BRADY CORP
For the period ended Jul 31, 2026. Filed Sep 3, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2026 · Filed Sep 3, 2026
BRC$78.72-1.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2025-07-31; filed 2025-09-04.
0000746598-25-000045
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2026-07-31; filed 2026-09-03.
0000746598-26-000044
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 66 previous paragraphs and 67 current paragraphs.
33 unchanged; 26 reworded; 8 added; 7 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 4 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (8)
Current report
The global trade environment remains complex and continues to evolve, driven by the imposition of tariffs on goods entering the U.S. and countermeasures from other nations. Our business has incurred, and we expect will continue to incur additional costs related to these incremental tariffs and related countermeasures. While we have received some refunds for tariffs previously paid, we continue to incur tariff costs that have remained above historical levels since the second half of fiscal 2025. Future impacts will depend on changes in trade policy and the timing, availability and amount of these further potential refunds. We also continue to face broader macroeconomic pressures impacting the cost and availability of certain raw materials, components, freight and other inputs. The Company has taken and will continue to take action to mitigate these pressures through a combination of targeted price increases, strategic sourcing adjustments, product portfolio optimization, as well as our ongoing efforts to drive sustainable efficiency gains in our operations and administrative structures.
Current report
The Company continues to evaluate developments related to tariff policy and related administrative proceedings. While we have received certain refunds for tariffs previously paid, we expect to continue to incur ongoing tariff costs while actively pursuing additional refunds. Any such potential refunds of tariffs previously paid remain subject to ongoing administrative processes and uncertainty regarding their timing, availability, and ultimate amount.
Current report
Americas & Asia segment profit increased 22.3% to $256.6 million in fiscal 2026 from $209.8 million in fiscal 2025. As a percent of net sales, segment profit increased to 23.2% in fiscal 2026 from 21.1% in fiscal 2025. The increase in segment profit as a percentage of net sales was due to increased profitability from organic sales growth in higher margin product lines, as well as reductions in the cost structure resulting from facility closures and other actions in the prior fiscal year.
Current report
Europe & Australia sales increased 6.7% to $554.9 million in fiscal 2026 compared to $519.9 million in fiscal 2025. The increase consisted of organic sales growth of 1.2% and an increase from foreign currency translation of 5.5%.
Current report
Organic sales in Europe increased in the low-single digits in fiscal 2026. Organic sales increased across all major product lines with the wire identification, safety and facility identification, and people identification product lines driving the organic sales growth.
Current report
Subsequent to the fiscal year-end, on August 3, 2026, the Company completed the acquisition of Honeywell’s PSS business for a cash purchase price of $1.4 billion, subject to customary post-closing adjustments. The transaction was funded through a combination of cash on hand, immediate borrowings under our new credit agreement, and private placement debt. This funding event included the full drawdown of the $500 million term loan facility alongside initial drawings of approximately $300 million under the revolving credit facility. Concurrently with the closing of the PSS acquisition, the available borrowing capacity under our revolving credit facility automatically expanded from an interim cap of $300 million to the full $500 million facility limit.
Current report
Net cash used in investing activities was $59.0 million during fiscal 2026 compared to $171.3 million in fiscal 2025. The decrease in net cash used in investing activities was primarily due to acquisitions, with the acquisition of Mecco for $17.4 million in the current year, and the acquisition of Gravotech for $123.6 million in the prior year.
Current report
Credit Agreements and Covenant Compliance
Removed paragraphs (7)
Previous report
In recent months, the U.S. government introduced incremental import tariffs on goods imported into the U.S. from numerous countries, triggering reciprocal tariffs and other actions from many countries on goods exported from the U.S. Trade policies of the U.S. and other countries, including China, are complex and rapidly evolving. Our strategy of manufacturing products near the point of sale reduces our overall exposure to tariffs, though certain sourced inputs and manufactured items remain subject to incremental tariffs. Our business has incurred, and expects to continue to incur, additional costs as it relates to these incremental tariffs for the foreseeable future. The Company has taken and will continue to take action to mitigate inflationary pressures caused by the incremental tariffs through a combination of targeted price increases and surcharges, strategic sourcing adjustments, product portfolio optimization, as well as our ongoing efforts to drive sustainable efficiency gains in our operations and administrative structures.
