Financial Analysis

Note 3 Acquisitions In October 2025, we acquired the distribution assets of Vegas Stone Brokers, a stone and hardscapes supplier, adding one location in Nevada. In August 2025, we acquired the distribution assets of Great Plains Supply Pool and Spa Products, a wholesale distributor of swimming pool products and supplies, adding one location in Kansas and one location in Texas. We have completed our accounting for these acquisitions, subject to adjustments for standard holdback provisions per the terms of the purchase agreements, which are not material. …

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Note 5 Debt The table below presents the components of our debt (in thousands): June 30, 2026 2025 Variable rate debt Short-term borrowings $ $ 4,612 Current portion of long-term debt: Australian credit facility 13,443 12,774 Short-term borrowings and current portion of long-term debt $ 13,443 $ 17,386 Long-term portion: Revolving credit facility $ 424,400 $ 354,800 Term loan under credit facility 500,000 450,000 Term facility 90,000 90,000 Receivables securitization facility 315,500 320,100 Less: financing costs, net 2,627 2,367 Long-term debt, net 1,327,273 1,212,533 Total debt $ 1,340,716 $ 1,229,919 Our accounts receivable securitization facility (the Receivables Facility) provides for the sale 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. We account for the sale of the receivable interests as a secured borrowing on our Consolidated Balance Sheets. The receivables subject to the agreement collateralize the cash proceeds received from the third-party financial institutions. We classify the entire outstanding balance, which matures on October 30, 2026, 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. We present …

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Note 4 Fair Value Measurements and Interest Rate Swaps Recurring Fair Value Measurements Our assets and liabilities that are measured at fair value on a recurring basis include the unrealized gains or losses on our interest rate swap contracts and our deferred compensation plan asset and liability. The three levels of the fair value hierarchy under the accounting guidance are described below: Level 1 Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets. Level 2 Inputs to the valuation methodology include: quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in inactive markets; inputs other than quoted prices that are observable for the asset or liability; or inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 3 Inputs to the valuation methodology are unobservable and significant to the fair value measurement. The table below presents our assets and liabilities measured and recorded at fair value on a recurring basis (in thousands): Fair Value at June 30, Input Level Classification 2026 2025 Assets Unrealized gains on interest rate swaps Level 2 Prepaid expenses and other current assets $ 6,272 $ Unrealized gains on interest rate swaps Level 2 Other assets 13,791 Deferred compensation plan asset Level 1 Other assets 20,423 18,832 Liabilities Deferred compensation plan li …

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Recent Accounting Pronouncements Pending Adoption The following table summarizes recent accounting pronouncements that we plan to adopt in future periods: Standard Description Effective Date Effect on Financial Statements and Other Significant Matters Accounting Standards Update (ASU) 2025-06, IntangiblesGoodwill and Other Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software In September 2025, the FASB issued ASU 2025-06, which modernizes the accounting for internal-use software to current development practices, clarifies when to begin capitalizing costs and enhances disclosure requirements. For annual periods beginning after December 15, 2027, including interim periods within those fiscal years. The ASU may be adopted on a prospective or retrospective basis with early adoption permitted. We are currently evaluating the impact that the adoption of this standard will have on our consolidated financial statements and related disclosures. ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses and related amendments In November 2024, the FASB issued ASU 2024-03, which adds new disclosure requirements, including more detailed information about certain income statement expense line items and a separate disclosure for selling expenses. For annual periods beginning after December 15, 2026, and interim periods beginning after Dec …

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Note 6 - Segment Information Since all of our sales centers have similar operations and share similar economic characteristics, we aggregate our sales centers into a single reportable segment and one reportable revenue stream. These similarities include (i) the nature of our products and services, (ii) the types of customers to whom we sell and (iii) the distribution methods we use. Our chief operating decision maker (CODM) is our president and chief executive officer. Our CODM evaluates each sales center based on individual performance that includes both financial and operational measures. These measures include operating income, accounts receivable and inventory management criteria. The accounting policies for our segment are the same as those described in Note 1 of our Notes to Consolidated Financial Statements, included in Part II, Item 8 in our 2025 Annual Report on Form 10-K and in Note 1 above. The table below presents segment revenue, operating expenses and operating income and reconciles segment operating income to consolidated income before taxes and equity in earnings (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2026 2025 2026 2025 Net sales $ 1,822,938 $ 1,784,530 $ 2,960,952 $ 2,856,056 Cost of sales 1,282,176 1,249,369 2,090,319 2,008,526 Gross profit 540,762 535,161 870,633 847,530 Compensation expenses 141,245 135,815 265,791 256,184 Freight out expenses 28,190 28,650 46,479 45,772 Other selling and administrative expenses 103,648 98,0 …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing