What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-18 compared with 2025-02-19 · 216 added, 189 removed, 270 unchanged (60% of the section changed)

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TrueBlue, Inc.

(the “company,” “TrueBlue,” “we,” “us” and “our”) is a leading provider of specialized workforce solutions that help our clients improve productivity and grow their businesses.

(the “company,” “TrueBlue,” “we,” “us” and “our”) is a leading provider of specialized workforce solutions that connect employers and talent.

Client demand for contingent workforce solutions and outsourced recruiting services is cyclical and dependent on the overall strength of the economy and labor market, as well as trends in workforce flexibility.

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Similarly, companies turn to hybrid or fully outsourced recruiting models during periods of rapid re-hiring and high employee turnover.

Our business strategy is focused on growth in each of our business segments by accelerating our digital transformation, expanding in attractive end markets and simplifying our organizational structure, which will enable us to capture market share, deliver more sustainable growth, and enhance our long-term profitability.

We have implemented these core strategies for each of our business segments:

PeopleReady, PeopleScout and PeopleManagement.

Our business strategy is focused on accelerating growth to capture market share, while enhancing our long-term profitability.

Key elements of this strategy include enhancing our sales function, expanding in high-growth, less cyclical and under-penetrated end markets as well as high-value roles, and accelerating innovation with technology and operational excellence.

For additional discussion on our business and strategy, refer to Business , found in Part I, Item 1 of this Annual Report on Form 10-K.

Fiscal 2025 highlights

Our 2024 and 2022 fiscal years contained 52 weeks, while our 2023 fiscal year contained 53 weeks, with the 53rd week falling in the fiscal fourth quarter.

Total company revenue declined 17.8% to $1.6 billion for the fiscal year ended December 29, 2024, compared to the prior year.

Demand for temporary labor and permanent hiring continues to be suppressed, as clients remained hesitant to make staffing decisions due to uncertainty around future workforce needs and utilized their existing workforce to reduce operating costs.

The additional week in fiscal 2023 contributed $20.3 million in revenue.

Total company revenue grew 3.1% to $1.6 billion for the fiscal year ended December 28, 2025, compared to the prior year.

Growth was primarily due to the acquisition of Healthcare Staffing Professionals, Inc.

in early 2025, as well as strong demand within our skilled businesses, while conditions continue to stabilize within on-demand, on-site and permanent hiring.

Total company gross profit as a percentage of revenue for the fiscal year ended December 28, 2025 contracted 310 basis points to 22.8%, compared to the prior year.

Changes in revenue mix towards our lower margin staffing businesses and pricing pressures were partially offset by lower workers’ compensation costs and recognition of certain COVID-19 government subsidies.

The decline was primarily due to changes in revenue mix toward our lower margin staffing businesses, as well as less favorability in prior year workers’ compensation reserve adjustments.

Total company selling, general and administrative (“SG&A”) expense decreased 9.7% to $371.1 million for the fiscal year ended December 28, 2025, compared to the prior year.

SG&A expense decreased as a result of continued operational cost management actions in response to the decline in demand for our services, and simplification of our organizational structure in line with our strategic plan.

The additional week in fiscal 2023 contributed $6.6 million of expense.

We recorded a goodwill and intangible asset impairment charge of $59.7 million during the fiscal year ended December 29, 2024, primarily related to our PeopleReady reporting unit.

This significant non-cash impairment charge, combined with U.S.

and foreign pre-tax losses beginning in 2023 and continuing into 2024, resulted in our conclusion to record a valuation allowance against our U.S.

federal, state, and certain foreign deferred tax assets, which increased our income tax expense by $63.7 million.

SG&A expense decreased as a result of continued operational cost management actions in response to the decline in demand for our services, and the simplification of our organizational structure in line with our strategic plan.

We recorded a goodwill and intangible asset impairment charge of $0.2 million during the fiscal year ended December 28, 2025, related to a trademark within our PeopleManagement segment.

For the same period in the prior year, we recorded goodwill and intangible asset impairment charges of $59.7 million, primarily related to our PeopleReady reporting unit.

We recorded a right-of-use and other long-lived asset impairment charge of $18.4 million during the fiscal year ended December 28, 2025, related to the execution of a sublease for our Chicago support center as part of our continued efforts to shift to a remote or hybrid work model for our headquarters and United States (“U.S.”) based support teams.

Income tax expense was $2.3 million for the fiscal year ended December 28, 2025, compared to $37.2 million for the same period in the prior year.

We continue to maintain a valuation allowance against our U.S.

federal, state and certain foreign deferred tax assets initially established in the fiscal second quarter of 2024, resulting in no current period income tax benefit for these jurisdictions.

The items described above contributed to our net loss of $48.0 million for the fiscal year ended December 28, 2025, compared to net loss of $125.7 million in the prior year.

As of December 29, 2024, we had cash and cash equivalents of $22.5 million and $118.5 million available under the most restrictive covenant of our revolving credit agreement (“Revolving Credit Facility”), for total liquidity of $141.1 million.

As of December 29, 2024, $7.6 million was drawn on the Revolving Credit Facility as a Swingline loan.

As of December 28, 2025, we had cash and cash equivalents of $24.5 million and outstanding debt of $65.8 million.

As of December 28, 2025, $67.6 million was available under the most restrictive covenant of our revolving credit agreement (“Revolving Credit Facility”), for total liquidity of $92.1 million.

MANAGEMENT’S DISCUSSION AND ANALYSIS

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Selling, general and administrative expense 371,087 23.0 410,870 26.2

Depreciation and amortization 28,624 1.8 25,821 1.4

Depreciation and amortization (exclusive of depreciation included in cost of services)

24,823 1.5 28,624 1.8

Goodwill and intangible asset impairment charge 200 — 59,674 3.8

Income (loss) from operations

Right-of-use and other long-lived asset impairment charge 18,366 1.2 — —

Loss from operations

(46,634) (2.9) % (92,775) (5.9) %

Interest and other income (expense), net 1,003 4,251

Income (loss) before tax expense (benefit)

(88,524) (20,645)

Income tax expense (benefit)

Loss before tax expense

(45,631) (88,524)

Net income (loss)

Income tax expense

$ (47,960) (3.0) % $ (125,748) (8.0) %

Net income (loss) per diluted share

Net loss per diluted share

$ (1.61) $ (4.17)

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PeopleReady $ 883,887 1.8 % 54.7 % $ 868,549 55.4 %

PeopleScout 156,643 (31.7) % 10.0 229,334 12.0

PeopleManagement 544,448 0.4 % 33.7 542,201 34.6

PeopleSolutions

187,662 19.8 % 11.6 156,643 10.0

Total company $ 1,615,997 3.1 % 100.0 % $ 1,567,393 100.0 %

Total company revenue declined 17.8% to $1.6 billion for the fiscal year ended December 29, 2024, compared to the prior year.