Previous report
Notwithstanding the uncertain situation relating to tariffs, we believe our financial strength positions us well to continue investing in acquisitions and organic growth opportunities, such as expanded sales channels, marketing programs, and research and development (“R&D”). We remain focused on driving sustainable efficiency gains and automation across our operations and selling, general and administrative (“SG&A”) functions, while also returning capital to our shareholders through dividends and share repurchases. At July 31, 2025, we had cash of $174.3 million, aswell as a credit agreement with$198.1 million available for future borrowing, which can be increased up to$1,093.1 million at the Company's option and subject to certain conditions, for total available liquidity of $1,267.4 million.
Previous report
Segment profit increased 6.6% to $209.8 million in fiscal 2025 from $196.8 million in fiscal 2024. As a percent of net sales, segment profit decreased to 21.1% in fiscal 2025 from 22.2% in fiscal 2024. The increase in segment profit was primarily due to increased profit from organic sales growth, which was partially offset by facility closure and other reorganization costs and incremental amortization expense related to acquired businesses. The decrease in segment profit as a percentage of sales was primarily due to costs associated with the closure of two facilities, incremental amortization from acquired businesses and purchase accounting adjustments, which was partially offset by increased profit from organic sales growth.
Previous report
Europe & Australia sales increased 14.3% to $519.9 million in fiscal 2025 compared to $454.9 million in fiscal 2024. The increase consisted of sales growth from acquisitions of 14.7% and an increase from foreign currency translation of 1.4%, which was partially offset by an organic sales decline of 1.8%. Organic sales declined due to softer industrial demand, driven by lower manufacturing output and ongoing economic uncertainty in Europe, particularly the United Kingdom and Germany, and by a weaker growth outlook in Australia. Looking ahead, the Company remains focused on leveraging its capabilities and market presence to drive growth in key markets over the long term.
Previous report
Organic sales in Europe declined in the low-single digits in fiscal 2025. The decline was driven by the safety and facility identification and people identification product lines, which was partially offset by growth in the wire identification product line. The decline was driven by the United Kingdom and Western Europe Regions, which was partially offset by growth in the Middle East and Nordic Regions.
Previous report
Net cash used in investing activities was $171.3 million during fiscal 2025, which primarily consisted of the acquisition of businesses of $144.5 million and capital expenditures of $27.6 million. Net cash used in investing activities was $81.0 million in fiscal 2024, which primarily consisted of capital expenditures, which included the purchase of a previously leased facility in Mexico and facility construction costs in Belgium.
Previous report
Credit Agreement and Covenant Compliance
Reworded paragraphs (26)
Previous wording
Brady Corporation is a global manufacturer and supplier of identification solutions and workplace safety products that identify and protect premises, products and people. The Company is organized and managed on a geographic basis with two reportable segments: Americas & Asia and Europe & Australia.
Current wording
Brady Corporation is a global manufacturer and supplier of identification solutions and workplace safety products that identify and protect premises, products and people. The Company is organized and managed on a geographic basis with two reportable segments: Americas & Asia and Europe & Australia. See “Item 1. Business—Recent Development” for a discussion of our acquisition of the PSS business. The financial results of the PSS business will be integrated into the Company’s consolidated financial statements starting from August 3, 2026 and are expected to be included in our Quarterly Report on Form 10-Q for the fiscal quarter ended October 31, 2026.
Previous wording
References in this Annual Report on Form 10-K to “organic sales” refer to sales calculated in accordance with U.S. GAAP, excluding the impact of foreign currency translation, sales recorded from divested companies up to the first anniversary of their divestiture and sales recorded from acquired companies prior to the first anniversary date of their acquisition. The Company’s organic sales disclosures exclude the effects of foreign currency translation as foreign currency translation is subject to volatility that can obscure underlying business trends. Management believes that the non-GAAP financial measure of organic sales is meaningful to investors as it provides them with useful information to aid in identifying underlying sales trends in our businesses and facilitating comparisons of our sales performance with prior periods.
