HAYW 10-K & 10-Q changes, risk factors and insider trading

We distribute our products through our customers who are distributors, builders, buying groups, retailers and servicers, many of whom also sell products of competing manufacturers. WeIn relycertain oncircumstances, ourwe customersalso to stock, market and recommendsell our products to poolcustomers ownersthat andmay ourcompete businesswith dependsus onin retainingone goodor more product categories or geographic markets. These relationships withmay ourpresent customers.inherent However,conflicts of interest, including the financialrisk conditionthat ofsuch these resellerscustomers could weaken,use theymarket couldknowledge, stoptechnical distributing our productsinsights or other information obtained through their commercial relationship with us to support competing offerings. In addition, a competitor-customer may reduce salesor ofdiscontinue our productspurchases in favor of ourinternally competitors.developed Further,or uncertaintyalternative regardingproducts, demandwhich forcould adversely affect our products could cause them to reduce their orderingsales and marketingmargins. ofAs our products.customer Asbase aevolves, result,including ourthrough business,consolidation financialor condition,expansion resultsinto ofadjacent operationsmarkets, andthese cashrisks flowsmay could be materially impacted.increase.

In several geographic markets, such asincluding Europe, many potential consumers prefer local suppliers, in some cases because of existing relationships and in other cases because of local legal restrictions or incentives that favor local businesses. Our success in these markets depends on obtaining and maintaining relationships with local channelcustomers partners whothat can effectively sell our products to pool ownersconsumers in the applicable market.markets. We have invested, and intend to continue to invest, in programs designed to enhance sales to distributors, builders, buying groups, retailers and servicers, including volume rebate programs with key distributors. However, these programs may not be successful in retaining or increasing product purchases by these customers or in maintaining or increasing our net income.

The demand for our swimming pool equipment products may be adversely affected by unfavorable economic and business conditions.

WeThe areCompany anis industry-leadinga leading global designer, manufacturer,designer and marketermanufacturer of a broad portfolio of pool equipment and associated automation systems. With the pool as the centerpiece of the growingequipment, outdoor living space,products theand poolindustrial industryflow hascontrol attractiveproducts. marketThe characteristics,Company includingbenefits significantfrom a large installed base, recurring aftermarket requirementsdemand (such as the ongoing repair, replacement, remodeling and upgrading of equipment for existing pools), innovation-led growth opportunities, and a favorable industry structure. We are a leader in this market with a highly-recognized brand, one of the largest installed bases of pool equipment in the world, decades-long relationships with our key channel partners and trade customers andfrom a history of technologicalinnovation, innovation.which together support long-term growth and cash generation. Our engineered products, which include various energy efficientenergy-efficient and more environmentally sustainable offerings, enhance the pool owner’s outdoor living lifestyle while also delivering high quality water, pleasant ambiance and ease of use for the ultimate backyard experience. Aftermarket replacements and upgrades to higher value IoT and energy efficient models are a primary growth driver for our business.

We have an estimated North American seasonal residential pool market share of approximately 33%. We believe that we are well-positioned for future growth. HistoricallyWe estimate aftermarket sales representedrepresent 80%approximately 85% of ourNorth American residential pool net sales and are generally recurring in nature since these products are critical to the ongoing operation of pools given requirements for water quality and sanitization. Our product replacement cycle of approximately 8eight to 11 years drives multiple replacement opportunities over the typical life of a pool, creating opportunities to generate aftermarket product sales as pool owners repair and replace equipment andrepair, remodel and upgrade their pools. We estimate aftermarket sales based upon feedback from certain representative customers and management’s interpretation of available industry and government data, and not upon our GAAP net sales results.

WeThe manufactureCompany our products athas seven manufacturing facilities worldwide, which are located in North Carolina, Georgia, Tennessee, Rhode Island, Spain (two) and China.China, and other facilities in the United States, Canada, France and Australia.

Our business is organized into two reportable segments: North America (“NAM”) and Europe & Rest of World (“E&RW”).RW. The Company determined its reportable segments based on how the Chief Operating Decision Maker (“CODM”) reviews the Company’s operating results in assessing performance and allocating resources. The Company's CODM is the President and Chief Executive Officer. NAM and E&RW accounted for approximately 85% and 15%, and 83% and 17%,15% of total net salessales, respectively, for both Fiscal Year 20242025 and Fiscal Year 2023, respectively.2024.

