Financial Performance - Net sales decreased 6.8% to $3.0 billion, with organic net sales down 3.0% due to flat price/mix and a 3.0% decrease in volume[5]. - Gross profit decreased 17.8% to $696 million, and adjusted gross profit decreased 17.1% to $698 million, primarily due to lower net sales and inflation in cost of goods sold[6]. - Reported diluted loss per share was $1.39, mainly due to non-cash goodwill and brand impairment charges, while adjusted EPS was $0.45[6]. - The company reported a net loss attributable to Conagra Brands, Inc. of $663.6 million, compared to a net income of $284.5 million in the prior year[54]. - Conagra Brands reported a net loss of $499.1 million for the twenty-six weeks ended November 23, 2025, compared to a net income of $751.4 million for the same period in 2024[57]. - The company experienced a 15.7% decrease in gross profit year-to-date, reporting $1,336.6 million compared to $1,586.0 million last year[55]. - The diluted earnings per share for the second quarter was $(1.39), compared to $0.59 in the same quarter last year[54]. - Adjusted net income for Q2 FY26 was $218.0 million, with diluted EPS of $0.45, down from $0.70 in Q2 FY25, reflecting a year-over-year decline of 35.7%[61]. - Adjusted YTD net income for Q2 FY26 was $407.2 million, with diluted EPS of $0.85, a decrease of 30.9% from $1.23 in Q2 FY25[62]. Segment Performance - The Grocery & Snacks segment net sales decreased 8.5% to $1.2 billion, driven by a volume decrease of 2.3%[11]. - The Refrigerated & Frozen segment reported an operating loss of $832 million due to goodwill and brand impairment charges, with adjusted operating profit down 35.6% to $128 million[14]. - The International segment net sales decreased 5.4% to $230 million, with a volume decrease of 6.4%[15]. - Organic net sales for Q2 FY26 decreased by 6.8% year-over-year, totaling $2,975.1 million, with significant declines in Grocery & Snacks and Refrigerated & Frozen segments[58]. - The Grocery & Snacks segment reported an adjusted operating profit of $231.2 million, reflecting a year-over-year decline of 21.8%[59]. - The Refrigerated & Frozen segment experienced an adjusted operating profit of $127.5 million, a decrease of 35.6% year-over-year[59]. - The International segment achieved an adjusted operating profit of $69.8 million, with a year-over-year decrease of 7.1%[60]. Cash Flow and Debt - The company generated $331 million in net cash flows from operating activities, down from $754 million in the prior year period[24]. - Net debt at the end of the quarter was $7.6 billion, a 10.1% reduction year-over-year, resulting in a net leverage ratio of 3.83x[25]. - The company experienced a cash flow from operating activities of $331.2 million for the twenty-six weeks ended November 23, 2025, down from $754.2 million in the prior year[57]. - Total debt decreased to $7,623.9 million in Q2 FY26 from $8,463.6 million in Q2 FY25, while net debt also reduced to $7,577.3 million from $8,426.2 million[63]. - The net debt to adjusted EBITDA ratio stood at 3.83 as of November 23, 2025[64]. Guidance and Future Outlook - The company reaffirmed its fiscal 2026 guidance, expecting organic net sales change of (1)% to 1% and adjusted EPS between $1.70 and $1.85[28]. - The company expects total cost of goods sold inflation of approximately 7% for fiscal 2026, driven by core inflation and tariffs[30]. - The company plans to focus on market expansion and new product development to drive future growth despite current challenges[58]. Impairment and Restructuring - Goodwill impairment charges amounted to $771.3 million, representing a 100% increase from the previous year when there were no such charges[54]. - Conagra Brands incurred goodwill and brand impairment charges totaling $968.3 million in Q2 FY26[59]. - The company reported an asset impairment charge of $975.0 million for the twenty-six weeks ended November 23, 2025, significantly higher than $87.6 million in the same period last year[57]. - Restructuring plans contributed $2.9 million to adjusted operating profit YTD, with a significant impact from legal matter recoveries of -$37.4 million[60]. - The company reported a restructuring plan expense of $2.5 million in Q2 FY26 YTD, down from $82.1 million in Q2 FY25 YTD[65]. Other Financial Metrics - Interest expense for the second quarter was $96.0 million, down 11.2% from $108.2 million in the previous year[54]. - Equity method investment earnings decreased by 33.5%, from $48.5 million to $32.2 million year-over-year[54]. - Year-to-date (YTD) reported gross profit for Q2 FY26 was $1,336.6 million, or 23.8% of net sales, down 266 basis points compared to the previous year[62]. - Year-over-year adjusted gross margin for Q2 FY26 was 24.2%, reflecting a decrease of 227 basis points compared to Q2 FY25[62]. - Free cash flow dropped significantly by 79.1% to $112.6 million in Q2 FY26 YTD from $538.8 million in Q2 FY25 YTD[63]. - Corporate hedging derivative gains for Q2 FY26 were $3.6 million, positively impacting adjusted net income[62]. - Advertising and promotion (A&P) expenses were $74.3 million for Q2 FY26, accounting for 2.5% of net sales, compared to 2.2% in Q2 FY25[61].

Financial Performance - The company incurred a net loss of approximately $(2.5) million for the year ended September 30, 2025, with an accumulated deficit of approximately $(94) million as of the same date[49]. - The company has experienced significant fluctuations in quarterly operating results, which could adversely affect stock price and profitability[78]. Competition and Market Challenges - The company faces intense competition in a rapidly changing marketplace, which could lead to price reductions and loss of market share[64]. - The complexity of AI systems and evolving competition in the AI space introduces uncertainty regarding the successful integration and commercialization of AI technologies[58]. - A reduction in license renewal rates could adversely affect revenue, as customers are not obligated to renew their subscription licenses[52]. Operational Risks - The company relies on third-party vendors for AI solutions, which may lead to quality and compliance issues[59]. - Security breaches could expose the company to significant legal and financial liabilities, impacting customer trust and future sales[60]. - The company may face challenges in protecting its intellectual property, which could allow competitors to undermine its market position[70]. - Claims of infringement on proprietary rights could require the company to redesign products or pay significant royalties, impacting financial performance[73]. Management and Personnel - The company is dependent on its management team, and the loss of key personnel could materially affect business operations and future prospects[82]. - The company may face challenges in attracting and retaining qualified personnel due to intense competition, which could impact its growth plans[84]. Stock and Financing - The average daily trading volume of the company's common stock increased to approximately 99,000 shares in fiscal 2025, compared to 41,000 shares in fiscal 2024 and 56,000 shares in fiscal 2023[79]. - The closing price of the company's common stock fluctuated between $1.05 and $2.80 during fiscal 2025, with a requirement to maintain a minimum closing bid price of at least $1.00 per share to avoid delisting from Nasdaq[81]. - The company has never paid cash dividends on its common stock and does not anticipate paying any in the future, meaning investors would only realize income through potential increases in market price[87]. - The company has issued 264,000 shares of Series A Preferred stock and may issue additional preferred stock to consummate financing or other transactions, which could dilute existing stockholder value[86]. Growth and Infrastructure - The company must continue to develop new products and enhance existing ones to maintain competitive positioning, as failure to do so could adversely affect business performance[69]. - The company may need to expand its infrastructure to manage projected growth, and failure to do so could harm profitability and revenue[78]. - The company has acquired multiple businesses since its inception, including two in fiscal 2021, but integration challenges could disrupt operations and dilute stockholder value[85]. Regulatory Environment - The company is subject to evolving regulations, including the GDPR, which may negatively impact its business and revenue due to stricter operational requirements[77]. - The company may require additional financing to expand operations, which may not be available on acceptable terms[50].

