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

The willingness of our customers and consumers to purchase our products may depend in part on economic conditions. Worsening economic conditions or future challenges to economic growth could have a negative impact on consumer demand, which could adversely affect our business. Deterioration of national and global economic conditions could cause consumers to forego certain purchases during economic downturns that could result in decreased demand for our business. The economic uncertainty may limit our ability to increase or maintain prices and reduce sales of higher margin products. In addition, changes in tax or interest rates, whethercurrent dueor tofuture recession,governmental policies or regulations, which include the imposition of tariffs, efforts to combat inflation, financial and credit market disruptions or other reasons, could negatively impact us.

Risks of Shortages or Increased Cost of Raw Materials and Packaging We are exposed to market risks arising from adverse changes in commodity prices, affecting the cost of our raw materials and energy. The raw materials and energy which we use for the production and distribution of our products are largely commodities that are subject to price volatility and fluctuations in availability caused by changes in global supply and demand, weather conditions, agricultural uncertainty, or governmental controls.policies and regulations, which can include the imposition of tariffs. We purchase these materials and energy mainly in the open market. Our procurement practices are intended to reduce the risk of future price increases, but also may potentially limit the ability to benefit from possible price decreases. If commodity price changes result in increases in raw materials and energy costs, we may not be able to increase our prices to offset these increased costs without suffering reduced revenue and operating income. These increased costs, if not offset, may have a significant impact on our profits.

Risks Relating to Pandemics, Epidemics, or Other Disease Outbreaks Pandemics, epidemics, or other disease outbreaks could significantly change consumption patterns for our products. These changes could force us to rapidly adapt to those new patterns, and, if we do not, our business could be materially and adversely affected. Additionally, pandemics, epidemics or other disease outbreaks may depress or otherwise impact demand for our products because quarantines may inhibit consumption or as the result of other factors.consumption. Restrictions on public gatherings or interactions may also limit the opportunity for our customers and consumers to purchase our products, especially in certain of our sales channels, such as food service. Any economic downturn caused by any pandemic, epidemic, or other disease outbreak may also cause substantial changes in consumer behavior and our supply chain operations, some of which may materially affect our operations and results of operations.

We have several large customers that account for a significant portion of our sales. Our top ten customers accounted for 46% of our sales during fiscal year 2025, 45% of our sales during fiscal year 2024 and 43% of our sales during fiscal yearsyear 2023 and 2022,2023, with our largest customer accounting for 10% of our sales in 2025, 9% of our sales in 2024, and 9% of our sales in 2023, and 8% of our sales in 2022.2023.

Acquisitions, including future acquisitions, require us to efficiently integrate the acquired business or businesses, which involves a significant degree of difficulty, including the following:

To help combat these potential headwinds, we strategically lookcontinue to improve ourpursue operational efficiencies and margins,improvements, as well as expand our growth opportunities across our various channels and customers. Some recent examples of implementing these strategies include:

Fiscal Year 2024 (52 weeks)2025 Compared to Fiscal Year 2023 (53 weeks)2024

Operating expenses included intangible asset impairment charges of $1.7 million in fiscal 2023, with no such charges incurred in fiscal 2024. As a percentage of sales, marketingMarketing and selling expenses as a percentage of sales increased from 7.1% in fiscal 2023 to 7.5% in fiscal 2024,2024 to 7.8% in fiscal 2025, with the increase primarily driven by the additionalhigher investment inpromotional marketing spend associated with new product launches and the promotion of our core brands, along with the incremental licensing fees on new churro business during the fiscal year.sponsorships. Distribution expenses as a percentage of sales increased slightlydecreased to 10.6% in fiscal 2025 from 11.2% in fiscal 20242024, fromwith 11.1%the in fiscal 2023. Some decreases in distribution expensesdecrease driven by the continued benefits of our strategic initiatives to improve logistics management and increase efficiency across our distribution network and supply chainchain, wereas morewell than offset byas approximately $5 million of non-recurring start-up costs related to the opening of two additional regional distribution centers in fiscal 2024. Administrative expenses as a percentage of sales decreasedincreased slightly from 4.8% in fiscal 2023 to 4.7% in fiscal 2024,2024 to 4.9% in fiscal 2025, with the decreaseincrease largely attributable to improved management of expenses, and leverage from higher sales.compensation costs.

