What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-12-09 compared with 2025-09-02 · 82 added, 73 removed, 390 unchanged (28% of the section changed)

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Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, our actual results may vary in material respects from those projected in these forward-looking statements.

The following discussion and analysis of our financial condition and results of operations should be read together with our unaudited financial statements and related notes included elsewhere in this Quarterly Report for the thirteen and twenty-six weeks ended August 2, 2025 and our audited financial statements for the fiscal year ended February 1, 2025 and the section entitled “Management's Discussion and Analysis of Financial Condition and Results of Operations” included in the Annual Report.

The following discussion and analysis of our financial condition and results of operations should be read together with our unaudited financial statements and related notes included elsewhere in this Quarterly Report for the thirteen and thirty-nine weeks ended November 1, 2025 and our audited financial statements for the fiscal year ended February 1, 2025 and the section entitled “Management's Discussion and Analysis of Financial Condition and Results of Operations” included in the Annual Report.

All references to “Academy,” “Academy Sports + Outdoors,” “ASO, Inc.,” “we,” “us,” “our” or the “Company” in this Quarterly Report refer to Academy Sports and Outdoors, Inc., a Delaware corporation and the current parent holding company of our operations, and its consolidated subsidiaries.

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References to any year, quarter, or month mean our fiscal year, fiscal quarter, and fiscal month, respectively, unless the context requires otherwise.

References to the “current quarter,” “2025 second quarter,” or similar reference refers to the thirteen week period ended August 2, 2025, and any reference to the “prior year quarter,” “2024 second quarter” or similar reference refers to the thirteen week period ended August 3, 2024.

References to the “current quarter,” “2025 third quarter,” or similar reference refers to the thirteen week period ended November 1, 2025, and any reference to the “prior year quarter,” “2024 third quarter” or similar reference refers to the thirteen week period ended November 2, 2024.

Unless otherwise specified, all comparisons regarding the current period of 2025 are made to the corresponding period of 2024.

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Our mission is to provide “Fun for All”, and we fulfill this mission with a localized merchandising strategy and value proposition that deeply connect with a broad range of consumers.

Our product assortment focuses on key categories of outdoor, sports and recreation, apparel, and footwear (representing 28%, 23%, 28%, and 21% of our 2025 second quarter net sales, respectively) through both leading national brands and a portfolio of private label brands, which go well beyond traditional sporting goods and apparel offerings.

Our product assortment focuses on key categories of outdoor, sports and recreation, apparel, and footwear (represen ting 32%, 21%, 25%, and 22% of our 2025 third quarter net sales, respectively) through both leading national brands and a portfolio of private label brands, which go well beyond traditional sporting goods and apparel offerings.

We sell a range of sporting and outdoor recreation products, including sporting equipment, apparel, footwear, camping gear, patio furniture, outdoor cooking equipment, and hunting and fishing gear, among many others.

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We provide locally relevant offerings, such as crawfish boilers in Louisiana, licensed apparel for area sports fans, baits and lures for area fishing spots, and beach towels in coastal markets.

As of August 2, 2025, we operated 306 stores that range in size from approximately 40,000 to 130,000 gross square feet, with an average size of approximately 70,000 gross square feet, throughout 21 contiguous states located primarily in the southern United States.

As of November 1, 2025, we operated 317 stores that range in size from approximately 40,000 to 130,000 gross square feet, with an average size of approximately 70,000 gross square feet, throughout 21 contiguous states located primarily in the southern United States.

Our stores are supported by approximately 24,000 team members, three distribution centers, and our e-commerce platform, which includes our website at www.academy.com and our mobile app.

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The following table summarizes store activity for the periods indicated:

Twenty-Six Weeks Ended

August 2, 2025 August 3, 2024

Thirty-Nine Weeks Ended

November 1, 2025 November 2, 2024

Beginning stores 298 282

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Q2 new stores 3 1

Q3 new stores 11 8

Ending stores 317 293

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Net sales are derived from in-store and e-commerce merchandise sales, net of sales tax and an allowance for merchandise returns.

demand, allowances and logistics, seasonality, unseasonal or extreme weather, changes in consumer shopping preferences, consumer discretionary spending, and market and sales promotions.

Net sales fluctuations can be driven by new store openings, comparable sales increases or decreases including e-commerce sales, our ability to adjust inventory based on sales fluctuations, our management of vendor relations and meeting customer demand, allowances and logistics, seasonality, unseasonal or extreme weather, changes in consumer shopping preferences, consumer discretionary spending, and market and sales promotions.

