162)

Net cash provided by operations was $27.2 million in the first three months of 2025 compared to $145.4 million in the first three months of 2024.

Of the $118.2 million decline, $68.5 million related to federal tax payments deferred from 2024 to the first quarter of 2025, while the remaining difference is attributable to changes in working capital, including a $69.8 million headwind from the changes in inventory and accounts payable due to higher purchases in the first quarter of 2025, and lower net income in 2025.

Net cash used in investing activities for the first three months of 2025 decreased $5.4 million compared to the first three months of 2024, primarily due to a reduction of $3.7 million in net capital expenditures and a $1.3 million decline in acquisition costs.

Net cash used in financing activities was $20.6 million for the first three months of 2025 compared to $124.2 million for the first three months of 2024, primarily reflecting $74.5 million of net debt proceeds in the first three months of 2025 versus $74.3 million of net debt payments in the first three months of 2024 and a $40.0 million increase in share repurchases.

Provided by (used in) financing activities 33,145 (100,034)

Net cash used in operations was $1.5 million in the first six months of 2025 compared to net cash provided by operations of $172.1 million in the first six months of 2024.

The difference in cash flow primarily relates to a $68.5 million federal tax payment, which was deferred from 2024, a headwind from our increased investments in inventory in the first six months of 2025, and lower net income.

Net cash used in investing activities for the first six months of 2025 decreased $9.9 million compared to the first six months of 2024, primarily due to a reduction of $7.5 million in net capital expenditures and a $4.4 million decline in acquisition costs.

Net cash provided by financing activities was $33.1 million for the first six months of 2025 compared to net cash used in financing activities of $100.0 million for the first six months of 2024, primarily reflecting our receipt of $279.2 million of net debt proceeds in the first six months of 2025 versus $62.9 million of net debt proceeds in the first six months of 2024, partially offset by a $76.2 million increase in share repurchases.

Future Sources and Uses of Cash

To supplement cash from operations as our primary source of working capital, we plan to continue to utilize our three major credit facilities, which are the Third Amended and Restated Revolving Credit Facility (the Credit Facility), the Term Facility (the Term Facility) and the Receivables Securitization Facility (the Receivables Facility).

To supplement cash from operations as our primary source of working capital, we plan to continue to utilize our three major credit facilities, which are the Fourth Amended and Restated Credit Facility (the Credit Facility), the term facility provided under the below-defined Term Agreement (the Term Facility) and the Receivables Securitization Facility (the Receivables Facility).

For additional details regarding these facilities, see the summary descriptions below and more complete descriptions in Note 5 of our “Notes to Consolidated Financial Statements,” included in Part II, Item 8 in our 2024 Annual Report on Form 10-K and Note 5 of “Notes to Consolidated Financial Statements” included in Part I, Item 1 of this Form 10-Q.

Credit Facility

Our Credit Facility provides for $1.3 billion in borrowing capacity consisting of an $800.0 million unsecured revolving credit facility and a $500.0 million term loan facility.

The Credit Facility also includes an accordion feature permitting us to request one or more incremental term loans or revolving credit family commitment increases up to $250.0 million and sublimits for the issuance of swingline loans and standby letters of credit.

We pay interest on revolving and term loan borrowings under the Credit Facility at a variable rate based on the one-month term secured overnight financing rate (Term SOFR), plus an applicable margin.

The term loan requires quarterly amortization payments with all remaining principal due on September 25, 2026.

The revolving credit facility matures on September 30, 2029.

Our Credit Facility, as recently amended on July 10, 2025, provides for $1.3 billion in borrowing capacity consisting of an $800.0 million unsecured revolving credit facility and a $500.0 million term loan facility.

The Credit Facility also includes an accordion feature permitting us to request one or more incremental term loans or revolving credit facility commitment increases up to $250.0 million and sublimits for the issuance of swingline loans and standby letters of credit.

We pay interest on revolving and term loan borrowings under the Credit Facility at a variable rate based on the one-month Term SOFR, plus an applicable margin.

The term loan requires quarterly amortization payments commencing on September 30, 2027, with all remaining principal due on September 30, 2029.

We intend to continue to use the Credit Facility for general corporate purposes, for future share repurchases and to fund future growth initiatives.

At March 31, 2025, there was $167.7 million of revolving borrowings outstanding, a $456.3 million term loan, $15.1 million of standby letters of credit outstanding and $617.2 million available for borrowing.

The weighted average effective interest rate for the Credit Facility as of March 31, 2025, was approximately 3.7%, excluding commitment fees and including the impact of our interest rates swaps.

At June 30, 2025, there was $354.8 million of revolving borrowings outstanding, a $450.0 million term loan, $15.1 million of standby letters of credit outstanding and $430.1 million available for borrowing.

The weighted average effective interest rate for the Credit Facility as of June 30, 2025, was approximately 4.1%, excluding commitment fees and including the impact of our interest rates swaps.

