INTERFACE INC 10-Q

ITEM 1. FINANCIAL STATEMENTS INTERFACE, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (in thousands, except par values) MARCH 30, 2025 DECEMBER 29, 2024 (UNAUDITED) ASSETS Current assets Cash and cash equivalents $ 97,757 $ 99,226 Accounts receivable, net 162,754 171,135 Inventories, net 281,741 260,581 Prepaid expenses and other current assets 37,185 33,355 Total current assets 579,437 564,297 Property, plant and equipment, net 283,783 282,374 Operating lease right-of-use assets 77,845 76,815 Deferred tax asset 25,033 24,624 Goodwill and intangible assets, net 152,282 148,160 Other assets 73,418 74,546 Total assets $ 1,191,798 $ 1,170,816 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities Accounts payable $ 82,958 $ 68,943 Accrued expenses 114,009 134,996 Current portion of operating lease liabilities 12,718 12,296 Current portion of long-term debt 487 482 Total current liabilities 210,172 216,717 Long-term debt 302,390 302,275 Operating lease liabilities 69,160 68,092 Deferred income taxes 32,557 31,822 Other long-term liabilities 64,452 62,762 Total liabilities 678,731 681,668 Commitments and contingencies (Note 14) Shareholders’ equity Preferred stock, par value $ 1.00 per share; 5,000 shares authorized; none issued or outstanding at March 30, 2025 and December 29, 2024 — — Common stock, par value $ 0.10 per share; 120,000 shares authorized; 58,610 and 58,304 shares issued and outstanding at March 30, 2025 and December 29, 2024, respectively 5,861 5,830 Additional paid-in capital 257,416 261,028 Retained earnings 417,802 405,441 Accumulated other comprehensive loss – foreign currency translation ( 127,483 ) ( 143,317 ) Accumulated other comprehensive loss – pension liability ( 40,529 ) ( 39,834 ) Total shareholders’ equity 513,067 489,148 Total liabilities and shareholders’ equity $ 1,191,798 $ 1,170,816 See accompanying notes to consolidated condensed financial statements. 3 Table of Contents INTERFACE, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) (in thousands, except per share data) THREE MONTHS ENDED MARCH 30, 2025 MARCH 31, 2024 Net sales $ 297,413 $ 289,743 Cost of sales 186,450 179,338 Gross profit 110,963 110,405 Selling, general and administrative expenses 87,736 85,959 Operating income 23,227 24,446 Interest expense 4,415 6,423 Other expense (income), net 1,703 ( 976 ) Income before income tax expense 17,109 18,999 Income tax expense 4,107 4,820 Net income $ 13,002 $ 14,179 Earnings per share – basic $ 0.22 $ 0.24 Earnings per share – diluted $ 0.22 $ 0.24 Common shares outstanding – basic 58,434 58,238 Common shares outstanding – diluted 59,173 58,714 See accompanying notes to consolidated condensed financial statements. 4 Table of Contents INTERFACE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (in thousands) THREE MONTHS ENDED MARCH 30, 2025 MARCH 31, 2024 Net income $ 13,002 $ 14,179 Other comprehensive income (loss), after tax: Foreign currency translation adjustment 15,834 ( 11,092 ) Pension liability adjustment ( 695 ) 458 Other comprehensive income (loss) 15,139 ( 10,634 ) Comprehensive income $ 28,141 $ 3,545 See accompanying notes to consolidated condensed financial statements. 5 Table of Contents INTERFACE, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands) THREE MONTHS ENDED MARCH 30, 2025 MARCH 31, 2024 OPERATING ACTIVITIES: Net income $ 13,002 $ 14,179 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 9,401 9,616 Share-based compensation expense 4,145 3,915 Deferred income taxes ( 837 ) ( 678 ) Other 3,070 ( 3,708 ) Amortization of acquired intangible assets 1,255 1,297 Working capital changes: Accounts receivable 10,675 13,837 Inventories ( 16,339 ) ( 20,477 ) Prepaid expenses and other current assets ( 3,438 ) ( 2,193 ) Accounts payable and accrued expenses ( 9,195 ) ( 3,169 ) Cash provided by operating activities 11,739 12,619 INVESTING ACTIVITIES: Capital expenditures ( 7,467 ) ( 4,033 ) Proceeds from sale of property, plant and equipment — 1,040 Insurance proceeds from property casualty loss — 1,000 Cash used in investing activities ( 7,467 ) ( 1,993 ) FINANCING ACTIVITIES: Repayments of long-term debt ( 122 ) ( 34,783 ) Borrowing of long-term debt — 10,000 Tax withholding payments for share-based compensation ( 7,730 ) ( 4,271 ) Dividends paid ( 54 ) ( 6 ) Finance lease payments ( 762 ) ( 716 ) Cash used in financing activities ( 8,668 ) ( 29,776 ) Net cash used in operating, investing and financing activities ( 4,396 ) ( 19,150 ) Effect of exchange rate changes on cash 2,927 ( 1,574 ) CASH AND CASH EQUIVALENTS: Net decrease ( 1,469 ) ( 20,724 ) Balance, beginning of period 99,226 110,498 Balance, end of period $ 97,757 $ 89,774 See accompanying notes to consolidated condensed financial statements. 