Holley Inc

Previous wording

Net sales for the 13-week period ended June 30, 2024 decreased $5.8 million, or 3.3%, to $169.5 million, as compared to $175.3 million for the 13-week period ended July 2, 2023. Lower sales volume resulted in a decrease of approximately$9.0 million, offset partially by improved price realization of approximately$3.2 million compared to the prior year period. Major categories driving the comparable year-over-year results includea decrease in electronic systems sales of$2.8 million (3.7% category decline), a decrease in exhaust sales of$2.2 million (12.6% category decline), and a decrease inaccessories sales of$2.0 million (7.4% category decline). An increase in safety sales of$2.3 million (14.3% category incline) partially offset the decrease in electronic systems, exhaust and accessories sales.

Current wording

Net sales for the 13-week period ended September 29, 2024 decreased $22.5 million, or 14.4%, to $134.0 million, as compared to $156.5 million for the 13-week period ended October 1, 2023. Lower sales volume resulted in a decrease of approximately$24.4 million, offset partially by improved price realization of approximately$1.9 million compared to the prior year period. Major categories driving the comparable year-over-year results includea decrease in electronic systems sales of$12.3 million (17.6% category decline), a decrease in exhaust sales of$2.9 million (20.5% category decline), a decrease in mechanical systems sales of $6.1 million (16.1% category decline) and a decrease inaccessories sales of$1.5 million (6.7% category decline). Partially offset by an increase in safety sales of$0.3 million (2.9% category incline).

Previous wording

Cost of goods sold for the 13-week period ended June 30, 2024 decreased$6.3 million, or 6.0%, to$99.2 million, as compared to$105.5 million for the 13-week period ended July 2, 2023. The decrease in cost of goods sold in 2024, a period in which product sales decreased 3.3%, was impacted by lower freight costs and product mix.

Current wording

Cost of goods sold for the 13-week period ended September 29, 2024 decreased$16.4 million, or 16.7%, to$81.7 million, as compared to$98.2 million for the 13-week period ended October 1, 2023. The decrease in cost of goods sold in 2024, a period in which product sales decreased 14.4%, was impacted by lower freight costs and product mix.

Previous wording

Gross profit for the 13-week period ended June 30, 2024 increased $0.6 million, or 0.8%, to $70.3 million, as compared to $69.8 million for the 13-week period ended July 2, 2023. Gross margin for the 13-week period ended June 30, 2024 was 41.5% as compared to a gross margin of 39.8% for the 13-week period ended July 2, 2023. Gross profit margin slightly increased primarily due to improvements in freight costs and product mix.

Current wording

Gross profit for the 13-week period ended September 29, 2024 decreased $6.1 million, or 10.4%, to $52.3 million, as compared to $58.4 million for the 13-week period ended October 1, 2023. Gross margin for the 13-week period ended September 29, 2024 was 39.0% as compared to a gross margin of 37.3% for the 13-week period ended October 1, 2023. Gross profit margin slightly increased due to our continued efforts to improve operational efficiencies primarily through a combination of improvements in freight costs, reduced purchasing price variance, warranty improvements and lower write-downs from E&O.

Previous wording

Selling, general and administrative costs for the 13-week period ended June 30, 2024 increased$5.5 million, or 18.8%, to$34.6 million, as compared to$29.1 million for the 13-week period ended July 2, 2023. Selling, general and administrative costs expressed as a percentage of sales increased to 20.4% for the 13-week period ended June 30, 2024 compared to 16.6% for the 13-week period ended July 2, 2023. The increase in selling, general and administrative costs was driven by $1.3 million increase in consulting and accounting fees, an increase of $0.8 million in wages, an increase of $0.5 million in promotion and advertisement, and $2.6 million of costs incurred for advisory services related to supporting transformation initiatives.

Current wording

Selling, general and administrative costs for the 13-week period ended September 29, 2024 increased$1.2 million, or 4.3%, to$30.1 million, as compared to$28.9 million for the 13-week period ended October 1, 2023. Selling, general and administrative costs expressed as a percentage of sales increased to 22.5% for the 13-week period ended September 29, 2024 compared to 18.5% for the 13-week period ended October 1, 2023. The increase in selling, general and administrative costs was driven by $1.0 million of transformation related non-recurring advisory costs to execute on the strategic transformation initiatives.

Previous wording

Research and development costs for the 13-week period ended June 30, 2024 decreased to $4.3 million as compared to $6.2 million for the 13-week period ended July 2, 2023, primarily due to headcount reductions, reflecting the implementation of resource allocation efforts in support ofportfolio development optimization.

Current wording

Research and development costs for the 13-week period ended September 29, 2024 decreased to $4.6 million as compared to $6.1 million for the 13-week period ended October 1, 2023, primarily due to headcount reductions, reflecting the implementation of resource allocation efforts in support ofportfolio development optimization. Further, the decrease is due to the Company's realignment of employees' roles and responsibilities from selling, general and administrative to research and development.

Previous wording

Restructuring costs for the 26-week period ended June 30, 2024 decreased by$1.1 million to$0.6 million, as compared to$1.7 million for the 26-week period ended July 2, 2023, reflecting a reduction in restructuring and integration activities associated with acquisitions.

Current wording

Restructuring costs for the 13-week period ended September 29, 2024 increased by $0.5 million to $1.0 million, as compared to $0.4 million for the 13-week period ended October 1, 2023, reflecting restructuring and integration activities associated with our implementation of resource allocation efforts in support of portfolio development optimization.

Previous wording

As a result of factors described above, operating income for the 13-week period ended June 30, 2024 decreased $2.1 million, or 6.9%, to $27.9 million, as compared to $30.0 million for the 13-week period ended July 2, 2023.

Current wording

As a result of factors described above, operating income for the 13-week period ended September 29, 2024 decreased $13.8 million, or 71.2%, to $5.6 million, as compared to $19.3 million for the 13-week period ended October 1, 2023.

Previous wording

For the 26-week period ended June 30, 2024, we recognized a gain of$6.5 million from the change in fair value of the warrant liability. For the 26-week period ended July 2, 2023, we recognized a loss of$3.5 million from the change in fair value of the warrant liability. The warrant liability reflects the fair value of the Warrants issued in connection with the Business Combination.

Current wording

For the 13-week period ended September 29, 2024, we recognized a gain of $1.0 million from the change in fair value of the warrant liability. For the 13-week period ended October 1, 2023, we recognized a loss of $2.1 million from the change in fair value of the warrant liability, due to our stock price. The warrant liability reflects the fair value of the Warrants issued in connection with the Business Combination.

Previous wording

For the 26-week period ended June 30, 2024, we recognized a gain of$1.7 million from the change in fair value of the earn-out liability. For the 26-week period ended July 2, 2023, we recognized a loss of$1.4 million, from the change in fair value of the earn-out liability. The earn-out liability reflects the fair value of the unvested Earn-Out Shares resulting from the Business Combination.

Current wording

For the 13-week period ended September 29, 2024, we recognized a gain of $0.6 million from the change in fair value of the earn-out liability. For the 13-week period ended October 1, 2023, we recognized a loss of $0.7 million, from the change in fair value of the earn-out liability, due to our stock price. The earn-out liability reflects the fair value of the unvested Earn-Out Shares resulting from the Business Combination.

Previous wording

As a result of factors described above, we recognized$19.2 million of income before income taxes for the 13-week period ended June 30, 2024, as compared to income before income taxes of$17.1 million for the 13-week period ended July 2, 2023.

Current wording

As a result of factors described above, we recognized$7.8 million of loss before income taxes for the 13-week period ended September 29, 2024, as compared to income before income taxes of$2.8 million for the 13-week period ended October 1, 2023.

Previous wording

Income tax expense for the 13-week period ended June 30, 2024 was$2.1 million, as compared to income tax expense of$4.1 million for the 13-week period ended July 2, 2023. Our effective tax rate for the 13-week period ended June 30, 2024 was 10.7%. The difference between the effective tax rate for the 13-week period ended June 30, 2024 and the federal statutory rate in 2024 wasdue topermanent differences related to changes in fair value of the warrant and earn-out liabilities recognized during the period and the impact of foreign taxes in higher tax rate jurisdictions. The effective tax rate for the 13-week period ended July 2, 2023 was 24.0%. The difference between the effective tax rate and the federal statutory rate in 2023 was primarily due to permanent differences resulting from the change in fair value of the warrant and earn-out liabilities.

Current wording

Income tax benefit for the 13-week period ended September 29, 2024 was$1.5 million, as compared to income tax expense of$2.1 million for the 13-week period ended October 1, 2023. Our effective tax rate for the 13-week period ended September 29, 2024 was 19.1%. The difference between the effective tax rate for the 13-week period ended September 29, 2024 and the federal statutory rate in 2024 wasdue topermanent differences related to changes in fair value of the warrant and earn-out liabilities recognized during the period and the impact of foreign taxes in higher tax rate jurisdictions. The effective tax rate for the 13-week period ended October 1, 2023 was 73.6%. The difference between the effective tax rate and the federal statutory rate in 2023 was primarily due to permanent differences resulting from the change in fair value of the warrant and earn-out liabilities.

Previous wording

As a result of factors described above, we recognized net income of $17.1 million for the 13-week period ended June 30, 2024, as compared to net income of $13.0 million for the 13-week period ended July 2, 2023. Additionally, we recognized total comprehensive income of $17.2 million for the 13-week period ended June 30, 2024, as compared to total comprehensive income of $13.3 million for the 13-week period ended July 2, 2023. Comprehensive income includes the effect of foreign currency translation adjustments.

Current wording

As a result of factors described above, we recognized net loss of $6.3 million for the 13-week period ended September 29, 2024, as compared to net income of $0.8 million for the 13-week period ended October 1, 2023. Additionally, we recognized total comprehensive loss of $5.9 million for the 13-week period ended September 29, 2024, as compared to total comprehensive income of $0.6 million for the 13-week period ended October 1, 2023. Comprehensive income includes the effect of foreign currency translation adjustments.

Previous wording

The table below presents Holley’s results of operations for the 26-week periods ended June 30, 2024 and July 2, 2023 (dollars in thousands):

Current wording

The table below presents Holley’s results of operations for the 39-week periods ended September 29, 2024 and October 1, 2023 (dollars in thousands):

Previous wording

Net sales for the 26-week period ended June 30, 2024 decreased$19.3 million, or 5.6%, to$328.1 million, as compared to$347.4 million for the 26-week period ended July 2, 2023. Lower sales volume resulted in a decrease of approximately$27.7 million offset partially by improved price realization of approximately$8.4 million compared to the prior year period. Major categories driving the comparable year-over-year results includea decrease in mechanical systems sales of$6.1 million (7.2% category decline), a decrease in electronic systems sales of$7.7 million (5.3% category decline), a decrease in exhaust sales of$4.0 million (12.1% category decline), and a decrease inaccessories sales of$6.0 million (11.2% category decline). An increase in safety sales of $4.5 million(13.5% category incline) partially offset the decrease in electronic systems, exhaust and accessories sales.

Current wording

Net sales for the 39-week period ended September 29, 2024 decreased$41.8 million, or 8.3%, to$462.1 million, as compared to$504.0 million for the 39-week period ended October 1, 2023. Lower sales volume resulted in a decrease of approximately$50.2 million offset partially by improved price realization of approximately$8.3 million compared to the prior year period. Major categories driving the comparable year-over-year results includea decrease in mechanical systems sales of$12.2 million (10.0% category decline), a decrease in electronic systems sales of$20.0 million (9.4% category decline), a decrease in exhaust sales of$7.0 million (14.6% category decline), and a decrease inaccessories sales of$7.4 million (9.9% category decline). An increase in safety sales of $4.8 million(10.6% category incline) partially offset the decrease in electronic systems, exhaust and accessories sales.

Previous wording

Cost of goods sold for the 26-week period ended June 30, 2024 decreased$4.2 million, or 2.0%, to$205.8 million, as compared to$210.0 million for the 26-week period ended July 2, 2023. The decrease in cost of goods sold in 2024, resulted from a 5.6% decrease in product sales and lower freight costs, partially offset by $8.2 million of product rationalization initiatives that are part of a portfolio transformation aimed at eliminating unprofitable or slow-moving stock keeping units ("SKUs").

Current wording

Cost of goods sold for the 39-week period ended September 29, 2024 decreased$20.6 million, or 6.7%, to$287.5 million, as compared to$308.1 million for the 39-week period ended October 1, 2023. The decrease in cost of goods sold in 2024, resulted from a 8.3% decrease in product sales and lower freight costs, partially offset by $8.8 million of strategic product rationalization charge that is part of a portfolio transformation aimed at eliminating unprofitable or slow-moving stock keeping units ("SKUs").

Previous wording

Gross profit for the 26-week period ended June 30, 2024 decreased $15.1 million, or 11.0%, to $122.4 million, as compared to $137.5 million for the 26-week period ended July 2, 2023. Gross margin for the 26-week period ended June 30, 2024 was 37.3% as compared to a gross margin of 39.6% for the 26-week period ended July 2, 2023. Gross profit margin declined primarily due to inventory charges driven by product rationalization initiatives, which was partially offset by improvements in freight costs. After adjusting for the $8.2 million of product rationalization and $0.6 million in other inventory charges, Adjusted Gross Margin for the year was 40.0% for the 26-week period ended June 30, 2024 compared to 39.3% for the 26-week period ended July 2, 2023. Gross profit was also negatively affected by lower sales volume.

Current wording

Gross profit for the 39-week period ended September 29, 2024 decreased $21.1 million, or 10.8%, to $174.7 million, as compared to $195.8 million for the 39-week period ended October 1, 2023. Gross margin for the 39-week period ended September 29, 2024 was 37.8% as compared to a gross margin of 38.9% for the 39-week period ended October 1, 2023. Gross profit margin declined primarily due to a strategic product rationalization charge driven by initiatives, which was partially offset by improvements in freight costs, purchasing price variance, warranty improvements and lower write-downs from E&O. After adjusting for the $8.8 million of a strategic product rationalization charge , Adjusted Gross Margin for the year was 39.7% for the 39-week period ended September 29, 2024 compared to 38.7% for the 39-week period ended October 1, 2023.

Previous wording

Selling, general and administrative costs for the 26-week period ended June 30, 2024 increased$8.4 million, or 14.3%, to$67.6 million, as compared to$59.1 million for the 26-week period ended July 2, 2023. Selling, general and administrative costs expressed as a percentage of sales increased to 20.6% for the 26-week period ended June 30, 2024 compared to 17.0%for the 26-week period ended July 2, 2023. The increase in selling, general and administrative costs was driven by $0.6 million increase in equity compensation, a $2 million reserve related to litigation settlements, a $2.3 million increase in wages, and $3.7 million of costs incurred for advisory services related to supporting transformation initiatives. These increases were partially offset by lower outbound shipping and handling costs.

Current wording

Selling, general and administrative costs for the 39-week period ended September 29, 2024 increased$9.6 million, or 11.0%, to$97.7 million, as compared to$88.0 million for the 39-week period ended October 1, 2023. Selling, general and administrative costs expressed as a percentage of sales increased to 21.1% for the 39-week period ended September 29, 2024 compared to 17.5% for the 39-week period ended October 1, 2023. The increase in selling, general and administrative costs was driven by a $2 million reserve related to litigation settlements, a $3.0 million increase in wages, and $4.5 million of costs incurred for advisory services related to supporting transformation initiatives. The increase in wages is offset by a reduction in research and development costs due to the Company's realignment of employees' roles and responsibilities from selling, general and administrative to research and development.

Previous wording

Research and development costs for the 26-week period ended June 30, 2024 decreased to$9.1 million as compared to$12.8 million for the 26-week period ended July 2, 2023, primarily due to headcount reductions, reflecting the implementation of resource allocation efforts in support ofportfolio development optimization.

Current wording

Research and development costs for the 39-week period ended September 29, 2024 decreased to$13.7 million as compared to$18.9 million for the 39-week period ended October 1, 2023, primarily due to headcount reductions, reflecting the implementation of resource allocation efforts in support ofportfolio development optimization. Further, the decrease is due to the Company's realignment of employees' roles and responsibilities from selling, general and administrative to research and development.

Previous wording

Restructuring costs for the 13-week period ended June 30, 2024 decreased by $0.4 million to $0.0 million, as compared to $0.4 million for the 13-week period ended July 2, 2023, reflecting a reduction in restructuring and integration activities associated with acquisitions.

Current wording

Restructuring costs for the 39-week period ended September 29, 2024 decreased by$0.5 million to$1.6 million, as compared to$2.1 million for the 39-week period ended October 1, 2023, reflecting a reduction in restructuring and integration activities associated with acquisitions.

Previous wording

As a result of factors described above, operating income for the 26-week period ended June 30, 2024 decreased$17.8 million, or 31.9%, to$38.1 million, as compared to$55.9 million for the 26-week period ended July 2, 2023.

Current wording

As a result of factors described above, operating income for the 39-week period ended September 29, 2024 decreased$31.6 million, or 42.0%, to$43.7 million, as compared to$75.2 million for the 39-week period ended October 1, 2023.

Previous wording

For the 13-week period ended June 30, 2024, we recognized a gain of $3.4 million from the change in fair value of the warrant liability. For the 13-week period ended July 2, 2023, we recognized a loss of $2.0 million from the change in fair value of the warrant liability. The warrant liability reflects the fair value of the Warrants issued in connection with the Business Combination.

Current wording

For the 39-week period ended September 29, 2024, we recognized a gain of$7.6 million from the change in fair value of the warrant liability. For the 39-week period ended October 1, 2023, we recognized a loss of$5.5 million from the change in fair value of the warrant liability. The warrant liability reflects the fair value of the Warrants issued in connection with the Business Combination.

Previous wording

For the 13-week period ended June 30, 2024, we recognized a gain of $1.1 million from the change in fair value of the earn-out liability. For the 13-week period ended July 2, 2023, we recognized a loss of $1.0 million, from the change in fair value of the earn-out liability. The earn-out liability reflects the fair value of the unvested Earn-Out Shares resulting from the Business Combination.

Current wording

For the 39-week period ended September 29, 2024, we recognized a gain of$2.3 million from the change in fair value of the earn-out liability. For the 39-week period ended October 1, 2023, we recognized a loss of$2.1 million, from the change in fair value of the earn-out liability. The earn-out liability reflects the fair value of the unvested Earn-Out Shares resulting from the Business Combination.

Previous wording

Interest expense for the 26-week period ended June 30, 2024 decreased$4.0 million, or 14.2%, to$24.2 million, as compared to$28.2 million for the 26-week period ended July 2, 2023, reflecting lower outstanding debt balances and the positive impact of the interest rate collar, offset in part by a higher effective interest rate on outstanding debt.

Current wording

Interest expense for the 39-week period ended September 29, 2024 decreased$2.7 million, or 6.5%, to$39.2 million, as compared to$41.9 million for the 39-week period ended October 1, 2023, reflecting lower outstanding debt balances, offset in part by a higher effective interest rate on outstanding debt. The Company recognized $0.2 million and $3.2 million of interest income related to the interest rate collar for 39-week periods ended September 29, 2024 and October 1, 2023, respectively.

Previous wording

As a result of factors described above, we recognized$22.0 million of income before income taxes for the 26-week period ended June 30, 2024, as compared to income before income taxes of$22.9 million for the 26-week period ended July 2, 2023.

Current wording

As a result of factors described above, we recognized$14.2 million of income before income taxes for the 39-week period ended September 29, 2024, as compared to income before income taxes of$25.7 million for the 39-week period ended October 1, 2023.

Previous wording

Income tax expense for the 26-week period ended June 30, 2024 was$1.1 million, as compared to income tax expense of$5.7 million for the 26-week period ended July 2, 2023. Our effective tax rate for the 26-week period ended June 30, 2024 was 5.3%. The difference between the effective tax rate for the 26-week period ended June 30, 2024 and the federal statutory rate in 2024 wasdue topermanent differences related to changes in fair value of the warrant and earn-out liabilities recognized during the period, federal research and development tax credits, and the impact of foreign taxes in higher tax rate jurisdictions. In addition, the company incurred expenses related to product rationalization that were determined to be significant and infrequent in nature, therefore, the full tax benefit of these expenses was recorded during the year as a discrete adjustment.** **The effective tax rate for the 26-week period ended July 2, 2023 was 24.7%. The difference between the effective tax rate and the federal statutory rate in 2023 was primarily due to permanent differences resulting from the change in fair value of the warrant and earn-out liabilities.

Current wording

Income tax benefit for the 39-week period ended September 29, 2024 was$0.3 million, as compared to income tax expense of$7.8 million for the 39-week period ended October 1, 2023. Our effective tax rate for the 39-week period ended September 29, 2024 was-2.2%. The difference between the effective tax rate for the 39-week period ended September 29, 2024 and the federal statutory rate in 2024 wasdue topermanent differences related to changes in fair value of the warrant and earn-out liabilities recognized during the period, federal research and development tax credits, and the impact of foreign taxes in higher tax rate jurisdictions. In addition, the company incurred expenses related to strategic product rationalization charge that were determined to be significant and infrequent in nature, therefore, the full tax benefit of these expenses was recorded during the year as a discrete adjustment.** **The effective tax rate for the 39-week period ended October 1, 2023 was 30.1%. The difference between the effective tax rate and the federal statutory rate in 2023 was primarily due to permanent differences resulting from the change in fair value of the warrant and earn-out liabilities.

Previous wording

As a result of factors described above, we recognized net income of $20.8 million for the 26-week period ended June 30, 2024, as compared to net income of $17.2 million for the 26-week period ended July 2, 2023. Additionally, we recognized total comprehensive income of $20.6 million for the 26-week period ended June 30, 2024, as compared to total comprehensive income of $17.3 million for the 26-week period ended July 2, 2023. Comprehensive income includes the effect of foreign currency translation adjustments.

Current wording

As a result of factors described above, we recognized net income of $14.5 million for the 39-week period ended September 29, 2024, as compared to net income of $18.0 million for the 39-week period ended October 1, 2023. Additionally, we recognized total comprehensive income of $14.8 million for the 39-week period ended September 29, 2024, as compared to total comprehensive income of $17.9 million for the 39-week period ended October 1, 2023. Comprehensive income includes the effect of foreign currency translation adjustments.

Previous wording

We define EBITDA as earnings before depreciation, amortization of intangible assets, interest expense, and income tax expense. We define Adjusted EBITDA as EBITDA adjusted to exclude, to the extent applicable, restructuring costs, which includes operational restructuring and integration activities, termination related benefits, facilities relocation, and executive transition costs; changes in the fair value of the warrant liability; changes in the fair value of the earn-out liability; equity-based compensation expense; inventory charges primarily due to product rationalization initiatives that are part of a portfolio transformation aimed at eliminating unprofitable or slow-moving SKUs; gain or loss on the early extinguishment of debt; notable items that we do not believe are reflective of our underlying operating performance, including litigation settlements and certain costs incurred for advisory services related to identifying performance initiatives; and other expenses or gains, which includes gains or losses from disposal of fixed assets, franchise taxes, and gains or losses from foreign currency transactions. We define Adjusted EBITDA Margin as Adjusted EBITDA divided by net sales.

Current wording

We define EBITDA as earnings before depreciation, amortization of intangible assets, interest expense, and income tax expense. We define Adjusted EBITDA as EBITDA adjusted to exclude, to the extent applicable, restructuring costs, which includes operational restructuring and integration activities, termination related benefits, facilities relocation, and executive transition costs; changes in the fair value of the warrant liability; changes in the fair value of the earn-out liability; equity-based compensation expense; strategic product rationalization charges primarily due to initiatives that are part of a portfolio transformation aimed at eliminating unprofitable or slow-moving SKUs; loss on sale of assets; gain or loss on the early extinguishment of debt; notable items that we do not believe are reflective of our underlying operating performance, including litigation settlements and certain costs incurred for advisory services related to identifying performance initiatives; and other expenses or gains, which includes gains or losses from disposal of fixed assets, franchise taxes, and gains or losses from foreign currency transactions. We define Adjusted EBITDA Margin as Adjusted EBITDA divided by net sales.

Previous wording

The following unaudited table presents the reconciliation of net income, the most directly comparable GAAP measure, to EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin for the 13-week and 26-week periods ended June 30, 2024 and July 2, 2023 (dollars in thousands):

Current wording

The following unaudited table presents the reconciliation of net income, the most directly comparable GAAP measure, to EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin for the 13-week and 39-week periods ended September 29, 2024 and October 1, 2023 (dollars in thousands):

Previous wording

We define adjusted gross profit as gross profit excluding inventory charges primarily due to product rationalization initiatives that are part of a portfolio transformation aimed at eliminating unprofitable or slow-moving SKUs. We define Adjusted Gross Margin as Adjusted Gross Profit divided by net sales.

Current wording

We define adjusted gross profit as gross profit excluding strategic product rationalization charges primarily due to initiatives that are part of a portfolio transformation aimed at eliminating unprofitable or slow-moving SKUs. We define Adjusted Gross Margin as Adjusted Gross Profit divided by net sales.

Previous wording

The following unaudited table presents the reconciliation of gross profit, the most directly comparable GAAP measure, to Adjusted Gross Profit and Adjusted Gross Margin for the 13-week and 26-week periods ended June 30, 2024 and July 2, 2023 (dollars in thousands):

Current wording

The following unaudited table presents the reconciliation of gross profit, the most directly comparable GAAP measure, to Adjusted Gross Profit and Adjusted Gross Margin for the 13-week and 39-week periods ended September 29, 2024 and October 1, 2023 (dollars in thousands):

Previous wording

The following unaudited tables present the reconciliation of net income and net income per diluted share, the most directly comparable GAAP measures, to Adjusted Net Income and Adjusted Diluted EPS for the 13-week and 26-week periods ended June 30, 2024 and July 2, 2023 (dollars in thousands):

Current wording

The following unaudited tables present the reconciliation of net income and net income per diluted share, the most directly comparable GAAP measures, to Adjusted Net Income and Adjusted Diluted EPS for the 13-week and 39-week periods ended September 29, 2024 and October 1, 2023 (dollars in thousands):

Previous wording

The following unaudited table presents the reconciliation of net cash provided by operating activities, the most directly comparable GAAP measure, to Free Cash Flow for the 13-week and 26-week periods ended June 30, 2024 and July 2, 2023 (dollars in thousands):

Current wording

The following unaudited table presents the reconciliation of net cash provided by operating activities, the most directly comparable GAAP measure, to Free Cash Flow for the 13-week and 39-week periods ended September 29, 2024 and October 1, 2023 (dollars in thousands):

Previous wording

As of June 30, 2024, the Company had cash of $53.1 million and availability of $122.9 million under its revolving credit facility. The Company has a senior secured revolving credit facility with $125 million in borrowing capacity. As of June 30, 2024, the Company had $2.2 million in letters of credit outstanding under the revolving credit facility. In February 2023, the Company entered into an amendment to its Credit Agreement which, among other things, contains a minimum liquidity financial covenant of $45 million, which includes unrestricted cash and any available borrowing capacity under the revolving credit facility. The amendment also increases the Total Leverage Ratio applicable under the Credit Agreement as of the fiscal quarter ending April 2, 2023, to initially 7.25:1.00, and provides for modified step-down levels for such covenant thereafter through the fiscal quarter ending June 30, 2024. Subsequent to June 30, 2024, the Company successfully exited the Covenant Relief Period.

Current wording

As of September 29, 2024, the Company had cash of $50.8 million and availability of $122.8 million under its revolving credit facility. The Company has a senior secured revolving credit facility with $125 million in borrowing capacity. As of September 29, 2024, the Company had$2.2 million in letters of credit outstanding under the revolving credit facility. In February 2023, the Company entered into an amendment to its Credit Agreement which, among other things, contains a minimum liquidity financial covenant of $45 million, which includes unrestricted cash and any available borrowing capacity under the revolving credit facility. The amendment also increased the Total Leverage Ratio applicable under the Credit Agreement as of the fiscal quarter ending April 2, 2023, to initially 7.25:1.00, and provides for modified step-down levels for such covenant thereafter through the fiscal quarter ending June 30, 2024. During the 39-week period ended September 29, 2024, the Company successfully exited the Covenant Relief Period.

Previous wording

The Company is obligated under various operating leases for facilities, equipment and automobiles with estimated lease payments of approximately $3.2 million, inclu ding short term leases, due during the remainder of fiscal year 2024. See Note 14,"Lease Commitments" in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q for additional information related to the Company’s lease obligations.

Current wording

The Company is obligated under various operating leases for facilities, equipment and automobiles with estimated lease payments of approximately $1.6 million, inclu ding short term leases, due during the remainder of fiscal year 2024. See Note 14,"Lease Commitments" in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q for additional information related to the Company’s lease obligations.

Previous wording

See Note 6,"Debt" in the Notes to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for further detail of our credit facility and the timing of principal maturities. As of June 30, 2024, based on the then current weighted average interest rate of 9.2%, expected interest payments associated with outstanding debt totaled approximately $26.0 million for the remainder of fiscal year 2024.

Current wording

See Note 6,"Debt" in the Notes to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for further detail of our credit facility and the timing of principal maturities. As of September 29, 2024, based on the then current weighted average interest rate of 9.1%, expected interest payments associated with outstanding debt totaled approximately $13.1 million for the remainder of fiscal year 2024.

Previous wording

Operating Activities. Net cash provided by operating activities for the 26-week period ended June 30, 2024 was $44.5 million compared to net cash provided by operating activities of $34.4 million for the 26-week period ended July 2, 2023. Significant changes in the year-over-year change in working capital activity included positive fluctuations from accounts payable of $16.3 million and accounts receivable of $2.6 million. Partially offsetting these increases were negative fluctuations in inventories and accrued liabilities of $4.9 million and $4.8 million, respectively. The change in inventory reflects the impact of fluctuations in sales while changes in accounts payable and accounts receivable are impacted by the timing of payments and receipts.

Current wording

Operating Activities. Net cash provided by operating activities for the 39-week period ended September 29, 2024 was$42.8 million compared to net cash provided by operating activities of$56.9 million for the 39-week period ended October 1, 2023. Significant changes in the year-over-year change in working capital activity included negative fluctuations in inventories of$23.4 million. Partially offsetting the decrease was a positive fluctuation from accounts payable of$14.4 million. The change in inventory reflects the impact of fluctuations in sales while changes in accounts payable are impacted by the timing of payments.

Previous wording

Investing Activities. Cash used in investing activities for the 13-week periods ended June 30, 2024 and July 2, 2023 were $2.4 million and $2.4 million, respectively, due to capital expenditures.

Current wording

Investing Activities. Cash used in investing activities for the 39-week periods ended September 29, 2024 and October 1, 2023 were$2.7 million and$3.1 million, respectively, due to capital expenditures.

Previous wording

Financing Activities. Cash used in financing activities for the 26-week period ended June 30, 2024 was $30.0 million, which primarily reflects $28.6 million in principal payments on long-term debt. The principal payments of long-term debt during the 26-week period ended June 30, 2024 include the repurchase of $25.0 million outstanding principal on the first lien term loan. Cash used in financing activities for the 26-week period ended July 2, 2023 was $15.6 million, which primarily reflects principal payments on long-term debt and deferred financing fees.

Current wording

Financing Activities. Cash used in financing activities for the 39-week period ended September 29, 2024 was$30.3 million, which primarily reflects $28.8 million in principal payments on long-term debt. The principal payments of long-term debt during the 39-week period ended September 29, 2024 include the repurchase of $25.0 million outstanding principal on the first lien term loan. Cash used in financing activities for the 39-week period ended October 1, 2023 was$43.0 million, which primarily reflects principal payments on long-term debt and deferred financing fees.