Resources nection(RGP) - 2026 Q1 - Quarterly Report

PART I—FINANCIAL INFORMATION ITEM 1. Consolidated Financial Statements (Unaudited) This section presents the unaudited consolidated financial statements for Resources Connection, Inc. for the three months ended August 30, 2025, and August 24, 2024, including balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows, along with detailed notes explaining significant accounting policies, acquisitions, segment information, and other financial disclosures Consolidated Balance Sheets This section provides a snapshot of the company's financial position at specific points in time, detailing assets, liabilities, and stockholders' equity Consolidated Balance Sheet Metrics (in thousands) | Metric (in thousands) | August 30, 2025 | May 31, 2025 | Change | % Change | | :-------------------- | :-------------- | :----------- | :----- | :------- | | Cash and cash equivalents | $77,518 | $86,147 | $(8,629) | -10.0% | | Trade accounts receivable, net | $93,555 | $99,210 | $(5,655) | -5.7% | | Total current assets | $188,248 | $203,686 | $(15,438) | -7.6% | | Total assets | $287,211 | $304,688 | $(17,477) | -5.7% | | Accrued salaries and related obligations | $32,207 | $47,931 | $(15,724) | -32.8% | | Total current liabilities | $58,614 | $75,402 | $(16,788) | -22.3% | | Total liabilities | $80,852 | $97,607 | $(16,755) | -17.2% | | Total stockholders' equity | $206,359 | $207,081 | $(722) | -0.3% | Consolidated Statements of Operations This section details the company's revenues, expenses, and net loss over specific periods, providing insight into operational performance Consolidated Statements of Operations Metrics (in thousands, except per share) | Metric (in thousands, except per share) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | Change | % Change | | :------------------------------------ | :--------------------------------- | :--------------------------------- | :----- | :------- | | Revenue | $120,229 | $136,935 | $(16,706) | -12.2% | | Cost of services | $72,760 | $86,948 | $(14,188) | -16.3% | | Gross profit | $47,469 | $49,987 | $(2,518) | -5.0% | | Gross profit margin | 39.5% | 36.5% | +3.0 pp | | | Selling, general and administrative expenses | $47,916 | $48,910 | $(994) | -2.0% | | Goodwill impairment | $0 | $3,855 | $(3,855) | -100.0% | | Loss from operations | $(1,988) | $(4,803) | $2,815 | -58.6% | | Net loss | $(2,405) | $(5,707) | $3,302 | -57.9% | | Basic net loss per common share | $(0.07) | $(0.17) | $0.10 | -58.8% | | Diluted net loss per common share | $(0.07) | $(0.17) | $0.10 | -58.8% | | Cash dividends declared per common share | $0.07 | $0.14 | $(0.07) | -50.0% | Consolidated Statements of Comprehensive Loss This section presents the total comprehensive loss, including net loss and other comprehensive income or loss items, for the specified periods Consolidated Statements of Comprehensive Loss Metrics (in thousands) | Metric (in thousands) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | Change | % Change | | :-------------------- | :--------------------------------- | :--------------------------------- | :----- | :------- | | Net loss | $(2,405) | $(5,707) | $3,302 | -57.9% | | Foreign currency translation adjustment gain, net of tax | $767 | $831 | $(64) | -7.7% | | Total comprehensive loss | $(1,638) | $(4,876) | $3,238 | -66.4% | Consolidated Statements of Stockholders' Equity This section outlines changes in the company's equity accounts, including common stock, additional paid-in capital, accumulated deficit, and treasury stock Consolidated Statements of Stockholders' Equity Metrics (in thousands) | Metric (in thousands) | Balances at May 31, 2025 | Balances at August 30, 2025 | Change | | :-------------------- | :----------------------- | :-------------------------- | :----- | | Common Stock (Amount) | $370 | $373 | $3 | | Additional Paid-in Capital | $400,180 | $403,673 | $3,493 | | Accumulated Other Comprehensive Loss | $(17,863) | $(17,096) | $767 | | Accumulated Deficit | $(121,575) | $(126,881) | $(5,306) | | Treasury Stock (Amount) | $(54,031) | $(53,710) | $321 | | Total Stockholders' Equity | $207,081 | $206,359 | $(722) | - Key changes in stockholders' equity for the three months ended August 30, 2025, include a $2.3 million increase from stock-based compensation expense, $1.1 million from ESPP share issuance, a $2.3 million decrease from cash dividends, and a $2.4 million net loss[18] Consolidated Statements of Cash Flows This section presents the cash inflows and outflows from operating, investing, and financing activities, reflecting the company's liquidity and solvency Consolidated Statements of Cash Flows Metrics (in thousands) | Metric (in thousands) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | Change | | :-------------------- | :--------------------------------- | :--------------------------------- | :----- | | Net cash used in operating activities | $(7,832) | $(309) | $(7,523) | | Net cash used in investing activities | $(121) | $(10,924) | $10,803 | | Net cash used in financing activities | $(1,554) | $(7,685) | $6,131 | | Net decrease in cash and cash equivalents | $(8,629) | $(19,267) | $10,638 | | Cash and cash equivalents at end of period | $77,518 | $89,625 | $(12,107) | - The significant increase in cash used in operating activities for Q1 FY2026 was primarily due to a $15.8 million decrease in accrued salaries and related obligations, driven by the timing of the pay cycle and annual incentive compensation payout[184] - The substantial reduction in cash used in investing activities in Q1 FY2026 was mainly because the prior year period included a $23.0 million net cash outflow for the Reference Point acquisition, partially offset by $12.3 million from the sale of the Irvine office building, with no comparable large transactions in the current period[187] Notes to Consolidated Financial Statements This section provides detailed explanations and additional information regarding the figures presented in the consolidated financial statements Note 1. Description of the Company and its Business This note describes Resources Connection, Inc.'s global professional services offerings and its primary markets of operation - Resources Connection, Inc. (RGP) is a global professional services firm offering On-Demand Talent, Consulting, and Outsourced Services, primarily serving CFOs and C-suite leaders[22] - The Company's principal markets of operations are North America, Europe & Asia Pacific[22] - The Company's fiscal year consists of 52 or 53 weeks, ending on the Saturday in May closest to May 31; fiscal 2026 will consist of 52 weeks[23] Note 2. Summary of Significant Accounting Policies This note outlines the key accounting principles and methods used in preparing the financial statements, including revenue recognition and segment reporting - The unaudited financial statements are prepared in conformity with GAAP for interim financial information and include all necessary normal recurring adjustments[24] - The Company's reportable segments are On-Demand Talent, Consulting, Europe & Asia Pacific, and Outsourced Services, with Sitrick disclosed under 'All Other'[29] - Revenue is primarily recognized over time based on hours worked, net of variable consideration, with fixed-price contracts using the input method[31][32] - The Company does not expect ASU 2025-06 (Intangibles — Goodwill and Other — Internal-Use Software) to have a material impact and is evaluating ASU 2025-05 (Financial Instruments – Credit Losses)[57][58] Note 3. Revenues This note provides details on contract assets and liabilities, and revenue recognized from deferred revenue Contract Assets and Liabilities (in thousands) | Metric (in thousands) | August 30, 2025 | May 31, 2025 | | :-------------------- | :-------------- | :----------- | | Contract assets | $25,100 | $30,700 | | Contract liabilities | $4,500 | $4,300 | Revenue Recognized from Deferred Revenue (in thousands) | Revenue Recognized from Deferred Revenue (in thousands) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | | :---------------------------------------------------- | :--------------------------------- | :--------------------------------- | | Revenue recognized from deferred revenue | $1,800 | $600 | Note 4. Acquisitions This note details the acquisition of Reference Point LLC, including the cash consideration, recognized intangible assets, and goodwill - On July 1, 2024, the Company acquired Reference Point LLC, a strategy, management, and technology consulting firm for the financial services sector, for cash consideration of $23.2 million (net of cash acquired)[64] - The acquisition resulted in the recognition of $15.7 million in identifiable intangible assets (customer relationships, non-compete, trade name) and $6.9 million in goodwill, primarily attributable to expected synergies and the assembled workforce[66][68] Acquisition Costs (in thousands) | Acquisition Costs (in thousands) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | | :------------------------------- | :--------------------------------- | :--------------------------------- | | Acquisition