HAYW

Our Company The Company is a leading global specialty water management company focused on designing and manufacturing pool and outdoor living technology and industrial flow control products. The Company benefits from a large installed base, recurring aftermarket demand (such as the ongoing repair, replacement, remodeling and upgrading of equipment for existing pools) and from a history of innovation, which together support long-term growth and cash generation. Our engineered products, which include various energy-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 residential pool market share of approximately 33%. We believe that we are well-positioned for future growth. We estimate aftermarket sales represent approximately 85% of North 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 eight 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, 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. The Company has seven manufacturing facilities worldwide, which are located in North Carolina, Georgia, Tennessee, Rhode Island, Spain (two) and China, and other facilities in the United States, Canada, France and Australia. Segments Our business is organized into two reportable segments: North America (“NAM”) and Europe & Rest of World (“E&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 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. E&RW 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. NAM accounted for 87% and 85% of total net sales for the three months ended June 27, 2026 and June 28, 2025, respectively, and E&RW accounted for 13% and 15% of total net sales for the three months ended June 27, 2026 and June 28, 2025, respectively. NAM accounted for 85% and 84% of total net sales for the six months ended June 27, 2026 and June 28, 2025, respectively, and E&RW accounted for 15% and 16% of total net sales for the six months ended June 27, 2026 and June 28, 2025, respectively. Factors Affecting the Comparability of our Results of Operations Our results of operations for the three and six months ended June 27, 2026 and June 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 six months ended June 27, 2026 compared to the 2025 period. Seasonality Our business is seasonal, with sales typically higher in the second and fourth quarters. During the second quarter of a fiscal year, sales are higher in anticipation of the start of the summer pool season. In the fourth quarter, we incentivize customers to buy and stock up in preparation for next year’s pool season under an “Early Buy” program, which features price discounts and extended payment terms. Shipments for the 2025 Early Buy program began in the late third quarter and continued through 24 approximately the first quarter of 2026. The favorable payment terms extended as part of the Early Buy program generally do not exceed 180 days. 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 the majority 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. Tariffs, Trade Restrictions and Other Geopolitical 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. 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. The availability, amount and timing of any 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 certain 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. Key Measures We Use to Evaluate Our Business We consider a variety of financial and operating measures in assessing the performance of our business. The key GAAP measures we use are net sales, gross profit and gross profit margin, selling, general, and administrative expense (“SG&A”), research, development, and engineering expense (“RD&E”), operating income and operating income margin. The key non-GAAP measures we use are EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted segment income, adjusted segment income margin, adjusted net income, adjusted net income margin, and adjusted diluted earnings per share. For information about our use of Non-GAAP measures and a reconciliation of these metrics to the most directly comparable GAAP measures see, “—Non-GAAP Reconciliations.” 25 Results of Operations Consolidated 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 June 27, 2026 and June 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: (In thousands) Three Months Ended Six Months Ended June 27, 2026 June 28, 2025 June 27, 2026 June 28, 2025 Net sales $ 318,378 $ 299,603 $ 573,594 $ 528,444 Cost of sales 163,327 152,149 299,842 275,737 Gross profit 155,051 147,454 273,752 252,707 Selling, general and administrative expense 64,271 61,508 126,857 118,503 Research, development and engineering expense 7,672 6,128 14,428 12,114 Acquisition and restructuring related expense 748 1,565 1,253 3,491 Amortization of intangible assets 6,361 6,870 12,727 13,705 Operating income 75,999 71,383 118,487 104,894 Interest expense, net 16,981 13,650 28,488 27,301 Loss on debt extinguishment 1,836 — 2,037 — Other income, net (2,079) (1,706) (1,413) (527) Total other expense 16,738 11,944 29,112 26,774 Income from operations before income taxes 59,261 59,439 89,375 78,120 Provision for income taxes 13,644 14,640 20,399 18,988 Net income $ 45,617 $ 44,799 $ 68,976 $ 59,132 Adjusted net income (a) $ 57,760 $ 52,245 $ 87,599 $ 74,332 Adjusted EBITDA (a) $ 92,715 $ 88,236 $ 149,096 $ 137,338 (a) See “—Non-GAAP Reconciliations.” Net sales Net sales increased to $318.4 million for the three months ended June 27, 2026 from $299.6 million for the three months ended June 28, 2025, an increase of $18.8 million, or 6.3%. See the segment discussion below for further information. Net sales increased to $573.6 million for the six months ended June 27, 2026 from $528.4 million for the six months ended June 28, 2025, an increase of $45.2 million, or 8.5%. See the segment discussion below for further information. The year-over-year net sales increase was driven by the following: Three Months Ended Six Months Ended June 27, 2026 June 27, 2026 Price, net of discounts and allowances 6.1 % 7.2 % Currency and other 0.3 0.9 Volume (0.1) 0.4 Total 6.3 % 8.5 % The net sales increase for the three months ended June 27, 2026 was driven by positive net price to offset inflation and tariffs and the favorable impact from foreign currency translation. The net sales increase for the six months ended June 27, 2026 was driven by positive net price to offset inflation and tariffs, the favorable impact from foreign currency translation, and a modest increase in volume. 26 Gross profit and gross profit margin Gross profit increased to $155.1 million for the three months ended June 27, 2026 from $147.5 million for the three months ended June 28, 2025, an increase of $7.6 million, or 5.2%. Gross profit margin decreased to 48.7% for the three months ended June 27, 2026 compared to 49.2% for the three months ended June 28, 2025, a decrease of 50 basis points, primarily due to an increase in cost of sales driven by inflation and tariffs, partially offset by positive net price. Gross profit increased to $273.8 million for the six months ended June 27, 2026 from $252.7 million for the six months ended June 28, 2025, an increase of $21.1 million, or 8.3%. Gross profit margin decreased to 47.7% for the six months ended June 27, 2026 compared to 47.8% for the six months ended June 28, 2025, a decrease of 10 basis points, primarily due to an increase in costs driven by inflation and tariffs, partially offset by positive net price. Selling, general, and administrative expense Selling, general, and administrative expense (SG&A) increased to $64.3 million for the three months ended June 27, 2026 from $61.5 million for the three months ended June 28, 2025, an increase of $2.8 million, or 4.5%, primarily due to higher incentive compensation. As a percentage of net sales, SG&A decreased to 20.2% for the three months ended June 27, 2026 as compared to 20.5% for the three months ended June 28, 2025, a decrease of 30 basis points, as the growth in net sales exceeded the growth in SG&A. SG&A increased to $126.9 million for the six months ended June 27, 2026 from $118.5 million for the six months ended June 28, 2025, an increase of $8.4 million, or 7.0%, driven by higher incentive compensation, incremental advertising expense, higher salary costs driven by investments in our selling teams and wage inflation and increased software costs. As a percentage of net sales, SG&A decreased to 22.1% for the six months ended June 27, 2026 as compared to 22.4% for six months ended June 28, 2025, a decrease of 30 basis points, as the growth in net sales exceeded the growth in SG&A. Research, development, and engineering expense Research, development, and engineering expense (RD&E) increased to $7.7 million for the three months ended June 27, 2026 from $6.1 million for the three months ended June 28, 2025, an increase of $1.6 million, or 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 increased to 2.4% for the three months ended June 27, 2026 as compared to 2.0% for the three months ended June 28, 2025, an increase of 40 basis points. RD&E increased to $14.4 million for the six months ended June 27, 2026 from $12.1 million for the six months ended June 28, 2025, an increase of $2.3 million, or 19.1%. As a percentage of net sales, RD&E was 2.5% for the six months ended June 27, 2026 compared to 2.3% for the six months ended June 28, 2025, an increase of 20 basis points. Acquisition and restructuring related expense For the three months ended June 27, 2026, we incurred $0.7 million of acquisition and restructuring related expense as compared to $1.6 million of expense for the three months ended June 28, 2025. The expense in the three months ended June 27, 2026 was driven by costs associated with a restructuring 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 recognized as compensation cost over the 12-month service period from the date of acquisition. For the six months ended June 27, 2026, we incurred $1.3 million of acquisition and restructuring related expense as compared to $3.5 million of expense for the six months ended June 28, 2025. The expense in the six months ended June 27, 2026 was driven by costs associated with restructuring actions, while the expense in the six months ended June 28, 2025 primarily included the deferred purchase price recognized as compensation cost related to the acquisition of ChlorKing. See Note 16. Acquisitions and Restructuring. 27 Amortization of intangible assets For the three months ended June 27, 2026, amortization of intangible assets decreased by $0.5 million compared to the three months ended June 28, 2025 due to the amortization pattern of certain intangible asset classes based on the declining balance method. For the six months ended June 27, 2026, amortization of intangible assets decreased $1.0 million compared to the six months ended June 28, 2025 due to the amortization pattern of certain intangible asset classes based on the declining balance method. Operating income For the three and six months ended June 27, 2026, operating income increased by $4.6 million and $13.6 million, respectively, due to the aggregated effect of the items described above. Interest expense, net Interest expense, net, increased to $17.0 million for the three months ended June 27, 2026 from $13.7 million for the three months ended June 28, 2025, an increase of $3.3 million, or 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 lower net interest expense on bank debt. Interest expense, net, for the three months ended June 27, 2026 consisted of $19.1 million of interest expense on the outstanding debt, including $5.2 million of debt financing costs, and $0.9 million of amortization of deferred financing fees, partially offset by $3.0 million of interest income on cash deposits. The effective interest rate on our borrowings, including the impact of interest rate hedges, was 6.13% for the three months ended June 27, 2026. Interest expense, net, for the three months ended June 28, 2025 consisted of $15.1 million of interest expense on the outstanding debt and $1.1 million of amortization of deferred financing fees, partially offset by $2.5 million of interest income on cash deposits. The effective interest rate on our borrowings, including the impact of interest rate hedges, was 6.52% for the three months ended June 28, 2025. Interest expense, net, increased to $28.5 million for the six months ended June 27, 2026 from $27.3 million for the six months ended June 28, 2025, an increase of $1.2 million or 4.3%. The increase was primarily due to the $5.2 million of debt financing costs discussed above, partially offset by increased interest income on cash investment balances and lower net interest expense on bank debt. Interest expense, net, for the six months ended June 27, 2026 consisted of $32.7 million of interest on the outstanding debt, including $5.2 million of debt financing costs, and $1.7 million of amortization of deferred financing fees, partially offset by $5.9 million of interest income on cash deposits. The effective interest rate on our borrowings, including the impact of interest rate hedges, was 6.18% for the six months ended June 27, 2026. Interest expense, net, for the six months ended June 28, 2025 consisted of $29.4 million of interest on the outstanding debt and $1.9 million of amortization of deferred financing fees, partially offset by $4.0 million of interest income on cash deposits. The effective interest rate on our borrowings, including the impact of interest rate hedges, was 6.41% for the six months ended June 28, 2025. Loss on debt extinguishment A $1.8 million and $2.0 million loss on debt extinguishment for the three and six months ended June 27, 2026, 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 for the three and six months ended June 28, 2025. Provision for income taxes We incurred income tax expense of $13.6 million for the three months ended June 27, 2026, compared to income tax expense of $14.6 million for the three months ended June 28, 2025, a decrease of $1.0 million, or 6.8%. The decrease in the Company’s effective tax rate from 24.6% for the three months ended June 28, 2025 to 23.0% for the three months ended June 27, 2026 was primarily due to lower state taxes. 