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

Although demand for many of our products is primarily non-discretionary in nature and tend to be purchased by consumers out of necessity, our sales are impacted by constraints on the economic health of our customers. The economic health of our customers is affected by many factors, including, among others, general business conditions, interest rates, inflation, tariffs, consumer debt levels, the availability of consumer credit, currency exchange rates, taxation, fuel prices, unemployment levels, a prolonged public health crisis or pandemic, and other matters that influence consumer confidence and spending. Many of these factors are outside of our control. Our customers’ purchases, including purchases of our products, could decline during periods when income is lower, when prices increase in response to rising costs, or in periods of actual or perceived unfavorable economic conditions or political uncertainty. If any of these events occur, or if unfavorable economic conditions challenge the consumer environment, our business, results of operations, financial condition, and cash flows could be adversely affected.

Overall demand for products sold in the automotive aftermarket is dependent upon many factors,factors in the countries in which we operate, including the total number of vehicle miles driven in the U.S.,driven, the total number of registered vehicles in the U.S.,vehicles, the age and quality of these registered vehicles, and the level of unemployment in the U.S.unemployment. Changes in vehicle technology used by the original equipment manufacturers (“OEM”) on future vehicles, including but not limited to electric, hybrid, and internal combustion engines, may result in less frequent repairs, parts lasting longer, or elimination of certain repairs. In addition, restrictions on access to telematics, diagnostic tools, and repair information imposed by the OEMs or by governmental regulations may force vehicle owners to rely on dealers to perform maintenance and repairs. Adverse changes in these factors could lead to a decreased level of demand for our products, which could negatively impact our business, results of operations, financial condition, and cash flows.

In addition, economic conditions, including decreased access to credit, may result in financial difficulties leading to restructurings, bankruptcies, liquidations, and other unfavorable events for our customers, suppliers, logistics, and other service providers and financial institutions that are counterparties to our credit facilities. Furthermore, the ability of these third parties to overcome these difficulties may worsen. If third parties, on whom we rely for merchandise, are unable to overcome difficulties resulting from the deterioration in economic conditions, the cause of which could includeinclude, among others, geopolitical uncertainty or a prolonged public health crisis or pandemic, and provide us with the merchandise we need, or if counterparties to our credit facilities do not perform their obligations, our business, results of operations, financial condition, and cash flows could be adversely affected.

WeOur arebusiness is sensitive to global, national, and regional economic and weather conditions and natural disasters that could impact our costs and sales.

Our business is sensitive to nationalimpacts from global, national, and regional economic and weather conditions and natural disasters. Unusually inclement weather,weather and natural disasters, such as significant rain, snow, sleet, freezing rain, flooding, wildfire, seismic activity, and hurricanes, hashave historically discouraged our customers from visiting our stores during the affected period and reduced our sales, particularly to DIY customers. Extreme weather conditions, such as extreme heat and extreme cold temperatures, may enhance demand for our products due to increased failure rates of our customers’ automotive parts, while temperate weather conditions may have a lesser impact on failure rates of automotive parts. In addition, our stores and DCsDCs, particularly those located in coastal regionsregions, may be subject to increased unrecoverable losses resulting from regional weather conditions or disasters and our results of operations, financial condition, and cash flows could be adversely affected.

Our business depends on developing and maintaining close relationships with our suppliers and on our suppliers’ ability or willingness to sell quality products to us at favorable prices and terms. Many factors outside of our control may harm these relationships and the ability or willingness of these suppliers to sell us products on favorable terms. For example, financial or operational difficulties that our suppliers may face could increase the cost of the products we purchase from them or our ability to source products from them. In addition, the trend toward consolidation among automotive parts suppliers, as well as the off-shoring of manufacturing capacity to foreign countries, may disrupt or end our relationship with some suppliers and could lead to less competition and result in higher prices. We could also be negatively impacted when our suppliers or our supply chain experiences work stoppages; and labor strikes; a prolonged public health crisis or pandemic; shippingimport, shipping, and transportation disruptions or increased costs;costs, such as from inflation, tariffs, or currency fluctuations or inflation; or other interruptions to, or difficulties in, the manufacture or supply of the products we purchase. If we are unable to effectively respond to such disruptions to our supply chain, or manage them more effectively than our competitors, our business and competitive position may be negatively impacted. In addition, changes in U.S.country specific trade policies, sanctions, practices, tariffs or taxes, import limitations, and other factors relating to foreign trade and port agreements could affect our ability to source products and our suppliers’ ability to source materials or provide products at current volumes and/or prices. These and other factors affecting our suppliers and our access to products could adversely affect our results of operations, financial condition, and cash flows.

Business interruptions, including from a prolonged public health crisis or pandemic, weather-related events, terrorist activities, war, political or civil unrest, disruption of critical infrastructure systems, or other disasters, or the threat of them, may result in a disruption of operations or the closure of one or more of our DCs or other facilities, or may adversely affect our ability to deliver inventory to our stores on a nightly basis. This may affect our ability to timely provide products to our customers, resulting in lost sales or a potential loss of customer loyalty, among other things. Some of our merchandise is imported from other countries and these goods could become difficult or impossible to bring into the Unitedcountries States,in which we operate, and we may not be able to obtain such merchandise from other sources at similar prices. Such a disruption in revenue could potentially have a negative impact on our results of operations, financial condition, and cash flows.

We rely extensively on information technology systems, some of which are managed or provided by third-party service providers, to collect, analyze, process, store, manage, transmit, and protect business operations, processes, transactions, and data. Delays in the maintenance, updates, upgrading, or patching of these systems, applications, or processes could adversely impact their effectiveness or could expose us to risks. Our systems, and the third-party systems with which we interact, are subject to damage, failure, or interruption due to various reasons, including, but not limited to, power or other critical infrastructure outages; facility damage; physical theft; telecommunications failures; malware; security incidents; cyber-attacks, including the use of malicious codes, worms, phishing, spyware, denial of service attacks, and ransomware; natural disasters and catastrophic events; inadequate or ineffective redundancy measures; and misconduct or design or usage errors by Team Members, contractors, or third-party service providers. In addition, the increased adoption of artificial intelligence could heighten certain of these risks. Although we seek to effectively maintain and safeguard our systems, and we seek to ensure our third-party service providers effectively maintain and safeguard their systems, such measures are not guaranteed to be successful. As a result, we or our service providers could experience one or more errors, interruptions, delays, or cessations of service impacting the integrity or availability of our information technology infrastructure. A material incident could significantly disrupt our operations and business processes; result in the impairment or loss of critical data; be costly and resource-intensive to remedy; and/or harm our reputation and relationship with customers, Team Members, suppliers, and other stakeholders, all of which could have a material adverse impact on our results of operations, financial condition, and cash flows.

In addition, our information technology systems, infrastructure, and personnel require substantial investments, such as replacing systems, maintaining or enhancing systems, or designing or acquiring new systems.systems or functionality, including artificial intelligence. These efforts can result in significant potential risks, including failure of the systems to operate as designed, potential loss or corruption of data, incurring more costs than expected, or implementation delays or errors, and may result in operational challenges, security control failures, reputational harm, and increased costs, all of which could have a material adverse impact on our results of operations, financial condition, and cash flows.

In addition, the regulatory environment related to information security and data collection, retention, processing, use, notification, consent, and privacy is complex and constantly evolving. The effects of complying with stricter and more complex data collection, retention, processing, use, notification, consent, and privacy and information security laws, regulations, and standards can be far-reaching and may increase our responsibility and liability, which may increase our costs by needing to invest significant, additional time and resources and make changes to our existing practice and processes. Failure to comply with data collection, retention, processing, use, notification, consent, and privacy and information security laws, regulations, and standards by us or our third-party service providers or suppliers could subject us to fines, sanctions, lawsuits, regulatory enforcement actions, governmental investigations, lawsuits, or reputational damage, which could have a material adverse impact on our results of operations, financial condition, and cash flows.

Environmental legislation and regulations, likesuch as the initiatives related to limitlimiting greenhouse gas emissions and bills related to climate change,change as well as extended producer responsibility and the associated costs, could adversely impact all industries. While it is uncertain whether these initiatives will become law, new or more stringent climate change-related mandates, laws, or regulations, or stricter interpretations of existing mandates, laws, or regulations could potentially be forthcoming. These matters, if enacted, could adversely impact our costs, by, among other things, increasing fuel prices or requiring additional expenditures by us or our suppliers to comply, which could have a material adverse effect on our business, results of operations, financial condition, and cash flows.

In Management’s Discussion and Analysis, we provide a historical and prospective narrative of our general financial condition, results of operations, liquidity, and certain other factors that may affect our future results, including:

The review of Management’s Discussion and Analysis should be made in conjunction with our consolidated financial statements, related notes and other financial information, forward-looking statements, and other risk factors included elsewhere in this annual report.report on Form 10-K.

We are a specialty retailer of automotive aftermarket parts, tools, supplies, equipment, and accessories in the United States, Puerto Rico, Mexico, and Canada. We are one of the largest U.S.North American automotive aftermarket specialty retailers, selling our products to both DIY customers and professional service providers – our “dual market strategy.” Our goal is to achieve growth in sales and profitability by capitalizing on our competitive advantages, such as our dual market strategy, superior customer service provided by well-trained and technically proficient Team Members, and strategic distribution and hub store network that provides same day and over-night inventory access for our stores to offer a broad selection of product offerings. The successful execution of our growth strategy includes aggressively opening new stores, growing sales in existing stores, continually enhancing merchandising and store layouts, and implementing our Omnichannel initiatives. As of December 31, 2024,2025, we operated 6,2656,447 stores in 48 U.S. states and Puerto Rico, 87112 stores in Mexico, and 26 stores in Canada.

Our stores also offer enhanced services and programs to our customers, including used oil, oil filter, and battery recycling; battery, wiper, and bulb replacement; battery diagnostic testing; electrical and module testing; check engine light code extraction through our trusted VeriScan technology, which provides diagnostic information with possible repair fixes; referrals to trusted local repair shops; loaner tool program; drum and rotor resurfacing; custom hydraulic hoses; professional paint shop mixing and related materials; and machine shops.

We believe the key drivers of demand over the long-term for the products sold within the automotive aftermarket include the number of U.S. miles driven, number of U.S. registered vehicles, annual rate of light vehicle sales, and average vehicle age.age:

The number of total miles driven in the U.S. influences the demand for repair and maintenance products sold within the automotive aftermarket. In total,the U.S., vehicles in the U.S. are driven approximately three trillion miles per year, resulting in ongoing wear and tear and a corresponding continued demand for the repair and maintenance products necessary to keep these vehicles in operation. According to the U.S. Department of Transportation, the number of total miles driven in the U.S. increased 0.9%2.1%, 1.0%, and 2.1%0.9% in 2022,2023, 2024, and 2023,2025, respectively, and year-to-date through November of 2024, miles driven increased 1.0%.respectively. Total miles driven can be impacted by macroeconomic factors, including rapid increases in fuel cost, but we are unable to predict the degree of impact these factors may have on miles driven in the future.

