PART I. FINANCIAL INFORMATION This section provides the unaudited financial statements and management's analysis of H.B. Fuller's financial condition and results of operations [ITEM 1. FINANCIAL STATEMENTS (Unaudited)](index=4&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS%20%28Unaudited%29) This section presents the unaudited consolidated financial statements of H.B. Fuller Company and Subsidiaries, including statements of income, comprehensive income, balance sheets, statements of total equity, and cash flows, along with detailed notes [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) This statement presents the company's revenues, expenses, and net income for the specified interim periods | Metric (in thousands) | Three Months Ended Aug 30, 2025 | Three Months Ended Aug 31, 2024 | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | | :-------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net revenue | $892,043 | $917,927 | $2,578,801 | $2,645,452 | | Gross profit | $285,114 | $275,729 | $798,573 | $797,017 | | Income before income taxes | $82,928 | $72,293 | $174,814 | $183,188 | | Net income attributable to H.B. Fuller | $67,160 | $55,361 | $122,236 | $137,615 | | Basic EPS | $1.23 | $1.01 | $2.24 | $2.51 | | Diluted EPS | $1.22 | $0.98 | $2.21 | $2.43 | [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) This statement details the company's net income and other comprehensive income components, reflecting changes in equity from non-owner sources | Metric (in thousands) | Three Months Ended Aug 30, 2025 | Three Months Ended Aug 31, 2024 | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | | :-------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net income including non-controlling interest | $67,233 | $55,339 | $122,342 | $137,647 | | Other comprehensive income (loss) | $18,775 | $650 | $79,682 | $(31,455) | | Comprehensive income attributable to H.B. Fuller | $85,966 | $55,980 | $201,884 | $106,170 | - Foreign currency translation significantly impacted other comprehensive income, showing a gain of **$36,962 thousand** for the three months ended August 30, 2025, compared to **$33,355 thousand** in the prior year, and a substantial gain of **$139,626 thousand** for the nine months ended August 30, 2025, reversing a loss of **$(12,932) thousand** in the prior year period[11](index=11&type=chunk) [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) This statement provides a snapshot of the company's assets, liabilities, and equity at specific points in time | Metric (in thousands) | As of Aug 30, 2025 | As of Nov 30, 2024 | | :-------------------- | :----------------- | :----------------- | | Total current assets | $1,300,745 | $1,299,205 | | Total assets | $5,166,102 | $4,933,244 | | Total current liabilities | $674,232 | $719,290 | | Long-term debt | $2,080,470 | $2,010,052 | | Total liabilities | $3,207,130 | $3,103,396 | | Total equity | $1,958,972 | $1,829,848 | - Goodwill increased to **$1,681,887 thousand** as of August 30, 2025, from **$1,532,221 thousand** as of November 30, 2024, reflecting recent acquisitions[13](index=13&type=chunk) [Consolidated Statements of Total Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Total%20Equity) This statement outlines changes in the company's equity components, including common stock, retained earnings, and comprehensive income | Equity Component (in thousands) | Balance at Nov 30, 2024 | Balance at Aug 30, 2025 | | :------------------------------ | :---------------------- | :---------------------- | | Common Stock | $54,657 | $54,043 |\n| Additional Paid-in Capital | $322,636 | $288,195 |\n| Retained Earnings | $1,924,761 | $2,009,152 |\n| Accumulated Other Comprehensive Income (Loss) | $(473,395) | $(393,747) |\n| Total H.B. Fuller Stockholders' Equity | $1,828,659 | $1,957,643 | - Retained earnings increased from **$1,924,761 thousand** at November 30, 2024, to **$2,009,152 thousand** at August 30, 2025, driven by comprehensive income, partially offset by dividends and share repurchases[15](index=15&type=chunk) - The company repurchased common stock totaling **$44,377 thousand** and **$16,288 thousand** in the periods ending March 1, 2025, and May 31, 2025, respectively, and **$63 thousand** in the period ending August 30, 2025[15](index=15&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This statement categorizes cash inflows and outflows from operating, investing, and financing activities over specified periods | Cash Flow Activity (in thousands) | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $156,756 | $216,787 |\n| Net cash used in investing activities | $(182,667) | $(385,818) |\n| Net cash (used in) provided by financing activities | $(33,693) | $131,608 |\n| Net change in cash and cash equivalents | $(46,894) | $(48,041) |\n| Cash and cash equivalents at end of period | $122,458 | $131,412 | - Cash used in investing activities decreased significantly from **$(385,818) thousand** in 2024 to **$(182,667) thousand** in 2025, primarily due to lower cash paid for business acquisitions and proceeds from the sale of a business[17](index=17&type=chunk) - Financing activities shifted from providing **$131,608 thousand** in 2024 to using **$(33,693) thousand** in 2025, mainly due to lower proceeds from debt issuance and stock option exercises, coupled with higher common stock repurchases[17](index=17&type=chunk) [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations and supplementary information for the consolidated financial statements [Note 1: Basis of Presentation](index=9&type=section&id=Note%201%3A%20Basis%20of%20Presentation) This note describes the accounting principles and methods used in preparing the interim financial statements - The unaudited interim Consolidated Financial Statements are prepared in accordance with U.S. GAAP for interim financial information and Form 10-Q instructions, reflecting all normal recurring adjustments[19](index=19&type=chunk) - New accounting pronouncements include ASU No. 2024-03 (Expense Disaggregation), ASU No. 2023-09 (Income Tax Disclosures), and ASU No. 2023-07 (Segment Reporting), with effective dates ranging from fiscal year ending November 29, 2025, to December 2, 2028. The company is evaluating their effects[21](index=21&type=chunk)[22](index=22&type=chunk)[23](index=23&type=chunk) - The company participates in supplier finance programs, with outstanding payment obligations of approximately **$8,122 thousand** as of August 30, 2025, and **$5,233 thousand** as of November 30, 2024, included in Accounts payable[25](index=25&type=chunk) [Note 2: Acquisitions and Divestiture](index=10&type=section&id=Note%202%3A%20Acquisitions%20and%20Divestiture) This note details the company's business acquisitions and divestitures during the reporting period - In fiscal year 2025, H.B. Fuller acquired ND Industries Asia, Inc. for approximately **$8,310 thousand**, GEM S.r.l. and Medifill Limited for approximately **$196,990 thousand**, and HS Butyl Limited for approximately **$23,428 thousand**. These acquisitions aim to accelerate growth in Greater Asia, establish a European headquarters for Medical Adhesives Technologies, and expand presence in the European waterproofing tape market[26](index=26&type=chunk)[27](index=27&type=chunk)[28](index=28&type=chunk)[29](index=29&type=chunk) - Goodwill recognized from these acquisitions includes **$2,422 thousand** for ND Industries Taiwan, **$90,198 thousand** for GEM and Medifill, and **$3,805 thousand** for HS Butyl[26](index=26&type=chunk)[28](index=28&type=chunk)[29](index=29&type=chunk) - On December 2, 2024, the company completed the sale of its North American Flooring business for **$75,727 thousand**, resulting in a **$1,515 thousand** loss on sale[34](index=34&type=chunk) [Note 3: Restructuring Actions](index=13&type=section&id=Note%203%3A%20Restructuring%20Actions) This note outlines the company's restructuring plans, associated costs, and liabilities - Restructuring plans approved in fiscal year 2023, expected to be completed by fiscal year 2026, aim to optimize operations and integrate acquired businesses. Total pre-tax costs are estimated at **$70,000 to $75,000 thousand**[35](index=35&type=chunk) | Restructuring Charges (in thousands) | Three Months Ended Aug 30, 2025 | Three Months Ended Aug 31, 2024 | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | | :----------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Cost of sales | $2,393 | $2,119 | $5,328 | $6,313 |\n| Selling, general and administrative | $634 | $2,632 | $3,386 | $5,076 |\n| Total | $3,027 | $4,751 | $8,714 | $11,389 | - The restructuring liability decreased to **$2,499 thousand** as of August 30, 2025, from **$8,430 thousand** at November 30, 2024, primarily due to cash payments of **$12,984 thousand** during the nine months ended August 30, 2025[37](index=37&type=chunk) [Note 4: Inventories](index=14&type=section&id=Note%204%3A%20Inventories) This note provides a breakdown of the company's inventory components and their valuation | Inventory Component (in thousands) | August 30, 2025 | November 30, 2024 | | :--------------------------------- | :-------------- | :---------------- | | Raw materials | $220,399 | $215,936 |\n| Finished goods | $282,557 | $251,562 |\n| Total inventories | $502,956 | $467,498 | - Total inventories increased by **$35,458 thousand** from November 30, 2024, to August 30, 2025, primarily driven by an increase in finished goods[39](index=39&type=chunk) [Note 5: Goodwill and Other Intangible Assets](index=14&type=section&id=Note%205%3A%20Goodwill%20and%20Other%20Intangible%20Assets) This note details the company's goodwill and other intangible assets, including changes from acquisitions and amortization | Segment Goodwill (in thousands) | Balance at Nov 30, 2024 | Acquisitions | Foreign Currency Translation Effect | Balance at Aug 30, 2025 | | :------------------------------ | :---------------------- | :----------- | :---------------------------------- | :---------------------- | | Hygiene, Health and Consumable Adhesives | $399,513 | $90,198 | $30,716 | $520,427 |\n| Engineering Adhesives | $581,344 | $2,572 | $24,427 | $608,343 |\n| Building Adhesive Solutions | $551,364 | $(851) | $2,604 | $553,117 |\n| Total | $1,532,221 | $91,919 | $57,747 | $1,681,887 | - Total goodwill increased by **$149,666 thousand** from November 30, 2024, to August 30, 2025, primarily due to acquisitions (**$91,919 thousand**) and foreign currency translation effects (**$57,747 thousand**)[40](index=40&type=chunk) - Amortization expense for identifiable intangible assets was **$64,525 thousand** for the nine months ended August 30, 2025, up from **$61,723 thousand** in the prior year[41](index=41&type=chunk) | Fiscal Year | Estimated Amortization Expense (in thousands) | | :---------- | :-------------------------------------------- | | 2025 | $23,632 |\n| 2026 | $105,293 |\n| 2027 | $103,909 |\n| 2028 | $105,102 |\n| 2029 | $99,473 |\n| Thereafter | $392,021 | [Note 6: Long-Term Debt](index=16&type=section&id=Note%206%3A%20Long-Term%20Debt) This note describes the company's long-term debt obligations and any significant changes or refinancing activities - On March 6, 2025, the company entered into a Refinancing Amendment, decreasing interest rate margins on Term B loans by **25 basis points** to **175 basis points** for SOFR loans and **75 basis points** for prime rate loans, while maintaining the February 15, 2030, maturity date[45](index=45&type=chunk) [Note 7: Components of Net Periodic Benefit related to Pension and Other Postretirement Benefit Plans](index=16&type=section&id=Note%207%3A%20Components%20of%20Net%20Periodic%20Benefit%20related%20to%20Pension%20and%20Other%20Postretirement%20Benefit%20Plans) This note outlines the costs and benefits associated with the company's pension and other postretirement benefit plans | Net Periodic (Benefit) Cost (in thousands) | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | | :----------------------------------------- | :----------------------------- | :----------------------------- | | U.S. Pension Plans | $(1,566) | $(5,797) |\n| Non-U.S. Pension Plans | $1,709 | $2,431 |\n| Other Postretirement Benefits | $(16,536) | $(7,307) |\n| Total Net Periodic (Benefit) Cost | $(16,393) | $(10,673) | - Net periodic benefit cost for U.S. Pension Plans decreased from a benefit of **$(5,797) thousand** in 2024 to **$(1,566) thousand** in 2025, while Other Postretirement Benefits saw a larger benefit of **$(16,536) thousand** in 2025 compared to **$(7,307) thousand** in 2024[46](index=46&type=chunk) [Note 8: Accumulated Other Comprehensive Income (Loss)](index=17&type=section&id=Note%208%3A%20Accumulated%20Other%20Comprehensive%20Income%20%28Loss%29) This note details the components of accumulated other comprehensive income or loss, including foreign currency translation adjustments | Component (in thousands) | August 30, 2025 | November 30, 2024 | | :----------------------- | :-------------- | :---------------- | | Foreign currency translation adjustment | $(182,626) | $(322,184) |\n| Defined benefit pension plans adjustment | $(88,602) | $(89,031) |\n| Interest rate swap | $(13,664) | $(6,744) |\n| Net investment hedges | $(90,934) | $(37,481) |\n| Accumulated other comprehensive loss | $(394,167) | $(473,781) | - Accumulated other comprehensive loss improved from **$(473,781) thousand** at November 30, 2024, to **$(394,167) thousand** at August 30, 2025, primarily due to a significant reduction in foreign currency translation adjustment losses[49](index=49&type=chunk)[50](index=50&type=chunk) - Net investment hedges contributed a loss of **$(53,453) thousand** to other comprehensive income for the nine months ended August 30, 2025, compared to a loss of **$(4,318) thousand** in the prior year[47](index=47&type=chunk) [Note 9: Income Taxes](index=19&type=section&id=Note%209%3A%20Income%20Taxes) This note provides information on the company's income tax expense, effective tax rates, and unrecognized tax benefits - For the three months ended August 30, 2025, income tax expense included a **$3,742 thousand** discrete tax benefit, resulting in an effective tax rate of **24.4%** (excluding benefit). For the nine months, it included an **$11,210 thousand** discrete tax expense, leading to an effective tax rate of **25.2%** (excluding expense)[51](index=51&type=chunk) - The liability for gross unrecognized tax benefits increased to **$18,012 thousand** as of August 30, 2025, from **$15,590 thousand** as of November 30, 2024[53](index=53&type=chunk) [Note 10: Earnings Per Share](index=19&type=section&id=Note%2010%3A%20Earnings%20Per%20Share) This note presents the calculation of basic and diluted earnings per share, including weighted-average share counts | Shares (in thousands) | Three Months Ended Aug 30, 2025 | Three Months Ended Aug 31, 2024 | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | | :-------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Weighted-average common shares - basic | 54,428 | 54,975 | 54,623 | 54,874 |\n| Weighted-average common and common equivalent shares - diluted | 55,162 | 56,650 | 55,381 | 56,620 | - Share-based compensation awards of **1,935,970 shares** for the three months and **2,132,875 shares** for the nine months ended August 30, 2025, were excluded from diluted EPS calculations due to their antidilutive effect[55](index=55&type=chunk) [Note 11: Financial Instruments](index=20&type=section&id=Note%2011%3A%20Financial%20Instruments) This note describes the company's use of financial instruments to manage market risks, such as foreign currency and interest rate exposures - The company uses foreign currency forward contracts, cross-currency swaps, interest rate swaps, and net investment hedges to manage foreign currency and interest rate risks, not for speculative or trading purposes[57](index=57&type=chunk) - Interest rate swap agreements convert variable rate debt to fixed rates, with combined fair values as liabilities of **$3,756 thousand**, **$3,067 thousand**, and **$1,407 thousand** as of August 30, 2025, for various maturities[59](index=59&type=chunk)[60](index=60&type=chunk)[61](index=61&type=chunk) - Cross-currency interest rate swaps, designated as net investment hedges, had a combined fair value liability of **$120,188 thousand** as of August 30, 2025, hedging Euro-denominated foreign subsidiaries[64](index=64&type=chunk) [Note 12: Fair Value Measurements](index=22&type=section&id=Note%2012%3A%20Fair%20Value%20Measurements) This note provides information on the fair value of financial instruments and other assets and liabilities, categorized by valuation inputs | Financial Instrument (in thousands) | August 30, 2025 (Level 2) | November 30, 2024 (Level 2) | | :---------------------------------- | :------------------------ | :-------------------------- | | Foreign exchange contract assets | $3,810 | $2,147 |\n| Foreign exchange contract liabilities | $821 | $7,074 |\n| Interest rate swaps, cash flow hedge liabilities | $8,230 | $265 |\n| Interest rate swaps, fair value hedge liabilities | $22,571 | $32,775 |\n| Net investment hedge liabilities | $120,188 | $51,871 | - The holdback liability related to the GEM and Medifill acquisition, measured using Level 3 inputs, was **$33,570 thousand** as of August 30, 2025, up from an initial valuation of **$28,922 thousand**[74](index=74&type=chunk)[75](index=75&type=chunk) - Long-term debt had an estimated fair value of **$2,082,934 thousand** as of August 30, 2025, compared to **$2,015,468 thousand** as of November 30, 2024[78](index=78&type=chunk) [Note 13: Commitments and Contingencies](index=23&type=section&id=Note%2013%3A%20Commitments%20and%20Contingencies) This note discloses the company's various commitments and contingent liabilities, including environmental and legal matters - The company recorded environmental remediation liabilities of **$2,818 thousand** as of August 30, 2025, down from **$3,445 thousand** at November 30, 2024, for probable and reasonably estimable costs[79](index=79&type=chunk) - The company is a defendant in asbestos-related lawsuits, with **7 cases** settled for **$369 thousand** (net of **$252 thousand** insurance payments) in the nine months ended August 30, 2025, compared to **9 cases** settled for **$1,208 thousand** (net of **$844 thousand** insurance payments) in the prior year[85](index=85&type=chunk) - The company is involved in a class-action lawsuit (Rouse et al. v. H.B. Fuller Company et al.) regarding alleged defects in grout, but is currently unable to estimate any possible loss[86](index=86&type=chunk) [Note 14: Share Repurchase Program](index=25&type=section&id=Note%2014%3A%20Share%20Repurchase%20Program) This note outlines the details of the company's authorized share repurchase program and recent repurchase activities - The Board of Directors authorized a share repurchase program of up to **$300,000 thousand** of common shares for up to five years, initiated on April 22, 2022[88](index=88&type=chunk) - During the nine months ended August 30, 2025, the company repurchased shares with an aggregate value of **$56,930 thousand** under this program[89](index=89&type=chunk) - No shares were repurchased during the third quarter of 2025[89](index=89&type=chunk) [Note 15: Segments](index=25&type=section&id=Note%2015%3A%20Segments) This note provides financial information by operating segment, including net revenue and operating income - As of fiscal 2025, the company reorganized its operating segments, selling the North American Flooring business and combining Insulated Glass, Woodworking, and Composite businesses with Construction Adhesives Roofing, Building Envelope, and Infrastructure businesses to form the new Building Adhesive Solutions segment[92](index=92&type=chunk) | Segment Net Revenue (in millions) | Three Months Ended Aug 30, 2025 | Three Months Ended Aug 31, 2024 | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | | :-------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Hygiene, Health and Consumable Adhesives | $386.0 | $390.0 | $1,151.8 | $1,151.4 |\n| Engineering Adhesives | $272.3 | $260.0 | $785.5 | $743.7 |\n| Building Adhesive Solutions | $233.7 | $228.4 | $641.5 | $630.6 |\n| Corporate Unallocated | $- | $39.5 | $- | $119.8 |\n| Total | $892.0 | $917.9 | $2,578.8 | $2,645.5 | | Segment Operating Income (in millions) | Three Months Ended Aug 30, 2025 | Three Months Ended Aug 31, 2024 | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | | :------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Hygiene, Health and Consumable Adhesives | $46.5 | $48.6 | $119.8 | $145.9 |\n| Engineering Adhesives | $46.8 | $40.1 | $121.9 | $104.9 |\n| Building Adhesive Solutions | $25.9 | $26.0 | $54.5 | $55.1 |\n| Corporate Unallocated | $(9.1) | $(10.4) | $(39.6) | $(34.1) |\n| Total | $110.1 | $104.3 | $256.6 | $271.8 | [ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=28&type=section&id=ITEM%202.%20MANAGEMENT%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides a detailed discussion and analysis of H.B. Fuller's financial condition and results of operations for the three and nine months ended August 30, 2025, compared to the corresponding periods in 2024. It covers overall revenue and profit trends, the impact of acquisitions and divestitures, restructuring plans, and segment-specific performance, as well as liquidity and capital resources [Overview](index=28&type=section&id=Overview) This section provides a high-level summary of the company's financial performance and key drivers for the reporting period - Net revenue decreased **2.8%** in Q3 2025 (YoY) due to a **2.9%** decrease from M&A and a **1.9%** decrease in sales volume, partially offset by **1.0%** positive currency effects and **1.0%** pricing increase[98](index=98&type=chunk) - Gross profit margin increased **200 basis points** in Q3 2025 (YoY) due to higher product pricing, lower distribution costs, and M&A impact[98](index=98&type=chunk) - Net income attributable to H.B. Fuller increased to **$67.2 million** in Q3 2025 from **$55.4 million** in Q3 2024, with diluted EPS rising to **$1.22** from **$0.98**[100](index=100&type=chunk) - For the first nine months of 2025, net revenue decreased **2.5%** (YoY), and net income attributable to H.B. Fuller decreased to **$122.2 million** from **$137.6 million**, with diluted EPS falling to **$2.21** from **$2.43**[99](index=99&type=chunk)[101](index=101&type=chunk) [Restructuring Plans](index=28&type=section&id=Restructuring%20Plans) This section discusses the company's ongoing restructuring initiatives, their estimated costs, and expected completion timeline - The company expects to incur **$70.0 million** to **$75.0 million** in pre-tax costs for restructuring plans, with **$69.7 million** incurred as of August 30, 2025. Plans are expected to be completed during fiscal year 2026[102](index=102&type=chunk) [Results of Operations](index=29&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance across key income statement line items for the reporting periods [Net revenue](index=29&type=section&id=Net%20revenue) This subsection analyzes the changes in the company's total sales, including organic growth, M&A impact, and currency effects | Metric (in millions) | Three Months Ended Aug 30, 2025 | Three Months Ended Aug 31, 2024 | 2025 vs 2024 Change | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | 2025 vs 2024 Change | | :------------------- | :------------------------------ | :------------------------------ | :------------------ | :----------------------------- | :----------------------------- | :------------------ | | Net revenue | $892.0 | $917.9 | (2.8)% | $2,578.8 | $2,645.5 | (2.5)% | | Revenue Variance | Three Months Ended Aug 30, 2025 vs. Aug 31, 2024 | Nine Months Ended Aug 30, 2025 vs. Aug 31, 2024 | | :--------------- | :----------------------------------------------- | :---------------------------------------------- | | Organic growth | (0.9)% | 0.4% |\n| M&A | (2.9)% | (1.8)% |\n| Currency | 1.0% | (1.1)% |\n| Total | (2.8)% | (2.5)% | - Q3 2025 organic revenue decreased **0.9%** due to a **1.9%** sales volume decrease, partially offset by a **1.0%** pricing increase. The M&A decrease was due to the NA Flooring divestiture, net of acquisitions[103](index=103&type=chunk) [Cost of sales](index=30&type=section&id=Cost%20of%20sales) This subsection examines the trends and drivers behind the company's cost of goods sold and its impact on profitability | Metric (in millions) | Three Months Ended Aug 30, 2025 | Three Months Ended Aug 31, 2024 | 2025 vs 2024 Change | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | 2025 vs 2024 Change | | :------------------- | :------------------------------ | :------------------------------ | :------------------ | :----------------------------- | :----------------------------- | :------------------ | | Cost of sales | $606.9 | $642.2 | (5.5)% | $1,780.2 | $1,848.5 | (3.7)% |\n| Percent of net revenue | 68.0% | 70.0% | (200 bps) | 69.0% | 69.9% | (90 bps) | - Cost of sales as a percentage of net revenue decreased by **200 basis points** in Q3 2025 (YoY), driven by **130 basis points** from higher product pricing and M&A impact, and **70 basis points** from lower manufacturing and distribution costs and M&A impact[106](index=106&type=chunk) [Gross profit](index=30&type=section&id=Gross%20profit) This subsection analyzes the company's gross profit and gross profit margin, highlighting factors influencing profitability | Metric (in millions) | Three Months Ended Aug 30, 2025 | Three Months Ended Aug 31, 2024 | 2025 vs 2024 Change | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | 2025 vs 2024 Change | | :------------------- | :------------------------------ | :------------------------------ | :------------------ | :----------------------------- | :----------------------------- | :------------------ | | Gross profit | $285.1 | $275.7 | 3.4% | $798.6 | $797.0 | 0.2% |\n| Percent of net revenue | 32.0% | 30.0% | 200 bps | 31.0% | 30.1% | 90 bps | - Gross profit margin increased by **200 basis points** in Q3 2025 (YoY) and **90 basis points** for the first nine months of 2025 (YoY), primarily due to higher product pricing and the impact of acquisitions/divestitures[108](index=108&type=chunk)[109](index=109&type=chunk) [Selling, general and administrative (SG&A) expenses](index=30&type=section&id=Selling%2C%20general%20and%20administrative%20%28SG%26A%29%20expenses) This subsection discusses the changes in the company's selling, general, and administrative expenses and their relation to revenue | Metric (in millions) | Three Months Ended Aug 30, 2025 | Three Months Ended Aug 31, 2024 | 2025 vs 2024 Change | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | 2025 vs 2024 Change | | :------------------- | :------------------------------ | :------------------------------ | :------------------ | :----------------------------- | :----------------------------- | :------------------ | | SG&A | $175.0 | $171.4 | 2.1% | $541.9 | $525.2 | 3.2% |\n| Percent of net revenue | 19.6% | 18.7% | 90 bps | 21.0% | 19.9% | 110 bps | - SG&A expenses as a percentage of net revenue increased by **90 basis points** in Q3 2025 (YoY) and **110 basis points** for the first nine months of 2025 (YoY), mainly due to higher compensation costs and the impact of acquisitions/divestitures[110](index=110&type=chunk)[111](index=111&type=chunk) [Other income, net](index=31&type=section&id=Other%20income%2C%20net) This subsection details non-operating income and expenses, including pension benefits and currency transaction gains or losses | Metric (in millions) | Three Months Ended Aug 30, 2025 | Three Months Ended Aug 31, 2024 | 2025 vs 2024 Change | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | 2025 vs 2024 Change | | :------------------- | :------------------------------ | :------------------------------ | :------------------ | :----------------------------- | :----------------------------- | :------------------ | | Other income, net | $5.3 | $2.1 | 152.4% | $15.7 | $7.3 | 115.1% | - Other income, net, significantly increased in Q3 2025 (YoY) and for the first nine months of 2025 (YoY), primarily driven by higher net defined benefit pension benefits and currency transaction gains, partially offset by a loss on the sale of the NA Flooring business in the nine-month period[112](index=112&type=chunk)[113](index=113&type=chunk) [Interest expense](index=31&type=section&id=Interest%20expense) This subsection analyzes the company's interest costs on outstanding debt, considering changes in rates and debt levels | Metric (in millions) | Three Months Ended Aug 30, 2025 | Three Months Ended Aug 31, 2024 | 2025 vs 2024 Change | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | 2025 vs 2024 Change | | :------------------- | :------------------------------ | :------------------------------ | :------------------ | :----------------------------- | :----------------------------- | :------------------ | | Interest expense | $33.6 | $35.3 | (4.8)% | $100.5 | $99.5 | 1.0% | - Interest expense decreased in Q3 2025 (YoY) due to lower interest rates, despite higher debt levels. For the first nine months, it increased slightly due to higher debt levels[114](index=114&type=chunk)[115](index=115&type=chunk) [Interest income](index=32&type=section&id=Interest%20income) This subsection reports the company's interest earnings, primarily from cross-currency swap activities | Metric (in millions) | Three Months Ended Aug 30, 2025 | Three Months Ended Aug 31, 2024 | 2025 vs 2024 Change | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | 2025 vs 2024 Change | | :------------------- | :------------------------------ | :------------------------------ | :------------------ | :----------------------------- | :----------------------------- | :------------------ | | Interest income | $1.1 | $1.1 | 0.0% | $3.1 | $3.6 | (13.9)% | - Interest income remained flat in Q3 2025 (YoY) but decreased by **13.9%** for the first nine months of 2025 (YoY), primarily consisting of interest on cross-currency swap activity[117](index=117&type=chunk)[118](index=118&type=chunk) [Income taxes](index=32&type=section&id=Income%20taxes) This subsection discusses the company's income tax expense and effective tax rates, including discrete tax adjustments | Metric (in millions) | Three Months Ended Aug 30, 2025 | Three Months Ended Aug 31, 2024 | 2025 vs 2024 Change | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | 2025 vs 2024 Change | | :------------------- | :------------------------------ | :------------------------------ | :------------------ | :----------------------------- | :----------------------------- | :------------------ | | Income taxes | $16.5 | $18.3 | (9.8)% | $55.2 | $48.5 | 13.8% |\n| Effective tax rate | 19.9% | 25.3% | | 31.6% | 26.5% | | - The effective tax rate for Q3 2025 was **24.4%** (excluding discrete benefit), down from **29.3%** in Q3 2024. For the first nine months, it was **25.2%** (excluding discrete expense), down from **28.7%** in the prior year[119](index=119&type=chunk)[120](index=120&type=chunk) [Income from equity method investments](index=33&type=section&id=Income%20from%20equity%20method%20investments) This subsection reports the company's share of net income or loss from its equity method investments | Metric (in millions) | Three Months Ended Aug 30, 2025 | Three Months Ended Aug 31, 2024 | 2025 vs 2024 Change | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | 2025 vs 2024 Change | | :------------------- | :------------------------------ | :------------------------------ | :------------------ | :----------------------------- | :----------------------------- | :------------------ | | Income from equity method investments | $0.8 | $1.3 | (38.5)% | $2.7 | $3.0 | (10.0)% | - Income from equity method investments decreased in both Q3 2025 (YoY) and for the first nine months of 2025 (YoY), primarily due to lower net income from the Sekisui-Fuller joint venture, partially offset by a stronger Japanese yen[121](index=121&type=chunk)[122](index=122&type=chunk) [Net income attributable to H.B. Fuller](index=33&type=section&id=Net%20income%20attributable%20to%20H.B.