6 Table of Contents INTERFACE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation References in this Quarterly Report on Form 10-Q to “Interface,” “the Company,” “we,” “our,” “ours” and “us” refer to Interface, Inc. and its subsidiaries or any of them, unless the context requires otherwise. As contemplated by the Securities and Exchange Commission (the “Commission”) instructions to Form 10-Q, the following footnotes have been condensed and, therefore, do not contain all disclosures required in connection with annual financial statements. Reference should be made to the Company’s year-end financial statements and notes thereto contained in its Annual Report on Form 10-K for the fiscal year ended December 29, 2024, as filed with the Commission. The financial information included in this report has been prepared by the Company. In the opinion of management, the financial information included in this report contains all adjustments necessary for a fair presentation of the results for the interim periods. All such adjustments are of a normal recurring nature unless otherwise disclosed. Nevertheless, the results shown for interim periods are not necessarily indicative of results to be expected for the full year. The December 29, 2024, consolidated condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States (“GAAP”). The three-month periods ended March 30, 2025 and March 31, 2024 both include 13 weeks. Risks and Uncertainties Global economic challenges including but not limited to the potential impacts of government-imposed tariffs and retaliatory tariffs, inflation, supply chain disruptions, the Russia-Ukraine war and the conflicts in the Middle East, and slow market conditions in certain parts of the globe could cause economic uncertainty and volatility. The Company considered these impacts and subsequent general uncertainties and volatility in the global economy on the assumptions and estimates used herein. These uncertainties could result in a future material adverse effect to the amounts reported within the Company’s consolidated condensed financial statements if actual results differ from these estimates. Reclassifications Certain reclassifications to prior year information have been made in the consolidated condensed statements of cash flows to conform to the current period presentation. The previously reported line item “deferred income taxes and other” was separated into two line items in the current period presentation of the consolidated condensed statements of cash flows to provide additional information. These reclassifications had no effect on cash provided by operating activities as previously reported. Recently Issued Accounting Pronouncements – Not Yet Adopted In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03, “Income Statement Reporting - Comprehensive Income - Expense Disaggregation (Topic 220-40)”. This ASU requires public entities to provide additional footnote disclosures to disaggregate the cost and expense line items presented in the income statement into specific categories including (a) purchases of inventory; (b) employee compensation; (c) depreciation; and (d) intangible asset amortization. The ASU also requires qualitative disclosure of other relevant expense categories not separately disclosed, the total amount of selling expenses, and the definition of selling expenses in annual reporting periods. The new guidance in ASU 2024-03 is effective for annual periods beginning after December 15, 2026 and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of this ASU to its consolidated financial statements. In December 2023, the FASB issued ASU 2023-09, “ Income Taxes (Topic 740 ): Improvements to Income Tax Disclosures. ” This ASU requires public entities on an annual basis to disclose a rate reconciliation with explicit categories, as outlined in the ASU, and requires additional disclosures for reconciling items that meet certain quantitative thresholds. Other disclosures include disaggregation of income taxes paid, pre-tax income, and income tax expense. The new guidance is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. We are currently assessing the updated guidance; however, it is not expected to have a material impact to our consolidated financial statements. 