v3.26.3
Income Taxes
 12 Months Ended
Aug. 31, 2026
Income Tax Disclosure [Abstract]  
Income Taxes

Note 15 — Income Taxes

The components of income from continuing operations before income taxes were as follows:

 

 

For The Year Ended August 31,

 

(In millions)

 

2026

 

 

2025

 

 

2024

 

Domestic

 

$

33.8

 

 

$

255.3

 

 

$

111.4

 

Foreign

 

 

44.8

 

 

 

29.1

 

 

 

112.3

 

Earnings before income tax and earnings from unconsolidated affiliates

 

$

78.6

 

 

$

284.4

 

 

$

223.7

 

 

 

 

 

 

 

 

 

 

 

Components of income tax expense were as follows:

 

 

For the Year Ended August 31,

 

(In millions)

 

2026

 

 

2025

 

 

2024

 

Current

 

 

 

 

 

 

 

 

 

Federal

 

$

(1.6

)

 

$

8.4

 

 

$

2.0

 

State

 

 

1.2

 

 

 

1.8

 

 

 

2.2

 

Foreign

 

 

6.4

 

 

 

35.2

 

 

 

38.8

 

 

 

6.0

 

 

 

45.4

 

 

 

43.0

 

Deferred

 

 

 

 

 

 

 

 

 

Federal

 

 

2.2

 

 

 

47.5

 

 

 

14.6

 

State

 

 

1.5

 

 

 

8.2

 

 

 

0.1

 

Foreign

 

 

(1.4

)

 

 

(7.7

)

 

 

(2.0

)

 

 

2.3

 

 

 

48.0

 

 

 

12.7

 

Change in valuation allowance

 

 

9.1

 

 

 

(2.0

)

 

 

6.3

 

Income tax expense

 

$

17.4

 

 

$

91.4

 

 

$

62.0

 

 

 

 

 

 

 

 

 

 

 

 

The reconciliation between effective and statutory tax rates on operations for the year ended August 31, 2026 is as follows:

 

 

For The Year Ended August 31, 2026

 

(In millions)

 

Amount

 

 

Percent

 

U.S. federal statutory tax rate

 

$

16.5

 

 

 

21.0

%

State and local income taxes, net of federal benefit 1

 

 

2.5

 

 

 

3.2

 

 

 

 

 

 

 

Foreign tax effects

 

 

 

 

 

 

Mexico:

 

 

 

 

 

 

Statutory tax rate difference

 

 

5.6

 

 

 

7.2

 

Nondeductible compensation

 

 

3.0

 

 

 

3.8

 

Foreign currency / inflationary effects

 

 

(11.4

)

 

 

(14.5

)

Change in valuation allowance

 

 

1.5

 

 

 

1.9

 

Other

 

 

0.4

 

 

 

0.6

 

Romania:

 

 

 

 

 

 

Minimum tax

 

 

2.1

 

 

 

2.7

 

Other

 

 

(1.5

)

 

 

(2.0

)

Canada:

 

 

 

 

 

 

Withholding tax

 

 

1.2

 

 

 

1.5

 

Other foreign jurisdictions:

 

 

0.8

 

 

 

1.0

 

 

 

 

 

 

 

Effects of cross-border tax laws

 

 

 

 

 

 

U.S. branch income

 

 

6.9

 

 

 

8.7

 

BEAT

 

 

(1.8

)

 

 

(2.2

)

Other

 

 

0.5

 

 

 

0.6

 

 

 

 

 

 

 

Tax credits

 

 

 

 

 

 

Foreign tax credits

 

 

(10.7

)

 

 

(13.6

)

Other

 

 

(0.7

)

 

 

(1.0

)

 

 

 

 

 

 

Changes in valuation allowances

 

 

4.6

 

 

 

5.9

 

 

 

 

 

 

 

Nontaxable or nondeductible items

 

 

 

 

 

 

Officer compensation

 

 

3.3

 

 

 

