WD-40 pany(WDFC) - 2023 Q2 - Quarterly Report

PART I — FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents WD-40 Company's unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive income, stockholders' equity, and cash flows, with detailed notes for the periods ended February 28, 2023 Condensed Consolidated Balance Sheets | Metric | Feb 28, 2023 (in thousands) | Aug 31, 2022 (in thousands) | | :-------------------------------- | :-------------------------- | :-------------------------- | | Total assets | $450,337 | $434,295 | | Total liabilities | $253,065 | $245,671 | | Total stockholders' equity | $197,272 | $188,624 | | Cash and cash equivalents | $37,992 | $37,843 | | Inventories | $108,565 | $104,101 | | Short-term borrowings | $47,477 | $39,173 | Condensed Consolidated Statements of Operations | Metric | Three Months Ended Feb 28, 2023 (in thousands) | Three Months Ended Feb 28, 2022 (in thousands) | Six Months Ended Feb 28, 2023 (in thousands) | Six Months Ended Feb 28, 2022 (in thousands) | | :-------------------------- | :--------------------------------------------- | :--------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Net sales | $130,193 | $129,986 | $255,086 | $264,732 | | Cost of products sold | $64,115 | $64,468 | $124,753 | $130,744 | | Gross profit | $66,078 | $65,518 | $130,333 | $133,988 | | Income from operations | $22,153 | $24,743 | $40,832 | $48,803 | | Net income | $16,526 | $19,508 | $30,523 | $38,063 | | Basic EPS | $1.21 | $1.41 | $2.24 | $2.76 | | Diluted EPS | $1.21 | $1.41 | $2.23 | $2.75 | Condensed Consolidated Statements of Comprehensive Income | Metric | Three Months Ended Feb 28, 2023 (in thousands) | Three Months Ended Feb 28, 2022 (in thousands) | Six Months Ended Feb 28, 2023 (in thousands) | Six Months Ended Feb 28, 2022 (in thousands) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Net income | $16,526 | $19,508 | $30,523 | $38,063 | | Foreign currency translation adjustment | $8 | $627 | $1,344 | $(1,266) | | Total comprehensive income | $16,534 | $20,135 | $31,867 | $36,797 | Condensed Consolidated Statements of Stockholders' Equity | Metric | Feb 28, 2023 (in thousands) | Aug 31, 2022 (in thousands) | | :-------------------------------- | :-------------------------- | :-------------------------- | | Total Stockholders' Equity | $197,272 | $188,624 | | Retained Earnings | $464,641 | $456,076 | | Common Stock Held in Treasury | $(402,877) | $(397,236) | - Cash dividends paid were $0.83 per share for the quarter ended Feb 28, 2023, totaling $11.3 million, and $0.78 per share for the quarter ended Nov 30, 2022, totaling $10.6 million[19] - The Company repurchased 9,250 shares of common stock for $1.6 million during the quarter ended Feb 28, 2023, and 22,420 shares for $4.1 million during the quarter ended Nov 30, 2022[19] Condensed Consolidated Statements of Cash Flows | Cash Flow Activity | Six Months Ended Feb 28, 2023 (in thousands) | Six Months Ended Feb 28, 2022 (in thousands) | | :-------------------------------- | :------------------------------------------- | :------------------------------------------- | | Net cash provided by operating activities | $20,947 | $4,083 | | Net cash used in investing activities | $(3,281) | $(3,571) | | Net cash used in financing activities | $(20,294) | $(42,267) | | Net increase (decrease) in cash and cash equivalents | $149 | $(42,639) | Notes to Condensed Consolidated Financial Statements Note 1. The Company - WD-40 Company is a global marketing organization selling maintenance products (WD-40® Multi-Use Product, WD-40 Specialist®, 3-IN-ONE®, GT85®) worldwide and homecare and cleaning products (X-14®, 2000 Flushes®, Carpet Fresh®, no vac®, Spot Shot®, 1001®, Lava®, Solvol®) primarily in North America, the U.K., and Australia[26][27] - Products are sold through various channels including warehouse club stores, hardware stores, automotive parts outlets, industrial distributors, mass retail, home centers, value retailers, grocery stores, and online retailers[27] Note 2. Basis of Presentation and Summary of Significant Accounting Policies - The condensed consolidated financial statements are unaudited, prepared in accordance with SEC rules and U.S. GAAP, and include all wholly-owned subsidiaries with intercompany transactions eliminated[28][29][30] - Management uses estimates and assumptions, which could materially differ from actual results, especially given the ongoing impacts of the COVID-19 pandemic on global economic conditions and financial markets[31][32] - The Company uses foreign currency forward contracts to manage exposure to exchange rate fluctuations, primarily for its U.K. subsidiary, with a notional amount of $7.0 million