We have prepared this Management’s Discussion and Analysis as an aid to understanding our financial results. It should be read in conjunction with the accompanying Consolidated Financial Statements and related Notes to Consolidated Financial Statements. After a cautionary note regarding forward-looking statements, we begin with an introduction to our key businesses and then provide discussions of our results of operations, liquidity and capital resources, and critical accounting policies.
Cautionary Note Regarding Forward-Looking Statements
La-Z-Boy Incorporated and its subsidiaries (individually and collectively, "we," "our," "us," "La-Z-Boy" or the "Company") make "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. Generally, forward-looking statements include information concerning expectations, projections or trends relating to our results of operations, financial results, financial condition, strategic initiatives and plans, acquisitions and divestitures, expenses, dividends, share repurchases, liquidity, use of cash and cash requirements, borrowing capacity, investments, future economic performance, and our business and industry.
Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements may include words such as "aim," "anticipates," "believes," "continues," "estimates," "expects," "feels," "forecasts," "hopes," "intends," "likely," "non-recurring," "one-time," "outlook," "plans," "projects," "seeks," "short-term," "target," "unusual," or words of similar meaning, or future or conditional verbs, such as "will," "should," "could," or "may." A forward-looking statement is neither a prediction nor a guarantee of future events or circumstances, and those future events or circumstances may not occur. You should not place undue reliance on forward-looking statements, which speak to our views only as of the date of this report. These forward-looking statements are all based on currently available operating, financial, and competitive information and are subject to various risks and uncertainties, many of which are unforeseeable and beyond our control. Additional risks and uncertainties that we do not presently know about or that we currently consider to be immaterial may also affect our business operations and financial performance.
Our actual future results and trends may differ materially from those we anticipate depending on a variety of factors, including, but not limited to, the risks and uncertainties discussed in our Annual Report for the fiscal year ended April 25, 2026, under Item 1A, "Risk Factors" and Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations" and in our other filings with the Securities and Exchange Commission. Given these risks and uncertainties, you should not rely on forward-looking statements as a prediction of actual results. Any or all of the forward-looking statements contained in this report, our Annual Report for the fiscal year ended April 25, 2026, or any other public statement made by us, including by our management, may turn out to be incorrect. We are including this cautionary note to make applicable and take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or for any other reason.
Introduction
Our Business
We are the leading global producer of reclining chairs and one of the largest manufacturers/distributors of residential furniture in the United States. The La-Z-Boy Stores retail network is the second largest retailer of single-branded furniture in the United States. We manufacture, market, import, export, distribute and retail upholstery furniture products under the La-Z-Boy®, England, and Joybird® tradenames. In addition, we import, distribute and retail accessories and casegoods (wood) furniture products under the Hammary® and Joybird® tradenames.
As of July 25, 2026, our supply chain operations included the following:
•Four major manufacturing locations and 9 distribution centers in the United States and two facilities in Mexico to support our speed-to-market and customization strategy
•A logistics company that distributes a portion of our products in the United States
•A wholesale sales office that is responsible for distribution of our product in the United Kingdom and Ireland
•A global trading company in Hong Kong that helps us manage our Asian supply chain by establishing and maintaining relationships with our Asian suppliers, as well as identifying efficiencies and savings opportunities
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We also participate in two consolidated joint ventures in Thailand that support our international businesses: one that operates a manufacturing facility and another that operates a wholesale sales office.
We sell our products through multiple channels: directly to consumers through retail stores that we own and operate; to furniture retailers or distributors in the United States, Canada, and approximately 45 other countries, including the United Kingdom, China, Australia, and New Zealand; and through our websites, www.la-z-boy.com and www.joybird.com.
•The centerpiece of our retail distribution strategy is our network of 379 La-Z-Boy Stores, over 500 La-Z-Boy Comfort Studio® locations, and over 900 La-Z-Boy branded space locations, each dedicated to marketing our La-Z-Boy branded products.
◦La-Z-Boy Stores help consumers furnish their homes by combining the style, comfort, and quality of La-Z-Boy furniture with our available design services. We own 234 of the La-Z-Boy Stores, while the remainder are independently owned and operated.
◦La-Z-Boy Comfort Studio® locations are defined spaces within larger independent retailers that are dedicated to displaying and selling La-Z-Boy branded products, while La-Z-Boy branded space locations display a curated selection of La-Z-Boy branded products within larger independent dealers. All La-Z-Boy Comfort Studio® locations and La-Z-Boy branded space locations are independently owned and operated.
◦In total, we have approximately 8 million square feet of proprietary floor space dedicated to selling La-Z-Boy branded products in North America within our La-Z-Boy Stores and La-Z-Boy Comfort Studio® locations.
◦We also have approximately 3 million square feet of floor space outside of North America dedicated to selling La-Z-Boy branded products.
•Our other brands, England, Hammary®, and Joybird enjoy distribution through various channels.
◦England has its own dedicated proprietary in-store programs with 465 outlets and approximately 1 million square feet of proprietary floor space.
◦Joybird sells product online, in 16 small-format stores in key markets, and through other distribution channels.
Century Vision Strategy
As La-Z-Boy approaches its centennial anniversary in 2027, we remain focused on executing our Century Vision strategy to grow sales and market share through growth of our consumer brands, La-Z-Boy and Joybird, and sustainably grow our operating margin well beyond this milestone year. Building on a century of innovation, comfort, craftsmanship, and consumer trust, we are working to leverage our iconic brand to expand market reach and strengthen our engagement with consumers, dealers and partners. Through continued investment in brand evolution, retail expansion, digital transformation, innovation, and consumer insights, we aim to deliver the transformational power of comfort to future generations with a consumer-first approach while honoring our almost 100 year heritage that has made La-Z-Boy one of America's most recognized and enduring brands. Our Century Vision strategy continues to have significant runway and we are executing through the following initiatives:
Expanding the La-Z-Boy brand reach
•Leveraging our connection to comfort and reinvigorating our brand with a consumer focus, expanded omni-channel presence, and digital transformation. Our strategic initiatives to leverage and reinvigorate our iconic La-Z-Boy brand center on a renewed focus on leveraging the compelling La-Z-Boy comfort message, accelerating our omni-channel offering, and identifying additional consumer-base growth opportunities. We leverage our consumer insights to develop and deliver meaningful product innovation, particularly in the motion and reclining categories. We also utilize consumer insights to optimize our messaging and marketing campaigns to increase recognition and consideration of La-Z-Boy among both existing and prospective customers. Our Long Live the Lazy campaign, launched in 2024, continues to resonate through its compelling, consumer-inspired message. In 2025, we successfully launched a refreshed brand identity - the first significant evolution of the La-Z-Boy brand in more than two decades - designed to modernize the brand, enhance differentiation, and strengthen relevance with a broader consumer audience across retail and digital footprints. Further, our goal is to connect with consumers along their purchase journey through multiple means, whether online or in person. We are driving change throughout our digital platforms to improve the user experience, with a specific focus on the ease with which customers browse through our broad product assortment,
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customize products to their liking, find stores to make a purchase, or purchase at www.la-z-boy.com. We believe that our digital transformation will improve traffic both online and in our retail locations.
•Growing our La-Z-Boy retail business. We expect to grow our Retail segment through organic same-store sales growth and by increasing company-owned stores through the opening of new stores and acquisitions. Opportunistically acquiring existing La-Z-Boy Stores and opening new La-Z-Boy Stores where we see opportunity for growth or further market penetration continues to be a priority. Over the last five years, as a result of opening new company-owned stores and acquiring independent La-Z-Boy Stores, we have increased our ownership percentage in this store network from 45% to 62%. With 379 stores currently in the La-Z-Boy Store network, we believe there is opportunity to open approximately ten stores annually, with the majority being company-owned, targeting a network of 450 stores.
