Nordson 10-Q 2023-07-31

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

For the quarterly period ended July 31, 2023

OR

For the transition period from to

Commission file number 0-7977

____________________________________________________

NORDSON CORPORATION

(Exact name of registrant as specified in its charter)

___________________________________________________

Ohio

(State or other jurisdiction of incorporation or organization)

28601 Clemens Road

Westlake, Ohio

(Address of principal executive offices)

34-0590250

(I.R.S. Employer Identification No.)

44145

(Zip Code)

(440) 892-1580

(Registrant's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes x No o

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: Common Shares, without par value as of August 22, 2023: 57,014,497

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Nordson Corporation

Part I – FINANCIAL INFORMATION

Condensed Consolidated Statements of Income

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The following is management's discussion and analysis of certain significant factors affecting our financial condition and results of operations for the periods included in the accompanying condensed consolidated financial statements.

Overview

Nordson Corporation is an innovative precision technology company that leverages a scalable growth framework to deliver top tier growth with leading margins and returns. The Company’s direct sales model and applications expertise serves global customers through a wide variety of critical applications. Its diverse end market exposure includes consumer non-durable, medical, electronics and industrial end markets. Founded in 1954 and headquartered in Westlake, Ohio, the Company has approximately 7,200 employees with operations and support offices in over 35 countries.

COVID-19 Update

In December 2019, a novel strain of coronavirus (COVID-19) emerged and spread to other countries, including the United States. In March 2020, the World Health Organization declared COVID-19 as a pandemic (the COVID-19 pandemic). The COVID-19 pandemic, including multiple variants, resulted in governments around the world implementing stringent measures to help control the spread of the virus, including quarantines, “shelter in place” and “stay at home” orders, travel restrictions, business interruptions and other measures.

Although the World Health Organization declared an end to the COVID-19 pandemic on May 5, 2023, we continue to actively monitor the impact of COVID-19, which has negatively disrupted, and may continue to negatively disrupt, our business and results of operations in the future. For example, in the first quarter of 2023, our revenue growth in Asia-Pacific was negatively impacted by labor shortages and business disruption from the spread of COVID-19. The full extent of COVID-19 on our operations and the markets we serve remains uncertain and will depend largely on future developments related to COVID-19, including infection rates increasing or returning in various geographic areas, variations of COVID-19, actions by government authorities to contain the outbreak or treat its impact, such as reimposing previously lifted measures or putting in place additional restrictions, and the widespread distribution and acceptance of an effective vaccine, among other things. Future developments regarding COVID-19 and its effects cannot be accurately predicted.

Acquisitions

On August 24, 2023, the Company completed the acquisition of the ARAG Group and its subsidiaries (ARAG Group or ARAG) pursuant to the terms of the Sale and Purchase Agreement, dated as of June 25, 2023, by and among the Company, its Italian subsidiary, Capvis Equity V LP (Capvis), DRIP Co-Investment (DRIP), and certain individuals (the Individual Sellers, and together with Capvis and DRIP, collectively, the Sellers). ARAG is a global market and innovation leader in the development, production and supply of precision control systems and smart fluid components for agricultural spraying. ARAG will operate as a division of our Industrial Precision Solutions segment. In anticipation of the acquisition, the Company entered into a €760,000 senior unsecured term loan facility with a group of banks in August 2023 (the Term Facility). The Term Facility has a 364-day term and matures in August 2024, and loans under the facility bear interest at a eurocurrency rate plus an applicable margin that will range from 1.1250% to 1.625% based on the Company’s Leverage Ratio (as defined in the term loan credit agreement and calculated on a consolidated net debt basis). The all-cash ARAG acquisition of approximately €957,000, net of the repayment of approximately €30,300 of debt of the acquired companies, was funded using the Term Facility and Revolving Facility. The financial results of the ARAG Group acquisition are not expected to have a material impact on our Consolidated Financial Statements.

