# POOL CORP (POOL)

Informational only - not investment advice.

CIK: 0000945841
SIC: 5090 Wholesale-Misc Durable Goods
SIC breadcrumb: [Wholesale Trade](/division/F/) > [SIC Major Group 50](/major-group/50/) > [SIC 5090 Wholesale-Misc Durable Goods](/industry/5090/)
Latest 10-K filed: 2026-02-26
SEC page: https://www.sec.gov/edgar/browse/?CIK=945841
Filing source: https://www.sec.gov/Archives/edgar/data/945841/000119312526074833/pool-20251231.htm

## Selected Fundamentals
| Metric | Value | Unit | FY | Filed |
| --- | ---: | --- | ---: | --- |
| Revenue | 5289396000 | USD | 2025 | 2026-02-26 |
| Net income | 406404000 | USD | 2025 | 2026-02-26 |
| Assets | 3626126000 | USD | 2025 | 2026-02-26 |

## Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-26. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000945841.json. Derived margins are computed from the extracted annual SEC facts.

| Metric | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Revenue | 2,570,803,000 | 2,788,188,000 | 2,998,097,000 | 3,199,517,000 | 3,936,623,000 | 5,295,584,000 | 6,179,727,000 | 5,541,595,000 | 5,310,953,000 | 5,289,396,000 |
| Net income | 148,955,000 | 191,633,000 | 234,461,000 | 261,575,000 | 366,738,000 | 650,624,000 | 748,462,000 | 523,229,000 | 434,325,000 | 406,404,000 |
| Operating income | 255,859,000 | 284,371,000 | 313,889,000 | 341,246,000 | 464,027,000 | 832,784,000 | 1,025,783,000 | 746,567,000 | 617,204,000 | 580,204,000 |
| Gross profit | 741,087,000 | 805,289,000 | 870,173,000 | 924,925,000 | 1,130,902,000 | 1,617,092,000 | 1,933,412,000 | 1,660,044,000 | 1,575,347,000 | 1,572,458,000 |
| Diluted EPS | 3.47 | 4.51 | 5.62 | 6.40 | 8.97 | 15.97 | 18.70 | 13.35 | 11.30 | 10.85 |
| Assets | 994,095,000 | 1,101,062,000 | 1,240,871,000 | 1,483,266,000 | 1,739,670,000 | 3,230,131,000 | 3,565,437,000 | 3,428,068,000 | 3,368,184,000 | 3,626,126,000 |
| Liabilities | 786,598,000 | 877,916,000 | 1,017,281,000 | 1,073,086,000 | 1,100,200,000 | 2,158,738,000 | 2,330,243,000 | 2,115,281,000 | 2,094,719,000 | 2,440,897,000 |
| Stockholders' equity | 205,210,000 | 223,146,000 | 223,590,000 | 410,180,000 | 639,470,000 | 1,071,393,000 | 1,235,194,000 | 1,312,787,000 | 1,273,465,000 | 1,185,229,000 |
| Net margin | 5.79% | 6.87% | 7.82% | 8.18% | 9.32% | 12.29% | 12.11% | 9.44% | 8.18% | 7.68% |
| Operating margin | 9.95% | 10.20% | 10.47% | 10.67% | 11.79% | 15.73% | 16.60% | 13.47% | 11.62% | 10.97% |

## Macro Cross-References
- [CPIAUCSL](/indicator/CPIAUCSL/): Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
- [UNRATE](/indicator/UNRATE/): Unemployment Rate
- [FEDFUNDS](/indicator/FEDFUNDS/): Federal Funds Effective Rate
- [CES0500000003](/indicator/CES0500000003/): Average Hourly Earnings of All Employees, Total Private
- [DFEDTARU](/indicator/DFEDTARU/): Federal Funds Target Range - Upper Limit
- [DFEDTARL](/indicator/DFEDTARL/): Federal Funds Target Range - Lower Limit
- [DGS3MO](/indicator/DGS3MO/): Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
- [DGS2](/indicator/DGS2/): Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
- [DGS10](/indicator/DGS10/): Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
- [DGS30](/indicator/DGS30/): Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
- [T10Y2Y](/indicator/T10Y2Y/): 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
- [CPILFESL](/indicator/CPILFESL/): Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
- [CPIUFDSL](/indicator/CPIUFDSL/): Consumer Price Index for All Urban Consumers: Food
- [CPIENGSL](/indicator/CPIENGSL/): Consumer Price Index for All Urban Consumers: Energy
- [CUSR0000SAH1](/indicator/CUSR0000SAH1/): Consumer Price Index for All Urban Consumers: Shelter
- [PCEPI](/indicator/PCEPI/): Personal Consumption Expenditures: Chain-type Price Index
- [PCEPILFE](/indicator/PCEPILFE/): Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
- [PPIACO](/indicator/PPIACO/): Producer Price Index by Commodity: All Commodities
- [T10YIE](/indicator/T10YIE/): 10-Year Breakeven Inflation Rate
- [U6RATE](/indicator/U6RATE/): Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
- [PAYEMS](/indicator/PAYEMS/): All Employees, Total Nonfarm
- [CIVPART](/indicator/CIVPART/): Labor Force Participation Rate
- [EMRATIO](/indicator/EMRATIO/): Employment-Population Ratio
- [UNEMPLOY](/indicator/UNEMPLOY/): Unemployed
- [CE16OV](/indicator/CE16OV/): Employment Level
- [ICSA](/indicator/ICSA/): Initial Claims
- [JTSJOL](/indicator/JTSJOL/): Job Openings: Total Nonfarm
- [JTSQUR](/indicator/JTSQUR/): Quits: Total Nonfarm
- [GDPC1](/indicator/GDPC1/): Real Gross Domestic Product
- [A191RL1Q225SBEA](/indicator/A191RL1Q225SBEA/): Real Gross Domestic Product: Percent Change from Preceding Period
- [INDPRO](/indicator/INDPRO/): Industrial Production: Total Index
- [TCU](/indicator/TCU/): Capacity Utilization: Total Index
- [HOUST](/indicator/HOUST/): New Privately-Owned Housing Units Started: Total Units
- [PERMIT](/indicator/PERMIT/): New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
- [RSAFS](/indicator/RSAFS/): Advance Retail Sales: Retail Trade
- [PCE](/indicator/PCE/): Personal Consumption Expenditures
- [DSPIC96](/indicator/DSPIC96/): Real Disposable Personal Income
- [PSAVERT](/indicator/PSAVERT/): Personal Saving Rate
- [M2SL](/indicator/M2SL/): M2
- [BOPGSTB](/indicator/BOPGSTB/): U.S. International Trade in Goods and Services: Balance

## Latest 10-K MD&A

Extracted between Item 7 and the next Item 7A/8 heading after HTML sanitization.
Confidence: high

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

For a discussion of our base business calculations, see the RESULTS OF OPERATIONS section below.

2025 FINANCIAL OVERVIEW

Financial Results

Net sales were $5.3 billion for 2025, comparable to 2024 net sales. Sales of non‑discretionary products were steady throughout the year. In the back half of the year, we noticed improved sales trends for discretionary products.

Gross margin was 29.7% in 2025 and 2024. Gross margin in 2024 included a 20 basis points benefit from the reversal of $12.6 million for estimated import taxes. Without this benefit included in our 2024 gross margin, our 2025 gross margin improved 20 basis points, reflecting positive impacts from price increases and disciplined supply chain management.

Selling and administrative expenses (operating expenses) increased 4% to $992.3 million in 2025 compared to $958.1 million in 2024. The growth in expenses was primarily driven by incremental investments in our technology initiatives and sales center network expansion, as well as inflationary impacts, particularly on base wages and facility costs.

Operating income of $580.2 million for the year was 6% lower than $617.2 million in 2024.

Net income decreased to $406.4 million in 2025 compared to $434.3 million in 2024. Without the impact of the 2024 import tax reversal discussed above, 2025 operating income was 4% lower than in 2024.

Earnings per diluted share declined 4% to $10.85 in 2025 compared to $11.30 in 2024, which included a $0.25 benefit from the import tax reversal discussed above. We recorded a $4.6 million, or $0.12 per diluted share, tax benefit from Accounting Standards Update (ASU) 2016-09, Improvements to Employee Share-Based Payment Accounting, in 2025 compared to an $8.8 million, or $0.23 per diluted share, tax benefit in 2024. Adjusting for the impact from ASU 2016-09 in both years, earnings per diluted share decreased 3% to $10.73 in 2025 compared to $11.07 in 2024. See RESULTS OF OPERATIONS below for definitions of our non-GAAP measures and reconciliations of our non-GAAP measures to GAAP measures.

Financial Position and Liquidity

Net cash provided by operations was $365.9 million in 2025. Our cash flows were impacted by working capital investments, including increases in inventory and $68.5 million in federal tax payments from 2024 that were deferred into 2025 due to relief granted by the IRS. The deferred tax payment increased operating cash flows in 2024 and decreased operating cash flows in 2025. Our 2025 operating cash flows helped to fund $184.9 million of quarterly cash dividend payments to shareholders and net capital expenditures and acquisitions of $67.2 million.

Total net receivables, including pledged receivables, increased 10% compared to December 31, 2024, primarily due to higher sales in December 2025. Our allowance for doubtful accounts was $8.0 million at December 31, 2025 and $8.6 million at December 31, 2024. Our days sales outstanding ratio, as calculated on a trailing four quarters basis, was 26.3 days at December 31, 2025 and at December 31, 2024.

Our inventory balance increased 13% to $1.5 billion at December 31, 2025 compared to $1.3 billion at December 31, 2024. This growth was primarily driven by increased purchasing ahead of price increases. Our inventory balance also reflects increases from inflation (including mid-season vendor price increases) and the addition of new and acquired sales centers. Our reserve for inventory obsolescence was $23.9 million at December 31, 2025 compared to $26.7 million at December 31, 2024. Our inventory turns, as calculated on a trailing four quarters basis, were 2.7 times at December 31, 2025 and 2.8 times at December 31, 2024.

Total debt outstanding of $1.2 billion at December 31, 2025 increased $249.1 million compared to December 31, 2024, primarily to fund open market share repurchases of $341.1 million in 2025 and working capital needs.

28

Current Trends and Outlook

Consumers’ investments in their homes, including backyard renovations, continue to be favorable. In recent years, steady increases in home values, lack of affordable new homes and increased mortgage rates have positioned homeowners to stay in their homes longer and upgrade their home environments, including their backyards. During the COVID-19 pandemic (generally 2020 through 2022), we experienced unprecedented demand as families spent more time at home and sought opportunities to create or expand home-based outdoor living and entertainment spaces. This trend had a positive impact on our financial performance during 2020 through 2022. Beginning in the latter half of 2022, these trends moderated resulting in lagging new pool construction and remodeling activities. Based on industry data, we estimate that new in-ground pool construction units decreased 3% to 5% from 62,000 units in 2024 to just below 60,000 units in 2025.

As in 2024, market conditions during the majority of 2025 were challenged by generally higher interest rates than the recent past, and product cost and labor inflation, which led to consumer hesitancy on discretionary spending and some cyclical suppression of demand. These market conditions impacted new pool construction and remodeling projects, particularly in the first half of the year. Throughout the year, non-discretionary maintenance product sales were stable. As lower housing turnover and market conditions encourage consumers to stay in their homes longer, we expect that consumers will continue to invest in outdoor living spaces as they consider backyards an extension of their home space. We believe that we are well positioned to benefit from the inherent long-term growth opportunities in our industry fueled by favorable population migration trends, and product developments and technological advancements as consumers focus on more sustainable and energy-efficient products.

In view of current trends, we established our outlook for 2026 based on reasonable expectations for industry demand, pricing and inflationary conditions, variable expense reductions, realization of our digital transformation initiatives and leverage of existing investments in our business. We also plan to broaden our geographic presence by opening 5 to 8 new sales centers in 2026 and by making selective acquisitions if and when appropriate opportunities arise.

We base our assumptions on normal weather conditions and do not incorporate alternative weather predictions into our guidance. Favorable weather positively impacts industry activity by accelerating growth in any given year, expanding the number of available construction days, extending the pool season and pool usage and positively impacting demand for discretionary products. Conversely, unfavorable weather typically impedes growth.