Current wording
References in this Annual Report on Form 10-K to “organic sales” refer to sales calculated in accordance with U.S. generally accepted accounting principles (“GAAP”), excluding the impact of foreign currency translation, sales recorded from divested companies up to the first anniversary of their divestiture and sales recorded from acquired companies prior to the first anniversary date of their acquisition. The Company’s organic sales disclosures exclude the effects of foreign currency translation as foreign currency translation is subject to volatility that can obscure underlying business trends. Management believes that the non-GAAP financial measure of organic sales is meaningful to investors as it provides them with useful information to aid in identifying underlying sales trends in our businesses and facilitating comparisons of our sales performance with prior periods.
Previous wording
We believe that our financial resources and liquidity levels, including the undrawn portion of our credit agreement and our ability to increase that credit line as necessary, are sufficient to support the execution of our growth strategy and to manage the impact of economic or geopolitical events that could potentially reduce sales, net income, or cash provided by operating activities. Refer to Risk Factors, included in Part I, Item 1A of this Annual Report on Form 10-K for the year ended July 31, 2025, for further discussion of the possible impact of global economic or geopolitical events on our business.
Current wording
Refer to Risk Factors, included in Part I, Item 1A of this Annual Report on Form 10-K for the year ended July 31, 2026, for further discussion of the possible impact of global economic or geopolitical events on our business.
Previous wording
The comparability of the operating results for the year ended July 31, 2025 to the year ended July 31, 2024 has been impacted by the acquisitions of Gravotech Holding (“Gravotech”) on August 1, 2024, American Barcode and RFID Incorporated (“AB&R”) on October 1, 2024 and the Microfluidic Solutions business unit of Funai Electric Co., Ltd. (“Microfluidic Solutions”) on April 1, 2025. The operating results of Gravotech, AB&R and Microfluidic Solutions have been included since their acquisition dates. Gravotech has been included in both reportable segments, and AB&R and Microfluidic Solutions have been included in the Americas & Asia reportable segment. The comparability of the operating results for the Americas & Asia segment has also been impacted by the divestiture of two non-core businesses, one in March 2023 and another in October 2023.
Current wording
The comparability of the operating results for the year ended July 31, 2026 to the year ended July 31, 2025 has been impacted by the acquisition of MECCO Partners LLC (“Mecco”) on August 4, 2025. The operating results of Mecco have been included since the acquisition date and are reported within the Americas & Asia reportable segment. The comparability of the operating results for the year ended July 31, 2025 to the year ended July 31, 2024 has been impacted by the acquisitions of Gravotech Holding (“Gravotech”) on August 1, 2024, American Barcode and RFID Incorporated (“AB&R”) on October 1, 2024 and the Microfluidic Solutions business unit of Funai Electric Co., Ltd. (“Microfluidic Solutions”) on April 1, 2025. The operating results of Gravotech, AB&R and Microfluidic Solutions have been included since their acquisition dates. Gravotech has been included in both reportable segments, and AB&R and Microfluidic Solutions have been included in the Americas & Asia reportable segment.
Previous wording
Net sales increased 12.8% to $1,513.6 million in fiscal 2025 compared to $1,341.4 million in fiscal 2024, which consisted of organic sales growth of 2.6% and sales growth from acquisitions of 10.5%, which was partially offset by a decrease of 0.3% due to divestitures. Organic sales grew 4.8% in the Americas & Asia segment, while organic sales declined 1.8% in the Europe & Australia segment.
Current wording
Net sales increased 9.8% to $1,661.6 million in fiscal 2026 compared to $1,513.6 million in fiscal 2025, which consisted of organic sales growth of 5.3%, an increase from foreign currency translation of 2.3%, and sales growth from acquisitions of 2.2%. Organic sales grew 7.5% in the Americas & Asia segment and organic sales grew 1.2% in the Europe & Australia segment.
Previous wording
Gross margin increased 10.6% to $760.8 million in fiscal 2025 compared to $687.9 million in fiscal 2024. As a percentage of net sales, gross margin decreased to 50.3% in fiscal 2025 from 51.3% in fiscal 2024. The decrease in gross margin as a percentage of net sales was primarily due to a non-recurring increase in cost of goods sold of $4.1 million related to the fair value adjustment to inventory from acquisitions, facility closure and other reorganization costs of $4.9 million, as well as the impact of incremental tariffs, which were partially offset by organic sales growth in higher gross margin product lines.
