Savers Value Village, Inc.

Note 1. Description of Business and Basis of Presentation

Description of business

Savers Value Village, Inc., a Washington State based company, together with its wholly owned subsidiaries (the “Company”, “we”, “us” or “our”), sells secondhand merchandise primarily in retail stores located in the United States (“U.S.”), Canada and Australia. Items that are unsuited for or unsold at retail stores are marketed to wholesale customers.

Basis of presentation

The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions are eliminated in consolidation. These consolidated financial statements present the results of operations, financial position and cash flows of the Company in accordance with U.S. generally accepted accounting principles (“GAAP”).

The Company reports on a fiscal year basis, which ends on the Saturday nearest December 31. Our last three fiscal years consisted of the 53 weeks ended January 3, 2026 (“fiscal 2025”), the 52 weeks ended December 28, 2024 (“fiscal 2024”) and the 52 weeks ended December 30, 2023 (“fiscal 2023”). All amounts in the Notes to the Consolidated Financial Statements, with the exception of per share amounts, are rounded to the nearest thousand unless otherwise indicated.

Initial public offering

The registration statement related to our initial public offering (“IPO”) was declared effective on June 28, 2023, and our common stock began trading on the New York Stock Exchange on June 29, 2023. On July 3, 2023, we completed our IPO for the sale of 18.8 million shares of our common stock, $0.000001 par value per share, at a public offering price of $18.00 per share. Net proceeds to the Company from the IPO were $295.0 million after deducting underwriting discounts and commissions of $22.8 million and offering expenses of $19.7 million.

In addition to the 18.8 million shares sold by the Company, certain funds, investment vehicles or accounts managed or advised by the Private Equity Group of Ares Management Corporation (the “Ares Funds”) sold 6.9 million shares, including 3.3 million shares pursuant to the exercise of the underwriters’ over-allotment option. The Company did not receive any proceeds from sales made by the Ares Funds.

Secondary offering

On May 16, 2025, the Ares Funds and Mark Walsh, the chief executive officer of the Company (collectively, the “Selling Stockholders”), sold 17.3 million shares, including approximately 2.3 million shares pursuant to the exercise of the underwriters’ over-allotment option (the “Secondary Offering”). The Company didnot receive any proceeds from sales made by the Selling Stockholders but incurred approximately $1.2 million in costs associated with the Secondary Offering, which were recorded in selling, general and administrative expenses in the Consolidated Statement of Operations and Comprehensive Income forfiscal 2025.

In connection with the Secondary Offering, the Company purchased from the underwriters approximately 2.3 million shares of common stock at a total cost of approximately $20.0 million, excluding excise tax, at a price per share equal to the price per share paid by the underwriters to the Selling Stockholders (the “Concurrent Share Repurchase”). The underwriters did not receive any compensation for the shares repurchased by the Company. See Note 14. Share Repurchases for further details.

Authorized shares

In connection with the Company’s IPO, the Company filed an amended and restated certificate of incorporation (the “A&R Charter”) on June 29, 2023. The Company also amended and restated its bylaws, effective as of June 28, 2023. The A&R Charter authorized 800.0 million shares of common stock, par value $0.000001 per share, and 100.0 million shares of preferred stock, par value $0.000001 per share.

Each share of common stock entitles its holder toone vote per share on all matters to be voted on by stockholders and to receive dividends when and as declared by the board of directors from legally available sources, subject to the prior rights of the holders of our preferred stock. Common stockholders are not entitled to preemptive rights and are therefore subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock that the board of directors may designate and issue in the future. In the event of a liquidation, dissolution or winding-up, the assets legally available for distribution to the Company’s stockholders would be distributable ratably among the holders of common stock and any participating preferred stock outstanding at that time after payment of liquidation preferences, if any, on any outstanding shares of preferred stock and payment of claims of creditors.

Note 2. Summary of Significant Accounting Policies

Use of estimates

The preparation of these consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. These estimates are based on available information and on various other assumptions that are believed to be reasonable under the circumstances. Certain items subject to such estimates and assumptions include, but are not limited to, the valuation of insurance reserves, impairment assessments associated with our goodwill and indefinite-lived intangible assets, and income taxes. Actual results could vary from those estimates under different assumptions or conditions.

Foreign currency

The functional currency of the Company’s foreign entities is the local currency of the country in which the entity operates. Assets and liabilities of foreign operations are translated into U.S. dollars, the reporting currency of the Company, using exchange rates in effect at the end of the reporting period. The net gain or loss resulting from translation is shown as a foreign currency translation adjustment and is included in other comprehensive loss in the Consolidated Statements of Operations and Comprehensive Income andin accumulated other comprehensive income on the Consolidated Balance Sheets. Income and expense accounts of the Company’s foreign entities are translated into U.S. dollars using average exchange rates during the reporting period.

(Gain) loss on foreign currency, net in the Consolidated Statements of Operations and Comprehensive Income comprises realized gains and losses upon settlement of foreign currency transactions, remeasurement gains and losses on unsettled foreign currency transactions, and realized and unrealized gains and losses on cross currency swaps and forward contracts (see Note 10. Derivative Financial Instruments). Realized and unrealized (gains) and losses on foreign currency transactions totaled $(14.2) million in fiscal 2025, $27.3 million in fiscal 2024 and $(9.8) million in fiscal 2023.

Foreign currency gains and losses relating to intercompany loans issued by or to foreign subsidiaries are not eliminated during consolidation and are included in (gain) loss on foreign currency, net in the Consolidated Statements of Operations and Comprehensive Income.

Revenue recognition

Retail sales. Revenue is recorded for store sales upon the purchase of merchandise by customers. Sales taxes collected from customers are not considered revenue and are included in accounts payable and accrued liabilities on the Consolidated Balance Sheets until remitted to the taxing authorities.

Revenue is recorded net of coupons, promotional discounts and sales discounts under reward programs. Revenue from gift cards is recognized upon redemption, and estimated breakage is recognized based on redemption data. The Company accounts for outstanding gift card balances as a liability, net of estimated breakage. Gift card liabilities are included in accounts payable and accrued liabilities on the Consolidated Balance Sheets. The Company does not record a sales return reserve as no right of return exists for customers.

Wholesale sales. Sales of products are recognized at the point of shipment with no right of return and exclude shipping and handling costs, which are paid by the customer. The Company’s revenue arrangements do not contain a significant financing component.

The following table disaggregates our revenue by retail and wholesale for the periods presented:

Cash and cash equivalents

Cash and cash equivalents consist of cash, demand deposits with banks, proceeds due from credit and debit card transactions and money market funds with maturity dates of three months or less from the date of purchase. The carrying amounts reported for cash and cash equivalents are considered to approximate fair value based upon their short maturities.

The Company’s cash deposits are maintained in accounts primarily withtwo major financial institutions in the U.S. and Canada. Substantially all cash on deposit exceeds the federally insured limits for such deposits. Money market funds are invested in a single fund that invests in U.S. Government and U.S. Treasury securities. The Company also maintains a money market account within a rabbi trust related to its deferred compensation plan that participants may select as an investment option.

Trade accounts receivable

Trade accounts receivable are recorded at the invoiced amount, net of any allowances. Both trade accounts receivable and the allowance for credit losses relate to wholesale sales.

