UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 McCORMICK & COMPANY, INCORPORATED (Exact name of registrant as specified in its charter) Maryland 52-0408290 (State or other jurisdiction of incorporation or organization) 24 Schilling Road, Suite 1, Hunt Valley, MD 21031 (Address of principal executive offices) (Zip Code) (I.R.S. Employer Identification No.) For the quarterly ...

[Company Overview and Fiscal Highlights](index=1&type=section&id=Company%20Overview%20and%20Fiscal%20Highlights) Penguin Solutions reported strong fiscal 2025 performance, achieving growth, GAAP profitability, and a new stock repurchase authorization [Fiscal 2025 & Q4 2025 Performance Highlights](index=1&type=section&id=Fiscal%202025%20Highlights) Penguin Solutions reported strong financial results for fiscal year 2025 and the fourth quarter, with significant growth in net sales and a turnaround from GAAP loss to profit, alongside a substantial increase in Non-GAAP EPS Fiscal Year 2025 Key Financial Highlights | Metric (FY25) | FY25 Value | FY24 Value | Change | | :------------ | :--------- | :--------- | :----- | | Net Sales | $1.37 billion | $1.17 billion | +17% | | GAAP EPS | $0.28 | ($0.85) | Up | | Non-GAAP EPS | $1.90 | $1.25 | +53% | Fourth Quarter Fiscal 2025 Key Financial Highlights | Metric (Q4 FY25) | Q4 FY25 Value | Q4 FY24 Value | Change | | :--------------- | :------------ | :------------ | :----- | | Net Sales | $338 million | $311 million | +9% | | GAAP Gross Margin | 28.6% | 28.0% | +60 bps | | Non-GAAP Gross Margin | 30.9% | 30.9% | Flat | | GAAP Diluted EPS | $0.11 | ($0.46) | Up | | Non-GAAP Diluted EPS | $0.43 | $0.37 | +16.2% | [CEO Commentary](index=1&type=section&id=CEO%20Commentary) CEO Mark Adams highlighted fiscal 2025 as a year of strong execution and significant progress in the company's transformation into an enterprise AI infrastructure solutions provider, emphasizing momentum in core businesses and emerging leadership in AI implementations - CEO Mark Adams stated that **Fiscal 2025** was a year of strong execution and meaningful progress in the company's transformation from a holding company structure to an enterprise AI infrastructure solutions company[3](index=3&type=chunk) - The results highlight momentum in core businesses and Penguin Solutions' position as an **emerging leader** in designing, building, deploying, and managing enterprise AI implementations[3](index=3&type=chunk) [Common Stock Repurchase Authorization](index=1&type=section&id=Common%20Stock%20Repurchase%20Authorization) The Audit Committee approved a new $75 million common stock repurchase authorization, bringing the total over four years to $225 million, allowing for flexible repurchases without an expiration date - On October 6, 2025, the Audit Committee of the Board of Directors approved a **$75 million** common stock repurchase authorization[3](index=3&type=chunk) - This new authorization brings total stock repurchase authorizations over the last four years to **$225 million**[3](index=3&type=chunk) - The stock repurchase authorization has no expiration date, may be suspended or terminated by the Audit Committee at any time, and does not obligate the Company to acquire any amount of common stock[3](index=3&type=chunk) [Detailed Financial Results](index=2&type=section&id=Detailed%20Financial%20Results) Penguin Solutions' annual and quarterly financial results detail net sales, profitability, and EPS across GAAP and Non-GAAP measures [Annual Financial Results (GAAP & Non-GAAP)](index=2&type=section&id=Annual%20Financial%20Results) Penguin Solutions reported significant annual growth in net sales and profitability for fiscal year 2025, driven by strong performance in Advanced Computing and Integrated Memory segments, with a notable shift from GAAP net loss to net income Annual Financial Results (in thousands, except per share amounts) | Metric | FY25 GAAP | FY24 GAAP | FY25 Non-GAAP | FY24 Non-GAAP | | :-------------------------------- | :-------- | :-------- | :------------ | :------------ | | **Net Sales:** | | | | | | Advanced Computing | $648,417 | $554,552 | $648,417 | $554,552 | | Integrated Memory | $464,249 | $356,426 | $464,249 | $356,426 | | Optimized LED | $256,128 | $259,818 | $256,128 | $259,818 | | Total net sales | $1,368,794| $1,170,796| $1,368,794 | $1,170,796 | | Gross profit | $394,274 | $340,776 | $424,600 | $373,981 | | Operating income | $58,135 | $18,295 | $167,652 | $120,257 | | Net income (loss) attributable to Penguin Solutions | $25,391 | ($44,324) | $120,325 | $66,907 | | Diluted earnings (loss) per share | $0.28 | ($0.85) | $1.90 | $1.25 | [Quarterly Financial Results (GAAP & Non-GAAP)](index=2&type=section&id=Quarterly%20Financial%20Results) In Q4 FY25, Penguin Solutions demonstrated sequential and year-over-year growth in net sales and improved profitability, particularly in the Integrated Memory segment, with both GAAP and Non-GAAP EPS showing positive trends Quarterly Financial Results (in thousands, except per share amounts) | Metric | Q4-25 GAAP | Q3-25 GAAP | Q4-24 GAAP | Q4-25 Non-GAAP | Q3-25 Non-GAAP | Q4-24 Non-GAAP | | :-------------------------------- | :--------- | :--------- | :--------- | :------------- | :------------- | :------------- | | **Net Sales:** | | | | | | | | Advanced Computing | $138,336 | $132,498 | $149,355 | $138,336 | $132,498 | $149,355 | | Integrated Memory | $132,159 | $130,124 | $95,832 | $132,159 | $130,124 | $95,832 | | Optimized LED | $67,427 | $61,629 | $65,961 | $67,427 | $61,629 | $65,961 | | Total net sales | $337,922 | $324,251 | $311,148 | $337,922 | $324,251 | $311,148 | | Gross profit | $96,731 | $95,083 | $87,086 | $104,317 | $102,753 | $96,007 | | Operating income (loss) | $12,448 | $9,843 | $8,791 | $39,170 | $38,474 | $33,739 | | Net income (loss) attributable to Penguin Solutions | $9,431 | $2,661 | ($24,547) | $28,843 | $31,128 | $20,007 | | Diluted earnings (loss) per share | $0.11 | ($0.01) | ($0.46) | $0.43 | $0.47 | $0.37 | [Business Outlook](index=3&type=section&id=Business%20Outlook) Penguin Solutions projects fiscal year 2026 financial performance, detailing net sales, gross margin, operating expenses, and diluted EPS, alongside Non-GAAP adjustments [Fiscal Year 2026 Business Outlook](index=3&type=section&id=Business%20Outlook) Penguin Solutions projects continued growth for fiscal year 2026, with anticipated net sales growth of 6% YoY and improved GAAP and Non-GAAP diluted EPS, alongside stable diluted shares Fiscal Year 2026 Financial Outlook | Metric (FY26 Outlook) | GAAP Outlook | Non-GAAP Outlook | | :-------------------- | :---------------- | :---------------- | | Net Sales | 6% YoY Growth +/-10% | 6% YoY Growth +/-10% | | Gross Margin | 27.5% +/- 1% | 29.5% +/- 1% | | Operating Expenses | $312 million +/- $10 million | $255 million +/- $10 million | | Diluted earnings per share | $0.89 +/- $0.25 | $2.00 +/- $0.25 | | Diluted shares | 55 million | 55 million | [Non-GAAP Adjustments for Outlook](index=3&type=section&id=Non-GAAP%20adjustments%20(in%20millions)) The fiscal year 2026 Non-GAAP outlook incorporates specific adjustments for stock-based compensation, amortization of acquisition-related intangibles, other adjustments, estimated income tax effects, and allocation of earnings to participating securities Non-GAAP Adjustments for FY26 Outlook (in millions) | Non-GAAP Adjustment | Amount | | :---------------------------------------------------------------- | :----- | | Stock-based compensation and amortization of acquisition-related intangibles included in cost of sales | $30 | | Stock-based compensation and amortization of acquisition-related intangibles included in R&D and SG&A | $49 | | Other adjustments | $8 | | Estimated income tax effects | ($19) | | Estimated effect of allocation of earnings to participating securities | ($7) | | Total | $61 | [Corporate Information and Disclosures](index=3&type=section&id=Corporate%20Information%20and%20Disclosures) This section details earnings call information, forward-looking statements, non-GAAP financial measures, U.S. domestication, and company overview [Earnings Conference Call and Webcast Details](index=3&type=section&id=Earnings%20Conference%20Call%20and%20Webcast%20Details) Penguin Solutions scheduled a conference call and webcast for October 7, 2025, to discuss Q4 and full year fiscal 2025 results, accessible via phone and the company's investor relations website - A conference call and webcast to discuss the fourth quarter and full year fiscal 2025 results was scheduled for **October 7, 2025**, at **1:30 p.m. Pacific Time (4:30 p.m. Eastern Time)**[10](index=10&type=chunk) - Interested parties could access the call by dialing **+1-833-470-1428** (United States) or **+1-404-975-4839** (international) using access code **561265**[10](index=10&type=chunk) - The earnings presentation and a live webcast were accessible from the Company's investor relations website (https://ir.penguinsolutions.com/investors/default.aspx) and would remain available for approximately one year[10](index=10&type=chunk) [Use of Forward-Looking Statements](index=3&type=section&id=Use%20of%20Forward-Looking%20Statements) This section outlines that the press release contains forward-looking statements, which are predictive and subject to significant risks and uncertainties, including global economic conditions, industry trends, and operational factors, cautioning investors against undue reliance - This press release contains forward-looking statements concerning future events, financial and operating performance, strategic transformation, business momentum, and the business and financial outlook for fiscal year 2026[11](index=11&type=chunk) - These statements are subject to a number of significant risks, uncertainties, and other factors, many of which are outside of the company's control, including global business and economic conditions, growth trends in technology industries (e.g., AI), geopolitical environment, and supply chain disruptions[12](index=12&type=chunk)[13](index=13&type=chunk) - Investors are cautioned not to place undue reliance on any forward-looking statements, and the company does not undertake to update them except as required by law[14](index=14&type=chunk) [Statement Regarding Use of Non-GAAP Financial Measures](index=4&type=section&id=Statement%20Regarding%20Use%20of%20Non-GAAP%20Financial%20Measures) Penguin Solutions uses non-GAAP financial measures to supplement GAAP results, excluding items like stock-based compensation and acquisition-related amortization, to provide investors with a clearer view of core operating performance, while emphasizing that these measures are not substitutes for GAAP - Penguin Solutions' management uses non-GAAP measures (e.g., non-GAAP gross profit, operating income, diluted earnings per share) to supplement GAAP financial results, believing this supplemental information is useful to investors in analyzing and assessing the Company's past and future operating performance[15](index=15&type=chunk) - These non-GAAP measures exclude certain items such as stock-based compensation expense, amortization of acquisition-related intangible assets, cost of sales-related restructuring, diligence, acquisition and integration expense, redomiciliation costs, and impairment of goodwill[15](index=15&type=chunk) - The long-term projected non-GAAP effective tax rate was reduced from **28% to 25%** in Q3 FY25 due to changes in geographic earnings mix, and further to **22%** for fiscal 2026 as a result of the U.S. Domestication[17](index=17&type=chunk) [Explanatory Note on U.S. Domestication](index=5&type=section&id=Explanatory%20Note) The company completed its redomiciliation from the Cayman Islands to Delaware on June 30, 2025, making Penguin Solutions, Inc., a Delaware corporation, the new publicly traded parent company, with shareholders exchanging Cayman shares for Delaware stock - On **June 30, 2025**, Penguin Solutions completed the redomiciliation of its parent company, Penguin Solutions (Cayman), Inc., from the Cayman Islands to the State of Delaware in the United States[19](index=19&type=chunk) - Penguin Solutions, Inc., a Delaware corporation, became the publicly traded parent company (the 'U.S. Domestication'), succeeding Penguin Solutions Cayman[19](index=19&type=chunk) - Each ordinary share of Penguin Solutions Cayman was exchanged for one share of common stock of Penguin Solutions Delaware, and each convertible preferred share for one share of convertible preferred stock[19](index=19&type=chunk) [About Penguin Solutions](index=6&type=section&id=About%20Penguin%20Solutions) Penguin Solutions assists customers in adopting advanced technological advancements across its core business lines: Advanced Computing, Integrated Memory, and Optimized LED, leveraging expertise and partnerships to address complex challenges - Penguin Solutions supports customers in achieving their ambitions across its Advanced Computing, Integrated Memory, and Optimized LED lines of business[21](index=21&type=chunk) - The company utilizes its expert skills, experience, and partnerships to transform customers' most complex challenges into compelling opportunities[21](index=21&type=chunk) [Unaudited Consolidated Financial Statements](index=7&type=section&id=Unaudited%20Consolidated%20Financial%20Statements) Penguin Solutions' unaudited consolidated financial statements include operations, balance sheets, cash flows, and GAAP to Non-GAAP reconciliations [Consolidated Statements of Operations](index=7&type=section&id=Consolidated%20Statements%20of%20Operations) The Consolidated Statements of Operations show Penguin Solutions' revenue, cost of sales, operating expenses, and net income (loss) for the three months and year ended August 29, 2025, and August 30, 2024, highlighting the shift from a net loss to net income year-over-year Consolidated Statements of Operations (in thousands, except per share amounts) | Metric | Q4 FY25 | Q3 FY25 | Q4 FY24 | FY25 | FY24 | | :------------------------------------- | :------ | :------ | :------ | :--- | :--- | | Total net sales | $337,922| $324,251| $311,148| $1,368,794| $1,170,796| | Gross profit | $96,731 | $95,083 | $87,086 | $394,274| $340,776| | Total operating expenses | $84,283 | $85,240 | $78,295 | $336,139| $322,481| | Operating income | $12,448 | $9,843 | $8,791 | $58,135 | $18,295 | | Net income (loss) attributable to Penguin Solutions | $9,431 | $2,661 | ($24,547)| $25,391 | ($52,472)| | Diluted earnings (loss) per share | $0.11 | ($0.01) | ($0.46) | $0.28 | ($1.00) | [Reconciliation of GAAP to Non-GAAP Measures](index=8&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Measures) This section provides detailed reconciliations between GAAP and Non-GAAP financial measures for gross profit, operating expenses, operating income, net income, diluted EPS, and Adjusted EBITDA, highlighting the impact of various adjustments such as stock-based compensation and acquisition-related intangibles Reconciliation of GAAP to Non-GAAP Operating Metrics (in thousands, except percentages) | Metric | Q4 FY25 GAAP | Q4 FY25 Non-GAAP | FY25 GAAP | FY25 Non-GAAP | | :--------------------------------- | :----------- | :--------------- | :-------- | :------------ | | Gross Profit | $96,731 | $104,317 | $394,274 | $424,600 | | Gross Margin | 28.6% | 30.9% | 28.8% | 31.0% | | Operating Expenses | $84,283 | $65,147 | $336,139 | $256,948 | | Operating Income | $12,448 | $39,170 | $58,135 | $167,652 | Reconciliation of GAAP to Non-GAAP Net Income, EPS, and Adjusted EBITDA (in thousands, except per share amounts) | Metric | Q4 FY25 GAAP | Q4 FY25 Non-GAAP | FY25 GAAP | FY25 Non-GAAP | | :--------------------------------------- | :----------- | :--------------- | :-------- | :------------ | | Net income (loss) attributable to Penguin Solutions | $9,431 | $28,843 | $25,391 | $120,325 | | Diluted earnings (loss) per share | $0.11 | $0.43 | $0.28 | $1.90 | | Adjusted EBITDA | $43,419 | N/A | $186,565 | N/A | [Consolidated Balance Sheets](index=10&type=section&id=Consolidated%20Balance%20Sheets) The Consolidated Balance Sheets present the company's financial position as of August 29, 2025, and August 30, 2024, showing increases in total assets, cash, and accounts receivable, alongside a decrease in long-term debt and the introduction of preferred stock Consolidated Balance Sheet Highlights (in thousands) | Metric | August 29, 2025 | August 30, 2024 | | :------------- | :-------------- | :-------------- | | Total current assets | $1,064,227 | $867,704 | | Total assets | $1,617,200 | $1,474,506 | | Total current liabilities | $473,899 | $327,596 | | Long-term debt | $441,893 | $657,347 | | Total liabilities | $1,008,973 | $1,075,298 | | Preferred stock | $202,710 | — | | Total stockholders' equity | $405,517 | $399,208 | [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) The Consolidated Statements of Cash Flows detail the cash generated from or used in operating, investing, and financing activities for the reported periods, indicating a net increase in cash for FY25 despite a decrease in Q4, with significant debt repayments and stock repurchases Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Q4 FY25 | FY25 | FY24 | | :------------------------------------------------------ | :------ | :--- | :--- | | Net cash provided by (used for) operating activities | ($70,432) | $109,084 | $77,185 | | Net cash provided by (used for) investing activities | $22,367 | $24,973 | $107,585 | | Net cash used for financing activities | ($208,052) | ($63,464) | ($210,101) | | Net increase (decrease) in cash, cash equivalents and restricted cash | ($256,117) | $70,593 | ($26,587) | | Cash, cash equivalents and restricted cash at end of period | $454,070 | $454,070 | $383,477 |

[Executive Summary & Fiscal 2025 Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Fiscal%202025%20Highlights) [Company Overview & Strategic Direction](index=1&type=section&id=Company%20Overview%20%26%20Strategic%20Direction) Penguin Solutions is actively transforming from a holding company structure into an enterprise AI infrastructure solutions provider, demonstrating strong momentum in its core businesses and establishing itself as a leader in enterprise AI implementations - Penguin Solutions is transforming from a holding company structure to an enterprise AI infrastructure solutions company, demonstrating **momentum in core businesses** and emerging as a leader in designing, building, deploying, and managing enterprise AI implementations[3](index=3&type=chunk) [Fiscal Year 2025 Key Financial Highlights](index=1&type=section&id=Fiscal%20Year%202025%20Key%20Financial%20Highlights) For fiscal year 2025, Penguin Solutions reported a 17% increase in net sales, a significant improvement in GAAP diluted EPS from a loss to a profit, and a 53% rise in Non-GAAP diluted EPS. Gross margins saw a slight decrease | Metric | FY2025 | FY2024 | Change | | :----------------------- | :------- | :------- | :----- | | Net sales | $1.37 billion | $1.17 billion | Up 17% | | GAAP gross margin | 28.8% | 29.1% | Down 30 bps | | Non-GAAP gross margin | 31.0% | 31.9% | Down 90 bps | | GAAP diluted EPS | $0.28 | $(0.85) | Up from loss | | Non-GAAP diluted EPS | $1.90 | $1.25 | Up 53% | [Fourth Quarter Fiscal 2025 Key Financial Highlights](index=1&type=section&id=Fourth%20Quarter%20Fiscal%202025%20Key%20Financial%20Highlights) In Q4 fiscal 2025, net sales grew 9% year-over-year, GAAP gross margin improved by 60 basis points, and GAAP diluted EPS turned positive from a prior-year loss. Non-GAAP diluted EPS also increased | Metric | Q4-25 | Q4-24 | Change | | :----------------------- | :------ | :------ | :----- | | Net sales | $338 million | $311 million | Up 9% | | GAAP gross margin | 28.6% | 28.0% | Up 60 bps | | Non-GAAP gross margin | 30.9% | 30.9% | Flat | | GAAP diluted EPS | $0.11 | $(0.46) | Up from loss | | Non-GAAP diluted EPS | $0.43 | $0.37 | Up 16.2% | [Common Stock Repurchase Authorization](index=1&type=section&id=Common%20Stock%20Repurchase%20Authorization) The Audit Committee approved a new $75 million common stock repurchase authorization on October 6, 2025, bringing the total authorizations over the last four years to $225 million. The program has no expiration date and is discretionary - On October 6, 2025, the Audit Committee approved a **$75 million common stock repurchase authorization**, increasing total authorizations over the last four years to **$225 million**[3](index=3&type=chunk) - The stock repurchase authorization has no expiration date, may be suspended or terminated at any time, and does not obligate the Company to acquire any specific amount of common stock[3](index=3&type=chunk) [Detailed Financial Results](index=2&type=section&id=Detailed%20Financial%20Results) [Annual Financial Results (GAAP & Non-GAAP)](index=2&type=section&id=Annual%20Financial%20Results%20%28GAAP%20%26%20Non-GAAP%29) For fiscal year 2025, total net sales reached $1.37 billion (GAAP & Non-GAAP), a 17% increase from FY2024. Advanced Computing and Integrated Memory segments showed strong growth, while Optimized LED sales slightly decreased. Both GAAP and Non-GAAP net income and diluted EPS significantly improved from the prior year | Metric (in thousands) | FY25 (GAAP) | FY24 (GAAP) | FY25 (Non-GAAP) | FY24 (Non-GAAP) | | :-------------------- | :---------- | :---------- | :-------------- | :-------------- | | **Net sales:** | | | | | | Advanced Computing | $648,417 | $554,552 | $648,417 | $554,552 | | Integrated Memory | $464,249 | $356,426 | $464,249 | $356,426 | | Optimized LED | $256,128 | $259,818 | $256,128 | $259,818 | | **Total net sales** | **$1,368,794** | **$1,170,796** | **$1,368,794** | **$1,170,796** | | Gross profit | $394,274 | $340,776 | $424,600 | $373,981 | | Operating income | $58,135 | $18,295 | $167,652 | $120,257 | | Net income (loss) attributable to Penguin Solutions | $25,391 | $(44,324) | $120,325 | $66,907 | | Diluted earnings (loss) per share | $0.28 | $(0.85) | $1.90 | $1.25 | [Quarterly Financial Results (GAAP & Non-GAAP)](index=2&type=section&id=Quarterly%20Financial%20Results%20%28GAAP%20%26%20Non-GAAP%29) In Q4 fiscal 2025, total net sales were $337.9 million, an increase from $311.1 million in Q4 fiscal 2024. Integrated Memory showed significant year-over-year growth. Both GAAP and Non-GAAP net income and diluted EPS improved substantially compared to the prior year's fourth quarter | Metric (in thousands) | Q4-25 (GAAP) | Q4-24 (GAAP) | Q4-25 (Non-GAAP) | Q4-24 (Non-GAAP) | | :-------------------- | :----------- | :----------- | :--------------- | :--------------- | | **Net sales:** | | | | | | Advanced Computing | $138,336 | $149,355 | $138,336 | $149,355 | | Integrated Memory | $132,159 | $95,832 | $132,159 | $95,832 | | Optimized LED | $67,427 | $65,961 | $67,427 | $65,961 | | **Total net sales** | **$337,922** | **$311,148** | **$337,922** | **$311,148** | | Gross profit | $96,731 | $87,086 | $104,317 | $96,007 | | Operating income (loss) | $12,448 | $8,791 | $39,170 | $33,739 | | Net income (loss) attributable to Penguin Solutions | $9,431 | $(24,547) | $28,843 | $20,007 | | Diluted earnings (loss) per share | $0.11 | $(0.46) | $0.43 | $0.37 | [Business Outlook & Forward-Looking Information](index=3&type=section&id=Business%20Outlook%20%26%20Forward-Looking%20Information) [Fiscal Year 2026 Financial Outlook](index=3&type=section&id=Fiscal%20Year%202026%20Financial%20Outlook) For fiscal year 2026, Penguin Solutions projects 6% YoY net sales growth (with a +/-10% range), GAAP gross margin of 27.5% (+/-1%), and Non-GAAP gross margin of 29.5% (+/-1%). Diluted EPS is expected to be $0.89 (+/-$0.25) GAAP and $2.00 (+/-$0.25) Non-GAAP, based on 55 million diluted shares | Metric | GAAP Outlook (FY26) | Non-GAAP Outlook (FY26) | | :-------------------- | :-------------------- | :---------------------- | | Net sales YoY Growth | 6% +/-10% | 6% +/-10% | | Gross margin | 27.5% +/- 1% | 29.5% +/- 1% | | Operating expenses | $312 million +/- $10 million | $255 million +/- $10 million | | Diluted earnings per share | $0.89 +/- $0.25 | $2.00 +/- $0.25 | | Diluted shares | 55 million | 55 million | [Non-GAAP Adjustments for Outlook](index=3&type=section&id=Non-GAAP%20Adjustments%20for%20Outlook) The non-GAAP adjustments for the fiscal year 2026 outlook total $61 million, primarily comprising stock-based compensation, amortization of acquisition-related intangibles, and other adjustments, with estimated income tax and participating securities effects | Non-GAAP Adjustment (in millions) | Amount | | :-------------------------------------------------------------------- | :----- | | Stock-based compensation and amortization of acquisition-related intangibles (cost of sales) | $30 | | Stock-based compensation and amortization of acquisition-related intangibles (R&D and SG&A) | $49 | | Other adjustments | $8 | | Estimated income tax effects | $(19) | | Estimated effect of allocation of earnings to participating securities | $(7) | | **Total Adjustments** | **$61** | [Earnings Conference Call Details](index=3&type=section&id=Earnings%20Conference%20Call%20Details) Penguin Solutions hosted a conference call and webcast on October 7, 2025, at 1:30 p.m. Pacific Time to discuss its Q4 and full year fiscal 2025 results. Access details were provided for interested parties - Penguin Solutions held a conference call and webcast on **October 7, 2025**, at **1:30 p.m. Pacific Time** to discuss its fourth quarter and full year fiscal 2025 results[10](index=10&type=chunk) - Interested parties could access the call via dialing +1-833-470-1428 (US) or +1-404-975-4839 (international) using access code **561265**, or via the Company's investor relations website[10](index=10&type=chunk) [Use of Forward-Looking Statements](index=3&type=section&id=Use%20of%20Forward-Looking%20Statements) The press release contains forward-looking statements regarding future financial performance, strategic transformation, and business outlook, which are subject to significant risks and uncertainties, including global economic conditions, geopolitical environment, supply chain disruptions, and market trends. Investors are cautioned not to place undue reliance on these statements - This press release contains forward-looking statements concerning future financial and operating performance, strategic transformation, business momentum, and the fiscal year 2026 outlook[11](index=11&type=chunk) - These statements are subject to significant risks and uncertainties, including global business and economic conditions, geopolitical environment, supply chain disruptions, changes in trade regulations, and growth trends in technology industries (including AI)[12](index=12&type=chunk)[13](index=13&type=chunk) - Investors are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of the press release and are not updated unless required by law[14](index=14&type=chunk) [Statement Regarding Use of Non-GAAP Financial Measures](index=4&type=section&id=Statement%20Regarding%20Use%20of%20Non-GAAP%20Financial%20Measures) Penguin Solutions uses non-GAAP financial measures to supplement GAAP results, believing they provide useful supplemental information for analyzing core operating results and comparisons. These measures exclude items like stock-based compensation, amortization of acquisition-related intangibles, and restructuring charges. The long-term non-GAAP effective tax rate was reduced to 25% in Q3 FY25 and further to 22% for FY26 due to changes in geographic earnings mix and U.S. Domestication - Penguin Solutions uses non-GAAP measures to supplement GAAP financial results, believing they are useful for investors in analyzing past and future operating performance by excluding certain items[15](index=15&type=chunk) - Excluded items include stock-based compensation, amortization of acquisition-related intangible assets, cost of sales-related restructuring, diligence, acquisition and integration expense, redomiciliation costs, restructuring charges, impairment of goodwill, and other infrequent or unusual items[15](index=15&type=chunk) - The long-term projected non-GAAP effective tax rate was reduced from **28% to 25% in Q3 FY25** due to changes in geographic earnings mix, and further to **22% for FY26** as a result of the U.S. Domestication[17](index=17&type=chunk) [Explanatory Note on U.S. Domestication](index=5&type=section&id=Explanatory%20Note%20on%20U.S.