LIFETIME BRANDS, INC

Previous wording

The Company is required to file its Annual Reports on Forms 10-K, Quarterly Reports on Forms 10-Q, Current Reports on Form 8-K, and other reports and documents as required from time to time with the SEC. The Company also maintains a website athttp://www.lifetimebrands.com. Information contained on this website is not a part of or incorporated by reference into this Quarterly Report on Form 10-Q. The Company makes available on its website the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to these reports as soon as reasonably practicable after these reports are filed with or furnished to the SEC. Users can access these reports free of charge on the Company’s website. The SEC also maintains a website that contains reports, proxy and information statements, and other information regarding the Company’s electronic filings with the SEC athttp://www.sec.gov.

Current wording

The Company is required to file its Annual Reports on Forms 10-K, Quarterly Reports on Forms 10-Q, Current Reports on Form 8-K, and other reports and documents as required from time to time with the SEC. The Company also maintains a website athttp://www.lifetimebrands.com. Information contained on this website is not a part of or incorporated by reference into this Quarterly Report on Form 10-Q. The Company makes available on its website the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to these reports as soon as reasonably practicable after these reports are filed with or furnished to the SEC. Users can access these reports free of charge on the

Previous wording

As of April 9, 2025, the U.S. has imposed an aggregate 145% tariff on imports from China. Other recent tariff policy updates that went into effect in April 2025 include a 10% universal tariff for all countries and reciprocal tariffs for specific countries, which have been paused for 90 days. As the Company sources almost all of its products from suppliers located outside the United States, primarily in China, any new or increased tariffs, quotas, embargoes, or other trade barriers could impact our supply chain and cost structure. Additionally, retaliatory measures by affected countries, could further disrupt operations or reduce our competitiveness in international markets. The Company continues to monitor these changing tariffs and trade restrictions. The Company is developing a plan to mitigate the impact of the increase price of goods imported by the Company into the U.S. The Company may seek to increase prices to its customers, negotiate product costs with its suppliers and further diversify its imports to countries that are expected to be subject to lower tariffs. To the extent the tariffs remain in place and the Company cannot mitigate the impact of the increase on the price of goods imported by the Company into the U.S., it may result in lower gross margin that the Company realizes from the sale of its products which could materially adversely affect the Company’s results of operations and financial condition and result in an impairment of our long-lived assets, including goodwill within the U.S. segment reporting unit.

Current wording

On April 9, 2025, the U.S. imposed an aggregate 145% tariff on imports from China, which was subsequently reduced to 30% effective May 14, 2025 for a 90 day pause period. Other recent tariff policy updates that went into effect in April 2025 include a 10% universal tariff for all countries and reciprocal tariffs for specific countries, which were originally paused until July 9, 2025 and subsequently extended to August 1, 2025. As the Company sources almost all of its products from suppliers located outside the United States, primarily in China, any new or increased tariffs, quotas, embargoes, or other trade barriers could impact our supply chain and cost structure. Additionally, retaliatory measures by affected countries, could further disrupt operations or reduce our competitiveness in international markets. The Company continues to monitor these changing tariffs and trade restrictions. To mitigate the impact of the increase price of goods imported by the Company into the U.S., the Company has negotiated price increase prices with its customers, negotiated product costs with its suppliers and continues to pursue diversification of its imports to countries that are expected to be subject to lower tariffs. To the extent that tariffs return to higher rates and the Company cannot mitigate the impact of the increase on the price of goods imported by the Company into the U.S., it may result in lower gross margin that the Company realizes from the sale of its products. The broader macroeconomic impacts related to the changes in tariff policies including potential mitigation efforts by retailers may negatively impact consumer spending and buying patterns of the Company's products. This could materially adversely affect the Company’s results of operations and financial condition.

Previous wording

The Hagerstown Facility will require capital expenditures for equipment and certain leasehold improvements of approximately $10.0 million. One-time relocation costs are estimated to be up to $7.0 million, which includes recruitment, relocation of inventory, set up costs and lease expenses prior to the Hagerstown Facility being fully operational. These one-time costs are expected to be incurred in 2026. The Company expects that the Hagerstown Facility will be operational by the second quarter of 2026. Additionally, in connection with the relocation to the Hagerstown Facility, the Company will receive tax abatement and incentives over the term of the Lease from the State of Maryland and Washington County, Maryland totaling approximately

Current wording

30 - inventory, set up costs and lease expenses prior to the Hagerstown Facility being fully operational. These one-time costs are expected to be incurred in 2026. The Company expects that the Hagerstown Facility will be operational by the second quarter of 2026. Additionally, in connection with the relocation to the Hagerstown Facility, the Company will receive tax abatement and incentives over the term of the Lease from the State of Maryland and Washington County, Maryland totaling approximately $13.1 million. These incentives include real property tax abatement, employee state withholding tax credit, conditional grants and income tax credits.