Inventories

Inventories consist almost entirely of used clothing and other household goods purchased from nonprofit partners. Inventory is valued at the lower of average purchase cost or net realizable value. The allowance for excess inventory as of January 3, 2026 and December 28, 2024 was immaterial.

Property and equipment

Property and equipment are stated at historical cost net of accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets ranging from 3 to 15 years for furniture, fixtures and equipment. Leasehold improvements are amortized using the straight-line method over the shorter of 7 years or the remaining lease term.

Long-lived assets

The carrying values of long-lived assets, consisting of property and equipment, right-of-use lease assets and long-lived intangible assets, are reviewed for impairment when store performance expectations, events or changes in circumstances - such as a decision to relocate or close a store, office or distribution center - indicate that the carrying amounts may not be recoverable. When testing for impairment, we group assets and liabilities at the lowest level for which cash flows are separately identifiable - which is primarily at the individual store level. We then assess the risk of impairment by comparing an estimate of the undiscounted cash flows expected to be generated by the asset group against the carrying value of the asset group (the “recoverability test”). Impairment is indicated when the carrying value of the asset group exceeds the estimated future undiscounted cash flows generated by those assets. When impairment is indicated and the fair value of the asset group is determined to be less than the carrying value of the asset group, the Company records an impairment charge equal to the amount by which the carrying value of the asset group exceeds the asset group’s fair value. Performing the recoverability test requires management to make judgments relating to future cash flows, growth rates and economic and market conditions. Depending on the asset class, estimated fair value may be determined either by the use of a discounted cash flow model and/or by reference to estimated selling prices of assets in similar condition.

In fiscal 2025 and 2024, the Company recorded an impairment charge on itslong-lived assets of $4.0 million and $4.3 million, respectively, which was recorded in selling, general and administrative expenses in the Consolidated Statements of Operations and Comprehensive Income. In fiscal 2023, no triggering events were identified andno impairment charges were recorded on the Company’s long-lived assets.

Goodwill

Goodwill is reviewed for impairment annually in the Company’s fourth quarter and whenever circumstances indicate goodwill might be impaired. The Company has the option of performing a qualitative assessment that involves evaluating relevant events and circumstances to determine whether it is more likely than not (i.e. a likelihood of greater than 50%) that the fair value of a reporting unit is less than its carrying amount. If not, no further impairment testing is performed. If the assessment indicates that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company performs a quantitative assessment by comparing the carrying value of the reporting unit to the estimated fair value of the reporting unit, both as of the testing date. If the carrying value of the reporting unit exceeds the estimated fair value, the Company will recognize an impairment charge equal to the amount by which the carrying value exceeds the reporting unit’s estimated fair value up to but not to exceed the total amount of goodwill allocated to the reporting unit.

While the Company generally performs a qualitative assessment, we may choose periodically to forgo the qualitative assessment and proceed directly to a quantitative analysis. Factors considered in determining whether to forgo the qualitative assessment and proceed directly to the quantitative analysis include the significance of the excess of a reporting unit’s estimated fair value over its carrying value at the last quantitative assessment date, the amount of time between quantitative assessments, the desirability of establishing an updated baseline quantitative analysis, and other performance and market indicators.

The Company’s reporting units are consistent with its reportable segments, with goodwill balances allocated entirely to the U.S. Retail and Canada Retail repo rting units. No goodwill impairment was recorded during fiscal 2025, 2024 and 2023.

Intangible assets

Intangible assets represent the Company’s trade names, trademarks and charity licensing agreements. The Company’s trade names and trademarks, which have indefinite lives, are not amortized, but rather, reviewed for impairment at least annually in the fourth quarter, or more frequently if events or changes in circumstances indicate that the asset may be impaired. Charity licensing agreements are amortized using the straight-line method over their estimated useful life, which is usually 15 years. No intangible asset impairment was recorded during fiscal 2025, 2024 and 2023.

Insurance reserves

The Company is self-insured for general liability, medical and workers’ compensation and regularly reviews the related insurance reserves and adjusts the balances as necessary. Self-insurance claims filed and claims incurred-but-not-reported are accrued based on management’s estimates of cost by considering historical claims experience, demographic factors, severity factors and other actuarial assumptions. Additionally, the Company reviews specific large insurance claims to determine whether there is a need for any additional accruals.

Advertising costs

Advertising production costs and media placement costs are expensed the first time the advertisement takes place. Total advertising costs during fiscal 2025, 2024 and 2023 were$8.3 million, $10.7 million and $9.0 million, respectively, and are included in selling, general and administrative expenses in the Consolidated Statements of Operations and Comprehensive Income.

Income taxes

The Company follows the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized based on the estimated future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. A valuation allowance is established when necessary to reduce deferred income tax assets to the amount more likely than not expected to be realized. Income tax expense represents the current expense incurred for the period plus or minus the change during the period in net deferred tax assets and liabilities.

Section 382 of the Internal Revenue Code and similar state regulations, contain provisions that may limit the net operating loss (“NOL”) carryforwards and other tax attributes available to be used to offset income and tax liabilities in any given year upon the occurrence of certain events, including changes in ownership of more than 50%.

The Company recognizes the effect of income tax positions only if those positions are more likely than not to be sustained. Recognized income tax positions are measured at the largest amount of the benefit that has a greater than 50% likelihood of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest related to unrecognized tax benefits in interest expense, net and penalties in income tax expense (benefit) in the Consolidated Statements of Operations and Comprehensive Income.

Stock-based compensation

The Company’s stock-based incentive plan allows for the issuance of various types of stock-based awards, including time-based options, performance-based options and restricted stock units (“RSUs”). Options are generally granted with an exercise price equal to the fair value of our common stock at the date of grant. Prior to July 3, 2023, the date we completed our IPO, the fair value of our common stock was established by the Board at the date of grant. Upon completion of our IPO, the fair value of our common stock is determined based on the closing price of our common stock on the New York Stock Exchange on the date of grant.

The grant-date fair value of time-based options is determined using the Black-Scholes-Merton option pricing model. The grant-date fair value of performance-based options is determined using the Black-Scholes-Merton option-pricing model for awards tied to the Company’s IPO and a Monte Carlo simulation for awards subject to market-specific conditions, with the probability of achieving the market condition reflected in the grant-date fair value.

We recognize expense for time-based options on a straight-line basis over the requisite service period of the awards, which is generally the vesting period. We recognize expense for performance-based options subject to Company-specific conditions when it is probable that performance conditions will be achieved, and recognize the expense on a graded vesting basis over the expected vesting period. For performance-based options subject to market-specific conditions, expense is recognized on a graded vesting basis over the expected vesting period and is recognized regardless of whether the market-specific conditions are achieved.

The grant-date fair value of all RSUs is estimated based on the fair value of our common stock on the date of grant. We recognize expense for RSUs on a straight-line basis over the requisite service period of the awards, which is generally the vesting period. Liability-classified RSUs are initially measured at fair value and remeasured at each reporting date until settlement, with changes in fair value recognized as compensation expense. For a more detailed discussion of stock-based compensation, see Note 13. Stock-Based Compensation.

Share repurchases

Repurchased shares are retired and the excess of cost over par value is recorded as an increase in accumulated deficit.