We must maintain sufficient inventory levels of merchandise that our customers desire to successfully operate our business.

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These platforms allow us to connect further with our customers for marketing and product education and assists us in introducing customers to the Academy brand by reaching customers outside of our current store footprint.

During the 2025 year-to-date second quarter, stores facilitated approximately 95% of our total sales, including ship-from-store, BOPIS and in-store retail sales.

During the 2025 year-to-date third quarter, stores facilitated approximately 95% of our total sales, including ship-from-store, BOPIS and in-store retail sales.

We expect to continue to invest in expanding and enhancing our omnichannel capabilities, including our mobile app, optimizing the web site experience and upgrading our fulfillment capabilities, which will continue to require further investments by us.

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We utilize comprehensive demographic and trade data to guide our real estate site selection.

During the 2025 second quarter, we opened 3 new stores.

During the 2025 third quarter, we opened 11 new stores.

Our strategic real estate approach, including the 58 stores opened since fiscal year 2021, has positioned us effectively for continued expansion.

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These expenses are both variable and fixed in nature.

SG&A expenses as a percentage of sales increased from 24.8% in the 2024 year-to-date second quarter to 26.9% in the 2025 year-to-date second quarter, primarily attributable to increased strategic investments, including the addition of 21 new stores since the end of the 2024 second quarter.

We track and measure operating expenses as a percentage of

net sales in order to evaluate our performance against profitability targets.

SG&A expenses as a percentage of sales increased from 25.5% in the 2024 year-to-date third quarter to 27.4% in the 2025 year-to-date third quarter, primarily attributable to increased strategic investments, including the addition of 24 new stores since the end of the 2024 third quarter.

We track and measure operating expenses as a percentage of net sales in order to evaluate our performance against profitability targets.

Management of SG&A expenses depends on our ability to balance a control of operating costs, such as store and corporate headcount, information technology infrastructure and marketing and advertising expenses, while efficiently and effectively servicing our customers.

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The following table summarizes our pre-opening expense activity for the periods presented:

Thirteen Weeks Ended Twenty-Six Weeks Ended

August 2, 2025 August 3, 2024 August 2, 2025 August 3, 2024

Thirteen Weeks Ended Thirty-Nine Weeks Ended

November 1, 2025 November 2, 2024 November 1, 2025 November 2, 2024

Number of new stores opened 11 8 19 11

Total pre-opening expenses incurred (in millions) $ 5.4 $ 5.6 $ 13.9 $ 10.2

During the third quarter of 2025, we closed on a sale-leaseback agreement involving a store property in Slidell, Louisiana.

We determined that the sale-leaseback transaction qualifies as a sale in accordance with ASC 842.

In connection with the sale-leaseback transaction, we recognized a net gain of approximately $3.6 million in Selling, General, and Administrative expenses on the Condensed Consolidated Statements of Income.

Interest Expense.

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federal, state, and local income tax purposes and accordingly, a provision for income taxes has been recorded for the anticipated tax consequences of our reported results of operations for federal, state and local income taxes.

Recent fluctuations in income tax expense have been primarily as a result of changes in income before income taxes and changes in equity awards activity.

Recent fluctuations in income tax expense have been primarily a result of changes in income before income taxes and changes in equity awards activity.

Results of Operations

Thirteen Weeks Ended August 2, 2025 Compared to Thirteen Weeks Ended August 3, 2024

Thirteen Weeks Ended November 1, 2025 Compared to Thirteen Weeks Ended November 2, 2024

The following table sets forth amounts and information derived from our unaudited statements of income for the periods indicated as follows (dollar amounts in thousands):

Thirteen Weeks Ended Change

August 2, 2025 August 3, 2024 Dollars Percent

November 1, 2025 November 2, 2024 Dollars Percent

Net sales $ 1,383,696 100.0 % $ 1,343,330 100.0 % $ 40,366 3.0 %

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*Percentages in table may not sum properly due to rounding.

Net sales increased $50.9 million, or 3.3%, i n the 2025 second quarter over the prior year second quarter.

The increase of 3.3% in net sales was driven by increased sales of 3.7% in the apparel merchandise division, 3.6% in the footwear merchandise division, 3.5% in the sports and recreation merchandise division and 2.5% in the outdoor merchandise division.

We opened 21 new stores since the end of the 2024 second quarter, 3 of which opened throughout the 2025 second quarter.

