Enerpac Tool Group Corp.
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Item 1. Business
General
Enerpac Tool Group Corp. is a premier industrial tools, services, technology, and solutions provider serving a broad and diverse set of customers and end markets for mission-critical applications in more than 100 countries. Enerpac Tool Group's businesses are global leaders in providing high pressure hydraulic tools, controlled force products and solutions for precise positioning of heavy loads that help customers safely and reliably tackle some of the most challenging jobs around the world. The Company was founded in 1910 and is headquartered in Milwaukee, Wisconsin. The Company has one reportable segment, the Industrial Tools & Services ("IT&S") Segment. The IT&S segment is primarily engaged in the design, manufacture and distribution of branded hydraulic and mechanical tools and in providing services and tool rental to the refinery/petrochemical; general industrial; industrial maintenance, repair and operations ("MRO"); machining & manufacturing; power generation; infrastructure; mining; and other markets. Financial information related to the Company's reportable segment is included in Note 16, "Business Segment, Geographic and Customer Information" in the notes to the consolidated financial statements. The Company has an Other operating segment, which does not meet the criteria to be considered a reportable segment.
Our businesses provide an array of products and services across multiple markets and geographies, which results in significant diversification. The IT&S segment and the Company are well-positioned to drive shareholder value through a sustainable business strategy built on well-established brands, broad global distribution and end markets, clear focus on the core tools and services business, and disciplined capital deployment.
Our Business Model
Our long-term goal is to create sustainable returns for our shareholders through above-market growth in our core business, expanding our margins, generating strong cash flow, and being disciplined in the deployment of our capital. We intend to grow through execution of our organic growth strategy, focused on key vertical markets that benefit from long-term macro trends, driving customer driven innovation, expansion of our digital ecosystem to acquire and engage customers, and an expansion in emerging markets such as Asia Pacific. In addition to organic growth, we also focus on margin expansion through operational efficiency techniques, including Lean, continuous improvement and 80/20, to drive productivity and lower costs, as well as optimizing our selling, general and administrative expenses through consolidation and shared service implementation. We also apply these techniques and pricing actions to offset commodity increases and inflationary pricing. Finally, cash flow generation
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is critical to achieving our financial and long-term strategic objectives. We believe driving profitable growth and margin expansion will result in cash flow generation, which we seek to supplement through minimizing primary working capital. We intend to allocate the cash flow that results from the execution of our strategy in a disciplined way toward investment in our businesses, maintaining our strong balance sheet, disciplined M&A and opportunistically returning capital to shareholders. We anticipate the compounding effect of reinvesting in our business will fuel further growth and profitable returns.
In March 2022, the Company announced the start of its ASCEND transformation program (''ASCEND''). ASCEND’s key initiatives included accelerating organic growth strategies, improving operational excellence and production efficiency by utilizing a Lean approach, and driving greater efficiency and productivity in selling, general and administrative (''SG&A'') expense by better leveraging resources to create a more efficient and agile organization. The ASCEND program was completed as of August 31, 2024, with total program costs of $75 million, of which $19 million related to restructuring charges.
Description of Business Segments
Industrial Tools & Services Reportable Segment
IT&S is a global supplier of branded hydraulic and mechanical tools and services to a broad array of end markets, including refinery/petrochemical; general industrial; industrial MRO; machining & manufacturing; power generation; infrastructure; mining; and other markets.
Our primary products include branded tools, cylinders, pumps, hydraulic torque wrenches, highly engineered heavy lifting technology solutions and other tools. Examples of our products include high-force hydraulic and mechanical tools (cylinders, pumps, valves, bolt tensioners, specialty tools and other miscellaneous products), which are designed to allow users to apply controlled force and motion to increase productivity, reduce labor costs and make work safer and easier to perform. These tools operate at very high pressures of approximately 5,000 to 12,000 pounds per square inch. With our products used in a wide variety of end markets, they are often deployed in harsh operating conditions, such as machining, infrastructure maintenance and repair, refining, and petrochemical production, where safety is a key differentiator. As a result, we hold ourselves to a world-class safety standard to protect both our employees and those using our products and services.
On the services side of the segment, our highly trained technicians provide maintenance and manpower services on customer assets to meet their specific needs including bolting, machining, and joint integrity. We also provide rental services for certain of our products.
Our branded tools and services are primarily marketed through the ENERPAC®, HYDRATIGHT®, LARZEP®, SIMPLEX® and DTA the Smart Move® brand names.
The segment delivers products and services primarily through our world-class, global network of distributors, as well as direct sales to OEMs and select end users.
Other Operating Segment
Cortland Biomedical is a full-service biomedical textile product development company and represents the Other operating segment. Cortland Biomedical does not meet the quantitative or qualitative thresholds to be considered a reportable segment and, since the business is not closely related to the IT&S segment, results are not aggregated to be included in the results of the IT&S reportable segment. On July 11, 2023, the Company completed the sale of the Cortland Industrial business (see Note 6, "Discontinued Operations and Other Divestiture Activities" in the notes to the consolidated financial statements). Certain information related to the Other operating segment is disclosed within Note 16, "Business Segment, Geographic, and Customer Information" in the notes to the consolidated financial statements in order to comply with requirements under generally accepted accounting principles in the United States ("US GAAP") to reconcile certain required disclosures to the Consolidated Financial Statements.
Acquisitions and Divestitures
For a summary of recent acquisition and divestiture transactions impacting continuing operations, see Note 5, "Acquisitions" and Note 6, "Discontinued Operations and Other Divestiture Activities", respectively, in the notes to the consolidated financial statements.
International Business
Our products and services are generally available globally, with our principal markets outside the United States being Europe, the Middle East and Asia. In fiscal 2025, we derived 37% of our net sales from the United States, 28% from Europe, 13% from the Middle East, 11% from Asia and 11% from other geographic areas. We have operations around the world that allow us to draw on the skills of a global workforce, provide flexibility to our operations, drive economies of scale, provide revenue streams that may help offset economic trends that are specific to individual countries, and facilitate access to new markets. Although international operations are subject to certain risks, we continue to believe that a global presence is key to
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maintaining strong relationships with many of our global customers and suppliers. Financial information related to the Company's geographic footprint of our continuing operations is included in Note 16, "Business Segment, Geographic and Customer Information" in the notes to the consolidated financial statements.
Product Development and Engineering
We conduct research and development ("R&D") activities to develop new products and to enhance the functionality, effectiveness, ease of use and reliability of our existing products. We believe that our engineering and research and development efforts have been, and continue to be, key drivers of our success in the marketplace. Our advanced design and engineering capabilities contribute to the development of innovative and highly engineered products, maintain our technological leadership and enhance our ability to provide customers with unique and customized solutions and products. We anticipate that we will continue to make significant expenditures for research and development as we seek to provide new innovative tools and services to grow our market share. R&D costs are expensed as incurred and were $14 million in fiscal 2025, $12 million in fiscal 2024 and $9 million in fiscal 2023.
The Company holds numerous patents and trademarks. While no individual patent is believed to be of such importance that its termination would have a material adverse effect on our business, the termination of certain of our trademarks, including ENERPAC®, HYDRATIGHT®, LARZEP®, SIMPLEX® and DTA the Smart Move®, could have a material adverse effect on our business.
Competition
The markets for our products are highly competitive. We provide a diverse and broad range of industrial products and services to numerous global end markets, many of which are highly fragmented. Although we face larger competitors in several served markets, some of our competition is comprised of smaller companies which may lack the footprint or financial resources to serve global customers. We compete for business principally on the basis of customer service, product quality and availability, and engineering and research and development expertise. In addition, we believe that our cost structure, strategic global sourcing capabilities and global distribution support our competitive position.
Manufacturing and Operations
While we do have manufacturing capabilities including machining and fabrication, our manufacturing consists primarily of light assembly of components we source from a network of global suppliers. We have implemented single piece flow processes in most of our plants which reduces inventory levels, lowers re-work costs and shortens lead times to customers. Components are built to our highly engineered specifications by a variety of suppliers in best-cost locations including various countries in Asia. We have built strong relationships with our key suppliers and, while we single source certain of our components, in many cases there are several qualified alternative sources.
