Oil-Dri Corp of America: Form 10-Q for the period ended Jan 31, 2026

The following discussion and analysis of our financial condition and results of operations should be read together with the financial statements and the related notes included herein and our Consolidated Financial Statements, accompanying notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the fiscal year ended July 31, 2025. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from the results discussed in the forward-looking statements. Factors that might cause a difference include, but are not limited to, those discussed herein under "Forward-Looking Statements" and "Risk Factors," and those discussed under Part I, Item 1A, "Risk Factors," of our Annual Report on Form 10-K for the fiscal year ended July 31, 2025.

OVERVIEW

We develop, mine, manufacture and market sorbent products principally produced from clay minerals, primarily consisting of calcium bentonite, attapulgite and diatomaceous shale. Our principal products include agricultural and horticultural chemical carriers, animal health and nutrition products, cat litter, fluids purification and filtration bleaching clays, industrial and automotive floor absorbents and sports field products. Our products are sold to two primary customer groups, including customers who resell our products as originally produced to the end consumer and other customers who use our products as part of their production process or use them as an ingredient in their final finished product. We have two reportable operating segments based on the different characteristics of our two primary customer groups: the Retail and Wholesale Products Group ("Retail and Wholesale") and the Business to Business Products Group ("Business to Business"), as described in Note 10 of the Notes to the unaudited Condensed Consolidated Financial Statements. Each operating segment is discussed individually below.

On October 9, 2024, the Company announced that our Board approved a two-for-one stock split in the form of a stock dividend. Stockholders of record as of the close of business on December 20, 2024 received a distribution of one additional share of Common Stock for each share of Common Stock held by such stockholder and one additional share of Class B Stock for each share of Class B Stock held by such stockholder as of the record date. The additional shares were distributed on January 3, 2025, and our Common Stock began trading on a post-split basis on January 6, 2025.

The stock split did not affect the par value of the Common Stock or Class B Stock, however, in order to implement the stock split we amended our Certificate of Incorporation on December 11, 2024 to increase the number of authorized shares of Common Stock from 15 million to 30 million. Proportionate adjustments were made to the number of shares that remain available for issuance pursuant to the 2006 Plan, as well as to the outstanding awards under the 2006 Plan.

Over a period of several days in January 2026, the southern and eastern United States was impacted by a significant weather event known as "Winter Storm Fern" that resulted in snow, freezing rain, and ice causing widespread damage and power outages (“Weather Event”). During this time, due to safety concerns and interruptions that we experienced to power, natural gas, and water, we temporarily shut down operations of our facilities in the effected regions, which resulted in reduced production. Our supply chain was also impacted, causing significant delays in delivery of materials and services necessary to resume production. These shutdowns and delays resulted in decreased fixed cost absorption and an increase of backlog, which we define as purchase orders that we have received from customers and that we have accepted, but that have not shipped by the customers’ requested ship dates.

SIX MONTHS ENDED JANUARY 31, 2026 COMPARED TO

SIX MONTHS ENDED JANUARY 31, 2025

CONSOLIDATED RESULTS

(in thousands)

Consolidated net sales for the six months ended January 31, 2026 were $238.2 million, a 3% decrease compared to net sales of $244.9 million for the six months ended January 31, 2025. The decrease was driven primarily by softer volumes across both our Business to Business and Retail and Wholesale product groups when compared to the same period in fiscal year 2025. Further details of the drivers are discussed below in the segment analysis.

Consolidated gross profit in the six months ended January 31, 2026 was $67.8 million, a decrease of $7.4 million, or 10%, from gross profit of $75.2 million in the six months ended January 31, 2025. Gross margin (defined as gross profit as a percentage of net sales) in the six months ended January 31, 2026 decreased to 28.5% from 30.7% in the six months ended January 31, 2025. This reduction in gross margin was mainly driven by softer volume and higher costs, which led to unfavorable fixed cost absorption. This was in part driven by the Weather Event which impacted our plants' production and ability to fulfill orders. For the six months ended January 31, 2026, the overall domestic per ton cost of goods sold increased 3% compared to the same period of fiscal year 2025. The increase was primarily driven by higher per ton manufacturing costs, including materials, which increased 8% when compared to six months ended January 31, 2025. These increases were slightly offset by a 5% decrease in per ton transportation costs, and 3% decrease in per ton packaging costs for the six months ended January 31, 2026, when compared to the six months ended January 31, 2025.