The following summarizes our outlook for 2026:

•
We expect sales to be a low single digit increase compared to 2025, impacted by the following factors and assumptions:

o
normal weather patterns for 2026;

o
slight growth in sales of pool maintenance products;

o
consistent new construction units to 2025;

o
flat to slightly up renovation and remodel activity;

o
inflationary product cost increases, which generally pass through to customers, of approximately 1% to 2%; and

o
the same number of selling days each quarter compared to 2025.

•
We project gross margin for the full year of 2026 to be similar to our 2025 gross margin of 29.7%. We expect our gross margin to benefit from effective supply chain management, advantageous pricing strategies and increased private label sales. Our actual gross margin will depend on changes in product and customer mix and on amounts and timing of sales and inflationary price increases.

29

•
We expect to leverage our existing infrastructure and strategically manage discretionary spending. We project that our operating expenses in 2026 will be impacted by the following factors:

o
an increase of approximately $10.0 million to $15.0 million as performance-based compensation normalizes;

o
$5.0 million of spend to add greenfields to our sales center network;

o
utilization of technological solutions to enhance capacity creation;

o
inflationary increases in areas such as labor and occupancy costs with some offsets from our efficiency initiatives; and

o
leverage from enhanced profitability efforts at our recent greenfield locations.

In 2026, we expect our effective tax rate will be around 25% without the impact of ASU 2016-09. Our effective tax rate is dependent upon our results of operations and may change if actual results are different from our current expectations. Due to 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 $4.6 million benefit in our provision for income taxes for the year ended December 31, 2025 related to ASU 2016-09.

We project that 2026 earnings will be in the range of $10.85 to $11.15 per diluted share. Our 2026 guidance does not include any estimated unrealized tax benefits related to stock option exercises, stock option expirations or restricted stock awards vesting in 2026. We expect to continue to use cash for the payment of dividends as and when declared by our Board and to fund opportunistic share repurchases at our discretion over the next year.

The forward-looking statements in this Current Trends and Outlook 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 sensitivity of our business to weather conditions; changes in the economy, 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 Item 1A of this Form 10-K. Also see “Cautionary Statement for Purposes of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995” prior to the heading “Risk Factors” in Item 1A.

30

CRITICAL ACCOUNTING ESTIMATES

Critical accounting estimates are those estimates made in accordance with U.S. generally accepted accounting principles that involve a significant level of estimation uncertainty and have had, or are reasonably likely to have, a material impact on our financial condition or results of operations.

Management has discussed the development, selection and disclosure of our critical accounting estimates with the Audit Committee of our Board. Our critical accounting estimates are discussed below, including, to the extent material and reasonably available, the impact such estimates have had, or are reasonably likely to have, on our financial condition or results of operations.

Allowance for Doubtful Accounts

We maintain an allowance for doubtful accounts based on an estimate of the losses we will incur if our customers do not make required payments. We perform periodic credit evaluations of our customers and typically do not require collateral. Consistent with industry practices, we generally require payment from our North American customers within 30 days, except for sales under early buy programs for which we provide extended payment terms to qualified customers. The extended terms usually require payments in equal installments in April, May and June or May and June, depending on geographic location. Credit losses have generally been within or better than our expectations.

Similar to our business, our customers’ businesses are seasonal. Sales are lowest in the winter months and our past due accounts receivable balance as a percentage of total receivables generally increases during this time. We provide reserves for uncollectible accounts based on our accounts receivable aging. These reserves range from 0.05% for amounts currently due to up to 100% for specific accounts more than 60 days past due.

At the end of each quarter, we perform a reserve analysis of all accounts with balances greater than $20,000 and more than 60 days past due. Additionally, we perform a separate reserve analysis on the balance of our accounts receivables with emphasis on past due accounts. We estimate future losses based upon historical bad debts, customer receivable balances, age of customer receivable balances, customers’ financial conditions and current economic trends, including certain trends in the housing market, the availability of consumer credit and general economic conditions (as commonly measured by GDP). We monitor housing market trends through review of the House Price Index as published by the Federal Housing Finance Agency, which measures the movement of single-family home prices.

During the year, we write off account balances when we have exhausted reasonable collection efforts and determined that the likelihood of collection is remote. These write-offs are charged against our allowance for doubtful accounts. In the past five years, write-offs have averaged approximately 0.10% of net sales annually. Write-offs as a percentage of net sales approximated 0.10% in 2025, 0.16% in 2024 and 0.12% in 2023. We expect that write-offs will approximate 0.10% of net sales in 2026.

At the end of each fiscal year, we prepare a hindsight analysis by comparing the prior year-end allowance for doubtful accounts balance to (i) current year write-offs and (ii) any significantly aged outstanding receivable balances. Based on our most recent hindsight analysis, we concluded that the prior year allowance was within a range of acceptable estimates and that our estimation methodology is appropriate.

If the allowance for doubtful accounts increased or decreased by 20% at December 31, 2025, pretax income would change by approximately $1.6 million and earnings per share would change by approximately $0.03 per diluted share (based on the number of weighted average diluted shares outstanding for the year ended December 31, 2025).

31

Inventory Obsolescence

Product inventories represent the largest asset on our balance sheet. Our goal is to minimize stock-outs to provide the highest level of service to our customers. To do this, we maintain an adequate inventory of stock keeping units (SKUs) with the highest sales volumes. At the same time, we continuously strive to better manage our slower moving classes of inventory, which are not as critical to our customers and thus, inherently turn at slower rates.

We establish our reserve for inventory obsolescence based on inventory with lower sales velocity and inventory with no sales for the past 12 months, which we believe represent some exposure to inventory obsolescence. The reserve is intended to reflect the value of inventory at net realizable value. We have not changed our methodology from prior years.

In evaluating the adequacy of our reserve for inventory obsolescence, we consider a combination of factors, including:

•
the level of inventory in relation to historical sales by product, including inventory usage based on product sales at both the sales center level and on a company-wide basis;

•
changes in customer preferences or regulatory requirements;

•
seasonal fluctuations in inventory levels;

•
geographic location; and

•
superseded products and new product offerings.

