Holley Inc.

Previous wording

Our business and results of operations, financial condition, and liquidity are impacted by broad economic conditions including inflation, labor shortages, disruption of the supply chain, and potential tariffs, as well as by geopolitical events, including military conflicts (including the conflict in Ukraine, the conflict in the Middle East, and the possible expansion of such conflicts). Our operations have been adversely impacted, and may continue to be adversely impacted, by inflationary pressures primarily related to transportation, labor and component costs. In response to the global supply chain volatility and inflationary impacts, we have attempted to minimize potential adverse impacts on our business with cost savings initiatives, price increases to customers, and by increasing inventory levels of certain products and working closely with our suppliers and customers to minimize disruptions in delivering products to customers. Our profitability has been, and may continue to be, adversely affected by constrained consumer demand, a shift in sales mix to lower-margin products, which is offset by our cost cutting and operating efficiency gains. Should the ongoing macroeconomic conditions not improve, or worsen, or if our attempts to mitigate the impact on our supply chain, operations and costs is not successful, our business, results of operations and financial condition may be adversely affected.

Current wording

Our business and results of operations, financial condition, and liquidity are impacted by broad economic conditions including inflation, labor shortages, disruption of the supply chain, and tariffs, as well as by geopolitical events, including military conflicts (including the conflict in Ukraine, the conflict in the Middle East, and the possible expansion of such conflicts). Our operations have been adversely impacted, and may continue to be adversely impacted, by inflationary pressures primarily related to transportation, labor and component costs. In response to the global supply chain volatility and inflationary impacts, we have attempted to minimize potential adverse impacts on our business with cost savings initiatives, price increases to customers, and by increasing inventory levels of certain products and working closely with our suppliers and customers to minimize disruptions in delivering products to customers. Our profitability has been, and may continue to be, adversely affected by constrained consumer demand and a shift in sales mix to lower-margin products, which is offset by our cost cutting and operating efficiency gains. Should the ongoing macroeconomic conditions not improve, or worsen, or if our attempts to mitigate the impact on our supply chain, operations and costs is not successful, our business, results of operations and financial condition may be adversely affected.

Previous wording

In February 2025, the United States government began to impose new tariffs on imports from certain countries and regions, including China, Canada, Mexico, and the European Union. In response, some foreign governments implemented retaliatory measures. These developments introduced new complexities to global supply chains. However, we believe Holley's business model and sourcing strategies have positioned us to manage these challenges effectively.

Current wording

The United States government has increased tariffs on certain goods imported from certain countries and regions, including China, Canada, Mexico, and the European Union. In response, some foreign governments implemented retaliatory measures. These developments introduced new complexities to global supply chains. As discussed in our quarterly report on Form 10-Q for the quarter ended March 29, 2026, we believe Holley's business model and sourcing strategies have positioned us to manage these challenges effectively and we have proactively developed and implemented plans to mitigate their impact.

Previous wording

On February 20, 2026, the U.S. Supreme Court issued a ruling striking down certain tariffs previously imposed under the International Emergency Economic Powers Act (“IEEPA”). The ultimate availability, timing, and amount of any potential refunds of such tariffs remain highly uncertain and are subject to further legal, regulatory, and administrative developments. Accordingly, as of March 29, 2026, the Company has not recorded any benefit related to potential refunds of IEEPA tariffs paid. Following the Supreme Court’s decision, the U.S. Administration announced its intention to invoke other laws to collect tariffs and announced new tariffs on imports from all countries, in addition to any existing non-IEEPA tariffs. There remains substantial uncertainty regarding the duration of existing and newly announced tariffs, potential changes or pauses to such tariffs, tariff levels, and whether further additional tariffs may be imposed, modified, or suspended, and the impacts of such actions on our business. There also remains substantial uncertainty regarding how countries with which the U.S. has negotiated or is in the process of negotiating tariff trade deals will respond to any further tariff actions by the U.S. Administration. We continue to monitor and evaluate these developments in order to analyze their impact on our business and identify possible actions to minimize adverse effects. The extent and duration of these tariffs, as well as their broader impact on macroeconomic conditions and our business, remain uncertain and will depend on a variety of factors outside of our control. Nevertheless, we remain committed to optimizing our operations, managing costs and leveraging our diversified supply chain to minimize the impact of tariffs on our results of operations and financial condition.

Current wording

On February 20, 2026, the U.S. Supreme Court issued a ruling striking down certain tariffs previously imposed under the International Emergency Economic Powers Act (“IEEPA”). During the 26-week period ended June 28, 2026, we received approximately $11,057 as a refund on such tariffs, of which $1,719 was recorded as a reduction of inventory, $8,863 was recorded as other income and $475 was recorded as interest income. We continue to monitor and evaluate these developments in order to analyze their impact on our business and identify possible actions to minimize adverse effects. The ultimate availability, timing and amount of any other potential refunds on such tariffs, and the extent and duration of these tariffs, as well as their broader impact on macroeconomic conditions and our business, remain uncertain and will depend on a variety of factors outside of our control. Nevertheless, we remain committed to optimizing our operations, managing costs and leveraging our diversified supply chain to minimize the impact of tariffs on our results of operations and financial condition.

Previous wording

As part of our strategic plan, we have launched a portfolio optimization initiative through which we expect to exit non-core, low profit businesses while reinvesting in targeted mergers and acquisitions that align with our strategic priorities. The first divestiture under this initiative, the sale of our Arizona Desert Shocks ("ADS") business, was completed on April 18, 2026, and we continue to evaluate additional divestiture and acquisition opportunities that meet our strategic and financial criteria. See Note 18, "Subsequent Events" in the Notes to the condensed consolidated financial statements included in this Quarterly Report for more details.

Current wording

As part of our strategic plan, we have launched a portfolio rebalance initiative through which we expect to exit non-core, low profit businesses while reinvesting in targeted mergers and acquisitions that align with our strategic priorities. During the 26-week period ended June 28, 2026, we sold three brands, ADS, Speartech, and Drake Brands, comprised of Drake Classic, Scott Drake, Drake Muscle Cars, Drake Automotive Group, Drake Auto Group, and Brothers Trucks brands. We continue to evaluate additional divestiture and acquisition opportunities that meet our strategic and financial criteria. See Note 2, "Acquisition and Divestitures" in the Notes to the condensed consolidated financial statements included in this Quarterly Report for more details.

Previous wording

Selling, general, and administrative costs consist of payroll and related personnel expenses, IT and office services, office rent expense and professional services. In addition, self-insurance, advertising, research and development, outgoing shipping costs, pre-production and start-up costs are also included within selling, general, and administrative. We have incurred additional expenses as a result of operating as a public company, including expenses necessary to comply with the rules and regulations applicable to companies listed on a national securities exchange and related to compliance and reporting obligations pursuant to the rules and regulations of the SEC, as well as higher expenses for general and director and officer insurance, investor relations and other professional services.

Current wording

Selling, general, and administrative costs consist of payroll and related personnel expenses, IT and office services, office rent expense and professional services. In addition, self-insurance, advertising, outgoing shipping costs, pre-production and start-up costs are also included within selling, general, and administrative. We have incurred additional expenses as a result of operating as a public company, including expenses necessary to comply with the rules and regulations applicable to companies listed on a national securities exchange and related to compliance and reporting obligations pursuant to the rules and regulations of the SEC, as well as higher expenses for general and director and officer insurance, investor relations and other professional services.

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 March 29, 2026, $529.4 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 June 28, 2026, $527.7 million was outstanding under our Credit Agreement.

Previous wording

Selling, general and administrative costs for the 13-week period ended March 29, 2026 decreased$1.3 million, or 3.5%, to$35.4 million, as compared to$36.7 million for the 13-week period ended March 30, 2025. Selling, general and administrative costs expressed as a percentage of sales remained the same at 24.0% for the 13-week period ended March 29, 2026 compared to 24.0% for the 13-week period ended March 30, 2025. The decrease in selling, general and administrative costs was due to greater efficiency on legal and marketing spend combined with lower outbound freight costs on reduced sales volume.

Current wording

Selling, general and administrative costs for the 13-week period ended June 28, 2026 increased$7.4 million, or 22.7%, to$40.4 million, as compared to$33.0 million for the 13-week period ended June 29, 2025. Selling, general and administrative costs expressed as a percentage of sales increased to 23.5% for the 13-week period ended June 28, 2026 compared to 19.8% for the 13-week period ended June 29, 2025. The increase in selling, general and administrative costs was due to increased legal fees related to the securities class action and increased insurance expenses, salaries and wages, and consulting fees related to our ongoing portfolio rebalancing initiative.