Current wording
Gross margin increased 13.0% to $859.8 million in fiscal 2026 compared to $760.8 million in fiscal 2025. As a percentage of net sales, gross margin increased to 51.7% in fiscal 2026 from 50.3% in fiscal 2025. The increase in gross margin as a percentage of net sales was primarily driven by organic sales growth in higher gross margin product lines, as well as the absence of a non-recurring fair value adjustment related to acquisition inventory and facility closure and other reorganization costs recorded in the prior-year period. The net impact of incremental tariffs and tariff refunds did not materially impact gross margin or gross margin as a percentage of net sales in fiscal 2026 compared to fiscal 2025.
Previous wording
R&D expenses increased 17.9% to $79.9 million in fiscal 2025 compared to $67.7 million in fiscal 2024. As a percentage of net sales, R&D expenses increased to 5.3% in fiscal 2025 compared to 5.1% in fiscal 2024. The increase in R&D spending in fiscal 2025 was primarily due to the acquisition of Gravotech, and, to a lesser extent, an increase in R&D headcount within the Company's organic business. The Company remains committed to investing in new innovative product development to drive long-term organic sales growth. Investments in new printing systems, pressure sensitive materials, scanners and software are the primary focus of R&D expenditures in fiscal 2026.
Current wording
R&D expenses increased 17.7% to $94.0 million in fiscal 2026 compared to $79.9 million in fiscal 2025. As a percentage of net sales, R&D expenses increased to 5.7% in fiscal 2026 compared to 5.3% in fiscal 2025. The increase in R&D spending in fiscal 2026 was primarily due to the acquisitions of Microfluidic Solutions and Mecco, and an increase in R&D headcount within the Company’s organic business. The Company remains committed to investing in new innovative product development to drive long-term organic sales growth. Investments in new printing systems, pressure sensitive materials, engraving systems, microfluidic technologies, scanners and software are the primary focus of R&D expenditures in fiscal 2027.
Previous wording
SG&A expenses include selling and administrative costs directly attributed to the Americas & Asia and Europe & Australia segments, as well as certain other corporate administrative expenses including finance, information technology, human resources and other administrative expenses. SG&A expenses increased 17.9% to $444.3 million in fiscal 2025 compared to $376.7 million in fiscal 2024. As a percentage of net sales, SG&A expense increased to 29.4% in fiscal 2025 compared to 28.1% in fiscal 2024 primarily due to incremental amortization expense from acquired intangible assets of $9.5 million and facility closure and other reorganization costs of $13.6 million.
Current wording
Selling, general and administrative (“SG&A”) expenses include selling and administrative costs directly attributed to the Americas & Asia and Europe & Australia segments, as well as certain other corporate administrative expenses including finance, information technology, human resources and other administrative expenses. SG&A expenses increased 13.1% to $502.3 million in fiscal 2026 compared to $444.3 million in fiscal 2025. As a percentage of net sales, SG&A expense increased to 30.2% in fiscal 2026 compared to 29.4% in fiscal 2025 primarily due to costs incurred related to the acquisition of the PSS business of $35.7 million which were partially offset by cost reductions from facility closures and other reorganization activities completed in the prior fiscal year, as well as the absence of $13.6 million of charges related to those activities recorded in the prior year.
Previous wording
Operating income decreased 2.8% to $236.6 million in fiscal 2025 compared to $243.4 million in fiscal 2024. As a percentage of sales, operating income decreased to 15.6% in fiscal 2025 compared to 18.1% in fiscal 2024. The decrease in operating income in fiscal 2025 was primarily due to facility closure and other reorganization costs, incremental amortization expense related to acquired businesses, and the fair value adjustment to inventory from acquisitions.