%20Fuller) This subsection analyzes the company's net income available to common shareholders and its percentage of net revenue | Metric (in millions) | Three Months Ended Aug 30, 2025 | Three Months Ended Aug 31, 2024 | 2025 vs 2024 Change | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | 2025 vs 2024 Change | | :------------------- | :------------------------------ | :------------------------------ | :------------------ | :----------------------------- | :----------------------------- | :------------------ | | Net income attributable to H.B. Fuller | $67.2 | $55.4 | 21.3% | $122.2 | $137.6 | (11.2)% |\n| Percent of net revenue | 7.5% | 6.0% | | 4.7% | 5.2% | | - Net income attributable to H.B. Fuller increased by **21.3%** in Q3 2025 (YoY) to **$67.2 million**, but decreased by **11.2%** for the first nine months of 2025 (YoY) to **$122.2 million**[123](index=123&type=chunk)[124](index=124&type=chunk) [Operating Segment Results](index=33&type=section&id=Operating%20Segment%20Results) This section provides a detailed analysis of the financial performance for each of the company's operating segments [Hygiene, Health and Consumable Adhesives](index=34&type=section&id=Hygiene%2C%20Health%20and%20Consumable%20Adhesives) This subsection analyzes the net revenue and operating income performance of the Hygiene, Health and Consumable Adhesives segment | Metric (in millions) | Three Months Ended Aug 30, 2025 | Three Months Ended Aug 31, 2024 | 2025 vs 2024 Change | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | 2025 vs 2024 Change | | :------------------- | :------------------------------ | :------------------------------ | :------------------ | :----------------------------- | :----------------------------- | :------------------ | | Net revenue | $386.0 | $390.0 | (1.0)% | $1,151.8 | $1,151.4 | 0.0% |\n| Segment operating income | $46.5 | $48.6 | (4.3)% | $119.8 | $145.9 | (17.9)% |\n| Segment operating margin | 12.0% | 12.5% | (50 bps) | 10.4% | 12.7% | (230 bps) | | Revenue Variance | Three Months Ended Aug 30, 2025 vs. Aug 31, 2024 | Nine Months Ended Aug 30, 2025 vs. Aug 31, 2024 | | :--------------- | :----------------------------------------------- | :---------------------------------------------- | | Organic growth | (3.1)% | 0.8% |\n| M&A | 1.5% | 1.3% |\n| Currency | 0.6% | (2.1)% |\n| Total | (1.0)% | 0.0% | - Q3 2025 organic growth decreased due to lower sales volume, partially offset by pricing. M&A contributed **1.5%** from GEM and Medifill acquisitions. Segment operating margin decreased **50 bps** due to higher SG&A and raw material costs[131](index=131&type=chunk) [Engineering Adhesives](index=36&type=section&id=Engineering%20Adhesives) This subsection analyzes the net revenue and operating income performance of the Engineering Adhesives segment | Metric (in millions) | Three Months Ended Aug 30, 2025 | Three Months Ended Aug 31, 2024 | 2025 vs 2024 Change | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | 2025 vs 2024 Change | | :------------------- | :------------------------------ | :------------------------------ | :------------------ | :----------------------------- | :----------------------------- | :------------------ | | Net revenue | $272.3 | $260.0 | 4.7% | $785.5 | $743.7 | 5.6% |\n| Segment operating income | $46.8 | $40.1 | 16.7% | $121.9 | $104.9 | 16.2% |\n| Segment operating margin | 17.2% | 15.4% | 180 bps | 15.5% | 14.1% | 140 bps | | Revenue Variance | Three Months Ended Aug 30, 2025 vs. Aug 31, 2024 | Nine Months Ended Aug 30, 2025 vs. Aug 31, 2024 | | :--------------- | :----------------------------------------------- | :---------------------------------------------- | | Organic growth | 2.2% | 0.1% |\n| M&A | 1.3% | 6.0% |\n| Currency | 1.2% | (0.5)% |\n| Total | 4.7% | 5.6% | - Q3 2025 net revenue increased **4.7%** (YoY) with organic growth of **2.2%** (pricing and volume increases). M&A contributed **1.3%** from ND Industries Taiwan acquisition. Segment operating margin increased **180 bps** due to lower raw material and manufacturing costs[134](index=134&type=chunk) [Building Adhesive Solutions](index=36&type=section&id=Building%20Adhesive%20Solutions) This subsection analyzes the net revenue and operating income performance of the Building Adhesive Solutions segment | Metric (in millions) | Three Months Ended Aug 30, 2025 | Three Months Ended Aug 31, 2024 | 2025 vs 2024 Change | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | 2025 vs 2024 Change | | :------------------- | :------------------------------ | :------------------------------ | :------------------ | :----------------------------- | :----------------------------- | :------------------ | | Net revenue | $233.7 | $228.4 | 2.3% | $641.5 | $630.6 | 1.7% |\n| Segment operating income | $25.9 | $26.0 | (0.4)% | $54.5 | $55.1 | (1.1)% |\n| Segment operating margin | 11.1% | 11.4% | (30 bps) | 8.5% | 8.7% | (20 bps) | | Revenue Variance | Three Months Ended Aug 30, 2025 vs. Aug 31, 2024 | Nine Months Ended Aug 30, 2025 vs. Aug 31, 2024 | | :--------------- | :----------------------------------------------- | :---------------------------------------------- | | Organic growth | (1.0)% | 0.0% |\n| M&A | 1.7% | 2.0% |\n| Currency | 1.6% | (0.3)% |\n| Total | 2.3% | 1.7% | - Q3 2025 net revenue increased **2.3%** (YoY), with M&A contributing **1.7%** from the HS Butyl acquisition. Organic growth decreased due to lower sales volume. Segment operating margin decreased **30 bps** due to higher SG&A and manufacturing costs[137](index=137&type=chunk) [Corporate Unallocated](index=37&type=section&id=Corporate%20Unallocated) This subsection discusses the financial results and operating loss attributed to corporate unallocated activities | Metric (in millions) | Three Months Ended Aug 30, 2025 | Three Months Ended Aug 31, 2024 | 2025 vs 2024 Change | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | 2025 vs 2024 Change | | :------------------- | :------------------------------ | :------------------------------ | :------------------ | :----------------------------- | :----------------------------- | :------------------ | | Net revenue | $- | $39.5 | (100.0)% | $- | $119.8 | (100.0)% |\n| Segment operating loss | $(9.1) | $(10.4) | (12.5)% | $(39.6) | $(34.1) | 16.1% | - Corporate Unallocated segment operating loss decreased by **12.5%** in Q3 2025 (YoY) due to the inclusion of NA Flooring business results in 2024. For the nine months, the loss increased by **16.1%** due to higher acquisition project costs and the NA Flooring business results in 2024[141](index=141&type=chunk) [Financial Condition, Liquidity and Capital Resources](index=38&type=section&id=Financial%20Condition%2C%20Liquidity%20and%20Capital%20Resources) This section evaluates the company's financial position, cash management, and funding capabilities - Total cash and cash equivalents were **$122.5 million** as of August 30, 2025, down from **$169.4 million** at November 30, 2024. The majority of cash is held outside the United States[142](index=142&type=chunk)[143](index=143&type=chunk) - Total long and short-term debt was **$2,080.5 million** as of August 30, 2025, an increase from **$2,010.6 million** at November 30, 2024[142](index=142&type=chunk) - The total debt to total capital ratio was **51.5%** as of August 30, 2025, compared to **50.8%** at November 30, 2024. The company was in compliance with all debt covenants[142](index=142&type=chunk)[144](index=144&type=chunk) [Selected Metrics of Liquidity](index=39&type=section&id=Selected%20Metrics%20of%20Liquidity) This subsection presents key financial ratios and metrics used to assess the company's short-term financial health and cash generation | Metric | August 30, 2025 | August 31, 2024 | | :--------------------------------------- | :-------------- | :-------------- | | Net working capital as a percentage of annualized net revenue | 17.0% | 16.1% |\n| Accounts receivable DSO (in days) | 57 | 57 |\n| Inventory days on hand (in days) | 78 | 75 |\n| Trade accounts payable DPO (in days) | 69 | 70 |\n| Free cash flow (in millions) | $62.2 | $104.0 |\n| Total debt to total capital ratio | 51.5% | 52.3% | - Free cash flow decreased to **$62.2 million** for the nine months ended August 30, 2025, from **$104.0 million** in the prior year, primarily due to lower net cash provided by operating activities[148](index=148&type=chunk)[150](index=150&type=chunk) [Summary of Cash Flows](index=40&type=section&id=Summary%20of%20Cash%20Flows) This subsection provides an overview of the company's cash inflows and outflows across its primary activities [Cash Flows from Operating Activities](index=40&type=section&id=Cash%20Flows%20from%20Operating%20Activities) This sub-subsection details the cash generated or used by the company's core business operations | Metric (in millions) | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | | :------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $156.8 | $216.8 | - Net cash provided by operating activities decreased to **$156.8 million** in the first nine months of 2025 from **$216.8 million** in 2024, largely due to changes in net working capital, which was a **$71.2 million** use of cash in 2025 compared to a **$13.9 million** source in 2024[152](index=152&type=chunk)[153](index=153&type=chunk) - Trade receivables were a **$3.3 million** use of cash in 2025 (vs. **$26.4 million** source in 2024), inventory was a **$42.1 million** use of cash (vs. **$62.2 million** use in 2024), and trade payables were a **$25.8 million** use of cash (vs. **$49.7 million** source in 2024)[153](index=153&type=chunk)[154](index=154&type=chunk) [Cash Flows from Investing Activities](index=41&type=section&id=Cash%20Flows%20from%20Investing%20Activities) This sub-subsection outlines the cash used for or generated from investments in assets and business acquisitions or divestitures | Metric (in millions) | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | | :------------------- | :----------------------------- | :----------------------------- | | Net cash used in investing activities | $(182.7) | $(385.8) | - Net cash used in investing activities decreased to **$182.7 million** in the first nine months of 2025 from **$385.8 million** in 2024. This was driven by lower purchases of property, plant and equipment (**$94.6 million** vs. **$112.8 million**) and lower cash paid for business acquisitions (**$162.1 million** vs. **$274.1 million**), partially offset by **$75.7 million** received from the sale of the NA Flooring business[155](index=155&type=chunk)[156](index=156&type=chunk) [Cash Flows from Financing Activities](index=41&type=section&id=Cash%20Flows%20from%20Financing%20Activities) This sub-subsection reports the cash flows related to debt, equity, and dividend transactions | Metric (in millions) | Nine Months Ended Aug 30, 2025 | Nine Months Ended Aug 31, 2024 | | :------------------- | :----------------------------- | :----------------------------- | | Net cash provided by financing activities | $(33.7) | $131.6 | - Net cash from financing activities shifted from a source of **$131.6 million** in 2024 to a use of **$33.7 million** in 2025. This change was due to lower proceeds from debt issuance (**$1,114.3 million** vs. **$1,732.9 million**) and stock options exercised (**$5.5 million** vs. **$34.2 million**), coupled with higher common stock repurchases (**$60.7 million** vs. **$39.4 million**)[157](index=157&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=42&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section states that the company is exposed to market risks from changes in interest rates, foreign currency rates, and raw material prices. It refers to the Annual Report on Form 10-K for further discussion and notes no material changes in market risk since November 30, 2024 - The company is exposed to market risks including changes in interest rates, foreign currency rates, and raw material prices[161](index=161&type=chunk) - There have been no material changes in the reported market risk since November 30, 2024[161](index=161&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=42&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) This section confirms the effectiveness of the company's disclosure controls and procedures as of August 30, 2025, following an evaluation by the CEO and CFO. It also states that there were no material changes in internal control over financial reporting during the most recently completed fiscal quarter - The company's disclosure controls and procedures were evaluated and concluded to be effective as of August 30, 2025[162](index=162&type=chunk) - No material changes in internal control over financial reporting occurred during the most recently completed fiscal quarter[164](index=164&type=chunk) PART II. OTHER INFORMATION This section includes disclosures on legal proceedings, risk factors, equity sales, and other relevant information [ITEM 1. LEGAL PROCEEDINGS](index=43&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) This section details the company's involvement in environmental investigations, clean-up activities, and various lawsuits, including product liability, personal injury, and asbestos-related litigation. The company maintains that, based on currently available information, these matters are not expected to have a material adverse effect on its results of operations, financial condition, or cash flow - The company is involved in environmental investigations and clean-up activities, and has established financial provisions for probable liabilities[165](index=165&type=chunk)[166](index=166&type=chunk) - The company is a party to various lawsuits, including asbestos-related litigation, but concludes that the ultimate resolution of these matters will not have a material adverse effect on its financial results[167](index=167&type=chunk) [ITEM 1A. RISK FACTORS](index=43&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section refers to the risk factors identified in the company's Annual Report on Form 10-K for the fiscal year ended November 30, 2024, and states that there have been no material changes to these risk factors - The company's future results could differ materially from forward-looking statements due to various risk factors, as detailed in the Annual Report on Form 10-K[169](index=169&type=chunk) - No material changes have occurred in the risk factors disclosed since the Annual Report on Form 10-K for the fiscal year ended November 30, 2024[169](index=169&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=44&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This section provides information on the company's share repurchase program. It reiterates the authorization of up to $300.0 million for common share repurchases over five years, but notes that no shares were repurchased during the quarter ended August 30, 2025 - The Board of Directors authorized a share repurchase program of up to **$300.0 million** of outstanding common shares for a period of up to five years, starting April 7, 2022[170](index=170&type=chunk) - No shares were repurchased under this program during the quarter ended August 30, 2025[170](index=170&type=chunk) [ITEM 5. OTHER INFORMATION](index=44&type=section&id=ITEM%205.%20OTHER%20INFORMATION) This section states that there were no Rule 10b5-1 Plan Adoptions and Modifications during the reporting period - There were no Rule 10b5-1 Plan Adoptions and Modifications during the reporting period[171](index=171&type=chunk) [ITEM 6. EXHIBITS](index=44&type=section&id=ITEM%206.%20EXHIBITS) This section lists the exhibits filed with the Form 10-Q, including certifications (302 and 906) and financial statements formatted in Inline XBRL - Exhibits include Form 302 Certifications by Celeste B. Mastin and John J. Corkrean, and Form 906 Certifications by the same individuals[173](index=173&type=chunk) - The Consolidated Statements of Income, Comprehensive Income, Balance Sheets, Total Equity, Cash Flows, and Notes to Consolidated Financial Statements are filed in Inline XBRL format[173](index=173&type=chunk) SIGNATURES This section contains the required signatures for the Form 10-Q, certifying its submission pursuant to the Securities Exchange Act of 1934 - The report is duly signed by John J. Corkrean, Executive Vice President, Chief Financial Officer, on behalf of H.B. Fuller Company[177](index=177&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 FORM 20-F ☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 30, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to OR ☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ...

