Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion in conjunction with the accompanying interim Consolidated Financial Statements and notes, the Consolidated Financial Statements and notes in our 2025 Annual Report on Form 10-K and Management's Discussion and Analysis in our 2025 Annual Report on Form 10-K.

Forward-Looking Statements

This report contains forward-looking information that involves risks and uncertainties. Our forward-looking statements express our current expectations or forecasts of possible future results or events, including projections of earnings and other financial performance measures, statements of management's expectations regarding our strategic, operational and capital allocation plans and objectives, management's views on economic, industry, competitive, technological and regulatory conditions and other forecasts of trends and other matters. Forward-looking statements speak only as of the date of this filing, and we undertake no obligation to publicly update or revise such statements to reflect new circumstances or unanticipated events as they occur. You can identify these statements by the fact that they do not relate strictly to historic or current facts and often use words such as "anticipate," "estimate," "expect," "intend," "believe," "will," "outlook," "project," "may," "can," "plan," "target," "potential," "should" and other words and expressions of similar meaning.

No assurance can be given that our expected results in any forward-looking statement will be achieved, and our actual results may differ materially due to one or more factors, including the sensitivity of our business to weather conditions; changes in economic conditions, consumer discretionary spending, the housing market, inflation or interest rates; our ability to maintain favorable relationships with suppliers and manufacturers; competition from other leisure product alternatives or mass merchants; our ability to continue to execute our growth strategies; changes in the regulatory environment; new or additional taxes, duties or tariffs; excess tax benefits or deficiencies recognized under ASU 2016-09 and other risks detailed in our 2025 Annual Report on Form 10-K, as updated by our subsequent filings with the U.S. Securities and Exchange Commission. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

OVERVIEW

Financial Results

Second quarter ended June 30, 2026 compared to the second quarter ended June 30, 2025

Net sales increased 2% to $1.8 billion in the second quarter of 2026. The increase reflected benefits from inflation, steady maintenance activity and improved sales of building materials amid a muted discretionary spending environment.

Gross profit increased 1% to $540.8 million. Gross margin decreased 30 basis points to 29.7% from 30.0% in the same period of 2025, primarily due to elevated inbound freight costs and changes in customer mix. These headwinds were partially offset by benefits from supply chain initiatives.

Selling and administrative expenses (operating expenses) increased 4% to $273.1 million from $262.5 million in the same period in 2025, primarily driven by $8.3 million of CEO transition costs. CEO transition costs comprise $6.3 million of non-cash share-based compensation expense for awards previously granted but not fully amortized and $2.0 million of cash transition costs. Adjusting for the impact of CEO transition costs, operating expenses increased 1% to $264.8 million.

Operating income decreased 2% to $267.7 million compared to $272.7 million in the same period last year. Adjusted operating income increased 1% to $275.9 million.

Net income decreased 3% to $188.1 million from $194.3 million in the second quarter of 2025. Adjusted net income increased 1% to $195.7 million compared to $194.2 million in the three months ended June 30, 2025.

Earnings per diluted share was $5.17 in both periods. Adjusted earnings per diluted share increased 4% to $5.38 compared to $5.17 in 2025.

See "Results of Operations" below for definitions of our non-GAAP measures and reconciliations of our non-GAAP measures to GAAP measures.

References to product line and product category data throughout this report generally reflect data related to the North American swimming pool market, as this data is more readily available for analysis and represents the largest component of our operations.

In this Form 10-Q and other of our public disclosures, we estimate the impact that favorable or unfavorable weather had on our operating results. In connection with these estimates, we make several assumptions and rely on various third-party sources. It is possible that others assessing the same data could reach conclusions that differ from ours.

Financial Position and Liquidity

As of June 30, 2026, total net receivables, including pledged receivables, increased 11% compared to June 30, 2025, primarily due to higher sales in June 2026. Our days sales outstanding (DSO), as calculated on a trailing four quarters basis, was 27.6 days at June 30, 2026 and 25.8 days at June 30, 2025. Our allowance for doubtful accounts balance was $8.5 million at June 30, 2026 and $8.3 million at June 30, 2025.

Our inventory balance was $1.4 billion at June 30, 2026, an increase of $48.5 million, or 4%, from June 30, 2025. The 4% year-over-year increase in inventory is down from the 14% increase reported in the first quarter of 2026, as we sell through our peak-season stocking levels. Our inventory levels reflect the impact of inflation and the addition of new and acquired sales centers over the past twelve months. Our inventory reserve was $24.1 million at June 30, 2026 and $27.7 million at June 30, 2025. Our inventory turns, as calculated on a trailing four quarters basis, was 2.6 times at June 30, 2026 and 2.8 times at June 30, 2025.