Raw Material Costs, Inflation and Tariffs
We source materials and components from a network of global suppliers. These items are typically available from multiple suppliers. Raw materials that go into the components we source, such as steel, aluminum, plastic resin, brass, steel wire and rubber, are subject to price fluctuations and tariffs, which could have an impact on our results. We have been able to offset the impact of inflation and tariffs with productivity and pricing actions. We continue to manage our supply chain to mitigate ongoing risks associated with the evolving geopolitical and inflationary environments.
Order Backlogs and Seasonality
Our operating segments have a relatively short order-to-ship cycle. We had order backlogs of $54 million and $41 million at August 31, 2025 and 2024, respectively. The increase in our order backlog during the fiscal year was primarily due to continued effort to decrease inventory levels globally. Assuming no significant supply chain constraints arise after the date of this report, substantially all of the backlog at August 31, 2025 is expected to be filled within twelve months.
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While we typically experience a stronger second half to our fiscal year, our consolidated sales are not subject to significant seasonal fluctuations.
Percentages of Sales by Fiscal Quarter* | |||||||||||
| 2025 | 2024 | ||||||||||
| Quarter 1 (September - November) | 24% | 24% | |||||||||
| Quarter 2 (December - February) | 24% | 23% | |||||||||
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Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .
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Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations
Enerpac Tool Group Corp. is a premier industrial tools, services, technology, and solutions provider serving a broad and diverse set of customers and end markets for mission-critical applications in more than 100 countries. Enerpac Tool Group's businesses are global leaders in providing high pressure hydraulic tools, controlled force products and solutions for precise positioning of heavy loads that help customers safely and reliably tackle some of the most challenging jobs around the world. The Company was founded in 1910 and is headquartered in Milwaukee, Wisconsin. The Company has one reportable segment, the Industrial Tools & Service Segment ("IT&S"), and an Other operating segment, which does not meet the criteria to be considered a reportable segment. The IT&S segment is primarily engaged in the design, manufacture and distribution of branded hydraulic and mechanical tools and in providing services and tool rental to the general industrial; refining and petrochemical; industrial maintenance, repair and operations (“MRO”), machining & manufacturing; power generation, infrastructure, mining and other markets. Financial information related to the Company's reportable segment is included in Note 11, “Segment Information” in the notes to the condensed consolidated financial statements.
Our businesses provide an array of products and services across multiple markets and geographies, which results in significant diversification. The IT&S segment and the Company are well-positioned to drive shareholder value through a sustainable business strategy built on well-established brands, broad global distribution and end markets, clear focus on the core tools and services business and disciplined capital deployment.
Our Business Model
Our long-term goal is to create sustainable returns for our shareholders through above-market growth in our core business, expanding our margins, generating strong cash flow, and being disciplined in the deployment of our capital. We intend to grow through execution of our organic growth strategy, focused on key vertical markets that benefit from long-term macro trends, driving customer driven innovation, expansion of our digital ecosystem to acquire and engage customers, and an expansion in emerging markets such as Asia Pacific. In addition to organic growth, we also focus on margin expansion through operational efficiency techniques, including lean, continuous improvement and 80/20, to drive productivity and lower costs, as well as optimizing our selling, general and administrative expenses through consolidation and shared service implementation. We also apply these techniques and pricing actions to offset commodity increases and inflationary pricing. Finally, cash flow generation is critical to achieving our financial and long-term strategic objectives. We believe driving profitable growth and margin expansion will result in cash flow generation, which we seek to supplement through minimizing primary working capital. We intend to allocate the cash flow that results from the execution of our strategy in a disciplined way toward investment in our businesses, maintaining our strong balance sheet, disciplined M&A program and opportunistically returning capital to shareholders. We anticipate the compounding effect of reinvesting in our business will fuel further growth and profitable returns.