7 Table of Contents NOTE 2 – REVENUE RECOGNITION The Company generates revenue from sales of modular carpet, resilient flooring, rubber flooring, and other flooring-related material, and from the installation of carpet and other flooring-related material. A summary of these revenue streams, as a percentage of net sales, for the three months ended March 30, 2025 and March 31, 2024 is as follows: Three Months Ended March 30, 2025 March 31, 2024 Revenue from the sale of flooring material 98 % 99 % Revenue from installation of flooring material 2 % 1 % Disaggregation of Revenue For the three months ended March 30, 2025 and March 31, 2024, revenue from the Company’s customers is broken down by geography as follows: Three Months Ended Geography March 30, 2025 March 31, 2024 Americas 60.5 % 58.6 % Europe 29.7 % 31.6 % Asia-Pacific 9.8 % 9.8 % Revenue from the Company’s customers in the Americas corresponds to the AMS reportable segment, and the EAAA reportable segment includes revenue from the Europe and Asia-Pacific geographies. See Note 10 entitled “Segment Information” for additional information. 8 Table of Contents NOTE 3 – INVENTORIES Inventories are summarized as follows: March 30, 2025 December 29, 2024 (in thousands) Finished goods $ 207,419 $ 192,705 Work-in-process 21,182 18,552 Raw materials 53,140 49,324 Inventories, net $ 281,741 $ 260,581 9 Table of Contents NOTE 4 – EARNINGS PER SHARE The Company computes basic earnings per share (“EPS”) by dividing net income by the weighted average common shares outstanding, including participating securities outstanding, during the period as discussed below. Diluted EPS reflects the potential dilution beyond shares for basic EPS that could occur if securities or other contracts to issue common stock were exercised, converted into common stock or resulted in the issuance of common stock that would have shared in the Company’s earnings. The Company includes all unvested stock awards that contain non-forfeitable rights to dividends or dividend equivalents, whether paid or unpaid, in the number of shares outstanding for basic EPS as these awards are considered participating securities. Unvested share-based awards of restricted stock are paid dividends equally with all other shares of common stock and are considered participating securities. As a result, the Company includes all outstanding restricted stock awards in the calculation of basic and diluted EPS. Any unvested share-based awards considered non-participating securities (restricted share units and performance shares) are included in diluted EPS calculations when the inclusion of these shares would be dilutive. The following table shows the computation of basic and diluted EPS: Three Months Ended March 30, 2025 March 31, 2024 (in thousands, except per share data) Numerator: Net income (1) $ 13,002 $ 14,179 Denominator: Weighted average shares outstanding 58,325 57,623 Participating securities 109 615 Shares for basic EPS 58,434 58,238 Dilutive effect of non-participating securities 739 476 Shares for diluted EPS 59,173 58,714 Basic EPS $ 0.22 $ 0.24 Diluted EPS $ 0.22 $ 0.24 (1) Including income attributable to participating securities, which was not material for the three months ended March 30, 2025 and was $ 0.2 million for the three months ended March 31, 2024. For the three months ended March 30, 2025, there were no securities excluded from the computation of diluted EPS that would have been antidilutive. For the three months ended March 31, 2024, 1,049,405 non-participating securities (restricted share units and performance shares) were excluded from the computation of diluted EPS as these securities would have been antidilutive for the period. 10 Table of Contents NOTE 5 – LONG-TERM DEBT Long-term debt consisted of the following: March 30, 2025 December 29, 2024 Outstanding Principal Interest Rate (1) Outstanding Principal Interest Rate (1) (in thousands) (in thousands) Syndicated Credit Facility (2) : Term loan borrowings $ 5,505 5.40 % $ 5,564 5.62 % 5.50% Senior Notes due 2028 300,000 5.50 % 300,000 5.50 % Total debt 305,505 305,564 Less: Unamortized debt issuance costs ( 2,628 ) ( 2,807 ) Total debt, net 302,877 302,757 Less: Current portion of long-term debt ( 487 ) ( 482 ) Total long-term debt, net $ 302,390 $ 302,275 (1) Represents the weighted average rate of interest for borrowings under the Syndicated Credit Facility and the stated rate of interest for the 5.50 % Senior Notes due 2028, without the effect of debt issuance costs. (2) The Syndicated Credit Facility also includes a multicurrency revolving loan facility up to $ 300.0 million. There were no revolving loan borrowings outstanding as of March 30, 2025 or December 29, 2024. Syndicated Credit Facility The Company’s Syndicated Credit Facility (the “Facility”) provides to the Company U.S. denominated and multicurrency term loans and provides to the Company and certain of its subsidiaries a multicurrency revolving credit facility. Interest on base rate loans is charged at varying rates computed by applying a margin depending on the Company’s consolidated net leverage ratio as of the most recently completed fiscal quarter. Interest on secured overnight financing