Net income per share

Basicnet income per share is computed by dividingnet income by the weighted-average number of shares outstanding during the period. Diluted net income per share reflects the impact of potentially dilutive common equivalent shares under the treasury stock method. The dilutive impact of shares issued under incentive plans is determined by applying the treasury stock method to the assumed vesting of outstanding restricted stock units and the exercise of outstanding time-based options. The dilutive impact related to contingently issuable performance-based options is determined using a two-step approach that applies both the contingently issuable share guidance and the treasury stock method.

Derivative instruments

In the normal course of business, the Company may use derivative financial instruments, including interest rate swaps, cross currency swaps and foreign exchange forwards, to hedge against fluctuations in interest rates or foreign exchange rates thereby reducing our exposure to variability in cash flows on our floating-rate debt or from foreign operations.

Derivative instruments are measured at fair value and classified as assets or liabilities, current or non-current, depending on the settlement dates of the individual contracts. The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and the resulting designation.

Derivative instruments that are not designated as hedges are intended to economically hedge a portion of our foreign exchange risk. All gains and losses on these economic hedges are recorded immediately in (gain) loss on foreign currency, net in the Consolidated Statements of Operations and Comprehensive Income.

For derivative instruments designated as cash flow hedges, unrealized gains and losses from changes in fair value are initially reported as a component of accumulated other comprehensive income on the Consolidated Balance Sheets and are reclassified to interest expense, net in the Consolidated Statements of Operations and Comprehensive Income as interest payments are made on the Company’s variable-rate debt. For derivative instruments designated as cash flow hedges, realized gains and losses from settlement are a component of interest expense, net in the Consolidated Statements of Operations and Comprehensive Income.

Realized gains and losses on interest rate swaps with an other-than-insignificant financing element at inception are reported within cash flows from financing activities on the Consolidated Statements of Cash Flows. Realized gains and losses on interest rate swaps without an other-than-insignificant financing element at inception are reported within cash flows from operating activities on the Consolidated Statements of Cash Flows. Realized gains and losses on cross currency swaps and forward contracts are reported within cash flows from investing activities on the Consolidated Statements of Cash Flows.

The Company does not use derivative instruments for trading or speculative purposes and does not use any leveraged derivative financial instruments.

Leases

The Company leases various real estate, including retail stores, offsite processing facilities, wholesale warehouses and office space, as well as vehicles. The Company determines if an arrangement is a lease at inception. Operating leases are included in right-of-use (“ROU”) lease assets, lease liabilities – current and non-current – in our Consolidated Balance Sheets. Leases with an initial term of 12 months or less are not recorded on the balance sheet and are expensed as incurred.

Our lease assets and liabilities are recognized at the lease commencement date based on the present value of the fixed lease payments over the lease term. As an implicit rate is not provided for most of our leases, we use an incremental borrowing rate which represents the rate used for a secured borrowing of a similar term as the lease. Our real estate leases typically require payment of real estate taxes, common area maintenance and insurance. These components comprise the majority of our variable lease costs and are excluded from the present value of our lease obligations.

As of January 3, 2026, the Company’s leases had remaining lease terms of greater than 1 year to 20 years. The lease term includes the initial contractual term as well as any options to extend the lease when it is reasonably certain that the Company will exercise that option. The option periods are generally not included in the lease term used to measure our lease liabilities and lease assets upon commencement as exercise of the options is not reasonably certain. We remeasure the lease liability and lease asset when we are reasonably certain to exercise a renewal option. The Company’s lease agreements do not contain any residual value guarantees or material restrictive covenants.

Recently adopted accounting pronouncements

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in this update require that public entities on an annual basis disclose specific categories in the rate reconciliation table, provide additional information for reconciling items that meet a quantitative threshold and provide additional information about income taxes paid. The Company adopted ASU 2023-09 for the year ended January 3, 2026 and applied the guidance on a prospective basis, with no change to prior period disclosures. This guidance impacted the Company’s disclosures only with no impact to its results of operations, financial position or cash flows.

Recently issued accounting pronouncements not yet adopted

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The amendments in this update require public entities to disclose, on an annual and interim basis, specific expenses included in each relevant expense caption on the income statement. The amendments in this update are effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is perm itted. This guidance is expected to impact the Company’s disclosures only with no impact to its results of operations, financial position or cash flows.

Note 3.2 Peaches Acquisition

On May 6, 2024, the Company acquired all of the equity of 2 Peaches Group, LLC (“2 Peaches”) for $5.4 million, which is comprised of cash consideration of $3.5 million, including a holdback of $0.5 million, and acquisition-related contingent consideration with an initial fair value of $1.9 million (the “2 Peaches Acquisition”). 2 Peaches was a thrift store chain with seven locations in the Atlanta, Georgia, metropolitan area. The acquired stores were the Company’s first locations in the state of Georgia and serve as a base for the Company’s entrance and expansion into the southeast region of the U.S.

The acquisition-related contingent consideration arrangement with an initial fair value of $1.9 million required us to make a future cash payment of up to $2.7 million upon achievement of specific milestones. In September 2025, the Company paid $0.7 million to settle the acquisition-related contingent consideration obligation in full.

Note 4. Property and Equipment

Property and equipment, net, consisted of the following:

Depreciation expense for fiscal 2025, 2024 and 2023 was$73.7 million, $61.3 million and $56.0 million, respectively. Fiscal 2025 includes accelerated depreciation of $1.6 million due to a reduction of the estimated useful lives for certain store-related property and equipment.

Note 5. Goodwill

Changes in the carrying value of goodwill by reportable segments were as follows:

Note 6. Intangible Assets

The components of intangible assets were as follows:

The amortization expense associated with intangible assets was$6.8 million, $8.3 million and $5.2 million for fiscal 2025, 2024 and 2023, respectively. Fiscal 2025 includes $2.6 million of accelerated amortization due to a reduction of the estimated useful lives for certain acquisition-related charity licensing agreements. The estimated aggregate amortization expense of intangible assets for each of the five years commencing after January 3, 2026 is$4.1 million.

Note 7. Debt

Long-term debt consisted of the following:

2025 Senior Secured Credit Facilities

On September 18, 2025, the Company entered into new Senior Secured Credit Facilities (the “2025 Senior Secured Credit Facilities”), consisting of a $750 million term loan facility (the “2025 Term Loan Facility”) and a $180 million revolving credit facility (the “2025 Revolving Credit Facility”). The proceeds of the 2025 Term Loan Facility were used, in part, to redeem the remaining aggregate principal amount of the Senior Secured Notes (the “Notes”), including accrued interest and a premium of 4.875%, or $19.5 million, and repay all outstanding borrowings under the term loan facility, dated as of April 26, 2021 (the “2021 Term Loan Facility”). As a result of this transaction, the Company recorded a $32.6 million loss on extinguishment of debt which included the $19.5 million prepayment premium, as well as the write-off of unamortized debt issuance costs and debt discounts under the Notes and 2021 Term Loan Facility.

The Company’s principal subsidiaries in the U.S. and Canada are borrowers under the 2025 Senior Secured Credit Facilities, and most of the Company’s U.S. and Canadian subsidiaries are guarantors. The 2025 Senior Secured Credit Facilities are secured by a first priority lien on substantially all assets of the borrowers and guarantors, subject to certain exceptions. The 2025 Revolving Credit Facility is senior to the 2025 Term Loan Facility in right of payment.