The additional week in fiscal 2023 contributed $20.3 million in revenue.

PeopleReady revenue declined 20.8% to $0.9 billion for the fiscal year ended December 29, 2024, compared to the prior year.

Revenue declined as a result of continued labor market uncertainty, leading our clients to reduce their dependence on contingent labor to supplement their core workforce.

The decline in demand has impacted clients across most industries and geographies.

The additional week in fiscal 2023 contributed $11.9 million in revenue.

PeopleScout revenue declined 31.7% to $156.6 million for the fiscal year ended December 29, 2024, compared to the prior year.

Revenue declined as clients are experiencing less employee turnover, and labor market conditions are leading to uncertainty around future workforce needs.

This has resulted in clients reducing hiring volumes, sourcing candidates with internal resources, and initiating hiring freezes to control costs.

Revenue was also negatively impacted by the loss of a large hospitality client during the year, due to their decision to insource hiring for high-volume roles.

The additional week in fiscal 2023 contributed $0.8 million in revenue.

Despite the challenging market dynamics, new business wins during fiscal 2024 outperformed fiscal 2023, which we expect to contribute to future revenue growth.

MANAGEMENT’S DISCUSSION AND ANALYSIS

Total company revenue grew 3.1% to $1.6 billion for the fiscal year ended December 28, 2025, compared to the prior year.

The primary driver of the growth was the acquisition of Healthcare Staffing Professionals, Inc.

in early 2025, which contributed 3.5%, as well as growth within our skilled businesses, specifically in the energy and commercial driving industries.

This growth was partially offset by declines within on-demand, on-site and permanent hiring, as business conditions continue to stabilize within these offerings.

PeopleReady revenue grew 1.8% to $883.9 million for the fiscal year ended December 28, 2025, compared to the prior year, primarily as a result of growth within our skilled businesses, specifically in the energy industry.

Growth from our skilled businesses was partially offset by declines within our on-demand business, as broader market conditions continue to stabilize.

PeopleManagement

PeopleManagement revenue declined 6.6% to $542.2 million for the fiscal year ended December 29, 2024, compared to the prior year.

Revenue declined as clients in our on-site businesses continued to be hesitant to make significant changes to their workforce strategies after taking steps to reduce their dependence on variable labor, primarily within the retail industry.

These declines were partially offset by growth within our commercial driving business.

The additional week in fiscal 2023 contributed $7.6 million in revenue.

Despite the challenging market dynamics, new business wins during fiscal 2024 outperformed fiscal 2023, which we expect to contribute to future revenue growth.

PeopleManagement revenue grew 0.4% to $544.4 million for the fiscal year ended December 28, 2025, compared to the prior year.

Revenue grew as a result of strong demand within our commercial driving business, partially offset by volume declines within our OnSite business.

OnSite new business wins during fiscal 2025 significantly outperformed fiscal 2024, most of which were won in the second half of fiscal 2025, positioning this business for future growth.

MANAGEMENT’S DISCUSSION AND ANALYSIS

PeopleSolutions

PeopleSolutions revenue grew 19.8% to $187.7 million for the fiscal year ended December 28, 2025, compared to the prior year.

The acquisition of Healthcare Staffing Professionals, Inc.

in early 2025 contributed 35.4% of growth for fiscal 2025.

Revenue for our PeopleScout business declined as labor market conditions have led to uncertainty around our clients’ future workforce needs, and clients continue to experience less employee turnover while also facing cost pressures.

This has resulted in our clients reducing hiring volumes, sourcing candidates with internal resources, and initiating hiring freezes to control costs.

Despite these challenges, we have expanded existing and new client relationships into higher skilled roles, and in attractive end markets such as healthcare, engineering and technology.

As our clients’ hiring volumes return, the scale of these engagements position us well for future growth in this business.

(in thousands, except percentages) 2025 2024

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Gross profit as a percentage of revenue contracted 310 basis points to 22.8% for the fiscal year ended December 28, 2025, compared to 25.9% for the prior year.

Changes in revenue mix resulted in a contraction of 90 basis points, driven in part by revenue shifts toward our lower margin staffing businesses.

Our staffing businesses contributed an additional 10 basis points of contraction as a result of pricing pressure typical of a low demand environment.

These contractions were partially offset by 20 basis points of expansion from lower workers’ compensation costs driven by favorable development of prior year reserves, as well as 20 basis points of expansion from recognition of certain COVID-19 government subsidies in the current year.

Changes in revenue mix resulted in a contraction of 200 basis points, primarily driven by revenue growth in renewable energy clients within our PeopleReady segment, as well as softness in RPO revenue and the acquisition of Healthcare Staffing Professionals, Inc.

within our PeopleSolutions segment.

Higher workers’ compensation costs, driven by less favorable workers’ compensation reserve adjustments, resulted in an additional 90 basis points of contraction.

In addition, depreciation of certain software within PeopleSolutions, reported in cost of services, contributed 20 basis points of contraction.

Selling, general and administrative expense

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Percentage of revenue 23.0 % 26.2 %

Total company SG&A expense decreased by $83.7 million or 16.9% for the fiscal year ended December 29, 2024, compared to the prior year.

We have continued to execute operational cost management actions in response to the decline in demand for our services, and simplify our organizational structure in line with our strategic plan.

SG&A expense in the current year included a benefit, net of related fees, of $6.8 million for recognition of certain COVID-19 government subsidies, offset by $6.4 million of accelerated third-party licensing fees associated with the previous version of our JobStack app.

SG&A expense in the prior year included $5.8 million of accelerated compensation costs related to transitions in our executive leadership, as well as an additional week which added $6.6 million of expense.

Total company SG&A expense improved by $39.8 million or 9.7% for the fiscal year ended December 28, 2025, compared to the prior year.

Operational cost management actions have resulted in a leaner cost structure, which strategically positions us to drive strong profitability as industry demand rebounds.

SG&A expense in the current year included a benefit, net of related fees, of $5.4 million for recognition of certain COVID-19 government subsidies, compared to a benefit of $6.8 million included in the prior year.

SG&A expense in fiscal year 2024 included $6.4 million of accelerated third-party licensing fees associated with the previous version of our JobStack ® app.

Depreciation and amortization

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Percentage of revenue 1.5 % 1.8 %

Depreciation and amortization increased due to assets placed into service at the end of fiscal 2023, primarily related to PeopleReady technology.

Depreciation and amortization decreased for the fiscal year ended December 28, 2025, compared to the prior year, as depreciation of certain software within PeopleSolutions has been included in cost of services on our Consolidated Statements of Operations and Compressive Income (Loss).

Additionally, certain customer relationship intangible assets were fully amortized during fiscal 2024.

This decrease was partially offset by amortization of intangible assets related to our acquisition of Healthcare Staffing Professionals, Inc.

in early fiscal 2025.

