What changed in this filing

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Item 1. Financial Statements

2025-04-09 compared with 2025-01-10 · 129 added, 81 removed, 444 unchanged (32% of the section changed)

33 unchanged sentences

Common stock — authorized 36,000,000 shares, $ 0.001 par value;

19,940,370 and 19,925,212 shares issued at November 30, 2024 and August 31, 2024, respectively;

and 13,549,989 and 13,548,581 shares outstanding at November 30, 2024 and August 31, 2024, respectively

19,954,495 and 19,925,212 shares issued at February 28, 2025 and August 31, 2024, respectively;

and 13,551,614 and 13,548,581 shares outstanding at February 28, 2025 and August 31, 2024, respectively

Additional paid-in capital 176,850 175,642

1 unchanged sentence

Accumulated other comprehensive loss ( 36,200 ) ( 29,268 )

Common stock held in treasury, at cost — 6,390,381 and 6,376,631 shares at November 30, 2024 and August 31, 2024, respectively

Common stock held in treasury, at cost — 6,402,881 and 6,376,631 shares at February 28, 2025 and August 31, 2024, respectively

( 422,497 ) ( 415,799 )

5 unchanged sentences

(Unaudited and in thousands, except per share amounts)

Three Months Ended November 30,

Three Months Ended February 28/29, Six Months Ended February 28/29,

2025 2024 2025 2024

Net sales $ 146,104 $ 139,105 $ 299,599 $ 279,521

10 unchanged sentences

Interest expense ( 1,021 ) ( 1,008 ) ( 1,894 ) ( 2,154 )

Other expense, net ( 141 ) ( 40 )

Other income (expense), net 74 ( 193 ) ( 67 ) ( 233 )

Income before income taxes 22,439 19,806 46,695 42,878

Provision for income taxes 5,331 5,590

(Benefit) provision for income taxes ( 7,412 ) 4,270 ( 2,081 ) 9,860

Net income $ 29,851 $ 15,536 $ 48,776 $ 33,018

9 unchanged sentences

(Unaudited and in thousands)

Three Months Ended November 30,

Three Months Ended February 28/29, Six Months Ended February 28/29,

2025 2024 2025 2024

Net income $ 29,851 $ 15,536 $ 48,776 $ 33,018

22 unchanged sentences

Balance at November 30, 2024 19,940,370 $ 20 $ 174,258 $ 506,898 $ ( 35,453 ) 6,390,381 $ ( 419,426 ) $ 226,297

Issuance of common stock under share-based compensation plan, net of shares withheld for taxes 14,125 - - -

Stock-based compensation 2,592 2,592

Cash dividends ($ 0.94 per share)

( 12,780 ) ( 12,780 )

Repurchases of common stock 12,500 ( 3,071 ) ( 3,071 )

Foreign currency translation adjustment ( 747 ) ( 747 )

Net income 29,851 29,851

Balance at February 28, 2025 19,954,495 $ 20 $ 176,850 $ 523,969 $ ( 36,200 ) 6,402,881 $ ( 422,497 ) $ 242,142

See accompanying notes to condensed consolidated financial statements (unaudited).

WD-40 COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited and in thousands, except share and per share amounts)

Common Stock Additional

14 unchanged sentences

Balance at November 30, 2023 19,911,495 $ 20 $ 173,139 $ 483,673 $ ( 30,816 ) 6,353,881 $ ( 410,084 ) $ 215,932

Issuance of common stock under share-based compensation plan, net of shares withheld for taxes 8,554 - ( 1,742 ) ( 1,742 )

Stock-based compensation 1,866 1,866

Cash dividends ($ 0.88 per share)

( 11,976 ) ( 11,976 )

Repurchases of common stock 11,500 ( 2,905 ) ( 2,905 )

Foreign currency translation adjustment ( 433 ) ( 433 )

Net income 15,536 15,536

Balance at February 29, 2024 19,920,049 $ 20 $ 173,263 $ 487,233 $ ( 31,249 ) 6,365,381 $ ( 412,989 ) $ 216,278

See accompanying notes to condensed consolidated financial statements (unaudited).