On November 3, 2022, the Company completed the acquisition of CyberOptics Corporation (CyberOptics) pursuant to the terms of the Agreement and Plan of Merger, dated as of August 7, 2022, by and among the Company, Meta Merger Company and CyberOptics. CyberOptics is a leading global developer and manufacturer of high-precision 3D optical sensing technology solutions. The CyberOptics acquisition expanded our test and inspection platform, providing differentiated technology that expands our product offering in the semiconductor and electronics industries and will be reported in our Advanced Technology Solutions segment. The all-cash transaction of approximately $378,000, net of cash acquired, was funded using borrowings under our revolving credit facility and cash on hand and is not expected to have a material impact on our Consolidated Financial Statements.

Critical Accounting Policies and Estimates

A comprehensive discussion of the Company’s critical accounting policies and management estimates and significant accounting policies followed in the preparation of the financial statements is included in Item 7 of our Annual Report on Form 10-K for the year ended October 31, 2022 (the 2022 Form 10-K). There have been no significant changes in critical accounting policies, management estimates or accounting policies followed since the year ended October 31, 2022.

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Nordson Corporation

Results of Operations

Three months ended July 31, 2023

Worldwide sales for the three months ended July 31, 2023, were $648,677, a decrease of 2.0% from sales of $662,128 for the comparable period of 2022. The decrease consisted of a 4.5% decrease in organic sales, which was partially offset by a 2.4% increase due to an acquisition and a favorable effect from currency translation of 0.1%. The organic sales decrease was driven by ongoing pressure in electronics, primarily semiconductor dispense applications, and biopharma end markets, offset by strong growth in medical interventional solutions and polymer processing product lines.

In the Americas region, sales were $290,515 for the three months ended July 31, 2023, an increase of 4.1% from the comparable period of 2022, consisting of an organic sales increase of 2.2%, an increase due to an acquisition of 1.2%, and favorable currency effects of 0.7%. In the Asia Pacific region, sales were $190,626, a decrease of 17.6% from the comparable period of 2022, consisting of an organic sales decrease of 20.0% and unfavorable currency effects of 1.9%, partially offset by a 4.3% increase due to an acquisition. In Europe, sales were $167,536, an increase of 10.5% from the comparable period of 2022, consisting of an organic sales increase of 5.7%, favorable currency effects of 3.4%, and a 1.4% increase due to an acquisition.

Cost of sales for the three months ended July 31, 2023 were $288,357, down from $296,544 in the comparable period of 2022. Gross profit, expressed as a percentage of sales, increased to 55.5% from 55.2% in the comparable period of 2022. The 0.3 improvement was primarily driven by improved manufacturing efficiency and price realization offset by severance-related cost structure simplification actions.

Selling and administrative expenses for the three months ended July 31, 2023 were $189,324, up from $180,666 in the comparable period of 2022. The 4.8% increase was primarily driven by the first-year effect of an acquisition and related acquisition costs, partially offset by lower base business and incentive costs.

Operating profit decreased to $170,996 for the three months ended July 31, 2023, compared to $184,918 in the comparable period of 2022. Operating profit as a percentage of sales decreased to 26.4% for the three months ended July 31, 2023, compared to 27.9% in the comparable period of 2022. The 1.5 percentage point decline in operating margin was primarily driven by lower sales volume and acquisition related costs.

Interest expense for the three months ended July 31, 2023 was $12,089, compared to $5,737 in the comparable period of 2022. The increase, compared to the prior year period, was primarily due to higher average debt levels, partially due to the CyberOptics acquisition, as well as increases in interest rates. Other income was $2,542 compared to $752 in the comparable period of 2022. Included in 2023 other income were pension and postretirement income of $1,343 and $886 of foreign currency losses. Included in 2022 other expense were pension and postretirement costs of $25 and $745 in foreign currency gains.

Net income for the three months ended July 31, 2023 was $127,891, or $2.22 per diluted share, compared to $141,811, or $2.45 per diluted share, in the same period of 2022. This represents a 9.8% decrease in net income, and a 9.4% decrease in diluted earnings per share. The decrease in income was driven by lower operating profit and increased interest expense.