rate based (“SOFR”) and alternative currency loans is charged at varying rates computed by applying a margin over the applicable SOFR rate or alternative currency rate, depending on the Company’s consolidated net leverage ratio as of the most recently completed fiscal quarter. In addition, the Company pays a commitment fee per annum (depending on the Company’s consolidated net leverage ratio as of the most recently completed fiscal quarter) on the unused portion of the Facility. Fees for commercial letters of credit are computed as a percentage of the amount available to be drawn under such letters of credit. Fees for standby letters of credit are charged at varying rates computed by applying a margin of the amount available to be drawn under such standby letters of credit, depending on the Company’s consolidated net leverage ratio as of the most recently completed fiscal quarter. As of March 30, 2025 and December 29, 2024, the Company had $ 0.5 million and $ 0.7 million, respectively, in letters of credit outstanding under the Facility. Under the Facility, the Company is required to make quarterly amortization payments of the term loan borrowings, which are due on the last day of the calendar quarter. The Company is in compliance with all covenants under the Facility and anticipates that it will remain in compliance with the covenants for the foreseeable future. Senior Notes due 2028 The 5.50 % Senior Notes due 2028 (the “Senior Notes”) bear an interest rate at 5.50 % per annum and mature on December 1, 2028. Interest is paid semi-annually on June 1 and December 1 of each year. The Senior Notes are unsecured and are guaranteed, jointly and severally, by each of the Company’s material domestic subsidiaries, all of which also guarantee the obligations of the Company under the Facility. The Company is in compliance with all covenants under the indenture governing the Senior Notes and anticipates that it will remain in compliance with the covenants for the foreseeable future. 11 Table of Contents NOTE 6 – SHAREHOLDERS’ EQUITY The following tables depict the activity in the accounts which make up shareholders’ equity for the three months ended March 30, 2025 and March 31, 2024: SHARES COMMON STOCK ADDITIONAL PAID-IN CAPITAL RETAINED EARNINGS PENSION LIABILITY FOREIGN CURRENCY TRANSLATION ADJUSTMENT TOTAL (in thousands, except per share data) Balance, at December 29, 2024 58,304 $ 5,830 $ 261,028 $ 405,441 $ ( 39,834 ) $ ( 143,317 ) $ 489,148 Net income — — — 13,002 — — 13,002 Issuances of stock related to restricted share units and performance shares 658 66 ( 66 ) — — — — Cash dividends declared, $ 0.01 per common share — — — ( 641 ) — — ( 641 ) Compensation expense related to share-based plans, net of forfeitures and shares received for tax withholdings ( 352 ) ( 35 ) ( 3,546 ) — — — ( 3,581 ) Pension liability adjustment — — — — ( 695 ) — ( 695 ) Foreign currency translation adjustment — — — — — 15,834 15,834 Balance, at March 30, 2025 58,610 $ 5,861 $ 257,416 $ 417,802 $ ( 40,529 ) $ ( 127,483 ) $ 513,067 SHARES COMMON STOCK ADDITIONAL PAID-IN CAPITAL RETAINED EARNINGS PENSION LIABILITY FOREIGN CURRENCY TRANSLATION ADJUSTMENT TOTAL (in thousands, except per share data) Balance, at December 31, 2023 58,112 $ 5,811 $ 252,909 $ 320,833 $ ( 34,016 ) $ ( 119,590 ) $ 425,947 Net income — — — 14,179 — — 14,179 Issuances of stock related to restricted share units and performance shares 472 47 ( 47 ) — — — — Cash dividends declared, $ 0.01 per common share — — — ( 589 ) — — ( 589 ) Compensation expense related to share-based plans, net of forfeitures and shares received for tax withholdings ( 311 ) ( 31 ) ( 324 ) — — — ( 355 ) Pension liability adjustment — — — — 458 — 458 Foreign currency translation adjustment — — — — — ( 11,092 ) ( 11,092 ) Balance, at March 31, 2024 58,273 $ 5,827 $ 252,538 $ 334,423 $ ( 33,558 ) $ ( 130,682 ) $ 428,548 12 Table of Contents The Company has share-based employee compensation plans, which are described more fully in Note 14 to the consolidated financial statements included in Item 8 of the Annual Report on Form 10-K for the fiscal year ended December 29, 2024 . Restricted Stock Awards Compensation expense related to restricted stock grants was $ 0.3 million and $ 0.9 million for the three months ended March 30, 2025 and March 31, 2024, respectively. The Company has reduced its expense for any restricted stock forfeited during the period. The following table summarizes restricted stock outstanding as of March 30, 2025, as well as activity during the three months then ended: Restricted Stock Weighted Average Grant Date Fair Value Outstanding at December 29, 2024 242,300 $ 13.92 Granted — — Vested ( 184,000 ) 13.19 Forfeited or canceled — — Outstanding at March 30, 2025 58,300 $ 16.22 As of March 30, 2025, the unrecognized total compensation cost related to unvested restricted stock was $ 0.1 million. That cost is expected to be recognized during the second quarter of 2025. Restricted Share Unit Awards Compensation expense related to the restricted share units was $ 1.8 million and $ 0.9 million for the three months ended March 30, 2025 and March 31, 2024, respectively. The Company has reduced its expense for any restricted share units forfeited during the period. The following table summarizes restricted share units outstanding as of March 30, 2025, as well as activity during the three months then ended: Restricted Share Units Weighted Average Grant Date Fair Value Outstanding at December 29, 2024 823,300 $ 11.76 Granted 247,200 21.46 Vested ( 283,100 ) 11.95 Forfeited or canceled ( 900 ) 10.80 Outstanding at March 30, 2025 786,500 $ 14.75 As of March 30, 2025, the unrecognized total compensation cost related to unvested restricted share units was $ 9.5 million. That cost is expected to be recognized by the first quarter of 2028. 13 Table of Contents Performance Share Awards The following table summarizes the performance shares outstanding as of March 30, 2025, as well as the activity during the three months then ended: Performance Shares Weighted Average Grant Date Fair Value Outstanding at December 29, 2024 1,171,700 $ 12.23 Granted 300,700 19.96 Vested ( 375,500 ) 12.99 Forfeited or canceled ( 2,000 ) 12.20 Outstanding at March 30, 2025 1,094,900 $ 14.09 Compensation expense related to the performance shares was $ 2.0 million and $ 2.1 million for the three months ended March 30, 2025 and March 31, 2024, respectively. The Company has reduced its expense for any performance shares forfeited during the period. Unrecognized compensation expense related to these performance shares was approximately $ 11.2 million as of March 30, 2025. The amount and timing of future compensation expense will depend on the performance of the Company. The compensation expense related to these outstanding performance shares is expected to be recognized by the first quarter of 2028. The tax benefit recognized with respect to restricted stock, restricted share units and performance shares was approximately $ 0.4 million for the three months ended March 30, 2025. 14 Table of Contents NOTE 7 – LEASES The table below represents a summary of the balances recorded in the consolidated condensed balance sheets related to the Company’s leases as of March 30, 2025 and December 29, 2024: March 30, 2025 December 29, 2024 Balance Sheet Location Operating Leases Finance Leases Operating Leases Finance Leases (in thousands) Operating lease right-of-use assets $ 77,845 $ 76,815 Current portion of operating lease liabilities $ 12,718 $ 12,296 Operating lease liabilities 69,160 68,092 Total operating lease liabilities $ 81,878 $ 80,388 Property, plant and equipment, net $ 8,034 $ 8,079 Accrued expenses $ 2,658 $ 2,657 Other long-term liabilities 5,757 5,797 Total finance lease liabilities $ 8,415 $ 8,454 As of March 30, 2025, there were no significant leases that had not commenced. Lease Costs Three Months Ended March 30, 2025 March 31, 2024 (in thousands) Finance lease cost: Amortization of right-of-use assets $ 848 $ 776 Interest on lease liabilities 137 99 Operating lease cost 4,993 4,989 Short-term lease cost 171 197 Variable lease cost 773 690 Total lease cost $ 6,922 $ 6,751 15 Table of Contents Other Supplemental Information Three Months Ended March 30, 2025 March 31, 2024 (in thousands) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from finance leases $ 131 $ 96 Operating cash flows from operating leases 4,437 4,097 Financing cash flows from finance leases 762 716 Right-of-use assets obtained in exchange for new finance lease liabilities 548 390 Right-of-use assets obtained in exchange for new operating lease liabilities 2,929 265 Lease Term and Discount Rate The table below presents the weighted average remaining lease terms and discount rates for finance and operating leases as of March 30, 2025 and December 29, 2024: March 30, 2025 December 29, 2024 Weighted-average remaining lease term – finance leases (in years) 3.61 3.61 Weighted-average remaining lease term – operating leases (in years) 7.57 7.68 Weighted-average discount rate – finance leases 6.54 % 6.44 % Weighted-average discount rate – operating leases 6.41 % 6.39 % Maturity Analysis A maturity analysis of lease payments under non-cancellable leases is presented as follows: Fiscal Year Operating Leases Finance Leases (in thousands) 2025 (excluding the three months ended March 30, 2025) $ 13,018 $ 2,379 2026 17,593 2,784 2027 14,658 2,159 2028 11,669 1,267 2029 10,060 607 Thereafter 