2 unchanged sentences

(Unaudited and in thousands)

Three Months Ended November 30,

Six Months Ended February 28/29,

Operating activities:

5 unchanged sentences

Deferred income taxes 308 711

Tax benefit from release of uncertain tax position ( 11,929 ) —

Stock-based compensation 4,091 4,137

35 unchanged sentences

WD-40® Multi-Use Product, WD-40 Specialist®, 3-IN-ONE®, GT85®, X-14®, 2000 Flushes®, Carpet Fresh®, no vac®, Spot Shot®, 1001®, Lava® and Solvol®.

Certain of our homecare and cleaning businesses are classified as held for sale as of November 30, 2024.

Please refer to Note 3 Assets Held for Sale for additional information.

Certain assets of the Company’s homecare and cleaning product businesses are classified as held for sale as of February 28, 2025.

Refer to Note 3 - Assets Held for Sale for additional information.

The Company’s products are sold in various locations around the world.

28 unchanged sentences

Foreign currency forward contracts in an asset position at the end of the reporting period are included in other current assets, while foreign currency forward contracts in a liability position at the end of the reporting period are included in accrued liabilities in the Company’s condensed consolidated balance sheets.

At November 30, 2024, the Company had a notional amount of $ 8.3 million outstanding in foreign currency forward contracts, which will mature in January 2025.

Unrealized net gains and losses related to foreign currency forward contracts were not significant at November 30, 2024 and August 31, 2024.

Realized net gains and losses related to foreign currency forward contracts were not significant for the three months ended November 30, 2024 and 2023.

At February 28, 2025, the Company had a notional amount of $ 4.4 million outstanding in foreign currency forward contracts, which matured in March 2025.

Unrealized net gains and losses related to foreign currency forward contracts were not significant at February 28, 2025 and August 31, 2024.

Realized net gains and losses related to foreign currency forward contracts were not significant for the three and six months ended February 28, 2025 and February 29, 2024.

Both unrealized and realized net gains and losses are recorded in other (expense) income, net in the Company’s condensed consolidated statements of operations.

25 unchanged sentences

Under fair value accounting, assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

As of November 30, 2024, the Company had no assets or liabilities that are measured at fair value in the financial statements on a recurring basis, with the exception of the foreign currency forward contracts, which are classified as Level 2 within the fair value hierarchy.

The carrying values of cash equivalents and short-term borrowings are recorded at cost, which approximates their fair values, primarily due to their short-term nature.

addition, the carrying value of borrowings held under the Company’s revolving credit facility approximates fair value, based on Level 2 inputs, due to the variable nature of underlying interest rates, which generally reflect market conditions.

As of February 28, 2025, the Company had no assets or liabilities that are measured at fair value in the financial statements on a recurring basis, with the exception of the foreign currency forward contracts, which are classified as Level 2 within the fair value hierarchy.

The carrying values of cash equivalents and short-

term borrowings are recorded at cost, which approximates their fair values, primarily due to their short-term nature.

In addition, the carrying value of borrowings held under the Company’s revolving credit facility approximates fair value, based on Level 2 inputs, due to the variable nature of underlying interest rates, which generally reflect market conditions.

The Company’s fixed rate long-term borrowings consist of senior notes and are recorded at carrying value.

The Company estimates that the fair value of its senior notes, based on Level 2 inputs, was approximately $ 60.3 million as of November 30, 2024, which was determined based on a discounted cash flow analysis using current market interest rates for instruments with similar terms, compared to their carrying value of $ 66.4 million.

During the three months ended November 30, 2024, the Company did not record any significant nonrecurring fair value measurements for assets or liabilities in periods subsequent to their initial recognition.

The Company estimates that the fair value of its senior notes, based on Level 2 inputs, was approximately $ 61.1 million as of February 28, 2025, which was determined based on a discounted cash flow analysis using current market interest rates for instruments with similar terms, compared to their carrying value of $ 66.4 million.

During the six months ended February 28, 2025, the Company did not record any significant nonrecurring fair value measurements for assets or liabilities in periods subsequent to their initial recognition.

Recently Issued Accounting Standards

3 unchanged sentences

The amendments are effective for the Company’s annual periods beginning September 1, 2024, and interim periods beginning September 1, 2025, with early adoption permitted, and will be applied retrospectively to all prior periods presented in the financial statements.

The Company has been evaluating this ASU to determine its impact on the Company’s disclosures.

The Company has been evaluating this ASU to determine its impact on the Company’s segment disclosures and will adopt this ASU on a retrospective basis in the Annual Report on Form 10-K for the fiscal year ending August 31, 2025.

In December 2023, the FASB issued ASU No.

10 unchanged sentences

Reclassification to Held for Sale of Certain Homecare and Cleaning Product Businesses

In the first quarter of fiscal year 2025, the Company’s homecare and cleaning product businesses in the Americas and EIMEA segments met the criteria to be classified as held for sale.

In the first quarter of fiscal year 2025, certain assets of the Company’s homecare and cleaning product businesses in the Americas and EIMEA segments met the criteria to be classified as held for sale.

Management has determined that the planned sale of these brands does not represent a strategic shift having a major effect on the Company’s operations and financial results and therefore does not meet the criteria for classification as discontinued operations in the first quarter of fiscal year 2025.

The Company expects to sell these homecare and cleaning product businesses in the Americas and EIMEA segments in fiscal year 2025.

Assets included as part of the disposal group classified as held for sale consisted of intangible assets, goodwill and inventory.

Assets included as part of the disposal group classified as held for sale consisted of inventory, goodwill and other intangible assets, net.

There are no liabilities in the disposal group.

The following table summarizes assets held for sale (in thousands):

Intangibles, Net 3,897

Goodwill 1,069

Inventory 4,598

Goodwill 1,120

Other intangible assets, net 3,799

Total assets held for sale (1) :

22 unchanged sentences

Total $ 58,628 $ 62,983

As of November 30, 2024 and August 31, 2024, the Company’s condensed consolidated balance sheets included $ 13.7 million and $ 13.4 million, respectively, of capitalized cloud computing implementation costs recorded as other assets within the Company’s condensed consolidated balance sheets.

Accumulated amortization associated with these assets was $ 2.5 million and $ 2.1 million as of November 30, 2024 and August 31, 2024, respectively.

Amortization expense associated with these assets was $ 0.4 million for the three months ended November 30, 2024 and was not significant for the three months ended November 30, 2023.

As of February 28, 2025 and August 31, 2024, the Company’s condensed consolidated balance sheets included $ 14.6 million and $ 13.4 million, respectively, of capitalized cloud computing implementation costs recorded as other assets within the Company’s condensed consolidated balance sheets.

Accumulated amortization associated with these assets was $ 2.9 million and $ 2.1 million as of February 28, 2025 and August 31, 2024, respectively.

Amortization expense associated with these assets was $ 0.4 million and $ 0.8 million for the three and six months ended February 28, 2025 and was not significant for the three and six months ended February 29, 2024.

Goodwill and Other Intangible Assets

5 unchanged sentences

( 1,035 ) ( 85 ) - ( 1,120 )

Balance as of November 30, 2024 $ 85,856 $ 9,519 $ 1,209 $ 96,584

Balance as of February 28, 2025 $ 85,817 $ 9,473 $ 1,209 $ 96,499

(1) Goodwill held for sale is included in other current assets on the Company’s condensed consolidated balance sheets.

There were no indicators of impairment identified as a result of the Company’s review of events and circumstances related to its goodwill as of November 30, 2024.

During the second quarter of fiscal year 2025, the Company performed its annual goodwill impairment test.

The annual goodwill impairment test was performed at the reporting unit level as of the Company’s most recent goodwill impairment testing date, December 1, 2024.

The Company performed a quantitative assessment to determine whether the fair value of any of its reporting units was lower than each reporting unit’s carrying amount.

The Company determined the fair value of its reporting units by following the income approach, which uses a discounted cash flow methodology.

The discounted cash flow methodology bases the fair value of each reporting unit on the present value of its estimated future cash flows.

The discounted cash flow methodology also requires that management make assumptions about certain key inputs in the estimated cash flows, including long-term sales forecasts or growth rates, terminal growth rates and discount rates, all of which are inherently uncertain.

The forecast of future cash flows was primarily based on historical data and management’s best estimates of sales growth rates and operating margins for each reporting unit for the next five fiscal years.

The discount rate used was based on management’s estimate of the current weighted-average cost of capital for each reporting unit.

As these assumptions are largely unobservable, the estimated fair values fall within Level 3 of the fair value hierarchy.

Based on its quantitative assessment, the Company determined that the estimated fair value of each of its reporting units significantly exceeded their respective carrying values.

As a result, the Company concluded that no impairment of its goodwill existed as of December 1, 2024.

In addition, the Company concluded that there were no indicators of impairment identified as a result of the Company’s review of events and circumstances related to its goodwill subsequent to December 1, 2024 through February 28, 2025.

To date, there have been no impairment losses identified and recorded related to the Company’s goodwill.

2 unchanged sentences

All of these assets are included in other intangible assets, net in the Company’s condensed consolidated balance sheets.

In the first quarter of fiscal year 2025, the Company’s homecare and cleaning product businesses in the Americas and EIMEA segments was classified as held for sale.

In the first quarter of fiscal year 2025, certain assets of the Company’s homecare and cleaning product businesses in the Americas and EIMEA segments was classified as held for sale.

Definite-lived intangible assets included in homecare and cleaning include Spot Shot and Carpet Fresh in the Americas segment as well as the 1001 trade name in the EIMEA segment.

2 unchanged sentences

Carpet Fresh in the Americas segment was recorded at an acquisition-date fair value of $ 2.8 million, was being amortized on a straight-line basis over the useful life of 13 years and was fully amortized as of August 31, 2022.

1001 trade name in the EIMEA segment was recorded at an acquisition-date fair value of $ 3.3 million and was being amortized on a straight-line basis over the useful life of 20 years.

The gross fair value for 1001 trade name in the EIMEA segment was $ 3.3 million at August 31, 2024 and was being amortized on a straight-line basis over the useful life of 20 years.

Accumulated amortization expense was $ 2.2 million and the carrying value of this asset was $ 1.1 million as of August 31, 2024.

4 unchanged sentences

Accumulated amortization ( 32,884 ) ( 32,641 )

intangibles, net current held for sale (1)

other intangible assets, net, held for sale (1)

Net carrying amount $ 2,345 $ 6,222

(1) Intangibles, current held for sale are included in other current assets on the Company’s condensed consolidated balance sheets.

There has been no impairment charge for the three months ended November 30, 2024 and there were no indicators of impairment identified as a result of the Company’s review of events and circumstances related to its existing definite-lived intangible assets.

Changes in the carrying amounts of definite-lived intangible assets by segment for the three months ended November 30, 2024 are summarized below (in thousands):

(1) Intangibles, net current held for sale are included in other current assets on the Company’s condensed consolidated balance sheets.

There has been no impairment charge for the six months ended February 28, 2025 and there were no indicators of impairment identified as a result of the Company’s review of events and circumstances related to its existing definite-lived intangible assets.

Changes in the carrying amounts of definite-lived intangible assets by segment for the six months ended February 28, 2025 are summarized below (in thousands):

Americas EIMEA Asia-Pacific Total

2 unchanged sentences

Translation adjustments ( 97 ) 110 — 13

Intangibles, net current held for sale (1)

other intangible assets, net, held for sale (1)

( 2,821 ) ( 978 ) — ( 3,799 )

Balance as of November 30, 2024 $ 2,373 $ ( 86 ) $ - $ 2,287

(1) Intangibles, current held for sale are included in other current assets on the Company’s condensed consolidated balance sheets.

Balance as of February 28, 2025 $ 2,345 $ - $ — $ 2,345

(1) Other intangible assets, net current held for sale are included in other current assets on the Company’s condensed consolidated balance sheets.

The estimated amortization expense for the Company’s definite-lived intangible assets is not significant in any future individual fiscal year.

17 unchanged sentences

Total $ 17,070 $ 26,055

As of November 30, 2024, the Company held borrowings under two separate agreements as detailed below.

As of February 28, 2025, the Company held borrowings under two separate agreements as detailed below.

Note Purchase and Private Shelf Agreement

1 unchanged sentence

(“Prudential”), and certain affiliates and managed accounts of Prudential (the “Note Purchasers”).

As of November 30, 2024, the Company had outstanding balances on its series A, B and C notes issued under the Note Agreement.

As of February 28, 2025, the Company had outstanding balances on its series A, B and C notes issued under the Note Agreement.

The Note Agreement was most recently amended on April 30, 2024 (the “Fourth Amendment”).

The Fourth Amendment permitted the Company to enter into an amendment to its revolving credit agreement with Bank of America, N.A.

and also included certain conforming amendments to the credit agreement, including the revision of financial and restrictive covenants.

included certain conforming amendments to the credit agreement, including the revision of financial and restrictive covenants.

Credit Agreement

8 unchanged sentences

Short-term and long-term borrowings under the Company’s Credit Agreement and Note Agreement consisted of the following (in thousands):

Issuance Maturities November 30,

Issuance Maturities February 28,

2025 August 31,

14 unchanged sentences

Outstanding draws for which management has the ability and intent to refinance with successive short-term borrowings for a period of at least twelve months are classified as long-term.

As of November 30, 2024, $ 19.0 million of this facility was classified as long-term and was entirely denominated in Euros.

As of February 28, 2025, $ 18.9 million of this facility was classified as long-term and was entirely denominated in Euros.

$ 29.9 million was classified as short-term and was denominated in U.S.

15 unchanged sentences

The consolidated interest coverage ratio means, as of any date of determination, the ratio of (a) consolidated EBITDA for the most recently completed four fiscal quarters to (b) consolidated interest charges for the most recently completed four fiscal quarters.

As of November 30, 2024, the Company was in compliance with all debt covenants under both the Note Agreement and the Credit Agreement.

As of February 28, 2025, the Company was in compliance with all debt covenants under both the Note Agreement and the Credit Agreement.

Share Repurchase Plan

1 unchanged sentence

Under the 2023 Repurchase Plan, which became effective on September 1, 2023, the Company is authorized to acquire up to $ 50.0 million of its outstanding shares through August 31, 2025.

The timing and amount of repurchases are based on terms and conditions as may be acceptable to the Company’s Chief Executive Officer and Chief Financial Officer, subject

to present loan covenants and in compliance with all laws and regulations applicable thereto.

During the three months ended November 30, 2024, the Company repurchased 13,750 shares at an average price of $ 263.75 per share, for a total cost of $ 3.6 million under this $ 50.0 million plan.

As of November 30, 2024, the Company is authorized to purchase an additional $ 38.3 million under the 2023 Repurchase Plan.

The timing and amount of repurchases are based on terms and conditions as may be acceptable to the Company’s Chief Executive Officer and Chief Financial Officer, subject to present loan covenants and in compliance with all laws and regulations applicable thereto.

During the six months ended February 28, 2025, the Company repurchased 26,250 shares at an average price of $ 255.17 per share, for a total cost of $ 6.7 million.

As of February 28, 2025, the Company is authorized to purchase an additional $ 35.2 million under the 2023 Repurchase Plan.

