Sally Beauty(SBH) - 2025 Q3 - Quarterly Report

PART I — FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements, including balance sheets, earnings, comprehensive income, equity, and cash flows, with detailed accounting notes Condensed Consolidated Balance Sheets This section provides a snapshot of the company's financial position, detailing assets, liabilities, and stockholders' equity Condensed Consolidated Balance Sheets (In thousands) | (In thousands) | June 30, 2025 (Unaudited) | September 30, 2024 | | :------------------------- | :------------------------ | :------------------- | | Assets | | | | Cash and cash equivalents | $112,800 | $107,961 | | Total current assets | $1,261,644 | $1,305,314 | | Total assets | $2,744,100 | $2,792,899 | | Liabilities | | | | Total current liabilities | $523,842 | $592,669 | | Long-term debt | $882,383 | $978,255 | | Total liabilities | $1,981,191 | $2,164,364 | | Stockholders' Equity | | | | Total stockholders' equity | $762,909 | $628,535 | Condensed Consolidated Statements of Earnings This section presents the company's financial performance over specific periods, detailing net sales, profit, and earnings per share Condensed Consolidated Statements of Earnings (In thousands, except per share data) | (In thousands, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net sales | $933,307 | $942,340 | $2,754,348 | $2,782,003 | | Gross profit | $480,985 | $480,883 | $1,416,642 | $1,411,131 | | Operating earnings | $78,173 | $71,770 | $247,866 | $200,467 | | Net earnings | $45,724 | $37,724 | $145,947 | $105,358 | | Basic EPS | $0.46 | $0.37 | $1.44 | $1.01 | | Diluted EPS | $0.44 | $0.36 | $1.40 | $0.98 | Condensed Consolidated Statements of Comprehensive Income This section details the company's total comprehensive income, including net earnings and other comprehensive income (loss) Condensed Consolidated Statements of Comprehensive Income (In thousands) | (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net earnings | $45,724 | $37,724 | $145,947 | $105,358 | | Other comprehensive income (loss), net of tax | $26,011 | $(5,022) | $11,833 | $910 | | Total comprehensive income | $71,735 | $32,702 | $157,780 | $106,268 | Condensed Consolidated Statements of Stockholders' Equity This section outlines changes in the company's equity, including common stock, accumulated earnings, and comprehensive loss Condensed Consolidated Statements of Stockholders' Equity (In thousands) | (In thousands) | Balance at September 30, 2024 | Balance at June 30, 2025 | | :------------- | :---------------------------- | :----------------------- | | Common Stock | $1,019 | $994 | | Accumulated Earnings | $740,685 | $863,251 | | Accumulated Other Comprehensive Loss | $(113,169) | $(101,336) | | Total Stockholders' Equity | $628,535 | $762,909 | Condensed Consolidated Statements of Cash Flows This section details the company's cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (In thousands) | (In thousands) | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------ | :------------------------------ | | Net cash provided by operating activities | $153,952 | $135,855 | | Net cash used by investing activities | $(12,940) | $(64,026) | | Net cash used by financing activities | $(137,863) | $(97,835) | | Net increase (decrease) in cash and cash equivalents | $4,839 | $(25,626) | | Cash and cash equivalents, end of period | $112,800 | $97,375 | Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements 1. Significant Accounting Policies This section details the basis of presentation for interim financial statements, adhering to GAAP, SEC rules, and consolidation principles - The interim financial statements are prepared in accordance with GAAP and SEC rules, condensing information normally found in annual statements[24] - All accounts of Sally Beauty Holdings, Inc. and its wholly-owned subsidiaries are consolidated, with intercompany balances eliminated[25] - Significant estimates are involved in areas such as sales allowances, deferred revenue, inventory valuation, amortization, depreciation, intangible assets, goodwill, and other reserves[27] 2. Recent Accounting Pronouncements This section details recent FASB ASUs on segment reporting, income tax, and expense disaggregation, with no material impact expected on financials - ASU No. 2023-07 (Segment Reporting) is effective for fiscal years beginning after December 15, 2023, and is not expected to materially impact consolidated financial statements, but will require additional disclosures[28] - ASU No. 2023-09 (Income Taxes) is effective for annual periods beginning after December 15, 2024, and is not expected to impact consolidated results or financial position[29] - ASU 2024-03 (Expense Disaggregation Disclosures) is effective for fiscal years beginning after December 15, 2026, and the company is evaluating its impact, not currently expecting early adoption[30][31] 3. Revenue Recognition Revenue is recognized from merchandise sales upon transfer of control, with contract liabilities from loyalty points and gift cards decreasing from $11.493 million to $10.694 million - Revenue is recognized from merchandise sales at the point-of-sale or shipment for e-commerce, net of estimated sales returns and taxes, when control transfers to the customer[32] Contract Liabilities (In thousands) | (in thousands) | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------- | :------------------------------ | :------------------------------ | | Beginning Balance (Contract Liabilities) | $11,493 | $14,038 | | Loyalty points and gift cards issued, net of estimated breakage | $5,904 | $9,266 | | Revenue recognized from beginning liability | $(6,703) | $(11,252) | | Ending Balance (Contract Liabilities) | $10,694 | $12,052 | 4. Fair Value Measurements Fair value of financial instruments is measured using a three-level hierarchy, with total assets at $812 thousand and liabilities at $1,957 thousand - Fair value is defined as the exit price in an orderly transaction, using a three-level hierarchy based on input observability[34][35] Fair Value of Financial Instruments (In thousands) | (in thousands) | June 30, 2025 | September 30, 2024 | | :------------- | :------------ | :----------------- | | Financial Assets: | | | | Foreign exchange contracts (Level 2) | $501 | $1,207 | | Interest rate swap (Level 2) | $311 | $0 | | Total assets | $812 | $1,207 | | Financial Liabilities: | | | | Foreign exchange contracts (Level 2) | $1,957 | $1,485 | | Interest rate swap (Level 2) | $0 | $635 | | Total liabilities | $1,957 | $2,120 | Fair Value of Long-Term Debt (In thousands) | (in thousands) | June 30, 2025 Carrying Value | June 30, 2025 Fair Value | September 30, 2024 Carrying Value | September 30, 2024 Fair Value | | :------------- | :--------------------------- | :----------------------- | :-------------------------------- | :---------------------------- | | 2032 Senior Notes (Level 2) | $600,000 | $614,250 | $600,000 | $615,000 | | Term Loan B (Level 2) | $296,000 | $295,260 | $394,000 | $393,508 | | Total long-term debt | $896,000 | $909,510 | $994,000 | $1,008,508 | 5. Stockholders' Equity The share repurchase program was extended with $487.8 million remaining, and AOCL decreased due to foreign currency translation - The share repurchase program was extended to September 30, 2029, with $487.8 million remaining authorization as of June 30, 2025[38] Share Repurchases (In millions, excluding excise taxes) | Share Repurchases (excluding excise taxes) | Three Months Ended June 30, 2025 | Nine Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2024 | | :----------------------------------------- | :------------------------------- | :------------------------------ | :------------------------------- | :------------------------------ | | Shares repurchased (millions) | 1.5 | 3.3 | 0.9 | 4.3 | | Total cost (millions) | $13.0 | $33.0 | $10.0 | $50.0 | Accumulated Other Comprehensive Loss (In thousands) | (in thousands) | Balance at September 30, 2024 | Balance at June 30, 2025 | | :------------- | :---------------------------- | :----------------------- | | Accumulated Other Comprehensive Loss | $(113,169) | $(101,336) | | Change due to Other comprehensive income (loss) before reclassification, net of tax | N/A | $13,217 | | Change due to Reclassification to net earnings, net of tax | N/A | $(1,384) | 6. Weighted-Average Shares This section reconciles basic and diluted weighted-average shares outstanding, showing 100.463 million basic and 103.239 million diluted shares for Q3 2025 Weighted-Average Shares (In thousands) | (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Weighted-average basic shares | 100,463 | 103,190 | 101,367 | 104,477 | | Dilutive securities (stock option and award programs) | 2,776 | 2,707 | 2,820 | 2,709 | | Weighted-average diluted shares | 103,239 | 105,897 | 104,187 | 107,186 | | Anti-dilutive options excluded | 1,840 | 1,678 | 1,499 | 1,678 | 7. Property and Equipment, Net and Divesture of Subsidiary The company sold its corporate headquarters for $45.5 million and divested Pro-Duo Spain SL for $3.2 million, recognizing gains - Sold corporate headquarters for $45.5 million, recognizing a $26.6 million gain, and entered a 12-month leaseback[42] - Divested Pro-Duo Spain SL (19 stores) for $3.2 million, recognizing a $0.8 million gain, with no material impact expected on consolidated financials[43] 8. Goodwill and Intangible Assets Annual impairment assessments found no goodwill impairment, but a $1.8 million trade name impairment loss was recognized in the SBS segment - No goodwill impairment was identified during the annual assessment, but a $1.8 million impairment loss was recognized for a trade name in the SBS segment[44] Goodwill Allocation (In thousands) | (in thousands) | June 30, 2025 | | :------------- | :------------ | | Goodwill (SBS) | $91,100 | | Goodwill (BSG) | $449,800 | Intangible Assets Amortization Expense (In thousands) | (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Intangible assets amortization expense | $851 | $764 | $2,550 | $2,415 | 9. Accrued Liabilities Accrued liabilities increased to $165.291 million, primarily driven by compensation ($61.481 million), deferred revenue, and interest payable Accrued Liabilities (In thousands) | (in thousands) | June 30, 2025 | September 30, 2024 | | :------------- | :------------ | :----------------- | | Compensation and benefits | $61,481 | $76,649 | | Deferred revenue | $15,829 | $16,080 | | Interest payable | $14,034 | $4,108 | | Accrued freight | $11,064 | $8,240 | | Rental obligations | $10,676 | $11,039 | | Insurance reserves | $8,084 | $7,526 | | Operating accruals and other | $44,123 | $39,308 | | Total accrued liabilities | $165,291 | $162,950 | 10. Short-term and Long-term Debt ABL Facility maturity extended to 2029 with $482.5 million available, and $95.0 million of Term Loan B principal was repaid - ABL Facility maturity extended to December 11, 2029; $482.5 million available for borrowing with no outstanding borrowings at June 30, 2025[48] - Voluntarily repaid $95.0 million of Term Loan B principal during the nine months ended June 30, 2025, resulting in a $0.9 million loss on debt extinguishment[49] 11. Derivative Instruments and Hedging Activities The company uses foreign currency forwards and an interest rate swap for hedging, expecting reclassification of net losses/gains to COGS and interest expense - The company uses foreign currency forwards to hedge forecasted inventory purchases, expecting to reclassify approximately $0.4 million of net losses from AOCL into COGS over the next 12 months[51] - An interest rate swap hedges Term Loan B exposure, with expected net gains of $0.3 million to be reclassified from AOCL into interest expense over the next 12 months[52][53] - Non-designated foreign exchange forward contracts for intercompany balances resulted in net losses of $1.3 million for the three months ended June 30, 2025, and $0.3 million for the nine months ended June 30, 2025[54] 12. Segment Reporting The company operates in SBS and BSG segments; SBS net sales decreased by 1.8%, while BSG net sales increased by 0.2% for the quarter Segment Net Sales and Operating Earnings (In thousands) | (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net sales: | | | | | | SBS | $526,782 | $536,536 | $1,552,803 | $1,573,015 | | BSG | $406,525 | $405,804 | $1,201,545 | $1,208,988 | | Total | $933,307 | $942,340 | $2,754,348 | $2,782,003 | | Segment operating earnings: | | | | | | SBS | $83,305 | $86,938 | $240,484 | $241,387 | | BSG | $50,672 | $46,753 | $145,075 | $134,395 | | Total | $133,977 | $133,691 | $385,559 | $375,782 | SBS Merchandise Category Sales Mix | SBS Merchandise Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :----------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Hair color | 42.9% | 40.6% | 41.9% | 39.7% | | Hair care | 23.0% | 24.2% | 23.5% | 24.5% | | Styling tools and supplies | 16.2% | 16.2% | 16.9% | 17.1% | | Nail | 10.2% | 10.5% | 10.0% | 10.2% | | Skin and cosmetics | 7.5% | 8.1% | 7.5% | 8.0% | | Other beauty items | 0.2% | 0.4% | 0.2% | 0.5% | | Total | 100.0% | 100.0% | 100.0% | 100.0% | SBS Sales Channels Mix | SBS Sales Channels | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :----------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Company-operated stores | 91.8% | 93.0% | 91.9% | 93.2% | | E-commerce | 8.2% | 7.0% | 8.1% | 6.8% | | Total | 100.0% | 100.0% | 100.0% | 100.0% | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial performance, condition, and cash flows, highlighting key metrics, segment results, and liquidity Financial Summary for the Three Months Ended June 30, 2025 This section summarizes key financial performance metrics for the three months ended June 30, 2025 - Consolidated net sales decreased 1.0% to $933.3 million[62] - Consolidated comparable sales decreased 0.4%[62] - Consolidated gross profit was flat at $481.0 million, with gross margin increasing 50 bps to 51.5%[62] - Consolidated operating earnings increased 8.9% to $78.2 million, with operating margin increasing 80 bps to 8.4%[62] - Consolidated net earnings increased 21.2% to $45.7 million[62] - Diluted EPS was $0.44, up from $0.36[62] - Cash provided by operations was $69.4 million, up from $47.9 million[62] Overview (Key Operating Metrics) This section provides a comprehensive overview of key operating metrics for both the three and nine months ended June 30, 2025 Key Operating Metrics (Dollars in thousands) | Key Operating Metrics (dollars in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Increase (Decrease) | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | Increase (Decrease) | | :----------------------------------------- | :------------------------------- | :------------------------------- | :------------------ | :------------------------------ | :------------------------------ | :------------------ | | Net sales: | | | | | | | | SBS | $526,782 | $536,536 | $(9,754) (1.8%) | $1,552,803 | $1,573,015 | $(20,212) (1.3%) | | BSG | $406,525 | $405,804 | $721 (0.2%) | $1,201,545 | $1,208,988 | $(7,443) (0.6%) | | Consolidated | $933,307 | $942,340 | $(9,033) (1.0%) | $2,754,348 | $2,782,003 | $(27,655) (1.0%) | | Gross profit: | | | | | | | | SBS | $320,866 | $321,051 | $(185) (0.1%) | $940,519 | $935,189 | $5,330 (0.6%) | | BSG | $160,119 | $159,832 | $287 (0.2%) | $476,123 | $475,942 | $181 (0.0%) | | Consolidated | $480,985 | $480,883 | $102 (0.0%) | $1,416,642 | $1,411,131 | $5,511 (0.4%) | | Segment gross margin: | | | | | | | | SBS | 60.9% | 59.8% | 110 bps | 60.6% | 59.5% | 110 bps |\ | BSG | 39.4% | 39.4% | — bps | 39.6% | 39.4% | 20 bps | | Consolidated | 51.5% | 51.0% | 50 bps | 51.4% | 50.7% | 70 bps | | Consolidated operating earnings | $78,173 | $71,770 | $6,403 (8.9%) | $247,866 | $200,467 | $47,399 (23.6%) | | Net earnings | $45,724 | $37,724 | $8,000 (21.2%) | $145,947 | $105,358 | $40,589 (38.5%) | | Comparable sales growth (decline): | | | | | | | | SBS | (1.1)% | 0.7% | (180) bps | 0.1% | (1.7)% | 180 bps | | BSG | 0.5% | 2.6% | (210) bps | (0.2)% | 1.8% | (200) bps | | Consolidated | (0.4)% | 1.5% | (190) bps | — | (0.2)% | 20 bps | | Number of stores at end-of-period: | | | | | | | | SBS | 3,096 | 3,128 | (32) (1.0%) | | | | | BSG | 1,329 | 1,332 | (3) (0.2%) | | | | | Consolidated | 4,425 | 4,460 | (35) (0.8%) | | | | Results of Operations This section compares operational results for the three and nine months, analyzing changes in sales, profit, expenses, and taxes across segments The Three Months Ended June 30, 2025, compared to the Three Months Ended June 30, 2024 SBS net sales decreased by $9.754 million while BSG net sales increased by $0.721 million, with improved SBS gross margin and lower interest expense - SBS net sales decreased by $9.754 million, primarily due to a 1.1% decline in comparable sales and net store closures, partially offset by foreign currency exchange[65][66] - BSG net sales increased by $0.721 million, driven by a 0.5% increase in comparable sales from expanded distribution and new brand innovation, partially offset by net store closures and foreign currency[66][67] - SBS gross margin improved due to higher product margins from Fuel for Growth, lower distribution/freight costs, and lower shrink, partially offset by an inventory write-off[68] - BSG gross margin was flat, with lower distribution/freight costs offset by lower product margins from brand mix[69] - Unallocated SG&A expenses decreased by $5.7 million, or 9.3%, primarily due to lower Fuel for Growth costs and savings, partially offset by higher IT and labor expenses[72] - Interest expense decreased due to a lower outstanding principal balance and interest rate on Term Loan B, fewer ABL facility borrowings, and lower debt extinguishment losses[73] - The effective tax rate increased to 26.8% from 26.1%, mainly due to the divestiture of Spain operations and associated unutilized net operating losses[74] The Nine Months Ended June 30, 2025, compared to the Nine Months Ended June 30, 2024 SBS net sales decreased by $20.212 million and BSG net sales by $7.443 million, with gross margin improvements and lower unallocated SG&A - SBS net sales decreased by $20.212 million, primarily due to negative foreign exchange rates and net store closures, partially offset by a 0.1% increase in comparable sales[76][77] - BSG net sales decreased by $7.443 million, reflecting negative comparable sales, foreign exchange impacts, and net store closures, partially offset by expanded distribution and new brand innovation[78][79] - SBS gross margin improved due to lower distribution/freight costs and higher product margins from promotional strategies and Fuel for Growth, partially offset by an inventory write-off[80] - BSG gross margin improved due to lower distribution/freight costs from supply chain efficiencies, partially offset by lower product margins related to brand mix[81] - Unallocated SG&A expenses decreased by $37.3 million, or 21.3%, primarily due to a $26.6 million gain on the sale of corporate headquarters and lower Fuel for Growth costs[85] - The effective tax rate increased to 26.4% from 25.8%, mainly due to foreign operations, including the Spain divestiture, and higher federal tax credits in the prior year[87] Liquidity and Capital Resources Liquidity is driven by cash from operations and the ABL Facility, with $595.3 million available and $896.0 million in outstanding debt Overview Primary liquidity sources are cash from operations and the ABL Facility, with $595.3 million available and increased working capital - Principal liquidity sources are cash from operations, cash and cash equivalents, and the ABL Facility[88] - As of June 30, 2025, available liquidity was $595.3 million, including $482.5 million from the ABL Facility and $112.8 million in cash and cash equivalents[88] - Working capital increased by $25.2 million to $737.8 million at June 30, 2025, primarily due to timing of accounts payable and income tax payments, partially offset by lower inventory[89] Cash Flows Operating cash flow increased to $153.952 million, investing cash flow decreased, and financing cash flow increased due to debt paydown Cash Flow Summary (In thousands) | (in thousands) | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------- | :------------------------------ | :------------------------------ | | Net cash provided by operating activities | $153,952 | $135,855 | | Net cash used by investing activities | $(12,940) | $(64,026) | | Net cash used by financing activities | $(137,863) | $(97,835) | - Increase in cash from operating activities was driven by lower inventory purchases and lower interest paid, partially offset by timing of accounts payable and income tax payments[92] - Decrease in cash used by investing activities was due to $43.6 million from corporate headquarters sale, lower capital expenditures, and $3.1 million from Spain operations divestiture[93] - Increase in cash used by financing activities was primarily due to higher net paydown of long-term debt, partially offset by fewer share repurchases[94] Debt and Guarantor Financial Information Outstanding debt principal was $896.0 million, with the company in compliance with all debt covenants - Outstanding debt principal was $896.0 million at June 30, 2025, comprising $600.0 million in 2032 Senior Notes and $296.0 million on Term Loan B[95] - The company is in compliance with all agreements and instruments governing its debt, including financial covenants[97] Issuers and Guarantors Financial Information (In thousands) | (in thousands) | June 30, 2025 | September 30, 2024 | | :------------- | :------------ | :----------------- | | Cash and cash equivalents | $41,923 | $32,817 | | Inventory | $745,712 | $781,512 | | Total assets | $2,048,655 | $2,085,179 | | Total liabilities | $1,785,679 | $1,951,874 | Share Repurchase Programs The company repurchased 3.3 million shares for $33.0 million during the nine months ended June 30, 2025 Share Repurchases (In millions, excluding excise taxes) | Share Repurchases (excluding