The 2025 Senior Secured Credit Facilities have customary affirmative and negative covenants, including restrictions on the Company’s ability to incur additional indebtedness, incur liens, make investments, make restricted payments, make optional prepayments on junior financings, engage in transactions with affiliates and make asset sales, in each case, subject to customary exceptions and baskets.

The 2025 Senior Secured Credit Facilities also have a customary uncommitted incremental facility of (i) the greater of $313.3 million and 1.0 times our EBITDA plus unused amounts under the “general” debt basket, plus (ii) an additional amount based on the Company’s leverage ratios or interest coverage ratio.

2025 Term Loan Facility

The 2025 Term Loan Facility matures in September 2032. Required minimum principal payments of $1.9 million are due quarterly. The Company is able to prepay amounts outstanding under the 2025 Term Loan Facility without a prepayment premium. The 2025 Term Loan Facility bears interest at a variable rate equal to a reference rate plus a margin ranging from 2.00% to 3.00% based on loan type and our first lien net leverage ratio.

The Company is required to prepay the 2025 Term Loan Facility with a percentage of the Company’s annual excess cash flow if the first lien net leverage ratio is greater than or equal to 4.00 to 1.00. The Company is also required to prepay the 2025 Term Loan Facility with a percentage of the net cash proceeds of certain asset sales, subject to customary reinvestment provisions, when the first lien net leverage ratio exceeds 4.00 to 1.00.

On December 23, 2025, the Company repaid $20.0 million in outstanding borrowings under the 2025 Term Loan Facility. This transaction resulted in a loss on extinguishment of debt of $0.4 million reflecting the write-off of a proportional amount of unamortized debt issuance costs and debt discount associated with the repayment.

2025 Revolving Credit Facility

The 2025 Revolving Credit Facility matures in September 2030. The maximum available amount under the 2025 Revolving Credit Facility is $180 million, with $75 million available for letters of credit and a swingline sublimit of $25 million. As of January 3, 2026, there wereno advances on the 2025 Revolving Credit Facility, there were $0.9 million of letters of credit outstanding and $179.1 million was available to borrow.

The interest rate on revolver draws is variable at a rate equal to the reference rate plus a margin of 1.50% or 3.00% based on loan type. A 0.375% commitment fee is payable quarterly on the unused portion of the 2025 Revolving Credit Facility.

The 2025 Revolving Credit Facility is subject to a financial maintenance covenant that requires us to ensure the first lien net leverage ratio, which is tested quarterly, does not exceed 7.75 to 1.00. The financial maintenance covenant is only applicable if the aggregate amount of revolving loans, swingline loans and letters of credit outstanding under the 2025 Revolving Credit Facility (excluding (i) letters of credit and (ii) for the first four fiscal quarters following the Closing Date, outstanding amounts incurred to finance the transactions contemplated by the 2025 Senior Secured Credit Facilities) exceeds 40% of the committed amount. The 2025 Revolving Credit Facility provides for customary equity cure rights.

2021 Senior Secured Credit Facilities

The 2021 Senior Secured Credit Facilities consisted of the 2021 Term Loan Facility and a revolving credit facility (the “2021 Revolving Credit Facility”). The Company’s principal subsidiaries in the U.S. and Canada were borrowers under the 2021 Senior Secured Credit Facilities and most of the Company’s U.S. and Canadian subsidiaries were guarantors. The 2021 Senior Secured Credit Facilities were secured by a first priority lien on substantially all assets of the borrowers and guarantors, subject to certain exceptions. The 2021 Revolving Credit Facility was senior to the 2021 Term Loan Facility in right of payment.

The 2021 Senior Secured Credit Facilities had customary affirmative and negative covenants, including restrictions on our ability to incur additional indebtedness, incur liens, make investments, make restricted payments (including restrictions on the payment of dividends), make optional prepayments on junior financings, engage in transactions with affiliates and make asset sales, in each case subject to customary exceptions and baskets.

The 2021 Senior Secured Credit Facilities also had a customary uncommitted incremental facility of (i) the greater of $136.0 million or EBITDA for the prior four fiscal quarters plus (ii) additional amounts based on the Company’s net leverage ratio or interest coverage ratio plus (iii) certain specific additional amounts.

2021 Term Loan Facility

Borrowings under the 2021 Term Loan Facility were due in full at maturity in April 2028. The Term Loan Facility bore interest at a variable rate equal to a reference rate plus a margin ranging from 2.50% to 3.75% based on loan type and our first lien net leverage ratio.

The Company was required to prepay the Term Loan Facility with a percentage of the Company’s annual excess cash flow if the first lien net leverage ratio was greater than or equal to 3.50 to 1.00. The Company was also required to prepay the Term Loan Facility with a percentage of the net cash proceeds of certain asset sales, subject to customary reinvestment provisions, when the first lien net leverage ratio was greater than or equal to 3.50 to 1.00. The Company was able to prepay amounts outstanding under the Term Loan Facility without a prepayment premium.

On January 30, 2024, the Company entered into the third amendment to its 2021 Senior Secured Credit Facilities which repriced the outstanding borrowings under the 2021 Term Loan Facility resulting in a loss on extinguishment of debt of $0.7 million.

2021 Revolving Credit Facility

The 2021 Revolving Credit Facility was set to mature in April 2027. The maximum available amount under the 2021 Revolving Credit Facility was $125.0 million, with $60.0 million available for letters of credit and a swingline sublimit of $10.0 million.

The interest rate on revolver draws was variable at a rate equal to the reference rate plus a margin of 2.25% or 3.25% based on loan type. A 0.5% commitment fee was payable quarterly on the unused portion of the Revolving Credit Facility.

The 2021 Revolving Credit Facility was subject to a financial maintenance covenant that required us to ensure the first lien net leverage ratio, which was tested quarterly, did not exceed 7.75 to 1.00. The financial maintenance covenant was only applicable if the aggregate amount of revolving loans, swingline loans and letters of credit outstanding under the 2021 Revolving Credit Facility (excluding up to $20 million of undrawn letters of credit and certain other amounts) exceeded 35% of the committed amount. The 2021 Revolving Credit Facility provided for customary equity cure rights.

Senior Secured Notes

In February 2023, the Company issued $550.0 million aggregate principal amount of Notes which had a fixed interest rate of 9.75% with interest due every February 15 and August 15. As of December 28, 2024, the Company had a $16.1 million balance for accrued interest on the Notes, which is classified in accounts payable & accrued liabilities in the Consolidated Balance Sheets. The Notes were due in full at maturity in April 2028, coterminous with the 2021 Term Loan Facility. The Company’s principal subsidiaries in the U.S. were issuers of the Notes. The Notes were fully and unconditionally guaranteed, jointly and severally, on a senior secured basis by most of the Company’s U.S. and Canadian subsidiaries (other than the issuers). The Notes were secured by a first priority lien on substantially all assets of the issuers and guarantors, subject to certain exceptions, on an equal and ratable basis with indebtedness under the 2021 Term Loan Facility. The Notes ranked pari passu with the 2021 Term Loan Facility in right of payment and were subordinated to our super-priority 2021 Revolving Credit Facility in right of payment.

The indenture, pursuant to which the Notes were issued, contains customary affirmative and negative covenants, which were similar in scope to those in the 2021 Senior Secured Credit Facilities, although there were no financial maintenance covenants in the indenture governing the Notes. Certain covenants could be suspended in the event the Notes were assigned an investment grade rating from two of three rating agencies.