Previous wording

In January 2025, the Company launched Project Concord, management's comprehensive plan to propel growth and streamline the cost structure of the International segment. The Company expects this plan to improve future results in its International segment through sales growth and the identification costs efficiencies.

Current wording

In January 2025, the Company launched Project Concord, management's comprehensive plan to propel growth and streamline the cost structure of the International segment. The Company expects this plan to improve future results in its International segment through sales growth and the identification costs efficiencies. On July 8, 2025, the Company announced a reorganization of its international workforce in connection with Project Concord, management's comprehensive plan to propel growth and streamline the cost structure of the International segment. The reorganization primarily affects the structure of the International segment's merchandising and sales workforce. The estimated restructuring expenses related to severance associated with the reorganization is $0.3 million. This charge will be recognized in the third quarter of 2025.

Previous wording

The Company’s business and working capital needs are seasonal, with a majority of sales occurring in the third and fourth quarters. In 2024 and 2023, net sales for the third and fourth quarters accounted for 58% and 57% of total annual net sales, respectively. In anticipation of the pre-holiday shipping season, inventory levels increase primarily in the June through October time period. The increase in inventory levels at March 31, 2025 compared to December 31, 2024 was due to preemptive measures taken in anticipation of, and designed to mitigate, the impact of the tariffs that went into effective in April 2025.

Current wording

The Company’s business and working capital needs are seasonal, with a majority of sales occurring in the third and fourth quarters. In 2024 and 2023, net sales for the third and fourth quarters accounted for 58% and 57% of total annual net sales, respectively. In anticipation of the pre-holiday shipping season, inventory levels increase primarily in the June through October time period.

Previous wording

Consolidated net sales for the three months ended March 31, 2025 were $140.1 million, representing a decrease of $2.1 million, or 1.5%, as compared to net sales of $142.2 million for the corresponding period in 2024. In constant currency, a non-GAAP financial measure, which excludes the impact of foreign exchange fluctuations and was determined by applying 2025 average rates to 2024 local currency amounts, consolidated net sales decreased by $2.0 million, or 1.4%, as compared to consolidated net sales in the corresponding period in 2024.

Current wording

Consolidated net sales for the three months ended June 30, 2025 were $131.9 million, representing a decrease of $9.8 million, or 6.9%, as compared to net sales of $141.7 million for the corresponding period in 2024. In constant currency, a non-GAAP financial measure, which excludes the impact of foreign exchange fluctuations and was determined by applying 2025 average rates to 2024 local currency amounts, consolidated net sales decreased by $10.4 million, or 7.3%, as compared to consolidated net sales in the corresponding period in 2024.

Previous wording

Net sales for the U.S. segment for the three months ended March 31, 2025 were $128.5 million, a decrease of $2.0 million, or 1.5%, as compared to net sales of $130.5 million for the corresponding period in 2024.

Current wording

Net sales for the U.S. segment for the three months ended June 30, 2025 were $119.3 million, a decrease of $11.2 million, or 8.6%, as compared to net sales of $130.5 million for the corresponding period in 2024.

Previous wording

Net sales for the International segment were $11.6 million for the three months ended March 31, 2025, a decrease of $0.1 million, or 0.9%, as compared to net sales of $11.7 million for the corresponding period in 2024. In constant currency, a non-GAAP financial measure, which excludes the impact of foreign exchange fluctuations, net sales decreased by 0.2%, as compared to consolidated net sales in the corresponding period in 2024. The decrease was driven by lower sales in the U.K. and continental Europe.

Current wording

Net sales for the International segment were $12.6 million for the three months ended June 30, 2025, an increase of $1.4 million, or 12.5%, as compared to net sales of $11.2 million for the corresponding period in 2024. In constant currency, a non-GAAP financial measure, which excludes the impact of foreign exchange fluctuations, net sales increased by $0.8 million, or 6.6%, as compared to consolidated net sales in the corresponding period in 2024. The increase was driven by improved sales in the U.K. and continental Europe.

Previous wording

Gross margin for the U.S. segment was $46.5 million, or 36.2%, for the three months ended March 31, 2025, as compared to $53.3 million, or 40.8%, for the corresponding period in 2024. The decrease in the gross margin percentage was driven by customer and product mix.

Current wording

Gross margin for the U.S. segment was $46.7 million, or 39.1%, for the three months ended June 30, 2025, as compared to $50.5 million, or 38.7%, for the corresponding period in 2024. The improvement in the gross margin percentage was driven by customer mix.

Previous wording

Gross margin for the International segment was $4.1 million, or 35.3%, for the three months ended March 31, 2025, as compared to $4.2 million, or 35.9%, for the corresponding period in 2024. The gross margin percentage remained consistent period over period.

Current wording

Gross margin for the International segment was $4.1 million, or 32.5%, for the three months ended June 30, 2025, as compared to $4.1 million, or 36.6%, for the corresponding period in 2024. The decline in gross margin percentage was driven by customer and product mix.