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Results of Operations
The following table sets forth our results of operations (dollars in millions, except per share amounts):
| Three Months Ended February 28, | Six Months Ended February 28, | |||||||||||||||||||||||||||||||||||||||||||||
Results from Operations (1) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||||||||||||
| Net sales | $ | 155 | 100 | % | $ | 146 | 100 | % | $ | 299 | 100 | % | $ | 291 | 100 | % | ||||||||||||||||||||||||||||||
| Cost of products sold | 83 | 54 | % | 72 | 50 | % | 154 | 52 | % | 143 | 49 | % | ||||||||||||||||||||||||||||||||||
| Gross profit | 72 | 46 | % | 73 | 50 | % | 145 | 48 | % | 148 | 51 | % | ||||||||||||||||||||||||||||||||||
| Selling, general and administrative expenses | 42 | 27 | % | 41 | 28 | % | 85 | 28 | % | 84 | 29 | % | ||||||||||||||||||||||||||||||||||
| Amortization of intangible assets | 1 | 1 | % | 1 | 1 | % | 3 | 1 | % | 2 | 1 | % | ||||||||||||||||||||||||||||||||||
| Restructuring charges | 3 | 2 | % | — | — | % | 3 | 1 | % | — | 0 | % | ||||||||||||||||||||||||||||||||||
| Operating profit | 25 | 16 | % | 31 | 21 | % | 54 | 18 | % | 62 | 21 | % | ||||||||||||||||||||||||||||||||||
| Financing costs, net | 2 | 1 | % | 2 | 2 | % | 4 | 1 | % | 5 | 2 | % | ||||||||||||||||||||||||||||||||||
| Other expense, net | 1 | 1 | % | 1 | 1 | % | 1 | — | % | 1 | — | % | ||||||||||||||||||||||||||||||||||
| Earnings before income tax expense | 22 | 14 | % | 28 | 19 | % | 48 | 16 | % | 56 | 19 | % | ||||||||||||||||||||||||||||||||||
| Income tax expense | 6 | 4 | % | 7 | 5 | % | 12 | 4 | % | 13 | 4 | % | ||||||||||||||||||||||||||||||||||
| Net earnings | $ | 16 | 11 | % | $ | 21 | 14 | % | $ | 35 | 12 | % | $ | 43 | 15 | % | ||||||||||||||||||||||||||||||
| Diluted earnings per share | $ | 0.31 | $ | 0.38 | $ | 0.67 | $ | 0.78 | ||||||||||||||||||||||||||||||||||||||
(1) The summation of the individual components may not equal the total due to rounding. Period to period differences between line items included in the table may differ from the amount presented below due to rounding.
Consolidated net sales for the three months ended February 28, 2026 were $155 million, an increase of $9 million, or 6%, compared to the prior-year comparable period. The effect of the weakening U.S. dollar on foreign currency rates compared to the prior-year period favorably impacted sales by $6 million, or 4%. This resulted in an organic sales increase of approximately 2% in the quarter. Management refers to sales adjusted to exclude the impact of foreign currency changes and recent acquisitions and divestitures as "organic sales". In the three months ended February 28, 2026, product sales grew $13 million, or 11%, year-over-year, while foreign currency favorably impacted product sales by $5 million, or 4%, resulting in organic product sales growth of 6% over the prior-year quarter. Service sales were down $8 million, or 13%, year-over-year, with a favorable impact of foreign currency of $1 million, or 4%, resulting in an organic service sales decline of 17%. Gross profit as a percent of sales decreased to 46.4%, compared to 50.5% in the second quarter of fiscal 2025; the decrease in gross profit margin is due to continued pressure in our service business, primarily in the EMEA region, as well as restructuring costs. Operating profit for the second quarter of fiscal year 2026 was $25 million, a decrease of $6 million compared to the second quarter of fiscal 2025. The decrease in operating profit was mainly driven by the declines in our service business, as well as restructuring costs recorded in the current-year period.