The NAM segment manufactures and sells a complete line of residential and commercial swimming pool equipment and supplies in the United States and Canada and manufactures and sells flow control products.

The E&RW segment manufactures and sells residential and commercial swimming pool equipment and supplies in Europe, Central and South America, the Middle East, Australia and other Asia Pacific countries.

•Seasonality. Our business is seasonal, with sales typically higher in the second and fourth quarters. DuringSeasonality is influenced by the second quarter, sales are higher in anticipationtiming of thecustomer startpurchasing ofpatterns and the summer pool season and in the fourth quarter, we incent trade customers to buy and stock in preparation for next year’s pool season under anCompany’s “Early Buy” program,Program, which features a price discountdiscounts and extended payment terms. ShipmentsThese forpurchasing patterns can impact inventory levels, accounts receivable and cash flows during the 2024 Early Buy program began in the late third quarter and will continue through approximately the first quarter of 2025. The favorable payment terms extended as part of the Early Buy program generally do not exceed 180 days.year. Revenue is recognized upon shipment of products, which cannot be returned after ten10 days from receipt of goods. For more information, see “—Key Factors and Measures We Use to Evaluate Our Business—Net Sales.’’Sales.” We aim to keep our manufacturing plants running at a constant level throughout the year and consequently we generally build inventory in the first and third quarters and inventory is sold-down in the second and fourth quarters. Our accounts receivable balance increases from September to April as a result of the Early Buy extended terms and increases through June due to higher sales in the second quarter. Also, because most of our sales are to distributors whose inventory of our products may vary, including due to reasons beyond our control, such as end-user demand, supply chain lead times and macroeconomic factors, our revenue may fluctuate from period to period.

•New product offerings. Our business is primarily driven by aftermarket spending. Pool owners are increasingly demanding new technologies, such as IoT-enabled and more energy efficient products, as they replace or upgrade their existing pool equipment. In Fiscal Year 2024, approximately 20% of gross sales was from new or next-generation products launched in the last three years. These new products offer higher energy efficiency, automation capabilities and enhanced water care solutions, and we expect will become primary drivers of our sales growth. Staying at the forefront of technological innovation and introducing new product offerings with new features will continue to be critical in growing our market share and revenue.

•Tariffs, Trade Restrictions and Other Geopolitical events.Events. The imposition of, and threat of imposition of, tariffs and other trade restrictions by the United States government in 2025, and tariffs and other trade restrictions announced by governments of other nations in response to these actions, have created substantial uncertainty in the global economy. This uncertainty, as well as the direct impact of these tariffs and other trade restrictions, may adversely affect the Company’s business by reducing market demand for the Company’s products, increasing the Company’s supply costs that cannot be passed on to customers and/or adversely affecting the competitiveness of the Company’s products against those of manufacturers not subject to such tariffs and trade restrictions. Geopolitical conflicts around the world have also created substantial uncertainty in the global economy, including as a result of sanctions and penalties imposed in response to these conflicts. In particular, armed conflicts in the Middle East and in Ukraine and Russia have adversely affected market demand in the Middle East and Asia, which has negatively impacted our results in our E&RW segment. See “—Segment—Europe & Rest of World (“E&RW”),” below. Given the nature of our business and global operations, if these or other geopolitical conflicts continue or worsen, our business and results of operations may be adversely affected.

Gross profit is equal to net sales less cost of sales. Cost of sales includes the direct cost of manufacturing, including direct materials, labor and related overhead, as well as warranty, inbound and outbound freight and import duties.

Our SG&A includes expenses arising from activities in selling, marketing, technical and customer services, warranty, warehousing, and administrative expenses. Other than warranty and variable compensation, SG&A is generally not directly proportional to net sales.

Acquisition and restructuring related costsexpense (or income)

The following tables summarize key components of our results of operations for the periods indicated, both in dollars and as a percentage of our net sales. We derived the consolidated statements of operations for the Fiscal Years 20242025 and 20232024 from our audited consolidated financial statements. Our historical results are not necessarily indicative of the results that may be expected in the future. A discussion regarding our financial condition and results of operations for the year ended December 31, 2023,2024, compared to the year ended December 31, 2022,2023, is included under “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023,2024, filed with the SEC on February 29,27, 2024.2025.

The Fiscal Year 20242025 increase in net sales was primarily driven by an increase inpositive net price, as well as by an increase in volumeprice and the favorable impact from acquisitions. The increase in net price was due to price increases enacted to offset inflationary pressures. The increase in volume was primarily the result of normalized channel inventory movements, partially offset by market declines in the Middle East and Asiatariff and lower new construction and remodel activity in the United States.pressures.

Gross profit increased to $530.8$538.7 million in Fiscal Year 20242025 from $477.0$487.0 million in Fiscal Year 2023,2024, an increase of $53.8$51.7 millionmillion, or 11.3%.10.6%.

Selling, general and administrative expense increased to $260.9$246.9 million in Fiscal Year 20242025 from $233.6$217.1 million in Fiscal Year 2023,2024, an increase of $27.3$29.8 millionmillion, or 11.7%,13.7%, drivenprimarily bydue normalizedto annualhigher incentive compensation, higher salary costs driven by wage inflation, targeted investments in our customer care, selling and businesscustomer analyticsservice teams,teams and discretea legalfull expenses,year partiallyof offsetexpense byrelated decreasedto warrantyChlorKing costs.HoldCo, LLC and related entities ("ChlorKing") acquired in June 2024 compared to six months of expense in the prior year.

RD&E expense increased to $27.2 million in Fiscal Year 2025 compared to $25.8 million in Fiscal Year 2024 compared to $24.5 million in Fiscal Year 2023,2024, an increase of $1.3$1.4 million, or 5.0%.5.5%. As a percentage of net sales, RD&E remained relatively flat at 2.4% in Fiscal Year 2025 as compared to 2.5% in eachFiscal year.Year 2024. RD&E spend continues to be focused on new product development and new product quality.

For additional information, see Note 19. “AcquisitionAcquisitions and Restructuring Related Expense” of Notes to Consolidated Financial Statements in this Annual Report on Form 10-K.

Amortization of intangible assets decreased to $27.5 million in Fiscal Year 2025 from $28.8 million in Fiscal Year 2024 from $30.4 million in Fiscal Year 2023,2024, a decrease of $1.6$1.3 million, or 5.1%,4.6%, due to the amortization pattern of certain intangiblesintangible asset classes based on the declining balance method.method, partially offset by a full year of amortization expense on the intangible assets acquired as part of the acquisition of ChlorKing in June 2024 compared to six months of expense in the prior year.

Interest expense, net, decreased to $50.3 million in Fiscal Year 2025 from $62.2 million in Fiscal Year 2024 from $73.6 million in Fiscal Year 2023,2024, a decrease of $11.4$11.9 million, or 15.5%.19.1%. The decrease was primarily due to lower interest rates, reduced debt as a result of the repayment of the Incremental Term Loan B principal balance in April 2024 and increased interest income on cash investment balances.

Interest expense in Fiscal Year 2025 consisted of $59.7 million of interest on the outstanding debt, net of the impact from the interest rate swaps, and $3.8 million of amortization of deferred financing fees, partially offset by $13.2 million of interest income. Interest expense in Fiscal Year 2024 consisted of $68.0 million of interest on the outstanding debt, net of the impact from the interest rate swaps, and $4.2 million of amortization of deferred financing fees, partially offset by $10.1 million of interest income. Interest expense in Fiscal Year 2023 consisted of $76.0 million on the outstanding debt and $4.7 million of amortization of deferred financing fees, partially offset by $7.1 million of interest income.

There was no loss on extinguishment of debt in Fiscal Year 2025. The $4.9 million loss on extinguishment of debt for Fiscal Year 2024 was incurred as a result of the voluntary repayment of the Incremental Term Loan B principal balance in April 2024.

We incurred income tax expense of $33.1 million for Fiscal Year 2025 and $25.5 million for Fiscal Year 20242024, and $20.4 million for Fiscal Year 2023, aan increase of $5.1$7.6 millionmillion, or 25.1%.29.5%. This increase in tax expense was primarily due to increased incomeoperating from operations.income.