Current wording
Operating income increased 11.3% to $263.5 million in fiscal 2026 compared to $236.6 million in fiscal 2025. As a percentage of sales, operating income increased to 15.9% in fiscal 2026 compared to 15.6% in fiscal 2025. The increase in operating income in fiscal 2026 was primarily due to organic sales growth in both reportable segments, gross margin improvements across both reportable segments, and SG&A cost efficiencies in the Europe & Australia segment, partially offset by PSS transaction-related costs of $35.7 million.
Previous wording
Investment and other income was $5.2 million in fiscal 2025 compared to $7.6 million in fiscal 2024. The decrease in investment and other income in fiscal 2025 was primarily due to a decrease in interest income resulting from a reduced cash balance and lower interest rates.
Current wording
Investment and other income was $5.6 million in fiscal 2026 compared to $5.2 million in fiscal 2025. The increase in investment and other income in fiscal 2026 was primarily due to an increase in the market value of securities held in deferred compensation plans.
Previous wording
Interest expense increased to $4.7 million in fiscal 2025 compared to $3.1 million in fiscal 2024. The increase in interest expense in fiscal 2025 was primarily due to an increase in outstanding borrowings on the Company's credit agreement to fund acquisitions, which was partially offset by a decrease in the weighted average interest rate compared to fiscal 2024.
Current wording
Interest expense increased to $9.7 million in fiscal 2026 compared to $4.7 million in fiscal 2025. The increase in interest expense in fiscal 2026 was primarily due to increased financing costs related to the Company’s new credit agreement and bridge facilities to fund the PSS acquisition.
Previous wording
The Company's income tax rate was 20.2% in fiscal 2025 compared to 20.4% in fiscal 2024. Refer to Item 8, Note 11, “Income Taxes” for additional information on the Company's income tax rates.
Current wording
The Company’s income tax rate was 20.8% in fiscal 2026 compared to 20.2% in fiscal 2025. Refer to Item 8, Note 11, “Income Taxes” for additional information on the Company’s income tax rates.
Previous wording
Americas & Asia net sales increased 12.1% to $993.7 million in fiscal 2025 compared to $886.5 million in fiscal 2024, which consisted of organic sales growth of 4.8% and sales growth from acquisitions of 8.3%, which were partially offset by a decrease from foreign currency translation of 0.6% and a decrease due to a divestiture of 0.4%. Organic sales growth reflected strong execution of our commercial strategies, supported by steady industrial demand in North America, continued expansion in key end markets across Latin America, and resilient demand in Asia despite mixed economic conditions in certain countries.
Current wording
Americas & Asia net sales increased 11.4% to $1,106.6 million in fiscal 2026 compared to $993.7 million in fiscal 2025, which consisted of organic sales growth of 7.5%, sales growth from acquisitions of 3.3%, and an increase from foreign currency translation of 0.6%. Organic sales growth reflected strong execution of our commercial strategies, supported by steady industrial demand in North America and increasing demand throughout Asia.
Previous wording
Organic sales in the Americas increased in the low-single digits in fiscal 2025. The increase in organic sales was primarily due to growth in the wire identification, safety and facility identification and product identification product lines, which was partially offset by a decline in the people identification and healthcare identification product lines.
Current wording
Organic sales in the Americas increased approximately 6% in fiscal 2026. The increase in organic sales was primarily due to growth in the wire identification, product identification, safety and facility identification, and healthcare identification product lines, which was partially offset by a decline in the people identification product line. Organic sales growth in the wire identification product line was driven by continued demand from datacenter construction projects.
Previous wording
Organic sales in Asia increased approximately 13% in fiscal 2025. The organic sales increase was primarily driven by higher demand from electronics manufacturing services providers, technology companies, and industrial suppliers across Japan, India, Malaysia and Singapore. This growth was partially offset by lower volumes in China.
Current wording
Organic sales in Asia increased approximately 15% in fiscal 2026. The organic sales increase was realized throughout Asia with continued growth from electronics manufacturing services providers, technology companies, and industrial suppliers across the region. While organic growth was broad-based across the region, the most significant organic sales increases were driven by India, Singapore, and a return to growth in China.
Previous wording
Organic sales in Australia declined in the mid-single digits in fiscal 2025. The organic sales decline was primarily driven by a decrease in volume in the safety and facility and wire identification product lines.
Current wording
Organic sales in Australia increased in the low-single digits in fiscal 2026. Organic sales growth was driven by growth in the safety and facility identification and wire identification product lines, which was partially offset by an organic sales decline in the product identification product line.
Previous wording
Segment profit decreased 19.4% to $56.9 million in fiscal 2025 compared to $70.6 million in fiscal 2024. As a percentage of net sales, segment profit decreased to 11.0% in fiscal 2025 compared to 15.5% in fiscal 2024. The decrease in segment profit and segment profit as a percentage of sales was primarily due to incremental amortization from acquired businesses, purchase accounting adjustments and reorganization costs in order to streamline our operating structure.
Current wording
Europe & Australia segment profit increased 30.5% to $74.3 million in fiscal 2026 compared to $56.9 million in fiscal 2025. As a percentage of net sales, segment profit increased to 13.4% in fiscal 2026 compared to 11.0% in fiscal 2025. The increase in segment profit as a percentage of net sales was primarily driven by a more efficient cost structure following reorganization activities completed in the prior fiscal year, as well as organic sales growth in both regions in the current fiscal year. Additionally, segment profit for the prior fiscal year included reorganization costs and purchase accounting adjustments.
Previous wording
The Company's cash balances are generated and held in numerous locations throughout the world. At July 31, 2025, approximately 97% of the Company's cash and cash equivalents were held outside the United States. The Company's organic and inorganic growth has historically been funded by a combination of cash provided by operating activities and debt financing. The Company believes that its cash flow from operating activities and its borrowing capacity are sufficient to fund its anticipated requirements for working capital, capital expenditures, research and development, common stock repurchases, dividend payments, and strategic acquisitions for the next 12 months and beyond. Although the Company believes these sources of cash are currently sufficient to fund domestic operations, annual cash needs could require repatriation of cash to the U.S. from foreign jurisdictions, which may result in additional tax payments.
Current wording
The Company’s cash balances are generated and held in numerous locations throughout the world. At July 31, 2026, approximately 93% of the Company’s cash and cash equivalents were held outside the United States. The Company’s organic and inorganic growth has historically been funded by a combination of cash provided by operating activities and debt financing. The Company believes that its cash flow from operating activities and its borrowing capacity are sufficient to fund its anticipated requirements for working capital, capital expenditures, R&D, common stock repurchases, dividend payments, and strategic acquisitions for the next 12 months and beyond. Although the Company believes these sources of cash are currently sufficient to fund domestic operations, annual cash needs could require repatriation of cash to the U.S. from foreign jurisdictions, which may result in additional tax payments.
Previous wording
Cash and cash equivalents were $174.3 million at July 31, 2025, a decrease of $75.8 million from July 31, 2024. The following summarizes the cash flow statement for the years ended July 31:
Current wording
Cash and cash equivalents were $187.1 million at July 31, 2026, an increase of $12.8 million from July 31, 2025. The following summarizes the cash flow statement for the years ended July 31:
Previous wording
Net cash provided by operating activities was $181.2 million during fiscal 2025 compared to $255.1 million in fiscal 2024. The decrease in cash provided by operating activities was primarily due to changes in working capital, including inventory growth to maintain high service levels and align with customer needs, higher receivables from strong organic growth in the Americas & Asia segment, and lower payroll-related accruals and accounts payable due to the timing of payments.
Current wording
Net cash provided by operating activities was $244.1 million during fiscal 2026 compared to $181.2 million in fiscal 2025. The increase in cash provided by operating activities was primarily due to organic sales growth and improved working capital management in the current year.
Previous wording
Net cash used in financing activities was $83.9 million during fiscal 2025 compared to $70.5 million in fiscal 2024. The increase in cash used in financing activities was primarily due to increased net repayments on borrowings on our credit agreement following the funding of acquisitions in fiscal 2025, which was partially offset by a decline in share repurchases compared to the prior year.
Current wording
Net cash used in financing activities was $177.4 million during fiscal 2026 compared to $83.9 million in fiscal 2025. The increase in cash used in financing activities was primarily due to net repayments on the Company’s prior credit agreement in the current year, compared to net borrowings in the prior year, which included borrowings used to fund the Gravotech acquisition.
Previous wording
Our material cash requirements for known contractual obligations include capital expenditures, borrowings on our credit agreement and lease obligations. We believe that net cash provided by operating activities will continue to be adequate to meet our liquidity and capital needs for these items over the next 12 months and in the long-term beyond the next 12 months. We also have cash requirements for purchase orders and contracts for the purchase of inventory and other goods and services, which are based on current and anticipated customer needs and are fulfilled by our suppliers within short time horizons. We do not have significant agreements for the purchase of inventory or other goods or services specifying minimum order quantities. In addition, we may have liabilities for uncertain tax positions, but we do not believe that the cash requirements to meet any of these liabilities will be material. A discussion of income taxes is contained in Note 11 of the notes to consolidated financial statements.
Current wording
Our material cash requirements for known contractual obligations include capital expenditures, borrowings on our new credit agreement and lease obligations. We believe that net cash provided by operating activities will continue to be adequate to meet our liquidity and capital needs for these items over the next 12 months and in the long-term beyond the next 12 months. We also have cash requirements for purchase orders and contracts for the purchase of inventory and other goods and services, which are based on current and anticipated customer needs and are fulfilled by our suppliers within short time horizons. We do not have significant agreements for the purchase of inventory or other goods or services specifying minimum order quantities. In addition, we may have liabilities for uncertain tax positions, but we do not believe that the cash requirements to meet any of these liabilities will be material. A discussion of income taxes is contained in Note 11 of the notes to consolidated financial statements.
Previous wording
Refer to Item 8, Note 6, “Debt” for information regarding the Company's credit agreement and covenant compliance.
Current wording
Refer to Item 8, Note 6, “Debt” for information regarding the Company’s new credit agreement, previous credit agreement and covenant compliance.
Previous wording
While the Company has support for the positions it takes on tax returns, taxing authorities may assert different interpretations of laws and facts and may challenge cross-jurisdictional transactions. The Company generally re-evaluates the technical merits of its tax positions and recognizes an uncertain tax benefit when (i) there is completion of a tax audit; (ii) there is a change in applicable tax laws including a tax case ruling or legislative guidance; or (iii) there is an expiration of the statute of limitations. The liability for unrecognized tax benefits, excluding interest and penalties, was $21.8 million and $22.6 million as of July 31, 2025 and 2024, respectively. If recognized, $18.3 million of unrecognized tax benefits would reduce the Company's income tax rate as of both July 31, 2025 and 2024. Accrued interest and penalties related to unrecognized tax benefits were $6.6 million and $6.1 million as of July 31, 2025 and 2024, respectively. The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense on the consolidated statements of income. The Company believes it is reasonably possible that the amount of gross unrecognized tax benefits could be reduced by up to $3.1 million in the next 12 months as a result of the resolution of worldwide tax matters, tax audit settlements, amended tax filings, and/or statute expirations, which would be the maximum amount that would be recognized as an income tax benefit in the consolidated statements of income.
Current wording
While the Company has support for the positions it takes on tax returns, taxing authorities may assert different interpretations of laws and facts and may challenge cross-jurisdictional transactions. The Company generally re-evaluates the technical merits of its tax positions and recognizes an uncertain tax benefit when (i) there is completion of a tax audit; (ii) there is a change in applicable tax laws including a tax case ruling or legislative guidance; or (iii) there is an expiration of the statute of limitations. The liability for unrecognized tax benefits, excluding interest and penalties, was $19.5 million and $21.8 million as of July 31, 2026 and 2025, respectively. If recognized, $16.0 million of unrecognized tax benefits would reduce the Company’s income tax rate as of both July 31, 2026 and 2025. Accrued interest and penalties related to unrecognized tax benefits were $5.9 million and $6.6 million as of July 31, 2026 and 2025, respectively. The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense on the consolidated statements of income. The Company believes it is reasonably possible that the amount of gross unrecognized tax benefits could be reduced by up to $2.6 million in the next 12 months as a result of the resolution of worldwide tax matters, tax audit settlements, amended tax filings, and/or statute expirations, which would be the maximum amount that would be recognized as an income tax benefit in the consolidated statements of income.