We periodically adjust our reserve for inventory obsolescence as changes occur in the above-identified factors. At the end of each fiscal year, we prepare a hindsight analysis by comparing the prior year-end obsolescence reserve balance to (i) current year inventory write-offs and (ii) the value of products with no sales for the past 12 months that remain in inventory. Based on our most recent hindsight analysis, we concluded that our prior year reserve was within a range of acceptable estimates and that our estimation methodology is appropriate.

If the reserve for inventory obsolescence increased or decreased by 20% at December 31, 2025, pretax income would change by approximately $4.8 million and earnings per share would change by approximately $0.10 per diluted share (based on the number of weighted average diluted shares outstanding for the year ended December 31, 2025).

Vendor Programs

Many of our vendor arrangements provide for us to receive specified amounts of consideration when we achieve certain measures. These measures generally relate to the volume level of purchases from our vendors, or our net cost of products sold, and may include negotiated pricing arrangements. We account for consideration under vendor programs as a reduction of the prices of the vendor’s products and therefore a reduction of product inventories until we sell the product, at which time we recognize such consideration as a reduction of cost of sales in our income statement.

Throughout the year, we estimate the amount earned based on our expectation of total purchases for the fiscal year relative to the purchase levels that mark our progress toward earning consideration under each program. We accrue vendor program benefits on a monthly basis using these estimates provided that we determine they are probable and reasonably estimable. Our estimates for annual purchases, future inventory levels and sales of qualifying products are driven by our sales projections, which can be significantly impacted by a number of external factors including changes in economic conditions and weather. Changes in our purchasing mix also impact our estimates, as certain program rates can vary depending on our volume of purchases from specific vendors.

We continually revise these estimates throughout the year to reflect actual purchase levels and identifiable trends. As a result, our estimated quarterly vendor program benefits accrual may include cumulative catch-up adjustments to reflect any changes in our estimates between reporting periods. These adjustments have a greater impact on gross margin in the fourth quarter since it is our seasonally slowest quarter and because the majority of our vendor arrangements are based on calendar year periods. We update our estimates for these arrangements at year end to reflect actual annual purchase or sales levels. In the first quarter of the subsequent year, we prepare a hindsight analysis by comparing actual vendor credits received to the prior year vendor receivable balances. Based on our most recent hindsight analysis, we concluded that our vendor program estimates were within a range of acceptable estimates and that our estimation methodology is appropriate.

32

If market conditions were to change, vendors may change the terms of some or all of these programs. Although such changes would not affect the amounts we have recorded related to products already purchased, they may lower or raise our cost for products purchased and sold in future periods.

Income Taxes

We record deferred tax assets and liabilities based on differences between the financial reporting and tax basis of assets and liabilities using currently enacted rates and laws that will be in effect when we expect the differences to reverse. Due to changing tax laws and state income tax rates, significant judgment is required to estimate the effective tax rate expected to apply to tax differences that are expected to reverse in the future.

We record Global Intangible Low Tax Income (GILTI) on foreign earnings as period costs if and when incurred. We have not realized any impacts since the December 2017 enactment of U.S. tax reform.

As of December 31, 2025, U.S. income taxes were not provided on the earnings or cash balances of our foreign subsidiaries, outside of the provisions of the transition tax from U.S. tax reform. As we have historically invested or expect to invest the undistributed earnings indefinitely to fund current cash flow needs in the countries where held, additional income tax provisions may be required. Determining the amount of unrecognized deferred tax liability on these undistributed earnings and cash balances is not practicable due to the complexity of tax laws and regulations and the varying circumstances, tax treatments and timing of any future repatriation.

We operate in 41 states, 1 United States territory and 11 foreign countries. We are subject to regular audits by federal, state and foreign tax authorities, and the amount of income taxes we pay is subject to adjustment by the applicable tax authorities. We recognize a benefit from an uncertain tax position only after determining it is more likely than not that the tax position will withstand examination by the applicable taxing authority. Our estimate for the potential outcome of any uncertain tax issue is highly judgmental. We regularly evaluate our tax positions and incorporate these expectations into our reserve estimates. We believe we have adequately provided for any reasonably foreseeable outcome related to these matters. However, our future results may include favorable or unfavorable adjustments to our estimated tax liabilities in the period the assessments are made or resolved, or when statutes of limitation on potential assessments expire. These adjustments may include changes in valuation allowances that we have established. As a result of these uncertainties, our total income tax provision may fluctuate on a quarterly basis.

Each year, we prepare a return to provision analysis upon filing our income tax returns. Based on our most recent hindsight analysis, we concluded that our prior year income tax provision was within a range of acceptable estimates and that our provision calculation methodology is appropriate. Differences between our effective income tax rate and federal and state statutory tax rates are primarily due to excess tax benefits associated with the exercise of deductible nonqualified stock options and the lapse of restrictions on deductible restricted stock awards.

On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law in the U.S., including a broad range of tax reform provisions. We currently do not expect the changes resulting from the OBBBA to have a material impact on our income tax provision.

Performance-Based Compensation Accrual

The Compensation and Human Capital Management Committee of our Board (Compensation Committee) and our management have designed compensation programs intended to create a performance culture. The primary objectives of our compensation programs are to attract, motivate, reward and retain our employees without leading to unnecessary risk taking. Our compensation packages include bonus plans that are specific to groups of eligible participants and their levels and areas of responsibility. The majority of our bonus plans consist of annual cash payments that are based primarily on objective performance criteria. We calculate bonuses based on the achievement of certain key measurable financial and operational results, including operating income.

We use an annual cash performance award (annual bonus) to focus corporate behavior on short-term goals for growth, financial performance and other specific financial and business improvement metrics. Management sets the company’s annual bonus objectives at the beginning of the bonus plan year using both historical information and forecasted results of operations for the current plan year. Management also establishes specific business improvement objectives for both our operating units and corporate employees. The Compensation Committee approves objectives for annual bonus plans involving executive management.

33

We record annual performance-based compensation accruals based on operating income achieved in a quarter as a percentage of total expected operating income for the year. Our estimate of full-year operating income incorporates management’s assessment of expected incentive payouts under the bonus plan objectives and is regularly updated throughout the year.

Our quarterly performance-based compensation expense and accrual balances may vary relative to actual annual bonus expense and payouts due to differences between estimated and actual performance and the discretionary components of the bonus plans.

We generally make bonus payments at the end of February following the most recently completed fiscal year. Each year, we compare the actual bonus payouts to amounts accrued at the previous year’s end to determine the accuracy of our performance-based compensation estimates. Based on our most recent hindsight analysis, we concluded that our performance-based compensation accrual balances were within a reasonable range of acceptable estimates and that our estimation methodologies are appropriate.

Impairment of Goodwill and Other Indefinite-Lived Intangible Assets

Goodwill is our largest intangible asset. At December 31, 2025, our goodwill balance was $707.3 million, representing approximately 20% of total assets. Goodwill represents the excess of the amount we paid to acquire a company over the estimated fair value of tangible assets and identifiable intangible assets acquired less liabilities assumed.

We perform a goodwill impairment test in the fourth quarter of each year or on a more frequent basis if events or changes in circumstances occur that indicate potential impairment. We have the option of first analyzing qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. When a qualitative goodwill test is performed, we analyze factors to determine whether it is more likely than not that the fair value of a reporting unit is less than the carrying amount as a basis for determining whether it is necessary to perform a quantitative goodwill impairment test. The evaluation of qualitative factors includes an assessment of relevant facts, events and circumstances including but not limited to: macroeconomic conditions, industry and market conditions, and the current and forecasted financial performance of the reporting unit. In combination with our qualitative test, we also estimate the fair value of our reporting units by projecting company-wide future cash flows using management’s assumptions for sales growth rates, operating margins and discount rates. Estimated earnings multiples are then used to estimate the fair value of each reporting unit. These estimates can significantly affect the outcome of our impairment test.

To the extent our qualitative test indicates it is more likely than not that the fair value of a reporting unit is less than the carrying amount or for any reporting unit where we only perform a quantitative test, we perform a discounted cash flow analysis at the reporting unit level to estimate its fair value. If the carrying value of the reporting unit exceeds the fair value, we record a goodwill impairment charge for the difference, up to the carrying value of the goodwill. The fair value estimates used in our impairment test are determined using discounted cash flow models, which require the use of significant unobservable inputs, representative of a Level 3 fair value measurement. Since we define an operating segment as an individual sales center and we do not have operations below the sales center level, we define a reporting unit as an individual sales center.

To test the reasonableness of our fair value estimate, we compared our company-wide estimated fair value to our market capitalization as of the date of our annual impairment test. In 2025, our company-wide estimated fair value was in line with our market capitalization. To facilitate a sensitivity analysis, we reduced our consolidated fair value estimate to reflect more conservative discounted cash flow assumptions, the sensitivity of a 50 basis point increase in our estimated weighted average cost of capital or a 50 basis point decrease in the estimated perpetuity growth rate. Our sensitivity analysis resulted in a fair value modestly lower than our market capitalization and did not result in the identification of additional locations for which it is more likely than not that the fair value is less than the carrying amount.

If our assumptions or estimates in our fair value calculations change or if operating results are less than forecasted, we could incur impairment charges in future periods. Impairment charges would decrease operating income, negatively impact diluted EPS and result in lower asset values on our balance sheet.

As of October 1, 2025, we had 253 reporting units with allocated goodwill balances. Our most significant goodwill balance of $401.6 million was related to our Porpoise Pool & Patio reporting unit. The average goodwill balance of our remaining reporting units was $1.2 million.

34

In October 2025, we performed our annual goodwill impairment test and recorded an aggregate goodwill impairment charge of $0.3 million related to our reporting unit in Germany and the closure of a Horizon reporting unit in Florida. We performed a discounted cash flow analysis for these reporting units and determined that the estimated fair value of the reporting units no longer exceeded their carrying value. In connection with our testing, we also identified one of our reporting units in Tennessee with goodwill of $12.1 million as most at risk for goodwill impairment due to marginal results in recent years. We performed a discounted cash flow analysis for this reporting unit and its estimated fair value exceeded its carrying value by 7.0%. The most sensitive assumptions related to our fair value for this location relate to the timing of macroeconomic market improvements and their impact on future projected sales growth.

In October 2024, we performed our annual goodwill impairment test and did not record any goodwill impairment at the reporting unit level.

In September 2023, we recorded an aggregate goodwill impairment charge of $0.6 million, primarily related to one of our Horizon reporting units in Texas that we previously identified as being most at risk of goodwill impairment. We had been monitoring this location’s results, which came in below expectations at the end of the 2023 season. We performed an interim goodwill impairment analysis, which included a discounted cash flow analysis, and determined that the estimated fair value of the reporting unit no longer exceeded its carrying value. Following this, in October 2023, we performed our annual goodwill impairment test and did not recognize any goodwill impairment at the reporting unit level.

Recent Accounting Pronouncements

See Note 1 of “Notes to Consolidated Financial Statements,” included in Item 8 of this Form 10-K for details.

35

RESULTS OF OPERATIONS

The table below summarizes information derived from our Consolidated Statements of Income expressed as a percentage of net sales for the past three fiscal years:

Year Ended December 31,

2025

2024

2023

Net sales

100.0%

100.0%

100.0%

Cost of sales

70.3

70.3

70.0

Gross profit

29.7

29.7

30.0

Operating expenses

18.8

18.0

16.5

Operating income

11.0

11.6

13.5

Interest and other non-operating expenses, net

0.9

0.9

1.1

Income before income taxes and equity in earnings

10.1%

10.7%

12.4%

Note: Due to rounding, percentages may not add to operating income or income before income taxes and equity in earnings.

Our discussion of consolidated operating results includes the operating results from acquisitions in 2025, 2024 and 2023. We have included the results of operations in our consolidated results since the respective acquisition dates.

Fiscal Year 2025 compared to Fiscal Year 2024

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-K as base business results for the quarter and year ended December 31, 2025 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 2025:

December 31, 2024

448

Acquired locations

3

New locations

8

Consolidated/closed locations

(3)

December 31, 2025

456

For information about our recent acquisitions, see Note 2 of “Notes to Consolidated Financial Statements,” included in Item 8 of this Form 10-K.

36

Net Sales

(in millions)

Year Ended December 31,

2025

2024

Change

Net sales

$

5,289.4

$

5,311.0

$

(21.6

)

–%

Net sales in 2025 were consistent with 2024. During 2025, maintenance product sales held steady, indicating stable demand for non-discretionary products. Sales volumes for discretionary products declined, impacted by unfavorable macroeconomic conditions.

