PART I. FINANCIAL INFORMATION [Cautionary Note Regarding Forward-Looking Statements](index=4&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This section cautions that forward-looking statements are not guarantees of future performance and are subject to various risks and uncertainties, with no obligation for updates - Forward-looking statements are based on information available at the time they are made and management's good faith belief, subject to risks and uncertainties that could cause actual results to differ materially[10](index=10&type=chunk) - The company does not undertake any obligation to update or revise forward-looking statements, cautioning against undue reliance on them[11](index=11&type=chunk) - Key factors that could cause differences include funding plans, capital resources, estimates accuracy, Nasdaq listing compliance, economic conditions, market preferences, competition, strategic transaction results, reliance on third-party partners, regulatory developments, retention of key personnel, intellectual property protection, corporate infrastructure, litigation outcomes, financial performance, and use of offering proceeds[12](index=12&type=chunk) [Item 1. FINANCIAL STATEMENTS](index=5&type=section&id=Item%201.%20FINANCIAL%20STATEMENTS) This section presents CIMG Inc.'s unaudited consolidated financial statements, including Balance Sheets, Statements of Operations, Comprehensive Loss, Changes in Stockholders' Equity, and Cash Flows, with detailed notes for the quarter ended December 31, 2024 [Consolidated Balance Sheets (unaudited)](index=5&type=section&id=Consolidated%20Balance%20Sheets%20%28unaudited%29) - Cash & cash equivalents decreased significantly from **$464,222 to $124,715** - Total stockholders' equity turned positive, increasing from an accumulated deficit of **$(650,668) to $1,527,570** | ASSETS (Unaudited) | December 31, 2024 ($) | September 30, 2024 ($) | | :------------------- | :-------------------- | :--------------------- | | Cash & cash equivalent | 124,715 | 464,222 | | Inventories, net | 4,608,307 | 4,548,035 | | Total current assets | 5,034,920 | 5,405,641 | | Total assets | 5,167,814 | 5,587,655 | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | | Accounts payable and accrued expenses | 1,820,200 | 2,240,337 | | Short term loan | 433,512 | 1,920,507 | | Convertible Notes | 678,308 | 1,063,624 | | Total current liabilities | 3,640,244 | 6,238,323 | | Total liabilities | 3,640,244 | 6,238,323 | | Total stockholders' equity | 1,527,570 | (650,668) | [Consolidated Statements of Operations (unaudited)](index=6&type=section&id=Consolidated%20Statements%20of%20Operations%20%28unaudited%29) - Net revenues decreased significantly from **$965,932 in Q4 2023 to $22,853 in Q4 2024** - Net loss improved from **$(2,148,611) in Q4 2023 to $(1,536,249) in Q4 2024**, and basic/diluted loss per share improved from **$(1.84) to $(0.17)** | (Unaudited) | Three Months Ended Dec 31, 2024 ($) | Three Months Ended Dec 31, 2023 ($) | | :------------ | :---------------------------------- | :---------------------------------- | | Revenues, net | 22,853 | 965,932 | | Cost of sales | (7,374) | (841,398) | | Gross profit | 15,479 | 124,534 | | Operating expenses | (1,517,758) | (2,145,642) | | Loss from operations | (1,502,279) | (2,021,108) | | Net loss | (1,536,249) | (2,148,611) | | Basic and diluted loss per common share | (0.17) | (1.84) | [Consolidated Statements of Comprehensive Loss (unaudited)](index=7&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Loss%20%28unaudited%29) - The foreign currency translation adjustment resulted in a **loss of $(192,038) in Q4 2024**, compared to a **gain of $42,408 in Q4 2023** | (Unaudited) | Three Months Ended Dec 31, 2024 ($) | Three Months Ended Dec 31, 2023 ($) | | :------------ | :---------------------------------- | :---------------------------------- | | Net loss | (1,536,249) | (2,148,611) | | Foreign currency translation | (192,038) | 42,408 | | Total other comprehensive income (loss), net of tax | (192,038) | 42,408 | | Comprehensive loss | (1,728,287) | (2,106,203) | [Consolidated Statements of Changes in Stockholders' Equity (unaudited)](index=8&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity%20%28unaudited%29) - Total common stock shares outstanding increased from **4,978,245 to 10,739,800** during the quarter[23](index=23&type=chunk) - Additional paid-in capital increased by **$3,906,468**, primarily from common stock issued for cash, compensation, and private placement[23](index=23&type=chunk) - Total stockholders' equity improved from a deficit of **$(650,668) to a positive balance of $1,527,570**[23](index=23&type=chunk) | (Unaudited) | Balance Sep 30, 2024 ($) | Common Stock issued for cash ($) | Common stock compensation ($) | Issued private placement ($) | Issued warrants ($) | Other comprehensive income ($) | Net loss ($) | Balance Dec 31, 2024 ($) | | :------------ | :----------------------- | :------------------------------- | :---------------------------- | :--------------------------- | :------------------ | :----------------------------- | :----------- | :----------------------- | | Common Stock Shares | 4,978,245 | 1,396,813 | 800,000 | 3,508,769 | 55,973 | - | - | 10,739,800 | | Amount | 50 | 13 | 8 | 35 | 1 | - | - | 107 | | Additional paid-in capital | 81,260,605 | 1,382,831 | 523,672 | 1,999,965 | - | - | - | 85,167,073 | | Accumulated deficit | (82,344,722) | - | - | - | - | - | (1,536,249) | (83,880,971) | | Accumulated Comprehensive income | 433,399 | - | - | - | - | (192,038) | - | 241,361 | | Total | (650,668) | 1,382,844 | 523,680 | 2,000,000 | 1 | (192,038) | (1,536,249) | 1,527,570 | [Consolidated Statements of Cash Flows (unaudited)](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20%28unaudited%29) - Net cash used in operating activities decreased from **$(2,193,439) in Q4 2023 to $(1,338,781) in Q4 2024**[26](index=26&type=chunk) - Investing activities showed no cash usage in Q4 2024, a significant change from **$(307,044) used in Q4 2023**[26](index=26&type=chunk) - Cash at the end of the period was **$124,715**, a decrease from the beginning of the period but an increase compared to **$116,067 in Q4 2023**[26](index=26&type=chunk) | (Unaudited) | Three Months Ended Dec 31, 2024 ($) | Three Months Ended Dec 31, 2023 ($) | | :------------ | :---------------------------------- | :---------------------------------- | | Net cash used in operating activities | (1,338,781) | (2,193,439) | | Net cash used in investing activities | 0 | (307,044) | | Net cash provided by financing activities | 1,191,312 | 1,65

[Executive Summary & Financial Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Financial%20Highlights) Cintas Corporation reported strong financial results for the first quarter of fiscal 2026, with significant increases across revenue, gross margin, operating income, net income, and diluted EPS. The company also continued its share buyback program and increased quarterly dividends Fiscal 2026 First Quarter Financial Performance (YoY) | Metric | Q1 FY2026 | Q1 FY2025 | % Change | | :-------------------------------- | :---------- | :---------- | :------- | | Revenue | $2.72 billion | $2.50 billion | 8.7% | | Organic Revenue Growth Rate | - | - | 7.8% | | Gross Margin | $1.37 billion | $1.25 billion | 9.1% | | Gross Margin as % of Revenue | 50.3% | 50.1% | +20 bps | | Operating Income | $617.9 million | $561.0 million | 10.1% | | Operating Income as % of Revenue | 22.7% | 22.4% | +30 bps | | Net Income | $491.1 million | $452.0 million | 8.7% | | Diluted Earnings Per Share (EPS) | $1.20 | $1.10 | 9.1% | Shareholder Returns (Q1 FY2026) | Activity | Amount | | :------------------ | :------------- | | Share Buybacks | $347.4 million | | Quarterly Dividend Paid | $182.3 million | | Dividend Increase (YoY) | 15.4% | [Management Commentary and Outlook](index=1&type=section&id=Management%20Commentary%20and%20Outlook) CEO Todd M. Schneider highlighted strong Q1 performance driven by disciplined execution and strategic investments. The company is focused on operational excellence, investing in people and platforms for sustainable growth, and maintaining balanced capital allocation. Cintas has also raised its full fiscal year 2026 financial guidance for both revenue and diluted EPS - Cintas' President and CEO, Todd M. Schneider, attributed **strong Q1 revenue growth and margin expansion** to disciplined execution, ongoing investment in technology and talent, and employee-partner commitment, reflecting the strength of their value proposition[7](index=7&type=chunk) - The company is focused on **operational excellence**, investing in people and platforms to position Cintas for **sustainable growth** and **long-term value creation**, supported by **robust cash flow generation** and **balanced capital allocation**[8](index=8&type=chunk) Updated Fiscal Year 2026 Financial Guidance | Metric | Previous Guidance | Updated Guidance | | :---------------- | :---------------------- | :--------------------- | | Annual Revenue | $11.00 billion to $11.15 billion | $11.06 billion to $11.18 billion | | Diluted EPS | $4.71 to $4.85 | $4.74 to $4.86 | - The total revenue guidance assumes the same number of workdays as fiscal year 2025, no future acquisitions, and a constant foreign currency exchange rate[8](index=8&type=chunk) [Company Profile and Webcast Information](index=2&type=section&id=Company%20Profile%20and%20Webcast%20Information) Cintas Corporation, a Fortune 500 company, provides a wide range of products and services to over one million businesses, helping them maintain clean, safe, and professional facilities and employees. The company also announced details for its fiscal 2026 first quarter results webcast - Cintas Corporation helps over **one million businesses** by providing products and services including uniforms, mats, mops, restroom supplies, workplace water services, first aid and safety products, safety training, and fire protection services[9](index=9&type=chunk) - Cintas is headquartered in Cincinnati, a publicly held **Fortune 500 company** traded on the Nasdaq Global Select Market under the symbol **CTAS**, and is a component of both the **S&P 500** and **Nasdaq-100 Indices**[9](index=9&type=chunk) - A live webcast to review the fiscal 2026 first quarter results was scheduled for **September 24, 2025, at 10:00 a.m. Eastern Time**, available on Cintas' website, with a replay available for two weeks[9](index=9&type=chunk) [Caution Concerning Forward-Looking Statements](index=2&type=section&id=CAUTION%20CONCERNING%20FORWARD-LOOKING%20STATEMENTS) This section serves as a cautionary statement regarding forward-looking statements made in the press release, emphasizing that such statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations - The press release contains forward-looking statements, including fiscal 2026 full-year guidance, protected by the **Private Securities Litigation Reform Act of 1995**[10](index=10&type=chunk) - Forward-looking statements are based on current expectations and are subject to various risks, uncertainties, and assumptions that could cause actual results to differ[10](index=10&type=chunk) - Factors that might cause differences include operating costs, sales volumes, customer loss, acquisition integration, supply chain constraints, macroeconomic conditions, changes in trade policies, material and labor costs, regulatory compliance, exchange rate fluctuations, environmental liabilities, cybersecurity threats, and litigation[10](index=10&type=chunk) [Additional Financial Guidance Details](index=2&type=section&id=Additional%20Financial%20Guidance%20Details) This section provides specific assumptions and expectations for Cintas' fiscal year 2026 financial guidance, particularly concerning net interest, effective tax rate, and the factors not included in the diluted EPS guidance - Fiscal year 2026 interest, net is expected to be approximately **$97.0 million**, an increase from **$95.0 million** in fiscal year 2025, primarily due to refinancing senior notes at a higher interest rate, partially offset by lower variable rate interest[11](index=11&type=chunk) - The expected interest, net may change based on future share buybacks or acquisition activity[11](index=11&type=chunk) - The fiscal year 2026 effective tax rate is expected to remain at **20.0%**, consistent with fiscal year 2025[11](index=11&type=chunk) - The diluted EPS guidance does not include any future share buybacks or significant economic disruptions or downturns[11](index=11&type=chunk) [Consolidated Condensed Statements of Income](index=3&type=section&id=Consolidated%20Condensed%20Statements%20of%20Income) This section presents the unaudited consolidated condensed statements of income for Cintas Corporation for the three months ended August 31, 2025, and August 31, 2024, detailing revenue, costs, operating income, and net income Consolidated Condensed Statements of Income (Unaudited, In thousands except per share data) | | Three Months Ended | | | | :-------------------------------------- | :---------------- | :---------------- | :------- | | | August 31, 2025 | August 31, 2024 | % Change | | **Revenue:** | | | | | Uniform rental and facility services | $ 2,091,066 | $ 1,933,839 | 8.1% | | Other | 627,056 | 567,748 | 10.4% | | **Total revenue** | **2,718,122** | **2,501,587** | **8.7%** | | **Costs and expenses:** | | | | | Cost of uniform rental and facility services | 1,052,553 | 981,163 | 7.3% | | Cost of other | 299,008 | 268,293 | 11.4% | | Selling and administrative expenses | 748,702 | 691,100 | 8.3% | | **Operating income** | **617,859** | **561,031** | **10.1%** | | Interest income | (2,209) | (1,250) | 76.7% | | Interest expense | 24,161 | 25,619 | (5.7)% | | **Income before income taxes** | **595,907** | **536,662** | **11.0%** | | Income taxes | 104,767 | 84,629 | 23.8% | | **Net income** | **$ 491,140** | **$ 452,033** | **8.7%** | | Basic earnings per share | $ 1.21 | $ 1.12 | 8.0% | | Diluted earnings per share | $ 1.20 | $ 1.10 | 9.1% | | Basic weighted average common shares outstanding | 403,292 | 403,382 | | | Diluted weighted average common shares outstanding | 409,294 | 410,496 | | [Supplemental Financial Data](index=4&type=section&id=Supplemental%20Financial%20Data) This section provides additional financial details, including a breakdown of gross margins by service type, a reconciliation of non-GAAP free cash flow, and a detailed segment-level performance analysis for the first quarter of fiscal 2026 and 2025 [Gross Margin and Net Income Margin Results](index=4&type=section&id=Gross%20Margin%20and%20Net%20Income%20Margin%20Results) Analysis of gross margin performance for uniform rental and facility services, other services, and total gross margin, alongside the net income margin for the first quarter of fiscal 2026 compared to the prior year Gross Margin and Net Income Margin Results | | Three Months Ended | | :------------------------------------ | :---------- | :---------------- | | | August 31, 2025 | August 31, 2024 | | Uniform rental and facility services gross margin | 49.7% | 49.3% | | Other gross margin | 52.3% | 52.7% | | Total gross margin | 50.3% | 50.1% | | Net income margin | 18.1% | 18.1% | [Non-GAAP Financial Measures: Free Cash Flow](index=4&type=section&id=Reconciliation%20of%20Non-GAAP%20Financial%20Measures) This section reconciles net cash provided by operations (GAAP) to free cash flow (non-GAAP), which management uses to evaluate the company's financial performance and its ability to fund ongoing business operations and growth Computation of Free Cash Flow (In thousands) | | Three Months Ended | | :-------------------------- | :---------------- | :---------------- | | | August 31, 2025 | August 31, 2024 | | Net cash provided by operations | $ 414,481 | $ 460,357 | | Capital expenditures | (101,957) | (92,921) | | Free cash flow | $ 312,524 | $ 367,436 | - Management uses **free cash flow** to assess the Company's **financial performance**, believing it is useful to investors as it relates **operating cash flow** to capital spent for continuing, improving, and growing business operations[19](index=19&type=chunk) [Supplemental Segment Data](index=5&type=section&id=SUPPLEMENTAL%20SEGMENT%20DATA) Detailed financial data is provided for Cintas' key segments: Uniform Rental and Facility Services, First Aid and Safety Services, and All Other, showing revenue, cost of sales, gross margin, selling and administrative expenses, and operating income for the first quarter of fiscal 2026 and 2025 Supplemental Segment Data (In thousands) | | Uniform Rental and Facility Services | First Aid and Safety Services | All Other | Total | | :------------------------------------ | :-------------------------------- | :---------------------------- | :---------- | :---------- | | **For the three months ended August 31, 2025** | | | | | | Revenue | $ 2,091,066 | $ 334,657 | $ 292,399 | $ 2,718,122 | | Cost of sales | 1,052,553 | 144,489 | 154,519 | 1,351,561 | | Gross margin | 1,038,513 | 190,168 | 137,880 | 1,366,561 | | Selling and administrative expenses | 538,576 | 109,841 | 100,285 | 748,702 | | Operating income | $ 499,937 | $ 80,327 | $ 37,595 | $ 617,859 | | **For the three months ended August 31, 2024** | | | | | | Revenue | $ 1,933,839 | $ 292,567 | $ 275,181 | $ 2,501,587 | | Cost of sales | 981,163 | 123,764 | 144,529 | 1,249,456 | | Gross margin | 952,676 | 168,803 | 130,652 | 1,252,131 | | Selling and administrative expenses | 506,238 | 97,515 | 87,347 | 691,100 | | Operating income | $ 446,438 | $ 71,288 | $ 43,305 | $ 561,031 | [Consolidated Condensed Balance Sheets](index=6&type=section&id=Consolidated%20Condensed%20Balance%20Sheets) This section presents the unaudited consolidated condensed balance sheets for Cintas Corporation as of August 31, 2025, and May 31, 2025, detailing assets, liabilities, and shareholders' equity Consolidated Condensed Balance Sheets (In thousands) | | August 31, 2025 | May 31, 2025 | | :------------------------------------------ | :---------------- | :---------------- | | **ASSETS** | | | | Current assets: | | | | Cash and cash equivalents | $ 138,143 | $ 263,973 | | Accounts receivable, net | 1,421,047 | 1,417,381 | | Inventories, net | 449,739 | 447,408 | | Uniforms and other rental items in service | 1,172,321 | 1,137,361 | | Prepaid expenses and other current assets | 194,676 | 170,046 | | Total current assets | 3,375,926 | 3,436,169 | | Property and equipment, net | 1,677,021 | 1,652,474 | | Investments | 369,503 | 339,518 | | Goodwill | 3,410,729 | 3,400,227 | | Service contracts, net | 298,025 | 309,828 | | Operating lease right-of-use assets, net | 244,067 | 224,383 | | Other assets, net | 462,419 | 462,642 | | **Total Assets** | **$ 9,837,690** | **$ 9,825,241** | | **LIABILITIES AND SHAREHOLDERS' EQUITY** | | | | Current liabilities: | | | | Accounts payable | $ 462,315 | $ 485,109 | | Accrued compensation and related liabilities | 135,185 | 229,538 | | Accrued liabilities | 779,672 | 875,077 | | Income taxes, current | 78,956 | 4,034 | | Operating lease liabilities, current | 51,691 | 50,744 | | Total current liabilities | 1,507,819 | 1,644,502 | | Long-term liabilities: | | | | Debt due after one year | 2,425,757 | 2,424,999 | | Deferred income taxes | 484,443 | 471,740 | | Operating lease liabilities | 197,818 | 178,738 | | Accrued liabilities | 466,153 | 420,781 | | Total long-term liabilities | 3,574,171 | 3,496,258 | | Shareholders' equity: | | | | Common stock, no par value, and paid-in capital | 2,694,077 | 2,593,479 | | Retained earnings | 12,107,250 | 11,798,451 | | Treasury stock | (10,125,516) | (9,791,838) | | Accumulated other comprehensive income | 79,889 | 84,389 | | Total shareholders' equity | 4,755,700 | 4,684,481 | | **Total Liabilities and Shareholders' Equity** | **$ 9,837,690** | **$ 9,825,241** | [Consolidated Condensed Statements of Cash Flows](index=7&type=section&id=Consolidated%20Condensed%20Statements%20of%20Cash%20Flows) This section presents the unaudited consolidated condensed statements of cash flows for Cintas Corporation for the three months ended August 31, 2025, and August 31, 2024, detailing cash flows from operating, investing, and financing activities Consolidated Condensed Statements of Cash Flows (Unaudited, In thousands) | | Three Months Ended | | :---------------------------------------------------------- | :---------------- | :---------------- | | | August 31, 2025 | August 31, 2024 | | **Cash flows from operating activities:** | | | | Net income | $ 491,140 | $ 452,033 | | Adjustments to reconcile net income to net cash provided by operating activities: | | | | Depreciation | 77,589 | 73,838 | | Amortization of intangible assets and capitalized contract costs | 48,348 | 46,554 | | Stock-based compensation | 30,348 | 33,367 | | Deferred income taxes | 13,496 | 1,887 | | Change in current assets and liabilities, net of acquisitions of businesses: | | | | Accounts receivable, net | (3,635) | (49,129) | | Inventories, net | (2,398) | 11,318 | | Uniforms and other rental items in service | (34,760) | (20,144) | | Prepaid expenses and other current assets and capitalized contract costs | (62,382) | (80,282) | | Accounts payable | (22,501) | 56,698 | | Accrued compensation and related liabilities | (94,275) | (86,965) | | Accrued liabilities and other | (101,114) | (44,268) | | Income taxes, current | 74,625 | 65,450 | | **Net cash provided by operating activities** | **414,481** | **460,357** | | **Cash flows from investing activities:** | | | | Capital expenditures | (101,957) | (92,921) | | Purchases of investments | (6,538) | (7,124) | | Acquisitions of businesses, net of cash acquired | (7,602) | (9,436) | | Other, net | (130) | 1 | | **Net cash used in investing activities** | **(116,227)** | **(109,480)** | | **Cash flows from financing activities:** | | | | Issuance of commercial paper, net | — | 166,000 | | Proceeds from exercise of stock-based compensation awards | 2,669 | 231 | | Dividends paid | (157,766) | (138,237) | | Repurchase of common stock | (266,097) | (614,802) | | Other, net | (2,807) | (4,461) | | **Net cash used in financing activities** | **(424,001)** | **(591,269)** | | Effect of exchange rate changes on cash and cash equivalents | (83) | (250) | | Net decrease in cash and cash equivalents | (125,830) | (240,642) | | Cash and cash equivalents at beginning of period | 263,973 | 342,015 | | **Cash and cash equivalents at end of period** | **$ 138,143** | **$ 101,373** |

PART I [Business Overview](index=3&type=section&id=ITEM%201.%20BUSINESS) THOR Industries, established in 1980, is the world's largest recreational vehicle (RV) manufacturer, dominating North American and European markets through decentralized operations - THOR Industries is the world's largest recreational vehicle (RV) manufacturer, dominating both North American and European markets[10](index=10&type=chunk) - The company manufactures towable and motorized RVs in North America through subsidiaries like Airstream, Jayco, and Keystone, and various RV types in Europe via Erwin Hymer Group (EHG)[11](index=11&type=chunk)[12](index=12&type=chunk) - Subsidiaries like Airxcel and Postle provide RV-related components and aluminum extrusions, supporting RV manufacturers and the aftermarket[22](index=22&type=chunk)[23](index=23&type=chunk) General - THOR Industries, founded in 1980, is the world's largest recreational vehicle (RV) manufacturer and a leading producer in both North America and Europe[10](index=10&type=chunk) - The company manufactures various RVs, related components, and accessories in the U.S. and Europe, primarily selling to independent dealers in the U.S., Canada, and Europe[10](index=10&type=chunk) North American Recreational Vehicles - THOR is the largest RV manufacturer in North America by both volume and revenue, maintaining a leading position through fiscal years 2025, 2024, and 2023[13](index=13&type=chunk) - Key North American operating subsidiaries include Airstream (premium towable and motorized RVs), Jayco (towable, fifth-wheel, and motorized RVs), Keystone, KZ, Thor Motor Coach, and Tiffin Group[11](index=11&type=chunk)[13](index=13&type=chunk)[15](index=15&type=chunk)[16](index=16&type=chunk)[17](index=17&type=chunk)[18](index=18&type=chunk)[19](index=19&type=chunk) - Heartland's operations (conventional travel trailers and fifth-wheel RVs) will be reported under Jayco starting in fiscal year 2026[14](index=14&type=chunk) European Recreational Vehicles - THOR is a leading recreational vehicle manufacturer in Europe through its Erwin Hymer Group (EHG) subsidiary[20](index=20&type=chunk) - EHG produces multiple brands, including Buccaneer, Buerstner, Carado, Dethleffs, and Hymer, across nine primary European production facilities, covering both motorized and towable RVs[21](index=21&type=chunk) Other Businesses - Airxcel, Inc. produces a comprehensive range of high-quality RV-related products through its operating divisions and subsidiaries, primarily for RV OEMs and aftermarket sales via dealers and retailers[22](index=22&type=chunk) - Postle Operating, LLC manufactures and sells aluminum extrusions and specialty component products to RV and other manufacturers[23](index=23&type=chunk) Product Line Sales and Segment Information - The company operates with three reportable segments: North American Towable Recreational Vehicles, North American Motorized Recreational Vehicles, and European Recreational Vehicles[24](index=24&type=chunk) - Airxcel and Postle subsidiaries' operations are categorized under "Other," primarily involving sales of aluminum extrusions and specialty RV components[25](index=25&type=chunk) Contribution to Net Sales by Reportable Segment (Fiscal Years 2023-2025) | | 2025 | | | 2024 | | | | 2023 | | |---|---|---|---|---|---|---|---|---|---| | | Amount | % | Amount | % | Amount | % | | Recreational vehicles: | | | | | | | | North American Towable | $3,784,666 | 39.5 | $3,679,671 | 36.6 | $4,202,628 | 37.8 | | North American Motorized | 2,175,604 | 22.7 | 2,445,850 | 24.4 | 3,314,170 | 29.8 | | European | 3,023,961 | 31.6 | 3,364,980 | 33.5 | 3,037,147 | 27.3 | | Total recreational vehicles | 8,984,231 | 93.8 | 9,490,501 | 94.5 | 10,553,945 | 94.9 | | Other | 859,609 | 9.0 | 781,927 | 7.8 | 777,639 | 7.0 | | Intercompany eliminations | (264,350) | (2.8) | (229,020) | (2.3) | (209,979) | (1.9) | | Total | $9,579,490 | 100.0 | $10,043,408 | 100.0 | $11,121,605 | 100.0 | Recreational Vehicle Product Classification - North American RVs primarily include towable RVs (such as conventional travel trailers and fifth-wheel travel trailers) and motorized RVs (Class A, C, and B)[28](index=28&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk) - European RVs include towable caravans, motorcaravans, campervans, and urban vehicles, with European products emphasizing lightweight and compact designs[28](index=28&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk)[37](index=37&type=chunk)[38](index=38&type=chunk) Production - RVs are typically produced based on dealer orders to minimize inventory; North American capacity adjustments are relatively quick and low-cost, while European adjustments are longer and more expensive[39](index=39&type=chunk) - The company relies on a limited number of chassis suppliers, and chassis supply constraints have previously caused production disruptions and may recur[40](index=40&type=chunk)[41](index=41&type=chunk) - Europe continues to face increased costs, intermittent shortages, and delivery delays for non-chassis raw material components in the current fiscal year, impacting production efficiency[43](index=43&type=chunk) Seasonality - RV sales are seasonal, typically lower in winter months (second fiscal quarter) and higher in spring and summer, though strong consumer demand or macro/social disruptions may alter these patterns[46](index=46&type=chunk) Marketing and Distribution - The company primarily sells RVs through independent, non-franchised dealers in the U.S., Canada, and Europe, with approximately **2,400 dealers in North America** and **1,100 in Europe** as of July 31, 2025[47](index=47&type=chunk) - FreedomRoads, LLC accounted for approximately **14.0% of the company's consolidated net sales in fiscal 2025**, and **14.0% and 13.0% in fiscal 2024 and 2023**, respectively[52](index=52&type=chunk) - The company generally does not directly finance dealer purchases but enters into repurchase agreements with lenders upon request, committing to repurchase vehicles if a dealer defaults[53](index=53&type=chunk) Backlog - The increase in North American motorized RV backlog is primarily due to lower retail sales as of July 31, 2024, and dealer and consumer concerns regarding higher interest rates and carrying costs[54](index=54&type=chunk) - The decrease in European recreational vehicle backlog is primarily due to improved chassis supply and normalized dealer inventory levels as of July 31, 2025[56](index=56&type=chunk) Recreational Vehicle Backlog (as of July 31) | | July 31, 2025 | | July 31, 2024 | | Change | % | |---|---|---|---|---|---|---| | Recreational vehicles | | | | | | | | North American Towable | $525,014 | $552,379 | $(27,365) | (5.0) | | North American Motorized | 1,004,620 | 776,903 | 227,717 | 29.3 | | Total North America | 1,529,634 | 1,329,282 | 200,352 | 15.1 | | European | 1,525,592 | 1,950,793 | (425,201) | (21.8) | | Total | $3,055,226 | $3,280,075 | $(224,849) | (6.9) | Product Warranties - North American RV retail purchasers typically receive a **one-to-two-year limited warranty** for defects in materials and workmanship, with longer terms for certain structural components[58](index=58&type=chunk) - European RVs generally offer a **two-year limited warranty** on structural components and up to a **12-year warranty** against water ingress[58](index=58&type=chunk) Regulation - The company complies with vehicle safety and compliance standards from the U.S. RVIA, NHTSA, and those in Canada and Europe[59](index=59&type=chunk) - Operations are subject to environmental control standards for air, water, and noise pollution, as well as workplace health and safety standards[60](index=60&type=chunk)[61](index=61&type=chunk) - The company believes its products and facilities comply in all material respects with applicable regulations and anticipates no significant impact on capital expenditures, earnings, or competitive position from ongoing compliance in the foreseeable future[62](index=62&type=chunk) Competition - The RV industry is highly competitive with low barriers to entry, featuring approximately **80 North American** and **30 European manufacturers**[63](index=63&type=chunk) - As of June 30, 2025, THOR's retail market share in the U.S. and Canada was approximately **39.1% for towable and fifth-wheel RVs** and **48.3% for motorized RVs**[64](index=64&type=chunk) - EHG's retail market share in Europe was approximately **26.1% for motorized RVs and campervans** and **17.3% for caravans**[65](index=65&type=chunk) Trademarks and Patents - The company holds registered trademarks and patents in the U.S., Canada, Germany, and other international markets, and does not rely on third-party patents or technology licenses[66](index=66&type=chunk) Human Capital Resources - As of July 31, 2025, the company employed approximately **20,900 full-time team members globally**, with **13,200 in the U.S.** and **7,700 in Europe**[68](index=68&type=chunk) - The company is committed to a "people-first" culture, offering competitive compensation and benefits, and prioritizing team member safety and well-being[70](index=70&type=chunk)[71](index=71&type=chunk)[72](index=72&type=chunk)[73](index=73&type=chunk) - The company provides annual training on its Business Ethics Policy to certain employees and offers an anonymous reporting channel to ensure ethical conduct[74](index=74&type=chunk) Forward-Looking Statements - This annual report contains forward-looking statements, and actual results may differ materially from expectations[76](index=76&type=chunk) - Risk factors include inflation, raw material and chassis supply constraints, geopolitical events, interest rate fluctuations, warranty and recall claims, dealer financial health, regulatory changes, and competition[76](index=76&type=chunk)[79](index=79&type=chunk) Available Information - The company's annual reports (10-K), quarterly reports (10-Q), current reports (8-K), and proxy statements are available free of charge on its website and the SEC's website[78](index=78&type=chunk) [Risk Factors](index=14&type=section&id=ITEM%201A.%20RISK%20FACTORS) The company faces risks from macroeconomic volatility, intense competition, supply chain dependency, product liabilities, dealer concentration, international operations, and regulatory compliance - RV industry sales are highly volatile, influenced by macroeconomic conditions (such as inflation and interest rates) and consumer sentiment, exhibiting cyclical and seasonal patterns[82](index=82&type=chunk)[83](index=83&type=chunk) - The company heavily relies on suppliers for timely raw materials and components, especially chassis, where shortages or price fluctuations can disrupt production and increase costs[94](index=94&type=chunk)[97](index=97&type=chunk)[100](index=100&type=chunk) - Product recalls, customer satisfaction initiatives, and product liability claims could materially and adversely affect the company's financial condition and reputation[105](index=105&type=chunk)[106](index=106&type=chunk)[107](index=107&type=chunk) - Reliance on key independent dealers (e.g., FreedomRoads, LLC) and dealer consolidation trends could negatively impact business[109](index=109&type=chunk)[110](index=110&type=chunk) - International operations face risks from exchange rate fluctuations, tariffs, regulatory differences, and geopolitical events[111](index=111&type=chunk)[113](index=113&type=chunk)[114](index=114&type=chunk) - Increasingly stringent climate-related regulations, ESG matters, data privacy, and AI regulations may lead to additional costs, restrict product use, or harm the company's reputation[133](index=133&type=chunk)[136](index=136&type=chunk)[139](index=139&type=chunk)[140](index=140&type=chunk) Macroeconomic, Market, and Strategic Risks - RV industry sales are highly volatile, influenced by macroeconomic conditions (such as inflation and interest rates) and consumer sentiment, exhibiting cyclical and seasonal patterns[82](index=82&type=chunk)[83](index=83&type=chunk) - The company's stock price may fluctuate significantly due to various factors, including competitor new products, government regulatory changes, global economic conditions, interest rate changes, and investor sentiment[85](index=85&type=chunk)[86](index=86&type=chunk) - The RV industry is highly competitive with low barriers to entry, featuring competition from existing manufacturers, new entrants, the used RV market, and other leisure spending options[88](index=88&type=chunk)[89](index=89&type=chunk)[90](index=90&type=chunk)[91](index=91&type=chunk) - The company's long-term success depends on its ability to innovate, including developing and marketing new products (e.g., electric and hybrid RVs) that meet consumer demand, but these investments are costly and uncertain[92](index=92&type=chunk)[93](index=93&type=chunk) Operational Risks - The company heavily relies on suppliers for timely raw materials and components, especially chassis, where shortages, production issues, or transportation delays can disrupt operations and increase manufacturing costs[94](index=94&type=chunk)[97](index=97&type=chunk)[101](index=101&type=chunk) - Fluctuations in raw material and component prices, along with changes in tariff policies, could increase costs and impact profit margins if not passed on to dealers[100](index=100&type=chunk) - Product recalls, customer satisfaction initiatives, and product liability claims could materially and adversely affect the company's financial condition and reputation[105](index=105&type=chunk)[106](index=106&type=chunk)[107](index=107&type=chunk) - Reliance on key independent dealers (e.g., FreedomRoads, LLC) and dealer consolidation trends could negatively impact business and increase concentration risk for repurchase obligations[109](index=109&type=chunk)[110](index=110&type=chunk) - International sales (accounting for **36.1% of consolidated sales in fiscal 2025**) expose the company to risks from exchange rate fluctuations, tariffs, international legal compliance, supply chain disruptions, and economic/social instability[111](index=111&type=chunk)[113](index=113&type=chunk)[114](index=114&type=chunk) - Attracting and retaining experienced skilled labor, managing rising labor costs and employee benefits, and potential unionization efforts are critical for the company's long-term success and competitiveness[117](index=117&type=chunk)[118](index=118&type=chunk)[119](index=119&type=chunk)[122](index=122&type=chunk)[123](index=123&type=chunk) Legal and Regulatory Risks - Climate-related regulations (e.g., emissions standards, zero-emission vehicle mandates) and increasing ESG focus may lead to additional compliance costs, restrict product use, or harm the company's reputation and stock price[133](index=133&type=chunk)[134](index=134&type=chunk)[136](index=136&type=chunk)[138](index=138&type=chunk) - Stricter privacy, data use, data protection, and artificial intelligence laws and regulations could result in increased compliance costs, fines, litigation, or reputational damage[139](index=139&type=chunk) - The company's operations are subject to numerous national, regional, federal, state, and local regulations, and any non-compliance or product recalls could materially and adversely affect operating results and reputation[140](index=140&type=chunk)[141](index=141&type=chunk)[142](index=142&type=chunk) - Anti-takeover provisions in the company's organizational documents may delay or prevent a change in control, thereby limiting shareholders' ability to receive a premium[143](index=143&type=chunk)[144](index=144&type=chunk) Financial Risks - Changes in tax rates, tax laws, or tariffs could negatively impact the company's operating results, cash flows, financial condition, dividend payments, or strategic plans[145](index=145&type=chunk)[147](index=147&type=chunk) - The company's repurchase agreements with lenders financing dealer inventory, totaling **$3.484 billion in commercial commitments** as of July 31, 2025, could lead to increased future costs[149](index=149&type=chunk)[150](index=150&type=chunk)[457](index=457&type=chunk) - The company holds significant goodwill, intangible assets, equity investments, and other long-term assets, which may incur impairment charges due to changes in business conditions, poor operating performance, or adjustments to valuation assumptions[151](index=151&type=chunk)[283](index=283&type=chunk)[284](index=284&type=chunk) - The availability and terms of financing for dealers and retail purchasers, particularly interest rates and credit availability, significantly impact product demand and company performance[152](index=152&type=chunk)[153](index=153&type=chunk) - The company's debt arrangements (totaling **$933.8 million** as of July 31, 2025) make it more sensitive to economic downturns and may limit future financing capacity and debt costs[155](index=155&type=chunk)[158](index=158&type=chunk) [Unresolved Staff Comments](index=26&type=section&id=ITEM%201B.%20UNRESOLVED%20STAFF%20COMMENTS) There are no unresolved staff comments in this report - There are no unresolved staff comments in this report[160](index=160&type=chunk) [Cybersecurity Risk Management, Strategy, and Governance](index=26&type=section&id=ITEM%201C.%20CYBERSECURITY%20RISK%20MANAGEMENT,%20STRATEGY%20AND%20GOVERNANCE) The company dedicates significant resources to its cybersecurity program, integrating it into the overall risk management system to identify, assess, and mitigate cyber threats, with board oversight - The company dedicates significant resources to its cybersecurity program, integrating it into the overall risk management system to identify, assess, and mitigate cyber threats[160](index=160&type=chunk) - Cybersecurity measures include penetration testing, internal testing, phishing simulations, and employee training, with cybersecurity insurance purchased to cover potential information security breach costs[161](index=161&type=chunk)[162](index=162&type=chunk) - The Board's Audit Committee oversees cybersecurity threat risks, with the Data Protection Officer (possessing nearly **25 years of cybersecurity experience**) regularly reporting to the Audit Committee and the Board[164](index=164&type=chunk)[165](index=165&type=chunk) - No cybersecurity threats with a material impact on the company's business strategy, operating results, or financial condition were identified in fiscal year 2025[163](index=163&type=chunk) Risk Management and Strategy - The company integrates cybersecurity risk management processes into its overall risk management system, regularly identifying and assessing threats, and developing mitigation strategies[160](index=160&type=chunk) - Internal measures include penetration testing, internal testing/code reviews, phishing simulations, and employee cybersecurity training[161](index=161&type=chunk) - The company maintains cybersecurity insurance to cover potential information security breach costs, and no material cybersecurity threats were identified in fiscal year 2025[162](index=162&type=chunk)[163](index=163&type=chunk) Governance - The company's Board of Directors' Audit Committee is responsible for overseeing cybersecurity threat risks[164](index=164&type=chunk) - The Data Protection Officer, reporting directly to the General Counsel, is responsible for the overall cybersecurity risk management program and regularly provides cybersecurity risk reports to the Audit Committee and the Board[164](index=164&type=chunk)[165](index=165&type=chunk) [Properties](index=27&type=section&id=ITEM%202.%20PROPERTIES) As of July 31, 2025, THOR Industries owns or leases approximately 24.136 million square feet of manufacturing and office space globally, primarily in Indiana and Germany, which are well-maintained and sufficient for intended use - As of July 31, 2025, the company owns or leases approximately **24,136,000 square feet** of manufacturing and office space globally[166](index=166&type=chunk)[167](index=167&type=chunk) - Primary properties are concentrated in Indiana, U.S. (**12,612,000 square feet**), and Germany, Europe (**4,065,000 square feet**)[167](index=167&type=chunk) - The company believes its existing facilities are well-maintained, in good condition, and sufficient for their intended purposes[166](index=166&type=chunk) [Legal Proceedings](index=28&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS) The company is involved in routine litigation, including 'lemon law' and warranty claims, but management believes these will not materially impact its financial position, with past product recalls and investigations resolved - The company is involved in routine litigation, primarily based on state "lemon laws," warranty claims, and vehicle accidents, and maintains insurance coverage exceeding its self-insured retention for these matters[168](index=168&type=chunk) - Management believes the ultimate disposition of any current legal proceedings or claims will not have a material adverse effect on the company's financial condition, results of operations, or cash flows[168](index=168&type=chunk) - A product recall at the end of fiscal 2021 and a German vehicle weight disclosure investigation in fiscal 2022 have been resolved, with no material impact on the company's operating results in fiscal 2025[169](index=169&type=chunk)[170](index=170&type=chunk)[463](index=463&type=chunk) [Mine Safety Disclosures](index=28&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable - This item is not applicable[171](index=171&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities](index=29&type=section&id=ITEM%205.%20MARKET%20FOR%20REGISTRANT'S%20COMMON%20EQUITY,%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) The company's common stock trades on the NYSE, with 131 registered shareholders as of September 16, 2025; the Board plans to continue quarterly cash dividends, and the company repurchased **$52.647 million** of common stock in fiscal 2025, with a new **$400 million** authorization approved - The company's common stock (par value **$0.10 per share**) trades on the New York Stock Exchange (NYSE) under the ticker symbol 'THO'[173](index=173&type=chunk) - As of September 16, 2025, there were **131 registered holders** of the company's common stock[173](index=173&type=chunk) - The Board plans to continue regular quarterly cash dividends in the future, subject to earnings, cash flow, and existing financing agreement conditions[175](index=175&type=chunk) - In fiscal 2025, the company repurchased **586,558 shares of common stock** totaling **$52.647 million**; as of July 31, 2025, **$379.3 million remained** under a new **$400 million stock repurchase authorization** (approved June 18, 2025, expiring July 31, 2027)[178](index=178&type=chunk)[977](index=977&type=chunk)[978](index=978&type=chunk) Market Information - The company's common stock (par value **$0.10 per share**) trades on the New York Stock Exchange (NYSE) under the ticker symbol 'THO'[173](index=173&type=chunk) Holders - As of September 16, 2025, there were **131 registered holders** of the company's common stock[173](index=173&type=chunk) Dividends - The company's Board of Directors currently plans to continue regular quarterly cash dividends in the future[175](index=175&type=chunk) - Dividend payments are subject to specific payment conditions in existing credit agreements, including minimum adjusted excess cash availability and fixed charge coverage tests[175](index=175&type=chunk) Quarterly Dividend Payments | Fiscal Year | Quarterly Dividend Per Share | | :--- | :----------- | | 2025 | $0.50 | | 2024 | $0.48 | Unregistered Sales of Equity Securities and Use of Proceeds - In fiscal 2025, the company repurchased **586,558 shares of common stock** at a weighted-average price of **$89.76**, totaling **$52.647 million**[178](index=178&type=chunk)[977](index=977&type=chunk) - On June 18, 2025, the Board approved a new **$400 million stock repurchase authorization**, effective until July 31, 2027, with **$379.3 million remaining** under the authorization as of July 31, 2025[178](index=178&type=chunk)[975](index=975&type=chunk)[978](index=978&type=chunk) Stock Repurchase Summary (Three Months Ended July 31, 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs | | :--------------- | :------------------------------- | :--------------------------- | :----------------------------------------------------------------------- | :------------------------------------------------------------------------------------- | | 5/1/25 – 5/31/25 | — | — | — | $421,095 | | 6/1/25 – 6/30/25 | 453,116 | $88.98 | 453,116 | $389,903 | | 7/1/25 – 7/31/25 | 117,242 | $90.44 | 117,242 | $379,300 | | | 570,358 | $89.28 | 570,358 | | [ (Reserved)](index=31&type=section&id=ITEM%206.%20(RESERVED)) This item is reserved - This item is reserved[8](index=8&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=ITEM%207.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) In fiscal 2025, consolidated net sales decreased **4.6% to $9.579 billion**, gross margin fell **0.5 percentage points to 14.0%**, and income before taxes dropped **15.1% to $296 million**, driven by demand shifts and macroeconomic factors - Consolidated net sales for fiscal 2025 decreased by **4.6%**, primarily due to lower demand in the North American motorized and European segments, partially offset by sales growth in the North American towable segment[227](index=227&type=chunk) - Income before income taxes for fiscal 2025 decreased by **15.1%**, primarily impacted by lower consolidated net sales and increased selling, general, and administrative expenses[231](index=231&type=chunk) - The company prioritizes using cash flow to reduce debt, maintain and grow dividend payments, fund organic growth, and pursue opportunistic acquisitions[266](index=266&type=chunk) Consolidated Financial Performance Summary (Fiscal Years 2025 vs. 2024) | Metric | Fiscal 2025 (Amount) | Fiscal 2024 (Amount) | Change (Amount) | Change (%) | | :------------------------------------ | :------------------- | :------------------- | :---------------- | :--------- | | Net Sales | $9,579,490 | $10,043,408 | $(463,918) | (4.6) | | Gross Profit | $1,340,641 | $1,451,962 | $(111,321) | (7.7) | | Gross Profit % of Net Sales | 14.0% | 14.5% | (0.5) pp | | | Selling, General & Administrative Expenses | $922,554 | $895,531 | $27,023 | 3.0 | | SG&A % of Net Sales | 9.6% | 8.9% | 0.7 pp | | | Income Before Income Taxes | $296,191 | $348,844 | $(52,653) | (15.1) | | Effective Income Tax Rate | 13.4% | 23.9% | (10.5) pp | | Executive Summary - THOR is the world's largest RV manufacturer, dominating both North American and European markets with a business model that includes decentralized operating units[183](index=183&type=chunk)[184](index=184&type=chunk) - In fiscal 2025, consumer confidence, inflation, and high interest rates negatively impacted RV wholesale and retail demand in North America and Europe[186](index=186&type=chunk) Significant Fiscal 2025 Events - The Omnibus Beautiful Bill (OBBB) was signed into law on July 4, 2025, with the most relevant impact for fiscal 2025 being **100% bonus depreciation** for qualified assets[187](index=187&type=chunk) - Other relevant OBBB provisions will impact the company in fiscal years 2026 and 2027, including the expensing of U.S. R&D costs and changes to international tax provisions[187](index=187&type=chunk) Significant Fiscal 2024 Events - On November 15, 2023, the company amended its term loan and ABL agreements, extending maturity dates and reducing applicable interest rates for U.S. dollar-denominated loans[188](index=188&type=chunk) - On July 1, 2024, the company further amended its term loan, reducing applicable interest rates for both U.S. dollar and Euro-denominated loans[189](index=189&type=chunk) - These amendments resulted in total charges of **$14.741 million** recognized in fiscal 2024, primarily comprising debt extinguishment costs and third-party expenses[188](index=188&type=chunk)[429](index=429&type=chunk) North American RV Industry - As of July 31, 2025, North American RV independent dealer inventory decreased by **2.3% to approximately 73,300 units**[191](index=191&type=chunk) - As of July 31, 2025, THOR's total North American RV backlog increased by **15.1% to $1.5296 billion**, primarily driven by an increase in North American motorized RV backlog[193](index=193&type=chunk) - RVIA forecasts North American wholesale unit shipments to increase by **1.0% to approximately 337,000 units in calendar year 2025**, and by **3.6% to approximately 349,300 units in calendar year 2026**[195](index=195&type=chunk)[196](index=196&type=chunk) - Despite recent challenges, the company remains optimistic about the long-term outlook for North American retail sales, believing consumer interest in the RV lifestyle remains strong[202](index=202&type=chunk)[203](index=203&type=chunk) North American RV Industry Wholesale Unit Shipments (Six Months Ended June 30) | | U.S. and Canada Wholesale Unit Shipments | | | | |---|---|---|---|---| | | Six Months Ended June 30, | | Increase | % | | | 2025 | 2024 | (Decrease) | Change | | North American Towable units | 172,041 | 159,407 | 12,634 | 7.9 | | North American Motorized units | 18,664 | 19,189 | (525) | (2.7) | | Total | 190,705 | 178,596 | 12,109 | 6.8 | North American RV Industry Retail Unit Registrations (Six Months Ended June 30) | | U.S. and Canada Retail Unit Registrations | | | | |---|---|---|---|---| | | Six Months Ended June 30, | | Increase | % | | | 2025 | 2024 | (Decrease) | Change | | North American Towable units | 166,013 | 169,013 | (3,000) | (1.8) | | North American Motorized units | 19,665 | 21,697 | (2,032) | (9.4) | | Total | 185,678 | 190,710 | (5,032) | (2.6) | European RV Industry - As of July 31, 2025, European RV independent dealer inventory was approximately **22,200 units**, down from **26,200 units** as of July 31, 2024[210](index=210&type=chunk) - As of July 31, 2025, European recreational vehicle backlog decreased by **21.8% to $1.5256 billion**, primarily due to improved chassis supply and normalized dealer inventory levels[211](index=211&type=chunk) - Despite short-term macroeconomic impacts, the company remains positive about the long-term growth prospects for European RV retail sales, driven by favorable demographic trends and increasing popularity of the RV lifestyle[216](index=216&type=chunk) European RV Industry Retail Unit Registrations (Six Months Ended June 30) | | European Unit Registrations | | | | | | |---|---|---|---|---|---|---| | | (2) Motorcaravan and Campervan | | | Caravan | | | | | Six Months Ended June 30, | | % | Six Months Ended June 30, | | % | | | 2025 | 2024 | Change | 2025 | 2024 | Change | | (1) OEM Reporting Countries | 82,524 | 82,909 | (0.5) | 24,869 | 26,898 | (7.5) | | (1) Non-OEM Reporting Countries | 12,139 | 11,901 | 2.0 | 6,393 | 7,776 | (17.8) | | Total | 94,663 | 94,810 | (0.2) | 31,262 | 34,674 | (9.8) | Results of Operations Consolidated Financial Performance - Consolidated net sales for fiscal 2025 decreased by **4.6% year-over-year to $9.579 billion**, primarily due to lower demand in the North American motorized and European segments[227](index=227&type=chunk) - Consolidated gross profit for fiscal 2025 decreased by **7.7% year-over-year to $1.341 billion**, with gross margin declining from **14.5% to 14.0%**, primarily due to lower sales and increased sales discounts[228](index=228&type=chunk) - Income before income taxes for fiscal 2025 decreased by **15.1% year-over-year to $296 million**, primarily impacted by lower consolidated net sales and increased selling, general, and administrative expenses[231](index=231&type=chunk) - The effective income tax rate for fiscal 2025 decreased from **23.9% to 13.4%**, primarily benefiting from foreign tax law changes (revaluation of deferred tax liabilities due to lower German corporate income tax rates) and a favorable mix of profitable jurisdictions[232](index=232&type=chunk)[445](index=445&type=chunk) Consolidated Operating Results (Fiscal Years 2025 vs. 2024) | | | FISCAL 2025 | FISCAL 2024 | | Change | % | |---|---|---|---|---|---|---| | NET SALES: | | | | | | | | Recreational vehicles | | | | | | | | North American Towable | $3,784,666 | $3,679,671 | $104,995 | 2.9 | | North American Motorized | 2,175,604 | 2,445,850 | (270,246) | (11.0) | | Total North America | 5,960,270 | 6,125,521 | (165,251) | (2.7) | | European | 3,023,961 | 3,364,980 | (341,019) | (10.1) | | Total recreational vehicles | 8,984,231 | 9,490,501 | (506,270) | (5.3) | | Other | 859,609 | 781,927 | 77,682 | 9.9 | | Intercompany eliminations | (264,350) | (229,020) | (35,330) | (15.4) | | Total | $9,579,490 | $10,043,408 | $(463,918) | (4.6) | Consolidated Gross Profit (Fiscal Years 2025 vs. 2024) | | | % of | | | % of | | | | |---|---|---|---|---|---|---|---|---| | | FISCAL 2025 | Segment | FISCAL 2024 | Segment | | Change | % | | | | Net Sales | | Net Sales | Amount | Change | | GROSS PROFIT: | | | | | | | | | Recreational vehicles | | | | | | | | | North American Towable | $496,976 | 13.1 | $427,386 | 11.6 | $69,590 | 16.3 | | North American Motorized | 210,634 | 9.7 | 277,840 | 11.4 | (67,206) | (24.2) | | Total North America | 707,610 | 11.9 | 705,226 | 11.5 | 2,384 | 0.3 | | European | 460,319 | 15.2 | 581,211 | 17.3 | (120,892) | (20.8) | | Total recreational vehicles | 1,167,929 | 13.0 | 1,286,437 | 13.6 | (118,508) | (9.2) | | Other, net | 172,712 | 20.1 | 165,525 | 21.2 | 7,187 | 4.3 | | Total | $1,340,641 | 14.0 | $1,451,962 | 14.5 | $(111,321) | (7.7) | Consolidated Income Before Income Taxes (Fiscal Years 2025 vs. 2024) | | | | % of | | % of | | Change | % | |---|---|---|---|---|---|---|---|---| | | | FISCAL 2025 | Segment | FISCAL 2024 | Segment | Amount | Change | | | | | Net Sales | | Net Sales | | | | INCOME (LOSS) BEFORE INCOME | | | | | | | | | TAXES: | | | | | | | | | Recreational vehicles | | | | | | | | | North American Towable | $247,012 | 6.5 | $169,232 | 4.6 | $77,780 | 46.0 | | North American Motorized | 85,343 | 3.9 | 126,496 | 5.2 | (41,153) | (32.5) | | Total North America | 332,355 | 5.6 | 295,728 | 4.8 | 36,627 | 12.4 | | European | 101,634 | 3.4 | 231,377 | 6.9 | (129,743) | (56.1) | | Total recreational vehicles | 433,989 | 4.8 | 527,105 | 5.6 | (93,116) | (17.7) | | Other, net | 53,740 | 6.3 | 45,299 | 5.8 | 8,441 | 18.6 | | Corporate | (191,538) | — | (223,560) | — | 32,022 | 14.3 | | Total | $296,191 | 3.1 | $348,844 | 3.5 | $(52,653) | (15.1) | Segment Reporting North American Towable Recreational Vehicles - Net sales increased by **2.9%**, primarily driven by a **6.2% increase in unit shipments**, despite a **3.3% decrease in net price per unit** due to a product mix shift towards mid-priced units[237](index=237&type=chunk)[238](index=238&type=chunk) - Gross profit increased by **16.3%**, with gross margin improving from **11.6% to 13.1%**, primarily due to a lower percentage of cost of products sold, including reduced sales discounts and improved warranty costs[239](index=239&type=chunk)[241](index=241&type=chunk) North American Towable Recreational Vehicles Segment Performance (Fiscal Years 2025 vs. 2024) | Metric | Fiscal 2025 (Amount) | Fiscal 2024 (Amount) | Change (Amount) | Change (%) | | :------------------------------------ | :------------------- | :------------------- | :---------------- | :--------- | | Net Sales | $3,784,666 | $3,679,671 | $104,995 | 2.9 | | Unit Shipments | 119,790 | 112,830 | 6,960 | 6.2 | | Gross Profit | $496,976 | $427,386 | $69,590 | 16.3 | | Gross Profit % of Net Sales | 13.1% | 11.6% | 1.5 pp | | | Income Before Income Taxes | $247,012 | $169,232 | $77,780 | 46.0 | North American Motorized Recreational Vehicles - Net sales decreased by **11.0%**, primarily due to an **8.6% decrease in unit shipments** and a **2.4% decrease in net price per unit**, the latter influenced by increased sales discounts and a product mix shift towards mid-priced gasoline models[245](index=245&type=chunk)[246](index=246&type=chunk) - Gross profit decreased by **24.2%**, with gross margin declining from **11.4% to 9.7%**, primarily due to lower sales and an increased percentage of cost of products sold, driven by higher sales discounts and product mix changes[247](index=247&type=chunk)[249](index=249&type=chunk) North American Motorized Recreational Vehicles Segment Performance (Fiscal Years 2025 vs. 2024) | Metric | Fiscal 2025 (Amount) | Fiscal 2024 (Amount) | Change (Amount) | Change (%) | | :------------------------------------ | :------------------- | :------------------- | :---------------- | :--------- | | Net Sales | $2,175,604 | $2,445,850 | $(270,246) | (11.0) | | Unit Shipments | 17,153 | 18,761 | (1,608) | (8.6) | | Gross Profit | $210,634 | $277,840 | $(67,206) | (24.2) | | Gross Profit % of Net Sales | 9.7% | 11.4% | (1.7) pp | | | Income Before Income Taxes | $85,343 | $126,496 | $(41,153) | (32.5) | European Recreational Vehicles - Net sales decreased by **10.1%**, primarily due to a **19.7% decrease in unit shipments**, partially offset by a **9.6% increase in net price per unit**, influenced by foreign currency exchange rate changes and a product mix shift towards motorized RVs[254](index=254&type=chunk)[255](index=255&type=chunk) - Gross profit decreased by **20.8%**, with gross margin declining from **17.3% to 15.2%**, primarily due to lower sales and an increased percentage of material and manufacturing costs[258](index=258&type=chunk)[259](index=259&type=chunk)[260](index=260&type=chunk) European Recreational Vehicles Segment Performance (Fiscal Years 2025 vs. 2024) | Metric | Fiscal 2025 (Amount) | Fiscal 2024 (Amount) | Change (Amount) | Change (%) | | :------------------------------------ | :------------------- | :------------------- | :---------------- | :--------- | | Net Sales | $3,023,961 | $3,364,980 | $(341,019) | (10.1) | | Unit Shipments | 44,445 | 55,317 | (10,872) | (19.7) | | Gross Profit | $460,319 | $581,211 | $(120,892) | (20.8) | | Gross Profit % of Net Sales | 15.2% | 17.3% | (2.1) pp | | | Income Before Income Taxes | $101,634 | $231,377 | $(129,743) | (56.1) | Liquidity and Capital Resources - As of July 31, 2025, cash and cash equivalents increased by **$85.28 million to $586.6 million**, with **$412.1 million held in the U.S.