Exhibit 99.1 Limoneira Company Announces Third Quarter Fiscal Year 2025 Financial Results Company On Track to Merge Citrus Sales and Marketing into Sunkist Growers with $5 Million in Annual Selling and Marketing Cost Savings and EBITDA Improvement Beginning in Fiscal Year 2026 Company Reiterates Avocado and Lemon Volume Guidance for Fiscal Year 2025 Company Explores Providing Housing on the Limco Del Mar Ranch to Address Ventura County's Housing Needs SANTA PAULA, Calif.-- (BUSINESS WIRE) – September 9, 202 ...

Executive Summary & First Quarter Highlights [First Quarter Highlights](index=1&type=section&id=1.1.%20First%20Quarter%20Highlights) AeroVironment reported a strong first quarter for fiscal year 2026, marked by the successful acquisition of BlueHalo, which significantly contributed to record revenue and backlog. The company also achieved substantial year-over-year growth in both total and legacy revenue - Successfully closed the acquisition of BlueHalo, which contributed **$235.2 million** of revenue in the first quarter[5](index=5&type=chunk) Q1 FY2026 Revenue Highlights | Metric | Q1 FY2026 | YoY Change | | :------------------- | :---------- | :--------- | | Record First Quarter Revenue | $454.7 million | +140% | | Legacy Revenue | $219.5 million | +16% | - Achieved record first quarter backlog of **$1.1 billion** and bookings of **$399.0 million**[5](index=5&type=chunk) - Visibility of **82%** to the midpoint of fiscal year 2026 revenue guidance range as of September 9, 2025[5](index=5&type=chunk) [CEO Commentary](index=1&type=section&id=1.2.%20CEO%20Commentary) CEO Wahid Nawabi highlighted the continued strength across both Autonomous Systems and Space, Cyber and Directed Energy segments, driven by record revenue and backlog. He expressed confidence in the company's ability to deliver best-in-class solutions aligned with customer priorities and to capture growing demand through innovative solutions and scalable manufacturing capacity - Continued strength across both Autonomous Systems and Space, Cyber and Directed Energy segments with record revenue and backlog[1](index=1&type=chunk) - Confident in the ability to deliver best-in-class solutions aligned to customers' highest priorities across all domains[1](index=1&type=chunk) - Exceptionally well positioned to capture growing demand due to innovative solutions and manufacturing capacity that can quickly scale[1](index=1&type=chunk) Fiscal 2026 First Quarter Financial Performance [Revenue Analysis](index=1&type=section&id=2.1.%20Revenue%20Analysis) AeroVironment reported record revenue for the first quarter of fiscal 2026, significantly increasing year-over-year, primarily driven by the BlueHalo acquisition and growth in both product sales and service revenue across its segments Q1 FY2026 Revenue Performance | Metric | Q1 FY2026 (Millions) | Q1 FY2025 (Millions) | YoY Change | | :---------------- | :------------------- | :------------------- | :--------- | | Total Revenue | $454.7 | $189.5 | +140% | | Product Sales | $313.5 | $159.5 | +96.5% | | Contract Services | $141.1 | $29.9 | +371.9% | - The acquisition of BlueHalo contributed **$123.7 million** to product revenue and **$111.5 million** to service revenue in the current quarter[2](index=2&type=chunk) Q1 FY2026 Segment Revenue | Segment | Revenue (Millions) | | :---------------- | :----------------- | | Autonomous Systems (AxS) | $285.3 | | Space, Cyber and Directed Energy (SCDE) | $169.4 | [Gross Margin](index=1&type=section&id=2.2.%20Gross%20Margin) Gross margin increased in absolute terms but decreased significantly as a percentage of revenue due to higher intangible amortization and other non-cash purchase accounting expenses, as well as an increased proportion of service revenue resulting from the BlueHalo acquisition Q1 FY2026 Gross Margin Performance | Metric | Q1 FY2026 (Millions) | Q1 FY2025 (Millions) | YoY Change | | :---------------- | :------------------- | :------------------- | :--------- | | Total Gross Margin | $95.1 | $81.5 | +17% | | Gross Margin % | 21% | 43% | -22 ppts | - Gross margin was negatively impacted by **$37.4 million** of intangible amortization and other related non-cash purchase accounting expenses in Q1 FY2026, compared to **$3.7 million** in Q1 FY2025[3](index=3&type=chunk) [Operating Income/Loss](index=1&type=section&id=2.3.%20Operating%20Income%2FLoss) The company reported an operating loss in Q1 FY2026, a significant decline from operating income in the prior year, primarily due to increased selling, general and administrative (SG&A) and research and development (R&D) expenses, heavily influenced by BlueHalo acquisition-related expenses and intangible amortization Q1 FY2026 Operating Performance | Metric | Q1 FY2026 (Millions) | Q1 FY2025 (Millions) | | :-------------------- | :------------------- | :------------------- | | (Loss) Income from Operations | $(69.3) | $23.1 | - The current quarter was negatively impacted by **$79.7 million** of intangible amortization and other related non-cash purchase accounting expenses, compared to **$4.8 million** in the prior year[4](index=4&type=chunk) - SG&A expense increased by **$97.5 million**, including **$41.2 million** of intangible amortization and **$23.7 million** of acquisition-related expenses. R&D expense increased by **$8.5 million**[4](index=4&type=chunk)[6](index=6&type=chunk) [Other Income/Loss and Tax Impact](index=3&type=section&id=2.4.%20Other%20Income%2FLoss%20and%20Tax%20Impact) Other loss, net, increased substantially due to higher interest expense from BlueHalo acquisition financing, while the company recorded a benefit from income taxes due to the pre-tax loss Q1 FY2026 Other Loss and Tax Impact | Metric | Q1 FY2026 (Millions) | Q1 FY2025 (Millions) | | :-------------------- | :------------------- | :------------------- | | Other (Loss) Income, net | $(15.1) | $(0.5) | | Benefit from Income Taxes | $(15.2) | $1.5 (Provision) | - The increase in other loss was primarily due to an increase in interest expense related to the term and revolver facility loans obtained in conjunction with the BlueHalo acquisition[7](index=7&type=chunk) - The decrease in income tax provision year-over-year was primarily due to the loss before income taxes[8](index=8&type=chunk) [Net Income/Loss and EPS](index=3&type=section&id=2.5.%20Net%20Income%2FLoss%20and%20EPS) AeroVironment reported a net loss and negative diluted EPS for Q1 FY2026, a significant reversal from net income in the prior year, largely due to the substantial impact of intangible amortization and other non-cash purchase accounting expenses related to the BlueHalo acquisition Q1 FY2026 Net Income/Loss and EPS | Metric | Q1 FY2026 | Q1 FY2025 | | :-------------------- | :------------------- | :------------------- | | Net (Loss) Income | $(67.4) million | $21.2 million | | Diluted EPS | $(1.44) | $0.75 | - The current quarter was negatively impacted by **$79.7 million**, or **$1.34** per diluted share, of intangible amortization and other related non-cash purchase accounting expenses, compared to **$4.8 million**, or **$0.13** per diluted share, in the prior-year period[9](index=9&type=chunk) [Non-GAAP Financial Measures (Q1)](index=3&type=section&id=2.6.%20Non-GAAP%20Financial%20Measures%20(Q1)) Non-GAAP adjusted EBITDA increased year-over-year, while non-GAAP diluted EPS decreased, reflecting adjustments for acquisition-related expenses and intangible amortization Q1 FY2026 Non-GAAP Financial Measures | Metric | Q1 FY2026 | Q1 FY2025 | YoY Change | | :-------------------- | :------------------- | :------------------- | :--------- | | Non-GAAP Adjusted EBITDA | $56.6 million | $37.2 million | +52.1% | | Non-GAAP Earnings per Diluted Share | $0.32 | $0.89 | -64% | Backlog and Bookings AeroVironment achieved a record funded backlog as of August 2, 2025, significantly increasing from the previous fiscal year-end, with strong bookings during the quarter, providing substantial revenue visibility for the current fiscal year Backlog and Bookings Data | Metric | As of August 2, 2025 | As of April 30, 2025 | | :---------------- | :------------------- | :------------------- | | Funded Backlog | $1.1 billion | $726.6 million | | Bookings (Q1 FY2026) | $399.0 million | N/A | - The company has visibility of **80%** of fiscal year 2026 revenue[11](index=11&type=chunk) Fiscal 2026 Full Year Outlook [Full Year Guidance](index=3&type=section&id=4.1.%20Full%20Year%20Guidance) The company reiterated its full-year fiscal 2026 guidance, projecting significant revenue growth and positive non-GAAP adjusted EBITDA, while expecting a net loss and GAAP loss per diluted share Fiscal Year 2026 Guidance | Metric | Range | | :-------------------------- | :------------------- | | Revenue | $1.9 billion - $2.0 billion | | Net Loss | $(77) million - $(72) million | | Non-GAAP Adjusted EBITDA | $300 million - $320 million | | Loss per Diluted Share | $(1.63) - $(1.53) | | Non-GAAP Earnings per Diluted Share | $3.60 - $3.70 | [Forward-Looking Statements and Risks](index=3&type=section&id=4.2.%20Forward-Looking%20Statements%20and%20Risks) The company's outlook is forward-looking and reflects management's view of current and future market conditions, subject to various risks and uncertainties. These include challenges related to integrating acquisitions, securing government contracts, responding to market demand, competitive pressures, regulatory changes, and general economic conditions - Estimates are forward-looking and reflect management's view of current and future market conditions, subject to certain risks and uncertainties[13](index=13&type=chunk)[19](index=19&type=chunk) - Key risk factors include: the impact of successfully integrating acquisitions (e.g., BlueHalo), reliance on U.S. government sales and funding availability, ability to win R&D and procurement programs, changes in government spending, supply chain disruptions, and compliance with extensive regulatory requirements[13](index=13&type=chunk)[20](index=20&type=chunk) - Other risks involve unexpected technical and marketing difficulties, potential security and cyber threats, failure to innovate or expand into new markets, unexpected changes in operating expenses, and litigation activity[20](index=20&type=chunk) Consolidated Financial Statements [Consolidated Statements of Operations](index=8&type=section&id=5.1.%20Consolidated%20Statements%20of%20Operations) This section presents the detailed breakdown of revenues, costs, and expenses, leading to the net loss for the three months ended August 2, 2025, compared to the prior year, reflecting the significant impact of the BlueHalo acquisition - Provides a comprehensive view of the company's financial performance, detailing product sales, contract services, cost of sales, gross margin, operating expenses (SG&A, R&D), other income/loss, and tax provision, culminating in net income/loss and earnings per share[23](index=23&type=chunk) [Consolidated Balance Sheets](index=9&type=section&id=5.2.%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's assets, liabilities, and stockholders' equity as of August 2, 2025, compared to April 30, 2025, showing significant increases in total assets, goodwill, intangibles, and long-term debt primarily due to the BlueHalo acquisition Consolidated Balance Sheet Highlights | Metric | August 2, 2025 (Thousands) | April 30, 2025 (Thousands) | | :-------------------------- | :------------------------- | :------------------------- | | Total Assets | $5,624,037 | $1,120,567 | | Cash and Cash Equivalents | $685,803 | $40,862 | | Intangibles, net | $1,118,848 | $48,711 | | Goodwill | $2,539,560 | $256,781 | | Total Liabilities | $1,106,958 | $234,061 | | Long-term debt | $725,703 | $30,000 | | Total Stockholders' Equity | $4,427,079 | $886,507 | [Consolidated Statements of Cash Flows](index=10&type=section&id=5.3.%20Consolidated%20Statements%20of%20Cash%20Flows) This section details the cash flows from operating, investing, and financing activities for the three months ended August 2, 2025, highlighting a significant net increase in cash primarily from financing activities related to the BlueHalo acquisition, despite cash used in operating and investing activities Consolidated Statements of Cash Flows Highlights | Metric | Q1 FY2026 (Thousands) | Q1 FY2025 (Thousands) | | :------------------------------------ | :-------------------- | :-------------------- | | Net cash (used in) provided by operating activities | $(123,726) | $28,351 | | Net cash used in investing activities | $(876,648) | $(6,613) | | Net cash provided by financing activities | $1,645,443 | $(13,954) | | Net increase in cash and cash equivalents | $644,941 | $7,861 | | Cash and cash equivalents at end of period | $685,803 | $81,162 | - Business acquisitions, net of cash acquired, accounted for **$(844,580) thousand** in investing activities[27](index=27&type=chunk) - Financing activities included proceeds from shares issued (**$968,515 thousand**) and convertible debt (**$726,944 thousand**)[27](index=27&type=chunk) Reportable Segment Results The report provides segment-level revenue and adjusted EBITDA, showing the significant contribution of the newly acquired Space, Cyber and Directed Energy (SCDE) segment and continued growth in the Autonomous Systems (AxS) segment Q1 FY2026 Segment Revenue | Segment | Revenue (Thousands) | | :------------------------------------ | :------------------ | | Autonomous Systems (AxS) | $285,324 | | Space, Cyber and Directed Energy (SCDE) | $169,352 | | Total | $454,676 | Q1 FY2026 Segment Adjusted EBITDA | Segment | Adjusted EBITDA (Thousands) | | :------------------------------------ | :-------------------------- | | Autonomous Systems (AxS) | $52,760 | | Space, Cyber and Directed Energy (SCDE) | $3,796 | | Total | $56,556 | - In Q1 FY2025, only the AxS segment reported revenue of **$189,483 thousand** and adjusted EBITDA of **$37,178 thousand**, indicating the new contribution from SCDE[29](index=29&type=chunk) Non-GAAP Measures Reconciliation and Explanation [Non-GAAP Earnings per Diluted Share Reconciliation](index=11&type=section&id=7.1.%20Non-GAAP%20Earnings%20per%20Diluted%20Share%20Reconciliation) This section reconciles GAAP diluted EPS to non-GAAP diluted EPS by adjusting for items such as amortization of acquired intangible assets, acquisition-related expenses, and equity method/securities investment activity, providing a clearer view of operational performance Q1 FY2026 Non-GAAP EPS Reconciliation | Item | Per Diluted Share | | :---------------------------------------------------------------- | :---------------- | | (Loss) earnings per diluted share (GAAP) | $(1.44) | | Amortization of acquired intangible assets and other purchase accounting adjustments | $1.34 | | Acquisition-related expenses | $0.52 | | Equity method and equity securities investments activity, net | $(0.10) | | Earnings per diluted share as adjusted (non-GAAP) | $0.32 | - The forecast for FY2026 non-GAAP earnings per diluted share is **$3.60 - $3.70**, adjusted from a forecast GAAP loss per diluted share of **$(1.63) - $(1.53)**[34](index=34&type=chunk) [Non-GAAP Adjusted EBITDA Reconciliation](index=11&type=section&id=7.2.%20Non-GAAP%20Adjusted%20EBITDA%20Reconciliation) This section reconciles GAAP net income/loss to non-GAAP adjusted EBITDA by adding back interest, taxes, depreciation, amortization, stock-based compensation, acquisition-related expenses, and other non-cash items, offering a measure of core operating profitability Q1 FY2026 Non-GAAP Adjusted EBITDA Reconciliation | Item | Amount (Millions) | | :---------------------------------------------------------------- | :---------------- | | Net (loss) income (GAAP) | $(67.4) | | Interest expense, net | $17.4 | | Provision for income taxes | $(15.2) | | Depreciation and amortization | $90.3 | | EBITDA (non-GAAP) | $25.1 | | Amortization of cloud computing arrangement implementation | $0.9 | | Stock-based compensation | $11.4 | | Acquisition-related expenses | $23.7 | | Equity method and equity securities investments activity, net | $(4.5) | | Adjusted EBITDA (non-GAAP) | $56.6 | - The forecast for FY2026 non-GAAP adjusted EBITDA is **$300 - $320 million**, adjusted from a forecast GAAP net loss of **$(77) - $(72) million**[35](index=35&type=chunk) [Statement Regarding Non-GAAP Measures](index=7&type=section&id=7.3.%20Statement%20Regarding%20Non-GAAP%20Measures) The company utilizes non-GAAP measures to provide additional insights into its long-term profitability trends and to facilitate comparisons with prior periods and peers, emphasizing that these measures should be considered supplementary to GAAP and may not be comparable to similarly titled measures reported by other companies - Non-GAAP measures are considered in addition to, not as a replacement for or superior to, comparable GAAP measures[21](index=21&type=chunk)[36](index=36&type=chunk) - Management believes these measures provide useful information by offering additional ways of viewing results, helping investors understand long-term profitability trends and compare performance[36](index=36&type=chunk) - Non-GAAP EPS excludes acquisition-related expenses, intangible amortization, and equity investment activities for consistent comparisons. Adjusted EBITDA is defined as net income before interest, taxes, depreciation, and amortization, adjusted for certain non-cash and non-operating items[37](index=37&type=chunk)[38](index=38&type=chunk) Company Overview [About AeroVironment, Inc.](index=5&type=section&id=8.1.%20About%20AeroVironment,%20Inc.) AeroVironment is a defense technology leader delivering integrated capabilities across air, land, sea, space, and cyber. The company specializes in developing and deploying autonomous systems, precision strike systems, counter-UAS technologies, and other advanced defense solutions to meet current and future mission needs - AeroVironment is a defense technology leader delivering integrated capabilities across air, land, sea, space, and cyber[18](index=18&type=chunk) - The company develops and deploys autonomous systems, precision strike systems, counter-UAS technologies, space-based platforms, directed energy systems, and cyber and electronic warfare capabilities[18](index=18&type=chunk) - Possesses a national manufacturing footprint and a deep innovation pipeline, delivering proven systems and future-defining capabilities with speed, scale, and operational relevance[18](index=18&type=chunk) Investor Information [Conference Call and Presentation](index=3&type=section&id=9.1.%20Conference%20Call%20and%20Presentation) AeroVironment hosted a conference call and webcast on September 9, 2025, to discuss the Q1 FY2026 results, with access details provided for live participation and subsequent replay, along with a supplementary investor presentation - A conference call was hosted on Tuesday, September 9, 2025, at 4:30 pm Eastern Time[14](index=14&type=chunk) - Investors could access the live audio webcast via a participant registration link or the Investor Relations page of the company's website[15](index=15&type=chunk) - A supplementary investor presentation for the first quarter fiscal year 2026 is accessible at https://investor.avinc.com/events-and-presentations, and an audio replay will be archived on the Investor Relations section of the Company's website[16](index=16&type=chunk)[17](index=17&type=chunk) [Contact Information](index=14&type=section&id=9.2.%20Contact%20Information) Contact details for investor relations are provided for further inquiries regarding AeroVironment - Contact Person: Denise Pacioni[40](index=40&type=chunk) - Phone: **+1 805-795-4108**[40](index=40&type=chunk) - Email: ir@avinc.com; Website: https://investor.avinc.com/contact-and-faq/contact-us[40](index=40&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 31, 2025 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to ___________ Commission File Number 001-14505 KORN FERRY (Exact Name of Registrant as Specified in its Charter) (State or Other Jurisdiction of Inc ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 31, 2025 Or o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission file number: 0-14939 AMERICA'S CAR-MART, INC. (Exact name of registrant as specified in its charter) Texas 63-0851141 (S ...