costs | $400 | $1,300 | Note 5. Goodwill and Intangible Assets This note provides information on goodwill impairment, allocation, and the net carrying amount and amortization of intangible assets - No goodwill impairment was recorded for the three months ended August 30, 2025. In the first quarter of fiscal 2025, a non-cash goodwill impairment charge of $3.9 million was recorded for the Europe & Asia Pacific segment due to a business segment reorganization[70][71] - As of August 30, 2025, all goodwill on the Consolidated Balance Sheet is allocated to the Outsourced Services segment[73] Intangible Assets (in thousands) | Intangible Assets (in thousands) | August 30, 2025 (Net Carrying Amount) | May 31, 2025 (Net Carrying Amount) | | :------------------------------- | :------------------------------------ | :--------------------------------- | | Customer contracts and relationships | $17,233 | $18,340 | | Trade names | $0 | $50 | | Non-Compete Agreements | $552 | $588 | | Total Intangible Assets, net | $17,785 | $18,978 | Amortization Expense (in thousands) | Amortization Expense (in thousands) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | | :---------------------------------- | :--------------------------------- | :--------------------------------- | | Amortization expense | $1,200 | $1,500 | Note 6. Leases This note details the components of lease cost, weighted-average lease terms, discount rates, and future operating lease liabilities Lease Cost Components (in thousands) | Lease Cost Components (in thousands) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | | :----------------------------------- | :--------------------------------- | :--------------------------------- | | Operating lease cost | $1,774 | $1,727 | | Short-term lease cost | $56 | $79 | | Variable lease cost | $368 | $381 | | Sublease income | $(128) | $(179) | | Total lease cost | $2,070 | $2,008 | - As of August 30, 2025, the weighted-average remaining lease term for operating leases was 6.1 years, and the weighted-average discount rate was 5.15%[76] Future Operating Lease Liabilities (in thousands) | Future Operating Lease Liabilities (in thousands) | Amount | | :------------------------------------------------ | :----- | | 2026 (remaining nine months) | $4,891 | | 2027 | $5,149 | | 2028 | $4,727 | | 2029 | $3,879 | | 2030 | $3,148 | | Thereafter | $8,014 | | Total future lease payments | $29,808 | | Less: interest | $(4,455) | | Present value of operating lease liabilities | $25,353 | Note 7. Long-Term Debt This note describes the Company's new $50.0 million secured revolving credit facility, its maturity, and interest rate terms - On July 2, 2025, the Company entered into a new $50.0 million secured revolving credit facility (the '2025 Credit Facility') maturing on November 30, 2029, concurrently terminating the previous 2021 Credit Facility[77] - As of August 30, 2025, the Company had no debt outstanding under the 2025 Credit Facility and $49.3 million of potential remaining capacity, subject to terms and financial covenants[83] - The 2025 Credit Facility bears interest at Term SOFR plus a margin ranging from 1.25% to 2.50% or Base Rate plus a margin of 0.25% to 1.50%, depending on Consolidated EBITDA[79] Note 8. Income Taxes This note provides details on income tax expense, effective tax rates, and unrecognized tax benefits Income Tax Metrics | Income Tax Metric | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | | :---------------- | :--------------------------------- | :--------------------------------- | | Income tax expense | $0.5 million | $1.1 million | | Effective tax rate | 24.7% | 22.7% | - The effective tax rate was negative in both quarters due to income tax expense measured against consolidated pretax losses, primarily driven by an increase in domestic and foreign valuation allowance in Q1 FY2026 and non-deductible tax adjustment on goodwill impairment in Q1 FY2025[85] - The Company's total liability for unrecognized gross tax benefits, including accrued interest and penalties, was $1.1 million as of August 30, 2025, with no anticipated cash payments within the next 12 months[87] Note 9. Stockholders' Equity This note details the remaining availability for stock repurchases and the declared quarterly cash dividends - As of August 30, 2025, approximately $79.2 million remained available for future repurchases under the Company's Stock Repurchase Programs, with no shares purchased in Q1 FY2026[89] - The Board of Directors approved a regular quarterly dividend