** and **$174.5 million in Europe**[263](index=263&type=chunk) - As of July 31, 2025, net working capital was **$1.193 billion**, up from **$1.083 billion** as of July 31, 2024[264](index=264&type=chunk) - The company expects its cash and cash equivalents on hand, funds generated from operations, and available funds under its revolving asset-based credit facility (approximately **$840 million** as of July 31, 2025) to be sufficient for foreseeable operating needs[265](index=265&type=chunk) - The company prioritizes using cash flow to reduce debt, maintain and grow dividend payments, fund organic growth, and pursue opportunistic acquisitions and stock repurchases[266](index=266&type=chunk) Operating Activities - Net cash provided by operating activities for fiscal 2025 was **$577.9 million**, primarily from net income adjusted for non-cash items (**$512 million**) and an increase in accounts payable[270](index=270&type=chunk) Net Cash Provided by Operating Activities | Fiscal Year | Amount | | :--- | :------- | | 2025 | $577,923 | | 2024 | $545,548 | Investing Activities - Net cash used in investing activities for fiscal 2025 was **$64.465 million**, primarily for capital expenditures (**$122.9 million**), partially offset by proceeds from the disposal of property, plant, and equipment (**$63.305 million**)[272](index=272&type=chunk) Net Cash Used in Investing Activities | Fiscal Year | Amount | | :--- | :--------- | | 2025 | $(64,465) | | 2024 | $(146,812) | Financing Activities - Net cash used in financing activities for fiscal 2025 was **$426.3 million**, primarily for term loan repayments (**$205 million**), quarterly dividend payments (**$106.1 million**), and treasury stock repurchases (**$52.647 million**)[274](index=274&type=chunk) - The company increased its quarterly dividend from **$0.48 to $0.50 per share** in October 2024[276](index=276&type=chunk) Net Cash Used in Financing Activities | Fiscal Year | Amount | | :--- | :--------- | | 2025 | $(426,306) | | 2024 | $(337,677) | Principal Contractual Obligations and Commercial Commitments - As of July 31, 2025, the company's total commercial commitments under dealer inventory financing repurchase obligations amounted to **$3.484 billion**[280](index=280&type=chunk)[457](index=457&type=chunk) Principal Contractual Cash Obligations (as of July 31, 2025) | Contractual Obligations | Total | Fiscal 2026 | Fiscal 2027-2028 | Fiscal 2029-2030 | After 5 Years | | :---------------------- | :------ | :---------- | :--------------- | :--------------- | :------------ | | Debt principal payments | $933,812 | $3,367 | $11,331 | $505,608 | $413,506 | | Finance leases | $2,062 | $1,107 | $955 | — | — | | Operating leases | $57,348 | $17,476 | $20,181 | $6,902 | $12,789 | | Purchase obligations | $201,391 | $201,391 | — | — | — | | **Total** | **$1,194,613** | **$223,341** | **$32,467** | **$512,510** | **$426,295** | Other Commercial Commitments (as of July 31, 2025) | Commercial Commitments | Total Committed | Less Than One Year | 1-3 Years | 4-5 Years | Over 5 Years | | :----------------------- | :-------------- | :----------------- | :---------- | :---------- | :----------- | | Standby repurchase obligations | $3,484,235 | $2,130,127 | $1,354,108 | — | — | Application of Critical Accounting Estimates - Critical accounting estimates include the valuation of goodwill, intangible assets, and long-lived assets, as well as product warranty reserves[282](index=282&type=chunk) - Goodwill (**$1.841 billion** as of July 31, 2025) is tested annually for impairment, with its fair value determined using a discounted cash flow model involving significant management judgments such as sales growth rates, gross margin patterns, and discount rates[283](index=283&type=chunk)[284](index=284&type=chunk) - Product warranty liabilities (**$291.1 million** as of July 31, 2025) are estimated based on retail sales history, dealer inventory, average costs, and the distribution of warranty expenditures[288](index=288&type=chunk)[425](index=425&type=chunk) Accounting Pronouncements - The company adopted ASU 2023-07, 'Segment Reporting: Improvements to Reportable Segment Disclosures,' as of July 31, 2025[380](index=380&type=chunk) - The company is evaluating ASU 2023-09, 'Income Taxes: Improvements to Income Tax Disclosures' (effective fiscal 2026), and ASU 2024-03, 'Income Statement—Reporting Comprehensive Income—Disaggregation of Expenses Disclosures' (effective fiscal 2028)[381](index=381&type=chunk)[382](index=382&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=52&type=section&id=ITEM%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company faces market risks from foreign currency exchange rates, interest rates, and commodity prices, managing these through forward contracts, economic hedges, and supplier negotiations - The company primarily faces foreign currency exchange rate risk from the Euro and British Pound, which it manages using forward foreign exchange contracts[292](index=292&type=chunk) - As of July 31, 2025, the company held **$373.8 million** in Euro-denominated debt, serving as an economic hedge against foreign currency exchange rate risk for its Euro-denominated subsidiary investments[293](index=293&type=chunk)[398](index=398&type=chunk) - Regarding interest rate risk, assuming constant floating-rate debt levels, a **one percentage point increase in interest rates** is projected to reduce income before income taxes by **$4.138 million annually**[294](index=294&type=chunk) - The company faces commodity price risk from fluctuations in raw material prices, such as steel and aluminum, and manages these risks through negotiations with suppliers[295](index=295&type=chunk) Currency Exchange Risk - The company primarily faces currency exchange rate risk from the Euro and British Pound, and uses forward foreign exchange contracts to manage risks associated with anticipated sales transactions[292](index=292&type=chunk) - As of July 31, 2025, the company held **$373.8 million** in Euro-denominated debt, and a hypothetical **10% change in the Euro/U.S. dollar exchange rate** would alter the debt balance by approximately **$37.381 million**[293](index=293&type=chunk) Interest Rate Risk - The company faces market risk from changes in interest rates, which could impact operating results and financial condition[294](index=294&type=chunk) - Based on the company's assumed level of floating-rate debt for the next 12 months, a **one percentage point increase in interest rates** is projected to reduce income before income taxes by **$4.138 million annually**[294](index=294&type=chunk) Commodity Price Risk - The company faces market risk from price fluctuations in purchased raw materials like steel and aluminum, which are integrated into its products and components[295](index=295&type=chunk) - The company manages the timing and magnitude of commodity price increases through negotiations with suppliers[295](index=295&type=chunk) [Financial Statements and Supplementary Data – See Item 15](index=53&type=section&id=ITEM%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA%20%E2%80%93%20SEE%20ITEM%2015) This item references the financial statements and supplementary data at the end of the report, including unaudited quarterly financial data for fiscal years 2025 and 2024 - This item references the financial statements and supplementary data found on pages F-1 through F-35 at the end of the report[297](index=297&type=chunk) Quarterly Financial Data (Unaudited) Quarterly Financial Data (Unaudited) - Fiscal Year 2025 | | | | | | Quarter Ended | | | | |---|---|---|---|---|---|---|---|---| | Fiscal 2025 | | October 31 | | January 31 | | April 30 | | July 31 | | Net sales | $2,142,784 | $2,018,107 | $2,894,816 | $2,523,783 | | Gross profit | 281,442 | 245,197 | 443,119 | 370,883 | | Net income (loss) attributable to THOR Industries, Inc. | (1,832) | (551) | 135,185 | 125,757 | | (1) Earnings (loss) per common share: | | | | | | | Basic | $ (0.03) | $ (0.01) | $ 2.54 | $ 2.37 | | Diluted | $ (0.03) | $ (0.01) | $ 2.53 | $ 2.36 | | Dividends paid per common share | $ 0.50 | $ 0.50 | $ 0.50 | $ 0.50 | | Market prices per common share | | | | | | | High | $ 115.86 | $ 118.85 | $ 105.75 | $ 97.32 | | Low | $ 93.86 | $ 92.45 | $ 63.16 | $ 72.07 | Quarterly Financial Data (Unaudited) - Fiscal Year 2024 | | | | | | Quarter Ended | | | | |---|---|---|---|---|---|---|---|---| | Fiscal 2024 | | October 31 | | January 31 | | April 30 | | July 31 | | Net sales | $2,500,759 | $2,207,369 | $2,801,113 | $2,534,167 | | Gross profit | 357,932 | 270,847 | 421,852 | 401,331 | | Net income attributable to THOR Industries, Inc. | 53,565 | 7,217 | 114,511 | 90,015 | | (1) Earnings per common share: | | | | | | | Basic | $ 1.01 | $ 0.14 | $ 2.15 | $ 1.70 | | Diluted | $ 0.99 | $ 0.13 | $ 2.13 | $ 1.68 | | Dividends paid per common share | $ 0.48 | $ 0.48 | $ 0.48 | $ 0.48 | | Market prices per common share | | | | | | | High | $ 116.31 | $ 122.00 | $ 129.31 | $ 110.32 | | Low | $ 84.55 | $ 87.52 | $ 96.99 | $ 88.37 | [Changes In and Disagreements With Accountants on Accounting and Financial Disclosure](index=56&type=section&id=ITEM%209.%20CHANGES%20IN%20AND%20DISAGREEMENTS%20WITH%20ACCOUNTANTS%20ON%20ACCOUNTING%20AND%20FINANCIAL%20DISCLOSURE) There are no changes in or disagreements with accountants on accounting and financial disclosure in this report - There are no changes in or disagreements with accountants on accounting and financial disclosure in this report[300](index=300&type=chunk) [Controls and Procedures](index=54&type=section&id=ITEM%209A.%20CONTROLS%20AND%20PROCEDURES) Management, including the CEO and CFO, affirmed the effectiveness of disclosure controls and internal controls over financial reporting as of July 31, 2025, with no significant changes in Q4 FY2025, and Deloitte issued an unqualified opinion on internal controls - The company's management assessed and confirmed that its disclosure controls and procedures were effective as of July 31, 2025[300](index=300&type=chunk) - Management, based on the COSO framework, assessed and concluded that the company's internal control over financial reporting was effective as of July 31, 2025[303](index=303&type=chunk) - No significant changes in internal control over financial reporting occurred during the fourth fiscal quarter of 2025[305](index=305&type=chunk) - Deloitte & Touche LLP, the independent registered public accounting firm, issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting[307](index=307&type=chunk)[308](index=308&type=chunk) Part A – Disclosure Controls and Procedures - The company's management, including the Chief Executive Officer and Chief Financial Officer, assessed and confirmed that its disclosure controls and procedures were effective as of July 31, 2025[300](index=300&type=chunk) - These controls are designed to ensure that required information is recorded, processed, summarized, and reported within SEC-prescribed timeframes, and communicated to management for disclosure decisions[300](index=300&type=chunk) Part B – Management's Annual Report on Internal Control Over Financial Reporting - Management is responsible for establishing and maintaining effective internal control over financial reporting and assessed its effectiveness based on the COSO framework (2013)[301](index=301&type=chunk)[303](index=303&type=chunk) - Management concluded that, as of July 31, 2025, the company's internal control over financial reporting was effective[303](index=303&type=chunk) Part C – Changes in Internal Control Over Financial Reporting - No changes in internal control over financial reporting occurred during the fourth fiscal quarter of 2025 that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[305](index=305&type=chunk) Part D – Attestation Report of Independent Registered Public Accounting Firm - Deloitte & Touche LLP issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting as of July 31, 2025[307](index=307&type=chunk) - Deloitte & Touche LLP also audited the company's consolidated financial statements for the year ended July 31, 2025, and issued an unqualified opinion[308](index=308&type=chunk) [Other Information](index=58&type=section&id=ITEM%209B.%20OTHER%20INFORMATION) The company permits directors and officers to trade company stock under Rule 10b5-1 plans, subject to insider trading policies and ownership requirements, with no new plans adopted or terminated in the three months ended July 31, 2025 - The company's insider trading policy permits directors and officers to trade company stock under Rule 10b5-1 trading arrangements, subject to applicable regulations, company insider trading policies, and stock ownership requirements[313](index=313&type=chunk) - No Rule 10b5-1 trading arrangements or "non-Rule 10b5-1 trading arrangements" were adopted or terminated by any director or officer during the three months ended July 31, 2025[314](index=314&type=chunk) Rule 10b5-1 Trading Arrangements - The company's insider trading policy permits directors and officers to enter into Rule 10b5-1 trading arrangements during open trading windows and when not in possession of material non-public information[313](index=313&type=chunk) - The company generally requires Rule 10b5-1 trading arrangements adopted by directors or officers not to expire within one year of implementation and to comply with mandatory cooling-off period requirements[313](index=313&type=chunk) - No Rule 10b5-1 trading arrangements were adopted or terminated by any director or officer during the three months ended July 31, 2025[314](index=314&type=chunk) [Disclosure Regarding Foreign Jurisdictions That Prevent Inspection](index=58&type=section&id=ITEM%209C.%20DISCLOSURE%20REGARDING%20FOREIGN%20JURISDICTIONS%20THAT%20PREVENT%20INSPECTION) This item is not applicable - This item is not applicable[315](index=315&type=chunk) PART III [Directors, Executive Officers, and Corporate Governance](index=59&type=section&id=ITEM%2010.%20DIRECTORS,%20EXECUTIVE%20OFFICERS%20AND%20CORPORATE%20GOVERNANCE) The company has adopted a Business Ethics Policy applicable to all directors, officers, and employees, with additional governance information incorporated by reference from its 2025 proxy statement - The company has adopted the "THOR Industries, Inc. Business Ethics Policy," applicable to all directors, officers, and employees, available on its website[318](index=318&type=chunk) - Additional information regarding directors, executive officers, and corporate governance is incorporated by reference from the company's 2025 Annual Meeting of Shareholders proxy statement[319](index=319&type=chunk) [Executive Compensation](index=59&type=section&id=ITEM%2011.%20EXECUTIVE%20COMPENSATION) Information regarding executive compensation is incorporated by reference from the company's proxy statement - Information regarding executive compensation is incorporated by reference from the company's proxy statement[320](index=320&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=59&type=section&id=ITEM%2012.%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS) As of July 31, 2025, **703,062 outstanding options, warrants, and rights** were issuable under the 2016 Equity and Incentive Plan, with **652,508 shares available for future issuance** - The **703,062 securities** in column (a) represent restricted stock units and performance stock units granted under the 2016 Plan, which do not have an exercise price[322](index=322&type=chunk)[323](index=323&type=chunk) - Additional information regarding security ownership of certain beneficial owners and management is incorporated by reference from the company's proxy statement[323](index=323&type=chunk) Equity Compensation Plan Information - The **703,062 securities** in column (a) represent restricted stock units and performance stock units granted under the 2016 Plan, which do not have an exercise price[322](index=322&type=chunk)[323](index=323&type=chunk) Equity Compensation Plan Information (as of July 31, 2025) | Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted-average exercise price of outstanding options, warrants and rights (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | | :------------------------------------------ | :-------------------------------------------------------------------------- | :-------------------------------------------------------------------------- | :------------------------------------------------------------------------------------------------------------------------------------------------ | | Equity compensation plans approved by security holders | 703,062 | $— | 652,508 | | Equity compensation plans not approved by security holders | — | — | — | | **Total** | **703,062** | **$—** | **652,508** | [Certain Relationships and Related Transactions and Director Independence](index=60&type=section&id=ITEM%2013.%20CERTAIN%20RELATIONSHIPS%20AND%20RELATED%20TRANSACTIONS%20AND%20DIRECTOR%20INDEPENDENCE) Information regarding certain relationships, related transactions, and director independence is incorporated by reference from the company's proxy statement - Information regarding certain relationships, related transactions, and director independence is incorporated by reference from the company's proxy statement[324](index=324&type=chunk) [Principal Accounting Fees and Services](index=60&type=section&id=ITEM%2014.%20PRINCIPAL%20ACCOUNTING%20FEES%20AND%20SERVICES) Information regarding principal accounting fees and services is incorporated by reference from the company's proxy statement - Information regarding principal accounting fees and services is incorporated by reference from the company's proxy statement[325](index=325&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=59&type=section&id=ITEM%2015.%20EXHIBITS%20AND%20FINANCIAL%20STATEMENT%20SCHEDULES) This item lists the financial statements and exhibits included in the annual report, with all financial statement schedules omitted as the information is inapplicable, immaterial, or already presented in the consolidated financial statements and notes - The financial statements on pages F-1 through F-35 at the end of this report are incorporated by reference into this item[327](index=327&type=chunk) - All financial statement schedules have been omitted because the required information is inapplicable, immaterial, or presented in the consolidated financial statements and their notes[328](index=328&type=chunk) - The exhibit list includes the company's articles of incorporation, debt agreements (e.g., term loan agreement, ABL credit agreement), equity and incentive plans, and various certification documents[329](index=329&type=chunk)[330](index=330&type=chunk) Financial Statements - Financial statements include the Report of Independent Registered Public Accounting Firm, Consolidated Balance Sheets, Consolidated Statements of Income and Comprehensive Income, Consolidated Statements of Stockholders' Equity, and Consolidated Statements of Cash Flows, along with Notes to Consolidated Financial Statements[327](index=327&type=chunk) Financial Statement Schedules - All financial statement schedules have been omitted because the required information is inapplicable, immaterial, or presented in the consolidated financial statements and their notes[328](index=328&type=chunk) Exhibits - The exhibit list includes the company's articles of incorporation, debt agreements (e.g., term loan agreement, ABL credit agreement), equity and incentive plans, and various certification documents[329](index=329&type=chunk)[330](index=330&type=chunk) [Signatures](index=64&type=section&id=SIGNATURES) This report was signed by Robert W. Martin (Director, President, and CEO) and Colleen Zuhl (SVP and CFO) on September 24, 2025, with Deloitte issuing an unqualified opinion on financial statements and internal controls, highlighting Airxcel's goodwill valuation as a critical audit matter - This report was signed by Robert W. Martin, Director, President, and Chief Executive Officer, and Colleen Zuhl, Senior Vice President and Chief Financial Officer of THOR Industries, Inc. on September 24, 2025[334](index=334&type=chunk)[335](index=335&type=chunk)[336](index=336&type=chunk) - Deloitte & Touche LLP issued an unqualified opinion on the consolidated financial statements and the effectiveness of internal control as of July 31, 2025[338](index=338&type=chunk)[339](index=339&type=chunk) - The valuation of goodwill for the Airxcel reporting unit was identified as a critical audit matter due to significant management judgments in estimating fair value, particularly regarding sales growth rates and discount rates[342](index=342&type=chunk)[343](index=343&type=chunk) Report of Independent Registered Public Accounting Firm - Deloitte & Touche LLP issued an unqualified opinion on the consolidated balance sheets of THOR Industries, Inc. and subsidiaries as of July 31, 2025 and 2024, and the related consolidated statements of income and comprehensive income, stockholders' equity, and cash flows for each of the three years ended July 31, 2025[338](index=338&type=chunk) - Deloitte & Touche LLP also issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting as of July 31, 2025[339](index=339&type=chunk) Opinion on the Financial Statements - Deloitte & Touche LLP believes the company's financial statements fairly present, in all material respects, the financial position as of July 31, 2025 and 2024, and the results of operations and cash flows for each of the three years ended July 31, 2025, in conformity with U.S. generally accepted accounting principles[338](index=338&type=chunk) Critical Audit Matter - The valuation of goodwill for the Airxcel reporting unit was identified as a critical audit matter due to significant management judgments in estimating fair value, particularly regarding sales growth rates and discount rates[342](index=342&type=chunk)[343](index=343&type=chunk) - As of July 31, 2025, the goodwill balance was **$1.841 billion**, with **$392 million allocated to the Airxcel reporting unit**, whose fair value exceeded its carrying value, with no impairment identified[342](index=342&type=chunk) - Audit procedures included testing management's controls over determining the reporting unit's fair value, evaluating the reasonableness of sales growth rates, and utilizing a fair value specialist to assess the reasonableness of discount rates[344](index=344&type=chunk)[345](index=345&type=chunk)

[Financial Highlights](index=1&type=section&id=Financial%20Highlights) Key financial metrics for the quarter and fiscal year ended July 31, 2025, show mixed performance in sales, profit, and cash flow Financial Highlights ($ in thousands, except for per share data) | | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Change (QoQ) | Fiscal Years Ended July 31, 2025 | Fiscal Years Ended July 31, 2024 | Change (YoY) | | :---------------------------------------- | :------------------------------- | :------------------------------- | :----------- | :------------------------------- | :------------------------------- | :----------- | | Net Sales | $2,523,783 | $2,534,167 | (0.4)% | $9,579,490 | $10,043,408 | (4.6)% | | Gross Profit | $370,883 | $401,331 | (7.6)% | $1,340,641 | $1,451,962 | (7.7)% | | Gross Profit Margin % | 14.7% | 15.8% | (110) bps | 14.0% | 14.5% | (50) bps | | Net Income Attributable to THOR | $125,757 | $90,015 | 39.7% | $258,559 | $265,308 | (2.5)% | | Diluted Earnings Per Share | $2.36 | $1.68 | 40.5% | $4.84 | $4.94 | (2.0)% | | Cash Flows from Operations | $258,674 | $338,016 | (23.5)% | $577,923 | $545,548 | 5.9% | | EBITDA | $224,804 | $219,025 | 2.6% | $615,839 | $714,655 | (13.8)% | | Adjusted EBITDA | $209,506 | $218,392 | (4.1)% | $659,126 | $730,095 | (9.7)% | [Market Update & Outlook](index=2&type=section&id=Market%20Update%20%26%20Outlook) This section provides an overview of North American and European market trends, dealer sentiment, consumer financial health, and affordability challenges, along with the company's outlook [North American Retail Demand Trends](index=2&type=section&id=North%20American%20Retail%20Demand%20Trends) North American retail trends strengthened during the spring selling season, leading to fiscal 2025 net sales slightly above guidance, but a low- to mid-single digit decline is anticipated for fiscal 2026 due to interest rates, product transition, and dealer relationships - Strengthening retail trends in the spring selling season led to fiscal **2025** consolidated net sales slightly above guidance[5](index=5&type=chunk) - Fiscal **2026** guidance assumes a low- to mid-single digit decline in North American retail[5](index=5&type=chunk) - Key considerations for fiscal **2026** retail include: lapping lower interest rates from calendar **2024**, an 'air pocket' during the Heartland product transition, and expected improvements from enhanced independent dealer relationships[5](index=5&type=chunk) [European Retail Environment & Outlook](index=2&type=section&id=European%20Retail%20Environment%20%26%20Outlook) The European market is expected to be relatively flat in fiscal 2026, despite encouraging signs like double-digit retail growth at the 2025 Caravan Salon, with challenges including a shift towards premium and entry-level brands and declining retail registrations, though ECB interest rate cuts are expected to aid future sales - Anticipate a relatively flat sell-through environment in Europe for fiscal **2026**[6](index=6&type=chunk) - European retail registrations for the first half of calendar year **2025** decreased **2.7%** compared to the prior-year period[6](index=6&type=chunk) European Retail Registrations (H1 2025 vs H1 2024) | Product Segment | Change (%) | | :-------------- | :----- | | Motorcaravans & Campervans | -0.2% | | Caravans | -9.8% | | Total Retail Registrations | -2.7% | - ECB interest rate cuts through June **2025** are expected to aid sales channel throughput by reducing carrying costs for dealers and moderating costs for retail customers[8](index=8&type=chunk) [North American Independent Dealers Sentiment & Industry Outlook](index=2&type=section&id=North%20American%20Independent%20Dealers%20Sentiment%20%26%20Industry%20Outlook) North American independent dealers are cautiously optimistic despite a volatile fiscal 2025, maintaining conservative inventory levels, while the RVIA forecasts approximately 337,000 wholesale shipments for calendar 2025, implying a 6% decline in H2 2025 - North American independent dealers' sentiment is cautiously optimistic, despite a volatile fiscal **2025**[7](index=7&type=chunk) - Dealers are expected to place orders closer to need and adopt a conservative inventory stance[7](index=7&type=chunk) - RVIA forecast for calendar **2025** North American wholesale shipments is **320,400 to 353,500 units**, with a most likely scenario of approximately **337,000 units**[7](index=7&type=chunk) - This forecast implies an approximately **6%** decline of industry wholesale shipments in the second half of calendar **2025** compared to the second half of calendar **2024**[7](index=7&type=chunk) [Consumer Financial Health & Sentiment](index=3&type=section&id=Consumer%20Financial%20Health%20%26%20Sentiment) Consumer financial health is varied, with resilient spending and wage growth offset by mounting household debt and a weakening labor market, leading to volatile sentiment and inflation expectations, as the company plans for a challenging operating environment in fiscal 2026 - Consumer spending and wage growth have been resilient, but there is mounting household debt and signs of a weakening labor market[10](index=10&type=chunk) - Consumer sentiment and inflation expectations remain volatile[10](index=10&type=chunk) - The company plans for a challenging operating environment in fiscal **2026**, similar to fiscal **2025**, with any upside likely driven by idiosyncratic business initiatives[10](index=10&type=chunk) [Affordability Concerns & Tariff Impacts](index=3&type=section&id=Affordability%20Concerns%20%26%20Tariff%20Impacts) Affordability remains a significant market challenge, with efforts to mitigate cost pass-through to consumers, while the full impact of tariffs in fiscal 2026 is difficult to quantify, and the company addresses affordability through innovative private label products and strong entry-level volume - Affordability is a significant challenge, with efforts to prevent incremental costs from being passed to consumers[11](index=11&type=chunk) - The full impact of tariffs in fiscal **2026** is difficult to quantify due to the shifting environment and influencing factors on product mix[11](index=11&type=chunk) - Strong volume in entry-level single axle trailers is expected to generate future sales growth of larger travel trailers and fifth wheels as customers progress through the trade-in cycle[9](index=9&type=chunk) - Innovative private label products in the Motorized segment are resonating in the market by hitting key price points for customers[9](index=9&type=chunk) [Operations Update](index=4&type=section&id=Operations%20Update) This section details updates on dealer inventory levels, the Heartland product consolidation, and strategic initiatives at Keystone to improve operational efficiency and market position [Dealer Inventory Levels](index=4&type=section&id=Dealer%20Inventory%20Levels) North American dealer inventory ended fiscal Q4 2025 at approximately 73,300 units, a decrease from prior periods, with improved dealer turns, while European dealer inventory also declined, positioning the company for market share growth - North American dealer inventory ended fiscal Q4 **2025** at approximately **73,300 units**, down from **91,800 units** as of April **30, 2025**, and **75,000 units** as of July **31, 2024**[12](index=12&type=chunk) - North American dealer turns finished at **1.9x** in fiscal Q4 **2025**, correcting a slip in Q3[12](index=12&type=chunk) - European dealer inventory levels approximated **22,200 units** at the end of fiscal Q4 **2025**, a modest decline from **23,000 units** in April **2025** and significantly lower than **26,200 units** in July **2024**[12](index=12&type=chunk) - Current inventory levels in both North America and Europe are deemed appropriate to grow market share[12](index=12&type=chunk) [Heartland Product Consolidation & Other Opportunities](index=4&type=section&id=Heartland%20Product%20Consolidation%20%26%20Other%20Opportunities) The consolidation of Heartland products under Jayco is expected to cause inefficiencies in H1 FY2026 but will lead to positive impacts on both top and bottom lines in H2 FY2026, driving profitable volume and multi-year share gains, while the company continuously