Financial Performance - Total company revenue for Q3 FY26 was $141.8 million, exceeding guidance by $12.2 million, with a year-over-year decrease of $1.8 million[6] - Total company adjusted EBITDA was $28.7 million, representing 20% of revenue, with GAAP net income of $13.7 million[10] - Revenue for the three months ended November 30, 2025, was $141.8 million, an increase from $129.6 million for the previous quarter, representing a growth of 16.9%[21] - Net income for the nine months ended November 30, 2025, was $28.9 million, a recovery from a net loss of $71.6 million in the same period last year[25] - Revenue for the nine months ended November 30, 2025, was $393.1 million, nearly flat compared to $393.2 million in 2024[38] Segment Performance - QNX division achieved record revenue of $68.7 million, reflecting a 10% year-over-year growth, with adjusted EBITDA at $16.4 million, or 24% of revenue[6] - Secure Communications revenue was $67.0 million, surpassing guidance by $7.1 million, with an annual recurring revenue (ARR) of $216 million[6] - QNX segment revenue for the three months ended November 30, 2025, was $68.7 million, an increase of 10.3% from $62.3 million in the same period of 2024[27] - Secure Communications segment revenue decreased by 10.2% to $67.0 million for the three months ended November 30, 2025, compared to $74.6 million in 2024[27] Cash Flow and Investments - Total cash and investments increased by $14 million sequentially to $378 million[10] - Cash and cash equivalents as of November 30, 2025, were $270.3 million, slightly up from $266.7 million as of February 28, 2025[23] - The company generated net cash provided by operating activities of $4.2 million for the nine months ended November 30, 2025, compared to a net cash used of $25.1 million in the same period last year[25] - Free cash flow for the three months ended November 30, 2025, was $17.0 million, significantly higher than $5.0 million in the same period of 2024[41] - Free cash flow for the nine months ended November 30, 2025, was $1.6 million, a recovery from a usage of $(27.8) million in 2024[41] Expenses and Margins - Research and development expenses for the three months ended November 30, 2025, increased to $29.6 million from $25.6 million in the previous quarter, indicating a focus on innovation[21] - Sales and marketing expenses increased to $29.3 million for the three months ended November 30, 2025, compared to $23.4 million in the previous year[31] - General and administrative expenses remained relatively stable at $36.1 million for the three months ended November 30, 2025, compared to $36.4 million in 2024[31] - Adjusted EBITDA for the three months ended November 30, 2025, was $28.7 million, compared to $37.5 million in 2024, reflecting a decline of 23.5%[33] - Adjusted operating income margin percentage decreased to 18% for the three months ended November 30, 2025, from 23% in 2024[33] Strategic Initiatives - BlackBerry announced the expansion of BlackBerry SecuSUITE to Windows devices, enhancing its product offerings[10] - A strategic partnership was formed with Universiti Kebangsaan Malaysia to advance cybersecurity talent[10] Shareholder Actions - BlackBerry repurchased $5 million worth of shares, totaling approximately 1.2 million shares[10] Financial Health - Total liabilities decreased to $477.3 million as of November 30, 2025, from $575.7 million as of February 28, 2025, reflecting improved financial health[23] - Deferred revenue decreased to $121.3 million for the current quarter from $161.5 million in the previous quarter, indicating changes in customer contracts or service delivery[23]

FORM 10-Q Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 31, 2025 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission file number 001-40699 PHARMACYTE BIOTECH, INC. (Exact name of registrant as specified in its charter) (State or o ...

Financial Performance - Net income for the fourth quarter of fiscal 2025 increased 35% to a record $188.3 million, or $1.33 per diluted share, compared to $139.7 million, or $0.99 per diluted share, in the fourth quarter of fiscal 2024[1]. - Net sales rose 19% to a record $1,209.4 million in the fourth quarter of fiscal 2025, up from $1,013.7 million in the same quarter of fiscal 2024[2]. - Operating income increased 28% to a record $279.0 million in the fourth quarter of fiscal 2025, compared to $218.6 million in the fourth quarter of fiscal 2024[2]. - Operating income for the year ended October 31, 2025, rose to $1,018,998,000, a 23.6% increase from $824,455,000 in 2024[32]. - Net income attributable to HEICO for the year ended October 31, 2025, was $690,385,000, representing a 34.3% increase compared to $514,109,000 in 2024[32]. Cash Flow and Assets - Cash flow from operating activities increased 44% to $295.3 million in the fourth quarter of fiscal 2025, up from $205.6 million in the fourth quarter of fiscal 2024[7]. - Net cash provided by operating