•Expanding the reach of our wholesale distribution channels. Consumers experience the La-Z-Boy brand in many channels including the La-Z-Boy Store network, the La-Z-Boy Comfort Studio® locations, our store-within-a-store format, and La-Z-Boy branded space locations. While consumers increasingly interact with the brand digitally, our consumers also demonstrate an affinity for visiting our stores to shop, allowing us to frequently deliver the flagship La-Z-Boy Store, La-Z-Boy Comfort Studio®, or La-Z-Boy branded space experience and provide design services. In addition to our branded distribution channels, over 1,000 other dealers sell La-Z-Boy products, which include some of the best-known names in the industry, providing us the benefit of multi-channel distribution. We believe there is significant growth potential for our consumer brands through these retail channels.
Profitably growing the Joybird brand
•Profitably growing the Joybird brand with a digital-first consumer experience. Joybird is a leading omni-channel, direct to consumer retailer and manufacturer of upholstered furniture. We believe that Joybird is a brand with long-term potential and our strategic initiatives in this area focus on driving profitable growth through the opening of additional small-format stores in key markets, expanding distribution channels, driving customer acquisition and awareness through digital marketing, and continued optimization of cost structure.
Enhancing our enterprise capabilities
•Enhancing our enterprise capabilities to support the growth of our consumer brands and enable potential acquisitions for growth. Key to successful growth is ensuring we have the capabilities to support that growth, including an agile supply chain, modern technology for consumers, employees, and analytic capabilities, and by delivering a human-centered employee experience. We continue to have initiatives focused on enhancing these capabilities with a consumer-first focus.
Reportable Segments
Our reportable operating segments include the Retail segment and the Wholesale segment.
•Retail Segment. Our Retail segment consists of one operating segment comprised of our 234 company-owned La-Z-Boy Stores. The Retail segment sells primarily upholstered furniture, in addition to some casegoods and other home furnishings accessories, to end consumers through these stores.
•Wholesale Segment. Our Wholesale segment consists primarily of three operating segments: La-Z-Boy, our largest operating segment, our England subsidiary and our international operating segment, which includes our international La-Z-Boy wholesale and manufacturing businesses. We aggregate these operating segments into one reportable segment because they are economically similar and meet the other aggregation criteria for determining reportable segments. Our Wholesale segment manufactures and imports upholstered furniture, such as recliners and motion furniture, sofas, loveseats, chairs, sectionals, modulars, ottomans and sleeper sofas and imports casegoods (wood) furniture such as bedroom sets, dining room sets, entertainment centers and occasional pieces. The Wholesale segment sells directly to La-Z-Boy Stores, operators of La-Z-Boy Comfort Studio® and branded space locations, England Custom Comfort Center locations, major dealers, and a wide cross-section of other independent retailers.
•Corporate and Other. Corporate and Other includes the shared costs for corporate functions, including human resources, information technology, finance and accounting, and legal, in addition to revenue generated through royalty agreements with companies licensed to use the La-Z-Boy® brand name on various products. We consider our corporate functions to be other business activities and have aggregated them with our other insignificant operating segments,
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including our global trading company in Hong Kong and Joybird, an omni-channel retailer that manufactures upholstered furniture, such as sofas, loveseats, chairs, ottomans, sleeper sofas and beds, and also imports casegoods (wood) furniture, such as occasional tables and other accessories. Joybird sells to the end consumer online through its website, www.joybird.com, through small-format stores in key markets, and through other distribution channels. None of the operating segments included in Corporate and Other meet the requirements of reportable segments.
Results of Operations
Fiscal 2027 First Quarter Compared with Fiscal 2026 First Quarter
Supply Chain Optimization
During the first quarter of fiscal 2027, we announced the planned closure of our leased upholstery assembly plant in San Luis Rio Colorado ("SLRC"), Mexico with operations ceased at the end of the first quarter of fiscal 2027. As a result of this action, during the first quarter of fiscal 2027, we recorded charges within the Wholesale segment of $9.3 million in SG&A expense for the impairment of various long-lived assets and $3.0 million in cost of sales primarily related to severance expense.