PART I FINANCIAL INFORMATION This section presents the Company's unaudited financial statements and management's discussion and analysis [ITEM 1 Financial Statements (Unaudited)](index=3&type=section&id=ITEM%201%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of earnings, comprehensive income, cash flows, and shareholders' equity, along with detailed notes explaining the basis of presentation, significant accounting policies, and specific financial line items for the periods ended August 2, 2025, and August 3, 2024 [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the Company's financial position, detailing assets, liabilities, and equity at specific reporting dates Condensed Consolidated Balance Sheets | ($ thousands) | August 2, 2025 | August 3, 2024 | February 1, 2025 | | :-------------- | :------------- | :------------- | :--------------- | | **Assets** | | | | | Cash and cash equivalents | $ 191,494 | $ 51,753 | $ 29,636 | | Total current assets | 1,099,418 | 939,700 | 836,509 | | Total assets | $ 2,152,228 | $ 2,019,985 | $ 1,894,754 | | **Liabilities and Equity** | | | | | Borrowings under revolving credit agreement | $ 387,500 | $ 146,500 | $ 219,500 | | Total current liabilities | 1,015,087 | 860,423 | 757,933 | | Total equity | 621,944 | 613,484 | 605,949 | | Total liabilities and equity | $ 2,152,228 | $ 2,019,985 | $ 1,894,754 | - Cash and cash equivalents **significantly increased** to **$191.5 million** as of August 2, 2025, from **$51.8 million** on August 3, 2024, and **$29.6 million** on February 1, 2025, primarily due to increased borrowings to fund the Stuart Weitzman acquisition[4](index=4&type=chunk) - Total current assets rose to **$1,099.4 million** as of August 2, 2025, from **$939.7 million** on August 3, 2024, and **$836.5 million** on February 1, 2025[4](index=4&type=chunk) - Borrowings under the revolving credit agreement increased to **$387.5 million** as of August 2, 2025, from **$146.5 million** on August 3, 2024, reflecting funding for the Stuart Weitzman acquisition[4](index=4&type=chunk) [Condensed Consolidated Statements of Earnings](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Earnings) This section presents the Company's financial performance over specific periods, detailing net sales, gross profit, operating earnings, and earnings per share Condensed Consolidated Statements of Earnings | ($ thousands, except per share amounts) | Thirteen Weeks Ended Aug 2, 2025 | Thirteen Weeks Ended Aug 3, 2024 | Twenty-Six Weeks Ended Aug 2, 2025 | Twenty-Six Weeks Ended Aug 3, 2024 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :--------------------------------- | :------------------------------- | | Net sales | $ 658,519 | $ 683,317 | $ 1,272,740 | $ 1,342,515 | | Gross profit | 285,795 | 310,878 | 564,489 | 619,973 | | Operating earnings | 9,292 | 42,529 | 20,876 | 85,288 | | Net earnings attributable to Caleres, Inc. | $ 6,713 | $ 29,958 | $ 13,656 | $ 60,898 | | Basic EPS | $ 0.20 | $ 0.85 | $ 0.40 | $ 1.73 | | Diluted EPS | $ 0.20 | $ 0.85 | $ 0.40 | $ 1.73 | - Net sales decreased by **3.6%** for the thirteen weeks ended August 2, 2025, and by **5.2%** for the twenty-six weeks ended August 2, 2025, compared to the prior year periods[5](index=5&type=chunk) - Operating earnings saw a **significant decline**, dropping by **78.2%** for the thirteen weeks and **75.5%** for the twenty-six weeks ended August 2, 2025, primarily due to lower net sales, reduced gross profit, and increased restructuring charges[5](index=5&type=chunk) - Diluted EPS decreased from **$0.85** to **$0.20** for the thirteen weeks and from **$1.73** to **$0.40** for the twenty-six weeks ended August 2, 2025, reflecting the overall decline in profitability[5](index=5&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section outlines comprehensive income, including net earnings and other comprehensive earnings from non-owner sources Condensed Consolidated Statements of Comprehensive Income | ($ thousands) | Thirteen Weeks Ended Aug 2, 2025 | Thirteen Weeks Ended Aug 3, 2024 | Twenty-Six Weeks Ended Aug 2, 2025 | Twenty-Six Weeks Ended Aug 3, 2024 | | :-------------- | :------------------------------- | :------------------------------- | :--------------------------------- | :------------------------------- | | Net earnings | $ 7,061 | $ 30,273 | $ 13,006 | $ 61,071 | | Other comprehensive earnings, net of tax | 18 | 4,530 | 6,915 | 4,841 | | Comprehensive income | 7,079 | 34,803 | 19,921 | 65,912 | | Comprehensive income attributable to Caleres, Inc. | $ 6,656 | $ 34,606 | $ 20,448 | $ 65,929 | - Comprehensive income attributable to Caleres, Inc. **decreased significantly** to **$6.7 million** for the thirteen weeks ended August 2, 2025, from **$34.6 million** in the prior year, and to **$20.4 million** for the twenty-six weeks, from **$65.9 million** in the prior year[7](index=7&type=chunk) - Other comprehensive earnings, net of tax, **decreased substantially** for the thirteen-week period (from **$4,530k** to **$18k**) but **increased** for the twenty-six-week period (from **$4,841k** to **$6,915k**), primarily driven by foreign currency translation adjustments and pension/postretirement benefit adjustments[7](index=7&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section details cash flows from operating, investing, and financing activities over specific periods Condensed Consolidated Statements of Cash Flows | ($ thousands) | Twenty-Six Weeks Ended Aug 2, 2025 | Twenty-Six Weeks Ended Aug 3, 2024 | | :-------------- | :--------------------------------- | :------------------------------- | | Net cash provided by operating activities | $ 41,646 | $ 115,696 | | Net cash used for investing activities | (34,072) | (21,808) | | Net cash provided by (used for) financing activities | 154,221 | (63,426) | | Increase in cash and cash equivalents | 161,858 | 30,395 | | Cash and cash equivalents at end of period | $ 191,494 | $ 51,753 | - Net cash provided by operating activities decreased by **$74.0 million** to **$41.6 million** for the twenty-six weeks ended August 2, 2025, compared to **$115.7 million** in the prior year, mainly due to a smaller increase in trade accounts payable, lower net earnings, and a larger increase in inventory[9](index=9&type=chunk)[162](index=162&type=chunk) - Net cash provided by financing activities **significantly increased** to **$154.2 million** for the twenty-six weeks ended August 2, 2025, from a net cash outflow of **$63.4 million** in the prior year, primarily driven by net borrowings on the revolving credit agreement to fund the Stuart Weitzman acquisition[9](index=9&type=chunk)[164](index=164&type=chunk) - Cash and cash equivalents at the end of the period **increased substantially** to **$191.5 million**, up from **$51.8 million** in the prior year, reflecting the increased financing activities[9](index=9&type=chunk) [Condensed Consolidated Statements of Shareholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) This section presents changes in shareholders' equity, including retained earnings and other comprehensive loss Condensed Consolidated Statements of Shareholders' Equity | ($ thousands) | August 2, 2025 | August 3, 2024 | February 1, 2025 | | :-------------- | :------------- | :------------- | :--------------- | | Total Caleres, Inc. shareholders' equity | $ 613,296 | $ 606,062 | $ 599,024 | | Noncontrolling interests | 8,648 | 7,422 | 6,925 | | Total equity | $ 621,944 | $ 613,484 | $ 605,949 | - Total Caleres, Inc. shareholders' equity increased to **$613.3 million** as of August 2, 2025, from **$606.1 million** on August 3, 2024, and **$599.0 million** on February 1, 2025[10](index=10&type=chunk) - Retained earnings increased to **$446.3 million** as of August 2, 2025, from **$451.3 million** on August 3, 2024, and **$442.4 million** on February 1, 2025, reflecting net earnings and dividend payments[10](index=10&type=chunk) - Accumulated other comprehensive loss improved slightly to **$(27.2) million** as of August 2, 2025, from **$(29.5) million** on August 3, 2024, and **$(34.0) million** on February 1, 2025[10](index=10&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information supporting the financial statements [Note 1 Basis of Presentation and General](index=8&type=section&id=Note%201%20Basis%20of%20Presentation%20and%20General) This note describes financial statement presentation, accounting policies, and business context, including acquisitions - The Company's business is seasonal, with historically higher earnings in the third fiscal quarter, though recent years show a more equal distribution[13](index=13&type=chunk) - The Company consolidates CLT Brand Solutions, a **50/50** joint venture with Brand Investment Holding Limited for selling footwear in China, on a one-month lag[16](index=16&type=chunk) CLT Brand Solutions Net Sales and Operating Earnings (Loss) | ($ thousands) | Thirteen Weeks Ended Aug 2, 2025 | Thirteen Weeks Ended Aug 3, 2024 | Twenty-Six Weeks Ended Aug 2, 2025 | Twenty-Six Weeks Ended Aug 3, 2024 | | :-------------- | :------------------------------- | :------------------------------- | :--------------------------------- | :------------------------------- | | Net sales | $ 13,374 | $ 10,098 | $ 20,584 | $ 15,820 | | Operating earnings (loss) | 700 | 688 | (1,296) | 388 | - The Company completed the acquisition of Stuart Weitzman from Tapestry, Inc. on August 4, 2025, for **$120.2 million** (net purchase price **$108.7 million**), which will be included in the Brand Portfolio segment starting Q3 2025[21](index=21&type=chunk) [Note 2 Impact of New Accounting Pronouncements](index=10&type=section&id=Note%202%20Impact%20of%20New%20Accounting%20Pronouncements) This note discusses the potential impact of recently issued accounting standards on financial statements - ASU 2023-09 (Income Taxes) is effective for the Company in fiscal year 2025 and is not expected to have a material impact on financial statement disclosures[22](index=22&type=chunk) - ASU 2024-03 (Disaggregation of Income Statement Expenses) is effective for annual disclosures in fiscal year 2027 and interim periods beginning Q1 2028; the Company is currently evaluating its impact[23](index=23&type=chunk) [Note 3 Revenues](index=11&type=section&id=Note%203%20Revenues) This note disaggregates net sales by channel and segment, with information on loyalty programs and credit losses Disaggregation of Revenues (Thirteen Weeks Ended) | ($ thousands) | August 2, 2025 | August 3, 2024 | | :-------------- | :------------- | :------------- | | Retail stores | $ 364,422 | $ 387,656 | | E-commerce - Company websites | 109,292 | 103,170 | | E-commerce - wholesale drop-ship | 23,166 | 22,520 | | Wholesale - e-commerce | 44,895 | 51,515 | | Wholesale - landed | 103,130 | 92,457 | | Wholesale - first cost | 11,740 | 22,598 | | Licensing and royalty | 1,724 | 3,261 | | Net sales | $ 658,519 | $ 683,317 | Disaggregation of Revenues (Twenty-Six Weeks Ended) | ($ thousands) | August 2, 2025 | August 3, 2024 | | :-------------- | :------------- | :------------- | | Retail stores | $ 662,972 | $ 709,274 | | E-commerce - Company websites | 209,782 | 205,654 | | E-commerce - wholesale drop-ship | 52,798 | 51,542 | | Wholesale - e-commerce | 108,002 | 119,302 | | Wholesale - landed | 213,693 | 211,997 | | Wholesale - first cost | 21,558 | 38,334 | | Licensing and royalty | 3,643 | 6,126 | | Net sales | $ 1,272,740 | $ 1,342,515 | - The loyalty programs liability increased by **$10.7 million** due to points earned and decreased by **$8.9 million** due to expirations and redemptions during the twenty-six weeks ended August 2, 2025[35](index=35&type=chunk) Allowance for Expected Credit Losses Activity (Twenty-Six Weeks Ended) | ($ thousands) | August 2, 2025 | August 3, 2024 | | :-------------- | :------------- | :------------- | | Balance, beginning of period | $ 8,323 | $ 8,820 | | Adjustment for expected credit losses | 2,322 | (769) | | Uncollectible account recoveries, net | 16 | 316 | | Balance, end of period | $ 10,661 | $ 8,367 | [Note 4 Earnings Per Share](index=14&type=section&id=Note%204%20Earnings%20Per%20Share) This note details basic and diluted earnings per share calculations, including share repurchases Earnings Per Share (Thirteen Weeks Ended) | ($ thousands, except per share amounts) | August 2, 2025 | August 3, 2024 | | :-------------------------------------- | :------------- | :------------- | | Net earnings attributable to Caleres, Inc. | $ 6,713 | $ 29,958 | | Basic EPS | $ 0.20 | $ 0.85 | | Diluted EPS | $ 0.20 | $ 0.85 | Earnings Per Share (Twenty-Six Weeks Ended) | ($ thousands, except per share amounts) | August 2, 2025 | August 3, 2024 | | :-------------------------------------- | :------------- | :------------- | | Net earnings attributable to Caleres, Inc. | $ 13,656 | $ 60,898 | | Basic EPS | $ 0.40 | $ 1.73 | | Diluted EPS | $ 0.40 | $ 1.73 | - The Company repurchased **300,000** shares during the twenty-six weeks ended August 2, 2025, and **416,000** shares during the twenty-six weeks ended August 3, 2024, under its share repurchase program[38](index=38&type=chunk) - An immaterial amount of excise taxes were incurred on share repurchases during the twenty-six weeks ended August 2, 2025, and August 3, 2024, as per the Inflation Reduction Act of 2022[39](index=39&type=chunk) [Note 5 Restructuring and Other Special Charges](index=15&type=section&id=Note%205%20Restructuring%20and%20Other%20Special%20Charges) This note outlines restructuring and special charges, including severance and acquisition-related expenses - The Company incurred **$4.5 million** (**$3.3 million** after-tax, or **$0.10** per diluted share) in severance and related costs for expense reduction initiatives during the thirteen weeks ended August 2, 2025[40](index=40&type=chunk) - Legal and other related costs for the Stuart Weitzman acquisition amounted to **$2.3 million** (**$1.7 million** after-tax, or **$0.05** per diluted share) for the thirteen weeks and **$2.9 million** (**$2.1 million** after-tax, or **$0.06** per diluted share) for the twenty-six weeks ended August 2, 2025[41](index=41&type=chunk) [Note 6 Business Segment Information](index=17&type=section&id=Note%206%20Business%20Segment%20Information) This note presents financial information by operating segments, detailing net sales and operating earnings Segment Net Sales and Operating Earnings (Thirteen Weeks Ended) | ($ thousands) | Famous Footwear | Brand Portfolio | Eliminations and Other | Total | | :-------------- | :-------------- | :-------------- | :--------------------- | :---- | | Net sales (Aug 2, 2025) | $ 399,593 | $ 275,620 | $ (16,694) | $ 658,519 | | Operating earnings (loss) (Aug 2, 2025) | $ 18,551 | $ 6,649 | $ (15,908) | $ 9,292 | | Net sales (Aug 3, 2024) | $ 420,289 | $ 285,497 | $ (22,469) | $ 683,317 | | Operating earnings (loss) (Aug 3, 2024) | $ 34,384 | $ 23,620 | $ (15,475) | $ 42,529 | Segment Net Sales and Operating Earnings (Twenty-Six Weeks Ended) | ($ thousands) | Famous Footwear | Brand Portfolio | Eliminations and Other | Total | | :-------------- | :-------------- | :-------------- | :--------------------- | :---- | | Net sales (Aug 2, 2025) | $ 727,269 | $ 571,015 | $ (25,544) | $ 1,272,740 | | Operating earnings (loss) (Aug 2, 2025) | $ 23,525 | $ 24,064 | $ (26,713) | $ 20,876 | | Net sales (Aug 3, 2024) | $ 769,841 | $ 602,708 | $ (30,034) | $ 1,342,515 | | Operating earnings (loss) (Aug 3, 2024) | $ 51,240 | $ 65,045 | $ (30,997) | $ 85,288 | - Famous Footwear's operating earnings decreased by **$15.8 million** (**46%**) for the thirteen weeks and **$27.7 million** (**54%**) for the twenty-six weeks ended August 2, 2025, compared to the prior year[43](index=43&type=chunk)[44](index=44&type=chunk) - Brand Portfolio's operating earnings decreased by **$16.9 million** (**71%**) for the thirteen weeks and **$41.0 million** (**63%**) for the twenty-six weeks ended August 2, 2025, compared to the prior year[43](index=43&type=chunk)[44](index=44&type=chunk) [Note 7 Inventories](index=19&type=section&id=Note%207%20Inventories) This note provides a breakdown of inventory composition, including raw materials, work-in-process, and finished goods Inventory Composition ($ thousands) | Category | August 2, 2025 | August 3, 2024 | February 1, 2025 | | :-------------- | :------------- | :------------- | :--------------- | | Raw materials | $ 15,700 | $ 13,964 | $ 14,352 | | Work-in-process | 751 | 606 | 644 | | Finished goods | 676,831 | 646,576 | 550,245 | | Inventories, net | $ 693,282 | $ 661,146 | $ 565,241 | - Net inventories increased to **$693.3 million** as of August 2, 2025, from **$661.1 million** on August 3, 2024, and **$565.2 million** on February 1, 2025, primarily driven by an increase in finished goods[47](index=47&type=chunk) [Note 8 Goodwill and Intangible Assets](index=19&type=section&id=Note%208%20Goodwill%20and%20Intangible%20Assets) This note details goodwill and intangible assets, including amortization expense and impairment assessments Goodwill and Intangible Assets, Net ($ thousands) | Category | August 2, 2025 | August 3, 2024 | February 1, 2025 | | :-------------- | :------------- | :------------- | :--------------- | | Total intangible assets, net | $ 181,800 | $ 192,836 | $ 187,318 | | Total goodwill | 4,956 | 4,956 | 4,956 | | Goodwill and intangible assets, net | $ 186,756 | $ 197,792 | $ 192,274 | - Total intangible assets, net, decreased to **$181.8 million** as of August 2, 2025, from **$192.8 million** on August 3, 2024, primarily due to accumulated amortization[48](index=48&type=chunk) - Amortization expense for intangible assets was **$2.8 million** for both thirteen-week periods and **$5.5 million** for both twenty-six-week periods[50](index=50&type=chunk) - No goodwill or indefinite-lived intangible asset impairment charges were recorded during the twenty-six weeks ended August 2, 2025, or August 3, 2024[51](index=51&type=chunk)[52](index=52&type=chunk) [Note 9 Leases](index=20&type=section&id=Note%209%20Leases) This note provides information on lease arrangements, including lease expense, right-of-use assets, and obligations - The Company recorded asset impairment charges of **$0.7 million** and **$0.8 million** during the twenty-six weeks ended August 2, 2025, and August 3, 2024, respectively, primarily related to underperforming retail stores[56](index=56&type=chunk) - New or amended leases resulted in the recognition of **$58.6 million** in right-of-use assets and lease obligations during the twenty-six weeks ended August 2, 2025[57](index=57&type=chunk) Lease Expense ($ thousands) | Category | Thirteen Weeks Ended Aug 2, 2025 | Thirteen Weeks Ended Aug 3, 2024 | Twenty-Six Weeks Ended Aug 2, 2025 | Twenty-Six Weeks Ended Aug 3, 2024 | | :-------------- | :------------------------------- | :------------------------------- | :--------------------------------- | :------------------------------- | | Operating lease expense | $ 41,712 | $ 40,251 | $ 82,289 | $ 80,273 | | Variable lease expense | 10,060 | 10,871 | 21,791 | 21,606 | | Short-term lease expense | 362 | 362 | 506 | 669 | | Total lease expense | $ 52,134 | $ 51,484 | $ 104,586 | $ 102,548 | [Note 10 Financing Arrangements](index=21&type=section&id=Note%2010%20Financing%20Arrangements) This note describes credit facilities, outstanding borrowings, and compliance with financial covenants - The Company amended its revolving credit facility on June 27, 2025, increasing the available amount by **$200.0 million** to **$700.0 million** and extending the maturity to June 27, 2030[60](index=60&type=chunk) - As of August 2, 2025, the Company had **$387.5 million** in borrowings outstanding and **$230.8 million** in additional borrowing availability under the credit agreement[65](index=65&type=chunk) - Borrowings under the revolving credit agreement were used to fund the Stuart Weitzman acquisition, which closed on August 4, 2025[65](index=65&type=chunk) - The Company was in compliance with all covenants and restrictions under the Credit Agreement as of August 2, 2025[64](index=64&type=chunk) [Note 11 Shareholders' Equity](index=24&type=section&id=Note%2011%20Shareholders'%20Equity) This note details changes in shareholders' equity components, particularly accumulated other comprehensive loss Changes in Accumulated Other Comprehensive Loss (OCL) ($ thousands) | Component | Balance at May 3, 2025 | Other comprehensive loss before reclassifications | Net reclassifications | Balance at August 2, 2025 | | :-------------- | :--------------------- | :------------------------------------------------ | :-------------------- | :------------------------ | | Foreign Currency Translation | $ (28) | $ (1,075) | $ — | $ (1,103) | | Pension and Other Postretirement Benefits | $ (27,145) | $ — | $ 1,018 | $ (26,127) | | Total OCL | $ (27,173) | $ (1,075) | $ 1,018 | $ (27,230) | - Accumulated other comprehensive loss slightly increased from **$(27.173) million** at May 3, 2025, to **$(27.230) million** at August 2, 2025, primarily due to foreign currency translation adjustments, partially offset by pension and other postretirement benefit adjustments[67](index=67&type=chunk) [Note 12 Share-Based Compensation](index=24&type=section&id=Note%2012%20Share-Based%20Compensation) This note outlines share-based compensation plans, including expense recognition and awards granted - Share-based compensation expense was **$4.1 million** for the thirteen weeks and **$6.9 million** for the twenty-six weeks ended August 2, 2025[68](index=68&type=chunk) - The Company granted **50,852** restricted shares during the thirteen weeks and **798,915** restricted shares during the twenty-six weeks ended August 2, 2025, with graded vesting over three years[70](index=70&type=chunk) - No performance share awards were granted during the twenty-six weeks ended August 2, 2025, but long-term incentive awards payable in cash were granted with a target value of **$6.7 million** for the 2025-2027 performance period[71](index=71&type=chunk)[72](index=72&type=chunk) - **75,035** RSUs were granted to non-employee directors during the thirteen weeks ended August 2, 2025, including dividend equivalents, with a weighted-average grant date fair value of **$13.18**[75](index=75&type=chunk) [Note 13 Retirement and Other Benefit Plans](index=27&type=section&id=Note%2013%20Retirement%20and%20Other%20Benefit%20Plans) This note provides details on pension and other postretirement benefit plans, including net periodic benefit expense Net Periodic Benefit Expense (Income) ($ thousands) | Component | Pension Benefits (13 Weeks Ended Aug 2, 2025) | Other Postretirement Benefits (13 Weeks Ended Aug 2, 2025) | Pension Benefits (26 Weeks Ended Aug 2, 2025) | Other Postretirement Benefits (26 Weeks Ended Aug 2, 2025) | | :-------------- | :-------------------------------------------- | :--------------------------------------------------------- | :-------------------------------------------- | :--------------------------------------------------------- | | Service cost | $ 1,115 | $ — | $ 2,339 | $ — | | Interest cost | 3,623 | 11 | 7,244 | 24 | | Expected return on assets | (5,561) | — | (11,117) | — | | Amortization of actuarial loss (gain) | 1,378 | (19) | 2,856 | (39) | | Amortization of prior service cost | 12 | — | 19 | — | | Total net periodic benefit expense (income) | $ 567 | $ (8) | $ 1,341 | $ (15) | - Total net periodic pension benefit expense increased to **$567k** for the thirteen weeks and **$1,341k** for the twenty-six weeks ended August 2, 2025, compared to **$491k** and **$902k** in the prior year periods, respectively[76](index=76&type=chunk) - Other postretirement benefits showed a net income of **$(8)k** for the thirteen weeks and **$(15)k** for the twenty-six weeks ended August 2, 2025[76](index=76&type=chunk) [Note 14 Fair Value Measurements](index=27&type=section&id=Note%2014%20Fair%20Value%20Measurements) This note explains the fair value measurement hierarchy and details assets and liabilities measured at fair value - The Company uses a fair value hierarchy (Level 1, 2, 3) to categorize valuation techniques based on input observability[78](index=78&type=chunk)[83](index=83&type=chunk) - Non-qualified deferred compensation plan assets and liabilities, non-qualified restoration plan assets and liabilities, and deferred compensation plan liabilities for non-employee directors are measured at fair value using Level 1 inputs (quoted market prices)[80](index=80&type=chunk)[81](index=81&type=chunk)[85](index=85&type=chunk)[86](index=86&type=chunk) Fair Value Measurements (August 2, 2025) | ($ thousands) | Total | Level 1 | Level 2 | Level 3 | | :-------------- | :---- | :------ | :------ | :------ | | Non-qualified deferred compensation plan assets | $ 11,603 | 11,603 | $ — | $ — | | Non-qualified deferred compensation plan liabilities | (11,603) | (11,603) | — | — | | Non-qualified restoration plan assets | 453 | 453 | — | — | | Non-qualified restoration plan liabilities | (453) | (453) | — | — | | Deferred compensation plan liabilities for non-employee directors | (784) | (784) | — | — | | Restricted stock units for non-employee directors | (820) | (820) | — | — | Long-Lived Asset Impairment Charges ($ thousands) | Segment | Thirteen Weeks Ended Aug 2, 2025 | Thirteen Weeks Ended Aug 3, 2024 | Twenty-Six Weeks Ended Aug 2, 2025 | Twenty-Six Weeks Ended Aug 3, 2024 | | :-------------- | :------------------------------- | :------------------------------- | :--------------------------------- | :------------------------------- | | Famous Footwear | $ 420 | $ 305 | $ 697 | $ 500 | | Brand Portfolio | 5 | 250 | 5 | 300 | | Total | $ 425 | $ 555 | $ 702 | $ 800 | [Note 15 Income Taxes](index=31&type=section&id=Note%2015%20Income%20Taxes) This note details effective tax rates, significant tax benefits, and deferred tax considerations - The consolidated effective tax rate was a benefit of **22.0%** for the thirteen weeks and **8.8%** for the twenty-six weeks ended August 2, 2025, compared to a provision of **25.0%** and **24.0%** for the prior year periods, respectively[93](index=93&type=chunk) - The lower effective tax rate for the current periods was primarily due to a discrete tax benefit of **$2.5 million** from the resolution of the remaining transition tax for mandatory deemed repatriation of foreign earnings[93](index=93&type=chunk) - No deferred taxes have been provided on accumulated unremitted earnings of foreign subsidiaries considered indefinitely reinvested[94](index=94&type=chunk) [Note 16 Commitments and Contingencies](index=31&type=section&id=Note%2016%20Commitments%20and%20Contingencies) This note describes environmental remediation commitments and other legal contingencies - The Company is involved in environmental remediation activities at its Redfield site in Colorado, with cumulative expenditures of **$35.0 million** through August 2, 2025[96](index=96&type=chunk)[98](index=98&type=chunk) - The reserve for anticipated future remediation activities at Redfield is **$8.9 million** as of August 2, 2025, with **$4.5 million** for off-site and **$4.4 million** for on-site remediation[98](index=98&type=chunk) - The Company expects to spend approximately **$0.1 million** in 2025, **$0.1 million** in each of the following four years, and **$12.0 million** thereafter for on-site remediation[98](index=98&type=chunk) - Management believes the outcome of ordinary course legal proceedings and litigation will not have a material adverse effect on the Company's results of operations or financial position[101](index=101&type=chunk) [ITEM 2 Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=ITEM%202%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial performance, condition, and results of operations for the second quarter and first six months of fiscal year 2025, discussing key trends, financial highlights, segment performance, liquidity, and capital resources [OVERVIEW](index=34&type=section&id=OVERVIEW) This section summarizes the Company's business, key financial results, macroeconomic impacts, and acquisitions - The Company is a global footwear company operating retail stores, e-commerce websites, and designing, developing, sourcing, manufacturing, and distributing footwear[103](index=103&type=chunk) - Macroeconomic factors, including lighter consumer traffic and tariff volatility, negatively impacted Q2 2025 financial results, with tariffs estimated to have a **$10 million** negative impact on net sales due to factory order cancellations and delayed receipts[104](index=104&type=chunk) - Restructuring actions in Q2 2025 are expected to decrease selling and administrative expenses by approximately **$15 million** on an annualized basis[104](index=104&type=chunk) - The Company's liquidity position remains strong with **$191.5 million** in cash and cash equivalents and **$230.8 million** in excess availability on its revolving credit agreement as of August 2, 2025[105](index=105&type=chunk) - The acquisition of Stuart Weitzman was completed on August 4, 2025, for **$120.2 million**, funded by the revolving credit agreement, strengthening the Company's position in luxury footwear[106](index=106&type=chunk) [Financial Highlights](index=35&type=section&id=Financial%20Highlights) This section presents a concise summary of the Company's key consolidated financial performance metrics Consolidated Financial Highlights (Thirteen Weeks Ended) | Metric | August 2, 2025 | August 3, 2024 | Change ($) | Change (%) | | :-------------- | :------------- | :------------- | :--------- | :--------- | | Consolidated net sales | $658.5 | $683.3 | ($24.8) | (3.6)% | | Famous Footwear segment net sales | $399.6 | $420.3 | ($20.7) | (4.9)% | | Famous Footwear comparable sales % change | (3.4)% | (2.9)% | n/m | n/m | | Brand Portfolio segment net sales | $275.6 | $285.5 | ($9.9) | (3.5)% | | Gross profit | $285.8 | $310.9 | ($25.1) | (8.1)% | | Gross margin | 43.4 % | 45.5 % | n/m | (210 bps) | | Operating earnings | $9.3 | $42.5 | ($33.2) | (78.2)% | | Diluted earnings per share | $0.20 | $0.85 | ($0.65) | (76.5)% | - Consolidated net sales decreased by **3.6%** to **$658.5 million**, and operating earnings plummeted by **78.2%** to **$9.3 million** for the second quarter of 2025[107](index=107&type=chunk) - Gross margin declined by **210 basis points** to **43.4%** in Q2 2025, primarily due to lower merchandise margins from tariffs and higher inventory markdowns[107](index=107&type=chunk) [Metrics Used in the Evaluation of Our Business](index=35&type=section&id=Metrics%20Used%20in%20the%20Evaluation%20of%20Our%20Business) This section defines key operational and financial metrics used by management to assess business performance - Comparable sales measure revenue for stores open over a year, including e-commerce sales that extend a retail chain, and are used to assess existing store performance[108](index=108&type=chunk) - Sales per square foot evaluate sales efficiency based on retail store square footage in North America, excluding e-commerce and the China joint venture[109](index=109&type=chunk) - Direct-to-consumer sales, including retail stores, company websites, and drop-ship sales, are monitored for their higher gross margin and ability to reinforce brand image and consumer connection[110](index=110&type=chunk) [CONSOLIDATED RESULTS](index=36&type=section&id=CONSOLIDATED%20RESULTS) This section analyzes overall financial performance, including net sales, gross profit, operating earnings, and net earnings Consolidated Results Summary ($ millions) | Metric | 13 Weeks Ended Aug 2, 2025 | % of Net Sales | 13 Weeks Ended Aug 3, 2024 | % of Net Sales | 26 Weeks Ended Aug 2, 2025 | % of Net Sales | 26 Weeks Ended Aug 3, 2024 | % of Net Sales | | :-------------- | :------------------------- | :------------- | :------------------------- | :------------- | :------------------------- | :------------- | :------------------------- | :------------- | | Net sales | $ 658.5 | 100.0 % | $ 683.3 | 100.0 % | $ 1,272.7 | 100.0 % | $ 1,342.5 | 100.0 % | | Gross profit | 285.8 | 43.4 % | 310.9 | 45.5 % | 564.5 | 44.4 % | 620.0 | 46.2 % | | Selling and administrative expenses | 269.7 | 40.9 % | 268.4 | 39.3 % | 536.2 | 42.1 % | 534.7 | 39.8 % | | Restructuring and other special charges, net | 6.8 | 1.1 % | — | — % | 7.4 | 0.6 % | — | — % | | Operating earnings | 9.3 | 1.4 % | 42.5 | 6.2 % | 20.9 | 1.7 % | 85.3 | 6.4 % | | Net earnings attributable to Caleres, Inc. | $ 6.7 | 1.0 % | $ 30.0 | 4.4 % | $ 13.7 | 1.1 % | $ 60.9 | 4.5 % | - Consolidated net sales decreased by **$24.8 million** (**3.6%**) for the second quarter and **$69.8 million** (**5.2%**) for the first six months of 2025, with declines in both Famous Footwear and Brand Portfolio segments[113](index=113&type=chunk)[114](index=114&type=chunk) - Gross profit decreased by **$25.1 million** (**8.1%**) for the second quarter and **$55.5 million** (**8.9%**) for the first six months of 2025, with gross margin declining due to tariffs, higher inventory markdowns, and increased freight costs[115](index=115&type=chunk)[116](index=116&type=chunk) - Selling and administrative expenses increased slightly, but as a percentage of net sales, they rose to **40.9%** (Q2) and **42.1%** (YTD) due to deleveraging on lower sales, higher retail facilities costs, and increased marketing/IT expenses[118](index=118&type=chunk)[119](index=119&type=chunk) - Operating earnings **significantly decreased** by **$33.2 million** (**78.2%**) for the second quarter and **$64.4 million** (**75.5%**) for the first six months of 2025, primarily due to lower sales, reduced gross profit, and restructuring charges[121](index=121&type=chunk)[122](index=122&type=chunk) - Interest expense, net, increased by **$1.2 million** (**36.3%**) for the second quarter and **$1.2 million** (**16.8%**) for the first six months of 2025, reflecting higher average borrowings on the revolving credit facility, particularly for the Stuart Weitzman acquisition[123](index=123&type=chunk) - The effective tax rate was a benefit of **22.0%** for Q2 2025 and **8.8%** for the first six months, driven by a **$2.5 million** discrete tax benefit related to foreign earnings repatriation[125](index=125&type=chunk) [FAMOUS FOOTWEAR](index=40&type=section&id=FAMOUS%20FOOTWEAR) This section analyzes Famous Footwear segment performance, detailing net sales, operating earnings, and comparable sales Famous Footwear Segment Performance ($ millions, except sales per square foot) | Metric | 13 Weeks Ended Aug 2, 2025 | % of Net Sales | 13 Weeks Ended Aug 3, 2024 | % of Net Sales | 26 Weeks Ended Aug 2, 2025 | % of Net Sales | 26 Weeks Ended Aug 3, 2024 | % of Net Sales | | :-------------- | :------------------------- | :------------- | :------------------------- | :------------- | :------------------------- | :------------- | :------------------------- | :------------- | | Net sales | $ 399.6 | 100.0 % | $ 420.3 | 100.0 % | $ 727.3 | 100.0 % | $ 769.8 | 100.0 % | | Gross profit | 174.7 | 43.7 % | 189.3 | 45.0 % | 323.1 | 44.4 % | 350.3 | 45.5 % | | Selling and administrative expenses | 156.0 | 39.1 % | 154.9 | 36.8 % | 299.5 | 41.2 % | 299.1 | 38.8 % | | Operating earnings | $ 18.6 | 4.6 % | $ 34.4 | 8.2 % | $ 23.5 | 3.2 % | $ 51.2 | 6.7 % | | Comparable sales % change | (3.4)% | | (2.9)% | | (3.9)% | | (2.6)% | | | Ending stores | 830 | | 855 | | 830 | | 855 | | - Famous Footwear net sales decreased by **4.9%** for Q2 2025 and **5.5%** for the first six months, with comparable sales declining **3.4%** and **3.9%** respectively, primarily due to reduced consumer traffic[130](index=130&type=chunk)[132](index=132&type=chunk) - E-commerce sales penetration increased to **14%** of net sales in Q2 2025, and the launch of the Jordan brand contributed to a strong back-to-school season[130](index=130&type=chunk) - Gross profit margin decreased to **43.7%** for Q2 2025 and **44.4%** for the first six months, driven by higher promotional activity and increased freight costs[133](index=133&type=chunk)[134](index=134&type=chunk) - Operating earnings decreased by **$15.8 million** (**46%**) for Q2 2025 and **$27.7 million** (**54%**) for the first six months, reflecting lower sales, reduced gross profit, and increased selling and administrative expenses[138](index=138&type=chunk)[139](index=139&type=chunk) - The segment ended Q2 2025 with **830** stores, having opened **2** and closed **7** during the quarter, and converted **21** stores to the FLAIR concept during the first half of 2025, which continue to outperform traditional stores[131](index=131&type=chunk)[132](index=132&type=chunk)[135](index=135&type=chunk) [BRAND PORTFOLIO](index=42&type=section&id=BRAND%20PORTFOLIO) This section analyzes Brand Portfolio segment performance, detailing net sales, operating earnings, and direct-to-consumer sales Brand Portfolio Segment Performance ($ millions) | Metric | 13 Weeks Ended Aug 2, 2025 | % of Net Sales | 13 Weeks Ended Aug 3, 2024 | % of Net Sales | 26 Weeks Ended Aug 2, 2025 | % of Net Sales | 26 Weeks Ended Aug 3, 2024 | % of Net Sales | | :-------------- | :------------------------- | :------------- | :------------------------- | :------------- | :------------------------- | :------------- | :------------------------- | :------------- | | Net sales | $ 275.6 | 100.0 % | $ 285.5 | 100.0 % | $ 571.0 | 100.0 % | $ 602.7 | 100.0 % | | Gross profit | 111.1 | 40.3 % | 121.9 | 42.7 % | 240.3 | 42.1 % | 269.7 | 44.7 % | | Selling and administrative expenses | 102.6 | 37.2 % | 98.3 | 34.4 % | 214.5 | 37.6 % | 204.7 | 33.9 % | | Operating earnings | $ 6.7 | 2.4 % | $ 23.6 | 8.3 % | $ 24.0 | 4.3 % | $ 65.0 | 10.8 % | | Direct-to-consumer (% of net sales) | 36 % | | 33 % | | 35 % | | 33 % | | | Unfilled order position at end of period | $ 244.2 | | $ 251.6 | | | | | | - Brand Portfolio net sales decreased by **3.5%** for Q2 2025 and **5.3%** for the first six months, primarily due to soft consumer demand and cautious wholesale buying, with tariffs negatively impacting Q2 net sales by an estimated **$10 million**[141](index=141&type=chunk)[142](index=142&type=chunk) - Direct-to-consumer sales increased to **36%** of net sales in Q2 2025, up from **33%** in the prior year[141](index=141&type=chunk) - Gross profit margin decreased to **40.3%** for Q2 2025 and **42.1%** for the first six months, driven by tariff impacts, higher inventory markdowns, and costs associated with moving inventory out of China[144](index=144&type=chunk)[145](index=145&type=chunk)[146](index=146&type=chunk) - Operating earnings decreased to **$6.7 million** for Q2 2025 (from **$23.6 million**) and **$24.0 million** for the first six months (from **$65.0 million**), reflecting lower sales, reduced gross profit, and increased selling and administrative expenses[150](index=150&type=chunk)[151](index=151&type=chunk) - The segment expanded its international presence, with **118** stores in East Asia and **145** international franchise locations as of August 2, 2025[141](index=141&type=chunk) [ELIMINATIONS AND OTHER](index=43&type=section&id=ELIMINATIONS%20AND%20OTHER) This section explains the financial impact of intersegment eliminations and unallocated corporate expenses Eliminations and Other Operating Loss ($ millions) | Metric | 13 Weeks Ended Aug 2, 2025 | % of Net Sales | 13 Weeks Ended Aug 3, 2024 | % of Net Sales | 26 Weeks Ended Aug 2, 2025 | % of Net Sales | 26 Weeks Ended Aug 3, 2024 | % of Net Sales | | :-------------- | :------------------------- | :------------- | :------------------------- | :------------- | :------------------------- | :------------- | :------------------------- | :------------- | | Net sales | $ (16.7) | 100.0 % | $ (22.5) | 100.0 % | $ (25.5) | 100.0 % | $ (30.0) | 100.0 % | | Operating loss | $ (15.9) | 95.2 % | $ (15.5) | 68.9 % | $ (26.7) | 104.8 % | $ (31.0) | 103.2 % | - Net sales elimination decreased by **$5.8 million** (**25.8%**) for Q2 2025 and **$4.5 million** (**14.9%**) for the first six months, reflecting a decrease in intersegment product sales from Brand Portfolio to Famous Footwear[153](index=153&type=chunk) - Selling and administrative expenses decreased by **$4.1 million** for Q2 2025 and **$8.7 million** for the first six months, primarily due to lower expenses related to cash and share-based incentive compensation[154](index=154&type=chunk)[155](index=155&type=chunk) - Restructuring and other special charges of **$4.8 million** for Q2 2025 and **$5.5 million** for the first six months were recorded for expense reduction initiatives and Stuart Weitzman acquisition costs[156](index=156&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=45&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section discusses cash flow, debt obligations, borrowing capacity, and working capital, highlighting funds - Total debt obligations increased by **$241.0 million** to **$387.5 million** at August 2, 2025, from **$146.5 million** at August 3, 2024, primarily to fund the Stuart Weitzman acquisition[158](index=158&type=chunk) - The Company had **$230.8 million** in additional borrowing availability under its **$700.0 million** revolving credit facility as of August 2, 2025, and was in compliance with all covenants[157](index=157&type=chunk)[159](index=159&type=chunk) Cash Flow Summary ($ millions) | ($ millions) | August 2, 2025 | August 3, 2024 | Change ($) | | :----------- | :------------- | :------------- | :--------- | | Net cash provided by operating activities | $ 41.7 | $ 115.7 | $ (74.0) | | Net cash used for investing activities | (34.1) | (21.8) | (12.3) | | Net cash provided by (used for) financing activities | 154.2 | (63.4) | 217.6 | | Increase in cash and cash equivalents | $ 161.9 | $ 30.4 | $ 131.5 | - Working capital increased by **$5.0 million** from August 3, 2024, to **$84.3 million** at August 2, 2025, driven by higher cash, lower trade accounts payable, and higher inventory, partially offset by increased borrowings[167](index=167&type=chunk) - The debt-to-capital ratio increased to **38.4%** as of August 2, 2025, from **19.3%** at August 3, 2024[167](index=167&type=chunk) - The Company declared and paid dividends of **$0.07** per share in Q2 2025 and expects to continue dividend payments[168](index=168&type=chunk) [CRITICAL ACCOUNTING POLICIES AND ESTIMATES](index=46&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20ESTIMATES) This section confirms no material changes to critical accounting policies and estimates since the last fiscal year - No material changes have occurred related to critical accounting policies and estimates since the end of the most recent fiscal year (February 1, 2025)[170](index=170&type=chunk) [RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS](index=46&type=section&id=RECENTLY%20ISSUED%20ACCOUNTING%20PRONOUNCEMENTS) This section refers to detailed information on new accounting pronouncements in the financial statements notes - Information on recently issued accounting pronouncements and their impact is detailed in Note 2 to the condensed consolidated financial statements[171](index=171&type=chunk) [FORWARD-LOOKING STATEMENTS](index=47&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section cautions about forward-looking statements, outlining risks and uncertainties affecting future results - The report contains forward-looking statements subject to various risks and uncertainties, including changes in trade policies, consumer demands, inflation, supply chain disruptions, and intense competition[172](index=172&type=chunk) - The Company does not undertake any obligation to update these forward-looking statements[172](index=172&type=chunk) [ITEM 3 Quantitative and Qualitative Disclosures About Market Risk](index=47&type=section&id=ITEM%203%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that there have been no material changes in quantitative and qualitative disclosures about market risk since the end of the most recent fiscal year - No material changes have occurred in the quantitative and qualitative information about market risk since the end of the most recent fiscal year (February 1, 2025)[173](index=173&type=chunk) [ITEM 4 Controls and Procedures](index=47&type=section&id=ITEM%204%20Controls%20and%20Procedures) This section details the evaluation of the Company's disclosure controls and procedures, concluding that they were effective at a reasonable assurance level as of August 2, 2025, with no material changes to internal controls over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective at the reasonable assurance level as of August 2, 2025[175](index=175&type=chunk) - No changes in internal controls over financial reporting materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting during the quarter ended August 2, 2025[177](index=177&type=chunk) PART II OTHER INFORMATION This section provides additional information not in financial statements, covering legal, risks, equity, and exhibits [ITEM 1 Legal Proceedings](index=49&type=section&id=ITEM%201%20Legal%20Proceedings) This section states that the Company is involved in ordinary course legal proceedings and litigation, but management does not expect their outcome to have a material adverse effect on financial results or position - Management believes the outcome of legal proceedings and litigation arising in the ordinary course of business will not have a material adverse effect on the Company's results of operations or financial position[178](index=178&type=chunk) [ITEM 1A Risk Factors](index=49&type=section&id=ITEM%201A%20Risk%20Factors) This section highlights material changes to risk factors, specifically emphasizing the adverse impact of changes in U.S. and international trade policies, including tariffs, on the Company's business, results of operations, and financial condition - Changes in U.S. and international trade policies, including tariffs, trade restrictions, and retaliatory actions, may adversely impact the Company's business, results of operations, and financial condition[181](index=181&type=chunk) - Tariffs negatively impacted net sales and gross margins in the Brand Portfolio segment during Q2 2025, and the uncertainty surrounding future tariff policies poses a **significant risk**[181](index=181&type=chunk) - The Company is implementing strategies to mitigate tariff effects, such as shifting production and negotiating with suppliers, but there is no assurance these measures will be successful[181](index=181&type=chunk) [ITEM 2 Unregistered Sales of Equity Securities and Use of Proceeds](index=50&type=section&id=ITEM%202%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section provides information on common stock repurchases during the second quarter of 2025, noting that no shares were repurchased under the publicly announced program during the thirteen weeks ended August 2, 2025, but 300,000 shares were repurchased during the twenty-six weeks Common Stock Repurchases (Second Quarter 2025) | Fiscal Period | Total Number of Shares Purchased | Average Price Paid per Share | | :---------------------- | :------------------------------- | :--------------------------- | | May 4, 2025 - May 31, 2025 | 14,739 | $ 16.49 | | June 1, 2025 - July 5, 2025 | 1,535 | $ 13.30 | | July 6, 2025 - August 2, 2025 | — | — | | Total | 16,274 | $ 16.19 | - No shares were repurchased under the 2022 Program during the thirteen weeks ended August 2, 2025, but **300,000** shares were repurchased during the twenty-six weeks ended August 2, 2025[184](index=184&type=chunk) - As of August 2, 2025, **3,366,055** shares remained authorized for repurchase under the 2022 Program[184](index=184&type=chunk) [ITEM 3 Defaults Upon Senior Securities](index=50&type=section&id=ITEM%203%20Defaults%20Upon%20Senior%20Securities) This section indicates that there were no defaults upon senior securities - There were no defaults upon senior securities[185](index=185&type=chunk) [ITEM 4 Mine Safety Disclosures](index=50&type=section&id=ITEM%204%20Mine%20Safety%20Disclosures) This section states that mine safety disclosures are not applicable to the Company - Mine safety disclosures are not applicable to the Company[186](index=186&type=chunk) [ITEM 5 Other Information](index=50&type=section&id=ITEM%205%20Other%20Information) This section reports on Director and Section 16 Officer trading arrangements, specifically noting the termination of a Rule 10b5-1 plan by Daniel Friedman, Chief Sourcing Officer, on July 8, 2025 - Daniel Friedman, Chief Sourcing Officer, terminated a Rule 10b5-1 plan on July 8, 2025, which had provided for the sale of up to **16,782** shares[187](index=187&type=chunk) - No other director or Section 16 officer adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the thirteen weeks ended August 2, 2025[188](index=188&type=chunk) [ITEM 6 Exhibits](index=51&type=section&id=ITEM%206%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including agreements related to the Stuart Weitzman acquisition, corporate governance documents, credit agreements, and certifications - Key exhibits include the Sale and Purchase Agreement for Stuart Weitzman, the Seventh Amendment to the Fourth Amended and Restated Credit Agreement, and certifications from the CEO and CFO[189](index=189&type=chunk) [Signature](index=52&type=section&id=Signature) This section contains the signature of the Company's Principal Financial Officer, Jack P. Calandra, certifying the filing of the report - The report was signed by Jack P. Calandra, Senior Vice President and Chief Financial Officer, on September 9, 2025[193](index=193&type=chunk)

[Part I. FINANCIAL INFORMATION](index=3&type=section&id=Part%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The company's unaudited condensed consolidated financial statements and accompanying notes are presented [Unaudited Condensed Consolidated Balance Sheets](index=3&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets%20%E2%80%93%20July%2031%2C%202025%20and%20January%2031%2C%202025) **Condensed Consolidated Balance Sheet Highlights (in thousands)** | Item | July 31, 2025 | January 31, 2025 | | :--- | :--- | :--- | | Total Assets | $143,149 | $145,595 | | Total Liabilities | $67,363 | $69,845 | | Total Shareholders' Equity | $75,786 | $75,750 | | Cash and Cash Equivalents | $3,855 | $5,050 | | Accounts Receivable, net | $18,535 | $21,218 | | Inventories, net | $48,393 | $47,894 | | Revolving Line of Credit | $19,079 | $20,929 | | Long-Term Debt, net of current portion | $18,566 | $19,044 | [Unaudited Condensed Consolidated Statements of Income (Loss)](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Income%20(Loss)%20%E2%80%93%20Three%20and%20Six%20Months%20Ended%20July%2031%2C%202025%20and%20August%203%2C%202024) **Condensed Consolidated Statements of Income (Loss) (in thousands, except per share data)** | Item | Three Months Ended July 31, 2025 | Three Months Ended August 3, 2024 | Six Months Ended July 31, 2025 | Six Months Ended August 3, 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $36,102 | $40,539 | $73,810 | $73,500 | | Gross Profit | $11,633 | $14,326 | $24,286 | $26,298 | | Operating Income (Loss) | $(708) | $1,061 | $(135) | $2,407 | | Net Income (Loss) | $(1,243) | $(311) | $(1,619) | $869 | | Net Income (Loss) per Common Share—Diluted | $(0.16) | $(0.04) | $(0.21) | $0.11 | [Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)%20%E2%80%93%20Three%20and%20Six%20Months%20Ended%20July%2031%2C%202025%20and%20August%203%2C%202024) **Condensed Consolidated Statements of Comprehensive Income (Loss) (in thousands)** | Item | Three Months Ended July 31, 2025 | Three Months Ended August 3, 2024 | Six Months Ended July 31, 2025 | Six Months Ended August 3, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Income (Loss) | $(1,243) | $(311) | $(1,619) | $869 | | Foreign Currency Translation Adjustments | $47 | $343 | $1,022 | $146 | | Comprehensive Income (Loss) | $(1,196) | $32 | $(597) | $1,015 | [Unaudited Condensed Consolidated Statements of Changes in Shareholders' Equity](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity%20%E2%80%93%20Three%20and%20Six%20Months%20Ended%20July%2031%2C%202025%20and%20August%203%2C%202024) **Changes in Shareholders' Equity (in thousands)** | Item | January 31, 2025 | July 31, 2025 | | :--- | :--- | :--- | | Common Stock | $547 | $552 | | Additional Paid-in Capital | $64,215 | $65,023 | | Retained Earnings | $49,380 | $47,761 | | Treasury Stock | $(35,043) | $(35,223) | | Accumulated Other Comprehensive Loss | $(3,349) | $(2,327) | | **Total Shareholders' Equity** | **$75,750** | **$75,786** | - Retained Earnings decreased by **$1,619 thousand** from January 31, 2025, to July 31, 2025, primarily due to net losses incurred during the period[15](index=15&type=chunk) - Accumulated Other Comprehensive Loss improved by **$1,022 thousand**, mainly driven by foreign currency translation adjustments[15](index=15&type=chunk)[99](index=99&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20%E2%80%93%20Six%20Months%20Ended%20July%2031%2C%202025%20and%20August%203%2C%202024) **Condensed Consolidated Statements of Cash Flows (in thousands)** | Cash Flow Activity | Six Months Ended July 31, 2025 | Six Months Ended August 3, 2024 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $4,644 | $7,066 | | Net Cash Used for Investing Activities | $(107) | $(21,559) | | Net Cash Provided by (Used for) Financing Activities | $(5,968) | $14,576 | | Net (Decrease) Increase in Cash and Cash Equivalents | $(1,195) | $297 | | Cash and Cash Equivalents, End of Period | $3,855 | $4,824 | - Net cash used for investing activities **significantly decreased in 2025** due to the absence of a major acquisition like MTEX, which occurred in 2024[18](index=18&type=chunk) - Net cash provided by operating activities **decreased by $2,422 thousand**, primarily due to a shift from net income to net loss and a decrease in cash provided by working capital[18](index=18&type=chunk)[194](index=194&type=chunk) [Notes to the Condensed Consolidated Financial Statements (unaudited)](index=8&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) [Note 1 – Business and Basis of Presentation](index=8&type=section&id=Note%201%20%E2%80%93%20Business%20and%20Basis%20of%20Presentation) - AstroNova, Inc operates in two segments: **Product Identification (Product ID)** and **Aerospace** (formerly Test & Measurement)[21](index=21&type=chunk) - The Test & Measurement segment was renamed "Aerospace" effective February 1, 2025, to better reflect its end markets, with no change to segment composition[21](index=21&type=chunk) - The company acquired MTEX New Solution, S.A on May 6, 2024, integrating its digital printing equipment into the Product ID segment[23](index=23&type=chunk) - Product ID segment revenue is approximately **20% hardware sales** and **80% recurring supplies**, parts, and service revenue[24](index=24&type=chunk) - Aerospace segment revenue is approximately **57% hardware sales** and **43% recurring supplies**, parts, and service revenue[26](index=26&type=chunk) [Note 2 – Summary of Significant Accounting Policies Update](index=9&type=section&id=Note%202%20%E2%80%93%20Summary%20of%20Significant%20Accounting%20Policies%20Update) - The accounting policies remain consistent with the Annual Report on Form 10-K