Earnings per Common Share

The table below reconciles net income to net income available to common stockholders (in thousands):

Three Months Ended November 30,

Three Months Ended February 28/29, Six Months Ended February 28/29,

2025 2024 2025 2024

Net income $ 29,851 $ 15,536 $ 48,776 $ 33,018

2 unchanged sentences

The table below summarizes the weighted-average number of common shares outstanding included in the calculation of basic and diluted EPS (in thousands):

Three Months Ended November 30,

Three Months Ended February 28/29, Six Months Ended February 28/29,

2025 2024 2025 2024

Weighted-average common shares outstanding, basic 13,552 13,558 13,550 13,559

1 unchanged sentence

Weighted-average common shares outstanding, diluted 13,572 13,583 13,572 13,583

For the three months ended November 30, 2024 and 2023 , weighted-average stock-based equity awards outstanding that are non-participating securities in the amount of 6,188 and 5,404 , respectively, were excluded from the calculation of diluted EPS under the treasury stock method as they were anti-dilutive.

For the three months ended February 28, 2025, weighted-average stock-based equity awards outstanding that are non-participating securities in the amount of 9,544 were excluded from the calculation of diluted EPS under the treasury stock method as they were anti-dilutive.

For the three months ended February 29, 2024, there were no anti-dilutive stock-based equity awards outstanding.

For the six months ended February 28, 2025 and February 29, 2024, weighted-average stock-based equity awards outstanding that are non-participating securities in the amount of 7,866 and 2,702 , respectively, were excluded from the calculation of diluted EPS under the treasury stock method as they were anti-dilutive.

The following table presents the Company’s revenues by segment and major source (in thousands):

Three Months Ended November 30, 2024

Americas EIMEA Asia-Pacific Total

Three Months Ended February 28, 2025 Six Months Ended February 28, 2025

Americas EIMEA Asia-Pacific Total Americas EIMEA Asia-Pacific Total

WD-40 Multi-Use Product $ 51,058 $ 46,406 $ 16,228 $ 113,692 $ 103,959 $ 91,272 $ 37,008 $ 232,239

5 unchanged sentences

Total net sales $ 65,529 $ 59,575 $ 21,000 $ 146,104 $ 134,965 $ 117,058 $ 47,576 $ 299,599

Three Months Ended November 30, 2023

Americas EIMEA Asia-Pacific Total

Three Months Ended February 29, 2024 Six Months Ended February 29, 2024

Americas EIMEA Asia-Pacific Total Americas EIMEA Asia-Pacific Total

WD-40 Multi-Use Product $ 49,043 $ 41,572 $ 16,619 $ 107,234 $ 97,554 $ 78,616 $ 38,741 $ 214,911

10 unchanged sentences

Deferred revenue is recorded when payments have been received from customers for undelivered products.

Revenue is subsequently recognized when revenue

recognition criteria are met, generally when control of the product transfers to the customer.

The Company had contract liabilities of $ 3.0 million and $ 4.3 million as of November 30, 2024 and August 31, 2024, respectively.

Substantially all of the $ 4.3 million that was included in contract liabilities as of August 31, 2024 was recognized to revenue during the three months ended November 30, 2024.

Revenue is subsequently recognized when revenue recognition criteria are met, generally when control of the product transfers to the customer.

The Company had contract liabilities of $ 4.1 million and $ 4.3 million as of February 28, 2025 and August 31, 2024, respectively.

Substantially all of the $ 4.3 million that was included in contract liabilities as of August 31, 2024 was recognized to revenue during the six months ended February 28, 2025.

These contract liabilities are recorded in accrued liabilities on the Company’s condensed consolidated balance sheets.

Contract assets are recorded if the Company has satisfied a performance obligation but does not yet have an unconditional right to consideration.

The Company did not have any contract assets as of November 30, 2024 and August 31, 2024.

The Company did not have any contract assets as of February 28, 2025 and August 31, 2024.

The Company has an unconditional right to payment for its trade and other accounts receivable on the Company’s condensed consolidated balance sheets.

These receivables are presented net of an allowance for credit losses of $ 1.8 million as of November 30, 2024 and which was not significant as of August 31, 2024.

These receivables are presented net of an allowance for credit losses of $ 1.9 million as of February 28, 2025 and which was not significant as of August 31, 2024.