Additionally, during the first quarter of fiscal 2027, we announced the planned closure of our leased Joybird manufacturing plant in Tijuana, Mexico, with all manufacturing operations expected to transfer to our U.S. plants by the end of fiscal 2027. As a result of this action, we recorded charges of $5.0 million in cost of sales within Corporate and Other for severance expense, accelerated depreciation, and accelerated lease expense.
La-Z-Boy Incorporated
Quarter Ended
(Unaudited, amounts in thousands, except percentages) 7/25/2026 7/26/2025 % Change
Sales $ 475,689 $ 492,229 (3.4)%
Operating income (2,104) 21,987 (109.6)%
Operating margin (0.4)% 4.5%
Sales
Consolidated sales decreased $16.5 million, or 3%, in the first quarter of fiscal 2027, compared with the same period a year ago. Sales in the first quarter of fiscal 2027 benefited from incremental sales from our retail store acquisitions that occurred over the last 12 months and increased sales from our retail store expansion. These increases were more than offset by a lower delivered volume in our wholesale businesses, which includes the absence of sales from our Casegoods businesses that were divested during the fourth quarter of fiscal 2026 and first quarter of fiscal 2027. Excluding the sales from the Casegoods divestiture, consolidated sales decreased 1%.
Operating Margin
Operating margin, which is calculated as operating income as a percentage of sales, decreased 490 basis points in the first quarter of fiscal 2027, compared with the same period a year ago.
•Gross margin, which is calculated as gross profit as a percentage of sales, increased 140 basis points in the first quarter of fiscal 2027, compared with the same period a year ago.
◦Changes in our consolidated mix led to a 210 basis point increase in gross margin in the first quarter of fiscal 2027 compared with the same period a year ago driven by growth of our Retail segment, which has a higher gross margin than our Wholesale segment.
◦Favorable tariff impact, including refunds and pricing actions net of tariff costs, drove an additional increase in gross margin in the first quarter of fiscal 2027 compared with the same period a year ago.
◦Partially offsetting the items above, gross margin decreased in the first quarter of fiscal 2027, compared with the same period a year ago, as a result of the Supply Chain Optimization actions in our Mexico manufacturing operations described above.
•SG&A expenses as a percentage of sales increased 630 basis points in the first quarter of fiscal 2027, compared with the same period a year ago.
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◦Changes in our consolidated mix led to a 220 basis point increase in SG&A expense as a percentage of sales in the first quarter of fiscal 2027 compared with the same period a year ago driven by growth of our Retail segment, which has a higher SG&A expense as a percentage of sales than our Wholesale segment.
◦Supply Chain Optimization actions in our Mexico manufacturing operations described above also contributed to the increase in the first quarter of fiscal 2027 compared with the same period a year ago.
◦Fixed cost deleverage from lower delivered sales further contributed to higher SG&A expense as a percentage of sales in the first quarter of fiscal 2027 compared with the same period a year ago.
We discuss each segment’s results in the following section.
Retail Segment
Quarter Ended
(Unaudited, amounts in thousands, except percentages) 7/25/2026 7/26/2025 % Change
Sales $ 228,555 $ 207,150 10.3%
Operating income 14,596 13,120 11.3%
Operating margin 6.4% 6.3%
Sales
The Retail segment’s sales increased $21.4 million, or 10%, in the first quarter of fiscal 2027, compared with the same period a year ago primarily due to $16.4 million of incremental sales resulting from our retail store acquisitions that occurred over the last 12 months along with $6.3 million of sales from the addition of new retail stores, net of closed stores. These increases were partially offset by a slight decline in delivered same-store sales.
Total written sales increased 16% in the first quarter of fiscal 2027, compared with the same period a year ago. Written same-store sales increased 3% over the same period, driven by strong in-store execution. Same-store sales include the sales of all currently active stores that have been open and company-owned for each comparable period and excludes the benefit of net new stores and acquired stores.
Operating Margin
The Retail segment's operating margin increased 10 basis points in the first quarter of fiscal 2027, compared with the same period a year ago.