Previous wording

Distribution expenses for the three months ended March 31, 2025 were $18.1 million, as compared to $16.2 million for the corresponding period in 2024. Distribution expenses as a percentage of net sales were 12.9% for the three months ended March 31, 2025, as compared to 11.4% for the three months ended March 31, 2024.

Current wording

Distribution expenses for the three months ended June 30, 2025 were $17.3 million, as compared to $15.1 million for the corresponding period in 2024. Distribution expenses as a percentage of net sales were 13.1% for the three months ended June 30, 2025, as compared to 10.6% for the three months ended June 30, 2024.

Previous wording

Company's west coast distribution center in September 2024. These increases were partially offset by lower freight-out expenses.

Current wording

Distribution expenses as a percentage of net sales for the U.S. segment were 11.4% and 9.1% for the three months ended June 30, 2025 and 2024, respectively. Distribution expense during the three months ended June 30, 2025 included $0.1 million for redesign costs related to the Company's warehouses. As a percentage of sales shipped from the Company’s U.S. warehouses, excluding non-recurring expenses, distribution expenses were 11.0% and 9.5% for the three months ended June 30, 2025 and 2024, respectively. The increase in expenses as a percentage of sales was attributable to lower shipment volume resulting in an unfavorable impact of fixed expenses, higher software expenses due to the launch of a new warehouse management system at the Company's west coast distribution center in September 2024 and an increase in freight-out expenses.

Previous wording

Selling, general and administrative expenses for the U.S. segment were $30.0 million for the three months ended March 31, 2025, as compared to $30.8 million for the corresponding period in 2024. As a percentage of net sales, selling, general and administrative expenses were 23.3% and 23.6% for the three months ended March 31, 2025 and 2024, respectively. The decrease in expenses was attributable to lower employee expenses, including incentive compensation, and legal expenses. This was partially offset by an increase in the provision for doubtful accounts in the current period and an increase in amortization expense related to an indefinite-lived trade name, which was reclassified to a finite-lived trade name in the fourth quarter 2024.

Current wording

Selling, general and administrative expenses for the U.S. segment were $29.5 million for the three months ended June 30, 2025, as compared to $29.4 million for the corresponding period in 2024. As a percentage of net sales, selling, general and administrative expenses were 24.7% and 22.5% for the three months ended June 30, 2025 and 2024, respectively. The increase in selling, general and administrative expenses as a percentage of net sales, was attributable to the impact of fixed costs on lower sales volume, an increase in the provision for doubtful accounts in the current period and an increase in amortization expense related to an indefinite-lived trade name, which was reclassified to a finite-lived trade name in the fourth quarter 2024. This was partially offset by lower employee expenses, including incentive compensation.

Previous wording

Selling, general and administrative expenses for the International segment were $3.7 million for the three months ended March 31, 2025, as compared to $4.2 million for the corresponding period in 2024. As a percentage of net sales, selling, general and administrative expenses were 31.9% and 35.9% for the three months ended March 31, 2025 and 2024, respectively. The decrease in expenses was attributable to lower commission expenses, and foreign currency exchange gains.

Current wording

Selling, general and administrative expenses for the International segment were $3.7 million for the three months ended June 30, 2025, as compared to $3.8 million for the corresponding period in 2024. As a percentage of net sales, selling, general and administrative expenses were 29.4% and 33.9% for the three months ended June 30, 2025 and 2024, respectively. The decrease in expenses as a percentage of net sales was attributable to higher sales and foreign currency exchange gains.

Previous wording

Interest expense was $4.9 million and $5.6 million for the three months ended March 31, 2025 and 2024, respectively. The decrease in expense was a result of lower average outstanding borrowings in the current period, and lower interest rates on outstanding borrowings.

Current wording

Interest expense was $5.1 million and $5.2 million for the three months ended June 30, 2025 and 2024, respectively. The decrease in expense was a result of lower average outstanding borrowings in the current period, and lower interest rates on outstanding borrowings.

Previous wording

Mark to market loss on interest rate derivatives was $0.5 million for the three months ended March 31, 2025, as compared to a mark to market loss on interest rate derivatives of $0.2 million for the three months ended March 31, 2024. The loss recognized for the three months ended March 31, 2025 and 2024, respectively, was attributable to the change in the fair value due to the change in the projected interest rate environment. The mark to market amount represents the change in fair value on the Company’s interest rate derivatives that have not been designated as hedging instruments. These derivatives were entered into for purposes of locking-in a fixed interest rate on a portion of the Company’s variable interest rate debt. As of March 31, 2025, the intent of the Company is to hold these derivative contracts until their maturity.

Current wording

Mark to market loss on interest rate derivatives was $0.2 million for the three months ended June 30, 2025, as compared to $0.1 million for the three months ended June 30, 2024. The loss recognized for the three months ended June 30, 2025 and 2024, respectively, was attributable to the change in the fair value due to the change in the projected interest rate environment. The mark to market amount represents the change in fair value on the Company’s interest rate derivatives that have not been designated as hedging instruments. These derivatives were entered into for purposes of locking-in a fixed interest rate on a portion of the Company’s variable interest rate debt. As of June 30, 2025, the intent of the Company is to hold these derivative contracts until their maturity.