During the 2025 second quarter, these 21 stores generated $60.8 million of net sales, including e-commerce.

Net sales increased $40.4 million, or 3.0%, i n the 2025 third quarter over the prior year third quarter.

The increase of 3.0% in net sales was driven b y increased sales of 5.6% in the sports and recreation merchandise division, 2.8% in the apparel merchandise division, 2.4% in the footwear merchandise division and 2.0% in the outdoor merchandise division.

We opened 24 new stores since the end of the 2024 third quarter, 11 of which opened throughout the 2025 third quarter.

During the 2025 third quarter, these 24 stores generated $48.6 million of net sales, including e-commerce.

Since re-launching our new store program in 2022, we have opened 58 new stores, 34 of which have been open for at least twelve months.

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We believe that performance of new stores in year one is partially affected by the season in which the new store opens and the brand awareness in the region the new store opens.

Comparable sales increased 0.2% driven b y higher sales across all merchandise divisions, except outdoor, as a result of a 1.5% increase in average ticket, partially offset by a decrease in comparable transactions of 1.4% .

E-commerce net sales represente d 10.9% of merchandise sales for the 2025 second quarter compared to 9.7% for the prior year second quarter.

Comparable sales decreased 0.9% driven b y lower comparable sales across all merchandise divisions, except sports and recreation, as a result of a 4.1% decrease in comparable transactions, partially offset by an increase in average ticket of 3.3%.

E-commerce net sales represente d 10.4% of merchandise sales for the 2025 third quarter compared to 8.8% for the prior year third quarter.

E-commerce net sales increased 22.2% i n the 2025 third quarter over the prior year third quarter.

Gross Margin.

Gross margi n increased $18.0 million, or 3.2%, to $576.7 million in the 2025 second quarter from $558.7 million in the 2024 second quarter.

As a percentage of net sales, gross margin remained relatively constant, with a decrease of 10 basis points primarily due to the effects of rounding as shown in the table above.

Gross margi n increased $36.7 million, or 8.0%, to $493.4 million in the 2025 third quarter from $456.7 million in the 2024 third quarter.

As a percentage of net sales, gross margin increased 170 basis points from 34.0% in the 2024 third quarter to 35.7% in the 2025 third quarter.

The increase of 170 basis points in gross margin was primarily attributable to:

• 130 basis points of favorability in merchandise margin;

• 30 basis points of favorability due to decreased freight;

• 20 basis points of favorability as a result of decreased shrink;

partially offset by

• 10 basis points of unfavorability as a result of increased e-commerce shipping due to increased e-commerce penetration.

Selling, General and Administrative Expenses.

SG&A expense s increased $35.7 million, or 9.7%, to $404.4 million in the 2025 second quarter as compared to $368.6 million in the 2024 second quarter, primarily as a result of our increased strategic investments o f $26.8 million in new stores and technology.

SG&A expen ses increased $27.8 million, or 7.6%, to $393.0 million in the 2025 third quarter as compared to $365.2 million in the 2024 third quarter, primarily as a result of our increased strategic investments of $24.7 million in new stores and technology.

Interest Expense.

Interest expens e remained relatively constant in the 2025 second quarter when compared with the 2024 second quarter .

Interest expens e remained relatively constant in the 2025 third quarter when compared with the 2024 third quarter .

Other Income, net.

Other income, ne t, decreased $4.1 million in the 2025 second quarter when compared with the 2024 second quarter, primarily driven by decreased money market investments at lower interest rates in the 2025 second quarter when compared with the 2024 second quarter.

Other income, ne t, decreased $3.8 million in the 2025 third quarter when compared with the 2024 third quarter, primarily driven by decreased money market investments at lower interest rates in the 2025 third quarter when compared with the 2024 third quarter.

Income Tax Expense.

Income tax expense decreased $4.6 million to $39.4 million for the 2025 second quarter as compared to $44.0 million in the 2024 second quarter, resulting primarily from a decrease in pre-tax income .

ASO, Inc.'s effective income tax rate was 23.9% in the second quarter of 2025 compared to 23.6% in the second quarter of 2024.

The increase in effective tax rate compared to the prior year quarter is due to a reduction in excess tax benefits for share based compensation.

Twenty-Six Weeks Ended August 2, 2025 Compared to Twenty-Six Weeks Ended August 3, 2024

Income tax expense decreased $0.5 million to $22.5 million for the 2025 third quarter as compared to $23.0 million in the 2024 third quarter.