4.2

 

Stock based compensation

 

 

(2.0

)

 

 

(2.5

)

Other

 

 

(1.6

)

 

 

(2.0

)

 

 

 

 

 

 

Changes in unrecognized tax benefits

 

 

(0.4

)

 

 

(0.5

)

 

 

 

 

 

 

Other reconciling items

 

 

 

 

 

 

Interest on tax refunds

 

 

(3.0

)

 

 

(3.8

)

Other

 

 

1.6

 

 

 

1.9

 

Effective tax rate

 

$

17.4

 

 

 

22.1

%

 

 

 

 

 

 

 

1 State income taxes, net of federal benefit for the year ended August 31, 2026 are primarily attributable to state taxes in Texas, Oregon, California and Louisiana.

As previously disclosed and prior to the adoption of ASU 2023-09, the reconciliation between effective and statutory tax rates on operations for the years ended August 31, 2025 and 2024 are as follows:

 

 

For the Year Ended August 31,

 

 

 

2025

 

 

2024

 

Federal statutory rate

 

 

21.0

%

 

 

21.0

%

State income taxes, net of federal benefit

 

 

2.0

 

 

 

1.4

 

Foreign operations

 

 

2.0

 

 

 

4.6

 

U.S. tax on foreign earnings

 

 

0.7

 

 

 

2.3

 

U.S. impact of foreign branch

 

 

2.3

 

 

 

(1.9

)

Permanent differences

 

 

1.2

 

 

 

4.0

 

BEAT and minimum taxes

 

 

4.4

 

 

 

0.5

 

Change in valuation allowance

 

 

(0.8

)

 

 

2.8

 

Unrecognized tax benefits

 

 

0.3

 

 

 

0.7

 

Noncontrolling interest in flow-through entity

 

 

(0.3

)

 

 

(0.3

)

Credits

 

 

(0.8

)

 

 

(4.7

)

Other

 

 

0.1

 

 

 

(2.7

)

Effective tax rate

 

 

32.1

%

 

 

27.7

%

 

 

 

 

 

 

 

On July 4, 2025, the U.S. enacted H.R. 1, commonly referred to as OBBBA. During fiscal years 2025 and 2026, the Company recorded an increase in deferred tax liabilities and a decrease in income taxes payable related to 100% bonus depreciation for qualifying assets placed in service after January 19, 2025. The Company's effective tax rate also increased during fiscal year 2025 due to non‑deductible depreciation included in the computation of its BEAT liability. Other provisions of OBBBA are effective in future tax years and are under evaluation, however the Company does not expect the provisions to have a material impact on its effective tax rate.

The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities were as follows:

 

 

As of August 31,

 

(In millions)

 

2026

 

 

2025

 

Deferred tax assets:

 

 

 

 

 

 

Accrued payroll and related liabilities

 

$

36.7

 

 

$

32.7

 

Accrued liabilities

 

 

5.6

 

 

 

5.2

 

Deferred revenue

 

 

5.3

 

 

 

11.2

 

Inventories and other

 

 

9.0

 

 

 

15.8

 

Maintenance and warranty accruals

 

 

4.4

 

 

 

4.8

 

Lease liability

 

 

17.8

 

 

 

18.8

 

Interest expense

 

 

15.8

 

 

 

15.5

 

Net operating losses

 

 

43.5

 

 

 

21.2

 

Investment, asset tax credits and other

 

 

30.4

 

 

 

16.3

 

 

 

168.5

 

 

 

141.5

 

Valuation allowance

 

 

(23.0

)

 

 

(13.9

)

Deferred tax liabilities:

 

 

 

 

 

 

Fixed assets

 

 

(260.4

)

 

 

(234.3

)

Intangibles

 

 

(5.8

)

 

 

(3.6

)

Right-of-use asset

 

 

(17.8

)

 

 

(18.5

)

Other

 

 

(12.2

)

 

 

(9.5

)

 

 

(296.2

)

 

 