seeks opportunities to streamline functions and right-size capacities - Heartland product consolidation under Jayco will cause inefficiencies in H1 FY**2026**, but is expected to lead to positive impacts on top and bottom lines in H2 FY**2026**[13](index=13&type=chunk) - The new Heartland product is expected to be a driver of profitable volume and has the potential for multi-year share gains[13](index=13&type=chunk) - The company is satisfied with its current structure and product portfolio, but will streamline functions or right-size capacities when opportunities arise[13](index=13&type=chunk) [Keystone Initiatives](index=4&type=section&id=Keystone%20Initiatives) Keystone, the highest volume operating company, underwent a comprehensive review and rebranding in June 2025 to regain market share lost post-COVID-19, with planned product refreshes, new entry-level lines, and a redesign of the Montana line, all aimed at market share recovery despite execution risks - Keystone, the highest volume operating company, lost market share post-COVID-19 and has undergone a comprehensive review and rebranding in June **2025**[14](index=14&type=chunk) - A product refresh, including full body paint on trailers, new content, and a geographically diverse portfolio, is being showcased at the September **2025** Open House[14](index=14&type=chunk) - New entry-level lines and a frame-up redesign of the Montana line are planned, with more product introductions leading up to Keystone's **30th** anniversary in **2026**[14](index=14&type=chunk) - The company is confident in Keystone's ability to regain market share, despite execution risks[14](index=14&type=chunk) [Strategic Update](index=5&type=section&id=Strategic%20Update) This section outlines strategic efforts to improve North American market share, the economic rationale behind private label brands, and the introduction of innovative electrified products [North American Market Share Improvement](index=5&type=section&id=North%20American%20Market%20Share%20Improvement) THOR's North American market share has steadily improved through June 2025, driven by effective initiatives to gain lot share with key dealer partners and a robust product portfolio at competitive price points, with future gains expected from refreshed lineups and tailored products - THOR's North American market share improved in recent months through June **2025** due to effective initiatives to gain lot share with key dealer partners[18](index=18&type=chunk) - Teams have worked to offer a more robust product portfolio at price levels consumers demand, leading to positive retail market share inflection[18](index=18&type=chunk) - Future share gains are expected from the refreshed Keystone lineup, revamped Heartland portfolio by Jayco, and Thor Motor Coach products tailored to consumer preferences[18](index=18&type=chunk) [Private Label Brands Economics & Strategy](index=5&type=section&id=Private%20Label%20Brands%20Economics%20%26%20Strategy) While THOR's established brands are foundational, private label products serve a role for growing dealership groups, offering advantageous upstream pricing through supply chain leverage and improved operational efficiencies from larger order quantities, largely offsetting lower wholesale prices - Private label products serve a place for growing dealership groups, complementing THOR's best-in-class brands[16](index=16&type=chunk) - Larger order quantities for private label products enable advantageous upstream pricing through supply chain leverage[16](index=16&type=chunk) - Increased operational efficiencies from larger, more uniform production batches largely offset the impact of lower wholesale prices for private label brands[16](index=16&type=chunk) [Jayco Entegra Embark Hybrid Motorhome](index=5&type=section&id=Jayco%20Entegra%20Embark%20Hybrid%20Motorhome) Jayco has unveiled the Entegra Embark hybrid Class A motorhome, a significant first step towards electrified offerings, featuring a quiet driving experience, European-inspired design, reduced emissions, and improved fuel usage, reinforcing THOR's industry leadership and attracting sustainability-focused customers - Jayco unveiled the Entegra Embark hybrid Class A motorhome, a significant first step towards electrified product offerings[17](index=17&type=chunk) - The hybrid motorhome offers an exceptionally quiet driving experience, European-inspired interior design, reduced emissions, and improved fuel usage[17](index=17&type=chunk) - This development reinforces THOR's industry leadership in technology and aims to attract new customers focused on sustainability and a sharper driving experience[17](index=17&type=chunk) [Financial Update](index=6&type=section&id=Financial%20Update) This section provides a detailed financial review, including segment gross profit margins, effective tax rate, other income drivers, and the company's fiscal 2026 guidance [North American Towable Gross Profit Margin](index=6&type=section&id=North%20American%20Towable%20Gross%20Profit%20Margin) North American Towable gross profit margin increased by 70 basis points to 13.3% in Q4 FY2025, driven by cost savings and reduced warranty/promotional expenses, despite a 4.6% decline in net sales, with further margin growth expected as promotional activity subsides - North American Towable gross profit margin increased to **13.3%** in Q4 FY**2025**, up **70 basis points** from **12.6%** in Q4 FY**2024**[19](index=19&type=chunk) - Improvement was driven by ongoing cost savings initiatives and reduced warranty and promotional expenses[19](index=19&type=chunk) - Net sales for the North American Towable segment declined **4.6%** in Q4 FY**2025**, primarily due to a **10.1%** decline in Company wholesale shipments[19](index=19&type=chunk) - Additional margin growth is achievable as promotional activity to clear discontinued models subsides[19](index=19&type=chunk) [North American Motorized Segment Performance & Gross Profit Margin](index=6&type=section&id=North%20American%20Motorized%20Segment%20Performance%20%26%20Gross%20Profit%20Margin) The North American Motorized segment outperformed the market for two consecutive quarters, with net sales increasing 7.8% in Q4 FY2025 driven by a 15.9% increase in unit shipments, though gross profit margin decreased to 11.3% due to a prior-year LIFO adjustment, aggressive promotions, and a product mix shift - North American Motorized segment net sales increased **7.8%** in Q4 FY**2025** compared to the prior-year period[20](index=20&type=chunk) - This growth was driven by a **15.9%** increase in Company unit shipments, with Class B and Class C product lines seeing **17.8%** and **28.0%** year-over-year improvements, respectively[20](index=20&type=chunk) - North American Motorized gross profit margin decreased to **11.3%** in Q4 FY**2025** from **12.8%** in Q4 FY**2024**[21](index=21&type=chunk) - Margin decline was primarily due to a favorable LIFO adjustment in the prior year, more aggressive promotional activity, and a shift in product mix towards lower-priced Class B and C units[21](index=21&type=chunk) [European Segment Profitability Decline](index=7&type=section&id=European%20Segment%20Profitability%20Decline) The European segment experienced a decline in income before income taxes in both Q4 and full-year fiscal 2025 due to shifting consumer preferences towards premium and entry-level products, increased promotional activity, and elevated discounting by industry peers, though restructuring and product refreshes are expected to drive longer-term results - European segment income before income taxes declined in both Q4 and full-year fiscal **2025**[23](index=23&type=chunk) - Profitability pressures stemmed from shifting consumer preferences towards premium and entry-level products, increased promotional activity, and elevated discounting by industry peers[23](index=23&type=chunk) - Restructuring initiatives and product refreshes in the mainstream category are expected to position the segment for meaningful longer-term results[23](index=23&type=chunk) [Effective Tax Rate](index=7&type=section&id=Effective%20Tax%20Rate) The effective tax rate in fiscal 2025 was unusually low due to a foreign tax law change and a favorable jurisdictional mix of earnings, with an expectation to return to a more typical rate in fiscal 2026 and beyond - The decrease in the annual effective income tax rate in fiscal **2025** was largely due to a foreign tax law change and a favorable jurisdictional mix of earnings[24](index=24&type=chunk) - This rate is considered much lower than usual, with an expectation to return to a more typical effective income tax rate in fiscal **2026** and beyond[24](index=24&type=chunk) [Other Income](index=7&type=section&id=Other%20Income) Other income for fiscal 2025 was approximately $45.6 million, significantly higher than fiscal 2024, primarily driven by gains from property sales, increased investment valuations, and an insurance settlement Other Income (Fiscal Years) | Fiscal Year | Amount (approx.) | | :---------- | :--------------- | | 2025 | $45.6 million | | 2024 | $13.6 million | - Main drivers of elevated other income in fiscal **2025** were gains from property sales (Heartland facilities), increased investment valuations, and gains from an insurance settlement (Airstream weather event)[25](index=25&type=chunk) [Fiscal 2026 Guidance](index=8&type=section&id=Fiscal%202026%20Guidance) THOR's initial guidance for fiscal 2026 assumes a continuation of the challenging retail market from fiscal 2025, with a conservative macroeconomic outlook, stable market share, flat to moderately higher average sale prices, and a normalized tax rate, without assuming meaningful financial impact from realignment or refresh initiatives - Fiscal **2026** guidance assumes a continuation of the challenging retail market from fiscal **2025**, with a cautious macroeconomic outlook[26](index=26&type=chunk) - Key assumptions include: wholesale and retail volumes roughly balanced, low- to mid-single digit North American retail decline, stable retail market share, average sale prices flat to moderately higher, steady European market, stable gross margin with upside in a stronger market, and a normalized tax rate[26](index=26&type=chunk) Fiscal 2026 Full-Year Guidance | Metric | Range | | :---------------------- | :--------------------- | | Consolidated Net Sales | $9.0 billion to $9.5 billion | | Diluted Earnings Per Share | $3.75 to $4.25 | | Gross Margin | Stable at midpoint, with upside in a stronger market | - Guidance does not assume a meaningful net financial impact related to the Heartland realignment, Keystone model refresh, or other restructuring initiatives[26](index=26&type=chunk) [Segment Data](index=9&type=section&id=Segment%20Data) This section presents detailed quarterly segment data for North American Towable, North American Motorized, and European RVs, including net sales, unit shipments, order backlog, and market share [Summary of Key Quarterly Segment Data – North American Towable RVs](index=9&type=section&id=Summary%20of%20Key%20Quarterly%20Segment%20Data%20%E2%80%93%20North%20American%20Towable%20RVs) North American Towable RVs experienced a 4.6% decline in total net sales for Q4 FY2025, driven by a 14.2% decrease in Travel Trailers sales, partially offset by an 11.5% increase in Fifth Wheels, with total units shipped decreasing by 10.1% and order backlog declining by 5.0%, resulting in a slight market share decrease to 38.2% North American Towable RVs - Net Sales (Q4 FY2025 vs Q4 FY2024) | Product Segment | 2025 ($ thousands) | 2024 ($ thousands) | Change | | :-------------- | :----------------- | :----------------- | :----- | | Travel Trailers | $500,931 | $584,031 | (14.2)% | | Fifth Wheels | $387,813 | $347,825 | 11.5% | | Total | $888,744 | $931,856 | (4.6)% | North American Towable RVs - of Units (Q4 FY2025 vs Q4 FY2024) | Product Segment | 2025 Units | 2024 Units | Change | | :-------------- | :--------- | :--------- | :----- | | Travel Trailers | 19,666 | 22,831 | (13.9)% | | Fifth Wheels | 6,016 | 5,741 | 4.8% | | Total | 25,682 | 28,572 | (10.1)% | North American Towable RVs - Order Backlog (as of July 31) | Year | Amount ($ thousands) | | :--- | :------------------- | | 2025 | $525,014 | | 2024 | $552,379 | | Change | (5.0)% | North American Towable RV Market Share (CYTD June 30) | Market | 2025 | 2024 | | :-------------- | :---- | :---- | | U.S. Market | 38.3% | 39.0% | | Canadian Market | 37.3% | 39.3% | | Combined North American Market | 38.2% | 39.1% | [Summary of Key Quarterly Segment Data – North American Motorized RVs](index=10&type=section&id=Summary%20of%20Key%20Quarterly%20Segment%20Data%20%E2%80%93%20North%20American%20Motorized%20RVs) North American Motorized RVs saw a 7.8% increase in total net sales for Q4 FY2025, driven by strong growth in Class C (+20.7%) and Class B (+16.0%) sales, despite a decline in Class A sales (-14.1%), with total units shipped increasing by 15.9% and order backlog significantly increasing by 29.3%, leading to an improved combined North American market share of 48.3% North American Motorized RVs - Net Sales (Q4 FY2025 vs Q4 FY2024) | Product Segment | 2025 ($ thousands) | 2024 ($ thousands) | Change | | :-------------- | :----------------- | :----------------- | :----- | | Class A | $154,050 | $179,277 | (14.1)% | | Class C | $289,303 | $239,752 | 20.7% | | Class B | $114,059 | $98,290 | 16.0% | | Total | $557,412 | $517,319 | 7.8% | North American Motorized RVs - of Units (Q4 FY2025 vs Q4 FY2024) | Product Segment | 2025 Units | 2024 Units | Change | | :-------------- | :--------- | :--------- | :----- | | Class A | 707 | 843 | (16.1)% | | Class C | 2,700 | 2,109 | 28.0% | | Class B | 972 | 825 | 17.8% | | Total | 4,379 | 3,777 | 15.9% | North American Motorized RVs - Order Backlog (as of July 31) | Year | Amount ($ thousands) | | :--- | :------------------- | | 2025 | $1,004,620 | | 2024 | $776,903 | | Change | 29.3% | North American Motorized RV Market Share (CYTD June 30) | Market | 2025 | 2024 | | :-------------- | :---- | :---- | | U.S. Market | 48.3% | 47.0% | | Canadian Market | 47.7% | 51.0% | | Combined North American Market | 48.3% | 47.3% | [Summary of Key Quarterly Segment Data – European RVs](index=11&type=section&id=Summary%20of%20Key%20Quarterly%20Segment%20Data%20%E2%80%93%20European%20RVs) European RVs experienced a 2.2% decline in total net sales for Q4 FY2025, with significant decreases in Campervan (-20.1%) and Caravan (-22.2%) sales, partially offset by an 8.1% increase in Motorcaravan sales, while total units shipped decreased by 14.1% and order backlog saw a substantial 21.8% decline, resulting in mixed market share changes European RVs - Net Sales (Q4 FY2025 vs Q4 FY2024) | Product Segment | 2025 ($ thousands) | 2024 ($ thousands) | Change | | :-------------- | :----------------- | :----------------- | :----- | | Motorcaravan | $522,500 | $483,477 | 8.1% | | Campervan | $246,402 | $308,510 | (20.1)% | | Caravan | $43,415 | $55,835 | (22.2)% | | Other | $110,734 | $95,602 | 15.8% | | Total | $923,051 | $943,424 | (2.2)% | European RVs - of Units (Q4 FY2025 vs Q4 FY2024) | Product Segment | 2025 Units | 2024 Units | Change | | :-------------- | :--------- | :--------- | :----- | | Motorcaravan | 6,699 | 6,586 | 1.7% | | Campervan | 4,492 | 6,145 | (26.9)% | | Caravan | 1,682 | 2,251 | (25.3)% | | Total | 12,873 | 14,982 | (14.1)% | European RVs - Order Backlog (as of July 31) | Year | Amount ($ thousands) | | :--- | :------------------- | | 2025 | $1,525,992 | | 2024 | $1,950,793 | | Change | (21.8)% | European RV Market Share (CYTD June 30) | Product Segment | 2025 | 2024 | | :---------------------- | :---- | :---- | | Motorcaravan and Campervan | 26.1% | 25.3% | | Caravan | 17.3% | 18.3% | [Non-GAAP Reconciliations](index=12&type=section&id=Non-GAAP%20Reconciliations) This section provides a reconciliation of non-GAAP financial measures, including EBITDA and Adjusted EBITDA, to their most directly comparable GAAP financial measures EBITDA Reconciliations ($ in thousands) | | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Fiscal Years Ended July 31, 2025 | Fiscal Years Ended July 31, 2024 | | :---------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Net income | $126,625 | $91,464 | $256,591 | $265,400 | | Add back: | | | | | | Interest expense, net | 10,058 | 18,410 | 48,441 | 88,666 | | Income tax provision | 16,742 | 35,554 | 39,600 | 83,444 | | Depreciation and amortization of intangible assets | 71,379 | 73,597 | 271,207 | 277,145 | | **EBITDA** | **$224,804** | **$219,025** | **$615,839** | **$714,655** | | Add back: | | | | | | Stock-based compensation expense | 4,074 | 8,852 | 30,872 | 37,901 | | Change in LIFO reserve, net | 3,602 | (6,494) | 702 | (14,494) | | Net expense (income) related to certain contingent liabilities | — | (1,079) | — | (17,979) | | Non-cash foreign currency loss (gain) | 1,944 | (1,380) | 9,255 | 940 | | Investment-related loss (gain) | (470) | 896 | 4,944 | 16,043 | | Weather-related loss (gain) | (12,153) | — | (13,653) | 2,500 | | Debt amendment expenses | — | — | — | 7,175 | | Strategic initiatives | 15,020 | — | 43,201 | — | | Other loss (gain), including sales of PP&E | (27,315) | (1,428) | (32,034) | (16,646) | | **Adjusted EBITDA** | **$209,506** | **$218,392** | **$659,126** | **$730,095** | [Forward-Looking Statements](index=13&type=section&id=Forward-Looking%20Statements) This section highlights that forward-looking statements are subject to inherent uncertainties and risks, and actual results may differ materially from expectations - The release contains forward-looking statements based on management's current expectations and beliefs, which inherently involve uncertainties and risks[46](index=46&type=chunk) - Actual results may differ materially from expectations due to various factors, including inflation, raw material price fluctuations, supply constraints, interest rates, labor market conditions, warranty claims, dealer financial health, regulatory changes, and economic conditions[46](index=46&type=chunk) - The company disclaims any obligation to update or revise forward-looking statements unless required by law[47](index=47&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended July 31, 2025 ☐ 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: 001-33706 URANIUM ENERGY CORP. (Exact name of registrant as specified in its charter) (Address of prin ...

Part I [Business Overview](index=6&type=section&id=Item%201.%20Business) Nutanix is a hybrid multicloud computing leader, providing a unified software platform for applications and AI, simplifying distributed app and data management. - Nutanix is a hybrid multicloud computing leader, offering a unified software platform for running applications and AI and managing data anywhere, with a vision to simplify distributed app and data operations[19](index=19&type=chunk) - The Nutanix Cloud Platform supports diverse workloads including business-critical applications, data platforms, enterprise AI (machine learning, generative AI, agentic AI), general-purpose, end-user computing, and cloud-native applications[20](index=20&type=chunk) - Nutanix has transitioned to a subscription-based business model, offering term-based licenses and SaaS subscriptions typically ranging from one to five years, with support and entitlements included[21](index=21&type=chunk)[22](index=22&type=chunk)[31](index=31&type=chunk)[32](index=32&type=chunk) - Key growth strategies include landing new end customers through targeted sales and marketing, expanding sales to existing customers by targeting new workloads and upselling, and driving renewals and retention for profitable growth[40](index=40&type=chunk)[44](index=44&type=chunk) - The company had over **29,000 end customers** as of July 31, 2025, across diverse industries, with approximately **77% of customers** with Nutanix for 18+ months making repeat purchases[39](index=39&type=chunk)[329](index=329&type=chunk) [Overview](index=6&type=section&id=Overview) Nutanix is a hybrid multicloud computing leader focused on simplifying distributed application and data management through its unified software platform. - Nutanix is a hybrid multicloud computing leader, offering a unified software platform for running applications and AI and managing data anywhere[19](index=19&type=chunk) - The company's mission is to delight customers with an open, secure platform with rich data services that increases their ability to take advantage of new technologies such as cloud native and AI, optimizes how they run their organizations today, and accelerates innovation, efficiency, and growth[19](index=19&type=chunk) - Nutanix pioneered hyperconverged infrastructure (HCI) and developed its native hypervisor, Nutanix AHV, transitioning to a subscription-based business model[21](index=21&type=chunk) [The Nutanix Cloud Platform](index=6&type=section&id=The%20Nutanix%20Cloud%20Platform) The Nutanix Cloud Platform provides a consistent operating model for applications and data across core data centers, edge, and public clouds. - The Nutanix Cloud Platform provides a consistent cloud operating model for running applications and managing data in core data centers, at the edge, and in public clouds[20](index=20&type=chunk) - It supports diverse workloads including business-critical applications, data platforms, enterprise AI (machine learning, generative AI, agentic AI), general-purpose workloads, end-user computing, and cloud-native applications[20](index=20&type=chunk) - Key components include Nutanix Cloud Infrastructure (NCI) for distributed HCI, Nutanix Cloud Manager (NCM) for unified management, Nutanix Kubernetes Platform (NKP) for enterprise-grade Kubernetes, Nutanix Unified Storage (NUS) for consolidated data services, Nutanix Database Service (NDB) for automated database management, and Nutanix Enterprise AI (NAI) for centralized inferencing[23](index=23&type=chunk)[24](index=24&type=chunk)[25](index=25&type=chunk)[26](index=26&type=chunk)[27](index=27&type=chunk)[28](index=28&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk) [Delivery of Our Solutions](index=9&type=section&id=Delivery%20of%20Our%20Solutions) Nutanix solutions are deployed across various environments, offered via subscription licenses, with hardware typically purchased from partners. - The Nutanix Cloud Platform can be deployed in core data centers, at the edge, or in public/managed clouds (AWS, Microsoft Azure, Google Cloud via NC2), running on various qualified hardware platforms[31](index=31&type=chunk) - Subscription term-based licenses typically range from one to five years, with cloud-based SaaS subscriptions extending up to five years[31](index=31&type=chunk) - Customers generally purchase qualified hardware platforms from channel partners or OEMs, and support and entitlements are included within subscription fees[31](index=31&type=chunk)[32](index=32&type=chunk) [Our Partners](index=9&type=section&id=Our%20Partners) Nutanix leverages a diverse partner ecosystem, including channel, OEM, and cloud partners, to drive sales and solution adoption. - Nutanix leverages channel, OEM, ecosystem, and cloud partners to drive sales and adoption of its solutions[33](index=33&type=chunk) - Channel partners (distributors, resellers, MSPs, telcos, GSIs) represented **41% of total revenue** for fiscal 2025 from the top two distributors[34](index=34&type=chunk) - OEM partners (Cisco, Dell, Fujitsu, HPE, Lenovo) sell Nutanix software bundled with their hardware, including new solutions integrating with Dell PowerFlex and certifying Cisco UCS blade servers[35](index=35&type=chunk) - Ecosystem partners (e.g., AMD, Intel, Nvidia) integrate their products with Nutanix solutions, while cloud partners (AWS, Microsoft Azure, Google Cloud) extend the platform's reach[36](index=36&type=chunk)[37](index=37&type=chunk) [Our Support Programs](index=10&type=section&id=Our%20Support%20Programs) Nutanix provides various levels of software and hardware support, alongside professional services for optimal environment management. - Nutanix offers varying levels of software support and hardware support for Nutanix-branded NX platforms[38](index=38&type=chunk) - Professional services are provided for assessment, design, deployment, and optimization of Nutanix environments[38](index=38&type=chunk) [Our End Customers](index=10&type=section&id=Our%20End%20Customers) Nutanix serves a broad base of over **29,000 end customers** across diverse industries and also supports service providers. - Nutanix serves a broad and diverse base of over **29,000 end customers** as of July 31, 2025, across industries like financial services, retail, manufacturing, public sector, and technology[39](index=39&type=chunk) - The company also sells to service providers who use the Nutanix Cloud Platform to offer cloud-based services to their own customers[39](index=39&type=chunk) [Growth Strategy](index=10&type=section&id=Growth%20Strategy) Nutanix's growth strategy focuses on customer acquisition, expansion, and retention, while driving profitable growth and deepening partner engagement. - Key growth elements include landing new end customers through sales and marketing investments and partner networks, expanding sales to existing customers via a 'land-and-expand' strategy, and driving renewals and retention[40](index=40&type=chunk) - The company aims to build on its hybrid multicloud vision, deepen engagement with all partner types, and drive profitable growth by balancing investments with operational efficiencies[44](index=44&type=chunk) [Sales and Marketing](index=11&type=section&id=Sales%20and%20Marketing) Sales efforts involve a global force supporting partners, while marketing focuses on educating customers and promoting cloud platform capabilities. - Sales primarily involve a global sales force interacting directly with IT decision-makers and supporting channel partners and OEMs[42](index=42&type=chunk) - Marketing focuses on educating customers about the benefits of the cloud software platform, driving market awareness of virtualization, cloud-native, and enterprise AI-ready capabilities, and leveraging co-marketing with partners[43](index=43&type=chunk) [Research and Development](index=12&type=section&id=Research%20and%20Development) R&D efforts are dedicated to enhancing existing technologies, developing new solutions, and supporting current customer deployments. - R&D efforts focus on enhancing existing technologies, developing new ones in current and adjacent markets, and supporting existing customer deployments[45](index=45&type=chunk) - Significant resources are dedicated to global R&D teams to support solution enhancements, improve ecosystem partner integration, and expand platform technologies and features[45](index=45&type=chunk) [Manufacturing](index=12&type=section&id=Manufacturing) Nutanix does not manufacture hardware; its NX series platforms are manufactured by Super Micro Computer, Inc. - Nutanix does not manufacture hardware; its NX series hardware platforms are manufactured by Super Micro Computer, Inc. (Supermicro)[46](index=46&type=chunk) - Supermicro designs, assembles, and tests the Nutanix-branded hardware, procuring components from third-party suppliers[46](index=46&type=chunk) [Competition](index=12&type=section&id=Competition) Nutanix operates in intensely competitive cloud infrastructure and platform services markets, facing diverse competitors and evolving competitive factors. - Nutanix operates in intensely competitive cloud infrastructure and platform services markets, facing competition from software providers (VMware, Microsoft, Red Hat), public cloud providers (AWS, Google Cloud, Azure), and traditional IT systems vendors (Dell, HPE, NetApp)[47](index=47&type=chunk)[49](index=49&type=chunk) - Competitive factors include platform features, scalability, performance, ecosystem, management, total cost of ownership, customer choice, application mobility, and customer experience[50](index=50&type=chunk)[54](index=54&type=chunk) - The company has expanded into adjacent markets like Kubernetes management, data/platform services, AI platform services, and cloud management, facing new and established competitors[50](index=50&type=chunk) [Intellectual Property](index=13&type=section&id=Intellectual%20Property) Nutanix protects its intellectual property through patents, trademarks, copyrights, trade secrets, and confidentiality agreements. - Nutanix relies on patents, trademarks, copyrights, trade secret laws, confidentiality procedures, and employee agreements to protect its intellectual property[52](index=52&type=chunk) - As of July 31, 2025, the company had **578 issued U.S. patents** (expiring between 2033 and 2045) and **159 non-provisional patent applications** pending[52](index=52&type=chunk) [Facilities](index=13&type=section&id=Facilities) Nutanix's corporate