Total debt outstanding increased $110.8 million to $1.3 billion at June 30, 2026, which helped to fund $266.7 million of open market share repurchases over the past twelve months.

For additional information, see "Liquidity and Capital Resources" below.

Current Trends and Outlook

For a detailed discussion of trends impacting us through 2025, see the "Current Trends and Outlook" section of Management's Discussion and Analysis included in Part II, Item 7 of our 2025 Annual Report on Form 10-K.

We expect sales for the full year of 2026 to increase by a low single-digit percentage compared to 2025.

We project gross margin for the full year of 2026 to be approximately 30 basis points below our 2025 gross margin of 29.7%. We expect our gross margin to be negatively impacted by higher inbound freight cost in the current year, partially offset by benefits from effective supply chain management, advantageous pricing strategies and increased private label sales. The prior year comparison is also impacted by margin benefit from mid-season price increases in the prior year. Our actual gross margin will depend on changes in product and customer mix and on amounts and timing of sales and inflationary price increases.

We expect to leverage our existing infrastructure and strategically manage discretionary spending while providing for a modest recovery in incentive compensation compared to the prior year. We project operating expenses for 2026 will increase approximately 3% compared to 2025, or 2% to 3% without the $8.3 million of CEO transition costs.

In 2026, we expect our effective tax rate will approximate 25.0% without the impact of Accounting Standards Update ASU 2016-09, Improvements to Employee Share-Based Payment Accounting. Under ASU 2016-09, we expect our effective tax rate will fluctuate from quarter to quarter, particularly in periods when employees elect to exercise their vested stock options or when restrictions on share-based awards lapse. We recorded a $0.7 million, or $0.02 per diluted share, tax benefit from ASU 2016-09 for the six months ended June 30, 2026.

For 2026, we project diluted EPS in the range of $10.66 to $10.96, or $10.87 to $11.17, excluding the impact of CEO transition costs and including the impact of year-to-date tax GAAP benefits of $0.02. We may recognize additional tax benefits related to stock option exercises in 2026 from grants that expire in future years. We have not included any expected tax benefits in our full year guidance beyond what we have recognized as of June 30, 2026.

During 2026, we expect to continue to use cash for the payment of cash dividends as and when declared by our Board of Directors (Board) and to fund opportunistic share repurchases at our discretion.

The forward-looking statements in the foregoing section and elsewhere in this report are based on current market conditions and our current business plans, speak only as of the filing date of this report, are based on several assumptions and are subject to significant risks and uncertainties, including the risks detailed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025 within the "Forward-Looking Statements" section.

RESULTS OF OPERATIONS

As of June 30, 2026, we conducted operations through 455 sales centers in North America, Europe and Australia. For the three and six months ended June 30, 2026, approximately 95% of our net sales were from our operations in North America.

The following table presents information derived from the Consolidated Statements of Income expressed as a percentage of net sales:

Note: Due to rounding, percentages presented in the table above may not add to Operating income or Income before income taxes and equity in earnings.

We have included the results of operations from acquisitions in 2025, as further discussed in Note 3, in our consolidated results since the acquisition dates.

For definitions of our non-GAAP measures and reconciliations of our non-GAAP measures to GAAP measures, see page 20.

Base Business

When calculating our base business results, we exclude for a period of 15 months sales centers that are acquired, opened in new markets or closed. We also exclude consolidated sales centers when we do not expect to maintain the majority of the existing business and existing sales centers that are consolidated with acquired sales centers.

We generally allocate corporate overhead expenses to excluded sales centers on the basis of their net sales as a percentage of total net sales. After 15 months, we include acquired, consolidated and new market sales centers in the base business calculation including the comparative prior year period.

We have not provided separate base business income statements within this Form 10-Q as our base business results for the three and six months ended June 30, 2026 closely approximated consolidated results. Excluded sales centers contributed less than 1% to the change in our reported net sales.

The table below summarizes the changes in our sales center count during the first six months of 2026:

Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025

Net Sales

Net sales of $1.8 billion in the second quarter of 2026 increased 2% compared to the second quarter of 2025. This growth was supported by inflationary price increases, steady maintenance volumes and improved sales of building materials.