28 We incurred income tax expense of $20.4 million for the six months ended June 27, 2026, compared to income tax expense of $19.0 million for the six months ended June 28, 2025, an increase of $1.4 million, or 7.4%. While pretax income increased 14.4% for the six months ended June 27, 2026, the effective tax rate decreased, resulting in a 7.4% increase in income tax expense compared to the six months ended June 28, 2025. The decrease in the Company’s effective tax rate from 24.3% for the six months ended June 28, 2025 to 22.8% for the six months ended June 27, 2026 was primarily due to lower state taxes. Net income and net income margin As a result of the foregoing, net income increased by $0.8 million and $9.8 million, respectively, for the three and six months ended June 27, 2026. Net income margin decreased to 14.3% for the three months ended June 27, 2026 compared to 15.0% for the three months ended June 28, 2025, a decrease of 70 basis points. Net income margin increased to 12.0% for the six months ended June 27, 2026 compared to 11.2% for the six months ended June 28, 2025, an increase of 80 basis points. Adjusted net income and Adjusted net income margin Adjusted net income increased to $57.8 million for the three months ended June 27, 2026 from $52.2 million for the three months ended June 28, 2025, an increase of $5.5 million, or 10.6%, driven primarily by increased net sales. Adjusted net income margin increased to 18.1% for the three months ended June 27, 2026 compared to 17.4% for the three months ended June 28, 2025, an increase of 70 basis points. Adjusted net income increased to $87.6 million for the six months ended June 27, 2026 from $74.3 million for the six months ended June 28, 2025, an increase of $13.3 million, or 17.8%, driven primarily by increased net sales. Adjusted net income margin increased to 15.3% for the six months ended June 27, 2026 compared to 14.1% for the six months ended June 28, 2025, an increase of 120 basis points. See “— Non-GAAP Reconciliations” for a reconciliation of adjusted net income and adjusted net income margin to the most directly comparable GAAP metric. Adjusted EBITDA and Adjusted EBITDA margin Adjusted EBITDA increased to $92.7 million for the three months ended June 27, 2026 from $88.2 million for the three months ended June 28, 2025, an increase of $4.5 million, or 5.1%, driven primarily by increased net sales. Adjusted EBITDA margin decreased to 29.1% for the three months ended June 27, 2026 compared to 29.5% for the three months ended June 28, 2025, a decrease of 40 basis points. Adjusted EBITDA increased to $149.1 million for the six months ended June 27, 2026 from $137.3 million for the six months ended June 28, 2025, an increase of $11.8 million, or 8.6%, driven primarily by increased net sales. Adjusted EBITDA margin remained consistent at 26.0% for both the six months ended June 27, 2026 and June 28, 2025. See “— Non-GAAP Reconciliations” for a reconciliation of adjusted EBITDA and adjusted EBITDA margin to the most directly comparable GAAP metric. Segment Results of Operations 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, segment SG&A and RD&E, excluding acquisition and restructuring related 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 intangible assets recorded within cost of sales 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 Reconciliations” for reconciliations of these metrics to the most directly comparable GAAP metric. 29 North America (Dollars in thousands) Three Months Ended Six Months Ended June 27, 2026 June 28, 2025 June 27, 2026 June 28, 2025 Net sales $ 277,658 $ 255,175 $ 487,455 $ 442,244 Gross profit $ 139,989 $ 130,840 $ 242,410 $ 222,083 Gross profit margin % 50.4 % 51.3 % 49.7 % 50.2 % Segment income $ 90,214 $ 83,374 $ 140,720 $ 126,828 Segment income margin % 32.5 % 32.7 % 28.9 % 28.7 % Adjusted segment income (a) $ 97,093 $ 89,070 $ 154,428 $ 139,727 Adjusted segment income margin % (a) 35.0 % 34.9 % 31.7 % 31.6 % (a) See “—Non-GAAP Reconciliations.” Net sales Net sales increased to $277.7 million for the three months ended June 27, 2026 from $255.2 million for the three months ended June 28, 2025, an increase of $22.5 million, or 8.8%. Net sales increased to $487.5 million for the six months ended June 27, 2026 from $442.2 million for the six months ended June 28, 2025, an increase of $45.3 million, or 10.2%. The year-over-year net sales increase was driven by the following factors: Three Months Ended Six Months Ended June 27, 2026 June 27, 2026 Price, net of allowances and discounts 7.0 % 8.4 % Volume 1.8 % 1.7 % Currency and other — % 0.1 % Total 8.8 % 10.2 % The net sales increase for the three months ended June 27, 2026 was driven primarily by positive net price to offset inflation and tariffs and an increase in volume. The net sales increase for the six months ended June 27, 2026 was driven primarily by positive net price to offset inflation and tariffs and an increase in volume. Gross profit and gross profit margin Gross profit increased to $140.0 million for the three months ended June 27, 2026 from $130.8 million for the three months ended June 28, 2025, an increase of $9.2 million, or 7.0%. Gross profit margin decreased to 50.4% for the three months ended June 27, 2026 from 51.3% for the three months ended June 28, 2025, a decrease of 90 basis points. Gross profit margin decreased primarily due to increased costs from inflation and tariffs, partially offset by positive net price impact. Gross profit increased to $242.4 million for the six months ended June 27, 2026 from $222.1 million for the six months ended June 28, 2025, an increase of $20.3 million, or 9.2%. Gross profit margin decreased to 49.7% for the six months ended June 27, 2026 from 50.2% for the six months ended June 28, 2025, a decrease of 50 basis points. Gross profit margin decreased primarily due to increased costs from inflation and tariffs, partially offset by positive net price impact. Segment income and segment income margin Segment income increased to $90.2 million for the three months ended June 27, 2026 from $83.4 million for the three months ended June 28, 2025, an increase of $6.8 million, or 8.2%. This was primarily attributable to the increase in net sales as discussed above, partially offset by higher SG&A expense due to higher incentive compensation. Segment income margin decreased to 32.5% for the three months ended June 27, 2026 from 32.7% for the three months ended June 28, 2025, a decrease of 20 basis points. 