The total number of vehicles on the road and the average age of the vehicle population heavily influence the demand for products sold within the automotive aftermarket industry. As reported by the Auto Care Association, the total number of U.S. registered vehicles increased 14.2%13.4% from 20132014 to 2023,2024, bringing the number of light vehicles on the road to 284286 million by the end of 2023.2024. For the year ended December 31, 2024,2025, the seasonally adjusted annual rate of light vehicle sales in the U.S. (“SAAR”) was approximately 16.816.0 million vehicles, contributing to the continued growth in the total number of registered vehicles on the road. From 20132014 to 2023,2024, U.S. vehicle scrappage rates have remained relatively stable, ranging from 4.1% to 5.7%5.6% annually. As a result, over the past decade, the average age of the U.S. vehicle population has increased,increased growing 10.6%,10.5%, from 11.311.4 years in 20132014 to 12.512.6 years in 2023.2024. While the annual changes to the vehicle population resulting from new vehicle sales and the fluctuation in vehicle scrappage rates in any given year represent a small percentage of the total light vehicle population and have a muted impact on the total number and average age of vehicles on the road over the short term, we believe our business benefits from therising current environment of elevatedaverage new and used vehicle prices, as consumers are generally more willing to continue to invest in their current vehicle.

We believe the increase in average vehicle age over the long term can be attributed to better engineered and manufactured vehicles, which can be reliably driven at higher mileages due to better quality power trains, interiorsinteriors, and exteriors, coupled with consumers’ willingness to invest in maintaining these higher-mileage, better built vehicles. As the average age of vehicles on the road increases, a larger percentage of miles are being driven by vehicles that are outside of a manufacturer warranty. These out-of-warranty, older vehicles generate strong demand for automotive aftermarket products as they go through more routine maintenance cycles, have more frequent mechanical failures, and generally require more maintenance than newer vehicles. We believe consumers will continue to invest in these reliable, higher-quality, higher-mileage vehicles, and these investments, along with an increasing total light vehicle fleet, will support continued demand for automotive aftermarket products.

We expect to fund these various commitments and obligations primarily with operating cash flows expected to be generated in the normal course of business or through borrowings under our unsecured revolving credit facility and commercial paper program. See Note 76 “Leases,” Note 1514 “Share-Based Compensation and Benefit Plans,” Note 1615 “Commitments,” and Note 1817 “Income Taxes” to the Consolidated Financial Statements for further information on our leasing arrangements, share-based compensation payments, construction commitments, and uncertain tax positions, respectively, which are not reflected in the table below.

As discussed in Note 9 “Financing” to the Consolidated Financial Statements, the Company is party to a credit agreement dated June 15, 2021, as amended and restated by the First Amended and Restated Credit Agreement as of March 31, 2025 (the “Credit Agreement”). The Credit Agreement contains certain covenants, including limitations on indebtedness, a minimum consolidated fixed charge coverage ratio of 2.50:1.00 and a maximum consolidated leverage ratio of 3.50:1.00. The consolidated fixed charge coverage ratio includes a calculation of earnings before interest, taxes, depreciation, amortization, rent, and non-cash share-based compensation expense to fixed charges. Fixed charges include interest expense, capitalized interest, and rent expense. The consolidated leverage ratio includes a calculation of adjusted debt to earnings before interest, taxes, depreciation, amortization, rent, and non-cash share-based compensation expense. Adjusted debt includes outstanding debt, outstanding stand-by letters of credit and similar instruments, and five-times rent expense and excludes any premium or discount recorded in conjunction with the issuance of long-term debt. In the event that we should default on any covenant contained within the Credit Agreement, certain actions may be taken, including, but not limited to, possible termination of commitments, immediate payment of outstanding principal amounts plus accrued interest and other amounts payable under the Credit Agreement, and litigation from our lenders.

The table below outlines the calculations of the consolidated fixed charge coverage ratio and consolidated leverage ratio covenants, as defined in the Credit Agreement governing theour Revolvingrevolving Creditcredit Facility,facility, for the years ended December 31, 20242025 and 20232024 (dollars in thousands):

Our self-insurance reserve estimate included on our Consolidated Balance Sheets increased $54$175 million from 20232024 to 2024,2025, which is primarily due to general litigation accruals, inflation in claim development costs, as well as our growing operations, increases in healthcare costs, the number of vehicles, and the number of hours worked, partially offset by having resolved and paid out claims throughout 2024.2025. If the underlying assumptions in management’s estimate changed self-insurance reserves by 10% from our estimated reserves at December 31, 2024,2025, the financial impact would have been approximately $27$44 million or 0.9%1.4% of pretax income for the year ended December 31, 2024.2025. See Note 1 “Summary of Significant Accounting Policies” to the Consolidated Financial Statements for further information on our self-insurance reserves.

As of MarchJune 31,30, 2026, there have been no material changes to the risk factors set forth in our annual report on Form 10-K for the year ended December 31, 2025.

We are a specialty retailer of automotive aftermarket parts, tools, supplies, equipment, and accessories in the United States, Puerto Rico, Mexico, and Canada. We are one of the largest North American automotive aftermarket specialty retailers, selling our products to both DIY customers and professional service providers – our “dual market strategy.” Our goal is to achieve growth in sales and profitability by capitalizing on our competitive advantages, such as our dual market strategy, superior customer service provided by well-trained and technically proficient Team Members, and strategic distribution and hub store network that provides same day and over-night inventory access for our stores to offer a broad selection of product offerings. The successful execution of our growth strategy includes aggressively opening new stores, growing sales in existing stores, continually enhancing merchandising and store layouts, and implementing our Omnichannel initiatives. As of MarchJune 31,30, 2026, we operated 6,4956,541 stores in 48 U.S. states and Puerto Rico, 121126 stores in Mexico, and 28 stores in Canada.

The number of total miles driven influences the demand for repair and maintenance products sold within the automotive aftermarket. In the U.S., vehicles are driven approximately three trillion miles per year, resulting in ongoing wear and tear and a corresponding continued demand for the repair and maintenance products necessary to keep these vehicles in operation. According to the U.S. Department of Transportation, the number of total miles driven in the U.S. increased 1.0% and 0.9% in 2024 and 2025, respectively, and year-to-date through FebruaryMay of 2026, miles driven have increased 1.3%.0.8%. Total miles driven can be impacted by macroeconomic factors, including rapid increases in fuel cost, but we are unable to predict the degree of impact these factors may have on miles driven in the future.

Sales for the three months ended MarchJune 31,30, 2026, increased $424$367 million, or 10%,8%, to $4.56$4.89 billion from $4.14$4.53 billion for the same period one year ago. Sales for the six months ended June 30, 2026, increased $791 million, or 9%, to $9.45 billion from $8.66 billion for the same period one year ago. Comparable store sales increased 8.1%6.0% and 3.6%4.1% for the three months ended MarchJune 31,30, 2026 and 2025, respectively. Comparable store sales increased 7.0% and 3.9% for the six months ended June 30, 2026 and 2025, respectively. Comparable store sales are calculated based on the change in sales for U.S. stores open at least one year and exclude sales of specialty machinery, sales to independent parts stores, and sales to Team Members. Online sales for ship-to-home orders and pick-up-in-store orders for U.S. stores open at least one year are included in the comparable store sales calculation. We opened 5951 and 38110 net, new stores during the three and six months ended MarchJune 31,30, 20262026, respectively, compared to opening 67 and 105 net, new stores during the three and six months ended June 30, 2025, respectively. We anticipate total new store growth to be 225 to 235 net, new store openings in 2026.

The increase in sales for the three months ended MarchJune 31,30, 2026, was primarily the result of the 8.1%6.0% increase in domestic comparable store sales and a $91$100 million increase in sales from new stores opened in 2025 and 2026 that are not considered comparable stores. The increase in sales for the six months ended June 30, 2026, was primarily the result of the 7.0% increase in domestic comparable store sales and a $191 million increase in sales from new stores opened in 2025 and 2026 that are not considered comparable stores. Our comparable store sales increaseincreases for the three and six months ended MarchJune 31,30, 2026, waswere driven by an increase in average ticket values for both professional service provider and DIY customers and an increase in transaction counts for professional service provider customers, partially offset by a slight decrease in transaction counts for DIY customers. Average ticket values benefited from increases in average selling prices on a same-SKU basis, as compared to the same period in 2025. Average ticket values continue to be positively impacted by the increasing complexity and cost of replacement parts necessary to maintain the current population of better-engineered and more technically advanced vehicles. These better-engineered, more technically advanced vehicles require less frequent repairs, as the component parts are more durable and last for longer periods of time. The resulting decrease in repair frequency creates pressure on customer transaction counts; however, when repairs are needed, the cost of replacement parts is, on average, greater, which is a benefit to average ticket values.