Total SG&A expenses of $35.2 million for the six months ended January 31, 2026 were $1.4 million, or 4%, lower compared to $36.6 million for the six months ended January 31, 2025. The decrease was driven by a $1.5 million reduction in corporate unallocated expenses, primarily as a result of lower corporate human resource costs and a lower incentive bonus accrual. The decrease was partially offset by SG&A expenses at the operating segments level, which increased by $0.1 million, as discussed below.

Total other income, net was $0.8 million for the six months ended January 31, 2026, a $3.0 million gain compared to other expenses, net of $2.2 million in the same period of fiscal year 2025. $0.8 million of this change was driven by the reduction in the estimated landfill modification costs recognized in fiscal year 2026 compared to an increase in the estimated cost recognized during the first half of fiscal year 2025 and $0.8 million was driven by foreign exchange gains. The gain was also in part driven by the positive outcome of a confidential legal settlement in the matter of Oil-Dri Corporation of America vs. Entera Animal Health, et al., as well as $0.5 million due to higher interest income and $0.2 million due to lower interest expense.

Tax expense was $5.5 million for the six months ended January 31, 2026 compared to $7.2 million for the six months ended January 31, 2025. $0.8 million of the decrease was due to a discrete tax benefit as a result of stock-based compensation recognized in the first quarter of fiscal year 2026. The remaining decrease was primarily due to the conversion of certain legal entities from corporations to limited liability companies resulting in state tax benefits.

Our unaudited Condensed Consolidated Balance Sheet as of January 31, 2026 and our unaudited Condensed Consolidated Statement of Cash Flows for the six months ended January 31, 2026 show a $3.5 million decrease in total cash and cash equivalents from fiscal year-end 2025. The decrease was driven primarily by financing and investing activities, partially offset by positive cash flow from operations. Refer to the "Liquidity and Capital Resources" section below for more details.

BUSINESS TO BUSINESS PRODUCTS GROUP

(in thousands)

Net sales of the Business to Business Products Group for the six months ended January 31, 2026 decreased $5.6 million, or 6%, compared to the six months ended January 31, 2025, driven primarily by a reduction in sales of our fluid purification and animal health products, partially offset by an increase in sales of our agricultural and horticultural products. Net sales of our fluids purification products for the six months ended January 31, 2026 decreased $5.0 million, or 9%, compared to the six months ended January 31, 2025. This decrease was due to lower volumes, primarily of our products used in renewable diesel filtration, which were significantly higher in fiscal year 2025 when several new customers began operations in new plants. Net sales of our animal health & nutrition products for the six months ended January 31, 2026 decreased $4.0 million, or 29%, compared to the six months ended January 31, 2025, due to lower volume primarily driven by the loss of a key customer at one of our distributors. Net sales of our agricultural and horticultural chemical carrier products for the six months ended January 31, 2026 increased $3.4 million, or 16%, compared to the six months ended January 31, 2025, due to a combination of favorable mix, higher volume and higher prices.

Gross profit decreased 14% in the six months ended January 31, 2026 compared to the six months ended January 31, 2025. This decrease was mainly due to lower sales resulting in unfavorable fixed cost absorption and higher per ton manufacturing costs. This was in part driven by the Weather Event which impacted our plants' production and ability to fulfill orders. Per ton manufacturing and packaging costs increased 9% and 2%, respectively, while transportation costs remained flat. SG&A expenses increased by $0.3 million, or 4%, for the six months ended January 31, 2026 compared to the six months ended January 31, 2025. This increase is primarily driven by higher compensation costs.

RETAIL AND WHOLESALE PRODUCTS GROUP

(in thousands)

Net sales of the Retail and Wholesale Products Group for the six months ended January 31, 2026 decreased $1.1 million, or 1%, compared to the six months ended January 31, 2025, mainly due to a decrease in cat litter sales. Domestic cat litter net sales, excluding co-packaged cat litter, were $112.3 million for the six months ended January 31, 2026, a decrease of $3.3 million, or 3%, when compared to the six months ended January 31, 2025. $2.1 million of the decrease was due to a private label account that was lost in the second quarter of fiscal year 2025, and $1.5 million decrease was tied to high demand in fiscal year 2025 due to a large promotion at a key account. These losses were partially offset by revenue gains with other customers. Net sales of co-packaged cat litter products increased 20% in the six months ended January 31, 2026, compared to the six months ended January 31, 2025. This increase was driven primarily by higher volumes as we expanded our co-packaged offerings to include lightweight cat litter. Net sales of our domestic industrial and sports products were $21.2 million for the six months ended January 31, 2026, an increase of $0.3 million, or 1%, when compared to the six months ended January 31, 2025, mainly driven by higher prices to offset elevated costs. Net sales by our subsidiary in Canada, which include both our cat litter and industrial products, increased $0.1 million for the six months ended January 31, 2026 when compared to the six months ended January 31, 2025. Due to the Weather Event, several of our plants were shut down and unable to ship products or allow for customers to pick up orders. This drove our backlog of Retail and Wholesale products to increase by $2.8 million at the end of the second quarter when compared to the prior quarter.

Gross profit decreased 5% in the six months ended January 31, 2026 compared to the six months ended January 31, 2025. This decrease was mainly due to lower sales resulting in unfavorable fixed cost absorption, and higher per ton manufacturing costs. This was in part driven by the Weather Event which impacted our plants' production and ability to fulfill orders. Per ton manufacturing costs, including purchased materials, increased 8%, this increase was partially offset by a 10% reduction in transportation and 4% reduction in per ton packaging costs. Certain key customers shifting terms from delivery to pick-up was the primary driver of the reduction of transportation costs. SG&A expenses decreased $0.2 million, or 2%, during the six months ended January 31, 2026, compared to the six months ended January 31, 2025, primarily due to less bad debt expense related to customer bankruptcies.

FOREIGN OPERATIONS

Foreign operations include our subsidiaries in Canada and the Netherlands, which are reported in the Retail and Wholesale Products Group, and our subsidiaries in the United Kingdom ("UK"), Mexico, China and Indonesia, which are reported in the Business to Business Products Group. Net sales by our foreign subsidiaries for the six months ended January 31, 2026 were $9.9 million, a decrease of $0.2 million compared to net sales of $10.1 million in the same period ended January 31, 2025, driven primarily by net sales decrease in sales volume in Mexico. Net sales by our foreign subsidiaries represented 4% of our consolidated net sales for both the six months ended January 31, 2026, and January 31, 2025.

Our foreign subsidiaries reported net income of $0.2 million for the six months ended January 31, 2026, compared to net loss of $0.3 million in the six months ended January 31, 2025. The increase in net income was primarily driven by the preliminary foreign VAT assessment recognized in fiscal year 2025.

Identifiable assets of our foreign subsidiaries as of January 31, 2026 were $9.2 million, compared to $9.0 million as of July 31, 2025.

THREE MONTHS ENDED JANUARY 31, 2026 COMPARED TO

THREE MONTHS ENDED JANUARY 31, 2025

CONSOLIDATED RESULTS

(in thousands)

Consolidated net sales for the second quarter of fiscal year 2026 were $117.7 million, a 1% increase compared to net sales of $116.9 million for the second quarter of fiscal year 2025 primarily driven by favorable product mix. This increase was primarily driven by higher sales of our agriculture and horticultural products within our Business to Business products group and higher sales of our cat litter products within the Retail and Wholesale products group.

Consolidated gross profit for the second quarter of fiscal year 2026 was $32.3 million, a decrease of 6% when compared to $34.4 million for the second quarter of fiscal year 2025. Our gross margin (defined as gross profit as a percentage of net sales) decreased to 27.4% from 29.5% in the second quarter of fiscal year 2026 compared to the second quarter of fiscal year 2025. This decrease was mainly driven by higher per ton costs of goods sold. Domestic per ton cost of goods sold increased 4%, due to an 8% increase in per ton manufacturing costs, including materials, which was driven primarily by product mix and certain higher expenses such as labor and depreciation. This increase was partially offset by a 5% reduction in per ton transportation costs and 2% reduction in packaging costs.