30 Segment income increased to $140.7 million for the six months ended June 27, 2026 from $126.8 million for the six months ended June 28, 2025, an increase of $13.9 million, or 11.0%. This was primarily attributable to the increase in net sales as discussed above, partially offset by higher SG&A expense due to incremental advertising expense, higher incentive compensation, higher salary costs driven by investments in our selling teams and wage inflation. Segment income margin increased to 28.9% for the six months ended June 27, 2026 from 28.7% for the six months ended June 28, 2025, an increase of 20 basis points. The increase was driven by the same factors as the increase in segment income discussed above. Adjusted segment income and Adjusted segment income margin Adjusted segment income increased to $97.1 million for the three months ended June 27, 2026 from $89.1 million for the three months ended June 28, 2025, an increase of $8.0 million, or 9.0%. This was driven by the increase in segment income as discussed above, after adjusting for the non-cash and specified costs discussed below in “— Non-GAAP Reconciliations.” Adjusted segment income margin increased to 35.0% for the three months ended June 27, 2026 from 34.9% for the three months ended June 28, 2025, an increase of 10 basis points. Adjusted segment income increased to $154.4 million for the six months ended June 27, 2026 from $139.7 million for the six months ended June 28, 2025, an increase of $14.7 million, or 10.5%. This was driven by the increase in segment income as discussed above, after adjusting for the non-cash and specified costs discussed below in “— Non-GAAP Reconciliations.” Adjusted segment income margin increased to 31.7% for the six months ended June 27, 2026 from 31.6% for the six months ended June 28, 2025, an increase of 10 basis points. Refer to “—Non-GAAP Reconciliations” for a reconciliation of segment income to adjusted segment income. Europe & Rest of World (Dollars in thousands) Three Months Ended Six Months Ended June 27, 2026 June 28, 2025 June 27, 2026 June 28, 2025 Net sales $ 40,720 $ 44,428 $ 86,139 $ 86,200 Gross profit $ 15,419 $ 16,614 $ 31,699 $ 30,624 Gross profit margin % 37.9 % 37.4 % 36.8 % 35.5 % Segment income $ 6,640 $ 7,589 $ 14,923 $ 14,127 Segment income margin % 16.3 % 17.1 % 17.3 % 16.4 % Adjusted segment income (a) $ 7,365 $ 8,028 $ 16,156 $ 14,980 Adjusted segment income margin % (a) 18.1 % 18.1 % 18.8 % 17.4 % (a) See “—Non-GAAP Reconciliations.” Net sales Net sales decreased to $40.7 million for the three months ended June 27, 2026 from $44.4 million for the three months ended June 28, 2025, a decrease of $3.7 million, or 8.3%. Net sales decreased to $86.1 million for the six months ended June 27, 2026 from $86.2 million for the six months ended June 28, 2025, a decrease of $0.1 million, or 0.1%. The year-over-year net sales decrease was driven by the following: Three Months Ended Six Months Ended June 27, 2026 June 27, 2026 Volume (11.6) (6.2) Currency and other 2.1 5.1 Price, net of allowances and discounts 1.2 1.0 Total (8.3) % (0.1) % The net sales decrease for the three months ended June 27, 2026 was primarily due to a decline in volume, partially offset by the favorable impact of foreign currency translation and positive net price. The decrease in volume was driven by the impact of geopolitical conflicts in the Middle East. 31 Net sales for the six months ended June 27, 2026 remained relatively flat compared to the six months ended June 28, 2025. A decline in volume primarily driven by the geopolitical conflicts in the Middle East was mostly offset by the favorable impact from foreign currency translation and positive net price to offset inflation. Gross profit and Gross profit margin Gross profit decreased to $15.4 million for the three months ended June 27, 2026 from $16.6 million for the three months ended June 28, 2025, a decrease of $1.2 million, or 7.2%. Gross profit margin increased to 37.9% for the three months ended June 27, 2026 from 37.4% for the three months ended June 28, 2025, an increase of 50 basis points, primarily driven by operational efficiencies. Gross profit increased to $31.7 million for the six months ended June 27, 2026 from $30.6 million for the six months ended June 28, 2025, an increase of $1.1 million, or 3.5%. Gross profit margin increased to 36.8% for the six months ended June 27, 2026 from 35.5% for the six months ended June 28, 2025, an increase of 130 basis points, primarily driven by operational efficiencies. Segment income and Segment income margin Segment income decreased to $6.6 million for the three months ended June 27, 2026 from $7.6 million for the three months ended June 28, 2025, a decrease of $1.0 million, or 12.5%. This was primarily driven by the decrease in net sales as discussed above. Segment income margin decreased by 80 basis points from 17.1% for the three months ended June 28, 2025 to 16.3% for the three months ended June 27, 2026, primarily resulting from the decrease in net sales as discussed above. Segment income increased to $14.9 million for the six months ended June 27, 2026 from $14.1 million for the six months ended June 28, 2025, an increase of $0.8 million, or 5.6%. This was driven by the factors discussed above. Segment income margin increased by 90 basis points to 17.3% for the six months ended June 27, 2026 as compared to 16.4% for the six months ended June 28, 2025. Adjusted segment income and Adjusted segment income margin Adjusted segment income decreased to $7.4 million for the three months ended June 27, 2026 from $8.0 million for the three months ended June 28, 2025, a decrease of $0.6 million, or 8.3%. This was primarily driven by the decrease in net sales as discussed above, after adjusting for the non-cash and specified costs described in “—Non-GAAP Reconciliations” below. Adjusted segment income margin remained relatively flat at 18.1% for both the three months ended June 27, 2026 and June 28, 2025. Adjusted segment income increased to $16.2 million for the six months ended June 27, 2026 from $15.0 million for the six months ended June 28, 2025, an increase of $1.2 million, or 7.9%. This was primarily driven by the increase in gross profit as discussed above, after adjusting for the non-cash and specified costs described in “—Non-GAAP Reconciliations” below. Adjusted segment income margin increased to 18.8% for the six months ended June 27, 2026 from 17.4% for the six months ended June 28, 2025, an increase of 140 basis points. Refer to “—Non-GAAP Reconciliation” for a reconciliation of segment income to adjusted segment income. 32 Non-GAAP Reconciliations The Company uses EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted segment income, adjusted segment income margin, adjusted net income, adjusted net income margin and adjusted diluted earnings per share to supplement GAAP measures of performance to evaluate the effectiveness of our business strategies. These metrics are also frequently used by analysts, investors and other interested parties to evaluate companies in our industry, when considered alongside other GAAP measures. EBITDA is defined as earnings before interest (including amortization of debt costs), income taxes, depreciation, and amortization. Adjusted EBITDA is defined as EBITDA adjusted for the impact of restructuring related income or expenses, stock-based compensation, currency exchange items, and certain non-cash, nonrecurring, or other items that are included in net income and EBITDA that we do not consider indicative of our ongoing operating performance. Adjusted EBITDA margin is defined as adjusted EBITDA divided by net sales. Adjusted segment income is defined as segment income adjusted for the impact of depreciation, amortization of intangible 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. Adjusted segment income margin is defined as adjusted segment income divided by segment net sales. Adjusted net income is defined as net income adjusted for the impact of restructuring related income or expenses, amortization, stock-based compensation, currency exchange items, and certain non-cash, nonrecurring, or other items that are included in net income that we do not consider indicative of our ongoing operating performance. These adjustments are further adjusted to reflect a normalized tax rate. Adjusted net income margin is defined as adjusted net income divided by net sales. EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted segment income, adjusted segment income margin, adjusted net income, adjusted net income margin and adjusted diluted earnings per share are not recognized measures of financial performance under GAAP. We believe these non-GAAP measures provide analysts, investors and other interested parties with additional insight into the underlying trends of our business and assist these parties in analyzing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance, which allows for a better comparison against historical results and expectations for future performance. Management uses these non-GAAP measures to understand and compare operating results across reporting periods for various purposes including internal budgeting and forecasting, short and long-term operating planning, employee incentive compensation, and debt compliance. These non-GAAP measures are not intended to replace the presentation of our financial results in accordance with GAAP. EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted segment income, adjusted segment income margin, adjusted net income, adjusted net income margin and adjusted diluted earnings per share are not calculated in the same manner by all companies, and accordingly, are not necessarily comparable to similarly titled measures of other companies and may not be an appropriate measure for performance relative to other companies. EBITDA, adjusted EBITDA, adjusted segment income and adjusted net income should not be construed as indicators of a company’s operating performance in isolation from, or as a substitute for, net income (loss) and segment income, which are prepared in accordance with GAAP. We have presented EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted segment income, adjusted segment income margin, adjusted net income, adjusted net income margin and adjusted diluted earnings per share solely as supplemental disclosure because we believe it allows for a more complete analysis of results of operations. In the future we may incur expenses such as those added back to calculate adjusted EBITDA, adjusted segment income and adjusted net income. Our presentation of adjusted EBITDA, adjusted segment income and adjusted net income should not be construed as an inference that our future results will be unaffected by these items. 33 Net Income and Net Income Margin to Adjusted EBITDA and Adjusted EBITDA Margin Following is a reconciliation from net income and net income margin to adjusted EBITDA and adjusted EBITDA margin: (Dollars in thousands) Three Months Ended Six Months Ended June 27, 2026 June 28, 2025 June 27, 2026 June 28, 2025 Net income $ 45,617 $ 44,799 $ 68,976 $ 59,132 Depreciation 5,913 5,254 11,862 11,517 Amortization 8,247 8,631 16,428 17,166 Interest expense, net 16,981 13,650 28,488 27,301 Income taxes 13,644 14,640 20,399 18,988 Loss on debt extinguishment 1,836 — 2,037 — EBITDA 92,238 86,974 148,190 134,104 Stock-based compensation (a) — 11 — 57 Currency exchange items (b) (505) 778 (581) 772 Acquisition and restructuring related expense, net (c) 748 1,565 1,253 3,491 Other (d) 234 (1,092) 234 (1,086) Total Adjustments 477 1,262 906 3,234 Adjusted EBITDA $ 92,715 $ 88,236 $ 149,096 $ 137,338 Net income margin 14.3 % 15.0 % 12.0 % 11.2 % Adjusted EBITDA margin 29.1 % 29.5 % 26.0 % 26.0 % (a) Represents non-cash stock-based compensation expense related to equity awards issued to management, employees, and directors. The adjustment includes only expense related to awards issued under the 2017 Equity Incentive Plan, which were awards granted prior to the effective date of Hayward’s IPO. (b) Represents unrealized non-cash (gains) losses on foreign denominated monetary assets and liabilities and foreign currency contracts. (c) Adjustments in the three months ended June 27, 2026 were primarily driven by $0.8 million of costs related to a restructuring action in E&RW. Adjustments in the three months ended June 28, 2025 were primarily driven by $1.5 million of transaction and integration costs associated with the acquisition of ChlorKing and $0.2 million of termination benefits related to a reduction-in-force within E&RW, partially offset by a reduction in expense of $0.2 million to finalize the relocation of the Company's corporate office functions to Charlotte, NC from Berkeley Heights, NJ. Adjustments in the six months ended June 27, 2026 were primarily driven by $0.8 million of costs related to a restructuring action in E&RW and $0.5 million of termination benefits associated with the restructuring of several teams. Adjustments in the six months ended June 28, 2025 were primarily driven by $3.3 million of transaction and integration costs associated with the acquisition of the ChlorKing business, $0.2 million of separation costs for the consolidation of operations in North America and $0.2 million of termination benefits related to a reduction-in-force within E&RW, partially offset by a reduction in expense of $0.2 million to finalize the relocation of the Company's corporate office functions to Charlotte, NC from Berkeley Heights, NJ. (d) Adjustments in the three and six months ended June 27, 2026 primarily included $0.2 million of non-recurring transition costs related to the restructuring in E&RW. Adjustments in the three and six months ended June 28, 2025 primarily included $1.1 million of income from insurance proceeds related to flood damage associated with a hurricane at a contract manufacturing facility. 34 Net Income and Net Income Margin to Adjusted Net Income and Adjusted Net Income Margin Following is a reconciliation from net income and net income margin to adjusted net income and adjusted net income margin: (Dollars in thousands, except per share data) Three Months Ended Six Months Ended June 27, 2026 June 28, 2025 June 27, 2026 June 28, 2025 Net income $ 45,617 $ 44,799 $ 68,976 $ 59,132 Tax adjustments (a) 18 (9) (258) (192) Other adjustments and amortization: Stock-based compensation (b) — 11 — 57 Currency exchange items (c) (505) 778 (581) 772 Acquisition and restructuring related expense, net (d) 748 1,565 1,253 3,491 Other (e) 234 (1,092) 234 (1,086) Total other adjustments 477 1,262 906 3,234 Loss on debt extinguishment 1,836 — 2,037 — Amortization 8,247 8,631 16,428 17,166 Debt refinancing fees (f) 5,186 — 5,186 — Tax effect (g) (3,621) (2,438) (5,676) (5,008) Adjusted net income $ 57,760 $ 52,245 $ 87,599 $ 74,332 Net income margin 14.3 % 15.0 % 12.0 % 11.2 % Adjusted net income margin 18.1 % 17.4 % 15.3 % 14.1 % Weighted average number of common shares outstanding, basic 216,352,470 216,382,177 216,844,828 216,175,618 Weighted average number of common shares outstanding, diluted 220,806,675 221,834,188 221,606,626 221,856,056 Basic EPS $ 0.21 $ 0.21 $ 0.32 $ 0.27 Diluted EPS $ 0.21 $ 0.20 $ 0.31 $ 0.27 Adjusted basic EPS $ 0.27 $ 0.24 $ 0.40 $ 0.34 Adjusted diluted EPS $ 0.26 $ 0.24 $ 0.40 $ 0.34 (a) Tax adjustments for the three and six months ended June 27, 2026 reflected a normalized tax rate of 23.0% and 23.1%, respectively, compared to the Company’s effective tax rate of 23.0% and 22.8%, respectively. The Company’s effective tax rate for the three and six months ended June 27, 2026 approximated the normalized tax rate as the net impact of discrete tax items was not significant. Tax adjustments for the three and six months ended June 28, 2025 reflect a normalized tax rate of 24.6% and 24.6% compared to the Company's effective tax rate of 24.6% and 24.3%, respectively. The Company’s effective tax rate for the three and six months ended June 28, 2025 primarily included the tax benefits resulting from stock-based compensation. (b) Represents non-cash stock-based compensation expense related to equity awards issued to management, employees, and directors. The adjustment includes only expense related to awards issued under the 2017 Equity Incentive Plan, which were awards granted prior to the effective date of the IPO. (c) Represents unrealized non-cash (gains) losses on foreign denominated monetary assets and liabilities and foreign currency contracts. (d) Adjustments in the three months ended June 27, 2026 were primarily driven by $0.8 million of costs related to a restructuring action in E&RW. Adjustments in the three months ended June 28, 2025 were primarily driven by $1.5 million of transaction and integration costs associated with the acquisition of ChlorKing and $0.2 million of termination benefits related to a reduction-in-force within E&RW, partially offset by a reduction in expense of $0.2 million to finalize the relocation of the Company's corporate office functions to Charlotte, NC from Berkeley Heights, NJ. Adjustments in the six months ended June 27, 2026 were primarily driven by $0.8 million of costs related to a restructuring action in E&RW and $0.5 million of termination benefits associated with the restructuring of several teams. Adjustments in the six months ended June 28, 2025 were primarily driven by $3.3 million of transaction and integration costs associated with the acquisition of the ChlorKing business, $0.2 million of separation costs for the consolidation of operations in North America and $0.2 million of termination benefits related to a reduction-in-force within E&RW, partially offset by a reduction in expense of $0.2 million to finalize the relocation of the Company's corporate office functions to Charlotte, NC from Berkeley Heights, NJ. (e) Adjustments in the three and six months ended June 27, 2026 primarily included $0.2 million of non-recurring transition costs related to the restructuring in E&RW. Adjustments in the three and six months ended June 28, 2025 primarily included $1.1 million of income from insurance proceeds related to flood damage associated with a hurricane at a contract manufacturing facility. (f) Represents non-recurring professional fees expensed as part of our credit facility refinance for the portion of debt that was accounted for as a modification. (g) The tax effect represented the immediately preceding adjustments at the normalized tax rates as discussed in footnote (a) above. 35 Following is a reconciliation from segment income and segment income margin to adjusted segment income and adjusted segment income margin for NAM (dollars in thousands): NAM Three Months Ended Six Months Ended June 27, 2026 June 28, 2025 June 27, 2026 June 28, 2025 Segment income $ 90,214 $ 83,374 $ 140,720 $ 126,828 Depreciation 4,994 4,448 10,007 9,948 Amortization 1,885 1,761 3,701 3,461 Other (a) — (513) — (510) Total adjustments 6,879 5,696 13,708 12,899 Adjusted segment income $ 97,093 $ 89,070 $ 154,428 $ 139,727 Segment income margin 32.5 % 32.7 % 28.9 % 28.7 % Adjusted segment income margin 35.0 % 34.9 % 31.7 % 31.6 % (a) Adjustments in the three and six months ended June 28, 2025 for NAM primarily included $0.5 million of income from insurance proceeds related to flood damage associated with a hurricane at a contract manufacturing facility. Following is a reconciliation from segment income and segment income margin to adjusted segment income and adjusted segment income margin for E&RW (dollars in thousands): E&RW Three Months Ended Six Months Ended June 27, 2026 June 28, 2025 June 27, 2026 June 28, 2025 Segment income $ 6,640 $ 7,589 $ 14,923 $ 14,127 Depreciation 491 439 999 853 Other (a) 234 — 234 — Total adjustments 725 439 1,233 853 Adjusted segment income $ 7,365 $ 8,028 $ 16,156 $ 14,980 Segment income margin 16.3 % 17.1 % 17.3 % 16.4 % Adjusted segment income margin 18.1 % 18.1 % 18.8 % 17.4 % (a) Adjustments in the three and six months ended June 27, 2026 primarily included $0.2 million for non-recurring transition costs related to the restructuring in E&RW. Liquidity and Capital Resources Our primary sources of liquidity are net cash provided by operating activities and availability under the Revolving Facility (as defined below). Primary working capital requirements are for raw materials, components and certain finished goods inventories and supplies, payroll, manufacturing, freight and distribution, facility, and other operating expenses. Cash flows from operating activities and working capital requirements fluctuate during the year, driven primarily by the seasonal demand for our products, an Early Buy program, the timing of inventory purchases and receipt of customer payments, and as such, the utilization of the Revolving Facility may fluctuate during the year. Unrestricted cash and cash equivalents totaled $304.1 million as of June 27, 2026, which was a decrease of $25.5 million from $329.6 million at December 31, 2025. As of June 27, 2026 and December 31, 2025, the Company had $179.3 million and $69.5 million, respectively, in time deposits and commercial paper, which were included in short-term investments on the unaudited condensed consolidated balance sheets. We focus on increasing cash flow, solidifying the liquidity position through working capital initiatives, and paying our debt obligations, while continuing to fund business growth initiatives and return of capital to stockholders. We believe that net cash provided by operating activities and availability under the Revolving Facility will be adequate to finance our working capital requirements, inclusive of capital expenditures, and debt service over the next 12 months. 36 Beyond the next 12 months, our principal demand for funds will be for maintenance of our core business, to satisfy long-term contractual obligations, the Company’s ongoing capital expenditure program designed to improve the effectiveness and capabilities of its facilities and technology, research and development activities, potential share repurchases and any potential merger and acquisition activity. The Company’s material contractual obligations include outstanding debt, operating leases and finance leases. For additional details related to the Company’s long-term contractual obligations for long-term debt, see Note 7 and for contractual obligations for leases see Note 13. We believe the combination of our current cash level, net cash provided by operating activities, and availability under the Revolving Facility will be sufficient to satisfy the above requirements. Accounts Receivable Sales On July 3, 2024, the Company entered into a Receivables Purchase Agreement under which it may offer to sell eligible accounts receivable. The agreement is uncommitted and the eligible accounts receivable to be sold under the agreement consist of up to $125 million in accounts receivable generated by sales to specified customers of the Company. The Company will be paid a discounted purchase price for each receivable sold. The discount rate used to determine the purchase price for the subject receivables is based upon an annual interest rate equal to the forward-looking term rate based on the secured overnight financing rate for the period of time between payment to the Company and the due date for the receivable plus a buffer period specific to the obligor, plus a margin applicable to the specified obligor. Transactions under this agreement are accounted for as sales of accounts receivable, and the receivables sold are removed from the unaudited condensed consolidated balance sheets at the time of the sales transaction. For ease of administration, the Company collects customer payments related to the receivables sold and remits those payments to the purchaser. Proceeds received from the sales of accounts receivable are classified as operating cash flows in the unaudited condensed consolidated statements of cash flows. We record the discount in the “Other income, net” line in the unaudited condensed consolidated statements of operations. The Company, as the servicer under the Receivables Purchase Agreement, continues to service the accounts receivable sold. No sales of accounts receivable occurred during the six months ended June 27, 2026. During the six months ended June 28, 2025, there were proceeds of $99.1 million from the sale of $100.0 million of receivables under the Receivables Purchase Agreement. As of June 28, 2025, none of the sold receivables remained to be collected and remitted to the transferee. The expense recognized related to the discount on sales for the six months ended June 28, 2025 was $0.9 million. Long-Term Debt, Net Long-term debt, net, consisted of the following (in thousands): June 27, 2026 December 31, 2025 Term Facility, due June 23, 2033 $ 960,000 $ 955,000 Other bank debt 1,317 4,826 Finance lease obligations 3,904 3,639 Subtotal 965,221 963,465 Less: Current portion of the long-term debt (10,811) (13,261) Less: Unamortized debt issuance costs (8,797) (6,657) Total $ 945,613 $ 943,547 Amended and Restated Term Loan and Cash Flow Revolving Facility On June 23, 2026, Hayward Industries, Inc. (the “US Borrower”), a New Jersey corporation and a wholly owned subsidiary of the Company, Hayward Pool Products Canada, Inc. / Produits de Piscines Hayward Canada, Inc., a Canadian federal corporation and a wholly owned subsidiary of the Company (together with the US Borrower, the “Borrowers”), and Hayward Intermediate, Inc., a Delaware corporation and a wholly owned subsidiary of the Company, entered into an Amended and Restated First Lien Credit Agreement (the “Credit Agreement”), which Credit Agreement refinanced in full and extended the maturities of the Borrowers’ previously outstanding term loans (the “Prior Term Loans”). In connection with the entry into the Credit Agreement, the Borrowers’ previously outstanding asset-based revolving credit facility (the “Prior ABL Facility”) was terminated on June 23, 2026 with no outstanding borrowings. Pursuant to the Credit Agreement, the Company (i) borrowed $960.0 million of new term loans (the “Term Loans”) in U.S. dollars under a seven-year term loan facility (the “Term Facility”) and (ii) entered into a $425.0 million five-year revolving credit facility available in U.S. dollars, Canadian dollars, British pounds sterling, Euros, Australian dollars and other approved currencies (the “Revolving Facility” and, together with the Term Facility, the “Credit Facilities”), which Revolving Facility includes a $100.0 million letter of credit sublimit and a $50.0 million swingline sublimit (with use under such sublimits 37 reducing availability under the Revolving Facility). All outstanding principal under the Term Facility is due at maturity on June 23, 2033. The maturity date under the Revolving Facility is June 23, 2031. The Term Loans bear interest, at the US Borrower’s option, at either (i) term SOFR (subject to a 0.50% floor) plus a margin of 2.00% per annum or (ii) the alternate base rate plus a margin of 1.00% per annum. The required quarterly payment of the Term Loans is 0.25% of the initial outstanding principal thereof. The US Borrower may voluntarily prepay the Term Loans in whole or in part, at any time, subject to a 1.00% prepayment premium in connection with certain repricing transactions and amendments occurring within the first six months after the closing date of the Term Facility. In addition, the Credit Agreement requires mandatory principal payments of the Term Loans to be made based on certain events, including annual excess cash flow (with the required prepayment percentage varying between 0% and 50% based on the first lien leverage ratio of the US Borrower and its restricted subsidiaries), non-ordinary course sales of assets and the incurrence of debt not otherwise permitted under the Credit Agreement, each subject to certain exceptions and thresholds as set forth in the Credit Agreement. Borrowings under the Revolving Facility bear interest, at the Borrowers’ option, at either (i) term SOFR (subject to a 