PART I — FINANCIAL INFORMATION This section presents AAR CORP.'s unaudited condensed consolidated financial statements and related notes, along with management's discussion and analysis, market risk disclosures, and controls [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents AAR CORP.'s unaudited condensed consolidated financial statements for the quarter ended August 31, 2025, including core financial statements and detailed explanatory notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This table provides a snapshot of AAR CORP.'s financial position, detailing assets, liabilities, and equity at specific quarter-end dates Condensed Consolidated Balance Sheets (Millions) | Balance Sheet Item | May 31, 2025 (Millions) | August 31, 2025 (Millions) | Change (Millions) | % Change | | :----------------- | :---------------------- | :------------------------- | :---------------- | :------- | | Total Assets | $2,844.6 | $2,929.7 | $85.1 | 3.0% | | Total Liabilities | $1,078.3 | $1,141.9 | $63.6 | 5.9% | | Total Equity | $1,211.6 | $1,249.3 | $37.7 | 3.1% | | Cash & Equivalents | $96.5 | $80.0 | $(16.5) | (17.1%) | | Inventories | $809.2 | $861.5 | $52.3 | 6.5% | | Long-term Debt | $968.0 | $1,022.1 | $54.1 | 5.6% | [Condensed Consolidated Statements of Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) This table outlines AAR CORP.'s financial performance over the quarter, showing sales, costs, and net income Condensed Consolidated Statements of Income (Millions) | Income Statement Item | 3 Months Ended Aug 31, 2025 (Millions) | 3 Months Ended Aug 31, 2024 (Millions) | Change (Millions) | % Change | | :-------------------- | :------------------------------------- | :------------------------------------- | :---------------- | :------- | | Sales | $739.6 | $661.7 | $77.9 | 11.8% | | Cost of Sales | $605.9 | $544.5 | $61.4 | 11.3% | | Gross Profit | $133.7 | $117.2 | $16.5 | 14.1% | | Operating Income | $64.9 | $43.4 | $21.5 | 49.5% | | Net Income | $34.4 | $18.0 | $16.4 | 91.1% | | EPS - Basic | $0.96 | $0.50 | $0.46 | 92.0% | | EPS - Diluted | $0.95 | $0.50 | $0.45 | 90.0% | [Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This table presents AAR CORP.'s total comprehensive income, including net income and other comprehensive income items like currency translation adjustments Condensed Consolidated Statements of Comprehensive Income (Millions) | Comprehensive Income Item | 3 Months Ended Aug 31, 2025 (Millions) | 3 Months Ended Aug 31, 2024 (Millions) | Change (Millions) | % Change | | :------------------------ | :------------------------------------- | :------------------------------------- | :---------------- | :------- | | Net Income | $34.4 | $18.0 | $16.4 | 91.1% | | Currency Translation Adj. | $0.4 | $1.5 | $(1.1) | (73.3%) | | Comprehensive Income | $34.8 | $19.5 | $15.3 | 78.5% | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This table details AAR CORP.'s cash inflows and outflows from operating, investing, and financing activities for the quarter Condensed Consolidated Statements of Cash Flows (Millions) | Cash Flow Activity | 3 Months Ended Aug 31, 2025 (Millions) | 3 Months Ended Aug 31, 2024 (Millions) | Change (Millions) | | :----------------- | :------------------------------------- | :------------------------------------- | :---------------- | | Operating | $(44.9) | $(18.6) | $(26.3) | | Investing | $(23.8) | $(5.3) | $(18.5) | | Financing | $51.1 | $(9.1) | $60.2 | | Net Decrease | $(17.6) | $(33.0) | $15.4 | | Cash, End of Period| $91.6 | $63.1 | $28.5 | [Condensed Consolidated Statements of Changes in Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Equity) This table illustrates the changes in AAR CORP.'s equity components, including common stock, retained earnings, and treasury stock, over the quarter Condensed Consolidated Statements of Changes in Equity (Millions) | Equity Component | Balance May 31, 2025 (Millions) | Net Income (Millions) | Stock Option Activity (Millions) | Restricted Stock Activity (Millions) | Other Comprehensive Income (Millions) | Balance Aug 31, 2025 (Millions) | | :--------------- | :------------------------------ | :-------------------- | :------------------------------- | :----------------------------------- | :------------------------------------ | :------------------------------ | | Common Stock | $45.3 | — | — | — | — | $45.3 | | Capital Surplus | $505.2 | — | $2.5 | $(4.2) | — | $503.5 | | Retained Earnings| $969.4 | $34.4 | — | — | — | $1,003.8 | | Treasury Stock | $(302.7) | — | $4.2 | $0.4 | — | $(298.1) | | AOCL | $(5.6) | — | — | — | $0.4 | $(5.2) | | Total Equity | $1,211.6 | $34.4 | $6.7 | $(3.8) | $0.4 | $1,249.3 | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements [Note 1. Basis of Presentation](index=9&type=section&id=Note%201.%20Basis%20of%20Presentation) This note describes the accounting principles and assumptions used in preparing the financial statements - Financial statements are **unaudited** and prepared under GAAP and SEC rules, with management estimates[27](index=27&type=chunk)[28](index=28&type=chunk) - New ASUs (2023-09 on Income Tax Disclosures and 2024-03 on Expense Disaggregation) are expected to impact **disclosures only**, not financial condition, results of operations, or cash flows[30](index=30&type=chunk)[31](index=31&type=chunk) [Note 2. Acquisitions](index=10&type=section&id=Note%202.%20Acquisitions) This note details recent acquisitions, including purchase prices, contingent considerations, and integration activities - Acquired Aerostrat Corp. on August 11, 2025, for a base purchase price of **$15.0 million** plus up to **$5.0 million** in contingent consideration. Aerostrat's operations are included in the Integrated Solutions segment[32](index=32&type=chunk)[33](index=33&type=chunk)[34](index=34&type=chunk) - Finalized purchase price adjustments for Triumph Group's Product Support business, acquired March 1, 2024, resulting in a **$2.9 million reduction** from the initial **$725.0 million**. Product Support is reported within the Repair & Engineering segment[36](index=36&type=chunk)[37](index=37&type=chunk) - Integration activities for Product Support include consolidating facility footprint, with **$1.0 million** in expenses recognized for the three months ended August 31, 2025[39](index=39&type=chunk) - Finalized post-closing adjustments for the Trax USA Corp. acquisition (March 2023), with **$4.4 million released** from escrow in Q4 FY2025 and **$5.3 million remaining**. Contingent consideration liability for Trax was **$8.1 million** as of August 31, 2025[41](index=41&type=chunk)[43](index=43&type=chunk) [Note 3. Discontinued Operations](index=14&type=section&id=Note%203.%20Discontinued%20Operations) This note provides information on assets and liabilities related to discontinued business segments - COCO business (Expeditionary Services) reported as **discontinued operations** since fiscal 2018[45](index=45&type=chunk) Discontinued Operations (Millions) | Discontinued Operations | August 31, 2025 (Millions) | May 31, 2025 (Millions) | | :---------------------- | :------------------------- | :---------------------- | | Assets | $5.2 | $6.2 | | Liabilities | $4.9 | $5.8 | [Note 4. Revenue Recognition](index=14&type=section&id=Note%204.%20Revenue%20Recognition) This note explains the company's policies for recognizing revenue, including contract assets and liabilities, and disaggregated sales data - Revenue is recognized when performance obligations are satisfied, either **over time** (cost-to-cost method) or **at a point in time** (product sales upon shipment)[47](index=47&type=chunk)[50](index=50&type=chunk)[51](index=51&type=chunk) - No cumulative catch-up adjustments were recognized for the three months ended August 31, 2025, compared to **favorable adjustments of $2.4 million** in the prior year period[67](index=67&type=chunk) Contract Assets & Liabilities (Millions) | Contract Assets & Liabilities | August 31, 2025 (Millions) | May 31, 2025 (Millions) | Change (Millions) | | :---------------------------- | :------------------------- | :---------------------- | :---------------- | | Net Contract Assets | $139.2 | $122.0 | $17.2 | | Current Contract Assets | $146.7 | $140.3 | $6.4 | | Current Deferred Revenue | $(32.3) | $(40.3) | $8.0 | - Remaining performance obligations (firm backlog) totaled approximately **$490 million** as of August 31, 2025, with **75% expected to be recognized** as revenue over the next 12 months[75](index=75&type=chunk) Disaggregation of Revenue (3 Months Ended Aug 31) (Millions) | Disaggregation of Revenue (3 Months Ended Aug 31) | 2025 (Millions) | 2024 (Millions) | % Change | | :------------------------------------------------ | :-------------- | :-------------- | :------- | | **By Segment & Customer Market:** | | | | | Parts Supply - Commercial | $254.5 | $210.4 | 20.9% | | Parts Supply - Government and defense | $63.3 | $39.3 | 61.1% | | Repair & Engineering - Commercial | $195.7 | $191.2 | 2.4% | | Repair & Engineering - Government and defense | $18.9 | $26.4 | (28.4%) | | Integrated Solutions - Commercial | $72.4 | $70.0 | 3.4% | | Integrated Solutions - Government and defense | $112.6 | $98.9 | 13.9% | | Expeditionary Services - Commercial | $0.7 | $1.3 | (46.2%) | | Expeditionary Services - Government and defense | $21.5 | $24.2 | (11.2%) | | **Consolidated Sales by Geographic Region:** | | | | | U.S./Canada | $519.1 | $473.4 | 9.7% | | Europe/Africa | $99.7 | $108.8 | (8.3%) | | Asia/South Pacific | $89.7 | $64.0 | 40.2% | | Other | $31.1 | $15.5 | 100.6% | | **Total Consolidated Sales** | $739.6 | $661.7 | 11.8% | [Note 5. Restricted Cash](index=22&type=section&id=Note%205.%20Restricted%20Cash) This note details the components and amounts of cash held under restrictions Restricted Cash Component (Millions) | Restricted Cash Component | August 31, 2025 (Millions) | | :------------------------ | :------------------------- | | Acquisition Escrows | $8.3 | | Receivable Securitization | $3.3 | | Total Restricted Cash | $11.6 | [Note 6. Accounts Receivable](index=22&type=section&id=Note%206.%20Accounts%20Receivable) This note breaks down accounts receivable by customer type, including U.S. Government and other customers Accounts Receivable (Millions) | Accounts Receivable | August 31, 2025 (Millions) | May 31, 2025 (Millions) | Change (Millions) | | :------------------ | :------------------------- | :---------------------- | :---------------- | | U.S. Government | $41.7 | $40.0 | $1.7 | | All Other Customers | $321.8 | $314.8 | $7.0 | | Total | $363.5 | $354.8 | $8.7 | [Note 7. Equity](index=22&type=section&id=Note%207.%20Equity) This note provides details on stock-based compensation, share grants, and their impact on equity - Granted **85,605 performance-based** and **64,795 time-based restricted shares** to employees, and **24,178 time-based restricted shares** to directors in July 2025[82](index=82&type=chunk) Stock-Based Compensation (Millions) | Stock-Based Compensation | 3 Months Ended Aug 31, 2025 (Millions) | 3 Months Ended Aug 31, 2024 (Millions) | Change (Millions) | | :----------------------- | :------------------------------------- | :------------------------------------- | :---------------- | | Restricted Stock Expense | $4.2 | $4.1 | $0.1 | | Stock Option Expense | $1.1 | $0.9 | $0.2 | | Intrinsic Value of Options Exercised | $4.6 | $0.2 | $4.4 | - **64,000 stock options** were anti-dilutive and excluded from diluted EPS computation for Q1 FY2026[87](index=87&type=chunk) [Note 8. Inventories](index=24&type=section&id=Note%208.%20Inventories) This note categorizes inventory components, including aircraft parts, raw materials, and work-in-process Inventory Category (Millions) | Inventory Category | August 31, 2025 (Millions) | May 31, 2025 (Millions) | Change (Millions) | | :----------------- | :------------------------- | :---------------------- | :---------------- | | Aircraft & Engine Parts | $694.6 | $659.4 | $35.2 | | Raw Materials & Parts | $135.8 | $119.9 | $15.9 | | Work-in-Process | $31.1 | $29.9 | $1.2 | | Total Inventories | $861.5 | $809.2 | $52.3 | [Note 9. Supplemental Cash Flow Information](index=24&type=section&id=Note%209.%20Supplemental%20Cash%20Flow%20Information) This note provides additional details on non-cash investing and financing activities and other cash flow items Supplemental Cash Flow Item (Millions) | Supplemental Cash Flow Item | 3 Months Ended Aug 31, 2025 (Millions) | 3 Months Ended Aug 31, 2024 (Millions) | Change (Millions) | | :-------------------------- | :------------------------------------- | :------------------------------------- | :---------------- | | Interest Paid | $8.5 | $9.0 | $(0.5) |\ | Income Taxes Paid | $5.6 | $5.2 | $0.4 |\ | Operating Lease Liabilities | $1.6 | $0.8 | $0.8 | [Note 10. Sale of Receivables](index=24&type=section&id=Note%2010.%20Sale%20of%20Receivables) This note describes the company's accounts receivable financing program and related activities - Maintains a Purchase Agreement with Citibank N.A. for the sale of accounts receivable, with a **maximum limit of $150 million**[90](index=90&type=chunk) Receivable Sale Activity (3 Months Ended Aug 31) (Millions) | Receivable Sale Activity (3 Months Ended Aug 31) | 2025 (Millions) | 2024 (Millions) | Change (Millions) | | :----------------------------------------------- | :-------------- | :-------------- | :---------------- | | Receivables Sold | $49.2 | $50.9 | $(1.7) | | Discounts on Sale | $0.2 | $0.3 | $(0.1) | - As of August 31, 2025, **$21.0 million** of the **$150 million facility** has been utilized, leaving **$129.0 million available**[91](index=91&type=chunk) [Note 11. Financing Arrangements](index=25&type=section&id=Note%2011.%20Financing%20Arrangements) This note details the company's debt structure, credit facilities, and compliance with financial covenants Debt Component (Millions) | Debt Component | August 31, 2025 (Millions) | May 31, 2025 (Millions) | Change (Millions) | | :------------- | :------------------------- | :---------------------- | :---------------- | | Senior Notes | $700.0 | $550.0 | $150.0 | | Revolving Credit Facility | $330.0 | $427.0 | $(97.0) | | Total Long-term Debt | $1,022.1 | $968.0 | $54.1 | - Amended Revolving Credit Facility increased aggregate commitments to **$825.0 million** from **$620.0 million**, with **$485.9 million available** as of August 31, 2025[97](index=97&type=chunk)[99](index=99&type=chunk) - Issued an additional **$150.0 million** aggregate principal amount of **6.75% Senior Notes due 2029** on August 14, 2025, bringing total Senior Notes to **$700.0 million**[103](index=103&type=chunk)[107](index=107&type=chunk) - The company was in **compliance with all financial and other covenants** in its financing agreements as of August 31, 2025[110](index=110&type=chunk) [Note 12. Other Non-current Assets](index=29&type=section&id=Note%2012.%20Other%20Non-current%20Assets) This note provides information on investments in joint ventures and other long-term assets - Holds a **50% ownership interest** in ASAS, providing aviation aftermarket supply chain solutions, with sales to ASAS JV of **$5.0 million** in Q1 FY2026, up from **$1.7 million** in Q1 FY2025[111](index=111&type=chunk)[112](index=112&type=chunk) - Sold its **40% ownership interest** in an Indian joint venture in Q1 FY2025, recognizing a **gain of $2.1 million**[114](index=114&type=chunk) - Holds a **49.9% ownership interest** in xCelle Americas, LLC, providing component repair services, and provided a **$3.3 million loan** to xCelle in March 2025[116](index=116&type=chunk)[117](index=117&type=chunk) [Note 13. Defined Benefit Pension Settlement](index=31&type=section&id=Note%2013.%20Defined%20Benefit%20Pension%20Settlement) This note outlines the settlement of the U.S. defined benefit retirement plan and its financial impact - Settled all future obligations under its frozen U.S. defined benefit retirement plan in Q1 FY2024, resulting in a **non-cash, pre-tax pension settlement charge of $26.7 million** (**$16.1 million after-tax**)[119](index=119&type=chunk) - Remaining surplus plan assets of **$0.8 million** as of August 31, 2025, are expected to be utilized over the next twelve months to fund 401(k) contributions[120](index=120&type=chunk) [Note 14. Accumulated Other Comprehensive Loss](index=31&type=section&id=Note%2014.%20Accumulated%20Other%20Comprehensive%20Loss) This note details the components of accumulated other comprehensive loss, including currency translation adjustments and pension plan impacts AOCL Component (Millions) | AOCL Component | Balance June 1, 2025 (Millions) | Other Comprehensive Income (Millions) | Balance Aug 31, 2025 (Millions) | | :------------- | :------------------------------ | :------------------------------------ | :------------------------------ | | Currency Translation Adjustments | $(2.4) | $0.4 | $(2.0) | | Pension Plans | $(3.2) | — | $(3.2) | | Total AOCL | $(5.6) | $0.4 | $(5.2) | [Note 15. Sale of Landing Gear Overhaul Business](index=31&type=section&id=Note%2015.%20Sale%20of%20Landing%20Gear%20Overhaul%20Business) This note describes the divestiture of the Landing Gear Overhaul business, including proceeds and recognized loss - Divested the LGO business in Q4 FY2025 for **net proceeds of $48.0 million**[124](index=124&type=chunk) - Recognized a **$71.1 million loss on divestiture**, including a **$63.0 million impairment charge** and **$14.6 million goodwill reclassified** to assets held for sale[122](index=122&type=chunk)[161](index=161&type=chunk) - Recognized a **gain of $1.0 million** in Q1 FY2026 for the final resolution of purchase price adjustments[124](index=124&type=chunk) [Note 16. Business Segment Information](index=32&type=section&id=Note%2016.%20Business%20Segment%20Information) This note provides financial data disaggregated by the company's operating segments, including sales, costs, and operating income - AAR CORP. operates in **four segments**: Parts Supply, Repair & Engineering, Integrated Solutions, and Expeditionary Services[125](index=125&type=chunk)[129](index=129&type=chunk) Segment (3 Months Ended Aug 31, 2025) (Millions) | Segment (3 Months Ended Aug 31, 2025) | Sales (Millions) | Cost of Sales (Millions) | SG&A (Millions) | Operating Income (Millions) | | :------------------------------------ | :--------------- | :----------------------- | :-------------- | :-------------------------- | | Parts Supply | $317.8 | $256.5 | $23.3 | $40.9 | | Repair & Engineering | $214.6 | $172.0 | $22.0 | $20.4 | | Integrated Solutions | $185.0 | $159.3 | $16.2 | $9.7 | | Expeditionary Services | $22.2 | $17.6 | $1.6 | $3.0 | | Total Consolidated | $739.6 | $605.4 | $63.1 | $74.0 | Segment (3 Months Ended Aug 31, 2024) (Millions) | Segment (3 Months Ended Aug 31, 2024) | Sales (Millions) | Cost of Sales (Millions) | SG&A (Millions) | Operating Income (Millions) | | :------------------------------------ | :--------------- | :----------------------- | :-------------- | :-------------------------- | | Parts Supply | $249.7 | $199.7 | $20.3 | $30.1 | | Repair & Engineering | $217.6 | $175.0 | $23.1 | $21.1 | | Integrated Solutions | $168.9 | $144.1 | $17.2 | $7.7 | | Expeditionary Services | $25.5 | $25.7 | $1.5 | $(1.7) | | Total Consolidated | $661.7 | $544.5 | $62.1 | $57.2 | Segment Total Assets (Millions) | Segment Total Assets | August 31, 2025 (Millions) | May 31, 2025 (Millions) | | :------------------- | :------------------------- | :---------------------- | | Parts Supply | $875.0 | $818.8 | | Repair & Engineering | $1,166.1 | $1,155.2 | | Integrated Solutions | $660.0 | $620.8 | | Expeditionary Services | $82.6 | $79.0 | | Corporate & Discontinued | $146.0 | $170.8 | | Total Assets | $2,929.7 | $2,844.6 | [Note 17. Legal Proceedings](index=35&type=section&id=Note%2017.%20Legal%20Proceedings) This note details ongoing legal matters, including bankruptcy litigation, performance guarantee claims, and regulatory compliance issues - Russian bankruptcy litigation concluded with a **final $1.8 million judgment** against the company, which it believes is due to a hostile business environment for foreign companies in Russia[138](index=138&type=chunk)[139](index=139&type=chunk)[140](index=140&type=chunk) - Faces a performance guarantee claim of **at least $32 million** related to the A220 Contract, which the company strongly disputes and believes it has numerous defenses against[142](index=142&type=chunk)[143](index=143&type=chunk) - Resolved FCPA violations with the DoJ and SEC, resulting in a **$55.6 million charge** in Q2 FY2025[147](index=147&type=chunk)[148](index=148&type=chunk) - Convicted in Nepal for public procurement law violations related to previously self-reported FCPA matters, facing a **$0.9 million fine** and **1.5-year prison sentence** (assigned to Mr. Holmes as principal executive), which the company does not intend to pay due to perceived lack of due process[149](index=149&type=chunk)[151](index=151&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides a detailed analysis of AAR CORP.'s financial condition, operating results, liquidity, and capital resources for the three months ended August 31, 2025 [General Overview and Outlook](index=40&type=section&id=General%20Overview%20and%20Outlook) This section provides an overview of AAR CORP.'s business segments, recent restructuring, and future market expectations - AAR CORP. operates in **four business segments**: Parts Supply, Repair & Engineering, Integrated Solutions, and Expeditionary Services[153](index=153&type=chunk)[159](index=159&type=chunk) - Executed a restructuring plan in Q1 FY2026, eliminating approximately **60 positions** and recognizing **$1.0 million in severance charges**[154](index=154&type=chunk) - Expects **long-term strength in aviation products and services**, with favorable commercial aftermarket growth trends and continued investment in both commercial and government markets[168](index=168&type=chunk) - Expanding Miami and Oklahoma City airframe maintenance facilities, with completion expected in early to mid-to-late calendar 2026[159](index=159&type=chunk)[160](index=160&type=chunk) [Discussion of Results of Operations](index=43&type=section&id=Discussion%20of%20Results%20of%20Operations) This section analyzes consolidated sales, gross profit, operating expenses, and tax rates for the quarter Financial Metric (3 Months Ended Aug 31) (Millions) | Financial Metric (3 Months Ended Aug 31) | 2025 (Millions) | 2024 (Millions) | % Change | | :--------------------------------------- | :-------------- | :-------------- | :------- | | Consolidated Sales | $739.6 | $661.7 | 11.8% | | Commercial Sales | $523.3 | $472.9 | 10.7% | | Government and Defense Sales | $216.3 | $188.8 | 14.6% | | Consolidated Gross Profit | $133.7 | $117.2 | 14.1% | | Commercial Gross Profit | $89.5 | $92.8 | (3.6%) | | Government and Defense Gross Profit | $44.2 | $24.4 | 81.1% | | Consolidated Gross Profit Margin | 18.1% | 17.7% | | | Commercial Gross Profit Margin | 17.1% | 19.6% | | | Government and Defense Gross Profit Margin | 20.4% | 12.9% | | - Selling, general, and administrative expenses decreased by **$4.7 million (6.2%)** to **$71.2 million**, primarily due to the settlement of FCPA matters. As a percentage of sales, SG&A decreased to **9.6%** from **11.5%**[173](index=173&type=chunk) - Interest expense remained **consistent at $18.8 million**, reflecting lower interest rates offset by higher average borrowings[174](index=174&type=chunk) - Effective income tax rate decreased to **26.8%** from **27.7%**, primarily due to higher tax benefits from stock compensation[175](index=175&type=chunk) [Operating Segment Results of Operations](index=44&type=section&id=Operating%20Segment%20Results%20of%20Operations) This section presents a detailed breakdown of financial performance for each of AAR CORP.'s operating segments [Parts Supply Segment](index=44&type=section&id=Parts%20Supply%20Segment) This section details the financial performance of the Parts Supply segment, including sales and operating income Parts Supply Segment (3 Months Ended Aug 31) (Millions) | Parts Supply Segment (3 Months Ended Aug 31) | 2025 (Millions) | 2024 (Millions) | % Change | | :------------------------------------------- | :-------------- | :-------------- | :------- | | Third-party sales | $317.8 | $249.7 | 27.3% | | Operating income | $40.9 | $30.1 | 35.9% | | Operating margin | 12.9% | 12.1% | | - Sales growth driven by **23.9% increase** in new parts Distribution and **32.1% increase** in USM activities[176](index=176&type=chunk) [Repair & Engineering Segment](index=44&type=section&id=Repair%20%26%20Engineering%20Segment) This section details the financial performance of the Repair & Engineering segment, including sales and operating income Repair & Engineering Segment (3 Months Ended Aug 31) (Millions) | Repair & Engineering Segment (3 Months Ended Aug 31) | 2025 (Millions) | 2024 (Millions) | % Change | | :--------------------------------------------------- | :-------------- | :-------------- | :------- | | Third-party sales | $214.6 | $217.6 | (1.4%) | | Operating income | $20.4 | $21.1 | (3.3%) | | Operating margin | 9.5% | 9.7% | | - Sales decrease primarily due to the divestiture of the LGO business (contributed **$19.2 million** in prior year sales), partially offset by a **$13.2 million increase** at airframe maintenance facilities[178](index=178&type=chunk) - Operating income and margin decreased due to **lower profitability** in Component Services activities[179](index=179&type=chunk) [Integrated Solutions Segment](index=44&type=section&id=Integrated%20Solutions%20Segment) This section details the financial performance of the Integrated Solutions segment, including sales and operating income Integrated Solutions Segment (3 Months Ended Aug 31) (Millions) | Integrated Solutions Segment (3 Months Ended Aug 31) | 2025 (Millions) | 2024 (Millions) | % Change | | :--------------------------------------------------- | :-------------- | :-------------- | :------- | | Third-party sales | $185.0 | $168.9 | 9.5% | | Operating income | $9.7 | $7.7 | 26.0% | | Operating margin | 5.2% | 4.6% | | - Sales and operating income increases primarily attributable to **higher government program activity** and a **favorable mix of products and services**[180](index=180&type=chunk)[182](index=182&type=chunk) - No cumulative catch-up adjustments were recognized in Q1 FY2026, compared to **favorable adjustments of $2.4 million** in the prior year quarter[181](index=181&type=chunk) [Expeditionary Services Segment](index=46&type=section&id=Expeditionary%20Services%20Segment) This section details the financial performance of the Expeditionary Services segment, including sales and operating income Expeditionary Services Segment (3 Months Ended Aug 31) (Millions) | Expeditionary Services Segment (3 Months Ended Aug 31) | 2025 (Millions) | 2024 (Millions) | % Change | | :----------------------------------------------------- | :-------------- | :-------------- | :------- | | Third-party sales | $22.2 | $25.5 | (12.9%) | | Operating income (loss) | $3.0 | $(1.7) | 276.5% | | Operating margin | 13.5% | (6.7%) | | - Sales decrease primarily due to the termination of the Next Generation Pallet contract in Q1 FY2025 (contributed **$9.5 million** in prior year sales), partially offset by growth in other product lines[183](index=183&type=chunk) - Operating income and margin significantly improved due to the **absence of the prior year's $12.7 million equipment and inventory expensing** related to the contract termination[184](index=184&type=chunk) [Liquidity, Capital Resources and Financial Position](index=46&type=section&id=Liquidity%2C%20Capital%20Resources%20and%20Financial%20Position) This section assesses the company's working capital, cash position, credit facilities, and cash flow activities - Working capital was **$1,028.4 million** and cash was **$80.0 million** as of August 31, 2025, providing **ample liquidity** for the foreseeable future[186](index=186&type=chunk) - Amended Revolving Credit Facility has **$485.9 million available**, and the accounts receivable financing program has **$129.0 million available**[189](index=189&type=chunk)[195](index=195&type=chunk) - Net cash used in operating activities increased to **$44.9 million** (from **$18.6 million** in prior year) primarily due to increased inventory investments[200](index=200&type=chunk) - Net cash provided by financing activities was **$51.1 million** (compared to **$9.1 million used** in prior year), driven by incremental borrowings to fund the Aerostrat acquisition and other investments[202](index=202&type=chunk) - Net cash used in investing activities increased to **$23.8 million** (from **$5.3 million** in prior year) primarily due to the Aerostrat acquisition[201](index=201&type=chunk) - No stock repurchases were made in Q1 FY2026 under the **$150 million stock repurchase program**, with **$107.5 million utilized** since inception[199](index=199&type=chunk) [Critical Accounting Policies and Significant Estimates](index=50&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Estimates) This section discusses the company's critical accounting policies and significant estimates, noting no material changes - No **significant changes** to the application of critical accounting policies during the first quarter of fiscal 2026[203](index=203&type=chunk) [Forward-Looking Statements](index=50&type=section&id=Forward-Looking%20Statements) This section highlights the inherent risks and uncertainties associated with forward-looking statements in the report - The report contains **forward-looking statements** subject to various risks and uncertainties, including those related to the commercial aviation industry, government contracts, acquisitions, and regulatory compliance[204](index=204&type=chunk)[205](index=205&type=chunk)[207](index=207&type=chunk) - The company assumes **no obligation to update** any forward-looking statements[208](index=208&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=52&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) AAR CORP.'s market risk exposure includes fluctuating interest rates, foreign exchange rates, and credit losses on accounts receivable, with no material impact from a hypothetical 10% U.S. dollar devaluation or significant changes in interest rate risk during the quarter - Market risk exposure includes fluctuating interest rates, foreign exchange rates, and credit losses on accounts receivable[209](index=209&type=chunk) - A hypothetical **10% devaluation of the U.S. dollar** would not have a **material impact** on financial position or continuing operations for the quarter ended August 31, 2025[210](index=210&type=chunk) - No **significant changes** in interest rate risk during the quarter ended August 31, 2025[211](index=211&type=chunk) [Item 4. Controls and Procedures](index=52&type=section&id=Item%204.%20Controls%20and%20Procedures) The CEO and CFO concluded that disclosure controls and procedures were effective as of August 31, 2025, with no material changes to internal control over financial reporting during the quarter - CEO and CFO concluded that disclosure controls and procedures were **effective** as of August 31, 2025, providing **reasonable assurance** of timely and accurate reporting[212](index=212&type=chunk) - No **material changes** in internal control over financial reporting occurred during the quarter ended August 31, 2025[213](index=213&type=chunk) PART II — OTHER INFORMATION This section covers legal proceedings, risk factors, other information including executive trading plans, and a list of exhibits [Item 1. Legal Proceedings](index=53&type=section&id=Item%201.%20Legal%20Proceedings) This section incorporates by reference the legal proceedings detailed in Note 17, confirming no other material pending legal proceedings - Incorporates by reference the legal proceedings detailed in Note 17, confirming **no other material pending legal proceedings**[214](index=214&type=chunk) [Item 1A. Risk Factors](index=53&type=page&id=Item%201A.%20Risk%20Factors) There have been no material changes in risk factors from the Annual Report on Form 10-K for the fiscal year ended May 31, 2025 - No **material changes** in risk factors from the Annual Report on Form 10-K for the fiscal year ended May 31, 2025[215](index=215&type=chunk) [Item 5. Other Information](index=53&type=section&id=Item%205.%20Other%20Information) CEO John M. Holmes adopted a Rule 10b5-1 trading plan for potential stock sales, with no other directors or officers initiating or modifying similar arrangements during the quarter - CEO John M. Holmes adopted a Rule 10b5-1 trading plan on August 6, 2025, for the potential sale of up to **61,539 shares** of common stock between November 5, 2025, and February 2, 2026[216](index=216&type=chunk) - No other directors or officers adopted, modified, or terminated trading arrangements during the three months ended August 31, 2025[217](index=217&type=chunk) [Item 6. Exhibits](index=54&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including material contracts, Section 302 and 906 certifications, and Interactive Data Files (Inline XBRL) - Lists exhibits including material contracts (incentive plans, stock agreements), Section 302 and 906 certifications, and Interactive Data Files (Inline XBRL)[219](index=219&type=chunk)