MANAGEMENT’S DISCUSSION AND ANALYSIS

Goodwill and intangible asset impairment charge

A summary of the goodwill and intangible asset impairment charges for the fiscal year ended December 29, 2024, by reportable segment, is as follows:

(in thousands) PeopleReady PeopleScout PeopleManagement Total company

Goodwill $ 59,074 $ — $ — $ 59,074

Trade names/trademark — — 600 600

Total $ 59,074 $ — $ 600 $ 59,674

We performed an interim impairment test as of the last day of fiscal May 2024 following the determination by management that a triggering event had occurred.

As a result of this impairment test, we concluded that the carrying amount of our PeopleReady reporting unit exceeded its fair value and we recorded a non-cash goodwill impairment charge of $59.1 million, which was included in goodwill and intangible asset impairment charge on our Consolidated Statements of Operations and Comprehensive Income (Loss) for the fiscal year ended December 29, 2024.

As a result of this impairment charge, the goodwill carrying value of $59.1 million for PeopleReady was fully impaired.

The goodwill impairment was primarily driven by recent performance of the PeopleReady reporting unit and the temporary industrial staffing industry since our annual impairment testing date, as well as a delay in the projected timing of recovery.

No further impairment charges were recognized during the fiscal year ended December 29, 2024.

(in thousands)

Goodwill and intangible asset impairment charge

$ 200 $ 59,674

We performed our annual impairment test as of the first day of our fiscal second quarter of 2025.

As a result of this impairment test, we concluded that a trademark related to our PeopleManagement segment exceeded its estimated fair value and we recorded a non-cash impairment charge of $0.2 million, which was included in goodwill and intangible asset impairment charge on our Consolidated Statements of Operations and Comprehensive Income (Loss) for the fiscal year ended December 28, 2025.

The charge was primarily driven by an increase in the discount rate.

The remaining balance for this trademark was $2.5 million as of December 28, 2025.

Goodwill and Intangible Assets , to our consolidated financial statements found in Item 8 of this Annual Report on Form 10-K, for additional details.

Indefinite-lived intangible assets

We performed an impairment test during our fiscal second quarter of 2024.

As a result of this impairment test, we concluded that a trade name/trademark related to our PeopleManagement segment exceeded its estimated fair value and we recorded a non-cash impairment charge of $0.6 million, which was included in goodwill and intangible asset impairment charge on our Consolidated Statements of Operations and Comprehensive Income (Loss) for the fiscal year ended December 29, 2024.

The charge was primarily driven by recent revenue performance of the related business given a decline in demand and overall economic uncertainty.

No further impairment charges were recognized during the fiscal year ended December 29, 2024.

The remaining balance for this trade name/trademark was $2.7 million as of December 29, 2024.

MANAGEMENT’S DISCUSSION AND ANALYSIS

Our tax provision and our effective tax rate are subject to variation due to several factors, including variability in our pre-tax and taxable income or loss by jurisdiction, tax credits, government audit developments, changes in laws, regulations and administrative practices, valuation allowances recorded on deferred tax assets, and relative changes in expenses or losses for which tax benefits are not recognized.

Additionally, our effective tax rate can be more or less volatile based on the amount of pre-tax income or loss.

For example, the impact of discrete items, tax credits, and non-deductible expenses on our effective tax rate is greater when our pre-tax income or loss is lower.

The items creating differences between income taxes computed at the statutory federal income tax rate and income taxes reported on the Consolidated Statements of Operations and Comprehensive Income (Loss) are as follows:

Right-of-use and other long-lived asset impairment charge

(in thousands) 2025 2024

Right-of-use and other long-lived asset impairment charge

The execution of a sublease related to our Chicago support center in the fiscal fourth quarter of 2025 required us to reevaluate the related long-lived asset group and test this asset group for recoverability and impairment.

The sublease was executed as part of our continued efforts to shift to a remote or hybrid work model for our headquarters and U.S.-based support teams.

The Chicago support center asset group consists of the right-of-use asset, and related leasehold improvements and furniture.

As a result of this impairment test, we concluded that the carrying value of the related asset group exceeded its estimated fair value and we recorded a non-cash impairment charge of $18.4 million, which was included in right-of-use and other long-lived asset impairment charge on our Consolidated Statements of Operations and Comprehensive Income (Loss) for the fiscal year ended December 28, 2025.

Commitments and Contingencies , to our consolidated financial statements found in Item 8 of this Annual Report on Form 10-K, for additional details.

(in thousands, except percentages) 2025 2024

Income tax expense (benefit) based on statutory rate

$ (18,590) 21.0 % $ (4,335) 21.0 %

Increase (decrease) resulting from:

State income taxes, net of federal benefit 591 (0.7) (1,384) 6.7

Hiring tax credits, net (4,123) 4.7 (4,997) 24.2

Valuation allowance

56,792 (64.1) — —

Uncertain tax positions (99) 0.1 (206) 1.0

Non-deductible goodwill impairment charge

— — 2,287 (11.1)

Non-deductible and non-taxable items

Loss before tax expense

$ (45,631) $ (88,524)

Foreign taxes 446 (0.5) 587 (2.9)

Other, net 1,543 (1.7) 398 (1.9)

Total income tax expense (benefit)

Income tax expense

$ 2,329 $ 37,224

Significant fluctuations in our effective tax rate for the fiscal year ended December 29, 2024 were primarily due to changes in the valuation allowance against our U.S.

federal, state and certain foreign deferred tax assets, as well as tax benefits from hiring credits.

Based on our deferred tax asset realizability assessments performed during the fiscal year ended December 29, 2024, we recorded additional valuation allowances against U.S.

federal, state and certain foreign deferred tax assets.

Our conclusion was driven by U.S.

and foreign pre-tax losses beginning in 2023 and continuing into 2024, combined with the significant non-cash goodwill impairment charge of $59.1 million recorded during the fiscal year ended December 29, 2024.

The federal Work Opportunity Tax Credit (“WOTC”), our primary hiring tax credit, is designed to encourage employers to hire workers from certain targeted groups with higher than average unemployment rates.

WOTC is generally calculated as a percentage of wages over a twelve-month period up to worker maximums by targeted groups.

Based on historical results and business trends, we estimate the amount of WOTC we expect to earn related to wages of the current year.

However, the estimate is subject to variation because 1) a small percentage of our workers qualify for one or more of the many targeted groups;

2) the targeted groups are subject to different incentive credit rates and limitations;

3) credits fluctuate depending on economic conditions and qualified worker retention periods;

and 4) state and federal offices can delay their credit certification processing and have inconsistent certification rates.

We recognize an adjustment to prior year hiring tax credits if credits certified by government offices differ from original estimates.

Congress has approved the WOTC program through the end of 2025.