0.50% floor), term CORRA, SONIA, BBSY or EURIBOR (depending on the currency of the borrowing) plus a margin in a range of 1.25-2.00% per annum (based on the total leverage ratio of the US Borrower and its restricted subsidiaries from time to time) or (ii) the alternate base rate, the Canadian prime rate or the Canadian base rate (depending on the currency of the borrowing) plus a margin in a range of 0.25-1.00% per annum (based on the total leverage ratio of the US Borrower and its restricted subsidiaries from time to time). The Revolving Facility also requires a commitment fee on a quarterly basis at a rate in a range of 0.20-0.30% per annum (based on the total leverage ratio of the US Borrower and its restricted subsidiaries from time to time). The Credit Facilities are guaranteed by substantially all of the Borrowers’ United States and Canadian wholly owned subsidiaries and collateralized by substantially all of the assets of the Borrowers and such guarantors, in each case, subject to customary exceptions. As of June 27, 2026, the loan balance was zero on the Revolving Facility with borrowing availability of $425.0 million. As of June 27, 2026, the balance outstanding under the Term Facility was $960.0 million. Prior ABL Facility The borrowings under the Prior ABL Facility bore interest at a rate equal to the Term SOFR and a margin of between 1.25% to 1.75%, or at a base rate plus a margin of 0.25% to 0.75%. For the year ended December 31, 2025, the average borrowing base under the Prior ABL Facility was $153.3 million, and the average loan balance outstanding was zero. As of December 31, 2025, the loan balance was zero with a borrowing availability of $124.9 million. As of June 23, 2026, the Prior ABL Facility was terminated with no outstanding borrowings. Prior Term Loans The Term Loans refinanced in full the Prior Term Loans. The Prior Term Loans bore interest at a rate equal to a base rate or Term SOFR (subject to a 0.50% floor), plus, in either case, an applicable margin. The applicable margin was 2.75% per annum, with a stepdown to 2.50% per annum when net secured leverage of the US Borrower and its restricted subsidiaries was less than 2.5x. For the three months ended June 27, 2026, the effective interest rate on borrowings under the combination of the Prior Term Loans from March 29, 2026 to June 22, 2026 and the Term Loans from June 23, 2026 to June 27, 2026, including the impact of an interest rate hedge, was 5.89%. The effective interest rate is comprised of 6.23% for interest and 0.29% for financing costs, partially offset by 0.63% for interest income on the interest rate swaps. For the six months ended June 27, 2026, the effective interest rate on borrowings under the combination of the Prior Term Loans from January 1, 2026 to June 22, 2026 and the Term Loans from June 23, 2026 to June 27, 2026, including the impact of an interest rate hedge, was 5.94%. The effective interest rate is comprised of 6.26% for interest and 0.29% for financing costs, partially offset by 0.61% for interest income on the interest rate swaps. Covenant Compliance The Credit Agreement contains customary collateral requirements, restrictions, and covenants, including restrictions on indebtedness, liens, dividends, distributions, acquisitions, investments, sale or transfer of assets and transactions with affiliates. The Credit Agreement also contains, for the benefit of the Revolving Facility only, covenants to maintain a maximum total leverage ratio and a minimum net interest coverage ratio. The Credit Agreement further contains customary events of default, 38 including a change of control. As of June 27, 2026, the Company was in compliance with all covenants under the Credit Agreement. Refer to Note 7. “Long-Term Debt, Net” of Notes to unaudited condensed consolidated financial statements for further information on the terms of the Credit Facilities. We also have a revolving credit facility for our Spain subsidiary in the amount of €0.5 million as a local source of liquidity. As of June 27, 2026, the Spain revolving facility balance was zero with a borrowing availability of €0.5 million. Sources and Uses of Cash Following is a summary of our cash flows from operating, investing, and financing activities: (Dollars in thousands) Six Months Ended June 27, 2026 June 28, 2025 Net cash provided by operating activities $ 171,563 $ 188,362 Net cash used in investing activities (126,722) (13,582) Net cash used in financing activities (69,523) (8,052) Effect of exchange rate changes on cash and cash equivalents (849) 1,734 Change in cash and cash equivalents $ (25,531) $ 168,462 Net cash provided by operating activities Net cash provided by operating activities decreased to $171.6 million for the six months ended June 27, 2026 from $188.4 million for the six months ended June 28, 2025, a decrease of $16.8 million, or 8.9%. The decrease in cash provided was primarily driven by higher incremental payments for accrued expenses, mainly customer rebates and incentive plans, partially offset by an increase in net income. Net cash used in investing activities Net cash used in investing activities was $126.7 million for the six months ended June 27, 2026 compared to net cash used in investing activities of $13.6 million for the six months ended June 28, 2025, an increase of $113.1 million, or 833.0%. The increase in net cash used in investing activities was primarily driven by the net purchases of short-term investments. Net cash used in financing activities Net cash used in financing activities was $69.5 million for the six months ended June 27, 2026 compared to net cash used in financing activities of $8.1 million for the six months ended June 28, 2025, an increase of $61.4 million, or 763.4%. The increase in net cash used in financing activities was driven by increased purchases of common stock and debt issuance costs related to the entry into the Credit Agreement during June 2026. Off-Balance Sheet Arrangements As of June 27, 2026 and December 31, 2025, we had an aggregate of $3.3 million and $3.9 million, respectively, of outstanding letters of credit on our Revolving Facility and Prior ABL Facility. Critical Accounting Estimates Our unaudited condensed consolidated financial statements have been prepared in accordance with GAAP. The preparation of financial statements requires management to make estimates and assumptions that affect amounts reported therein. The estimates that require management’s most difficult, subjective or complex judgments are described in Part II, Item 7, under the heading “Critical Accounting Estimates” in our Annual Report on Form 10-K, which section is incorporated herein by reference. There have been no material changes to our critical accounting estimates during the six months ended June 27, 2026. Recently Issued Accounting Standards See Note 2. "Significant Accounting Policies" of Notes to our Unaudited Condensed Consolidated Financial Statementsfor additional information.