for the fiscal year ended January 31, 2025[32](index=32&type=chunk) - ASU 2024-03 (Expense Disaggregation Disclosures) and ASU 2023-09 (Improvements to Income Tax Disclosures) are **not expected to have a material impact** on consolidated financial statements or disclosures upon adoption[33](index=33&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk) [Note 3 – Acquisition](index=10&type=section&id=Note%203%20%E2%80%93%20Acquisition) - AstroNova acquired MTEX New Solution, S.A on May 6, 2024, for a final purchase price of **$19,473 thousand**[37](index=37&type=chunk)[39](index=39&type=chunk) **Final Purchase Price Allocation of MTEX Acquisition (in thousands)** | Item | Amount | | :--- | :--- | | Cash | $364 | | Accounts Receivable | $1,212 | | Inventory | $3,607 | | Property, Plant and Equipment | $4,802 | | Identifiable Intangible Assets | $7,539 | | Goodwill | $14,279 | | Accounts Payable and Other Current Liabilities | $(6,095) | | Debt Assumed | $(7,918) | | Other Long-Term Liabilities | $(4,826) | | **Total Purchase Price** | **$19,473** | - Goodwill of **$14.3 million** was recognized, allocated to the Product ID segment, and is not deductible for tax purposes[43](index=43&type=chunk) **MTEX Financial Results Included in Consolidated Statements of Income (Loss) (in thousands)** | Item | Three Months Ended July 31, 2025 | Six Months Ended July 31, 2025 | | :--- | :--- | :--- | | Revenue | $711 | $2,114 | | Gross Profit | $(522) | $(403) | | Operating Loss | $(1,879) | $(2,796) | | Earnings (Loss) before Taxes | $(47) | $(1,103) | [Note 4 – Revenue Recognition](index=13&type=section&id=Note%204%20%E2%80%93%20Revenue%20Recognition) - Revenue is derived from the sale of hardware, related supplies, repairs and maintenance, and service agreements[49](index=49&type=chunk) **Revenue by Major Product Type (in thousands)** | Product Type | Six Months Ended July 31, 2025 | Six Months Ended August 3, 2024 | % Change | | :--- | :--- | :--- | :--- | | Hardware | $22,231 | $21,234 | 4.7% | | Supplies | $40,576 | $40,977 | (1.0)% | | Service and Other | $11,003 | $11,289 | (2.5)% | | **Total Revenue** | **$73,810** | **$73,500** | **0.4%** | - Deferred revenue increased to **$1,459 thousand** at July 31, 2025, from $543 thousand at January 31, 2025, including a $1.1 million advance payment for an Aerospace product line[9](index=9&type=chunk)[52](index=52&type=chunk)[53](index=53&type=chunk) [Note 5 – Net Income (Loss) Per Common Share](index=14&type=section&id=Note%205%20%E2%80%93%20Net%20Income%20(Loss)%20Per%20Common%20Share) **Net Income (Loss) per Common Share** | Item | Three Months Ended July 31, 2025 | Six Months Ended July 31, 2025 | | :--- | :--- | :--- | | Net Income (Loss) per Common Share—Basic | $(0.16) | $(0.21) | | Net Income (Loss) per Common Share—Diluted | $(0.16) | $(0.21) | - Weighted average common stock equivalent shares of 38,232 (three months) and 51,130 (six months) were **excluded from diluted EPS computation** for July 31, 2025, due to their anti-dilutive effect given the net loss[55](index=55&type=chunk) [Note 6 – Intangible Assets](index=15&type=section&id=Note%206%20%E2%80%93%20Intangible%20Assets) **Intangible Assets, Net (in thousands)** | Item | July 31, 2025 | January 31, 2025 | | :--- | :--- | :--- | | Intangible Assets, net | $22,729 | $23,519 | - Amortization expense for acquired intangible assets was **$1.4 million** for the six months ended July 31, 2025[59](index=59&type=chunk) **Estimated Amortization Expense for Next Five Fiscal Years (in thousands)** | Fiscal Year | Estimated Amortization Expense | | :--- | :--- | | 2026 | $1,439 | | 2027 | $2,878 | | 2028 | $2,376 | | 2029 | $2,009 | | 2030 | $2,009 | [Note 7 – Inventories](index=15&type=section&id=Note%207%20%E2%80%93%20Inventories) **Inventories, Net (in thousands)** | Item | July 31, 2025 | January 31, 2025 | | :--- | :--- | :--- | | Materials and Supplies | $32,839 | $35,181 | | Work-In-Process | $2,602 | $2,559 | | Finished Goods | $22,401 | $19,879 | | Inventory Reserve | $(9,449) | $(9,725) | | **Total Inventories, net** | **$48,393** | **$47,894** | [Note 8 – Property, Plant and Equipment](index=16&type=section&id=Note%208%20%E2%80%93%20Property%2C%20Plant%20and%20Equipment) **Net Property, Plant and Equipment (in thousands)** | Item | July 31, 2025 | January 31, 2025 | | :--- | :--- | :--- | | Gross Property, Plant and Equipment | $63,094 | $62,361 | | Accumulated Depreciation | $(46,076) | $(44,722) | | **Net Property, Plant and Equipment** | **$17,018** | **$17,639** | - Depreciation expense on property, plant and equipment was **$1.1 million** for the six months ended July 31, 2025[62](index=62&type=chunk) [Note 9 – Credit Agreement and Long-Term Debt](index=16&type=section&id=Note%209%20%E2%80%93%20Credit%20Agreement%20and%20Long-Term%20Debt) - The company entered into a **Fourth Amendment** to its credit agreement on March 20, 2025, modifying Term Loan repayment terms and interest rate margins[65](index=65&type=chunk)[66](index=66&type=chunk)[72](index=72&type=chunk) - As of July 31, 2025, the company was **not in compliance** with the minimum consolidated fixed charge coverage ratio but received a waiver via a Fifth Amendment on September 8, 2025[76](index=76&type=chunk)[217](index=217&type=chunk) **Summary of Outstanding Debt (in thousands)** | Debt Type | July 31, 2025 | January 31, 2025 | | :--- | :--- | :--- | | USD Term Loan | $8,800 | $9,450 | | Euro Term Loan | $12,667 | $12,719 | | MTEX Euro Term Loan | $1,590 | $1,514 | | MTEX Euro Government Grant Term Loan | $561 | $876 | | Equipment Loan | $605 | $680 | | **Total Debt** | **$24,223** | **$25,239** | | Revolving Line of Credit (Current Liability) | $19,079 | $20,929 | - As of July 31, 2025, **$5.9 million remained available** for borrowing under the revolving credit facility[82](index=82&type=chunk) [Note 10 – Financial Instruments and Risk Management](index=19&type=section&id=Note%2010%20%E2%80%93%20Financial%20Instruments%20and%20Risk%20Management) - The company uses foreign currency-denominated debt to partially hedge its net investment in European operations, specifically in its German operation as of January 31, 2025[85](index=85&type=chunk) - A foreign currency translation gain of **$1,022 thousand** was recognized in Other Comprehensive Income for the six months ended July 31, 2025[14](index=14&type=chunk)[99](index=99&type=chunk) [Note 11 – Royalty Obligation](index=20&type=section&id=Note%2011%20%E2%80%93%20Royalty%20Obligation) - As of July 31, 2025, **$13.5 million** of the $15.0 million guaranteed minimum royalty obligation with Honeywell has been paid[87](index=87&type=chunk) - The remaining guaranteed minimum royalty obligation is **$1.0 million (current)** and **$0.5 million (long-term)** at July 31, 2025[87](index=87&type=chunk) - A new royalty agreement for Boeing 787 aircraft printers has an outstanding obligation of **$0.5 million** as of July 31, 2025, including $0.2 million current[89](index=89&type=chunk) [Note 12 – Leases](index=20&type=section&id=Note%2012%20%E2%80%93%20Leases) **Operating Lease Information (in thousands)** | Item | July 31, 2025 | January 31, 2025 | | :--- | :--- | :--- | | Right of Use Assets | $2,689 | $1,781 | | Lease Liabilities – Current | $547 | $320 | | Lease Liabilities – Long Term | $2,235 | $1,535 | | **Total Lease Liabilities** | **$2,782** | **$1,855** | - Operating lease costs were **$341 thousand** for the six months ended July 31, 2025[90](index=90&type=chunk) - The weighted-average remaining lease term is **5.8 years**, with a weighted-average discount rate of **6.10%** as of July 31, 2025[92](index=92&type=chunk) [Note 13 – Government Grants](index=22&type=section&id=Note%2013%20%E2%80%93%20Government%20Grants) - MTEX receives government grants from Portugal for operations and capital projects[95](index=95&type=chunk) - As of July 31, 2025, **$1.3 million** in short and long-term deferred revenue for capital grants is recognized[97](index=97&type=chunk) - Grant revenue of **$0.1 million** (capital-related) was recognized as an offset to depreciation expense, and **$0.2 million** (operational-related) was offset against selling and marketing expense for the six months ended July 31, 2025[97](index=97&type=chunk)[98](index=98&type=chunk) [Note 14 – Accumulated Other Comprehensive Loss](index=22&type=section&id=Note%2014%20%E2%80%93%20Accumulated%20Other%20Comprehensive%20Loss) **Accumulated Other Comprehensive Loss (in thousands)** | Item | January 31, 2025 | July 31, 2025 | | :--- | :--- | :--- | | Balance | $(3,349) | $(2,327) | | Other Comprehensive Income | N/A | $1,022 | | **Change** | **N/A** | **$1,022** | - The improvement in accumulated other comprehensive loss is primarily due to **foreign currency translation adjustments**[99](index=99&type=chunk) [Note 15 – Share-Based Compensation](index=22&type=section&id=Note%2015%20%E2%80%93%20Share-Based%20Compensation) **Share-Based Compensation Expense (in thousands)** | Item | Three Months Ended July 31, 2025 | Six Months Ended July 31, 2025 | | :--- | :--- | :--- | | Stock Options | $35 | $35 | | Restricted Stock Awards and Restricted Stock Units | $421 | $702 | | Stock-Settled Performance Awards | $43 | $43 | | Employee Stock Purchase Plan | $0 | $25 | | **Total** | **$499** | **$805** | - Approximately **$1.1 million** of unrecognized compensation expense related to RSUs, PSUs, and RSAs is expected to be recognized over a weighted average period of 2.3 years[108](index=108&type=chunk) - The Employee Stock Purchase Plan (ESPP) was **terminated** effective April 22, 2025[111](index=111&type=chunk) [Note 16 – Income Taxes](index=24&type=section&id=Note%2016%20%E2%80%93%20Income%20Taxes) **Effective Tax Rates** | Period | Fiscal 2026 | Fiscal 2025 | | :--- | :--- | :--- | | Three Months Ended July 31 | 26.8% | (522.0)% | | Six Months Ended July 31 | 18.9% | (24.9)% | - An income tax benefit of **$378 thousand** was recognized for the six months ended July 31, 2025[115](index=115&type=chunk) - The "One Big Beautiful Bill Act" (OBBBA), enacted on July 4, 2025, is **not expected to have a material impact** on the consolidated financial statements[116](index=116&type=chunk) [Note 17 – Segment Information](index=25&type=section&id=Note%2017%20%E2%80%93%20Segment%20Information) - AstroNova operates in two reporting segments: **Product ID** and **Aerospace** (formerly Test & Measurement)[118](index=118&type=chunk)[119](index=119&type=chunk) **Revenue by Segment (in thousands)** | Segment | Three Months Ended July 31, 2025 | Three Months Ended August 3, 2024 | Six Months Ended July 31, 2025 | Six Months Ended August 3, 2024 | | :--- | :--- | :--- | :--- | :--- | | Product ID | $24,754 | $27,165 | $51,043 | $50,350 | | Aerospace | $11,348 | $13,374 | $22,767 | $23,150 | | **Total Revenue** | **$36,102** | **$40,539** | **$73,810** | **$73,500** | **Segment Operating Income (in thousands)** | Segment | Three Months Ended July 31, 2025 | Three Months Ended August 3, 2024 | Six Months Ended July 31, 2025 | Six Months Ended August 3, 2024 | | :--- | :--- | :--- | :--- | :--- | | Product ID | $1,916 | $2,348 | $4,707 | $5,340 | | Aerospace | $2,410 | $3,834 | $5,176 | $5,555 | | **Total Segment Operating Income** | **$4,326** | **$6,182** | **$9,883** | **$10,895** | [Note 18 – Fair Value](index=27&type=section&id=Note%2018%20%E2%80%93%20Fair%20Value) - The fair value of long-term debt, including the current portion, is estimated at **$24,115 thousand** as of July 31, 2025, and is classified as a Level 3 measurement[126](index=126&type=chunk) [Note 19 – Restructuring](index=27&type=section&id=Note%2019%20%E2%80%93%20Restructuring) - A restructuring plan for fiscal 2026 was announced on March 20, 2025, including a **10% global workforce reduction** and realignment of the MTEX operation[127](index=127&type=chunk) - The plan involves cutting approximately **70% of the MTEX product portfolio** to focus on higher-margin products and integrating MTEX sales, marketing, and customer support functions[127](index=127&type=chunk) - The company anticipates **$3.0 million in annualized savings** and has recognized **$1.2 million in pre-tax restructuring charges** as of July 31, 2025[127](index=127&type=chunk)[128](index=128&type=chunk) [Note 20 – Subsequent Events](index=28&type=section&id=Note%2020%20%E2%80%93%20Subsequent%20Events) - On September 8, 2025, the company entered into a **Fifth Amendment** to its credit agreement, which waived a covenant default as of July 31, 2025[130](index=130&type=chunk)[217](index=217&type=chunk) - The Fifth Amendment also requires the company to provide a mortgage on its Elk Grove Village, Illinois property and obtain a Phase II environmental site assessment for its West Warwick, Rhode Island property[130](index=130&type=chunk)[217](index=217&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes financial condition, operational results, liquidity, and the impact of acquisitions and restructuring [Business Overview](index=28&type=section&id=Business%20Overview) - AstroNova operates in Product Identification and Aerospace segments, focusing on organic growth through product innovation and customer-centric strategies[132](index=132&type=chunk)[133](index=133&type=chunk)[136](index=136&type=chunk) - The MTEX acquisition (May 2024) was integrated into the Product ID segment, but its integration has been challenging, leading to an investigation of potential breaches of representations and warranties[134](index=134&type=chunk)[159](index=159&type=chunk) - A fiscal 2026 restructuring plan, announced March 20, 2025, includes a **10% global workforce reduction** and realignment of MTEX operations, aiming for **$3.0 million in annualized savings**[135](index=135&type=chunk) - Jorik E Ittmann was appointed President and Chief Executive Officer, effective August 15, 2025[137](index=137&type=chunk) [Results of Operations](index=29&type=section&id=Results%20of%20Operations) [Three Months Ended July 31, 2025 vs. Three Months Ended August 3, 2024](index=29&type=section&id=Three%20Months%20Ended%20July%2031%2C%202025%20vs.%20Three%20Months%20Ended%20August%203%2C%202024) **Revenue by Segment (in thousands)** | Segment | July 31, 2025 | August 3, 2024 | % Change | | :--- | :--- | :--- | :--- | | Product ID | $24,754 | $27,165 | (8.9)% | | Aerospace | $11,348 | $13,374 | (15.1)% | | **Total** | **$36,102** | **$40,539** | **(10.9)%** | - Gross profit **decreased by 18.8% to $11.6 million**, with gross profit margin declining 3.1 points to 32.2%, primarily due to unfavorable product mix and lower sales[142](index=142&type=chunk) - Net loss for the quarter was **$1.2 million**, or $(0.16) per diluted share, impacted by $0.7 million in restructuring charges, $0.1 million in legal fees, and $0.4 million in proxy solicitation costs[146](index=146&type=chunk) [Six Months Ended July 31, 2025 vs. Six Months Ended August 3, 2024](index=30&type=section&id=Six%20Months%20Ended%20July%2031%2C%202025%20vs.%20Six%20Months%20Ended%20August%203%2C%202024) **Revenue by Segment (in thousands)** | Segment | July 31, 2025 | August 3, 2024 | % Change | | :--- | :--- | :--- | :--- | | Product ID | $51,043 | $50,350 | 1.4% | | Aerospace | $22,767 | $23,150 | (1.7)% | | **Total** | **$73,810** | **$73,500** | **0.4%** | - Gross profit **decreased by 7.7% to $24.3 million**, with gross profit margin declining 2.9 percentage points to 32.9%, primarily due to lower sales, product mix, and $0.4 million in restructuring costs[151](index=151&type=chunk)[152](index=152&type=chunk) - The company reported a **net loss of $1.6 million**, or $(0.21) per diluted share, a shift from net income of $0.9 million in the prior year, significantly impacted by $1.2 million in restructuring charges and other non-recurring costs[156](index=156&type=chunk) [Segment Analysis](index=31&type=section&id=Segment%20Analysis) [Product ID Segment Analysis](index=32&type=section&id=Product%20ID%20Segment%20Analysis) - Product ID segment revenue **decreased by 8.9% in Q2 2025**, primarily due to declines in desktop, professional label, and direct-to-package printers[162](index=162&type=chunk) - For the six months ended July 31, 2025, Product ID revenue **increased by 1.4%**, driven by direct-to-package/overprinters and mail & sheet/flat pack printers[163](index=163&type=chunk) - Segment operating profit margin for Product ID **decreased to 7.7% in Q2 2025 and 9.2% for H1 2025**, primarily due to lower sales, unfavorable product mix, and higher costs associated with restructuring[162](index=162&type=chunk)[163](index=163&type=chunk) - The integration of MTEX has been more challenging than anticipated, leading to an investigation of potential breaches of representations and warranties and a **reduction of 70% of the MTEX product portfolio**[159](index=159&type=chunk)[135](index=135&type=chunk) [Aerospace Segment Analysis](index=33&type=section&id=Aerospace%20Segment%20Analysis) - Aerospace segment revenue **decreased by 15.1% in Q2 2025**, mainly due to a 25.2% decrease in commercial aircraft sales, partially offset by a 72.2% increase in defense market sales[168](index=168&type=chunk) - For the six months ended July 31, 2025, Aerospace revenue **decreased by 1.7%**, with declines in commercial aircraft and regional/business jet markets, partially offset by a 98.3% increase in defense market sales[169](index=169&type=chunk) - Segment operating profit margin for Aerospace **decreased to 21.2% in Q2 2025 and 22.7% for H1 2025**, due to lower revenue and product mix[168](index=168&type=chunk)[169](index=169&type=chunk) - Certain sales amounts for the three months ended April 30, 2025, were reclassified between market categories to correct a presentation error, with no impact on total net sales or financial statements[166](index=166&type=chunk)[167](index=167&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) [Overview of Liquidity](index=35&type=section&id=Overview%20of%20Liquidity) - Primary liquidity sources are cash from operating activities and borrowings under the revolving credit facility[171](index=171&type=chunk) - Despite net losses for the three and six months ended July 31, 2025, management believes current liquidity sources will support anticipated needs[172](index=172&type=chunk) - As of July 31, 2025, the company **failed to satisfy certain financial covenants** under its credit agreement but received a waiver from the Lender[173](index=173&type=chunk) - Cash and cash equivalents were **$3.9 million** at July 31, 2025, with **$5.9 million available** under the revolving credit facility[177](index=177&type=chunk) [Indebtedness](index=35&type=section&id=Indebtedness) - The **Fourth Amendment** (March 20, 2025) modified repayment installments for the Term Loan and adjusted interest rate margins for various loans[176](index=176&type=chunk)[178](index=178&type=chunk)[183](index=183&type=chunk) - The **Fifth Amendment** (September 8, 2025) waived a covenant default as of July 31, 2025, and required additional collateral, including a mortgage on an Illinois property[187](index=187&type=chunk) - Assumed MTEX financing obligations include a Term Loan (**$1.6 million remaining**) and interest-free Government Grant Term Loans (**$0.6 million remaining**) as of July 31, 2025[191](index=191&type=chunk)[192](index=192&type=chunk) [Cash Flow](index=37&type=section&id=Cash%20Flow) - Net cash provided by operating activities **decreased to $4.6 million** for the six months ended July 31, 2025, from $7.1 million in the prior year, primarily due to a shift to net loss and decreased cash from working capital[194](index=194&type=chunk) - Net cash used for investing activities **significantly decreased to $(0.1) million** in 2025, compared to $(21.6) million in 2024, due to the absence of the MTEX acquisition[18](index=18&type=chunk)[194](index=194&type=chunk) - Accounts receivable decreased to $18.5 million, with days sales outstanding **improving to 47 days** from 51 days[195](index=195&type=chunk) - Inventory increased to $48.4 million, primarily to satisfy ink supply obligations, with inventory days on hand **increasing to 178 days** from 175 days[195](index=195&type=chunk) [Contractual Obligations, Commitments and Contingencies](index=38&type=section&id=Contractual%20Obligations%2C%20Commitments%20and%20Contingencies) - No material changes to contractual obligations, commitments, and contingencies have occurred since the Annual Report on Form 10-K for January 31, 2025, other than those in the ordinary course of business[197](index=197&type=chunk) [Critical Accounting Policies, Estimates and Certain Other Matters](index=38&type=section&id=Critical%20Accounting%20Policies%2C%20Estimates%20and%20Certain%20Other%20Matters) - The preparation of financial statements involves significant estimates and assumptions, including revenue recognition, inventory valuation, income taxes, and valuation of long-lived assets[198](index=198&type=chunk)[29](index=29&type=chunk) - Management continuously re-evaluates these estimates based on facts, historical experience, and economic conditions, acknowledging that actual results may differ materially[199](index=199&type=chunk) - There have been **no material changes** to the application of critical accounting policies since the Annual Report on Form 10-K for January 31, 2025[200](index=200&type=chunk) [Cautionary Note Regarding Forward-Looking Statements](index=38&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) - The report contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially from expectations[201](index=201&type=chunk) - Key risk factors include general economic conditions, declining demand, new product development, supply chain dependence, competition, intellectual property, cybersecurity, and the ability to manage debt and integrate acquisitions[201](index=201&type=chunk) - The company assumes no obligation to update or revise any forward-looking statement[201](index=201&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks involve foreign currency exchange rates and interest rate fluctuations [Foreign Currency Exchange Risk](index=39&type=section&id=Foreign%20Currency%20Exchange%20Risk) - The company is exposed to foreign currency exchange risk from translating foreign subsidiary financial statements (primarily Danish Kroner and Euro) and from transactional exposure[203](index=203&type=chunk)[204](index=204&type=chunk) - A hypothetical **10% change in exchange rates** would result in an increase or decrease in consolidated net income of **less than $0.1 million** for the quarter ended July 31, 2025[203](index=203&type=chunk) - Foreign exchange losses from transactional exposure were **less than $0.1 million** for the six months ended July 31, 2025[204](index=204&type=chunk) [Item 4. Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of July 31, 2025 [Evaluation of Disclosure Controls and Procedures](index=39&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - Management, with CEO and CFO participation, concluded that disclosure controls and procedures were **effective** as of July 31, 2025[206](index=206&type=chunk) [Changes in Internal Control over Financial Reporting](index=39&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) - **No changes** in internal control over financial reporting materially affected or are reasonably likely to materially affect the company's internal control over financial reporting during the fiscal quarter ended July 31, 2025[207](index=207&type=chunk) [Part II. OTHER INFORMATION](index=39&type=section&id=Part%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=39&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in arbitration proceedings related to the MTEX acquisition, with a ruling expected in 2026 - Arbitration proceedings were initiated on March 11, 2025, by Effort Premier Solutions LDA and Elói Serafim Alves Ferreira, alleging breaches of the MTEX acquisition agreement[208](index=208&type=chunk) - AstroNova has rejected the claims and intends to file counterclaims based on breaches of the MTEX acquisition agreement[208](index=208&type=chunk) - The evidentiary process and hearings are planned over the next six months, with a ruling not expected until the first half of 2026[209](index=209&type=chunk) [Item 1A. Risk Factors](index=40&type=section&id=Item%201A.%20Risk%20Factors) Non-compliance with the credit agreement could have a material adverse impact on the company's business - Readers should carefully consider the risk factors discussed in Part I, Item 1A of the Annual Report on Form 10-K for the fiscal year ended January 31, 2025[211](index=211&type=chunk) - A significant risk is the **inability to comply with the credit agreement** or secure alternative financing, which could materially adversely affect the business and financial condition[212](index=212&type=chunk) - As of July 31, 2025, the company was **not in compliance** with the minimum consolidated fixed charge coverage ratio under its credit agreement, though a waiver was subsequently obtained[212](index=212&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=40&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased common stock from employees to cover tax obligations from vested restricted shares **Common Stock Repurchases (Q2 FY2026)** | Period | Total Number of Shares Repurchased | Weighted Average Price Paid Per Share | | :--- | :--- | :--- | | June 1 - June 30 | 2,739 | $9.01 | - The shares were repurchased from employees to satisfy taxes due in connection with the vesting of restricted shares[214](index=214&type=chunk) [Item 5. Other Information](index=41&type=section&id=Item%205.%20Other%20Information) A Fifth Amendment to the credit agreement waived a covenant default and added new collateral requirements - On September 8, 2025, the company entered into a **Fifth Amendment** to its credit agreement, waiving the event of default for non-compliance with the minimum consolidated fixed charge coverage ratio as of July 31, 2025[217](index=217&type=chunk) - The Fifth Amendment requires the company to provide a mortgage on its Elk Grove Village, Illinois property and obtain a Phase II environmental site assessment for its West Warwick, Rhode Island property[217](index=217&type=chunk) - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the three months ended July 31, 2025[217](index=217&type=chunk) [Item 6. Exhibits](index=42&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the report, including key agreements and required certifications - The exhibits include organizational documents (Restated Articles of Incorporation, By-laws), key agreements (Stock-Settled Performance Award, Separation Agreement, Fifth Amendment to Credit Agreement), and certifications (CEO, CFO)[220](index=220&type=chunk) [Signatures](index=43&type=section&id=Signatures) The report is officially signed by the CEO and CFO, confirming its submission on September 9, 2025 - The report was signed on September 9, 2025, by Jorik E Ittmann, President and Chief Executive Officer, and Thomas D DeByle, Vice President, Chief Financial Officer and Treasurer[224](index=224&type=chunk)

EXHIBIT 99.1 News Release 25-23-TR For Immediate Release Date: September 9, 2025 Teck and Anglo American to combine through merger of equals to form a global critical minerals champion Vancouver, B.C. – Teck Resources Limited (TSX: TECK.A and TECK.B, NYSE: TECK) ("Teck") and Anglo American plc ("Anglo American") announce they have reached an agreement to combine the two companies in a merger of equals ("the Merger") to form the Anglo Teck group ("Anglo Teck"), a global critical minerals champion and top fiv ...