Previous wording

Income tax benefit of $0.1 million and provision of $0.2 million for the three months ended March 31, 2025 and 2024, respectively, represent taxes on both U.S. and foreign earnings at a combined effective income tax benefit rate of 3.3% and provision rate of (5.3)%, respectively. The negative rate for the three months ended March 31, 2024 reflects tax expense on a pretax financial reporting loss. The effective tax rate for the three months ended March 31, 2025 differs from the federal statutory income tax rate of 21.0% primarily due to foreign losses for which no tax benefit is recognized as such amounts are fully offset with a valuation allowance. The effective tax rate for the three months ended March 31, 2024 differs from the federal statutory income tax rate of 21.0% primarily due to the expiration of non-qualified stock options and the vesting of equity-based awards, where the book expense exceeded the tax deduction upon vesting, and foreign losses for which no tax benefit is recognized as such amounts are fully offset with a valuation allowance.

Current wording

Income tax benefit of $2.8 million and benefit of $0.1 million for the three months ended June 30, 2025 and 2024, respectively, represent taxes on both U.S. and foreign earnings at a combined effective income tax benefit rate of 6.5% and benefit rate of 0.3%, respectively. The effective tax rate for the three months ended June 30, 2025 differs from the federal statutory income tax rate of 21.0% primarily due to a partial valuation allowance on U.S. deferred tax assets that are not more likely than not to be realized as a result of the goodwill impairment in the current quarter. The effective tax rate for the three months ended June 30, 2024 differs from the federal statutory income tax rate of 21.0% primarily due to the expiration of non-qualified stock options and the vesting of equity-based awards, where the book expense exceeded the tax deduction upon vesting, and foreign losses for which no tax benefit is recognized as such amounts are fully offset with a valuation allowance.

Previous wording

Net sales for the U.S. segment’s Kitchenware product category were $79.5 million for the three months ended March 31, 2025, a decrease of $4.0 million, or 4.8%, as compared to $83.5 million for the corresponding period in 2024. The decrease was driven by a reduction in sales for kitchen tools and cutlery and boards, partially offset by higher sales for bakeware.

Current wording

Net sales for the U.S. segment’s Kitchenware product category were $162.0 million for the six months ended June 30, 2025, a decrease of $2.3 million, or 1.4%, as compared to $164.3 million for the corresponding period in 2024. The decrease was driven by lower sales for kitchen tools, partially offset by higher sales for cutlery and boards and kitchen measurement products.

Previous wording

Net sales for the U.S. segment’s Tableware product category were $27.6 million for the three months ended March 31, 2025, an increase of $1.8 million, or 7.0%, as compared to $25.8 million for the corresponding period in 2024. The increase was attributable to dinnerware sales in the dollar channel, partially offset by a flatware warehouse club program not repeated in Q1 2025.

Current wording

Net sales for the U.S. segment’s Tableware product category were $48.9 million for the six months ended June 30, 2025, a decrease of $3.2 million, or 6.1%, as compared to $52.1 million for the corresponding period in 2024. The decrease was driven by lower flatware sales due to a warehouse club program not repeated, partially offset by higher sales in dinnerware in the dollar channel.

Previous wording

Net sales for the U.S. segment’s Home Solutions product category were $21.4 million for the three months ended March 31, 2025, an increase of $0.2 million, or 0.9%, as compared to $21.2 million for the corresponding period in 2024. The increase was attributable to higher sales for Home Décor products driven in the dollar channel and a new warehouse program. The increase was partially offset by lower sales of bath measurement products.

Current wording

Net sales for the U.S. segment’s Home Solutions product category were $36.9 million for the six months ended June 30, 2025, a decrease of $7.7 million, or 17.3%, as compared to $44.6 million for the corresponding period in 2024. The decrease was attributable to lower sales of hydration products and bath measurement products. The decrease was partially offset by higher sales for home décor products driven by a new warehouse club program and sales in the dollar channel.

Previous wording

Distribution expenses as a percentage of net sales for the U.S. segment were 11.5% and 10.0% for the three months ended March 31, 2025 and 2024, respectively. As a percentage of sales shipped from the Company’s U.S. warehouses, distribution expenses were 11.9% and 10.5% for the three months ended March 31, 2025 and 2024, respectively. The increase in expenses as a percentage of sales was attributable to an increase in employee expenses as a result of less labor management efficiencies due to higher inventory levels, higher software expenses due to the launch of a new warehouse management system at the

Current wording

Distribution expenses as a percentage of net sales for the U.S. segment were 11.4% and 9.5% for the six months ended June 30, 2025 and 2024, respectively. Distribution expenses during the six months ended June 30, 2025 and 2024 included $0.1 million for redesign costs related to the Company's warehouses. As a percentage of sales shipped from the Company’s U.S. warehouses, excluding non-recurring expenses, distribution expenses were 11.5% and 10.0% for the six months ended June 30, 2025 and 2024, respectively. The increase in expenses as a percentage of net sales was attributable to lower shipment volume resulting in an unfavorable impact of fixed expenses, an increase in employee expenses as a result of less labor management efficiencies due to higher inventory levels, higher software expenses due to the launch of a new warehouse management system at the Company's west coast distribution center in September 2024 and an increase in freight-out expenses.

Previous wording

Distribution expenses as a percentage of net sales for the International segment were 28.3% for the three months ended March 31, 2025, compared to 27.2% for the corresponding period in 2024. As a percentage of sales shipped from the Company’s international warehouses distribution expenses were 25.0% and 23.6% for the three months ended March 31, 2025 and 2024, respectively. The increase in expenses as a percentage of net sales was primarily attributed to an increase in warehouse rent expense, partially offset by lower freight out-expenses.

Current wording

Distribution expenses as a percentage of net sales for the International segment were 29.1% for the six months ended June 30, 2025, compared to 27.7% for the corresponding period in 2024. As a percentage of sales shipped from the Company’s international warehouses, distribution expenses were 25.9% and 24.3% for the six months ended June 30, 2025 and 2024, respectively. The increase in expenses as a percentage of sales was primarily attributed to higher warehouse expenses related to the expanded distribution of the Company's products within the Asia Pacific region and an increase in freight-out expenses.

Previous wording

Unallocated corporate income for the three months ended March 31, 2025 was $2.2 million, as compared to expenses of $4.5 million for the corresponding period in 2024. The current period income was driven by the recognition of a net legal settlement gain of $6.4 million. The remaining decrease compared to the prior period was due to lower incentive compensation and legal expenses, partially offset by an increase in stock compensation expense.

Current wording

Unallocated corporate expenses for the six months ended June 30, 2025 were $2.1 million, as compared to expenses of $9.6 million for the corresponding period in 2024. The decrease in expenses was driven by the recognition of a net legal settlement gain of $6.4 million in the current period, lower incentive compensation and legal expenses, partially offset by an increase in stock compensation expense.

Previous wording

Equity in losses of Vasconia, net of taxes, was $2.1 million for the three months ended March 31, 2024.

Current wording

Equity in losses of Vasconia, net of taxes, was $2.1 million for the six months ended June 30, 2024.

Previous wording

At March 31, 2025, the Company had cash and cash equivalents of $10.4 million, compared to$2.9 million at December 31, 2024. Working capital was $216.4 million at March 31, 2025, compared to $221.8 million at December 31, 2024. Liquidity as of March 31, 2025 was $89.6 million, consisting of $10.4 million of cash and cash equivalents, $63.2 million of availability under the ABL Agreement, limited by the Term Loan financial covenant, and $16.0 million of available funding under the Receivables Purchase Agreement.

Current wording

At June 30, 2025, the Company had cash and cash equivalents of $12.0 million, compared to$2.9 million at December 31, 2024. Working capital was $210.1 million at June 30, 2025, compared to $221.8 million at December 31, 2024. Liquidity as of June 30, 2025 was $96.9 million, consisting of $12.0 million of cash and cash equivalents, $65.7 million of availability under the ABL Agreement, limited by the Term Loan financial covenant, and $19.2 million of available funding under the Receivables Purchase Agreement.

Previous wording

Inventory, a large component of the Company’s working capital, is expected to fluctuate from period to period, with inventory levels higher primarily in the June through October time period. The Company also expects inventory turnover to fluctuate from period to period based on product and customer mix. Certain product categories have lower inventory turnover rates as a result of minimum order quantities from the Company’s vendors or customer replenishment needs. Certain other product categories experience higher inventory turns due to lower minimum order quantities or trending sale demands. For the three months ended March 31, 2025, inventory turnover was 1.8 times, or 208 days, as compared to 1.8 times, or 203 days, for the three months ended March 31, 2024. Inventory turns have remained relatively consistent.

Current wording

Inventory, a large component of the Company’s working capital, is expected to fluctuate from period to period, with inventory levels higher primarily in the June through October time period. The Company also expects inventory turnover to fluctuate from period to period based on product and customer mix. Certain product categories have lower inventory turnover rates as a result of minimum order quantities from the Company’s vendors or customer replenishment needs. Certain other product categories experience higher inventory turns due to lower minimum order quantities or trending sale demands. For the three months ended June 30, 2025, inventory turnover was 1.5 times, or 241 days, as compared to 1.8 times, or 208 days, for the three months ended June 30, 2024. Inventory turns have slowed compared to the prior year due to lower sales and higher inventory levels because of higher inventory purchases in the first quarter of 2025 intended to mitigate the impact of the tariffs.

Previous wording

Availability under the ABL Agreement is limited to the lesser of the $200.0 million commitment thereunder and the borrowing base and therefore depends on the valuation of certain current assets comprising the borrowing base. The borrowing capacity under the ABL Agreement will depend, in part, on eligible levels of accounts receivable and inventory that fluctuate regularly. Due to the seasonality of the Company’s business, the Company may have greater borrowing availability during the third and fourth quarters of each year. Consequently, the $200.0 million commitment thereunder may not represent actual borrowing capacity. The Company’s borrowing capacity may be further limited by the Term Loan financial covenant of 5.00 to 1.00 maximum Total Net Leverage Ratio. As of March 31, 2025, the availability under the ABL Agreement, limited by the Term Loan financial covenant, was $63.2 million.

Current wording

Availability under the ABL Agreement is limited to the lesser of the $200.0 million commitment thereunder and the borrowing base and therefore depends on the valuation of certain current assets comprising the borrowing base. The borrowing capacity under the ABL Agreement will depend, in part, on eligible levels of accounts receivable and inventory that fluctuate regularly. Due to the seasonality of the Company’s business, the Company may have greater borrowing availability during the third and fourth quarters of each year. Consequently, the $200.0 million commitment thereunder may not represent actual borrowing capacity. The Company’s borrowing capacity may be further limited by the Term Loan financial covenant of 5.00 to 1.00 maximum Total Net Leverage Ratio. As of June 30, 2025, the availability under the ABL Agreement, limited by the Term Loan financial covenant, was $65.7 million.

Previous wording

The 2024 excess cash flow payment of $1.2 million was paid on April 4, 2025 and reduces the scheduled quarterly payment due on June 30, 2025. As of March 31, 2025, the Company estimates no excess cash flow payment will be due for 2025.

Current wording

The 2024 excess cash flow payment of $1.2 million was paid on April 4, 2025 and reduced the scheduled quarterly payment due on June 30, 2025. As of June 30, 2025, the Company estimates no excess cash flow payment will be due for 2025.

Previous wording

The Company’s payment obligations under its Debt Agreements are unconditionally guaranteed by its existing and future U.S. subsidiaries with certain minor exceptions. Certain payment obligations under the ABL Agreement are also direct obligations of its foreign subsidiary borrowers designated as such under the ABL Agreement and, subject to limitations on such guaranty, are guaranteed by the foreign subsidiary borrowers, as well as by the Company. The obligations of the foreign subsidiary borrowers under the ABL Agreement are secured by security interests in substantially all of the assets of, and stock in, such foreign subsidiary borrowers, subject to certain limitations. The obligations of the Company under the Debt Agreements and any hedging arrangements and cash management services and the guarantees by its domestic subsidiaries in respect of those obligations are secured by security interests in substantially all of the assets and stock (but in the case of foreign subsidiaries, limited to 65% of the capital stock in first-tier foreign subsidiaries and not including the stock of subsidiaries of such first-tier foreign subsidiaries) owned by the Company and the U.S. subsidiary guarantors, subject to certain exceptions. Such security interests consist of (1) a first-priority lien, subject to certain permitted liens, with respect to certain assets of the Company and certain of its subsidiaries (the “ABL Collateral”) pledged as collateral in favor of lenders under the ABL Agreement and a second-priority lien in the ABL Collateral in favor of the lenders under the Term Loan and (2) a first-priority lien, subject to certain permitted liens, with respect to certain assets of the Company and certain of its subsidiaries (the “Term Loan

Current wording

The Company’s payment obligations under its Debt Agreements are unconditionally guaranteed by its existing and future U.S. subsidiaries with certain minor exceptions. Certain payment obligations under the ABL Agreement are also direct obligations of its foreign subsidiary borrowers designated as such under the ABL Agreement and, subject to limitations on such guaranty, are guaranteed by the foreign subsidiary borrowers, as well as by the Company. The obligations of the foreign subsidiary borrowers under the ABL Agreement are secured by security interests in substantially all of the assets of, and stock in, such foreign subsidiary borrowers, subject to certain limitations. The obligations of the Company under the Debt Agreements and any hedging arrangements and cash management services and the guarantees by its domestic subsidiaries in respect of those obligations are secured by security interests in substantially all of the assets and stock (but in the case of foreign subsidiaries, limited to 65% of the capital stock in first-tier foreign subsidiaries and not including the stock of subsidiaries of such first-tier foreign subsidiaries) owned by the Company and the U.S. subsidiary guarantors, subject to certain exceptions. Such security interests consist of (1) a first-priority lien, subject to certain permitted liens, with respect to certain assets of the Company and certain of its subsidiaries (the “ABL Collateral”) pledged as collateral in favor of lenders under the ABL Agreement and a second-priority lien in the ABL Collateral in favor of the lenders under the Term Loan and (2) a first-priority lien, subject to certain permitted liens, with respect to certain assets of the Company and certain of its subsidiaries (the “Term Loan Collateral”) pledged as collateral in favor of lenders under the Term Loan and a second-priority lien in the Term Loan Collateral in favor of the lenders under the ABL Agreement.

Previous wording

Borrowings under the revolving credit facility bear interest, at the Company’s option, at one of the following rates: (i) an alternate base rate, defined, for any day, as the greater of the prime rate, a federal funds and overnight bank funding based rate plus 0.5% or one-month Adjusted Term Secured Overnight Financing Rate (“SOFR”) plus 1.0% as of a specified date in advance of the determination, but in each case not less than 1.0%, plus a margin of 0.25% to 0.50%, or (ii) Adjusted Term SOFR, which is the Term SOFR Rate for the selected 1, 3 or 6 month interest period plus 0.10% (or Euro Interbank Offered Rate “EURIBOR” for borrowings denominated in Euro; or Sterling Overnight Index Average “SONIA” for borrowings denominated in Pounds Sterling), but in each case not less than zero, plus a margin of 1.25% to 1.50%. The respective margins are based upon average quarterly availability, as defined in and computed pursuant to the ABL Agreement. In addition, the Company pays a commitment fee of 0.20% to 0.25% per annum based on the average daily unused portion of the aggregate commitment under the ABL Agreement. The interest rate on outstanding borrowings under the ABL Agreement at March 31, 2025 was between 3.79% and 5.86%. The Company paid a commitment fee of 0.25% on the unused portion of the ABL Agreement during the three months ended March 31, 2025.

Current wording

Borrowings under the revolving credit facility bear interest, at the Company’s option, at one of the following rates: (i) an alternate base rate, defined, for any day, as the greater of the prime rate, a federal funds and overnight bank funding based rate plus 0.5% or one-month Adjusted Term Secured Overnight Financing Rate (“SOFR”) plus 1.0% as of a specified date in advance of the determination, but in each case not less than 1.0%, plus a margin of 0.25% to 0.50%, or (ii) Adjusted Term SOFR, which is the Term SOFR Rate for the selected 1, 3 or 6 month interest period plus 0.10% (or Euro Interbank Offered Rate “EURIBOR” for borrowings denominated in Euro; or Sterling Overnight Index Average “SONIA” for borrowings denominated in Pounds Sterling), but in each case not less than zero, plus a margin of 1.25% to 1.50%. The respective margins are based upon average quarterly availability, as defined in and computed pursuant to the ABL Agreement. In addition, the Company pays a commitment fee of 0.20% to 0.25% per annum based on the average daily unused portion of the aggregate commitment under the ABL Agreement. The interest rate on outstanding borrowings under the ABL Agreement at June 30, 2025 was between 3.30% and 5.79%. The Company paid a commitment fee of 0.25% on the unused portion of the ABL Agreement during the six months ended June 30, 2025.

Previous wording

The Term Loan bears interest, at the Company’s option, at one of the following rates: (i) alternate base rate, defined, for any day, as the greater of (x) the prime rate, (y) a federal funds and overnight bank funding based rate plus 0.5% or (z) one-month Adjusted Term SOFR, but not less than 1.0%, plus 1.0%, plus a margin of 4.5% or (ii) Adjusted Term SOFR (Term SOFR plus the Term SOFR Adjustment) for the applicable interest period, but not less than 1.0%, plus a margin of 5.5%. The interest rate on outstanding borrowings under the Term Loan at March 31, 2025 was 9.94%.

Current wording

The Term Loan bears interest, at the Company’s option, at one of the following rates: (i) alternate base rate, defined, for any day, as the greater of (x) the prime rate, (y) a federal funds and overnight bank funding based rate plus 0.5% or (z) one-month Adjusted Term SOFR, but not less than 1.0%, plus 1.0%, plus a margin of 4.5% or (ii) Adjusted Term SOFR (Term SOFR plus the Term SOFR Adjustment) for the applicable interest period, but not less than 1.0%, plus a margin of 5.5%. The interest rate on outstanding borrowings under the Term Loan at June 30, 2025 was 9.93%.

Previous wording

The Debt Agreements provide for customary restrictions and events of default. Restrictions include limitations on additional indebtedness, liens, acquisitions, investments and payment of dividends, among other things. Under the Term Loan, the Total Net Leverage Ratio is not permitted to be greater than 5.00 to 1.00 determined as of the end of each fiscal quarters. Further, the ABL Agreement provides that during any period (a) commencing on the last day of the most recently ended four consecutive fiscal quarters on or prior to the date availability under the ABL Agreement is less than the greater of $20.0 million and 10% of the aggregate commitment under the ABL Agreement at any time and (b) ending on the day after such availability has exceeded the greater of $20.0 million and 10% of the aggregate commitment under the ABL Agreement for 45 consecutive days, the Company is required to maintain a minimum fixed charge coverage ratio of 1.10 to 1.00 as of the last day of any period of four consecutive fiscal quarters.