of $0.07 per share for Q1 FY2026, a 50% reduction from the $0.14 per share declared in Q1 FY2025[13][90] Note 10. Stock-Based Compensation Plans This note outlines stock-based compensation expense, shares issued under the ESPP, and unrecognized compensation costs for various equity awards Stock-Based Compensation Expense (in thousands) | Stock-Based Compensation Expense (in thousands) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | | :---------------------------------------------- | :--------------------------------- | :--------------------------------- | | Stock-based compensation expense | $2,300 | $1,600 | - The Company issued 240,674 shares under the Employee Stock Purchase Plan (ESPP) in Q1 FY2026, compared to 229,341 shares in Q1 FY2025, with 589,714 shares remaining available for issuance[98] Unrecognized Compensation Costs (in thousands) | Unrecognized Compensation Costs (in thousands) | Amount | Weighted-Average Recognition Period | | :--------------------------------------------- | :----- | :---------------------------------- | | Restricted Stock Awards (RSAs) | $1,900 | 1.53 years | | Equity-classified Restricted Stock Units (RSUs) | $8,100 | 2.07 years | | Liability-classified Restricted Stock Units (RSUs) | $500 | 1.70 years | | Performance Stock Units (PSUs) | $1,200 | 1.75 years | Note 11. Commitments and Contingencies This note addresses the company's legal matters and management's assessment of their potential financial impact - Management believes that all legal matters, if disposed of unfavorably, would not have a material adverse effect on the Company's financial position, cash flows, or results of operations[106] Note 12. Segment Information and Enterprise Reporting This note provides a breakdown of the company's reportable segments, including revenue and Adjusted EBITDA by segment and geographic revenue - The Company's reportable segments are On-Demand Talent, Consulting, Europe & Asia Pacific, and Outsourced Services, with Sitrick reported as 'All Other'[109] Segment Revenue (in thousands) | Segment Revenue (in thousands) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | Change | % Change | | :----------------------------- | :--------------------------------- | :--------------------------------- | :----- | :------- | | On-Demand Talent | $44,442 | $52,473 | $(8,031) | -15.3% | | Consulting | $43,641 | $55,025 | $(11,384) | -20.7% | | Europe & Asia Pacific | $19,888 | $17,983 | $1,905 | 10.6% | | Outsourced Services | $9,994 | $9,491 | $503 | 5.3% | | All Other | $2,264 | $1,963 | $301 | 15.3% | | Total consolidated revenue | $120,229 | $136,935 | $(16,706) | -12.2% | Segment Adjusted EBITDA (in thousands) | Segment Adjusted EBITDA (in thousands) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | Change | % Change | | :------------------------------------- | :--------------------------------- | :--------------------------------- | :----- | :------- | | On-Demand Talent | $4,422 | $2,559 | $1,863 | 72.8% | | Consulting | $5,045 | $7,753 | $(2,708) | -34.9% | | Europe & Asia Pacific | $837 | $227 | $610 | 268.7% | | Outsourced Services | $2,330 | $1,394 | $936 | 67.1% | | All Other | $183 | $(467) | $650 | 139.2% | Geographic Revenue (in thousands) | Geographic Revenue (in thousands) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | | :-------------------------------- | :--------------------------------- | :--------------------------------- | | United States | $95,556 | $112,452 | | International | $24,673 | $24,483 | | Total | $120,229 | $136,935 | Note 13. Subsequent Events This note discloses a global workforce reduction initiated after the reporting period and its expected financial charges - On September 30, 2025, the Company initiated a global reduction in its management and administrative workforce, expecting estimated charges of approximately $2.1 million in Q2 FY2026, primarily for one-time employee termination benefits[116] ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides a detailed discussion and analysis of the Company's financial condition, results of operations, and liquidity and capital resources for the three months ended August 30, 2025, compared to the prior year period. It covers strategic focus areas, market trends, critical accounting policies, non-GAAP financial measures, and a breakdown of operating results by segment and cash flow activities Forward-Looking Statements This section highlights that the report contains forward-looking statements subject to various risks and uncertainties that could cause actual results to differ materially - The report contains forward-looking statements regarding expectations for operating segments, macroeconomic environment, costs, liabilities, business strategies, growth, and future performance, identified by words like 'anticipates,' 'expects,' 'will,' or similar terms[119] - These statements are subject to known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially, including economic downturns, market competition, talent retention, and compliance risks[120] Overview This section provides a general description of RGP as a global professional services firm and outlines its strategic reorganization and focus areas - RGP is a global professional services firm delivering flexible solutions through on-demand resourcing, strategic and execution consulting, and fully outsourced services, with core capabilities spanning Enterprise Strategy & Operational Performance; Finance & Accounting; Digital, Technology & Data; and Governance, Risk & Compliance[122] - In Q1 FY2025, the Company reorganized into distinct business units: On-Demand Talent, Consulting, Europe & Asia Pacific, Outsourced Services, and Sitrick (All Other), focusing on CFO Advisory and Digital, Data and Cloud, and completed technology modernization in North America[123] Fiscal 2026 Strategic Focus Areas This section outlines the company's key strategic priorities for fiscal year 2026, including expanding cross-sell opportunities and optimizing high-growth solutions - The Company's fiscal 2026 strategic focus areas include expanding cross-sell opportunities across its diversified services platform (On-Demand Talent, Consulting, Outsourced Services)[124][126] - Other key focus areas are optimizing high-growth solutions (e.g., ERP/cloud finance modernization, AI adoption) and evolving talent strategy, further leveraging value-based pricing, and driving improvement in cost structure[125][126][127][128][129] Market Trends and Uncertainties This section discusses the impact of uncertain macroeconomic conditions on the company's financial results and professional services spending - Uncertain macroeconomic conditions, including ambiguity around interest rates, softening labor markets, currency fluctuations, and policy changes, have created significant uncertainty in the global economy and adversely impacted financial results[130] - The Company observes caution in professional services spending, and persistent adverse conditions could lead to further declines in billable hours and bill rates[130] Critical Accounting Policies and Estimates This section confirms that there have been no material changes to the company's critical accounting policies or estimates since the last annual report - There have been no material changes in the Company's critical accounting policies or underlying estimates and assumptions from those described in its Fiscal Year 2025 Form 10-K[132] Non-GAAP Financial Measures This section explains the company's use of non-GAAP financial measures such as Same-day constant currency revenue, EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin to evaluate performance - The Company uses non-GAAP financial measures like Same-day constant currency revenue, EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin to assess financial and operating performance and evaluate revenue trends on a comparable basis[133][135][138][139] Non-GAAP Financial Metrics (in thousands, except %) | Non-GAAP Metric (in thousands, except %) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | Change | % Change | | :--------------------------------------- | :--------------------------------- | :--------------------------------- | :----- | :------- | | Same-day constant currency revenue | $117,969 | $136,935 | $(18,966) | -13.9% | | Adjusted EBITDA | $3,065 | $2,320 | $745 | 32.1% | | Adjusted EBITDA Margin | 2.5% | 1.7% | +0.8 pp | | Results of Operations This section analyzes the consolidated operating results, including revenue, cost of services, gross profit, and selling, general and administrative expenses Consolidated Operating Results (in thousands, except %) | Consolidated Operating Results (in thousands, except %) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | Change | % Change | | :---------------------------------------------------- | :--------------------------------- | :--------------------------------- | :----- | :------- | | Revenue | $120,229 | $136,935 | $(16,706) | -12.2% | | Cost of services | $72,760 | $86,948 | $(14,188) | -16.3% | | Gross profit | $47,469 | $49,987 | $(2,518) | -5.0% | | Selling, general