[Executive Summary & Business Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Business%20Highlights) AstroNova reported disappointing Q2 FY26 results, leading to a revised outlook and strategic re-evaluation, despite new product advancements [CEO Statement & Strategic Priorities](index=1&type=section&id=CEO%20Statement%20%26%20Strategic%20Priorities) CEO Jorik Ittmann expressed disappointment with Q2 FY26 results, prompting a strategic re-evaluation focused on Product ID turnaround and operational efficiency - CEO Jorik Ittmann expressed disappointment with **Q2 FY26 financial results** and adjusted the company's outlook[3](index=3&type=chunk) - Strategic priorities include turning around the **Product ID segment**, rebuilding customer relationships, securing new customers, and improving operational efficiency[3](index=3&type=chunk) [Key Business Updates](index=1&type=section&id=Key%20Business%20Updates) AstroNova launched new Product ID printers with MTEX printheads and began shipping the ToughWriter 640 flight deck printer for its Aerospace segment - Shipped first redesigned **Product ID printers** incorporating **MTEX's autonomous ink printheads** (QL-425, QL-435 professional label presses, and AJ-800 direct-to-packaging print solution)[4](index=4&type=chunk)[6](index=6&type=chunk) - Aerospace business began shipping the **ToughWriter 640 flight deck printer** to a major aircraft manufacturer, aiming for **over 80% of flight deck printer shipments** to be ToughWriters by end of fiscal 2026[5](index=5&type=chunk)[6](index=6&type=chunk) [Fiscal 2026 Second Quarter Highlights](index=1&type=section&id=Fiscal%202026%20Second%20Quarter%20Highlights) Q2 FY26 revenue declined **10.9%** to **$36.1 million** due to Product ID challenges, leading to revised FY26 revenue guidance of **$149-$154 million** and **7.5%-8.5%** adjusted EBITDA margin Q2 FY26 Key Highlights | Metric | Value | Change | Notes | | :--- | :--- | :--- | :--- | | Revenue | $36.1 million | -10.9% YoY | Reflects challenges in Product Identification shipments | | Redesigned Product ID MTEX label presses | Shipped | N/A | Advanced from development to commercial release | | ToughWriter® shipments to major OEM | Started | N/A | On track for >80% of flight deck printer shipments by end of FY26 | | Revised FY26 Revenue Guidance | $149 - $154 million | Downward | Previously $160 - $165 million | | Revised FY26 EBITDA Margin Guidance | 7.5% - 8.5% | Downward | Previously 8.5% - 9.5% | [Financial Performance Overview](index=2&type=section&id=Financial%20Performance%20Overview) AstroNova's Q2 FY26 financial performance was challenging, marked by significant declines in consolidated revenue and gross profit, leading to an operating loss and widened net loss [Consolidated Financial Results (GAAP)](index=2&type=section&id=Consolidated%20Financial%20Results%20(GAAP)) AstroNova's Q2 FY26 GAAP results showed significant declines in revenue and gross profit, resulting in an operating loss and a widened net loss Three Months Ended July 31, 2025 (vs. August 3, 2024) | Metric | July 31, 2025 ($ thousands) | August 3, 2024 ($ thousands) | $ Variance ($ thousands) | % Variance | | :--- | :--- | :--- | :--- | :--- | | Revenue | $36,102 | $40,539 | $(4,437) | (10.9)% | | Gross Profit | $11,633 | $14,326 | $(2,693) | (18.8)% | | Gross Profit Margin | 32.2% | 35.3% | | | | Operating Income (Loss) | $(708) | $1,061 | $(1,769) | (166.7)% | | Operating Margin | (2.0)% | 2.6% | | | | Net Income (Loss) | $(1,243) | $(311) | $(932) | 299.7% | | Net Income (Loss) per Common Share – Basic | $(0.16) | $(0.04) | | | - Revenue declined **$4.4 million** due to delays in new product launches in Product Identification and a difficult year-over-year comparison in Aerospace[7](index=7&type=chunk) - Gross profit decline and margin reduction were attributed to lower sales volume and unfavorable product mix[8](index=8&type=chunk) - Operating loss primarily resulted from lower sales volume, partially offset by approximately **$0.9 million** in lower operating expenses[8](index=8&type=chunk) [Segment Performance](index=2&type=section&id=Segment%20Performance) Both Product Identification and Aerospace segments experienced revenue and operating income declines in Q2 FY26, driven by new technology deployment delays and tough prior-year comparisons [Product Identification Segment](index=2&type=section&id=Product%20Identification%20Segment) The Product ID segment's revenue decreased by **8.9%** to **$24.8 million**, primarily due to delays in new technology deployment, longer sales cycles, and lower legacy product sales, leading to reduced operating income Product ID Segment Performance (Q2 FY26 vs. Q2 FY25) | Metric | Q2 FY26 ($ millions) | Q2 FY25 ($ millions) | $ Variance ($ millions) | % Variance | | :--- | :--- | :--- | :--- | :--- | | Revenue | $24.8 | $27.2 | $(2.4) | (8.9)% | | Operating Income | $1.9 | $2.3 | $(0.4) | N/A | | Operating Margin | 7.7% | 8.6% | | | - Lower revenue was attributed to delays in new technology deployment, longer sales cycles for higher-value printing equipment, and decreased sales for legacy QuickLabel® and TrojanLabel® products[10](index=10&type=chunk) - Operating income reflected lower sales volume and **$0.1 million** in restructuring charges[11](index=11&type=chunk) [Aerospace Segment](index=3&type=section&id=Aerospace%20Segment) The Aerospace segment experienced a **15.1%** revenue decrease to **$11.3 million**, largely due to higher comparable sales in the prior year from atypical orders, resulting in a significant drop in operating profit Aerospace Segment Performance (Q2 FY26 vs. Q2 FY25) | Metric | Q2 FY26 ($ millions) | Q2 FY25 ($ millions) | $ Variance ($ millions) | % Variance | | :--- | :--- | :--- | :--- | :--- | | Revenue | $11.3 | $13.4 | $(2.0) | (15.1)% | | Operating Profit | $2.4 | $3.8 | $(1.4) | (37.1)% | - Revenue decrease was driven by higher prior-year comparable sales from atypical orders, including large spare printer orders and non-recurring engineering revenue[13](index=13&type=chunk) [Balance Sheet and Cash Flow](index=3&type=section&id=Balance%20Sheet%20and%20Cash%20Flow) Cash and cash equivalents decreased by **$1.2 million** in H1 FY26, with lower cash from operations, while total debt was reduced by **$3.2 million**, and the company is exploring real estate-backed financing Balance Sheet & Cash Flow Highlights (H1 FY26) | Metric | July 31, 2025 ($ millions) | Change from Jan 31, 2025 ($ millions) | | :--- | :--- | :--- | | Cash and Cash Equivalents | $3.9 | Down $1.2 | | Cash provided by operations (H1 FY26) | $4.6 | Down from prior year | | Capital expenditures (H1 FY26) | $0.1 | Down $0.7 from prior year | | Total Debt Reduction (H1 FY26) | $3.2 | N/A | | Net Debt (July 31, 2025) | $39.6 | Down from $41.6 (Jan 31, 2025) | - The company entered into an amended credit agreement, waiving non-compliance with a minimum fixed charge coverage ratio covenant for Q2 FY26, and is discussing restructuring financing into a real estate-backed loan[17](index=17&type=chunk) [Orders and Backlog](index=3&type=section&id=Orders%20and%20Backlog) Overall orders for Q2 FY26 remained relatively flat at **$35.9 million**, with total backlog slightly decreasing to **$25.3 million**, as Product ID's book-to-bill was **95%** and Aerospace's was **110%** Orders and Backlog (Q2 FY26 vs. Q2 FY25) | Metric | Q2 FY26 ($ millions) | Q2 FY25 ($ millions) | Change | | :--- | :--- | :--- | :--- | | Total Orders | $35.9 | $35.8 | Relatively unchanged | | Total Backlog (July 31, 2025) | $25.3 | N/A | Down from $25.5 (Q1 FY26) | | Product ID Orders | $23.4 | $23.4 | Relatively unchanged | | Product ID Book-to-Bill Ratio | 95% | N/A | | | Aerospace Orders | $12.5 | $12.5 | Relatively unchanged | | Aerospace Book-to-Bill Ratio | 110% | N/A | | - Product ID backlog decreased by **$1.3 million** from Q1 FY26, while Aerospace backlog increased by **$1.1 million** due to timing variability[19](index=19&type=chunk)[20](index=20&type=chunk) [Fiscal Year 2026 Outlook](index=3&type=section&id=Fiscal%20Year%202026%20Outlook) AstroNova revised its FY26 revenue guidance downward to **$149-$154 million** and adjusted EBITDA margin to **7.5%-8.5%**, anticipating modest growth in the second half from new Product ID solutions and cost restructuring Revised Fiscal 2026 Guidance | Metric | Previous Guidance ($ millions) | Revised Guidance ($ millions) | Change | | :--- | :--- | :--- | :--- | | Revenue | $160 - $165 | $149 - $154 | Downward | | Adjusted EBITDA Margin | 8.5% - 9.5% | 7.5% - 8.5% | Downward | | Expected Effective Tax Rate | N/A | ~32.8% | N/A | - Modest revenue growth and improved EBITDA margin are expected in the second half of FY26, driven by recently launched Product ID solutions and the full impact of cost restructuring efforts[21](index=21&type=chunk) [Company Information & Non-GAAP Measures](index=4&type=section&id=Company%20Information%20%26%20Non-GAAP%20Measures) This section provides details on AstroNova's earnings call, company profile, rationale for using Non-GAAP financial measures, and important forward-looking statement disclaimers [Earnings Conference Call Information](index=4&type=section&id=Earnings%20Conference%20Call%20Information) AstroNova hosted a conference call and webcast on September 9, 2025, to discuss Q2 FY26 financial and operating results, with replays available for review - Conference call and webcast held on September 9, 2025, at 10:00 a.m. ET to review Q2 FY26 results[24](index=24&type=chunk) - Telephonic replay available until September 23, 2025, and webcast replay on the Investor Relations section of the company's website[25](index=25&type=chunk) [About AstroNova, Inc.](index=4&type=section&id=About%20AstroNova%2C%20Inc.) AstroNova (Nasdaq: ALOT) is a leading innovator in specialized print technology solutions, focusing on profitable growth through innovation, expanding its installed base, and strategic aftermarket sourcing - AstroNova (Nasdaq: ALOT) specializes in print technology solutions, providing products that acquire, store, analyze, and present data[26](index=26&type=chunk) - Strategy: drive profitable growth via innovative technologies, expand installed base for recurring revenue, and strategically source aftermarket products[26](index=26&type=chunk) - Segments include Product Identification (digital marking and identification solutions) and Aerospace (airborne printing, avionics, data acquisition)[27](index=27&type=chunk) [Use of Non-GAAP Financial Measures](index=4&type=section&id=Use%20of%20Non-GAAP%20Financial%20Measures) AstroNova utilizes Non-GAAP financial measures to provide investors with a clearer understanding of core operating results and facilitate comparisons, acknowledging limitations in reconciling forward-looking Adjusted EBITDA - Non-GAAP measures (e.g., Non-GAAP gross profit, operating income, net income, Adjusted EBITDA) are used to help investors understand core operating results and compare performance[28](index=28&type=chunk) - Management uses Non-GAAP measures for evaluating core operating performance, comparing to prior periods and competitors, and for financial/operating decision-making[28](index=28&type=chunk) - Forward-looking Adjusted EBITDA margin cannot be reconciled to GAAP without unreasonable effort due to the unpredictability of cost of sales, operating expenses, depreciation, amortization, and stock-based compensation[29](index=29&type=chunk) [Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) This news release contains forward-looking statements subject to various risks and uncertainties that could cause actual results to differ materially, with no obligation for the company to update them - Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from expectations[31](index=31&type=chunk) - Key risks include the success of Product ID sales improvement, customer adoption of redesigned print solutions, realization of cost-reduction benefits, Aerospace customer build rates, benefits from next-generation print engine technology, and successful restructuring of financing arrangements[31](index=31&type=chunk) - The company undertakes no obligation to publicly update or revise any forward-looking statements[31](index=31&type=chunk) [Financial Statements (GAAP)](index=6&type=section&id=Financial%20Statements%20(GAAP)) This section provides AstroNova's unaudited condensed consolidated GAAP financial statements, including statements of income (loss), balance sheets, and cash flow, for the specified periods [Condensed Consolidated Statements of Income (Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20(Loss)) This section presents AstroNova's unaudited condensed consolidated statements of income (loss), detailing revenue, gross profit, operating income (loss), and net income (loss) for the three and six months ended July 31, 2025, and August 3, 2024 Condensed Consolidated Statements of Income (Loss) (Three Months Ended) | Metric | July 31, 2025 ($ thousands) | August 3, 2024 ($ thousands) | $ Variance ($ thousands) | % Variance | | :--- | :--- | :--- | :--- | :--- | | Revenue | $36,102 | $40,539 | $(4,437) | (10.9)% | | Gross Profit | $11,633 | $14,326 | $(2,693) | (18.8)% | | Operating Income (Loss) | $(708) | $1,061 | $(1,769) | (166.7)% | | Net Income (Loss) | $(1,243) | $(311) | $(932) | 299.7)% | | Net Income (Loss) per Common Share – Basic | $(0.16) | $(0.04) | | | Condensed Consolidated Statements of Income (Loss) (Six Months Ended) | Metric | July 31, 2025 ($ thousands) | August 3, 2024 ($ thousands) | $ Variance ($ thousands) | % Variance | | :--- | :--- | :--- | :--- | :--- | | Revenue | $73,810 | $73,500 | $310 | 0.4% | | Gross Profit | $24,286 | $26,298 | $(2,012) | (7.7)% | | Operating Income (Loss) | $(135) | $2,407 | $(2,542) | (105.6)% | | Net Income (Loss) | $(1,619) | $869 | $(2,488) | (286.3)% | | Net Income (Loss) per Common Share – Basic | $(0.21) | $0.12 | | | [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents AstroNova's unaudited condensed consolidated balance sheets as of July 31, 2025, and January 31, 2025, providing a snapshot of the company's financial position, including assets, liabilities, and shareholders' equity Condensed Consolidated Balance Sheets Highlights | Metric | July 31, 2025 ($ thousands) | January 31, 2025 ($ thousands) | | :--- | :--- | :--- | | Total Current Assets | $75,230 | $78,017 | | Property, Plant and Equipment, net | $17,018 | $17,639 | | Total Assets | $143,149 | $145,595 | | Total Current Liabilities | $43,876 | $46,346 | | Total Liabilities | $67,363 | $69,845 | | Total Shareholders' Equity | $75,786 | $75,750 | [Condensed Consolidated Statements of Cash Flow](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flow) This section provides AstroNova's unaudited condensed consolidated statements of cash flow for the six months ended July 31, 2025, and August 3, 2024, detailing the sources and uses of cash from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flow Highlights (Six Months Ended) | Metric | July 31, 2025 ($ thousands) | August 3, 2024 ($ thousands) | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $4,644 | $7,066 | | Net Cash Used for Investing Activities | $(107) | $(21,559) | | Net Cash Provided by (Used for) Financing Activities | $(5,968) | $14,576 | | Net (Decrease) Increase in Cash and Cash Equivalents | $(1,195) | $297 | | Cash and Cash Equivalents, End of Period | $3,855 | $4,824 | [Segment Financials & Non-GAAP Reconciliations](index=9&type=section&id=Segment%20Financials%20%26%20Non-GAAP%20Reconciliations) This section provides detailed GAAP and Non-GAAP segment financial data, including sales, profit, revenue breakdown, bookings, backlog, and comprehensive reconciliations of GAAP to Non-GAAP measures [Segment Sales and Profit (GAAP)](index=9&type=section&id=Segment%20Sales%20and%20Profit%20(GAAP)) This section presents AstroNova's unaudited GAAP segment sales and profit data for Product ID and Aerospace, detailing revenue, gross profit, and operating income for the three and six months ended July 31, 2025, and August 3, 2024 Segment Sales and Profit (GAAP) - Three Months Ended July 31, 2025 | Metric | Product ID ($ thousands) | Aerospace ($ thousands) | Total ($ thousands) | | :--- | :--- | :--- | :--- | | Revenue | $24,754 | $11,348 | $36,102 | | Gross Profit | $7,677 | $3,956 | $11,633 | | Gross Profit Margin | 31.0% | 34.9% | 32.2% | | Segment Operating Income | $1,916 | $2,410 | $4,326 | | Segment Operating Margin | 7.7% | 21.2% | 12.0% | [Segment Sales and Non-GAAP Profit](index=10&type=section&id=Segment%20Sales%20and%20Non-GAAP%20Profit) This section presents AstroNova's unaudited Non-GAAP segment sales and profit for Product ID and Aerospace, providing a view of performance adjusted for specific non-recurring items for the three and six months ended July 31, 2025, and August 3, 2024 Segment Sales and Non-GAAP Profit - Three Months Ended July 31, 2025 | Metric | Product ID ($ thousands) | Aerospace ($ thousands) | Total ($ thousands) | | :--- | :--- | :--- | :--- | | Revenue | $24,754 | $11,348 | $36,102 | | Non-GAAP Gross Profit | $7,679 | $3,952 | $11,631 | | Non-GAAP Gross Profit Margin | 31.0% | 34.8% | 32.2% | | Non-GAAP Segment Operating Income | $2,019 | $2,411 | $4,430 | | Non-GAAP Segment Operating Margin | 8.2% | 21.2% | 12.3% | [Revenue by Market and Type](index=11&type=section&id=Revenue%20by%20Market%20and%20Type) This section details AstroNova's revenue breakdown by market categories and by type (Hardware vs. Recurring Supplies, Parts & Service) for both Product ID and Aerospace segments across several fiscal quarters Product ID Revenue by Market (Q2 FY26) | Market Category | Q2 FY26 Revenue ($ thousands) | | :--- | :--- | | Desktop Label Printers | $15,190 | | Mail & Sheet/Flat Pack Printers | $3,740 | | Professional Label Printers | $3,506 | | Direct to Package/Overprint Printers | $2,230 | | Flexible Packaging Printers | $69 | | Other | $19 | | **TOTAL Product ID** | **$24,754** | Consolidated Revenue by Type (Q2 FY26) | Revenue Type | Q2 FY26 Revenue ($ thousands) | | :--- | :--- | | AstroNova HW | $10,936 | | AstroNova Recurring Supplies, Parts & Service | $25,166 | | **TOTAL CONSOLIDATED** | **$36,102** | [Bookings and Backlog Details](index=12&type=section&id=Bookings%20and%20Backlog%20Details) This section provides detailed bookings and backlog information for AstroNova consolidated, Product ID, and Aerospace segments across several fiscal quarters, including book-to-bill ratios AstroNova Consolidated Bookings and Backlog (Q2 FY26) | Metric | Q2 FY26 ($ thousands) | | :--- | :--- | | Beginning backlog (incl. MTEX) | $25,491 | | Revenue Recognized (Billings) | $36,102 | | New Bookings During Period | $35,901 | | Backlog End of Period | $25,291 | | Book/Bill% | 99% | Segment Book-to-Bill Ratios (Q2 FY26) | Segment | Book/Bill% | | :--- | :--- | | Product Identification | 95% | | Aerospace | 110% | [Reconciliation of GAAP to Non-GAAP Items](index=13&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Items) This section provides a detailed reconciliation of GAAP to Non-GAAP financial measures, adjusting for items like inventory step-up, restructuring charges, and acquisition expenses to present core operational performance Key Non-GAAP Adjustments (Three Months Ended July 31, 2025) | Adjustment Type | Impact on Non-GAAP Operating Income ($ thousands) | | :--- | :--- | | MTEX-related Acquisition Expenses | $(25) | | Restructuring Charges | $689 | | Non-Recurring Legal Expenses | $69 | | Non-Recurring Proxy Costs | $355 | Key Non-GAAP Adjustments (Six Months Ended July 31, 2025) | Adjustment Type | Impact on Non-GAAP Operating Income ($ thousands) | | :--- | :--- | | MTEX-related Acquisition Expenses | $311 | | Inventory Step-Up | $61 | | Restructuring Charges | $1,247 | | Non-Recurring Legal Expenses | $69 | | Non-Recurring Proxy Costs | $355 | [Reconciliation of Net Income and Margin to Adjusted EBITDA and Margin](index=15&type=section&id=Reconciliation%20of%20Net%20Income%20and%20Margin%20to%20Adjusted%20EBITDA%20and%20Margin) This section reconciles Net Income (Loss) and Margin to Adjusted EBITDA and Margin, adjusting for interest, tax, depreciation, amortization, share-based compensation, and non-recurring items to show profitability before non-operating and non-cash charges Adjusted EBITDA Reconciliation (Three Months Ended July 31, 2025) | Metric | Value ($ thousands) | | :--- | :--- | | Net Income (Loss) | $(1,243) | | EBITDA | $468 | | Adjusted EBITDA | $2,055 | | Adjusted EBITDA Margin | 5.7% | Adjusted EBITDA Reconciliation (Six Months Ended July 31, 2025) | Metric | Value ($ thousands) | | :--- | :--- | | Net Income (Loss) | $(1,619) | | EBITDA | $2,355 | | Adjusted EBITDA | $5,203 | | Adjusted EBITDA Margin | 7.0% | [Reconciliation of Segment Gross Profit and Margin to Non-GAAP Gross Profit and Margin](index=16&type=section&id=Reconciliation%20of%20Segment%20Gross%20Profit%20and%20Margin%20to%20Non-GAAP%20Gross%20Profit%20and%20Margin) This section reconciles GAAP Segment Gross Profit and Margin to Non-GAAP Segment Gross Profit and Margin for Product ID and Aerospace, adjusting for inventory step-up and restructuring charges to show segment-specific gross profitability Non-GAAP Segment Gross Profit & Margin (Q2 FY26) | Segment | GAAP Gross Profit ($ thousands) | Non-GAAP Gross Profit ($ thousands) | GAAP Gross Profit Margin | Non-GAAP Gross Profit Margin | | :--- | :--- | :--- | :--- | :--- | | Product ID | $7,677 | $7,679 | 31.0% | 31.0% | | Aerospace | $3,956 | $3,952 | 34.9% | 34.8% | | Total | $11,633 | $11,631 | 32.2% | 32.2% | [Reconciliation of Segment Operating Profit and Margin to Non-GAAP Operating Profit and Margin](index=17&type=section&id=Reconciliation%20of%20Segment%20Operating%20Profit%20and%20Margin%20to%20Non-GAAP%20Operating%20Profit%20and%20Margin) This section reconciles GAAP Segment Operating Income and Margin to Non-GAAP Segment Operating Income and Margin for Product ID and Aerospace, with adjustments for inventory step-up and restructuring charges, providing a segment-level view of operating performance Non-GAAP Segment Operating Profit & Margin (Q2 FY26) | Segment | GAAP Operating Income ($ thousands) | Non-GAAP Operating Income ($ thousands) | GAAP Operating Margin | Non-GAAP Operating Margin | | :--- | :--- | :--- | :--- | :--- | | Product ID | $1,916 | $2,019 | 7.7% | 8.2% | | Aerospace | $2,410 | $2,411 | 21.2% | 21.2% | | Total | $4,326 | $4,430 | 12.0% | 12.3% |