Consolidated net sales for the first half of fiscal 2026 were $299 million, an increase of $8 million, or 3%, compared to the prior-year comparable period. The effect of the weakening U.S. dollar on foreign currency rates compared to the prior-year period favorably impacted sales by $9 million, or 3%. This resulted in flat organic sales in the first half of the year compared to the prior-year period. In the first half of fiscal 2026, product sales grew $20 million, or 9%, while foreign currency favorably impacted sales by $7 million, or 3%, resulting in organic product sales growth of 6% over the prior-year period. Service sales were down $12 million, or 19%, year-over-year, with a favorable impact of foreign currency of $2 million, or 3%, resulting in an organic service sales decline of 22%. Gross profit as a percent of sales decreased to 48.5%, compared to 50.9% in the first half of fiscal 2025; the decrease in gross profit margin is due to continued pressure in our service business, primarily in the EMEA region and higher tariff-driven costs flowing through cost of goods sold. Operating profit for the first half of fiscal year 2026 was $54 million, a decrease of $8 million compared to the first half of fiscal 2025. The decrease in operating profit was mainly driven by the declines in our service business and higher tariff-driven costs flowing through cost of goods sold, as well as restructuring costs recorded in the current-year period.
Segment Results
IT&S Segment
The IT&S segment is a global supplier of branded hydraulic and mechanical tools and services to a broad array of end markets, including general industrial; refining and petrochemical; industrial MRO; machining & manufacturing; power generation; infrastructure; mining; and other markets. Its primary products include branded tools, cylinders, pumps, hydraulic torque wrenches, highly engineered heavy lifting technology solutions and other tools (Product product line). The segment provides maintenance and
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manpower services to meet customer-specific needs and rental capabilities for certain of our products (Service & Rental product line). The following table sets forth the results of operations for the IT&S segment (dollars in millions):
| Three Months Ended February 28, | Six Months Ended February 28, | |||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Net sales | $ | 149 | $ | 141 | $ | 286 | $ | 281 | ||||||||||||||
| Operating profit | 32 | 39 | 67 | 77 | ||||||||||||||||||
| Operating profit % | 21.2% | 27.5% | 23.5 | % | 27.3 | % | ||||||||||||||||
IT&S segment net sales for the second quarter of fiscal 2026 increased by $8 million, or 6%, compared to the second quarter of fiscal 2025. The weakening of the U.S. dollar on foreign currency rates compared to the three months ended February 28, 2025 favorably impacted sales by $6 million, or 4%. This resulted in an organic sales increase of $2 million, or 1%, in the quarter. The organic sales increase is driven by growth in our product business, offset by activity declines in our service business. Service sales were down $3 million, or 13%, year-over-year, with a favorable impact of foreign currency of $1 million, or 4%, resulting in an organic service sales decline of 17%. Product sales were up $11 million, or 10%, year-over-year, with a favorable impact of foreign currency of $5 million, or 4%, resulting in organic product sales growth of 6%. The organic sales increase was due to tariff related actions and increased demand. Operating profit for the three months ended February 28, 2026 was $32 million, compared to $39 million in the same period of the prior year. The decrease in operating profit was mainly driven by the declines in our service business, as well as restructuring costs recorded in the current-year period.
IT&S segment net sales for the first half of fiscal 2026 increased by $6 million, or 2%, compared to the first half of fiscal 2025. The weakening of the U.S. dollar on foreign currency rates compared to the six months ended February 28, 2025 favorably impacted sales by $9 million, or 3%. This resulted in an organic sales decline of $3 million, or 1%. The organic sales decrease is driven by activity declines in our service business, partially offset by growth in our product business. Service sales were down $12 million, or 19%, year-over-year, with a favorable impact of foreign currency of $2 million, or 3%, resulting in an organic service sales decline of 22%. Product sales were up $17 million, or 8%, year-over-year, with a favorable impact of foreign currency of $7 million, or 3%, resulting in organic product sales growth of 5%. The organic sales increase was due to tariff related actions and increased demand. Operating profit for the six months ended February 28, 2026 was $67 million, compared to $77 million in the same period of the prior year. The decrease in operating profit was mainly driven by the declines in our service business, higher tariff-driven costs flowing through cost of goods sold, as well as restructuring costs recorded in the current-year period.
Corporate
Corporate expenses were $8 million in both the three months ended February 28, 2026 and 2025. Corporate expenses were $18 million and $17 million for the six months ended February 28, 2026 and 2025, respectively. The increase in expense was driven by higher personnel charges and growth investments.