%20Domestication) On June 30, 2025, Penguin Solutions completed its redomiciliation from the Cayman Islands to Delaware, making Penguin Solutions, Inc., a Delaware corporation, the new publicly traded parent company. This U.S. Domestication was approved by shareholders and involved exchanging Cayman Islands shares for Delaware common stock - Penguin Solutions completed its redomiciliation from the Cayman Islands to the State of Delaware on **June 30, 2025**, with Penguin Solutions, Inc., a Delaware corporation, becoming the publicly traded parent company[19](index=19&type=chunk) - The U.S. Domestication was approved by shareholders and involved exchanging ordinary shares of Penguin Solutions Cayman for common stock of Penguin Solutions Delaware[19](index=19&type=chunk) [About Penguin Solutions](index=6&type=section&id=About%20Penguin%20Solutions) [Company Description](index=6&type=section&id=Company%20Description) Penguin Solutions assists customers in adopting advanced technological advancements across its Advanced Computing, Integrated Memory, and Optimized LED business lines, leveraging expert skills and partnerships to convert complex challenges into opportunities - Penguin Solutions supports customers in achieving ambitions across its Advanced Computing, Integrated Memory, and Optimized LED lines of business[21](index=21&type=chunk) - The company leverages expert skills, experience, and partnerships to transform complex technological challenges into compelling opportunities[21](index=21&type=chunk) [Unaudited Consolidated Financial Statements](index=7&type=section&id=Unaudited%20Consolidated%20Financial%20Statements) [Consolidated Statements of Operations](index=7&type=section&id=Consolidated%20Statements%20of%20Operations) The consolidated statements of operations show a significant improvement in net income for both the fourth quarter and full fiscal year 2025 compared to the prior year, driven by increased net sales, particularly in Integrated Memory and Advanced Computing | Metric (in thousands) | Q4-25 | Q4-24 | FY25 | FY24 | | :------------------------------------ | :------ | :------ | :--------- | :--------- | | Total net sales | $337,922 | $311,148 | $1,368,794 | $1,170,796 | | Gross profit | $96,731 | $87,086 | $394,274 | $340,776 | | Operating income | $12,448 | $8,791 | $58,135 | $18,295 | | Net income (loss) attributable to Penguin Solutions | $9,431 | $(24,547) | $25,391 | $(52,472) | | Diluted earnings (loss) per share | $0.11 | $(0.46) | $0.28 | $(1.00) | [Reconciliation of GAAP to Non-GAAP Measures](index=8&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Measures) This section provides detailed reconciliations from GAAP to Non-GAAP figures for gross profit, operating expenses, operating income, net income, diluted EPS, and Adjusted EBITDA, highlighting the specific adjustments made for items like stock-based compensation, amortization of intangibles, and redomiciliation costs | Metric (in thousands) | Q4-25 GAAP | Q4-25 Non-GAAP | FY25 GAAP | FY25 Non-GAAP | | :------------------------------------ | :--------- | :----------- | :---------- | :------------ | | Gross profit | $96,731 | $104,317 | $394,274 | $424,600 | | Operating expenses | $84,283 | $65,147 | $336,139 | $256,948 | | Operating income | $12,448 | $39,170 | $58,135 | $167,652 | | Net income (loss) attributable to Penguin Solutions | $9,431 | $28,843 | $25,391 | $120,325 | | Diluted earnings (loss) per share | $0.11 | $0.43 | $0.28 | $1.90 | | Adjusted EBITDA | $43,419 | $43,419 | $186,565 | $186,565 | [Consolidated Balance Sheets](index=10&type=section&id=Consolidated%20Balance%20Sheets) As of August 29, 2025, Penguin Solutions reported an increase in total assets to $1.62 billion from $1.47 billion in FY2024, primarily driven by higher cash and cash equivalents, accounts receivable, and inventories. Total liabilities decreased, while total stockholders' equity increased | Metric (in thousands) | August 29, 2025 | August 30, 2024 | | :-------------------- | :-------------- | :-------------- | | Total current assets | $1,064,227 | $867,704 | | Total assets | $1,617,200 | $1,474,506 | | Total current liabilities | $473,899 | $327,596 | | Total liabilities | $1,008,973 | $1,075,298 | | Total stockholders' equity | $405,517 | $399,208 | [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For fiscal year 2025, net cash provided by operating activities from continuing operations was $113.18 million, a slight increase from FY2024. Net cash used for financing activities decreased significantly, while net cash provided by investing activities turned positive | Cash Flow Activity (in thousands) | FY25 | FY24 | | :------------------------------------------ | :--------- | :--------- | | Net cash provided by (used for) operating activities | $109,084 | $77,185 | | Net cash provided by (used for) investing activities | $24,973 | $107,585 | | Net cash used for financing activities | $(63,464) | $(210,101) | | Net increase (decrease) in cash, cash equivalents and restricted cash | $70,593 | $(26,587) | | Cash, cash equivalents and restricted cash at end of period | $454,070 | $383,477 | [Contact Information](index=13&type=section&id=Contact%20Information) [Investor and PR Contacts](index=13&type=section&id=Investor%20and%20PR%20Contacts) Contact information for Penguin Solutions' Investor Relations and Corporate Communications departments is provided for inquiries - Investor Relations contact: Suzanne Schmidt, **ir@penguinsolutions.com**, **+1-510-360-8596**[28](index=28&type=chunk) - PR Contact: Maureen O'Lea, **pr@penguinsolutions.com**, **+1-602-330-6846**[28](index=28&type=chunk)

[Executive Summary](index=1&type=section&id=Executive%20Summary) Saratoga Investment Corp. reported increased NAV and ROE, resolved a non-accrual investment, and achieved significant net originations, maintaining strong credit quality [Key Highlights](index=1&type=section&id=Key%20Highlights) Saratoga Investment Corp. reported a 3.6% increase in NAV and 0.4% increase in NAV per share from the previous quarter, achieving a quarterly ROE of 13.8% which surpassed the BDC industry average - NAV increased by **3.6%** from the previous quarter, and NAV per share increased by **0.4%**[1](index=1&type=chunk) - Quarterly Return on Equity (ROE) was **13.8%**, outperforming the BDC industry average of **7.3%**[1](index=1&type=chunk) - Zollege investment returned to accrual status, reducing non-accrual investments to **one**, representing only **0.2%** of the portfolio at fair value[1](index=1&type=chunk)[2](index=2&type=chunk) [CEO Commentary](index=1&type=section&id=CEO%20Commentary) The CEO highlighted continued NAV and NAV per share growth, strong ROE, and net originations of $22.4 million, focusing on prudent new commitments and high credit quality - Announced a base dividend of **$0.25 per share per month**, totaling **$0.75 per share** for Q3 fiscal 2026, representing a **12.3% yield**[3](index=3&type=chunk) - Net originations for the quarter were **$22.4 million**, with **$52.2 million** in new originations (three follow-ons and new BB/BBB structured credit securities)[2](index=2&type=chunk)[3](index=3&type=chunk) - Overall credit quality remained steady at **99.7%** of credits rated in the highest category, with only **one investment** (Pepper Palace) remaining on non-accrual status, representing **0.2%** of fair value[5](index=5&type=chunk) - The fair value of the portfolio increased by **$3.8 million** during the quarter, driven by **$3.9 million** net appreciation in the core non-CLO portfolio[4](index=4&type=chunk) [Financial Performance Overview](index=1&type=section&id=Financial%20Performance%20Overview) The company reported mixed financial results with sequential AUM and NAV growth, but decreased investment income and NII year-over-year, while maintaining strong ROE [Summary Financial Information](index=1&type=section&id=Summary%20Financial%20Information) The company's summary financial information for the fiscal second quarter 2026 shows an increase in NAV and NAV per share quarter-over-quarter, despite a decrease in total investment income and net investment income per share compared to both the previous quarter and the prior year Summary Financial Information (Q2 FY2026 vs. Q1 FY2026 vs. Q2 FY2025) | ($ in thousands, except per share) | August 31, 2025 | May 31, 2025 | August 31, 2024 | | :--------------------------------- | :-------------- | :----------- | :-------------- | | Assets Under Management (AUM) | 995,295 | 968,318 | 1,040,711 | | Net Asset Value (NAV) | 410,500 | 396,369 | 372,054 | | NAV per share | 25.61 | 25.52 | 27.07 | | Total Investment Income | 30,626 | 32,319 | 43,003 | | Net Investment Income (NII) per share | 0.58 | 0.66 | 1.33 | | Adjusted NII per share | 0.58 | 0.66 | 1.33 | | Earnings per share | 0.84 | 0.91 | 0.97 | | Dividends per share (declared) | 0.75 | 0.75 | 0.74 | | Return on Equity – annualized quarter | 13.8% | 14.1% | 14.4% | | Originations | 52,222 | 50,086 | 2,584 | | Repayments | 29,824 | 64,330 | 60,140 | [Discussion of Quarterly Financial Results](index=3&type=section&id=Discussion%20of%20Quarterly%20Financial%20Results) For the quarter ended August 31, 2025, AUM increased sequentially but decreased year-over-year, with total investment income and adjusted NII declining due to non-recurring interest income and lower base rates - AUM as of August 31, 2025, was **$995.3 million**, a **2.8% increase** from the previous quarter (**$968.3 million**) but a **4.4% decrease** from the prior year (**$1.041 billion**)[6](index=6&type=chunk) Total Investment Income Trends | Period | Amount ($ millions) | Change YoY | Change QoQ | | :----- | :------------------ | :--------- | :--------- | | Aug 31, 2025 | 30.6 | -28.8% | -5.2% | | May 31, 2025 | 32.3 | - | - | | Aug 31, 2024 | 43.0 | - | - | - Total investment income decrease was primarily due to non-recurrence of **$7.9 million** interest income from Knowland investment, base rate decreases, and lower AUM levels[7](index=7&type=chunk) Adjusted Net Investment Income (NII) Trends | Period | Amount ($ millions) | Change YoY | Change QoQ | | :----- | :------------------ | :--------- | :--------- | | Aug 31, 2025 | 9.1 | -50.1% | -10.5% | | May 31, 2025 | 10.1 | - | - | | Aug 31, 2024 | 18.2 | - | - | NAV and NAV per Share Trends | Metric | Aug 31, 2025 | May 31, 2025 | Aug 31, 2024 | | :----- | :----------- | :----------- | :----------- | | NAV ($ millions) | 410.5 | 396.4 | 372.1 | | NAV per share | 25.61 | 25.52 | 27.07 | Return on Equity (ROE) Trends | Metric | Aug 31, 2025 (LTM) | May 31, 2025 (LTM) | Aug 31, 2024 (LTM) | | :----- | :----------------- | :----------------- | :----------------- | | LTM ROE | 9.1% | 9.3% | 5.8% | | Annualized Qtr ROE | 13.8% | 14.1% | 14.4% | - Weighted average common shares outstanding increased to **15.8 million** for the quarter ended August 31, 2025, up from **15.3 million** last quarter and **13.7 million** last year[8](index=8&type=chunk) [Adjusted Net Investment Income (Non-GAAP) Reconciliation](index=16&type=section&id=Adjusted%20Net%20Investment%20Income%20(Non-GAAP)%20Reconciliation) The company provides adjusted net investment income (NII) as a non-GAAP measure, which for the three and six months ended August 31, 2025, was identical to GAAP NII due to no changes in accrued capital gains incentive fees Adjusted Net Investment Income Reconciliation (Three Months Ended August 31) | Metric | August 31, 2025 | August 31, 2024 | | :------------------------------------------ | :-------------- | :-------------- | | Net Investment Income | $9,080,733 | $18,197,398 | | Changes in accrued capital gains incentive fee | - | - | | Adjusted net investment income | $9,080,733 | $18,197,398 | | Net investment income yield | 9.0% | 19.7% | | Adjusted net investment income yield | 9.0% | 19.7% | | Net investment income per share | $0.58 | $1.33 | | Adjusted net investment income per share | $0.58 | $1.33 | Adjusted Net Investment Income Reconciliation (Six Months Ended August 31) | Metric | August 31, 2025 | August 31, 2024 | | :------------------------------------------ | :-------------- | :-------------- | | Net Investment Income | $19,222,765 | $32,532,403 | | Changes in accrued capital gains incentive fee | - | - | | Adjusted net investment income | $19,222,765 | $32,532,403 | | Net investment income yield | 9.6% | 17.6% | | Adjusted net investment income yield | 9.6% | 17.6% | | Net investment income per share | $1.24 | $2.37 | | Adjusted net investment income per share | $1.24 | $2.37 | [Portfolio and Investment Activity](index=5&type=section&id=Portfolio%20and%20Investment%20Activity) The company's portfolio fair value increased with new investments and repayments, maintaining a conservative composition primarily in first lien debt, with significant post-quarter origination activity [Quarterly Investment Activity](index=5&type=section&id=Quarterly%20Investment%20Activity) During the quarter ended August 31, 2025, Saratoga Investment's portfolio fair value was $995.3 million, with $52.2 million in new investments and $29.8 million in repayments, resulting in a net increase from appreciation - Fair value of the portfolio was **$995.3 million**, invested in **44 portfolio companies**, one CLO, one JV, and twenty BB/BBB CLO debt investments[9](index=9&type=chunk) - Cost of investments made during the quarter was **$52.2 million**, including three follow-on investments[9](index=9&type=chunk) - Principal repayments totaled **$29.8 million**, including two full and four partial repayments[9](index=9&type=chunk) - The fair value of the portfolio increased by **$3.8 million** due to net realized gains and unrealized appreciation, including **$3.9 million** net appreciation in the core non-CLO portfolio[9](index=9&type=chunk) - Since 2010, the company has generated **$1.29 billion** in repayments and sales, with a gross unlevered IRR of **14.9%** on **$2.34 billion** in total originations[9](index=9&type=chunk) [Portfolio Composition and Yield](index=5&type=section&id=Portfolio%20Composition%20and%20Yield) The portfolio is predominantly composed of first lien debt (84.3%), reflecting a conservative investment strategy, with an overall weighted average current yield of 10.4% Overall Portfolio Composition | Investment Type | Percentage of Portfolio | | :-------------- | :---------------------- | | First lien term loans | 84.3% | | Second lien term loans | 0.7% | | Unsecured term loans | 1.7% | | Structured finance securities | 5.4% | | Common equity | 7.9% | Weighted Average Current Yield by Investment Type | Investment Type | Weighted Average Current Yield | | :-------------- | :----------------------------- | | Overall Portfolio | 10.4% | | First lien term loans | 11.0% | | Second lien term loans | 16.9% | | Unsecured term loans | 10.5% | | Structured finance securities | 12.2% | | Equity interests | 0.0% | [Post-Quarter End Activity](index=6&type=section&id=Post-Quarter%20End%20Activity) Subsequent to quarter-end, Saratoga Investment has closed or is in the process of closing approximately $52.3 million in new originations, with an anticipated net increase in investments of $39.5 million after repayments - Subsequent to quarter-end, approximately **$52.3 million** in new originations (three new portfolio companies, two follow-ons) have closed or are in closing[10](index=10&type=chunk) - Two repayments totaling **$12.8 million** occurred post-quarter, resulting in a net anticipated increase in investments of approximately **$39.5 million**[10](index=10&type=chunk) [Liquidity and Capital Management](index=6&type=section&id=Liquidity%20and%20Capital%20Management) The company maintains a strong liquidity position with $70.0 million in outstanding credit facility borrowings, $170.0 million in SBA debentures, and $406.8 million in total undrawn borrowing capacity [Outstanding Borrowings](index=6&type=section&id=Outstanding%20Borrowings) As of August 31, 2025, Saratoga Investment had $70.0 million in outstanding combined borrowings under its revolving credit facilities, along with $170.0 million in SBA debentures and various listed and unlisted notes payable totaling $509.4 million - Combined outstanding borrowings under senior secured revolving credit facilities totaled **$70.0 million**[14](index=14&type=chunk) - SBA debentures outstanding amounted to **$131.0 million** for SBIC II and **$39.0 million** for SBIC III, totaling **$170.0 million**[14](index=14&type=chunk) - The company had **$269.4 million** of listed baby bonds and **$250.0 million** of unsecured unlisted institutional bond issuances outstanding[14](index=14&type=chunk) [Undrawn Borrowing Capacity](index=6&type=section&id=Undrawn%20Borrowing%20Capacity) Saratoga Investment maintained a strong liquidity position with $270.8 million in undrawn credit facility capacity and cash, plus an additional $136.0 million in undrawn SBA debentures, bringing the total undrawn borrowing capacity to $406.8 million - Total undrawn credit facility borrowing capacity and cash and cash equivalents was **$270.8 million** (**$70.0 million** from credit facilities + **$200.8 million** cash)[14](index=14&type=chunk) - An additional **$136.0 million** in undrawn SBA debentures was available from the existing SBIC III license[14](index=14&type=chunk) - Total Saratoga Investment undrawn borrowing capacity was **$406.8 million**[14](index=14&type=chunk) - The company had **$47.0 million** of committed undrawn lending commitments and **$49.2 million** of discretionary funding commitments[14](index=14&type=chunk) [Equity Distribution Agreement (ATM)](index=7&type=section&id=Equity%20Distribution%20Agreement%20(ATM)) Saratoga Investment has an active At-The-Market (ATM) equity distribution agreement, through which it sold 443,406 shares for gross proceeds of $11.4 million during the quarter ended August 31, 2025 - The company has an active ATM offering for up to **$300.0 million** of common stock[17](index=17&type=chunk) - During the three months ended August 31, 2025, **443,406 shares** were sold for gross proceeds of **$11.4 million** at an average price of **$25.86**[17](index=17&type=chunk) - As of August 31, 2025, a total of **8,532,953 shares** have been sold through the ATM for gross proceeds of **$225.7 million**[17](index=17&type=chunk) [Shareholder Returns](index=7&type=section&id=Shareholder%20Returns) Saratoga Investment declared a $0.75 per share quarterly dividend and maintained an active share repurchase plan, though no shares were bought back this quarter [Dividend Declaration and History](index=7&type=section&id=Dividend%20Declaration%20and%20History) Saratoga Investment declared a base quarterly dividend of $0.75 per share for the third quarter of fiscal 2026, payable in three monthly installments of $0.25 per share, with DRIP shares issued at a 5% discount - A base quarterly dividend of **$0.75 per share** was declared for Q3 fiscal 2026, consisting of three monthly **$0.25 per share** dividends[16](index=16&type=chunk) Q3 Fiscal 2026 Monthly Dividends | Month | Amount Per Share | Record Date | Payment Date | | :------------ | :--------------- | :---------- | :----------- | | September 2025 | $0.25 | October 7, 2025 | October 23, 2025 | | October 2025 | $0.25 | November 4, 2025 | November 20, 2025 | | November 2025 | $0.25 | December 2, 2025 | December 18, 2025 | - Shareholders can receive dividends in cash or common stock, with DRIP shares issued at a **5% discount** to the average market price[16](index=16&type=chunk) Dividend History (Fiscal Years 2023-2026) | Period (Fiscal Year ends Feb) | Base Dividend Per Share | Special Dividend Per Share | Total Dividend Per Share | | :---------------------------- | :---------------------- | :------------------------- | :----------------------- | | Full Year Fiscal 2026 (Projected) | $2.25 | - | $2.25 | | Full Year Fiscal 2025 | $2.96 | $0.35 | $3.31 | | Full Year Fiscal 2024 | $2.86 | - | $2.86 | | Full Year Fiscal 2023 | $2.44 | - | $2.44 | [Share Repurchase Plan](index=8&type=section&id=Share%20Repurchase%20Plan) The company's Share Repurchase Plan, extended to January 15, 2026, allows for repurchases of up to 1.7 million shares, with 1,035,203 shares purchased to date, though none in the current quarter - The Share Repurchase Plan was extended to January 15, 2026, allowing repurchases of up to **1.7 million shares**[20](index=20&type=chunk) - As of August 31, 2025, **1,035,203 shares** have been purchased at an average price of **$22.05**, totaling approximately **$22.8 million**[19](index=19&type=chunk) - No shares were purchased under the plan during the three and six months ended August 31, 2025[19](index=19&type=chunk) [Company Information and Disclosures](index=9&type=section&id=Company%20Information%20and%20Disclosures) Saratoga Investment Corp. is a BDC providing financing to middle-market businesses, with details on investor communications, forward-looking statement disclaimers, and contact information [About Saratoga Investment Corp.](index=9&type=section&id=About%20Saratoga%20Investment%20Corp.) Saratoga Investment Corp. is a specialty finance company regulated as a Business Development Company (BDC), providing customized financing solutions to U.S. middle-market businesses, and managing CLO and JV funds - Saratoga Investment Corp. is a specialty finance company regulated as a Business Development Company (BDC)[22](index=22&type=chunk) - The company provides customized financing solutions to U.S. middle-market businesses, primarily investing in senior and unitranche leveraged loans and mezzanine debt[22](index=22&type=chunk) - It manages a **$650 million** collateralized loan obligation (CLO) fund and co-manages a joint venture (JV) fund that owns a **$400 million** CLO fund[22](index=22&type=chunk) [Conference Call/Webcast Information](index=9&type=section&id=Conference%20Call%2FWebcast%20Information) A live webcast and conference call for the fiscal second quarter 2026 financial results were scheduled for October 8, 2025, at 10:00 a.m. ET, with replay availability on the company's investor relations website - Fiscal Second Quarter 2026 conference call/webcast was scheduled for October 8, 2025, at 10:00 a.m. Eastern Time[23](index=23&type=chunk) - Access to the live webcast and presentation was available via the 'Events & Presentations' section of Saratoga Investment Corp.'s investor relations website[23](index=23&type=chunk) [Forward-Looking Statements](index=10&type=section&id=Forward-Looking%20Statements) The press release contains forward-looking statements subject to various risks and uncertainties, including market changes, economic downturns, and interest rate volatility, with no duty to update except as required by law - Forward-looking statements are based on beliefs, assumptions, and expectations, and are not guarantees of future performance[24](index=24&type=chunk) - Risks and uncertainties include changes in markets, financial conditions, economic downturns, interest rate volatility, trade policies, supply chain constraints, labor shortages, and inflation[24](index=24&type=chunk) - The company undertakes no duty to update forward-looking statements, and readers are encouraged to review SEC filings for a complete discussion of risks[25](index=25&type=chunk) [Contacts](index=10&type=section&id=Contacts) Contact information for Saratoga Investment Corporation's Chief Financial Officer, Henri Steenkamp, and investor relations representatives from The Equity Group Inc., Lena Cati and Val Ferraro, is provided - Henri Steenkamp, Chief Financial Officer, can be reached at 212-906-7800[26](index=26&type=chunk) - Lena Cati and Val Ferraro from The Equity Group Inc. are listed as investor relations contacts[26](index=26&type=chunk) [Consolidated Financial Statements](index=11&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements show an increase in total assets and net assets, despite a decrease in investment income, driven by positive net realized and unrealized gains [Consolidated Statements of Assets and Liabilities](index=11&type=section&id=Consolidated%20Statements%20of%20Assets%20and%20Liabilities) As of August 31, 2025, total assets increased to $1,206.2 million from $1,191.5 million at February 28, 2025, primarily driven by an increase in total investments at fair value, leading to an increase in total net assets to $410.5 million Key Balance Sheet Figures | Metric | August 31, 2025 ($) | February 28, 2025 ($) | | :-------------------------------- | :------------------ | :-------------------- | | Total investments at fair value | 995,295,010 | 978,077,750 | | Cash and cash equivalents | 105,660,178 | 148,218,491 | | Total assets | 1,206,211,434 | 1,191,543,857 | | Revolving credit facilities | 70,000,000 | 52,500,000 | | SBA debentures payable | 170,000,000 | 170,000,000 | | Total liabilities | 795,711,866 | 798,878,389 | | Total net assets | 410,499,568 | 392,665,468 | | NET ASSET VALUE PER SHARE | 25.61 | 25.86 | | Asset Coverage Ratio | 166.6% | 162.9% | [Consolidated Statements of Operations (Three Months)](index=13&type=section&id=Consolidated%20Statements%20of%20Operations%20(Three%20Months)) For the three months ended August 31, 2025, total investment income decreased significantly to $30.6 million from $43.0 million in the prior year, but positive net realized and unrealized gains resulted in a net increase in net assets from operations of $13.3 million Key Income Statement Figures (Three Months Ended August 31) | Metric | 2025 ($) | 2024 ($) | | :------------------------------------------ | :------- | :------- | | Total investment income | 30,625,756 | 43,003,375 | | Total operating expenses | 21,545,023 | 24,805,977 | | NET INVESTMENT INCOME | 9,080,733 | 18,197,398 | | Net realized and unrealized gain (loss) on investments | 4,204,402 | (4,879,759) | | NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | 13,285,135 | 13,317,639 | | WEIGHTED AVERAGE - BASIC AND DILUTED EARNINGS (LOSS) PER COMMON SHARE | 0.84 | 0.97 | | WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC AND DILUTED | 15,775,387 | 13,726,142 | [Consolidated Statements of Operations (Six Months)](index=15&type=section&id=Consolidated%20Statements%20of%20Operations%20(Six%20Months)) For the six months ended August 31, 2025, total investment income decreased to $62.9 million from $81.7 million in the prior year, but a positive net realized and unrealized gain led to a net increase in net assets from operations of $27.2 million Key Income Statement Figures (Six Months Ended August 31) | Metric | 2025 ($) | 2024 ($) | | :------------------------------------------ | :------- | :------- | | Total investment income | 62,944,373 | 81,681,525 | | Total operating expenses | 43,721,608 | 49,149,122 | | NET INVESTMENT INCOME | 19,222,765 | 32,532,403 | | Net realized and unrealized gain (loss) on investments | 7,994,633 | (12,604,326) | | NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | 27,217,398 | 19,928,077 | | WEIGHTED AVERAGE - BASIC AND DILUTED EARNINGS (LOSS) PER COMMON SHARE | 1.75 | 1.45 | | WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC AND DILUTED | 15,560,114 | 13,704,759 |

[FORM 8-K Filing Details](index=1&type=section&id=FORM%208-K%20Filing%20Details) This section details the foundational information of the Form 8-K filing, including registrant identity and securities specifics [General Information](index=1&type=section&id=General%20Information) This section provides foundational details of the Form 8-K filing, including registrant identity, jurisdiction, and securities information - The report is a Current Report on Form 8-K, filed under Section 13 or 15(d) of The Securities Exchange Act of 1934[2](index=2&type=chunk) Registrant and Filing Details | Detail | Value | | :--- | :--- | | **Registrant Name** | ImmuCell Corporation | | **Date of Report** | October 7, 2025 | | **State of Incorporation** | Delaware | | **Commission File Number** | 001-12934 | | **IRS Employer Identification No.** | 01-0382980 | | **Registrant's Telephone Number** | 207-878-2770 | | **Title of Class** | Common Stock, $0.10 par value per share | | **Trading Symbol** | ICCC | | **Exchange Registered On** | The Nasdaq Capital Market | - The registrant is **not an emerging growth company** and has not elected the extended transition period for new accounting standards[4](index=4&type=chunk) [Reported Events](index=3&type=section&id=Reported%20Events) This section details the specific events reported in the Form 8-K, including financial results and required exhibits [Item 2.02. Results of Operations and Financial Condition](index=3&type=section&id=Item%202.02.%20Results%20of%20Operations%20and%20Financial%20Condition) ImmuCell Corporation announced preliminary, unaudited product sales for Q3 2025 via press release, furnished but not filed for liability - ImmuCell Corporation issued a press release on October 7, 2025, announcing preliminary, unaudited product sales for the quarter ended September 30, 2025[5](index=5&type=chunk) - The full text of the press release is attached as **Exhibit 99.1** to this Current Report on Form 8-K[5](index=5&type=chunk) - Information under Item 2.02 is **furnished, not filed**, limiting liability under Section 18 of the Securities Exchange Act of 1934[6](index=6&type=chunk) [Item 9.01. Financial Statements and Exhibits](index=3&type=section&id=Item%209.01.%20Financial%20Statements%20and%20Exhibits) This section lists exhibits furnished with the Form 8-K filing, including the press release and interactive data file Exhibits Furnished | Exhibit No. | Description | | :--- | :--- | | 99.1 | Press Release of the Company dated October 7, 2025 | | 104 | Cover page Interactive Data File (embedded within the Inline XBRL document) | - Exhibits related to Item 2.02 are **furnished, not filed**[7](index=7&type=chunk) [Signatures and Exhibit Index](index=4&type=section&id=Signatures%20and%20Exhibit%20Index) This section includes the official signatures for the report and a comprehensive index of all attached exhibits [SIGNATURE](index=4&type=section&id=SIGNATURE) The report is duly signed by authorized officers of ImmuCell Corporation, affirming compliance with Exchange Act requirements - The report was signed on **October 7, 2025**, by Michael F. Brigham (President, CEO, PFO) and Timothy C. Fiori (CFO)[9](index=9&type=chunk)[10](index=10&type=chunk)[11](index=11&type=chunk) [Exhibit Index](index=5&type=section&id=Exhibit%20Index) This section provides a final, consolidated list of all exhibits included in the Form 8-K filing for easy reference Consolidated Exhibit List | Exhibit No. | Description | | :--- | :--- | | 99.1 | Press Release of the Company dated October 7, 2025 | | 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |

[Filing Information](index=1&type=section&id=Filing%20Information) This section provides essential details about the registrant, Golub Capital BDC, Inc., including its incorporation, executive offices, and securities trading information [Registrant Information](index=1&type=section&id=Registrant%20Information) This section identifies Golub Capital BDC, Inc. as the registrant, a Delaware corporation, and provides its principal executive offices address and telephone number - Registrant: **Golub Capital BDC, Inc.**[1](index=1&type=chunk) - Jurisdiction of Incorporation: **Delaware**[1](index=1&type=chunk) - Principal Executive Offices: **200 Park Avenue, 25th Floor, New York, NY 10166**[1](index=1&type=chunk) [Securities Information](index=1&type=section&id=Securities%20Information) The registrant's Common Stock is traded on The Nasdaq Global Select Market under the symbol GBDC, and the company is not an emerging growth company Common Stock Listing Details | Title of each class | Trading Symbol | Name of each exchange on which registered | | :------------------------------ | :------------- | :---------------------------------------- | | Common Stock, par value $0.001 per share | GBDC | The Nasdaq Global Select Market | - The registrant is not an emerging growth company[3](index=3&type=chunk) [Current Report Items](index=3&type=section&id=Current%20Report%20Items) This section details the announcement of financial results and lists the exhibits accompanying the Form 8-K filing [Item 2.02. Results of Operations and Financial Condition](index=3&type=section&id=Item%202.02.%20Results%20of%20Operations%20and%20Financial%20Condition) Golub Capital BDC, Inc. announced it will release financial results for the quarter and year ended September 30, 2025, on November 18, 2025, after market close, with a press release furnished as Exhibit 99.1 - Golub Capital BDC, Inc. will release financial results for the quarter and year ended September 30, 2025, on **Tuesday, November 18, 2025**, after the close of financial markets[4](index=4&type=chunk) - A press release (Exhibit 99.1) announcing the financial results release is attached[4](index=4&type=chunk) - The information in Item 2.02 and Exhibit 99.1 is furnished and not deemed 'filed' under Section 18 of the Securities Exchange Act of 1934[5](index=5&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, including the press release regarding financial results and the Cover Page Interactive Data File List of Exhibits | Exhibit Number | Description | | :------------- | :--------------------------------------------------------- | | 99.1 | Press release of Golub Capital BDC, Inc., dated as of October 7, 2025 | | 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | [SIGNATURES](index=4&type=section&id=SIGNATURES) The report was duly signed on behalf of Golub Capital BDC, Inc. by Christopher C. Ericson, Chief Financial Officer, on October 7, 2025 - The report was signed by **Christopher C. Ericson, Chief Financial Officer**[10](index=10&type=chunk) - Date of signature: **October 7, 2025**[10](index=10&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended August 31, 2025 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No. 814-00732 SARATOGA INVESTMENT CORP. (Exact name of registrant as specified in its charter) | Maryland | 20-8700615 | | --- | --- | | (State or other jurisdiction of | (I.R.S. Employe ...

PART I. FINANCIAL INFORMATION This section presents the company's unaudited condensed interim financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures [Item 1. Condensed Interim Financial Statements](index=4&type=section&id=Item%201.%20Condensed%20Interim%20Financial%20Statements) This section presents Legato Merger Corp. III's unaudited condensed financial statements, including balance sheets, statements of operations, equity changes, cash flows, and comprehensive notes [Condensed Balance Sheets](index=4&type=section&id=Condensed%20Balance%20Sheets) This section presents the company's condensed balance sheets as of August 31, 2025, and November 30, 2024 | Metric | August 31, 2025 (unaudited) | November 30, 2024 | | :--------------------------------------- | :-------------------------- | :------------------ | | Total assets | $217,966,099 | $211,914,067 | | Investments held in Trust Account | $216,806,288 | $210,061,362 | | Cash | $1,078,756 | $1,625,752 | | Total liabilities | $7,043,750 | $7,043,750 | | Ordinary shares subject to possible redemption | $216,711,289 | $209,966,362 | | Accumulated deficit | $(5,789,508) | $(5,096,613) | [Condensed Statements of Operations](index=5&type=section&id=Condensed%20Statements%20of%20Operations) This section presents the company's condensed statements of operations for the three and nine months ended August 31, 2025, and 2024 | Metric | Three Months Ended Aug 31, 2025 | Three Months Ended Aug 31, 2024 | Nine Months Ended Aug 31, 2025 | Nine Months Ended Aug 31, 2024 | | :--------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | General and administrative costs | $269,064 | $284,948 | $744,740 | $506,106 | | Income from Investments held in Trust Account | $2,260,109 | $2,842,357 | $6,744,927 | $6,255,687 | | Interest income on cash accounts | $8,340 | $16,083 | $51,845 | $36,247 | | Net income | $1,999,385 | $2,573,492 | $6,052,032 | $5,785,828 | | Basic and diluted net income per share, Public Shares | $0.08 | $0.10 | $0.23 | $0.22 | [Condensed Statements of Changes in Shareholders' (Deficit) Equity](index=6&type=section&id=Condensed%20Statements%20of%20Changes%20in%20Shareholders'%20Deficit%20Equity) This section presents the company's condensed statements of changes in shareholders' deficit equity | Metric | August 31, 2025 (unaudited) | November 30, 2024 | | :--------------------------------------- | :-------------------------- | :------------------ | | Balance at period end (Shareholders' Deficit) | $(5,788,940) | $(5,096,045) | | Net income (9 months ended Aug 31, 2025) | $6,052,032 | N/A | | Ordinary shares - accretion redemption value (9 months ended Aug 31, 2025) | $(6,744,927) | N/A | [Condensed Statements of Cash Flows](index=8&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) This section presents the company's condensed statements of cash flows for the nine months ended August 31, 2025, and 2024 | Metric | Nine Months Ended Aug 31, 2025 | Nine Months Ended Aug 31, 2024 | | :--------------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(546,996) | $(727,064) | | Cash deposited into trust account | $0 | $(201,250,000) | | Net cash provided by financing activities | $0 | $203,715,244 | | Cash at end of period | $1,078,756 | $1,738,180 | [Notes to Unaudited Condensed Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Financial%20Statements) This section provides detailed notes explaining the company's organization, accounting policies, and specific financial instrument treatments [Note 1 — Organization and Plan of Business Operations](index=9&type=section&id=Note%201%20%E2%80%94%20Organization%20and%20Plan%20of%20Business%20Operations) This note details the company's incorporation, IPO, trust account setup, liquidity, and going concern considerations - Legato Merger Corp. III was incorporated on November 6, 2023, as an exempted company in the Cayman Islands, with the primary objective of acquiring one or more businesses through a Business Combination[21](index=21&type=chunk) - The Company consummated its Initial Public Offering (IPO) on February 8, 2024, raising gross proceeds of **$201,250,000** from **20,125,000 units**, and simultaneously completed a private placement of **555,625 units** for **$5,556,250**[24](index=24&type=chunk)[25](index=25&type=chunk) - Following the IPO, **$201,250,000** was placed in a Trust Account, invested in U.S. government securities or money market funds, to be used for a Business Combination or redemption of public shares[27](index=27&type=chunk) - As of August 31, 2025, the Company had **$1,078,756** in cash outside the Trust Account and working capital of **$1,159,811**[34](index=34&type=chunk) - Management has determined that the liquidity conditions and the mandatory liquidation date (February 8, 2026, or May 8, 2026, if an LOI is executed) raise substantial doubt about the Company's ability to continue as a going concern[37](index=37&type=chunk) [Note 2 — Summary of Significant Accounting Policies](index=12&type=section&id=Note%202%20%E2%80%94%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the company's accounting principles, including U.S. GAAP compliance, emerging growth company status, and fair value measurements - The unaudited condensed financial statements are prepared in accordance with U.S. GAAP and SEC rules for interim financial information, with certain disclosures condensed or omitted[38](index=38&type=chunk)[39](index=39&type=chunk) - The Company is an "emerging growth company" and has elected not to opt out of the extended transition period for complying with new or revised financial accounting standards[41](index=41&type=chunk)[42](index=42&type=chunk) - Investments held in the Trust Account are classified as trading securities and presented at fair value, with gains and losses included in income from investments[46](index=46&type=chunk) - Ordinary shares subject to possible redemption are classified outside of permanent equity as redeemable, with accretion from initial book value to redemption amount recognized[47](index=47&type=chunk) - No income taxation is imposed by the government of the Cayman Islands, and thus income taxes are not reflected in the financial statements[53](index=53&type=chunk) [Note 3 — Initial Public Offering](index=18&type=section&id=Note%203%20%E2%80%94%20Initial%20Public%20Offering) This note details the terms and proceeds of the company's Initial Public Offering on February 8, 2024 - On February 8, 2024, the Company sold **20,125,000 units** in its Initial Public Offering at **$10.00 per unit**[65](index=65&type=chunk) - Each unit consisted of one ordinary share and one-half of one redeemable warrant, with each whole warrant exercisable at **$11.50 per share**[65](index=65&type=chunk) [Note 4 — Private Placement](index=18&type=section&id=Note%204%20%E2%80%94%20Private%20Placement) This note describes the private placement of units conducted simultaneously with the Initial Public Offering - Simultaneously with the IPO, **555,625 Private Units** were purchased by Insiders and underwriters at **$10.00 per unit**, generating **$5,556,250**[66](index=66&type=chunk) - Proceeds from the Private Units were added to the Trust Account[66](index=66&type=chunk) [Note 5 — Related Party Transactions](index=18&type=section&id=Note%205%20%E2%80%94%20Related%20Party%20Transactions) This note discloses transactions with related parties, including founder shares, administrative fees, and loans from the Chief SPAC Officer - The Company issued **5,031,250 Founder Shares** for **$25,000**, with no shares subject to forfeiture after the underwriters' over-allotment option was fully exercised[67](index=67&type=chunk) - An administrative service fee of **$20,000 per month** is paid to Crescendo Advisors II, LLC, an affiliate, for office space and administrative support[69](index=69&type=chunk) Administrative Service Fee

[FORM 10-Q Filing Information](index=1&type=section&id=FORM%2010-Q%20Filing%20Information) This section details the filing specifics of the Quarterly Report on Form 10-Q, including the reporting period and outstanding shares - Constellation Brands, Inc. filed its Quarterly Report on Form 10-Q for the period ended **August 31, 2025**[2](index=2&type=chunk) - As of **September 30, 2025**, there were **175,013,336 shares of Class A Common Stock** and **27,167 shares of Class 1 Common Stock** outstanding[6](index=6&type=chunk) - The registrant is classified as a **Large Accelerated Filer**[4](index=4&type=chunk) [Defined Terms](index=3&type=section&id=DEFINED%20TERMS) This section provides definitions for key terms and abbreviations used throughout the Form 10-Q, including financial measures, company initiatives (e.g., 2025 Restructuring Initiative, Wine Divestitures), and operational concepts (e.g., Depletions, DTC) [Part I – Financial Information](index=7&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This part presents the company's unaudited consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Financial Statements](index=7&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements, including balance sheets, statements of comprehensive income (loss), statements of changes in stockholders' equity, and statements of cash flows, along with detailed notes explaining the basis of presentation, significant transactions, and accounting policies [Consolidated Balance Sheets](index=7&type=section&id=Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's assets, liabilities, and equity at specific points in time, highlighting key changes Consolidated Balance Sheet Highlights (in millions) | Item | August 31, 2025 | February 28, 2025 | Change | | :--------------------------------------- | :---------------- | :------------------ | :------- | | Total assets | $21,419.4 | $21,652.3 | $(232.9) | | Total liabilities | $13,633.1 | $14,517.5 | $(884.4) | | Total stockholders' equity | $7,786.3 | $7,134.8 | $651.5 | - Current assets decreased from **$3,716.4 million** to **$2,878.9 million**, primarily due to the divestiture of assets held for sale (from **$913.5 million** to **$0**)[19](index=19&type=chunk) - Property, plant, and equipment, net, increased from **$7,409.8 million** to **$8,002.2 million**[19](index=19&type=chunk) [Consolidated Statements of Comprehensive Income (Loss)](index=8&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) This section details the company's financial performance over periods, including net sales, operating income, and net income Consolidated Statements of Comprehensive Income (Loss) Highlights (in millions, except per share data) | Item | Six Months Ended Aug 31, 2025 | Six Months Ended Aug 31, 2024 | Three Months Ended Aug 31, 2025 | Three Months Ended Aug 31, 2024 | | :--------------------------------------- | :---------------------------- | :---------------------------- | :------------------------------ | :------------------------------ | | Net sales | $4,996.0 | $5,580.7 | $2,481.0 | $2,918.9 | | Operating income (loss) | $1,587.8 | $(287.8) | $874.0 | $(1,229.4) | | Net income (loss) attributable to CBI | $982.1 | $(322.0) | $466.0 | $(1,199.0) | | Diluted net income (loss) per common share attributable to CBI | $5.55 | $(1.77) | $2.65 | $(6.59) | - Operating income and net income attributable to CBI significantly improved year-over-year, primarily due to the absence of a **$2,250.0 million goodwill impairment charge** recorded in the prior year (Six Months and Three Months Ended August 31, 2024)[22](index=22&type=chunk) - Net sales decreased by **10.5%** for the six months and **15.0%** for the three months ended August 31, 2025, compared to the prior year[22](index=22&type=chunk) [Consolidated Statements of Changes in Stockholders' Equity](index=9&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) This section outlines the changes in the company's equity accounts, including impacts from net income, share repurchases, and dividends Changes in Stockholders' Equity (in millions) | Item | Balance at Feb 28, 2025 | Balance at Aug 31, 2025 | Change | | :--------------------------------------- | :---------------------- | :---------------------- | :------- | | Total CBI stockholders' equity | $6,882.0 | $7,500.4 | $618.4 | | Noncontrolling interests | $252.8 | $285.9 | $33.1 | | Total stockholders' equity | $7,134.8 | $7,786.3 | $651.5 | - The increase in total stockholders' equity was driven by net income of **$982.1 million** and positive other comprehensive income, partially offset by **$604.0 million** in share repurchases and **$360.0 million** in dividends declared during the six months ended August 31, 2025[25](index=25&type=chunk) [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section reports the cash generated and used by operating, investing, and financing activities over specific periods Consolidated Statements of Cash Flows (Six Months Ended August 31, in millions) | Activity | 2025 | 2024 | Change | | :--------------------------------------- | :-------- | :-------- | :-------- | | Net cash provided by (used in) operating activities | $1,489.3 | $1,872.3 | $(383.0) | | Net cash provided by (used in) investing activities | $464.8 | $(857.6) | $1,322.4 | | Net cash provided by (used in) financing activities | $(1,953.1)| $(1,104.0)| $(849.1) | | Net increase (decrease) in cash and cash equivalents | $3.9 | $(87.8) | $91.7 | - Net cash provided by operating activities decreased by **$383.0 million**, largely due to changes in operating assets and liabilities, despite higher net income[30](index=30&type=chunk)[226](index=226&type=chunk) - Investing activities shifted from a net use of cash to a net provision of cash, primarily driven by **$851.1 million** in proceeds from the sale of businesses (2025 Wine Divestitures) and reduced capital expenditures[30](index=30&type=chunk)[227](index=227&type=chunk) - Financing activities used significantly more cash, primarily due to increased principal payments of long-term debt (**$902.1 million**) and purchases of treasury stock (**$604.0 million**)[32](index=32&type=chunk)[228](index=228&type=chunk) [Notes to Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the consolidated financial statements [1. Basis of Presentation](index=13&type=section&id=1.%20Basis%20of%20Presentation) This note describes the accounting principles and conventions used in preparing the interim financial statements - The financial statements are unaudited and prepared in accordance with SEC rules for quarterly reporting, reflecting all necessary normal recurring adjustments[33](index=33&type=chunk) - Interim results are not necessarily indicative of annual results[33](index=33&type=chunk) [2. Acquisitions and Divestitures](index=13&type=section&id=2.%20Acquisitions%20and%20Divestitures) This note details significant business acquisitions and divestitures, including their financial impacts and proceeds - Acquired Sea Smoke, a luxury wine business, for **$158.7 million** in **June 2024**, including goodwill, inventory, and a trademark[34](index=34&type=chunk) - Completed 2025 Wine Divestitures on **June 2, 2025**, selling mainstream wine brands for **$846.5 million** in net cash proceeds, resulting in a **$15.7 million loss on sale**. Proceeds were used for debt repayment[35](index=35&type=chunk) - Sold the SVEDKA brand and related assets on **January 6, 2025**, with proceeds used for general corporate purposes, including share repurchases, capital expenditures, and debt repayment[36](index=36&type=chunk) Assets Held for Sale (February 28, 2025, in millions) | Asset Category | Amount | | :--------------------------------------- | :----- | | Inventories | $788.7 | | Property, plant, and equipment | $474.4 | | Intangible assets | $127.9 | | Less: Asset impairment | $(478.0)| | **Total Assets held for sale** | **$913.5**| [3. Restructuring](index=14&type=section&id=3.%20Restructuring) This note outlines the company's restructuring initiatives, including estimated costs and expected savings - The 2025 Restructuring Initiative is an enterprise-wide cost savings and restructuring effort expected to be largely completed within **Fiscal 2026**[39](index=39&type=chunk) - Estimated cumulative pre-tax costs for the initiative are **$80 million to $100 million**, with net annualized cost savings expected to be fully realized by **Fiscal 2028**, exceeding **$200 million**[39](index=39&type=chunk)[142](index=142&type=chunk) Pre-tax Restructuring Costs Incurred (in millions) | Item | Six Months Ended Aug 31, 2025 | Three Months Ended Aug 31, 2025 | | :--------------------------------------- | :---------------------------- | :------------------------------ | | Consulting services | $21.5 | $8.2 | | Other costs | $0.1 | $0.1 | | **Total** | **$21.6** | **$8.3** | Cumulative Pre-tax Restructuring Costs (as of August 31, 2025, in millions) | Item | Amount | Percent of Total Costs | | :--------------------------------------- | :----- | :--------------------- | | Employee termination | $46.9 | 66% | | Consulting services | $24.3 | 34% | | Other costs | $0.1 | 0% | | **Total** | **$71.3**| **100%** | [4. Inventories](index=15&type=section&id=4.%20Inventories) This note provides details on the composition and valuation methods of the company's inventory - Inventories are stated at the lower of cost (primarily FIFO method) or net realizable value[43](index=43&type=chunk) Inventories (in millions) | Category | August 31, 2025 | February 28, 2025 | | :--------------------------------------- | :---------------- | :------------------ | | Raw materials and supplies | $216.2 | $230.2 | | In-process inventories | $499.4 | $540.9 | | Finished case goods | $724.1 | $666.1 | | **Total Inventories** | **$1,439.7** | **$1,437.2** | [5. Prepaid Expenses and Other](index=15&type=section&id=5.%20Prepaid%20Expenses%20and%20Other) This note details the components of prepaid expenses and other current assets Prepaid Expenses and Other (in millions) | Category | August 31, 2025 | February 28, 2025 | | :--------------------------------------- | :---------------- | :------------------ | | Value added taxes receivable | $278.4 | $241.3 | | Prepaid excise and sales taxes | $157.1 | $150.4 | | Derivative assets | $131.1 | $67.2 | | Prepaid advertising | $30.5 | $16.6 | | Prepaid insurance | $22.0 | $9.7 | | Other | $80.5 | $75.9 | | **Total** | **$699.6** | **$561.1** | - Total prepaid expenses and other increased by **$138.5 million**, primarily driven by a **$63.9 million** increase in derivative assets and a **$37.1 million** increase in value added taxes receivable[44](index=44&type=chunk) [6. Derivative Instruments](index=15&type=section&id=6.%20Derivative%20Instruments) This note describes the company's use of derivative instruments for managing market risks and their notional values - The company uses derivative instruments (foreign currency, commodity, net investment hedges) to manage market risks and reduce volatility, not for trading or speculative purposes[255](index=255&type=chunk) Aggregate Notional Value of Outstanding Derivative Instruments (in millions) | Type | August 31, 2025 | February 28, 2025 | | :--------------------------------------- | :---------------- | :------------------ | | Foreign currency contracts (hedging) | $2,776.6 | $2,843.6 | | Pre-issuance hedge contracts (hedging) | $0 | $275.0 | | Net investment hedge contracts (hedging) | $145.5 | $0 | | Foreign currency contracts (non-hedging) | $487.2 | $378.2 | | Commodity derivative contracts (non-hedging)| $327.1 | $322.1 | - In **April 2025**, cross-currency swaps were entered into and designated as net investment hedges to protect against foreign currency exchange rate fluctuations in non-U.S. operations[48](index=48&type=chunk) - The company expects **$66.4 million** of net gains (net of income tax effect) from cash flow hedges to be reclassified from AOCI to results of operations within the next **12 months**[54](index=54&type=chunk) [7. Fair Value of Financial Instruments](index=18&type=section&id=7.%20Fair%20Value%20of%20Financial%20Instruments) This note explains the fair value hierarchy and provides fair value measurements for financial instruments - Fair value measurements are categorized into a three-level hierarchy: **Level 1** (quoted prices in active markets), **Level 2** (observable inputs), and **Level 3** (unobservable inputs). Derivative instruments are primarily **Level 2**[56](index=56&type=chunk)[57](index=57&type=chunk)[58](index=58&type=chunk) Long-term Debt Carrying Amount vs. Fair Value (in millions) | Date | Carrying Amount | Estimated Fair Value | | :--------------------------------------- | :---------------- | :------------------- | | August 31, 2025 | $10,292.4 | $9,677.9 | | February 28, 2025 | $10,691.0 | $9,999.0 | - For the six months ended August 31, 2025, total losses from nonrecurring fair value measurements were **$53.6 million**, including **$52.1 million** for assets held for sale and related net assets, and **$1.5 million** for equity method investments[64](index=64&type=chunk) - A **$2,250.0 million goodwill impairment** was recognized in the Wine and Spirits reporting unit for the six months ended August 31, 2024, due to negative market trends[64](index=64&type=chunk)[66](index=66&type=chunk)[67](index=67&type=chunk) [8. Goodwill](index=21&type=section&id=8.%20Goodwill) This note details the carrying amount of goodwill by segment and any impairment charges recognized Goodwill Carrying Amount by Segment (in millions) | Segment | February 29, 2024 | February 28, 2025 | August 31, 2025 | | :--------------------------------------- | :---------------- | :---------------- | :---------------- | | Beer | $5,238.2 | $5,126.8 | $5,179.3 | | Wine and Spirits | $2,742.1 | $0 | $0 | | **Consolidated** | **$7,980.3** | **$5,126.8** | **$5,179.3** | - The Wine and Spirits segment's goodwill was written down to **zero** in **Fiscal 2025** due to goodwill impairments resulting from negative trends in the U.S. wholesale market and declines in mainstream and premium wine brands[71](index=71&type=chunk) - Goodwill for the Beer segment increased by **$52.5 million** due to foreign currency translation adjustments[70](index=70&type=chunk) [9. Intangible Assets](index=22&type=section&id=9.%20Intangible%20Assets) This note provides a breakdown of amortizable and nonamortizable intangible assets Intangible Assets (Net Carrying Amount, in millions) | Category | August 31, 2025 | February 28, 2025 | | :--------------------------------------- | :---------------- | :------------------ | | Amortizable intangible assets | $14.5 | $15.2 | | Nonamortizable intangible assets (Trademarks)| $2,518.9 | $2,517.1 | | **Total intangible assets** | **$2,533.4** | **$2,532.3** | - Trademarks constitute the vast majority of nonamortizable intangible assets[72](index=72&type=chunk) - No costs were incurred to renew or extend the term of acquired intangible assets during the reported periods[72](index=72&type=chunk) [10. Other Assets](index=22&type=section&id=10.%20Other%20Assets) This note details the various components categorized as other assets, including equity method investments and derivative assets Other Assets (in millions) | Category | August 31, 2025 | February 28, 2025 | | :--------------------------------------- | :---------------- | :------------------ | | Operating lease right-of-use asset | $606.3 | $545.7 | | Income taxes receivable | $153.3 | $135.5 | | Equity method investments | $124.8 | $124.5 | | Derivative assets | $113.6 | $41.6 | | Other investments in debt and equity securities | $62.5 | $60.3 | | Exchangeable Shares | $21.2 | $21.2 | | Other | $155.5 | $132.9 | | **Total** | **$1,237.2** | **$1,061.7** | - Total other assets increased by **$175.5 million**, primarily due to increases in operating lease right-of-use assets and derivative assets[73](index=73&type=chunk) - Certain equity method investments and Exchangeable Shares were evaluated for impairment and written down due to business underperformance and declining share prices, respectively[69](index=69&type=chunk)[75](index=75&type=chunk)[77](index=77&type=chunk) - A net gain of **$83.3 million** was recognized in connection with Exchangeable Shares for the six months ended August 31, 2024, following the conversion of Canopy common shares[77](index=77&type=chunk)[152](index=152&type=chunk) [11. Borrowings](index=23&type=section&id=11.