Holley Inc.

Previous wording

Unless the context requires otherwise, references to “Holley,” “we,” “us,” “our” and “the Company” in this section are to the business and operations of Holley Inc. and its subsidiaries unless the context otherwise indicates. The following discussion and analysis should be read in conjunction with Holley’s condensed consolidated financial statements and related notes thereto included in this Quarterly Report on Form 10-Q. In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties, and assumptions that could cause Holley’s actual results to differ materially from management’s expectations. Factors that could cause such differences are discussed herein and under the caption, “Cautionary Note Regarding Forward-Looking Statements.”

Current wording

Unless the context otherwise requires or indicates, references to “Holley,” “we,” “us,” “our” and “the Company” in this section are to the business and operations of Holley Inc. and its subsidiaries. The following discussion and analysis should be read in conjunction with Holley’s condensed consolidated financial statements and related notes thereto included in this Quarterly Report on Form 10-Q. In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties, and assumptions that could cause Holley’s actual results to differ materially from management’s expectations. Factors that could cause such differences are discussed herein and under the caption, “Cautionary Note Regarding Forward-Looking Statements.”

Previous wording

Interest expense consists of interest due on the indebtedness under our credit facilities. Interest is based on SOFR or the base rate, at the Company's election, plus the applicable margin rate. As of June 29, 2025, $557.6 million was outstanding under our Credit Agreement.

Current wording

Interest expense consists of interest due on the indebtedness under our credit facilities. Interest is based on SOFR or the base rate, at the Company's election, plus the applicable margin rate. As of September 28, 2025, $542.6 million was outstanding under our Credit Agreement.

Previous wording

Net sales for the 26-week period ended June 29, 2025 decreased $8.4 million, or 2.6%, to $319.7 million, as compared to $328.1 million forthe 26-week period ended June 30, 2024. Lower sales volume resulted in a decrease of approximately $12.2 million, offset partially by improved price realization of approximately $3.8 million compared to the prior year period.

Current wording

Net sales for the 13-week period ended September 28, 2025 increased $4.3 million, or 3.2%, to $138.4 million, as compared to $134.0 million for the 13-week period ended September 29, 2024. Improved price realization of approximately $4.4 million, offset partially by lower sales volume resulted in a decrease of $0.1 million compared to the prior year period. The flat volume was related to SKU rationalization and divested business.

Previous wording

The table below presents our net sales for the 26-week periods ended June 29, 2025 and June 30, 2024, as well as sales related to divestitures and sales part of our strategic product rationalization project. The divestitures sales relate to divested businesses prior to the divestiture date. The divestitures include Detroit Speed Engineering, Gear FX, and Proforged. The strategic product rationalization sales related to a 2024 initiative to discontinued stock keeping units ("SKUs").

Current wording

The table below presents our net sales for the 13-week periods ended September 28, 2025 and September 29, 2024, as well as sales related to divestitures and sales related to our strategic product rationalization project. The divestitures sales relate to divested businesses prior to the divestiture date. The divestitures include Detroit Speed Engineering, Gear FX, and Proforged. The strategic product rationalization sales related to a 2024 initiative to discontinued stock keeping units ("SKUs").

Previous wording

Cost of goods sold for the 13-week period ended June 29, 2025 decreased $2.1 million, or 2.1%, to$97.1 million, as compared to$99.2 million for the 13-week period ended June 30, 2024. The decrease in cost of goods sold in the second quarter of 2025, a period in which product sales decreased 1.7%, was due to lower inbound freight costs, which is one of the Company's cost saving initiatives.

Current wording

Cost of goods sold for the 13-week period ended September 28, 2025 decreased $3.2 million, or 3.9%, to$78.5 million, as compared to$81.7 million for the 13-week period ended September 29, 2024. The decrease in cost of goods sold in the third quarter of 2025, a period in which product sales increased 3.2%, was due to improved operational initiatives across facility efficiencies, and improvements in quality through reduced warranty claims.

Previous wording

Gross profit for the 13-week period ended June 29, 2025 decreased$0.7 million, or 1.0%, to$69.6 million, as compared to$70.3 million for the 13-week period ended June 30, 2024. Gross margin for the 13-week period ended June 29, 2025 was 41.7% as compared to a gross margin of 41.5% for the 13-week period ended June 30, 2024. Gross profit margin increased primarily due to significant clearance activity in prior year and not repeating in 2025.