Our effective income tax rate decreasedincreased to 17.9% for Fiscal Year 2025 from 17.7% for Fiscal Year 2024 from 20.2% for Fiscal Year 2023 primarily due to decreasedhigher foreign withholdingderived taxesintangible andincome statedeductions taxes,during the prior year, partially offset by decreasedlower excessstate taxand benefitlocal fromincome stock compensation.taxes.

Adjusted EBITDA increased to $299.3 million in Fiscal Year 2025 from $277.4 million in Fiscal Year 2024 from $247.3 million in Fiscal Year 2023,2024, an increase of $30.1$21.9 million, or 12.2%,7.9%, driven primarily by increased net sales and an increase inhigher gross profit of $53.8 million,profit, partially offset by an increase in SG&A expenses of $27.3 million.expenses.

The Company manages its business primarily on a geographic basis. The Company’s reportable segments consist of NAM and E&RW. We evaluate performance based on net sales, gross profit, segment income and adjusted segment income, and we use gross profit margin, segment income margin and adjusted segment income margin as comparable performance measures for our reporting segments.

Segment income represents segment net sales less cost of sales, less segment SG&A and RD&E, excluding acquisition and restructuring related expense,expense as well as amortization of intangible assets. A reconciliation of segment income to our operating income is detailed below. Adjusted segment income represents segment income adjusted for the impact of depreciation, amortization of certain intangible assets,assets recorded within cost of sales, stock-based compensation and certain non-cash, nonrecurring or other items that are included in segment income that we do not consider indicative of the ongoing segment operating performance. See “—Non-GAAP Reconciliation” for a reconciliation of these non-GAAP measuresmetrics to the most directly comparable GAAP measures.metric.

(a) See “—Non-GAAP Reconciliation.”

Year-over-yearThe year-over-year net sales increase was driven by the following factors:

Segment income increased to $284.8 million in Fiscal Year 2025 from $261.7 million in Fiscal Year 2024 from $215.4 million in Fiscal Year 2023,2024, an increase of $46.3$23.1 million, or 21.5%.8.8%. This was primarily drivenattributable byto anthe increase in net sales and gross profit as discussed above, partially offset by higher SG&A expense due to higher incentive compensation and higher salary costs driven by normalizedinvestments annualin incentiveour compensation. As a percentage of segment net sales, SG&Aselling and RD&Ecustomer expensescare remainedteams consistentand atwage 23.7% for each year.inflation.

Segment income margin increased to 29.7% in Fiscal Year 2025 from 29.2% in Fiscal Year 2024 from 26.2% in Fiscal Year 2023,2024, an increase of 30050 basis points primarily resulting from the increase in salessegment and gross profit asincome discussed above.

Adjusted segment income increased to $310.7 million in Fiscal Year 2025 from $291.0 million in Fiscal Year 2024 from $237.7 million in Fiscal Year 2023,2024, an increase of $53.3$19.7 million, or 22.4%.6.8%. This was driven by higherthe increased segment income as discussed above, adjustedafter adjusting for additionalthe non-cash orand non-recurringspecified charges.costs discussed below in “— Non-GAAP Reconciliation.”

Adjusted segment income margin increaseddecreased to 32.4% in Fiscal Year 2025 from 32.5% in Fiscal Year 20242024, froma 28.9% in Fiscal Year 2023, an increasedecrease of 36010 basis points.

Europe & Rest of World (“E&RW”) (Dollars in thousands)

(a) See “—Non-GAAP Reconciliation.”

Year-over-yearThe year-over-year net sales decreaseincrease was driven by the following:

Net sales decreasedincreased to $163.0 million in Fiscal Year 2025 from $156.1 million in Fiscal Year 20242024, froman $169.2 million in Fiscal Year 2023, a decreaseincrease of $13.1$6.9 million, or 7.7%.4.4%.

The decreaseincrease in net sales was primarily due to a declinegrowth in volume, partially offset by the favorable impact offrom foreign currency translation and positive net price.price to offset inflation. The decline in volume growth was primarily driven by Early Buy shipments and improved market declinesconditions in the Middle EastAsia and Asia,Europe partiallycompared as a result ofto the impactprior of geopolitical conflicts in the Middle East.year.

Gross profit decreasedincreased to $56.5$59.8 million in Fiscal Year 20242025 from $66.3$53.7 million in Fiscal Year 2023,2024, aan decreaseincrease of $9.8$6.1 millionmillion, or 14.8%.11.3%.

Gross profit margin decreasedincreased to 36.2%36.7% in Fiscal Year 20242025 compared to 39.2%34.4% in Fiscal Year 2023,2024, aan decreaseincrease of 300230 basis points, primarily driven by loweroperational operatingefficiencies leverage, discrete inventory adjustments and unfavorable mix duerelated to thehigher impact of geopolitical conflicts in the Middle East, partially offset by the net price increases discussed above.volume.

Segment income decreasedincreased to $26.5 million in Fiscal Year 2025 from $21.6 million in Fiscal Year 20242024, froman $33.5 million in Fiscal Year 2023, a decreaseincrease of $11.9$4.9 million, or 35.5%.22.7%. This was primarily driven by aan decreaseincrease in net sales and gross profit as discussed above. As a percentage of segment net sales, SG&A and RD&E expenses increased from 19.4% in the Fiscal Year 2023 to 22.3% as a result of lower net sales as discussed above.

Segment income margin decreasedincreased to 16.3% in Fiscal Year 2025 from 13.9% in Fiscal Year 20242024, an increase of 240 basis points, resulting from 19.8%the increase in Fiscalgross Year 2023, a decrease of 590 basis points. The decline was primarily attributable to the decreased sales and operating leverage.profit.

NAM manufactures and sells a complete line of residential and commercial swimming pool equipment and supplies in the United States and Canada, and manufactures and sells industrial flow control products.

NAM accounted for 82%87% and 85% of total net sales for both the three months ended MarchJune 28,27, 2026 and MarchJune 29,28, 2025, respectively, and E&RW accounted for 18%13% and 15% of total net sales for both the three months ended MarchJune 28,27, 2026 and MarchJune 29,28, 2025.2025, respectively.

Our results of operations for the three and six months ended MarchJune 28,27, 2026 and MarchJune 29,28, 2025 have been affected by the following, among other events, which must be understood to assess the comparability of our period-to-period financial performance and condition.

Our fiscal quarters end on the Saturday closest to and before the calendar quarter end, with the exception of year end which ends on December 31 of each fiscal year. The interim closing date for the first, second and third quarters of 2026 are March 28, June 27, and September 26, compared to the respective March 29, June 28, and September 27, 2025 dates. This resulted in one fewer working day for the threesix months ended MarchJune 28,27, 2026 compared to the 2025 period.

The imposition of, and threat of imposition of, tariffs and other trade restrictions by the United States government in 2025, and tariffs and other trade restrictions announced by governments of other nations in response to these actions, have created substantial uncertainty in the global economy. On February 20, 2026, the United States Supreme Court issued a ruling striking down certain tariffs previously imposed under the International Emergency Economic Powers Act (“IEEPA”). Following the Supreme Court’s decision, the U.S. announced its intention to invoke other laws to collect tariffs and announced new tariffs on imports, 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 or other retaliatory actions may be imposed, modified, or suspended, and the impacts of such actions on our business. Furthermore, the Company has received, and may be eligible to receive additional refunds of certain tariffs it paid that were levied under the IEEPA. If it is determined that the Company is eligible for refunds, theThe availability, amount and timing of suchany additional refunds is uncertain and subject to further developments. This uncertainty, as well as the direct impact of tariffs and other trade restrictions, may adversely affect the Company’s business by reducing market demand for the Company’s products, increasing the Company’s supply costs that cannot be passed on to customers and/or adversely affecting the competitiveness of the Company’s products against those of manufacturers not subject to such tariffs and trade restrictions. Geopolitical conflicts around the world have also created substantial uncertainty in the global economy, including as a result of sanctions and penalties imposed in response to these conflicts. In particular, armed conflicts in the Middle East and in Ukraine and Russia have adversely affected market demand in thecertain Middle East and Asia,markets, which has negatively impacted our results in our E&RW segment. See “—Segment—Europe & Rest of World,” below. Given the nature of our business and global operations, if these or other geopolitical conflicts continue or worsen, our business and results of operations may be adversely affected.

For information about our use of Non-GAAP measures and a reconciliation of these metrics to the most directly comparable GAAP measures seesee, “—Non-GAAP Reconciliations.”

The following tables summarize key components of our results of operations for the periods indicated. We derived the consolidated statements of operations for the three and six months ended MarchJune 28,27, 2026 and MarchJune 29,28, 2025 from our unaudited condensed consolidated financial statements. Our historical results are not necessarily indicative of the results that may be expected in the future. The following table summarizes our results of operations:

Net sales increased to $255.2$318.4 million for the three months ended MarchJune 28,27, 2026 from $228.8$299.6 million for the three months ended MarchJune 29,28, 2025, an increase of $26.4$18.8 million, or 11.5%.6.3%. See the segment discussion below for further information.

The net sales increase for the three months ended MarchJune 28,27, 2026 was driven by positive net price to offset inflation and tariffs,tariffs and the favorable impact from foreign currency translation, and an increase in volume.translation.

Gross profit increased to $118.7$155.1 million for the three months ended MarchJune 28,27, 2026 from $105.3$147.5 million for the three months ended MarchJune 29,28, 2025, an increase of $13.4$7.6 million, or 12.8%.5.2%.

Gross profit margin increaseddecreased to 46.5%48.7% for the three months ended MarchJune 28,27, 2026 compared to 46.0%49.2% for the three months ended MarchJune 29,28, 2025, ana increasedecrease of 50 basis points, primarily due to positive net price and operating efficiencies, partially offset by an increase in cost of sales driven by tariffsinflation and inflation.tariffs, partially offset by positive net price.

Selling, general, and administrative expense ("SG&A") increased to $62.6$64.3 million for the three months ended MarchJune 28,27, 2026 from $57.0$61.5 million for the three months ended MarchJune 29,28, 2025, an increase of $5.6$2.8 million, or 9.8%,4.5%, primarily due to thehigher timingincentive of certain sales expenses during the year, incremental advertising expense for trade shows and new customers, and increased software costs.compensation.

As a percentage of net sales, SG&A decreased to 24.5%20.2% for the three months ended MarchJune 28,27, 2026 as compared to 24.9%20.5% for the three months ended MarchJune 29,28, 2025, a decrease of 4030 basis points, as the growth in net sales exceeded the growth in SG&A.

Research, development, and engineering expense (RD&E) increased to $6.8$7.7 million for the three months ended MarchJune 28,27, 2026 from $6.0$6.1 million for the three months ended MarchJune 29,28, 2025, an increase of $0.8$1.6 million, or 12.9%.25.2%. RD&E spend continues to be focused on new product development and new product performance improvements.

As a percentage of net sales, RD&E remainedincreased relativelyto consistent at 2.6%2.4% for both the three months ended MarchJune 27, 2026 as compared to 2.0% for the three months ended June 28, 20262025, andan Marchincrease 29,of 2025.40 basis points.

For the three months ended MarchJune 28,27, 2026, we incurred $0.5$0.7 million of acquisition and restructuring related expense as compared to $1.9$1.6 million of expense for the three months ended MarchJune 29,28, 2025. The expense in the three months ended MarchJune 28,27, 2026 was driven by costs associated with a restructuring actions,action in the E&RW segment, while the prior period expense was primarily driven by costs associated with the acquisition of ChlorKing HoldCo, LLC and related entities (“ChlorKing”), including the deferred purchase price treatedrecognized as compensation cost over the 12-month service period from the date of acquisition.

For the three months ended MarchJune 28,27, 2026, amortization of intangible assets decreased by $0.5 million compared to the three months ended MarchJune 29,28, 2025 due to the amortization pattern of certain intangible asset classes based on the declining balance method.

For the three and six months ended MarchJune 28,27, 2026, operating income increased by $9.0$4.6 million and $13.6 million, respectively, due to the aggregated effect of the items described above.

Interest expense, net, decreasedincreased to $11.5$17.0 million for the three months ended MarchJune 28,27, 2026 from $13.7 million for the three months ended MarchJune 29,28, 2025, aan decreaseincrease of $2.2$3.3 million, or 15.7%,24.4%. The increase was primarily due to $5.2 million of debt financing costs from the entry into the Credit Agreement (as defined below) on June 23, 2026, partially offset by higher interest income on cash deposits and decreasedlower net interest expense on bank debt.

Interest expense, net, for the three months ended MarchJune 28,27, 2026 consisted of $13.6$19.1 million of interest expense on the outstanding debt, including $5.2 million of debt financing costs, and $0.8$0.9 million of amortization of deferred financing fees, partially offset by $2.9$3.0 million of interest income on cash deposits. The effective interest rate on our borrowings, including the impact of interest rate hedges, was 6.21%6.13% for the three months ended MarchJune 28,27, 2026.

Interest expense, net, for the three months ended MarchJune 29,28, 2025 consisted of $14.3$15.1 million of interest expense on the outstanding debt and $0.9$1.1 million of amortization of deferred financing fees, partially offset by $1.5$2.5 million of interest income on cash deposits. The effective interest rate on our borrowings, including the impact of interest rate hedges, was 6.31%6.52% for the three months ended MarchJune 29,28, 2025.

Loss on debt extinguishment of debt

TheA $0.2$1.8 million and $2.0 million loss on debt extinguishment of debt for the three and six months ended MarchJune 28,27, 20262026, respectively, was incurred primarily as a result of the Company's debt refinancing in June 2026 in connection with the entry into the Credit Agreement. The Company also incurred a loss on debt extinguishment as a result of the voluntary repayment of the principal balance for a portion of other bank debt in February 2026. There was no loss on debt extinguishment of debt for the three and six months ended MarchJune 29,28, 2025.

We incurred income tax expense of $6.8$13.6 million for the three months ended MarchJune 28,27, 2026, compared to income tax expense of $4.3$14.6 million for the three months ended MarchJune 29,28, 2025, ana increasedecrease of $2.5$1.0 million, or 55.4%. While pretax income increased 61.2% for the three months ended March 28, 2026, the effective tax rate decreased, resulting in a 55.4% increase in income tax expense compared to the three months ended March 29, 2025.6.8%.

The decrease in the Company’s effective tax rate from 23.3%24.6% for the three months ended MarchJune 29,28, 2025 to 22.4%23.0% for the three months ended MarchJune 28,27, 2026 was primarily due to lower state taxes.

As a result of the foregoing, net income increased by $9.0$0.8 million and $9.8 million, or 63.0%,respectively, for the three and six months ended MarchJune 28,27, 2026.

Net income margin increaseddecreased to 9.2%14.3% for the three months ended MarchJune 28,27, 2026 compared to 6.3%15.0% for the three months ended MarchJune 29,28, 2025, ana increasedecrease of 29070 basis points.

Adjusted net income increased to $29.8$57.8 million for the three months ended MarchJune 28,27, 2026 from $22.1$52.2 million for the three months ended MarchJune 29,28, 2025, an increase of $7.7$5.5 million, or 34.9%,10.6%, driven primarily by increased net sales.

Adjusted net income margin increased to 11.7%18.1% for the three months ended MarchJune 28,27, 2026 compared to 9.7%17.4% for the three months ended MarchJune 29,28, 2025, an increase of 20070 basis points.

Adjusted EBITDA increased to $56.4$92.7 million for the three months ended MarchJune 28,27, 2026 from $49.1$88.2 million for the three months ended MarchJune 29,28, 2025, an increase of $7.3$4.5 million, or 14.8%,5.1%, driven primarily by increased net sales.

Adjusted EBITDA margin increaseddecreased to 22.1%29.1% for the three months ended MarchJune 28,27, 2026 compared to 21.5%29.5% for the three months ended MarchJune 29,28, 2025, ana increasedecrease of 6040 basis points.

Net sales increased to $209.8$277.7 million for the three months ended MarchJune 28,27, 2026 from $187.1$255.2 million for the three months ended MarchJune 29,28, 2025, an increase of $22.7$22.5 million, or 12.1%.8.8%.

The net sales increase for the three months ended MarchJune 28,27, 2026 was driven primarily by positive net price to offset inflation and tariffs,tariffs and an increase in volume, and the favorable impact from foreign currency translation.volume.

Gross profit increased to $102.4$140.0 million for the three months ended MarchJune 28,27, 2026 from $91.2$130.8 million for the three months ended MarchJune 29,28, 2025, an increase of $11.2$9.2 million, or 12.3%.7.0%.