Commitments and Contingencies

6 unchanged sentences

Upon the termination of contracts with contract manufacturers, the Company obtains certain inventory control rights and is obligated to work with the contract manufacturer to sell through all product held by or manufactured by the contract manufacturer on behalf of the Company during the termination notification period.

If any inventory remains at the contract manufacturer at the termination date, the Company is obligated to purchase such inventory, which may include raw materials, components and finished goods.

If any inventory remains at the contract

manufacturer at the termination date, the Company is obligated to purchase such inventory, which may include raw materials, components and finished goods.

The amounts for inventory purchased under termination commitments have been immaterial.

In addition to the commitments to purchase products from contract manufacturers described above, the Company may also enter into commitments with other manufacturers to purchase finished goods and components to support innovation and renovation initiatives and/or supply chain initiatives.

As of November 30, 2024, no such commitments were outstanding.

As of February 28, 2025, no such commitments were outstanding.

From time to time, the Company is subject to various claims, lawsuits, investigations and proceedings arising in the ordinary course of business, including but not limited to, product liability litigation and other claims and proceedings with respect to intellectual property, breach of contract, labor and employment, tax and other matters.

As of November 30, 2024, there were no unasserted claims or pending proceedings for claims against the Company that the Company believes will result in a probable loss.

As of February 28, 2025, there were no unasserted claims or pending proceedings for claims against the Company that the Company believes will result in a probable loss.

As to claims that the Company believes may result in a reasonably possible loss, the Company believes that no reasonably possible outcome of any such claim will have a materially adverse impact on the Company’s financial condition, results of operations or cash flows.

4 unchanged sentences

As a result of the Company’s insurance coverage, management believes that the estimated fair value of these indemnification agreements is minimal.

Thus, no liabilities have been recorded for these agreements as of November 30, 2024.

Thus, no liabilities have been recorded for these agreements as of February 28, 2025.

From time to time, the Company enters into indemnification agreements with certain parties in the ordinary course of business, including agreements with lenders, lessors, contract manufacturers, marketing distributors, customers and certain vendors.

Indemnification agreements are generally entered into in the context of the particular agreements and are provided in an attempt to allocate risk of loss in connection with the consummation of the underlying contractual arrangements.

Although the maximum amount of future payments that the Company could be required to make under these

indemnification agreements is not capped, management believes that the Company maintains adequate levels of insurance coverage to protect the Company with respect to most potential claims arising from such agreements and that such agreements do not otherwise have value separate and apart from the liabilities incurred in the ordinary course of the Company’s business.

Thus, no liabilities have been recorded with respect to such indemnification agreements as of November 30, 2024.

The Company uses an estimated annual effective tax rate, which is based on expected annual income, statutory tax rates and tax planning opportunities available in the various jurisdictions in which the Company operates, to determine its quarterly provision for income taxes.

Although the maximum amount of future payments that the Company could be required to make under these indemnification agreements is not capped, management believes that the Company maintains adequate levels of insurance coverage to protect the Company with respect to most potential claims arising from such agreements and that such agreements do not otherwise have value separate and apart from the liabilities incurred in the ordinary course of the Company’s business.

Thus, no liabilities have been recorded with respect to such indemnification agreements as of February 28, 2025.

Certain significant or unusual items are separately recognized in the quarter in which they occur and can be a source of variability in the effective tax rates from quarter to quarter.

The provision for income taxes was 22.0 % and 24.2 % of income before income taxes for the three months ended November 30, 2024 and 2023, respectively.

This 2.2 % decrease in the effective tax rate from period to period was primarily due to an increase in excess tax benefits from settlements of stock-based equity awards that are recognized in the provision for income taxes.

The (benefit) provision for income taxes was ( 33.0 )% and 21.6 % as a percentage of income before income taxes for the three months ended February 28, 2025 and February 29, 2024, respectively.

This 54.6 % decrease in the effective tax rate from period to period was primarily due to the expiration of the statute of limitations on the uncertain tax position associated with the Tax Cuts and Jobs Act’s mandatory onetime “toll tax” on unremitted foreign earnings.

The release of the uncertain tax position generated a favorable income tax adjustment of $ 11.9 million in the current quarter which was net of the tax effect of the related interest.

