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Income Taxes
 12 Months Ended
Aug. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes

Note 16 — Income Taxes

Components of income tax expense were as follows:

 

 

 

For the Year Ended August 31,

 

(In millions)

 

2025

 

 

2024

 

 

2023

 

Current

 

 

 

 

 

 

 

 

 

Federal

 

$

8.4

 

 

$

2.0

 

 

$

7.4

 

State

 

 

1.8

 

 

 

2.2

 

 

 

2.7

 

Foreign

 

 

35.2

 

 

 

38.8

 

 

 

9.7

 

 

 

45.4

 

 

 

43.0

 

 

 

19.8

 

Deferred

 

 

 

 

 

 

 

 

 

Federal

 

 

47.5

 

 

 

14.6

 

 

 

7.9

 

State

 

 

8.2

 

 

 

0.1

 

 

 

0.6

 

Foreign

 

 

(7.7

)

 

 

(2.0

)

 

 

(3.4

)

 

 

48.0

 

 

 

12.7

 

 

 

5.1

 

Change in valuation allowance

 

 

(2.0

)

 

 

6.3

 

 

 

(0.3

)

Income tax expense

 

$

91.4

 

 

$

62.0

 

 

$

24.6

 

 

 

 

 

 

 

 

 

 

 

Earnings before income tax and earnings from unconsolidated affiliates for the years ended August 31, 2025, 2024 and 2023 were $255.3 million, $111.4 million and $32.2 million, respectively, for our domestic U.S. operations and $29.1 million, $112.3 million and $58.8 million, respectively for our foreign operations.

The reconciliation between effective and statutory tax rates on operations is as follows:

 

 

For the Year Ended August 31,

 

 

 

2025

 

 

2024

 

 

2023

 

Federal statutory rate

 

 

21.0

%

 

 

21.0

%

 

 

21.0

%

State income taxes, net of federal benefit

 

 

2.0

 

 

 

1.4

 

 

 

3.0

 

Foreign operations

 

 

2.0

 

 

 

4.6

 

 

 

6.2

 

U.S. tax on foreign earnings

 

 

0.7

 

 

 

2.3

 

 

 

4.5

 

U.S. impact of foreign branch

 

 

2.3

 

 

 

(1.9

)

 

 

—

 

Permanent differences

 

 

1.2

 

 

 

4.0

 

 

 

(5.8

)

BEAT and minimum taxes

 

 

4.4

 

 

 

0.5

 

 

 

1.6

 

Change in valuation allowance

 

 

(0.8

)

 

 

2.8

 

 

 

(0.5

)

Unrecognized tax benefits

 

 

0.3

 

 

 

0.7

 

 

 

1.4

 

Noncontrolling interest in flow-through entity

 

 

(0.3

)

 

 

(0.3

)

 

 

(2.7

)

Credits

 

 

(0.8

)

 

 

(4.7

)

 

 

0.1

 

Other

 

 

0.1

 

 

 

(2.7

)

 

 

(1.8

)

Effective tax rate

 

 

32.1

%

 

 

27.7

%

 

 

27.0

%

 

 

 

 

 

 

 

 

 

 

Due to the enactment of the Coronavirus Aid, Relief and Economic Security (CARES) Act in 2020, the Company filed a Federal claim to carryback fiscal year 2021 tax losses to the fiscal years 2016 through 2018, allowing the recovery of Federal income taxes previously paid at rates of 35.0% or 25.7%, rather than the current Federal rate of

21.0% in effect beginning with the fiscal year 2019. As of August 31, 2025, income taxes receivable includes a balance of $22.9 million related to the carryback of the 2021 loss.

On July 4, 2025, the U.S. enacted H.R. 1, commonly referred to as the One Big Beautiful Bill Act (OBBBA). As a result, we recorded an increase of deferred tax liabilities and decrease of income tax payable related to the provisions for 100% bonus depreciation on assets placed in service after January 19, 2025. Additionally, our effective tax rate increased due to the impact of non-deductible depreciation in the calculation of our BEAT liability. Many other provisions of the OBBBA will take effect in future tax years, and we are currently assessing their potential impact.