Total SG&A expenses of $16.6 million for the second quarter of fiscal year 2026 decreased by $0.4 million, or 2%, compared to $17.0 million for the same period of fiscal year 2025, primarily due to the decrease in corporate unallocated expenses, partially offset by an increase in operating segments' SG&A expenses. Unallocated corporate expenses were $6.9 million, a decrease of $1.3 million, or 16%, compared to the same period in fiscal year 2025, primarily as a result of a lower corporate bonus accrual. SG&A expenses at the operating segments level are discussed below in the discussion of our segments' operating income.

Total net other income was $0.1 million for the second quarter of fiscal year 2026, compared to net other expenses of $1.2 million for the second quarter of fiscal year 2025. This change was driven by $0.6 million of foreign exchange gains, along with $0.4 million from the reduction in the estimated landfill modification costs recognized this quarter compared to an increase in the estimated cost recognized during the second quarter of fiscal year 2025.

Tax expense was $3.2 million for the second quarter of fiscal year 2026 compared to $3.3 million for the second quarter of fiscal year 2025. We used an effective tax rate of 21% in both the second quarter of fiscal year 2026 and 2025. We adjust our effective tax rate quarterly based on expected annual taxable income and our assessment of various tax adjustments, including depletion and discrete items.

BUSINESS TO BUSINESS PRODUCTS GROUP

(in thousands)

Net sales of the Business to Business Products Group decreased $1.4 million, or 3%, in the second quarter of fiscal year 2026, compared to the same period in 2025, driven primarily by a reduction in sales of our animal health and fluids purification products, partially offset by an increase in net sales of our agriculture and horticultural products. Net sales of our animal health and nutrition products in the second quarter of fiscal year 2026 decreased $2.5 million, or 32%, compared to the second quarter of fiscal year 2025, due to lower volume primarily driven by the loss of a key customer at one of our distributors. Net sales of our fluids purification products in the second quarter of fiscal year 2026 decreased $1.0 million, or 4%, compared to the second quarter of fiscal year 2025. This decrease was due to lower volumes, primarily of our products used in renewable diesel filtration. Net sales of our agricultural and horticultural chemical carrier products in the second quarter of fiscal year 2026 increased $2.1 million, or 23%, compared to the second quarter of fiscal year 2025, due to a combination of favorable mix, higher prices and increased demand.

Gross profit decreased 10% in the second quarter of fiscal year 2026, compared to the same period in 2025. This decrease was mainly due to a combination of lower sales resulting in unfavorable fixed cost absorption and higher per ton costs. This was in part driven by the Weather Event which impacted our plants' production and ability to fulfill orders. Domestic per ton manufacturing and packaging costs increased 5% and 11%, respectively, partially offset by a 2% reduction in per ton transportation costs. The increase in packaging was primarily due to mix and selling more packaged agricultural and horticultural products. Total SG&A expenses for the Business to Business Products Group in the second quarter of fiscal year 2026 increased $0.7 million, or 21%, compared to the same period of fiscal year 2025. This increase is primarily driven by higher compensation and consultant costs.

RETAIL AND WHOLESALE PRODUCTS GROUP

(in thousands)