Previous wording
The Company recognizes deferred tax assets and liabilities for differences between the financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. The Company establishes valuation allowances for its deferred tax assets if it is more likely than not that some or all of the deferred tax asset will not be realized. This requires management to make judgments regarding: (i) the timing and amount of the reversal of taxable temporary differences, (ii) expected future taxable income or loss, and (iii) the impact of tax planning strategies. The Company recognized valuation allowances for its deferred tax assets of$82.2 million and $47.2 million as of July 31, 2025 and 2024, respectively, which were primarily related to foreign tax credit carryforwards and net operating loss carryforwards in its various tax jurisdictions.
Current wording
The Company recognizes deferred tax assets and liabilities for differences between the financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. The Company establishes valuation allowances for its deferred tax assets if it is more likely than not that some or all of the deferred tax asset will not be realized. This requires management to make judgments regarding: (i) the timing and amount of the reversal of taxable temporary differences, (ii) expected future taxable income or loss, and (iii) the impact of tax planning strategies. The Company recognized valuation allowances for its deferred tax assets of$84.0 million and $82.2 million as of July 31, 2026 and 2025, respectively, which were primarily related to foreign tax credit carryforwards and net operating loss carryforwards in its various tax jurisdictions.
Previous wording
The Company has identified six reporting units within its two reportable segments, Americas & Asia and Europe & Australia, with the following goodwill balances as of July 31, 2025: North America, $494.8 million; Europe, $179.3 million; and Latin America, $2.9 million. The other three identified reporting units each have a goodwill balance of zero. The Company has the option to first assess qualitative factors to determine if it is more likely than not that the fair value of the reporting unit is greater than its respective carrying value. If the qualitative assessment leads to a determination that the fair value of a reporting unit may be less than its carrying value, or if the Company elects to bypass the qualitative assessment altogether, the Company performs a quantitative impairment test by calculating the fair value of the reporting unit and comparing the fair value with its associated carrying value. When the Company performs the quantitative test for goodwill, the Company establishes the fair value for the reporting unit based on the income approach, in which a discounted cash flow model is utilized, the market approach, in which market multiples of comparable companies are utilized, or a combination of both approaches. The income approach requires the use of significant estimates and assumptions, including forecasted sales growth, operating income projections, and discount rates and changes in these assumptions may adversely impact the fair value assessments. The market approach requires significant assumptions related to the selection of comparable publicly traded companies and the market multiples. Significant negative industry or macroeconomic trends, disruptions to the Company's business, loss of significant customers, inability to effectively integrate acquired businesses, unexpected significant changes or planned changes in use of the assets or in entity structure, and divestitures may adversely impact the assumptions used in the valuations.
Current wording
The Company has identified six reporting units within its two reportable segments, Americas & Asia and Europe & Australia, with the following goodwill balances as of July 31, 2026: North America, $501.0 million; Europe, $181.8 million; and Latin America, $3.2 million. The other three identified reporting units each have a goodwill balance of zero. The Company has the option to first assess qualitative factors to determine if it is more likely than not that the fair value of the reporting unit is greater than its respective carrying value. If the qualitative assessment leads to a determination that the fair value of a reporting unit may be less than its carrying value, or if the Company elects to bypass the qualitative assessment altogether, the Company performs a quantitative impairment test by calculating the fair value of the reporting unit and comparing the fair value with its associated carrying value. When the Company performs the quantitative test for goodwill, the Company establishes the fair value for the reporting unit based on the income approach, in which a discounted cash flow model is utilized, the market approach, in which market multiples of comparable companies are utilized, or a combination of both approaches. The income approach requires the use of significant estimates and assumptions, including forecasted sales growth, operating income projections, and discount rates and changes in these assumptions may adversely impact the fair value assessments. The market approach requires significant assumptions related to the selection of comparable publicly traded companies and the market multiples. Significant negative industry or macroeconomic trends, disruptions to the Company’s business, loss of significant customers, inability to effectively integrate acquired businesses, unexpected significant changes or planned changes in use of the assets or in entity structure, and divestitures may adversely impact the assumptions used in the valuations.