Industrial Precision Solutions

Sales of the Industrial Precision Solutions segment were $338,257 in the three months ended July 31, 2023, a decrease of 0.9% from sales of $341,215 for the comparable period of 2022. The decrease consisted of an organic sales decrease of 1.5%, which was partially offset by favorable currency effects of 0.6%. The organic sales decrease was driven primarily by our product assembly and nonwovens product lines in Asia Pacific, partially offset by continued strength in the polymer processing product lines.

Operating profit as a percentage of sales decreased to 34.1% for the three months ended July 31, 2023, compared to 35.1% in the comparable period of 2022. The 1.0 percentage point decline in operating margin was primarily driven by lower sales volume and unfavorable sales mix.

Medical and Fluid Solutions

Sales of the Medical and Fluid Solutions segment were $170,871 in the three months ended July 31, 2023, a decrease of 3.9% from sales of $177,840 for the comparable period of 2022. The decrease consisted of an organic sales decrease of 3.9%, which was driven by continued softness in the medical fluid components and fluid solutions product lines, partially offset by strong double-digit demand for medical interventional solutions product lines.

Operating profit as a percentage of sales decreased to 31.6% for the three months ended July 31, 2023, compared to 32.7% in the comparable period of 2022. The 1.1 percentage point decline in operating margin was primarily due to lower sales volume and sales mix changes within medical product lines.

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Nordson Corporation

Advanced Technology Solutions

Sales of the Advanced Technology Solutions segment were $139,549 in the three months ended July 31, 2023, a decrease of 2.5% from sales of $143,073 for the comparable period of 2022. The decrease consisted of an organic sales decrease of 12.8% and unfavorable currency effects of 0.4%, partially offset by a 10.7% increase due to an acquisition. The organic sales decrease was driven by electronics dispense products serving semiconductor end markets, predominantly in Asia Pacific, slightly offset by continued growth in test and inspection product lines.

Operating profit as a percentage of sales decreased to 19.4% for the three months ended July 31, 2023, compared to 19.7% in the comparable period of 2022. The 0.3 percentage point decline in operating margin was driven by severance costs, partially offset by favorable sales mix and realization of cost savings actions.

Nine months ended July 31, 2023

Worldwide sales for the nine months ended July 31, 2023 were $1,909,319, an increase of 0.1% from sales of $1,906,697 for the comparable period of 2022. The increase consisted of a 2.6% increase due to an acquisition, substantially offset by unfavorable currency translation effects of 1.8% and a 0.7% decrease in organic sales volume. Strength in the polymer processing and medical interventional solutions product lines was offset by weakness in the electronic dispense, fluid solutions, and medical fluid components product lines.

In the Americas region, sales were $834,125 for the nine months ended July 31, 2023, an increase of 5.2% from the comparable period of 2022, consisting of an organic sales increase of 3.2%, an increase due to an acquisition of 1.9%, and a favorable effect from currency translation of 0.1%. In the Asia Pacific region, sales were $576,815, a decrease of 9.0% from the comparable period of 2022, consisting of an organic sales decrease of 9.7% and a 3.7% decrease from unfavorable currency translation effects, partially offset by a 4.4% increase due to an acquisition. In Europe, sales were $498,379, an increase of 3.9% from the comparable period of 2022, consisting of an organic sales increase of 4.3% and a 1.6% increase due to an acquisition, partially offset by unfavorable currency effects of 2.0%.

Cost of sales for the nine months ended July 31, 2023 were $868,007, up from $843,344 in the comparable period of 2022. Gross profit, expressed as a percentage of sales, decreased to 54.5% from 55.8% in the comparable period of 2022. The 1.3 percentage point decrease in gross margin was driven by reduced manufacturing efficiency and severance in sites dealing with meaningful volume decreases and incremental inventory step-up amortization of $2,743 incurred in the first quarter of 2023 compared to 2022.

Selling and administrative expenses for the nine months ended July 31, 2023 were $553,590, up from $538,602 in the comparable period of 2022. The 2.8% increase was primarily driven by the first-year effect of an acquisition and acquisition related costs, partially offset by favorable currency translation effects and lower incentive costs.