%20Borrowings) This note provides information on the company's short-term and long-term debt, including refinancing activities Borrowings (in millions) | Category | August 31, 2025 | February 28, 2025 | | :--------------------------------------- | :---------------- | :------------------ | | Short-term borrowings | $252.5 | $806.7 | | Long-term debt (including current maturities)| $10,292.4 | $10,691.0 | | **Total Borrowings** | **$10,544.9** | **$11,497.7** | - Total debt outstanding decreased by **$952.8 million** from February 28, 2025, to August 31, 2025[229](index=229&type=chunk) - The company refinanced its **$2.25 billion** revolving credit facility (2025 Credit Agreement) and entered into a new **$500.0 million** delayed draw term loan facility (2025 Term Credit Agreement) in **April and May 2025**, respectively[79](index=79&type=chunk)[80](index=80&type=chunk)[231](index=231&type=chunk)[232](index=232&type=chunk) - Repaid **$900.0 million** in senior notes (**4.75% December 2015** and **5.00% February 2023**) using proceeds from the 2025 Wine Divestitures and cash on hand, while issuing **$500.0 million** of new **4.80% May 2025 Senior Notes**[84](index=84&type=chunk)[86](index=86&type=chunk)[233](index=233&type=chunk)[234](index=234&type=chunk) - Remaining borrowing capacity under the revolving credit facility was **$1,986.0 million** as of **August 31, 2025**[238](index=238&type=chunk) [12. Income Taxes](index=25&type=section&id=12.%20Income%20Taxes) This note explains the effective tax rates and significant factors influencing the company's income tax provision Effective Tax Rate | Period | August 31, 2025 | August 31, 2024 | | :--------------------------------------- | :---------------- | :---------------- | | Six Months Ended | 27.6% (expense) | 30.0% (benefit) | | Three Months Ended | 37.9% (expense) | 11.4% (benefit) | - The effective tax rate for the six and three months ended August 31, 2025, was higher than the federal statutory rate of **21%**, largely due to changes in valuation allowances, tax legislation updates, partially offset by benefits from prior tax examinations and lower foreign effective tax rates[89](index=89&type=chunk) - The OB3 Act, signed into law on **July 4, 2025**, is expected to have a negative impact on the **Fiscal 2026** effective tax rate, primarily due to changes in the limitation on interest expense deductibility[92](index=92&type=chunk)[93](index=93&type=chunk) - The company expects its reported effective tax rate for **Fiscal 2026** to be in the range of **17% to 19%**, inclusive of the OB3 Act and Pillar Two impacts[217](index=217&type=chunk) [13. Stockholders' Equity](index=26&type=section&id=13.%20Stockholders%27%20Equity) This note details changes in stockholders' equity, including share repurchase programs and dividends - In **April 2025**, the Board of Directors authorized a new **$4.0 billion** share repurchase program (2025 Authorization) expiring in **February 2028**[99](index=99&type=chunk)[246](index=246&type=chunk) Share Repurchases under 2025 Authorization (Six Months Ended August 31, 2025) | Item | Dollar Value of Shares Repurchased (millions) | Number of Shares Repurchased | | :--------------------------------------- | :---------------------------- | :--------------------------- | | Class A Stock | $604.0 | 3,375,602 | - As of **August 31, 2025**, **$3,396.0 million** remains available for future share repurchases under the 2025 Authorization[100](index=100&type=chunk)[246](index=246&type=chunk) [14. Net Income (Loss) Per Common Share Attributable to CBI](index=28&type=section&id=14.%20Net%20Income%20%28Loss%29%20Per%20Common%20Share%20Attributable%20to%20CBI) This note presents the calculation of basic and diluted net income (loss) per common share attributable to CBI Net Income (Loss) Per Common Share Attributable to CBI (in millions, except per share data) | Item | Six Months Ended Aug 31, 2025 | Six Months Ended Aug 31, 2024 | Three Months Ended Aug 31, 2025 | Three Months Ended Aug 31, 2024 | | :--------------------------------------- | :---------------------------- | :---------------------------- | :------------------------------ | :------------------------------ | | Net income (loss) attributable to CBI | $982.1 | $(322.0) | $466.0 | $(1,199.0) | | Weighted average common shares outstanding – diluted | 176.957 | 182.356 | 175.938 | 181.947 | | Net income (loss) per common share attributable to CBI – diluted | $5.55 | $(1.77) | $2.65 | $(6.59) | - Diluted EPS significantly improved from a loss of **$(1.77)** to a gain of **$5.55** for the six months ended August 31, 2025, reflecting the turnaround in net income[101](index=101&type=chunk) [15. Comprehensive Income (Loss) Attributable to CBI](index=28&type=section&id=15.%20Comprehensive%20Income%20%28Loss%29%20Attributable%20to%20CBI) This note provides a breakdown of comprehensive income (loss) and accumulated other comprehensive income (loss) Comprehensive Income (Loss) Attributable to CBI (in millions) | Period | August 31, 2025 | August 31, 2024 | | :--------------------------------------- | :---------------- | :---------------- | | Six Months Ended | $1,552.5 | $(1,125.8) | | Three Months Ended | $685.7 | $(1,993.8) | - The significant positive shift in comprehensive income for **2025** periods was largely driven by net income and positive foreign currency translation adjustments, contrasting with substantial losses in the prior year[102](index=102&type=chunk)[105](index=105&type=chunk) Accumulated Other Comprehensive Income (Loss), Net of Tax Effect (in millions) | Component | February 28, 2025 | August 31, 2025 | | :--------------------------------------- | :---------------- | :---------------- | | Foreign Currency Translation Adjustments | $(683.8) | $(275.5) | | Unrealized Net Gain (Loss) on Derivative Instruments | $21.8 | $185.1 | | Pension/Postretirement Adjustments | $(0.4) | $(0.5) | | Share of OCI of Equity Method Investments| $(0.3) | $(1.4) | | **Total Accumulated Other Comprehensive Income (Loss)** | **$(662.7)** | **$(92.3)** | [16. Business Segment Information](index=31&type=section&id=16.%20Business%20Segment%20Information) This note presents financial data disaggregated by the company's operating segments: Beer, Wine and Spirits, and Corporate Operations - The company reports operating results in three segments: **Beer**, **Wine and Spirits**, and **Corporate Operations and Other**[108](index=108&type=chunk)[130](index=130&type=chunk) Net Sales by Segment (Six Months Ended August 31, in millions) | Segment | 2026 | 2025 | Change ($) | Change (%) | | :--------------------------------------- | :-------- | :-------- | :--------- | :--------- | | Beer | $4,579.5 | $4,803.0 | $(223.5) | -4.6% | | Wine and Spirits | $416.5 | $777.7 | $(361.2) | -46.4% | | **Consolidated** | **$4,996.0**| **$5,580.7**| **$(584.7)** | **-10.5%** | Comparable Operating Income (Loss) by Segment (Six Months Ended August 31, in millions) | Segment | 2026 | 2025 | Change ($) | Change (%) | | :--------------------------------------- | :-------- | :-------- | :--------- | :--------- | | Beer | $1,825.0 | $2,000.7 | $(175.7) | -8.8% | | Wine and Spirits | $(25.8) | $130.2 | $(156.0) | -119.8% | | Corporate Operations and Other | $(103.1) | $(117.1) | $14.0 | 12.0% | | **Consolidated** | **$1,696.1**| **$2,013.8**| **$(317.7)** | **-15.8%** | - Beer segment net sales decreased due to shipment volume decline, partially offset by favorable pricing. Gross profit was impacted by increased cost of product sold, including tariffs on aluminum cans and unfavorable fixed cost absorption, but partially mitigated by efficiency initiatives[198](index=198&type=chunk)[202](index=202&type=chunk) - Wine and Spirits net sales and operating income significantly decreased due to the **2025 Wine Divestitures** and organic declines from unfavorable product mix, shipment volume, and lower contractual distributor payments[201](index=201&type=chunk)[204](index=204&type=chunk) [17. Accounting Guidance Not Yet Adopted](index=35&type=section&id=17.%20Accounting%20Guidance%20Not%20Yet%20Adopted) This note discusses new accounting standards issued by FASB that have not yet been adopted by the company - New FASB standards on income tax disclosures (effective **FY2026**) and disaggregation of income statement expenses (effective **FY2028**) are expected to impact disclosures but not materially affect financial condition, results of operations, or cash flows[119](index=119&type=chunk)[120](index=120&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=36&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides a detailed analysis of the company's business, strategy, financial condition, cash flows, and results of operations for the three and six months ended August 31, 2025, highlighting key performance drivers, comparable adjustments, and segment-specific trends [Introduction](index=36&type=section&id=Introduction) This introduction outlines the purpose and scope of the Management's Discussion and Analysis section - This MD&A provides additional information on the company's businesses, current developments, financial condition, cash flows, and results of operations, to be read in conjunction with the Financial Statements and **2025 Annual Report**[124](index=124&type=chunk) [Overview](index=36&type=section&id=Overview) This section provides a high-level summary of the company's business, market position, and strategic repositioning efforts - Constellation Brands is an international producer and marketer of beer, wine, and spirits, a **top growth contributor** in the U.S. beverage alcohol market, and the **1 dollar share gainer** in the high-end and overall U.S. beer market[128](index=128&type=chunk) - The company's wine and spirits business has been repositioned to a portfolio of exclusively **higher-end brands** to align with consumer-led premiumization trends, aiming for **higher growth and margins**[129](index=129&type=chunk) - A **$2,250.0 million goodwill impairment** was recorded in the Wine and Spirits segment for the Second Quarter and Six Months **2025** (prior year) due to negative trends in the U.S. wholesale market[131](index=131&type=chunk) [Strategy](index=37&type=section&id=Strategy) This section details the company's strategic vision, segment-specific objectives, and key initiatives like restructuring and divestitures - The strategic vision focuses on consumer-led decision making, talent development, infrastructure investment, and fiscal management to deliver **industry-leading total stockholder returns**[132](index=132&type=chunk)[133](index=133&type=chunk) - The Beer segment strategy aims to uphold leadership in the U.S. high-end beer market, increase distribution, optimize growth through differentiated brand positioning, and invest in modular capacity additions (Mexico Beer Projects)[135](index=135&type=chunk) - The Wine and Spirits segment strategy focuses on driving growth and improving margins beyond **Fiscal 2026** with higher-end brands, expanding into international markets, DTC channels, and 3-tier eCommerce[136](index=136&type=chunk) - The 2025 Restructuring Initiative is expected to yield **over $200 million** in net annualized cost savings by **Fiscal 2028**, with **$71.3 million** in cumulative pre-tax costs incurred since inception[142](index=142&type=chunk) - Significant divestitures include the **2025 Wine Divestitures** (**$846.5 million** proceeds) and SVEDKA Divestiture, while acquisitions include Sea Smoke (**$158.7 million**)[144](index=144&type=chunk)[145](index=145&type=chunk)[148](index=148&type=chunk) - The company recognized an **$83.3 million net gain** from Exchangeable Shares in Six Months **2025** (prior year) but subsequently impaired them to **$21.2 million** due to declining share price[152](index=152&type=chunk)[153](index=153&type=chunk) [Results of Operations](index=40&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, including net sales, operating income, and net income trends [Financial Highlights](index=40&type=section&id=Financial%20Highlights) This section summarizes key financial performance metrics and their period-over-period changes - Net sales decreased **15%** for Q2 FY26 and **10%** for Six Months FY26, primarily due to the Wine and Spirits Divestitures and lower Beer net sales[156](index=156&type=chunk)[159](index=159&type=chunk) - Operating income increased **171%** for Q2 FY26 and **652%** for Six Months FY26, largely due to the absence of the prior year's Wine and Spirits goodwill impairment and successful efficiency initiatives in the Beer segment[157](index=157&type=chunk)[160](index=160&type=chunk) - Net income attributable to CBI and diluted EPS increased significantly (**139-414%**) for both periods, driven by the operating income improvements, partially offset by income tax provisions and prior year's gain on Exchangeable Shares[158](index=158&type=chunk)[161](index=161&type=chunk) [Comparable Adjustments](index=41&type=section&id=Comparable%20Adjustments) This section explains adjustments made to reported financial results to provide a clearer view of core operational performance - Comparable Adjustments are excluded from segment operating results to reflect core operations and evaluate segment management performance[162](index=162&type=chunk) Total Comparable Adjustments, Operating Income (Loss) (in millions) | Period | August 31, 2025 | August 31, 2024 | | :--------------------------------------- | :---------------- | :---------------- | | Six Months Ended | $(108.3) | $(2,301.6) | | Three Months Ended | $(12.2) | $(2,319.2) | - Key adjustments for Six Months FY26 included **$21.6 million** for the 2025 Restructuring Initiative, **$16.3 million loss on sale of business**, and **$52.1 million** for asset impairment and related expenses[163](index=163&type=chunk)[165](index=165&type=chunk) - The prior year's comparable adjustments were dominated by a **$2,250.0 million goodwill impairment**[163](index=163&type=chunk)[165](index=165&type=chunk) [Business Segments](index=43&type=section&id=Business%20Segments) This section provides a detailed analysis of the financial performance of each operating segment [Second Quarter 2026 compared to Second Quarter 2025](index=43&type=section&id=Second%20Quarter%202026%20compared%20to%20Second%20Quarter%202025) This section compares the financial results of the Beer and Wine and Spirits segments for the second quarter Net Sales by Segment (Three Months Ended August 31, in millions) | Segment | 2026 | 2025 | Change ($) | Change (%) | | :--------------------------------------- | :-------- | :-------- | :--------- | :--------- | | Beer | $2,345.0 | $2,530.2 | $(185.2) | -7% | | Wine and Spirits | $136.0 | $388.7 | $(252.7) | -65% | | **Consolidated** | **$2,481.0**| **$2,918.9**| **$(437.9)** | **-15%** | - Beer net sales decreased **7%** due to a **$219.3 million** decline in shipment volume, partially offset by **$40.6 million** from favorable pricing. Shipments trailed depletions as distributors rebalanced inventory[177](index=177&type=chunk) - Wine and Spirits net sales decreased **65%**, with **$220.5 million** from divestitures and a **$32.2 million** organic decrease driven by unfavorable product mix, shipment volume decline, and lower contractual distributor payments[179](index=179&type=chunk) - Consolidated gross profit margin increased to **52.8%** from **51.8%**, driven by comparable adjustments, divestitures of lower-margin brands, and Beer pricing, despite higher Beer cost of product sold (tariffs on aluminum cans, fixed cost absorption)[180](index=180&type=chunk)[184](index=184&type=chunk) - Consolidated operating income increased **$2,103.4 million** (**+171%**) to **$874.0 million**, primarily due to the absence of the prior year's goodwill impairment[190](index=190&type=chunk) [Six Months 2026 compared to Six Months 2025](index=47&type=section&id=Six%20Months%202026%20compared%20to%20Six%20Months%202025) This section compares the financial results of the Beer and Wine and Spirits segments for the six-month period Net Sales by Segment (Six Months Ended August 31, in millions) | Segment | 2026 | 2025 | Change ($) | Change (%) | | :--------------------------------------- | :-------- | :-------- | :--------- | :--------- | | Beer | $4,579.5 | $4,803.0 | $(223.5) | -5% | | Wine and Spirits | $416.5 | $777.7 | $(361.2) | -46% | | **Consolidated** | **$4,996.0**| **$5,580.7**| **$(584.7)** | **-10%** | - Beer net sales decreased **5%** due to a **$295.1 million** decline in shipment volume and **$14.0 million** unfavorable product mix, partially offset by **$85.6 million** from favorable pricing[198](index=198&type=chunk) - Wine and Spirits net sales decreased **46%**, with **$256.5 million** from divestitures and a **$104.7 million** organic decrease driven by shipment volume decline, unfavorable pricing, lower contractual distributor payments, and unfavorable product mix[201](index=201&type=chunk) - Consolidated gross profit margin decreased to **51.6%** from **52.2%**, primarily due to higher cost of product sold in both Beer (tariffs on aluminum cans, fixed cost absorption) and Wine & Spirits segments[202](index=202&type=chunk)[204](index=204&type=chunk)[205](index=205&type=chunk) - Consolidated operating income increased **$1,875.6 million** (**+652%**) to **$1,587.8 million**, primarily due to the absence of the prior year's goodwill impairment[211](index=211&type=chunk) [Liquidity and Capital Resources](index=51&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's cash flow, debt levels, and strategies for managing liquidity and capital - Cash flow from operating activities is the primary source of liquidity, enabling investments, capital expenditures, dividends, and share repurchases[220](index=220&type=chunk) Net Cash Flow Summary (Six Months Ended August 31, in millions) | Activity | 2026 | 2025 | Change ($) | | :--------------------------------------- | :-------- | :-------- | :--------- | | Operating activities | $1,489.3 | $1,872.3 | $(383.0) | | Investing activities | $464.8 | $(857.6) | $1,322.4 | | Financing activities | $(1,953.1)| $(1,104.0)| $(849.1) | - Total debt outstanding decreased by **$952.8 million** to **$10,544.9 million** as of **August 31, 2025**, primarily due to senior note repayments using divestiture proceeds, partially offset by new debt issuance[229](index=229&type=chunk)[233](index=233&type=chunk)[234](index=234&type=chunk) - The company repurchased **$604.0 million** of Class A Stock under its **$4.0 billion 2025 Authorization**, with **$3,396.0 million** remaining available[246](index=246&type=chunk) - A quarterly cash dividend of **$1.02 per Class A share** and **$0.92 per Class 1 share** was declared on **September 30, 2025**[244](index=244&type=chunk) [Information Regarding Forward-Looking Statements](index=56&type=section&id=INFORMATION%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section provides cautionary statements about forward-looking information and potential risks that could affect future results - This Form 10-Q contains forward-looking statements subject to numerous risks and uncertainties that could cause actual results to differ materially from expectations[249](index=249&type=chunk) - Forward-looking statements cover business strategy, growth plans, digital acceleration, capital expenditures, effective tax rates, consumer demand, socioeconomic factors, trade policies, share repurchase programs, and future dividends[251](index=251&type=chunk) - Key risks include declines in product consumption, dependence on Mexican beer brands, impacts of acquisitions/divestitures, competition, international operations uncertainties, supply chain disruptions, climate change, litigation, and changes to tax laws[254](index=254&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=58&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section describes the company's exposure to market risks, including foreign currency, commodity, and interest rate fluctuations - The company is exposed to market risks from foreign currency exchange rates, commodity prices, and interest rates, which are managed through derivative instruments for hedging purposes[255](index=255&type=chunk) - As of **August 31, 2025**, **83%** of forecasted transactional foreign currency exposures and approximately **82%** of forecasted transactional commodity exposures for the remaining six months of **Fiscal 2026** were hedged[256](index=256&type=chunk)[257](index=257&type=chunk) Sensitivity Analysis (Hypothetical Adverse Change, in millions) | Risk Category | 10% Adverse Change (Fair Value Impact) | 1% Rate Increase (Fair Value/Expense Impact) | | :--------------------------------------- | :------------------------------------- | :------------------------------------------- | | Foreign currency contracts | $(192.2) | N/A | | Commodity derivative contracts | $29.1 | N/A | | Fixed interest rate debt | N/A | $(510.1) (Fair Value) | | Variable interest rate debt | N/A | $2.0 (Interest Expense, Six Months) | [Item 4. Controls and Procedures](index=59&type=section&id=Item%204.%20Controls%20and%20Procedures) This section reports on the effectiveness of the company's disclosure controls and internal control over financial reporting - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were **effective** as of **August 31, 2025**[263](index=263&type=chunk) - No changes were identified in the company's internal control over financial reporting during the quarter ended August 31, 2025, that have materially affected or are reasonably likely to materially affect it[264](index=264&type=chunk) [Part II – Other Information](index=60&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) This part includes disclosures on legal proceedings, equity security sales, and other relevant information not covered in Part I [Item 1. Legal Proceedings](index=60&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in a putative class action lawsuit (Meza v. Constellation Brands, Inc., et al.) alleging securities law violations related to statements about its beer business. Additionally, several derivative complaints with similar allegations were filed, some of which have been consolidated or dismissed - A putative class action, Meza v. Constellation Brands, Inc., et al., was filed on **February 18, 2025**, alleging violations of Sections **10(b)** and **20(a)** of the Exchange Act concerning allegedly false or misleading statements about the company's beer business prospects. A motion to dismiss is pending[267](index=267&type=chunk) - Derivative complaints (Silva v. Newlands, et al., Mason v. Newlands, et al., Wasserman v. Baldwin, et al.) with similar allegations were filed against current and former directors and officers. The Silva and Mason litigations were consolidated and stayed, while the Wasserman litigation was voluntarily dismissed[268](index=268&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=61&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased 1,740,884 shares of Class A Stock for an aggregate cost of $297.9 million during the three months ended August 31, 2025, under its $4.0 billion 2025 Authorization Issuer Purchases of Equity Securities (Three Months Ended August 31, 2025) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (millions) | | :--------------------------------------- | :----------------------------- | :--------------------------- | :------------------------------------------------------------------------------------ | | June 1 – 30, 2025 | 431,578 | $173.78 | $3,618.9 | | July 1 – 31, 2025 | 931,314 | $170.68 | $3,460.0 | | August 1 – 31, 2025 | 377,992 | $169.31 | $3,396.0 | | **Total** | **1,740,884** | **$171.15** | **N/A** | - As of **August 31, 2025**, **$3,396.0 million** remains available for future share repurchases under the 2025 Authorization[271](index=271&type=chunk) [Item 5. Other Information](index=61&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted or terminated Rule 10b5-1 trading arrangements during the three months ended August 31, 2025 - None of the company's directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the three months ended August 31, 2025[272](index=272&type=chunk) [Item 6. Exhibits](index=61&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including organizational documents, indentures for senior notes, credit agreements, equity compensation plans, and certifications [Signatures](index=65&type=section&id=SIGNATURES) This section contains the official signatures of the company's authorized officers, certifying the accuracy of the report - The report was signed on **October 7, 2025**, by Kenneth W. Metz, Senior Vice President, Controller and Corporate Finance, and Garth Hankinson, Executive Vice President and Chief Financial Officer[281](index=281&type=chunk)

[Filing Information](index=1&type=section&id=Filing%20Information) This section details the registrant's corporate information and lists its various classes of securities registered on the Nasdaq Global Market [Registrant and Securities Details](index=1&type=section&id=Registrant%20and%20Securities%20Details) This section provides the general filing information for Great Elm Capital Corp.'s Form 8-K, detailing the registrant's corporate information and listing its various classes of securities registered on the Nasdaq Global Market - **Great Elm Capital Corp.** is the registrant[1](index=1&type=chunk) - Jurisdiction of incorporation is **Maryland**[1](index=1&type=chunk) - The registrant is not an emerging growth company[3](index=3&type=chunk) Securities Registered on Nasdaq Global Market | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | :------------------ | :---------------- | :---------------------------------------- | | Common stock, $0.01 par value | GECC | Nasdaq Global Market | | 5.875% Notes due 2026 | GECCO | Nasdaq Global Market | | 8.50% Notes due 2029 | GECCI | Nasdaq Global Market | | 8.125% Notes due 2029 | GECCH | Nasdaq Global Market | | 7.75% Notes due 2030 | GECCG | Nasdaq Global Market | [Item 2.02 Results of Operations and Financial Condition](index=2&type=section&id=Item%202.02%20Results%20of%20Operations%20and%20Financial%20Condition) This item reports the issuance of a press release containing preliminary unaudited financial information for the quarter ended September 30, 2025 [Preliminary Financial Information](index=2&type=section&id=Preliminary%20Financial%20Information) Great Elm Capital Corp. announced the issuance of a press release on October 7, 2025, which includes selected preliminary and unaudited financial information for the quarter ended September 30, 2025 - Great Elm Capital Corp. issued a press release on **October 7, 2025**[4](index=4&type=chunk) - The press release contained selected preliminary and unaudited financial information[4](index=4&type=chunk) - Financial information covers the quarter ended **September 30, 2025**[4](index=4&type=chunk) - The press release is furnished as **Exhibit 99.1**[4](index=4&type=chunk) [Item 8.01 Other Events](index=2&type=section&id=Item%208.01%20Other%20Events) This item formally incorporates by reference the preliminary financial information and results of operations discussed in Item 2.02 [Cross-Reference to Financial Information](index=2&type=section&id=Cross-Reference%20to%20Financial%20Information) This section formally incorporates by reference the preliminary financial information and results of operations discussed in Item 2.02 of this report - Information from **Item 2.02** is incorporated by reference into **Item 8.01**[5](index=5&type=chunk) [Item 9.01 Financial Statements and Exhibits](index=2&type=section&id=Item%209.01%20Financial%20Statements%20and%20Exhibits) This item lists the exhibits furnished with the Form 8-K, including the press release and inline XBRL cover page [List of Exhibits](index=2&type=section&id=List%20of%20Exhibits) This section provides a list of exhibits furnished with the Form 8-K, including the press release containing preliminary financial information and the inline XBRL formatted cover page Exhibits Furnished | Exhibit Number | Description | | :------------- | :------------------------------------------------ | | 99.1 | Press Release, dated October 7, 2025 | | 104 | The cover page of this Current Report on Form 8-K, formatted as inline XBRL | - The listed exhibits are furnished with the report but are not deemed filed[7](index=7&type=chunk) [Signatures](index=3&type=section&id=SIGNATURES) This section confirms the official signing and authorization of the report by the Chief Financial Officer, in compliance with the Securities Exchange Act of 1934 [Authorization and Filing](index=3&type=section&id=Authorization%20and%20Filing) The report was officially signed on October 7, 2025, by Keri A. Davis, Chief Financial Officer of Great Elm Capital Corp., confirming its due authorization and compliance with the Securities Exchange Act of 1934 - The report was signed on behalf of Great Elm Capital Corp. on **October 7, 2025**[10](index=10&type=chunk)[11](index=11&type=chunk) - Signed by **Keri A. Davis**, Chief Financial Officer[11](index=11&type=chunk) - The signing is pursuant to the requirements of the **Securities Exchange Act of 1934**[9](index=9&type=chunk)