[Executive Summary & Financial Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Financial%20Highlights) This section provides a comprehensive overview of RAVE Restaurant Group's financial performance for Q4 and the full fiscal year 2025, highlighting key revenue, income, and same-store sales metrics [Fourth Quarter Fiscal Year 2025 Highlights](index=1&type=section&id=Fourth%20Quarter%20Fiscal%20Year%202025%20Highlights) RAVE Restaurant Group reported Q4 FY2025 net income of $0.8 million, a 3.6% decrease, with total revenue down 6.0% to $3.2 million and adjusted EBITDA down 7.3% to $1.1 million Fourth Quarter Fiscal Year 2025 Financial Performance (vs. Prior Year): | Metric | Q4 FY2025 | Prior Year | Change (%) | | :-------------------------------- | :-------- | :-------- | :--------- | | Net Income | $0.8 million | $0.83 million | -3.6% | | Pre-tax Income | $1.2 million | $1.16 million | +3.8% | | Total Revenue | $3.2 million | $3.4 million | -6.0% | | Adjusted EBITDA | $1.1 million | $1.19 million | -7.3% | | Diluted Net Income Per Share | $0.06 | $0.06 | 0.0% | Fourth Quarter Fiscal Year 2025 Same-Store Retail Sales (13 Weeks vs. 13 Weeks): | Brand | Change (%) | | :-------- | :--------- | | Pizza Inn Domestic | +6.3% | | Pie Five Domestic | -7.2% | - Cash and cash equivalents totaled **$2.9 million**, with short-term investments at **$7.0 million** as of June 29, 2025[2](index=2&type=chunk) - At quarter-end, Pizza Inn had **96 domestic** and **22 international** locations, while Pie Five had **17 domestic** locations[2](index=2&type=chunk) [Annual Fiscal Year 2025 Highlights](index=2&type=section&id=Annual%20Fiscal%20Year%202025%20Highlights) For FY2025 (52 weeks), net income increased to $2.7 million, pre-tax income to $3.6 million, total revenue slightly decreased to $12.0 million, and adjusted EBITDA rose to $3.6 million Annual Fiscal Year 2025 Financial Performance (vs. Prior Year): | Metric | FY2025 | FY2024 | Change | | :-------------------------------- | :------- | :------- | :------- | | Net Income | $2.7 million | $2.5 million | +$0.2 million | | Pre-tax Income | $3.6 million | $3.1 million | +$0.5 million | | Total Revenue | $12.0 million | $12.1 million | -$0.1 million | | Adjusted EBITDA | $3.6 million | $3.2 million | +$0.4 million | | Diluted Net Income Per Share | $0.19 | $0.17 | +$0.02 | Annual Fiscal Year 2025 Same-Store Retail Sales (vs. Prior Year): | Brand | Change (%) | | :-------------------------------- | :--------- | | RAVE Domestic Total | +0.8% | | Pizza Inn Domestic | +1.9% | | Pie Five Domestic | -8.4% | - Pizza Inn buffet locations achieved net growth for the **fourth consecutive year**[3](index=3&type=chunk) - Cash flow from operations increased by **$0.6 million** to **$3.4 million**[3](index=3&type=chunk) - Cash and short-term investments increased by **$2.1 million** in FY2025, reaching **$9.9 million** as of June 29, 2025[3](index=3&type=chunk) [Management Commentary](index=3&type=section&id=Management%20Commentary) This section presents insights from the CEO and CFO on the company's operational achievements, financial management, and strategic growth initiatives for the fiscal year [CEO Remarks](index=3&type=section&id=CEO%20Remarks) CEO Brandon Solano highlighted 21 consecutive profitable quarters, noting the success of the $8 'I'm Eating at Pizza Inn' promotion and accelerated Pizza Inn brand growth through new openings and remodels - The company has achieved **21 consecutive profitable quarters**[4](index=4&type=chunk) - The '$8 I'm Eating at Pizza Inn' promotion drove **30.6% sales growth** and **34.7% traffic growth** during the last eight weeks of Q4[5](index=5&type=chunk) - Pizza Inn locations not participating in the $8 promotion still saw **over 5% same-store sales growth** with a summer salad bar promotion[5](index=5&type=chunk) - The Pizza Inn brand increased its buffet count for the **fourth consecutive year** and completed **11 remodels** with positive results[5](index=5&type=chunk) - The domestic new store pipeline includes **31 signed locations**, with **12 planned to open** in the current fiscal year (ending June 28, 2026), alongside new international openings in Egypt and Saudi Arabia[5](index=5&type=chunk) [CFO Remarks](index=3&type=section&id=CFO%20Remarks) CFO Jay Rooney noted effective expense management and Pizza Inn's 6.3% Q4 same-store sales growth contributed to over 17% annual pre-tax income increase for FY2025 - Effective expense management was maintained throughout fiscal year 2025[5](index=5&type=chunk) - Pizza Inn's **6.3% same-store sales growth** in Q4 contributed to an **over 17% increase** in annual pre-tax income compared to the prior 53-week fiscal year[5](index=5&type=chunk) [Company Overview](index=5&type=section&id=Company%20Overview) This section introduces RAVE Restaurant Group, Inc., detailing its business model, brand portfolio, and the distinct offerings of Pizza Inn and Pie Five [About RAVE Restaurant Group, Inc.](index=5&type=section&id=About%20RAVE%20Restaurant%20Group%2C%20Inc.) RAVE Restaurant Group, Inc., based in Dallas, operates Pizza Inn and Pie Five brands via franchising, licensing, and supply, with Pizza Inn known for its buffet and Pie Five for fast-casual personalized pizza - RAVE Restaurant Group operates Pie Five and Pizza Inn restaurants through **franchising, licensing, and supply** across domestic and international markets[11](index=11&type=chunk) - Founded in 1958, Pizza Inn is renowned for its buffet experience featuring **house-made dough, 100% whole-milk mozzarella, fresh ingredients, and signature sauces**[11](index=11&type=chunk) - Pie Five Pizza, launched in 2011, pioneered the fast-casual pizza concept, offering **customizable, gourmet ingredients and rapid service**[11](index=11&type=chunk) [Non-GAAP Financial Measures](index=3&type=section&id=Non-GAAP%20Financial%20Measures) This section defines non-GAAP financial metrics like EBITDA and Adjusted EBITDA, explaining their utility for performance assessment and providing a detailed reconciliation to GAAP net income [Definition and Use of Non-GAAP Measures](index=3&type=section&id=Definition%20and%20Use%20of%20Non-GAAP%20Measures) The company provides non-GAAP metrics like EBITDA and Adjusted EBITDA, which management deems useful for assessing operating performance and strategy, but emphasizes they are not GAAP substitutes - Non-GAAP financial measures, such as EBITDA and Adjusted EBITDA, are considered important supplemental metrics for evaluating operating performance and are useful for investors and management in assessing business strategy, planning, and budgeting[6](index=6&type=chunk)[7](index=7&type=chunk) - These non-GAAP measures should not be considered as a substitute for or superior to financial statements prepared in accordance with generally accepted accounting principles (GAAP)[6](index=6&type=chunk) - EBITDA is defined as earnings before interest, taxes, depreciation, and amortization[8](index=8&type=chunk) - Adjusted EBITDA further excludes stock-based compensation, severance, gain/loss on asset disposals, impairment and other lease charges, franchise defaults and store closing income/expense, and store closing and non-operating store costs from EBITDA[8](index=8&type=chunk) [Adjusted EBITDA Reconciliation](index=9&type=section&id=Adjusted%20EBITDA%20Reconciliation) This section provides a reconciliation of net income to EBITDA and Adjusted EBITDA for fiscal years 2025 and 2024, detailing adjustments made to derive non-GAAP figures Adjusted EBITDA Reconciliation (in thousands): | Metric | FY2025 (June 29) | FY2024 (June 30) | | :-------------------------------- | :--------------- | :--------------- | | Net Income | $2,702 | $2,473 | | Interest Income | (354) | (153) | | Income Tax Expense | 918 | 619 | | Depreciation and Amortization | 182 | 219 | | **EBITDA** | **$3,448** | **$3,158** | | Stock-based Compensation Expense | 136 | 149 | | Severance | 12 | 5 | | Franchise Defaults and Store Closing Income | (13) | (156) | | **Adjusted EBITDA** | **$3,583** | **$3,156** | [Consolidated Financial Statements](index=6&type=section&id=Consolidated%20Financial%20Statements) This section presents the company's complete financial position and performance through consolidated statements of income, balance sheets, and cash flows for recent fiscal periods [Consolidated Statements of Income](index=6&type=section&id=Consolidated%20Statements%20of%20Income) The consolidated statements of income show RAVE Restaurant Group's net income increased from $1,613 thousand in FY2023 to $2,702 thousand in FY2025, despite a slight decrease in total revenue Consolidated Statements of Income (in thousands, except per share amounts): | Metric | FY2025 (June 29) | FY2024 (June 30) | FY2023 (June 25) | | :-------------------------------- | :--------------- | :--------------- | :--------------- | | Revenue | $12,039 | $12,150 | $11,889 | | Cost of Sales and Expenses | 8,419 | 9,058 | 9,739 | | Pre-tax Income | 3,620 | 3,092 | 2,150 | | Income Tax Expense | 918 | 619 | 537 | | **Net Income** | **$2,702** | **$2,473** | **$1,613** | | Diluted Net Income Per Share | $0.19 | $0.17 | $0.10 | [Consolidated Balance Sheets](index=7&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheets indicate total assets increased from $15,819 thousand in FY2024 to $16,557 thousand in FY2025, driven by higher short-term investments, while total liabilities decreased Consolidated Balance Sheets (in thousands, except share amounts): | Metric | June 29, 2025 | June 30, 2024 | | :-------------------------------- | :-------------- | :-------------- | | **Assets** | | | | Cash and Cash Equivalents | $2,859 | $2,886 | | Short-term Investments | 7,024 | 4,945 | | Total Current Assets | 11,493 | 9,536 | | **Total Assets** | **$16,557** | **$15,819** | | **Liabilities and Stockholders' Equity** | | | | Total Current Liabilities | 1,740 | 2,019 | | Total Liabilities | 2,403 | 3,117 | | Total Stockholders' Equity | 14,154 | 12,702 | | **Total Liabilities and Stockholders' Equity** | **$16,557** | **$15,819** | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow increased to $3,395 thousand in FY2025, with net cash used in investing activities significantly improving to $2,036 thousand, and financing activities using $1,386 thousand for stock repurchases Consolidated Statements of Cash Flows (in thousands): | Metric | FY2025 (June 29) | FY2024 (June 30) | FY2023 (June 25) | | :-------------------------------- | :--------------- | :--------------- | :--------------- | | Cash Flow from Operating Activities | $3,395 | $2,845 | $2,841 | | Cash Flow Used in Investing Activities | (2,036) | (4,976) | (227) | | Cash Flow Used in Financing Activities | (1,386) | (311) | (5,009) | | Net Decrease in Cash and Cash Equivalents | (27) | (2,442) | (2,395) | | Cash and Cash Equivalents, End of Period | $2,859 | $2,886 | $5,328 | [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) This section includes a cautionary note regarding forward-looking statements, emphasizing inherent risks, uncertainties, and the speculative nature of future projections [Note Regarding Forward-Looking Statements](index=4&type=section&id=Note%20Regarding%20Forward-Looking%20Statements) This section serves as a cautionary statement, indicating that non-historical information in the press release may constitute forward-looking statements subject to risks, uncertainties, and assumptions - Certain statements in this press release, excluding historical information, may be considered forward-looking statements protected by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995[9](index=9&type=chunk) - These forward-looking statements are based on current expectations and involve numerous risks, uncertainties, and assumptions, many of which are difficult to predict accurately and are beyond the company's control[9](index=9&type=chunk) - While assumptions underlying forward-looking statements are believed to be reasonable, any assumption could prove inaccurate, thus no assurance can be given regarding the accuracy of any forward-looking statement or the achievement of company goals and plans[9](index=9&type=chunk) [Other Information](index=5&type=section&id=Other%20Information) This section provides essential supplementary details, including contact information for investor relations [Contact Information](index=5&type=section&id=Contact%20Information) This section provides contact information for RAVE Restaurant Group, Inc. investor relations - Investor Relations Contact: RAVE Restaurant Group, Inc., Phone: **469-384-5000**[12](index=12&type=chunk)

PART I [ITEM 1. BUSINESS](index=2&type=section&id=ITEM%201.%20BUSINESS%2E) Rave Restaurant Group operates and franchises Pizza Inn and Pie Five pizza concepts, with 135 total units as of June 29, 2025 - Rave Restaurant Group, Inc. operates and franchises pizza concepts under **'Pizza Inn'** (Buffet, Delco, Express, Ghost Kitchens, PIE Kiosks) and **'Pie Five'** (fast-casual, ghost kitchens)[11](index=11&type=chunk) - The company facilitates food, equipment, and supply distribution to its domestic and international restaurant system through third-party agreements[11](index=11&type=chunk) [General Business Overview](index=2&type=section&id=General%20Business%20Overview) The company operates and franchises pizza restaurant concepts under the Pizza Inn and Pie Five brands, with various unit types - Rave Restaurant Group, Inc. operates and franchises pizza concepts under **'Pizza Inn'** (Buffet, Delco, Express, Ghost Kitchens, PIE Kiosks) and **'Pie Five'** (fast-casual, ghost kitchens)[11](index=11&type=chunk) Restaurant Unit Count (June 29, 2025) | Category | Count | | :-------------------------------- | :---- | | Total Franchised Pizza Inn | 117 | | Total Franchised Pie Five | 17 | | Total Licensed PIE Unit | 1 | | Domestic Franchised Pizza Inn | 95 | | International Franchised Pizza Inn | 22 | [Company History](index=2&type=section&id=Our%20History) Pizza Inn opened its first restaurant in 1958, expanded internationally in the late 1970s, and began trading on NASDAQ in 1993 - The first Pizza Inn opened in Dallas, Texas in **1958**, with the first franchise awarded in **1963** and international franchising beginning in the late **1970s**[13](index=13&type=chunk) - The company's stock began trading on NASDAQ in **1993** under the ticker symbol **'RAVE'**[13](index=13&type=chunk) - The first Pie Five restaurant opened in **2011**, and the PIE kiosk solution was launched in **2019**[13](index=13&type=chunk) [Restaurant Concepts](index=2&type=section&id=Our%20Concepts) The company operates and franchises restaurant concepts under two distinct brands: Pizza Inn and Pie Five - The company operates and franchises restaurant concepts under two distinct brands: **Pizza Inn** and **Pie Five**[14](index=14&type=chunk) [Pizza Inn Concept Details](index=2&type=section&id=Pizza%20Inn) Pizza Inn offers diverse unit types including Buffet, Delco, Express, Ghost Kitchens, and licensed PIE Kiosks - Pizza Inn offers Buffet, Delco (delivery/carryout), Express, and Ghost Kitchen Units, along with licensed PIE Kiosks[15](index=15&type=chunk) - Buffet and Delco Units feature hand-made dough and proprietary ingredients, while Express Units use pre-prepared crusts for lower investment and operating costs[15](index=15&type=chunk)[18](index=18&type=chunk) - Pizza Inn Ghost Kitchen Units operate within Pie Five restaurants, serving online customers through third-party delivery[20](index=20&type=chunk) [Pie Five Concept Details](index=3&type=section&id=Pie%20Five) Pie Five is a fast-casual pizza concept offering individualized pizzas with fresh toppings, typically located in high-traffic areas - Pie Five is a fast-casual pizza concept offering individualized pizzas with fresh toppings, baked in specially designed ovens[21](index=21&type=chunk) - Traditional Pie Five restaurants are typically **1,800-2,400 square feet**, located in high-traffic urban/suburban areas, and serve lunch and dinner[22](index=22&type=chunk) [Site Selection Process](index=3&type=section&id=Site%20Selection) The company considers site selection critical, involving demographic review and evaluation, often leveraging franchisee knowledge - The company considers site selection critical, involving trade area demographics review and evaluation, often relying on franchisee knowledge[23](index=23&type=chunk) [Development and Operations Strategy](index=3&type=section&id=Development%20and%20Operations%20Strategy) The company plans to expand Pizza Inn domestically and internationally, while opportunistically evaluating Pie Five unit development - The company plans to expand the Pizza Inn system domestically and internationally through new franchised restaurants, evaluating international development in fiscal 2026[24](index=24&type=chunk) - For Pie Five, the company will opportunistically evaluate franchised unit development, focusing on experienced, well-capitalized operators, and expects a modest decrease in units in future periods[27](index=27&type=chunk) [Domestic Franchise Operations](index=4&type=section&id=Domestic%20Franchise%20Operations) Franchise agreements require adherence to operating systems, payment of fees, marketing contributions, and ongoing royalties - Franchise agreements require adherence to operating systems, payment of franchise fees, marketing fund contributions, and continuing royalties[28](index=28&type=chunk)[29](index=29&type=chunk) - The company offers training programs focusing on food preparation, service, cost control, sanitation, safety, marketing, and personnel management[30](index=30&type=chunk) - Franchisees must comply with written policies and standards for menu, ingredients, decor, and operations, with ongoing support from franchise business consultants[31](index=31&type=chunk) [Domestic Kiosk License Operations](index=4&type=section&id=Domestic%20Kiosk%20License%20Operations) PIE Units are offered under five-year initial license periods without development fees, license fees, royalties, or advertising assessments - PIE Units are offered under five-year initial license periods with renewal options, without development fees, license fees, royalties, or advertising assessments[32](index=32&type=chunk) - Licensees must comply with Pizza Inn brand standards, and mandated product sourcing provisions result in supplier rebates for the company[32](index=32&type=chunk)[34](index=34&type=chunk) [International Franchise Operations](index=5&type=section&id=International%20Franchise%20Operations) The company offers master license rights for Pizza Inn internationally, with 22 international Pizza Inn restaurants as of June 29, 2025 - The company offers master license rights for Pizza Inn in foreign countries, with negotiated fees, development schedules, and ongoing royalties, but is not actively marketing Pie Five internationally[36](index=36&type=chunk) - As of June 29, 2025, there were **22 international Pizza Inn restaurants**, primarily in Saudi Arabia and the Middle East, with a few in Honduras and New Zealand[37](index=37&type=chunk) [Food and Supply Distribution](index=5&type=section&id=Food%20and%20Supply%20Distribution) Franchisees and licensees purchase food and supplies from authorized third-party distributors, benefiting from the company's vendor negotiations - Franchisees and licensees purchase food and supplies from authorized third-party distributors, benefiting from the company's direct vendor negotiations and volume purchasing[38](index=38&type=chunk) - Proprietary food products (e.g., cheese, pizza sauce, flour mixture) must be purchased from authorized distributors to ensure quality and consistency[38](index=38&type=chunk) - The company does not engage in commodity hedging but enters into pricing arrangements for up to a year in advance for certain high-volume products[40](index=40&type=chunk) [Marketing and Advertising](index=5&type=section&id=Marketing%20and%20Advertising) Franchisees contribute a percentage of sales to a marketing fund and conduct local marketing efforts with company support - Franchisees contribute a specified percentage of sales to a marketing fund for various advertising programs and materials, including print, digital, social media, and in-store promotions[42](index=42&type=chunk) - Franchisees are also required to conduct independent local marketing efforts, supported by company-provided materials[43](index=43&type=chunk) [Trademarks and Quality Control](index=6&type=section&id=Trademarks%20and%20Quality%20Control) The company owns various trademarks, including 'Pizza Inn' and 'Pie Five', which are essential for business protection - The company owns various trademarks, including **'Pizza Inn'** and **'Pie Five'**, registered with the USPTO and in several foreign countries, essential for business protection[44](index=44&type=chunk) [Government Regulation](index=6&type=section&id=Government%20Regulation) The company and its franchisees are subject to federal, state, and local laws affecting restaurant operations and franchise sales - The company and its franchisees are subject to federal, state, and local laws affecting restaurant operations, including licensing and regulation by health, safety, and alcoholic beverage authorities[45](index=45&type=chunk) - The company is subject to FTC regulations and state laws governing franchise offers and sales, requiring a franchise disclosure document for prospective franchisees[46](index=46&type=chunk) [Employees](index=6&type=section&id=Employees) As of June 29, 2025, the company had 24 full-time employees, none covered by collective bargaining agreements - As of June 29, 2025, the company had **24 full-time employees**, none of whom are covered by collective bargaining agreements[47](index=47&type=chunk) [Industry and Competition](index=6&type=section&id=Industry%20and%20Competition) The restaurant industry is intensely competitive across various factors, with numerous established competitors in the pizza segment - The restaurant industry is intensely competitive regarding price, service, location, and food quality, with many well-established competitors[48](index=48&type=chunk) - Primary competitors in the pizza segment include national and regional pizza chains, as well as frozen pizza products and fast-casual pizza concepts[48](index=48&type=chunk) - Competition for franchise sales is based on product quality, price, value, consumer acceptance, franchisor experience, and support[49](index=49&type=chunk) [ITEM 1A. RISK FACTORS](index=6&type=section&id=ITEM%201A.%20RISK%20FACTORS%2E) Risk factors disclosure is not required for a smaller reporting company - Risk factors disclosure is not required for a smaller reporting company[50](index=50&type=chunk) [ITEM 1B. UNRESOLVED STAFF COMMENTS](index=6&type=section&id=ITEM%201B.%20UNRESOLVED%20STAFF%20COMMENTS%2

[Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) [Fiscal Year 2025 Performance Overview](index=1&type=section&id=Fiscal%20Year%202025%20Performance%20Overview) Jabil achieved a strong Fiscal Year 2025, marked by revenue growth, solid core margins, increased core diluted EPS, and robust free cash flow, driven by strong AI-driven demand offsetting pressures in Automotive and Renewables - CEO Mike Dastoor stated, "Fiscal 2025 was a strong year for Jabil as we grew revenue, delivered solid core margins, increased core diluted EPS, and generated robust free cash flow"[2](index=2&type=chunk) - Performance was driven by strength in **AI-driven demand** across capital equipment, data centers, and networking, combined with deliberate portfolio actions, offsetting pressures in Automotive and Renewables[2](index=2&type=chunk) | Metric | Value | | :----------------------------- | :---------------- | | Net revenue | $29.8 billion | | U.S. GAAP operating income | $1.2 billion | | U.S. GAAP diluted earnings per share | $5.92 | | Core operating income (Non-GAAP) | $1.6 billion | | Core diluted earnings per share (Non-GAAP) | $9.75 | [Fourth Quarter Fiscal Year 2025 Performance](index=1&type=section&id=Fourth%20Quarter%20Fiscal%20Year%202025%20Performance) Jabil reported strong financial results for the fourth quarter of Fiscal Year 2025, with significant year-over-year increases in net revenue, GAAP operating income, and core diluted earnings per share | Metric | Value | | :----------------------------- | :---------------- | | Net revenue | $8.3 billion | | U.S. GAAP operating income | $337 million | | U.S. GAAP diluted earnings per share | $1.99 | | Core operating income (Non-GAAP) | $519 million | | Core diluted earnings per share (Non-GAAP) | $3.29 | [Fiscal Year 2026 Outlook](index=1&type=section&id=Fiscal%20Year%202026%20Outlook) Jabil projects strong FY26 with increased revenue, improved core margins, higher core diluted EPS, and robust free cash flow, driven by AI and healthcare - CEO Mike Dastoor expects FY26 revenue of approximately **$31.3 billion**, core operating margins of **5.6%**, core diluted EPS of **$11.00**, and adjusted free cash flow greater than **$1.3 billion**[4](index=4&type=chunk) - Jabil is well-positioned for sustainable value creation with significant opportunities in **AI data center infrastructure**, **healthcare**, and advanced warehouse and retail automation[4](index=4&type=chunk) | Metric | Projection | | :----------------------------- | :---------------- | | Net revenue | $31.3 billion | | Core operating margin (Non-GAAP) | 5.6% | | Core diluted earnings per share (Non-GAAP) | $11.00 per diluted share | | Adjusted free cash flow (Non-GAAP) | $1.3+ billion | [First Quarter Fiscal Year 2026 Outlook](index=1&type=section&id=First%20Quarter%20Fiscal%20Year%202026%20Outlook) Jabil forecasts Q1 FY26 net revenue between $7.7 billion and $8.3 billion, with core diluted EPS $2.47 to $2.87 | Metric | Range | | :----------------------------- | :---------------- | | Net revenue | $7.7 billion to $8.3 billion | | U.S. GAAP operating income | $263 million to $343 million | | U.S. GAAP diluted earnings per share | $1.27 to $1.84 per diluted share | | Core operating income (Non-GAAP) | $400 million to $460 million | | Core diluted earnings per share (Non-GAAP) | $2.47 to $2.87 per diluted share | [Financial Statements](index=4&type=section&id=Financial%20Statements) [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Jabil's total assets increased to $18.543 billion, driven by higher accounts receivable and inventories, while total liabilities rose and stockholders' equity decreased | Metric | Aug 31, 2025 (Unaudited) | Aug 31, 2024 | Change (YoY) | | :---------------------------------- | :----------------------- | :------------- | :------------ | | Total assets | $18,543 million | $17,351 million | +$1,192 million | | Total liabilities | $17,026 million | $15,614 million | +$1,412 million | | Total Jabil Inc. stockholders' equity | $1,513 million | $1,737 million | -$224 million | - Key asset changes include an increase in accounts receivable, net (from **$3,533 million to $4,039 million**), inventories, net (from **$4,276 million to $4,681 million**), and goodwill and intangible assets, net (from **$804 million to $1,114 million**)[17](index=17&type=chunk) - Accounts payable significantly increased from **$6,190 million in FY24 to $7,937 million in FY25**[17](index=17&type=chunk) [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For FY25, Jabil reported a slight increase in net revenue to $29.802 billion, but GAAP operating income and net income significantly decreased, influenced by a divestiture loss versus prior year gain Fiscal Year Performance | Metric | FY25 (Unaudited) | FY24 | Change (YoY) | | :---------------------------------- | :--------------- | :----------- | :----------- | | Net revenue | $29,802 million | $28,883 million | +$919 million | | Gross profit | $2,646 million | $2,676 million | -$30 million | | Operating income | $1,182 million | $2,013 million | -$831 million | | Net income attributable to Jabil Inc. | $657 million | $1,388 million | -$731 million | | Diluted EPS | $5.92 | $11.17 | -$5.25 | Three Months Ended August 31 Performance | Metric | Q4 FY25 (Unaudited) | Q4 FY24 | Change (YoY) | | :---------------------------------- | :------------------ | :---------- | :----------- | | Net revenue | $8,252 million | $6,964 million | +$1,288 million | | Gross profit | $783 million | $663 million | +$120 million | | Operating income | $337 million | $318 million | +$19 million | | Net income attributable to Jabil Inc. | $218 million | $138 million | +$80 million | | Diluted EPS | $1.99 | $1.18 | +$0.81 | - The loss from the divestiture of businesses was **$53 million in FY25**, a significant shift from a gain of **$942 million in FY24**[19](index=19&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Jabil's net cash from operating activities slightly decreased in FY25 to $1.640 billion, while investing activities shifted to a net outflow of $714 million due to lower divestiture proceeds and increased acquisitions | Metric | FY25 (Unaudited) | FY24 | Change (YoY) | | :---------------------------------- | :--------------- | :----------- | :----------- | | Net cash provided by operating activities | $1,640 million | $1,716 million | -$76 million | | Net cash (used in) provided by investing activities | -$714 million | $1,351 million | -$2,065 million | | Net cash used in financing activities | -$1,204 million | -$2,668 million | +$1,464 million | | Net (decrease) increase in cash and cash equivalents | -$268 million | $397 million | -$665 million | - Proceeds from the divestiture of businesses, net of cash, decreased significantly from **$2,108 million in FY24 to $7 million in FY25**[21](index=21&type=chunk) - Cash paid for business and intangible asset acquisitions, net of cash, increased from **$90 million in FY24 to $392 million in FY25**[21](index=21&type=chunk) [Non-GAAP Financial Measures](index=2&type=section&id=Non-GAAP%20Financial%20Measures) [Explanation of Non-GAAP Measures](index=2&type=section&id=Explanation%20of%20Non-GAAP%20Measures) Jabil uses non-GAAP measures like core operating income and adjusted free cash flow to offer investors an alternative perspective on its core manufacturing operations, excluding certain U.S. GAAP items for comparable evaluation - Non-GAAP measures facilitate evaluation of Jabil's core operating performance, offering an additional method for assessing operating income, earnings, diluted EPS, and free cash flow from its core manufacturing operations[9](index=9&type=chunk)[10](index=10&type=chunk) - Management uses non-GAAP financial measures for operating decisions, assessing business performance, and as a factor in determining certain employee incentive compensation[10](index=10&type=chunk) - A normalized core tax rate is determined annually for non-GAAP income tax provision to ensure consistency across reporting periods, based on full-year financial projections and tax considerations[11](index=11&type=chunk) [Reconciliation of GAAP to Non-GAAP Measures](index=7&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Measures) Jabil provides detailed reconciliation of U.S. GAAP to non-GAAP measures, illustrating adjustments for amortization, stock-based compensation, restructuring, and divestiture gains/losses, impacting reported operating income, net income, and diluted EPS Core Operating Income Reconciliation | Metric | Q4 FY25 | Q4 FY24 | FY25 | FY24 | | :-------------------------- | :-------- | :-------- | :------- | :------- | | Operating income (U.S. GAAP) | $337 | $318 | $1,182 | $2,013 | | Adjustments to operating income | $182 | $83 | $438 | -$425 | | Core operating income (Non-GAAP) | $519 | $401 | $1,620 | $1,588 | Core Earnings Reconciliation | Metric | Q4 FY25 | Q4 FY24 | FY25 | FY24 | | :---------------------------------- | :-------- | :-------- | :------- | :------- | | Net income attributable to Jabil Inc. (U.S. GAAP) | $218 | $138 | $657 | $1,388 | | Core earnings (Non-GAAP) | $360 | $270 | $1,082 | $1,056 | Core Diluted EPS Reconciliation | Metric | Q4 FY25 | Q4 FY24 | FY25 | FY24 | | :---------------------------------- | :-------- | :-------- | :------- | :------- | | Diluted earnings per share (U.S. GAAP) | $1.99 | $1.18 | $5.92 | $11.17 | | Diluted core earnings per share (Non-GAAP) | $3.29 | $2.30 | $9.75 | $8.49 | [Adjusted Free Cash Flow](index=8&type=section&id=Adjusted%20Free%20Cash%20Flow) Jabil reported an adjusted free cash flow of $1.318 billion for FY25, an increase from $1.055 billion in FY24, demonstrating strong cash generation despite capital expenditures | Metric | FY25 (Unaudited) | FY24 | Change (YoY) | | :---------------------------------- | :--------------- | :----------- | :----------- | | Net cash provided by operating activities (U.S. GAAP) | $1,640 million | $1,716 million | -$76 million | | Acquisition of property, plant and equipment ("PP&E") | -$468 million | -$784 million | +$316 million | | Proceeds and advances from sale of PP&E | $146 million | $123 million | +$23 million | | Adjusted free cash flow (Non-GAAP) | $1,318 million | $1,055 million | +$263 million | - The calculation of adjusted free cash flow includes customer co-investment in PP&E, where cash payments for acquisition are recognized, and reimbursements are recognized as proceeds from sale[24](index=24&type=chunk) [Company Information & Disclosures](index=2&type=section&id=Company%20Information%20%26%20Disclosures) [About Jabil](index=3&type=section&id=About%20Jabil) Jabil (NYSE: JBL) is a global manufacturing solutions provider with over 50 years of experience, offering comprehensive engineering, supply chain, and manufacturing services across more than 100 sites worldwide, committed to sustainable processes and diverse communities - Jabil is a trusted partner for top brands, providing comprehensive engineering, supply chain, and manufacturing solutions[14](index=14&type=chunk) - With over **50 years of experience** and a network of over **100 sites worldwide**, Jabil combines global reach with local expertise[14](index=14&type=chunk) - Jabil is committed to building sustainable processes that minimize environmental impact and foster vibrant and diverse communities[14](index=14&type=chunk) [Investor Relations & Media Contacts](index=3&type=section&id=Investor%20Relations%20%26%20Media%20Contacts) Contact information for Jabil's Investor Relations (Adam Berry) and Media Relations (Timur Aydin) is provided for stakeholder inquiries - Investor Contact: **Adam Berry**, Senior Vice President, Investor Relations and Corporate Affairs (Adam_Berry@jabil.com)[15](index=15&type=chunk) - Media Contact: **Timur Aydin**, Senior Director, Enterprise Marketing and Communications (publicrelations@jabil.com)[15](index=15&type=chunk) [Conference Call & Replay Information](index=3&type=section&id=Conference%20Call%20%26%20Replay%20Information) Jabil held a conference call on September 25, 2025, to discuss earnings, with a live audio webcast and slide presentation available on the Investor Relations website, where an archived replay is also accessible - A conference call was held on **September 25, 2025, at 8:30 a.m. ET** to discuss Q4 and FY25 earnings and provide an investor briefing[13](index=13&type=chunk) - The live audio webcast and accompanying slide presentation are available on Jabil's Investor Relations website (https://investors.jabil.com), with an archived replay also accessible[13](index=13&type=chunk) [Forward-Looking Statements](index=2&type=section&id=Forward-Looking%20Statements) This release contains forward-looking statements regarding Jabil's anticipated financial results and future performance, based on current expectations and subject to risks and uncertainties that could cause actual outcomes to differ materially, with no obligation to update - The statements in this release are based on current expectations, forecasts, and assumptions involving risks and uncertainties that could cause actual outcomes and results to differ materially[7](index=7&type=chunk) - Risk factors include, but are not limited to, managing production and demand, dependence on limited customers/suppliers, changes in technology, international operations, regulatory risks, financial risks, and global events[7](index=7&type=chunk) - Jabil assumes no obligation to update these forward-looking statements[7](index=7&type=chunk)

[Executive Summary](index=1&type=section&id=Executive%20Summary) BlackBerry delivered year-over-year revenue growth, expanded gross margins, and reduced operating expenses, achieving GAAP profitability for Q2 FY26 [Overview of Q2 FY26 Results](index=1&type=section&id=Overview%20of%20Q2%20FY26%20Results) BlackBerry delivered year-over-year revenue growth, expanded gross margins, and reduced operating expenses, achieving GAAP profitability for the second consecutive quarter in Q2 FY26. Both the QNX and Secure Communications divisions exceeded expectations and raised full-year guidance, while the company also returned $20 million to shareholders - BlackBerry delivered **year-over-year revenue growth**, expanded **gross margins**, and reduced **operating expenses**, achieving a **second consecutive quarter of GAAP profitability**[3](index=3&type=chunk) - QNX division recorded a **'rule of 40' quarter** and made progress across key growth initiatives. Secure Communications division **exceeded expectations** at both the top and bottom line[3](index=3&type=chunk) - The company returned **$20 million** to shareholders as part of a **share buyback program**[5](index=5&type=chunk) [Second Quarter Fiscal 2026 Financial Highlights](index=1&type=section&id=Second%20Quarter%20Fiscal%202026%20Financial%20Highlights) BlackBerry exceeded Q2 FY26 revenue guidance, achieving 3% YoY growth, 75% gross margin, and positive GAAP operating income [Overall Company Performance](index=1&type=section&id=Overall%20Company%20Performance) BlackBerry's total revenue for Q2 FY26 exceeded guidance at $129.6 million, marking a 3% year-over-year increase. The company also saw its GAAP and adjusted gross margin rise by 4 percentage points year-over-year to 75%, and achieved GAAP Operating Income of $11.5 million and adjusted EBITDA of $25.9 million Q2 FY26 Overall Company Financial Performance | Metric | Value (Millions USD) | YoY Change | | :-------------------------------- | :------------------- | :--------- | | Total Company Revenue | $129.6 | +3% | | Total Company GAAP Gross Margin | 75% | +4 ppts | | Total Company Adjusted Gross Margin | 75% | +4 ppts | | Total Company GAAP Operating Income | $11.5 | +$9.3 million | | Total Company Adjusted EBITDA | $25.9 | Exceeded guidance | | Adjusted EBITDA as % of Revenue | 20% | | - BlackBerry achieved **GAAP net income of $13.3 million** and **non-GAAP basic earnings per share of $0.04**, beating previously provided guidance[10](index=10&type=chunk) - Operating cash flow for the second quarter was **positive $3.4 million**, beating expectations[10](index=10&type=chunk) [Segment Performance](index=1&type=section&id=Segment%20Performance) In Q2 FY26, the QNX division reported strong performance with revenue growing 15% year-over-year to $63.1 million and adjusted EBITDA of $20.5 million. The Secure Communications division, despite a 10% year-over-year revenue decrease to $59.9 million, improved its adjusted gross margin to 66% and saw its Annual Recurring Revenue (ARR) increase. Licensing revenue was $6.6 million Q2 FY26 Segment Financial Performance | Segment | Revenue (Millions USD) | YoY Growth | Adj. Gross Margin | Adj. EBITDA (Millions USD) | | :---------------------- | :------------------- | :--------- | :---------------- | :------------------------- | | QNX | $63.1 | +15% | 83% | $20.5 | | Secure Communications | $59.9 | -10% | 66% | $9.7 | | Licensing | $6.6 | | | $5.6 | - Secure Communications ARR increased year-over-year and sequentially to **$213 million**[6](index=6&type=chunk) - Secure Communications DBNRR was flat year-over-year, and increased by **1 percentage point sequentially to 93%**[6](index=6&type=chunk) [Business Highlights & Strategic Announcements](index=2&type=section&id=Business%20Highlights%20%26%20Strategic%20Announcements) BlackBerry announced key product developments and strategic partnerships, including NVIDIA DRIVE AGX Thor integration with QNX OS for Safety 8 and BSI certification for UEM [Key Developments and Partnerships](index=2&type=section&id=Key%20Developments%20and%20Partnerships) BlackBerry announced key product developments and partnerships, including the general availability of the NVIDIA DRIVE AGX Thor development kit integrated with QNX® OS for Safety 8, and the launch of QNX OS for Safety 8. The company also achieved BSI certification for BlackBerry UEM deployment and expanded cybersecurity training in Malaysia - QNX and NVIDIA announced general availability of NVIDIA DRIVE AGX Thor development kit, integrated with **QNX® OS for Safety 8** to accelerate autonomous drive systems development[10](index=10&type=chunk) - QNX launched its foundational, safety-certified **QNX OS for Safety 8** to streamline the development and certification of safety- and security-critical embedded systems[10](index=10&type=chunk) - BlackBerry became the **first Mobile Device Management (MDM) vendor to achieve BSI certification** for BlackBerry UEM deployment with Apple Indigo and Samsung Knox[10](index=10&type=chunk) [Financial Outlook](index=2&type=section&id=Financial%20Outlook) BlackBerry provided Q3 FY26 and full fiscal year 2026 guidance, projecting continued revenue growth and positive adjusted EBITDA across all segments [Q3 FY26 Guidance](index=2&type=section&id=Q3%20FY26%20Guidance) For the third fiscal quarter ending November 30, 2025, BlackBerry projects total revenue between $132-$140 million, with QNX revenue at $66-$70 million and Secure Communications revenue at $60-$64 million. Total company adjusted EBITDA is expected to be $20-$28 million Q3 FY26 Financial Guidance | Metric | Q3 FY26 Guidance (Millions USD) | | :-------------------------------------- | :----------------------------- | | Total BlackBerry Revenue | $132 - $140 | | QNX Revenue | $66 - $70 | | Secure Communications Revenue | $60 - $64 | | Licensing Revenue | Approximately $6 | | QNX Segment Adjusted EBITDA | $13 - $17 | | Secure Communications Segment Adjusted EBITDA | $12 - $16 | | Licensing Segment Adjusted EBITDA | Approximately $5 | | Total Company Adjusted EBITDA | $20 - $28 | | Non-GAAP Basic EPS | $0.02 – $0.04 | | Operating Cash Flow | $10 – $20 | [Full Fiscal Year FY26 Guidance](index=2&type=section&id=Full%20Fiscal%20Year%20FY26%20Guidance) For the full fiscal year 2026 ending February 28, 2026, BlackBerry anticipates total revenue of $519-$541 million, with QNX revenue of $256-$270 million and Secure Communications revenue of $239-$247 million. Total company adjusted EBITDA is expected to be $82-$101 million Full Fiscal Year FY26 Financial Guidance | Metric | Full FY26 Guidance (Millions USD) | | :-------------------------------------- | :------------------------------- | | Total BlackBerry Revenue | $519 - $541 | | QNX Revenue | $256 - $270 | | Secure Communications Revenue | $239 - $247 | | Licensing Revenue | Approximately $24 | | QNX Segment Adjusted EBITDA | $64 - $73 | | Secure Communications Segment Adjusted EBITDA | $38 - $48 | | Licensing Segment Adjusted EBITDA | Approximately $20 | | Total Company Adjusted EBITDA | $82 - $101 | | Non-GAAP Basic EPS | $0.11 – $0.15 | | Operating Cash Flow | $35 - $40 | [Consolidated Financial Statements](index=5&type=section&id=Consolidated%20Financial%20Statements) BlackBerry's Q2 FY26 consolidated statements show improved net income, stable assets with reduced liabilities, and positive operating cash flow [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) For the three months ended August 31, 2025, BlackBerry reported revenue of $129.6 million, a gross margin of 74.5%, and net income of $13.3 million, resulting in basic earnings per share of $0.02. This marks a significant improvement from a net loss of $(19.7) million in the prior year period Consolidated Statements of Operations (Selected Data) | Metric | 3 Months Ended Aug 31, 2025 (Millions USD) | 3 Months Ended Aug 31, 2024 (Millions USD) | 6 Months Ended Aug 31, 2025 (Millions USD) | 6 Months Ended Aug 31, 2024 (Millions USD) | | :-------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Revenue | $129.6 | $126.2 | $251.3 | $249.6 | | Gross margin % | 74.5% | 70.2% | 74.4% | 71.6% | | Operating income (loss) | $11.5 | $2.2 | $13.5 | $(10.7) | | Net income (loss) | $13.3 | $(19.7) | $15.2 | $(61.1) | | Basic earnings (loss) per share | $0.02 | $(0.03) | $0.03 | $(0.10) | [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) As of August 31, 2025, BlackBerry reported total assets of $1,184.1 million, a decrease from $1,295.6 million at February 28, 2025. Current assets stood at $507.2 million, while total liabilities were $459.0 million, and shareholders' equity increased slightly to $725.1 million Consolidated Balance Sheets (Selected Data) | Metric | As at Aug 31, 2025 (Millions USD) | As at Feb 28, 2025 (Millions USD) | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Total Assets | $1,184.1 | $1,295.6 | | Current Assets | $507.2 | $591.5 | | Cash and cash equivalents | $276.4 | $266.7 | | Short-term investments | $14.1 | $71.1 | | Total Liabilities | $459.0 | $575.7 | | Shareholders' Equity | $725.1 | $719.9 | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended August 31, 2025, net cash used in operating activities was $(14.1) million, an improvement from $(31.1) million in the prior year. Net cash provided by investing activities was $52.8 million, while net cash used in financing activities was $(28.8) million, primarily due to common shares repurchased Consolidated Statements of Cash Flows (Selected Data) | Metric | 6 Months Ended Aug 31, 2025 (Millions USD) | 6 Months Ended Aug 31, 2024 (Millions USD) | | :-------------------------------------------------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Net cash used in operating activities | $(14.1) | $(31.1) | | Net cash provided by investing activities | $52.8 | $16.6 | | Net cash provided by (used in) financing activities | $(28.8) | $1.5 | | Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents during the period | $10.3 | $(12.8) | | Cash, cash equivalents, restricted cash, and restricted cash equivalents, end of period | $290.6 | $187.7 | - Common shares repurchased amounted to **$30.0 million** during the six months ended August 31, 2025[25](index=25&type=chunk) [Segment Results and Adjusted EBITDA Reconciliation](index=8&type=section&id=Segment%20Results%20and%20Adjusted%20EBITDA%20Reconciliation) This section details QNX, Secure Communications, and Licensing segment revenues and adjusted EBITDA for Q2 FY26 and Q2 FY25, highlighting year-over-year performance changes [Three Months Ended August 31, 2025](index=8&type=section&id=Three%20Months%20Ended%20August%2031%2C%202025) For the three months ended August 31, 2025, the QNX segment reported $63.1 million in revenue and $20.5 million in adjusted EBITDA. The Secure Communications segment had $59.9 million in revenue and $9.7 million in adjusted EBITDA, while Licensing contributed $6.6 million in revenue and $5.6 million in adjusted EBITDA Segment Performance (Q2 FY26) | Segment | Revenue (Millions USD) | Adj. Gross Margin (Millions USD) | Adj. EBITDA (Millions USD) | | :--------------------- | :--------------------- | :------------------------------- | :------------------------- | | QNX | $63.1 | $52.4 | $20.5 | | Secure Communications | $59.9 | $39.7 | $9.7 | | Licensing | $6.6 | $5.1 | $5.6 | | Total Segment Adjusted EBITDA | $35.8 | | | [Three Months Ended August 31, 2024](index=9&type=section&id=Three%20Months%20Ended%20August%2031%2C%202024) For the three months ended August 31, 2024, the QNX segment generated $54.7 million in revenue and $13.1 million in adjusted EBITDA. The Secure Communications segment reported $66.5 million in revenue and $7.4 million in adjusted EBITDA, with Licensing revenue at $5.0 million and adjusted EBITDA at $4.0 million Segment Performance (Q2 FY25) | Segment | Revenue (Millions USD) | Adj. Gross Margin (Millions USD) | Adj. EBITDA (Millions USD) | | :--------------------- | :--------------------- | :------------------------------- | :------------------------- | | QNX | $54.7 | $45.4 | $13.1 | | Secure Communications | $66.5 | $40.4 | $7.4 | | Licensing | $5.0 | $3.4 | $4.0 | | Total Segment Adjusted EBITDA | $25.0 | | | - Reconciliation of Total Segment Adjusted EBITDA to Consolidated income before income taxes for Q2 FY26 was **$13.4 million** (from **$35.8 million Adjusted EBITDA**) and for Q2 FY25 was **$4.9 million** (from **$25.0 million Adjusted EBITDA**), after various adjustments[30](index=30&type=chunk) [Non-GAAP Financial Measures Reconciliation](index=2&type=section&id=Non-GAAP%20Financial%20Measures%20Reconciliation) This section explains BlackBerry's use of non-GAAP financial measures and provides detailed reconciliations for adjusted gross margin, net income, EPS, and EBITDA for both quarterly and half-yearly periods [Introduction to Non-GAAP