On March 4, 2024, the Company redeemed $49.5 million aggregate principal amount of the Notes, equal to 10% of the outstanding balance at December 30, 2023. In addition to paying accrued interest, the Company paid a premium of 3%, or $1.5 million, on the partial redemption. This transaction resulted in a loss on extinguishment of debt of $3.4 million.

On February 6, 2025, the Company redeemed $44.5 million aggregate principal amount of the Notes, equal to 10% of the outstanding balance at December 28, 2024. In addition to paying accrued interest, the Company paid a premium of 3%, or $1.3 million, on the partial redemption. This transaction resulted in a loss on extinguishment of debt of $2.7 million.

As described above, the Company redeemed the remaining aggregate principal amount of the Notes in September 2025 using the proceeds of the 2025 Term Loan Facility.

Required minimum principal payments

Required minimum principal payments on debt for each of the following fiscal years as of January 3, 2026 are as follows:

Note 8. Fair Value Measurements

The Company utilizes fair value measurements for its financial assets and financial liabilities and fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the financial statements on a recurring basis. Fair value is based upon a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

•Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

•Level 2 inputs are inputs other than unadjusted quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

•Level 3 inputs are unobservable inputs for the asset or liability.

The level in the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest level input that is significant to the fair value measurement.

Recurring fair value measurements

The following table presents financial assets and financial liabilities that are measured at fair value on a recurring basis at January 3, 2026:

(1)Represents investments held in a rabbi trust associated with the Company’s deferred compensation plan and are included in prepaid expenses and other current assets and other assets on the Consolidated Balance Sheets.

The following table presents financial assets and financial liabilities that are measured at fair value on a recurring basis at December 28, 2024:

There were no transfers of financial assets or liabilities between Level 1, Level 2 or Level 3 for fiscal 2025 or fiscal 2024.

Money market funds, consisting of short-term deposits with an original maturity of three months or less, are valued based on quoted market prices of identical assets and are classified within Level 1. Marketable securities are deferred compensation investments measured at fair value using unadjusted quoted market prices available from national securities exchanges and are classified within Level 1.

Forward contracts, cross currency swaps and interest rate swaps are fair valued using independent valuation services, and the valuations are based on observable market data. As such, the forward contracts, cross currency swaps and interest rate swaps are classified within Level 2. The Company reviews the independent valuation and obtains an understanding of the methods used in pricing the instruments.

The fair value of the acquisition-related contingent consideration liability is measured using the probability-weighted present value of the potential payment. The probability-weighted present value of the potential payment is based on significant unobservable inputs, including management estimates and assumptions. Accordingly, the fair value of the acquisition-related contingent consideration has been classified as Level 3. In September 2025, the Company paid $0.7 million to settle the 2 Peaches acquisition-related contingent consideration obligation in full.

The following table provides a reconciliation of the acquisition-related contingent consideration liability measured at fair value using Level 3 significant unobservable inputs:

Non-recurring fair value measurements

The Company’s non-financial assets, such as goodwill, intangible assets, property and equipment, and ROU lease assets, are recorded at cost. Fair value adjustments are made to these non-financial assets in the period an impairment charge is recognized. In fiscal 2025 and 2024, the Company recognized impairment charges of$2.8 million and$2.5 million, respectively, on ROU lease assets and$1.2 million and$1.8 million, respectively, on property and equipment which are recorded in selling, general and administrative expenses in the Consolidated Statements of Operations and Comprehensive Income. Fair value of these assets was determined using discounted cash flow models based on significant unobservable inputs, including projected store-level cash flows, discount rates and market rental data. Accordingly, the fair value of these assets are classified as Level 3 within the fair value hierarchy.

Other fair value disclosures

The fair value of borrowings under the Company’s 2025 Senior Secured Credit Facilities approximate their carrying value as the current rates approximate rates on similar debt and were based on rate notices provided by the Administrative Agent (Level 2 inputs) at January 3, 2026. The Company’s Notes were fully redeemed on September 18, 2025. The fair value of the Company’s Notes, based on Level 1 inputs, was $467.6 million at December 28, 2024. The fair value of borrowings under the Company’s 2021 Senior Secured Credit Facilities approximated their carrying value and were based on rate notices provided by the Administrative Agent (Level 2 inputs) at December 28, 2024.

Note 9. Leases

The components of total lease costs, net, consisted of the following:

The maturities of our lease obligations at January 3, 2026 were as follows:

Supplemental cash flow information related to leases is as follows:

Supplemental balance sheet information related to leases is as follows:

(1)Finance lease assets are net of accumulated amortization of $7.1 million and $4.8 millionas of January 3, 2026 and December 28, 2024, respectively.

Note 10. Derivative Financial Instruments

As a result of its operating and financing activities, the Company is exposed to market risks from changes in foreign currency exchange rates and interest rates. These market risks may adversely affect the Company’s operating results, cash flows and financial position. The Company seeks to manage risk from changes in foreign currency exchange rates through the use of forward contracts, cross currency swaps or both and uses interest rate swaps to manage the risk of changes in interest rates. The Company’s derivative contracts are not collate ralized and are entered into with large, reputable financial institutions that are monitored for counterparty risk. We maintain master netting arrangements that allow for the non-conditional offsetting of amounts receivable and payable with counterparties to help manage our risks and record derivative positions on a net basis. Refer to Note 8. Fair Value Measurements for information on the fair value of our derivative financial instruments.

Foreign currency contracts

The Company operates in foreign countries, which exposes it to market risk associated with foreign currency exchange rate fluctuations. The Company uses forward contracts and cross currency swaps to manage its exposure to fluctuations in the U.S. dollar (“USD”) – Canadian dollar (“CAD”) exchange rate. Forward contracts and cross currency swaps lock in the exchange rate for a portion of the estimated cash flows of the Company’s Canadian operations. As of January 3, 2026 and December 28, 2024, the Company’s forward contracts had USD equivalent notional amounts of $102.4 million and $102.5 million, respectively. In September 2025, the Company entered into cross currency swaps with USD notional amounts of$200.0 million as of January 3, 2026. In April 2024, the Company terminated its then-existing cross currency swaps, resulting in net proceeds of $28.1 million. Cross currency swaps and forward contracts were not designated in hedging relationships.

Interest rate swap contracts

The Company’s market risk is affected by changes in interest rates. The Company’s 2025 Senior Secured Credit Facilities bear interest based on market rates plus an applicable margin. Because the interest rate on the Company’s floating-rate debt is tied to market rates, the Company manages its exposure to interest rate movements by effectively converting a portion of its floating-rate debt to fixed-rate debt using interest rate swaps. Interest rate swaps, as used by the Company, involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreement without exchange of the underlying notional amount. In September 2025, the Company entered into interest rate swaps with USD notional amounts of$600.0 million as of January 3, 2026. In April 2024, the Company terminated its then-existing interest rate swaps, resulting in net proceeds of $10.3 million. All interest rate swaps were designated as cash flow hedging instruments.

The fair value of derivative financial instruments were as follows:

(1)Derivatives subject to master netting agreements are presented net on the Consolidated Balance Sheets.

(2)Presented gross of immaterial income taxes.

(3)The accumulated other comprehensive income balance of$4.4 million consists of the deferred gain associated with interest rate swaps that were terminated in April 2024.

The impact of derivative financial instruments on the Consolidated Statements of Operations and Comprehensive Income was as follows:

The table below presents the effect of cash flow hedge accounting oncomprehensive income:

Amounts reclassified from accumulated other comprehensive income intonet income are recognized in interest expense, net in the Consolidated Statements of Operations and Comprehensive Income. Within the next twelve months, the Company estimates that$0.1 million of losses currently recognized within accumulated other comprehensive income will be reclassified as an increase in interest expense, net.

Note 11. Segments

The Company’s Chief Executive Officer, who is the chief operating decision maker (“CODM”), assesses segment performance and makes resource allocation decisions based on the geographies in which it conducts its retail operations, and separately for its wholesale operations, each of which represents an operating segment. For disclosure purposes, U.S. Retail and Canada Retail were determined to be reportable segments. Neither the Company’s retail operations in Australia nor its wholesale operations meet the quantitative thresholds to be reported separately and since they do not share similar economic characteristics, they have been combined and disclosed within Other Profit. We do not separately present assets for our reportable segments because the Company’s CODM is not provided these amounts.

The Company’s CODM assesses segment performance and makes resource allocation decisions primarily based on weekly, monthly and quarterly reports that focus predominantly on segment net sales, the drivers of segment net sales and key non-financial operating metrics by segment. These weekly, monthly and quarterly reports compare actual segment performance against performance in the comparative period in the prior year, against budget, against forecast, or as a trend over time, or any combination of the foregoing. Collectively, these factors provide the CODM with insight into segment profitability. The Company’s CODM is provided with segment profit as well as significant segment expenses on a recurring basis.

General corporate expenses include unallocated corporate overhead recorded in salaries, wages and benefits, and selling, general and administrative expensesin the Consolidated Statements of Operations and Comprehensive Income.

Beginning in the first quarter of fiscal 2025, the Company revised its calculation of segment profit to include, among other things, lease expense as recognized under Topic 842, Leases, consistent with the information provided to the CODM. Previously, segment profit included cash-basis rent. Prior period amounts have been recast to reflect this change, resulting in a decrease in segment profit of $5.3 million for the U.S. Retail segment and a decrease of $1.5 million for the Canada Retail segment for fiscal 2024. For fiscal 2023, the recast resulted in a decrease in segment profit of $5.6 million for the U.S. Retail segment and a decrease of $2.0 million for the Canada Retail segment.

Segment profit may not be comparable to similarly titled measures used by other entities. These measures should not be considered as alternatives to our GAAP measures of operating income, net income or cash flows from operating activities as an indicator of the Company’s performance or as a measure of its liquidity.

Our segment results are presented in the tables below. In each table, “Other profit” is attributable to the Australia Retail and Wholesale operating segments which have been combined.

We do not separately present assets for our reportable segments because the Company’s CODM is not provided these amounts. The Company’s long-lived assets are primarily located in the U.S. and Canada, with a portion located in Australia. Long-lived assets consist of property and equipment, ROU lease assets and charity licensing agreements. The following table disaggregates our long-lived assets by location:

The following table reconciles total reportable segment net sales to consolidated net sales. “Other sales” is attributable to the Australia Retail and Wholesale operating segments which have been combined.

The following table disaggregates the Company’s net sales by geography, based on the location of the Company’s customers:

Note 12. Net Income Per Share

Basic and dilutednet income per share were as follows:

(1)For fiscal 2025, 2024 and 2023, the calculation of diluted net income per share excludes the effect of 6.7 million,3.1 million and 0.8 million, respectively, of potential shares of common stock as the inclusion of these potential shares would have been antidilutive and/or the shares were contingently issuable and not issuable based on current period results, assuming the end of the reporting period was the end of the contingency period.

Note 13. Stock-Based Compensation

2019 Management Incentive Plan

On March 28, 2019, the Company adopted the 2019 Management Incentive Plan (the “2019 Plan”) which allowed for the issuance of stock options to directors, officers and key employees. Stock options awarded under the 2019 Plan may contain both service and performance conditions and have a 10-year maximum contractual term. In connection with the adoption of the Omnibus Incentive Compensation Plan (as defined below), the Company ceased issuing awards under the 2019 Plan. As a result, no shares remain available for issuance under the 2019 Plan; however, the 2019 Plan continues to govern awards that are outstanding under it. As of January 3, 2026,11.5 million shares remain subject to outstanding options under the 2019 Plan.

Omnibus Incentive Plan

In connection with the IPO, the Company’s Board of Directors (the “Board”) approved the Omnibus Incentive Compensation Plan (the “Omnibus Incentive Plan”), which became effective on June 28, 2023, the date the SEC declared our IPO registration statement on Form S-1 effective.

The Omnibus Incentive Plan allows for issuance of up to 15.0 million new shares of common stock. In addition, should any awards under the 2019 Plan expire, terminate or be canceled, the shares of common stock underlying those awards will become available for issuance under the Omnibus Incentive Plan. Awards under the Omnibus Incentive Plan may be in the form of incentive stock options, nonqualified stock options, stock appreciation rights, stock awards, stock units, other stock-based awards and cash awards. Awards issued under the Omnibus Incentive Plan have a maximum contractual term of 10 years. As of January 3, 2026, there were 11.6 million shares available for future issuance under the Omnibus Incentive Plan.

Stock-based compensation

The Company classifies stock-based compensation expense in salaries, wages and benefits in the Consolidated Statements of Operations and Comprehensive Income. The Company recognized stock-based compensation expense of $38.6 million, $61.6 million and $72.6 million during fiscal 2025, 2024 and 2023, respectively. The total tax benefit associated with stock-based compensation for fiscal 2025, 2024 and 2023 was $4.7 million, $6.0 million and $7.2 million, respectively.

Equity-classified time-based options

Stock option awards containing only a service condition (“time-based options”) generally vest in equal annual installments over aone-year, three-year orfive-year period from the date of grant provided the participant continues to be employed by, or provide service to, the Company through each vesting date. Stock-based compensation cost for time-based options is measured at the grant date based on the fair value of the award using the Black-Scholes-Merton option pricing model and is recognized on a straight-line basis over the requisite service period of the award. The Company accounts for forfeitures of time-based options as they occur.

The following assumptions apply to time-based options awarded during fiscal 2025, 2024 and 2023 under the Black-Scholes-Merton option pricing model:

The dividend yield assumption iszero for fiscal 2025,2024 and 2023. Although the Company paid a cash dividend in February 2023 and December 2022, the Company has no history of making regular dividends, nor does it anticipate paying any cash dividends in the foreseeable future.

The weighted average grant-date fair value of time-based stock options awarded during fiscal 2025,2024 and 2023 was $2.98, $9.26 and $6.01, respectively.

Expected volatility is based on historic share price volatilities of comparable publicly traded companies over a term consistent with the expected term. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of each grant, which corresponds to the expected term of the stock options. Based upon limited exercise history, the Company has elected to use the simplified method for estimating the expected term. The expected term of options granted represents the period of time that options are expected to be outstanding.

The following table summarizes activity related to time-based options:

The total intrinsic value of time-based options exercised during fiscal 2025,2024 and 2023 was $7.0 million, $21.8 million and $2.6 million, respectively. As of January 3, 2026, unrecognized compensation expense related to outstanding time-based options was $9.6 million, which is expected to be recognized over a weighted average remaining vesting period of 2.12 years.

Equity-classified performance-based options

Stock option awards containing a performance condition (“performance-based options”) vest in 25% increments as performance conditions are achieved through the term of the options. Twenty-five percent of outstanding performance-based options vested upon completion of the Company’s IPO, with the remainder scheduled to vest in equal increments over three years starting on June 30, 2024 provided market-specific conditions, including stock price performance, are achieved. The vesting of performance-based options is subject to continued employment through the vesting date. To the extent that the requisite service is rendered, compensation cost for accounting purposes is not reversed; rather, it is recognized regardless of whether the market-specific conditions are achieved. The Company accounts for forfeitures of performance-based options as they occur.

In October 2022, May 2023 and July 2023, the Company modified the vesting terms of its performance-based options to reflect the vesting terms above. The Company determined that the modified vesting terms constituted modifications under Topic 718, Compensation - Stock Compensation and thus remeasured the fair value of the outstanding performance-based options as of their respective modification dates. Forty-one grantees were affected by the modifications that occurred in October 2022, May 2023 and July 2023. A Black-Scholes-Merton option pricing model was used to determine the grant-date fair value of the performance-based options that were tied to the Company’s IPO and a Monte Carlo simulation under the option pricing framework was used to determine the grant-date fair value of the performance-based options subject to market-specific conditions.

During fiscal 2025,2024 and 2023, we recognized $22.3 million, $51.3 million and $38.8 million, respectively, of expense related to amortization of the remaining outstanding performance-based options that is recognized on a graded vesting basis over their expected vesting period. During fiscal 2023, we also recognized $28.0 million of expense related to performance-based options that vested upon completion of our IPO.

Black-Scholes-Merton option pricing model

The following assumptions were used to remeasure the fair value of performance-based options resulting from the October 2022 and May 2023 modifications under the Black-Scholes-Merton option pricing model:

The dividend yield assumption waszero for fiscal 2023 and 2022. Although the Company paid a cash dividend in February 2023 and December 2022, the Company did not have a history of making regular dividends, nor did it anticipate paying any cash dividends in the foreseeable future.

The weighted average grant-date fair value of performance-based stock options modified during fiscal 2023 and 2022 was $16.32 and $13.51, respectively.

Expected volatility is based on historic share price volatilities of comparable publicly traded companies over a term consistent with the expected term. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of each grant, which corresponds to the expected term of the stock options. Based upon limited exercise history, the Company has elected to use the simplified method for estimating the expected term. The expected term of options granted represents the period of time that options are expected to be outstanding.

Monte Carlo simulation

The following assumptions were used to remeasure the fair value of performance-based options resulting from the July 2023 modification under the Monte Carlo simulation:

The dividend yield assumption waszero. Although the Company paid a cash dividend in February 2023 and December 2022, the Company did not have a history of making regular dividends, nor did it anticipate paying any cash dividends in the foreseeable future.

The weighted average grant-date fair value of performance-based stock options modified during July 2023 was $21.18.

Expected volatility is based on historic share price volatilities of comparable publicly traded companies over a term consistent with the expected term. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of each grant, which corresponds to the expected term of the stock options. Based upon limited exercise history, the Company has elected to use the simplified method for estimating the expected term. The expected term of options granted represents the period of time that options are expected to be outstanding.

The following table summarizes activity related to performance-based options:

The total intrinsic value of performance-based options exercised during fiscal 2025 and 2024 was $4.4 million and $4.1 million, respectively. No performance-based options were exercised during fiscal 2023. The Company did not award performance-based options during fiscal 2025, 2024 or 2023. As of January 3, 2026, unrecognized compensation expense related to outstanding performance-based options was $6.0 million, which is expected to be fully recognized by the second quarter of fiscal 2026.

Equity-classified restricted stock units

RSUs containing only a service condition generally vest in equal annual installments over aone-year orthree-year period from the date of grant, provided the participant continues to be employed by, or provide service to, the Company through each vesting date. The fair value of RSUs is determined using the closing price of the Company’s common stock on the date of the grant. All RSUs were granted after the Company’s common stock commenced trading on June 29, 2023.

The following table summarizes activity related to RSUs as of January 3, 2026:

As of January 3, 2026, unrecognized compensation expense related to outstanding RSUs was $14.2 million, which is expected to be recognized over a weighted average remaining vesting period of 2.0 years.

Liability-classified restricted stock units

The Company’s annual incentive compensation program for certain employees includes awards of RSUs that are earned based on the achievement of Company-specific performance metrics for a given fiscal year, and continued employee service over a defined period. The level of performance determines the compensation cost, and the number of RSUs to be issued will be determined based on the attained award amount divided by the market price of the Company’s common stock on the date of grant.

Prior to grant, the RSUs are considered liability-classified awards. Upon issuance, the awards will become equity-classified as they no longer meet the criteria for liability classification. The grant date of the awards typically occurs during the first quarter following the performance year, and the awards vest on the one-year anniversary of the date of grant, subject to continued employment until that date. As of January 3, 2026, $2.0 million was accrued and included in accrued payroll and related taxes in the Consolidated Balance Sheets.

Note 14. Share Repurchases

Concurrent share repurchase

As part of the Secondary Offering, the Company purchased from the underwriters approximately 2.3 million shares of common stock at a price per share of $8.86 and a total cost of approximately $20.0 million, excluding excise tax. The Company funded the Concurrent Share Repurchase from its existing cash on hand and it was not part of its share repurchase programs.

Share repurchase programs

During fiscal 2025 and 2024, under our share repurchase programs, we repurchased 2.9 million and 3.2 million shares, respectively, at a weighted average price of $8.51 and $9.95, respectively, and a total cost of $25.1 million and $31.9 million, respectively, excluding commissions and excise tax. As of January 3, 2026, we had $41.7 million remaining under the 2025 Share Repurchase Program (as defined below).

2023 Share Repurchase Program

In November 2023, the Company authorized a share repurchase program of up to $50 million of the Company’s common stock (the “2023 Share Repurchase Program”). The 2023 Share Repurchase Program expired on November 8, 2025.

2025 Share Repurchase Program

The Company announced on October 30, 2025 the authorization of a new share repurchase program of up to $50 million of the Company’s common stock (the “2025 Share Repurchase Program”). The 2025 Share Repurchase Program became effective as of November 9, 2025 and expires on November 8, 2027. Under the 2025 Share Repurchase Program, the Company may purchase shares from time to time in compliance with applicable securities laws, that may include Securities Act Rule 10b-18 and Securities Act Rule 10b5-1. The timing and amount of any shares purchased will be based upon a variety of factors, including the share price of the common stock, general market conditions, alternative uses for capital, the Company’s’ financial performance and other considerations. The 2025 Share Repurchase Program does not obligate the Company to purchase any minimum number of shares, and the program may be suspended, modified or discontinued at any time without prior notice. Any repurchases will be funded by available cash and cash equivalents.

Note 15. Income Taxes

Income before income taxes consisted of the following:

Components of income tax expense (benefit) are summarized as follows:

A reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory U.S. federal income tax rate to income before income taxes after the adoption of ASU 2023-09 is as follows:

(1)The states and local jurisdictions that contribute to the majority (greater than 50%) of the tax effect in this category include California, Maryland, Massachusetts and Minnesota.

A reconciliation of the provision for income taxes to the amount computed by applying the 21% U.S. federal income tax rate to income before income taxes prior to the adoption of ASU 2023-09 is as follows:

(1)In October 2023 the Company underwent an internal legal entity restructuring.

(2)GILTI and FDII refer to Global Intangible Low-Taxed Income and Foreign-Derived Intangible Income, respectively.

The One Big Beautiful Bill Act (“OB3”) was enacted on July 4, 2025, which includes wide-ranging tax reforms for businesses. OB3 extended and modified certain provisions of the Tax Cuts & Jobs Act (TCJA) and made certain key elements permanent, including 100% bonus depreciation, immediate expensing of domestic research costs and the deductibility of business interest expense. The Company’s consolidated financial statements for fiscal 2025 reflect adjustments related to OB3. While the enacted legislation did not have a material impact on the Company’s effective tax rate for the year ended January 3, 2026, it resulted in a favorable change in the timing of cash taxes due to certain accelerated deductions. The Company will continue to assess the impact of OB3 provisions that become effective in future years and monitor potential outcomes based on its facts and circumstances each upcoming year.

The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities are as follows for the consolidated taxable entities at January 3, 2026 and December 28, 2024:

Section 382 of the Internal Revenue Code and similar state regulations, contain provisions that may limit certain tax attributes available to be used to offset income in any given year upon the occurrence of certain events, including changes in the ownership within the meaning of Section 382.

The Company maintains a valuation allowance of $0.1 million,$5.4 million and $5.7 million related to its U.S. state, Canadian and Australian operations, respectively. A valuation allowance is established when necessary to reduce deferred tax assets to the amounts that are more-likely-than-not expected to be realized. Management evaluates and weighs all available positive and negative evidence such as historic results, projected future taxable income, future reversals of existing deferred tax liabilities, as well as prudent and feasible tax-planning strategies. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are utilizable, we believe it is more likely than not that the Company will realize the net benefits of its deferred tax assets, other than the deferred tax assets related to certain U.S. state net operating loss carryforwards, unrealized foreign exchange losses in Canada and deferred tax assets in Australia for which a valuation allowance has been established due to uncertainties relating to their realization.

As of January 3, 2026 and December 28, 2024, the Company hadnot recognized a deferred tax liability on the excess of the amount for financial reporting over the tax basis in the stock of certain foreign subsidiaries that is essentially permanent in duration. This amount becomes taxable upon a repatriation of assets from the subsidiaries or a disposal of the subsidiaries. It is not practicable to determine the amount of the related unrecognized deferred income tax liability.

As of January 3, 2026, the Company had the following net operating loss and income tax credit carryforwards:

As of January 3, 2026 and December 28, 2024, the Company did not have U.S. federal net operating loss carryforwards.

The following table summarizes the activity related to the Company’s unrecognized tax benefits:

As of January 3, 2026, the Company had $0.1 million of unrecognized tax benefits that, if recognized, would favorably affect our effective tax rate in the future.

In the normal course of business, the Company is subject to examination by taxing authorities in the countries in which it operates. As of January 3, 2026 the operations for tax years 2022 to 2025 remain subject to examination in the U.S. federal jurisdiction, and the operations for tax years 2021 to 2025 remain subject to examination in Canada, Australia, and most U.S. state jurisdictions. Although the outcome of tax audits is always uncertain, the Company has assessed the probable outcomes and potential exposure and believes that it has provided adequate amounts of tax, interest and penalties for any adjustments that may arise from these open tax years. The Company’s continuing practice is to recognize interest and penalties related to income tax matters in income tax expense (benefit) in the Consolidated Statements of Operations and Comprehensive Income.

The Organization for Economic Cooperation and Development (OECD) proposed model rules to ensure a minimal level of taxation (commonly referred to as Pillar II) and the European Union member states have agreed to implement Pillar II’s proposed global corporate minimum tax rate of 15%. We considered the applicable tax law changes from Pillar II implementation in the relevant countries in which we operate, and determined that there is no material impact to our tax provision for fiscal 2025. We will continue to evaluate the impact of these tax law changes in future reporting periods.

The amounts of cash income taxes paid, net of refunds received, by the Company were as follows:

The amount of cash income taxes paid, net of refunds received, by the Company during the years ended December 28, 2024 and December 30, 2023 was $48.2 million and $22.5 million, respectively.

As of January 3, 2026, the Company had a $28.7 million balance in prepaid income taxes, which is classified in prepaid expenses and other current assets in the Consolidated Balance Sheets. The Company’s prepaid income tax balance increased significantly compared to the prior year primarily as a result of the aforementioned new tax legislation enacted in July 2025. Prior to the enactment of the legislation, the Company made estimated income tax payments based on tax laws then in effect. The new legislation introduced favorable timing‑related deductions for tax purposes, which reduced the Company’s estimated current‑year taxable income and overall tax liabilities in the U.S. As a result, the estimated tax payments made under the pre‑new law exceeded the revised estimated tax obligation under the new law, giving rise to an overpayment that is reflected as prepaid income taxes. The balance represents amounts expected to be refunded or applied against future tax liabilities and is based on the Company’s preliminary assessment of the impact of the legislation, which will continue to be refined in subsequent periods.

Note 16. Commitments and Contingencies

Litigation and regulatory matters

The Company is involved from time to time in claims, proceedings and litigation arising in the ordinary course of business. The Company has made accruals with respect to these matters, where appropriate, which are reflected in the consolidated financial statements. For some matters, the amount of liability is not probable or the amount cannot be reasonably estimated and therefore accruals have not been made. The Company may enter into discussions regarding settlement of these matters and may enter into settlement agreements, if in the best interest of the Company. From time to time, the Company is involved in routine litigation that arises in the ordinary course of business. There are no pending significant legal proceedings to which the Company is a party for which management believes the ultimate outcome would have a material adverse effect on the Company’s financial position.

Note 17. Related Party Transactions

In November 2025, the Company entered into a consulting arrangement with Brian Ames, a member of the Company’s Board and Nominating, Governance & Sustainability Committee. Under the terms of this arrangement, Mr. Ames served as Interim Chief Innovation Officer for twelve weeks and received $150,000 in cash compensation. As a result of the arrangement, Mr. Ames is considered a related party pursuant to Item 404(a) of Regulation S-K.

In connection with this arrangement, the Company also granted Mr. Ames an equity award in the form of RSUs during fiscal 2025, with a grant date fair value of $75,000. The RSUs will cliff vest on thethree-month anniversary of the grant date, subject to completion of services.

Note 18. Retirement Plans

Defined contribution plans

The Company sponsors certain retirement plans in both the U.S. and Canada. Once eligible, the Company will match $1.00 for every $1.00 contributed by the employee each paycheck, up to the first 4% of eligible pay, subject to annual regulatory limits. The total expense related to the Company’s contributions to the U.S. and Canadian plans for fiscal 2025, 2024 and 2023 was $5.3 million,$5.2 million and $4.7 million, respectively.

Deferred compensation plans

The Company has a non-qualified deferred compensation program which permits executives and other key employees to defer an amount of income into the plan which provides benefits payable at specified future dates. The plan investments are held within a rabbi trust with the deferred amount included within accrued payroll & related taxes and other liabilities in the accompanying Consolidated Balance Sheets. Participants’ cash deferrals earn market returns based on the participants’ selection of investments.