Executive Summary & Financial Highlights [Company Announcement & Overview](index=1&type=section&id=Company%20Announcement%20%26%20Overview) American Battery Technology Company (ABTC) announced its fiscal 2025 fourth quarter and full year financial results, highlighting a significant acceleration in revenue growth that nearly tripled quarterly revenue and substantially outpaced operational cost increases, signaling a clear trajectory towards profitability - ABTC nearly tripled quarterly revenue, increasing over **180% for Q4 FY2025**[1](index=1&type=chunk) - Revenue growth substantially outpaced the increase in operational costs, signaling a clear trajectory towards profitability[2](index=2&type=chunk) [Key Financial Highlights](index=1&type=section&id=Key%20Financial%20Highlights) ABTC achieved exponential revenue growth in FY2025, with Q4 revenue nearly tripling and full-year revenue increasing over 1,100%, demonstrating strong cost control, reduced operating expenses, and a robust cash position, while also being added to the Russell 2000 index Key Financial Highlights (Q4 FY2025 vs Q3 FY2025, and FY2025 vs FY2024) | Metric | Q4 FY2025 (million $) | Q3 FY2025 (million $) | Change (QoQ) | FY2025 (million $) | FY2024 (million $) | Change (YoY) | | :-------------------------------- | :------------------- | :------------------- | :----------- | :----------------- | :----------------- | :----------- | | Revenue | 2.8 | 1.0 | +183% | 4.3 | 0.3 | +1,149% | | Cash Cost of Goods Sold (non-GAAP) | 3.9 | 2.3 | +70% | 10.5 | 1.8 | +483% | | Total Operating Expenses | N/A | N/A | N/A | 31.4 | 44.8 | -30% | - Added to Russell 2000 index in June 2025, resulting in a significant increase in trading volume and institutional ownership[3](index=3&type=chunk) - Strong cash position with **$12.5 million** at June 30, 2025, further enhanced to **$25.4 million** as of September 15, 2025[3](index=3&type=chunk) Operational Highlights [CEO Statement](index=2&type=section&id=CEO%20Statement) CEO Ryan Melsert expressed pride in the ABTC team's exponential ramp-up of operations at their first recycling facility and outlined an exciting path ahead, including continued growth and accelerating the commercialization of the Tonopah Flats Lithium Project and a second battery recycling facility - CEO Ryan Melsert highlighted the exponential ramp-up of the first recycling facility and future growth plans for the Tonopah Flats Lithium Project and a second battery recycling facility[4](index=4&type=chunk) [Battery Recycling Highlights](index=2&type=section&id=Battery%20Recycling%20Highlights) ABTC significantly scaled its battery recycling operations, increasing Q4 throughput by 70% and expanding feed material sources to include stationary battery energy storage systems, while successfully completing its USCAR contract and securing a **$144 million** DOE grant for a second facility - Continued ramp of operations at the first battery recycling facility, with Q4 throughput increasing **70%** over Q3[6](index=6&type=chunk) - ABTC's recycling facility is now receiving substantial quantities of feed material from stationary battery energy storage systems (BESS), in addition to end-of-life electric vehicles and consumer electronics[6](index=6&type=chunk) - Successfully closed out and completed all requirements in its contract with the U.S. Advanced Battery Consortium (USCAR) during FY2025[6](index=6&type=chunk) - Selected for and contracted a competitive grant for **$144 million** from the U.S. DOE for the construction of a second battery recycling facility in the Southeast U.S.[6](index=6&type=chunk) [Primary Lithium from Claystone Manufacturing Highlights](index=2&type=section&id=Primary%20Lithium%20from%20Claystone%20Manufacturing%20Highlights) ABTC advanced its Tonopah Flats Lithium Project by developing proprietary technologies for lithium hydroxide manufacturing from Nevada-based claystone, completing a multi-tonne per day integrated pilot facility, gaining 'Transparency Priority' and 'Covered Project' status, and securing a **$900 million** Letter of Interest for a low-interest loan - Developed proprietary technologies for manufacturing critical mineral lithium hydroxide from Nevada-based claystone material and constructed a multi-tonne per day integrated pilot facility[6](index=6&type=chunk) - Successfully closed out and completed all requirements in its **$2.3 million** grant award from the U.S. DOE for the design, construction, and operation of its integrated domestic claystone to lithium hydroxide pilot facility[6](index=6&type=chunk) - Designed a commercial-scale lithium refinery for the Tonopah Flats Lithium Project, anticipated to manufacture **30,000 tonnes of lithium hydroxide per year**, with long-term commercial offtake agreements under development[6](index=6&type=chunk) - Tonopah Flats Lithium Project was approved as a 'Covered Project' by the FAST-41 Permitting Council and National Energy Dominance Council, prioritizing streamlined permitting[6](index=6&type=chunk) - Received an approved Letter of Interest from the US Export-Import Bank for a **$900 million** low-interest loan to support the construction of the commercial lithium mine and refinery[6](index=6&type=chunk) Financial Performance [Unaudited Condensed Consolidated Statements of Operations](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) For fiscal year 2025, ABTC reported a significant increase in revenue to **$4.3 million**, alongside a gross loss of **$10.6 million**, with total operating expenses decreasing by **30%** to **$31.4 million**, contributing to a reduced net loss of **$46.8 million** Unaudited Condensed Consolidated Statements of Operations (FY2025 vs FY2024) | Metric | FY2025 ($) | FY2024 ($) | Change (%) | | :----------------------------------- | :----------- | :----------- | :--------- | | Revenue | 4,290,224 | 343,500 | +1,149% | | Cost of goods sold | 14,864,633 | 3,304,707 | +350% | | Gross loss | (10,574,409) | (2,961,207) | +257% | | General and administrative | 21,151,445 | 16,106,807 | +31.3% | | Research and development | 8,470,161 | 14,325,681 | -40.9% | | Exploration | 1,827,314 | 4,121,941 | -55.7% | | Impairment charge on held-for-sale assets | - | 10,254,037 | -100% | | Total operating expenses | 31,448,920 | 44,808,466 | -30% | | Net loss attributable to common stockholders | (46,762,625) | (52,501,824) | -11% | | Net loss per share, basic and diluted | (0.58) | (1.02) | -43.1% | | Weighted average shares outstanding | 80,316,363 | 51,243,106 | +56.7% | [Unaudited Condensed Consolidated Balance Sheets](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, ABTC's total assets increased to **$84.5 million** from **$77.7 million** in FY2024, driven by growth in current assets, while total liabilities decreased to **$13.9 million** and total stockholders' equity rose to **$70.6 million** Unaudited Condensed Consolidated Balance Sheets (June 30, 2025 vs June 30, 2024) | Metric | June 30, 2025 ($) | June 30, 2024 ($) | Change (%) | | :-------------------------------- | :---------------- | :---------------- | :--------- | | **ASSETS** | | | | | Cash | 7,474,304 | 7,001,786 | +6.7% | | Accounts receivable | 2,799,603 | 228,499 | +1,125% | | Restricted cash | 5,000,000 | – | N/A | | Total current assets | 29,532,110 | 18,406,048 | +60.4% | | Total assets | 84,457,791 | 77,675,132 | +8.7% | | **LIABILITIES & STOCKHOLDERS' EQUITY** | | | | | Total current liabilities | 13,668,605 | 15,798,298 | -13.5% | | Total liabilities | 13,858,768 | 16,207,492 | -14.5% | | Total stockholders' equity | 70,599,023 | 61,467,640 | +14.9% | [Non-GAAP Financial Measures Reconciliation](index=3&type=section&id=NON-GAAP%20FINANCIAL%20MEASURES) ABTC provides non-GAAP financial measures, specifically 'cash cost of goods sold,' to offer investors additional insights into its fundamental business performance by excluding non-cash items not indicative of core operations Reconciliation of GAAP to Non-GAAP Cash Cost of Goods Sold (Q4 FY2025) | Description | Amount ($M) | | :-------------------------- | :---------- | | GAAP Cost of Goods Sold | 5.1 | | Less: Depreciation Expense | (1.0) | | Less: Stock-Based Compensation | (0.2) | | Non-GAAP Cash Cost of Goods Sold | 3.9 | Reconciliation of GAAP to Non-GAAP Cash Cost of Goods Sold (FY2025) | Description | Amount ($M) | | :-------------------------- | :---------- | | GAAP Cost of Goods Sold | 14.9 | | Less: Depreciation Expense | (3.6) | | Less: Stock-Based Compensation | (0.6) | | Non-GAAP Cash Cost of Goods Sold | 10.7 | - Non-GAAP measures are used to provide meaningful comparisons by excluding items not reflecting fundamental business performance[11](index=11&type=chunk) Company Information & Disclosures [About American Battery Technology Company](index=3&type=section&id=About%20American%20Battery%20Technology%20Company) American Battery Technology Company (ABTC), headquartered in Reno, Nevada, pioneers technologies to unlock domestically manufactured and recycled battery metals, committed to establishing a circular supply chain for sustainable energy - ABTC pioneers technologies for domestically manufactured and recycled battery metals critically needed for electric vehicles, stationary storage, and consumer electronics industries[9](index=9&type=chunk) - Committed to a circular supply chain for battery metals, innovating for a global transition to electrification and sustainable energy[9](index=9&type=chunk) [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) This section outlines various forward-looking statements regarding ABTC's future operations, sales, financing, and project developments, emphasizing that actual results may differ materially due to inherent risks and uncertainties including going concern ability, permitting, economic conditions, and fluctuating mineral prices - Statements include future sales, potential loans/grants, scale of operations, anticipated production, and project costs/schedules[10](index=10&type=chunk) - Warns that future results may differ materially due to risks such as going concern ability, interpretations of geologic information, inability to obtain permits, general economic conditions, regulatory requirements, and fluctuating mineral prices[10](index=10&type=chunk) [Earnings Call & Media Contact](index=3&type=section&id=Earnings%20Call%20%26%20Media%20Contact) ABTC announced its fiscal year 2025 earnings call to be held on Monday, September 22, at 4:30 p.m. ET, providing details for accessing the webcast, with media contact information also provided for inquiries - ABTC will host its FY2025 earnings call on Monday, September 22 at 4:30 p.m. ET[7](index=7&type=chunk) - Media contact for inquiries: Tiffiany Moehring, tmoehring@batterymetals.com, 720-254-1556[12](index=12&type=chunk)

PART I This part provides an overview of the company's business, including its strategy, pipeline, competition, regulatory environment, and financial risks [Item 1. Business](index=4&type=section&id=Item%201.%20Business) Palatin Technologies, Inc. is a biopharmaceutical company focused on developing first-in-class medicines that modulate the melanocortin receptor (MCR) system. The company's strategy involves developing products and then forming marketing collaborations. Key development areas include MC4R agonists for obesity and MC1R agonists for inflammatory and autoimmune diseases. The company sold its Vyleesi product in December 2023 and entered into a collaboration with Boehringer Ingelheim in August 2025 for retinal diseases [1.1 Our Business Overview](index=4&type=section&id=1.1%20Our%20Business%20Overview) Palatin Technologies, Inc. develops first-in-class medicines modulating the melanocortin receptor system for unmet medical needs - Palatin Technologies, Inc. is a biopharmaceutical company focused on developing **first-in-class medicines** that modulate the melanocortin receptor (MCR) system for diseases with significant unmet medical need[22](index=22&type=chunk) - The MCR system influences inflammation, immune response, food intake, metabolism, and sexual function, with **five melanocortin receptors (MC1R-MC5R)** that can be modulated by agonists or antagonists[23](index=23&type=chunk) - Current development focuses on **MC4R agonists for obesity** and metabolic disorders, and **MC1R agonists for inflammatory and autoimmune diseases** like dry eye disease, uveitis, diabetic retinopathy, and inflammatory bowel disease[24](index=24&type=chunk)[25](index=25&type=chunk) - Positive topline data was reported in **Q1 2025** for a Phase 2 clinical study of bremelanotide co-administered with tirzepatide for obesity[26](index=26&type=chunk) - **Vyleesi**, an FDA-approved MCRA for HSDD, was acquired by Cosette in **December 2023**[29](index=29&type=chunk) - Boehringer Ingelheim acquired certain patent applications for MCR-targeted peptides for retinal diseases in **August 2025**, while Palatin retains rights to PL9643 for dry eye disease[30](index=30&type=chunk) [1.2 Our Business Strategy](index=4&type=section&id=1.2%20Our%20Business%20Strategy) The business strategy focuses on MCR product development, strategic alliances, partial funding from Vyleesi milestones, and regulatory approval for product candidates - Key elements of the business strategy include maintaining a team for MCR product development, entering strategic alliances, partially funding programs with **Vyleesi milestone payments** and future agreements, and completing development and seeking regulatory approval for other product candidates[33](index=33&type=chunk) [1.3 Pipeline Overview](index=4&type=section&id=1.3%20Pipeline%20Overview) The company's pipeline includes MC4R agonists for obesity and MC1R agonists for ocular, gastroenterology, and renal diseases Pipeline Development Programs | Pipeline Development Programs | Preclinical Phase 1 NDA Status/Next Steps | Phase 2 | Phase 3 | | :---------------------------- | :--------------------------------------- | :------ | :------ | | **Obesity** | | | | | Bremelanotide | | | | | Obesity - GLP-1 adjunct therapy | Positive topline data reported 1Q25 | MC4R agonist + GLP-1 in obese patients initiated | | | Novel Once-Weekly Peptide MC4R Agonist | IND filing 1Q26, IND enabling - CMC activities 1Q25 - 4Q25, Phase 1 SAD/MAD data 1H26 | | | | PL7737 Oral Small Molecule MC4R Agonist | IND enabling - CMC activities 1Q25 - 4Q25, IND filing 1Q26, Phase 1 SAD/MAD data 1H26 | | | | **Spin-Out / Out-License Product Candidates - Seeking Development & Commercial Partnerships** | | | | | **Ocular** | | | | | PL9643 MCR Agonist (Dry eye disease) | FDA confirmation on protocols and endpoints, Phase 3 Melody-2 & -3 start targeted for 1H26 | | MELODY-1 completed, positive data | | PL9588 MCR Agonist (Glaucoma) | Research Collaboration / License Agreement with Boehringer Ingelheim August 2025 | | | | PL9654 MCR Agonist (Retinal diseases) | Research Collaboration / License Agreement with Boehringer Ingelheim August 2025 | | | | **Gastroenterology, Renal** | | | | | PL8177 Oral MC1R Agonist (Ulcerative colitis) | | Proof-of-Concept, Positive topline data reported 1Q25 | | | MCR Agonist (Diabetic nephropathy) | | Open Label Trial, Positive topline data reported 4Q24 | | [1.4 Melanocortin Receptor Programs](index=5&type=section&id=1.4%20Melanocortin%20Receptor%20Programs) Product development focuses on MC4R agonists for obesity and MC1R agonists for inflammatory and autoimmune diseases, with several programs in clinical trials - The current product development strategy focuses on **MC4R agonists for obesity** and metabolic disorders, including novel peptides and small molecule agonists[35](index=35&type=chunk) - Development also includes **MC1R agonist products for inflammatory and autoimmune diseases** like dry eye disease, uveitis, diabetic retinopathy, and inflammatory bowel disease, leveraging broad anti-inflammatory effects[36](index=36&type=chunk)[37](index=37&type=chunk) - IND-enabling activities are advancing for a novel MC4R selective long-acting agonist (**PL7737 oral small molecule and a peptide**), with IND filings projected for **Q1 2026**[38](index=38&type=chunk)[40](index=40&type=chunk) - A Phase 2 clinical trial for co-administration of **bremelanotide with tirzepatide (GLP-1 agonist)** for obesity reported positive topline data in **Q1 2025**[41](index=41&type=chunk) - **PL9643 for dry eye disease** successfully completed a Phase 3 clinical trial (**MELODY-1**) with positive symptom endpoints, and two additional Phase 3 studies (**MELODY-2 and MELODY-3**) are targeted for **H1 2026**[43](index=43&type=chunk)[44](index=44&type=chunk) - Oral **PL8177 for inflammatory bowel diseases**, including ulcerative colitis, reported positive topline data in a Phase 2 proof-of-concept study in **Q1 2025**[45](index=45&type=chunk)[46](index=46&type=chunk) - A Phase 2 proof-of-concept study for diabetic nephropathy using a melanocortin pan agonist reported **positive topline results in Q4 2024**[47](index=47&type=chunk) [1.5 Technologies We Use](index=5&type=section&id=1.5%20Technologies%20We%20Use) The company uses rational drug design to develop proprietary peptide, mimetic, and small molecule compounds targeting the melanocortin receptor system - The company employs a **rational drug design approach** to discover and develop proprietary peptide, peptide mimetic, and small molecule agonist compounds, focusing on the melanocortin receptor system[48](index=48&type=chunk) [1.6 Competition](index=6&type=section&id=1.6%20Competition) The company faces intense competition from established pharmaceutical and biotechnology companies across its therapeutic areas, including obesity and inflammatory diseases - The pharmaceutical and biotechnology industries are **highly competitive**, with numerous established products and companies possessing significantly greater resources[49](index=49&type=chunk)[50](index=50&type=chunk)[51](index=51&type=chunk) - For obesity, competitors include major pharmaceutical companies and **GLP-1 receptor agonists** (e.g., Wegovy, Ozempic), as well as other melanocortin agonists like Imcivree®[52](index=52&type=chunk)[53](index=53&type=chunk) - For erectile dysfunction (ED), **PDE5i drugs** (e.g., Viagra, Cialis) are widely used, but no disclosed co-formulations of an MC4R agonist and a PDE5i exist[54](index=54&type=chunk) - For anti-inflammatory ocular indications like dry eye disease, treatments include artificial tears, topical immunosuppressants (e.g., Restasis), and drugs inhibiting inflammatory cell binding (e.g., Xiidra); no reported MC1R agonist drugs are in clinical trials by third parties for DED[56](index=56&type=chunk) - For inflammatory bowel diseases/ulcerative colitis, approved drugs include aminosalicylates, immunosuppressants, corticosteroids, and biologics; no reported MC1R agonist drugs are in clinical trials for IBD[57](index=57&type=chunk) [1.7 Patents and Proprietary Information](index=6&type=section&id=1.7%20Patents%20and%20Proprietary%20Information) Success relies on obtaining and defending patents, maintaining trade secrets, and avoiding infringement, with risks of litigation and unauthorized disclosure - The company's success depends on obtaining, defending, and enforcing patents, maintaining trade secrets, and avoiding infringement of others' rights[59](index=59&type=chunk) - Patent applications for **PL9643** and other peptides for ocular/inflammatory diseases have a presumptive term until **2041**, with an irrevocable, royalty-free license for PL9643 assigned to Boehringer Ingelheim[60](index=60&type=chunk) - Issued patents for highly selective **MC1R agonist peptides** for inflammation-related diseases have a presumptive term until **2030**[61](index=61&type=chunk) - Risks include costly and time-consuming patent litigation, potential invalidation or narrowing of claims, and the possibility of infringing third-party patents[63](index=63&type=chunk)[64](index=64&type=chunk) - The company relies on unpatented trade secrets and know-how, protected by confidentiality agreements, but faces risks of unauthorized use or disclosure[65](index=65&type=chunk)[66](index=66&type=chunk) [1.8 U.S. Governmental Regulation of Pharmaceutical Products](index=7&type=section&id=1.8%20U.S.%20Governmental%20Regulation%20of%20Pharmaceutical%20Products) Pharmaceutical products are subject to extensive FDA regulation covering development, testing, manufacturing, and marketing, with complex approval processes and post-marketing compliance - Pharmaceutical products are subject to extensive regulation by governmental authorities, primarily the **FDA in the U.S.**, covering research, development, testing, manufacturing, safety, efficacy, labeling, and marketing[67](index=67&type=chunk) - The FDA approval process involves preclinical testing, submission of an **Investigational New Drug (IND) application**, multi-phase human clinical trials (Phase 1, 2, 3), and submission of a **New Drug Application (NDA)**[68](index=68&type=chunk)[71](index=71&type=chunk)[73](index=73&type=chunk)[74](index=74&type=chunk) - Post-marketing regulation includes ongoing compliance with **GMP**, adverse event reporting, and restrictions on advertising and promotion, with potential sanctions for non-compliance[79](index=79&type=chunk)[80](index=80&type=chunk)[82](index=82&type=chunk)[83](index=83&type=chunk)[84](index=84&type=chunk) - Generic competition is influenced by patent listings in the **FDA's Orange Book** and regulatory exclusivities (e.g., **5-year NCE exclusivity, 3-year exclusivity** for new indications)[92](index=92&type=chunk)[93](index=93&type=chunk)[99](index=99&type=chunk)[100](index=100&type=chunk) - The company is also subject to federal and state healthcare fraud and abuse laws, false claims laws, and health information privacy and security laws, with potential for substantial penalties for non-compliance[86](index=86&type=chunk)[89](index=89&type=chunk)[90](index=90&type=chunk)[95](index=95&type=chunk) [1.9 Third-Party Reimbursements](index=10&type=section&id=1.9%20Third-Party%20Reimbursements) Product sales depend on adequate and timely reimbursement from third-party payers, a costly and time-consuming process often involving coverage limitations and price pressure - Successful sales of proposed products depend on adequate reimbursement from **third-party payers** (governmental entities, managed care organizations, private insurance plans)[105](index=105&type=chunk) - Reimbursement is a **time-consuming and costly process**, with payers often limiting coverage and pressuring for lower prices[106](index=106&type=chunk) [1.10 Manufacturing and Marketing](index=10&type=section&id=1.10%20Manufacturing%20and%20Marketing) The company relies on third-party contractors for commercial manufacturing under GMP, facing challenges in scaling production and ensuring regulatory compliance - The company relies on collaborators, licensees, or **contract manufacturers** for commercial manufacturing of its proposed products under GMP[107](index=107&type=chunk) - Challenges include scaling up peptide production to commercial quantities under **GMP**, which involves production, purification, and formulation problems[108](index=108&type=chunk) - Failure of manufacturers or suppliers to comply with FDA regulations or supply agreements could disrupt product delivery and necessitate seeking alternative, FDA-approved sources, which is costly and time-consuming[109](index=109&type=chunk) [1.11 Product Liability and Insurance](index=10&type=section&id=1.11%20Product%20Liability%20and%20Insurance) Product development and use entail inherent liability risks, with current insurance coverage of $10 million, but future availability and sufficiency are uncertain - The testing, manufacturing, marketing, and use of products entail inherent **product liability risks**[110](index=110&type=chunk) - The company carries **$10 million in liability insurance** for product liability and clinical trial risks, but there is no assurance that future insurance will be available at reasonable cost or in sufficient amounts[110](index=110&type=chunk) [1.12 Compliance with Environmental Laws](index=10&type=section&id=1.12%20Compliance%20with%20Environmental%20Laws) The company complies with environmental laws, with no material impact expected on capital expenditures, earnings, or competitive position in the foreseeable future - The company is subject to federal, state, and local environmental laws and regulations, but compliance is not expected to have a **material effect** on capital expenditures, earnings, or competitive position in the foreseeable future[111](index=111&type=chunk)[112](index=112&type=chunk) [1.13 Employees](index=11&type=section&id=1.13%20Employees) As of September 19, 2025, the company employed 29 full-time staff, with 20 in R&D, and relies on contractors for specific programs and services - As of **September 19, 2025**, the company employed **29 full-time people**: **20 in research and development** and **9 in administration and management**[113](index=113&type=chunk) - The company relies on contractors and scientific consultants for specific R&D programs and independent organizations for services like manufacturing, testing, and clinical management[114](index=114&type=chunk) [1.14 Corporate Information](index=11&type=section&id=1.14%20Corporate%20Information) Palatin Technologies, Inc. was incorporated in Delaware in 1986, commenced biopharmaceutical operations in 1996, with executive offices and research labs in New Jersey - Palatin Technologies, Inc. was incorporated in Delaware on **November 21, 1986**, and commenced biopharmaceutical operations in **1996**[115](index=115&type=chunk) - The company's executive offices are in **Princeton, New Jersey**, and its research laboratory is in **Monmouth Junction, New Jersey**[115](index=115&type=chunk) [Item 1A. Risk Factors](index=11&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks, including substantial doubt about its ability to continue as a going concern due to historical operating losses and the need for additional financing. Product development is in early stages, subject to clinical trial delays, regulatory hurdles, and intense competition. Commercial success of licensed products (Vyleesi, Boehringer Ingelheim peptides) is uncertain. The company also faces risks related to intellectual property, cybersecurity, and stock price volatility, exacerbated by its delisting from NYSE American [1A.1 Risks Related to Our Financial Results and Need for Financing](index=11&type=section&id=1A.1%20Risks%20Related%20to%20Our%20Financial%20Results%20and%20Need%20for%20Financing) Substantial doubt exists about the company's going concern ability due to historical losses and the critical need for additional financing, which may dilute existing stockholders - Management has determined there is **substantial doubt** about the company's ability to continue as a going concern due to the need for significant additional financing to complete clinical trials and product development[117](index=117&type=chunk) Financial Metric (Year Ended June 30) | Financial Metric (Year Ended June 30) | 2025 (USD) | 2024 (USD) | | :------------------------------------ | :--------- | :--------- | | Net Loss | $(17.3M) | $(29.7M) | | Accumulated Deficit | $(459.1M) | $(441.8M) | | Cash and Cash Equivalents | $2.6M | $9.5M | | Current Liabilities | $8.0M | $9.7M | - The company expects to incur substantial net losses for the foreseeable future and may never achieve or maintain profitability[119](index=119&type=chunk)[124](index=124&type=chunk) - Additional funding is required to complete clinical trials and development programs, which may not be available on acceptable terms, if at all, and could lead to **dilution of existing stockholders' ownership interests**[125](index=125&type=chunk)[126](index=126&type=chunk)[134](index=134&type=chunk) - The company has a limited operating history for commercializing current product candidates, making investment decisions difficult[129](index=129&type=chunk)[130](index=130&type=chunk) [1A.2 Risks Related to Our Business, Strategy, and Industry](index=13&type=section&id=1A.2%20Risks%20Related%20to%20Our%20Business%2C%20Strategy%2C%20and%20Industry) Commercial success of licensed products is uncertain, product candidates face early-stage development risks, and reliance on third-party contractors and key personnel poses operational challenges - The commercial success of **Vyleesi** and the potential for significant milestone payments from Cosette are uncertain and depend on Cosette's sales and other factors[135](index=135&type=chunk)[140](index=140&type=chunk) - The company may not receive significant milestone payments under its agreement with **Boehringer Ingelheim**, as clinical and commercial success depends on various factors[138](index=138&type=chunk)[141](index=141&type=chunk)[142](index=142&type=chunk) - Ongoing military conflicts (e.g., Russia-Ukraine, Israel-Hamas) could cause geopolitical instability, economic uncertainty, and financial market volatility, adversely affecting operations and financing[144](index=144&type=chunk) - Product candidates are in **early development stages** and require significant research, development, and testing, with risks of prolonged or delayed clinical trials due to various factors like side effects, recruitment rates, and manufacturing issues[145](index=145&type=chunk)[146](index=146&type=chunk)[147](index=147&type=chunk) - Even with regulatory approval, product candidates may not achieve market acceptance due to perceptions of safety/effectiveness, cost-effectiveness, reimbursement availability, or competition[150](index=150&type=chunk)[155](index=155&type=chunk) - The company relies heavily on **third-party contractors** for preclinical studies, clinical trials, and manufacturing, over whom it has limited control, posing risks to product development and supply[160](index=160&type=chunk)[161](index=161&type=chunk) - The use of **artificial intelligence (AI)** in business carries risks such as inaccuracy, bias, intellectual property infringement, data privacy issues, and cybersecurity threats[172](index=172&type=chunk) - The company is highly dependent on its management team, senior staff, and third-party contractors, and the loss of their services could materially adversely affect the business[180](index=180&type=chunk)[181](index=181&type=chunk) [1A.3 Risks Related to Government Regulation](index=18&type=section&id=1A.3%20Risks%20Related%20to%20Government%20Regulation) Product candidates face extensive and uncertain regulatory approval processes, with non-compliance leading to sanctions and healthcare reforms potentially increasing costs and restrictions - Product candidates are subject to extensive and ongoing regulatory requirements both before and after marketing approval, with non-compliance leading to sanctions such as restrictions, fines, or withdrawal of approval[182](index=182&type=chunk)[183](index=183&type=chunk)[184](index=184&type=chunk) - The regulatory approval process is lengthy, expensive, and uncertain, with no guarantee of approval, and may be delayed by FDA requests for additional information or differing interpretations of data[188](index=188&type=chunk)[191](index=191&type=chunk) - Products used in combination with drug delivery devices (**combination products**) face increased regulatory complexity and dependence on third-party device suppliers for approvals and compliance[192](index=192&type=chunk) - Legislative or regulatory healthcare reforms in the U.S., such as the **PPACA**, may increase costs, lengthen review times, and impose price controls or other restrictions, adversely affecting the business[196](index=196&type=chunk)[198](index=198&type=chunk)[201](index=201&type=chunk)[203](index=203&type=chunk) [1A.4 Risks Related to Our Intellectual Property](index=20&type=section&id=1A.4%20Risks%20Related%20to%20Our%20Intellectual%20Property) Success depends on protecting patents and trade secrets, but risks include costly litigation, patent invalidation, infringement claims, and challenges in global enforcement - The company's success depends on its ability to obtain, defend, and enforce patents and maintain trade secrets, and to operate without infringing on the proprietary rights of others[205](index=205&type=chunk) - Risks include costly and time-consuming lawsuits to protect or enforce patents, potential invalidation or narrow interpretation of patents, and the possibility of infringing third-party intellectual property rights, which could lead to substantial damages or licensing costs[206](index=206&type=chunk)[207](index=207&type=chunk)[210](index=210&type=chunk)[211](index=211&type=chunk) - Changes in U.S. and foreign patent standards, such as the **Leahy-Smith America Invents Act**, can impact the grant, validity, enforceability, or term of patents, increasing prosecution costs and competitive risks[215](index=215&type=chunk)[216](index=216&type=chunk) - Protecting intellectual property rights globally is expensive and challenging, as foreign laws may offer less protection, potentially allowing competitors to use technologies or export infringing products[217](index=217&type=chunk)[218](index=218&type=chunk) - Inability to keep trade secrets confidential could allow competitors to use proprietary information, materially affecting the company's competitive position[220](index=220&type=chunk) [1A.5 Risks Related to the Ownership of Our Common Stock](index=21&type=section&id=1A.5%20Risks%20Related%20to%20the%20Ownership%20of%20Our%20Common%20Stock) Stock price volatility, delisting from NYSE American, potential dilution from equity instruments, and anti-takeover provisions pose significant risks to common stockholders - The company's stock price is **volatile** and may fluctuate disproportionately to operating performance, influenced by clinical results, regulatory decisions, competition, and economic factors[221](index=221&type=chunk)[222](index=222&type=chunk)[223](index=223&type=chunk)[224](index=224&type=chunk) - As of **June 30, 2024**, the company's internal control over financial reporting was ineffective due to a **material weakness** in accounting for complex financial instruments, though it was remediated by **June 30, 2025**[225](index=225&type=chunk)[226](index=226&type=chunk)[453](index=453&type=chunk)[454](index=454&type=chunk) - The company's common stock was suspended from trading on the **NYSE American on May 7, 2025**, and now trades on the **OTCQB® Venture Market**, leading to reduced liquidity and market quotations[241](index=241&type=chunk)[243](index=243&type=chunk) - Stockholders may experience **dilution** from the conversion of preferred stock and the exercise of outstanding options, restricted stock units, and warrants, totaling **838,142 shares** as of **September 19, 2025**[238](index=238&type=chunk)[240](index=240&type=chunk)[242](index=242&type=chunk) - The company does not anticipate paying cash dividends in the foreseeable future, making capital appreciation the sole source of gains for stockholders[231](index=231&type=chunk) - Anti-takeover provisions in Delaware law and the company's charter documents may make potential acquisitions more difficult and could entrench management[232](index=232&type=chunk)[233](index=233&type=chunk)[234](index=234&type=chunk)[236](index=236&type=chunk) [Item 1B. Unresolved Staff Comments](index=24&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company has no unresolved staff comments from the SEC - There are no unresolved staff comments[244](index=244&type=chunk) [Item 1C. Cybersecurity](index=24&type=section&id=Item%201C.%20Cybersecurity) The company has established processes for identifying, evaluating, and managing material risks from cybersecurity threats, including engaging third parties for assessment and providing employee training. The audit committee oversees the technology management strategy. No material cybersecurity threats have been identified in the last two fiscal years - The company has established processes for identifying, evaluating, and managing material risks from cybersecurity threats as part of its overall technology management strategy[245](index=245&type=chunk) - Third parties are engaged to assess cybersecurity effectiveness, and ongoing security training is provided to employees[246](index=246&type=chunk)[247](index=247&type=chunk) - No cybersecurity threats that have materially affected the business, results of operations, or financial condition have been identified in the last two fiscal years[248](index=248&type=chunk) - The board's audit committee provides oversight of the technology management strategy to ensure cybersecurity threats and risks are identified, evaluated, and managed[248](index=248&type=chunk) [Item 2. Properties](index=24&type=section&id=Item%202.%20Properties) The company leases its corporate offices in Princeton, New Jersey, with an agreement expiring in January 2026, and laboratory space in Monmouth Junction, New Jersey, with a lease expiring in October 2026. The current facilities are considered adequate for its needs - The company leases corporate offices in **Princeton, New Jersey**, under an agreement expiring in **January 2026**[249](index=249&type=chunk) - Approximately **3,600 square feet** of laboratory space is leased in **Monmouth Junction, New Jersey**, with the lease expiring in **October 2026**[249](index=249&type=chunk) - The company believes its present facilities are adequate for its current needs and does not own any real property[249](index=249&type=chunk) [Item 3. Legal Proceedings](index=24&type=section&id=Item%203.%20Legal%20Proceedings) The company is currently involved in a breach of contract lawsuit filed by H.C. Wainwright & Co., LLC, seeking monetary damages and warrants. The company denies liability and plans to vigorously defend the action. No other pending or threatened legal proceedings are known - The company is a defendant in a **breach of contract lawsuit** filed by H.C. Wainwright & Co., LLC, seeking monetary damages and warrants allegedly due under an engagement agreement[251](index=251&type=chunk) - The company denies all liability and plans to vigorously defend against the lawsuit[251](index=251&type=chunk) - As of the filing date, the company is not aware of any other pending or threatened legal proceedings or governmental actions[252](index=252&type=chunk) [Item 4. Mine Safety Disclosures](index=24&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Mine Safety Disclosures are not applicable to the registrant[253](index=253&type=chunk) PART II This part covers the market for the registrant's common equity, management's discussion and analysis of financial condition, and financial statements [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=24&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock was delisted from the NYSE American on May 8, 2025, and now trades on the OTCQB® Venture Market. The company has never paid dividends and does not anticipate doing so in the foreseeable future, with Series A Preferred Stock having a dividend preference. No issuer purchases of equity securities were made in Q4 FY2025 - The company's common stock traded on **NYSE American** until **May 8, 2025**, and has since traded on the **OTCQB® Venture Market** under the symbol 'PTNT' (later 'PTNTD' after a reverse stock split)[254](index=254&type=chunk) Metric (as of Sep 19, 2025) | Metric (as of Sep 19, 2025) | Value | | :-------------------------- | :------------- | | Closing Sales Price (OTCQB) | $8.64 per share | | Market Value (Non-affiliates) | $8,346,059 | - The company has never declared or paid any dividends and intends to retain future earnings for business development, not anticipating dividends in the foreseeable future[257](index=257&type=chunk) - The outstanding **Series A Preferred Stock (4,030 shares)** has a provision requiring a special dividend of **$100 per share** to its holders before any dividend or distribution to other stock classes[258](index=258&type=chunk) - No shares were withheld by the company to satisfy tax withholding amounts for employees upon vesting of restricted stock units and stock options during the quarter ended **June 30, 2025**[256](index=256&type=chunk) [Item 6. [Reserved]](index=25&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and contains no information [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Palatin Technologies, Inc. is a biopharmaceutical company focused on melanocortin receptor system modulation, with a primary focus on MC4R agonists for obesity and MC1R agonists for inflammatory/autoimmune diseases. The company sold its Vyleesi product line in December 2023, leading to no product revenue in fiscal 2025. Net loss decreased significantly in fiscal 2025 due to lower R&D and SG&A expenses, and gains from the Vyleesi sale settlement and purchase commitment amendment. The company continues to face substantial doubt about its ability to continue as a going concern, with limited cash reserves and a reliance on future financing and milestone payments, including a recent collaboration with Boehringer Ingelheim [7.1 Introduction](index=25&type=section&id=7.1%20Introduction) Palatin Technologies, Inc. develops first-in-class medicines modulating the melanocortin receptor system, focusing on MC4R agonists for obesity and MC1R agonists for inflammatory diseases - Palatin Technologies, Inc. is a biopharmaceutical company developing **first-in-class medicines** based on molecules that modulate the activity of the melanocortin receptor system[262](index=262&type=chunk) - Product development focuses primarily on **MC4R agonists for obesity** and metabolic-related disorders, and **MC1R agonist products for inflammatory and autoimmune diseases**[263](index=263&type=chunk)[265](index=265&type=chunk) - The company's prior commercial product, **Vyleesi®**, was acquired by Cosette Pharmaceuticals, Inc. in **December 2023**[266](index=266&type=chunk) [7.2 Critical Accounting Policies and Estimates](index=25&type=section&id=7.2%20Critical%20Accounting%20Policies%20and%20Estimates) Key accounting policies include revenue recognition, inventory valuation, purchase commitment liabilities, accrued expenses, and stock-based compensation, requiring significant management judgment - Critical accounting policies and estimates include revenue recognition, the carrying value of inventory, purchase commitment liabilities, accrued expenses, and stock-based compensation[266](index=266&type=chunk) - Revenue recognition for product sales (prior to Vyleesi sale) followed **ASC Topic 606**, recognizing revenue when control of the product is transferred, net of allowances for fees, discounts, and rebates[267](index=267&type=chunk)[268](index=268&type=chunk)[269](index=269&type=chunk)[270](index=270&type=chunk) - Losses on firm commitment contractual obligations are recognized based on agreement terms and expected sales requirements[271](index=271&type=chunk) - Accrued expenses for third-party development activities are estimated based on work completed and milestones achieved[272](index=272&type=chunk) - Stock-based compensation is expensed at fair value, using the **Black-Scholes model** for stock options and Monte Carlo simulations for market conditions, recognized over the service period[273](index=273&type=chunk) [7.3 Results of Operations (Year Ended June 30, 2025 Compared to the Year Ended June 30, 2024)](index=26&type=section&id=7.3%20Results%20of%20Operations%20%28Year%20Ended%20June%2030%2C%202025%20Compared%20to%20the%20Year%20Ended%20June%2030%2C%202024%29) Fiscal 2025 saw no product revenue due to the Vyleesi sale, with decreased R&D and SG&A expenses, and a lower net loss compared to fiscal 2024 Metric (Year Ended June 30) | Metric (Year Ended June 30) | 2025 (USD) | 2024 (USD) | Change (YoY) (USD) | | :-------------------------- | :--------- | :--------- | :----------------- | | Product Revenue, net | $0 | $4,490,090 | $(4,490,090) | | Cost of Products Sold | $0 | $97,637 | $(97,637) | | Research and Development | $14,898,494| $22,400,372| $(7,501,878) | | Selling, General and Administrative | $7,809,345 | $12,270,046| $(4,460,701) | | Gain on Purchase Commitment | $(2,117,900)| $0 | $(2,117,900) | | Gain on Sale of Vyleesi | $(3,130,000)| $(7,781,844)| $4,651,844 | | Net Loss | $(17,307,349)| $(29,736,113)| $12,428,764 | | Basic and Diluted Net Loss Per Common Share | $(32.15) | $(101.16) | $69.01 | - The decrease in net revenue and cost of products sold in fiscal 2025 is a direct result of the sale of **Vyleesi's worldwide rights** to Cosette during fiscal 2024[275](index=275&type=chunk)[276](index=276&type=chunk) - Research and development expenses decreased primarily due to lower spending on MCR programs, while selling, general and administrative expenses decreased due to the absence of Vyleesi selling expenses and reduced compensation costs[277](index=277&type=chunk)[278](index=278&type=chunk)[280](index=280&type=chunk) - A gain on purchase commitments was recognized in fiscal 2025 due to amending minimum purchase commitments under the **Catalent and Ypsomed agreements**[281](index=281&type=chunk) - Other income (expense) improved significantly in fiscal 2025, primarily due to the absence of a large increase in the fair value of warrant liabilities recognized in fiscal 2024[284](index=284&type=chunk) [7.4 Liquidity and Capital Resources](index=26&type=section&id=7.4%20Liquidity%20and%20Capital%20Resources) The company faces substantial doubt about its going concern ability due to historical losses and limited cash, relying on future financing and milestone payments, including a recent Boehringer Ingelheim collaboration - The company has historically incurred net operating losses and negative cash flows, relying on debt, equity financings, and collaborative agreements for funding[286](index=286&type=chunk) Cash Flow Activity (Year Ended June 30) | Cash Flow Activity (Year Ended June 30) | 2025 (USD) | 2024 (USD) | | :-------------------------------------- | :--------- | :--------- | | Net Cash Used in Operating Activities | $(21,306,637)| $(31,461,441)| | Net Cash Provided by Investing Activities | $3,130,000 | $12,450,364| | Net Cash Provided by Financing Activities | $11,213,506| $20,548,891| | Cash and Cash Equivalents, End of Period | $2,564,265 | $9,527,396 | - As of **June 30, 2025**, cash and cash equivalents were **$2.6 million**, with current liabilities of **$8.0 million**, leading management to conclude that **substantial doubt exists** about the company's ability to continue as a going concern for one year[294](index=294&type=chunk)[296](index=296&type=chunk) - The company expects existing cash and cash equivalents to fund anticipated operating expenses through the **second half of calendar year 2025**[296](index=296&type=chunk) - A Research Collaboration, License and Patent Assignment Agreement with **Boehringer Ingelheim** in **August 2025** provided an upfront payment of **$2.3 million** (received Sep 2025) and potential milestone payments up to **$307 million**, with a **$6.5 million** research milestone achieved in **September 2025**[297](index=297&type=chunk)[298](index=298&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=27&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This item is not applicable to the company - Quantitative and Qualitative Disclosures About Market Risk are not applicable[299](index=299&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=27&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the audited consolidated financial statements for Palatin Technologies, Inc. for the fiscal years ended June 30, 2025, and 2024, including the balance sheets, statements of operations, changes in stockholders' deficiency, and cash flows. The independent auditor, KPMG LLP, issued a fair opinion but noted substantial doubt about the company's going concern ability. The notes detail significant accounting policies, recent accounting pronouncements, the Vyleesi sale, lease information, and equity-related transactions, including a reverse stock split and various warrant and stock offerings [8.1 Report of Independent Registered Public Accounting Firm](index=28&type=section&id=8.1%20Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) KPMG LLP issued a fair opinion on the consolidated financial statements for FY2025 and FY2024, noting substantial doubt about the company's going concern ability - **KPMG LLP** audited the consolidated financial statements for Palatin Technologies, Inc. for the fiscal years ended **June 30, 2025, and 2024**, expressing a fair opinion[304](index=304&type=chunk) - The report includes an explanatory paragraph highlighting **substantial doubt** about the company's ability to continue as a going concern[305](index=305&type=chunk) - No critical audit matters were identified during the audit[309](index=309&type=chunk) [8.2 Consolidated Balance Sheets](index=28&type=section&id=8.2%20Consolidated%20Balance%20Sheets) The consolidated balance sheets as of June 30, 2025, and 2024, present the company's assets, liabilities, and stockholders' deficiency ASSETS (as of June 30) | ASSETS (as of June 30) | 2025 (USD) | 2024 (USD) | | :--------------------- | :--------- | :--------- | | Cash and cash equivalents | $2,564,265 | $9,527,396 | | Other receivables | $29,468 | $0 | | Prepaid expenses and other current assets | $325,695 | $242,272 | | Total current assets | $2,919,428 | $9,769,668 | | Property and equipment, net | $129,444 | $388,361 | | Right-of-use assets - operating leases | $161,166 | $527,321 | | Other assets | $56,916 | $56,916 | | Total assets | $3,266,954 | $10,742,266| LIABILITIES AND STOCKHOLDERS DEFICIENCY (as of June 30) | LIABILITIES AND STOCKHOLDERS DEFICIENCY (as of June 30) | 2025 (USD) | 2024 (USD) | | :---------------------------------------------------- | :--------- | :--------- | | Accounts payable | $6,998,806 | $4,101,929 | | Accrued expenses | $881,412 | $4,185,046 | | Short-term operating lease liabilities | $129,812 | $380,542 | | Short-term finance lease liabilities | $0 | $46,014 | | Other current liabilities | $0 | $944,150 | | Total current liabilities | $8,010,030 | $9,657,681 | | Long-term operating lease liabilities | $33,969 | $163,782 | | Other long-term liabilities | $0 | $1,032,300 | | Total liabilities | $8,043,999 | $10,853,763| | Stockholders deficiency: | | | | Series A Convertible Preferred Stock | $40 | $40 | | Series D Convertible Preferred Stock | $34 | $0 | | Common stock | $9,296 | $3,585 | | Additional paid-in capital | $454,287,484| $441,651,428| | Accumulated deficit | $(459,073,899)| $(441,766,550)| | Total stockholders deficiency | $(4,777,045)| $(111,497) | [8.3 Consolidated Statements of Operations](index=29&type=section&id=8.3%20Consolidated%20Statements%20of%20Operations) The consolidated statements of operations for fiscal years 2025 and 2024 detail revenues, operating expenses, and net loss, reflecting the Vyleesi sale impact REVENUES (Year Ended June 30) | REVENUES (Year Ended June 30) | 2025 (USD) | 2024 (USD) | | :---------------------------- | :--------- | :--------- | | Product revenue, net | $0 | $4,490,090 | OPERATING EXPENSES (Year Ended June 30) | OPERATING EXPENSES (Year Ended June 30) | 2025 (USD) | 2024 (USD) | | :------------------------------------ | :--------- | :--------- | | Cost of products sold | $0 | $97,637 | | Research and development | $14,898,494| $22,400,372| | Selling, general and administrative | $7,809,345 | $12,270,046| | Loss (Gain) on sale of Vyleesi | $(3,130,000)| $(7,781,844)| | Gain on purchase commitment | $(2,117,900)| $0 | | Total operating expenses | $17,459,939| $26,986,211| | Loss from operations | $(17,459,939)| $(22,496,121)| OTHER INCOME (EXPENSE) (Year Ended June 30) | OTHER INCOME (EXPENSE) (Year Ended June 30) | 2025 (USD) | 2024 (USD) | | :---------------------------------------- | :--------- | :--------- | | Investment income | $167,665 | $376,843 | | Foreign currency transaction (loss) gain | $(50) | $59,753 | | Interest expense | $(15,025) | $(17,114) | | Offering expenses | $0 | $(696,912) | | Change in fair value of warrant liabilities | $0 | $(6,962,562)| | Total other income (expense), net | $152,590 | $(7,239,992)| | NET LOSS | $(17,307,349)| $(29,736,113)| | Basic and diluted net loss per common share | $(32.15) | $(101.16) | | Weighted average number of common shares outstanding | 538,348 | 293,951 | [8.4 Consolidated Statements of Changes in Stockholders' Deficiency](index=29&type=section&id=8.4%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Deficiency) The consolidated statements of changes in stockholders' deficiency for fiscal years 2025 and 2024 show changes in equity components, including accumulated deficit and common stock Stockholders' Deficiency (as of June 30) | Stockholders' Deficiency (as of June 30) | 2025 (USD) | 2024 (USD) | | :--------------------------------------- | :--------- | :--------- | | Series A Convertible Preferred Stock | $40 | $40 | | Series D Convertible Preferred Stock | $34 | $0 | | Common Stock | $9,296 | $3,585 | | Additional Paid-in Capital | $454,287,484| $441,651,428| | Accumulated Deficit | $(459,073,899)| $(441,766,550)| | Total Stockholders Deficiency | $(4,777,045)| $(111,497) | - The accumulated deficit increased from **$(441.8) million** in FY2024 to **$(459.1) million** in FY2025[312](index=312&type=chunk)[316](index=316&type=chunk) - Common stock shares outstanding increased from **358,532** in FY2024 to **929,597** in FY2025[312](index=312&type=chunk)[316](index=316&type=chunk) - The company issued **3,400 shares of Series D Convertible Preferred Stock** in FY2025[312](index=312&type=chunk)[316](index=316&type=chunk) [8.5 Consolidated Statements of Cash Flows](index=30&type=section&id=8.5%20Consolidated%20Statements%20of%20Cash%20Flows) The consolidated statements of cash flows for fiscal years 2025 and 2024 detail operating, investing, and financing activities, showing a net decrease in cash for FY2025 Cash Flow Activity (Year Ended June 30) | Cash Flow Activity (Year Ended June 30) | 2025 (USD) | 2024 (USD) | | :-------------------------------------- | :--------- | :--------- | | Net cash used in operating activities | $(21,306,637)| $(31,461,441)| | Net cash provided by investing activities | $3,130,000 | $12,450,364| | Net cash provided by financing activities | $11,213,506| $20,548,891| | Net (decrease) increase in cash and cash equivalents | $(6,963,131)| $1,537,814 | | Cash and cash equivalents, beginning of period | $9,527,396 | $7,989,582 | | Cash and cash equivalents, end of period | $2,564,265 | $9,527,396 | - Net cash used in operating activities decreased by **$10.15 million** in FY2025 compared to FY2024, primarily due to a lower net loss and gains on the sale of Vyleesi and purchase commitments[289](index=289&type=chunk)[318](index=318&type=chunk) - Net cash provided by investing activities decreased in FY2025, consisting solely of proceeds from the sale of Vyleesi, compared to proceeds from Vyleesi and marketable securities maturity in FY2024[290](index=290&type=chunk)[318](index=318&type=chunk) - Net cash provided by financing activities decreased in FY2025, with proceeds from common stock and warrant sales and exercises being lower than in FY2024[291](index=291&type=chunk)[318](index=318&type=chunk) [8.6 Notes to Consolidated Financial Statements](index=31&type=section&id=8.6%20Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed notes to the consolidated financial statements, explaining significant accounting policies, transactions, and financial disclosures [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=40&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) There have been no changes in or disagreements with accountants on accounting and financial disclosure - There have been no changes in and disagreements with accountants on accounting and financial disclosure[448](index=448&type=chunk) [Item 9A. Controls and Procedures](index=40&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with a previously identified material weakness in internal control over financial reporting now remediated - Management concluded that the company's disclosure controls and procedures were **effective** as of **June 30, 2025**[449](index=449&type=chunk) - A **material weakness** in internal control over financial reporting, identified as of **June 30, 2024**, concerning the accounting for complex financial instruments, has been **remediated** as of **June 30, 2025**[453](index=453&type=chunk)[454](index=454&type=chunk)[455](index=455&type=chunk) [Item 9B. Other Information](index=40&type=section&id=Item%209B.%20Other%20Information) No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the fiscal quarter ended June 30, 2025 - No director or officer adopted or terminated a **Rule 10b5-1 trading arrangement** or a non-Rule 10b5-1 trading arrangement during the fiscal quarter ended **June 30, 2025**[456](index=456&type=chunk) [Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=40&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - Disclosure Regarding Foreign Jurisdictions that Prevent Inspections is not applicable[457](index=457&type=chunk) PART III This part details the company's directors, executive officers, corporate governance, executive compensation, security ownership, related party transactions, and principal accountant fees [Item 10. Directors, Executive Officers and Corporate Governance](index=41&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) This section identifies the company's directors and executive officers, providing their ages, positions, and qualifications. It details the structure and responsibilities of the Board and its committees (Audit, Compensation, Nominating and Corporate Governance), emphasizing director independence and risk oversight. The company maintains a separate Chairperson and CEO, and has adopted a Code of Corporate Conduct and Ethics - The board of directors consists of **Carl Spana (CEO, President, Director)**, **John K.A. Prendergast (Director, Chairperson)**, **Alan W. Dunton (Director)**, and **Arlene M. Morris (Director)**[459](index=459&type=chunk)[460](index=460&type=chunk) - The board has an **Audit Committee**, a **Compensation Committee**, and a **Nominating and Corporate Governance Committee**, all composed of independent directors[470](index=470&type=chunk)[471](index=471&type=chunk)[472](index=472&type=chunk)[474](index=474&type=chunk) - The roles of **Chairperson of the board (John K.A. Prendergast)** and **Chief Executive Officer (Carl Spana)** are held by separate persons, a structure believed to enhance accountability and board independence[480](index=480&type=chunk) - The board oversees risk management through regular reports from officers and committee assistance, with the Audit Committee overseeing financial reporting and compliance, and the Compensation Committee overseeing compensation-related risks[478](index=478&type=chunk)[479](index=479&type=chunk) - The executive officers are **Carl Spana (CEO, President, Director)** and **Stephen T. Wills (CFO, COO, Executive Vice President, Secretary and Treasurer)**[483](index=483&type=chunk) [Item 11. Executive Compensation](index=43&type=section&id=Item%2011.