The Company’s leases its corporate headquarters located in Torrance, California. On February 12, 2026, the Torrance office lease expired. The Company plans to move into their new corporate headquarters location in March 2026. The Company also leases warehouse space in LaSalle, Illinois, Las Vegas, Nevada, Grand Prairie, Texas, and Jacksonville, Florida, in addition to leasing office space for the Philippines subsidiary. Refer to Note 12 – “Subsequent Event” for information on the new corporate headquarters lease and information on the Philippines subsidiary being sold to a third-party.

On September 29, 2025, the Company entered into a lease termination agreement related to its Virginia distribution center, which was closed during the third quarter of 2025 to optimize the supply chain structure. Pursuant to the terms of the agreement, the Company agreed to pay a termination fee of $485. In connection with the lease termination, the loss on early lease termination of $393 was recorded within other income, net, in the consolidated statements of operations for the fiscal year ended January 3, 2026.

Quantitative information regarding the Company’s leases are as follows (in thousands):


		Fiscal Year ended
	January 3, 2026			December 28, 2024
Components of lease cost
Finance lease cost components
Amortization of finance lease assets	$	3,491		$	4,491
Interest on finance lease liabilities		680			866
Total finance lease costs	$	4,171		$	5,357
Operating lease costs	$	5,418		$	4,884

Total lease cost	$	9,589		$	10,241

Supplemental cash flow information related to operating and finance leases is as follows:		Fiscal Year ended
	January 3, 2026			December 28, 2024
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflow from operating leases	$	7,716		$	7,006
Operating cash outflow from finance leases		680			866
Financing cash outflow from finance leases		3,444			4,311

Weighted-average remaining lease term-finance leases (in years)		5.3			5.4
Weighted-average remaining lease term-operating leases (in years)		4.2			4.9
Weighted-average discount rate-finance leases		6.95	%		6.48	%
Weighted-average discount rate-operating leases		6.87	%		6.37	%

Asbestos. A wholly-owned subsidiary of the Company, Automotive Specialty Accessories and Parts, Inc. and its wholly-owned subsidiary Whitney Automotive Group, Inc. ("WAG"), are named defendants in several lawsuits involving claims for damages caused by installation of brakes during the late 1960’s and early 1970’s that contained asbestos. WAG marketed certain brakes, but did not manufacture any brakes. WAG maintains liability insurance coverage to protect its and the Company’s assets from losses arising from the litigation and coverage is provided on an occurrence rather than a claims made basis, and the Company is not expected to incur significant out-of-pocket costs in connection with this matter that would be material to its consolidated financial statements.

Ordinary course litigation. The Company is subject to legal proceedings and claims which arise in the ordinary course of its business, including, for example, claims relating to product liability, workplace injuries, intellectual property rights, and employment matters. For example, a worker, who was directly employed by the Company’s third party labor contracting firm at the Company’s Grand Prairie, Texas warehouse has filed a negligence claim in the Superior Court of the State of California, Los Angeles Count y, Central District relating to a workplace injury from March 2021. In July 2024, the Court granted the Company’s motion for summary judgment. Appeals could be filed by the plaintiff and the Company intends to continue to defend itself vigorously, although there can be no assurance that there will not be some liability. As of the date hereof, the Company believes that the final disposition of such matters will not have a material adverse effect on the financial position, results of operations or cash flow of the Company. The Company maintains liability insurance coverage to protect the Company’s assets from losses arising out of or involving activities associated with ongoing and normal business operations.

The Company has entered into indemnification agreements with the Company’s directors and executive officers. These agreements require the Company to indemnify these individuals to the fullest extent permitted under law against liabilities that may arise by reason of their service to the Company, and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified.