Lindsay Corp: Form 10-Q for the period ended May 31, 2025

Concerning Forward‑Looking Statements

This Quarterly Report on Form 10-Q contains not only historical information, but also forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements that are not historical are forward-looking and reflect information concerning possible or assumed future results of operations and planned financing of the Company. In addition, forward-looking statements may be made orally or in press releases, conferences, reports, on the Company's web site, or otherwise, in the future by or on behalf of the Company. When used by or on behalf of the Company, the words “expect,” “anticipate,” “estimate,” “believe,” “intend,” “will,” “plan,” “predict,” “project,” “outlook,” “could,” “may,” “should” or similar expressions generally identify forward-looking statements. The entire section entitled “Executive Overview and Outlook” should be considered forward-looking statements. For these statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

Forward-looking statements involve a number of risks and uncertainties, including but not limited to those discussed in the “Risk Factors” section in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2024. Readers should not place undue reliance on any forward-looking statement and should recognize that the statements are predictions of future results or conditions, which may not occur as anticipated. Actual results or conditions could differ materially from those anticipated in the forward-looking statements and from historical results, due to the risks and uncertainties described herein and in the Company’s other public filings with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K for the Company’s fiscal year ended August 31, 2024, as well as other risks and uncertainties not now anticipated. The risks and uncertainties described herein and in the Company’s other public filings are not exclusive and further information concerning the Company and its businesses, including factors that potentially could materially affect the Company's financial results, may emerge from time to time. Except as required by law, the Company assumes no obligation to update forward-looking statements to reflect actual results or changes in factors or assumptions affecting such forward-looking statements.

Accounting Policies

In preparing the Company’s condensed consolidated financial statements in conformity with U.S. GAAP, management must make a variety of decisions which impact the reported amounts and the related disclosures. These decisions include the selection of the appropriate accounting principles to be applied and the assumptions on which to base accounting estimates. In making these decisions, management applies its judgment based on its understanding and analysis of the relevant circumstances and the Company’s historical experience.

The Company’s accounting policies that are most important to the presentation of its results of operations and financial condition, and which require the greatest use of judgments and estimates by management, are designated as its critical accounting policies. See discussion of the Company’s critical accounting policies under Item 7 in the Company’s Annual Report on Form 10-K for the Company’s fiscal year ended August 31, 2024. Management periodically re-evaluates and adjusts its critical accounting policies as circumstances change. There were no significant changes in the Company’s critical accounting policies during the nine months ended May 31, 2025.

Recent Accounting Guidance

See Note 1 – Basis of Presentation and the disclosure therein of recently adopted accounting guidance to the condensed consolidated financial statements set forth in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Executive Overview and Outlook

Operating revenues for the three months ended May 31, 2025 were $169.5 million, an increase of 22 percent compared to $139.2 million for the three months ended May 31, 2024. Irrigation segment revenues for the three months ended May 31, 2025 increased 25 percent to $143.7 million from the same prior year period, while infrastructure segment revenues increased 6 percent to $25.7 million. Net earnings for the three months ended May 31, 2025 were $19.5 million, or $1.78 per diluted share, compared to net earnings of $20.4 million, or $1.85 per diluted share, for the three months ended May 31, 2024. The year-over-year decrease in net earnings resulted primarily from the recognition of a one-time income tax credit in the prior year period of $4.8 million, or $0.44 per diluted share.

The primary drivers for the Company’s irrigation segment are the need for irrigated agricultural crop production, which is tied to population growth and the attendant need for expanded food production, and the need to use water resources more efficiently. These drivers are affected by a number of factors, including the following:

• Agricultural commodity prices – As of May 2025, U.S. corn prices have decreased approximately 1 percent and U.S. soybean prices have decreased approximately 15 percent from price levels prevailing in May 2024. Agriculture commodity prices fluctuate based on supply factors, such as global production and inventory levels of commodities, and demand factors such as food and feed consumption, biofuel production and the level of China's demand for agricultural imports.
• Net farm income – In February 2025, the U.S. Department of Agriculture (the “USDA”) released its initial forecast for 2025 U.S. net farm income, which is estimated to be $180.1 billion, an increase of 29 percent from 2024 U.S. net farm income of $139.1 billion. This forecasted increase is based mainly on an increase in government support payments from supplemental and ad-hoc disaster support programs, while cash receipts from crops are expected to decrease 2 percent. Net farm income for 2024 declined 6 percent from the prior year.
• Weather conditions – Demand for irrigation equipment is often positively affected by storm damage and prolonged periods of drought conditions as producers look for ways to reduce the risk of low crop production and crop failures. Conversely, demand for irrigation equipment can be negatively affected during periods of more predictable or abundant natural precipitation.
• Governmental action– A number of governmental laws, regulations and policies can affect the Company’s business, including the following:
• In response to recently announced U.S. tariffs on imports from Canada, Mexico, China and other countries, the Company has implemented a comprehensive action plan that includes supplier negotiation, strategic inventory placement, and other supply chain initiatives to manage potential cost impacts. The impact of the proposed tariffs is anticipated to result in a marginal increase to the Company's cost of goods, which is expected to be passed through to the market through increased pricing of products. The potential impact of additional tariffs or retaliatory actions has been considered, and the Company plans to utilize its global footprint and supply chain to try to minimize the potential impact of these actions on its business and customers.
• The Agriculture Improvement Act of 2018 (the “Farm Bill”) was signed into law in December 2018 and provides a degree of certainty to growers, including funding for the Environmental Quality Incentives Program, which provides financial assistance to farmers to implement conservation practices, and is frequently used to assist in the purchase of center pivot irrigation systems. In December 2024, Congress voted to extend the Farm Bill through September 30, 2025, at which date it will expire without new legislation or another extension.
• Changes to U.S. income tax laws enacted in December 2017 (the "2017 Tax Act") increased the benefit of certain tax incentives, such as the Section 179 income tax deduction and Section 168 bonus depreciation, which are intended to encourage equipment purchases by allowing 100 percent of the cost of equipment to be treated as an expense in the year of purchase rather than amortized over its useful life. This benefit is being phased out by 20 percent per year over a five-year period, beginning in 2023. For calendar 2025, the allowable deduction is 40 percent of the cost of equipment and in calendar 2026 the allowable deduction will drop to 20 percent. Proposed legislation currently being considered in Congress would restore these incentives to levels set in the 2017 Tax Act to once again allow 100 percent of the cost of equipment to be treated as an expense in the year of purchase rather than amortized over its useful life.
• Biofuel production continues to be a major demand driver for irrigated corn, sugar cane and soybeans as these crops are used in high volumes to produce ethanol and biodiesel. The U.S. Environmental Protection Agency (“EPA”) establishes biofuel volume requirements for the Renewable Fuels Standard (RFS). In June, 2025 the EPA proposed new volume requirements for 2026 and 2027 that represent increases of approximately 8 percent and 10 percent, respectively, over 2025 requirements. The new requirements, along with other proposed regulatory changes, are intended to strengthen the RFS program and support the growth of domestically produced renewable fuels.
• Many international markets are affected by government policies such as subsidies and other agriculturally related incentives. While these policies can have a significant effect on individual markets, they typically do not have a material effect on the consolidated results of the Company.
• Currency – The value of the U.S. dollar fluctuates in relation to the value of currencies in a number of countries to which the Company exports products and in which the Company maintains local operations. The strengthening of

the dollar increases the cost in the local currency of the products exported from the U.S. into these countries and, therefore, could negatively affect the Company’s international sales and margins. In addition, the U.S. dollar value of sales made in any affected foreign currencies will decline as the value of the dollar rises in relation to these other currencies.

The forecasted increase in estimated 2025 net farm income is not expected to have a meaningful positive impact on demand for irrigation equipment as the increase results primarily from government support payments while crop receipts are expected to be slightly lower compared to the prior year. Severe drought conditions are beginning to develop in certain parts of the Midwest which could provide a catalyst for incremental sales of replacement parts in the near term.

The most significant opportunities for growth in irrigation sales over the next several years continue to be in international markets where irrigation use is less developed and demand is driven not only by commodity prices and net farm income, but also by food security, water scarcity and population growth. While international irrigation markets remain active with opportunities for further development and expansion, regional political and economic factors, including armed conflict, currency conditions and other factors can create a challenging environment. Additionally, international results are influenced by large project sales which tend to fluctuate and can be difficult to forecast accurately. In the fourth quarter of fiscal 2024, the Company began shipment under a multi-year supply agreement to provide irrigation systems and remote management and scheduling technology for a large project in the Middle East and North Africa (MENA) region. The project is valued at over $100 million in revenue, with equipment deliveries expected to continue throughout fiscal 2025 and into the first quarter of fiscal 2026.

The infrastructure business continues to be driven by the Company's transportation safety products, the demand for which largely depends on government spending for road construction and improvements. The enactment of the Infrastructure Investment and Jobs Act ("IIJA") in November 2021 introduced $110 billion in incremental federal funding for roads, bridges, and other transportation projects, which the Company anticipates may support higher demand for its transportation safety products as states utilize these funds in construction projects. The federal programs under IIJA run through September 2026 with funding anticipated to extend up to two years beyond that date.

The backlog of unshipped orders at May 31, 2025 was $117.1 million compared with $205.9 million at May 31, 2024. Included in these backlogs are amounts of $12.3 million and $62.0 million, respectively, for orders that are not expected to be fulfilled within the subsequent 12 months. The decrease in backlog is primarily attributed to the completion of deliveries of the large irrigation project in the MENA region over the Company's past four fiscal quarters. The Company’s backlog can fluctuate from period to period due to the seasonality, cyclicality, timing and execution of contracts. Backlog typically represents long-term projects as well as short lead-time orders, and therefore is generally not a good indication of the next fiscal quarter’s revenues.

Results of Operations

For the Three Months ended May 31, 2025 compared to the Three Months ended May 31, 2024

The following section presents an analysis of the Company’s operating results displayed in the condensed consolidated statements of earnings for the three months ended May 31, 2025 and 2024. It should be read together with the business segments information in Note 14 to the condensed consolidated financial statements:

($ in thousands)

(1) Includes $8.8 million and $5.9 million of corporate operating expenses for the three months ended May 31, 2025 and 2024, respectively.

Revenues

Operating revenues for the three months ended May 31, 2025 increased 22 percent to $169.5 million from $139.2 million for the three months ended May 31, 2024, as irrigation revenues increased $28.9 million and infrastructure revenues increased $1.4 million compared to the prior year period. The irrigation segment provided 85 percent of the Company’s revenue during the three months ended May 31, 2025 as compared to 83 percent for the three months ended May 31, 2024.

North America irrigation revenues for the three months ended May 31, 2025 of $69.1 million increased $0.8 million, or 1 percent, from $68.2 million for the three months ended May 31, 2024. Unit sales volume of irrigation equipment was comparable to the prior year period, while average selling prices were up slightly. This increase was partially offset by the impact of slightly shorter machines, on average, compared to the prior year period.

International irrigation revenues for the three months ended May 31, 2025 of $74.7 million increased $28.1 million, or 60 percent, from $46.6 million for the three months ended May 31, 2024. The majority of the increase resulted from revenues related to the large project in the MENA region, along with higher sales volumes in Brazil and other parts of South America. These increases were partially offset by the unfavorable effects of foreign currency translation of approximately $2.5 million compared to the prior year period.

Infrastructure segment revenues for the three months ended May 31, 2025 of $25.7 million increased $1.4 million, or 6 percent, from $24.4 million for the three months ended May 31, 2024. The increase was primarily driven by higher sales volumes of road safety products while Road Zipper System sales and lease revenues were comparable to the prior year period.

Gross Profit

Gross profit for the three months ended May 31, 2025 of $53.6 million increased 15 percent from $46.5 million for the three months ended May 31, 2024. The increase in gross profit resulted primarily from higher international irrigation revenues. Gross margin was 31.6 percent of sales for the three months ended May 31, 2025 compared with 33.4 percent of sales for the three months ended May 31, 2024. The decrease in gross margin was driven primarily by lower irrigation gross margin resulting from a higher percentage of international project revenue in the current year period that was dilutive to gross margin. Infrastructure gross margin declined slightly due to a less favorable margin mix of Road Zipper System revenues compared to the prior year period.

Operating Expenses

Operating expenses of $29.8 million for the three months ended May 31, 2025 increased $3.3 million, or 12 percent, compared with $26.6 million for the three months ended May 31, 2024. The increase was primarily driven by higher sales commissions and incentive compensation expense, partially offset by lower salary and wage expense compared to the prior year period.

Other Income (Expense), net

The Company recorded other income of $1.9 million and $0.2 million for the three months ended May 31, 2025 and 2024, respectively. The change resulted primarily from favorable changes in interest income and interest expense.

Income Taxes

The Company recorded income tax expense of $6.2 million and an income tax benefit $0.2 million for the three months ended May 31, 2025 and 2024, respectively. The effective income tax rate was 24.2 percent and -1.0 percent for the three months ended May 31, 2025 and 2024, respectively. The current year period effective tax rate reflects a higher proportion of earnings in low tax jurisdictions compared to the prior year period and includes a negligible impact of discrete items, while the prior year period effective rate includes a one-time discrete benefit of $4.8 million that did not repeat in the current year period.

For the Nine Months ended May 31, 2025 compared to the Nine Months ended May 31, 2024

The following section presents an analysis of the Company’s operating results displayed in the condensed consolidated statements of earnings for the nine months ended May 31, 2025 and 2024. It should be read together with the business segments information in Note 14 to the condensed consolidated financial statements:

($ in thousands)

(1) Includes $25.3 million and $20.8 million of corporate operating expenses for the nine months ended May 31, 2025 and 2024, respectively.

Revenues

Operating revenues for the nine months ended May 31, 2025 increased 16 percent to $522.8 million from $452.1 million for the nine months ended May 31, 2024, as irrigation revenues increased $50.9 million and infrastructure revenues increased $19.8 million. The irrigation segment provided 84 percent of the Company’s revenue during the nine months ended May 31, 2025 as compared to 86 percent for the nine months ended May 31, 2024.

North America irrigation revenues for the nine months ended May 31, 2025 of $223.8 million decreased $16.7 million, or 7 percent, from $240.5 million for the nine months ended May 31, 2024. The decrease resulted primarily from lower unit sales volume, as well as a less favorable mix of shorter machines, and slightly lower average selling prices compared to the prior year period.

International irrigation revenues for the nine months ended May 31, 2025 of $215.2 million increased $67.6 million, or 46 percent, from $147.6 million for the nine months ended May 31, 2024. The majority of the increase resulted from revenues related to shipments for a large project in the MENA region, along with higher sales volumes in Brazil and other parts of South America. The current year period was also impacted by the unfavorable effects of foreign currency translation of approximately $9.4 million compared to the prior year period.

Infrastructure segment revenues for the nine months ended May 31, 2025 of $83.8 million increased $19.8 million, or 31 percent, from $64.1 million for the nine months ended May 31, 2024. The increase was primarily driven by a large Road Zipper System project, valued at over $20 million, that was delivered in the current year period, and slightly higher sales volumes of road safety products. These increases were partially offset by lower leasing revenue in the current year period.

Gross Profit

Gross profit for the nine months ended May 31, 2025 of $166.1 million increased 14 percent from $145.4 million for the nine months ended May 31, 2024. The increase in gross profit resulted from higher revenues in irrigation and infrastructure. Gross margin was 31.8 percent of sales for the nine months ended May 31, 2025 compared with 32.2 percent of sales for the nine months ended May 31, 2024. Increased gross margin in infrastructure resulted primarily from a more favorable margin mix of revenues with higher Road Zipper System sales. This favorable impact was partially offset by lower irrigation gross margin resulting primarily from a higher percentage of international project revenue that was dilutive to gross margin compared to the prior year period.

Operating Expenses

Operating expenses of $89.3 million for the nine months ended May 31, 2025 increased $7.0 million compared with $82.2 million for the nine months ended May 31, 2024. The increase was driven by higher sales commissions and incentive compensation expense, partially offset by lower salary and wage expense compared to the prior year period.

Other Income (Expense), net

The Company recorded other income of $4.2 million and $0.8 million for the nine months ended May 31, 2025 and 2024, respectively. The increase in the current year period was driven by favorable changes related to interest income and interest expense. The current year period also includes $0.2 million of foreign currency gains while the same prior year period includes $0.3 million of foreign currency losses.

Income Taxes

The Company recorded income tax expense of $17.7 million and $10.3 million for the nine months ended May 31, 2025 and 2024, respectively. The effective income tax rate was 21.9 percent and 16.2 percent for the nine months ended May 31, 2025 and 2024, respectively. The current year period effective tax rate reflects a higher proportion of earnings in low tax jurisdictions compared to the prior year period and includes a negligible impact of discrete items, while the prior year period effective rate includes discrete benefits totaling $6.1 million that did not repeat in the current year period.

Liquidity and Capital Resources

The Company's cash, cash equivalents, and marketable securities totaled $210.8 million at May 31, 2025 compared with $152.7 million at May 31, 2024 and $190.9 million at August 31, 2024. The Company requires cash for financing its receivables and inventories, paying operating expenses and capital expenditures, and for dividends and share repurchases. The Company meets its liquidity needs and finances its capital expenditures from its available cash and funds provided by operations along with borrowings under its credit arrangements described below. The Company’s investments in marketable securities consist of investment grade corporate bonds and commercial paper. In the normal course of business, the Company enters into contracts and commitments which obligate the Company to make future payments. The Company does not have any additional off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. The Company believes its current cash resources, investments in marketable securities, projected operating cash flow, and remaining capacity under its continuing bank lines of credit are sufficient to cover all its expected working capital needs, planned capital expenditures and dividends. The Company may require additional borrowings to fund potential acquisitions in the future.

The Company’s total cash and cash equivalents held by foreign subsidiaries were approximately $108.5 million, $62.9 million, and $84.3 million as of May 31, 2025, May 31, 2024, and August 31, 2024, respectively. The Company does not consider earnings in foreign subsidiaries to be permanently reinvested and accrues and pay incremental applicable taxes on earnings expected to be repatriated. The Company does not expect the repatriation of these funds, and any applicable taxes, to have a significant impact on the Company’s overall liquidity.

Net working capital was $397.0 million at May 31, 2025, as compared with $365.0 million at May 31, 2024 and $367.4 million at August 31, 2024. Cash provided by operating activities totaled $68.9 million during the nine months ended May 31, 2025, compared to cash provided by operating activities of $42.7 million during the nine months ended May 31, 2024. The current year period included higher net earnings and a more favorable impact of changes in working capital compared to the prior year period.

Cash flows used in investing activities totaled $48.4 million during the nine months ended May 31, 2025 compared to $32.4 million during the nine months ended May 31, 2024. The current year includes the purchase of a minority interest in Pessl Instruments for $5.8 million, while the prior year includes proceeds from maturities of marketable securities of $8.3 million. Purchases of property, plant, and equipment were $28.3 million, compared to $23.5 million in the same prior year period.

Cash flows used in financing activities totaled $14.4 million during the nine months ended May 31, 2025 compared to cash flows used in financing activities of $30.2 million during the nine months ended May 31, 2024. During the current year period, the Company repurchased $2.7 million of common stock compared to $17.9 million in the prior year period.

Capital Allocation Plan

The Company’s capital allocation plan is to continue investing in revenue and earnings growth, combined with a defined process for enhancing returns to stockholders. Under the Company’s capital allocation plan, the priorities for uses of cash include:

• Investment in organic growth including capital expenditures and expansion of international markets,
• Dividends to stockholders, along with expectations to increase dividends over time,
• Synergistic acquisitions that provide attractive returns to stockholders, and
• Opportunistic share repurchases taking into account cyclical and seasonal fluctuations.

Capital Expenditures

Capital expenditures for fiscal 2025 are expected to be between $35.0 million and $40.0 million, including equipment replacement, productivity improvements, new product development and commercial growth investments. The increase over recent levels of capital expenditures is primarily related to modernization and productivity improvements planned at certain manufacturing facilities. The Company’s management does maintain flexibility to modify the amount and timing of some of the planned expenditures in response to economic conditions.

Dividends

In the third quarter of fiscal 2025, the Company paid a quarterly cash dividend to stockholders of $0.36 per common share, or $3.9 million, compared to a quarterly cash dividend of $0.35 per common share, or $3.8 million, in the third quarter of fiscal 2024.

Share Repurchases

The Company’s Board of Directors authorized a share repurchase program of up to $250.0 million of common stock with no expiration date. Under the program, shares may be repurchased in privately negotiated and/or open market transactions as well as under formalized trading plans in accordance with the guidelines specified under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. All purchases under the program are open market transactions.

During the three and nine months ended May 31, 2025, the Company repurchased approximately 11 thousand and 23 thousand shares, respectively, of its common stock under the program for $1.2 million and $2.7 million, respectively, inclusive of excise taxes. During both the three and nine months ended May 31, 2024, the Company repurchased approximately 154 thousand shares of its common stock under the program for $17.9 million. As of May 31, 2025, the repurchased shares were held as treasury stock and $38.8 million of the authorization remained available for future share repurchases.

Long-Term Borrowing Facilities

Senior Notes. The Company has outstanding $115.0 million in aggregate principal amount of Senior Notes, Series A (the “Senior Notes”). The entire principal of the Senior Notes is due and payable on February 19, 2030. Interest on the Senior Notes is payable semi-annually at a fixed annual rate of 3.82 percent. Borrowings under the Senior Notes are unsecured. The Company used the proceeds of the sale of the Senior Notes for general corporate purposes, including acquisitions and dividends.

Revolving Credit Facility. The Company has outstanding a $50.0 million unsecured Amended and Restated Revolving Credit Facility (the “Revolving Credit Facility”) with Wells Fargo Bank, National Association (“Wells Fargo”) expiring August 26, 2026. The Company intends to use borrowings under the Revolving Credit Facility for working capital purposes and to fund acquisitions. At May 31, 2025 and 2024, the Company had no outstanding borrowings under the Revolving Credit Facility. The amount of borrowings available at any time under the Revolving Credit Facility is reduced by the amount of standby letters of credit issued by Wells Fargo then outstanding. At May 31, 2025, the Company had the ability to borrow up to $50.0 million under the Revolving Credit Facility. The Revolving Credit Facility may be increased by up to an additional $50.0 million at any time, subject to additional commitment approval. Borrowings under the Revolving Credit Facility bear interest at a variable rate equal to the Secured Overnight Financing Rate ("SOFR") plus a margin of between 100 and 210 basis points depending on the Company’s leverage ratio then in effect (which resulted in a variable rate of 5.70 percent at May 31, 2025), subject to adjustment as set forth in the loan documents for the Revolving Credit Facility. Interest is paid on a monthly to quarterly basis depending on loan type. The Company currently pays an annual commitment fee on the unused portion of the Revolving Credit Facility. The fee is between 0.125 percent and 0.2 percent on the unused balance depending on the Company’s leverage ratio then in effect (which resulted in a fee of 0.125 percent at May 31, 2025).

Borrowings under the Revolving Credit Facility have equal priority with borrowings under the Company’s Senior Notes. Each of the credit arrangements described above include certain covenants relating primarily to the Company’s financial condition. These financial covenants include a funded debt to EBITDA leverage ratio and an interest coverage ratio. In the event that the loan documents for the Revolving Credit Facility were to require the Company to comply with any financial covenant that is not already included or is more restrictive than what is already included in the arrangement governing the Senior Notes, then such covenant shall be deemed incorporated by reference for the benefit of holders of the Senior Notes. Upon the occurrence of any event of default of these covenants, including a change in control of the Company, all amounts outstanding thereunder may be declared to be immediately due and payable. At May 31, 2025 and 2024, the Company was in compliance with all financial loan covenants contained in its credit arrangements in place as of each of those dates.

Contractual Obligations and Commercial Commitments

There have been no material changes in the Company’s contractual obligations and commercial commitments as described in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2024.

There have been no material changes from the Company’s quantitative and qualitative disclosures about market risk previously disclosed in the Company’s most recent Annual Report on Form 10-K. See discussion of the Company’s quantitative and qualitative disclosures about market risk under Part II, Item 7A in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2024.

Disclosure Controls and Procedures

The Company carried out an evaluation under the supervision and the participation of the Company’s management, including the Company’s Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rules 13a-15(e) and 15d-15(e). Based upon that evaluation, the CEO and CFO concluded that the Company’s disclosure controls and procedures were effective as of May 31, 2025.

Changes in Internal Control over Financial Reporting

The CEO and CFO determined that there has not been any significant change to the Company’s internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

There have been no material changes from risk factors previously disclosed in the Company’s most recent Annual Report on Form 10-K. See the discussions of the Company’s risk factors under Part I, Item 1A in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2024.