%20Executive%20Compensation) This section details the compensation for the company's principal executive and financial officers for fiscal years 2025 and 2024, showing a significant decrease in total compensation for FY2025 due to no annual salary increases or bonuses. The compensation program emphasizes long-term incentives and pay-for-performance, with policies like stock ownership, clawbacks, and 'double trigger' equity acceleration. Director compensation includes annual equity grants and cash retainers, with no additional compensation for employee directors Fiscal 2025 Summary Compensation Table | Name and Principal Position | Fiscal Year | Salary ($) | Stock awards ($) | Option awards ($) | Nonequity incentive plan compensation ($) | All other compensation ($) | Total ($) | | :-------------------------- | :---------- | :--------- | :--------------- | :---------------- | :--------------------------------------- | :------------------------- | :-------- | | Carl Spana, Ph.D., CEO and President | 2025 | 721,000 | - | - | - | 17,500 | 738,500 | | | 2024 | 700,000 | 195,400 | 178,700 | 357,000 | 17,250 | 1,448,350 | | Stephen T. Wills, MST, CPA, CFO, COO, EVP | 2025 | 670,000 | - | - | - | 17,960 | 687,960 | | | 2024 | 650,000 | 170,700 | 155,800 | 431,500 | 16,644 | 1,424,644 | - No annual salary increases or bonuses (cash or equity) were granted or approved for the fiscal year ended **June 30, 2025**, due to the company's financial status[491](index=491&type=chunk) - The executive compensation program is heavily weighted to **long-term incentive opportunities** (stock options and restricted stock units) to align executives' interests with stockholders and enhance retention[492](index=492&type=chunk)[493](index=493&type=chunk)[503](index=503&type=chunk) - New employment agreements effective **July 1, 2025**, for Dr. Spana and Mr. Wills include base salaries of **$721,000** and **$670,000**, respectively, with provisions for annual bonus compensation and participation in benefit programs[497](index=497&type=chunk)[498](index=498&type=chunk) - Key compensation policies include retaining an independent compensation advisor, emphasizing **'compensation at risk'** and **'pay-for-performance,'** maintaining a stock ownership policy, a clawback policy, and **'double trigger' acceleration** for CEO and CFO/COO equity awards[499](index=499&type=chunk)[503](index=503&type=chunk) Non-Employee Director Compensation (Fiscal 2025) | Name | Fees earned or paid in cash ($) | Stock awards ($) | Option awards ($) | Total ($) | | :------------------------ | :------------------------------ | :--------------- | :---------------- | :-------- | | John K.A. Prendergast, Ph.D. | 119,500 | 29,280 | 28,975 | 177,755 | | Robert K. deVeer, Jr. | 80,000 | 21,960 | 21,416 | 123,376 | | J. Stanley Hull | 70,000 | 21,960 | 21,416 | 113,376 | | Alan W. Dunton, M.D. | 80,000 | 21,960 | 21,416 | 123,376 | | Arlene Morris | 65,000 | 21,960 | 21,416 | 108,376 | | Anthony Manning, Ph.D. | 65,000 | 21,960 | 21,416 | 108,376 | - Non-employee directors receive an annual equity grant and cash retainers for board and committee service, with the Chairperson receiving a higher retainer[521](index=521&type=chunk)[522](index=522&type=chunk)[524](index=524&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=47&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) This section provides information on equity compensation plans and beneficial ownership of the company's securities. As of June 30, 2025, 66,783 securities were issuable under equity compensation plans, with 65,433 shares remaining available for future issuance. As of September 19, 2025, the total voting power is calculated based on common stock, Series A, and Series D preferred stock, with management and directors holding 9.2% of common stock and 6.7% of total voting power. Several individuals are identified as beneficial owners of more than 5% of Series A or Series D Preferred Stock Equity Compensation Plan Information (as of June 30, 2025) | Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted average exercise price of outstanding options, warrants and rights (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | | :------------------------------------------------ | :-------------------------------------------------------------------------------- | :------------------------------------------------------------------------------ | :------------------------------------------------------------------------------------------------------------------------------------------ | | Equity compensation plans approved by security holders | 66,783 | $305.92 | 65,433 | | Equity compensation plans not approved by security holders | - | - | - | | Total | 66,783 | | 65,433 | - As of **September 19, 2025**, **973,291 shares of common stock**, **4,030 shares of Series A preferred stock** (convertible into 278 common shares), and **3,400 shares of Series D preferred stock** (convertible into 61,816 common shares) were outstanding[528](index=528&type=chunk) - The common stock has **one vote per share**, Series A preferred stock has approximately **0.07 votes per share**, and Series D Convertible Preferred Stock has approximately **18.18 votes per share**[528](index=528&type=chunk) Management and Directors Beneficial Ownership (as of Sep 19, 2025) | Name | Amount and nature of beneficial ownership (Common Stock) | Percent of class | Percent of total voting power | | :------------------------ | :--------------------------------------- | :--------------- | :---------------------------- | | Carl Spana, Ph.D. | 40,125 | 4.0% | 2.9% | | Stephen T. Wills | 38,624 | 3.8% | 2.9% | | John K.A. Prendergast, Ph.D. | 6,511 | * | * | | Alan W. Dunton, M.D. | 5,608 | * | * | | Arlene M. Morris | 1,958 | * | * | | All current directors and executive officers as a group (eight persons) | 92,826 | 9.2% | 6.7% | *Less than one percent. More Than 5% Beneficial Owners (as of Sep 19, 2025) | Class | Name and address of beneficial owner | Amount and nature of beneficial ownership | Percent of class | Percent of total voting power | | :-------- | :----------------------------------- | :---------------------------------------- | :--------------- | :---------------------------- | | Series A Preferred | Steven N. Ostrovsky, 43 Nikki Ct., Morganville, NJ 07751 | 500 | 12.4% | * | | Series A Preferred | Thomas L. Cassidy IRA Rollover, 38 Canaan Close, New Canaan, CT 06840 | 500 | 12.4% | * | | Series A Preferred | Jonathan E. Rothschild, 300 Mercer St., 28F, New York, NY 10003 | 500 | 12.4% | * | | Series A Preferred | Arthur J. Nagle | 250 | 6.2% | * | | Series A Preferred | Thomas P. and Mary E. Heiser, JTWROS, 10 Ridge Road, Hopkinton, MA 01748 | 250 | 6.2% | * | | Series A Preferred | Carl F. Schwartz, 31 West 87th St., New York, NY 10016 | 250 | 6.2% | * | | Series A Preferred | Michael J. Wrubel, 3650 N. 36 Avenue, 39, Hollywood, FL 33021 | 250 | 6.2% | * | | Series A Preferred | Myron M. Teitelbaum, M.D., 175 Burton Lane, Lawrence, NY 11559 | 250 | 6.2% | * | | Series A Preferred | Laura Gold Galleries Ltd. Profit Sharing Trust Park South Gallery at Carnegie Hall, 154 West 57th Street, Suite 114, New York, NY 10019 | 250 | 6.2% | * | | Series A Preferred | Laura Gold, 180 W. 58th Street, New York, NY 10019 | 250 | 6.2% | * | | Series A Preferred | Nadji T. Richmond, 20 E. Wedgewood Glen, The Woodlands, TX 77381 | 230 | 5.7% | * | | Series D Preferred | Carl Spana | 1,500 | 44.1% | 2.9% | | Series D Preferred | Stephen T. Wills | 1,500 | 44.1% | 2.9% | | Series D Preferred | John K.A. Prendergast, Ph.D. | 200 | 5.9% | * | | Series D Preferred | Alan W. Dunton, M.D. | 200 | 5.9% | * | *Less than one percent. [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=49&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) All directors, except for the CEO, Dr. Spana, are considered independent. The company's code of corporate conduct and ethics requires the audit committee to review and approve related party transactions. There have been no related party transactions since July 1, 2022 - All directors, except Dr. Spana (CEO and President), are **independent** as defined by NYSE American listing standards[538](index=538&type=chunk) - The company's code of corporate conduct and ethics requires the audit committee to review and approve related party transactions[539](index=539&type=chunk) - There have been no transactions or proposed transactions with related persons having a direct or indirect material interest since **July 1, 2022**[539](index=539&type=chunk) [Item 14. Principal Accountant Fees and Services](index=49&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) KPMG LLP served as the independent registered public accounting firm for fiscal years 2025 and 2024. Audit fees were $670,000 in FY2025 and $504,000 in FY2024. Tax fees were $62,702 in FY2025 and $70,662 in FY2024. No audit-related or other fees were incurred. The audit committee has a policy to pre-approve all audit and permissible non-audit services - **KPMG LLP** served as the independent registered public accounting firm for fiscal 2025 and fiscal 2024[540](index=540&type=chunk) Fee Type | Fee Type | Fiscal Year 2025 (USD) | Fiscal Year 2024 (USD) | | :---------- | :--------------------- | :--------------------- | | Audit Fees | $670,000 | $504,000 | | Tax Fees | $62,702 | $70,662 | | Audit-Related Fees | $0 | $0 | | All Other Fees | $0 | $0 | - The audit committee has a policy to pre-approve all audit and permissible non-audit services provided by the independent registered public accounting firm[544](inde

[First Quarter Fiscal Year 2026 Highlights](index=1&type=section&id=First%20Quarter%20Fiscal%20Year%202026%20Highlights) AAR reported strong Q1 FY2026 financial performance with significant organic sales and adjusted EBITDA growth, driven by strategic investments [Q1 FY2026 Financial Performance Overview](index=1&type=section&id=Q1%20FY2026%20Financial%20Performance%20Overview) AAR reported a strong start to fiscal year 2026, achieving significant growth across all segments, with adjusted sales increasing **17%** organically, primarily driven by a **27%** rise in the Parts Supply segment, leading to an **18%** increase in adjusted EBITDA and an expansion of adjusted EBITDA margins to **11.7%** - Adjusted sales were up **17%** organically, largely driven by Parts Supply which was up **27%** in the quarter[3](index=3&type=chunk) Key Financial Metrics | Metric | Value | | :-------------------- | :------ | | Sales | $740 million | | Sales Increase (YoY) | 12% | | GAAP EPS | $0.95 | | Adjusted Diluted EPS | $1.08 | | Adjusted Diluted EPS Increase (YoY) | 27% | | GAAP Net Income | $34 million | | Adjusted EBITDA | $87 million | | Adjusted EBITDA Increase (YoY) | 18% | | Adjusted EBITDA Margin | 11.7% | | Adjusted EBITDA Margin (Q1 FY2025) | 11.3% | [Strategic Outlook and Investments](index=2&type=section&id=Strategic%20Outlook%20and%20Investments) AAR made strategic investments, particularly in supporting the rapid growth of its Parts Supply segment, and acquired Aerostrat to enhance its Trax software capabilities, anticipating continued sales growth, positive operating cash flows, and further margin improvement - Investments were made across the Company with a particular focus on supporting the rapid growth in Parts Supply[5](index=5&type=chunk) - Acquired Aerostrat, adding to Trax software capabilities, with an expectation to generate **positive operating cash flows** over the remainder of the fiscal year[5](index=5&type=chunk) - Demand for Parts Supply offerings remains **very high**, supported by inventory investments, Repair & Engineering hangars have a **multi-year backlog**, and new capacity coming online in 2026 is **already sold out**[5](index=5&type=chunk) [Recent Business Developments](index=2&type=section&id=Recent%20Business%20Developments) AAR expanded its market presence through the Aerostrat acquisition and secured new multi-year defense and DLA contracts [Acquisitions and Partnerships](index=2&type=section&id=Acquisitions%20and%20Partnerships) AAR completed the acquisition of Aerostrat, a long-range maintenance planning software company, for **$15 million** plus potential contingent consideration, thereby enhancing its Trax solutions, and expanded its existing Trax agreement with JetBlue Airways - Acquired Aerostrat, a leading long-range maintenance planning software company, for a purchase price of **$15 million** plus contingent consideration of up to **$5 million**, enhancing Trax solutions[6](index=6&type=chunk) - Expanded Trax's agreement with JetBlue Airways to include eMobility and its cloud hosting solution[7](index=7&type=chunk) [New Contracts and Agreements](index=2&type=section&id=New%20Contracts%20and%20Agreements) AAR secured a multi-year exclusive defense agreement with AmSafe Bridport for product distribution across specific military platforms, and was subsequently awarded an indefinite-delivery/indefinite-quantity (IDIQ) contract with the Defense Logistics Agency (DLA) Troop Support for up to **$85 million** - Secured multi-year exclusive defense agreement with AmSafe Bridport to distribute their product lines across the KC-46 and C-40 platforms to the global defense and military aftermarket[7](index=7&type=chunk) - Awarded indefinite-delivery/indefinite-quantity contract with the Defense Logistics Agency Troop Support for up to **$85 million** to provide specialized shipping and storage containers, shelters, and accessories[7](index=7&type=chunk) [Detailed First Quarter Fiscal Year 2026 Results](index=3&type=section&id=Detailed%20First%20Quarter%20Fiscal%20Year%202026%20Results) Consolidated sales and net income significantly increased in Q1 FY2026, driven by strong Parts Supply segment performance and improved operating margins [Consolidated Financial Performance](index=3&type=section&id=Consolidated%20Financial%20Performance) Consolidated sales for Q1 FY2026 increased **12%** to **$739.6 million**, driven by double-digit growth in both aftermarket parts trading and new parts distribution within the Parts Supply segment, with net income more than doubling to **$34.4 million** and adjusted diluted EPS rising **27%** to **$1.08**, while operating margins significantly improved and cash flow used in operating activities increased due to investments Consolidated Sales Performance | Metric | Q1 FY2026 (Millions) | Q1 FY2025 (Millions) | Change (%) | | :-------------------------- | :------------------- | :------------------- | :--------- | | Consolidated Sales | $739.6 | $661.7 | 12% | | Commercial Sales Increase | $50.4 | N/A | 11% | | Government Sales Increase | N/A | N/A | 15% | | Commercial Sales % of Total | 71% | 71% | 0% | Net Income and EPS | Metric | Q1 FY2026 | Q1 FY2025 | Change (%) | | :-------------------- | :--------- | :--------- | :--------- | | Net Income | $34.4 million | $18.0 million | 91.1% | | GAAP Diluted EPS | $0.95 | $0.50 | 90% | | Adjusted Diluted EPS | $1.08 | $0.85 | 27% | Operating Margins | Metric | Q1 FY2026 | Q1 FY2025 | Change (pp) | | :-------------------- | :--------- | :--------- | :---------- | | Operating Margin | 8.8% | 6.6% | +2.2 | | Adjusted Operating Margin | 9.7% | 9.1% | +0.6 | Cash Flow and Net Debt Summary | Metric | Q1 FY2026 (Millions) | Q1 FY2025 (Millions) | | :-------------------------------- | :------------------- | :------------------- | | Cash flow used in operating activities | $(44.9) | $(18.6) | | Net debt (as of Aug 31, 2025) | $950.0 | N/A | | Net leverage (as of Aug 31, 2025) | 2.82x | N/A | [Segment Performance](index=9&type=section&id=Segment%20Performance) The Parts Supply segment was the primary growth driver, with sales increasing **27.3%** and operating income rising **35.9%**, while Integrated Solutions also showed strong sales and operating income growth, Repair & Engineering experienced a slight sales decrease but maintained solid operating income, and Expeditionary Services moved from an operating loss to a profit Segment Sales Performance | Segment | Q1 FY2026 Sales (Millions) | Q1 FY2025 Sales (Millions) | Change (%) | | :-------------------- | :------------------------- | :------------------------- | :--------- | | Parts Supply | $317.8 | $249.7 | 27.3% | | Repair & Engineering | $214.6 | $217.6 | -1.4% | | Integrated Solutions | $185.0 | $168.9 | 9.5% | | Expeditionary Services | $22.2 | $25.5 | -12.9% | | **Total** | **$739.6** | **$661.7** | **11.8%** | Segment Operating Income | Segment | Q1 FY2026 Operating Income (Millions) | Q1 FY2025 Operating Income (Millions) | Change (%) | | :-------------------- | :---------------------------------- | :---------------------------------- | :--------- | | Parts Supply | $40.9 | $30.1 | 35.9% | | Repair & Engineering | $20.4 | $21.1 | -3.3% | | Integrated Solutions | $9.7 | $7.7 | 26.0% | | Expeditionary Services | $3.0 | $(1.7) | N/A (from loss to profit) | | **Total Segment Op. Income** | **$74.0** | **$57.2** | **29.4%** | [Financial Statements](index=6&type=section&id=Financial%20Statements) The financial statements reveal increased Q1 FY2026 profitability, growth in assets and debt, and higher cash usage for operations and investments [Condensed Consolidated Statements of Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) The condensed consolidated statements of income for Q1 FY2026 show a substantial increase in net income and diluted earnings per share compared to the prior year, driven by higher sales and improved gross and operating profits Condensed Consolidated Statements of Income | Metric (Millions) | August 31, 2025 | August 31, 2024 | | :-------------------------- | :---------------- | :---------------- | | Sales | $739.6 | $661.7 | | Cost of sales | $605.9 | $544.5 | | Gross profit | $133.7 | $117.2 | | Operating income | $64.9 | $43.4 | | Income before income taxes | $47.0 | $24.9 | | Net income | $34.4 | $18.0 | | Diluted EPS | $0.95 | $0.50 | [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of August 31, 2025, AAR's balance sheet reflects an increase in total assets, primarily due to growth in inventories and goodwill/intangible assets, with total liabilities also rising, mainly driven by an increase in long-term debt, while total equity saw a corresponding increase Condensed Consolidated Balance Sheets | Metric (Millions) | August 31, 2025 | May 31, 2025 | | :-------------------------- | :---------------- | :---------------- | | Total current assets | $1,566.9 | $1,510.6 | | Inventories, net | $861.5 | $809.2 | | Goodwill and intangible assets, net | $769.0 | $750.4 | | Total assets | $2,929.7 | $2,844.6 | | Total current liabilities | $538.5 | $554.7 | | Long-term debt | $1,022.1 | $968.0 | | Total liabilities | $1,680.4 | $1,633.0 | | Equity | $1,249.3 | $1,211.6 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) AAR reported increased cash used in operating activities for Q1 FY2026, primarily due to higher inventory investments and changes in accounts payable and accrued liabilities, with cash used in investing activities also increasing, largely driven by acquisitions, though net cash provided by financing activities helped mitigate the overall decrease in cash and cash equivalents Condensed Consolidated Statements of Cash Flows | Metric (Millions) | August 31, 2025 | August 31, 2024 | | :-------------------------------------- | :---------------- | :---------------- | | Net cash used in operating activities | $(44.9) | $(18.6) | | Net cash used in investing activities | $(23.8) | $(5.3) | | Net cash provided by (used in) financing activities | $51.1 | $(9.1) | | Decrease in cash, cash equivalents, and restricted cash | $(17.6) | $(33.0) | | Cash, cash equivalents, and restricted cash at end of period | $91.6 | $63.1 | - Key drivers for increased cash used in operating activities include a **$(51.8) million** change in inventories (vs. **$(14.8) million** in prior year) and a **$(16.7) million** change in accounts payable and accrued liabilities (vs. **$8.5 million** in prior year)[26](index=26&type=chunk) - Cash used in investing activities was significantly impacted by **$(11.9) million** for acquisitions, net of cash acquired (vs. **$2.9 million** in prior year)[26](index=26&type=chunk) - Financing activities were boosted by **$153.0 million** in proceeds from long-term borrowings[26](index=26&type=chunk) [Non-GAAP Financial Measures and Reconciliations](index=9&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) This section explains and reconciles non-GAAP measures, demonstrating improved adjusted profitability, sales growth, and EBITDA, alongside cash flow and net debt adjustments [Explanation of Non-GAAP Measures](index=9&type=section&id=Explanation%20of%20Non-GAAP%20Measures) AAR utilizes various non-GAAP financial measures, including adjusted net income, adjusted diluted EPS, adjusted sales, organic sales growth, adjusted operating margin, adjusted cash flow from operating activities, adjusted EBITDA, adjusted EBITDA margin, net debt, and net leverage, to provide investors with a clearer view of the company's core operating performance, cash flows, and leverage by excluding items not indicative of ongoing activities - Non-GAAP financial measures are used to illustrate core operating performance, cash flows, and leverage, unaffected by certain items not indicative of ongoing and core operating activities[28](index=28&type=chunk) - Adjustments include costs related to U.S. Foreign Corrupt Practices Act (FCPA) matters, expenses from recent acquisition activity (professional fees, amortization, integration, contingent consideration), legal judgments, contract termination costs/benefits, and losses from business exits[29](index=29&type=chunk) - Adjusted EBITDA is defined as net income before interest, other income/expense, income taxes, depreciation and amortization, stock-based compensation, and unusual items like business divestitures/acquisitions, FCPA costs, certain legal judgments, and significant customer contract terminations[30](index=30&type=chunk) [Adjusted Net Income and EPS Reconciliation](index=10&type=section&id=Adjusted%20Net%20Income%20and%20EPS%20Reconciliation) AAR's adjusted net income for Q1 FY2026 increased to **$39.0 million** from **$30.3 million** in Q1 FY2025, and adjusted diluted EPS rose to **$1.08** from **$0.85**, with key adjustments including acquisition, integration, and amortization expenses, and the absence of FCPA investigation and contract termination costs present in the prior year Adjusted Net Income Reconciliation | Metric (Millions) | August 31, 2025 | August 31, 2024 | | :-------------------------------------- | :---------------- | :---------------- | | Net income (GAAP) | $34.4 | $18.0 | | Acquisition, integration, and amortization expenses | $6.4 | $9.0 | | Severance charges | $1.0 | –– | | Gain related to sale of business/joint venture, net | $(0.7) | $(1.3) | | Government COVID-related subsidy liability reversal | $(0.7) | –– | | FCPA investigation costs | –– | $5.0 | | Contract termination costs | –– | $3.2 | | Tax effect on adjustments | $(1.4) | $(3.6) | | **Adjusted net income** | **$39.0** | **$30.3** | Adjusted Diluted EPS Reconciliation | Metric | August 31, 2025 | August 31, 2024 | | :-------------------------------------- | :---------------- | :---------------- | | Diluted earnings per share (GAAP) | $0.95 | $0.50 | | Acquisition, integration, and amortization expenses | $0.18 | $0.25 | | Severance charges | $0.03 | –– | | Gain related to sale of business/joint venture | $(0.02) | $(0.03) | | Government COVID-related subsidy liability reversal | $(0.02) | –– | | FCPA investigation costs | –– | $0.14 | | Contract termination costs | –– | $0.09 | | Tax effect on adjustments | $(0.04) | $(0.10) | | **Adjusted diluted earnings per share** | **$1.08** | **$0.85** | [Adjusted Operating Margin and Sales Growth Reconciliation](index=11&type=section&id=Adjusted%20Operating%20Margin%20and%20Sales%20Growth%20Reconciliation) AAR's adjusted operating margin for Q1 FY2026 improved to **9.7%** from **9.1%** in the prior year, with adjusted organic sales growth for the quarter at **16.8%**, significantly higher than the GAAP sales growth of **11.8%**, primarily due to the impact of the Landing Gear Overhaul divestiture Adjusted Operating Margin Reconciliation | Metric | August 31, 2025 | August 31, 2024 | | :-------------------- | :---------------- | :---------------- | | Operating income (GAAP) | $64.9 | $43.4 | | Adjusted operating income | $71.6 | $59.2 | | Operating margin (GAAP) | 8.8% | 6.6% | | Adjusted operating margin | 9.7% | 9.1% | Adjusted Sales Growth Reconciliation | Metric | Value | | :-------------------------- | :------ | | GAAP sales growth | 11.8% | | Impact of Landing Gear Overhaul divestiture | 3.3% | | Organic sales growth | 15.1% | | Adjusted sales growth | 13.4% | | Impact of Landing Gear Overhaul divestiture | 3.4% | | **Adjusted organic sales growth** | **16.8%** | [Adjusted Cash Flows from Operating Activities Reconciliation](index=11&type=section&id=Adjusted%20Cash%20Flows%20from%20Operating%20Activities%20Reconciliation) Adjusted cash flows used in operating activities for Q1 FY2026 were **$(47.9) million**, an increase from **$(33.9) million** in Q1 FY2025, after accounting for the net impact of amounts outstanding on the accounts receivable financing program Adjusted Operating Cash Flows Reconciliation | Metric (Millions) | August 31, 2025 | August 31, 2024 | | :-------------------------------------- | :---------------- | :---------------- | | Cash flows used in operating activities (GAAP) | $(44.9) | $(18.6) | | Amounts outstanding on accounts receivable financing program: Beginning of period | 21.3 | 13.7 | | Amounts outstanding on accounts receivable financing program: End of period | $(24.3) | $(29.0) | | **Adjusted cash flows used in operating activities** | **$(47.9)** | **$(33.9)** | [Adjusted EBITDA and Net Debt Reconciliation](index=12&type=section&id=Adjusted%20EBITDA%20and%20Net%20Debt%20Reconciliation) Adjusted EBITDA for Q1 FY2026 increased to **$86.7 million** from **$73.7 million** in Q1 FY2025, with the adjusted EBITDA margin expanding to **11.7%**, while net debt as of August 31, 2025, stood at **$950.0 million**, resulting in a net debt to Adjusted EBITDA ratio of **2.82x** for the trailing twelve months Adjusted EBITDA Reconciliation | Metric (Millions) | August 31, 2025 | August 31, 2024 | | :-------------------------------------- | :---------------- | :---------------- | | Net income (GAAP) | $34.4 | $18.0 | | Income tax expense | $12.6 | $6.9 | | Interest expense, net | $18.5 | $18.3 | | Depreciation and amortization | $13.8 | $13.5 | | Acquisition and integration expenses | $2.4 | $5.0 | | FCPA settlement and investigation costs | –– | $5.0 | | Stock-based compensation | $5.3 | $5.0 | | **Adjusted EBITDA** | **$86.7** | **$73.7** | Adjusted EBITDA Margin | Metric | August 31, 2025 | August 31, 2024 | | :-------------------- | :---------------- | :---------------- | | Net income margin | 4.7% | 2.7% | | Adjusted EBITDA margin | 11.7% | 11.3% | Net Debt Calculation | Metric (Millions) | August 31, 2025 | August 31, 2024 | | :-------------------- | :---------------- | :---------------- | | Total debt | $1,030.0 | $992.0 | | Less: Cash and cash equivalents | $(80.0) | $(49.3) | | **Net debt** | **$950.0** | **$942.7** | Net Debt to Adjusted EBITDA Ratio | Metric | Value | | :-------------------------------------- | :------ | | Adjusted EBITDA for the twelve months ended August 31, 2025 | $337.2 million | | Net debt at August 31, 2025 | $950.0 million | | **Net debt to Adjusted EBITDA** | **2.82** | [Company Information and Forward-Looking Statements](index=4&type=section&id=Company%20Information%20and%20Forward-Looking%20Statements) This section provides conference call details, an overview of AAR's global aerospace and defense business, and outlines forward-looking statements with associated risk factors [Conference Call Information](index=4&type=section&id=Conference%20Call%20Information) AAR hosted a conference call on September 23, 2025, to discuss its Q1 FY2026 results, making a listen-only webcast and slides available, along with a registration process for phone participants, and a replay of the call will be accessible for approximately one year - A conference call was held on Tuesday, September 23, 2025, at 4 p.m. Central time to discuss the results[13](index=13&type=chunk) - A listen-only webcast and slides were accessible online, with phone participation requiring prior registration[13](index=13&type=chunk)[15](index=15&type=chunk) - A replay of the conference call will be available for on-demand listening for approximately one year[14](index=14&type=chunk) [About AAR](index=4&type=section&id=About%20AAR) AAR is a global aerospace and defense aftermarket solutions company, headquartered in the Chicago area, with operations spanning over **20** countries, serving both commercial and government customers through its four distinct operating segments: Parts Supply, Repair & Engineering, Integrated Solutions, and Expeditionary Services - AAR is a global aerospace and defense aftermarket solutions company[16](index=16&type=chunk) - Headquartered in the Chicago area, with operations in over **20** countries[16](index=16&type=chunk) - Supports commercial and government customers through four operating segments: Parts Supply, Repair & Engineering, Integrated Solutions, and Expeditionary Services[16](index=16&type=chunk) [Forward-Looking Statements and Risk Factors](index=5&type=section&id=Forward-Looking%20Statements%20and%20Risk%20Factors) The press release includes forward-looking statements that reflect management's expectations regarding future conditions, such as continued market demand, business growth, acquisition benefits, operational expansion, margin improvement, and financial performance, which are subject to various risks and uncertainties that could cause actual results to differ materially - Forward-looking statements reflect management's expectations about future conditions, including continued demand, market position, anticipated business relationships, acquisition contributions, capability expansion, margin improvement, sales growth, earnings, debt management, and capital allocation[17](index=17&type=chunk) - These statements are subject to risks and uncertainties that could cause actual results to differ materially, such as factors affecting the commercial aviation industry, adverse events in aviation, reduction in U.S. government sales, cost overruns, nonperformance by subcontractors, and inability to integrate acquisitions effectively[19](index=19&type=chunk) - Additional risks include financial, operational, and legal risks from international operations, competition, cyber threats, capital expenditure needs, intellectual property restrictions, and compliance with laws and regulations[19](index=19&type=chunk)