[Executive Summary & Business Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Business%20Highlights) [Second Quarter 2025 Performance Highlights](index=1&type=section&id=Second%20Quarter%202025%20Performance%20Highlights) Designer Brands Inc. reported a sequential improvement in comparable sales for Q2 2025, achieving positive diluted EPS and adjusted diluted EPS with growth year-over-year, despite decreases in net sales, total comparable sales, and gross profit compared to the prior year - The company achieved a **280-basis point sequential improvement** in comparable sales from the first quarter of 2025[2](index=2&type=chunk) Second Quarter 2025 Key Financial Highlights (vs. Q2 2024) | Metric | Q2 2025 (million USD) | Q2 2024 (million USD) | Change (million USD) | Change (%) | | :-------------------------- | :------ | :------ | :----- | :--------- | | Net Sales | $739.8 | $771.9 | $(32.1) | (4.2)% | | Total Comparable Sales | (5.0)% | (1.4)% | (3.6)% | - | | Gross Profit | $322.9 | $339.5 | $(16.6) | (4.9)% | | Gross Margin | 43.7% | 44.0% | (0.3)% | (30) bps | | Diluted EPS | $0.22 | $0.24 | $(0.02) | (8.3)% | | Adjusted Diluted EPS | $0.34 | $0.29 | $0.05 | 17.2% | [CEO Commentary](index=1&type=section&id=CEO%20Commentary) CEO Doug Howe highlighted the positive impact of targeted operational initiatives, leading to a strong start for the back-to-school season in U.S. Retail and improvements in traffic and conversion, while acknowledging ongoing macroeconomic volatility and uncertainty - Targeted operational initiatives supported a **strong start to the back-to-school season** within the U.S. Retail segment[2](index=2&type=chunk) - The company observed gradual improvements in traffic and a notable uptick in conversion[2](index=2&type=chunk) - Ongoing efforts include strengthening the brand, driving awareness through marketing investments, and optimizing the omni-channel model[2](index=2&type=chunk) - Management remains committed to disciplined execution amidst macroeconomic volatility, extended tariff increases, and caution in discretionary spending[2](index=2&type=chunk) [Consolidated Financial Results](index=6&type=section&id=Consolidated%20Financial%20Results) [Condensed Consolidated Statements of Operations](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the second quarter of 2025, Designer Brands Inc. reported a decrease in net sales, gross profit, and net income attributable to Designer Brands Inc. compared to the prior year, with operating profit also declining and diluted EPS decreasing from $0.24 to $0.22 Condensed Consolidated Statements of Operations (Three Months Ended) | Metric | August 2, 2025 (thousands USD) | August 3, 2024 (thousands USD) | Change (thousands USD) | Change (%) | | :------------------------------------------ | :------------- | :------------- | :----- | :--------- | | Net sales | $739,762 | $771,900 | $(32,138) | (4.2)% | | Gross profit | $322,933 | $339,549 | $(16,616) | (4.9)% | | Operating profit | $26,583 | $28,589 | $(2,006) | (7.0)% | | Net income (loss) attributable to Designer Brands Inc. | $10,827 | $13,824 | $(2,997) | (21.7)% | | Diluted earnings (loss) per share | $0.22 | $0.24 | $(0.02) | (8.3)% | Condensed Consolidated Statements of Operations (Six Months Ended) | Metric | August 2, 2025 (thousands USD) | August 3, 2024 (thousands USD) | Change (thousands USD) | Change (%) | | :------------------------------------------ | :------------- | :------------- | :----- | :--------- | | Net sales | $1,426,671 | $1,518,496 | $(91,825) | (6.0)% | | Gross profit | $618,059 | $669,560 | $(51,501) | (7.7)% | | Operating profit | $19,321 | $37,971 | $(18,650) | (49.1)% | | Net income (loss) attributable to Designer Brands Inc. | $(6,597) | $14,607 | $(21,204) | (145.2)% | | Diluted earnings (loss) per share | $(0.14) | $0.25 | $(0.39) | (156.0)% | [Segment Performance](index=6&type=section&id=Segment%20Performance) Segment performance for Q2 2025 showed mixed results, with U.S. Retail experiencing declines across key metrics, Canada Retail seeing a slight net sales increase but overall declines, and the Brand Portfolio segment facing significant decreases across all key metrics [Net Sales by Segment](index=6&type=section&id=Net%20Sales%20by%20Segment) Consolidated net sales decreased by 4.2% for the three months ended August 2, 2025, with declines in U.S. Retail and Brand Portfolio segments, partially offset by a slight increase in Canada Retail Segment Net Sales (Three Months Ended August 2, 2025 vs. August 3, 2024) | Segment | August 2, 2025 (thousands USD) | August 3, 2024 (thousands USD) | Change (thousands USD) | Change (%) | | :---------------- | :------------- | :------------- | :----- | :--------- | | U.S. Retail | $610,926 | $641,694 | $(30,768) | (4.8)% | | Canada Retail | $75,077 | $74,797 | $280 | 0.4% | | Brand Portfolio | $73,157 | $95,993 | $(22,836) | (23.8)% | | Total Segment Net Sales | $759,160 | $812,484 | $(53,324) | (6.6)% | | Consolidated Net Sales | $739,762 | $771,900 | $(32,138) | (4.2)% | [Comparable Sales by Segment](index=6&type=section&id=Comparable%20Sales%20by%20Segment) Total comparable sales decreased by 5.0% for the three months ended August 2, 2025, with the Brand Portfolio segment's direct-to-consumer channel experiencing the most significant decline Change in Comparable Sales (Three Months Ended August 2, 2025 vs. August 3, 2024) | Segment | August 2, 2025 (%) | August 3, 2024 (%) | | :------------------------------------ | :------------- | :------------- | | U.S. Retail segment | (4.9)% | (1.1)% | | Canada Retail segment | (0.6)% | (3.1)% | | Brand Portfolio segment - direct-to-consumer channel | (29.2)% | (7.0)% | | Total | (5.0)% | (1.4)% | [Gross Profit by Segment](index=7&type=section&id=Gross%20Profit%20by%20Segment) Consolidated gross profit decreased by 4.9% for the three months ended August 2, 2025, with a slight decline in gross margin, and all segments experiencing a decrease in gross profit, particularly the Brand Portfolio Segment Gross Profit (Three Months Ended August 2, 2025 vs. August 3, 2024) | Segment | August 2, 2025 (thousands USD) | August 2, 2025 (% of Segment Net Sales) | August 3, 2024 (thousands USD) | August 3, 2024 (% of Segment Net Sales) | Change (%) | Basis Points Change (bps) | | :-------------------- | :---------------------- | :------------------------------------- | :---------------------- | :------------------------------------- | :--------- | :------------------ | | U.S. Retail | $264,522 | 43.3% | $282,916 | 44.1% | (6.5)% | (80) | | Canada Retail | $34,950 | 46.6% | $35,087 | 46.9% | (0.4)% | (30) | | Brand Portfolio | $18,508 | 25.3% | $26,635 | 27.7% | (30.5)% | (240) | | Consolidated Gross Profit | $322,933 | 43.7% | $339,549 | 44.0% | (4.9)% | (30) | [Operating Profit by Segment](index=7&type=section&id=Operating%20Profit%20by%20Segment) Consolidated operating profit decreased by 7.0% for the three months ended August 2, 2025, with all segments reporting a decline in operating profit, and the Brand Portfolio showing a significant increase in operating loss Segment Operating Profit (Three Months Ended August 2, 2025 vs. August 3, 2024) | Segment | August 2, 2025 (thousands USD) | August 2, 2025 (% of Segment Net Sales) | August 3, 2024 (thousands USD) | August 3, 2024 (% of Segment Net Sales) | Change (%) | Basis Points Change (bps) | | :-------------------- | :---------------------- | :------------------------------------- | :---------------------- | :------------------------------------- | :--------- | :------------------ | | U.S. Retail | $60,211 | 9.9% | $77,573 | 12.1% | (22.4)% | (220) | | Canada Retail | $8,498 | 11.3% | $9,052 | 12.1% | (6.1)% | (80) | | Brand Portfolio | $(3,606) | (4.9)% | $(2,053) | (2.1)% | 75.6% | (280) | | Consolidated Operating Profit | $26,583 | 3.6% | $28,589 | 3.7% | (7.0)% | (10) | [Financial Position & Capital Structure](index=2&type=section&id=Financial%20Position%20%26%20Capital%20Structure) [Condensed Consolidated Balance Sheets](index=10&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of August 2, 2025, Designer Brands Inc. reported an increase in cash and cash equivalents and a decrease in inventories compared to the prior year, with total assets slightly decreasing and total liabilities increasing Condensed Consolidated Balance Sheet Highlights (as of August 2, 2025 vs. August 3, 2024) | Metric | August 2, 2025 (thousands USD) | August 3, 2024 (thousands USD) | Change (thousands USD) | | :-------------------------- | :------------- | :------------- | :----- | | Cash and cash equivalents | $44,937 | $38,834 | $6,103 | | Inventories | $610,876 | $642,783 | $(31,907) | | Total current assets | $751,925 | $798,048 | $(46,123) | | Total assets | $2,061,731 | $2,107,134 | $(45,403) | | Total current liabilities | $573,495 | $619,038 | $(45,543) | | Long-term debt | $509,593 | $458,974 | $50,619 | | Total liabilities | $1,777,720 | $1,748,070 | $29,650 | | Total shareholders' equity | $280,797 | $355,545 | $(74,748) | [Liquidity](index=2&type=section&id=Liquidity) The company's cash and cash equivalents increased year-over-year, and it maintained significant availability under its revolving credit facility, despite an increase in total debt compared to the prior year Liquidity Position (as of August 2, 2025 vs. August 3, 2024) | Metric | August 2, 2025 (million USD) | August 3, 2024 (million USD) | Change (million USD) | | :------------------------------------------------ | :------------- | :------------- | :----- | | Cash and cash equivalents | $44.9 | $38.8 | $6.1 | | Available for borrowings under credit facility | $104.3 | N/A | N/A | | Total Debt | $516.3 | $465.7 | $50.6 | | Inventories | $610.9 | $642.8 | $(31.9) | [Store Count](index=2&type=section&id=Store%20Count) As of August 2, 2025, Designer Brands Inc. operated 668 stores across its U.S. Retail and Canada Retail segments, a slight decrease from the previous year, with a corresponding reduction in total square footage Store Count and Square Footage (as of August 2, 2025 vs. August 3, 2024) | Segment | Stores (count) | Square Footage (thousands sq ft) | Stores (count) | Square Footage (thousands sq ft) | | :---------------------- | :------------------- | :--------------------------- | :------------------- | :--------------------------- | | U.S. Retail - DSW stores | 493 | 9,686 | 499 | 9,879 | | Canada Retail - The Shoe Co. stores | 121 | 618 | 123 | 631 | | Canada Retail - Rubino stores | 28 | 147 | 28 | 149 | | Canada Retail - DSW stores | 26 | 511 | 26 | 511 | | Total number of stores | 668 | 10,962 | 676 | 11,170 | [Financial Outlook & Non-GAAP Reconciliation](index=2&type=section&id=Financial%20Outlook%20%26%20Non-GAAP%20Reconciliation) [2025 Financial Outlook](index=2&type=section&id=2025%20Financial%20Outlook) Due to ongoing macroeconomic uncertainty, particularly concerning global trade policies, Designer Brands Inc. has decided not to reinstate its full-year 2025 financial guidance - The Company has elected not to reinstate full year 2025 guidance due to macroeconomic uncertainty stemming primarily from global trade policies[6](index=6&type=chunk) [Non-GAAP Reconciliation](index=11&type=section&id=Non-GAAP%20Reconciliation) The company provides adjusted non-GAAP financial measures to offer a clearer view of its core operating performance by excluding certain one-time or non-recurring items, with adjusted diluted EPS for Q2 2025 at $0.34, higher than the GAAP diluted EPS of $0.22 Non-GAAP Adjusted Financial Results (Three Months Ended August 2, 2025 vs. August 3, 2024) | Metric | August 2, 2025 (thousands USD) | August 3, 2024 (thousands USD) | Change (thousands USD) | | :-------------------------- | :------------- | :------------- | :----- | | Adjusted operating expenses | $(295,250) | $(309,596) | $14,346 | | Adjusted operating profit | $30,261 | $32,524 | $(2,263) | | Adjusted net income | $16,716 | $17,071 | $(355) | | Adjusted diluted earnings per share | $0.34 | $0.29 | $0.05 | [Non-GAAP Measures Explanation](index=11&type=section&id=Non-GAAP%20Measures%20Explanation) Designer Brands Inc. uses non-GAAP financial measures to supplement GAAP results by adjusting for items not indicative of core operations, such as restructuring costs, acquisition-related costs, impairment charges, and foreign currency transaction losses, to provide better comparability and insight into business trends - Non-GAAP measures adjust for restructuring and integration costs, acquisition-related costs, impairment charges, foreign currency transaction losses, and their net tax impact[24](index=24&type=chunk)[25](index=25&type=chunk) - These measures are used to increase comparability to prior periods, identify business trends, and evaluate operating performance by adjusting for items not indicative of core operations[25](index=25&type=chunk) [Comparable Sales Performance Metric Definition](index=12&type=section&id=Comparable%20Sales%20Performance%20Metric%20Definition) The company defines comparable sales as a key metric for its direct-to-consumer businesses, encompassing sales from stores open for at least 14 months and e-commerce sales, with Canada Retail specifically excluding foreign currency translation impact - Comparable sales include sales from stores in operation for at least 14 months at the beginning of the applicable year[26](index=26&type=chunk) - The metric includes e-commerce sales for U.S. Retail and Canada Retail segments, and direct-to-consumer e-commerce net sales for the Brand Portfolio segment[26](index=26&type=chunk) - Comparable sales for the Canada Retail segment exclude the impact of foreign currency translation[26](index=26&type=chunk) [Company Overview & Legal Disclosures](index=3&type=section&id=Company%20Overview%20%26%20Legal%20Disclosures) [About Designer Brands](index=3&type=section&id=About%20Designer%20Brands) Designer Brands Inc. is a major global designer, producer, and retailer of footwear and accessories, operating through a diversified brand portfolio, a robust omni-channel infrastructure, and over 660 stores in North America, while also engaging in international distribution and private label product development with a commitment to corporate social responsibility - Designer Brands is one of the world's largest designers, producers, and retailers of footwear and accessories, with a mission of being shoe obsessed[10](index=10&type=chunk) - The company's portfolio includes brands such as Topo Athletic, Keds, Vince Camuto, Kelly & Katie, Jessica Simpson, Lucky Brand, Mix No. 6, and Crown Vintage[10](index=10&type=chunk) - Operations include a direct-to-consumer omni-channel infrastructure, national wholesale distribution, a **billion-dollar digital commerce business**, and over **660 DSW, The Shoe Co., and Rubino stores** in North America[10](index=10&type=chunk) - Designer Brands supports the global community by donating over **twelve million pairs of shoes** to Soles4Souls since 2018[11](index=11&type=chunk) [Safe Harbor Statement](index=4&type=section&id=Safe%20Harbor%20Statement) The report contains forward-looking statements subject to known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially, including general economic conditions, consumer preferences, supply chain disruptions, and tariffs, with no undertaking by the company to update these statements - Forward-looking statements are based on current views and expectations and involve known and unknown risks and uncertainties[12](index=12&type=chunk) - Key risk factors include uncertain general economic and financial conditions, supply chain disruptions, tariffs, fluctuating interest rates, and impacts on consumer discretionary spending[12](index=12&type=chunk) - Other risks relate to changing consumer preferences, climate change, execution of business strategies, integration of acquisitions, supplier relationships, distribution systems, cybersecurity, and compliance with laws and regulations[12](index=12&type=chunk)[13](index=13&type=chunk) [Webcast and Conference Call Information](index=3&type=section&id=Webcast%20and%20Conference%20Call%20Information) Designer Brands Inc. hosted a conference call on September 9, 2025, to discuss its financial results, with details provided for live participation and an archived replay, and important information also disseminated via the company's investor website - A conference call was hosted on **September 9, 2025, at 8:30 am Eastern Time**[8](index=8&type=chunk) - Investors and analysts could participate via dial-in or live webcast, with an archived version available until September 23, 2025[8](index=8&type=chunk)[9](index=9&type=chunk) - Important information may be disseminated initially or exclusively via the Company's investor website[9](index=9&type=chunk) [Contact Information](index=12&type=section&id=Contact%20Information) Contact information for investor relations inquiries is provided - Contact for investor relations: Stacy Turnof, DesignerBrandsIR@edelman.com[27](index=27&type=chunk)

[Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements%2E) [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets%20as%20of%20July%2031%2C%202025%20and%20October%2031%2C%202024%2E) As of July 31, 2025, the company's total assets were **$830.5 million**, a decrease from **$944.1 million** as of October 31, 2024, with both current assets and total liabilities decreasing, and stockholders' equity falling from **$656.9 million** to **$556.2 million** Consolidated Balance Sheets (USD in thousands) | Metric | July 31, 2025 (USD in thousands) | October 31, 2024 (USD in thousands) | | :-------------------------------- | :------------------------------- | :-------------------------------- | | **Assets** | | | | Cash and Cash Equivalents, unrestricted | 174,662 | 148,133 | | Investments - Short-term | - | 109,123 | | Inventories | 104,598 | 113,703 | | Project Assets, net | 224,482 | 242,131 | | Goodwill | - | 4,075 | | Intangible Assets, net | 4,215 | 14,779 | | Total Assets | 830,535 | 944,124 | | **Liabilities and Stockholders' Equity** | | | | Total Current Liabilities | 69,027 | 73,904 | | Long-term Liabilities and Other Liabilities | 119,320 | 130,850 | | Total Liabilities | 205,458 | 216,658 | | Total Stockholders' Equity | 556,171 | 656,922 | - As of July 31, 2025, the company's unrestricted cash and cash equivalents increased to **$174.7 million** from **$148.1 million** as of October 31, 2024, with all short-term investments having matured and no longer held[7](index=7&type=chunk) - Goodwill and certain intangible assets were impaired to zero due to restructuring plans and the cessation of solid oxide technology commercialization activities[7](index=7&type=chunk)[66](index=66&type=chunk)[78](index=78&type=chunk) [Consolidated Statements of Operations and Comprehensive Loss (Three Months Ended July 31, 2025 and 2024)](index=4&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss%20for%20the%20three%20months%20ended%20July%2031%2C%202025%20and%202024%2E) For the three months ended July 31, 2025, total revenue increased by **97%** to **$46.7 million** year-over-year, but operating and net losses significantly widened due to **$64.5 million** in impairment charges and **$4.1 million** in restructuring expenses Consolidated Statements of Operations and Comprehensive Loss (USD in thousands) | Metric (USD in thousands) | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | | :------------------------ | :------------------------------- | :------------------------------- | | Total Revenue | 46,743 | 23,695 | | Total Cost of Sales | 51,877 | 29,897 | | Gross Loss | (5,134) | (6,202) | | Total Operating Expenses | 90,230 | 27,415 | | Operating Loss | (95,364) | (33,617) | | Net Loss | (91,896) | (35,123) | | Net Loss Attributable to Common Stockholders | (92,456) | (33,460) | | Basic and Diluted Loss Per Share | (3.78) | (1.99) | - Product revenue significantly increased, primarily driven by the delivery and commissioning of **8** fuel cell modules under a Long-Term Service Agreement (LTSA) with GGE, and a sales contract with Ameresco, Inc[130](index=130&type=chunk) - The quarter recognized **$64.5 million** in impairment charges, mainly related to goodwill, in-process intangible assets, property, plant, and equipment, and inventories associated with solid oxide technology, along with **$4.1 million** in restructuring expenses[8](index=8&type=chunk)[146](index=146&type=chunk)[147](index=147&type=chunk) [Consolidated Statements of Operations and Comprehensive Loss (Nine Months Ended July 31, 2025 and 2024)](index=5&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss%20for%20the%20nine%20months%20ended%20July%2031%2C%202025%20and%202024%2E) For the nine months ended July 31, 2025, total revenue increased by **64%** to **$103.1 million** year-over-year, but net loss expanded to **$162 million** with a loss per share of **$7.22** due to impairment and restructuring charges Consolidated Statements of Operations and Comprehensive Loss (USD in thousands) | Metric (USD in thousands) | Nine Months Ended July 31, 2025 | Nine Months Ended July 31, 2024 | | :------------------------ | :------------------------------ | :------------------------------ | | Total Revenue | 103,146 | 62,806 | | Total Cost of Sales | 122,922 | 87,807 | | Gross Loss | (19,776) | (25,001) | | Total Operating Expenses | 144,249 | 92,455 | | Operating Loss | (164,025) | (117,456) | | Net Loss | (162,031) | (117,178) | | Net Loss Attributable to Common Stockholders | (160,431) | (86,993) | | Basic and Diluted Loss Per Share | (7.22) | (5.56) | - Product revenue was primarily driven by the delivery and commissioning of **12** fuel cell modules under the LTSA with GGE, and a sales contract with Ameresco, Inc[161](index=161&type=chunk) - Research and development expenses decreased to **$28.6 million**, mainly due to reduced investment in the commercial development of solid oxide power generation and electrolysis platforms, and carbon separation and capture solutions[177](index=177&type=chunk) [Consolidated Statements of Changes in Equity (Three and Nine Months Ended July 31, 2025)](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Equity%20for%20the%20three%20and%20nine%20months%20ended%20July%2031%2C%202025%2E) For the nine months ended July 31, 2025, total stockholders' equity decreased from **$657 million** as of October 31, 2024, to **$556 million**, primarily due to net loss and preferred stock dividends, partially offset by common stock issuances and equity incentive plans Consolidated Statements of Changes in Equity (USD in thousands) | Metric (USD in thousands) | Balance as of October 31, 2024 | Balance as of July 31, 2025 | | :------------------------ | :----------------------------- | :-------------------------- | | Common Stock Shares | 20,375,932 | 29,645,294 | | Common Stock Amount | 2 | 3 | | Additional Paid-in Capital | 2,300,031 | 2,357,630 | | Accumulated Deficit | (1,641,550) | (1,799,581) | | Accumulated Other Comprehensive Loss | (1,561) | (1,881) | | Treasury Stock | (1,198) | (1,360) | | Deferred Compensation | 1,198 | 1,360 | | Total Stockholders' Equity | 656,922 | 556,171 | | Noncontrolling Interests | 10,687 | 9,049 | | Total Equity | 667,609 | 565,220 | - For the nine months ended July 31, 2025, approximately **9.2 million** shares of common stock were sold through the Amended Sales Agreement, generating net proceeds of approximately **$51.6 million**[30](index=30&type=chunk)[89](index=89&type=chunk) - Preferred stock dividends were **$2.4 million** for both nine-month periods[9](index=9&type=chunk)[189](index=189&type=chunk) [Consolidated Statements of Changes in Equity (Three and Nine Months Ended July 31, 2024)](index=7&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Equity%20for%20the%20three%20and%20nine%20months%20ended%20July%2031%2C%202024%2E) For the nine months ended July 31, 2024, total stockholders' equity decreased from **$700 million** as of October 31, 2023, to **$685 million**, primarily due to net loss and preferred stock dividends, partially offset by common stock issuances and noncontrolling interest contributions Consolidated Statements of Changes in Equity (USD in thousands) | Metric (USD in thousands) | Balance as of October 31, 2023 | Balance as of July 31, 2024 | | :------------------------ | :----------------------------- | :-------------------------- | | Common Stock Shares | 15,020,872 | 18,461,340 | | Common Stock Amount | 2 | 2 | | Additional Paid-in Capital | 2,199,704 | 2,277,470 | | Accumulated Deficit | (1,515,541) | (1,600,134) | | Accumulated Other Comprehensive Loss | (1,672) | (1,576) | | Treasury Stock | (1,078) | (1,198) | | Deferred Compensation | 1,078 | 1,198 | | Total Stockholders' Equity | 682,493 | 675,762 | | Noncontrolling Interests | 17,955 | 9,345 | | Total Equity | 700,448 | 685,107 | - For the nine months ended July 31, 2024, noncontrolling interests contributed **$25.1 million**, primarily from tax equity financing transactions for the Derby and Groton projects[14](index=14&type=chunk)[247](index=247&type=chunk) - Net proceeds from common stock issuances totaled **$71.7 million**[14](index=14&type=chunk)[247](index=247&type=chunk) [Consolidated Statements of Cash Flows (Nine Months Ended July 31, 2025 and 2024)](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20nine%20months%20ended%20July%2031%2C%202025%20and%202024%2E) For the nine months ended July 31, 2025, cash used in operating activities decreased, cash provided by investing activities significantly increased, and cash provided by financing activities decreased, with total cash, cash equivalents, and restricted cash at period-end increasing to **$237 million** Consolidated Statements of Cash Flows (USD in thousands) | Cash Flow Activities (USD in thousands) | Nine Months Ended July 31, 2025 | Nine Months Ended July 31, 2024 | | :------------------------------------ | :------------------------------ | :------------------------------ | | Net Cash Used in Operating Activities | (102,427) | (158,751) | | Net Cash Provided by (Used in) Investing Activities | 89,970 | (18,978) | | Net Cash Provided by Financing Activities | 40,537 | 96,238 | | Effect of Exchange Rate Changes on Cash | (109) | 96 | | Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash | 27,971 | (81,395) | | Cash, Cash Equivalents, and Restricted Cash at End of Period | 236,854 | 218,181 | - Cash provided by investing activities primarily resulted from **$772 million** in maturities of U.S. Treasury securities, offset by **$661 million** in U.S. Treasury security purchases, **$3.8 million** in project asset expenditures, and **$17.6 million** in capital expenditures[243](index=243&type=chunk) - Cash provided by financing activities primarily stemmed from **$4 million** in noncontrolling interest contributions and **$51.6 million** in net proceeds from common stock sales, partially offset by **$10.4 million** in debt repayments and **$2.4 million** in preferred stock dividend payments[246](index=246&type=chunk) [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%2E) The notes to consolidated financial statements provide detailed information on the company's business, accounting policies, recent accounting pronouncements, tax equity financings, revenue recognition, impairment and restructuring, investments, inventories, project assets, goodwill and intangible assets, accrued liabilities, leases, stockholders' equity, redeemable preferred stock, loss per share, restricted cash, debt, benefit plans, commitments and contingencies, and subsequent events [Note 1. Nature of Business and Basis of Presentation](index=13&type=section&id=Note%201.