CENTRAL GARDEN & PET CO

Previous wording

Our Pet segment includes dog and cat supplies such as dog treats and chews, toys, pet beds and grooming products, waste management and training pads, pet containment; supplies for aquatics, small animals, reptiles and pet birds including toys, enclosures and habitats, bedding, food and supplements; products for equine and livestock, animal and household health and insect control products; live fish and small animals as well as outdoor cushions. These products are sold under brands such as Aqueon®, Cadet®, C&S®, Comfort Zone®, Farnam®, Four Paws®, Kaytee®, Nylabone® and Zilla®.

Current wording

Our Pet segment offers a broad range of products for dog and cat supplies, including treats and chews, toys, beds and containment, grooming items, waste management and training pads. We also provide supplies for aquatics, small animals, reptiles and pet birds, such as toys, enclosures, habitats, bedding, food and supplements, equine and livestock products, animal and household health solutions and insect control items. This segment also includes live fish and small animals as well as outdoor cushions. Products are sold under well-recognized brands including Aqueon®, Best Bully Sticks®, Cadet®, C&S®, Comfort Zone®, Farnam®, Four Paws®, Kaytee®, Nylabone®, Zilla® and Zoëcon®.

Previous wording

Our Garden segment includes lawn and garden consumables such as grass seed, vegetable, flower and herb packet seed; wild bird feed, bird houses and other birding accessories; weed, grass, and other herbicides, insecticide and pesticide products; fertilizers and live plants. These products are sold under brands such as Amdro®, Ferry-Morse®, Pennington® and Sevin®.

Current wording

Our Garden segment includes lawn and garden consumables such as grass seed; vegetable, flower and herb packet seed; wild bird feed, bird houses and other birding accessories; weed, grass, and other herbicides, insecticide and pesticide products; fertilizers and live plants. Brands in this segment include 3D®, Amdro®, Ferry-Morse®, Pennington® and Sevin®.

Previous wording

In fiscal 2024, our consolidated net sales were $3.2 billion, of which our Pet segment, or Pet, accounted for approximately $1.8 billion and our Garden segment, or Garden, accounted for approximately $1.4 billion. In fiscal 2024, our operating income was $185 million consisting of income from our Pet segment of $203 million, income from our Garden segment of $82 million and corporate expenses of $100 million.

Current wording

In fiscal 2025, our consolidated net sales were $3.1 billion, of which our Pet segment, or Pet, accounted for approximately $1.8 billion and our Garden segment, or Garden, accounted for approximately $1.3 billion. In fiscal 2025, our operating income was $250 million consisting of income from our Pet segment of $216 million, income from our Garden segment of $142 million and corporate expenses of $108 million.

Previous wording

•Net sales decreased $35.4 million, or 3.6%, from the prior year quarter to $961 million, with Pet net sales decreasing 3.1% and Garden net sales decreasing 4.1%.

Current wording

•Net sales decreased $39.0 million, or 6.0%, from the prior year quarter to $617 million, with Pet net sales decreasing 2.7% and Garden net sales decreasing 12.0%.

Previous wording

•Operating income increased $19.2 million, or 16.6%, from the prior year quarter to $135.1 million in the third quarter of fiscal 2025. On a non-GAAP basis, operating income increased $12.0 million from the prior year quarter.

Current wording

•Operating income declined $11.5 million from the prior year quarter to $16.5 million in the first quarter of fiscal 2026. On a non-GAAP basis, operating income decreased $3.7 million from the prior year quarter.

Previous wording

•Net income in the third quarter of fiscal 2025 was $95.0 million, or $1.52 per diluted share, compared to $79.7 million, or $1.19 per diluted share, in the third quarter of fiscal 2024. On a non-GAAP basis, net income was $97.9 million, or $1.56 per diluted share, in the third quarter of fiscal 2025 compared to $88.2 million, or $1.32 per diluted share, in the third quarter of fiscal 2024.

Current wording

•Net income in the first quarter of fiscal 2026 was $6.8 million, or $0.11 per diluted share, compared to $14.0 million, or $0.21 per diluted share, in the first quarter of fiscal 2025. On a non-GAAP basis, net income was $12.8 million, or $0.21 per diluted share, in the first quarter of fiscal 2026 compared to $14.0 million, or $0.21 per diluted share, in the first quarter of fiscal 2025.

Previous wording

Garden net sales decreased $56 million, or 5.0%, to $1,077 million for the nine months ended June 28, 2025. The decline in Garden net sales was due primarily to decreased sales of third-party products negatively impacted by the loss of distribution of two product lines and extended periods of cool and rainy weather during the garden season, which impacted some seasonal categories. The declines were partially offset by increased sales in our wild bird feed business and fertilizer business. Garden branded sales decreased $9 million, and sales of other manufacturers’ products decreased $47 million.

Current wording

Garden net sales decreased $27.3 million, or 12.0%, to $201.6 million for the three months ended December 27, 2025, from $229.0 million for the three months ended December 28, 2024. The decline in Garden net sales was due primarily to the adverse impact of the timing of shipments, affecting the sales of both our controls and grass seed businesses, the loss of distribution of two product lines, and our planned exit of lower-margin categories in our live plant business. The declines were partially offset by increased sales in our wild bird feed business. Garden branded product sales decreased $20.7 million, and sales of other manufacturers' products decreased $6.6 million.

Previous wording

Gross profit for the three months ended June 28, 2025 increased $14.9 million, or 4.7%, to $332.0 million from $317.1 million for the three months ended June 29, 2024. Gross margin increased 280 basis points to 34.6% for the three months ended June 28, 2025 from 31.8% for the three months ended June 29, 2024. The increase in gross profit and gross margin was driven by productivity gains resulting from our Cost and Simplicity program and a reduction in charges related to the closing of facilities in the current three-month period compared to the prior three-month period.

Current wording

Gross profit for the three months ended December 27, 2025 decreased $5.1 million, or 2.6%, to $190.6 million from $195.7 million for the three months ended December 28, 2024. Gross margin increased 110 basis points to 30.9% for the three months ended December 27, 2025 from 29.8% for the three months ended December 28, 2024. The decrease in gross profit was due to the $39.1 million decrease in net sales. The increase in gross margin was driven primarily by productivity gains resulting from our Cost and Simplicity agenda and, secondarily, to a mix shift in sales. Reduced sales from lower margin products due to portfolio optimization actions in both Pet and Garden were replaced by increased sales of higher margin product lines, particularly within Pet.

Previous wording

Selling, general and administrative expenses decreased $4.2 million, or 2.1%, to $196.9 million for the three months ended June 28, 2025. As a percentage of net sales, selling, general and administrative expenses increased to 20.5% for the three months ended June 28, 2025, compared to 20.2% in the comparable prior year quarter due primarily to the decrease in net sales. Selling, general and administrative expenses decreased in both corporate and Garden, partially offset by an increase in Pet, as compared to the prior year quarter.

Current wording

Selling, general and administrative expenses increased $6.4 million, or 3.8%, to $174.1 million for the three months ended December 27, 2025. As a percentage of net sales, selling, general and administrative expenses increased to 28.2% for the three months ended December 27, 2025, compared to 25.5% in the comparable prior year quarter due primarily to $8.3 million in facility closure costs. On a non-GAAP basis, selling, general and administrative expenses decreased $2.0 million to $165.7 million for the three months ended December 27, 2025, and was 26.8% of net sales.

Previous wording

Selling and delivery expense decreased $2.9 million to $94.0 million for the three months ended June 28, 2025 as compared to $96.9 million in the prior year quarter. The decreased expense was in the Garden segment due primarily to lower marketing expense and merchandising expense, both impacted by lower headcount.

Current wording

Selling and delivery expense increased $1.1 million to $73.8 million for the three months ended December 27, 2025 as compared to $72.7 million in the prior year quarter. The increased expense was in the Garden segment due primarily to incremental wild bird marketing expenses.

Previous wording

Warehouse and administrative expense decreased $1.3 million, or 1.3%, to $102.9 million for the three months ended June 28, 2025 from $104.2 million for the three months ended June 29, 2024. The decrease in warehouse and administrative expense was primarily at corporate and a minor decrease in Garden, partially offset by an increase in Pet. Corporate expense decreased $5.6 million due primarily to lower compensation expense related to reduced headcount and lower insurance costs. Corporate expenses are included within administrative expense and relate to the costs of unallocated executive, administrative, finance, legal, human resources, and information technology functions.

Current wording

Warehouse and administrative expense increased $5.2 million, to $100.2 million for the three months ended December 27, 2025 from $95.0 million for the three months ended December 28, 2024. The increase in warehouse and administrative expense was primarily in Garden and due to $7.8 million in facility closure costs, partially offset by a decrease in corporate expense. On a non-GAAP basis, warehouse and administrative expense decreased $3.1 million for the quarter ended December 27, 2025, as compared to the prior-year quarter. Corporate expense decreased $2.1 million due primarily to lower third-party provider expense and lower variable compensation expense. Corporate expenses are included within administrative expense and relate to the costs of unallocated executive, administrative, finance, legal, human resources, and information technology functions.

Previous wording

Operating income increased $19.2 million, or 16.6%, to $135.1 million for the three months ended June 28, 2025 from $115.9 million for the three months ended June 29, 2024. Our operating margin increased from 11.6% in the prior year quarter to 14.1% in the current year quarter. The increase in operating income was due to a 280 basis point increase in gross margin and a $4.2 million decrease in selling, general and administrative expense, partially offset by a $35.4 million decrease in net sales.

Current wording

Operating income decreased $11.5 million, or 40.9%, to $16.5 million for the three months ended December 27, 2025 from $28.0 million for the three months ended December 28, 2024. Our operating margin decreased from 4.3% in the prior year quarter to 2.7% in the current year quarter. The decrease in operating income was due to a $39.1 million decrease in net sales and a $6.4 million increase in selling, general and administrative expense partially offset by a 110 basis point increase in gross margin. On a non-GAAP basis, operating income decreased $3.7 million to $24.3 million and operating margin was 3.9%.

Previous wording

Pet operating income decreased $6.9 million, or 8.3%, to $76.2 million for the three months ended June 28, 2025 from $83.1 million for the three months ended June 29, 2024. Pet operating income decreased due to a $15.5 million decline in net sales and increased selling, general and administrative expense partially offset by improved gross margin.

Current wording

Pet operating income decreased $1.5 million, or 2.8%, to $49.8 million for the three months ended December 27, 2025 from $51.3 million for the three months ended December 28, 2024. Pet operating income decreased due to a $11.7 million decline in net sales and a $0.3 million increase in selling, general and administrative expense partially offset by a 70 basis point improvement in gross margin.

Previous wording

Corporate operating expense decreased $5.6 million, or 18.8%, to $24.1 million for the three months ended June 28, 2025 from $29.7 million for the three months ended June 29, 2024, due primarily to lower compensation expense related to reduced headcount and lower insurance costs.

Current wording

Corporate operating expense decreased $2.1 million, or 8.2%, to $23.6 million for the three months ended December 27, 2025 from $25.7 million for the three months ended December 28, 2024, due primarily to lower third-party provider expense and lower variable compensation expense.

Previous wording

Net interest expense for the three months ended June 28, 2025 decreased $1.4 million, or 13.4%, to $8.8 million from $10.2 million for the three months ended June 29, 2024. The decrease in net interest expense was due to increased interest income resulting from higher cash balances during the current quarter. Debt outstanding on June 28, 2025 was $1,191.3 million compared to $1,189.7 million at June 29, 2024.

Current wording

Net interest expense for the three months ended December 27, 2025 was $7.8 million, fairly consistent with $7.7 million for the three months ended December 28, 2024. Debt outstanding on December 27, 2025 was $1,192.2 million compared to $1,190.4 million at December 28, 2024.

Previous wording

Other income is comprised of income or losses from investments accounted for under the equity method of accounting and foreign currency exchange gains and losses. Other income increased $0.8 million to $1.1 million for the three months ended June 28, 2025. The increase in other income was due primarily to foreign currency gains in the current year quarter.

Current wording

Other income is comprised of income or losses from investments accounted for under the equity method of accounting and foreign currency exchange gains and losses. Other income increased $1.9 million to $0.2 million for the three months ended December 27, 2025 as compared to an expense of $1.7 million in the prior quarter. The increase in other income (expense) was due primarily to foreign currency gains in the current year quarter as compared to foreign currency losses in the prior year quarter.

Previous wording

Our effective income tax rate was 25.1% for the quarter ended June 28, 2025 and 24.0% for the quarter ended June 29, 2024. The increase in our effective income tax rate was due primarily to the non-deductibility for tax purposes of losses incurred in connection with the wind-down of our U.K. operations.

Current wording

Our effective income tax rate was 23.3% for the quarter ended December 27, 2025 relatively consistent with 23.5% for the quarter ended December 28, 2024.

Previous wording

Net income in the third quarter of fiscal 2025 was $95.0 million, or $1.52 per diluted share, compared to $79.7 million, or $1.19 per diluted share, in the third quarter of fiscal 2024. On a non-GAAP basis, net income in the third quarter of fiscal 2025 was $97.9 million, or $1.56 per diluted share, compared to $88.2 million, or $1.32 per diluted share, in the third quarter of fiscal 2024.

Current wording

Net income in the first quarter of fiscal 2026 was $6.8 million, or $0.11 per diluted share, compared to $14.0 million, or $0.21 per diluted share, in the first quarter of fiscal 2025. On a non-GAAP basis, net income in the first quarter of fiscal 2026 was $12.8 million, or $0.21 per diluted share, compared to $14.0 million, or $0.21 per diluted share, in the first quarter of fiscal 2025.

Previous wording

•Facility closures and business exit: we have excluded charges related to the closure of distribution and manufacturing facilities and our decisions to exit the businesses as they represent infrequent transactions that impact the comparability between operating periods. We believe these exclusions supplement the GAAP information with a measure that may be useful to investors in assessing the sustainability of our operating performance.

Current wording

•Facility closures and business exit: we have excluded charges related to the closure of distribution and manufacturing facilities and our decisions to exit businesses as they represent infrequent transactions that impact the comparability between operating periods. We believe these exclusions supplement the GAAP information with a measure that may be useful to investors in assessing the sustainability of our operating performance.

Previous wording

During the third quarter of fiscal 2025, we recognized incremental expense of $3.9 million in the consolidated statement of operations, $2.2 million in our Garden segment related to closing a distribution facility in Ontario, California and beginning the consolidation of our Western distribution network and an incremental $1.7 million in our Pet segment related to the previous quarter's decision to wind-down our operations in the U.K.

Current wording

During the first quarter of fiscal 2026, we recognized incremental expense of $7.7 million in the consolidated statement of operations, $7.2 million in our Garden segment related to the closure of three distribution centers in fiscal 2025 and 2024, and an incremental $0.5 million in our Pet segment related to the closure of a sales and logistics facility in Pennsylvania.

Previous wording

Our revenues and margins are dependent on various economic factors, including fluctuating rates of inflation, energy costs, interest rates, currencies and consumer attitudes toward discretionary spending. Inflation moderated in fiscal 2024, and this has continued into fiscal 2025. We have benefited from lower cost inventory and significant productivity gains resulting in improved margins. The imposition of tariffs and a global trade war, however, could result in higher inflation as the year progresses.

Current wording

Our revenues and margins are dependent on various economic factors, including fluctuating rates of inflation on various input costs (e.g., commodities and energy), interest rates, tariffs, currencies and consumer attitudes toward discretionary spending. Inflation moderated in fiscal 2024 and into the first half of fiscal 2025 before increasing in the second half of fiscal 2025 and first quarter of fiscal 2026 due primarily to the increasing impact of tariffs. We have benefited from lower cost inventory and significant productivity gains resulting in improved margins. However, the continued imposition of tariffs and a global trade war could result in higher inflation as the year progresses.

Previous wording

Our sales of lawn and garden products are impacted by weather conditions in the different markets we serve. Our Garden segment’s business is highly seasonal. In fiscal 2024, approximately 66% of our Garden segment’s net sales and 59% of our total net sales occurred during our second and third fiscal quarters. Substantially all of the Garden segment’s operating income is typically generated in this period.

Current wording

Our sales of lawn and garden products are impacted by weather conditions in the different markets we serve. Our Garden segment’s business is highly seasonal. In fiscal 2025, approximately 64% of our Garden segment’s net sales and 57% of our total net sales occurred during our second and third fiscal quarters. Substantially all of the Garden segment’s operating income is typically generated in this period.

Previous wording

We service two broad markets: pet supplies and lawn and garden supplies. Our pet supplies businesses have a year round selling cycle with a slight degree of seasonality. As a result, it is not necessary to maintain large quantities of inventory to meet peak demands. Our lawn and garden businesses are highly seasonal with approximately 66% of our Garden segment’s net sales occurring during the second and third fiscal quarters. This seasonality requires the shipment of large quantities of product well ahead of the peak consumer buying periods. To encourage retailers and distributors to stock large quantities of inventory, industry practice has been for manufacturers to give extended credit terms and/or promotional discounts.

Current wording

We service two broad markets: pet supplies and lawn and garden supplies. Our pet supplies businesses have a year round selling cycle with a slight degree of seasonality. As a result, it is not necessary to maintain large quantities of inventory to meet peak demands. Our lawn and garden businesses are highly seasonal with approximately 64% of our Garden segment’s net sales occurring during the second and third fiscal quarters. This seasonality requires the shipment of large quantities of product well ahead of the peak consumer buying periods. To encourage retailers and distributors to stock large quantities of inventory, industry practice has been for manufacturers to give extended credit terms and/or promotional discounts.

Previous wording

Net cash provided by operating activities decreased by $42.0 million, from $191.8 million for the nine months ended June 29, 2024, to $149.8 million for the nine months ended June 28, 2025. The decrease in cash provided by operating activities was due primarily to changes in our working capital accounts for the nine-month period ended June 28, 2025, primarily an increase in accounts receivable and a smaller decrease in inventory as compared to the prior year period.

Current wording

Net cash used by operating activities increased by $1.4 million, from $68.8 million for the three months ended December 28, 2024, to $70.2 million for the three months ended December 27, 2025. The minor increase in cash used by operating activities was due primarily to changes in our working capital accounts for the three-month period ended December 27, 2025, primarily an increase in inventory, partially offset by a decrease in accounts receivable and the net of changes in other working capital accounts.

Previous wording

Net cash used in investing activities decreased $60.5 million, from $94.6 million for the nine months ended June 29, 2024 to $34.0 million during the nine months ended June 28, 2025. The decrease in cash used in investing activities was due primarily to more significant acquisition activity in the prior year as compared to the current year as well as decreased capital expenditures in the current year.

Current wording

Net cash used in investing activities increased $58.4 million, from $9.4 million for the three months ended December 28, 2024 to $67.8 million during the three months ended December 27, 2025. The increase in cash used in investing activities was due primarily to more significant acquisition activity in the current year as compared to the prior year.

Previous wording

Net cash used in financing activities increased $140.3 million, from $16.0 million for the nine months ended June 29, 2024, to $156.3 million for the nine months ended June 28, 2025. The increase in cash used in financing activities during the current year was due primarily to increased open market purchases of our common stock as compared to the prior year. During the nine months ended June 28, 2025, we repurchased approximately 3.2 million shares of our non-voting Class A common stock (CENTA) on the open market at an aggregate cost of approximately $98.2 million, or approximately $30.82 per share, and approximately 1.4 million shares of our voting common stock (CENT) on the open market at an aggregate cost of approximately $50.2 million, or approximately $35.23 per share. During the nine months ended June 29, 2024, we repurchased approximately 0.1 million shares of our non-voting Class A common stock (CENTA) on the open market at an aggregate cost of approximately $1.4 million, or approximately $28.75 per share.

Current wording

Net cash used in financing activities decreased $32 million, from $55.4 million for the three months ended December 28, 2024, to $23.5 million for the three months ended December 27, 2025. The decrease in cash used in financing activities during the current year was due primarily to decreased open market purchases of our common stock as compared to the prior year. During the three months ended December 27, 2025, we repurchased approximately 0.7 million shares of our non-voting Class A common stock (CENTA) on the open market at an aggregate cost of approximately $18.5 million, or approximately $28.01 per share. During the three months ended December 28, 2024, we repurchased approximately 1.3 million shares of our non-voting Class A common stock (CENTA) on the open market at an aggregate cost of approximately $39.9 million and 0.4 million shares of our voting common stock (CENT) on the open market at an aggregate cost of approximately $12.3 million.

Previous wording

We expect that our principal sources of funds will be cash generated from our operations and, if necessary, borrowings under our $750 million Credit Facility. Based on our anticipated cash needs, availability under our Credit Facility and the scheduled maturity of our debt, we believe that our sources of liquidity should be adequate to meet our working capital, capital spending and other cash needs for at least the next 12 months. However, we cannot assure you that these sources will continue to provide us with sufficient liquidity and, should we require it, that we will be able to obtain financing on terms satisfactory to us, or at all.

Current wording

We expect that our principal sources of funds will be cash generated from our operations and, if necessary, borrowings under our $600 million Credit Facility. Based on our anticipated cash needs, availability under our Credit Facility and the scheduled maturities of our debt, we believe that our sources of liquidity should be adequate to meet our working capital, capital spending and other cash needs for at least the next 12 months. However, we cannot assure you that these sources will continue to provide us with sufficient liquidity and, should we require it, that we will be able to obtain financing on terms satisfactory to us, or at all.

Previous wording

We believe that cash flows from operating activities, funds available under our Credit Facility, and arrangements with suppliers will be adequate to fund our presently anticipated working capital and capital expenditure requirements for the foreseeable future. We anticipate that our capital expenditures, which are related primarily to replacements and expansion of and upgrades to plant and equipment and also investment in our continued implementation of a scalable enterprise-wide information technology platform, will be approximately $50 to $60 million in fiscal 2025, of which we have invested approximately $31 million through June 28, 2025.

Current wording

We believe that cash flows from operating activities, funds available under our Credit Facility, and arrangements with suppliers will be adequate to fund our presently anticipated working capital and capital expenditure requirements for the foreseeable future. We anticipate that our capital expenditures, which are related primarily to replacements and expansion of and upgrades to plant and equipment and also investment in our continued implementation of a scalable enterprise-wide information technology platform, will be approximately $50 million in fiscal 2026, of which we have invested approximately $11 million through December 27, 2025.

Previous wording

At June 28, 2025, our total debt outstanding was $1,191.3 million, as compared with $1,189.7 million at June 29, 2024.

Current wording

At December 27, 2025, our total debt outstanding was $1,192.2 million, as compared with $1,190.4 million at December 28, 2024.

Previous wording

We may redeem some or all of the 2030 Notes at any time, at our option, prior to October 15, 2025 at a price equal to 100% of the principal amount plus a “make-whole” premium. We may redeem some or all of the 2030 Notes, at our option, in whole or in part, at any time on or after October 15, 2025 for 102.063%, on or after October 15, 2026 for 101.375%, on or after October 15, 2027 for 100.688% and on or after October 15, 2028 for 100.0%, plus accrued and unpaid interest.

Current wording

We may redeem some or all of the 2030 Notes, at our option, in whole or in part, at any time on or after October 15, 2025 for 102.063%, on or after October 15, 2026 for 101.375%, on or after October 15, 2027 for 100.688% and on or after October 15, 2028 for 100.0%, plus accrued and unpaid interest.

Previous wording

On December 16, 2021, we entered into a Third Amended and Restated Credit Agreement (the “Credit Agreement”). The Credit Agreement provides for a $750 million principal amount senior secured asset-based revolving credit facility, with up to an additional $400 million principal amount available with the consent of the Lenders, as defined, if we exercise the uncommitted accordion feature set forth therein (collectively, the “Credit Facility”). The Credit Facility matures on December 16, 2026. We may borrow, repay and reborrow amounts under the Credit Facility until its maturity date, at which time all amounts outstanding under the Credit Facility must be repaid in full.

Current wording

On November 7, 2025, we entered into a Fourth Amended and Restated Credit Agreement (the “Credit Agreement”). The Credit Agreement provides for a $600 million principal amount senior secured asset-based revolving credit facility, with up to an additional $400 million principal amount available, as defined, if we exercise the uncommitted accordion feature set forth therein (collectively, the “Credit Facility”). The Credit Facility matures on November 7, 2030. We may borrow, repay and reborrow amounts under the Credit Facility until its maturity date, at which time all amounts outstanding under the Credit Facility must be repaid in full.

Previous wording

The Credit Facility is subject to a borrowing base that is calculated using a formula based upon eligible receivables and inventory, and at our election, eligible real property, minus certain reserves. Proceeds of the Credit Facility will be used for general corporate purposes. Net availability under the Credit Facility was approximately $565 million as of June 28, 2025. The Credit Facility includes a $50 million sublimit for the issuance of standby and commercial letters of credit and a $75 million sublimit for swing loan borrowings. As of June 28, 2025, there were no borrowings outstanding and no letters of credit outstanding under the Credit Facility. Outside of the Credit Facility, there were other standby and commercial letters of credit of $4.2 million outstanding as of June 28, 2025.

Current wording

The Credit Facility is subject to a borrowing base that is calculated using a formula based upon eligible receivables and inventory, and at our election, eligible real property, minus certain reserves. Proceeds of the Credit Facility may be used for general corporate purposes. Net availability under the Credit Facility was approximately $545 million as of December 27, 2025. The Credit Facility includes a $50 million sublimit for the issuance of standby and commercial letters of credit and a $75 million sublimit for swing loan borrowings. As of December 27, 2025, there were no borrowings outstanding and no letters of credit outstanding under the Credit Facility. Outside of the Credit Facility, there were other standby and commercial letters of credit of $3.0 million outstanding as of December 27, 2025.

Previous wording

Borrowings under the Credit Facility bear interest at a rate based on SOFR (which will not be less than 0.00%) or, at our option, the Base Rate, plus, in either case, an applicable margin based on our usage under the Credit Facility. Base Rate is defined as the highest of (a) the Truist prime Bank rate, (b) the Federal Funds Rate plus 0.50%, (c) one-month SOFR plus 1.00% and (d) 0.00%. The applicable margin for SOFR-based borrowings fluctuates between 1.00%-1.50%, and was 1.00% as of June 28, 2025, and the applicable margin for Base Rate borrowings fluctuates between 0.00%-0.50%, and was 0.00% as of June 28, 2025. An unused line fee shall be payable quarterly in respect of the total amount of the unutilized Lenders’ commitments and short-notice borrowings under the Credit Facility. Standby letter of credit fees at the applicable margin on the average undrawn and unreimbursed amount of standby letters of credit are payable quarterly and a facing fee of 0.125% is payable quarterly for the stated amount of each letter of credit. We are also required to pay certain fees to the administrative agent under the Credit Facility. As of June 28, 2025, the interest rate applicable to Base Rate borrowings was 7.5%, and the interest rate applicable to one-month SOFR-based borrowings was 5.3%.

Current wording

Borrowings under the Credit Facility will bear interest at an index based on SOFR (which will not be less than 0.00%) or, at the Company's option, the Base Rate, plus, in either case, an applicable margin based on the average availability level under the Credit Facility. Base Rate is defined as the highest of (a) the Truist prime rate, (b) the Federal Funds Rate plus 0.50%, (c) one-month SOFR plus 1.00% and (d) 0.00%. The applicable margin for SOFR-based borrowings fluctuates between 1.00%-1.50%, and was 1.00% as of December 27, 2025, and the applicable margin for Base Rate borrowings fluctuates between 0.00%-0.50% and was 0.00% as of December 27, 2025. An unused line fee shall be payable quarterly in respect of the total amount of the unutilized commitments under the Credit Facility, and a letter of credit plus a facing fee to the issuing bank. We are also required to pay certain fees to the administrative agent under the Credit Facility. As of December 27, 2025, the interest rate applicable to Base Rate borrowings was 6.8%, and the interest rate applicable to one-month SOFR-based borrowings was 4.7%.

Previous wording

We incurred approximately $2.4 million of debt issuance costs in conjunction with this transaction, which included lender fees and legal expenses. The debt issuance costs are being amortized over the term of the Credit Facility.

Current wording

We incurred approximately $2.3 million of debt issuance costs in conjunction with this transaction, which included lender fees and legal expenses. The debt issuance costs are being amortized over the term of the Credit Facility.

Previous wording

The Credit Facility contains customary covenants, including financial covenants which require us to maintain a minimum fixed charge coverage ratio of 1:1 upon triggered quarterly testing (e.g. when availability falls below certain thresholds established in the agreement), reporting requirements and events of default. The Credit Facility is secured by substantially all assets of the borrowing parties, including (i) pledges of 100% of the stock or other equity interest of each domestic subsidiary that is directly owned by such entity and (ii) 65% of the stock or other equity interest of each foreign subsidiary that is directly owned by such entity, in each case subject to customary exceptions. We were in compliance with all financial covenants under the Credit Facility as of June 28, 2025.

Current wording

The Credit Facility contains customary covenants, including a financial covenant which requires us to maintain a minimum fixed charge coverage ratio of 1:1 when availability falls below certain thresholds established in the Credit Agreement, reporting requirements and events of default. The Credit Facility is secured by substantially all of our assets and the assets of our subsidiaries guaranteeing the Credit Facility, including (i) pledges of 100% of the stock or other equity interest of each domestic subsidiary that is directly owned by such entity and (ii) 65% of the stock or other equity interest of each foreign subsidiary that is directly owned by such entity, in each case subject to customary exceptions. We were in compliance with all financial covenants under the Credit Facility as of December 27, 2025.