Effective income tax rate (5.1) % (42.0) %

Additionally, our effective tax rate can be more or less volatile based on the amount of pre-tax income or loss.

For example, the impact of discrete items, tax credits, non-deductible expenses and valuation allowance on our effective tax rate can be greater when our pre-tax income or loss is lower.

For the fiscal year ended December 28, 2025, our income tax expense is related primarily to our foreign operations.

We continue to maintain a valuation allowance against our U.S.

federal, state and certain foreign deferred tax assets, initially established in the fiscal second quarter of 2024, resulting in no income tax benefit for these jurisdictions.

Our conclusion to maintain a valuation allowance was driven by U.S.

and certain foreign pre-tax losses beginning in fiscal 2023 and continuing through fiscal 2025, combined with the significant non-cash goodwill impairment charge of $59.1 million recorded during the fiscal year ended December 29, 2024.

Summary of Significant Accounting Policies and Note 13:

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Segment profit excludes goodwill and intangible asset impairment charges, depreciation and amortization expense, unallocated corporate general and administrative expense, interest and other income (expense), income taxes, and other costs and benefits not considered to be ongoing.

Segment Information , to our consolidated financial statements found in Item 8 of this Annual Report on Form 10-K, for additional details on our reportable segments, including a reconciliation of segment profit to income (loss) before tax expense (benefit).

Segment profit should not be considered a measure of financial performance in isolation or as an alternative to net income (loss) in the Consolidated Statements of Operations and Comprehensive Income (Loss) in accordance with accounting principles generally accepted in the United States of America (“U.S.

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Segment profit $ 6,534 0.7 % $ 5,783 0.7 %

PeopleReady segment profit declined $20.8 million and declined as a percentage of revenue for the fiscal year ended December 29, 2024, compared to the prior year.

The decline in segment profit was driven by the decline in revenue, as well as the increase in cost of services as a percentage of revenue from pricing pressures typical of a low demand environment, partially offset by lower workers’ compensation costs.

While SG&A expense declined overall due to operational cost management actions and simplification of our organizational structure, it increased slightly as a percentage of revenue due to the relatively high ratio of fixed to variable costs.

PeopleScout segment performance was as follows:

PeopleReady segment profit grew $0.8 million and remained unchanged as a percentage of revenue for the fiscal year ended December 28, 2025, compared to the prior year.

This was primarily due to operational cost management actions, which have resulted in a more efficient cost structure, as well as growth within our skilled businesses, specifically in the energy industry.

These were partially offset by higher workers’ compensation costs driven by less favorable workers’ compensation reserve adjustments.

PeopleManagement segment performance was as follows:

(in thousands, except percentages) 2025 % of revenue 2024 % of revenue

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Segment profit $ 17,772 3.3 % $ 15,119 2.8 %

PeopleScout segment profit declined $14.8 million and declined as a percentage of revenue for the fiscal year ended December 29, 2024, compared to the prior year.

The decline in segment profit was driven by the decline in revenue, partially offset by a decrease in cost of services as a percentage of revenue due to swift cost actions in response to lower revenue levels.

While SG&A expense declined overall due to operational cost management actions and simplification of our organizational structure, it increased as a percentage of revenue due to the relatively high ratio of fixed to variable costs.

PeopleManagement segment performance was as follows:

PeopleManagement segment profit grew $2.7 million and grew as a percentage of revenue for the fiscal year ended December 28, 2025, compared to the prior year.

Growth was primarily driven by higher revenue from our commercial driving business, coupled with a reduction in SG&A expense, which was the result of disciplined cost management actions to simplify and streamline our organizational structure to improve efficiency.

PeopleSolutions segment performance was as follows:

(in thousands, except percentages) 2025 % of revenue 2024 % of revenue

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Segment profit $ 11,332 6.0 % $ 12,152 7.8 %

PeopleManagement segment profit grew $8.2 million and grew as a percentage of revenue for the fiscal year ended December 29, 2024, compared to the prior year.

This growth was primarily due to the decrease in SG&A expense, which was the result of disciplined cost management actions to simplify and streamline our organizational structure to improve efficiency.

PeopleSolutions segment profit declined $0.8 million and declined as a percentage of revenue for the fiscal year ended December 28, 2025, compared to the prior year.

The declines were primarily due to changes in revenue mix, the effects of which were softened by our cost management actions.

MANAGEMENT’S DISCUSSION AND ANALYSIS

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Operating outlook

• For the fiscal first quarter of 2025, we expect revenue to decline between 13% and 7% as compared to the same period in the prior year.

The decline assumes current market conditions continue, and includes approximately 1% headwind due to the sale of Labour Ready Temporary Services, Ltd.

(“PeopleReady Canada”) in early 2024, partially offset by approximately 3% inorganic growth from the acquisition of Healthcare Staffing Professionals, Inc.

(“HSP”) in late January 2025.

• For the fiscal first quarter of 2025 we anticipate gross profit as a percentage of revenue to decline between 70 and 30 basis points as compared to the same period in the prior year, primarily due to continued changes in business mix.

• For the fiscal first quarter of 2026, we expect revenue to grow between 3% and 9% as compared to the same period in the prior year.

The growth includes approximately 1% growth from the acquisition of Healthcare Staffing Professionals, Inc.

• For the fiscal first quarter of 2026 we anticipate gross profit as a percentage of revenue to decline between 350 and 310 basis points as compared to the same period in the prior year, primarily due to prior year workers’ compensation reserve adjustments not expected to repeat at the same level.

• For the fiscal first quarter of 2026, we anticipate SG&A expense to be between $86 million and $90 million, representing improvement compared to the same period in the prior year, and the result of our ongoing cost management efforts.

4 unchanged sentences

Liquidity outlook

• For fiscal 2025, capital expenditures and spending for software as a service assets are expected to be between $19 million and $23 million, with approximately $3 million of this amount relating to spending for software as a service assets.

• To help fund the acquisition of HSP in late January, we borrowed $35.0 million under the Revolving Credit Facility as a Term Secured Overnight Financing Rate (“SOFR’) loan.

MANAGEMENT’S DISCUSSION AND ANALYSIS

• For fiscal 2026, capital expenditures and capitalized costs associated with the development of software as a service assets are expected to be between $13 million and $17 million, with approximately $1 million of this amount relating to spending for software as a service assets.

LIQUIDITY AND CAPITAL RESOURCES

We believe we have a strong financial position and sufficient sources of funding to meet our short- and long-term obligations.

As of December 29, 2024, we had $22.5 million in cash and cash equivalents and $7.6 million debt outstanding as a Swingline loan under the Revolving Credit Facility.

An additional $2.7 million of the Revolving Credit Facility was utilized by outstanding standby letters of credit, leaving $244.7 million unused, of which $118.5 million is available for additional borrowing after considering our most restrictive covenant.