Following the recent amendment to the Credit Facility on July 10, 2025, there was $380.0 million of revolving borrowings outstanding, a $500.0 million term loan, $14.4 million of standby letters of credit outstanding and $405.6 million available for borrowing.

Term Facility

Our Term Facility provides for $185.0 million in borrowing capacity and matures on December 30, 2026.

Our Term Facility, as recently amended on July 10, 2025, provides for $90.0 million in borrowing capacity.

Proceeds from the Term Facility were used to pay down the Credit Facility in December 2019, adding borrowing capacity for future share repurchases, acquisitions and growth-oriented working capital expansion.

We pay interest on borrowings under the Term Facility at a variable rate based on one-month Term SOFR, plus an applicable margin.

The Term Facility is repaid in quarterly installments of 1.250% of the Term Facility, with the final principal repayment due on the maturity date.

The Term Facility is repaid in quarterly installments of 1.250% of the Term Facility beginning in the third quarter of 2027, with the final principal repayment due on

September 30, 2029.

We may prepay amounts outstanding under the Term Facility without penalty other than interest breakage costs.

At March 31, 2025, there was $100.0 million outstanding under the Term Facility with a weighted average effective interest rate of 5.6%.

At June 30, 2025, there was $90.0 million outstanding under the Term Facility with a weighted average effective interest rate of 5.6%.

Receivables Securitization Facility

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Upon payment of the receivables by customers, rather than remitting to the financial institutions the amounts collected, we retain such collections as proceeds for the sale of new receivables until payments become due.

At March 31, 2025, there was $290.4 million outstanding under the Receivables Facility at a weighted average effective interest rate of 5.3%, excluding commitment fees.

At June 30, 2025, there was $320.1 million outstanding under the Receivables Facility at a weighted average effective interest rate of 5.3%, excluding commitment fees.

Financial Covenants

Financial covenants of the Credit Facility, Term Facility and Receivables Facility include maintenance of a maximum average total leverage ratio and a minimum fixed charge coverage ratio, which are our most restrictive financial covenants.

As of March 31, 2025, the calculations of these two covenants are detailed below:

As of June 30, 2025, the calculations of these two covenants are detailed below:

• Maximum Average Total Leverage Ratio .

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Average Total Leverage Ratio is the ratio of the sum of (i) Total Non-Revolving Funded Indebtedness as of such date, (ii) the trailing twelve months (TTM) Average Total Revolving Funded Indebtedness and (iii) the TTM Average Accounts Securitization Proceeds divided by TTM EBITDA (as those terms are defined in the Credit Facility).

As of March 31, 2025, our average total leverage ratio equaled 1.47 (compared to 1.42 as of December 31, 2024) and the TTM average total indebtedness amount used in this calculation was $957.3 million.

As of June 30, 2025, our average total leverage ratio equaled 1.47 (compared to 1.47 as of March 31, 2025) and the TTM average total indebtedness amount used in this calculation was $965.5 million.

• Minimum Fixed Charge Coverage Ratio .

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Fixed Charge Ratio is the ratio of the TTM EBITDAR divided by TTM Interest Expense paid or payable in cash plus TTM Rental Expense (as those terms are defined in the Credit Facility).

As of March 31, 2025, our fixed charge ratio equaled 4.89 (compared to 5.07 as of December 31, 2024) and TTM Rental Expense was $106.5 million.

As of June 30, 2025, our fixed charge ratio equaled 4.90 (compared to 4.89 as of March 31, 2025) and TTM Rental Expense was $108.9 million.

The Credit Facility and Term Facility limit the declaration and payment of dividends on our common stock to a manner consistent with past practice, provided no default or event of default has occurred and is continuing, or would result from the payment of dividends.

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Interest expense related to the notional amounts under all swap contracts is based on the fixed rates plus the applicable margin on the respective borrowings.

As of March 31, 2025, we had two interest rate swap contracts in place, each of which has the effect of converting our exposure to variable interest rates on a portion of our variable rate borrowings to fixed interest rates.

As of June 30, 2025, we had two interest rate swap contracts in place, each of which has the effect of converting our exposure to variable interest rates on a portion of our variable rate borrowings to fixed interest rates.

For more information, see Note 4 of “Notes to Consolidated Financial Statements” included in Part I, Item 1 of this Form 10-Q.

Compliance and Future Availability

As of March 31, 2025, we were in compliance with all material covenants and financial ratio requirements under our Credit Facility, our Term Facility and our Receivables Facility.

As of June 30, 2025, we were in compliance with all material covenants and financial ratio requirements under our Credit Facility, our Term Facility and our Receivables Facility.

We believe we will remain in compliance with all material covenants and financial ratio requirements throughout the next twelve months.

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If suitable acquisition opportunities arise that would require financing, we believe that we would have the ability to finance any such transactions.

As of April 24, 2025, $290.8 million remained available to purchase shares of our common stock under our current Board-approved share repurchase program.

As of July 24, 2025, $515.7 million remained available to purchase shares of our common stock under our current Board-approved share repurchase program.

We expect to repurchase shares on the open market from time to time subject to market conditions.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis