What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-07-29 compared with 2026-04-29 · 140 added, 52 removed, 266 unchanged (42% of the section changed)

12 unchanged sentences

We believe our asset-light, highly-franchised business model generates strong operating margins and requires low capital expenditures, creating stockholder value through strong and consistent free cash flow and capital-efficient growth.

Highlights for the fiscal first quarter 2026 compared to the fiscal first quarter 2025:

Highlights for the fiscal second quarter 2026 compared to the fiscal second quarter 2025:

• System-wide sales increased 5.3% to $1.4 billion;

• 97 net new openings in the fiscal first quarter 2026;

• 102 net new openings in the fiscal second quarter 2026;

• Domestic same store sales decreased 7.5%;

• Total revenue increased 6.4% to $185.6 million;

• Net income increased 16.9% to $31.3 million, or $1.15 per diluted share;

• Adjusted net income and adjusted earnings per diluted share, both non-GAAP measures, increased 14.9% to $32.1 million, or $1.18 per diluted share;

• Adjusted EBITDA, a non-GAAP measure, increased 12.5% to $66.6 million.

Highlights for the year-to-date second quarter of 2026 compared to the year-to-date second quarter of 2025:

• System-wide sales increased 5.6% to $2.8 billion;

• 199 net new openings in the year-to-date second quarter of 2026;

• Domestic same store sales decreased 8.1% over the prior fiscal year-to-date period;

• Total revenue increased 6.9% to $369.3 million over the prior fiscal year-to-date period;

• Net income decreased 48.6% to $61.2 million, or $2.23 per diluted share;

5 unchanged sentences

Management reviews the number of new restaurants, the number of closed restaurants, and the number of acquisitions and divestitures of restaurants to assess net new restaurant growth.

Thirteen Weeks Ended

2026 March 29,

Thirteen Weeks Ended Twenty-Six Weeks Ended

2026 June 28,

2025 June 27,

2026 June 28,

Domestic Franchised Activity:

1 unchanged sentence

Openings 76 110 143 206

Closures (1) — (1) —

Acquired by Company — (3) — (3)

Restaurants end of period 2,671 2,357 2,671 2,357

1 unchanged sentence

Beginning of period 57 51 57 50

Openings — 1 — 2

Closures — (1) — (1)

Acquired by Company — 3 — 3

Restaurants end of period 57 54 57 54

16 unchanged sentences

Domestic AUV allows management to assess our domestic company-owned and franchised restaurant economics.

Changes in domestic AUV growth are primarily driven by increases in same store sales and are also influenced by opening new restaurants.

Changes in domestic AUV are primarily driven by changes in same store sales and are also influenced by opening new restaurants.

Domestic same store sales.

7 unchanged sentences

We define EBITDA as net income before interest expense, net, income tax expense (benefit), and depreciation and amortization.

We define Adjusted EBITDA as net income before interest expense, net, income tax

expense (benefit), and depreciation and amortization, with further adjustments for losses on debt extinguishment and financing transactions, transaction costs, costs and fees associated with investments in our strategic initiatives, certain system implementation costs, gains and losses on non-recurring transactions, certain restructuring charges, and stock-based compensation expense.

We define Adjusted EBITDA as net income before interest expense, net, income tax expense (benefit), and depreciation and amortization, with further adjustments for losses on debt extinguishment and financing transactions, transaction costs, costs and fees associated with investments in our strategic initiatives, certain system implementation costs, gains and losses on non-recurring transactions, certain restructuring charges, and stock-based compensation expense.

Adjusted EBITDA may not be comparable to other similarly titled captions of other companies due to differences in methods of calculation.

4 unchanged sentences

For a reconciliation of net income to Adjusted net income and for further discussion of Adjusted net income and Adjusted earnings per diluted share as non-GAAP measures and how we utilize them, see footnote 3 below.

The following table sets forth our key performance indicators for the thirteen weeks ended March 28, 2026 and March 29, 2025 (in thousands, except unit data):

Thirteen Weeks Ended

March 28, 2026 March 29, 2025

The following table sets forth our key performance indicators for the thirteen and twenty-six weeks ended June 27, 2026 and June 28, 2025 (in thousands, except unit data):

Thirteen Weeks Ended Twenty-Six Weeks Ended

June 27, 2026 June 28, 2025 June 27, 2026 June 28, 2025

Number of system-wide restaurants open at end of period 3,255 2,818 3,255 2,818

10 unchanged sentences

$ 32,092 $ 27,929 $ 64,561 $ 56,246

(1) The percentage of system-wide sales attributable to company-owned restaurants was 2.4% and 2.3% for the thirteen weeks ended March 28, 2026 and March 29, 2025, respectively.

(1) The percentage of system-wide sales attributable to company-owned restaurants was 2.4% and 2.4% for the thirteen and twenty-six weeks ended June 27, 2026 and June 28, 2025, respectively.

The remainder was generated by franchised restaurants, as reported by our franchisees.

22 unchanged sentences

We compensate for these limitations by relying primarily on our GAAP results and using these non-GAAP measures only as performance measures and supplementally.

As noted in the table below, Adjusted EBITDA includes adjustments for losses on debt extinguishment and financing transactions, transaction costs, costs and fees associated with investments in our strategic initiatives, certain system implementation costs, gains and losses on non-recurring transactions, certain restrucutring charges, and stock-based compensation expense.

As noted in the table below, Adjusted EBITDA includes adjustments for losses on debt extinguishment and financing transactions, transaction costs, costs and fees associated with investments in our strategic initiatives, certain system implementation costs, gains and losses on non-recurring transactions, certain restructuring charges, and stock-based compensation expense.

We believe these adjustments are appropriate because the amounts recognized can vary significantly from period to period, do not directly relate to the ongoing operations of our restaurants, and complicate comparisons of our internal operating results and operating results of other restaurant companies over time.

Each of the normal recurring adjustments and other adjustments described in this paragraph and in the reconciliation table below help management measure our core operating performance over time by removing items that are not related to day-to-day operations.

The following table reconciles net income to EBITDA and Adjusted EBITDA for the thirteen weeks ended March 28, 2026 and March 29, 2025 (in thousands):

Thirteen Weeks Ended

2026 March 29,

The following table reconciles net income to EBITDA and Adjusted EBITDA for the thirteen and twenty-six weeks ended June 27, 2026 and June 28, 2025 (in thousands):

Thirteen Weeks Ended Twenty-Six Weeks Ended

2026 June 28,

2025 June 27,

2026 June 28,

Net income $ 31,288 $ 26,763 $ 61,171 $ 119,028

7 unchanged sentences

Gain on sale of investment (c)

— — — (92,485)

System implementation costs (d)

514 1,534 1,060 2,846

Amortization of capitalized system implementation costs (e)

1 unchanged sentence

Stock-based compensation expense (g)

3,893 6,217 8,716 11,529

Adjusted EBITDA $ 66,627 $ 59,205 $ 132,030 $ 118,703

5 unchanged sentences

(d) System implementation costs represent non-recurring expenses incurred related to the development and implementation of new enterprise resource planning, human capital management, and global development technology, which are included in Selling, general and administrative on the Consolidated Statements of Comprehensive Income.

Costs related to these initiatives are not expected to recur beyond the current period.

(e) Represents amortization associated with capitalized cloud computing costs related to our system implementation, which are included in Selling, general and administrative on the Consolidated Statements of Comprehensive Income.

5 unchanged sentences

Additionally, management believes adjusted net income and adjusted earnings per diluted share supplement GAAP measures and enable management to more effectively evaluate the Company’s performance period-over-period and relative to competitors.