We have an option to increase the total line of credit amount under the Revolving Credit Facility from $255.0 million to $405.0 million, subject to lender approval.

As of December 28, 2025, we had $24.5 million in cash and cash equivalents and $65.8 million debt outstanding.

Under the Revolving Credit Facility, an additional $11.4 million was utilized by outstanding standby letters of credit, leaving $177.8 million unused, of which $67.6 million is available for additional borrowing after considering our most restrictive covenant.

Long-Term Debt , to our consolidated financial statements found in Item 8 of this Annual Report on Form 10-K, for details on our Revolving Credit Facility.

On January 30, 2026, we entered into a second amendment to our credit agreement (“Second Amendment”).

The Second Amendment reduces our line of credit from $255 million to $175 million, while retaining our option to increase the amount by $150 million, subject to lender approval, with no changes in Swingline sub-limits, letters of credit sub-limits, interest rate pricing or the maturity date.

The Second Amendment converts the Revolving Credit Facility from a cash-flow based revolving credit facility to an asset-based lending facility by replacing the existing structure of a revolving commitment with availability subject to a borrowing base and a minimum excess availability covenant.

The minimum excess availability covenant may subsequently be replaced with a springing fixed charge coverage ratio covenant upon the satisfaction of meeting a minimum fixed charge coverage ratio test for two consecutive quarters occurring on or after September 27, 2026.

The fixed charge coverage ratio covenant will thereafter apply when Excess Availability (as defined in the Second Amendment) is below certain thresholds.

MANAGEMENT’S DISCUSSION AND ANALYSIS

Cash generated through our core operations is generally our primary source of liquidity.

26 unchanged sentences

Long-term rating A A2 A

Total collateral commitments decreased $24.5 million during the fiscal year ended December 29, 2024 primarily due to a decrease in collateral levels required by our insurance carriers, as well as the use of collateral to satisfy workers’ compensation claims.

Total collateral commitments decreased $45.5 million during the fiscal year ended December 28, 2025 primarily due to the use of collateral to satisfy workers’ compensation claims, as well as a decrease in collateral levels required by our insurance carriers, consistent with the $43.0 million decrease in workers’ compensation claims reserve.

Commitments and Contingencies , to our consolidated financial statements found in Item 8 of this Annual Report on Form 10-K, for additional details on our workers’ compensation commitments.

4 unchanged sentences

MANAGEMENT’S DISCUSSION AND ANALYSIS

The following table provides an analysis of changes in our workers’ compensation claims reserves:

Fiscal year ended

(in thousands) Dec 28, 2025 Dec 29, 2024

Beginning balance

$ 139,792 $ 196,515

Self-insurance reserve expenses related to current year, net

34,917 36,694

Cash payments related to current year claims

(12,557) (9,135)

Cash payments related to claims from prior years

(32,727) (32,976)

Changes to prior years’ self-insurance reserve, net

(19,574) (35,409)

Amortization of prior years’ discount (1)

Net change in excess claims reserve (2)

(12,984) (16,195)

Ending balance

96,744 139,792

Less current portion

24,193 34,729

Long-term portion

$ 72,551 $ 105,063

(1) The discount is amortized over the estimated weighted average life.

In addition, any changes to the estimated weighted average lives and corresponding discount rates for actual payments made are reflected in cost of services on the Consolidated Statement of Operations and Comprehensive Income (Loss) in the period when the changes in estimates are made.

(2) Changes to our claims above our self-insured limits (“excess claims”) are discounted to an estimated net present value using the risk-free rates associated with the actuarially determined weighted average lives of our excess claims.

Restricted cash, cash equivalents and investments also includes collateral to support our non-qualified deferred compensation plan in the form of company-owned life insurance policies.

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(in thousands) Dec 28, 2025 Dec 29, 2024

Net cash (used in) provided by operating activities

Net cash used in operating activities

$ (58,042) $ (17,058)

Net cash used in investing activities (16,062) (2,453)

Net cash used in financing activities (17,087) (37,583)

Change in cash, cash equivalents and restricted cash and cash equivalents reclassified to assets held-for-sale — (300)

Net cash provided by (used in) financing activities

57,143 (17,087)

Effect of exchange rate changes on cash, cash equivalents and restricted cash and cash equivalents (119) (1,608)

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Cash flows from operating activities

Operating cash flows consist of net income (loss) adjusted for non-cash benefits and expenses, and changes in operating assets and liabilities.

As client demand declines, the result is a deleveraging of accounts receivable and accounts payable.

Operating cash flows consist of net loss adjusted for non-cash benefits and expenses, and changes in operating assets and liabilities.

As client demand improves, the result is generally an increase in accounts receivable and accounts payable.

Accrued wages and benefits can fluctuate based on whether the period end requires the accrual of one or two weeks of payroll, the amount and timing of bonus payments and timing of payroll tax payments.

Net cash provided by accounts receivable collections through deleveraging during the fiscal year ended December 29, 2024 was partially offset by an increase in days sales outstanding of approximately three days compared to 2023, primarily due to a shift in business mix towards clients with longer payment terms.

Net cash used for payments on accounts payable and other accrued expenses was primarily related to timing of payments to vendors as well as a decrease in certain accrued expenses that fluctuate with revenue.

Net cash used for payments on accrued wages and benefits was primarily due to the release of certain COVID-19 government subsidy reserves.

Net cash used by accounts receivable during the fiscal year ended December 28, 2025 was primarily due to increased revenue, as well as an increase in days sales outstanding of approximately two days compared to fiscal year ended December 29, 2024, primarily due to a shift in business mix towards clients with longer payment terms.

Net cash used for payments on accounts payable and other accrued expenses was primarily related to timing of payments to vendors.

In addition, our workers’ compensation claims reserve decreases as claims are paid, and as a result of favorable adjustments of prior year reserves, both of which were the case in the current period.

Cash flows from investing activities

Investing cash flows consist of capital expenditures, and purchases, sales and maturities of restricted investments, which are managed in line with our workers’ compensation collateral funding requirements and timing of claim payments.

Capital expenditures for the fiscal year ended December 29, 2024 included continued investments to upgrade our PeopleReady technology platform.

Our capital expenditures were partially offset by cash provided by maturities of restricted investments to pay workers’ compensation claims exceeding purchases of new restricted investments.

Investing cash flows consist of capital expenditures, cash used for business acquisitions, net proceeds from divestitures, and purchases, sales and maturities of restricted investments, which are managed in line with our workers’ compensation collateral funding requirements and timing of claim payments.

MANAGEMENT’S DISCUSSION AND ANALYSIS

The primary use of cash for investing activities during the fiscal year ended December 28, 2025 was the acquisition of Healthcare Staffing Professionals, Inc.

Capital expenditures included continued investments to upgrade our PeopleReady on-demand technology platform.

Cash used was partially offset by cash provided by maturities of restricted investments, which were not reinvested due to lower workers’ compensation collateral requirements.

Cash flows from financing activities

Financing cash flows consist primarily of repurchases of common stock as part of our publicly announced share repurchase program, amounts to satisfy employee tax withholding obligations upon the vesting of restricted stock, and the net change in our Revolving Credit Facility.

Net cash used in financing activities during the fiscal year ended December 29, 2024 was primarily due to use of $21.3 million to repurchase our common stock in the open market.

As of December 29, 2024, $33.5 million remains available for repurchase under existing authorization, though we are limited to $25.0 million in aggregate share repurchases in any twelve-month period by our financial covenants.

Common stock repurchases were partially offset by a net increase in debt outstanding under our Revolving Credit Facility.

Financing cash flows consist primarily of repurchases of common stock as part of our publicly announced share repurchase program, amounts to satisfy employee tax withholding obligations upon the vesting of restricted stock, the net change in our Revolving Credit Facility, and proceeds from the sale of common stock through our employee stock purchase plan.

Net cash provided by financing activities during the fiscal year ended December 28, 2025 was due to draws on our Revolving Credit Facility, primarily to fund the acquisition of Healthcare Staffing Professionals, Inc.

and to finance working capital needs as revenue increased.

While we have not executed share repurchases during the fiscal year ended December 28, 2025, $33.5 million remains available for repurchase under existing authorization as of December 28, 2025.

We are limited to $25.0 million in aggregate share repurchases in any twelve-month period by our financial covenants.

FISCAL 2024 AS COMPARED TO FISCAL 2023

Management’s Discussion and Analysis of Financial Condition and Results of Operations , found in Part II of the Annual Report on Form 10-K for the fiscal year ended December 29, 2024 for discussion of fiscal 2024 compared to fiscal 2023.

MANAGEMENT’S DISCUSSION AND ANALYSIS

SUMMARY OF CRITICAL ACCOUNTING ESTIMATES

Management’s discussion and analysis of financial condition and results of operations discusses our financial statements, which have been prepared in accordance with U.S.

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

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

On an ongoing basis, management evaluates its estimates and judgments.

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When appropriate, we record a valuation allowance against the insurance receivable to reflect amounts that may not be realized.

MANAGEMENT’S DISCUSSION AND ANALYSIS

There are two main factors that impact workers’ compensation cost:

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For fiscal 2025 claims, a 5% change in one or more of the above factors would result in a change to workers’ compensation cost of approximately $2 million.

Our reserve balances have been positively impacted primarily by the success of our accident prevention programs and our focus on resolving open claims in a timely manner.

Our reserve balances have been positively impacted primarily by the success of our accident prevention programs, our focus on resolving open claims in a timely manner, as well as shifts in business mix.

In the event that we are not able to further reduce our accident rates or resolve open claims in a timely manner, the positive impacts to our reserve balance will diminish.

Management evaluates the adequacy of the workers’ compensation reserves in conjunction with an independent quarterly actuarial assessment.

Factors considered in establishing and adjusting these reserves include, among other things:

Factors considered by management, along with our third-party actuary and third-party administrator, in establishing and adjusting these reserves include, among other things:

• changes in medical and time loss (“indemnity”) costs;

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• positive or adverse development of claims.

MANAGEMENT’S DISCUSSION AND ANALYSIS

Accounts receivable allowance for credit losses

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Based on an analysis of the risk characteristics of our clients and associated receivables, we have concluded our pools are as follows:

• PeopleReady has a large, diverse set of clients, generally with frequent, low dollar invoices due to the daily nature of the work we perform.

• PeopleReady (excluding RenewableWorks) has a large, diverse set of clients, generally with frequent, low dollar invoices due to the daily nature of the work we perform.

This results in high turnover in accounts receivable.

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Payment terms are slightly longer than PeopleReady.

• PeopleScout has a smaller number of clients, and generally sends monthly invoices on a consolidated basis for a client.

Invoice amounts are generally higher for PeopleScout than our other businesses, with longer payment terms than PeopleReady and Centerline.

• Staff Management | SMX and SIMOS Insourcing Solutions have a smaller number of clients, and follow a contractual billing schedule.

These clients have longer payment terms than our other businesses.

• Our PeopleScout and HSP brands have a smaller number of clients in a variety of industries and are generally invoiced monthly on a consolidated basis.

Invoice amounts are generally higher for these brands than our other businesses, with longer payment terms than PeopleReady and Centerline.

These businesses also have significant balances due from governmental entities.

• Our Staff Management | SMX and SIMOS Insourcing Solutions brands have a smaller number of clients and follow a contractual billing schedule.

These clients generally operate in the manufacturing, warehousing and distribution industries and have longer payment terms than our other businesses.

• Our RenewableWorks brand has a small number of large clients that operate in the energy industry, generally with high dollar invoices, and follows a contractual billing schedule.

Payment terms are slightly longer than most of our other businesses.

When specific clients are identified as no longer sharing the same risk profile as their current pool, they are removed from the pool and evaluated separately.

The credit loss rates applied to each aging category by pool are based on current collection efforts, historical collection trends, write-off experience, client credit risk, current economic data and forecasted information.

The credit loss rates applied to each aging category by pool are based on current collection efforts, historical collection trends, write-off experience, client credit risk and current economic data.

Management has elected the practical expedient to assume that current conditions as of the balance sheet date do not change for the remaining life of the assets.

The allowance for credit loss is reviewed and represents our best estimate of the amount of expected credit losses.

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Changes in the allowance for credit losses are recorded in SG&A expense on the Consolidated Statements of Operations and Comprehensive Income (Loss).

MANAGEMENT’S DISCUSSION AND ANALYSIS

Business combinations

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The purchase price of an acquisition is allocated to the underlying assets acquired and liabilities assumed based upon their estimated fair values at the date of acquisition.

We determine the estimated fair values after review and consideration of relevant information including discounted cash flows, quoted market prices and estimates made by management.

Determining the fair value of an acquired company is judgmental in nature and involves the use of significant estimates and assumptions.

The significant judgments include estimation of future cash flows, which is dependent on forecasts;

estimation of the long-term rate of growth;

estimation of the useful life over which cash flows will occur;

and determination of a weighted average cost of capital, which is risk-adjusted to reflect the specific risk profile of the business being purchased.

Determining the fair value of the assets acquired and liabilities assumed is judgmental in nature and involves the use of significant estimates and assumptions.

Estimates are used in accounting for, among other things, the fair value of acquired net operating assets, property and equipment, intangible assets, useful lives of property and equipment, and amortizable lives for acquired intangible assets.

Intangible assets that arise from contractual/legal rights, or are capable of being separated, are measured and recorded at fair value and amortized over the estimated useful life.

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Subsequent changes in the estimate of the amount to be paid under the contingent consideration arrangement are recognized on the Consolidated Statements of Operations and Comprehensive Income (Loss).

Cash payments for contingent or deferred consideration are classified within cash flows from investing activities for the purchase price fair value of the contingent consideration while amounts paid in excess are classified within cash flows from operating activities on the Consolidated Statements of Cash Flows.

Cash payments to settle the contingent consideration liability within a relatively short period of time after the acquisition is completed are classified as investing activities in the Consolidated Statements of Cash Flows.

Cash payments to settle the contingent consideration liability up to the acquisition date fair value (including measurement period adjustments) that are not within a relatively short period of time are recorded as financing activities in the Consolidated Statements of Cash Flows.

Cash payments to settle contingent consideration liability in excess of the acquisition date fair value (including measurement period adjustments) are recorded as operating activities in the Consolidated Statements of Cash Flows.

Alternatively, our acquisitions may include contingent payments to employees that are selling shareholders, which are separate from the business combination and are accounted for as compensation expense.

MANAGEMENT’S DISCUSSION AND ANALYSIS

Goodwill and indefinite-lived intangible assets

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We test for goodwill impairment at the reporting unit level.

We consider our operating segments to be our reporting units for goodwill impairment testing.

Our reporting units with remaining goodwill as of the first day of our fiscal second quarter of 2024 were PeopleReady, Centerline, PeopleScout RPO and PeopleScout MSP.

We consider our reporting units to be our operating segments or one level below that (the component level) based on our organizational structure.

Effective March 31, 2025 (the first day of our fiscal second quarter of 2025), we combined our PeopleScout RPO and PeopleScout MSP reporting units into one reporting unit, PeopleScout.

This change coincided with the elimination of PeopleScout MSP as an operating segment within the PeopleSolutions reportable segment.

Immediately before the combination, we tested the PeopleScout RPO reporting unit, with a remaining goodwill balance of $22.4 million, and the PeopleScout MSP reporting unit, with a remaining goodwill balance of $0.8 million, for impairment.

The PeopleScout RPO reporting unit’s fair value was substantially in excess of its carrying value, and the PeopleScout MSP reporting unit’s fair value approximated its carrying value.

After combining the reporting units, the fair value of the PeopleScout reporting unit was substantially in excess of its carrying value.

As a result, no impairment charge was recognized.

Our reporting units with remaining goodwill as of December 28, 2025 were Centerline, PeopleScout and HSP.

When evaluating goodwill for impairment, we may first assess qualitative factors to determine whether it is more likely than not the fair value of a reporting unit is less than its carrying amount.

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If, after assessing the totality of events and circumstances, we determine that it is more likely than not the fair value of the reporting unit is greater than its carrying amount, the quantitative impairment test is unnecessary.

MANAGEMENT’S DISCUSSION AND ANALYSIS

The quantitative impairment test, if necessary, involves comparing the fair value of each reporting unit to its carrying value, including goodwill.

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Impairment test

During the fiscal second quarter of 2024, management determined that a triggering event had occurred as a result of additional decline in demand for our services, prolonged economic uncertainty, and a further decrease in our stock price.

Therefore, we performed an interim impairment test as of the last day of fiscal May 2024.

We performed our annual impairment test as of the first day of our fiscal second quarter of 2025.

The weighted average cost of capital used in our most recent impairment test was risk-adjusted to reflect the specific risk profile of the reporting units and ranged from 14.5% to 16.5%.

We also applied a market approach, which develops a value correlation based on the market capitalization of similar publicly traded companies, referred to as a multiple, to apply to the forecasted future operating results of the reporting units.

The primary market multiples considered for the market approach are revenue and earnings before interest, taxes, depreciation, and amortization.

In our most recent impairment test, the market multiples were based on earnings before interest, taxes, depreciation, and amortization for Centerline and PeopleScout RPO, while market multiples based on revenue were used for PeopleReady.

The income and market approaches for each reporting unit were equally weighted in our most recent annual impairment test, except for PeopleScout MSP which relied only on the income approach.

The combined fair values for all reporting units were then reconciled to the aggregate market value of our shares of common stock on the date of valuation.

MANAGEMENT’S DISCUSSION AND ANALYSIS

Based on the results of our interim impairment test, we concluded that the carrying amount of goodwill for the PeopleReady reporting unit exceeded the estimated fair value and we recorded a non-cash impairment charge of $59.1 million, which was included in goodwill and intangible asset impairment charge on our Consolidated Statements of Operations and Comprehensive Income (Loss) for the fiscal year ended December 29, 2024.

As a result of this impairment charge, the total goodwill carrying value of $59.1 million for PeopleReady was fully impaired.

Based on our interim impairment test, we concluded the fair value of all other reporting units were substantially in excess of their carrying value, and the goodwill associated with those reporting units was not impaired.

Additionally, following performance of the interim impairment test, we did not identify any events or conditions that make it more likely than not that an additional impairment may have occurred during the fiscal year ended December 29, 2024.

Based on the results of our annual impairment test, all of our reporting units’ fair values were substantially in excess of their respective carrying values, except for HSP, for which the estimated fair value was in excess of its carrying value by approximately 5%.

This level of headroom is expected, due to the short amount of time that has passed between the acquisition date, when the carrying value of the reporting unit approximated its fair value, and our annual impairment test as of the first day of our fiscal second quarter of 2025.

A discount rate of 15.5% was used in calculating the fair value of the HSP reporting unit.

In the event either the discount rate increases, forecasted revenue growth declines, or gross profit as a percentage of revenue declines by less than 1 percentage point, the carrying value of the reporting unit would exceed its fair value.

Any significant adverse change in our near- or long-term projections or macroeconomic conditions could result in future impairment charges.

The goodwill balance for HSP as of December 28, 2025 was $17.3 million.

We will continue to closely monitor the operational performance of this reporting unit.

Additionally, following performance of the annual impairment test, we did not identify any events or conditions that make it more likely than not that an additional impairment may have occurred during the fiscal year ended December 28, 2025.

Goodwill and Intangible Assets , to our consolidated financial statements found in Item 8 of this Annual Report on Form 10-K, for additional details on the 2025, 2024 and 2023 goodwill impairment.

There were no goodwill impairment charges recorded during fiscal 2022.

Indefinite-lived intangible assets

We have indefinite-lived intangible assets for trade names/trademarks related to businesses within our PeopleScout and PeopleManagement segments.

We have indefinite-lived intangible assets for trademarks related to businesses within our PeopleSolutions and PeopleManagement segments.

We evaluate our indefinite-lived intangible assets for impairment on an annual basis as of the first day of our fiscal second quarter, or whenever events or circumstances make it more likely than not that an impairment may have occurred.

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We monitor the existence of potential impairment indicators throughout the fiscal year.