and administrative expenses | $47,916 | $48,910 | $(994) | -2.0% | | Loss from operations | $(1,988) | $(4,803) | $2,815 | -58.6% | | Net loss | $(2,405) | $(5,707) | $3,302 | -57.9% | - Revenue decreased by 12.2% year-over-year, or 13.9% on a same-day constant currency basis, primarily due to a 14.3% decline in billable hours amidst a choppy demand environment, partially offset by a 2.2% increase in average bill rates[145] - Cost of services as a percentage of revenue improved to 60.5% from 63.5% year-over-year, driven by an improved pay/bill ratio and lower consultant costs[147] - Selling, general and administrative expenses decreased by $1.0 million, primarily due to reduced employee compensation, technology transformation costs, and business support costs, partially offset by the absence of a gain on sale of assets recorded in the prior year[150] Operating Results of Segments This section analyzes the revenue and Adjusted EBITDA performance of the On-Demand Talent, Consulting, Europe & Asia Pacific, and Outsourced Services segments - On-Demand Talent revenue declined by 15.3% due to lower demand and a softer labor market, while Adjusted EBITDA increased by 72.8% due to decreased segment expenses[162][167] - Consulting revenue decreased by 20.7% due to a 28.4% decrease in billable hours, despite an 11.1% increase in average bill rates from value-based pricing, leading to a 34.9% decrease in Adjusted EBITDA[163][168] - Europe & Asia Pacific revenue increased by 10.6% (5.4% on a same-day constant currency basis), driven by a 9.6% increase in average bill rates and growing client demand in Europe, resulting in a 268.7% increase in Adjusted EBITDA[164][169] - Outsourced Services revenue grew by 5.3% (3.7% on a same-day constant currency basis) due to increased billable hours, and Adjusted EBITDA increased by 67.1% primarily from higher gross profit[165][170] Liquidity and Capital Resources This section discusses the company's sources of liquidity, cash position, new credit facility, purchase obligations, and future funding outlook - Primary liquidity sources include cash from operating activities and the senior secured revolving credit facility. As of August 30, 2025, the Company had $77.5 million in cash and cash equivalents, with $41.3 million held in international operations[172] - The Company entered into a new 2025 Credit Facility on July 2, 2025, providing a secured revolving loan up to $50.0 million, maturing on November 30, 2029, with no debt outstanding as of August 30, 2025[174][176] - Non-cancellable purchase obligations total $8.5 million, primarily for licensing arrangements, with $4.0 million due in fiscal 2026[178][179] - The Company believes current cash, ongoing cash flows from operations, and the 2025 Credit Facility will provide sufficient funds for working capital and capital expenditure needs for at least the next 12 months, despite macroeconomic uncertainties[181] Operating Activities This section analyzes the net cash used in operating activities and the primary drivers of changes between periods Cash Flow from Operating Activities (in thousands) | Cash Flow from Operating Activities (in thousands) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | | :----------------------------------------------- | :--------------------------------- | :--------------------------------- | | Net cash used in operating activities | $(7,832) | $(309) | - The increase in cash used in operating activities was primarily driven by a $15.8 million decrease in accrued salaries and related obligations due to the timing of the pay cycle and annual incentive compensation payout[184] Investing Activities This section details the net cash used in investing activities, highlighting the impact of acquisitions and asset sales Cash Flow from Investing Activities (in thousands) | Cash Flow from Investing Activities (in thousands) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | | :------------------------------------------------ | :--------------------------------- | :--------------------------------- | | Net cash used in investing activities | $(121) | $(10,924) | - Net cash used in investing activities significantly decreased from $10.9 million in Q1 FY2025 to $0.1 million in Q1 FY2026. The prior period included a $23.0 million net cash outflow for the Reference Point acquisition and $12.3 million net proceeds from the sale of the Irvine office building[187] Financing Activities This section analyzes the net cash used in financing activities, focusing on changes related to dividends