The following factors impacted our sales growth during the quarter and are listed in order of estimated magnitude:

In the second quarter of 2026, sales of equipment for maintenance, renovation and new construction activities, including swimming pool heaters, pumps, lights, filters and automation devices, increased 3% versus the same period last year, and collectively represented approximately 29% of net sales for the period. Sales of building materials, which are primarily used in new pool construction and remodeling, increased 4% compared to the same period in 2025 and represented approximately 12% of net sales in the second quarter of 2026.

Gross Profit

Gross profit increased 1% in the second quarter of 2026 compared to the second quarter of 2025. Gross margin decreased 30 basis points to 29.7% from 30.0% in the second quarter of 2025, driven primarily by higher inbound freight costs and an unfavorable shift in customer mix, partially offset by supply chain initiatives.

Operating Expenses

Selling and administrative expenses in the second quarter of 2026 increased 4% compared to the second quarter of 2025, primarily driven by $8.3 million of CEO transition costs. CEO transition costs comprise $6.3 million of non-cash share-based compensation expense for awards previously granted but not yet fully amortized and $2.0 million of cash transition costs. Adjusting for the impact of CEO transition costs, operating expenses increased 1% to $264.8 million.

Interest and Other Non-Operating Expenses, Net

Interest and other non-operating expenses, net for the second quarter of 2026 increased $2.1 million compared to the second quarter of 2025, primarily due to an increase in average outstanding debt between periods. Our weighted average effective interest rate decreased to 4.2% in the second quarter of 2026 compared to 4.6% in the second quarter of 2025 on average outstanding debt of $1.3 billion and $1.1 billion for the respective periods.

Income Taxes

Our effective income tax rate was 25.8% for the three months ended June 30, 2026 compared to 25.4% for the three months ended June 30, 2025.

Net Income and Earnings Per Share

Net income decreased to $188.1 million in the second quarter of 2026 compared to $194.3 million in the second quarter of 2025. Adjusted net income increased 1% to $195.7 million compared to $194.2 million in the three months ended June 30, 2025.

Earnings per diluted share was $5.17 in both periods. Adjusted earnings per diluted share increased 4% to $5.38 compared to $5.17 in the second quarter of 2025.

Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025

Net Sales

Net sales for the first six months of 2026 increased 4% from the same period last year. The following factors impacted our sales in the first six months of 2026 and are listed in order of estimated magnitude:

In the first six months of 2026, sales of equipment for maintenance, renovation and new construction activities, including swimming pool heaters, pumps, lights, filters and automation devices, increased approximately 5% compared to the same period last year and collectively represented 31% of net sales in the first six months of 2026. The increase in sales of equipment reflects price increases and stable maintenance volumes. Sales of building materials, which are primarily used in new pool construction and remodeling, increased approximately 5% compared to the first six months of 2025 and represented approximately 12% of net sales in the first six months of 2026.

Gross Profit

Gross profit increased 3% in the first six months of 2026 from the first six months of 2025. Gross margin declined 30 basis points to 29.4% in the six months ended June 30, 2026 compared to 29.7% in the first six months of 2025. Gross margin in the first six months of 2026 was impacted by increases in freight costs and an unfavorable shift in customer mix, partially offset by benefits from our supply chain optimization efforts.

Operating Expenses

Operating expenses for the six months ended June 30, 2026 were up 5% compared to the prior year period, primarily driven by $8.3 million of CEO transition costs. Adjusted operating expenses increased 3% to $512.1 million. The remaining increase largely reflects broad-based inflation and higher base wages and facility costs to start the year.

Interest and Other Non-Operating Expenses, Net

Interest and other non-operating expenses, net for the first six months of 2026 increased $3.3 million compared to the same period last year, primarily due to increases in average outstanding debt between periods. Our weighted average effective interest rate decreased to 4.2% from 4.5% for the respective periods on average outstanding debt of $1.2 billion for the six months ended June 30, 2026 and $1.0 billion for the six months ended June 30, 2025.

Income Taxes

Our effective income tax rate was 25.4% for the six months ended June 30, 2026 compared to 24.2% for the six months ended June 30, 2025. We recorded a $0.7 million, or $0.02 per diluted share, tax benefit from ASU 2016-09 in the six months ended June 30, 2026 compared to a $3.9 million, or $0.10 per diluted share, tax benefit in the same period of 2025.

Net Income and Earnings Per Share

Net income decreased 3% to $241.3 million for the six months ended June 30, 2026 compared to $247.8 million for the six months ended June 30, 2025. Adjusted net income increased by 2% to $248.1 million compared to $243.9 million in the six months ended June 30, 2025.

Earnings per diluted share increased 1% to $6.61 compared to $6.57 in the same period of 2025. Adjusted earnings per diluted share increased 5% to $6.80 from $6.47 in the first six months of 2025.

Reconciliation of Non-GAAP Financial Measures

The non-GAAP measures described below should be considered in the context of all of our other disclosures in this Form 10-Q.

Adjusted Income Statement Information

We have included adjusted operating expenses, adjusted operating income, adjusted net income and adjusted diluted EPS, which are non-GAAP financial measures, in this Form 10-Q as supplemental disclosures because we believe these measures are useful to management, investors and others in assessing our year-over-year operating performance. We believe these measures should be considered in addition to, not as a substitute for, operating expenses, operating income, net income and diluted EPS presented in accordance with GAAP and in the context of our other disclosures in this Form 10-Q. Other companies may calculate these non-GAAP financial measures differently than we do, which may limit their usefulness as comparative measures.

The table below presents a reconciliation of operating expenses to adjusted operating expenses.

The table below presents a reconciliation of operating income to adjusted operating income.

The table below presents a reconciliation of net income to adjusted net income.

The table below presents a reconciliation of diluted EPS to adjusted diluted EPS.

Seasonality and Quarterly Fluctuations

Our business is seasonal. In general, sales and operating income are highest during the second and third quarters, which represent the peak months of both swimming pool use and installation and irrigation and landscape installations and maintenance. Sales are lower during the first and fourth quarters. In 2025, we generated approximately 61% of our net sales and 78% of our operating income in the second and third quarters of the year.

We typically experience a build-up of product inventories and accounts payable during the winter months in anticipation of the peak selling season. Excluding borrowings to finance acquisitions, dividend payments and share repurchases, our peak borrowing usually occurs during the second quarter, primarily because extended payment terms offered by certain of our suppliers are typically payable in April, May and June, while our peak accounts receivable collections typically occur in June, July and August.

The following table presents certain unaudited quarterly income statement and balance sheet data for the most recent eight quarters to illustrate seasonal fluctuations in these amounts. We believe this information reflects all normal and recurring adjustments considered necessary for a fair presentation of this data. The results of any one or more quarters are not necessarily a good indication of results for an entire fiscal year or of continuing future trends for a variety of reasons, including the seasonal nature of our business and the impact of new and acquired sales centers.

We expect that our quarterly results of operations will continue to fluctuate depending on the timing and amount of revenue contributed by new and acquired sales centers. Based on our peak summer selling season, we generally open new sales centers and close or consolidate sales centers, when warranted, either in the first quarter before the peak selling season begins or in the fourth quarter after the peak selling season ends.

Weather is one of the principal external factors affecting our business. The table below presents some of the possible effects resulting from various weather conditions.

Weather Impacts on 2026 and 2025 Results

Weather conditions in the second quarter of 2026 were characterized by above-average temperatures across many of our markets, with regional variability in precipitation. While severe storms and periods of heavy rainfall created localized disruptions in portions of the Midwest and South, warmer and drier conditions persisted across much of the West. Overall, the net impact on our second quarter results was broadly neutral. During the second quarter of 2025, the net impact of weather conditions were also generally neutral, with above-average temperatures being offset by localized disruptions from severe storms, flash flooding and tornado activity.

Weather conditions in the first quarter of 2026 were generally warmer than average across our key markets, particularly in January and March. February conditions were more variable, with intermittent cold outbreaks and winter storms affecting portions of the Midwest and Northeast. Precipitation patterns were mixed but trended drier overall, especially across the Plains, Southwest and southern regions. Overall, the warmer weather conditions generally benefited maintenance and discretionary activities during the quarter. In comparison, weather conditions during the first quarter of 2025 were mixed across our key markets, as early January snowstorms and overall cooler temperatures through much of February negatively impacted early season sales activity, which was partially offset by warmer and drier weather in March.

CRITICAL ACCOUNTING ESTIMATES

We prepare our Consolidated Financial Statements in accordance with U.S. generally accepted accounting principles (GAAP), which require management to make estimates and assumptions that affect reported amounts and related disclosures. Management identifies critical accounting estimates as:

Management has discussed the development, selection and disclosure of our critical accounting estimates with the Audit Committee of our Board. For a description of our critical accounting estimates, please see the "Critical Accounting Estimates"

section included in Part II, Item 7 in our 2025 Annual Report on Form 10-K. We have not changed any of these policies from those previously disclosed in that report.