Net sales of the Retail and Wholesale Products Group increased $2.3 million, or 3%, in the second quarter of fiscal year 2026, compared to the same period in 2025, primarily due to cat litter sales. Net sales of co-packaged cat litter products increased 31% compared to the second quarter of fiscal year 2025, due to higher volumes as we expanded our co-packaged offerings to include lightweight cat litter. Domestic cat litter net sales, excluding sales of co-packaged cat litter, were $56.0 million for the second quarter of fiscal year 2026, an increase of $0.3 million, when compared to the second quarter of fiscal year 2025. This was primarily driven by higher sales of our crystal cat litter. Net sales of our domestic industrial and sports products in the second quarter of fiscal year 2026 were $10.2 million, an increase of $0.4 million, or 4%, when compared to the second quarter of fiscal year 2025, mainly driven by the higher pricing to offset elevated costs. Net sales by our subsidiary in Canada, which include both our cat litter and industrial products, in the second quarter of fiscal year 2026, increased $0.1 million, or 4%, compared to the same period in 2025. Due to the Weather Event, several of our plants were shut down and unable to ship products or allow for customers to pick up orders. This drove our backlog of Retail and Wholesale products to increase by $2.8 million at the end of the second quarter when compared to the prior quarter.

Gross profit decreased 2% in the second quarter of fiscal year 2026, compared to the same period in 2025. This decrease was mainly due to a combination of unfavorable fixed cost absorption which was in part driven by the Weather Event that impacted our plants' production and ability to fulfill orders, and higher per ton manufacturing costs, including materials. Domestic per ton manufacturing costs increased 9%, primarily due to higher per ton labor and depreciation costs. This was partially offset by a 7% reduction in per ton transportation costs and a 3% reduction in per ton packaging costs. Certain key customers shifting terms from delivery to pick-up was the primary driver of the reduction of transportation costs. SG&A expenses for the Retail and Wholesale Products Group increased by $0.2 million, or 4%, during the second quarter of fiscal year 2026, compared to the same period in fiscal year 2025.

FOREIGN OPERATIONS

Foreign operations include our subsidiaries in Canada and the Netherlands, which are reported in the Retail and Wholesale Products Group, and our subsidiaries in the UK, Mexico, China and Indonesia, which are reported in the Business to Business Products Group. Net sales by our foreign subsidiaries during the second quarter of fiscal year 2026 were $4.8 million, a decrease of $0.1 million compared to net sales of $4.9 million during the same period of fiscal year 2025. This decrease was driven primarily by a $0.2 million decrease in net sales in Mexico, partially offset by a $0.1 million increase in net sales in Canada. Net sales by our foreign subsidiaries represented 4% of our consolidated net sales during the second quarter of both fiscal years 2026 and 2025.

Our foreign subsidiaries reported an increase of $0.1 million for the second quarter of fiscal year 2026 as compared to a net loss of $0.1 million in the second quarter of fiscal year 2025.

LIQUIDITY AND CAPITAL RESOURCES

Our principal liquidity needs are to fund our capital requirements, including funding working capital needs; purchasing and upgrading equipment, facilities, information systems, and real estate; supporting new product development; investing in infrastructure; repurchasing stock; paying dividends; and, from time to time, business acquisitions, and funding our debt service requirements. During the six months ended January 31, 2026, we principally funded these short and long-term capital requirements using cash from current operations as well as cash generated from previous borrowings under our Credit Agreement and Series B, C and D Senior Notes issued under the Note Agreement. See Note 8 of the Notes to the unaudited Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for further information relating to our existing borrowings.

We believe that cash flow from operations, availability under our Note Agreement and revolving credit facility under our Credit Agreement, current cash balances and our ability to obtain other financing, if necessary, will provide sufficient liquidity for foreseeable working capital needs, capital expenditures at existing facilities, deferred compensation payouts, dividend payments and debt service obligations for the foreseeable future.

We continually evaluate our liquidity position and anticipated cash needs, as well as the financing options available to obtain additional cash reserves. Our ability to fund operations, to make planned capital expenditures, to make scheduled debt payments and to remain in compliance with all financial covenants under debt agreements, including, but not limited to, the Credit Agreement, depends on our future operating performance, which, in turn, is subject to prevailing economic conditions and to financial, business and other factors. The timing and size of any new business ventures or acquisitions that we complete may also impact our cash requirements.

Cash and cash equivalents totaled $46.9 million and $22.6 million as of January 31, 2026, and 2025, respectively. The following table sets forth certain elements of our unaudited Condensed Consolidated Statements of Cash Flows (in thousands):

Net cash provided by operating activities

In addition to net income, as adjusted for depreciation and amortization and other non-cash operating activities, the primary sources and uses of operating cash flows for the six months ended January 31, 2026, were as follows:

Accounts receivable, net of allowances increased by $0.6 million in the six months ended January 31, 2026, as compared to the six months ended January 31, 2025. The increase in accounts receivable was driven primarily by net sales and timing of collections.