and stock repurchases Cash Flow from Financing Activities (in thousands) | Cash Flow from Financing Activities (in thousands) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | | :------------------------------------------------ | :--------------------------------- | :--------------------------------- | | Net cash used in financing activities | $(1,554) | $(7,685) | - Net cash used in financing activities decreased significantly, primarily due to lower cash dividend payments ($2.3 million vs $4.7 million) and the absence of common stock repurchases ($0 vs $5.0 million) compared to the prior year[188][189] ITEM 3. Quantitative and Qualitative Disclosures About Market Risk This section outlines the Company's exposure to market risks, primarily from fluctuations in interest rates and foreign currency exchange rates, and discusses how these risks are managed Interest Rate Risk This section discusses the company's exposure to interest rate fluctuations on its cash and borrowings, and the expected impact of rate changes - The Company is exposed to market risks from fluctuations in interest rates affecting its cash and cash equivalents and borrowings under the 2025 Credit Facility[190] - As of August 30, 2025, the Company had $77.5 million in cash and cash equivalents and no outstanding borrowings under its 2025 Credit Facility, with a 10% decline in interest rates not expected to materially impact financial position or results[191][192] Foreign Currency Exchange Rate Risk This section details the company's exposure to foreign currency exchange rate fluctuations due to international operations and cash holdings - Approximately 20.5% of the Company's revenues for Q1 FY2026 were generated outside the U.S., making operating results subject to foreign currency exchange rate fluctuations[193] - As of August 30, 2025, 53.3% of cash and cash equivalents were denominated in foreign currencies (Euros, Mexican Pesos, Canadian Dollar, Chinese Yuan, Indian Rupee, Japanese Yen, and British Pound Sterling)[194] - The Company does not currently use financial hedges to mitigate foreign currency fluctuation risks, believing its economic exposure has not been material[195] ITEM 4. Controls and Procedures This section details the evaluation of the Company's disclosure controls and procedures and reports on any changes in internal control over financial reporting Evaluation of Disclosure Controls and Procedures This section confirms the effectiveness of the company's disclosure controls and procedures as evaluated by its principal officers - As of August 30, 2025, the Company's Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective[197] Changes in Internal Control Over Financial Reporting This section reports on any material changes in the company's internal control over financial reporting during the fiscal quarter - There has been no material change in the Company's internal control over financial reporting during the fiscal quarter ended August 30, 2025[198] PART II—OTHER INFORMATION ITEM 1A. Risk Factors This section states that there have been no material changes to the Company's risk factors since its last annual report - There have been no material changes in the Company's risk factors from those disclosed in Part I, Item 1A of its Fiscal Year 2025 Form 10-K[200] ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds This section reports that there were no unregistered sales of equity securities or use of proceeds during the period - There were no unregistered sales of equity securities and use of proceeds during the reporting period[201] ITEM 5. Other Information This section confirms that there are no other material information or insider trading arrangements to report - There were no insider trading arrangements to report[202] ITEM 6. Exhibits This section lists the exhibits filed with or incorporated by reference in this Quarterly Report on Form 10-Q, including certifications and financial statements in Inline XBRL format - The report includes certifications from the CEO and CFO (Exhibits 31.1, 31.2, 32.1, 32.2) and unaudited interim consolidated financial statements formatted in Inline XBRL (Exhibit 101)[204] Signatures This section contains the duly authorized signatures of the Company's President and Chief Executive Officer and Executive Vice President and Chief Financial Officer, affirming the filing of the report - The report is signed by Kate W. Duchene, President and Chief Executive Officer, and Jennifer Ryu, Executive Vice President and Chief Financial Officer, on October 8, 2025[208]