Operating profit decreased to $487,722 for the nine months ended July 31, 2023, compared to $524,751 in the comparable period of 2022. Operating profit as a percentage of sales decreased to 25.5% for the nine months ended July 31, 2023, compared to 27.5% in the comparable period of 2022. The 2.0 percentage point decline in operating margin was primarily driven by unfavorable sales mix, and a combination of fees, severance, and non-cash inventory charges associated with the CyberOptics and ARAG Group acquisitions.

Interest expense for the nine months ended July 31, 2023 was $32,532, compared to $16,748 in the comparable period of 2022. The increase, compared to the prior year period, was primarily due to higher average debt levels, partially due to the CyberOptics acquisition, as well as increases in interest rates. Other expense was $2,059 compared to $37,720 in the comparable period of 2022. Included in 2023 other expense were pension income of $4,044 and $7,625 in foreign currency losses. Included in 2022 other expense were non-cash pension settlement charges of $41,221 related to the purchase of an annuity contract to relieve the Company of certain pension benefit obligations, other pension and postretirement income of $1,002 and $2,109 in foreign currency gains.

Net income for the nine months ended July 31, 2023 was $359,715, or $6.24 per diluted share, compared to $371,854, or $6.37 per diluted share, in the same period of 2022. This represents a 3.3% decrease in net income, and a 2.0% decrease in diluted earnings per share. Net income for the nine months ended July 31, 2022 included after tax non-cash pension settlement charges of $32,450, or $0.56 per diluted share, related to the purchase of an annuity contract to relieve the Company of certain pension benefit obligations. Excluding the prior year pension settlement charges, the decrease was driven primarily by a combination of lower margins; fees, severance and non-cash inventory charges associated with the CyberOptics and ARAG Group acquisitions and higher interest expense.

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Nordson Corporation

Industrial Precision Solutions

Sales of the Industrial Precision Solutions segment were $985,610 in the nine months ended July 31, 2023, an increase of 0.4% from sales of $981,582 for the comparable period of 2022. The increase consisted of an organic sales increase of 2.6%, partially offset by unfavorable currency effects that decreased sales by 2.2%. The organic sales increase was driven primarily by strong demand in polymer processing product lines.

Operating profit as a percentage of sales increased to 33.4% for the nine months ended July 31, 2023, compared to 33.0% in the comparable period of 2022. The 0.4 percentage point improvement in operating margin was primarily due to non-recurring inventory step-up amortization incurred in the first quarter of 2022 compared to 2023.

Medical and Fluid Solutions

Sales of the Medical and Fluid Solutions segment were $491,683 in the nine months ended July 31, 2023, a decrease of 3.4% from sales of $508,836 for the comparable period of 2022. The decrease consisted of an organic sales decrease of 2.4% and unfavorable currency effects that decreased sales by 1.0%. The organic sales decrease was driven by lower demand for the medical fluid components and fluid solutions product lines, partially offset by strong demand for medical interventional solutions product lines.

Operating profit as a percentage of sales decreased to 28.7% for the nine months ended July 31, 2023, compared to 32.5% in the comparable period of 2022. The 3.8 percentage point decline in operating margin was primarily due to meaningful sales mix changes within medical product lines and related factory inefficiencies due to reduced volumes.

Advanced Technology Solutions

Sales of the Advanced Technology Solutions segment were $432,026 in the nine months ended July 31, 2023, an increase of 3.8% from sales of $416,279 for the comparable period of 2022. The increase was the result of a 12.2% increase due to an acquisition, partially offset by an organic sales volume decrease of 6.6% and unfavorable currency effects of 1.8%. The organic sales decrease was driven by lower demand in electronic dispense product lines, partially offset by stronger demand in test and inspection product lines.

Operating profit as a percentage of sales decreased to 16.2% for the nine months ended July 31, 2023, compared to 22.9% in the comparable period of 2022. The 6.7 percentage point decline in operating margin was primarily due to fees, severance and non-cash inventory charges of $10,295 associated with the CyberOptics acquisition incurred in the first quarter of 2023 and factory inefficiencies due to reduced volumes.