37,213 276 Total future minimum lease payments (undiscounted) 104,211 9,472 Less: Present value discount ( 22,333 ) ( 1,057 ) Total lease liabilities $ 81,878 $ 8,415 16 Table of Contents NOTE 8 – EMPLOYEE BENEFIT PLANS The Company has defined benefit and multi-employer pension plans, which are described more fully in Note 19 to the consolidated financial statements included in Item 8 of the Annual Report on Form 10-K for the fiscal year ended December 29, 2024 . During the three-month periods ended March 30, 2025 and March 31, 2024, the Company recorded multi-employer pension expense related to multi-employer contributions of $ 0.7 million for both periods, respectively. The following tables provide the components of net periodic benefit cost for the three months ended March 30, 2025 and March 31, 2024: Three Months Ended Defined Benefit Retirement Plans (Europe) March 30, 2025 March 31, 2024 (in thousands) Interest cost $ 1,813 $ 1,710 Expected return on plan assets ( 1,938 ) ( 1,966 ) Amortization of prior service cost 44 45 Amortization of net actuarial losses 375 269 Net periodic benefit cost $ 294 $ 58 Three Months Ended Salary Continuation Plan March 30, 2025 March 31, 2024 (in thousands) Interest cost $ 275 $ 266 Amortization of net actuarial losses 47 60 Net periodic benefit cost $ 322 $ 326 Three Months Ended nora Defined Benefit Plan March 30, 2025 March 31, 2024 (in thousands) Service cost $ 103 $ 126 Interest cost 253 264 Amortization of net actuarial gains ( 82 ) — Net periodic benefit cost $ 274 $ 390 The service cost component of net periodic benefit costs is presented within operating income in the consolidated condensed statements of operations, while all other components of net periodic benefit costs are presented within other expense (income), net, in the consolidated condensed statements of operations. 17 Table of Contents NOTE 9 – GOODWILL AND OTHER INTANGIBLE ASSETS The ending balance and the change in the carrying amount of good will fo r the three months ended March 30, 2025 is as follows: Goodwill (1) (in thousands) Balance, at December 29, 2024 $ 99,887 Foreign currency translation (2) 3,656 Balance, at March 30, 2025 $ 103,543 (1) The goodwill balance is allocated entirely to the AMS reportable segment. (2) A portion of the goodwill balance is comprised of goodwill denominated in foreign currency attributable to the nora acquisition. The net carrying value of intangible assets other than goodwill was $ 48.7 million and $ 48.3 million at March 30, 2025 and December 29, 2024, respectively. 18 Table of Contents NOTE 10 – SEGMENT INFORMATION The Company determines that an operating segment exists if a component (i) engages in business activities from which it earns revenues and incurs expenses, (ii) has operating results that are regularly reviewed by the chief operating decision maker (“CODM”), and (iii) has discrete financial information. Additionally, accounting standards require the utilization of a “management approach” to report the financial results of operating segments, which is based on information used by the CODM to assess performance and make operating and resource allocation decisions. The Company determined that it has two operating segments organized by geographical area – namely (a) Americas (“AMS”) and (b) Europe, Africa, Asia and Australia (collectively “EAAA”). The AMS operating segment includes the United States, Canada and Latin America geographic areas. Pursuant to the management approach discussed above, the Company’s CODM, our chief executive officer, evaluates performance at the AMS and EAAA operating segment levels and makes operating and resource allocation decisions based on segment operating income (“AOI”). The CODM uses AOI to evaluate segment operating results compared to expectations. AOI is also used by the CODM to develop variable compensation targets and make capital spend decisions. AOI excludes: nora purchase accounting amortization; restructuring, asset impairment, severance, and other, net, and the impact of a cyber event. Intersegment revenues for the three months ended March 30, 2025 and March 31, 2024 were $ 28.0 million and $ 16.8 million, respectively. Intersegment revenues are eliminated from net sales presented below since these amounts are not included in the information provided to the CODM. The Company has determined that it has two reportable segments – AMS and EAAA, as each operating segment meets the quantitative thresholds defined in the accounting guidance. The following table outlines information by reportable segment including net sales, significant segment expenses, and AOI. The table also includes a reconciliation to income before taxes for the three months ended March 30, 2025 and March 31, 