outstanding as of February 28, 2023[34][35] Note 3. Inventories - Inventories are valued at the lower of cost or net realizable value, using a first-in, first-out (FIFO) or average cost method[38] | Inventory Type | Feb 28, 2023 (in thousands) | Aug 31, 2022 (in thousands) | | :-------------------------------- | :-------------------------- | :-------------------------- | | Product held at third-party contract manufacturers | $5,271 | $7,915 | | Raw materials and components | $18,103 | $13,952 | | Work-in-process | $1,108 | $881 | | Finished goods | $84,083 | $81,353 | | Total Inventories | $108,565 | $104,101 | Note 4. Property and Equipment and Capitalized Cloud-Based Software Implementation Costs | Asset Category | Feb 28, 2023 (in thousands) | Aug 31, 2022 (in thousands) | | :-------------------------------- | :-------------------------- | :-------------------------- | | Property and equipment, net | $65,791 | $65,977 | | Capitalized cloud-based implementation costs | $8,900 | $6,500 | - Capitalized cloud-based implementation costs primarily relate to the ongoing implementation of a new cloud-based enterprise resource planning system[39] Note 5. Goodwill and Other Intangible Assets | Segment | Goodwill as of Feb 28, 2023 (in thousands) | Goodwill as of Aug 31, 2022 (in thousands) | | :-------------------------------- | :----------------------------------------- | :----------------------------------------- | | Americas | $85,412 | $85,402 | | EMEA | $8,658 | $8,569 | | Asia-Pacific | $1,209 | $1,209 | | Total Goodwill | $95,279 | $95,180 | - The Company performed its annual goodwill impairment test as of December 1, 2022, and concluded that no impairment existed, nor were there indicators of impairment through February 28, 2023[41][42] - Net carrying amount of definite-lived intangible assets was $5.1 million as of February 28, 2023, with no impairment charges for the six months ended February 28, 2023[42][44] Note 6. Accrued and Other Liabilities | Accrued Liabilities | Feb 28, 2023 (in thousands) | Aug 31, 2022 (in thousands) | | :-------------------------------- | :-------------------------- | :-------------------------- | | Accrued advertising and sales promotion expenses | $14,062 | $13,563 | | Deferred revenue | $3,102 | $4,988 | | Total Accrued Liabilities | $28,427 | $27,161 | | Accrued Payroll and Related Expenses | $11,912 | $11,583 | Note 7. Debt | Borrowing Type | Feb 28, 2023 (in thousands) | Aug 31, 2022 (in thousands) | | :-------------------------------- | :-------------------------- | :-------------------------- | | Total borrowings | $155,786 | $146,312 | | Short-term portion of borrowings | $(47,477) | $(39,173) | | Total long-term borrowings | $108,309 | $107,139 | - The Company has a revolving credit facility of up to $150.0 million and outstanding senior notes under a Note Purchase and Private Shelf Agreement[49][51] - As of February 28, 2023, the Company was in compliance with all debt covenants, including a consolidated leverage ratio not greater than 3.5:1 and a consolidated interest coverage ratio not less than 3:1[55][58] Note 8. Share Repurchase Plan - A share repurchase plan authorized up to $75.0 million of outstanding shares through August 31, 2023[56] - During the six months ended February 28, 2023, the Company repurchased 31,670 shares for a total cost of $5.6 million under this plan[56] Note 9. Earnings per Common Share | Metric | Three Months Ended Feb 28, 2023 | Three Months Ended Feb 28, 2022 | Six Months Ended Feb 28, 2023 | Six Months Ended Feb 28, 2022 | | :-------------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Net income available to common stockholders (in thousands) | $16,455 | $19,435 | $30,398 | $37,926 | | Weighted-average common shares outstanding, basic (in thousands) | 13,583 | 13,679 | 13,586 | 13,773 | | Weighted-average common shares outstanding, diluted (in thousands) | 13,608 | 13,704 | 13,608 | 13,804 | Note 10. Revenue Recognition | Segment | Six Months Ended Feb 28, 2023 (in thousands) | Six Months Ended Feb 28, 2022 (in thousands) | | :-------------------------------- | :------------------------------------------- | :------------------------------------------- | | Americas | $120,904 | $110,785 | | EMEA | $87,581 | $111,618 | | Asia-Pacific | $46,601 | $42,329 | | Total Net Sales | $255,086 | $264,732 | - Contract liabilities (deferred revenue) were $3.1 million as of February 28, 2023, down from $5.0 million as of August 31, 2022, with all prior period deferred revenue recognized[61] Note 11. Commitments and Contingencies - The Company has ongoing purchase commitments with contract manufacturers based on short-term projections, but definitive minimum obligations have been