Current wording

Gross profit for the 13-week period ended September 28, 2025 increased$7.5 million, or 14.4%, to$59.8 million, as compared to$52.3 million for the 13-week period ended September 29, 2024. Gross margin for the 13-week period ended September 28, 2025 was 43.2% as compared to a gross margin of 39.0% for the 13-week period ended September 29, 2024. This improvement was through a combination of pricing flow through as well as operational initiatives across facility efficiencies, and improvements in quality through reduced warranty claims.

Previous wording

Selling, general and administrative costs for the 26-week period ended June 29, 2025 increased$2.1 million, or 3.1%, to$69.7 million, as compared to$67.6 million for the 26-week period ended June 30, 2024. Selling, general and administrative costs expressed as a percentage of sales increased to 21.8% for the 26-week period ended June 29, 2025 compared to 20.6% for the 26-week period ended June 30, 2024. The increase in selling, general and administrative costs was driven by an increase in legal fees of $2.3 million, which included $1.3 million in legal settlement costs.

Current wording

Selling, general and administrative costs for the 13-week period ended September 28, 2025 increased$3.4 million, or 11.1%, to$33.5 million, as compared to$30.1 million for the 13-week period ended September 29, 2024. Selling, general and administrative costs expressed as a percentage of sales increased to 24.2% for the 13-week period ended September 28, 2025 compared to 22.5% for the 13-week period ended September 29, 2024. The increase in selling, general and administrative costs was due to an increase in salaries for the Company in the third quarter of 2025, compared to the third quarter of 2024. The increase is due to reduced payroll expense in 2024 from the furlough activity, reduced 2024 incentive compensation, and increased investments in 2025 related to SOX, cyber security and tariff mitigation.

Previous wording

Research and development costs for the 13-week period ended June 29, 2025 slightly increased to $5.1 million as compared to $4.3 million for the 13-week period ended June 30, 2024, primarily due to the Company's realignment of employees' roles and responsibilities from selling, general and administrative to research and development.

Current wording

Research and development costs for the 13-week period ended September 28, 2025 slightly increased to $4.7 million as compared to $4.6 million for the 13-week period ended September 29, 2024, primarily due to the Company's realignment of employees' roles and responsibilities from selling, general and administrative to research and development.

Previous wording

Amortization of intangible assets was$3.4 million for the 13-week period ended June 29, 2025 compared to$3.4 million for the 13-week period ended June 30, 2024.

Current wording

Amortization of intangible assets was$3.5 million for the 13-week period ended September 28, 2025 compared to$3.4 million for the 13-week period ended September 29, 2024.

Previous wording

Restructuring costs for the 13-week period ended June 29, 2025 increased by$0.4 million to$0.4 million, as compared to less than $0.1 million for the 13-week period ended June 30, 2024, reflecting restructuring and integration activities associated with our implementation of resource allocation efforts in support of portfolio development optimization.

Current wording

Restructuring costs for the 13-week period ended September 28, 2025 increased by$0.4 million to$1.4 million, as compared to$1.0 million for the 13-week period ended September 29, 2024, 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 29, 2025 decreased$0.4 million, or 1.3%, to$27.5 million, as compared to$27.9 million for the 13-week period ended June 30, 2024.

Current wording

As a result of factors described above, operating income for the 13-week period ended September 28, 2025 increased$10.3 million, or 185.2%, to$15.9 million, as compared to$5.6 million for the 13-week period ended September 29, 2024.

Previous wording

For the 13-week periods ended June 29, 2025 and June 30, 2024, we recognized a gain of less than $0.1 million and$3.4 million, respectively. The warrant liability reflects the fair value of the Warrants issued in connection with the Business Combination.

Current wording

For the 13-week periods ended September 28, 2025 and September 29, 2024, we recognized a loss of$3.0 millionand a gain of$1.0 million, respectively. The warrant liability reflects the fair value of the Warrants issued in connection with the Business Combination.

Previous wording

For the 13-week periods ended June 29, 2025 and June 30, 2024, we recognized a gain of$0.2 million and$1.1 million, respectively. 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 periods ended September 28, 2025 and September 29, 2024, we recognized a loss of$1.1 million and a gain of$0.6 million, respectively. 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 13-week period ended June 29, 2025 increased$0.2 million, or 1.5%, to$13.4 million, as compared to$13.2 million for the 13-week period ended June 30, 2024, reflecting the negative impact of the interest rate collar. The Company recognized interest expense of$1.4 million and interest income of$(0.1) million related to the interest rate collar for 13-week periods ended June 29, 2025 and June 30, 2024, respectively.

Current wording

Interest expense for the 13-week period ended September 28, 2025 decreased$3.8 million, or 25.0%, to$11.3 million, as compared to$15.0 million for the 13-week period ended September 29, 2024. The increase was primarily attributable to the unfavorable impact of the interest rate collar, which resulted in recognized interest expense of $1.0 million and interest income of $2.2 million related to the interest rate collar for 13-week periods ended September 28, 2025 and September 29, 2024, respectively. This increase was partially offset by lower interest expense on outstanding debt due to a decrease in our debt balance.

Previous wording

As a result of factors described above, we recognized$18.3 million and$22.0 million of income before income taxes for the 26-week periods ended June 29, 2025 and June 30, 2024, respectively.

Current wording

As a result of factors described above, we recognized$0.5 million ofincome before income taxes and$7.8 million of loss before income taxes for the 13-week periods ended September 28, 2025 and September 29, 2024, respectively.

Previous wording

Income tax expense for the 13-week period ended June 29, 2025 was$3.5 million, as compared to income tax expense of$2.1 million for the 13-week period ended June 30, 2024. Our effective tax rate for the 13-week period ended June 29, 2025 was 24.4%. The difference between the effective tax rate for the 13-week period ended June 29, 2025 and the federal statutory rate in 2025 was due to federal research and development tax credits, state taxes, the impact of foreign taxes in higher tax rate jurisdictions, and excess tax deficiencies from share-based compensation recognized during the period. The 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 was due to permanent 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.

Current wording

Income tax expense for the 13-week period ended September 28, 2025 was$1.3 million, as compared to income tax benefit of$1.5 million for the 13-week period ended September 29, 2024. Our effective tax rate for the 13-week period ended September 28, 2025 was 274.1%. The difference between the effective tax rate for the 13-week period ended September 28, 2025 and the federal statutory rate in 2025 was due to permanent differences related to changes in fair value of the warrant and earn-out liabilities recognized during the period, state taxes, and the impact of foreign taxes in higher rate jurisdictions. The 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 was due to permanent 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.

Previous wording

As a result of factors described above, we recognized net income of$13.7 million and$20.8 million for the 26-week periods ended June 29, 2025 and June 30, 2024, respectively. Additionally, we recognized total comprehensive income of$14.6 million for the 26-week period ended June 29, 2025, as compared to total comprehensive income of$20.7 million for the 26-week period ended June 30, 2024. Comprehensive income includes the effect of foreign currency translation adjustments.

Current wording

As a result of factors described above, we recognized net loss of$0.8 million and net loss of$6.3 million for the 13-week periods ended September 28, 2025 and September 29, 2024, respectively. Additionally, we recognized total comprehensive loss of$0.4 million for the 13-week period ended September 28, 2025, as compared to total comprehensive loss of$5.9 million for the 13-week period ended September 29, 2024. Comprehensive loss 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 29, 2025 and June 30, 2024 (dollars in thousands):

Current wording

The table below presents Holley’s results of operations for the 39-week periods ended September 28, 2025 and September 29, 2024 (dollars in thousands):

Previous wording

Net sales for the 13-week period ended June 29, 2025 decreased $2.8 million, or 1.7%, to $166.7 million, as compared to $169.5 million for the 13-week period ended June 30, 2024. Lower sales volume resulted in a decrease of approximately $4.2 million, offset partially by improved price realization of approximately $1.4 million compared to the prior year period.

Current wording

Net sales for the 39-week period ended September 28, 2025 decreased $4.1 million, or 0.9%, to $458.1 million, as compared to $462.2 million for the 39-week period ended September 29, 2024. Lower sales volume resulted in a decrease of approximately $12.5 million, offset partially by improved price realization of approximately $8.4 million compared to the prior year period.

Previous wording

The table below presents our net sales for the 13-week periods ended June 29, 2025 and June 30, 2024, as well as sales related to divestitures and sales part of our strategic product rationalization project. The divestitures sales relate to divested businesses prior to the divestiture date. The divestitures include Detroit Speed Engineering, Gear FX, and Proforged. The strategic product rationalization sales related to a 2024 initiative to discontinued stock keeping units ("SKUs").

Current wording

The table below presents our net sales for the 39-week periods ended September 28, 2025 and September 29, 2024, as well as sales related to divestitures and sales part of our strategic product rationalization project. The divestitures sales relate to divested businesses prior to the divestiture date. The divestitures include Detroit Speed Engineering, Gear FX, and Proforged. The strategic product rationalization sales related to a 2024 initiative to discontinued stock keeping units ("SKUs").

Previous wording

Cost of goods sold for the 26-week period ended June 29, 2025 decreased$19.7 million, or 9.6%, to$186.1 million, as compared to$205.8 million for the 26-week period ended June 30, 2024. The decrease in cost of goods sold in 2025, a period in which product sales decreased 2.6%, was due to the $9.1 million of product rationalization initiative in 2024. The initiative focused on eliminating unprofitable or slow-moving SKUs. Lower freight costs also contributed to the decrease.

Current wording

Cost of goods sold for the 39-week period ended September 28, 2025 decreased$22.9 million, or 8.0%, to$264.6 million, as compared to$287.5 million for the 39-week period ended September 29, 2024. The decrease in cost of goods sold in 2025, a period in which product sales decreased 0.9%, was primarily due to the $9.1 million of product rationalization initiative in 2024. The initiative focused on eliminating unprofitable or slow-moving SKUs. Lower freight costs also contributed to the decrease.

Previous wording

Gross profit for the 26-week period ended June 29, 2025 increased$11.3 million, or 9.2%, to$133.6 million, as compared to$122.4 million for the 26-week period ended June 30, 2024. Gross margin for the 26-week period ended June 29, 2025 was 41.8% as compared to a gross margin of 37.3% for the 26-week period ended June 30, 2024. Gross profit margin increased primarily due to inventory charges in 2024, driven by the product rationalization initiative. The increase was also due to improvements in freight costs.

Current wording

Gross profit for the 39-week period ended September 28, 2025 increased$18.8 million, or 10.8%, to$193.5 million, as compared to$174.7 million for the 39-week period ended September 29, 2024. Gross margin for the 39-week period ended September 28, 2025 was 42.2% as compared to a gross margin of 37.8% for the 39-week period ended September 29, 2024. Gross profit margin increased primarily due to inventory charges in 2024, driven by the product rationalization initiative. The increase was also due to sales and improvements in freight costs.

Previous wording

Selling, general and administrative costs for the 13-week period ended June 29, 2025 decreased$1.6 million, or 4.7%, to$33.0 million, as compared to$34.6 million for the 13-week period ended June 30, 2024. Selling, general and administrative costs expressed as a percentage of sales decreased to 19.8% for the 13-week period ended June 29, 2025 compared to 20.4% for the 13-week period ended June 30, 2024. The decrease in selling, general and administrative costs was due to the Company's realignment of employees' roles and responsibilities from selling, general and administrative to research and development. Overall, salaries increased for the Company in the second quarter of 2025, compared to the second quarter of 2024. The increase is due to the furlough that occurred during 2024. The increase was offset by a decrease in transformative consulting fees.

Current wording

Selling, general and administrative costs for the 39-week period ended September 28, 2025 increased$5.4 million, or 5.6%, to$103.1 million, as compared to$97.7 million for the 39-week period ended September 29, 2024. Selling, general and administrative costs expressed as a percentage of sales increased to 22.5% for the 39-week period ended September 28, 2025 compared to 21.1% for the 39-week period ended September 29, 2024. The increase in selling, general and administrative costs was driven by an increase in legal fees of $1.1 million, which was related to legal settlement costs. Overall, salaries increased for the Company in 2025, compared to 2024. The increase is due to the furlough that occurred during 2024. The increase was offset by a decrease in transformative consulting fees.

Previous wording

Research and development costs for the 26-week period ended June 29, 2025 slightly increased to $9.2 million as compared to $9.1 million for the 26-week period ended June 30, 2024, primarily due to the Company's realignment of employees' roles and responsibilities from selling, general and administrative to research and development.

Current wording

Research and development costs for the 39-week period ended September 28, 2025 slightly increased to $13.9 million as compared to $13.7 million for the 39-week period ended September 29, 2024, primarily 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 29, 2025 increased by$0.2 million to$0.8 million, as compared to$0.6 million for the 26-week period ended June 30, 2024, reflecting restructuring and integration activities associated with our implementation of resource allocation efforts in support of portfolio development optimization.

Current wording

Restructuring costs for the 39-week period ended September 28, 2025 increased by$0.6 million to$2.2 million, as compared to$1.6 million for the 39-week period ended September 29, 2024, 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 26-week period ended June 29, 2025 increased$8.8 million, or 23.0%, to$46.9 million, as compared to$38.1 million for the 26-week period ended June 30, 2024.

Current wording

As a result of factors described above, operating income for the 39-week period ended September 28, 2025 increased$19.1 million, or 43.7%, to$62.7 million, as compared to$43.6 million for the 39-week period ended September 29, 2024.

Previous wording

For the 26-week periods ended June 29, 2025 and June 30, 2024, we recognized a gain of$0.1 million and$6.5 million, respectively. The warrant liability reflects the fair value of the Warrants issued in connection with the Business Combination.

Current wording

For the 39-week periods ended September 28, 2025 and September 29, 2024, we recognized a loss of$2.9 million and a gain of$7.6 million, respectively. The warrant liability reflects the fair value of the Warrants issued in connection with the Business Combination.

Previous wording

For the 26-week periods ended June 29, 2025 and June 30, 2024, we recognized a gain of$0.4 million and$1.7 million, respectively. 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 periods ended September 28, 2025 and September 29, 2024, we recognized a loss of$0.7 million and a gain of$2.3 million, respectively. 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 29, 2025 increased$4.9 million, or 20.3%, to$29.1 million, as compared to$24.2 million for the 26-week period ended June 30, 2024, reflecting the negative impact of the interest rate collar. The Company recognized interest expense of$5.2 million and interest income of$2.4 million related to the interest rate collar for 26-week periods ended June 29, 2025 and June 30, 2024, respectively.

Current wording

Interest expense for the 39-week period ended September 28, 2025 increased$1.1 million, or 2.9%, to$40.3 million, as compared to $39.2 million for the 39-week period ended September 29, 2024. The increase was primarily attributable to the unfavorable impact of the interest rate collar, which resulted in recognized interest expense of $4.3 million and interest income of $0.2 million related to the interest rate collar for 39-week periods ended September 28, 2025 and September 29, 2024, respectively. This increase was partially offset by lower interest expense on outstanding debt due to a decrease in our debt balance.

Previous wording

As a result of factors described above, we recognized$14.4 million and$19.2 million of income before income taxes for the 13-week periods ended June 29, 2025 and June 30, 2024, respectively.

Current wording

As a result of factors described above, we recognized$18.7 million and$14.2 million of income before income taxes for the 39-week periods ended September 28, 2025 and September 29, 2024, respectively.

Previous wording

Income tax expense for the 26-week period ended June 29, 2025 was$4.6 million, as compared to income tax expense of$1.2 million for the 26-week period ended June 30, 2024. Our effective tax rate for the 26-week period ended June 29, 2025 was 25.1%. The difference between the effective tax rate for the 26-week period ended June 29, 2025 and the federal statutory rate in 2025 was due to federal research and development tax credits, state taxes, the impact of foreign taxes in higher tax rate jurisdictions, and excess tax deficiencies from share-based compensation recognized during the period. The effective tax rate for the 26 week period ended June 30, 2024 was 5.3%. The difference between the effective tax rate and the federal statutory rate in 2024 was due to permanent 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.

Current wording

Income tax expense for the 39-week period ended September 28, 2025 was$5.8 million, as compared to income tax benefit of$0.3 million for the 39-week period ended September 29, 2024. Our effective tax rate for the 39-week period ended September 28, 2025 was 31.2%. The difference between the effective tax rate for the 39-week period ended September 28, 2025 and the federal statutory rate in 2025 was due to permanent differences related to changes in fair value of the warrant and earn-out liabilities recognized during the period, state taxes, the impact of foreign taxes in higher tax rate jurisdictions, and excess tax deficiencies from share-based compensation recognized during the period. The effective tax rate for the 39 week period ended September 29, 2024 was (2.2)%. The difference between the effective tax rate and the federal statutory rate in 2024 was due to permanent 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.

Previous wording

As a result of factors described above, we recognized net income of$10.9 million and$17.1 million for the 13-week periods ended June 29, 2025 and June 30, 2024, respectively. Additionally, we recognized total comprehensive income of$12.1 million for the 13-week period ended June 29, 2025, as compared to total comprehensive income of$17.1 million for the 13-week period ended June 30, 2024. Comprehensive income includes the effect of foreign currency translation adjustments.

Current wording

As a result of factors described above, we recognized net income of$12.9 million and$14.5 million for the 39-week periods ended September 28, 2025 and September 29, 2024, respectively. Additionally, we recognized total comprehensive income of$14.2 million for the 39-week period ended September 28, 2025, as compared to total comprehensive income of$14.8 million for the 39-week period ended September 29, 2024. Comprehensive income includes the effect of foreign currency translation adjustments.

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 29, 2025 and June 30, 2024 (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 28, 2025 and September 29, 2024 (dollars in thousands):

Previous wording

Adjusted EBITDA for 2024 includes the impact of a $9.1 million, non-cash charge related to a previously announced strategic product rationalization. For 2024, Adjusted EBITDA includes $2.8 million benefit also related to the strategic product rationalization, netting to $6.3 million non-cash charge.

Current wording

Adjusted EBITDA for 2024 includes the impact of a $9.1 million, non-cash charge related to a previously announced strategic product rationalization. For 2024, Adjusted EBITDA includes $2.0 million benefit also related to the strategic product rationalization, netting to $7.1 million non-cash charge.

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 29, 2025 and June 30, 2024 (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 28, 2025 and September 29, 2024 (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 29, 2025 and June 30, 2024 (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 28, 2025 and September 29, 2024 (dollars in thousands):

Previous wording

As of June 29, 2025, the Company had cash of $63.8 million and availability of $97.4 million under its revolving credit facility. The Company has a senior secured revolving credit facility with $100.0 million in borrowing capacity. As of June 29, 2025, the Company had $2.5 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 $45.0 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. The Company successfully exited the Covenant Relief Period.

Current wording

As of September 28, 2025, the Company had cash of $50.7 million and availability of $97.5 million under its $100.0 million senior secured revolving credit facility. As of September 28, 2025, the Company had $2.5 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 $45.0 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. 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 $3.8 million, including short term leases, due during the remainder of fiscal year 2025. 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 $1.9 million, including short term leases, due during the remainder of fiscal year 2025. 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 29, 2025, based on the then current weighted average interest rate of 8.2%, expected interest payments associated with outstanding debt totaled approximately $22.8 million for the remainder of fiscal year 2025.

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 28, 2025, based on the then current weighted average interest rate of 8.2%, expected interest payments associated with outstanding debt totaled approximately $11.6 million for the remainder of fiscal year 2025.

Previous wording

Operating Activities. Net cash provided by operating activities for the 26-week period ended June 29, 2025 was $32.6 million compared to net cash provided by operating activities of $44.5 million for the 26-week period ended June 30, 2024. Significant changes in the year-over-year change in working capital activity included negative fluctuations in accounts receivable and accrued and other liabilities of $14.9 million and $2.9 million, respectively. Partially offsetting the decrease was a positive fluctuation from inventories of $9.2 million.

Current wording

Operating Activities. Net cash provided by operating activities for the 39-week period ended September 28, 2025 was $40.1 million compared to net cash provided by operating activities of $42.8 million for the 39-week period ended September 29, 2024. Significant changes in the year-over-year change in working capital activity included negative fluctuations in accounts receivable, inventories, and accrued and other liabilities of $13.6 million, $3.0 million and $1.3 million, respectively. Partially offsetting the decrease were positive fluctuations from prepaids and other assets, accounts payable and accrued interest of $8.1 million,$6.4 million and$4.3 million, respectively.