2024. Three Months Ended March 30, 2025 March 31, 2024 AMS EAAA TOTAL AMS EAAA TOTAL (in thousands) Net sales $ 179,937 $ 117,476 $ 297,413 $ 169,915 $ 119,828 $ 289,743 Less: significant segment expenses (1) Adjusted cost of sales (2) 108,527 76,668 101,605 76,435 Adjusted selling, general, & administrative expenses (3) 51,547 35,217 50,230 35,948 Segment AOI 19,863 5,591 25,454 18,080 7,445 25,525 Reconciliation of AOI to income before taxes Restructuring, severance, asset impairment and other, net 973 198 Purchasing accounting amortization 1,255 1,297 Cyber event impact — ( 416 ) Interest expense 4,415 6,423 Other expense (income), net 1,703 ( 976 ) Income before taxes $ 17,109 $ 18,999 (1) Significant segment expense categories and amounts align with segment level information that is regularly provided to the CODM, included in the measure of segment profit, and considered to be significant. Amounts include allocation of corporate overhead and global support costs. Intersegment expenses are excluded. (2) Adjusted cost of sales excludes purchase accounting amortization. (3) Adjusted selling, general, and administrative expenses exclude restructuring, asset impairment, severance, and other, net and the impact of a cyber event. 19 Table of Contents Segment depreciation and amortization for the three months ended March 30, 2025 and March 31, 2024 is presented as follows: Three Months Ended March 30, 2025 March 31, 2024 (in thousands) Depreciation and amortization AMS $ 4,587 $ 4,353 EAAA 4,814 5,263 Total depreciation and amortization $ 9,401 $ 9,616 A reconciliation of the Company’s total operating segment assets to the corresponding consolidated amounts follows: March 30, 2025 December 29, 2024 (in thousands) Assets AMS $ 546,021 $ 644,085 EAAA 617,445 587,639 Total segment assets 1,163,466 1,231,724 Corporate assets 101,208 111,761 Eliminations ( 72,876 ) ( 172,669 ) Total reported assets $ 1,191,798 $ 1,170,816 20 Table of Contents NOTE 11 – SUPPLEMENTAL CASH FLOW INFORMATION Supplemental cash flow information for the three months ended March 30, 2025 and March 31, 2024 is presented in the following table: Three Months Ended March 30, 2025 March 31, 2024 (in thousands) Cash paid for interest $ 169 $ 2,099 Cash paid for income taxes, net of refunds 5,756 7,161 See Note 7 entitled “Leases” for additional supplemental disclosures related to finance and operating leases. Non-Cash Financing Activities On March 11, 2025, the Company declared cash dividends on its common stock of $ 0.6 million, which were paid during the second quarter of 2025 to shareholders of record as of March 28, 2025. At March 30, 2025, the dividends were recorded within accrued expenses in the consolidated condensed balance sheet. 21 Table of Contents NOTE 12 – INCOME TAXES The Company determines its provision for income taxes for interim periods using an estimate of its annual effective tax rate (“AETR”) and records any changes affecting the estimated AETR in the interim period in which the change occurs, including discrete tax items. During the three months ended March 30, 2025, the Company recorded a total income tax provision of $ 4.1 million on pre-tax income of $ 17.1 million resulting in an effective tax rate of 24.0 %, as compared to a total income tax provision of $ 4.8 million on pre-tax income of $ 19.0 million resulting in an effective tax rate of 25.4 % during the three months ended March 31, 2024. The decrease in the effective tax rate for the three months ended March 30, 2025 as compared to the three months ended March 31, 2024, was primarily due to an increase in tax benefits related to share-based compensation. This favorable change was partially offset by an unfavorable change related to the cash surrender value of Company-owned life insurance. On December 20, 2021, the Organization for Economic Co-operation and Development (“OECD”) published Pillar Two Model Rules defining the global minimum tax, which calls for the taxation of large corporations at a minimum rate of 15 %. The OECD has since issued administrative guidance providing transition and safe harbor rules around the implementation of the Pillar Two global minimum tax. Many non-U.S. tax jurisdictions have either recently enacted legislation to adopt certain components of the Pillar Two Model Rules beginning in 2024 (including the European Union Member States) with the adoption of additional components in later years or announced their plans to enact legislation in future years. For fiscal year 2025, we expect to meet the Transitional Country-by-Country (CbCR) Safe Harbor rules for most if not all jurisdictions and do not expect these provisions to have a material impact on the Company’s financial statements. We will continue