Previous wording

Research and development costs for the 13-week period ended March 29, 2026 slightly decreased to $4.0 million as compared to $4.1 million for the 13-week period ended March 30, 2025, primarily due to a decrease in salaries.

Current wording

Research and development costs for the 13-week period ended June 28, 2026 decreased to $3.7 million as compared to $5.1 million for the 13-week period ended June 29, 2025, primarily due to a decrease in salaries and consulting fees.

Previous wording

Restructuring costs for the 13-week period ended March 29, 2026 increased by $0.4 million to $0.9 million, as compared to $0.5 million for the 13-week period ended March 30, 2025, 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 June 28, 2026 increased by $0.4 million to $0.8 million, as compared to $0.4 million for the 13-week period ended June 29, 2025, reflecting restructuring and integration activities associated with our implementation of resource allocation efforts in support of our portfolio rebalance initiative.

Previous wording

As a result of factors described above, operating income for the 13-week period ended March 29, 2026 decreased$1.8 million, or 9.5%, to$17.5 million, as compared to$19.3 million for the 13-week period ended March 30, 2025.

Current wording

As a result of factors described above, operating income for the 13-week period ended June 28, 2026 decreased$24.7 million, or 89.9%, to$2.8 million, as compared to$27.5 million for the 13-week period ended June 29, 2025.

Previous wording

For the 13-week periods ended March 29, 2026 and March 30, 2025, we recognized a gain of$1.0 millionand a gain of$0.1 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 June 28, 2026 and June 29, 2025, we recognized a gain of$0.5 millionand a gain of less than $0.1 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 March 29, 2026 and March 30, 2025, we recognized a gain of$0.5 million and a gain of$0.2 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 June 28, 2026 and June 29, 2025, we recognized a gain of$1.3 million and a gain of$0.2 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 March 29, 2026 decreased$5.8 million, or 36.9%, to$9.9 million, as compared to$15.7 million for the 13-week period ended March 30, 2025. The decrease was primarily attributable to changes in the fair value of the interest rate collar, which decreased interest expense by $1.0 million during the 13-week period ended March 29, 2026, compared to an increase to interest expense of $3.8 million the 13-week period ended March 30, 2025. Additionally, the interest expense decrease resulted from a decrease in our outstanding debt balance.

Current wording

Interest expense for the 13-week period ended June 28, 2026 decreased$5.2 million, or 38.7%, to$8.2 million, as compared to$13.4 million for the 13-week period ended June 29, 2025. The decrease was primarily attributable to changes in the fair value of the interest rate collar, which decreased interest expense by $1.9 million during the 13-week period ended June 28, 2026, compared to an increase to interest expense of $1.4 million the 13-week period ended June 29, 2025. Additionally, the interest expense decrease resulted from a decrease in our outstanding debt balance.

Previous wording

As a result of factors described above, we recognized$9.1 million ofincome before income taxes and$3.9 million of income before income taxes for the 13-week periods ended March 29, 2026 and March 30, 2025, respectively.

Current wording

As a result of factors described above, we recognized$3.6 million ofloss before income taxes and$14.4 million of income before income taxes for the 13-week periods ended June 28, 2026 and June 29, 2025, respectively.

Previous wording

Income tax expense for the 13-week period ended March 29, 2026 was $1.9 million, as compared to income tax expense of $1.1 million for the 13-week period ended March 30, 2025. Our effective tax rate for the 13-week period ended March 29, 2026 was 20.6%. The difference between the effective tax rate for the 13-week period ended March 29, 2026 and the federal statutory rate in 2026 was due to permanent differences related to changes in fair value of warrant and earn-out liabilities recognized during the period, the benefit from the foreign derived intangible income (FDII) deduction, federal research and development tax credits, state taxes, and the impact of foreign taxes in higher tax rate jurisdictions. The effective tax rate for the 13-week period ended March 30, 2025 was 27.6%. The difference between the effective tax rate for the 13-week period ended March 30, 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.

