v3.26.3
INCOME TAXES
 12 Months Ended
Jul. 31, 2026
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
The sources of income before income taxes are as follows:
For the Fiscal Years Ended July 31,
202620252024
United States$160,468 $180,390 $115,618 
Foreign78,253 115,801 233,226 
Total$238,721 $296,191 $348,844 

The components of the provision for income taxes are as follows:
For the Fiscal Years Ended July 31,
Income Taxes:202620252024
U.S. Federal$(665)$37,250 $52,832 
U.S. state and local4,584 10,660 10,372 
Foreign31,134 20,750 48,242 
Total current expense35,053 68,660 111,446 
U.S. Federal29,764 (4,997)(22,236)
U.S. state and local4,506 268 (4,116)
Foreign(5,256)(24,331)(1,650)
Total deferred expense (benefit)29,014 (29,060)(28,002)
Total income tax expense$64,067 $39,600 $83,444 

The One Big Beautiful Bill Act (“OBBB”) was signed into law on July 4, 2025. The OBBB includes a broad range of tax reform provisions affecting businesses including, but not limited to, 100% bonus depreciation, expensing of U.S.-based research and development costs, interest expense deduction limitations and changes to international tax provisions. The most relevant impact to the Company was the 100% bonus depreciation for qualified property placed in service after January 19, 2025. The other relevant provisions of the OBBB impact the Company in fiscal years 2026 and 2027. For fiscal year 2026, the Company elected to accelerate its previously capitalized and unamortized US research and development costs and deduct them all in the current fiscal year. Changes to the international provisions will impact the Company in fiscal year 2027.
Effective with the Company’s annual disclosures for the year ended July 31, 2026, the Company prospectively adopted new guidance which requires disclosure of specific categories and greater disaggregation of information presented in the effective tax rate reconciliation. The following table is a reconciliation between the U.S. federal statutory tax rate and the effective tax rate for the twelve months ended July 31, 2026:

Year Ended July 31, 2026
AmountPercent
U.S. federal statutory tax rate$50,131 21.00 %
State and local income taxes, net of federal income tax effect (1)
8,346 3.50 %
Foreign tax effects
Germany
Nondeductible interest costs4,817 2.02 %
Statutory tax rate difference between Germany and U.S.1,618 0.68 %
FX gain and loss not subject to foreign taxation1,203 0.50 %
Other(1,322)(0.55)%
Bermuda
Statutory tax rate differences between Bermuda and U.S. on interest and other income(5,041)(2.11)%
FX gain and loss not subject to foreign taxation(738)(0.31)%
United Kingdom
Tax effects of restructuring6,761 2.83 %
Other(113)(0.05)%
Other foreign jurisdictions2,260 0.95 %
Effect of changes in tax laws or rates enacted in the current period— — %
Effect of cross-border tax laws
Global Intangible Low-Taxed Income / Subpart F53 0.02 %
Other15 0.01 %
Tax credits
Foreign tax credit(7,073)(2.96)%
Other(515)(0.22)%
Changes in valuation allowances— — %
Nontaxable or nondeductible items
Executive compensation limitation under Section 162(m)4,443 1.86 %
Other(14)(0.01)%
Changes in unrecognized tax benefits (2)(3)
(689)(0.29)%
Other(75)(0.03)%
Effective tax rate$64,067 26.84 %
(1) State taxes in Alabama, California, Indiana, Michigan, New York, Oregon, Pennsylvania and Texas made up the majority (greater than 50 percent) of the tax effect in this category.
(2) The Company presents changes in unrecognized tax benefits related to tax positions taken in prior annual reporting periods within Changes in unrecognized tax benefits. Amounts in this category may be aggregated across federal, state and foreign jurisdictions.
(3) Current-year and prior-year uncertain tax benefit activity is presented within Changes in unrecognized tax benefits. Amounts presented in this category are aggregated across federal, state and foreign jurisdictions, consistent with ASU 2023-09 presentation guidance. If current-year uncertain tax benefits are instead presented in another category, the amounts would be subject to the disaggregation requirements applicable to that category.
The differences between income tax expense at the federal statutory rate and the actual income tax expense for July 31, 2025 and July 31, 2024 are as follows:

For the Fiscal Years Ended July 31,
20252024
Provision at federal statutory rate$62,200 $73,257 
Differences between U.S. Federal statutory and foreign tax rates(38,152)3,821 
Foreign currency remeasurement (gains) losses21,522 (7,621)
U.S. state and local income taxes, net of federal benefit7,779 4,840 
Nondeductible compensation4,133 3,976 
Effect of foreign tax law change(15,314)— 
Contingent liability accrual and settlement— (7,456)
Global Intangible Low-Taxed Income— 12,068 
Other(2,568)559 
Total income tax expense$39,600 $83,444 

A summary of the deferred income tax balances is as follows:
July 31,
20262025
Deferred income tax assets (liabilities):
Inventory basis$9,453 $11,550 
Self-insurance reserves3,965 4,531 
Accrued product warranties52,932 59,008 
Accrued incentives10,072 6,340 
Employee benefits10,440 14,040 
Sales returns and allowances2,869 2,942 
Accrued expenses13,545 6,030 
Operating leases9,792 9,998 
Research and development2,452 22,021 
Deferred compensation33,253 32,591 
Net operating loss and other carryforwards37,276 37,049 
Unrealized loss4,962 5,711 
Unrecognized tax benefits2,432 2,684 
Other43 8,118 
Total deferred tax assets193,486 222,613 
Valuation allowance(15,720)(14,342)
Total deferred tax assets, net of valuation allowance177,766 208,271 
Property, plant and equipment(30,597)(33,241)
Operating leases(9,477)(9,871)
Investments(5,371)(1,838)
Intangibles(178,390)(182,057)
Total deferred tax (liabilities)$(223,835)$(227,007)
Total net long-term deferred tax assets (liabilities)$(46,069)$(18,736)