Recent Accounting Pronouncements

See Note 1 of "Notes to Consolidated Financial Statements," included in Part I, Item 1 of this Form 10-Q for discussion of recent accounting pronouncements.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity is defined as the ability to generate adequate amounts of cash to meet short-term and long-term cash needs. We assess our liquidity in terms of our ability to generate cash to fund our operating activities, taking into consideration the seasonal nature of our business. Significant factors which could affect our liquidity include the following:

Our primary capital needs are seasonal working capital obligations, debt repayment obligations and other general corporate initiatives, including acquisitions, opening new sales centers, technology-related investments, dividend payments and discretionary share repurchases. Our primary working capital obligations are for the purchase of inventory, payroll, rent, other facility costs and selling and administrative expenses. Our working capital obligations fluctuate during the year, driven primarily by seasonality and the timing of inventory purchases. Our primary sources of working capital are cash from operations supplemented by bank borrowings, which have historically been sufficient to support our growth and finance acquisitions. We have funded our capital expenditures and share repurchases in substantially the same manner.

We prioritize our use of cash based on investing in our business, maintaining a prudent capital structure, including a modest amount of debt, and returning cash to our shareholders through dividends and share repurchases. Our specific priorities for the use of cash are as follows:

We focus our capital expenditure plans based on the needs of our existing sales centers and the opening of new sales centers. Our capital spending primarily relates to leasehold improvements, delivery and service vehicles and information technology. In recent years, we have increased our investment in technology and automation enabling us to operate more efficiently and better serve our customers.

Historically, our capital expenditures have averaged roughly 1.0% of net sales. Capital expenditures were 1.1% of net sales in 2025 and 2024. Based on management's current plans, we project capital expenditures for 2026 will be approximately 1.0% to 1.5% of net sales.

Sources and Uses of Cash

The following table summarizes our cash flows (in thousands):

Net cash used in operations was $0.7 million in the first six months of 2026 compared to $1.5 million in the first six months of 2025.

Net cash used in investing activities for the first six months of 2026 increased $7.6 million compared to the first six months of 2025, primarily due to a $9.2 million increase in net capital expenditures.

Net cash used in financing activities was $37.8 million for the first six months of 2026 compared to net cash provided by financing activities of $33.1 million for the first six months of 2025, primarily due to a decrease of $138.5 million in net debt proceeds between periods, partially offset by a $74.2 million decrease in share repurchases in the first six months of 2026 versus the same period in 2025.

Future Sources and Uses of Cash

To supplement cash from operations as our primary source of working capital, we plan to continue to utilize our three major credit facilities, which are our Credit Facility, Term Facility and our Receivables Facility. For additional details regarding these facilities, see the summary descriptions below and more complete descriptions in Note 5 of our "Notes to Consolidated Financial Statements," included in Part II, Item 8 in our 2025 Annual Report on Form 10-K and Note 5 of "Notes to Consolidated Financial Statements" included in Part I, Item 1 of this Form 10-Q.

Credit Facility

Our Credit Facility provides for $1.3 billion in borrowing capacity consisting of an $800.0 million revolving credit facility and a $500.0 million term loan facility. The Credit Facility also includes an accordion feature permitting us to request one or more incremental term loans or revolving credit facility commitment increases up to $250.0 million and sublimits for the issuance of swingline loans and standby letters of credit. We pay interest on revolving and term loan borrowings under the Credit Facility at a variable rate based on the one-month term secured overnight financing rate (Term SOFR), plus an applicable margin. The term loan requires quarterly amortization payments commencing on September 30, 2027 with all remaining principal due on September 30, 2029. We intend to continue to use the Credit Facility for general corporate purposes, for future share repurchases and to fund future growth initiatives.

At June 30, 2026, there was $424.4 million of revolving borrowings outstanding, a $500.0 million term loan outstanding, $15.7 million of standby letters of credit outstanding and $359.9 million available for borrowing under the Credit Facility. The weighted average effective interest rate for the Credit Facility as of June 30, 2026 was approximately 3.9%, excluding commitment fees and including the impact of our interest rate swaps.

