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Tilray(TLRY) - 2026 Q1 - Quarterly Results
2025-10-09 11:01
[Q1 Fiscal Year 2026 Performance Overview](index=1&type=section&id=Q1_FY2026_Performance_Overview) Tilray Brands reported strong first quarter fiscal 2026 results, achieving record net revenue and net income, driven by operational efficiencies and a focus on profitability [Headline Summary](index=1&type=section&id=Headline_Summary) Tilray Brands reported strong first quarter fiscal 2026 results, achieving record net revenue and net income, driven by operational efficiencies and a focus on profitability Q1 FY2026 Performance Overview | Metric | Q1 FY2026 (Aug 31, 2025) | Q1 FY2025 (Aug 31, 2024) | Change (YoY) | % Change (YoY) | | :------------------------- | :----------------------- | :----------------------- | :----------- | :------------- | | Net Revenue | $210 million | $200 million | +$10 million | +5% | | Net Income | $1.5 million | $(34.7) million | +$36.2 million | +104% | | Adjusted EBITDA | $10 million | $9.3 million | +$0.7 million | +9% | | Net Cash Used in Operations| $(1.3) million | $(35.3) million | +$34 million | -96% (Improvement) | | Cash Balance | $265 million | - | - | - | | Net Debt | $4 million | - | Reduced | - | - Canadian Adult-Use Cannabis Gross Revenue increased **12%**, maintaining the **1 position** in revenue and expanding market share[1](index=1&type=chunk) - International Cannabis Revenue grew **10%** year-over-year[1](index=1&type=chunk) - Reiterated Fiscal Year 2026 Adjusted EBITDA Outlook of **$62 Million – $72 Million**[1](index=1&type=chunk) [CEO Commentary](index=1&type=section&id=CEO_Commentary) CEO Irwin D. Simon highlighted the effectiveness of Tilray's strategic vision and disciplined execution, emphasizing record Q1 net revenue, net income, and a fortified balance sheet as proof points of sustainable growth and operational excellence - Record Q1 net revenue of **$210 million**, delivering net income, and fortifying the balance sheet are proof points of commitment to sustainable growth, operational excellence, and unlocking shareholder value[2](index=2&type=chunk) - Confidence in Tilray's ability to seize transformative opportunities, especially with the U.S. exploring cannabis rescheduling and the evolving European cannabis landscape[2](index=2&type=chunk) - Tilray's global platform, proven expertise in medical and adult-use cannabis, and trusted partnerships position it as a leader in the global cannabis, beverage, and wellness sectors[2](index=2&type=chunk) [Financial Highlights](index=1&type=section&id=Financial_Highlights) Tilray Brands demonstrated significant financial improvements in Q1 FY2026, particularly in profitability, with a shift from net loss to net income and a substantial increase in adjusted EBITDA, alongside improved cash flow from operations [Key Consolidated Financial Metrics](index=1&type=section&id=Key_Consolidated_Financial_Metrics) Tilray Brands demonstrated significant financial improvements in Q1 FY2026, particularly in profitability, with a shift from net loss to net income and a substantial increase in adjusted EBITDA, alongside improved cash flow from operations Consolidated Financial Performance (Q1 FY2026 vs. Q1 FY2025) (in millions of US dollars) | Metric | Q1 FY2026 (Aug 31, 2025) | Q1 FY2025 (Aug 31, 2024) | Change (YoY) | % Change (YoY) | | :------------------------- | :----------------------- | :----------------------- | :----------- | :------------- | | Net Revenue | $209.5 million | $200.0 million | +$9.5 million | +5% | | Gross Profit | $57.5 million | $59.7 million | $(2.2) million | (4)% | | Gross Margin | 27% | 30% | (3) ppts | - | | Net Income (Loss) | $1.5 million | $(34.7) million | +$36.2 million | +104% | | Adjusted Net Income (Loss) | $3.9 million | $(6.1) million | +$10.0 million | +165% | | Adjusted EBITDA | $10.2 million | $9.3 million | +$0.9 million | +9% | | Cash Used in Operations | $(1.3) million | $(35.3) million | +$34.0 million | -96% (Improvement) | [Balance Sheet Update](index=2&type=section&id=Balance_Sheet_Update) Tilray Brands successfully reduced its total outstanding debt in Q1 FY2026, leading to a significantly improved net debt to adjusted EBITDA ratio and maintaining a strong cash balance for strategic flexibility - Total outstanding debt reduced by **$7.7 million** in the first quarter[5](index=5&type=chunk) - Net debt to trailing twelve months adjusted EBITDA ratio reduced to **0.07x**[5](index=5&type=chunk) - Cash balance of **$264.8 million** provides flexibility for strategic opportunities[5](index=5&type=chunk) [About Tilray Brands](index=2&type=section&id=About_Tilray_Brands) Tilray Brands is a global lifestyle and consumer packaged goods company operating across Canada, the U.S., Europe, Australia, and Latin America, leading in the cannabis, beverage, wellness, and entertainment sectors [Company Overview](index=2&type=section&id=Company_Overview) Tilray Brands is a global lifestyle and consumer packaged goods company operating across Canada, the U.S., Europe, Australia, and Latin America, leading in the cannabis, beverage, wellness, and entertainment sectors - Tilray Brands is a leading global lifestyle and consumer packaged goods company with operations in Canada, the United States, Europe, Australia, and Latin America[7](index=7&type=chunk) - The company is a transformative force at the nexus of cannabis, beverage, wellness, and entertainment[7](index=7&type=chunk) - Tilray's platform supports over **40 brands** in over **20 countries**, including comprehensive cannabis offerings, hemp-based foods, and craft beverages[7](index=7&type=chunk) [Use of Non-GAAP Financial Measures](index=3&type=section&id=Use_of_Non-GAAP_Financial_Measures) Tilray Brands utilizes several non-GAAP financial measures, such as Adjusted gross margin, Adjusted EBITDA, and Adjusted net income, to provide investors with additional insights into operational trends and period-over-period comparisons [Non-GAAP Definitions and Rationale](index=3&type=section&id=Non-GAAP_Definitions_and_Rationale) Tilray Brands utilizes several non-GAAP financial measures, such as Adjusted gross margin, Adjusted EBITDA, and Adjusted net income, to provide investors with additional insights into operational trends and period-over-period comparisons - Non-GAAP measures provide useful additional information to investors about current trends and are useful for period-over-period comparisons, but should not be considered in isolation or as a substitute for GAAP measures[13](index=13&type=chunk) - Key non-GAAP measures include Adjusted gross margin, Adjusted gross profit, Adjusted EBITDA, Adjusted net income (loss), Adjusted net income (loss) per share, free cash flow, adjusted free cash flow, constant currency presentations of revenue, cash and marketable securities, net debt, and net debt to adjusted EBITDA[13](index=13&type=chunk) - The company is unable to reconcile certain forward-looking non-GAAP measures to GAAP without unreasonable efforts due to the unpredictability of certain impacting items[14](index=14&type=chunk) [Consolidated Financial Statements](index=4&type=section&id=Consolidated_Financial_Statements) This section presents Tilray's consolidated financial statements, including the statements of financial position, net income (loss), and cash flows, providing a comprehensive overview of the company's financial health and performance [Consolidated Statements of Financial Position](index=4&type=section&id=Consolidated_Statements_of_Financial_Position) Tilray's balance sheet as of August 31, 2025, shows an increase in total assets and stockholders' equity compared to May 31, 2025, primarily driven by higher cash and cash equivalents, while total liabilities decreased Key Balance Sheet Items (in thousands of US dollars) | Metric | August 31, 2025 | May 31, 2025 | Change | | :-------------------------- | :-------------- | :----------- | :----- | | Cash and cash equivalents | $264,828 | $221,666 | +$43,162 | | Total current assets | $701,140 | $688,626 | +$12,514 | | Total assets | $2,082,646 | $2,074,327 | +$8,319 | | Total current liabilities | $267,632 | $280,303 | $(12,671) | | Total liabilities | $561,988 | $584,752 | $(22,764) | | Total stockholders' equity | $1,520,658 | $1,489,575 | +$31,083 | [Condensed Consolidated Statements of Net Income (Loss) and Comprehensive Income (Loss)](index=5&type=section&id=Condensed_Consolidated_Statements_of_Net_Income_Loss) For Q1 FY2026, Tilray reported a significant turnaround from a net loss to a net income, driven by increased net revenue and a substantial reduction in total operating expenses, particularly amortization and changes in fair value of contingent consideration Condensed Consolidated Statements of Net Income (Loss) (in thousands of U.S. dollars) | Metric | Q1 FY2026 (Aug 31, 2025) | Q1 FY2025 (Aug 31, 2024) | Change (YoY) | % Change (YoY) | | :---------------------------------- | :----------------------- | :----------------------- | :----------- | :------------- | | Net revenue | $209,501 | $200,044 | +$9,457 | +5% | | Cost of goods sold | $152,032 | $140,338 | +$11,694 | +8% | | Gross profit | $57,469 | $59,706 | $(2,237) | (4)% | | Total operating expenses | $55,377 | $96,276 | $(40,899) | (42)% | | Operating income (loss) | $2,092 | $(36,570) | +$38,662 | (106)% | | Net income (loss) | $1,513 | $(34,652) | +$36,165 | (104)% | | Net loss per share - basic & diluted| $(0.00) | $(0.04) | +$0.04 | (100)% | - Amortization expense decreased significantly by **$17.9 million (82%)** year-over-year[28](index=28&type=chunk) - Change in fair value of contingent consideration resulted in a **$15.0 million income** in Q1 FY2026, compared to zero in the prior year[28](index=28&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed_Consolidated_Statements_of_Cash_Flows) Tilray significantly improved its cash flow from operations, reducing cash used by 96% year-over-year, with investing activities shifting from a net use to a net provision of cash, primarily due to marketable securities disposal Condensed Consolidated Statements of Cash Flows (in thousands of US dollars) | Activity | Q1 FY2026 (Aug 31, 2025) | Q1 FY2025 (Aug 31, 2024) | Change (YoY) | % Change (YoY) | | :-------------------------------- | :----------------------- | :----------------------- | :----------- | :------------- | | Net cash used in operating activities | $(1,341) | $(35,307) | +$33,966 | (96)% (Improvement) | | Net cash provided by (used in) investing activities | $24,467 | $(49,395) | +$73,862 | (150)% | | Net cash provided by financing activities | $19,848 | $60,590 | $(40,742) | (67)% | | Net increase (decrease) in cash and cash equivalents | $43,162 | $(23,154) | +$66,316 | (286)% | | Cash and cash equivalents, end of period | $264,828 | $205,186 | +$59,642 | +29% | - The significant improvement in investing activities was largely due to **$34.7 million** in proceeds from the disposal of marketable securities in Q1 FY2026, compared to a **$42.7 million** purchase in Q1 FY2025[30](index=30&type=chunk) [Segmental Revenue Performance](index=7&type=section&id=Segmental_Revenue_Performance) This section details Tilray's net revenue breakdown by operating segment and cannabis market channel, highlighting key growth drivers and market share dynamics [Net Revenue by Operating Segment](index=7&type=section&id=Net_Revenue_by_Operating_Segment) Tilray's total net revenue increased by 5% year-over-year, with growth primarily driven by the Distribution and Cannabis segments, while the Beverage segment remained relatively stable Net Revenue by Operating Segment (in thousands of U.S. dollars) | Segment | Q1 FY2026 (Aug 31, 2025) | % of Total Revenue (2025) | Q1 FY2025 (Aug 31, 2024) | % of Total Revenue (2024) | Change (YoY) | % Change (YoY) | | :---------------- | :----------------------- | :------------------------ | :----------------------- | :------------------------ | :----------- | :------------- | | Beverage business | $55,739 | 27% | $55,972 | 28% | $(233) | (0.4)% | | Cannabis business | $64,511 | 31% | $61,249 | 31% | +$3,262 | +5% | | Distribution business | $74,007 | 35% | $68,071 | 34% | +$5,936 | +9% | | Wellness business | $15,244 | 7% | $14,752 | 7% | +$492 | +3% | | **Total net revenue** | **$209,501** | **100%** | **$200,044** | **100%** | **+$9,457** | **+5%** | - In constant currency, total net revenue was **$204.8 million**, indicating a slight negative foreign exchange impact on reported revenue[32](index=32&type=chunk) [Net Cannabis Revenue by Market Channel](index=8&type=section&id=Net_Cannabis_Revenue_by_Market_Channel) Canadian adult-use cannabis revenue was the primary driver of growth within the cannabis segment, increasing by 12% year-over-year and significantly expanding its share of total cannabis revenue Net Cannabis Revenue by Market Channel (in thousands of U.S. dollars) | Channel | Q1 FY2026 (Aug 31, 2025) | % of Total Cannabis Revenue (2025) | Q1 FY2025 (Aug 31, 2024) | % of Total Cannabis Revenue (2024) | Change (YoY) | % Change (YoY) | | :-------------------------- | :----------------------- | :--------------------------------- | :----------------------- | :--------------------------------- | :----------- | :------------- | | Canadian medical cannabis | $6,146 | 10% | $6,261 | 10% | $(115) | (2)% | | Canadian adult-use cannabis | $64,067 | 99% | $57,235 | 94% | +$6,832 | +12% | | Wholesale cannabis | $4,155 | 6% | $5,507 | 9% | $(1,352) | (25)% | | International cannabis | $13,367 | 21% | $12,191 | 20% | +$1,176 | +10% | | Less excise taxes | $(23,224) | (36)% | $(19,945) | (33)% | $(3,279) | +16% | | **Total** | **$64,511** | **100%** | **$61,249** | **100%** | **+$3,262** | **+5%** | - In constant currency, Canadian adult-use cannabis revenue was **$64.4 million**, showing consistent growth[34](index=34&type=chunk) [Reconciliations and Key Operating Metrics](index=8&type=section&id=Reconciliations_and_Key_Operating_Metrics) This section provides reconciliations for non-GAAP financial measures such as Adjusted EBITDA, Adjusted Net Income, and Adjusted Free Cash Flow, offering deeper insights into Tilray's operational performance [Gross Margin and Adjusted Gross Margin](index=9&type=section&id=Gross_Margin_and_Adjusted_Gross_Margin) Consolidated gross margin decreased slightly year-over-year, primarily due to declines in Beverage, Cannabis, and Distribution segments, with Adjusted gross margin showing similar trends Gross Margin and Adjusted Gross Margin by Segment | Segment | Gross Margin Q1 FY2026 | Gross Margin Q1 FY2025 | Adjusted Gross Margin Q1 FY2026 | Adjusted Gross Margin Q1 FY2025 | | :---------------- | :--------------------- | :--------------------- | :------------------------------ | :------------------------------ | | Beverage | 38% | 41% | 38% | 41% | | Cannabis | 36% | 40% | 36% | 40% | | Distribution | 11% | 12% | 11% | 12% | | Wellness | 32% | 32% | 32% | 32% | | **Total** | **27%** | **30%** | **27%** | **30%** | - Purchase price accounting step-up adjustment was **$175 thousand** in Q1 FY2025, impacting adjusted gross profit[37](index=37&type=chunk) [Adjusted EBITDA Reconciliation](index=9&type=section&id=Adjusted_EBITDA_Reconciliation) Tilray's Adjusted EBITDA increased by 9% year-over-year, reaching $10.2 million, primarily due to the significant improvement in net income and reduced amortization and restructuring costs Adjusted EBITDA (in thousands of U.S. dollars) | Metric | Q1 FY2026 (Aug 31, 2025) | Q1 FY2025 (Aug 31, 2024) | Change (YoY) | % Change (YoY) | | :------------------------- | :----------------------- | :----------------------- | :----------- | :------------- | | Net income (loss) | $1,513 | $(34,652) | +$36,165 | (104)% | | Amortization | $15,561 | $31,814 | $(16,253) | (51)% | | Change in fair value of contingent consideration | $(15,000) | $0 | $(15,000) | NM | | Restructuring costs | $869 | $4,247 | $(3,378) | (80)% | | **Adjusted EBITDA** | **$10,181** | **$9,334** | **+$847** | **+9%** | [Adjusted Net Income (Loss) Per Share Reconciliation](index=10&type=section&id=Adjusted_Net_Income_Loss_Per_Share_Reconciliation) Tilray achieved a positive Adjusted Net Income of $3.9 million in Q1 FY2026, a significant improvement from a loss in the prior year, resulting in a positive Adjusted Net Income per share Adjusted Net Income (Loss) Per Share (in thousands of U.S. dollars) | Metric | Q1 FY2026 (Aug 31, 2025) | Q1 FY2025 (Aug 31, 2024) | Change (YoY) | % Change (YoY) | | :---------------------------------- | :----------------------- | :----------------------- | :----------- | :------------- | | Net loss attributable to stockholders of Tilray Brands, Inc. | $(322) | $(39,165) | +$38,843 | (99)% | | Amortization | $15,561 | $31,814 | $(16,253) | (51)% | | Change in fair value of contingent consideration | $(15,000) | $0 | $(15,000) | NM | | **Adjusted net income (loss)** | **$3,935** | **$(6,082)** | **+$10,017** | **(165)%** | | **Adjusted net income (loss) per share - basic and diluted** | **$0.00** | **$(0.01)** | **+$0.01** | **(100)%** | [Adjusted Free Cash Flow Reconciliation](index=10&type=section&id=Adjusted_Free_Cash_Flow_Reconciliation) Tilray significantly improved its adjusted free cash flow, reducing the cash outflow by 88% year-over-year, primarily driven by the substantial improvement in net cash used in operating activities Adjusted Free Cash Flow (in thousands of U.S. dollars) | Metric | Q1 FY2026 (Aug 31, 2025) | Q1 FY2025 (Aug 31, 2024) | Change (YoY) | % Change (YoY) | | :-------------------------------- | :----------------------- | :----------------------- | :----------- | :------------- | | Net cash used in operating activities | $(1,341) | $(35,307) | +$33,966 | (96)% (Improvement) | | Investments in capital and intangible assets, net | $(9,230) | $(6,708) | $(2,522) | +38% | | Free cash flow | $(10,571) | $(42,015) | +$31,444 | (75)% (Improvement) | | Add: growth CAPEX | $3,009 | $2,540 | +$469 | +18% | | Add: cash paid for litigation settlements | $2,804 | $0 | +$2,804 | NM | | **Adjusted free cash flow** | **$(4,758)** | **$(39,475)** | **+$34,717** | **(88)% (Improvement)** | [Cautionary Statement Concerning Forward-Looking Statements](index=2&type=section&id=Cautionary_Statement_Concerning_Forward-Looking_Statements) This section outlines the nature of forward-looking statements, which involve intentions, beliefs, and expectations about future events, and highlights that actual results may differ materially due to various risks and uncertainties [Forward-Looking Statements Overview](index=2&type=section&id=Forward-Looking_Statements_Overview) This section outlines the nature of forward-looking statements, which involve intentions, beliefs, and expectations about future events, and highlights that actual results may differ materially due to various risks and uncertainties - Forward-looking statements are identified by words like 'forecast,' 'future,' 'should,' 'could,' 'believe,' 'anticipate,' 'expect,' 'intend,' 'may,' 'project,' 'will,' 'would' and similar expressions[9](index=9&type=chunk) - These statements include expectations regarding becoming a leading lifestyle CPG company, achieving long-term profitability, operational scale, market share, revenue growth, margin improvements, fiscal year 2026 financial guidance (including Adjusted EBITDA), opportunities in the U.S. cannabis market, and leveraging AI strategies[10](index=10&type=chunk) - Many factors could cause actual results to differ materially from forward-looking statements, and the company does not undertake to publicly update them unless required by law[11](index=11&type=chunk)[12](index=12&type=chunk) [Corporate Information](index=2&type=section&id=Corporate_Information) This section provides details on the Q1 FY2026 financial results webcast and contact information for investor relations and media inquiries [Live Audio Webcast](index=2&type=section&id=Live_Audio_Webcast) Tilray Brands hosted a live audio webcast to discuss its Q1 FY2026 financial results, with a replay available on the company's investor relations website - Webcast held on **October 09, 2025**, at **8:30 a.m. Eastern Time**[6](index=6&type=chunk) - Available on the Events & Presentations section of Tilray's Investor Relations website, with a replay archived on the Company's website[6](index=6&type=chunk) [Contacts](index=4&type=section&id=Contacts) Contact information for investor relations and media inquiries is provided - Investor Relations: investors@tilray.com, Pro-TLRY@prosek.com[24](index=24&type=chunk) - Media: news@tilray.com[24](index=24&type=chunk)
Helen of Troy(HELE) - 2026 Q2 - Quarterly Report
2025-10-09 10:56
PART I. FINANCIAL INFORMATION This section provides a comprehensive overview of the company's financial performance and position, including detailed statements and explanatory notes [ITEM 1. FINANCIAL STATEMENTS](index=4&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) Presents unaudited condensed consolidated financial statements, including balance sheets, income statements, cash flows, and detailed explanatory notes [Condensed Consolidated Balance Sheets (Unaudited)](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(Unaudited)) Presents the company's financial position, detailing assets, liabilities, and stockholders' equity at specific reporting dates | Metric (in thousands) | August 31, 2025 | February 28, 2025 | Change | % Change | | :-------------------- | :-------------- | :---------------- | :----- | :------- | | **Assets:** | | | | | | Total assets, current | $938,129 | $931,712 | $6,417 | 0.7% | | Goodwill | $569,150 | $1,182,899 | $(613,749)| -51.9% | | Other intangible assets, net | $429,025 | $566,756 | $(137,731)| -24.3% | | Total assets | $2,407,554 | $3,132,083 | $(724,529)| -23.1% | | **Liabilities:** | | | | | | Total liabilities, current | $549,952 | $466,259 | $83,693 | 17.9% | | Long-term debt, excluding current maturities | $871,345 | $907,519 | $(36,174)| -4.0% | | Total liabilities | $1,481,272 | $1,448,644 | $32,628 | 2.3% | | **Stockholders' Equity:** | | | | | | Total stockholders' equity | $926,282 | $1,683,439 | $(757,157)| -45.0% | [Condensed Consolidated Statements of (Loss) Income (Unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20(Loss)%20Income%20(Unaudited)) Details the company's financial performance, including sales revenue, gross profit, operating income, and net (loss) income over specific periods | Metric (in thousands, except per share data) | Three Months Ended Aug 31, 2025 | Three Months Ended Aug 31, 2024 | Six Months Ended Aug 31, 2025 | Six Months Ended Aug 31, 2024 | | :------------------------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Sales revenue, net | $431,781 | $474,221 | $803,436 | $891,068 | | Gross profit | $190,681 | $216,070 | $365,692 | $419,149 | | SG&A | $176,999 | $179,692 | $344,663 | $350,173 | | Asset impairment charges | $326,394 | $0 | $740,779 | $0 | | Operating (loss) income | $(315,717) | $34,852 | $(722,755) | $65,615 | | Net (loss) income | $(308,643) | $17,014 | $(759,361) | $23,218 | | Basic (Loss) earnings per share | $(13.44) | $0.75 | $(33.09) | $1.00 | | Diluted (Loss) earnings per share | $(13.44) | $0.74 | $(33.09) | $1.00 | [Condensed Consolidated Statements of Comprehensive (Loss) Income (Unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20(Loss)%20Income%20(Unaudited)) Outlines net (loss) income and other comprehensive (loss) income components, reflecting total comprehensive financial performance | Metric (in thousands) | Three Months Ended Aug 31, 2025 | Three Months Ended Aug 31, 2024 | Six Months Ended Aug 31, 2025 | Six Months Ended Aug 31, 2024 | | :-------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Net (loss) income | $(308,643) | $17,014 | $(759,361) | $23,218 | | Other comprehensive loss, net of tax | $(1,983) | $(4,312) | $(7,739) | $(3,614) | | Comprehensive (loss) income | $(310,626) | $12,702 | $(767,100) | $19,604 | [Condensed Consolidated Statements of Stockholders' Equity (Unaudited)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity%20(Unaudited)) Shows changes in common stock, additional paid-in capital, retained earnings, and accumulated other comprehensive (loss) income over time | Metric (in thousands) | Balances at Feb 28, 2025 | Net Loss (6 months) | Other Comprehensive Loss (6 months) | Balances at Aug 31, 2025 | | :-------------------- | :----------------------- | :------------------ | :---------------------------------- | :----------------------- | | Common Stock Par Value | $2,286 | - | - | $2,296 | | Additional Paid in Capital | $367,106 | - | - | $377,039 | | Accumulated Other Comprehensive (Loss) Income | $2,278 | - | $(7,739) | $(5,461) | | Retained Earnings | $1,311,769 | $(759,361) | - | $552,408 | | Total Stockholders' Equity | $1,683,439 | $(759,361) | $(7,739) | $926,282 | [Condensed Consolidated Statements of Cash Flows (Unaudited)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) Summarizes cash inflows and outflows from operating, investing, and financing activities, indicating changes in cash and cash equivalents | Metric (in thousands) | Six Months Ended Aug 31, 2025 | Six Months Ended Aug 31, 2024 | | :-------------------- | :---------------------------- | :---------------------------- | | Net cash provided by operating activities | $47,868 | $69,916 | | Net cash used by investing activities | $(20,975) | $(14,101) | | Net cash used by financing activities | $(23,390) | $(54,179) | | Net increase in cash and cash equivalents | $3,503 | $1,636 | | Cash and cash equivalents, ending balance | $22,370 | $20,137 | [Note 1 - Basis of Presentation and Related Information](index=9&type=section&id=Note%201%20-%20Basis%20of%20Presentation%20and%20Related%20Information) Provides background on Helen of Troy Limited, its business segments, seasonal operations, supply chain, and recent acquisition of Olive & June - Helen of Troy Limited, incorporated in Bermuda in 1994, is a global consumer products company with brands like OXO, Hydro Flask, Osprey, Vicks, Braun, Honeywell, PUR, Hot Tools, Drybar, Curlsmith, Revlon, and Olive & June. It operates two reportable segments: Home & Outdoor and Beauty & Wellness[17](index=17&type=chunk)[18](index=18&type=chunk) - The company's business is seasonal, with the highest sales volume and operating income typically occurring in the **third fiscal quarter** (ending November 30th). Products are primarily purchased from manufacturers in China, Mexico, Vietnam, and the U.S[19](index=19&type=chunk) - On December 16, 2024, the company acquired Olive & June, an omni-channel nail care brand, for an initial cash consideration of **$224.7 million** and contingent cash consideration of up to **$15.0 million**. This acquisition was added to the Beauty & Wellness segment[20](index=20&type=chunk) [Note 2 - New Accounting Pronouncements](index=10&type=section&id=Note%202%20-%20New%20Accounting%20Pronouncements) Discusses recently issued accounting standards, ASU 2025-05 and ASU 2025-06, and their expected impact on the company's financial reporting - ASU 2025-05 (Financial Instruments – Credit Losses) was issued in July 2025, allowing entities to assume current conditions for accounts receivable and contract assets when estimating credit losses. It is effective for fiscal years beginning after December 15, 2025, and is not expected to have a **material impact**[24](index=24&type=chunk) - ASU 2025-06 (Intangibles – Goodwill and Other – Internal-Use Software) was issued in September 2025, requiring capitalization of software costs when management authorizes funding and project completion is probable. It is effective for fiscal years beginning after December 15, 2027, and the company is evaluating its impact[25](index=25&type=chunk) [Note 3 - Accrued Expenses and Other Current Liabilities](index=11&type=section&id=Note%203%20-%20Accrued%20Expenses%20and%20Other%20Current%20Liabilities) Details the composition and changes in various accrued expenses and other current liabilities, including compensation, sales allowances, and advertising | (in thousands) | August 31, 2025 | February 28, 2025 | Change | % Change | | :------------- | :-------------- | :---------------- | :----- | :------- | | Accrued compensation, benefits and payroll taxes | $26,760 | $16,096 | $10,664 | 66.3% | | Accrued sales discounts and allowances | $46,035 | $36,600 | $9,435 | 25.8% | | Accrued sales returns | $21,559 | $20,190 | $1,369 | 6.8% | | Accrued advertising | $29,199 | $25,716 | $3,483 | 13.5% | | Other | $73,111 | $62,138 | $10,973 | 17.7% | | Total accrued expenses and other current liabilities | $196,664 | $160,740 | $35,924 | 22.3% | [Note 4 - Acquisition of Olive & June](index=11&type=section&id=Note%204%20-%20Acquisition%20of%20Olive%20%26%20June) Provides details on the acquisition of Olive & June, including initial and contingent cash consideration, funding, and recognized goodwill and intangible assets - On December 16, 2024, Helen of Troy acquired Olive & June, an omni-channel nail care brand, for an initial cash consideration of **$224.7 million** (net of cash acquired and a favorable post-closing adjustment of **$3.9 million**) and contingent cash consideration of up to **$15.0 million**[27](index=27&type=chunk) - The acquisition was funded by cash on hand and borrowings from the existing revolving credit facility. The contingent consideration is subject to Olive & June achieving certain annual adjusted EBITDA targets for calendar years **2025-2027**[27](index=27&type=chunk)[28](index=28&type=chunk) - Goodwill of **$150.7 million** was recognized, primarily attributable to expected synergies from leveraging operational scale, customer relationships, and distribution capabilities. Acquired intangible assets included trade names (**$51.0 million**), customer relationships (**$8.0 million**), and non-compete agreements (**$1.6 million**)[29](index=29&type=chunk)[31](index=31&type=chunk) [Note 5 - Goodwill and Intangibles](index=12&type=section&id=Note%205%20-%20Goodwill%20and%20Intangibles) Reports significant asset impairment charges for goodwill and other intangible assets across Home & Outdoor and Beauty & Wellness segments due to market conditions - During the first and second quarters of fiscal 2026, the company recognized pre-tax asset impairment charges totaling **$326.4 million** for the three months ended August 31, 2025, and **$740.8 million** for the six months ended August 31, 2025, due to a sustained decline in stock price, downward revisions to internal forecasts, and macroeconomic factors[33](index=33&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk) | Segment (in thousands) | Three Months Ended Aug 31, 2025 | Six Months Ended Aug 31, 2025 | | :--------------------- | :------------------------------ | :---------------------------- | | Home & Outdoor | $85,537 | $304,632 | | Beauty & Wellness | $240,857 | $436,147 | | **Total** | **$326,394** | **$740,779** | - Goodwill impairment charges for the six months ended August 31, 2025, totaled **$609.6 million**, with **$229.1 million** in Home & Outdoor (Hydro Flask, Osprey) and **$380.5 million** in Beauty & Wellness (Health & Wellness, Drybar, Curlsmith). The Hydro Flask reporting unit's goodwill was reduced to **zero**[37](index=37&type=chunk)[39](index=39&type=chunk) - Other intangible asset impairment charges for the six months ended August 31, 2025, totaled **$131.2 million**, affecting trade names (Hydro Flask, Osprey, PUR), trademark licenses (Revlon), customer relationships (Drybar, Hydro Flask), and other intangibles (Drybar, Hydro Flask)[39](index=39&type=chunk)[41](index=41&type=chunk) [Note 6 - Share-Based Compensation Plans](index=15&type=section&id=Note%206%20-%20Share-Based%20Compensation%20Plans) Outlines the 2025 Stock Incentive Plan, share-based compensation expense, and unrecognized compensation, including various award types - The 2025 Stock Incentive Plan replaced the 2018 Plan on August 20, 2025, with **1,155,478 shares** available for future issuance. During the first quarter of fiscal 2026, **272,909 service condition awards**, **191,946 performance-based awards**, and **128,081 market condition awards** were granted[43](index=43&type=chunk)[44](index=44&type=chunk) | (in thousands) | Three Months Ended Aug 31, 2025 | Three Months Ended Aug 31, 2024 | Six Months Ended Aug 31, 2025 | Six Months Ended Aug 31, 2024 | | :------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Share-based compensation expense | $9,372 | $5,487 | $9,668 | $11,320 | | Less: income tax benefits | $(445) | $(221) | $(602) | $(485) | | Net expense | $8,927 | $5,266 | $9,066 | $10,835 | - Total unrecognized share-based compensation was **$26.6 million** as of August 31, 2025, to be recognized over a weighted average amortization period of **2.1 years**. This includes estimates for target achievement for fiscal 2026 and 2025 awards, and **zero percent** for fiscal 2024 awards[46](index=46&type=chunk) [Note 7 - Repurchases of Common Stock](index=16&type=section&id=Note%207%20-%20Repurchases%20of%20Common%20Stock) Details the common stock repurchase authorization, remaining availability, and shares acquired in connection with share-based compensation - In August 2024, the Board authorized the repurchase of up to **$500 million** of common stock over **three years**, replacing a former authorization. As of August 31, 2025, **$498.4 million** remained available under this authorization[47](index=47&type=chunk) | (in thousands, except share and per share data) | Three Months Ended Aug 31, 2025 | Three Months Ended Aug 31, 2024 | Six Months Ended Aug 31, 2025 | Six Months Ended Aug 31, 2024 | | :---------------------------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Common stock repurchased on the open market: | | | | | | Number of shares | — | — | — | 1,011,243 | | Aggregate value of shares | $— | $— | $— | $100,019 | | Common stock received in connection with share-based compensation: | | | | | | Number of shares | 5,279 | 1,403 | 29,939 | 26,775 | | Aggregate value of shares | $151 | $109 | $1,482 | $3,125 | [Note 8 - Restructuring Plan](index=16&type=section&id=Note%208%20-%20Restructuring%20Plan) Describes Project Pegasus, a global restructuring plan completed in fiscal 2025, aimed at improving efficiency and reducing costs - Project Pegasus, a global restructuring plan initiated in fiscal 2023 to improve efficiency and reduce costs, was completed in the **fourth quarter of fiscal 2025**. Targeted savings are expected through fiscal **2027**[50](index=50&type=chunk) | Metric (in thousands) | Three Months Ended Aug 31, 2025 | Three Months Ended Aug 31, 2024 | Six Months Ended Aug 31, 2025 | Six Months Ended Aug 31, 2024 | | :-------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Pre-tax restructuring costs | $3,005 | $1,526 | $3,005 | $3,361 | | Cash restructuring payments | N/A | N/A | $4,000 | $5,600 | | Remaining liability (as of Aug 31, 2025) | N/A | N/A | $3,700 | N/A | [Note 9 - Commitments and Contingencies](index=17&type=section&id=Note%209%20-%20Commitments%20and%20Contingencies) Discusses ongoing legal proceedings, including patent litigation with Brita LP, and discussions with the EPA regarding product packaging claims - The company is involved in patent litigation with Brita LP regarding PUR water filtration systems. The ITC initially ruled against the company but later issued a Final Determination in its favor on **September 19, 2023**. Brita LP is appealing this decision to the Federal Circuit, with oral arguments held on **August 5, 2025**[53](index=53&type=chunk) - Discussions with the U.S. Environmental Protection Agency (EPA) regarding packaging claims on certain air/water filtration and humidifier products were ongoing. The company voluntarily stopped shipments, repackaged products, and expects potential future fines or penalties, though these cannot be **reasonably estimated**[54](index=54&type=chunk)[55](index=55&type=chunk) [Note 10 - Long-Term Debt](index=18&type=section&id=Note%2010%20-%20Long-Term%20Debt) Provides details on the company's Credit Agreement, revolving and term loans, interest rates, and anticipated amendment due to covenant compliance concerns | (in thousands) | August 31, 2025 | February 28, 2025 | Change | % Change | | :------------- | :-------------- | :---------------- | :----- | :------- | | Revolving loans | $411,900 | $678,100 | $(266,200)| -39.3% | | Term loans | $486,719 | $243,750 | $242,969 | 99.7% | | Total borrowings under Credit Agreement | $898,619 | $921,850 | $(23,231)| -2.5% | | Total long-term debt | $893,220 | $916,894 | $(23,674)| -2.6% | | Long-term debt, excluding current maturities | $871,345 | $907,519 | $(36,174)| -4.0% | - The company has a **$1.5 billion** Credit Agreement maturing on **February 15, 2029**, comprising a **$1.0 billion** revolving credit facility, a **$250 million** term loan, and a **$250 million** delayed draw term loan facility. Borrowings bear floating interest rates, with **$625 million** (as of Aug 31, 2025) hedged by interest rate swaps[57](index=57&type=chunk)[59](index=59&type=chunk) - As of August 31, 2025, the company was in compliance with all debt covenants. However, due to negative sales trends and macroeconomic conditions, the company anticipates seeking an amendment to the Credit Agreement in the **third fiscal quarter** to extend temporary adjustments to the maximum leverage ratio and reduce the minimum interest coverage ratio[63](index=63&type=chunk) [Note 11 - Fair Value](index=20&type=section&id=Note%2011%20-%20Fair%20Value) Explains the fair value hierarchy for financial instruments and details non-recurring fair value measurements related to significant asset impairment charges - The company classifies financial assets and liabilities into a fair value hierarchy (**Level 1**, **2**, or **3**). U.S. Treasury Bills are **Level 1**, most other financial instruments are **Level 2**, and the contingent consideration liability from the Olive & June acquisition is **Level 3** due to unobservable inputs (projected adjusted EBITDA)[64](index=64&type=chunk)[70](index=70&type=chunk) | (in thousands) | August 31, 2025 | February 28, 2025 | | :------------- | :-------------- | :---------------- | | **Assets:** | | | | Cash equivalents (money market accounts) | $3,882 | $3,852 | | U.S. Treasury Bills | $11,562 | $11,268 | | Interest rate swaps | $743 | $1,065 | | Foreign currency derivatives | $149 | $2,163 | | **Total assets** | **$16,336** | **$18,348** | | **Liabilities:** | | | | Interest rate swaps | $106 | $221 | | Contingent consideration | $4,100 | $4,100 | | Foreign currency derivatives | $7,692 | $119 | | **Total liabilities** | **$11,898** | **$4,440** | - During the six months ended August 31, 2025, non-recurring fair value measurements resulted from impairment charges of **$609.6 million** for goodwill, **$73.0 million** for indefinite-lived intangible assets, and **$58.2 million** for definite-lived intangible assets[72](index=72&type=chunk)[73](index=73&type=chunk) [Note 12 - Financial Instruments and Risk Management](index=23&type=section&id=Note%2012%20-%20Financial%20Instruments%20and%20Risk%20Management) Describes the company's use of foreign currency forward contracts and interest rate swaps to manage foreign currency and interest rate risks - Approximately **14%** and **15%** of net sales revenue for the three and six months ended August 31, 2025, respectively, were denominated in foreign currencies (primarily Euros, Canadian Dollars, British Pounds). The company uses foreign currency forward contracts to mitigate foreign currency exchange rate risk[77](index=77&type=chunk)[78](index=78&type=chunk) - Foreign currency exchange rate net gains of **$2.9 million** (3 months) and **$9.5 million** (6 months) were recorded in income tax expense for the period ended August 31, 2025, compared to net losses in the prior year[78](index=78&type=chunk) - Interest on outstanding debt is based on floating rates, with **$625 million** (as of Aug 31, 2025) hedged by interest rate swaps to fix rates. Both foreign currency contracts and interest rate swaps are designated as cash flow hedges, with changes in fair value recorded in OCI[79](index=79&type=chunk) [Note 13 - Accumulated Other Comprehensive Income (Loss)](index=26&type=section&id=Note%2013%20-%20Accumulated%20Other%20Comprehensive%20Income%20(Loss)) Details the components and changes in accumulated other comprehensive income (loss), primarily influenced by foreign currency contracts | (in thousands) | Balance at Feb 29, 2024 | Other comprehensive income (loss) before reclassification (6 months) | Amounts reclassified out of AOCI (6 months) | Tax effects (6 months) | Balance at Aug 31, 2025 | | :------------- | :---------------------- | :--------------------------------------------------- | :---------------------------------------- | :--------------------- | :---------------------- | | Interest Rate Swaps | $1,917 | $1,870 | $(2,077) | $50 | $489 | | Foreign Currency Contracts | $182 | $(12,075) | $2,493 | $2,000 | $(5,950) | | **Total** | **$2,099** | **$(10,205)** | **$416** | **$2,050** | **$(5,461)** | - The balance of Accumulated Other Comprehensive Income (Loss) shifted from a gain of **$2.1 million** at February 29, 2024, to a loss of **$5.5 million** at August 31, 2025, primarily driven by a significant other comprehensive loss before reclassification from foreign currency contracts[84](index=84&type=chunk) [Note 14 - Segment and Geographic Information](index=26&type=section&id=Note%2014%20-%20Segment%20and%20Geographic%20Information) Provides financial data by reportable segment (Home & Outdoor, Beauty & Wellness) and geographic region, including sales revenue and operating income - The company operates two reportable segments: Home & Outdoor and Beauty & Wellness. Segment performance is assessed by the Chief Operating Decision Maker (CODM) using segment operating income, which includes net sales revenue, cost of goods sold, SG&A, asset impairment, and restructuring charges[85](index=85&type=chunk)[86](index=86&type=chunk) | (in thousands) | Three Months Ended Aug 31, 2025 | Three Months Ended Aug 31, 2024 | Six Months Ended Aug 31, 2025 | Six Months Ended Aug 31, 2024 | | :------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | **Sales revenue, net:** | | | | | | Home & Outdoor | $208,721 | $241,944 | $386,704 | $440,403 | | Beauty & Wellness | $223,060 | $232,277 | $416,732 | $450,665 | | **Operating (loss) income:** | | | | | | Home & Outdoor | $(72,578) | $31,152 | $(286,371) | $47,002 | | Beauty & Wellness | $(243,139) | $3,700 | $(436,384) | $18,613 | | (in thousands) | Three Months Ended Aug 31, 2025 | Three Months Ended Aug 31, 2024 | Six Months Ended Aug 31, 2025 | Six Months Ended Aug 31, 2024 | | :------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Domestic sales revenue, net | $330,496 (76.5%) | $365,750 (77.1%) | $608,456 (75.7%) | $666,430 (74.8%) | | International sales revenue, net | $101,285 (23.5%) | $108,471 (22.9%) | $194,980 (24.3%) | $224,638 (25.2%) | [Note 15 - Income Taxes](index=29&type=section&id=Note%2015%20-%20Income%20Taxes) Discusses the company's tax structure, impact of global tax reforms, and the effect of goodwill and intangible asset impairment charges on income tax benefits - The company's foreign income is largely not subject to U.S. taxation, and intangible assets are primarily owned by foreign affiliates, leading to higher earnings in lower tax jurisdictions[91](index=91&type=chunk) - Global tax reform initiatives, including OECD's Pillar Two (global minimum corporate income tax of **15%**), are expected to increase the fiscal 2026 effective tax rate. Barbados and Bermuda have enacted **9%** and **15%** corporate income tax rates, respectively, effective fiscal **2025/2026**[93](index=93&type=chunk)[96](index=96&type=chunk)[97](index=97&type=chunk)[98](index=98&type=chunk) - During the three and six months ended August 31, 2025, the company recognized **$326.4 million** and **$740.8 million**, respectively, in goodwill and other intangible asset impairment charges, including **$246.0 million** and **$511.0 million** of non-deductible goodwill. A valuation allowance of **$13.5 million** (3 months) and **$30.0 million** (6 months) was recorded on a related deferred tax asset[100](index=100&type=chunk)[101](index=101&type=chunk) - The income tax benefit as a percentage of loss before income tax was **6.4%** for the three months ended August 31, 2025 (vs. **22.0%** expense YoY), and **(1.2)%** for the six months ended August 31, 2025 (vs. **42.1%** expense YoY), primarily due to impairment charges and increased tax benefits for discrete items, partially offset by valuation allowances[102](index=102&type=chunk)[103](index=103&type=chunk) [Note 16 - Earnings Per Share](index=30&type=section&id=Note%2016%20-%20Earnings%20Per%20Share) Presents basic and diluted weighted average shares outstanding and explains the exclusion of anti-dilutive securities due to net losses | (in thousands) | Three Months Ended Aug 31, 2025 | Three Months Ended Aug 31, 2024 | Six Months Ended Aug 31, 2025 | Six Months Ended Aug 31, 2024 | | :------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Weighted average shares outstanding, basic | 22,959 | 22,814 | 22,951 | 23,169 | | Weighted average shares outstanding, diluted | 22,959 | 22,839 | 22,951 | 23,236 | | Anti-dilutive securities | 454 | 155 | 442 | 140 | - Due to net losses for the three and six months ended August 31, 2025, incremental shares from share-based compensation arrangements (**53 thousand** and **41 thousand**, respectively) were excluded from diluted EPS computation as their effect would be anti-dilutive[105](index=105&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=32&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Provides management's perspective on financial condition, results of operations, key trends, liquidity, and critical accounting estimates [Overview](index=33&type=section&id=Overview) Introduces Helen of Troy as a global consumer products company, highlights recent CEO appointment, significant asset impairment charges, and the Olive & June acquisition - Helen of Troy is a global consumer products company with a diversified brand portfolio across Home & Outdoor and Beauty & Wellness segments. G. Scott Uzzell was appointed as the **new CEO** effective **September 1, 2025**[109](index=109&type=chunk)[110](index=110&type=chunk) - The company recorded pre-tax asset impairment charges of **$326.4 million** (Q2 FY26) and **$740.8 million** (YTD FY26) due to a sustained decline in stock price and revised internal forecasts[111](index=111&type=chunk) - The acquisition of Olive & June on December 16, 2024, for **$224.7 million** (initial cash) and up to **$15.0 million** (contingent), was added to the Beauty & Wellness segment, aiming to broaden the beauty portfolio and accelerate growth[113](index=113&type=chunk) [Significant Trends Impacting the Business](index=34&type=section&id=Significant%20Trends%20Impacting%20the%20Business) Examines the impact of U.S. tariff policies, macroeconomic conditions, consumer spending shifts, increased competition, and the Project Pegasus restructuring plan - Evolving U.S. tariff policies, including IEEPA and Section 232 tariffs, have increased costs and negatively impacted sales. The company is diversifying production outside China and implementing cost reductions and price increases to mitigate risks[114](index=114&type=chunk)[115](index=115&type=chunk)[116](index=116&type=chunk)[118](index=118&type=chunk)[120](index=120&type=chunk) - Macroeconomic trends like high inflation, interest rates, and geopolitical events have negatively impacted consumer disposable income and spending, adversely affecting the business. The company has implemented cost reduction measures and optimized marketing investments[121](index=121&type=chunk)[122](index=122&type=chunk) - Consumer spending shifts and increased competition led to reduced replenishment orders from retailers and declines in online channel net sales (down **22%** for Q2 FY26 YoY). The company has invested in distribution capabilities and a centralized e-commerce platform[124](index=124&type=chunk)[125](index=125&type=chunk)[128](index=128&type=chunk) - Project Pegasus, a restructuring plan completed in Q4 FY25, aims for **$75-85 million** in annualized pre-tax operating profit improvements by end of fiscal **2027**, primarily through reduced cost of goods sold (**60%**) and lower SG&A (**40%**)[129](index=129&type=chunk)[132](index=132&type=chunk) - The company is awaiting the Federal Circuit's opinion on Brita LP's appeal regarding the PUR water filtration patent litigation, which could have a **material adverse impact** if adversely determined[133](index=133&type=chunk) [RESULTS OF OPERATIONS](index=40&type=section&id=RESULTS%20OF%20OPERATIONS) Analyzes consolidated net sales revenue, gross profit, operating (loss) income, and net (loss) income, detailing the impact of asset impairment charges and acquisitions | Metric (in thousands) | Q2 FY26 | Q2 FY25 | YTD FY26 | YTD FY25 | | :-------------------- | :------ | :------ | :------- | :------- | | Sales revenue, net | $431,781| $474,221| $803,436 | $891,068 | | Cost of goods sold | $241,100| $258,151| $437,744 | $471,919 | | Gross profit | $190,681| $216,070| $365,692 | $419,149 | | SG&A | $176,999| $179,692| $344,663 | $350,173 | | Asset impairment charges | $326,394| $— | $740,779 | $— | | Restructuring charges | $3,005 | $1,526 | $3,005 | $3,361 | | Operating (loss) income | $(315,717)| $34,852 | $(722,755)| $65,615 | | Net (loss) income | $(308,643)| $17,014 | $(759,361)| $23,218 | | Diluted (Loss) earnings per share | $(13.44)| $0.74 | $(33.09) | $1.00 | - Consolidated net sales revenue decreased **8.9%** in Q2 FY26 and **9.8%** in YTD FY26, primarily due to a **16.0%** (Q2) and **16.5%** (YTD) decline in Organic business, partially offset by the Olive & June acquisition (**7.0%** Q2, **6.8%** YTD contribution)[149](index=149&type=chunk)[151](index=151&type=chunk) - Consolidated operating loss was **$315.7 million** (Q2 FY26) and **$722.8 million** (YTD FY26), largely driven by significant asset impairment charges. Adjusted operating income decreased **41.9%** (Q2) and **51.8%** (YTD) due to higher retail trade/promotional expense, tariffs, increased share-based compensation, and unfavorable operating leverage[145](index=145&type=chunk)[173](index=173&type=chunk)[174](index=174&type=chunk) - Net loss was **$308.6 million** (Q2 FY26) and **$759.4 million** (YTD FY26), resulting in diluted loss per share of **$13.44** (Q2) and **$33.09** (YTD), primarily due to asset impairment charges and lower operating income[145](index=145&type=chunk)[206](index=206&type=chunk)[208](index=208&type=chunk) [Liquidity and Capital Resources](index=56&type=section&id=Liquidity%20and%20Capital%20Resources) Discusses the company's cash flow from operations, investing and financing activities, debt facilities, and anticipated need for Credit Agreement amendments - The company relies on cash flow from operations and borrowings under its Credit Agreement to finance operations, capital expenditures, acquisitions, and share repurchases. Cash and cash equivalents totaled **$22.4 million** as of August 31, 2025[210](index=210&type=chunk) | Cash Flow Activity (in thousands) | Six Months Ended Aug 31, 2025 | Six Months Ended Aug 31, 2024 | | :-------------------------------- | :---------------------------- | :---------------------------- | | Net cash provided by operating activities | $47,868 | $69,916 | | Net cash used by investing activities | $(20,975) | $(14,101) | | Net cash used by financing activities | $(23,390) | $(54,179) | - Investing activities used **$21.0 million** (YTD FY26), an increase from **$14.1 million** (YTD FY25), primarily due to increased capital and intangible asset expenditures for manufacturing diversification outside of China[215](index=215&type=chunk)[216](index=216&type=chunk) - Financing activities used **$23.4 million** (YTD FY26), a decrease from **$54.2 million** (YTD FY25), mainly due to fewer common stock repurchases, partially offset by net repayments of long-term debt[217](index=217&type=chunk) - As of August 31, 2025, **$578.6 million** was available for revolving loans under the Credit Agreement, and **$212.7 million** was available per the maximum leverage ratio. The company expects to seek an amendment to its Credit Agreement due to potential covenant compliance issues from negative sales trends and macroeconomic conditions[221](index=221&type=chunk)[223](index=223&type=chunk) [Critical Accounting Policies and Estimates](index=58&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Explains critical accounting judgments, particularly regarding goodwill and intangible asset impairment testing, fair value determination, and related uncertainties - During Q1 and Q2 FY26, a goodwill impairment triggering event occurred due to a sustained decline in stock price and downward revisions to internal forecasts, leading to quantitative impairment testing[224](index=224&type=chunk)[225](index=225&type=chunk) - Pre-tax asset impairment charges totaled **$326.4 million** (Q2 FY26) and **$740.8 million** (YTD FY26), impacting both Home & Outdoor and Beauty & Wellness segments[226](index=226&type=chunk) - Goodwill impairment charges for YTD FY26 were **$609.6 million**, with Hydro Flask's goodwill reduced to **zero**. The fair value of the OXO reporting unit was **107%** of its carrying value, with a hypothetical **10%** sales decline potentially leading to a **$156.3 million** impairment[229](index=229&type=chunk)[230](index=230&type=chunk)[232](index=232&type=chunk) - Intangible asset impairment charges for YTD FY26 totaled **$73.0 million** for indefinite-lived assets (trade names like Hydro Flask, Osprey, PUR) and **$35.1 million** for definite-lived assets (Revlon, Curlsmith, Drybar trade names). Customer relationships and other intangibles for Drybar and Hydro Flask were reduced to **zero**[237](index=237&type=chunk)[238](index=238&type=chunk)[239](index=239&type=chunk)[240](index=240&type=chunk) - Management judgment in estimating future cash flows, discount rates, and other assumptions for fair value determination is critical and subject to uncertainty from factors like tariffs, economic conditions, and consumer demand, which could lead to **further material impairment charges**[233](index=233&type=chunk)[234](index=234&type=chunk)[244](index=244&type=chunk)[245](index=245&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=65&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) Reports no material changes in market risk disclosures since the Form 10-K filing - No material changes in market risk disclosures since the last Form 10-K filing[250](index=250&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=65&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) CEO and CFO concluded disclosure controls were effective, with no material changes in internal control over financial reporting - Disclosure controls and procedures were **effective** at the reasonable assurance level as of August 31, 2025[251](index=251&type=chunk) - No material changes in internal control over financial reporting occurred during the period covered by this Quarterly Report on Form 10-Q[251](index=251&type=chunk) PART II. OTHER INFORMATION This section provides additional information beyond financial statements, covering legal proceedings, risk factors, equity sales, and other disclosures [ITEM 1. LEGAL PROCEEDINGS](index=65&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) Details ongoing legal claims and proceedings, noting no material changes since the Form 10-K filing - No material changes in legal proceedings since the Form 10-K, with updates detailed in Note 9[252](index=252&type=chunk) [ITEM 1A. RISK FACTORS](index=65&type=section&id=ITEM%201A.%20RISK%20FACTORS) Refers to risk factors in Form 10-K, confirming no material changes since its filing - No material changes in risk factors since the Form 10-K filing[253](index=253&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=66&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) Outlines the common stock repurchase program and shares acquired for tax withholding, with no open market repurchases - A **$500 million** common stock repurchase authorization became effective in August 2024, with **$498.4 million** remaining as of August 31, 2025[254](index=254&type=chunk)[257](index=257&type=chunk) | Period | Total Number of Shares Purchased (1) | Average Price Paid per Share | | :----- | :----------------------------------- | :--------------------------- | | June 1 through June 30, 2025 | 2,929 | $30.72 | | July 1 through July 31, 2025 | 1,701 | $26.84 | | August 1 through August 31, 2025 | 649 | $24.06 | | **Total** | **5,279** | **$28.65** | - Shares purchased include those acquired from associates to satisfy tax withholding on equity awards; there were **no common stock open market repurchases** during the three months ended August 31, 2025[256](index=256&type=chunk) [ITEM 5. OTHER INFORMATION](index=66&type=section&id=ITEM%205.%20OTHER%20INFORMATION) Confirms no Rule 10b5-1 trading plans were adopted or terminated by officers or directors during the period - No Rule 10b5-1 trading plans or non-Rule 10b5-1 trading arrangements were adopted or terminated by officers or directors during the three months ended August 31, 2025[258](index=258&type=chunk) [ITEM 6. EXHIBITS](index=67&type=section&id=ITEM%206.%20EXHIBITS) Lists exhibits filed with the Form 10-Q, including the 2025 Stock Incentive Plan, CEO employment agreement, and certifications - Key exhibits include the 2025 Stock Incentive Plan, CEO employment agreement, CEO/CFO certifications (Rule 13a-14(a) and 18 U.S.C. Section 1350), and iXBRL formatted financial statements[259](index=259&type=chunk) [SIGNATURES](index=68&type=section&id=SIGNATURES) The report was duly signed on October 9, 2025, by the Chief Executive Officer and Chief Financial Officer - The report was signed on **October 9, 2025**, by G. Scott Uzzell (CEO) and Brian L. Grass (CFO)[264](index=264&type=chunk)