ASO, Inc.'s effective income tax rate was 23.9% in the third quarter of 2025 compared to 25.9% in the third quarter of 2024.

The decreases in income tax expense and effective tax rate compared to the prior year quarter are primarily due to a relative increase in excess tax benefits for share based compensation.

Thirty-Nine Weeks Ended November 1, 2025 Compared to Thirty-Nine Weeks Ended November 2, 2024

The following table sets forth amounts and information derived from our unaudited statements of income for the periods indicated as follows (dollar amounts in thousands):

Twenty-Six Weeks Ended Change

August 2, 2025 August 3, 2024 Dollars Percent

Thirty-Nine Weeks Ended Change

November 1, 2025 November 2, 2024 Dollars Percent

Net sales $ 4,334,942 100.0 % $ 4,256,530 100.0 % $ 78,412 1.8 %

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*Percentages in table may not sum properly due to rounding.

Net sale s increased $38.0 million, or 1.3% , year-to-date 2025 compared to year-to-date 2024, which was driven by increased sales of 1.9% in the footwear merchandise division, 1.9% in the apparel merchandise division, 1.3% in the sports and recreation merchandise division and 0.6% in the outdoor division.

We opened 21 new stores since the end of the 2024 second quarter, 3 of which opened throughout the 2025 second quarter.

Net sale s increased $78.4 million, or 1.8%, year-to-date 2025 compared to year-to-date 2024 , which was driven by increased sales of 2.5% in the sports and recreation merchandise division, 2.1% in the apparel merchandise division, 2.1% in the footwear merchandise division and 1.1% in the outdoor division.

We opened 24 new stores since the end of the 2024 third quarter, 11 of which opened throughout the 2025 third quarter.

During the year-to-date 2025, these 24 stores generated $110.3 million of net sales, including e-commerce.

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We believe that performance of new stores in year one is partially affected by the season in which the new store opens and the brand awareness in the region the new store opens.

Comparable sales decreased 1.7% driven b y lower sales across all merchandise divisions as a result of a 3.1% decrease in comparable transactions, partially offset by a n increase in average ticket of 1.5%.

Comparable sale s decreased 1.4% driven b y lower comparable sales across all merchandise divisions as a result of a 3.4% decrease in comparable transactions, partially offset by an increase in average ticket of 2.1%.

E-commerce net sales represen ted 10.5% of merchandise sales for the year-to-date 2025 compared to 9.2% for the year-to-date 2024 .

E-commerce net sales increased 16.1% year-to-date 2025 compared to year-to-date 2024.

Gross Margin.

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As a percentage of net sales, gross margi n increased 70 basis points from 34.6% for the year-to-date 2024 to 35.3% for the year-to-date 2025 .

The increase of 30 basis points in gross margin was primarily attributable to 50 basis points of favorability in merchandise margin, which was partially offset by 20 basis points of unfavorability due to increased shrink and e-commerce shipping.

The increase of 70 basis points in gross margin was primarily attributable to 60 basis points of favorability in merchandise margin and 10 basis points of favorability as a result of decreased freight.

Selling, General and Administrative Expenses.

SG&A expense s increased $71.9 million, or 10.0%, to $794.0 million for the year-to-date 2025 as compared to $722.1 million for the year-to-date 20 24, primarily as a result of our increased strategic investments of $60.2 million in new stores, technology, and the Jordan Brand launch.

Write off of Deferred Loan Costs.

Write off of deferred loan costs decreased b y $0.4 million for the year-to-date 2025 when compared with the year-to-date 202 4, in connection with the amendment in the 2024 first quarter that led to the write off of deferred loan costs on the ABL Facility for the year-to-date 2024.

SG&A expense s increased $99.7 million, or 9.2%, to $1,187.0 million for the year-to-date 2025 as compared to $1,087.3 million for the year-to-date 2024, primarily as a result of our increased strategic investments of $85.0 million, including $77.5 million in new stores and technology as well as $7.5 million for the Jordan Brand launch.

W rite off of Deferred Loan Costs.

Write off of deferred loan costs decreased by $0.4 million for the year-to-date 2025 when compared with the year-to-date 2024, in connection with the amendment in the 2024 first quarter that led to the write off of deferred loan costs on the ABL Facility for the year-to-date 2024.

Interest Expense.