immaterial or well below historical purchase volumes[62] - No unasserted claims or pending proceedings are expected to result in a probable or materially adverse loss, and indemnification agreements are covered by insurance[67][68][69] Note 12. Income Taxes | Period | Effective Tax Rate | | :-------------------------------- | :----------------- | | Three Months Ended Feb 28, 2023 | 20.8% | | Three Months Ended Feb 28, 2022 | 20.1% | | Six Months Ended Feb 28, 2023 | 20.9% | | Six Months Ended Feb 28, 2022 | 19.9% | - The increase in effective tax rate for the six months ended February 28, 2023, was primarily due to tax shortfalls from stock-based equity awards ($0.7 million unfavorable impact) partially offset by a one-time tax benefit from a charitable donation of its former corporate headquarters ($0.7 million favorable impact)[72][74] Note 13. Business Segments and Foreign Operations - The Company operates in three geographical segments: Americas, EMEA (Europe, Middle East, Africa), and Asia-Pacific, with unallocated corporate expenses reported separately[76] | Segment | Six Months Ended Feb 28, 2023 (in thousands) | Six Months Ended Feb 28, 2022 (in thousands) | | :-------------------------------- | :------------------------------------------- | :------------------------------------------- | | Americas Net Sales | $120,904 | $110,785 | | EMEA Net Sales | $87,581 | $111,618 | | Asia-Pacific Net Sales | $46,601 | $42,329 | | Americas Income from Operations | $26,484 | $23,234 | | EMEA Income from Operations | $16,666 | $27,928 | | Asia-Pacific Income from Operations | $16,640 | $15,227 | Note 14. Subsequent Event - On March 21, 2023, the Board declared a cash dividend of $0.83 per share, payable on April 28, 2023[80] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's analysis of the Company's financial condition and results of operations, covering key highlights, macroeconomic impacts, segment performance, non-operating items, non-GAAP measures, and liquidity for the periods ended February 28, 2023 Overview - The Company's strategic initiatives focus on building for the future, talent development, operational excellence, growing WD-40 Multi-Use Product and Specialist lines, and expanding portfolio opportunities[91] - Consolidated net sales decreased 4% ($9.6 million) for the six months ended February 28, 2023, primarily due to decreased sales volume ($44.7 million unfavorable) and foreign currency exchange rates ($15.1 million unfavorable), partially offset by price increases ($50.2 million favorable)[94] - Gross profit as a percentage of net sales increased to 51.1% (from 50.6%) due to price increases, but was offset by ongoing global supply chain challenges, increased raw material costs, and inflation[94] - The Russia-Ukraine conflict led to the suspension of sales in Russia and Belarus (historically 3-4% of consolidated net sales) and increased crude oil prices, unfavorably impacting product and transportation costs[99][100][101] Results of Operations Operating Items | Metric | Six Months Ended Feb 28, 2023 (in thousands) | Six Months Ended Feb 28, 2022 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------- | :------------------------------------------- | :------------------------------------------- | :-------------------- | :--------- | | Total net sales | $255,086 | $264,732 | $(9,646) | (4)% | | Gross profit | $130,333 | $133,988 | $(3,655) | (3)% | | Income from operations | $40,832 | $48,803 | $(7,971) | (16)% | | Net income | $30,523 | $38,063 | $(7,540) | (20)% | | Diluted EPS | $2.23 | $2.75 | $(0.52) | (19)% | Net Sales by Segment | Segment | Six Months Ended Feb 28, 2023 (in thousands) | Six Months Ended Feb 28, 2022 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------------- | :------------------------------------------- | :------------------------------------------- | :-------------------- | :--------- | | Americas | $120,904 | $110,785 | $10,119 | 9% | | EMEA | $87,581 | $111,618 | $(24,037) | (22)% | | Asia-Pacific | $46,601 | $42,329 | $4,272 | 10% | | Total | $255,086 | $264,732 | $(9,646) | (4)% | - On a constant currency basis, consolidated net sales would have increased by $5.4 million (2%) for the first half of fiscal year 2023, indicating a significant unfavorable impact from foreign currency exchange rates, particularly in EMEA[94] Americas Sales - Americas net sales increased 9% ($10.1 million) for the six months ended February 28, 2023, driven by a $25.6 million increase in average selling price, partially offset by a $15.5 million decrease in sales volume[103][105] - U.S. sales increased 19% due to price increases and improved supply chain capacity for WD-40 Multi-Use Product, WD-40 Specialist, and 