(265.9

)

Net deferred tax liability

 

$

(150.7

)

 

$

(138.3

)

 

 

 

 

 

 

 

 

As of August 31, 2026, the Company had $77.1 million of federal net operating loss carryforwards that do not expire, $27.0 million of federal credit carryforwards that will begin to expire in 2028, $47.6 million of state net operating loss carryforwards that do not expire, $100.9 million of state net operating loss carryforwards that will begin to expire in 2031, $24.2 million of foreign net operating loss carryforwards that begin to expire in 2029 and $46.8 million of foreign net operating loss carryforwards that do not expire. The Company has placed a valuation allowance of $23.0 million against the deferred tax assets for which a benefit is not more likely than not to be realized, including those for loss and credit carryforwards unlikely to be used before their expiration dates or where the possibility of utilization is remote. The net increase in the total valuation allowance was approximately $9.1 million for the year ended August 31, 2026.

The Company does not intend to repatriate certain foreign earnings and continues to assert that such earnings are indefinitely reinvested. Accordingly, the Company has not recorded a liability for foreign withholding taxes associated with these undistributed foreign earnings. Determination of the amount of the unrecognized deferred tax liability associated with these earnings is not practicable.

The following is a tabular reconciliation of the total amounts of unrecognized tax benefits:

 

 

For the Year Ended August 31,

 

(In millions)

 

2026

 

 

2025

 

 

2024

 

Unrecognized Tax Benefit – Opening Balance

 

$

3.6

 

 

$

3.1

 

 

$

1.7

 

Gross increases – tax positions in prior period

 

 

1.4

 

 

 

0.5

 

 

 

1.8

 

Settlements

 

 

(1.3

)

 

 

—

 

 

 

—

 

Lapse of statute of limitations

 

 

—

 

 

 

—

 

 

 

(0.4

)

Unrecognized Tax Benefit – Ending Balance

 

$

3.7

 

 

$

3.6

 

 

$

3.1

 

 

 

 

 

 

 

 

 

 

 

All unrecognized tax benefits, when recognized, would impact the effective tax rate.

Interest and penalties related to income taxes are classified as a component of income tax expense. As of August 31, 2026 and 2025, accrued interest related to unrecognized tax benefits was $0.7 million and $1.2 million, respectively. Income tax expense for the fiscal years ended August 31, 2026, 2025, and 2024 included interest (benefit) expense related to unrecognized tax benefits of $(0.5) million, $0.4 million, and $0.2 million, respectively. The Company has not accrued any penalties related to unrecognized tax benefits.

The Company is subject to income taxes in the U.S., including state and local jurisdictions, as well as in certain foreign jurisdictions. The Company is no longer subject to U.S. federal income tax examinations for fiscal years prior to 2022, state and local tax examinations for fiscal years prior to 2021, or foreign tax examinations for fiscal years prior to 2017. During fiscal year 2026, the Internal Revenue Service is examining the Company's U.S. federal income tax returns for fiscal years 2024 and 2025. Income tax examinations are also ongoing in Canada, Poland and Romania.

The components of income taxes refunded, net of payments, are as follows:

 

 

For The Year Ended August 31,

 

(In millions)

 

2026

 

Federal

 

$

(27.3

)

State

 

 

 

Texas

 

 

0.5

 

California

 

 

0.2

 

Other

 

 

0.5

 

Foreign

 

 

 

Mexico

 

 

16.6

 

Romania

 

 

3.3

 

Canada

 

 

1.2

 

Brazil

 

 

0.6

 

Netherlands

 

 

0.3

 

Poland

 

 

(0.3

)

Other

 

 

0.3

 

Income taxes refunded, net of payments

 

$

(4.1

)

 

 

 

 

 

Federal tax refunds include amounts received as a result of the carryback of fiscal year 2021 net operating losses to fiscal years 2016 through 2018, as permitted under the Coronavirus Aid, Relief, and Economic Security Act enacted in 2020.