Financing Costs, net
Net financing costs were $2 million in both the three months ended February 28, 2026 and 2025 and $4 million and $5 million in the six months ended February 28, 2026 and 2025, respectively. Financing costs decreased due to lower debt balances and interest rates.
Income Tax Expense
The Company's global operations, acquisition activity (as applicable) and specific tax attributes provide opportunities for continuous global tax planning initiatives to maximize tax credits and deductions. Comparative earnings before income taxes, income tax expense and effective income tax rates are as follows (dollars in millions):
| Three Months Ended February 28, | Six Months Ended February 28, | |||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Earnings before income tax expense | $ | 22 | $ | 28 | $ | 48 | $ | 56 | ||||||||||||||
| Income tax expense | 6 | 7 | 12 | 13 | ||||||||||||||||||
| Effective income tax rate | 26.3% | 24.5% | 25.7 | % | 23.3 | % | ||||||||||||||||
The Company’s earnings before income taxes include earnings from both U.S. and foreign jurisdictions. As several foreign tax rates are higher than the U.S. tax rate of 21%, the annual effective tax rate is impacted by foreign rate differentials, withholding taxes, losses in jurisdictions where no benefit can be realized, and key international provisions enacted from recent tax legislation, such as the Global Intangible Low-Taxed Income and Foreign-Derived Intangible Income provisions.
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The effective tax rate for the three months ended February 28, 2026 was 26.3%, compared to 24.5% for the comparable prior-year period. The effective tax rate in each time period was impacted by year-to-date losses and deductions in jurisdictions where no tax benefit can be realized. The higher effective tax rate for the three months ended February 28, 2026 was primarily driven by the more favorable tax impact of stock compensation in the prior period as compared to the current period. Both the current and prior-year period effective income tax rates include the impact of non-recurring items.
Cash Flows and Liquidity
At February 28, 2026, we had $99 million of cash and cash equivalents, of which $90 million was held by our foreign subsidiaries and $9 million was held domestically. The following table summarizes our cash flows provided by operating, investing and financing activities (dollars in millions):
| Six Months Ended February 28, | |||||||||||
| 2026 | 2025 | ||||||||||
| Cash provided by operating activities | $ | 29 | $ | 16 | |||||||
| Cash used in investing activities | (7) | (39) | |||||||||
| Cash used in financing activities | (75) | (25) | |||||||||
| Effect of exchange rate changes on cash | — | — | |||||||||
| Net decrease in cash and cash equivalents | $ | (53) | $ | (48) | |||||||
Net cash provided by operating activities was $29 million and $16 million for the six months ended February 28, 2026 and 2025, respectively. The $13 million year-over-year variance is primarily driven by the timing of payments and increases in contract liabilities.
Net cash used in investing activities was $7 million and $39 million for the six months ended February 28, 2026 and 2025, respectively. This decreased use of cash was primarily due to the $27 million payment made for the DTA acquisition in the first quarter of fiscal 2025 and the decrease in capital expenditures in the current year after the prior year increase from the headquarter move during fiscal 2025.
Net cash used in financing activities was $75 million and $25 million for the six months ended February 28, 2026 and 2025, respectively. The $50 million increase in net cash used in financing activities for the six months ended February 28, 2026 was driven by higher share repurchases in the current-year period.
On September 9, 2022, the Company refinanced its previous senior credit facility with a $600 million senior credit facility, comprised of a $400 million revolving line of credit and a $200 million term loan, which is scheduled to mature in September 2027. The Company has the option to request up to $300 million of additional revolving commitments and/or term loans under the new facility, subject to customary conditions, including the commitment of the participating lenders. The senior credit facility contains restrictive covenants and financial covenants. See Note 6, "Debt" in the notes to the condensed consolidated financial statements for further details regarding the senior credit facility.
At February 28, 2026, there were no borrowings and $399 million available under the revolving line of credit facility. The Company was in compliance with all covenants under the senior credit facility at February 28, 2026.
We believe that the revolving credit line, combined with our existing cash on hand and anticipated operating cash flows, will be adequate to meet operating, debt service, acquisition and capital expenditure funding requirements for the foreseeable future.