Inventory increased by $2.1 million in the six months ended January 31, 2026, as compared to the six months ended January 31, 2025, mainly due to the building of finished goods inventory and purchases of other additives to meet anticipated demand.

Excluding the impact of payments related to capital expenditures, accounts payable decreased by $2.9 million in the six months ended January 31, 2026, as compared to the six months ended January 31, 2025. The decrease was mainly due to the timing of payments, cost of goods and services we purchase, production volume levels and vendor payment terms. In the six months ended January 31, 2026, there was a $3.7 million decrease in accounts payable related to capital expenditures recognized as cash used in investing activities as compared to the six months ended January 31, 2025.

Excluding the impact of payments made related to capital expenditures, accrued expenses decreased $10.6 million in the six months ended January 31, 2026, as compared to the six months ended January 31, 2025. The decrease was mainly due to the payout of annual bonuses and other miscellaneous expenses which fluctuate due to timing of payments, changes in the cost of goods and services we purchase, production volume levels, and vendor payment terms, including freight. In the six months ended January 31, 2026, there was a $1.1 million decrease in accrued expenses related to capital expenditures recognized as cash used in investing activities as compared to the six months ended January 31, 2025.

Net cash used in investing activities

Cash used in investing activities of $14.8 million in the six months ended January 31, 2026 was driven by capital expenditures. During the six months ended January 31, 2026, we continued to expand our plant equipment and improve our facilities to improve efficiency of our manufacturing process and meet customer demands.

Net cash used in financing activities

Cash used in financing activities of $17.2 million in the six months ended January 31, 2026, included $12.4 million for stock repurchases and $4.9 million for dividend payments.

Other

Total cash balances held by our foreign subsidiaries were $5.8 million as of January 31, 2026, compared to $4.7 million as of July 31, 2025.

As of January 31, 2026, we had remaining authority to repurchase 174,742 shares of Common Stock and 208,197 shares of Class B Stock under a repurchase plan approved by our Board. Repurchases may be made on the open market (pursuant to Rule 10b5-1 plans or otherwise) or in negotiated transactions. The timing, number and manner of share repurchases will be determined by our management pursuant to the repurchase plan approved by our Board.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

This discussion and analysis of financial condition and results of operations is based on our unaudited Condensed Consolidated Financial Statements, which have been prepared in accordance with U.S. GAAP for interim financial information and in compliance with instructions to Form 10-Q and Article 10 of Regulation S-X. The preparation of these financial statements requires the use of estimates and assumptions related to the reporting of assets, liabilities, revenues, expenses and related disclosures. In preparing these financial statements, we have made our best estimates and judgments of certain amounts included in the financial statements. Estimates and assumptions are revised periodically. Actual results could differ from these estimates. See the information concerning our critical accounting policies included under "Management’s Discussion of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended July 31, 2025.

There has been no material change in our exposure to market risk from that discussed in our Annual Report on Form 10-K for the fiscal year ended July 31, 2025.

Evaluation of Disclosure Controls and Procedures

Management conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act")) as of the end of the period covered by this Quarterly Report on Form 10-Q. The controls evaluation was conducted under the supervision and with the participation of management, including our Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"). Based upon the controls evaluation, our CEO and CFO have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the fiscal quarter ended January 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

Our management, including the CEO and CFO, do not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

PART II – OTHER INFORMATION

Items 1, 3, and 5 of this Part II are either inapplicable or are answered in the negative and are omitted pursuant to the instructions to Part II of Form 10-Q.

Our operations and financial results are subject to various risks and uncertainties, including those described in Part I, Item 1A, "Risk Factors," of our Annual Report on Form 10-K for the fiscal year ended July 31, 2025. There have been no material changes to our risk factors since our Annual Report on Form 10-K for the fiscal year ended July 31, 2025.