Current wording

39 - fiscal quarters on or prior to the date availability under the ABL Agreement is less than the greater of $20.0 million and 10% of the aggregate commitment under the ABL Agreement at any time and (b) ending on the day after such availability has exceeded the greater of $20.0 million and 10% of the aggregate commitment under the ABL Agreement for 45 consecutive days, the Company is required to maintain a minimum fixed charge coverage ratio of 1.10 to 1.00 as of the last day of any period of four consecutive fiscal quarters.

Previous wording

The Company’s adjusted EBITDA for the trailing twelve months ended March 31, 2025 was $51.0 million.

Current wording

The Company’s adjusted EBITDA (including pro forma adjustments), for the trailing twelve months ended June 30, 2025 was $50.7 million.

Previous wording

Capital expenditures for the three months ended March 31, 2025 were $1.6 million.

Current wording

Capital expenditures for the six months ended June 30, 2025 were $2.7 million.

Previous wording

Investors should consider this non-GAAP financial measure in addition to, and not as a substitute for, the Company’s financial performance measures prepared in accordance with U.S. GAAP. Further, the Company’s non-GAAP information may be

Current wording

Investors should consider this non-GAAP financial measure in addition to, and not as a substitute for, the Company’s financial performance measures prepared in accordance with U.S. GAAP. Further, the Company’s non-GAAP information may be different from the non-GAAP information provided by other companies including other companies within the home retail industry.

Previous wording

The following is a reconciliation of the net (loss) income, as reported, to Adjusted EBITDA, for each of the last four quarters and the 12 months ended March 31, 2025:

Current wording

The following is a reconciliation of the net income (loss), as reported, to Adjusted EBITDA, for each of the last four quarters and the 12 months ended June 30, 2025:

Previous wording

(3) Adjusted EBITDA is a non-GAAP financial measure that is defined in the Company’s debt agreements. Adjusted EBITDA is defined as net (loss) income, adjusted to exclude loss on equity securities, income tax (benefit) provision, interest expense, depreciation and amortization, mark to market loss (gain) on interest rate derivatives, stock compensation expense, legal settlement gain, net and other items detailed in the table above that are consistent with exclusions permitted by our debt agreements.

Current wording

(4) Adjusted EBITDA is a non-GAAP financial measure that is defined in the Company’s debt agreements. Adjusted EBITDA is defined as net income (loss), adjusted to exclude income tax provision (benefit), interest expense, depreciation and amortization, mark to market loss (gain) on interest rate derivatives, goodwill impairment, stock compensation expense, legal settlement gain, net and other items detailed in the table above that are consistent with exclusions permitted by our debt agreements.

Previous wording

The Company did not sell receivables to HSBC during the three months ended March 31, 2025 and March 31, 2024. At March 31, 2025, $16.0 million of accounts receivables were available for sale to HSBC, net of applicable charges.

Current wording

The Company did not sell receivables to HSBC during the three and six months ended June 30, 2025 and June 30, 2024. At June 30, 2025, $19.2 million of accounts receivables were available for sale to HSBC, net of applicable charges.

Previous wording

The Company’s derivatives expose it to credit risks from possible non-performance by counterparties. The Company has limited its credit risk by entering into derivative transactions exclusively with investment-grade rated financial institutions and monitors the creditworthiness of these financial institutions on an ongoing basis. The Company utilizes standard counterparty master netting agreements that net certain foreign currency and interest rate swap transactions in the event of the insolvency of

Current wording

The Company’s derivatives expose it to credit risks from possible non-performance by counterparties. The Company has limited its credit risk by entering into derivative transactions exclusively with investment-grade rated financial institutions and monitors the creditworthiness of these financial institutions on an ongoing basis. The Company utilizes standard counterparty master netting agreements that net certain foreign currency and interest rate swap transactions in the event of the insolvency of one of the parties to the transaction. These master netting arrangements permit the Company to net amounts due from the Company to counterparty with amounts due to the Company from the same counterparty. Although all of the Company’s recognized derivative assets and liabilities are subject to enforceable master netting arrangements, the Company has elected to present these assets and liabilities on a gross basis.

Previous wording

To reduce the impact of changes in foreign currency exchange rates on its results, from time to time the Company is a party to certain foreign exchange contracts, primarily to offset the earnings impact related to fluctuations in foreign currency exchange rates associated with inventory purchases. The Company designates these contracts for accounting purposes as cash flow hedges. The Company purchases foreign currency forward contracts with terms less than 18 months. The aggregate gross notional value of foreign exchange contracts at March 31, 2025 was $9.3 million.

Current wording

To reduce the impact of changes in foreign currency exchange rates on its results, from time to time the Company is a party to certain foreign exchange contracts, primarily to offset the earnings impact related to fluctuations in foreign currency exchange rates associated with inventory purchases. The Company designates these contracts for accounting purposes as cash flow hedges. The Company purchases foreign currency forward contracts with terms less than 18 months. The aggregate gross notional value of foreign exchange contracts at June 30, 2025 was $6.1 million.