Primary Working Capital Management
We use primary working capital as a percentage of sales (PWC %) as a key metric of working capital management. We define this metric as the sum of net accounts receivable and net inventory less accounts payable, divided by the past three months sales annualized. The following table shows a comparison of primary working capital (dollars in millions):
| February 28, 2026 | PWC% | August 31, 2025 | PWC% | |||||||||||||||||
| Accounts receivable, net | $ | 110 | 18 | % | $ | 106 | 16 | % | ||||||||||||
| Inventory, net | 93 | 15 | % | 79 | 12 | % | ||||||||||||||
| Accounts payable | (42) | (7) | % | (43) | (6) | % | ||||||||||||||
Net primary working capital (1) | $ | 160 | 26 | % | $ | 142 | 21 | % | ||||||||||||
(1) The summation of the individual components may not equal the total due to rounding.
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Commitments and Contingencies
Given our desire to allocate cash flow and revolver availability to fund growth initiatives, we have historically leased most of our facilities and some operating equipment. We lease certain facilities, computers, equipment and vehicles under various operating lease agreements, generally over periods ranging from one to twenty years. Under most arrangements, we pay the property taxes, insurance, maintenance and expenses related to the leased property. Many of our leases include provisions that enable us to renew the leases at contractually agreed rates or, less commonly, based upon market rental rates on the date of expiration of the initial leases.
We had outstanding letters of credit of $7 million and surety bonds of $5 million at February 28, 2026 and $6 million of letters of credit and $5 million of surety bonds at August 31, 2025, the majority of which relate to commercial contracts and self-insured workers' compensation programs.
We are also subject to certain contingencies with respect to legal proceedings and regulatory matters which are described in Note 12, "Commitments and Contingencies" in the notes to the condensed consolidated financial statements. While there can be no assurance of the ultimate outcome of these matters, the Company believes that there will be no material adverse effect on the Company's results of operations, financial position or cash flows.
Contractual Obligations
Our contractual obligations have not materially changed at February 28, 2026 from what was previously disclosed in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the heading “Contractual Obligations” in the fiscal 2025 Annual Report on Form 10-K.
Critical Accounting Estimates
Management has evaluated the accounting estimates used in the preparation of the Company's condensed consolidated financial statements and related notes and believe those estimates to be reasonable and appropriate. Certain of these accounting estimates are considered by management to be the most critical in understanding judgments involved in the preparation of our condensed consolidated financial statements and uncertainties that could impact our results of operations, financial position and cash flow. For information about more of the Company’s policies, methodology and assumptions related to critical accounting policies refer to the Critical Accounting Policies in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in the fiscal 2025 Annual Report on Form 10-K.
Next expected filings
- ~2026-10-17 10-K expected by 2026-10-21 (in 100 days)
- ~2026-12-23 10-Q expected by 2027-01-09 (in 167 days)
- ~2027-03-28 10-Q expected by 2027-04-14 (in 262 days)
- ~2027-06-28 10-Q expected by 2027-07-15 (in 354 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 2026-07-09 8-K Material Agreement Entered; Material Financial Obligation; Regulation FD Disclosure; Financial Statements and Exhibits
- 2026-07-08 8-K Earnings Release; Financial Statements and Exhibits
- 2026-03-27 10-Q Quarterly Report
- 2026-03-25 8-K Earnings Release; Financial Statements and Exhibits
- 2025-12-22 10-Q Quarterly Report
- 2025-12-17 8-K Earnings Release; Financial Statements and Exhibits
- 2025-12-15 8-K Trading Blackout
- 2025-10-17 10-K Annual Report
- 2025-10-15 8-K Earnings Release; Financial Statements and Exhibits
- 2025-07-07 8-K Officer/Director Change
- 2025-06-27 10-Q Quarterly Report
- 2025-06-26 8-K Earnings Release; Financial Statements and Exhibits
- 2025-03-26 10-Q Quarterly Report
- 2025-03-24 8-K Earnings Release; Financial Statements and Exhibits
- 2025-01-23 8-K Officer/Director Change; Financial Statements and Exhibits