activities for the year ended October 31, 2025, was $934,266,000, compared to $672,370,000 in 2024, marking a 38.9% increase[37]. - Cash and cash equivalents as of October 31, 2025, increased to $217,781,000 from $162,103,000 in 2024, reflecting a 34.3% growth[36]. - Total assets as of October 31, 2025, reached $8,500,434,000, a 11.9% increase from $7,592,822,000 in 2024[36]. Debt and Leverage - Total debt to net income attributable to HEICO ratio improved to 3.14x as of October 31, 2025, down from 4.34x as of October 31, 2024[8]. - The net debt to EBITDA ratio improved to 1.60 in 2025 from 2.06 in 2024, indicating better leverage management[38]. - The company’s interest expense decreased to $129,877,000 in 2025 from $149,313,000 in 2024, a reduction of 13.0%[32]. Segment Performance - The Flight Support Group's net sales increased 21% to a record $834.4 million in the fourth quarter of fiscal 2025, up from $691.8 million in the fourth quarter of fiscal 2024[12]. - The Electronic Technologies Group's net sales increased 14% to a record $384.8 million in the fourth quarter of fiscal 2025, up from $336.2 million in the fourth quarter of fiscal 2024[16]. - The Flight Support Group's net sales for the three months ended October 31, 2025, were $834,372,000, up 20.6% from $691,780,000 in 2024[30]. Future Outlook - Looking ahead to fiscal 2026, the company anticipates net sales growth across both the Flight Support Group and Electronic Technologies Group, driven by organic growth and recent acquisitions[10]. - The company completed five acquisitions in fiscal 2025, contributing to net sales and earnings growth[9]. Dividends - The company declared a semiannual cash dividend of $0.12 per share, marking the 95th consecutive semiannual cash dividend since 1979[9].

EXHIBIT 99.1 December 18, 2025 Victor H. Mendelson (305) 374-1745 ext. 7590 Carlos L. Macau, Jr. (954) 987-4000 ext. 7570 HEICO CORPORATION REPORTS RECORD NET INCOME (UP 35%) ON RECORD OPERATING INCOME (UP 28%) AND RECORD NET SALES (UP 19%) FOR THE FOURTH QUARTER OF FISCAL 2025 HOLLYWOOD, FL and MIAMI, FL -- HEICO CORPORATION (NYSE: HEI.A) (NYSE: HEI) today reported net income increased 35% to a record $188.3 million, or $1.33 per diluted share, in the fourth quarter of fiscal 2025, up from $139.7 million, ...

Customer Concentration - Sales to the top 10 customers accounted for approximately 67% of net sales for the year ended October 31, 2025, compared to 69% for the year ended October 31, 2024, and 65% for the year ended October 31, 2023[62]. Product Reliance and Risks - The company relies primarily on one main product—avocados—exposing it to concentrated risks related to supply, pricing, and competition[49]. - The ability to generate revenues is limited by the supply of fruit, with potential increases in costs if supply decreases dramatically due to various factors[50]. - Profitability is sensitive to fluctuations in market prices, which are influenced by supply conditions and competition[51]. - The company faces increasing competition, which may adversely affect its operating results if it cannot offer competitive prices or consistent supply[54]. Economic and Regulatory Environment - Economic and political conditions in Mexico, the largest source of avocado supply, may adversely affect the company's operations and financial condition[64]. - The company is subject to various legal and regulatory changes in Mexico that could impact its operations and profitability[65]. - Changes in U.S. trade policy, tariffs, and international trade regulations could negatively impact the company's operating results and market conditions[97][98]. - Compliance with changing USDA and FDA regulations regarding product importation and distribution may adversely affect the company's operations and financial results[95][96]. - The company is subject to value-added taxes (VAT) in various foreign jurisdictions, including Mexico, which may adversely impact future cash flows and pretax earnings due to potential delays or rejections of VAT refund claims[117]. Cost and Supply Chain Challenges - Inflationary pressures and increases in costs of commodities, such as fuel and packaging, could negatively impact operating results[57]. - Supply chain constraints may lead to increased costs and disruptions, adversely affecting the company's financial results[70]. - The company has experienced increases in transportation costs and labor shortages, which could result in delays in customer shipments and negatively impact sales[73]. - Seasonal factors, such as the availability and quality of fruit, may cause revenue and operating results to vary significantly[80]. Climate and Environmental Risks - Climate change poses risks to farming operations, including adverse weather conditions that could impact costs and product supply[75]. - Legal and regulatory pressures related to climate change may impose additional costs and operational restrictions on the company[78]. - Environmental regulations regarding the use of agricultural products could lead to significant compliance costs and impact the company's financial position[101]. Legal and Compliance Issues - The company is involved in various legal proceedings that could result in substantial monetary damages and affect its reputation[107]. - The company incurs significant costs as a public entity due to compliance with legal and regulatory requirements, which may divert management's attention from core business operations[125]. - Compliance with evolving data privacy laws may require significant resources and could result in fines or reputational harm if not adhered to[91]. Financial Performance and Market Conditions - General economic conditions or downturns could reduce consumer spending and demand for the company's products, adversely affecting financial results[69]. - The company's financial results are significantly affected by fluctuations in fruit pricing and crop sizes, which may limit the ability to accurately forecast future performance[119]. - The trading price of the company's common stock has been highly volatile, influenced by market conditions that may not correlate with the company's operational performance[122]. Corporate Governance and Control - Approximately 33% of the company's outstanding common stock is owned by executive officers and directors, allowing them to control significant corporate matters, which may impede changes in management or business strategy[123]. - Provisions in the company's charter may discourage favorable takeovers and limit stockholder influence over management decisions[131]. - The approval of at least two-thirds of the shares entitled to vote is required for adopting, amending, or repealing bylaws, which may deter potential acquirers[139]. Financial Management and Capital Structure - The company is subject to restrictive covenants under its credit facility, which may limit flexibility in funding operations and strategic initiatives[137]. - Compliance with financial covenants is based on operating results, and economic downturns could adversely impact business and capital deployment[140]. - A 10% increase or decrease in interest rates on long-term debt would not materially affect the financial position or cash flows[253]. - The majority of sales are in U.S. dollars, while input costs are in foreign currencies, but this is not expected to materially affect operations due to short inventory turn-time[254]. - Inflation increases costs of labor, materials, and transportation, and the company cannot estimate the ability to recover these costs through price increases[255]. Strategic Opportunities - The company is exploring acquisition opportunities, which may involve risks such as integration challenges and increased debt, potentially affecting financial performance[104]. Operational Risks - The company faces potential material adverse effects on its business due to product recalls and liability claims related to consumer injuries or illnesses[94]. - The company faces cybersecurity risks that could disrupt operations and adversely affect revenue and reputation[81]. - The company may face challenges in managing third-party service providers, which could lead to additional costs and business disruptions[86]. - The company relies on key personnel for effective operations, and failure to attract or retain them may adversely affect business strategy and financial condition[74]. - The company's infrastructure must maintain sufficient capacity to meet business needs; failures could adversely impact operations and financial condition[105].

Financial Performance - Revenues for Q4 2025 totaled $1.69 billion, down from $2.00 billion year-over-year[4] - Net income for Q4 2025 was $101.5 million, compared to $190.6 million in the prior year[4] - Adjusted diluted earnings per share for Q4 2025 was $1.92, down from $2.53 year-over-year[4] - Total revenues for the three months ended November 30, 2025, were $1,694,378, a decrease of 15.3% compared to $1,999,899 in the same period of 2024[18] - Homebuilding revenues for the twelve months ended November 30, 2025, were $6,211,905, down 10% from $6,902,239 in 2024[18] - Operating income for the three months ended November 30, 2025, was $117,098, a decline of 48.9% from $229,099 in the prior year[18] - Net income for the twelve months ended November 30, 2025, was $428,789, down 34.5% from $655,018 in 2024[18] - Adjusted net income for Q4 2025 was $125,710, down 34.2% from $191,217 in Q4 2024[29] - Diluted earnings per share for Q4 2025 were $1.55, compared to $2.52 in Q4 2024[29] Sales and Deliveries - Homes delivered decreased by 9% to 3,619 units in Q4 2025[4] - Total homes delivered in Q4 2025 were 3,619, a decrease of 9.0% from 3,978 in Q4 2024[24] - Net orders for Q4 2025 totaled 2,414, down 10.2% from 2,688 in Q4 2024[24] - Total net order value for Q4 2025 was $1,099,317, a decrease of 16.5% compared to $1,316,653 in Q4 2024[24] - The company plans to deliver between 11,000 to 12,500 homes in 2026[14] Pricing and Margins - Average selling price declined by 7% to $465,600 in Q4 2025[4] - The average selling price for homes in the total market decreased to $465,600 in the three months ended November 30, 2025, from $501,000 in the same period of 2024[22] - Adjusted housing gross profit margin for Q4 2025 was 17.8%, compared to 20.9% in Q4 2024[26] - Total housing gross profits for Q4 2025 were $285,596, down from $415,760 in Q4 2024[26] Liquidity and Capital Management - Total liquidity as of November 30, 2025, was $1.43 billion, including $228.6 million in cash[10] - The company repurchased $100.0 million of common stock in Q4 2025, totaling approximately 9.4 million shares repurchased for the year[10] - Cash and cash equivalents decreased to $228,614 as of November 30, 2025, from $597,973 in 2024, reflecting a decline of 61.8%[20] - Total assets as of November 30, 2025, were $6,680,252, down from $6,936,169 in 2024, indicating a decrease of 3.7%[20] - Total liabilities decreased to $2,779,394 as of November 30, 2025, from $2,875,553 in 2024, a reduction of 3.3%[20] Other Financial Metrics - The effective tax rate for Q1 2026 is projected to be approximately 19.0%[14] - Financial services pretax income for the twelve months ended November 30, 2025, was $34,979, down 28.4% from $48,890 in 2024[18] - The company reported a loss on early extinguishment of debt of $954 for the three months ended November 30, 2025[18] - The company incurred inventory-related charges of $13,700 in Q4 2025, compared to $912 in Q4 2024[29] Backlog - Total backlog as of November 30, 2025, was 3,128 homes valued at $1,403,352, down from 4,434 homes valued at $2,242,907 in the previous year[24]

Revenue Growth - Revenue increased by 7% in Q2 2026 and 5% in the first half of 2026, primarily due to improvements in U.S. domestic and international priority base yields, increased U.S. domestic package volume, and favorable exchange rates [140]. - Federal Express segment revenue increased by 8% in Q2 2026 and 6% in the first half of 2026, attributed to yield improvements and increased domestic package volumes [141]. - The company anticipates revenue growth to continue into the second half of 2026, driven by U.S. Domestic service offerings, despite constraints in international revenue due to geopolitical uncertainties [154]. - U.S. domestic package volume rose by 6% in Q2 2026 and 5% in the first half of 2026, primarily due to increased U.S. ground home delivery/economy package volumes [173]. - International priority package yield increased by 9% in Q2 2026 and 11% in the first half of 2026, attributed to higher base yields and favorable exchange rates [174]. Operating Income and Margins - Operating income rose by 31% in Q2 2026 and 20% in the first half of 2026, driven by improved yields and structural cost reductions from business optimization initiatives [129]. - Operating income for the second quarter of 2026 was $1,378 million, a 31% increase from $1,052 million in the same period of 2025, while operating income for the first half rose by 20% to $2,564 million from $2,132 million [142]. - Operating margin for the Federal Express segment improved by 200 basis points to 7.6% in Q2 2026, while the FedEx Freight segment's margin decreased by 1,010 basis points to 4.2% [128]. - Federal Express segment operating income surged by 47% in Q2 2026 and 34% in the first half of 2026, supported by higher package yields and structural cost reductions [175]. Costs and Expenses - Operating expenses for the three months ended November 30, 2025, increased by 6% to $22,091 million compared to $20,915 million in 2024, with total operating expenses for the six months rising by 4% to $43,149 million from $41,414 million [142]. - Salaries and employee benefits increased by 7% in the second quarter and 5% in the first half of 2026, primarily due to higher wage rates and variable incentive compensation [142]. - Business optimization costs amounted to $30 million in the second quarter and $97 million in the first half of 2026, compared to $326 million and $454 million in the same periods of 2025, respectively [146]. - Total operating expenses as a percentage of revenue increased to 95.8% in Q2 2026 from 85.7% in Q2 2025 [179]. Spin-off and Related Costs - Costs related to the planned spin-off of FedEx Freight amounted to $205 million in Q2 2026 and $246 million in the first half of 2026 [130]. - The planned spin-off of FedEx Freight is expected to incur costs of $205 million in the second quarter of 2026 and $248 million in the first half of 2026, primarily for professional services [143]. - Operating income for the FedEx Freight segment decreased by 71% in Q2 2026 and 40% in the first half of 2026, primarily due to higher costs related to the planned spin-off and reduced demand [182]. Capital Expenditures and Stock Repurchase - Capital expenditures for 2026 are