The (benefit) provision for income taxes was ( 4.5 )% and 23.0 % as a percentage of income before income taxes for the six months ended February 28, 2025 and February 29, 2024, respectively.

This 27.5 % decrease in the effective tax rate from period to period was primarily due to the expiration of the statute of limitations on the uncertain tax position associated with the Tax Cuts and Jobs Act’s mandatory onetime “toll tax” on unremitted foreign earnings as discussed above in the above section for the three months ended February 28, 2025.

The Company is subject to taxation in the U.S.

4 unchanged sentences

The Company is currently under audit in various state jurisdictions for fiscal years 2021 through 2022.

The Company has estimated that up to $ 13.4 million of unrecognized tax benefits related to income tax positions may be affected by the resolution of tax examinations or expiring statutes of limitations within the next twelve months.

This includes $ 13.1 million associated with the Tax Cuts and Jobs Act’s mandatory one-time “toll tax” on unremitted foreign earnings.

The Company had an insignificant amount of unrecognized tax positions related to income tax positions that may be affected by the resolution of tax examinations or expiring statutes of limitations within the next twelve months.

Audit outcomes and the timing of settlements are subject to significant uncertainty.

Please refer to subsequent events for potential unrecognized tax benefits related to income tax positions after the period ending November 30, 2024.

Business Segments and Foreign Operations

9 unchanged sentences

Corporate (1)

November 30, 2024

February 28, 2025

Net sales $ 65,529 $ 59,575 $ 21,000 $ - $ 146,104

4 unchanged sentences

Interest expense $ 838 $ 182 $ 1 $ - $ 1,021

November 30, 2023

February 29, 2024

Net sales $ 63,507 $ 54,313 $ 21,285 $ - $ 139,105

4 unchanged sentences

Interest expense $ 505 $ 502 $ 1 $ - $ 1,008

For the Six Months Ended

February 28, 2025

Net sales $ 134,965 $ 117,058 $ 47,576 $ - $ 299,599

Income from operations $ 25,862 $ 28,954 $ 17,529 $ ( 23,943 ) $ 48,402

Depreciation and amortization expense (2)

$ 1,815 $ 1,994 $ 115 $ 138 $ 4,062

Interest income $ 107 $ 83 $ 64 $ - $ 254

Interest expense $ 1,491 $ 401 $ 2 $ - $ 1,894

February 29, 2024

Net sales $ 127,582 $ 103,067 $ 48,872 $ - $ 279,521

Income from operations $ 27,416 $ 21,602 $ 18,514 $ ( 22,407 ) $ 45,125

Depreciation and amortization expense (2)

$ 2,195 $ 2,224 $ 113 $ 151 $ 4,683

Interest income $ - $ 82 $ 58 $ - $ 140

Interest expense $ 1,065 $ 1,086 $ 3 $ - $ 2,154

(1) These expenses are reported separately from the Company’s identified segments and are included in selling, general and administrative expenses in the Company’s condensed consolidated statements of operations.

3 unchanged sentences

Dividend Declaration

On December 11, 2024, the Company’s Board approved a 7 % increase in the regular quarterly cash dividend, increasing it from $ 0.88 per share to $ 0.94 per share.

The $ 0.94 per share dividend declared on December 11, 2024 is payable on January 31, 2025 to stockholders of record at the close of business on January 17, 2025.

Release of Uncertain Tax Position

Due to the expiration of federal statutes on December 17, 2024, the Company released an unrecognized tax benefit associated with the Tax Cuts and Jobs Act of 2017 mandatory onetime “toll tax” on unremitted foreign earnings.

The release of this unrecognized tax benefit is expected to generate a favorable income tax adjustment of $ 11.9 million, net of federal benefit, in the fiscal second quarter ending February 28, 2025.

On March 18, 2025, the Company’s Board declared a cash dividend of $ 0.94 per share payable on April 30, 2025 to stockholders of record at the close of business on April 18, 2025.

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 1. Financial Statements