When evaluating indefinite-lived intangible assets for impairment, we may first assess qualitative factors to determine whether it is more likely than not the fair value of the indefinite-lived intangible is less than its carrying amount.

MANAGEMENT’S DISCUSSION AND ANALYSIS

Qualitative factors include macroeconomic conditions, industry and market conditions and overall company financial performance.

If, after assessing the totality of events and circumstances, we determine that it is more likely than not the fair value of the indefinite-lived intangible asset is greater than its carrying amount, the quantitative impairment test is unnecessary.

The quantitative impairment test, if necessary, utilizes the relief from royalty method to determine the fair value of each of our trade names/trademarks.

The quantitative impairment test, if necessary, utilizes the relief from royalty method to determine the fair value of each of our trademarks.

If the carrying value exceeds the fair value, we recognize an impairment charge in an amount equal to the excess, not to exceed the carrying value.

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Impairment test

We performed an indefinite-lived intangible asset impairment test during our fiscal second quarter of 2024.

As a result of this impairment test, we concluded that a trade name/trademark related to the PeopleManagement segment exceeded its estimated fair value and we recorded a non-cash impairment charge of $0.6 million, which was included in goodwill and intangible asset impairment charge on our Consolidated Statements of Operations and Comprehensive Income (Loss) for the fiscal year ended December 29, 2024.

The charge was primarily driven by recent revenue performance of the related business given a decline in demand and overall economic uncertainty.

The remaining balance for this trade name/trademark was $2.7 million as of December 29, 2024.

As of our impairment testing date, the fair value of the trade name/trademark related to the PeopleScout segment was substantially in excess of its carrying amount of $2.1 million, and therefore did not result in an impairment.

As a result of our annual impairment test as of the first day of our fiscal second quarter of 2025, we concluded that a trademark related to the PeopleManagement segment exceeded its estimated fair value and we recorded a non-cash impairment charge of $0.2 million, which was included in goodwill and intangible asset impairment charge on our Consolidated Statements of Operations and Comprehensive Income (Loss) for the fiscal year ended December 28, 2025.

The charge was primarily driven by an increase in the discount rate of 1.0% since our last impairment test.

The remaining balance for this trademark was $2.5 million as of December 28, 2025.

As of our impairment testing date, the fair value of the trademark related to the PeopleSolutions segment was in excess of its carrying amount of $2.1 million, and therefore did not result in an impairment.

Additionally, following performance of the impairment test, we did not identify any events or conditions that make it more likely than not that an additional impairment may have occurred during the fiscal year ended December 28, 2025.

Goodwill and Intangible Assets , to our consolidated financial statements found in Item 8 of this Annual Report on Form 10-K, for additional details on the 2025, 2024 and 2023 indefinite-lived intangible asset impairment.

There were no indefinite-lived intangible asset impairment charges recorded during fiscal 2022.

MANAGEMENT’S DISCUSSION AND ANALYSIS

Finite-lived intangible assets and other long-lived assets

We review intangible assets that have finite useful lives and other long-lived assets whenever an event or change in circumstances indicates that the carrying value of the asset may not be recoverable.

Important factors that could result in an impairment review include, but are not limited to, significant underperformance relative to historical or planned operating results, or significant changes in business strategies.

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When an impairment charge is recognized, the carrying amount of the asset is reduced to its estimated fair value based on discounted cash flow analysis or other valuation techniques.

No impairment charges were recorded during fiscal 2024, 2023 or 2022.

Impairment test

Following the coronavirus pandemic, the company shifted to a remote or hybrid work model for our headquarters and U.S.-based support teams, reducing the need for corporate office space.

As a result, on October 6, 2025, we executed a sublease for our Chicago support center, which was approved by the landlord on October 28, 2025.

The sublessee is expected to take possession of the space on April 1, 2026, and the sublease will remain in effect for the duration of the original lease term, concluding on June 29, 2036.

MANAGEMENT’S DISCUSSION AND ANALYSIS

Execution of the sublease required us to reevaluate the long-lived asset group for the Chicago support center and test the new asset group for recoverability and impairment during the fiscal fourth quarter of 2025.

The Chicago support center asset group consists of the operating lease right-of-use asset, and related property and equipment, including leasehold improvements and furniture.

We determined that the carrying value of the asset group, which was $23.5 million as of the measurement date, was not recoverable based on the undiscounted cash flows expected to result from the use and eventual disposition of the asset group.

Therefore, we performed an impairment analysis.

To perform this analysis, we estimated the fair value of the asset group using the income approach, specifically a discounted cash flow valuation technique.

The valuation incorporated the terms of our executed sublease, which were determined to reflect market-based terms, and a discount rate of 9.0%.

As of the measurement date, we concluded that the carrying value of the asset group exceeded its estimated fair value and we recorded a non-cash impairment charge of $18.4 million, which was included in right-of-use and other long-lived asset impairment charge on our Consolidated Statements of Operations and Comprehensive Income (Loss) for the fiscal year ended December 28, 2025.

The impairment was allocated to the assets within the asset group using a pro-rata method based on relative carrying values, with $13.0 million allocated to operating lease right-of-use assets, net, and the remaining $5.4 million allocated to property and equipment, net, on our Consolidated Balance Sheets, which included leasehold improvement impairment of $5.2 million and furniture impairment of $0.2 million.

Commitments and Contingencies , to our consolidated financial statements found in Item 8 of this Annual Report on Form 10-K, for additional details on the 2025 right-of-use and other long-lived asset impairment charge.

There were no additional finite-lived intangible asset or other long-lived asset impairment charges recorded during fiscal 2025.

There were no material finite-lived intangible asset or other long-lived asset impairment charges recorded during fiscal 2024 or 2023.

Estimated contingent legal and regulatory liabilities

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When appropriate, we record a valuation allowance against deferred tax assets to reduce deferred tax assets to the amount that is more likely than not to be realized.

Based on our deferred tax asset realizability assessments during the year ended December 29, 2024, we determined that a valuation allowance was appropriate against our U.S.

federal, state and certain foreign deferred tax assets that we expect will not be utilized within the permitted carryforward periods.

During the year ended December 28, 2025, we performed our deferred tax asset realizability assessments and, as a result, we maintained a valuation allowance against our U.S.

federal, state and certain foreign deferred tax assets.

Our conclusion was driven by U.S.

and certain foreign pre-tax losses beginning in 2023 and continuing into 2025, combined with the non-cash goodwill impairment charge of $59.1 million recorded during fiscal 2024.

Income Taxes , to our consolidated financial statements found in Item 8 of this Annual Report on Form 10-K, for details on our current valuation allowance.

MANAGEMENT’S DISCUSSION AND ANALYSIS

NEW ACCOUNTING STANDARDS

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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-K

Item 7. Management’s Discussion and Analysis