3-IN-ONE products, despite lower customer orders[109] - Latin America sales decreased 16% due to timing of marketing distributor orders (higher purchases in prior period before price increase) and weaker economic conditions, partially offset by growth in Mexico[109] EMEA Sales - EMEA net sales decreased 22% ($24.0 million) for the six months ended February 28, 2023, primarily due to a $12.9 million unfavorable currency impact and a $31.7 million decrease in sales volume (including $8.3 million from Russian markets), partially offset by $20.6 million from price increases[103][113] - Sales in Russia decreased $8.3 million due to the ongoing military action in Ukraine and suspension of sales[117] - Direct markets experienced sales volume decreases due to reduced demand and weaker economic conditions, while distributor markets saw lower sales volumes in India, Poland, and the Czech Republic[115][117] Asia-Pacific Sales - Asia-Pacific net sales increased 10% ($4.3 million) for the six months ended February 28, 2023, driven by a $4.0 million increase in average selling price and a $2.5 million increase in sales volume, partially offset by a $2.2 million unfavorable currency impact[103][120] - Asia distributor markets sales increased 14% due to successful promotional programs, easing of COVID-19 lockdowns, and price increases, leading to increased demand and sales volumes[122] - China sales increased 10% (20% on a constant currency basis) due to promotional programs and price increases, while Australia sales increased 3% (11% on a constant currency basis) driven by price increases and promotions[122] Gross Profit | Metric | Three Months Ended Feb 28, 2023 | Three Months Ended Feb 28, 2022 | Six Months Ended Feb 28, 2023 | Six Months Ended Feb 28, 2022 | | :-------------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Gross profit (in thousands) | $66,078 | $65,518 | $130,333 | $133,988 | | Gross margin | 50.8% | 50.4% | 51.1% | 50.6% | - Gross margin increased by 40 bps for the three months and 50 bps for the six months ended February 28, 2023, primarily due to sales price increases (910 bps and 880 bps favorable, respectively) and favorable foreign currency exchange rates in EMEA (90 bps and 100 bps favorable, respectively)[124] - These gains were significantly offset by higher costs of specialty chemicals (410 bps and 380 bps unfavorable), aerosol cans (400 bps and 390 bps unfavorable), and filling fees (90 bps unfavorable) due to inflationary impacts[124] Selling, General and Administrative ("SG&A") Expenses | Metric | Three Months Ended Feb 28, 2023 (in thousands) | Three Months Ended Feb 28, 2022 (in thousands) | Six Months Ended Feb 28, 2023 (in thousands) | Six Months Ended Feb 28, 2022 (in thousands) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | SG&A expenses | $37,690 | $34,819 | $77,674 | $73,242 | | % of net sales | 28.9% | 26.8% | 30.5% | 27.7% | - SG&A expenses increased by $2.9 million (8%) for the three months and $4.4 million (6%) for the six months ended February 28, 2023, primarily due to higher employee-related costs ($2.6 million and $3.5 million respectively), increased travel and meeting expenses ($0.9 million and $3.0 million respectively), and higher professional services fees ($0.9 million and $1.7 million respectively)[126][127][128] - These increases were partially offset by favorable foreign currency exchange rates, which decreased SG&A expenses by $1.5 million for the three months and $4.2 million for the six months[127][128] - Research and development costs were $1.2 million and $2.5 million for the three and six months ended February 28, 2023, respectively, supporting product innovation and renovation[129] Advertising and Sales Promotion ("A&P") Expenses | Metric | Three Months Ended Feb 28, 2023 (in thousands) | Three Months Ended Feb 28, 2022 (in thousands) | Six Months Ended Feb 28, 2023 (in thousands) | Six Months Ended Feb 28, 2022 (in thousands) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | A&P expenses | $5,985 | $5,596 | $11,324 | $11,220 | | % of net sales | 4.6% | 4.3% | 4.4% | 4.2% | - A&P expenses increased by $0.4 million (7%) for the three months ended February 28, 2023, primarily due to higher promotional programs in the Americas, partially offset by favorable foreign currency changes in EMEA[131] - Total investment in A&P activities (including promotional costs as a reduction to sales) was $13.1 million for the three months and $24.9 million for the six months ended February 28, 2023[132][134] Income from Operations by Segment | Segment | Six Months Ended Feb 28, 2023 (in thousands) | Six Months Ended Feb 28, 2022 (in thousands) | | :-------------------------------- | :------------------------------------------- | :------------------------------------------- | | Americas | $26,484 | $23,234 | | EMEA | $16,666 | $27,928 | | Asia-Pacific | $16,640 | $15,227 | | Unallocated corporate | $(18,958) | $(17,586) | | Total | $40,832 | $48,803 | Americas Operating Income - Americas operating income increased 14% ($3.3 million) to $26.5 million for the six months ended February 28, 2023, driven by a $10.1 million sales increase and higher gross margin (49.4% from 47.7%), partially offset by increased operating expenses[137] EMEA Operating Income - EMEA operating income decreased 40% ($11.3 million) to $16.7 million for the six months ended February 28, 2023, primarily due to a $24.0 million sales decrease and a lower gross margin (51.5% from 51.8%), despite a slight decrease in operating expenses[140] Asia-Pacific Operating Income - Asia-Pacific operating income increased 9% ($1.4 million) to $16.6 million for the six months ended February 28, 2023, driven by a $4.3 million sales increase, partially offset by a lower gross margin (54.8% from 55.2%) and increased operating expenses[142] Non-Operating Items | Metric | Six Months Ended Feb 28, 2023 (in thousands) | Six Months Ended Feb 28, 2022 (in thousands) | | :-------------------------------- | :------------------------------------------- | :------------------------------------------- | | Interest income | $95 | $46 | | Interest expense | $2,671 | $1,233 | | Other income (expense), net | $315 | $(77) | | Provision for income taxes | $8,048 | $9,476 | Interest Income - Interest income remained insignificant for both the three and six months ended February 28, 2023 and 2022[144] Interest Expense - Interest expense increased by $0.9 million for the three months and $1.4 million for the six months ended February 28, 2023, primarily due to higher interest rates and increased outstanding balances on the revolving credit agreement[145] Other Income (Expense), Net - Other income (expense), net, changed by $0.4 million for the six months ended February 28, 2023, primarily due to fluctuations in foreign currency exchange rates, particularly for the U.S. Dollar and Euro against the Pound Sterling[147] Provision for Income Taxes - The effective tax rate increased to 20.9% for the six months ended February 28, 2023 (from 19.9%), mainly due to tax shortfalls from stock-based equity awards (2.4% unfavorable impact), partially offset by a one-time tax benefit from a charitable donation (1.9% favorable impact)[149] Net Income - Net income decreased 20% to $30.5 million for the six months ended February 28, 2023, resulting in diluted EPS of $2.23 (down from $2.75)[151] - Foreign currency exchange rates had an unfavorable impact of $2.2 million on consolidated net income for the six months, meaning net income would have decreased 14% on a constant currency basis[151] Performance Measures and Non-GAAP Reconciliations - The Company's 55/30/25 business model targets a gross margin at or above 55%, cost of doing business at 30% of net sales, and EBITDA at or above 25% of net sales[152] | Performance Measure | Three Months Ended Feb 28, 2023 | Three Months Ended Feb 28, 2022 | Six Months Ended Feb 28, 2023 | Six Months Ended Feb 28, 2022 | | :-------------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Gross margin – GAAP | 51% | 50% | 51% | 51% | | Cost of doing business as a percentage of net sales – non-GAAP | 33% | 30% | 34% | 31% | | EBITDA as a percentage of net sales – non-GAAP | 19% | 21% | 18% | 20% | - Current performance is below the 55/30/25 targets due to increased global supply chain constraints and an inflationary environment, which have significantly lowered gross margin[152][153] Liquidity and Capital Resources - The Company maintains strong financial condition and liquidity, primarily relying on cash from operations and its unsecured revolving credit facility[157][158] - As of February 28, 2023, the Company had $38.0 million in cash and cash equivalents and was in compliance with all material debt covenants[159] - Future cash from operations and the credit facility are expected to fund short-term and long-term operating requirements, capital expenditures, dividends, acquisitions, and share repurchases[160] Cash Flows | Cash Flow Activity | Six Months Ended Feb 28, 2023 (in thousands) | Six Months Ended Feb 28, 2022 (in thousands) | | :-------------------------------- | :------------------------------------------- | :------------------------------------------- | | Net cash provided by operating activities | $20,947 | $4,083 | | Net cash used in investing activities | $(3,281) | $(3,571) | | Net cash used in financing activities | $(20,294) | $(42,267) | - Operating cash flow increased