projected to be approximately $4.5 billion, an increase of $0.4 billion from 2025, driven by investments in Network 2.0 and modernization efforts [157]. - The company repurchased $276 million of common stock during Q2 2026, with a total of $1.3 billion remaining available for future repurchases [134]. - FedEx repurchased $276 million of common stock in the second quarter and $776 million in the first half of 2026 [202]. Financial Position and Liquidity - Cash and cash equivalents totaled $6.6 billion at November 30, 2025, up from $5.5 billion at May 31, 2025 [185]. - The company held $6.6 billion in cash and cash equivalents at November 30, 2025, with an additional $3.5 billion in available liquidity from credit agreements [201]. - The planned spin-off of FedEx Freight is expected to incur significant costs but is not anticipated to adversely affect liquidity [201]. Risks and Market Conditions - Global inflation and elevated interest rates are expected to continue negatively affecting demand for transportation services throughout 2026 [124]. - The company faces risks related to failure in receiving expected insurance coverage and disruptions from third-party service providers [217]. - The company is exposed to intense competition affecting its ability to maintain or grow revenue and market share [217]. - The company has significant foreign currency exchange rate risks, particularly with the euro, Chinese yuan, and British pound [220]. - A stronger U.S. dollar positively impacted the company's results during the first half of 2026 [220]. Employee Relations and Compliance - The workforce reduction plan in Europe is expected to yield annualized savings of approximately $150 million starting in calendar 2026, following the completion of the plan impacting around 1,400 employees [148]. - The company is focused on maintaining good employee relations to avoid increased operating costs from labor organization attempts [217]. - The company is subject to increasing costs related to compliance with data protection regulations [217].

Revenue Performance - Second quarter revenues were $12.4 billion, up 1 percent on a reported basis and flat on a currency-neutral basis[5]. - NIKE Brand revenues were $12.1 billion, up 1 percent on a reported and currency-neutral basis, primarily due to growth in North America[6]. - Total revenues for Nike, Inc. increased by 1% to $12,427 million for the three months ended November 30, 2025, compared to $12,354 million for the same period in 2024[17]. - Total Nike Brand revenues for the six months ended November 30, 2025, were $23,486 million, reflecting a 2% increase compared to $23,061 million for the same period in 2024[17]. Direct Sales and Digital Performance - NIKE Direct revenues were $4.6 billion, down 8 percent on a reported basis and down 9 percent on a currency-neutral basis, driven by a 14 percent decrease in NIKE Brand Digital[6]. - Greater China experienced a significant decline, with footwear sales dropping by 21% to $954 million for the three months ended November 30, 2025[17]. - Converse brand revenues fell by 30% to $300 million for the three months ended November 30, 2025, compared to $429 million in the same period of 2024[17]. - Equipment sales in North America increased by 12% to $280 million for the three months ended November 30, 2025[17]. Profitability and Margins - Gross margin decreased 300 basis points to 40.6 percent, primarily due to higher tariffs in North America[6]. - Net income was $0.8 billion, down 32 percent, with diluted earnings per share at $0.53, also a decrease of 32 percent[6]. - Earnings before interest and taxes (EBIT) for Nike, Inc. decreased by 29% to $990 million for the three months ended November 30, 2025, compared to $1,392 million in the same period of 2024[19]. - The EBIT margin for Nike, Inc. was 8.0% for the three months ended November 30, 2025, down from 11.3% in the prior year[19]. - The total EBIT for the Nike Brand was $1,502 million for the three months ended November 30, 2025, down 21% from $1,904 million in the same period of 2024[19]. Expenses and Investments - Demand creation expense was $1.3 billion, up 13 percent, primarily due to higher brand marketing and sports marketing expenses[6]. - The effective tax rate was 20.7 percent compared to 17.9 percent for the same period last year[6]. - Cash and equivalents and short-term investments were $8.3 billion, down approximately $1.4 billion[11]. - Inventories were $7.7 billion, down 3 percent, reflecting a decrease in units[11]. - The company returned approximately $598 million to shareholders through dividends, up 7 percent from the prior year[7]. Regional Sales Performance - North America footwear sales rose by 9% to $3,542 million for the three months ended November 30, 2025, while apparel sales increased by 7% to $1,811 million[17]. - Global Brand Divisions reported a revenue decline of 31% to $9 million for the three months ended November 30, 2025[17].