%20Nature%20of%20Business%20and%20Basis%20of%20Presentation) FuelCell Energy is a global leader in fuel cell technology, offering clean power, heat, hydrogen, and carbon capture solutions, which implemented a 1-for-30 reverse stock split in November 2024 and generates cash primarily through product sales, projects, power generation, R&D, and financing activities - The company focuses on providing environmentally responsible distributed baseload energy solutions through its proprietary fuel cell technology platforms, including clean power, heat, clean hydrogen, and water, with carbon capture capabilities[18](index=18&type=chunk) - On November 8, 2024, the company effected a 1-for-30 reverse stock split, reducing outstanding common stock from **611 million** shares to approximately **20.376 million** shares[21](index=21&type=chunk) - As of July 31, 2025, unrestricted cash and cash equivalents were **$174.7 million**, an increase from **$148.1 million** as of October 31, 2024, with all short-term U.S. Treasury security investments having matured prior to July 31, 2025[27](index=27&type=chunk) - The company anticipates sufficient liquidity for the next **12 months**, but long-term profitability and cash flow depend on timely project completion, increased power generation cash flows, financing access, order growth, R&D funding, solid oxide and carbon capture platform commercialization, and cost reductions[33](index=33&type=chunk)[34](index=34&type=chunk) [Note 2. Recent Accounting Pronouncements](index=19&type=section&id=Note%202.%20Recent%20Accounting%20Pronouncements) The company is evaluating recent FASB accounting pronouncements on reportable segment disclosures, income tax disclosures, and expense classification disclosures, expecting the impact on financial statements to be primarily in disclosures with no material effect on operating results - The FASB issued guidance in November 2023 to improve reportable segment disclosures, requiring enhanced disclosure of significant segment expenses, effective for annual reports in fiscal year 2025[39](index=39&type=chunk) - The FASB issued guidance in December 2023 to enhance income tax disclosures, requiring more information on how entity operations, tax risks, tax planning, and operating opportunities affect tax rates and future cash flows, effective for fiscal years beginning after December 15, 2025[40](index=40&type=chunk) - The FASB issued new guidance in November 2024, requiring enhanced disclosures for specific expense categories within certain expense captions in the income statement, effective for fiscal years beginning after December 15, 2026[41](index=41&type=chunk) [Note 3. Tax Equity Financings](index=19&type=section&id=Note%203.%20Tax%20Equity%20Financings) The company funds its Derby, Groton, and Yaphank projects through tax equity financing transactions, with Derby showing net income attributable to noncontrolling interests of **$0.4 million** (three months) and **$1.2 million** (nine months) for 2025, and net losses for Groton and Yaphank in both periods Net Income (Loss) Attributable to Noncontrolling Interests (USD in thousands) | Project | Period | Net Income (Loss) Attributable to Noncontrolling Interests (USD in thousands) | | :------ | :------------------------------- | :------------------------------------------------------------ | | Derby | Three Months Ended July 31, 2025 | 400 | | Derby | Three Months Ended July 31, 2024 | (1,800) | | Derby | Nine Months Ended July 31, 2025 | 1,200 | | Derby | Nine Months Ended July 31, 2024 | (28,600) | | Groton | Three Months Ended July 31, 2025 | (10) | | Groton | Three Months Ended July 31, 2024 | (200) | | Groton | Nine Months Ended July 31, 2025 | (3,500) | | Groton | Nine Months Ended July 31, 2024 | (3,500) | | Yaphank | Three Months Ended July 31, 2025 | (600) | | Yaphank | Three Months Ended July 31, 2024 | (400) | | Yaphank | Nine Months Ended July 31, 2025 | (1,700) | | Yaphank | Nine Months Ended July 31, 2024 | (500) | - For the nine months ended July 31, 2024, the loss attributable to noncontrolling interests for the Derby project was primarily due to investment tax credits (ITC) and accelerated depreciation[191](index=191&type=chunk) [Note 4. Revenue Recognition](index=21&type=section&id=Note%204.%20Revenue%20Recognition) The company's contract assets and liabilities both increased, customer consideration payable related to the Toyota hydrogen production and power purchase agreement remained stable, and the joint development agreement with ExxonMobil Technology and Engineering Company (EMTEC) and Rotterdam pilot project purchase order continued to contribute to advanced technology revenue, while the Long-Term Service Agreement (LTSA) with Gyeonggi Green Energy Co., Ltd. (GGE) is valued at **$159.6 million** for **42** fuel cell module replacements and long-term O&M services Contract Balances (USD in thousands) | Metric (USD in thousands) | July 31, 2025 | October 31, 2024 | | :------------------------ | :------------ | :--------------- | | Contract Assets | 98,100 | 65,100 | | Contract Liabilities | 10,700 | 7,200 | | Customer Consideration Payable | 6,000 | 6,000 | - The joint development agreement with EMTEC was extended to December 31, 2026, with an expected annual budget of at least **$10 million**, and allows the company to pursue new carbon capture projects using Generation 1 and Generation 2 technologies[56](index=56&type=chunk)[57](index=57&type=chunk) - The LTSA with GGE totals **$159.6 million** for the replacement of **42** 1.4 MW fuel cell modules, balance of plant replacement parts, and long-term operations and maintenance services, with the first **6** modules commissioned in Fall 2024 and another **12** modules commissioned during the nine months ended July 31, 2025[59](index=59&type=chunk)[61](index=61&type=chunk) Remaining Performance Obligations (USD in thousands) | Remaining Performance Obligations (USD in thousands) | Amount (USD in thousands) | Estimated Recognition Period | | :----------------------------------- | :------------------------ | :--------------------------- | | Service Agreements | 169,400 | 3-15 years | | Power Purchase Agreements (PPAs) | 378,900 | 19-20 years | | Advanced Technology Contracts | 7,100 | Approximately 2 years | | Product Purchase Agreements | 96,200 | Next 2 fiscal years | [Note 5. Impairment and Restructuring](index=25&type=section&id=Note%205.%20Impairment%20and%20Restructuring) The company implemented multiple restructuring rounds in September, November 2024, and June 2025, including workforce reductions of approximately **39%** to lower operating costs and reallocate resources, with the June 2025 plan resulting in **$64.5 million** in impairment charges related to solid oxide technology goodwill, in-process intangible assets, inventories, and property, plant, and equipment - In June 2025, the Board of Directors approved a global restructuring plan, reducing the workforce by **122** employees (approximately **22%** of total staff) and ceasing most solid oxide technology development efforts to lower operating costs and reallocate resources[64](index=64&type=chunk) Impairment Charges by Category (USD in thousands) | Impairment Charge Category (USD in thousands) | Amount (USD in thousands) | | :------------------------------------ | :------------------------ | | Property, Plant, and Equipment | 42,100 | | Inventories | 9,000 | | In-Process Intangible Assets | 9,300 | | Goodwill | 4,100 | | **Total** | **64,500** | - Restructuring expenses, primarily severance, were **$4.1 million** and **$5.6 million** for the three and nine months ended July 31, 2025, respectively[65](index=65&type=chunk) [Note 6. Investments – Short-Term](index=29&type=section&id=Note%206.%20Investments%20%E2%80%93%20Short-Term) As of July 31, 2025, the company no longer holds short-term U.S. Treasury security investments, as all such securities held during the first nine months of fiscal year 2025 have matured Investments – Short-Term (USD in thousands) | Metric (USD in thousands) | July 31, 2025 | October 31, 2024 | | :------------------------ | :------------ | :--------------- | | U.S. Treasury Securities | - | 109,123 | - The company classified U.S. Treasury securities as held-to-maturity and recorded them at amortized cost, with a weighted-average yield to maturity of **4.78%** as of October 31, 2024[72](index=72&type=chunk) [Note 7. Inventories](index=29&type=section&id=Note%207.%20Inventories) As of July 31, 2025, the company's total inventories were **$107.3 million**, including **$71 million** in work-in-process inventories, and a **$9 million** impairment charge for solid oxide inventories was recognized during the three months ended July 31, 2025, due to the cessation of solid oxide technology commercialization activities Inventories by Category (USD in thousands) | Inventory Category (USD in thousands) | July 31, 2025 | October 31, 2024 | | :---------------------------------- | :------------ | :--------------- | | Raw Materials | 36,360 | 35,989 | | Work-in-Process | 70,981 | 80,457 | | Total Inventories | 107,341 | 116,446 | | Inventories – Current | (104,598) | (113,703) | | Inventories – Long-term | 2,743 | 2,743 | - Work-in-process inventories primarily include standard inventories used to manufacture modules or module components, intended for future project asset construction, power plant orders, or service agreements[73](index=73&type=chunk) - Long-term inventories include exchange modules contractually required to be segregated for specific project assets[74](index=74&type=chunk) [Note 8. Project Assets](index=30&type=section&id=Note%208.%20Project%20Assets) As of July 31, 2025, the company's net project assets totaled **$224.5 million**, primarily comprising **12** completed and operational power generation facilities with a net value of **$223.8 million**, and **$0.7 million** in construction-in-progress project assets Project Assets by Category (USD in thousands) | Project Asset Category (USD in thousands) | July 31, 2025 | October 31, 2024 | | :------------------------------------ | :------------ | :--------------- | | Project Assets in Operation | 306,747 | 308,503 | | Accumulated Depreciation | (82,964) | (66,542) | | Project Assets in Operation, net | 223,783 | 241,961 | | Construction-in-Progress Project Assets | 699 | 170 | | **Project Assets, net** | **224,482** | **242,131** | - The estimated useful lives for project assets are **20 years** for balance of plant and site construction, and **4 to 7 years** for modules[76](index=76&type=chunk) [Note 9. Goodwill and Intangible Assets](index=30&type=section&id=Note%209.%20Goodwill%20and%20Intangible%20Assets) Due to the June 2025 restructuring plan, the company recognized **$4.1 million** in goodwill and **$9.3 million** in in-process intangible asset impairment charges related to Versa Inc. during the three months ended July 31, 2025, reducing goodwill to zero, and as of July 31, 2025, net intangible assets were **$4.2 million**, primarily associated with the Bridgeport Fuel Cell Project acquisition Intangible Assets by Category (USD in thousands) | Intangible Asset Category (USD in thousands) | Net as of July 31, 2025 | Net as of October 31, 2024 | | :----------------------------------- | :---------------------- | :------------------------- | | In-Process Intangible Assets | - | 9,592 | | Bridgeport PPA | 4,215 | 5,187 | | **Total** | **4,215** | **14,779** | - Amortization expense for intangible assets related to the Bridgeport Fuel Cell Project was **$0.3 million** for both three-month periods and **$1 million** for both nine-month periods ended July 31, 2025 and 2024[79](index=79&type=chunk) [Note 10. Accrued Liabilities](index=32&type=section&id=Note%2010.%20Accrued%20Liabilities) As of July 31, 2025, the company's total accrued liabilities were **$29.87 million**, slightly lower than **$30.36 million** as of October 31, 2024, primarily comprising accrued payroll and employee benefits, customer consideration payable, accrued service agreement and PPA costs, and accrued severance Accrued Liabilities by Category (USD in thousands) | Accrued Liability Category (USD in thousands) | July 31, 2025 | October 31, 2024 | | :------------------------------------ | :------------ | :--------------- | | Accrued Payroll and Employee Benefits | 6,999 | 9,808 | | Customer Consideration Payable | 2,515 | 2,515 | | Accrued Service Agreement and PPA Costs | 11,872 | 10,574 | | Accrued Legal, Tax, Professional, and Other | 5,097 | 5,230 | | Accrued Severance | 3,383 | 2,235 | | **Total Accrued Liabilities** | **29,866** | **30,362** | - Accrued service agreement costs include a service agreement loss reserve of **$9.8 million** as of July 31, 2025, and **$9 million** as of October 31, 2024[85](index=85&type=chunk) - Accrued severance is primarily related to restructuring activities and workforce reductions in September, November 2024, and June 2025[85](index=85&type=chunk) [Note 11. Leases](index=32&type=section&id=Note%2011.%20Leases) The company primarily leases real estate, vehicles, and equipment through operating lease agreements, with a weighted-average remaining lease term of approximately **18 years** and a weighted-average discount rate of **7.8%** as of July 31, 2025 Operating Lease Expense (USD in thousands) | Operating Lease Expense (USD in thousands) | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | | Operating Lease Expense | 300 | 400 | | Operating Lease Expense (USD in thousands) | Nine Months Ended July 31, 2025 | Nine Months Ended July 31, 2024 | | Operating Lease Expense | 1,000 | 1,100 | Undiscounted Operating Lease Liability Maturities (USD in thousands) | Undiscounted Operating Lease Liability Maturities (USD in thousands) | Amount (USD in thousands) | | :------------------------------------------- | :------------------------ | | Due in Year 1 | 1,313 | | Due in Year 2 | 1,431 | | Due in Year 3 | 1,748 | | Due in Year 4 | 1,221 | | Due in Year 5 | 1,119 | | Thereafter | 17,617 | | **Total Undiscounted Lease Payments** | **24,449** | [Note 12. Stockholders' Equity](index=32&type=section&id=Note%2012.%20Stockholders%27%20Equity) The company continues to issue common stock through its Amended Sales Agreement, selling approximately **6.8 million** shares for net proceeds of **$38.1 million** during the three months ended July 31, 2025, and approximately **9.2 million** shares for net proceeds of **$51.6 million** during the nine months ended July 31, 2025, with approximately **$151.4 million** of stock remaining available for sale as of July 31, 2025 - The Amended Sales Agreement allows the company to issue and sell common stock with an aggregate offering price of up to **$300 million** from time to time[88](index=88&type=chunk) Common Stock Sales through Amended Sales Agreement | Period | Common Stock Shares Sold (millions) | Average Selling Price (USD/share) | Net Proceeds (million USD) | | :----- | :-------------------------------- | :-------------------------------- | :------------------------- | | Three Months Ended July 31, 2025 | 6.8 | 5.70 | 38.1 | | Nine Months Ended July 31, 2025 | 9.2 | 5.84 | 51.6 | - As of July 31, 2025, approximately **$151.4 million** of stock remained available for sale under the Amended Sales Agreement[90](index=90&type=chunk) [Note 13. Redeemable Preferred Stock](index=34&type=section&id=Note%2013.%20Redeemable%20Preferred%20Stock) As of July 31, 2025, the company had **64,020** shares of Series B 5% Cumulative Convertible Perpetual Preferred Stock issued and outstanding, with a liquidation preference of **$1,000** per share and a carrying value of **$59.9 million**, and paid **$0.8 million** and **$2.4 million** in preferred stock dividends for the three and nine months ended July 31, 2025 and 2024, respectively Redeemable Preferred Stock (USD in thousands) | Metric (USD in thousands) | July 31, 2025 | October 31, 2024 | | :------------------------ | :------------ | :--------------- | | Series B Preferred Stock (Shares Outstanding) | 64,020 | 64,020 | | Series B Preferred Stock (Carrying Value) | 59,857 | 59,857 | - The Series B Preferred Stock has a liquidation preference of **$1,000** per share[92](index=92&type=chunk) - The company paid **$0.8 million** and **$2.4 million** in preferred stock dividends for the three and nine months ended July 31, 2025 and 2024, respectively[92](index=92&type=chunk) [Note 14. Loss Per Share](index=35&type=section&id=Note%2014.%20Loss%20Per%20Share) Due to net losses, diluted loss per share calculations did not consider potentially dilutive securities, with net loss attributable to common stockholders of **$92.5 million** and **$160.4 million**, and loss per share of **$3.78** and **$7.22**, for the three and nine months ended July 31, 2025, respectively Loss Per Share (USD in thousands, except per share data) | Metric | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | | :----- | :------------------------------- | :------------------------------- | | Net Loss Attributable to Common Stockholders (USD in thousands) | (92,456) | (33,460) | | Basic and Diluted Loss Per Share (USD) | (3.78) | (1.99) | | Weighted-Average Common Stock Shares | 24,441,294 | 16,772,791 | | Metric | Nine Months Ended July 31, 2025 | Nine Months Ended July 31, 2024 | | :----- | :------------------------------- | :------------------------------- | | Net Loss Attributable to Common Stockholders (USD in thousands) | (160,431) | (86,993) | | Basic and Diluted Loss Per Share (USD) | (7.22) | (5.56) | | Weighted-Average Common Stock Shares | 22,233,074 | 15,646,242 | Potentially Dilutive Securities | Potentially Dilutive Securities | July 31, 2025 | July 31, 2024 | | :------------------------------ | :------------ | :------------ | | Options to Purchase Common Stock | 523 | 577 | | Unvested Restricted Stock Units | 929,358 | 559,081 | | Series B Preferred Stock | 1,261 | 1,261 | | **Total** | **931,142** | **560,919** | [Note 15. Restricted Cash](index=35&type=section&id=Note%2015.%20Restricted%20Cash) As of July 31, 2025, the company's total restricted cash and cash equivalents amounted to **$62.2 million**, primarily designated for performance guarantees, future debt service, and letters of credit, with **$16.1 million** classified as short-term and **$46.1 million** as long-term restricted cash Restricted Cash by Category (USD in thousands) | Restricted Cash Category (USD in thousands) | July 31, 2025 | October 31, 2024 | | :------------------------------------ | :------------ | :--------------- | | Restricted Cash for Letters of Credit | 14,152 | 14,152 | | Restricted Cash for Crestmark Sale-Leaseback Transaction | 2,914 | 2,908 | | Debt Service and Performance Reserve for OpCo Financing Facility | 20,868 | 24,721 | | Debt Service and Performance Reserve for Senior and Subordinate Back-Leverage Facilities | 15,756 | 12,869 | | Other | 8,502 | 6,100 | | **Total Restricted Cash** | **62,192** | **60,750** | | Short-term Restricted Cash | (16,092) | (12,161) | | Long-term Restricted Cash | 46,100 | 48,589 | - As of July 31, 2025, total outstanding letters of credit were **$14.2 million**, with various maturity dates extending through October 2029[95](index=95&type=chunk) [Note 16. Debt](index=37&type=section&id=Note%2016.