Term Facility

Our Term Facility provides for $90.0 million in borrowing capacity. We pay interest on borrowings under the Term Facility at a variable rate based on one-month Term SOFR, plus an applicable margin. The Term Facility is repaid in quarterly installments of 1.250% of the Term Facility beginning in the third quarter of 2027, with the final principal repayment due on September 30, 2029. We may prepay amounts outstanding under the Term Facility without penalty other than interest breakage costs.

At June 30, 2026, the Term Facility had an outstanding balance of $90.0 million at a weighted average effective interest rate of 4.9%.

Receivables Facility

Our two-year Receivables Facility offers us a lower-cost form of financing. Under this facility, we can borrow up to $375.0 million between April through May and from $210.0 million to $350.0 million during the remaining months of the year. We pay interest on borrowings under the Receivables Facility at a variable rate based on one-month Term SOFR, plus an applicable margin. The Receivables Facility matures on October 30, 2026. We classify the entire outstanding balance as Long-term debt, net on our Consolidated Balance Sheets as we intend and have the ability to refinance the obligations on a long-term basis.

The Receivables Facility provides for the sale of certain of our receivables to a wholly-owned subsidiary (the Securitization Subsidiary). The Securitization Subsidiary transfers variable undivided percentage interests in the receivables and related rights to certain third-party financial institutions in exchange for cash proceeds, limited to the applicable funding capacities. Upon payment of the receivables by customers, rather than remitting to the financial institutions the amounts collected, we retain such collections as proceeds for the sale of new receivables until payments become due.

At June 30, 2026, there was $315.5 million outstanding under the Receivables Facility at a weighted average effective interest rate of 4.6%, excluding commitment fees.

Financial Covenants

Financial covenants of the Credit Facility, Term Facility and Receivables Facility include maintenance of a maximum average total leverage ratio and a minimum fixed charge coverage ratio, which are our most restrictive financial covenants. As of June 30, 2026, the calculations of these two covenants are detailed below:

The Credit Facility and Term Facility limit the declaration and payment of dividends on our common stock to a manner consistent with past practice, provided no default or event of default has occurred and is continuing, or would result from the payment of dividends. We may declare and pay quarterly dividends so long as (i) the amount per share of such dividends is not greater than the most recently publicly announced amount of dividends per share and (ii) our Average Total Leverage Ratio is less than 3.25 to 1.00 both immediately before and after giving pro forma effect to such dividends. Under the Credit Facility and Term Facility, we may repurchase shares of our common stock provided no default or event of default has occurred and is continuing, or would result from the repurchase of shares, and our maximum average total leverage ratio (determined on a pro forma basis) is less than 3.25 to 1.00.

Other covenants in each of our credit facilities include restrictions on our ability to grant liens, incur indebtedness, make investments, merge or consolidate, and sell or transfer assets. Failure to comply with any of our financial covenants or any other terms of our credit facilities could result in, among other things, higher interest rates on our borrowings or the acceleration of the maturities of our outstanding debt.

Interest Rate Swaps

We utilize interest rate swap contracts to reduce our exposure to fluctuations in variable interest rates for future interest payments on our variable rate borrowings. Interest expense related to the notional amounts under all swap contracts is based on fixed rates plus the applicable margin on the respective borrowings.

As of June 30, 2026, we had two interest rate swap contracts in place, each of which has the effect of converting our exposure to variable interest rates on a portion of our variable rate borrowings to fixed interest rates. For more information, see Note 4 of "Notes to Consolidated Financial Statements" included in Part I, Item 1 of this Form 10-Q.

Compliance and Future Availability

As of June 30, 2026, we were in compliance with all covenants and financial ratio requirements under our Credit Facility, our Term Facility and our Receivables Facility. We believe we will remain in compliance with all material covenants and financial ratio requirements throughout the next twelve months. For additional information regarding our debt arrangements, see Note 5 of "Notes to Consolidated Financial Statements," included in Part II, Item 8 of our 2025 Annual Report on Form 10-K, as updated by Note 5 of "Notes to Consolidated Financial Statements," included in Part I, Item 1 of this Form 10-Q.

We believe we have adequate availability of capital to fund present operations and the current capacity to finance any working capital needs that may arise. We continually evaluate potential acquisitions and hold discussions with acquisition candidates. If suitable acquisition opportunities arise that would require financing, we believe that we would have the ability to finance any such transactions.

As of July 23, 2026, we were authorized to purchase up to $580.0 million of our common stock under our current Board-approved share repurchase program. We expect to continue to repurchase shares on the open market from time to time subject to market conditions. We plan to fund these repurchases with cash provided by operations and borrowings under the above-described credit facilities.