Current wording

Income tax benefit for the 13-week period ended June 28, 2026 was $1.2 million, as compared to income tax expense of $3.5 million for the 13-week period ended June 29, 2025. Our effective tax rate for the 13-week period ended June 28, 2026 was 33.1%. The difference between the effective tax rate for the 13-week period ended June 28, 2026 and the federal statutory rate in 2026 was due to permanent differences related to changes in fair value of warrant and earn-out liabilities recognized during the period, the benefit from the foreign derived intangible income (FDII) deduction, federal research and development tax credits, state taxes, and the impact of foreign taxes in higher tax rate jurisdictions. The 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, the impact of foreign taxes in higher rate jurisdictions, and excess tax deficiencies from share based compensation recognized during the period.

Previous wording

Net Income and Total Comprehensive Loss

Current wording

Net Income (Loss) and Total Comprehensive (Loss) Income

Previous wording

As a result of factors described above, we recognized net income of $7.3 million and net income of$2.8 million for the 13-week periods ended March 29, 2026 and March 30, 2025, respectively. Additionally, we recognized total comprehensive income of $6.3 million for the 13-week period ended March 29, 2026, as compared to total comprehensive income of $2.5 million for the 13-week period ended March 30, 2025. Comprehensive income includes the effect of foreign currency translation adjustments.

Current wording

As a result of factors described above, we recognized net loss of $2.4 million and net income of$10.9 million for the 13-week periods ended June 28, 2026 and June 29, 2025, respectively. Additionally, we recognized total comprehensive loss of $4.3 million for the 13-week period ended June 28, 2026, as compared to total comprehensive income of $12.1 million for the 13-week period ended June 29, 2025. Comprehensive income and loss includes the effect of foreign currency translation adjustments.

Previous wording

Net sales for the 13-week period ended March 29, 2026 decreased $5.7 million, or 3.7%, to $147.3 million, as compared to $153.0 million for the 13-week period ended March 30, 2025. Lower sales volume resulted in a decrease of approximately $14.2 million, offset partially by improved price realization of approximately $8.1 million compared to the prior year period.

Current wording

Net sales for the 26-week period ended June 28, 2026 decreased $0.4 million, or 0.1%, to $319.3 million, as compared to $319.7 million for the 26-week period ended June 29, 2025. Lower sales volume resulted in a decrease of approximately $18.6 million, offset partially by HRX acquisition net sales and improved price realization totalling approximately $18.2 million compared to the prior year period.

Previous wording

Cost of goods sold for the 13-week period ended March 29, 2026 decreased $2.4 million, or 2.7%, to$86.6 million, as compared to$89.0 million for the 13-week period ended March 30, 2025. The decrease in cost of goods sold in the first quarter of 2026, a period in which product sales decreased 3.7%, was due to lower sales volume and improved operational initiatives across facility efficiencies.

Current wording

Cost of goods sold for the 26-week period ended June 28, 2026 increased$2.0 million, or 1.1%, to$188.1 million, as compared to$186.1 million for the 26-week period ended June 29, 2025. The increase in cost of goods sold in 2026, a period in which product sales decreased 0.1%, was primarily due to additional costs associated with the recent HRX acquisition and a one-time adjustment related to the prior-year capitalization of tariff costs.

Previous wording

Gross profit for the 13-week period ended March 29, 2026 decreased$3.4 million, or 5.2%, to$60.7 million, as compared to$64.1 million for the 13-week period ended March 30, 2025. Gross margin for the 13-week period ended March 29, 2026 was 41.2% as compared to a gross margin of 41.9% for the 13-week period ended March 30, 2025. Gross profit margin decreased slightly due to fixed cost deleverage on lower new sales volume partially offset by improvements in operating efficiency.

Current wording

Gross profit for the 26-week period ended June 28, 2026 decreased$2.3 million, or 1.8%, to$131.3 million, as compared to$133.6 million for the 26-week period ended June 29, 2025. Gross margin for the 26-week period ended June 28, 2026 was 41.1% as compared to a gross margin of 41.8% for the 26-week period ended June 29, 2025. Gross profit margin decreased slightly due to fixed cost deleverage on lower new sales volume, partially offset by pricing actions and improvements in operating efficiency.

Previous wording

Change in Fair Value of Warrant Liability

Current wording

Change in Fair Value of Earn-Out Liability

Previous wording

We define EBITDA as earnings before depreciation, amortization of intangible assets, interest expense, and income tax expense. We define Adjusted EBITDA as EBITDA adjusted to exclude, to the extent applicable, acquisition and restructuring costs, which includes operational restructuring and integration activities, termination related benefits, facilities relocation, and executive transition costs; changes in the fair value of the warrant liability; changes in the fair value of the earn-out liability; equity-based compensation expense; notable items that we do not believe are reflective of our underlying operating performance, including litigation settlements, transformative consulting fees and certain costs incurred for advisory services related to identifying performance initiatives; and other expenses or gains, which includes gains or losses from disposal of fixed assets, franchise taxes, and gains or losses from foreign currency transactions. We define Adjusted EBITDA Margin as Adjusted EBITDA divided by net sales.

Current wording

We define EBITDA as earnings before depreciation, amortization of intangible assets, interest expense, and income tax expense. We define Adjusted EBITDA as EBITDA adjusted to exclude, to the extent applicable, acquisition and restructuring costs, which includes operational restructuring and integration activities, termination related benefits, facilities relocation, and executive transition costs; changes in the fair value of the warrant liability; changes in the fair value of the earn-out liability; equity-based compensation expense; notable items that we do not believe are reflective of our underlying operating performance, including litigation settlements, transformative consulting fees and certain costs incurred for advisory services related to identifying performance initiatives; and other expenses or gains, which includes gains or losses from disposal of fixed assets, franchise taxes, and gains or losses from foreign currency transactions. In addition, beginning with the quarter ended June 28, 2026, the Company has excluded from Adjusted EBITDA any tariff refund income received in the quarter, as the refunds are non-recurring in nature for tariff costs incurred in the past and are not reflective of the Company's ongoing performance, such refunds are included in other operating income. We define Adjusted EBITDA Margin as Adjusted EBITDA divided by net sales.

Previous wording

The following unaudited table presents the reconciliation of net income, the most directly comparable GAAP measure, to EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin for the 13-week periods ended March 29, 2026 and March 30, 2025 (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 26-week periods ended June 28, 2026 and June 29, 2025 (dollars in thousands):

Previous wording

We define Adjusted Net Income as earnings excluding the after-tax effect of changes in the fair value of the warrant liability, changes in the fair value of the earn-out liability, impairment of goodwill and indefinite-lived intangible assets, loss on sale of assets, and gain or loss on the early extinguishment of debt. We define Adjusted Diluted EPS as Adjusted Net Income on a per share basis. Management uses these measures to focus on on-going operations and believes that it is useful to investors because it enables them to perform meaningful comparisons of past and present consolidated operating results. We believe that using this information, along with net income and net income per diluted share, provides for a more complete analysis of the results of operations.

Current wording

We define Adjusted Net Income as earnings excluding the effect of changes in the fair value of the warrant liability, changes in the fair value of the earn-out liability, impairment of goodwill and indefinite-lived intangible assets, loss on sale of assets, and gain or loss on the early extinguishment of debt. We define Adjusted Diluted EPS as Adjusted Net Income on a per share basis. Management uses these measures to focus on on-going operations and believes that it is useful to investors because it enables them to perform meaningful comparisons of past and present consolidated operating results. We believe that using this information, along with net income and net income per diluted share, provides for a more complete analysis of the results of operations.

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 periods ended March 29, 2026 and March 30, 2025 (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 26-week periods ended June 28, 2026 and June 29, 2025 (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 periods ended March 29, 2026 and March 30, 2025 (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 26-week periods ended June 28, 2026 and June 29, 2025 (dollars in thousands):

Previous wording

On March 29, 2026, the Company had cash of $33.1 million and availability of $87.5 million under its $100.0 million senior secured revolving credit facility. As of March 29, 2026, the Company had $2.5 million in letters of credit and $10.0 million in borrowings outstanding under the revolving credit facility.

Current wording

On June 28, 2026, the Company had cash of $69.0 million and availability of $97.5 million under its $100.0 million senior secured revolving credit facility. As of June 28, 2026, the Company had $2.5 million in letters of credit outstanding under the revolving credit facility. On July 13, 2026, the Company repaid $15.0 million on the outstanding principal of its first lien term loan facility.

Previous wording

On March 18, 2026, the Company acquired HRX S.r.l., an Italian motorsports racewear brand, for a purchase price funded through a combination of borrowings under the Company's revolving credit facility and cash on hand. The acquisition impacted the Company's liquidity position as reflected in the March 29, 2026 cash and revolver balances noted above. The Company believes its existing cash balances, together with availability under its revolving credit facility, will be sufficient to fund its operating requirements, capital expenditures, and debt service obligations for the foreseeable future. See Note 2, "Acquisition" 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 acquisition of HRX.

Current wording

On March 18, 2026, the Company acquired HRX S.r.l., an Italian motorsports racewear brand, for a purchase price funded through a combination of borrowings under the Company's revolving credit facility and cash on hand. The acquisition impacted the Company's liquidity position as reflected in the June 28, 2026 cash and revolver balances noted above. The Company believes its existing cash balances, together with availability under its revolving credit facility, will be sufficient to fund its operating requirements, capital expenditures, and debt service obligations for the foreseeable future. See Note 2, "Acquisition and Divestitures" 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 acquisition of HRX.

Previous wording

The Company is obligated under various operating leases for facilities, equipment and automobiles with estimated lease payments of approximately $6.8 million, including short term leases, due during the remainder of fiscal year 2026. See Note 15, "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 $4.6 million, including short term leases, due during the remainder of fiscal year 2026. See Note 16, "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 7, "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 March 29,

Current wording

See Note 7, "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 28, 2026, based on the then current weighted average interest rate of 7.5%, expected interest payments associated with outstanding debt totaled approximately $20.4 million for the remainder of fiscal year 2026.

Previous wording

Operating Activities. Net cash used in operating activities for the 13-week period ended March 29, 2026 was $2.9 million compared to net cash used in operating activities of $7.9 million for the 13-week period ended March 30, 2025. Cash used in operating activities included, but not limited to, negative fluctuations in prepaids and other assets, accounts payable, and inventories of $13.4 million, $4.1 million, and $4.0 million, respectively. Partially offsetting the decrease were positive fluctuations from accounts receivable, accrued and other liabilities, and accrued interest of $14.8 million, $9.2 million, and $3.8 million, respectively.

Current wording

Operating Activities. Net cash provided by operating activities for the 26-week period ended June 28, 2026 was $44.3 million compared to net cash provided by operating activities of $32.6 million for the 26-week period ended June 29, 2025. Cash provided by operating activities included, but not limited to, positive fluctuations from accounts receivable, inventory, accrued and other liabilities, and accrued interest of $12.1 million, $4.8 million, $2.5 million, and $3.3 million, respectively. Partially offsetting the increase were negative fluctuations in prepaids and other assets and accounts payable of $16.0 million and $5.6 million, respectively.

Previous wording

Investing Activities. Net cash used in investing activities for the 13-week periods ended March 29, 2026 and March 30, 2025 was $9.8 million and $7.7 million, respectively, due to the cash payments related to the HRX acquisition in March 2026 and the acquisition of the perpetual license agreement with Cataclean in January 2025.

Current wording

Investing Activities. Net cash used in investing activities for the 26-week periods ended June 28, 2026 and June 29, 2025 was$6.0 million and$20.9 million, respectively, primarily due to the cash payments related to the HRX acquisition in March 2026, the acquisition of the perpetual license agreement with Cataclean in January 2025, and other capital expenditures.

Previous wording

Financing Activities. Net cash provided by financing activities for the 13-week periods ended March 29, 2026 was $9.0 million, which primarily reflects borrowings under revolving credit agreement and deferred financing fees. The borrowings under revolving credit agreement during the 13-week periods ended March 29, 2026 totaled $10.0 million. Cash used in financing activities for the 13-week period ended March 30, 2025 was $2.4 million, which primarily reflects prepayments of principal of $1.8 million on the first lien term loan.

Current wording

Financing Activities. Net cash used in financing activities for the 26-week periods ended June 28, 2026 was $6.1 million, which primarily reflects$1.6 million of principal payments on long-term debt,$2.5 million ofstock-based award activities and$2.0 million of treasury stock purchases. Cash used in financing activities for the 26-week period ended June 29, 2025 was $4.5 million, which primarily reflects prepayments of principal of $3.6 million on the first lien term loan.