excise taxes) | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :----------------------------------------- | :------------------------------ | :------------------------------ | | Shares repurchased (millions) | 3.3 | 4.3 | | Total cost (millions) | $33.0 | $50.0 | Contractual Obligations No material changes to contractual obligations, excluding debt, have occurred since September 30, 2024 - No material changes to contractual obligations, excluding debt, since September 30, 2024[101] Off-Balance Sheet Financing Arrangements No off-balance sheet financing arrangements exist, except for outstanding letters of credit for inventory and self-insurance - No off-balance sheet financing arrangements other than outstanding letters of credit for inventory purchases and self-insurance programs[102] Critical Accounting Estimates No material changes to critical accounting estimates or assumptions have occurred since September 30, 2024 - No material changes to critical accounting estimates or assumptions since September 30, 2024[103] Recent Accounting Pronouncements Refer to Note 2 of the financial statements for details on recent accounting pronouncements - Refer to Note 2 for details on recent accounting pronouncements[104] U.S. Income Tax Regulations The company is evaluating the financial impact of "The One Big Beautiful Bill Act," signed into law on July 4, 2025 - The company is evaluating the impact of "The One Big Beautiful Bill Act," signed on July 4, 2025, on its financial statements[105] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company faces market risks from foreign currency, interest rates, and government actions, with no material changes since FY2024 - The company is subject to market risks from foreign currency fluctuations, interest rates, and government actions[107] - No material changes to market risks have occurred since the fiscal year ended September 30, 2024[107] Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2025[108][112] - Disclosure controls provide reasonable assurance that required information is recorded, processed, summarized, and reported timely[112] - No material changes in internal control over financial reporting occurred during the most recent fiscal quarter[113] PART II — OTHER INFORMATION Item 1. Legal Proceedings The company is involved in various legal proceedings but expects no material financial impact, and is in compliance with regulations - The company is involved in various claims and lawsuits but does not expect a material adverse impact on its financial position, cash flows, or results of operations[115] - The company believes it is in material compliance with U.S. and foreign laws and regulations regarding product and sales methods[116] Item 1A. Risk Factors Readers should review risk factors from the FY2024 Annual Report on Form 10-K, as no material changes have occurred - Readers should consider risk factors from the Annual Report on Form 10-K for the fiscal year ended September 30, 2024[117] - No material changes to the disclosed risk factors have occurred[117] Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities The company repurchased 1.46 million shares for $13.0 million during the quarter, with $487.77 million remaining authorized Issuer Purchases of Equity Securities | Fiscal Period | Total Number of Shares Purchased | Average Price Paid per Share | | :------------------ | :------------------------------- | :--------------------------- | | Apr 1 - Apr 30, 2025 | — | $— | | May 1 - May 31, 2025 | 610,460 | $9.00 | | Jun 1 - Jun 30, 2025 | 845,404 | $8.90 | | Total this quarter | 1,455,864 | $8.94 | - As of June 30, 2025, approximately $487.77 million remained authorized for share repurchases under the program, which was extended through September 30, 2029[118][121] Item 5. Other Information No director or officer adopted, modified, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements - No director or officer adopted, modified, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended June 30, 2025[119] Item 6. Exhibits This section lists exhibits filed with the Quarterly Report on Form 10-Q, including corporate documents and certifications - Exhibits include the Third Restated Certificate of Incorporation, Amended and Restated By-Laws, List of Subsidiary Guarantors, CEO and CFO certifications (Rule 13a-14(a)/15d-14(a) and Section 1350), and financial information in iXBRL format[122]