The following factors impacted our 2025 sales and are listed in order of estimated magnitude:

•
stable maintenance product sales;

•
lower sales volume of products used in pool construction and discretionary activities (see discussion below); and

•
a benefit of approximately 2% to 3% from inflationary product cost increases, partially offset by 1% price deflation on some items.

In 2025, sales of equipment for maintenance, renovation and new construction activities, including swimming pool heaters, pumps, lights, filters and automation devices, were flat compared to 2024 and represented approximately 31% of net sales in 2025. Sales of building materials, which are primarily used in new pool construction and remodeling, were also comparable to 2024 and represented approximately 12% of net sales in 2025.

2025 Quarterly Sales Performance Compared to 2024 Quarterly Sales Performance

Quarter

2025

First

Second

Third

Fourth

Net Sales (Decline) Growth

(4)%

1%

1%

(1)%

•
In the first quarter of 2025, net sales were anchored by consistent sales of non-discretionary products while sales of discretionary products continued to feel downward pressure from macroeconomic constraints and unfavorable weather in January and February. Net sales benefited approximately 2% from inflationary product cost increases, partially offset by 1% price deflation on certain items. One less selling day also lowered sales.

•
Although the market environment remained constrained in the second quarter of 2025, we saw overall sales expansion and discretionary activities were less of a drag on overall sales. Net sales benefited approximately 2% to 3% from inflationary product cost increases, partially offset by 1% price deflation on certain items.

•
Net sales in the third quarter of 2025 were supported by stable demand for maintenance products and sales growth of building materials products. Net sales benefited approximately 3% from inflationary product cost increases, partially offset by 1% price deflation on certain items.

•
Sales in the fourth quarter of 2025 were impacted by lower sales volumes compared to the fourth quarter of 2024, which benefited from repair and replacement activity following Hurricanes Helene and Milton in Florida. Net sales benefited approximately 3% from inflationary product cost increases, partially offset by 1% price deflation on certain items.

In addition to the sales discussion above, see further details of significant weather impacts under the subheading Seasonality and Quarterly Fluctuations below.

37

Gross Profit

(in millions)

Year Ended December 31,

2025

2024

Change

Gross profit

$

1,572.5

$

1,575.3

$

(2.8

)

–%

Gross margin

29.7

%

29.7

%

Gross margin was 29.7% in 2025 and 2024. In 2024, gross margin benefited 20 basis points from the reversal of $12.6 million for estimated import taxes. In 2025, our gross margin reflected positive impacts from our strategic pricing and supply chain initiatives, partially offset by a less advantageous customer mix and the absence of the import tax reversal recognized in the prior year.

Operating Expenses

(in millions)

Year Ended December 31,

2025

2024

Change

Selling and administrative expenses

$

992.3

$

958.1

$

34.2

4

%

Operating expenses as a percentage of net sales

18.8

%

18.0

%

Operating expenses increased 4%, or $34.2 million, to $992.3 million in 2025, up from $958.1 million in 2024. Our operating expenses have increased due to investments in our technology initiatives and expanding our sales center network, along with inflationary impacts on rent, base wages and insurance.

Interest and Other Non-operating Expenses, net

Interest and other non-operating expenses, net decreased $3.5 million compared to 2024, primarily due to a decrease in the weighted average effective interest rate between periods, which includes benefits from our 2025 refinancings. Our weighted average effective interest rate was 4.5% in 2025 and 5.2% in 2024 on average outstanding debt of $1.0 billion in 2025 versus $956.3 million in 2024.

Income Taxes

Our effective income tax rate was 23.8% at December 31, 2025 and 23.4% at December 31, 2024. We recorded a $4.6 million, or $0.12 per diluted share, benefit from ASU 2016-09 for the year ended December 31, 2025 compared to a benefit of $8.8 million, or $0.23 per diluted share, realized in 2024. Without the benefits from ASU 2016-09, our effective tax rate was 24.7% for the year ended 2025 and 25.0% for the year ended 2024.

Net Income and Earnings Per Share

Net income decreased to $406.4 million in 2025 compared to $434.3 million in 2024. Earnings per diluted share declined 4% to $10.85 in 2025 compared to $11.30 in 2024.

38

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-K.

Adjusted Diluted EPS

We have included adjusted diluted EPS, a non-GAAP financial measure, as a supplemental disclosure, because we believe this measure is useful to management, investors and others in assessing our period-to-period operating performance.

Adjusted diluted EPS is a key measure used by management to demonstrate the impact of tax benefits from ASU 2016-09 on our diluted EPS and to provide investors and others with additional information about our potential future operating performance to supplement GAAP measures.

We believe this measure should be considered in addition to, not as a substitute for, diluted EPS presented in accordance with GAAP, and in the context of our other disclosures in this Form 10-K. Other companies may calculate this non-GAAP financial measure differently than we do, which may limit its usefulness as a comparative measure.

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

(Unaudited)

Year Ended

December 31,

2025

2024

Diluted EPS

$

10.85

$

11.30

Less: ASU 2016-09 tax benefit

0.12

0.23

Adjusted diluted EPS

$

10.73

$

11.07

Fiscal Year 2024 compared to Fiscal Year 2023

For a detailed discussion of the Results of Operations in Fiscal Year 2024 compared to Fiscal Year 2023, see the Results of Operations section of Management’s Discussion and Analysis included in Part II, Item 7 of our 2024 Annual Report on Form 10-K.

39

Seasonality and Quarterly Fluctuations

For discussion regarding the effects seasonality and weather have on our business, see Item 1, “Business,” of this Form 10-K.

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.