Income taxes

We record our interim provision for income taxes based on our estimated annual effective tax rate, as well as certain items discrete to the current period. Significant judgment is involved regarding the application of global income tax laws and regulations and when projecting the jurisdictional mix of income. We have considered several factors in determining the probability of realizing deferred income tax assets which include forecasted operating earnings, available tax planning strategies and the time period over which the temporary differences will reverse. We review our tax positions on a regular basis and adjust the balances as new information becomes available. The effective tax rate for the three and nine months ended July 31, 2023 was 21.1% and 20.9%, respectively, compared to 21.4% and 21.2% for the three and nine months ended July 31, 2022, respectively.

Due to our share-based payment transactions, our income tax provision included a discrete tax benefit of $996 and $2,745 for the three months and nine months ended July 31, 2023, respectively, compared to $115 and $1,539 for the three and nine months ended July 31, 2022, respectively.

Foreign Currency Effects

In the aggregate, average exchange rates for 2023 used to translate international sales and operating results into U.S. dollars were generally unfavorable compared with average exchange rates existing during 2022. It is not possible to precisely measure the impact on operating results arising from foreign currency exchange rate changes, because of changes in selling prices, sales volume, product mix and cost structure in each country in which we operate. However, if transactions for the three months ended July 31, 2023 were translated at exchange rates in effect during the same period of 2022, we estimated that sales would have been approximately $4,000 lower while costs of sales and selling and administrative expenses would have been approximately $3,000 lower. If transactions for the nine months ended July 31, 2023 were translated at exchange rates in effect during the same period of 2022, we estimated that sales would have been approximately $35,000 higher while costs of sales and selling and administrative expenses would have been approximately $23,000 higher.

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Nordson Corporation

Financial Condition

Liquidity and Capital Resources

During the nine months ended July 31, 2023, cash and cash equivalents decreased $20,319. Cash provided by operations during this period was $478,072 compared to $339,691 for the nine months ended July 31, 2022. Changes in operating assets and liabilities increased cash by $19,197 in the nine months ended July 31, 2023 and decreased cash by $162,333 in the comparable period of 2022, driven primarily by improvements in accounts receivable and inventory, as well as cash inflows related to settlement of foreign exchange contracts.

Cash used in investing activities was $401,996 for the nine months ended July 31, 2023, compared to $210,571 used in the comparable period of 2022. During the nine months ended July 31, 2023, cash of $377,843 was used for the CyberOptics acquisition and cash of $24,244 was used for capital expenditures. During the nine months ended July 31, 2022, cash of $171,613 was used for the NDC acquisition and $39,373 was used for capital expenditures.

Cash used in financing activities was $102,074 for the nine months ended July 31, 2023, compared to $294,418 in the comparable period of 2022. In the nine months ended July 31, 2023, cash of $111,547 was used for dividend payments and cash of $78,163 was used for the purchase of treasury shares, versus $88,675 and $233,767, respectively, in the comparable period of 2022. The nine months ended July 31, 2023 included net borrowings of long-term debt of $73,956, used primarily to fund the acquisition of CyberOptics, compared to net borrowings of $22,905 during the nine months ended July 31, 2022.

The following is a summary of significant changes in balance sheet captions from October 31, 2022 to July 31, 2023. Inventories-net increased by $56,343, primarily as a result of the CyberOptics acquisition. Goodwill and intangibles increased by $279,630 and $58,600, respectively, due to the CyberOptics acquisition. Accrued liabilities decreased by $37,193 due primarily to incentive compensation payments made in the nine months ended July 31, 2023, and long-term debt increased principally as result of refinancing activities completed in 2023.

We believe the combination of present and expected capital resources, cash from operations and unused financing sources, such as our credit facilities, which includes our revolving credit agreement entered in June 2023 and the 364-day term loan facility utilized to fund the ARAG Group acquisition, are more than adequate to meet cash requirements for the next twelve months and for the foreseeable future thereafter. There are no significant restrictions limiting the transfer of funds from international subsidiaries to the parent Company. We were in compliance with all debt covenants as of July 31, 2023. Refer to our Long-term debt and Subsequent Event Notes in the notes to our condensed consolidated financial statements for additional details regarding our debt outstanding and Term Facility.