to closely monitor ongoing developments and evaluate any potential impact on future periods. In the first three months of 2025, the Company increased its liability for unrecognized tax benefits by $ 0.3 million. As of March 30, 2025, the Company had accrued approximately $ 5.1 million for unrecognized tax benefits. The Company’s deferred tax asset as of March 30, 2025 reflects a reduction for $ 2.6 million of these unrecognized tax benefits. Unrecognized tax benefits are reviewed on an ongoing basis and are adjusted for changing facts and circumstances, including the progress of tax audits and the closing of statutes of limitations. While it is reasonably possible that some of the unrecognized tax benefits will be recognized within the next 12 months, the Company does not expect the recognition of such amounts will have a material impact on the Company’s financial results. 22 Table of Contents NOTE 13 – ITEMS RECLASSIFIED FROM ACCUMULATED OTHER COMPREHENSIVE LOSS Amounts reclassified out of accumulated other comprehensive loss (“AOCL”), before tax, to the consolidated condensed statements of operations during the three months ended March 30, 2025 and March 31, 2024 are reflected in the table below: Three Months Ended Statement of Operations Location March 30, 2025 March 31, 2024 (in thousands) Amortization of benefit plan net actuarial losses and prior service cost Other expense (income), net $ ( 384 ) $ ( 374 ) Total loss reclassified from AOCL $ ( 384 ) $ ( 374 ) 23 Table of Contents NOTE 14 – COMMITMENTS AND CONTINGENCIES From time to time, we are a party to legal proceedings, whether arising in the ordinary course of business or otherwise. See disclosure under the heading “Lawsuit by Former CEO in Connection with Termination” set forth in Note 18 to the consolidated financial statements included in Item 8 of the Annual Report on Form 10-K for the fiscal year ended December 29, 2024 . There have been no material changes since December 29, 2024. 24 Table of Contents NOTE 15 – FAIR VALUE OF FINANCIAL INSTRUMENTS Accounting standards establish a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure estimated fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy under applicable accounting standards are described below: Level 1 Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Level 2 Inputs to the valuation methodology include: • quoted prices for similar assets in active markets; • quoted prices for identical or similar assets in inactive markets; • inputs other than quoted prices that are observable for the asset; and • inputs that are derived principally or corroborated by observable data by correlation or other. Level 3 Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The following table presents the carrying values and estimated fair values, including the level within the fair value hierarchy, of certain financial instruments: March 30, 2025 December 29, 2024 Carrying Value Fair Value (Level 1) Fair Value (Level 2) Carrying Value Fair Value (Level 1) Fair Value (Level 2) (in thousands) Assets: Company-owned life insurance $ 22,948 $ — $ 22,948 $ 22,911 $ — $ 22,911 Deferred compensation investments 28,476 7,263 21,213 30,521 8,697 21,824 Liabilities (1) : Borrowings under Syndicated Credit Facility (2) 5,505 — 5,505 5,564 — 5,564 5.50% Senior Notes due 2028 (3) 300,000 — 292,140 300,000 — 294,738 (1) Carrying values are presented gross, excluding the impact of unamortized debt issuance costs and including amounts presented as current liabilities on the consolidated balance sheets. (2) The carrying value of borrowings under the Facility approximates fair value as the Facility bears variable interest rates that are similar to existing market rates. The fair value of borrowings under the Facility is estimated using observable market rates. (3) Unamortized debt issuance costs associated with the Senior Notes, recorded as a reduction of long-term debt in the consolidated balance sheets, were $ 2.6 million and $ 2.8 million as of March 30, 2025 and December 29, 2024, respectively. Fair value of the Senior Notes is derived using quoted prices for similar instruments. The fair value of Company-owned life insurance is measured on a readily determinable cash surrender value on a recurring basis. Assets associated with the Company’s nonqualified savings plans are held in a rabbi trust and consist of investments in mutual funds and insurance contracts. The fair value of the mutual funds is derived from quoted prices in active markets. The fair value of the insurance contracts is based on observable inputs related to the performance measurement funds that shadow the deferral investment allocations made by participants in the nonqualified savings plans. 25 Table of Contents