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)

 

2025

 

 

2024

 

Deferred tax assets:

 

 

 

 

 

 

Accrued payroll and related liabilities

 

$

32.7

 

 

$

35.0

 

Accrued liabilities

 

 

5.2

 

 

 

3.5

 

Deferred revenue

 

 

11.2

 

 

 

6.7

 

Inventories and other

 

 

15.8

 

 

 

7.7

 

Maintenance and warranty accruals

 

 

4.8

 

 

 

5.5

 

Lease liability

 

 

18.8

 

 

 

14.7

 

Interest expense

 

 

15.5

 

 

 

13.4

 

Net operating losses

 

 

21.2

 

 

 

35.9

 

Investment, asset tax credits and other

 

 

16.3

 

 

 

16.2

 

 

 

141.5

 

 

 

138.6

 

Valuation allowance

 

 

(13.9

)

 

 

(15.9

)

Deferred tax liabilities:

 

 

 

 

 

 

Fixed assets

 

 

(234.3

)

 

 

(187.2

)

Intangibles

 

 

(3.6

)

 

 

(5.6

)

Right-of-use asset

 

 

(18.5

)

 

 

(14.4

)

Other

 

 

(9.5

)

 

 

(11.5

)

 

 

(265.9

)

 

 

(218.7

)

Net deferred tax liability

 

$

(138.3

)

 

$

(96.0

)

As of August 31, 2025, the Company had $5.6 million of federal net operating loss carryforwards that do not expire, $16.3 million of federal credit carryforwards that will begin to expire in 2028, $40.2 million of state net operating loss carryforwards that do not expire, $108.5 million of state net operating loss carryforwards that will begin to expire in 2031, $16.1 million of foreign net operating loss carryforwards that begin to expire in 2027 and $27.8 million of foreign net operating loss carryforwards that do not expire. The Company has placed a valuation allowance of $13.9 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 decrease in the total valuation allowance was approximately $2.0 million for the year ended August 31, 2025.

The Company's cumulative undistributed foreign earnings, if repatriated, would be accompanied by foreign withholdings taxes. However, the Company does not intend to repatriate these foreign earnings and continues to assert that its foreign earnings are indefinitely reinvested. As a result, it has not recorded a liability for foreign withholding taxes associated with undistributed foreign earnings. The determination of the unrecognized deferred tax liability on these earnings is not practicable due to the complexity and variety of assumptions necessary to estimate the tax.

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

 

 

For the Year Ended August 31,

 

(In millions)

 

2025

 

 

2024

 

 

2023

 

Unrecognized Tax Benefit – Opening Balance

 

$

3.1

 

 

$

1.7

 

 

$

0.4

 

Gross increases – tax positions in prior period

 

 

0.5

 

 

 

1.8

 

 

 

1.3

 

Lapse of statute of limitations

 

 

—

 

 

 

(0.4

)

 

 

—

 

Unrecognized Tax Benefit – Ending Balance

 

$

3.6

 

 

$

3.1

 

 

$

1.7

 

 

 

 

 

 

 

 

 

 

 

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, 2025 and 2024, the total amount of accrued interest was $1.2 million and $0.8 million, respectively. Income tax expense for the years ended August 31, 2025, 2024 and 2023 included interest expense related to unrecognized tax benefits of $0.4 million, $0.2 million and $0.5 million, respectively.

The Company has not accrued any penalties on the unrecognized tax benefits and anticipates a decrease of approximately $1.3 million within the next twelve months relating to settlements with taxing authorities. The Company is subject to taxation in the U.S. and in various states and foreign jurisdictions. The Company is effectively no longer subject to U.S. Federal examination for fiscal years ending before 2022, to state and local examinations before 2021, or to foreign examinations before 2017. The Company currently has ongoing examinations in Poland and Romania.