%20Debt) As of July 31, 2025, the company's total debt and financing obligations were **$123.1 million**, slightly lower than **$131.7 million** as of October 31, 2024, primarily comprising EXIM financing, Derby and Groton back-leverage loans, the OpCo financing facility, and the Connecticut loan, with the OpCo financing facility's interest rate swap generating a **$0.6 million** gain and a **$0.2 million** loss for the three and nine months ended July 31, 2025, respectively Debt by Category (USD in thousands) | Debt Category (USD in thousands) | July 31, 2025 | October 31, 2024 | | :------------------------------- | :------------ | :--------------- | | EXIM Financing Facility | 9,409 | 10,104 | | Derby Senior Back-Leverage Facility | 7,805 | 8,514 | | Derby Subordinate Back-Leverage Facility | 3,500 | 3,500 | | Groton Senior Back-Leverage Facility | 10,145 | 10,857 | | Groton Subordinate Back-Leverage Facility | 8,000 | 8,000 | | Sale-Leaseback Transaction Financing Obligation | 18,781 | 18,811 | | Connecticut Loan | 5,350 | 6,024 | | OpCo Financing Facility | 63,563 | 70,067 | | Deferred Financing Costs | (3,481) | (4,215) | | **Total Debt and Financing Obligations** | **123,072** | **131,662** | | Current Portion | (16,710) | (15,924) | | Long-term Portion | 106,362 | 115,738 | - The OpCo financing facility's interest rate swap generated a **$0.6 million** gain and a **$0.2 million** loss for the three and nine months ended July 31, 2025, respectively[98](index=98&type=chunk) [Note 17. Benefit Plans](index=39&type=section&id=Note%2017.%20Benefit%20Plans) The company implements long-term incentive plans, including Performance Stock Units (PSUs) tied to relative Total Shareholder Return (TSR) and time-vesting Restricted Stock Units (RSUs), granting **186,507** PSUs and **186,501** time-vesting RSUs to senior management, and **321,184** time-vesting RSUs to other employees in fiscal year 2025, with a total of **929,358** unvested RSUs as of July 31, 2025 - The fiscal year 2025 long-term incentive plan includes relative Total Shareholder Return (TSR) Performance Stock Units (PSUs) and time-vesting Restricted Stock Units (RSUs)[100](index=100&type=chunk)[102](index=102&type=chunk) Equity Compensation Expense (USD in thousands) | Equity Compensation Expense (USD in thousands) | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | | :------------------------------------- | :------------------------------- | :------------------------------- | | Cost of Sales | 207 | 463 | | Administrative and Selling Expenses | 1,271 | 2,304 | | Research and Development Expenses | 158 | 483 | | **Total** | **1,636** | **3,250** | | Equity Compensation Expense (USD in thousands) | Nine Months Ended July 31, 2025 | Nine Months Ended July 31, 2024 | | :------------------------------------- | :------------------------------- | :------------------------------- | | Cost of Sales | 620 | 1,211 | | Administrative and Selling Expenses | 7,399 | 6,498 | | Research and Development Expenses | 482 | 1,257 | | **Total** | **8,501** | **8,966** | Restricted Stock Unit Activity | Restricted Stock Unit Activity | Shares | Weighted-Average Fair Value (USD) | | :----------------------------- | :-------- | :-------------------------------- | | Unvested as of October 31, 2024 | 516,561 | 64.53 | | Granted - Time-Vesting RSUs | 507,685 | 8.11 | | Granted - PSUs | 186,507 | 14.38 | | Vested | (146,207) | 63.36 | | Forfeited | (135,188) | 39.84 | | **Unvested as of July 31, 2025** | **929,358** | **26.53** | [Note 18. Commitments and Contingencies](index=41&type=section&id=Note%2018.%20Commitments%20and%20Contingencies) The company faces risks from performance penalties under service agreements, fuel price volatility under power purchase agreements, and other purchase commitments, with **$66.9 million** in material, supply, and service purchase commitments as of July 31, 2025, and derivative fair value risk related to natural gas purchase contracts, though management believes existing legal proceedings will not materially adversely affect financial statements - The company's service agreements require power plants to meet minimum operating levels, otherwise it may face performance penalties or need to replace fuel cell modules[108](index=108&type=chunk) - Power purchase agreements expose the company to fuel price volatility and fuel procurement risks, which are mitigated through fuel cost pass-through mechanisms, fixed-price supply contracts, and potential financial hedges[110](index=110&type=chunk) - As of July 31, 2025, the company had **$66.9 million** in material, supply, and service purchase commitments[112](index=112&type=chunk) - The company recognized net mark-to-market gains of **$1 million** and **$2 million** related to natural gas contract derivatives for the three and nine months ended July 31, 2025, respectively[111](index=111&type=chunk) [Note 19. Subsequent Events](index=43&type=section&id=Note%2019.%20Subsequent%20Events) Subsequent to the quarter-end, the company sold approximately **2.7 million** shares of common stock through its Amended Sales Agreement, generating net proceeds of approximately **$11.8 million**, with approximately **$139.4 million** of stock remaining available for sale under the agreement - Subsequent to the quarter-end, the company sold approximately **2.7 million** shares of common stock through its Amended Sales Agreement at an average price of **$4.55** per share, generating net proceeds of approximately **$11.8 million**[114](index=114&type=chunk)[199](index=199&type=chunk) - Following this sale, approximately **$139.4 million** of stock remained available for sale under the Amended Sales Agreement[114](index=114&type=chunk)[199](index=199&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%2E) [FORWARD-LOOKING STATEMENTS](index=44&type=section&id=FORWARD-LOOKING%20STATEMENTS) This report contains numerous forward-looking statements regarding the company's future financial condition, operating results, business plans, market developments, project completion timelines, financing capabilities, cost competitiveness, restructuring plan effectiveness, and sales targets, which are based on current beliefs and assumptions and involve inherent risks and uncertainties that could cause actual results to differ materially from expectations - Forward-looking statements cover the development and commercialization of fuel cell technologies and products, project completion timelines, business plans and strategies, anticipated operating results (such as revenue growth and profitability), liquidity, future funding under advanced technology contracts, project financing, and cost reduction targets[117](index=117&type=chunk) - Risks and uncertainties include those related to product development and manufacturing, economic conditions, interest rate changes, supply chain disruptions, changes in the regulatory environment, availability of government subsidies, unexpected costs or consequences of restructuring plans, technological changes, competition, and the ability to obtain additional financing[118](index=118&type=chunk) [OVERVIEW](index=46&type=section&id=OVERVIEW) FuelCell Energy is dedicated to providing clean energy solutions through its proprietary fuel cell technology, including power, heat, hydrogen, and carbon capture, having been founded in 1969 and commencing commercial sales of stationary fuel cell power plants in 2003, focusing on markets with high energy costs, poor grid reliability, and support for multi-value streams and emissions reduction policies - The company offers commercial technologies capable of producing clean electricity, heat, clean hydrogen, and water, with the ability to recycle and capture carbon[124](index=124&type=chunk) - The company continues to invest in product development and commercialization technologies to enhance the solid oxide technology platform's ability to provide hydrogen and long-duration hydrogen-based energy storage, and to augment existing platforms with carbon capture solutions[124](index=124&type=chunk) - The company primarily sells its products in the U.S., European, and South Korean markets, while also seeking opportunities in other countries globally[125](index=125&type=chunk) [RESULTS OF OPERATIONS](index=48&type=section&id=RESULTS%20OF%20OPERATIONS) This section discusses the company's results of operations for the three and nine months ended July 31, 2025 and 2024, focusing on changes in revenue, cost of sales, gross loss, operating expenses, and net loss [Comparison of the Three Months Ended July 31, 2025 and 2024](index=48&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20July%2031%2C%202025%20and%202024) For the three months ended July 31, 2025, total revenue increased by **97%** to **$46.7 million** year-over-year, primarily driven by a significant increase in product revenue, but operating and net losses expanded considerably due to **$64.5 million** in impairment charges and **$4.1 million** in restructuring expenses Consolidated Statements of Operations and Comprehensive Loss (USD in thousands) | Metric (USD in thousands) | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Change (USD in thousands) | Change (%) | | :------------------------ | :------------------------------- | :------------------------------- | :------------------------ | :--------- | | Total Revenue | 46,743 | 23,695 | 23,048 | 97% | | Total Cost of Sales | 51,877 | 29,897 | 21,980 | 74% | | Gross Loss | (5,134) | (6,202) | 1,068 | 17% | | Operating Loss | (95,364) | (33,617) | (61,747) | (184)% | | Net Loss | (91,896) | (35,123) | (56,773) | (162)% | Revenue by Category (USD in thousands) | Revenue Category (USD in thousands) | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Change (USD in thousands) | Change (%) | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------ | :--------- | | Product Revenue | 26,000 | 250 | 25,750 | 10300% | | Service Agreement Revenue | 3,130 | 1,411 | 1,719 | 122% | | Power Generation Revenue | 12,355 | 13,402 | (1,047) | (8)% | | Advanced Technology Revenue | 5,258 | 8,632 | (3,374) | (39)% | - Administrative and selling expenses and research and development expenses both decreased, but were significantly offset by impairment and restructuring charges[144](index=144&type=chunk)[145](index=145&type=chunk)[146](index=146&type=chunk)[147](index=147&type=chunk) [Comparison of the Nine Months Ended July 31, 2025 and 2024](index=57&type=section&id=Comparison%20of%20the%20Nine%20Months%20Ended%20July%2031%2C%202025%20and%202024) For the nine months ended July 31, 2025, total revenue increased by **64%** to **$103.1 million** year-over-year, driven by growth in product and service revenue, but operating and net losses significantly widened due to impairment and restructuring charges Consolidated Statements of Operations and Comprehensive Loss (USD in thousands) | Metric (USD in thousands) | Nine Months Ended July 31, 2025 | Nine Months Ended July 31, 2024 | Change (USD in thousands) | Change (%) | | :------------------------ | :------------------------------ | :------------------------------ | :------------------------ | :--------- | | Total Revenue | 103,146 | 62,806 | 40,340 | 64% | | Total Cost of Sales | 122,922 | 87,807 | 35,115 | 40% | | Gross Loss | (19,776) | (25,001) | 5,225 | 21% | | Operating Loss | (164,025) | (117,456) | (46,569) | (40)% | | Net Loss | (162,031) | (117,178) | (44,853) | (38)% | Revenue by Category (USD in thousands) | Revenue Category (USD in thousands) | Nine Months Ended July 31, 2025 | Nine Months Ended July 31, 2024 | Change (USD in thousands) | Change (%) | | :-------------------------------- | :------------------------------ | :------------------------------ | :------------------------ | :--------- | | Product Revenue | 39,099 | 250 | 38,849 | 15540% | | Service Agreement Revenue | 13,122 | 4,397 | 8,725 | 198% | | Power Generation Revenue | 35,825 | 38,013 | (2,188) | (6)% | | Advanced Technology Revenue | 15,100 | 20,146 | (5,046) | (25)% | - Administrative and selling expenses and research and development expenses both decreased, but were significantly offset by impairment and restructuring charges[176](index=176&type=chunk)[177](index=177&type=chunk)[179](index=179&type=chunk)[181](index=181&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=66&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) The company primarily obtains cash through product sales, power generation revenue, R&D contracts, equity issuances, and debt financing, with unrestricted cash and cash equivalents of **$174.7 million** as of July 31, 2025, and continues to raise capital through its at-the-market sales agreement, expecting sufficient liquidity for the next **12 months**, though long-term liquidity remains dependent on project completion, cash flow growth, financing access, and cost reductions, with detailed disclosures on various loans and restricted cash [Overview, Cash Position, Sources and Uses](index=66&type=section&id=Overview%2C%20Cash%20Position%2C%20Sources%20and%20Uses) The company primarily obtains cash through product sales, power generation revenue, R&D contracts, equity issuances, and debt financing, with unrestricted cash and cash equivalents of **$174.7 million** as of July 31, 2025, and all short-term U.S. Treasury securities having matured, while continuing to raise capital through its at-the-market sales agreement and expecting sufficient liquidity for the next **12 months** - As of July 31, 2025, unrestricted cash and cash equivalents were **$174.7 million**, an increase from **$148.1 million** as of October 31, 2024[196](index=196&type=chunk) - For the first nine months of fiscal year 2025, the company received **$4 million** in noncontrolling interest contributions through a tax equity financing transaction with East West Bank[197](index=197&type=chunk) - For the nine months ended July 31, 2025, approximately **9.2 million** shares of common stock were sold through the Amended Sales Agreement, generating net proceeds of approximately **$51.6 million**[198](index=198&type=chunk) - The company expects its unrestricted cash and cash equivalents, anticipated revenue from its contract backlog, and the release of short-term restricted cash to be sufficient to meet its obligations for the next **12 months**[204](index=204&type=chunk) [Generation Operating Portfolio, Project Assets, and Backlog](index=70&type=section&id=Generation%20Operating%20Portfolio%2C%20Project%20Assets%2C%20and%20Backlog) The company expands its power generation operating portfolio by investing in the development and construction of fuel cell projects, with a total operating capacity of **62.8 MW** as of July 31, 2025, and its total backlog increased to **$1.24 billion**, driven by the Hartford project and long-term service agreements with CGN and GGE - As of July 31, 2025, the company's power generation operating portfolio had a total capacity of **62.8 MW**, consistent with July 31, 2024[140](index=140&type=chunk)[214](index=214&type=chunk) Power Generation Operating Portfolio | Project Name | Location | Rated Capacity (MW) | PPA Term (Years) | | :----------- | :------- | :------------------ | :--------------- | | CCSU | CT | 1.4 | 15 | | Riverside | CA | 1.4 | 20 | | Pfizer, Inc. | CT | 5.6 | 20 | | Santa Rita Jail | CA | 1.4 | 20 | | Bridgeport Fuel Cell Project | CT | 14.9 | 15 | | Tulare BioMAT | CA | 2.8 | 20 | | San Bernardino | CA | 1.4 | 20 | | LIPA Yaphank Project | NY | 7.4 | 20 | | Groton Project | CT | 7.4 | 20 | | Toyota | CA | 2.3 | 20 | | Derby - CT RFP-2 | CT | 14.0 | 20 | | SCEF - Derby | CT | 2.8 | 20 | | **Total** | | **62.8** | | - The company has ceased development and expenditures for the Trinity College and UConn solid oxide projects and removed them from the contract backlog[217](index=217&type=chunk)[218](index=218&type=chunk) Backlog by Category (USD in thousands) | Backlog Category (USD in thousands) | July 31, 2025 | July 31, 2024 | | :-------------------------------- | :------------ | :------------ | | Service Agreements | 169,400 | 178,400 | | Power Generation | 955,000 | 839,500 | | Products | 96,200 | 136,700 | | Advanced Technology Contracts | 24,300 | 42,500 | | **Total** | **1,244,900** | **1,197,100** | [Factors that may impact our liquidity](index=75&type=section&id=Factors%20that%20may%20impact%20our%20liquidity) Factors impacting the company's liquidity include cash reserves, long decision cycles for large projects, productivity management, extended project cycles requiring upfront investment, fluctuations in accounts receivable and unbilled receivables, inventory levels, project asset investments, fuel procurement risks, capital expenditures, R&D spending, performance guarantees, and the ability to continuously implement cost-saving measures - As of July 31, 2025, unrestricted cash and cash equivalents were **$174.7 million**[225](index=225&type=chunk) - The company's annualized production rate for the first nine months of fiscal year 2025 was **30.5 MW**, slightly lower than **31.1 MW** for the first nine months of fiscal year 2024, primarily due to adjusting production levels based on contractual demand[163](index=163&type=chunk)[225](index=225&type=chunk) - As of July 31, 2025, total accounts receivable and unbilled receivables were **$108.1 million**, with **$53.4 million** classified as "other assets"[225](index=225&type=chunk) - Capital expenditures for fiscal year 2025 are projected to be between **$15 million** and **$20 million**, revised downward due to the June 2025 restructuring plan[230](index=230&type=chunk) - Company-funded research and development expenditures are expected to be between **$35 million** and **$40 million** for fiscal year 2025, also revised downward due to the restructuring plan[238](index=238&type=chunk) [Cash Flows](index=83&type=section&id=Cash%20Flows) For the nine months ended July 31, 2025, cash used in operating activities decreased to **$102.4 million**, cash provided by investing activities turned into **$89.9 million**, and cash provided by financing activities decreased to **$40.5 million**, with total cash, cash equivalents, and restricted cash at period-end increasing to **$236.9 million** Cash Flow Activities (USD in thousands) | Cash Flow Activities (USD in thousands) | Nine Months Ended July 31, 2025 | Nine Months Ended July 31, 2024 | | :------------------------------------ | :------------------------------ | :------------------------------ | | Net Cash Used in Operating Activities | (102,427) | (158,751) | | Net Cash Provided by (Used in) Investing Activities | 89,970 | (18,978) | | Net Cash Provided by Financing Activities | 40,537 | 96,238 | | Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash | 27,971 | (81,395) | - The decrease in cash used in operating activities was primarily due to non-cash adjustments to net loss and a reduction in accounts receivable[240](index=240&type=chunk) - Cash provided by investing activities primarily resulted from **$772.4 million** in maturities of U.S. Treasury securities, partially offset by U.S. Treasury security purchases and capital expenditures[243](index=243&type=chunk) - The decrease in cash provided by financing activities was mainly due to reduced noncontrolling interest contributions and increased debt repayments, despite continued funding from common stock issuances[246](index=246&type=chunk)[247](index=247&type=chunk) [Commitments and Significant Contractual Obligations](index=85&type=section&id=Commitments%20and%20Significant%20Contractual%20Obligations) As of July 31, 2025, the company's total commitments and contractual obligations amounted to **$270.5 million**, primarily including purchase commitments, term loans (principal and interest), operating lease commitments, sale-leaseback financing obligations, and natural gas and biomethane supply contracts Commitments and Contractual Obligations (USD in thousands) | Commitment Category (USD in thousands) | Total (USD in thousands) | Less than 1 Year (USD in thousands) | 1-3 Years (USD in thousands) | 3-5 Years (USD in thousands) | More than 5 Years (USD in thousands) | | :----------------------------------- | :----------------------- | :---------------------------------- | :--------------------------- | :--------------------------- | :----------------------------------- | | Purchase Commitments | 66,861 | 58,464 | 4,274 | 2,825 | 1,298 | | Term Loans (Principal and Interest) | 136,315 | 18,543 | 31,567 | 60,930 | 25,275 | | Operating Lease Commitments | 24,449 | 1,313 | 3,179 | 2,340 | 17,617 | | Sale-Leaseback Financing Obligations | 7,133 | 1,394 | 2,583 | 2,562 | 594 | | Natural Gas and Biomethane Supply Contracts | 35,727 | 9,504 | 17,672 | 8,551 | - | | **Total** | **270,485** | **89,218** | **59,275** | **77,208** | **44,784** | - The company pays **$3.2 million** annually in Series B Preferred Stock dividends, which are not included in this table as it is not reasonably determinable when they might convert to common stock[250](index=250&type=chunk) [Outstanding Loans as of July 31, 2025](index=86&type=section&id=Outstanding%20Loans%20as%20of%20July%2031%2C%202025) As of July 31, 2025, the company's outstanding loans include EXIM financing, Derby and Groton back-leverage loans, the OpCo financing facility, and the Connecticut loan, with EXIM financing supporting the GGE long-term service agreement, Derby and Groton back-leverage loans for project financing, the OpCo financing facility secured by six operational fuel cell power generation projects, and the Connecticut loan facing an accelerated repayment penalty for not meeting employment obligations - The EXIM financing, completed on October 31, 2024, generated approximately **$10.1 million** in gross proceeds to support the long-term service agreement with GGE, with a fixed interest rate of **5.81%** over a **7-year** term[251](index=251&type=chunk) - The Derby Senior and Subordinate Back-Leverage Facilities, completed on April 25, 2024, totaled **$13 million** and bear interest at **7.25%** and **8%**, respectively[254](index=254&type=chunk)[256](index=256&type=chunk)[257](index=257&type=chunk) - The OpCo financing facility, completed on May 19, 2023, includes an **$80.5 million** term loan and a **$6.5 million** letter of credit, secured by six operational fuel cell power generation projects[261](index=261&type=chunk)[262](index=262&type=chunk) - The Connecticut loan is expected to incur a **$2.1 million** accelerated repayment penalty due to the company's failure to meet revised employment obligations by October 31, 2024[298](index=298&type=chunk)[300](index=300&type=chunk) [Restricted Cash](index=102&type=section&id=Restricted%20Cash) As of July 31, 2025, the company has pledged approximately **$62.2 million** in cash and cash equivalents as collateral for performance guarantees and letters of credit, including reserves for letters of credit, sale-leaseback transactions, Groton and Derby back-leverage loans, and the OpCo financing facility - As of July 31, 2025, the company has pledged approximately **$62.2 million** in cash and cash equivalents as collateral for performance guarantees and letters of credit[302](index=302&type=chunk) - Restricted cash includes **$14.2 million** for outstanding letters of credit, **$2.9 million** for the Crestmark sale-leaseback transaction, **$14 million** for the Groton Senior Back-Leverage Facility, **$1.8 million** for the Derby Senior and Subordinate Back-Leverage Facilities, and **$20.9 million** for the OpCo financing facility[302](index=302&type=chunk) [Service and warranty agreements](index=104&type=section&id=Service%20and%20warranty%20agreements) The company provides standard warranties for its products and enters into service contracts with customers to ensure power plants meet minimum operating levels for terms up to **20 years**, with service contract pricing based on future cost