Helen of Troy(HELE) - 2026 Q2 - Quarterly Results
2025-10-09 10:50
[Executive Summary](index=1&type=section&id=Executive%20Summary) [CEO and CFO Statements](index=1&type=section&id=CEO%20and%20CFO%20Statements) Helen of Troy's new CEO, Mr G Scott Uzzell, expressed confidence in the company's ability to achieve a comeback by focusing on consumers, innovation, and sustainable growth - New CEO Mr G Scott Uzzell is confident in the company's comeback, focusing on consumers, innovation, and sustainable growth[4](index=4&type=chunk) - CFO Mr Brian L Grass noted Q2 net sales and adjusted EPS were at the better end of guidance, despite significant business disruption and cost headwinds[4](index=4&type=chunk) - Company is implementing measures to enhance execution, operational efficiency, go-to-market effectiveness, and fuel product-driven growth[4](index=4&type=chunk) [Second Quarter Fiscal 2026 Financial Highlights](index=1&type=section&id=Second%20Quarter%20Fiscal%202026%20Financial%20Highlights) Helen of Troy Limited reported a consolidated net sales decline of 8.9% to $431.8 million in Q2 FY26, with GAAP diluted loss per share at $13.44 | Metric | Q2 FY26 (Millions) | Q2 FY25 (Millions) | Change (%) | | :-------------------------------- | :----------------- | :----------------- | :--------- | | Consolidated Net Sales Revenue | $431.8 | $474.2 | -8.9% | | Gross Profit Margin | 44.2% | 45.6% | -1.4 pp | | Operating Margin (GAAP) | (73.1)% | 7.3% | -80.4 pp | | Adjusted Operating Margin (Non-GAAP) | 6.2% | 9.8% | -3.6 pp | | GAAP Diluted EPS | ($13.44) | $0.74 | -1916.2% | | Non-GAAP Adjusted Diluted EPS | $0.59 | $1.21 | -51.2% | | Net Cash Used by Operating Activities | ($10.5) | $44.6 (Provided) | -123.5% | | Non-GAAP Adjusted EBITDA Margin | 8.4% | 11.8% | -3.4 pp | [Consolidated Financial Performance (Q2 FY26 vs Q2 FY25)](index=2&type=section&id=Consolidated%20Financial%20Performance%20(Q2%20FY26%20vs%20Q2%20FY25)) [Net Sales Revenue](index=2&type=section&id=Net%20Sales%20Revenue) Consolidated net sales revenue decreased by 8.9% to $431.8 million, driven by a 16.0% organic business decline, partially offset by the Olive & June acquisition | Metric | Q2 FY26 (Millions) | Q2 FY25 (Millions) | Change ($ Millions) | Change (%) | | :----------------------- | :----------------- | :----------------- | :------------------ | :--------- | | Consolidated Net Sales | $431.8 | $474.2 | ($42.4) | -8.9% | | Organic Business Decline | ($76.1) | N/A | N/A | -16.0% | | Olive & June Acquisition | $33.4 | N/A | N/A | +7.0% | - Organic business decline was due to lower sales of thermometers, heaters, hair appliances in Beauty & Wellness, and decreased insulated beverageware and home categories in Home & Outdoor[7](index=7&type=chunk) [Gross Profit and SG&A](index=2&type=section&id=Gross%20Profit%20and%20SG%26A) Consolidated gross profit margin decreased by 140 basis points to 44.2%, while the SG&A ratio increased by 310 basis points to 41.0% | Metric | Q2 FY26 | Q2 FY25 | Change (bps) | | :-------------------------------- | :------ | :------ | :----------- | | Consolidated Gross Profit Margin | 44.2% | 45.6% | -140 | | Consolidated SG&A Ratio | 41.0% | 37.9% | +310 | - Gross profit margin was negatively impacted by approximately **200 basis points** due to higher tariffs on cost of goods sold[7](index=7&type=chunk) - SG&A ratio increase was partially offset by favorable comparative impact of higher distribution center expense in the prior year due to automation startup issues[7](index=7&type=chunk) [Operating Income/Loss and Asset Impairment](index=2&type=section&id=Operating%20Income%2FLoss%20and%20Asset%20Impairment) The company recognized significant non-cash asset impairment charges of $326.4 million, leading to a consolidated operating loss of $315.7 million | Metric | Q2 FY26 (Millions) | Q2 FY25 (Millions) | Change ($ Millions) | | :-------------------------- | :----------------- | :----------------- | :------------------ | | Asset Impairment Charges | $326.4 | — | +$326.4 | | Consolidated Operating (Loss) Income | ($315.7) | $34.9 | ($350.6) | - The impairment charges reduced goodwill by **$292.6 million** and other intangible assets by **$33.8 million**, impacting both Beauty & Wellness and Home & Outdoor segments[7](index=7&type=chunk) [Interest Expense and Income Tax](index=3&type=section&id=Interest%20Expense%20and%20Income%20Tax) Interest expense increased to $14.2 million, primarily due to higher average borrowings, while the income tax benefit was 6.4% of loss before tax | Metric | Q2 FY26 (Millions) | Q2 FY25 (Millions) | Change ($ Millions) | | :-------------------------------- | :----------------- | :----------------- | :------------------ | | Interest Expense | $14.2 | $13.2 | +$1.0 | | Income Tax (Benefit) Expense (% of pre-tax) | (6.4)% | 22.0% | -28.4 pp | - Higher average borrowings were used to fund the Olive & June acquisition, increased inventory due to forward buys in advance of tariffs, and higher tariff costs[8](index=8&type=chunk) [Net Income/Loss and Diluted EPS](index=3&type=section&id=Net%20Income%2FLoss%20and%20Diluted%20EPS) The company reported a net loss of $308.6 million, or diluted loss per share of $13.44, primarily due to asset impairment charges | Metric | Q2 FY26 (Millions) | Q2 FY25 (Millions) | Change ($ Millions) | | :------------------- | :----------------- | :----------------- | :------------------ | | Net (Loss) Income | ($308.6) | $17.0 | ($325.6) | | Diluted (Loss) EPS | ($13.44) | $0.74 | ($14.18) | - The decrease in net income and diluted EPS was primarily driven by the **$294.0 million** after-tax asset impairment charge and lower operating income[8](index=8&type=chunk) [Non-GAAP Adjusted Financial Measures](index=3&type=section&id=Non-GAAP%20Adjusted%20Financial%20Measures) Adjusted operating income decreased by 41.9% to $26.9 million, and adjusted diluted EPS decreased by 51.2% to $0.59 | Metric | Q2 FY26 (Millions) | Q2 FY25 (Millions) | Change ($ Millions) | Change (%) | | :-------------------------- | :----------------- | :----------------- | :------------------ | :--------- | | Adjusted Operating Income | $26.9 | $46.4 | ($19.5) | -41.9% | | Adjusted Operating Margin | 6.2% | 9.8% | -3.6 pp | N/A | | Adjusted EBITDA | $36.2 | $55.8 | ($19.6) | -35.1% | | Adjusted EBITDA Margin | 8.4% | 11.8% | -3.4 pp | N/A | | Adjusted Income | $13.5 | $27.5 | ($14.0) | -50.8% | | Adjusted Diluted EPS | $0.59 | $1.21 | ($0.62) | -51.2% | - The decrease in adjusted operating margin was primarily driven by higher tariffs on cost of goods sold (approx **200 basis points** impact), increased retail trade/promotional expense, higher outbound freight costs, and unfavorable operating leverage[8](index=8&type=chunk) [Segment Performance (Q2 FY26 vs Q2 FY25)](index=4&type=section&id=Segment%20Performance%20(Q2%20FY26%20vs%20Q2%20FY25)) [Home & Outdoor Segment](index=4&type=section&id=Home%20%26%20Outdoor%20Segment) Home & Outdoor net sales revenue decreased by 13.7% to $208.7 million, resulting in an operating loss of $72.6 million due to asset impairment charges | Metric | Q2 FY26 (Millions) | Q2 FY25 (Millions) | Change ($ Millions) | Change (%) | | :-------------------------- | :----------------- | :----------------- | :------------------ | :--------- | | Net Sales Revenue | $208.7 | $241.9 | ($33.2) | -13.7% | | Operating (Loss) Income (GAAP) | ($72.6) | $31.2 | ($103.8) | -332.7% | | Asset Impairment Charges | $85.5 | — | +$85.5 | N/A | | Adjusted Operating Income (Non-GAAP) | $20.1 | $36.3 | ($16.2) | -44.6% | - Key drivers for sales decline include retailer inventory rebalancing, competition, distribution loss, and cancellation of direct import orders due to higher tariffs[12](index=12&type=chunk) - The **670 basis point** decrease in segment operating margin (excluding impairment) was primarily due to higher tariffs, increased retail trade/promotional expense, share-based compensation, outbound freight, and unfavorable operating leverage[10](index=10&type=chunk)[13](index=13&type=chunk) [Beauty & Wellness Segment](index=4&type=section&id=Beauty%20%26%20Wellness%20Segment) Beauty & Wellness net sales revenue decreased by 4.0% to $223.1 million, driven by an 18.2% organic decline, partially offset by the Olive & June acquisition | Metric | Q2 FY26 (Millions) | Q2 FY25 (Millions) | Change ($ Millions) | Change (%) | | :-------------------------- | :----------------- | :----------------- | :------------------ | :--------- | | Net Sales Revenue | $223.1 | $232.3 | ($9.2) | -4.0% | | Organic Business Decline | ($42.3) | N/A | N/A | -18.2% | | Olive & June Acquisition | $33.4 | N/A | N/A | +14.4% | | Operating (Loss) Income (GAAP) | ($243.1) | $3.7 | ($246.8) | -6670.3% | | Asset Impairment Charges | $240.9 | — | +$240.9 | N/A | | Adjusted Operating Income (Non-GAAP) | $6.9 | $10.2 | ($3.3) | -32.4% | - Organic decline in thermometry was due to evolving China market dynamics, heightened competition from domestic sellers, and weaker illness season[14](index=14&type=chunk) - The **260 basis point** decrease in segment operating margin (excluding impairment) was primarily due to higher tariffs, increased retail trade/promotional expense, share-based compensation, outbound freight, increased marketing, and unfavorable operating leverage[15](index=15&type=chunk)[18](index=18&type=chunk) [Balance Sheet and Cash Flow](index=5&type=section&id=Balance%20Sheet%20and%20Cash%20Flow) [Key Balance Sheet Items](index=5&type=section&id=Key%20Balance%20Sheet%20Items) As of August 31, 2025, cash and cash equivalents increased to $22.4 million, while total debt significantly rose to $893.2 million | Metric | August 31, 2025 (Millions) | August 31, 2024 (Millions) | Change ($ Millions) | | :---------------------- | :------------------------- | :------------------------- | :------------------ | | Cash and cash equivalents | $22.4 | $20.1 | +$2.3 | | Accounts receivable turnover | 72.2 days | 69.0 days | +3.2 days | | Inventory | $528.9 | $469.6 | +$59.3 | | Total short- and long-term debt | $893.2 | $713.2 | +$180.0 | [Cash Flow from Operations and Free Cash Flow](index=5&type=section&id=Cash%20Flow%20from%20Operations%20and%20Free%20Cash%20Flow) Net cash provided by operating activities for the first six months of FY26 decreased to $47.9 million, and free cash flow declined to $23.0 million | Metric (Six Months Ended August 31) | FY26 (Millions) | FY25 (Millions) | Change ($ Millions) | | :---------------------------------- | :-------------- | :-------------- | :------------------ | | Net cash provided by operating activities | $47.9 | $69.9 | ($22.0) | | Free cash flow | $23.0 | $55.9 | ($32.9) | [Fiscal 2026 Outlook](index=5&type=section&id=Fiscal%202026%20Outlook) [Tariff Impact and Mitigation](index=5&type=section&id=Tariff%20Impact%20and%20Mitigation) Helen of Troy is assessing tariff exposure and implementing mitigation plans, aiming to reduce net tariff impact on operating income to less than $20 million - Company expects to reduce cost of goods sold exposed to China tariffs to between **25% and 30%** by the end of fiscal 2026, compared to the prior expectation of less than **25%**[17](index=17&type=chunk) - Initiated significant efforts to diversify production outside of China into regions with lower tariffs or overall costs, and to source the same product in more than one region[17](index=17&type=chunk) - Company now believes it can reduce the net tariff impact on operating income to less than **$20 million**, compared to the prior expectation of less than **$15 million**[20](index=20&type=chunk) [Cost Reduction Initiatives](index=6&type=section&id=Cost%20Reduction%20Initiatives) The company continues to implement cost reduction and cash flow preservation measures, including suspending non-critical projects and optimizing working capital - Suspension of non-critical projects and capital expenditures - Actions to reduce overall personnel costs and pause most project and travel expenses - Resumption of optimized marketing, promotional, and new product development investments focused on highest returns - Actions to optimize working capital and balance sheet productivity[20](index=20&type=chunk)[22](index=22&type=chunk) [Consolidated Net Sales Outlook](index=6&type=section&id=Consolidated%20Net%20Sales%20Outlook) For full-year fiscal 2026, Helen of Troy expects consolidated net sales revenue between $1.739 billion and $1.780 billion, implying an 8.8% to 6.7% decline | Period | Outlook Range (Millions) | Implied Decline (YoY) | | :-------------------- | :----------------------- | :-------------------- | | Full Year Fiscal 2026 | $1,739 - $1,780 | 8.8% - 6.7% | | Third Quarter Fiscal 2026 | $491 - $512 | 7.5% - 3.5% | - The sales outlook reflects continued consumer spending softness, increased macro uncertainty, a more promotional environment, and a stretched consumer[21](index=21&type=chunk) [Segment Net Sales Outlook](index=6&type=section&id=Segment%20Net%20Sales%20Outlook) For fiscal 2026, Home & Outdoor net sales are expected to decline by 11.8% to 9.7%, while Beauty & Wellness net sales are projected to decline by 6.2% to 4.0% | Segment | Full Year FY26 Net Sales Decline (YoY) | Q3 FY26 Net Sales Decline/Growth (YoY) | | :---------------- | :------------------------------------- | :------------------------------------- | | Home & Outdoor | 11.8% - 9.7% | 12.8% - 8.7% | | Beauty & Wellness | 6.2% - 4.0% (incl. $109M-$112M from Olive & June) | 2.9% decline - 1.0% growth (incl. $36M-$39M from Olive & June) | [GAAP and Adjusted Diluted EPS Outlook](index=7&type=section&id=GAAP%20and%20Adjusted%20Diluted%20EPS%20Outlook) The company forecasts full-year fiscal 2026 GAAP diluted loss per share of $29.90 to $29.40 and non-GAAP adjusted diluted EPS in the range of $3.75 to $4.25 | Metric | Full Year FY26 Outlook | Q3 FY26 Outlook | | :-------------------------- | :--------------------- | :-------------- | | GAAP Diluted (Loss) EPS | ($29.90) - ($29.40) | $1.85 - $2.05 | | Adjusted Diluted EPS (Non-GAAP) | $3.75 - $4.25 | $1.55 - $1.80 | | Implied Adjusted EPS Decline (YoY) | 47.7% - 40.7% | 41.9% - 32.6% | - Adjusted diluted EPS outlook reflects pressures from a more promotional environment, consumer trade-down, unfavorable product mix, higher commodity/product costs (offset by Project Pegasus and price increases), growth investments, and unfavorable operating leverage[28](index=28&type=chunk) [Key Assumptions for Outlook](index=7&type=section&id=Key%20Assumptions%20for%20Outlook) The outlook assumes an average cough, cold, and flu season, continued softer consumer demand, increased competition, and conservative retailer inventory management - Average cough, cold, and flu season - Continued softer consumer demand and increased competition - Consumer trade-down behavior, reflected in heightened deal-seeking and emphasis on essential categories - Conservative retailer inventory management in response to demand trends[27](index=27&type=chunk) - September 2025 foreign currency exchange rates will remain constant - Full year fiscal 2026 expected interest expense in the range of **$56 million to $57 million** - Third quarter fiscal 2026 reported GAAP effective tax rate range of **(10.0)% to (16.0)%** and adjusted effective tax rate range of **22.0% to 25.0%** - Fiscal 2026 reported GAAP effective tax rate range of **(0.8)% to (0.6)%** and adjusted effective tax rate range of **15.0% to 16.0%** - Full year fiscal 2026 estimated weighted average diluted shares outstanding of **23.0 million**[28](index=28&type=chunk) [Debt Covenants](index=7&type=section&id=Debt%20Covenants) As of August 31, 2025, Helen of Troy was in compliance with all credit agreement covenants, but expects to seek an amendment during Q3 FY26 - Company was in compliance with all credit agreement covenants as of **August 31, 2025**[26](index=26&type=chunk) - Company expects to proactively seek an amendment during Q3 FY26 to extend temporary adjustments to the maximum leverage ratio and reduce the minimum interest coverage ratio[26](index=26&type=chunk) - Preliminary indications are that lenders will be supportive of the potential amendment, but there is no assurance of success[26](index=26&type=chunk) [Additional Company Information](index=8&type=section&id=Additional%20Company%20Information) [Conference Call and Webcast](index=8&type=section&id=Conference%20Call%20and%20Webcast) Helen of Troy Limited will host a teleconference and webcast on October 9, 2025, at 9:00 a.m Eastern Time to discuss its earnings results - Teleconference and webcast scheduled for **October 9, 2025**, at **9:00 a.m Eastern Time**[30](index=30&type=chunk) - Replay available via telephone until **October 23, 2025**, and webcast replay available on the website for one year[30](index=30&type=chunk) [Non-GAAP Financial Measures Disclosure](index=8&type=section&id=Non-GAAP%20Financial%20Measures%20Disclosure) The company uses non-GAAP financial measures to supplement GAAP results, providing useful information for management and investors regarding financial trends - Non-GAAP financial measures are used to supplement GAAP results and provide additional perspective on financial and business trends[31](index=31&type=chunk) - These measures are not GAAP alternatives and may differ from those of other companies; undue reliance should not be placed on them[31](index=31&type=chunk) [About Helen of Troy Limited](index=9&type=section&id=About%20Helen%20of%20Troy%20Limited) Helen of Troy Limited is a global consumer products company known for designing, developing, and marketing branded home, outdoor, beauty, and wellness products - Helen of Troy Limited is a leading global consumer products company[32](index=32&type=chunk) - Portfolio includes well-known brands like OXO, Hydro Flask, Osprey, Vicks, Braun, Honeywell, PUR, Hot Tools, Drybar, Curlsmith, Revlon, and Olive & June[32](index=32&type=chunk) [Forward-Looking Statements](index=9&type=section&id=Forward-Looking%20Statements) The press release contains forward-looking statements subject to various risks beyond the company's control, including geographic concentration and cybersecurity incidents - Forward-looking statements are subject to risks, many beyond the company's control, that could cause actual results to differ materially[33](index=33&type=chunk) - Risks include geographic concentration of distribution facilities, cyber incidents, ability to introduce new products, dependence on large customers and third-party manufacturers (mostly in Asia) - Other risks involve trade barriers, economic downturns, public health crises, reliance on key officers, licensed trademarks, and the ability to execute strategic initiatives like acquisitions and restructuring plans - Risks also include significant tariffs on imports from China, Mexico or Vietnam, changes in laws and regulations (environmental, employment, tax), and global legal developments regarding privacy and data security[33](index=33&type=chunk)[34](index=34&type=chunk) [Investor Contact](index=10&type=section&id=Investor%20Contact) Contact information for investor relations is provided for Helen of Troy Limited and ICR, Inc - Investor contact information is provided for Helen of Troy Limited (Anne Rakunas) and ICR, Inc (Allison Malkin)[35](index=35&type=chunk) [Detailed Financial Tables and Reconciliations](index=11&type=section&id=Detailed%20Financial%20Tables%20and%20Reconciliations) [Condensed Consolidated Statements of Income](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) This section presents the unaudited condensed consolidated statements of income for the three and six months ended August 31, 2025, and 2024 **Three Months Ended August 31:** | Metric (in thousands) | 2025 | % of Sales | 2024 | % of Sales | | :-------------------- | :---------- | :--------- | :---------- | :--------- | | Sales revenue, net | $431,781 | 100.0% | $474,221 | 100.0% | | Cost of goods sold | $241,100 | 55.8% | $258,151 | 54.4% | | Gross profit | $190,681 | 44.2% | $216,070 | 45.6% | | SG&A | $176,999 | 41.0% | $179,692 | 37.9% | | Asset impairment charges | $326,394 | 75.6% | — | —% | | Restructuring charges | $3,005 | 0.7% | $1,526 | 0.3% | | Operating (loss) income | ($315,717) | (73.1)% | $34,852 | 7.3% | | Interest expense | $14,221 | 3.3% | $13,216 | 2.8% | | Net (loss) income | ($308,643) | (71.5)% | $17,014 | 3.6% | | Diluted (loss) earnings per share | ($13.44) | | $0.74 | | **Six Months Ended August 31:** | Metric (in thousands) | 2025 | % of Sales | 2024 | % of Sales | | :-------------------- | :---------- | :--------- | :---------- | :--------- | | Sales revenue, net | $803,436 | 100.0% | $891,068 | 100.0% | | Cost of goods sold | $437,744 | 54.5% | $471,919 | 53.0% | | Gross profit | $365,692 | 45.5% | $419,149 | 47.0% | | SG&A | $344,663 | 42.9% | $350,173 | 39.3% | | Asset impairment charges | $740,779 | 92.2% | — | —% | | Restructuring charges | $3,005 | 0.4% | $3,361 | 0.4% | | Operating (loss) income | ($722,755) | (90.0)% | $65,615 | 7.4% | | Interest expense | $28,029 | 3.5% | $25,759 | 2.9% | | Net (loss) income | ($759,361) | (94.5)% | $23,218 | 2.6% | | Diluted (loss) earnings per share | ($33.09) | | $1.00 | | [Consolidated Net Sales by Geographic Region](index=12&type=section&id=Consolidated%20Net%20Sales%20by%20Geographic%20Region) This table provides a breakdown of consolidated net sales revenue by geographic region (Domestic and International) for the three and six months ended August 31, 2025, and 2024 **Three Months Ended August 31:** | Region (in thousands) | 2025 | % of Total | 2024 | % of Total | | :-------------------- | :---------- | :--------- | :---------- | :--------- | | Domestic sales revenue, net | $330,496 | 76.5% | $365,750 | 77.1% | | International sales revenue, net | $101,285 | 23.5% | $108,471 | 22.9% | | Total sales revenue, net | $431,781 | 100.0% | $474,221 | 100.0% | **Six Months Ended August 31:** | Region (in thousands) | 2025 | % of Total | 2024 | % of Total | | :-------------------- | :---------- | :--------- | :---------- | :--------- | | Domestic sales revenue, net | $608,456 | 75.7% | $666,430 | 74.8% | | International sales revenue, net | $194,980 | 24.3% | $224,638 | 25.2% | | Total sales revenue, net | $803,436 | 100.0% | $891,068 | 100.0% | [Reconciliation of GAAP to Non-GAAP Operating Income/Margin](index=13&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Operating%20Income%2FMargin) This section provides a reconciliation of GAAP operating income/loss and operating margin to adjusted operating income and adjusted operating margin (non-GAAP) for both segments and consolidated totals **Three Months Ended August 31, 2025 (Total):** | Metric (in thousands) | Amount | % of Sales | | :-------------------- | :---------- | :--------- | | Operating loss, as reported (GAAP) | ($315,717) | (73.1)% | | Add: Asset impairment charges | $326,394 | 75.6% | | Add: Restructuring charges | $3,005 | 0.7% | | Add: Amortization of intangible assets | $3,885 | 0.9% | | Add: Non-cash share-based compensation | $9,372 | 2.2% | | Adjusted operating income (non-GAAP) | $26,939 | 6.2% | **Three Months Ended August 31, 2024 (Total):** | Metric (in thousands) | Amount | % of Sales | | :-------------------- | :---------- | :--------- | | Operating income, as reported (GAAP) | $34,852 | 7.3% | | Add: Restructuring charges | $1,526 | 0.3% | | Add: Amortization of intangible assets | $4,539 | 1.0% | | Add: Non-cash share-based compensation | $5,487 | 1.2% | | Adjusted operating income (non-GAAP) | $46,404 | 9.8% | **Six Months Ended August 31, 2025 (Total):** | Metric (in thousands) | Amount | % of Sales | | :-------------------- | :---------- | :--------- | | Operating loss, as reported (GAAP) | ($722,755) | (90.0)% | | Add: Asset impairment charges | $740,779 | 92.2% | | Add: CEO succession costs | $3,484 | 0.4% | | Add: Restructuring charges | $3,005 | 0.4% | | Add: Amortization of intangible assets | $8,874 | 1.1% | | Add: Non-cash share-based compensation | $9,668 | 1.2% | | Adjusted operating income (non-GAAP) | $43,055 | 5.4% | **Six Months Ended August 31, 2024 (Total):** | Metric (in thousands) | Amount | % of Sales | | :-------------------- | :---------- | :--------- | | Operating income, as reported (GAAP) | $65,615 | 7.4% | | Add: Restructuring charges | $3,361 | 0.4% | | Add: Amortization of intangible assets | $9,059 | 1.0% | | Add: Non-cash share-based compensation | $11,320 | 1.3% | | Adjusted operating income (non-GAAP) | $89,355 | 10.0% | [Reconciliation of GAAP Operating Income to EBITDA and Adjusted EBITDA](index=14&type=section&id=Reconciliation%20of%20GAAP%20Operating%20Income%20to%20EBITDA%20and%20Adjusted%20EBITDA) This table reconciles GAAP operating income/loss to EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin for the three and six months ended August 31, 2025, and 2024 **Three Months Ended August 31, 2025 (Total):** | Metric (in thousands) | Amount | % of Sales | | :-------------------- | :---------- | :--------- | | Operating loss, as reported (GAAP) | ($315,717) | (73.1)% | | Add: Depreciation and amortization | $12,860 | 3.0% | | EBITDA (non-GAAP) | ($302,608) | (70.1)% | | Add: Asset impairment charges | $326,394 | 75.6% | | Add: Restructuring charges | $3,005 | 0.7% | | Add: Non-cash share-based compensation | $9,372 | 2.2% | | Adjusted EBITDA (non-GAAP) | $36,163 | 8.4% | **Three Months Ended August 31, 2024 (Total):** | Metric (in thousands) | Amount | % of Sales | | :-------------------- | :---------- | :--------- | | Operating income, as reported (GAAP) | $34,852 | 7.3% | | Add: Depreciation and amortization | $13,792 | 2.9% | | EBITDA (non-GAAP) | $48,814 | 10.3% | | Add: Restructuring charges | $1,526 | 0.3% | | Add: Non-cash share-based compensation | $5,487 | 1.2% | | Adjusted EBITDA (non-GAAP) | $55,827 | 11.8% | **Six Months Ended August 31, 2025 (Total):** | Metric (in thousands) | Amount | % of Sales | | :-------------------- | :---------- | :--------- | | Operating loss, as reported (GAAP) | ($722,755) | (90.0)% | | Add: Depreciation and amortization | $26,944 | 3.4% | | EBITDA (non-GAAP) | ($695,254) | (86.5)% | | Add: Asset impairment charges | $740,779 | 92.2% | | Add: CEO succession costs | $3,484 | 0.4% | | Add: Restructuring charges | $3,005 | 0.4% | | Add: Non-cash share-based compensation | $9,668 | 1.2% | | Adjusted EBITDA (non-GAAP) | $61,682 | 7.7% | **Six Months Ended August 31, 2024 (Total):** | Metric (in thousands) | Amount | % of Sales | | :-------------------- | :---------- | :--------- | | Operating income, as reported (GAAP) | $65,615 | 7.4% | | Add: Depreciation and amortization | $27,628 | 3.1% | | EBITDA (non-GAAP) | $93,513 | 10.5% | | Add: Restructuring charges | $3,361 | 0.4% | | Add: Non-cash share-based compensation | $11,320 | 1.3% | | Adjusted EBITDA (non-GAAP) | $108,194 | 12.1% | [Reconciliation of GAAP Net Income to EBITDA and Adjusted EBITDA](index=15&type=section&id=Reconciliation%20of%20GAAP%20Net%20Income%20to%20EBITDA%20and%20Adjusted%20EBITDA) This table reconciles GAAP net income/loss to EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin for the three and six months ended August 31, 2025, and 2024, and for the trailing twelve months ended August 31, 2025 **Three Months Ended August 31:** | Metric (in thousands) | 2025 | % of Sales | 2024 | % of Sales | | :-------------------- | :---------- | :--------- | :---------- | :--------- | | Net (loss) income, as reported (GAAP) | ($308,643) | (71.5)% | $17,014 | 3.6% | | Add: Interest expense | $14,221 | 3.3% | $13,216 | 2.8% | | Add: Income tax (benefit) expense | ($21,046) | (4.9)% | $4,792 | 1.0% | | Add: Depreciation and amortization | $12,860 | 3.0% | $13,792 | 2.9% | | EBITDA (non-GAAP) | ($302,608) | (70.1)% | $48,814 | 10.3% | | Add: Asset impairment charges | $326,394 | 75.6% | — | —% | | Add: Restructuring charges | $3,005 | 0.7% | $1,526 | 0.3% | | Add: Non-cash share-based compensation | $9,372 | 2.2% | $5,487 | 1.2% | | Adjusted EBITDA (non-GAAP) | $36,163 | 8.4% | $55,827 | 11.8% | **Six Months Ended August 31:** | Metric (in thousands) | 2025 | % of Sales | 2024 | % of Sales | | :-------------------- | :---------- | :--------- | :---------- | :--------- | | Net (loss) income, as reported (GAAP) | ($759,361) | (94.5)% | $23,218 | 2.6% | | Add: Interest expense | $28,029 | 3.5% | $25,759 | 2.9% | | Add: Income tax expense | $9,134 | 1.1% | $16,908 | 1.9% | | Add: Depreciation and amortization | $26,944 | 3.4% | $27,628 | 3.1% | | EBITDA (non-GAAP) | ($695,254) | (86.5)% | $93,513 | 10.5% | | Add: Asset impairment charges | $740,779 | 92.2% | — | —% | | Add: CEO succession costs | $3,484 | 0.4% | — | —% | | Add: Restructuring charges | $3,005 | 0.4% | $3,361 | 0.4% | | Add: Non-cash share-based compensation | $9,668 | 1.2% | $11,320 | 1.3% | | Adjusted EBITDA (non-GAAP) | $61,682 | 7.7% | $108,194 | 12.1% | **Twelve Months Ended August 31, 2025:** | Metric (in thousands) | Amount | | :-------------------- | :---------- | | Net income (loss), as reported (GAAP) | ($658,828) | | Add: Interest expense | $54,192 | | Add: Income tax expense (benefit) | ($39,861) | | Add: Depreciation and amortization | $54,364 | | EBITDA (non-GAAP) | ($590,133) | | Add: Acquisition-related expenses | $3,035 | | Add: Asset impairment charges | $792,234 | | Add: CEO succession costs | $3,484 | | Add: Restructuring charges | $14,466 | | Add: Non-cash share-based compensation | $19,724 | | Adjusted EBITDA (non-GAAP) | $242,810 | [Reconciliation of GAAP Income/EPS to Adjusted Income/EPS](index=16&type=section&id=Reconciliation%20of%20GAAP%20Income%2FEPS%20to%20Adjusted%20Income%2FEPS) This section provides a detailed reconciliation of GAAP (loss) income and diluted (loss) earnings per share to adjusted income and adjusted diluted earnings per share (non-GAAP) for the three and six months ended August 31, 2025, and 2024 **Three Months Ended August 31, 2025:** | Metric | (Loss) Income Before Tax (Thousands) | Tax (Thousands) | Net of Tax (Thousands) | Diluted (Loss) EPS | | :-------------------------------- | :--------------------------------- | :-------------- | :--------------------- | :----------------- | | As reported (GAAP) | ($329,689) | ($21,046) | ($308,643) | ($13.44) | | Add: Asset impairment charges | $326,394 | $32,419 | $293,975 | $12.77 | | Add: Intangible asset reorganization | — | ($13,485) | $13,485 | $0.59 | | Add: Restructuring charges | $3,005 | $421 | $2,584 | $0.11 | | Add: Amortization of intangible assets | $3,885 | $669 | $3,216 | $0.14 | | Add: Non-cash share-based compensation | $9,372 | $445 | $8,927 | $0.39 | | Adjusted (non-GAAP) | $12,967 | ($577) | $13,544 | $0.59 | **Three Months Ended August 31, 2024:** | Metric | Income Before Tax (Thousands) | Tax (Thousands) | Net of Tax (Thousands) | Diluted Earnings Per Share | | :-------------------------------- | :---------------------------- | :-------------- | :--------------------- | :------------------------- | | As reported (GAAP) | $21,806 | $4,792 | $17,014 | $0.74 | | Add: Restructuring charges | $1,526 | $138 | $1,388 | $0.06 | | Add: Amortization of intangible assets | $4,539 | $661 | $3,878 | $0.17 | | Add: Non-cash share-based compensation | $5,487 | $221 | $5,266 | $0.23 | | Adjusted (non-GAAP) | $33,358 | $5,812 | $27,546 | $1.21 | **Six Months Ended August 31, 2025:** | Metric | (Loss) Income Before Tax (Thousands) | Tax (Thousands) | Net of Tax (Thousands) | Diluted (Loss) EPS | | :-------------------------------- | :--------------------------------- | :-------------- | :--------------------- | :----------------- | | As reported (GAAP) | ($750,227) | $9,134 | ($759,361) | ($33.09) | | Add: Asset impairment charges | $740,779 | $10,650 | $730,129 | $31.76 | | Add: CEO succession costs | $3,484 | $153 | $3,331 | $0.14 | | Add: Intangible asset reorganization | — | ($29,959) | $29,959 | $1.30 | | Add: Restructuring charges | $3,005 | $421 | $2,584 | $0.11 | | Add: Amortization of intangible assets | $8,874 | $1,551 | $7,323 | $0.32 | | Add: Non-cash share-based compensation | $9,668 | $602 | $9,066 | $0.39 | | Adjusted (non-GAAP) | $15,583 | ($7,448) | $23,031 | $1.00 | **Six Months Ended August 31, 2024:** | Metric | Income Before Tax (Thousands) | Tax (Thousands) | Net of Tax (Thousands) | Diluted Earnings Per Share | | :-------------------------------- | :---------------------------- | :-------------- | :--------------------- | :------------------------- | | As reported (GAAP) | $40,126 | $16,908 | $23,218 | $1.00 | | Add: Barbados tax reform | — | ($6,045) | $6,045 | $0.26 | | Add: Restructuring charges | $3,361 | $303 | $3,058 | $0.13 | | Add: Amortization of intangible assets | $9,059 | $1,322 | $7,737 | $0.33 | | Add: Non-cash share-based compensation | $11,320 | $485 | $10,835 | $0.47 | | Adjusted (non-GAAP) | $63,866 | $12,973 | $50,893 | $2.19 | [Selected Consolidated Balance Sheet and Cash Flow Information](index=18&type=section&id=Selected%20Consolidated%20Balance%20Sheet%20and%20Cash%20Flow%20Information) This section provides selected unaudited consolidated balance sheet data as of August 31, 2025, and 2024, and cash flow information for the six months ended August 31, 2025, and 2024 **Balance Sheet (in thousands):** | Metric | August 31, 2025 | August 31, 2024 | | :-------------------- | :-------------- | :-------------- | | Cash and cash equivalents | $22,370 | $20,137 | | Receivables, net | $350,231 | $365,675 | | Inventory | $528,893 | $469,625 | | Total assets, current | $938,129 | $900,635 | | Total assets | $2,407,554 | $2,880,377 | | Total liabilities, current | $549,952 | $508,696 | | Total long-term liabilities | $931,320 | $804,101 | | Total debt | $893,220 | $713,235 | | Stockholders' equity | $926,282 | $1,567,580 | **Cash Flow (Six Months Ended August 31, in thousands):** | Metric | 2025 | 2024 | | :-------------------- | :---------- | :---------- | | Depreciation and amortization | $26,944 | $27,628 | | Net cash provided by operating activities | $47,868 | $69,916 | | Capital and intangible asset expenditures | $24,832 | $14,026 | | Net debt (repayments) proceeds | ($23,231) | $46,925 | | Payments for repurchases of common stock | $1,482 | $103,144 | [Reconciliation of GAAP Net Cash Provided by Operating Activities to Free Cash Flow](index=18&type=section&id=Reconciliation%20of%20GAAP%20Net%20Cash%20Provided%20by%20Operating%20Activities%20to%20Free%20Cash%20Flow) This table reconciles GAAP net cash provided by operating activities to free cash flow (non-GAAP) for the six months ended August 31, 2025, and 2024 **Six Months Ended August 31 (in thousands):** | Metric | 2025 | 2024 | | :-------------------- | :---------- | :---------- | | Net cash provided by operating activities (GAAP) | $47,868 | $69,916 | | Less: Capital and intangible asset expenditures | ($24,832) | ($14,026) | | Free cash flow (non-GAAP) | $23,036 | $55,890 | [Reconciliation of Net Leverage Ratio](index=18&type=section&id=Reconciliation%20of%20Net%20Leverage%20Ratio) This table presents the calculation of the Net Leverage Ratio (non-GAAP) for the twelve months ended August 31, 2025, showing the components of Adjusted EBITDA and net debt **Twelve Months Ended August 31, 2025 (in thousands):** | Metric | Amount | | :-------------------- | :---------- | | Adjusted EBITDA (non-GAAP) | $242,810 | | Pro forma effect of the Olive & June acquisition | $6,260 | | Adjusted EBITDA per the credit agreement | $249,070 | | Total borrowings under the credit agreement, as reported (GAAP) | $898,619 | | Add: Outstanding letters of credit | $9,460 | | Less: Unrestricted cash and cash equivalents | ($27,227) | | Net debt | $880,852 | | Net leverage ratio (non-GAAP) | 3.54 | [Third Quarter and Annual Fiscal 2026 Outlook for Net Sales Revenue and EPS Reconciliation](index=19&type=section&id=Third%20Quarter%20and%20Annual%20Fiscal%202026%20Outlook%20for%20Net%20Sales%20Revenue%20and%20EPS%20Reconciliation) This section provides the outlook for consolidated net sales revenue and EPS reconciliations for Q3 and full fiscal year 2026 **Third Quarter Fiscal 2026 Outlook:** | Metric | Range (Thousands) | | :-------------------- | :---------------- | | Net sales revenue | $491,000 - $512,000 | | Net sales revenue decline | (7.5)% - (3.5)% | **Annual Fiscal 2026 Outlook:** | Metric | Range (Thousands) | | :-------------------- | :---------------- | | Net sales revenue | $1,739,000 - $1,780,000 | | Net sales revenue decline | (8.8)% - (6.7)% | **Third Quarter Fiscal 2026 Outlook (EPS):** | Metric | Diluted EPS (GAAP) | Adjusted Diluted EPS (Non-GAAP) | | :-------------------- | :----------------- | :------------------------------ | | Range | $1.85 - $2.05 | $1.55 - $1.80 | | Effective Tax Rate | (16.0)% - (10.0)% | 25.0% - 22.0% | **Annual Fiscal 2026 Outlook (EPS):** | Metric | Diluted (Loss) EPS (GAAP) | Adjusted Diluted EPS (Non-GAAP) | | :-------------------- | :------------------------ | :------------------------------ | | Range | ($29.90) - ($29.40) | $3.75 - $4.25 | | Effective Tax Rate | (0.6)% - (0.8)% | 16.0% - 15.0% | [Notes to Press Release](index=20&type=section&id=Notes%20to%20Press%20Release) This section provides detailed notes explaining non-GAAP financial measures, organic business definitions, acquisition details, and other financial adjustments - Provides definitions and explanations for non-GAAP financial measures such as Adjusted Operating Income, Adjusted EBITDA, and Free Cash Flow[51](index=51&type=chunk) - Clarifies that 'Organic business' excludes the first twelve months from acquisition date and foreign currency impact, while 'Acquisition' refers to Olive & June sales[51](index=51&type=chunk) - Explains specific adjustments like asset impairment charges, intangible asset reorganization, CEO succession costs, and Barbados tax reform[51](index=51&type=chunk)
Delta(DAL) - 2025 Q3 - Quarterly Results
2025-10-09 10:30
[Executive Summary & Financial Outlook](index=1&type=section&id=Executive%20Summary%20%26%20Financial%20Outlook) Delta Air Lines reported strong September quarter results and provided a positive outlook for the December quarter and full year 2025, driven by robust revenue growth and effective cost management [September Quarter 2025 Highlights](index=1&type=section&id=September%20Quarter%202025%20Highlights) Delta Air Lines reported record September quarter revenue, achieving results at the top end of expectations due to strong execution and improving fundamentals. Both GAAP and adjusted financial metrics showed significant improvements year-over-year September Quarter 2025 Financial Highlights (GAAP vs. Non-GAAP) | Metric | GAAP (3Q25) | Non-GAAP (3Q25) | | :-------------------------- | :---------- | :-------------- | | Operating revenue | $16.7 billion | $15.2 billion | | Operating income | $1.7 billion | $1.7 billion | | Operating margin | 10.1 % | 11.2 % | | Pre-tax income | $1.8 billion | $1.5 billion | | Pre-tax margin | 10.7 % | 9.8 % | | Earnings per share | $2.17 | $1.71 | | Operating cash flow | $1.8 billion | $1.8 billion | | Total debt & finance lease obligations | $14.9 billion | N/A | [December Quarter and Full Year 2025 Outlook](index=1&type=section&id=December%20Quarter%20and%20Full%20Year%202025%20Outlook) Delta anticipates strong December quarter earnings and expects to deliver full-year adjusted EPS in the upper half of its July guidance, along with free cash flow in line with long-term targets. The company projects continued revenue growth and margin expansion Financial Outlook | Metric | FY 2025 Outlook | 4Q25 Outlook | | :-------------------- | :-------------- | :------------- | | Adjusted EPS | Approx. $6 | $1.60 - $1.90 | | Free Cash Flow ($B) | $3.5 - $4 | N/A | | Gross Leverage | Less than 2.5x | N/A | | Total Revenue YoY | N/A | Up 2% - 4% | | Operating Margin | N/A | 10.5% - 12% | [Management Commentary](index=1&type=section&id=Management%20Commentary) CEO Ed Bastian highlighted Delta's competitive advantages and industry leadership, attributing strong September quarter results to execution and improving fundamentals. President Glen Hauenstein noted record revenue and accelerating sales trends, while CFO Dan Janki emphasized strong cash generation and debt reduction, positioning Delta for future growth and shareholder returns - CEO Ed Bastian stated that Delta's competitive advantages and differentiation are evident, leading to **strong September quarter results at the top end of expectations**, driven by execution and improving fundamentals. He anticipates continued momentum into 2026 with **top-line growth, margin expansion, and earnings improvement**[2](index=2&type=chunk)[3](index=3&type=chunk) - President Glen Hauenstein reported **record September quarter revenue of $15.2 billion, up 4.1% year-over-year**, reflecting strong revenue streams and improving Domestic fundamentals. He expects **2-4% total revenue growth for the December quarter**[6](index=6&type=chunk) - CFO Dan Janki noted that **non-fuel unit cost growth was approximately flat year-over-year**, consistent with low-single digit guidance. He also highlighted **nearly $2 billion in debt paid down year-to-date**, bringing **gross leverage to 2.4x**, and a **full-year free cash flow outlook of $3.5 billion to $4 billion**[7](index=7&type=chunk)[10](index=10&type=chunk) [September Quarter 2025 Financial Performance Overview](index=2&type=section&id=September%20Quarter%202025%20Financial%20Performance%20Overview) This section provides a detailed overview of Delta's September quarter 2025 financial performance, covering revenue, cost, balance sheet, and liquidity highlights [Revenue Performance](index=2&type=section&id=Revenue%20Performance) Delta achieved record September quarter revenue of $15.2 billion, a 4.1% increase year-over-year, driven by premium products, corporate sales, and loyalty programs. Domestic revenue grew 5%, supported by a rebound in corporate sales and strength in premium cabins - **Record September quarter total revenue increased 4.1% over prior year to $15.2 billion**, primarily driven by premium, corporate, and loyalty segments[8](index=8&type=chunk) - Diverse, high-margin revenue streams contributed **60% of total revenue** and grew double-digits year-over-year, with **Premium revenue up 9%** and **Loyalty revenue up 9%**. American Express remuneration grew **12% to $2 billion**[8](index=8&type=chunk) - **Domestic passenger revenue grew 5% year-over-year**, with **corporate sales rebounding by 8%** over prior year in the third quarter[8](index=8&type=chunk) [Cost Performance](index=2&type=section&id=Cost%20Performance) Non-fuel unit costs remained largely flat year-over-year, aligning with the company's guidance. Adjusted fuel expense decreased significantly due to lower fuel prices - **Non-fuel unit cost growth was approximately flat** compared to the prior year, bringing year-to-date non-fuel unit cost growth to **less than 2%**, consistent with initial guidance[7](index=7&type=chunk) September Quarter 2025 Cost Performance | Metric | 3Q25 | 3Q24 | $ Change | % Change | | :---------------------------------- | :----------- | :----------- | :--------- | :--------- | | Operating expense | $15.0 billion | $14.3 billion | $709 million | 5 % | | Adjusted operating expense | $13.5 billion | $13.2 billion | $281 million | 2 % | | Adjusted non-fuel costs | $10.6 billion | $10.1 billion | $421 million | 4 % | | Non-fuel CASM | 13.35¢ | 13.30¢ | 0.05¢ | 0.3 % | | Adjusted fuel expense | $2.6 billion | $2.8 billion | ($212) million | (8)% | | Adjusted fuel price per gallon | $2.25 | $2.53 | ($0.28) | (11)% | [Balance Sheet and Liquidity](index=3&type=section&id=Balance%20Sheet%20and%20Liquidity) Delta demonstrated strong cash generation, reducing debt by nearly $2 billion year-to-date and achieving a gross leverage of 2.4x. The company maintains robust liquidity and expects significant free cash flow for the full year - **Paid down nearly $2 billion in debt year-to-date**, bringing **gross leverage to 2.4x** at the end of the September quarter[10](index=10&type=chunk) - **Full-year free cash flow is expected to be $3.5 billion to $4 billion**, within the long-term target range[10](index=10&type=chunk) September Quarter 2025 Balance Sheet & Liquidity Highlights | Metric | 3Q25 | | :------------------------------------ | :----------- | | Adjusted net debt | $15.6 billion | | Payments on debt & finance lease obligations | $459 million | | Weighted average interest rate | 4.5 % | | Adjusted operating cash flow | $1.8 billion | | Free cash flow | $833 million | | Air Traffic Liability | $8.2 billion | | Liquidity (cash, short-term investments, undrawn revolver) | $6.9 billion | [Operational and Strategic Highlights](index=4&type=section&id=Operational%20and%20Strategic%20Highlights) This section details Delta's achievements in operational excellence, network expansion, fleet modernization, employee engagement, customer experience enhancements, and environmental sustainability initiatives [Operations, Network and Fleet](index=4&type=section&id=Operations%2C%20Network%20and%20Fleet) Delta maintained industry-leading operational performance, expanded its fleet with new aircraft deliveries, and strategically enhanced its network with new international and domestic routes, including new service to Sardinia, Malta, Austin, Madrid, Nice, Barcelona, Milan, Rome, Porto, and Hong Kong - Operated as the **most on-time airline year-to-date**, leading competitive set in on-time departures and arrivals[16](index=16&type=chunk) - Took delivery of **31 aircraft year-to-date (12 in 3Q25)** and retired **20 aircraft year-to-date (6 in 3Q25)**[16](index=16&type=chunk) - Announced **new and expanded service in Austin**, new Transatlantic routes from Boston and Seattle, and the **first-ever U.S. carrier nonstop service from New York-JFK to Porto, Portugal, and a new Hong Kong route from LAX**[16](index=16&type=chunk) [Culture and People](index=4&type=section&id=Culture%20and%20People) Delta continued its commitment to its employees, accruing significant profit sharing and earning multiple recognitions as a top employer. The company also engaged in community service and initiatives promoting diversity in aviation - Accrued **$986 million in profit sharing year-to-date** towards next February's payout[16](index=16&type=chunk) - Earned **Great Place To Work® Certification™ for the seventh year** and ranked **No. 2 on Forbes' 2025 list of the World's Best Employers**[16](index=16&type=chunk) - Volunteered with the 9/11 Day organization and hosted the **annual Women Inspiring the Next Generation (WING) flight**[16](index=16&type=chunk) [Customer Experience and Loyalty](index=4&type=section&id=Customer%20Experience%20and%20Loyalty) Delta enhanced its customer experience through new in-flight entertainment partnerships, expanded loyalty program benefits, and improved digital tools. The company received awards for its entertainment offerings and overall customer satisfaction - Launched **YouTube as a new in-flight entertainment partner**, providing ad-free content to customers[16](index=16&type=chunk) - **Over 1 million SkyMiles Members linked accounts with Uber** to earn miles, and the company expanded advanced meal selection options[16](index=16&type=chunk) - Named the **Best Airline Entertainment winner in the 2025 Rolling Stone Travel Awards** and continued the roll out of **fast, free Wi-Fi for SkyMiles Members**[16](index=16&type=chunk) [Environmental Sustainability](index=4&type=section&id=Environmental%20Sustainability) Delta continued its commitment to environmental sustainability by partnering on hybrid-electric aircraft development and facilitating the first commercial-scale Sustainable Aviation Fuel (SAF) uplift at Portland International Airport - Announced a new partnership with Maeve Aerospace to advance the **development of hybrid-electric regional aircraft**[16](index=16&type=chunk) - Took delivery of Sustainable Aviation Fuel (SAF) into the PDX fuel system, marking the **first commercial-scale SAF uplift at PDX**[16](index=16&type=chunk) [Detailed GAAP Financial Results](index=5&type=section&id=Detailed%20GAAP%20Financial%20Results) This section presents Delta's comprehensive GAAP financial statements, including consolidated statements of operations, passenger and other revenue details, geographic segment performance, statistical summary, cash flows, and balance sheets [Consolidated Statements of Operations](index=7&type=section&id=Consolidated%20Statements%20of%20Operations) Delta's GAAP consolidated statements of operations for the September quarter 2025 show significant year-over-year growth in total operating revenue and operating income, driven by increases across passenger, cargo, and other revenue streams, while managing operating expenses Consolidated Statements of Operations (GAAP) - Three Months Ended September 30 | Metric (in millions) | 2025 | 2024 | $ Change | % Change | | :-------------------------- | :----- | :----- | :------- | :------- | | Total operating revenue | $16,673 | $15,677 | $996 | 6 % | | Operating Income | $1,684 | $1,397 | $287 | 21 % | | Income Before Income Taxes | $1,777 | $1,561 | $216 | 14 % | | Net Income | $1,417 | $1,272 | $145 | 11 % | | Diluted Earnings Per Share | $2.17 | $1.97 | $0.20 | 10 % | Consolidated Statements of Operations (GAAP) - Nine Months Ended September 30 | Metric (in millions) | 2025 | 2024 | $ Change | % Change | | :-------------------------- | :----- | :----- | :------- | :------- | | Total operating revenue | $47,361 | $46,084 | $1,277 | 3 % | | Operating Income | $4,355 | $4,278 | $77 | 2 % | | Income Before Income Taxes | $4,672 | $3,456 | $1,216 | 35 % | | Net Income | $3,786 | $2,614 | $1,172 | 45 % | | Diluted Earnings Per Share | $5.80 | $4.04 | N/A | N/A | [Passenger Revenue Details](index=8&type=section&id=Passenger%20Revenue%20Details) Passenger revenue for the September quarter 2025 increased by 3% year-over-year, primarily driven by strong growth in premium products and loyalty travel awards, offsetting a slight decrease in main cabin ticket revenue Passenger Revenue (GAAP) - Three Months Ended September 30 | Category (in millions) | 2025 | 2024 | $ Change | % Change | | :--------------------- | :----- | :----- | :------- | :------- | | Ticket - Main cabin | $6,063 | $6,309 | ($246) | (4)% | | Ticket - Premium products | $5,796 | $5,336 | $460 | 9 % | | Loyalty travel awards | $1,108 | $978 | $130 | 13 % | | Travel-related services | $539 | $484 | $55 | 11 % | | **Passenger revenue** | **$13,506** | **$13,107** | **$399** | **3 %** | Passenger Revenue (GAAP) - Nine Months Ended September 30 | Category (in millions) | 2025 | 2024 | $ Change | % Change | | :--------------------- | :----- | :----- | :------- | :------- | | Ticket - Main cabin | $17,771 | $18,450 | ($679) | (4)% | | Ticket - Premium products | $16,402 | $15,377 | $1,025 | 7 % | | Loyalty travel awards | $3,140 | $2,798 | $342 | 12 % | | Travel-related services | $1,539 | $1,454 | $85 | 6 % | | **Passenger revenue** | **$38,852** | **$38,079** | **$773** | **2 %** | [Other Revenue Details](index=8&type=section&id=Other%20Revenue%20Details) Other revenue saw a substantial increase of 24% in the September quarter 2025, primarily driven by significant growth in refinery and ancillary businesses, alongside contributions from loyalty programs and miscellaneous sources Other Revenue (GAAP) - Three Months Ended September 30 | Category (in millions) | 2025 | 2024 | $ Change | % Change | | :--------------------- | :----- | :----- | :------- | :------- | | Refinery | $1,476 | $1,083 | $393 | 36 % | | Loyalty program | $847 | $820 | $27 | 3 % | | Ancillary businesses | $256 | $161 | $95 | 59 % | | Miscellaneous | $355 | $310 | $45 | 15 % | | **Other revenue** | **$2,934** | **$2,374** | **$560** | **24 %** | Other Revenue (GAAP) - Nine Months Ended September 30 | Category (in millions) | 2025 | 2024 | $ Change | % Change | | :--------------------- | :----- | :----- | :------- | :------- | | Refinery | $3,680 | $3,520 | $160 | 5 % | | Loyalty program | $2,509 | $2,451 | $58 | 2 % | | Ancillary businesses | $710 | $554 | $156 | 28 % | | Miscellaneous | $956 | $906 | $50 | 6 % | | **Other revenue** | **$7,855** | **$7,431** | **$424** | **6 %** | [Total Revenue by Geographic Segment](index=8&type=section&id=Total%20Revenue%20by%20Geographic%20Segment) Total revenue for the September quarter 2025 increased by 6% on a GAAP basis, with Domestic revenue growing 5%. Cargo and Other revenue streams showed strong double-digit growth, while Atlantic and Latin America passenger revenues experienced slight declines Total Revenue by Segment (GAAP) - 3Q25 vs 3Q24 | Revenue Segment | 3Q25 ($M) | Change | Unit Revenue | Yield | Capacity | | :---------------- | :-------- | :----- | :----------- | :---- | :------- | | Domestic | $9,103 | 5% | 2% | 4% | 4% | | Atlantic | $2,977 | (2)% | (7)% | (5)% | 5% | | Latin America | $759 | (3)% | —% | 1% | (2)% | | Pacific | $667 | 3% | (4)% | (6)% | 7% | | Passenger Revenue | $13,506 | 3% | (1)% | 1% | 4% | | Cargo Revenue | $233 | 19% | N/A | N/A | N/A | | Other Revenue | $2,934 | 24% | N/A | N/A | N/A | | **Total Revenue** | **$16,673** | **6%** | **2%** | N/A | N/A | [Statistical Summary](index=9&type=section&id=Statistical%20Summary) Delta's statistical summary for the September quarter 2025 indicates growth in revenue passenger miles (RPMs) and available seat miles (ASMs), alongside a slight increase in total revenue per available seat mile (TRASM). Passenger load factor saw a minor decrease, while average fuel prices declined significantly Statistical Summary (GAAP) - Three Months Ended September 30 | Metric | 2025 | 2024 | Change | | :---------------------------------- | :------- | :------- | :------- | | Revenue passenger miles (millions) | 67,621 | 66,310 | 2 % | | Available seat miles (millions) | 79,054 | 76,162 | 4 % | | Passenger mile yield (cents) | 19.97 | 19.77 | 1 % | | Passenger revenue per available seat mile (cents) | 17.08 | 17.21 | (1) % | | Total revenue per available seat mile (cents) | 21.09 | 20.58 | 2 % | | Passenger load factor | 86 % | 87 % | (1) pt | | Fuel gallons consumed (millions) | 1,138 | 1,096 | 4 % | | Average price per fuel gallon | $2.26 | $2.51 | (10) % | Statistical Summary (GAAP) - Nine Months Ended September 30 | Metric | 2025 | 2024 | Change | | :---------------------------------- | :------- | :------- | :------- | | Revenue passenger miles (millions) | 189,717 | 185,757 | 2 % | | Available seat miles (millions) | 225,099 | 216,360 | 4 % | | Passenger mile yield (cents) | 20.48 | 20.50 | — % | | Passenger revenue per available seat mile (cents) | 17.26 | 17.60 | (2) % | | Total revenue per available seat mile (cents) | 21.04 | 21.30 | (1) % | | Passenger load factor | 84 % | 86 % | (2) pts | | Fuel gallons consumed (millions) | 3,226 | 3,093 | 4 % | | Average price per fuel gallon | $2.31 | $2.64 | (12) % | [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Delta's consolidated statements of cash flows for the September quarter 2025 show a significant increase in net cash provided by operating activities, contributing to a net increase in cash and cash equivalents, despite substantial investments in property and equipment and payments on debt Consolidated Statements of Cash Flows (GAAP) - Three Months Ended September 30 | Category (in millions) | 2025 | 2024 | | :------------------------------------------ | :----- | :----- | | Net cash provided by operating activities | $1,847 | $1,274 | | Net cash used in investing activities | ($1,035) | ($1,123) | | Net cash used in financing activities | ($370) | ($372) | | Net Increase/(Decrease) in Cash, Cash Equivalents and Restricted Cash Equivalents | $442 | ($221) | | Cash, cash equivalents and restricted cash equivalents at end of period | $3,971 | $4,286 | [Consolidated Balance Sheets](index=11&type=section&id=Consolidated%20Balance%20Sheets) As of September 30, 2025, Delta's consolidated balance sheet reflects an increase in total assets, primarily driven by growth in cash and cash equivalents, accounts receivable, and property and equipment. Total liabilities also increased, with a notable rise in air traffic liability and loyalty program deferred revenue Consolidated Balance Sheets (GAAP) - As of September 30, 2025 vs. December 31, 2024 | Category (in millions) | Sep 30, 2025 | Dec 31, 2024 | | :------------------------------------ | :----------- | :----------- | | **ASSETS** | | | | Total current assets | $11,230 | $9,844 | | Property and Equipment, Net | $39,372 | $37,595 | | Total other assets | $29,021 | $27,933 | | **Total assets** | **$79,623** | **$75,372** | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | | Total current liabilities | $28,249 | $26,670 | | Total noncurrent liabilities | $32,552 | $33,409 | | Stockholders' Equity | $18,822 | $15,293 | | **Total liabilities and stockholders' equity** | **$79,623** | **$75,372** | [Non-GAAP Financial Measures and Reconciliations](index=12&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) This section provides explanations and reconciliations for Delta's non-GAAP financial measures, offering a clearer view of core operational performance by excluding certain non-recurring or volatile items [Explanation of Non-GAAP Adjustments](index=12&type=section&id=Explanation%20of%20Non-GAAP%20Adjustments) Delta utilizes non-GAAP financial measures to provide a more meaningful comparison of its core airline operations and performance, excluding items such as third-party refinery sales, mark-to-market adjustments on hedges and investments, and losses/gains on debt extinguishment or investment sales, which are not indicative of core operational performance - Non-GAAP measures are used to provide comparability between reported periods and a more meaningful understanding of **core performance**, as they exclude items not directly related to airline operations or subject to significant volatility[42](index=42&type=chunk)[43](index=43&type=chunk) - Adjustments include **third-party refinery sales**, **mark-to-market (MTM) adjustments and settlements on hedges**, **MTM adjustments on investments**, **loss on extinguishment of debt**, and **realized gain on sale of investments**[43](index=43&type=chunk)[44](index=44&type=chunk)[45](index=45&type=chunk)[46](index=46&type=chunk)[47](index=47&type=chunk) [Adjusted Operating Revenue and TRASM](index=12&type=section&id=Adjusted%20Operating%20Revenue%20and%20TRASM) Adjusted operating revenue for the September quarter 2025 increased by 4.1% year-over-year, and adjusted total revenue per available seat mile (TRASM) showed a slight improvement of 0.3%, after excluding third-party refinery sales Adjusted Operating Revenue and TRASM - Three Months Ended September 30 | Metric | 2025 | 2024 | % Change | | :------------------------ | :------- | :------- | :------- | | Operating revenue (GAAP) | $16,673 | $15,677 | N/A | | Third-party refinery sales | ($1,476) | ($1,083) | N/A | | **Operating revenue, adjusted** | **$15,197** | **$14,594** | **4.1 %** | | TRASM (cents) (GAAP) | 21.09 | 20.58 | N/A | | Third-party refinery sales | (1.87) | (1.42) | N/A | | **TRASM, adjusted (cents)** | **19.22** | **19.16** | **0.3 %** | [Adjusted Operating Income and Margin](index=12&type=section&id=Adjusted%20Operating%20Income%20and%20Margin) Adjusted operating income for the September quarter 2025 increased by 23% year-over-year, resulting in an adjusted operating margin of 11.2%, a 1.7 percentage point improvement, after accounting for MTM adjustments and settlements on hedges and third-party refinery sales Adjusted Operating Income - Three Months Ended September 30 | Metric (in millions) | 2025 | 2024 | | :---------------------------------- | :----- | :----- | | Operating income (GAAP) | $1,684 | $1,397 | | MTM adjustments and settlements on hedges | $11 | ($24) | | **Operating income, adjusted** | **$1,695** | **$1,373** | Adjusted Operating Margin - Three Months Ended September 30 | Metric | 2025 | 2024 | | :---------------------------------- | :----- | :----- | | Operating margin (GAAP) | 10.1 % | 8.9 % | | Third-party refinery sales | 1.0 | 0.6 | | MTM adjustments and settlements on hedges | 0.1 | (0.2) | | **Operating margin, adjusted** | **11.2 %** | **9.4 %** | [Adjusted Pre-Tax Income, Net Income, and EPS](index=14&type=section&id=Adjusted%20Pre-Tax%20Income%2C%20Net%20Income%2C%20and%20EPS) Adjusted pre-tax income, net income, and diluted earnings per share all showed significant year-over-year growth for the September quarter 2025, reflecting improved core operational performance after excluding non-recurring and non-operational items Adjusted Pre-Tax Income, Net Income, and Diluted EPS - Three Months Ended September 30, 2025 | Metric (in millions, except per share) | Pre-Tax Income | Net Income | Earnings Per Diluted Share | | :------------------------------------- | :------------- | :--------- | :------------------------- | | GAAP | $1,777 | $1,417 | $2.17 | | Adjustments (MTM, debt extinguishment) | ($311) + $11 + $6 | N/A | N/A | | **Non-GAAP** | **$1,483** | **$1,120** | **$1.71** | Adjusted Pre-Tax Income, Net Income, and Diluted EPS - Three Months Ended September 30, 2024 | Metric (in millions, except per share) | Pre-Tax Income | Net Income | Earnings Per Diluted Share | | :------------------------------------- | :------------- | :--------- | :------------------------- | | GAAP | $1,561 | $1,272 | $1.97 | | Adjustments (MTM, realized gain) | ($350) + ($24) + $67 | N/A | N/A | | **Non-GAAP** | **$1,254** | **$971** | **$1.50** | [Adjusted Pre-Tax Margin](index=14&type=section&id=Adjusted%20Pre-Tax%20Margin) The adjusted pre-tax margin for the September quarter 2025 improved to 9.8%, up 1.2 percentage points from the prior year, after excluding the impact of refinery sales, MTM adjustments on investments and hedges, and realized gains on investment sales Adjusted Pre-Tax Margin - Three Months Ended September 30 | Metric | 2025 | 2024 | | :---------------------------------- | :----- | :----- | | Pre-tax margin (GAAP) | 10.7 % | 10.0 % | | Third-party refinery sales | 0.9 | 0.6 | | MTM adjustments on investments | (1.9) | (2.2) | | MTM adjustments and settlements on hedges | 0.1 | (0.2) | | Realized gain on sale of investments | — | 0.4 | | **Pre-tax margin, adjusted** | **9.8 %** | **8.6 %** | [Adjusted Operating Cash Flow](index=15&type=section&id=Adjusted%20Operating%20Cash%20Flow) Adjusted operating cash flow for the September quarter 2025 significantly increased to $1.816 billion, reflecting a 42% rise year-over-year, after excluding cash flows related to certain airport construction projects to better represent core operations Adjusted Operating Cash Flow - Three Months Ended September 30 | Metric (in millions) | 2025 | 2024 | | :---------------------------------------------------- | :----- | :----- | | Net cash provided by operating activities (GAAP) | $1,847 | $1,274 | | Net cash flows related to certain airport construction projects and other | ($31) | $2 | | **Operating cash flow, adjusted** | **$1,816** | **$1,276** | [Adjusted Operating Revenue (Premium & Diverse Streams)](index=15&type=section&id=Adjusted%20Operating%20Revenue%20(Premium%20%26%20Diverse%20Streams)) Adjusted operating revenue related to premium products and diverse revenue streams grew by 10% year-over-year in the September quarter 2025, representing 60% of total adjusted operating revenue, indicating a strong shift towards higher-margin offerings Adjusted Operating Revenue (Premium & Diverse Streams) - Three Months Ended September 30 | Metric (in millions) | 2025 | 2024 | Change | | :---------------------------------------------------------------- | :----- | :----- | :----- | | Operating revenue, adjusted | $15,197 | $14,594 | N/A | | Less: main cabin revenue | ($6,063) | ($6,309) | N/A | | **Operating revenue, adjusted related to premium products and diverse revenue streams** | **$9,134** | **$8,285** | **10 %** | | Percent of operating revenue, adjusted related to premium products and diverse revenue streams | 60 % | 57 % | 3 points | [Adjusted Non-Fuel Cost and CASM-Ex](index=15&type=section&id=Adjusted%20Non-Fuel%20Cost%20and%20CASM-Ex) Adjusted non-fuel cost increased by 4% year-over-year for the September quarter 2025, while non-fuel unit cost (CASM-Ex) remained relatively flat, increasing by only 0.3%, demonstrating effective cost management despite operational growth Adjusted Non-Fuel Cost - Three Months Ended September 30 | Metric (in millions) | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Operating expense (GAAP) | $14,989 | $14,280 | | Aircraft fuel and related taxes | ($2,570) | ($2,747) | | Third-party refinery sales | ($1,476) | ($1,083) | | Profit sharing | ($392) | ($320) | | **Non-Fuel Cost** | **$10,551** | **$10,130** | CASM-Ex - Three Months Ended September 30 | Metric (cents) | 2025 | 2024 | % Change | | :-------------------------- | :----- | :----- | :------- | | CASM (GAAP) | 18.96 | 18.75 | N/A | | Aircraft fuel and related taxes | (3.25) | (3.61) | N/A | | Third-party refinery sales | (1.87) | (1.42) | N/A | | Profit sharing | (0.50) | (0.42) | N/A | | **CASM-Ex** | **13.35** | **13.30** | **0.3 %** | CASM-Ex - Nine Months Ended September 30 | Metric (cents) | 2025 | 2024 | % Change | | :-------------------------- | :----- | :----- | :------- | | CASM (GAAP) | 19.11 | 19.32 | N/A | | Aircraft fuel and related taxes | (3.30) | (3.77) | N/A | | Third-party refinery sales | (1.63) | (1.63) | N/A | | Profit sharing | (0.44) | (0.45) | N/A | | **CASM-Ex** | **13.73** | **13.48** | **1.8 %** | [Adjusted Operating Expense](index=16&type=section&id=Adjusted%20Operating%20Expense) Adjusted operating expense for the September quarter 2025 increased by 2% year-over-year, reflecting a controlled rise in costs after excluding third-party refinery sales and MTM adjustments on hedges Adjusted Operating Expense - Three Months Ended September 30 | Metric (in millions) | 2025 | 2024 | | :---------------------------------- | :----- | :----- | | Operating expense (GAAP) | $14,989 | $14,280 | | Third-party refinery sales | ($1,476) | ($1,083) | | MTM adjustments and settlements on hedges | ($11) | $24 | | **Operating expense, adjusted** | **$13,502** | **$13,221** | [Adjusted Fuel Expense and Price](index=16&type=section&id=Adjusted%20Fuel%20Expense%20and%20Price) Adjusted total fuel expense decreased by 8% and the adjusted average fuel price per gallon decreased by 11% for the September quarter 2025, primarily due to lower market fuel prices and refinery benefits Adjusted Fuel Expense and Price - Three Months Ended September 30 | Metric (in millions, except per gallon) | 2025 | 2024 | % Change | | :-------------------------------------- | :----- | :----- | :------- | | Total fuel expense (GAAP) | $2,570 | $2,747 | N/A | | MTM adjustments and settlements on hedges | ($11) | $24 | N/A | | **Total fuel expense, adjusted** | **$2,559** | **$2,771** | **(8)%** | | Average price per fuel gallon (GAAP) | $2.26 | $2.51 | N/A | | MTM adjustments and settlements on hedges | ($0.01) | $0.02 | N/A | | **Average price per fuel gallon, adjusted** | **$2.25** | **$2.53** | **(11)%** | [Adjusted Debt to EBITDAR](index=16&type=section&id=Adjusted%20Debt%20to%20EBITDAR) Delta's adjusted debt to EBITDAR (gross leverage) stood at 2.4x as of September 30, 2025, indicating a healthy debt profile, calculated by including operating lease liabilities and adjusting operating income for depreciation, amortization, and fixed operating lease expense Adjusted Debt to EBITDAR - As of September 30, 2025 | Metric (in millions) | Amount | | :---------------------------------------------------- | :------- | | Debt and finance lease obligations | $14,879 | | Plus: operating lease liabilities | $6,099 | | Plus: sale-leaseback financing liabilities | $1,793 | | Plus: unamortized discount/(premium) and debt issue cost, net and other | ($1) | | **Adjusted debt** | **$22,769** | | EBITDAR (Twelve Months Ended Sep 30, 2025) | $9,510 | | **Adjusted Debt to EBITDAR** | **2.4x** | [Adjusted Net Debt](index=17&type=section&id=Adjusted%20Net%20Debt) Adjusted net debt decreased by $2.394 billion from December 31, 2024, to $15.586 billion as of September 30, 2025, reflecting the company's efforts in debt reduction and strong cash management Adjusted Net Debt - As of September 30, 2025 vs. December 31, 2024 | Metric (in millions) | Sep 30, 2025 | Dec 31, 2024 | $ Change | | :------------------------------------------ | :----------- | :----------- | :--------- | | Adjusted debt and finance lease obligations | $16,670 | $18,055 | N/A | | Plus: fleet operating lease liabilities | $2,790 | $3,178 | N/A | | **Adjusted gross debt** | **$19,460** | **$21,234** | N/A | | Less: cash and cash equivalents | ($3,791) | ($3,069) | N/A | | Less: LGA restricted cash | ($83) | ($184) | N/A | | **Adjusted net debt** | **$15,586** | **$17,980** | **($2,394)** | [Gross Capital Expenditures](index=17&type=section&id=Gross%20Capital%20Expenditures) Gross capital expenditures for the September quarter 2025 were $1.113 billion, a decrease from the prior year, after adjusting for cash flows related to certain airport construction projects that are funded by restricted cash or reimbursed by third parties Gross Capital Expenditures - Three Months Ended September 30 | Metric (in millions) | 2025 | 2024 | | :---------------------------------------------------- | :----- | :----- | | Flight equipment, including advance payments | $930 | $1,053 | | Ground property and equipment, including technology | $230 | $275 | | Net cash flows related to certain airport construction projects | ($47) | ($59) | | **Gross capital expenditures** | **$1,113** | **$1,270** | [Free Cash Flow](index=17&type=section&id=Free%20Cash%20Flow) Free cash flow for the September quarter 2025 significantly increased to $833 million, up from $95 million in the prior year, after adjustments for pension plan contributions, airport construction project cash flows, and net redemptions of short-term investments, highlighting the company's improved ability to generate cash for debt service and corporate initiatives Free Cash Flow - Three Months Ended September 30 | Metric (in millions) | 2025 | 2024 | | :---------------------------------------------------- | :----- | :----- | | Net cash provided by operating activities (GAAP) | $1,847 | $1,274 | | Net cash used in investing activities (GAAP) | ($1,035) | ($1,123) | | Pension plan contributions | $6 | — | | Net cash flows related to certain airport construction projects and other | $15 | $61 | | Net redemptions of short-term investments | — | ($117) | | **Free cash flow** | **$833** | **$95** | [Additional Company Information](index=6&type=section&id=Additional%20Company%20Information) This section provides background on Delta Air Lines, including its global reach and industry recognition, along with important disclosures regarding forward-looking statements and associated risks [About Delta Air Lines](index=6&type=section&id=About%20Delta%20Air%20Lines) Delta Air Lines is a leading global airline known for exceptional service and innovation, serving over 300 destinations across six continents. The company is headquartered in Atlanta, operates significant hubs worldwide, and is a founding member of the SkyTeam alliance, recognized with numerous industry awards for customer satisfaction, operational excellence, and as a top employer - Delta Air Lines serves up to **5,000 peak day flights to more than 300 destinations on six continents**, connecting **over 200 million customers in 2024**[19](index=19&type=chunk)[20](index=20&type=chunk) - Headquartered in Atlanta, Delta operates **significant hubs and key markets globally**, including Amsterdam, Boston, Detroit, London-Heathrow, Los Angeles, New York-JFK, Paris-Charles de Gaulle, Seattle, and Tokyo[22](index=22&type=chunk) - A founding member of the SkyTeam alliance, Delta has been recognized as **No. 1 in Premium Economy Passenger Satisfaction by J.D. Power**, the **top U.S. airline by the Wall Street Journal**, and among **Forbes' World's Best Employers**[20](index=20&type=chunk)[24](index=24&type=chunk)[25](index=25&type=chunk) [Forward-Looking Statements](index=6&type=section&id=Forward-Looking%20Statements) This section contains forward-looking statements regarding future estimates, expectations, and goals, which are subject to various risks and uncertainties. These risks include accidents, security breaches, fuel costs, operational disruptions, regulatory changes, and economic conditions, which could cause actual results to differ materially from projections - Statements regarding future estimates, expectations, beliefs, intentions, projections, goals, aspirations, commitments, or strategies are considered **'forward-looking statements'** and are not guarantees or promised outcomes[26](index=26&type=chunk) - Risks and uncertainties that could cause actual results to differ materially include **serious accidents, security breaches, disruptions in IT infrastructure, increases in fuel costs, operational disruptions, labor-related disruptions, severe weather, regulatory changes, and unfavorable economic or political conditions**[26](index=26&type=chunk) - Readers are cautioned **not to place undue reliance on forward-looking statements**, which represent views only as of the press release date, and Delta undertakes no obligation to update them except as required by law[27](index=27&type=chunk)
PepsiCo(PEP) - 2025 Q3 - Quarterly Results
2025-10-08 23:16
[Executive Summary & Financial Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Financial%20Highlights) PepsiCo reported Q3 2025 GAAP net revenue growth of 2.6% and diluted EPS of $1.90, with organic revenue at 1.3% and core constant currency EPS declining by 2%, alongside strategic priorities for growth and cost optimization [Third-Quarter 2025 Reported (GAAP) Results](index=1&type=section&id=Third-Quarter%202025%20Reported%20(GAAP)%20Results) PepsiCo reported a 2.6% net revenue performance for Q3 2025, with a foreign exchange impact of 0.5%. Diluted EPS for the quarter was $1.90, representing an 11% decrease year-over-year, with a 1% positive foreign exchange impact | Metric | Third-Quarter | Year-to-Date | | :--- | :--- | :--- | | Net revenue performance | 2.6% | 0.8% | | Foreign exchange impact on net revenue | 0.5% | (1)% | | Earnings per share (EPS) | $1.90 | $4.15 | | EPS change | (11)% | (29)% | | Foreign exchange impact on EPS | 1% | (2)% | [Third-Quarter 2025 Organic/Core (non-GAAP) Results](index=1&type=section&id=Third-Quarter%202025%20Organic%2FCore%20(non-GAAP)%20Results) For Q3 2025, PepsiCo achieved 1.3% organic revenue performance. Core EPS stood at $2.29, with core constant currency EPS declining by 2% compared to the prior year | Metric | Third-Quarter | Year-to-Date | | :--- | :--- | :--- | | Organic revenue performance | 1.3% | 1.5% | | Core EPS | $2.29 | $5.88 | | Core constant currency EPS change | (2)% | (3.5)% | [CEO Commentary & Strategic Priorities](index=1&type=section&id=CEO%20Commentary%20%26%20Strategic%20Priorities) Chairman and CEO Ramon Laguarta highlighted accelerated reported net revenue growth, driven by international business resilience, improved momentum in North America Beverages, and portfolio reshaping. Key priorities for the future include accelerating growth and aggressively optimizing the cost structure through innovation, sharpening price pack architecture, and right-sizing the cost base - Reported net revenue growth accelerated, reflecting resilience in international business, improved momentum in North America Beverages, and benefits from portfolio reshaping actions[5](index=5&type=chunk) - Top priorities are to accelerate growth and aggressively optimize the cost structure[6](index=6&type=chunk) - Strategies include introducing a strong pipeline of innovation, continuously sharpening price pack architecture, and right-sizing the entire cost base[6](index=6&type=chunk) [Segment Performance Summary](index=2&type=section&id=Segment%20Performance%20Summary) PepsiCo's Q3 and year-to-date 2025 segment performance shows varied revenue and operating profit changes across North America, EMEA, Latin America, and Asia Pacific regions [Third-Quarter 2025 Segment Performance](index=2&type=section&id=Third-Quarter%202025%20Segment%20Performance) In Q3 2025, PepsiCo's total reported net revenue increased by 3%, with organic revenue growth of 1%. EMEA showed strong organic revenue growth at 5.5%, while PFNA experienced a 3% organic revenue decline. Operating profit saw a GAAP reported decline of 8% overall, but core constant currency operating profit declined by 1.5% Q3 2025 Revenue Performance by Segment | Segment | GAAP Reported % Change | Foreign Exchange Translation | Acquisitions and Divestitures | Organic % Change | Convenient Foods Volume % Change | Beverages Volume % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | PepsiCo Foods North America (PFNA) | — | — | (2.5) | (3) | (4) | | | PepsiCo Beverages North America (PBNA) | 2 | — | — | 2 | | (3) | | International Beverages Franchise (IB Franchise) | — | (1) | — | (1) | | (1) | | Europe, Middle East and Africa (EMEA) | 9 | (4) | — | 5.5 | (1) | 1.5 | | Latin America Foods (LatAm Foods) | 2 | 2 | — | 4 | — | | | Asia Pacific Foods | 2 | — | (1) | 1 | 3 | | | **Total** | **3** | **(0.5)** | **(1)** | **1** | **(1)** | **(1)** | Q3 2025 Operating Profit and EPS by Segment | Segment | GAAP Reported % Change | Items Affecting Comparability | Foreign Exchange Translation | Core Constant Currency % Change | | :--- | :--- | :--- | :--- | :--- | | PFNA | (5) | 2 | — | (3.5) | | PBNA | (20) | 13 | — | (7) | | IB Franchise | (5) | 13 | (1) | 7 | | EMEA | 1 | 6 | (4) | 3 | | LatAm Foods | (12) | 18 | 2 | 9 | | Asia Pacific Foods | 16 | 3 | (1) | 18 | | Corporate unallocated expenses | (3.5) | 19 | — | 16 | | **Total** | **(8)** | **7** | **(1)** | **(1.5)** | | **EPS** | **(11)** | **10** | **(1)** | **(2)** | [Year-to-Date 2025 Segment Performance](index=3&type=section&id=Year-to-Date%202025%20Segment%20Performance) Year-to-date 2025, PepsiCo's total reported net revenue increased by 1%, with organic revenue growth of 1.5%. LatAm Foods showed significant foreign exchange impact on revenue (10%) and strong core constant currency operating profit growth (8%). Overall GAAP reported operating profit declined by 25%, while core constant currency operating profit declined by 2% YTD 2025 Revenue Performance by Segment | Segment | GAAP Reported % Change | Foreign Exchange Translation | Acquisitions and Divestitures | Organic % Change | Convenient Foods Volume % Change | Beverages Volume % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | PFNA | — | — | (2) | (2) | (2) | | | PBNA | 1 | — | — | 1 | | (3) | | IB Franchise | 2 | 1 | — | 3 | | 1 | | EMEA | 6 | — | — | 6 | (5) | — | | LatAm Foods | (5) | 10 | — | 4 | 1 | | | Asia Pacific Foods | — | 1 | (1) | — | 4 | | | **Total** | **1** | **1** | **(0.5)** | **1.5** | **(2)** | **—** | YTD 2025 Operating Profit and EPS by Segment | Segment | GAAP Reported % Change | Items Affecting Comparability | Foreign Exchange Translation | Core Constant Currency % Change | | :--- | :--- | :--- | :--- | :--- | | PFNA | (7) | (1) | — | (8) | | PBNA | (77) | 77 | — | — | | IB Franchise | 2 | 5 | 2 | 9 | | EMEA | (13) | 20 | (1) | 5.5 | | LatAm Foods | (9) | 6 | 12 | 8 | | Asia Pacific Foods | (21) | 21 | — | — | | Corporate unallocated expenses | 9 | 5 | — | 14 | | **Total** | **(25)** | **22** | **2** | **(2)** | | **EPS** | **(29)** | **24** | **2** | **(3.5)** | [Financial Guidance and Outlook](index=4&type=section&id=Financial%20Guidance%20and%20Outlook) PepsiCo reaffirms its 2025 guidance for low-single-digit organic revenue growth and stable core constant currency EPS, with an updated foreign exchange impact and details on the investor webcast [Full-Year 2025 Guidance](index=4&type=section&id=Full-Year%202025%20Guidance) PepsiCo reaffirms its 2025 guidance, expecting low-single-digit organic revenue growth and core constant currency EPS to be approximately even with the prior year. The company anticipates a core annual effective tax rate of approximately 20% and plans total cash returns to shareholders of approximately $8.6 billion, comprising $7.6 billion in dividends and $1.0 billion in share repurchases - Company continues to expect a **low-single-digit increase** in organic revenue for 2025[18](index=18&type=chunk) - Core constant currency EPS is expected to be approximately **even with the prior year**[18](index=18&type=chunk) - Anticipates a core annual effective tax rate of approximately **20%**[18](index=18&type=chunk) - Total cash returns to shareholders of approximately **$8.6 billion**, including **$7.6 billion in dividends** and **$1.0 billion in share repurchases**[18](index=18&type=chunk) [Foreign Exchange Impact Update](index=4&type=section&id=Foreign%20Exchange%20Impact%20Update) The company has updated its expectation for foreign exchange translation headwind, now anticipating approximately 0.5 percentage points negative impact on reported net revenue and core EPS growth, an improvement from the previously expected 1.5-percentage-point headwind. This implies a 0.5% decline in core EPS for 2025, an improvement from the prior 1.5% decline - Foreign exchange translation headwind is now expected to be approximately **0.5 percentage points**, negatively impacting reported net revenue and core EPS growth (previously 1.5 percentage points)[15](index=15&type=chunk) - This updated assumption implies a **0.5% decline in core EPS in 2025** (previously 1.5% decline) compared to 2024 core EPS of $8.16[16](index=16&type=chunk) [Investor Webcast Information](index=4&type=section&id=Investor%20Webcast%20Information) PepsiCo will post prepared management remarks for its Q3 2025 results and 2025 outlook on October 9, 2025, at 6:30 a.m. (Eastern time) on its investor relations website. A live question and answer session with investors and financial analysts will follow at 8:15 a.m. (Eastern time) on the same day - Prepared management remarks for Q3 2025 results and 2025 outlook will be posted at 6:30 a.m. (Eastern time) on October 9, 2025, at https://www.pepsico.com/investors[17](index=17&type=chunk) - A live question and answer session will be hosted at 8:15 a.m. (Eastern time) on October 9, 2025, accessible via the company's investor website[17](index=17&type=chunk) [Condensed Consolidated Financial Statements](index=5&type=section&id=Condensed%20Consolidated%20Financial%20Statements) PepsiCo's condensed consolidated statements of income, cash flows, and balance sheet for Q3 and year-to-date 2025 detail key financial positions and performance [Condensed Consolidated Statement of Income](index=5&type=section&id=Condensed%20Consolidated%20Statement%20of%20Income) For the 12 weeks ended September 6, 2025, PepsiCo reported net revenue of $23,937 million, a gross profit of $12,824 million, and net income attributable to PepsiCo of $2,603 million, resulting in diluted EPS of $1.90. For the 36 weeks ended September 6, 2025, net revenue was $64,582 million, gross profit $35,239 million, and diluted EPS $4.15 Condensed Consolidated Statement of Income (Selected Data) | Metric | 12 Weeks Ended 9/6/2025 (in millions) | 12 Weeks Ended 9/7/2024 (in millions) | 36 Weeks Ended 9/6/2025 (in millions) | 36 Weeks Ended 9/7/2024 (in millions) | | :--- | :--- | :--- | :--- | :--- | | Net Revenue | $23,937 | $23,319 | $64,582 | $64,070 | | Cost of sales | $11,113 | $10,396 | $29,343 | $28,563 | | Gross profit | $12,824 | $12,923 | $35,239 | $35,507 | | Operating Profit | $3,569 | $3,872 | $7,941 | $10,637 | | Net Income Attributable to PepsiCo | $2,603 | $2,930 | $5,700 | $8,055 | | Diluted Net income attributable to PepsiCo per common share | $1.90 | $2.13 | $4.15 | $5.84 | - For the 12 and 36 weeks ended September 6, 2025, charges were recognized primarily related to the impairment of the **Rockstar brand**[20](index=20&type=chunk) [Condensed Consolidated Statement of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) For the 36 weeks ended September 6, 2025, net cash provided by operating activities was $5,468 million, a decrease from $6,220 million in the prior year. Net cash used for investing activities significantly increased to $5,237 million, primarily due to higher acquisitions. Net cash used for financing activities decreased to $1,008 million, largely due to increased proceeds from long-term debt issuances Condensed Consolidated Statement of Cash Flows (Selected Data) | Activity | 36 Weeks Ended 9/6/2025 (in millions) | 36 Weeks Ended 9/7/2024 (in millions) | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $5,468 | $6,220 | | Net Cash Used for Investing Activities | $(5,237) | $(2,965) | | Net Cash Used for Financing Activities | $(1,008) | $(5,282) | | Net Decrease in Cash and Cash Equivalents and Restricted Cash | $(382) | $(2,418) | | Cash and Cash Equivalents and Restricted Cash, End of Period | $8,171 | $7,343 | - Acquisitions, net of cash acquired, investments in noncontrolled affiliates and purchases of intangible and other assets significantly increased to **$3,176 million in 2025** from $31 million in 2024[23](index=23&type=chunk) - Proceeds from issuances of long-term debt more than doubled to **$8,179 million in 2025** from $4,014 million in 2024[25](index=25&type=chunk) [Condensed Consolidated Balance Sheet](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheet) As of September 6, 2025, PepsiCo's total assets increased to $106,558 million from $99,467 million at December 28, 2024. This increase was driven by higher accounts and notes receivable, inventories, and goodwill. Total liabilities also increased to $87,015 million, primarily due to a rise in long-term debt obligations. Total equity grew to $19,543 million Condensed Consolidated Balance Sheet (Selected Data) | Metric | 9/6/2025 (in millions) | 12/28/2024 (in millions) | | :--- | :--- | :--- | | Total Current Assets | $28,722 | $25,826 | | Property, Plant and Equipment, net | $29,053 | $28,008 | | Goodwill | $18,845 | $17,534 | | Total Assets | $106,558 | $99,467 | | Total Current Liabilities | $31,499 | $31,536 | | Long-Term Debt Obligations | $44,113 | $37,224 | | Total Liabilities | $87,015 | $81,296 | | Total Equity | $19,543 | $18,171 | - Accounts and notes receivable, net, increased to **$12,634 million** from $10,333 million[28](index=28&type=chunk) - Inventories increased to **$6,093 million** from $5,306 million[28](index=28&type=chunk) [Non-GAAP Measures & Glossary](index=9&type=section&id=Non-GAAP%20Measures%20%26%20Glossary) This section explains PepsiCo's use of non-GAAP financial measures for internal decision-making and provides a comprehensive glossary of related terms [Explanation of Non-GAAP Measures](index=9&type=section&id=Explanation%20of%20Non-GAAP%20Measures) PepsiCo uses non-GAAP financial measures like organic revenue performance, core results, and core constant currency results internally for operational and strategic decisions, including annual operating plans and compensation. These measures provide additional information for comparing historical operating results and understanding underlying performance trends, adjusting for items not indicative of ongoing performance such as mark-to-market gains/losses, restructuring charges, and acquisition/divestiture impacts - Non-GAAP measures are used internally for operating and strategic decisions, annual operating plan preparation, business performance evaluation, and compensation determination[29](index=29&type=chunk) - These measures facilitate comparison of historical operating results and trends, providing transparency on how the business is evaluated[29](index=29&type=chunk) - Adjustments are made for items like mark-to-market gains/losses, restructuring charges, acquisition/divestiture charges, asset impairment, product recall impacts, and pension/retiree medical-related amounts[30](index=30&type=chunk) [Glossary of Non-GAAP Terms](index=9&type=section&id=Glossary%20of%20Non-GAAP%20Terms) The glossary defines key non-GAAP terms used by PepsiCo, including 'Acquisitions and divestitures' for structural changes, 'Bottler case sales (BCS)' and 'Concentrate shipments and equivalents (CSE)' for beverage volume, 'Constant currency' for results assuming stable foreign exchange rates, and 'Core' results which exclude specific items affecting comparability. It also details various excluded items such as mark-to-market net impact, restructuring and impairment charges, acquisition and divestiture-related charges, impairment and other charges (e.g., Rockstar brand), indirect and income tax impact, product recall-related impact, and pension and retiree medical-related impact. 