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The following table provides reconciliations of net income to Adjusted EBITDA and to Adjusted EBIT for the periods presented (amounts in thousands):

Thirteen Weeks Ended Twenty-Six Weeks Ended

August 2, 2025 August 3, 2024 August 2, 2025 August 3, 2024

Thirteen Weeks Ended Thirty-Nine Weeks Ended

November 1, 2025 November 2, 2024 November 1, 2025 November 2, 2024

Net income $ 71,562 $ 65,763 $ 243,080 $ 284,816

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The following table provides a reconciliation of net income to Adjusted Net Income and Adjusted Earnings per Share for the periods presented (amounts in thousands, except per share data):

Thirteen Weeks Ended Twenty-Six Weeks Ended

August 2, 2025 August 3, 2024 August 2, 2025 August 3, 2024

Thirteen Weeks Ended Thirty-Nine Weeks Ended

November 1, 2025 November 2, 2024 November 1, 2025 November 2, 2024

Net income $ 71,562 $ 65,763 $ 243,080 $ 284,816

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Represents non-cash charges related to equity-based compensation, which vary from period to period depending on certain factors such as timing and valuation of awards, achievement of performance targets and equity award forfeitures.

For the thirteen and twenty-six weeks ended August 2, 2025 and August 3, 2024, this represents the estimated tax effect (by using the projected full year tax rates for the respective years) of the total adjustments made to arrive at Adjusted Net Income.

For the thirteen and thirty-nine weeks ended November 1, 2025 and November 2, 2024, this represents the estimated tax effect (by using the projected full year tax rates for the respective years) of the total adjustments made to arrive at Adjusted Net Income.

Adjusted Free Cash Flow

The following table provides a reconciliation of net cash provided by operating activities to Adjusted Free Cash Flow for the periods presented (amounts in thousands):

Thirteen Weeks Ended Twenty-Six Weeks Ended

August 2, 2025 August 3, 2024 August 2, 2025 August 3, 2024

Thirteen Weeks Ended Thirty-Nine Weeks Ended

November 1, 2025 November 2, 2024 November 1, 2025 November 2, 2024

Net cash provided by operating activities $ 49,019 $ 96,891 $ 285,066 $ 387,912

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We fund these liquidity requirements through cash and cash equivalents, cash generated from operating activities, issuances of debt (such as the Notes) and borrowings under our ABL Facility.

On August 2, 2025, our cash and cash equivalents totaled $300.9 million.

On November 1, 2025, our cash and cash equivalents totaled $289.5 million.

We believe our cash and cash equivalents, as well as our availability under the ABL Facility, will be sufficient to fund our cash requirements for the next 12 months and the longer term foreseeable future.

Long-Term Debt

As of August 2, 2025, the Company's long-term debt and interest rates consist of :

As of November 1, 2025, the Company's long-term debt and interest rates consist of :

• Notes - 6.00% fixed rate senior secured notes with $400 million in principal outstanding and full principal maturing November 15, 2027;

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Liquidity information related to the ABL Facility is as follows for the periods shown (dollar amounts in thousands):

Twenty-Six Weeks Ended

August 2, 2025 August 3, 2024

Thirty-Nine Weeks Ended

November 1, 2025 November 2, 2024

Average funds drawn $ — $ 43

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Liquidity information related to the ABL Facility (amounts in thousands) as of:

August 2, 2025 February 1, 2025 August 3, 2024

November 1, 2025 February 1, 2025 November 2, 2024

Outstanding borrowings $ — $ — $ —

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We predominantly lease store locations, distribution centers, office space and certain equipment under operating leases expiring between fiscal years 2026 and 2045.

Operating lease obligations include future minimum lease payments under all of our non-cancelable operating leases at August 2, 2025.

Operating lease obligations include future minimum lease payments under all of our non-cancelable operating leases at November 1, 2025.

The following table summarizes our remaining operating lease obligations by fiscal year (amounts in thousands):

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(1) Minimum lease payments have not been reduced by sublease rentals of $1.5 million due in the future under non-cancelable sub-leases.

(2) These balances include stores where we have an executed contract but have not taken possession of the location as of August 2, 2025.

(2) These balances include stores where we have an executed contract but have not taken possession of the location as of November 1, 2025.

Share Repurchases

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The 2024 Share Repurchase Program does not obligate the Company to acquire any particular number of common shares, and the program may be suspended, extended, modified or discontinued at any time.

As of August 2, 2025, the Company had $536.5 million remaining for share repurchases under the Share Repurchase Programs.

As of November 1, 2025, the Company had $536.5 million remaining for share repurchases under the Share Repurchase Programs.

See Note 2 to the consolidated financial statements.

The following table summarizes our share repurchases for the 2025 first and second quarters (dollar amounts in thousands, except per share amounts):

The following table summarizes our share repurchases for the year-to-date 2025 (dollar amounts in thousands, except per share amounts):

Total Number of Shares Purchased Average Price Paid per Share (1)

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Second Quarter (May 4, 2025 to August 2, 2025) — — —

Third Quarter (August 3, 2025 to November 1, 2025) — — —

Total Share Repurchase Activity 2,080,772 $ 47.59 $ 99,031

(1) Excludes the impact of unpaid excise taxes.

The following table summarizes our quarterly dividend payments in 2025 first and second quarters (amounts in thousands, except per share amounts):

The following table summarizes our quarterly dividend payments for the year-to-date 2025 (amounts in thousands, except per share amounts):

Dividend per Share Total Dividends Paid Stockholder Date of Record

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Second Quarter (May 4, 2025 to August 2, 2025) 0.13 8,649 June 19, 2025

Third Quarter (August 3, 2025 to November 1, 2025) 0.13 8,663 December 18, 2025

Total Dividends Paid $ 26,028

On August 28, 2025, the Company's Board of Directors declared a quarterly cash dividend with respect to the fiscal quarter ended August 2, 2025, of $0.13 per share of the Company's common stock, payable on October 9, 2025, to stockholders of record as of the close of business on September 11, 2025.

On December 4, 2025, the Company's Board of Directors declared a quarterly cash dividend with respect to the fiscal quarter ended November 1, 2025, of $0.13 per share of the Company's common stock, payable on January 15, 2026, to stockholders of record as of the close of business on December 18, 2025.

Capital Expenditures

The following table summarizes our capital expenditures for the twenty-six weeks ended August 2, 2025 and August 3, 2024 (amounts in thousands):

Twenty-Six Weeks Ended

August 2, 2025 August 3, 2024

The following table summarizes our capital expenditures for the thirty-nine weeks ended November 1, 2025 and November 2, 2024 (amounts in thousands):

Thirty-Nine Weeks Ended

November 1, 2025 November 2, 2024

New stores $ 97,447 $ 73,321

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We review forecasted capital expenditures throughout the year and will adjust our capital expenditures based on business conditions at that time.

Cash Flows for the Twenty-Six Weeks Ended August 2, 2025 and August 3, 2024

Cash Flows for the Thirty-Nine Weeks Ended November 1, 2025 and November 2, 2024

Our unaudited statements of cash flows are summarized as follows (in thousands):

Twenty-Six Weeks Ended

August 2, 2025 August 3, 2024

Thirty-Nine Weeks Ended

November 1, 2025 November 2, 2024

Net cash provided by operating activities $ 285,066 $ 387,912

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partially offset by

• $34.8 million net increase in non-cash charges.

• $39.9 million net increase in non-cash charges, offset by a $3.6 million gain, net of fees, on a sale-leaseback transaction in the third quarter of fiscal year 2025.

The decrease in cash flows from operating assets and liabilities was primarily attributable to:

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• $34.3 million increase in capital expenditures, primarily driven by increased spending related to updates for existing stores and distribution centers, as well as new stores in the year-to-date 2025 compared to the year-to-date 2024;

partially offset by

• $4.7 million in proceeds related to the sale-leaseback transaction in the 2025 third quarter discussed in the Selling, General, and Administrative Expenses section above.

Financing Activities .

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• $174.7 million decrease in cash outflows for repurchases of common stock in the year-to-date 2025;

• $6.5 million in proceeds received as of the third quarter of fiscal year 2025 for the sale of rights to tariff relief litigation claims.

Critical Accounting Policies and Estimates

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The information set forth in Note 2 to our unaudited consolidated financial statements included under Part I, Item 1 of this Quarterly Report is incorporated herein by reference.

Income Tax Regulations

On July 4, 2025, an Act to provide for reconciliation pursuant to title II of H.

14, commonly referred to as the One Big Beautiful Bill Act (“OBBBA”), was enacted into law in the United States.

The OBBBA introduces significant changes to U.S.

tax law, including full deductibility of qualified capital expenditures, full deductibility of domestic research and development expenditures, changes to the business interest limitation, and modifications to the international tax framework.

For the fiscal year ending January 31, 2026, the Company anticipates a material decrease to the current tax expense and corresponding increase to deferred tax expense that results in no net impact to the effective tax rate.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis