J&J SNACK FOODS CORP

J & J SNACK FOODS CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

The accompanying notes are an integral part of these statements.

J & J SNACK FOODS CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)

(in thousands, except per share amounts)

The accompanying notes are an integral part of these statements.

J&J SNACK FOODS CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(in thousands)

The accompanying notes are an integral part of these statements.

J & J SNACK FOODS CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(Unaudited) (in thousands)

The accompanying notes are an integral part of these statements.

J & J SNACK FOODS CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited) (in thousands)

The accompanying notes are an integral part of these statements.

J & J SNACK FOODS CORP. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. They do not include all information and notes required by generally accepted accounting principles for complete financial statements. However, except as disclosed herein, there has been no material change in the information disclosed in the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended September 27, 2025.

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the Company’s financial position and the results of operations and cash flows.

The results of operations for the three and six months ended March 28, 2026 and March 29, 2025 are not necessarily indicative of results for the full year. Sales of our frozen beverages and frozen novelties are generally higher in the fiscal third and fourth quarters due to warmer weather.

While we believe that the disclosures presented are adequate to make the information not misleading, it is suggested that these consolidated financial statements be read in conjunction with the audited consolidated financial statements and the notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 27, 2025.

We recognize revenue in accordance with ASC 606, “Revenue from Contracts with Customers.” Revenue-related taxes collected on behalf of customers and remitted to taxing authorities, principally sales and use taxes, are not included in net sales.

When Performance Obligations Are Satisfied

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account for revenue recognition. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied.

The performance obligations of our customer contracts for product and machine sales is determined by each individual purchase order and the respective products ordered, with revenue being recognized at a point-in-time when the obligation under the terms of the agreement is satisfied and product control is transferred to our customer. Specifically, control transfers to our customers when the product is delivered to, installed or picked up by our customers based upon applicable shipping terms, as our customers can direct the use and obtain substantially all of the remaining benefits from the product at this point in time. The performance obligations in our customer contracts for product are generally satisfied within 30 days.

The singular performance obligation of our customer contracts for time and material repair and maintenance equipment service is the performance of the repair and maintenance with revenue being recognized at a point-in-time when the repair and maintenance is completed.

The singular performance obligation of our customer repair and maintenance equipment service contracts is the performance of the repair and maintenance with revenue being recognized over the time the service is expected to be performed. Our customers are billed for service contracts in advance of performance and therefore we have contract liability on our balance sheet.

Significant Payment Terms

In general, within our customer contracts, the purchase order identifies the product, quantity, price, pick-up allowances, payment terms and final delivery terms. Although some payment terms may be more extended, presently the majority of our payment terms are 30 days. As a result, we have used the available practical expedient and, consequently, do not adjust our revenues for the effects of a significant financing component.

Shipping

All amounts billed to customers related to shipping and handling are classified as revenues; therefore, we recognize revenue for shipping and handling fees at the time the products are shipped or when services are performed. The cost of shipping products to the customer is recognized at the time the products are shipped to the customer and our policy is to classify them as Distribution expenses.

Variable Consideration

In addition to fixed contract consideration, our contracts include some form of variable consideration, including sales discounts, trade promotions and certain other sales and consumer incentives, including rebates and coupon redemptions. In general, variable consideration is treated as a reduction in revenue when the related revenue is recognized. Depending on the specific type of variable consideration, we use the most likely amount method to determine the variable consideration. We believe there will be no significant changes to our estimates of variable consideration when any related uncertainties are resolved with our customers. We review and update our estimates and related accruals of variable consideration each period based on historical experience. Our recorded liability for allowances, end-user pricing adjustments and trade spending was approximately $23.0 million at March 28, 2026 and $22.3 million at September 27, 2025.

Warranties & Returns

We provide all customers with a standard or assurance type warranty. Either stated or implied, we provide assurance that the related products will comply with all agreed-upon specifications and other warranties provided under the law. No services beyond an assurance warranty are provided to our customers.

We do not grant a general right of return. However, customers may return defective or non-conforming products. Customer remedies may include either a cash refund or an exchange of the product. We do not estimate a right-of-return and related refund liability as returns of our products are rare.

Contract Balances

Our customers are billed for service contracts in advance of performance and therefore we have contract liability on our balance sheet as follows:

Disaggregation of Revenue

The Company disaggregates revenue by geography and by type of good or service, which management believes best depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. Product revenues with the food service and retail segments are derived from the sale of snack food products that share similar characteristics, including consistent pricing models, distribution channels, customer typers, and point-in-time revenue recognition upon transfer of control. As a result, management has aggregated product lines within these segments. Product revenues within the frozen beverage segment are derived from the sale of frozen beverage syrup, cups, straws and lids. See Note 10 for disaggregation of our net sales by geography and type of good or service.

Allowance for Estimated Credit Losses

The Company continuously monitors collections and payments from its customers and maintains a provision for estimated credit losses. The allowance for estimated credit losses considers a number of factors including the age of receivable balances, the history of losses, expectations of future credit losses, and the customers’ ability to pay off obligations. The allowance for estimated credit losses was $2.9 million and $3.3 million at March 28, 2026 and September 27, 2025, respectively.

Depreciation of equipment and buildings is provided for by the straight-line method over the assets’ estimated useful lives. Amortization of improvements is provided for by the straight-line method over the term of the lease or the assets’ estimated useful lives, whichever is shorter. Licenses and rights, customer relationships, franchise agreements, and technology are amortized by the straight-line method over periods ranging from 2 to 20 years. Depreciation expense was $17.6 million and $15.8 million for the three months ended March 28, 2026 and March 29, 2025, respectively and $34.8 million and $31.6 million for the six months ended March 28, 2026 and March 29, 2025, respectively.

Basic earnings per common share (“EPS”) excludes dilution and is computed by dividing income available to common shareholders by the weighted average common shares outstanding during the period. Diluted EPS takes into consideration the potential dilution that could occur if securities (stock options, service share units (“RSU’s”), and performance share units (“PSU’s”)) or other contracts to issue common stock were exercised and converted into common stock. Our calculation of EPS is as follows:

217,912 anti-dilutive shares have been excluded in the computation of EPS for the three months ended March 28, 2026.

249,222 anti-dilutive shares have been excluded in the computation of EPS for the six months ended March 28, 2026.

126,436 anti-dilutive shares have been excluded in the computation of EPS for the three months ended March 29, 2025.

108,068 anti-dilutive shares have been excluded in the computation of EPS for the six months ended March 29, 2025.

As of March 28, 2026, the Company has two stock-based employee compensation plans. Pre-tax share-based compensation expense was recognized as follows:

The fair value of each option grant is estimated on the date of grant using the Black-Scholes options-pricing model.

Expected volatility is based on the historical volatility of the price of our common shares over the past 51 months for 5-year options and 10 years for 10-year options. We use historical information to estimate expected life and forfeitures within the valuation model. The expected term of awards represents the period of time that options granted are expected to be outstanding. The risk-free rate for periods within the expected life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Compensation cost is recognized using a straight-line method over the vesting or service period and is net of estimated forfeitures.

The Company didnot grant any stock options during the six months ended March 28, 2026, or during the six months ended March 29, 2025.

During the six months ended March 28, 2026, the Company issued 28,152 RSU’s. During the six months ended March 29, 2025, the Company issued 13,557 RSU’s. Each RSU entitles the awardee to one share of common stock upon vesting. The fair value of the RSU’s was determined based upon the closing price of the Company’s common stock on the date of grant. No such RSU’s were issued in the three months ended March 28, 2026, or in the three months March 29, 2025.

During the six months ended March 28, 2026, the Company also issued 28,144 PSU’s. During the six months ended March 29, 2025, the Company issued 13,548 PSU’s. Each PSU may result in the issuance of up to two shares of common stock upon vesting, dependent upon the level of achievement of the applicable performance goal. The fair value of the PSU’s was determined based upon the closing price of the Company’s common stock on the date of grant. Additionally, the Company applies a quarterly probability assessment in computing this non-cash compensation expense, and any change in estimate is reflected as a cumulative adjustment to expense in the quarter of the change. No such PSU’s were issued in the three months ended March 28, 2026, or in the three months ended March 29, 2025.

We account for our income taxes under the liability method. Under the liability method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities as measured by the enacted tax rates that will be in effect when these differences reverse. Deferred tax expense is the result of changes in deferred tax assets and liabilities.

Additionally, we recognize a liability for income taxes and associated penalties and interest for tax positions taken or expected to be taken in a tax return which are more likely than not to be overturned by taxing authorities (“uncertain tax positions”). We have not recognized a tax benefit in our financial statements for these uncertain tax positions.

The total amount of gross unrecognized tax benefits is $0.3 million on both March 28, 2026 and September 27, 2025, all of which would impact our effective tax rate over time, if recognized. We recognize interest and penalties related to uncertain tax positions as a part of the provision for income taxes. As of March 28, 2026 and September 27, 2025, the Company has $0.3 million of accrued interest and penalties, respectively.

In addition to our federal tax return and tax returns for Mexico, Canada and Netherlands, we file tax returns in all states that have a corporate income tax. Virtually all the returns noted above are open for examination for three to four years.

Our effective tax rate for the three months and six months ended March 28, 2026 was 28.1%, and 27.7%, respectively, both of which are higher than the company’s 21.0% statutory tax rate primarily due to state income taxes, and the tax effect in foreign jurisdictions. Our effective tax rate was 27.2% in both the three and six months ended March 29, 2025, which was higher than the company’s 21.0% statutory tax rate primarily due to state income taxes, and the tax effect in foreign jurisdictions.

In December 2023, the FASB issued ASU No. 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” This guidance enhances the transparency around income tax information through improvements to income tax disclosures, primarily related to the effective rate reconciliation and income taxes paid, to improve the overall effectiveness of income tax disclosures. The amendments in the ASU are effective for fiscal years beginning after December 15, 2024, with early adoption permitted. We are currently assessing the impact of the guidance on our consolidated financial statements and disclosures.

In November 2024, the FASB issued ASU No. 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures.” This guidance improves disclosure requirements and provides more detailed information around an entity’s expenses, specifically amounts related to purchases of inventory, employee compensation, depreciation, intangible asset amortization, and selling expenses, along with qualitative descriptions of certain other types of expenses. This guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. We are currently assessing the impact of the guidance on our consolidated financial statements and disclosures.

In July 2025, the FASB issued ASU No. 2025-05 “Financial Instruments – Credit Losses (Topic 326).” This guidance introduces a practical expedient for all entities with qualifying assets to assume that current conditions remain unchanged for the remaining life of the asset with estimated credit losses. The amendments in the ASU are effective for fiscal years beginning after December 15, 2025, with early adoption permitted. We are currently assessing the impact of the guidance on our consolidated financial statements and disclosures.

In September 2025, the FASB issued ASU No. 2025-06 “Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40).” This authoritative guidance modernizes the accounting for internal use software costs including the elimination of the stage-based capitalization model and updated disclosure requirements. The guidance is effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Amendments can be applied using a prospective transition approach, a modified transition approach, or a retrospective transition approach. We are currently assessing the impact of the guidance on our consolidated financial statements and disclosures.

In December 2021, the Company entered into an amended and restated loan agreement (the “Credit Agreement”) with our existing banks which provided for up to a $50 million revolving credit facility repayable in December 2026.

Interest accrues, at the Company’s election at (i) the SOFR Rate (as defined in the Credit Agreement), plus an applicable margin, based upon the Consolidated Net Leverage Ratio, as defined in the Credit Agreement, or (ii) the Alternate Base Rate (a rate based on the higher of (a) the prime rate announced from time-to-time by the Administrative Agent, (b) the Federal Reserve System’sfederal funds rate, plus 0.50% or (c) the Daily SOFR Rate, plus an applicable margin). The Alternate Base Rate is defined in the Credit Agreement.

The Credit Agreement requires the Company to comply with various affirmative and negative covenants, including without limitation (i) covenants to maintain a minimum specified interest coverage ratio and maximum specified net leverage ratio, and (ii) subject to certain exceptions, covenants that prevent or restrict the Company’s ability to pay dividends, engage in certain mergers or acquisitions, make certain investments or loans, incur future indebtedness, alter its capital structure or line of business, prepay subordinated indebtedness, engage in certain transactions with affiliates, or amend its organizational documents. As of March 28, 2026, the Company is in compliance with all financial covenants and terms of the Credit Agreement.

On June 21, 2022, the Company entered into an amendment to the Credit Agreement, the “Amended Credit Agreement” which provided for an incremental increase of $175 million in available borrowings. The Amended Credit Agreement also includes an option to increase the size of the revolving credit facility by up to an amount not to exceed in the aggregate the greater of $225 million or $50 million plus the Consolidated EBITDA of the Borrowers, subject to the satisfaction of certain terms and conditions.

As of March 28, 2026, $29.0 million was outstanding under the Amended Credit Agreement with a weighted average interest rate of 6.75%. Given that the Amended Credit Agreement is set to expire in December 2026, these borrowings have been classified as Current Portion of Long-Term Debt on the Company’s Balance Sheet. As of March 28, 2026, the amount available under the Amended Credit Agreement was $181.2 million, after giving effect to the outstanding letters of credit.

As of September 27, 2025, there wasno outstanding balance under the Amended Credit Agreement. As of September 27, 2025, the amount available under the Amended Credit Agreement was $210.2 million, after giving effect to the outstanding letters of credit.

Inventories consist of the following:

Our financial results are presented as three reportable segments: Food Service, Retail Supermarkets and Frozen Beverages. These segments are described below:

Food Service

The primary products sold by the Food Service segment are soft pretzels, frozen novelties, churros, handheld products and baked goods. Our customers in the Food Service segment include snack bars and food stands in chain, department and discount stores; malls and shopping centers; casual dining restaurants; fast food and casual dining restaurants; stadiums and sports arenas; leisure and theme parks; convenience stores; movie theatres; warehouse club stores; schools, colleges and other institutions. Within the food service industry, our products are purchased by the consumer primarily for consumption at the point-of-sale or for take-away.

Retail Supermarkets

The primary products sold to the retail supermarket channel are soft pretzel products – including SUPERPRETZEL and AUNTIE ANNE’S, frozen novelties including LUIGI’S Real Italian Ice, MINUTE MAID Juice Bars and Soft Frozen Lemonade, WHOLE FRUIT frozen fruit bars and sorbet, DOGSTERS ice cream style treats for dogs, PHILLY SWIRL cups and sticks, ICEE Squeeze-Up Tubes and handheld products.

Frozen Beverages

We sell frozen beverages to the foodservice industry primarily under the names ICEE, SLUSH PUPPIE and PARROT ICE in the United States, Mexico and Canada. We also provide repair and maintenance services to customers for customer-owned equipment.

We principally sell our products to the food service and retail supermarket industries. Sales and results of our frozen beverages business are monitored separately from the balance of our food service business because of different distribution and capital requirements. We maintain separate and discrete financial information for the three operating segments mentioned above which is available to our Chief Operating Decision Maker, who is our Chief Executive Officer. We have applied no aggregation criteria to any of these operating segments in order to determine reportable segments. All inter-segment net sales and expenses have been eliminated in computing net sales and operating income.

The Chief Operating Decision Maker reviews monthly detailed operating income statements and sales reports in order to assess performance and allocate resources to each individual segment. Sales and operating income are key variables monitored by the Chief Operating Decision Maker when determining each segment and the Company’s financial condition and operating performance.

Significant expenses are expenses which are regularly provided to the Chief Operating Decision Maker and are included in segment operating income. These consist of cost of sales, marketing and selling expenses, distribution expenses, administrative expenses, intangible asset impairment charges, and other general expenses. Cost of sales includes raw materials, direct labor and plant overhead costs. Distribution expenses include costs associated with the transportation of our products to customers. Marketing and selling expenses include costs to execute sales to customers, and costs related to the selling, marketing, advertising and promotional activities. Administrative expenses include costs that are not directly tied to the manufacturing, distribution, or marketing and selling of our products.

Costs that are directly attributable to our Food Service, Retail Supermarkets, or Frozen Beverages segments are charged directly to the appropriate segment. Costs that are deemed to be indirect, excluding unallocated general corporate expenses and other unusual significant transactions such as gain on insurance proceeds received for damage to property, plant and equipment, and plant closure expenses, are allocated to the three reportable segment using a reasonable methodology that is consistently applied.

To align with how our Chief Operating Decision Maker currently reviews the monthly detailed operating income statements, we have reclassified certain corporate expenses that are not allocated to our three reportable segments. This change in presentation resulted in an increase to our Food Service segment operating income of $6.2 million and $13.4 million, to our Retail segment operating income of $0.7 million and $1.5 million, and to our Frozen Beverage segment of $0.5 million and $1.0 million, in the three and six months ended March 29, 2025, respectively, with the corresponding impacts of the presentation change seen within General corporate expenses in the table below.

In addition, the Chief Operating Decision Maker reviews and evaluates capital spending of each segment on a quarterly basis to monitor cash flow and asset needs of each segment. Additionally, our Chief Operating Decision Maker considers variances of actual performance to our annual operating plan and periodic forecasts when making decisions.

Information regarding the operations in these three reportable segments is as follows:

Net sales to external customers by type of good or service were:

Total depreciation and amortization expense, capital expenditures, and total assets by segment, reflecting our current segment structure for all periods presented, were:

Geographic data for net sales (recognized in the countries where products were sold from) and total assets were:

Intangible Assets

Our reportable segments are Food Service, Retail Supermarkets and Frozen Beverages.

The carrying amounts of acquired intangible assets for the Food Service, Retail Supermarkets and Frozen Beverages segments as of March 28, 2026 and September 27, 2025 are as follows:

Amortizing intangible assets are being amortized by the straight-line method over periods ranging from 10 to 20 years and amortization expense is reflected throughout operating expenses. Aggregate amortization expense of intangible assets for the three months ended March 28, 2026 and March 29, 2025 was $1.4 million and $2.0 million, respectively. Aggregate amortization expense of intangible assets for the six months ended March 28, 2026 and March 29, 2025 was $2.8 million and $3.9 million, respectively.

Estimated amortization expense for the next five fiscal years is approximately $2.8 million in 2026 (excluding the six months ended March 28, 2026), $4.7 million in 2027, $4.3 million in 2028 and 2029, and $4.2 million in 2030.

The weighted amortization period of the intangible assets, in total, is 10.0 years. The weighted amortization period by intangible asset class is 10 years for Technology,10 years for Customer relationships,20 years for Licenses & rights, and 10 years for Franchise agreements.

Goodwill

The carrying amounts of goodwill for the Food Service, Retail Supermarket and Frozen Beverage segments are as follows:

We are a party to litigation which has arisen in the normal course of business which management currently believes will not have a material adverse effect on our financial condition or results of operations.

We self-insure, up to loss limits, certain insurable risks such as workers’ compensation, automobile, and general liability claims. Accruals for claims under our self-insurance program are recorded on a claims incurred basis. Our total recorded liability for all years’ claims incurred but not yet paid was $14.0 million and $14.4 million at March 28, 2026 and September 27, 2025, respectively. In connection with certain self-insurance agreements, we customarily enter into letters of credit arrangements with our insurers. At both March 28, 2026 and September 27, 2025, we had outstanding letters of credit totaling $14.8 million.

We have a self-insured medical plan which covers approximately 1,800 of our employees. We record a liability for incurred but not yet reported or paid claims based on our historical experience of claim payments and a calculated lag time period. Our recorded liability at March 28, 2026 and September 27, 2025 was $1.9 million and $2.2 million, respectively.

On August 19, 2024, we experienced a fire at our Holly Ridge plant in North Carolina. The building was damaged as a result of the fire, and plant operations were interrupted. We maintain property, general liability and business interruption insurance coverage. Based on the provisions of our insurance policies, we record estimated insurance recoveries for fire related costs for which recovery is deemed to be probable.

In the three months ended December 27, 2025, we recorded $0.3 million of fire related costs, and we received $1.5 million of insurance proceeds for inventory, fixed asset replacement costs, and business interruption losses. Additionally, in the three months ended December 27, 2025, we recognized a gain of $0.8 million for insurance proceeds received for damage to property, plant, and equipment in the Consolidated Statement of Earnings, and we recognized a gain of $2.0 million for the proceeds received, and expected to be received, in excess of operational losses recognized, in cost of goods sold, in the Consolidated Statement of Earnings. As of December 27, 2025, $1.6 million of these insurance proceeds were recorded in prepaid expenses and other, in the Consolidated Balance Sheet. The $1.6 million insurance proceeds were subsequently received in January 2026. During the three months ended March 28, 2026, no additional insurance proceeds were received.

In the three and six months ended March 29, 2025, we recorded an additional $1.8 million and $10.1 million of fire related costs, respectively, for all of which recovery was deemed to be probable. In the three and six months ended March 29, 2025, we received $1.5 million and $2.5 million of insurance proceeds for inventory and business interruption losses, respectively. Additionally, for the three and six month periods ended March 29, 2025, we recorded a gain of $0.3 million and $0.8 million, respectively, in cost of goods sold in the Consolidated Statement of Earnings representing the proceeds received in excess of losses recognized and we recorded an insurance receivable, net of advance proceeds received, for other fire related costs for which recovery was deemed probable of $10.2 million, which was recorded in prepaid expenses and other, in the Consolidated Balance Sheet as of March 29, 2025.

Cumulative fire related costs recorded through March 28, 2026 were $17.5 million, for all of which recovery has been received. Cumulative insurance proceeds received as of March 28, 2026 were $34.7 million for inventory, fixed asset replacement costs, and business interruption losses.

See below for a roll forward of the insurance receivable, net of advanced proceeds received for other fire related costs for which recovery was deemed probable in the Consolidated Balance Sheet for the three and six months ended March 28, 2026 and March 29, 2025.

Changes to the components of accumulated other comprehensive loss are as follows:

General Lease Description

We have operating leases with initial noncancelable lease terms in excess of one year covering the rental of various facilities and equipment. Certain of these leases contain renewal options and some provide options to purchase during the lease term. Our operating leases include leases for real estate for some of our office and manufacturing facilities as well as manufacturing and non-manufacturing equipment used in our business. The remaining lease terms for these operating leases range from 1 month to 18 years.

We have finance leases with initial noncancelable lease terms in excess of one year covering the rental of various equipment. These leases are generally for manufacturing and non-manufacturing equipment used in our business. The remaining lease terms for these finance leases range from 1 year to 6 years.

Significant Assumptions and Judgments* *

Contract Contains a Lease

In evaluating our contracts to determine whether a contract is or contains a lease, we considered the following:

Allocation of Consideration

In determining how to allocate consideration between lease and non-lease components in a contract that was deemed to contain a lease, we used judgment and consistent application of assumptions to reasonably allocate the consideration.

Options to Extend or Terminate Leases

We have leases which contain options to extend or terminate the leases. On a lease-by-lease basis, we have determined if the extension should be considered reasonably certain to be exercised and thus a right-of-use asset and a lease liability should be recorded.

Discount Rate

The discount rate for leases, if not explicitly stated in the lease, is the incremental borrowing rate, which is the rate of interest that we would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.

We used the discount rate to calculate the present value of the lease liability at the date of adoption. In the development of the discount rate, we considered our incremental borrowing rate as provided by our lender which was based on cash collateral and credit risk specific to us, and our lease portfolio characteristics.

As of March 28, 2026, the weighted-average discount rate of our operating and finance leases was 5.2% and 4.1%, respectively. As of September 27, 2025, the weighted-average discount rate of our operating and finance leases was 5.2% and 4.1%, respectively.

Practical Expedients and Accounting Policy Elections

We elected the package of practical expedients that permits us not to reassess our prior conclusions about lease identification, lease classification and initial direct costs and made an accounting policy election to exclude short-term leases with an initial term of 12 months or less from our Consolidated Balance Sheets.

Amounts Recognized in the Financial Statements

The components of lease expense were as follows:

Supplemental balance sheet information related to leases is as follows:

Supplemental cash flow information related to leases is as follows:

As of March 28, 2026, the maturities of lease liabilities were as follows:

As of March 28, 2026 the weighted-average remaining term of our operating and finance leases was 11.0 years and 3.6 years, respectively.

As of September 27, 2025 the weighted-average remaining term of our operating and finance leases was 11.4 years and 4.1 years, respectively.

During the three- and six-months ending March 28, 2026, the Company recorded a non-cash impairment charge of $0.9 million related to the right-of-use asset of a corporate office lease. The charge is recorded within Administrative Operating Expenses on the Consolidated Statements of Earnings.

NFI Industries, Inc.

We have related party expenses for distribution and shipping related costs with NFI Industries, Inc. and its affiliated entities (“NFI”). Our director, Sidney R. Brown, is CEO and an owner of NFI Industries, Inc.

The payments to NFI were as follows:

As of March 28, 2026, and September 27, 2025, related party trade payables of approximately $3.8 million and $0.6 million, respectively, were recorded as accounts payable.

All agreements with NFI include terms that are consistent with those that we believe would have been negotiated at an arm’s length with an independent party.

Ken Roshkoff

The Company pays board advisory consulting fees to the husband of our director, Marjorie Roshkoff. In both the three and six months ended March 28, 2026 and March 29, 2025, the Company paid $13,000 and $26,000 for these board advisory consulting fees, respectively.

Certain prior year financial statements amounts have been reclassified to be consistent with the presentation for the current year.

On February 3, 2025, the Company announced that the Board of Directors authorized a share repurchase program (the 2025 Share Repurchase Program) pursuant to which the Company could repurchase up to $50.0 million of the Company’s common stock, exclusive of any fees, commissions, and other expenses related to such repurchases. Under the 2025 Share Repurchase Program, the Company may repurchase its common stock from time to time, in amounts, at prices, and at such times as the Company deems appropriate, subject to market conditions, legal requirements, and other considerations. The Company’s repurchases may be executed using open market purchases, unsolicited or solicited privately negotiated transactions, or other transactions, and may be affected pursuant to trading plans intended to qualify under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. The 2025 Share Repurchase Program is effective fortwo years; however, the 2025 Share Repurchase Program does not obligate the Company to repurchase any specific number of shares and may be suspended, modified or terminated at any time without prior notice.

During the three months ended March 29, 2025, the Company repurchased 39,061 shares of common stock of the Company at an average price of $128.00 per share on the open market, pursuant to the 2025 Share Repurchase Program. As of the date of the repurchase, the repurchased shares were retired and returned to the status of authorized but unissued shares of common stock.

During the three months ended December 27, 2025, the Company repurchased 458,467 shares of common stock of the Company at an average price of $91.61 per share on the open market, pursuant to the 2025 Share Repurchase Program. As of the date of the repurchase, the repurchased shares were retired and returned to the status of authorized but unissued shares of common stock. As of December 27, 2025, the Company had fully exhausted its share repurchase ability under the 2025 Share Repurchase Program.

On February 3, 2026, the Company announced that the Board of Directors authorized a new share repurchase program (the “2026 Share Repurchase Program”) pursuant to which the Company could repurchase up to $50.0 million of the Company’s common stock, exclusive of any fees, commissions, and other expenses related to such repurchases. Under the 2026 Share Repurchase Program, the Company may repurchase its common stock from time to time, in amounts, at prices, and at such times as the Company deems appropriate, subject to market conditions, legal requirements, and other considerations. The Company’s repurchases may be executed using open market purchases, unsolicited or solicited privately negotiated transactions, or other transactions, and may be affected pursuant to trading plans intended to qualify under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. The 2026 Share Repurchase Program is effective for approximately two years, however, the 2026 Share Repurchase Program does not obligate the Company to repurchase any specific number of shares and may be suspended, modified or terminated at any time without prior notice.

During the three months ended March 28, 2026, the Company repurchased 259,889 shares of common stock of the Company at an average price of $84.56 per share on the open market, pursuant to the 2026 Share Repurchase Program. As of the date of the repurchase, the repurchased shares were retired and returned to the status of authorized but unissued shares of common stock. As a result of the Company’s recent stock repurchases, as of March 28, 2026, there remains $28.0 million of share repurchase availability under the 2026 Share Repurchase Program.

During the fourth quarter of fiscal 2025, we announced the closure of two manufacturing facilities, our plant in Holly Ridge, North Carolina, and our plant in Atlanta, Georgia. In October 2025, during the first quarter of fiscal 2026, we subsequently announced the closure of a third manufacturing facility, our plant in Colton, California. In March 2026, during the second quarter of fiscal 2026, we made the decision to close a fourth facility, our manufacturing/distribution facility in New York, New York, which is expected to close in our third fiscal quarter. Production from these facilities will either be consolidated into various other facilities across our network, or it will be discontinued. This consolidation was enabled by investments we have made in our plants to modernize and expand capacity for our core products, as well as our investments made to build out our three regional distribution centers.

As a result of the plant closures, we recorded charges of $4.8 million and $10.9 million in three and six months ended March 28, 2026, respectively. These costs are reported in theplant closure expenses item within the Operating expenses sections of the Consolidated Statements of Income. Included in the results in the three months ended March 28, 2026 are $1.6 million of charges that have resulted or will result in cash outflows, and $3.2 million of non-cash charges. Included in the results in the six months ended March 28, 2026 are $5.9 million of charges that have resulted or will result in cash outflows, and $5.0 million of non-cash charges. No plant closure expenses were recorded in the three or six months ended March 29, 2025.

The manufacturing facility in Holly Ridge, NC produced handheld products for our Food Service and Retail Supermarket segments and ceased production on July 31, 2025. During the three months ended March 28, 2026, in connection with our plan to actively market and sell the building and land at Holly Ridge, NC, we reclassified $6.3 million of property, plant, and equipment, net, to assets held for sale as of March 28, 2026. We then measured the assets held for sale at the lower of their carrying value or fair value less the estimated costs to sell, and recorded a pre-tax, non-cash impairment charge of $2.0 million during the three months ended March 28, 2026. The remaining $4.3 million of assets held for sale are reported in the Prepaid expenses and other item, within current assets, on our Consolidated Balance Sheet. We expect to be able to sell the building and land for fair value less the estimated costs to sell, within the next twelve months.

The closure costs for the facility totaled $3.0 million in the three months ended March 28, 2026, including $2.0 million of impairment charges on assets held-for-sale noted above, and $1.0 million of other exit and disposal costs. The closure costs for the facility totaled $3.4 million in the six months ended March 28, 2026, including the $2.0 million impairment charge on assets held-for-sale noted above, and $1.4 million of other exit and disposal costs. These costs are reported in the plant closure expenses item of the Consolidated Statements of Earnings.

The manufacturing facility in Atlanta, GA produced bakery and biscuit products for our Food Service and Retail Supermarket segments and ceased production on September 27, 2025. The closure costs for the facility totaled $0.6 million in the three months ended March 28, 2026, including $0.3 million of inventory write-offs, and $0.3 million of other exit and disposal costs. The closure costs for the facility totaled $4.2 million in the six months ended March 28 2026, including $2.0 million of other exit and disposal costs, $1.7 million of inventory write-offs, and $0.5 million of severance and benefits costs. These costs are reported in the plant closure expenses item of the Consolidated Statements of Earnings.

The manufacturing facility in Colton, CA produced churro products for our Food Service and Retail Supermarket segments and ceased production in the first quarter of fiscal 2026. The closure costs for the facility totaled $0.1 million in three months ended March 28, 2026, including $0.1 million of other exit and disposal costs. The closure costs for the facility totaled $2.2 million in the six months ended March 28, 2026, including $1.4 million of severance and benefits costs, $0.4 million of long-lived asset impairment charges, and $0.4 million of other exit and disposal costs. These costs are reported in the plant closure expenses item of the Consolidated Statements of Earnings.

The manufacturing and distribution facility in New York, NY produced and distributed soft pretzel products for our Food Service segment and is expected to cease production during the third quarter of our fiscal 2026. The closure costs for the facility totaled $1.1 million in the three and six months ended March 28, 2026, including $0.9 million of right-of-use (“ROU”) asset and long-lived asset impairment charges and $0.2 million of severance and benefits costs. These costs are reported in the plant closure expenses item of the Consolidated Statements of Earnings.

The following table reflects our liability related to manufacturing and distribution facility closures as of March 28, 2026 (in thousands):