(Unaudited)

QUARTER

(in thousands)

2025

2024

First

Second

Third

Fourth

First

Second

Third

Fourth

Statement of Income Data

Net sales

1,071,526

1,784,530

1,451,131

982,209

1,120,810

1,769,784

1,432,879

987,480

Gross profit

312,369

535,161

429,183

295,745

338,560

530,141

416,403

290,244

Operating income

77,538

272,670

177,987

52,008

108,720

271,481

176,353

60,651

Net income

53,545

194,258

127,013

31,587

78,885

192,439

125,701

37,300

Net sales as a % of annual net sales

20%

34%

27%

19%

21%

33%

27%

19%

Gross profit as a % of annual gross

   profit

20%

34%

27%

19%

21%

34%

26%

18%

Operating income as a % of annual

   operating income

13%

47%

31%

9%

18%

44%

29%

10%

Balance Sheet Data

Total receivables, net

497,076

576,804

443,609

347,803

527,175

577,529

425,693

314,861

Product inventories, net

1,460,680

1,330,221

1,223,809

1,454,672

1,496,947

1,295,600

1,180,491

1,289,300

Accounts payable

890,167

529,316

457,319

652,619

907,806

515,645

401,702

525,235

Total debt

1,025,090

1,229,919

1,062,002

1,199,453

979,177

1,116,553

923,829

950,356

Note: Due to rounding, the sum of quarterly percentage amounts may not equal 100%.

Weather Impacts on Fiscal Year 2025 to Fiscal Year 2024 Comparisons

Weather conditions in the first quarter of 2025 were mixed across our key markets. Early January snowstorms and overall cooler temperatures through much of February negatively impacted early season sales activity. While March brought warmer and drier weather, these improvements provided only partial relief to our sales trends and were insufficient to offset the slower start to the quarter. During the first quarter of 2024, above-average temperatures in some regions, including California, contributed positively to economic activities. However, the adverse effects of cooler and wetter weather in Florida and the Southeast, and excessive precipitation in Texas and the Northeast, outweighed the positives, resulting in an overall unfavorable impact on net sales.

Weather conditions in the second quarter of 2025 were generally marked by above-average temperatures and higher-than-normal precipitation. Warm conditions generally supported seasonal trends, though localized disruptions occurred due to severe storms, flash flooding and tornado outbreaks, particularly in April and May. Around mid-June, we observed intense heat across many regions, further supporting demand in key markets. Overall, while weather patterns were variable, we believe that the net impact on our results was broadly neutral. In the second quarter of 2024, weather across the U.S. was mixed, with wetter conditions in the central regions and Texas, drier conditions in the West, and warmer-than-average temperatures, especially in June, supporting maintenance activities and leading to varied impacts across our markets.

Temperatures in the third quarter of 2025 were above average in several regions, including the Northwest, Midwest, South and Western regions. Localized flooding occurred early in the quarter, followed by drought conditions across the Central and Western regions. In the third quarter of 2024, temperatures were slightly warmer than the third quarter of 2025, and there were more variable weather conditions in the third quarter of 2024 with several notable weather events. Overall, weather conditions did not significantly impact our sales results for the third quarter of 2025.

Weather conditions in the fourth quarter of 2025 were generally warmer than average across much of the U.S., particularly in October and November. Precipitation patterns were mixed, with localized drought conditions in parts of the central regions and variable rainfall

40

elsewhere. In October, rainy weather in California slowed sales, which is typically among Horizon’s busier months. December brought colder temperatures and winter weather in North and Northeastern markets, consistent with normal seasonal patterns. In 2024, repair and replacement activity following Hurricanes Helene and Milton provided some weather-related benefits to Florida’s results, contributing to an increase in consolidated sales of approximately 1%. Overall, the fourth quarter of 2025 did not see similar benefits from weather conditions as the fourth quarter of 2024.

Weather Impacts on Fiscal Year 2024 to Fiscal Year 2023 Comparisons

For a detailed discussion of Weather Impacts on Fiscal Year 2024 compared to Fiscal Year 2023, see the Seasonality and Quarterly Fluctuations section of Management’s Discussion and Analysis included in Part II, Item 7 of our 2024 Annual Report on Form 10-K.

Geographic Areas

Since all of our sales centers have similar operations and share similar economic characteristics, we aggregate our sales centers into a single reportable segment. For additional details, see Note 1 of our “Notes to Consolidated Financial Statements,” included in Item 8 of this Form 10-K.

For a breakdown of net sales and property, plant and equipment between our United States and international operations, see Item 1, “Business,” of this Form 10-K.

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:

•
cash flows generated from operating activities;

•
the adequacy of available bank lines of credit;

•
the quality of our receivables;

•
acquisitions;

•
dividend payments;

•
capital expenditures;

•
changes in income tax laws and regulations;

•
the timing and extent of share repurchases; and

•
the ability to attract long-term capital with satisfactory terms.

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.

41

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:

•
capital expenditures primarily for maintenance and growth of our sales center network, technology-related investments and fleet vehicles;

•
inventory and other operating expenses;

•
strategic acquisitions executed opportunistically;

•
payment of cash dividends as and when declared by our Board;

•
repayment of debt to maintain an average total target leverage ratio (as defined below) between 1.5 and 2.0; and

•
discretionary repurchases of our common stock under our Board authorized share repurchase program.

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, 2024 and 2023. Based on management’s current plans, we project capital expenditures for 2026 will be approximately 1% to 1.5% of net sales.

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 have the ability to finance any such transactions.

As of February 20, 2026, $331.0 million remained available to purchase shares of our common stock under our current Board-approved share repurchase plan program. We expect to repurchase additional shares in 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 our credit and receivables facilities described below.

Sources and Uses of Cash

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

Year Ended December 31,

2025

2024

Operating activities

$

365,850

$

659,186

Investing activities

(67,792

)

(66,169

)

Financing activities

(273,379

)

(576,550

)

Cash provided by operations of $365.9 million for 2025 decreased $293.3 million compared to 2024. The change in net cash flow from operations is mainly attributable to increased working capital investments, such as higher inventory balances, and $68.5 million in federal tax payments deferred from 2024 into 2025 as a result of relief granted by the IRS. This deferred tax payment increased operating cash flows in 2024 and decreased operating cash flows in 2025.

Cash used in investing activities increased $1.6 million to $67.8 million in 2025, primarily reflecting an increase of $6.1 million in payments for acquisitions compared to 2024, partially offset by a decrease of $3.1 million in net capital expenditures between years.

Cash used in financing activities decreased to $273.4 million in 2025 compared to $576.6 million in 2024. The change in financing activities primarily reflects $249.5 million of net debt proceeds in 2025 versus $101.7 million of net debt payments in 2024, partially offset by increases in share repurchases of $40.0 million and dividends paid of $5.3 million in 2025 versus 2024.

42

For a discussion of our sources and uses of cash in 2023, see the Liquidity and Capital Resources – Sources and Uses of Cash section of Management’s Discussion and Analysis included in Part II, Item 7 of our 2024 Annual Report on Form 10-K.

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 the Fourth Amended and Restated Credit Facility (the Credit Facility), the Term Facility (the Term Facility) and the Receivables Securitization Facility (the 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 Item 8 of this Form 10-K.

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 (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 December 31, 2025, there was $925.1 million outstanding, including a $500.0 million term loan, with $14.4 million in standby letters of credit outstanding and $360.5 million available for borrowing under the Credit Facility. The weighted average effective interest rate for the Credit Facility as of December 31, 2025 was approximately 4.0%, 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 December 31, 2025, the Term Facility had an outstanding balance of $90.0 million at a weighted average effective interest rate of 5.0%

Receivables Securitization Facility

Our two-year accounts receivable securitization 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.

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 December 31, 2025, there was $174.5 million outstanding under the Receivables Facility at a weighted average effective interest rate of 4.6%, excluding commitment fees.

43

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 December 31, 2025, the calculations of these two covenants are detailed below:

•
Maximum Average Total Leverage Ratio. On the last day of each fiscal quarter, our average total leverage ratio must be less than 3.25 to 1.00. Average Total Leverage Ratio is the ratio of the sum of (i) Total Non-Revolving Funded Indebtedness as of such date, (ii) the trailing twelve months (TTM) Average Total Revolving Funded Indebtedness and (iii) the TTM Average Accounts Securitization Proceeds divided by TTM EBITDA (as those terms are defined in the Credit Facility). As of December 31, 2025, our average total leverage ratio equaled 1.67 (compared to 1.42 as of December 31, 2024) and the TTM average total indebtedness amount used in this calculation was $1.1 billion.

•
Minimum Fixed Charge Coverage Ratio. On the last day of each fiscal quarter, our fixed charge ratio must be greater than or equal to 2.25 to 1.00. Fixed Charge Ratio is the ratio of the TTM EBITDAR divided by TTM Interest Expense paid or payable in cash plus TTM Rental Expense (as those terms are defined in the Credit Facility). As of December 31, 2025, our fixed charge ratio equaled 4.78 (compared to 5.07 as of December 31, 2024) and TTM Rental Expense was $112.2 million.

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 the Credit Facility and the Term Facility 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 applicable fixed rates plus the applicable margin on the respective borrowings.

As of December 31, 2025, 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 5 of “Notes to Consolidated Financial Statements” included in Item 8 of this Form 10-K.

Compliance and Future Availability

As of December 31, 2025, 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 covenants and financial ratio requirements throughout the next 12 months. For additional information regarding our debt arrangements, see Note 5 of “Notes to Consolidated Financial Statements,” included in Item 8 of this Form 10-K.

44

Future Obligations

We have certain fixed contractual obligations and commitments that include future estimated payments for general operating purposes. Changes in our business needs, fluctuating interest rates and other factors may result in actual payments differing from our estimates. We cannot provide certainty regarding the timing and amounts of these payments. The following table summarizes our obligations as of December 31, 2025 (in thousands) that are expected to impact liquidity and cash flow in future periods. We believe we will be able to fund these obligations through our existing cash, cash expected to be generated from operations, borrowings on our facilities and proceeds from any future refinancing transactions.

Payments Due by Period

Total

Less than

1 year

1-3 years

3-5 years

More than

5 years

Long-term debt

$

1,202,629

$

187,529

$

44,250

$

970,850

$

—

Operating leases

387,601

106,657

161,568

85,926

33,450

Purchase obligations

131,094

30,490

67,318

33,286

—

$

1,721,324

$

324,676

$

273,136

$

1,090,062

$

33,450

The significant assumptions used in our determination of amounts presented in the above table are as follows:

•
Long-term debt amounts represent only the future principal payments on our debt as of December 31, 2025. Estimates of interest payable on this debt is separately reflected in the table appearing below. On our Consolidated Balance Sheets, we classify the entire outstanding balance of the Receivables Facility as Long-term debt as we intend and have the ability to refinance the obligations on a long-term basis. For additional information regarding our debt arrangements, see Note 5 of our “Notes to Consolidated Financial Statements,” included in Item 8 of this Form 10-K.

•
Operating lease amounts include future rental payments under the current terms of our operating leases. For additional information regarding our operating leases, see Note 9 of our “Notes to Consolidated Financial Statements,” included in Item 8 of this Form 10-K.

•
Purchase obligations include all legally binding contracts such as firm minimum commitments for inventory purchases and software commitments. We issue inventory purchase orders in the normal course of business, which represent authorizations to purchase that are cancellable by their terms. We do not consider our cancellable purchase orders to be firm inventory commitments; therefore, they are excluded from the table above.

For certain of our future obligations, such as unrecognized tax benefits, uncertainties exist regarding the timing of future payments and the amount by which these potential obligations will increase or decrease over time. As such, we have excluded unrecognized tax benefits from the table above. See Note 7 of “Notes to Consolidated Financial Statements,” included in Item 8 of this Form 10-K for additional discussion related to our unrecognized tax benefits. The table also excludes various other liabilities that are not contractual in nature, including contingent liabilities, litigation accruals and contract termination fees.

The table below contains estimated interest payments (in thousands) related to our long-term debt obligations presented in the table above. We calculated estimates of future interest payments based on the December 31, 2025 outstanding debt balances, using the fixed rates under our interest rate swap agreements for the applicable notional amounts and the weighted average effective interest rates as of December 31, 2025 for the remaining outstanding balances not covered by our swap contracts. To project the estimated interest expense to coincide with the time periods used in the table above, we projected the estimated debt balances for future years based on the scheduled maturity dates of the Credit Facility, the Term Facility and the Receivables Facility. Our actual interest payments could vary substantially from the amounts projected.

Estimated Interest Payments Due by Period

Total

Less than

1 year

1-3 years

3-5 years

More than

5 years

Interest

$

175,004

$

44,023

$

95,107

$

35,874

$

—

45