Deferred tax assets are reduced by a valuation allowance if, based upon available evidence, it is more likely than not that some, or all, of the deferred tax assets will not be realized. The valuation allowances recorded at July 31, 2026 and July 31, 2025 relate to certain state and foreign net operating loss ("NOL") carryforwards, state tax credit carryforwards, other assets in foreign jurisdictions and certain disallowed state interest carryforwards.
As of July 31, 2026, the Company had $13,528 of deferred tax assets related to NOL carryforwards in certain foreign jurisdictions that will expire from fiscal 2027 or be carried forward indefinitely, of which $11,664 has been fully reserved with a valuation allowance, and the remaining amount the Company expects to realize. In addition, the Company has $1,753 of tax-affected U.S. state tax NOL carryforwards that expire from fiscal 2027 to 2046, of which $722 has been fully reserved with a valuation allowance and $763 has no deferred tax asset or valuation allowance recorded since there is no expectation of future realization. The Company has a deferred tax asset related to disallowed interest carryforwards of $20,526 in foreign jurisdictions, which it expects to fully realize, and $2,330 of deferred tax assets related to U.S. state disallowed interest and credit carryforwards, on which a full $2,330 valuation allowance is recorded.

With the exception of foreign subsidiary investment basis differences not attributable to un-repatriated foreign earnings, we consider all of our undistributed earnings of our foreign subsidiaries, as of July 31, 2026, to not be indefinitely reinvested outside of the United States, with the exception of those unremitted earnings associated with several European jurisdictions. As of July 31, 2026, the related income tax cost of the repatriation of foreign earnings was not material.

Effective with the Company’s annual disclosures for the year ended July 31, 2026, the Company prospectively adopted new guidance which requires disaggregation of income taxes paid by jurisdiction. The following table presents income taxes paid by jurisdiction, net of refunds, for the twelve months ended July 31, 2026:

July 31, 2026
Federal$28,000 
State10,705 
Foreign
Germany20,763 
Other foreign2,334 
Total income taxes paid (net of refunds)$61,802 

The benefits of tax positions reflected on income tax returns but whose outcome remains uncertain are only recognized for financial accounting purposes if they meet minimum recognition thresholds. The total amount of unrecognized tax benefits that, if recognized, would have impacted the Company’s effective tax rate were $6,955 for fiscal 2026, $8,027 for fiscal 2025 and $8,614 for fiscal 2024.

Changes in the unrecognized tax benefit during fiscal years 2026, 2025 and 2024 were as follows:
 
202620252024
Beginning balance$20,175 $10,434 $13,712 
Tax positions related to prior years:
Additions480 1,201 1,692 
Reductions(2,077)(648)(1,977)
Tax positions related to current year:
Additions137 10,598 386 
Settlements(733)— (2,133)
Lapses in statute of limitations(1,219)(1,410)(1,246)
Ending balance$16,763 $20,175 $10,434 

It is the Company’s policy to recognize interest and penalties accrued relative to unrecognized tax benefits in income tax expense. The total amount of interest and penalties expense (benefit) recognized in the Consolidated Statements of Income and Comprehensive Income for the fiscal years ended July 31, 2026, July 31, 2025 and July 31, 2024 were $(120), $1,552 and $111, respectively.

The total unrecognized tax benefits above, along with the related accrued interest and penalties, are reported within the liability section of the Consolidated Balance Sheets. A portion of the unrecognized tax benefits is classified as short-term and is included in the “Income and other taxes” line of the Consolidated Balance Sheets, while the remainder is classified as a long-term liability.
The components of total unrecognized tax benefits are summarized as follows:
July 31,
20262025
Unrecognized tax benefits$16,763 $20,175 
Reduction to unrecognized tax benefits for deferred tax assets(8,269)(10,263)
Accrued interest and penalties3,441 3,776 
Total unrecognized tax benefits$11,935 $13,688 
Short-term, included in “Income and other taxes”$1,590 $1,513 
Long-term10,345 12,175 
Total unrecognized tax benefits$11,935 $13,688 

The Company files income tax returns in the U.S. federal jurisdiction and in many U.S. state and foreign jurisdictions. The Company is currently under a federal income tax exam for fiscal year 2022 and by certain foreign jurisdictions for fiscal years ended 2016 through 2021. The Company believes it has adequately reserved for its exposure to additional payments for uncertain tax positions in its liability for unrecognized tax benefits. 

The major tax jurisdictions we file in, with the years still subject to income tax examinations, are listed below:
 
Major Tax JurisdictionTax Years Subject to Examination
United States – FederalFiscal 2022 – Fiscal 2025
United States – StateFiscal 2022 – Fiscal 2025
GermanyFiscal 2016 – Fiscal 2024
FranceFiscal 2022 – Fiscal 2025
ItalyFiscal 2016 – Fiscal 2024
United Kingdom     Fiscal 2025