Gross profit for the three months ended MarchJune 31,30, 2026, increased 11%8% to $2.35$2.52 billion (or 51.4% of sales) from $2.33 billion (or 51.4% of sales) for the same period one year ago. Gross profit for the six months ended June 30, 2026, increased 9% to $4.86 billion (or 51.5% of sales) from $2.12$4.45 billion (or 51.3%51.4% of sales) for the same period one year ago. The increaseincreases in gross profit dollars for the three and six months ended MarchJune 31,30, 2026, waswere primarily the result of the increase in comparable store sales at existing stores and sales from new stores. The increaseincreases in gross profit as a percentage of sales for the three and six months ended MarchJune 31,30, 2026, waswere primarily due to improved acquisition costs and distribution operating efficiencies, partially offset by a greater percentage of our total sales mix being generated from professional service provider customers, which carry a lower gross margin percentage than DIY sales.

Selling, general and administrative expenses (“SG&A”) for the three months ended MarchJune 31,30, 2026, increased 8% to $1.53 billion (or 31.3% of sales) from $1.41 billion (or 31.2% of sales) for the same period one year ago. SG&A for the six months ended June 30, 2026, increased 9% to $1.51$3.04 billion (or 33.0%32.1% of sales) from $1.38$2.79 billion (or 33.4%32.2% of sales) for the same period one year ago. The increaseincreases in total SG&A dollars for the three and six months ended MarchJune 31,30, 2026, waswere primarily the result of additional Team Members and operating expenses to support our increased sales and store count. The decreaseincrease in SG&A as a percentage of sales for the three months ended MarchJune 31,30, 2026, was principally due to inflationary pressure in costs and higher costs relating to medical and casualty insurance programs, partially offset by leverage of store operating costs on strong comparable store sales. The decrease in SG&A as a percentage of sales for the six months ended June 30, 2026, was principally due to leverage of store operating costs on strong comparable store sales, partially offset by inflationary pressure in costs and higher costs relating to medical and casualty insurance programs.

As a result of the impact discussed above, operating income for the three months ended June 30, 2026, increased 8% to $986 million (or 20.2% of sales), from $914 million (or 20.2% of sales) for the same period one year ago. As a result of the impacts discussed above, operating income for the threesix months ended MarchJune 31,30, 2026, increased 14%10% to $842$1.83 millionbillion (or 18.5%19.3% of sales) from $741$1.66 millionbillion (or 17.9%19.1% of sales) for the same period one year ago.

Total other expense for the three months ended MarchJune 31,30, 2026, increased 8%16% to $62 million (or 1.3% of sales) from $57$53 million (or 1.4%1.2% of sales) for the same period one year ago. Total other expense for the six months ended June 30, 2026, increased 12% to $123 million (or 1.3% of sales) from $110 million (or 1.3% of sales) for the same period one year ago. The increaseincreases in total other expense for the three and six months ended MarchJune 31,30, 2026, waswere the result of increased interest expense on higher average outstanding borrowings.

Our provision for income taxes for the three months ended MarchJune 31,30, 2026, increased 21%8% to $176$209 million (22.5%22.6% effective tax rate) from $146$193 million (21.3%22.4% effective tax rate) for the same period one year ago. Our provision for income taxes for the six months ended June 30, 2026, increased 14% to $385 million (22.6% effective tax rate) from $339 million (21.9% effective tax rate) for the same period one year ago. The increaseincreases in our provision for income taxes for the three and six months ended MarchJune 31,30, 2026, waswere the result of the higher taxable income and lower excess tax benefits from share-based compensation. The increaseincreases in our effective tax rate for the three and six months ended MarchJune 31,30, 2026, waswere primarily the result of lower excess tax benefits from share-based compensation.

As a result of the impacts discussed above, net income for the three months ended MarchJune 31,30, 2026, increased 12%7% to $604$715 million (or 13.2%14.6% of sales) from $538$669 million (or 13.0%14.8% of sales) for the same period one year ago. As a result of the impacts discussed above, net income for the six months ended June 30, 2026, increased 9% to $1.32 billion (or 14.0% of sales) from $1.21 billion (or 13.9% of sales) for the same period one year ago.

Our diluted earnings per common share for the three months ended MarchJune 31,30, 2026, increased 16%10% to $0.72$0.86 on 843829 million shares from $0.62$0.78 on 864858 million shares for the same period one year ago. Our diluted earnings per common share for the six months ended June 30, 2026, increased 13% to $1.58 on 836 million shares from $1.40 on 861 million shares for the same period one year ago.

The following table identifies cash provided by/(used in) our operating, investing and financing activities for the threesix months ended MarchJune 31,30, 2026 and 2025 (in thousands):

The increase in net cash provided by operating activities during the threesix months ended MarchJune 31,30, 2026, compared to the same period in 2025, was primarily due to a decrease in net inventory investment, versus an increase in net inventory investment during the sametiming periodof inpayment 2025,for transferrable federal renewable energy tax credits and an increase in operating income.income, partially offset by a prepaid income taxes position at the end of the current period, versus an increase in a net taxes payable position for the same period in 2025.

The decrease in net cash used in investing activities during the threesix months ended MarchJune 31,30, 2026, compared to the same period in 2025, was the result of a decrease in capital expenditures, which was primarily attributable to the timing of store and distribution expansion and enhancement projects in the current period compared to the same period in 2025.

The increase in net cash used in financing activities during the threesix months ended MarchJune 31,30, 2026, compared to the same period in 2025, was attributable to an increase in repurchases of our common stock and the redemption of $500 million aggregate principal amount of senior notes, an increase in repurchases of our common stock, and a net paydown on the Company’s commercial paper program in the current period, versus net borrowings on commercial paper during the same period in 2025, partially offset by the issuance of $850 million aggregate principal amount of senior notes in the current period.period and net borrowings on the Company’s commercial paper program.

The indentures governing our senior notes contain covenants that limit our ability and the ability of certain of our subsidiaries to, among other things, create certain liens on assets to secure certain debt and enter into certain sale and leaseback transactions, and limit our ability to merge or consolidate with another company or transfer all or substantially all of our property, in each case as set forth in the indentures. These covenants are, however, subject to a number of important limitations and exceptions. As of MarchJune 31,30, 2026, we were in compliance with the covenants applicable to our senior notes.

We had a consolidated fixed charge coverage ratio of 6.146.11 times and 6.036.02 times as of MarchJune 31,30, 2026 and 2025, respectively, and a consolidated leverage ratio of 1.922.07 times and 1.921.95 times as of MarchJune 31,30, 2026 and 2025, respectively, remaining in compliance with all covenants related to the borrowing arrangements.

The table below outlines the calculations of the consolidated fixed charge coverage ratio and consolidated leverage ratio covenants, as defined in the Credit Agreement governing the Revolving Credit Facility, for the twelve months ended MarchJune 31,30, 2026 and 2025 (dollars in thousands):

The table below outlines the calculation of Free cash flow and reconciles Free cash flow to Net cash provided by operating activities, the most directly comparable GAAP financial measure, for the threesix months ended MarchJune 31,30, 2026 and 2025 (in thousands):