Measures](index=2&type=section&id=Introduction%20to%20Non-GAAP%20Measures) BlackBerry utilizes non-GAAP financial measures to provide a consistent basis for comparison across accounting periods and to help management and readers understand the company's operating results and underlying operational trends. However, the company cautions that these non-GAAP measures may not be comparable to similarly titled measures reported by other companies - Non-GAAP financial measures provide a consistent basis for comparison across accounting periods and are useful in understanding operating results and underlying operational trends[33](index=33&type=chunk) - Readers are cautioned that non-GAAP measures do not have any standardized meaning prescribed by U.S. GAAP and are therefore unlikely to be comparable to similarly titled measures reported by other companies[34](index=34&type=chunk) - The company does not provide a reconciliation of expected Adjusted EBITDA and expected Non-GAAP basic EPS for Q3 FY26 to GAAP measures due to the inability to predict certain uncertain items like restructuring and impairment charges[11](index=11&type=chunk) [Three Months Ended August 31, 2025 and 2024](index=10&type=section&id=Three%20Months%20Ended%20August%2031%2C%202025%20and%202024) This section provides reconciliations for various non-GAAP measures for the three months ended August 31, 2025 and 2024, including adjusted gross margin, adjusted operating expense, adjusted corporate operating costs, adjusted net income, adjusted EPS, and adjusted EBITDA, detailing the impact of non-recurring and non-cash items Adjusted Gross Margin Reconciliation (Q2 FY26 vs Q2 FY25) | Metric | Aug 31, 2025 (Millions USD) | Aug 31, 2024 (Millions USD) | | :-------------------------- | :-------------------------- | :-------------------------- | | Gross margin | $96.6 | $88.6 | | Stock compensation expense | $0.6 | $0.6 | | Adjusted gross margin | $97.2 | $89.2 | | Gross margin % | 74.5% | 70.2% | | Adjusted gross margin % | 75.0% | 70.7% | Adjusted Net Income (Loss) and EPS Reconciliation (Q2 FY26 vs Q2 FY25) | Metric | Aug 31, 2025 (Millions USD) | Basic EPS | Aug 31, 2024 (Millions USD) | Basic EPS | | :-------------------------- | :-------------------------- | :-------- | :-------------------------- | :-------- | | Net income (loss) | $13.3 | $0.02 | $(19.7) | $(0.03) | | Restructuring charges | $3.4 | | $0.9 | | | Stock compensation expense | $5.9 | | $7.1 | | | Acquired intangibles amortization | $1.1 | | $8.5 | | | LLA impairment charge | $0.5 | | $0.6 | | | Adjusted net income (loss) | $24.2 | $0.04 | $(2.6) | $0.00 | Adjusted EBITDA Reconciliation (Q2 FY26 vs Q2 FY25) | Metric | Aug 31, 2025 (Millions USD) | Aug 31, 2024 (Millions USD) | | :-------------------------- | :-------------------------- | :-------------------------- | | Operating income | $11.5 | $2.2 | | Total non-GAAP adjustments to operating income | $10.9 | $8.5 | | Adjusted operating income | $22.4 | $10.7 | | Amortization (net of acquired intangibles) | $3.5 | $4.4 | | Adjusted EBITDA | $25.9 | $15.1 | | Adjusted EBITDA margin % | 20.0% | 12.0% | [Six Months Ended August 31, 2025 and 2024](index=12&type=section&id=Six%20Months%20Ended%20August%2031%2C%202025%20and%202024) This section provides reconciliations for various non-GAAP measures for the six months ended August 31, 2025 and 2024, including adjusted gross margin, adjusted operating expense, adjusted corporate operating costs, adjusted net income, adjusted EPS, and adjusted EBITDA, offering a half-year perspective on non-GAAP performance and free cash flow Adjusted Gross Margin Reconciliation (H1 FY26 vs H1 FY25) | Metric | Aug 31, 2025 (Millions USD) | Aug 31, 2024 (Millions USD) | | :-------------------------- | :-------------------------- | :-------------------------- | | Gross margin | $186.9 | $178.6 | | Stock compensation expense | $1.1 | $1.3 | | Adjusted gross margin | $188.0 | $179.9 | | Gross margin % | 74.4% | 71.6% | | Adjusted gross margin % | 74.8% | 72.1% | Adjusted Net Income (Loss) and EPS Reconciliation (H1 FY26 vs H1 FY25) | Metric | Aug 31, 2025 (Millions USD) | Basic EPS | Aug 31, 2024 (Millions USD) | Basic EPS | | :-------------------------- | :-------------------------- | :-------- | :-------------------------- | :-------- | | Net income (loss) | $15.2 | $0.03 | $(61.1) | $(0.10) | | Restructuring charges | $6.3 | | $8.2 | | | Stock compensation expense | $11.6 | | $14.8 | | | Acquired intangibles amortization | $2.8 | | $17.1 | | | LLA impairment charge | $0.6 | | $4.1 | | | Adjusted net income (loss) | $36.5 | $0.06 | $(16.9) | $(0.03) | Adjusted EBITDA and Free Cash Flow Reconciliation (H1 FY26 vs H1 FY25) | Metric | Aug 31, 2025 (Millions USD) | Aug 31, 2024 (Millions USD) | | :---------------------------------------- | :-------------------------- | :-------------------------- | | Adjusted EBITDA | $42.3 | $25.6 | | Adjusted EBITDA margin % | 17% | 10% | | Net cash provided by (used in) operating activities | $3.4 | $(16.0) | | Acquisition of property, plant and equipment | $(0.8) | $(0.5) | | Free cash flow (usage) | $2.6 | $(16.5) | [Key Metrics](index=14&type=section&id=Key%20Metrics) BlackBerry monitors Secure Communications operational metrics, including Annual Recurring Revenue (ARR) and Dollar-Based Net Retention Rate (DBNRR), to assess performance [Secure Communications Operational Metrics](index=14&type=section&id=Secure%20Communications%20Operational%20Metrics) BlackBerry monitors specific operational metrics for its Secure Communications segment, including Annual Recurring Revenue (ARR) and Dollar-Based Net Retention Rate (DBNRR), to measure current and estimated future performance, noting that these are non-standardized measures Secure Communications Key Metrics (Q2 FY26) | Metric | Aug 31, 2025 (Millions USD) | | :---------------------------------------- | :-------------------------- | | Secure Communications Annual Recurring Revenue | $213 | | Secure Communications Dollar-Based Net Retention Rate | 93% | - Readers are cautioned that Secure Communications ARR and DBNRR do not have any standardized meaning and are unlikely to be comparable to similarly titled measures reported by other companies[45](index=45&type=chunk) [Corporate Information](index=3&type=section&id=Corporate%20Information) This section provides details on BlackBerry's Q2 FY26 conference call, an overview of the company's intelligent software and services, and important disclosures regarding forward-looking statements [Conference Call and Webcast](index=3&type=section&id=Conference%20Call%20and%20Webcast) BlackBerry hosted a conference call and live webcast on September 25, 2025, at 8:00 a.m. ET to discuss its financial results, with a replay available for those unable to attend live - A conference call and live webcast were held on **September 25, 2025**, beginning at **8:00 a.m. ET**[12](index=12&type=chunk) - A replay of the conference call was made available at approximately **11:00 a.m. ET** on the same day[13](index=13&type=chunk) [About BlackBerry](index=3&type=section&id=About%20BlackBerry) BlackBerry provides intelligent software and services to enterprises and governments, specializing in high-performance foundational software for major automakers and industrial giants. The company delivers operational resiliency through a comprehensive, highly secure, and extensively certified portfolio for mobile fortification, mission-critical communications, and critical events management - BlackBerry provides intelligent software and services that power enterprises and governments[14](index=14&type=chunk) - The company's high-performance foundational software enables major automakers and industrial giants to unlock transformative applications, drive new revenue streams, and launch innovative business models without sacrificing safety, security, and reliability[14](index=14&type=chunk) - BlackBerry delivers operational resiliency with a comprehensive, highly secure, and extensively certified portfolio for mobile fortification, mission-critical communications, and critical events management[14](index=14&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This news release contains forward-looking statements regarding BlackBerry's plans, strategies, and objectives, which are based on estimates and assumptions. These statements are subject to various factors and risks, including competition, product development, cybersecurity, and macroeconomic conditions, which could cause actual results to differ materially from expectations. Readers are cautioned not to place undue reliance on these statements - The news release contains forward-looking statements regarding BlackBerry's plans, strategies, and objectives, identified by words like 'expect', 'anticipate', and 'estimate'[15](index=15&type=chunk)[16](index=16&type=chunk) - Forward-looking statements are based on estimates and assumptions and are subject to many factors that could cause actual results to differ materially, including competition, product development, government demand, cybersecurity, and macroeconomic conditions[16](index=16&type=chunk)[17](index=17&type=chunk) - Readers should consider these risk factors carefully and not place undue reliance on forward-looking statements, which are made only as of the date of the release and are not subject to updates unless required by law[18](index=18&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 20-F (Mark One) ☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(B) OR 12(G) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended May 31, 2025. OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EX ...

[Executive Summary](index=1&type=section&id=Executive%20Summary) [Second Quarter Highlights](index=1&type=section&id=Second%20Quarter%20Highlights) CarMax reported a challenging Q2 FY26 with decreases in retail and wholesale unit sales and net earnings per diluted share. Despite this, the company maintained solid unit margins, initiated significant SG&A reductions, and continued share repurchases - Retail used unit sales decreased **5.4%** and comparable store used unit sales decreased **6.3%**; wholesale units decreased **2.2%**[3](index=3&type=chunk) - Solid unit margins with gross profit per retail used unit of **$2,216**, gross profit per wholesale unit of **$993**, and Extended Protection Plans (EPP) margin per retail unit of **$576**, all in line with the prior year's second quarter[3](index=3&type=chunk) - Bought **293,000** vehicles from consumers and dealers, a decrease of **2.4%**[3](index=3&type=chunk) - SG&A decreased **1.6%** to **$601.1 million**. Established plans for incremental SG&A reductions of at least **$150 million** over the next 18 months[3](index=3&type=chunk) - CarMax Auto Finance (CAF) income decreased **11.2%** to **$102.6 million** as an increase in the provision for loan losses outweighed growth in the net interest margin percentage[3](index=3&type=chunk) - Net earnings per diluted share of **$0.64** versus **$0.85** a year ago[3](index=3&type=chunk) - Repurchased **$180.0 million** in shares of common stock, continuing an accelerated quarterly pace compared to fiscal year 2025[3](index=3&type=chunk) - Launched a new brand positioning campaign, 'Wanna Drive?', emphasizing customer empowerment and the omni-channel experience[3](index=3&type=chunk) [CEO Commentary](index=2&type=section&id=CEO%20Commentary) [Strategic Outlook and Initiatives](index=2&type=section&id=Strategic%20Outlook%20and%20Initiatives) CEO Bill Nash acknowledged a challenging quarter but expressed confidence in the long-term strategy and earnings model. He highlighted the new 'Wanna Drive?' brand campaign emphasizing customer empowerment and reiterated the commitment to driving SG&A efficiency with a target of at least $150 million in incremental reductions - Expressed confidence in the long-term strategy and the strength of the earnings model[4](index=4&type=chunk) - Highlighted the recent launch of the new brand positioning campaign 'Wanna Drive?' to bring the omni-channel experience to life and empower customers[4](index=4&type=chunk) - Committed to driving SG&A efficiency, targeting at least **$150 million** in incremental SG&A reductions over the next 18 months[4](index=4&type=chunk) [Second Quarter Business Performance Review](index=2&type=section&id=Second%20Quarter%20Business%20Performance%20Review) [Sales Performance](index=2&type=section&id=Sales%20Performance) CarMax experienced a decline in combined retail and wholesale unit sales, with retail used vehicle sales decreasing by 5.4% and wholesale by 2.2%. Total retail used vehicle revenues also fell by 7.2%. The company bought fewer vehicles from consumers and dealers overall. Digital capabilities supported 80% of retail unit sales - Combined retail and wholesale used vehicle unit sales decreased **4.1%** from the prior year's second quarter to **338,031 units**[5](index=5&type=chunk) - Total retail used vehicle unit sales decreased **5.4%** to **199,729**, and comparable store used unit sales decreased **6.3%**. Total retail used vehicle revenues decreased **7.2%**[6](index=6&type=chunk) - Total wholesale vehicle unit sales decreased **2.2%** to **138,302**, with total wholesale revenues declining **0.4%**, partially offset by a **1.6%** increase in average selling price[7](index=7&type=chunk) - Bought **293,000** vehicles from consumers and dealers, down **2.4%** year-over-year[8](index=8&type=chunk) - Digital capabilities supported **80%** of retail unit sales, with omni sales at **68%** and online retail sales at **12%**[9](index=9&type=chunk) [Gross Profit Analysis](index=2&type=section&id=Gross%20Profit%20Analysis) Total gross profit decreased by 5.6% year-over-year. While gross profit per retail used unit and wholesale unit remained consistent with the prior year, the overall decline was driven by lower unit sales and a reduction in EPP revenues - Total gross profit was **$717.7 million**, down **5.6%** versus last year's second quarter[9](index=9&type=chunk) - Retail used vehicle gross profit decreased **7.6%**, but retail gross profit per used unit was **$2,216**, in line with the prior year[9](index=9&type=chunk) - Wholesale vehicle gross profit decreased **0.4%**, with gross profit per unit at **$993**, consistent with last year[10](index=10&type=chunk) - Other gross profit decreased **4.2%**, primarily reflecting a reduction in EPP revenues due to lower retail unit sales[11](index=11&type=chunk) [SG&A Expenses](index=2&type=section&id=SG%26A%20Expenses) SG&A expenses decreased by 1.6% to $601.1 million, mainly due to a reduction in share-based compensation. However, SG&A as a percentage of gross profit increased to 83.8% from 80.3% due to the decline in gross profit. The company plans for at least $150 million in SG&A reductions over the next 18 months - SG&A expenses decreased **1.6%** or **$9.5 million** to **$601.1 million**, primarily driven by a reduction in share-based compensation[12](index=12&type=chunk) - SG&A as a percent of gross profit was **83.8%** in the second quarter compared to **80.3%** in the prior year's second quarter, driven by the decline in gross profit[12](index=12&type=chunk) - Established plans for SG&A reductions of at least **$150 million** over the next 18 months, with the vast majority materializing by the end of fiscal 2027[13](index=13&type=chunk) [CarMax Auto Finance (CAF) Performance](index=3&type=section&id=CarMax%20Auto%20Finance%20(CAF)%20Performance) CAF income decreased by 11.2% to $102.6 million, primarily due to a significant increase in the provision for loan losses ($142.2 million vs. $112.6 million YoY). This increase was driven by worsening performance in 2022 and 2023 loan vintages, though these remain profitable. Underwriting standards tightened after April 2024 are performing as expected. CAF's total interest margin percentage improved to 6.6%, and it financed 42.6% of units sold - CAF income decreased **11.2%** to **$102.6 million**, as an increase in the provision for loan losses outweighed growth in CAF's net interest margin percentage[14](index=14&type=chunk) - Provision for loan losses was **$142.2 million** (vs. **$112.6 million** YoY), including a **$71.3 million** increase due to worsening performance among 2022 and 2023 vintages[14](index=14&type=chunk) - CAF's total interest margin percentage was **6.6%** of average auto loans outstanding (up **50 basis points** YoY), and CAF financed **42.6%** of units sold (up from **42.0%** YoY)[15](index=15&type=chunk) - Executed a **$900 million** non-prime securitization transaction post-quarter, expecting a gain on sale of approximately **$25 million to $30 million** in Q3 income[16](index=16&type=chunk) [Share Repurchase Activity](index=3&type=section&id=Share%20Repurchase%20Activity) CarMax repurchased 2.9 million shares of common stock for $180.0 million during Q2 FY26, continuing an accelerated pace compared to FY25. As of August 31, 2025, $1.56 billion remained available under the current authorization - Repurchased **2.9 million** shares of common stock for **$180.0 million** during the second quarter of fiscal year 2026[17](index=17&type=chunk) - As of August 31, 2025, **$1.56 billion** remained available for repurchase under the outstanding authorization[17](index=17&type=chunk) [Location Openings](index=3&type=section&id=Location%20Openings) During the second quarter of fiscal 2026, CarMax opened three new store locations and one stand-alone reconditioning/auction center - Opened **three** new store locations in Tuscaloosa, Alabama, El Cajon, California, and Hagerstown, Maryland[18](index=18&type=chunk) - Opened **one** stand-alone reconditioning/auction center located in New Kent County, Virginia[18](index=18&type=chunk) [Supplemental Financial Information](index=4&type=section&id=Supplemental%20Financial%20Information) [Sales Components](index=4&type=section&id=Sales%20Components) Total net sales and operating revenues for Q2 FY26 decreased by 6.0% to $6,594.7 million, primarily driven by a 7.2% decline in used vehicle sales and a 0.4% decline in wholesale vehicle sales. Other sales and revenues also saw a 4.2% decrease Sales Components (Three Months Ended August 31) | (In millions) | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Used vehicle sales | $5,270.7 | $5,677.1 | (7.2)% | | Wholesale vehicle sales | $1,149.6 | $1,154.5 | (0.4)% | | Other sales and revenues | $174.4 | $182.0 | (4.2)% | | Total net sales and operating revenues | $6,594.7 | $7,013.5 | (6.0)% | [Unit Sales](index=4&type=section&id=Unit%20Sales) Used vehicle unit sales decreased by 5.4% to 199,729 units, and wholesale vehicle unit sales decreased by 2.2% to 138,302 units for the three months ended August 31, 2025 Unit Sales (Three Months Ended August 31) | | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Used vehicles | 199,729 | 211,020 | (5.4)% | | Wholesale vehicles | 138,302 | 141,458 | (2.2)% | [Average Selling Prices](index=4&type=section&id=Average%20Selling%20Prices) The average selling price for used vehicles decreased by 1.0% to $25,993, while the average selling price for wholesale vehicles increased by 1.6% to $7,891 for the three months ended August 31, 2025 Average Selling Prices (Three Months Ended August 31) | | 2025 $ | 2024 $ | Change | | :--- | :--- | :--- | :--- | | Used vehicles | $25,993 | $26,245 | (1.0)% | | Wholesale vehicles | $7,891 | $7,768 | 1.6 % | [Vehicle Sales Changes](index=4&type=section&id=Vehicle%20Sales%20Changes) For the three months ended August 31, 2025, used vehicle units and revenues declined by 5.4% and 7.2% respectively, while wholesale vehicle units and revenues also saw decreases of 2.2% and 0.4% Vehicle Sales Changes (Three Months Ended August 31) | | 2025 % | 2024 % | | :--- | :--- | :--- | | Used vehicle units | (5.4)% | 5.1 % | | Used vehicle revenues | (7.2)% | 1.5 % | | Wholesale vehicle units | (2.2)% | (0.3)% | | Wholesale vehicle revenues | (0.4)% | (12.7)% | [Comparable Store Used Vehicle Sales Changes](index=5&type=section&id=Comparable%20Store%20Used%20Vehicle%20Sales%20Changes) Comparable store used vehicle units decreased by 6.3% and revenues by 7.1% for the three months ended August 31, 2025, indicating a decline in sales performance at established locations Comparable Store Used Vehicle Sales Changes (Three Months Ended August 31) | | 2025 % | 2024 % | | :--- | :--- | :--- | | Used vehicle units | (6.3)% | 4.3 % | | Used vehicle revenues | (7.1)% | (0.2)% | [Used Vehicle Financing Penetration by Channel](index=5&type=section&id=Used%20Vehicle%20Financing%20Penetration%20by%20Channel) CAF's financing penetration increased slightly to 45.2% for Q2 FY26, while Tier 2 third-party financing decreased to 16.5%. Tier 3 financing saw a slight increase to 7.3%, and other financing remained stable at 31.0% Used Vehicle Financing Penetration by Channel (Three Months Ended August 31) | | 2025 % | 2024 % | | :--- | :--- | :--- | | CAF | 45.2 % | 44.6 % | | Tier 2 | 16.5 % | 17.7 % | | Tier 3 | 7.3 % | 6.7 % | | Other | 31.0 % | 31.0 % | | Total | 100.0 % | 100.0 % | [Selected Operating Ratios](index=5&type=section&id=Selected%20Operating%20Ratios) For Q2 FY26, gross profit as a percentage of net sales and operating revenues slightly increased to 10.9%, while CAF income remained stable at 1.6%. SG&A expenses as a percentage of revenues increased to 9.1%, and net earnings as a percentage of revenues decreased to 1.4% Selected Operating Ratios (Three Months Ended August 31, as % of Net Sales and Operating Revenues) | | 2025 % | 2024 % | | :--- | :--- | :--- | | Net sales and operating revenues | 100.0 | 100.0 | | Gross profit | 10.9 | 10.8 | | CarMax Auto Finance income | 1.6 | 1.6 | | Selling, general, and administrative expenses | 9.1 | 8.7 | | Earnings before income taxes | 1.9 | 2.5 | | Net earnings | 1.4 | 1.9 | [Gross Profit Details](index=6&type=section&id=Gross%20Profit%20Details) Total gross profit for Q2 FY26 decreased by 5.6% to $717.7 million. This was primarily due to a 7.6% decrease in used vehicle gross profit, while wholesale vehicle gross profit saw a minor decrease of 0.4% Gross Profit (Three Months Ended August 31) | (In millions) | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Used vehicle gross profit | $442.6 | $478.8 | (7.6)% | | Wholesale vehicle gross profit | $137.3 | $137.9 | (0.4)% | | Other gross profit | $137.8 | $143.8 | (4.2)% | | Total | $717.7 | $760.5 | (5.6)% | [Gross Profit per Unit](index=6&type=section&id=Gross%20Profit%20per%20Unit) Gross profit per used vehicle unit slightly decreased to $2,216, while gross profit per wholesale vehicle unit increased to $993 for Q2 FY26. Other gross profit per unit also saw an increase to $690 Gross Profit per Unit (Three Months Ended August 31) | | 2025 $ per unit | 2024 $ per unit | | :--- | :--- | :--- | | Used vehicle gross profit per unit | $2,216 | $2,269 | | Wholesale vehicle gross profit per unit | $993 | $975 | | Other gross profit per unit | $690 | $682 | [SG&A Expenses Breakdown](index=6&type=section&id=SG%26A%20Expenses%20Breakdown) Total SG&A expenses decreased by 1.6% to $601.1 million in Q2 FY26, primarily driven by a 30.1% reduction in share-based compensation expense. Compensation and benefits excluding share-based compensation saw a slight increase of 0.6% SG&A Expenses (Three Months Ended August 31) | (In millions) | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Compensation and benefits, excluding share-based compensation expense | $323.4 | $321.3 | 0.6 % | | Share-based compensation expense | $22.4 | $32.1 | (30.1)% | | Total compensation and benefits | $345.8 | $353.4 | (2.2)% | | Occupancy costs | $74.1 | $74.7 | (0.8)% | | Advertising expense | $63.7 | $63.0 | 1.2 % | | Other overhead costs | $117.5 | $119.5 | (1.7)% | | Total SG&A expenses | $601.1 | $610.6 | (1.6)% | | SG&A as a % of gross profit | 83.8 % | 80.3 % | 3.5 % | [Components of CAF Income and Other CAF Information](index=8&type=section&id=Components%20of%20CAF%20Income%20and%20Other%20CAF%20Information) CAF income decreased to $102.6 million due to a significant increase in the provision for loan losses to $142.2 million. Despite this, the total interest margin increased to $290.6 million, and the interest margin as a percentage of average auto loans outstanding improved to 6.6% Components of CAF Income (Three Months Ended August 31) | (In millions) | 2025 | 2024 | | :--- | :--- | :--- | | Interest and fee income | $489.8 | $464.5 | | Interest expense | ($199.2) | ($193.7) | | Total interest margin | $290.6 | $270.8 | | Provision for loan losses | ($142.2) | ($112.6) | | Total interest margin after provision for loan losses | $148.4 | $158.2 | | Total direct expenses | ($45.8) | ($42.6) | | CarMax Auto Finance income | $102.6 | $115.6 | Other CAF Information (Three Months Ended August 31) | | 2025 | 2024 | | :--- | :--- | :--- | | Average auto loans outstanding | $17,734.5 | $17,728.8 | | Total interest margin as a percent of average auto loans outstanding | 6.6 % | 6.1 % | | Net auto loans originated | $2,039.6 | $2,159.7 | | Net penetration rate | 42.6 % | 42.0 % | | Weighted average contract rate | 11.2 % | 11.5 % | | Ending allowance for loan losses | $507.3 | $500.8 | [Earnings Highlights](index=8&type=section&id=Earnings%20Highlights) Net earnings for Q2 FY26 decreased by 28.2% to $95.4 million, resulting in a diluted net earnings per share of $0.64, down from $0.85 in the prior year Earnings Highlights (Three Months Ended August 31) | (In millions except per share data) | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Net earnings | $95.4 | $132.8 | (28.2)% | | Diluted weighted average shares outstanding | 149.6 | 156.5 | (4.4)% | | Net earnings per diluted share | $0.64 | $0.85 | (24.7)% | [Corporate Information and Outlook](index=9&type=section&id=Corporate%20Information%20and%20Outlook) [Conference Call Information](index=9&type=section&id=Conference%20Call%20Information) CarMax hosted a conference call for investors on September 25, 2025, with webcast replay available until December 17, 2025 - Conference call for investors held on September 25, 2025, at 9:00 a.m. ET[33](index=33&type=chunk) - A live webcast and replay are available on investors.carmax.com through December 17, 2025[33](index=33&type=chunk)[34](index=34&type=chunk) [Third Quarter Fiscal 2026 Earnings Release Date](index=9&type=section&id=Third%20Quarter%20Fiscal%202026%20Earnings%20Release%20Date) CarMax plans to release its Q3 FY26 results on Thursday, December 18, 2025, before market open, followed by an investor conference call - Results for the third quarter ending November 30, 2025, are planned for release on Thursday, December 18, 2025, before the opening of trading on the New York Stock Exchange[35](index=35&type=chunk) - A conference call for investors is planned for 9:00 a.m. ET on the release date[35](index=35&type=chunk) [About CarMax](index=9&type=section&id=About%20CarMax) CarMax is the largest used auto retailer in the U.S., known for its omni-channel experience. In FY25, the company sold approximately 790,000 used vehicles and 540,000 wholesale vehicles, with CarMax Auto Finance originating over $8 billion in loans. CarMax operates more than 250 stores and employs over 30,000 associates - CarMax is the nation's largest retailer of used autos, offering a personalized omni-channel experience[36](index=36&type=chunk) - During fiscal year ended February 28, 2025, CarMax sold approximately **790,000** used vehicles and **540,000** wholesale vehicles[36](index=36&type=chunk) - CarMax Auto Finance originated more than **$8 billion** in auto loans during fiscal 2025, adding to its nearly **$18 billion** portfolio[36](index=36&type=chunk) - CarMax has more than **250** store locations and over **30,000** associates[36](index=36&type=chunk) [Forward-Looking Statements and Risk Factors](index=9&type=section&id=Forward-Looking%20Statements%20and%20Risk%20Factors) This section provides a cautionary note regarding forward-looking statements, highlighting that actual results may differ materially due to various risks and uncertainties. Key risk factors include changes in the competitive landscape, economic conditions, capital availability, reputation, vehicle prices, inventory, and the ability to realize benefits from strategic initiatives and manage credit losses - Statements about future business plans, operations, challenges, opportunities, or prospects are forward-looking statements[37](index=37&type=chunk) - Actual results could differ materially from anticipated results due to various risks and uncertainties[37](index=37&type=chunk) - Key risk factors include changes in the competitive landscape, general U.S. economic conditions (e.g., inflation, interest rates), availability/cost of capital, significant changes in vehicle prices, and the inability to realize benefits from omni-channel or technology initiatives (including AI)[39](index=39&type=chunk) - Other risks include greater credit losses for CAF's loan portfolio, changes in consumer credit availability, and factors related to the regulatory and legislative environment[39](index=39&type=chunk) [Investor and Media Contacts](index=11&type=section&id=Investor%20and%20Media%20Contacts) Contact information for investor relations and media inquiries is provided - Investors can contact David Lowenstein, Vice President, Investor Relations at investor_relations@carmax.com or (804) 747-0422 x7865[40](index=40&type=chunk) - Media inquiries can be directed to pr@carmax.com or (855) 887-2915[40](index=40&type=chunk) [Consolidated Financial Statements](index=12&type=section&id=Consolidated%20Financial%20Statements) [Consolidated Statements of Earnings](index=12&type=section&id=Consolidated%20Statements%20of%20Earnings) For the three months ended August 31, 2025, CarMax reported net sales and operating revenues of $6,594.7 million, a gross profit of $717.7 million, and net earnings of $95.4 million, resulting in diluted EPS of $0.64. These figures represent a decline compared to the prior year Consolidated Statements of Earnings (Three Months Ended August 31, in thousands except per share data) | | 2025 | 2024 | | :--- | :--- | :--- | | NET SALES AND OPERATING REVENUES | $6,594,684 | $7,013,529 | | TOTAL COST OF SALES | $5,877,018 | $6,253,062 | | GROSS PROFIT | $717,666 | $760,467 | | CARMAX AUTO FINANCE INCOME | $102,638 | $115,580 | | Selling, general, and administrative expenses | $601,093 | $610,562 | | Earnings before income taxes | $127,097 | $177,844 | | Income tax provision | $31,719 | $45,035 | | NET EARNINGS | $95,378 | $132,809 | | Diluted weighted average shares | 149,637 | 156,526 | | NET EARNINGS PER SHARE: Diluted | $0.64 | $0.85 | [Consolidated Balance Sheets](index=13&type=section&id=Consolidated%20Balance%20Sheets) As of August 31, 2025, total assets were $27,079.6 million, a slight decrease from February 28, 2025. Key changes include an increase in cash and cash equivalents and auto loans held for sale, while inventory and auto loans held for investment decreased. Total liabilities also decreased, leading to a slight decrease in total shareholders' equity Consolidated Balance Sheets (As of August 31, 2025 and February 28, 2025, in thousands) | ASSETS | August 31, 2025 | February 28, 2025 | | :--- | :--- | :--- | | Cash and cash equivalents | $540,374 | $246,960 | | Auto loans held for sale | $921,928 | — | | Inventory | $3,149,570 | $3,934,622 | | Auto loans held for investment, net | $16,386,236 | $17,242,789 | | TOTAL ASSETS | $27,079,644 | $27,404,206 | | LIABILITIES AND SHAREHOLDERS' EQUITY | | | | TOTAL CURRENT LIABILITIES | $2,252,036 | $2,197,971 | | TOTAL LIABILITIES | $20,879,122 | $21,161,218 | | TOTAL SHAREHOLDERS' EQUITY | $6,200,522 | $6,242,988 | | TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $27,079,644 | $27,404,206 | [Consolidated Statements of Cash Flows](index=14&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended August 31, 2025, net cash provided by operating activities significantly increased to $1,085.0 million from $501.4 million in the prior year, largely due to changes in inventory and auto loans held for investment. Net cash used in investing activities increased, and net cash used in financing activities also increased, primarily due to higher share repurchases Consolidated Statements of Cash Flows (Six Months Ended August 31, in thousands) | | 2025 | 2024 | | :--- | :--- | :--- | | NET CASH PROVIDED BY OPERATING ACTIVITIES | $1,085,037 | $501,414 | | NET CASH USED IN INVESTING ACTIVITIES | ($272,466) | ($215,463) | | NET CASH USED IN FINANCING ACTIVITIES | ($467,706) | ($283,067) | | Increase in cash, cash equivalents, and restricted cash | $344,865 | $2,884 | | CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD | $1,305,175 | $1,253,294 |

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