'Organic revenue performance' is defined as revenue adjusted for foreign exchange, acquisitions, divestitures, and calendar week impacts - Acquisitions and divestitures: Mergers, acquisitions, divestitures, and structural changes[32](index=32&type=chunk) - Constant currency: Financial results assuming constant foreign currency exchange rates based on prior-year period rates[34](index=34&type=chunk) - Core: Non-GAAP financial measures excluding items affecting comparability, such as mark-to-market net impact, restructuring and impairment charges, acquisition and divestiture-related charges, impairment and other charges (e.g., Rockstar brand), indirect and income tax impact, product recall-related impact, and pension and retiree medical-related impact[35](index=35&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk) - Organic revenue performance: Revenue adjusted for foreign exchange translation, acquisitions and divestitures, and the impact of an additional week of results (every five or six years)[44](index=44&type=chunk) [Reconciliation of GAAP and Non-GAAP Information](index=11&type=section&id=Reconciliation%20of%20GAAP%20and%20Non-GAAP%20Information) This section provides detailed reconciliations of PepsiCo's GAAP reported results to non-GAAP measures for organic revenue, operating profit, and diluted EPS across various periods [Organic Revenue Performance Reconciliation (Q3 & YTD)](index=11&type=section&id=Organic%20Revenue%20Performance%20Reconciliation%20(Q3%20%26%20YTD)) The reconciliation details the adjustments from GAAP reported net revenue to non-GAAP organic revenue performance for both the 12 and 36 weeks ended September 6, 2025. For Q3 2025, total reported net revenue growth was 3%, which adjusted to 1% organic revenue growth after accounting for foreign exchange translation and acquisitions/divestitures. Year-to-date, reported net revenue growth was 1%, leading to 1.5% organic revenue growth Organic Revenue Performance Reconciliation (12 Weeks Ended 9/6/2025) | Segment | Reported Net Revenue % Change, GAAP | Impact of foreign exchange translation | Impact of acquisitions and divestitures | Organic Revenue % Change, non-GAAP | | :--- | :--- | :--- | :--- | :--- | | PFNA | — | — | (2.5) | (3) | | PBNA | 2 | — | — | 2 | | IB Franchise | — | (1) | — | (1) | | EMEA | 9 | (4) | — | 5.5 | | LatAm Foods | 2 | 2 | — | 4 | | Asia Pacific Foods | 2 | — | (1) | 1 | | **Total** | **3** | **(0.5)** | **(1)** | **1** | Organic Revenue Performance Reconciliation (36 Weeks Ended 9/6/2025) | Segment | Reported Net Revenue % Change, GAAP | Impact of foreign exchange translation | Impact of acquisitions and divestitures | Organic Revenue % Change, non-GAAP | | :--- | :--- | :--- | :--- | :--- | | PFNA | — | — | (2) | (2) | | PBNA | 1 | — | — | 1 | | IB Franchise | 2 | 1 | — | 3 | | EMEA | 6 | — | — | 6 | | LatAm Foods | (5) | 10 | — | 4 | | Asia Pacific Foods | — | 1 | (1) | — | | **Total** | **1** | **1** | **(0.5)** | **1.5** | [Certain Line Items by Segment Reconciliation (Q3 2025)](index=12&type=section&id=Certain%20Line%20Items%20by%20Segment%20Reconciliation%20(Q3%202025)) For the 12 weeks ended September 6, 2025, the reconciliation shows adjustments from GAAP to Core for various line items by segment. Total GAAP reported operating profit was $3,569 million (14.9% margin), which adjusted to $4,137 million (17.3% margin) on a non-GAAP Core basis, after adding back items affecting comparability such as restructuring and impairment charges ($142 million) and acquisition and divestiture-related charges ($221 million) Q3 2025 Operating Profit Reconciliation (Selected Data) | Metric | Reported Operating Profit, GAAP (in millions) | Items Affecting Comparability (in millions) | Core Operating Profit, non-GAAP (in millions) | Core Operating Profit Margin, non-GAAP | | :--- | :--- | :--- | :--- | :--- | | PFNA | $1,536 | $34 | $1,570 | 17.3% | | PBNA | $729 | $246 | $975 | | | IB Franchise | $436 | $75 | $511 | | | EMEA | $720 | $88 | $808 | | | LatAm Foods | $424 | $99 | $523 | | | Asia Pacific Foods | $151 | $5 | $156 | | | Corporate unallocated expenses | $(427) | $21 | $(406) | | | **Total** | **$3,569** | **$568** | **$4,137** | **17.3%** | - Items affecting comparability for Q3 2025 operating profit included **$142 million in restructuring and impairment charges**, **$221 million in acquisition and divestiture-related charges**, and **$100 million in impairment and other charges**[52](index=52&type=chunk) [Certain Line Items by Segment Reconciliation (Q3 2024)](index=13&type=section&id=Certain%20Line%20Items%20by%20Segment%20Reconciliation%20(Q3%202024)) For the 12 weeks ended September 7, 2024, GAAP reported operating profit was $3,872 million (16.6% margin). After adjusting for items affecting comparability, the non-GAAP Core operating profit was $4,176 million (17.9% margin). Key adjustments included $238 million for restructuring and impairment charges and $52 million for mark-to-market net impact Q3 2024 Operating Profit Reconciliation (Selected Data) | Metric | Reported Operating Profit, GAAP (in millions) | Items Affecting Comparability (in millions) | Core Operating Profit, non-GAAP (in millions) | Core Operating Profit Margin, non-GAAP | | :--- | :--- | :--- | :--- | :--- | | PFNA | $1,620 | $7 | $1,627 | 17.9% | | PBNA | $914 | $133 | $1,047 | | | IB Franchise | $458 | $15 | $473 | | | EMEA | $713 | $45 | $758 | | | LatAm Foods | $480 | $11 | $491 | | | Asia Pacific Foods | $129 | $2 | $131 | | | Corporate unallocated expenses | $(442) | $91 | $(351) | | | **Total** | **$3,872** | **$304** | **$4,176** | **17.9%** | - Items affecting comparability for Q3 2024 operating profit included **$238 million in restructuring and impairment charges** and **$52 million in mark-to-market net impact**[56](index=56&type=chunk) [Certain Line Items by Segment Reconciliation (YTD 2025)](index=14&type=section&id=Certain%20Line%20Items%20by%20Segment%20Reconciliation%20(YTD%202025)) For the 36 weeks ended September 6, 2025, GAAP reported operating profit was $7,941 million (12.3% margin). After adjustments, non-GAAP Core operating profit was $10,837 million (16.8% margin). Significant adjustments included $1,960 million for impairment and other charges, $554 million for restructuring and impairment charges, and $308 million for acquisition and divestiture-related charges YTD 2025 Operating Profit Reconciliation (Selected Data) | Metric | Reported Operating Profit, GAAP (in millions) | Items Affecting Comparability (in millions) | Core Operating Profit, non-GAAP (in millions) | Core Operating Profit Margin, non-GAAP | | :--- | :--- | :--- | :--- | :--- | | PFNA | $4,463 | $170 | $4,633 | 16.8% | | PBNA | $550 | $2,014 | $2,564 | | | IB Franchise | $1,248 | $73 | $1,328 | | | EMEA | $1,310 | $388 | $1,698 | | | LatAm Foods | $1,301 | $118 | $1,419 | | | Asia Pacific Foods | $321 | $89 | $410 | | | Corporate unallocated expenses | $(1,252) | $37 | $(1,215) | | | **Total** | **$7,941** | **$2,896** | **$10,837** | **16.8%** | - Items affecting comparability for YTD 2025 operating profit included **$1,960 million in impairment and other charges**, **$554 million in restructuring and impairment charges**, and **$308 million in acquisition and divestiture-related charges**[60](index=60&type=chunk) [Certain Line Items by Segment Reconciliation (YTD 2024)](index=15&type=section&id=Certain%20Line%20Items%20by%20Segment%20Reconciliation%20(YTD%202024)) For the 36 weeks ended September 7, 2024, GAAP reported operating profit was $10,637 million (16.6% margin). After adjustments, non-GAAP Core operating profit was $11,236 million (17.5% margin). Key adjustments included $393 million for restructuring and impairment charges and $181 million for product recall-related impact YTD 2024 Operating Profit Reconciliation (Selected Data) | Metric | Reported Operating Profit, GAAP (in millions) | Items Affecting Comparability (in millions) | Core Operating Profit, non-GAAP (in millions) | Core Operating Profit Margin, non-GAAP | | :--- | :--- | :--- | :--- | :--- | | PFNA | $4,802 | $228 | $5,030 | 17.5% | | PBNA | $2,411 | $150 | $2,561 | | | IB Franchise | $1,221 | $15 | $1,236 | | | EMEA | $1,509 | $85 | $1,594 | | | LatAm Foods | $1,436 | $32 | $1,468 | | | Asia Pacific Foods | $407 | $6 | $413 | | | Corporate unallocated expenses | $(1,149) | $83 | $(1,066) | | | **Total** | **$10,637** | **$599** | **$11,236** | **17.5%** | - Items affecting comparability for YTD 2024 operating profit included **$393 million in restructuring and impairment charges** and **$181 million in product recall-related impact**[64](index=64&type=chunk) [Certain Line Items Reconciliation (Q3 2025 & Q3 2024)](index=16&type=section&id=Certain%20Line%20Items%20Reconciliation%20(Q3%202025%20%26%20Q3%202024)) For Q3 2025, GAAP diluted EPS was $1.90, which adjusted to $2.29 on a non-GAAP Core basis. For Q3 2024, GAAP diluted EPS was $2.13, adjusting to $2.31 Core. The reconciliation highlights the impact of various items affecting comparability on net income and EPS, such as acquisition and divestiture-related charges and indirect and income tax impact Q3 Diluted EPS Reconciliation | Metric | 12 Weeks Ended 9/6/2025 (GAAP) | Items Affecting Comparability (9/6/2025) | 12 Weeks Ended 9/6/2025 (Core) | 12 Weeks Ended 9/7/2024 (GAAP) | Items Affecting Comparability (9/7/2024) | 12 Weeks Ended 9/7/2024 (Core) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net income attributable to PepsiCo per common share - diluted | $1.90 | $0.39 | $2.29 | $2.13 | $0.18 | $2.31 | | Effective tax rate | 21.4% | -2.0% | 19.4% | 20.3% | 0.0% | 20.3% | - For Q3 2025, items affecting comparability increased diluted EPS by **$0.39**, including **$0.12 from acquisition and divestiture-related charges** and **$0.09 from indirect and income tax impact**[68](index=68&type=chunk) - For Q3 2024, items affecting comparability increased diluted EPS by **$0.18**, primarily from **$0.14 in restructuring and impairment charges**[68](index=68&type=chunk) [Certain Line Items Reconciliation (YTD 2025 & YTD 2024)](index=17&type=section&id=Certain%20Line%20Items%20Reconciliation%20(YTD%202025%20%26%20YTD%202024)) For YTD 2025, GAAP diluted EPS was $4.15, which adjusted to $5.88 on a non-GAAP Core basis. For YTD 2024, GAAP diluted EPS was $5.84, adjusting to $6.20 Core. The reconciliation highlights significant adjustments for impairment and other charges, which added $1.12 to YTD 2025 Core EPS YTD Diluted EPS Reconciliation | Metric | 36 Weeks Ended 9/6/2025 (GAAP) | Items Affecting Comparability (9/6/2025) | 36 Weeks Ended 9/6/2025 (Core) | 36 Weeks Ended 9/7/2024 (GAAP) | Items Affecting Comparability (9/7/2024) | 36 Weeks Ended 9/7/2024 (Core) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net income attributable to PepsiCo per common share - diluted | $4.15 | $1.73 | $5.88 | $5.84 | $0.36 | $6.20 | | Effective tax rate | 20.8% | -0.6% | 20.2% | 20.2% | 0.1% | 20.3% | - For YTD 2025, items affecting comparability increased diluted EPS by **$1.73**, with impairment and other charges contributing **$1.12**[72](index=72&type=chunk) - For YTD 2024, items affecting comparability increased diluted EPS by **$0.36**, with restructuring and impairment charges contributing **$0.24** and product recall-related impact contributing **$0.10**[72](index=72&type=chunk) [Fiscal 2024 Diluted EPS Reconciliation](index=18&type=section&id=Fiscal%202024%20Diluted%20EPS%20Reconciliation) For the fiscal year 2024, PepsiCo's reported diluted EPS (GAAP) was $6.95. After adjusting for various items affecting comparability, the non-GAAP Core diluted EPS was $8.16. Significant adjustments included $0.41 for restructuring and impairment charges and $0.38 for impairment and other charges Fiscal 2024 Diluted EPS Reconciliation | Metric | Year Ended 12/28/2024 | | :--- | :--- | | Reported diluted EPS, GAAP measure | $6.95 | | Mark-to-market net impact | (0.01) | | Restructuring and impairment charges | 0.41 | | Acquisition and divestiture-related charges | 0.01 | | Impairment and other charges | 0.38 | | Indirect and income tax impact | 0.16 | | Product recall-related impact | 0.10 | | Pension and retiree medical-related impact | 0.16 | | **Core diluted EPS, non-GAAP measure** | **$8.16** | [Cautionary Statement](index=19&type=section&id=Cautionary%20Statement) This section outlines cautionary statements regarding PepsiCo's forward-looking statements and identifies key risks that could materially affect future results [Forward-Looking Statements and Risk Factors](index=19&type=section&id=Forward-Looking%20Statements%20and%20Risk%20Factors) This section contains cautionary statements regarding forward-looking statements, including 2025 guidance, which are based on current information and projections. These statements inherently involve risks and uncertainties that could cause actual results to differ materially. Key risks include future demand, brand image damage, competition, workforce management, water scarcity, retail landscape changes, supply chain disruptions, geopolitical conditions, economic changes, cyber incidents, and regulatory compliance. Investors are advised not to place undue reliance on these statements and to refer to SEC filings for additional risk factors - Forward-looking statements are based on currently available information, operating plans, and projections, and inherently involve risks and uncertainties[79](index=79&type=chunk) - Risks include future demand for products, damage to reputation, product recalls, competition, workforce management, water scarcity, changes in retail landscape, supply chain disruptions, political/social/geopolitical conditions, economic conditions, cyber incidents, and regulatory compliance[79](index=79&type=chunk) - Investors are cautioned not to place undue reliance on forward-looking statements and should refer to PepsiCo's SEC filings (Form 10-K, 10-Q, 8-K) for additional risk factors[80](index=80&type=chunk)
SuRo Capital(SSSS) - 2025 Q3 - Quarterly Results
2025-10-08 22:03
[Filing Information](index=1&type=section&id=Filing%20Information) This section details the registrant's identification, contact information, and registered securities with their trading symbols and exchanges [Registrant Details](index=1&type=section&id=Registrant%20Details) This section provides the basic identification details for SuRo Capital Corp. as filed with the SEC, including its address and contact information - Registrant: **SURO CAPITAL CORP.**, located at 640 Fifth Avenue, 12th Floor, New York, NY 10019. Telephone: (212) 931-6331[1](index=1&type=chunk) [Securities Information](index=1&type=section&id=Securities%20Information) Details the classes of securities registered by SuRo Capital Corp. and their trading information, confirming its status regarding emerging growth company regulations Registered Securities | Title of each class | Trading symbol | Name of each exchange on which registered | | :------------------ | :------------- | :-------------------------------------- | | Common Stock, par value $0.01 per share | SSSS | Nasdaq Global Select Market | | 6.00% Notes due 2026 | SSSSL | Nasdaq Global Select Market | - The registrant is **not an emerging growth company**[4](index=4&type=chunk) [Item 2.02. Results of Operations and Financial Condition](index=2&type=section&id=Item%202.02.%20Results%20of%20Operations%20and%20Financial%20Condition) This section provides preliminary estimates for the third quarter ended September 30, 2025, and clarifies its furnishing status [Preliminary Q3 2025 Results Overview](index=2&type=section&id=Preliminary%20Q3%202025%20Results%20Overview) SuRo Capital Corp. issued a press release on October 8, 2025, providing preliminary Q3 2025 estimates, furnished under Section 18 of the Exchange Act - SuRo Capital Corp. issued a press release on **October 8, 2025**, containing preliminary estimates for the third quarter ended September 30, 2025[5](index=5&type=chunk) - The information disclosed is **'furnished'** and **not 'filed'** for purposes of Section 18 of the Securities Exchange Act of 1934, as amended[6](index=6&type=chunk) [Item 8.01. Other Events](index=2&type=section&id=Item%208.01.%20Other%20Events) This section covers preliminary financial estimates, investment portfolio activities, at-the-market offering updates, and dividend declarations [Preliminary Estimates and Investment Portfolio Update](index=2&type=section&id=Preliminary%20Estimates%20and%20Investment%20Portfolio%20Update) This section provides preliminary Q3 2025 financial estimates, including NAV per share, and details investment activities, ATM offering status, and dividend declarations [Preliminary Financial Estimates](index=2&type=section&id=Preliminary%20Financial%20Estimates) This subsection presents the estimated Net Asset Value per share for Q3 2025 and the total outstanding common stock shares Net Asset Value (NAV) Per Share | Date | NAV Per Share | | :---------------- | :------------ | | June 30, 2025 | ~$9.18 | | September 30, 2024 | ~$6.73 | | September 30, 2025 (estimated) | $9.00 - $9.50 | - As of September 30, 2025, there were **25,119,091 shares** of the Company's common stock outstanding[9](index=9&type=chunk) [Investment Portfolio Activity](index=2&type=section&id=Investment%20Portfolio%20Activity) This subsection details the company's investment holdings, new investments, and sales activities during the third quarter of 2025 - As of September 30, 2025, the Company held positions in **37 portfolio companies** (**33 privately held** and **4 publicly held**)[10](index=10&type=chunk) New Investments During Q3 2025 | Portfolio Company | Investment Type | Transaction Date | Amount ($) | | :---------------------------------- | :---------------- | :--------------- | :----- | | Supplying Demand, Inc. (d/b/a Liquid Death) | Convertible Note | 7/29/2025 | 0.3 million | | HL Digital Assets Inc. | Preferred Shares | 9/18/2025 | 5.0 million | - HL Digital Assets Inc.'s primary purpose is to invest and manage its investment in **HYPE**, the digital token of Hyperliquid[12](index=12&type=chunk) Investment Sales/Proceeds During Q3 2025 | Portfolio Company | Transaction Date | Quantity | Average Net Share Price ($) | Net Proceeds ($) | Realized Gain ($) | | :------------------------------------ | :--------------- | :------- | :---------------------- | :----------- | :------------ | | CW Opportunity 2 LP | Various | -- | -- | 7.2 million | 3.7 million | | GrabAGun Digital Holdings Inc. – Public Warrants | Various | 395,512 | 1.67 | 0.7 million | 0.5 million | - SuRo Capital retains approximately **83.4%** of its investment in CW Opportunity 2, LP as of September 30, 2025. The realized gain includes a discount related to estimated fees[20](index=20&type=chunk) - As of September 30, 2025, SuRo Capital held **1,204,488** remaining GrabAGun Digital Holdings Inc. public warrants[20](index=20&type=chunk) [At-The-Market Offering](index=3&type=section&id=At-The-Market%20Offering) This subsection details the shares sold and remaining value under the company's at-the-market offering during Q3 2025 - During Q3 2025, SuRo Capital sold **1,230,984 shares** under its at-the-market (ATM) offering for gross aggregate proceeds of approximately **$10.8 million**[14](index=14&type=chunk) - The remaining aggregate dollar value of shares that may yet be sold under the ATM Offering is approximately **$88.0 million**[14](index=14&type=chunk) [Dividend Declaration](index=3&type=section&id=Dividend%20Declaration) This subsection reports the cash dividend declared and paid in July 2025 to common stockholders - On **July 3, 2025**, a cash dividend of **$0.25 per share** was declared, paid on **July 31, 2025**, to common stockholders of record as of **July 21, 2025**[15](index=15&type=chunk) [Preliminary Estimates and Guidance](index=3&type=section&id=Preliminary%20Estimates%20and%20Guidance) This section clarifies that the preliminary financial estimates are unaudited and subject to change, with the full Q3 2025 results expected in November 2025 - The preliminary financial estimates are **unaudited** and prepared by management; actual results may differ materially[16](index=16&type=chunk) - The Company expects to announce its third quarter ended September 30, 2025 results in **November 2025**[17](index=17&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This standard disclosure warns that forward-looking statements are not guarantees of future performance and involve risks and uncertainties that could cause actual results to differ materially - Forward-looking statements are **not guarantees of future performance** and involve risks and uncertainties that could cause actual results to differ materially from projections[18](index=18&type=chunk) - The Company undertakes **no obligation** to update any forward-looking statement[18](index=18&type=chunk) [Item 9.01. Financial Statements and Exhibits](index=3&type=section&id=Item%209.01.%20Financial%20Statements%20and%20Exhibits) This section lists the exhibits accompanying the Form 8-K filing, including the press release and interactive data file [Exhibits List](index=3&type=section&id=Exhibits%20List) This section lists the exhibits accompanying the Form 8-K filing, including the press release and interactive data file Exhibits Filed | Exhibit No. | Description | | :------------ | :---------------------------------------------------- | | Exhibit 99.1 | Press Release dated October 8, 2025* | | Exhibit 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | - Exhibit 99.1 (Press Release) is **'furnished'** and **not 'filed'**, as described in Item 2.02[19](index=19&type=chunk) [Signature](index=4&type=section&id=Signature) This section provides the signatory details for the report, including the officer's name, title, and signing date - The report was signed on **October 8, 2025**, by **Allison Green**, **Chief Financial Officer, Chief Compliance Officer, Treasurer, and Corporate Secretary** of SuRo Capital Corp[23](index=23&type=chunk)
FS KKR Capital (FSK) - 2025 Q3 - Quarterly Results
2025-10-08 21:29
[FORM 8-K Filing Information](index=1&type=section&id=FORM%208-K%20Filing%20Information) This section details the registrant's identity and stock exchange listing [Registrant Details](index=1&type=section&id=Registrant%20Details) FS KKR Capital Corp. is identified as the registrant, a Maryland corporation, with common stock traded on the New York Stock Exchange under FSK - Registrant: **FS KKR Capital Corp.**[1](index=1&type=chunk) - State of Incorporation: **Maryland**[1](index=1&type=chunk) | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | :------------------ | :---------------- | :---------------------------------------- | | Common stock | FSK | New York Stock Exchange | [Item 2.02. Results of Operations and Financial Condition](index=3&type=section&id=Item%202.02.%20Results%20of%20Operations%20and%20Financial%20Condition) This item announces the upcoming conference call for third quarter 2025 financial results [Third Quarter 2025 Earnings Call Announcement](index=3&type=section&id=Third%20Quarter%202025%20Earnings%20Call%20Announcement) FS KKR Capital Corp. announced it will host a conference call to discuss its third quarter 2025 results on Thursday, November 6, 2025 - Conference Call Date: **Thursday, November 6, 2025**[4](index=4&type=chunk) - Conference Call Time: **9:00 a.m. (Eastern Time)**[4](index=4&type=chunk) - Purpose: Discuss third quarter 2025 results[4](index=4&type=chunk) [Item 7.01. Regulation FD Disclosure](index=3&type=section&id=Item%207.01.%20Regulation%20FD%20Disclosure) This item discloses the declared cash distribution and the availability of an investor presentation [Cash Distribution Declaration](index=3&type=section&id=Cash%20Distribution%20Declaration) The Company announced a cash distribution of $0.70 per share, payable in December 2025 to stockholders of record in early December 2025 | Metric | Value | | :-------------------------- | :--------------------- | | Cash Distribution per Share | $0.70 | | Payment Date | On or about Dec 17, 2025 | | Record Date | Dec 3, 2025 | [Investor Presentation Availability](index=3&type=section&id=Investor%20Presentation%20Availability) A presentation containing financial and operating information will be made available on the Company's website prior to the November 6, 2025 conference call - A presentation with financial and operating information will be available on the Company's website (www.fskkradvisor.com/fsk) under 'Events & Presentations' before the November 6, 2025 conference call[7](index=7&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This section provides a disclaimer regarding forward-looking statements and outlines potential risk factors [Disclaimer and Risk Factors](index=3&type=section&id=Disclaimer%20and%20Risk%20Factors) This section includes standard forward-looking statements, identified by terms like 'believes' and 'expects,' which are subject to inherent uncertainties - The report contains forward-looking statements, identified by words such as 'believes,' 'expects,' and 'projects,' which are subject to inherent uncertainties[8](index=8&type=chunk) - Actual results could differ materially due to factors including changes in the economy, risks from terrorism, natural disasters or pandemics, future changes in laws or regulations, and stock price fluctuations[8](index=8&type=chunk) - The Company undertakes no obligation to update or revise any forward-looking statements[8](index=8&type=chunk) [Item 9.01. Financial Statements and Exhibits](index=3&type=section&id=Item%209.01.%20Financial%20Statements%20and%20Exhibits) This item lists the exhibits filed with the report, specifically a press release [Exhibits List](index=3&type=section&id=Exhibits%20List) This item lists Exhibit 99.1, which is a Press Release dated October 8, 2025, incorporated by reference | Exhibit Number | Description | | :------------- | :-------------------------- | | 99.1 | Press Release, dated Oct 8, 2025 | [SIGNATURE](index=4&type=section&id=SIGNATURE) This section confirms the official authorization and signing of the report by the company's General Counsel [Report Authorization](index=4&type=section&id=Report%20Authorization) The report was duly signed on behalf of FS KKR Capital Corp. by Stephen Sypherd, General Counsel, on October 8, 2025, pursuant to the Securities Exchange Act of 1934 - The report was signed by Stephen Sypherd, General Counsel of FS KKR Capital Corp., on **October 8, 2025**[11](index=11&type=chunk)[12](index=12&type=chunk) [EXHIBIT INDEX](index=5&type=section&id=EXHIBIT%20INDEX) This section provides a comprehensive listing of all exhibits accompanying the filing [Detailed Exhibit Listing](index=5&type=section&id=Detailed%20Exhibit%20Listing) This section provides a detailed index of the exhibits filed with the report, specifically Exhibit 99.1, the Press Release dated October 8, 2025 | Exhibit Number | Description | | :------------- | :-------------------------- | | 99.1 | Press Release, dated Oct 8, 2025 |
Resources nection(RGP) - 2026 Q1 - Quarterly Report
2025-10-08 21:11
PART I—FINANCIAL INFORMATION [ITEM 1. Consolidated Financial Statements (Unaudited)](index=3&type=section&id=ITEM%201.%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents the unaudited consolidated financial statements for Resources Connection, Inc. for the three months ended August 30, 2025, and August 24, 2024, including balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows, along with detailed notes explaining significant accounting policies, acquisitions, segment information, and other financial disclosures [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position at specific points in time, detailing assets, liabilities, and stockholders' equity Consolidated Balance Sheet Metrics (in thousands) | Metric (in thousands) | August 30, 2025 | May 31, 2025 | Change | % Change | | :-------------------- | :-------------- | :----------- | :----- | :------- | | Cash and cash equivalents | $77,518 | $86,147 | $(8,629) | -10.0% | | Trade accounts receivable, net | $93,555 | $99,210 | $(5,655) | -5.7% | | Total current assets | $188,248 | $203,686 | $(15,438) | -7.6% | | Total assets | $287,211 | $304,688 | $(17,477) | -5.7% | | Accrued salaries and related obligations | $32,207 | $47,931 | $(15,724) | -32.8% | | Total current liabilities | $58,614 | $75,402 | $(16,788) | -22.3% | | Total liabilities | $80,852 | $97,607 | $(16,755) | -17.2% | | Total stockholders' equity | $206,359 | $207,081 | $(722) | -0.3% | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) This section details the company's revenues, expenses, and net loss over specific periods, providing insight into operational performance Consolidated Statements of Operations Metrics (in thousands, except per share) | Metric (in thousands, except per share) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | Change | % Change | | :------------------------------------ | :--------------------------------- | :--------------------------------- | :----- | :------- | | Revenue | $120,229 | $136,935 | $(16,706) | -12.2% | | Cost of services | $72,760 | $86,948 | $(14,188) | -16.3% | | Gross profit | $47,469 | $49,987 | $(2,518) | -5.0% | | Gross profit margin | 39.5% | 36.5% | +3.0 pp | | | Selling, general and administrative expenses | $47,916 | $48,910 | $(994) | -2.0% | | Goodwill impairment | $0 | $3,855 | $(3,855) | -100.0% | | Loss from operations | $(1,988) | $(4,803) | $2,815 | -58.6% | | Net loss | $(2,405) | $(5,707) | $3,302 | -57.9% | | Basic net loss per common share | $(0.07) | $(0.17) | $0.10 | -58.8% | | Diluted net loss per common share | $(0.07) | $(0.17) | $0.10 | -58.8% | | Cash dividends declared per common share | $0.07 | $0.14 | $(0.07) | -50.0% | [Consolidated Statements of Comprehensive Loss](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Loss) This section presents the total comprehensive loss, including net loss and other comprehensive income or loss items, for the specified periods Consolidated Statements of Comprehensive Loss Metrics (in thousands) | Metric (in thousands) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | Change | % Change | | :-------------------- | :--------------------------------- | :--------------------------------- | :----- | :------- | | Net loss | $(2,405) | $(5,707) | $3,302 | -57.9% | | Foreign currency translation adjustment gain, net of tax | $767 | $831 | $(64) | -7.7% | | Total comprehensive loss | $(1,638) | $(4,876) | $3,238 | -66.4% | [Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) This section outlines changes in the company's equity accounts, including common stock, additional paid-in capital, accumulated deficit, and treasury stock Consolidated Statements of Stockholders' Equity Metrics (in thousands) | Metric (in thousands) | Balances at May 31, 2025 | Balances at August 30, 2025 | Change | | :-------------------- | :----------------------- | :-------------------------- | :----- | | Common Stock (Amount) | $370 | $373 | $3 | | Additional Paid-in Capital | $400,180 | $403,673 | $3,493 | | Accumulated Other Comprehensive Loss | $(17,863) | $(17,096) | $767 | | Accumulated Deficit | $(121,575) | $(126,881) | $(5,306) | | Treasury Stock (Amount) | $(54,031) | $(53,710) | $321 | | Total Stockholders' Equity | $207,081 | $206,359 | $(722) | - Key changes in stockholders' equity for the three months ended August 30, 2025, include a **$2.3 million increase** from stock-based compensation expense, **$1.1 million** from ESPP share issuance, a **$2.3 million decrease** from cash dividends, and a **$2.4 million net loss**[18](index=18&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section presents the cash inflows and outflows from operating, investing, and financing activities, reflecting the company's liquidity and solvency Consolidated Statements of Cash Flows Metrics (in thousands) | Metric (in thousands) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | Change | | :-------------------- | :--------------------------------- | :--------------------------------- | :----- | | Net cash used in operating activities | $(7,832) | $(309) | $(7,523) | | Net cash used in investing activities | $(121) | $(10,924) | $10,803 | | Net cash used in financing activities | $(1,554) | $(7,685) | $6,131 | | Net decrease in cash and cash equivalents | $(8,629) | $(19,267) | $10,638 | | Cash and cash equivalents at end of period | $77,518 | $89,625 | $(12,107) | - The significant increase in cash used in operating activities for Q1 FY2026 was primarily due to a **$15.8 million decrease** in accrued salaries and related obligations, driven by the timing of the pay cycle and annual incentive compensation payout[184](index=184&type=chunk) - The substantial reduction in cash used in investing activities in Q1 FY2026 was mainly because the prior year period included a **$23.0 million net cash outflow** for the Reference Point acquisition, partially offset by **$12.3 million** from the sale of the Irvine office building, with no comparable large transactions in the current period[187](index=187&type=chunk) [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information regarding the figures presented in the consolidated financial statements [Note 1. Description of the Company and its Business](index=8&type=section&id=Note%201.%20Description%20of%20the%20Company%20and%20its%20Business) This note describes Resources Connection, Inc.'s global professional services offerings and its primary markets of operation - Resources Connection, Inc. (RGP) is a global professional services firm offering On-Demand Talent, Consulting, and Outsourced Services, primarily serving CFOs and C-suite leaders[22](index=22&type=chunk) - The Company's principal markets of operations are North America, Europe & Asia Pacific[22](index=22&type=chunk) - The Company's fiscal year consists of 52 or 53 weeks, ending on the Saturday in May closest to May 31; fiscal 2026 will consist of **52 weeks**[23](index=23&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=8&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the key accounting principles and methods used in preparing the financial statements, including revenue recognition and segment reporting - The unaudited financial statements are prepared in conformity with GAAP for interim financial information and include all necessary normal recurring adjustments[24](index=24&type=chunk) - The Company's reportable segments are On-Demand Talent, Consulting, Europe & Asia Pacific, and Outsourced Services, with Sitrick disclosed under 'All Other'[29](index=29&type=chunk) - Revenue is primarily recognized over time based on hours worked, net of variable consideration, with fixed-price contracts using the input method[31](index=31&type=chunk)[32](index=32&type=chunk) - The Company does not expect ASU 2025-06 (Intangibles — Goodwill and Other — Internal-Use Software) to have a material impact and is evaluating ASU 2025-05 (Financial Instruments – Credit Losses)[57](index=57&type=chunk)[58](index=58&type=chunk) [Note 3. Revenues](index=14&type=section&id=Note%203.%20Revenues) This note provides details on contract assets and liabilities, and revenue recognized from deferred revenue Contract Assets and Liabilities (in thousands) | Metric (in thousands) | August 30, 2025 | May 31, 2025 | | :-------------------- | :-------------- | :----------- | | Contract assets | $25,100 | $30,700 | | Contract liabilities | $4,500 | $4,300 | Revenue Recognized from Deferred Revenue (in thousands) | Revenue Recognized from Deferred Revenue (in thousands) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | | :---------------------------------------------------- | :--------------------------------- | :--------------------------------- | | Revenue recognized from deferred revenue | $1,800 | $600 | [Note 4. Acquisitions](index=14&type=section&id=Note%204.%20Acquisitions) This note details the acquisition of Reference Point LLC, including the cash consideration, recognized intangible assets, and goodwill - On July 1, 2024, the Company acquired Reference Point LLC, a strategy, management, and technology consulting firm for the financial services sector, for cash consideration of **$23.2 million** (net of cash acquired)[64](index=64&type=chunk) - The acquisition resulted in the recognition of **$15.7 million** in identifiable intangible assets (customer relationships, non-compete, trade name) and **$6.9 million** in goodwill, primarily attributable to expected synergies and the assembled workforce[66](index=66&type=chunk)[68](index=68&type=chunk) Acquisition Costs (in thousands) | Acquisition Costs (in thousands) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | | :------------------------------- | :--------------------------------- | :--------------------------------- | | Acquisition costs | $400 | $1,300 | [Note 5. Goodwill and Intangible Assets](index=15&type=section&id=Note%205.%20Goodwill%20and%20Intangible%20Assets) This note provides information on goodwill impairment, allocation, and the net carrying amount and amortization of intangible assets - No goodwill impairment was recorded for the three months ended August 30, 2025. In the first quarter of fiscal 2025, a non-cash goodwill impairment charge of **$3.9 million** was recorded for the Europe & Asia Pacific segment due to a business segment reorganization[70](index=70&type=chunk)[71](index=71&type=chunk) - As of August 30, 2025, all goodwill on the Consolidated Balance Sheet is allocated to the Outsourced Services segment[73](index=73&type=chunk) Intangible Assets (in thousands) | Intangible Assets (in thousands) | August 30, 2025 (Net Carrying Amount) | May 31, 2025 (Net Carrying Amount) | | :------------------------------- | :------------------------------------ | :--------------------------------- | | Customer contracts and relationships | $17,233 | $18,340 | | Trade names | $0 | $50 | | Non-Compete Agreements | $552 | $588 | | Total Intangible Assets, net | $17,785 | $18,978 | Amortization Expense (in thousands) | Amortization Expense (in thousands) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | | :---------------------------------- | :--------------------------------- | :--------------------------------- | | Amortization expense | $1,200 | $1,500 | [Note 6. Leases](index=16&type=section&id=Note%206.%20Leases) This note details the components of lease cost, weighted-average lease terms, discount rates, and future operating lease liabilities Lease Cost Components (in thousands) | Lease Cost Components (in thousands) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | | :----------------------------------- | :--------------------------------- | :--------------------------------- | | Operating lease cost | $1,774 | $1,727 | | Short-term lease cost | $56 | $79 | | Variable lease cost | $368 | $381 | | Sublease income | $(128) | $(179) | | Total lease cost | $2,070 | $2,008 | - As of August 30, 2025, the weighted-average remaining lease term for operating leases was **6.1 years**, and the weighted-average discount rate was **5.15%**[76](index=76&type=chunk) Future Operating Lease Liabilities (in thousands) | Future Operating Lease Liabilities (in thousands) | Amount | | :------------------------------------------------ | :----- | | 2026 (remaining nine months) | $4,891 | | 2027 | $5,149 | | 2028 | $4,727 | | 2029 | $3,879 | | 2030 | $3,148 | | Thereafter | $8,014 | | Total future lease payments | $29,808 | | Less: interest | $(4,455) | | Present value of operating lease liabilities | $25,353 | [Note 7. Long-Term Debt](index=17&type=section&id=Note%207.%20Long-Term%20Debt) This note describes the Company's new $50.0 million secured revolving credit facility, its maturity, and interest rate terms - On July 2, 2025, the Company entered into a new **$50.0 million** secured revolving credit facility (the '2025 Credit Facility') maturing on November 30, 2029, concurrently terminating the previous 2021 Credit Facility[77](index=77&type=chunk) - As of August 30, 2025, the Company had no debt outstanding under the 2025 Credit Facility and **$49.3 million** of potential remaining capacity, subject to terms and financial covenants[83](index=83&type=chunk) - The 2025 Credit Facility bears interest at Term SOFR plus a margin ranging from **1.25% to 2.50%** or Base Rate plus a margin of **0.25% to 1.50%**, depending on Consolidated EBITDA[79](index=79&type=chunk) [Note 8. Income Taxes](index=18&type=section&id=Note%208.%20Income%20Taxes) This note provides details on income tax expense, effective tax rates, and unrecognized tax benefits Income Tax Metrics | Income Tax Metric | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | | :---------------- | :--------------------------------- | :--------------------------------- | | Income tax expense | $0.5 million | $1.1 million | | Effective tax rate | 24.7% | 22.7% | - The effective tax rate was negative in both quarters due to income tax expense measured against consolidated pretax losses, primarily driven by an increase in domestic and foreign valuation allowance in Q1 FY2026 and non-deductible tax adjustment on goodwill impairment in Q1 FY2025[85](index=85&type=chunk) - The Company's total liability for unrecognized gross tax benefits, including accrued interest and penalties, was **$1.1 million** as of August 30, 2025, with no anticipated cash payments within the next 12 months[87](index=87&type=chunk) [Note 9. Stockholders' Equity](index=18&type=section&id=Note%209.%20Stockholders'%20Equity) This note details the remaining availability for stock repurchases and the declared quarterly cash dividends - As of August 30, 2025, approximately **$79.2 million** remained available for future repurchases under the Company's Stock Repurchase Programs, with no shares purchased in Q1 FY2026[89](index=89&type=chunk) - The Board of Directors approved a regular quarterly dividend of **$0.07 per share** for Q1 FY2026, a **50% reduction** from the **$0.14 per share** declared in Q1 FY2025[13](index=13&type=chunk)[90](index=90&type=chunk) [Note 10. Stock-Based Compensation Plans](index=19&type=section&id=Note%2010.%20Stock-Based%20Compensation%20Plans) This note outlines stock-based compensation expense, shares issued under the ESPP, and unrecognized compensation costs for various equity awards Stock-Based Compensation Expense (in thousands) | Stock-Based Compensation Expense (in thousands) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | | :---------------------------------------------- | :--------------------------------- | :--------------------------------- | | Stock-based compensation expense | $2,300 | $1,600 | - The Company issued **240,674 shares** under the Employee Stock Purchase Plan (ESPP) in Q1 FY2026, compared to **229,341 shares** in Q1 FY2025, with **589,714 shares** remaining available for issuance[98](index=98&type=chunk) Unrecognized Compensation Costs (in thousands) | Unrecognized Compensation Costs (in thousands) | Amount | Weighted-Average Recognition Period | | :--------------------------------------------- | :----- | :---------------------------------- | | Restricted Stock Awards (RSAs) | $1,900 | 1.53 years | | Equity-classified Restricted Stock Units (RSUs) | $8,100 | 2.07 years | | Liability-classified Restricted Stock Units (RSUs) | $500 | 1.70 years | | Performance Stock Units (PSUs) | $1,200 | 1.75 years | [Note 11. Commitments and Contingencies](index=22&type=section&id=Note%2011.%20Commitments%20and%20Contingencies) This note addresses the company's legal matters and management's assessment of their potential financial impact - Management believes that all legal matters, if disposed of unfavorably, would not have a material adverse effect on the Company's financial position, cash flows, or results of operations[106](index=106&type=chunk) [Note 12. Segment Information and Enterprise Reporting](index=22&type=section&id=Note%2012.%20Segment%20Information%20and%20Enterprise%20Reporting) This note provides a breakdown of the company's reportable segments, including revenue and Adjusted EBITDA by segment and geographic revenue - The Company's reportable segments are On-Demand Talent, Consulting, Europe & Asia Pacific, and Outsourced Services, with Sitrick reported as 'All Other'[109](index=109&type=chunk) Segment Revenue (in thousands) | Segment Revenue (in thousands) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | Change | % Change | | :----------------------------- | :--------------------------------- | :--------------------------------- | :----- | :------- | | On-Demand Talent | $44,442 | $52,473 | $(8,031) | -15.3% | | Consulting | $43,641 | $55,025 | $(11,384) | -20.7% | | Europe & Asia Pacific | $19,888 | $17,983 | $1,905 | 10.6% | | Outsourced Services | $9,994 | $9,491 | $503 | 5.3% | | All Other | $2,264 | $1,963 | $301 | 15.3% | | Total consolidated revenue | $120,229 | $136,935 | $(16,706) | -12.2% | Segment Adjusted EBITDA (in thousands) | Segment Adjusted EBITDA (in thousands) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | Change | % Change | | :------------------------------------- | :--------------------------------- | :--------------------------------- | :----- | :------- | | On-Demand Talent | $4,422 | $2,559 | $1,863 | 72.8% | | Consulting | $5,045 | $7,753 | $(2,708) | -34.9% | | Europe & Asia Pacific | $837 | $227 | $610 | 268.7% | | Outsourced Services | $2,330 | $1,394 | $936 | 67.1% | | All Other | $183 | $(467) | $650 | 139.2% | Geographic Revenue (in thousands) | Geographic Revenue (in thousands) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | | :-------------------------------- | :--------------------------------- | :--------------------------------- | | United States | $95,556 | $112,452 | | International | $24,673 | $24,483 | | Total | $120,229 | $136,935 | [Note 13. Subsequent Events](index=26&type=section&id=Note%2013.%20Subsequent%20Events) This note discloses a global workforce reduction initiated after the reporting period and its expected financial charges - On September 30, 2025, the Company initiated a global reduction in its management and administrative workforce, expecting estimated charges of approximately **$2.1 million** in Q2 FY2026, primarily for one-time employee termination benefits[116](index=116&type=chunk) [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides a detailed discussion and analysis of the Company's financial condition, results of operations, and liquidity and capital resources for the three months ended August 30, 2025, compared to the prior year period. It covers strategic focus areas, market trends, critical accounting policies, non-GAAP financial measures, and a breakdown of operating results by segment and cash flow activities [Forward-Looking Statements](index=27&type=section&id=Forward-Looking%20Statements) This section highlights that the report contains forward-looking statements subject to various risks and uncertainties that could cause actual results to differ materially - The report contains forward-looking statements regarding expectations for operating segments, macroeconomic environment, costs, liabilities, business strategies, growth, and future performance, identified by words like 'anticipates,' 'expects,' 'will,' or similar terms[119](index=119&type=chunk) - These statements are subject to known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially, including economic downturns, market competition, talent retention, and compliance risks[120](index=120&type=chunk) [Overview](index=28&type=section&id=Overview) This section provides a general description of RGP as a global professional services firm and outlines its strategic reorganization and focus areas - RGP is a global professional services firm delivering flexible solutions through on-demand resourcing, strategic and execution consulting, and fully outsourced services, with core capabilities spanning Enterprise Strategy & Operational Performance; Finance & Accounting; Digital, Technology & Data; and Governance, Risk & Compliance[122](index=122&type=chunk) - In Q1 FY2025, the Company reorganized into distinct business units: On-Demand Talent, Consulting, Europe & Asia Pacific, Outsourced Services, and Sitrick (All Other), focusing on CFO Advisory and Digital, Data and Cloud, and completed technology modernization in North America[123](index=123&type=chunk) [Fiscal 2026 Strategic Focus Areas](index=28&type=section&id=Fiscal%202026%20Strategic%20Focus%20Areas) This section outlines the company's key strategic priorities for fiscal year 2026, including expanding cross-sell opportunities and optimizing high-growth solutions - The Company's fiscal 2026 strategic focus areas include expanding cross-sell opportunities across its diversified services platform (On-Demand Talent, Consulting, Outsourced Services)[124](index=124&type=chunk)[126](index=126&type=chunk) - Other key focus areas are optimizing high-growth solutions (e.g., ERP/cloud finance modernization, AI adoption) and evolving talent strategy, further leveraging value-based pricing, and driving improvement in cost structure[125](index=125&type=chunk)[126](index=126&type=chunk)[127](index=127&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk) [Market Trends and Uncertainties](index=29&type=section&id=Market%20Trends%20and%20Uncertainties) This section discusses the impact of uncertain macroeconomic conditions on the company's financial results and professional services spending - Uncertain macroeconomic conditions, including ambiguity around interest rates, softening labor markets, currency fluctuations, and policy changes, have created significant uncertainty in the global economy and adversely impacted financial results[130](index=130&type=chunk) - The Company observes caution in professional services spending, and persistent adverse conditions could lead to further declines in billable hours and bill rates[130](index=130&type=chunk) [Critical Accounting Policies and Estimates](index=29&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section confirms that there have been no material changes to the company's critical accounting policies or estimates since the last annual report - There have been no material changes in the Company's critical accounting policies or underlying estimates and assumptions from those described in its Fiscal Year 2025 Form 10-K[132](index=132&type=chunk) [Non-GAAP Financial Measures](index=29&type=section&id=Non-GAAP%20Financial%20Measures) This section explains the company's use of non-GAAP financial measures such as Same-day constant currency revenue, EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin to evaluate performance - The Company uses non-GAAP financial measures like Same-day constant currency revenue, EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin to assess financial and operating performance and evaluate revenue trends on a comparable basis[133](index=133&type=chunk)[135](index=135&type=chunk)[138](index=138&type=chunk)[139](index=139&type=chunk) Non-GAAP Financial Metrics (in thousands, except %) | Non-GAAP Metric (in thousands, except %) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | Change | % Change | | :--------------------------------------- | :--------------------------------- | :--------------------------------- | :----- | :------- | | Same-day constant currency revenue | $117,969 | $136,935 | $(18,966) | -13.9% | | Adjusted EBITDA | $3,065 | $2,320 | $745 | 32.1% | | Adjusted EBITDA Margin | 2.5% | 1.7% | +0.8 pp | | [Results of Operations](index=32&type=section&id=Results%20of%20Operations) This section analyzes the consolidated operating results, including revenue, cost of services, gross profit, and selling, general and administrative expenses Consolidated Operating Results (in thousands, except %) | Consolidated Operating Results (in thousands, except %) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | Change | % Change | | :---------------------------------------------------- | :--------------------------------- | :--------------------------------- | :----- | :------- | | Revenue | $120,229 | $136,935 | $(16,706) | -12.2% | | Cost of services | $72,760 | $86,948 | $(14,188) | -16.3% | | Gross profit | $47,469 | $49,987 | $(2,518) | -5.0% | | Selling, general and administrative expenses | $47,916 | $48,910 | $(994) | -2.0% | | Loss from operations | $(1,988) | $(4,803) | $2,815 | -58.6% | | Net loss | $(2,405) | $(5,707) | $3,302 | -57.9% | - Revenue decreased by **12.2%** year-over-year, or **13.9%** on a same-day constant currency basis, primarily due to a **14.3% decline** in billable hours amidst a choppy demand environment, partially offset by a **2.2% increase** in average bill rates[145](index=145&type=chunk) - Cost of services as a percentage of revenue improved to **60.5%** from **63.5%** year-over-year, driven by an improved pay/bill ratio and lower consultant costs[147](index=147&type=chunk) - Selling, general and administrative expenses decreased by **$1.0 million**, primarily due to reduced employee compensation, technology transformation costs, and business support costs, partially offset by the absence of a gain on sale of assets recorded in the prior year[150](index=150&type=chunk) [Operating Results of Segments](index=34&type=section&id=Operating%20Results%20of%20Segments) This section analyzes the revenue and Adjusted EBITDA performance of the On-Demand Talent, Consulting, Europe & Asia Pacific, and Outsourced Services segments - On-Demand Talent revenue declined by **15.3%** due to lower demand and a softer labor market, while Adjusted EBITDA increased by **72.8%** due to decreased segment expenses[162](index=162&type=chunk)[167](index=167&type=chunk) - Consulting revenue decreased by **20.7%** due to a **28.4% decrease** in billable hours, despite an **11.1% increase** in average bill rates from value-based pricing, leading to a **34.9% decrease** in Adjusted EBITDA[163](index=163&type=chunk)[168](index=168&type=chunk) - Europe & Asia Pacific revenue increased by **10.6%** (**5.4%** on a same-day constant currency basis), driven by a **9.6% increase** in average bill rates and growing client demand in Europe, resulting in a **268.7% increase** in Adjusted EBITDA[164](index=164&type=chunk)[169](index=169&type=chunk) - Outsourced Services revenue grew by **5.3%** (**3.7%** on a same-day constant currency basis) due to increased billable hours, and Adjusted EBITDA increased by **67.1%** primarily from higher gross profit[165](index=165&type=chunk)[170](index=170&type=chunk) [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's sources of liquidity, cash position, new credit facility, purchase obligations, and future funding outlook - Primary liquidity sources include cash from operating activities and the senior secured revolving credit facility. As of August 30, 2025, the Company had **$77.5 million** in cash and cash equivalents, with **$41.3 million** held in international operations[172](index=172&type=chunk) - The Company entered into a new 2025 Credit Facility on July 2, 2025, providing a secured revolving loan up to **$50.0 million**, maturing on November 30, 2029, with no debt outstanding as of August 30, 2025[174](index=174&type=chunk)[176](index=176&type=chunk) - Non-cancellable purchase obligations total **$8.5 million**, primarily for licensing arrangements, with **$4.0 million** due in fiscal 2026[178](index=178&type=chunk)[179](index=179&type=chunk) - The Company believes current cash, ongoing cash flows from operations, and the 2025 Credit Facility will provide sufficient funds for working capital and capital expenditure needs for at least the next 12 months, despite macroeconomic uncertainties[181](index=181&type=chunk) [Operating Activities](index=38&type=section&id=Operating%20Activities) This section analyzes the net cash used in operating activities and the primary drivers of changes between periods Cash Flow from Operating Activities (in thousands) | Cash Flow from Operating Activities (in thousands) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | | :----------------------------------------------- | :--------------------------------- | :--------------------------------- | | Net cash used in operating activities | $(7,832) | $(309) | - The increase in cash used in operating activities was primarily driven by a **$15.8 million decrease** in accrued salaries and related obligations due to the timing of the pay cycle and annual incentive compensation payout[184](index=184&type=chunk) [Investing Activities](index=39&type=section&id=Investing%20Activities) This section details the net cash used in investing activities, highlighting the impact of acquisitions and asset sales Cash Flow from Investing Activities (in thousands) | Cash Flow from Investing Activities (in thousands) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | | :------------------------------------------------ | :--------------------------------- | :--------------------------------- | | Net cash used in investing activities | $(121) | $(10,924) | - Net cash used in investing activities significantly decreased from **$10.9 million** in Q1 FY2025 to **$0.1 million** in Q1 FY2026. The prior period included a **$23.0 million net cash outflow** for the Reference Point acquisition and **$12.3 million net proceeds** from the sale of the Irvine office building[187](index=187&type=chunk) [Financing Activities](index=39&type=section&id=Financing%20Activities) This section analyzes the net cash used in financing activities, focusing on changes related to dividends and stock repurchases Cash Flow from Financing Activities (in thousands) | Cash Flow from Financing Activities (in thousands) | Three Months Ended August 30, 2025 | Three Months Ended August 24, 2024 | | :------------------------------------------------ | :--------------------------------- | :--------------------------------- | | Net cash used in financing activities | $(1,554) | $(7,685) | - Net cash used in financing activities decreased significantly, primarily due to lower cash dividend payments (**$2.3 million** vs **$4.7 million**) and the absence of common stock repurchases (**$0** vs **$5.0 million**) compared to the prior year[188](index=188&type=chunk)[189](index=189&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) This section outlines the Company's exposure to market risks, primarily from fluctuations in interest rates and foreign currency exchange rates, and discusses how these risks are managed [Interest Rate Risk](index=39&type=section&id=Interest%20Rate%20Risk) This section discusses the company's exposure to interest rate fluctuations on its cash and borrowings, and the expected impact of rate changes - The Company is exposed to market risks from fluctuations in interest rates affecting its cash and cash equivalents and borrowings under the 2025 Credit Facility[190](index=190&type=chunk) - As of August 30, 2025, the Company had **$77.5 million** in cash and cash equivalents and no outstanding borrowings under its 2025 Credit Facility, with a **10% decline** in interest rates not expected to materially impact financial position or results[191](index=191&type=chunk)[192](index=192&type=chunk) [Foreign Currency Exchange Rate Risk](index=39&type=section&id=Foreign%20Currency%20Exchange%20Rate%20Risk) This section details the company's exposure to foreign currency exchange rate fluctuations due to international operations and cash holdings - Approximately **20.5%** of the Company's revenues for Q1 FY2026 were generated outside the U.S., making operating results subject to foreign currency exchange rate fluctuations[193](index=193&type=chunk) - As of August 30, 2025, **53.3%** of cash and cash equivalents were denominated in foreign currencies (Euros, Mexican Pesos, Canadian Dollar, Chinese Yuan, Indian Rupee, Japanese Yen, and British Pound Sterling)[194](index=194&type=chunk) - The Company does not currently use financial hedges to mitigate foreign currency fluctuation risks, believing its economic exposure has not been material[195](index=195&type=chunk) [ITEM 4. Controls and Procedures](index=41&type=section&id=ITEM%204.%20Controls%20and%20Procedures) This section details the evaluation of the Company's disclosure controls and procedures and reports on any changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=41&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures as evaluated by its principal officers - As of August 30, 2025, the Company's Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective[197](index=197&type=chunk) [Changes in Internal Control Over Financial Reporting](index=41&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) This section reports on any material changes in the company's internal control over financial reporting during the fiscal quarter - There has been no material change in the Company's internal control over financial reporting during the fiscal quarter ended August 30, 2025[198](index=198&type=chunk) PART II—OTHER INFORMATION [ITEM 1A. Risk Factors](index=42&type=section&id=ITEM%201A.%20Risk%20Factors) This section states that there have been no material changes to the Company's risk factors since its last annual report - There have been no material changes in the Company's risk factors from those disclosed in Part I, Item 1A of its Fiscal Year 2025 Form 10-K[200](index=200&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=42&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports that there were no unregistered sales of equity securities or use of proceeds during the period - There were no unregistered sales of equity securities and use of proceeds during the reporting period[201](index=201&type=chunk) [ITEM 5. Other Information](index=42&type=section&id=ITEM%205.%20Other%20Information) This section confirms that there are no other material information or insider trading arrangements to report - There were no insider trading arrangements to report[202](index=202&type=chunk) [ITEM 6. Exhibits](index=43&type=section&id=ITEM%206.%20Exhibits) This section lists the exhibits filed with or incorporated by reference in this Quarterly Report on Form 10-Q, including certifications and financial statements in Inline XBRL format - The report includes certifications from the CEO and CFO (Exhibits 31.1, 31.2, 32.1, 32.2) and unaudited interim consolidated financial statements formatted in Inline XBRL (Exhibit 101)[204](index=204&type=chunk) [Signatures](index=44&type=section&id=Signatures) This section contains the duly authorized signatures of the Company's President and Chief Executive Officer and Executive Vice President and Chief Financial Officer, affirming the filing of the report - The report is signed by Kate W. Duchene, President and Chief Executive Officer, and Jennifer Ryu, Executive Vice President and Chief Financial Officer, on October 8, 2025[208](index=208&type=chunk)
APA(APA) - 2025 Q3 - Quarterly Results
2025-10-08 20:58
[Filing Information](index=1&type=section&id=Filing%20Information) This section details the registrant's general filing information, securities status, and contact details [General Filing Details](index=1&type=section&id=General%20Filing%20Details) This section provides the foundational details of the Form 8-K filing, including the registrant's legal name, jurisdiction of incorporation, principal executive offices address, and telephone number - Registrant Name: **APA CORPORATION**[2](index=2&type=chunk) - Date of Report (earliest event reported): **October 8, 2025**[2](index=2&type=chunk) - Jurisdiction of Incorporation: **Delaware**[2](index=2&type=chunk) - Principal Executive Offices: **2000 W Sam Houston Pkwy S, Suite 200, Houston, Texas 77042-3643**[2](index=2&type=chunk) - Registrant's Telephone Number: **(713) 296-6000**[2](index=2&type=chunk) [Securities and Registrant Status](index=1&type=section&id=Securities%20and%20Registrant%20Status) This section outlines the securities registered under Section 12(b) of the Act and confirms the registrant's status regarding emerging growth company provisions | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | :------------------ | :---------------- | :---------------------------------------- | | Common Stock, $0.625 par value | APA | Nasdaq Global Select Market | - Emerging growth company status: **Not an emerging growth company**[4](index=4&type=chunk) [Report Items](index=2&type=section&id=Report%20Items) This section details the company's financial and operating results and lists accompanying exhibits [Item 2.02 Results of Operations and Financial Condition](index=2&type=section&id=Item%202.02%20Results%20of%20Operations%20and%20Financial%20Condition) APA Corporation announced supplemental financial and operating results for the fiscal quarter ended September 30, 2025, through a press release issued on October 8, 2025 - Date of press release: **October 8, 2025**[6](index=6&type=chunk) - Information announced: **Supplemental information regarding certain financial and operating results**[6](index=6&type=chunk) - Period covered: **Fiscal quarter ended September 30, 2025**[6](index=6&type=chunk) - Exhibit reference: **Full text of the press release is furnished as Exhibit 99.1**[6](index=6&type=chunk) [Item 9.01 Financial Statements and Exhibits](index=2&type=section&id=Item%209.01%20Financial%20Statements%20and%20Exhibits) This section lists the exhibits accompanying the Form 8-K filing, which include the press release detailing financial and operating results and the interactive data file | Exhibit No. | Description | | :---------- | :---------- | | 99.1 | Press Release of APA Corporation dated October 8, 2025 | | 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | [Signatures](index=3&type=section&id=Signatures) This section provides the authorization and signatory details for the Form 8-K filing [Authorization and Signatory](index=3&type=section&id=Authorization%20and%20Signatory) The report is duly signed on behalf of APA Corporation by Rebecca A. Hoyt, Senior Vice President, Chief Accounting Officer, and Controller, on October 8, 2025 - Signatory: **Rebecca A. Hoyt**[11](index=11&type=chunk) - Title: **Senior Vice President, Chief Accounting Officer, and Controller (Principal Accounting Officer)**[11](index=11&type=chunk) - Date of Signature: **October 8, 2025**[11](index=11&type=chunk)
Richardson Electronics(RELL) - 2026 Q1 - Quarterly Results
2025-10-08 20:37
[Executive Summary](index=1&type=section&id=1.%20Executive%20Summary) Richardson Electronics achieved its fifth consecutive quarter of YoY net sales growth, driven by semiconductor wafer fab sales, alongside positive operating income and cash flow, and declared a dividend [Q1 FY26 Performance Highlights](index=1&type=section&id=1.1.%20Q1%20FY26%20Performance%20Highlights) The company achieved its fifth consecutive quarter of YoY net sales growth, driven by semiconductor wafer fab sales, and maintained positive operating income and cash flow - Net sales increased YoY for the **5th consecutive quarter**, led by a **52.2% YoY increase** in semi-conductor wafer fab net sales[1](index=1&type=chunk) - Generated **$1.0 million** of operating income and ended Q1 FY26 with positive operating cash flow for the **6th consecutive quarter**[1](index=1&type=chunk) - The Board of Directors declared a **$0.06 per share** quarterly cash dividend[1](index=1&type=chunk) [CEO Commentary](index=1&type=section&id=1.2.%20CEO%20Commentary) The CEO expressed satisfaction with Q1 FY26 results, highlighting significant operating income improvement from a profitable sales mix and cost control, and projected improved fiscal year performance - Excluding Healthcare (majority of assets sold in January 2025), net sales grew by **6.8% year-over-year**[2](index=2&type=chunk) - Operating income more than tripled from the prior year's first quarter due to a more profitable sales mix and continued focus on controlling fixed costs[2](index=2&type=chunk) - Management is confident in the ability to deliver improved results for the year, supported by a solid balance sheet and a highly capable team[3](index=3&type=chunk) [First Quarter Fiscal 2026 Financial Review](index=2&type=section&id=2.%20First%20Quarter%20Fiscal%202026%20Financial%20Review) This section provides a detailed financial review of Richardson Electronics' performance for the first quarter of fiscal year 2026 [Net Sales](index=2&type=section&id=2.1.%20Net%20Sales) Q1 FY26 net sales grew by **1.6%** YoY to **$54.6 million**, or **6.8%** excluding Healthcare, driven by PMT and Canvys, with a slight increase in backlog | Metric | Q1 FY26 (Millions) | Q1 FY25 (Millions) | YoY Change | | :----- | :----------------- | :----------------- | :--------- | | Net Sales | $54.6 | $53.7 | +1.6% | | Net Sales (Excl. Healthcare) | N/A | N/A | +6.8% | - PMT sales increased by **$1.1 million (+2.8%)**, or **+10.5%** excluding Healthcare, driven by higher demand from semiconductor wafer fab customers and distributed electron tube products[5](index=5&type=chunk) - Canvys sales increased by **$0.6 million (+8.3%)** reflecting improved market conditions in Europe[5](index=5&type=chunk) - GES sales declined by **$0.8 million**, mainly due to the non-recurrence of a large EV Locomotive order[5](index=5&type=chunk) Net Sales by Strategic Business Unit (in thousands) | Segment | Q1 FY26 (Aug 30, 2025, in thousands) | Q1 FY25 (Aug 31, 2024, in thousands) | % Change | | :------ | :--------------------- | :--------------------- | :------- | | PMT | $39,069 | $38,001 | +2.8% | | GES | $7,263 | $8,086 | -10.2% | | Canvys | $8,275 | $7,638 | +8.3% | | Total | $54,607 | $53,725 | +1.6% | - Backlog totaled **$134.7 million** at the end of Q1 FY26, versus **$134.2 million** at the end of fiscal 2025, primarily driven by increases in PMT and Canvys[6](index=6&type=chunk) [Gross Margin](index=2&type=section&id=2.2.%20Gross%20Margin) Overall gross margin improved to **31.0%** in Q1 FY26, with PMT and GES margins increasing due to product mix, while Canvys' margin decreased | Metric | Q1 FY26 | Q1 FY25 | Change | | :----- | :------- | :------- | :----- | | Gross Margin | 31.0% | 30.6% | +0.4 pp | - PMT gross margin increased to **31.3%** (from **30.1%**) due to a favorable product mix and improved manufacturing absorption[7](index=7&type=chunk) - GES gross margin increased to **29.6%** (from **29.4%**) due to product mix[7](index=7&type=chunk) - Canvys gross margin decreased to **30.9%** (from **34.3%**) primarily due to product mix and higher freight costs[7](index=7&type=chunk) Gross Profit by Strategic Business Unit (in thousands) | Segment | Q1 FY26 Gross Profit (in thousands) | Q1 FY26 % of Net Sales | Q1 FY25 Gross Profit (in thousands) | Q1 FY25 % of Net Sales | | :------ | :------------------ | :-------------------- | :------------------ | :-------------------- | | PMT | $12,226 | 31.3% | $11,431 | 30.1% | | GES | $2,150 | 29.6% | $2,374 | 29.4% | | Canvys | $2,553 | 30.9% | $2,621 | 34.3% | | Total | $16,929 | 31.0% | $16,426 | 30.6% | [Operating Expenses and Income](index=2&type=section&id=2.3.%20Operating%20Expenses%20and%20Income) Operating expenses slightly decreased in Q1 FY26, resulting in operating income more than tripling compared to the prior year | Metric | Q1 FY26 (Millions) | Q1 FY25 (Millions) | YoY Change | | :----- | :----------------- | :----------------- | :--------- | | Operating Expenses | $16.0 | $16.1 | -0.6% | | Operating Expenses (% of Net Sales) | 29.2% | 30.0% | -0.8 pp | | Operating Income | $1.0 | $0.3 | +233.3% | - The decrease in operating expenses resulted from lower travel expenses[8](index=8&type=chunk) [Other Income, Taxes, and Net Income](index=2&type=section&id=2.4.%20Other%20Income,%20Taxes,%20and%20Net%20Income) Other income significantly increased due to a non-recurring gain, driving substantial growth in income before taxes and net income, despite a higher effective tax rate | Metric | Q1 FY26 (Millions) | Q1 FY25 (Millions) | YoY Change | | :----- | :----------------- | :----------------- | :--------- | | Other Income | $1.4 | $0.3 | +366.7% | | Income Before Income Taxes | $2.3 | $0.6 | +283.3% | | Income Tax Provision | $0.4 | < $0.1 | Significant Increase | | Effective Tax Rate | 18.1% | 9.0% | +9.1 pp | | Net Income | $1.9 | $0.6 | +216.7% | - The increase in other income was mainly due to a non-recurring gain of **$0.9 million**[9](index=9&type=chunk) [Earnings Per Share (EPS) and EBITDA](index=2&type=section&id=2.5.%20Earnings%20Per%20Share%20(EPS)%20and%20EBITDA) Diluted EPS more than tripled and EBITDA more than doubled in Q1 FY26, reflecting strong net income growth | Metric | Q1 FY26 | Q1 FY25 | YoY Change | | :----- | :------- | :------- | :--------- | | Diluted EPS | $0.13 | $0.04 | +225.0% | | EBITDA (Millions) | $3.3 | $1.7 | +94.1% | [Financial Position and Capital Management](index=2&type=section&id=3.%20Financial%20Position%20and%20Capital%20Management) This section reviews Richardson Electronics' financial position, cash management, debt, and capital allocation strategies for the quarter [Cash and Capital Expenditures](index=2&type=section&id=3.1.%20Cash%20and%20Capital%20Expenditures) The company maintained **$35.7 million** in cash and cash equivalents, primarily using cash for dividends, while capital expenditures slightly increased YoY | Metric | August 30, 2025 (Millions) | May 31, 2025 (Millions) | QoQ Change | | :----- | :------------------------- | :---------------------- | :--------- | | Cash and Cash Equivalents | $35.7 | $35.9 | -0.6% | - Cash used during the first quarter of fiscal 2026 primarily related to the payment of dividends[12](index=12&type=chunk) - The Company invested **$1.0 million** in capital expenditures during the quarter, primarily for its manufacturing business, facilities improvements, and IT systems, versus **$0.9 million** in the prior year's first quarter[12](index=12&type=chunk) [Debt and Credit Facilities](index=3&type=section&id=3.2.%20Debt%20and%20Credit%20Facilities) Richardson Electronics has no outstanding debt on its revolving credit line and extended its **$20 million** Credit Agreement with PNC Bank through October 2028 - As of the end of Q1 FY26, the Company had no outstanding debt on its revolving line of credit with PNC Bank[13](index=13&type=chunk) - The Credit Agreement has been extended through October 6, 2028, with similar terms and a **$20 million** borrowing limit[13](index=13&type=chunk) [Quarterly Cash Dividend](index=3&type=section&id=3.3.%20Quarterly%20Cash%20Dividend) The Board declared a quarterly cash dividend of **$0.06** per common share and **$0.054** per Class B common share, payable November 26, 2025 - A **$0.06** quarterly cash dividend per share was declared for holders of common stock[14](index=14&type=chunk) - A **$0.054** cash dividend per share was declared for holders of Class B common stock[14](index=14&type=chunk) - The dividend will be payable on November 26, 2025, to common stockholders of record as of November 7, 2025[14](index=14&type=chunk) [Non-GAAP Financial Measures](index=3&type=section&id=4.%20Non-GAAP%20Financial%20Measures) This section defines and explains the company's use of non-GAAP financial measures, specifically EBITDA, and its reconciliation [Non-GAAP Measure Definition and Use](index=3&type=section&id=4.1.%20Non-GAAP%20Measure%20Definition%20and%20Use) The company defines EBITDA as a non-GAAP measure, used by management to assess ongoing financial performance by excluding non-core items for evaluation and planning - EBITDA is presented as a non-GAAP financial measure, reflecting earnings before interest, income tax, depreciation, and amortization expenses[15](index=15&type=chunk) - Management believes EBITDA provides useful information to investors by assessing financial performance excluding items not indicative of ongoing results, and uses it for evaluating performance, planning, forecasting, and analyzing future periods[16](index=16&type=chunk) - Non-GAAP financial measures are not intended as a substitute for GAAP measurements and may not be comparable to similarly titled measures reported by other companies[16](index=16&type=chunk) [Corporate Information](index=3&type=section&id=5.%20Corporate%20Information) This section provides an overview of Richardson Electronics, its forward-looking statements, and details for its upcoming conference call [About Richardson Electronics, Ltd.](index=4&type=section&id=5.1.%20About%20Richardson%20Electronics,%20Ltd.) Richardson Electronics is a global manufacturer specializing in engineered solutions, green energy products, and various electronic components, providing technical expertise and value-added services - Richardson Electronics is a leading global manufacturer of engineered solutions, green energy products, power grid and microwave tubes, power conversion and RF and microwave components, tubes for diagnostic imaging equipment, and customized display solutions[20](index=20&type=chunk) - The company serves customers in alternative energy, healthcare, aviation, broadcast, communications, industrial, marine, medical, military, scientific, and semiconductor markets[21](index=21&type=chunk) - The Company's strategy is to provide specialized technical expertise and "engineered solutions" through design-in support, systems integration, prototype design and manufacturing, testing, logistics, and aftermarket technical service and repair[21](index=21&type=chunk) [Forward-Looking Statements](index=3&type=section&id=5.2.%20Forward-Looking%20Statements) This release contains forward-looking statements subject to risks and uncertainties, with readers advised to consult SEC filings and the company disclaiming update responsibility - This release includes certain "forward-looking" statements as defined by the Securities and Exchange Commission, which involve risks and uncertainties[19](index=19&type=chunk) - For a discussion of such risks and uncertainties, readers should refer to Item 1A, "Risk Factors" in the Company's Annual Report on Form 10-K and other reports filed with the SEC[19](index=19&type=chunk) - The Company assumes no responsibility to update the "forward-looking" statements in this release[19](index=19&type=chunk) [Conference Call Details](index=3&type=section&id=5.3.%20Conference%20Call%20Details) Richardson Electronics will host a conference call on October 9, 2025, at 9:00 a.m. Central Time to discuss Q1 FY26 results, with a replay available - The Company will host a conference call and question-and-answer session on Thursday, October 9, 2025, at 9:00 a.m. Central Time, to discuss its first quarter fiscal 2026 results[17](index=17&type=chunk) - Participants may register for the call, and a replay will be available beginning at 1:00 p.m. Central Time on October 10, 2025, for seven days[18](index=18&type=chunk) - A webcast link is also available[18](index=18&type=chunk) [Consolidated Financial Statements](index=5&type=section&id=6.%20Consolidated%20Financial%20Statements) This section presents the consolidated financial statements, including balance sheets, income statements, cash flows, and segment-level performance data [Consolidated Balance Sheets](index=5&type=section&id=6.1.%20Consolidated%20Balance%20Sheets) The balance sheet shows slight increases in total assets and stockholders' equity, driven by accounts receivable and inventories, with a corresponding rise in current liabilities | Metric (in thousands) | August 30, 2025 (in thousands) | May 31, 2025 (in thousands) | Change | | :-------------------- | :-------------- | :----------- | :----- | | Total Assets | $200,067 | $195,835 | +$4,232 | | Total Liabilities | $40,699 | $39,176 | +$1,523 | | Total Stockholders' Equity | $159,368 | $156,659 | +$2,709 | | Cash and cash equivalents | $35,654 | $35,901 | -$247 | | Accounts receivable, net | $27,039 | $24,117 | +$2,922 | | Inventories, net | $104,635 | $102,799 | +$1,836 | | Total current assets | $170,276 | $165,887 | +$4,389 | | Total current liabilities | $38,699 | $36,786 | +$1,913 | [Consolidated Statements of Comprehensive Income](index=6&type=section&id=6.2.%20Consolidated%20Statements%20of%20Comprehensive%20Income) The statement highlights significant YoY growth in net sales, gross profit, operating income, and net income for Q1 FY26, with comprehensive income more than doubling | Metric (in thousands) | Q1 FY26 (Aug 30, 2025, in thousands) | Q1 FY25 (Aug 31, 2024, in thousands) | YoY Change | | :-------------------- | :--------------------- | :--------------------- | :--------- | | Net sales | $54,607 | $53,725 | +1.6% | | Gross profit | $16,929 | $16,426 | +3.1% | | Operating income | $968 | $316 | +206.3% | | Income before income taxes | $2,330 | $648 | +259.6% | | Net income | $1,909 | $590 | +223.6% | | Comprehensive income | $2,963 | $1,226 | +141.7% | | Diluted EPS (Common Stock) | $0.13 | $0.04 | +225.0% | [Consolidated Statements of Cash Flows](index=7&type=section&id=6.3.%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities significantly increased in Q1 FY26, with cash primarily used for investing and financing, leading to a slight quarterly decrease in cash equivalents | Metric (in thousands) | Q1 FY26 (Aug 30, 2025, in thousands) | Q1 FY25 (Aug 31, 2024, in thousands) | YoY Change | | :-------------------- | :--------------------- | :--------------------- | :--------- | | Net cash provided by operating activities | $1,367 | $412 | +231.8% | | Net cash used in investing activities | $(1,025) | $(919) | +11.5% | | Net cash used in financing activities | $(895) | $(868) | +3.1% | | Decrease in cash and cash equivalents | $(247) | $(1,228) | -79.9% | | Cash and cash equivalents at end of period | $35,654 | $23,035 | +54.8% | [Net Sales and Gross Profit by Strategic Business Unit](index=8&type=section&id=6.4.%20Net%20Sales%20and%20Gross%20Profit%20by%20Strategic%20Business%20Unit) This section details net sales and gross profit by strategic business unit, showing sales growth in PMT and Canvys, a decline in GES, and varied gross margin performance Net Sales by Strategic Business Unit (in thousands) | Segment | Q1 FY26 (Aug 30, 2025, in thousands) | Q1 FY25 (Aug 31, 2024, in thousands) | % Change | | :------ | :--------------------- | :--------------------- | :------- | | PMT | $39,069 | $38,001 | +2.8% | | GES | $7,263 | $8,086 | -10.2% | | Canvys | $8,275 | $7,638 | +8.3% | | Total | $54,607 | $53,725 | +1.6% | Gross Profit by Strategic Business Unit (in thousands) | Segment | Q1 FY26 Gross Profit (in thousands) | Q1 FY26 % of Net Sales | Q1 FY25 Gross Profit (in thousands) | Q1 FY25 % of Net Sales | | :------ | :------------------ | :-------------------- | :------------------ | :-------------------- | | PMT | $12,226 | 31.3% | $11,431 | 30.1% | | GES | $2,150 | 29.6% | $2,374 | 29.4% | | Canvys | $2,553 | 30.9% | $2,621 | 34.3% | | Total | $16,929 | 31.0% | $16,426 | 30.6% | [Reconciliation of Non-GAAP Financial Measures (EBITDA)](index=9&type=section&id=6.5.%20Reconciliation%20of%20Non-GAAP%20Financial%20Measures%20(EBITDA)) This section reconciles net income to EBITDA, demonstrating a significant increase in Q1 FY26 EBITDA, reflecting improved operational profitability before non-cash and financing items EBITDA Reconciliation (in thousands) | Metric | Q1 FY26 (Aug 30, 2025, in thousands) | Q1 FY25 (Aug 31, 2024, in thousands) | | :----- | :--------------------- | :--------------------- | | Net income | $1,909 | $590 | | Income tax expense | $421 | $58 | | Depreciation & amortization | $971 | $1,044 | | **EBITDA** | **$3,301** | **$1,692** |