by $16.9 million due to a lower increase in inventory and lower incentive payouts, partially offset by decreases in accounts payable and accrued liabilities[164][165] - Financing cash used decreased by $22.0 million, primarily due to $12.5 million less in treasury stock purchases and $7.1 million higher proceeds from the credit facility[167] Commercial Commitments - The Company has ongoing purchase commitments with contract manufacturers based on short-term projections, but definitive minimum obligations have been immaterial or well below historical purchase volumes[170] - No significant commitments for finished goods or components to support innovation initiatives were outstanding as of February 28, 2023[172] Share Repurchase Plan - Information regarding the share repurchase plan is incorporated by reference to Note 8 of the financial statements[173] Dividends - Information regarding dividend declaration is incorporated by reference to Note 14 of the financial statements[174] Critical Accounting Policies and Estimates - Critical accounting policies involve subjective judgments and estimates in areas such as revenue recognition, accounting for income taxes, and impairment of definite-lived intangible assets[176] - There have been no material changes to critical accounting policies and estimates from those disclosed in the Annual Report on Form 10-K for the fiscal year ended August 31, 2022[177] Recently Issued Accounting Standards - No recently issued accounting standards are expected to have a material impact on the consolidated financial statements and related disclosures[178] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section incorporates by reference the Company's market risk disclosures from its most recent Annual Report on Form 10-K - Information regarding quantitative and qualitative disclosures about market risk is incorporated by reference from the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 2022[179] Item 4. Controls and Procedures This section confirms the effectiveness of the Company's disclosure controls and procedures and reports no material changes in internal control over financial reporting during the quarter - The Company's disclosure controls and procedures were evaluated as effective as of February 28, 2023, ensuring timely and accurate reporting under the Exchange Act[180] - There were no material changes in internal control over financial reporting during the three months ended February 28, 2023[181] PART II — OTHER INFORMATION Item 1. Legal Proceedings This section incorporates by reference legal proceedings information from Note 11 of the condensed consolidated financial statements - Information regarding legal proceedings is incorporated by reference to Note 11 — Commitments and Contingencies, included in this report[184] Item 1A. Risk Factors This section states no material changes to risk factors from the prior Annual Report on Form 10-K, while acknowledging additional unknown or immaterial risks - No material changes to risk factors have occurred since the Annual Report on Form 10-K for the fiscal year ended August 31, 2022[185] - The Company acknowledges that additional unknown or currently immaterial risks could adversely affect its operating results, financial condition, or future business[185] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the Company's share repurchase activities under its authorized plan for the three months ended February 28, 2023 - The Company is authorized to acquire up to $75.0 million of its outstanding shares through August 31, 2023, under a plan effective November 1, 2021[186] | Period | Total of Shares Purchased | Average Price Paid Per Share | Total Shares Purchased as Part of Publicly Announced Plans & Programs | Max $ Value of Shares That May Yet Be Purchased Under the Plans & Programs | | :-------------------------------- | :-------------------------- | :--------------------------- | :-------------------------------------------------------------------- | :----------------------------------------------------------------------- | | December 1 – December 31 | 3,250 | $165.85 | 3,250 | $41,233,453 | | January 1 – January 31 | 3,750 | $170.00 | 3,750 | $40,595,836 | | February 1 – February 28 | 2,250 | $174.33 | 2,250 | $40,203,477 | | Total (3 months) | 9,250 | $169.60 | 9,250 | | Item 6. Exhibits This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including corporate documents, certifications, and XBRL financial statements - Exhibits include the Certificate of Incorporation, Amended and Restated Bylaws, Change in Control Severance Agreement, CEO and CFO certifications (Sarbanes-Oxley Act Sections 302 and 906), and iXBRL formatted financial statements[189]