Investment income increased by $0.5$0.4 million, or 18%,11%, to $3.2$3.6 million in fiscal 20242025 due to higher average cash balances andduring higherthe interest rates on foreign cash balances.year.

Our effective tax rate in fiscal 2025 was 24.1%. Our effective tax rate in fiscal 2024 was 27.2%. OurThe effective tax ratedecrease in fiscal 2023 was 26.6%. The slight increaserate between periods was primarily attributable to a slightlychange higherin estimate on blended state tax rate.rate and the impact on the valuation of net deferred tax liabilities.

Net earnings increaseddecreased $7.6by $21.0 million, or 10%,24%, in fiscal 20242025 to $65.6 million, or $3.36 per diluted share, from $86.6 million,million or $4.45 per diluted share, from $78.9 million or $4.08 per diluted share, in fiscal 20232024 as a result of the aforementioned items.

The Chief Operating Decision Maker for Food Service, Retail Supermarkets and Frozen Beverages reviews monthly detailed operating income statements and sales reports in order to assess performance and allocate resources to each individual segment. Sales and operating income are the key variables monitored by the Chief Operating Decision Maker and management when determining each segment’ssegment and the Company’s financial condition and operating performance. In addition, the Chief Operating Decision Maker reviews and evaluates depreciation, capital spending and assets of each segment on a quarterly basis to monitor cash flow and asset needs of each segment.

Sales to food service customers increased $3.4$16.2 million, or 0.3%,1.6%, to $985.2$1,001.4 million in fiscal 2024.2025. Soft pretzel sales to the food service market decreasedincreased 6%4% to $222.2$230.1 million for the year, with the decreaseincrease attributablelargely todriven softby consumerstrong spending in key channels, as well as the impactsecond-half of the additional week in fiscal 2023.year volume increases across many of our pretzel products and brands, most notably our Bavarian pretzels, with a secondary benefit of price increases. Frozen novelties sales increased $2.6$1.9 million, or 2%,1%, to $148.0$149.9 million for the year, with a strong fiscal year performance seen across multiple brands within our frozen novelties portfolio despite the softincrease channeldriven performanceby an approximate 3% increase in amusement and convenience, which are key sales venues for Dippin’ Dots.Dots sales. Churro sales to food service customers were updown 5%14% to $114.3$97.9 million for the year ledwith the decrease largely driven by the lapping of the benefit of limited time offer churro volumes with a major customer expansionin andthe growingprior menuyear penetration.period which did not recur in the current year period. Sales of bakery products increased $9.0$18.8 million, or 2%,5%, to $387.1$405.9 million for the year, with the increase attributable to contractual pricing true-up on costing on certain raw material ingredients, as well as,as some volumetargeted, non-contractual price increases amongsttaken to offset the rising costs on certain customersraw material ingredients, offset somewhat by volume declines, most notably in our first fiscal quarter related to our pie portfolio and the productloss category.of some seasonal business with a declining margin profile that we bid on, but did not retain. Handheld sales to food service customers increased 5%7% to $86.1$92.0 million in fiscal 2024,2025, with the increase largely attributable to a combination of strong volume increases across our core food service handhelds as well as pricing increases related to the contractual pricing true-up of costing on certain raw material ingredients, as well as some volume increases amongst certain customers in the product category.ingredients.

Sales of new products in the first twelve months since their introduction were approximately $24.7$3.9 million for the fiscal year, driven primarily by the addition of churros to the menu of a major QSRfast-food customer. TheSales benefitin the fiscal year benefited from the impact of themid-single wrapdigit of prior yearpercentage price increases, aswith wellthose asprice someincreases currentprimarily yearrelated to the contractual pricing true-up of costing on certain raw material ingredientsingredients, hadas well as some targeted, non-contractual price increases taken in an attempt to offset the rising costs on certain raw material ingredients. The revenue increase attributable to price increases was somewhat offset by declining volumes, most noticeably in our churro portfolio due to the lapping of the benefit of limited time offer churro volumes with a slightmajor favorable impact on salescustomer in the prior fiscal year, andas morewell thanas offsetin someour verybakery slightportfolio, due to the volume declines thatin wereour primarilypie attributablebusiness in the first fiscal quarter related to the additionalloss weekof insome fiscalseasonal 2023.business with declining profit margin profile that we bid on, but did not retain.

Sales of products to retail supermarkets increaseddecreased $5.9$7.5 million, or 3%, to $221.3$213.8 million in fiscal year 2024.2025. Soft pretzel sales to retail supermarkets wereremained materially flat at $61.7 million, anwith increasea ofstrong $1.5fiscal million,fourth orquarter 2%,offsetting fromsome salesdeclines earlier in the fiscal 2023, with the increase largely attributable to the incremental distribution of our core soft pretzel brands.year. Sales of frozen novelties decreased $3.6$1.9 million, or 3%,2%, to $112.2$110.3 million in fiscal 2024,2025, with the decrease mostly attributable to thevolume impactdeclines ofseen in the additional week in fiscal 2023. The favorable impact of very strong fiscal second and fiscal third quarters was mostly offset by a weaker fiscal fourth quarter for a majorityhalf of our frozenfiscal novelty brands.year. Sales of biscuits and dumplings decreased 3%5% to $24.2$23.1 million inand fiscal 2024. Handheldhandheld sales to retail supermarket customers increaseddecreased 58%18% to $26.3$21.6 million in fiscal 2024,2025, with the increasedecrease largelyin drivenhandheld bysales expandedprimarily placementsattributable to the impact of productcapacity withconstraints arelated majorto retailer.the fire at our Holly Ridge facility.

Sales of new products in retail supermarkets were minimalapproximately in$5.0 fiscalmillion, 2024.driven primarily by the launch of Dippin’ Dots sundaes. Sales in the fiscal 2024year benefitted minimallybenefited from the impact of priorlow-single fiscaldigit year’spercentage price increases, andwith those increases more than offset slightby volume decreases in volume that were primarily attributablenoted towithin the additionalthird weekand infourth fiscal 2023.quarters.

Operating income in our Retail Supermarkets segment increaseddecreased $7.3$5.9 million or 31% to $13.3 million in fiscal 2024 to $16.6 million2025, with the increasedecrease primarily driven by salesthe growthdeclining asfrozen wellnovelties asvolumes improved gross margin performanceseen in mostthe second half of our retailfiscal product categories.year.

Total frozen beverage segment sales increaseddecreased $6.7slightly millionby or$0.2 2%million, to $368.3 million$368.0 in fiscal 2024.2025. Beverage-related sales increaseddecreased 2%,5%, or $5.4$10.7 million, in fiscal 2024.2025, with the decrease primarily reflecting weakness in certain channels, as well as the unfavorable foreign exchange impacts from a weaker Mexican Peso, somewhat offset by comparative strength noted within the theater channel. Gallon sales decreased 3%4% from the prior fiscal year, primarily reflecting a weaker theater performance as the prior year’s actors’ strike impacted the volume and quality of movie releases, although the weakness began to soften in Q4 as some stronger releases began to hit the market.year. Service revenue increased 1% to $96.6$97.4 million in fiscal 20242025 and machines revenue, primarily sales of frozen beverage machines, increased 1%25% to $38.2$47.8 million in fiscal 2024.2025, primarily driven by strong growth from theater and convenience customers.

The estimated number of Company-owned frozen beverage dispensers was 24,000 at both September 27, 2025 and 23,000 at September 28, 2024 and September 30, 2023, respectively.2024. Operating income in our Frozen Beverage segment increaseddecreased 2%,7%, or $1.1$3.5 million, in fiscal 2024.2025, primarily due to the impact of unfavorable mix and the unfavorable foreign exchange related headwinds.

Interest accrues, at the Company’s election at (i) the BSBYSOFR Rate (as defined in the Credit Agreement), plus an applicable margin, based upon the Consolidated Net Leverage Ratio, as defined in the Credit Agreement, or (ii) the Alternate Base Rate (a rate based on the higher of (a) the prime rate announced from time-to-time by the Administrative Agent, (b) the Federal Reserve System’s federal funds rate, plus 0.50% or (c) the Daily BSBYSOFR Rate, plus an applicable margin). The Alternate Base Rate is defined in the Credit Agreement.

The singular performance obligationobligations of our customer contracts for product and machine sales isare determined by each individual purchase order and the respective products ordered, with revenue being recognized at a point-in-time when the obligation under the terms of the agreement is satisfied and product control is transferred to our customer. Specifically, control transfers to our customers when the product is delivered to, installed, or picked up by our customers based upon applicable shipping terms, aswhich is when our customers can direct the use and obtain substantially all of the remaining benefits from the product at this point in time.product. The performance obligations in our customer contracts for product are generally satisfied within 30 days.

We have a self-insured medical plan which covers approximately 1,800 of our employees. We record a liability for incurred but not yet reported or paid claims based on our historical experience of claims payments and a calculated lag time period.time. Considering that we have stop loss coverage of $225,000$300,000 for each individual plan subscriber, the general consistency of claims payments and the short time lag, we believe that there is not a material exposure for this liability.

Our products are generally sold for discretionary consumption. Our results are impacted by macroeconomic and demographic trends and changes in consumer behavior. The U.S. economy has experienced economic volatility and uncertainty in recent years, which has had, and we expect might continue to have, an impact on consumer behavior. Consumer spending may continue to be impacted by levels of discretionary income and the impact of that on the consumer’s decisions makingdecision-making around their purchases. In addition, inflation continues to impact our business and fluctuating raw material input costs may continue to impact the cost of our products.

While overall packaging and raw material inflation appears to behave moderatingmoderated forduring fiscal 2026, uncertainty within the supply chain surrounding impacts from the US government’s tariffs on imports, as well as risingelevated fuel and freight costs, could continue to be potential headwinds for the Company inthroughout the remainder of fiscal 2026.2026 and into fiscal 2027. Tariffs and elevated fuel and freight costs may increase the cost of certain raw materials and packaging that we use in our business, as well as increase our distribution costs, and our financial performance may be adversely impacted if we are unable to pass on the cost increases in the form of price increases to our customers. Additionally, the ultimate impact of tariffs may be difficult to predict as tariff rates and duration remain uncertain, which can make our planning process more challenging.

The above referenced Project Apollo is expected to generate atapproximately least $20$25 million of run-rate operating income for the initiatives that are expected to be implemented by the end of fiscal 2026. The initial focus of the project is the consolidation and optimization of our manufacturing network. During the fourth quarter of fiscal 2025, we announced the closure of two manufacturing facilities, our plant in Holly Ridge, North Carolina, and our plant in Atlanta, Georgia. In the first quarter of fiscal 2026, we announced the closure of a third manufacturing facility, our plant in Colton, California. During the second quarter of fiscal 2026, we made the decision to close a fourth facility, our manufacturing/distribution facility in New York, New York, which isclosed expectedas toanticipated close induring our third fiscal quarter.

Production from these facilities willhas either bebeen consolidated into various other facilities across our network, or itin willcertain becases, has been discontinued. This consolidation was enabled by investments we have made in our plants to modernize and expand capacity for our core products, as well as our investments made to build out our three regional distribution centers. In connection with the closing of our four facilities, we recorded plant closure costs of approximately $24 million in the fourth quarter of fiscal 2025, and another $4.8 million and $10.9 million in the three and six months ended March 28, 2026, respectively. These costs primarily related to non-cash write-downs and write-offs related to inventory and property, plant and equipment, as well as severance and benefit costs and other exit and disposal activities.

In addition to plant consolidation, as part of the first phase of Project Apollo, we are expectingcontinuing to work towards optimally repositionrepositioning production within our network, which we are expecting to generate additional freight savings in fiscal 2026 and beyond, and to streamline our corporate functions, both of which ishave expectedstarted to generate general and administrative expense savings in fiscal 20262026, but for which we anticipate the full run-rate benefit to begin to be seen in fiscal 2027 and beyond.

RESULTS OF OPERATIONS – Three and sixnine months ended MarchJune 28,27, 2026

The following discussion provides a review of results for the three and sixnine months ended MarchJune 28,27, 2026 as compared with the three and sixnine months ended MarchJune 29,28, 2025.

Net sales decreased by $11.3$28.3 million, or 3.2%,6.2%, to $344.8$426.0 million for the three months ended MarchJune 28,27, 2026. Net sales decreased by $30.1$58.4 million, or 4.2%,5.0%, to $688.6$1,114.6 million for the sixnine months ended MarchJune 28,27, 2026. The sales decrease was primarily driven by declines in our Food Service segment, most notably within our bakery portfolio, and the majority of which related to the anticipated sales reductions in our bakery business.

Gross Profit increased by $3.6$1.0 million, or 3.8%,0.6%, to $99.3$151.0 million for the three months ended MarchJune 28,27, 2026. As a percentage of sales, gross profit increased from 26.9%33.0% to 28.8%.35.5%. The increase in gross profit as a percentage of sales was largely driven by the benefits of our previously announced plant closures as well as the favorable impact from mix improvements. These favorable tailwinds significantly offset the unfavorable impact of lower sales volumes in our Food Service segment, as well as the higher slotting fees and promotional spend within our Retail segment.

Gross Profit increased by $5.7$6.7 million, or 3.0%,2.0%, to $195.3$346.3 million for the sixnine months ended MarchJune 28,27, 2026. As a percentage of sales, gross profit increased from 26.4%29.0% to 28.4%.31.1%. The increase in gross profit as a percentage of sales was largely driven by the benefits of our previously announced plant closures as well as the favorable impact from mix improvements. These favorable tailwinds significantly offset the unfavorable impact of lower sales volumes in our Food Service segment, as well as the higher slotting fees and promotional spend within our Retail segment.

Operating Expenses increased $15.5by $15.3 million, or 8.8%,17.1%, to $192.9$104.7 million for the sixthree months ended MarchJune 28,27, 2026. As a percentage of sales, operating expenses increased from 24.7%19.7% to 28.0%.24.6%. Operating expenses in the prior year included $10.9the millionbenefit of plant closure expenses and a partly offsetting $0.8$10.6 million gain on insurance proceeds received for damage to property, plant,plant and equipmentequipment, inrelated to the sixfire monthsat endedour MarchHolly 28,Ridge 2026.plant, offset slightly by the $1.5 million intangible asset impairment charge. The net impact of thesethose two items increasedreduced prior year operating expenses as a percentage of sales by approximately 150200 bps.

The remaining increase in operating expenses was most notably driven by increases in selling and marketing expenses, and general and administrative expenses. As a percentage of sales, sellingmarketing and marketingselling expenses increased from 8.0%7.5% to 8.9%8.1% and from $57.2$33.8 million to $61.6$34.6 million in the sixthree months ended MarchJune 28,27, 2026, with the increase primarily attributable to increased commission costs on retail vending sales, increased spend on sponsorships, brand support and other promotional activities, and higher depreciation for customer equipment for growth.

As a percentage of sales, general and administrative expenses increased from 5.4%4.4% to 6.0%4.7% and from $38.7$20.0 million to $41.6$20.1 million in the sixthree months ended MarchJune 28,27, 2026. The increase was most significantly driven by non-recurring restructuring and legal expenses.

As a percentage of sales, distribution expenses increased from 11.3%10.8% to 11.6%, but declined slightlyand from $81.4$126.1 million to $79.8$129.4 million in the sixnine months ended MarchJune 28,27, 2026, with the decreaseincrease mostlyprimarily attributable to theelevated lowerfuel salescosts volumesdue duringto rising oil prices and higher freight rates resulting from the period.constrained capacity due to regulatory and legislative changes, which were incurred predominantly in the three months ended June 27, 2026.

Investment income increased slightly from $0.7$0.6 million to $0.8$0.7 million for the three months ended MarchJune 28,27, 2026, but decreased slightly from $1.7$2.3 million to $1.5$2.2 million for the sixnine months ended MarchJune 28,27, 2026.

Interest expense increased byfrom $0.2$0.4 million to $0.3 million and by $0.1 million to $0.4$1.0 million for the three months ended June 27, 2026, and sixfrom $0.7 million to $1.4 million for the nine months ended MarchJune 28,27, 2026, respectively, due to the increase in the Company’s average outstanding borrowings onunder the Amended Credit Agreement for the three and six-nine- month periods ended MarchJune 28,27, 2026, as compared to the prior year periods.

Our effective tax rate remained materially consistent, increasing slightlydecreased from 27.2% to 28.1%23.2% and from 27.2% to 27.7%23.5% for the three and sixnine months ended MarchJune 28,27, 2026, respectively. The decrease in rate between periods was primarily attributable to a change in the blended state tax rate between periods.

Net earnings decreased by $3.1$8.9 million, or 65.2%,20.1%, for the three months ended MarchJune 28,27, 2026, due to the aforementioned items.

Net earnings decreased by $7.4$16.3 million, or 74.3%,30.1%, for the sixnine months ended MarchJune 28,27, 2026, due to the aforementioned items.

Sales to food service customers decreased $31.1$22.9 million, or 6.7%,8.3%, to $433.8$254.3 million for the sixthree months ended MarchJune 28,27, 2026. The largest driver of the decrease were the sales ofwas bakery products,product sales, which decreased by 16.4%,19%, with the decrease largely attributable to the anticipated sales reductions in our bakery business. Additionally, sales of handhelds decreased by 18.9%,16%, with the decrease attributable to lower comparative volumes on our core handhelds,volumes, as well as contractual pricing true-ups on the lower costing of certain raw material ingredients. SomewhatThe offsettingdecrease thesein decreasessales werewithin those two product categories was offset slightly by modest growth within our soft pretzel salesand tochurro foodserviceproduct customers, which increased by 10.1%, with the increase largely attributable to volume increases seen within the category on our key brands, a continuation of the trend seen in the second half of our fiscal 2025.categories.

Sales of new products in the first twelve months since their introduction were minimal for the sixthree months ended MarchJune 28,27, 2026. Low-single digit net pricing increases were more than offset by the net volume declines, primarily attributable to the anticipated sales reductions in our bakery business.

Operating income in our Food Service segment increased $4.7$0.2 million, or 28.7%0.7%, to $21.0$28.1 million for the sixthree months ended MarchJune 28,27, 2026, which reflected the efficiencies and benefits of the optimization of our manufacturing footprint seen within gross profit, as well as mix improvements across the portfolio.portfolio more than offsetting the lower comparative sales volumes.

Sales of products to retail customers decreasedincreased $2.2$1.1 million, or 4.1%,1.7%, to $51.6$64.9 million for the three months ended MarchJune 28,27, 2026. The net decreaseincrease was primarily attributable to volume increases seen across the majority of our retail product categories, offset somewhat by the comparative increased slotting fees and promotional spend, primarily within the frozen novelties category, combined with some slight volume decreases in the frozen novelties categories, offset somewhat by handheld volume increases.category. Sales of new products in retail supermarkets were minimalapproximately $2.4 million in the three months ended MarchJune 28,27, 2026.2026, driven by the launch of new frozen novelties products. Sales in the quarter were minimally negatively impacted by the higher slotting fees and promotional spend, which drove high-single digit negative net pricing,pricing withand amostly portion ofoffset the decrease also attributable to slight net volume decreasesincreases across the retail portfolio.

Operating income in our Retail SupermarketsSupermarket segment decreased $3.9$3.5 million in the three months ended MarchJune 28,27, 2026, primarily driven by the impact of the higher comparative slotting fees and promotional spend within the frozen novelties category, along with the impact of product mix on gross profit.

Sales of products to retail customers decreasedremained $1.1materially million,flat orat 1.1%, to $97.5$162.4 million for the sixnine months ended MarchJune 28,27, 2026, with the netvolume decreaseincreases primarilyacross attributablethe tomajority of retail product categories offset by the increased slotting fees and promotional spend in our second fiscal quarter, offset by continued strong handheld sales volumes throughout the period.spend. Sales of new products in retail supermarkets were approximately $0.5$2.9 million in the sixnine months ended MarchJune 28,27, 2026.2026, driven by the launch of new frozen novelties products. Sales in the six-monthnine-month period benefitedwere minimallyimpacted fromby the impacthigher ofslotting fees and promotional spend, which drove mid-single digit negative net pricing and mostly offset the prior fiscal year’s price increases, with the increase offset by slight net volume decreasesincreases across the retail portfolio.

Operating income in our Retail SupermarketsSupermarket segment decreased $3.9$7.5 million, or 83.5%,68.5%, to $0.8$3.4 million in the sixnine months ended MarchJune 28,27, 2026, primarily driven by the impactsimpact noted inof the sectionhigher abovecomparative relatedslotting tofees and promotional spend within the threefrozen monthsnovelties endedcategory, Marchalong 28,with 2026.the impact of product mix on gross profit.

Frozen beverage and related product sales increaseddecreased $2.3$6.5 million, or 3.1%,5.8%, in the three months ended MarchJune 28,27, 2026. Beverage sales increased 12.6%6% to $46.7$75.3 million, with the increase driven by a strong performance in our theater channel, combined with pricing increases, a favorable sales mix and somemass foreignmerchandising exchange related tailwinds.channels. Gallon sales increased approximately 2%7% for the three months ended MarchJune 28,27, 2026. Service revenue decreased 13.2%14% to $21.0 million due to weakness in demand related to customer decisions to insource their maintenance, as well as slower restaurant traffic.maintenance. Machine revenue (primarily sales of frozen beverage machines) increaseddecreased 3.6%43% to $10.0$9.6 millionmillion, drivenprimarily bythe strongresult growthof fromthe lapping of the impact of a major convenience customer.customer that had updated its equipment across its store network in the prior year.

Operating income in our Frozen Beverage segment increaseddecreased $2.1$0.9 million in the quarter to $4.6$22.8 million, as the decrease in service revenue and machine revenue more than offset the strong beverage sales positively impacted leverage across the business.sales.

Frozen beverage and related product sales increaseddecreased $2.1$4.5 million, or 1.3%1.7% in the sixnine months ended MarchJune 28,27, 2026. Beverage sales increased 6.3%6% to $91.6$166.9 million with the increase driven by strong performance in our theater channel, combined with pricing increases, a favorable sales mix and some foreign exchange relatedexchange-related tailwinds. Gallon sales decreasedincreased approximately 2% for the sixnine months ended MarchJune 28,27, 2026. Service revenue decreased 9.1%11% to $43.5$64.5 million due to weakness in demand related to customer decisions to insource their maintenance, as well as slower restaurant traffic. Machine revenue (primarily sales of frozen beverage machines) increaseddecreased 5.2%17% to $20.7$30.3 million, primarily driventhe byresult strongof growththe fromlapping of the impact of a major convenience customer.customer that had updated its equipment across its store network in the prior year third fiscal quarter.

Operating income in our Frozen Beverage segment increased $1.5$0.6 million in the sixnine months ended MarchJune 28,27, 2026 to $8.7$31.5 million, primarily due to the factors noted above in the fiscal second quarter, as strong beverage sales positively impacted leverage across the business.

As of MarchJune 28,27, 2026, we had $59.7$63.1 million of Cash and Cash Equivalents.

In December 2021, the Company entered into an amended and restated loan agreement (as amended, the “Credit Agreement”) with our existing banks which provided for up to a $50 million revolving credit facility repayable in December 2026.

On June 21, 2022, the Company entered into an amendment to the Credit Agreement, the(“Amendment “AmendedNo. Credit Agreement1”), which provided for an incremental increase of $175 million in available borrowings.borrowings Theunder Amendedthe Creditrevolving Agreementcredit facility. Amendment No. 1 also includesincluded an option to increase the size of the revolving credit facility by up to an amount not to exceed in the aggregate the greater of $225 million or, $50 million plus the Consolidated EBITDA (as defined in the Credit Agreement) of the Borrowers,Borrowers (as defined in the Credit Agreement), subject to the satisfaction of certain terms and conditions.

The Credit Agreement requires the Company to comply with various affirmative and negative covenants, including without limitation (i) covenants to maintain a minimum specified interest coverage ratio and maximum specified net leverage ratio, and (ii) subject to certain exceptions, covenants that prevent or restrict the Company’s ability to pay dividends, engage in certain mergers or acquisitions, make certain investments or loans, incur future indebtedness, alter its capital structure or line of business, prepay subordinated indebtedness, engage in certain transactions with affiliates, or amend its organizational documents. As of MarchJune 28,27, 2026, the Company is in compliance with all financial covenants of the Credit Agreement.

As of MarchJune 28,27, 2026, $29.0$28.0 million was outstanding under the Amended Credit Agreement with a weighted average interest rate of 6.75%. Given that the Amended Credit Agreement is set to expire in December 2026, these borrowings have been classified as Current Portion of Long-Term Debt on the Company’s Balance Sheet.5.64%. As of MarchJune 28,27, 2026, the amount available under the Amended Credit Agreement was $181.2$182.2 million, after giving effect to the outstanding letters of credit.