RCM TECHNOLOGIES, INC.

Previous wording

A discussion of the recently issued accounting pronouncements is set forth in Note 12, New Accounting Standards and Updates, in the unaudited condensed consolidated financial statements included in Part I, Item I of this Quarterly Report on Form 10-Q and is incorporated herein by reference.

Current wording

A discussion of the recently issued accounting pronouncements is set forth in Note 12, New Accounting Standards and Updates from the Securities and Exchange Commission, in the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q and is incorporated herein by reference.

Previous wording

Revenue. Revenue decreased by $1.4 million for the thirteen weeks ended April 4, 2026 as compared to the thirteen weeks ended March 29, 2025 (the “comparable prior-year period”). Revenue increased $4.8 million in the Specialty Healthcare segment, decreased $6.0 million in the Engineering segment and decreased $0.2 million in the Life Sciences, Data and Solutions segment. See more detailed disclosure by segment in our Segment Discussion.

Current wording

**Revenue.**Revenue increased by $15.6 million for the thirteen weeks ended July 4, 2026 as compared to the thirteen weeks ended June 28, 2025 (the “comparable prior-year period”). Revenue increased $1.9 million in the Specialty Health Care segment, $13.0 million in the Engineering segment, and $0.7 million in the Life Sciences, Data and Solutions segment. See more detailed disclosure by segment in our Segment Discussion.

Previous wording

Cost of Services and Gross Profit. Cost of services decreased by $1.5 million for the thirteen weeks ended April 4, 2026 as compared to the comparable prior-year period, primarily due to the decrease in revenue. Cost of services as a percentage of revenue for the thirteen weeks ended April 4, 2026 and March 29, 2025 was 73.5% and 74.0%, respectively. See Segment Discussion for further information regarding changes in cost of services and gross profit.

Current wording

**Cost of Services and Gross Profit.**Cost of services increased by $13.8 million for the thirteen weeks ended July 4, 2026 as compared to the comparable prior-year period, primarily due to the increase in revenue. Cost of services as a percentage of revenue for the thirteen weeks ended July 4, 2026 and June 28, 2025 was 74.3% and 71.5%, respectively. See Segment Discussion for further information regarding changes in cost of services and gross profit.

Previous wording

Selling, General and Administrative. Selling, general and administrative (“SGA”) expenses were $15.5 million for the thirteen weeks ended April 4, 2026 as compared to $15.0 million for the comparable prior-year period. As a percentage of revenue, SGA expenses were 18.7% for the thirteen weeks ended April 4, 2026 and 17.7% for the comparable prior-year period. See Segment Discussion for further information on SGA expense changes.

Current wording

**Selling, General and Administrative.**Selling, general and administrative (“SGA”) expenses were $15.6 million for the thirteen weeks ended July 4, 2026 as compared to $15.3 million for the comparable prior-year period. As a percentage of revenue, SGA expenses were 16.6% for the thirteen weeks ended July 4, 2026, as compared to 19.6% for the comparable prior-year period. See Segment Discussion for further information on SGA expense changes.

Previous wording

Other Expense, Net. Other expense, net consists of interest expense, unused line fees and amortized loan costs on the Company’s revolving credit facility, net of interest income and gains and losses on foreign currency transactions. Other expense, net decreased by $0.1 million as compared to the comparable prior year period, primarily due to differences in the impact from foreign currency transactions.

Current wording

**Other Expense, Net.**Other expense, net consists of interest expense, unused line fees and amortized loan costs on the Company’s revolving credit facility, net of interest income and gains and losses on foreign currency transactions. Other expense, net decreased by $0.2 million as compared to the comparable prior year period, due mainly to a $0.3 million decrease in loss on foreign currency transactions, offset by a $0.1 million increase in interest expense, net. Interest expense increased primarily due to increased borrowing and increased letters of credit.

Previous wording

Income Tax Expense. The Company recognized $1.5 million of income tax expense for the thirteen weeks ended April 4, 2026 as compared to $1.7 million for the comparable prior-year period. The consolidated effective income tax rate for the current period was 28.5% as compared to 28.9% for the comparable prior-year period. The effective income tax rates for the thirteen weeks ended April 4, 2026, were approximately 29.0%, 23.4%, 28.0%, and 24.9% in the United States/Puerto Rico, Canada, Europe, and the Philippines, respectively. The relative income or loss generated in each jurisdiction can materially impact the overall effective income tax rate of the Company, particularly the ratio of Canadian and European pretax income versus U.S. pretax income. The effective income tax rate can also be impacted by discrete permanent differences affecting any period presented. The comparable prior-year period estimated income tax rates were 29.3%, 26.7%, and 55.7% in the United States, Canada, and Europe, respectively.

Current wording

Income Tax Expense. The Company recognized $2.3 million of income tax expense for the thirteen weeks ended July 4, 2026 as compared to $1.9 million for the comparable prior-year period. The consolidated effective income tax rate for the current period was 32.1% as compared to 33.3% for the comparable prior-year period. The effective income tax rates for the thirteen weeks ended July 4, 2026, were approximately 32.5%, 31.1%, 20.1%, and 25.1% in the United States, Canada, Europe, and the Philippines, respectively. The relative income or loss generated in each jurisdiction can materially impact the overall effective income tax rate of the Company, particularly the ratio of Canadian and European pretax income versus U.S. pretax income. The effective income tax rate can also be impacted by discrete permanent differences affecting any period presented. The comparable prior-year period estimated income tax rates were 34.0%, 23.7%, and 8.5% in the United States, Canada, and Europe, respectively. The primary reason for the decrease in the consolidated and United States effective rates in the current period was due to decreases in permanent tax differences in the United States. The low effective tax rate in Europe during the prior-year period was due to a fixed tax benefit relative to a small pretax loss.

Previous wording

Life Sciences, Data and Solutions revenue of $8.8 million for the thirteen weeks ended April 4, 2026, decreased 2.8%, or $0.2 million, compared to the comparable prior-year period. The Company primarily attributes the decrease in revenue to the timing of large projects, offset by a deemphasis of the Company’s legacy staffing business. Gross profit of $3.3 million for the thirteen weeks ended April 4, 2026, decreased 8.6%, or $0.3 million, compared to $3.6 million for the comparable prior-year period. Gross profit decreased due to the decrease in revenue and a decrease in gross profit margin. Gross profit margin for the thirteen weeks ended April 4, 2026, was 37.3% as compared to 39.7% for the comparable prior-year period. The Company attributes the gross profit margin decrease to normal fluctuations in project work. The Life Sciences, Data and Solutions segment experienced operating income of $2.0 million for the thirteen weeks ended April 4, 2026, compared to $2.1 million for the comparable prior-year period. The decrease in operating income was primarily due to the decrease in gross profit, offset by a decrease in SGA expense. The Life Sciences, Data and Solutions segment’s SGA expense of $1.2 million decreased from $1.4 million, primarily due to a deliberate effort to gain efficiency on SGA expense.

Current wording

Life Sciences, Data and Solutions revenue of $9.6 million for the thirteen weeks ended July 4, 2026, increased 8.4%, or $0.7 million, compared to the comparable prior-year period. The Company primarily attributes the increase in revenue to increases in managed services revenue in its Life Sciences practice. Gross profit of $3.9 million for the thirteen weeks ended July 4, 2026, increased 10.5%, or $0.4 million, compared to $3.5 million for the comparable prior-year period. Gross profit increased due to higher revenue and gross margin. Gross profit margin for the thirteen weeks ended July 4, 2026, was 40.6% as compared to 39.8% for the comparable prior-year period. The Company attributes the gross profit margin increase to an emphasis on high-margin project work. The Life Sciences, Data and Solutions segment experienced operating income of $2.7 million for the thirteen weeks ended July 4, 2026 compared to $2.0 million for the comparable prior-year period. The increase in operating income was due to the increase in gross profit and augmented by a decrease in SGA expense of $0.3 million. The Life Sciences, Data and Solutions segment’s SGA expense decreased primarily due to a deliberate effort to gain efficiency on SGA expense.

Previous wording

Specialty Healthcare revenue of $48.1 million for the thirteen weeks ended April 4, 2026, increased 11.1%, or $4.8 million, compared to the comparable prior-year period. The increase in revenue was driven by the Company’s school clients, offset by a decrease in revenue from the Company’s non-school clients. Revenue from school clients for the thirteen weeks ended April 4, 2026, was $42.9 million as compared to $37.3 million for the comparable prior-year period. Revenue from non-school clients for the thirteen weeks ended April 4, 2026, was $5.2 million as compared to $6.0 million for the comparable prior-year period. The decrease in non-school revenue was primarily driven by the reduction in revenue of $0.7 million from a lost contract with a corrections facility. Gross profit increased by 10.1%, or $1.2 million, to $13.4 million for the thirteen weeks ended April 4, 2026 as compared to $12.2 million in the comparable prior-year period. Gross profit increased due to an increase in revenue, offset by a decrease in gross profit margin. Gross profit margin for the thirteen weeks ended April 4, 2026, decreased to 27.9% compared to 28.2% for the comparable prior-year period. The decrease in gross profit margin was primarily attributed to a greater mix shift to lower-margin services. Specialty Healthcare experienced operating income of $6.6 million for the thirteen weeks ended April 4, 2026, as compared to $6.2 million for the comparable prior-year period. The primary reason for the increase in operating income was the increase to gross profit, offset by an increase in SGA expense to $6.7 million for the thirteen weeks ended April 4, 2026 compared to $5.9 million for the comparable prior-year period. SGA expense increased primarily due to sales and recruiting infrastructure investments to support revenue growth.

Current wording

Specialty Health Care revenue of $92.8 million for the twenty-six weeks ended July 4, 2026, increased 7.8%, or $6.7 million, compared to the comparable prior-year period. The increase in revenue was driven by the Company’s school clients, offset by a decrease in revenue from the Company’s non-school clients. Revenue from school clients for the twenty-six weeks ended July 4, 2026, was $82.1 million as compared to $74.5 million for the comparable prior-year period. The increase to revenue from school contracts was driven by both existing and new clients. Revenue from non-school clients for the twenty-six weeks ended July 4, 2026, was $10.7 million as compared to $11.6 million for the comparable prior-year period. The decrease in non-school revenue was primarily driven by the reduction in revenue of $0.7 million from a lost contract with a corrections facility. Gross profit increased by 8.7%, or $2.1 million, to $26.6 million for the twenty-six weeks ended July 4, 2026 as compared to $24.5 million in the comparable prior-year period. Gross profit increased due to an increase in revenue, augmented by an increase in gross profit margin. Gross profit margin for the twenty-six weeks ended July 4, 2026, increased to 28.7% compared to 28.4% for the comparable prior-year period. The increase in gross profit margin was primarily attributed to normal fluctuations. Specialty Health Care experienced operating income of $13.1 million for the twenty-six weeks ended July 4, 2026, as compared to $12.3 million for the comparable prior-year period. The primary reason for the increase in operating income was the increase in gross profit, offset by an increase in SGA expense to $13.3 million for the twenty-six weeks ended July 4, 2026 compared to $12.0 million for the comparable prior-year period. SGA expense increased primarily due to sales and recruiting infrastructure investments to support revenue growth.

Previous wording

Engineering revenue of $26.1 million for the thirteen weeks ended April 4, 2026, decreased 18.7%, or $6.0 million, compared to the comparable prior-year period. The decrease in revenue included decreases in Energy Services revenue of $2.2 million, Aerospace revenue of $2.1 million, and Industrial Processing revenue of $1.7 million. Energy Services revenue decreased primarily because of decreased activity from EPC projects. The Company believes the decrease on Energy Services revenue was primarily due to gaps between the end dates and start dates major projects. Aerospace revenue decreased primarily due to a decrease in spending from several clients. Gross profit decreased by 14.3%, or $0.9 million, compared to the comparable prior-year period. Gross profit decreased because of the decrease in revenue, enhanced by an increase in gross profit margin. The gross profit margin of 20.3% for the current period increased from 19.2% for the comparable prior-year period. The increase in gross profit margin was primarily due to a change in mix associated with EPC project revenue from the Energy Services group and Aerospace revenue. The Engineering segment experienced operating income of $2.4 million for the thirteen weeks ended April 4, 2026, as compared to $2.9 million for the comparable prior-year period. The decrease in operating income was due to the decrease in gross profit, offset by a decrease in SGA expense. The Engineering segment’s SGA expense of $2.7 million decreased from $3.1 million, primarily due to a concentrated effort to align certain costs with gross profit.

Current wording

Engineering revenue of $65.7 million for the twenty-six weeks ended July 4, 2026, increased 11.9%, or $7.0 million, compared to the comparable prior-year period. The increase in revenue included increases in Energy Services revenue of $12.5 million, offset by decreases in Aerospace revenue of $3.3 million and Industrial Processing revenue of $2.2 million. Energy Services revenue increased primarily because of increased activity from EPC (Engineering, Procurement and Construction Management) projects. Aerospace revenue decreased primarily due to curtailed spending from one client. The Company believes the decrease in Industrial Processing revenue was mainly due to normal fluctuations. Gross profit decreased by 2.6%, or $0.3 million, compared to the comparable prior-year period. Gross profit decreased due to a decline in gross profit margin. Gross profit margin of 18.8% for the current period decreased from 21.6% for the comparable prior-year period. The decrease in gross profit margin was primarily due the Energy Services group, due to gaps between the end dates and start dates of major projects in the first quarter of 2026 and a change in mix associated with EPC project revenue in the second quarter of 2026. The Engineering segment experienced operating income of $6.0 million as compared to $6.2 million for the comparable prior year period. Operating income decreased due to the decrease in gross profit, offset by a decrease in SGA expenses. The Engineering segment’s SGA expense of $5.8 million decreased from $6.1 million, primarily due to a deliberate effort to gain efficiency on SGA expense.

Previous wording

The Company’s corporate SGA expense includes but is not limited to the following costs: public company-related costs, executive compensation, board compensation, directors and officers insurance, SAP ERP infrastructure, professional fees, numerous centralized functions including accounting and financial management, information technology and cyber security infrastructure, payroll, billing, accounts receivable, and marketing. The corporate segment team primarily operates out of the United States, with limited operations in Serbia and the Philippines. Corporate SGA expense was $4.9 million for the thirteen weeks ended April 4, 2026 as compared to $4.5 million for the comparable prior year period. The increase was primarily caused by $0.6 million in excess professional fees over budget associated with the Company’s fiscal 2025 audit, partially offset by reductions to various other costs.

Current wording

The Company’s corporate SGA expense includes but is not limited to the following costs: public company related, executive compensation, board compensation, directors and officers insurance, SAP ERP infrastructure, numerous centralized functions including accounting and financial management, information technology and cyber security infrastructure, payroll, billing, accounts receivables, and marketing. The corporate segment team primarily operates out of the United States, with limited operations in Serbia and the Philippines. Corporate SGA expense was $9.6 million for the twenty-six weeks ended July 4, 2026 as compared to $9.1 million for the comparable prior year period, increasing by $0.5 million. The increase was primarily caused by $0.6 million in excess professional fees over budget associated with the Company’s fiscal 2025 audit completed in the first quarter of 2026.

Previous wording

The following unaudited tables present the Company's GAAP net income and GAAP operating income and the corresponding adjustments used to calculate Adjusted operating income, EBITDA, Adjusted EBITDA, Adjusted net income and Adjusted diluted net earnings per share for the thirteen weeks ended April 4, 2026, and March 29, 2025.

Current wording

The following unaudited tables present the Company's GAAP net income and GAAP operating income, and the corresponding adjustments used to calculate Adjusted operating income, EBITDA, Adjusted EBITDA, Adjusted net income, and Adjusted diluted net earnings per share for the thirteen and twenty-six weeks ended July 4, 2026, and June 28, 2025.

Previous wording

Operating activities provided $2.7 million of cash for the thirteen weeks ended April 4, 2026 as compared to providing $16.7 million in the comparable prior-year period. The major components of cash provided by operating activities in the thirteen weeks ended April 4, 2026 and the comparable prior-year period are as follows: net income, and changes in accounts receivable, the net of transit accounts payable and transit accounts receivable, prepaid expenses and other current assets, accounts payable, accrued expenses and accrued payroll and related costs, and deferred revenue.

Current wording

Operating activities provided $13.5 million of cash for the twenty-six weeks ended July 4, 2026, as compared to providing $8.7 million in the comparable prior-year period. The major components of cash provided by operating activities in the twenty-six weeks ended July 4, 2026, and the comparable prior-year period are as follows: net income, changes in accounts receivable, the net of transit accounts payable and transit accounts receivable, contract assets, prepaid expenses and other current assets, accounts payable, accrued expenses and accrued payroll and related costs, and deferred revenue.

Previous wording

For the thirteen weeks ended April 4, 2026, the Company reported net income of $3.8 million, compared with $4.2 million in the comparable prior-year period. An increase in accounts receivable in the thirteen weeks ended April 4, 2026, used $3.9 million of cash compared to providing $9.6 million in the comparable prior-year period. The Company primarily attributes this increase in accounts receivable for the thirteen weeks ended April 4, 2026 to normal fluctuations in its Engineering segment clients, mainly due to the timing of milestones associated with its fixed price contracts.

Current wording

For the twenty-six weeks ended July 4, 2026, the Company experienced net income of $8.7 million compared to $8.0 million for the comparable prior-year period. An increase in accounts receivable and contract assets in the twenty-six weeks ended July 4, 2026, used $0.3 million of cash compared to using $5.8 million in the comparable prior-year period. The Company primarily attributes this increase in accounts receivable for the twenty-six weeks ended July 4, 2026, to increased revenue in the second quarter of 2026 as compared to the fourth quarter of 2025.

Previous wording

While highly variable, the Company’s transit accounts payable typically exceeds the Company’s transit accounts receivable, but absolute amounts and differences fluctuate significantly from quarter to quarter in the normal course of business. The net of transit accounts payable and transit accounts receivable was a net payable of $8.0 million as of April 4, and a net payable of $8.2 million as of January 3, 2026, using $0.2 million of cash during the thirteen weeks ended April 4, 2026. The net of transit accounts payable and transit accounts receivable was a net payable of $12.2 million as of March 29, 2025 and a net payable of $16.6 million as of December 28, 2024, using $4.4 million of cash during the thirteen weeks ended March 29, 2025. The decrease to net transit payable as of April 4, 2026 was due to normal fluctuations associated with several large, multiyear EPC projects. In a typical EPC contract, the Company receives significant cash upfront to fund equipment procurement and construction subcontractors throughout the project.

Current wording

While highly variable, the Company’s transit accounts payable typically exceeds the Company’s transit accounts receivable, but absolute amounts and differences fluctuate significantly from quarter to quarter in the normal course of business. The net of transit accounts payable and transit accounts receivable was a net payable of $7.8 million as of July 4, 2026 and a net payable of $8.2 million as of January 3, 2026, using $0.4 million of cash during the twenty-six weeks ended July 4, 2026. The net of transit accounts payable and transit accounts receivable was a net payable of $14.9 million as of June 28, 2025 and a net payable of $16.6 million as of December 28, 2024, using $1.7 million of cash during the twenty-six weeks ended June 28, 2025. The decrease to net transit payable as of July 4, 2026 was due to normal fluctuations associated with several large, multiyear EPC projects. In a typical EPC contract, the Company receives significant cash upfront to fund equipment procurement and construction subcontractors throughout the project.

Previous wording

Prepaid expenses and other current assets provided cash of $0.6 million for the thirteen weeks ended April 4, 2026 as compared to providing $1.8 million of cash for the comparable prior-year period. The Company typically attributes changes to prepaid expenses and other current assets, if any, to general timing of payments in the normal course of business. Since certain expenses are paid before a fiscal year concludes and are amortized over the next fiscal year, prepaid expenses and other current assets generally tend to increase at the end of a fiscal year and decrease during the first three quarters of the following fiscal year.

Current wording

Prepaid expenses and other current assets provided cash of $2.1 million for the twenty-six weeks ended July 4, 2026 as compared to providing $3.0 million of cash for the comparable prior-year period. The Company typically attributes changes to prepaid expenses and other current assets, if any, to general timing of payments in the normal course of business. Since certain expenses are paid before a fiscal year concludes and are amortized over the next fiscal year, prepaid expenses and other current assets generally tend to increase at the end of a fiscal year and decrease during the first three quarters of the following fiscal year.

Previous wording

An increase in accounts payable and accrued expenses provided cash of $0.7 million for the thirteen weeks ended April 4, 2026 as compared to providing $1.4 million for the comparable prior-year period. The Company attributes these changes to typical fluctuations in the normal course of business.

Current wording

A increase in accounts payable and accrued expenses provided cash of $5.0 million for the twenty-six weeks ended July 4, 2026, as compared to using $3.4 million for the comparable prior-year period. The Company attributes these changes to typical fluctuations in the normal course of business.

Previous wording

Changes in accrued payroll and related costs provided $1.5 million for the thirteen weeks ended April 4, 2026, as compared to providing $2.7 million for the comparable prior-year period. There are four primary factors that generally impact accrued payroll and related costs: 1) there is a general correlation to operating expenses as payroll and related costs is the Company’s largest expense group, so as operating costs increase or decrease, absent all other factors, so will the accrued payroll and related costs; 2) the Company pays the majority of its payroll biweekly (every two weeks) and normally has thirteen weeks in a fiscal quarter, which means that the Company normally has a biweekly payroll on the last business day of every other quarter; 3) the timing of various payroll related payments varies in the normal course of business; and 4) most of the Company’s senior management participate in annual incentive plans and while progress advances are sometimes made during the fiscal year, these accrued bonus balances, to the extent they are projected to be achieved, generally accumulate throughout the year. A significant portion of these incentive plan accruals are typically paid at the beginning of one fiscal year, pertaining to the prior fiscal year. The Company’s last biweekly payroll for the thirteen weeks ended April 4, 2026 was paid on April 3, 2026.

Current wording

Changes in accrued payroll and related costs provided $2.1 million for the twenty-six weeks ended July 4, 2026 as compared to providing $0.4 million for the comparable prior-year period. There are four primary factors that generally impact accrued payroll and related costs: 1) there is a general correlation to operating expenses as payroll and related costs is the Company’s largest expense group, so as operating costs increase or decrease, absent all other factors, so will the accrued payroll and related costs; 2) the Company pays the majority of its payroll every two weeks and normally has thirteen weeks in a fiscal quarter, which means that the Company normally has a major payroll on the last business day of every other quarter; 3) the timing of various payroll related payments varies in the normal course of business; and 4) most of the Company’s senior management participate in annual incentive plans and while progress advances are sometimes made during the fiscal year, these accrued bonus balances, to the extent they are projected to be achieved, generally accumulate throughout the year. A significant portion of these incentive plan accruals are typically paid at the beginning of one fiscal year, pertaining to the prior fiscal year. The Company’s last major payroll for the twenty-six weeks ended July 4, 2026 was paid on June 26, 2026.

Previous wording

The Company’s deferred revenue balance as of April 4, 2026 was $13.4 million, compared to $14.8 million as of January 3, 2026, using cash from operations of $1.4 million for the thirteen weeks ended April 4, 2026. The decrease was associated with upfront payments for future labor associated with the Company’s EPC contracts.

Current wording

The Company’s deferred revenue balance as of July 4, 2026 was $8.2 million, compared to $14.8 million as of January 3, 2026, using cash from operations of $6.6 million for the twenty-six weeks ended July 4, 2026. The decrease was associated with upfront payments for future labor associated with the Company’s EPC contracts.

Previous wording

Investing activities used $0.1 million for the purchase of property and equipment in the current period as compared to using $0.4 million in the comparable prior-year period. The primary reason for the decrease was the completed implementation of the Company’s new ERP software system.

Current wording

Investing activities used $0.2 million for the purchase of property and equipment in the current period as compared to using $0.9 million in the comparable prior-year period. The primary reason for the decrease was the completed implementation of the Company’s new ERP software system.

Previous wording

Financing activities used $2.5 million of cash for the thirteen weeks ended April 4, 2026, compared to using $15.6 million in the comparable prior-year period. The Company made net borrowings under its revolving credit facility of $4.1 million during the thirteen weeks ended April 4, 2026, compared with net payments of $11.6 million in the comparable prior-year period. The Company used $6.7 million to purchase shares of its common stock during the thirteen weeks ended April 4, 2026, and used $3.2 million to purchase shares of its common stock during in the comparable prior-year period. During the thirteen weeks ended April 4, 2026, the Company used negligible cash to retire shares of vested equity grants, as compared to using $0.9 million in the comparable prior year period, the proceeds of which were used to pay withholding taxes upon the vesting of equity grants. The Company generated cash of $0.3 million from sales of shares from its equity plans for both periods presented.

Current wording

Financing activities used $9.3 million of cash for the twenty-six weeks ended July 4, 2026, compared to using $7.1 million in the comparable prior-year period. The Company made net payments under its revolving credit facility of $1.3 million during the twenty-six weeks ended July 4, 2026, as compared to making net payments of $1.0 million in the comparable prior-year period. The Company used $6.7 million to purchase shares of its common stock during the twenty-six weeks ended July 4, 2026 as compared to using $5.1 million during the twenty-six week period ended June 28, 2025. During the twenty-six weeks ended July 4, 2026, the Company used $1.2 million to retire shares of vested equity grants, the proceeds of which were used to pay withholding taxes upon the vesting of equity grants, as compared to using $0.9 million in the comparable prior year period. The Company generated cash of $0.3 million from sales of shares from its employee stock purchase plan for both periods presented.

Previous wording

Borrowings under the Revolving Credit Facility bear interest at one of two alternative rates, as selected by the Company at each incremental borrowing. These alternatives are: (i) SOFR (Secured Overnight Financing Rate), plus applicable margin or (ii) the agent bank’s prime rate generally borrowed over shorter durations. The Company also pays unused line fees based on the amount of the Revolving Credit Facility that is not drawn. Unused line fees are recorded as interest expense. The effective weighted average interest rate, including unused line fees, for the thirteen weeks ended April 4, 2026 and March 29, 2025 were 5.7% and 6.0%, respectively.

Current wording

Borrowings under the Revolving Credit Facility bear interest at one of two alternative rates, as selected by the Company at each incremental borrowing. These alternatives are: (i) SOFR (Secured Overnight Financing Rate), plus applicable margin or (ii) the agent bank’s prime rate generally borrowed over shorter durations. The Company also pays unused line fees based on the amount of the Revolving Credit Facility that is not drawn. Unused line fees are recorded as interest expense. The effective weighted average interest rate, including unused line fees, for the twenty-six weeks ended July 4, 2026 and June 28, 2025 were 5.6% and 6.2%, respectively.

Previous wording

Borrowings under the Revolving Credit Facility as of April 4, 2026 and January 3, 2026 were $28.8 million and $24.7 million, respectively. There were letters of credit outstanding at April 4, 2026 and January 3, 2026 for $12.9 million and $13.2 million, respectively. At April 4, 2026 and January 3, 2026, the Company had availability for additional borrowings under the Revolving Credit Facility of $33.3 million and $27.1 million, respectively.

Current wording

Borrowings under the revolving credit facility as of July 4, 2026 and January 3, 2026 were $23.4 million and $24.7 million, respectively. There were letters of credit outstanding at July 4, 2026 and January 3, 2026 for $18.9 million and $13.2 million, respectively. At July 4, 2026 and January 3, 2026, the Company had availability for additional borrowings under the Revolving Credit Facility of $32.7 million and $27.1 million, respectively.

Previous wording

Liquidity is a measure of our ability to meet potential cash requirements, maintain our assets, fund our operations, and meet the other general cash needs of our business. Our liquidity is impacted by general economic, financial, competitive, and other factors beyond our control. Our liquidity requirements consist primarily of funds necessary to pay our expenses, principally labor costs, and other related expenditures. We generally satisfy our liquidity needs through cash provided by operations and, when necessary, our Revolving Credit Facility. The Company believes it has a great deal of flexibility to reduce its costs if it becomes necessary. The Company believes that it can satisfy its liquidity needs for at least the next twelve months.

Current wording

Liquidity is a measure of our ability to meet potential cash requirements, maintain our assets, fund our operations, and meet the other general cash needs of our business. Our liquidity is impacted by general economic, financial, competitive, and other factors beyond our control. Our liquidity requirements consist primarily of funds needed to cover our expenses, principally labor costs and other related expenditures. We generally satisfy our liquidity needs through cash provided by operations and, when necessary, our Revolving Credit Facility. The Company believes it has considerable flexibility to reduce its costs if necessary. The Company believes it can meet its liquidity needs for at least the next 12 months.

Previous wording

The Company’s liquidity and capital resources as of April 4, 2026 included accounts receivable and total current asset balances of $85.2 million and $101.6 million, respectively. Current liabilities were $52.8 million as of April 4, 2026 and were exceeded by total current assets by $48.8 million.

Current wording

The Company’s liquidity and capital resources as of July 4, 2026 included accounts receivable and total current asset balances of $81.5 million and $100.4 million, respectively. Current liabilities were $52.2 million as of July 4, 2026, and were exceeded by total current assets by $48.2 million.

Previous wording

The Company is exposed to various asserted claims as of April 4, 2026, where the Company believes it has a probability of loss. Additionally, the Company is exposed to other asserted claims whereby an amount of loss has not been declared, and the Company cannot determine the potential loss. Any of these various claims could result in an unfavorable outcome or settlement that exceeds the accrued amounts. However, the Company believes that such matters will not, either individually or in the aggregate, have a material adverse effect on its business, consolidated financial position, results of operations, or cash flows. As of both April 4, 2026, and January 3, 2026, the Company had accrued $0.3 million for asserted claims.

Current wording

The Company is exposed to various asserted claims as of July 4, 2026, where the Company believes it has a probability of loss. Additionally, the Company is exposed to other asserted claims whereby an amount of loss has not been declared, and the Company cannot determine the potential loss. Any of these various claims could result in an unfavorable outcome or settlement that exceeds the accrued amounts. However, the Company believes that such matters will not, either individually or in the aggregate, have a material adverse effect on its business, consolidated financial position, results of operations, or cash flows. As of July 4, 2026, the Company had accrued $0.4 million for asserted claims.