Safe Harbor Statements Under the Private Securities Litigation Reform Act of 1995

This Form 10-Q, particularly “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements within the meaning of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Such statements relate to, among other things, income, earnings, cash flows, changes in operations, operating improvements, businesses in which we operate and the United States and global economies. Statements in this quarterly report that are not historical are hereby identified as “forward-looking statements” and may be indicated by words or phrases such as “anticipates,” “supports,” “plans,” “projects,” “expects,” “believes,” “should,” “would,” “could,” “hope,” “forecast,” “management is of the opinion,” use of the future tense and similar words or phrases. These statements reflect management’s current expectations and involve a number of risks and uncertainties. These risks and uncertainties include, but are not limited to, U.S. and international economic conditions; financial and market conditions; currency exchange rates and devaluations; possible acquisitions including the Company’s ability to complete and successfully integrate acquisitions, including the integration of CyberOptics and ARAG; the Company’s ability to successfully divest or dispose of businesses that are deemed not to fit with its strategic plan; the effects of changes in U.S. trade policy and trade agreements; the effects of changes in tax law; and the possible effects of events beyond our control, such as political unrest, including the conflict between Russia and Ukraine and tensions between the United States and China, acts of terror, natural disasters and pandemics, including the recent COVID-19 pandemic.

In light of these risks and uncertainties, actual events and results may vary significantly from those included in or contemplated or implied by such statements. Readers are cautioned not to place undue reliance on such forward-looking statements. These forward-looking statements speak only as of the date made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Factors that could cause actual results to differ materially from the expected results are discussed in Part I, Item 1A, Risk Factors in our 2022 Form 10-K.

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Information regarding our financial instruments that are sensitive to changes in interest rates and foreign currency exchange rates was disclosed under Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” in our 2022 Form 10-K. The information disclosed has not changed materially in the interim period since then.

Our management with the participation of the principal executive officer (President and Chief Executive Officer) and principal financial officer (Executive Vice President, Chief Financial Officer) has reviewed and evaluated our disclosure controls and procedures (as defined in the Securities Exchange Act Rule 13a-15(e)) as of July 31, 2023. Based on that evaluation, our management, including the principal executive and financial officers, has concluded that our disclosure controls and procedures were effective as of July 31, 2023 in ensuring that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and is accumulated and communicated to management, including the principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

There were no changes in our internal control over financial reporting that occurred during the three months ended July 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Nordson Corporation

Part II – OTHER INFORMATION

See our Contingencies Note to the condensed consolidated financial statements for a discussion of our contingencies and legal matters.

In addition to the other information set forth in this quarterly report, you should carefully consider the risk factors disclosed in “Item 1A. Risk Factors” of our 2022 Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table summarizes common shares repurchased by the Company during the three months ended July 31, 2023:

(1) Includes shares tendered for taxes related to stock option exercises and vesting of restricted stock.

(2) In December 2014, the board of directors authorized a $300,000 common share repurchase program. In August 2015, the board of directors authorized the repurchase of up to an additional $200,000 of the Company’s common shares. In August 2018, the board of directors authorized the repurchase of an additional $500,000 of the Company’s common shares. In September 2022, the board of directors authorized the repurchase of up to an additional $500,000 of the Company's common shares. Approximately $561,762 of the total $1,500,000 authorized remained available for share repurchases at July 31, 2023. Uses for repurchased shares include the funding of benefit programs including stock options and restricted stock. Shares purchased are treated as treasury shares until used for such purposes. The repurchase program will be funded using cash from operations and proceeds from borrowings under our credit facilities. The repurchase program does not have an expiration date.

On June 30, 2023, Stephen P. Lovass, an Executive Vice President of the Company, adopted a trading arrangement for the sale of the Company’s common shares (a “Rule 10b5-1 Trading Plan”) that is intended to satisfy the affirmative defense conditions of Securities Exchange Act Rule 10b5-1(c). Mr. Lovass’s Rule 10b5-1 Trading Plan, which expires no later than March 28, 2024, provides for the sale of up to 6,898 common shares pursuant to the terms of the Rule 10b5-1 Trading Plan.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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