•Gross margin increased 70 basis points in the first quarter of fiscal 2027, compared with the same period a year ago, primarily due to reduced promotional activity on casegoods products and accessories relative to the prior year along with a favorable shift in product mix towards higher margin product.
•SG&A expenses as a percentage of sales increased 60 basis points in the first quarter of fiscal 2027, compared with the same period a year ago, primarily due to fixed cost deleverage from lower delivered same-store sales.
Wholesale Segment
Quarter Ended
(Unaudited, amounts in thousands, except percentages) 7/25/2026 7/26/2025 % Change
Sales to external customers $ 218,814 $ 255,345
Intersegment sales 104,132 97,612
Total Sales 322,946 352,957 (8.5)%
Operating income 6,725 25,175 (73.3)%
Operating margin 2.1% 7.1%
Sales
The Wholesale segment’s sales decreased $30.0 million, or 9%, in the first quarter of fiscal 2027, compared with the same period a year ago, primarily due to lower delivered volume including the absence of sales from our Casegoods wholesale businesses that were divested during the fourth quarter of fiscal 2026 and first quarter of fiscal 2027. Excluding the sales from
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the Casegoods divestiture, the Wholesale segment's sales decreased 5%. These decreases were partially offset by a favorable shift in product mix towards higher priced products.
Operating Margin
The Wholesale segment's operating margin decreased 500 basis points in the first quarter of fiscal 2027, compared with the same period a year ago.
•Gross margin increased 40 basis points in the first quarter of fiscal 2027, compared with the same period a year ago.
◦Favorable tariff impact, including refunds and pricing actions net of tariff costs, drove a 240 basis point increase in gross margin in the first quarter of fiscal 2027 compared with the same period a year ago.
◦Partially offsetting the item above, gross margin decreased 100 basis points in the first quarter of fiscal 2027 compared with the same period a year ago, as a result of the Supply Chain Optimization actions related to our SLRC, Mexico facility described above.
◦Targeted promotional activity also contributed to a 90 basis point decrease in gross margin in the first quarter of fiscal 2027 compared with the same period a year ago.
•SG&A expense as a percentage of sales increased 540 basis points in the first quarter of fiscal 2027, compared with the same period a year ago.
◦SG&A expense as a percentage of sales increased 290 basis points in the first quarter of fiscal 2027 compared with the same period a year ago, as a result of the Supply Chain Optimization actions related to our SLRC, Mexico facility described previously.
◦SG&A expense as a percentage of sales increased an additional 80 basis points in the first quarter of fiscal 2027 compared with the same period a year ago, due to the one-time loss recognized from the divestiture of our Casegoods wholesale business.
◦The remaining increase in SG&A expense as a percentage of sales in the first quarter of fiscal 2027 compared with the same period a year ago was primarily due to fixed cost deleverage on lower delivered sales volume.
Corporate and Other
Quarter Ended
(Unaudited, amounts in thousands, except percentages) 7/25/2026 7/26/2025 % Change
Sales $ 30,025 $ 31,235 (3.9)%
Intercompany eliminations (105,837) (99,113) (6.8)%
Operating loss (23,425) (16,308) (43.6)%
Sales
Corporate and Other sales decreased $1.2 million in the first quarter of fiscal 2027, compared with the same period a year ago, resulting from a decrease in Joybird sales to $26.5 million driven by lower delivered volume partially offset by a favorable shift in product mix. Written sales for Joybird decreased 17% in the first quarter of fiscal 2027, compared with the same period a year ago, as this consumer segment continues to be particularly volatile in the current macroeconomic environment.
Intercompany eliminations increased in the first quarter of fiscal 2027 compared with the same period a year ago due to higher sales from our Wholesale segment to our Retail segment.
Operating Loss
Our Corporate and Other operating loss increased $7.1 million in the first quarter of fiscal 2027, compared with the same period a year ago, primarily due to the Supply Chain Optimization actions related to our Tijuana, Mexico facility described above along with Joybird's operating loss resulting from lower delivered volume and unfavorable gross margin.
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Non-Operating Income (Expense)
Other income (expense), net was $4.3 million of expense in the first quarter of fiscal 2027, compared with $0.6 million of expense in the same period a year ago. The expense in fiscal 2027 was primarily due to a $4.1 million loss related to the termination and lump-sum settlement of our non-qualified legacy acquired retirement plan along with losses on investments held to fund the plan.
Interest Income
Interest income was $0.2 million lower in the first quarter of fiscal 2027, compared with the same period a year ago, primarily driven by lower interest rates along with lower interest-bearing cash balances.
Income Taxes
Our effective tax rate was 45.8% benefit for the first quarter of fiscal 2027, compared with 25.0% expense for the first quarter of fiscal 2026. Due to the immaterial net loss position in the first quarter of fiscal 2027, the change in the effective tax rate was disproportionately impacted by one-time impacts of certain non-deductible supply chain optimization charges along with the tax benefits from the vesting of stock awards and state refunds. We expect a more normalized effective tax rate for the full year fiscal 2027.
Liquidity and Capital Resources
Our sources of liquidity include cash and cash equivalents, short-term and long-term investments, cash from operations, and amounts available under our credit facility. We believe these sources remain adequate to meet our short-term and long-term liquidity requirements, finance our long-term growth plans, and fulfill other cash requirements for day-to-day operations and capital expenditures, including fiscal 2027 contractual obligations.
We had cash and cash equivalents of $267.3 million at July 25, 2026, compared with $303.2 million at April 25, 2026. In addition, we had investments to enhance our returns on cash of $5.4 million at July 25, 2026, compared with $5.5 million at April 25, 2026.
The following table illustrates the main components of our cash flows:
Quarter Ended
(Unaudited, amounts in thousands) 7/25/2026 7/26/2025
Cash Flows Provided By (Used For)
Net cash provided by operating activities $ 15,648 $ 36,292
Net cash used for investing activities (12,986) (18,819)
Net cash used for financing activities (38,110) (27,716)
Exchange rate changes (511) 338
Change in cash and cash equivalents $ (35,959) $ (9,905)
Operating Activities
During the first quarter of fiscal 2027, net cash provided by operating activities was $15.6 million, primarily attributable to net income, adjusted for non-cash items, and improvements in working capital, partially offset by the payout of our fiscal 2026 incentive compensation award and a $10.9 million lump-sum payment to participants to terminate our non-qualified legacy acquired retirement plan (funded by cash proceeds from the sale of investments). Net cash provided by operating activities in first quarter of fiscal 2027 was $20.6 million lower than the same period a year ago primarily due to lower net income, adjusted for non-cash items and the lump-sum payments to participants to terminate our non-qualified legacy acquired retirement plan.
Investing Activities
During the first quarter of fiscal 2027, net cash used for investing activities was $13.0 million, a decrease of $5.8 million compared with the same period a year ago, due to proceeds from the sale of investments and proceeds from the divestiture of our Casegoods wholesale business, partially offset by increased cash paid for acquisitions along with increased capital expenditures. Cash used for investing activities in fiscal 2027 included the following:
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•Cash used for capital expenditures in the period was $23.3 million, which was primarily related to our distribution and home delivery transformation, manufacturing-related investments, and La-Z-Boy Stores (new stores and remodels). We anticipate that spending on these items will continue, with full year fiscal 2027 capital expenditures expected to be in the range of $90 to $110 million. We have no material contractual commitments outstanding for future capital expenditures.
•Cash used for acquisitions was $15.7 million, related to the acquisition of the retail business in the Gulf Coast region.
•Proceeds from the sale of investments were $18.5 million, primarily to fund the lump-sum payments to participants to terminate our non-qualified legacy acquired retirement plan.
•Proceeds from the sale of assets were $7.5 million, primarily from the divestiture of our Casegoods wholesale business.
Financing Activities
During the first quarter of fiscal 2027, net cash used for financing activities was $38.1 million, an increase of $10.4 million compared with the same period a year ago, primarily due to an increase in share repurchases, partially offset by proceeds from exercised stock options. Cash used for financing activities in fiscal 2027 included the following:
•Cash paid to repurchase 0.7 million shares of company stock was $25.1 million. In April 2026, our board of directors rescinded the remaining repurchase authorization as of May 14, 2026, and established a new stock repurchase program, effective as of May 14, 2026, authorizing the repurchase of up to $300 million of Company stock. The new authorization does not have an expiration date. As of July 25, 2026, the maximum dollar value of shares that remained under the current repurchase program was approximately $291.2 million. With the operating cash flows we anticipate generating in fiscal 2027, we expect to continue repurchasing Company stock, subject to market conditions and other factors as deemed relevant by our board of directors.
•Cash paid to our shareholders in quarterly dividends was $9.7 million. Our board of directors has sole authority to determine if and when we will declare future dividends and on what terms. We expect the board to continue declaring regular quarterly cash dividends for the foreseeable future, but it may discontinue doing so at any time at the board's discretion.
•Cash paid for tax withholding on stock issued as part of our employee benefit plans, net of proceeds from exercised stock options, was $3.1 million.
On October 15, 2021, we entered into a credit agreement with Wells Fargo Bank, National Association, as administrative agent, the other agents and lenders named therein and the other parties thereto (as amended prior to July 1, 2025, the “Credit Agreement”). The Credit Agreement provides for an unsecured revolving credit facility in an aggregate principal amount of $200 million, which includes a $50 million letter of credit sub-limit (the “Credit Facility”).
On July 1, 2025, we entered into an amendment to the Credit Agreement (the “Credit Agreement Amendment”). The Credit Agreement Amendment, among other things, (i) extended the maturity date of the Credit Facility from October 15, 2026 to July 1, 2030, (ii) increased the accordion basket for additional revolving commitments and/or incremental term loans from $100 million to $125 million, (iii) removed the secured overnight financing rate (“SOFR”) credit spread adjustment, and (iv) decreased the consolidated fixed charge coverage ratio required to be satisfied under the Company’s financial covenant.
Borrowings under the Credit Facility may be used by the Company for general corporate purposes. The Credit Facility will mature on July 1, 2030, and provides us the ability to extend the maturity date for two additional one-year periods, subject to the satisfaction of customary conditions.
The Credit Facility contains certain restrictive loan covenants, including, among others, financial covenants requiring a maximum consolidated net lease adjusted leverage ratio and a minimum consolidated fixed charge coverage ratio, as well as customary covenants limiting our ability to incur indebtedness, grant liens, make acquisitions, merge or consolidate, and dispose of certain assets.
As of July 25, 2026, we have no borrowings outstanding under the Credit Facility and we were in compliance with our financial covenants under the Credit Facility. We believe our cash and cash equivalents, short-term investments, and cash from operations, in addition to our available Credit Facility, will provide adequate liquidity for our business operations over the next 12 months.
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Exchange Rate Changes
Due to changes in exchange rates, our cash and cash equivalents decreased by $0.5 million for the quarter ended July 25, 2026. These changes impacted our cash balances held in Canada and Thailand.
Other
During the first quarter of fiscal 2027, there were no material changes to the information about our contractual obligations and commitments disclosed in our Annual Report on Form 10-K for the fiscal year ended April 25, 2026. We do not expect our continuing compliance with existing federal, state and local statutes dealing with protection of the environment to have a material effect on our capital expenditures, earnings, competitive position or liquidity.
Critical Accounting Policies
We disclosed our critical accounting policies in our Annual Report on Form 10-K for the fiscal year ended April 25, 2026. There were no material changes to our critical accounting policies or estimates during the quarter ended July 25, 2026.
Recent Accounting Pronouncements
See Note 1, Basis of Presentation, to the consolidated financial statements included in this Quarterly Report on Form 10-Q for a discussion of recently adopted accounting standards and other new accounting standards.
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