The following table reconciles net income to Adjusted net income and calculates adjusted earnings per diluted share for the thirteen weeks ended March 28, 2026 and March 29, 2025 (in thousands):

Thirteen Weeks Ended

2026 March 29,

The following table reconciles net income to Adjusted net income and calculates adjusted earnings per diluted share for the thirteen and twenty-six weeks ended June 27, 2026 and June 28, 2025 (in thousands):

Thirteen Weeks Ended Twenty-Six Weeks Ended

2026 June 28,

2025 June 27,

2026 June 28,

Net income $ 31,288 $ 26,763 $ 61,171 $ 119,028

2 unchanged sentences

Gain on sale of investment (c)

— — — (92,485)

System implementation costs (d)

514 1,534 1,060 2,846

Amortization of capitalized system implementation costs (e)

1 unchanged sentence

Tax effect of adjustments (g)

(254) (368) (1,071) 19,826

Adjusted net income $ 32,092 $ 27,929 $ 64,561 $ 56,246

7 unchanged sentences

Costs related to these initiatives are not expected to recur beyond the current period.

(f) Represents certain restructuring charges related to corporate realignment announced on January 13, 2026.

(g) Represents the tax effect of the aforementioned adjustments to reflect corporate income taxes at an assumed effective tax rate of 24% for the thirteen weeks ended March 28, 2026, which includes provisions for U.S.

(g) Represents the tax effect of the aforementioned adjustments to reflect corporate income taxes at an assumed effective tax rate of 24% for the thirteen and twenty-six weeks ended June 27, 2026, which includes provisions for U.S.

federal income taxes, and assumes the respective statutory rates for applicable state and local jurisdictions.

Results of Operations

Thirteen Weeks Ended March 28, 2026 compared to Thirteen Weeks Ended March 29, 2025

The following table sets forth our results of operations for the thirteen weeks ended March 28, 2026 and March 29, 2025 (dollars in thousands):

Thirteen Weeks Ended June 27, 2026 compared to Thirteen Weeks Ended June 28, 2025

The following table sets forth our results of operations for the thirteen weeks ended June 27, 2026 and June 28, 2025 (dollars in thousands):

Thirteen Weeks Ended Increase / (Decrease)

2026 March 29,

2026 June 28,

Royalty revenue, franchise fees and other $ 86,844 $ 79,889 $ 6,955 8.7 %

8 unchanged sentences

Depreciation and amortization 7,212 6,220 992 15.9 %

Loss on disposal of assets — 6,535 (6,535) NM*

Total costs and expenses 130,933 129,095 1,838 1.4 %

7 unchanged sentences

*Not meaningful.

During the thirteen weeks ended March 28, 2026, total revenue was $183.7 million, an increase of $12.6 million, or 7.4%, compared to $171.1 million in the comparable period in 2025.

Royalty revenue, franchise fees and other increased $8.7 million, primarily driven by $12.2 million from net new franchise restaurant development and a $3.4 million increase in vendor rebates, partially offset by a $5.9 million decrease attributable to an 8.7% decline in domestic same store sales.

Company-owned restaurant sales increased $2.9 million, driven by six additional corporate stores opened or acquired since the prior year period.

During the thirteen weeks ended June 27, 2026, total revenue was $185.6 million, an increase of $11.2 million, or 6.4%, compared to $174.3 million in the comparable period in 2025.

Royalty revenue, franchise fees and other increased $7.0 million, primarily driven by $11.2 million from net new franchise restaurant development and a $0.8 million increase from vendor rebates, partially offset by a $5.0 million decrease attributable to a 7.5% decline in domestic same store sales.

Advertising fees increased $2.6 million due to a 5.3% increase in system-wide sales during the thirteen weeks ended June 27, 2026.

Company-owned restaurant sales increased $1.7 million, driven by three additional corporate stores opened or acquired since the prior year period.

Cost of sales

1 unchanged sentence

Thirteen Weeks Ended

March 28, 2026 March 29, 2025

June 27, 2026 June 28, 2025

In dollars As a % of company-owned restaurant sales In dollars As a % of company-owned restaurant sales

4 unchanged sentences

Total cost of sales $ 25,068 73.3 % $ 24,405 75.2 %

Food, beverage and packaging costs as a percentage of company-owned restaurant sales were 35.8% in the thirteen weeks ended March 28, 2026, compared to 37.4% in the comparable period in 2025.

Food, beverage and packaging costs as a percentage of company-owned restaurant sales were 35.2% in the thirteen weeks ended June 27, 2026, compared to 36.8% in the comparable period in 2025.

This decrease as a percentage of company-owned restaurant sales was primarily due to a 9.1% decrease in the cost of bone-in chicken wings as compared to the prior year period.

Labor costs as a percentage of company-owned restaurant sales were 23.9% for the thirteen weeks ended March 28, 2026, which was comparable to 23.8% for the thirteen weeks ended March 29, 2025.

Other restaurant operating expenses as a percentage of company-owned restaurant sales were 17.8% for the thirteen weeks ended March 28, 2026, compared to 17.3% for the thirteen weeks ended March 29, 2025.

The increase as a percentage of company-owned restaurant sales was due to repairs and maintenance costs.

Labor costs as a percentage of company-owned restaurant sales were 22.7% for the thirteen weeks ended June 27, 2026, which was comparable to 22.9% for the thirteen weeks ended June 28, 2025.

Other restaurant operating expenses as a percentage of company-owned restaurant sales were 18.1% for the thirteen weeks ended June 27, 2026, which was comparable to 17.9% for the thirteen weeks ended June 28, 2025.

Advertising expenses

During the thirteen weeks ended March 28, 2026, advertising expenses were $67.3 million, an increase of $1.5 million compared to $65.8 million in the comparable period in 2025.

During the thirteen weeks ended June 27, 2026, advertising expenses were $68.4 million, an increase of $2.9 million compared to $65.5 million in the comparable period in 2025.

Advertising expenses are recognized at the same time the related revenue is recognized, which does not necessarily correlate to the actual timing of the related advertising spend.

Selling, general and administrative (“SG&A”)

During the thirteen weeks ended March 28, 2026, SG&A expense was $34.4 million, an increase of $3.0 million compared to $31.4 million in the comparable period in 2025.

The increase in SG&A expense was primarily driven by $2.4 million in restructuring charges during the fiscal first quarter 2026 related to the corporate realignment announced in January 2026, partially offset by lower system implementation costs and other expenses compared to the prior year period.

During the thirteen weeks ended June 27, 2026, SG&A expense was $30.2 million, a decrease of $2.7 million compared to $32.9 million in the comparable period in 2025.

The decrease in SG&A expense was primarily driven by $2.3 million in reduced stock compensation expense due to forfeitures recognized in the current period.

Also contributing to the decrease was a $1.6 million reduction in payroll costs which was partially offset by a $1.5 million increase in professional fees.

Depreciation and amortization

During the thirteen weeks ended March 28, 2026, depreciation and amortization was $6.8 million, an increase of $0.6 million compared to $6.2 million in the comparable period in 2025.

During the thirteen weeks ended June 27, 2026, depreciation and amortization was $7.2 million, an increase of $1.0 million compared to $6.2 million in the comparable period in 2025.

The increase in depreciation and amortization was primarily due to capital expenditures placed in service during the period related to our technology investments.

Interest expense, net

During the thirteen weeks ended March 28, 2026, interest expense, net increased to $9.8 million from $8.9 million in the prior year period, primarily driven by a $0.6 million decline in interest income due to lower average cash balances and $0.3 million of additional interest expense.

During the thirteen weeks ended June 27, 2026, interest expense, net increased to $9.8 million from $8.5 million in the prior year period, primarily driven by a $1.0 million decline in interest income due to lower average cash balances and $0.3 million of additional interest expense.

Investment (income) expense

Investment income decreased by $93.8 million compared to the prior year period, which reflected a gain recorded on the sale of the Company’s unconsolidated equity method investment in LPH, its United Kingdom master franchisee, during the fiscal first quarter 2025.

See Note 9 of the Consolidated Financial Statements for further discussion.

Investment income decreased by $0.2 million and was comparable to the prior year period.

Income tax expense

During the thirteen weeks ended March 28, 2026, we recognized income tax expense of $10.7 million, yielding an effective tax rate of 26.3%, compared to an effective tax rate of 25.1% in the prior year period.

During the thirteen weeks ended June 27, 2026, we recognized income tax expense of $13.4 million, yielding an effective tax rate of 29.9%, compared to an effective tax rate of 27.2% in the prior year period.

T he increase in the effective tax rate was primarily due to an increase in state income taxes and other non-deductible items.

Twenty-Six Weeks Ended June 27, 2026 compared to Twenty-Six Weeks Ended June 28, 2025

The following table sets forth our results of operations for the twenty-six weeks ended June 27, 2026 and June 28, 2025 (dollars in thousands):

Twenty-Six Weeks Ended Increase / (Decrease)

2026 June 28,

Royalty revenue, franchise fees and other $ 174,314 $ 158,664 $ 15,650 9.9 %

Advertising fees 127,805 124,234 3,571 2.9 %

Company-owned restaurant sales 67,170 62,525 4,645 7.4 %

Total revenue 369,289 345,423 23,866 6.9 %

Costs and expenses:

Cost of sales (1)

49,784 47,240 2,544 5.4 %

Advertising expenses 135,728 131,328 4,400 3.4 %

Selling, general and administrative 64,685 64,377 308 0.5 %

Depreciation and amortization 14,053 12,448 1,605 12.9 %

Loss on disposal of assets — 6,535 (6,535) 100.0 %

Total costs and expenses 264,250 261,928 2,322 0.9 %

Operating income 105,039 83,495 21,544 25.8 %

Interest expense, net 19,577 17,379 2,198 12.6 %

Investment (income) expense 239 (93,839) 94,078 NM*

Income before income tax expense 85,223 159,955 (74,732) (46.7) %

Income tax expense 24,052 40,927 (16,875) (41.2) %

Net income $ 61,171 $ 119,028 $ (57,857) (48.6) %

(1) Cost of sales includes all operating expenses of company-owned restaurants, including advertising expenses, and excludes depreciation and amortization, which are presented separately.

*Not meaningful.

During the twenty-six weeks ended June 27, 2026, total revenue was $369.3 million, an increase of $23.9 million, or 6.9%, compared to $345.4 million in the comparable period in 2025.

Royalty revenue, franchise fees and other increased $15.7 million, of which $22.4 million was due to net new franchise restaurant development and a $4.1 million increase in vendor rebates, partially offset by a decrease of $10.8 million due to a decline in domestic same store sales growth of 8.1%.

Advertising fees increased $3.6 million due to a 5.6% increase in system-wide sales during the twenty-six weeks ended June 27, 2026.

Company-owned restaurant sales increased $4.6 million, which was largely driven by company-owned restaurants opened and acquired since the prior fiscal second quarter.

Cost of sales

The table below presents the major components of cost of sales (dollars in thousands):

Twenty-Six Weeks Ended

June 27, 2026 June 28, 2025

In dollars As a % of company-owned restaurant sales In dollars As a % of company-owned restaurant sales

Food, beverage and packaging costs $ 23,835 35.5 % $ 23,178 37.1 %

Labor costs 15,652 23.3 % 14,594 23.3 %

Other restaurant operating expenses 12,049 17.9 % 11,012 17.6 %

Vendor rebates (1,752) (2.6) % (1,544) (2.5) %

Total cost of sales $ 49,784 74.1 % $ 47,240 75.5 %

Food, beverage and packaging costs as a percentage of company-owned restaurant sales were 35.5% in the twenty-six weeks ended June 27, 2026, compared to 37.1% in the comparable period in 2025.

The decrease as a percentage of company-owned restaurant sales was primarily due to a 10.7% decrease in the cost of bone-in chicken wings, which favorably impacted margins, as compared to the prior year period.

This was partially offset by increases in other food costs during the period.

Labor costs as a percentage of company-owned restaurant sales were 23.3% for the twenty-six weeks ended June 27, 2026, which was comparable to the prior year period.

Other restaurant operating expenses as a percentage of company-owned restaurant sales were 17.9% for the twenty-six weeks ended June 27, 2026, compared to 17.6% in the prior year period in 2025.

The increase as a percentage of company-owned restaurant sales was primarily due to increased rent charges.

Advertising expenses

During the twenty-six weeks ended June 27, 2026, advertising expenses were $135.7 million, an increase of $4.4 million compared to $131.3 million in the comparable period in 2025.

Advertising expenses are recognized at the same time the related revenue is recognized, which does not necessarily correlate to the actual timing of the related advertising spend.

Selling, general and administrative (SG&A)

During the twenty-six weeks ended June 27, 2026, SG&A expense was $64.7 million, an increase of $0.3 million compared to $64.4 million in the comparable period in 2025.

The increase in SG&A expense was driven by an increase in professional fees of $1.8 million and an increase of $1.5 million in IT service agreements for the twenty-six weeks ended June 27, 2026.

These increased costs were slightly offset by a reduction in stock-based compensation expense of $2.8 million due to forfeitures recognized in the current period.

Depreciation and amortization

During the twenty-six weeks ended June 27, 2026, depreciation and amortization was $14.1 million, an increase of $1.6 million compared to $12.4 million in the comparable period in 2025.

The increase in depreciation and amortization was primarily due to capital expenditures related to our technology investments.

Interest expense, net

During the twenty-six weeks ended June 27, 2026, interest expense, net was $19.6 million, an increase of $2.2 million compared to $17.4 million in the comparable period in 2025.

The increase was primarily driven by a $1.6 million decline in interest income due to lower average cash balances and $0.6 million of additional interest expense.

Investment income, net

During the twenty-six weeks ended June 27, 2026, investment income, net was $0.2 million, a decrease of $94.0 million compared to $93.8 million in the comparable period in 2025.

The decrease was driven almost entirely by a non-recurring gain recorded on the sale of the Company’s unconsolidated equity method investment in its United Kingdom franchisee during the fiscal first quarter 2025.

Income tax expense

During the twenty-six weeks ended June 27, 2026, we recognized income tax expense of $24.1 million yielding an effective tax rate of 28.2%, compared to an effective tax rate of 25.6% in the prior year period.

The increase in the effective tax rate is primarily related to the impact of nondeductible expenses for executive compensation during the twenty-six weeks ended June 27, 2026.

Liquidity and Capital Resources

2 unchanged sentences

We generally utilize available cash flows from operations to invest in our business, service our debt obligations, pay dividends, and execute our share repurchase program.

As of March 28, 2026, the Company had $176.6 million of cash and cash equivalents on its balance sheet.

As of June 27, 2026, the Company had $157.4 of cash, cash equivalents, and restricted cash.

Based upon current levels of operations and anticipated growth, we expect that cash flows from operations, combined with our securitized financing facility, including our Variable Funding Notes, will be sufficient to meet our capital expenditure, working capital and debt service requirements for at least the next twelve months and the foreseeable future.

The following table shows summary cash flows information for the thirteen weeks ended March 28, 2026 and March 29, 2025 (in thousands):

Thirteen Weeks Ended

2026 March 29,

The following table shows summary cash flows information for the twenty-six weeks ended June 27, 2026 and June 28, 2025 (in thousands):

Twenty-Six Weeks Ended

2026 June 28,

Net cash provided by (used in):

7 unchanged sentences

Restaurant-level operating costs at our company-owned restaurants, unearned franchise and development fees, and corporate overhead costs also impact our cash flow from operating activities.

Net cash provided by operating activities was $61.4 million in the thirteen weeks ended March 28, 2026, an increase of $36.1 million from net cash provided by operating activities of $25.3 million in the thirteen weeks ended March 29, 2025, primarily related to changes in Ad Fund cash and cash equivalents, directly related to the timing of payments for expenses incurred for national advertising, as well as changes in working capital.

Net cash provided by operating activities was $68.3 million in the twenty-six weeks ended June 27, 2026, an increase of $36.4 million from net cash provided by operating activities of $31.9 million in the twenty-six weeks ended June 28, 2025, primarily related to changes in Ad Fund cash and cash equivalents, directly related to the timing of payments for expenses incurred for national advertising, as well as changes in working capital.

Investing activities .

Our net cash used in investing activities was $17.7 million in the thirteen weeks ended March 28, 2026, a change of $58.2 million from net cash provided by investing activities of $40.5 million in the thirteen weeks ended March 29, 2025.

The increase in capital expenditures primarily relates to our investments in technology.

Our net cash used in investing activities was $35.9 million in the twenty-six weeks ended June 27, 2026, a change of $52.9 million from net cash provided by investing activities of $16.9 million in the twenty-six weeks ended June 28, 2025.

The increase in capital expenditures primarily relates to our investments in technology and equipment.

The prior year period included proceeds of $107.7 million from the sale of our non-controlling interest in LPH, partially offset by reinvestment in the newly formed entity of $75.4 million, as well as proceeds from the sale of an office building of $17.3 million in the prior year period.

Financing activities .

Our net cash used in financing activities was $95.5 million in the thirteen weeks ended March 28, 2026, a decrease of $44.9 million from net cash used in financing activities of $140.4 million in the thirteen weeks ended March 29, 2025.

Our net cash used in financing activities was $103.4 million in the twenty-six weeks ended June 27, 2026, a decrease of $45.8 million from net cash used in financing activities of $149.2 million in the twenty-six weeks ended June 28, 2025.

The decrease is primarily related to an additional $42.2 million in common stock repurchased under our share repurchase program in the prior year period compared to the current year period.

5 unchanged sentences

In addition to the 2024 Notes, the Company’s outstanding debt consists of its existing Series 2022-1 3.734% Fixed Rate Senior Secured Notes, Class A-2 (the “2022 Class A-2 Notes”) and Series 2020-1 2.84% Fixed Rate Senior Secured Notes, Class A-2 (the “2020 Class A-2 Notes”).

During the fiscal first quarter of 2026, the Company continued to have a leverage ratio under the 2020 Class A-2 Notes, the 2022 Class A-2 Notes, and 2024 Class A-2 Notes of less than 5.0x.

During the fiscal second quarter of 2026, the Company continued to have a leverage ratio under the 2020 Class A-2 Notes, the 2022 Class A-2 Notes, and 2024 Class A-2 Notes of less than 5.0x.

Per the terms of the Company’s debt agreements, principal payments can be suspended at the borrower’s election until the repayment date, as long as the Company maintains a leverage ratio of less than 5.0x.

Accordingly, the Company elected to suspend payments, and the entire outstanding balance of the 2020 Class A-2 Notes, the 2022 Class A-2 Notes, and the 2024 Class A-2 Notes has been classified as long-term debt due after fiscal year 2026.

We paid a quarterly cash dividend of $0.30 per share of common stock resulting in aggregate declared dividends of $8.2 million during the thirteen weeks ended March 28, 2026.

On April 28, 2026 the Company’s Board of Directors declared a dividend of $0.30 per share, to be paid on June 5, 2026 to stockholders of record as of May 15, 2026, totaling approximately $8.2 million.

We paid a quarterly cash dividend of $0.30 per share of common stock in each of the first two quarters of 2026, resulting in aggregate declared dividends of $16.4 million during the twenty-six weeks ended June 27, 2026.

On July 28, 2026 the Company’s Board of Directors declared a dividend of $0.33 per share, to be paid on September 5, 2026 to stockholders of record as of August 15, 2026, totaling approximately $9 million.

We do not currently expect the restrictions in our debt instruments to impact our ability to make regular quarterly dividends pursuant to our quarterly dividend program.

2 unchanged sentences

On March 5, 2026, the Company’s Board of Directors authorized the repurchase of up to an additional $300.0 million of its outstanding shares of common stock under its existing share repurchase program (the “Share Repurchase Program”).

During the thirteen weeks ended March 28, 2026, the Company repurchased and retired 374,324 shares of its common stock at an average price of $208.08 per share.

As of March 28, 2026, $313.4 million remained available under the Share Repurchase Program.

During the twenty-six weeks ended June 27, 2026, the Company repurchased and retired 374,324 shares of its common stock at an average price of $208.08 per share.

As of June 27, 2026, $313.4 million remained available under the Share Repurchase Program.

The authorization for the repurchase continues until all such shares have been repurchased or the repurchase plan is terminated by action of the Company’s Board of Directors.

48 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis